10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarter ended June 30, 2003

(   ) Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from __________ to ___________

Commission File No. 1-12911

GRANITE CONSTRUCTION INCORPORATED

State of Incorporation:	I.R.S. Employer Identification Number:
Delaware	77-0239383

Corporate Administration:

585 W. Beach Street
Watsonville, California 95076
(831) 724-1011

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  (X)   No  (   )

Indicate by checkmark whether the registrant is an accelerated filer (as defined in Rule 12 b-2 of the Exchange Act). Yes  (X)   No  (   )

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of August 7, 2003.

Class	Outstanding
Common Stock, $0.01 par value	41,533,311 shares

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
	Item 1. FINANCIAL STATEMENTS
		CONDENSED CONSOLIDATED BALANCE SHEETS
		CONDENSED CONSOLIDATED STATEMENTS OF INCOME
		CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
		NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
	Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	Item 4. CONTROLS AND PROCEDURES
PART II. OTHER INFORMATION
	Item 1. LEGAL PROCEEDINGS
	Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
	Item 3. DEFAULTS UPON SENIOR SECURITIES
	Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
	Item 5. OTHER INFORMATION
	Item 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
Exhibit 10.1
Exhibit 10.2
Exhibit 10.3
Exhibit 10.4
Exhibit 10.5
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

Index

			Page
PART I. FINANCIAL INFORMATION				3
	Item 1.	Financial Statements (unaudited)		4
		Condensed Consolidated Balance Sheets as of June 30, 2003 and December 31, 2002		4
		Condensed Consolidated Statements of Income for the Three Months and Six Months Ended June 30, 2003 and 2002		5
		Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2003 and 2002		6
		Notes to the Condensed Consolidated Financial Statements		7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		12
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		21
	Item 4.	Controls and Procedures		21
PART II. OTHER INFORMATION				22
	Item 1.	Legal Proceedings		23
	Item 2.	Changes in Securities and Use of Proceeds		23
	Item 3.	Defaults Upon Senior Securities		23
	Item 4.	Submission of Matters to a Vote of Security Holders		23
	Item 5.	Other Information		23
	Item 6.	Exhibits and Reports on Form 8-K		24

2

PART I. FINANCIAL INFORMATION

3

Item 1. FINANCIAL STATEMENTS (unaudited)

Granite Construction Incorporated
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)

			June 30,			December 31,
			2003			2002
			(Unaudited)
Assets
Current assets
	Cash and cash equivalents		$	77,615		$	52,032
	Short-term marketable securities			62,819			96,900
	Accounts receivable, net			295,194			265,896
	Costs and estimated earnings in excess of billings			51,734			42,966
	Inventories			32,698			29,984
	Deferred income taxes			22,714			23,056
	Equity in construction joint ventures			29,145			24,329
	Other current assets			10,159			12,732
		Total current assets		582,078			547,895
Property and equipment, net				359,550			347,963
Long-term marketable securities				37,649			33,762
Investments in affiliates				19,216			18,970
Other assets				39,572			35,229
			$	1,038,065		$	983,819
Liabilities and Stockholders’ Equity
Current liabilities
	Current maturities of long-term debt		$	10,179		$	8,640
	Accounts payable			152,554			118,813
	Billings in excess of costs and estimated earnings			97,367			105,725
	Accrued expenses and other current liabilities			105,132			94,321
		Total current liabilities		365,232			327,499
Long-term debt				131,177			132,380
Other long-term liabilities				15,918			13,742
Deferred income taxes				40,011			40,011
Commitments and contingencies
Minority interest in consolidated subsidiaries				16,072			15,318
Stockholders’ equity
	Preferred stock, $0.01 par value, authorized 3,000,000 shares, none outstanding			—			—
	Common stock, $0.01 par value, authorized 100,000,000 shares; issued and outstanding 41,544,417 shares in 2003 and 41,257,015 in 2002			415			413
	Additional paid-in capital			73,832			69,390
	Retained earnings			410,887			398,383
	Accumulated other comprehensive loss			(788	)		(1,402	)
				484,346			466,784
	Unearned compensation			(14,691	)		(11,915	)
				469,655			454,869
			$	1,038,065		$	983,819

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

Granite Construction Incorporated
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - in thousands, except per share data)

				Three Months Ended June 30,						Six Months Ended June 30,
				2003			2002			2003			2002
Revenue:
	Construction			$	403,399		$	397,326		$	665,865		$	635,188
	Material sales				66,006			61,684			105,700			92,967
		Total revenue			469,405			459,010			771,565			728,155
Cost of revenue:
	Construction				362,456			344,466			596,700			559,701
	Material sales				53,766			50,685			88,665			77,683
		Total cost of revenue			416,222			395,151			685,365			637,384
			Gross Profit		53,183			63,859			86,200			90,771
General and administrative expenses					36,395			35,531			72,945			65,986
			Operating income		16,788			28,328			13,255			24,785
Other income (expense):
	Interest income				2,002			1,902			3,488			3,892
	Interest expense				(2,529	)		(2,531	)		(4,638	)		(4,176	)
	Gain on sales of property and equipment				232			415			528			631
	Equity in income of affiliates				110			1,431			18,125			1,953
	Other, net				1,951			(1,826	)		2,278			(1,994	)
					1,766			(609	)		19,781			306
			Income before provision for income taxes and minority interest		18,554			27,719			33,036			25,091
Provision for income taxes					6,718			10,394			11,959			9,409
			Income before minority interest		11,836			17,325			21,077			15,682
Minority interest in consolidated subsidiaries					(1,042	)		(767	)		(265	)		(767	)
			Net income	$	10,794		$	16,558		$	20,812		$	14,915
Net income per share
	Basic			$	0.27		$	0.41		$	0.52		$	0.37
	Diluted			$	0.26		$	0.41		$	0.51		$	0.37
Weighted average shares of common stock
	Basic				40,212			40,006			40,130			39,964
	Diluted				40,802			40,818			40,657			40,726
Dividends per share				$	0.10		$	0.08		$	0.20		$	0.16

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

Granite Construction Incorporated
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands)

				Six Months Ended June 30,
				2003			2002
Operating Activities
	Net income			$	20,812		$	14,915
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation, depletion and amortization			32,979			26,174
		Gain on sales of property and equipment			(528	)		(631	)
		Change in deferred income taxes			—			1,457
		Amortization of unearned compensation			2,997			2,912
		Common stock contributed to ESOP			—			1,989
		Minority interest in income of consolidated subsidiaries			265			767
		Equity in income of affiliates			(18,125	)		(1,953	)
		Gain on sale of equity investment			(1,853	)		—
	Changes in assets and liabilities, net of the effects of acquisitions:
		Accounts and notes receivable			(29,113	)		(37,730	)
		Inventories			(2,714	)		(2,692	)
		Equity in construction joint ventures			(4,816	)		(237	)
		Other assets			3,627			502
		Accounts payable			33,741			1,809
		Billings in excess of costs and estimated earnings, net			(17,126	)		(7,593	)
		Accrued expenses and other liabilities			8,863			11,747
			Net cash provided by operating activities		29,009			11,436
Investing Activities
	Purchases of marketable securities				(80,289	)		(281,112	)
	Maturities of marketable securities				111,439			300,899
	Additions to property and equipment				(42,597	)		(35,072	)
	Proceeds from sales of property and equipment				2,060			1,413
	Proceeds from sale of equity investment				6,033			13,051
	Distributions from affiliates, net				13,699			(636	)
	Acquisitions of businesses, net of cash received				—			(22,100	)
	Other investing activities				(1,628	)		(12	)
			Net cash provided by (used in) investing activities		8,717			(23,596	)
Financing Activities
	Additions of long-term debt				18,890			14,975
	Repayments of long-term debt				(23,455	)		(26,358	)
	Dividends paid				(7,455	)		(6,593	)
	Repurchase of common stock and other				(1,679	)		(4,347	)
	Sale of subsidiary common stock				1,556			433
			Net cash used in financing activities		(12,143	)		(21,890	)
Increase (decrease) in cash and cash equivalents					25,583			(34,023	)
Cash and cash equivalents at beginning of period					52,032			125,174
Cash and cash equivalents at end of period				$	77,615		$	91,151
Supplementary Information
	Cash paid during the period for:
		Interest		$	4,590		$	4,347
		Income taxes			5,317			1,016
	Non-cash investing and financing activity:
		Restricted stock issued for services		$	5,908		$	7,041
		Dividends accrued but not paid			4,154			3,304
		Financed acquisition of long-term asset			4,004			—
		Subsidiary preferred stock exchanged for subsidiary common stock			—			3,299

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

Granite Construction Incorporated
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.	Basis of Presentation:
	The condensed consolidated financial statements included herein have been prepared by Granite Construction Incorporated (“we”, “us”, “our” or “Granite”) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission and should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2002. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted, although we believe the disclosures which are made are adequate to make the information presented not misleading. Further, the condensed consolidated financial statements reflect, in the opinion of management, all normal recurring adjustments necessary to present fairly our financial position at June 30, 2003 and the results of our operations and cash flows for the periods presented. The December 31, 2002 condensed consolidated balance sheet data was derived from audited consolidated financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.
	Interim results are subject to significant seasonal variations and the results of operations for the three months ended June 30, 2003 are not necessarily indicative of the results to be expected for the full year.
2.	Newly Effective and Recently Issued Accounting Pronouncements:
	Recent Accounting Pronouncements: In January 2003, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities - an Interpretation of ARB No. 51.” FIN 46 addresses consolidation accounting for certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 is effective immediately for all variable interest entities created or acquired after January 31, 2003. For variable interest entities created or acquired prior to February 1, 2003, the provisions of FIN 46 must be applied for the first interim or annual period beginning after June 15, 2003. As more fully described in our Annual Report of Form 10-K under the section entitled “Critical Accounting Policies,” we participate in various construction joint ventures in order to share expertise, risk and resources for certain highly complex projects. We are currently evaluating whether certain of these jointly controlled entities meet the definition of a variable interest entity in FIN 46. If all of the entities being evaluated met the definition and we were required to consolidate them, the result to our financial position would be an increase in assets (primarily current assets) of approximately $108.0 million and an increase in current liabilities of approximately $100.0 million. Additionally, consolidation of these entities would increase our revenue and cost of revenue, but there would be no impact on operating profit or net income.
	In May 2003, the FASB issued Statement of Financial Accounting Standards No. 150 (“SFAS 150”), “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity.” SFAS 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). It is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003, except for mandatorily redeemable financial instruments of nonpublic entities. It is to be implemented by reporting the cumulative effect of a change in an accounting principle

7

Granite Construction Incorporated
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	for financial instruments created before the issuance date of the Statement and still existing at the beginning of the interim period of adoption. Our majority owned subsidiary, Wilder Construction Company, has certain redemption features covering substantially all of its non-Granite common shareholders and we are currently assessing the applicability of SFAS 150 to these instruments. If it is determined that all of these instruments meet the requirements described in SFAS 150 we could record a long-term liability of approximately $22.0 million and a cumulative effect of a change in an accounting principle of approximately $10.0 million in our financial statements for the third quarter ended September 30, 2003.
3.	Inventories:
	Inventories consist primarily of quarry products valued at the lower of average cost or market.
4.	Property and Equipment:

	June 30, 2003
In thousands	(Unaudited)		December 31, 2002
Land	$	51,394	$	50,697
Quarry property		77,370		75,459
Buildings and leasehold improvements		61,522		59,229
Equipment and vehicles		689,769		656,857
Office furniture and equipment		13,110		11,782
		893,165		854,024
Less accumulated depreciation, depletion and amortization		533,615		506,061
	$	359,550	$	347,963

5. Earnings Per Share:

					Three Months Ended				Six Months Ended
					June 30,				June 30,
In thousands, except per share data					2003		2002		2003		2002
Numerator – basic and diluted earnings per share
	Net income				$	10,794	$	16,558	$	20,812	$	14,915
Denominator – basic earnings per share
	Weighted average common stock outstanding					41,537		41,289		41,395		41,221
	Less weighted average restricted stock outstanding					1,325		1,283		1,265		1,257
			Total			40,212		40,006		40,130		39,964
Basic earnings per share					$	0.27	$	0.41	$	0.52	$	0.37
Denominator – diluted earnings per share
	Denominator – basic earnings per share					40,212		40,006		40,130		39,964
	Effect of dilutive securities:
		Common stock options				23		21		19		20
		Warrants				—		202		—		199
		Restricted stock				567		589		508		543
				Total		40,802		40,818		40,657		40,726
Diluted earnings per share					$	0.26	$	0.41	$	0.51	$	0.37

Common stock options, warrants and common stock equivalents representing 57 shares for the three months ended June 30, 2003 and 86 shares and 357 shares for the six months ended June 30, 2003 and 2002, respectively, have been excluded from the calculation of diluted earnings per share because their effects are anti-dilutive.

8

Granite Construction Incorporated
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6.	Comprehensive Income:
	The components of comprehensive income, net of tax, are as follows:

		Three Months Ended					Six Months Ended
		June 30,					June 30,
In thousands		2003		2002			2003		2002
Net income		$	10,794	$	16,558		$	20,812	$	14,915
Other comprehensive income (loss):
	Changes in net unrealized losses on investments		781		(420	)		614		(400	)
Total comprehensive income		$	11,575	$	16,138		$	21,426	$	14,515

7.	Commitments and Contingencies:
	We are a party to a number of legal proceedings and believe that the nature and number of these proceedings are typical for a construction firm of our size and scope. Our litigation typically involves claims regarding public liability or contract related issues. While management currently believes that the ultimate outcome of these proceedings, individually and in the aggregate, will not have a material adverse effect on our financial position or overall trends in results of operations, litigation is subject to inherent uncertainties. Were an unanticipated unfavorable ruling to occur, there exists the possibility of a material adverse impact on the results of operations for the period in which the ruling occurs.
8.	Business Segment Information:
	We have two reportable segments: the Branch Division and the Heavy Construction Division (“HCD”). The Branch Division is comprised of branch offices, including our majority owned subsidiary, Wilder Construction Company, that serve local markets, while HCD pursues major infrastructure projects throughout the nation. HCD focuses on building larger heavy-civil projects with contract durations that are frequently greater than two years, while the Branch Division projects are typically smaller in size and shorter in duration. HCD has been the primary participant in our construction joint ventures.
	The accounting policies of the segments are the same as those described in the summary of significant accounting policies contained in our 2002 Annual Report on Form 10-K. We evaluate performance based on operating profit or loss, which does not include income taxes, interest income, interest expense or other income (expense).

9

Granite Construction Incorporated
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Information about Profit and Assets (in thousands):

		Three Months Ended June 30,
		HCD			Branch		Total
2003
	Revenue from external customers	$	192,825		$	276,580	$	469,405
	Inter-segment revenue transfer		(2,974	)		2,974		—
	Net revenue		189,851			279,554		469,405
	Depreciation, depletion and amortization		3,588			10,748		14,336
	Operating profit		7,173			19,632		26,805
2002
	Revenue from external customers	$	157,136		$	301,874	$	459,010
	Inter-segment revenue transfer		(5,884	)		5,884		—
	Net revenue		151,252			307,758		459,010
	Depreciation, depletion and amortization		2,823			9,213		12,036
	Operating profit		10,635			28,568		39,203

		Six Months Ended June 30,
		HCD			Branch		Total
2003
	Revenue from external customers	$	325,370		$	446,195	$	771,565
	Inter-segment revenue transfer		(5,434	)		5,434		—
	Net revenue		319,936			451,629		771,565
	Depreciation, depletion and amortization		6,737			22,679		29,416
	Operating profit		14,037			16,373		30,410
	Property and equipment		43,037			297,830		340,867
2002
	Revenue from external customers	$	280,524		$	447,631	$	728,155
	Inter-segment revenue transfer		(11,157	)		11,157		—
	Net revenue		269,367			458,788		728,155
	Depreciation, depletion and amortization		5,755			17,642		23,397
	Operating profit		9,765			34,636		44,401
	Property and equipment		41,519			267,294		308,813

Reconciliation of Segment Profit to Consolidated Totals (in thousands):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2003			2002			2003			2002
Profit:
Total profit for reportable segments	$	26,805		$	39,203		$	30,410		$	44,401
Other income (expense)		1,766			(609	)		19,781			306
Unallocated other corporate expenses		(10,017	)		(10,875	)		(17,155	)		(19,616	)
Income before provision for income taxes and minority interest	$	18,554		$	27,719		$	33,036		$	25,091

9.

Investments in Affiliates:

On January 3, 2003, the California Private Transportation Company, LP (“CPTC”), of which we are a 22.2% limited partner, closed the sale of the State Route 91 Toll Road Franchise to the Orange County Transportation Authority for $72.5 million in cash and the assumption of $135.0 million in long-term debt. We completed construction of the $60.4 million project in 1995 and have maintained an equity interest in the partnership since its inception. Included in other income for the six months ended June 30, 2003 is $18.4 million related to this sale by CPTC.

10

Granite Construction Incorporated
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	In June 2003, T.I.C. Holdings, Inc. (“TIC”) repurchased 0.3 million shares of the TIC shares held by us for a cash payment of $6.0 million. We account for our investment in TIC using the cost method. This transaction reduced our ownership interest from 15.5% to 10.6% and resulted in a gain of $1.9 million, which is included in other income, net.
10.	Line of Credit:
	On June 27, 2003, we entered into an agreement for a $100.0 million bank revolving line of credit, which allows for unsecured borrowings for up to three years through June 27, 2006, with interest rate options. Outstanding borrowings under the revolving line of credit are at LIBOR plus margin (1.20% and 1.38% at June 30, 2003). This line of credit replaces a $60.0 million line of credit we entered into in June of 2001. Additionally, we have standby letters of credit totaling $1.5 million, of which $1.3 million reduces the amount available under the line of credit. The unused and available portion of the line of credit at June 30, 2003 was $98.7 million. Restrictive covenants under the terms of this line of credit include the maintenance of certain financial ratios and tangible net worth (as defined) of approximately $377.0 million. We are in compliance with these covenants and the covenants of our other debt agreements at June 30, 2003.
11.	Acquisitions:
	During the three-month period ended June 30, 2002 we completed the following acquisitions:
	We purchased an additional 698,483 shares of Wilder common stock for total consideration of $7.9 million (excluding $9.1 million of cash applied in consolidation). As a result of this transaction our interest in Wilder increased to above 50% and we discontinued application of the equity method of accounting and fully consolidated Wilder in our financial statements.
	We purchased certain assets and assumed certain contracts and liabilities of two northern California construction contractors and materials suppliers for cash consideration of approximately $23.3 million. The purchase price was allocated to the assets acquired and the liabilities assumed based on their estimated fair values at the date of acquisition
12.	Reclassifications:
	Certain financial statement items have been reclassified to conform to the current year’s format. These reclassifications had no impact on previously reported net income, financial position or cash flows.
13.	Subsequent Event:
	On July 28, 2003 we announced a quarterly cash dividend of $0.10 per common share. The dividend is payable October 15, 2003 to stockholders of record on September 30, 2003.

11

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Disclosure:

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Litigation Reform Act of 1995 regarding future events and the future results of Granite that are based on current expectations, estimates, forecasts, and projects as well as the beliefs and assumptions of Granite’s management. Words such as “outlook”, “believes”, “expects”, “appears”, “may”, “will”, “should”, “anticipates” or the negative thereof or comparable terminology, are intended to identify such forward-looking statements. These forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore actual results may differ materially and adversely from those expressed in any forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in our Annual Report on Form 10-K under the section entitled “Risk Factors”. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this Report. Granite undertakes no obligation to revise or update publicly any forward-looking statements for any reason.

General:

We are one of the largest heavy civil contractors in the United States and are engaged in the construction of highways, dams, airports, mass transit facilities and other infrastructure-related projects. We have offices in California, Nevada, Arizona, Utah, Washington, Oregon, Alaska, Texas, Georgia, Florida and New York. Our business involves two operating segments: the Branch Division and the Heavy Construction Division.

Our contracts are obtained primarily through competitive bidding in response to advertisements by federal, state and local agencies, and private parties and to a lesser extent through negotiation with private parties. Our bidding activity is affected by such factors as backlog, current utilization of equipment and other resources, ability to obtain necessary surety bonds and competitive considerations. Bidding activity, backlog and revenue resulting from the award of new contracts may vary significantly from period to period.

Our general and administrative costs include salaries and related expenses, incentive compensation, discretionary profit sharing and other variable compensation, as well as other overhead costs to support our overall business. In general, these costs will increase in response to the growth and the related increased complexity of our business. These costs may also vary depending on the number of projects in process in a particular area and the corresponding level of estimating activity. For example, as large projects are completed or if the level of work slows down in a particular area, we will often re-assign employees from those projects to estimating and bidding activities until another project assignment becomes available, temporarily moving their salaries and related costs from cost of revenue to general and administrative expense. Additionally, our compensation strategy for selected management personnel is to rely heavily on a variable cash and restricted stock performance-based incentive element. The cash portion of these incentives is expensed when earned while the restricted stock portion is expensed over the vesting period of the stock (generally five years). Depending on the mix of cash and restricted stock, these incentives can have the effect of increasing general and administrative expenses in a very profitable year and decreasing expenses in less profitable years.

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Results of Operations

Revenue			Three Months Ended June 30,										Six Months Ended June 30,
			2003					2002					2003					2002
(in thousands)			Amount		Percent			Amount		Percent			Amount		Percent			Amount		Percent
Revenue by Division:
	Branch Division		$	279,554		59.6	%	$	307,758		67.0	%	$	451,629		58.5	%	$	458,788		63.0	%
	Heavy Construction Division			189,851		40.4	%		151,252		33.0	%		319,936		41.5	%		269,367		37.0	%
			$	469,405		100.0	%	$	459,010		100.0	%	$	771,565		100.0	%	$	728,155		100.0	%
Revenue by Geographic Area:
	California		$	151,702		32.3	%	$	190,140		41.4	%	$	262,704		34.1	%	$	293,199		40.2	%
	West (excluding California)			166,621		35.5	%		157,940		34.4	%		262,655		34.0	%		229,749		31.6	%
	Midwest			14,830		3.2	%		18,831		4.1	%		24,675		3.2	%		35,434		4.9	%
	Northeast			42,139		9.0	%		26,439		5.8	%		70,326		9.1	%		46,493		6.4	%
	South			94,113		20.0	%		65,660		14.3	%		151,205		19.6	%		123,280		16.9	%
			$	469,405		100.0	%	$	459,010		100.0	%	$	771,565		100.0	%	$	728,155		100.0	%
Revenue by Market Sector:
	Federal Agencies		$	12,882		2.7	%	$	14,182		3.1	%	$	22,212		2.9	%	$	25,466		3.5	%
	State Agencies			193,043		41.1	%		181,126		39.5	%		303,352		39.3	%		302,343		41.5	%
	Local Public Agencies			142,557		30.4	%		126,673		27.6	%		238,948		31.0	%		183,984		25.3	%
		Total Public Sector		348,482		74.2	%		321,981		70.2	%		564,512		73.2	%		511,793		70.3	%
	Private Sector			54,917		11.7	%		75,345		16.4	%		101,353		13.1	%		123,395		16.9	%
	Material Sales			66,006		14.1	%		61,684		13.4	%		105,700		13.7	%		92,967		12.8	%
			$	469,405		100.0	%	$	459,010		100.0	%	$	771,565		100.0	%	$	728,155		100.0	%

Revenue: Total revenue for the three and six month periods ended June 30, 2003 increased over the corresponding 2002 periods by $10.4 million and $43.4 million, respectively. Branch Division revenue for the three and six month periods in 2003 includes $55.8 million and $73.5 million, respectively, from our majority owned Wilder Construction Company (“Wilder”) subsidiary, which was consolidated in our financial statements beginning in May of 2002, versus $35.9 million in the three and six month periods in 2002. Excluding the Wilder revenue, Branch Division revenue for the three and six month periods ended June 30, 2003 decreased over the corresponding 2002 periods by $48.1 million and $44.7 million, respectively, due primarily to higher than normal rainfall during the first part of the second quarter in many of the areas the Branch Division works and the effects of a weaker general economy and uncertainty surrounding public funding, particularly in California (see “Outlook”). Revenue from our Heavy Construction Division increased 25.5% and 18.8% in the three and six months ended June 30, 2003 over the corresponding periods in 2002 due primarily to larger volume from a higher backlog at the beginning of 2003.

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Backlog			June 30,					March 31,					June 30,
			2003					2003					2002
(in thousands)			Amount		Percent			Amount		Percent			Amount		Percent
Backlog by Division:
	Branch Division		$	536,209		27.8	%	$	527,147		28.2	%	$	570,859		35.9	%
	Heavy Construction Division			1,395,185		72.2	%		1,343,681		71.8	%		1,017,108		64.1	%
			$	1,931,394		100.0	%	$	1,870,828		100.0	%	$	1,587,967		100.0	%
Backlog by Geographic Area:
	California		$	296,469		15.4	%	$	264,106		14.1	%	$	373,402		23.5	%
	West (excluding California)			401,387		20.8	%		463,986		24.8	%		338,254		21.3	%
	Midwest			65,186		3.3	%		78,356		4.2	%		126,326		8.0	%
	Northeast			426,987		22.1	%		469,449		25.1	%		243,302		15.3	%
	South			741,365		38.4	%		594,931		31.8	%		506,683		31.9	%
			$	1,931,394		100.0	%	$	1,870,828		100.0	%	$	1,587,967		100.0	%
Backlog by Market Sector:
	Federal agencies		$	88,997		4.6	%	$	87,386		4.7	%	$	41,095		2.6	%
	State agencies			847,726		43.9	%		798,061		42.7	%		783,030		49.3	%
	Local public agencies			817,399		42.3	%		823,067		43.9	%		649,104		40.9	%
		Total public sector		1,754,122		90.8	%		1,708,514		91.3	%		1,473,229		92.8	%
	Private sector			177,272		9.2	%		162,314		8.7	%		114,738		7.2	%
			$	1,931,394		100.0	%	$	1,870,828		100.0	%	$	1,587,967		100.0	%

Backlog: Our backlog at June 30, 2003 of $1,931.4 million was $343.4 million, or 21.6%, higher than the backlog at June 30, 2002. Branch Division backlog decreased by $34.7 million, or 6.1%, from June 30, 2002 to June 30, 2003, reflecting decreases in most of the areas the Branch Division works. The decreased Branch Division backlog reflects decreases in both public sector and private sector backlog which we believe is the result of a continued weak economy in most of the Branch Division locations and uncertainty surrounding public funding, particularly in California (see “Outlook”).

Heavy Construction Division backlog at June 30, 2003 of $1,395.2 million represents an increase of $378.1 million, or 37.2%, from its backlog at June 30, 2002 and $51.5 million, or 3.8%, from its backlog at March 31, 2003. HCD’s awards for the second quarter of 2003 included a $66.6 million highway contract in North Carolina, a $53.4 million dam project in Arkansas and a $91.2 million share of a highway bridge joint venture contract in Virginia.

Gross Profit	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2003			2002			2003			2002
Total gross profit	$	53,183		$	63,859		$	86,200		$	90,771
Percent of revenue		11.3	%		13.9	%		11.2	%		12.5	%

Gross Profit: Gross profit as a percent of revenue decreased to 11.3% in the second quarter of 2003 from 13.9% in the second quarter of 2002 and to 11.2% in the six months ended June 30, 2003 from 12.5% in the corresponding 2002 period. Gross profit in the quarter and six months ended June 30, 2003 was negatively impacted by a higher volume of revenue from projects less than 25% complete. We recognize revenue only to the extent of cost, deferring profit recognition, until a project reaches 25% complete. The amount of revenue generated from projects below the 25% completion threshold was approximately $53.0

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million and $35.0 million for the three months ended June 30, 2003 and 2002, respectively, and $63.0 million and $48.0 million for the six months ended June 30, 2003 and 2002, respectively. Gross margins in the Branch Division were also negatively impacted by reductions in various state and local transportation funding programs, resulting in fewer projects being bid with increasing pressure on margins. Additionally, HCD gross margins were lower than expected during the 2003 quarter due to revised profit forecasts on several projects.

Cost of revenue consists of direct costs on contracts, including labor and materials, subcontractor costs, direct overhead costs and equipment expense (primarily depreciation, maintenance and repairs and fuel). Although the composition of costs varies with each contract, our gross profit margins were not significantly impacted by changes in any one of these costs during the first six months of 2003.

General and Administrative Expenses		Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)		2003			2002			2003			2002
Salaries and related expenses		$	19,768		$	17,893		$	41,414		$	34,733
Incentive compensation, discretionary profit sharing and other variable compensation			4,604			5,372			9,036			7,894
Other general and administrative expenses			12,023			12,266			22,495			23,359
	Total	$	36,395		$	35,531		$	72,945		$	65,986
Percent of revenue			7.8	%		7.7	%		9.5	%		9.1	%

General and Administrative Expenses: General and administrative expenses increased by $7.0 million in the six months ended June 30, 2003 from the comparable 2002 period and by $0.9 million in the quarter ended June 30, 2003 compared with the June 2002 quarter. Included in these increases were costs of approximately $6.3 million and $1.2 million for the six months and three months ended June 30, 2003, respectively, associated with our Wilder subsidiary and our expansion into Northern California, both of which were first reflected in our costs in May, 2002. Variable compensation decreased in the second quarter 2003 due to lower income than in the comparable 2002 quarter and increased in the six-month period ended June 30, 2003 due primarily to higher variable compensation associated with the CPTC investment income recognition (see “Other Income/Expense”). Other general and administrative costs include information technology, occupancy, office equipment and supplies, depreciation, travel and entertainment, outside services, advertising and marketing, training and other miscellaneous expenses, none of which individually exceeded 10% of total general and administrative expense.

Operating Income	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2003			2002			2003			2002
Branch Division	$	19,632		$	28,568		$	16,373		$	34,636
Heavy Construction Division		7,173			10,635			14,037			9,765
Unallocated other corporate expenses		(10,017	)		(10,875	)		(17,155	)		(19,616	)
Total	$	16,788		$	28,328		$	13,255		$	24,785

Operating Income: Our Heavy Construction Division’s contribution to operating income decreased in the second quarter of 2003 compared with the second quarter of 2002 primarily due to the effects of lowered profit forecasts on several projects that were partially offset by the positive contribution from higher revenue during the 2003 period. For the six months ended June 30, 2003, HCD’s contribution to operating income increased due to the margin generated from higher 2003 revenue. Our Branch Division’s contribution to operating income decreased in both the quarter and six months ended June 30, 2003 compared with the same periods in 2002 due to the factors described in “Revenue”, “Gross Profit”,

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and “General and Administrative Expenses”, above. Unallocated other corporate expenses principally comprise corporate general and administrative expenses.

Other Income (Expense)		Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)		2003			2002			2003			2002
Interest income		$	2,002		$	1,902		$	3,488		$	3,892
Interest expense			(2,529	)		(2,531	)		(4,638	)		(4,176	)
Gain on sales of property and equipment			232			415			528			631
Equity in income of affiliates			110			1,431			18,125			1,953
Other, net			1,951			(1,826	)		2,278			(1,994	)
	Total	$	1,766		$	(609	)	$	19,781		$	306

     Other Income (Expense): Included in other income (expense) in the six months ended June 30, 2003 is $18.4 million recognized in the first quarter of 2003 related to the sale of the State Route 91 Tollroad Franchise by the California Private Transportation Corporation, of which we are a 22.2% limited partner. Additionally, included in other, net in the three and six months ended June 30, 2003 is approximately $1.9 million in gain recognized on the sale of a portion of our investment in T.I.C. Holdings, Inc. (“TIC”) back to TIC for a cash payment of approximately $6.0 million.

Provision for Income Taxes	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2003			2002			2003			2002
Provision for income taxes	$	6,718		$	10,394		$	11,959		$	9,409
Effective tax rate		36.2	%		37.5	%		36.2	%		37.5	%

Provision for Income Taxes: Our effective tax rate decreased to 36.2% in the three and six month periods ended June 30, 2003 from 37.5% in the comparable periods in 2002 due to the combined factors of higher percentage depletion deductions related to quarry properties and higher tax credits.

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Outlook

Our outlook for the remainder of 2003 and into 2004 includes both challenges and opportunities. The short-term challenges are primarily caused by reduced transportation budgets and economic conditions we are experiencing in the West – particularly in California. On the positive side, we have a strong Heavy Construction Division (HCD) backlog and see continued demand for our services.

California Budget Overview

On the political front in California, after a 43-day stalemate, Governor Gray Davis signed the much anticipated fiscal year 2003-2004 budget. The California budget includes significant reductions to the state’s transportation budget using transportation funds to aid the General Fund. With California being the largest market for the Branch Division, this is a concern for us going forward and has created uncertainty in our Branch business, which will likely persist through 2004.

To date in 2003, the California Transportation Commission (“CTC”) has allocated $1.0 billion to new projects and suggested that an additional $800 million will be allocated over the fiscal year ended June 2004. This works out to $1.8 billion over an 18-month period, which annualizes to $1.2 billion. With new contracting from the California Department of Transportation (“Caltrans”) averaging around $2.4 billion annually over the past several years, the current construction contracting level amounts equate to a 50% reduction from the historic contracting level. It also remains questionable how much the program can, or will be, ramped up during the next fiscal year. In addition to the state budget, the amount that the CTC is able to allocate depends on the level of federal funding, state fuel tax revenues and truck weight fees. The State Highway Account has lost more than $150.0 million annually as a result of a 2000 state law restructuring the fees. Corrective legislation to prospectively restore these lost fees is pending in Sacramento.

Under Proposition 42, approved by voters in March 2002, revenue from the sales tax on gasoline that previously went to the General Fund was to be transferred into the Transportation Investment Fund (“TIF”) for transportation purposes, beginning in 2003-2004. However, the current budget requires that the Proposition 42 transfer be partially suspended with a total of $289.0 million being transferred to the TIF with the balance of $856.0 million remaining in the General Fund, which is to be repaid with interest by 2009. Of the $289.0 million portion transferred to the TIF, $189.0 million will be available for projects and the remaining $100.0 million allocated to the State Highway Account to repay prior loans to the Transportation Highway Congestion Relief Program.

Branch Division Outlook

As the volume of public sector work being put out to bid in California decreases, and areas of the private sector economy remain weak, we are seeing an increase in the number of bidders for the available work, which is creating pressure on project margins. We do not expect this pressure to let up in the foreseeable future. On the positive side, our Branch Division aggregate sales are holding up well compared to last year’s record levels. Although we are experiencing some softening of material prices, we continue to have success in selling our materials, in some cases, to those construction jobs on which we were the unsuccessful bidder. We feel that our quality control program and the ability to understand the issues from the contractor’s viewpoint gives us a unique advantage over some of the pure-materials suppliers. However, there is no reason to believe that the aggregate business will escape the same pricing pressure that we are experiencing in our Branch Division construction business.

While it is still too early to precisely predict what the specific impact of state and local funding reductions will have on our Branch business, we anticipate 2003 operating income for the Branch Division to be down approximately 20% from its 2002 level. However, some of the indicators discussed above suggest that even that level of performance will be a challenge.

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Federal Highway Bill Reauthorization

At the federal level, the House and Senate Committees are still working toward a six-year reauthorization bill to replace the current legislation, the Transportation Equity Act of the 21st Century (“TEA-21”), which expires September 30, 2003. Industry analysts are indicating that the reality of a six-year bill is increasingly unlikely. Expedient alternatives would be either a two-year or six-month extension, with the former being favored by the industry. There appears to be considerable sentiment in both houses and on both sides of the aisle to bring funding levels for transportation significantly higher than the levels being proposed by the Bush Administration. According to the American Road and Transportation Builders Association, the likely annual average funding levels could be in the range of $39.0 billion to $50.0 billion. The average annual funding level under TEA-21 was $28.8 billion.

Heavy Construction Division Outlook

HCD continues to participate in a very strong bidding environment across the country and has seen a significant increase in awards of large projects, including transit and rail projects over the past few years. HCD is taking aim at these new opportunities and pursuing new markets in Minnesota, Oregon, Washington and Virginia, while also actively bidding in its core geographic marketplaces, such as Texas, Florida and New York. As these projects are quite large and have been in the development pipeline for a longer period, they are not as influenced by current states’ budget problems.

In addition, HCD is targeting bidding opportunities from coast to coast, totaling more than $12.0 billion over the next twelve to eighteen months – excluding the approximately $2.0 billion in projects that our Granite Halmar office in New York is targeting throughout their area. The division is currently pursuing approximately 18 design-build projects, to which we feel our experience in the design-build area provides us with a competitive advantage. Through June 30, 2003, design-build projects made up approximately 28.0% of HCD’s backlog.

Going forward, we are focused on the relentless execution of our work in order to capture the operating income that our stakeholders deserve. We believe that our employees, diverse structure and financial strength will enable us to successfully navigate through these uncertain times and position our business to take advantage of the upturn when it does occur. We remain very encouraged about the short and long-term prospects for HCD and our Branches, despite the current difficult environment in California. We remain confident that the on-going need to maintain and replace our nation’s infrastructure will provide us with the opportunities to grow our business.

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Liquidity and Capital Resources

		Six Months Ended June 30,
(in thousands)		2003			2002
Cash and cash equivalents		$	77,615		$	91,151
Net cash provided (used) by:
	Operating activities		29,009			11,436
	Investing activities		8,717			(23,569	)
	Financing activities		(12,143	)		(21,890	)
Capital expenditures			(42,597	)		(35,072	)

Cash provided by operating activities of $29.0 million for the six months ended June 30, 2003 represents a $17.6 million increase from the amount provided by operating activities in the same period in 2002. This increase was primarily attributable to a larger growth in accounts payable in the first six months of 2003 due to costs associated with higher revenue, partially offset by a lower increase in accounts receivable in the same period due primarily to a change in the mix between billed receivables and unbilled revenue (costs and estimated earnings in excess of billings). Changes in cash from operating activities primarily reflect seasonal variations based on the amount and progress of work being performed.

Cash provided by investing activities of $8.7 million for the six months ended June 30, 2003 represents a $32.3 million increase from the amount used in investing activities in the same period in 2002. The increase was largely due to cash received from the sale of the State Route 91 Tollroad Franchise by the California Private Transportation Corporation, of which we are a 22.2% limited partner and higher net maturities of marketable securities. We have budgeted approximately $59.0 million for capital expenditures in 2003, which includes amounts for construction equipment, aggregate and asphalt plants, buildings, leasehold improvements and the purchase of aggregate reserves.

Cash used by financing activities was $12.1 million for the six months ended June 30, 2003, a decrease of $9.7 million from the same period in 2002. The decrease was mainly due to lower net repayments of long-term debt by our Wilder subsidiary.

On June 27, 2003, we entered into an agreement for a $100.0 million bank revolving line of credit, which allows for unsecured borrowings for up to three years through June 27, 2006, with interest rate options. Outstanding borrowings under the revolving line of credit are at LIBOR plus margin (1.20% and 1.38% at June 30, 2003). This line of credit replaces a $60.0 million line of credit we entered into in June of 2001. Additionally, we have standby letters of credit totaling $1.5 million, of which $1.3 million reduces the amount available under the line of credit. The unused and available portion of the line of credit at June 30, 2003 was $98.7 million. Restrictive covenants under the terms of this line of credit include the maintenance of certain financial ratios and tangible net worth (as defined) of approximately $377.0 million. We are in compliance with these covenants and the covenants of our other debt agreements at June 30, 2003.

Additionally, our Wilder subsidiary has a bank revolving line of credit of $10.0 million that expires in June 2005, of which $6.5 million was available at June 30, 2003.

On July 28, 2003 we announced a quarterly cash dividend of $0.10 per common share. The dividend is payable October 15, 2003 to stockholders of record on September 30, 2003.

Our cash and cash equivalents and short-term and long-term marketable securities totaled $178.1 million at June 30, 2003. We believe that our current cash and cash equivalents, short-term marketable securities,

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cash generated from operations and amounts available under our existing credit facilities will be sufficient to meet our expected working capital needs, capital expenditures, financial commitments and other liquidity requirements associated with our existing operations through at least the next twelve months.

Recent Accounting Pronouncements: In January 2003, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities - an Interpretation of ARB No. 51.” FIN 46 addresses consolidation accounting for certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 is effective immediately for all variable interest entities created or acquired after January 31, 2003. For variable interest entities created or acquired prior to February 1, 2003, the provisions of FIN 46 must be applied for the first interim or annual period beginning after June 15, 2003. As more fully described in our Annual Report of Form 10-K under the section entitled “Critical Accounting Policies,” we participate in various construction joint ventures in order to share expertise, risk and resources for certain highly complex projects. We are currently evaluating whether certain of these jointly controlled entities meet the definition of a variable interest entity in FIN 46. If all of the entities being evaluated met the definition and we were required to consolidate them, the result to our financial position would be an increase in assets (primarily current assets) of approximately $108.0 million and an increase in current liabilities of approximately $100.0 million. Additionally, consolidation of these entities would increase our revenue and cost of revenue, but there would be no impact on operating profit or net income.

In May 2003, the FASB issued Statement of Financial Accounting Standards No. 150 (“SFAS 150”), “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity.” SFAS 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). It is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003, except for mandatorily redeemable financial instruments of nonpublic entities. It is to be implemented by reporting the cumulative effect of a change in an accounting principle for financial instruments created before the issuance date of the Statement and still existing at the beginning of the interim period of adoption. Our majority owned subsidiary, Wilder, has certain redemption features covering substantially all of its non-Granite common shareholders and we are currently assessing the applicability of SFAS 150 to these instruments. If it is determined that all of these instruments meet the requirements described in SFAS 150 we could record a long-term liability of approximately $22.0 million and a cumulative effect of a change in an accounting principle of approximately $10.0 million in our financial statements for the third quarter ended September 30, 2003.

Website Access

Our website address is www.graniteconstruction.com. On our website we make available, free of charge, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission. The information on our website is not incorporated into, and is not part of, this report.

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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In February 2003, we entered into two interest rate swap agreements in order to gain access to the lower borrowing rates normally available on floating-rate debt, while avoiding the prepayment and other costs that would be associated with refinancing our long-term fixed-rate debt. The swaps purchased have a combined notional amount of $50.0 million, a thirty-month term with six-month settlement periods and provide for us to pay variable interest at LIBOR plus a set rate spread and receive fixed interest of between 6.54% and 6.96%. The notional amount does not quantify risk or represent assets or liabilities, but rather, is used in the determination of cash settlement under the swap agreement. As a result of purchasing these swaps, we will be exposed to credit losses from counter-party non-performance; however, we do not anticipate any such losses from these agreements, which are with a major financial institution. The agreements will also expose us to interest rate risk should LIBOR rise during the term of the agreements. These swap agreements are accounted for under Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS 133”). Under the provisions of SFAS 133, we initially recorded the interest rate swaps at fair value, and subsequently recorded any changes in fair value in other income, net. Fair value is determined based on quoted market prices, which reflect the difference between estimated future variable-rate payments and future fixed-rate receipts.

Item 4. CONTROLS AND PROCEDURES

We carried out an evaluation, under the supervision of and with the participation of management, including our Chief Executive Officer and our Chief Financial Officer, of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2003, our disclosure controls and procedures are effective for gathering, analyzing and disclosing the information we are required to disclose in the reports we file under the Exchange Act, within the time periods specified in the SEC’s rules and forms.

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PART II. OTHER INFORMATION

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Item 1. LEGAL PROCEEDINGS

None

Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

None

Item 3. DEFAULTS UPON SENIOR SECURITIES

None

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At the Company’s Annual Meeting of Shareholders held on May 19, 2003, the following members were elected to three-year terms to the Board of Directors:

	Affirmative
	Votes		Withhold
Richard M. Brooks		37,008,467		278,141
Linda Griego		37,170,092		196,516
Raymond E. Miles		37,169,630		196,978
David H. Kelsey		37,180,481		186,127

Directors continuing in office are Joseph J. Barclay, Brian C. Kelly, Rebecca A. McDonald, J. Fernando Niebla, George B. Searle and David H. Watts.

The following proposals were approved at the Company’s Annual Meeting:

	Affirmative
	Votes		Against		Abstain
To ratify the appointment of PricewaterhouseCoopers LLP as the independent accountants of the Company for the fiscal year ending December 31, 2003		36,120,436		1,182,440		63,732

Item 5. OTHER INFORMATION

None

23

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

a) Exhibits

Exhibit
No.	Exhibit Description
10.1	Credit Agreement dated and effective June 27, 2003
10.2	Continuing Guaranty Agreement from the Subsidiaries of Granite Construction Incorporated as Guarantors of financial accommodations pursuant to the terms of the Credit Agreement dated June 27, 2003
10.3	First Amendment to Amended and Restated Note Purchase Agreement between Granite Construction Incorporated and certain purchasers dated June 15, 2003
10.4	First Amendment to Note Purchase Agreement between Granite Construction Incorporated and certain purchasers dated June 15, 2003
10.5	International Swap Dealers Association, Inc. Master Agreement between BNP Paribas and Granite Construction Incorporated dated as of February 10, 2003
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

b)	Reports on Form 8-K
	On May 7, 2003 we filed a report on Form 8-K containing the press release announcing our first quarter 2003 financial results.

24

SIGNATURES

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 thereunto duly authorized.

GRANITE CONSTRUCTION INCORPORATED

Date:	August 12, 2003	By:	/s/ William E. Barton
			William E. Barton
			Senior Vice President and Chief Financial Officer

25 EX-10.1 3 f91753exv10w1.txt EXHIBIT 10.1 EXHIBIT 10.1 ================================================================================ CREDIT AGREEMENT Dated as of June 27, 2003 among GRANITE CONSTRUCTION INCORPORATED, as the Borrower, BANK OF AMERICA, N.A., as Administrative Agent, as a Lender, and as L/C Issuer, and The Other Lenders Party Hereto BANC OF AMERICA SECURITIES LLC, as Sole Lead Arranger and Sole Book Manager ================================================================================ TABLE OF CONTENTS

SECTION PAGE - ------- ---- ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS.................................................................. 1 1.01 Defined Terms.................................................................................. 1 1.02 Other Interpretive Provisions.................................................................. 21 1.03 Accounting Terms............................................................................... 21 1.04 Rounding....................................................................................... 22 1.05 References to Agreements and Laws.............................................................. 22 ARTICLE II. THE COMMITMENTS AND CREDIT EXTENSIONS............................................................ 22 2.01 Loans.......................................................................................... 22 2.02 Borrowings, Conversions and Continuations of Loans............................................. 22 2.03 Letters of Credit.............................................................................. 24 2.04 Prepayments.................................................................................... 31 2.05 Reduction or Termination of Commitments........................................................ 31 2.06 Repayment of Loans............................................................................. 32 2.07 Interest....................................................................................... 32 2.08 Fees........................................................................................... 32 2.09 Computation of Interest and Fees............................................................... 33 2.10 Evidence of Debt............................................................................... 33 2.11 Payments Generally............................................................................. 34 2.12 Sharing of Payments............................................................................ 35 2.13 Guaranty of Obligations........................................................................ 36 ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY.......................................................... 37 3.01 Taxes.......................................................................................... 37 3.02 Illegality..................................................................................... 38 3.03 Inability to Determine Rates................................................................... 38 3.04 Increased Cost and Reduced Return; Capital Adequacy............................................ 38 3.05 Funding Losses................................................................................. 39 3.06 Matters Applicable to all Requests for Compensation............................................ 39 3.07 Survival....................................................................................... 40 ARTICLE IV. CONDITIONS PRECEDENT TO CREDIT EXTENSIONS........................................................ 40 4.01 Conditions to Effectiveness and Initial Credit Extension....................................... 40 4.02 Conditions to all Credit Extensions............................................................ 41 ARTICLE V. REPRESENTATIONS AND WARRANTIES.................................................................... 42 5.01 Existence, Qualification and Power; Compliance with Laws....................................... 42 5.02 Authorization; No Contravention................................................................ 42 5.03 Governmental Authorization..................................................................... 42 5.04 Binding Effect................................................................................. 43 5.05 Financial Statements; No Material Adverse Effect............................................... 43

i 5.06 Litigation..................................................................................... 43 5.07 No Default..................................................................................... 43 5.08 Ownership of Property; Liens................................................................... 44 5.09 Environmental Compliance....................................................................... 44 5.10 Insurance...................................................................................... 45 5.11 Taxes.......................................................................................... 45 5.12 ERISA Compliance............................................................................... 45 5.13 Subsidiaries................................................................................... 46 5.14 Margin Regulations; Investment Company Act; Public Utility Holding Company Act................. 46 5.15 Disclosure..................................................................................... 46 5.16 Intellectual Property; Licenses, Etc........................................................... 46 5.17 Swap Contracts................................................................................. 47 5.18 Labor Relations................................................................................ 47 5.19 Use of Proceeds................................................................................ 47 5.20 Solvency....................................................................................... 47 5.21 Unrestricted Subsidiary Matters................................................................ 47 5.22 Burdensome Agreements.......................................................................... 47 5.23 Tax Shelter Regulations........................................................................ 48 ARTICLE VI. AFFIRMATIVE COVENANTS............................................................................ 48 6.01 Financial Statements........................................................................... 48 6.02 Certificates; Other Information................................................................ 49 6.03 Notices........................................................................................ 50 6.04 Payment of Obligations......................................................................... 51 6.05 Preservation of Existence, Etc................................................................. 51 6.06 Maintenance of Properties...................................................................... 51 6.07 Maintenance of Insurance....................................................................... 52 6.08 Compliance with Laws........................................................................... 52 6.09 Books and Records.............................................................................. 52 6.10 Inspection Rights.............................................................................. 52 6.11 Compliance with ERISA.......................................................................... 52 6.12 Environmental Laws............................................................................. 53 6.13 Use of Proceeds................................................................................ 53 6.14 Tax Clearance Certificates..................................................................... 53 ARTICLE VII. NEGATIVE COVENANTS.............................................................................. 53 7.01 Liens.......................................................................................... 53 7.02 Investments.................................................................................... 55 7.03 Indebtedness................................................................................... 56 7.04 Fundamental Changes............................................................................ 57 7.05 Dispositions................................................................................... 58 7.06 Lease Obligations.............................................................................. 59 7.07 Restricted Payments............................................................................ 59 7.08 ERISA.......................................................................................... 60 7.09 Change in Nature of Business or in Structure................................................... 60 ii 7.10 Transactions with Affiliates................................................................... 60 7.11 Burdensome Agreements.......................................................................... 60 7.12 Use of Proceeds................................................................................ 61 7.13 Financial Covenants............................................................................ 61 7.14 Unrestricted Subsidiary Matters................................................................ 61 ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES................................................................. 61 8.01 Events of Default.............................................................................. 61 8.02 Remedies Upon Event of Default................................................................. 64 ARTICLE IX. ADMINISTRATIVE AGENT............................................................................. 64 9.01 Appointment and Authorization of Administrative Agent.......................................... 64 9.02 Delegation of Duties........................................................................... 65 9.03 Liability of Administrative Agent.............................................................. 65 9.04 Reliance by Administrative Agent............................................................... 65 9.05 Notice of Default.............................................................................. 66 9.06 Credit Decision; Disclosure of Information by Administrative Agent............................. 66 9.07 Indemnification of Administrative Agent........................................................ 67 9.08 Administrative Agent in its Individual Capacity................................................ 67 9.09 Successor Administrative Agent................................................................. 68 9.10 Administrative Agent May File Proofs of Claim.................................................. 68 ARTICLE X. GENERAL PROVISIONS................................................................................ 69 10.01 Amendments, Etc................................................................................ 69 10.02 Notices and Other Communications; Facsimile Copies............................................. 70 10.03 No Waiver; Cumulative Remedies................................................................. 71 10.04 Attorney Costs, Expenses and Taxes............................................................. 71 10.05 Indemnification by the Borrower................................................................ 72 10.06 Payments Set Aside............................................................................. 73 10.07 Successors and Assigns......................................................................... 73 10.08 Confidentiality................................................................................ 76 10.09 Set-off........................................................................................ 77 10.10 Interest Rate Limitation....................................................................... 77 10.11 Counterparts................................................................................... 77 10.12 Integration.................................................................................... 77 10.13 Survival of Representations and Warranties..................................................... 78 10.14 Severability................................................................................... 78 10.15 Foreign Lenders................................................................................ 78 10.16 Removal and Replacement of Lenders............................................................. 80 10.17 Governing Law.................................................................................. 80 10.18 Waiver of Right to Trial by Jury............................................................... 81 10.19 Time of the Essence............................................................................ 81 SIGNATURES.............................................................................................. S-1 iii SCHEDULES 1.01(e) Existing Letters of Credit 1.01(g) Guarantors 2.01 Commitments and Pro Rata Shares 5.05(c) Project Debt 5.06 Litigation 5.09 Environmental Matters 5.13(a) Subsidiaries and Other Equity Investments 5.13(b) Senior Note Guarantors 5.16 Intellectual Property Matters 5.21 Unrestricted Subsidiary Matters 5.22 Burdensome Agreements 7.01 Existing Liens 7.02(a) Existing Investments 7.02(b) Investment Policy 7.02(j) Wilder Investments 7.03 Existing Indebtedness 7.06 Existing Leases 10.02 Eurodollar and Domestic Lending Offices; Addresses for Notices EXHIBITS Exhibit A Form of Loan Notice Exhibit B Form of Note Exhibit C Form of Compliance Certificate Exhibit D Form of Assignment and Assumption Agreement Exhibit E Form of Guaranty Exhibit F Form of Closing Opinion iv CREDIT AGREEMENT THIS CREDIT AGREEMENT, dated as of June 27, 2003, by and among GRANITE CONSTRUCTION INCORPORATED, a Delaware corporation (the "Borrower"), each lender from time to time party hereto (collectively, the "Lenders" and, individually, a "Lender"), and BANK OF AMERICA, N.A., as Administrative Agent and as L/C Issuer. A. The Borrower has requested that the Lenders provide a revolving credit facility, and the Lenders are willing to do so on the terms and conditions set forth herein. B. In consideration of the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the parties hereto covenant and agree as follows: ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS 1.01 DEFINED TERMS. As used in this Agreement, the following terms shall have the meanings set forth below: "Administrative Agent" means the sole administrative agent under the Loan Documents or any successor administrative agent, which initially shall be Bank of America. "Administrative Agent's Office" means the Administrative Agent's address and, as appropriate, account as set forth on Schedule 10.02, or such other address or account as the Administrative Agent may from time to time notify to the Borrower and the Lenders. "Affiliate" means, as to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person. A Person shall be deemed to be "controlled by" any other Person if such other Person possesses, directly or indirectly, power (a) to vote 5% or more of the securities having ordinary voting power for the election of directors or managing general partners; or (b) to direct or cause the direction of the management and policies of such Person whether by voting securities, through the ownership of contract or otherwise. "Agent-Related Persons" means the Administrative Agent (including any successor administrative agent), together with its Affiliates (including, in the case of Bank of America in its capacity as the Administrative Agent, the Arranger), and the officers, directors, employees, agents and attorneys-in-fact of such Persons and Affiliates. "Aggregate Commitments" means, as of any date of determination, the aggregate amount of all Lenders' Commitments hereunder. "Agreement" means this Credit Agreement. "Applicable Rate" means, with respect to commitment fees, Base Rate Loans, Eurodollar Rate Loans and utilization fees, as applicable, the following percentages per annum, each based 1 upon the Pricing Level Leverage Ratio as set forth in the most recent Compliance Certificate received by the Administrative Agent pursuant to Section 6.02(b); provided, however, that notwithstanding the foregoing (but subject to the proviso in the following paragraph), until such date on which Borrower shall have delivered to the Administrative Agent a Compliance Certificate for the fiscal quarter ending on June 30, 2003, Pricing Level 3 shall apply:

- --------------------------------------------------------------------------------------------------------------------- APPLICABLE APPLICABLE APPLICABLE RATE RATE APPLICABLE RATE PRICING (COMMITMENT (EURODOLLAR RATE (BASE (UTILIZATION LEVEL PRICING LEVEL LEVERAGE RATIO FEE) RATE LOANS) RATE LOANS) FEE) - ------------------------------------------------------------------------------------------------------------------- 1 Less than 0.50 to 1.00 0.25% 1.00% 00.0% 0.125% - ------------------------------------------------------------------------------------------------------------------- 2 Less than 1.00 to 1.00 but 0.30% 1.25% 00.0% 0.125% greater than or equal to 0.50 to 1.00 - ------------------------------------------------------------------------------------------------------------------- 3 Less than 1.50 to 1.00 but 0.35% 1.375% 00.0% 0.125% greater than or equal to 1.00 to 1.00 - ------------------------------------------------------------------------------------------------------------------- 4 Greater than or equal to 1.50 to 0.40% 1.625% 00.0% 0.125% 1.00 - -------------------------------------------------------------------------------------------------------------------

Any increase or decrease in the Applicable Rate resulting from a change in the Pricing Level Leverage Ratio shall become effective as of the date that is the earlier of: (a) the last date by which the Borrower is otherwise required to deliver a Compliance Certificate in accordance with Section 6.02(b) with reference to Section 6.01 for a given fiscal period (each such date, a "Calculation Date"); and (b) the date that is two Business Days after the date (prior to the related Calculation Date) on which the Borrower actually delivers a Compliance Certificate in accordance with Section 6.02(b) with reference to Section 6.01 for such fiscal period; provided that, if any Compliance Certificate for any fiscal period is not delivered to the Administrative Agent on or before the related Calculation Date, then Pricing Level 4 shall apply, effective on the related Calculation Date until two Business Days after such Compliance Certificate is actually received by the Administrative Agent. "Approved Fund" has the meaning set forth in Section 10.07(h). "Arranger" means the Person acting as sole lead arranger and sole book manager, which, initially, shall be Banc of America Securities LLC. "Assignment and Assumption Agreement" means an Assignment and Assumption Agreement substantially in the form of Exhibit D. "Attorney Costs" means and includes all fees and disbursements of any law firm or other external counsel and the allocated cost of internal legal services and all disbursements of internal counsel. 2 "Attributable Indebtedness" means, on any date, (a) in respect of any capital lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a capital lease. "Audited Financial Statements" means the audited consolidated balance sheet of the Borrower and its Subsidiaries for the fiscal year ended December 31, 2002, and the related consolidated statements of income or operations, shareholders' equity and cash flows for such fiscal year of the Borrower and its Subsidiaries. "Auto-Renewal Letter of Credit" has the meaning set forth in Section 2.03(b)(iii). "Bank of America" means Bank of America, N.A. "Bankruptcy Code" means the federal Bankruptcy Reform Act of 1978 (11 U.S.C. Section 101 et seq.). "Base Rate" means for any day a fluctuating rate per annum equal to the higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its "prime rate." Bank of America's "prime rate" is a rate set by Bank of America based upon various factors including Bank of America's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change. "Base Rate Loan" means a Loan that bears interest based on the Base Rate. "Borrower" has the meaning set forth in the introductory paragraph hereto. "Borrowing" means a borrowing consisting of simultaneous Loans of the same Type and having the same Interest Period made by each of the Lenders pursuant to Section 2.01. "Business Day" means any day other than a Saturday, Sunday, or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Administrative Agent's Office is located and, if such day relates to any Eurodollar Rate Loan, means any such day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market. "Calculation Date" has the meaning set forth in the definition of "Applicable Rate" contained herein. "Capital Expenditures" means for any period and with respect to the Consolidated Restricted Group, the aggregate of all expenditures by such Consolidated Restricted Group (excluding, however, expenditures by any Project Debt Entity) for the acquisition or leasing of fixed or capital assets or additions to equipment (including replacements, capitalized repairs and 3 improvements during such period) which should be capitalized under GAAP on a consolidated balance sheet of such Consolidated Restricted Group, minus net proceeds from sales of fixed or capital assets received by such Consolidated Restricted Group (other than a Project Debt Entity) during such period. For the purpose of this definition, the purchase price of equipment which is purchased simultaneously with the trade-in of existing equipment owned by such Consolidated Restricted Group or with insurance proceeds shall be included in Capital Expenditures only to the extent of the gross amount of such purchase price less the credit granted by the seller of such equipment for such equipment being traded in at such time, or the amount of such proceeds, as the case may be. "Cash Collateralize" means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the L/C Issuer and the Lenders, as collateral for the L/C Obligations, cash or deposit account balances pursuant to documentation in form and substance satisfactory to the Administrative Agent and the L/C Issuer (which documents are hereby consented to by the Lenders). Derivatives of such term shall have corresponding meaning. The Borrower hereby grants the Administrative Agent, for the benefit of the L/C Issuer and the Lenders, a Lien on all such cash and deposit account balances. Cash collateral shall be maintained in blocked, non-interest bearing deposit accounts at Bank of America. "Change of Control" means, with respect to any Person, an event or series of events by which: (a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person or group shall be deemed to have "beneficial ownership" of all securities that such person or group has the right to acquire (such right, an "option right"), whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 25% or more of the equity securities of such Person entitled to vote for members of the board of directors or equivalent governing body of such Person on a partially-diluted basis (i.e., taking into account all such securities that such person or group has the right to acquire pursuant to any option right); or (b) during any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body of such Person cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body. 4 "Closing Date" means the first date on which all the conditions precedent in Section 4.01 are satisfied or waived in accordance with Section 4.01 (or, in the case of Section 4.01(b), waived by the Person entitled to receive the applicable payment). "Code" means the Internal Revenue Code of 1986. "Commitment" means, as to each Lender as of any date of determination, its obligation to (a) make Loans to the Borrower pursuant to Section 2.01, and (b) purchase participations in L/C Obligations, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender's name on Schedule 2.01, as such amount may be reduced or adjusted from time to time in accordance with this Agreement. "Compensation Period" has the meaning set forth in Section 2.11(d)(ii). "Compliance Certificate" means a certificate substantially in the form of Exhibit C. "Consolidated Cash Taxes" means, for any Subject Period, for the Consolidated Restricted Group on a consolidated basis (excluding, however, any Project Debt Entity), the aggregate of all taxes actually paid by such Persons in cash during such period. "Consolidated EBITDA" means, for any Subject Period, for the Consolidated Restricted Group on a consolidated basis (excluding, however, any Project Debt Entity), an amount equal to Consolidated Net Income for such period plus the following to the extent deducted in calculating such Consolidated Net Income: (a) Consolidated Interest Expense for such period, (b) Consolidated Cash Taxes for such period, and (c) depreciation and amortization expense for such period. "Consolidated Funded Indebtedness" means, as of any date of determination, for the Consolidated Restricted Group on a consolidated basis, the sum of (a) the outstanding principal amount of all obligations, whether current or long-term, for borrowed money (including Obligations hereunder) and all obligations evidenced by bonds, debentures, notes, loan agreements or other similar instruments, with or without recourse, but not including Project Debt, plus (b) Attributable Indebtedness in respect of capital leases and Synthetic Lease Obligations, but not including Project Debt, plus (c) without duplication, all Guaranty Obligations of the Consolidated Restricted Group with respect to Indebtedness of the types specified in subsections (a) and (b) above of Persons other than the Borrower or any Subsidiary in the Consolidated Restricted Group. "Consolidated Interest Expense" means, for any Subject Period, for the Consolidated Restricted Group on a consolidated basis, the sum of (a) all interest, premium payments, fees, charges and related expenses of the Consolidated Restricted Group in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets, in each case to the extent treated as interest in accordance with GAAP, plus (b) the portion of rent expense of the Consolidated Restricted Group with respect to such period under capital leases that is treated as interest in accordance with GAAP and the portion of Synthetic Lease Obligations payable by the Consolidated Restricted Group with respect to such period that would be treated as interest in accordance with GAAP if such lease were treated as a capital lease under 5 GAAP; excluding for purposes of clause (a) and (b) hereof, such amounts in respect of Project Debt. "Consolidated Net Income" means, for any Subject Period, for the Consolidated Restricted Group on a consolidated basis, the net income of the Consolidated Restricted Group from continuing operations, excluding extraordinary items and excluding gains and losses from Dispositions for that period; not including, however, net income in respect of or attributable to any Project Debt Entity. "Consolidated Restricted Group" means, at any time, the Borrower and its consolidated Subsidiaries at such time, other than any Unrestricted Subsidiary at such time. "Consolidated Stockholders' Equity" means, as of any date of determination for the Consolidated Restricted Group on a consolidated basis, stockholders' equity as of that date, determined in accordance with GAAP. "Consolidated Tangible Net Worth" means, as of any date of determination, the amount equal to Consolidated Stockholders' Equity on that date minus the Intangible Assets of the Consolidated Restricted Group (determined on a consolidated basis in accordance with GAAP) on that date. "Construction JV" means any Joint Venture entered into by the Borrower or any of its Subsidiaries with any one or more other Persons in the Ordinary Course of Business solely for purposes of undertaking or completing a construction project. "Construction JV Investments" means Investments in any Joint Venture arising upon any initial capital contribution to or subsequent capital contribution in such Joint Venture, and participated in ratably by all co-joint venturers having an interest in such Joint Venture, solely for purposes of undertaking or completing a construction project; provided Construction JV Investments shall not include the incurrence, directly or indirectly, of any Guaranty Obligation by the Borrower or any of its Restricted Subsidiaries. "Contractual Obligation" means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound. "Credit Extension" means each of the following: (a) a Borrowing; and (b) an L/C Credit Extension. "Debtor Relief Laws" means the Bankruptcy Code, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States of America or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally. "Default" means any event that, with the giving of any notice, the passage of time, or both, would be an Event of Default. 6 "Default Rate" means an interest rate equal to (a) the Base Rate plus (b) the Applicable Rate, if any, applicable to Base Rate Loans plus (c) 2% per annum; provided, however, that with respect to a Eurodollar Rate Loan or fee based upon the Applicable Rate determined with reference to Eurodollar Rate Loans, the Default Rate shall be a rate equal to the rate (including any Applicable Rate) otherwise applicable to such Loan or fee plus 2% per annum, in each case to the fullest extent permitted by applicable Laws. "Disposition" or "Dispose" means the sale, transfer, license or other disposition (including any sale and leaseback transaction) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith. "Dollar" and "$" means lawful money of the United States of America. "Eligible Assignee" has the meaning set forth in Section 10.07(h). "Environmental Claims" means all claims, however asserted, by any Governmental Authority or any other Person alleging potential liability or responsibility for violation of any Environmental Law or for release or injury to the environment or threat to public health, personal injury (including sickness, disease or death), property damage, natural resources damage, or otherwise alleging liability or responsibility for damages (punitive or otherwise), cleanup, removal, remedial or response costs, restitution, civil or criminal penalties, injunctive relief, or other type of relief, resulting from or based upon (a) the presence, placement, discharge, emission or release (including intentional and unintentional, negligent and non-negligent, sudden or non-sudden, accidental or non-accidental placement, spills, leaks, discharges, emissions or releases) of any Hazardous Material at, in or from property, whether or not owned by the Borrower or any of its Subsidiaries, or (b) any other circumstances forming the basis of any violation, or alleged violation, of any Environmental Law. "Environmental Laws" means any and all federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems. "Environmental Permits" has the meaning set forth in Section 5.09(b). "ERISA" means the Employee Retirement Income Security Act of 1974 and any regulations issued pursuant thereto. "ERISA Affiliate" means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code). 7 "ERISA Event" means any of the following: (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate. "Eurodollar Rate" means for any Interest Period with respect to any Eurodollar Rate Loan, a rate per annum determined by the Administrative Agent pursuant to the following formula: Eurodollar Base Rate Eurodollar Rate = ------------------------------------------------- 1.00 - Eurodollar Reserve Percentage Where, "Eurodollar Base Rate" means, for such Interest Period: (a) the rate per annum equal to the rate determined by the Administrative Agent to be the offered rate that appears on the page of the Telerate screen (or any successor thereto) that displays an average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of such Interest Period, or (b) if the rate referenced in the preceding subsection (a) does not appear on such page or service or such page or service shall cease to be available, the rate per annum equal to the rate determined by the Administrative Agent to be the offered rate on such other page or other service that displays an average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of such Interest Period, or 8 (c) if the rates referenced in the preceding subsections (a) and (b) are not available, the rate per annum determined by the Administrative Agent as the rate of interest (rounded upward to the next 1/100th of 1%) at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Eurodollar Rate Loan being made, continued or converted by Bank of America and with a term equivalent to such Interest Period would be offered by Bank of America's London Branch to major banks in the London interbank eurodollar market at their request at approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of such Interest Period; and "Eurodollar Reserve Percentage" means, for any day during any Interest Period, the reserve percentage (expressed as a decimal, carried out to five decimal places) in effect on such day, whether or not applicable to any Lender, under regulations issued from time to time by the FRB for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurodollar funding (currently referred to as "Eurocurrency liabilities"). The Eurodollar Rate for each outstanding Eurodollar Rate Loan shall be adjusted automatically as of the effective date of any change in the Eurodollar Reserve Percentage. "Eurodollar Rate Loan" means a Loan that bears interest at a rate based on the Eurodollar Rate. "Event of Default" means any of the events or circumstances specified in Section 8.01. "Exchange Act" means the Securities Exchange Act of 1934 and the regulations promulgated thereunder. "Existing Credit Agreement" means that Credit Agreement dated as of June 29, 2001 by and among the Borrower, Bank of America, N.A. as "Administrative Agent", and the "Lenders" thereunder. "Existing Letters of Credit" means the letters of credit issued by Bank of America (as the financial institution issuing letters of credit under the Existing Credit Agreement) that are outstanding immediately prior to the effectiveness of this Agreement, as more particularly described on Schedule 1.01(e). "Federal Funds Rate" means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the "Federal Funds Rate" for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the "Federal Funds Rate" for such day shall be the average rate charged to Bank of America on such day on such transactions as determined by the Administrative Agent. 9 "Fee Letter" means that certain letter agreement relating to fees, dated as of March 5, 2003, among the Borrower, the Arranger and the Administrative Agent. "Financial Letter of Credit" means any Letter of Credit that is a "financial standby letter of credit" as set forth in applicable Laws promulgated from time to time by the FRB. "Fixed Charge Coverage Ratio" means, as of any date of determination, the ratio of (a) the sum of (i) Consolidated EBITDA, measured for the Subject Period ending on such day, minus (ii) Consolidated Cash Taxes for the Subject Period ending on such date plus (iii) interest income of the Consolidated Restricted Group (other than in respect of Project Debt Entities) for the Subject Period ending on such day (to the extent not included in the determination of Consolidated EBITDA for such Subject Period in clause (i) above) minus (iv) all Capital Expenditures actually made during such period to (b) the sum of (i) Consolidated Interest Expense, measured for the Subject Period ending on such day, which was deductible in determining the operating income for such period plus (ii) the current portion (determined in accordance with GAAP) of Consolidated Funded Indebtedness. "Foreign Lender" has the meaning set forth in Section 10.15. "FRB" means the Board of Governors of the Federal Reserve System of the United States of America. "Fund" has the meaning set forth in Section 10.07(h). "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession, that are applicable to the circumstances as of the date of determination, consistently applied. "Granite Land Company" means Granite Land Company, a California corporation, and any successor thereto. "GLC Venture" means any Joint Venture, now or hereafter formed by any Land Development Company or any of its Subsidiaries with any other Person in the Ordinary Course of Business of such Land Development Company or Subsidiary. "Governmental Authority" means any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, administrative tribunal, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing. "Guarantors" means all of the Subsidiaries listed on Schedule 1.01(g), together with all other Persons who, following the Closing Date, execute and deliver a Guaranty pursuant to Section 2.13. 10 "Guaranty" means the guaranty substantially in the form of Exhibit E, or otherwise in form and substance satisfactory to the Required Lenders. "Guaranty Obligation" means, as to any Person, any (a) any obligation, contingent or otherwise, of such Person guarantying or having the economic effect of guarantying any Indebtedness or other obligation payable or performable by another Person (the "primary obligor") in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person. The amount of any Guaranty Obligation shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guaranty Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guarantying Person in good faith. "Hazardous Materials" means, collectively, as of any date: (a) any petroleum or petroleum products, flammable explosives, radioactive materials, asbestos in any form that is or could become friable, urea formaldehyde foam insulation, and transformers or other equipment that contain dielectric fluid containing polychlorinated biphenyls (PCB's); (b) any chemicals or other materials or substances which as of such date are defined as or included in the definition of "hazardous substances," "hazardous wastes," "hazardous materials," "extremely hazardous wastes," "restricted hazardous wastes," "toxic substances," "toxic pollutants," "contaminants," "infectious wastes," "pollutants" or words of similar import under any Environmental Law; and (c) any other chemical or other material or substance, exposure to which or use of which as of such date is prohibited, limited or regulated under any Environmental Law. "Honor Date" has the meaning set forth in Section 2.03(c)(i). "Indebtedness" means, as to any Person at a particular time, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP: (a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments; (b) all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), reimbursement agreements, bankers' acceptances, bank guaranties, surety bonds and similar instruments (in each case, whether or not such obligations are contingent or absolute); provided that the amount of any such 11 contingent obligation shall be deemed to be equal to the maximum reasonably anticipated liability in respect thereof; (c) net obligations under any Swap Contract in an amount equal to the Swap Termination Value thereof; (d) all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the Ordinary Course of Business); (e) indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse; (f) capital leases and Synthetic Lease Obligations; and (g) all Guaranty Obligations of such Person in respect of any of the foregoing. For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any Joint Venture (other than a Joint Venture that is itself a corporation or limited liability company) in which such Person is a general partner or joint venturer, unless such Indebtedness is expressly made non-recourse to such Person and to such Person's assets (subject only to customary exceptions acceptable to the Required Lenders). The amount of any capital lease or Synthetic Lease Obligation as of any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date. "Indemnified Liabilities" has the meaning set forth in Section 10.05. "Indemnitees" has the meaning set forth in Section 10.05. "Information" has the meaning set forth in Section 10.08. "Intangible Assets" means assets that are considered to be intangible assets under GAAP, including customer lists, goodwill, computer software, copyrights, trade names, trade marks, patents, unamortized deferred charges, unamortized debt discount, and capitalized research and development costs. "Interest Payment Date" means, (a) as to any Eurodollar Rate Loan, the last day of each Interest Period applicable to such Loan; provided that, if any Interest Period for a Eurodollar Rate Loan exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates; and (b) as to any Base Rate Loan, the last Business Day of each March, June, September, and December, and the Maturity Date. "Interest Period" means, as to each Eurodollar Rate Loan, the period commencing on the date such Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar Rate 12 Loan, and ending on the date one, two, three or six months thereafter, as selected by the Borrower in its Loan Notice; provided that: (a) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless, in the case of a Eurodollar Rate Loan, such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day; (b) any Interest Period pertaining to a Eurodollar Rate Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and (c) no Interest Period shall extend beyond the scheduled Maturity Date. "Investment" means, as to any Person, any acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of capital stock or other securities of another Person, (b) a loan, advance or capital contribution to, guaranty of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in or with such other Person, (c) the provision of goods or services to another Person for consideration other than cash payable in full upon the delivery or provision of such goods or services (other than trade accounts payable in the Ordinary Course of Business), or (d) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit of that Person. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment. "IP Rights" has the meaning set forth in Section 5.16. "IRS" means the United States Internal Revenue Service. "Joint Venture" means a single-purpose corporation, partnership, limited liability company, joint venture or other similar legal arrangement (whether created by contract or conducted through a separate legal entity) now or hereafter formed by one Person with another Person in order to conduct a common venture or enterprise with such Person. "Land Development Company" means Granite Land Company and any and all other Subsidiaries of the Borrower (or the Borrower itself) now or hereafter engaged, directly, or indirectly through Subsidiaries or Joint Ventures, in the business of land or real estate development. "Laws" means, collectively, all international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and 13 permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law. "L/C Advance" means, with respect to each Lender, such Lender's participation in any L/C Borrowing in accordance with its Pro Rata Share. "L/C Borrowing" means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the date when made or refinanced as a Borrowing. "L/C Credit Extension" means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the renewal or increase of the amount thereof. "L/C Issuer" means the financial institution acting as issuer of Letters of Credit hereunder (or any successor issuer of Letters of Credit hereunder), which initially shall be Bank of America. "L/C Obligations" means, as at any date of determination, the aggregate undrawn face amount of all outstanding Letters of Credit plus the aggregate of all Unreimbursed Amounts, including all L/C Borrowings. "Lender" has the meaning set forth in the introductory paragraph hereto and, as the context requires, includes the L/C Issuer. "Lending Office" means, as to any Lender, the office or offices of such Lender described as such on Schedule 10.02, or such other office or offices as a Lender may from time to time notify the Borrower and the Administrative Agent. "Letter of Credit" means any standby letter of credit issued hereunder, and shall include each Existing Letter of Credit. "Letter of Credit Application" means an application and agreement for the issuance or amendment of a letter of credit in the form from time to time in use by the L/C Issuer. "Letter of Credit Expiration Date" means the day that is 35 Business Days prior to the Maturity Date (or, if such day is not a Business Day, the next preceding Business Day). "Letter of Credit Sublimit" means an amount equal to the lesser of the Aggregate Commitments and $60,000,000. The Letter of Credit Sublimit is part of, and not in addition to, the Aggregate Commitments. "Leverage Ratio" means, as of any date of determination, the ratio of (a) Consolidated Funded Indebtedness to (b) Consolidated Funded Indebtedness plus Consolidated Tangible Net Worth. "Lien" means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any financing lease having substantially the same economic 14 effect as any of the foregoing, and the filing of any financing statement under the Uniform Commercial Code or comparable Laws of any jurisdiction), including the interest of a purchaser of accounts receivable. "Loan" means an extension of credit by a Lender to the Borrower under Article II in the form of a loan. "Loan Documents" means this Agreement, all Notes, the Fee Letter, all Requests for Credit Extensions, all Compliance Certificates, each Guaranty, and all other agreements, documents and instruments, executed and delivered by a Loan Party in connection with the transactions contemplated hereby (other than Swap Contracts) in favor of the Administrative Agent, the Arranger, the L/C Issuer or any Lender. "Loan Notice" means a notice of (a) a Borrowing, (b) a conversion of Loans from one Type to the other, or (c) a continuation of Loans as the same Type, pursuant to Section 2.02(a), which, if in writing, shall be substantially in the form of Exhibit A. "Loan Parties" means, collectively, the Borrower and each Guarantor. "Material Adverse Effect" means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, condition (financial or otherwise) or prospects of the Borrower or the Borrower and its Restricted Subsidiaries taken as a whole; (b) a material impairment of the ability of any Loan Party to perform its obligations under any Loan Document to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party. "Material Subsidiary" means, at any time, any Subsidiary, other than an Unrestricted Subsidiary, that meets either of the following conditions at such time: (a) such Subsidiary's consolidated total revenues for the period of the immediately preceding four fiscal quarters is equal to or greater than 10% of the consolidated total revenues of the Borrower and its Subsidiaries for such period, determined in accordance with GAAP, in each case as reflected in the most recent annual or quarterly (as applicable) financial statements required to be delivered pursuant to Section 6.01; or (b) such Subsidiary's total consolidated assets, as of the last day of the immediately preceding fiscal quarter, are equal to or greater than 10% of the consolidated total assets of the Borrower and its Subsidiaries as of such date, determined in accordance with GAAP, in each case as reflected in the most recent annual or quarterly (as applicable) financial statements of the Borrower required to be delivered pursuant to Section 6.01; provided, however, that at all times prior to the date on which the Borrower shall have delivered the quarterly financial statements for the fiscal quarter ending June 30, 2003 in accordance with Section 6.01, each of the entities listed on Schedule 1.01(g) shall be deemed a "Material Subsidiary." "Material Unrestricted Subsidiary" means, at any time, any Unrestricted Subsidiary that meets either of the following conditions at such time: (a) such Unrestricted Subsidiary's consolidated total revenues for the period of the immediately preceding four fiscal quarters is equal to or greater than 10% of the consolidated total revenues of the Borrower and its Subsidiaries for such period, determined in accordance with GAAP, in each case as reflected in the most recent annual or quarterly (as applicable) financial statements required to be delivered 15 pursuant to Section 6.01; or (b) such Unrestricted Subsidiary's total consolidated assets, as of the last day of the immediately preceding fiscal quarter, are equal to or greater than 10% of the consolidated total assets of the Borrower and its Subsidiaries as of such date, determined in accordance with GAAP, in each case as reflected in the most recent annual or quarterly (as applicable) financial statements of the Borrower required to be delivered pursuant to Section 6.01; provided, however, that at all times prior to the date on which the Borrower shall have delivered the quarterly financial statements for the fiscal quarter ending June 30, 2003 in accordance with Section 6.01, Wilder shall be deemed the only Material Unrestricted Subsidiary. "Maturity Date" means: (a) June 27, 2006; or (b) such earlier date upon which the Aggregate Commitments are terminated in accordance with the terms hereof. "Maximum Rate" has the meaning set forth in Section 10.10. "Moody's" means Moody's Investors Service, Inc. or any successor thereto. "Multiemployer Plan" means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding three calendar years, has made or been obligated to make contributions. "Non-Guarantor Subsidiary" has the meaning set forth in Section 2.13. "Nonrenewal Notice Date" has the meaning set forth in Section 2.03(b)(iii). "Note" means a promissory note, substantially in the form of Exhibit B, made by the Borrower in favor of a Lender evidencing the Loans made by such Lender. "Obligations" means all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest that accrues after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding. "Ordinary Course of Business" means, in respect of any transaction involving the Borrower or any Subsidiary of the Borrower, (a) the ordinary course of such Person's business, substantially as conducted by any such Person prior to or as of the Closing Date, and undertaken by such Person in good faith and not for purposes of evading any covenant or restriction in any Loan Document, or (b) transactions outside the ordinary course of such Person's then-existing business, as long as the Borrower provides written notice to the Administrative Agent and the Lenders prior to such Person undertaking such business, specifically referencing this definition, provided that the Required Lenders shall not have delivered written objections to the Administrative Agent within five (5) Business Days after their receipt of such written notice. "Organization Documents" means: (a) with respect to any corporation, such Person's certificate or articles of incorporation and its bylaws; (b) with respect to any limited liability company, such Person's articles of formation and operating agreement; and (c) with respect to 16 any partnership, Joint Venture, trust or other form of business entity, such Person's applicable agreement of formation and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation with the secretary of state or other department in the state of its formation, in each case as amended from time to time. "Other Taxes" has the meaning set forth in Section 3.01(b). "Outstanding Amount" means: (a) with respect to Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Loans occurring on such date; and (b) with respect to any L/C Obligations on any date, the amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements of outstanding unpaid drawings under any Letters of Credit or any reductions in the maximum amount available for drawing under Letters of Credit taking effect on such date. "Participant" has the meaning set forth in Section 10.07(d). "PBGC" means the Pension Benefit Guaranty Corporation. "Pension Plan" means any "employee pension benefit plan" (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by the Borrower or any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer plan (as described in Section 4064(a) of ERISA) has made contributions at any time during the immediately preceding five plan years. "Performance Letter of Credit" means any Letter of Credit that is a "performance standby letter of credit" as set forth in applicable Laws promulgated from time to time by the FRB. "Person" means any individual, trustee, corporation, general partnership, limited partnership, limited liability company, joint stock company, trust, unincorporated organization, bank, business association, firm, Joint Venture or Governmental Authority. "Plan" means any "employee benefit plan" (as such term is defined in Section 3(3) of ERISA) established by the Borrower or any ERISA Affiliate. "Pricing Level Leverage Ratio" means, as of any date of determination, the ratio of (a) Consolidated Funded Indebtedness as of such date to (b) Consolidated EBITDA for the Subject Period ending on such date. "Pro Rata Share" means, with respect to each Lender, the percentage (carried out to the ninth decimal place) of the Aggregate Commitments set forth opposite the name of such Lender on Schedule 2.01, as such share may from time to time be adjusted as contemplated herein. "Project Debt" means, in respect of any GLC Venture (the "obligor"), any Indebtedness of such obligor incurred in the Ordinary Course of Business of such obligor and of the Borrower and its Restricted Subsidiaries, secured by a Lien on assets of such obligor, but as to which there 17 is no general recourse to such obligor or to the Borrower or any of the Borrower's Restricted Subsidiaries, other than against such obligor for breach of customary representations and warranties. "Project Debt Entity" means at any time, any GLC Venture obligated in respect of Project Debt at such time. "Register" has the meaning set forth in Section 10.07(c). "Release" means any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration into the indoor or outdoor environment, including the movement of Hazardous Materials through ambient air, soil, surface water, ground water, wetlands, land or subsurface strata. "Reportable Event" means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived. "Request for Credit Extension" means (a) with respect to a Borrowing, conversion or continuation of Loans, a Loan Notice, and (b) with respect to an L/C Credit Extension, a Letter of Credit Application. "Required Lenders" means, as of any date of determination, Lenders whose Voting Percentages aggregate more than 50%. "Responsible Officer" means the president, chief operating officer, chief executive officer, chief financial officer, treasurer, assistant treasurer or secretary of a Loan Party. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party. "Restricted Payment" means any dividend or other distribution (whether in cash, securities or other property) with respect to any capital stock of the Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such capital stock or of any option, warrant or other right to acquire any such capital stock. "Restricted Subsidiaries" means, at any time, all Subsidiaries of the Borrower, other than any Unrestricted Subsidiary at such time. "S&P" means Standard & Poor's Ratings Services, or any successor thereto. "SEC" means the Securities and Exchange Commission or any successor or similar Governmental Authority. 18 "Senior Note Documents" means any and all note purchase agreements, notes and other documents evidencing or relating to any outstanding Indebtedness from time to time of the Borrower evidenced by senior notes. "Senior Note Guarantor" means, at any time, any Subsidiary that is at such time a guarantor of Indebtedness of the Borrower pursuant to any Senior Note Documents. "Solvent" means, as to any Person at any time, that: (a) the fair value of the property of such Person is greater than the amount of such Person's liabilities (including disputed, contingent and unliquidated liabilities) as such value is established and liabilities evaluated for purposes of Section 101(32) of the Bankruptcy Code and, in the alternative, for purposes of the California Uniform Fraudulent Transfer Act; (b) the present fair saleable value of the property of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured; (c) such Person is able to realize upon its property and pay its debts and other liabilities (including disputed, contingent and unliquidated liabilities) as they mature in the normal course of business; (d) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay as such debts and liabilities mature; and (e) such Person is not engaged in business or a transaction for which such Person's property would constitute unreasonably small capital. "Subject Period" means, as of any date of determination, the four consecutive fiscal quarter period ending on such date. "Subsidiary" of a Person means a corporation, partnership, Joint Venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a "Subsidiary" or to "Subsidiaries" shall refer to a Subsidiary or Subsidiaries of the Borrower. "Swap Contract" means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a "Master Agreement"), including any such obligations or liabilities under any Master Agreement. 19 "Swap Termination Value" means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a) the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include any Lender). "Synthetic Lease Obligation" means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment). "Taxes" has the meaning set forth in Section 3.01(a). "Type" means, with respect to a Loan, its character as a Base Rate Loan or a Eurodollar Rate Loan. "Unfunded Pension Liability" means the excess of a Pension Plan's benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan's assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year. "Unreimbursed Amount" has the meaning set forth in Section 2.03(c)(i). "Unrestricted Subsidiaries" means, at any time, Wilder and each of its Subsidiaries, provided that at all times prior to such time (a) the consolidated revenue of Wilder and its Subsidiaries does not exceed 15% of the consolidated total revenue of the Borrower and its Subsidiaries, and (b) the consolidated total assets of Wilder and its Subsidiaries do not exceed 15% of the consolidated total assets of the Borrower and its Subsidiaries, in each case (a) and (b), determined in accordance with GAAP, and as reflected in the most recent annual or quarterly (as applicable) financial statements of the Borrower required to be delivered pursuant to Section 6.01, and further provided that Wilder at no time at or prior to such time is or has been, directly or indirectly, a wholly-owned Subsidiary of the Borrower. "Voting Percentage" means, as to any Lender, (a) at any time when the Aggregate Commitments are in effect, such Lender's Pro Rata Share and (b) at any time after the termination of the Aggregate Commitments, the percentage (carried out to the ninth decimal place) which (i) the sum of (A) the Outstanding Amount of such Lender's Loans, plus (B) such Lender's Pro Rata Share of the Outstanding Amount of L/C Obligations, then comprises of (ii) the Outstanding Amount of all Loans and L/C Obligations; provided that, if any Lender has failed to fund any portion of the Loans, participations in L/C Obligations required to be funded by it hereunder, such Lender's Voting Percentage shall be deemed to be zero, and the respective Pro Rata Shares and Voting Percentages of the other Lenders shall be recomputed for purposes 20 of this definition and the definition of "Required Lenders" without regard to such Lender's Commitment or the outstanding amount of its Loans and L/C Advances, as the case may be. "Wilder" means Wilder Construction Co., a Washington corporation, and any successor thereto. 1.02 OTHER INTERPRETIVE PROVISIONS. With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document: (a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms. (b) (i) The words "herein" and "hereunder" and words of similar import when used in any Loan Document shall refer to such Loan Document as a whole and not to any particular provision thereof. (ii) Article, Section, Exhibit and Schedule references are to the Loan Document in which such reference appears. (iii) The term "including" is by way of example and not limitation. (iv) The term "documents" includes any and all instruments, documents, agreements, certificates, notices, reports, financial statements and other writings, however evidenced, whether in physical or electronic form. (c) In the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including;" the words "to" and "until" each mean "to but excluding;" and the word "through" means "to and including." (d) Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document. (e) Unless otherwise expressly provided herein: (i) references to agreements (including this Agreement) and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of any Loan Document; and (ii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting the statute or regulation. 1.03 ACCOUNTING TERMS. (a) All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein. 21 (b) If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP. 1.04 ROUNDING. Any financial ratios required to be maintained by the Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number). 1.05 REFERENCES TO AGREEMENTS AND LAWS. Unless otherwise expressly provided herein, (a) references to agreements (including the Loan Documents) and other contractual instruments shall be deemed to include all subsequent amendments, restatements, extensions, supplements and other modifications thereto, but only to the extent that such amendments, restatements, extensions, supplements and other modifications are not prohibited by any Loan Document; and (b) references to any Law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such Law. ARTICLE II. THE COMMITMENTS AND CREDIT EXTENSIONS 2.01 LOANS. Subject to the terms and conditions set forth herein, each Lender severally agrees to make loans to the Borrower from time to time on any Business Day during the period from the Closing Date to the Maturity Date in an aggregate amount not to exceed at any time outstanding the amount of such Lender's Commitment; provided that, after giving effect to any Borrowing, (i) the aggregate Outstanding Amount of all Loans and L/C Obligations shall not exceed the Aggregate Commitments, and (ii) the aggregate Outstanding Amount of the Loans of any Lender plus such Lender's Pro Rata Share of the Outstanding Amount of all L/C Obligations shall not exceed such Lender's Commitment. Within the limits of each Lender's Commitment, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.01, prepay under Section 2.04, and reborrow under this Section 2.01. Loans may be Base Rate Loans or Eurodollar Rate Loans, as further provided herein. 2.02 BORROWINGS, CONVERSIONS AND CONTINUATIONS OF LOANS. (a) Each Borrowing, each conversion of Loans from one Type to a different Type and each continuation of Loans as the same Type shall be made upon the Borrower's irrevocable notice to the Administrative Agent, which may be given by telephone. Each such notice must be received by the Administrative Agent not later than 9:00 a.m., San Francisco time, (i) three (3) Business Days prior to the requested date of any Borrowing of, conversion to or continuation of 22 Eurodollar Rate Loans or of any conversion of Eurodollar Rate Loans to Base Rate Loans, and (ii) on the requested date of any Borrowing of Base Rate Loans. Each such telephonic notice must be confirmed immediately by delivery to the Administrative Agent of a written Loan Notice (which may be sent by facsimile), appropriately completed and signed by two (2) Responsible Officers of the Borrower. Each Borrowing of Loans, each conversion of Loans from one Type to another Type, and each continuation of Eurodollar Rate Loans shall be in a principal amount of $3,000,000 or a whole multiple of $1,000,000 in excess thereof. Each Loan Notice (whether telephonic or written) shall specify (i) whether the Borrower is requesting a Borrowing, a conversion of Loans from one Type to the other, or a continuation of Loans as the same Type, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Loans to be borrowed, converted or continued, (iv) the Type of Loans to be borrowed or to which existing Loans are to be converted, and (v) if applicable, the duration of the Interest Period with respect thereto. If the Borrower fails to specify a Type of Loan in a Loan Notice or if the Borrower fails to give a timely notice requesting a conversion or continuation, then the applicable Loans shall be made or continued as, or converted to, Base Rate Loans. Any such automatic conversion to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Eurodollar Rate Loans. If the Borrower requests a Borrowing of, conversion to, or continuation of Eurodollar Rate Loans in any such Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month. (b) Following receipt of a Loan Notice, the Administrative Agent shall promptly notify each Lender of its Pro Rata Share of the applicable Loans, and if no timely notice of a conversion or continuation is provided by the Borrower, the Administrative Agent shall notify each Lender of the details of any automatic conversion to Base Rate Loans described in the preceding subsection. In the case of a Borrowing, each Lender shall make the amount of its Loan available to the Administrative Agent in immediately available funds at the Administrative Agent's Office not later than 11:00 a.m., San Francisco time, on the Business Day specified in the applicable Loan Notice. Upon satisfaction of the applicable conditions set forth in Section 4.02 (and, if such Borrowing is the initial Credit Extension, Section 4.01), the Administrative Agent shall make all funds so received available to the Borrower in like funds as received by the Administrative Agent either by (i) crediting the account of the Borrower on the books of Bank of America with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to the Administrative Agent by the Borrower; provided that, if, on the date of the Borrowing, there are L/C Borrowings outstanding, then the proceeds of such Borrowing shall be applied, first, to the payment in full of any such L/C Borrowings and, second, to the Borrower as provided above. (c) Except as otherwise provided herein, a Eurodollar Rate Loan may be continued or converted only on the last day of the Interest Period for such Eurodollar Rate Loan. During the existence of a Default or Event of Default, no Loans may be requested as, converted to or continued as Eurodollar Rate Loans without the consent of the Required Lenders, and the Required Lenders may demand that any or all of the then outstanding Eurodollar Rate Loans be converted immediately to Base Rate Loans. (d) The Administrative Agent shall promptly notify the Borrower and the Lenders of the interest rate applicable to any Eurodollar Rate Loan upon determination of such interest rate. 23 The determination of the Eurodollar Rate by the Administrative Agent shall be conclusive in the absence of manifest error. The Administrative Agent shall notify the Borrower and the Lenders of any change in Bank of America's prime rate used in determining the Base Rate promptly following the public announcement of such change. (e) After giving effect to all Borrowings, all conversions of Loans from one Type to the other, and all continuations of Loans as the same Type, there shall not be more than ten Interest Periods in effect with respect to Loans. 2.03 LETTERS OF CREDIT. (a) The Letter of Credit Commitment. (i) Subject to the terms and conditions set forth herein, (A) the L/C Issuer agrees, in reliance upon the agreements of the other Lenders set forth in this Section 2.03, (1) from time to time on any Business Day during the period from the Closing Date until the Letter of Credit Expiration Date, to issue Letters of Credit for the account of the Borrower, and to amend or renew Letters of Credit previously issued by it, in accordance with subsection (b) below, and (2) to honor drafts under the Letters of Credit; and (B) the Lenders severally agree to participate in Letters of Credit issued for the account of the Borrower; provided that the L/C Issuer shall not be obligated to make any L/C Credit Extension with respect to any Letter of Credit, and no Lender shall be obligated to participate in, any Letter of Credit if as of the date of such L/C Credit Extension, (x) the Outstanding Amount of all L/C Obligations and all Loans would exceed the Aggregate Commitments, (y) the sum of the aggregate Outstanding Amount of the Loans of any Lender plus such Lender's Pro Rata Share of the Outstanding Amount of all L/C Obligations would exceed such Lender's Commitment, or (z) the Outstanding Amount of the L/C Obligations would exceed the Letter of Credit Sublimit. Within the foregoing limits, and subject to the terms and conditions hereof, the Borrower's ability to obtain Letters of Credit shall be fully revolving, and accordingly the Borrower may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed. All Existing Letters of Credit shall be deemed to have been issued pursuant hereto and, from and after the Closing Date, shall be subject to and governed by the terms and conditions hereof. (ii) The L/C Issuer shall be under no obligation to issue any Letter of Credit if: (A) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the L/C Issuer from issuing such Letter of Credit, or any Law applicable to the L/C Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the L/C Issuer shall prohibit, or request that the L/C Issuer refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the L/C Issuer with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the L/C Issuer any unreimbursed loss, cost or 24 expense which was not applicable on the Closing Date and which the L/C Issuer in good faith deems material to it; (B) subject to clause (C) below and subject to Section 2.03(b)(iii), the expiry date of any Letter of Credit would occur more than one year after the date of issuance or last renewal, unless the Required Lenders have approved such expiry date; (C) the expiry date of such requested Letter of Credit would occur after the Letter of Credit Expiration Date, unless all the Lenders have approved such expiry date; (D) the issuance of such Letter of Credit would violate one or more policies of the L/C Issuer or such Letter of Credit does not provide for drafts; (E) the face amount of any Letter of Credit (other than an Existing Letter of Credit) is less than $1,000,000; (F) such Letter of Credit is for the purpose of supporting the issuance of any letter of credit issued by any other Person; or (G) such Letter of Credit is denominated in a currency other than Dollars. (iii) The L/C Issuer shall be under no obligation to amend any Letter of Credit if (A) the L/C Issuer would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit. (b) Procedures for Issuance and Amendment of Letters of Credit; Auto-Renewal Letters of Credit. (i) Each Letter of Credit shall be issued or amended, as the case may be, upon the request of the Borrower delivered to the L/C Issuer (with a copy to the Administrative Agent) in the form of a Letter of Credit Application, appropriately completed and signed by two (2) Responsible Officers of the Borrower. Such L/C Application must be received by the L/C Issuer and the Administrative Agent not later than 9:00 a.m., San Francisco time, at least two (2) Business Days (or such later date and time as the L/C Issuer may agree in a particular instance in its sole discretion) prior to the proposed issuance date or date of amendment, as the case may be. In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; and (G) such other matters as the L/C Issuer may require. In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit 25 Application shall specify in form and detail satisfactory to the L/C Issuer (A) the Letter of Credit to be amended; (B) the proposed date of amendment thereof (which shall be a Business Day); (C) the nature of the proposed amendment; and (D) such other matters as the L/C Issuer may require. (ii) Promptly after receipt of any Letter of Credit Application, the L/C Issuer will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of such Letter of Credit Application from the Borrower and, if not, the L/C Issuer will provide the Administrative Agent with a copy thereof. Upon receipt by the L/C Issuer of confirmation from the Administrative Agent that the requested issuance or amendment is permitted in accordance with the terms hereof, then, subject to the terms and conditions hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of the Borrower or enter into the applicable amendment, as the case may be, in each case in accordance with the L/C Issuer's usual and customary business practices. Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the L/C Issuer a risk participation in such Letter of Credit in an amount equal to the product of such Lender's Pro Rata Share times the amount of such Letter of Credit. (iii) If the Borrower so requests in any applicable Letter of Credit Application, the L/C Issuer may, in it sole and absolute discretion, agree to issue a Letter of Credit that has automatic renewal provisions (each, an "Auto-Renewal Letter of Credit"); provided that any such Auto-Renewal Letter of Credit must permit the L/C Issuer to prevent any such renewal at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the "Nonrenewal Notice Date") in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the L/C Issuer, the Borrower shall not be required to make a specific request to the L/C Issuer for any such renewal. Once an Auto-Renewal Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the L/C Issuer to permit the renewal of such Letter of Credit at any time to a date not later than the Letter of Credit Expiration Date; provided that the L/C Issuer shall not permit any such renewal if (A) the L/C Issuer would have no obligation at such time to issue such Letter of Credit in its renewed form under the terms hereof, or (B) it has received notice (which shall be in writing, including by facsimile) on or before the fifth Business Day immediately preceding the Nonrenewal Notice Date (1) from the Administrative Agent that the Required Lenders have elected not to permit such renewal or (2) from the Administrative Agent, any Lender or the Borrower that one or more of the applicable conditions specified in Section 4.02 is not then satisfied. Notwithstanding anything to the contrary contained herein, the L/C Issuer shall have no obligation to permit the renewal of any Auto-Renewal Letter of Credit at any time. (iv) Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the L/C Issuer will also deliver to the Borrower and the Administrative Agent a true and complete copy of such Letter of Credit or amendment. 26 (c) Drawings and Reimbursements; Funding of Participations. (i) Upon any drawing under any Letter of Credit, the L/C Issuer shall notify the Borrower and the Administrative Agent thereof. Not later than 9:00 a.m., San Francisco time, on the date of any payment by the L/C Issuer under a Letter of Credit (each such date, an "Honor Date"), the Borrower shall reimburse the L/C Issuer through the Administrative Agent in an amount equal to the amount of such drawing. If the Borrower fails to so reimburse the L/C Issuer by such time, the Administrative Agent shall promptly notify each Lender of the Honor Date, the amount of the unreimbursed drawing (the "Unreimbursed Amount"), and such Lender's Pro Rata Share thereof. In such event, the Borrower shall be deemed to have requested a Borrowing of Base Rate Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed Amount, without regard to the minimum and multiples specified in Section 2.02 for the principal amount of Base Rate Loans, but subject to the amount of the unutilized portion of the Aggregate Commitments and the conditions set forth in Section 4.02 (other than the delivery of a Loan Notice). Any notice given by the L/C Issuer or the Administrative Agent pursuant to this Section 2.03(c)(i) may be given by telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice. (ii) Each Lender (including the Lender acting as L/C Issuer) shall upon any notice pursuant to Section 2.03(c)(i) make funds available to the Administrative Agent for the account of the L/C Issuer at the Administrative Agent's Office in an amount equal to its Pro Rata Share of the Unreimbursed Amount not later than 11:00 a.m., San Francisco time, on the Business Day specified in such notice by the Administrative Agent, whereupon, subject to the provisions of Section 2.03(c)(iii), each Lender that so makes funds available shall be deemed to have made a Base Rate Loan to the Borrower in such amount. The Administrative Agent shall remit the funds so received to the L/C Issuer. (iii) With respect to any Unreimbursed Amount that is not fully refinanced by a Borrowing of Base Rate Loans because the conditions set forth in Section 4.02 cannot be satisfied or for any other reason, the Borrower shall be deemed to have incurred from the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate. In such event, each Lender's payment to the Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(ii) shall be deemed payment in respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its participation obligation under this Section 2.03. (iv) Until each Lender funds its Loan or L/C Advance pursuant to this Section 2.03(c) to reimburse the L/C Issuer for any amount drawn under any Letter of Credit, interest in respect of such Lender's Pro Rata Share of such amount shall be solely for the account of the L/C Issuer. 27 (v) Each Lender's obligation to make Loans or L/C Advances to reimburse the L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this Section 2.03(c), shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against the L/C Issuer, the Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default or Event of Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing. Any reimbursement pursuant to this Section 2.03 shall not relieve or otherwise impair the obligation of the Borrower to reimburse the L/C Issuer for the amount of any payment made by the L/C Issuer under any Letter of Credit, together with interest as provided herein. (vi) If any Lender fails to make available to the Administrative Agent for the account of the L/C Issuer any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.03(c) by the time specified in Section 2.03(c)(ii), the L/C Issuer shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the L/C Issuer at a rate per annum equal to the Federal Funds Rate from time to time in effect. A certificate of the L/C Issuer submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (vi) shall be conclusive absent manifest error. (d) Repayment of Participations. (i) At any time after the L/C Issuer has made a payment under any Letter of Credit and has received from any Lender such Lender's L/C Advance in respect of such payment in accordance with Section 2.03(c), if the Administrative Agent receives for the account of the L/C Issuer any payment related to such Letter of Credit (whether directly from the Borrower or otherwise, including proceeds of Cash Collateral applied thereto by the Administrative Agent), or any payment of interest thereon, the Administrative Agent will distribute to such Lender its Pro Rata Share thereof in the same funds as those received by the Administrative Agent. (ii) If any payment received by the Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(i) is required to be returned, each Lender shall pay to the Administrative Agent for the account of the L/C Issuer its Pro Rata Share thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned by such Lender, at a rate per annum equal to the Federal Funds Rate from time to time in effect. (e) Obligations Absolute. The obligation of the Borrower to reimburse the L/C Issuer for each drawing under each Letter of Credit, and to repay each L/C Borrowing and each drawing under a Letter of Credit that is refinanced by a Borrowing of Loans, shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following: 28 (i) any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other agreement or instrument relating thereto; (ii) the existence of any claim, counterclaim, set-off, defense or other right that the Borrower may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the L/C Issuer or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction; (iii) any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit; (iv) any payment by the L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by the L/C Issuer under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law; or (v) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Borrower. The Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with the Borrower's instructions or other irregularity, the Borrower will immediately notify the L/C Issuer. The Borrower shall be conclusively deemed to have waived any such claim against the L/C Issuer and its correspondents unless such notice is given as aforesaid. (f) Role of L/C Issuer. Each Lender and the Borrower agree that, in paying any drawing under a Letter of Credit, the L/C Issuer shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. No Agent-Related Person nor any of the respective correspondents, participants or assignees of the L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the Lenders or the Required Lenders, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Letter of Credit Application. The Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided that this assumption is not intended to, and shall not, preclude the Borrower's pursuing such rights and 29 remedies as it may have against the beneficiary or transferee at law or under any other agreement. No Agent-Related Person, nor any of the respective correspondents, participants or assignees of the L/C Issuer, shall be liable or responsible for any of the matters described in clauses (i) through (v) of Section 2.03(e); provided that, notwithstanding anything in such clauses to the contrary, the Borrower may have a claim against the L/C Issuer, and the L/C Issuer may be liable to the Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Borrower which the Borrower proves were caused by the L/C Issuer's willful misconduct or gross negligence or the L/C Issuer's willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, the L/C Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and the L/C Issuer shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason. (g) Cash Collateral. Upon the request of the Administrative Agent, (i) if the L/C Issuer has honored any full or partial drawing request under any Letter of Credit and such drawing has resulted in an L/C Borrowing, or (ii) if, as of the Letter of Credit Expiration Date, any Letter of Credit may for any reason remain outstanding and partially or wholly undrawn, the Borrower shall immediately Cash Collateralize the then Outstanding Amount of all L/C Obligations (in an amount equal to such Outstanding Amount). (h) Applicability of ISP98. Unless otherwise expressly agreed by the L/C Issuer and the Borrower when a Letter of Credit is issued (including any such agreement applicable to an Existing Letter of Credit), the rules of the "International Standby Practices 1998" published by the Institute of International Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance) shall apply to such Letter of Credit. (i) Letter of Credit Fees. The Borrower shall pay to the Administrative Agent for the account of each Lender in accordance with its Pro Rata Share, subject to Section 2.07(b), (i) a Letter of Credit fee for each outstanding Performance Letter of Credit equal to 75% of the Applicable Rate (for Eurodollar Rate Loans) multiplied by the actual daily maximum amount available to be drawn under each such Letter of Credit, and (ii) a Letter of Credit fee for each Financial Letter of Credit equal to the Applicable Rate (for Eurodollar Rate Loans) multiplied by the actual daily maximum amount available to be drawn under each such Letter of Credit. Such Letter of Credit fees shall be computed on a quarterly basis in arrears. Such fee for each Letter of Credit shall be due and payable on the last Business Day of each March, June, September and December, commencing with the first such date to occur after the issuance of such Letter of Credit, and on the Letter of Credit Expiration Date. If there is any change in the Applicable Rate (or in the characterization of such Letter of Credit as a Performance Letter of Credit or Financial Letter of Credit) during any quarter, the actual daily amount of each Letter of Credit shall be computed and multiplied by the Applicable Rate (or applicable percentage thereof) separately for each period during such quarter that such Applicable Rate (or characterization) was in effect. 30 (j) Fronting Fee and Documentary and Processing Charges Payable to L/C Issuer. The Borrower shall pay directly to the L/C Issuer for its own account a fronting fee with respect to each Letter of Credit in the amounts and at the times specified in the Fee Letter. In addition, the Borrower shall pay directly to the L/C Issuer for its own account the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of the L/C Issuer relating to letters of credit as from time to time in effect. Such fees and charges are due and payable on demand and are nonrefundable. (k) Conflict with Letter of Credit Application. In the event of any conflict between the terms hereof and the terms of any Letter of Credit Application, the terms hereof shall control. 2.04 PREPAYMENTS. (a) The Borrower may, upon notice to the Administrative Agent, at any time or from time to time voluntarily prepay Loans in whole or in part without premium or penalty; provided that (i) such notice must be received by the Administrative Agent not later than 9:00 a.m., San Francisco time, (A) three (3) Business Days prior to any date of prepayment of Eurodollar Rate Loans, and (B) on the date of prepayment of Base Rate Loans; and (ii) any prepayment of Loans shall be in a principal amount of $3,000,000 or a whole multiple of $1,000,000 in excess thereof. Each such notice shall specify the date and amount of such prepayment and the Type(s) of Loans to be prepaid. The Administrative Agent will promptly notify each Lender of its receipt of each such notice, and of such Lender's Pro Rata Share of such prepayment. If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of a Eurodollar Rate Loan shall be accompanied by all accrued interest thereon, together with any additional amounts required pursuant to Section 3.05. Each such prepayment shall be applied to the Loans of the Lenders in accordance with their respective Pro Rata Shares. (b) If for any reason the Outstanding Amount of all Loans and L/C Obligations at any time exceeds the Aggregate Commitments then in effect, the Borrower shall immediately prepay Loans and/or Cash Collateralize the L/C Obligations in an aggregate amount equal to such excess. 2.05 REDUCTION OR TERMINATION OF COMMITMENTS. The Borrower may, upon notice to the Administrative Agent, terminate the Aggregate Commitments, or permanently reduce the Aggregate Commitments to an amount not less than the then Outstanding Amount of all Loans and L/C Obligations; provided that (i) any such notice shall be received by the Administrative Agent not later than 9:00 a.m., San Francisco time, five (5) Business Days prior to the date of termination or reduction, and (ii) any such partial reduction shall be in an aggregate amount of $10,000,000 or any whole multiple of $1,000,000 in excess thereof. The Administrative Agent shall promptly notify the Lenders of any such notice of reduction or termination of the Aggregate Commitments. Once reduced in accordance with this Section, the Aggregate Commitments may not be increased. Any reduction of the Aggregate Commitments shall be applied to the Commitment of each Lender according to its Pro Rata Share. All fees accrued until the effective date of any termination of the Aggregate Commitments shall be paid on the effective date of such termination. 31 2.06 REPAYMENT OF LOANS. The Borrower shall repay to the Lenders on the Maturity Date the aggregate principal amount of Loans outstanding on such date. 2.07 INTEREST. (a) Subject to the provisions of subsection (b) below, (i) each Eurodollar Rate Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Eurodollar Rate for such Interest Period plus the Applicable Rate; and (ii) each Base Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate. (b) While any Event of Default exists or after acceleration, the Borrower shall pay interest on the principal amount of all outstanding Obligations at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Law. Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand. (c) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law. 2.08 FEES. In addition to certain fees described in subsections (i) and (j) of Section 2.03: (a) Commitment Fee. The Borrower shall pay to the Administrative Agent for the account of each Lender in accordance with its Pro Rata Share, a commitment fee equal to the Applicable Rate multiplied by the actual daily amount by which the Aggregate Commitments exceed the sum of (i) the Outstanding Amount of Loans and (ii) the Outstanding Amount of L/C Obligations during each quarterly period (or portion thereof). The commitment fee shall accrue at all times from the Closing Date until the Maturity Date and shall be due and payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing with the first such date to occur after the Closing Date, and on the Maturity Date. The commitment fee shall be calculated quarterly in arrears, and, if there is any change in the Applicable Rate during any quarter, the actual daily amount shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect. The commitment fee shall accrue at all times, including at any time during which one or more of the conditions in Article IV is not met. (b) Utilization Fee. The Borrower shall pay to the Administrative Agent for the account of each Lender in accordance with its Pro Rata Share, a utilization fee equal to the Applicable Rate multiplied by the actual daily aggregate Outstanding Amount of Loans and L/C Obligations on each day that such aggregate Outstanding Amount exceeds 33.00% of the Aggregate Commitments. The utilization fee shall be due and payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing with the first such date to occur after the Closing Date, and on the Maturity Date. The utilization fee shall be 32 calculated quarterly in arrears. The utilization fee shall accrue at all times, including at any time during which one or more of the conditions in Article IV is not met. (c) Arrangement and Agency Fees. The Borrower shall pay an arrangement fee to the Arranger for the Arranger's own account, and shall pay an agency fee to the Administrative Agent for the Administrative Agent's own account, in the amounts and at the times specified in the Fee Letter. Such fees shall be fully earned when paid and shall be nonrefundable for any reason whatsoever. (d) Lenders' Upfront Fees. On the Closing Date, the Borrower shall pay to the Administrative Agent, for the account of the Lenders in accordance with their respective Pro Rata Shares, an upfront fee in an amount set forth in the Fee Letter. Such upfront fees are for the credit facilities committed by the Lenders under this Agreement and are fully earned on the date paid. The upfront fee paid to each Lender is solely for its own account and is nonrefundable for any reason whatsoever. 2.09 COMPUTATION OF INTEREST AND FEES. Interest on Base Rate Loans shall be calculated on the basis of a year of 365 or 366 days, as the case may be, and the actual number of days elapsed. Computation of all other types of interest and all fees shall be calculated on the basis of a year of 360 days and the actual number of days elapsed, which results in a higher yield to the payee thereof than a method based on a year of 365 or 366 days. Interest shall accrue on each Loan for the day on which the Loan is made and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan (or any such portion) is paid; provided that any Loan that is repaid on the same day on which it is made shall bear interest for one day. 2.10 EVIDENCE OF DEBT. (a) The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive (absent manifest error) of the amount of the Credit Extensions made by the Lenders to the Borrower and all interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Loans or the L/C Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of such Lender shall control. Upon the request of any Lender made through the Administrative Agent, such Lender's Loans may be evidenced by a Note in addition to such accounts or records. Each Lender may attach schedules to its Note(s) and endorse thereon the date, Type (if applicable), amount and maturity of the applicable Loans and payments with respect thereto. (b) In addition to the accounts and records referred to in subsection (a), each Lender and the Administrative Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit. In the event of any conflict between the accounts and records maintained by the Administrative Agent 33 and the accounts and records of any Lender in respect of such matters, the accounts and records of the Administrative Agent shall control. 2.11 PAYMENTS GENERALLY. (a) All payments to be made by the Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent's Office in Dollars and in immediately available funds not later than 11:00 a.m., San Francisco time, on the date specified herein. The Administrative Agent will promptly distribute to each Lender its Pro Rata Share (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender's Lending Office. All payments received by the Administrative Agent after 11:00 a.m., San Francisco time, shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. (b) Subject to the definition of "Interest Period" contained in Section 1.01, if any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be. (c) If at any time the funds received by and available to the Administrative Agent are not sufficient to pay fully all amounts of principal, L/C Borrowings, interest and fees then due hereunder, such funds shall be applied (i) first, toward costs and expenses (including Attorney Costs and amounts payable under Article III) incurred by the Administrative Agent and each Lender, (ii) second, toward repayment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (iii) third, toward repayment of principal and L/C Borrowings then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and L/C Borrowings then due to such parties. (d) Unless the Borrower or any Lender has notified the Administrative Agent prior to the date any payment is required to be made by it to the Administrative Agent hereunder, that the Borrower or such Lender, as the case may be, will not make such payment, the Administrative Agent may assume that the Borrower or such Lender, as the case may be, has timely made such payment and may (but shall not be so required to), in reliance thereon, make available a corresponding amount to the Person entitled thereto. If and to the extent that such payment was not in fact made to the Administrative Agent in immediately available funds, then: (i) if the Borrower failed to make such payment, each Lender shall forthwith on demand repay to the Administrative Agent the portion of such assumed payment that was made available to such Lender in immediately available funds, together with interest thereon in respect of each day from and including the date such amount was made available by the Administrative Agent to such Lender to the date such amount is repaid to the Administrative Agent in immediately available funds, at the Federal Funds Rate from time to time in effect; and 34 (ii) if any Lender failed to make such payment, such Lender shall forthwith on demand pay to the Administrative Agent the amount thereof in immediately available funds, together with interest thereon for the period from the date such amount was made available by the Administrative Agent to the Borrower to the date such amount is recovered by the Administrative Agent (the "Compensation Period") at a rate per annum equal to the Federal Funds Rate from time to time in effect. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender's Loan included in the applicable Borrowing. If such Lender does not pay such amount forthwith upon the Administrative Agent's demand therefor, the Administrative Agent may make a demand therefor upon the Borrower, and the Borrower shall pay such amount to the Administrative Agent, together with interest thereon for the Compensation Period at a rate per annum equal to the rate of interest applicable to the applicable Borrowing. Nothing herein shall be deemed to relieve any Lender from its obligation to fulfill its Commitment or to prejudice any rights, which the Administrative Agent or the Borrower may have against any Lender as a result of any default by such Lender hereunder. A notice of the Administrative Agent to any Lender with respect to any amount owing under this subsection (d) shall be conclusive, absent manifest error. (e) If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article II, and the conditions to the applicable Credit Extension set forth in Article IV are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest. (f) The obligations of the Lenders hereunder to make Loans and to fund participations in Letters of Credit are several and not joint. The failure of any Lender to make any Loan or to fund any such participation on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan or purchase its participation. (g) Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner. 2.12 SHARING OF PAYMENTS. If, other than as expressly provided elsewhere herein, any Lender shall obtain on account of the Loans made by it, or the participations in L/C Obligations held by it, any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) in excess of its ratable share (or other share contemplated hereunder) thereof, such Lender shall immediately (a) notify the Administrative Agent of such fact, and (b) purchase from the other Lenders such participations in the Loans made by them and/or such subparticipations in the participations in L/C Obligations held by them, as the case may be, as shall be necessary to cause such purchasing Lender to share the excess payment in respect of such Loans or such participations, as the case may be, pro rata with each of them; provided that if all or any portion of such excess payment is thereafter recovered from the purchasing Lender, such purchase shall to that extent be rescinded and each other Lender shall repay to the 35 purchasing Lender the purchase price paid therefor, together with an amount equal to such paying Lender's ratable share (according to the proportion of (i) the amount of such paying Lender's required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Borrower agrees that any Lender so purchasing a participation from another Lender may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off, but subject to Section 10.09) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. The Administrative Agent will keep records (which shall be conclusive and binding in the absence of manifest error) of participations purchased under this Section and will in each case notify the Lenders following any such purchases or repayments. Each Lender that purchases a participation pursuant to this Section shall from and after such purchase have the right to give all notices, requests, demands, directions and other communications under this Agreement with respect to the portion of the Obligations purchased to the same extent as though the purchasing Lender were the original owner of the Obligations purchased. 2.13 GUARANTY OF OBLIGATIONS. The Obligations shall be jointly and severally guaranteed by the Guarantors pursuant to one or more Guaranties. Promptly after the date on which any Person becomes a Material Subsidiary of the Borrower or becomes a Senior Note Guarantor, and, in any event, within ten (10) Business Days following receipt by the Borrower from the Administrative Agent of a request therefor, the Borrower will cause such Person to execute and deliver to the Administrative Agent, on behalf of the Lenders, a Guaranty. In addition, promptly after any date on which the total revenues or total assets of all Restricted Subsidiaries that are at such time not Guarantors (each, a "Non-Guarantor Subsidiary") together exceed 20% of the consolidated total revenues or consolidated total assets, as the case may be, of the Borrower and its Restricted Subsidiaries, based upon the financial statements most recently delivered by the Borrower to the Administrative Agent pursuant to Section 6.01(a), and in any event, within ten (10) Business Days following receipt by the Borrower from the Administrative Agent of a request therefor, the Borrower will cause one or more Non-Guarantor Subsidiaries to execute and deliver to the Administrative Agent, on behalf of the Lenders, a Guaranty, so that, after delivery of such Guaranty, the total revenues and total assets of all remaining Non-Guarantor Subsidiaries (other than any Unrestricted Subsidiary) together are less than 20% of the total revenues or total assets, as the case may be, of the Borrower and its consolidated Subsidiaries (other than any Unrestricted Subsidiary). In all of the foregoing instances, the Borrower shall deliver or cause to be delivered such other agreements, documents, instruments and other information and items as are reasonably requested by the Administrative Agent, at the request of any Lender, in connection with the foregoing, including resolutions, incumbency and officers' certificates and opinions of counsel. Without limiting the foregoing, the Borrower shall determine, promptly after the date on which the quarterly financial statements for the fiscal quarter ending on June 30, 2003 shall have been delivered in accordance with Section 6.01, whether there exists or shall have arisen any Material Subsidiary other than the entities specified on Schedule 1.01(g), and shall cause each such Material Subsidiary to execute and deliver to the Administrative Agent, on behalf of the Lenders, a Guaranty, together with other agreements, documents or instruments referenced above. 36 ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY 3.01 TAXES. (a) Any and all payments by the Borrower to or for the account of the Administrative Agent or any Lender under any Loan Document shall be made free and clear of and without deduction for any and all present or future taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and all liabilities with respect thereto, excluding, in the case of the Administrative Agent and each Lender, taxes imposed on or measured by its net income, and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the Laws of which the Administrative Agent or such Lender, as the case may be, is organized or maintains a lending office (all such non-excluded taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and liabilities with respect thereto being hereinafter collectively referred to as "Taxes"). If the Borrower shall be required by any Laws to deduct any Taxes from or in respect of any sum payable under any Loan Document to the Administrative Agent or any Lender, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section), the Administrative Agent and such Lender receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions, (iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable Laws, and (iv) within 30 days after the date of such payment, the Borrower shall furnish to the Administrative Agent (which shall forward the same to such Lender) the original or a certified copy of a receipt evidencing payment thereof. (b) In addition, the Borrower agrees to pay any and all present or future stamp, court or documentary taxes and any other excise or property taxes or charges or similar levies which arise from any payment made under any Loan Document or from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, any Loan Document (hereinafter referred to as "Other Taxes"). (c) If the Borrower shall be required to deduct or pay any Taxes or Other Taxes from or in respect of any sum payable under any Loan Document to the Administrative Agent or any Lender, the Borrower shall also pay to the Administrative Agent (for the account of such Lender) or to such Lender, at the time interest is paid, such additional amount that such Lender specifies is necessary to preserve the after-tax yield (after factoring in all taxes, including taxes imposed on or measured by net income) such Lender would have received if such Taxes or Other Taxes had not been imposed. (d) The Borrower agrees to indemnify the Administrative Agent and each Lender for (i) the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section) paid by the Administrative Agent and such Lender, (ii) amounts payable under Section 3.01(c) and (iii) any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, in each case whether or not such Taxes or Other Taxes were correctly or legally imposed or asserted by the 37 relevant Governmental Authority. Payment under this subsection (d) shall be made within 30 days after the date the Lender or the Administrative Agent makes a demand therefor. 3.02 ILLEGALITY. If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Eurodollar Rate Loans, or to determine or charge interest rates based upon the Eurodollar Rate, then, on notice thereof by such Lender to the Borrower through the Administrative Agent, any obligation of such Lender to make or continue Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate Loans shall be suspended until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, the Borrower shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all Eurodollar Rate Loans of such Lender to Base Rate Loans, either on the last day of the Interest Period thereof, if such Lender may lawfully continue to maintain such Eurodollar Rate Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurodollar Rate Loans. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted. Each Lender agrees to designate a different Lending Office if such designation will avoid the need for such notice and will not, in the good faith judgment of such Lender, otherwise be materially disadvantageous to such Lender. 3.03 INABILITY TO DETERMINE RATES. If the Administrative Agent determines in connection with any request for a Eurodollar Rate Loan or a conversion to or continuation thereof that (a) Dollar deposits are not being offered to banks in the London interbank eurodollar market for the applicable amount and Interest Period of such Eurodollar Rate Loan, (b) adequate and reasonable means do not exist for determining the Eurodollar Rate for such Eurodollar Rate Loan, or (c) the Eurodollar Rate for such Eurodollar Rate Loan does not adequately and fairly reflect the cost to the Lenders of funding such Eurodollar Rate Loan, the Administrative Agent will promptly notify the Borrower and all Lenders. Thereafter, the obligation of the Lenders to make or maintain Eurodollar Rate Loans shall be suspended until the Administrative Agent revokes such notice. Upon receipt of such notice, the Borrower may revoke any pending request for a Borrowing, conversion or continuation of Eurodollar Rate Loans or, failing that, will be deemed to have converted such request into a request for a Borrowing of Base Rate Loans in the amount specified therein. 3.04 INCREASED COST AND REDUCED RETURN; CAPITAL ADEQUACY. (a) If any Lender determines that as a result of the introduction of or any change in or in the interpretation of any Law, or such Lender's compliance therewith, there shall be any increase in the cost to such Lender of agreeing to make or making, funding or maintaining Eurodollar Rate Loans or (as the case may be) issuing or participating in Letters of Credit, or a reduction in the amount received or receivable by such Lender in connection with any of the foregoing (excluding for purposes of this subsection (a) any such increased costs or reduction in amount resulting from (i) Taxes or Other Taxes (as to which Section 3.01 shall govern), and (ii) changes in the basis of taxation of overall net income or overall gross income by the United States or any foreign jurisdiction or any political subdivision of either thereof under the Laws of which such 38 Lender is organized or has its Lending Office, the Borrower shall pay to such Lender such additional amounts as will compensate such Lender for such increased cost or reduction. (b) If any Lender determines that the introduction of any Law regarding capital adequacy or any change therein or in the interpretation thereof, or compliance by such Lender (or its Lending Office) therewith, has the effect of reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of such Lender's obligations hereunder (taking into consideration its policies with respect to capital adequacy and such Lender's desired return on capital), then from time to time upon demand of such Lender (with a copy of such demand to the Administrative Agent), the Borrower shall pay to such Lender such additional amounts as will compensate such Lender for such reduction. 3.05 FUNDING LOSSES. Upon demand of any Lender (with a copy to the Administrative Agent) from time to time, the Borrower shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of: (a) any continuation, conversion, payment or prepayment of any Loan other than a Base Rate Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise); (b) any failure by the Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on the date or in the amount notified by the Borrower; or (c) any assignment of a Eurodollar Rate Loan on a day other than the last day of the Interest Period therefor as a result of a request by the Borrower pursuant to Section 10.16; including any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained. The Borrower shall also pay any customary administrative fees charged by such Lender in connection with the foregoing. For purposes of calculating amounts payable by the Borrower to the Lenders under this Section 3.05, each Lender shall be deemed to have funded each Eurodollar Rate Loan made by it at the Eurodollar Rate for such Loan by a matching deposit or other borrowing in the London interbank eurodollar market for a comparable amount and for a comparable period, whether or not such Eurodollar Rate Loan was in fact so funded. 3.06 MATTERS APPLICABLE TO ALL REQUESTS FOR COMPENSATION. (a) A certificate of the Administrative Agent or any Lender claiming compensation under this Article III and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error. In determining such amount, the Administrative Agent or such Lender may use any reasonable averaging and attribution methods. (b) Upon any Lender's making a claim for compensation under Section 3.01 or 3.04, the Borrower may remove or replace such Lender in accordance with Section 10.16. 39 3.07 SURVIVAL. All of the Borrower's obligations under this Article III shall survive termination of the Aggregate Commitments and repayment of all other Obligations. ARTICLE IV. CONDITIONS PRECEDENT TO CREDIT EXTENSIONS 4.01 CONDITIONS TO EFFECTIVENESS AND INITIAL CREDIT EXTENSION. The effectiveness of this Agreement and the obligation of each Lender to make its initial Credit Extension hereunder are subject to satisfaction of the following conditions precedent: (a) Unless waived by all the Lenders (or by the Administrative Agent with respect to immaterial matters or items specified in clause (iv) below with respect to which the Borrower has given assurances satisfactory to the Administrative Agent that such items shall be delivered promptly following the Closing Date), the Administrative Agent's receipt of the following, each of which shall be originals or facsimiles (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the signing Loan Party (or, in the case of the opinion of counsel, by such counsel), each dated the Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date acceptable to the Administrative Agent) and each in form and substance satisfactory to the Administrative Agent, the Lenders and their respective legal counsel: (i) executed counterparts of this Agreement and the Guaranty, sufficient in number for distribution to the Administrative Agent, each Lender and the Borrower; (ii) if requested by a Lender, a Note executed by the Borrower in favor of such Lender, such Note to be in an original face amount equal to such Lender's Commitment; (iii) such certificates respecting resolutions or other actions, incumbency certificates and/or other certificates of Responsible Officers of each Loan Party as the Administrative Agent or any Lender may require to establish the identities of and verify the authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents to which such Loan Party is a party; (iv) such evidence as the Administrative Agent and/or any Lender may require to verify that each Loan Party is duly organized or formed, validly existing, in good standing and qualified to engage in business in each jurisdiction in which it is required to be qualified to engage in business, including certified copies of each Loan Party's Organization Documents, certificates of good standing and qualification to engage in business and tax clearance certificates; provided that, to the extent that any of the tax clearance certificates required under this sub-paragraph (iv) have not been received by the Borrower prior to June 27, 2003, the Borrower shall only be required to deliver such tax clearance certificates in accordance with Section 6.14; (v) a certificate signed by a Responsible Officer of the Borrower certifying (A) that the conditions specified in Sections 4.02(a) and (b) have been satisfied, and 40 (B) that there has been no event or circumstance since the date of the Audited Financial Statements which has or could be reasonably expected to have a Material Adverse Effect; (vi) an opinion of counsel to each Loan Party, addressing the matters set forth on Exhibit F, in form and substance satisfactory to the Administrative Agent; (vii) [Reserved] (viii) evidence satisfactory to the Administrative Agent of the termination in accordance with its terms of the commitments under the Existing Credit Agreement, and the repayment of all outstanding amounts thereunder, together with interest fees and other charges payable, provided that, upon execution of this Agreement, each Lender hereto that is a party to the Existing Credit Agreement waives the notice provision for early termination of the Existing Credit Agreement set forth in Section 2.05 thereunder; (ix) evidence satisfactory to the Administrative Agent of amendments, satisfactory to the Administrative Agent and the Lenders, to the Senior Note Documents; and (x) such other assurances, certificates, documents, consents, approvals, materials or opinions as the Administrative Agent, the L/C Issuer or any Lender reasonably may require. (b) Any fees required to be paid on or before the Closing Date shall have been paid. (c) Unless waived by the Administrative Agent, the Borrower shall have paid all reasonable Attorney Costs of the Administrative Agent to the extent invoiced prior to or on the Closing Date, plus such additional amounts of reasonable Attorney Costs as shall constitute its reasonable estimate of such Attorney Costs incurred or to be incurred by it through the closing proceedings, provided that such estimate shall not thereafter preclude a final settling of accounts between the Borrower and the Administrative Agent. Notwithstanding anything to the contrary contained in this Section 4.01, neither this Agreement nor any of the other Loan Documents shall become effective or be binding on any party unless the preceding conditions have been satisfied (or waived, as appropriate), on or before 5:00 p.m., San Francisco time, on June 30, 2003. 4.02 CONDITIONS TO ALL CREDIT EXTENSIONS. The obligation of each Lender to honor any Request for Credit Extension (other than a Loan Notice requesting only a conversion of a Loan to the other Type, or a continuation of a Loan as the same Type) is subject to the following conditions precedent: (a) The representations and warranties of the Borrower contained in Article V, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct on and as of the date of such Credit Extension, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date. 41 (b) No Default or Event of Default shall exist or would result from such Credit Extension. (c) The Administrative Agent and, if applicable, the L/C Issuer shall have received a Request for Credit Extension in accordance with the requirements hereof. (d) The Administrative Agent shall have received, in form and substance satisfactory to it, such other assurances, certificates, documents or consents related to the foregoing as the Administrative Agent or the Required Lenders reasonably may require. Each Request for Credit Extension (other than a Loan Notice requesting only a conversion of a Loan to the other Type, or a continuation of a Loan as the same Type) submitted by the Borrower shall be deemed to be a representation and warranty that the conditions specified in Sections 4.02(a) and (b) have been satisfied on and as of the date of the applicable Credit Extension. ARTICLE V. REPRESENTATIONS AND WARRANTIES The Borrower represents and warrants to the Administrative Agent and the Lenders that: 5.01 EXISTENCE, QUALIFICATION AND POWER; COMPLIANCE WITH LAWS. Each Loan Party (a) is a corporation, partnership or limited liability company, duly organized or formed, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all governmental licenses, authorizations, consents and approvals to own its assets, carry on its business and to execute, deliver, and perform its obligations under the Loan Documents to which it is a party, (c) is duly qualified and is licensed and in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license, and (d) is in compliance with all Laws, except in each case referred to in subsection (c) or (d) of this Section, to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect. 5.02 AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is party, have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of any of such Person's Organization Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, any Contractual Obligation to which such Person is a party or any order, injunction, writ or decree of any Governmental Authority to which such Person or its property is subject; or (c) violate any Law. 5.03 GOVERNMENTAL AUTHORIZATION. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document. 42 5.04 BINDING EFFECT. This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto. This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws generally affecting the rights of creditors, and subject to equitable principles of general application. 5.05 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE EFFECT. (a) The Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present the financial condition of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show all material indebtedness and other liabilities, direct or contingent, of the Borrower and its consolidated Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Indebtedness. (b) The unaudited consolidated financial statements of the Borrower and its Subsidiaries, dated March 31, 2003, contained in the related quarterly report on Form 10-Q filed with the SEC (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and subject to ordinary, good faith year end audit adjustments; (ii) fairly present the financial condition of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby; and (iii) show all material indebtedness and other liabilities, direct or contingent, of the Borrower and its consolidated Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Indebtedness. (c) Since the date of the Audited Financial Statements, there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect. (d) As of the Closing Date, there exists no Project Debt, other than as specifically identified on Schedule 5.05(c). 5.06 LITIGATION. Except as specifically disclosed on Schedule 5.06, there are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the Borrower after due and diligent investigation, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against the Borrower or any of its Subsidiaries or against any of their properties or revenues that (a) purport to affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby, or (b) if determined adversely, could reasonably be expected to have a Material Adverse Effect. 5.07 NO DEFAULT. Neither the Borrower nor any Subsidiary is in default under or with respect to (a) any Senior Note Documents or (b) any Contractual Obligation that could be reasonably expected to have a Material Adverse Effect. No Default or Event of Default has 43 occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document. 5.08 OWNERSHIP OF PROPERTY; LIENS. Each of the Borrower and its Subsidiaries has good record and marketable title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its business, except for such defects in title as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. As of the Effective Date, the property of the Borrower and its Subsidiaries is not subject to any Lien, other than Liens permitted by Section 7.01. 5.09 ENVIRONMENTAL COMPLIANCE. (a) The on-going operations of the Borrower and each of its Subsidiaries, after the Closing Date, comply in all respects with all Environmental Laws, except such non-compliance that would not result in liability in excess of $2,000,000 in the aggregate. (b) Except as specifically identified on Schedule 5.09, and except to the extent that noncompliance would not result in liability in excess of $300,000 in the aggregate, the Borrower and each of its Subsidiaries have obtained all licenses, permits, authorizations and registrations required under any Environmental Law ("Environmental Permits") necessary for their respective operations, and all such Environmental Permits are in good standing, and the Borrower and each of its Subsidiaries are in compliance with all terms and conditions of such Environmental Permits. (c) Except as specifically identified on Schedule 5.09, none of the Borrower or any of its Subsidiaries or any of their present property or operations is subject to any outstanding written order from or agreement with any Governmental Authority or other Person, nor is subject to any judicial or docketed administrative proceeding respecting any Environmental Law, Environmental Claim or Hazardous Material. (d) There are no conditions or circumstances relating to any property of the Borrower or its Subsidiaries, or arising from operations of the Borrower or its Subsidiaries conducted prior to the Closing Date that, together with all other such conditions and circumstances relating to all other properties and operations, may give rise to Environmental Claims with a potential liability as to the Borrower and its Subsidiaries together in excess of $20,000,000 in the aggregate. Schedule 5.09 contains the Borrower's good faith estimate of clean-up costs associated with hydrocarbon contamination at the properties described therein. Notwithstanding the foregoing, (i) neither the Borrower nor any of its Subsidiaries has any underground storage tanks (x) that are not properly registered or permitted under applicable Environmental Laws or (y) that are leaking or disposing of Hazardous Materials off-site, (ii) the Borrower and its Subsidiaries have notified all of their employees of the existence, if any, of any health hazard arising from the conditions of their employment and have met all notification requirements under all applicable Environmental Laws, and (iii) no Hazardous Materials have been Released at, on or under any site, facility or vessel now or previously owned, operated or leased by the Borrower or any of its Subsidiaries that would have a Material Adverse Effect. 44 (e) Except as specifically identified on Schedule 5.09, the Borrower has no knowledge of any oral or written notification of a Release of a Hazardous Material has been filed by or on behalf of the Borrower or any of its Subsidiaries and no site, facility or vessel now or previously owned, operated or leased by the Borrower or any of its Subsidiaries is listed or proposed for listing on any federal or state list of sites requiring investigation or clean-up. 5.10 INSURANCE. The properties of the Borrower and its Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of the Borrower, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Borrower or its Subsidiaries operate. 5.11 TAXES. The Borrower and its Subsidiaries have filed all Federal, state and other material tax returns and reports required to be filed, and have paid all Federal, state and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings and for which adequate reserves have been provided in accordance with GAAP. There is no proposed tax assessment against the Borrower or any Subsidiary that would, if made, have a Material Adverse Effect. 5.12 ERISA COMPLIANCE. (a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state Laws. Each Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto and, to the best knowledge of the Borrower, nothing has occurred which would prevent, or cause the loss of, such qualification. The Borrower and each ERISA Affiliate have made all required contributions to each Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan. (b) There are no pending or, to the best knowledge of the Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could be reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in a Material Adverse Effect. (c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither the Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Sections 4069 or 4212(c) of ERISA. 45 5.13 SUBSIDIARIES. (a) As of the Closing Date, the Borrower has no Subsidiaries other than those specifically disclosed in Part (1) of Schedule 5.13(a), and those of whom the Borrower has notified the Administrative Agent in writing following the Closing Date pursuant to Section 2.13, and has no equity investments in any other corporation or entity (including GLC Ventures and Construction JV's) other than those specifically disclosed in Part (2) of Schedule 5.13(a). (b) As of the Closing Date, there exist no Senior Note Guarantors, other than as listed on Schedule 5.13(b). 5.14 MARGIN REGULATIONS; INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT. (a) The Borrower is not engaged and will not engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock. (b) None of the Borrower, any Person controlling the Borrower, or any Subsidiary (i) is a "holding company," or a "subsidiary company" of a "holding company," or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company," within the meaning of the Public Utility Holding Company Act of 1935, or (ii) is or is required to be registered as an "investment company" under the Investment Company Act of 1940, the Federal Power Act, the Interstate Commerce Act, any state public utilities code or any other federal or state statute or regulation limiting its ability to incur Indebtedness. 5.15 DISCLOSURE. The documents, certificates and written statements (including the Loan Documents) furnished to the Administrative Agent and the Lenders by the Borrower or any Subsidiary for use in connection with the transactions contemplated by this Agreement, taken as a whole, do not contain any untrue statement of a material fact or omit to state a material fact (known to the Borrower in the case of any document not furnished by it) necessary in order to make the statements contained herein or therein not misleading (it being recognized by the Administrative Agent and the Lenders that projections and forecasts provided to them by the Borrower are not to be viewed as facts and that actual results during the period or periods covered by any such projections and forecasts may differ from the projected or forecasted results). 5.16 INTELLECTUAL PROPERTY; LICENSES, ETC. The Borrower and its Subsidiaries own, or possess the right to use, all of the trademarks, service marks, trade names, copyrights, patents, patent rights, franchises, licenses and other intellectual property rights (collectively, "IP Rights") that are reasonably necessary for the operation of their respective businesses, without conflict with the rights of any other Person. To the best knowledge of the Borrower, no slogan or other advertising device, product, process, method, substance, part or other material employed or contemplated to be employed by the Borrower or any Subsidiary infringes upon any rights held by any other Person. Except as specifically disclosed in Schedule 5.16, no claim or litigation regarding any of the foregoing is pending or, to the best knowledge of the Borrower, threatened, 46 and no patent, invention, device, application, principle or any statute, law, rule, regulation, standard or code is pending or, to the knowledge of the Borrower, proposed, which, in either case, could reasonably be expected to have a Material Adverse Effect. 5.17 SWAP CONTRACTS. The Borrower and its Subsidiaries have each voluntarily entered into each Swap Contract to which it is a party based upon its own independent assessment of its consolidated assets, liabilities and commitments in each case as an appropriate means of mitigating and managing risks associated with such matters. 5.18 LABOR RELATIONS. There are no strikes, lockouts or other labor disputes against the Borrower or any of its Subsidiaries, or, to the best of the Borrower's knowledge, threatened against or affecting the Borrower or any of its Subsidiaries, and no significant unfair labor practice complaint is pending against the Borrower or any of its Subsidiaries or, to the best knowledge of the Borrower, threatened against any of them before any Governmental Authority, which could reasonably be expected to result in a Material Adverse Effect. 5.19 USE OF PROCEEDS. The Borrower shall use the proceeds of the Credit Extensions solely for working capital and other general corporate purposes of the Borrower and its Restricted Subsidiaries not in contravention of any Loan Document or any Law. 5.20 SOLVENCY. The Borrower is and shall continue to be, and shall cause each of its Subsidiaries to be, Solvent. 5.21 UNRESTRICTED SUBSIDIARY MATTERS. Except as specifically identified in Schedule 5.21: (a) As of the Closing Date, none of the Borrower or any of its Restricted Subsidiaries is party to any Contractual Obligation pursuant to which cash, deposit balances or investments of the Borrower or any of its Restricted Subsidiaries are pooled or otherwise commingled with similar assets of any Unrestricted Subsidiary. (b) As of the Closing Date, there is no employee stock option plan or employee stock purchase plan of the Borrower that extends to employees of any Unrestricted Subsidiary. (c) As of the Closing Date, none of the Unrestricted Subsidiaries directly or indirectly own capital stock in the Borrower or have any right to purchase, redeem or otherwise acquire capital stock in the Borrower. 5.22 BURDENSOME AGREEMENTS. Except as specifically identified in Schedule 5.22, as of the Closing Date neither the Borrower nor any of its Restricted Subsidiaries is party or subject to (i) any Contractual Obligation that limits the ability of any Restricted Subsidiary to make Restricted Payments to the Borrower or to otherwise transfer property to the Borrower, (ii) any employment contracts or other arrangements with officers, directors or employees having terms, including salaries, benefits and other compensation, that are materially different from those previously entered into by it in the Ordinary Course of Business, or (iii) any Contractual Obligation that directly or indirectly prohibits the Borrower or any of its Restricted Subsidiaries from granting any Lien on property or assets of such Persons. 47 5.23 TAX SHELTER REGULATIONS. The Borrower does not intend to treat the Loans and/or Letters of Credit and related transactions as being a "reportable transaction" (within the meaning of Treasury Regulation Section 1.6011-4). In the event the Borrower determines to take any action inconsistent with such intention, it will promptly notify the Administrative Agent thereof. If the Borrower so notifies the Administrative Agent, the Borrower acknowledges that the Administrative Agent and each of the Lenders may treat the Loans and the Letters of Credit as part of a transaction that is subject to Treasury Regulation Section 301.6112-1, and the Administrative Agent will maintain the lists and other records required by such Treasury Regulation. ARTICLE VI. AFFIRMATIVE COVENANTS So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, the Borrower shall, and shall (except in the case of the covenants set forth in Sections 6.01, 6.02 and 6.03) cause each Subsidiary to: 6.01 FINANCIAL STATEMENTS. Deliver to the Administrative Agent and each Lender, in form and detail satisfactory to the Administrative Agent and the Required Lenders: (a) as soon as available, but in any event within 90 days after the end of each fiscal year of the Borrower: (i) (A) a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year, and the related consolidated statements of income or operations, shareholders' equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail, audited and accompanied by a report and opinion of an independent certified public accountant of nationally recognized standing reasonably acceptable to the Required Lenders, which report and opinion shall be prepared in accordance with GAAP and shall not be subject to any qualifications or exceptions as to the scope of the audit nor to any qualifications or exceptions not reasonably acceptable to the Required Lenders; or (B) an SEC Form 10-K for the Borrower (excluding the exhibits thereto) relating to such fiscal year; and (ii) provided Wilder is an Unrestricted Subsidiary as of the end of such fiscal year, a consolidated balance sheet of Wilder as at the end of such fiscal year, and the related consolidated statements of income or operations, shareholders' equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail, audited and accompanied by a report and opinion of an independent certified public accountant of nationally recognized standing reasonably acceptable to the Required Lenders, which report and opinion shall be prepared in accordance with GAAP and shall not be subject to any qualifications or exceptions as to the scope of the audit nor to any qualifications or exceptions not reasonably acceptable to the Required Lenders; and (b) as soon as available, but in any event within 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower: (i) (A) a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal quarter, and the related consolidated statements of income or operations, shareholders' equity and cash flows for such fiscal quarter and for the portion of the Borrower's fiscal year then ended, setting forth in each case in 48 comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail and certified by a Responsible Officer of the Borrower as fairly presenting the financial condition, results of operations and cash flows of the Borrower and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes; or (B) an SEC Form 10-Q for the Borrower (excluding the exhibits thereto) relating to such fiscal quarter; and (ii) provided Wilder is an Unrestricted Subsidiary as of the end of such fiscal quarter, a consolidated balance sheet of Wilder as at the end of such fiscal quarter, and the related consolidated statements of income or operations, shareholders' equity and cash flows for such fiscal quarter and for the portion of Wilder's fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail and certified by a Responsible Officer of Borrower as fairly presenting the financial condition, results of operations and cash flows of Wilder on a consolidated basis in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes. 6.02 CERTIFICATES; OTHER INFORMATION. Deliver to the Administrative Agent and each Lender, in form and detail satisfactory to the Administrative Agent and the Required Lenders: (a) concurrently with the delivery of the financial statements referred to in Section 6.01(a) (unless included in the applicable SEC Form 10-K), a certificate of its independent certified public accountants certifying such financial statements; (b) concurrently with the delivery of the financial statements referred to in Sections 6.01(a) and (b), a duly completed Compliance Certificate signed by a Responsible Officer of the Borrower; (c) promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of the Borrower, and copies of all annual, regular, periodic and special reports and registration statements which the Borrower may file or be required to file with the SEC under Section 13 or 15(d) of the Exchange Act, and not otherwise required to be delivered to the Administrative Agent pursuant hereto; (d) promptly, such additional information regarding the business, financial or corporate affairs of the Borrower or any Subsidiary as the Administrative Agent, at the request of any Lender, may from time to time request; and (e) promptly after the Borrower has notified the Administrative Agent of any intention by the Borrower to treat the Loans or Letters of Credit and related transactions as being a "reportable transaction" (within the meaning of Treasury Regulation Section 1.6011-4), a duly completed copy of IRS Form 8886 or any successor form. Reports required to be delivered pursuant to Section 6.01(a)(i) or (b)(i) or Section 6.02(b) shall be deemed to have been delivered on the date on which the Borrower posts such reports on the Borrower's website on the Internet at the website address listed on Schedule 10.02 or when such report is posted on the SEC's website at www.sec.gov; provided that (x) the Borrower shall deliver electronic copies via electronic mail or paper copies of such reports to the Administrative 49 Agent or any Lender who requests the Borrower to deliver such paper copies until written request to cease delivering paper copies is given by the Administrative Agent or such Lender, (y) the Borrower shall notify by electronic copies via electronic mail or paper copies via facsimile the Administrative Agent and each Lender of the posting of any such reports, and (z) in every instance, the Borrower shall provide paper copies of the Compliance Certificates required by Section 6.02(b) to the Administrative Agent and each of the Lenders. Except for such Compliance Certificates, the Administrative Agent shall not have any obligation to request the delivery or to maintain copies of the reports referred to above (and, in any event, the Administrative Agent shall not have any responsibility to monitor compliance by the Borrower with any such request for delivery), and each Lender shall be solely responsible for requesting delivery to it, or maintaining its copies, of such reports. 6.03 NOTICES. Promptly notify the Administrative Agent and each Lender: (a) of the occurrence of any Default or Event of Default; (b) of any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect, including (i) breach or non-performance of, or any default under, a Contractual Obligation of the Borrower or any Subsidiary; (ii) any dispute, litigation, investigation, proceeding or suspension between the Borrower or any Subsidiary and any Governmental Authority; or (iii) the commencement of, or any material development in, any litigation or proceeding affecting the Borrower or any Subsidiary, including pursuant to any applicable Environmental Laws; (c) of any litigation, investigation or proceeding affecting any Loan Party (i) in which the amount of damages claimed and not fully covered by insurance equals or exceeds $5,000,000 (or its equivalent in another currency or currencies), or in which injunctive relief or similar relief is sought, which relief, if granted, could reasonably be expected to have a Material Adverse Effect or (ii) within four days after reporting the same to the SEC if the Borrower is required to report the same to such entity under applicable Law; (d) of the occurrence of any ERISA Event; (e) of any material change in accounting policies or financial reporting practices by the Borrower or any Subsidiary; (f) within five (5) Business Days after the date of such occurrence, (i) if any Subsidiary or other Person shall become a Material Subsidiary of the Borrower, or (ii) if the total revenues or total assets of all Non-Guarantor Subsidiaries shall at any time together exceed 20% of the total revenues or total assets, as the case may be, of the Borrower and its Restricted Subsidiaries, determined on a consolidated basis, or (iii) if any Unrestricted Subsidiary shall cease to be such or any Person shall become an Unrestricted Subsidiary, or (iv) if any Subsidiary shall become a Senior Note Guarantor; for purposes of this Section 6.03(f), the date of such an occurrence or circumstance shall be the first to occur of either the closing of a transaction that triggers such an occurrence or circumstance or the Borrower files or is required to file with the SEC a Form 8K, 10K or 10Q report or is required to deliver financial statements under Section 6.01 reflecting such an occurrence or circumstance; 50 (g) if applicable, upon the request from time to time of the Administrative Agent, of the Swap Termination Values, together with a description of the method by which such values were determined, relating to any Swap Contracts then outstanding to which the Borrower or any of its Subsidiaries is a party; (h) upon becoming aware thereof, of any labor controversy resulting in or threatening to result in, any strike, work stoppage, boycott, shutdown or other labor disruption against or involving the Borrower or any Subsidiary that would materially impact the operations of the Borrower or any Subsidiary; and (i) upon, but in no event later than ten days after, becoming aware of (i) any and all enforcement, cleanup, removal or other governmental or regulatory actions involving a potential liability in excess of $10,000,000 in the aggregate instituted, completed or threatened against the Borrower or any Subsidiary or any of their properties pursuant to any applicable Environmental Laws, (ii) all other Environmental Claims involving the Borrower or a Subsidiary with a potential liability in excess of $10,000,000 in the aggregate, and (iii) any environmental or similar condition on any real property adjoining or in the vicinity of the property of the Borrower or any Subsidiary that could reasonably be anticipated to cause such property or any part thereof to be subject to any restrictions on the ownership, occupancy, transferability or use of such property under any Environmental Laws and involving a potential liability in excess of $10,000,000 in the aggregate. Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer of the Borrower setting forth details of the occurrence referred to therein and stating what action the Borrower has taken and proposes to take with respect thereto. Each notice pursuant to Section 6.03(a) shall describe with particularity any and all provisions of this Agreement or other Loan Document that have been breached. 6.04 PAYMENT OF OBLIGATIONS. Pay and discharge as the same shall become due and payable (a) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings and adequate reserves in accordance with GAAP are being maintained by the Borrower or such Subsidiary; (b) all lawful claims which, if unpaid, would by law become a Lien upon its property; and (c) all Indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness. 6.05 PRESERVATION OF EXISTENCE, ETC. Preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization; take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except in a transaction permitted by Section 7.04 or 7.05; and preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation of which could reasonably be expected to have a Material Adverse Effect. 51 6.06 MAINTENANCE OF PROPERTIES. (a) Maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted; (b) make all necessary repairs thereto and renewals and replacements thereof except where the failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) use the standard of care typical in the industry in the operation and maintenance of its facilities. 6.07 MAINTENANCE OF INSURANCE. Maintain with financially sound and reputable insurance companies not Affiliates of the Borrower, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons. 6.08 COMPLIANCE WITH LAWS. Comply in all material respects with the requirements of all Laws applicable to it or to its business or property, except in such instances in which (i) such requirement of Law is being contested in good faith or a bona fide dispute exists with respect thereto; or (ii) the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect. 6.09 BOOKS AND RECORDS. (a) Maintain (i) proper financial records in conformity with GAAP and presented fairly in all material respects, and (ii) properly, all other books and records, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all transactions and matters involving the assets and business of the Borrower or such Subsidiary, as the case may be; and (b) maintain all books of record and accounts in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over the Borrower or such Subsidiary, as the case may be. 6.10 INSPECTION RIGHTS. Permit representatives and independent contractors of the Administrative Agent and each Lender to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants, all at the expense of the Borrower and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Borrower; provided that when an Event of Default exists the Administrative Agent or any Lender (or any of their respective representatives or independent contractors) may do any of the foregoing at the expense of the Borrower at any time during normal business hours and without advance notice. 6.11 COMPLIANCE WITH ERISA. Do, and cause each of its ERISA Affiliates to do, each of the following: (a) maintain each Plan in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state law; (b) cause each Plan which is qualified under Section 401(a) of the Code to maintain such qualification; and (c) make all required contributions to any Plan subject to Section 412 of the Code. 52 6.12 ENVIRONMENTAL LAWS. (a) The Borrower shall, and shall cause each of its Subsidiaries to, conduct its operations and keep and maintain its property in compliance in all material respects with all Environmental Laws, except to the extent that the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect. (b) Upon written request of the Administrative Agent or any Lender, the Borrower shall submit and cause each of its Subsidiaries to submit, to the Administrative Agent and such Lender, at the Borrower's sole cost and expense and at reasonable intervals, a report providing an update of the status of any environmental, health or safety compliance, hazard or liability issue identified in any notice or report required pursuant to Section 6.03(i) and any other environmental, health or safety compliance obligation, remedial obligation or liability, that could, individually or in the aggregate, result in liability in excess of $5,000,000. 6.13 USE OF PROCEEDS. Use the proceeds of the Credit Extensions solely for working capital and other general corporate purposes of the Borrower and its Restricted Subsidiaries not in contravention of any Law or of any Loan Document. 6.14 TAX CLEARANCE CERTIFICATES. On or before the date that is 30 calendar days following the Closing Date, the Borrower shall provide to the Administrative Agent all tax clearance certificates not delivered to the Administrative Agent under Section 4.01(a)(iv) and permitted by such section to be delivered under this Section 6.14; provided that, if the Borrower is unable to deliver any such certificate by virtue of a delay in the ability of any applicable Governmental Authority to provide such certificate in the ordinary course (and not by virtue of any Loan Party not being in tax good standing) and the Borrower has provided to the Administrative Agent reasonable evidence of such inability, then the Borrower shall have such additional time to deliver such certificate(s) as the Administrative Agent shall reasonably determine. ARTICLE VII. NEGATIVE COVENANTS So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, the Borrower shall not, nor shall it permit any Restricted Subsidiary (or, in the case of Sections 7.08, 7.09, and 7.10, permit any Subsidiary) to, directly or indirectly: 7.01 LIENS. Create, incur, assume or suffer to exist, any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, other than the following. (a) Liens pursuant to any Loan Document; (b) Liens existing on the date hereof and listed on Schedule 7.01 and any renewals or extensions thereof, provided that the property covered thereby is not increased and any renewal or extension of the obligations secured or benefited thereby is permitted by Section 7.03(b); 53 (c) Liens for taxes not yet due or which are being contested in good faith and by appropriate proceedings, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP; (d) carriers', landlords', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the Ordinary Course of Business in respect of the Borrower and its Restricted Subsidiaries, which are not overdue for a period of more than 30 days or which are being contested in good faith and by appropriate proceedings, if adequate reserves with respect thereto are maintained on the books of the applicable Person; (e) pledges or deposits in the Ordinary Course of Business in connection with obligations of the Borrower or its Restricted Subsidiaries arising under workers' compensation, unemployment insurance and other social security legislation, other than any Lien imposed by ERISA; (f) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case, incurred by the Borrower or its Restricted Subsidiaries in the Ordinary Course of Business, provided that all such deposits in the aggregate could not reasonably be expected to result in a Material Adverse Effect; (g) easements, rights-of-way, restrictions and other similar encumbrances affecting real property which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person; (h) Liens securing or arising from judgments, decrees or attachments in respect of the Borrower and its Restricted Subsidiaries, in circumstances not constituting an Event of Default under Section 8.01(h); (i) Liens securing Indebtedness of the Borrower or its Restricted Subsidiaries permitted under Section 7.03(d), provided that (i) such Liens do not at any time encumber any property other than the property financed by such Indebtedness; (ii) such Liens attach to the subject property within 30 days after the acquisition thereof and (iii) the Indebtedness secured thereby does not exceed the cost or fair market value, whichever is lower, of the property being acquired on the date of acquisition; or Liens on assets of any Project Debt Entity securing Indebtedness of such entity permitted under Section 7.03(i); (j) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods by the Borrower or its Restricted Subsidiaries; (k) Liens securing reimbursement obligations of the Borrower or its Restricted Subsidiaries with respect to commercial letters of credit obtained in the Ordinary Course of Business and not prohibited hereby, provided that such Liens shall attach only to documents or other property relating to such letters of credit and products and proceeds thereof; 54 (l) Liens arising solely by virtue of any statutory or common law provision relating to banker's liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depository institution, provided that (i) such deposit account is not a dedicated cash collateral account and is not subject to restrictions against access by the Borrower in excess of those set forth by regulations promulgated by the FRB, and (ii) such deposit account is not intended by the Borrower or any Subsidiary to provide collateral to the depository institution; and (m) Liens not otherwise permitted hereunder securing Indebtedness not in excess of $10,000,000 at any time. 7.02 INVESTMENTS. Make any Investments, except: (a) Investments, other than those permitted by subsections (b) through (j), that are existing on the date hereof and listed on Schedule 7.02(a); (b) Investments held by the Borrower or any of its Restricted Subsidiaries (i) in the form of cash and cash equivalents, and (ii) Investments permitted under the Borrower's investment policy attached hereto as Schedule 7.02(b), other than Investments of any type requiring any special or further approval under such policy; (c) Investments consisting of extensions of credit by the Borrower to any of its wholly-owned Restricted Subsidiaries, or by any of its wholly-owned Restricted Subsidiaries to the Borrower or to another of its wholly-owned Restricted Subsidiaries; (d) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the sale or lease of goods or services in the Ordinary Course of Business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss; (e) Guaranty Obligations permitted by Section 7.03; (f) Investments resulting by virtue of transactions otherwise permitted by Section 7.07; (g) Investments (including Construction JV Investments) by any Land Development Company, or any Subsidiary thereof, in an aggregate amount not to exceed for all such Investments and entities together at any time, $25,000,000; (h) Investments in the equity of any Restricted Subsidiary, or the capital stock, assets, obligations or other securities of or interests in any other Person (other than an Unrestricted Subsidiary); in an aggregate amount for all such Investments together not to exceed at any time $100,000,000; (i) Construction JV Investments arising in the Ordinary Course of Business in an aggregate amount for all such Investments together not to exceed at any time $100,000,000; and (j) Investments in Unrestricted Subsidiaries existing on the Closing Date and set forth on Schedule 7.02(j), and additional equity Investments in Unrestricted Subsidiaries entered into or 55 incurred after the Closing Date not to exceed in the aggregate for all such additional equity Investments the lesser of (i) $35,000,000 and (ii) the minimum amount required in order to increase the Borrower's share of total outstanding equity securities of Wilder from the level existing on the Closing Date to 100%. 7.03 INDEBTEDNESS. Create, incur, assume or suffer to exist any Indebtedness, except: (a) Indebtedness under the Loan Documents; (b) Indebtedness of the Borrower and its Restricted Subsidiaries outstanding on the date hereof and listed on Schedule 7.03 and any refinancings, refundings, renewals or extensions thereof, provided that the amount of such Indebtedness is not increased at the time of such refinancing, refunding, renewal or extension except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with such refinancing and by an amount equal to any existing commitments unutilized thereunder; (c) obligations (contingent or otherwise) of the Borrower or any Restricted Subsidiary existing or arising under any Swap Contract entered into by such Person, provided that (i) such obligations are (or were) entered into by such Person in the Ordinary Course of Business for the purpose of directly mitigating risks associated with liabilities, commitments, investments, assets, or property held or reasonably anticipated by such Person, or changes in the value of securities issued by such Person and not for purposes of speculation or taking a "market view;" and (ii) such Swap Contract does not contain any provision exonerating the non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party; (d) Indebtedness in respect of capital leases, Synthetic Lease Obligations and purchase money Indebtedness for fixed or capital assets acquired by the Borrower or any Restricted Subsidiary; provided that the aggregate principal amount of (i) all purchase money Indebtedness for fixed or capital assets that may be incurred by the Borrower or any of its then-existing Restricted Subsidiaries in any fiscal year of the Borrower shall not exceed $15,000,000; (ii) all Indebtedness in respect of capital leases and Synthetic Lease Obligations to finance the acquisition of fixed or capital assets incurred by the Borrower or any of its Restricted Subsidiaries in any fiscal year of the Borrower shall not exceed $15,000,000; and (iii) all Indebtedness in respect of capital leases, Synthetic Lease Obligations and purchase money Indebtedness for fixed or capital assets of Persons immediately prior to such Persons becoming Restricted Subsidiaries or being merged with or into (or otherwise becoming acquired by) the Borrower or any of its Restricted Subsidiaries following the Closing Date shall not exceed an amount equal to $40,000,000; provided that none of such Indebtedness was incurred in anticipation of any such merger or acquisition; (e) Indebtedness arising as a consequence of Investments permitted pursuant to Section 7.02(c); (f) Indebtedness in respect of (i) letters of credit (other than Letters of Credit) issued solely for the account and benefit of the Borrower or any Restricted Subsidiary in the Ordinary Course of Business in an aggregate outstanding amount not to exceed at any time an amount equal to $25,000,000; and (ii) the obligation of a subcontractor of the Borrower or its Restricted 56 Subsidiaries on a construction project, provided that the Borrower or such Subsidiary determines in good faith that such financial arrangement best serves the Borrower's or such Subsidiary's financial interests; (g) Indebtedness incurred in the Ordinary Course of Business in connection with (i) securing the performance of bids, trade contracts (other than for borrowed money), and statutory obligations, in each case, solely for the account and benefit of the Borrower, its Subsidiaries, any GLC Venture or Construction JV, (ii) obligations on surety and appeal bonds solely for the account and benefit of the Borrower, its Subsidiaries, any GLC Venture or Construction JV, (other than in relation to borrowed money debt), and (iii) other obligations of a like nature incurred in the Ordinary Course of Business solely for the account and benefit of the Borrower, its Subsidiaries, any GLC Venture or Construction JV, (other than in relation to borrowed money debt), in each of the foregoing cases to the extent not otherwise prohibited by the terms of any Loan Document; (h) Indebtedness (other than Guaranty Obligations as to which an Unrestricted Subsidiary is the primary obligor and other than Indebtedness incurred for the benefit of an Unrestricted Subsidiary), comprised solely of (i) the outstanding principal amount of obligations, whether current or long-term, for borrowed money and all obligations evidenced by bonds (other than performance, surety and appeal bonds), debentures, notes, loan agreements or other similar instruments, (ii) Attributable Indebtedness in respect of capital leases and Synthetic Lease Obligations, or (iii) without duplication, Guaranty Obligations (other than Guaranty Obligations as to which an Unrestricted Subsidiary is the primary obligor) with respect to Indebtedness of the types specified in the immediately preceding clauses (i) and (ii), in an aggregate principal amount outstanding not to exceed $100,000,000 at any time; provided that no such Indebtedness shall be permitted under this clause (h) if such Indebtedness represents Indebtedness of any co-joint venturer in any Joint Venture, to which the Borrower or any Subsidiary is a party, that is assumed by the Borrower or any Subsidiary, if such Indebtedness was not originally incurred by such co-joint venturer in connection with (and relate solely to) the subject Joint Venture; and (i) Project Debt. 7.04 FUNDAMENTAL CHANGES. Merge, consolidate with or into, or convey, transfer, lease or otherwise Dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person or enter into any Joint Venture, except that, so long as no Default or Event of Default exists at the time or would occur as a result thereof: (a) any Restricted Subsidiary may merge with (i) the Borrower, provided that the Borrower shall be the continuing or surviving Person, (ii) any one or more Restricted Subsidiaries, provided that, when any wholly-owned Subsidiary is merging with another Subsidiary, the wholly-owned Subsidiary shall be the continuing or surviving Person, or (iii) any other Person (other than an Unrestricted Subsidiary), provided that the Restricted Subsidiary shall be the continuing or surviving Person or immediately upon such merger, consolidation or combination, the surviving Person shall be a wholly-owned Restricted Subsidiary of the Borrower; 57 (b) any Restricted Subsidiary may sell all or substantially all of its assets (upon voluntary liquidation or otherwise), to the Borrower or to another Restricted Subsidiary; provided that if the seller in such a transaction is a wholly-owned Subsidiary, then the purchaser must either be the Borrower or a wholly-owned Subsidiary; (c) the Borrower may merge, consolidate or combine with another entity if the Borrower is the corporation surviving the merger; and (d) the Borrower and its Restricted Subsidiaries may enter into any GLC Venture or Construction JV in the Ordinary Course of Business, subject to compliance with all other terms and provisions hereof. 7.05 DISPOSITIONS. Sell, lease or make any Disposition or enter into any agreement to make any Disposition, except: (a) Dispositions of obsolete or worn out property, whether now owned or hereafter acquired, in the Ordinary Course of Business to Persons; (b) Dispositions of inventory in the Ordinary Course of Business; (c) Dispositions of equipment or real property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property for use in the Ordinary Course of Business, (ii) the proceeds of such Disposition are reasonably promptly applied to the purchase price of such replacement property for use in the Ordinary Course of Business or (iii) the board of directors or senior management of the Borrower or such Subsidiary has determined in good faith that the failure to replace such property will not be detrimental to the business of the Borrower or such Subsidiary; (d) Dispositions of property by any Restricted Subsidiary to the Borrower or to a wholly-owned Restricted Subsidiary of the Borrower; (e) Dispositions comprising transactions expressly permitted by Section 7.04(a) through (d); (f) non-exclusive licenses of IP Rights in the Ordinary Course of Business and substantially consistent with past practice for terms not exceeding five years; and (g) other Dispositions to Persons other than an Unrestricted Subsidiary of property (other than accounts and notes receivable) not described in subsections (a) through (f) of this Section 7.05; provided (i) no Default or Event of Default exists at the time or would occur as a result thereof, and (ii) the aggregate consideration from such Dispositions received by the Borrower and its Restricted Subsidiaries, including aggregate cash received and the aggregate fair market value of non-cash property received, shall not exceed 5% of the total assets of the Borrower and its Restricted Subsidiaries (determined on a consolidated basis in accordance with GAAP) as of the end of the Borrower's most recently ended fiscal year; provided that any Disposition pursuant to subsections (a) through (g) of this Section 7.05 shall be for fair market value. 58 7.06 LEASE OBLIGATIONS. Create or suffer to exist any obligations for the payment of rent for any property under lease or agreement to lease, except: (a) leases in existence on the date hereof and listed on Schedule 7.06, and any renewal, extension or refinancing thereof; (b) operating leases (other than those constituting Synthetic Lease Obligations) entered into or assumed by the Borrower or any Restricted Subsidiary after the date hereof in the Ordinary Course of Business with or from Persons other than an Unrestricted Subsidiary; (c) leases in connection with any sale-leaseback arrangement entered into with any Person other than an Unrestricted Subsidiary and otherwise permitted hereby; and (d) capital leases and Synthetic Lease Obligations entered into with any Person other than an Unrestricted Subsidiary and to the extent permitted by Section 7.03(d). 7.07 RESTRICTED PAYMENTS. Declare or make, directly or indirectly, any Restricted Payment (including, but not limited to, dividends, redemptions and repurchases of common stock), or incur any obligation (contingent or otherwise) to do so, except that: (a) each Subsidiary may make Restricted Payments to the Borrower and to wholly-owned Restricted Subsidiaries (and, in the case of a Restricted Payment by a non-wholly-owned Subsidiary, to the Borrower and any Restricted Subsidiary and to each other owner (other than an Unrestricted Subsidiary) of capital stock of such Subsidiary on a pro rata basis based on their relative ownership interests); (b) the Borrower and each Subsidiary may declare and make dividend payments or other distributions payable solely in the common stock of such Person; (c) so long as no Default or Event of Default exists or would result by virtue thereof, the Borrower and each Subsidiary may purchase, redeem or otherwise acquire shares of its common stock or warrants or options to acquire any such shares with the proceeds received from the substantially concurrent issue of new shares of its common stock; (d) so long as no Default or Event of Default exists or would result by virtue thereof, the Borrower may purchase, redeem or otherwise acquire shares of common stock for cash in order to contribute such shares to the Borrower's employee stock ownership plan, provided the aggregate amount paid by the Borrower in connection with such transactions does not exceed in any fiscal year an amount equal to 15% of plan compensation (as such term is interpreted for purposes of Section 401(a)(17) of the Code) paid by the Borrower in such fiscal year, and such shares are promptly so contributed; (e) so long as no Default or Event of Default exists or would result by virtue thereof, the Borrower may purchase, redeem or otherwise acquire, other than, directly or indirectly, from an Unrestricted Subsidiary shares of its capital stock, or warrants, rights or options to acquire any such shares for cash in an aggregate amount not to exceed $50,000,000 computed on a cumulative basis during the term of this Agreement; and 59 (f) so long as no Default or Event of Default exists or would result by virtue thereof, the Borrower may declare and make dividend payments in cash. 7.08 ERISA. At any time engage in a transaction which could be subject to Section 4069 or 4212(c) of ERISA, or permit any Plan to (a) engage in any non-exempt "prohibited transaction" (as defined in Section 4975 of the Code); (b) fail to comply with ERISA or any other applicable Laws; or (c) incur any material "accumulated funding deficiency" (as defined in Section 302 of ERISA), which, with respect to each event listed above, could reasonably be expected to have a Material Adverse Effect. 7.09 CHANGE IN NATURE OF BUSINESS OR IN STRUCTURE. (a) Engage in any material line of business substantially different from those lines of business conducted by the Borrower and its Restricted Subsidiaries on the date hereof; (b) Except as otherwise permitted under Section 7.04, make any change in the Borrower's capital structure (including in the terms of its outstanding capital stock) or amend its certificate of incorporation or bylaws if, as a result, there would be a reasonable likelihood of the occurrence of a Material Adverse Effect; or (c) Engage in any transaction not in the Ordinary Course of Business with any Unrestricted Subsidiary. 7.10 TRANSACTIONS WITH AFFILIATES. Enter into any transaction of any kind with any Affiliate of the Borrower, other than arm's-length transactions with Affiliates that are otherwise permitted hereunder. 7.11 BURDENSOME AGREEMENTS. (a) Restricted Payment Prohibitions. Enter into, assume or suffer to exist any Contractual Obligation that limits the ability of any Restricted Subsidiary to make Restricted Payments to the Borrower or to otherwise transfer property to the Borrower; (b) Employment Contracts. Enter into, assume or suffer to exist any employment contracts or other arrangements with officers, directors or employees having terms, including salaries, benefits and other compensation, that differs in any material respect from those previously entered into by it in the Ordinary Course of Business; or (c) Other Negative Pledges. Enter into, assume or otherwise become subject to any Contractual Obligation that directly or indirectly prohibits the Borrower or any of its Restricted Subsidiaries from granting any Lien on property or assets of such Persons, provided that the Borrower and its Restricted Subsidiaries may enter into, assume or otherwise become subject to any such Contractual Obligation solely to the extent (i) incurred pursuant to the acquisition by such Persons of businesses, properties or assets of other Persons otherwise permitted hereunder if such restrictions affect only such businesses, assets and property so acquired, and are not entered into in contemplation of such acquisition, (ii) pursuant to a transaction creating Liens permitted by Section 7.01(i), provided such restriction is limited to the assets or properties subject to such Liens, or (iii) incurred pursuant to the issuance of senior notes otherwise permitted hereunder 60 pursuant to any note purchase agreement containing negative pledge provisions not more restrictive than that certain Note Purchase Agreement dated as of May 1, 2001, by and among the Borrower and the purchasers named therein in respect of $75,000,000 6.96% Senior Notes due May 1, 2013. 7.12 USE OF PROCEEDS. Use the proceeds of any Credit Extension, whether directly or indirectly, and whether immediately, incidentally or ultimately, (a) to purchase or carry margin stock (within the meaning of Regulation U of the FRB), to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose, or to acquire any security in any transaction that is subject to Section 13 or 14 of the Exchange Act, or (b) for the benefit of an Unrestricted Subsidiary. 7.13 FINANCIAL COVENANTS. (a) Consolidated Tangible Net Worth. Permit Consolidated Tangible Net Worth at any time to be less than the sum of (a) an amount equal to 85% of the Consolidated Tangible Net Worth as of date of the Audited Financial Statements plus (b) an amount equal to 50% of the Consolidated Net Income earned in each fiscal quarter ending after the date of the Audited Financial Statements (with no deduction for a net loss in any such fiscal quarter) plus (c) an amount equal to 50% of the aggregate increases in Consolidated Stockholders' Equity after such date by reason of the issuance and sale of capital stock of the Borrower. (b) Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage Ratio, as of the last day of any fiscal quarter of the Borrower, to be less than 1.50 to 1.00. (c) Leverage Ratio. Permit the Leverage Ratio as of the last day of any fiscal quarter of the Borrower to be greater than 0.55 to 1.00. 7.14 UNRESTRICTED SUBSIDIARY MATTERS. (a) Enter into, assume or otherwise become subject to any Contractual Obligation pursuant to which cash, deposit balances or investments of the Borrower or any of its Restricted Subsidiaries are pooled or otherwise commingled with similar assets of any Unrestricted Subsidiary. (b) Permit any employee stock option plan or employee stock purchase plan of the Borrower to extend to employees of any Unrestricted Subsidiary, other than on the same terms and conditions as made available to employees of comparable position and seniority of the Borrower and Subsidiaries other than Unrestricted Subsidiaries. (c) Permit any Unrestricted Subsidiary directly or indirectly to own capital stock in the Borrower. ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES 8.01 EVENTS OF DEFAULT. Any of the following shall constitute an "Event of Default": (a) Non-Payment. The Borrower fails to pay (i) when and as required to be paid herein, any amount of principal of any Loan or any L/C Obligation, or (ii) within three (3) Business 61 Days after the same becomes due, any interest on any Loan or on any L/C Obligation, any commitment, utilization or other fee due hereunder, or any other amount payable hereunder or under any other Loan Document; or (b) Specific Covenants. The Borrower fails to perform or observe any term, covenant or agreement contained in any of Section 6.01, 6.02, 6.03, 6.05, 6.10, 6.12, 6.13 or 6.14, or Article VII; or (c) Other Defaults. Any Loan Party fails to perform or observe any other covenant or agreement (not specified in subsection (a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for 30 days; or (d) Representations and Warranties. Any representation or warranty made or deemed made by the Borrower or any other Loan Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith proves to have been incorrect when made or deemed made; or (e) Cross-Default. (i) The Borrower, any Material Subsidiary, any Material Unrestricted Subsidiary, or any Guarantor (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or Guaranty Obligation (other than Indebtedness hereunder and Indebtedness under Swap Contracts) having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than $5,000,000, or (B) fails to observe or perform any other agreement or condition relating to any such Indebtedness or Guaranty Obligation or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such Guaranty Obligation (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased or redeemed (automatically or otherwise) prior to its stated maturity, or such Guaranty Obligation to become payable or cash collateral in respect thereof to be demanded; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which the Borrower or any Material Subsidiary or any Guarantor is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which the Borrower, any Material Subsidiary, any Material Unrestricted Subsidiary or any Guarantor is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by such Person as a result thereof is greater than $5,000,000; or (f) Insolvency Proceedings, Etc. Any Loan Party or any of its Subsidiaries institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for 60 calendar days; or any proceeding 62 under any Debtor Relief Law relating to any such Person or to all or any part of its property is instituted without the consent of such Person and continues undismissed or unstayed for 60 calendar days, or an order for relief is entered in any such proceeding; or (g) Inability to Pay Debts; Attachment. (i) Any Loan Party or any of its Subsidiaries becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within 30 days after its issue or levy; or (h) Judgments. There is entered against any Loan Party or any Subsidiary (i) a final judgment or order for the payment of money in an aggregate amount exceeding $5,000,000 (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage), or (ii) any non-monetary final judgment that has, or could reasonably be expected to have, a Material Adverse Effect and, in either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of 10 consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or (i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of the Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of $5,000,000, or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of the $5,000,000; or (j) Invalidity of Loan Documents. Any Loan Document, at any time after its execution and delivery and for any reason other than the agreement of all the Lenders or satisfaction in full of all the Obligations, ceases to be in full force and effect, or is declared by a court of competent jurisdiction to be null and void, invalid or unenforceable in any respect; or any Loan Party denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any Loan Document; or (k) Loss of Material Licenses, Permits or Intellectual Property. Any Governmental Authority revokes or fails to renew any material license, permit or franchise of the Borrower or any of its Subsidiaries, or the Borrower or any of its Subsidiaries for any reason loses any material license, permit or franchise, or the Borrower or any of its Subsidiaries suffers the imposition of any restraining order, escrow, suspension or impound of funds in connection with any proceeding (judicial or administrative) with respect to any material license, permit or franchise; or (l) Change of Control. There occurs any Change of Control; or (m) Material Adverse Effect. There occurs any event or circumstance that has a Material Adverse Effect. 63 8.02 REMEDIES UPON EVENT OF DEFAULT. If any Event of Default occurs, the Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders: (a) declare the commitment of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions to be terminated, whereupon such commitments and obligation shall be terminated; (b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrower; (c) require that the Borrower Cash Collateralize the L/C Obligations (in an amount equal to the then Outstanding Amount thereof); and (d) exercise on behalf of itself and the Lenders all rights and remedies available to it and the Lenders under the Loan Documents or applicable law; provided that, upon the occurrence of any event specified in subsection (f) of Section 8.01, the obligation of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable, the obligation of the Borrower to Cash Collateralize the L/C Obligations as aforesaid shall automatically become effective, all payment obligations under the Guaranty of each Guarantor shall automatically become due and payable, in each case without further act of the Administrative Agent or any Lender. ARTICLE IX. ADMINISTRATIVE AGENT 9.01 APPOINTMENT AND AUTHORIZATION OF ADMINISTRATIVE AGENT. (a) Each Lender hereby irrevocably appoints, designates and authorizes the Administrative Agent to take such action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary contained elsewhere herein or in any other Loan Document, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall the Administrative Agent have or be deemed to have any fiduciary relationship with any Lender or participant, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Administrative Agent. Without limiting the generality of the foregoing sentence, the use of the term "agent" herein and in the other Loan Documents with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market 64 custom, and is intended to create or reflect only an administrative relationship between independent contracting parties. (b) The L/C Issuer shall act on behalf of the Lenders with respect to any Letters of Credit issued by it and the documents associated therewith until such time (and except for so long) as the Administrative Agent may agree at the request of the Required Lenders to act for the L/C Issuer with respect thereto; provided that the L/C Issuer shall have all of the benefits and immunities (i) provided to the Administrative Agent in this Article IX with respect to any acts taken or omissions suffered by the L/C Issuer in connection with Letters of Credit issued by it or proposed to be issued by it and the application and agreements for letters of credit pertaining to the Letters of Credit as fully as if the term "Administrative Agent" as used in this Article IX included the L/C Issuer with respect to such acts or omissions, and (ii) as additionally provided herein with respect to the L/C Issuer. 9.02 DELEGATION OF DUTIES. The Administrative Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel and other consultants or experts concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects in the absence of gross negligence or willful misconduct. 9.03 LIABILITY OF ADMINISTRATIVE AGENT. No Agent-Related Person shall (a) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct in connection with its duties expressly set forth herein), or (b) be responsible in any manner to any Lender or participant for any recital, statement, representation or warranty made by any Loan Party or any officer thereof, contained herein or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of any Loan Party or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Lender or participant to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of any Loan Party or any Affiliate thereof. 9.04 RELIANCE BY ADMINISTRATIVE AGENT. (a) The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, communication, signature, resolution, representation, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex, telephone or electronic mail message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to any Loan Party), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to take any action under any Loan Document unless it shall first receive such 65 advice or concurrence of the Required Lenders as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Required Lenders or all the Lenders, if required hereunder, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and participants. Where this Agreement expressly permits or prohibits an action unless the Required Lenders otherwise determine, the Administrative Agent shall, and in all other instances, the Administrative Agent may, but shall not be required to, initiate any solicitation for the consent or a vote of the Lenders. (b) For purposes of determining compliance with the conditions specified in Section 4.01, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter either sent by the Administrative Agent to such Lender for consent, approval, acceptance or satisfaction, or required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender. 9.05 NOTICE OF DEFAULT. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest and fees required to be paid to the Administrative Agent for the account of the Lenders, unless the Administrative Agent shall have received written notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default." The Administrative Agent will notify the Lenders of its receipt of any such notice. The Administrative Agent shall take such action with respect to such Default or Event of Default as may be directed by the Required Lenders in accordance with Article VIII; provided that unless and until the Administrative Agent has received any such direction, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable or in the best interest of the Lenders. 9.06 CREDIT DECISION; DISCLOSURE OF INFORMATION BY ADMINISTRATIVE AGENT. Each Lender acknowledges that no Agent-Related Person has made any representation or warranty to it, and that no act by the Administrative Agent hereafter taken, including any consent to and acceptance of any assignment or review of the affairs of any Loan Party or any Affiliate thereof, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender as to any matter, including whether Agent-Related Persons have disclosed material information in their possession. Each Lender represents to the Administrative Agent that it has, independently and without reliance upon any Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the Loan Parties and their respective Subsidiaries, and all applicable bank or other regulatory Laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to the Borrower and the other Loan Parties hereunder. Each Lender also represents that it will, independently and without reliance upon any Agent-Related Person and based on such documents and information as it shall deem 66 appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Borrower and the other Loan Parties. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent herein, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of any of the Loan Parties or any of their respective Affiliates which may come into the possession of any Agent-Related Person. 9.07 INDEMNIFICATION OF ADMINISTRATIVE AGENT. Whether or not the transactions contemplated hereby are consummated, the Lenders shall indemnify upon demand each Agent-Related Person (to the extent not reimbursed by or on behalf of any Loan Party and without limiting the obligation of any Loan Party to do so), pro rata, and hold harmless each Agent-Related Person from and against any and all Indemnified Liabilities incurred by it; provided that no Lender shall be liable for the payment to any Agent-Related Person of any portion of such Indemnified Liabilities determined in a final, nonappealable judgment by a court of competent jurisdiction to have been caused primarily by such Person's own gross negligence or willful misconduct; provided that no action taken in accordance with the directions of the Required Lenders shall be deemed to constitute gross negligence or willful misconduct for purposes of this Section. Without limitation of the foregoing, each Lender shall reimburse the Administrative Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including reasonable Attorney Costs and costs and expenses in connection with the use of the Internet, IntraLinks or other similar information transmission systems in connection with this Agreement) incurred by the Administrative Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein, to the extent that the Administrative Agent is not reimbursed for such expenses by or on behalf of the Borrower. The undertaking in this Section shall survive termination of the Aggregate Commitments, the payment of all Obligations hereunder and the resignation or replacement of the Administrative Agent. 9.08 ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY. Bank of America and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with each of the Loan Parties and their respective Affiliates as though Bank of America were not the Administrative Agent or the L/C Issuer hereunder and without notice to or consent of the Lenders. The Lenders acknowledge that, pursuant to such activities, Bank of America or its Affiliates may receive information regarding any Loan Party or its Affiliates (including information that may be subject to confidentiality obligations in favor of such Loan Party or such Affiliate) and acknowledge that the Administrative Agent shall be under no obligation to provide such information to them. With respect to its Loans, Bank of America shall have the same rights and powers under this Agreement as any other Lender and may 67 exercise such rights and powers as though it were not the Administrative Agent or the L/C Issuer, and the terms "Lender" and "Lenders" include Bank of America in its individual capacity. 9.09 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may resign as Administrative Agent upon 30 days prior notice to the Lenders; provided that any such resignation by Bank of America shall also constitute its resignation as L/C Issuer. If the Administrative Agent resigns under this Agreement, the Required Lenders shall appoint from among the Lenders a successor administrative agent for the Lenders which successor administrative agent shall be consented to by the Borrower at all times other than during the existence of an Event of Default (which consent of the Borrower shall not be unreasonably withheld or delayed). If no successor administrative agent is appointed prior to the effective date of the resignation of the Administrative Agent, then the Administrative Agent may appoint, after consulting with the Lenders and the Borrower, a successor administrative agent from among the Lenders. Upon the acceptance of its appointment as successor administrative agent hereunder, the Person acting as such successor administrative agent shall succeed to all the rights, powers and duties of the retiring Administrative Agent and L/C Issuer and the respective terms "Administrative Agent" and "L/C Issuer" shall mean such successor administrative agent and Letter of Credit issuer, and the retiring Administrative Agent's appointment, powers and duties as Administrative Agent shall be terminated and the retiring L/C Issuer's rights, powers and duties as such shall be terminated, without any other or further act or deed on the part of such retiring L/C Issuer or any other Lender, other than the obligation of the successor L/C Issuer to issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession. After any retiring Administrative Agent's resignation hereunder as Administrative Agent, the provisions of this Article IX and Sections 10.04 and 10.05 shall inure to such Person's benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. If no successor administrative agent has accepted appointment as Administrative Agent by the date which is 30 days following a retiring Administrative Agent's notice of resignation, the retiring Administrative Agent's resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above. 9.10 ADMINISTRATIVE AGENT MAY FILE PROOFS OF CLAIM. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan or L/C Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise (a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, L/C Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all 68 other amounts due the Lenders and the Administrative Agent under Sections 2.03(i) and (j), 2.09 and 10.04) allowed in such judicial proceeding; and (b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.08 and 10.04. Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding. ARTICLE X. GENERAL PROVISIONS 10.01 AMENDMENTS, ETC. No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by the Borrower or any other Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders and the Borrower or the applicable Loan Party, as the case may be, and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that no such amendment, waiver or consent shall, unless in writing and signed by each of the Lenders directly affected thereby and by the Borrower, and acknowledged by the Administrative Agent, do any of the following: (a) extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 8.02); (b) postpone any date fixed by this Agreement or any other Loan Document for any payment or mandatory prepayment of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any other Loan Document; (c) reduce the principal of, or the rate of interest specified herein on, any Loan or L/C Borrowing, or (subject to clause (iii) of the proviso below) any fees or other amounts payable hereunder or under any other Loan Document, or change the manner of computation of the Pricing Level Leverage Ratio that would result in a reduction of any interest rate on any Loan; provided that only the consent of the Required Lenders shall be necessary to amend the definition of "Default Rate" contained in Section 1.01 or to waive any obligation of the Borrower to pay interest at the Default Rate; 69 (d) change the percentage of the Aggregate Commitments or of the aggregate unpaid principal amount of the Loans and L/C Obligations which is required for the Lenders or any of them to take any action hereunder; (e) change the Pro Rata Share or Voting Percentage of any Lender (except for any change resulting from Section 3.06(b)); (f) amend this Section, or Section 2.12, or any provision herein providing for consent or other action by all the Lenders; or (g) release any Guarantor from the Guaranty; provided further that (i) no amendment, waiver or consent shall, unless in writing and signed by the L/C Issuer in addition to the Required Lenders or each directly-affected Lender, as the case may be, affect the rights or duties of the L/C Issuer under this Agreement or any Letter of Credit Application relating to any Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Required Lenders or each directly-affected Lender, as the case may be, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document; and (iii) the Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the respective parties thereto. Notwithstanding anything to the contrary herein, any Lender that has a Voting Percentage of zero shall not have any right to approve or disapprove any amendment, waiver or consent hereunder, except that the Pro Rata Share of such Lender may not be increased (except for any such increase resulting from Section 3.06(b)) without the consent of such Lender. 10.02 NOTICES AND OTHER COMMUNICATIONS; FACSIMILE COPIES. (a) General. Unless otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including by facsimile transmission) and mailed, faxed or delivered, to the address, facsimile number or (subject to subsection (c) below) electronic mail address specified for notices on Schedule 10.02; or, in the case of the Borrower, the Administrative Agent or the L/C Issuer, to such other address as shall be designated by such party in a notice to the other parties, and in the case of any other party, to such other address as shall be designated by such party in a notice to the Borrower, the Administrative Agent and the L/C Issuer. All such notices and other communications shall be deemed to be given or made upon the earlier to occur of (i) actual receipt by the intended recipient and (ii) (A) if delivered by hand or by courier, when signed for by the intended recipient; (B) if delivered by mail, four (4) Business Days after deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent and receipt has been confirmed by telephone; and (D) if delivered by electronic mail (which form of delivery is subject to the provisions of subsection (c) below), when delivered; provided that notices and other communications to the Administrative Agent and the L/C Issuer pursuant to Article II shall be in writing (including by facsimile) and shall not be effective until actually received by such Person. Any notice or other communication permitted to be given, made or confirmed by telephone hereunder shall be given, made or confirmed by means of a telephone call to the intended recipient at the number specified 70 on Schedule 10.02, it being understood and agreed that a voicemail message shall in no event be effective as a notice, communication or confirmation hereunder. (b) Effectiveness of Facsimile Documents and Signatures. Loan Documents may be transmitted and/or signed by facsimile. The effectiveness of any such documents and signatures shall, subject to applicable Law, have the same force and effect as manually-signed originals and shall be binding on all Loan Parties, the Administrative Agent and the Lenders. The Administrative Agent may also require that any such documents and signatures be confirmed by a manually-signed original thereof; provided that the failure to request or deliver the same shall not limit the effectiveness of any facsimile document or signature. (c) Limited Use of Electronic Mail. Electronic mail and internet and intranet websites may be used only to distribute routine communications, such as financial statements (including as required by Section 6.01 and 6.02) and other information, and to distribute Loan Documents for execution by the parties thereto, and may not be used for any other purpose. (d) Reliance by Administrative Agent and Lenders. The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices (including telephonic Loan Notices) purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Borrower shall indemnify each Agent-Related Person and each Lender from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Borrower. All telephonic notices to and other communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording. 10.03 NO WAIVER; CUMULATIVE REMEDIES. No failure by any Lender or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein or therein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 10.04 ATTORNEY COSTS, EXPENSES AND TAXES. The Borrower agrees (a) to pay or reimburse the Administrative Agent for all costs and expenses incurred in connection with the development, preparation, negotiation and execution of this Agreement and the other Loan Documents and any amendment, waiver, consent or other modification of the provisions hereof and thereof (whether or not the transactions contemplated hereby or thereby are consummated), and the consummation and administration of the transactions contemplated hereby and thereby, including all reasonable Attorney Costs (including non-duplicative allocated costs of in-house counsel) and costs and expenses in connection with the use of internet, IntraLinks or other similar information transmission systems in connection with this Agreement, and (b) to pay or reimburse the Administrative Agent, the Arranger and each Lender for all costs and expenses (including Attorney Costs) incurred in connection with the enforcement, attempted enforcement, or preservation of any rights or remedies under this Agreement, the other Loan Documents or 71 applicable Law (including all such costs and expenses incurred during any "workout" or restructuring in respect of the Obligations and during any legal proceeding, including any proceeding under any Debtor Relief Law). The foregoing costs and expenses shall include all search, filing, recording, title insurance and appraisal charges and fees and taxes related thereto, and other out-of-pocket expenses incurred by the Administrative Agent and the cost of independent public accountants and other outside experts retained by the Administrative Agent or any Lender. All amounts due under this Section 10.04 shall be paid within ten Business Days after demand therefor. The agreements in this Section shall survive the termination of the Aggregate Commitments and repayment of all other Obligations. 10.05 INDEMNIFICATION BY THE BORROWER. Whether or not the transactions contemplated hereby are consummated, the Borrower agrees to indemnify, save and hold harmless, each Agent-Related Person, each Lender and their respective Affiliates, directors, officers, employees, counsel, agents and attorneys-in-fact (collectively the "Indemnitees") from and against: (a) any and all claims, demands, actions or causes of action that are asserted against any Indemnitee by any Person (other than the Administrative Agent or any Lender) relating directly or indirectly to a claim, demand, action or cause of action that such Person asserts or may assert against any Loan Party, any Affiliate of any Loan Party or any of their respective officers or directors arising out of or relating to the Loan Documents, any predecessor loan documents, any Commitment, the use or contemplated use of the proceeds of any Credit Extension, or the relationship of any Loan Party, the Administrative Agent and the Lenders under this Agreement or any other Loan Document, (b) any and all claims, demands, actions or causes of action that may at any time (including at any time following repayment of the Obligations and the resignation or removal of the Administrative Agent or the replacement of any Lender) be asserted or imposed against any Indemnitee arising out of or relating to the Loan Documents, any predecessor loan documents, any Commitment, the use or contemplated use of the proceeds of any Credit Extension, or the relationship of any Loan Party, the Administrative Agent and the Lenders under this Agreement or any other Loan Document; (c) any administrative or investigative proceeding by any Governmental Authority arising out of or related to a claim, demand, action or cause of action described in subsection (a) or (b) above; and (d) any and all liabilities (including liabilities under indemnities), losses, costs or expenses (including Attorney Costs) that any Indemnitee suffers or incurs as a result of the assertion of any foregoing claim, demand, action, cause of action or proceeding, or as a result of the preparation of any defense in connection with any foregoing claim, demand, action, cause of action or proceeding, in all cases, whether or not arising out of the negligence of an Indemnitee, and whether or not an Indemnitee is a party to such claim, demand, action, cause of action or proceeding (all the foregoing, collectively, the "Indemnified Liabilities"); provided that no Indemnitee shall be entitled to indemnification for any claim determined in a final, nonappealable judgment by a court of competent jurisdiction to have been caused primarily by its own gross negligence or willful misconduct or for any loss asserted against it by another Indemnitee. No Indemnitee shall be liable for any damages arising from the use by others of any information or other materials obtained through internet, IntraLinks or other similar information transmission systems in connection with this Agreement. All amounts due under this Section 10.05 shall be paid within ten Business Days after demand therefor. The agreements in this Section shall survive the termination of the Aggregate Commitments and repayment of all other Obligations. 72 10.06 PAYMENTS SET ASIDE. To the extent that the Borrower makes a payment to the Administrative Agent or any Lender, or the Administrative Agent or any Lender exercises its right of set-off, and such payment or the proceeds of such set-off or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such set-off had not occurred, and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its applicable share of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect. 10.07 SUCCESSORS AND ASSIGNS. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby and, to the extent expressly contemplated hereby, the Indemnitees) any legal or equitable right, remedy or claim under or by reason of this Agreement. (b) Any Lender may, with the prior written consent of the Administrative Agent and, so long as no Default or Event of Default has occurred and is continuing, the Borrower (whose consent, if required, shall not be unreasonably withheld or delayed), assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans (including for purposes of this subsection (b), participations in L/C Obligations) at the time owing to it); provided that (i) except in the case of an assignment of the entire remaining amount of the assigning Lender's Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender or an Affiliate of a Lender or an Approved Fund with respect to a Lender, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding hereunder) subject to each such assignment, determined as of the date the Assignment and Assumption Agreement with respect to such assignment is delivered to the Administrative Agent, shall not be less than $5,000,000 unless the Administrative Agent and, so long as no Default or Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed), (ii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender's rights and obligations under this Agreement with respect to the Loans or the Commitment assigned and (iii) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption Agreement and shall pay to the Administrative Agent a processing and recordation fee in an amount equal to $3,500. Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption 73 Agreement, the Eligible Assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption Agreement, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption Agreement, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption Agreement covering all of the assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Article III and Sections 10.04 and 10.05). Upon request, the Borrower (at its expense) shall execute and deliver new or replacement Notes to the assigning Lender and the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section. (c) The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at the Administrative Agent's Office a copy of each Assignment and Assumption Agreement delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amount of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the "Register"). The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice. (d) Any Lender may, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to one or more banks or other Persons (a "Participant") in all or a portion of such Lender's rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or Loans (including such Lender's participations in L/C Obligations) owing to it); provided that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification that would (i) postpone any date upon which any payment of money is scheduled to be paid to such Participant, (ii) reduce the principal, interest, fees or other amounts payable to such Participant or (iii) release any Guarantor from the Guaranty. Subject to subsection (e) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.09 as though it were a Lender, provided such Participant agrees to be subject to Section 2.12 as though it were a Lender. 74 (e) A Participant shall not be entitled to receive any greater payment under Section 3.01 or 3.04 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower's prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 3.01 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 10.15 as though it were a Lender. (f) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Notes, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto. (g) If the consent of the Borrower to an assignment or to an Eligible Assignee is required hereunder (including a consent to an assignment which does not meet the minimum assignment threshold specified in clause (i) of the proviso to the first sentence of Section 10.07(b)), the Borrower shall be deemed to have given its consent five (5) Business Days after the date notice thereof has been delivered by the assigning Lender (through the Administrative Agent) unless such consent is expressly refused by the Borrower prior to such fifth (5th) Business Day. (h) As used herein, the following terms have the following meanings: "Approved Fund" means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender. "Eligible Assignee" means (a) a Lender; (b) an Affiliate of a Lender; (c) an Approved Fund; and (d) any other Person (other than a natural Person) approved by (i) the Administrative Agent, in the case of any assignment of a Loan, (ii) the L/C Issuer, and (iii) unless (A) such Person is taking delivery of an assignment in connection with physical settlement of a credit derivatives transaction or (B) an Event of Default has occurred and is continuing, the Borrower (each such approval referred to in clauses (i) through (iii) not to be unreasonably withheld or delayed). "Fund" means any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business. (i) Notwithstanding anything to the contrary contained herein, if at any time Bank of America assigns all of its Commitment and Loans pursuant to subsection (b) above, Bank of America may, upon 30 days prior written notice to the Borrower and the Lenders, resign as L/C Issuer. In the event of any such resignation as L/C Issuer, the Borrower shall be entitled to appoint from among the Lenders a successor L/C Issuer hereunder, provided that no failure by the Borrower to appoint any such successor shall affect the resignation of Bank of America as L/C Issuer. Bank of America shall retain all of the rights and obligations of the L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its 75 resignation as L/C Issuer and all L/C Obligations with respect thereto (including the right to require the Lenders to make Base Rate Loans or fund participations in Unreimbursed Amounts pursuant to Section 2.03(c)). Until such time, if at all, as Bank of America shall have resigned as "L/C Issuer" hereunder, no other Person shall be, shall be entitled to be or shall be deemed to be an "L/C Issuer" or additional or co- "L/C Issuer" hereunder. 10.08 CONFIDENTIALITY. Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates' directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential); (b) to the extent requested by any regulatory authority; (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process; (d) to any other party to this Agreement; (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder; (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any Eligible Assignee of or Participant in, or any prospective Eligible Assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any direct or indirect contractual counterparty or prospective counterparty (or such contractual counterparty's or prospective counterparty's professional advisor) to any credit derivative or securitization transaction relating to obligations of the Borrower; (g) with the consent of the Borrower; (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent or any Lender on a non-confidential basis from a source other than the Borrower; or (i) to the National Association of Insurance Commissioners or any other similar organization or any nationally recognized rating agency that requires access to information about a Lender's or its Affiliates' investment portfolio in connection with ratings issued with respect to such Lender or its Affiliates. In addition, the Administrative Agent and the Lenders may disclose the existence of this Agreement and information about this Agreement to market data collectors, similar service providers to the lending industry, and service providers to the Administrative Agent and the Lenders in connection with the administration and management of this Agreement, the other Loan Documents, the Commitments, and the Credit Extensions. For the purposes of this Section, "Information" means all information received from the Borrower relating to the Borrower or its business, other than any such information that is available to the Administrative Agent or any Lender on a non-confidential basis prior to disclosure by the Borrower; provided that, in the case of information received from the Borrower after the date hereof, such information is clearly identified in writing at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. Notwithstanding anything herein to the contrary, "Information" shall not include, and the Administrative Agent and the Lenders may disclose without limitation of any kind, any information with respect to the "tax treatment" and "tax structure" (in each case, within the meaning of Treasury Regulation Section 1.6011-4) of the transactions contemplated hereby and all materials of any kind (including opinions or other tax analyses) that are provided to the Administrative Agent and the Lenders relating to such tax treatment and tax structure; provided 76 that with respect to any document or similar item that in either case contains information concerning the tax treatment or tax structure of the transaction as well as other information, this sentence shall only apply to such portions of the document or similar item that relate to the tax treatment or tax structure of the Loans, Letters of Credit and transactions contemplated hereby. 10.09 SET-OFF. In addition to any rights and remedies of the Lenders provided by law, upon the occurrence and during the continuance of any Event of Default, each Lender is authorized at any time and from time to time, without prior notice to the Borrower or any other Loan Party, any such notice being waived by the Borrower (on its own behalf and on behalf of each Loan Party) to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other indebtedness at any time owing by, such Lender to or for the credit or the account of the respective Loan Parties against any and all Obligations owing to such Lender, now or hereafter existing, irrespective of whether or not the Administrative Agent or such Lender shall have made demand under this Agreement or any other Loan Document and although such Obligations may be contingent or unmatured. Each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such set-off and application made by such Lender; provided that the failure to give such notice shall not affect the validity of such set-off and application. 10.10 INTEREST RATE LIMITATION. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the "Maximum Rate"). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations. 10.11 COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 10.12 INTEGRATION. This Agreement, together with the other Loan Documents, comprises the complete and integrated agreement of the parties on the subject matter hereof and thereof and supersedes all prior agreements, written or oral, on such subject matter. In the event of any conflict between the provisions of this Agreement and those of any other Loan Document, the provisions of this Agreement shall control; provided that the inclusion of supplemental rights or remedies in favor of the Administrative Agent or the Lenders in any other Loan Document shall not be deemed a conflict with this Agreement. Each Loan Document was drafted with the joint participation of the respective parties thereto and shall be construed neither against nor in favor of any party, but rather in accordance with the fair meaning thereof. 77 10.13 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default or Event of Default at the time of any Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding. 10.14 SEVERABILITY. Any provision of this Agreement and the other Loan Documents to which the Borrower is a party that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions thereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 10.15 FOREIGN LENDERS. (a) (i) Each Lender that is not a "United States person" within the meaning of Section 7701(a)(30) of the Code (a "Foreign Lender") shall deliver to the Administrative Agent, prior to receipt of any payment subject to withholding under the Code (or upon accepting an assignment of an interest herein), two duly signed completed copies of either IRS Form W-8BEN or any successor thereto (relating to such Foreign Lender and entitling it to an exemption from, or reduction of, withholding tax on all payments to be made to such Foreign Lender by the Borrower pursuant to this Agreement) or IRS Form W-8ECI or any successor thereto (relating to all payments to be made to such Foreign Lender by the Borrower pursuant to this Agreement) or such other evidence satisfactory to the Borrower and the Administrative Agent that such Foreign Lender is entitled to an exemption from, or reduction of, U.S. withholding tax, including any exemption pursuant to Section 881(c) of the Code. Thereafter and from time to time, each such Foreign Lender shall (A) promptly submit to the Administrative Agent such additional duly completed and signed copies of one of such forms (or such successor forms as shall be adopted from time to time by the relevant United States taxing authorities) as may then be available under then current United States laws and regulations to avoid, or such evidence as is satisfactory to the Borrower and the Administrative Agent of any available exemption from or reduction of, United States withholding taxes in respect of all payments to be made to such Foreign Lender by the Borrower pursuant to this Agreement, (B) promptly notify the Administrative Agent of any change in circumstances which would modify or render invalid any claimed exemption or reduction, and (C) take such steps as shall not be materially disadvantageous to it, in the reasonable judgment of such Lender, and as may be reasonably necessary (including the re-designation of its Lending Office) to avoid any requirement of applicable Laws that the Borrower make any deduction or withholding for taxes from amounts payable to such Foreign Lender. (ii) Each Foreign Lender, to the extent it does not act or ceases to act for its own account with respect to any portion of any sums paid or payable to such Lender 78 under any of the Loan Documents (for example, in the case of a typical participation by such Lender), shall deliver to the Administrative Agent on the date when such Foreign Lender ceases to act for its own account with respect to any portion of any such sums paid or payable, and at such other times as may be necessary in the determination of the Administrative Agent (in the reasonable exercise of its discretion), (A) two duly signed completed copies of the forms or statements required to be provided by such Lender as set forth above, to establish the portion of any such sums paid or payable with respect to which such Lender acts for its own account that is not subject to U.S. withholding tax, and (B) two duly signed completed copies of IRS Form W-8IMY (or any successor thereto), together with any information such Lender chooses to transmit with such form, and any other certificate or statement of exemption required under the Code, to establish that such Lender is not acting for its own account with respect to a portion of any such sums payable to such Lender. (iii) The Borrower shall not be required to pay any additional amount to any Foreign Lender under Section 3.01 (A) with respect to any Taxes required to be deducted or withheld on the basis of the information, certificates or statements of exemption such Lender transmits with an IRS Form W-8IMY pursuant to this Section 10.15(a) or (B) if such Lender shall have failed to satisfy the foregoing provisions of this Section 10.15(a); provided that if such Lender shall have satisfied the requirement of this Section 10.15(a) on the date such Lender became a Lender or ceased to act for its own account with respect to any payment under any of the Loan Documents, nothing in this Section 10.15(a) shall relieve the Borrower of its obligation to pay any amounts pursuant to Section 3.01 in the event that, as a result of any change in any applicable law, treaty or governmental rule, regulation or order, or any change in the interpretation, administration or application thereof, such Lender is no longer properly entitled to deliver forms, certificates or other evidence at a subsequent date establishing the fact that such Lender or other Person for the account of which such Lender receives any sums payable under any of the Loan Documents is not subject to withholding or is subject to withholding at a reduced rate. (iv) The Administrative Agent may, without reduction, withhold any Taxes required to be deducted and withheld from any payment under any of the Loan Documents with respect to which the Borrower is not required to pay additional amounts under this Section 10.15(a). (b) Upon the request of the Administrative Agent, each Lender that is a "United States person" within the meaning of Section 7701(a)(30) of the Code shall deliver to the Administrative Agent two duly signed completed copies of IRS Form W-9. If such Lender fails to deliver such forms, then the Administrative Agent may withhold from any interest payment to such Lender an amount equivalent to the applicable back-up withholding tax imposed by the Code, without reduction. (c) If any Governmental Authority asserts that the Administrative Agent did not properly withhold or backup withhold, as the case may be, any tax or other amount from payments made to or for the account of any Lender, such Lender shall indemnify the Administrative Agent therefor, including all penalties and interest, any taxes imposed by any jurisdiction on the 79 amounts payable to the Administrative Agent under this Section, and costs and expenses (including Attorney Costs) of the Administrative Agent. The obligation of the Lenders under this Section shall survive the termination of the Aggregate Commitments, repayment of all other Obligations hereunder and the resignation of the Administrative Agent. 10.16 REMOVAL AND REPLACEMENT OF LENDERS. (a) Under any circumstances set forth herein providing that the Borrower shall have the right to remove or replace a Lender as a party to this Agreement, the Borrower may, upon notice to such Lender and the Administrative Agent, (i) remove such Lender by terminating such Lender's Commitment or (ii) replace such Lender by causing such Lender to assign its Commitment (without payment of any assignment fee) pursuant to Section 10.07(b) to one or more other Lenders or Eligible Assignees procured by the Borrower; provided that if the Borrower elects to exercise such right with respect to any Lender pursuant to Section 3.06(b), it shall be obligated to remove or replace, as the case may be, all Lenders that have made similar requests for compensation pursuant to Section 3.01 or 3.04. The Borrower shall (x) pay in full all principal, interest, fees and other amounts owing to such Lender through the date of removal or replacement (including any amounts payable pursuant to Section 3.05), (y) provide appropriate assurances and indemnities (which may include letters of credit) to the L/C Issuer as each may reasonably require with respect to any continuing obligation to purchase participation interests in any L/C Obligations then outstanding, and (z) release such Lender from its obligations under the Loan Documents. Any Lender being replaced shall execute and deliver an Assignment and Assumption Agreement with respect to such Lender's Commitment and outstanding Credit Extensions. The Administrative Agent shall distribute an amended Schedule 2.01, which shall be deemed incorporated into this Agreement, to reflect changes in the identities of the Lenders and adjustments of their respective Commitments and/or Pro Rata Shares resulting from any such removal or replacement. (b) In order to make all the Lenders' interests in any outstanding Credit Extensions ratable in accordance with any revised Pro Rata Shares after giving effect to the removal or replacement of a Lender, the Borrower shall pay or prepay, if necessary, on the effective date thereof, all outstanding Loans of all Lenders, together with any amounts due under Section 3.05. The Borrower may then request Loans from the Lenders in accordance with their revised Pro Rata Shares. The Borrower may net any payments required hereunder against any funds being provided by any Lender or Eligible Assignee replacing a terminating Lender. The effect for purposes of this Agreement shall be the same as if separate transfers of funds had been made with respect thereto. (c) This section shall supersede any provision in Section 10.01 to the contrary. 10.17 GOVERNING LAW. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE ADMINISTRATIVE AGENT AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW. 80 (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA SITTING IN THE CITY AND COUNTY OF SAN FRANCISCO, CALIFORNIA OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF SUCH STATE, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO. THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE. 10.18 WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. 10.19 TIME OF THE ESSENCE. Time is of the essence as to the Loan Documents. [The remainder of this page is intentionally left blank.] 81 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first written above. GRANITE CONSTRUCTION INCORPORATED, a Delaware corporation, as the Borrower By: /s/ William G. Dorey ------------------------------------ Name: William G. Dorey Title: President By: /s/ William E. Barton ------------------------------------ Name: William E. Barton Title: Chief Financial Officer (Signature Page to Credit Agreement) S-1 BANK OF AMERICA, N.A., as Administrative Agent, as a Lender and as L/C Issuer By: /s/ Kenneth J. Beck ------------------------------------- Name: Kenneth J. Beck Title: Principal (Signature Page to Credit Agreement) S-2 UNION BANK OF CALIFORNIA, N.A., as a Lender By: /s/ William E. Hinch ------------------------------------- Name: William E. Hinch Title: Vice President (Signature Page to Credit Agreement) S-3 US BANK NATIONAL ASSOCIATION, as a Lender By: /s/ Dan Stevens ------------------------------------- Name: Dan Stevens Title: Vice President (Signature Page to Credit Agreement) S-4 WASHINGTON MUTUAL BANK, as a Lender By: /s/ Gary Perkins ------------------------------------- Name: Gary Perkins Title: Vice President (Signature Page to Credit Agreement) S-5 COMERICA BANK, as a Lender By: /s/ Elise M. Walker ------------------------------------- Name: Elise M. Walker Title: Assistant Vice President (Signature Page to Credit Agreement) S-6 HARRIS TRUST AND SAVINGS BANK, as a Lender By: /s/ Isabella Battista ------------------------------------- Name: Isabella Battista Title: Vice President (Signature Page to Credit Agreement) S-7 BNP PARIBAS, as a Lender By: /s/ Sandra F. Bertram ------------------------------------- Name: Sandra F. Bertram Title: Vice President By: /s/ Debra H. Wright ------------------------------------- Name: Debra Wright Title: Vice President (Signature Page to Credit Agreement) S-8 SCHEDULE 1.01 (e) EXISTING LETTERS OF CREDIT

L/C NO. ORIGINAL ISSUE DATE BENEFICIARY EXPIRY DATE FACE AMOUNT AS OF 06/27/03 1171 6/29/1996 State of California 3/15/2004 1,293,390.00 Self Insurance Plans

SCHEDULE 1.01 (e) Page 1 SCHEDULE 1.01(g) GUARANTORS Granite Construction Company, a California corporation Granite Land Company, a California corporation Intermountain Slurry Seal, Inc., a Wyoming corporation Pozzolan Products Company (P.P.C.) (dba Garco Testing), a Utah corporation GILC, L.P., a California limited partnership Granite Halmar Construction Company, Inc., a New York corporation SCHEDULE 1.01 (g) Page 1 SCHEDULE 2.01 COMMITMENTS AND PRO RATA SHARES

LENDER COMMITMENT PRO RATA SHARE Bank of America, N.A. 17,500,000 17.5% Union Bank of California 17,500,000 17.5% US Bank 15,000,000 15.0% BMO/Harris Bank 15,000,000 15.0% BNP Paribas 15,000,000 15.0% Comerica Bank 10,000,000 10.0% Washington Mutual 10,000,000 10.0% TOTAL 100,000,000 100.0%

Schedule 2.01 Page 1 SCHDULE 5.05 (c) PROJECT DEBT

INTEREST BALANCE OBLIGOR PAYEE Rate TERMS 04/30/03 Presidio Vista I, LTD Dell USA, L.P., a Texas limited 7.50% Interest only, payable semi-annually, 4,003,877 partnership principal due at 02/11/2008 Phase 1 Regional Park Limited Sacramento City Employee 7.30% 25 year amortization, balloon 09/01/2008 11,311,577 Retirement Systems Phase 1 Regional Park Limited GE Capital Business Asset Fund 8.15% 30 year amortization, balloon 09/01/2010 18,858,850 Phase 1 Regional Park Limited Northwest Mutual Life Insurance 7.25% 25 year amortization, balloon 09/01/2021 17,935,273 Phase 1 Regional Park Limited Northwest Mutual Life Insurance 6.03% 25 year amortization, balloon 09/01/2018 18,913,776 Oly/Mandalay Bay, General Granite/Mandalay Bay Finance, 20.00% Interest is deferred and paid when the 2,550,000 Partnership LLC project is sold Oly/Mandalay Bay, General Santa Barbara Bank & Trust Prime Rate + Interest only, payable semi annually, 3,850,791 Partnership 1.5% principal due at 01/01/2004 Oly/Mandalay Bay, General Oly/Granite, GP 17.00% Interest is deferred and paid when the 12,416,024 Partnership project is sold Oly/Mandalay Bay, General Oly/Granite, GP 17.00% Interest is deferred and paid when the 1,379,558 Partnership project is sold $ 91,219,726

Schedule 5.05(c) Page 1 SCHEDULE 5.06 LITIGATION

DEFENDANT NATURE OF CASE COMMENTS USA ex rel Maxfield/Peterson False Claims Act arising from I-15, Salt Lake See 12/31/02 10-K or 03/31/03 vs. Wasatch/GCCo City, UT construction contract 10-Q for more information

Schedule 5.06 Page 1 SCHEDULE 5.09 ENVIRONMENTAL MATTERS Granite Construction in the normal course of business utilizes petroleum (hydrocarbon) products which may be considered hazardous materials when encountered at regulatory levels established by the Federal EPA or the Regional State EPA. The utilization of these asphalt products, diesel, and gasoline over the years of operations have the potential of creating exposure to environmental clean up requirements. All underground tanks meet current requirements. There are no pending governmental ordered clean up requirements. However, the following represents estimates based on construction industry housekeeping practices as encountered during our normal course of business. Except as indicated with an " * ", these costs do not represent actual identified exposures. Items indicated with an " * " are carried on the books as a liability.

- ---------------------------------------------------------------------------------------------------- LOCATIONS DESCRIPTION AMOUNT - ---------------------------------------------------------------------------------------------------- Anchorage, AK Surface Spills, wash rack facilities 60,000 Anchorage, AK Surface Spills, former AC Plant 17,500 Huachuca City, AZ Surface Spills, AC Plant 15,000 Marana, AZ Surface Spills, AC Plant 15,000 Tucson, AZ Surface Spills 10,000 Tucson, AZ AC Plant 25,000 29 Palms, CA * Surface Spills, AC Plant 4,409 Arcata, CA * Surface Spills, AC Plant 236,000 Arvin, CA Surface Spills, AC Plant 25,000 Bakersfield, CA Surface Spills, AC Plant 250,000 Bishop, CA Surface Spills, AC Plant 15,000 Buelton, CA Surface Spills, AC Plant 50,000 City of Blue Lake, CA Surface Spills 40,000 Coalinga, CA Surface Spills, AC Plant 50,000 Concord, CA Surface Spills, AC Plant 35,000 Crescent City, CA * Surface Spills, AC Plant 682,836 Ducor, CA * Surface Spills, AC Plant 12,529 El Centro, CA Surface Spills, AC Plant 25,000 Felton, Ca Surface Spills, AC Plant 100,000 French Camp, CA Surface Spills, AC Plant, old fill material 500,000 Highway 175, CA * Surface Spills, AC Plant 150,000 Indio, CA Surface Spills, AC Plant 25,000 Inyokern, CA Surface Spills, AC Plant 25,000 Kelseyville, CA * Surface Spills, AC Plant 873,000 Lee Vining, CA Surface Spills, AC Plant 15,000 Littlerock, CA Surface Spills, AC Plant 25,000 Longvale, CA * Surface Spills, AC Plant 274,000 Los Banos, CA AC Plant 10,000 Pleasanton, CA AC Plant 10,000 - ----------------------------------------------------------------------------------------------------

Schedule 5.09 Page 1 Granite Construction in the normal course of business utilizes petroleum (hydrocarbon) products which may be considered hazardous materials when encountered at regulatory levels established by the Federal EPA or the Regional State EPA. The utilization of these asphalt products, diesel, and gasoline over the years of operations have the potential of creating exposure to environmental clean up requirements. All underground tanks meet current requirements. There are no pending governmental ordered clean up requirements. However, the following represents estimates based on construction industry housekeeping practices as encountered during our normal course of business. Except as indicated with an " * ", these costs do not represent actual identified exposures. Items indicated with an " * " are carried on the books as a liability.

- ----------------------------------------------------------------------------------------------------- LOCATIONS DESCRIPTION AMOUNT - ----------------------------------------------------------------------------------------------------- Rio Linda, CA Surface Spills, AC Plant 50,000 Sacramento, CA Surface Spills, AC Plant 500,000 Salinas, CA Surface Spills, AC Plant 10,000 Salinas, CA Former Underground Storage Tanks 200,000 San Jose, CA Surface Spills 10,000 Santa Barbara, CA Surface Spills 25,000 Tracy, CA Surface Spills, AC Plant 25,000 Ukiah, CA * Surface Spills, AC Plant 430,000 Watsonville, CA Surface Spills 35,000 Watsonville, CA Former Underground Storage Tanks 35,000 Tampa, FL Surface Spills 75,000 Odenton, MD Surface Spills 100,000 Carson City, NV Surface Spills, AC Plant 10,000 Lockwood, NV Surface Spills, AC Plant 50,000 Sparks, NV Surface Spills, AC Plant 100,000 Wappinger Falls, NY Surface Spills 100,000 Lubbock, TX Surface Spills, AC Plant 100,000 Lubbock, TX Surface Spills 75,000 Lubbock, TX Surface Spills 50,000 Morgan County, UT Surface Spills 10,000 North Ogden, UT Old fill material 250,000 Ogden, UT * Former Webb AC Plant 723,377 Salt City, UT * Former 2200 North AC Plant 132,363 Salt Lake City, UT AC Plant 150,000 Salt Lake City, UT Surface Spills 50,000 Salt Lake City, UT * Former Whitehill AC Plant 25,288 Sandy City, UT Surface Spills, AC Plant 100,000 Kearns, UT * Surface Spills, AC Plant 12,529 Wasatch County, UT Surface Spills, AC Plant 10,000 West Haven, UT Surface Spills, AC Plant 25,000 Bellington, WA Hannegan surface spills, AC Plant, shop 500,000 Everett, WA Surface Spills, AC Plant 100,000 Whatcom County, WA Former AC Plant 260,000 Whatcom County, WA Former UST and shop area 17,500 - ----------------------------------------------------------------------------------------------------- $7,921,331 ----------

SCHEDULE 5.13(a) PART (1) AND (2) SUBSIDIARIES AND OTHER EQUITY INVESTMENTS

JURISDICTION OF OWNERSHIP BY COMPANY AND/OR NAME ORGANIZATION CAPITAL STRUCTURE SUBSIDIARY NAME OWNERSHIP POSITION S Granite Construction International California C Corp GCI 100.00% investor S Granite Construction Company ("GCCo") California C Corp GCI 100.00% investor S Wilder Construction Company ("Wilder") Washington C Corp GCCo 60.04% investor S Wilder Realty Washington C Corp Wilder 100.00% investor S Wilder Washington Washington C Corp Wilder 100.00% investor Axton Aggregate Partnership Washington General Partnership Wilder 50.00% GP Axton Aggregate Company Washington General Partnership Wilder 50.00% GP HLA / Wilder, a Joint Venture Washington Construction Joint Venture Wilder 55.00% partner Largo Properties, LLC Maryland Limited Liability Company GCCo 33.30% member Riverside Motorsports Park, LLC California Limited Liability Company GCCo 2.50% member California Corridor Constructors, a Joint Venture California Construction Joint Venture GCCo 30.00% partner Granite Kiewit, a Joint Venture Montana Construction Joint Venture GCCo 76.00% sponsor Granite2-Sundt, a Joint Venture Arizona Construction Joint Venture GCCo 65.00% sponsor L Granite-Frontier Kemper, a Joint Venture Arkansas Construction Joint Venture GCCo 82.00% sponsor L Granite-Meyers, a Joint Venture California Construction Joint Venture GCCo 41.20% managing L Granite-PCL, a Joint Venture Florida Construction Joint Venture GCCo 64.70% sponsor Granite-Rizzani de Eccher, a Joint Venture Florida Construction Joint Venture GCCo 60.00% sponsor Granite-Sundt, a Joint Venture Arizona Construction Joint Venture GCCo 55.00% sponsor K-G Leasing, a Joint Venture California Construction Joint Venture GCCo 30.00% partner K-G-W Leasing, a Joint Venture Utah Construction Joint Venture GCCo 23.00% partner Kiewit-Granite, a Joint Venture California Construction Joint Venture GCCo 25.00% partner L Las Vegas Monorail Team, a Joint Venture Nevada Construction Joint Venture GCCo 44.80% managing LGS, a Joint Venture Construction Joint Venture GCCo 30.00% partner Minnesota Transit Constructors, a Joint Venture Minnesota Construction Joint Venture GCCo 56.50% sponsor S River Mountain Constructors, a Joint Venture Arkansas Construction Joint Venture GCCo 100.00% sponsor L Sampson-Granite, a Joint Venture California Construction Joint Venture GCCo 40.00% partner Sierra Blanca Constructors, a Joint Venture New Mexico Construction Joint Venture GCCo 52.00% sponsor TGM Constructors Kentucky Construction Joint Venture GCCo 25.00% partner Tri-County Rail Constructors, a Joint Venture Florida Construction Joint Venture GCCo 30.00% partner S Virginia Approach Constructors Maryland Construction Joint Venture GCCo 79.00% partner Wasatch Constructors, a Joint Venture Utah Construction Joint Venture GCCo 23.00% partner Washington-Granite, a Joint Venture California Construction Joint Venture GCCo 40.00% partner Western Summit-TIC-Granite, a Joint Venture Georgia Construction Joint Venture GCCo 15.00% partner WSCI TIC Granite, a Joint Venture Georgia Construction Joint Venture GCCo 15.00% partner Yonkers Contracting Company, Inc. / Granite Construction Company, a Joint Venture New Jersey Construction Joint Venture GCCo 40.00% partner S Granite Halmar Construction Company, Inc. ("GHCCo") New York C Corp GCI 100.00% investor S Halmar-Egis, a Joint Venture New York Construction Joint Venture GHCCo 100.00% partner S Halmar-Schiavone, a Joint Venture New York Construction Joint Venture GHCCo 100.00% partner Granite Halmar/Schiavone, a Joint Venture New York Construction Joint Venture GHCCo 60.00% partner GH/JMA, a Joint Venture New York Construction Joint Venture GHCCo 51.00% partner Schiavone/Granite Halmar, a Joint Venture New York Construction Joint Venture GHCCo 40.00% partner S Intermountain Slurry Seal, Inc. Wyoming C Corp GCI 100.00% investor S Pozzolan Products Company Utah C Corp GCI 100.00% investor

Schedule 5.13(a) Page 1 SCHEDULE 5.13(a) PART (1) AND (2) SUBSIDIARIES AND OTHER EQUITY INVESTMENTS

JURISDICTION OF OWNERSHIP BY COMPANY AND/OR NAME ORGANIZATION CAPITAL STRUCTURE SUBSIDIARY NAME OWNERSHIP POSITION S Granite Land Company ("GLC") California C Corp GCI 100.00% investor S GLC Fort Worth, LLC ("GLCFW, LLC") Texas Limited Liability Company GLC 100.00% GP S Presidio Vista I, LTD Texas Limited Partnership GLC 89.00% LP GLCFW, LLC 1.00% GP S Main Street Ventures, LLC California Limited Liability Company GLC 90.00% managing Granite/Mandalay Bay Finance, LLC California Limited Liability Company GLC 70.00% member Granite/Mandalay, LLC ("GM, LLC ") California Limited Liability Company GLC 90.00% member Oly/Granite General Partnership California Limited Partnership GM, LLC 10.00% LP Oly/Mandalay Bay General Partnership California Limited Partnership GM, LLC 10.00% LP Phase 1 Regional Park Limited California Limited Partnership GLC 25.00% LP Williamson Ranch Plaza, LP California Limited Partnership GLC 25.00% LP S Granite Grado Ventures, LLC ("GGV, LLC") California Limited Liability Company GLC 90.00% managing S Granite Grado Ventures Project 1, LLC California Limited Liability Company GGV,LLC 100.00% managing S GILC, Incorporated ("GILC") California C Corp GCI 100.00% investor S GILC, LP California Limited Partnership GCCo 99.00% LP GILC 1.00% GP S Wilcott Corporation Colorado C Corp GCI 100.00% investor S Granite SR 91 Corporation ("GSR91") California C Corp GCI 100.00% investor S Granite SR 91, LP ("SR91, LP") California Limited Partnership GCI 99.00% LP GSR91 1.00% GP California Private Transportation Company, LP California Limited Partnership SR91, LP 22.22% LP S GTC, Inc. ("GTC") Texas C Corp GCI 100.00% investor S GTC II, LP ("GTC, LP") Texas Limited Partnership GCI 99.00% LP GTC 1.00% GP WR II Associates, LTD Texas Limited Partnership GCI 69.88% LP GTC, LP 1.00% GP Paramount-Nevada Asphalt Company, LLC Nevada Limited Liability Company GCI 50.00% member TIC Holdings, Inc Delaware C Corp GCI 10.00% investor

S = Investments considered Subisidaries under the Credit Agreement, and reported on a GAAP consolidated basis ; all other reported under GAAP utilizing the equity method of reporting L = Granite's portion of Line-item Construction Joint Ventures which are reported on a GAAP consolidated basis SCHEDULE 5.13 (b) SENIOR NOTE GUARANTORS Granite Construction Company, a California corporation Granite Land Company, a California corporation Intermountain Slurry Seal, Inc., a Wyoming corporation Pozzolan Products Company (P.P.C.) (dba Garco Testing), a Utah corporation GILC, L.P., a California Limited Partnership Granite Halmar Construction Company, Inc., a New York corporation Schedule 5.13(b) Page 1 SCHEDULE 5.16 INTELLECTUAL PROPERTY LITIGATION/CLAIMS MATTERS NONE Schedule 5.16 Page 1 SCHEDULE 5.21 UNRESTRICTED SUBSIDIARY MATTERS 5.21(a)

CONTRACTUAL OBLIGATION PURPOSE Teaming Agreement Obligation for Granite Construction Company (70%) to enter into a Construction Joint Venture prior to August 4, 2003 with Wilder (30%), its Unrestricted Subsidiary, for the purposes of bidding the civil construction portion of the Seattle Sound Transit Rainier Valley Light Rail Link Project Teaming Agreement Obligation for Granite Construction Company (52%) to enter into a Construction Joint Venture prior to January 4, 2004, with Kiewit (33%), Skanska (10%)k and Wilder (5%), its Unrestricted Subsidiary, for the purposes of bidding the civil construction portion of the Seattle Monorail Project.

5.21(b) NONE 5.21 (c) NONE Schedule 5.21 Page 1 SCHEDULE 5.22 BURDENSOME AGREEMENTS NONE Schedule 5.22 Page 1 SCHEDULE 7.01 EXISTING LIENS

DEBTOR LIEN HOLDER PROPERTY MATURITY BALANCE May Granite construction Company Benna Investments Glendale NV property 12/01/07 1,043,652 Apr Presidio Vista I, LTD Dell USA, L.P. Project Debt - Presidio Vista 02/11/08 4,003,877 Apr Phase 1 Regional Park Limited Sacramento City Employee Project Debt - Granite 09/01/08 11,311,577 Retirement Systems Regional Park Apr Phase 1 Regional Park Limited GE Capital Business Asset Fund Project Debt - Granite 8/01/10 18,858,850 Regional Park Apr Phase 1 Regional Park Limited Northwestern Mutual Life Project Debt - Granite 03/01/21 17,935,273 Insurance Regional Park Apr Phase 1 Regional Park Limited Northwestern Mutual Life Project Debt - Granite 01/01/18 18,913,776 Insurance Regional Park Apr Oly/Mandalay Bay General Granite/Mandalay Bay Finance, Project Debt - Seabridge at sale of 2,550,000 Partnership LLC project Apr Oly/Mandalay Bay General Santa Barbara Bank & Trust Project Debt - Seabridge 01/01/04 3,850,791 Partnership Apr Oly/Mandalay Bay General Oly/Granite, GP Project Debt - Seabridge at sale of 12,416,024 Partnership project Apr Oly/Mandalay Bay General Oly/Granite, GP Project Debt - Seabridge at sale of 1,379,558 Partnership project $92,263,378

May = Balance as of 05/31/03 Apr = Balance as of 04/30/03 Schedule 7.01 Page 1 SCHEDULE 7.02 (a) EXISTING INVESTMENTS EXCEPT AS PERMITTED BY SUBSECTIONS 7.02(b) THROUGH 7.02(j) NONE Schedule 7.02(a) Page 1 SCHEDULE 7.02 (b) INVESTMENT POLICY GRANITE CONSTRUCTION INCORPORATED INVESTMENT POLICY GUIDELINES FOR WORKING CAPITAL PORTFOLIO EFFECTIVE: FEBRUARY 1, 2003 PURPOSE Within the spectrum of activities of this Corporation, it is necessary to provide a framework for the regular and continuous management of its investment funds. Short term and intermediate term investments provide earnings on excess cash while maintaining liquidity and working funds for the present and future operations. INVESTMENT OBJECTIVES In order to provide control of all investments and cash, the Corporation has established the following objectives regarding its investment policy: - - Safety - the primary objective of the investment activities of the Corporation is protection of capital. Each investment transaction shall seek to first ensure that capital losses are avoided, whether they are from securities defaults or erosion of market value. - - Liquidity - the investment portfolio must be structured in a manner that will provide sufficient liquidity to pay the obligations of the Corporation. Any excess cash above the aforementioned requirements may be invested in instruments with longer maturity. - - Diversification - the investment activity must ensure diversification of investments that minimizes risk exposure to any one security and/or issuer. - - Investment Return - the Corporation seeks to maximize the return on all investments within the constraints of safety and liquidity. DURATION The duration of the portfolio including escrows and deposits shall be consistent with the cash needs as determined by the cash forecast. Cash investments are restricted to the average duration of one (1) year from date of settlement. Any investments with longer maturity than one year must be invested in instruments issued by, guaranteed by, or insured by the U.S. Government or any of its agencies. The average portfolio duration of escrows and deposit agreements shall not exceed five (5) years. Short-term investments shall be defined as instruments maturing in ninety-one (91) days or more. MARKETABILITY Holdings should be of sufficient size and held in issues, which are traded actively (except time deposits, loan participation, and master notes) to facilitate transactions at minimum cost and accurate market valuations. Schedule 7.02(b) Page 1 TRADING The following individuals are authorized traders: Roxane C. Allbritton, Vice President/Treasurer Jigisha Desai, Director of Corporate Treasury Mary McCann-Jenni, Controller Rebecca (Becky) M. Frantti, Treasury Manager Any individual transaction conforming to the policy set forth herein or, any transaction of an Investment Manager not conforming to the respective Investment Manager's policy shall be approved by one of the following officers or, any transaction not conforming to the policy set forth herein must be approved by any two of the following officers: D. H. Watts W. E. Barton P. M. Costanzo W. G. Dorey M. E. Boitano DEALERS AND BANKS FOR TRADING The following institutions are authorized dealers: BA Securities Lehman Brothers Merrill Lynch Salomon Smith Barney All purchased investments will be delivered to Bank of New York for safekeeping and paid for upon receipt. SAFEKEEPING The banks designated as safekeeping depositories in order of choice are: Bank of New York (BNY Western Trust Company) Each financial institution must provide timely confirmation/safekeeping receipts on all investment transactions and provide monthly transaction reports. ESCROW Escrows in lieu of retention are allowed at the following: Comerica Bank* Fleet National Bank* Nevada Highway Fund (State of Nevada Treasury)* Union Bank of California US Trust of California Wachovia Securities* Zions Bank, Utah* *Required by Owner Schedule 7.02(b) Page 2 The types of investments will be guided by the terms of the escrow, but in all cases the investment will be governed by the investment policy. *Required by Owner. Banks not listed, but required by escrow agreement, will also be acceptable. REPORTING - - Daily - An investment transaction sheet, sequentially numbered will be processed for approval by an authorized offer. - - Weekly and Monthly - A portfolio will be provided to the President, Chief Operating Officer, Chief Financial Officer and all traders. - - Monthly - The fixed income portfolio will be monitored against the performance of Merrill Lynch U.S. Domestic Master 1-3 years index. - - For FASB 115 purposes, the Corporation classifies all fixed income investments as "Held to Maturity." Schedule 7.02(b) Page 3 GRANITE CONSTRUCTION INCORPORATED INVESTMENT POLICY GUIDELINES FOR WORKING CAPITAL PORTFOLIO EFFECTIVE: FEBRUARY 1, 2003

- ------------------------------------------------------------------------------------------------------------------------------------ CONCENTRATION BY CONCENTRATION BY ELIGIBLE INVESTMENTS MINIMUM CREDIT QUALITY ISSUER PORTFOLIO - ------------------------------------------------------------------------------------------------------------------------------------ Obligations issued by U.S. Government limited N/A No Maximum No Maximum to: U.S. Treasury Bills/Bonds/Notes - ------------------------------------------------------------------------------------------------------------------------------------ Obligations of agencies of the U.S. Government N/A $ 5,000,000 or 10% of 40% limited to: total portfolio Federal Farm Credit Bank (whichever is greater) Federal Home Loan Bank Federal Home Loan Mortgage Corp. Federal National Mortgage Association Student Loan Marketing Association - ------------------------------------------------------------------------------------------------------------------------------------ Obligations collateralized by U.S. Government Fully collateralized by U.S. Gov't $ 5,000,000 or 10% of 25% securities limited to: and Agency securities included in total portfolio Repurchase Agreements these guidelines. (whichever is greater) Reverse Repurchase Agreements Collateral value plus accrued interest must exceed and be maintained at level exceeding value of agreement. - ------------------------------------------------------------------------------------------------------------------------------------ Obligations issued by U.S. owned domestic Limited to Top 25 U.S. Banks by $ 5,000,000 or 10% of 50% commercial banks limited to: deposit and assets. total portfolio Banker's Acceptance Short-Term rating of A-1/P-1, or (whichever is greater) Certificate of Deposit Long-Term rating of AAA/NR or AA/Aa (at the time of purchase) - ------------------------------------------------------------------------------------------------------------------------------------ Obligations issued by U.S. bank subsidiaries Limited to Top 25 World Banks by $ 5,000,000 or 10% of 40% of Non U.S. Bank limited to: deposit and assets. total portfolio Yankee Banker's Acceptance Short-Term rating of A-1/P-1, or (whichever is greater) Yankee Certificates of Deposit Long-Term rating of AAA/NR or (all securities U.S. dollar denominated) AA/Aa (at the time of purchase) - ------------------------------------------------------------------------------------------------------------------------------------ Obligations of major U.S. corporations and U.S. Any TWO of three rating services: $5,000,000 or 10% of 75% holding companies limited to: A-1/P-1/D-1 total portfolio Commercial Paper S&P, Moody's, Duff & Phelps (whichever is greater) (at the time of purchase) Any split-rated of three rating $5,000,000 or 10% of 30% of Overall services: Commercial Paper Commercial Paper A1/P2, A2/P1 portfolio portfolio S&P, Moody's, Duff & Phelps (whichever is greater) or (at the time of purchase) 22.5% of Total Must be publicly traded Corporation Portfolio Must have at least $20B in Market Capitalization (at the time of purchase) Any TWO of three rating services: A-2/P-2/D-2 S&P, Moody's, Duff & Phelps $5,000,000 or 10% of 20% of Overall Must be publicly traded Corporation Commercial Paper portfolio Commercial Paper Must have at least $20B in Market (whichever is greater) portfolio Capitalization or (at the time of purchase) 15% of Total Portfolio - ------------------------------------------------------------------------------------------------------------------------------------

Schedule 7.02(b) Page 4 GRANITE CONSTRUCTION INCORPORATED INVESTMENT POLICY GUIDELINES FOR WORKING CAPITAL PORTFOLIO EFFECTIVE: FEBRUARY 1, 2003

- ------------------------------------------------------------------------------------------------------------------------------------ CONCENTRATION BY CONCENTRATION BY ELIGIBLE INVESTMENTS MINIMUM CREDIT QUALITY ISSUER PORTFOLIO - ------------------------------------------------------------------------------------------------------------------------------------ Loan Participation Same as commercial paper credit $ 5,000,000 or 10% of 25% Master Notes quality requirements total portfolio (whichever is greater) - ------------------------------------------------------------------------------------------------------------------------------------ Any TWO of three rating services: $ 5,000,000 or 10% of 50% AAAm/Aaa/AAA total portfolio S&P, Moody's, Duff & Phelps (whichever is greater) (at the time of purchase) - ------------------------------------------------------------------------------------------------------------------------------------ Taxable & Tax-exempt investments limited to: S&P: A-1, AA or better, Sp-1 $ 5,000,000 or 10% of 25% Auction Rate Preferred Bonds AND total portfolio Auction Rate Certificates Moody's: P-1, Aa or better, VMIG-1 (whichever is greater) Municipal Notes Municipal Bonds - ------------------------------------------------------------------------------------------------------------------------------------

Schedule 7.02(b) Page 5 GRANITE CONSTRUCTION INCORPORATED INVESTMENT POLICY GUIDELINES FOR HIGH-YIELD PORTFOLIO EFFECTIVE: FEBRUARY 1, 2003 STATEMENT OF PURPOSE Cash is the major source of working capital for the present and future operations of Granite. Managing the cash to ensure the liquidity necessary to meet Granite's business needs is of paramount importance. Any cash balances above those necessary for day-to-day working capital requirements are available for longer-term investments. These investments can be held for a longer interval to enhance the portfolio yield, and add diversification, without loosing sight of capital preservation within this policy's guidelines. INVESTMENT OBJECTIVES The investment objective of this portfolio is to seek consistency of investment return with emphasis on capital appreciation and secondarily capital preservation with a goal of either equaling or exceeding the Composite Policy Index. The Composite Policy Index is defined, as an Index comprised of several indices corresponding to the various mutual funds being used in this portfolio as per the asset allocation study. Therefore, the investment objectives are: - Investment Return: Optimize the investment returns within the constraints of this policy. - Safety: Emphasize preservation of capital assets over economic business cycles. - Diversification: - Provide investments in mutual fund companies that have sufficient number of funds with different investment characteristics. - Select funds from mutual fund companies that provide a balanced investment approach that can be diversified among the major assets classes and will provide sufficiently varied risk/return characteristics (see Exhibit A). PERFORMANCE MEASUREMENT GUIDELINES Normally, investment performance should be judged over a complete economic cycle (typically 3 to 5 years). Since short-term results are not usually meaningful, true investment success will be looked at as a long-term proposition. To accomplish this, the performance measurement guidelines are: - To manage the concentration in any one class of mutual funds, the portfolio will be invested based on an asset allocation study prepared by an outside investment advisory firm and managed accordingly. Periodically, the Composite Policy Index will be modified to coincide to the most recent asset allocation study. - To invest in funds that will have ratings from Morningstar of 3, 4, or 5 and will be comparable in performance to the respective indices, e.g. growth fund index, growth and income index, etc. (see Exhibit B) To determine if the investment guidelines are being followed, a review of fund performance will be prepared each quarter by an outside investment advisory firm. The review will take into consideration overall economic conditions as well as the risk and return objectives of these guidelines. MARKETABILITY Investments should be of sufficient size and be held in issues, which are traded actively to facilitate transactions at minimum cost and accurate market valuations. Schedule 7.02(b) Page 6 TRADING The following individuals are authorized traders: Roxane C. Allbritton Jigisha Desai Mary McCann-Jenni Rebecca (Becky) M. Frantti Any individual transaction conforming to the policy set forth herein shall be approved by one of the following officers or, any transaction not conforming to the policy set forth herein must be approved by any two of the following officers: D. H. Watts W. E. Barton W. G. Dorey M. E. Boitano P. M. Costanzo MUTUAL FUNDS The following mutual funds are authorized: Franklin Small Cap Fund Loomis Sayles Pimco Bond Fund Putnam Mutual Funds Lord Abbett Mid Cap Value Fund Fremont U.S. Micro-Cap Fund All purchased investments will be delivered to the custodian bank for safekeeping and paid for upon receipt. SAFEKEEPING The institutions designated as a safekeeping depository are: Fleet Bank Merrill Lynch The custodian bank must provide timely confirmation/safekeeping receipts on all investment transactions and provide monthly transaction reports. REPORTING - Daily - Upon a settlement of trade, an investment transaction sheet, sequentially numbered will be processed for approval by an authorized officer. - Monthly and quarterly - Financial reporting requirements for GAAP. - Monthly - The mutual fund portfolio will be evaluated based on a unit-based performance analysis and will be distributed to the President, Chief Operating Officer, Chief Financial Officer and all traders. - Quarterly - A risk-adjusted performance analysis and a composite policy index analysis of funds will be prepared by an outside advisory firm. - Quarterly - An asset allocation status, indicating out of balance funds rebalancing (if any) that is required. - An outside firm will do an asset allocation study every three (3) years. - For FASB 115 purposed, the Corporation classifies mutual fund investments as "Trading Securities." Schedule 7.02(b) Page 7 GRANITE CONSTRUCTION HIGH YIELD PORTFOLIO INVESTMENT OBJECTIVES EXHIBIT A In order to comply with the investment objectives of the Granite Construction High Yield Investment Guidelines, the following investment funds shall be available for investments: Putnam International Growth Fund (As of 2/28/03: Morningstar rating of 4 stars) The Fund invests in established and emerging markets in more than 25 countries in order to maximize the value of its investments over time. The Fund invests in stocks of both large and small foreign companies that offer above-average growth potential at exceptionally attractive prices. Putnam Vista Fund (As of 2/28/03: Morningstar rating of 3 stars) The Fund invests mainly in well-researched growth stocks of medium-sized companies. The Fund's investment strategy is focused on mid-capitalization growth stocks, issued by medium-sized companies that do not carry as much risk as small-company stocks but are not usually as thoroughly researched as large-company stocks. Because of this, there is a greater opportunity for Putnam's research to play a significant role in realizing a stock's potential. Putnam Voyager Fund (As of 2/28/03: Morningstar rating of 3 stars) The Fund invests mainly in common stocks of U.S. companies, with a focus on growth stocks. Growth stocks are issued by companies that the Fund manager believes are fast-growing and whose earnings are likely to increase over time. Growth in earnings may lead to an increase in the price of the stock. The Fund invests mainly in mid-sized and large companies, although it can invest in companies of any size. Putnam Investors A Fund (As of 2/28/03: Morningstar rating of 2 stars) The Fund seeks long-term growth by investing mainly in common stocks of larger, well-established companies. By selecting stocks from a range of industries, the Fund's managers seek to balance potential risk and reward by providing a significant level of diversification. Franklin Balance Sheet Investment Fund (As of 2/28/03: Morningstar rating of 5 stars) The Fund seeks high total return, of which capital appreciation and income are components. Under normal market conditions, the Fund invests most of its assets in equity securities of companies the Fund's manager believes are undervalued at the time of purchase but that have the potential for significant capital appreciation. Common stocks and preferred stocks are examples of equity securities. Schedule 7.02(b) Page 8 The Putnam Fund of Growth and Income (As of 2/28/03: Morningstar rating of 2 stars) The Fund invests mainly in common stocks of U.S. companies, with a focus on value stocks that offer the potential for capital growth, current income, or both. Value stocks are those that the Fund's manager believes are currently undervalued by the market. The Fund looks for companies undergoing positive change. If it is correct and other investors recognize the value of the company, the price of the stock may rise. The Fund invests mainly in large companies. Loomis Sayles Bond Fund (As of 2/28/03: Morningstar rating of 4 stars) The Fund seeks high total investment return through a combination of current income and capital appreciation. The Fund normally invests at least 65% of assets in investment-grade debt securities and convertibles. It may invest the balance of assets in securities rated below BBB. The Fund may invest up to 20% of assets in preferred stocks. It may invest without limit in Canadian issues, and may invest up to 20% of assets in securities issued in other foreign countries. PIMCO Total Return Bond Fund (As of 2/28/03: Morningstar rating of 3 stars) The Fund seeks total return consistent with preservation of capital. The Fund invests at least 65% of assets in debt securities, including U.S. government securities, corporate bonds, and mortgage-related securities. It may invest up to 20% of assets in securities denominated in foreign currencies. The portfolio duration generally ranges from three to six years. Lord Abbett Mid-Cap Value Fund (As of 2/28/03: Morningstar rating of 5 stars) The Fund seeks capital appreciation by investing in the stocks of mid-sized companies that are believed to be undervalued in the marketplace. To pursue this goal, the Fund normally invests at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in equity securities of mid-sized companies, those with market capitalization of roughly $500 million to $10 billion, at the time of purchase. This market capitalization range may vary in response to changes in the markets. The Fund will provide shareholders with at least 60 days notice of any change in this policy. Equity securities in which the Fund may invest include common stocks, convertible bonds, convertible preferred stocks, depository receipts and warrants. Fremont U.S. Micro-Cap Fund (As of 2/28/03: Morningstar rating of 4 stars) The Fund seeks long-term capital appreciation through investing in the nation's smallest and fastest-growing publicly traded companies. The U.S. micro-cap stock market is home to entrepreneurially managed companies with exceptional growth prospects. With minimal Wall Street coverage and low institutional ownership, micro-cap stocks represent the least efficient sector of the market. Research-driven investors can uncover some terrific growth companies trading at very reasonable valuations. Schedule 7.02(b) Page 9 SCHEDULE 7.02 (j) INVESTMENTS IN UNRESTRICTED SUBSIDIARIES WILDER CONSTRUCTION COMPANY STOCK PURCHASES

DATE NUMBER OF SHARES INVESTMENT 03/31/00 1,333,929 13,156,637 09/30/00 15,817 166,553 12/31/00 150,000 1,518,000 03/31/01 450,000 4,554,000 04/30/02 698,483 7,948,737 2,648,229 $27,343,927

Schedule 7.02(i) Page 1 SCHEDULE 7.03 EXISTING INDEBTEDNESS

INTEREST BALANCE BORROWER LENDER'S NAME DESCRIPTION RATE MATURITY 05/31/03 Granite Construction Company Benna Investments Glendale NV property 6.50% 12/01/07 1,043,652 Granite Construction Company Rosemary's Mountain Southern CA Aggregate property 8.82% 06/01/04 1,400,000 Granite Construction Private Placement Due Refinance debt & general corporate 6.54% 03/15/10 46,666,668 Incorporated 03/15/10 purposes Granite Construction Private Placement Due Refinance debt & General corporate 6.96% 05/01/13 75,000,000 Incorporated 05/01/13 purposes Granite Construction Lenders under Existing Self insured Worker's Compensation 100.0 bps 04/30/02 1,293,390 Incorporated Credit Agreement Granite Construction Company Bank of America Letter City of Patterson 32.5 bps 02/04/04 200,000 of Credit Granite Construction BNP Paribas $30MM notional amount floating 6 Mth LIBOR 09/15/05 (559,168) Incorporated interest rate swap agreement + 386.75 bps Granite Construction BNP Paribas $20MM notional amount floating 6 Mth LIBOR 11/05/05 (369,914) Incorporated interest rate swap agreement + 418.00 bps $124,674,628 AS OF 4/30/03 Presidio Vista I, LTD Dell USA, L.P. Project Debt - Presidio Vista 7.50% 02/11/08 4,003,877 Phase 1 Regional Park Limited Sacramento City Project Debt - Granite Regional 7.30% 09/01/08 11,311,577 Employee Retirement Park Systems Phase 1 Regional Park Limited GE Capital Business Project Debt - Granite Regional 8.15% 08/01/10 18,858,850 Asset Fund Park Phase 1 Regional Park Limited Northwestern Mutual Project Debt - Granite Regional 7.25% 03/01/21 17,935,273 Life Insurance Park Phase 1 Regional Park Limited Northwestern Mutual Project Debt - Granite Regional 6.03% 01/01/18 18,913,776 Life Insurance Park Oly/Mandalay Bay General Granite/Mandalay Bay Project Debt - Seabridge 20.00% at sale of 2,550,000 Partnership Finance, LLC project Oly/Mandalay Bay General Santa Barbara Bank & Project Debt - Seabridge Prime Rate 01/01/04 3,850,791 Partnership Trust + 1.5% Oly/Mandalay Bay General Oly/Granite, GP Project Debt - Seabridge 17.00% at sale of 12,416,024 Partnership project Oly/Mandalay Bay General Oly/Granite, GP Project Debt - Seabridge 17.00% at sale of 1,379,558 Partnership project $91,219,726

AS OF 4/30/03 COST TO PRINCIPAL INSURER DESCRIPTION PENAL SUM MATURITY COMPLETE Granite Construction Company, Federal Insurance Payment and Performance bonds on 4,469,230,085 Varies 1,563,136,793 Company, various construction projects Granite Halmar Construction Travelers Casualty and Company, Inc., Surety Company, and Intermountain Slurry Seal St Paul Fire and Marine Miscellaneous Bonds in support of 23,413,124 Varies 23,413,124 Inc., and Pozzolan Products Insurance Company, as permitting, licensing and Company co-sureties reclamation $4,492,643,209 $1,586,549,917

Schedule 7.03 Page 1 SCHEDULE 7.06 EXISTING LEASES

- ---------------------------------------------------------------------------------------------------- ANNUAL LESSOR DESCRIPTION MATURITY PAYMENTS - ---------------------------------------------------------------------------------------------------- GRANITE CONSTRUCTION COMPANY AS A LESSEE City of Calipatria Pit 06/30/03 600 Recupido, Fredrick R. Rental Office 11/30/03 18,337 Gibbons Realty Co. Pit 12/31/03 83,448 Meredith, Parker, Key and Bath Pit 12/31/03 338,415 Robert and Donna Sauers Rental Office 02/28/04 44,340 Associates Leasing Construction Equipment 04/30/04 215,415 Robert L. and Nira M. Stewart Quarry Property 07/01/04 5,000 Delta Precast, Inc. Material Sales Agreement 07/31/04 10 800 Associates Leasing Construction Equipment 08/01/04 44,981 Associates Leasing Construction Equipment 08/31/04 234,090 PSAF Development Partners, L.P. Rental Office 11/30/04 25,464 City of Salinas AC Plant 12/31/04 108,444 John V. Crawford Quarry Property 12/31/04 40,000 Joseph J. Leavey Quarry Property 12/31/04 5,000 Wells Family Members Pit 12/31/04 25,000 Morias Properties Quarry Property 01/22/05 12,500 Rossi Materials Quarry Property 01/31/05 25,200 Musat Vineyards Quarry Property 04/30/05 25,000 FCC Equipment Financing, Inc. Construction Equipment 08/31/05 63,840 FCC Equipment Financing, Inc. Construction Equipment 09/30/05 39,720 Granite Rock Co. Rental Office 12/31/05 218,686 Jackling Aggregates Limited Pit 12/31/05 72,000 Heber Bank Block, LLC Quarry Property 05/31/06 10,636 RMC Pacific Materials Inc. Plant Lease 09/04/06 600,000 Jacobson Construction, et al Pit 10/11/06 787,500 RMC Pacific Materials Inc. Plant Lease 10/31/06 125,000 California Dept. of Water Resources Equipment permit 11/30/06 42,000 Joseph, Russell & David Rose Pit 12/26/06 42,000 Richard Rose Pit 12/26/06 3,000 R. Vogt & A. Koustas Rental Office 02/14/07 42,000 W. P. R. R. Co. Pit 06/01/07 15,000 Topo Ranch (Singleton Group) Quarry Property 06/30/07 22,500 Chemical Lime Co. of Arizona Material Sales Agreement 10/31/07 800,000 City of Willits Quarry Property 11/25/08 100,005 R. Jay DeSerpa Co. Equipment yard 12/31/08 12,000 Rowland Quarry Property 06/30/09 50,000 - ----------------------------------------------------------------------------------------------------

Schedule 7.06 Page 1

- ---------------------------------------------------------------------------------------------------- ANNUAL LESSOR DESCRIPTION MATURITY PAYMENTS - ---------------------------------------------------------------------------------------------------- Tejon Ranch Co. Pit 10/31/09 60,000 Donald and Carol Graham Hot Plant 12/31/09 96,000 Julia C. Matthews Quarry Property 12/31/09 26,400 Walker Development Pit 12/31/09 75,000 Bingelli Rock Products Inc., et al. AC Plant 10/31/11 10,000 The Pacific Lumber Company Material Sales Agreement 04/30/12 24,000 Haber/Kester Property Quarry Property 07/31/14 19,500 Hansen & Sinnot Estate Quarry Property 07/31/14 19,500 L.R. Peterson and E.W. McGah Hot Plant 01/02/16 80,000 Ricardo Jimenez, Jr. Pit 06/30/16 12,000 M. Prickett & P. Dixon, individuals Rental Office 07/31/20 36,000 GRANITE LAND COMPANY AS A LESSEE Property California LS Corp. Rental Office 02/28/04 113,628 INTERMOUNTAIN SLURRY SEAL AS A LESSEE City of Los Angeles Quarry Property 03/31/05 7,485 City of Los Angeles Quarry Property 06/30/05 3,600 Muller, Raymond J. and Franchon L. Quarry Property 03/07/16 24,000 GRANITE HALMAR CONSTRUCTION COMPANY, INC. AS A LESSEE Stephen Sipes Rental Office 11/30/03 22,921 CIT Group Construction Equipment 03/16/04 72,473 Allied St. Geroge Rental Office 06/30/04 72,680 Mike Albert Leasing Vehicles (autos and trucks) Varies 201,989 - ---------------------------------------------------------------------------------------------------- $5,246,047 ----------

Schedule 7.06 Page 2 SCHEDULE 10.02 EURODOLLAR AND DOMESTIC LENDING OFFICES; ADDRESSES FOR NOTICES BORROWER: GRANITE CONSTRUCTION INCORPORATED Granite Construction Incorporated P. O. Box 50085 Watsonville, CA 95077 Attention: William Barton, Vice President/Chief Financial Officer Telephone: (831) 761-4704 Facsimile (831) 722-9657 Email: bbarton@gcinc.com Website: http://www.graniteconstruction.com WITH A COPY TO: Granite Construction Incorporated 585 West Beach Street Watsonville, CA 95076 Attention: Roxane Allbritton, Treasurer Telephone: (831) 761-4772 Facsimile (831) 728-1701 Email: rallbritton@gcinc.com ADMINISTRATIVE AGENT: BANK OF AMERICA, N.A. (for lending and administrative notices (including payments and Requests for Credit Extensions)): Bank of America, N.A. Mail Code: CA4-706-05-09 Agency Administrative Services #5596 1850 Gateway Boulevard, 5th Floor Concord, CA 94520 Schedule 10.02 Page 1 Attention: Sally Escosa Telephone: (925) 675-8421 Facsimile: (925) 969-2901 Email: rosalia.m.escosa@bankofamerica.com Account No.: 3750836479 Ref: Granite Construction ABA# 111000012 (for all purposes other than lending and administrative notices): Bank of America, N.A. Mail Code: CA5-701-0519 1455 Market Street, 5th Floor San Francisco, CA 94103 Attention: SuzieAnna Wan, Assistant Vice President Telephone: (415) 436-2772 Facsimile: (415) 503-5015 Email: SuzieAnna.Wan@bankofamerica.com L/C ISSUER: BANK OF AMERICA, N.A. Bank of America, N.A. Trade Operations-Los Angeles #22621 333 S. Beaudry Avenue, 19th Floor Mail Code: CA9-703-19-23 Los Angeles, CA 90017-1466 Attention: Sandra Leon, Vice President Telephone: (213) 345-5231 Facsimile: (213) 345-6694 Email: sandra.leon@bankofamerica.com Schedule 10.02 Page 2 LENDERS: BANK OF AMERICA, N.A.: Bank of America, N.A. Mail Code: CA5-705-12-14 555 California Street, 12th Floor San Francisco, CA 94104-1502 Attention: Kenneth J. Beck, Principal Telephone: (415) 953-5753 Facsimile (415) 622-4585 Email: kenneth.j.beck@bankofamerica.com UNION BANK OF CALIFORNIA, N.A. Union Bank of California, N.A. 601 Potrero Grande Drive Monterey Park, CA 91755 Attention: Shirley Davis, Coml. Loan Service Officer Telephone: (323) 720-2870 Facsimile (323) 724-6198 (323) 720-2224 Email: Shirley.davis@UBOC.com US BANK NATIONAL ASSOCIATION US Bank 1331 North California Blvd Suite 350 Walnut Creek, CA 94596 Attention: Dan Stevens, Vice President Telephone: (925) 472-5791 Facsimile (925) 945-6919 (323) 720-2224 Email: Daniel.stevens@usbank.com Schedule 10.02 Page 3 WASHINGTON MUTUAL BANK Washington Mutual Bank 1201 Third Avenue Suite 1400 Seattle, WA 98101 Attention: Gary Perkins, Vice President Telephone: (206) 490-5198 Facsimile (206) 377-3812 Email: Gary.Perkins@wamu.net COMERICA BANK Comerica Bank 1920 Main Street Suite 1150 Irvine, CA 92614 Attention: Elise M. Walker, Vice President Telephone: (949) 798-7244 Facsimile (949) 476-1222 Email: emwalker@comerica.com HARRIS TRUST AND SAVINGS BANK Harris Trust and Savings Bank 111 West Monroe Street Chicago, IL 60603 Attention: Isabella Battista, Vice President Telephone: (312) 293-8358 Facsimile (312) 293-5852 Email: isabela.battista@harrisbank.com Schedule 10.02 Page 4 BNP PARIBAS BNP Paribas One Front Street, 23rd Floor San Francisco, CA 94111 Attention: Joseph Mack Telephone: (415) 772-1355 Facsimile (415) 269-8954 Email: Joseph.mack@americas.bnpparibas.com Schedule 10.02 Page 5 EXHIBIT A FORM OF LOAN NOTICE Date: ___________, _____ To: Bank of America, N.A., as Administrative Agent Ladies and Gentlemen: Reference is made to that certain Credit Agreement, dated as of [ , 2003] (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "Agreement"; the terms defined therein being used herein as therein defined), among Granite Construction Incorporated, a Delaware corporation (the "Borrower"), the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent and L/C Issuer. The undersigned hereby requests (select one): [ ] A Borrowing of_____________________________. [Type of Loans requested] [ ] A conversion of Loans from _____ to ______ [ ] A continuation of ___________________________. [Type of Loans requested] 1. On ____________________________________________(a Business Day). 2. In the amount of $ ____________________________. 3. Comprised of __________________________________. [Type of Loans requested] 4. With an Interest Period of _________________ months. The Borrowing requested herein complies with the proviso to the first sentence of Section 2.01 of the Agreement. GRANITE CONSTRUCTION INCORPORATED By: ________________________________________ Name: ______________________________________ Title: _____________________________________ A-1 By: ________________________________________ Name: ______________________________________ Title: _____________________________________ A-2 EXHIBIT B FORM OF NOTE $_____________________ _____________________ FOR VALUE RECEIVED, the undersigned (the "Borrower"), hereby promises to pay to the order of __________________ (the "Lender"), on the Maturity Date (as defined in the Credit Agreement referred to below) the principal amount of __________________Dollars ($____________), or such lesser principal amount of Loans (as defined in such Credit Agreement) due and payable by the Borrower to the Lender on the Maturity Date under that certain Credit Agreement, dated as of [ , 2003] (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "Agreement"; the terms defined therein being used herein as therein defined), among the Borrower, the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent and L/C Issuer. The Borrower promises to pay interest on the unpaid principal amount of each Loan from the date of such Loan until such principal amount is paid in full, at such interest rates, and at such times as are specified in the Agreement. All payments of principal and interest shall be made to the Administrative Agent for the account of the Lender in Dollars in immediately available funds at the Administrative Agent's Office. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Agreement. This Note is one of the Notes referred to in the Agreement, is entitled to the benefits thereof and is subject to optional and mandatory prepayment in whole or in part as provided therein. This Note is also entitled to the benefits of the Guaranties. Upon the occurrence of one or more of the Events of Default specified in the Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable all as provided in the Agreement. Loans made by the Lender shall be evidenced by one or more loan accounts or records maintained by the Lender in the ordinary course of business. The Lender may also attach schedules to this Note and endorse thereon the date, amount and maturity of its Loans and payments with respect thereto. The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Note. B-1 THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW. GRANITE CONSTRUCTION INCORPORATED By: ________________________________________ Name: ______________________________________ Title: _____________________________________ By: ________________________________________ Name: ______________________________________ Title: _____________________________________ B-2 EXHIBIT C FORM OF COMPLIANCE CERTIFICATE Financial Statement Date:______, 200_ The undersigned refers to that certain Credit Agreement, dated as of [ , 2003] (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "Credit Agreement"), among Granite Construction Incorporated, a Delaware corporation (the "Borrower"), the financial institutions from time to time party thereto (collectively, the "Lenders") and Bank of America, N.A., as Administrative Agent (the "Administrative Agent"). Unless otherwise defined herein, each capitalized term used herein has the meaning assigned thereto in the Credit Agreement. The undersigned Responsible Officer of the Borrower hereby certifies as of the date hereof that s/he holds the office of _____________________ with the Borrower, that, as such, s/he is authorized to execute and deliver this Certificate to the Bank on behalf of the Borrower and its Subsidiaries, and that: 1. - Attached hereto or - posted on the Borrower's website or - - posted on the website of the Securities and Exchange Commission at www.sec.gov is: - a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of the fiscal year ended [____________, 200_] (the "Subject Fiscal Year"), and the related consolidated statements of income or operations, shareholders' equity and cash flows for the Subject Fiscal Year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail, audited and accompanied by a report and opinion of an independent certified public accountant of nationally recognized standing reasonably acceptable to the Required Lenders, which report and opinion have been prepared in accordance with GAAP and are not subject to any qualifications or exceptions as to the scope of the audit nor to any qualifications and exceptions that are not reasonably acceptable to the Required Lenders; or - an SEC Form 10-K for the Borrower (excluding the exhibits thereto) relating to the fiscal year ended [____________, 200_]; or - a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of the fiscal quarter ended [____________, 200_] (the "Subject Fiscal Quarter"), and the related consolidated statements of income or operations, shareholders' equity and cash flows for the Subject Fiscal Quarter and for the portion of the Borrower's fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail and certified by a Responsible Officer of the Borrower as fairly presenting the financial condition, results of operations and cash flows of the Borrower and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes; or C-1 - an SEC Form 10-Q for the Borrower (excluding the exhibits thereto) relating to the fiscal quarter ended [____________, 200_]. 2. - Attached hereto is: - a consolidating balance sheet of all Unrestricted Subsidiaries as at the end of such fiscal year, and the related consolidating statements of income or operations, shareholders' equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail, audited and accompanied by a report and opinion of an independent certified public accountant of nationally recognized standing reasonably acceptable to the Required Lenders, which report and opinion shall be prepared in accordance with GAAP and shall not be subject to any qualifications or exceptions as to the scope of the audit nor to any qualifications or exceptions not reasonably acceptable to the Required Lenders; or - a consolidating balance sheet of all Unrestricted Subsidiaries as at the end of such fiscal quarter, and the related consolidating statements of income or operations, shareholders' equity and cash flows for such fiscal quarter and for the portion of the Borrower's fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail and certified by a Responsible Officer of the Borrower as fairly presenting the financial condition, results of operations and cash flows of such Subsidiaries on a consolidating basis in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes. 3. The financial statements referred to in Paragraph 1 fairly present, in all material respects, the consolidated financial position and the results of operations of the Borrower and its Subsidiaries. 4. The undersigned has reviewed and is familiar with the terms of the Credit Agreement and the other Loan Documents and has made, or has caused to be made under my supervision, a detailed review of the transactions and conditions (financial or otherwise) of the Borrower and its Subsidiaries during the accounting period covered by the attached financial statements. 5. To the best of the undersigned's knowledge, the Borrower and each of its Subsidiaries have, during such period, observed, performed and/or satisfied and/or have caused to be observed, performed and/or satisfied all of their respective covenants and other agreements contained in the Loan Documents to which they are a party, and have satisfied every condition in the Loan Documents to which they are a party to be observed, performed and/or satisfied by them, and the undersigned has no knowledge of any condition, event or occurrence, which constitutes a Default or Event of Default, except as set forth below: [Describe below (or in a separate attachment to this Certificate) the exceptions, if any, to paragraph 4 above by listing, in detail and with reference to specific sections of the Credit Agreement, the nature of the condition, event or occurrence, the period during which it has C-2 existed and the actions that the Borrower has taken, is taking or proposes to take with respect to such condition, event or occurrence.] 6. The financial covenant and other compliance analyses and information set forth on Schedule 1 attached hereto are true, complete and accurate on and as of the date of this Certificate. The foregoing certifications, together with the computations set forth in Schedule 1 hereto, are made and delivered, and the financial statements referenced above are made or posted, as applicable, this ____ day of _____, 200_, pursuant to the provisions of the Credit Agreement. By: ____________________________________ Title: ____________________________________ of Granite Construction Incorporated C-3 SCHEDULE 1 TO COMPLIANCE CERTIFICATE 1. INVESTMENTS - INVESTMENTS (INCLUDING CONSTRUCTION JV INVESTMENTS) BY ANY LAND DEVELOPMENT COMPANY, OR ANY SUBSIDIARY THEREOF. Section 7.02(g) A. The aggregate amount of Investments (including Construction JV Investments) by any Land Development Company, or any Subsidiary thereof: $______________ REQUIREMENT: THE AMOUNT IN A MAY NOT EXCEED $25,000,000. 2. INVESTMENTS - OTHER INVESTMENTS. Section 7.02(h) A. The aggregate amount of Investments not otherwise permitted pursuant to subsections (a) through (g) of Section 7.02 in the equity of any Restricted Subsidiary or the capital stock, assets, obligations or other securities of or interests in any other Person (other than an Unrestricted Subsidiary): $______________ REQUIREMENT: THE AMOUNT IN A MAY NOT EXCEED $100,000,000. 3. INDEBTEDNESS - OTHER INDEBTEDNESS. Section 7.03(h) A. Indebtedness of the Borrower and its Subsidiaries, comprised solely of (i) the outstanding principal amount of obligations, whether current or long-term, for borrowed money and all obligations evidenced by bonds (other than performance, surety and appeal bonds), debentures, notes, loan agreements or other similar instruments, (ii) Attributable Indebtedness in respect of capital leases and Synthetic Lease Obligations, or (iii) without duplication, Guaranty Obligations (other than Guaranty Obligations as to which an Unrestricted Subsidiary is the primary obligor) with respect to Indebtedness of the types specified in the immediately preceding clauses (i) and (ii); provided that none of the foregoing includes Indebtedness of any co-joint venturer in any Joint Venture to which the Borrower or any Subsidiary is a party that has been assumed by the Borrower or any Subsidiary if such Indebtedness was not originally incurred by such co-joint venturer in connection with (and relates solely to) the subject Joint Venture: $______________ B. All Guaranty Obligations as to which an Unrestricted Subsidiary is the primary Obligor and Indebtedness incurred for the benefit of an Unrestricted Subsidiary: $________________ C. A minus B: $______________________ REQUIREMENT: THE AMOUNT IN C MAY NOT EXCEED $100,000,000. S-1 4. DISPOSITIONS OF ASSETS. Section 7.05(g) A. The aggregate consideration from Dispositions received by the Borrower and its Subsidiaries pursuant to Section 7.05(g), including aggregate cash received and the aggregate fair market value of non-cash property received, during the current fiscal year: $______________ B. The aggregate consideration from Dispositions received by any Unrestricted Subsidiaries, including aggregate cash received and the aggregate fair market value of non-cash property received, during the current fiscal year: $______________ C. A minus B: $_________________________ D. The amount equal to 5% of the total assets of the Borrower (determined on a consolidated basis in accordance with GAAP) as of the end of the Borrower's most recently ended fiscal year: $______________ REQUIREMENT: THE AMOUNT IN C MAY NOT EXCEED THE AMOUNT IN D. 5. MINIMUM CONSOLIDATED TANGIBLE NET WORTH. Section 7.13(a) A. Consolidated Tangible Net Worth (A(i) minus (A)(ii)): $______________ (i) Consolidated Stockholders' Equity for Consolidated Restricted Group (A(i)(A) minus A(i)(B) below): $______________ (A) Stockholders' equity for the Borrower and its consolidated Subsidiaries (determined in accordance with GAAP): $______________ (B) Stockholders' equity for the Unrestricted Subsidiaries (determined in accordance with GAAP): $______________ (ii) Intangible Assets of the Consolidated Restricted Group (determined on a consolidated basis in accordance with GAAP) (A(ii)(A) minus A(ii)(B)): $______________ (A) Intangible Assets of the Borrower and its consolidated Subsidiaries (determined on a consolidated basis in accordance with GAAP): $______________ (B) Intangible Assets of the Unrestricted Subsidiaries (determined on a consolidated basis in accordance with GAAP): $______________ B. Consolidated Net Income (B(i) minus B(ii)): $_______________________ S-2 (i) Net income, on a consolidated basis, of the Borrower and its consolidated Subsidiaries from continuing operations, excluding extraordinary items and excluding gains and losses from Dispositions earned in each fiscal quarter ending after the date of the Audited Financial Statements (not including net income in respect of or attributable to any Project Debt Entity): $______________ (ii) Net income, on a consolidated basis, of the Unrestricted Subsidiaries from continuing operations, excluding extraordinary items and excluding gains and losses from Dispositions earned in each fiscal quarter ending after the date of the Audited Financial Statements (not including net income in respect of or attributable to any Project Debt Entity): $______________ C. Calculation of Minimum Consolidated Tangible Net Worth (C(i) + C(ii) + C(iii) below): $_______________ (i) 85% of the Consolidated Tangible Net Worth as of the date of the Audited Financial Statements: $_________________ plus (ii) 50% of Consolidated Net Income (line B above): $______________ plus (iii) 50% of the aggregate increases in Consolidated Stockholders' Equity for the Consolidated Restricted Group (line A(i) above) after the date of the Audited Financial Statements by reason of the issuance and sale of the capital stock of the Borrower: $______________ REQUIREMENT: THE AMOUNT IN A MAY NOT BE LESS THAN THE AMOUNT IN C. 6. MINIMUM FIXED CHARGE COVERAGE RATIO. Section 7.13(b) A. Consolidated EBITDA for Consolidated Restricted Group (A(i) minus A(ii)): $________________________ (i) Consolidated EBITDA for the Borrower and its consolidated Subsidiaries (A(i)(A) plus A(i)(B) plus A(i)(C) plus A(i)(D): $___________________ (A) Net income, on a consolidated basis, of Borrower and its consolidated Subsidiaries (excluding any Project Debt Entity) from continuing operations, excluding extraordinary items and excluding gains and losses from Dispositions for such Subject Period: $_________________ S-3 (B) Consolidated Interest Expense for such Subject Period to the extent deducted in calculating Consolidated Net Income: $_______________ (C) Consolidated Cash Taxes for such Subject Period the extent deducted in calculating Consolidated Net Income: $______________ (D) Depreciation and amortization expense for such Subject Period to the extent deducted in calculating Consolidated Net Income: $_______________ (ii) Consolidated EBITDA for the Unrestricted Subsidiaries (A(ii)(A) plus A(ii)(B) plus A(ii)(C) plus A(ii)(D): $___________________ (A) Net income, on a consolidated basis, of the Unrestricted Subsidiaries (excluding any Project Debt Entity) from continuing operations, excluding extraordinary items and excluding gains and losses from Dispositions for such Subject Period: $______________ (B) Consolidated Interest Expense for such Subject Period to the extent deducted in calculating Consolidated Net Income: $_________________ (C) Consolidated Cash Taxes for such Subject Period the extent deducted in calculating Consolidated Net Income: $________________ (D) Depreciation and amortization expense for such Subject Period to the extent deducted in calculating Consolidated Net Income: $_______________ B. Consolidated Cash Taxes for the Consolidated Restricted Group (B(i) minus B(ii)): $_____________ (i) Aggregate of all taxes, on a consolidated basis, actually paid by the Borrower and its consolidated Subsidiaries in cash during such Subject Period (excluding any Project Entity Debt): $_____________ (ii) Aggregate of all taxes, on a consolidated basis, actually paid in respect of the Unrestricted Subsidiaries in cash during such Subject Period (excluding any Project Entity Debt): $_____________ C. Interest Income of the Consolidated Restricted Group (C(i) minus C(ii)): $_____________ S-4 (i) Aggregate of all interest income of the Borrower and its consolidated Subsidiaries (other than in respect of Project Debt Entities) for the Subject Period ending on such day (to the extent not included in the determination of Consolidated EBITDA (line A(i) above) for such Subject Period): $_____________ (ii) Aggregate of all interest income of the Unrestricted Subsidiaries for the Subject Period (other than in respect of Project Debt Entities) ending on such day (to the extent not included in the determination of Consolidated EBITDA (line A(ii) above) for such Subject Period): $_____________ D. Capital Expenditures for the Consolidated Restricted Group (D(i) minus D(ii)): $_____________ (i) Aggregate of all expenditures by the Borrower and its consolidated Subsidiaries (excluding expenditures by any Project Debt Entity) for the acquisition or leasing of fixed or capital assets or additions to equipment (including replacements, capitalized repairs and improvements during such period) which should be capitalized under GAAP on a consolidated balance sheet of the Borrower and its consolidated Subsidiaries, minus net proceeds from sales of fixed or capital assets received by the Borrower and its consolidated Subsidiaries during such Subject Period: $_____________ (ii) Aggregate of all expenditures by the Unrestricted Subsidiaries for the acquisition or leasing of fixed or capital assets or additions to equipment (including replacements, capitalized repairs and improvements during such period) which should be capitalized under GAAP on a consolidated balance sheet of the Unrestricted Subsidiaries, minus net proceeds from sales of fixed or capital assets received by the Unrestricted Subsidiaries during such Subject Period: $_____________ E. A minus B plus C minus D: $________________ F. Consolidated Interest Expense for the Consolidated Restricted Group (F(i) minus F(ii)): $________________ (i) Consolidated Interest Expense for the Borrower and its consolidated Subsidiaries (F(i)(A) plus F(i)(B)): $________________ (A) All interest, premium payments, fees, charges and related expenses of the Borrower and its consolidated Subsidiaries in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets, in each case to the extent treated as interest in accordance with GAAP (excluding such amounts in respect of Project Debt): $________________ (B) The portion of rent expense of the Borrower and its consolidated Subsidiaries with respect to such Subject Period under capital leases S-5 that is treated as interest in accordance with GAAP and the portion of Synthetic Lease Obligations payable by the Borrower and its consolidated Subsidiaries with respect to such Subject Period that would be treated as interest in accordance with GAAP if such lease were treated as a capital lease under GAAP (excluding such amounts in respect of Project Debt): $________________ (ii) Consolidated Interest Expense for the Unrestricted Subsidiaries (F(ii)(A) plus F(ii)(B)): $________________ (A) All interest, premium payments, fees, charges and related expenses of the Unrestricted Subsidiaries in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets, in each case to the extent treated as interest in accordance with GAAP (excluding such amounts in respect of Project Debt): $________________ (B) The portion of rent expense of the Unrestricted Subsidiaries with respect to such period under capital leases that is treated as interest in accordance with GAAP and the portion of Synthetic Lease Obligations payable by the Borrower and its consolidated Subsidiaries with respect to such Subject Period that would be treated as interest in accordance with GAAP if such lease were treated as a capital lease under GAAP (excluding such amounts in respect of Project Debt): $_____________ G. Current portion (determined in accordance with GAAP) of Consolidated Funded Indebtedness for the Consolidated Restricted Group (G(i) minus G(ii)): $______________ (i) Current portion (determined in accordance with GAAP) of Consolidated Funded Indebtedness for the Borrower and its consolidated Subsidiaries (G(i)(A) plus G(i)(B)): $___________________ (A) On a consolidated basis, the outstanding principal amount of all obligations, whether current or long-term, for borrowed money (including Obligations under the Credit Agreement) and all obligations evidenced by bonds, debentures, notes, loan agreements or other similar instruments of Borrower and its consolidated Subsidiaries (not including Project Debt): $______________ (B) Attributable Indebtedness in respect of capital leases and Synthetic Lease Obligations of Borrower and its consolidated Subsidiaries (not including Project Debt): $___________ (ii) Current portion (determined in accordance with GAAP) of Consolidated Funded Indebtedness for the Unrestricted Subsidiaries (G(ii)(A) plus G(ii)(B) plus G(ii)(C)): $___________________ S-6 (A) On a consolidated basis, the outstanding principal amount of all obligations, whether current or long-term, for borrowed money (including Obligations under the Credit Agreement) and all obligations evidenced by bonds, debentures, notes, loan agreements or other similar instruments of the Unrestricted Subsidiaries (not including Project Debt): $______________ (B) Attributable Indebtedness in respect of capital leases and Synthetic Lease Obligations of the Unrestricted Subsidiaries (not including Project Debt): $___________ (C) Without duplication, all Guaranty Obligations with respect to Indebtedness of the types specified in subsections (A) and (B) above: $_______________ H. F plus G: $______________________ I. Ratio of E to H: _________ to 1.00 REQUIREMENT: THE RATIO IN I (I.E., THE RATIO OF E TO H) MAY NOT BE LESS THAN 1.50 TO 1.00 AS OF THE LAST DAY OF ANY FISCAL QUARTER OF THE BORROWER. 7. LEVERAGE RATIO. Section 7.13(c) A. Consolidated Funded Indebtedness for the Consolidated Restricted Group (A(i) minus A(ii)): $______________ (i) Consolidated Funded Indebtedness for the Borrower and its consolidated Subsidiaries (A(i)(A) plus A(i)(B)): $___________________ (A) On a consolidated basis, the outstanding principal amount of all obligations, whether current or long-term, for borrowed money (including Obligations under the Credit Agreement) and all obligations evidenced by bonds, debentures, notes, loan agreements or other similar instruments of Borrower and its consolidated Subsidiaries (not including Project Debt): $______________ (B) Attributable Indebtedness in respect of capital leases and Synthetic Lease Obligations of Borrower and its consolidated Subsidiaries (not including Project Debt): $___________ (ii) Consolidated Funded Indebtedness for the Unrestricted Subsidiaries (A(ii)(A) plus A(ii)(B) plus A(ii)(C)): $___________________ (A) On a consolidated basis, the outstanding principal amount of all obligations, whether current or long-term, for borrowed money (including Obligations under the Credit Agreement) and all obligations evidenced by bonds, debentures, notes, loan agreements or other S-7 similar instruments of the Unrestricted Subsidiaries (not including Project Debt): $______________ (B) Attributable Indebtedness in respect of capital leases and Synthetic Lease Obligations of the Unrestricted Subsidiaries (not including Project Debt): $___________ (C) Without duplication, all Guaranty Obligations with respect to Indebtedness of the types specified in subsections (A) and (B) above: $_______________ B. (i) Consolidated Funded Indebtedness for the Consolidated Restricted Group (line A above): $______________ plus (ii) Consolidated Tangible Net Worth for the Consolidated Restricted Group: $______________ Total: $______________ C. Ratio of A to B: _________ to 1.00 REQUIREMENT: THE RATIO IN C (I.E., THE RATIO OF A TO B) MAY NOT EXCEED 0.55 TO 1.00 AS OF THE LAST DAY OF ANY FISCAL QUARTER OF THE BORROWER. S-8 EXHIBIT D FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT This Assignment and Assumption Agreement (this "Assignment") is dated as of the Effective Date set forth below and is entered into by and between __________ (the "Assignor") and _______________ (the "Assignee"). Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (the "Credit Agreement"), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment as if set forth herein in full. For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below, the interest in and to all of the Assignor's rights and obligations under the Credit Agreement and any other documents or instruments delivered pursuant thereto that represents the amount and percentage interest identified below of all of the Assignor's outstanding rights and obligations under the respective facilities identified below (including, to the extent included in any such facilities and Letters of Credit) (the "Assigned Interest"). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment, without representation or warranty by the Assignor. 1. Assignor: ______________________________ 2. Assignee: ______________________________ [and is an Affiliate/Approved Fund] 3. Borrower(s): Granite Construction Incorporated 4. Administrative Agent: Bank of America, N.A., as the administrative agent under the Credit Agreement 5. Credit Agreement: The Credit Agreement, dated as of [ , 2003], among Granite Construction Incorporated, the Lenders parties thereto, and Bank of America, N.A., as Administrative Agent and as L/C Issuer 6. Assigned Interest:

- ------------------------------------------------------------------------------------------------------- Aggregate Amount of Amount of Percentage Commitment/Loans Commitment/Loans Assigned of Facility Assigned for all Lenders Assigned Commitment/Loans - ------------------------------------------------------------------------------------------------------- _____________ $________________ $________________ ______________% - ------------------------------------------------------------------------------------------------------- _____________ $________________ $________________ ______________% - ------------------------------------------------------------------------------------------------------- _____________ $________________ $________________ ______________% - -------------------------------------------------------------------------------------------------------

D-1 Effective Date: __________________, 200__ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.] The terms set forth in this Assignment are hereby agreed to: ASSIGNOR [NAME OF ASSIGNOR] By: __________________________ Title: ASSIGNEE [NAME OF ASSIGNEE] By: __________________________ Title: Consented to and Accepted: BANK OF AMERICA, N.A., as Administrative Agent By: ____________________________ Title: GRANITE CONSTRUCTION INCORPORATED, as Borrower By: ___________________________ Title: D-2 ANNEX 1 TO ASSIGNMENT AND ASSUMPTION AGREEMENT CREDIT AGREEMENT, DATED AS OF [ , 2003], AMONG GRANITE CONSTRUCTION INCORPORATED, THE LENDERS PARTY THERETO, AND BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT AND AS L/C ISSUER (THE "CREDIT AGREEMENT") STANDARD TERMS AND CONDITIONS FOR ASSIGNMENT AND ASSUMPTION AGREEMENT 1. Representations and Warranties. 1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with any Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any other instrument or document delivered pursuant thereto, other than this Assignment (herein collectively the "Loan Documents"), or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document. 1.2 Assignee. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all requirements of an Eligible Assignee under the Credit Agreement, (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 6.01 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and to purchase the Assigned Interest on the basis of which it has made such analysis and decision, and (v) if it is a Foreign Lender, attached hereto is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender. 1.3 Assignee's Address for Notices, etc. Attached hereto as Schedule 1 is all contact information, address, account and other administrative information relating to the Assignee. D-3 2. Payments. From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignee whether such amounts have accrued prior to or on or after the Effective Date. The Assignor and the Assignee shall make all appropriate adjustments in payments by the Administrative Agent for periods prior to the Effective Date or with respect to the making of this assignment directly between themselves. 3. General Provisions. This Assignment shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment. THIS ASSIGNMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE PARTIES HERETO SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW. D-4 SCHEDULE 1 TO ASSIGNMENT AND ASSUMPTION AGREEMENT ADMINISTRATIVE DETAILS (Assignee to list names of credit contacts, addresses, phone and facsimile numbers, electronic mail addresses and account and payment information) D-5 EXHIBIT E FORM OF CONTINUING GUARANTY AGREEMENT CONTINUING GUARANTY AGREEMENT This CONTINUING GUARANTY AGREEMENT (this "Agreement"), dated as of [], 200[_], is made by each of the undersigned (each, a "Guarantor" and, collectively, the "Guarantors"), in favor of each Guaranteed Party (as hereinafter defined). WHEREAS, Granite Construction Incorporation, a Delaware corporation (together with its successors, the "Company"), Bank of America, N.A., as Administrative Agent, as L/C Issuer and as a Lender, and the other financial institutions as are, or may from time to time become, parties thereto have entered into or are in the process of entering into that certain Credit Agreement, dated as of [ 2003] as amended, modified and/or supplemented from time to time, the "Credit Agreement", pursuant to which the Lenders have provided the Commitments and agreed to make Loans to the Company and to participate in Letters of Credit issued by the L/C Issuer for the account of the Company or its Subsidiaries on the terms and conditions contained therein; and WHEREAS, to induce the Lenders and the L/C Issuer to provide and to continue to provide financial accommodations to the Company pursuant to the terms of the Credit Agreement and the other Loan Documents, the Guarantors have each agreed to enter into this Agreement; NOW, THEREFORE, for good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), and intending to be legally bound hereby, each Guarantor irrevocably and unconditionally undertakes and agrees for the benefit of Guaranteed Party as follows: ARTICLE I CERTAIN DEFINITIONS AND RULES OF CONSTRUCTION Section 1.1 Certain Definitions. Each capitalized term used but not otherwise defined herein has the meaning ascribed thereto in the Credit Agreement. As used herein, the term "Guaranteed Party" means, as the context may require, the Administrative Agent, the L/C Issuer, each Lender and each Indemnitee (and each such Person's respective successors, transferees and assigns). Section 1.2 Construction. For purposes of this Agreement and unless otherwise specified herein: (a) references to the plural include the singular and to the singular include the plural, references to any gender include any other gender, the part includes the whole, the term "including" is not limiting, and the term "or" has, except where otherwise indicated, the inclusive meaning represented by the phrase "and/or"; (b) references in this Agreement to any determination by the Guaranteed Party include good faith estimates (in the case of quantitative determinations) and good faith beliefs (in the case of qualitative determinations) by any Guaranteed Party; any determination made in good faith by any Guaranteed Party shall be E-1 conclusive absent manifest error; (c) the words "hereof," "herein," "hereby," and "hereunder," and any other similar words, refer to this Agreement as a whole and not to any particular provision of this Agreement; (d) article, section, subsection, clause, exhibit and schedule references are to this Agreement; and (e) any reference to this Agreement or any other Loan Document includes all permitted alterations, amendments, changes, extensions, modifications, renewals, or supplements thereto or thereof, as applicable. ARTICLE II GUARANTY BY GUARANTORS Section 2.1 Promise to Pay and Perform. Each Guarantor jointly and severally unconditionally and irrevocably guarantees to each Guaranteed Party the payment and performance of all Obligations when and as the same shall become due and payable (whether at stipulated or any accelerated or earlier date of maturity (including the date of any required prepayment)) (the "Guaranteed Obligations"), it being each Guarantor's intent that such Guarantor's guaranty is a guaranty of payment and not a guaranty of collection. If the Company fails to pay or perform any Guaranteed Obligation on or before the date when due (whether at stipulated or any accelerated or earlier date of maturity (including the date of any required prepayment)), each Guarantor shall jointly and severally unconditionally and immediately make such payment or render such performance upon written demand therefor by any Guaranteed Party. Section 2.2 Cumulative Obligations; Continuing Guaranty. The obligations of each Guarantor hereunder are in addition to any other obligations of such Guarantor under any other guaranties of the Indebtedness or other obligations of the Company or any other Person at any time given to any Guaranteed Party. This Agreement shall not affect or invalidate any such other guaranties. This Agreement is a continuing guaranty and shall remain in full force and effect notwithstanding the fact that, at any particular time, no Guaranteed Obligations may be outstanding. Section 2.3 Joint and Several Obligation; Independent Obligation. Each Guarantor is directly, jointly and severally with all other guarantors of the Guaranteed Obligations or any portion thereof, liable to the Guaranteed Parties. The obligations of each Guarantor hereunder are direct and primary and are independent of the obligations of the Company or any other such guarantor, and a separate action may be brought against each Guarantor irrespective of whether an action is brought against the Company or any other such other guarantor or whether the Company or any such other guarantor is joined in such action. Each Guarantor's liability hereunder shall not be contingent upon the exercise or enforcement by the Guaranteed Parties of any remedies they may have against the Company or any other guarantor or the enforcement of any Lien or realization upon any security the Guaranteed Parties may at any time possess. Any release that may be given by the Guaranteed Parties to the Company or any other guarantor shall not release any Guarantor hereunder unless such release expressly so provides. Section 2.4 Limit of Liability. Notwithstanding anything to the contrary contained herein, each Guarantor shall be liable hereunder only for the largest amount that would not render such Guarantor's obligations hereunder subject to avoidance under Section 548 of the Bankruptcy Code or comparable provisions of any applicable state law; provided that such E-2 amount shall be presumed to be the entire amount of the Guaranteed Obligations. If, any Guarantor claims that such Guarantor's liability hereunder is less than the entire amount of the Guaranteed Obligations, such Guarantor shall have the burden of proving, by clear and convincing evidence, that such Guarantor's liability hereunder should be so limited since the information concerning, and the circumstances of, the financial condition of such Guarantor are more readily available to and are under the control of such Guarantor. All payments received by any Guaranteed Party from any Person other than a Guarantor on account of the Guaranteed Obligations shall be deemed as having been applied to Guaranteed Obligations that, pursuant to this Section 2.4, are in excess of the amounts guaranteed hereunder. ARTICLE III PAYMENTS Section 3.1 Nature and Application of Payments. Each Guarantor shall make all payments hereunder in immediately available lawful money of the United States, without deduction or withholding (whether for taxes (whether income, excise, or otherwise) or offset). Without regard to the form in which received, the Guaranteed Parties may apply any payment with respect to the Guaranteed Obligations or any other amounts due hereunder in such order as the Guaranteed Parties shall in their sole and absolute discretion determine, irrespective of any contrary instructions received from any other Person. Section 3.2 Indefeasible Payment; Revival. If any portion of any payment to the Guaranteed Parties is set aside and repaid by any Guaranteed Party for any reason after being made by any Guarantor, the amount so set aside shall be revived as a Guaranteed Obligation and each Guarantor shall be liable for the full amount the Guaranteed Parties are, or any Guaranteed Party is, required to repay plus all costs and expenses (including attorneys' fees, costs, and expenses) incurred by the Guaranteed Parties in connection therewith. ARTICLE IV CERTAIN REPRESENTATIONS AND WARRANTIES OF GUARANTORS Each Guarantor represents and warrants as follows (which representations and warranties shall be true, correct, and complete at all times): Section 4.1 No Contravention; No Default. The execution, delivery, and performance by such Guarantor of this Agreement do not and will not: (a) conflict with or result in any breach or contravention of, or the creation of any Lien under, any contractual obligation to which such Guarantor is a party or any order, injunction, writ, or decree of any Governmental Authority to which such Guarantor or such Guarantor's properties are subject; or (b) violate any Laws of any Governmental Authority. Section 4.2 Binding Effect. This Agreement constitutes the legal, valid, and binding obligation of such Guarantor, enforceable against such Guarantor in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors' rights generally or by equitable principles relating to enforceability. E-3 Section 4.3 Litigation. Except as set forth on Schedule 5.06 to the Credit Agreement, there are no actions, suits, proceedings, claims, or disputes pending, or, to the best knowledge of such Guarantor, threatened in writing, at law, in equity, in arbitration, or before any Governmental Authority, against such Guarantor or any of such Guarantor's properties which purport to affect or pertain to this Agreement, any of the other Loan Documents, or any of the transactions contemplated hereby or thereby. Section 4.4 Regulated Entity. Neither such Guarantor nor any Person controlling such Guarantor is: (a) an "investment company" within the meaning of the Investment Company Act of 1940; or (b) subject to regulation by any federal or state statute or regulation limiting such Guarantor's ability to incur such Guarantor's obligations hereunder. Section 4.5 No Action Required. No consent, license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing, or declaration with any Governmental Authority or of, to, or with any other Person, is or will be required for: (a) the execution, delivery, or performance of this Agreement by such Guarantor; or (b) the exercise by the Guaranteed Parties of any of their respective rights and remedies provided for herein. Section 4.6 Changes Affecting the Guaranteed Obligations. Such Guarantor has taken and is taking all steps in such Guarantor's opinion necessary or appropriate to be informed on a continuing basis of changes or potential changes affecting the Guaranteed Obligations. Without limiting the generality of the foregoing, such Guarantor hereby confirms that it has received and reviewed the Credit Agreement, the Fee Letter and all other Loan Documents (and all other agreements, documents and instruments related thereto) that such Guarantor, in such Guarantor's sole determination, has deemed necessary or appropriate to receive and review. Section 4.7 Reliance by Guarantor; Financial Condition of the Company. This Agreement is not made by such Guarantor in reliance on any representation or warranty, express or implied, by any Guaranteed Party concerning the financial condition of the Company, the nature, value, or extent of any security for the Guaranteed Obligations, or any other matter. Such Guarantor is presently informed of the financial condition of the Company and of all other circumstances that a diligent inquiry would reveal and which bear upon the risk of nonpayment of the Guaranteed Obligations. Such Guarantor has reviewed each of the Loan Documents. Section 4.8 Adequate Consideration. The consideration given or provided, or to be given or provided, by the Guaranteed Parties in connection with this Agreement is adequate and satisfactory in all respects, and represents reasonably equivalent value, to support this Agreement and such Guarantor's obligations hereunder. ARTICLE V CERTAIN COVENANTS OF GUARANTORS Section 5.1 Knowledge of Financial Condition. Each Guarantor shall keep informed of the Company's financial condition, the status of any guarantors or of any security for the Guaranteed Obligations, and all other circumstances that bear upon the risk of nonpayment of the Guaranteed Obligations. E-4 Section 5.2 Further Assurances. Each Guarantor shall, from time to time, at the expense of such Guarantor, promptly execute and deliver all further documents and take all further action that may be necessary, or that the Guaranteed Parties (or any of them) may reasonably request, to enable the Guaranteed Parties (or any of them) to exercise and enforce their respective rights and remedies hereunder. Section 5.3 Sales, Dispositions, etc. Each Guarantor will not, without the prior written consent of the Guaranteed Party, sell, lease, assign, encumber, hypothecate, transfer or otherwise dispose of all of substantially all of such Guarantor's properties or assets, or any interest therein, except as otherwise permitted by the Credit Agreement. ARTICLE VI CERTAIN ACKNOWLEDGEMENTS AND AGREEMENTS OF GUARANTORS Section 6.1 Modifications to Loan Documents and Guaranteed Obligations. Each Guarantor acknowledges and agrees that, without notice to such Guarantor and without affecting or impairing the obligations of such Guarantor hereunder, the Guaranteed Parties (or any of them) may, by action or inaction, compromise or settle, extend the period of duration or the time for the payment, or discharge the performance of, or may refuse to, or otherwise not enforce, or may, by action or inaction, release all or any one or more parties to, any one or more of the Loan Documents or otherwise with respect to the Guaranteed Obligations or may grant other indulgences to the Company in respect thereof, or may amend or modify in any manner and at any time (or from time to time) any one or more of the Loan Documents or otherwise with respect to the Guaranteed Obligations, or may, by action or inaction, release or substitute any guarantor, if any, of the Guaranteed Obligations, or may enforce, exchange, release, or waive, by action or inaction, any security for the Guaranteed Obligations or any guaranty of the Guaranteed Obligations, or any portion thereof. Section 6.2 Subordination. Each Guarantor agrees that any and all present and future indebtedness of the Company owing to such Guarantor is postponed in favor of and subordinated to indefeasible payment, in full, in cash, of the Guaranteed Obligations. In this regard, upon the occurrence and during the continuance of a Default or an Event of Default, no payment of any kind whatsoever shall be made with respect to such indebtedness until the Guaranteed Obligations have been indefeasibly paid in full. Any payment received by any Guarantor in respect of such indebtedness shall be held by such Guarantor as trustee for the Guaranteed Parties and promptly paid over to the Guaranteed Parties on account of the Guaranteed Obligations but without reducing or affecting in any manner the liability of such Guarantor under the other provisions of this Agreement. Section 6.3 Administrative Agent as Each Guarantor's Attorney-in-Fact. Each Guarantor irrevocably appoints the Administrative Agent as such Guarantor's attorney-in-fact, with full authority in the place and stead and name of such Guarantor, from time to time at the Administrative Agent's discretion but only following the occurrence and during the continuation of an Event of Default, to take any action and to execute any instrument which the Guaranteed Parties (or any of them) may, in accordance with the provisions of the Loan Documents or this Agreement, require as necessary or advisable to accomplish the purposes of this Agreement. E-5 ARTICLE VII GENERAL PROVISIONS Section 7.1 Notices. All notices, requests, and other communications to any party under this Agreement shall be in writing (including telegraphic, telex, telefacsimile, or cable communication) and mailed, telegraphed, telexed, sent by telefacsimile, cabled, or delivered to such party at its address or telefacsimile number set forth, in the case of each Guarantor, on the signature pages hereof, or, in the case of the Guaranteed Parties, on Schedule 10.02 to the Credit Agreement, or such other address or telefacsimile number as such party may hereafter specify for the purpose by notice to the other party given in accordance with this Section 7.1. Each such notice, request or other communication shall be deemed to have been received: (a) if mailed as provided above by any method other than overnight delivery service, on the third Business Day after deposit in the mails; (b) if mailed by overnight delivery service, telegraphed, telexed, sent by telefacsimile, or cable, when delivered for overnight delivery, delivered to the telegraph company, confirmed by telex answerback, transmitted by telefacsimile (with electronic confirmation), or delivered to the cable company, respectively; or (c) if delivered by hand, upon delivery. If any conflict exists between any oral communication to any Guaranteed Party and the written confirmation thereof, the oral communication shall control if any Guaranteed Party has acted thereon prior to actual receipt of such written confirmation. Section 7.2 Amendments, Waivers, and Consents. No amendments or waivers of any provision of this Agreement nor any consent to any departure by any Guarantor from the terms hereof shall in any event be effective unless the same shall be in writing and signed by the Administrative Agent (or all Guaranteed Parties if required by the terms of the Credit Agreement) and the Guarantors. Any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. Section 7.3 No Waiver; Cumulative Nature of Remedies. No failure or delay on the part of any Guaranteed Party in exercising any of its rights and remedies under this Agreement, any of the Loan Documents, or otherwise with respect to any of the Guaranteed Obligations shall operate as a waiver thereof; nor shall any single or partial exercise of any right under this Agreement, the Loan Documents, or otherwise with respect to the Guaranteed Obligations preclude any other or further exercise thereof or the exercise of any other right or remedies. The rights and remedies provided in this Agreement and otherwise with respect to the Guaranteed Obligations are cumulative and not exclusive of any rights and remedies provided by law. Section 7.4 Costs and Expenses. Each Guarantor shall pay or reimburse the Guaranteed Parties on demand for all fees, costs, and expenses incurred by the Guaranteed Parties in connection with the enforcement or attempted enforcement of this Agreement, the preservation of any rights or remedies under this Agreement, or in any action, case, or proceeding (whether at law or in equity) relating to this Agreement. Without limiting the generality of the foregoing, such fees, costs, and expenses shall include reasonable Attorney Costs actually incurred by the Guaranteed Parties or any of them (irrespective of whether the Company is liable therefor), whether or not suit is brought, in connection therewith. Section 7.5 Successors and Assigns. This Agreement shall: (a) be binding upon each Guarantor and each Guarantor's successors and assigns; and (b) inure to the benefit of each E-6 Guaranteed Party and its successors and assigns (all to the extent permitted by the Loan Documents). Without limiting the generality of the foregoing subsection (b) but subject to the provisions of the Credit Agreement, any Guaranteed Party may assign or otherwise transfer all or any part of the Guaranteed Obligations owed to it to any other Person. Section 7.6 Headings. Section and subsection headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement and shall not be given any substantive effect. Section 7.7 Ambiguities. Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved using any presumption against any Guarantor or any Guaranteed Party, whether under any rule of construction or otherwise. On the contrary, this Agreement has been reviewed by each Guarantor and each Guaranteed Party and their respective counsel. In case of any ambiguity or uncertainty, this Agreement shall be construed and interpreted according to the ordinary meaning of the words used to accomplish fairly the purposes and intentions of all parties hereto. Section 7.8 Severability. In case any provision in or obligation under this Agreement shall be invalid, illegal, or unenforceable in any jurisdiction, the validity, legality, and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. In addition, all agreements and covenants herein shall be given independent effect such that, if a particular action or condition is prohibited by the terms of any such agreement or covenant, the fact that such action or condition would be permitted by another agreement or covenant shall not be construed as allowing such action to be taken or condition to exist. Section 7.9 Counterparts; Telefacsimile Signatures. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. Each Guarantor may effect execution and delivery of this Agreement by executing a counterpart hereof and sending the signature page bearing such Guarantor's signature to the Administrative Agent by telefacsimile and, thereafter, promptly sending by mail or delivering such signature page to the Administrative Agent; provided that the failure to deliver such signature page by such Guarantor shall not affect the validity, enforceability, or binding effect of this Agreement against such Guarantor. Section 7.10 Entire Agreement. This Agreement and the Credit Agreement embody the entire agreement and understanding concerning the Guarantors and the Guaranteed Parties relating to the subject matter hereof and supersede all prior agreements and understandings relating to the subject matter hereof. No course of prior dealing between any Guarantor and the Guaranteed Parties (or any of them), no usage of the trade, and no parole or extrinsic evidence of any nature, shall be used or be relevant to supplement, explain or modify any term used herein. ARTICLE VIII CERTAIN WAIVERS BY GUARANTORS EACH GUARANTOR MAKES THE FOLLOWING WAIVERS WITH FULL KNOWLEDGE AND UNDERSTANDING THAT SUCH WAIVERS, IF NOT SO MADE, E-7 MIGHT OTHERWISE RESULT IN SUCH GUARANTOR BEING ABLE TO AVOID OR LIMIT SUCH GUARANTOR'S LIABILITY HEREUNDER EITHER IN WHOLE OR IN PART. Section 8.1 Notices. Each Guarantor absolutely, unconditionally, knowingly, and expressly waives: (a) notice of the acceptance by the Guaranteed Parties of this Agreement; (b) notice of any Credit Extensions consisting Guaranteed Obligations; (c) notice of the amount of the Guaranteed Obligations, subject, however, to such Guarantor's right to make inquiry, at any reasonable time, of any Guaranteed Party to ascertain the amount of the Guaranteed Obligations owing to such Guaranteed Party; (d) notice of any adverse change in the financial condition of the Company, of any change in value, or the release, of any collateral, or of any other fact that might increase such Guarantor's risk hereunder; (e) notice of presentment for payment, demand, protest, and notice thereof as to any instrument; (f) notice of any Default or Event of Default; and (g) all other notices (except if such notice is expressly required to be given to such Guarantor under this Agreement) and demands to which guarantor might otherwise be entitled. Section 8.2 Revocation. Each Guarantor absolutely, unconditionally, knowingly, and expressly waives any right to revoke such Guarantor's guaranty obligation hereunder as to future Guaranteed Obligations and, in light thereof, all protection afforded such Guarantor under Section 2815 of the California Civil Code. Each Guarantor fully realizes and understands that, upon execution of this Agreement, such Guarantor will not have any right to revoke this Agreement as to any future indebtedness and, thus, may have no control over such Guarantor's ultimate responsibility for the amount and nature of the Guaranteed Obligations. Section 8.3 Defenses of the Company. Each Guarantor absolutely, unconditionally, knowingly, and expressly waives any defense arising by reason of any disability or other defense (other than the defense that the Guaranteed Obligations shall have been fully and finally performed and indefeasibly paid) of the Company or by reason of the cessation from any cause whatsoever (including any act or failure to act by the Company or the Guaranteed Parties) of the liability of the Company in respect thereof, including any such defense or cessation of liability arising from or as a result of: (a) any statute of limitations; (b) any lack of power or authority of the Company or any Person acting or purporting to act on the Company's behalf; (c) the operation of Sections 580a, 580b, 580d, or 726 of the California Code of Civil Procedure or any similar law of the State of California or any other jurisdiction; or (d) any claim of fraudulent transfer or preference. Section 8.4 Suretyship and Certain Other Rights and Defenses of Guarantors. Each Guarantor absolutely, unconditionally, knowingly, and expressly waives: (a) any right to assert against the Guaranteed Parties (or any of them) any defense (legal or equitable), set-off, counterclaim, or claim which such Guarantor may now or at any time hereafter have against the Company or any other Person liable to the Guaranteed Parties (or any of them); (b) any defense, set-off, counterclaim, or claim, of any kind or nature, arising directly or indirectly from the present or future lack of perfection, sufficiency, validity, or enforceability E-8 of any of the Guaranteed Obligations or any security therefor or from any failure of the Guaranteed Parties (or any of them) to act in a commercially reasonable manner; (c) any defense arising by reason of or deriving from any claim or defense based upon an election of remedies by the Guaranteed Parties (or any of them) (including a nonjudicial foreclosure sale of any real property collateral which destroys, diminishes, or otherwise adversely affects any Guarantor's rights of subrogation, reimbursement, indemnity, or contribution or other rights against the Company or any other Person), including any defense based upon an election of remedies by any Guaranteed Party under the provisions of Sections 580a, 580b, 580d, and 726 of the California Code of Civil Procedure or any similar law of the State of California or any other jurisdiction. In making this waiver, each Guarantor specifically acknowledges that it understands and is aware that, under Sections 580b and 580d of the California Code of Civil Procedure, if the Guaranteed Parties (or any of them) conducted a nonjudicial foreclosure sale of real property collateral: (i) such Guaranteed Party(ies) would lose the right to pursue the Company for any deficiency that might remain following such sale; (ii) if such Guarantor were to pay such deficiency following such sale, it would be precluded from pursuing the Company for reimbursement; and (iii) as a result, such Guaranteed Party(ies) would be prevented from pursuing such Guarantor for such deficiency following such sale; (d) the benefit of any statute of limitations affecting such Guarantor's liability hereunder (or the enforcement thereof); (e) any defense based on any alteration, impairment, or release of the Guaranteed Obligations or any security therefor, irrespective of whether resulting from any act or failure to act by the Guaranteed Parties (or any of them); and (f) any right to require the Guaranteed Parties (or any of them): (i) to institute suit or otherwise proceed against the Company or any other Person; or (ii) to exhaust any rights and remedies which the Guaranteed Parties (or any of them) have or may have against the Company or any other Person. Section 8.5 Marshalling. Each Guarantor absolutely, unconditionally, knowingly, and expressly waives any rights it has to require the Guaranteed Parties (or any of them) to marshal, foreclose upon, sell, or otherwise realize upon or collect or apply any particular part of any other assets securing any of the Guaranteed Obligations (including any rights arising by virtue of Sections 2899 and 3433 of the California Civil Code). Section 8.6 Claims Against the Company and Others. Each Guarantor absolutely, unconditionally, knowingly, and expressly agrees that, until the Guaranteed Obligations have been indefeasibly repaid in full, such Guarantor will not in any manner enforce or pursue, or seek to enforce or pursue, any or all of the following rights (it being expressly agreed that all such rights are subordinate to any claims of the Guaranteed Parties (or any of them)): (a) any right of subrogation, indemnity, or contribution such Guarantor has or may have as against the Company or any other Person with respect to any of the Guaranteed Obligations; (b) any right to proceed against the Company or any other Person, now or hereafter, for contribution, indemnity, reimbursement, or any other suretyship rights and claims (irrespective of whether direct or indirect, liquidated or contingent) with respect to any of the Guaranteed Obligations; and (c) any E-9 right to proceed or to seek recourse against or with respect to any assets of the Company or any other Person with respect to any of the Guaranteed Obligations. Section 8.7 Certain Additional Statutory Rights. Without limiting the generality of any other waiver or other provision set forth in this agreement, each Guarantor absolutely, unconditionally, knowingly, and expressly waives any and all benefits or defenses, if any, arising directly or indirectly under any one or more of Sections 2799, 2808, 2809, 2810, 2815, 2819, 2820, 2821, 2822, 2838, 2839, 2845, 2848, 2849, and 2850 of the California Civil Code, Sections 580a, 580b, 580c, 580d, and 726 of the California Code of Civil Procedure, and Sections 3116, 3118, 3119, 3419, 3605, 9504, 9505, and 9507 of the California Uniform Commercial Code. ARTICLE IX GOVERNING LAW; JURISDICTION AND VENUE; WAIVER OF TRIAL BY JURY Section 9.1 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAW OF THE STATE OF CALIFORNIA, PROVIDED THAT THE GUARANTEED PARTIES SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW. Section 9.2 Jurisdiction. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH GUARANTOR AND EACH OF THE GUARANTEED PARTIES CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THOSE COURTS. EACH GUARANTOR AND EACH OF THE GUARANTEED PARTIES IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. EACH GUARANTOR AND EACH OF THE GUARANTEED PARTIES WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW. Section 9.3. Waiver of Jury Trial. EACH GUARANTOR AND EACH OF THE GUARANTEED PARTIES WAIVES ITS RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY INDEMNIFIED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH GUARANTOR AND EACH OF THE GUARANTEED PARTIES AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER E-10 AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. EACH GUARANTOR WARRANTS AND AGREES THAT EACH OF THE WAIVERS SET FORTH ABOVE IS MADE WITH SUCH GUARANTOR'S FULL KNOWLEDGE OF ITS SIGNIFICANCE AND CONSEQUENCE AND THAT, UNDER THE CIRCUMSTANCES, THE WAIVERS ARE REASONABLE AND NOT CONTRARY TO PUBLIC POLICY OR LAW. IF ANY SUCH WAIVER IS DETERMINED TO BE CONTRARY TO ANY APPLICABLE LAW OR PUBLIC POLICY, SUCH WAIVER SHALL BE EFFECTIVE ONLY TO THE EXTENT, BUT TO THE FULLEST EXTENT, PERMITTED BY LAW OR PUBLIC POLICY. EACH GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT THIS AGREEMENT IS EFFECTIVE UPON SUCH GUARANTOR'S EXECUTION AND DELIVERY OF THIS AGREEMENT TO THE ADMINISTRATIVE AGENT ON BEHALF OF ALL OF THE GUARANTEED PARTIES. NO FORMAL ACCEPTANCE BY THE GUARANTEED PARTIES IS NECESSARY TO MAKE THIS AGREEMENT EFFECTIVE. E-11 IN WITNESS WHEREOF, each Guarantor has executed this Agreement as of the date first written above. [________________________________], a [_____________] By: ____________________________ Name: ____________________________ Title:____________________________ Notice Information: __________________________________ __________________________________ __________________________________ Attn: ___________________________ Telephone: ______._______._______ Telefacsimile: ______._____._____ E-12 EXHIBIT F OPINION OF COUNSEL Matters to be addressed by opinion of Borrower's counsel: 1. (a) Borrower is a corporation, duly incorporated and validly existing under the laws of Delaware and has the requisite corporate power and authority to own its property and to conduct the business in which it is currently engaged; (b) Each of GCC and GLC is a corporation duly incorporated and validly existing under the laws of California and has the requisite corporate power and authority to own its property and to conduct the business in which it is currently engaged; (c) Each of GG&R and Pozzolan is a corporation duly incorporated and validly existing under the laws of Utah and has the requisite corporate power and authority to own its property and to conduct the business in which it is currently engaged; (d) Intermountain is a corporation duly incorporated and validly existing under the laws of Wyoming and has the requisite corporate power and authority to own its property and to conduct the business in which it is currently engaged; (e) GILC is a California limited partnership validly existing under the laws of California and has the requisite partnership power and authority to own its property and to conduct the business in which it is currently engaged. [ADD ADDITIONAL GUARANTORS, IF NECESSARY] 2. Borrower (a) has taken all necessary and appropriate corporate action to authorize the execution, delivery and performance of the Credit Agreement and the Notes, and (b) has the corporate power and authority to execute, deliver and perform the Credit Agreement. Each Subsidiary (a) has taken all necessary and appropriate corporate action or partnership action, as applicable, to authorize the execution, delivery and performance of the Guaranty, and (b) has the corporate power or partnership power, as applicable, and authority to execute, deliver and perform the Guaranty. 3. The Credit Agreement and the Notes have been duly executed and delivered by the Borrower. The Guaranty has been duly executed and delivered by each Guarantor. The Credit Agreement and the Notes constitute legal, valid and binding obligations of Borrower, enforceable against Borrower in accordance with their terms. The Guaranty constitutes a legal, valid and binding obligation of each Guarantor, enforceable against each Guarantor in accordance with its terms. 4. The execution, delivery and performance by Borrower of the Credit Agreement and the Notes do not: (a) violate or contravene any injunction, order, writ, judgment, decree, determination or award of any United States or California Governmental Authority as presently in effect applicable to Borrower; (b) conflict with or result in a breach of or constitute a default under the certificate of incorporation and bylaws of Borrower; (c) violate or result in a breach of or constitute any default under any agreements of Borrower, and, do not result in or require the creation or imposition of any lien on any of Borrower's properties or revenues pursuant to any injunction, order, decree or undertaking as presently in effect or any such agreements of Borrower; or (d) result in or require the creation or imposition of any lien on any of its properties or revenues pursuant to any provision of any law, rule or regulation as presently in effect. F-1 5. The execution, delivery and performance by each Guarantor of the Guaranty do not: (a) violate or contravene any injunction, order. writ, judgment, decree, determination or award of any United States or California Governmental Authority as presently in effect applicable to each Guarantor; (b) conflict with or result in a breach of or constitute a default under the articles/certificates of incorporation and bylaws or partnership agreement, as applicable, of each Guarantor; (c) violate or result in a breach of or constitute any default under any agreements of each Guarantor, and do not result in or require the creation or imposition of any lien on any Guarantor's its properties or revenues pursuant to any injunction, order, decree or undertaking as presently in effect or any such agreements of each Guarantor; or (d) result in or require the creation or imposition of any lien on any of its properties or revenues pursuant to any provision of any law, rule or regulation as presently in effect. 6. Each of Borrower and the Subsidiaries is duly qualified to do business and is in good standing in [the states listed below its name on Exhibit [ ] hereto][the jurisdiction of its respective incorporation or formation and in each other state, where such qualification or licensing is required]. 7. No authorization, consent, approval, license, qualification or formal exemption from, nor notice to, nor any filing, recordation, declaration or registration with, any United States or California Governmental Authority, or to my knowledge any other Governmental Authority, is necessary or required on the part of Borrower in connection with the execution, delivery, or performance by Borrower of the Credit Agreement and the Notes. 8. No authorization, consent, approval, license, qualification or formal exemption from, nor notice to, nor any filing, recordation, declaration or registration with any United States or California Governmental Authority, or to my knowledge any other Governmental Authority, is necessary or required on the part of each Guarantor in connection with the execution, delivery, or performance by each Guarantor of the Guaranty. 9. There is no claim, dispute, injunction, temporary restraining order, action, litigation, investigation or proceeding pending or, to the best of my knowledge, threatened against Borrower before any court, arbitrator, administrative agency or Governmental Authority of any kind (a) with respect to the Credit Agreement and the Notes or (b) which, if adversely determined, would have a Material Adverse Effect. 10. There is no claim, dispute, injunction, temporary restraining order, action, litigation, investigation or proceeding pending or, to the best of my knowledge, threatened against any Subsidiary before any court, arbitrator, administrative agency or Governmental Authority of any kind (a) with respect to the Guaranty or (b) which, if adversely determined, would have a Material Adverse Effect. 11. Neither the Borrower nor any Subsidiary is an "investment company" or a company "controlled" by an "investment company," within the meaning of the Investment Company Act of 1940, as amended. Neither the Borrower nor any Subsidiary is subject to regulation under the Public Utility Holding Company Act of 1935, the Interstate Commerce Act (49 U.S.C Sections 10101 et seq. (Supp. 1992)) or the Federal Power Act, which would limit its ability to incur Indebtedness. F-2 12. Neither the Borrower nor any Subsidiary is generally engaged in the business of purchasing or selling Margin Stock or extending credit for the purpose of purchasing or carrying Margin Stock. The aggregate value of all Margin Stock directly or indirectly owned by the Borrower and its Subsidiaries is less than 25 % of the aggregate value of the consolidated assets of the Borrower and its Subsidiaries. 13. The only subsidiaries of Borrower are the Subsidiaries and [______________]. F-3 EX-10.2 4 f91753exv10w2.txt EXHIBIT 10.2 EXHIBIT 10.2 CONTINUING GUARANTY AGREEMENT This CONTINUING GUARANTY AGREEMENT (this "Agreement"), dated as of June 27, 2003, is made by each of the undersigned (each, a "Guarantor" and, collectively, the "Guarantors"), in favor of each Guaranteed Party (as hereinafter defined). WHEREAS, Granite Construction Incorporation, a Delaware corporation (together with its successors, the "Company"), Bank of America, N.A., as Administrative Agent, as L/C Issuer and as a Lender, and the other financial institutions as are, or may from time to time become, parties thereto have entered into or are in the process of entering into that certain Credit Agreement, dated as of June 27, 2003 as amended, modified and/or supplemented from time to time, the "Credit Agreement", pursuant to which the Lenders have provided the Commitments and agreed to make Loans to the Company and to participate in Letters of Credit issued by the L/C Issuer for the account of the Company or its Subsidiaries on the terms and conditions contained therein; and WHEREAS, to induce the Lenders and the L/C Issuer to provide and to continue to provide financial accommodations to the Company pursuant to the terms of the Credit Agreement and the other Loan Documents, the Guarantors have each agreed to enter into this Agreement; NOW, THEREFORE, for good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), and intending to be legally bound hereby, each Guarantor irrevocably and unconditionally undertakes and agrees for the benefit of Guaranteed Party as follows: ARTICLE I CERTAIN DEFINITIONS AND RULES OF CONSTRUCTION Section 1.1 Certain Definitions. Each capitalized term used but not otherwise defined herein has the meaning ascribed thereto in the Credit Agreement. As used herein, the term "Guaranteed Party" means, as the context may require, the Administrative Agent, the L/C Issuer, each Lender and each Indemnitee (and each such Person's respective successors, transferees and assigns). Section 1.2 Construction. For purposes of this Agreement and unless otherwise specified herein: (a) references to the plural include the singular and to the singular include the plural, references to any gender include any other gender, the part includes the whole, the term "including" is not limiting, and the term "or" has, except where otherwise indicated, the inclusive meaning represented by the phrase "and/or"; (b) references in this Agreement to any determination by the Guaranteed Party include good faith estimates (in the case of quantitative determinations) and good faith beliefs (in the case of qualitative determinations) by any Guaranteed Party; any determination made in good faith by any Guaranteed Party shall be conclusive absent manifest error; (c) the words "hereof," "herein," "hereby," and "hereunder," and any other similar words, refer to this Agreement as a whole and not to any particular provision of this Agreement; (d) article, section, subsection, clause, exhibit and schedule references are to this Agreement; and (e) any reference to this Agreement or any other Loan Document includes all permitted alterations, amendments, changes, extensions, modifications, renewals, or supplements thereto or thereof, as applicable. ARTICLE II GUARANTY BY GUARANTORS Section 2.1 Promise to Pay and Perform. Each Guarantor jointly and severally unconditionally and irrevocably guarantees to each Guaranteed Party the payment and performance of all Obligations when and as the same shall become due and payable (whether at stipulated or any accelerated or earlier date of maturity (including the date of any required prepayment)) (the "Guaranteed Obligations"), it being each Guarantor's intent that such Guarantor's guaranty is a guaranty of payment and not a guaranty of collection. If the Company fails to pay or perform any Guaranteed Obligation on or before the date when due (whether at stipulated or any accelerated or earlier date of maturity (including the date of any required prepayment)), each Guarantor shall jointly and severally unconditionally and immediately make such payment or render such performance upon written demand therefor by any Guaranteed Party. Section 2.2 Cumulative Obligations; Continuing Guaranty. The obligations of each Guarantor hereunder are in addition to any other obligations of such Guarantor under any other guaranties of the Indebtedness or other obligations of the Company or any other Person at any time given to any Guaranteed Party. This Agreement shall not affect or invalidate any such other guaranties. This Agreement is a continuing guaranty and shall remain in full force and effect notwithstanding the fact that, at any particular time, no Guaranteed Obligations may be outstanding. Section 2.3 Joint and Several Obligation; Independent Obligation. Each Guarantor is directly, jointly and severally with all other guarantors of the Guaranteed Obligations or any portion thereof, liable to the Guaranteed Parties. The obligations of each Guarantor hereunder are direct and primary and are independent of the obligations of the Company or any other such guarantor, and a separate action may be brought against each Guarantor irrespective of whether an action is brought against the Company or any other such other guarantor or whether the Company or any such other guarantor is joined in such action. Each Guarantor's liability hereunder shall not be contingent upon the exercise or enforcement by the Guaranteed Parties of any remedies they may have against the Company or any other guarantor or the enforcement of any Lien or realization upon any security the Guaranteed Parties may at any time possess. Any release that may be given by the Guaranteed Parties to the Company or any other guarantor shall not release any Guarantor hereunder unless such release expressly so provides. Section 2.4 Limit of Liability. Notwithstanding anything to the contrary contained herein, each Guarantor shall be liable hereunder only for the largest amount that would not render such Guarantor's obligations hereunder subject to avoidance under Section 548 of the Bankruptcy Code or comparable provisions of any applicable state law; provided that such amount shall be presumed to be the entire amount of the Guaranteed Obligations. If, any Guarantor claims that such Guarantor's liability hereunder is less than the entire amount of the 2 Guaranteed Obligations, such Guarantor shall have the burden of proving, by clear and convincing evidence, that such Guarantor's liability hereunder should be so limited since the information concerning, and the circumstances of, the financial condition of such Guarantor are more readily available to and are under the control of such Guarantor. All payments received by any Guaranteed Party from any Person other than a Guarantor on account of the Guaranteed Obligations shall be deemed as having been applied to Guaranteed Obligations that, pursuant to this Section 2.4, are in excess of the amounts guaranteed hereunder. ARTICLE III PAYMENTS Section 3.1 Nature and Application of Payments. Each Guarantor shall make all payments hereunder in immediately available lawful money of the United States, without deduction or withholding (whether for taxes (whether income, excise, or otherwise) or offset). Without regard to the form in which received, the Guaranteed Parties may apply any payment with respect to the Guaranteed Obligations or any other amounts due hereunder in such order as the Guaranteed Parties shall in their sole and absolute discretion determine, irrespective of any contrary instructions received from any other Person. Section 3.2 Indefeasible Payment; Revival. If any portion of any payment to the Guaranteed Parties is set aside and repaid by any Guaranteed Party for any reason after being made by any Guarantor, the amount so set aside shall be revived as a Guaranteed Obligation and each Guarantor shall be liable for the full amount the Guaranteed Parties are, or any Guaranteed Party is, required to repay plus all costs and expenses (including attorneys' fees, costs, and expenses) incurred by the Guaranteed Parties in connection therewith. ARTICLE IV CERTAIN REPRESENTATIONS AND WARRANTIES OF GUARANTORS Each Guarantor represents and warrants as follows (which representations and warranties shall be true, correct, and complete at all times): Section 4.1 No Contravention; No Default. The execution, delivery, and performance by such Guarantor of this Agreement do not and will not: (a) conflict with or result in any breach or contravention of, or the creation of any Lien under, any contractual obligation to which such Guarantor is a party or any order, injunction, writ, or decree of any Governmental Authority to which such Guarantor or such Guarantor's properties are subject; or (b) violate any Laws of any Governmental Authority. Section 4.2 Binding Effect. This Agreement constitutes the legal, valid, and binding obligation of such Guarantor, enforceable against such Guarantor in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors' rights generally or by equitable principles relating to enforceability. Section 4.3 Litigation. Except as set forth on Schedule 5.06 to the Credit Agreement, there are no actions, suits, proceedings, claims, or disputes pending, or, to the best knowledge of 3 such Guarantor, threatened in writing, at law, in equity, in arbitration, or before any Governmental Authority, against such Guarantor or any of such Guarantor's properties which purport to affect or pertain to this Agreement, any of the other Loan Documents, or any of the transactions contemplated hereby or thereby. Section 4.4 Regulated Entity. Neither such Guarantor nor any Person controlling such Guarantor is: (a) an "investment company" within the meaning of the Investment Company Act of 1940; or (b) subject to regulation by any federal or state statute or regulation limiting such Guarantor's ability to incur such Guarantor's obligations hereunder. Section 4.5 No Action Required. No consent, license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing, or declaration with any Governmental Authority or of, to, or with any other Person, is or will be required for: (a) the execution, delivery, or performance of this Agreement by such Guarantor; or (b) the exercise by the Guaranteed Parties of any of their respective rights and remedies provided for herein. Section 4.6 Changes Affecting the Guaranteed Obligations. Such Guarantor has taken and is taking all steps in such Guarantor's opinion necessary or appropriate to be informed on a continuing basis of changes or potential changes affecting the Guaranteed Obligations. Without limiting the generality of the foregoing, such Guarantor hereby confirms that it has received and reviewed the Credit Agreement, the Fee Letter and all other Loan Documents (and all other agreements, documents and instruments related thereto) that such Guarantor, in such Guarantor's sole determination, has deemed necessary or appropriate to receive and review. Section 4.7 Reliance by Guarantor: Financial Condition of the Company. This Agreement is not made by such Guarantor in reliance on any representation or warranty, express or implied, by any Guaranteed Party concerning the financial condition of the Company, the nature, value, or extent of any security for the Guaranteed Obligations, or any other matter. Such Guarantor is presently informed of the financial condition of the Company and of all other circumstances that a diligent inquiry would reveal and which bear upon the risk of nonpayment of the Guaranteed Obligations. Such Guarantor has reviewed each of the Loan Documents. Section 4.8 Adequate Consideration. The consideration given or provided, or to be given or provided, by the Guaranteed Parties in connection with this Agreement is adequate and satisfactory in all respects, and represents reasonably equivalent value, to support this Agreement and such Guarantor's obligations hereunder. ARTICLE V CERTAIN COVENANTS OF GUARANTORS Section 5.1 Knowledge of Financial Condition. Each Guarantor shall keep informed of the Company's financial condition, the status of any guarantors or of any security for the Guaranteed Obligations, and all other circumstances that bear upon the risk of nonpayment of the Guaranteed Obligations. Section 5.2 Further Assurances. Each Guarantor shall, from time to time, at the expense of such Guarantor, promptly execute and deliver all further documents and take all 4 further action that may be necessary, or that the Guaranteed Parties (or any of them) may reasonably request, to enable the Guaranteed Parties (or any of them) to exercise and enforce their respective rights and remedies hereunder. Section 5.3 Sales, Dispositions, etc. Each Guarantor will not, without the prior written consent of the Guaranteed Party, sell, lease, assign, encumber, hypothecate, transfer or otherwise dispose of all of substantially all of such Guarantor's properties or assets, or any interest therein, except as otherwise permitted by the Credit Agreement. ARTICLE VI CERTAIN ACKNOWLEDGEMENTS AND AGREEMENTS OF GUARANTORS Section 6.1 Modifications to Loan Documents and Guaranteed Obligations. Each Guarantor acknowledges and agrees that, without notice to such Guarantor and without affecting or impairing the obligations of such Guarantor hereunder, the Guaranteed Parties (or any of them) may, by action or inaction, compromise or settle, extend the period of duration or the time for the payment, or discharge the performance of, or may refuse to, or otherwise not enforce, or may, by action or inaction, release all or any one or more parties to, any one or more of the Loan Documents or otherwise with respect to the Guaranteed Obligations or may grant other indulgences to the Company in respect thereof, or may amend or modify in any manner and at any time (or from time to time) any one or more of the Loan Documents or otherwise with respect to the Guaranteed Obligations, or may, by action or inaction, release or substitute any guarantor, if any, of the Guaranteed Obligations, or may enforce, exchange, release, or waive, by action or inaction, any security for the Guaranteed Obligations or any guaranty of the Guaranteed Obligations, or any portion thereof. Section 6.2 Subordination. Each Guarantor agrees that any and all present and future indebtedness of the Company owing to such Guarantor is postponed in favor of and subordinated to indefeasible payment, in full, in cash, of the Guaranteed Obligations. In this regard, upon the occurrence and during the continuance of a Default or an Event of Default, no payment of any kind whatsoever shall be made with respect to such indebtedness until the Guaranteed Obligations have been indefeasibly paid in full. Any payment received by any Guarantor in respect of such indebtedness shall be held by such Guarantor as trustee for the Guaranteed Parties and promptly paid over to the Guaranteed Parties on account of the Guaranteed Obligations but without reducing or affecting in any manner the liability of such Guarantor under the other provisions of this Agreement. Section 6.3 Administrative Agent as Each Guarantor's Attorney-in-Fact. Each Guarantor irrevocably appoints the Administrative Agent as such Guarantor's attorney-in-fact, with full authority in the place and stead and name of such Guarantor, from time to time at the Administrative Agent's discretion but only following the occurrence and during the continuation of an Event of Default, to take any action and to execute any instrument which the Guaranteed Parties (or any of them) may, in accordance with the provisions of the Loan Documents or this Agreement, require as necessary or advisable to accomplish the purposes of this Agreement. 5 ARTICLE VII GENERAL PROVISIONS Section 7.1 Notices. All notices, requests, and other communications to any party under this Agreement shall be in writing (including telegraphic, telex, telefacsimile, or cable communication) and mailed, telegraphed, telexed, sent by telefacsimile, cabled, or delivered to such party at its address or telefacsimile number set forth, in the case of each Guarantor, on the signature pages hereof, or, in the case of the Guaranteed Parties, on Schedule 10.02 to the Credit Agreement, or such other address or telefacsimile number as such party may hereafter specify for the purpose by notice to the other party given in accordance with this Section 7.1. Each such notice, request or other communication shall be deemed to have been received: (a) if mailed as provided above by any method other than overnight delivery service, on the third Business Day after deposit in the mails; (b) if mailed by overnight delivery service, telegraphed, telexed, sent by telefacsimile, or cable, when delivered for overnight delivery, delivered to the telegraph company, confirmed by telex answerback, transmitted by telefacsimile (with electronic confirmation), or delivered to the cable company, respectively; or (c) if delivered by hand, upon delivery. If any conflict exists between any oral communication to any Guaranteed Party and the written confirmation thereof, the oral communication shall control if any Guaranteed Party has acted thereon prior to actual receipt of such written confirmation. Section 7.2 Amendments, Waivers, and Consents. No amendments or waivers of any provision of this Agreement nor any consent to any departure by any Guarantor from the terms hereof shall in any event be effective unless the same shall be in writing and signed by the Administrative Agent (or all Guaranteed Parties if required by the terms of the Credit Agreement) and the Guarantors. Any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. Section 7.3 No Waiver; Cumulative Nature of Remedies. No failure or delay on the part of any Guaranteed Party in exercising any of its rights and remedies under this Agreement, any of the Loan Documents, or otherwise with respect to any of the Guaranteed Obligations shall operate as a waiver thereof; nor shall any single or partial exercise of any right under this Agreement, the Loan Documents, or otherwise with respect to the Guaranteed Obligations preclude any other or further exercise thereof or the exercise of any other right or remedies. The rights and remedies provided in this Agreement and otherwise with respect to the Guaranteed Obligations are cumulative and not exclusive of any rights and remedies provided by law. Section 7.4 Costs and Expenses. Each Guarantor shall pay or reimburse the Guaranteed Parties on demand for all fees, costs, and expenses incurred by the Guaranteed Parties in connection with the enforcement or attempted enforcement of this Agreement, the preservation of any rights or remedies under this Agreement, or in any action, case, or proceeding (whether at law or in equity) relating to this Agreement. Without limiting the generality of the foregoing, such fees, costs, and expenses shall include reasonable Attorney Costs actually incurred by the Guaranteed Parties or any of them (irrespective of whether the Company is liable therefor), whether or not suit is brought, in connection therewith. Section 7.5 Successors and Assigns. This Agreement shall: (a) be binding upon each Guarantor and each Guarantor's successors and assigns; and (b) inure to the benefit of each 6 Guaranteed Party and its successors and assigns (all to the extent permitted by the Loan Documents). Without limiting the generality of the foregoing subsection (b) but subject to the provisions of the Credit Agreement, any Guaranteed Party may assign or otherwise transfer all or any part of the Guaranteed Obligations owed to it to any other Person. Section 7.6 Headings. Section and subsection headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement and shall not be given any substantive effect. Section 7.7 Ambiguities. Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved using any presumption against any Guarantor or any Guaranteed Party, whether under any rule of construction or otherwise. On the contrary, this Agreement has been reviewed by each Guarantor and each Guaranteed Party and their respective counsel. In case of any ambiguity or uncertainty, this Agreement shall be construed and interpreted according to the ordinary meaning of the words used to accomplish fairly the purposes and intentions of all parties hereto. Section 7.8 Severability. In case any provision in or obligation under this Agreement shall be invalid, illegal, or unenforceable in any jurisdiction, the validity, legality, and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. In addition, all agreements and covenants herein shall be given independent effect such that, if a particular action or condition is prohibited by the terms of any such agreement or covenant, the fact that such action or condition would be permitted by another agreement or covenant shall not be construed as allowing such action to be taken or condition to exist. Section 7.9 Counterparts; Telefacsimile Signatures. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. Each Guarantor may effect execution and delivery of this Agreement by executing a counterpart hereof and sending the signature page bearing such Guarantor's signature to the Administrative Agent by telefacsimile and, thereafter, promptly sending by mail or delivering such signature page to the Administrative Agent; provided that the failure to deliver such signature page by such Guarantor shall not affect the validity, enforceability, or binding effect of this Agreement against such Guarantor. Section 7.10 Entire Agreement. This Agreement and the Credit Agreement embody the entire agreement and understanding concerning the Guarantors and the Guaranteed Parties relating to the subject matter hereof and supersede all prior agreements and understandings relating to the subject matter hereof. No course of prior dealing between any Guarantor and the Guaranteed Parties (or any of them), no usage of the trade, and no parole or extrinsic evidence of any nature, shall be used or be relevant to supplement, explain or modify any term used herein. ARTICLE VIII CERTAIN WAIVERS BY GUARANTORS EACH GUARANTOR MAKES THE FOLLOWING WAIVERS WITH FULL KNOWLEDGE AND UNDERSTANDING THAT SUCH WAIVERS, IF NOT SO MADE, 7 MIGHT OTHERWISE RESULT IN SUCH GUARANTOR BEING ABLE TO AVOID OR LIMIT SUCH GUARANTOR'S LIABILITY HEREUNDER EITHER IN WHOLE OR IN PART. Section 8.1 Notices. Each Guarantor absolutely, unconditionally, knowingly, and expressly waives: (a) notice of the acceptance by the Guaranteed Parties of this Agreement; (b) notice of any Credit Extensions consisting Guaranteed Obligations; (c) notice of the amount of the Guaranteed Obligations, subject, however, to such Guarantor's right to make inquiry, at any reasonable time, of any Guaranteed Party to ascertain the amount of the Guaranteed Obligations owing to such Guaranteed Party; (d) notice of any adverse change in the financial condition of the Company, of any change in value, or the release, of any collateral, or of any other fact that might increase such Guarantor's risk hereunder; (e) notice of presentment for payment, demand, protest, and notice thereof as to any instrument; (f) notice of any Default or Event of Default; and (g) all other notices (except if such notice is expressly required to be given to such Guarantor under this Agreement) and demands to which guarantor might otherwise be entitled. Section 8.2 Revocation. Each Guarantor absolutely, unconditionally, knowingly, and expressly waives any right to revoke such Guarantor's guaranty obligation hereunder as to future Guaranteed Obligations and, in light thereof, all protection afforded such Guarantor under Section 2815 of the California Civil Code. Each Guarantor fully realizes and understands that, upon execution of this Agreement, such Guarantor will not have any right to revoke this Agreement as to any future indebtedness and, thus, may have no control over such Guarantor's ultimate responsibility for the amount and nature of the Guaranteed Obligations. Section 8.3 Defenses of the Company. Each Guarantor absolutely, unconditionally, knowingly, and expressly waives any defense arising by reason of any disability or other defense (other than the defense that the Guaranteed Obligations shall have been fully and finally performed and indefeasibly paid) of the Company or by reason of the cessation from any cause whatsoever (including any act or failure to act by the Company or the Guaranteed Parties) of the liability of the Company in respect thereof, including any such defense or cessation of liability arising from or as a result of: (a) any statute of limitations; (b) any lack of power or authority of the Company or any Person acting or purporting to act on the Company's behalf; (c) the operation of Sections 580a, 580b, 580d, or 726 of the California Code of Civil Procedure or any similar law of the State of California or any other jurisdiction; or (d) any claim of fraudulent transfer or preference. Section 8.4 Suretyship and Certain Other Rights and Defenses of Guarantors. Each Guarantor absolutely, unconditionally, knowingly, and expressly waives: (a) any right to assert against the Guaranteed Parties (or any of them) any defense (legal or equitable), set-off, counterclaim, or claim which such Guarantor may now or at any time hereafter have against the Company or any other Person liable to the Guaranteed Parties (or any of them); (b) any defense, set-off, counterclaim, or claim, of any kind or nature, arising directly or indirectly from the present or future lack of perfection, sufficiency, validity, or enforceability 8 of any of the Guaranteed Obligations or any security therefor or from any failure of the Guaranteed Parties (or any of them) to act in a commercially reasonable manner; (c) any defense arising by reason of or deriving from any claim or defense based upon an election of remedies by the Guaranteed Parties (or any of them) (including a nonjudicial foreclosure sale of any real property collateral which destroys, diminishes, or otherwise adversely affects any Guarantor's rights of subrogation, reimbursement, indemnity, or contribution or other rights against the Company or any other Person), including any defense based upon an election of remedies by any Guaranteed Party under the provisions of Sections 580a, 580b, 580d, and 726 of the California Code of Civil Procedure or any similar law of the State of California or any other jurisdiction. In making this waiver, each Guarantor specifically acknowledges that it understands and is aware that, under Sections 580b and 580d of the California Code of Civil Procedure, if the Guaranteed Parties (or any of them) conducted a nonjudicial foreclosure sale of real property collateral: (i) such Guaranteed Party(ies) would lose the right to pursue the Company for any deficiency that might remain following such sale; (ii) if such Guarantor were to pay such deficiency following such sale, it would be precluded from pursuing the Company for reimbursement; and (iii) as a result, such Guaranteed Party(ies) would be prevented from pursuing such Guarantor for such deficiency following such sale; (d) the benefit of any statute of limitations affecting such Guarantor's liability hereunder (or the enforcement thereof); (e) any defense based on any alteration, impairment, or release of the Guaranteed Obligations or any security therefor, irrespective of whether resulting from any act or failure to act by the Guaranteed Parties (or any of them); and (f) any right to require the Guaranteed Parties (or any of them): (i) to institute suit or otherwise proceed against the Company or any other Person; or (ii) to exhaust any rights and remedies which the Guaranteed Parties (or any of them) have or may have against the Company or any other Person. Section 8.5 Marshalling. Each Guarantor absolutely, unconditionally, knowingly, and expressly waives any rights it has to require the Guaranteed Parties (or any of them) to marshal, foreclose upon, sell, or otherwise realize upon or collect or apply any particular part of any other assets securing any of the Guaranteed Obligations (including any rights arising by virtue of Sections 2899 and 3433 of the California Civil Code). Section 8.6 Claims Against the Company and Others. Each Guarantor absolutely, unconditionally, knowingly, and expressly agrees that, until the Guaranteed Obligations have been indefeasibly repaid in full, such Guarantor will not in any manner enforce or pursue, or seek to enforce or pursue, any or all of the following rights (it being expressly agreed that all such rights are subordinate to any claims of the Guaranteed Parties (or any of them)): (a) any right of subrogation, indemnity, or contribution such Guarantor has or may have as against the Company or any other Person with respect to any of the Guaranteed Obligations; (b) any right to proceed against the Company or any other Person, now or hereafter, for contribution, indemnity, reimbursement, or any other suretyship rights and claims (irrespective of whether direct or indirect, liquidated or contingent) with respect to any of the Guaranteed Obligations; and (c) any 9 right to proceed or to seek recourse against or with respect to any assets of the Company or any other Person with respect to any of the Guaranteed Obligations. Section 8.7 Certain Additional Statutory Rights. Without limiting the generality of any other waiver or other provision set forth in this agreement, each Guarantor absolutely, unconditionally, knowingly, and expressly waives any and all benefits or defenses, if any, arising directly or indirectly under any one or more of Sections 2799, 2808, 2809, 2810, 2815, 2819, 2820, 2821, 2822, 2838, 2839, 2845, 2848, 2849, and 2850 of the California Civil Code, Sections 580a, 580b, 580c, 580d, and 726 of the California Code of Civil Procedure, and Sections 3116, 3118, 3119, 3419, 3605, 9504, 9505, and 9507 of the California Uniform Commercial Code. ARTICLE IX GOVERNING LAW; JURISDICTION AND VENUE: WAIVER OF TRIAL BY JURY Section 9.1 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAW OF THE STATE OF CALIFORNIA, PROVIDED THAT THE GUARANTEED PARTIES SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW. Section 9.2 Jurisdiction. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH GUARANTOR AND EACH OF THE GUARANTEED PARTIES CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THOSE COURTS. EACH GUARANTOR AND EACH OF THE GUARANTEED PARTIES IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. EACH GUARANTOR AND EACH OF THE GUARANTEED PARTIES WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW. Section 9.3. Waiver of Jury Trial. EACH GUARANTOR AND EACH OF THE GUARANTEED PARTIES WAIVES ITS RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY INDEMNIFIED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH GUARANTOR AND EACH OF THE GUARANTEED PARTIES AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER 10 AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. EACH GUARANTOR WARRANTS AND AGREES THAT EACH OF THE WAIVERS SET FORTH ABOVE IS MADE WITH SUCH GUARANTOR'S FULL KNOWLEDGE OF ITS SIGNIFICANCE AND CONSEQUENCE AND THAT, UNDER THE CIRCUMSTANCES, THE WAIVERS ARE REASONABLE AND NOT CONTRARY TO PUBLIC POLICY OR LAW. IF ANY SUCH WAIVER IS DETERMINED TO BE CONTRARY TO ANY APPLICABLE LAW OR PUBLIC POLICY, SUCH WAIVER SHALL BE EFFECTIVE ONLY TO THE EXTENT, BUT TO THE FULLEST EXTENT, PERMITTED BY LAW OR PUBLIC POLICY. EACH GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT THIS AGREEMENT IS EFFECTIVE UPON SUCH GUARANTOR'S EXECUTION AND DELIVERY OF THIS AGREEMENT TO THE ADMINISTRATIVE AGENT ON BEHALF OF ALL OF THE GUARANTEED PARTIES. NO FORMAL ACCEPTANCE BY THE GUARANTEED PARTIES IS NECESSARY TO MAKE THIS AGREEMENT EFFECTIVE. 11 IN WITNESS WHEREOF, each Guarantor has executed this Agreement as of the date first written above. GRANITE CONSTRUCTION COMPANY, a California corporation By: /s/ William G. Dorey ---------------------------------------- William G. Dorey President By: /s/ William E. Barton ---------------------------------------- William E. Barton Chief Financial Officer Notice: c/o Granite Construction Incorporated P.O. Box 50085 Watsonville, CA 95077 Attn: William Barton, Senior Vice President, Chief Financial Officer Telephone: (831)761-4704 Facsimile: (831)722-9657 SIGNATURE PAGE 1 TO CONTINUING GUARANTY AGREEMENT IN WITNESS WHEREOF, each Guarantor has executed this Agreement as of the date first written above. GRANITE LAND COMPANY, a California corporation By: /s/ William G. Dorey --------------------------------------------- William G. Dorey President, Granite Construction Incorporated By: /s/ William E. Barton --------------------------------------------- William E. Barton Chief Financial Officer, Granite Construction Incorporated Notice: c/o Granite Construction Incorporated P.O. Box 50085 Watsonville, CA 95077 Attn: William Barton, Senior Vice President, Chief Financial Officer Telephone: (831)761-4704 Facsimile: (831)722-9657 SIGNATURE PAGE 2 TO CONTINUING GUARANTY AGREEMENT IN WITNESS WHEREOF, each Guarantor has executed this Agreement as of the date first written above. INTERMOUNTAIN SLURRY SEAL, INC., a Wyoming corporation By: /s/ Michael L. Thomas ---------------------------------------- Michael L. Thomas President By: /s/ David J. Brunton ---------------------------------------- David J. Brunton Chief Financial Officer Notice: c/o Granite Construction Incorporated P.O. Box 50085 Watsonville, CA 95077 Attn: William Barton, Senior Vice President, Chief Financial Officer Telephone: (831)761-4704 Facsimile: (831)722-9657 SIGNATURE PAGE 3 TO CONTINUING GUARANTY AGREEMENT IN WITNESS WHEREOF, each Guarantor has executed this Agreement as of the date first written above. POZZOLAN PRODUCTS COMPANY (P.P.C.), a Utah corporation By: /s/ Michael L. Thomas ---------------------------------------- Michael L. Thomas President By: /s/ David J. Brunton ---------------------------------------- David J. Brunton Chief Financial Officer Notice: c/o Granite Construction Incorporated P.O. Box 50085 Watsonville, CA 95077 Attn: William Barton, Senior Vice President, Chief Financial Officer Telephone: (831)761-4704 Facsimile: (831)722-9657 SIGNATURE PAGE 4 TO CONTINUING GUARANTY AGREEMENT IN WITNESS WHEREOF, each Guarantor has executed this Agreement as of the date first written above. GILC, L.P., a California Limited Partnership By: /s/ William E. Barton ------------------------------------------- William E. Barton Chief Executive Officer, GILC Incorporated, its sole General Partner By: /s/ Michael Futch ------------------------------------------- Michael Futch Secretary, GILC Incorporated, its sole General Partner Notice: c/o Granite Construction Incorporated P.O. Box 50085 Watsonville, CA 95077 Attn: William Barton, Senior Vice President, Chief Financial Officer Telephone: (831)761-4704 Facsimile: (831)722-9657 SIGNATURE PAGE 5 TO CONTINUING GUARANTY AGREEMENT IN WITNESS WHEREOF, each Guarantor has executed this Agreement as of the date first written above. GRANITE HALMAR CONSTRUCTION COMPANY, INC., a New York corporation By: /s/ William G. Dorey ---------------------------------------- William G. Dorey President By: /s/ William E. Barton ---------------------------------------- William E. Barton Chief Financial Officer Notice: c/o Granite Construction Incorporated P.O. Box 50085 Watsonville, CA 95077 Attn: William Barton, Senior Vice President, Chief Financial Officer Telephone: (831)761-4704 Facsimile: (831)722-9657 SIGNATURE PAGE 6 TO CONTINUING GUARANTY AGREEMENT EX-10.3 5 f91753exv10w3.txt EXHIBIT 10.3 EXHIBIT 10.3 ================================================================================ GRANITE CONSTRUCTION INCORPORATED ---------------------------------- FIRST AMENDMENT Dated as of June 15, 2003 to AMENDED AND RESTATED NOTE PURCHASE AGREEMENT Dated as of November 1, 2001 ---------------------------- Re: $60,000,000 6.54% Senior Notes due March 15, 2010 ================================================================================ FIRST AMENDMENT TO AMENDED AND RESTATED NOTE PURCHASE AGREEMENT THIS FIRST AMENDMENT dated as of June 15, 2003 (the or this "First Amendment") to that certain Amended and Restated Note Purchase Agreement dated as of November 1, 2001 is between GRANITE CONSTRUCTION INCORPORATED, a Delaware corporation (the "Company"), and each of the institutional investors listed on the signature pages hereto (collectively, the "Noteholders") RECITALS: A. The Company and each of the Noteholders have heretofore entered into that certain Amended and Restated Note Purchase Agreement dated as of November 1, 2001 (the "Note Purchase Agreement"). The Company has heretofore issued $60,000,000 aggregate principal amount of its 6.54% Senior Notes due March 15, 2010 (the "Notes"} pursuant to the Note Purchase Agreement. The Noteholders are the holders of 100% of the outstanding principal amount of the Notes. B. The Company and the Noteholders now desire to amend the Note Purchase Agreement in the respects, but only in the respects, hereinafter set forth. C. 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. D. All requirements of law have been fully complied with and all other acts and things necessary to make this First Amendment a valid, legal and binding instrument according to its terms for the purposes herein expressed have been done or performed. Now, THEREFORE, upon the full and complete satisfaction of the conditions precedent to the effectiveness of this First Amendment 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. AMENDMENTS. 1.1. Section 9.6(a)(I) of the Note Purchase Agreement shall be and is hereby amended by inserting the following new sentence at the end of such Section. "Notwithstanding the foregoing, Wilder shall not be required to execute a supplement to the Guaranty Agreement or otherwise Guaranty the Notes until the earliest to occur of: (A) Wilder becoming an obligor or guarantor of any Debt existing under the Bank Credit Agreement, (B)(I) the total net revenues of Wilder and its Subsidiaries for the period of the immediately preceding four fiscal quarters is equal to or greater than 15% of the consolidated total net revenues of the Company and its Subsidiaries for such period determined in accordance with GAAP, in each case as reflected in the most recent annual or quarterly financial statements of the Company and its Subsidiaries; or (II) the total assets of Wilder and its Subsidiaries, as of the last day of the immediately preceding fiscal quarter, is equal to or greater than 15% of consolidated total assets of the Company and its Subsidiaries as of such date determined in accordance with GAAP, in each case as reflected in the most recent annual or quarterly financial statements of the Company and its Subsidiaries and (C) Wilder becoming a Wholly-Owned Subsidiary of the Company." 1.2. SCHEDULE B to the Note Purchase Agreement shall be and is hereby amended by inserting the following new definition in the proper alphabetical order: ""Wilder" shall mean Wilder Construction Co., a Washington corporation, and any successor thereto." SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. 2.1. To induce the Noteholders to execute and deliver this First Amendment (which representations shall survive the execution and delivery of this First Amendment), the Company represents and warrants to the Noteholders that: (a) this First Amendment has been duly authorized, executed and delivered by it and this First Amendment constitutes the legal, valid and binding obligation, contract and agreement of the Company enforceable against it in accordance with its 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 Note Purchase Agreement, as amended by this First Amendment, constitutes the legal, valid and binding obligation, contract and agreement of the Company enforceable against it in accordance with its 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; (c) the execution, delivery and performance by the Company of this First Amendment (i) has been duly authorized by all requisite corporate action and, if required, shareholder action, (ii) does not require the consent or approval of any governmental or regulatory body or agency, and (iii) will not (A) violate (1) any provision of law, statute, rule or regulation or its certificate of incorporation or bylaws, (2) any order of any court or any rule, regulation or order of any other agency or government binding upon it, or (3) 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 (B) 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 (iii)(A)(3) of this Section 2.l(c); - 2 - (d) as of the date hereof and after giving effect to this First Amendment, no Default or Event of Default has occurred which is continuing and no waiver of Default or Event of Default is in effect; and (e) except as set forth on SCHEDULE 2 hereto, all the representations and warranties contained in Section 5 of 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. SECTION 3. CONDITIONS TO EFFECTIVENESS OF THIS FIRST AMENDMENT. 3.1. Upon satisfaction of each and every one of the following conditions, this First Amendment shall become effective as of June 27, 2003: (a) executed counterparts of this First Amendment, duly executed by the Company and the holders of at least 51% of the outstanding principal of the Notes, shall have been delivered to the Noteholders; (b) each Guarantor shall have duly executed the reaffirmation of Guaranty Agreement attached hereto; (c) 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; (d) each Noteholder shall have received evidence satisfactory to it that (i) Wilder Construction Co. is not an obligor or guarantor of Debt under the Credit Agreement dated as of June 27, 2003 among the Company, each lender from time to time party thereto and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer and (ii) the Amended and Restated Note Purchase Agreement dated as of November 1, 2001 by and among the Company and the institutional investors named therein has been amended in the same manner as the Note Purchase Agreement has been amended by this First Amendment; (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 the amount set forth opposite such holder's name in SCHEDULE 1 attached hereto; and (f) the Company shall have paid the fees and expenses of Schiff Hardin & Waite, special counsel to the Noteholders, in connection with the negotiation, preparation, approval, execution and delivery of this First Amendment. Upon receipt of all of the foregoing, this First Amendment shall become effective. - 3 - SECTION 4. MISCELLANEOUS. 4.1. This First Amendment shall be construed in connection with and as part of the Note Purchase Agreement, and except as modified and expressly amended by this First Amendment, 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. 4.2. Any and all notices, requests, certificates and other instruments executed and delivered after the execution and delivery of this First Amendment may refer to the Note Purchase Agreement without making specific reference to this First Amendment but nevertheless all such references shall include this First Amendment unless the context otherwise requires. 4.3. The descriptive headings of the various Sections or parts of this First Amendment are for convenience only and shall not affect the meaning or construction of any of the provisions hereof. 4.4. This First Amendment shall he governed by and construed in accordance with the laws of the State of Illinois. [Remainder of page intentionally left blank.] - 4 - 4.5. The execution hereof by you shall constitute a contract between us for the uses and purposes hereinabove set forth, and this First Amendment may be executed in any number of counterparts, each executed counterpart constituting an original, but all together only one agreement. GRANITE CONSTRUCTION INCORPORATED By /s/ William G. Dorey --------------------- William G. Dorey President By /s/ William E. Barton ---------------------- William E. Barton Chief Financial Officer SIGNATURE PAGE TO THE FIRST AMENDMENT TO THE MARCH 1, 1998 PURCHASE AGREEMENT Accepted and Agreed to: ALLSTATE LIFE INSURANCE COMPANY By __________________________ Name: By___________________________ Name: Authorized Signatories UNITED OF OMAHA LIFE INSURANCE COMPANY By /s/ Curtis R. Caldwell --------------------------- Its Vice President MUTUAL OF OMAHA INSURANCE COMPANY By /s/ Curtis R. Caldwell --------------------------- Its Vice President COMPANION LIFE INSURANCE COMPANY By /s/ Curtis R. Caldwell --------------------------- Name: Curtis R. Caldwell Title: Authorized Signer SIGNATURE PAGE TO THE FIRST AMENDMENT TO THE MARCH 1, 1998 NOTE PURCHASE AGREEMENT NATIONWIDE LIFE INSURANCE COMPANY By /s/ Mark W. Poeppelman ---------------------------------------- Name: Mark W. Poeppelman Title: Vice President THRIVENT FINANCIAL FOR LUTHERANS, successor by merger to Lutheran Brotherhood By _________________________________________ Name: Glen J. Vanic TITLE: Portfolio Manager AMERICAN UNITED LIFE INSURANCE COMPANY By _________________________________________ Its SIGNATURE PAGE TO THE FIRST AMENDMENT TO THE MARCH 1, 1998 NOTE PURCHASE AGREEMENT NATIONWIDE LIFE INSURANCE COMPANY By_______________________________________ Name: Title: THRIVENT FINANCIAL FOR LUTHERANS, successor by merger to Lutheran Brotherhood By /s/ Glen J. Vanic ----------------------------------------- Name: Glen J. Vanic Title: Portfolio Manager AMERICAN UNITED LIFE INSURANCE COMPANY By_________________________________________ Its SIGNATURE PAGE TO THE FIRST AMENDMENT TO THE MARCH 1, 1998 NOTE PURCHASE AGREEMENT Accepted and Agreed to: ALLSTATE LIFE INSURANCE COMPANY By /s/ Rhonda L. Hopps -------------------------------------- Name: Rhonda L. Hopps By /s/ Jerry D. Zinkula -------------------------------------- Name: Jerry D. Zinkula Authorized Signatories UNITED OF OMAHA LIFE INSURANCE COMPANY By ______________________________________ Its MUTUAL OF OMAHA INSURANCE COMPANY By ______________________________________ Its COMPANION LIFE INSURANCE COMPANY By_______________________________________ Name: Title: SIGNATURE PAGE TO THE FIRST AMENDMENT TO THE MARCH 1, 1998 NOTE PURCHASE AGREEMENT NATIONWIDE LIFE INSURANCE COMPANY By_______________________________________ Name: Title: THRIVENT FINANCIAL FOR LUTHERANS, successor by merger to Lutheran Brotherhood By __________________________________________ Name: Glen J. Vanic Title: Portfolio Manager AMERICAN UNITED LIFE INSURANCE COMPANY By /s/ CHRISTOPHER PAHLKE ------------------------------------------ Its CHRISTOPHER PAHLKE VP PRIVATE PLACEMENTS SIGNATURE PAGE TO THE FIRST AMENDMENT TO THE MARCH 1, 1998 NOTE PURCHASE AGREEMENT REAFFIRMATION OF GUARANTY AGREEMENT The undersigned Guarantors hereby acknowledge and agree to the foregoing First Amendment to Note Purchase Agreement and reaffirm the Guaranty Agreement dated as of March 1, 1998 given in favor of each Noteholder and their respective successors and assigns: GRANITE CONSTRUCTION COMPANY By /s/ William G. Dorey --------------------------- William G. Dorey President BY /s/ William E. Barton --------------------------- William E. Barton Chief Financial Officer GRANITE LAND COMPANY BY /s/ Scott D. Wolcott --------------------------- Scott D. Wolcott President By /s/ William G. Dorey --------------------------- William G. Dorey President, Granite Construction Incorporated GRANITE HALMAR CONSTRUCTION COMPANY, INC. By /s/ William G. Dorey --------------------------- William G. Dorey President By /s/ William E. Barton ----------------------------- William E. Barton Chief Financial Officer SIGNATURE PAGE TO THE REAFFIRMATION OF GUARANTY TO THE MARCH 1, 1998 GUARANTY AGREEMENT INTERMOUNTAIN SLURRY SEAL, INC. By /s/ Michael L. Thomas -------------------------------- Michael L. Thomas President By /s/ David J. Brunton -------------------------------- David J. Brunton Chief Financial Officer POZZOLAN PRODUCTS COMPANY (P.P.C.) By /s/ Michael L. Thomas --------------------------------- Michael L. Thomas President By /s/ David J. Brunton --------------------------------- David J. Brunton Chief Financial Officer GILC, L.P. By: GILC Incorporated, its sole General Partner By /s/ William E. Barton --------------------------------- William E. Barton Chief Executive Officer By /s/ R.C. Allbritton --------------------------------- R.C. Allbritton Chief Financial Officer SIGNATURE PAGE TO THE REAFFIRMATION OF GUARANTY TO THE MARCH 1, 1998 GUARANTY AGREEMENT FEE SCHEDULE Allstate Life Insurance Company $ 8,555.56 United of Omaha Life Insurance Company $ 3,888.89 Mutual of Omaha Insurance Company $ 1,944.45 Companion Life Insurance Company $ 777.78 Nationwide Life Insurance Company $ 3,111.11 American United Life Insurance Company $ 1,944.45 Thrivent Financial For Lutherans $ 3,111.11 Total: $23,333.33 SCHEDULE 1 (to First Amendment) VARIANCES TO REPRESENTATIONS AND WARRANTIES The Company represents and warrants to each holder that except as hereinafter set forth in this Schedule 2, each of the representations and warranties set forth in Section 5 of the Note Purchase Agreement is true and correct as of the date hereof. The Section references hereinafter set forth correspond to the similar sections of the Note Purchase Agreement which are supplemented hereby: Section 5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates. (a) Schedule 5.4 to the First Amendment contains (except as noted therein) complete and correct lists (1) of the Company's Subsidiaries, showing, as to each Subsidiary, the correct name thereof, the jurisdiction of its organization, and the percentage of shares of each class of its capital stock or similar equity interests outstanding owned by the Company and each other Subsidiary, (2) of the Company's Affiliates, other than Subsidiaries and (3) of the Company's directors and senior officers. (b) All of the outstanding shares of capital stock or similar equity interests of each Subsidiary shown in Schedule 5.4 to the First Amendment as being owned by the Company and its Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by the Company or another Subsidiary free and clear of any Lien (except as otherwise disclosed in Schedule 5.4 to the First Amendment). (c) Each Subsidiary identified in Schedule 5.4 to the First Amendment is a corporation or other legal entity duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and is duly qualified as a foreign corporation or other legal entity and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each such Subsidiary has the corporate or other power and authority to own or hold under lease the properties it purports to own or hold under lease and to transact the business it transacts and proposes to transact. (d) No Subsidiary is a party to, or otherwise subject to, any legal restriction or any agreement or instrument (other than this Agreement, the agreements listed on Schedule 5.4 to the First Amendment and customary limitations imposed by corporate law statutes) restricting the ability of such Subsidiary to pay dividends out of profits or make any other similar distributions of profits to the Company or any of its Subsidiaries that own outstanding shares of capital stock or similar equity interests of such Subsidiary. Section 5.8. Litigation; Observance of Agreements, Statutes and Orders. (a) Except as disclosed in Schedule 5.8 to the First Amendment, there are no actions, suits or proceedings pending or, to the knowledge of the Company, threatened against or affecting the Company or SCHEDULE 2 (to First Amendment) any Subsidiary or any property of the Company or any Subsidiary in any court or before any arbitrator of any kind or before or by any Governmental Authority that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. Section 5.15. Existing Debt. Except as described therein, Schedule 5.15 to the First Amendment sets forth a complete and correct list of all outstanding Debt of the Company and its Subsidiaries as of May 31, 2003 (other than with respect to the Debt of Wilder and Presidio Vista which are as of April 30, 2003), since which date there has been no Material change in the amounts, interest rates, sinking funds, installment payments or maturities of the Debt of the Company or its Subsidiaries. Neither the Company nor any Subsidiary is in default and no waiver of default is currently in effect, in the payment of any principal or interest on any Debt of the Company or such Subsidiary and no event or condition exists with respect to any Debt of the Company or any Subsidiary that would permit (or that with notice or the lapse of time, or both, would permit) one or more Persons to cause such Debt to become due and payable before its stated maturity or before its regularly scheduled dates of payment. Section 5.16. Existing Investments. Schedule 5.16 to the First Amendment sets forth a complete and correct list of all outstanding Investments of the Company and its Subsidiaries as of May 31, 2003, since which date there has been no Material change in the amounts of such Investments. Section 5.18. Environmental Matters. Neither the Company nor any Subsidiary has knowledge of any Material claim or has received any notice of any Material claim, and no proceeding has been instituted raising any Material claim against the Company or any of its Subsidiaries or any of their respective real properties now or formerly owned, leased or operated by any of them or other assets, alleging any damage to the environment or violation of any Environmental Laws. Except as otherwise disclosed in Schedule 5.18 to the First Amendment: (a) neither the Company nor any Subsidiary has knowledge of any facts which would give rise to any Material claim, public or private, or Material violation of Environmental Laws or damage to the environment emanating from, occurring on or in any way related to real properties now or formerly owned, leased or operated by any of them or to other assets or their use; (b) neither the Company nor any of its Subsidiaries (l)has stored any Hazardous Materials on real properties now or formerly owned, leased or operated by any of them or (2) has disposed of any Hazardous Materials in a manner contrary to any Environmental Laws; in each case in any manner that could reasonably be expected to result in a Material Adverse Effect; and (c) all buildings on all real properties now owned, leased or operated by the Company or any of its Subsidiaries are in material compliance with applicable Environmental Laws. S-2-2 GRANITE CONSTRUCTION INCORPORATED SCHEDULE 5.4 SUBSIDIARIES, OTHER AFFILIATES, AND DIRECTORS AND OFFICERS

JURISDICTION OF OWNERSHIP BY COMPANY AND/OR NAME ORGANIZATION CAPITAL STRUCTURE SUBSIDIARY NAME OWNERSHIP POSITION 1 Granite Construction International California C Corp GCI 100.00% investor 1 Granite Construction Company ("GCCo") California C Corp GCI 100.00% investor 1 Wilder Construction Company ("Wilder") Washington C Corp GCCo 60.04% investor 1 Wilder Realty Washington C Corp Wilder 100.00% investor 1 Wilder Washington Washington C Corp Wilder 100.00% investor 2 Axton Aggregate Partnership Washington General Partnership Wilder 50.00% GP 2 Axton Aggregate Company Washington General Partnership Wilder 50.00% GP 1 HLA / Wilder, a Joint Venture Washington Construction Joint Venture Wilder 55.00% partner 2 Largo Properties, LLC Maryland Limited Liability Company GCCo 33.30% member 2 Riverside Motorsports Park, LLC California Limited Liability Company GCCo 2.50% member 2 California Corridor Constructors, a Joint Venture California Construction Joint Venture GCCo 30.00% partner 1 Granite Kiewit, a Joint Venture Montana Construction Joint Venture GCCo 76.00% sponsor 1 Granite2-Sundt, a Joint Venture Arizona Construction Joint Venture GCCo 65.00% sponsor 1 Granite-Frontier Kemper, a Joint Venture Arkansas Construction Joint Venture GCCo 82.00% sponsor 2 Granite-Meyers, a Joint Venture California Construction Joint Venture GCCo 41.20% managing 1 Granite-PCL, a Joint Venture Florida Construction Joint Venture GCCo 64.70% sponsor 1 Granite-Rizzani de Eccher, a Joint Venture Florida Construction Joint Venture GCCo 60.00% sponsor 1 Granite-Sundt, a Joint Venture Arizona Construction Joint Venture GCCo 55.00% sponsor 2 K-G Leasing, a Joint Venture California Construction Joint Venture GCCo 30.00% partner 2 K-G-W Leasing, a Joint Venture Utah Construction Joint Venture GCCo 23.00% partner 2 Kiewit-Granite, a Joint Venture California Construction Joint Venture GCCo 25.00% partner 1 Las Vegas Monorail Team, a Joint Venture Nevada Construction Joint Venture GCCo 44.80% managing 2 LGS, a Joint Venture Maryland Construction Joint Venture GCCo 30.00% partner 1 Minnesota Transit Constructors, a Joint Venture Minnesota Construction Joint Venture GCCo 56.50% sponsor 1 River Mountain Constructors, a Joint Venture Arkansas Construction Joint Venture GCCo 100.00% sponsor 1 Sampson-Granite, a Joint Venture California Construction Joint Venture GCCo 40.00% partner 1 Sierra Blanca Constructors, a Joint Venture New Mexico Construction Joint Venture GCCo 52.00% sponsor 2 TGM Constructors Kentucky Construction Joint Venture GCCo 25.00% partner 2 Tri-County Rail Constructors, a Joint Venture Florida Construction Joint Venture GCCo 30.00% partner 1 Virginia Approach Constructors Maryland Construction Joint Venture GCCo 79.00% partner 2 Wasatch Constructors, a Joint Venture Utah Construction Joint Venture GCCo 23.00% partner 2 Washington-Granite, a Joint Venture California Construction Joint Venture GCCo 40.00% partner 2 Western Summit-TIC-Granite, a Joint Venture Georgia Construction Joint Venture GCCo 15.00% partner 2 WSCI TIC Granite, a Joint Venture Georgia Construction Joint Venture GCCo 15.00% partner 2 Yonkers Contracting Company, Inc. / Granite New Jersey Construction Joint Venture GCCo 40.00% partner Construction Company, a Joint Venture 1 Granite Halmar Construction Company, Inc. ("GHCCo") New York C Corp GCI 100.00% investor 1 Halmar-Egis, a Joint Venture New York Construction Joint Venture GHCCo 100.00% partner 1 Halmar-Schiavone, a Joint Venture New York Construction Joint Venture GHCCo 100.00% partner 1 Granite Halmar/Schiavone, a Joint Venture New York Construction Joint Venture GHCCo 60.00% partner 1 GH/JMA, a Joint Venture New York Construction Joint Venture GHCCo 51.00% partner 2 Schiavone/Granite Halmar, a Joint Venture New York Construction Joint Venture GHCCo 40.00% partner 1 Intermountain Slurry Seal, Inc. Wyoming C Corp GCI 100.00% investor 1 Pozzolan Products Company Utah C Corp GCI 100.00% investor

Schedule 5.4 Page 1 of 2 GRANITE CONSTRUCTION INCORPORATED SCHEDULE 5.4 SUBSIDIARIES, OTHER AFFILIATES, AND DIRECTORS AND OFFICERS

JURISDICTION OF OWNERSHIP BY COMPANY AND/OR NAME ORGANIZATION CAPITAL STRUCTURE SUBSIDIARY NAME OWNERSHIP POSITION 1 Granite Land Company ("GLC") California C Corp GCI 100.00% investor 1 GLC Fort Worth, LLC ("GLCFW, LLC") Texas Limited Liability Company GLC 100.00% GP 1 Presidio Vista I, LTD Texas Limited Partnership GLC 89.00% LP GLCFW, LLC 1.00% GP 1 Main Street Ventures, LLC California Limited Liability Company GLC 90.00% managing 1 Granite/Mandalay Bay Finance, LLC California Limited Liability Company GLC 70.00% member 1 Granite/Mandalay, LLC ("GM, LLC") California Limited Liability Company GLC 90.00% member 2 Oly/Granite General Partnership California Limited Partnership GM, LLC 10.00% LP 2 Oly/Mandalay Bay General Partnership California Limited Partnership GM, LLC 10.00% LP 2 Phase 1 Regional Park Limited California Limited Partnership GLC 25.00% LP 2 Williamson Ranch Plaza, LP California Limited Partnership GLC 25.00% LP 1 Granite Grado Ventures, LLC ("GGV, LLC") California Limited Liability Company GLC 90.00% managing 1 Granite Grado Ventures Project 1, LLC California Limited Liability Company GGV, LLC 100.00% managing 1 GILC, Incorporated ("GILC") California C Corp GCI 100.00% investor 1 GILC, LP California Limited Partnership GCCo 99.00% LP GILC 1.00% GP 1 Wilcott Corporation Colorado C Corp GCI 100.00% investor 1 Granite SR 91 Corporation ("GSR91") California C Corp GCI 100.00% investor 1 Granite SR 91, LP ("SR91, LP") California Limited Partnership GCI 99.00% LP GSR91 1.00% GP 2 California Private Transportation Company, LP California Limited Partnership SR91, LP 22.22% LP 1 GTC, Inc. ("GTC") Texas C Corp GCI 100.00% investor 1 GTC II, LP ("GTC, LP") Texas Limited Partnership GCI 99.00% LP GTC 1.00% GP 1 WR II Associates, LTD Texas Limited Partnership GCI 69.88% LP GTC, LP 1.00% GP 2 Paramount-Nevada Asphalt Company, LLC Nevada Limited Liability Company GCI 50.00% member

3 DIRECTORS David H. Watts - Chairman of the David H. Kelsey - Director Board & CEO Joseph J. Barclay - Director Rebecca A. McDonald - Director Richard M. Brooks - Director Raymond E. Miles - Director Linda Griego - Director J. Fernando Niebla - Director Brian C. Kelly - Director George B. Searle - Director SENIOR OFFICERS William G. Dorey - President & COO Mark E. Boitano - Executive Vice President & Branch Division Manager Patrick M. Costanzo - Senior Vice President & Heavy Construction Division Manager William E. Barton - Senior Vice President & CFO R.C. Allbritton - Vice President & Treasurer Michael Futch - Vice President, Secretary & General Counsel Garry M. Higdem - Vice President & Heavy Construction Division Asstistant Manager James H. Roberts - Vice President & Branch Division Assistant Manager Michael L. Thomas - Vice President & Director of Human Resources Schedule 5.4 Page 2 of 2 GRANITE CONSTRUCTION INCORPORATED SCHEDULE 5.8 LITIGATION 5.8(a)

DEFENDANT NATURE OF CASE COMMENTS USA ex rel Maxfield/Peterson False Calims Act arising from I-15, Salt Lake See 12/31/02 10-K, PART I, Item vs. Wasatch (GCCo City, UT construction contract 3, or 03/31/03 10-Q, NOTE 7, construction joint venture) for more information

5.8(b) NONE Schedule 5.8 GRANITE CONSTRUCTION INCORPORATED SCHEDULE 5.15 EXISTING INDEBTEDNESS

INTEREST BORROWER LENDER'S NAME DESCRIPTION RATE MATURITY BALANCE Granite Construction Company Benna Investments Glendale NV property 6.50% 12/01/07 1,043,652 Granite Construction Company Rosemary's Mountain Southern CA Aggregate property 8.82% 06/01/04 1,400,000 Granite Construction Incorporated Private Placement Due 03/15/10 Refinance debt & general corporate purposes 6.54% 03/15/10 46,666,668 Granite Construction Incorporated Private Placement Due 05/01/13 Refinance debt & general corporate purposes 6.96% 05/01/13 75,000,000 Granite Construction Incorporated Lenders under existing Bank Credit Agreement Self insured Worker's Compensation 100.0 bps 04/30/02 1,293,390 Granite Construction Company Bank of America Letter of Credit City of Patterson Performance Guarantee 32.5 bps 02/04/04 200,000 Wilder Construction Company (1) Gebhardt Promisory Note - stock repurchase prime 05/16/07 180,997 Wilder Construction Company (1) Hesell Promisory Note - stock repurchase prime 03/15/10 2,607,761 Wilder Construction Company (1) Ross Promisory Note - stock repurchase prime 04/29/05 2,588,757 Wilder Construction Company (1) Fulton Promisory Note - stock repurchase prime 12/20/07 104,317 Wilder Construction Company (1) Gent Promisory Note - stock repurchase prime 12/20/07 948,333 Wilder Construction Company (1) Jonasson Promisory Note - stock repurchase prime 12/20/07 569,000 Wilder Construction Company (1) Suhadolnik Promisory Note - stock repurchase prime 12/20/07 246,567 Wilder Construction Company (1) Giammalva Promisory Note - stock repurchase prime 03/15/06 897,083 Wilder Construction Company (1) Bank of America Priority Debt - Construction Equipment 3.90% 06/01/05 975,000 Wilder Construction Company (1) Bank of America Priority Debt - Alaska Yard & Office 7.40% 12/01/08 799,938 Wilder Construction Company (1) Bank of America Priority Debt - Line of Credit prime minus 100 bp 06/01/04 1,000,000 Presidio Vista I, LTD (2) Dell USA, L.P. Priority Debt - Presidio Vista Development 7.50% 02/08/11 4,003,877 $140,525,340 Granite Construction Incorporated BNP Paribas $30MM notional amount floating interest rate swap 6 Mth LIBOR + 09/15/05 (559,168) agreement 386.75 bps Granite Construction Incorporated BNP Paribas $20MM notional amount floating interest rate swap 6 Mth LIBOR + 11/05/05 (369,914) agreement 418.00 bps ($929,082)

(1) - Wilder debt is not guaranteed by Granite Construction Incorporated or any of it non-Wilder Subsidiaries or Affiliates (2) - This debt is non-recourse debt secured by the assets of the development project and is not guaranteed by Granite Construction Incorporated or any of its Subsidiaries or Affiliates. Schedule 5.15 GRANITE CONSTRUCTION INCORPORATED SCHEDULE 5.16 EXISTING INVESTMENTS

INVESTMENT TYPE VALUE Paramount-Nevada Asphalt Company, LLC Asphalt Tank Farm 2,299,957 Bank of America (BA) Bankers Acceptance 1,228,989 Bank of America (BA) Bankers Acceptance 4,992,625 Bank of America CD Certificate of Deposit 2,500,000 AOL Time Warner Commercial Paper 2nd Tier 4,983,436 Kraft Foods Inc Commercial Paper 2nd Tier 4,994,263 GMAC Commercial Paper Split Rated 3,990,133 Allianz Finance Corp Commercial Paper Top Tier 3,991,944 Citigroup Global Markets Commercial Paper Top Tier 4,994,704 General Electric Captial Service Commercial Paper Top Tier 3,998,360 New York Times Commercial Paper Top Tier 3,996,000 Schering-Plough Commercial Paper Top Tier 4,995,703 Toyota Motor Corp Commercial Paper Top Tier 4,997,797 Transamerica Financial Corp Commercial Paper Top Tier 4,989,931 Verizon Net Funding Commercial Paper Top Tier 2,991,420 Granite Halmar/Schiavone, a Joint Venture Construction Joint Venture 350,000 Granite Kiewit, a Joint Venture Construction Joint Venture 105,962 Granite2-Sundt, a Joint Venture Construction Joint Venture 5,163,735 Granite-Rizzani de Eccher, a Joint Venture Construction Joint Venture (2,524,188) Granite-Sundt, a Joint Venture Construction Joint Venture 497,796 Halmar-Egis, a Joint Venture Construction Joint Venture 2,977,542 Halmar-Schiavone, a Joint Venture Construction Joint Venture 5,412,624 K-G Leasing, a Joint Venture Construction Joint Venture 341,615 K-G-W Leasing, a Joint Venture Construction Joint Venture 759,154 Kiewit-Granite, a Joint Venture Construction Joint Venture 445,740 LGS, a Joint Venture Construction Joint Venture 6,434,245 Minnesota Transit Constructors, a Joint Venture Construction Joint Venture 1,667,811 Sampson-Granite, a Joint Venture Construction Joint Venture 11,008 Schiavone/Granite Halmar, a Joint Venture Construction Joint Venture 800,032 Sierra Blanca Constructors, a Joint Venture Construction Joint Venture 2,842,704 TGM Constructors Construction Joint Venture 1,553,084 Tri-County Rail Constructors, a Joint Venture Construction Joint Venture 1,561,575 Virginia Approach Constructors Construction Joint Venture 2,370,000 Wasatch Constructors, a Joint Venture Construction Joint Venture 91,505 Washington-Granite, a Joint Venture Construction Joint Venture 252,968 Western Summit-TIC-Granite, a Joint Venture Construction Joint Venture 15,565 Yonkers Contracting Company, Inc. / Granite Construction Company, a Joint Venture Construction Joint Venture 2,489,018 Largo Properties, LLC Construction JV Property 2,123,970 Rancho San Carlos Partnership, L.P. Construction Note 6,000,000 Granite/Mandalay Bay Finance, LLC Development Project 1,905,999 Granite/Mandalay, LLC ("GM, LLC") Development Project 2,558,017 Main Street Ventures, LLC Development Project 51,740 Phase 1 Regional Park Limited Development Project 546,165 Presidio Vista I, LTD Development Project 135,000 Riverside Motorsports Park, LLC Development Project 50,000 Williamson Ranch Plaza, LP Development Project (364,595) WR II Associates, LTD Development Project 460,882 Bank of America/Nations Fund Sweep Money Market Funds 1,001,172 Fidelity Inst'l MM Domestic 690 Money Market Funds 7,654,560 Fidelity Inst'l MM Govern. 057 Money Market Funds 3,112,553

Schedule 5.16 Page 3 of 6 GRANITE CONSTRUCTION INCORPORATED SCHEDULE 5.16 EXISTING INVESTMENTS

INVESTMENT TYPE VALUE JP Morgan Prime Institutional Fund Money Market Funds 1,466,920 JP Morgan Tax-Free Institutional Fund Money Market Funds 15,062,571 JPM Chase Overnight Investment Money Market Funds 3,873,664 CA Revenue Anticipation Note Municipal Bonds 5,003,119 California State Water Department Municipal Bonds 3,000,000 New Jersey Transit Series B Municipal Bonds 3,000,000 TX Tax & Revenue Antic. Bond Municipal Bonds 2,006,560 UT Transit Authority Revenue Bond Municipal Bonds 2,975,881 Franklin Balance Sheet Inv. Fund Mutual Fund - Equity 698,014 Lord Abbett Mid - Cap Value Fund Mutual Fund - Equity 217,013 Putnam Fund for Growth & Income Mutual Fund - Equity 2,205,437 Putnam International Growth CLA Mutual Fund - Equity 2,522,837 Putnam Investors Fund Mutual Fund - Equity 430,494 Putnam New Opportunities Fund Mutual Fund - Equity 803,789 Putnam Vista Fund Mutual Fund - Equity 728,709 Putnam Voyager Fd CLA Mutual Fund - Equity 629,304 Loomis Sayles Bond FD Mutual Fund - Fixed Income 1,659,494 Pimco Total Return FD Mutual Fund - Fixed Income 2,416,837 TIC Holdings, Inc stock 12,535,179 Wilder Construction Company ("Wilder") stock 26,932,686 California Private Transportation Company, LP Toll Road 354,349 Fannie Mae US Treasury & Agency Notes 3,391,481 Fannie Mae US Treasury & Agency Notes 2,993,900 Fannie Mae US Treasury & Agency Notes 5,074,892 Federal Farm Credit Bank US Treasury & Agency Notes 5,100,743 Federal Home Loan Bank US Treasury & Agency Notes 2,707,728 Federal Home Loan Bank US Treasury & Agency Notes 1,994,258 Federal Home Loan Bank US Treasury & Agency Notes 5,082,445 Federal Home Loan Bank US Treasury & Agency Notes 5,177,271 Freddie Mac US Treasury & Agency Notes 2,997,233 Freddie Mac US Treasury & Agency Notes 1,497,975 Freddie Mac US Treasury & Agency Notes 5,104,376 Sallie Mae US Treasury & Agency Notes 5,055,638 U.S. Treasury Note US Treasury & Agency Notes 2,000,000 U.S. Treasury Note US Treasury & Agency Notes 1,552,952 U.S. Treasury Note US Treasury & Agency Notes 2,100,975 U.S. Treasury Note US Treasury & Agency Notes 3,100,238 $262,255,179

Schedule 5.16 Page 4 of 6 GRANITE CONSTRUCTION INCORPORATED SCHEDULE 5.18 ENVIRONMENTAL MATTERS 5.18(a) Granite Construction in the normal course of business utilizes petroleum (hydrocarbon) products which may be considered hazardous materials when encountered at regulatory levels established by the Federal EPA or the Regional State EPA. The utilization of these asphalt products, diesel, and gasoline over the years of operations have the potential of creating exposure to environmental clean up requirements. All underground tanks meet current requirements. There are no pending governmental ordered clean up requirements. However, the following represents estimates based on construction industry housekeeping practices as encountered during our normal course of business. Except as indicated with an " * ", these costs do not represent actual identified exposures. Items indicated with an " * " are carried on the books as a liability.

- ----------------------------------------------------------------------------------------- LOCATIONS DESCRIPTION AMOUNT - --------------------- --------------------------------------------- ------- Anchorage, AK Surface Spills, wash rack facilities 60,000 Anchorage, AK Surface Spills, former AC Plant 17,500 Huachuca City, AZ Surface Spills, AC Plant 15,000 Marana, AZ Surface Spills, AC Plant 15,000 Tucson, AZ Surface Spills 10,000 Tucson, AZ AC Plant 25,000 29 Palms, CA * Surface Spills, AC Plant 4,409 Arcata, CA * Surface Spills, AC Plant 236,000 Arvin, CA Surface Spills, AC Plant 25,000 Bakersfield, CA Surface Spills, AC Plant 250,000 Bishop, CA Surface Spills, AC Plant 15,000 Buelton, CA Surface Spills, AC Plant 50,000 City of Blue Lake, CA Surface Spills 40,000 Coalinga, CA Surface Spills, AC Plant 50,000 Concord, CA Surface Spills, AC Plant 35,000 Crescent City, CA * Surface Spills, AC Plant 682,836 Ducor, CA * Surface Spills, AC Plant 12,529 El Centro, CA Surface Spills, AC Plant 25,000 Felton, Ca Surface Spills, AC Plant 100,000 French Camp, CA Surface Spills, AC Plant, old fill material 500,000 Highway 175, CA * Surface Spills, AC Plant 150,000 Indio, CA Surface Spills, AC Plant 25,000 Inyokern, CA Surface Spills, AC Plant 25,000 Kelseyville, CA * Surface Spills, AC Plant 873,000 Lee Vining, CA Surface Spills, AC Plant 15,000 Littlerock, CA Surface Spills, AC Plant 25,000 Longvale, CA * Surface Spills, AC Plant 274,000 Los Banos, CA AC Plant 10,000 Pleasanton, CA AC Plant 10,000 Rio Linda, CA Surface Spills, AC Plant 50,000 Sacramento, CA Surface Spills, AC Plant 500,000 Salinas, CA Surface Spills, AC Plant 10,000 Salinas, CA Former Underground Storage Tanks 200,000 San Jose, CA Surface Spills 10,000 Santa Barbara, CA Surface Spills 25,000

Schedule 5.18 Page 5 of 6 GRANITE CONSTRUCTION INCORPORATED SCHEDULE 5.18 ENVIRONMENTAL MATTERS 5.18(a) Granite Construction in the normal course of business utilizes petroleum (hydrocarbon) products which may be considered hazardous materials when encountered at regulatory levels established by the Federal EPA or the Regional State EPA. The utilization of these asphalt products, diesel, and gasoline over the years of operations have the potential of creating exposure to environmental clean up requirements. All underground tanks meet current requirements. There are no pending governmental ordered clean up requirements. However, the following represents estimates based on construction industry housekeeping practices as encountered during our normal course of business. Except as indicated with an " * ", these costs do not represent actual identified exposures. Items indicated with an " * " are carried on the books as a liability.

- ----------------------------------------------------------------------------------------- LOCATIONS DESCRIPTION AMOUNT - ------------------- ----------------------------------------- ---------- Tracy, CA Surface Spills, AC Plant 25,000 Ukiah, CA * Surface Spills, AC Plant 430,000 Watsonville, CA Surface Spills 35,000 Watsonville, CA Former Underground Storage Tanks 35,000 Tampa, FL Surface Spills 75,000 Odenton, MD Surface Spills 100,000 Carson City, NV Surface Spills, AC Plant 10,000 Lockwood, NV Surface Spills, AC Plant 50,000 Sparks, NV Surface Spills, AC Plant 100,000 Wappinger Falls, NY Surface Spills 100,000 Lubbock, TX Surface Spills, AC Plant 100,000 Lubbock, TX Surface Spills 75,000 Lubbock, TX Surface Spills 50,000 Morgan County, UT Surface Spills 10,000 North Ogden, UT Old fill material 250,000 Ogden, UT * Former Webb AC Plant 723,377 Salt City, UT * Former 2200 North AC Plant 132,363 Salt Lake City, UT AC Plant 150,000 Salt Lake City, UT Surface Spills 50,000 Salt Lake City, UT * Former Whitehill AC Plant 25,288 Sandy City, UT Surface Spills, AC Plant 100,000 Kearns, UT * Surface Spills, AC Plant 12,529 Wasatch County, UT Surface Spills, AC Plant 10,000 West Haven, UT Surface Spills, AC Plant 25,000 Bellington, WA Hannegan surface spills, AC Plant, shop 500,000 Everett, WA Surface Spills, AC Plant 100,000 Whatcom County, WA Former AC Plant 260,000 Whatcom County, WA Former UST and shop area 17,500 ---------- $7,921,331 ----------

5.18 (b) AND (c) NONE Schedule 5.18 Page 6 of 6 EX-10.4 6 f91753exv10w4.txt EXHIBIT 10.4 EXHIBIT 10.4 ================================================================================ GRANITE CONSTRUCTION INCORPORATED ----------------------------- FIRST AMENDMENT Dated as of June 15, 2003 to NOTE PURCHASE AGREEMENT Dated as of May 1, 2001 ----------------------------- Re: $75,000,000 6.96% Senior Notes due May 1, 2013 ================================================================================ FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT THIS FIRST AMENDMENT dated as of June 15, 2003 (the or this "First Amendment") to that certain Note Purchase Agreement dated as of May 1, 2001 is between GRANITE CONSTRUCTION INCORPORATED, a Delaware corporation (the "Company"), and each of the institutional investors listed on the signature pages hereto (collectively, the "Noteholders") RECITALS: A. The Company and each of the Noteholders have heretofore entered into that certain Note Purchase Agreement dated as of May 1, 2001 (the "Note Purchase Agreement). The Company has heretofore issued $75,000,000 aggregate principal amount of its 6.96% Senior Notes due May 1, 2013 (the "Notes") pursuant to the Note Purchase Agreement. The Noteholders are the holders of 100% of the outstanding principal amount of the Notes. B. The Company and the Noteholders now desire to amend the Note Purchase Agreement in the respects, but only in the respects, hereinafter set forth. C. 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. D. All requirements of law have been fully complied with and all other acts and things necessary to make this First Amendment a valid, legal and binding instrument according to its terms for the purposes herein expressed have been done or performed. Now, THEREFORE, upon the full and complete satisfaction of the conditions precedent to the effectiveness of this First Amendment 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. AMENDMENTS. 1.1. Section 9.6(a)(1) of the Note Purchase Agreement shall be and is hereby amended by inserting the following new sentence at the end of such Section. "Notwithstanding the foregoing, Wilder shall not be required to execute a supplement to the Guaranty Agreement or otherwise Guaranty the Notes until the earliest to occur of: (A) Wilder becoming an obligor or guarantor of any Debt existing under the Bank Credit Agreement, (B)(I) the total net revenues of Wilder and its Subsidiaries for the period of the immediately preceding four fiscal quarters is equal to or greater than 15% of the consolidated total net revenues of the Company and its Subsidiaries for such period determined in accordance with GAAP, in each case as reflected in the most recent annual or quarterly financial statements of the Company and its Subsidiaries; or (II) the total assets of Wilder and its Subsidiaries, as of the last day of the immediately preceding fiscal quarter, is equal to or greater than 15% of consolidated total assets of the Company and its Subsidiaries as of such date determined in accordance with GAAP, in each case as reflected in the most recent annual or quarterly financial statements of the Company and its Subsidiaries and (C) Wilder becoming a Wholly-Owned Subsidiary of the Company." 1.2. SCHEDULE B to the Note Purchase Agreement shall be and is hereby amended by inserting the following new definition in the proper alphabetical order: ""Wilder" shall mean Wilder Construction Co., a Washington corporation, and any successor thereto." SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. 2.1. To induce the Noteholders to execute and deliver this First Amendment (which representations shall survive the execution and delivery of this First Amendment), the Company represents and warrants to the Noteholders that: (a) this First Amendment has been duly authorized, executed and delivered by it and this First Amendment constitutes the legal, valid and binding obligation, contract and agreement of the Company enforceable against it in accordance with its 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 Note Purchase Agreement, as amended by this First Amendment, constitutes the legal, valid and binding obligation, contract and agreement of the Company enforceable against it in accordance with its 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; (c) the execution, delivery and performance by the Company of this First Amendment (i) has been duly authorized by all requisite corporate action and, if required, shareholder action, (ii) does not require the consent or approval of any governmental or regulatory body or agency, and (iii) will not (A) violate (1) any provision of law, statute, rule or regulation or its certificate of incorporation or bylaws, (2) any order of any court or any rule, regulation or order of any other agency or government binding upon it, or (3) 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 (B) 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 (iii)(A)(3) of this Section 2.1(c); (d) as of the date hereof and after giving effect to this First Amendment, no Default or Event of Default has occurred which is continuing and no waiver of Default or Event of Default is in effect; and - 2 - (e) except as set forth on SCHEDULE 2 hereto, all the representations and warranties contained in Section 5 of 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. SECTION 3. CONDITIONS TO EFFECTIVENESS OF THIS FIRST AMENDMENT. 3.1. Upon satisfaction of each and every one of the following conditions, this First Amendment shall become effective as of June 27, 2003: (a) executed counterparts of this First Amendment, duly executed by the Company and the holders of at least 51% of the outstanding principal of the Notes, shall have been delivered to the Noteholders; (b) each Guarantor shall have duly executed the reaffirmation of Guaranty Agreement attached hereto; (c) 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; (d) each Noteholder shall have received evidence satisfactory to it that (i) Wilder Construction Co. is not an obligor or guarantor of Debt under the Credit Agreement dated as of June 27, 2003 among the Company, each lender from time to time party thereto and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer and (ii) the Amended and Restated Note Purchase Agreement dated as of November 1, 2001 by and among the Company and the institutional investors named therein has been amended in the same manner as the Note Purchase Agreement has been amended by this First Amendment; (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 the amount set forth opposite such holder's name in SCHEDULE 1 attached hereto; and (f) the Company shall have paid the fees and expenses of Schiff Hardin & Waite, special counsel to the Noteholders, in connection with the negotiation, preparation, approval, execution and delivery of this First Amendment. Upon receipt of all of the foregoing, this First Amendment shall become effective. SECTION 4. MISCELLANEOUS. 4.1. This First Amendment shall be construed in connection with and as part of the Note Purchase Agreement, and except as modified and expressly amended by this First - 3 - Amendment, 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. 4.2. Any and all notices, requests, certificates and other instruments executed and delivered after the execution and delivery of this First Amendment may refer to the Note Purchase Agreement without making specific reference to this First Amendment but nevertheless all such references shall include this First Amendment unless the context otherwise requires. 4.3. The descriptive headings of the various Sections or parts of this First Amendment are for convenience only and shall not affect the meaning or construction of any of the provisions hereof. 4.4. This First Amendment shall he governed by and construed in accordance with the laws of the State of Illinois. [Remainder of page intentionally left blank.] - 4 - 4.5. The execution hereof by you shall constitute a contract between us for the uses and purposes hereinabove set forth, and this First Amendment may be executed in any number of counterparts, each executed counterpart constituting an original, but all together only one agreement. GRANITE CONSTRUCTION INCORPORATED By /s/ William G. Dorey -------------------------- William G. Dorey President By /s/ William E. Barton -------------------------- William E. Barton Chief Financial Officer SIGNATURE PAGE TO THE FIRST AMENDMENT NATIONWIDE MUTUAL INSURANCE COMPANY By /s/ MARK W. POEPPELMAN --------------------------- Name: MARK W. POEPPELMAN Title: VICE PRESIDENT ALLSTATE LIFE INSURANCE COMPANY By _____________________________ Name: By _____________________________ Name: Authorized Signatories ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK By ____________________________ Name: By ____________________________ Name: Authorized Signatories UNITED OF OMAHA LIFE INSURANCE COMPANY By ____________________________ Its SIGNATURE PAGE TO THE FIRST AMENDMENT NATIONWIDE MUTUAL INSURANCE COMPANY By _____________________________ Name: Title: ALLSTATE LIFE INSURANCE COMPANY By /s/ Rhonda L. Hopps ----------------------------- Name: By /s/ Jerry D. Zinkula ----------------------------- Name: Authorized Signatories ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK By /s/ Rhonda L. Hopps ----------------------------- Name: By /s/ Jerry D. Zinkula ----------------------------- Name: Authorized Signatories UNITED OF OMAHA LIFE INSURANCE COMPANY By _____________________________ Its SIGNATURE PAGE TO THE FIRST AMENDMENT NATIONWIDE MUTUAL INSURANCE COMPANY By _____________________________ Name: Title: ALLSTATE LIFE INSURANCE COMPANY By _____________________________ Name: By _____________________________ Name: Authorized Signatories ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK By _____________________________ Name: By _____________________________ Name: Authorized Signatories UNITED OF OMAHA LIFE INSURANCE COMPANY By /s/ Curtis R. Caldwell ----------------------------- Its Vice President SIGNATURE PAGE TO THE FIRST AMENDMENT Accepted and Agreed to: CONNECTICUT GENERAL LIFE INSURANCE COMPANY By: Cigna Investments, Inc. (authorized agent) By /s/ Donald F. Rieger, Jr. ------------------------------ Its Donald F. Rieger, Jr. Managing Director NATIONWIDE LIFE INSURANCE COMPANY By ______________________________ Name: Title: NATIONWIDE INDEMNITY COMPANY By ______________________________ Name: Title: NATIONWIDE MUTUAL FIRE INSURANCE COMPANY By ______________________________ Name: Title: SIGNATURE PAGE TO THE FIRST AMENDMENT Accepted and Agreed to: CONNECTICUT GENERAL LIFE INSURANCE COMPANY By: Cigna Investments, Inc. (authorized agent) By ______________________________ Its NATIONWIDE LIFE INSURANCE COMPANY By /s/ MARK W. POEPPELMAN ------------------------------ Name: MARK W. POEPPELMAN Title: VICE PRESIDENT NATIONWIDE INDEMNITY COMPANY By /s/ MARK W. POEPPELMAN ------------------------------ Name: MARK W. POEPPELMAN Title: VICE PRESIDENT NATIONWIDE MUTUAL FIRE INSURANCE COMPANY By /s/ MARK W. POEPPELMAN ------------------------------ Name: MARK W. POEPPELMAN Title: VICE PRESIDENT SIGNATURE PAGE TO THE FIRST AMENDMENT COMPANION LIFE INSURANCE COMPANY By /s/ Curtis R. Caldwell ------------------------------ Name: Curtis R. Caldwell Title: Authorized Signer THRIVENT FINANCIAL FOR LUTHERANS, successor by merger to Lutheran Brotherhood By ______________________________ Name: Glen J. Vanic Title: Portfolio Manager SIGNATURE PAGE TO THE FIRST AMENDMENT COMPANION LIFE INSURANCE COMPANY By ______________________________ Name: Title: THRIVENT FINANCIAL FOR LUTHERANS, successor by merger to Lutheran Brotherhood By /s/ Glen J. Vanic ------------------------------ Name: Glen J. Vanic Title: Portfolio Manager SIGNATURE PAGE TO THE FIRST AMENDMENT REAFFIRMATION OF GUARANTY AGREEMENT The undersigned Guarantors hereby acknowledge and agree to the foregoing First Amendment to Note Purchase Agreement and reaffirm the Guaranty Agreement dated as of May 1, 2001 given in favor of each Noteholder and their respective successors and assigns: GRANITE CONSTRUCTION COMPANY By /s/ William G. Dorey ------------------------------- William G. Dorey President By /s/ William E. Barton ------------------------------- William E. Barton Chief Financial Officer GRANITE LAND COMPANY By /s/ Scott D. Wolcott ------------------------------- Scott D. Wolcott President By /s/ William G. Dorey ------------------------------- William G. Dorey President, Granite Construction Incorporated GRANITE HALMAR CONSTRUCTION COMPANY, INC. By /s/ William G. Dorey ------------------------------- William G. Dorey President By /s/ William E. Barton ------------------------------- William E. Barton Chief Financial Officer INTERMOUNTAIN SLURRY SEAL, INC. By /s/ Michael L. Thomas ------------------------------- Michael L. Thomas President By /s/ David J. Brunton ------------------------------- David J. Brunton Chief Financial Officer POZZOLAN PRODUCTS COMPANY (P.P.C.) By /s/ Michael L. Thomas ------------------------------- Michael L. Thomas President By /s/ David J. Brunton ------------------------------- David J. Brunton Chief Financial Officer GILC, L.P. By: GILC Incorporated, its sole General Partner By /s/ William E. Barton ------------------------------- William E. Barton Chief Executive Officer By /s/ R.C. Allbritton ------------------------------- R.C. Allbritton Chief Financial Officer SIGNATURE PAGE TO REAFFIRMATION OF GUARANTY AGREEMENT FEE SCHEDULE Connecticut General Life Insurance Company $ 11,000.00 Nationwide Life Insurance Company $ 5,000.00 Nationwide Indemnity Company $ 2,500.00 Nationwide Mutual Fire Insurance Company $ 2,000.00 Nationwide Mutual Insurance Company $ 1,500.00 Allstate Life Insurance Company $ 4,500.00 Allstate Life Insurance Company of New York $ 4,500.00 United of Omaha Life Insurance Company $ 3,000.00 Companion Life Insurance Company $ 1,000.00 Thrivent Financial For Lutherans $ 2,500.00 Total: $ 37,500.00 SCHEDULE 1 (to First Amendment) VARIANCES TO REPRESENTATIONS AND WARRANTIES The Company represents and warrants to each holder that except as hereinafter set forth in this Schedule 2, each of the representations and warranties set forth in Section 5 of the Note Purchase Agreement is true and correct as of the date hereof. The Section references hereinafter set forth correspond to the similar sections of the Note Purchase Agreement which are supplemented hereby: Section 5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates. (a) Schedule 5.4 to the First Amendment contains (except as noted therein) complete and correct lists (1) of the Company's Subsidiaries, showing, as to each Subsidiary, the correct name thereof, the jurisdiction of its organization, and the percentage of shares of each class of its capital stock or similar equity interests outstanding owned by the Company and each other Subsidiary, (2) of the Company's Affiliates, other than Subsidiaries and (3) of the Company's directors and senior officers. (b) All of the outstanding shares of capital stock or similar equity interests of each Subsidiary shown in Schedule 5.4 to the First Amendment as being owned by the Company and its Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by the Company or another Subsidiary free and clear of any Lien (except as otherwise disclosed in Schedule 5.4 to the First Amendment). (c) Each Subsidiary identified in Schedule 5.4 to the First Amendment is a corporation or other legal entity duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and is duly qualified as a foreign corporation or other legal entity and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each such Subsidiary has the corporate or other power and authority to own or hold under lease the properties it purports to own or hold under lease and to transact the business it transacts and proposes to transact. (d) No Subsidiary is a party to, or otherwise subject to, any legal restriction or any agreement or instrument (other than this Agreement, the agreements listed on Schedule 5.4 to the First Amendment and customary limitations imposed by corporate law statutes) restricting the ability of such Subsidiary to pay dividends out of profits or make any other similar distributions of profits to the Company or any of its Subsidiaries that own outstanding shares of capital stock or similar equity interests of such Subsidiary. Section 5.8. Litigation; Observance of Agreements, Statutes and Orders. (a) Except as disclosed in Schedule 5.8 to the First Amendment, there are no actions, suits or proceedings pending or, to the knowledge of the Company, threatened against or affecting the Company or SCHEDULE 2 (to First Amendment) any Subsidiary or any property of the Company or any Subsidiary in any court or before any arbitrator of any kind or before or by any Governmental Authority that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. Section 5.15. Existing Debt. Except as described therein, Schedule 5.15 to the First Amendment sets forth a complete and correct list of all outstanding Debt of the Company and its Subsidiaries as of May 31, 2003 (other than with respect to the Debt of Wilder and Presidio Vista which are as of April 30, 2003), since which date there has been no Material change in the amounts, interest rates, sinking funds, installment payments or maturities of the Debt of the Company or its Subsidiaries. Neither the Company nor any Subsidiary is in default and no waiver of default is currently in effect, in the payment of any principal or interest on any Debt of the Company or such Subsidiary and no event or condition exists with respect to any Debt of the Company or any Subsidiary that would permit (or that with notice or the lapse of time, or both, would permit) one or more Persons to cause such Debt to become due and payable before its stated maturity or before its regularly scheduled dates of payment. Section 5.16. Existing Investments. Schedule 5.16 to the First Amendment sets forth a complete and correct list of all outstanding Investments of the Company and its Subsidiaries as of May 31, 2003, since which date there has been no Material change in the amounts of such Investments. Section 5.18. Environmental Matters. Neither the Company nor any Subsidiary has knowledge of any Material claim or has received any notice of any Material claim, and no proceeding has been instituted raising any Material claim against the Company or any of its Subsidiaries or any of their respective real properties now or formerly owned, leased or operated by any of them or other assets, alleging any damage to the environment or violation of any Environmental Laws. Except as otherwise disclosed in Schedule 5.18 to the First Amendment: (a) neither the Company nor any Subsidiary has knowledge of any facts which would give rise to any Material claim, public or private, or Material violation of Environmental Laws or damage to the environment emanating from, occurring on or in any way related to real properties now or formerly owned, leased or operated by any of them or to other assets or their use; (b) neither the Company nor any of its Subsidiaries (1)has stored any Hazardous Materials on real properties now or formerly owned, leased or operated by any of them or (2) has disposed of any Hazardous Materials in a manner contrary to any Environmental Laws; in each case in any manner that could reasonably be expected to result in a Material Adverse Effect; and (c) all buildings on all real properties now owned, leased or operated by the Company or any of its Subsidiaries are in material compliance with applicable Environmental Laws. S-2-2 GRANITE CONSTRUCTION INCORPORATED SCHEDULE 5.4 SUBSIDIARIES, OTHER AFFILIATES, AND DIRECTORS AND OFFICERS

JURISDICTION OF OWNERSHIP BY COMPANY AND/OR NAME ORGANIZATION CAPITAL STRUCTURE SUBSIDIARY NAME OWNERSHIP POSITION 1 Granite Construction International California C Corp GCI 100.00% investor 1 Granite Construction Company ("GCCo") California C Corp GCI 100.00% investor 1 Wilder Construction Company ("Wilder") Washington C Corp GCCo 60.04% investor 1 Wilder Realty Washington C Corp Wilder 100.00% investor 1 Wilder Washington Washington C Corp Wilder 100.00% investor 2 Axton Aggregate Partnership Washington General Partnership Wilder 50.00% GP 2 Axton Aggregate Company Washington General Partnership Wilder 50.00% GP 1 HLA / Wilder, a Joint Venture Washington Construction Joint Venture Wilder 55.00% partner 2 Largo Properties, LLC Maryland Limited Liability Company GCCo 33.30% member 2 Riverside Motorsports Park, LLC California Limited Liability Company GCCo 2.50% member 2 California Corridor Constructors, a Joint Venture California Construction Joint Venture GCCo 30.00% partner 1 Granite Kiewit, a Joint Venture Montana Construction Joint Venture GCCo 76.00% sponsor 1 Granite2-Sundt, a Joint Venture Arizona Construction Joint Venture GCCo 65.00% sponsor 1 Granite-Frontier Kemper, a Joint Venture Arkansas Construction Joint Venture GCCo 82.00% sponsor 2 Granite-Meyers, a Joint Venture California Construction Joint Venture GCCo 41.20% managing 1 Granite-PCL, a Joint Venture Florida Construction Joint Venture GCCo 64.70% sponsor 1 Granite-Rizzani de Eccher, a Joint Venture Florida Construction Joint Venture GCCo 60.00% sponsor 1 Granite-Sundt, a Joint Venture Arizona Construction Joint Venture GCCo 55.00% sponsor 2 K-G Leasing, a Joint Venture California Construction Joint Venture GCCo 30.00% partner 2 K-G-W Leasing, a Joint Venture Utah Construction Joint Venture GCCo 23.00% partner 2 Kiewit-Granite, a Joint Venture California Construction Joint Venture GCCo 25.00% partner 1 Las Vegas Monorail Team, a Joint Venture Nevada Construction Joint Venture GCCo 44.80% managing 2 LGS, a Joint Venture Maryland Construction Joint Venture GCCo 30.00% partner 1 Minnesota Transit Constructors, a Joint Venture Minnesota Construction Joint Venture GCCo 56.50% sponsor 1 River Mountain Constructors, a Joint Venture Arkansas Construction Joint Venture GCCo 100.00% sponsor 1 Sampson-Granite, a Joint Venture California Construction Joint Venture GCCo 40.00% partner 1 Sierra Blanca Constructors, a Joint Venture New Mexico Construction Joint Venture GCCo 52.00% sponsor 2 TGM Constructors Kentucky Construction Joint Venture GCCo 25.00% partner 2 Tri-County Rail Constructors, a Joint Venture Florida Construction Joint Venture GCCo 30.00% partner 1 Virginia Approach Constructors Maryland Construction Joint Venture GCCo 79.00% partner 2 Wasatch Constructors, a Joint Venture Utah Construction Joint Venture GCCo 23.00% partner 2 Washington-Granite, a Joint Venture California Construction Joint Venture GCCo 40.00% partner 2 Western Summit-TIC-Granite, a Joint Venture Georgia Construction Joint Venture GCCo 15.00% partner 2 WSCI TIC Granite, a Joint Venture Georgia Construction Joint Venture GCCo 15.00% partner 2 Yonkers Contracting Company, Inc. / Granite New Jersey Construction Joint Venture GCCo 40.00% partner Construction Company, a Joint Venture 1 Granite Halmar Construction Company, Inc. ("GHCCo") New York C Corp GCI 100.00% investor 1 Halmar-Egis, a Joint Venture New York Construction Joint Venture GHCCo 100.00% partner 1 Halmar-Schiavone, a Joint Venture New York Construction Joint Venture GHCCo 100.00% partner 1 Granite Halmar/Schiavone, a Joint Venture New York Construction Joint Venture GHCCo 60.00% partner 1 GH/JMA, a Joint Venture New York Construction Joint Venture GHCCo 51.00% partner 2 Schiavone/Granite Halmar, a Joint Venture New York Construction Joint Venture GHCCo 40.00% partner 1 Intermountain Slurry Seal, Inc. Wyoming C Corp GCI 100.00% investor 1 Pozzolan Products Company Utah C Corp GCI 100.00% investor

Schedule 5.4 Page 1 of 2 GRANITE CONSTRUCTION INCORPORATED SCHEDULE 5.4 SUBSIDIARIES, OTHER AFFILIATES, AND DIRECTORS AND OFFICERS

JURISDICTION OF OWNERSHIP BY COMPANY AND/OR NAME ORGANIZATION CAPITAL STRUCTURE SUBSIDIARY NAME OWNERSHIP POSITION 1 Granite Land Company ("GLC") California C Corp GCI 100.00% investor 1 GLC Fort Worth, LLC ("GLCFW, LLC") Texas Limited Liability Company GLC 100.00% GP 1 Presidio Vista I, LTD Texas Limited Partnership GLC 89.00% LP GLCFW, LLC 1.00% GP 1 Main Street Ventures, LLC California Limited Liability Company GLC 90.00% managing 1 Granite/Mandalay Bay Finance, LLC California Limited Liability Company GLC 70.00% member 1 Granite/Mandalay, LLC ("GM, LLC") California Limited Liability Company GLC 90.00% member 2 Oly/Granite General Partnership California Limited Partnership GM, LLC 10.00% LP 2 Oly/Mandalay Bay General Partnership California Limited Partnership GM, LLC 10.00% LP 2 Phase 1 Regional Park Limited California Limited Partnership GLC 25.00% LP 2 Williamson Ranch Plaza, LP California Limited Partnership GLC 25.00% LP 1 Granite Grado Ventures, LLC ("GGV, LLC") California Limited Liability Company GLC 90.00% managing 1 Granite Grado Ventures Project 1, LLC California Limited Liability Company GGV, LLC 100.00% managing 1 GILC, Incorporated ("GILC") California C Corp GCI 100.00% investor 1 GILC, LP California Limited Partnership GCCo 99.00% LP GILC 1.00% GP 1 Wilcott Corporation Colorado C Corp GCI 100.00% investor 1 Granite SR 91 Corporation ("GSR91") California C Corp GCI 100.00% investor 1 Granite SR 91, LP ("SR91, LP") California Limited Partnership GCI 99.00% LP GSR91 1.00% GP 2 California Private Transportation Company, LP California Limited Partnership SR91, LP 22.22% LP 1 GTC, Inc. ("GTC") Texas C Corp GCI 100.00% investor 1 GTC II, LP ("GTC, LP") Texas Limited Partnership GCI 99.00% LP GTC 1.00% GP 1 WR II Associates, LTD Texas Limited Partnership GCI 69.88% LP GTC, LP 1.00% GP 2 Paramount-Nevada Asphalt Company, LLC Nevada Limited Liability Company GCI 50.00% member

3 DIRECTORS David H. Watts - Chairman of the David H. Kelsey - Director Board & CEO Joseph J. Barclay - Director Rebecca A. McDonald - Director Richard M. Brooks - Director Raymond E. Miles - Director Linda Griego - Director J. Fernando Niebla - Director Brian C. Kelly - Director George B. Searle - Director SENIOR OFFICERS William G. Dorey - President & COO Mark E. Boitano - Executive Vice President & Branch Division Manager Patrick M. Costanzo - Senior Vice President & Heavy Construction Division Manager William E. Barton - Senior Vice President & CFO R.C. Allbritton - Vice President & Treasurer Michael Futch - Vice President, Secretary & General Counsel Garry M. Higdem - Vice President & Heavy Construction Division Asstistant Manager James H. Roberts - Vice President & Branch Division Assistant Manager Michael L. Thomas - Vice President & Director of Human Resources Schedule 5.4 Page 2 of 2 GRANITE CONSTRUCTION INCORPORATED SCHEDULE 5.8 LITIGATION 5.8(a)

DEFENDANT NATURE OF CASE COMMENTS USA ex rel Maxfield/Peterson False Calims Act arising from 1-15, Salt Lake See 12/31/02 10-K, PART I, Item vs. Wasatch (GCCo City, UT construction contract 3, or 03/31/03 10-Q, NOTE 7, construction joint venture) for more information

5.8(b) NONE Schedule 5.8 GRANITE CONSTRUCTION INCORPORATED SCHEDULE 5.15 EXISTING INDEBTEDNESS

INTEREST BORROWER LENDER'S NAME DESCRIPTION RATE MATURITY BALANCE Granite Construction Company Benna Investments Glendale NV property 6.50% 12/01/07 1,043,652 Granite Construction Company Rosemary's Mountain Southern CA Aggregate property 8.82% 06/01/04 1,400,000 Granite Construction Incorporated Private Placement Refinance debt & general corporate Due 03/15/10 purposes 6.54% 03/15/10 46,666,668 Granite Construction Incorporated Private Placement Refinance debt & general corporate Due 05/01/13 purposes 6.96% 05/01/13 75,000,000 Granite Construction Incorporated Lenders under Self insured Worker's Compensation 100.0 bps 04/30/02 1,293,390 existing Bank Credit Agreement Granite Construction Company Bank of America City of Patterson Performance Letter of Credit Guarantee 32.5 bps 02/04/04 200,000 Wilder Construction Company (1) Gebhardt Promisory Note - stock repurchase prime 05/16/07 180,997 Wilder Construction Company (1) Hesell Promisory Note - stock repurchase prime 03/15/10 2,607,761 Wilder Construction Company (1) Ross Promisory Note - stock repurchase prime 04/29/05 2,588,757 Wilder Construction Company (1) Fulton Promisory Note - stock repurchase prime 12/20/07 104,317 Wilder Construction Company (1) Gent Promisory Note - stock repurchase prime 12/20/07 948,333 Wilder Construction Company (1) Jonasson Promisory Note - stock repurchase prime 12/20/07 569,000 Wilder Construction Company (1) Suhadolnik Promisory Note - stock repurchase prime 12/20/07 246,567 Wilder Construction Company (1) Giammalva Promisory Note - stock repurchase prime 03/15/06 897,083 Wilder Construction Company (1) Bank of America Priority Debt - Construction Equipment 3.90% 06/01/05 975,000 Wilder Construction Company (1) Bank of America Priority Debt - Alaska Yard & Office 7.40% 12/01/08 799,938 Wilder Construction Company (1) Bank of America Priority Debt - Line of Credit prime minus 100 bp 06/01/04 1,000,000 Presidio Vista I, LTD (2) Dell USA, L.P. Priority Debt - Presidio Vista Development 7.50% 02/08/11 4,003,877 $140,525,340 Granite Construction Incorporated BNP Paribas $30MM notional amount floating 6 Mth LIBOR + 09/15/05 (559,168) interest rate swap agreement 386.75 bps Granite Construction Incorporated BNP Paribas $20MM notional amount floating 6 Mth LIBOR + 11/05/05 (369,914) interest rate swap agreement 418.00 bps ($929,082)

(1) - Wilder debt is not guaranteed by Granite Construction Incorporated or any of it non-Wilder Subsidiaries or Affiliates (2) - This debt is non-recourse debt secured by the assets of the development project and is not guaranteed by Granite Construction Incorporated or any of its Subsidiaries or Affiliates. Schedule 5.15 GRANITE CONSTRUCTION INCORPORATED SCHEDULE 5.16 EXISTING INVESTMENTS

INVESTMENT TYPE VALUE Paramount-Nevada Asphalt Company, LLC Asphalt Tank Farm 2,299,957 Bank of America (BA) Bankers Acceptance 1,228,989 Bank of America (BA) Bankers Acceptance 4,992,625 Bank of America CD Certificate of Deposit 2,500,000 AOL Time Warner Commercial Paper 2nd Tier 4,983,436 Kraft Foods Inc Commercial Paper 2nd Tier 4,994,263 GMAC Commercial Paper Split Rated 3,990,133 Allianz Finance Corp Commercial Paper Top Tier 3,991,944 Citigroup Global Markets Commercial Paper Top Tier 4,994,704 General Electric Captial Service Commercial Paper Top Tier 3,998,360 New York Times Commercial Paper Top Tier 3,996,000 Schering-Plough Commercial Paper Top Tier 4,995,703 Toyota Motor Corp Commercial Paper Top Tier 4,997,797 Transamerica Financial Corp Commercial Paper Top Tier 4,989,931 Verizon Net Funding Commercial Paper Top Tier 2,991,420 Granite Halmar/Schiavone, a Joint Venture Construction Joint Venture 350,000 Granite Kiewit, a Joint Venture Construction Joint Venture 105,962 Granite2-Sundt, a Joint Venture Construction Joint Venture 5,163,735 Granite-Rizzani de Eccher, a Joint Venture Construction Joint Venture (2,524,188) Granite-Sundt, a Joint Venture Construction Joint Venture 497,796 Halmar-Egis, a Joint Venture Construction Joint Venture 2,977,542 Halmar-Schiavone, a Joint Venture Construction Joint Venture 5,412,624 K-G Leasing, a Joint Venture Construction Joint Venture 341,615 K-G-W Leasing, a Joint Venture Construction Joint Venture 759,154 Kiewit-Granite, a Joint Venture Construction Joint Venture 445,740 LGS, a Joint Venture Construction Joint Venture 6,434,245 Minnesota Transit Constructors, a Joint Venture Construction Joint Venture 1,667,811 Sampson-Granite, a Joint Venture Construction Joint Venture 11,008 Schiavone/Granite Halmar, a Joint Venture Construction Joint Venture 800,032 Sierra Blanca Constructors, a Joint Venture Construction Joint Venture 2,842,704 TGM Constructors Construction Joint Venture 1,553,084 Tri-County Rail Constructors, a Joint Venture Construction Joint Venture 1,561,575 Virginia Approach Constructors Construction Joint Venture 2,370,000 Wasatch Constructors, a Joint Venture Construction Joint Venture 91,505 Washington-Granite, a Joint Venture Construction Joint Venture 252,968 Western Summit-TIC-Granite, a Joint Venture Construction Joint Venture 15,565 Yonkers Contracting Company, Inc. / Granite Construction Company, a Joint Venture Construction Joint Venture 2,489,018 Largo Properties, LLC Construction JV Property 2,123,970 Rancho San Carlos Partnership, L.P. Construction Note 6,000,000 Granite/Mandalay Bay Finance, LLC Development Project 1,905,999 Granite/Mandalay, LLC ("GM, LLC") Development Project 2,558,017 Main Street Ventures, LLC Development Project 51,740 Phase 1 Regional Park Limited Development Project 546,165 Presidio Vista I, LTD Development Project 135,000 Riverside Motorsports Park, LLC Development Project 50,000 Williamson Ranch Plaza, LP Development Project (364,595) WR II Associates, LTD Development Project 460,882 Bank of America/Nations Fund Sweep Money Market Funds 1,001,172 Fidelity Inst'l MM Domestic 690 Money Market Funds 7,654,560 Fidelity Inst'l MM Govern. 057 Money Market Funds 3,112,553

Schedule 5.16 Page 3 of 6 GRANITE CONSTRUCTION INCORPORATED SCHEDULE 5.16 EXISTING INVESTMENTS

INVESTMENT TYPE VALUE JP Morgan Prime Institutional Fund Money Market Funds 1,466,920 JP Morgan Tax-Free Institutional Fund Money Market Funds 15,062,571 JPM Chase Overnight Investment Money Market Funds 3,873,664 CA Revenue Anticipation Note Municipal Bonds 5,003,119 California State Water Department Municipal Bonds 3,000,000 New Jersey Transit Series B Municipal Bonds 3,000,000 TX Tax & Revenue Antic. Bond Municipal Bonds 2,006,560 UT Transit Authority Revenue Bond Municipal Bonds 2,975,881 Franklin Balance Sheet Inv. Fund Mutual Fund - Equity 698,014 Lord Abbett Mid - Cap Value Fund Mutual Fund - Equity 217,013 Putnam Fund for Growth & Income Mutual Fund - Equity 2,205,437 Putnam International Growth CL A Mutual Fund - Equity 2,522,837 Putnam Investors Fund Mutual Fund - Equity 430,494 Putnam New Opportunities Fund Mutual Fund - Equity 803,789 Putnam Vista Fund Mutual Fund - Equity 728,709 Putnam Voyager Fd CL A Mutual Fund - Equity 629,304 Loomis Sayles Bond FD Mutual Fund - Fixed Income 1,659,494 Pimco Total Return FD Mutual Fund - Fixed Income 2,416,837 TIC Holdings, Inc stock 12,535,179 Wilder Construction Company ("Wilder") stock 26,932,686 California Private Transportation Company, LP Toll Road 354,349 Fannie Mae US Treasury & Agency Notes 3,391,481 Fannie Mae US Treasury & Agency Notes 2,993,900 Fannie Mae US Treasury & Agency Notes 5,074,892 Federal Farm Credit Bank US Treasury & Agency Notes 5,100,743 Federal Home Loan Bank US Treasury & Agency Notes 2,707,728 Federal Home Loan Bank US Treasury & Agency Notes 1,994,258 Federal Home Loan Bank US Treasury & Agency Notes 5,082,445 Federal Home Loan Bank US Treasury & Agency Notes 5,177,271 Freddie Mac US Treasury & Agency Notes 2,997,233 Freddie Mac US Treasury & Agency Notes 1,497,975 Freddie Mac US Treasury & Agency Notes 5,104,376 Sallie Mae US Treasury & Agency Notes 5,055,638 U.S. Treasury Note US Treasury & Agency Notes 2,000,000 U.S. Treasury Note US Treasury & Agency Notes 1,552,952 U.S. Treasury Note US Treasury & Agency Notes 2,100,975 U.S. Treasury Note US Treasury & Agency Notes 3,100,238 $262,255,179

Schedule 5.16 Page 4 of 6 GRANITE CONSTRUCTION INCORPORATED SCHEDULE 5.18 ENVIRONMENTAL MATTERS 5.18(a) Granite Construction in the normal course of business utilizes petroleum (hydrocarbon) products which may be considered hazardous materials when encountered at regulatory levels established by the Federal EPA or the Regional State EPA. The utilization of these asphalt products, diesel, and gasoline over the years of operations have the potential of creating exposure to environmental clean up requirements. All underground tanks meet current requirements. There are no pending governmental ordered clean up requirements. However, the following represents estimates based on construction industry housekeeping practices as encountered during our normal course of business. Except as indicated with an " * ", these costs do not represent actual identified exposures. Items indicated with an " * " are carried on the books as a liability.

- ----------------------------------------------------------------------------------------- LOCATIONS DESCRIPTION AMOUNT - ----------------------------------------------------------------------------------------- Anchorage, AK Surface Spills, wash rack facilities 60,000 Anchorage, AK Surface Spills, former AC Plant 17,500 Huachuca City, AZ Surface Spills, AC Plant 15,000 Marana, AZ Surface Spills, AC Plant 15,000 Tucson, AZ Surface Spills 10,000 Tucson, AZ AC Plant 25,000 29 Palms, CA * Surface Spills, AC Plant 4,409 Arcata, CA * Surface Spills, AC Plant 236,000 Arvin, CA Surface Spills, AC Plant 25,000 Bakersfield, CA Surface Spills, AC Plant 250,000 Bishop, CA Surface Spills, AC Plant 15,000 Buelton, CA Surface Spills, AC Plant 50,000 City of Blue Lake, CA Surface Spills 40,000 Coalinga, CA Surface Spills, AC Plant 50,000 Concord, CA Surface Spills, AC Plant 35,000 Crescent City, CA * Surface Spills, AC Plant 682,836 Ducor, CA * Surface Spills, AC Plant 12,529 El Centro, CA Surface Spills, AC Plant 25,000 Felton, Ca Surface Spills, AC Plant 100,000 French Camp, CA Surface Spills, AC Plant, old fill material 500,000 Highway 175, CA * Surface Spills, AC Plant 150,000 Indio, CA Surface Spills, AC Plant 25,000 Inyokern, CA Surface Spills, AC Plant 25,000 Kelseyville, CA * Surface Spills, AC Plant 873,000 Lee Vining, CA Surface Spills, AC Plant 15,000 Littlerock, CA Surface Spills, AC Plant 25,000 Longvale, CA * Surface Spills, AC Plant 274,000 Los Banos, CA AC Plant 10,000 Pleasanton, CA AC Plant 10,000 Rio Linda, CA Surface Spills, AC Plant 50,000 Sacramento, CA Surface Spills, AC Plant 500,000 Salinas, CA Surface Spills, AC Plant 10,000 Salinas, CA Former Underground Storage Tanks 200,000 San Jose, CA Surface Spills 10,000 Santa Barbara, CA Surface Spills 25,000

Schedule 5.18 Page 5 of 6 GRANITE CONSTRUCTION INCORPORATED SCHEDULE 5.18 ENVIRONMENTAL MATTERS 5.18(a) Granite Construction in the normal course of business utilizes petroleum (hydrocarbon) products which may be considered hazardous materials when encountered at regulatory levels established by the Federal EPA or the Regional State EPA. The utilization of these asphalt products, diesel, and gasoline over the years of operations have the potential of creating exposure to environmental clean up requirements. All underground tanks meet current requirements. There are no pending governmental ordered clean up requirements. However, the following represents estimates based on construction industry housekeeping practices as encountered during our normal course of business. Except as indicated with an " * ", these costs do not represent actual identified exposures. Items indicated with an " * " are carried on the books as a liability.

- ----------------------------------------------------------------------------------------- LOCATIONS DESCRIPTION AMOUNT - ----------------------------------------------------------------------------------------- Tracy, CA Surface Spills, AC Plant 25,000 - ----------------------------------------------------------------------------------------- Ukiah, CA * Surface Spills, AC Plant 430,000 Watsonville, CA Surface Spills 35,000 Watsonville, CA Former Underground Storage Tanks 35,000 Tampa, FL Surface Spills 75,000 Odenton, MD Surface Spills 100,000 Carson City, NV Surface Spills, AC Plant 10,000 Lockwood, NV Surface Spills, AC Plant 50,000 Sparks, NV Surface Spills, AC Plant 100,000 Wappinger Falls, NY Surface Spills 100,000 Lubbock, TX Surface Spills, AC Plant 100,000 Lubbock, TX Surface Spills 75,000 Lubbock, TX Surface Spills 50,000 Morgan County, UT Surface Spills 10,000 North Ogden, UT Old fill material 250,000 Ogden, UT * Former Webb AC Plant 723,377 Salt City, UT * Former 2200 North AC Plant 132,363 Salt Lake City, UT AC Plant 150,000 Salt Lake City, UT Surface Spills 50,000 Salt Lake City, UT * Former Whitehill AC Plant 25,288 Sandy City, UT Surface Spills, AC Plant 100,000 Kearns, UT * Surface Spills, AC Plant 12,529 Wasatch County, UT Surface Spills, AC Plant 10,000 West Haven, UT Surface Spills, AC Plant 25,000 Bellington, WA Hannegan surface spills, AC Plant, shop 500,000 Everett, WA Surface Spills, AC Plant 100,000 Whatcom County, WA Former AC Plant 260,000 Whatcom County, WA Former UST and shop area 17,500 ---------- $7,921,331 ----------

5.18 (b) AND (c) NONE Schedule 5.18 Page 6 of 6 EX-10.5 7 f91753exv10w5.txt EXHIBIT 10.5 EXHIBIT 10.5 (MULTICURRENCY--CROSS BORDER) [ISDA(R) LOGO] INTERNATIONAL SWAP DEALERS ASSOCIATION, INC. MASTER AGREEMENT DATED AS OF FEBRUARY 10, 2003 BNP PARIBAS AND GRANITE CONSTRUCTION INCORPORATED have entered and/or anticipate entering into one or more transactions (each a "Transaction") that are or will be governed by this Master Agreement, which includes the schedule (the "Schedule"), and the documents and other confirming evidence (each a "Confirmation") exchanged between the parties confirming those Transactions. Accordingly, the parties agree as follows:-- 1. INTERPRETATION (a) DEFINITIONS. The terms defied in Section 14 and in the Schedule will have the meanings therein specified for the purpose of this Master Agreement. (b) INCONSISTENCY. In the event of any inconsistency between the provisions of the Schedule and the other provisions of this Master Agreement, the Schedule will prevail. In the event of any inconsistency between the provisions of any Confirmation and this Master Agreement (including the Schedule), such Confirmation will prevail for the purpose of the relevant Transaction. (c) SINGLE AGREEMENT. All Transactions are entered into in reliance on the fact that this Master Agreement and all Confirmations form a single agreement between the parties (collectively referred to as this "Agreement"), and the parties would not otherwise enter into any Transactions. 2. OBLIGATIONS (a) GENERAL CONDITIONS. (i) Each party will make each payment or delivery specified in each Confirmation to be made by it, subject to the other provisions of this Agreement. (ii) Payments under this Agreement will be made on the due date for value on that date in the place of the account specified in the relevant Confirmation or otherwise pursuant to this Agreement, in freely transferable funds and in the manner customary for payments in the required currency. Where settlement is by delivery (that is, other than by payment), such delivery will be made for receipt on the due date in the manner customary for the relevant obligation unless otherwise specified in the relevant Confirmation or elsewhere in this Agreement. (iii) Each obligation of each party under Section 2(a)(i) is subject to (1) the condition precedent that no Event of Default or Potential Event of Default with respect to the other party has occurred and is continuing, (2) the condition precedent that no Early Termination Date in respect of the relevant Transaction has occurred or been effectively designated and (3) each other applicable condition precedent specified in this Agreement. COPYRIGHT (C) 1992 BY INTERNATIONAL SWAP DEALERS ASSOCIATION, INC. (b) CHANGE OF ACCOUNT. Either party may change its account for receiving a payment or delivery by giving notice to the other party at least five Local Business Days prior to the scheduled date for the payment or delivery to which such change applies unless such other party gives timely notice of a reasonable objection to such change. (c) NETTING. If on any date amounts would otherwise be payable:-- (i) in the same currency; and (ii) in respect of the same Transaction, by each party to the other, then, on such date, each party's obligation to make payment of any such amount will be automatically satisfied and discharged and, if the aggregate amount that would otherwise have been payable by one party exceeds the aggregate amount that would otherwise have been payable by the other party, replaced by an obligation upon the party by whom the larger aggregate amount would have been payable to pay to the other party the excess of the large aggregate amount over the smaller aggregate amount. The parties may elect in respect of two or more Transaction that a net amount will be determined in respect of all amounts payable on the same date in the same currency in respect of such Transactions, regardless of whether such amounts are payable in respect of the same Transaction. The election may be made in the Schedule or a Confirmation by specifying that subparagraph (ii) above will not apply to the Transactions identified as being subject to the election, together with the starting date (in which case subparagraph (ii) above will not, or will cease to, apply to such Transactions from such date). This election may be made separately for different groups of Transactions and will apply separately to each pairing of Offices through which the parties make and receive payments or deliveries. (d) DEDUCTION OR WITHHOLDING FOR TAX. (i) GROSS-UP. All payment under this Agreement will be made without any deduction or withholding for or on account of any Tax unless such deduction or withholding is required by any applicable law, as modified by the practice of any relevant governmental revenue authority, then in effect. If a party is so required to deduct or withhold, then that party ("X") will:-- (1) promptly notify the other party ("Y") of such requirement; (2) pay to the relevant authorities the full amount required to be deducted or withheld (including the full amount required to be deducted or withheld from any additional amount paid by X to Y under this Section 2(d)) promptly upon the earlier of determining that such deduction or withholding is required or receiving notice that such amount has been assessed against Y; (3) promptly forward to Y an official receipt (or a certified copy), or other documentation reasonably acceptable to Y, evidencing such payment to such authorities; and (4) if such Tax is an Indemnifiable Tax, pay to Y, in addition to the payment to which Y is otherwise entitled under this Agreement, such additional amount as is necessary to ensure that the net amount actually received by Y (free and clear of Indemnifiable Taxes, whether assessed against X or Y) will equal the full amount Y would have received had no such deduction or withholding been required. However, X will not be required to pay any additional amount to Y to the extent that it would not be required to be paid but for:-- (A) the failure by Y to comply with or perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d); or (B) the failure of a representation made by Y pursuant to Section 3(f) to be accurate and true unless such failure would not have occurred but for (I) any action taken by a taxing authority, or brought in a court of competent jurisdiction, on or after the date on which a Transaction is entered into (regardless of whether such action is taken or brought with respect to a party this Agreement) or (II) a Change in Tax Law. 2 (ii) LIABILITY. If:-- (1) X is required by any applicable law, as modified by the practice of any relevant governmental revenue authority, to make any deduction or withholding in respect of which X would not be required to pay an additional amount to Y under Section 2(d)(i)(4); (2) X does not so deduct or withhold; and (3) a liability resulting from such Tax is assessed directly against X, then, except to the extent Y has satisfied or then satisfies the liability resulting from such Tax, Y will promptly pay to X the amount of such liability (including any related liability for interest, but including any related liability for penalties only if Y has failed to comply with or perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d)). (e) DEFAULT INTEREST; OTHER AMOUNTS. Prior to the occurrence or effective designation of an Early Termination Date in respect of the relevant Transaction, a party that defaults in the performance of any payment obligation will, to the extent permitted by law and subject to Section 6(c), be required to pay interest (before as well as after judgment) on the overdue amount to the other party on demand in the same currency as such overdue amount, for the period from (and including) the original due date for payment to (but excluding) the date of actual payment, at the Default Rate. Such interest will be calculated on the basis of daily compounding and the actual number of days elapsed. If, prior to the occurrence or effective designation of an Early Termination Date in respect of the relevant Transaction, a party defaults in the performance of any obligation required to be settled by delivery, it will compensate the other party on demand if and to the extent provided for in the relevant Confirmation or elsewhere in this Agreement. (3) REPRESENTATIONS Each party represents to the other party (which representations will be deemed to be repeated by each party on each date on which a Transaction entered into and, in the case of the representations in Section 3(f), at is all times until the termination of this Agreement) that:-- (a) BASIC REPRESENTATIONS. (i) STATUS. It is duly organised and validly existing under the laws of the jurisdiction of its organisation or incorporation and, if relevant under such laws, in good standing; (ii) POWERS. It has the power to execute this Agreement and any other documentation relating to this Agreement to which it is a party, to deliver this Agreement and any other documentation relating to this Agreement that it is required by this Agreement to deliver and to perform its obligations under this Agreement and any obligations it has under any Credit Support Document to which it is a party and has taken all necessary action to authorise such execution, delivery and performance; (iii) NO VIOLATION OR CONFLICT. Such execution, delivery and performance do not violate or conflict with any law applicable to it, any provision of its constitutional documents, any order or judgment of any court or other agency of government applicable to it or any of its assets or any contractual restriction binding on or affecting it or any of its assets; (iv) CONSENTS. All governmental and other consents that are required to have been obtained by it with respect to this Agreement or any Credit Support Document to which it is a party have been obtained and are in full force and effect and all conditions of any such consents have been complied with; and (v) OBLIGATIONS BINDING. Its obligations under this Agreement and any Credit Support Document to which it is a party constitute its legal, valid and binding obligations, enforceable in accordance with their respective terms (subject to applicable bankruptcy, recorganisation, insolvency, moratorium or similar laws affecting creditors' rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)). 3 (b) ABSENCE OF CERTAIN EVENTS. No Event of Default or Potential Event of Default or, to its knowledge, Termination Event with respect to it has occurred and is continuing and no such event or circumstance would occur as a result of its entering into or performing its obligations under this Agreement or any Credit Support Document to which it is a party. (c) ABSENCE OF LITIGATION. There is not pending or, to its knowledge, threatened against it or any of its Affiliates any action, suit or proceeding at law or in equity or before any court, tribunal, governmental body, agency or official or any arbitrator that is likely to affect the legality, validity or enforceability against it of this Agreement or any Credit Support Document to which it is a party or its ability to perform its obligations under this Agreement or such Credit Support Document. (d) ACCURACY OF SPECIFIED INFORMATION. All applicable information that is furnished in writing by or on behalf of it to the other party and is identified for the purpose of this Section 3(d) in the Schedule is, as of the date of the information, true, accurate and complete in every material respect. (e) PAYER TAX REPRESENTATION. Each representation specified in the Schedule as being made by it for the purpose of this Section 3(e) is accurate and true. (f) PAYEE TAX REPRESENTATION. Each representation specified in the Schedule as being made by it for the purpose of this Section 3(f) is accurate and true. 4. AGREEMENTS Each party agrees with the other that, so long as either party has or may have any obligation under this Agreement or under any Credit Support Document to which it is a party:-- (a) FURNISH SPECIFIED INFORMATION. It will deliver to the other party or, in certain cases under subparagraph (iii) below, to such government or taxing authority as the other party reasonably directs:-- (i) any forms, documents or certificates relating to taxation specified in the Schedule or any Confirmation. (ii) any other documents specified in the Schedule or any Confirmation; and (iii) upon reasonable demand by such other party, any form or document that may be required or reasonably requested in writing in order to allow such other party or its Credit Support Provider to make a payment under this Agreement or any applicable Credit Support Document without any deduction or withholding for or on account of any Tax or with such deduction or withholding at a reduced rate (so long as the completion, execution or submission of such form or document would not materially prejudice the legal or commercial position of the party in receipt of such demand), with any such form or document to be accurate and completed in a manner reasonably satisfactory to such other party and to be executed and to be delivered with any reasonably required certification, in each case by the date specified in the Schedule or such Confirmation or, if none is specified, as soon as reasonably practicable. (b) MAINTAIN AUTHORISATIONS. It will use all reasonable efforts to maintain in full force and effect all consents of any governmental or other authority that are required to be obtained by it with respect to this Agreement or any Credit Support Document to which it is a party and will use all reasonable efforts to obtain any that may become necessary in the future. (c) COMPLY WITH LAWS. It will comply in all material respects with all applicable laws and orders to which it may be subject if failure so to comply would materially impair its ability to perform its obligations under this Agreement or any Credit Support Document to which it is a party. (d) TAX AGREEMENT. It will give notice of any failure of a representation made by it under Section 3(f) to be accurate and true promptly upon learning of such failure. (e) PAYMENT OF STAMP TAX. Subject to Section II, it will pay any Stamp Tax levied or imposed upon it or in respect of its execution or performance of this Agreement by a jurisdiction in which it is incorporated, 4 organised, managed and controlled, or considered to have its seat, or in which a branch or office through which it is acting for the purpose of this Agreement is located ("Stamp Tax Jurisdiction") and will indemnify the other party against any Stamp Tax levied or imposed upon the other party or in respect of the other party's execution or performance of this Agreement by any such Stamp Tax Jurisdiction which is not also a Stamp Tax Jurisdiction with respect to the other party. 5. EVENTS OF DEFAULT AND TERMINATION EVENTS (a) EVENTS OF DEFAULT. The occurrence at any time with respect to a party or, if applicable, any Credit Support Provider of such party or any Specified Entity of such party of any of the following events constitutes an event of default (an "Event of Default") with respect to such party:-- (i) FAILURE TO PAY OR DELIVER. Failure by the party to make, when due, any payment under this Agreement or delivery under Section 2(a)(i) or 2(e) required to be made by it if such failure is not remedied on or before the third Local Business Day after notice of such failure is given to the party; (ii) BREACH OF AGREEMENT. Failure by the party to comply with or perform any agreement or obligation (other than an obligation to make any payment under this Agreement or delivery under Section 2(a)(i) or 2(e) or to give notice of a Termination Event or any agreement or obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied with or performed by the party in accordance with this Agreement if such failure is not remedied on or before the thirtieth day after notice of such failure is given to the party; (iii) CREDIT SUPPORT DEFAULT. (1) Failure by the party or any Credit Support Provider of such party to comply with or perform any agreement or obligation to be complied with or performed by it in accordance with any Credit Support Document if such failure is continuing after any applicable grace period has elapsed; (2) the expiration or termination of such Credit Support Document or the failing or ceasing of such Credit Support Document to be in full force and effect for the purpose of this Agreement (in either case other than in accordance with its terms) prior to the satisfaction of all obligations of such party under each Transaction to which such Credit Support Document relates without the written consent of the other party; or (3) the party or such Credit Support Provider disaffirms, disclaims, repudiates or rejects, in whole or in part, or challenges the validity of, such Credit Support Document; (iv) MISREPRESENTATION. A representation (other than a representation under Section 3(e) or (f)) made or repeated or deemed to have been made or repeated by the party or any Credit Support Provider of such party in this Agreement or any Credit Support Document proves to have been incorrect or misleading in any material respect when made or repeated or deemed to have been made or repeated; (v) DEFAULT UNDER SPECIFIED TRANSACTION. The party, any Credit Support Provider of such party or any applicable Specified Entity of such party (1) defaults under a Specified Transaction and, after giving effect to any applicable notice requirement or grace period, there occurs a liquidation of, an acceleration of obligations under, or an early termination of, that Specified Transaction, (2) defaults, after giving effect to any applicable notice requirement or grace period, in making any payment or delivery due on the last payment, delivery or exchange date of, or any payment on early termination of, a Specified Transaction (or such default continues for at least three Local Business Days if there is no applicable notice requirement or grace period) or (3) disaffirms, disclaims, repudiates or rejects, in whole or in part, a Specified Transaction (or such action is taken by any person or entity appointed or empowered to operate it or act on its behalf); (vi) CROSS DEFAULT. If "Cross Default" is specified in the Schedule as applying to the party, the occurrence or existence of (1) a default, event of default or other similar condition or event (however 5 described) in respect of such party, any Credit Support Provider of such party or any applicable Specified Entity of such party under one or more agreements or instruments relating to Specified Indebtedness of any of them (individually or collectively) in an aggregate amount of not less than the applicable Threshold Amount (as specified in the Schedule) which has resulted in such Specified Indebtedness becoming, or becoming capable at such time of being declared, due and payable under such agreements or instruments, before it would otherwise have been due and payable or (2) a default by such party, such Credit Support Provider or such Specified Entity (individually or collectively) in making one or more payments on the due date thereof in an aggregate amount of not less than the applicable Threshold Amount under such agreements or instruments (after giving effect to any applicable notice requirement or grace period); (vii) BANKRUPTCY. The party, any Credit Support Provider of such party or any applicable Specified Entity of such party:-- (1) is dissolved (other than pursuant to a consolidation, amalgamation or merger); (2) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due; (3) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (4) institutes or has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors' rights, or a petition is presented for its winding-up or liquidation and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition (A) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (B) is not dismissed, discharged, stayed or restrained in each case within 30 days of the institution or presentation thereof; (5) has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger); (6) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets; (7) has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter; (8) causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in clauses (1) to (7) (inclusive); or (9) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts; or (viii) MERGER WITHOUT ASSUMPTION. The party or any Credit Support Provider of such party consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets to, another entity and, at the time of such consolidation, amalgamation, merger or transfer:-- (1) the resulting, surviving or transferee entity fails to assume all the obligations of such party or such Credit Support Provider under this Agreement or any Credit Support Document to which it or its predecessor was a party by operation of law or pursuant to an agreement reasonably satisfactory to the other party to this Agreement; or (2) the benefits of any Credit Support Document fail to extend (without the consent of the other party) to the performance by such resulting, surviving or transferee entity of its obligations under this Agreement. (b) TERMINATION EVENTS. The occurrence at any time with respect to a party or, if applicable, any Credit Support Provider of such party or any Specified Entity of such party of any event specified below constitutes an Illegality if the event is specified in (i) below, a Tax Event if the event is specified in (ii) below or a Tax Event Upon Merger if the event is specified in (iii) below, and, if specified to be applicable, a Credit Event 6 Upon Merger if the event is specified pursuant to (iv) below or an Additional Termination Event if the event is specified pursuant to (v) below:-- (i) ILLEGALITY. Due to the adoption of, or any change in, any applicable law after the date on which a Transaction is entered into, or due to the promulgation of, or any change in, the interpretation by any court, tribunal or regulatory authority with competent jurisdiction of any applicable law after such date, it becomes unlawful (other than as a result of a breach by the party of Section 4(b)) for such party (which will be the Affected Party):-- (1) to perform any absolute or contingent obligation to make a payment or delivery or to receive a payment or delivery in respect of such Transaction or to comply with any other material provision of this Agreement relating to such Transaction; or (2) to perform, or for any Credit Support Provider of such party to perform, any contingent or other obligation which the party (or such Credit Support Provider) has under any Credit Support Document relating to such Transaction; (ii) TAX EVENT. Due to (x) any action taken by a taxing authority, or brought in a court of competent jurisdiction, on or after the date on which a Transaction is entered into (regardless of whether such action is taken or brought with respect to a party to this Agreement) or (y) a Change in Tax Law, the party (which will be the Affected Party) will, or there is a substantial likelihood that it will, on the next succeeding Scheduled Payment Date (1) be required to pay to the other party an additional amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which an amount is required to be deducted or withheld for or on account of a Tax (except in respect of interest under Section 2(e),6(d)(ii) or 6(e)) and no additional amount is required to be paid in respect of such Tax under Section 2(d)(i)(4) (other than by reason of Section 2(d)(i)(4)(A) or (B)); (iii) TAX EVENT UPON MERGER. The party (the "Burdened Party") on the next succeeding Scheduled Payment Date will either (1) be required to pay an additional amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which an amount has been deducted or withheld for or on account of any Indemnifiable Tax in respect of which the other party is not required to pay an additional amount (other than by reason of Section 2(d)(i)(4)(A) or (B)), in either case as a result of a party consolidating or amalgamating with, or merging with or into, or transferring all or substantially all its assets to, another entity (which will be the Affected Party) where such action does not constitute an event described in Section 5(a)(viii); (iv) CREDIT EVENT UPON MERGER. If "Credit Event Upon Merger" is specified in the Schedule as applying to the party, such party ("X"), any Credit Support Provider of X or any applicable Specified Entity of X consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets to, another entity and such action does not constitute an event described in Section 5(a)(viii) but the creditworthiness of the resulting, surviving or transferee entity is materially weaker than that of X, such Credit Support Provider or such Specified Entity, as the case may be, immediately prior to such action (and, in such event, X or its successor or transferee, as appropriate, will be the Affected Party); or (v) ADDITIONAL TERMINATION EVENT. If any "Additional Termination Event" is specified in the Schedule or any Confirmation as applying, the occurrence of such event (and, in such event, the Affected Party or Affected Parties shall be as specified for such Additional Termination Event in the Schedule or such Confirmation). (c) EVENT OF DEFAULT AND ILLEGALITY. If an event or circumstance which would otherwise constitute or give rise to an Event of Default also constitutes an Illegality, it will be treated as an Illegality and will not constitute an Event of Default. 7 6. EARLY TERMINATION (a) RIGHT TO TERMINATE FOLLOWING EVENT OF DEFAULT. If at any time an Event of Default with respect to a party (the "Defaulting Party") has occurred and is then continuing, the other party (the "Non-defaulting Party") may, by not more than 20 days notice to the Defaulting Party specifying the relevant Event of Default, designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of all outstanding Transactions. If, however, "Automatic Early Termination" is specified in the Schedule as applying to a party, then an Early Termination Date in respect of all outstanding Transactions will occur immediately upon the occurrence with respect to such party of an Event of Default specified in Section 5(a)(vii)(1),(3),(5),(6) or, to the extent analogous thereto, (8), and as of the time immediately preceding the institution of the relevant proceeding or the presentation of the relevant petition upon the occurrence with respect to such party of an Event of Default specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8). (b) RIGHT TO TERMINATE FOLLOWING TERMINATION EVENT. (i) NOTICE. If a Termination Event occurs, an Affected Party will, promptly upon becoming aware of it, notify the other party, specifying the nature of that Termination Event and each Affected Transaction and will also give such other information about that Termination Event as the other party may reasonably require. (ii) TRANSFER TO AVOID TERMINATION EVENT. If either an Illegality under Section 5(b)(i)(l) or a Tax Event occurs and there is only one Affected Party, or if a Tax Event Upon Merger occurs and the Burdened party is the Affected Party, the Affected Party will, as a condition to its right to designate an Early Termination Date under Section 6(b)(iv), use all reasonable efforts (which will not require such party to incur a loss, excluding immaterial, incidental expenses) to transfer within 20 days after it gives notice under Section 6(b)(i) all its rights and obligations under this Agreement in respect of the Affected Transactions to another of its Offices of Affiliates so that such Termination Event ceases to exist. If the Affected Party is not able to make such a transfer it will give notice to the other party to that effect within such 20 day period, whereupon the other party may effect such a transfer within 30 days after the notice is given under Section 6(b)(i). Any such transfer by a party under this Section 6(b)(ii) will be subject to and conditional upon the prior written consent of the other party, which consent will not be withheld if such other party's policies in effect at such time would permit it to enter into transactions with the transferee on the terms proposed. (iii) TWO AFFECTED PARTIES. If an Illegality under Section 5(b)(i)(1) or a Tax Event occurs and there are two Affected Parties, such party will use all reasonable efforts to reach agreement within 30 days after notice thereof is given under Section 6(b)(i) on action to avoid that Termination Event. (iv) RIGHT TO TERMINATE IF:-- (1) a transfer under Section 6(b)(ii) or an agreement under Section 6(b) (iii), as the case may be has not been effected with respect to all Affected Transactions within 30 days after an Affected Party gives notice under Section 6(b)(i); or (2) an Illegality under Section 5(b)(i)(2), a credit Event Upon Merger or an Additional Termination Event occurs, or a Tax Event Upon Merger occurs and the Burdened Party is not the Affected Party. either party in the case of an Illegality ,the Burdened Party in the case of a Tax Event Upon Merger, any Affected Party in the case of a Tax Event or an Additional Termination Event if there is more than one Affected Party, or the party which is not the Affected Party in the case of a Credit Event Upon Merger or an Additional Termination Event if there is only one Affected Party may, be not more than 20 days notice to the other party and provided that the relevant Termination Event is then 8 continuing, designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of all Affected Transactions. (c) EFFECT OF DESIGNATION. (i) If notice designating an Early Termination Date is given under Section 6(a) or (b), the Early Termination Date will occur on the date so designated, whether or not the relevant Event of Default or Termination Event is then continuing. (ii) Upon the occurrence or effective designation of an Early Termination Date, no further payments or deliveries under Section 2(a)(i) or 2(e) in respect of the Terminated Transactions will be required to be made, but without prejudice to the other provisions of this Agreement. The amount, if any, payable in respect of an Early Termination Date shall be determined pursuant to Section 6(e). (d) CALCULATIONS. (i) STATEMENT. On or as soon as reasonably practicable following the occurrence of an Early Termination Date, each party will make the calculations on its part, if any, contemplated by Section 6(e) and will provide to the other party a statement (1) showing, in reasonable detail, such calculations (including all relevant quotations and specifying any amount payable under Section 6(e)) and (2) giving details of the relevant account to which any amount payable to it is to be paid. In the absence of written confirmation from the source of a quotation obtained in determining a Market Quotation, the records of the party obtaining such quotation will be conclusive evidence of the existence and accuracy of such quotation. (ii) PAYMENT DATE. An amount calculated as being due in respect of any Early Termination Date under Section 6(e) will be payable on the day that notice of the amount payable is effective (in the case of an Early Termination Date which is designated or occurs as a result of an Event of Default) and on the day which is two Local Business Days after the day on which notice of the amount payable is effective (in the case of an Early Termination Date which is designated as a result of a Termination Event). Such amount will be paid together with (to the extent permitted under applicable law) interest thereon (before as well as after judgment) in the Termination Currency, from (and including) the relevant Early Termination Date to (but excluding) the date such amount is paid, at the Applicable Rate. Such interest will be calculated on the basis of daily compounding and the actual number of days elapsed. (e) PAYMENTS ON EARLY TERMINATION. If an Early Termination Date occurs, the following provisions shall apply based on the parties' election in the Schedule of a payment measure, either "Market Quotation" or "Loss", and a payment method, either the "First Method" or the "Second Method". If the parties fail to designate a payment measure or payment method in the Schedule, it will be deemed that "Market Quotation" or the "Second Method", as the case may be, shall apply. The amount, if any, payable in respect of an Early Termination Date and determined pursuant to this Section will be subject to any Set-off. (i) EVENTS OF DEFAULT. If the Early Termination Date results from an Event of Default:-- (1) First Method and Market Quotation. If the First Method and Market Quotation apply, the Defaulting Party will pay to the Non-defaulting Party the excess, if a positive number, of (A) the sum of the Settlement Amount (determined by the Non-defaulting Party) in respect of the Terminated Transactions and the Termination Currency Equivalent of the Unpaid Amounts owing to the Non-defaulting Party over (B) the Termination Currency Equivalent of the Unpaid Amounts owing to the Defaulting Party. (2) First Method and Loss. If the First Method and Loss apply, the Defaulting Party will pay to the Non-defaulting Party, if a positive number, the Non-defaulting Party's Loss in respect of this Agreement. (3) Second Method and Market Quotation. If the Second Method and Market Quotation apply, an amount will be payable equal to (A) the sum of the Settlement Amount (determined by the 9 Non-defaulting Party) in respect of the Terminated Transactions and the Termination Currency Equivalent of the Unpaid Amounts owing to the Non-defaulting Party less (B) the Termination Currency Equivalent of the Unpaid Amounts owing to the Defaulting Party. If that amount is a positive number, the Defaulting Party will pay it to the Non-defaulting Party; if it is a negative number, the Non-defaulting Party will pay the absolute value of that amount to the Defaulting Party. (4) Second Method and Loss. If the Second Method and Loss apply, an amount will be payable equal to the Non-defaulting Party's Loss in respect of this Agreement. If that amount is a positive number, the Defaulting Party will pay it to the Non-defaulting Party; if it is a negative number, the Non-defaulting Party will pay the absolute value of that amount to the Defaulting, Party. (ii) TERMINATION EVENTS. If the Early Termination Date results from a Termination Event:-- (1) One Affected Party. If there is one Affected Party, the amount payable will be determined in accordance with Section 6(e)(i)(3), if Market Quotation applies, or Section 6(e)(i)(4), if Loss applies, except that, in either case, references to the Defaulting Party and to the Non-defaulting Party will be deemed to be references to the Affected Party and the party which is not the Affected Party, respectively, and, if Loss applies and fewer than all the Transactions are being terminated, Loss shall be calculated in respect of all Terminated Transactions. (2) Two Affected Parties. If there are two Affected Parties:-- (A) if Market Quotation applies, each party will determine a Settlement Amount in respect of the Terminated Transactions, and an amount will be payable equal to (I) the sum of (a) one-half of the difference between the Settlement Amount of the party with the higher Settlement Amount ("X") and the Settlement Amount of the party with the lower Settlement Amount ("Y") and (b) the Termination Currency Equivalent of the Unpaid Amounts owing to X less (II) the Termination Currency Equivalent of the Unpaid Amounts owing to Y; and (B) if Loss applies, each party will determine its Loss in respect of this Agreement (or, if fewer than all the Transactions are being terminated, in respect of all Terminated Transactions) and an amount will be payable equal to one-half of the difference between the Loss of the party with the higher Loss ("X") and the Loss of the party with the lower Loss ("Y"). If the amount payable is a positive number, Y will pay it to X; if it is a negative number, X will pay the absolute value of that amount to Y. (iii) ADJUSTMENT FOR BANKRUPTCY. In circumstances where an Early Termination Date occurs because "Automatic Early Termination" applies in respect of a party, the amount determined under this Section 6(e) will be subject to such adjustments as are appropriate and permitted by law to reflect any payments or deliveries made by one party to the other under this Agreement (and retained by such other party) during the period from the relevant Early Termination Date to the date for payment determined under Section 6(d)(ii). (iv) PRE-ESTIMATE. The parties agree that if Market Quotation applies an amount recoverable under this Section 6(e) is a reasonable pre-estimate of loss and not a penalty. Such amount is payable for the loss of bargain and the loss of protection against future risks and except as otherwise provided in this Agreement neither party will be entitled to recover any additional damages as a consequence of such losses. 10 7. TRANSFER Subject to Section 6(b)(ii), neither this Agreement nor any interest or obligation in or under this Agreement may be transferred (whether by way of security or otherwise) by either party without the prior written consent of the other party, except that:-- (a) a party may make such a transfer of this Agreement pursuant to a consolidation or amalgamation with, or merger with or into, or transfer of all or substantially all its assets to, another entity (but without prejudice to any other right or remedy under this Agreement); and (b) a party may make such a transfer of all or any part of its interest in any amount payable to it from a Defaulting Party under Section 6(e). Any purported transfer that is not in compliance with this Section will be void. 8. CONTRACTUAL CURRENCY (a) PAYMENT IN THE CONTRACTUAL CURRENCY. Each payment under this Agreement will be made in the relevant currency specified in this Agreement for that payment (the "Contractual Currency"). To the extent permitted by applicable law, any obligation to make payments under this Agreement in the Contractual Currency will not be discharged or satisfied by any tender in any currency other than the Contractual Currency, except to the extent such tender results in the actual receipt by the party to which payment is owed, acting in a reasonable manner and in good faith in converting the currency so tendered into the Contractual Currency, of the full amount in the Contractual Currency of all amounts payable in respect of this Agreement. If for any reason the amount in the Contractual Currency so received falls short of the amount in the Contractual Currency payable in respect of this Agreement, the party required to make the payment will, to the extent permitted by applicable law, immediately pay such additional amount in the Contractual Currency as may be necessary to compensate for the shortfall. If for any reason the amount in the Contractual Currency so received exceeds the amount in the Contractual Currency payable in respect of this Agreement, the party receiving the payment will refund promptly the amount of such excess. (b) JUDGMENTS. To the extent permitted by applicable law, if any judgment or order expressed in a currency other than the Contractual Currency is rendered (i) for the payment of any amount owing in respect of this Agreement, (ii) for the payment of any amount relating to any early termination in respect of this Agreement or (iii) in respect of a judgment or order of another court for the payment of any amount described in (i) or (ii) above, the party seeking recovery, after recovery in full of the aggregate amount to which such party is entitled pursuant to the judgment or order, will be entitled to receive immediately from the other party the amount of any shortfall of the Contractual Currency received by such party as a consequence of sums paid in such other currency and will refund promptly to the other party any excess of the Contractual Currency received by such party as a consequence of sums paid in such other currency if such shortfall or such excess arises or results from any variation between the rate of exchange at which the Contractual Currency is converted into the currency of the judgment or order for the purposes of such judgment or order and the rate of exchange at which such party is able, acting in a reasonable manner and in good faith in converting the currency received into the Contractual Currency, to purchase the Contractual Currency with the amount of the currency of the judgment or order actually received by such party. The term "rate of exchange" includes, without limitation, any premiums and costs of exchange payable in connection with the purchase of or conversion into the Contractual Currency. (c) SEPARATE INDEMNITIES. To the extent permitted by applicable law, these indemnities constitute separate and independent obligations from the other obligations in this Agreement, will be enforceable as separate and independent causes of action, will apply notwithstanding any indulgence granted by the party to which any payment is owed and will not be affected by judgment being obtained or claim or proof being made for any other sums payable in respect of this Agreement. (d) EVIDENCE OF LOSS. For the purpose of this Section 8, it will be sufficient for a party to demonstrate that it would have suffered a loss had an actual exchange or purchase been made. 11 9. MISCELLANEOUS (a) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and understanding of the parties with respect to its subject matter and supersedes all oral communication and prior writings with respect thereto. (b) AMENDMENTS. No amendment, modification or waiver in respect of this Agreement will be effective unless in writing (including a writing evidenced by a facsimile transmission) and executed by each of the parties or confirmed by an exchange of telexes or electronic messages on an electronic messaging system. (c) SURVIVAL OF OBLIGATIONS. Without prejudice to Sections 2(a)(iii) and 6(c)(ii), the obligations of the parties under this Agreement will survive the termination of any Transaction. (d) REMEDIES CUMULATIVE. Except as provided in this Agreement, the rights, powers, remedies and privileges provided in this Agreement are cumulative and not exclusive of any rights, powers, remedies and privileges provided by law. (e) COUNTERPARTS AND CONFIRMATIONS. (i) This Agreement (and each amendment, modification and waiver in respect of it) may be executed and delivered in counterparts (including by facsimile transmission), each of which will be deemed an original. (ii) The parties intend that the are legally bound by the terms of each Transaction from the moment they agree to those terms (whether orally or otherwise). A Confirmation shall be entered into as soon as practicable and may be executed and delivered in counterparts (including by facsimile transmission) or be created by an exchange of telexes or by an exchange of electronic messages on an electronic messaging system, which in each case will be sufficient for all purposes to evidence a binding supplement to this Agreement. The parties will specify therein or through another effective means that any such counterpart, telex or electronic message constitutes a Confirmation. (f) NO WAIVER OF RIGHTS. A failure or delay in exercising any right, power or privilege in respect of this Agreement will not be presumed to operate as a waiver, and a single or partial exercise of any right, power or privilege will not be presumed to preclude any subsequent or further exercise, of that right, power or privilege or the exercise of any other right, power or privilege. (g) HEADINGS. The headings used in this Agreement are for convenience of reference only and are not to affect the construction of or to be taken into consideration in interpreting this Agreement. 10. OFFICES; MULTIBRANCH PARTIES (a) If Section 10(a) is specified in the Schedule as applying, each party that enters into a Transaction through an Office other than its head or home office represents to the other party that, notwithstanding the place of booking office or jurisdiction of incorporation or organisation of such party, the obligations of such party are the same as if it had entered into the Transaction through its head or home office. This representation will be deemed to be repeated by such party on each date on which a Transaction is entered into. (b) Neither party may change the Office through which it makes and receives payments or deliveries for the purpose of a Transaction without the prior written consent of the other party. (c) If a party is specified as a Multibranch Party in the Schedule, such Multibranch Party may make and receive payments or deliveries under any Transaction through any Office listed in the Schedule, and the Office through which it makes and receives payments or deliveries with respect to a Transaction will be specified in the relevant Confirmation. 11. EXPENSES A Defaulting Party will, on demand, indemnify and hold harmless the other party for and against all reasonable out-of-pocket expenses, including legal fees and Stamp Tax, incurred by such other party by reason of the enforcement and protection of its rights under this Agreement or any Credit Support Document 12 to which the Defaulting Party is a party or by reason of the early termination of any Transaction, including, but not limited to, costs of collection. 12. NOTICES (a) EFFECTIVENESS. Any notice or other communication in respect of this Agreement may be given in any manner set forth below (except that a notice or other communication under Section 5 or 6 may not be given by facsimile transmission or electronic messaging system) to the address or number or in accordance with the electronic messaging system details provided (see the Schedule) and will be deemed effective as indicated:-- (i) if in writing and delivered in person or by courier, on the date it is delivered; (ii) if sent by telex, on the date the recipient's answerback is received; (iii) if sent by facsimile transmission, on the date that transmission is received by a responsible employee of the recipient in legible form (it being agreed that the burden of proving receipt will be on the sender and will not be met by a transmission report generated by the sender's facsimile machine); (iv) if sent by certified or registered mail (airmail, if overseas) or the equivalent (return receipt requested), on the date that mail is delivered or its delivery is attempted; or (v) if sent by electronic messaging system, on the date that electronic message is received, unless the date of that delivery (or attempted delivery) or that receipt, as applicable, is not a Local Business Day or that communication is delivered (or attempted) or received, as applicable, after the close of business on a Local Business Day, in which case that communication shall be deemed given and effective on the first following day that is a Local Business Day. (b) CHANGE OF ADDRESSES. Either party may by notice to the other change the address, telex or facsimile number or electronic messaging system details at which notices or other communications are to be given to it. 13. GOVERNING LAW AND JURISDICTION (a) GOVERNING LAW. This Agreement will be governed by and construed in accordance with the law specified in the Schedule. (b) JURISDICTION. With respect to any suit, action or proceedings relating to this Agreement ("Proceedings"), each party irrevocably:-- (i) submits to the jurisdiction of the English courts, if this Agreement is expressed to be governed by English law, or to the non-exclusive jurisdiction of the courts of the State of New York and the United States District Court located in the Borough of Manhattan in New York City, if this Agreement is expressed to be governed by the laws of the State of New York; and (ii) waives any objection which it may have at any time to the laying of venue of any Proceedings brought in any such court, waives any claim that such Proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such Proceedings, that such court does not have any jurisdiction over such party. Nothing in this Agreement precludes either party from bringing Proceedings in any other jurisdiction (outside, if this Agreement is expressed to be governed by English law, the Contracting States, as defined in Section 1(3) of the Civil Jurisdiction and Judgments Act 1982 or any modification, extension or re-enactment thereof for the time being in force) nor will the bringing of Proceedings in any one or more jurisdictions preclude the bringing of Proceedings in any other jurisdiction. (c) SERVICE OF PROCESS. Each party irrevocably appoints the Process Agent (if any) specified opposite its name in the Schedule to receive, for it and on its behalf, service of process in any Proceedings. If for any 13 reason any party's Process Agent is unable to act as such, such party will promptly notify the other party and within 30 days appoint a substitute process agent acceptable to the other party. The parties irrevocably consent to service of process given in the manner provided for notices in Section 12. Nothing in this Agreement will affect the right of either party to serve process in any other manner permitted by law. (d) WAIVER OF IMMUNITIES. Each party irrevocably waives, to the fullest extent permitted by applicable law, with respect to itself and its revenues and assets (irrespective of their use or intended use), all immunity on the grounds of sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any court, (iii) relief by way of injunction, order for specific performance or for recovery of property, (iv) attachment of its assets (whether before or after judgment) and (v) execution or enforcement of any judgment to which it or its revenues or assets might otherwise be entitled in any Proceedings in the courts of any jurisdiction and irrevocably agrees, to the extent permitted by applicable law, that it will not claim any such immunity in any Proceedings. 14. DEFINITIONS As used in this Agreement:-- "ADDITIONAL TERMINATION EVENT" has the meaning specified in Section 5(b). "AFFECTED PARTY" has the meaning specified in Section 5(b). "AFFECTED TRANSACTIONS" means (a) with respect to any Termination Event consisting of an Illegality, Tax Event or Tax Event Upon Merger, all Transactions affected by the occurrence of such Termination Event and (b) with respect to any other Termination Event, all Transaction. "AFFILIATE" means, subject to the Schedule, in relation to any person, any entity controlled, directly or indirectly, by the person, any entity that controls, directly or indirectly, the person or any entity directly or indirectly under common control with the person. For this purpose, "control" of any entity or person means ownership of a majority of the voting power of the entity or person. "APPLICABLE RATE" means:-- (a) in respect of obligations payable or deliverable (or which would have been but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate; (b) in respect of an obligation to pay an amount under Section 6(e) of either party from and after the date (determined in accordance with Section 6(d)(ii)) on which that amount is payable, the Default Rate; (c) in respect of all other obligations payable or deliverable (or which would have been but for Section 2(a)(iii)) by a Non-defaulting party, the Non-default Rate; and (d) in all other cases, the Termination Rate. "BURDENED PARTY" has the meaning specified in Section 5(b). "CHANGE IN TAX LAW" means the enactment, promulgation, execution or ratification of, or any change in or amendment to, any law (or in the application or official interpretation of any law) that occurs on or after the date on which the relevant Transaction is entered into. "CONSENT" includes a consent, approval, action, authorisation, exemption, notice, filing, registration or exchange control consent. "CREDIT EVENT UPON MERGER" has the meaning specified in Section 5(b). "CREDIT SUPPORT DOCUMENT" means any agreement or instrument that is specified as such in this Agreement. "CREDIT SUPPORT PROVIDER" has the meaning specified in the Schedule. "DEFAULT RATE" means a rate per annum equal to the cost (without proof or evidence of any actual cost) to the relevant payee (as certified by it) if it were to fund or of funding the relevant amount plus 1% per annum. 14 "DEFAULTING PARTY" has the meaning specified in Section 6(a). "EARLY TERMINATION DATE" means the date determined in accordance with Section 6(a) or 6(b)(iv). "EVENT OF DEFAULT" has the meaning specified in Section 5(a) and, if applicable, in the Schedule. "ILLEGALITY" has the meaning specified in Section 5(b). "INDEMNIFIABLE TAX" means any Tax other than a Tax that would not be imposed in respect of a payment under this Agreement but for a present or former connection between the jurisdiction of the government or taxation authority imposing such Tax and the recipient of such payment or a person related to such recipient (including, without limitation, a connection arising from such recipient or related person being or having been a citizen or resident of such jurisdiction, or being or having been organised, present or engaged in a trade or business in such jurisdiction, or having or having had a permanent establishment or fixed place of business in such jurisdiction, but excluding a connection arising solely from such recipient or related person having executed, delivered, performed its obligations or received a payment under, or enforced, this Agreement or a Credit Support Document). "LAW" includes any treaty, law, rule or regulation (as modified, in the case of tax matters, by the practice of any relevant governmental revenue authority) and "lawful" and "unlawful" will be construed accordingly. "LOCAL BUSINESS DAY" means, subject to the Schedule, a day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) (a) in relation to any obligation under Section 2(a)(i), in the place(s) specified in the relevant Confirmation or, if not so specified, as otherwise agreed by the parties in writing or determined pursuant to provisions contained, or incorporated by reference, in this Agreement, (b) in relation to any other payment, in the place where the relevant account is located and, if different, in the principal financial centre, if any, of the currency of such payment, (c) in relation to any notice or other communication, including notice contemplated under Section 5(a)(i), in the city specified in the address for notice provided by the recipient and, in the case of a notice contemplated by Section 2(b), in the place where the relevant new account is to be located and (d) in relation to Section 5(a)(v)(2), in the relevant locations for performance with respect to such Specified Transaction. "LOSS" means, with respect to this Agreement or one or more Terminated Transactions, as the case may be, and a party, the Termination Currency Equivalent of an amount that party reasonably determines in good faith to be its total losses and costs (or gain, in which case expressed as a negative number) in connection with this Agreement or that Terminated Transaction or group of Terminated Transactions, as the case may be, including any loss of bargain, cost of funding or, at the election of such party but without duplication, loss or cost incurred as a result of its terminating, liquidating, obtaining or reestablishing any hedge or related trading position (or any gain resulting from any of them). Loss includes losses and costs (or gains) in respect of any payment or delivery required to have been made (assuming satisfaction of each applicable condition precedent) on or before the relevant Early Termination Date and not made, except, so as to avoid duplication, if Section 6(e)(i)(l) or (3) or 6(e)(ii)(2)(A) applies. Loss does not include a party's legal fees and out-of-pocket expenses referred to under Section 11. A party will determine its Loss as of the relevant Early Termination Date, or, if that is not reasonably practicable, as of the earliest date thereafter as is reasonably practicable. A party may (but need not) determine its Loss by reference to quotations of relevant rates or prices from one or more leading dealers in the relevant markets. "MARKET QUOTATION" means, with respect to one or more Terminated Transactions and a party making the determination, an amount determined on the basis of quotations from Reference Market-makers. Each quotation will be for an amount, if any, that would be paid to such party (expressed as a negative number) or by such party (expressed as a positive number) in consideration of an agreement between such party (taking into account any existing Credit Support Document with respect to the obligations of such party) and the quoting Reference Market-maker to enter into a transaction (the "Replacement Transaction") that would have the effect of preserving for such party the economic equivalent of any payment or delivery (whether the underlying obligation was absolute or contingent and assuming the satisfaction of each applicable condition precedent) by the parties under Section 2(a)(i) in respect of such Terminated Transaction or group of Terminated Transactions that would, but for the occurrence of the relevant Early Termination Date, have 15 been required after that date. For this purpose, Unpaid Amounts in respect of the Terminated Transaction or group of Terminated Transactions are to be excluded but, without limitation, any payment or delivery that would, but for the relevant Early Termination Date, have been required (assuming satisfaction of each applicable condition precedent) after that Early Termination Date is to be included. The Replacement Transaction would be subject to such documentation as such party and the Reference Market-maker may, in good faith, agree. The party making the determination (or its agent) will request each Reference Market-maker to provide its quotation to the extent reasonably practicable as of the same day and time (without regard to different time zones) on or as soon as reasonably practicable after the relevant Early Termination Date. The day and time as of which those quotations are to be obtained will be selected in good faith by the party obliged to make a determination under Section 6(e), and, if each party is so obliged, after consultation with the other. If more than three quotations are provided, the Market Quotation will be the arithmetic mean of the quotations, without regard to the quotations having the highest and lowest values. If exactly three such quotations are provided, the Market Quotation will be the quotation remaining after disregarding the highest and lowest quotations. For this purpose, if more than one quotation has the same highest value or lowest value, then one of such quotations shall be disregarded. If fewer than three quotations are provided, it will be deemed that the Market Quotation in respect of such Terminated Transaction or group of Terminated Transactions cannot be determined. "NON-DEFAULT RATE" means a rate per annum equal to the cost (without proof or evidence of any actual cost) to the Non-defaulting Party (as certified by it) if it were to fund the relevant amount. "NON-DEFAULTING PARTY" has the meaning specified in Section 6(a). "OFFICE" means a branch or office of a party, which may be such party's head or home office. "POTENTIAL EVENT OF DEFAULT" means any event which, with the giving of notice or the lapse of time or both, would constitute an Event of Default. "REFERENCE MARKET-MAKERS" means four leading dealers in the relevant market selected by the party determining a Market Quotation in good faith (a) from among dealers of the highest credit standing which satisfy all the criteria that such party applies generally at the time in deciding whether to offer or to make an extension of credit and (b) to the extent practicable, from among such dealers having an office in the same city. "RELEVANT JURISDICTION" means, with respect to a party, the jurisdictions (a) in which the party is incorporated, organised, managed and controlled or considered to have its seat, (b) where an Office through which the party is acting for purposes of this Agreement is located, (c) in which the party executes this Agreement and (d) in relation to any payment, from or through which such payment is made. "SCHEDULED PAYMENT DATE" means a date on which a payment or delivery is to be made under Section 2(a)(i) with respect to a Transaction. "SET-OFF" means set-off, offset, combination of accounts, right of retention or withholding or similar right or requirement to which the payer of an amount under Section 6 is entitled or subject (whether arising under this Agreement, another contract, applicable law or otherwise) that is exercised by, or imposed on, such payer. "SETTLEMENT AMOUNT" means, with respect to a party and any Early Termination Date, the sum of:-- (a) the Termination Currency Equivalent of the Market Quotations (whether positive or negative) for each Terminated Transaction or group of Terminated Transactions for which a Market Quotation is determined; and (b) such party's Loss (whether positive or negative and without reference to any Unpaid Amounts) for each Terminated Transaction or group of terminated Transactions for which a Market Quotation cannot be determined or would not (in the reasonable belief of the party making the determination) produce a commercially reasonable result. "SPECIFIED ENTITY" has the meaning specified in the Schedule. 16 "SPECIFIED INDEBTEDNESS" means, subject to the Schedule, any obligation (whether present or future, contingent or otherwise, as principal or surety or otherwise) in respect of borrowed money. "SPECIFIED TRANSACTION" means, subject to the Schedule, (a) any transaction (including an agreement with respect thereto) now existing or hereafter entered into between one party to this Agreement (or any Credit Support Provider of such party or any applicable Specified Entity of such party) and the other party to this Agreement (or any Credit Support Provider of such other party or any applicable Specified Entity of such other party) which is a rate swap transaction, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions), (b) any combination of these transactions and (c) any other transaction identified as a Specified Transaction in this Agreement or the relevant confirmation. "STAMP TAX" means any stamp, registration, documentation or similar tax. "TAX" means any present or future tax levy, impost, duty, charge, assessment or fee of any nature (including interest, penalties and additions thereto that is imposed by any government or other taxing authority in respect of any payment under this Agreement other than a stamp, registration, documentation or similar tax. "TAX EVENT" has the meaning specified in Section 5(b). "TAX EVENT UPON MERGER" has the meaning specified in Section 5(b). "TERMINATED TRANSACTIONS" means with respect to any Early Termination Date (a) if resulting from a Termination Event, all Affected Transactions and (b) if resulting from an Event of Default, all Transactions (in either case) in effect immediately before the effectiveness of the notice designating that Early Termination Date (or, if "Automatic Early Termination" applies, immediately before that Early Termination Date). "TERMINATION CURRENCY" has the meaning specified in the Schedule. "TERMINATION CURRENCY EQUIVALENT" means, in respect of any amount denominated in the Termination Currency, such Termination Currency amount and, in respect of any amount denominated in a currency other than the Termination Currency (the "Other Currency"), the amount in the Termination Currency determined by the party making the relevant determination as being required to purchase such amount of such Other Currency as at the relevant Early Termination Date, or, if the relevant Market Quotation or Loss (as the case, may be), is determined as of a later date that later date, with the Termination Currency at the rate equal to the spot exchange rate of the foreign exchange agent (selected as provided below) for the purchase of such Other Currency with the Termination currency at or about 11:00 a.m. (in the city in which such foreign exchange agent is located) on such date as would be customary for the determination of such a rate for the purchase of such Other Currency for value on the relevant Early Termination Date or that later date. The foreign exchange agent will, if only one party is obliged to make a determination under Section 6(e), be selected in good faith by that party and otherwise will be agreed by the parties. "TERMINATION EVENT" means an Illegality, a Tax Event or a Tax Event Upon Merger or, if specified to be applicable, a Credit Event Upon Merger or an Additional Termination Event. "TERMINATION RATE" means a rate per annum equal to the arithmetic mean of the cost (without proof or evidence of any actual cost) to each party (as certified by such party) if it were to fund or of funding such amounts. "UNPAID AMOUNTS" owing to any party means, with respect to an Early Termination Date, the aggregate of (a) in respect of all Terminated Transactions, the amounts that became payable (or that would have become payable but for Section 2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early Termination Date and which remain unpaid as at such Early Termination Date and (b) in respect of each Terminated Transaction, for each obligation under Section 2(a)(i) which was (or would have been but for Section 2(a)(iii)) required to be settled by delivery to such party on or prior to such Early Termination Date and which has not been so settled as at such Early Termination Date, an amount equal to the fair market 17 value of that which was (or would have been) required to be delivered as of the originally scheduled date for delivery, in each case together with to the extent permitted under applicable law) interest, in the currency of such amounts, from (and including) the date such amounts or obligations were or would have been required to have been paid or performed to (but excluding) such Early Termination Date, at the Applicable Rate. Such amounts of interest will be calculated on the basis of daily compounding and the actual number of days elapsed. The fair market value of any obligation referred to in clause (b) above shall be reasonably determined by the party obliged to make the determination under Section 6(e) or, if each party is so obliged, it shall be the average of the Termination Currency Equivalents of the fair market values reasonably determined by both parties. IN WITNESS WHEREOF the parties have executed this document on the respective dates specified below with effect from the date specified on the first page of this document. BNP PARIBAS SECURITIES CORP. ON BEHALF OF BNP PARIBAS GRANITE CONSTRUCTION INCORPORATED - -------------------------------- --------------------------------- (Name of Party) (Name of Party) By : /s/ Christine Smith Howard By : /s/ WILLIAM E. BARTON, ---------------------------- ------------------------------ Name: Christine Smith Howard Name: WILLIAM E. BARTON, Title: Authorized Signatory Title: SR. VICE PRESIDENT Date: February 18, 2003 Date: By : /s/ Mindy Sperling By : /s/ R.C. ALLBRITTON, ---------------------------- ----------------------------- Name: Mindy Sperling R.C. ALLBRITTON, VICE PRESIDENT Title: Authorized Signatory Date: February 18, 2003 18 EXECUTION COPY SCHEDULE TO THE MASTER AGREEMENT DATED AS OF FEBRUARY 10, 2003 BETWEEN BNP PARIBAS ("PARTY A ") AND GRANITE CONSTRUCTION INCORPORATED ("PARTY B") PART 1 TERMINATION PROVISIONS (a) "SPECIFIED ENTITY " means in relation to Party A and Party B for the purpose of:- Section 5(a) None Section 5(a)(v), None Section 5(a)(vi), None Section 5(a)(vii), None Section 5(b) None Section 5(b)(iv), None (b) "SPECIFIED TRANSACTION" will have the meaning specified in Section 14 of this Agreement. (c) The "CROSS DEFAULT" provisions of Section 5(a)(vi) will apply to Party A and will apply to Party B. If such provisions apply:- "SPECIFIED INDEBTEDNESS" will have the meaning specified in Section 14 of this Agreement but will exclude deposits received by a party in the ordinary course of its banking business. "THRESHOLD AMOUNT" means USD 10,000,000 (or the equivalent thereof in any other currency or currencies) with respect to Party A and Party B. (d) The "CREDIT EVENT UPON MERGER" provisions of Section 5(b)(iv) will apply to Party A and will apply to Party B. (e) The "AUTOMATIC EARLY TERMINATION" provision of Section 6(a) will not apply to Party A and will not apply to Party B. (f) PAYMENTS ON EARLY TERMINATION. For the purpose of Section 6(e) of this Agreement:- (i) Loss will apply. (ii) The Second Method, incorporating the set-off provisions set out in paragraph (a) of Part 5 hereof, will apply. 19 EXECUTION COPY (g) "TERMINATION CURRENCY" means United States Dollars. (h) "ADDITIONAL TERMINATION EVENT" will apply. The following shall constitute an Additional Termination Event:- If at any time Party A ceases to be a Lender under the Credit Agreement dated as of June 29, 2001 among Party B, as the Borrower, Bank of America, N.A., as Administrative Agent, as a Lender, and as L/C Issuer and the other Lenders party thereto, as such agreement may from time to time be restated, amended or otherwise modified or any substitute or replacement agreement with respect thereto (the "Credit Agreement"). Capitalized terms used herein and not defined shall have the meaning assigned to such term in the Credit Agreement. For the purpose of the foregoing Termination Event, the Affected Party or Affected Parties shall be:- Party B PART 2 TAX REPRESENTATIONS (a) PAYER REPRESENTATIONS. For the purpose of Section 3(e) of this Agreement, Party A will make the following representation and Party B will make the following representation:- It is not required by any applicable law, as modified by the practice of any relevant governmental revenue authority, of any Relevant Jurisdiction to make any deduction or withholding for or on account of any Tax from any payment (other than interest under Section 2(e), 6(d)(ii) or 6(e) of this Agreement) to be made by it to the other party under this Agreement. In making his representation, it may rely on:- (i) the accuracy of any representations made by the other party pursuant to Section 3(f) of this Agreement; (ii) the satisfaction of the agreement contained in Section 4(a)(i) or 4(a)(iii) of this Agreement and the accuracy and effectiveness of any document provided by the other party pursuant to Section 4(a)(i) or 4(a)(iii) of this Agreement; and (iii) the satisfaction of the agreement of the other party contained in Section 4(d) of this Agreement, provided that it shall not be a breach of this representation where reliance is placed on clause (ii) and the other party does not deliver a form or document under Section 4(a)(iii) by reason of material prejudice to its legal or commercial position. (b) PAYEE TAX REPRESENTATIONS. For the purpose of Section 3(f) of this Agreement, Party A and Party B will not make any representations. PART 3 AGREEMENT TO DELIVER DOCUMENTS For the purpose of Sections 4(a)(i) and (ii) of this Agreement, each party agrees to deliver the following documents, as applicable:- (a) Tax forms, documents or certificates to be delivered are: None 20 EXECUTION COPY (B) OTHER DOCUMENTS TO BE DELIVERED ARE:

DATE BY WHICH COVERED BY PARTY REQUIRED TO TO BE SECTION 3(D) DELIVER DOCUMENT FORM/DOCUMENT/CERTIFICATE DELIVERED REPRESENTATION Party A such proof as Party B may reasonably on signing Yes request of the names, true signatures and authority of persons signing this Agreement or its behalf and any other document referred to herein to which it is a party Party B Certified copies of all corporate on signing Yes authorizations and any other documents with respect to the execution, delivery and performance of this Agreement; together with a certificate of authority and specimen signatures of the persons executing this Agreement; Party B A copy of its most recently available promptly after a Yes annual report containing audited financial request by Party statements for its most recently ended A fiscal year certified by its independent public accountants as fairly presenting its financial condition and results of operations for and as at the close of such fiscal year; Party B A copy of its most recently available promptly after a unaudited financial statements for its most request by recently ended fiscal quarter certified by Party A its chief financial officer as fairly presenting its financial condition and results of operations for and as at the close of such quarter; Party B Each regular financial and/or business promptly after a Yes reporting document that is distributed or is request by generally available to its partners, Party A shareholders, creditors or investors or is filed with any regulatory authorities and is publicly available or relates to its financial condition; Party B Such other information respecting Party promptly after Yes B's condition or operations, financial or a request by otherwise, as Party A may reasonably Party A request from time to time; and Party B Opinion of general counsel for Party B in upon execution Yes the form of Exhibit I and delivery of this Agreement

21 EXECUTION COPY PART 4 MISCELLANEOUS (a) ADDRESSES FOR NOTICES. For the purpose of Section 12(a) of this Agreement:- Address for notices or communications to Party A:- Address: BNP Paribas, 20 Boulevard des Italiens, 75009 Paris, France Attention: BFI/BOLTIT Telex No. 282919 Answerback: BNP 282919F copy to: BNP Paribas, 10 Harewood Avenue, London NWI 6AA, England Attention: Legal and Transaction Management Group Telex No: 296723 Answerback: PARCAP Electronic Messaging System Details: BPCMGB2X (For all purposes) Address for notices or communications to Party B:- Address: Granite Construction Incorporated, P.O. Box 50085 Watsonville, CA 95077-5085 Attention: Jigisha Desai, Director of Corporate Treasury Telex No: 831-761-4784 Jigisha.Desai@goinc.com copy to: Granite Construction Incorporated, P.O. Box 50085 Watsonville, CA 95077-5085 Attention: R. C. Allbritton, Vice President & Treasurer Telex No. 831-761-4772 R.C.Allbritton@goinc.com Electronic Messaging System Details: (For all purposes) (b) "PROCESS AGENT". For the purpose of Section 13(c) of this Agreement:- Party A appoints as its Process Agent: its New York Branch at 787 Seventh Avenue, New York, New York 10019. Party B appoints as its Process Agent: Michael FutchGranite Construction Incorporated P.O. Box 50085 Watsonville, CA 95077-5085 (c) OFFICES. The provisions of Section 10(a) will apply to this Agreement. 22 EXECUTION COPY (d) MULTIBRANCH PARTY. For the purpose of Section 10(c)of this Agreement:- Party A is a Multibranch Party and may act through the following Offices:- BNP Paribas Head Office Its New York Branch at Its other United States 20, Boulevard des Italiens The Equitable Tower Branches 75009 Paris 31st Floor France 787 Seventh Avenue New York, NY 10019 USA Its Tokyo Branch at Its London Branch at Its Hong Kong Branch at 11th Sankei Building 18F 10 Harewood Avenue Floor 1-7-2, Otemachi, London NW16AA Central Tower Chiyoda-ku England 28 Queen's Road Central Tokyo 100-0004 Hong Kong Japan Its Singapore Branch Its Dublin Branch Its Sydney Branch Tung Centre 5 George's Dock 12 Castlereagh Street 20 Collyer Quay IFSC Sydney NSW 2001 Singapore 0104 Dublin I Australia Ireland Its Grand Caymon Branch Party B is not a Multibranch Party. (e) CALCULATION AGENT. The Calculation Agent is Party A, unless otherwise specified in a Confirmation in relation to the relevant Transaction. The Calculation Agent's calculation and determinations shall be conclusive and binding in the absence of manifest error. The failure by Party A to perform its obligations as Calculation Agent hereunder shall not be construed as an Event of Default or Termination Event. (f) CREDIT SUPPORT DOCUMENT. With respect to Party A: Not Applicable. With respect to Party B: (i) The Credit Agreement, the Guaranty, and any other material document in which Party A is a beneficiary of or may become a beneficiary of at any time after the date hereof which expressly provides that it guarantees or secures the material obligations of Party B under this Agreement. (g) CREDIT SUPPORT PROVIDER. With respect to Party A: Not Applicable. With respect to Party B: All pledgors and guarantors, or other persons or parties providing collateral or security, however such term may be defined in the Credit Agreement, the Guaranty, or any other Credit Support Document, including without limitation any guarantors thereto. (h) GOVERNING LAW. This Agreement will be governed by and construed in accordance with the laws of the State of New York without reference to choice of law doctrine. (i) NETTING OF PAYMENTS. Subparagraph (ii) of Section 2(c) of this Agreement will apply unless otherwise stated in any Confirmation. 23 EXECUTION COPY (j) AFFILIATE" will have the meaning specified in Section 14 of this Agreement. PART 5 OTHER PROVISIONS (a) SET-OFF. Section 6 of this Agreement shall be amended by the insertion of the following additional provision: "(f) Set-off. Any amount (the "Early Termination Amount") payable to one party (the "Payee") by the other party (the "Payer") under Section 6(e), in circumstances where there is a Defaulting Party or one Affected Party where a Termination Event under Section 5(b)(iv) has occurred, will, at the option of the party ("X") other than the Defaulting Party or the Affected Party (and without prior notice to the Defaulting Party or the Affected Party),be reduced by its Set-off against any amount(s) (the "Other Agreement Amount") payable (whether at such time or in the future or upon the occurrence of a contingency) by the Payee to the Payer (irrespective of the currency, place of payment or booking office of the obligation) under any other agreement(s) between the Payee and the Payer or instrument(s) or undertaking(s) issued or executed by one party to, or in favor of, the other party (the "Other Agreement") (and the Other Agreement Amount will be discharged pro tanto). X will give notice to the other party of any set-off so effected. For this purpose, either the Early Termination Amount or the Other Agreement Amount (or the relevant part of such amounts) may be converted at the applicable prevailing exchange rate into the currency in which the other is denominated. If an obligation is unascertained, X may in good faith estimate that obligation and set-off in respect of the estimate, subject to the relevant party accounting to the other when the obligation is ascertained. Nothing in this Section 6(f) shall be effective to create a charge or other security interest. This Section shall be without prejudice and in addition to any right of set-off, combination of accounts, lien or other right to which any party is at any time otherwise entitled (whether by operation of law, contract or otherwise). (b) ISDA DEFINITIONS. The definitions and provisions contained in the 2000 ISDA Definitions, the 1999 ISDA Credit Derivatives Definitions, , each as published by the International Swaps and Derivatives Association, Inc. (collectively, the "Definitions", as such Definitions may be further amended) are incorporated into any Confirmation which supplements and forms part of this Agreement, and all capitalized terms used in a Confirmation shall have the meaning set forth in the Definitions, unless otherwise defined in a Confirmation. In the event of any conflict between the provisions of this Agreement and the provisions of the Definitions, the provisions of the Agreement shall apply and in the event of any conflict between the provisions of this Agreement and a Confirmation, the provisions of the Confirmation shall apply. (c) CONFIRMATIONS. A new Section l(d) is hereby added to the Agreement as follows (d) CONFIRMATIONS. Any transaction entered into by the parties, whether or not prior to the date hereof, which would otherwise constitute a "Specified Transaction" under this Agreement [excluding Repo Transactions] shall be deemed to be a Transaction for the purposes of this Agreement, even where not so specified in the documentation for such transaction. Any document or other writing (including telexes, faxes and electronic messages) evidencing the terms of such a Transaction shall, unless otherwise specified in such writing, be deemed to be a Confirmation for the purposes of this Agreement and, unless otherwise agreed by the parties, each such Confirmation shall supplement, form a part of, and be subject to this Agreement and all provisions in the Agreement will govern the Confirmation except as modified therein." (d) REPRESENTATIONS. Each party will be deemed represent to the other party on the date on which it enters into a Transaction that (absent a written agreement between the parties that expressly imposes affirmative obligations to the contrary for that Transaction: 24 EXECUTION COPY (i) NON-RELIANCE. It is acting for its own account and it has made its own independent decisions to enter into that Transaction and as to whether that Transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary. It is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to enter into that Transaction; it being understood that information and explanations related to the terms and conditions of a Transaction shall not be considered investment advice or a recommendation to enter into that Transaction. It has not received from the other party any assurance or guarantee as to the expected results of the Transaction. (ii) EVALUATIONS AND UNDERSTANDING. It is capable of evaluating and understanding (on its own behalf or through professional advice), and understands and accepts, the terms, conditions and risks of that Transaction. It is also capable of assuming, and assumes, the financial and other risks of that Transaction. (iii) STATUS OF PARTIES. The other party is not acting as a fiduciary or an adviser for it in respect of that Transaction. (iv) ACTING AS PRINCIPAL. It is acting as principal and not as agent or in any other capacity, fiduciary or otherwise. (v) BENEFICIAL OWNER. With respect to any physically settled Transactions, it shall at the time of delivery be the legal and beneficial owner free of liens and other encumbrances of any securities or commodities it delivers to the other party. (vi) ELIGIBLE CONTRACT PARTICIPANT. It is an "eligible contract participant" within the meaning of the Commodity Exchange Act". (e) ADDITIONAL PARTY B REPRESENTATIONS. Party B will be deemed to represent to the other party on the date hereof and each date on which it enters into a Transaction that this Agreement is a Swap Contract (as defined in the Credit Agreement), and this Agreement and any Transaction ranks pari passu with Party B's obligations under all senior secured credit facilities. (f) DEFAULT INTEREST. Section 2(e) of this Agreement is hereby amended by the deletion of the final sentence and the subsitution of the following thereof; "If, prior to the occurrence or effective designation of an Early Termination Date, a party defaults in the performance of any obligation required to be settled by delivery, it will indemnify the other party on demand for any costs, losses or expenses (including the costs of borrowing the shares or other equity securities, bonds or other debt securities or other instrument or commodity as the case may be, if applicable) resulting from such default. A certificate signed by the deliveree setting out such costs, losses or expenses in reasonable detail will be conclusive evidence that they have been incurred." (g) DEFAULT CAUSED BY ILLEGALITY. An Event of Default pursuant to Section 5(a)(vi) shall not be deemed to have occurred if it is caused by an event that would constitute an Illegality if it occurred in connection with this Agreement. (h) EVENTS OF DEFAULT. Section 5 (a) of the Agreement is amended by inserting the following at the end of subsection (vii) (3) thereof: "or a notice is sent convening a meeting to propose a voluntary arrangement of its creditors" (i) EXPENSES. Section 11 of the Agreement is amended by inserting the word "reasonable" between the words "including" and "legal" in the second line thereof. (j) NOTICES. Section 12(a) of the Agreement is amended by (i) removing the words "or its delivery is attempted" in the thirteenth line; (ii) removing the words "(or attempted delivery)" in the fifteenth line; and (iii) removing the words "(or attempted)" in the sixteenth line. 25 (k) WAIVER OF JURY TRIAL. Each party waives to the fullest extent permitted by applicable law any right it may have to have a trial by jury in respect of any Proceedings and acknowledges that it and the other party have been induced to enter into this Agreement (and provide for any Credit Support Document, as applicable) by, among other things, the mutual waivers in this Section. (l) NOTIFICATION OF THE RECORDING OF TELEPHONE CONVERSATIONS. Each Party (i) consents to the recording of telephone conversations of trading and marketing personnel of the parties in connection with this Agreement and any Transactions hereunder and to the submission of such recordings in evidence in any Proceedings and (ii) agrees to obtain any necessary consent of, and give notice of such recording to, such personnel. IN WITNESS WHEREOF the parties have executed this Schedule to the Agreement with effect from the date specified on the first page of this document. BNP PARIBAS SECURITIES CORP. GRANITE CONSTRUCTION INCORPORATED ON BEHALF OF BNP PARIBAS By: /s/ Christine Smith Howard By: /s/ William E. Barton -------------------------- ---------------------- Name: Christine Smith Howard Name: WILLIAM E. BARTON Title: Authorized Signatory Title: SR. VICE PRESIDENT By: /s/ Mindy Sperling By: /s/ R.C. Allbritton --------------------------- ----------------------- Name: Mindy Sperling Name: R.C. ALLBRITTON Title: Authorized Signatory Title: VICE PRESIDENT 26 OPINION OF COUNSEL FOR THE COUNTERPARTY ____________, 2003 BNP Paribas 20 Boulevard des Italiens 75009 Paris France Dear Sirs I have acted as counsel for Granite Construction Incorporated (the "Counterparty") in connection with the ISDA Master Agreement (the "Agreement") dated as of February 10, 2003 between the Counterparty and BNP Paribas ("BNP Paribas"), pursuant to which this opinion is furnished. I have examined originals or copies, certified or otherwise identified to my satisfaction, of such documents, corporate records, certificates of public officials and other instruments and have conducted such other investigations of fact and law as I have deemed necessary or advisable for purposes of this opinion. I express no opinion as to any laws other than the laws and regulations of________________as currently in effect. In addition, I have assumed that the Agreement has been, and any Confirmation exchanged between the parties confirming the Transaction which supplements and is subject to the Agreement (a "Confirmation") will be, duly authorized, executed and delivered (or, in the case of a Confirmation, entered into, as provided for therein) by BNP Paribas [and that the Agreement constitutes, and when confirmed, as provided for therein, any Confirmation will constitute, a valid and binding obligation under the laws of the State of New York. Upon the basis of the foregoing, I am of the opinion that: 1. The Counterparty is a _________duly incorporated, validly existing and in good standing under the laws of ________________ and has full power and authority to execute, deliver and perform the Agreement and to confirm, as provided for therein, and perform any Confirmation. 2. The execution, delivery and performance by the Counterparty of the Agreement and the entering into, as provided for therein, and performance of any Confirmation have been duly authorized by all necessary corporate action, require no action by or in respect of, or filing with, any governmental body, agency or official and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the certificate of incorporation or by-laws of the Counterparty or of any agreement, judgement, injunction, order, decree or other instrument binding upon the Counterparty. 3. The Agreement constitutes and, when confirmed, as provided for therein, any Confirmation, together with the Agreement, will constitute, a valid and binding obligation of the Counterparty enforceable in accordance with its terms except as enforcement may be limited by the provisions of any applicable bankruptcy, liquidation, insolvency and reorganization or other laws, relating to or affecting, generally the enforcement of creditor's rights. 4. No authorization, approvals or consents are required under the laws of _________ to permit the purchase by the Counterparty of any currency which may be needed to make payment pursuant to the Agreement. 5. The submission to the non exclusive jurisdiction of the State and Federal courts in New York City for all purposes in connection with, and the consent to service of process in, the Agreement are valid and binding upon the Counterparty and not subject to revocation. There are no provisions in the Agreement which are repugnant to the public thereof. If any final and conclusive judgement of a State or Federal court sitting in New York City 27 is rendered against the Counterparty in connection with any action arising out of or relating to the Agreement, such judgement would be recognized and enforced by the courts of ______________ without any re-trial or re-examination of the merits of action; provided that the ______________ court in which enforcement is sought determines that: [brief description of the grounds under which such judgement would be recognized without a re-examination of the merits] Very truly yours, 28 CERTIFICATE OF AUTHORITY I, Dominique Hoenn, Chief Operating Officer of BNP PARIBAS, hereby confirm that BNP PARIBAS has consented to and has delegated authority to BNP PARIBAS SECURITIES Corporation, New York to: (i) arrange on behalf of and in the name of BNP PARIBAS (A) any transaction or agreement which is a rate swap transaction, swap option, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rates option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option, credit protection transaction, credit swap, credit default swap, credit default option, total return swap, credit spread transaction, repurchase transaction, reverse repurchase transaction, buy-sell back transaction or securities lending transaction or any transaction similar to the foregoing (including any option with respect to any of these transactions or any combination of such transactions or agreements) including any margin or collateral provisions related thereto or (B) the purchase and/or sale of any securities (including but not limited to government securities), bank debt (including but not limited to floating rate par/near par and distressed bank debt), participations in and options on the foregoing, and any other items as may be related to the foregoing as may be approved by BNP PARIBAS from time to time: (all of the foregoing in (A) or (B) referred to as a transaction) and (ii) execute in connection with such authority any confirmation or agreement or documentation evidencing any such transaction specified above or margin or collateral arrangement or any agreement to which such transaction or margin or collateral arrangement is subject and to take any other action or execute any other instrument or paper necessary or proper in relation thereto. Any transaction undertaken or agreement executed by BNP PARIBAS SECURITIES Corporation on behalf of BNP PARIBAS in respect of the foregoing prior to or subsequent to the date hereof is hereby ratified. By /s/ Dominique Hoenn ------------------- Dominique Hoenn Dated the 22nd day of January 2001. PARIBAS CORPORATION I, David L. Brummer, President of Paribas Corporation (the "Corporation"), pursuant to Resolutions duly adopted by the Board of Directors of the Corporation on February 25, 2000, hereby appoint and authorize the employees of the Corporation whose names are listed below to prepare, negotiate, execute and deliver any contract or agreement (including any margin or collateral provisions related thereto) necessary, advisable or convenient in connection with the business for the Corporation's account in (A) currencies, securities, and financial instruments and contracts of every type, (B) credit default swaps or credit default options and other credit derivative transactions, total return swaps, rate swaps, basis swaps, forward rate agreements, commodity swaps or commodity options, equity or equity index swaps, equity or equity index options, bond options, interest rate options, foreign exchange, caps, floors, collars, cross-currency rate swaps, currency swaps or currency option transactions and any combination of these transactions or contracts of every type, (C) forward contracts of every type and (D) repurchase agreements, reverse repurchase agreements, and buy/sell back agreements of every type. The foregoing appointment and authorization shall include the authority of such persons to exercise the foregoing powers on behalf of BNP Paribas with respect to its business pursuant to the authority granted to the Corporation by BNP Paribas. Authorized Employees Douglas Cook James Lettiere John Powers Mindy Sperling Christine M. Smith The appointments and authorizations granted hereunder supersede all appointments and authorizations previously granted by the President of Paribas Corporation with respect to the foregoing. IN WITNESS WHEREOF, I have hereunto set my hand this 25th day of August, 2000. /s/ David L. Brummer - -------------------- David L. Brummer President [PARIBAS CORPORATION LOGO] /s/ Christine M. Smith ---------------------- Christine M. Smith 787 Seventh Avenue, New York, NY 10019 [PARIBAS CORPORATION LOGO] /s/ Mindy Sperling ------------------- Mindy Sperling 787 Seventh Avenue, New York, NY 10019 [GRANITE CONSTRUCTION INCORPORATED LOGO] OPINION OF COUNSEL FOR THE COUNTERPARTY February 11, 2003 BNP Paribas 20 Boulevard des Italiens 75009 Paris France Dear Sirs I have acted as counsel for Granite Construction Incorporate (the "Counterparty") in connection with the ISDA Master Agreement (the "Agreement") dated as of February 10, 2003 between the Counterparty and BNP Paribas ("BNP Paribas"), pursuant to which this opinion is furnished. I have examined originals or copies, certified or otherwise identified to my satisfaction, of such documents, corporate records, certificates of public officials and other instruments and have conducted such other investigations of fact and law as I have deemed necessary or advisable for purposes of this opinion. I express no opinion as to any laws other than the laws and regulations of California, the Delaware General Corporation Law and the federal laws of the United States of America as currently in effect. In addition, I have assumed that the Agreement has been, and any Confirmation exchanged between the parties confirming the Transaction which supplements and is subject to the Agreement (a "Confirmation") will be, duly authorized, executed and delivered (or, in the case of a Confirmation, entered into, as provided for therein) by BNP Paribas and that the Agreement constitutes, and when confirmed, as provided for therein, any Confirmation will constitute, a valid and binding obligation under the laws of the state of New York. Upon the basis of the foregoing, I am of the opinion that: 1. The Counterparty is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware and has full power and authority to execute, deliver and perform the Agreement and to confirm, as provided for therein, and perform any Confirmation. Box 50085 Watsonville, CA 95077-5085 Phone 831/724-1011 FAX 831/722-9657 BNP Paribas February 10, 2003 Page 2 2. The execution, delivery and performance by the Counterparty of the Agreement and the entering into, as provided for therein, and performance of any confirmation have been duly authorized by all necessary corporate action, require no action by or in respect of, or filing with, any government body, agency or official and do not contravence, or constitute a default under, any provision of applicable law or regulation or of the certificate of incorporation or by-laws of the Counterparty or of any agreement, judgement, injunction, order decree or other instrument binding upon the Counterparty. 3. The Agreement constitutes and, when confirmed, as provided for therein, any Confirmation, together with the Agreement, will constitute, a valid and binding obligation of the Counterparty enforceable in accordance with its terms except as enforcement may be limited by the provisions of any applicable bankruptcy, liquidation, insolvency and reorganization or other laws, relating to or affecting, generally the enforcement of creditor's rights. 4. No authorizations, approvals or consents are required under the laws of California to permit the purchase by the Counterparty of any currency which may be needed to make payment pursuant to the Agreement. 5. The submission to the non-exclusive jurisdiction of the State and Federal courts in New York City for all purposes in connection with, and the consent to service of process in, the Agreement are valid and binding upon the Counterparty and not subject to revocation. There are no provisions in the Agreement which are repugnant to the public policy thereof. If any final and conclusive judgement of a State or Federal court sitting in New York City is rendered against the Counterparty in connection with any action arising out of or relating to the Agreement, such judgement would be recognized and enforced by the courts of California without any re-trial or re-examination of the merits of action; provided that the California court in which enforcement is sought determines that the judgment should not be vacated pursuant to C.C.P. Section 1710.40. Sincerely, /s/ Michael Futch ----------------- Michael Futch, Esq. Vice President and General Counsel MF\pac GRANITE CONSTRUCTION INCORPORATED WHEREAS, the Company is obligated to pay fixed rates of 6.54% and 6.96% to holders of its Senior Notes purchased on March 1, 1998 and May 1, 2001 respectively; and WHEREAS, the Company desires to enter into swap transactions with BNP Paribas wherein it will swap its fixed rates for floating rates of 6m LIBOR + 386.75 bps and 6m LIBOR + 418 bps respectively pursuant to a ISDA Master Agreement and related schedules and exhibits pertaining thereto (collectively the "Agreement"); and WHEREAS, Management has reviewed the Agreement and found it to be acceptable in form and substance. NOW, THEREFORE, BE IT RESOLVED, that the Executive Committee does hereby approve the Agreement and the schedules, exhibits and other related documents pertaining to the transaction described above and attached to the Agreement. FURTHER RESOLVED, that any two Responsible Officers of the Company (as defined in the Company's Credit Agreement dated June 29, 2001) be, and each of them acting together are hereby authorized, empowered and directed, for and on behalf of the Company, to take or cause to be taken any and all actions, including, without limitation, the execution, acknowledgment, filing, amendment and delivery of any and all papers, agreements, documents, instruments and certificates, and the payment of such sums, as such officers may deem necessary or advisable to carry out and perform the obligations of the Company under the Agreement and consummate the transaction contemplated therein. CERTIFICATE OF SECRETARY I certify that: I am duly qualified as Secretary of GRANITE CONSTRUCTION INCORPORATED, a Delaware corporation, (the "Company"). The foregoing is a true copy of resolution adopted by the Board of Directors at a regular meeting held on February 11, 2003 and entered in the Minute Book of the Company. The action is in conformity with the Articles of Incorporation and Bylaws of the Company, has not been modified or repealed, and is now in full force and effect. Dated: February 21, 2003 /s/ Michael Futch ----------------- Michael Futch EX-31.1 8 f91753exv31w1.txt EXHIBIT 31.1 Exhibit 31.1 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, David H. Watts, Chief Executive Officer, certify that: 1. I have reviewed this report on Form 10-Q of Granite Construction Incorporated; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Dated: August 12, 2003 /s/ David H. Watts ------------------------------------ David H. Watts Chairman and Chief Executive Officer EX-31.2 9 f91753exv31w2.txt EXHIBIT 31.2 Exhibit 31.2 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, William E. Barton, Senior Vice President and Chief Financial Officer, certify that: 1. I have reviewed this report on Form 10-Q of Granite Construction Incorporated; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Dated: August 12, 2003 /s/ William E. Barton ----------------------------------- William E. Barton Senior Vice President and Chief Financial Officer EX-32.1 10 f91753exv32w1.txt EXHIBIT 32.1 Exhibit 32.1 CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officer of Granite Construction Incorporated (the "Company") does hereby certify to such officer's knowledge that: The Quarterly Report on Form 10-Q for the quarter ended June 30, 2003 of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and information contained in the Form 10-Q fairly presents in all material respects the financial condition and results of operations of the Company. Dated: August 12, 2003 /s/ David H. Watts ----------------------------------- David H. Watts Chairman of the Board & Chief Executive Officer EX-32.2 11 f91753exv32w2.txt EXHIBIT 32.2 Exhibit 32.2 CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officer of Granite Construction Incorporated (the "Company") does hereby certify to such officer's knowledge that: The Quarterly Report on Form 10-Q for the quarter ended June 30, 2003 of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and information contained in the Form 10-Q fairly presents in all material respects the financial condition and results of operations of the Company. Dated: August 12, 2003 /s/ William E. Barton ----------------------------------- William E. Barton Senior Vice President & Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----

EX-10.1

                                                                    EXHIBIT 10.1

================================================================================

                                CREDIT AGREEMENT

                            Dated as of June 27, 2003

                                      among

                       GRANITE CONSTRUCTION INCORPORATED,

                                as the Borrower,

                             BANK OF AMERICA, N.A.,

                      as Administrative Agent, as a Lender,

                                       and

                                 as L/C Issuer,

                                       and

                         The Other Lenders Party Hereto

                         BANC OF AMERICA SECURITIES LLC,

                                       as

                    Sole Lead Arranger and Sole Book Manager

================================================================================



                                TABLE OF CONTENTS



SECTION                                                                                                        PAGE
- -------                                                                                                        ----
                                                                                                            
ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS..................................................................    1
     1.01     Defined Terms..................................................................................    1
     1.02     Other Interpretive Provisions..................................................................   21
     1.03     Accounting Terms...............................................................................   21
     1.04     Rounding.......................................................................................   22
     1.05     References to Agreements and Laws..............................................................   22

ARTICLE II. THE COMMITMENTS AND CREDIT EXTENSIONS............................................................   22
     2.01     Loans..........................................................................................   22
     2.02     Borrowings, Conversions and Continuations of Loans.............................................   22
     2.03     Letters of Credit..............................................................................   24
     2.04     Prepayments....................................................................................   31
     2.05     Reduction or Termination of Commitments........................................................   31
     2.06     Repayment of Loans.............................................................................   32
     2.07     Interest.......................................................................................   32
     2.08     Fees...........................................................................................   32
     2.09     Computation of Interest and Fees...............................................................   33
     2.10     Evidence of Debt...............................................................................   33
     2.11     Payments Generally.............................................................................   34
     2.12     Sharing of Payments............................................................................   35
     2.13     Guaranty of Obligations........................................................................   36

ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY..........................................................   37
     3.01     Taxes..........................................................................................   37
     3.02     Illegality.....................................................................................   38
     3.03     Inability to Determine Rates...................................................................   38
     3.04     Increased Cost and Reduced Return; Capital Adequacy............................................   38
     3.05     Funding Losses.................................................................................   39
     3.06     Matters Applicable to all Requests for Compensation............................................   39
     3.07     Survival.......................................................................................   40

ARTICLE IV. CONDITIONS PRECEDENT TO CREDIT EXTENSIONS........................................................   40
     4.01     Conditions to Effectiveness and Initial Credit Extension.......................................   40
     4.02     Conditions to all Credit Extensions............................................................   41

ARTICLE V. REPRESENTATIONS AND WARRANTIES....................................................................   42
     5.01     Existence, Qualification and Power; Compliance with Laws.......................................   42
     5.02     Authorization; No Contravention................................................................   42
     5.03     Governmental Authorization.....................................................................   42
     5.04     Binding Effect.................................................................................   43
     5.05     Financial Statements; No Material Adverse Effect...............................................   43


                                       i



                                                                                                            
     5.06     Litigation.....................................................................................   43
     5.07     No Default.....................................................................................   43
     5.08     Ownership of Property; Liens...................................................................   44
     5.09     Environmental Compliance.......................................................................   44
     5.10     Insurance......................................................................................   45
     5.11     Taxes..........................................................................................   45
     5.12     ERISA Compliance...............................................................................   45
     5.13     Subsidiaries...................................................................................   46
     5.14     Margin Regulations; Investment Company Act; Public Utility Holding Company Act.................   46
     5.15     Disclosure.....................................................................................   46
     5.16     Intellectual Property; Licenses, Etc...........................................................   46
     5.17     Swap Contracts.................................................................................   47
     5.18     Labor Relations................................................................................   47
     5.19     Use of Proceeds................................................................................   47
     5.20     Solvency.......................................................................................   47
     5.21     Unrestricted Subsidiary Matters................................................................   47
     5.22     Burdensome Agreements..........................................................................   47
     5.23     Tax Shelter Regulations........................................................................   48

ARTICLE VI. AFFIRMATIVE COVENANTS............................................................................   48
     6.01     Financial Statements...........................................................................   48
     6.02     Certificates; Other Information................................................................   49
     6.03     Notices........................................................................................   50
     6.04     Payment of Obligations.........................................................................   51
     6.05     Preservation of Existence, Etc.................................................................   51
     6.06     Maintenance of Properties......................................................................   51
     6.07     Maintenance of Insurance.......................................................................   52
     6.08     Compliance with Laws...........................................................................   52
     6.09     Books and Records..............................................................................   52
     6.10     Inspection Rights..............................................................................   52
     6.11     Compliance with ERISA..........................................................................   52
     6.12     Environmental Laws.............................................................................   53
     6.13     Use of Proceeds................................................................................   53
     6.14     Tax Clearance Certificates.....................................................................   53

ARTICLE VII. NEGATIVE COVENANTS..............................................................................   53
     7.01     Liens..........................................................................................   53
     7.02     Investments....................................................................................   55
     7.03     Indebtedness...................................................................................   56
     7.04     Fundamental Changes............................................................................   57
     7.05     Dispositions...................................................................................   58
     7.06     Lease Obligations..............................................................................   59
     7.07     Restricted Payments............................................................................   59
     7.08     ERISA..........................................................................................   60
     7.09     Change in Nature of Business or in Structure...................................................   60



                                       ii



                                                                                                            
     7.10     Transactions with Affiliates...................................................................   60
     7.11     Burdensome Agreements..........................................................................   60
     7.12     Use of Proceeds................................................................................   61
     7.13     Financial Covenants............................................................................   61
     7.14     Unrestricted Subsidiary Matters................................................................   61

ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES.................................................................   61
     8.01     Events of Default..............................................................................   61
     8.02     Remedies Upon Event of Default.................................................................   64

ARTICLE IX. ADMINISTRATIVE AGENT.............................................................................   64
     9.01     Appointment and Authorization of Administrative Agent..........................................   64
     9.02     Delegation of Duties...........................................................................   65
     9.03     Liability of Administrative Agent..............................................................   65
     9.04     Reliance by Administrative Agent...............................................................   65
     9.05     Notice of Default..............................................................................   66
     9.06     Credit Decision; Disclosure of Information by Administrative Agent.............................   66
     9.07     Indemnification of Administrative Agent........................................................   67
     9.08     Administrative Agent in its Individual Capacity................................................   67
     9.09     Successor Administrative Agent.................................................................   68
     9.10     Administrative Agent May File Proofs of Claim..................................................   68

ARTICLE X. GENERAL PROVISIONS................................................................................   69
     10.01    Amendments, Etc................................................................................   69
     10.02    Notices and Other Communications; Facsimile Copies.............................................   70
     10.03    No Waiver; Cumulative Remedies.................................................................   71
     10.04    Attorney Costs, Expenses and Taxes.............................................................   71
     10.05    Indemnification by the Borrower................................................................   72
     10.06    Payments Set Aside.............................................................................   73
     10.07    Successors and Assigns.........................................................................   73
     10.08    Confidentiality................................................................................   76
     10.09    Set-off........................................................................................   77
     10.10    Interest Rate Limitation.......................................................................   77
     10.11    Counterparts...................................................................................   77
     10.12    Integration....................................................................................   77
     10.13    Survival of Representations and Warranties.....................................................   78
     10.14    Severability...................................................................................   78
     10.15    Foreign Lenders................................................................................   78
     10.16    Removal and Replacement of Lenders.............................................................   80
     10.17    Governing Law..................................................................................   80
     10.18    Waiver of Right to Trial by Jury...............................................................   81
     10.19    Time of the Essence............................................................................   81

     SIGNATURES..............................................................................................  S-1



                                      iii



                    
SCHEDULES
     1.01(e)           Existing Letters of Credit
     1.01(g)           Guarantors
     2.01              Commitments and Pro Rata Shares
     5.05(c)           Project Debt
     5.06              Litigation
     5.09              Environmental Matters
     5.13(a)           Subsidiaries and Other Equity Investments
     5.13(b)           Senior Note Guarantors
     5.16              Intellectual Property Matters
     5.21              Unrestricted Subsidiary Matters
     5.22              Burdensome Agreements
     7.01              Existing Liens
     7.02(a)           Existing Investments
     7.02(b)           Investment Policy
     7.02(j)           Wilder Investments
     7.03              Existing Indebtedness
     7.06              Existing Leases
     10.02             Eurodollar and Domestic Lending Offices; Addresses for Notices

EXHIBITS

     Exhibit A         Form of Loan Notice
     Exhibit B         Form of Note
     Exhibit C         Form of Compliance Certificate
     Exhibit D         Form of Assignment and Assumption Agreement
     Exhibit E         Form of Guaranty
     Exhibit F         Form of Closing Opinion



                                       iv



                            CREDIT AGREEMENT

         THIS CREDIT AGREEMENT, dated as of June 27, 2003, by and among GRANITE
CONSTRUCTION INCORPORATED, a Delaware corporation (the "Borrower"), each lender
from time to time party hereto (collectively, the "Lenders" and, individually, a
"Lender"), and BANK OF AMERICA, N.A., as Administrative Agent and as L/C Issuer.

         A.       The Borrower has requested that the Lenders provide a
revolving credit facility, and the Lenders are willing to do so on the terms and
conditions set forth herein.

         B.       In consideration of the mutual covenants and agreements herein
contained, and intending to be legally bound hereby, the parties hereto covenant
and agree as follows:

                                   ARTICLE I.
                        DEFINITIONS AND ACCOUNTING TERMS

         1.01     DEFINED TERMS.

         As used in this Agreement, the following terms shall have the meanings
set forth below:

         "Administrative Agent" means the sole administrative agent under the
Loan Documents or any successor administrative agent, which initially shall be
Bank of America.

         "Administrative Agent's Office" means the Administrative Agent's
address and, as appropriate, account as set forth on Schedule 10.02, or such
other address or account as the Administrative Agent may from time to time
notify to the Borrower and the Lenders.

         "Affiliate" means, as to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power (a)
to vote 5% or more of the securities having ordinary voting power for the
election of directors or managing general partners; or (b) to direct or cause
the direction of the management and policies of such Person whether by voting
securities, through the ownership of contract or otherwise.

         "Agent-Related Persons" means the Administrative Agent (including any
successor administrative agent), together with its Affiliates (including, in the
case of Bank of America in its capacity as the Administrative Agent, the
Arranger), and the officers, directors, employees, agents and attorneys-in-fact
of such Persons and Affiliates.

         "Aggregate Commitments" means, as of any date of determination, the
aggregate amount of all Lenders' Commitments hereunder.

         "Agreement" means this Credit Agreement.

         "Applicable Rate" means, with respect to commitment fees, Base Rate
Loans, Eurodollar Rate Loans and utilization fees, as applicable, the following
percentages per annum, each based

                                       1


upon the Pricing Level Leverage Ratio as set forth in the most recent Compliance
Certificate received by the Administrative Agent pursuant to Section 6.02(b);
provided, however, that notwithstanding the foregoing (but subject to the
proviso in the following paragraph), until such date on which Borrower shall
have delivered to the Administrative Agent a Compliance Certificate for the
fiscal quarter ending on June 30, 2003, Pricing Level 3 shall apply:



- ---------------------------------------------------------------------------------------------------------------------
                                                                    APPLICABLE                        APPLICABLE
                                               APPLICABLE RATE         RATE          APPLICABLE          RATE
PRICING                                          (COMMITMENT       (EURODOLLAR       RATE (BASE      (UTILIZATION
 LEVEL       PRICING LEVEL LEVERAGE RATIO           FEE)           RATE LOANS)       RATE LOANS)         FEE)
- -------------------------------------------------------------------------------------------------------------------
                                                                                      
   1       Less than 0.50 to 1.00                   0.25%              1.00%            00.0%            0.125%
- -------------------------------------------------------------------------------------------------------------------
   2       Less than 1.00 to 1.00 but               0.30%              1.25%            00.0%            0.125%
           greater than or equal to 0.50 to
           1.00
- -------------------------------------------------------------------------------------------------------------------
   3       Less than 1.50 to 1.00 but               0.35%             1.375%            00.0%            0.125%
           greater than or equal to 1.00 to
           1.00
- -------------------------------------------------------------------------------------------------------------------
   4       Greater than or equal to 1.50 to         0.40%             1.625%            00.0%            0.125%
           1.00
- -------------------------------------------------------------------------------------------------------------------


         Any increase or decrease in the Applicable Rate resulting from a change
in the Pricing Level Leverage Ratio shall become effective as of the date that
is the earlier of: (a) the last date by which the Borrower is otherwise required
to deliver a Compliance Certificate in accordance with Section 6.02(b) with
reference to Section 6.01 for a given fiscal period (each such date, a
"Calculation Date"); and (b) the date that is two Business Days after the date
(prior to the related Calculation Date) on which the Borrower actually delivers
a Compliance Certificate in accordance with Section 6.02(b) with reference to
Section 6.01 for such fiscal period; provided that, if any Compliance
Certificate for any fiscal period is not delivered to the Administrative Agent
on or before the related Calculation Date, then Pricing Level 4 shall apply,
effective on the related Calculation Date until two Business Days after such
Compliance Certificate is actually received by the Administrative Agent.

         "Approved Fund" has the meaning set forth in Section 10.07(h).

         "Arranger" means the Person acting as sole lead arranger and sole book
manager, which, initially, shall be Banc of America Securities LLC.

         "Assignment and Assumption Agreement" means an Assignment and
Assumption Agreement substantially in the form of Exhibit D.

         "Attorney Costs" means and includes all fees and disbursements of any
law firm or other external counsel and the allocated cost of internal legal
services and all disbursements of internal counsel.

                                       2


         "Attributable Indebtedness" means, on any date, (a) in respect of any
capital lease of any Person, the capitalized amount thereof that would appear on
a balance sheet of such Person prepared as of such date in accordance with GAAP,
and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of
the remaining lease payments under the relevant lease that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP if
such lease were accounted for as a capital lease.

         "Audited Financial Statements" means the audited consolidated balance
sheet of the Borrower and its Subsidiaries for the fiscal year ended December
31, 2002, and the related consolidated statements of income or operations,
shareholders' equity and cash flows for such fiscal year of the Borrower and its
Subsidiaries.

         "Auto-Renewal Letter of Credit" has the meaning set forth in Section
2.03(b)(iii).

         "Bank of America" means Bank of America, N.A.

         "Bankruptcy Code" means the federal Bankruptcy Reform Act of 1978 (11
U.S.C. Section 101 et seq.).

         "Base Rate" means for any day a fluctuating rate per annum equal to the
higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest
in effect for such day as publicly announced from time to time by Bank of
America as its "prime rate." Bank of America's "prime rate" is a rate set by
Bank of America based upon various factors including Bank of America's costs and
desired return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate. Any change in such rate announced by Bank of America shall
take effect at the opening of business on the day specified in the public
announcement of such change.

         "Base Rate Loan" means a Loan that bears interest based on the Base
Rate.

         "Borrower" has the meaning set forth in the introductory paragraph
hereto.

         "Borrowing" means a borrowing consisting of simultaneous Loans of the
same Type and having the same Interest Period made by each of the Lenders
pursuant to Section 2.01.

         "Business Day" means any day other than a Saturday, Sunday, or other
day on which commercial banks are authorized to close under the Laws of, or are
in fact closed in, the state where the Administrative Agent's Office is located
and, if such day relates to any Eurodollar Rate Loan, means any such day on
which dealings in Dollar deposits are conducted by and between banks in the
London interbank eurodollar market.

         "Calculation Date" has the meaning set forth in the definition of
"Applicable Rate" contained herein.

         "Capital Expenditures" means for any period and with respect to the
Consolidated Restricted Group, the aggregate of all expenditures by such
Consolidated Restricted Group (excluding, however, expenditures by any Project
Debt Entity) for the acquisition or leasing of fixed or capital assets or
additions to equipment (including replacements, capitalized repairs and

                                       3


improvements during such period) which should be capitalized under GAAP on a
consolidated balance sheet of such Consolidated Restricted Group, minus net
proceeds from sales of fixed or capital assets received by such Consolidated
Restricted Group (other than a Project Debt Entity) during such period. For the
purpose of this definition, the purchase price of equipment which is purchased
simultaneously with the trade-in of existing equipment owned by such
Consolidated Restricted Group or with insurance proceeds shall be included in
Capital Expenditures only to the extent of the gross amount of such purchase
price less the credit granted by the seller of such equipment for such equipment
being traded in at such time, or the amount of such proceeds, as the case may
be.

         "Cash Collateralize" means to pledge and deposit with or deliver to the
Administrative Agent, for the benefit of the L/C Issuer and the Lenders, as
collateral for the L/C Obligations, cash or deposit account balances pursuant to
documentation in form and substance satisfactory to the Administrative Agent and
the L/C Issuer (which documents are hereby consented to by the Lenders).
Derivatives of such term shall have corresponding meaning. The Borrower hereby
grants the Administrative Agent, for the benefit of the L/C Issuer and the
Lenders, a Lien on all such cash and deposit account balances. Cash collateral
shall be maintained in blocked, non-interest bearing deposit accounts at Bank of
America.

         "Change of Control" means, with respect to any Person, an event or
series of events by which:

                  (a)      any "person" or "group" (as such terms are used in
         Sections 13(d) and 14(d) of the Exchange Act, but excluding any
         employee benefit plan of such person or its subsidiaries, and any
         person or entity acting in its capacity as trustee, agent or other
         fiduciary or administrator of any such plan) becomes the "beneficial
         owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
         except that a person or group shall be deemed to have "beneficial
         ownership" of all securities that such person or group has the right to
         acquire (such right, an "option right"), whether such right is
         exercisable immediately or only after the passage of time), directly or
         indirectly, of 25% or more of the equity securities of such Person
         entitled to vote for members of the board of directors or equivalent
         governing body of such Person on a partially-diluted basis (i.e.,
         taking into account all such securities that such person or group has
         the right to acquire pursuant to any option right); or

                  (b)      during any period of 12 consecutive months, a
         majority of the members of the board of directors or other equivalent
         governing body of such Person cease to be composed of individuals (i)
         who were members of that board or equivalent governing body on the
         first day of such period, (ii) whose election or nomination to that
         board or equivalent governing body was approved by individuals referred
         to in clause (i) above constituting at the time of such election or
         nomination at least a majority of that board or equivalent governing
         body or (iii) whose election or nomination to that board or other
         equivalent governing body was approved by individuals referred to in
         clauses (i) and (ii) above constituting at the time of such election or
         nomination at least a majority of that board or equivalent governing
         body.

                                       4


         "Closing Date" means the first date on which all the conditions
precedent in Section 4.01 are satisfied or waived in accordance with Section
4.01 (or, in the case of Section 4.01(b), waived by the Person entitled to
receive the applicable payment).

         "Code" means the Internal Revenue Code of 1986.

         "Commitment" means, as to each Lender as of any date of determination,
its obligation to (a) make Loans to the Borrower pursuant to Section 2.01, and
(b) purchase participations in L/C Obligations, in an aggregate principal amount
at any one time outstanding not to exceed the amount set forth opposite such
Lender's name on Schedule 2.01, as such amount may be reduced or adjusted from
time to time in accordance with this Agreement.

         "Compensation Period" has the meaning set forth in Section 2.11(d)(ii).

         "Compliance Certificate" means a certificate substantially in the form
of Exhibit C.

         "Consolidated Cash Taxes" means, for any Subject Period, for the
Consolidated Restricted Group on a consolidated basis (excluding, however, any
Project Debt Entity), the aggregate of all taxes actually paid by such Persons
in cash during such period.

         "Consolidated EBITDA" means, for any Subject Period, for the
Consolidated Restricted Group on a consolidated basis (excluding, however, any
Project Debt Entity), an amount equal to Consolidated Net Income for such period
plus the following to the extent deducted in calculating such Consolidated Net
Income: (a) Consolidated Interest Expense for such period, (b) Consolidated Cash
Taxes for such period, and (c) depreciation and amortization expense for such
period.

         "Consolidated Funded Indebtedness" means, as of any date of
determination, for the Consolidated Restricted Group on a consolidated basis,
the sum of (a) the outstanding principal amount of all obligations, whether
current or long-term, for borrowed money (including Obligations hereunder) and
all obligations evidenced by bonds, debentures, notes, loan agreements or other
similar instruments, with or without recourse, but not including Project Debt,
plus (b) Attributable Indebtedness in respect of capital leases and Synthetic
Lease Obligations, but not including Project Debt, plus (c) without duplication,
all Guaranty Obligations of the Consolidated Restricted Group with respect to
Indebtedness of the types specified in subsections (a) and (b) above of Persons
other than the Borrower or any Subsidiary in the Consolidated Restricted Group.

         "Consolidated Interest Expense" means, for any Subject Period, for the
Consolidated Restricted Group on a consolidated basis, the sum of (a) all
interest, premium payments, fees, charges and related expenses of the
Consolidated Restricted Group in connection with borrowed money (including
capitalized interest) or in connection with the deferred purchase price of
assets, in each case to the extent treated as interest in accordance with GAAP,
plus (b) the portion of rent expense of the Consolidated Restricted Group with
respect to such period under capital leases that is treated as interest in
accordance with GAAP and the portion of Synthetic Lease Obligations payable by
the Consolidated Restricted Group with respect to such period that would be
treated as interest in accordance with GAAP if such lease were treated as a
capital lease under

                                       5


GAAP; excluding for purposes of clause (a) and (b) hereof, such amounts in
respect of Project Debt.

         "Consolidated Net Income" means, for any Subject Period, for the
Consolidated Restricted Group on a consolidated basis, the net income of the
Consolidated Restricted Group from continuing operations, excluding
extraordinary items and excluding gains and losses from Dispositions for that
period; not including, however, net income in respect of or attributable to any
Project Debt Entity.

         "Consolidated Restricted Group" means, at any time, the Borrower and
its consolidated Subsidiaries at such time, other than any Unrestricted
Subsidiary at such time.

         "Consolidated Stockholders' Equity" means, as of any date of
determination for the Consolidated Restricted Group on a consolidated basis,
stockholders' equity as of that date, determined in accordance with GAAP.

         "Consolidated Tangible Net Worth" means, as of any date of
determination, the amount equal to Consolidated Stockholders' Equity on that
date minus the Intangible Assets of the Consolidated Restricted Group
(determined on a consolidated basis in accordance with GAAP) on that date.

         "Construction JV" means any Joint Venture entered into by the Borrower
or any of its Subsidiaries with any one or more other Persons in the Ordinary
Course of Business solely for purposes of undertaking or completing a
construction project.

         "Construction JV Investments" means Investments in any Joint Venture
arising upon any initial capital contribution to or subsequent capital
contribution in such Joint Venture, and participated in ratably by all co-joint
venturers having an interest in such Joint Venture, solely for purposes of
undertaking or completing a construction project; provided Construction JV
Investments shall not include the incurrence, directly or indirectly, of any
Guaranty Obligation by the Borrower or any of its Restricted Subsidiaries.

          "Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.

         "Credit Extension" means each of the following: (a) a Borrowing; and
(b) an L/C Credit Extension.

         "Debtor Relief Laws" means the Bankruptcy Code, and all other
liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief Laws of the United States of America or other
applicable jurisdictions from time to time in effect and affecting the rights of
creditors generally.

         "Default" means any event that, with the giving of any notice, the
passage of time, or both, would be an Event of Default.

                                       6


         "Default Rate" means an interest rate equal to (a) the Base Rate plus
(b) the Applicable Rate, if any, applicable to Base Rate Loans plus (c) 2% per
annum; provided, however, that with respect to a Eurodollar Rate Loan or fee
based upon the Applicable Rate determined with reference to Eurodollar Rate
Loans, the Default Rate shall be a rate equal to the rate (including any
Applicable Rate) otherwise applicable to such Loan or fee plus 2% per annum, in
each case to the fullest extent permitted by applicable Laws.

         "Disposition" or "Dispose" means the sale, transfer, license or other
disposition (including any sale and leaseback transaction) of any property by
any Person, including any sale, assignment, transfer or other disposal, with or
without recourse, of any notes or accounts receivable or any rights and claims
associated therewith.

         "Dollar" and "$" means lawful money of the United States of America.

         "Eligible Assignee" has the meaning set forth in Section 10.07(h).

          "Environmental Claims" means all claims, however asserted, by any
Governmental Authority or any other Person alleging potential liability or
responsibility for violation of any Environmental Law or for release or injury
to the environment or threat to public health, personal injury (including
sickness, disease or death), property damage, natural resources damage, or
otherwise alleging liability or responsibility for damages (punitive or
otherwise), cleanup, removal, remedial or response costs, restitution, civil or
criminal penalties, injunctive relief, or other type of relief, resulting from
or based upon (a) the presence, placement, discharge, emission or release
(including intentional and unintentional, negligent and non-negligent, sudden or
non-sudden, accidental or non-accidental placement, spills, leaks, discharges,
emissions or releases) of any Hazardous Material at, in or from property,
whether or not owned by the Borrower or any of its Subsidiaries, or (b) any
other circumstances forming the basis of any violation, or alleged violation, of
any Environmental Law.

         "Environmental Laws" means any and all federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including
those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.

         "Environmental Permits" has the meaning set forth in Section 5.09(b).

         "ERISA" means the Employee Retirement Income Security Act of 1974 and
any regulations issued pursuant thereto.

         "ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Borrower within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).

                                       7


         "ERISA Event" means any of the following: (a) a Reportable Event with
respect to a Pension Plan; (b) a withdrawal by the Borrower or any ERISA
Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan
year in which it was a substantial employer (as defined in Section 4001(a)(2) of
ERISA) or a cessation of operations that is treated as such a withdrawal under
Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower
or any ERISA Affiliate from a Multiemployer Plan or notification that a
Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to
terminate, the treatment of a Plan amendment as a termination under Sections
4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to
terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which
might reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under
Title IV of ERISA, other than PBGC premiums due but not delinquent under Section
4007 of ERISA, upon the Borrower or any ERISA Affiliate.

         "Eurodollar Rate" means for any Interest Period with respect to any
Eurodollar Rate Loan, a rate per annum determined by the Administrative Agent
pursuant to the following formula:

                                           Eurodollar Base Rate
            Eurodollar Rate =  -------------------------------------------------
                                     1.00 - Eurodollar Reserve Percentage

         Where,

                  "Eurodollar Base Rate" means, for such Interest Period:

                  (a)      the rate per annum equal to the rate determined by
         the Administrative Agent to be the offered rate that appears on the
         page of the Telerate screen (or any successor thereto) that displays an
         average British Bankers Association Interest Settlement Rate for
         deposits in Dollars (for delivery on the first day of such Interest
         Period) with a term equivalent to such Interest Period, determined as
         of approximately 11:00 a.m. (London time) two (2) Business Days prior
         to the first day of such Interest Period, or

                  (b)      if the rate referenced in the preceding subsection
         (a) does not appear on such page or service or such page or service
         shall cease to be available, the rate per annum equal to the rate
         determined by the Administrative Agent to be the offered rate on such
         other page or other service that displays an average British Bankers
         Association Interest Settlement Rate for deposits in Dollars (for
         delivery on the first day of such Interest Period) with a term
         equivalent to such Interest Period, determined as of approximately
         11:00 a.m. (London time) two (2) Business Days prior to the first day
         of such Interest Period, or

                                       8


                  (c)      if the rates referenced in the preceding subsections
         (a) and (b) are not available, the rate per annum determined by the
         Administrative Agent as the rate of interest (rounded upward to the
         next 1/100th of 1%) at which deposits in Dollars for delivery on the
         first day of such Interest Period in same day funds in the approximate
         amount of the Eurodollar Rate Loan being made, continued or converted
         by Bank of America and with a term equivalent to such Interest Period
         would be offered by Bank of America's London Branch to major banks in
         the London interbank eurodollar market at their request at
         approximately 11:00 a.m. (London time) two (2) Business Days prior to
         the first day of such Interest Period; and

                  "Eurodollar Reserve Percentage" means, for any day during any
         Interest Period, the reserve percentage (expressed as a decimal,
         carried out to five decimal places) in effect on such day, whether or
         not applicable to any Lender, under regulations issued from time to
         time by the FRB for determining the maximum reserve requirement
         (including any emergency, supplemental or other marginal reserve
         requirement) with respect to Eurodollar funding (currently referred to
         as "Eurocurrency liabilities"). The Eurodollar Rate for each
         outstanding Eurodollar Rate Loan shall be adjusted automatically as of
         the effective date of any change in the Eurodollar Reserve Percentage.

         "Eurodollar Rate Loan" means a Loan that bears interest at a rate based
on the Eurodollar Rate.

         "Event of Default" means any of the events or circumstances specified
in Section 8.01.

         "Exchange Act" means the Securities Exchange Act of 1934 and the
regulations promulgated thereunder.

         "Existing Credit Agreement" means that Credit Agreement dated as of
June 29, 2001 by and among the Borrower, Bank of America, N.A. as
"Administrative Agent", and the "Lenders" thereunder.

         "Existing Letters of Credit" means the letters of credit issued by Bank
of America (as the financial institution issuing letters of credit under the
Existing Credit Agreement) that are outstanding immediately prior to the
effectiveness of this Agreement, as more particularly described on Schedule
1.01(e).

         "Federal Funds Rate" means, for any day, the rate per annum equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank on the Business Day next
succeeding such day; provided that (a) if such day is not a Business Day, the
"Federal Funds Rate" for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the "Federal Funds Rate" for such day shall be the average rate charged to Bank
of America on such day on such transactions as determined by the Administrative
Agent.

                                       9


         "Fee Letter" means that certain letter agreement relating to fees,
dated as of March 5, 2003, among the Borrower, the Arranger and the
Administrative Agent.

         "Financial Letter of Credit" means any Letter of Credit that is a
"financial standby letter of credit" as set forth in applicable Laws promulgated
from time to time by the FRB.

         "Fixed Charge Coverage Ratio" means, as of any date of determination,
the ratio of (a) the sum of (i) Consolidated EBITDA, measured for the Subject
Period ending on such day, minus (ii) Consolidated Cash Taxes for the Subject
Period ending on such date plus (iii) interest income of the Consolidated
Restricted Group (other than in respect of Project Debt Entities) for the
Subject Period ending on such day (to the extent not included in the
determination of Consolidated EBITDA for such Subject Period in clause (i)
above) minus (iv) all Capital Expenditures actually made during such period to
(b) the sum of (i) Consolidated Interest Expense, measured for the Subject
Period ending on such day, which was deductible in determining the operating
income for such period plus (ii) the current portion (determined in accordance
with GAAP) of Consolidated Funded Indebtedness.

         "Foreign Lender" has the meaning set forth in Section 10.15.

         "FRB" means the Board of Governors of the Federal Reserve System of the
United States of America.

         "Fund" has the meaning set forth in Section 10.07(h).

         "GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or such other principles as may be
approved by a significant segment of the accounting profession, that are
applicable to the circumstances as of the date of determination, consistently
applied.

         "Granite Land Company" means Granite Land Company, a California
corporation, and any successor thereto.

         "GLC Venture" means any Joint Venture, now or hereafter formed by any
Land Development Company or any of its Subsidiaries with any other Person in the
Ordinary Course of Business of such Land Development Company or Subsidiary.

         "Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, administrative tribunal, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock or capital
ownership or otherwise, by any of the foregoing.

         "Guarantors" means all of the Subsidiaries listed on Schedule 1.01(g),
together with all other Persons who, following the Closing Date, execute and
deliver a Guaranty pursuant to Section 2.13.

                                       10


         "Guaranty" means the guaranty substantially in the form of Exhibit E,
or otherwise in form and substance satisfactory to the Required Lenders.

         "Guaranty Obligation" means, as to any Person, any (a) any obligation,
contingent or otherwise, of such Person guarantying or having the economic
effect of guarantying any Indebtedness or other obligation payable or
performable by another Person (the "primary obligor") in any manner, whether
directly or indirectly, and including any obligation of such Person, direct or
indirect, (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation, (ii) to purchase or lease
property, securities or services for the purpose of assuring the obligee in
respect of such Indebtedness or other obligation of the payment or performance
of such Indebtedness or other obligation, (iii) to maintain working capital,
equity capital or any other financial statement condition or liquidity of the
primary obligor so as to enable the primary obligor to pay such Indebtedness or
other obligation, or (iv) entered into for the purpose of assuring in any other
manner the obligee in respect of such Indebtedness or other obligation of the
payment or performance thereof or to protect such obligee against loss in
respect thereof (in whole or in part), or (b) any Lien on any assets of such
Person securing any Indebtedness or other obligation of any other Person,
whether or not such Indebtedness or other obligation is assumed by such Person.
The amount of any Guaranty Obligation shall be deemed to be an amount equal to
the stated or determinable amount of the related primary obligation, or portion
thereof, in respect of which such Guaranty Obligation is made or, if not stated
or determinable, the maximum reasonably anticipated liability in respect thereof
as determined by the guarantying Person in good faith.

         "Hazardous Materials" means, collectively, as of any date: (a) any
petroleum or petroleum products, flammable explosives, radioactive materials,
asbestos in any form that is or could become friable, urea formaldehyde foam
insulation, and transformers or other equipment that contain dielectric fluid
containing polychlorinated biphenyls (PCB's); (b) any chemicals or other
materials or substances which as of such date are defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous wastes," "restricted hazardous wastes," "toxic substances,"
"toxic pollutants," "contaminants," "infectious wastes," "pollutants" or words
of similar import under any Environmental Law; and (c) any other chemical or
other material or substance, exposure to which or use of which as of such date
is prohibited, limited or regulated under any Environmental Law.

         "Honor Date" has the meaning set forth in Section 2.03(c)(i).

         "Indebtedness" means, as to any Person at a particular time, all of the
following, whether or not included as indebtedness or liabilities in accordance
with GAAP:

                  (a)      all obligations of such Person for borrowed money and
         all obligations of such Person evidenced by bonds, debentures, notes,
         loan agreements or other similar instruments;

                  (b)      all direct or contingent obligations of such Person
         arising under letters of credit (including standby and commercial),
         reimbursement agreements, bankers' acceptances, bank guaranties, surety
         bonds and similar instruments (in each case, whether or not such
         obligations are contingent or absolute); provided that the amount of
         any such

                                       11


         contingent obligation shall be deemed to be equal to the maximum
         reasonably anticipated liability in respect thereof;

                  (c)      net obligations under any Swap Contract in an amount
         equal to the Swap Termination Value thereof;

                  (d)      all obligations of such Person to pay the deferred
         purchase price of property or services (other than trade accounts
         payable in the Ordinary Course of Business);

                  (e) indebtedness (excluding prepaid interest thereon) secured
         by a Lien on property owned or being purchased by such Person
         (including indebtedness arising under conditional sales or other title
         retention agreements), whether or not such indebtedness shall have been
         assumed by such Person or is limited in recourse;

                  (f)      capital leases and Synthetic Lease Obligations; and

                  (g)      all Guaranty Obligations of such Person in respect of
         any of the foregoing.

         For all purposes hereof, the Indebtedness of any Person shall include
the Indebtedness of any Joint Venture (other than a Joint Venture that is itself
a corporation or limited liability company) in which such Person is a general
partner or joint venturer, unless such Indebtedness is expressly made
non-recourse to such Person and to such Person's assets (subject only to
customary exceptions acceptable to the Required Lenders). The amount of any
capital lease or Synthetic Lease Obligation as of any date shall be deemed to be
the amount of Attributable Indebtedness in respect thereof as of such date.

         "Indemnified Liabilities" has the meaning set forth in Section 10.05.

         "Indemnitees" has the meaning set forth in Section 10.05.

         "Information" has the meaning set forth in Section 10.08.

         "Intangible Assets" means assets that are considered to be intangible
assets under GAAP, including customer lists, goodwill, computer software,
copyrights, trade names, trade marks, patents, unamortized deferred charges,
unamortized debt discount, and capitalized research and development costs.

         "Interest Payment Date" means, (a) as to any Eurodollar Rate Loan, the
last day of each Interest Period applicable to such Loan; provided that, if any
Interest Period for a Eurodollar Rate Loan exceeds three months, the respective
dates that fall every three months after the beginning of such Interest Period
shall also be Interest Payment Dates; and (b) as to any Base Rate Loan, the last
Business Day of each March, June, September, and December, and the Maturity
Date.

         "Interest Period" means, as to each Eurodollar Rate Loan, the period
commencing on the date such Eurodollar Rate Loan is disbursed or converted to or
continued as a Eurodollar Rate

                                       12


Loan, and ending on the date one, two, three or six months thereafter, as
selected by the Borrower in its Loan Notice; provided that:

                  (a)      any Interest Period that would otherwise end on a day
         that is not a Business Day shall be extended to the next succeeding
         Business Day unless, in the case of a Eurodollar Rate Loan, such
         Business Day falls in another calendar month, in which case such
         Interest Period shall end on the next preceding Business Day;

                  (b)      any Interest Period pertaining to a Eurodollar Rate
         Loan that begins on the last Business Day of a calendar month (or on a
         day for which there is no numerically corresponding day in the calendar
         month at the end of such Interest Period) shall end on the last
         Business Day of the calendar month at the end of such Interest Period;
         and

                  (c)      no Interest Period shall extend beyond the scheduled
         Maturity Date.

         "Investment" means, as to any Person, any acquisition or investment by
such Person, whether by means of (a) the purchase or other acquisition of
capital stock or other securities of another Person, (b) a loan, advance or
capital contribution to, guaranty of debt of, or purchase or other acquisition
of any other debt or equity participation or interest in, another Person,
including any partnership or joint venture interest in or with such other
Person, (c) the provision of goods or services to another Person for
consideration other than cash payable in full upon the delivery or provision of
such goods or services (other than trade accounts payable in the Ordinary Course
of Business), or (d) the purchase or other acquisition (in one transaction or a
series of transactions) of assets of another Person that constitute a business
unit of that Person. For purposes of covenant compliance, the amount of any
Investment shall be the amount actually invested, without adjustment for
subsequent increases or decreases in the value of such Investment.

         "IP Rights" has the meaning set forth in Section 5.16.

         "IRS" means the United States Internal Revenue Service.

         "Joint Venture" means a single-purpose corporation, partnership,
limited liability company, joint venture or other similar legal arrangement
(whether created by contract or conducted through a separate legal entity) now
or hereafter formed by one Person with another Person in order to conduct a
common venture or enterprise with such Person.

         "Land Development Company" means Granite Land Company and any and all
other Subsidiaries of the Borrower (or the Borrower itself) now or hereafter
engaged, directly, or indirectly through Subsidiaries or Joint Ventures, in the
business of land or real estate development.

         "Laws" means, collectively, all international, foreign, federal, state
and local statutes, treaties, rules, guidelines, regulations, ordinances, codes
and administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and

                                       13


permits of, and agreements with, any Governmental Authority, in each case
whether or not having the force of law.

         "L/C Advance" means, with respect to each Lender, such Lender's
participation in any L/C Borrowing in accordance with its Pro Rata Share.

         "L/C Borrowing" means an extension of credit resulting from a drawing
under any Letter of Credit which has not been reimbursed on the date when made
or refinanced as a Borrowing.

         "L/C Credit Extension" means, with respect to any Letter of Credit, the
issuance thereof or extension of the expiry date thereof, or the renewal or
increase of the amount thereof.

         "L/C Issuer" means the financial institution acting as issuer of
Letters of Credit hereunder (or any successor issuer of Letters of Credit
hereunder), which initially shall be Bank of America.

         "L/C Obligations" means, as at any date of determination, the aggregate
undrawn face amount of all outstanding Letters of Credit plus the aggregate of
all Unreimbursed Amounts, including all L/C Borrowings.

         "Lender" has the meaning set forth in the introductory paragraph hereto
and, as the context requires, includes the L/C Issuer.

         "Lending Office" means, as to any Lender, the office or offices of such
Lender described as such on Schedule 10.02, or such other office or offices as a
Lender may from time to time notify the Borrower and the Administrative Agent.

         "Letter of Credit" means any standby letter of credit issued hereunder,
and shall include each Existing Letter of Credit.

         "Letter of Credit Application" means an application and agreement for
the issuance or amendment of a letter of credit in the form from time to time in
use by the L/C Issuer.

         "Letter of Credit Expiration Date" means the day that is 35 Business
Days prior to the Maturity Date (or, if such day is not a Business Day, the next
preceding Business Day).

         "Letter of Credit Sublimit" means an amount equal to the lesser of the
Aggregate Commitments and $60,000,000. The Letter of Credit Sublimit is part of,
and not in addition to, the Aggregate Commitments.

         "Leverage Ratio" means, as of any date of determination, the ratio of
(a) Consolidated Funded Indebtedness to (b) Consolidated Funded Indebtedness
plus Consolidated Tangible Net Worth.

         "Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or preference,
priority or other security interest or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement, any financing lease having substantially the same economic

                                       14


effect as any of the foregoing, and the filing of any financing statement under
the Uniform Commercial Code or comparable Laws of any jurisdiction), including
the interest of a purchaser of accounts receivable.

         "Loan" means an extension of credit by a Lender to the Borrower under
Article II in the form of a loan.

         "Loan Documents" means this Agreement, all Notes, the Fee Letter, all
Requests for Credit Extensions, all Compliance Certificates, each Guaranty, and
all other agreements, documents and instruments, executed and delivered by a
Loan Party in connection with the transactions contemplated hereby (other than
Swap Contracts) in favor of the Administrative Agent, the Arranger, the L/C
Issuer or any Lender.

         "Loan Notice" means a notice of (a) a Borrowing, (b) a conversion of
Loans from one Type to the other, or (c) a continuation of Loans as the same
Type, pursuant to Section 2.02(a), which, if in writing, shall be substantially
in the form of Exhibit A.

         "Loan Parties" means, collectively, the Borrower and each Guarantor.

         "Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, condition
(financial or otherwise) or prospects of the Borrower or the Borrower and its
Restricted Subsidiaries taken as a whole; (b) a material impairment of the
ability of any Loan Party to perform its obligations under any Loan Document to
which it is a party; or (c) a material adverse effect upon the legality,
validity, binding effect or enforceability against any Loan Party of any Loan
Document to which it is a party.

         "Material Subsidiary" means, at any time, any Subsidiary, other than an
Unrestricted Subsidiary, that meets either of the following conditions at such
time: (a) such Subsidiary's consolidated total revenues for the period of the
immediately preceding four fiscal quarters is equal to or greater than 10% of
the consolidated total revenues of the Borrower and its Subsidiaries for such
period, determined in accordance with GAAP, in each case as reflected in the
most recent annual or quarterly (as applicable) financial statements required to
be delivered pursuant to Section 6.01; or (b) such Subsidiary's total
consolidated assets, as of the last day of the immediately preceding fiscal
quarter, are equal to or greater than 10% of the consolidated total assets of
the Borrower and its Subsidiaries as of such date, determined in accordance with
GAAP, in each case as reflected in the most recent annual or quarterly (as
applicable) financial statements of the Borrower required to be delivered
pursuant to Section 6.01; provided, however, that at all times prior to the date
on which the Borrower shall have delivered the quarterly financial statements
for the fiscal quarter ending June 30, 2003 in accordance with Section 6.01,
each of the entities listed on Schedule 1.01(g) shall be deemed a "Material
Subsidiary."

         "Material Unrestricted Subsidiary" means, at any time, any Unrestricted
Subsidiary that meets either of the following conditions at such time: (a) such
Unrestricted Subsidiary's consolidated total revenues for the period of the
immediately preceding four fiscal quarters is equal to or greater than 10% of
the consolidated total revenues of the Borrower and its Subsidiaries for such
period, determined in accordance with GAAP, in each case as reflected in the
most recent annual or quarterly (as applicable) financial statements required to
be delivered

                                       15


pursuant to Section 6.01; or (b) such Unrestricted Subsidiary's total
consolidated assets, as of the last day of the immediately preceding fiscal
quarter, are equal to or greater than 10% of the consolidated total assets of
the Borrower and its Subsidiaries as of such date, determined in accordance with
GAAP, in each case as reflected in the most recent annual or quarterly (as
applicable) financial statements of the Borrower required to be delivered
pursuant to Section 6.01; provided, however, that at all times prior to the date
on which the Borrower shall have delivered the quarterly financial statements
for the fiscal quarter ending June 30, 2003 in accordance with Section 6.01,
Wilder shall be deemed the only Material Unrestricted Subsidiary.

         "Maturity Date" means: (a) June 27, 2006; or (b) such earlier date upon
which the Aggregate Commitments are terminated in accordance with the terms
hereof.

         "Maximum Rate" has the meaning set forth in Section 10.10.

         "Moody's" means Moody's Investors Service, Inc. or any successor
thereto.

         "Multiemployer Plan" means any employee benefit plan of the type
described in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA
Affiliate makes or is obligated to make contributions, or during the preceding
three calendar years, has made or been obligated to make contributions.

         "Non-Guarantor Subsidiary" has the meaning set forth in Section 2.13.

         "Nonrenewal Notice Date" has the meaning set forth in Section
2.03(b)(iii).

         "Note" means a promissory note, substantially in the form of Exhibit B,
made by the Borrower in favor of a Lender evidencing the Loans made by such
Lender.

         "Obligations" means all advances to, and debts, liabilities,
obligations, covenants and duties of, any Loan Party arising under any Loan
Document, whether direct or indirect (including those acquired by assumption),
absolute or contingent, due or to become due, now existing or hereafter arising
and including interest that accrues after the commencement by or against any
Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief
Laws naming such Person as the debtor in such proceeding.

         "Ordinary Course of Business" means, in respect of any transaction
involving the Borrower or any Subsidiary of the Borrower, (a) the ordinary
course of such Person's business, substantially as conducted by any such Person
prior to or as of the Closing Date, and undertaken by such Person in good faith
and not for purposes of evading any covenant or restriction in any Loan
Document, or (b) transactions outside the ordinary course of such Person's
then-existing business, as long as the Borrower provides written notice to the
Administrative Agent and the Lenders prior to such Person undertaking such
business, specifically referencing this definition, provided that the Required
Lenders shall not have delivered written objections to the Administrative Agent
within five (5) Business Days after their receipt of such written notice.

         "Organization Documents" means: (a) with respect to any corporation,
such Person's certificate or articles of incorporation and its bylaws; (b) with
respect to any limited liability company, such Person's articles of formation
and operating agreement; and (c) with respect to

                                       16


any partnership, Joint Venture, trust or other form of business entity, such
Person's applicable agreement of formation and any agreement, instrument, filing
or notice with respect thereto filed in connection with its formation with the
secretary of state or other department in the state of its formation, in each
case as amended from time to time.

         "Other Taxes" has the meaning set forth in Section 3.01(b).

         "Outstanding Amount" means: (a) with respect to Loans on any date, the
aggregate outstanding principal amount thereof after giving effect to any
borrowings and prepayments or repayments of Loans occurring on such date; and
(b) with respect to any L/C Obligations on any date, the amount of such L/C
Obligations on such date after giving effect to any L/C Credit Extension
occurring on such date and any other changes in the aggregate amount of the L/C
Obligations as of such date, including as a result of any reimbursements of
outstanding unpaid drawings under any Letters of Credit or any reductions in the
maximum amount available for drawing under Letters of Credit taking effect on
such date.

         "Participant" has the meaning set forth in Section 10.07(d).

         "PBGC" means the Pension Benefit Guaranty Corporation.

         "Pension Plan" means any "employee pension benefit plan" (as such term
is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by the Borrower or
any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes
or has an obligation to contribute, or in the case of a multiple employer plan
(as described in Section 4064(a) of ERISA) has made contributions at any time
during the immediately preceding five plan years.

         "Performance Letter of Credit" means any Letter of Credit that is a
"performance standby letter of credit" as set forth in applicable Laws
promulgated from time to time by the FRB.

         "Person" means any individual, trustee, corporation, general
partnership, limited partnership, limited liability company, joint stock
company, trust, unincorporated organization, bank, business association, firm,
Joint Venture or Governmental Authority.

         "Plan" means any "employee benefit plan" (as such term is defined in
Section 3(3) of ERISA) established by the Borrower or any ERISA Affiliate.

         "Pricing Level Leverage Ratio" means, as of any date of determination,
the ratio of (a) Consolidated Funded Indebtedness as of such date to (b)
Consolidated EBITDA for the Subject Period ending on such date.

         "Pro Rata Share" means, with respect to each Lender, the percentage
(carried out to the ninth decimal place) of the Aggregate Commitments set forth
opposite the name of such Lender on Schedule 2.01, as such share may from time
to time be adjusted as contemplated herein.

         "Project Debt" means, in respect of any GLC Venture (the "obligor"),
any Indebtedness of such obligor incurred in the Ordinary Course of Business of
such obligor and of the Borrower and its Restricted Subsidiaries, secured by a
Lien on assets of such obligor, but as to which there

                                       17


is no general recourse to such obligor or to the Borrower or any of the
Borrower's Restricted Subsidiaries, other than against such obligor for breach
of customary representations and warranties.

         "Project Debt Entity" means at any time, any GLC Venture obligated in
respect of Project Debt at such time.

         "Register" has the meaning set forth in Section 10.07(c).

         "Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, including the movement of Hazardous Materials
through ambient air, soil, surface water, ground water, wetlands, land or
subsurface strata.

         "Reportable Event" means any of the events set forth in Section 4043(c)
of ERISA, other than events for which the 30 day notice period has been waived.

         "Request for Credit Extension" means (a) with respect to a Borrowing,
conversion or continuation of Loans, a Loan Notice, and (b) with respect to an
L/C Credit Extension, a Letter of Credit Application.

         "Required Lenders" means, as of any date of determination, Lenders
whose Voting Percentages aggregate more than 50%.

         "Responsible Officer" means the president, chief operating officer,
chief executive officer, chief financial officer, treasurer, assistant treasurer
or secretary of a Loan Party. Any document delivered hereunder that is signed by
a Responsible Officer of a Loan Party shall be conclusively presumed to have
been authorized by all necessary corporate, partnership and/or other action on
the part of such Loan Party and such Responsible Officer shall be conclusively
presumed to have acted on behalf of such Loan Party.

         "Restricted Payment" means any dividend or other distribution (whether
in cash, securities or other property) with respect to any capital stock of the
Borrower or any Subsidiary, or any payment (whether in cash, securities or other
property), including any sinking fund or similar deposit on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of
any such capital stock or of any option, warrant or other right to acquire any
such capital stock.

         "Restricted Subsidiaries" means, at any time, all Subsidiaries of the
Borrower, other than any Unrestricted Subsidiary at such time.

         "S&P" means Standard & Poor's Ratings Services, or any successor
thereto.

         "SEC" means the Securities and Exchange Commission or any successor or
similar Governmental Authority.

                                       18


         "Senior Note Documents" means any and all note purchase agreements,
notes and other documents evidencing or relating to any outstanding Indebtedness
from time to time of the Borrower evidenced by senior notes.

         "Senior Note Guarantor" means, at any time, any Subsidiary that is at
such time a guarantor of Indebtedness of the Borrower pursuant to any Senior
Note Documents.

         "Solvent" means, as to any Person at any time, that: (a) the fair value
of the property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(32) of the Bankruptcy Code and, in the alternative, for purposes of the
California Uniform Fraudulent Transfer Act; (b) the present fair saleable value
of the property of such Person is not less than the amount that will be required
to pay the probable liability of such Person on its debts as they become
absolute and matured; (c) such Person is able to realize upon its property and
pay its debts and other liabilities (including disputed, contingent and
unliquidated liabilities) as they mature in the normal course of business; (d)
such Person does not intend to, and does not believe that it will, incur debts
or liabilities beyond such Person's ability to pay as such debts and liabilities
mature; and (e) such Person is not engaged in business or a transaction for
which such Person's property would constitute unreasonably small capital.

         "Subject Period" means, as of any date of determination, the four
consecutive fiscal quarter period ending on such date.

         "Subsidiary" of a Person means a corporation, partnership, Joint
Venture, limited liability company or other business entity of which a majority
of the shares of securities or other interests having ordinary voting power for
the election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise specified, all references herein to a
"Subsidiary" or to "Subsidiaries" shall refer to a Subsidiary or Subsidiaries of
the Borrower.

         "Swap Contract" means (a) any and all rate swap transactions, basis
swaps, credit derivative transactions, forward rate transactions, commodity
swaps, commodity options, forward commodity contracts, equity or equity index
swaps or options, bond or bond price or bond index swaps or options or forward
bond or forward bond price or forward bond index transactions, interest rate
options, forward foreign exchange transactions, cap transactions, floor
transactions, collar transactions, currency swap transactions, cross-currency
rate swap transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a "Master Agreement"), including
any such obligations or liabilities under any Master Agreement.

                                       19


         "Swap Termination Value" means, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or after
the date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a) the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined based upon one or
more mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include any Lender).

         "Synthetic Lease Obligation" means the monetary obligation of a Person
under (a) a so-called synthetic, off-balance sheet or tax retention lease, or
(b) an agreement for the use or possession of property creating obligations that
do not appear on the balance sheet of such Person but which, upon the insolvency
or bankruptcy of such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).

         "Taxes" has the meaning set forth in Section 3.01(a).

         "Type" means, with respect to a Loan, its character as a Base Rate Loan
or a Eurodollar Rate Loan.

         "Unfunded Pension Liability" means the excess of a Pension Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the current value
of that Pension Plan's assets, determined in accordance with the assumptions
used for funding the Pension Plan pursuant to Section 412 of the Code for the
applicable plan year.

         "Unreimbursed Amount" has the meaning set forth in Section 2.03(c)(i).

         "Unrestricted Subsidiaries" means, at any time, Wilder and each of its
Subsidiaries, provided that at all times prior to such time (a) the consolidated
revenue of Wilder and its Subsidiaries does not exceed 15% of the consolidated
total revenue of the Borrower and its Subsidiaries, and (b) the consolidated
total assets of Wilder and its Subsidiaries do not exceed 15% of the
consolidated total assets of the Borrower and its Subsidiaries, in each case (a)
and (b), determined in accordance with GAAP, and as reflected in the most recent
annual or quarterly (as applicable) financial statements of the Borrower
required to be delivered pursuant to Section 6.01, and further provided that
Wilder at no time at or prior to such time is or has been, directly or
indirectly, a wholly-owned Subsidiary of the Borrower.

         "Voting Percentage" means, as to any Lender, (a) at any time when the
Aggregate Commitments are in effect, such Lender's Pro Rata Share and (b) at any
time after the termination of the Aggregate Commitments, the percentage (carried
out to the ninth decimal place) which (i) the sum of (A) the Outstanding Amount
of such Lender's Loans, plus (B) such Lender's Pro Rata Share of the Outstanding
Amount of L/C Obligations, then comprises of (ii) the Outstanding Amount of all
Loans and L/C Obligations; provided that, if any Lender has failed to fund any
portion of the Loans, participations in L/C Obligations required to be funded by
it hereunder, such Lender's Voting Percentage shall be deemed to be zero, and
the respective Pro Rata Shares and Voting Percentages of the other Lenders shall
be recomputed for purposes

                                       20


of this definition and the definition of "Required Lenders" without regard to
such Lender's Commitment or the outstanding amount of its Loans and L/C
Advances, as the case may be.

         "Wilder" means Wilder Construction Co., a Washington corporation, and
any successor thereto.

         1.02 OTHER INTERPRETIVE PROVISIONS. With reference to this Agreement
and each other Loan Document, unless otherwise specified herein or in such other
Loan Document:

         (a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.

         (b)      (i)      The words "herein" and "hereunder" and words of
         similar import when used in any Loan Document shall refer to such Loan
         Document as a whole and not to any particular provision thereof.

                  (ii)     Article, Section, Exhibit and Schedule references are
         to the Loan Document in which such reference appears.

                  (iii)    The term "including" is by way of example and not
         limitation.

                  (iv)     The term "documents" includes any and all
         instruments, documents, agreements, certificates, notices, reports,
         financial statements and other writings, however evidenced, whether in
         physical or electronic form.

         (c) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including;" the words
"to" and "until" each mean "to but excluding;" and the word "through" means "to
and including."

         (d) Section headings herein and in the other Loan Documents are
included for convenience of reference only and shall not affect the
interpretation of this Agreement or any other Loan Document.

         (e) Unless otherwise expressly provided herein: (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document; and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.

         1.03     ACCOUNTING TERMS.

         (a) All accounting terms not specifically or completely defined herein
shall be construed in conformity with, and all financial data required to be
submitted pursuant to this Agreement shall be prepared in conformity with, GAAP
applied on a consistent basis, as in effect from time to time, applied in a
manner consistent with that used in preparing the Audited Financial Statements,
except as otherwise specifically prescribed herein.

                                       21


         (b) If at any time any change in GAAP would affect the computation of
any financial ratio or requirement set forth in any Loan Document, and either
the Borrower or the Required Lenders shall so request, the Administrative Agent,
the Lenders and the Borrower shall negotiate in good faith to amend such ratio
or requirement to preserve the original intent thereof in light of such change
in GAAP (subject to the approval of the Required Lenders); provided that, until
so amended, (i) such ratio or requirement shall continue to be computed in
accordance with GAAP prior to such change therein and (ii) the Borrower shall
provide to the Administrative Agent and the Lenders financial statements and
other documents required under this Agreement or as reasonably requested
hereunder setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP.

         1.04     ROUNDING. Any financial ratios required to be maintained by
the Borrower pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed herein and
rounding the result up or down to the nearest number (with a rounding-up if
there is no nearest number).

         1.05     REFERENCES TO AGREEMENTS AND LAWS. Unless otherwise expressly
provided herein, (a) references to agreements (including the Loan Documents) and
other contractual instruments shall be deemed to include all subsequent
amendments, restatements, extensions, supplements and other modifications
thereto, but only to the extent that such amendments, restatements, extensions,
supplements and other modifications are not prohibited by any Loan Document; and
(b) references to any Law shall include all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting such Law.

                                  ARTICLE II.
                      THE COMMITMENTS AND CREDIT EXTENSIONS

         2.01     LOANS. Subject to the terms and conditions set forth herein,
each Lender severally agrees to make loans to the Borrower from time to time on
any Business Day during the period from the Closing Date to the Maturity Date in
an aggregate amount not to exceed at any time outstanding the amount of such
Lender's Commitment; provided that, after giving effect to any Borrowing, (i)
the aggregate Outstanding Amount of all Loans and L/C Obligations shall not
exceed the Aggregate Commitments, and (ii) the aggregate Outstanding Amount of
the Loans of any Lender plus such Lender's Pro Rata Share of the Outstanding
Amount of all L/C Obligations shall not exceed such Lender's Commitment. Within
the limits of each Lender's Commitment, and subject to the other terms and
conditions hereof, the Borrower may borrow under this Section 2.01, prepay under
Section 2.04, and reborrow under this Section 2.01. Loans may be Base Rate Loans
or Eurodollar Rate Loans, as further provided herein.

         2.02     BORROWINGS, CONVERSIONS AND CONTINUATIONS OF LOANS.

         (a) Each Borrowing, each conversion of Loans from one Type to a
different Type and each continuation of Loans as the same Type shall be made
upon the Borrower's irrevocable notice to the Administrative Agent, which may be
given by telephone. Each such notice must be received by the Administrative
Agent not later than 9:00 a.m., San Francisco time, (i) three (3) Business Days
prior to the requested date of any Borrowing of, conversion to or continuation
of

                                       22


Eurodollar Rate Loans or of any conversion of Eurodollar Rate Loans to Base Rate
Loans, and (ii) on the requested date of any Borrowing of Base Rate Loans. Each
such telephonic notice must be confirmed immediately by delivery to the
Administrative Agent of a written Loan Notice (which may be sent by facsimile),
appropriately completed and signed by two (2) Responsible Officers of the
Borrower. Each Borrowing of Loans, each conversion of Loans from one Type to
another Type, and each continuation of Eurodollar Rate Loans shall be in a
principal amount of $3,000,000 or a whole multiple of $1,000,000 in excess
thereof. Each Loan Notice (whether telephonic or written) shall specify (i)
whether the Borrower is requesting a Borrowing, a conversion of Loans from one
Type to the other, or a continuation of Loans as the same Type, (ii) the
requested date of the Borrowing, conversion or continuation, as the case may be
(which shall be a Business Day), (iii) the principal amount of Loans to be
borrowed, converted or continued, (iv) the Type of Loans to be borrowed or to
which existing Loans are to be converted, and (v) if applicable, the duration of
the Interest Period with respect thereto. If the Borrower fails to specify a
Type of Loan in a Loan Notice or if the Borrower fails to give a timely notice
requesting a conversion or continuation, then the applicable Loans shall be made
or continued as, or converted to, Base Rate Loans. Any such automatic conversion
to Base Rate Loans shall be effective as of the last day of the Interest Period
then in effect with respect to the applicable Eurodollar Rate Loans. If the
Borrower requests a Borrowing of, conversion to, or continuation of Eurodollar
Rate Loans in any such Loan Notice, but fails to specify an Interest Period, it
will be deemed to have specified an Interest Period of one month.

         (b) Following receipt of a Loan Notice, the Administrative Agent shall
promptly notify each Lender of its Pro Rata Share of the applicable Loans, and
if no timely notice of a conversion or continuation is provided by the Borrower,
the Administrative Agent shall notify each Lender of the details of any
automatic conversion to Base Rate Loans described in the preceding subsection.
In the case of a Borrowing, each Lender shall make the amount of its Loan
available to the Administrative Agent in immediately available funds at the
Administrative Agent's Office not later than 11:00 a.m., San Francisco time, on
the Business Day specified in the applicable Loan Notice. Upon satisfaction of
the applicable conditions set forth in Section 4.02 (and, if such Borrowing is
the initial Credit Extension, Section 4.01), the Administrative Agent shall make
all funds so received available to the Borrower in like funds as received by the
Administrative Agent either by (i) crediting the account of the Borrower on the
books of Bank of America with the amount of such funds or (ii) wire transfer of
such funds, in each case in accordance with instructions provided to the
Administrative Agent by the Borrower; provided that, if, on the date of the
Borrowing, there are L/C Borrowings outstanding, then the proceeds of such
Borrowing shall be applied, first, to the payment in full of any such L/C
Borrowings and, second, to the Borrower as provided above.

         (c) Except as otherwise provided herein, a Eurodollar Rate Loan may be
continued or converted only on the last day of the Interest Period for such
Eurodollar Rate Loan. During the existence of a Default or Event of Default, no
Loans may be requested as, converted to or continued as Eurodollar Rate Loans
without the consent of the Required Lenders, and the Required Lenders may demand
that any or all of the then outstanding Eurodollar Rate Loans be converted
immediately to Base Rate Loans.

         (d) The Administrative Agent shall promptly notify the Borrower and the
Lenders of the interest rate applicable to any Eurodollar Rate Loan upon
determination of such interest rate.

                                       23


The determination of the Eurodollar Rate by the Administrative Agent shall be
conclusive in the absence of manifest error. The Administrative Agent shall
notify the Borrower and the Lenders of any change in Bank of America's prime
rate used in determining the Base Rate promptly following the public
announcement of such change.

         (e) After giving effect to all Borrowings, all conversions of Loans
from one Type to the other, and all continuations of Loans as the same Type,
there shall not be more than ten Interest Periods in effect with respect to
Loans.

         2.03     LETTERS OF CREDIT.

         (a) The Letter of Credit Commitment.

                  (i)      Subject to the terms and conditions set forth herein,
         (A) the L/C Issuer agrees, in reliance upon the agreements of the other
         Lenders set forth in this Section 2.03, (1) from time to time on any
         Business Day during the period from the Closing Date until the Letter
         of Credit Expiration Date, to issue Letters of Credit for the account
         of the Borrower, and to amend or renew Letters of Credit previously
         issued by it, in accordance with subsection (b) below, and (2) to honor
         drafts under the Letters of Credit; and (B) the Lenders severally agree
         to participate in Letters of Credit issued for the account of the
         Borrower; provided that the L/C Issuer shall not be obligated to make
         any L/C Credit Extension with respect to any Letter of Credit, and no
         Lender shall be obligated to participate in, any Letter of Credit if as
         of the date of such L/C Credit Extension, (x) the Outstanding Amount of
         all L/C Obligations and all Loans would exceed the Aggregate
         Commitments, (y) the sum of the aggregate Outstanding Amount of the
         Loans of any Lender plus such Lender's Pro Rata Share of the
         Outstanding Amount of all L/C Obligations would exceed such Lender's
         Commitment, or (z) the Outstanding Amount of the L/C Obligations would
         exceed the Letter of Credit Sublimit. Within the foregoing limits, and
         subject to the terms and conditions hereof, the Borrower's ability to
         obtain Letters of Credit shall be fully revolving, and accordingly the
         Borrower may, during the foregoing period, obtain Letters of Credit to
         replace Letters of Credit that have expired or that have been drawn
         upon and reimbursed. All Existing Letters of Credit shall be deemed to
         have been issued pursuant hereto and, from and after the Closing Date,
         shall be subject to and governed by the terms and conditions hereof.

                  (ii)     The L/C Issuer shall be under no obligation to issue
         any Letter of Credit if:

                           (A) any order, judgment or decree of any Governmental
                  Authority or arbitrator shall by its terms purport to enjoin
                  or restrain the L/C Issuer from issuing such Letter of Credit,
                  or any Law applicable to the L/C Issuer or any request or
                  directive (whether or not having the force of law) from any
                  Governmental Authority with jurisdiction over the L/C Issuer
                  shall prohibit, or request that the L/C Issuer refrain from,
                  the issuance of letters of credit generally or such Letter of
                  Credit in particular or shall impose upon the L/C Issuer with
                  respect to such Letter of Credit any restriction, reserve or
                  capital requirement (for which the L/C Issuer is not otherwise
                  compensated hereunder) not in effect on the Closing Date, or
                  shall impose upon the L/C Issuer any unreimbursed loss, cost
                  or

                                       24


                  expense which was not applicable on the Closing Date and which
                  the L/C Issuer in good faith deems material to it;

                           (B) subject to clause (C) below and subject to
                  Section 2.03(b)(iii), the expiry date of any Letter of Credit
                  would occur more than one year after the date of issuance or
                  last renewal, unless the Required Lenders have approved such
                  expiry date;

                           (C) the expiry date of such requested Letter of
                  Credit would occur after the Letter of Credit Expiration Date,
                  unless all the Lenders have approved such expiry date;

                           (D) the issuance of such Letter of Credit would
                  violate one or more policies of the L/C Issuer or such Letter
                  of Credit does not provide for drafts;

                           (E) the face amount of any Letter of Credit (other
                  than an Existing Letter of Credit) is less than $1,000,000;

                           (F) such Letter of Credit is for the purpose of
                  supporting the issuance of any letter of credit issued by any
                  other Person; or

                           (G) such Letter of Credit is denominated in a
                  currency other than Dollars.

                  (iii)    The L/C Issuer shall be under no obligation to amend
         any Letter of Credit if (A) the L/C Issuer would have no obligation at
         such time to issue such Letter of Credit in its amended form under the
         terms hereof, or (B) the beneficiary of such Letter of Credit does not
         accept the proposed amendment to such Letter of Credit.

         (b) Procedures for Issuance and Amendment of Letters of Credit;
Auto-Renewal Letters of Credit.

                  (i)      Each Letter of Credit shall be issued or amended, as
         the case may be, upon the request of the Borrower delivered to the L/C
         Issuer (with a copy to the Administrative Agent) in the form of a
         Letter of Credit Application, appropriately completed and signed by two
         (2) Responsible Officers of the Borrower. Such L/C Application must be
         received by the L/C Issuer and the Administrative Agent not later than
         9:00 a.m., San Francisco time, at least two (2) Business Days (or such
         later date and time as the L/C Issuer may agree in a particular
         instance in its sole discretion) prior to the proposed issuance date or
         date of amendment, as the case may be. In the case of a request for an
         initial issuance of a Letter of Credit, such Letter of Credit
         Application shall specify in form and detail satisfactory to the L/C
         Issuer: (A) the proposed issuance date of the requested Letter of
         Credit (which shall be a Business Day); (B) the amount thereof; (C) the
         expiry date thereof; (D) the name and address of the beneficiary
         thereof; (E) the documents to be presented by such beneficiary in case
         of any drawing thereunder; (F) the full text of any certificate to be
         presented by such beneficiary in case of any drawing thereunder; and
         (G) such other matters as the L/C Issuer may require. In the case of a
         request for an amendment of any outstanding Letter of Credit, such
         Letter of Credit

                                       25


         Application shall specify in form and detail satisfactory to the L/C
         Issuer (A) the Letter of Credit to be amended; (B) the proposed date of
         amendment thereof (which shall be a Business Day); (C) the nature of
         the proposed amendment; and (D) such other matters as the L/C Issuer
         may require.

                  (ii)     Promptly after receipt of any Letter of Credit
         Application, the L/C Issuer will confirm with the Administrative Agent
         (by telephone or in writing) that the Administrative Agent has received
         a copy of such Letter of Credit Application from the Borrower and, if
         not, the L/C Issuer will provide the Administrative Agent with a copy
         thereof. Upon receipt by the L/C Issuer of confirmation from the
         Administrative Agent that the requested issuance or amendment is
         permitted in accordance with the terms hereof, then, subject to the
         terms and conditions hereof, the L/C Issuer shall, on the requested
         date, issue a Letter of Credit for the account of the Borrower or enter
         into the applicable amendment, as the case may be, in each case in
         accordance with the L/C Issuer's usual and customary business
         practices. Immediately upon the issuance of each Letter of Credit, each
         Lender shall be deemed to, and hereby irrevocably and unconditionally
         agrees to, purchase from the L/C Issuer a risk participation in such
         Letter of Credit in an amount equal to the product of such Lender's Pro
         Rata Share times the amount of such Letter of Credit.

                  (iii)    If the Borrower so requests in any applicable Letter
         of Credit Application, the L/C Issuer may, in it sole and absolute
         discretion, agree to issue a Letter of Credit that has automatic
         renewal provisions (each, an "Auto-Renewal Letter of Credit"); provided
         that any such Auto-Renewal Letter of Credit must permit the L/C Issuer
         to prevent any such renewal at least once in each twelve-month period
         (commencing with the date of issuance of such Letter of Credit) by
         giving prior notice to the beneficiary thereof not later than a day
         (the "Nonrenewal Notice Date") in each such twelve-month period to be
         agreed upon at the time such Letter of Credit is issued. Unless
         otherwise directed by the L/C Issuer, the Borrower shall not be
         required to make a specific request to the L/C Issuer for any such
         renewal. Once an Auto-Renewal Letter of Credit has been issued, the
         Lenders shall be deemed to have authorized (but may not require) the
         L/C Issuer to permit the renewal of such Letter of Credit at any time
         to a date not later than the Letter of Credit Expiration Date; provided
         that the L/C Issuer shall not permit any such renewal if (A) the L/C
         Issuer would have no obligation at such time to issue such Letter of
         Credit in its renewed form under the terms hereof, or (B) it has
         received notice (which shall be in writing, including by facsimile) on
         or before the fifth Business Day immediately preceding the Nonrenewal
         Notice Date (1) from the Administrative Agent that the Required Lenders
         have elected not to permit such renewal or (2) from the Administrative
         Agent, any Lender or the Borrower that one or more of the applicable
         conditions specified in Section 4.02 is not then satisfied.
         Notwithstanding anything to the contrary contained herein, the L/C
         Issuer shall have no obligation to permit the renewal of any
         Auto-Renewal Letter of Credit at any time.

                  (iv)     Promptly after its delivery of any Letter of Credit
         or any amendment to a Letter of Credit to an advising bank with respect
         thereto or to the beneficiary thereof, the L/C Issuer will also deliver
         to the Borrower and the Administrative Agent a true and complete copy
         of such Letter of Credit or amendment.

                                       26


         (c) Drawings and Reimbursements; Funding of Participations.

                  (i)      Upon any drawing under any Letter of Credit, the L/C
         Issuer shall notify the Borrower and the Administrative Agent thereof.
         Not later than 9:00 a.m., San Francisco time, on the date of any
         payment by the L/C Issuer under a Letter of Credit (each such date, an
         "Honor Date"), the Borrower shall reimburse the L/C Issuer through the
         Administrative Agent in an amount equal to the amount of such drawing.
         If the Borrower fails to so reimburse the L/C Issuer by such time, the
         Administrative Agent shall promptly notify each Lender of the Honor
         Date, the amount of the unreimbursed drawing (the "Unreimbursed
         Amount"), and such Lender's Pro Rata Share thereof. In such event, the
         Borrower shall be deemed to have requested a Borrowing of Base Rate
         Loans to be disbursed on the Honor Date in an amount equal to the
         Unreimbursed Amount, without regard to the minimum and multiples
         specified in Section 2.02 for the principal amount of Base Rate Loans,
         but subject to the amount of the unutilized portion of the Aggregate
         Commitments and the conditions set forth in Section 4.02 (other than
         the delivery of a Loan Notice). Any notice given by the L/C Issuer or
         the Administrative Agent pursuant to this Section 2.03(c)(i) may be
         given by telephone if immediately confirmed in writing; provided that
         the lack of such an immediate confirmation shall not affect the
         conclusiveness or binding effect of such notice.

                  (ii)     Each Lender (including the Lender acting as L/C
         Issuer) shall upon any notice pursuant to Section 2.03(c)(i) make funds
         available to the Administrative Agent for the account of the L/C Issuer
         at the Administrative Agent's Office in an amount equal to its Pro Rata
         Share of the Unreimbursed Amount not later than 11:00 a.m., San
         Francisco time, on the Business Day specified in such notice by the
         Administrative Agent, whereupon, subject to the provisions of Section
         2.03(c)(iii), each Lender that so makes funds available shall be deemed
         to have made a Base Rate Loan to the Borrower in such amount. The
         Administrative Agent shall remit the funds so received to the L/C
         Issuer.

                  (iii)    With respect to any Unreimbursed Amount that is not
         fully refinanced by a Borrowing of Base Rate Loans because the
         conditions set forth in Section 4.02 cannot be satisfied or for any
         other reason, the Borrower shall be deemed to have incurred from the
         L/C Issuer an L/C Borrowing in the amount of the Unreimbursed Amount
         that is not so refinanced, which L/C Borrowing shall be due and payable
         on demand (together with interest) and shall bear interest at the
         Default Rate. In such event, each Lender's payment to the
         Administrative Agent for the account of the L/C Issuer pursuant to
         Section 2.03(c)(ii) shall be deemed payment in respect of its
         participation in such L/C Borrowing and shall constitute an L/C Advance
         from such Lender in satisfaction of its participation obligation under
         this Section 2.03.

                  (iv)     Until each Lender funds its Loan or L/C Advance
         pursuant to this Section 2.03(c) to reimburse the L/C Issuer for any
         amount drawn under any Letter of Credit, interest in respect of such
         Lender's Pro Rata Share of such amount shall be solely for the account
         of the L/C Issuer.

                                       27


                  (v)      Each Lender's obligation to make Loans or L/C
         Advances to reimburse the L/C Issuer for amounts drawn under Letters of
         Credit, as contemplated by this Section 2.03(c), shall be absolute and
         unconditional and shall not be affected by any circumstance, including
         (A) any set-off, counterclaim, recoupment, defense or other right which
         such Lender may have against the L/C Issuer, the Borrower or any other
         Person for any reason whatsoever; (B) the occurrence or continuance of
         a Default or Event of Default, or (C) any other occurrence, event or
         condition, whether or not similar to any of the foregoing. Any
         reimbursement pursuant to this Section 2.03 shall not relieve or
         otherwise impair the obligation of the Borrower to reimburse the L/C
         Issuer for the amount of any payment made by the L/C Issuer under any
         Letter of Credit, together with interest as provided herein.

                  (vi)     If any Lender fails to make available to the
         Administrative Agent for the account of the L/C Issuer any amount
         required to be paid by such Lender pursuant to the foregoing provisions
         of this Section 2.03(c) by the time specified in Section 2.03(c)(ii),
         the L/C Issuer shall be entitled to recover from such Lender (acting
         through the Administrative Agent), on demand, such amount with interest
         thereon for the period from the date such payment is required to the
         date on which such payment is immediately available to the L/C Issuer
         at a rate per annum equal to the Federal Funds Rate from time to time
         in effect. A certificate of the L/C Issuer submitted to any Lender
         (through the Administrative Agent) with respect to any amounts owing
         under this clause (vi) shall be conclusive absent manifest error.

         (d) Repayment of Participations.

                  (i)      At any time after the L/C Issuer has made a payment
         under any Letter of Credit and has received from any Lender such
         Lender's L/C Advance in respect of such payment in accordance with
         Section 2.03(c), if the Administrative Agent receives for the account
         of the L/C Issuer any payment related to such Letter of Credit (whether
         directly from the Borrower or otherwise, including proceeds of Cash
         Collateral applied thereto by the Administrative Agent), or any payment
         of interest thereon, the Administrative Agent will distribute to such
         Lender its Pro Rata Share thereof in the same funds as those received
         by the Administrative Agent.

                  (ii)     If any payment received by the Administrative Agent
         for the account of the L/C Issuer pursuant to Section 2.03(c)(i) is
         required to be returned, each Lender shall pay to the Administrative
         Agent for the account of the L/C Issuer its Pro Rata Share thereof on
         demand of the Administrative Agent, plus interest thereon from the date
         of such demand to the date such amount is returned by such Lender, at a
         rate per annum equal to the Federal Funds Rate from time to time in
         effect.

         (e) Obligations Absolute. The obligation of the Borrower to reimburse
the L/C Issuer for each drawing under each Letter of Credit, and to repay each
L/C Borrowing and each drawing under a Letter of Credit that is refinanced by a
Borrowing of Loans, shall be absolute, unconditional and irrevocable, and shall
be paid strictly in accordance with the terms of this Agreement under all
circumstances, including the following:

                                       28


                  (i)      any lack of validity or enforceability of such Letter
         of Credit, this Agreement, or any other agreement or instrument
         relating thereto;

                  (ii)     the existence of any claim, counterclaim, set-off,
         defense or other right that the Borrower may have at any time against
         any beneficiary or any transferee of such Letter of Credit (or any
         Person for whom any such beneficiary or any such transferee may be
         acting), the L/C Issuer or any other Person, whether in connection with
         this Agreement, the transactions contemplated hereby or by such Letter
         of Credit or any agreement or instrument relating thereto, or any
         unrelated transaction;

                  (iii)    any draft, demand, certificate or other document
         presented under such Letter of Credit proving to be forged, fraudulent,
         invalid or insufficient in any respect or any statement therein being
         untrue or inaccurate in any respect; or any loss or delay in the
         transmission or otherwise of any document required in order to make a
         drawing under such Letter of Credit;

                  (iv)     any payment by the L/C Issuer under such Letter of
         Credit against presentation of a draft or certificate that does not
         strictly comply with the terms of such Letter of Credit; or any payment
         made by the L/C Issuer under such Letter of Credit to any Person
         purporting to be a trustee in bankruptcy, debtor-in-possession,
         assignee for the benefit of creditors, liquidator, receiver or other
         representative of or successor to any beneficiary or any transferee of
         such Letter of Credit, including any arising in connection with any
         proceeding under any Debtor Relief Law; or

                  (v)      any other circumstance or happening whatsoever,
         whether or not similar to any of the foregoing, including any other
         circumstance that might otherwise constitute a defense available to, or
         a discharge of, the Borrower.

         The Borrower shall promptly examine a copy of each Letter of Credit and
each amendment thereto that is delivered to it and, in the event of any claim of
noncompliance with the Borrower's instructions or other irregularity, the
Borrower will immediately notify the L/C Issuer. The Borrower shall be
conclusively deemed to have waived any such claim against the L/C Issuer and its
correspondents unless such notice is given as aforesaid.

         (f) Role of L/C Issuer. Each Lender and the Borrower agree that, in
paying any drawing under a Letter of Credit, the L/C Issuer shall not have any
responsibility to obtain any document (other than any sight draft, certificates
and documents expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document. No Agent-Related Person
nor any of the respective correspondents, participants or assignees of the L/C
Issuer shall be liable to any Lender for (i) any action taken or omitted in
connection herewith at the request or with the approval of the Lenders or the
Required Lenders, as applicable; (ii) any action taken or omitted in the absence
of gross negligence or willful misconduct; or (iii) the due execution,
effectiveness, validity or enforceability of any document or instrument related
to any Letter of Credit or Letter of Credit Application. The Borrower hereby
assumes all risks of the acts or omissions of any beneficiary or transferee with
respect to its use of any Letter of Credit; provided that this assumption is not
intended to, and shall not, preclude the Borrower's pursuing such rights and

                                       29


remedies as it may have against the beneficiary or transferee at law or under
any other agreement. No Agent-Related Person, nor any of the respective
correspondents, participants or assignees of the L/C Issuer, shall be liable or
responsible for any of the matters described in clauses (i) through (v) of
Section 2.03(e); provided that, notwithstanding anything in such clauses to the
contrary, the Borrower may have a claim against the L/C Issuer, and the L/C
Issuer may be liable to the Borrower, to the extent, but only to the extent, of
any direct, as opposed to consequential or exemplary, damages suffered by the
Borrower which the Borrower proves were caused by the L/C Issuer's willful
misconduct or gross negligence or the L/C Issuer's willful failure to pay under
any Letter of Credit after the presentation to it by the beneficiary of a sight
draft and certificate(s) strictly complying with the terms and conditions of a
Letter of Credit. In furtherance and not in limitation of the foregoing, the L/C
Issuer may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary, and the L/C Issuer shall not be responsible for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason.

         (g) Cash Collateral. Upon the request of the Administrative Agent, (i)
if the L/C Issuer has honored any full or partial drawing request under any
Letter of Credit and such drawing has resulted in an L/C Borrowing, or (ii) if,
as of the Letter of Credit Expiration Date, any Letter of Credit may for any
reason remain outstanding and partially or wholly undrawn, the Borrower shall
immediately Cash Collateralize the then Outstanding Amount of all L/C
Obligations (in an amount equal to such Outstanding Amount).

         (h) Applicability of ISP98. Unless otherwise expressly agreed by the
L/C Issuer and the Borrower when a Letter of Credit is issued (including any
such agreement applicable to an Existing Letter of Credit), the rules of the
"International Standby Practices 1998" published by the Institute of
International Banking Law & Practice (or such later version thereof as may be in
effect at the time of issuance) shall apply to such Letter of Credit.

         (i) Letter of Credit Fees. The Borrower shall pay to the Administrative
Agent for the account of each Lender in accordance with its Pro Rata Share,
subject to Section 2.07(b), (i) a Letter of Credit fee for each outstanding
Performance Letter of Credit equal to 75% of the Applicable Rate (for Eurodollar
Rate Loans) multiplied by the actual daily maximum amount available to be drawn
under each such Letter of Credit, and (ii) a Letter of Credit fee for each
Financial Letter of Credit equal to the Applicable Rate (for Eurodollar Rate
Loans) multiplied by the actual daily maximum amount available to be drawn under
each such Letter of Credit. Such Letter of Credit fees shall be computed on a
quarterly basis in arrears. Such fee for each Letter of Credit shall be due and
payable on the last Business Day of each March, June, September and December,
commencing with the first such date to occur after the issuance of such Letter
of Credit, and on the Letter of Credit Expiration Date. If there is any change
in the Applicable Rate (or in the characterization of such Letter of Credit as a
Performance Letter of Credit or Financial Letter of Credit) during any quarter,
the actual daily amount of each Letter of Credit shall be computed and
multiplied by the Applicable Rate (or applicable percentage thereof) separately
for each period during such quarter that such Applicable Rate (or
characterization) was in effect.

                                       30


         (j) Fronting Fee and Documentary and Processing Charges Payable to L/C
Issuer. The Borrower shall pay directly to the L/C Issuer for its own account a
fronting fee with respect to each Letter of Credit in the amounts and at the
times specified in the Fee Letter. In addition, the Borrower shall pay directly
to the L/C Issuer for its own account the customary issuance, presentation,
amendment and other processing fees, and other standard costs and charges, of
the L/C Issuer relating to letters of credit as from time to time in effect.
Such fees and charges are due and payable on demand and are nonrefundable.

         (k) Conflict with Letter of Credit Application. In the event of any
conflict between the terms hereof and the terms of any Letter of Credit
Application, the terms hereof shall control.

         2.04     PREPAYMENTS.

         (a) The Borrower may, upon notice to the Administrative Agent, at any
time or from time to time voluntarily prepay Loans in whole or in part without
premium or penalty; provided that (i) such notice must be received by the
Administrative Agent not later than 9:00 a.m., San Francisco time, (A) three (3)
Business Days prior to any date of prepayment of Eurodollar Rate Loans, and (B)
on the date of prepayment of Base Rate Loans; and (ii) any prepayment of Loans
shall be in a principal amount of $3,000,000 or a whole multiple of $1,000,000
in excess thereof. Each such notice shall specify the date and amount of such
prepayment and the Type(s) of Loans to be prepaid. The Administrative Agent will
promptly notify each Lender of its receipt of each such notice, and of such
Lender's Pro Rata Share of such prepayment. If such notice is given by the
Borrower, the Borrower shall make such prepayment and the payment amount
specified in such notice shall be due and payable on the date specified therein.
Any prepayment of a Eurodollar Rate Loan shall be accompanied by all accrued
interest thereon, together with any additional amounts required pursuant to
Section 3.05. Each such prepayment shall be applied to the Loans of the Lenders
in accordance with their respective Pro Rata Shares.

         (b) If for any reason the Outstanding Amount of all Loans and L/C
Obligations at any time exceeds the Aggregate Commitments then in effect, the
Borrower shall immediately prepay Loans and/or Cash Collateralize the L/C
Obligations in an aggregate amount equal to such excess.

         2.05     REDUCTION OR TERMINATION OF COMMITMENTS. The Borrower may,
upon notice to the Administrative Agent, terminate the Aggregate Commitments, or
permanently reduce the Aggregate Commitments to an amount not less than the then
Outstanding Amount of all Loans and L/C Obligations; provided that (i) any such
notice shall be received by the Administrative Agent not later than 9:00 a.m.,
San Francisco time, five (5) Business Days prior to the date of termination or
reduction, and (ii) any such partial reduction shall be in an aggregate amount
of $10,000,000 or any whole multiple of $1,000,000 in excess thereof. The
Administrative Agent shall promptly notify the Lenders of any such notice of
reduction or termination of the Aggregate Commitments. Once reduced in
accordance with this Section, the Aggregate Commitments may not be increased.
Any reduction of the Aggregate Commitments shall be applied to the Commitment of
each Lender according to its Pro Rata Share. All fees accrued until the
effective date of any termination of the Aggregate Commitments shall be paid on
the effective date of such termination.

                                       31


         2.06     REPAYMENT OF LOANS. The Borrower shall repay to the Lenders on
the Maturity Date the aggregate principal amount of Loans outstanding on such
date.

         2.07     INTEREST.

         (a) Subject to the provisions of subsection (b) below, (i) each
Eurodollar Rate Loan shall bear interest on the outstanding principal amount
thereof for each Interest Period at a rate per annum equal to the Eurodollar
Rate for such Interest Period plus the Applicable Rate; and (ii) each Base Rate
Loan shall bear interest on the outstanding principal amount thereof from the
applicable borrowing date at a rate per annum equal to the Base Rate plus the
Applicable Rate.

         (b) While any Event of Default exists or after acceleration, the
Borrower shall pay interest on the principal amount of all outstanding
Obligations at a fluctuating interest rate per annum at all times equal to the
Default Rate to the fullest extent permitted by applicable Law. Accrued and
unpaid interest on past due amounts (including interest on past due interest)
shall be due and payable upon demand.

         (c) Interest on each Loan shall be due and payable in arrears on each
Interest Payment Date applicable thereto and at such other times as may be
specified herein. Interest hereunder shall be due and payable in accordance with
the terms hereof before and after judgment, and before and after the
commencement of any proceeding under any Debtor Relief Law.

         2.08     FEES. In addition to certain fees described in subsections (i)
and (j) of Section 2.03:

         (a) Commitment Fee. The Borrower shall pay to the Administrative Agent
for the account of each Lender in accordance with its Pro Rata Share, a
commitment fee equal to the Applicable Rate multiplied by the actual daily
amount by which the Aggregate Commitments exceed the sum of (i) the Outstanding
Amount of Loans and (ii) the Outstanding Amount of L/C Obligations during each
quarterly period (or portion thereof). The commitment fee shall accrue at all
times from the Closing Date until the Maturity Date and shall be due and payable
quarterly in arrears on the last Business Day of each March, June, September and
December, commencing with the first such date to occur after the Closing Date,
and on the Maturity Date. The commitment fee shall be calculated quarterly in
arrears, and, if there is any change in the Applicable Rate during any quarter,
the actual daily amount shall be computed and multiplied by the Applicable Rate
separately for each period during such quarter that such Applicable Rate was in
effect. The commitment fee shall accrue at all times, including at any time
during which one or more of the conditions in Article IV is not met.

         (b) Utilization Fee. The Borrower shall pay to the Administrative Agent
for the account of each Lender in accordance with its Pro Rata Share, a
utilization fee equal to the Applicable Rate multiplied by the actual daily
aggregate Outstanding Amount of Loans and L/C Obligations on each day that such
aggregate Outstanding Amount exceeds 33.00% of the Aggregate Commitments. The
utilization fee shall be due and payable quarterly in arrears on the last
Business Day of each March, June, September and December, commencing with the
first such date to occur after the Closing Date, and on the Maturity Date. The
utilization fee shall be

                                       32


calculated quarterly in arrears. The utilization fee shall accrue at all times,
including at any time during which one or more of the conditions in Article IV
is not met.

         (c) Arrangement and Agency Fees. The Borrower shall pay an arrangement
fee to the Arranger for the Arranger's own account, and shall pay an agency fee
to the Administrative Agent for the Administrative Agent's own account, in the
amounts and at the times specified in the Fee Letter. Such fees shall be fully
earned when paid and shall be nonrefundable for any reason whatsoever.

         (d) Lenders' Upfront Fees. On the Closing Date, the Borrower shall pay
to the Administrative Agent, for the account of the Lenders in accordance with
their respective Pro Rata Shares, an upfront fee in an amount set forth in the
Fee Letter. Such upfront fees are for the credit facilities committed by the
Lenders under this Agreement and are fully earned on the date paid. The upfront
fee paid to each Lender is solely for its own account and is nonrefundable for
any reason whatsoever.

         2.09     COMPUTATION OF INTEREST AND FEES. Interest on Base Rate Loans
shall be calculated on the basis of a year of 365 or 366 days, as the case may
be, and the actual number of days elapsed. Computation of all other types of
interest and all fees shall be calculated on the basis of a year of 360 days and
the actual number of days elapsed, which results in a higher yield to the payee
thereof than a method based on a year of 365 or 366 days. Interest shall accrue
on each Loan for the day on which the Loan is made and shall not accrue on a
Loan, or any portion thereof, for the day on which the Loan (or any such
portion) is paid; provided that any Loan that is repaid on the same day on which
it is made shall bear interest for one day.

         2.10     EVIDENCE OF DEBT.

         (a) The Credit Extensions made by each Lender shall be evidenced by one
or more accounts or records maintained by such Lender and by the Administrative
Agent in the ordinary course of business. The accounts or records maintained by
the Administrative Agent and each Lender shall be conclusive (absent manifest
error) of the amount of the Credit Extensions made by the Lenders to the
Borrower and all interest and payments thereon. Any failure to so record or any
error in doing so shall not, however, limit or otherwise affect the obligation
of the Borrower hereunder to pay any amount owing with respect to the Loans or
the L/C Obligations. In the event of any conflict between the accounts and
records maintained by any Lender and the accounts and records of the
Administrative Agent in respect of such matters, the accounts and records of
such Lender shall control. Upon the request of any Lender made through the
Administrative Agent, such Lender's Loans may be evidenced by a Note in addition
to such accounts or records. Each Lender may attach schedules to its Note(s) and
endorse thereon the date, Type (if applicable), amount and maturity of the
applicable Loans and payments with respect thereto.

         (b) In addition to the accounts and records referred to in subsection
(a), each Lender and the Administrative Agent shall maintain in accordance with
its usual practice accounts or records evidencing the purchases and sales by
such Lender of participations in Letters of Credit. In the event of any conflict
between the accounts and records maintained by the Administrative Agent

                                       33


and the accounts and records of any Lender in respect of such matters, the
accounts and records of the Administrative Agent shall control.

         2.11     PAYMENTS GENERALLY.

         (a) All payments to be made by the Borrower shall be made without
condition or deduction for any counterclaim, defense, recoupment or setoff.
Except as otherwise expressly provided herein, all payments by the Borrower
hereunder shall be made to the Administrative Agent, for the account of the
respective Lenders to which such payment is owed, at the Administrative Agent's
Office in Dollars and in immediately available funds not later than 11:00 a.m.,
San Francisco time, on the date specified herein. The Administrative Agent will
promptly distribute to each Lender its Pro Rata Share (or other applicable share
as provided herein) of such payment in like funds as received by wire transfer
to such Lender's Lending Office. All payments received by the Administrative
Agent after 11:00 a.m., San Francisco time, shall be deemed received on the next
succeeding Business Day and any applicable interest or fee shall continue to
accrue.

         (b) Subject to the definition of "Interest Period" contained in Section
1.01, if any payment to be made by the Borrower shall come due on a day other
than a Business Day, payment shall be made on the next following Business Day,
and such extension of time shall be reflected in computing interest or fees, as
the case may be.

         (c) If at any time the funds received by and available to the
Administrative Agent are not sufficient to pay fully all amounts of principal,
L/C Borrowings, interest and fees then due hereunder, such funds shall be
applied (i) first, toward costs and expenses (including Attorney Costs and
amounts payable under Article III) incurred by the Administrative Agent and each
Lender, (ii) second, toward repayment of interest and fees then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
interest and fees then due to such parties, and (iii) third, toward repayment of
principal and L/C Borrowings then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal and L/C Borrowings
then due to such parties.

         (d) Unless the Borrower or any Lender has notified the Administrative
Agent prior to the date any payment is required to be made by it to the
Administrative Agent hereunder, that the Borrower or such Lender, as the case
may be, will not make such payment, the Administrative Agent may assume that the
Borrower or such Lender, as the case may be, has timely made such payment and
may (but shall not be so required to), in reliance thereon, make available a
corresponding amount to the Person entitled thereto. If and to the extent that
such payment was not in fact made to the Administrative Agent in immediately
available funds, then:

                  (i)      if the Borrower failed to make such payment, each
         Lender shall forthwith on demand repay to the Administrative Agent the
         portion of such assumed payment that was made available to such Lender
         in immediately available funds, together with interest thereon in
         respect of each day from and including the date such amount was made
         available by the Administrative Agent to such Lender to the date such
         amount is repaid to the Administrative Agent in immediately available
         funds, at the Federal Funds Rate from time to time in effect; and

                                       34


                  (ii)     if any Lender failed to make such payment, such
         Lender shall forthwith on demand pay to the Administrative Agent the
         amount thereof in immediately available funds, together with interest
         thereon for the period from the date such amount was made available by
         the Administrative Agent to the Borrower to the date such amount is
         recovered by the Administrative Agent (the "Compensation Period") at a
         rate per annum equal to the Federal Funds Rate from time to time in
         effect. If such Lender pays such amount to the Administrative Agent,
         then such amount shall constitute such Lender's Loan included in the
         applicable Borrowing. If such Lender does not pay such amount forthwith
         upon the Administrative Agent's demand therefor, the Administrative
         Agent may make a demand therefor upon the Borrower, and the Borrower
         shall pay such amount to the Administrative Agent, together with
         interest thereon for the Compensation Period at a rate per annum equal
         to the rate of interest applicable to the applicable Borrowing. Nothing
         herein shall be deemed to relieve any Lender from its obligation to
         fulfill its Commitment or to prejudice any rights, which the
         Administrative Agent or the Borrower may have against any Lender as a
         result of any default by such Lender hereunder.

         A notice of the Administrative Agent to any Lender with respect to any
amount owing under this subsection (d) shall be conclusive, absent manifest
error.

         (e) If any Lender makes available to the Administrative Agent funds for
any Loan to be made by such Lender as provided in the foregoing provisions of
this Article II, and the conditions to the applicable Credit Extension set forth
in Article IV are not satisfied or waived in accordance with the terms hereof,
the Administrative Agent shall return such funds (in like funds as received from
such Lender) to such Lender, without interest.

         (f) The obligations of the Lenders hereunder to make Loans and to fund
participations in Letters of Credit are several and not joint. The failure of
any Lender to make any Loan or to fund any such participation on any date
required hereunder shall not relieve any other Lender of its corresponding
obligation to do so on such date, and no Lender shall be responsible for the
failure of any other Lender to so make its Loan or purchase its participation.

         (g) Nothing herein shall be deemed to obligate any Lender to obtain the
funds for any Loan in any particular place or manner or to constitute a
representation by any Lender that it has obtained or will obtain the funds for
any Loan in any particular place or manner.

         2.12     SHARING OF PAYMENTS. If, other than as expressly provided
elsewhere herein, any Lender shall obtain on account of the Loans made by it, or
the participations in L/C Obligations held by it, any payment (whether
voluntary, involuntary, through the exercise of any right of set-off, or
otherwise) in excess of its ratable share (or other share contemplated
hereunder) thereof, such Lender shall immediately (a) notify the Administrative
Agent of such fact, and (b) purchase from the other Lenders such participations
in the Loans made by them and/or such subparticipations in the participations in
L/C Obligations held by them, as the case may be, as shall be necessary to cause
such purchasing Lender to share the excess payment in respect of such Loans or
such participations, as the case may be, pro rata with each of them; provided
that if all or any portion of such excess payment is thereafter recovered from
the purchasing Lender, such purchase shall to that extent be rescinded and each
other Lender shall repay to the

                                       35


purchasing Lender the purchase price paid therefor, together with an amount
equal to such paying Lender's ratable share (according to the proportion of (i)
the amount of such paying Lender's required repayment to (ii) the total amount
so recovered from the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect of the total amount so recovered.
The Borrower agrees that any Lender so purchasing a participation from another
Lender may, to the fullest extent permitted by law, exercise all its rights of
payment (including the right of set-off, but subject to Section 10.09) with
respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation. The Administrative
Agent will keep records (which shall be conclusive and binding in the absence of
manifest error) of participations purchased under this Section and will in each
case notify the Lenders following any such purchases or repayments. Each Lender
that purchases a participation pursuant to this Section shall from and after
such purchase have the right to give all notices, requests, demands, directions
and other communications under this Agreement with respect to the portion of the
Obligations purchased to the same extent as though the purchasing Lender were
the original owner of the Obligations purchased.

         2.13     GUARANTY OF OBLIGATIONS. The Obligations shall be jointly and
severally guaranteed by the Guarantors pursuant to one or more Guaranties.
Promptly after the date on which any Person becomes a Material Subsidiary of the
Borrower or becomes a Senior Note Guarantor, and, in any event, within ten (10)
Business Days following receipt by the Borrower from the Administrative Agent of
a request therefor, the Borrower will cause such Person to execute and deliver
to the Administrative Agent, on behalf of the Lenders, a Guaranty. In addition,
promptly after any date on which the total revenues or total assets of all
Restricted Subsidiaries that are at such time not Guarantors (each, a
"Non-Guarantor Subsidiary") together exceed 20% of the consolidated total
revenues or consolidated total assets, as the case may be, of the Borrower and
its Restricted Subsidiaries, based upon the financial statements most recently
delivered by the Borrower to the Administrative Agent pursuant to Section
6.01(a), and in any event, within ten (10) Business Days following receipt by
the Borrower from the Administrative Agent of a request therefor, the Borrower
will cause one or more Non-Guarantor Subsidiaries to execute and deliver to the
Administrative Agent, on behalf of the Lenders, a Guaranty, so that, after
delivery of such Guaranty, the total revenues and total assets of all remaining
Non-Guarantor Subsidiaries (other than any Unrestricted Subsidiary) together are
less than 20% of the total revenues or total assets, as the case may be, of the
Borrower and its consolidated Subsidiaries (other than any Unrestricted
Subsidiary). In all of the foregoing instances, the Borrower shall deliver or
cause to be delivered such other agreements, documents, instruments and other
information and items as are reasonably requested by the Administrative Agent,
at the request of any Lender, in connection with the foregoing, including
resolutions, incumbency and officers' certificates and opinions of counsel.
Without limiting the foregoing, the Borrower shall determine, promptly after the
date on which the quarterly financial statements for the fiscal quarter ending
on June 30, 2003 shall have been delivered in accordance with Section 6.01,
whether there exists or shall have arisen any Material Subsidiary other than the
entities specified on Schedule 1.01(g), and shall cause each such Material
Subsidiary to execute and deliver to the Administrative Agent, on behalf of the
Lenders, a Guaranty, together with other agreements, documents or instruments
referenced above.

                                       36


                                  ARTICLE III.
                     TAXES, YIELD PROTECTION AND ILLEGALITY

         3.01     TAXES.

         (a) Any and all payments by the Borrower to or for the account of the
Administrative Agent or any Lender under any Loan Document shall be made free
and clear of and without deduction for any and all present or future taxes,
duties, levies, imposts, deductions, assessments, fees, withholdings or similar
charges, and all liabilities with respect thereto, excluding, in the case of the
Administrative Agent and each Lender, taxes imposed on or measured by its net
income, and franchise taxes imposed on it (in lieu of net income taxes), by the
jurisdiction (or any political subdivision thereof) under the Laws of which the
Administrative Agent or such Lender, as the case may be, is organized or
maintains a lending office (all such non-excluded taxes, duties, levies,
imposts, deductions, assessments, fees, withholdings or similar charges, and
liabilities with respect thereto being hereinafter collectively referred to as
"Taxes"). If the Borrower shall be required by any Laws to deduct any Taxes from
or in respect of any sum payable under any Loan Document to the Administrative
Agent or any Lender, (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section), the Administrative Agent and such
Lender receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions, (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable Laws, and (iv) within 30 days
after the date of such payment, the Borrower shall furnish to the Administrative
Agent (which shall forward the same to such Lender) the original or a certified
copy of a receipt evidencing payment thereof.

         (b) In addition, the Borrower agrees to pay any and all present or
future stamp, court or documentary taxes and any other excise or property taxes
or charges or similar levies which arise from any payment made under any Loan
Document or from the execution, delivery, performance, enforcement or
registration of, or otherwise with respect to, any Loan Document (hereinafter
referred to as "Other Taxes").

         (c) If the Borrower shall be required to deduct or pay any Taxes or
Other Taxes from or in respect of any sum payable under any Loan Document to the
Administrative Agent or any Lender, the Borrower shall also pay to the
Administrative Agent (for the account of such Lender) or to such Lender, at the
time interest is paid, such additional amount that such Lender specifies is
necessary to preserve the after-tax yield (after factoring in all taxes,
including taxes imposed on or measured by net income) such Lender would have
received if such Taxes or Other Taxes had not been imposed.

         (d) The Borrower agrees to indemnify the Administrative Agent and each
Lender for (i) the full amount of Taxes and Other Taxes (including any Taxes or
Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this Section) paid by the Administrative Agent and such Lender, (ii) amounts
payable under Section 3.01(c) and (iii) any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto, in each case
whether or not such Taxes or Other Taxes were correctly or legally imposed or
asserted by the

                                       37


relevant Governmental Authority. Payment under this subsection (d) shall be made
within 30 days after the date the Lender or the Administrative Agent makes a
demand therefor.

         3.02     ILLEGALITY. If any Lender determines that any Law has made it
unlawful, or that any Governmental Authority has asserted that it is unlawful,
for any Lender or its applicable Lending Office to make, maintain or fund
Eurodollar Rate Loans, or to determine or charge interest rates based upon the
Eurodollar Rate, then, on notice thereof by such Lender to the Borrower through
the Administrative Agent, any obligation of such Lender to make or continue
Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate Loans
shall be suspended until such Lender notifies the Administrative Agent and the
Borrower that the circumstances giving rise to such determination no longer
exist. Upon receipt of such notice, the Borrower shall, upon demand from such
Lender (with a copy to the Administrative Agent), prepay or, if applicable,
convert all Eurodollar Rate Loans of such Lender to Base Rate Loans, either on
the last day of the Interest Period thereof, if such Lender may lawfully
continue to maintain such Eurodollar Rate Loans to such day, or immediately, if
such Lender may not lawfully continue to maintain such Eurodollar Rate Loans.
Upon any such prepayment or conversion, the Borrower shall also pay accrued
interest on the amount so prepaid or converted. Each Lender agrees to designate
a different Lending Office if such designation will avoid the need for such
notice and will not, in the good faith judgment of such Lender, otherwise be
materially disadvantageous to such Lender.

         3.03     INABILITY TO DETERMINE RATES. If the Administrative Agent
determines in connection with any request for a Eurodollar Rate Loan or a
conversion to or continuation thereof that (a) Dollar deposits are not being
offered to banks in the London interbank eurodollar market for the applicable
amount and Interest Period of such Eurodollar Rate Loan, (b) adequate and
reasonable means do not exist for determining the Eurodollar Rate for such
Eurodollar Rate Loan, or (c) the Eurodollar Rate for such Eurodollar Rate Loan
does not adequately and fairly reflect the cost to the Lenders of funding such
Eurodollar Rate Loan, the Administrative Agent will promptly notify the Borrower
and all Lenders. Thereafter, the obligation of the Lenders to make or maintain
Eurodollar Rate Loans shall be suspended until the Administrative Agent revokes
such notice. Upon receipt of such notice, the Borrower may revoke any pending
request for a Borrowing, conversion or continuation of Eurodollar Rate Loans or,
failing that, will be deemed to have converted such request into a request for a
Borrowing of Base Rate Loans in the amount specified therein.

         3.04     INCREASED COST AND REDUCED RETURN; CAPITAL ADEQUACY.

         (a) If any Lender determines that as a result of the introduction of or
any change in or in the interpretation of any Law, or such Lender's compliance
therewith, there shall be any increase in the cost to such Lender of agreeing to
make or making, funding or maintaining Eurodollar Rate Loans or (as the case may
be) issuing or participating in Letters of Credit, or a reduction in the amount
received or receivable by such Lender in connection with any of the foregoing
(excluding for purposes of this subsection (a) any such increased costs or
reduction in amount resulting from (i) Taxes or Other Taxes (as to which Section
3.01 shall govern), and (ii) changes in the basis of taxation of overall net
income or overall gross income by the United States or any foreign jurisdiction
or any political subdivision of either thereof under the Laws of which such

                                       38


Lender is organized or has its Lending Office, the Borrower shall pay to such
Lender such additional amounts as will compensate such Lender for such increased
cost or reduction.

         (b) If any Lender determines that the introduction of any Law regarding
capital adequacy or any change therein or in the interpretation thereof, or
compliance by such Lender (or its Lending Office) therewith, has the effect of
reducing the rate of return on the capital of such Lender or any corporation
controlling such Lender as a consequence of such Lender's obligations hereunder
(taking into consideration its policies with respect to capital adequacy and
such Lender's desired return on capital), then from time to time upon demand of
such Lender (with a copy of such demand to the Administrative Agent), the
Borrower shall pay to such Lender such additional amounts as will compensate
such Lender for such reduction.

         3.05     FUNDING LOSSES. Upon demand of any Lender (with a copy to the
Administrative Agent) from time to time, the Borrower shall promptly compensate
such Lender for and hold such Lender harmless from any loss, cost or expense
incurred by it as a result of:

         (a) any continuation, conversion, payment or prepayment of any Loan
other than a Base Rate Loan on a day other than the last day of the Interest
Period for such Loan (whether voluntary, mandatory, automatic, by reason of
acceleration, or otherwise);

         (b) any failure by the Borrower (for a reason other than the failure of
such Lender to make a Loan) to prepay, borrow, continue or convert any Loan
other than a Base Rate Loan on the date or in the amount notified by the
Borrower; or

         (c) any assignment of a Eurodollar Rate Loan on a day other than the
last day of the Interest Period therefor as a result of a request by the
Borrower pursuant to Section 10.16;

including any loss of anticipated profits and any loss or expense arising from
the liquidation or reemployment of funds obtained by it to maintain such Loan or
from fees payable to terminate the deposits from which such funds were obtained.
The Borrower shall also pay any customary administrative fees charged by such
Lender in connection with the foregoing.

For purposes of calculating amounts payable by the Borrower to the Lenders under
this Section 3.05, each Lender shall be deemed to have funded each Eurodollar
Rate Loan made by it at the Eurodollar Rate for such Loan by a matching deposit
or other borrowing in the London interbank eurodollar market for a comparable
amount and for a comparable period, whether or not such Eurodollar Rate Loan was
in fact so funded.

         3.06     MATTERS APPLICABLE TO ALL REQUESTS FOR COMPENSATION.

         (a) A certificate of the Administrative Agent or any Lender claiming
compensation under this Article III and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, the Administrative Agent or such
Lender may use any reasonable averaging and attribution methods.

         (b) Upon any Lender's making a claim for compensation under Section
3.01 or 3.04, the Borrower may remove or replace such Lender in accordance with
Section 10.16.

                                       39


         3.07     SURVIVAL. All of the Borrower's obligations under this Article
III shall survive termination of the Aggregate Commitments and repayment of all
other Obligations.

                                   ARTICLE IV.
                    CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

         4.01     CONDITIONS TO EFFECTIVENESS AND INITIAL CREDIT EXTENSION. The
effectiveness of this Agreement and the obligation of each Lender to make its
initial Credit Extension hereunder are subject to satisfaction of the following
conditions precedent:

         (a) Unless waived by all the Lenders (or by the Administrative Agent
with respect to immaterial matters or items specified in clause (iv) below with
respect to which the Borrower has given assurances satisfactory to the
Administrative Agent that such items shall be delivered promptly following the
Closing Date), the Administrative Agent's receipt of the following, each of
which shall be originals or facsimiles (followed promptly by originals) unless
otherwise specified, each properly executed by a Responsible Officer of the
signing Loan Party (or, in the case of the opinion of counsel, by such counsel),
each dated the Closing Date (or, in the case of certificates of governmental
officials, a recent date before the Closing Date acceptable to the
Administrative Agent) and each in form and substance satisfactory to the
Administrative Agent, the Lenders and their respective legal counsel:

                  (i)      executed counterparts of this Agreement and the
         Guaranty, sufficient in number for distribution to the Administrative
         Agent, each Lender and the Borrower;

                  (ii)     if requested by a Lender, a Note executed by the
         Borrower in favor of such Lender, such Note to be in an original face
         amount equal to such Lender's Commitment;

                  (iii)    such certificates respecting resolutions or other
         actions, incumbency certificates and/or other certificates of
         Responsible Officers of each Loan Party as the Administrative Agent or
         any Lender may require to establish the identities of and verify the
         authority and capacity of each Responsible Officer thereof authorized
         to act as a Responsible Officer in connection with this Agreement and
         the other Loan Documents to which such Loan Party is a party;

                  (iv)     such evidence as the Administrative Agent and/or any
         Lender may require to verify that each Loan Party is duly organized or
         formed, validly existing, in good standing and qualified to engage in
         business in each jurisdiction in which it is required to be qualified
         to engage in business, including certified copies of each Loan Party's
         Organization Documents, certificates of good standing and qualification
         to engage in business and tax clearance certificates; provided that, to
         the extent that any of the tax clearance certificates required under
         this sub-paragraph (iv) have not been received by the Borrower prior to
         June 27, 2003, the Borrower shall only be required to deliver such tax
         clearance certificates in accordance with Section 6.14;

                  (v)      a certificate signed by a Responsible Officer of the
         Borrower certifying (A) that the conditions specified in Sections
         4.02(a) and (b) have been satisfied, and

                                       40


         (B) that there has been no event or circumstance since the date of the
         Audited Financial Statements which has or could be reasonably expected
         to have a Material Adverse Effect;

                  (vi)     an opinion of counsel to each Loan Party, addressing
         the matters set forth on Exhibit F, in form and substance satisfactory
         to the Administrative Agent;

                  (vii)    [Reserved]

                  (viii)   evidence satisfactory to the Administrative Agent of
         the termination in accordance with its terms of the commitments under
         the Existing Credit Agreement, and the repayment of all outstanding
         amounts thereunder, together with interest fees and other charges
         payable, provided that, upon execution of this Agreement, each Lender
         hereto that is a party to the Existing Credit Agreement waives the
         notice provision for early termination of the Existing Credit Agreement
         set forth in Section 2.05 thereunder;

                  (ix)     evidence satisfactory to the Administrative Agent of
         amendments, satisfactory to the Administrative Agent and the Lenders,
         to the Senior Note Documents; and

                  (x)      such other assurances, certificates, documents,
         consents, approvals, materials or opinions as the Administrative Agent,
         the L/C Issuer or any Lender reasonably may require.

         (b) Any fees required to be paid on or before the Closing Date shall
have been paid.

         (c) Unless waived by the Administrative Agent, the Borrower shall have
paid all reasonable Attorney Costs of the Administrative Agent to the extent
invoiced prior to or on the Closing Date, plus such additional amounts of
reasonable Attorney Costs as shall constitute its reasonable estimate of such
Attorney Costs incurred or to be incurred by it through the closing proceedings,
provided that such estimate shall not thereafter preclude a final settling of
accounts between the Borrower and the Administrative Agent.

         Notwithstanding anything to the contrary contained in this Section
4.01, neither this Agreement nor any of the other Loan Documents shall become
effective or be binding on any party unless the preceding conditions have been
satisfied (or waived, as appropriate), on or before 5:00 p.m., San Francisco
time, on June 30, 2003.

         4.02     CONDITIONS TO ALL CREDIT EXTENSIONS. The obligation of each
Lender to honor any Request for Credit Extension (other than a Loan Notice
requesting only a conversion of a Loan to the other Type, or a continuation of a
Loan as the same Type) is subject to the following conditions precedent:

         (a) The representations and warranties of the Borrower contained in
Article V, or which are contained in any document furnished at any time under or
in connection herewith or therewith, shall be true and correct on and as of the
date of such Credit Extension, except to the extent that such representations
and warranties specifically refer to an earlier date, in which case they shall
be true and correct as of such earlier date.

                                       41


         (b) No Default or Event of Default shall exist or would result from
such Credit Extension.

         (c) The Administrative Agent and, if applicable, the L/C Issuer shall
have received a Request for Credit Extension in accordance with the requirements
hereof.

         (d) The Administrative Agent shall have received, in form and substance
satisfactory to it, such other assurances, certificates, documents or consents
related to the foregoing as the Administrative Agent or the Required Lenders
reasonably may require.

         Each Request for Credit Extension (other than a Loan Notice requesting
only a conversion of a Loan to the other Type, or a continuation of a Loan as
the same Type) submitted by the Borrower shall be deemed to be a representation
and warranty that the conditions specified in Sections 4.02(a) and (b) have been
satisfied on and as of the date of the applicable Credit Extension.

                                   ARTICLE V.
                         REPRESENTATIONS AND WARRANTIES

         The Borrower represents and warrants to the Administrative Agent and
the Lenders that:

         5.01     EXISTENCE, QUALIFICATION AND POWER; COMPLIANCE WITH LAWS. Each
Loan Party (a) is a corporation, partnership or limited liability company, duly
organized or formed, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation or organization, (b) has all requisite power
and authority and all governmental licenses, authorizations, consents and
approvals to own its assets, carry on its business and to execute, deliver, and
perform its obligations under the Loan Documents to which it is a party, (c) is
duly qualified and is licensed and in good standing under the Laws of each
jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification or license, and (d) is in
compliance with all Laws, except in each case referred to in subsection (c) or
(d) of this Section, to the extent that failure to do so could not reasonably be
expected to have a Material Adverse Effect.

         5.02     AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and
performance by each Loan Party of each Loan Document to which such Person is
party, have been duly authorized by all necessary corporate or other
organizational action, and do not and will not (a) contravene the terms of any
of such Person's Organization Documents; (b) conflict with or result in any
breach or contravention of, or the creation of any Lien under, any Contractual
Obligation to which such Person is a party or any order, injunction, writ or
decree of any Governmental Authority to which such Person or its property is
subject; or (c) violate any Law.

         5.03     GOVERNMENTAL AUTHORIZATION. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, any Loan Party of
this Agreement or any other Loan Document.

                                       42


         5.04     BINDING EFFECT. This Agreement has been, and each other Loan
Document, when delivered hereunder, will have been, duly executed and delivered
by each Loan Party that is party thereto. This Agreement constitutes, and each
other Loan Document when so delivered will constitute, a legal, valid and
binding obligation of such Loan Party, enforceable against each Loan Party that
is party thereto in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws generally affecting
the rights of creditors, and subject to equitable principles of general
application.

         5.05     FINANCIAL STATEMENTS; NO MATERIAL ADVERSE EFFECT.

         (a) The Audited Financial Statements (i) were prepared in accordance
with GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; (ii) fairly present the financial condition
of the Borrower and its Subsidiaries as of the date thereof and their results of
operations for the period covered thereby in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein; and (iii) show all material indebtedness and other liabilities,
direct or contingent, of the Borrower and its consolidated Subsidiaries as of
the date thereof, including liabilities for taxes, material commitments and
Indebtedness.

         (b) The unaudited consolidated financial statements of the Borrower and
its Subsidiaries, dated March 31, 2003, contained in the related quarterly
report on Form 10-Q filed with the SEC (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein, and subject to ordinary, good faith year end audit
adjustments; (ii) fairly present the financial condition of the Borrower and its
Subsidiaries as of the date thereof and their results of operations for the
period covered thereby; and (iii) show all material indebtedness and other
liabilities, direct or contingent, of the Borrower and its consolidated
Subsidiaries as of the date thereof, including liabilities for taxes, material
commitments and Indebtedness.

         (c) Since the date of the Audited Financial Statements, there has been
no event or circumstance, either individually or in the aggregate, that has had
or could reasonably be expected to have a Material Adverse Effect.

         (d) As of the Closing Date, there exists no Project Debt, other than as
specifically identified on Schedule 5.05(c).

         5.06     LITIGATION. Except as specifically disclosed on Schedule 5.06,
there are no actions, suits, proceedings, claims or disputes pending or, to the
knowledge of the Borrower after due and diligent investigation, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, by or against the Borrower or any of its Subsidiaries or against any
of their properties or revenues that (a) purport to affect or pertain to this
Agreement or any other Loan Document, or any of the transactions contemplated
hereby, or (b) if determined adversely, could reasonably be expected to have a
Material Adverse Effect.

         5.07     NO DEFAULT. Neither the Borrower nor any Subsidiary is in
default under or with respect to (a) any Senior Note Documents or (b) any
Contractual Obligation that could be reasonably expected to have a Material
Adverse Effect. No Default or Event of Default has

                                       43


occurred and is continuing or would result from the consummation of the
transactions contemplated by this Agreement or any other Loan Document.

         5.08     OWNERSHIP OF PROPERTY; LIENS. Each of the Borrower and its
Subsidiaries has good record and marketable title in fee simple to, or valid
leasehold interests in, all real property necessary or used in the ordinary
conduct of its business, except for such defects in title as could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. As of the Effective Date, the property of the Borrower and its
Subsidiaries is not subject to any Lien, other than Liens permitted by Section
7.01.

         5.09     ENVIRONMENTAL COMPLIANCE.

         (a) The on-going operations of the Borrower and each of its
Subsidiaries, after the Closing Date, comply in all respects with all
Environmental Laws, except such non-compliance that would not result in
liability in excess of $2,000,000 in the aggregate.

         (b) Except as specifically identified on Schedule 5.09, and except to
the extent that noncompliance would not result in liability in excess of
$300,000 in the aggregate, the Borrower and each of its Subsidiaries have
obtained all licenses, permits, authorizations and registrations required under
any Environmental Law ("Environmental Permits") necessary for their respective
operations, and all such Environmental Permits are in good standing, and the
Borrower and each of its Subsidiaries are in compliance with all terms and
conditions of such Environmental Permits.

         (c) Except as specifically identified on Schedule 5.09, none of the
Borrower or any of its Subsidiaries or any of their present property or
operations is subject to any outstanding written order from or agreement with
any Governmental Authority or other Person, nor is subject to any judicial or
docketed administrative proceeding respecting any Environmental Law,
Environmental Claim or Hazardous Material.

         (d) There are no conditions or circumstances relating to any property
of the Borrower or its Subsidiaries, or arising from operations of the Borrower
or its Subsidiaries conducted prior to the Closing Date that, together with all
other such conditions and circumstances relating to all other properties and
operations, may give rise to Environmental Claims with a potential liability as
to the Borrower and its Subsidiaries together in excess of $20,000,000 in the
aggregate. Schedule 5.09 contains the Borrower's good faith estimate of clean-up
costs associated with hydrocarbon contamination at the properties described
therein. Notwithstanding the foregoing, (i) neither the Borrower nor any of its
Subsidiaries has any underground storage tanks (x) that are not properly
registered or permitted under applicable Environmental Laws or (y) that are
leaking or disposing of Hazardous Materials off-site, (ii) the Borrower and its
Subsidiaries have notified all of their employees of the existence, if any, of
any health hazard arising from the conditions of their employment and have met
all notification requirements under all applicable Environmental Laws, and (iii)
no Hazardous Materials have been Released at, on or under any site, facility or
vessel now or previously owned, operated or leased by the Borrower or any of its
Subsidiaries that would have a Material Adverse Effect.

                                       44


         (e) Except as specifically identified on Schedule 5.09, the Borrower
has no knowledge of any oral or written notification of a Release of a Hazardous
Material has been filed by or on behalf of the Borrower or any of its
Subsidiaries and no site, facility or vessel now or previously owned, operated
or leased by the Borrower or any of its Subsidiaries is listed or proposed for
listing on any federal or state list of sites requiring investigation or
clean-up.

         5.10     INSURANCE. The properties of the Borrower and its Subsidiaries
are insured with financially sound and reputable insurance companies not
Affiliates of the Borrower, in such amounts, with such deductibles and covering
such risks as are customarily carried by companies engaged in similar businesses
and owning similar properties in localities where the Borrower or its
Subsidiaries operate.

         5.11     TAXES. The Borrower and its Subsidiaries have filed all
Federal, state and other material tax returns and reports required to be filed,
and have paid all Federal, state and other material taxes, assessments, fees and
other governmental charges levied or imposed upon them or their properties,
income or assets otherwise due and payable, except those which are being
contested in good faith by appropriate proceedings and for which adequate
reserves have been provided in accordance with GAAP. There is no proposed tax
assessment against the Borrower or any Subsidiary that would, if made, have a
Material Adverse Effect.

         5.12     ERISA COMPLIANCE.

         (a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal or state Laws. Each
Plan that is intended to qualify under Section 401(a) of the Code has received a
favorable determination letter from the IRS or an application for such a letter
is currently being processed by the IRS with respect thereto and, to the best
knowledge of the Borrower, nothing has occurred which would prevent, or cause
the loss of, such qualification. The Borrower and each ERISA Affiliate have made
all required contributions to each Plan subject to Section 412 of the Code, and
no application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.

         (b) There are no pending or, to the best knowledge of the Borrower,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan that could be reasonably be expected to have a Material
Adverse Effect. There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan that has resulted or
could reasonably be expected to result in a Material Adverse Effect.

         (c) (i) No ERISA Event has occurred or is reasonably expected to occur;
(ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither the
Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur,
any liability under Title IV of ERISA with respect to any Pension Plan (other
than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither
the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability (and no event has occurred which, with the giving of notice
under Section 4219 of ERISA, would result in such liability) under Sections 4201
or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither the
Borrower nor any ERISA Affiliate has engaged in a transaction that could be
subject to Sections 4069 or 4212(c) of ERISA.

                                       45


         5.13     SUBSIDIARIES.

         (a) As of the Closing Date, the Borrower has no Subsidiaries other than
those specifically disclosed in Part (1) of Schedule 5.13(a), and those of whom
the Borrower has notified the Administrative Agent in writing following the
Closing Date pursuant to Section 2.13, and has no equity investments in any
other corporation or entity (including GLC Ventures and Construction JV's) other
than those specifically disclosed in Part (2) of Schedule 5.13(a).

         (b) As of the Closing Date, there exist no Senior Note Guarantors,
other than as listed on Schedule 5.13(b).

         5.14     MARGIN REGULATIONS; INVESTMENT COMPANY ACT; PUBLIC UTILITY
                  HOLDING COMPANY ACT.

         (a) The Borrower is not engaged and will not engage, principally or as
one of its important activities, in the business of purchasing or carrying
margin stock (within the meaning of Regulation U issued by the FRB), or
extending credit for the purpose of purchasing or carrying margin stock.

         (b) None of the Borrower, any Person controlling the Borrower, or any
Subsidiary (i) is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935, or (ii) is or is required to be registered as an "investment
company" under the Investment Company Act of 1940, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code or any other federal or
state statute or regulation limiting its ability to incur Indebtedness.

         5.15     DISCLOSURE. The documents, certificates and written statements
(including the Loan Documents) furnished to the Administrative Agent and the
Lenders by the Borrower or any Subsidiary for use in connection with the
transactions contemplated by this Agreement, taken as a whole, do not contain
any untrue statement of a material fact or omit to state a material fact (known
to the Borrower in the case of any document not furnished by it) necessary in
order to make the statements contained herein or therein not misleading (it
being recognized by the Administrative Agent and the Lenders that projections
and forecasts provided to them by the Borrower are not to be viewed as facts and
that actual results during the period or periods covered by any such projections
and forecasts may differ from the projected or forecasted results).

         5.16     INTELLECTUAL PROPERTY; LICENSES, ETC. The Borrower and its
Subsidiaries own, or possess the right to use, all of the trademarks, service
marks, trade names, copyrights, patents, patent rights, franchises, licenses and
other intellectual property rights (collectively, "IP Rights") that are
reasonably necessary for the operation of their respective businesses, without
conflict with the rights of any other Person. To the best knowledge of the
Borrower, no slogan or other advertising device, product, process, method,
substance, part or other material employed or contemplated to be employed by the
Borrower or any Subsidiary infringes upon any rights held by any other Person.
Except as specifically disclosed in Schedule 5.16, no claim or litigation
regarding any of the foregoing is pending or, to the best knowledge of the
Borrower, threatened,

                                       46


and no patent, invention, device, application, principle or any statute, law,
rule, regulation, standard or code is pending or, to the knowledge of the
Borrower, proposed, which, in either case, could reasonably be expected to have
a Material Adverse Effect.

         5.17     SWAP CONTRACTS. The Borrower and its Subsidiaries have each
voluntarily entered into each Swap Contract to which it is a party based upon
its own independent assessment of its consolidated assets, liabilities and
commitments in each case as an appropriate means of mitigating and managing
risks associated with such matters.

         5.18     LABOR RELATIONS. There are no strikes, lockouts or other labor
disputes against the Borrower or any of its Subsidiaries, or, to the best of the
Borrower's knowledge, threatened against or affecting the Borrower or any of its
Subsidiaries, and no significant unfair labor practice complaint is pending
against the Borrower or any of its Subsidiaries or, to the best knowledge of the
Borrower, threatened against any of them before any Governmental Authority,
which could reasonably be expected to result in a Material Adverse Effect.

         5.19     USE OF PROCEEDS. The Borrower shall use the proceeds of the
Credit Extensions solely for working capital and other general corporate
purposes of the Borrower and its Restricted Subsidiaries not in contravention of
any Loan Document or any Law.

         5.20     SOLVENCY. The Borrower is and shall continue to be, and shall
cause each of its Subsidiaries to be, Solvent.

         5.21     UNRESTRICTED SUBSIDIARY MATTERS. Except as specifically
identified in Schedule 5.21:

         (a) As of the Closing Date, none of the Borrower or any of its
Restricted Subsidiaries is party to any Contractual Obligation pursuant to which
cash, deposit balances or investments of the Borrower or any of its Restricted
Subsidiaries are pooled or otherwise commingled with similar assets of any
Unrestricted Subsidiary.

         (b) As of the Closing Date, there is no employee stock option plan or
employee stock purchase plan of the Borrower that extends to employees of any
Unrestricted Subsidiary.

         (c) As of the Closing Date, none of the Unrestricted Subsidiaries
directly or indirectly own capital stock in the Borrower or have any right to
purchase, redeem or otherwise acquire capital stock in the Borrower.

         5.22     BURDENSOME AGREEMENTS. Except as specifically identified in
Schedule 5.22, as of the Closing Date neither the Borrower nor any of its
Restricted Subsidiaries is party or subject to (i) any Contractual Obligation
that limits the ability of any Restricted Subsidiary to make Restricted Payments
to the Borrower or to otherwise transfer property to the Borrower, (ii) any
employment contracts or other arrangements with officers, directors or employees
having terms, including salaries, benefits and other compensation, that are
materially different from those previously entered into by it in the Ordinary
Course of Business, or (iii) any Contractual Obligation that directly or
indirectly prohibits the Borrower or any of its Restricted Subsidiaries from
granting any Lien on property or assets of such Persons.

                                       47


         5.23     TAX SHELTER REGULATIONS. The Borrower does not intend to treat
the Loans and/or Letters of Credit and related transactions as being a
"reportable transaction" (within the meaning of Treasury Regulation Section
1.6011-4). In the event the Borrower determines to take any action inconsistent
with such intention, it will promptly notify the Administrative Agent thereof.
If the Borrower so notifies the Administrative Agent, the Borrower acknowledges
that the Administrative Agent and each of the Lenders may treat the Loans and
the Letters of Credit as part of a transaction that is subject to Treasury
Regulation Section 301.6112-1, and the Administrative Agent will maintain the
lists and other records required by such Treasury Regulation.

                                  ARTICLE VI.
                              AFFIRMATIVE COVENANTS

         So long as any Lender shall have any Commitment hereunder, any Loan or
other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding, the Borrower shall, and shall (except in the case of
the covenants set forth in Sections 6.01, 6.02 and 6.03) cause each Subsidiary
to:

         6.01     FINANCIAL STATEMENTS. Deliver to the Administrative Agent and
each Lender, in form and detail satisfactory to the Administrative Agent and the
Required Lenders:

         (a) as soon as available, but in any event within 90 days after the end
of each fiscal year of the Borrower: (i) (A) a consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such fiscal year, and the related
consolidated statements of income or operations, shareholders' equity and cash
flows for such fiscal year, setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail, audited and
accompanied by a report and opinion of an independent certified public
accountant of nationally recognized standing reasonably acceptable to the
Required Lenders, which report and opinion shall be prepared in accordance with
GAAP and shall not be subject to any qualifications or exceptions as to the
scope of the audit nor to any qualifications or exceptions not reasonably
acceptable to the Required Lenders; or (B) an SEC Form 10-K for the Borrower
(excluding the exhibits thereto) relating to such fiscal year; and (ii) provided
Wilder is an Unrestricted Subsidiary as of the end of such fiscal year, a
consolidated balance sheet of Wilder as at the end of such fiscal year, and the
related consolidated statements of income or operations, shareholders' equity
and cash flows for such fiscal year, setting forth in each case in comparative
form the figures for the previous fiscal year, all in reasonable detail, audited
and accompanied by a report and opinion of an independent certified public
accountant of nationally recognized standing reasonably acceptable to the
Required Lenders, which report and opinion shall be prepared in accordance with
GAAP and shall not be subject to any qualifications or exceptions as to the
scope of the audit nor to any qualifications or exceptions not reasonably
acceptable to the Required Lenders; and

         (b) as soon as available, but in any event within 45 days after the end
of each of the first three fiscal quarters of each fiscal year of the Borrower:
(i) (A) a consolidated balance sheet of the Borrower and its Subsidiaries as at
the end of such fiscal quarter, and the related consolidated statements of
income or operations, shareholders' equity and cash flows for such fiscal
quarter and for the portion of the Borrower's fiscal year then ended, setting
forth in each case in

                                       48


comparative form the figures for the corresponding fiscal quarter of the
previous fiscal year and the corresponding portion of the previous fiscal year,
all in reasonable detail and certified by a Responsible Officer of the Borrower
as fairly presenting the financial condition, results of operations and cash
flows of the Borrower and its Subsidiaries in accordance with GAAP, subject only
to normal year-end audit adjustments and the absence of footnotes; or (B) an SEC
Form 10-Q for the Borrower (excluding the exhibits thereto) relating to such
fiscal quarter; and (ii) provided Wilder is an Unrestricted Subsidiary as of the
end of such fiscal quarter, a consolidated balance sheet of Wilder as at the end
of such fiscal quarter, and the related consolidated statements of income or
operations, shareholders' equity and cash flows for such fiscal quarter and for
the portion of Wilder's fiscal year then ended, setting forth in each case in
comparative form the figures for the corresponding fiscal quarter of the
previous fiscal year and the corresponding portion of the previous fiscal year,
all in reasonable detail and certified by a Responsible Officer of Borrower as
fairly presenting the financial condition, results of operations and cash flows
of Wilder on a consolidated basis in accordance with GAAP, subject only to
normal year-end audit adjustments and the absence of footnotes.

         6.02     CERTIFICATES; OTHER INFORMATION. Deliver to the Administrative
Agent and each Lender, in form and detail satisfactory to the Administrative
Agent and the Required Lenders:

         (a) concurrently with the delivery of the financial statements referred
to in Section 6.01(a) (unless included in the applicable SEC Form 10-K), a
certificate of its independent certified public accountants certifying such
financial statements;

         (b) concurrently with the delivery of the financial statements referred
to in Sections 6.01(a) and (b), a duly completed Compliance Certificate signed
by a Responsible Officer of the Borrower;

         (c) promptly after the same are available, copies of each annual
report, proxy or financial statement or other report or communication sent to
the stockholders of the Borrower, and copies of all annual, regular, periodic
and special reports and registration statements which the Borrower may file or
be required to file with the SEC under Section 13 or 15(d) of the Exchange Act,
and not otherwise required to be delivered to the Administrative Agent pursuant
hereto;

         (d) promptly, such additional information regarding the business,
financial or corporate affairs of the Borrower or any Subsidiary as the
Administrative Agent, at the request of any Lender, may from time to time
request; and

         (e) promptly after the Borrower has notified the Administrative Agent
of any intention by the Borrower to treat the Loans or Letters of Credit and
related transactions as being a "reportable transaction" (within the meaning of
Treasury Regulation Section 1.6011-4), a duly completed copy of IRS Form 8886 or
any successor form.

         Reports required to be delivered pursuant to Section 6.01(a)(i) or
(b)(i) or Section 6.02(b) shall be deemed to have been delivered on the date on
which the Borrower posts such reports on the Borrower's website on the Internet
at the website address listed on Schedule 10.02 or when such report is posted on
the SEC's website at www.sec.gov; provided that (x) the Borrower shall deliver
electronic copies via electronic mail or paper copies of such reports to the
Administrative

                                       49


Agent or any Lender who requests the Borrower to deliver such paper copies until
written request to cease delivering paper copies is given by the Administrative
Agent or such Lender, (y) the Borrower shall notify by electronic copies via
electronic mail or paper copies via facsimile the Administrative Agent and each
Lender of the posting of any such reports, and (z) in every instance, the
Borrower shall provide paper copies of the Compliance Certificates required by
Section 6.02(b) to the Administrative Agent and each of the Lenders. Except for
such Compliance Certificates, the Administrative Agent shall not have any
obligation to request the delivery or to maintain copies of the reports referred
to above (and, in any event, the Administrative Agent shall not have any
responsibility to monitor compliance by the Borrower with any such request for
delivery), and each Lender shall be solely responsible for requesting delivery
to it, or maintaining its copies, of such reports.

         6.03     NOTICES. Promptly notify the Administrative Agent and each
Lender:

         (a) of the occurrence of any Default or Event of Default;

         (b) of any matter that has resulted or could reasonably be expected to
result in a Material Adverse Effect, including (i) breach or non-performance of,
or any default under, a Contractual Obligation of the Borrower or any
Subsidiary; (ii) any dispute, litigation, investigation, proceeding or
suspension between the Borrower or any Subsidiary and any Governmental
Authority; or (iii) the commencement of, or any material development in, any
litigation or proceeding affecting the Borrower or any Subsidiary, including
pursuant to any applicable Environmental Laws;

         (c) of any litigation, investigation or proceeding affecting any Loan
Party (i) in which the amount of damages claimed and not fully covered by
insurance equals or exceeds $5,000,000 (or its equivalent in another currency or
currencies), or in which injunctive relief or similar relief is sought, which
relief, if granted, could reasonably be expected to have a Material Adverse
Effect or (ii) within four days after reporting the same to the SEC if the
Borrower is required to report the same to such entity under applicable Law;

         (d) of the occurrence of any ERISA Event;

         (e) of any material change in accounting policies or financial
reporting practices by the Borrower or any Subsidiary;

         (f) within five (5) Business Days after the date of such occurrence,
(i) if any Subsidiary or other Person shall become a Material Subsidiary of the
Borrower, or (ii) if the total revenues or total assets of all Non-Guarantor
Subsidiaries shall at any time together exceed 20% of the total revenues or
total assets, as the case may be, of the Borrower and its Restricted
Subsidiaries, determined on a consolidated basis, or (iii) if any Unrestricted
Subsidiary shall cease to be such or any Person shall become an Unrestricted
Subsidiary, or (iv) if any Subsidiary shall become a Senior Note Guarantor; for
purposes of this Section 6.03(f), the date of such an occurrence or circumstance
shall be the first to occur of either the closing of a transaction that triggers
such an occurrence or circumstance or the Borrower files or is required to file
with the SEC a Form 8K, 10K or 10Q report or is required to deliver financial
statements under Section 6.01 reflecting such an occurrence or circumstance;

                                       50


         (g) if applicable, upon the request from time to time of the
Administrative Agent, of the Swap Termination Values, together with a
description of the method by which such values were determined, relating to any
Swap Contracts then outstanding to which the Borrower or any of its Subsidiaries
is a party;

         (h) upon becoming aware thereof, of any labor controversy resulting in
or threatening to result in, any strike, work stoppage, boycott, shutdown or
other labor disruption against or involving the Borrower or any Subsidiary that
would materially impact the operations of the Borrower or any Subsidiary; and

         (i) upon, but in no event later than ten days after, becoming aware of
(i) any and all enforcement, cleanup, removal or other governmental or
regulatory actions involving a potential liability in excess of $10,000,000 in
the aggregate instituted, completed or threatened against the Borrower or any
Subsidiary or any of their properties pursuant to any applicable Environmental
Laws, (ii) all other Environmental Claims involving the Borrower or a Subsidiary
with a potential liability in excess of $10,000,000 in the aggregate, and (iii)
any environmental or similar condition on any real property adjoining or in the
vicinity of the property of the Borrower or any Subsidiary that could reasonably
be anticipated to cause such property or any part thereof to be subject to any
restrictions on the ownership, occupancy, transferability or use of such
property under any Environmental Laws and involving a potential liability in
excess of $10,000,000 in the aggregate.

         Each notice pursuant to this Section shall be accompanied by a
statement of a Responsible Officer of the Borrower setting forth details of the
occurrence referred to therein and stating what action the Borrower has taken
and proposes to take with respect thereto. Each notice pursuant to Section
6.03(a) shall describe with particularity any and all provisions of this
Agreement or other Loan Document that have been breached.

         6.04     PAYMENT OF OBLIGATIONS. Pay and discharge as the same shall
become due and payable (a) all tax liabilities, assessments and governmental
charges or levies upon it or its properties or assets, unless the same are being
contested in good faith by appropriate proceedings and adequate reserves in
accordance with GAAP are being maintained by the Borrower or such Subsidiary;
(b) all lawful claims which, if unpaid, would by law become a Lien upon its
property; and (c) all Indebtedness, as and when due and payable, but subject to
any subordination provisions contained in any instrument or agreement evidencing
such Indebtedness.

         6.05     PRESERVATION OF EXISTENCE, ETC. Preserve, renew and maintain
in full force and effect its legal existence and good standing under the Laws of
the jurisdiction of its organization; take all reasonable action to maintain all
rights, privileges, permits, licenses and franchises necessary or desirable in
the normal conduct of its business, except in a transaction permitted by Section
7.04 or 7.05; and preserve or renew all of its registered patents, trademarks,
trade names and service marks, the non-preservation of which could reasonably be
expected to have a Material Adverse Effect.

                                       51


         6.06     MAINTENANCE OF PROPERTIES.

         (a) Maintain, preserve and protect all of its material properties and
equipment necessary in the operation of its business in good working order and
condition, ordinary wear and tear excepted; (b) make all necessary repairs
thereto and renewals and replacements thereof except where the failure to do so
could not reasonably be expected to have a Material Adverse Effect; and (c) use
the standard of care typical in the industry in the operation and maintenance of
its facilities.

         6.07     MAINTENANCE OF INSURANCE. Maintain with financially sound and
reputable insurance companies not Affiliates of the Borrower, insurance with
respect to its properties and business against loss or damage of the kinds
customarily insured against by Persons engaged in the same or similar business,
of such types and in such amounts as are customarily carried under similar
circumstances by such other Persons.

         6.08     COMPLIANCE WITH LAWS. Comply in all material respects with the
requirements of all Laws applicable to it or to its business or property, except
in such instances in which (i) such requirement of Law is being contested in
good faith or a bona fide dispute exists with respect thereto; or (ii) the
failure to comply therewith could not reasonably be expected to have a Material
Adverse Effect.

         6.09     BOOKS AND RECORDS.

         (a) Maintain (i) proper financial records in conformity with GAAP and
presented fairly in all material respects, and (ii) properly, all other books
and records, in which full, true and correct entries in conformity with GAAP
consistently applied shall be made of all transactions and matters involving the
assets and business of the Borrower or such Subsidiary, as the case may be; and

         (b) maintain all books of record and accounts in material conformity
with all applicable requirements of any Governmental Authority having regulatory
jurisdiction over the Borrower or such Subsidiary, as the case may be.

         6.10     INSPECTION RIGHTS. Permit representatives and independent
contractors of the Administrative Agent and each Lender to visit and inspect any
of its properties, to examine its corporate, financial and operating records,
and make copies thereof or abstracts therefrom, and to discuss its affairs,
finances and accounts with its directors, officers, and independent public
accountants, all at the expense of the Borrower and at such reasonable times
during normal business hours and as often as may be reasonably desired, upon
reasonable advance notice to the Borrower; provided that when an Event of
Default exists the Administrative Agent or any Lender (or any of their
respective representatives or independent contractors) may do any of the
foregoing at the expense of the Borrower at any time during normal business
hours and without advance notice.

         6.11     COMPLIANCE WITH ERISA. Do, and cause each of its ERISA
Affiliates to do, each of the following: (a) maintain each Plan in compliance in
all material respects with the applicable provisions of ERISA, the Code and
other Federal or state law; (b) cause each Plan which is qualified under Section
401(a) of the Code to maintain such qualification; and (c) make all required
contributions to any Plan subject to Section 412 of the Code.

                                       52


         6.12     ENVIRONMENTAL LAWS.

         (a) The Borrower shall, and shall cause each of its Subsidiaries to,
conduct its operations and keep and maintain its property in compliance in all
material respects with all Environmental Laws, except to the extent that the
failure to comply therewith could not reasonably be expected to have a Material
Adverse Effect.

         (b) Upon written request of the Administrative Agent or any Lender, the
Borrower shall submit and cause each of its Subsidiaries to submit, to the
Administrative Agent and such Lender, at the Borrower's sole cost and expense
and at reasonable intervals, a report providing an update of the status of any
environmental, health or safety compliance, hazard or liability issue identified
in any notice or report required pursuant to Section 6.03(i) and any other
environmental, health or safety compliance obligation, remedial obligation or
liability, that could, individually or in the aggregate, result in liability in
excess of $5,000,000.

         6.13     USE OF PROCEEDS. Use the proceeds of the Credit Extensions
solely for working capital and other general corporate purposes of the Borrower
and its Restricted Subsidiaries not in contravention of any Law or of any Loan
Document.

         6.14     TAX CLEARANCE CERTIFICATES. On or before the date that is 30
calendar days following the Closing Date, the Borrower shall provide to the
Administrative Agent all tax clearance certificates not delivered to the
Administrative Agent under Section 4.01(a)(iv) and permitted by such section to
be delivered under this Section 6.14; provided that, if the Borrower is unable
to deliver any such certificate by virtue of a delay in the ability of any
applicable Governmental Authority to provide such certificate in the ordinary
course (and not by virtue of any Loan Party not being in tax good standing) and
the Borrower has provided to the Administrative Agent reasonable evidence of
such inability, then the Borrower shall have such additional time to deliver
such certificate(s) as the Administrative Agent shall reasonably determine.

                                  ARTICLE VII.
                               NEGATIVE COVENANTS

         So long as any Lender shall have any Commitment hereunder, any Loan or
other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding, the Borrower shall not, nor shall it permit any
Restricted Subsidiary (or, in the case of Sections 7.08, 7.09, and 7.10, permit
any Subsidiary) to, directly or indirectly:

         7.01     LIENS. Create, incur, assume or suffer to exist, any Lien upon
any of its property, assets or revenues, whether now owned or hereafter
acquired, other than the following.

         (a) Liens pursuant to any Loan Document;

         (b) Liens existing on the date hereof and listed on Schedule 7.01 and
any renewals or extensions thereof, provided that the property covered thereby
is not increased and any renewal or extension of the obligations secured or
benefited thereby is permitted by Section 7.03(b);

                                       53


         (c) Liens for taxes not yet due or which are being contested in good
faith and by appropriate proceedings, if adequate reserves with respect thereto
are maintained on the books of the applicable Person in accordance with GAAP;

         (d) carriers', landlords', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the Ordinary Course of Business in
respect of the Borrower and its Restricted Subsidiaries, which are not overdue
for a period of more than 30 days or which are being contested in good faith and
by appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of the applicable Person;

         (e) pledges or deposits in the Ordinary Course of Business in
connection with obligations of the Borrower or its Restricted Subsidiaries
arising under workers' compensation, unemployment insurance and other social
security legislation, other than any Lien imposed by ERISA;

         (f) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature, in each case,
incurred by the Borrower or its Restricted Subsidiaries in the Ordinary Course
of Business, provided that all such deposits in the aggregate could not
reasonably be expected to result in a Material Adverse Effect;

         (g) easements, rights-of-way, restrictions and other similar
encumbrances affecting real property which, in the aggregate, are not
substantial in amount, and which do not in any case materially detract from the
value of the property subject thereto or materially interfere with the ordinary
conduct of the business of the applicable Person;

         (h) Liens securing or arising from judgments, decrees or attachments in
respect of the Borrower and its Restricted Subsidiaries, in circumstances not
constituting an Event of Default under Section 8.01(h);

         (i) Liens securing Indebtedness of the Borrower or its Restricted
Subsidiaries permitted under Section 7.03(d), provided that (i) such Liens do
not at any time encumber any property other than the property financed by such
Indebtedness; (ii) such Liens attach to the subject property within 30 days
after the acquisition thereof and (iii) the Indebtedness secured thereby does
not exceed the cost or fair market value, whichever is lower, of the property
being acquired on the date of acquisition; or Liens on assets of any Project
Debt Entity securing Indebtedness of such entity permitted under Section
7.03(i);

         (j) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods by the Borrower or its Restricted Subsidiaries;

         (k) Liens securing reimbursement obligations of the Borrower or its
Restricted Subsidiaries with respect to commercial letters of credit obtained in
the Ordinary Course of Business and not prohibited hereby, provided that such
Liens shall attach only to documents or other property relating to such letters
of credit and products and proceeds thereof;

                                       54



         (l) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution, provided that (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Borrower in excess of those set forth by regulations promulgated
by the FRB, and (ii) such deposit account is not intended by the Borrower or any
Subsidiary to provide collateral to the depository institution; and

         (m) Liens not otherwise permitted hereunder securing Indebtedness not
in excess of $10,000,000 at any time.

         7.02     INVESTMENTS. Make any Investments, except:

         (a) Investments, other than those permitted by subsections (b) through
(j), that are existing on the date hereof and listed on Schedule 7.02(a);

         (b) Investments held by the Borrower or any of its Restricted
Subsidiaries (i) in the form of cash and cash equivalents, and (ii) Investments
permitted under the Borrower's investment policy attached hereto as Schedule
7.02(b), other than Investments of any type requiring any special or further
approval under such policy;

         (c) Investments consisting of extensions of credit by the Borrower to
any of its wholly-owned Restricted Subsidiaries, or by any of its wholly-owned
Restricted Subsidiaries to the Borrower or to another of its wholly-owned
Restricted Subsidiaries;

         (d) Investments consisting of extensions of credit in the nature of
accounts receivable or notes receivable arising from the sale or lease of goods
or services in the Ordinary Course of Business, and Investments received in
satisfaction or partial satisfaction thereof from financially troubled account
debtors to the extent reasonably necessary in order to prevent or limit loss;

         (e) Guaranty Obligations permitted by Section 7.03;

         (f) Investments resulting by virtue of transactions otherwise permitted
by Section 7.07;

         (g) Investments (including Construction JV Investments) by any Land
Development Company, or any Subsidiary thereof, in an aggregate amount not to
exceed for all such Investments and entities together at any time, $25,000,000;

         (h) Investments in the equity of any Restricted Subsidiary, or the
capital stock, assets, obligations or other securities of or interests in any
other Person (other than an Unrestricted Subsidiary); in an aggregate amount for
all such Investments together not to exceed at any time $100,000,000;

         (i) Construction JV Investments arising in the Ordinary Course of
Business in an aggregate amount for all such Investments together not to exceed
at any time $100,000,000; and

         (j) Investments in Unrestricted Subsidiaries existing on the Closing
Date and set forth on Schedule 7.02(j), and additional equity Investments in
Unrestricted Subsidiaries entered into or

                                       55


incurred after the Closing Date not to exceed in the aggregate for all such
additional equity Investments the lesser of (i) $35,000,000 and (ii) the minimum
amount required in order to increase the Borrower's share of total outstanding
equity securities of Wilder from the level existing on the Closing Date to 100%.

         7.03     INDEBTEDNESS. Create, incur, assume or suffer to exist any
Indebtedness, except:

         (a) Indebtedness under the Loan Documents;

         (b) Indebtedness of the Borrower and its Restricted Subsidiaries
outstanding on the date hereof and listed on Schedule 7.03 and any refinancings,
refundings, renewals or extensions thereof, provided that the amount of such
Indebtedness is not increased at the time of such refinancing, refunding,
renewal or extension except by an amount equal to a reasonable premium or other
reasonable amount paid, and fees and expenses reasonably incurred, in connection
with such refinancing and by an amount equal to any existing commitments
unutilized thereunder;

         (c) obligations (contingent or otherwise) of the Borrower or any
Restricted Subsidiary existing or arising under any Swap Contract entered into
by such Person, provided that (i) such obligations are (or were) entered into by
such Person in the Ordinary Course of Business for the purpose of directly
mitigating risks associated with liabilities, commitments, investments, assets,
or property held or reasonably anticipated by such Person, or changes in the
value of securities issued by such Person and not for purposes of speculation or
taking a "market view;" and (ii) such Swap Contract does not contain any
provision exonerating the non-defaulting party from its obligation to make
payments on outstanding transactions to the defaulting party;

         (d) Indebtedness in respect of capital leases, Synthetic Lease
Obligations and purchase money Indebtedness for fixed or capital assets acquired
by the Borrower or any Restricted Subsidiary; provided that the aggregate
principal amount of (i) all purchase money Indebtedness for fixed or capital
assets that may be incurred by the Borrower or any of its then-existing
Restricted Subsidiaries in any fiscal year of the Borrower shall not exceed
$15,000,000; (ii) all Indebtedness in respect of capital leases and Synthetic
Lease Obligations to finance the acquisition of fixed or capital assets incurred
by the Borrower or any of its Restricted Subsidiaries in any fiscal year of the
Borrower shall not exceed $15,000,000; and (iii) all Indebtedness in respect of
capital leases, Synthetic Lease Obligations and purchase money Indebtedness for
fixed or capital assets of Persons immediately prior to such Persons becoming
Restricted Subsidiaries or being merged with or into (or otherwise becoming
acquired by) the Borrower or any of its Restricted Subsidiaries following the
Closing Date shall not exceed an amount equal to $40,000,000; provided that none
of such Indebtedness was incurred in anticipation of any such merger or
acquisition;

         (e) Indebtedness arising as a consequence of Investments permitted
pursuant to Section 7.02(c);

         (f) Indebtedness in respect of (i) letters of credit (other than
Letters of Credit) issued solely for the account and benefit of the Borrower or
any Restricted Subsidiary in the Ordinary Course of Business in an aggregate
outstanding amount not to exceed at any time an amount equal to $25,000,000; and
(ii) the obligation of a subcontractor of the Borrower or its Restricted

                                       56



Subsidiaries on a construction project, provided that the Borrower or such
Subsidiary determines in good faith that such financial arrangement best serves
the Borrower's or such Subsidiary's financial interests;

         (g) Indebtedness incurred in the Ordinary Course of Business in
connection with (i) securing the performance of bids, trade contracts (other
than for borrowed money), and statutory obligations, in each case, solely for
the account and benefit of the Borrower, its Subsidiaries, any GLC Venture or
Construction JV, (ii) obligations on surety and appeal bonds solely for the
account and benefit of the Borrower, its Subsidiaries, any GLC Venture or
Construction JV, (other than in relation to borrowed money debt), and (iii)
other obligations of a like nature incurred in the Ordinary Course of Business
solely for the account and benefit of the Borrower, its Subsidiaries, any GLC
Venture or Construction JV, (other than in relation to borrowed money debt), in
each of the foregoing cases to the extent not otherwise prohibited by the terms
of any Loan Document;

         (h) Indebtedness (other than Guaranty Obligations as to which an
Unrestricted Subsidiary is the primary obligor and other than Indebtedness
incurred for the benefit of an Unrestricted Subsidiary), comprised solely of (i)
the outstanding principal amount of obligations, whether current or long-term,
for borrowed money and all obligations evidenced by bonds (other than
performance, surety and appeal bonds), debentures, notes, loan agreements or
other similar instruments, (ii) Attributable Indebtedness in respect of capital
leases and Synthetic Lease Obligations, or (iii) without duplication, Guaranty
Obligations (other than Guaranty Obligations as to which an Unrestricted
Subsidiary is the primary obligor) with respect to Indebtedness of the types
specified in the immediately preceding clauses (i) and (ii), in an aggregate
principal amount outstanding not to exceed $100,000,000 at any time; provided
that no such Indebtedness shall be permitted under this clause (h) if such
Indebtedness represents Indebtedness of any co-joint venturer in any Joint
Venture, to which the Borrower or any Subsidiary is a party, that is assumed by
the Borrower or any Subsidiary, if such Indebtedness was not originally incurred
by such co-joint venturer in connection with (and relate solely to) the subject
Joint Venture; and

         (i) Project Debt.

         7.04     FUNDAMENTAL CHANGES. Merge, consolidate with or into, or
convey, transfer, lease or otherwise Dispose of (whether in one transaction or
in a series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to or in favor of any Person or enter into any
Joint Venture, except that, so long as no Default or Event of Default exists at
the time or would occur as a result thereof:

         (a) any Restricted Subsidiary may merge with (i) the Borrower, provided
that the Borrower shall be the continuing or surviving Person, (ii) any one or
more Restricted Subsidiaries, provided that, when any wholly-owned Subsidiary is
merging with another Subsidiary, the wholly-owned Subsidiary shall be the
continuing or surviving Person, or (iii) any other Person (other than an
Unrestricted Subsidiary), provided that the Restricted Subsidiary shall be the
continuing or surviving Person or immediately upon such merger, consolidation or
combination, the surviving Person shall be a wholly-owned Restricted Subsidiary
of the Borrower;

                                       57



         (b) any Restricted Subsidiary may sell all or substantially all of its
assets (upon voluntary liquidation or otherwise), to the Borrower or to another
Restricted Subsidiary; provided that if the seller in such a transaction is a
wholly-owned Subsidiary, then the purchaser must either be the Borrower or a
wholly-owned Subsidiary;

         (c) the Borrower may merge, consolidate or combine with another entity
if the Borrower is the corporation surviving the merger; and

         (d) the Borrower and its Restricted Subsidiaries may enter into any GLC
Venture or Construction JV in the Ordinary Course of Business, subject to
compliance with all other terms and provisions hereof.

         7.05     DISPOSITIONS. Sell, lease or make any Disposition or enter
into any agreement to make any Disposition, except:

         (a) Dispositions of obsolete or worn out property, whether now owned or
hereafter acquired, in the Ordinary Course of Business to Persons;

         (b) Dispositions of inventory in the Ordinary Course of Business;

         (c) Dispositions of equipment or real property to the extent that (i)
such property is exchanged for credit against the purchase price of similar
replacement property for use in the Ordinary Course of Business, (ii) the
proceeds of such Disposition are reasonably promptly applied to the purchase
price of such replacement property for use in the Ordinary Course of Business or
(iii) the board of directors or senior management of the Borrower or such
Subsidiary has determined in good faith that the failure to replace such
property will not be detrimental to the business of the Borrower or such
Subsidiary;

         (d) Dispositions of property by any Restricted Subsidiary to the
Borrower or to a wholly-owned Restricted Subsidiary of the Borrower;

         (e) Dispositions comprising transactions expressly permitted by Section
7.04(a) through (d);

         (f) non-exclusive licenses of IP Rights in the Ordinary Course of
Business and substantially consistent with past practice for terms not exceeding
five years; and

         (g) other Dispositions to Persons other than an Unrestricted Subsidiary
of property (other than accounts and notes receivable) not described in
subsections (a) through (f) of this Section 7.05; provided (i) no Default or
Event of Default exists at the time or would occur as a result thereof, and (ii)
the aggregate consideration from such Dispositions received by the Borrower and
its Restricted Subsidiaries, including aggregate cash received and the aggregate
fair market value of non-cash property received, shall not exceed 5% of the
total assets of the Borrower and its Restricted Subsidiaries (determined on a
consolidated basis in accordance with GAAP) as of the end of the Borrower's most
recently ended fiscal year;

provided that any Disposition pursuant to subsections (a) through (g) of this
Section 7.05 shall be for fair market value.

                                       58



         7.06     LEASE OBLIGATIONS. Create or suffer to exist any obligations
for the payment of rent for any property under lease or agreement to lease,
except:

         (a) leases in existence on the date hereof and listed on Schedule 7.06,
and any renewal, extension or refinancing thereof;

         (b) operating leases (other than those constituting Synthetic Lease
Obligations) entered into or assumed by the Borrower or any Restricted
Subsidiary after the date hereof in the Ordinary Course of Business with or from
Persons other than an Unrestricted Subsidiary;

         (c) leases in connection with any sale-leaseback arrangement entered
into with any Person other than an Unrestricted Subsidiary and otherwise
permitted hereby; and

         (d) capital leases and Synthetic Lease Obligations entered into with
any Person other than an Unrestricted Subsidiary and to the extent permitted by
Section 7.03(d).

         7.07     RESTRICTED PAYMENTS. Declare or make, directly or indirectly,
any Restricted Payment (including, but not limited to, dividends, redemptions
and repurchases of common stock), or incur any obligation (contingent or
otherwise) to do so, except that:

         (a) each Subsidiary may make Restricted Payments to the Borrower and to
wholly-owned Restricted Subsidiaries (and, in the case of a Restricted Payment
by a non-wholly-owned Subsidiary, to the Borrower and any Restricted Subsidiary
and to each other owner (other than an Unrestricted Subsidiary) of capital stock
of such Subsidiary on a pro rata basis based on their relative ownership
interests);

         (b) the Borrower and each Subsidiary may declare and make dividend
payments or other distributions payable solely in the common stock of such
Person;

         (c) so long as no Default or Event of Default exists or would result by
virtue thereof, the Borrower and each Subsidiary may purchase, redeem or
otherwise acquire shares of its common stock or warrants or options to acquire
any such shares with the proceeds received from the substantially concurrent
issue of new shares of its common stock;

         (d) so long as no Default or Event of Default exists or would result by
virtue thereof, the Borrower may purchase, redeem or otherwise acquire shares of
common stock for cash in order to contribute such shares to the Borrower's
employee stock ownership plan, provided the aggregate amount paid by the
Borrower in connection with such transactions does not exceed in any fiscal year
an amount equal to 15% of plan compensation (as such term is interpreted for
purposes of Section 401(a)(17) of the Code) paid by the Borrower in such fiscal
year, and such shares are promptly so contributed;

         (e) so long as no Default or Event of Default exists or would result by
virtue thereof, the Borrower may purchase, redeem or otherwise acquire, other
than, directly or indirectly, from an Unrestricted Subsidiary shares of its
capital stock, or warrants, rights or options to acquire any such shares for
cash in an aggregate amount not to exceed $50,000,000 computed on a cumulative
basis during the term of this Agreement; and

                                       59



         (f) so long as no Default or Event of Default exists or would result by
virtue thereof, the Borrower may declare and make dividend payments in cash.

         7.08     ERISA. At any time engage in a transaction which could be
subject to Section 4069 or 4212(c) of ERISA, or permit any Plan to (a) engage in
any non-exempt "prohibited transaction" (as defined in Section 4975 of the
Code); (b) fail to comply with ERISA or any other applicable Laws; or (c) incur
any material "accumulated funding deficiency" (as defined in Section 302 of
ERISA), which, with respect to each event listed above, could reasonably be
expected to have a Material Adverse Effect.

         7.09     CHANGE IN NATURE OF BUSINESS OR IN STRUCTURE.

         (a) Engage in any material line of business substantially different
from those lines of business conducted by the Borrower and its Restricted
Subsidiaries on the date hereof;

         (b) Except as otherwise permitted under Section 7.04, make any change
in the Borrower's capital structure (including in the terms of its outstanding
capital stock) or amend its certificate of incorporation or bylaws if, as a
result, there would be a reasonable likelihood of the occurrence of a Material
Adverse Effect; or

         (c) Engage in any transaction not in the Ordinary Course of Business
with any Unrestricted Subsidiary.

         7.10     TRANSACTIONS WITH AFFILIATES. Enter into any transaction of
any kind with any Affiliate of the Borrower, other than arm's-length
transactions with Affiliates that are otherwise permitted hereunder.

         7.11     BURDENSOME AGREEMENTS.

         (a) Restricted Payment Prohibitions. Enter into, assume or suffer to
exist any Contractual Obligation that limits the ability of any Restricted
Subsidiary to make Restricted Payments to the Borrower or to otherwise transfer
property to the Borrower;

         (b) Employment Contracts. Enter into, assume or suffer to exist any
employment contracts or other arrangements with officers, directors or employees
having terms, including salaries, benefits and other compensation, that differs
in any material respect from those previously entered into by it in the Ordinary
Course of Business; or

         (c) Other Negative Pledges. Enter into, assume or otherwise become
subject to any Contractual Obligation that directly or indirectly prohibits the
Borrower or any of its Restricted Subsidiaries from granting any Lien on
property or assets of such Persons, provided that the Borrower and its
Restricted Subsidiaries may enter into, assume or otherwise become subject to
any such Contractual Obligation solely to the extent (i) incurred pursuant to
the acquisition by such Persons of businesses, properties or assets of other
Persons otherwise permitted hereunder if such restrictions affect only such
businesses, assets and property so acquired, and are not entered into in
contemplation of such acquisition, (ii) pursuant to a transaction creating Liens
permitted by Section 7.01(i), provided such restriction is limited to the assets
or properties subject to such Liens, or (iii) incurred pursuant to the issuance
of senior notes otherwise permitted hereunder

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pursuant to any note purchase agreement containing negative pledge provisions
not more restrictive than that certain Note Purchase Agreement dated as of May
1, 2001, by and among the Borrower and the purchasers named therein in respect
of $75,000,000 6.96% Senior Notes due May 1, 2013.

         7.12     USE OF PROCEEDS. Use the proceeds of any Credit Extension,
whether directly or indirectly, and whether immediately, incidentally or
ultimately, (a) to purchase or carry margin stock (within the meaning of
Regulation U of the FRB), to extend credit to others for the purpose of
purchasing or carrying margin stock or to refund indebtedness originally
incurred for such purpose, or to acquire any security in any transaction that is
subject to Section 13 or 14 of the Exchange Act, or (b) for the benefit of an
Unrestricted Subsidiary.

         7.13     FINANCIAL COVENANTS.

         (a) Consolidated Tangible Net Worth. Permit Consolidated Tangible Net
Worth at any time to be less than the sum of (a) an amount equal to 85% of the
Consolidated Tangible Net Worth as of date of the Audited Financial Statements
plus (b) an amount equal to 50% of the Consolidated Net Income earned in each
fiscal quarter ending after the date of the Audited Financial Statements (with
no deduction for a net loss in any such fiscal quarter) plus (c) an amount equal
to 50% of the aggregate increases in Consolidated Stockholders' Equity after
such date by reason of the issuance and sale of capital stock of the Borrower.

         (b) Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage
Ratio, as of the last day of any fiscal quarter of the Borrower, to be less than
1.50 to 1.00.

         (c) Leverage Ratio. Permit the Leverage Ratio as of the last day of any
fiscal quarter of the Borrower to be greater than 0.55 to 1.00.

         7.14     UNRESTRICTED SUBSIDIARY MATTERS. (a) Enter into, assume or
otherwise become subject to any Contractual Obligation pursuant to which cash,
deposit balances or investments of the Borrower or any of its Restricted
Subsidiaries are pooled or otherwise commingled with similar assets of any
Unrestricted Subsidiary.

         (b) Permit any employee stock option plan or employee stock purchase
plan of the Borrower to extend to employees of any Unrestricted Subsidiary,
other than on the same terms and conditions as made available to employees of
comparable position and seniority of the Borrower and Subsidiaries other than
Unrestricted Subsidiaries.

         (c) Permit any Unrestricted Subsidiary directly or indirectly to own
capital stock in the Borrower.

                                 ARTICLE VIII.
                         EVENTS OF DEFAULT AND REMEDIES

         8.01     EVENTS OF DEFAULT. Any of the following shall constitute an
"Event of Default":

         (a) Non-Payment. The Borrower fails to pay (i) when and as required to
be paid herein, any amount of principal of any Loan or any L/C Obligation, or
(ii) within three (3) Business

                                       61



Days after the same becomes due, any interest on any Loan or on any L/C
Obligation, any commitment, utilization or other fee due hereunder, or any other
amount payable hereunder or under any other Loan Document; or

         (b) Specific Covenants. The Borrower fails to perform or observe any
term, covenant or agreement contained in any of Section 6.01, 6.02, 6.03, 6.05,
6.10, 6.12, 6.13 or 6.14, or Article VII; or

         (c) Other Defaults. Any Loan Party fails to perform or observe any
other covenant or agreement (not specified in subsection (a) or (b) above)
contained in any Loan Document on its part to be performed or observed and such
failure continues for 30 days; or

         (d) Representations and Warranties. Any representation or warranty made
or deemed made by the Borrower or any other Loan Party herein, in any other Loan
Document, or in any document delivered in connection herewith or therewith
proves to have been incorrect when made or deemed made; or

         (e) Cross-Default. (i) The Borrower, any Material Subsidiary, any
Material Unrestricted Subsidiary, or any Guarantor (A) fails to make any payment
when due (whether by scheduled maturity, required prepayment, acceleration,
demand, or otherwise) in respect of any Indebtedness or Guaranty Obligation
(other than Indebtedness hereunder and Indebtedness under Swap Contracts) having
an aggregate principal amount (including undrawn committed or available amounts
and including amounts owing to all creditors under any combined or syndicated
credit arrangement) of more than $5,000,000, or (B) fails to observe or perform
any other agreement or condition relating to any such Indebtedness or Guaranty
Obligation or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event occurs, the effect of which default or
other event is to cause, or to permit the holder or holders of such Indebtedness
or the beneficiary or beneficiaries of such Guaranty Obligation (or a trustee or
agent on behalf of such holder or holders or beneficiary or beneficiaries) to
cause, with the giving of notice if required, such Indebtedness to be demanded
or to become due or to be repurchased or redeemed (automatically or otherwise)
prior to its stated maturity, or such Guaranty Obligation to become payable or
cash collateral in respect thereof to be demanded; or (ii) there occurs under
any Swap Contract an Early Termination Date (as defined in such Swap Contract)
resulting from (A) any event of default under such Swap Contract as to which the
Borrower or any Material Subsidiary or any Guarantor is the Defaulting Party (as
defined in such Swap Contract) or (B) any Termination Event (as so defined)
under such Swap Contract as to which the Borrower, any Material Subsidiary, any
Material Unrestricted Subsidiary or any Guarantor is an Affected Party (as so
defined) and, in either event, the Swap Termination Value owed by such Person as
a result thereof is greater than $5,000,000; or

         (f) Insolvency Proceedings, Etc. Any Loan Party or any of its
Subsidiaries institutes or consents to the institution of any proceeding under
any Debtor Relief Law, or makes an assignment for the benefit of creditors; or
applies for or consents to the appointment of any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer for it or for all or
any material part of its property; or any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer is appointed without
the application or consent of such Person and the appointment continues
undischarged or unstayed for 60 calendar days; or any proceeding

                                       62



under any Debtor Relief Law relating to any such Person or to all or any part of
its property is instituted without the consent of such Person and continues
undismissed or unstayed for 60 calendar days, or an order for relief is entered
in any such proceeding; or

         (g) Inability to Pay Debts; Attachment. (i) Any Loan Party or any of
its Subsidiaries becomes unable or admits in writing its inability or fails
generally to pay its debts as they become due, or (ii) any writ or warrant of
attachment or execution or similar process is issued or levied against all or
any material part of the property of any such Person and is not released,
vacated or fully bonded within 30 days after its issue or levy; or

         (h) Judgments. There is entered against any Loan Party or any
Subsidiary (i) a final judgment or order for the payment of money in an
aggregate amount exceeding $5,000,000 (to the extent not covered by independent
third-party insurance as to which the insurer does not dispute coverage), or
(ii) any non-monetary final judgment that has, or could reasonably be expected
to have, a Material Adverse Effect and, in either case, (A) enforcement
proceedings are commenced by any creditor upon such judgment or order, or (B)
there is a period of 10 consecutive days during which a stay of enforcement of
such judgment, by reason of a pending appeal or otherwise, is not in effect; or

         (i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of the Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of $5,000,000,
or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after the
expiration of any applicable grace period, any installment payment with respect
to its withdrawal liability under Section 4201 of ERISA under a Multiemployer
Plan in an aggregate amount in excess of the $5,000,000; or

         (j) Invalidity of Loan Documents. Any Loan Document, at any time after
its execution and delivery and for any reason other than the agreement of all
the Lenders or satisfaction in full of all the Obligations, ceases to be in full
force and effect, or is declared by a court of competent jurisdiction to be null
and void, invalid or unenforceable in any respect; or any Loan Party denies that
it has any or further liability or obligation under any Loan Document, or
purports to revoke, terminate or rescind any Loan Document; or

         (k) Loss of Material Licenses, Permits or Intellectual Property. Any
Governmental Authority revokes or fails to renew any material license, permit or
franchise of the Borrower or any of its Subsidiaries, or the Borrower or any of
its Subsidiaries for any reason loses any material license, permit or franchise,
or the Borrower or any of its Subsidiaries suffers the imposition of any
restraining order, escrow, suspension or impound of funds in connection with any
proceeding (judicial or administrative) with respect to any material license,
permit or franchise; or

         (l) Change of Control. There occurs any Change of Control; or

         (m) Material Adverse Effect. There occurs any event or circumstance
that has a Material Adverse Effect.

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         8.02     REMEDIES UPON EVENT OF DEFAULT. If any Event of Default
occurs, the Administrative Agent shall, at the request of, or may, with the
consent of, the Required Lenders:

         (a) declare the commitment of each Lender to make Loans and any
obligation of the L/C Issuer to make L/C Credit Extensions to be terminated,
whereupon such commitments and obligation shall be terminated;

         (b) declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Borrower;

         (c) require that the Borrower Cash Collateralize the L/C Obligations
(in an amount equal to the then Outstanding Amount thereof); and

         (d) exercise on behalf of itself and the Lenders all rights and
remedies available to it and the Lenders under the Loan Documents or applicable
law;

provided that, upon the occurrence of any event specified in subsection (f) of
Section 8.01, the obligation of each Lender to make Loans and any obligation of
the L/C Issuer to make L/C Credit Extensions shall automatically terminate, the
unpaid principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable, the obligation
of the Borrower to Cash Collateralize the L/C Obligations as aforesaid shall
automatically become effective, all payment obligations under the Guaranty of
each Guarantor shall automatically become due and payable, in each case without
further act of the Administrative Agent or any Lender.

                                  ARTICLE IX.
                              ADMINISTRATIVE AGENT

         9.01     APPOINTMENT AND AUTHORIZATION OF ADMINISTRATIVE AGENT.

         (a) Each Lender hereby irrevocably appoints, designates and authorizes
the Administrative Agent to take such action on its behalf under the provisions
of this Agreement and each other Loan Document and to exercise such powers and
perform such duties as are expressly delegated to it by the terms of this
Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere herein or in any other Loan Document, the Administrative
Agent shall not have any duties or responsibilities, except those expressly set
forth herein, nor shall the Administrative Agent have or be deemed to have any
fiduciary relationship with any Lender or participant, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against the
Administrative Agent. Without limiting the generality of the foregoing sentence,
the use of the term "agent" herein and in the other Loan Documents with
reference to the Administrative Agent is not intended to connote any fiduciary
or other implied (or express) obligations arising under agency doctrine of any
applicable law. Instead, such term is used merely as a matter of market

                                       64



custom, and is intended to create or reflect only an administrative relationship
between independent contracting parties.

         (b) The L/C Issuer shall act on behalf of the Lenders with respect to
any Letters of Credit issued by it and the documents associated therewith until
such time (and except for so long) as the Administrative Agent may agree at the
request of the Required Lenders to act for the L/C Issuer with respect thereto;
provided that the L/C Issuer shall have all of the benefits and immunities (i)
provided to the Administrative Agent in this Article IX with respect to any acts
taken or omissions suffered by the L/C Issuer in connection with Letters of
Credit issued by it or proposed to be issued by it and the application and
agreements for letters of credit pertaining to the Letters of Credit as fully as
if the term "Administrative Agent" as used in this Article IX included the L/C
Issuer with respect to such acts or omissions, and (ii) as additionally provided
herein with respect to the L/C Issuer.

         9.02     DELEGATION OF DUTIES. The Administrative Agent may execute any
of its duties under this Agreement or any other Loan Document by or through
agents, employees or attorneys-in-fact and shall be entitled to advice of
counsel and other consultants or experts concerning all matters pertaining to
such duties. The Administrative Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects in the
absence of gross negligence or willful misconduct.

         9.03     LIABILITY OF ADMINISTRATIVE AGENT. No Agent-Related Person
shall (a) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct in connection with its duties expressly set forth herein), or (b) be
responsible in any manner to any Lender or participant for any recital,
statement, representation or warranty made by any Loan Party or any officer
thereof, contained herein or in any other Loan Document, or in any certificate,
report, statement or other document referred to or provided for in, or received
by the Administrative Agent under or in connection with, this Agreement or any
other Loan Document, or the validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document, or for any failure
of any Loan Party or any other party to any Loan Document to perform its
obligations hereunder or thereunder. No Agent-Related Person shall be under any
obligation to any Lender or participant to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of any Loan Party or any Affiliate thereof.

         9.04     RELIANCE BY ADMINISTRATIVE AGENT.

         (a) The Administrative Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, communication, signature,
resolution, representation, notice, consent, certificate, affidavit, letter,
telegram, facsimile, telex, telephone or electronic mail message, statement or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons, and upon advice
and statements of legal counsel (including counsel to any Loan Party),
independent accountants and other experts selected by the Administrative Agent.
The Administrative Agent shall be fully justified in failing or refusing to take
any action under any Loan Document unless it shall first receive such

                                       65



advice or concurrence of the Required Lenders as it deems appropriate and, if it
so requests, it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting, under
this Agreement or any other Loan Document in accordance with a request or
consent of the Required Lenders or all the Lenders, if required hereunder, and
such request and any action taken or failure to act pursuant thereto shall be
binding upon all the Lenders and participants. Where this Agreement expressly
permits or prohibits an action unless the Required Lenders otherwise determine,
the Administrative Agent shall, and in all other instances, the Administrative
Agent may, but shall not be required to, initiate any solicitation for the
consent or a vote of the Lenders.

         (b) For purposes of determining compliance with the conditions
specified in Section 4.01, each Lender that has signed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Administrative Agent to such Lender
for consent, approval, acceptance or satisfaction, or required thereunder to be
consented to or approved by or acceptable or satisfactory to a Lender.

         9.05     NOTICE OF DEFAULT. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal, interest
and fees required to be paid to the Administrative Agent for the account of the
Lenders, unless the Administrative Agent shall have received written notice from
a Lender or the Borrower referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default." The
Administrative Agent will notify the Lenders of its receipt of any such notice.
The Administrative Agent shall take such action with respect to such Default or
Event of Default as may be directed by the Required Lenders in accordance with
Article VIII; provided that unless and until the Administrative Agent has
received any such direction, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable or in the best
interest of the Lenders.

         9.06     CREDIT DECISION; DISCLOSURE OF INFORMATION BY ADMINISTRATIVE
AGENT. Each Lender acknowledges that no Agent-Related Person has made any
representation or warranty to it, and that no act by the Administrative Agent
hereafter taken, including any consent to and acceptance of any assignment or
review of the affairs of any Loan Party or any Affiliate thereof, shall be
deemed to constitute any representation or warranty by any Agent-Related Person
to any Lender as to any matter, including whether Agent-Related Persons have
disclosed material information in their possession. Each Lender represents to
the Administrative Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Loan Parties and their respective Subsidiaries, and all
applicable bank or other regulatory Laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement and
to extend credit to the Borrower and the other Loan Parties hereunder. Each
Lender also represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem

                                       66



appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement and the other
Loan Documents, and to make such investigations as it deems necessary to inform
itself as to the business, prospects, operations, property, financial and other
condition and creditworthiness of the Borrower and the other Loan Parties.
Except for notices, reports and other documents expressly required to be
furnished to the Lenders by the Administrative Agent herein, the Administrative
Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of any of the Loan
Parties or any of their respective Affiliates which may come into the possession
of any Agent-Related Person.

         9.07     INDEMNIFICATION OF ADMINISTRATIVE AGENT. Whether or not the
transactions contemplated hereby are consummated, the Lenders shall indemnify
upon demand each Agent-Related Person (to the extent not reimbursed by or on
behalf of any Loan Party and without limiting the obligation of any Loan Party
to do so), pro rata, and hold harmless each Agent-Related Person from and
against any and all Indemnified Liabilities incurred by it; provided that no
Lender shall be liable for the payment to any Agent-Related Person of any
portion of such Indemnified Liabilities determined in a final, nonappealable
judgment by a court of competent jurisdiction to have been caused primarily by
such Person's own gross negligence or willful misconduct; provided that no
action taken in accordance with the directions of the Required Lenders shall be
deemed to constitute gross negligence or willful misconduct for purposes of this
Section. Without limitation of the foregoing, each Lender shall reimburse the
Administrative Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including reasonable Attorney Costs and costs and
expenses in connection with the use of the Internet, IntraLinks or other similar
information transmission systems in connection with this Agreement) incurred by
the Administrative Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, any other Loan
Document, or any document contemplated by or referred to herein, to the extent
that the Administrative Agent is not reimbursed for such expenses by or on
behalf of the Borrower. The undertaking in this Section shall survive
termination of the Aggregate Commitments, the payment of all Obligations
hereunder and the resignation or replacement of the Administrative Agent.

         9.08     ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY. Bank of
America and its Affiliates may make loans to, issue letters of credit for the
account of, accept deposits from, acquire equity interests in and generally
engage in any kind of banking, trust, financial advisory, underwriting or other
business with each of the Loan Parties and their respective Affiliates as though
Bank of America were not the Administrative Agent or the L/C Issuer hereunder
and without notice to or consent of the Lenders. The Lenders acknowledge that,
pursuant to such activities, Bank of America or its Affiliates may receive
information regarding any Loan Party or its Affiliates (including information
that may be subject to confidentiality obligations in favor of such Loan Party
or such Affiliate) and acknowledge that the Administrative Agent shall be under
no obligation to provide such information to them. With respect to its Loans,
Bank of America shall have the same rights and powers under this Agreement as
any other Lender and may

                                       67



exercise such rights and powers as though it were not the Administrative Agent
or the L/C Issuer, and the terms "Lender" and "Lenders" include Bank of America
in its individual capacity.

         9.09     SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may
resign as Administrative Agent upon 30 days prior notice to the Lenders;
provided that any such resignation by Bank of America shall also constitute its
resignation as L/C Issuer. If the Administrative Agent resigns under this
Agreement, the Required Lenders shall appoint from among the Lenders a successor
administrative agent for the Lenders which successor administrative agent shall
be consented to by the Borrower at all times other than during the existence of
an Event of Default (which consent of the Borrower shall not be unreasonably
withheld or delayed). If no successor administrative agent is appointed prior to
the effective date of the resignation of the Administrative Agent, then the
Administrative Agent may appoint, after consulting with the Lenders and the
Borrower, a successor administrative agent from among the Lenders. Upon the
acceptance of its appointment as successor administrative agent hereunder, the
Person acting as such successor administrative agent shall succeed to all the
rights, powers and duties of the retiring Administrative Agent and L/C Issuer
and the respective terms "Administrative Agent" and "L/C Issuer" shall mean such
successor administrative agent and Letter of Credit issuer, and the retiring
Administrative Agent's appointment, powers and duties as Administrative Agent
shall be terminated and the retiring L/C Issuer's rights, powers and duties as
such shall be terminated, without any other or further act or deed on the part
of such retiring L/C Issuer or any other Lender, other than the obligation of
the successor L/C Issuer to issue letters of credit in substitution for the
Letters of Credit, if any, outstanding at the time of such succession. After any
retiring Administrative Agent's resignation hereunder as Administrative Agent,
the provisions of this Article IX and Sections 10.04 and 10.05 shall inure to
such Person's benefit as to any actions taken or omitted to be taken by it while
it was Administrative Agent under this Agreement. If no successor administrative
agent has accepted appointment as Administrative Agent by the date which is 30
days following a retiring Administrative Agent's notice of resignation, the
retiring Administrative Agent's resignation shall nevertheless thereupon become
effective and the Lenders shall perform all of the duties of the Administrative
Agent hereunder until such time, if any, as the Required Lenders appoint a
successor agent as provided for above.

         9.10     ADMINISTRATIVE AGENT MAY FILE PROOFS OF CLAIM. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to any Loan Party, the Administrative Agent (irrespective of
whether the principal of any Loan or L/C Obligation shall then be due and
payable as herein expressed or by declaration or otherwise and irrespective of
whether the Administrative Agent shall have made any demand on the Borrower)
shall be entitled and empowered, by intervention in such proceeding or otherwise

                  (a)      to file and prove a claim for the whole amount of the
         principal and interest owing and unpaid in respect of the Loans, L/C
         Obligations and all other Obligations that are owing and unpaid and to
         file such other documents as may be necessary or advisable in order to
         have the claims of the Lenders and the Administrative Agent (including
         any claim for the reasonable compensation, expenses, disbursements and
         advances of the Lenders and the Administrative Agent and their
         respective agents and counsel and all

                                       68



         other amounts due the Lenders and the Administrative Agent under
         Sections 2.03(i) and (j), 2.09 and 10.04) allowed in such judicial
         proceeding; and

                  (b)      to collect and receive any monies or other property
         payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Sections 2.08 and 10.04.

         Nothing contained herein shall be deemed to authorize the
Administrative Agent to authorize or consent to or accept or adopt on behalf of
any Lender any plan of reorganization, arrangement, adjustment or composition
affecting the Obligations or the rights of any Lender or to authorize the
Administrative Agent to vote in respect of the claim of any Lender in any such
proceeding.

                                   ARTICLE X.
                               GENERAL PROVISIONS

         10.01    AMENDMENTS, ETC. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent to any departure by
the Borrower or any other Loan Party therefrom, shall be effective unless in
writing signed by the Required Lenders and the Borrower or the applicable Loan
Party, as the case may be, and acknowledged by the Administrative Agent, and
each such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given; provided that no such amendment,
waiver or consent shall, unless in writing and signed by each of the Lenders
directly affected thereby and by the Borrower, and acknowledged by the
Administrative Agent, do any of the following:

         (a) extend or increase the Commitment of any Lender (or reinstate any
Commitment terminated pursuant to Section 8.02);

         (b) postpone any date fixed by this Agreement or any other Loan
Document for any payment or mandatory prepayment of principal, interest, fees or
other amounts due to the Lenders (or any of them) hereunder or under any other
Loan Document;

         (c) reduce the principal of, or the rate of interest specified herein
on, any Loan or L/C Borrowing, or (subject to clause (iii) of the proviso below)
any fees or other amounts payable hereunder or under any other Loan Document, or
change the manner of computation of the Pricing Level Leverage Ratio that would
result in a reduction of any interest rate on any Loan; provided that only the
consent of the Required Lenders shall be necessary to amend the definition of
"Default Rate" contained in Section 1.01 or to waive any obligation of the
Borrower to pay interest at the Default Rate;

                                       69



         (d) change the percentage of the Aggregate Commitments or of the
aggregate unpaid principal amount of the Loans and L/C Obligations which is
required for the Lenders or any of them to take any action hereunder;

         (e) change the Pro Rata Share or Voting Percentage of any Lender
(except for any change resulting from Section 3.06(b));

         (f) amend this Section, or Section 2.12, or any provision herein
providing for consent or other action by all the Lenders; or

         (g) release any Guarantor from the Guaranty;

provided further that (i) no amendment, waiver or consent shall, unless in
writing and signed by the L/C Issuer in addition to the Required Lenders or each
directly-affected Lender, as the case may be, affect the rights or duties of the
L/C Issuer under this Agreement or any Letter of Credit Application relating to
any Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or
consent shall, unless in writing and signed by the Administrative Agent in
addition to the Required Lenders or each directly-affected Lender, as the case
may be, affect the rights or duties of the Administrative Agent under this
Agreement or any other Loan Document; and (iii) the Fee Letter may be amended,
or rights or privileges thereunder waived, in a writing executed only by the
respective parties thereto. Notwithstanding anything to the contrary herein, any
Lender that has a Voting Percentage of zero shall not have any right to approve
or disapprove any amendment, waiver or consent hereunder, except that the Pro
Rata Share of such Lender may not be increased (except for any such increase
resulting from Section 3.06(b)) without the consent of such Lender.

         10.02    NOTICES AND OTHER COMMUNICATIONS; FACSIMILE COPIES.

         (a) General. Unless otherwise expressly provided herein, all notices
and other communications provided for hereunder shall be in writing (including
by facsimile transmission) and mailed, faxed or delivered, to the address,
facsimile number or (subject to subsection (c) below) electronic mail address
specified for notices on Schedule 10.02; or, in the case of the Borrower, the
Administrative Agent or the L/C Issuer, to such other address as shall be
designated by such party in a notice to the other parties, and in the case of
any other party, to such other address as shall be designated by such party in a
notice to the Borrower, the Administrative Agent and the L/C Issuer. All such
notices and other communications shall be deemed to be given or made upon the
earlier to occur of (i) actual receipt by the intended recipient and (ii) (A) if
delivered by hand or by courier, when signed for by the intended recipient; (B)
if delivered by mail, four (4) Business Days after deposit in the mails, postage
prepaid; (C) if delivered by facsimile, when sent and receipt has been confirmed
by telephone; and (D) if delivered by electronic mail (which form of delivery is
subject to the provisions of subsection (c) below), when delivered; provided
that notices and other communications to the Administrative Agent and the L/C
Issuer pursuant to Article II shall be in writing (including by facsimile) and
shall not be effective until actually received by such Person. Any notice or
other communication permitted to be given, made or confirmed by telephone
hereunder shall be given, made or confirmed by means of a telephone call to the
intended recipient at the number specified

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on Schedule 10.02, it being understood and agreed that a voicemail message shall
in no event be effective as a notice, communication or confirmation hereunder.

         (b) Effectiveness of Facsimile Documents and Signatures. Loan Documents
may be transmitted and/or signed by facsimile. The effectiveness of any such
documents and signatures shall, subject to applicable Law, have the same force
and effect as manually-signed originals and shall be binding on all Loan
Parties, the Administrative Agent and the Lenders. The Administrative Agent may
also require that any such documents and signatures be confirmed by a
manually-signed original thereof; provided that the failure to request or
deliver the same shall not limit the effectiveness of any facsimile document or
signature.

         (c) Limited Use of Electronic Mail. Electronic mail and internet and
intranet websites may be used only to distribute routine communications, such as
financial statements (including as required by Section 6.01 and 6.02) and other
information, and to distribute Loan Documents for execution by the parties
thereto, and may not be used for any other purpose.

         (d) Reliance by Administrative Agent and Lenders. The Administrative
Agent and the Lenders shall be entitled to rely and act upon any notices
(including telephonic Loan Notices) purportedly given by or on behalf of the
Borrower even if (i) such notices were not made in a manner specified herein,
were incomplete or were not preceded or followed by any other form of notice
specified herein, or (ii) the terms thereof, as understood by the recipient,
varied from any confirmation thereof. The Borrower shall indemnify each
Agent-Related Person and each Lender from all losses, costs, expenses and
liabilities resulting from the reliance by such Person on each notice
purportedly given by or on behalf of the Borrower. All telephonic notices to and
other communications with the Administrative Agent may be recorded by the
Administrative Agent, and each of the parties hereto hereby consents to such
recording.

         10.03    NO WAIVER; CUMULATIVE REMEDIES. No failure by any Lender or
the Administrative Agent to exercise, and no delay by any such Person in
exercising, any right, remedy, power or privilege hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein or therein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.

         10.04    ATTORNEY COSTS, EXPENSES AND TAXES. The Borrower agrees (a) to
pay or reimburse the Administrative Agent for all costs and expenses incurred in
connection with the development, preparation, negotiation and execution of this
Agreement and the other Loan Documents and any amendment, waiver, consent or
other modification of the provisions hereof and thereof (whether or not the
transactions contemplated hereby or thereby are consummated), and the
consummation and administration of the transactions contemplated hereby and
thereby, including all reasonable Attorney Costs (including non-duplicative
allocated costs of in-house counsel) and costs and expenses in connection with
the use of internet, IntraLinks or other similar information transmission
systems in connection with this Agreement, and (b) to pay or reimburse the
Administrative Agent, the Arranger and each Lender for all costs and expenses
(including Attorney Costs) incurred in connection with the enforcement,
attempted enforcement, or preservation of any rights or remedies under this
Agreement, the other Loan Documents or

                                       71



applicable Law (including all such costs and expenses incurred during any
"workout" or restructuring in respect of the Obligations and during any legal
proceeding, including any proceeding under any Debtor Relief Law). The foregoing
costs and expenses shall include all search, filing, recording, title insurance
and appraisal charges and fees and taxes related thereto, and other
out-of-pocket expenses incurred by the Administrative Agent and the cost of
independent public accountants and other outside experts retained by the
Administrative Agent or any Lender. All amounts due under this Section 10.04
shall be paid within ten Business Days after demand therefor. The agreements in
this Section shall survive the termination of the Aggregate Commitments and
repayment of all other Obligations.

         10.05    INDEMNIFICATION BY THE BORROWER. Whether or not the
transactions contemplated hereby are consummated, the Borrower agrees to
indemnify, save and hold harmless, each Agent-Related Person, each Lender and
their respective Affiliates, directors, officers, employees, counsel, agents and
attorneys-in-fact (collectively the "Indemnitees") from and against: (a) any and
all claims, demands, actions or causes of action that are asserted against any
Indemnitee by any Person (other than the Administrative Agent or any Lender)
relating directly or indirectly to a claim, demand, action or cause of action
that such Person asserts or may assert against any Loan Party, any Affiliate of
any Loan Party or any of their respective officers or directors arising out of
or relating to the Loan Documents, any predecessor loan documents, any
Commitment, the use or contemplated use of the proceeds of any Credit Extension,
or the relationship of any Loan Party, the Administrative Agent and the Lenders
under this Agreement or any other Loan Document, (b) any and all claims,
demands, actions or causes of action that may at any time (including at any time
following repayment of the Obligations and the resignation or removal of the
Administrative Agent or the replacement of any Lender) be asserted or imposed
against any Indemnitee arising out of or relating to the Loan Documents, any
predecessor loan documents, any Commitment, the use or contemplated use of the
proceeds of any Credit Extension, or the relationship of any Loan Party, the
Administrative Agent and the Lenders under this Agreement or any other Loan
Document; (c) any administrative or investigative proceeding by any Governmental
Authority arising out of or related to a claim, demand, action or cause of
action described in subsection (a) or (b) above; and (d) any and all liabilities
(including liabilities under indemnities), losses, costs or expenses (including
Attorney Costs) that any Indemnitee suffers or incurs as a result of the
assertion of any foregoing claim, demand, action, cause of action or proceeding,
or as a result of the preparation of any defense in connection with any
foregoing claim, demand, action, cause of action or proceeding, in all cases,
whether or not arising out of the negligence of an Indemnitee, and whether or
not an Indemnitee is a party to such claim, demand, action, cause of action or
proceeding (all the foregoing, collectively, the "Indemnified Liabilities");
provided that no Indemnitee shall be entitled to indemnification for any claim
determined in a final, nonappealable judgment by a court of competent
jurisdiction to have been caused primarily by its own gross negligence or
willful misconduct or for any loss asserted against it by another Indemnitee. No
Indemnitee shall be liable for any damages arising from the use by others of any
information or other materials obtained through internet, IntraLinks or other
similar information transmission systems in connection with this Agreement. All
amounts due under this Section 10.05 shall be paid within ten Business Days
after demand therefor. The agreements in this Section shall survive the
termination of the Aggregate Commitments and repayment of all other Obligations.

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         10.06    PAYMENTS SET ASIDE. To the extent that the Borrower makes a
payment to the Administrative Agent or any Lender, or the Administrative Agent
or any Lender exercises its right of set-off, and such payment or the proceeds
of such set-off or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by the Administrative Agent or such Lender in its
discretion) to be repaid to a trustee, receiver or any other party, in
connection with any proceeding under any Debtor Relief Law or otherwise, then
(a) to the extent of such recovery, the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such set-off had not occurred, and (b)
each Lender severally agrees to pay to the Administrative Agent upon demand its
applicable share of any amount so recovered from or repaid by the Administrative
Agent, plus interest thereon from the date of such demand to the date such
payment is made at a rate per annum equal to the Federal Funds Rate from time to
time in effect.

         10.07    SUCCESSORS AND ASSIGNS.

         (a) The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that the Borrower may not assign or otherwise transfer
any of its rights or obligations hereunder without the prior written consent of
each Lender (and any attempted assignment or transfer by the Borrower without
such consent shall be null and void). Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby and, to the
extent expressly contemplated hereby, the Indemnitees) any legal or equitable
right, remedy or claim under or by reason of this Agreement.

         (b) Any Lender may, with the prior written consent of the
Administrative Agent and, so long as no Default or Event of Default has occurred
and is continuing, the Borrower (whose consent, if required, shall not be
unreasonably withheld or delayed), assign to one or more Eligible Assignees all
or a portion of its rights and obligations under this Agreement (including all
or a portion of its Commitment and the Loans (including for purposes of this
subsection (b), participations in L/C Obligations) at the time owing to it);
provided that (i) except in the case of an assignment of the entire remaining
amount of the assigning Lender's Commitment and the Loans at the time owing to
it or in the case of an assignment to a Lender or an Affiliate of a Lender or an
Approved Fund with respect to a Lender, the aggregate amount of the Commitment
(which for this purpose includes Loans outstanding hereunder) subject to each
such assignment, determined as of the date the Assignment and Assumption
Agreement with respect to such assignment is delivered to the Administrative
Agent, shall not be less than $5,000,000 unless the Administrative Agent and, so
long as no Default or Event of Default has occurred and is continuing, the
Borrower otherwise consents (each such consent not to be unreasonably withheld
or delayed), (ii) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender's rights and obligations under
this Agreement with respect to the Loans or the Commitment assigned and (iii)
the parties to each assignment shall execute and deliver to the Administrative
Agent an Assignment and Assumption Agreement and shall pay to the Administrative
Agent a processing and recordation fee in an amount equal to $3,500. Subject to
acceptance and recording thereof by the Administrative Agent pursuant to
subsection (c) of this Section, from and after the effective date specified in
each Assignment and Assumption

                                       73



Agreement, the Eligible Assignee thereunder shall be a party hereto and, to the
extent of the interest assigned by such Assignment and Assumption Agreement,
have the rights and obligations of a Lender under this Agreement, and the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Assumption Agreement, be released from its obligations under
this Agreement (and, in the case of an Assignment and Assumption Agreement
covering all of the assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto but shall continue to be
entitled to the benefits of Article III and Sections 10.04 and 10.05). Upon
request, the Borrower (at its expense) shall execute and deliver new or
replacement Notes to the assigning Lender and the assignee Lender. Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this subsection shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with subsection (d) of this Section.

         (c) The Administrative Agent, acting solely for this purpose as an
agent of the Borrower, shall maintain at the Administrative Agent's Office a
copy of each Assignment and Assumption Agreement delivered to it and a register
for the recordation of the names and addresses of the Lenders, and the
Commitments of, and principal amount of the Loans and L/C Obligations owing to,
each Lender pursuant to the terms hereof from time to time (the "Register"). The
entries in the Register shall be conclusive, and the Borrower, the
Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by the Borrower and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.

         (d) Any Lender may, without the consent of, or notice to, the Borrower
or the Administrative Agent, sell participations to one or more banks or other
Persons (a "Participant") in all or a portion of such Lender's rights and/or
obligations under this Agreement (including all or a portion of its Commitment
and/or Loans (including such Lender's participations in L/C Obligations) owing
to it); provided that (i) such Lender's obligations under this Agreement shall
remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (iii) the Borrower,
the Administrative Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, waiver or other modification
that would (i) postpone any date upon which any payment of money is scheduled to
be paid to such Participant, (ii) reduce the principal, interest, fees or other
amounts payable to such Participant or (iii) release any Guarantor from the
Guaranty. Subject to subsection (e) of this Section, the Borrower agrees that
each Participant shall be entitled to the benefits of Sections 3.01, 3.04 and
3.05 to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to subsection (b) of this Section. To the extent permitted
by law, each Participant also shall be entitled to the benefits of Section 10.09
as though it were a Lender, provided such Participant agrees to be subject to
Section 2.12 as though it were a Lender.

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         (e) A Participant shall not be entitled to receive any greater payment
under Section 3.01 or 3.04 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with the Borrower's
prior written consent. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 3.01 unless the Borrower
is notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply with Section 10.15 as though
it were a Lender.

         (f) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement (including under its
Notes, if any) to secure obligations of such Lender, including any pledge or
assignment to secure obligations to a Federal Reserve Bank; provided that no
such pledge or assignment shall release a Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party
hereto.

         (g) If the consent of the Borrower to an assignment or to an Eligible
Assignee is required hereunder (including a consent to an assignment which does
not meet the minimum assignment threshold specified in clause (i) of the proviso
to the first sentence of Section 10.07(b)), the Borrower shall be deemed to have
given its consent five (5) Business Days after the date notice thereof has been
delivered by the assigning Lender (through the Administrative Agent) unless such
consent is expressly refused by the Borrower prior to such fifth (5th) Business
Day.

         (h) As used herein, the following terms have the following meanings:

                  "Approved Fund" means any Fund that is administered or managed
         by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an
         Affiliate of an entity that administers or manages a Lender.

                  "Eligible Assignee" means (a) a Lender; (b) an Affiliate of a
         Lender; (c) an Approved Fund; and (d) any other Person (other than a
         natural Person) approved by (i) the Administrative Agent, in the case
         of any assignment of a Loan, (ii) the L/C Issuer, and (iii) unless (A)
         such Person is taking delivery of an assignment in connection with
         physical settlement of a credit derivatives transaction or (B) an Event
         of Default has occurred and is continuing, the Borrower (each such
         approval referred to in clauses (i) through (iii) not to be
         unreasonably withheld or delayed).

                  "Fund" means any Person (other than a natural Person) that is
         (or will be) engaged in making, purchasing, holding or otherwise
         investing in commercial loans and similar extensions of credit in the
         ordinary course of its business.

         (i) Notwithstanding anything to the contrary contained herein, if at
any time Bank of America assigns all of its Commitment and Loans pursuant to
subsection (b) above, Bank of America may, upon 30 days prior written notice to
the Borrower and the Lenders, resign as L/C Issuer. In the event of any such
resignation as L/C Issuer, the Borrower shall be entitled to appoint from among
the Lenders a successor L/C Issuer hereunder, provided that no failure by the
Borrower to appoint any such successor shall affect the resignation of Bank of
America as L/C Issuer. Bank of America shall retain all of the rights and
obligations of the L/C Issuer hereunder with respect to all Letters of Credit
outstanding as of the effective date of its

                                       75



resignation as L/C Issuer and all L/C Obligations with respect thereto
(including the right to require the Lenders to make Base Rate Loans or fund
participations in Unreimbursed Amounts pursuant to Section 2.03(c)). Until such
time, if at all, as Bank of America shall have resigned as "L/C Issuer"
hereunder, no other Person shall be, shall be entitled to be or shall be deemed
to be an "L/C Issuer" or additional or co- "L/C Issuer" hereunder.

         10.08    CONFIDENTIALITY. Each of the Administrative Agent and the
Lenders agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its and its Affiliates'
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential); (b) to the extent requested
by any regulatory authority; (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process; (d) to any other party
to this Agreement; (e) in connection with the exercise of any remedies hereunder
or any suit, action or proceeding relating to this Agreement or the enforcement
of rights hereunder; (f) subject to an agreement containing provisions
substantially the same as those of this Section, to (i) any Eligible Assignee of
or Participant in, or any prospective Eligible Assignee of or Participant in,
any of its rights or obligations under this Agreement or (ii) any direct or
indirect contractual counterparty or prospective counterparty (or such
contractual counterparty's or prospective counterparty's professional advisor)
to any credit derivative or securitization transaction relating to obligations
of the Borrower; (g) with the consent of the Borrower; (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section or (ii) becomes available to the Administrative Agent or any Lender
on a non-confidential basis from a source other than the Borrower; or (i) to the
National Association of Insurance Commissioners or any other similar
organization or any nationally recognized rating agency that requires access to
information about a Lender's or its Affiliates' investment portfolio in
connection with ratings issued with respect to such Lender or its Affiliates. In
addition, the Administrative Agent and the Lenders may disclose the existence of
this Agreement and information about this Agreement to market data collectors,
similar service providers to the lending industry, and service providers to the
Administrative Agent and the Lenders in connection with the administration and
management of this Agreement, the other Loan Documents, the Commitments, and the
Credit Extensions. For the purposes of this Section, "Information" means all
information received from the Borrower relating to the Borrower or its business,
other than any such information that is available to the Administrative Agent or
any Lender on a non-confidential basis prior to disclosure by the Borrower;
provided that, in the case of information received from the Borrower after the
date hereof, such information is clearly identified in writing at the time of
delivery as confidential. Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information. Notwithstanding anything herein to
the contrary, "Information" shall not include, and the Administrative Agent and
the Lenders may disclose without limitation of any kind, any information with
respect to the "tax treatment" and "tax structure" (in each case, within the
meaning of Treasury Regulation Section 1.6011-4) of the transactions
contemplated hereby and all materials of any kind (including opinions or other
tax analyses) that are provided to the Administrative Agent and the Lenders
relating to such tax treatment and tax structure; provided

                                       76



that with respect to any document or similar item that in either case contains
information concerning the tax treatment or tax structure of the transaction as
well as other information, this sentence shall only apply to such portions of
the document or similar item that relate to the tax treatment or tax structure
of the Loans, Letters of Credit and transactions contemplated hereby.

         10.09    SET-OFF. In addition to any rights and remedies of the Lenders
provided by law, upon the occurrence and during the continuance of any Event of
Default, each Lender is authorized at any time and from time to time, without
prior notice to the Borrower or any other Loan Party, any such notice being
waived by the Borrower (on its own behalf and on behalf of each Loan Party) to
the fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held by,
and other indebtedness at any time owing by, such Lender to or for the credit or
the account of the respective Loan Parties against any and all Obligations owing
to such Lender, now or hereafter existing, irrespective of whether or not the
Administrative Agent or such Lender shall have made demand under this Agreement
or any other Loan Document and although such Obligations may be contingent or
unmatured. Each Lender agrees promptly to notify the Borrower and the
Administrative Agent after any such set-off and application made by such Lender;
provided that the failure to give such notice shall not affect the validity of
such set-off and application.

         10.10    INTEREST RATE LIMITATION. Notwithstanding anything to the
contrary contained in any Loan Document, the interest paid or agreed to be paid
under the Loan Documents shall not exceed the maximum rate of non-usurious
interest permitted by applicable Law (the "Maximum Rate"). If the Administrative
Agent or any Lender shall receive interest in an amount that exceeds the Maximum
Rate, the excess interest shall be applied to the principal of the Loans or, if
it exceeds such unpaid principal, refunded to the Borrower. In determining
whether the interest contracted for, charged, or received by the Administrative
Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent
permitted by applicable Law, (a) characterize any payment that is not principal
as an expense, fee, or premium rather than interest, (b) exclude voluntary
prepayments and the effects thereof, and (c) amortize, prorate, allocate, and
spread in equal or unequal parts the total amount of interest throughout the
contemplated term of the Obligations.

         10.11    COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

         10.12    INTEGRATION. This Agreement, together with the other Loan
Documents, comprises the complete and integrated agreement of the parties on the
subject matter hereof and thereof and supersedes all prior agreements, written
or oral, on such subject matter. In the event of any conflict between the
provisions of this Agreement and those of any other Loan Document, the
provisions of this Agreement shall control; provided that the inclusion of
supplemental rights or remedies in favor of the Administrative Agent or the
Lenders in any other Loan Document shall not be deemed a conflict with this
Agreement. Each Loan Document was drafted with the joint participation of the
respective parties thereto and shall be construed neither against nor in favor
of any party, but rather in accordance with the fair meaning thereof.

                                       77



         10.13    SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made hereunder and in any other Loan Document or
other document delivered pursuant hereto or thereto or in connection herewith or
therewith shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by the
Administrative Agent and each Lender, regardless of any investigation made by
the Administrative Agent or any Lender or on their behalf and notwithstanding
that the Administrative Agent or any Lender may have had notice or knowledge of
any Default or Event of Default at the time of any Credit Extension, and shall
continue in full force and effect as long as any Loan or any other Obligation
shall remain unpaid or unsatisfied or any Letter of Credit shall remain
outstanding.

         10.14    SEVERABILITY. Any provision of this Agreement and the other
Loan Documents to which the Borrower is a party that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions thereof, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.

         10.15    FOREIGN LENDERS. (a) (i) Each Lender that is not a "United
         States person" within the meaning of Section 7701(a)(30) of the Code (a
         "Foreign Lender") shall deliver to the Administrative Agent, prior to
         receipt of any payment subject to withholding under the Code (or upon
         accepting an assignment of an interest herein), two duly signed
         completed copies of either IRS Form W-8BEN or any successor thereto
         (relating to such Foreign Lender and entitling it to an exemption from,
         or reduction of, withholding tax on all payments to be made to such
         Foreign Lender by the Borrower pursuant to this Agreement) or IRS Form
         W-8ECI or any successor thereto (relating to all payments to be made to
         such Foreign Lender by the Borrower pursuant to this Agreement) or such
         other evidence satisfactory to the Borrower and the Administrative
         Agent that such Foreign Lender is entitled to an exemption from, or
         reduction of, U.S. withholding tax, including any exemption pursuant to
         Section 881(c) of the Code. Thereafter and from time to time, each such
         Foreign Lender shall (A) promptly submit to the Administrative Agent
         such additional duly completed and signed copies of one of such forms
         (or such successor forms as shall be adopted from time to time by the
         relevant United States taxing authorities) as may then be available
         under then current United States laws and regulations to avoid, or such
         evidence as is satisfactory to the Borrower and the Administrative
         Agent of any available exemption from or reduction of, United States
         withholding taxes in respect of all payments to be made to such Foreign
         Lender by the Borrower pursuant to this Agreement, (B) promptly notify
         the Administrative Agent of any change in circumstances which would
         modify or render invalid any claimed exemption or reduction, and (C)
         take such steps as shall not be materially disadvantageous to it, in
         the reasonable judgment of such Lender, and as may be reasonably
         necessary (including the re-designation of its Lending Office) to avoid
         any requirement of applicable Laws that the Borrower make any deduction
         or withholding for taxes from amounts payable to such Foreign Lender.

                  (ii)     Each Foreign Lender, to the extent it does not act or
         ceases to act for its own account with respect to any portion of any
         sums paid or payable to such Lender

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         under any of the Loan Documents (for example, in the case of a typical
         participation by such Lender), shall deliver to the Administrative
         Agent on the date when such Foreign Lender ceases to act for its own
         account with respect to any portion of any such sums paid or payable,
         and at such other times as may be necessary in the determination of the
         Administrative Agent (in the reasonable exercise of its discretion),
         (A) two duly signed completed copies of the forms or statements
         required to be provided by such Lender as set forth above, to establish
         the portion of any such sums paid or payable with respect to which such
         Lender acts for its own account that is not subject to U.S. withholding
         tax, and (B) two duly signed completed copies of IRS Form W-8IMY (or
         any successor thereto), together with any information such Lender
         chooses to transmit with such form, and any other certificate or
         statement of exemption required under the Code, to establish that such
         Lender is not acting for its own account with respect to a portion of
         any such sums payable to such Lender.

                  (iii)    The Borrower shall not be required to pay any
         additional amount to any Foreign Lender under Section 3.01 (A) with
         respect to any Taxes required to be deducted or withheld on the basis
         of the information, certificates or statements of exemption such Lender
         transmits with an IRS Form W-8IMY pursuant to this Section 10.15(a) or
         (B) if such Lender shall have failed to satisfy the foregoing
         provisions of this Section 10.15(a); provided that if such Lender shall
         have satisfied the requirement of this Section 10.15(a) on the date
         such Lender became a Lender or ceased to act for its own account with
         respect to any payment under any of the Loan Documents, nothing in this
         Section 10.15(a) shall relieve the Borrower of its obligation to pay
         any amounts pursuant to Section 3.01 in the event that, as a result of
         any change in any applicable law, treaty or governmental rule,
         regulation or order, or any change in the interpretation,
         administration or application thereof, such Lender is no longer
         properly entitled to deliver forms, certificates or other evidence at a
         subsequent date establishing the fact that such Lender or other Person
         for the account of which such Lender receives any sums payable under
         any of the Loan Documents is not subject to withholding or is subject
         to withholding at a reduced rate.

                  (iv)     The Administrative Agent may, without reduction,
         withhold any Taxes required to be deducted and withheld from any
         payment under any of the Loan Documents with respect to which the
         Borrower is not required to pay additional amounts under this Section
         10.15(a).

         (b) Upon the request of the Administrative Agent, each Lender that is a
"United States person" within the meaning of Section 7701(a)(30) of the Code
shall deliver to the Administrative Agent two duly signed completed copies of
IRS Form W-9. If such Lender fails to deliver such forms, then the
Administrative Agent may withhold from any interest payment to such Lender an
amount equivalent to the applicable back-up withholding tax imposed by the Code,
without reduction.

         (c) If any Governmental Authority asserts that the Administrative Agent
did not properly withhold or backup withhold, as the case may be, any tax or
other amount from payments made to or for the account of any Lender, such Lender
shall indemnify the Administrative Agent therefor, including all penalties and
interest, any taxes imposed by any jurisdiction on the

                                       79



amounts payable to the Administrative Agent under this Section, and costs and
expenses (including Attorney Costs) of the Administrative Agent. The obligation
of the Lenders under this Section shall survive the termination of the Aggregate
Commitments, repayment of all other Obligations hereunder and the resignation of
the Administrative Agent.

         10.16    REMOVAL AND REPLACEMENT OF LENDERS.

         (a) Under any circumstances set forth herein providing that the
Borrower shall have the right to remove or replace a Lender as a party to this
Agreement, the Borrower may, upon notice to such Lender and the Administrative
Agent, (i) remove such Lender by terminating such Lender's Commitment or (ii)
replace such Lender by causing such Lender to assign its Commitment (without
payment of any assignment fee) pursuant to Section 10.07(b) to one or more other
Lenders or Eligible Assignees procured by the Borrower; provided that if the
Borrower elects to exercise such right with respect to any Lender pursuant to
Section 3.06(b), it shall be obligated to remove or replace, as the case may be,
all Lenders that have made similar requests for compensation pursuant to Section
3.01 or 3.04. The Borrower shall (x) pay in full all principal, interest, fees
and other amounts owing to such Lender through the date of removal or
replacement (including any amounts payable pursuant to Section 3.05), (y)
provide appropriate assurances and indemnities (which may include letters of
credit) to the L/C Issuer as each may reasonably require with respect to any
continuing obligation to purchase participation interests in any L/C Obligations
then outstanding, and (z) release such Lender from its obligations under the
Loan Documents. Any Lender being replaced shall execute and deliver an
Assignment and Assumption Agreement with respect to such Lender's Commitment and
outstanding Credit Extensions. The Administrative Agent shall distribute an
amended Schedule 2.01, which shall be deemed incorporated into this Agreement,
to reflect changes in the identities of the Lenders and adjustments of their
respective Commitments and/or Pro Rata Shares resulting from any such removal or
replacement.

         (b) In order to make all the Lenders' interests in any outstanding
Credit Extensions ratable in accordance with any revised Pro Rata Shares after
giving effect to the removal or replacement of a Lender, the Borrower shall pay
or prepay, if necessary, on the effective date thereof, all outstanding Loans of
all Lenders, together with any amounts due under Section 3.05. The Borrower may
then request Loans from the Lenders in accordance with their revised Pro Rata
Shares. The Borrower may net any payments required hereunder against any funds
being provided by any Lender or Eligible Assignee replacing a terminating
Lender. The effect for purposes of this Agreement shall be the same as if
separate transfers of funds had been made with respect thereto.

         (c) This section shall supersede any provision in Section 10.01 to the
contrary.

         10.17    GOVERNING LAW.

         (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE ADMINISTRATIVE AGENT AND
EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

                                       80



         (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA
SITTING IN THE CITY AND COUNTY OF SAN FRANCISCO, CALIFORNIA OR OF THE UNITED
STATES FOR THE NORTHERN DISTRICT OF SUCH STATE, AND, BY EXECUTION AND DELIVERY
OF THIS AGREEMENT, THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH
LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING
OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION
IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO. THE BORROWER,
THE ADMINISTRATIVE AGENT AND EACH LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
THE LAW OF SUCH STATE.

         10.18    WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT
OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

         10.19    TIME OF THE ESSENCE.

         Time is of the essence as to the Loan Documents.

            [The remainder of this page is intentionally left blank.]

                                       81



         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.

                                        GRANITE CONSTRUCTION
                                        INCORPORATED,
                                        a Delaware corporation, as the Borrower

                                        By:        /s/ William G. Dorey
                                           ------------------------------------
                                        Name:      William G. Dorey
                                        Title:     President

                                        By:        /s/ William E. Barton
                                           ------------------------------------
                                        Name:      William E. Barton
                                        Title:     Chief Financial Officer

                      (Signature Page to Credit Agreement)

                                       S-1



                                        BANK OF AMERICA, N.A., as Administrative
                                        Agent, as a Lender and as L/C Issuer

                                        By:        /s/ Kenneth J. Beck
                                           -------------------------------------
                                        Name:      Kenneth J. Beck
                                        Title:     Principal

                      (Signature Page to Credit Agreement)

                                       S-2



                                        UNION BANK OF CALIFORNIA, N.A., as a
                                        Lender

                                        By:        /s/ William E. Hinch
                                           -------------------------------------
                                        Name:      William E. Hinch
                                        Title:     Vice President

                      (Signature Page to Credit Agreement)

                                       S-3



                                        US BANK NATIONAL ASSOCIATION, as a
                                        Lender

                                        By:        /s/ Dan Stevens
                                           -------------------------------------
                                        Name:      Dan Stevens
                                        Title:     Vice President

                      (Signature Page to Credit Agreement)

                                       S-4



                                        WASHINGTON MUTUAL BANK, as a Lender

                                        By:        /s/ Gary Perkins
                                           -------------------------------------
                                        Name:      Gary Perkins
                                        Title:     Vice President

                      (Signature Page to Credit Agreement)

                                       S-5



                                        COMERICA BANK, as a Lender

                                        By:        /s/ Elise M. Walker
                                           -------------------------------------
                                        Name:      Elise M. Walker
                                        Title:     Assistant Vice President

                      (Signature Page to Credit Agreement)

                                       S-6



                                        HARRIS TRUST AND SAVINGS BANK, as a
                                        Lender

                                        By:        /s/ Isabella Battista
                                           -------------------------------------
                                        Name:      Isabella Battista
                                        Title:     Vice President

                      (Signature Page to Credit Agreement)

                                       S-7



                                        BNP PARIBAS, as a Lender

                                        By:        /s/ Sandra F. Bertram
                                           -------------------------------------
                                        Name:      Sandra F. Bertram
                                        Title:     Vice President

                                        By:        /s/ Debra H. Wright
                                           -------------------------------------
                                        Name:      Debra Wright
                                        Title:     Vice President

                      (Signature Page to Credit Agreement)

                                       S-8



                                SCHEDULE 1.01 (e)

                           EXISTING LETTERS OF CREDIT



L/C NO.    ORIGINAL ISSUE DATE        BENEFICIARY           EXPIRY DATE          FACE AMOUNT AS OF 06/27/03
                                                                     
 1171          6/29/1996          State of California        3/15/2004                 1,293,390.00
                                  Self Insurance Plans


                                SCHEDULE 1.01 (e)

                                     Page 1



                                SCHEDULE 1.01(g)

                                   GUARANTORS

Granite Construction Company, a California corporation
Granite Land Company, a California corporation
Intermountain Slurry Seal, Inc., a Wyoming corporation
Pozzolan Products Company (P.P.C.) (dba Garco Testing), a Utah corporation
GILC, L.P., a California limited partnership
Granite Halmar Construction Company, Inc., a New York corporation

                                SCHEDULE 1.01 (g)

                                     Page 1


                                  SCHEDULE 2.01

                         COMMITMENTS AND PRO RATA SHARES



        LENDER                     COMMITMENT           PRO RATA SHARE
                                                  
Bank of America, N.A.              17,500,000                17.5%
Union Bank of California           17,500,000                17.5%
US Bank                            15,000,000                15.0%
BMO/Harris Bank                    15,000,000                15.0%
BNP Paribas                        15,000,000                15.0%
Comerica Bank                      10,000,000                10.0%
Washington Mutual                  10,000,000                10.0%
TOTAL                             100,000,000               100.0%


                                  Schedule 2.01
                                     Page 1



                                SCHDULE 5.05 (c)

                                  PROJECT DEBT



                                                                  INTEREST                                                 BALANCE
          OBLIGOR                          PAYEE                    Rate                     TERMS                        04/30/03
                                                                                                            
Presidio Vista I, LTD          Dell USA, L.P., a Texas limited      7.50%      Interest only, payable semi-annually,       4,003,877
                               partnership                                          principal due at 02/11/2008

Phase 1 Regional Park Limited  Sacramento City Employee             7.30%     25 year amortization, balloon 09/01/2008    11,311,577
                               Retirement Systems

Phase 1 Regional Park Limited  GE Capital Business Asset Fund       8.15%     30 year amortization, balloon 09/01/2010    18,858,850

Phase 1 Regional Park Limited  Northwest Mutual Life Insurance      7.25%     25 year amortization, balloon 09/01/2021    17,935,273


Phase 1 Regional Park Limited  Northwest Mutual Life Insurance      6.03%     25 year amortization, balloon 09/01/2018    18,913,776


Oly/Mandalay Bay, General      Granite/Mandalay Bay Finance,       20.00%      Interest is deferred and paid when the      2,550,000
Partnership                    LLC                                                        project is sold

Oly/Mandalay Bay, General      Santa Barbara Bank & Trust       Prime Rate +   Interest only, payable semi annually,       3,850,791
Partnership                                                          1.5%           principal due at 01/01/2004

Oly/Mandalay Bay, General      Oly/Granite, GP                     17.00%      Interest is deferred and paid when the     12,416,024
Partnership                                                                               project is sold

Oly/Mandalay Bay, General      Oly/Granite, GP                     17.00%      Interest is deferred and paid when the      1,379,558
Partnership                                                                               project is sold

                                                                                                                        $ 91,219,726


                                Schedule 5.05(c)
                                     Page 1



                                  SCHEDULE 5.06

                                   LITIGATION



          DEFENDANT                          NATURE OF CASE                               COMMENTS
                                                                          
USA ex rel Maxfield/Peterson   False Claims Act arising from I-15, Salt Lake    See 12/31/02 10-K or 03/31/03
vs. Wasatch/GCCo               City, UT construction contract                   10-Q for more information


                                  Schedule 5.06
                                     Page 1



                                  SCHEDULE 5.09

                              ENVIRONMENTAL MATTERS

Granite Construction in the normal course of business utilizes petroleum
(hydrocarbon) products which may be considered hazardous materials when
encountered at regulatory levels established by the Federal EPA or the Regional
State EPA. The utilization of these asphalt products, diesel, and gasoline over
the years of operations have the potential of creating exposure to environmental
clean up requirements. All underground tanks meet current requirements. There
are no pending governmental ordered clean up requirements. However, the
following represents estimates based on construction industry housekeeping
practices as encountered during our normal course of business. Except as
indicated with an " * ", these costs do not represent actual identified
exposures. Items indicated with an " * " are carried on the books as a
liability.



- ----------------------------------------------------------------------------------------------------
    LOCATIONS                                    DESCRIPTION                                  AMOUNT
- ----------------------------------------------------------------------------------------------------
                                                                                       
Anchorage, AK                           Surface Spills, wash rack facilities                  60,000
Anchorage, AK                           Surface Spills, former AC Plant                       17,500
Huachuca City, AZ                       Surface Spills, AC Plant                              15,000
Marana, AZ                              Surface Spills, AC Plant                              15,000
Tucson, AZ                              Surface Spills                                        10,000
Tucson, AZ                              AC Plant                                              25,000
29 Palms, CA                         *  Surface Spills, AC Plant                               4,409
Arcata, CA                           *  Surface Spills, AC Plant                             236,000
Arvin, CA                               Surface Spills, AC Plant                              25,000
Bakersfield, CA                         Surface Spills, AC Plant                             250,000
Bishop, CA                              Surface Spills, AC Plant                              15,000
Buelton, CA                             Surface Spills, AC Plant                              50,000
City of Blue Lake, CA                   Surface Spills                                        40,000
Coalinga, CA                            Surface Spills, AC Plant                              50,000
Concord, CA                             Surface Spills, AC Plant                              35,000
Crescent City, CA                    *  Surface Spills, AC Plant                             682,836
Ducor, CA                            *  Surface Spills, AC Plant                              12,529
El Centro, CA                           Surface Spills, AC Plant                              25,000
Felton, Ca                              Surface Spills, AC Plant                             100,000
French Camp, CA                         Surface Spills, AC Plant, old fill material          500,000
Highway 175, CA                      *  Surface Spills, AC Plant                             150,000
Indio, CA                               Surface Spills, AC Plant                              25,000
Inyokern, CA                            Surface Spills, AC Plant                              25,000
Kelseyville, CA                      *  Surface Spills, AC Plant                             873,000
Lee Vining, CA                          Surface Spills, AC Plant                              15,000
Littlerock, CA                          Surface Spills, AC Plant                              25,000
Longvale, CA                         *  Surface Spills, AC Plant                             274,000
Los Banos, CA                           AC Plant                                              10,000
Pleasanton, CA                          AC Plant                                              10,000
- ----------------------------------------------------------------------------------------------------


                                  Schedule 5.09
                                     Page 1



Granite Construction in the normal course of business utilizes petroleum
(hydrocarbon) products which may be considered hazardous materials when
encountered at regulatory levels established by the Federal EPA or the Regional
State EPA. The utilization of these asphalt products, diesel, and gasoline over
the years of operations have the potential of creating exposure to environmental
clean up requirements. All underground tanks meet current requirements. There
are no pending governmental ordered clean up requirements. However, the
following represents estimates based on construction industry housekeeping
practices as encountered during our normal course of business. Except as
indicated with an " * ", these costs do not represent actual identified
exposures. Items indicated with an " * " are carried on the books as a
liability.



- -----------------------------------------------------------------------------------------------------
    LOCATIONS                                    DESCRIPTION                                  AMOUNT
- -----------------------------------------------------------------------------------------------------
                                                                                     
Rio Linda, CA                           Surface Spills, AC Plant                               50,000
Sacramento, CA                          Surface Spills, AC Plant                              500,000
Salinas, CA                             Surface Spills, AC Plant                               10,000
Salinas, CA                             Former Underground Storage Tanks                      200,000
San Jose, CA                            Surface Spills                                         10,000
Santa Barbara, CA                       Surface Spills                                         25,000
Tracy, CA                               Surface Spills, AC Plant                               25,000
Ukiah, CA                            *  Surface Spills, AC Plant                              430,000
Watsonville, CA                         Surface Spills                                         35,000
Watsonville, CA                         Former Underground Storage Tanks                       35,000
Tampa, FL                               Surface Spills                                         75,000
Odenton, MD                             Surface Spills                                        100,000
Carson City, NV                         Surface Spills, AC Plant                               10,000
Lockwood, NV                            Surface Spills, AC Plant                               50,000
Sparks, NV                              Surface Spills, AC Plant                              100,000
Wappinger Falls, NY                     Surface Spills                                        100,000
Lubbock, TX                             Surface Spills, AC Plant                              100,000
Lubbock, TX                             Surface Spills                                         75,000
Lubbock, TX                             Surface Spills                                         50,000
Morgan County, UT                       Surface Spills                                         10,000
North Ogden, UT                         Old fill material                                     250,000
Ogden, UT                            *  Former Webb AC Plant                                  723,377
Salt City, UT                        *  Former 2200 North AC Plant                            132,363
Salt Lake City, UT                      AC Plant                                              150,000
Salt Lake City, UT                      Surface Spills                                         50,000
Salt Lake City, UT                   *  Former Whitehill AC Plant                              25,288
Sandy City, UT                          Surface Spills, AC Plant                              100,000
Kearns, UT                           *  Surface Spills, AC Plant                               12,529
Wasatch County, UT                      Surface Spills, AC Plant                               10,000
West Haven, UT                          Surface Spills, AC Plant                               25,000
Bellington, WA                          Hannegan surface spills, AC Plant, shop               500,000
Everett, WA                             Surface Spills, AC Plant                              100,000
Whatcom County, WA                      Former AC Plant                                       260,000
Whatcom County, WA                      Former UST and shop area                               17,500
- -----------------------------------------------------------------------------------------------------
                                                                                           $7,921,331
                                                                                           ----------





                        SCHEDULE 5.13(a) PART (1) AND (2)
                    SUBSIDIARIES AND OTHER EQUITY INVESTMENTS



                                                       JURISDICTION OF                                 OWNERSHIP BY COMPANY AND/OR
                     NAME                               ORGANIZATION        CAPITAL STRUCTURE                   SUBSIDIARY
                                                                                                        NAME     OWNERSHIP  POSITION
                                                                                                             
S Granite Construction International                     California               C Corp                GCI       100.00%   investor
S Granite Construction Company ("GCCo")                  California               C Corp                GCI       100.00%   investor
    S Wilder Construction Company ("Wilder")             Washington               C Corp                GCCo       60.04%   investor
          S Wilder Realty                                Washington               C Corp               Wilder     100.00%   investor
          S Wilder Washington                            Washington               C Corp               Wilder     100.00%   investor
            Axton Aggregate Partnership                  Washington        General Partnership         Wilder      50.00%      GP
            Axton Aggregate Company                      Washington        General Partnership         Wilder      50.00%      GP
            HLA / Wilder, a Joint Venture                Washington     Construction Joint Venture     Wilder      55.00%   partner
      Largo Properties, LLC                               Maryland      Limited Liability Company       GCCo       33.30%    member
      Riverside Motorsports Park, LLC                    California     Limited Liability Company       GCCo        2.50%    member
      California Corridor Constructors, a
       Joint Venture                                     California     Construction Joint Venture      GCCo       30.00%   partner
      Granite Kiewit, a Joint Venture                      Montana      Construction Joint Venture      GCCo       76.00%   sponsor
      Granite2-Sundt, a Joint Venture                      Arizona      Construction Joint Venture      GCCo       65.00%   sponsor
    L Granite-Frontier Kemper, a Joint Venture            Arkansas      Construction Joint Venture      GCCo       82.00%   sponsor
    L Granite-Meyers, a Joint Venture                    California     Construction Joint Venture      GCCo       41.20%   managing
    L Granite-PCL, a Joint Venture                         Florida      Construction Joint Venture      GCCo       64.70%   sponsor
      Granite-Rizzani de Eccher, a Joint Venture           Florida      Construction Joint Venture      GCCo       60.00%   sponsor
      Granite-Sundt, a Joint Venture                       Arizona      Construction Joint Venture      GCCo       55.00%   sponsor
      K-G Leasing, a Joint Venture                       California     Construction Joint Venture      GCCo       30.00%   partner
      K-G-W Leasing, a Joint Venture                        Utah        Construction Joint Venture      GCCo       23.00%   partner
      Kiewit-Granite, a Joint Venture                    California     Construction Joint Venture      GCCo       25.00%   partner
    L Las Vegas Monorail Team, a Joint Venture             Nevada       Construction Joint Venture      GCCo       44.80%   managing
      LGS, a Joint Venture                                              Construction Joint Venture      GCCo       30.00%   partner
      Minnesota Transit Constructors, a Joint Venture     Minnesota     Construction Joint Venture      GCCo       56.50%   sponsor
    S River Mountain Constructors, a Joint Venture        Arkansas      Construction Joint Venture      GCCo      100.00%   sponsor
    L Sampson-Granite, a Joint Venture                   California     Construction Joint Venture      GCCo       40.00%   partner
      Sierra Blanca Constructors, a Joint Venture        New Mexico     Construction Joint Venture      GCCo       52.00%   sponsor
      TGM Constructors                                    Kentucky      Construction Joint Venture      GCCo       25.00%   partner
      Tri-County Rail Constructors, a Joint Venture        Florida      Construction Joint Venture      GCCo       30.00%   partner
    S Virginia Approach Constructors                      Maryland      Construction Joint Venture      GCCo       79.00%   partner
      Wasatch Constructors, a Joint Venture                 Utah        Construction Joint Venture      GCCo       23.00%   partner
      Washington-Granite, a Joint Venture                California     Construction Joint Venture      GCCo       40.00%   partner
      Western Summit-TIC-Granite, a Joint Venture          Georgia      Construction Joint Venture      GCCo       15.00%   partner
      WSCI TIC Granite, a Joint Venture                    Georgia      Construction Joint Venture      GCCo       15.00%   partner
      Yonkers Contracting Company, Inc. / Granite
       Construction Company, a Joint Venture             New Jersey     Construction Joint Venture      GCCo       40.00%   partner
S Granite Halmar Construction Company, Inc. ("GHCCo")     New York                C Corp                GCI       100.00%   investor
    S Halmar-Egis, a Joint Venture                        New York      Construction Joint Venture     GHCCo      100.00%   partner
    S Halmar-Schiavone, a Joint Venture                   New York      Construction Joint Venture     GHCCo      100.00%   partner
      Granite Halmar/Schiavone, a Joint Venture           New York      Construction Joint Venture     GHCCo       60.00%   partner
      GH/JMA, a Joint Venture                             New York      Construction Joint Venture     GHCCo       51.00%   partner
      Schiavone/Granite Halmar, a Joint Venture           New York      Construction Joint Venture     GHCCo       40.00%   partner
S Intermountain Slurry Seal, Inc.                          Wyoming                C Corp                GCI       100.00%   investor
S Pozzolan Products Company                                 Utah                  C Corp                GCI       100.00%   investor


                                 Schedule 5.13(a)
                                     Page 1



                        SCHEDULE 5.13(a) PART (1) AND (2)
                    SUBSIDIARIES AND OTHER EQUITY INVESTMENTS



                                                       JURISDICTION OF                                 OWNERSHIP BY COMPANY AND/OR
                     NAME                               ORGANIZATION        CAPITAL STRUCTURE                   SUBSIDIARY
                                                                                                        NAME     OWNERSHIP  POSITION
                                                                                                             

S Granite Land Company ("GLC")                           California               C Corp                GCI       100.00%   investor
    S GLC Fort Worth, LLC ("GLCFW, LLC")                    Texas       Limited Liability Company       GLC       100.00%      GP
           S Presidio Vista I, LTD                          Texas          Limited Partnership          GLC        89.00%      LP
                                                                                                     GLCFW, LLC     1.00%      GP

    S Main Street Ventures, LLC                          California     Limited Liability Company       GLC        90.00%   managing
      Granite/Mandalay Bay Finance, LLC                  California     Limited Liability Company       GLC        70.00%    member
      Granite/Mandalay, LLC ("GM, LLC ")                 California     Limited Liability Company       GLC        90.00%    member
             Oly/Granite General Partnership             California        Limited Partnership        GM, LLC      10.00%      LP
             Oly/Mandalay Bay General Partnership        California        Limited Partnership        GM, LLC      10.00%      LP
      Phase 1 Regional Park Limited                      California        Limited Partnership          GLC        25.00%      LP
      Williamson Ranch Plaza, LP                         California        Limited Partnership          GLC        25.00%      LP
    S Granite Grado Ventures, LLC ("GGV, LLC")           California     Limited Liability Company       GLC        90.00%   managing
      S Granite Grado Ventures Project 1, LLC            California     Limited Liability Company     GGV,LLC     100.00%   managing
S GILC, Incorporated ("GILC")                            California               C Corp                GCI       100.00%   investor
    S   GILC, LP                                         California        Limited Partnership          GCCo       99.00%      LP
                                                                                                        GILC        1.00%      GP

S Wilcott Corporation                                     Colorado                C Corp                GCI       100.00%   investor
S Granite SR 91 Corporation ("GSR91")                    California               C Corp                GCI       100.00%   investor
    S Granite SR 91, LP ("SR91, LP")                     California        Limited Partnership          GCI        99.00%      LP
                                                                                                       GSR91        1.00%      GP

              California Private Transportation
               Company, LP                               California        Limited Partnership        SR91, LP     22.22%      LP
S GTC, Inc. ("GTC")                                         Texas                 C Corp                GCI       100.00%   investor
    S GTC II, LP ("GTC, LP")                                Texas          Limited Partnership          GCI        99.00%      LP
                                                                                                        GTC         1.00%      GP

               WR II Associates, LTD                        Texas          Limited Partnership          GCI        69.88%      LP
                                                                                                      GTC, LP       1.00%      GP
  Paramount-Nevada Asphalt Company, LLC                    Nevada       Limited Liability Company       GCI        50.00%    member
  TIC Holdings, Inc                                       Delaware                C Corp                GCI        10.00%   investor


S =  Investments considered Subisidaries under the Credit Agreement, and
     reported on a GAAP consolidated basis ; all other reported under GAAP
     utilizing the equity method of reporting

L =  Granite's portion of Line-item Construction Joint Ventures which are
     reported on a GAAP consolidated basis




                                SCHEDULE 5.13 (b)

                             SENIOR NOTE GUARANTORS

Granite Construction Company, a California corporation
Granite Land Company, a California corporation
Intermountain Slurry Seal, Inc., a Wyoming corporation
Pozzolan Products Company (P.P.C.) (dba Garco Testing), a Utah corporation
GILC, L.P., a California Limited Partnership
Granite Halmar Construction Company, Inc., a New York corporation

                                Schedule 5.13(b)
                                     Page 1



                                  SCHEDULE 5.16

                 INTELLECTUAL PROPERTY LITIGATION/CLAIMS MATTERS

                                      NONE

                                  Schedule 5.16
                                     Page 1



                                  SCHEDULE 5.21

                         UNRESTRICTED SUBSIDIARY MATTERS

5.21(a)



   CONTRACTUAL OBLIGATION                        PURPOSE
                              
Teaming Agreement                Obligation for Granite Construction Company
                                 (70%) to enter into a Construction Joint
                                 Venture prior to August 4, 2003 with Wilder
                                 (30%), its Unrestricted Subsidiary, for the
                                 purposes of bidding the civil construction
                                 portion of the Seattle Sound Transit Rainier
                                 Valley Light Rail Link Project

Teaming Agreement                Obligation for Granite Construction Company
                                 (52%) to enter into a Construction Joint
                                 Venture prior to January 4, 2004, with Kiewit
                                 (33%), Skanska (10%)k and Wilder (5%), its
                                 Unrestricted Subsidiary, for the purposes of
                                 bidding the civil construction portion of the
                                 Seattle Monorail Project.


5.21(b)
         NONE

5.21 (c)

         NONE

                                  Schedule 5.21
                                     Page 1



                                  SCHEDULE 5.22

                              BURDENSOME AGREEMENTS

                                      NONE

                                  Schedule 5.22
                                     Page 1



                                  SCHEDULE 7.01

                                 EXISTING LIENS



                 DEBTOR                        LIEN HOLDER                       PROPERTY                MATURITY       BALANCE
                                                                                                      
May   Granite construction Company    Benna Investments                 Glendale NV property              12/01/07     1,043,652
Apr   Presidio Vista I, LTD           Dell USA, L.P.                    Project Debt - Presidio Vista     02/11/08     4,003,877
Apr   Phase 1 Regional Park Limited   Sacramento City Employee          Project Debt - Granite            09/01/08    11,311,577
                                      Retirement Systems                Regional Park
Apr   Phase 1 Regional Park Limited   GE Capital Business Asset Fund    Project Debt - Granite             8/01/10    18,858,850
                                                                        Regional Park
Apr   Phase 1 Regional Park Limited   Northwestern Mutual Life          Project Debt - Granite            03/01/21    17,935,273
                                      Insurance                         Regional Park
Apr   Phase 1 Regional Park Limited   Northwestern Mutual Life          Project Debt - Granite            01/01/18    18,913,776
                                      Insurance                         Regional Park
Apr   Oly/Mandalay Bay General        Granite/Mandalay Bay Finance,     Project Debt - Seabridge        at sale of     2,550,000
      Partnership                     LLC                                                                  project
Apr   Oly/Mandalay Bay General        Santa Barbara Bank & Trust        Project Debt - Seabridge          01/01/04     3,850,791
      Partnership
Apr   Oly/Mandalay Bay General        Oly/Granite, GP                   Project Debt - Seabridge        at sale of    12,416,024
      Partnership                                                                                          project
Apr   Oly/Mandalay Bay General        Oly/Granite, GP                   Project Debt - Seabridge        at sale of     1,379,558
      Partnership                                                                                          project
                                                                                                                     $92,263,378


May = Balance as of 05/31/03
Apr = Balance as of 04/30/03

                                  Schedule 7.01
                                     Page 1



                                SCHEDULE 7.02 (a)

     EXISTING INVESTMENTS EXCEPT AS PERMITTED BY SUBSECTIONS 7.02(b) THROUGH
                                    7.02(j)

                                      NONE

                                Schedule 7.02(a)
                                     Page 1



                                SCHEDULE 7.02 (b)

                                INVESTMENT POLICY

                        GRANITE CONSTRUCTION INCORPORATED
                          INVESTMENT POLICY GUIDELINES
                          FOR WORKING CAPITAL PORTFOLIO

                           EFFECTIVE: FEBRUARY 1, 2003

PURPOSE

Within the spectrum of activities of this Corporation, it is necessary to
provide a framework for the regular and continuous management of its investment
funds. Short term and intermediate term investments provide earnings on excess
cash while maintaining liquidity and working funds for the present and future
operations.

INVESTMENT OBJECTIVES

In order to provide control of all investments and cash, the Corporation has
established the following objectives regarding its investment policy:

- -        Safety - the primary objective of the investment activities of the
         Corporation is protection of capital. Each investment transaction shall
         seek to first ensure that capital losses are avoided, whether they are
         from securities defaults or erosion of market value.

- -        Liquidity - the investment portfolio must be structured in a manner
         that will provide sufficient liquidity to pay the obligations of the
         Corporation. Any excess cash above the aforementioned requirements may
         be invested in instruments with longer maturity.

- -        Diversification - the investment activity must ensure diversification
         of investments that minimizes risk exposure to any one security and/or
         issuer.

- -        Investment Return - the Corporation seeks to maximize the return on all
         investments within the constraints of safety and liquidity.

DURATION

The duration of the portfolio including escrows and deposits shall be consistent
with the cash needs as determined by the cash forecast. Cash investments are
restricted to the average duration of one (1) year from date of settlement. Any
investments with longer maturity than one year must be invested in instruments
issued by, guaranteed by, or insured by the U.S. Government or any of its
agencies. The average portfolio duration of escrows and deposit agreements shall
not exceed five (5) years.

Short-term investments shall be defined as instruments maturing in ninety-one
(91) days or more.

MARKETABILITY

Holdings should be of sufficient size and held in issues, which are traded
actively (except time deposits, loan participation, and master notes) to
facilitate transactions at minimum cost and accurate market valuations.

                                Schedule 7.02(b)
                                     Page 1



TRADING

The following individuals are authorized traders:

         Roxane C. Allbritton, Vice President/Treasurer
         Jigisha Desai, Director of Corporate Treasury
         Mary McCann-Jenni, Controller
         Rebecca (Becky) M. Frantti, Treasury Manager

Any individual transaction conforming to the policy set forth herein or, any
transaction of an Investment Manager not conforming to the respective Investment
Manager's policy shall be approved by one of the following officers or, any
transaction not conforming to the policy set forth herein must be approved by
any two of the following officers:

D. H. Watts                      W. E. Barton                   P. M. Costanzo
W. G. Dorey                      M. E. Boitano

DEALERS AND BANKS FOR TRADING

The following institutions are authorized dealers:

        BA Securities
        Lehman Brothers
        Merrill Lynch
        Salomon Smith Barney

All purchased investments will be delivered to Bank of New York for safekeeping
and paid for upon receipt.

SAFEKEEPING

The banks designated as safekeeping depositories in order of choice are:

        Bank of New York (BNY Western Trust Company)

Each financial institution must provide timely confirmation/safekeeping receipts
on all investment transactions and provide monthly transaction reports.

ESCROW

Escrows in lieu of retention are allowed at the following:

        Comerica Bank*
        Fleet National Bank*
        Nevada Highway Fund (State of Nevada Treasury)*
        Union Bank of California
        US Trust of California
        Wachovia Securities*
        Zions Bank, Utah*                   *Required by Owner

                                Schedule 7.02(b)
                                     Page 2



The types of investments will be guided by the terms of the escrow, but in all
cases the investment will be governed by the investment policy. *Required by
Owner.

Banks not listed, but required by escrow agreement, will also be acceptable.

REPORTING

- -  Daily - An investment transaction sheet, sequentially numbered will be
   processed for approval by an authorized offer.

- -  Weekly and Monthly - A portfolio will be provided to the President, Chief
   Operating Officer, Chief Financial Officer and all traders.

- -  Monthly - The fixed income portfolio will be monitored against the
   performance of Merrill Lynch U.S. Domestic Master 1-3 years index.

- -  For FASB 115 purposes, the Corporation classifies all fixed income
   investments as "Held to Maturity."

                                Schedule 7.02(b)
                                     Page 3



                        GRANITE CONSTRUCTION INCORPORATED
                          INVESTMENT POLICY GUIDELINES
                          FOR WORKING CAPITAL PORTFOLIO
                           EFFECTIVE: FEBRUARY 1, 2003



- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                             CONCENTRATION
                                                                                                  BY               CONCENTRATION BY
              ELIGIBLE INVESTMENTS                      MINIMUM CREDIT QUALITY                  ISSUER                 PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       
Obligations issued by U.S. Government limited                     N/A                  No Maximum               No Maximum
to:
U.S. Treasury Bills/Bonds/Notes
- ------------------------------------------------------------------------------------------------------------------------------------
Obligations of agencies of the U.S. Government                    N/A                  $ 5,000,000 or 10% of              40%
limited to:                                                                            total portfolio
Federal Farm Credit Bank                                                               (whichever is greater)
Federal Home Loan Bank
Federal Home Loan Mortgage Corp.
Federal National Mortgage Association
Student Loan Marketing Association
- ------------------------------------------------------------------------------------------------------------------------------------
Obligations collateralized by U.S. Government     Fully collateralized by U.S. Gov't   $ 5,000,000 or 10% of              25%
securities limited to:                            and Agency securities included in    total portfolio
Repurchase Agreements                             these guidelines.                    (whichever is greater)
Reverse Repurchase Agreements                     Collateral value plus accrued
                                                  interest must exceed and be
                                                  maintained at level exceeding
                                                  value of agreement.
- ------------------------------------------------------------------------------------------------------------------------------------
Obligations issued by U.S. owned domestic         Limited to Top 25 U.S. Banks by      $ 5,000,000 or 10% of              50%
commercial banks limited to:                      deposit and assets.                  total portfolio
Banker's Acceptance                               Short-Term rating of A-1/P-1, or     (whichever is greater)
Certificate of Deposit                            Long-Term rating of AAA/NR or AA/Aa
                                                  (at the time of purchase)
- ------------------------------------------------------------------------------------------------------------------------------------
Obligations issued by U.S. bank subsidiaries      Limited to Top 25 World Banks by     $ 5,000,000 or 10% of              40%
of Non U.S. Bank limited to:                      deposit and assets.                  total portfolio
Yankee Banker's Acceptance                        Short-Term rating of A-1/P-1, or     (whichever is greater)
Yankee Certificates of Deposit                    Long-Term rating of AAA/NR or
(all securities U.S. dollar denominated)          AA/Aa
                                                  (at the time of purchase)
- ------------------------------------------------------------------------------------------------------------------------------------
Obligations of major U.S. corporations and U.S.   Any TWO of three rating services:    $5,000,000 or 10% of               75%
holding companies limited to:                     A-1/P-1/D-1                          total portfolio
Commercial Paper                                  S&P, Moody's, Duff & Phelps          (whichever is greater)
                                                  (at the time of purchase)

                                                  Any split-rated of three rating      $5,000,000 or 10% of         30% of Overall
                                                  services:                            Commercial Paper            Commercial Paper
                                                  A1/P2, A2/P1                         portfolio                       portfolio
                                                  S&P, Moody's, Duff & Phelps          (whichever is greater)             or
                                                  (at the time of purchase)                                         22.5% of Total
                                                  Must be publicly traded Corporation                                  Portfolio
                                                  Must have at least $20B in Market
                                                  Capitalization
                                                  (at the time of purchase)

                                                  Any TWO of three rating services:
                                                  A-2/P-2/D-2 S&P, Moody's, Duff &
                                                  Phelps                               $5,000,000 or 10% of         20% of Overall
                                                  Must be publicly traded Corporation  Commercial Paper portfolio  Commercial Paper
                                                  Must have at least $20B in Market    (whichever is greater)          portfolio
                                                  Capitalization                                                          or
                                                  (at the time of purchase)                                          15% of Total
                                                                                                                       Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------


                                Schedule 7.02(b)
                                     Page 4



                        GRANITE CONSTRUCTION INCORPORATED
                          INVESTMENT POLICY GUIDELINES
                          FOR WORKING CAPITAL PORTFOLIO
                           EFFECTIVE: FEBRUARY 1, 2003



- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                             CONCENTRATION
                                                                                                  BY               CONCENTRATION BY
              ELIGIBLE INVESTMENTS                      MINIMUM CREDIT QUALITY                  ISSUER                 PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       
Loan Participation                                Same as commercial paper credit      $ 5,000,000 or 10% of              25%
Master Notes                                      quality requirements                 total portfolio
                                                                                       (whichever is greater)
- ------------------------------------------------------------------------------------------------------------------------------------
                                                  Any TWO of three rating services:    $ 5,000,000 or 10% of              50%
                                                  AAAm/Aaa/AAA                         total portfolio
                                                  S&P, Moody's, Duff & Phelps          (whichever is greater)
                                                  (at the time of purchase)
- ------------------------------------------------------------------------------------------------------------------------------------
Taxable & Tax-exempt investments limited to:      S&P: A-1, AA or better, Sp-1         $ 5,000,000 or 10% of              25%
Auction Rate Preferred Bonds                      AND                                  total portfolio
Auction Rate Certificates                         Moody's: P-1, Aa or better, VMIG-1   (whichever is greater)
Municipal Notes
Municipal Bonds
- ------------------------------------------------------------------------------------------------------------------------------------


                                Schedule 7.02(b)
                                     Page 5



                        GRANITE CONSTRUCTION INCORPORATED
                          INVESTMENT POLICY GUIDELINES
                            FOR HIGH-YIELD PORTFOLIO
                           EFFECTIVE: FEBRUARY 1, 2003

STATEMENT OF PURPOSE

Cash is the major source of working capital for the present and future
operations of Granite. Managing the cash to ensure the liquidity necessary to
meet Granite's business needs is of paramount importance. Any cash balances
above those necessary for day-to-day working capital requirements are available
for longer-term investments. These investments can be held for a longer interval
to enhance the portfolio yield, and add diversification, without loosing sight
of capital preservation within this policy's guidelines.

INVESTMENT OBJECTIVES

The investment objective of this portfolio is to seek consistency of investment
return with emphasis on capital appreciation and secondarily capital
preservation with a goal of either equaling or exceeding the Composite Policy
Index. The Composite Policy Index is defined, as an Index comprised of several
indices corresponding to the various mutual funds being used in this portfolio
as per the asset allocation study. Therefore, the investment objectives are:

         -        Investment Return: Optimize the investment returns within the
                  constraints of this policy.

         -        Safety: Emphasize preservation of capital assets over economic
                  business cycles.

         -        Diversification:

                  -        Provide investments in mutual fund companies that
                           have sufficient number of funds with different
                           investment characteristics.

                  -        Select funds from mutual fund companies that provide
                           a balanced investment approach that can be
                           diversified among the major assets classes and will
                           provide sufficiently varied risk/return
                           characteristics (see Exhibit A).

PERFORMANCE MEASUREMENT GUIDELINES

Normally, investment performance should be judged over a complete economic cycle
(typically 3 to 5 years). Since short-term results are not usually meaningful,
true investment success will be looked at as a long-term proposition. To
accomplish this, the performance measurement guidelines are:

         -        To manage the concentration in any one class of mutual funds,
                  the portfolio will be invested based on an asset allocation
                  study prepared by an outside investment advisory firm and
                  managed accordingly. Periodically, the Composite Policy Index
                  will be modified to coincide to the most recent asset
                  allocation study.

         -        To invest in funds that will have ratings from Morningstar of
                  3, 4, or 5 and will be comparable in performance to the
                  respective indices, e.g. growth fund index, growth and income
                  index, etc. (see Exhibit B)

To determine if the investment guidelines are being followed, a review of fund
performance will be prepared each quarter by an outside investment advisory
firm. The review will take into consideration overall economic conditions as
well as the risk and return objectives of these guidelines.

MARKETABILITY

Investments should be of sufficient size and be held in issues, which are traded
actively to facilitate transactions at minimum cost and accurate market
valuations.

                                Schedule 7.02(b)
                                     Page 6



TRADING

The following individuals are authorized traders:

        Roxane C. Allbritton
        Jigisha Desai
        Mary McCann-Jenni
        Rebecca (Becky) M. Frantti

Any individual transaction conforming to the policy set forth herein shall be
approved by one of the following officers or, any transaction not conforming to
the policy set forth herein must be approved by any two of the following
officers:

D. H. Watts                      W. E. Barton
W. G. Dorey                      M. E. Boitano                  P. M. Costanzo

MUTUAL FUNDS

The following mutual funds are authorized:

        Franklin Small Cap Fund
        Loomis Sayles
        Pimco Bond Fund
        Putnam Mutual Funds
        Lord Abbett Mid Cap Value Fund
        Fremont U.S. Micro-Cap Fund

All purchased investments will be delivered to the custodian bank for
safekeeping and paid for upon receipt.

SAFEKEEPING

The institutions designated as a safekeeping depository are:

        Fleet Bank
        Merrill Lynch

The custodian bank must provide timely confirmation/safekeeping receipts on all
investment transactions and provide monthly transaction reports.

REPORTING

         -        Daily - Upon a settlement of trade, an investment transaction
                  sheet, sequentially numbered will be processed for approval by
                  an authorized officer.

         -        Monthly and quarterly - Financial reporting requirements for
                  GAAP.

         -        Monthly - The mutual fund portfolio will be evaluated based on
                  a unit-based performance analysis and will be distributed to
                  the President, Chief Operating Officer, Chief Financial
                  Officer and all traders.

         -        Quarterly - A risk-adjusted performance analysis and a
                  composite policy index analysis of funds will be prepared by
                  an outside advisory firm.

         -        Quarterly - An asset allocation status, indicating out of
                  balance funds rebalancing (if any) that is required.

         -        An outside firm will do an asset allocation study every three
                  (3) years.

         -        For FASB 115 purposed, the Corporation classifies mutual fund
                  investments as "Trading Securities."

                                Schedule 7.02(b)
                                     Page 7



                              GRANITE CONSTRUCTION
                              HIGH YIELD PORTFOLIO
                              INVESTMENT OBJECTIVES
                                    EXHIBIT A

In order to comply with the investment objectives of the Granite Construction
High Yield Investment Guidelines, the following investment funds shall be
available for investments:

Putnam International Growth Fund
(As of 2/28/03: Morningstar rating of 4 stars)

The Fund invests in established and emerging markets in more than 25 countries
in order to maximize the value of its investments over time. The Fund invests in
stocks of both large and small foreign companies that offer above-average growth
potential at exceptionally attractive prices.

Putnam Vista Fund
(As of 2/28/03: Morningstar rating of 3 stars)

The Fund invests mainly in well-researched growth stocks of medium-sized
companies. The Fund's investment strategy is focused on mid-capitalization
growth stocks, issued by medium-sized companies that do not carry as much risk
as small-company stocks but are not usually as thoroughly researched as
large-company stocks. Because of this, there is a greater opportunity for
Putnam's research to play a significant role in realizing a stock's potential.

Putnam Voyager Fund
(As of 2/28/03: Morningstar rating of 3 stars)

The Fund invests mainly in common stocks of U.S. companies, with a focus on
growth stocks. Growth stocks are issued by companies that the Fund manager
believes are fast-growing and whose earnings are likely to increase over time.
Growth in earnings may lead to an increase in the price of the stock. The Fund
invests mainly in mid-sized and large companies, although it can invest in
companies of any size.

Putnam Investors A Fund
(As of 2/28/03: Morningstar rating of 2 stars)

The Fund seeks long-term growth by investing mainly in common stocks of larger,
well-established companies. By selecting stocks from a range of industries, the
Fund's managers seek to balance potential risk and reward by providing a
significant level of diversification.

Franklin Balance Sheet Investment Fund
(As of 2/28/03: Morningstar rating of 5 stars)

The Fund seeks high total return, of which capital appreciation and income are
components. Under normal market conditions, the Fund invests most of its assets
in equity securities of companies the Fund's manager believes are undervalued at
the time of purchase but that have the potential for significant capital
appreciation. Common stocks and preferred stocks are examples of equity
securities.

                                Schedule 7.02(b)
                                     Page 8



The Putnam Fund of Growth and Income
(As of 2/28/03: Morningstar rating of 2 stars)

The Fund invests mainly in common stocks of U.S. companies, with a focus on
value stocks that offer the potential for capital growth, current income, or
both. Value stocks are those that the Fund's manager believes are currently
undervalued by the market. The Fund looks for companies undergoing positive
change. If it is correct and other investors recognize the value of the company,
the price of the stock may rise. The Fund invests mainly in large companies.

Loomis Sayles Bond Fund
(As of 2/28/03: Morningstar rating of 4 stars)

The Fund seeks high total investment return through a combination of current
income and capital appreciation. The Fund normally invests at least 65% of
assets in investment-grade debt securities and convertibles. It may invest the
balance of assets in securities rated below BBB. The Fund may invest up to 20%
of assets in preferred stocks. It may invest without limit in Canadian issues,
and may invest up to 20% of assets in securities issued in other foreign
countries.

PIMCO Total Return Bond Fund
(As of 2/28/03: Morningstar rating of 3 stars)

The Fund seeks total return consistent with preservation of capital. The Fund
invests at least 65% of assets in debt securities, including U.S. government
securities, corporate bonds, and mortgage-related securities. It may invest up
to 20% of assets in securities denominated in foreign currencies. The portfolio
duration generally ranges from three to six years.

Lord Abbett Mid-Cap Value Fund
(As of 2/28/03: Morningstar rating of 5 stars)

The Fund seeks capital appreciation by investing in the stocks of mid-sized
companies that are believed to be undervalued in the marketplace. To pursue this
goal, the Fund normally invests at least 80% of its net assets, plus the amount
of any borrowings for investment purposes, in equity securities of mid-sized
companies, those with market capitalization of roughly $500 million to $10
billion, at the time of purchase. This market capitalization range may vary in
response to changes in the markets. The Fund will provide shareholders with at
least 60 days notice of any change in this policy. Equity securities in which
the Fund may invest include common stocks, convertible bonds, convertible
preferred stocks, depository receipts and warrants.

Fremont U.S. Micro-Cap Fund
(As of 2/28/03: Morningstar rating of 4 stars)

The Fund seeks long-term capital appreciation through investing in the nation's
smallest and fastest-growing publicly traded companies. The U.S. micro-cap stock
market is home to entrepreneurially managed companies with exceptional growth
prospects. With minimal Wall Street coverage and low institutional ownership,
micro-cap stocks represent the least efficient sector of the market.
Research-driven investors can uncover some terrific growth companies trading at
very reasonable valuations.

                                Schedule 7.02(b)
                                     Page 9



                                SCHEDULE 7.02 (j)

                    INVESTMENTS IN UNRESTRICTED SUBSIDIARIES

                   WILDER CONSTRUCTION COMPANY STOCK PURCHASES



  DATE          NUMBER OF SHARES     INVESTMENT
                              
03/31/00            1,333,929        13,156,637
09/30/00               15,817           166,553
12/31/00              150,000         1,518,000
03/31/01              450,000         4,554,000
04/30/02              698,483         7,948,737
                    2,648,229       $27,343,927


                                Schedule 7.02(i)
                                     Page 1



                                  SCHEDULE 7.03

                              EXISTING INDEBTEDNESS



                                                                                             INTEREST                     BALANCE
          BORROWER                  LENDER'S NAME                  DESCRIPTION                 RATE        MATURITY       05/31/03
                                                                                                       
Granite Construction Company   Benna Investments       Glendale NV property                       6.50%     12/01/07      1,043,652
Granite Construction Company   Rosemary's Mountain     Southern CA Aggregate property             8.82%     06/01/04      1,400,000
Granite Construction           Private Placement Due   Refinance debt & general corporate         6.54%     03/15/10     46,666,668
Incorporated                   03/15/10                purposes
Granite Construction           Private Placement Due   Refinance debt & General corporate         6.96%     05/01/13     75,000,000
Incorporated                   05/01/13                purposes
Granite Construction           Lenders under Existing  Self insured Worker's Compensation     100.0 bps     04/30/02      1,293,390
Incorporated                   Credit Agreement
Granite Construction Company   Bank of America Letter  City of Patterson                       32.5 bps     02/04/04        200,000
                               of Credit
Granite Construction           BNP Paribas             $30MM notional amount floating       6 Mth LIBOR     09/15/05       (559,168)
Incorporated                                           interest rate swap agreement        + 386.75 bps
Granite Construction           BNP Paribas             $20MM notional amount floating       6 Mth LIBOR     11/05/05       (369,914)
Incorporated                                           interest rate swap agreement        + 418.00 bps
                                                                                                                       $124,674,628

                                                                                                                      AS OF 4/30/03

Presidio Vista I, LTD          Dell USA, L.P.          Project Debt - Presidio Vista              7.50%     02/11/08      4,003,877
Phase 1 Regional Park Limited  Sacramento City         Project Debt - Granite Regional            7.30%     09/01/08     11,311,577
                               Employee Retirement     Park
                               Systems

Phase 1 Regional Park Limited  GE Capital Business     Project Debt - Granite Regional            8.15%     08/01/10     18,858,850
                               Asset Fund              Park
Phase 1 Regional Park Limited  Northwestern Mutual     Project Debt - Granite Regional            7.25%     03/01/21     17,935,273
                               Life Insurance          Park
Phase 1 Regional Park Limited  Northwestern Mutual     Project Debt - Granite Regional            6.03%     01/01/18     18,913,776
                               Life Insurance          Park
Oly/Mandalay Bay General       Granite/Mandalay Bay    Project Debt - Seabridge                  20.00%   at sale of      2,550,000
Partnership                    Finance, LLC                                                                  project
Oly/Mandalay Bay General       Santa Barbara Bank &    Project Debt - Seabridge              Prime Rate     01/01/04      3,850,791
Partnership                    Trust                                                             + 1.5%
Oly/Mandalay Bay General       Oly/Granite, GP         Project Debt - Seabridge                  17.00%   at sale of     12,416,024
Partnership                                                                                                  project
Oly/Mandalay Bay General       Oly/Granite, GP         Project Debt - Seabridge                  17.00%   at sale of      1,379,558
Partnership                                                                                                  project
                                                                                                                        $91,219,726




                                                                                                                      AS OF 4/30/03
                                                                                                                         COST TO
          PRINCIPAL                    INSURER                      DESCRIPTION               PENAL SUM    MATURITY     COMPLETE
                                                                                                      
Granite Construction Company,  Federal Insurance        Payment and Performance bonds on    4,469,230,085   Varies    1,563,136,793
                               Company,                 various construction projects
Granite Halmar Construction    Travelers Casualty and
Company, Inc.,                 Surety Company, and
Intermountain Slurry Seal      St Paul Fire and Marine  Miscellaneous Bonds in support of      23,413,124   Varies       23,413,124
Inc., and Pozzolan Products    Insurance Company, as    permitting, licensing and
Company                        co-sureties              reclamation
                                                                                           $4,492,643,209            $1,586,549,917


                                  Schedule 7.03
                                     Page 1



                                  SCHEDULE 7.06

                                 EXISTING LEASES



- ----------------------------------------------------------------------------------------------------
                                                                                             ANNUAL
                 LESSOR                            DESCRIPTION              MATURITY        PAYMENTS
- ----------------------------------------------------------------------------------------------------
                                                                                   
GRANITE CONSTRUCTION COMPANY AS A LESSEE
City of Calipatria                        Pit                                06/30/03            600
Recupido, Fredrick R.                     Rental Office                      11/30/03         18,337
Gibbons Realty Co.                        Pit                                12/31/03         83,448
Meredith, Parker, Key and Bath            Pit                                12/31/03        338,415
Robert and Donna Sauers                   Rental Office                      02/28/04         44,340
Associates Leasing                        Construction Equipment             04/30/04        215,415
Robert L. and Nira M. Stewart             Quarry Property                    07/01/04          5,000
Delta Precast, Inc.                       Material Sales Agreement           07/31/04         10 800
Associates Leasing                        Construction Equipment             08/01/04         44,981
Associates Leasing                        Construction Equipment             08/31/04        234,090
PSAF Development Partners, L.P.           Rental Office                      11/30/04         25,464
City of Salinas                           AC Plant                           12/31/04        108,444
John V. Crawford                          Quarry Property                    12/31/04         40,000
Joseph J. Leavey                          Quarry Property                    12/31/04          5,000
Wells Family Members                      Pit                                12/31/04         25,000
Morias Properties                         Quarry Property                    01/22/05         12,500
Rossi Materials                           Quarry Property                    01/31/05         25,200
Musat Vineyards                           Quarry Property                    04/30/05         25,000
FCC Equipment Financing, Inc.             Construction Equipment             08/31/05         63,840
FCC Equipment Financing, Inc.             Construction Equipment             09/30/05         39,720
Granite Rock Co.                          Rental Office                      12/31/05        218,686
Jackling Aggregates Limited               Pit                                12/31/05         72,000
Heber Bank Block, LLC                     Quarry Property                    05/31/06         10,636
RMC Pacific Materials Inc.                Plant Lease                        09/04/06        600,000
Jacobson Construction, et al              Pit                                10/11/06        787,500
RMC Pacific Materials Inc.                Plant Lease                        10/31/06        125,000
California Dept. of Water Resources       Equipment permit                   11/30/06         42,000
Joseph, Russell & David Rose              Pit                                12/26/06         42,000
Richard Rose                              Pit                                12/26/06          3,000
R. Vogt & A. Koustas                      Rental Office                      02/14/07         42,000
W. P. R. R. Co.                           Pit                                06/01/07         15,000
Topo Ranch (Singleton Group)              Quarry Property                    06/30/07         22,500
Chemical Lime Co. of Arizona              Material Sales Agreement           10/31/07        800,000
City of Willits                           Quarry Property                    11/25/08        100,005
R. Jay DeSerpa Co.                        Equipment yard                     12/31/08         12,000
Rowland                                   Quarry Property                    06/30/09         50,000
- ----------------------------------------------------------------------------------------------------


                                  Schedule 7.06
                                     Page 1





- ----------------------------------------------------------------------------------------------------
                                                                                             ANNUAL
                 LESSOR                            DESCRIPTION              MATURITY        PAYMENTS
- ----------------------------------------------------------------------------------------------------
                                                                                 
Tejon Ranch Co.                           Pit                                10/31/09         60,000
Donald and Carol Graham                   Hot Plant                          12/31/09         96,000
Julia C. Matthews                         Quarry Property                    12/31/09         26,400
Walker Development                        Pit                                12/31/09         75,000
Bingelli Rock Products Inc., et al.       AC Plant                           10/31/11         10,000
The Pacific Lumber Company                Material Sales Agreement           04/30/12         24,000
Haber/Kester Property                     Quarry Property                    07/31/14         19,500
Hansen & Sinnot Estate                    Quarry Property                    07/31/14         19,500
L.R. Peterson and E.W. McGah              Hot Plant                          01/02/16         80,000
Ricardo Jimenez, Jr.                      Pit                                06/30/16         12,000
M. Prickett & P. Dixon, individuals       Rental Office                      07/31/20         36,000
GRANITE LAND COMPANY AS A LESSEE
Property California LS Corp.              Rental Office                      02/28/04        113,628
INTERMOUNTAIN SLURRY SEAL AS A LESSEE
City of Los Angeles                       Quarry Property                    03/31/05          7,485
City of Los Angeles                       Quarry Property                    06/30/05          3,600
Muller, Raymond J. and Franchon L.        Quarry Property                    03/07/16         24,000
GRANITE HALMAR CONSTRUCTION COMPANY, INC. AS A LESSEE
Stephen Sipes                             Rental Office                      11/30/03         22,921
CIT Group                                 Construction Equipment             03/16/04         72,473
Allied St. Geroge                         Rental Office                      06/30/04         72,680
Mike Albert Leasing                       Vehicles (autos and trucks)          Varies        201,989
- ----------------------------------------------------------------------------------------------------
                                                                                          $5,246,047
                                                                                          ----------


                                  Schedule 7.06
                                     Page 2


                           SCHEDULE 10.02

                    EURODOLLAR AND DOMESTIC LENDING OFFICES;
                              ADDRESSES FOR NOTICES

BORROWER:

GRANITE CONSTRUCTION INCORPORATED

Granite Construction Incorporated
P. O. Box 50085
Watsonville, CA 95077

Attention:    William Barton, Vice President/Chief Financial Officer
Telephone:    (831) 761-4704
Facsimile     (831) 722-9657
Email:        bbarton@gcinc.com
Website:      http://www.graniteconstruction.com

WITH A COPY TO:

Granite Construction Incorporated
585 West Beach Street
Watsonville, CA 95076

Attention:    Roxane Allbritton, Treasurer
Telephone:    (831) 761-4772
Facsimile     (831) 728-1701
Email:        rallbritton@gcinc.com

ADMINISTRATIVE AGENT:

BANK OF AMERICA, N.A.

(for lending and administrative notices (including payments and Requests for
Credit Extensions)):

Bank of America, N.A.
Mail Code: CA4-706-05-09
Agency Administrative Services #5596
1850 Gateway Boulevard, 5th Floor
Concord, CA 94520

                                 Schedule 10.02

                                     Page 1



Attention:    Sally Escosa
Telephone:    (925) 675-8421
Facsimile:    (925) 969-2901
Email:        rosalia.m.escosa@bankofamerica.com
Account No.:  3750836479
Ref:          Granite Construction
ABA#          111000012

(for all purposes other than lending and administrative notices):

Bank of America, N.A.
Mail Code: CA5-701-0519
1455 Market Street, 5th Floor
San Francisco, CA 94103

Attention:    SuzieAnna Wan, Assistant Vice President
Telephone:    (415) 436-2772
Facsimile:    (415) 503-5015
Email:        SuzieAnna.Wan@bankofamerica.com

L/C ISSUER:

BANK OF AMERICA, N.A.

Bank of America, N.A.
Trade Operations-Los Angeles #22621
333 S. Beaudry Avenue, 19th Floor
Mail Code: CA9-703-19-23
Los Angeles, CA 90017-1466

Attention:    Sandra Leon, Vice President
Telephone:    (213) 345-5231
Facsimile:    (213) 345-6694
Email:        sandra.leon@bankofamerica.com

                                 Schedule 10.02

                                     Page 2



LENDERS:

BANK OF AMERICA, N.A.:

Bank of America, N.A.
Mail Code: CA5-705-12-14
555 California Street, 12th Floor
San Francisco, CA 94104-1502

Attention:    Kenneth J. Beck, Principal
Telephone:    (415) 953-5753
Facsimile     (415) 622-4585
Email:        kenneth.j.beck@bankofamerica.com

UNION BANK OF CALIFORNIA, N.A.

Union Bank of California, N.A.
601 Potrero Grande Drive
Monterey Park, CA 91755

Attention:    Shirley Davis, Coml. Loan Service Officer
Telephone:    (323) 720-2870
Facsimile     (323) 724-6198
              (323) 720-2224
Email:        Shirley.davis@UBOC.com

US BANK NATIONAL ASSOCIATION

US Bank
1331 North California Blvd
Suite 350
Walnut Creek, CA 94596

Attention:    Dan Stevens, Vice President
Telephone:    (925) 472-5791
Facsimile     (925) 945-6919
              (323) 720-2224

Email:        Daniel.stevens@usbank.com

                                 Schedule 10.02

                                     Page 3



WASHINGTON MUTUAL BANK

Washington Mutual Bank
1201 Third Avenue
Suite 1400
Seattle, WA 98101

Attention:    Gary Perkins, Vice President
Telephone:    (206) 490-5198
Facsimile     (206) 377-3812
Email:        Gary.Perkins@wamu.net

COMERICA BANK

Comerica Bank
1920 Main Street
Suite 1150
Irvine, CA 92614

Attention:    Elise M. Walker, Vice President
Telephone:    (949) 798-7244
Facsimile     (949) 476-1222
Email:        emwalker@comerica.com

HARRIS TRUST AND SAVINGS BANK

Harris Trust and Savings Bank
111 West Monroe Street
Chicago, IL 60603

Attention:    Isabella Battista, Vice President
Telephone:    (312) 293-8358
Facsimile     (312) 293-5852
Email:        isabela.battista@harrisbank.com

                                 Schedule 10.02

                                     Page 4



BNP PARIBAS

BNP Paribas
One Front Street, 23rd Floor
San Francisco, CA 94111

Attention:    Joseph Mack
Telephone:    (415) 772-1355
Facsimile     (415) 269-8954
Email:        Joseph.mack@americas.bnpparibas.com

                                 Schedule 10.02

                                     Page 5



                                    EXHIBIT A

                               FORM OF LOAN NOTICE

                                                        Date: ___________, _____

To:      Bank of America, N.A., as Administrative Agent

Ladies and Gentlemen:

         Reference is made to that certain Credit Agreement, dated as of [ ,
2003] (as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, the "Agreement"; the terms defined therein being used
herein as therein defined), among Granite Construction Incorporated, a Delaware
corporation (the "Borrower"), the Lenders from time to time party thereto, and
Bank of America, N.A., as Administrative Agent and L/C Issuer.

The undersigned hereby requests (select one):

         [ ] A Borrowing of_____________________________.
                            [Type of Loans requested]

         [ ] A conversion of Loans from _____ to ______

         [ ] A continuation of ___________________________.
                              [Type of Loans requested]

1.       On ____________________________________________(a Business Day).

2.       In the amount of $ ____________________________.

3.       Comprised of __________________________________.
                         [Type of Loans requested]

4.       With an Interest Period of _________________ months.

The Borrowing requested herein complies with the proviso to the first sentence
of Section 2.01 of the Agreement.

                                    GRANITE CONSTRUCTION INCORPORATED

                                    By: ________________________________________

                                    Name: ______________________________________

                                    Title: _____________________________________

                                       A-1



                                    By: ________________________________________

                                    Name: ______________________________________

                                    Title: _____________________________________

                                       A-2



                                    EXHIBIT B

                                  FORM OF NOTE

         $_____________________                            _____________________

         FOR VALUE RECEIVED, the undersigned (the "Borrower"), hereby promises
to pay to the order of __________________ (the "Lender"), on the Maturity Date
(as defined in the Credit Agreement referred to below) the principal amount of
__________________Dollars ($____________), or such lesser principal amount of
Loans (as defined in such Credit Agreement) due and payable by the Borrower to
the Lender on the Maturity Date under that certain Credit Agreement, dated as of
[ , 2003] (as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, the "Agreement"; the terms defined therein being used
herein as therein defined), among the Borrower, the Lenders from time to time
party thereto, and Bank of America, N.A., as Administrative Agent and L/C
Issuer.

         The Borrower promises to pay interest on the unpaid principal amount of
each Loan from the date of such Loan until such principal amount is paid in
full, at such interest rates, and at such times as are specified in the
Agreement. All payments of principal and interest shall be made to the
Administrative Agent for the account of the Lender in Dollars in immediately
available funds at the Administrative Agent's Office. If any amount is not paid
in full when due hereunder, such unpaid amount shall bear interest, to be paid
upon demand, from the due date thereof until the date of actual payment (and
before as well as after judgment) computed at the per annum rate set forth in
the Agreement.

         This Note is one of the Notes referred to in the Agreement, is entitled
to the benefits thereof and is subject to optional and mandatory prepayment in
whole or in part as provided therein. This Note is also entitled to the benefits
of the Guaranties. Upon the occurrence of one or more of the Events of Default
specified in the Agreement, all amounts then remaining unpaid on this Note shall
become, or may be declared to be, immediately due and payable all as provided in
the Agreement. Loans made by the Lender shall be evidenced by one or more loan
accounts or records maintained by the Lender in the ordinary course of business.
The Lender may also attach schedules to this Note and endorse thereon the date,
amount and maturity of its Loans and payments with respect thereto.

         The Borrower, for itself, its successors and assigns, hereby waives
diligence, presentment, protest and demand and notice of protest, demand,
dishonor and non-payment of this Note.

                                       B-1



         THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE; PROVIDED THAT LENDER SHALL RETAIN ALL RIGHTS ARISING
UNDER FEDERAL LAW.

                                    GRANITE CONSTRUCTION INCORPORATED

                                    By: ________________________________________

                                    Name: ______________________________________

                                    Title: _____________________________________

                                    By: ________________________________________

                                    Name: ______________________________________

                                    Title: _____________________________________

                                       B-2



                                    EXHIBIT C

                         FORM OF COMPLIANCE CERTIFICATE

                        Financial Statement Date:______, 200_

         The undersigned refers to that certain Credit Agreement, dated as of [
, 2003] (as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, the "Credit Agreement"), among Granite Construction
Incorporated, a Delaware corporation (the "Borrower"), the financial
institutions from time to time party thereto (collectively, the "Lenders") and
Bank of America, N.A., as Administrative Agent (the "Administrative Agent").
Unless otherwise defined herein, each capitalized term used herein has the
meaning assigned thereto in the Credit Agreement.

         The undersigned Responsible Officer of the Borrower hereby certifies as
of the date hereof that s/he holds the office of _____________________ with the
Borrower, that, as such, s/he is authorized to execute and deliver this
Certificate to the Bank on behalf of the Borrower and its Subsidiaries, and
that:

         1.       - Attached hereto or - posted on the Borrower's website or
- - posted on the website of the Securities and Exchange Commission at
www.sec.gov is:

                           -        a consolidated balance sheet of the Borrower
                  and its Subsidiaries as at the end of the fiscal year ended
                  [____________, 200_] (the "Subject Fiscal Year"), and the
                  related consolidated statements of income or operations,
                  shareholders' equity and cash flows for the Subject Fiscal
                  Year, setting forth in each case in comparative form the
                  figures for the previous fiscal year, all in reasonable
                  detail, audited and accompanied by a report and opinion of an
                  independent certified public accountant of nationally
                  recognized standing reasonably acceptable to the Required
                  Lenders, which report and opinion have been prepared in
                  accordance with GAAP and are not subject to any qualifications
                  or exceptions as to the scope of the audit nor to any
                  qualifications and exceptions that are not reasonably
                  acceptable to the Required Lenders; or

                           -        an SEC Form 10-K for the Borrower
                  (excluding the exhibits thereto) relating to the fiscal year
                  ended [____________, 200_]; or

                           -        a consolidated balance sheet of the Borrower
                  and its Subsidiaries as at the end of the fiscal quarter ended
                  [____________, 200_] (the "Subject Fiscal Quarter"), and the
                  related consolidated statements of income or operations,
                  shareholders' equity and cash flows for the Subject Fiscal
                  Quarter and for the portion of the Borrower's fiscal year then
                  ended, setting forth in each case in comparative form the
                  figures for the corresponding fiscal quarter of the previous
                  fiscal year and the corresponding portion of the previous
                  fiscal year, all in reasonable detail and certified by a
                  Responsible Officer of the Borrower as fairly presenting the
                  financial condition, results of operations and cash flows of
                  the Borrower and its Subsidiaries in accordance with GAAP,
                  subject only to normal year-end audit adjustments and the
                  absence of footnotes; or

                                       C-1



                           -        an SEC Form 10-Q for the Borrower
                  (excluding the exhibits thereto) relating to the fiscal
                  quarter ended [____________, 200_].

         2.       -   Attached hereto is:

                           -        a consolidating balance sheet of all
                  Unrestricted Subsidiaries as at the end of such fiscal year,
                  and the related consolidating statements of income or
                  operations, shareholders' equity and cash flows for such
                  fiscal year, setting forth in each case in comparative form
                  the figures for the previous fiscal year, all in reasonable
                  detail, audited and accompanied by a report and opinion of an
                  independent certified public accountant of nationally
                  recognized standing reasonably acceptable to the Required
                  Lenders, which report and opinion shall be prepared in
                  accordance with GAAP and shall not be subject to any
                  qualifications or exceptions as to the scope of the audit nor
                  to any qualifications or exceptions not reasonably acceptable
                  to the Required Lenders; or

                           -        a consolidating balance sheet of all
                  Unrestricted Subsidiaries as at the end of such fiscal
                  quarter, and the related consolidating statements of income or
                  operations, shareholders' equity and cash flows for such
                  fiscal quarter and for the portion of the Borrower's fiscal
                  year then ended, setting forth in each case in comparative
                  form the figures for the corresponding fiscal quarter of the
                  previous fiscal year and the corresponding portion of the
                  previous fiscal year, all in reasonable detail and certified
                  by a Responsible Officer of the Borrower as fairly presenting
                  the financial condition, results of operations and cash flows
                  of such Subsidiaries on a consolidating basis in accordance
                  with GAAP, subject only to normal year-end audit adjustments
                  and the absence of footnotes.

         3.       The financial statements referred to in Paragraph 1 fairly
present, in all material respects, the consolidated financial position and the
results of operations of the Borrower and its Subsidiaries.

         4.       The undersigned has reviewed and is familiar with the terms of
the Credit Agreement and the other Loan Documents and has made, or has caused to
be made under my supervision, a detailed review of the transactions and
conditions (financial or otherwise) of the Borrower and its Subsidiaries during
the accounting period covered by the attached financial statements.

         5.       To the best of the undersigned's knowledge, the Borrower and
each of its Subsidiaries have, during such period, observed, performed and/or
satisfied and/or have caused to be observed, performed and/or satisfied all of
their respective covenants and other agreements contained in the Loan Documents
to which they are a party, and have satisfied every condition in the Loan
Documents to which they are a party to be observed, performed and/or satisfied
by them, and the undersigned has no knowledge of any condition, event or
occurrence, which constitutes a Default or Event of Default, except as set forth
below:

         [Describe below (or in a separate attachment to this Certificate) the
exceptions, if any, to paragraph 4 above by listing, in detail and with
reference to specific sections of the Credit Agreement, the nature of the
condition, event or occurrence, the period during which it has

                                      C-2



existed and the actions that the Borrower has taken, is taking or proposes to
take with respect to such condition, event or occurrence.]

         6.       The financial covenant and other compliance analyses and
information set forth on Schedule 1 attached hereto are true, complete and
accurate on and as of the date of this Certificate.

         The foregoing certifications, together with the computations set forth
in Schedule 1 hereto, are made and delivered, and the financial statements
referenced above are made or posted, as applicable, this ____ day of _____,
200_, pursuant to the provisions of the Credit Agreement.

                                    By:    ____________________________________
                                    Title: ____________________________________
                                           of Granite Construction Incorporated

                                      C-3



                                   SCHEDULE 1

                            TO COMPLIANCE CERTIFICATE

1.       INVESTMENTS - INVESTMENTS (INCLUDING CONSTRUCTION JV INVESTMENTS) BY
         ANY LAND DEVELOPMENT COMPANY, OR ANY SUBSIDIARY THEREOF. Section
         7.02(g)

         A.       The aggregate amount of Investments (including Construction JV
                  Investments) by any Land Development Company, or any
                  Subsidiary thereof: $______________

              REQUIREMENT: THE AMOUNT IN A MAY NOT EXCEED $25,000,000.

2.       INVESTMENTS - OTHER INVESTMENTS. Section 7.02(h)

         A.       The aggregate amount of Investments not otherwise permitted
                  pursuant to subsections (a) through (g) of Section 7.02 in the
                  equity of any Restricted Subsidiary or the capital stock,
                  assets, obligations or other securities of or interests in any
                  other Person (other than an Unrestricted Subsidiary):
                  $______________

              REQUIREMENT: THE AMOUNT IN A MAY NOT EXCEED $100,000,000.

3.       INDEBTEDNESS - OTHER INDEBTEDNESS. Section 7.03(h)

         A.       Indebtedness of the Borrower and its Subsidiaries, comprised
                  solely of (i) the outstanding principal amount of obligations,
                  whether current or long-term, for borrowed money and all
                  obligations evidenced by bonds (other than performance, surety
                  and appeal bonds), debentures, notes, loan agreements or other
                  similar instruments, (ii) Attributable Indebtedness in respect
                  of capital leases and Synthetic Lease Obligations, or (iii)
                  without duplication, Guaranty Obligations (other than Guaranty
                  Obligations as to which an Unrestricted Subsidiary is the
                  primary obligor) with respect to Indebtedness of the types
                  specified in the immediately preceding clauses (i) and (ii);
                  provided that none of the foregoing includes Indebtedness of
                  any co-joint venturer in any Joint Venture to which the
                  Borrower or any Subsidiary is a party that has been assumed by
                  the Borrower or any Subsidiary if such Indebtedness was not
                  originally incurred by such co-joint venturer in connection
                  with (and relates solely to) the subject Joint Venture:
                  $______________

         B.       All Guaranty Obligations as to which an Unrestricted
                  Subsidiary is the primary Obligor and Indebtedness incurred
                  for the benefit of an Unrestricted Subsidiary:
                  $________________

         C.       A minus B: $______________________

         REQUIREMENT:      THE AMOUNT IN C MAY NOT EXCEED $100,000,000.

                                      S-1



4.       DISPOSITIONS OF ASSETS. Section 7.05(g)

         A.       The aggregate consideration from Dispositions received by the
                  Borrower and its Subsidiaries pursuant to Section 7.05(g),
                  including aggregate cash received and the aggregate fair
                  market value of non-cash property received, during the current
                  fiscal year: $______________

         B.       The aggregate consideration from Dispositions received by any
                  Unrestricted Subsidiaries, including aggregate cash received
                  and the aggregate fair market value of non-cash property
                  received, during the current fiscal year: $______________

         C.       A minus B: $_________________________

         D.       The amount equal to 5% of the total assets of the Borrower
                  (determined on a consolidated basis in accordance with GAAP)
                  as of the end of the Borrower's most recently ended fiscal
                  year: $______________

         REQUIREMENT:      THE AMOUNT IN C MAY NOT EXCEED THE AMOUNT IN D.

5.       MINIMUM CONSOLIDATED TANGIBLE NET WORTH. Section 7.13(a)

         A.       Consolidated Tangible Net Worth (A(i) minus (A)(ii)):
                  $______________

                  (i)      Consolidated Stockholders' Equity for Consolidated
                           Restricted Group (A(i)(A) minus A(i)(B) below):
                           $______________

                           (A)      Stockholders' equity for the Borrower and
                                    its consolidated Subsidiaries (determined in
                                    accordance with GAAP): $______________

                           (B)      Stockholders' equity for the Unrestricted
                                    Subsidiaries (determined in accordance with
                                    GAAP): $______________

                  (ii)     Intangible Assets of the Consolidated Restricted
                           Group (determined on a consolidated basis in
                           accordance with GAAP) (A(ii)(A) minus A(ii)(B)):
                           $______________

                           (A)      Intangible Assets of the Borrower and its
                                    consolidated Subsidiaries (determined on a
                                    consolidated basis in accordance with GAAP):
                                    $______________

                           (B)      Intangible Assets of the Unrestricted
                                    Subsidiaries (determined on a consolidated
                                    basis in accordance with GAAP):
                                    $______________

         B.       Consolidated Net Income (B(i) minus B(ii)):
                  $_______________________

                                      S-2



                  (i)      Net income, on a consolidated basis, of the Borrower
                           and its consolidated Subsidiaries from continuing
                           operations, excluding extraordinary items and
                           excluding gains and losses from Dispositions earned
                           in each fiscal quarter ending after the date of the
                           Audited Financial Statements (not including net
                           income in respect of or attributable to any Project
                           Debt Entity): $______________

                  (ii)     Net income, on a consolidated basis, of the
                           Unrestricted Subsidiaries from continuing operations,
                           excluding extraordinary items and excluding gains and
                           losses from Dispositions earned in each fiscal
                           quarter ending after the date of the Audited
                           Financial Statements (not including net income in
                           respect of or attributable to any Project Debt
                           Entity): $______________

         C.       Calculation of Minimum Consolidated Tangible Net Worth (C(i) +
                  C(ii) + C(iii) below): $_______________

                  (i)      85% of the Consolidated Tangible Net Worth as of the
                           date of the Audited Financial Statements:
                           $_________________

                  plus

                  (ii)     50% of Consolidated Net Income (line B above):
                           $______________

                  plus

                  (iii)    50% of the aggregate increases in Consolidated
                           Stockholders' Equity for the Consolidated Restricted
                           Group (line A(i) above) after the date of the Audited
                           Financial Statements by reason of the issuance and
                           sale of the capital stock of the Borrower:
                           $______________

         REQUIREMENT:      THE AMOUNT IN A MAY NOT BE LESS THAN THE AMOUNT IN C.

6.       MINIMUM FIXED CHARGE COVERAGE RATIO. Section 7.13(b)

         A.       Consolidated EBITDA for Consolidated Restricted Group (A(i)
                  minus A(ii)): $________________________

                  (i)      Consolidated EBITDA for the Borrower and its
                           consolidated Subsidiaries (A(i)(A) plus A(i)(B) plus
                           A(i)(C) plus A(i)(D): $___________________

                           (A)      Net income, on a consolidated basis, of
                                    Borrower and its consolidated Subsidiaries
                                    (excluding any Project Debt Entity) from
                                    continuing operations, excluding
                                    extraordinary items and excluding gains and
                                    losses from Dispositions for such Subject
                                    Period: $_________________

                                      S-3



                           (B)      Consolidated Interest Expense for such
                                    Subject Period to the extent deducted in
                                    calculating Consolidated Net Income:
                                    $_______________

                           (C)      Consolidated Cash Taxes for such Subject
                                    Period the extent deducted in calculating
                                    Consolidated Net Income: $______________

                           (D)      Depreciation and amortization expense for
                                    such Subject Period to the extent deducted
                                    in calculating Consolidated Net Income:
                                    $_______________

                  (ii)     Consolidated EBITDA for the Unrestricted Subsidiaries
                           (A(ii)(A) plus A(ii)(B) plus A(ii)(C) plus A(ii)(D):
                           $___________________

                           (A)      Net income, on a consolidated basis, of the
                                    Unrestricted Subsidiaries (excluding any
                                    Project Debt Entity) from continuing
                                    operations, excluding extraordinary items
                                    and excluding gains and losses from
                                    Dispositions for such Subject Period:
                                    $______________

                           (B)      Consolidated Interest Expense for such
                                    Subject Period to the extent deducted in
                                    calculating Consolidated Net Income:
                                    $_________________

                           (C)      Consolidated Cash Taxes for such Subject
                                    Period the extent deducted in calculating
                                    Consolidated Net Income: $________________

                           (D)      Depreciation and amortization expense for
                                    such Subject Period to the extent deducted
                                    in calculating Consolidated Net Income:
                                    $_______________

         B.       Consolidated Cash Taxes for the Consolidated Restricted Group
                  (B(i) minus B(ii)): $_____________

                  (i)      Aggregate of all taxes, on a consolidated basis,
                           actually paid by the Borrower and its consolidated
                           Subsidiaries in cash during such Subject Period
                           (excluding any Project Entity Debt): $_____________

                  (ii)     Aggregate of all taxes, on a consolidated basis,
                           actually paid in respect of the Unrestricted
                           Subsidiaries in cash during such Subject Period
                           (excluding any Project Entity Debt): $_____________

         C.       Interest Income of the Consolidated Restricted Group (C(i)
                  minus C(ii)): $_____________

                                      S-4



                  (i)      Aggregate of all interest income of the Borrower and
                           its consolidated Subsidiaries (other than in respect
                           of Project Debt Entities) for the Subject Period
                           ending on such day (to the extent not included in the
                           determination of Consolidated EBITDA (line A(i)
                           above) for such Subject Period): $_____________

                  (ii)     Aggregate of all interest income of the Unrestricted
                           Subsidiaries for the Subject Period (other than in
                           respect of Project Debt Entities) ending on such day
                           (to the extent not included in the determination of
                           Consolidated EBITDA (line A(ii) above) for such
                           Subject Period): $_____________

         D.       Capital Expenditures for the Consolidated Restricted Group
                  (D(i) minus D(ii)): $_____________

                  (i)      Aggregate of all expenditures by the Borrower and its
                           consolidated Subsidiaries (excluding expenditures by
                           any Project Debt Entity) for the acquisition or
                           leasing of fixed or capital assets or additions to
                           equipment (including replacements, capitalized
                           repairs and improvements during such period) which
                           should be capitalized under GAAP on a consolidated
                           balance sheet of the Borrower and its consolidated
                           Subsidiaries, minus net proceeds from sales of fixed
                           or capital assets received by the Borrower and its
                           consolidated Subsidiaries during such Subject Period:
                           $_____________

                  (ii)     Aggregate of all expenditures by the Unrestricted
                           Subsidiaries for the acquisition or leasing of fixed
                           or capital assets or additions to equipment
                           (including replacements, capitalized repairs and
                           improvements during such period) which should be
                           capitalized under GAAP on a consolidated balance
                           sheet of the Unrestricted Subsidiaries, minus net
                           proceeds from sales of fixed or capital assets
                           received by the Unrestricted Subsidiaries during such
                           Subject Period: $_____________

         E.       A minus B plus C minus D: $________________

         F.       Consolidated Interest Expense for the Consolidated Restricted
                  Group (F(i) minus F(ii)): $________________

                  (i)      Consolidated Interest Expense for the Borrower and
                           its consolidated Subsidiaries (F(i)(A) plus F(i)(B)):
                           $________________

                           (A)      All interest, premium payments, fees,
                                    charges and related expenses of the Borrower
                                    and its consolidated Subsidiaries in
                                    connection with borrowed money (including
                                    capitalized interest) or in connection with
                                    the deferred purchase price of assets, in
                                    each case to the extent treated as interest
                                    in accordance with GAAP (excluding such
                                    amounts in respect of Project Debt):
                                    $________________

                           (B)      The portion of rent expense of the Borrower
                                    and its consolidated Subsidiaries with
                                    respect to such Subject Period under capital
                                    leases

                                      S-5



                                    that is treated as interest in accordance
                                    with GAAP and the portion of Synthetic Lease
                                    Obligations payable by the Borrower and its
                                    consolidated Subsidiaries with respect to
                                    such Subject Period that would be treated as
                                    interest in accordance with GAAP if such
                                    lease were treated as a capital lease under
                                    GAAP (excluding such amounts in respect of
                                    Project Debt): $________________

                  (ii)     Consolidated Interest Expense for the Unrestricted
                           Subsidiaries (F(ii)(A) plus F(ii)(B)):
                           $________________

                           (A)      All interest, premium payments, fees,
                                    charges and related expenses of the
                                    Unrestricted Subsidiaries in connection with
                                    borrowed money (including capitalized
                                    interest) or in connection with the deferred
                                    purchase price of assets, in each case to
                                    the extent treated as interest in accordance
                                    with GAAP (excluding such amounts in respect
                                    of Project Debt): $________________

                           (B)      The portion of rent expense of the
                                    Unrestricted Subsidiaries with respect to
                                    such period under capital leases that is
                                    treated as interest in accordance with GAAP
                                    and the portion of Synthetic Lease
                                    Obligations payable by the Borrower and its
                                    consolidated Subsidiaries with respect to
                                    such Subject Period that would be treated as
                                    interest in accordance with GAAP if such
                                    lease were treated as a capital lease under
                                    GAAP (excluding such amounts in respect of
                                    Project Debt): $_____________

         G.       Current portion (determined in accordance with GAAP) of
                  Consolidated Funded Indebtedness for the Consolidated
                  Restricted Group (G(i) minus G(ii)): $______________

                  (i)      Current portion (determined in accordance with GAAP)
                           of Consolidated Funded Indebtedness for the Borrower
                           and its consolidated Subsidiaries (G(i)(A) plus
                           G(i)(B)): $___________________

                           (A)      On a consolidated basis, the outstanding
                                    principal amount of all obligations, whether
                                    current or long-term, for borrowed money
                                    (including Obligations under the Credit
                                    Agreement) and all obligations evidenced by
                                    bonds, debentures, notes, loan agreements or
                                    other similar instruments of Borrower and
                                    its consolidated Subsidiaries (not including
                                    Project Debt): $______________

                           (B)      Attributable Indebtedness in respect of
                                    capital leases and Synthetic Lease
                                    Obligations of Borrower and its consolidated
                                    Subsidiaries (not including Project Debt):
                                    $___________

                  (ii)     Current portion (determined in accordance with GAAP)
                           of Consolidated Funded Indebtedness for the
                           Unrestricted Subsidiaries (G(ii)(A) plus G(ii)(B)
                           plus G(ii)(C)): $___________________

                                      S-6



                           (A)      On a consolidated basis, the outstanding
                                    principal amount of all obligations, whether
                                    current or long-term, for borrowed money
                                    (including Obligations under the Credit
                                    Agreement) and all obligations evidenced by
                                    bonds, debentures, notes, loan agreements or
                                    other similar instruments of the
                                    Unrestricted Subsidiaries (not including
                                    Project Debt): $______________

                           (B)      Attributable Indebtedness in respect of
                                    capital leases and Synthetic Lease
                                    Obligations of the Unrestricted Subsidiaries
                                    (not including Project Debt): $___________

                           (C)      Without duplication, all Guaranty
                                    Obligations with respect to Indebtedness of
                                    the types specified in subsections (A) and
                                    (B) above: $_______________

         H.       F plus G: $______________________

         I.       Ratio of E to H: _________ to 1.00

         REQUIREMENT:      THE RATIO IN I (I.E., THE RATIO OF E TO H) MAY NOT
                           BE LESS THAN 1.50 TO 1.00 AS OF THE LAST DAY OF ANY
                           FISCAL QUARTER OF THE BORROWER.

7.       LEVERAGE RATIO. Section 7.13(c)

         A.       Consolidated Funded Indebtedness for the Consolidated
                  Restricted Group (A(i) minus A(ii)): $______________

                  (i)      Consolidated Funded Indebtedness for the Borrower and
                           its consolidated Subsidiaries (A(i)(A) plus A(i)(B)):
                           $___________________

                           (A)      On a consolidated basis, the outstanding
                                    principal amount of all obligations, whether
                                    current or long-term, for borrowed money
                                    (including Obligations under the Credit
                                    Agreement) and all obligations evidenced by
                                    bonds, debentures, notes, loan agreements or
                                    other similar instruments of Borrower and
                                    its consolidated Subsidiaries (not including
                                    Project Debt): $______________

                           (B)      Attributable Indebtedness in respect of
                                    capital leases and Synthetic Lease
                                    Obligations of Borrower and its consolidated
                                    Subsidiaries (not including Project Debt):
                                    $___________

                  (ii)     Consolidated Funded Indebtedness for the Unrestricted
                           Subsidiaries (A(ii)(A) plus A(ii)(B) plus A(ii)(C)):
                           $___________________

                           (A)      On a consolidated basis, the outstanding
                                    principal amount of all obligations, whether
                                    current or long-term, for borrowed money
                                    (including Obligations under the Credit
                                    Agreement) and all obligations evidenced by
                                    bonds, debentures, notes, loan agreements or
                                    other

                                      S-7



                                    similar instruments of the Unrestricted
                                    Subsidiaries (not including Project Debt):
                                    $______________

                           (B)      Attributable Indebtedness in respect of
                                    capital leases and Synthetic Lease
                                    Obligations of the Unrestricted Subsidiaries
                                    (not including Project Debt): $___________

                           (C)      Without duplication, all Guaranty
                                    Obligations with respect to Indebtedness of
                                    the types specified in subsections (A) and
                                    (B) above: $_______________

         B.       (i)      Consolidated Funded Indebtedness for the Consolidated
                  Restricted Group (line A above): $______________

                  plus

                  (ii)     Consolidated Tangible Net Worth for the Consolidated
                           Restricted Group: $______________

                  Total: $______________

         C.       Ratio of A to B: _________ to 1.00

         REQUIREMENT: THE RATIO IN C (I.E., THE RATIO OF A TO B) MAY NOT
         EXCEED 0.55 TO 1.00 AS OF THE LAST DAY OF ANY FISCAL QUARTER OF THE
         BORROWER.

                                      S-8



                                   EXHIBIT D

                   FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT

         This Assignment and Assumption Agreement (this "Assignment") is dated
as of the Effective Date set forth below and is entered into by and between
__________ (the "Assignor") and _______________ (the "Assignee"). Capitalized
terms used but not defined herein shall have the meanings given to them in the
Credit Agreement identified below (the "Credit Agreement"), receipt of a copy of
which is hereby acknowledged by the Assignee. The Standard Terms and Conditions
set forth in Annex 1 attached hereto are hereby agreed to and incorporated
herein by reference and made a part of this Assignment as if set forth herein in
full.

         For an agreed consideration, the Assignor hereby irrevocably sells and
assigns to the Assignee, and the Assignee hereby irrevocably purchases and
assumes from the Assignor, subject to and in accordance with the Standard Terms
and Conditions and the Credit Agreement, as of the Effective Date inserted by
the Administrative Agent as contemplated below, the interest in and to all of
the Assignor's rights and obligations under the Credit Agreement and any other
documents or instruments delivered pursuant thereto that represents the amount
and percentage interest identified below of all of the Assignor's outstanding
rights and obligations under the respective facilities identified below
(including, to the extent included in any such facilities and Letters of Credit)
(the "Assigned Interest"). Such sale and assignment is without recourse to the
Assignor and, except as expressly provided in this Assignment, without
representation or warranty by the Assignor.

1.       Assignor:      ______________________________

2.       Assignee:      ______________________________ [and is an
                                                        Affiliate/Approved Fund]

3.       Borrower(s):   Granite Construction Incorporated

4.       Administrative Agent:      Bank of America, N.A., as the administrative
                                    agent under the Credit Agreement

5.       Credit Agreement:  The Credit Agreement, dated as of [     , 2003],
                            among Granite Construction Incorporated, the Lenders
                            parties thereto, and Bank of America, N.A., as
                            Administrative Agent and as L/C Issuer

6.       Assigned Interest:



- -------------------------------------------------------------------------------------------------------
                                   Aggregate
                                   Amount of                       Amount of               Percentage
                                Commitment/Loans               Commitment/Loans           Assigned of
Facility Assigned               for all Lenders                    Assigned            Commitment/Loans
- -------------------------------------------------------------------------------------------------------
                                                                              
  _____________                $________________              $________________         ______________%
- -------------------------------------------------------------------------------------------------------
  _____________                $________________              $________________         ______________%
- -------------------------------------------------------------------------------------------------------
  _____________                $________________              $________________         ______________%
- -------------------------------------------------------------------------------------------------------


                                       D-1



         Effective Date: __________________, 200__ [TO BE INSERTED BY
ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF
TRANSFER IN THE REGISTER THEREFOR.]

          The terms set forth in this Assignment are hereby agreed to:

                                                  ASSIGNOR
                                                  [NAME OF ASSIGNOR]

                                                  By: __________________________
                                                           Title:

                                                  ASSIGNEE
                                                  [NAME OF ASSIGNEE]

                                                  By: __________________________
                                                           Title:
Consented to and Accepted:

BANK OF AMERICA, N.A., as
Administrative Agent

By: ____________________________
    Title:

GRANITE CONSTRUCTION INCORPORATED, as
Borrower

By: ___________________________
    Title:

                                      D-2



                 ANNEX 1 TO ASSIGNMENT AND ASSUMPTION AGREEMENT

       CREDIT AGREEMENT, DATED AS OF [ , 2003], AMONG GRANITE CONSTRUCTION
      INCORPORATED, THE LENDERS PARTY THERETO, AND BANK OF AMERICA, N.A.,
       AS ADMINISTRATIVE AGENT AND AS L/C ISSUER (THE "CREDIT AGREEMENT")

                  STANDARD TERMS AND CONDITIONS FOR ASSIGNMENT

                            AND ASSUMPTION AGREEMENT

         1.       Representations and Warranties.

                  1.1      Assignor. The Assignor (a) represents and warrants
that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the
Assigned Interest is free and clear of any lien, encumbrance or other adverse
claim and (iii) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and to consummate the
transactions contemplated hereby; and (b) assumes no responsibility with respect
to (i) any statements, warranties or representations made in or in connection
with any Loan Document, (ii) the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement or any other
instrument or document delivered pursuant thereto, other than this Assignment
(herein collectively the "Loan Documents"), or any collateral thereunder, (iii)
the financial condition of the Borrower, any of its Subsidiaries or Affiliates
or any other Person obligated in respect of any Loan Document or (iv) the
performance or observance by the Borrower, any of its Subsidiaries or Affiliates
or any other Person of any of their respective obligations under any Loan
Document.

                  1.2      Assignee. The Assignee (a) represents and warrants
that (i) it has full power and authority, and has taken all action necessary, to
execute and deliver this Assignment and to consummate the transactions
contemplated hereby and to become a Lender under the Credit Agreement, (ii) it
meets all requirements of an Eligible Assignee under the Credit Agreement, (iii)
from and after the Effective Date, it shall be bound by the provisions of the
Credit Agreement and, to the extent of the Assigned Interest, shall have the
obligations of a Lender thereunder, (iv) it has received a copy of the Credit
Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 6.01 thereof, as applicable, and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and to purchase the Assigned
Interest on the basis of which it has made such analysis and decision, and (v)
if it is a Foreign Lender, attached hereto is any documentation required to be
delivered by it pursuant to the terms of the Credit Agreement, duly completed
and executed by the Assignee; and (b) agrees that (i) it will, independently and
without reliance on the Administrative Agent, the Assignor or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Loan Documents, and (ii) it will perform in accordance with their
terms all of the obligations which by the terms of the Loan Documents are
required to be performed by it as a Lender.

                  1.3      Assignee's Address for Notices, etc. Attached hereto
as Schedule 1 is all contact information, address, account and other
administrative information relating to the Assignee.

                                       D-3



         2.       Payments. From and after the Effective Date, the
Administrative Agent shall make all payments in respect of the Assigned Interest
(including payments of principal, interest, fees and other amounts) to the
Assignee whether such amounts have accrued prior to or on or after the Effective
Date. The Assignor and the Assignee shall make all appropriate adjustments in
payments by the Administrative Agent for periods prior to the Effective Date or
with respect to the making of this assignment directly between themselves.

         3.       General Provisions. This Assignment shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and
assigns. This Assignment may be executed in any number of counterparts, which
together shall constitute one instrument. Delivery of an executed counterpart of
a signature page of this Assignment by telecopy shall be effective as delivery
of a manually executed counterpart of this Assignment. THIS ASSIGNMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN
SUCH STATE; PROVIDED THAT THE PARTIES HERETO SHALL RETAIN ALL RIGHTS ARISING
UNDER FEDERAL LAW.

                                       D-4



                SCHEDULE 1 TO ASSIGNMENT AND ASSUMPTION AGREEMENT

                             ADMINISTRATIVE DETAILS

   (Assignee to list names of credit contacts, addresses, phone and facsimile
    numbers, electronic mail addresses and account and payment information)

                                       D-5



                                    EXHIBIT E

                      FORM OF CONTINUING GUARANTY AGREEMENT

                          CONTINUING GUARANTY AGREEMENT

         This CONTINUING GUARANTY AGREEMENT (this "Agreement"), dated as of [],
200[_], is made by each of the undersigned (each, a "Guarantor" and,
collectively, the "Guarantors"), in favor of each Guaranteed Party (as
hereinafter defined).

         WHEREAS, Granite Construction Incorporation, a Delaware corporation
(together with its successors, the "Company"), Bank of America, N.A., as
Administrative Agent, as L/C Issuer and as a Lender, and the other financial
institutions as are, or may from time to time become, parties thereto have
entered into or are in the process of entering into that certain Credit
Agreement, dated as of [ 2003] as amended, modified and/or supplemented from
time to time, the "Credit Agreement", pursuant to which the Lenders have
provided the Commitments and agreed to make Loans to the Company and to
participate in Letters of Credit issued by the L/C Issuer for the account of the
Company or its Subsidiaries on the terms and conditions contained therein; and

         WHEREAS, to induce the Lenders and the L/C Issuer to provide and to
continue to provide financial accommodations to the Company pursuant to the
terms of the Credit Agreement and the other Loan Documents, the Guarantors have
each agreed to enter into this Agreement;

         NOW, THEREFORE, for good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged), and intending to be legally bound
hereby, each Guarantor irrevocably and unconditionally undertakes and agrees for
the benefit of Guaranteed Party as follows:

                                    ARTICLE I
                  CERTAIN DEFINITIONS AND RULES OF CONSTRUCTION

         Section 1.1       Certain Definitions. Each capitalized term used but
not otherwise defined herein has the meaning ascribed thereto in the Credit
Agreement. As used herein, the term "Guaranteed Party" means, as the context may
require, the Administrative Agent, the L/C Issuer, each Lender and each
Indemnitee (and each such Person's respective successors, transferees and
assigns).

         Section 1.2       Construction. For purposes of this Agreement and
unless otherwise specified herein: (a) references to the plural include the
singular and to the singular include the plural, references to any gender
include any other gender, the part includes the whole, the term "including" is
not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or"; (b) references in this
Agreement to any determination by the Guaranteed Party include good faith
estimates (in the case of quantitative determinations) and good faith beliefs
(in the case of qualitative determinations) by any Guaranteed Party; any
determination made in good faith by any Guaranteed Party shall be

                                       E-1



conclusive absent manifest error; (c) the words "hereof," "herein," "hereby,"
and "hereunder," and any other similar words, refer to this Agreement as a whole
and not to any particular provision of this Agreement; (d) article, section,
subsection, clause, exhibit and schedule references are to this Agreement; and
(e) any reference to this Agreement or any other Loan Document includes all
permitted alterations, amendments, changes, extensions, modifications, renewals,
or supplements thereto or thereof, as applicable.

                                   ARTICLE II
                             GUARANTY BY GUARANTORS

         Section 2.1       Promise to Pay and Perform. Each Guarantor jointly
and severally unconditionally and irrevocably guarantees to each Guaranteed
Party the payment and performance of all Obligations when and as the same shall
become due and payable (whether at stipulated or any accelerated or earlier date
of maturity (including the date of any required prepayment)) (the "Guaranteed
Obligations"), it being each Guarantor's intent that such Guarantor's guaranty
is a guaranty of payment and not a guaranty of collection. If the Company fails
to pay or perform any Guaranteed Obligation on or before the date when due
(whether at stipulated or any accelerated or earlier date of maturity (including
the date of any required prepayment)), each Guarantor shall jointly and
severally unconditionally and immediately make such payment or render such
performance upon written demand therefor by any Guaranteed Party.

         Section 2.2       Cumulative Obligations; Continuing Guaranty. The
obligations of each Guarantor hereunder are in addition to any other obligations
of such Guarantor under any other guaranties of the Indebtedness or other
obligations of the Company or any other Person at any time given to any
Guaranteed Party. This Agreement shall not affect or invalidate any such other
guaranties. This Agreement is a continuing guaranty and shall remain in full
force and effect notwithstanding the fact that, at any particular time, no
Guaranteed Obligations may be outstanding.

         Section 2.3       Joint and Several Obligation; Independent Obligation.
Each Guarantor is directly, jointly and severally with all other guarantors of
the Guaranteed Obligations or any portion thereof, liable to the Guaranteed
Parties. The obligations of each Guarantor hereunder are direct and primary and
are independent of the obligations of the Company or any other such guarantor,
and a separate action may be brought against each Guarantor irrespective of
whether an action is brought against the Company or any other such other
guarantor or whether the Company or any such other guarantor is joined in such
action. Each Guarantor's liability hereunder shall not be contingent upon the
exercise or enforcement by the Guaranteed Parties of any remedies they may have
against the Company or any other guarantor or the enforcement of any Lien or
realization upon any security the Guaranteed Parties may at any time possess.
Any release that may be given by the Guaranteed Parties to the Company or any
other guarantor shall not release any Guarantor hereunder unless such release
expressly so provides.

         Section 2.4       Limit of Liability. Notwithstanding anything to the
contrary contained herein, each Guarantor shall be liable hereunder only for the
largest amount that would not render such Guarantor's obligations hereunder
subject to avoidance under Section 548 of the Bankruptcy Code or comparable
provisions of any applicable state law; provided that such

                                       E-2



amount shall be presumed to be the entire amount of the Guaranteed Obligations.
If, any Guarantor claims that such Guarantor's liability hereunder is less than
the entire amount of the Guaranteed Obligations, such Guarantor shall have the
burden of proving, by clear and convincing evidence, that such Guarantor's
liability hereunder should be so limited since the information concerning, and
the circumstances of, the financial condition of such Guarantor are more readily
available to and are under the control of such Guarantor. All payments received
by any Guaranteed Party from any Person other than a Guarantor on account of the
Guaranteed Obligations shall be deemed as having been applied to Guaranteed
Obligations that, pursuant to this Section 2.4, are in excess of the amounts
guaranteed hereunder.

                                   ARTICLE III
                                    PAYMENTS

         Section 3.1       Nature and Application of Payments. Each Guarantor
shall make all payments hereunder in immediately available lawful money of the
United States, without deduction or withholding (whether for taxes (whether
income, excise, or otherwise) or offset). Without regard to the form in which
received, the Guaranteed Parties may apply any payment with respect to the
Guaranteed Obligations or any other amounts due hereunder in such order as the
Guaranteed Parties shall in their sole and absolute discretion determine,
irrespective of any contrary instructions received from any other Person.

         Section 3.2       Indefeasible Payment; Revival. If any portion of any
payment to the Guaranteed Parties is set aside and repaid by any Guaranteed
Party for any reason after being made by any Guarantor, the amount so set aside
shall be revived as a Guaranteed Obligation and each Guarantor shall be liable
for the full amount the Guaranteed Parties are, or any Guaranteed Party is,
required to repay plus all costs and expenses (including attorneys' fees, costs,
and expenses) incurred by the Guaranteed Parties in connection therewith.

                                   ARTICLE IV
              CERTAIN REPRESENTATIONS AND WARRANTIES OF GUARANTORS

         Each Guarantor represents and warrants as follows (which
representations and warranties shall be true, correct, and complete at all
times):

         Section 4.1       No Contravention; No Default. The execution,
delivery, and performance by such Guarantor of this Agreement do not and will
not: (a) conflict with or result in any breach or contravention of, or the
creation of any Lien under, any contractual obligation to which such Guarantor
is a party or any order, injunction, writ, or decree of any Governmental
Authority to which such Guarantor or such Guarantor's properties are subject; or
(b) violate any Laws of any Governmental Authority.

         Section 4.2       Binding Effect. This Agreement constitutes the legal,
valid, and binding obligation of such Guarantor, enforceable against such
Guarantor in accordance with its terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, or similar laws affecting the enforcement
of creditors' rights generally or by equitable principles relating to
enforceability.

                                       E-3



         Section 4.3       Litigation. Except as set forth on Schedule 5.06 to
the Credit Agreement, there are no actions, suits, proceedings, claims, or
disputes pending, or, to the best knowledge of such Guarantor, threatened in
writing, at law, in equity, in arbitration, or before any Governmental
Authority, against such Guarantor or any of such Guarantor's properties which
purport to affect or pertain to this Agreement, any of the other Loan Documents,
or any of the transactions contemplated hereby or thereby.

         Section 4.4       Regulated Entity. Neither such Guarantor nor any
Person controlling such Guarantor is: (a) an "investment company" within the
meaning of the Investment Company Act of 1940; or (b) subject to regulation by
any federal or state statute or regulation limiting such Guarantor's ability to
incur such Guarantor's obligations hereunder.

         Section 4.5       No Action Required. No consent, license, permit,
approval or authorization of, exemption by, notice or report to, or
registration, filing, or declaration with any Governmental Authority or of, to,
or with any other Person, is or will be required for: (a) the execution,
delivery, or performance of this Agreement by such Guarantor; or (b) the
exercise by the Guaranteed Parties of any of their respective rights and
remedies provided for herein.

         Section 4.6       Changes Affecting the Guaranteed Obligations. Such
Guarantor has taken and is taking all steps in such Guarantor's opinion
necessary or appropriate to be informed on a continuing basis of changes or
potential changes affecting the Guaranteed Obligations. Without limiting the
generality of the foregoing, such Guarantor hereby confirms that it has received
and reviewed the Credit Agreement, the Fee Letter and all other Loan Documents
(and all other agreements, documents and instruments related thereto) that such
Guarantor, in such Guarantor's sole determination, has deemed necessary or
appropriate to receive and review.

         Section 4.7       Reliance by Guarantor; Financial Condition of the
Company. This Agreement is not made by such Guarantor in reliance on any
representation or warranty, express or implied, by any Guaranteed Party
concerning the financial condition of the Company, the nature, value, or extent
of any security for the Guaranteed Obligations, or any other matter. Such
Guarantor is presently informed of the financial condition of the Company and of
all other circumstances that a diligent inquiry would reveal and which bear upon
the risk of nonpayment of the Guaranteed Obligations. Such Guarantor has
reviewed each of the Loan Documents.

         Section 4.8       Adequate Consideration. The consideration given or
provided, or to be given or provided, by the Guaranteed Parties in connection
with this Agreement is adequate and satisfactory in all respects, and represents
reasonably equivalent value, to support this Agreement and such Guarantor's
obligations hereunder.

                                    ARTICLE V
                         CERTAIN COVENANTS OF GUARANTORS

         Section 5.1       Knowledge of Financial Condition. Each Guarantor
shall keep informed of the Company's financial condition, the status of any
guarantors or of any security for the Guaranteed Obligations, and all other
circumstances that bear upon the risk of nonpayment of the Guaranteed
Obligations.

                                       E-4



         Section 5.2       Further Assurances. Each Guarantor shall, from time
to time, at the expense of such Guarantor, promptly execute and deliver all
further documents and take all further action that may be necessary, or that the
Guaranteed Parties (or any of them) may reasonably request, to enable the
Guaranteed Parties (or any of them) to exercise and enforce their respective
rights and remedies hereunder.

         Section 5.3       Sales, Dispositions, etc. Each Guarantor will not,
without the prior written consent of the Guaranteed Party, sell, lease, assign,
encumber, hypothecate, transfer or otherwise dispose of all of substantially all
of such Guarantor's properties or assets, or any interest therein, except as
otherwise permitted by the Credit Agreement.

                                   ARTICLE VI
              CERTAIN ACKNOWLEDGEMENTS AND AGREEMENTS OF GUARANTORS

         Section 6.1       Modifications to Loan Documents and Guaranteed
Obligations. Each Guarantor acknowledges and agrees that, without notice to such
Guarantor and without affecting or impairing the obligations of such Guarantor
hereunder, the Guaranteed Parties (or any of them) may, by action or inaction,
compromise or settle, extend the period of duration or the time for the payment,
or discharge the performance of, or may refuse to, or otherwise not enforce, or
may, by action or inaction, release all or any one or more parties to, any one
or more of the Loan Documents or otherwise with respect to the Guaranteed
Obligations or may grant other indulgences to the Company in respect thereof, or
may amend or modify in any manner and at any time (or from time to time) any one
or more of the Loan Documents or otherwise with respect to the Guaranteed
Obligations, or may, by action or inaction, release or substitute any guarantor,
if any, of the Guaranteed Obligations, or may enforce, exchange, release, or
waive, by action or inaction, any security for the Guaranteed Obligations or any
guaranty of the Guaranteed Obligations, or any portion thereof.

         Section 6.2       Subordination. Each Guarantor agrees that any and all
present and future indebtedness of the Company owing to such Guarantor is
postponed in favor of and subordinated to indefeasible payment, in full, in
cash, of the Guaranteed Obligations. In this regard, upon the occurrence and
during the continuance of a Default or an Event of Default, no payment of any
kind whatsoever shall be made with respect to such indebtedness until the
Guaranteed Obligations have been indefeasibly paid in full. Any payment received
by any Guarantor in respect of such indebtedness shall be held by such Guarantor
as trustee for the Guaranteed Parties and promptly paid over to the Guaranteed
Parties on account of the Guaranteed Obligations but without reducing or
affecting in any manner the liability of such Guarantor under the other
provisions of this Agreement.

         Section 6.3       Administrative Agent as Each Guarantor's
Attorney-in-Fact. Each Guarantor irrevocably appoints the Administrative Agent
as such Guarantor's attorney-in-fact, with full authority in the place and stead
and name of such Guarantor, from time to time at the Administrative Agent's
discretion but only following the occurrence and during the continuation of an
Event of Default, to take any action and to execute any instrument which the
Guaranteed Parties (or any of them) may, in accordance with the provisions of
the Loan Documents or this Agreement, require as necessary or advisable to
accomplish the purposes of this Agreement.

                                       E-5



                                   ARTICLE VII
                               GENERAL PROVISIONS

         Section 7.1       Notices. All notices, requests, and other
communications to any party under this Agreement shall be in writing (including
telegraphic, telex, telefacsimile, or cable communication) and mailed,
telegraphed, telexed, sent by telefacsimile, cabled, or delivered to such party
at its address or telefacsimile number set forth, in the case of each Guarantor,
on the signature pages hereof, or, in the case of the Guaranteed Parties, on
Schedule 10.02 to the Credit Agreement, or such other address or telefacsimile
number as such party may hereafter specify for the purpose by notice to the
other party given in accordance with this Section 7.1. Each such notice, request
or other communication shall be deemed to have been received: (a) if mailed as
provided above by any method other than overnight delivery service, on the third
Business Day after deposit in the mails; (b) if mailed by overnight delivery
service, telegraphed, telexed, sent by telefacsimile, or cable, when delivered
for overnight delivery, delivered to the telegraph company, confirmed by telex
answerback, transmitted by telefacsimile (with electronic confirmation), or
delivered to the cable company, respectively; or (c) if delivered by hand, upon
delivery. If any conflict exists between any oral communication to any
Guaranteed Party and the written confirmation thereof, the oral communication
shall control if any Guaranteed Party has acted thereon prior to actual receipt
of such written confirmation.

         Section 7.2       Amendments, Waivers, and Consents. No amendments or
waivers of any provision of this Agreement nor any consent to any departure by
any Guarantor from the terms hereof shall in any event be effective unless the
same shall be in writing and signed by the Administrative Agent (or all
Guaranteed Parties if required by the terms of the Credit Agreement) and the
Guarantors. Any such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.

         Section 7.3       No Waiver; Cumulative Nature of Remedies. No failure
or delay on the part of any Guaranteed Party in exercising any of its rights and
remedies under this Agreement, any of the Loan Documents, or otherwise with
respect to any of the Guaranteed Obligations shall operate as a waiver thereof;
nor shall any single or partial exercise of any right under this Agreement, the
Loan Documents, or otherwise with respect to the Guaranteed Obligations preclude
any other or further exercise thereof or the exercise of any other right or
remedies. The rights and remedies provided in this Agreement and otherwise with
respect to the Guaranteed Obligations are cumulative and not exclusive of any
rights and remedies provided by law.

         Section 7.4       Costs and Expenses. Each Guarantor shall pay or
reimburse the Guaranteed Parties on demand for all fees, costs, and expenses
incurred by the Guaranteed Parties in connection with the enforcement or
attempted enforcement of this Agreement, the preservation of any rights or
remedies under this Agreement, or in any action, case, or proceeding (whether at
law or in equity) relating to this Agreement. Without limiting the generality of
the foregoing, such fees, costs, and expenses shall include reasonable Attorney
Costs actually incurred by the Guaranteed Parties or any of them (irrespective
of whether the Company is liable therefor), whether or not suit is brought, in
connection therewith.

         Section 7.5       Successors and Assigns. This Agreement shall: (a) be
binding upon each Guarantor and each Guarantor's successors and assigns; and (b)
inure to the benefit of each

                                       E-6



Guaranteed Party and its successors and assigns (all to the extent permitted by
the Loan Documents). Without limiting the generality of the foregoing subsection
(b) but subject to the provisions of the Credit Agreement, any Guaranteed Party
may assign or otherwise transfer all or any part of the Guaranteed Obligations
owed to it to any other Person.

         Section 7.6       Headings. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement and shall not be given any substantive
effect.

         Section 7.7       Ambiguities. Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed or resolved using any
presumption against any Guarantor or any Guaranteed Party, whether under any
rule of construction or otherwise. On the contrary, this Agreement has been
reviewed by each Guarantor and each Guaranteed Party and their respective
counsel. In case of any ambiguity or uncertainty, this Agreement shall be
construed and interpreted according to the ordinary meaning of the words used to
accomplish fairly the purposes and intentions of all parties hereto.

         Section 7.8       Severability. In case any provision in or obligation
under this Agreement shall be invalid, illegal, or unenforceable in any
jurisdiction, the validity, legality, and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby. In addition,
all agreements and covenants herein shall be given independent effect such that,
if a particular action or condition is prohibited by the terms of any such
agreement or covenant, the fact that such action or condition would be permitted
by another agreement or covenant shall not be construed as allowing such action
to be taken or condition to exist.

         Section 7.9       Counterparts; Telefacsimile Signatures. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument. Each Guarantor may effect execution and delivery of this Agreement
by executing a counterpart hereof and sending the signature page bearing such
Guarantor's signature to the Administrative Agent by telefacsimile and,
thereafter, promptly sending by mail or delivering such signature page to the
Administrative Agent; provided that the failure to deliver such signature page
by such Guarantor shall not affect the validity, enforceability, or binding
effect of this Agreement against such Guarantor.

         Section 7.10      Entire Agreement. This Agreement and the Credit
Agreement embody the entire agreement and understanding concerning the
Guarantors and the Guaranteed Parties relating to the subject matter hereof and
supersede all prior agreements and understandings relating to the subject matter
hereof. No course of prior dealing between any Guarantor and the Guaranteed
Parties (or any of them), no usage of the trade, and no parole or extrinsic
evidence of any nature, shall be used or be relevant to supplement, explain or
modify any term used herein.

                                  ARTICLE VIII
                          CERTAIN WAIVERS BY GUARANTORS

         EACH GUARANTOR MAKES THE FOLLOWING WAIVERS WITH FULL KNOWLEDGE AND
UNDERSTANDING THAT SUCH WAIVERS, IF NOT SO MADE,

                                       E-7



MIGHT OTHERWISE RESULT IN SUCH GUARANTOR BEING ABLE TO AVOID OR LIMIT SUCH
GUARANTOR'S LIABILITY HEREUNDER EITHER IN WHOLE OR IN PART.

         Section 8.1       Notices. Each Guarantor absolutely, unconditionally,
knowingly, and expressly waives: (a) notice of the acceptance by the Guaranteed
Parties of this Agreement; (b) notice of any Credit Extensions consisting
Guaranteed Obligations; (c) notice of the amount of the Guaranteed Obligations,
subject, however, to such Guarantor's right to make inquiry, at any reasonable
time, of any Guaranteed Party to ascertain the amount of the Guaranteed
Obligations owing to such Guaranteed Party; (d) notice of any adverse change in
the financial condition of the Company, of any change in value, or the release,
of any collateral, or of any other fact that might increase such Guarantor's
risk hereunder; (e) notice of presentment for payment, demand, protest, and
notice thereof as to any instrument; (f) notice of any Default or Event of
Default; and (g) all other notices (except if such notice is expressly required
to be given to such Guarantor under this Agreement) and demands to which
guarantor might otherwise be entitled.

         Section 8.2       Revocation. Each Guarantor absolutely,
unconditionally, knowingly, and expressly waives any right to revoke such
Guarantor's guaranty obligation hereunder as to future Guaranteed Obligations
and, in light thereof, all protection afforded such Guarantor under Section 2815
of the California Civil Code. Each Guarantor fully realizes and understands
that, upon execution of this Agreement, such Guarantor will not have any right
to revoke this Agreement as to any future indebtedness and, thus, may have no
control over such Guarantor's ultimate responsibility for the amount and nature
of the Guaranteed Obligations.

         Section 8.3       Defenses of the Company. Each Guarantor absolutely,
unconditionally, knowingly, and expressly waives any defense arising by reason
of any disability or other defense (other than the defense that the Guaranteed
Obligations shall have been fully and finally performed and indefeasibly paid)
of the Company or by reason of the cessation from any cause whatsoever
(including any act or failure to act by the Company or the Guaranteed Parties)
of the liability of the Company in respect thereof, including any such defense
or cessation of liability arising from or as a result of: (a) any statute of
limitations; (b) any lack of power or authority of the Company or any Person
acting or purporting to act on the Company's behalf; (c) the operation of
Sections 580a, 580b, 580d, or 726 of the California Code of Civil Procedure or
any similar law of the State of California or any other jurisdiction; or (d) any
claim of fraudulent transfer or preference.

         Section 8.4       Suretyship and Certain Other Rights and Defenses of
Guarantors. Each Guarantor absolutely, unconditionally, knowingly, and expressly
waives:

         (a)      any right to assert against the Guaranteed Parties (or any of
them) any defense (legal or equitable), set-off, counterclaim, or claim which
such Guarantor may now or at any time hereafter have against the Company or any
other Person liable to the Guaranteed Parties (or any of them);

         (b)      any defense, set-off, counterclaim, or claim, of any kind or
nature, arising directly or indirectly from the present or future lack of
perfection, sufficiency, validity, or enforceability

                                       E-8



of any of the Guaranteed Obligations or any security therefor or from any
failure of the Guaranteed Parties (or any of them) to act in a commercially
reasonable manner;

         (c)      any defense arising by reason of or deriving from any claim or
defense based upon an election of remedies by the Guaranteed Parties (or any of
them) (including a nonjudicial foreclosure sale of any real property collateral
which destroys, diminishes, or otherwise adversely affects any Guarantor's
rights of subrogation, reimbursement, indemnity, or contribution or other rights
against the Company or any other Person), including any defense based upon an
election of remedies by any Guaranteed Party under the provisions of Sections
580a, 580b, 580d, and 726 of the California Code of Civil Procedure or any
similar law of the State of California or any other jurisdiction. In making this
waiver, each Guarantor specifically acknowledges that it understands and is
aware that, under Sections 580b and 580d of the California Code of Civil
Procedure, if the Guaranteed Parties (or any of them) conducted a nonjudicial
foreclosure sale of real property collateral: (i) such Guaranteed Party(ies)
would lose the right to pursue the Company for any deficiency that might remain
following such sale; (ii) if such Guarantor were to pay such deficiency
following such sale, it would be precluded from pursuing the Company for
reimbursement; and (iii) as a result, such Guaranteed Party(ies) would be
prevented from pursuing such Guarantor for such deficiency following such sale;

         (d)      the benefit of any statute of limitations affecting such
Guarantor's liability hereunder (or the enforcement thereof);

         (e)      any defense based on any alteration, impairment, or release of
the Guaranteed Obligations or any security therefor, irrespective of whether
resulting from any act or failure to act by the Guaranteed Parties (or any of
them); and

         (f)      any right to require the Guaranteed Parties (or any of them):
(i) to institute suit or otherwise proceed against the Company or any other
Person; or (ii) to exhaust any rights and remedies which the Guaranteed Parties
(or any of them) have or may have against the Company or any other Person.

         Section 8.5       Marshalling. Each Guarantor absolutely,
unconditionally, knowingly, and expressly waives any rights it has to require
the Guaranteed Parties (or any of them) to marshal, foreclose upon, sell, or
otherwise realize upon or collect or apply any particular part of any other
assets securing any of the Guaranteed Obligations (including any rights arising
by virtue of Sections 2899 and 3433 of the California Civil Code).

         Section 8.6       Claims Against the Company and Others. Each Guarantor
absolutely, unconditionally, knowingly, and expressly agrees that, until the
Guaranteed Obligations have been indefeasibly repaid in full, such Guarantor
will not in any manner enforce or pursue, or seek to enforce or pursue, any or
all of the following rights (it being expressly agreed that all such rights are
subordinate to any claims of the Guaranteed Parties (or any of them)): (a) any
right of subrogation, indemnity, or contribution such Guarantor has or may have
as against the Company or any other Person with respect to any of the Guaranteed
Obligations; (b) any right to proceed against the Company or any other Person,
now or hereafter, for contribution, indemnity, reimbursement, or any other
suretyship rights and claims (irrespective of whether direct or indirect,
liquidated or contingent) with respect to any of the Guaranteed Obligations; and
(c) any

                                       E-9



right to proceed or to seek recourse against or with respect to any assets of
the Company or any other Person with respect to any of the Guaranteed
Obligations.

         Section 8.7       Certain Additional Statutory Rights. Without limiting
the generality of any other waiver or other provision set forth in this
agreement, each Guarantor absolutely, unconditionally, knowingly, and expressly
waives any and all benefits or defenses, if any, arising directly or indirectly
under any one or more of Sections 2799, 2808, 2809, 2810, 2815, 2819, 2820,
2821, 2822, 2838, 2839, 2845, 2848, 2849, and 2850 of the California Civil Code,
Sections 580a, 580b, 580c, 580d, and 726 of the California Code of Civil
Procedure, and Sections 3116, 3118, 3119, 3419, 3605, 9504, 9505, and 9507 of
the California Uniform Commercial Code.

                                   ARTICLE IX
         GOVERNING LAW; JURISDICTION AND VENUE; WAIVER OF TRIAL BY JURY

         Section 9.1       Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAW OF THE STATE OF CALIFORNIA,
PROVIDED THAT THE GUARANTEED PARTIES SHALL RETAIN ALL RIGHTS ARISING UNDER
FEDERAL LAW.

         Section 9.2       Jurisdiction. ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE
COURTS OF THE STATE OF CALIFORNIA OR OF THE UNITED STATES FOR THE NORTHERN
DISTRICT OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH
GUARANTOR AND EACH OF THE GUARANTEED PARTIES CONSENTS, FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THOSE COURTS. EACH
GUARANTOR AND EACH OF THE GUARANTEED PARTIES IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION
OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. EACH GUARANTOR AND EACH OF THE GUARANTEED PARTIES WAIVES
PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE
BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW.

         Section 9.3.      Waiver of Jury Trial. EACH GUARANTOR AND EACH OF THE
GUARANTEED PARTIES WAIVES ITS RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST
ANY OTHER PARTY OR ANY INDEMNIFIED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH
RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH GUARANTOR AND EACH
OF THE GUARANTEED PARTIES AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
PARTIES FURTHER

                                      E-10



AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF
THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN
WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT
OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

         EACH GUARANTOR WARRANTS AND AGREES THAT EACH OF THE WAIVERS SET FORTH
ABOVE IS MADE WITH SUCH GUARANTOR'S FULL KNOWLEDGE OF ITS SIGNIFICANCE AND
CONSEQUENCE AND THAT, UNDER THE CIRCUMSTANCES, THE WAIVERS ARE REASONABLE AND
NOT CONTRARY TO PUBLIC POLICY OR LAW. IF ANY SUCH WAIVER IS DETERMINED TO BE
CONTRARY TO ANY APPLICABLE LAW OR PUBLIC POLICY, SUCH WAIVER SHALL BE EFFECTIVE
ONLY TO THE EXTENT, BUT TO THE FULLEST EXTENT, PERMITTED BY LAW OR PUBLIC
POLICY.

         EACH GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
AGREEMENT AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS AGREEMENT IS EFFECTIVE UPON SUCH GUARANTOR'S EXECUTION AND DELIVERY OF THIS
AGREEMENT TO THE ADMINISTRATIVE AGENT ON BEHALF OF ALL OF THE GUARANTEED
PARTIES. NO FORMAL ACCEPTANCE BY THE GUARANTEED PARTIES IS NECESSARY TO MAKE
THIS AGREEMENT EFFECTIVE.

                                      E-11



         IN WITNESS WHEREOF, each Guarantor has executed this Agreement as of
the date first written above.

                                             [________________________________],
                                             a [_____________]

                                             By:   ____________________________
                                             Name: ____________________________
                                             Title:____________________________

                                             Notice Information:

                                             __________________________________
                                             __________________________________
                                             __________________________________
                                             Attn: ___________________________
                                             Telephone: ______._______._______
                                             Telefacsimile: ______._____._____

                                      E-12



                                    EXHIBIT F

                               OPINION OF COUNSEL

Matters to be addressed by opinion of Borrower's counsel:

         1.       (a) Borrower is a corporation, duly incorporated and validly
existing under the laws of Delaware and has the requisite corporate power and
authority to own its property and to conduct the business in which it is
currently engaged; (b) Each of GCC and GLC is a corporation duly incorporated
and validly existing under the laws of California and has the requisite
corporate power and authority to own its property and to conduct the business in
which it is currently engaged; (c) Each of GG&R and Pozzolan is a corporation
duly incorporated and validly existing under the laws of Utah and has the
requisite corporate power and authority to own its property and to conduct the
business in which it is currently engaged; (d) Intermountain is a corporation
duly incorporated and validly existing under the laws of Wyoming and has the
requisite corporate power and authority to own its property and to conduct the
business in which it is currently engaged; (e) GILC is a California limited
partnership validly existing under the laws of California and has the requisite
partnership power and authority to own its property and to conduct the business
in which it is currently engaged. [ADD ADDITIONAL GUARANTORS, IF NECESSARY]

         2.       Borrower (a) has taken all necessary and appropriate corporate
action to authorize the execution, delivery and performance of the Credit
Agreement and the Notes, and (b) has the corporate power and authority to
execute, deliver and perform the Credit Agreement. Each Subsidiary (a) has taken
all necessary and appropriate corporate action or partnership action, as
applicable, to authorize the execution, delivery and performance of the
Guaranty, and (b) has the corporate power or partnership power, as applicable,
and authority to execute, deliver and perform the Guaranty.

         3.       The Credit Agreement and the Notes have been duly executed and
delivered by the Borrower. The Guaranty has been duly executed and delivered by
each Guarantor. The Credit Agreement and the Notes constitute legal, valid and
binding obligations of Borrower, enforceable against Borrower in accordance with
their terms. The Guaranty constitutes a legal, valid and binding obligation of
each Guarantor, enforceable against each Guarantor in accordance with its terms.

         4.       The execution, delivery and performance by Borrower of the
Credit Agreement and the Notes do not: (a) violate or contravene any injunction,
order, writ, judgment, decree, determination or award of any United States or
California Governmental Authority as presently in effect applicable to Borrower;
(b) conflict with or result in a breach of or constitute a default under the
certificate of incorporation and bylaws of Borrower; (c) violate or result in a
breach of or constitute any default under any agreements of Borrower, and, do
not result in or require the creation or imposition of any lien on any of
Borrower's properties or revenues pursuant to any injunction, order, decree or
undertaking as presently in effect or any such agreements of Borrower; or (d)
result in or require the creation or imposition of any lien on any of its
properties or revenues pursuant to any provision of any law, rule or regulation
as presently in effect.

                                      F-1



         5.       The execution, delivery and performance by each Guarantor of
the Guaranty do not: (a) violate or contravene any injunction, order. writ,
judgment, decree, determination or award of any United States or California
Governmental Authority as presently in effect applicable to each Guarantor; (b)
conflict with or result in a breach of or constitute a default under the
articles/certificates of incorporation and bylaws or partnership agreement, as
applicable, of each Guarantor; (c) violate or result in a breach of or
constitute any default under any agreements of each Guarantor, and do not result
in or require the creation or imposition of any lien on any Guarantor's its
properties or revenues pursuant to any injunction, order, decree or undertaking
as presently in effect or any such agreements of each Guarantor; or (d) result
in or require the creation or imposition of any lien on any of its properties or
revenues pursuant to any provision of any law, rule or regulation as presently
in effect.

         6.       Each of Borrower and the Subsidiaries is duly qualified to do
business and is in good standing in [the states listed below its name on Exhibit
[ ] hereto][the jurisdiction of its respective incorporation or formation and in
each other state, where such qualification or licensing is required].

         7.       No authorization, consent, approval, license, qualification or
formal exemption from, nor notice to, nor any filing, recordation, declaration
or registration with, any United States or California Governmental Authority, or
to my knowledge any other Governmental Authority, is necessary or required on
the part of Borrower in connection with the execution, delivery, or performance
by Borrower of the Credit Agreement and the Notes.

         8.       No authorization, consent, approval, license, qualification or
formal exemption from, nor notice to, nor any filing, recordation, declaration
or registration with any United States or California Governmental Authority, or
to my knowledge any other Governmental Authority, is necessary or required on
the part of each Guarantor in connection with the execution, delivery, or
performance by each Guarantor of the Guaranty.

         9.       There is no claim, dispute, injunction, temporary restraining
order, action, litigation, investigation or proceeding pending or, to the best
of my knowledge, threatened against Borrower before any court, arbitrator,
administrative agency or Governmental Authority of any kind (a) with respect to
the Credit Agreement and the Notes or (b) which, if adversely determined, would
have a Material Adverse Effect.

         10.      There is no claim, dispute, injunction, temporary restraining
order, action, litigation, investigation or proceeding pending or, to the best
of my knowledge, threatened against any Subsidiary before any court, arbitrator,
administrative agency or Governmental Authority of any kind (a) with respect to
the Guaranty or (b) which, if adversely determined, would have a Material
Adverse Effect.

         11.      Neither the Borrower nor any Subsidiary is an "investment
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended. Neither the Borrower
nor any Subsidiary is subject to regulation under the Public Utility Holding
Company Act of 1935, the Interstate Commerce Act (49 U.S.C Sections 10101 et
seq. (Supp. 1992)) or the Federal Power Act, which would limit its ability to
incur Indebtedness.

                                      F-2



         12.      Neither the Borrower nor any Subsidiary is generally engaged
in the business of purchasing or selling Margin Stock or extending credit for
the purpose of purchasing or carrying Margin Stock. The aggregate value of all
Margin Stock directly or indirectly owned by the Borrower and its Subsidiaries
is less than 25 % of the aggregate value of the consolidated assets of the
Borrower and its Subsidiaries.

         13.      The only subsidiaries of Borrower are the Subsidiaries and
[______________].

                                      F-3

EX-10.2

                                                                    EXHIBIT 10.2

                          CONTINUING GUARANTY AGREEMENT

         This CONTINUING GUARANTY AGREEMENT (this "Agreement"), dated as of June
27, 2003, is made by each of the undersigned (each, a "Guarantor" and,
collectively, the "Guarantors"), in favor of each Guaranteed Party (as
hereinafter defined).

         WHEREAS, Granite Construction Incorporation, a Delaware corporation
(together with its successors, the "Company"), Bank of America, N.A., as
Administrative Agent, as L/C Issuer and as a Lender, and the other financial
institutions as are, or may from time to time become, parties thereto have
entered into or are in the process of entering into that certain Credit
Agreement, dated as of June 27, 2003 as amended, modified and/or supplemented
from time to time, the "Credit Agreement", pursuant to which the Lenders have
provided the Commitments and agreed to make Loans to the Company and to
participate in Letters of Credit issued by the L/C Issuer for the account of the
Company or its Subsidiaries on the terms and conditions contained therein; and

         WHEREAS, to induce the Lenders and the L/C Issuer to provide and to
continue to provide financial accommodations to the Company pursuant to the
terms of the Credit Agreement and the other Loan Documents, the Guarantors have
each agreed to enter into this Agreement;

         NOW, THEREFORE, for good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged), and intending to be legally bound
hereby, each Guarantor irrevocably and unconditionally undertakes and agrees for
the benefit of Guaranteed Party as follows:

                                    ARTICLE I
                  CERTAIN DEFINITIONS AND RULES OF CONSTRUCTION

         Section 1.1 Certain Definitions. Each capitalized term used but not
otherwise defined herein has the meaning ascribed thereto in the Credit
Agreement. As used herein, the term "Guaranteed Party" means, as the context may
require, the Administrative Agent, the L/C Issuer, each Lender and each
Indemnitee (and each such Person's respective successors, transferees and
assigns).

         Section 1.2 Construction. For purposes of this Agreement and unless
otherwise specified herein: (a) references to the plural include the singular
and to the singular include the plural, references to any gender include any
other gender, the part includes the whole, the term "including" is not limiting,
and the term "or" has, except where otherwise indicated, the inclusive meaning
represented by the phrase "and/or"; (b) references in this Agreement to any
determination by the Guaranteed Party include good faith estimates (in the case
of quantitative determinations) and good faith beliefs (in the case of
qualitative determinations) by any Guaranteed Party; any determination made in
good faith by any Guaranteed Party shall be conclusive absent manifest error;
(c) the words "hereof," "herein," "hereby," and "hereunder," and any other
similar words, refer to this Agreement as a whole and not to any particular



provision of this Agreement; (d) article, section, subsection, clause, exhibit
and schedule references are to this Agreement; and (e) any reference to this
Agreement or any other Loan Document includes all permitted alterations,
amendments, changes, extensions, modifications, renewals, or supplements thereto
or thereof, as applicable.

                                   ARTICLE II
                             GUARANTY BY GUARANTORS

         Section 2.1 Promise to Pay and Perform. Each Guarantor jointly and
severally unconditionally and irrevocably guarantees to each Guaranteed Party
the payment and performance of all Obligations when and as the same shall become
due and payable (whether at stipulated or any accelerated or earlier date of
maturity (including the date of any required prepayment)) (the "Guaranteed
Obligations"), it being each Guarantor's intent that such Guarantor's guaranty
is a guaranty of payment and not a guaranty of collection. If the Company fails
to pay or perform any Guaranteed Obligation on or before the date when due
(whether at stipulated or any accelerated or earlier date of maturity (including
the date of any required prepayment)), each Guarantor shall jointly and
severally unconditionally and immediately make such payment or render such
performance upon written demand therefor by any Guaranteed Party.

         Section 2.2 Cumulative Obligations; Continuing Guaranty. The
obligations of each Guarantor hereunder are in addition to any other obligations
of such Guarantor under any other guaranties of the Indebtedness or other
obligations of the Company or any other Person at any time given to any
Guaranteed Party. This Agreement shall not affect or invalidate any such other
guaranties. This Agreement is a continuing guaranty and shall remain in full
force and effect notwithstanding the fact that, at any particular time, no
Guaranteed Obligations may be outstanding.

         Section 2.3 Joint and Several Obligation; Independent Obligation. Each
Guarantor is directly, jointly and severally with all other guarantors of the
Guaranteed Obligations or any portion thereof, liable to the Guaranteed Parties.
The obligations of each Guarantor hereunder are direct and primary and are
independent of the obligations of the Company or any other such guarantor, and a
separate action may be brought against each Guarantor irrespective of whether an
action is brought against the Company or any other such other guarantor or
whether the Company or any such other guarantor is joined in such action. Each
Guarantor's liability hereunder shall not be contingent upon the exercise or
enforcement by the Guaranteed Parties of any remedies they may have against the
Company or any other guarantor or the enforcement of any Lien or realization
upon any security the Guaranteed Parties may at any time possess. Any release
that may be given by the Guaranteed Parties to the Company or any other
guarantor shall not release any Guarantor hereunder unless such release
expressly so provides.

         Section 2.4 Limit of Liability. Notwithstanding anything to the
contrary contained herein, each Guarantor shall be liable hereunder only for the
largest amount that would not render such Guarantor's obligations hereunder
subject to avoidance under Section 548 of the Bankruptcy Code or comparable
provisions of any applicable state law; provided that such amount shall be
presumed to be the entire amount of the Guaranteed Obligations. If, any
Guarantor claims that such Guarantor's liability hereunder is less than the
entire amount of the

                                       2



Guaranteed Obligations, such Guarantor shall have the burden of proving, by
clear and convincing evidence, that such Guarantor's liability hereunder should
be so limited since the information concerning, and the circumstances of, the
financial condition of such Guarantor are more readily available to and are
under the control of such Guarantor. All payments received by any Guaranteed
Party from any Person other than a Guarantor on account of the Guaranteed
Obligations shall be deemed as having been applied to Guaranteed Obligations
that, pursuant to this Section 2.4, are in excess of the amounts guaranteed
hereunder.

                                   ARTICLE III
                                    PAYMENTS

         Section 3.1 Nature and Application of Payments. Each Guarantor shall
make all payments hereunder in immediately available lawful money of the United
States, without deduction or withholding (whether for taxes (whether income,
excise, or otherwise) or offset). Without regard to the form in which received,
the Guaranteed Parties may apply any payment with respect to the Guaranteed
Obligations or any other amounts due hereunder in such order as the Guaranteed
Parties shall in their sole and absolute discretion determine, irrespective of
any contrary instructions received from any other Person.

         Section 3.2 Indefeasible Payment; Revival. If any portion of any
payment to the Guaranteed Parties is set aside and repaid by any Guaranteed
Party for any reason after being made by any Guarantor, the amount so set aside
shall be revived as a Guaranteed Obligation and each Guarantor shall be liable
for the full amount the Guaranteed Parties are, or any Guaranteed Party is,
required to repay plus all costs and expenses (including attorneys' fees, costs,
and expenses) incurred by the Guaranteed Parties in connection therewith.

                                   ARTICLE IV
              CERTAIN REPRESENTATIONS AND WARRANTIES OF GUARANTORS

         Each Guarantor represents and warrants as follows (which
representations and warranties shall be true, correct, and complete at all
times):

         Section 4.1 No Contravention; No Default. The execution, delivery, and
performance by such Guarantor of this Agreement do not and will not: (a)
conflict with or result in any breach or contravention of, or the creation of
any Lien under, any contractual obligation to which such Guarantor is a party or
any order, injunction, writ, or decree of any Governmental Authority to which
such Guarantor or such Guarantor's properties are subject; or (b) violate any
Laws of any Governmental Authority.

         Section 4.2 Binding Effect. This Agreement constitutes the legal,
valid, and binding obligation of such Guarantor, enforceable against such
Guarantor in accordance with its terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, or similar laws affecting the enforcement
of creditors' rights generally or by equitable principles relating to
enforceability.

         Section 4.3 Litigation. Except as set forth on Schedule 5.06 to the
Credit Agreement, there are no actions, suits, proceedings, claims, or disputes
pending, or, to the best knowledge of

                                        3



such Guarantor, threatened in writing, at law, in equity, in arbitration, or
before any Governmental Authority, against such Guarantor or any of such
Guarantor's properties which purport to affect or pertain to this Agreement, any
of the other Loan Documents, or any of the transactions contemplated hereby or
thereby.

         Section 4.4 Regulated Entity. Neither such Guarantor nor any Person
controlling such Guarantor is: (a) an "investment company" within the meaning of
the Investment Company Act of 1940; or (b) subject to regulation by any federal
or state statute or regulation limiting such Guarantor's ability to incur such
Guarantor's obligations hereunder.

         Section 4.5 No Action Required. No consent, license, permit, approval
or authorization of, exemption by, notice or report to, or registration, filing,
or declaration with any Governmental Authority or of, to, or with any other
Person, is or will be required for: (a) the execution, delivery, or performance
of this Agreement by such Guarantor; or (b) the exercise by the Guaranteed
Parties of any of their respective rights and remedies provided for herein.

         Section 4.6 Changes Affecting the Guaranteed Obligations. Such
Guarantor has taken and is taking all steps in such Guarantor's opinion
necessary or appropriate to be informed on a continuing basis of changes or
potential changes affecting the Guaranteed Obligations. Without limiting the
generality of the foregoing, such Guarantor hereby confirms that it has received
and reviewed the Credit Agreement, the Fee Letter and all other Loan Documents
(and all other agreements, documents and instruments related thereto) that such
Guarantor, in such Guarantor's sole determination, has deemed necessary or
appropriate to receive and review.

         Section 4.7 Reliance by Guarantor: Financial Condition of the Company.
This Agreement is not made by such Guarantor in reliance on any representation
or warranty, express or implied, by any Guaranteed Party concerning the
financial condition of the Company, the nature, value, or extent of any security
for the Guaranteed Obligations, or any other matter. Such Guarantor is presently
informed of the financial condition of the Company and of all other
circumstances that a diligent inquiry would reveal and which bear upon the risk
of nonpayment of the Guaranteed Obligations. Such Guarantor has reviewed each of
the Loan Documents.

         Section 4.8 Adequate Consideration. The consideration given or
provided, or to be given or provided, by the Guaranteed Parties in connection
with this Agreement is adequate and satisfactory in all respects, and represents
reasonably equivalent value, to support this Agreement and such Guarantor's
obligations hereunder.

                                    ARTICLE V
                        CERTAIN COVENANTS OF GUARANTORS

         Section 5.1 Knowledge of Financial Condition. Each Guarantor shall keep
informed of the Company's financial condition, the status of any guarantors or
of any security for the Guaranteed Obligations, and all other circumstances that
bear upon the risk of nonpayment of the Guaranteed Obligations.

         Section 5.2 Further Assurances. Each Guarantor shall, from time to
time, at the expense of such Guarantor, promptly execute and deliver all further
documents and take all

                                        4



further action that may be necessary, or that the Guaranteed Parties (or any of
them) may reasonably request, to enable the Guaranteed Parties (or any of them)
to exercise and enforce their respective rights and remedies hereunder.

         Section 5.3 Sales, Dispositions, etc. Each Guarantor will not, without
the prior written consent of the Guaranteed Party, sell, lease, assign,
encumber, hypothecate, transfer or otherwise dispose of all of substantially all
of such Guarantor's properties or assets, or any interest therein, except as
otherwise permitted by the Credit Agreement.

                                   ARTICLE VI
             CERTAIN ACKNOWLEDGEMENTS AND AGREEMENTS OF GUARANTORS

         Section 6.1 Modifications to Loan Documents and Guaranteed Obligations.
Each Guarantor acknowledges and agrees that, without notice to such Guarantor
and without affecting or impairing the obligations of such Guarantor hereunder,
the Guaranteed Parties (or any of them) may, by action or inaction, compromise
or settle, extend the period of duration or the time for the payment, or
discharge the performance of, or may refuse to, or otherwise not enforce, or
may, by action or inaction, release all or any one or more parties to, any one
or more of the Loan Documents or otherwise with respect to the Guaranteed
Obligations or may grant other indulgences to the Company in respect thereof, or
may amend or modify in any manner and at any time (or from time to time) any one
or more of the Loan Documents or otherwise with respect to the Guaranteed
Obligations, or may, by action or inaction, release or substitute any guarantor,
if any, of the Guaranteed Obligations, or may enforce, exchange, release, or
waive, by action or inaction, any security for the Guaranteed Obligations or any
guaranty of the Guaranteed Obligations, or any portion thereof.

         Section 6.2 Subordination. Each Guarantor agrees that any and all
present and future indebtedness of the Company owing to such Guarantor is
postponed in favor of and subordinated to indefeasible payment, in full, in
cash, of the Guaranteed Obligations. In this regard, upon the occurrence and
during the continuance of a Default or an Event of Default, no payment of any
kind whatsoever shall be made with respect to such indebtedness until the
Guaranteed Obligations have been indefeasibly paid in full. Any payment received
by any Guarantor in respect of such indebtedness shall be held by such Guarantor
as trustee for the Guaranteed Parties and promptly paid over to the Guaranteed
Parties on account of the Guaranteed Obligations but without reducing or
affecting in any manner the liability of such Guarantor under the other
provisions of this Agreement.

         Section 6.3 Administrative Agent as Each Guarantor's Attorney-in-Fact.
Each Guarantor irrevocably appoints the Administrative Agent as such Guarantor's
attorney-in-fact, with full authority in the place and stead and name of such
Guarantor, from time to time at the Administrative Agent's discretion but only
following the occurrence and during the continuation of an Event of Default, to
take any action and to execute any instrument which the Guaranteed Parties (or
any of them) may, in accordance with the provisions of the Loan Documents or
this Agreement, require as necessary or advisable to accomplish the purposes of
this Agreement.

                                       5



                                   ARTICLE VII
                               GENERAL PROVISIONS

         Section 7.1 Notices. All notices, requests, and other communications to
any party under this Agreement shall be in writing (including telegraphic,
telex, telefacsimile, or cable communication) and mailed, telegraphed, telexed,
sent by telefacsimile, cabled, or delivered to such party at its address or
telefacsimile number set forth, in the case of each Guarantor, on the signature
pages hereof, or, in the case of the Guaranteed Parties, on Schedule 10.02 to
the Credit Agreement, or such other address or telefacsimile number as such
party may hereafter specify for the purpose by notice to the other party given
in accordance with this Section 7.1. Each such notice, request or other
communication shall be deemed to have been received: (a) if mailed as provided
above by any method other than overnight delivery service, on the third Business
Day after deposit in the mails; (b) if mailed by overnight delivery service,
telegraphed, telexed, sent by telefacsimile, or cable, when delivered for
overnight delivery, delivered to the telegraph company, confirmed by telex
answerback, transmitted by telefacsimile (with electronic confirmation), or
delivered to the cable company, respectively; or (c) if delivered by hand, upon
delivery. If any conflict exists between any oral communication to any
Guaranteed Party and the written confirmation thereof, the oral communication
shall control if any Guaranteed Party has acted thereon prior to actual receipt
of such written confirmation.

         Section 7.2 Amendments, Waivers, and Consents. No amendments or waivers
of any provision of this Agreement nor any consent to any departure by any
Guarantor from the terms hereof shall in any event be effective unless the same
shall be in writing and signed by the Administrative Agent (or all Guaranteed
Parties if required by the terms of the Credit Agreement) and the Guarantors.
Any such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.

         Section 7.3 No Waiver; Cumulative Nature of Remedies. No failure or
delay on the part of any Guaranteed Party in exercising any of its rights and
remedies under this Agreement, any of the Loan Documents, or otherwise with
respect to any of the Guaranteed Obligations shall operate as a waiver thereof;
nor shall any single or partial exercise of any right under this Agreement, the
Loan Documents, or otherwise with respect to the Guaranteed Obligations preclude
any other or further exercise thereof or the exercise of any other right or
remedies. The rights and remedies provided in this Agreement and otherwise with
respect to the Guaranteed Obligations are cumulative and not exclusive of any
rights and remedies provided by law.

         Section 7.4 Costs and Expenses. Each Guarantor shall pay or reimburse
the Guaranteed Parties on demand for all fees, costs, and expenses incurred by
the Guaranteed Parties in connection with the enforcement or attempted
enforcement of this Agreement, the preservation of any rights or remedies under
this Agreement, or in any action, case, or proceeding (whether at law or in
equity) relating to this Agreement. Without limiting the generality of the
foregoing, such fees, costs, and expenses shall include reasonable Attorney
Costs actually incurred by the Guaranteed Parties or any of them (irrespective
of whether the Company is liable therefor), whether or not suit is brought, in
connection therewith.

         Section 7.5 Successors and Assigns. This Agreement shall: (a) be
binding upon each Guarantor and each Guarantor's successors and assigns; and (b)
inure to the benefit of each

                                       6



Guaranteed Party and its successors and assigns (all to the extent permitted by
the Loan Documents). Without limiting the generality of the foregoing subsection
(b) but subject to the provisions of the Credit Agreement, any Guaranteed Party
may assign or otherwise transfer all or any part of the Guaranteed Obligations
owed to it to any other Person.

         Section 7.6 Headings. Section and subsection headings in this Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Agreement and shall not be given any substantive effect.

         Section 7.7 Ambiguities. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved using any presumption against
any Guarantor or any Guaranteed Party, whether under any rule of construction or
otherwise. On the contrary, this Agreement has been reviewed by each Guarantor
and each Guaranteed Party and their respective counsel. In case of any ambiguity
or uncertainty, this Agreement shall be construed and interpreted according to
the ordinary meaning of the words used to accomplish fairly the purposes and
intentions of all parties hereto.

         Section 7.8 Severability. In case any provision in or obligation under
this Agreement shall be invalid, illegal, or unenforceable in any jurisdiction,
the validity, legality, and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby. In addition, all agreements and
covenants herein shall be given independent effect such that, if a particular
action or condition is prohibited by the terms of any such agreement or
covenant, the fact that such action or condition would be permitted by another
agreement or covenant shall not be construed as allowing such action to be taken
or condition to exist.

         Section 7.9 Counterparts; Telefacsimile Signatures. This Agreement may
be executed in one or more counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same instrument.
Each Guarantor may effect execution and delivery of this Agreement by executing
a counterpart hereof and sending the signature page bearing such Guarantor's
signature to the Administrative Agent by telefacsimile and, thereafter, promptly
sending by mail or delivering such signature page to the Administrative Agent;
provided that the failure to deliver such signature page by such Guarantor shall
not affect the validity, enforceability, or binding effect of this Agreement
against such Guarantor.

         Section 7.10 Entire Agreement. This Agreement and the Credit Agreement
embody the entire agreement and understanding concerning the Guarantors and the
Guaranteed Parties relating to the subject matter hereof and supersede all prior
agreements and understandings relating to the subject matter hereof. No course
of prior dealing between any Guarantor and the Guaranteed Parties (or any of
them), no usage of the trade, and no parole or extrinsic evidence of any nature,
shall be used or be relevant to supplement, explain or modify any term used
herein.

                                   ARTICLE VIII
                          CERTAIN WAIVERS BY GUARANTORS

         EACH GUARANTOR MAKES THE FOLLOWING WAIVERS WITH FULL KNOWLEDGE AND
UNDERSTANDING THAT SUCH WAIVERS, IF NOT SO MADE,

                                        7



MIGHT OTHERWISE RESULT IN SUCH GUARANTOR BEING ABLE TO AVOID OR LIMIT SUCH
GUARANTOR'S LIABILITY HEREUNDER EITHER IN WHOLE OR IN PART.

         Section 8.1 Notices. Each Guarantor absolutely, unconditionally,
knowingly, and expressly waives: (a) notice of the acceptance by the Guaranteed
Parties of this Agreement; (b) notice of any Credit Extensions consisting
Guaranteed Obligations; (c) notice of the amount of the Guaranteed Obligations,
subject, however, to such Guarantor's right to make inquiry, at any reasonable
time, of any Guaranteed Party to ascertain the amount of the Guaranteed
Obligations owing to such Guaranteed Party; (d) notice of any adverse change in
the financial condition of the Company, of any change in value, or the release,
of any collateral, or of any other fact that might increase such Guarantor's
risk hereunder; (e) notice of presentment for payment, demand, protest, and
notice thereof as to any instrument; (f) notice of any Default or Event of
Default; and (g) all other notices (except if such notice is expressly required
to be given to such Guarantor under this Agreement) and demands to which
guarantor might otherwise be entitled.

         Section 8.2 Revocation. Each Guarantor absolutely, unconditionally,
knowingly, and expressly waives any right to revoke such Guarantor's guaranty
obligation hereunder as to future Guaranteed Obligations and, in light thereof,
all protection afforded such Guarantor under Section 2815 of the California
Civil Code. Each Guarantor fully realizes and understands that, upon execution
of this Agreement, such Guarantor will not have any right to revoke this
Agreement as to any future indebtedness and, thus, may have no control over such
Guarantor's ultimate responsibility for the amount and nature of the Guaranteed
Obligations.

         Section 8.3 Defenses of the Company. Each Guarantor absolutely,
unconditionally, knowingly, and expressly waives any defense arising by reason
of any disability or other defense (other than the defense that the Guaranteed
Obligations shall have been fully and finally performed and indefeasibly paid)
of the Company or by reason of the cessation from any cause whatsoever
(including any act or failure to act by the Company or the Guaranteed Parties)
of the liability of the Company in respect thereof, including any such defense
or cessation of liability arising from or as a result of: (a) any statute of
limitations; (b) any lack of power or authority of the Company or any Person
acting or purporting to act on the Company's behalf; (c) the operation of
Sections 580a, 580b, 580d, or 726 of the California Code of Civil Procedure or
any similar law of the State of California or any other jurisdiction; or (d) any
claim of fraudulent transfer or preference.

         Section 8.4 Suretyship and Certain Other Rights and Defenses of
Guarantors. Each Guarantor absolutely, unconditionally, knowingly, and expressly
waives:

         (a)      any right to assert against the Guaranteed Parties (or any of
them) any defense (legal or equitable), set-off, counterclaim, or claim which
such Guarantor may now or at any time hereafter have against the Company or any
other Person liable to the Guaranteed Parties (or any of them);

         (b)      any defense, set-off, counterclaim, or claim, of any kind or
nature, arising directly or indirectly from the present or future lack of
perfection, sufficiency, validity, or enforceability

                                        8



of any of the Guaranteed Obligations or any security therefor or from any
failure of the Guaranteed Parties (or any of them) to act in a commercially
reasonable manner;

        (c)      any defense arising by reason of or deriving from any claim or
defense based upon an election of remedies by the Guaranteed Parties (or any of
them) (including a nonjudicial foreclosure sale of any real property collateral
which destroys, diminishes, or otherwise adversely affects any Guarantor's
rights of subrogation, reimbursement, indemnity, or contribution or other rights
against the Company or any other Person), including any defense based upon an
election of remedies by any Guaranteed Party under the provisions of Sections
580a, 580b, 580d, and 726 of the California Code of Civil Procedure or any
similar law of the State of California or any other jurisdiction. In making this
waiver, each Guarantor specifically acknowledges that it understands and is
aware that, under Sections 580b and 580d of the California Code of Civil
Procedure, if the Guaranteed Parties (or any of them) conducted a nonjudicial
foreclosure sale of real property collateral: (i) such Guaranteed Party(ies)
would lose the right to pursue the Company for any deficiency that might remain
following such sale; (ii) if such Guarantor were to pay such deficiency
following such sale, it would be precluded from pursuing the Company for
reimbursement; and (iii) as a result, such Guaranteed Party(ies) would be
prevented from pursuing such Guarantor for such deficiency following such sale;

         (d)      the benefit of any statute of limitations affecting such
Guarantor's liability hereunder (or the enforcement thereof);

         (e)      any defense based on any alteration, impairment, or release of
the Guaranteed Obligations or any security therefor, irrespective of whether
resulting from any act or failure to act by the Guaranteed Parties (or any of
them); and

         (f)      any right to require the Guaranteed Parties (or any of them):
(i) to institute suit or otherwise proceed against the Company or any other
Person; or (ii) to exhaust any rights and remedies which the Guaranteed Parties
(or any of them) have or may have against the Company or any other Person.

         Section 8.5 Marshalling. Each Guarantor absolutely, unconditionally,
knowingly, and expressly waives any rights it has to require the Guaranteed
Parties (or any of them) to marshal, foreclose upon, sell, or otherwise realize
upon or collect or apply any particular part of any other assets securing any of
the Guaranteed Obligations (including any rights arising by virtue of Sections
2899 and 3433 of the California Civil Code).

         Section 8.6 Claims Against the Company and Others. Each Guarantor
absolutely, unconditionally, knowingly, and expressly agrees that, until the
Guaranteed Obligations have been indefeasibly repaid in full, such Guarantor
will not in any manner enforce or pursue, or seek to enforce or pursue, any or
all of the following rights (it being expressly agreed that all such rights are
subordinate to any claims of the Guaranteed Parties (or any of them)): (a) any
right of subrogation, indemnity, or contribution such Guarantor has or may have
as against the Company or any other Person with respect to any of the Guaranteed
Obligations; (b) any right to proceed against the Company or any other Person,
now or hereafter, for contribution, indemnity, reimbursement, or any other
suretyship rights and claims (irrespective of whether direct or indirect,
liquidated or contingent) with respect to any of the Guaranteed Obligations; and
(c) any

                                       9



right to proceed or to seek recourse against or with respect to any assets of
the Company or any other Person with respect to any of the Guaranteed
Obligations.

         Section 8.7 Certain Additional Statutory Rights. Without limiting the
generality of any other waiver or other provision set forth in this agreement,
each Guarantor absolutely, unconditionally, knowingly, and expressly waives any
and all benefits or defenses, if any, arising directly or indirectly under any
one or more of Sections 2799, 2808, 2809, 2810, 2815, 2819, 2820, 2821, 2822,
2838, 2839, 2845, 2848, 2849, and 2850 of the California Civil Code, Sections
580a, 580b, 580c, 580d, and 726 of the California Code of Civil Procedure, and
Sections 3116, 3118, 3119, 3419, 3605, 9504, 9505, and 9507 of the California
Uniform Commercial Code.

                                   ARTICLE IX
         GOVERNING LAW; JURISDICTION AND VENUE: WAIVER OF TRIAL BY JURY

         Section 9.1 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAW OF THE STATE OF CALIFORNIA,
PROVIDED THAT THE GUARANTEED PARTIES SHALL RETAIN ALL RIGHTS ARISING UNDER
FEDERAL LAW.

         Section 9.2 Jurisdiction. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE
STATE OF CALIFORNIA OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF
CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH GUARANTOR AND
EACH OF THE GUARANTEED PARTIES CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THOSE COURTS. EACH GUARANTOR AND
EACH OF THE GUARANTEED PARTIES IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. EACH GUARANTOR AND EACH OF THE GUARANTEED PARTIES WAIVES
PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE
BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW.

         Section 9.3. Waiver of Jury Trial. EACH GUARANTOR AND EACH OF THE
GUARANTEED PARTIES WAIVES ITS RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST
ANY OTHER PARTY OR ANY INDEMNIFIED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH
RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH GUARANTOR AND EACH
OF THE GUARANTEED PARTIES AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
PARTIES FURTHER

                                       10



AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF
THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN
WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT
OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

         EACH GUARANTOR WARRANTS AND AGREES THAT EACH OF THE WAIVERS SET FORTH
ABOVE IS MADE WITH SUCH GUARANTOR'S FULL KNOWLEDGE OF ITS SIGNIFICANCE AND
CONSEQUENCE AND THAT, UNDER THE CIRCUMSTANCES, THE WAIVERS ARE REASONABLE AND
NOT CONTRARY TO PUBLIC POLICY OR LAW. IF ANY SUCH WAIVER IS DETERMINED TO BE
CONTRARY TO ANY APPLICABLE LAW OR PUBLIC POLICY, SUCH WAIVER SHALL BE EFFECTIVE
ONLY TO THE EXTENT, BUT TO THE FULLEST EXTENT, PERMITTED BY LAW OR PUBLIC
POLICY.

         EACH GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
AGREEMENT AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS AGREEMENT IS EFFECTIVE UPON SUCH GUARANTOR'S EXECUTION AND DELIVERY OF THIS
AGREEMENT TO THE ADMINISTRATIVE AGENT ON BEHALF OF ALL OF THE GUARANTEED
PARTIES. NO FORMAL ACCEPTANCE BY THE GUARANTEED PARTIES IS NECESSARY TO MAKE
THIS AGREEMENT EFFECTIVE.

                                       11



         IN WITNESS WHEREOF, each Guarantor has executed this Agreement as of
the date first written above.

                                    GRANITE CONSTRUCTION COMPANY,
                                    a California corporation

                                    By: /s/ William G. Dorey
                                        ----------------------------------------
                                        William G. Dorey
                                        President

                                    By: /s/ William E. Barton
                                        ----------------------------------------
                                        William E. Barton
                                        Chief Financial Officer

                                    Notice:
                                    c/o Granite Construction Incorporated
                                    P.O. Box 50085
                                    Watsonville, CA 95077
                                    Attn: William Barton, Senior Vice President,
                                          Chief Financial Officer
                                    Telephone: (831)761-4704
                                    Facsimile: (831)722-9657

                SIGNATURE PAGE 1 TO CONTINUING GUARANTY AGREEMENT



         IN WITNESS WHEREOF, each Guarantor has executed this Agreement as of
the date first written above.

                               GRANITE LAND COMPANY,
                               a California corporation

                               By: /s/ William G. Dorey
                                   ---------------------------------------------
                                   William G. Dorey
                                   President, Granite Construction Incorporated

                               By: /s/ William E. Barton
                                   ---------------------------------------------
                                   William E. Barton
                                   Chief Financial Officer, Granite Construction
                                   Incorporated

                               Notice:
                               c/o Granite Construction Incorporated
                               P.O. Box 50085
                               Watsonville, CA 95077
                               Attn: William Barton, Senior Vice President,
                                     Chief Financial Officer
                               Telephone: (831)761-4704
                               Facsimile: (831)722-9657

                SIGNATURE PAGE 2 TO CONTINUING GUARANTY AGREEMENT



         IN WITNESS WHEREOF, each Guarantor has executed this Agreement as of
the date first written above.

                                    INTERMOUNTAIN SLURRY SEAL, INC.,
                                    a Wyoming corporation

                                    By: /s/ Michael L. Thomas
                                        ----------------------------------------
                                        Michael L. Thomas
                                        President

                                    By: /s/ David J. Brunton
                                        ----------------------------------------
                                        David J. Brunton
                                        Chief Financial Officer

                                    Notice:
                                    c/o Granite Construction Incorporated
                                    P.O. Box 50085
                                    Watsonville, CA 95077
                                    Attn: William Barton, Senior Vice President,
                                          Chief Financial Officer
                                    Telephone: (831)761-4704
                                    Facsimile: (831)722-9657

                SIGNATURE PAGE 3 TO CONTINUING GUARANTY AGREEMENT



         IN WITNESS WHEREOF, each Guarantor has executed this Agreement as of
the date first written above.

                                    POZZOLAN PRODUCTS COMPANY
                                    (P.P.C.), a Utah corporation

                                    By: /s/ Michael L. Thomas
                                        ----------------------------------------
                                        Michael L. Thomas
                                        President

                                    By: /s/ David J. Brunton
                                        ----------------------------------------
                                        David J. Brunton
                                        Chief Financial Officer

                                    Notice:
                                    c/o Granite Construction Incorporated
                                    P.O. Box 50085
                                    Watsonville, CA 95077
                                    Attn: William Barton, Senior Vice President,
                                          Chief Financial Officer
                                    Telephone: (831)761-4704
                                    Facsimile: (831)722-9657

                SIGNATURE PAGE 4 TO CONTINUING GUARANTY AGREEMENT



         IN WITNESS WHEREOF, each Guarantor has executed this Agreement as of
the date first written above.

                                 GILC, L.P.,
                                 a California Limited Partnership

                                 By: /s/ William E. Barton
                                     -------------------------------------------
                                     William E. Barton
                                     Chief Executive Officer, GILC Incorporated,
                                     its sole General Partner

                                 By: /s/ Michael Futch
                                     -------------------------------------------
                                     Michael Futch
                                     Secretary, GILC Incorporated,
                                     its sole General Partner

                                 Notice:
                                 c/o Granite Construction Incorporated
                                 P.O. Box 50085
                                 Watsonville, CA 95077
                                 Attn: William Barton, Senior Vice President,
                                       Chief Financial Officer
                                 Telephone: (831)761-4704
                                 Facsimile: (831)722-9657

                SIGNATURE PAGE 5 TO CONTINUING GUARANTY AGREEMENT



         IN WITNESS WHEREOF, each Guarantor has executed this Agreement as of
the date first written above.

                                    GRANITE HALMAR CONSTRUCTION
                                    COMPANY, INC.,
                                    a New York corporation

                                    By: /s/ William G. Dorey
                                        ----------------------------------------
                                        William G. Dorey
                                        President

                                    By: /s/ William E. Barton
                                        ----------------------------------------
                                        William E. Barton
                                        Chief Financial Officer

                                    Notice:
                                    c/o Granite Construction Incorporated
                                    P.O. Box 50085
                                    Watsonville, CA 95077
                                    Attn: William Barton, Senior Vice President,
                                          Chief Financial Officer
                                    Telephone: (831)761-4704
                                    Facsimile: (831)722-9657

                SIGNATURE PAGE 6 TO CONTINUING GUARANTY AGREEMENT

EX-10.3

                                                                    EXHIBIT 10.3

================================================================================

                        GRANITE CONSTRUCTION INCORPORATED

                       ----------------------------------

                                 FIRST AMENDMENT
                            Dated as of June 15, 2003

                                       to

                  AMENDED AND RESTATED NOTE PURCHASE AGREEMENT
                          Dated as of November 1, 2001

                          ----------------------------

Re:      $60,000,000 6.54% Senior Notes due March 15, 2010

================================================================================



         FIRST AMENDMENT TO AMENDED AND RESTATED NOTE PURCHASE AGREEMENT

         THIS FIRST AMENDMENT dated as of June 15, 2003 (the or this "First
Amendment") to that certain Amended and Restated Note Purchase Agreement dated
as of November 1, 2001 is between GRANITE CONSTRUCTION INCORPORATED, a Delaware
corporation (the "Company"), and each of the institutional investors listed on
the signature pages hereto (collectively, the "Noteholders")

                                    RECITALS:

         A.       The Company and each of the Noteholders have heretofore
entered into that certain Amended and Restated Note Purchase Agreement dated as
of November 1, 2001 (the "Note Purchase Agreement"). The Company has heretofore
issued $60,000,000 aggregate principal amount of its 6.54% Senior Notes due
March 15, 2010 (the "Notes"} pursuant to the Note Purchase Agreement. The
Noteholders are the holders of 100% of the outstanding principal amount of the
Notes.

         B.       The Company and the Noteholders now desire to amend the Note
Purchase Agreement in the respects, but only in the respects, hereinafter set
forth.

         C.       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.

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

         Now, THEREFORE, upon the full and complete satisfaction of the
conditions precedent to the effectiveness of this First Amendment 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. AMENDMENTS.

         1.1. Section 9.6(a)(I) of the Note Purchase Agreement shall be and is
hereby amended by inserting the following new sentence at the end of such
Section.

         "Notwithstanding the foregoing, Wilder shall not be required to execute
         a supplement to the Guaranty Agreement or otherwise Guaranty the Notes
         until the earliest to occur of: (A) Wilder becoming an obligor or
         guarantor of any Debt existing under the Bank Credit Agreement, (B)(I)
         the total net revenues of Wilder and its Subsidiaries for the period of
         the immediately preceding four fiscal quarters is equal to or greater
         than 15% of the consolidated total net revenues of the Company and its
         Subsidiaries for such period determined in accordance with GAAP, in
         each case as reflected in the most recent annual



         or quarterly financial statements of the Company and its Subsidiaries;
         or (II) the total assets of Wilder and its Subsidiaries, as of the last
         day of the immediately preceding fiscal quarter, is equal to or greater
         than 15% of consolidated total assets of the Company and its
         Subsidiaries as of such date determined in accordance with GAAP, in
         each case as reflected in the most recent annual or quarterly financial
         statements of the Company and its Subsidiaries and (C) Wilder becoming
         a Wholly-Owned Subsidiary of the Company."

         1.2.     SCHEDULE B to the Note Purchase Agreement shall be and is
hereby amended by inserting the following new definition in the proper
alphabetical order:

                  ""Wilder" shall mean Wilder Construction Co., a Washington
         corporation, and any successor thereto."

SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

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

                  (a)      this First Amendment has been duly authorized,
         executed and delivered by it and this First Amendment constitutes the
         legal, valid and binding obligation, contract and agreement of the
         Company enforceable against it in accordance with its 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 Note Purchase Agreement, as amended by this First
         Amendment, constitutes the legal, valid and binding obligation,
         contract and agreement of the Company enforceable against it in
         accordance with its 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;

                  (c)      the execution, delivery and performance by the
         Company of this First Amendment (i) has been duly authorized by all
         requisite corporate action and, if required, shareholder action, (ii)
         does not require the consent or approval of any governmental or
         regulatory body or agency, and (iii) will not (A) violate (1) any
         provision of law, statute, rule or regulation or its certificate of
         incorporation or bylaws, (2) any order of any court or any rule,
         regulation or order of any other agency or government binding upon it,
         or (3) 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 (B) 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 (iii)(A)(3) of this
         Section 2.l(c);

                                     - 2 -



                  (d)      as of the date hereof and after giving effect to this
         First Amendment, no Default or Event of Default has occurred which is
         continuing and no waiver of Default or Event of Default is in effect;
         and

                  (e)      except as set forth on SCHEDULE 2 hereto, all the
         representations and warranties contained in Section 5 of 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.

SECTION 3. CONDITIONS TO EFFECTIVENESS OF THIS FIRST AMENDMENT.

         3.1.     Upon satisfaction of each and every one of the following
conditions, this First Amendment shall become effective as of June 27, 2003:

                  (a)      executed counterparts of this First Amendment, duly
         executed by the Company and the holders of at least 51% of the
         outstanding principal of the Notes, shall have been delivered to the
         Noteholders;

                  (b)      each Guarantor shall have duly executed the
         reaffirmation of Guaranty Agreement attached hereto;

                  (c)      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;

                  (d)      each Noteholder shall have received evidence
         satisfactory to it that (i) Wilder Construction Co. is not an obligor
         or guarantor of Debt under the Credit Agreement dated as of June 27,
         2003 among the Company, each lender from time to time party thereto and
         Bank of America, N.A., as Administrative Agent, Swing Line Lender and
         L/C Issuer and (ii) the Amended and Restated Note Purchase Agreement
         dated as of November 1, 2001 by and among the Company and the
         institutional investors named therein has been amended in the same
         manner as the Note Purchase Agreement has been amended by this First
         Amendment;

                  (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 the amount set forth opposite
         such holder's name in SCHEDULE 1 attached hereto; and

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

Upon receipt of all of the foregoing, this First Amendment shall become
effective.

                                     - 3 -



SECTION 4. MISCELLANEOUS.

         4.1.     This First Amendment shall be construed in connection with and
as part of the Note Purchase Agreement, and except as modified and expressly
amended by this First Amendment, 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.

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

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

         4.4.     This First Amendment shall he governed by and construed in
accordance with the laws of the State of Illinois.

                  [Remainder of page intentionally left blank.]

                                     - 4 -



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

                                       GRANITE CONSTRUCTION INCORPORATED

                                       By /s/ William G. Dorey
                                          ---------------------
                                          William G. Dorey
                                          President

                                       By /s/ William E. Barton
                                          ----------------------
                                          William E. Barton
                                          Chief Financial Officer

SIGNATURE PAGE TO THE
FIRST AMENDMENT TO THE
MARCH 1, 1998 PURCHASE AGREEMENT



Accepted and Agreed to:

                                       ALLSTATE LIFE INSURANCE COMPANY

                                       By __________________________
                                       Name:

                                       By___________________________
                                       Name:
                                           Authorized Signatories

                                       UNITED OF OMAHA LIFE INSURANCE COMPANY

                                       By /s/ Curtis R. Caldwell
                                          ---------------------------
                                          Its    Vice President

                                       MUTUAL OF OMAHA INSURANCE COMPANY

                                       By /s/ Curtis R. Caldwell
                                          ---------------------------
                                          Its    Vice President

                                       COMPANION LIFE INSURANCE COMPANY

                                       By /s/ Curtis R. Caldwell
                                          ---------------------------
                                          Name: Curtis R. Caldwell
                                          Title:  Authorized Signer

SIGNATURE PAGE TO THE
FIRST AMENDMENT TO THE
MARCH 1, 1998 NOTE PURCHASE AGREEMENT



                                  NATIONWIDE LIFE INSURANCE COMPANY

                                  By /s/ Mark W. Poeppelman
                                     ----------------------------------------
                                     Name: Mark W. Poeppelman
                                     Title: Vice President

                                  THRIVENT FINANCIAL FOR LUTHERANS,
                                     successor by merger to Lutheran Brotherhood

                                  By _________________________________________
                                     Name:  Glen J. Vanic
                                     TITLE: Portfolio Manager

                                  AMERICAN UNITED LIFE INSURANCE COMPANY

                                  By _________________________________________
                                     Its

SIGNATURE PAGE TO THE
FIRST AMENDMENT TO THE
MARCH 1, 1998 NOTE PURCHASE AGREEMENT



                                  NATIONWIDE LIFE INSURANCE COMPANY

                                  By_______________________________________
                                    Name:
                                    Title:

                                  THRIVENT FINANCIAL FOR LUTHERANS,
                                    successor by merger to Lutheran Brotherhood

                                  By /s/ Glen J. Vanic
                                     -----------------------------------------
                                     Name:  Glen J. Vanic
                                     Title: Portfolio Manager

                                  AMERICAN UNITED LIFE INSURANCE COMPANY

                                  By_________________________________________
                                    Its

SIGNATURE PAGE TO THE
FIRST AMENDMENT TO THE
MARCH 1, 1998 NOTE PURCHASE AGREEMENT



Accepted and Agreed to:

                                       ALLSTATE LIFE INSURANCE COMPANY

                                       By /s/ Rhonda L. Hopps
                                          --------------------------------------
                                          Name: Rhonda L. Hopps

                                       By /s/ Jerry D. Zinkula
                                          --------------------------------------
                                          Name: Jerry D. Zinkula
                                             Authorized Signatories

                                       UNITED OF OMAHA LIFE INSURANCE COMPANY

                                       By ______________________________________
                                          Its

                                          MUTUAL OF OMAHA INSURANCE COMPANY

                                       By ______________________________________
                                          Its

                                       COMPANION LIFE INSURANCE COMPANY

                                       By_______________________________________
                                         Name:
                                         Title:

SIGNATURE PAGE TO THE
FIRST AMENDMENT TO THE
MARCH 1, 1998 NOTE PURCHASE AGREEMENT



                                   NATIONWIDE LIFE INSURANCE COMPANY

                                   By_______________________________________
                                     Name:
                                     Title:

                                   THRIVENT FINANCIAL FOR LUTHERANS,
                                     successor by merger to Lutheran Brotherhood

                                   By __________________________________________
                                      Name: Glen J. Vanic
                                      Title: Portfolio Manager

                                   AMERICAN UNITED LIFE INSURANCE COMPANY

                                   By /s/ CHRISTOPHER PAHLKE
                                      ------------------------------------------
                                      Its CHRISTOPHER PAHLKE
                                          VP PRIVATE PLACEMENTS

SIGNATURE PAGE TO THE
FIRST AMENDMENT TO THE
MARCH 1, 1998 NOTE PURCHASE AGREEMENT



                       REAFFIRMATION OF GUARANTY AGREEMENT

The undersigned Guarantors hereby acknowledge and agree to the foregoing First
Amendment to Note Purchase Agreement and reaffirm the Guaranty Agreement dated
as of March 1, 1998 given in favor of each Noteholder and their respective
successors and assigns:

                                 GRANITE CONSTRUCTION COMPANY

                                 By /s/ William G. Dorey
                                    ---------------------------
                                    William G. Dorey
                                    President

                                 BY /s/ William E. Barton
                                    ---------------------------
                                    William E. Barton
                                    Chief Financial Officer

                                 GRANITE LAND COMPANY

                                 BY /s/ Scott D. Wolcott
                                    ---------------------------
                                    Scott D. Wolcott
                                    President

                                 By /s/ William G. Dorey
                                    ---------------------------
                                    William G. Dorey
                                    President, Granite Construction Incorporated

                                 GRANITE HALMAR CONSTRUCTION COMPANY,
                                 INC.

                                 By /s/ William G. Dorey
                                    ---------------------------
                                    William G. Dorey
                                    President

                                 By /s/ William E. Barton
                                    -----------------------------
                                    William E. Barton
                                    Chief Financial Officer

SIGNATURE PAGE TO THE
REAFFIRMATION OF GUARANTY TO THE
MARCH 1, 1998 GUARANTY AGREEMENT



                                       INTERMOUNTAIN SLURRY SEAL, INC.

                                       By /s/ Michael L. Thomas
                                          --------------------------------
                                          Michael L. Thomas
                                          President

                                       By /s/ David J. Brunton
                                          --------------------------------
                                          David J. Brunton
                                          Chief Financial Officer

                                       POZZOLAN PRODUCTS COMPANY (P.P.C.)

                                       By /s/ Michael L. Thomas
                                          ---------------------------------
                                          Michael L. Thomas
                                          President

                                       By /s/ David J. Brunton
                                          ---------------------------------
                                          David J. Brunton
                                          Chief Financial Officer

                                       GILC, L.P.

                                       By: GILC Incorporated, its sole General
                                           Partner

                                       By /s/ William E. Barton
                                          ---------------------------------
                                          William E. Barton
                                          Chief Executive Officer

                                       By /s/ R.C. Allbritton
                                          ---------------------------------
                                          R.C. Allbritton
                                          Chief Financial Officer

SIGNATURE PAGE TO THE
REAFFIRMATION OF GUARANTY TO THE
MARCH 1, 1998 GUARANTY AGREEMENT



                                  FEE SCHEDULE

                                                        
Allstate Life Insurance Company                            $ 8,555.56
United of Omaha Life Insurance Company                     $ 3,888.89
Mutual of Omaha Insurance Company                          $ 1,944.45
Companion Life Insurance Company                           $   777.78
Nationwide Life Insurance Company                          $ 3,111.11
American United Life Insurance Company                     $ 1,944.45
Thrivent Financial For Lutherans                           $ 3,111.11

                                   Total:                  $23,333.33



                                   SCHEDULE 1
                              (to First Amendment)



                   VARIANCES TO REPRESENTATIONS AND WARRANTIES

         The Company represents and warrants to each holder that except as
hereinafter set forth in this Schedule 2, each of the representations and
warranties set forth in Section 5 of the Note Purchase Agreement is true and
correct as of the date hereof. The Section references hereinafter set forth
correspond to the similar sections of the Note Purchase Agreement which are
supplemented hereby:

         Section 5.4. Organization and Ownership of Shares of Subsidiaries;
Affiliates. (a) Schedule 5.4 to the First Amendment contains (except as noted
therein) complete and correct lists (1) of the Company's Subsidiaries, showing,
as to each Subsidiary, the correct name thereof, the jurisdiction of its
organization, and the percentage of shares of each class of its capital stock or
similar equity interests outstanding owned by the Company and each other
Subsidiary, (2) of the Company's Affiliates, other than Subsidiaries and (3) of
the Company's directors and senior officers.

         (b) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 5.4 to the First Amendment as
being owned by the Company and its Subsidiaries have been validly issued, are
fully paid and nonassessable and are owned by the Company or another Subsidiary
free and clear of any Lien (except as otherwise disclosed in Schedule 5.4 to the
First Amendment).

         (c) Each Subsidiary identified in Schedule 5.4 to the First Amendment
is a corporation or other legal entity duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization, and is duly
qualified as a foreign corporation or other legal entity and is in good standing
in each jurisdiction in which such qualification is required by law, other than
those jurisdictions as to which the failure to be so qualified or in good
standing could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. Each such Subsidiary has the corporate or other
power and authority to own or hold under lease the properties it purports to own
or hold under lease and to transact the business it transacts and proposes to
transact.

         (d) No Subsidiary is a party to, or otherwise subject to, any legal
restriction or any agreement or instrument (other than this Agreement, the
agreements listed on Schedule 5.4 to the First Amendment and customary
limitations imposed by corporate law statutes) restricting the ability of such
Subsidiary to pay dividends out of profits or make any other similar
distributions of profits to the Company or any of its Subsidiaries that own
outstanding shares of capital stock or similar equity interests of such
Subsidiary.

         Section 5.8. Litigation; Observance of Agreements, Statutes and Orders.
(a) Except as disclosed in Schedule 5.8 to the First Amendment, there are no
actions, suits or proceedings pending or, to the knowledge of the Company,
threatened against or affecting the Company or

                                   SCHEDULE 2
                              (to First Amendment)



any Subsidiary or any property of the Company or any Subsidiary in any court or
before any arbitrator of any kind or before or by any Governmental Authority
that, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

         Section 5.15. Existing Debt. Except as described therein, Schedule 5.15
to the First Amendment sets forth a complete and correct list of all outstanding
Debt of the Company and its Subsidiaries as of May 31, 2003 (other than with
respect to the Debt of Wilder and Presidio Vista which are as of April 30,
2003), since which date there has been no Material change in the amounts,
interest rates, sinking funds, installment payments or maturities of the Debt of
the Company or its Subsidiaries. Neither the Company nor any Subsidiary is in
default and no waiver of default is currently in effect, in the payment of any
principal or interest on any Debt of the Company or such Subsidiary and no event
or condition exists with respect to any Debt of the Company or any Subsidiary
that would permit (or that with notice or the lapse of time, or both, would
permit) one or more Persons to cause such Debt to become due and payable before
its stated maturity or before its regularly scheduled dates of payment.

         Section 5.16. Existing Investments. Schedule 5.16 to the First
Amendment sets forth a complete and correct list of all outstanding Investments
of the Company and its Subsidiaries as of May 31, 2003, since which date there
has been no Material change in the amounts of such Investments.

         Section 5.18. Environmental Matters. Neither the Company nor any
Subsidiary has knowledge of any Material claim or has received any notice of any
Material claim, and no proceeding has been instituted raising any Material claim
against the Company or any of its Subsidiaries or any of their respective real
properties now or formerly owned, leased or operated by any of them or other
assets, alleging any damage to the environment or violation of any Environmental
Laws. Except as otherwise disclosed in Schedule 5.18 to the First Amendment:

                  (a)      neither the Company nor any Subsidiary has knowledge
         of any facts which would give rise to any Material claim, public or
         private, or Material violation of Environmental Laws or damage to the
         environment emanating from, occurring on or in any way related to real
         properties now or formerly owned, leased or operated by any of them or
         to other assets or their use;

                  (b)      neither the Company nor any of its Subsidiaries
         (l)has stored any Hazardous Materials on real properties now or
         formerly owned, leased or operated by any of them or (2) has disposed
         of any Hazardous Materials in a manner contrary to any Environmental
         Laws; in each case in any manner that could reasonably be expected to
         result in a Material Adverse Effect; and

                  (c)      all buildings on all real properties now owned,
         leased or operated by the Company or any of its Subsidiaries are in
         material compliance with applicable Environmental Laws.

                                      S-2-2


                        GRANITE CONSTRUCTION INCORPORATED
                                  SCHEDULE 5.4
           SUBSIDIARIES, OTHER AFFILIATES, AND DIRECTORS AND OFFICERS



                                                         JURISDICTION OF                                OWNERSHIP BY COMPANY AND/OR
                         NAME                             ORGANIZATION         CAPITAL STRUCTURE                 SUBSIDIARY
                                                                                                         NAME   OWNERSHIP  POSITION
                                                                                                            
1  Granite Construction International                      California               C Corp               GCI     100.00%   investor
1  Granite Construction Company ("GCCo")                   California               C Corp               GCI     100.00%   investor
   1  Wilder Construction Company ("Wilder")               Washington               C Corp               GCCo     60.04%   investor
      1 Wilder Realty                                      Washington               C Corp              Wilder   100.00%   investor
      1 Wilder Washington                                  Washington               C Corp              Wilder   100.00%   investor
      2 Axton Aggregate Partnership                        Washington        General Partnership        Wilder    50.00%      GP
      2 Axton Aggregate Company                            Washington        General Partnership        Wilder    50.00%      GP
      1 HLA / Wilder, a Joint Venture                      Washington     Construction Joint Venture    Wilder    55.00%    partner
   2  Largo Properties, LLC                                 Maryland      Limited Liability Company      GCCo     33.30%    member
   2  Riverside Motorsports Park, LLC                      California     Limited Liability Company      GCCo      2.50%    member
   2  California Corridor Constructors, a Joint Venture    California     Construction Joint Venture     GCCo     30.00%    partner
   1  Granite Kiewit, a Joint Venture                       Montana       Construction Joint Venture     GCCo     76.00%    sponsor
   1  Granite2-Sundt, a Joint Venture                       Arizona       Construction Joint Venture     GCCo     65.00%    sponsor
   1  Granite-Frontier Kemper, a Joint Venture              Arkansas      Construction Joint Venture     GCCo     82.00%    sponsor
   2  Granite-Meyers, a Joint Venture                      California     Construction Joint Venture     GCCo     41.20%   managing
   1  Granite-PCL, a Joint Venture                          Florida       Construction Joint Venture     GCCo     64.70%    sponsor
   1  Granite-Rizzani de Eccher, a Joint Venture            Florida       Construction Joint Venture     GCCo     60.00%    sponsor
   1  Granite-Sundt, a Joint Venture                        Arizona       Construction Joint Venture     GCCo     55.00%    sponsor
   2  K-G Leasing, a Joint Venture                         California     Construction Joint Venture     GCCo     30.00%    partner
   2  K-G-W Leasing, a Joint Venture                          Utah        Construction Joint Venture     GCCo     23.00%    partner
   2  Kiewit-Granite, a Joint Venture                      California     Construction Joint Venture     GCCo     25.00%    partner
   1  Las Vegas Monorail Team, a Joint Venture               Nevada       Construction Joint Venture     GCCo     44.80%   managing
   2  LGS, a Joint Venture                                  Maryland      Construction Joint Venture     GCCo     30.00%    partner
   1  Minnesota Transit Constructors, a Joint Venture      Minnesota      Construction Joint Venture     GCCo     56.50%    sponsor
   1  River Mountain Constructors, a Joint Venture          Arkansas      Construction Joint Venture     GCCo    100.00%    sponsor
   1  Sampson-Granite, a Joint Venture                     California     Construction Joint Venture     GCCo     40.00%    partner
   1  Sierra Blanca Constructors, a Joint Venture          New Mexico     Construction Joint Venture     GCCo     52.00%    sponsor
   2  TGM Constructors                                      Kentucky      Construction Joint Venture     GCCo     25.00%    partner
   2  Tri-County Rail Constructors, a Joint Venture         Florida       Construction Joint Venture     GCCo     30.00%    partner
   1  Virginia Approach Constructors                        Maryland      Construction Joint Venture     GCCo     79.00%    partner
   2  Wasatch Constructors, a Joint Venture                   Utah        Construction Joint Venture     GCCo     23.00%    partner
   2  Washington-Granite, a Joint Venture                  California     Construction Joint Venture     GCCo     40.00%    partner
   2  Western Summit-TIC-Granite, a Joint Venture           Georgia       Construction Joint Venture     GCCo     15.00%    partner
   2  WSCI TIC Granite, a Joint Venture                     Georgia       Construction Joint Venture     GCCo     15.00%    partner
   2  Yonkers Contracting Company, Inc. / Granite          New Jersey     Construction Joint Venture     GCCo     40.00%    partner
      Construction Company, a Joint Venture
1  Granite Halmar Construction Company, Inc. ("GHCCo")      New York                C Corp               GCI     100.00%   investor
   1  Halmar-Egis, a Joint Venture                          New York      Construction Joint Venture    GHCCo    100.00%    partner
   1  Halmar-Schiavone, a Joint Venture                     New York      Construction Joint Venture    GHCCo    100.00%    partner
   1  Granite Halmar/Schiavone, a Joint Venture             New York      Construction Joint Venture    GHCCo     60.00%    partner
   1  GH/JMA, a Joint Venture                               New York      Construction Joint Venture    GHCCo     51.00%    partner
   2  Schiavone/Granite Halmar, a Joint Venture             New York      Construction Joint Venture    GHCCo     40.00%    partner
1  Intermountain Slurry Seal, Inc.                          Wyoming                 C Corp               GCI     100.00%   investor
1  Pozzolan Products Company                                  Utah                  C Corp               GCI     100.00%   investor


                                  Schedule 5.4
                                   Page 1 of 2



                        GRANITE CONSTRUCTION INCORPORATED
                                  SCHEDULE 5.4
           SUBSIDIARIES, OTHER AFFILIATES, AND DIRECTORS AND OFFICERS



                                                       JURISDICTION OF                                OWNERSHIP BY COMPANY AND/OR
                       NAME                              ORGANIZATION       CAPITAL STRUCTURE                  SUBSIDIARY
                                                                                                      NAME     OWNERSHIP  POSITION
                                                                                                           
1  Granite Land Company ("GLC")                           California             C Corp                GCI      100.00%   investor
   1  GLC Fort Worth, LLC ("GLCFW, LLC")                     Texas      Limited Liability Company      GLC      100.00%      GP
      1 Presidio Vista I, LTD                                Texas         Limited Partnership         GLC       89.00%      LP
                                                                                                   GLCFW, LLC     1.00%      GP
   1  Main Street Ventures, LLC                           California    Limited Liability Company      GLC       90.00%   managing
   1  Granite/Mandalay Bay Finance, LLC                   California    Limited Liability Company      GLC       70.00%    member
   1  Granite/Mandalay, LLC ("GM, LLC")                   California    Limited Liability Company      GLC       90.00%    member
      2 Oly/Granite General Partnership                   California       Limited Partnership       GM, LLC     10.00%      LP
      2 Oly/Mandalay Bay General Partnership              California       Limited Partnership       GM, LLC     10.00%      LP
   2  Phase 1 Regional Park Limited                       California       Limited Partnership         GLC       25.00%      LP
   2  Williamson Ranch Plaza, LP                          California       Limited Partnership         GLC       25.00%      LP
   1  Granite Grado Ventures, LLC ("GGV, LLC")            California    Limited Liability Company      GLC       90.00%   managing
      1 Granite Grado Ventures Project 1, LLC             California    Limited Liability Company    GGV, LLC   100.00%   managing
1  GILC, Incorporated ("GILC")                            California             C Corp                GCI      100.00%   investor
   1  GILC, LP                                            California       Limited Partnership        GCCo       99.00%      LP
                                                                                                      GILC        1.00%      GP
1  Wilcott Corporation                                     Colorado              C Corp                GCI      100.00%   investor
1  Granite SR 91 Corporation ("GSR91")                    California             C Corp                GCI      100.00%   investor
   1  Granite SR 91, LP ("SR91, LP")                      California       Limited Partnership         GCI       99.00%      LP
                                                                                                      GSR91       1.00%      GP
      2 California Private Transportation Company, LP     California       Limited Partnership      SR91, LP     22.22%      LP
1  GTC, Inc. ("GTC")                                         Texas               C Corp                GCI      100.00%   investor
   1  GTC II, LP ("GTC, LP")                                 Texas         Limited Partnership         GCI       99.00%      LP
                                                                                                       GTC        1.00%      GP
      1 WR II Associates, LTD                                Texas         Limited Partnership         GCI       69.88%      LP
                                                                                                     GTC, LP      1.00%      GP
2  Paramount-Nevada Asphalt Company, LLC                     Nevada     Limited Liability Company      GCI       50.00%    member


3  DIRECTORS
      David H. Watts - Chairman of the           David H. Kelsey - Director
      Board & CEO
      Joseph J. Barclay - Director               Rebecca A. McDonald - Director
      Richard M. Brooks - Director               Raymond E. Miles - Director
      Linda Griego - Director                    J. Fernando Niebla - Director
      Brian C. Kelly - Director                  George B. Searle - Director

   SENIOR OFFICERS

      William G. Dorey - President & COO
      Mark E. Boitano - Executive Vice President & Branch Division Manager
      Patrick M. Costanzo - Senior Vice President & Heavy Construction Division
        Manager
      William E. Barton - Senior Vice President & CFO
      R.C. Allbritton - Vice President & Treasurer
      Michael Futch - Vice President, Secretary & General Counsel
      Garry M. Higdem - Vice President & Heavy Construction Division Asstistant
        Manager
      James H. Roberts - Vice President & Branch Division Assistant Manager
      Michael L. Thomas - Vice President & Director of Human Resources

                                  Schedule 5.4
                                   Page 2 of 2



                        GRANITE CONSTRUCTION INCORPORATED
                                  SCHEDULE 5.8
                                   LITIGATION

5.8(a)



         DEFENDANT                              NATURE OF CASE                              COMMENTS
                                                                           
USA ex rel Maxfield/Peterson    False Calims Act arising from I-15, Salt Lake    See 12/31/02 10-K, PART I, Item
vs. Wasatch (GCCo               City, UT construction contract                   3, or 03/31/03 10-Q, NOTE 7,
construction joint venture)                                                      for more information


5.8(b)
                      NONE

                                  Schedule 5.8



                        GRANITE CONSTRUCTION INCORPORATED
                                  SCHEDULE 5.15
                              EXISTING INDEBTEDNESS



                                                                                              INTEREST
            BORROWER                 LENDER'S NAME                 DESCRIPTION                  RATE         MATURITY     BALANCE
                                                                                                        
Granite Construction Company      Benna Investments   Glendale NV property                            6.50%  12/01/07     1,043,652
Granite Construction Company      Rosemary's Mountain Southern CA Aggregate property                  8.82%  06/01/04     1,400,000
Granite Construction Incorporated Private Placement
                                    Due 03/15/10      Refinance debt & general corporate
                                                      purposes                                        6.54%  03/15/10    46,666,668
Granite Construction Incorporated Private Placement
                                    Due 05/01/13      Refinance debt & general corporate
                                                      purposes                                        6.96%  05/01/13    75,000,000
Granite Construction Incorporated Lenders under
                                    existing Bank
                                    Credit Agreement  Self insured Worker's Compensation          100.0 bps  04/30/02     1,293,390
Granite Construction Company      Bank of America
                                    Letter of Credit  City of Patterson Performance
                                                      Guarantee                                    32.5 bps  02/04/04       200,000
Wilder Construction Company (1)   Gebhardt            Promisory Note - stock repurchase               prime  05/16/07       180,997
Wilder Construction Company (1)   Hesell              Promisory Note - stock repurchase               prime  03/15/10     2,607,761
Wilder Construction Company (1)   Ross                Promisory Note - stock repurchase               prime  04/29/05     2,588,757
Wilder Construction Company (1)   Fulton              Promisory Note - stock repurchase               prime  12/20/07       104,317
Wilder Construction Company (1)   Gent                Promisory Note - stock repurchase               prime  12/20/07       948,333
Wilder Construction Company (1)   Jonasson            Promisory Note - stock repurchase               prime  12/20/07       569,000
Wilder Construction Company (1)   Suhadolnik          Promisory Note - stock repurchase               prime  12/20/07       246,567
Wilder Construction Company (1)   Giammalva           Promisory Note - stock repurchase               prime  03/15/06       897,083
Wilder Construction Company (1)   Bank of America     Priority Debt - Construction
                                                      Equipment                                       3.90%  06/01/05       975,000
Wilder Construction Company (1)   Bank of America     Priority Debt - Alaska
                                                      Yard & Office                                   7.40%  12/01/08       799,938
Wilder Construction Company (1)   Bank of America     Priority Debt - Line of Credit     prime minus 100 bp  06/01/04     1,000,000
Presidio Vista I, LTD (2)         Dell USA, L.P.      Priority Debt - Presidio Vista
                                                      Development                                     7.50%  02/08/11     4,003,877
                                                                                                                       $140,525,340
Granite Construction Incorporated BNP Paribas         $30MM notional amount floating
                                                      interest rate swap                      6 Mth LIBOR +  09/15/05      (559,168)
                                                      agreement                                  386.75 bps
Granite Construction Incorporated BNP Paribas         $20MM notional amount floating
                                                      interest rate swap                      6 Mth LIBOR +  11/05/05      (369,914)
                                                      agreement                                  418.00 bps
                                                                                                                          ($929,082)


(1) - Wilder debt is not guaranteed by Granite Construction Incorporated or any
of it non-Wilder Subsidiaries or Affiliates

(2) - This debt is non-recourse debt secured by the assets of the development
project and is not guaranteed by Granite Construction Incorporated or any of its
Subsidiaries or Affiliates.

                                  Schedule 5.15



                        GRANITE CONSTRUCTION INCORPORATED
                                  SCHEDULE 5.16
                              EXISTING INVESTMENTS



                      INVESTMENT                                         TYPE                       VALUE
                                                                                           
Paramount-Nevada Asphalt Company, LLC                             Asphalt Tank Farm               2,299,957
Bank of America (BA)                                              Bankers Acceptance              1,228,989
Bank of America (BA)                                              Bankers Acceptance              4,992,625
Bank of America CD                                              Certificate of Deposit            2,500,000
AOL Time Warner                                               Commercial Paper 2nd Tier           4,983,436
Kraft Foods Inc                                               Commercial Paper 2nd Tier           4,994,263
GMAC                                                         Commercial Paper Split Rated         3,990,133
Allianz Finance Corp                                          Commercial Paper Top Tier           3,991,944
Citigroup Global Markets                                      Commercial Paper Top Tier           4,994,704
General Electric Captial Service                              Commercial Paper Top Tier           3,998,360
New York Times                                                Commercial Paper Top Tier           3,996,000
Schering-Plough                                               Commercial Paper Top Tier           4,995,703
Toyota Motor Corp                                             Commercial Paper Top Tier           4,997,797
Transamerica Financial Corp                                   Commercial Paper Top Tier           4,989,931
Verizon Net Funding                                           Commercial Paper Top Tier           2,991,420
Granite Halmar/Schiavone, a Joint Venture                     Construction Joint Venture            350,000
Granite Kiewit, a Joint Venture                               Construction Joint Venture            105,962
Granite2-Sundt, a Joint Venture                               Construction Joint Venture          5,163,735
Granite-Rizzani de Eccher, a Joint Venture                    Construction Joint Venture         (2,524,188)
Granite-Sundt, a Joint Venture                                Construction Joint Venture            497,796
Halmar-Egis, a Joint Venture                                  Construction Joint Venture          2,977,542
Halmar-Schiavone, a Joint Venture                             Construction Joint Venture          5,412,624
K-G Leasing, a Joint Venture                                  Construction Joint Venture            341,615
K-G-W Leasing, a Joint Venture                                Construction Joint Venture            759,154
Kiewit-Granite, a Joint Venture                               Construction Joint Venture            445,740
LGS, a Joint Venture                                          Construction Joint Venture          6,434,245
Minnesota Transit Constructors, a Joint Venture               Construction Joint Venture          1,667,811
Sampson-Granite, a Joint Venture                              Construction Joint Venture             11,008
Schiavone/Granite Halmar, a Joint Venture                     Construction Joint Venture            800,032
Sierra Blanca Constructors, a Joint Venture                   Construction Joint Venture          2,842,704
TGM Constructors                                              Construction Joint Venture          1,553,084
Tri-County Rail Constructors, a Joint Venture                 Construction Joint Venture          1,561,575
Virginia Approach Constructors                                Construction Joint Venture          2,370,000
Wasatch Constructors, a Joint Venture                         Construction Joint Venture             91,505
Washington-Granite, a Joint Venture                           Construction Joint Venture            252,968
Western Summit-TIC-Granite, a Joint Venture                   Construction Joint Venture             15,565
Yonkers Contracting Company, Inc. / Granite Construction
  Company, a Joint Venture                                    Construction Joint Venture          2,489,018
Largo Properties, LLC                                          Construction JV Property           2,123,970
Rancho San Carlos Partnership, L.P.                               Construction Note               6,000,000
Granite/Mandalay Bay Finance, LLC                                Development Project              1,905,999
Granite/Mandalay, LLC ("GM, LLC")                                Development Project              2,558,017
Main Street Ventures, LLC                                        Development Project                 51,740
Phase 1 Regional Park Limited                                    Development Project                546,165
Presidio Vista I, LTD                                            Development Project                135,000
Riverside Motorsports Park, LLC                                  Development Project                 50,000
Williamson Ranch Plaza, LP                                       Development Project               (364,595)
WR II Associates, LTD                                            Development Project                460,882
Bank of America/Nations Fund Sweep                                Money Market Funds              1,001,172
Fidelity Inst'l MM Domestic 690                                   Money Market Funds              7,654,560
Fidelity Inst'l MM Govern. 057                                    Money Market Funds              3,112,553


                                  Schedule 5.16
                                   Page 3 of 6



                        GRANITE CONSTRUCTION INCORPORATED
                                  SCHEDULE 5.16
                              EXISTING INVESTMENTS



                 INVESTMENT                                         TYPE                        VALUE
                                                                                      
JP Morgan Prime Institutional Fund                           Money Market Funds                1,466,920
JP Morgan Tax-Free Institutional Fund                        Money Market Funds               15,062,571
JPM Chase Overnight Investment                               Money Market Funds                3,873,664
CA Revenue Anticipation Note                                  Municipal Bonds                  5,003,119
California State Water Department                             Municipal Bonds                  3,000,000
New Jersey Transit Series B                                   Municipal Bonds                  3,000,000
TX Tax & Revenue Antic. Bond                                  Municipal Bonds                  2,006,560
UT Transit Authority Revenue Bond                             Municipal Bonds                  2,975,881
Franklin Balance Sheet Inv. Fund                            Mutual Fund - Equity                 698,014
Lord Abbett Mid - Cap Value Fund                            Mutual Fund - Equity                 217,013
Putnam Fund for Growth & Income                             Mutual Fund - Equity               2,205,437
Putnam International Growth CLA                             Mutual Fund - Equity               2,522,837
Putnam Investors Fund                                       Mutual Fund - Equity                 430,494
Putnam New Opportunities Fund                               Mutual Fund - Equity                 803,789
Putnam Vista Fund                                           Mutual Fund - Equity                 728,709
Putnam Voyager Fd CLA                                      Mutual Fund - Equity                 629,304
Loomis Sayles Bond FD                                    Mutual Fund - Fixed Income            1,659,494
Pimco Total Return FD                                    Mutual Fund - Fixed Income            2,416,837
TIC Holdings, Inc                                                  stock                      12,535,179
Wilder Construction Company ("Wilder")                             stock                      26,932,686
California Private Transportation Company, LP                    Toll Road                       354,349
Fannie Mae                                               US Treasury & Agency Notes            3,391,481
Fannie Mae                                               US Treasury & Agency Notes            2,993,900
Fannie Mae                                               US Treasury & Agency Notes            5,074,892
Federal Farm Credit Bank                                 US Treasury & Agency Notes            5,100,743
Federal Home Loan Bank                                   US Treasury & Agency Notes            2,707,728
Federal Home Loan Bank                                   US Treasury & Agency Notes            1,994,258
Federal Home Loan Bank                                   US Treasury & Agency Notes            5,082,445
Federal Home Loan Bank                                   US Treasury & Agency Notes            5,177,271
Freddie Mac                                              US Treasury & Agency Notes            2,997,233
Freddie Mac                                              US Treasury & Agency Notes            1,497,975
Freddie Mac                                              US Treasury & Agency Notes            5,104,376
Sallie Mae                                               US Treasury & Agency Notes            5,055,638
U.S. Treasury Note                                       US Treasury & Agency Notes            2,000,000
U.S. Treasury Note                                       US Treasury & Agency Notes            1,552,952
U.S. Treasury Note                                       US Treasury & Agency Notes            2,100,975
U.S. Treasury Note                                       US Treasury & Agency Notes            3,100,238
                                                                                            $262,255,179


                                  Schedule 5.16
                                   Page 4 of 6



                        GRANITE CONSTRUCTION INCORPORATED
                                  SCHEDULE 5.18
                              ENVIRONMENTAL MATTERS

5.18(a)

Granite Construction in the normal course of business utilizes petroleum
(hydrocarbon) products which may be considered hazardous materials when
encountered at regulatory levels established by the Federal EPA or the Regional
State EPA. The utilization of these asphalt products, diesel, and gasoline over
the years of operations have the potential of creating exposure to environmental
clean up requirements. All underground tanks meet current requirements. There
are no pending governmental ordered clean up requirements. However, the
following represents estimates based on construction industry housekeeping
practices as encountered during our normal course of business. Except as
indicated with an " * ", these costs do not represent actual identified
exposures. Items indicated with an " * " are carried on the books as a
liability.



- -----------------------------------------------------------------------------------------
      LOCATIONS                               DESCRIPTION                          AMOUNT
- ---------------------        ---------------------------------------------        -------
                                                                            
Anchorage, AK                  Surface Spills, wash rack facilities                60,000
Anchorage, AK                  Surface Spills, former AC Plant                     17,500
Huachuca City, AZ              Surface Spills, AC Plant                            15,000
Marana, AZ                     Surface Spills, AC Plant                            15,000
Tucson, AZ                     Surface Spills                                      10,000
Tucson, AZ                     AC Plant                                            25,000
29 Palms, CA                 * Surface Spills, AC Plant                             4,409
Arcata, CA                   * Surface Spills, AC Plant                           236,000
Arvin, CA                      Surface Spills, AC Plant                            25,000
Bakersfield, CA                Surface Spills, AC Plant                           250,000
Bishop, CA                     Surface Spills, AC Plant                            15,000
Buelton, CA                    Surface Spills, AC Plant                            50,000
City of Blue Lake, CA          Surface Spills                                      40,000
Coalinga, CA                   Surface Spills, AC Plant                            50,000
Concord, CA                    Surface Spills, AC Plant                            35,000
Crescent City, CA            * Surface Spills, AC Plant                           682,836
Ducor, CA                    * Surface Spills, AC Plant                            12,529
El Centro, CA                  Surface Spills, AC Plant                            25,000
Felton, Ca                     Surface Spills, AC Plant                           100,000
French Camp, CA                Surface Spills, AC Plant, old fill material        500,000
Highway 175, CA              * Surface Spills, AC Plant                           150,000
Indio, CA                      Surface Spills, AC Plant                            25,000
Inyokern, CA                   Surface Spills, AC Plant                            25,000
Kelseyville, CA              * Surface Spills, AC Plant                           873,000
Lee Vining, CA                 Surface Spills, AC Plant                            15,000
Littlerock, CA                 Surface Spills, AC Plant                            25,000
Longvale, CA                 * Surface Spills, AC Plant                           274,000
Los Banos, CA                  AC Plant                                            10,000
Pleasanton, CA                 AC Plant                                            10,000
Rio Linda, CA                  Surface Spills, AC Plant                            50,000
Sacramento, CA                 Surface Spills, AC Plant                           500,000
Salinas, CA                    Surface Spills, AC Plant                            10,000
Salinas, CA                    Former Underground Storage Tanks                   200,000
San Jose, CA                   Surface Spills                                      10,000
Santa Barbara, CA              Surface Spills                                      25,000


                                  Schedule 5.18
                                   Page 5 of 6



                        GRANITE CONSTRUCTION INCORPORATED
                                  SCHEDULE 5.18
                              ENVIRONMENTAL MATTERS

5.18(a)

Granite Construction in the normal course of business utilizes petroleum
(hydrocarbon) products which may be considered hazardous materials when
encountered at regulatory levels established by the Federal EPA or the Regional
State EPA. The utilization of these asphalt products, diesel, and gasoline over
the years of operations have the potential of creating exposure to environmental
clean up requirements. All underground tanks meet current requirements. There
are no pending governmental ordered clean up requirements. However, the
following represents estimates based on construction industry housekeeping
practices as encountered during our normal course of business. Except as
indicated with an " * ", these costs do not represent actual identified
exposures. Items indicated with an " * " are carried on the books as a
liability.



- -----------------------------------------------------------------------------------------
     LOCATIONS                               DESCRIPTION                         AMOUNT
- -------------------            -----------------------------------------       ----------
                                                                         
Tracy, CA                        Surface Spills, AC Plant                          25,000
Ukiah, CA                      * Surface Spills, AC Plant                         430,000
Watsonville, CA                  Surface Spills                                    35,000
Watsonville, CA                  Former Underground Storage Tanks                  35,000
Tampa, FL                        Surface Spills                                    75,000
Odenton, MD                      Surface Spills                                   100,000
Carson City, NV                  Surface Spills, AC Plant                          10,000
Lockwood, NV                     Surface Spills, AC Plant                          50,000
Sparks, NV                       Surface Spills, AC Plant                         100,000
Wappinger Falls, NY              Surface Spills                                   100,000
Lubbock, TX                      Surface Spills, AC Plant                         100,000
Lubbock, TX                      Surface Spills                                    75,000
Lubbock, TX                      Surface Spills                                    50,000
Morgan County, UT                Surface Spills                                    10,000
North Ogden, UT                  Old fill material                                250,000
Ogden, UT                      * Former Webb AC Plant                             723,377
Salt City, UT                  * Former 2200 North AC Plant                       132,363
Salt Lake City, UT               AC Plant                                         150,000
Salt Lake City, UT               Surface Spills                                    50,000
Salt Lake City, UT             * Former Whitehill AC Plant                         25,288
Sandy City, UT                   Surface Spills, AC Plant                         100,000
Kearns, UT                     * Surface Spills, AC Plant                          12,529
Wasatch County, UT               Surface Spills, AC Plant                          10,000
West Haven, UT                   Surface Spills, AC Plant                          25,000
Bellington, WA                   Hannegan surface spills, AC Plant, shop          500,000
Everett, WA                      Surface Spills, AC Plant                         100,000
Whatcom County, WA               Former AC Plant                                  260,000
Whatcom County, WA               Former UST and shop area                          17,500
                                                                               ----------
                                                                               $7,921,331
                                                                               ----------


5.18 (b) AND (c)

                      NONE

                                  Schedule 5.18
                                   Page 6 of 6

EX-10.4

                                                                    EXHIBIT 10.4

================================================================================

                        GRANITE CONSTRUCTION INCORPORATED

                          -----------------------------

                                 FIRST AMENDMENT
                            Dated as of June 15, 2003

                                       to

                             NOTE PURCHASE AGREEMENT
                             Dated as of May 1, 2001

                          -----------------------------

          Re:      $75,000,000 6.96% Senior Notes due May 1, 2013

================================================================================



                   FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT

         THIS FIRST AMENDMENT dated as of June 15, 2003 (the or this "First
Amendment") to that certain Note Purchase Agreement dated as of May 1, 2001 is
between GRANITE CONSTRUCTION INCORPORATED, a Delaware corporation (the
"Company"), and each of the institutional investors listed on the signature
pages hereto (collectively, the "Noteholders")

                                    RECITALS:

         A.       The Company and each of the Noteholders have heretofore
entered into that certain Note Purchase Agreement dated as of May 1, 2001 (the
"Note Purchase Agreement). The Company has heretofore issued $75,000,000
aggregate principal amount of its 6.96% Senior Notes due May 1, 2013 (the
"Notes") pursuant to the Note Purchase Agreement. The Noteholders are the
holders of 100% of the outstanding principal amount of the Notes.

         B.       The Company and the Noteholders now desire to amend the Note
Purchase Agreement in the respects, but only in the respects, hereinafter set
forth.

         C.       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.

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

         Now, THEREFORE, upon the full and complete satisfaction of the
conditions precedent to the effectiveness of this First Amendment 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. AMENDMENTS.

         1.1.     Section 9.6(a)(1) of the Note Purchase Agreement shall be and
is hereby amended by inserting the following new sentence at the end of such
Section.

         "Notwithstanding the foregoing, Wilder shall not be required to execute
         a supplement to the Guaranty Agreement or otherwise Guaranty the Notes
         until the earliest to occur of: (A) Wilder becoming an obligor or
         guarantor of any Debt existing under the Bank Credit Agreement, (B)(I)
         the total net revenues of Wilder and its Subsidiaries for the period of
         the immediately preceding four fiscal quarters is equal to or greater
         than 15% of the consolidated total net revenues of the Company and its
         Subsidiaries for such period determined in accordance with GAAP, in
         each case as reflected in the most recent annual or quarterly financial
         statements of the Company and its Subsidiaries; or (II) the total
         assets of Wilder and its Subsidiaries, as of the last day of the
         immediately preceding



         fiscal quarter, is equal to or greater than 15% of consolidated total
         assets of the Company and its Subsidiaries as of such date determined
         in accordance with GAAP, in each case as reflected in the most recent
         annual or quarterly financial statements of the Company and its
         Subsidiaries and (C) Wilder becoming a Wholly-Owned Subsidiary of the
         Company."

         1.2.     SCHEDULE B to the Note Purchase Agreement shall be and is
hereby amended by inserting the following new definition in the proper
alphabetical order:

                  ""Wilder" shall mean Wilder Construction Co., a Washington
         corporation, and any successor thereto."

SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

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

                  (a)      this First Amendment has been duly authorized,
         executed and delivered by it and this First Amendment constitutes the
         legal, valid and binding obligation, contract and agreement of the
         Company enforceable against it in accordance with its 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 Note Purchase Agreement, as amended by this First
         Amendment, constitutes the legal, valid and binding obligation,
         contract and agreement of the Company enforceable against it in
         accordance with its 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;

                  (c)      the execution, delivery and performance by the
         Company of this First Amendment (i) has been duly authorized by all
         requisite corporate action and, if required, shareholder action, (ii)
         does not require the consent or approval of any governmental or
         regulatory body or agency, and (iii) will not (A) violate (1) any
         provision of law, statute, rule or regulation or its certificate of
         incorporation or bylaws, (2) any order of any court or any rule,
         regulation or order of any other agency or government binding upon it,
         or (3) 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 (B) 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 (iii)(A)(3) of this
         Section 2.1(c);

                  (d)      as of the date hereof and after giving effect to this
         First Amendment, no Default or Event of Default has occurred which is
         continuing and no waiver of Default or Event of Default is in effect;
         and

                                      - 2 -



                  (e)      except as set forth on SCHEDULE 2 hereto, all the
         representations and warranties contained in Section 5 of 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.

SECTION 3. CONDITIONS TO EFFECTIVENESS OF THIS FIRST AMENDMENT.

         3.1.     Upon satisfaction of each and every one of the following
conditions, this First Amendment shall become effective as of June 27, 2003:

                  (a)      executed counterparts of this First Amendment, duly
         executed by the Company and the holders of at least 51% of the
         outstanding principal of the Notes, shall have been delivered to the
         Noteholders;

                  (b)      each Guarantor shall have duly executed the
         reaffirmation of Guaranty Agreement attached hereto;

                  (c)      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;

                  (d)      each Noteholder shall have received evidence
         satisfactory to it that (i) Wilder Construction Co. is not an obligor
         or guarantor of Debt under the Credit Agreement dated as of June 27,
         2003 among the Company, each lender from time to time party thereto and
         Bank of America, N.A., as Administrative Agent, Swing Line Lender and
         L/C Issuer and (ii) the Amended and Restated Note Purchase Agreement
         dated as of November 1, 2001 by and among the Company and the
         institutional investors named therein has been amended in the same
         manner as the Note Purchase Agreement has been amended by this First
         Amendment;

                  (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 the amount set forth opposite
         such holder's name in SCHEDULE 1 attached hereto; and

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

Upon receipt of all of the foregoing, this First Amendment shall become
effective.

SECTION 4. MISCELLANEOUS.

         4.1.     This First Amendment shall be construed in connection with and
as part of the Note Purchase Agreement, and except as modified and expressly
amended by this First

                                      - 3 -



Amendment, 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.

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

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

         4.4.     This First Amendment shall he governed by and construed in
accordance with the laws of the State of Illinois.

                  [Remainder of page intentionally left blank.]

                                      - 4 -



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

                                         GRANITE CONSTRUCTION INCORPORATED

                                         By /s/ William G. Dorey
                                            --------------------------
                                            William G. Dorey
                                            President

                                         By /s/ William E. Barton
                                            --------------------------
                                            William E. Barton
                                            Chief Financial Officer

SIGNATURE PAGE TO THE
FIRST AMENDMENT



                                         NATIONWIDE MUTUAL INSURANCE COMPANY

                                         By /s/ MARK W. POEPPELMAN
                                            ---------------------------
                                            Name: MARK W. POEPPELMAN
                                            Title: VICE PRESIDENT

                                         ALLSTATE LIFE INSURANCE COMPANY

                                         By _____________________________
                                         Name:

                                         By _____________________________
                                         Name:
                                           Authorized Signatories

                                         ALLSTATE LIFE INSURANCE COMPANY OF NEW
                                           YORK

                                         By ____________________________
                                         Name:

                                         By ____________________________
                                         Name:
                                            Authorized Signatories

                                         UNITED OF OMAHA LIFE INSURANCE COMPANY

                                         By ____________________________
                                            Its

SIGNATURE PAGE TO THE
FIRST AMENDMENT



                                         NATIONWIDE MUTUAL INSURANCE COMPANY

                                         By _____________________________
                                            Name:
                                            Title:

                                         ALLSTATE LIFE INSURANCE COMPANY

                                         By   /s/   Rhonda L. Hopps
                                            -----------------------------
                                         Name:

                                         By   /s/   Jerry D. Zinkula
                                            -----------------------------
                                         Name:
                                            Authorized Signatories

                                         ALLSTATE LIFE INSURANCE COMPANY OF NEW
                                            YORK

                                         By   /s/   Rhonda L. Hopps
                                            -----------------------------
                                         Name:

                                         By   /s/   Jerry D. Zinkula
                                            -----------------------------
                                         Name:
                                            Authorized Signatories

                                         UNITED OF OMAHA LIFE INSURANCE COMPANY

                                         By _____________________________
                                            Its

SIGNATURE PAGE TO THE
FIRST AMENDMENT



                                         NATIONWIDE MUTUAL INSURANCE COMPANY

                                         By _____________________________
                                            Name:
                                            Title:

                                         ALLSTATE LIFE INSURANCE COMPANY

                                         By _____________________________
                                         Name:

                                         By _____________________________
                                         Name:
                                            Authorized Signatories

                                         ALLSTATE LIFE INSURANCE COMPANY OF NEW
                                            YORK

                                         By _____________________________
                                         Name:

                                         By _____________________________
                                         Name:
                                            Authorized Signatories

                                         UNITED OF OMAHA LIFE INSURANCE COMPANY

                                         By /s/ Curtis R. Caldwell
                                            -----------------------------
                                            Its Vice President

SIGNATURE PAGE TO THE
FIRST AMENDMENT



Accepted and Agreed to:

                                         CONNECTICUT GENERAL LIFE INSURANCE
                                            COMPANY

                                            By: Cigna Investments, Inc.
                                                (authorized agent)

                                         By /s/ Donald F. Rieger, Jr.
                                            ------------------------------
                                            Its Donald F. Rieger, Jr.
                                                Managing Director

                                         NATIONWIDE LIFE INSURANCE COMPANY

                                         By ______________________________
                                            Name:
                                            Title:

                                         NATIONWIDE INDEMNITY COMPANY

                                         By ______________________________
                                            Name:
                                            Title:

                                         NATIONWIDE MUTUAL FIRE INSURANCE
                                            COMPANY

                                         By ______________________________
                                            Name:
                                            Title:

SIGNATURE PAGE TO THE
FIRST AMENDMENT



Accepted and Agreed to:

                                         CONNECTICUT GENERAL LIFE INSURANCE
                                            COMPANY

                                            By: Cigna Investments, Inc.
                                                (authorized agent)

                                         By ______________________________
                                            Its

                                         NATIONWIDE LIFE INSURANCE COMPANY

                                         By /s/ MARK W. POEPPELMAN
                                            ------------------------------
                                            Name: MARK W. POEPPELMAN
                                            Title: VICE PRESIDENT

                                         NATIONWIDE INDEMNITY COMPANY

                                         By /s/ MARK W. POEPPELMAN
                                            ------------------------------
                                            Name: MARK W. POEPPELMAN
                                            Title: VICE PRESIDENT

                                         NATIONWIDE MUTUAL FIRE INSURANCE
                                            COMPANY

                                         By /s/ MARK W. POEPPELMAN
                                            ------------------------------
                                            Name: MARK W. POEPPELMAN
                                            Title: VICE PRESIDENT

SIGNATURE PAGE TO THE
FIRST AMENDMENT



                                         COMPANION LIFE INSURANCE COMPANY

                                         By /s/ Curtis R. Caldwell
                                            ------------------------------
                                            Name:  Curtis R. Caldwell
                                            Title: Authorized Signer

                                         THRIVENT FINANCIAL FOR LUTHERANS,
                                            successor by merger to Lutheran
                                            Brotherhood

                                         By ______________________________
                                            Name:  Glen J. Vanic
                                            Title: Portfolio Manager

SIGNATURE PAGE TO THE
FIRST AMENDMENT



                                         COMPANION LIFE INSURANCE COMPANY

                                         By ______________________________
                                            Name:
                                            Title:

                                         THRIVENT FINANCIAL FOR LUTHERANS,
                                            successor by merger to Lutheran
                                            Brotherhood

                                         By /s/ Glen J. Vanic
                                            ------------------------------
                                            Name:  Glen J. Vanic
                                            Title: Portfolio Manager

SIGNATURE PAGE TO THE
FIRST AMENDMENT



                       REAFFIRMATION OF GUARANTY AGREEMENT

The undersigned Guarantors hereby acknowledge and agree to the foregoing First
Amendment to Note Purchase Agreement and reaffirm the Guaranty Agreement dated
as of May 1, 2001 given in favor of each Noteholder and their respective
successors and assigns:

                                         GRANITE CONSTRUCTION COMPANY

                                         By /s/ William G. Dorey
                                            -------------------------------
                                            William G. Dorey
                                            President

                                         By /s/ William E. Barton
                                            -------------------------------
                                            William E. Barton
                                            Chief Financial Officer

                                         GRANITE LAND COMPANY

                                         By /s/ Scott D. Wolcott
                                            -------------------------------
                                            Scott D. Wolcott
                                            President

                                         By /s/ William G. Dorey
                                            -------------------------------
                                            William G. Dorey
                                            President, Granite Construction
                                            Incorporated

                                         GRANITE HALMAR CONSTRUCTION COMPANY,
                                         INC.

                                         By /s/ William G. Dorey
                                            -------------------------------
                                            William G. Dorey
                                            President

                                         By /s/ William E. Barton
                                            -------------------------------
                                            William E. Barton
                                            Chief Financial Officer



                                         INTERMOUNTAIN SLURRY SEAL, INC.

                                         By /s/ Michael L. Thomas
                                            -------------------------------
                                            Michael L. Thomas
                                            President

                                         By /s/ David J. Brunton
                                            -------------------------------
                                            David J. Brunton
                                            Chief Financial Officer

                                         POZZOLAN PRODUCTS COMPANY (P.P.C.)

                                         By /s/ Michael L. Thomas
                                            -------------------------------
                                            Michael L. Thomas
                                            President

                                         By /s/ David J. Brunton
                                            -------------------------------
                                            David J. Brunton
                                            Chief Financial Officer

                                         GILC, L.P.

                                         By: GILC Incorporated, its sole
                                               General Partner

                                         By /s/ William E. Barton
                                            -------------------------------
                                            William E. Barton
                                            Chief Executive Officer

                                         By /s/ R.C. Allbritton
                                            -------------------------------
                                            R.C. Allbritton
                                            Chief Financial Officer

SIGNATURE PAGE TO
REAFFIRMATION OF GUARANTY AGREEMENT



                                  FEE SCHEDULE

                                                            
Connecticut General Life Insurance Company                     $ 11,000.00
Nationwide Life Insurance Company                              $  5,000.00
Nationwide Indemnity Company                                   $  2,500.00
Nationwide Mutual Fire Insurance Company                       $  2,000.00
Nationwide Mutual Insurance Company                            $  1,500.00
Allstate Life Insurance Company                                $  4,500.00
Allstate Life Insurance Company of New York                    $  4,500.00
United of Omaha Life Insurance Company                         $  3,000.00
Companion Life Insurance Company                               $  1,000.00
Thrivent Financial For Lutherans                               $  2,500.00

                                             Total:            $ 37,500.00



                                   SCHEDULE 1
                              (to First Amendment)



                   VARIANCES TO REPRESENTATIONS AND WARRANTIES

         The Company represents and warrants to each holder that except as
hereinafter set forth in this Schedule 2, each of the representations and
warranties set forth in Section 5 of the Note Purchase Agreement is true and
correct as of the date hereof. The Section references hereinafter set forth
correspond to the similar sections of the Note Purchase Agreement which are
supplemented hereby:

         Section 5.4.      Organization and Ownership of Shares of
Subsidiaries; Affiliates. (a) Schedule 5.4 to the First Amendment contains
(except as noted therein) complete and correct lists (1) of the Company's
Subsidiaries, showing, as to each Subsidiary, the correct name thereof, the
jurisdiction of its organization, and the percentage of shares of each class of
its capital stock or similar equity interests outstanding owned by the Company
and each other Subsidiary, (2) of the Company's Affiliates, other than
Subsidiaries and (3) of the Company's directors and senior officers.

         (b)      All of the outstanding shares of capital stock or similar
equity interests of each Subsidiary shown in Schedule 5.4 to the First Amendment
as being owned by the Company and its Subsidiaries have been validly issued, are
fully paid and nonassessable and are owned by the Company or another Subsidiary
free and clear of any Lien (except as otherwise disclosed in Schedule 5.4 to the
First Amendment).

         (c)      Each Subsidiary identified in Schedule 5.4 to the First
Amendment is a corporation or other legal entity duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, and is duly qualified as a foreign corporation or other legal
entity and is in good standing in each jurisdiction in which such qualification
is required by law, other than those jurisdictions as to which the failure to be
so qualified or in good standing could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Each such Subsidiary
has the corporate or other power and authority to own or hold under lease the
properties it purports to own or hold under lease and to transact the business
it transacts and proposes to transact.

         (d)      No Subsidiary is a party to, or otherwise subject to, any
legal restriction or any agreement or instrument (other than this Agreement, the
agreements listed on Schedule 5.4 to the First Amendment and customary
limitations imposed by corporate law statutes) restricting the ability of such
Subsidiary to pay dividends out of profits or make any other similar
distributions of profits to the Company or any of its Subsidiaries that own
outstanding shares of capital stock or similar equity interests of such
Subsidiary.

         Section 5.8.      Litigation; Observance of Agreements, Statutes and
Orders. (a) Except as disclosed in Schedule 5.8 to the First Amendment, there
are no actions, suits or proceedings pending or, to the knowledge of the
Company, threatened against or affecting the Company or

                                   SCHEDULE 2
                              (to First Amendment)



any Subsidiary or any property of the Company or any Subsidiary in any court or
before any arbitrator of any kind or before or by any Governmental Authority
that, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

         Section 5.15.     Existing Debt. Except as described therein,
Schedule 5.15 to the First Amendment sets forth a complete and correct list of
all outstanding Debt of the Company and its Subsidiaries as of May 31, 2003
(other than with respect to the Debt of Wilder and Presidio Vista which are as
of April 30, 2003), since which date there has been no Material change in the
amounts, interest rates, sinking funds, installment payments or maturities of
the Debt of the Company or its Subsidiaries. Neither the Company nor any
Subsidiary is in default and no waiver of default is currently in effect, in the
payment of any principal or interest on any Debt of the Company or such
Subsidiary and no event or condition exists with respect to any Debt of the
Company or any Subsidiary that would permit (or that with notice or the lapse of
time, or both, would permit) one or more Persons to cause such Debt to become
due and payable before its stated maturity or before its regularly scheduled
dates of payment.

         Section 5.16.     Existing Investments. Schedule 5.16 to the First
Amendment sets forth a complete and correct list of all outstanding Investments
of the Company and its Subsidiaries as of May 31, 2003, since which date there
has been no Material change in the amounts of such Investments.

         Section 5.18.     Environmental Matters. Neither the Company nor any
Subsidiary has knowledge of any Material claim or has received any notice of any
Material claim, and no proceeding has been instituted raising any Material claim
against the Company or any of its Subsidiaries or any of their respective real
properties now or formerly owned, leased or operated by any of them or other
assets, alleging any damage to the environment or violation of any Environmental
Laws. Except as otherwise disclosed in Schedule 5.18 to the First Amendment:

                  (a)      neither the Company nor any Subsidiary has knowledge
         of any facts which would give rise to any Material claim, public or
         private, or Material violation of Environmental Laws or damage to the
         environment emanating from, occurring on or in any way related to real
         properties now or formerly owned, leased or operated by any of them or
         to other assets or their use;

                  (b)      neither the Company nor any of its Subsidiaries
         (1)has stored any Hazardous Materials on real properties now or
         formerly owned, leased or operated by any of them or (2) has disposed
         of any Hazardous Materials in a manner contrary to any Environmental
         Laws; in each case in any manner that could reasonably be expected to
         result in a Material Adverse Effect; and

                  (c)      all buildings on all real properties now owned,
         leased or operated by the Company or any of its Subsidiaries are in
         material compliance with applicable Environmental Laws.

                                      S-2-2


                        GRANITE CONSTRUCTION INCORPORATED
                                  SCHEDULE 5.4
           SUBSIDIARIES, OTHER AFFILIATES, AND DIRECTORS AND OFFICERS



                                                         JURISDICTION OF                                OWNERSHIP BY COMPANY AND/OR
                         NAME                             ORGANIZATION         CAPITAL STRUCTURE                 SUBSIDIARY
                                                                                                         NAME   OWNERSHIP  POSITION
                                                                                                            
1  Granite Construction International                      California               C Corp               GCI     100.00%   investor
1  Granite Construction Company ("GCCo")                   California               C Corp               GCI     100.00%   investor
   1  Wilder Construction Company ("Wilder")               Washington               C Corp               GCCo     60.04%   investor
      1 Wilder Realty                                      Washington               C Corp              Wilder   100.00%   investor
      1 Wilder Washington                                  Washington               C Corp              Wilder   100.00%   investor
      2 Axton Aggregate Partnership                        Washington        General Partnership        Wilder    50.00%      GP
      2 Axton Aggregate Company                            Washington        General Partnership        Wilder    50.00%      GP
      1 HLA / Wilder, a Joint Venture                      Washington     Construction Joint Venture    Wilder    55.00%    partner
   2  Largo Properties, LLC                                 Maryland      Limited Liability Company      GCCo     33.30%    member
   2  Riverside Motorsports Park, LLC                      California     Limited Liability Company      GCCo      2.50%    member
   2  California Corridor Constructors, a Joint Venture    California     Construction Joint Venture     GCCo     30.00%    partner
   1  Granite Kiewit, a Joint Venture                       Montana       Construction Joint Venture     GCCo     76.00%    sponsor
   1  Granite2-Sundt, a Joint Venture                       Arizona       Construction Joint Venture     GCCo     65.00%    sponsor
   1  Granite-Frontier Kemper, a Joint Venture              Arkansas      Construction Joint Venture     GCCo     82.00%    sponsor
   2  Granite-Meyers, a Joint Venture                      California     Construction Joint Venture     GCCo     41.20%   managing
   1  Granite-PCL, a Joint Venture                          Florida       Construction Joint Venture     GCCo     64.70%    sponsor
   1  Granite-Rizzani de Eccher, a Joint Venture            Florida       Construction Joint Venture     GCCo     60.00%    sponsor
   1  Granite-Sundt, a Joint Venture                        Arizona       Construction Joint Venture     GCCo     55.00%    sponsor
   2  K-G Leasing, a Joint Venture                         California     Construction Joint Venture     GCCo     30.00%    partner
   2  K-G-W Leasing, a Joint Venture                          Utah        Construction Joint Venture     GCCo     23.00%    partner
   2  Kiewit-Granite, a Joint Venture                      California     Construction Joint Venture     GCCo     25.00%    partner
   1  Las Vegas Monorail Team, a Joint Venture               Nevada       Construction Joint Venture     GCCo     44.80%   managing
   2  LGS, a Joint Venture                                  Maryland      Construction Joint Venture     GCCo     30.00%    partner
   1  Minnesota Transit Constructors, a Joint Venture      Minnesota      Construction Joint Venture     GCCo     56.50%    sponsor
   1  River Mountain Constructors, a Joint Venture          Arkansas      Construction Joint Venture     GCCo    100.00%    sponsor
   1  Sampson-Granite, a Joint Venture                     California     Construction Joint Venture     GCCo     40.00%    partner
   1  Sierra Blanca Constructors, a Joint Venture          New Mexico     Construction Joint Venture     GCCo     52.00%    sponsor
   2  TGM Constructors                                      Kentucky      Construction Joint Venture     GCCo     25.00%    partner
   2  Tri-County Rail Constructors, a Joint Venture         Florida       Construction Joint Venture     GCCo     30.00%    partner
   1  Virginia Approach Constructors                        Maryland      Construction Joint Venture     GCCo     79.00%    partner
   2  Wasatch Constructors, a Joint Venture                   Utah        Construction Joint Venture     GCCo     23.00%    partner
   2  Washington-Granite, a Joint Venture                  California     Construction Joint Venture     GCCo     40.00%    partner
   2  Western Summit-TIC-Granite, a Joint Venture           Georgia       Construction Joint Venture     GCCo     15.00%    partner
   2  WSCI TIC Granite, a Joint Venture                     Georgia       Construction Joint Venture     GCCo     15.00%    partner
   2  Yonkers Contracting Company, Inc. / Granite          New Jersey     Construction Joint Venture     GCCo     40.00%    partner
      Construction Company, a Joint Venture
1  Granite Halmar Construction Company, Inc. ("GHCCo")      New York                C Corp               GCI     100.00%   investor
   1  Halmar-Egis, a Joint Venture                          New York      Construction Joint Venture    GHCCo    100.00%    partner
   1  Halmar-Schiavone, a Joint Venture                     New York      Construction Joint Venture    GHCCo    100.00%    partner
   1  Granite Halmar/Schiavone, a Joint Venture             New York      Construction Joint Venture    GHCCo     60.00%    partner
   1  GH/JMA, a Joint Venture                               New York      Construction Joint Venture    GHCCo     51.00%    partner
   2  Schiavone/Granite Halmar, a Joint Venture             New York      Construction Joint Venture    GHCCo     40.00%    partner
1  Intermountain Slurry Seal, Inc.                          Wyoming                 C Corp               GCI     100.00%   investor
1  Pozzolan Products Company                                  Utah                  C Corp               GCI     100.00%   investor


                                  Schedule 5.4

                                   Page 1 of 2



                        GRANITE CONSTRUCTION INCORPORATED
                                  SCHEDULE 5.4
           SUBSIDIARIES, OTHER AFFILIATES, AND DIRECTORS AND OFFICERS



                                                       JURISDICTION OF                                OWNERSHIP BY COMPANY AND/OR
                         NAME                            ORGANIZATION       CAPITAL STRUCTURE                  SUBSIDIARY
                                                                                                      NAME     OWNERSHIP  POSITION
                                                                                                           
1  Granite Land Company ("GLC")                           California             C Corp                GCI      100.00%   investor
   1  GLC Fort Worth, LLC ("GLCFW, LLC")                     Texas      Limited Liability Company      GLC      100.00%      GP
      1 Presidio Vista I, LTD                                Texas         Limited Partnership         GLC       89.00%      LP
                                                                                                   GLCFW, LLC     1.00%      GP
   1  Main Street Ventures, LLC                           California    Limited Liability Company      GLC       90.00%   managing
   1  Granite/Mandalay Bay Finance, LLC                   California    Limited Liability Company      GLC       70.00%    member
   1  Granite/Mandalay, LLC ("GM, LLC")                   California    Limited Liability Company      GLC       90.00%    member
      2 Oly/Granite General Partnership                   California       Limited Partnership       GM, LLC     10.00%      LP
      2 Oly/Mandalay Bay General Partnership              California       Limited Partnership       GM, LLC     10.00%      LP
   2  Phase 1 Regional Park Limited                       California       Limited Partnership         GLC       25.00%      LP
   2  Williamson Ranch Plaza, LP                          California       Limited Partnership         GLC       25.00%      LP
   1  Granite Grado Ventures, LLC ("GGV, LLC")            California    Limited Liability Company      GLC       90.00%   managing
      1 Granite Grado Ventures Project 1, LLC             California    Limited Liability Company    GGV, LLC   100.00%   managing
1  GILC, Incorporated ("GILC")                            California             C Corp                GCI      100.00%   investor
   1  GILC, LP                                            California       Limited Partnership        GCCo       99.00%      LP
                                                                                                      GILC        1.00%      GP
1  Wilcott Corporation                                     Colorado              C Corp                GCI      100.00%   investor
1  Granite SR 91 Corporation ("GSR91")                    California             C Corp                GCI      100.00%   investor
   1  Granite SR 91, LP ("SR91, LP")                      California       Limited Partnership         GCI       99.00%      LP
                                                                                                      GSR91       1.00%      GP
      2 California Private Transportation Company, LP     California       Limited Partnership      SR91, LP     22.22%      LP
1  GTC, Inc. ("GTC")                                         Texas               C Corp                GCI      100.00%   investor
   1  GTC II, LP ("GTC, LP")                                 Texas         Limited Partnership         GCI       99.00%      LP
                                                                                                       GTC        1.00%      GP
      1 WR II Associates, LTD                                Texas         Limited Partnership         GCI       69.88%      LP
                                                                                                     GTC, LP      1.00%      GP
2  Paramount-Nevada Asphalt Company, LLC                     Nevada     Limited Liability Company      GCI       50.00%    member


3  DIRECTORS
      David H. Watts - Chairman of the          David H. Kelsey - Director
      Board & CEO
      Joseph J. Barclay - Director              Rebecca A. McDonald - Director
      Richard M. Brooks - Director              Raymond E. Miles - Director
      Linda Griego - Director                   J. Fernando Niebla - Director
      Brian C. Kelly - Director                 George B. Searle - Director

   SENIOR OFFICERS

      William G. Dorey - President & COO
      Mark E. Boitano - Executive Vice President & Branch Division Manager
      Patrick M. Costanzo - Senior Vice President & Heavy Construction Division
        Manager
      William E. Barton - Senior Vice President & CFO
      R.C. Allbritton - Vice President & Treasurer
      Michael Futch - Vice President, Secretary & General Counsel
      Garry M. Higdem - Vice President & Heavy Construction Division Asstistant
        Manager
      James H. Roberts - Vice President & Branch Division Assistant Manager
      Michael L. Thomas - Vice President & Director of Human Resources

                                  Schedule 5.4

                                   Page 2 of 2




                        GRANITE CONSTRUCTION INCORPORATED
                                  SCHEDULE 5.8
                                   LITIGATION

5.8(a)



         DEFENDANT                              NATURE OF CASE                              COMMENTS
                                                                           
USA ex rel Maxfield/Peterson    False Calims Act arising from 1-15, Salt Lake    See 12/31/02 10-K, PART I, Item
vs. Wasatch (GCCo               City, UT construction contract                   3, or 03/31/03 10-Q, NOTE 7,
construction joint venture)                                                      for more information


5.8(b)

                      NONE

                                  Schedule 5.8




                        GRANITE CONSTRUCTION INCORPORATED
                                  SCHEDULE 5.15
                              EXISTING INDEBTEDNESS



                                                                                              INTEREST
            BORROWER                 LENDER'S NAME               DESCRIPTION                    RATE         MATURITY     BALANCE
                                                                                                        
Granite Construction Company      Benna Investments   Glendale NV property                          6.50%    12/01/07     1,043,652
Granite Construction Company      Rosemary's Mountain Southern CA Aggregate property                8.82%    06/01/04     1,400,000
Granite Construction Incorporated Private Placement   Refinance debt & general corporate
                                    Due 03/15/10      purposes                                      6.54%    03/15/10    46,666,668

Granite Construction Incorporated Private Placement   Refinance debt & general corporate
                                    Due 05/01/13      purposes                                      6.96%    05/01/13    75,000,000

Granite Construction Incorporated Lenders under       Self insured Worker's Compensation           100.0 bps 04/30/02     1,293,390
                                    existing Bank
                                    Credit Agreement
Granite Construction Company      Bank of America     City of Patterson Performance
                                    Letter of Credit  Guarantee                                     32.5 bps 02/04/04       200,000
Wilder Construction Company (1)   Gebhardt            Promisory Note - stock repurchase            prime     05/16/07       180,997
Wilder Construction Company (1)   Hesell              Promisory Note - stock repurchase            prime     03/15/10     2,607,761
Wilder Construction Company (1)   Ross                Promisory Note - stock repurchase            prime     04/29/05     2,588,757
Wilder Construction Company (1)   Fulton              Promisory Note - stock repurchase            prime     12/20/07       104,317
Wilder Construction Company (1)   Gent                Promisory Note - stock repurchase            prime     12/20/07       948,333
Wilder Construction Company (1)   Jonasson            Promisory Note - stock repurchase            prime     12/20/07       569,000
Wilder Construction Company (1)   Suhadolnik          Promisory Note - stock repurchase            prime     12/20/07       246,567
Wilder Construction Company (1)   Giammalva           Promisory Note - stock repurchase            prime     03/15/06       897,083
Wilder Construction Company (1)   Bank of America     Priority Debt - Construction
                                                      Equipment                                     3.90%    06/01/05       975,000
Wilder Construction Company (1)   Bank of America     Priority Debt - Alaska Yard &
                                                      Office                                        7.40%    12/01/08       799,938
Wilder Construction Company (1)   Bank of America     Priority Debt - Line of Credit     prime minus 100 bp  06/01/04     1,000,000
Presidio Vista I, LTD (2)         Dell USA, L.P.      Priority Debt - Presidio Vista
                                                      Development                                   7.50%    02/08/11     4,003,877
                                                                                                                       $140,525,340
Granite Construction Incorporated BNP Paribas         $30MM notional amount floating        6 Mth LIBOR +    09/15/05      (559,168)
                                                      interest rate swap agreement            386.75 bps

Granite Construction Incorporated BNP Paribas         $20MM notional amount floating        6 Mth LIBOR +    11/05/05      (369,914)
                                                      interest rate swap agreement            418.00 bps
                                                                                                                          ($929,082)


(1) - Wilder debt is not guaranteed by Granite Construction Incorporated or any
of it non-Wilder Subsidiaries or Affiliates

(2) - This debt is non-recourse debt secured by the assets of the development
project and is not guaranteed by Granite Construction Incorporated or any of its
Subsidiaries or Affiliates.

                                  Schedule 5.15



                        GRANITE CONSTRUCTION INCORPORATED
                                  SCHEDULE 5.16
                              EXISTING INVESTMENTS



                      INVESTMENT                                         TYPE                       VALUE
                                                                                           
Paramount-Nevada Asphalt Company, LLC                             Asphalt Tank Farm               2,299,957
Bank of America (BA)                                              Bankers Acceptance              1,228,989
Bank of America (BA)                                              Bankers Acceptance              4,992,625
Bank of America CD                                              Certificate of Deposit            2,500,000
AOL Time Warner                                               Commercial Paper 2nd Tier           4,983,436
Kraft Foods Inc                                               Commercial Paper 2nd Tier           4,994,263
GMAC                                                         Commercial Paper Split Rated         3,990,133
Allianz Finance Corp                                          Commercial Paper Top Tier           3,991,944
Citigroup Global Markets                                      Commercial Paper Top Tier           4,994,704
General Electric Captial Service                              Commercial Paper Top Tier           3,998,360
New York Times                                                Commercial Paper Top Tier           3,996,000
Schering-Plough                                               Commercial Paper Top Tier           4,995,703
Toyota Motor Corp                                             Commercial Paper Top Tier           4,997,797
Transamerica Financial Corp                                   Commercial Paper Top Tier           4,989,931
Verizon Net Funding                                           Commercial Paper Top Tier           2,991,420
Granite Halmar/Schiavone, a Joint Venture                     Construction Joint Venture            350,000
Granite Kiewit, a Joint Venture                               Construction Joint Venture            105,962
Granite2-Sundt, a Joint Venture                               Construction Joint Venture          5,163,735
Granite-Rizzani de Eccher, a Joint Venture                    Construction Joint Venture         (2,524,188)
Granite-Sundt, a Joint Venture                                Construction Joint Venture            497,796
Halmar-Egis, a Joint Venture                                  Construction Joint Venture          2,977,542
Halmar-Schiavone, a Joint Venture                             Construction Joint Venture          5,412,624
K-G Leasing, a Joint Venture                                  Construction Joint Venture            341,615
K-G-W Leasing, a Joint Venture                                Construction Joint Venture            759,154
Kiewit-Granite, a Joint Venture                               Construction Joint Venture            445,740
LGS, a Joint Venture                                          Construction Joint Venture          6,434,245
Minnesota Transit Constructors, a Joint Venture               Construction Joint Venture          1,667,811
Sampson-Granite, a Joint Venture                              Construction Joint Venture             11,008
Schiavone/Granite Halmar, a Joint Venture                     Construction Joint Venture            800,032
Sierra Blanca Constructors, a Joint Venture                   Construction Joint Venture          2,842,704
TGM Constructors                                              Construction Joint Venture          1,553,084
Tri-County Rail Constructors, a Joint Venture                 Construction Joint Venture          1,561,575
Virginia Approach Constructors                                Construction Joint Venture          2,370,000
Wasatch Constructors, a Joint Venture                         Construction Joint Venture             91,505
Washington-Granite, a Joint Venture                           Construction Joint Venture            252,968
Western Summit-TIC-Granite, a Joint Venture                   Construction Joint Venture             15,565
Yonkers Contracting Company, Inc. / Granite Construction
  Company, a Joint Venture                                    Construction Joint Venture          2,489,018
Largo Properties, LLC                                          Construction JV Property           2,123,970
Rancho San Carlos Partnership, L.P.                               Construction Note               6,000,000
Granite/Mandalay Bay Finance, LLC                                Development Project              1,905,999
Granite/Mandalay, LLC ("GM, LLC")                                Development Project              2,558,017
Main Street Ventures, LLC                                        Development Project                 51,740
Phase 1 Regional Park Limited                                    Development Project                546,165
Presidio Vista I, LTD                                            Development Project                135,000
Riverside Motorsports Park, LLC                                  Development Project                 50,000
Williamson Ranch Plaza, LP                                       Development Project               (364,595)
WR II Associates, LTD                                            Development Project                460,882
Bank of America/Nations Fund Sweep                                Money Market Funds              1,001,172
Fidelity Inst'l MM Domestic 690                                   Money Market Funds              7,654,560
Fidelity Inst'l MM Govern. 057                                    Money Market Funds              3,112,553


                                  Schedule 5.16

                                   Page 3 of 6



                        GRANITE CONSTRUCTION INCORPORATED
                                  SCHEDULE 5.16
                              EXISTING INVESTMENTS



                 INVESTMENT                                         TYPE                        VALUE
                                                                                      
JP Morgan Prime Institutional Fund                           Money Market Funds                1,466,920
JP Morgan Tax-Free Institutional Fund                        Money Market Funds               15,062,571
JPM Chase Overnight Investment                               Money Market Funds                3,873,664
CA Revenue Anticipation Note                                  Municipal Bonds                  5,003,119
California State Water Department                             Municipal Bonds                  3,000,000
New Jersey Transit Series B                                   Municipal Bonds                  3,000,000
TX Tax & Revenue Antic. Bond                                  Municipal Bonds                  2,006,560
UT Transit Authority Revenue Bond                             Municipal Bonds                  2,975,881
Franklin Balance Sheet Inv. Fund                            Mutual Fund - Equity                 698,014
Lord Abbett Mid - Cap Value Fund                            Mutual Fund - Equity                 217,013
Putnam Fund for Growth & Income                             Mutual Fund - Equity               2,205,437
Putnam International Growth CL A                            Mutual Fund - Equity               2,522,837
Putnam Investors Fund                                       Mutual Fund - Equity                 430,494
Putnam New Opportunities Fund                               Mutual Fund - Equity                 803,789
Putnam Vista Fund                                           Mutual Fund - Equity                 728,709
Putnam Voyager Fd CL A                                      Mutual Fund - Equity                 629,304
Loomis Sayles Bond FD                                    Mutual Fund - Fixed Income            1,659,494
Pimco Total Return FD                                    Mutual Fund - Fixed Income            2,416,837
TIC Holdings, Inc                                                  stock                      12,535,179
Wilder Construction Company ("Wilder")                             stock                      26,932,686
California Private Transportation Company, LP                    Toll Road                       354,349
Fannie Mae                                               US Treasury & Agency Notes            3,391,481
Fannie Mae                                               US Treasury & Agency Notes            2,993,900
Fannie Mae                                               US Treasury & Agency Notes            5,074,892
Federal Farm Credit Bank                                 US Treasury & Agency Notes            5,100,743
Federal Home Loan Bank                                   US Treasury & Agency Notes            2,707,728
Federal Home Loan Bank                                   US Treasury & Agency Notes            1,994,258
Federal Home Loan Bank                                   US Treasury & Agency Notes            5,082,445
Federal Home Loan Bank                                   US Treasury & Agency Notes            5,177,271
Freddie Mac                                              US Treasury & Agency Notes            2,997,233
Freddie Mac                                              US Treasury & Agency Notes            1,497,975
Freddie Mac                                              US Treasury & Agency Notes            5,104,376
Sallie Mae                                               US Treasury & Agency Notes            5,055,638
U.S. Treasury Note                                       US Treasury & Agency Notes            2,000,000
U.S. Treasury Note                                       US Treasury & Agency Notes            1,552,952
U.S. Treasury Note                                       US Treasury & Agency Notes            2,100,975
U.S. Treasury Note                                       US Treasury & Agency Notes            3,100,238
                                                                                            $262,255,179


                                  Schedule 5.16

                                   Page 4 of 6




                        GRANITE CONSTRUCTION INCORPORATED
                                  SCHEDULE 5.18
                              ENVIRONMENTAL MATTERS

5.18(a)

Granite Construction in the normal course of business utilizes petroleum
(hydrocarbon) products which may be considered hazardous materials when
encountered at regulatory levels established by the Federal EPA or the Regional
State EPA. The utilization of these asphalt products, diesel, and gasoline over
the years of operations have the potential of creating exposure to environmental
clean up requirements. All underground tanks meet current requirements. There
are no pending governmental ordered clean up requirements. However, the
following represents estimates based on construction industry housekeeping
practices as encountered during our normal course of business. Except as
indicated with an " * ", these costs do not represent actual identified
exposures. Items indicated with an " * " are carried on the books as a
liability.



- -----------------------------------------------------------------------------------------
      LOCATIONS                               DESCRIPTION                          AMOUNT
- -----------------------------------------------------------------------------------------
                                                                            
Anchorage, AK                  Surface Spills, wash rack facilities                60,000
Anchorage, AK                  Surface Spills, former AC Plant                     17,500
Huachuca City, AZ              Surface Spills, AC Plant                            15,000
Marana, AZ                     Surface Spills, AC Plant                            15,000
Tucson, AZ                     Surface Spills                                      10,000
Tucson, AZ                     AC Plant                                            25,000
29 Palms, CA                 * Surface Spills, AC Plant                             4,409
Arcata, CA                   * Surface Spills, AC Plant                           236,000
Arvin, CA                      Surface Spills, AC Plant                            25,000
Bakersfield, CA                Surface Spills, AC Plant                           250,000
Bishop, CA                     Surface Spills, AC Plant                            15,000
Buelton, CA                    Surface Spills, AC Plant                            50,000
City of Blue Lake, CA          Surface Spills                                      40,000
Coalinga, CA                   Surface Spills, AC Plant                            50,000
Concord, CA                    Surface Spills, AC Plant                            35,000
Crescent City, CA            * Surface Spills, AC Plant                           682,836
Ducor, CA                    * Surface Spills, AC Plant                            12,529
El Centro, CA                  Surface Spills, AC Plant                            25,000
Felton, Ca                     Surface Spills, AC Plant                           100,000
French Camp, CA                Surface Spills, AC Plant, old fill material        500,000
Highway 175, CA              * Surface Spills, AC Plant                           150,000
Indio, CA                      Surface Spills, AC Plant                            25,000
Inyokern, CA                   Surface Spills, AC Plant                            25,000
Kelseyville, CA              * Surface Spills, AC Plant                           873,000
Lee Vining, CA                 Surface Spills, AC Plant                            15,000
Littlerock, CA                 Surface Spills, AC Plant                            25,000
Longvale, CA                 * Surface Spills, AC Plant                           274,000
Los Banos, CA                  AC Plant                                            10,000
Pleasanton, CA                 AC Plant                                            10,000
Rio Linda, CA                  Surface Spills, AC Plant                            50,000
Sacramento, CA                 Surface Spills, AC Plant                           500,000
Salinas, CA                    Surface Spills, AC Plant                            10,000
Salinas, CA                    Former Underground Storage Tanks                   200,000
San Jose, CA                   Surface Spills                                      10,000
Santa Barbara, CA              Surface Spills                                      25,000


                                  Schedule 5.18

                                   Page 5 of 6




                        GRANITE CONSTRUCTION INCORPORATED
                                  SCHEDULE 5.18
                              ENVIRONMENTAL MATTERS

5.18(a)

Granite Construction in the normal course of business utilizes petroleum
(hydrocarbon) products which may be considered hazardous materials when
encountered at regulatory levels established by the Federal EPA or the Regional
State EPA. The utilization of these asphalt products, diesel, and gasoline over
the years of operations have the potential of creating exposure to environmental
clean up requirements. All underground tanks meet current requirements. There
are no pending governmental ordered clean up requirements. However, the
following represents estimates based on construction industry housekeeping
practices as encountered during our normal course of business. Except as
indicated with an " * ", these costs do not represent actual identified
exposures. Items indicated with an " * " are carried on the books as a
liability.



- -----------------------------------------------------------------------------------------
     LOCATIONS                               DESCRIPTION                         AMOUNT
- -----------------------------------------------------------------------------------------
                                                                         
Tracy, CA                        Surface Spills, AC Plant                          25,000
- -----------------------------------------------------------------------------------------
Ukiah, CA                      * Surface Spills, AC Plant                         430,000
Watsonville, CA                  Surface Spills                                    35,000
Watsonville, CA                  Former Underground Storage Tanks                  35,000
Tampa, FL                        Surface Spills                                    75,000
Odenton, MD                      Surface Spills                                   100,000
Carson City, NV                  Surface Spills, AC Plant                          10,000
Lockwood, NV                     Surface Spills, AC Plant                          50,000
Sparks, NV                       Surface Spills, AC Plant                         100,000
Wappinger Falls, NY              Surface Spills                                   100,000
Lubbock, TX                      Surface Spills, AC Plant                         100,000
Lubbock, TX                      Surface Spills                                    75,000
Lubbock, TX                      Surface Spills                                    50,000
Morgan County, UT                Surface Spills                                    10,000
North Ogden, UT                  Old fill material                                250,000
Ogden, UT                      * Former Webb AC Plant                             723,377
Salt City, UT                  * Former 2200 North AC Plant                       132,363
Salt Lake City, UT               AC Plant                                         150,000
Salt Lake City, UT               Surface Spills                                    50,000
Salt Lake City, UT             * Former Whitehill AC Plant                         25,288
Sandy City, UT                   Surface Spills, AC Plant                         100,000
Kearns, UT                     * Surface Spills, AC Plant                          12,529
Wasatch County, UT               Surface Spills, AC Plant                          10,000
West Haven, UT                   Surface Spills, AC Plant                          25,000
Bellington, WA                   Hannegan surface spills, AC Plant, shop          500,000
Everett, WA                      Surface Spills, AC Plant                         100,000
Whatcom County, WA               Former AC Plant                                  260,000
Whatcom County, WA               Former UST and shop area                          17,500
                                                                               ----------
                                                                               $7,921,331
                                                                               ----------


5.18 (b) AND (c)

                      NONE

                                  Schedule 5.18

                                   Page 6 of 6

EX-10.5

                                                                    EXHIBIT 10.5



(MULTICURRENCY--CROSS BORDER)

                                 [ISDA(R) LOGO]

                  INTERNATIONAL SWAP DEALERS ASSOCIATION, INC.

                                MASTER AGREEMENT

                          DATED AS OF FEBRUARY 10, 2003

BNP PARIBAS AND GRANITE CONSTRUCTION INCORPORATED

have entered and/or anticipate entering into one or more transactions (each a
"Transaction") that are or will be governed by this Master Agreement, which
includes the schedule (the "Schedule"), and the documents and other confirming
evidence (each a "Confirmation") exchanged between the parties confirming those
Transactions.

Accordingly, the parties agree as follows:--

1.       INTERPRETATION

(a)      DEFINITIONS. The terms defied in Section 14 and in the Schedule will
have the meanings therein specified for the purpose of this Master Agreement.

(b)      INCONSISTENCY. In the event of any inconsistency between the provisions
of the Schedule and the other provisions of this Master Agreement, the Schedule
will prevail. In the event of any inconsistency between the provisions of any
Confirmation and this Master Agreement (including the Schedule), such
Confirmation will prevail for the purpose of the relevant Transaction.

(c)      SINGLE AGREEMENT. All Transactions are entered into in reliance on the
fact that this Master Agreement and all Confirmations form a single agreement
between the parties (collectively referred to as this "Agreement"), and the
parties would not otherwise enter into any Transactions.

2.       OBLIGATIONS

(a)      GENERAL CONDITIONS.

         (i)      Each party will make each payment or delivery specified in
         each Confirmation to be made by it, subject to the other provisions of
         this Agreement.

         (ii)     Payments under this Agreement will be made on the due date for
         value on that date in the place of the account specified in the
         relevant Confirmation or otherwise pursuant to this Agreement, in
         freely transferable funds and in the manner customary for payments in
         the required currency. Where settlement is by delivery (that is, other
         than by payment), such delivery will be made for receipt on the due
         date in the manner customary for the relevant obligation unless
         otherwise specified in the relevant Confirmation or elsewhere in this
         Agreement.

         (iii)    Each obligation of each party under Section 2(a)(i) is subject
         to (1) the condition precedent that no Event of Default or Potential
         Event of Default with respect to the other party has occurred and is
         continuing, (2) the condition precedent that no Early Termination Date
         in respect of the relevant Transaction has occurred or been effectively
         designated and (3) each other applicable condition precedent specified
         in this Agreement.

       COPYRIGHT (C) 1992 BY INTERNATIONAL SWAP DEALERS ASSOCIATION, INC.



(b)      CHANGE OF ACCOUNT. Either party may change its account for receiving a
payment or delivery by giving notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to which
such change applies unless such other party gives timely notice of a reasonable
objection to such change.

(c)      NETTING. If on any date amounts would otherwise be payable:--

         (i)      in the same currency; and

         (ii)     in respect of the same Transaction,

by each party to the other, then, on such date, each party's obligation to make
payment of any such amount will be automatically satisfied and discharged and,
if the aggregate amount that would otherwise have been payable by one party
exceeds the aggregate amount that would otherwise have been payable by the other
party, replaced by an obligation upon the party by whom the larger aggregate
amount would have been payable to pay to the other party the excess of the large
aggregate amount over the smaller aggregate amount.

The parties may elect in respect of two or more Transaction that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be made
in the Schedule or a Confirmation by specifying that subparagraph (ii) above
will not apply to the Transactions identified as being subject to the election,
together with the starting date (in which case subparagraph (ii) above will not,
or will cease to, apply to such Transactions from such date). This election may
be made separately for different groups of Transactions and will apply
separately to each pairing of Offices through which the parties make and receive
payments or deliveries.

(d)      DEDUCTION OR WITHHOLDING FOR TAX.

         (i)      GROSS-UP. All payment under this Agreement will be made
         without any deduction or withholding for or on account of any Tax
         unless such deduction or withholding is required by any applicable law,
         as modified by the practice of any relevant governmental revenue
         authority, then in effect. If a party is so required to deduct or
         withhold, then that party ("X") will:--

                  (1)      promptly notify the other party ("Y") of such
                  requirement;

                  (2)      pay to the relevant authorities the full amount
                  required to be deducted or withheld (including the full amount
                  required to be deducted or withheld from any additional amount
                  paid by X to Y under this Section 2(d)) promptly upon the
                  earlier of determining that such deduction or withholding is
                  required or receiving notice that such amount has been
                  assessed against Y;

                  (3)      promptly forward to Y an official receipt (or a
                  certified copy), or other documentation reasonably acceptable
                  to Y, evidencing such payment to such authorities; and

                  (4)      if such Tax is an Indemnifiable Tax, pay to Y, in
                  addition to the payment to which Y is otherwise entitled under
                  this Agreement, such additional amount as is necessary to
                  ensure that the net amount actually received by Y (free and
                  clear of Indemnifiable Taxes, whether assessed against X or Y)
                  will equal the full amount Y would have received had no such
                  deduction or withholding been required. However, X will not be
                  required to pay any additional amount to Y to the extent that
                  it would not be required to be paid but for:--

                           (A)      the failure by Y to comply with or perform
                           any agreement contained in Section 4(a)(i), 4(a)(iii)
                           or 4(d); or

                           (B)      the failure of a representation made by Y
                           pursuant to Section 3(f) to be accurate and true
                           unless such failure would not have occurred but for
                           (I) any action taken by a taxing authority, or
                           brought in a court of competent jurisdiction, on or
                           after the date on which a Transaction is entered into
                           (regardless of whether such action is taken or
                           brought with respect to a party this Agreement) or
                           (II) a Change in Tax Law.

                                       2



         (ii)     LIABILITY. If:--

                  (1)      X is required by any applicable law, as modified by
                  the practice of any relevant governmental revenue authority,
                  to make any deduction or withholding in respect of which X
                  would not be required to pay an additional amount to Y under
                  Section 2(d)(i)(4);

                  (2)      X does not so deduct or withhold; and

                  (3)      a liability resulting from such Tax is assessed
                  directly against X,

         then, except to the extent Y has satisfied or then satisfies the
         liability resulting from such Tax, Y will promptly pay to X the amount
         of such liability (including any related liability for interest, but
         including any related liability for penalties only if Y has failed to
         comply with or perform any agreement contained in Section 4(a)(i),
         4(a)(iii) or 4(d)).

(e)      DEFAULT INTEREST; OTHER AMOUNTS. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant Transaction,
a party that defaults in the performance of any payment obligation will, to the
extent permitted by law and subject to Section 6(c), be required to pay interest
(before as well as after judgment) on the overdue amount to the other party on
demand in the same currency as such overdue amount, for the period from (and
including) the original due date for payment to (but excluding) the date of
actual payment, at the Default Rate. Such interest will be calculated on the
basis of daily compounding and the actual number of days elapsed. If, prior to
the occurrence or effective designation of an Early Termination Date in respect
of the relevant Transaction, a party defaults in the performance of any
obligation required to be settled by delivery, it will compensate the other
party on demand if and to the extent provided for in the relevant Confirmation
or elsewhere in this Agreement.

(3)      REPRESENTATIONS

Each party represents to the other party (which representations will be deemed
to be repeated by each party on each date on which a Transaction entered into
and, in the case of the representations in Section 3(f), at is all times until
the termination of this Agreement) that:--

(a)      BASIC REPRESENTATIONS.

         (i)      STATUS. It is duly organised and validly existing under the
         laws of the jurisdiction of its organisation or incorporation and, if
         relevant under such laws, in good standing;

         (ii)     POWERS. It has the power to execute this Agreement and any
         other documentation relating to this Agreement to which it is a party,
         to deliver this Agreement and any other documentation relating to this
         Agreement that it is required by this Agreement to deliver and to
         perform its obligations under this Agreement and any obligations it has
         under any Credit Support Document to which it is a party and has taken
         all necessary action to authorise such execution, delivery and
         performance;

         (iii)    NO VIOLATION OR CONFLICT. Such execution, delivery and
         performance do not violate or conflict with any law applicable to it,
         any provision of its constitutional documents, any order or judgment of
         any court or other agency of government applicable to it or any of its
         assets or any contractual restriction binding on or affecting it or any
         of its assets;

         (iv)     CONSENTS. All governmental and other consents that are
         required to have been obtained by it with respect to this Agreement or
         any Credit Support Document to which it is a party have been obtained
         and are in full force and effect and all conditions of any such
         consents have been complied with; and

         (v)      OBLIGATIONS BINDING. Its obligations under this Agreement and
         any Credit Support Document to which it is a party constitute its
         legal, valid and binding obligations, enforceable in accordance with
         their respective terms (subject to applicable bankruptcy,
         recorganisation, insolvency, moratorium or similar laws affecting
         creditors' rights generally and subject, as to enforceability, to
         equitable principles of general application (regardless of whether
         enforcement is sought in a proceeding in equity or at law)).

                                       3


(b)      ABSENCE OF CERTAIN EVENTS. No Event of Default or Potential Event of
Default or, to its knowledge, Termination Event with respect to it has occurred
and is continuing and no such event or circumstance would occur as a result of
its entering into or performing its obligations under this Agreement or any
Credit Support Document to which it is a party.

(c)      ABSENCE OF LITIGATION. There is not pending or, to its knowledge,
threatened against it or any of its Affiliates any action, suit or proceeding at
law or in equity or before any court, tribunal, governmental body, agency or
official or any arbitrator that is likely to affect the legality, validity or
enforceability against it of this Agreement or any Credit Support Document to
which it is a party or its ability to perform its obligations under this
Agreement or such Credit Support Document.

(d)      ACCURACY OF SPECIFIED INFORMATION. All applicable information that is
furnished in writing by or on behalf of it to the other party and is identified
for the purpose of this Section 3(d) in the Schedule is, as of the date of the
information, true, accurate and complete in every material respect.

(e)      PAYER TAX REPRESENTATION. Each representation specified in the Schedule
as being made by it for the purpose of this Section 3(e) is accurate and true.

(f)      PAYEE TAX REPRESENTATION. Each representation specified in the Schedule
as being made by it for the purpose of this Section 3(f) is accurate and true.

4.       AGREEMENTS

Each party agrees with the other that, so long as either party has or may have
any obligation under this Agreement or under any Credit Support Document to
which it is a party:--

(a)      FURNISH SPECIFIED INFORMATION. It will deliver to the other party or,
in certain cases under subparagraph (iii) below, to such government or taxing
authority as the other party reasonably directs:--

         (i)      any forms, documents or certificates relating to taxation
         specified in the Schedule or any Confirmation.

         (ii)     any other documents specified in the Schedule or any
         Confirmation; and

         (iii)    upon reasonable demand by such other party, any form or
         document that may be required or reasonably requested in writing in
         order to allow such other party or its Credit Support Provider to make
         a payment under this Agreement or any applicable Credit Support
         Document without any deduction or withholding for or on account of any
         Tax or with such deduction or withholding at a reduced rate (so long as
         the completion, execution or submission of such form or document would
         not materially prejudice the legal or commercial position of the party
         in receipt of such demand), with any such form or document to be
         accurate and completed in a manner reasonably satisfactory to such
         other party and to be executed and to be delivered with any reasonably
         required certification,

in each case by the date specified in the Schedule or such Confirmation or, if
none is specified, as soon as reasonably practicable.

(b)      MAINTAIN AUTHORISATIONS. It will use all reasonable efforts to maintain
in full force and effect all consents of any governmental or other authority
that are required to be obtained by it with respect to this Agreement or any
Credit Support Document to which it is a party and will use all reasonable
efforts to obtain any that may become necessary in the future.

(c)      COMPLY WITH LAWS. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Agreement or any Credit Support Document to which it is a party.

(d)      TAX AGREEMENT. It will give notice of any failure of a representation
made by it under Section 3(f) to be accurate and true promptly upon learning of
such failure.

(e)      PAYMENT OF STAMP TAX. Subject to Section II, it will pay any Stamp Tax
levied or imposed upon it or in respect of its execution or performance of this
Agreement by a jurisdiction in which it is incorporated,

                                       4


organised, managed and controlled, or considered to have its seat, or in which a
branch or office through which it is acting for the purpose of this Agreement is
located ("Stamp Tax Jurisdiction") and will indemnify the other party against
any Stamp Tax levied or imposed upon the other party or in respect of the other
party's execution or performance of this Agreement by any such Stamp Tax
Jurisdiction which is not also a Stamp Tax Jurisdiction with respect to the
other party.

5.       EVENTS OF DEFAULT AND TERMINATION EVENTS

(a)      EVENTS OF DEFAULT. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any of the following events constitutes an event of
default (an "Event of Default") with respect to such party:--

         (i)      FAILURE TO PAY OR DELIVER. Failure by the party to make, when
         due, any payment under this Agreement or delivery under Section 2(a)(i)
         or 2(e) required to be made by it if such failure is not remedied on or
         before the third Local Business Day after notice of such failure is
         given to the party;

         (ii)     BREACH OF AGREEMENT. Failure by the party to comply with or
         perform any agreement or obligation (other than an obligation to make
         any payment under this Agreement or delivery under Section 2(a)(i) or
         2(e) or to give notice of a Termination Event or any agreement or
         obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied
         with or performed by the party in accordance with this Agreement if
         such failure is not remedied on or before the thirtieth day after
         notice of such failure is given to the party;

         (iii)    CREDIT SUPPORT DEFAULT.

                  (1)      Failure by the party or any Credit Support Provider
                  of such party to comply with or perform any agreement or
                  obligation to be complied with or performed by it in
                  accordance with any Credit Support Document if such failure is
                  continuing after any applicable grace period has elapsed;

                  (2)      the expiration or termination of such Credit Support
                  Document or the failing or ceasing of such Credit Support
                  Document to be in full force and effect for the purpose of
                  this Agreement (in either case other than in accordance with
                  its terms) prior to the satisfaction of all obligations of
                  such party under each Transaction to which such Credit Support
                  Document relates without the written consent of the other
                  party; or

                  (3)      the party or such Credit Support Provider disaffirms,
                  disclaims, repudiates or rejects, in whole or in part, or
                  challenges the validity of, such Credit Support Document;

         (iv)     MISREPRESENTATION. A representation (other than a
         representation under Section 3(e) or (f)) made or repeated or deemed to
         have been made or repeated by the party or any Credit Support Provider
         of such party in this Agreement or any Credit Support Document proves
         to have been incorrect or misleading in any material respect when made
         or repeated or deemed to have been made or repeated;

         (v)      DEFAULT UNDER SPECIFIED TRANSACTION. The party, any Credit
         Support Provider of such party or any applicable Specified Entity of
         such party (1) defaults under a Specified Transaction and, after giving
         effect to any applicable notice requirement or grace period, there
         occurs a liquidation of, an acceleration of obligations under, or an
         early termination of, that Specified Transaction, (2) defaults, after
         giving effect to any applicable notice requirement or grace period, in
         making any payment or delivery due on the last payment, delivery or
         exchange date of, or any payment on early termination of, a Specified
         Transaction (or such default continues for at least three Local
         Business Days if there is no applicable notice requirement or grace
         period) or (3) disaffirms, disclaims, repudiates or rejects, in whole
         or in part, a Specified Transaction (or such action is taken by any
         person or entity appointed or empowered to operate it or act on its
         behalf);

         (vi)     CROSS DEFAULT. If "Cross Default" is specified in the Schedule
         as applying to the party, the occurrence or existence of (1) a default,
         event of default or other similar condition or event (however

                                       5



         described) in respect of such party, any Credit Support Provider of
         such party or any applicable Specified Entity of such party under one
         or more agreements or instruments relating to Specified Indebtedness of
         any of them (individually or collectively) in an aggregate amount of
         not less than the applicable Threshold Amount (as specified in the
         Schedule) which has resulted in such Specified Indebtedness becoming,
         or becoming capable at such time of being declared, due and payable
         under such agreements or instruments, before it would otherwise have
         been due and payable or (2) a default by such party, such Credit
         Support Provider or such Specified Entity (individually or
         collectively) in making one or more payments on the due date thereof in
         an aggregate amount of not less than the applicable Threshold Amount
         under such agreements or instruments (after giving effect to any
         applicable notice requirement or grace period);


         (vii)    BANKRUPTCY. The party, any Credit Support Provider of such
         party or any applicable Specified Entity of such party:--

                  (1) is dissolved (other than pursuant to a consolidation,
                  amalgamation or merger); (2) becomes insolvent or is unable to
                  pay its debts or fails or admits in writing its inability
                  generally to pay its debts as they become due; (3) makes a
                  general assignment, arrangement or composition with or for the
                  benefit of its creditors; (4) institutes or has instituted
                  against it a proceeding seeking a judgment of insolvency or
                  bankruptcy or any other relief under any bankruptcy or
                  insolvency law or other similar law affecting creditors'
                  rights, or a petition is presented for its winding-up or
                  liquidation and, in the case of any such proceeding or
                  petition instituted or presented against it, such proceeding
                  or petition (A) results in a judgment of insolvency or
                  bankruptcy or the entry of an order for relief or the making
                  of an order for its winding-up or liquidation or (B) is not
                  dismissed, discharged, stayed or restrained in each case
                  within 30 days of the institution or presentation thereof; (5)
                  has a resolution passed for its winding-up, official
                  management or liquidation (other than pursuant to a
                  consolidation, amalgamation or merger); (6) seeks or becomes
                  subject to the appointment of an administrator, provisional
                  liquidator, conservator, receiver, trustee, custodian or other
                  similar official for it or for all or substantially all its
                  assets; (7) has a secured party take possession of all or
                  substantially all its assets or has a distress, execution,
                  attachment, sequestration or other legal process levied,
                  enforced or sued on or against all or substantially all its
                  assets and such secured party maintains possession, or any
                  such process is not dismissed, discharged, stayed or
                  restrained, in each case within 30 days thereafter; (8) causes
                  or is subject to any event with respect to it which, under the
                  applicable laws of any jurisdiction, has an analogous effect
                  to any of the events specified in clauses (1) to (7)
                  (inclusive); or (9) takes any action in furtherance of, or
                  indicating its consent to, approval of, or acquiescence in,
                  any of the foregoing acts; or

         (viii)   MERGER WITHOUT ASSUMPTION. The party or any Credit Support
         Provider of such party consolidates or amalgamates with, or merges with
         or into, or transfers all or substantially all its assets to, another
         entity and, at the time of such consolidation, amalgamation, merger or
         transfer:--

                  (1)      the resulting, surviving or transferee entity fails
         to assume all the obligations of such party or such Credit Support
         Provider under this Agreement or any Credit Support Document to which
         it or its predecessor was a party by operation of law or pursuant to an
         agreement reasonably satisfactory to the other party to this Agreement;
         or

                  (2)      the benefits of any Credit Support Document fail to
         extend (without the consent of the other party) to the performance by
         such resulting, surviving or transferee entity of its obligations under
         this Agreement.

(b)      TERMINATION EVENTS. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any event specified below constitutes an Illegality if
the event is specified in (i) below, a Tax Event if the event is specified in
(ii) below or a Tax Event Upon Merger if the event is specified in (iii) below,
and, if specified to be applicable, a Credit Event

                                       6



Upon Merger if the event is specified pursuant to (iv) below or an Additional
Termination Event if the event is specified pursuant to (v) below:--


         (i)      ILLEGALITY. Due to the adoption of, or any change in, any
         applicable law after the date on which a Transaction is entered into,
         or due to the promulgation of, or any change in, the interpretation by
         any court, tribunal or regulatory authority with competent jurisdiction
         of any applicable law after such date, it becomes unlawful (other than
         as a result of a breach by the party of Section 4(b)) for such party
         (which will be the Affected Party):--


                  (1)      to perform any absolute or contingent obligation to
                  make a payment or delivery or to receive a payment or delivery
                  in respect of such Transaction or to comply with any other
                  material provision of this Agreement relating to such
                  Transaction; or

                  (2)      to perform, or for any Credit Support Provider of
                  such party to perform, any contingent or other obligation
                  which the party (or such Credit Support Provider) has under
                  any Credit Support Document relating to such Transaction;

         (ii)     TAX EVENT. Due to (x) any action taken by a taxing authority,
         or brought in a court of competent jurisdiction, on or after the date
         on which a Transaction is entered into (regardless of whether such
         action is taken or brought with respect to a party to this Agreement)
         or (y) a Change in Tax Law, the party (which will be the Affected
         Party) will, or there is a substantial likelihood that it will, on the
         next succeeding Scheduled Payment Date (1) be required to pay to the
         other party an additional amount in respect of an Indemnifiable Tax
         under Section 2(d)(i)(4) (except in respect of interest under Section
         2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which an amount
         is required to be deducted or withheld for or on account of a Tax
         (except in respect of interest under Section 2(e),6(d)(ii) or 6(e)) and
         no additional amount is required to be paid in respect of such Tax
         under Section 2(d)(i)(4) (other than by reason of Section 2(d)(i)(4)(A)
         or (B));

         (iii)    TAX EVENT UPON MERGER. The party (the "Burdened Party") on the
         next succeeding Scheduled Payment Date will either (1) be required to
         pay an additional amount in respect of an Indemnifiable Tax under
         Section 2(d)(i)(4) (except in respect of interest under Section 2(e),
         6(d)(ii) or 6(e)) or (2) receive a payment from which an amount has
         been deducted or withheld for or on account of any Indemnifiable Tax in
         respect of which the other party is not required to pay an additional
         amount (other than by reason of Section 2(d)(i)(4)(A) or (B)), in
         either case as a result of a party consolidating or amalgamating with,
         or merging with or into, or transferring all or substantially all its
         assets to, another entity (which will be the Affected Party) where such
         action does not constitute an event described in Section 5(a)(viii);

         (iv)     CREDIT EVENT UPON MERGER. If "Credit Event Upon Merger" is
         specified in the Schedule as applying to the party, such party ("X"),
         any Credit Support Provider of X or any applicable Specified Entity of
         X consolidates or amalgamates with, or merges with or into, or
         transfers all or substantially all its assets to, another entity and
         such action does not constitute an event described in Section
         5(a)(viii) but the creditworthiness of the resulting, surviving or
         transferee entity is materially weaker than that of X, such Credit
         Support Provider or such Specified Entity, as the case may be,
         immediately prior to such action (and, in such event, X or its
         successor or transferee, as appropriate, will be the Affected Party);
         or

         (v)      ADDITIONAL TERMINATION EVENT. If any "Additional Termination
         Event" is specified in the Schedule or any Confirmation as applying,
         the occurrence of such event (and, in such event, the Affected Party or
         Affected Parties shall be as specified for such Additional Termination
         Event in the Schedule or such Confirmation).

(c)      EVENT OF DEFAULT AND ILLEGALITY. If an event or circumstance which
would otherwise constitute or give rise to an Event of Default also constitutes
an Illegality, it will be treated as an Illegality and will not constitute an
Event of Default.

                                        7



6.       EARLY TERMINATION

(a)      RIGHT TO TERMINATE FOLLOWING EVENT OF DEFAULT. If at any time an Event
of Default with respect to a party (the "Defaulting Party") has occurred and is
then continuing, the other party (the "Non-defaulting Party") may, by not more
than 20 days notice to the Defaulting Party specifying the relevant Event of
Default, designate a day not earlier than the day such notice is effective as an
Early Termination Date in respect of all outstanding Transactions. If, however,
"Automatic Early Termination" is specified in the Schedule as applying to a
party, then an Early Termination Date in respect of all outstanding Transactions
will occur immediately upon the occurrence with respect to such party of an
Event of Default specified in Section 5(a)(vii)(1),(3),(5),(6) or, to the extent
analogous thereto, (8), and as of the time immediately preceding the institution
of the relevant proceeding or the presentation of the relevant petition upon the
occurrence with respect to such party of an Event of Default specified in
Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).


(b)      RIGHT TO TERMINATE FOLLOWING TERMINATION EVENT.

         (i)      NOTICE. If a Termination Event occurs, an Affected Party will,
         promptly upon becoming aware of it, notify the other party, specifying
         the nature of that Termination Event and each Affected Transaction and
         will also give such other information about that Termination Event as
         the other party may reasonably require.

         (ii)     TRANSFER TO AVOID TERMINATION EVENT. If either an Illegality
         under Section 5(b)(i)(l) or a Tax Event occurs and there is only one
         Affected Party, or if a Tax Event Upon Merger occurs and the Burdened
         party is the Affected Party, the Affected Party will, as a condition to
         its right to designate an Early Termination Date under Section
         6(b)(iv), use all reasonable efforts (which will not require such party
         to incur a loss, excluding immaterial, incidental expenses) to transfer
         within 20 days after it gives notice under Section 6(b)(i) all its
         rights and obligations under this Agreement in respect of the Affected
         Transactions to another of its Offices of Affiliates so that such
         Termination Event ceases to exist.

         If the Affected Party is not able to make such a transfer it will give
         notice to the other party to that effect within such 20 day period,
         whereupon the other party may effect such a transfer within 30 days
         after the notice is given under Section 6(b)(i).

         Any such transfer by a party under this Section 6(b)(ii) will be
         subject to and conditional upon the prior written consent of the other
         party, which consent will not be withheld if such other party's
         policies in effect at such time would permit it to enter into
         transactions with the transferee on the terms proposed.

         (iii)    TWO AFFECTED PARTIES. If an Illegality under Section
         5(b)(i)(1) or a Tax Event occurs and there are two Affected Parties,
         such party will use all reasonable efforts to reach agreement within
         30 days after notice thereof is given under Section 6(b)(i) on action
         to avoid that Termination Event.

         (iv)     RIGHT TO TERMINATE IF:--

                  (1)      a transfer under Section 6(b)(ii) or an agreement
                  under Section 6(b) (iii), as the case may be has not been
                  effected with respect to all Affected Transactions within 30
                  days after an Affected Party gives notice under Section
                  6(b)(i); or

                  (2)      an Illegality under Section 5(b)(i)(2), a credit
                  Event Upon Merger or an Additional Termination Event occurs,
                  or a Tax Event Upon Merger occurs and the Burdened Party is
                  not the Affected Party.

         either party in the case of an Illegality ,the Burdened Party in the
         case of a Tax Event Upon Merger, any Affected Party in the case of a
         Tax Event or an Additional Termination Event if there is more than one
         Affected Party, or the party which is not the Affected Party in the
         case of a Credit Event Upon Merger or an Additional Termination Event
         if there is only one Affected Party may, be not more than 20 days
         notice to the other party and provided that the relevant Termination
         Event is then

                                       8



         continuing, designate a day not earlier than the day such notice is
         effective as an Early Termination Date in respect of all Affected
         Transactions.

(c)      EFFECT OF DESIGNATION.

         (i) If notice designating an Early Termination Date is given under
         Section 6(a) or (b), the Early Termination Date will occur on the date
         so designated, whether or not the relevant Event of Default or
         Termination Event is then continuing.

         (ii) Upon the occurrence or effective designation of an Early
         Termination Date, no further payments or deliveries under Section
         2(a)(i) or 2(e) in respect of the Terminated Transactions will be
         required to be made, but without prejudice to the other provisions of
         this Agreement. The amount, if any, payable in respect of an Early
         Termination Date shall be determined pursuant to Section 6(e).

(d)      CALCULATIONS.

         (i) STATEMENT. On or as soon as reasonably practicable following the
         occurrence of an Early Termination Date, each party will make the
         calculations on its part, if any, contemplated by Section 6(e) and will
         provide to the other party a statement (1) showing, in reasonable
         detail, such calculations (including all relevant quotations and
         specifying any amount payable under Section 6(e)) and (2) giving
         details of the relevant account to which any amount payable to it is to
         be paid. In the absence of written confirmation from the source of a
         quotation obtained in determining a Market Quotation, the records of
         the party obtaining such quotation will be conclusive evidence of the
         existence and accuracy of such quotation.

         (ii) PAYMENT DATE. An amount calculated as being due in respect of any
         Early Termination Date under Section 6(e) will be payable on the day
         that notice of the amount payable is effective (in the case of an Early
         Termination Date which is designated or occurs as a result of an Event
         of Default) and on the day which is two Local Business Days after the
         day on which notice of the amount payable is effective (in the case of
         an Early Termination Date which is designated as a result of a
         Termination Event). Such amount will be paid together with (to the
         extent permitted under applicable law) interest thereon (before as well
         as after judgment) in the Termination Currency, from (and including)
         the relevant Early Termination Date to (but excluding) the date such
         amount is paid, at the Applicable Rate. Such interest will be
         calculated on the basis of daily compounding and the actual number of
         days elapsed.

(e)      PAYMENTS ON EARLY TERMINATION. If an Early Termination Date occurs, the
following provisions shall apply based on the parties' election in the Schedule
of a payment measure, either "Market Quotation" or "Loss", and a payment method,
either the "First Method" or the "Second Method". If the parties fail to
designate a payment measure or payment method in the Schedule, it will be deemed
that "Market Quotation" or the "Second Method", as the case may be, shall apply.
The amount, if any, payable in respect of an Early Termination Date and
determined pursuant to this Section will be subject to any Set-off.

         (i) EVENTS OF DEFAULT. If the Early Termination Date results from an
             Event of Default:--

             (1) First Method and Market Quotation. If the First Method and
             Market Quotation apply, the Defaulting Party will pay to the
             Non-defaulting Party the excess, if a positive number, of (A) the
             sum of the Settlement Amount (determined by the Non-defaulting
             Party) in respect of the Terminated Transactions and the
             Termination Currency Equivalent of the Unpaid Amounts owing to the
             Non-defaulting Party over (B) the Termination Currency Equivalent
             of the Unpaid Amounts owing to the Defaulting Party.

             (2) First Method and Loss. If the First Method and Loss apply, the
             Defaulting Party will pay to the Non-defaulting Party, if a
             positive number, the Non-defaulting Party's Loss in respect of this
             Agreement.

             (3) Second Method and Market Quotation. If the Second Method and
             Market Quotation apply, an amount will be payable equal to (A) the
             sum of the Settlement Amount (determined by the

                                        9


     Non-defaulting Party) in respect of the Terminated Transactions and the
     Termination Currency Equivalent of the Unpaid Amounts owing to the
     Non-defaulting Party less (B) the Termination Currency Equivalent of the
     Unpaid Amounts owing to the Defaulting Party. If that amount is a positive
     number, the Defaulting Party will pay it to the Non-defaulting Party; if it
     is a negative number, the Non-defaulting Party will pay the absolute value
     of that amount to the Defaulting Party.

     (4) Second Method and Loss. If the Second Method and Loss apply, an amount
     will be payable equal to the Non-defaulting Party's Loss in respect of this
     Agreement. If that amount is a positive number, the Defaulting Party will
     pay it to the Non-defaulting Party; if it is a negative number, the
     Non-defaulting Party will pay the absolute value of that amount to the
     Defaulting, Party.

(ii) TERMINATION EVENTS. If the Early Termination Date results from a
     Termination Event:--

     (1)  One Affected Party. If there is one Affected Party, the amount payable
     will be determined in accordance with Section 6(e)(i)(3), if Market
     Quotation applies, or Section 6(e)(i)(4), if Loss applies, except that, in
     either case, references to the Defaulting Party and to the Non-defaulting
     Party will be deemed to be references to the Affected Party and the party
     which is not the Affected Party, respectively, and, if Loss applies and
     fewer than all the Transactions are being terminated, Loss shall be
     calculated in respect of all Terminated Transactions.

     (2)  Two Affected Parties. If there are two Affected Parties:--

          (A) if Market Quotation applies, each party will determine a
          Settlement Amount in respect of the Terminated Transactions, and an
          amount will be payable equal to (I) the sum of (a) one-half of the
          difference between the Settlement Amount of the party with the higher
          Settlement Amount ("X") and the Settlement Amount of the party with
          the lower Settlement Amount ("Y") and (b) the Termination Currency
          Equivalent of the Unpaid Amounts owing to X less (II) the Termination
          Currency Equivalent of the Unpaid Amounts owing to Y; and

          (B) if Loss applies, each party will determine its Loss in respect of
          this Agreement (or, if fewer than all the Transactions are being
          terminated, in respect of all Terminated Transactions) and an amount
          will be payable equal to one-half of the difference between the Loss
          of the party with the higher Loss ("X") and the Loss of the party with
          the lower Loss ("Y").

     If the amount payable is a positive number, Y will pay it to X; if it is a
     negative number, X will pay the absolute value of that amount to Y.

(iii) ADJUSTMENT FOR BANKRUPTCY. In circumstances where an Early Termination
Date occurs because "Automatic Early Termination" applies in respect of a party,
the amount determined under this Section 6(e) will be subject to such
adjustments as are appropriate and permitted by law to reflect any payments or
deliveries made by one party to the other under this Agreement (and retained by
such other party) during the period from the relevant Early Termination Date to
the date for payment determined under Section 6(d)(ii).

(iv) PRE-ESTIMATE. The parties agree that if Market Quotation applies an amount
recoverable under this Section 6(e) is a reasonable pre-estimate of loss and not
a penalty. Such amount is payable for the loss of bargain and the loss of
protection against future risks and except as otherwise provided in this
Agreement neither party will be entitled to recover any additional damages as a
consequence of such losses.

                                       10


7.       TRANSFER

Subject to Section 6(b)(ii), neither this Agreement nor any interest or
obligation in or under this Agreement may be transferred (whether by way of
security or otherwise) by either party without the prior written consent of the
other party, except that:--

(a)      a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to any
other right or remedy under this Agreement); and

(b)      a party may make such a transfer of all or any part of its interest in
any amount payable to it from a Defaulting Party under Section 6(e).

Any purported transfer that is not in compliance with this Section will be void.

8.       CONTRACTUAL CURRENCY

(a)      PAYMENT IN THE CONTRACTUAL CURRENCY. Each payment under this Agreement
will be made in the relevant currency specified in this Agreement for that
payment (the "Contractual Currency"). To the extent permitted by applicable law,
any obligation to make payments under this Agreement in the Contractual Currency
will not be discharged or satisfied by any tender in any currency other than the
Contractual Currency, except to the extent such tender results in the actual
receipt by the party to which payment is owed, acting in a reasonable manner and
in good faith in converting the currency so tendered into the Contractual
Currency, of the full amount in the Contractual Currency of all amounts payable
in respect of this Agreement. If for any reason the amount in the Contractual
Currency so received falls short of the amount in the Contractual Currency
payable in respect of this Agreement, the party required to make the payment
will, to the extent permitted by applicable law, immediately pay such additional
amount in the Contractual Currency as may be necessary to compensate for the
shortfall. If for any reason the amount in the Contractual Currency so received
exceeds the amount in the Contractual Currency payable in respect of this
Agreement, the party receiving the payment will refund promptly the amount of
such excess.

(b)      JUDGMENTS. To the extent permitted by applicable law, if any judgment
or order expressed in a currency other than the Contractual Currency is rendered
(i) for the payment of any amount owing in respect of this Agreement, (ii) for
the payment of any amount relating to any early termination in respect of this
Agreement or (iii) in respect of a judgment or order of another court for the
payment of any amount described in (i) or (ii) above, the party seeking
recovery, after recovery in full of the aggregate amount to which such party is
entitled pursuant to the judgment or order, will be entitled to receive
immediately from the other party the amount of any shortfall of the Contractual
Currency received by such party as a consequence of sums paid in such other
currency and will refund promptly to the other party any excess of the
Contractual Currency received by such party as a consequence of sums paid in
such other currency if such shortfall or such excess arises or results from any
variation between the rate of exchange at which the Contractual Currency is
converted into the currency of the judgment or order for the purposes of such
judgment or order and the rate of exchange at which such party is able, acting
in a reasonable manner and in good faith in converting the currency received
into the Contractual Currency, to purchase the Contractual Currency with the
amount of the currency of the judgment or order actually received by such party.
The term "rate of exchange" includes, without limitation, any premiums and costs
of exchange payable in connection with the purchase of or conversion into the
Contractual Currency.

(c)      SEPARATE INDEMNITIES. To the extent permitted by applicable law, these
indemnities constitute separate and independent obligations from the other
obligations in this Agreement, will be enforceable as separate and independent
causes of action, will apply notwithstanding any indulgence granted by the party
to which any payment is owed and will not be affected by judgment being obtained
or claim or proof being made for any other sums payable in respect of this
Agreement.

(d)      EVIDENCE OF LOSS. For the purpose of this Section 8, it will be
sufficient for a party to demonstrate that it would have suffered a loss had an
actual exchange or purchase been made.

                                       11


9.       MISCELLANEOUS

(a)      ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings with respect thereto.

(b)      AMENDMENTS. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing evidenced by
a facsimile transmission) and executed by each of the parties or confirmed by an
exchange of telexes or electronic messages on an electronic messaging system.

(c)      SURVIVAL OF OBLIGATIONS. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive
the termination of any Transaction.

(d)      REMEDIES CUMULATIVE. Except as provided in this Agreement, the rights,
powers, remedies and privileges provided in this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by law.

(e)      COUNTERPARTS AND CONFIRMATIONS.

         (i)      This Agreement (and each amendment, modification and waiver in
         respect of it) may be executed and delivered in counterparts (including
         by facsimile transmission), each of which will be deemed an original.

         (ii)     The parties intend that the are legally bound by the terms of
         each Transaction from the moment they agree to those terms (whether
         orally or otherwise). A Confirmation shall be entered into as soon as
         practicable and may be executed and delivered in counterparts
         (including by facsimile transmission) or be created by an exchange of
         telexes or by an exchange of electronic messages on an electronic
         messaging system, which in each case will be sufficient for all
         purposes to evidence a binding supplement to this Agreement. The
         parties will specify therein or through another effective means that
         any such counterpart, telex or electronic message constitutes a
         Confirmation.

(f)      NO WAIVER OF RIGHTS. A failure or delay in exercising any right, power
or privilege in respect of this Agreement will not be presumed to operate as a
waiver, and a single or partial exercise of any right, power or privilege will
not be presumed to preclude any subsequent or further exercise, of that right,
power or privilege or the exercise of any other right, power or privilege.

(g)      HEADINGS. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.

10.      OFFICES; MULTIBRANCH PARTIES

(a)      If Section 10(a) is specified in the Schedule as applying, each party
that enters into a Transaction through an Office other than its head or home
office represents to the other party that, notwithstanding the place of booking
office or jurisdiction of incorporation or organisation of such party, the
obligations of such party are the same as if it had entered into the Transaction
through its head or home office. This representation will be deemed to be
repeated by such party on each date on which a Transaction is entered into.

(b)      Neither party may change the Office through which it makes and receives
payments or deliveries for the purpose of a Transaction without the prior
written consent of the other party.

(c)      If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office through
which it makes and receives payments or deliveries with respect to a Transaction
will be specified in the relevant Confirmation.

11.      EXPENSES

A Defaulting Party will, on demand, indemnify and hold harmless the other party
for and against all reasonable out-of-pocket expenses, including legal fees and
Stamp Tax, incurred by such other party by reason of the enforcement and
protection of its rights under this Agreement or any Credit Support Document


                                       12



to which the Defaulting Party is a party or by reason of the early termination
of any Transaction, including, but not limited to, costs of collection.

12.      NOTICES

(a)      EFFECTIVENESS. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated:--

         (i)      if in writing and delivered in person or by courier, on the
         date it is delivered;

         (ii)     if sent by telex, on the date the recipient's answerback is
         received;

         (iii)    if sent by facsimile transmission, on the date that
         transmission is received by a responsible employee of the recipient in
         legible form (it being agreed that the burden of proving receipt will
         be on the sender and will not be met by a transmission report generated
         by the sender's facsimile machine);

         (iv)     if sent by certified or registered mail (airmail, if overseas)
         or the equivalent (return receipt requested), on the date that mail is
         delivered or its delivery is attempted; or

         (v)      if sent by electronic messaging system, on the date that
         electronic message is received,

unless the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.

(b)      CHANGE OF ADDRESSES. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system details at
which notices or other communications are to be given to it.


13.      GOVERNING LAW AND JURISDICTION

(a)      GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.

(b)      JURISDICTION. With respect to any suit, action or proceedings relating
to this Agreement ("Proceedings"), each party irrevocably:--

         (i)      submits to the jurisdiction of the English courts, if this
         Agreement is expressed to be governed by English law, or to the
         non-exclusive jurisdiction of the courts of the State of New York and
         the United States District Court located in the Borough of Manhattan in
         New York City, if this Agreement is expressed to be governed by the
         laws of the State of New York; and

         (ii)     waives any objection which it may have at any time to the
         laying of venue of any Proceedings brought in any such court, waives
         any claim that such Proceedings have been brought in an inconvenient
         forum and further waives the right to object, with respect to such
         Proceedings, that such court does not have any jurisdiction over such
         party.

Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the Civil
Jurisdiction and Judgments Act 1982 or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.

(c)      SERVICE OF PROCESS. Each party irrevocably appoints the Process Agent
(if any) specified opposite its name in the Schedule to receive, for it and on
its behalf, service of process in any Proceedings. If for any

                                       13



reason any party's Process Agent is unable to act as such, such party will
promptly notify the other party and within 30 days appoint a substitute process
agent acceptable to the other party. The parties irrevocably consent to service
of process given in the manner provided for notices in Section 12. Nothing in
this Agreement will affect the right of either party to serve process in any
other manner permitted by law.

(d)      WAIVER OF IMMUNITIES. Each party irrevocably waives, to the fullest
extent permitted by applicable law, with respect to itself and its revenues and
assets (irrespective of their use or intended use), all immunity on the grounds
of sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any
court, (iii) relief by way of injunction, order for specific performance or for
recovery of property, (iv) attachment of its assets (whether before or after
judgment) and (v) execution or enforcement of any judgment to which it or its
revenues or assets might otherwise be entitled in any Proceedings in the courts
of any jurisdiction and irrevocably agrees, to the extent permitted by
applicable law, that it will not claim any such immunity in any Proceedings.

14.      DEFINITIONS

As used in this Agreement:--

"ADDITIONAL TERMINATION EVENT" has the meaning specified in Section 5(b).

"AFFECTED PARTY" has the meaning specified in Section 5(b).

"AFFECTED TRANSACTIONS" means (a) with respect to any Termination Event
consisting of an Illegality, Tax Event or Tax Event Upon Merger, all
Transactions affected by the occurrence of such Termination Event and (b) with
respect to any other Termination Event, all Transaction.

"AFFILIATE" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control" of
any entity or person means ownership of a majority of the voting power of the
entity or person.

"APPLICABLE RATE" means:--

(a)      in respect of obligations payable or deliverable (or which would have
been but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;


(b)      in respect of an obligation to pay an amount under Section 6(e) of
either party from and after the date (determined in accordance with Section
6(d)(ii)) on which that amount is payable, the Default Rate;

(c)      in respect of all other obligations payable or deliverable (or which
would have been but for Section 2(a)(iii)) by a Non-defaulting party, the
Non-default Rate; and

(d)      in all other cases, the Termination Rate.

"BURDENED PARTY" has the meaning specified in Section 5(b).

"CHANGE IN TAX LAW" means the enactment, promulgation, execution or ratification
of, or any change in or amendment to, any law (or in the application or official
interpretation of any law) that occurs on or after the date on which the
relevant Transaction is entered into.

"CONSENT" includes a consent, approval, action, authorisation, exemption,
notice, filing, registration or exchange control consent.

"CREDIT EVENT UPON MERGER" has the meaning specified in Section 5(b).

"CREDIT SUPPORT DOCUMENT" means any agreement or instrument that is specified as
such in this Agreement.

"CREDIT SUPPORT PROVIDER" has the meaning specified in the Schedule.

"DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if it
were to fund or of funding the relevant amount plus 1% per annum.

                                       14



"DEFAULTING PARTY" has the meaning specified in Section 6(a).

"EARLY TERMINATION DATE" means the date determined in accordance with Section
6(a) or 6(b)(iv).

"EVENT OF DEFAULT" has the meaning specified in Section 5(a) and, if applicable,
in the Schedule.

"ILLEGALITY" has the meaning specified in Section 5(b).

"INDEMNIFIABLE TAX" means any Tax other than a Tax that would not be imposed in
respect of a payment under this Agreement but for a present or former connection
between the jurisdiction of the government or taxation authority imposing such
Tax and the recipient of such payment or a person related to such recipient
(including, without limitation, a connection arising from such recipient or
related person being or having been a citizen or resident of such jurisdiction,
or being or having been organised, present or engaged in a trade or business in
such jurisdiction, or having or having had a permanent establishment or fixed
place of business in such jurisdiction, but excluding a connection arising
solely from such recipient or related person having executed, delivered,
performed its obligations or received a payment under, or enforced, this
Agreement or a Credit Support Document).

"LAW" includes any treaty, law, rule or regulation (as modified, in the case of
tax matters, by the practice of any relevant governmental revenue authority) and
"lawful" and "unlawful" will be construed accordingly.

"LOCAL BUSINESS DAY" means, subject to the Schedule, a day on which commercial
banks are open for business (including dealings in foreign exchange and foreign
currency deposits) (a) in relation to any obligation under Section 2(a)(i), in
the place(s) specified in the relevant Confirmation or, if not so specified, as
otherwise agreed by the parties in writing or determined pursuant to provisions
contained, or incorporated by reference, in this Agreement, (b) in relation to
any other payment, in the place where the relevant account is located and, if
different, in the principal financial centre, if any, of the currency of such
payment, (c) in relation to any notice or other communication, including notice
contemplated under Section 5(a)(i), in the city specified in the address for
notice provided by the recipient and, in the case of a notice contemplated by
Section 2(b), in the place where the relevant new account is to be located and
(d) in relation to Section 5(a)(v)(2), in the relevant locations for performance
with respect to such Specified Transaction.

"LOSS" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party reasonably determines in good faith to be its
total losses and costs (or gain, in which case expressed as a negative number)
in connection with this Agreement or that Terminated Transaction or group of
Terminated Transactions, as the case may be, including any loss of bargain, cost
of funding or, at the election of such party but without duplication, loss or
cost incurred as a result of its terminating, liquidating, obtaining or
reestablishing any hedge or related trading position (or any gain resulting from
any of them). Loss includes losses and costs (or gains) in respect of any
payment or delivery required to have been made (assuming satisfaction of each
applicable condition precedent) on or before the relevant Early Termination Date
and not made, except, so as to avoid duplication, if Section 6(e)(i)(l) or (3)
or 6(e)(ii)(2)(A) applies. Loss does not include a party's legal fees and
out-of-pocket expenses referred to under Section 11. A party will determine
its Loss as of the relevant Early Termination Date, or, if that is not
reasonably practicable, as of the earliest date thereafter as is reasonably
practicable. A party may (but need not) determine its Loss by reference to
quotations of relevant rates or prices from one or more leading dealers in the
relevant markets.

"MARKET QUOTATION" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or by
such party (expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support Document
with respect to the obligations of such party) and the quoting Reference
Market-maker to enter into a transaction (the "Replacement Transaction") that
would have the effect of preserving for such party the economic equivalent of
any payment or delivery (whether the underlying obligation was absolute or
contingent and assuming the satisfaction of each applicable condition precedent)
by the parties under Section 2(a)(i) in respect of such Terminated Transaction
or group of Terminated Transactions that would, but for the occurrence of the
relevant Early Termination Date, have

                                       15



been required after that date. For this purpose, Unpaid Amounts in respect of
the Terminated Transaction or group of Terminated Transactions are to be
excluded but, without limitation, any payment or delivery that would, but for
the relevant Early Termination Date, have been required (assuming satisfaction
of each applicable condition precedent) after that Early Termination Date is to
be included. The Replacement Transaction would be subject to such documentation
as such party and the Reference Market-maker may, in good faith, agree. The
party making the determination (or its agent) will request each Reference
Market-maker to provide its quotation to the extent reasonably practicable as of
the same day and time (without regard to different time zones) on or as soon as
reasonably practicable after the relevant Early Termination Date. The day and
time as of which those quotations are to be obtained will be selected in good
faith by the party obliged to make a determination under Section 6(e), and, if
each party is so obliged, after consultation with the other. If more than three
quotations are provided, the Market Quotation will be the arithmetic mean of the
quotations, without regard to the quotations having the highest and lowest
values. If exactly three such quotations are provided, the Market Quotation will
be the quotation remaining after disregarding the highest and lowest quotations.
For this purpose, if more than one quotation has the same highest value or
lowest value, then one of such quotations shall be disregarded. If fewer than
three quotations are provided, it will be deemed that the Market Quotation in
respect of such Terminated Transaction or group of Terminated Transactions
cannot be determined.

"NON-DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it) if
it were to fund the relevant amount.

"NON-DEFAULTING PARTY" has the meaning specified in Section 6(a).

"OFFICE" means a branch or office of a party, which may be such party's head or
home office.

"POTENTIAL EVENT OF DEFAULT" means any event which, with the giving of notice or
the lapse of time or both, would constitute an Event of Default.

"REFERENCE MARKET-MAKERS" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria that
such party applies generally at the time in deciding whether to offer or to make
an extension of credit and (b) to the extent practicable, from among such
dealers having an office in the same city.

"RELEVANT JURISDICTION" means, with respect to a party, the jurisdictions (a) in
which the party is incorporated, organised, managed and controlled or considered
to have its seat, (b) where an Office through which the party is acting for
purposes of this Agreement is located, (c) in which the party executes this
Agreement and (d) in relation to any payment, from or through which such payment
is made.

"SCHEDULED PAYMENT DATE" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.

"SET-OFF" means set-off, offset, combination of accounts, right of retention or
withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract, applicable law or otherwise) that is exercised by, or imposed
on, such payer.

"SETTLEMENT AMOUNT" means, with respect to a party and any Early Termination
Date, the sum of:--

(a)      the Termination Currency Equivalent of the Market Quotations (whether
positive or negative) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation is determined; and

(b)      such party's Loss (whether positive or negative and without reference
to any Unpaid Amounts) for each Terminated Transaction or group of terminated
Transactions for which a Market Quotation cannot be determined or would not (in
the reasonable belief of the party making the determination) produce a
commercially reasonable result.

"SPECIFIED ENTITY" has the meaning specified in the Schedule.

                                       16



"SPECIFIED INDEBTEDNESS" means, subject to the Schedule, any obligation (whether
present or future, contingent or otherwise, as principal or surety or otherwise)
in respect of borrowed money.

"SPECIFIED TRANSACTION" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter entered
into between one party to this Agreement (or any Credit Support Provider of such
party or any applicable Specified Entity of such party) and the other party to
this Agreement (or any Credit Support Provider of such other party or any
applicable Specified Entity of such other party) which is a rate swap
transaction, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction cap transaction, floor
transaction, collar transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions), (b) any combination of
these transactions and (c) any other transaction identified as a Specified
Transaction in this Agreement or the relevant confirmation.

"STAMP TAX" means any stamp, registration, documentation or similar tax.

"TAX" means any present or future tax levy, impost, duty, charge, assessment or
fee of any nature (including interest, penalties and additions thereto that is
imposed by any government or other taxing authority in respect of any payment
under this Agreement other than a stamp, registration, documentation or similar
tax.

"TAX EVENT" has the meaning specified in Section 5(b).

"TAX EVENT UPON MERGER" has the meaning specified in Section 5(b).

"TERMINATED TRANSACTIONS" means with respect to any Early Termination Date (a)
if resulting from a Termination Event, all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either case) in effect
immediately before the effectiveness of the notice designating that Early
Termination Date (or, if "Automatic Early Termination" applies, immediately
before that Early Termination Date).

"TERMINATION CURRENCY" has the meaning specified in the Schedule.

"TERMINATION CURRENCY EQUIVALENT" means, in respect of any amount denominated in
the Termination Currency, such Termination Currency amount and, in respect of
any amount denominated in a currency other than the Termination Currency (the
"Other Currency"), the amount in the Termination Currency determined by the
party making the relevant determination as being required to purchase such
amount of such Other Currency as at the relevant Early Termination Date, or, if
the relevant Market Quotation or Loss (as the case, may be), is determined as of
a later date that later date, with the Termination Currency at the rate equal to
the spot exchange rate of the foreign exchange agent (selected as provided
below) for the purchase of such Other Currency with the Termination currency at
or about 11:00 a.m. (in the city in which such foreign exchange agent is
located) on such date as would be customary for the determination of such a rate
for the purchase of such Other Currency for value on the relevant Early
Termination Date or that later date. The foreign exchange agent will, if only
one party is obliged to make a determination under Section 6(e), be selected in
good faith by that party and otherwise will be agreed by the parties.

"TERMINATION EVENT" means an Illegality, a Tax Event or a Tax Event Upon Merger
or, if specified to be applicable, a Credit Event Upon Merger or an Additional
Termination Event.

"TERMINATION RATE" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as certified
by such party) if it were to fund or of funding such amounts.

"UNPAID AMOUNTS" owing to any party means, with respect to an Early Termination
Date, the aggregate of (a) in respect of all Terminated Transactions, the
amounts that became payable (or that would have become payable but for Section
2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early
Termination Date and which remain unpaid as at such Early Termination Date and
(b) in respect of each Terminated Transaction, for each obligation under Section
2(a)(i) which was (or would have been but for Section 2(a)(iii)) required to be
settled by delivery to such party on or prior to such Early Termination Date and
which has not been so settled as at such Early Termination Date, an amount equal
to the fair market

                                       17


value of that which was (or would have been) required to be delivered as of the
originally scheduled date for delivery, in each case together with to the extent
permitted under applicable law) interest, in the currency of such amounts, from
(and including) the date such amounts or obligations were or would have been
required to have been paid or performed to (but excluding) such Early
Termination Date, at the Applicable Rate. Such amounts of interest will be
calculated on the basis of daily compounding and the actual number of days
elapsed. The fair market value of any obligation referred to in clause (b) above
shall be reasonably determined by the party obliged to make the determination
under Section 6(e) or, if each party is so obliged, it shall be the average of
the Termination Currency Equivalents of the fair market values reasonably
determined by both parties.

IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.

BNP PARIBAS SECURITIES CORP.
ON BEHALF OF BNP PARIBAS                 GRANITE CONSTRUCTION INCORPORATED
- --------------------------------         ---------------------------------
     (Name of Party)                             (Name of Party)

By : /s/ Christine Smith Howard         By : /s/ WILLIAM E. BARTON,
    ----------------------------        ------------------------------
    Name: Christine Smith Howard        Name: WILLIAM E. BARTON,
    Title: Authorized Signatory         Title: SR. VICE PRESIDENT
    Date:  February 18, 2003            Date:

By : /s/ Mindy Sperling                    By : /s/ R.C. ALLBRITTON,
    ----------------------------           -----------------------------
    Name: Mindy Sperling                   R.C. ALLBRITTON, VICE PRESIDENT
    Title:  Authorized Signatory
    Date:   February 18, 2003

                                       18



EXECUTION COPY

                                    SCHEDULE

                                     TO THE

                                MASTER AGREEMENT

                         DATED AS OF FEBRUARY 10, 2003

                                     BETWEEN

                            BNP PARIBAS ("PARTY A ")

                                       AND

                  GRANITE CONSTRUCTION INCORPORATED ("PARTY B")

                                     PART 1
                             TERMINATION PROVISIONS

(a)      "SPECIFIED ENTITY " means in relation to Party A and Party B for the
         purpose of:-
         Section 5(a)                        None
         Section 5(a)(v),                    None
         Section 5(a)(vi),                   None
         Section 5(a)(vii),                  None
         Section 5(b)                        None
         Section 5(b)(iv),                   None

(b)      "SPECIFIED TRANSACTION" will have the meaning specified in Section 14
         of this Agreement.

(c)      The "CROSS DEFAULT" provisions of Section 5(a)(vi) will apply to Party
         A and will apply to Party B.

         If such provisions apply:-

         "SPECIFIED INDEBTEDNESS" will have the meaning specified in Section 14
         of this Agreement but will exclude deposits received by a party in the
         ordinary course of its banking business.

         "THRESHOLD AMOUNT" means USD 10,000,000 (or the equivalent thereof in
         any other currency or currencies) with respect to Party A and Party B.

(d)      The "CREDIT EVENT UPON MERGER" provisions of Section 5(b)(iv) will
         apply to Party A and will apply to Party B.

(e)      The "AUTOMATIC EARLY TERMINATION" provision of Section 6(a) will not
         apply to Party A and will not apply to Party B.

(f)      PAYMENTS ON EARLY TERMINATION. For the purpose of Section 6(e) of this
         Agreement:-

         (i)      Loss will apply.

         (ii)     The Second Method, incorporating the set-off provisions set
                  out in paragraph (a) of Part 5 hereof, will apply.

                                       19



 EXECUTION COPY

(g)      "TERMINATION CURRENCY" means United States Dollars.

(h)      "ADDITIONAL TERMINATION EVENT" will apply.

         The following shall constitute an Additional Termination Event:-

         If at any time Party A ceases to be a Lender under the Credit Agreement
         dated as of June 29, 2001 among Party B, as the Borrower, Bank of
         America, N.A., as Administrative Agent, as a Lender, and as L/C Issuer
         and the other Lenders party thereto, as such agreement may from time to
         time be restated, amended or otherwise modified or any substitute or
         replacement agreement with respect thereto (the "Credit Agreement").
         Capitalized terms used herein and not defined shall have the meaning
         assigned to such term in the Credit Agreement.

         For the purpose of the foregoing Termination Event, the Affected Party
         or Affected Parties shall be:-

         Party B

                                     PART 2
                               TAX REPRESENTATIONS

(a)      PAYER REPRESENTATIONS. For the purpose of Section 3(e) of this
         Agreement, Party A will make the following representation and Party B
         will make the following representation:-

         It is not required by any applicable law, as modified by the practice
         of any relevant governmental revenue authority, of any Relevant
         Jurisdiction to make any deduction or withholding for or on account of
         any Tax from any payment (other than interest under Section 2(e),
         6(d)(ii) or 6(e) of this Agreement) to be made by it to the other party
         under this Agreement. In making his representation, it may rely on:-

         (i)      the accuracy of any representations made by the other party
                  pursuant to Section 3(f) of this Agreement;

         (ii)     the satisfaction of the agreement contained in Section 4(a)(i)
                  or 4(a)(iii) of this Agreement and the accuracy and
                  effectiveness of any document provided by the other party
                  pursuant to Section 4(a)(i) or 4(a)(iii) of this Agreement;
                  and

         (iii)    the satisfaction of the agreement of the other party contained
                  in Section 4(d) of this Agreement,

         provided that it shall not be a breach of this representation where
         reliance is placed on clause (ii) and the other party does not deliver
         a form or document under Section 4(a)(iii) by reason of material
         prejudice to its legal or commercial position.

(b)      PAYEE TAX REPRESENTATIONS. For the purpose of Section 3(f) of this
         Agreement, Party A and Party B will not make any representations.

                                     PART 3
                         AGREEMENT TO DELIVER DOCUMENTS

For the purpose of Sections 4(a)(i) and (ii) of this Agreement, each party
agrees to deliver the following documents, as applicable:-

(a)      Tax forms, documents or certificates to be delivered are: None

                                       20



EXECUTION COPY

(B)      OTHER DOCUMENTS TO BE DELIVERED ARE:



                                                                                          DATE BY WHICH        COVERED BY
PARTY REQUIRED TO                                                                             TO BE            SECTION 3(D)
DELIVER DOCUMENT                FORM/DOCUMENT/CERTIFICATE                                   DELIVERED        REPRESENTATION

                                                                                                     
    Party A               such proof as Party B may reasonably                          on signing                 Yes
                          request of the names, true signatures and
                          authority of persons signing this
                          Agreement or its behalf and any other
                          document referred to herein to which it is a
                          party

    Party B               Certified copies of all corporate                             on signing                 Yes
                          authorizations and any other documents
                          with respect to the execution, delivery and
                          performance of this Agreement; together
                          with a certificate of authority and
                          specimen signatures of the persons
                          executing this Agreement;

    Party B               A copy of its most recently available                         promptly after a           Yes
                          annual report containing audited financial                    request by Party
                          statements for its most recently ended                        A
                          fiscal year certified by its independent
                          public accountants as fairly presenting its
                          financial condition and results of
                          operations for and as at the close of such
                          fiscal year;

    Party B               A copy of its most recently available                         promptly after a
                          unaudited financial statements for its most                   request by
                          recently ended fiscal quarter certified by                    Party A
                          its chief financial officer as fairly
                          presenting its financial condition and
                          results of operations for and as at the close
                          of such quarter;

    Party B               Each regular financial and/or business                        promptly after a           Yes
                          reporting document that is distributed or is                  request by
                          generally available to its partners,                          Party A
                          shareholders, creditors or investors or is
                          filed with any regulatory authorities and is
                          publicly available or relates to its financial
                          condition;

    Party B               Such other information respecting Party                       promptly after             Yes
                          B's condition or operations, financial or                     a request by
                          otherwise, as Party A may reasonably                          Party A
                          request from time to time; and

    Party B               Opinion of general counsel for Party B in                     upon execution             Yes
                          the form of Exhibit I                                         and delivery of
                                                                                        this Agreement


                                       21



EXECUTION COPY

                                     PART 4
                                  MISCELLANEOUS

(a)      ADDRESSES FOR NOTICES. For the purpose of Section 12(a) of this
         Agreement:-

         Address for notices or communications to Party A:-

              
Address:         BNP Paribas, 20 Boulevard des Italiens, 75009 Paris, France
Attention:       BFI/BOLTIT
Telex No.        282919 Answerback: BNP 282919F

copy to:         BNP Paribas, 10 Harewood Avenue, London NWI 6AA, England
Attention:       Legal and Transaction Management Group
Telex No:        296723 Answerback: PARCAP



         Electronic Messaging System Details: BPCMGB2X
         (For all purposes)

         Address for notices or communications to Party B:-

              
Address:         Granite Construction Incorporated, P.O. Box 50085 Watsonville,
                 CA 95077-5085

Attention:       Jigisha Desai, Director of Corporate Treasury

Telex No:        831-761-4784
                 Jigisha.Desai@goinc.com

copy to:         Granite Construction Incorporated, P.O. Box 50085 Watsonville,
                 CA 95077-5085
Attention:       R. C. Allbritton, Vice President & Treasurer
Telex No.        831-761-4772
                 R.C.Allbritton@goinc.com



         Electronic Messaging System Details:
         (For all purposes)

(b)      "PROCESS AGENT". For the purpose of Section 13(c) of this Agreement:-

         Party A appoints as its Process Agent:
         its New York Branch at 787 Seventh Avenue, New York, New York 10019.

         Party B appoints as its Process Agent:
         Michael FutchGranite Construction Incorporated
         P.O. Box 50085
         Watsonville, CA 95077-5085

(c)      OFFICES. The provisions of Section 10(a) will apply to this Agreement.

                                       22


EXECUTION COPY

(d)      MULTIBRANCH PARTY. For the purpose of Section 10(c)of this Agreement:-

         Party A is a Multibranch Party and may act through the following
         Offices:-

                                                             
BNP Paribas Head Office             Its New York Branch at         Its other United States
20, Boulevard des Italiens          The Equitable Tower            Branches
75009 Paris                         31st Floor
France                              787 Seventh Avenue
                                    New York, NY 10019
                                    USA

Its Tokyo Branch at                 Its London Branch at           Its Hong Kong Branch at 11th
Sankei Building 18F                 10 Harewood Avenue             Floor
1-7-2, Otemachi,                    London NW16AA                  Central Tower
Chiyoda-ku                          England                        28 Queen's Road Central
Tokyo 100-0004                                                     Hong Kong
Japan

Its Singapore Branch                Its Dublin Branch              Its Sydney Branch
Tung Centre                         5 George's Dock                12 Castlereagh Street
20 Collyer Quay                     IFSC                           Sydney NSW 2001
Singapore 0104                      Dublin I                       Australia
                                    Ireland



         Its Grand Caymon Branch

         Party B is not a Multibranch Party.

(e)      CALCULATION AGENT. The Calculation Agent is Party A, unless otherwise
         specified in a Confirmation in relation to the relevant Transaction.
         The Calculation Agent's calculation and determinations shall be
         conclusive and binding in the absence of manifest error. The failure by
         Party A to perform its obligations as Calculation Agent hereunder shall
         not be construed as an Event of Default or Termination Event.

(f)      CREDIT SUPPORT DOCUMENT. With respect to Party A: Not Applicable.

         With respect to Party B:

         (i)      The Credit Agreement, the Guaranty, and any other material
                  document in which Party A is a beneficiary of or may become a
                  beneficiary of at any time after the date hereof which
                  expressly provides that it guarantees or secures the material
                  obligations of Party B under this Agreement.

(g)      CREDIT SUPPORT PROVIDER. With respect to Party A: Not Applicable.

         With respect to Party B:

                  All pledgors and guarantors, or other persons or parties
                  providing collateral or security, however such term may be
                  defined in the Credit Agreement, the Guaranty, or any other
                  Credit Support Document, including without limitation any
                  guarantors thereto.

(h)      GOVERNING LAW. This Agreement will be governed by and construed in
         accordance with the laws of the State of New York without reference to
         choice of law doctrine.

(i)      NETTING OF PAYMENTS. Subparagraph (ii) of Section 2(c) of this
         Agreement will apply unless otherwise stated in any Confirmation.

                                       23



EXECUTION COPY

(j)      AFFILIATE" will have the meaning specified in Section 14 of this
         Agreement.

                                     PART 5
                                OTHER PROVISIONS

(a)      SET-OFF. Section 6 of this Agreement shall be amended by the insertion
         of the following additional provision:

         "(f) Set-off. Any amount (the "Early Termination Amount") payable to
         one party (the "Payee") by the other party (the "Payer") under Section
         6(e), in circumstances where there is a Defaulting Party or one
         Affected Party where a Termination Event under Section 5(b)(iv) has
         occurred, will, at the option of the party ("X") other than the
         Defaulting Party or the Affected Party (and without prior notice to the
         Defaulting Party or the Affected Party),be reduced by its Set-off
         against any amount(s) (the "Other Agreement Amount") payable (whether
         at such time or in the future or upon the occurrence of a contingency)
         by the Payee to the Payer (irrespective of the currency, place of
         payment or booking office of the obligation) under any other
         agreement(s) between the Payee and the Payer or instrument(s) or
         undertaking(s) issued or executed by one party to, or in favor of, the
         other party (the "Other Agreement") (and the Other Agreement Amount
         will be discharged pro tanto). X will give notice to the other party of
         any set-off so effected.

         For this purpose, either the Early Termination Amount or the Other
         Agreement Amount (or the relevant part of such amounts) may be
         converted at the applicable prevailing exchange rate into the currency
         in which the other is denominated.

         If an obligation is unascertained, X may in good faith estimate that
         obligation and set-off in respect of the estimate, subject to the
         relevant party accounting to the other when the obligation is
         ascertained.

         Nothing in this Section 6(f) shall be effective to create a charge or
         other security interest. This Section shall be without prejudice and in
         addition to any right of set-off, combination of accounts, lien or
         other right to which any party is at any time otherwise entitled
         (whether by operation of law, contract or otherwise).

(b)      ISDA DEFINITIONS. The definitions and provisions contained in the 2000
         ISDA Definitions, the 1999 ISDA Credit Derivatives Definitions, , each
         as published by the International Swaps and Derivatives Association,
         Inc. (collectively, the "Definitions", as such Definitions may be
         further amended) are incorporated into any Confirmation which
         supplements and forms part of this Agreement, and all capitalized terms
         used in a Confirmation shall have the meaning set forth in the
         Definitions, unless otherwise defined in a Confirmation. In the event
         of any conflict between the provisions of this Agreement and the
         provisions of the Definitions, the provisions of the Agreement shall
         apply and in the event of any conflict between the provisions of this
         Agreement and a Confirmation, the provisions of the Confirmation shall
         apply.

(c)      CONFIRMATIONS. A new Section l(d) is hereby added to the Agreement as
         follows

         (d) CONFIRMATIONS. Any transaction entered into by the parties, whether
         or not prior to the date hereof, which would otherwise constitute a
         "Specified Transaction" under this Agreement [excluding Repo
         Transactions] shall be deemed to be a Transaction for the purposes of
         this Agreement, even where not so specified in the documentation for
         such transaction. Any document or other writing (including telexes,
         faxes and electronic messages) evidencing the terms of such a
         Transaction shall, unless otherwise specified in such writing, be
         deemed to be a Confirmation for the purposes of this Agreement and,
         unless otherwise agreed by the parties, each such Confirmation shall
         supplement, form a part of, and be subject to this Agreement and all
         provisions in the Agreement will govern the Confirmation except as
         modified therein."

(d)      REPRESENTATIONS. Each party will be deemed represent to the other party
         on the date on which it enters into a Transaction that (absent a
         written agreement between the parties that expressly imposes
         affirmative obligations to the contrary for that Transaction:

                                       24

EXECUTION COPY

         (i) NON-RELIANCE. It is acting for its own account and it has made its
         own independent decisions to enter into that Transaction and as to
         whether that Transaction is appropriate or proper for it based upon its
         own judgment and upon advice from such advisers as it has deemed
         necessary. It is not relying on any communication (written or oral) of
         the other party as investment advice or as a recommendation to enter
         into that Transaction; it being understood that information and
         explanations related to the terms and conditions of a Transaction shall
         not be considered investment advice or a recommendation to enter into
         that Transaction. It has not received from the other party any
         assurance or guarantee as to the expected results of the Transaction.

         (ii) EVALUATIONS AND UNDERSTANDING. It is capable of evaluating and
         understanding (on its own behalf or through professional advice), and
         understands and accepts, the terms, conditions and risks of that
         Transaction. It is also capable of assuming, and assumes, the financial
         and other risks of that Transaction.

         (iii) STATUS OF PARTIES. The other party is not acting as a fiduciary
         or an adviser for it in respect of that Transaction.

         (iv) ACTING AS PRINCIPAL. It is acting as principal and not as agent or
         in any other capacity, fiduciary or otherwise.

         (v) BENEFICIAL OWNER. With respect to any physically settled
         Transactions, it shall at the time of delivery be the legal and
         beneficial owner free of liens and other encumbrances of any securities
         or commodities it delivers to the other party.

         (vi) ELIGIBLE CONTRACT PARTICIPANT. It is an "eligible contract
         participant" within the meaning of the Commodity Exchange Act".

(e)      ADDITIONAL PARTY B REPRESENTATIONS. Party B will be deemed to represent
         to the other party on the date hereof and each date on which it enters
         into a Transaction that this Agreement is a Swap Contract (as defined
         in the Credit Agreement), and this Agreement and any Transaction ranks
         pari passu with Party B's obligations under all senior secured credit
         facilities.

(f)      DEFAULT INTEREST. Section 2(e) of this Agreement is hereby amended by
         the deletion of the final sentence and the subsitution of the following
         thereof;

         "If, prior to the occurrence or effective designation of an Early
         Termination Date, a party defaults in the performance of any obligation
         required to be settled by delivery, it will indemnify the other party
         on demand for any costs, losses or expenses (including the costs of
         borrowing the shares or other equity securities, bonds or other debt
         securities or other instrument or commodity as the case may be, if
         applicable) resulting from such default. A certificate signed by the
         deliveree setting out such costs, losses or expenses in reasonable
         detail will be conclusive evidence that they have been incurred."

(g)      DEFAULT CAUSED BY ILLEGALITY. An Event of Default pursuant to Section
         5(a)(vi) shall not be deemed to have occurred if it is caused by an
         event that would constitute an Illegality if it occurred in connection
         with this Agreement.

(h)      EVENTS OF DEFAULT. Section 5 (a) of the Agreement is amended by
         inserting the following at the end of subsection (vii) (3) thereof:

         "or a notice is sent convening a meeting to propose a voluntary
         arrangement of its creditors"

(i)      EXPENSES. Section 11 of the Agreement is amended by inserting the word
         "reasonable" between the words "including" and "legal" in the second
         line thereof.

(j)      NOTICES. Section 12(a) of the Agreement is amended by (i) removing the
         words "or its delivery is attempted" in the thirteenth line; (ii)
         removing the words "(or attempted delivery)" in the fifteenth line; and
         (iii) removing the words "(or attempted)" in the sixteenth line.

                                       25





(k)      WAIVER OF JURY TRIAL. Each party waives to the fullest extent permitted
         by applicable law any right it may have to have a trial by jury in
         respect of any Proceedings and acknowledges that it and the other party
         have been induced to enter into this Agreement (and provide for any
         Credit Support Document, as applicable) by, among other things, the
         mutual waivers in this Section.

(l)      NOTIFICATION OF THE RECORDING OF TELEPHONE CONVERSATIONS. Each Party
         (i) consents to the recording of telephone conversations of trading and
         marketing personnel of the parties in connection with this Agreement
         and any Transactions hereunder and to the submission of such recordings
         in evidence in any Proceedings and (ii) agrees to obtain any necessary
         consent of, and give notice of such recording to, such personnel.

IN WITNESS WHEREOF the parties have executed this Schedule to the Agreement with
effect from the date specified on the first page of this document.

BNP PARIBAS SECURITIES CORP.           GRANITE CONSTRUCTION INCORPORATED

ON BEHALF OF BNP PARIBAS

By: /s/ Christine Smith Howard         By: /s/ William E. Barton
    --------------------------             ----------------------

Name: Christine Smith Howard           Name: WILLIAM E. BARTON

Title: Authorized Signatory            Title: SR. VICE PRESIDENT

By: /s/ Mindy Sperling                 By: /s/ R.C. Allbritton
   ---------------------------           -----------------------

Name: Mindy Sperling                   Name: R.C. ALLBRITTON

Title: Authorized Signatory            Title: VICE PRESIDENT

                                       26





                     OPINION OF COUNSEL FOR THE COUNTERPARTY

                                                              ____________, 2003

BNP Paribas
20 Boulevard des Italiens
75009 Paris
France

Dear Sirs

I have acted as counsel for Granite Construction Incorporated (the
"Counterparty") in connection with the ISDA Master Agreement (the "Agreement")
dated as of February 10, 2003 between the Counterparty and BNP Paribas ("BNP
Paribas"), pursuant to which this opinion is furnished.

I have examined originals or copies, certified or otherwise identified to my
satisfaction, of such documents, corporate records, certificates of public
officials and other instruments and have conducted such other investigations of
fact and law as I have deemed necessary or advisable for purposes of this
opinion.

I express no opinion as to any laws other than the laws and regulations
of________________as currently in effect. In addition, I have assumed that the
Agreement has been, and any Confirmation exchanged between the parties
confirming the Transaction which supplements and is subject to the Agreement (a
"Confirmation") will be, duly authorized, executed and delivered (or, in the
case of a Confirmation, entered into, as provided for therein) by BNP Paribas
[and that the Agreement constitutes, and when confirmed, as provided for
therein, any Confirmation will constitute, a valid and binding obligation under
the laws of the State of New York.

Upon the basis of the foregoing, I am of the opinion that:

1.       The Counterparty is a _________duly incorporated, validly existing and
         in good standing under the laws of ________________ and has full power
         and authority to execute, deliver and perform the Agreement and to
         confirm, as provided for therein, and perform any Confirmation.

2.       The execution, delivery and performance by the Counterparty of the
         Agreement and the entering into, as provided for therein, and
         performance of any Confirmation have been duly authorized by all
         necessary corporate action, require no action by or in respect of, or
         filing with, any governmental body, agency or official and do not
         contravene, or constitute a default under, any provision of applicable
         law or regulation or of the certificate of incorporation or by-laws of
         the Counterparty or of any agreement, judgement, injunction, order,
         decree or other instrument binding upon the Counterparty.

3.       The Agreement constitutes and, when confirmed, as provided for therein,
         any Confirmation, together with the Agreement, will constitute, a valid
         and binding obligation of the Counterparty enforceable in accordance
         with its terms except as enforcement may be limited by the provisions
         of any applicable bankruptcy, liquidation, insolvency and
         reorganization or other laws, relating to or affecting, generally the
         enforcement of creditor's rights.

4.       No authorization, approvals or consents are required under the laws of
         _________ to permit the purchase by the Counterparty of any currency
         which may be needed to make payment pursuant to the Agreement.

5.       The submission to the non exclusive jurisdiction of the State and
         Federal courts in New York City for all purposes in connection with,
         and the consent to service of process in, the Agreement are valid and
         binding upon the Counterparty and not subject to revocation. There are
         no provisions in the Agreement which are repugnant to the public
         thereof. If any final and conclusive judgement of a State or Federal
         court sitting in New York City

                                       27




         is rendered against the Counterparty in connection with any action
         arising out of or relating to the Agreement, such judgement would be
         recognized and enforced by the courts of ______________ without any
         re-trial or re-examination of the merits of action; provided that the
         ______________ court in which enforcement is sought determines that:
         [brief description of the grounds under which such judgement would be
         recognized without a re-examination of the merits]

                                                               Very truly yours,

                                       28



                            CERTIFICATE OF AUTHORITY

I, Dominique Hoenn, Chief Operating Officer of BNP PARIBAS, hereby confirm that
BNP PARIBAS has consented to and has delegated authority to BNP PARIBAS
SECURITIES Corporation,

New York to:

(i)      arrange on behalf of and in the name of BNP PARIBAS (A) any transaction
         or agreement which is a rate swap transaction, swap option, basis swap,
         forward rate transaction, commodity swap, commodity option, equity or
         equity index swap, equity or equity index option, bond option, interest
         rates option, foreign exchange transaction, cap transaction, floor
         transaction, collar transaction, currency swap transaction,
         cross-currency rate swap transaction, currency option, credit
         protection transaction, credit swap, credit default swap, credit
         default option, total return swap, credit spread transaction,
         repurchase transaction, reverse repurchase transaction, buy-sell back
         transaction or securities lending transaction or any transaction
         similar to the foregoing (including any option with respect to any of
         these transactions or any combination of such transactions or
         agreements) including any margin or collateral provisions related
         thereto or (B) the purchase and/or sale of any securities (including
         but not limited to government securities), bank debt (including but not
         limited to floating rate par/near par and distressed bank debt),
         participations in and options on the foregoing, and any other items as
         may be related to the foregoing as may be approved by BNP PARIBAS from
         time to time: (all of the foregoing in (A) or (B) referred to as a
         transaction) and

(ii)     execute in connection with such authority any confirmation or agreement
         or documentation evidencing any such transaction specified above or
         margin or collateral arrangement or any agreement to which such
         transaction or margin or collateral arrangement is subject and to take
         any other action or execute any other instrument or paper necessary or
         proper in relation thereto.

Any transaction undertaken or agreement executed by BNP PARIBAS SECURITIES
Corporation on behalf of BNP PARIBAS in respect of the foregoing prior to or
subsequent to the date hereof is hereby ratified.

By /s/ Dominique Hoenn
   -------------------
Dominique Hoenn

Dated the 22nd day of January 2001.



                               PARIBAS CORPORATION

         I, David L. Brummer, President of Paribas Corporation (the
"Corporation"), pursuant to Resolutions duly adopted by the Board of Directors
of the Corporation on February 25, 2000, hereby appoint and authorize the
employees of the Corporation whose names are listed below to prepare, negotiate,
execute and deliver any contract or agreement (including any margin or
collateral provisions related thereto) necessary, advisable or convenient in
connection with the business for the Corporation's account in (A) currencies,
securities, and financial instruments and contracts of every type, (B) credit
default swaps or credit default options and other credit derivative
transactions, total return swaps, rate swaps, basis swaps, forward rate
agreements, commodity swaps or commodity options, equity or equity index swaps,
equity or equity index options, bond options, interest rate options, foreign
exchange, caps, floors, collars, cross-currency rate swaps, currency swaps or
currency option transactions and any combination of these transactions or
contracts of every type, (C) forward contracts of every type and (D) repurchase
agreements, reverse repurchase agreements, and buy/sell back agreements of every
type. The foregoing appointment and authorization shall include the authority of
such persons to exercise the foregoing powers on behalf of BNP Paribas with
respect to its business pursuant to the authority granted to the Corporation by
BNP Paribas.

                              Authorized Employees

                                  Douglas Cook
                                 James Lettiere
                                   John Powers
                                 Mindy Sperling
                               Christine M. Smith

         The appointments and authorizations granted hereunder supersede all
appointments and authorizations previously granted by the President of Paribas
Corporation with respect to the foregoing.

         IN WITNESS WHEREOF, I have hereunto set my hand this 25th day of
August, 2000.

/s/ David L. Brummer
- --------------------
David L. Brummer
President



                           [PARIBAS CORPORATION LOGO]

                             /s/ Christine M. Smith
                             ----------------------
                               Christine M. Smith

                     787 Seventh Avenue, New York, NY 10019



                           [PARIBAS CORPORATION LOGO]

                               /s/ Mindy Sperling
                               -------------------
                                 Mindy Sperling

                     787 Seventh Avenue, New York, NY 10019



                                        [GRANITE CONSTRUCTION INCORPORATED LOGO]

                    OPINION OF COUNSEL FOR THE COUNTERPARTY

                                                               February 11, 2003

BNP Paribas
20 Boulevard des Italiens
75009 Paris
France

Dear Sirs

I have acted as counsel for Granite Construction Incorporate (the
"Counterparty") in connection with the ISDA Master Agreement (the "Agreement")
dated as of February 10, 2003 between the Counterparty and BNP Paribas ("BNP
Paribas"), pursuant to which this opinion is furnished.

I have examined originals or copies, certified or otherwise identified to my
satisfaction, of such documents, corporate records, certificates of public
officials and other instruments and have conducted such other investigations of
fact and law as I have deemed necessary or advisable for purposes of this
opinion.

I express no opinion as to any laws other than the laws and regulations of
California, the Delaware General Corporation Law and the federal laws of the
United States of America as currently in effect. In addition, I have assumed
that the Agreement has been, and any Confirmation exchanged between the parties
confirming the Transaction which supplements and is subject to the Agreement (a
"Confirmation") will be, duly authorized, executed and delivered (or, in the
case of a Confirmation, entered into, as provided for therein) by BNP Paribas
and that the Agreement constitutes, and when confirmed, as provided for therein,
any Confirmation will constitute, a valid and binding obligation under the laws
of the state of New York.

Upon the basis of the foregoing, I am of the opinion that:

1.       The Counterparty is a corporation duly incorporated, validly existing
         and in good standing under the laws of Delaware and has full power and
         authority to execute, deliver and perform the Agreement and to confirm,
         as provided for therein, and perform any Confirmation.

                                                      Box 50085
                                                      Watsonville, CA 95077-5085
                                                      Phone 831/724-1011
                                                      FAX 831/722-9657



BNP Paribas
February 10, 2003
Page 2

2.       The execution, delivery and performance by the Counterparty of the
         Agreement and the entering into, as provided for therein, and
         performance of any confirmation have been duly authorized by all
         necessary corporate action, require no action by or in respect of, or
         filing with, any government body, agency or official and do not
         contravence, or constitute a default under, any provision of applicable
         law or regulation or of the certificate of incorporation or by-laws of
         the Counterparty or of any agreement, judgement, injunction, order
         decree or other instrument binding upon the Counterparty.

3.       The Agreement constitutes and, when confirmed, as provided for therein,
         any Confirmation, together with the Agreement, will constitute, a valid
         and binding obligation of the Counterparty enforceable in accordance
         with its terms except as enforcement may be limited by the provisions
         of any applicable bankruptcy, liquidation, insolvency and
         reorganization or other laws, relating to or affecting, generally the
         enforcement of creditor's rights.

4.       No authorizations, approvals or consents are required under the laws of
         California to permit the purchase by the Counterparty of any currency
         which may be needed to make payment pursuant to the Agreement.

5.       The submission to the non-exclusive jurisdiction of the State and
         Federal courts in New York City for all purposes in connection with,
         and the consent to service of process in, the Agreement are valid and
         binding upon the Counterparty and not subject to revocation. There are
         no provisions in the Agreement which are repugnant to the public policy
         thereof. If any final and conclusive judgement of a State or Federal
         court sitting in New York City is rendered against the Counterparty in
         connection with any action arising out of or relating to the Agreement,
         such judgement would be recognized and enforced by the courts of
         California without any re-trial or re-examination of the merits of
         action; provided that the California court in which enforcement is
         sought determines that the judgment should not be vacated pursuant to
         C.C.P. Section 1710.40.

                                   Sincerely,

                                /s/ Michael Futch
                                -----------------
                               Michael Futch, Esq.
                       Vice President and General Counsel

MF\pac



                        GRANITE CONSTRUCTION INCORPORATED

         WHEREAS, the Company is obligated to pay fixed rates of 6.54% and 6.96%
to holders of its Senior Notes purchased on March 1, 1998 and May 1, 2001
respectively; and

         WHEREAS, the Company desires to enter into swap transactions with BNP
Paribas wherein it will swap its fixed rates for floating rates of 6m LIBOR +
386.75 bps and 6m LIBOR + 418 bps respectively pursuant to a ISDA Master
Agreement and related schedules and exhibits pertaining thereto (collectively
the "Agreement"); and

         WHEREAS, Management has reviewed the Agreement and found it to be
acceptable in form and substance.

         NOW, THEREFORE, BE IT RESOLVED, that the Executive Committee does
hereby approve the Agreement and the schedules, exhibits and other related
documents pertaining to the transaction described above and attached to the
Agreement.

         FURTHER RESOLVED, that any two Responsible Officers of the Company (as
defined in the Company's Credit Agreement dated June 29, 2001) be, and each of
them acting together are hereby authorized, empowered and directed, for and on
behalf of the Company, to take or cause to be taken any and all actions,
including, without limitation, the execution, acknowledgment, filing, amendment
and delivery of any and all papers, agreements, documents, instruments and
certificates, and the payment of such sums, as such officers may deem necessary
or advisable to carry out and perform the obligations of the Company under the
Agreement and consummate the transaction contemplated therein.

                            CERTIFICATE OF SECRETARY

         I certify that:

         I am duly qualified as Secretary of GRANITE CONSTRUCTION INCORPORATED,
a Delaware corporation, (the "Company").

         The foregoing is a true copy of resolution adopted by the Board of
Directors at a regular meeting held on February 11, 2003 and entered in the
Minute Book of the Company.

         The action is in conformity with the Articles of Incorporation and
Bylaws of the Company, has not been modified or repealed, and is now in full
force and effect.

Dated: February 21, 2003                   /s/ Michael Futch
                                           -----------------
                                           Michael Futch

EX-31.1

                                                                    Exhibit 31.1

                      CERTIFICATION PURSUANT TO SECTION 302
                        OF THE SARBANES-OXLEY ACT OF 2002

I, David H. Watts, Chief Executive Officer, certify that:

     1. I have reviewed this report on Form 10-Q of Granite Construction
     Incorporated;

     2. Based on my knowledge, this report does not contain any untrue statement
     of a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

     3. Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations, and cash flows of
     the registrant as of, and for, the periods presented in this report;

     4. The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

          a) Designed such disclosure controls and procedures, or caused such
          disclosure controls and procedures to be designed under our
          supervision, to ensure that material information relating to the
          registrant, including its consolidated subsidiaries, is made known to
          us by others within those entities, particularly during the period in
          which this report is being prepared;

          b) Evaluated the effectiveness of the registrant's disclosure controls
          and procedures and presented in this report our conclusions about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

          c) Disclosed in this report any change in the registrant's internal
          control over financial reporting that occurred during the registrant's
          most recent fiscal quarter (the registrant's fourth fiscal quarter in
          the case of an annual report) that has materially affected, or is
          reasonably likely to materially affect, the registrant's internal
          control over financial reporting; and

     5. The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of registrant's board of
     directors (or persons performing the equivalent function):





          a) All significant deficiencies and material weaknesses in the design
          or operation of internal control over financial reporting which are
          reasonably likely to adversely affect the registrant's ability to
          record, process, summarize and report financial information; and

          b) Any fraud, whether or not material, that involves management or
          other employees who have a significant role in the registrant's
          internal controls over financial reporting.

Dated: August 12, 2003                      /s/ David H. Watts
                                            ------------------------------------
                                            David H. Watts
                                            Chairman and Chief Executive Officer

EX-31.2

                                                                    Exhibit 31.2

                      CERTIFICATION PURSUANT TO SECTION 302
                        OF THE SARBANES-OXLEY ACT OF 2002

I, William E. Barton, Senior Vice President and Chief Financial Officer, certify
that:

     1. I have reviewed this report on Form 10-Q of Granite Construction
     Incorporated;

     2. Based on my knowledge, this report does not contain any untrue statement
     of a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

     3. Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations, and cash flows of
     the registrant as of, and for, the periods presented in this report;

     4. The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

          a) Designed such disclosure controls and procedures, or caused such
          disclosure controls and procedures to be designed under our
          supervision, to ensure that material information relating to the
          registrant, including its consolidated subsidiaries, is made known to
          us by others within those entities, particularly during the period in
          which this report is being prepared;

          b) Evaluated the effectiveness of the registrant's disclosure controls
          and procedures and presented in this report our conclusions about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

          c) Disclosed in this report any change in the registrant's internal
          control over financial reporting that occurred during the registrant's
          most recent fiscal quarter (the registrant's fourth fiscal quarter in
          the case of an annual report) that has materially affected, or is
          reasonably likely to materially affect, the registrant's internal
          control over financial reporting; and

     5. The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of registrant's board of
     directors (or persons performing the equivalent function):





          a) All significant deficiencies and material weaknesses in the design
          or operation of internal control over financial reporting which are
          reasonably likely to adversely affect the registrant's ability to
          record, process, summarize and report financial information; and

          b) Any fraud, whether or not material, that involves management or
          other employees who have a significant role in the registrant's
          internal controls over financial reporting.

Dated:   August 12, 2003                     /s/ William E. Barton
                                             -----------------------------------
                                             William E. Barton
                                             Senior Vice President
                                             and Chief Financial Officer

EX-32.1

                                                                    Exhibit 32.1

                      CERTIFICATION PURSUANT TO SECTION 906
                        OF THE SARBANES-OXLEY ACT OF 2002

         Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections
(a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the
undersigned officer of Granite Construction Incorporated (the "Company") does
hereby certify to such officer's knowledge that:

         The Quarterly Report on Form 10-Q for the quarter ended June 30, 2003
of the Company fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934, and information contained in the Form 10-Q
fairly presents in all material respects the financial condition and results of
operations of the Company.

Dated: August 12, 2003                       /s/ David H. Watts
                                             -----------------------------------
                                             David H. Watts
                                             Chairman of the Board &
                                             Chief Executive Officer

EX-32.2

                                                                    Exhibit 32.2

                      CERTIFICATION PURSUANT TO SECTION 906
                        OF THE SARBANES-OXLEY ACT OF 2002

         Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections
(a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the
undersigned officer of Granite Construction Incorporated (the "Company") does
hereby certify to such officer's knowledge that:

         The Quarterly Report on Form 10-Q for the quarter ended June 30, 2003
of the Company fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934, and information contained in the Form 10-Q
fairly presents in all material respects the financial condition and results of
operations of the Company.

Dated: August 12, 2003                       /s/ William E. Barton
                                             -----------------------------------
                                             William E. Barton
                                             Senior Vice President & Chief
                                             Financial Officer