Exhibit 10.3
 
(Multicurrency--Cross Border)
ISDAâ
International Swap Dealers Association, Inc.

MASTER AGREEMENT

dated as of    3/16/2010

SHELL ENERGY NORTH AMERICA (US), L.P. 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 defined 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.
 
 
 
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(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
larger aggregate amount over the smaller aggregate amount.

The parties may elect in respect of two or more Transactions 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 payments 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
 
 
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into (regardless of whether such action is taken or brought with respect to a
party to this Agreement) or (II) a Change in Tax Law.

(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 is entered into
and, in the case of the representations in Section 3(f), at all times until the
termination of this Agreement) that:

(a)           Basic Representations.

(i)   Status.  It is duly organized and validly existing under the laws of the
jurisdiction of its organization 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 authorize 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
 
 
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(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, reorganization, 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)).

(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 Representations.  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 Authorizations.  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.
 
 
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(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 11, 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,
organized, 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
 
 
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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 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.
 
 
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(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 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).
 
 
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(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.

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)(l), (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)(1) 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 or 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)(l) or a
Tax Event occurs and there are two Affected Parties, each 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
 
 
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Additional Termination Event if there is only one Affected Party may, by not
more than 20 days notice to the other party and provided that the relevant
Termination Event is then 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.
 
 
9
 
 
(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 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.

 
11
 
 
(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.

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 they 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 organization 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
 
 
12
 
 
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 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 answer back 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.
 
 
13
 
 
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 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 Transactions.

"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).
 
 
14
 
 
"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, authorization, 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.

"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 organized, 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 center, 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
 
 
15
 
 
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)(1) 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 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, organized, 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.
 
 
16
 
 
"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.

"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
 
 
17
 
 
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 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.

SHELL ENERGY NORTH AMERICA (US),
L.P.                                               GRANITE CONSTRUCTION
INCORPORATED
                                (Name of
Party)                                                                                                (Name
of Party)

By:           /s/ Glenn T.
Wright                                                                                      By:              /s/  Jigisha
Desai 
Name:              Glenn T.
Wright                                                                             Name:           Jigisha
Desai
Title:                      Senior Vice
President                                                                     Title:              Vice
President
Date:                      3/25/10                                                                                   Date:             April
1, 2010

 
18
 
 
SCHEDULE

to the

MASTER AGREEMENT
dated as of 16th March, 2010
between

SHELL ENERGY NORTH AMERICA (US), L.P.,
a limited partnership organized under
the laws of the State of Delaware
(“Party A”),
and

GRANITE CONSTRUCTION INCORPORATED,
a corporation organized under
the laws of the State of Delaware
(“Party B”).

Part 1.                Termination Provisions.
     
      (a)         “Specified Entity” means in relation to Party A for the
purpose of:

Section 5(a)(v), Not Applicable
Section 5(a)(vi), Not Applicable
Section 5(a)(vii), Not Applicable
Section 5(b)(iv), Not Applicable

and in relation to Party B for the purpose of:

Section 5(a)(v), Not Applicable
Section 5(a)(vi), Not Applicable
Section 5(a)(vii), Not Applicable
Section 5(b)(iv), Not Applicable

(b)           “Specified Transaction” will have the meaning specified in Section
14 of the Agreement.

(c)             (i)           Section 5(a)(vi) is hereby amended by deleting in
the seventh line thereof the words “, or becoming capable at such time of being
declared,”.

  (ii)           The “Cross Default” provisions of Section 5(a)(vi) as amended
will apply to Party A and to Party B.

"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 in the form of a revolving credit facility
agreement".
 
 
1
 
 
“Threshold Amount” means, with respect to Party A, US $50 million and, with
respect to Party B (and Party B's Credit Support Provider), US $10 million.

(d)           Section 5(a)(vii) is hereby amended by:  (i) adding in Clause (1)
thereof (third line) after the word “merger” and before the closed parenthetical
the words “or, in the case of Party A, reconstitution, reformation,
incorporation, or a Permitted Partnership Event” (as defined in Part 5(p)
hereof); and (ii) adding in Clause (5) thereof (fourteenth line) after the word
“merger” and before the closed parenthetical the words “or, in the case of Party
A, reconstitution, reformation, incorporation, or a Permitted Partnership
Event”.

(e)           The “Credit Event Upon Merger” provisions of Section 5(b)(iv) will
apply to Party A and Party B and is hereby amended and restated as follows:

“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 an applicable
Specified Entity of X consolidates or amalgamates with, or merges with or into,
transfers all or substantially all of its assets to, or reorganizes,
incorporates, reincorporates, or reconstitutes into or as, another entity
(collectively, a “CEUM Event”) and such action does not constitute an event
described in Section 5(a)(viii) but the creditworthiness of the resulting,
surviving or transferee entity (the “Resulting 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 the
Resulting Entity will be the Affected Party).

(f)           The “Automatic Early Termination” provision of Section 6(a) will
not apply to Party A or Party B.

(g)           Payments on Early Termination.  For the purpose of Section 6(e) of
this Agreement:

(i)           Either Market Quotation or Loss will apply, at the election of the
Non-defaulting Party or non-Affected Party, and Market Quotation will apply if
there are two Affected Parties.

(ii)           The Second Method will apply.

(h)           “Termination Currency” means United States Dollars.

(i)           Without limiting the applicability of any other provision of the
U.S. Bankruptcy Code as amended (the “Bankruptcy Code”) (including without
limitation Sections 362, 546, 556, and 560 thereof and the applicable
definitions in Section 101 thereof), the parties acknowledge and agree that all
Transactions entered into hereunder will constitute “forward contracts” or “swap
agreements” as defined in Section 101 of the Bankruptcy Code, that the rights of
the parties under Section 6 of this Agreement will constitute contractual rights
to liquidate Transactions, that any margin or collateral provided under any
margin, collateral, security, or similar agreement related hereto will
constitute a “margin payment” as defined in Section 101 of the Bankruptcy Code,
and that the parties are entitled to the rights under, and protections afforded
by, Sections 362, 546, 556, and 560 of the Bankruptcy Code.

(j)           Additional Event of Default.  None.
 
 
2
 
 
(k)           Additional Termination Event. The occurrence of a Credit Event
with respect to either party shall be an Additional Termination Event.   Upon
the occurrence of a Credit Event, the party subject to the Credit Event shall be
the Affected Party.

With respect to Party A, “Credit Event” shall mean that (i) Party A’s Credit
Rating shall cease to be at least Baa3 by Moody’s or BBB- by S & P, or (ii)
Party A shall cease to be so rated by at least one of the foregoing rating
agencies.

With respect to Party B, “Credit Event” shall mean the failure of Party B
(and/or its Credit Support Provider, if any) to provide adequate assurances to
Party A within five (5) days of Party A’s written demand for such assurance,
when such a demand is based upon Party A’s commercially reasonable good faith
belief, based on the financial condition of Party B (and/or its Credit Support
Provider, if any) that the ability of Party B (and/or its Credit Support
Provider, if any) to perform its obligations under this Agreement is materially
impaired. As used herein, “adequate assurances” shall mean Eligible Collateral
or other financial security in a form and amount reasonably satisfactory to
Party A, notwithstanding the amount of any margin Threshold set forth in the
Schedule to the Credit Support Annex attached hereto.

Part 2.                Tax Representations.

(a)           Payer Representations.  For the purpose of Section 3(e), Party A
and Party B each 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 this
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, however, 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 Representations. For the purpose of Section 3(f) of this
Agreement:

(i)           The following representation will apply to Party A:

 
Party A is a limited partnership organized under the laws of the State of
Delaware and is a resident of the United States of America and its U.S. taxpayer
identification number is 76-0480645.

(ii)   The following representation will apply to Party B:

Party B is a corporation organized under the laws of the State of Delaware and
is a resident of the United States of America and its U.S. taxpayer
identification number is 77-023983.
 
 
3
 
 
Part 3.                        Agreement to Deliver Documents.

For the purpose of Section 4(a), each party agrees to deliver the following
documents, as applicable:

(a)           Tax forms, documents, or certificates to be delivered are:

Party required to deliver document
Form/Document/Certificate
Date by which to be delivered
Party A and Party B
An executed United States Internal Revenue Service Form [Form W-9/W-8BEN/W-8ECI]
(or any successor form thereto)
(i) At execution of this Agreement and (ii) promptly after reasonable request by
the other party.

(b)           Other documents to be delivered are:

Party
to deliver
Form/Document/
Certificate
Date to be
Delivered
Covered by Section 3(d)
Party A and Party B
 
Most recently prepared annual financial statements of the party and its Credit
Support Provider, if any, certified by independent public accountants and
prepared in accordance with generally accepted accounting principles
 
As soon as available after request by the other party
Yes
Party A and Party B
Certified resolutions of the board of directors, or other evidence acceptable to
the other party, authorizing the use of ISDA Master Agreements and Transactions
of the type contemplated hereby
 
At execution of this Agreement
 
Yes
 
Party A and Party B
Certified incumbency certificate or other evidence of authority and specimen
signatures with respect to signatories executing this Agreement or any Credit
Support Document
At execution of this Agreement
Yes
Party B
Most recently prepared quarterly financial statements of Party B and its Credit
Support Provider, if any, prepared in accordance with generally accepted
accounting principles
 
As soon as available after request by Party A
Yes
Party A and Party B
Duly executed copy of the Credit Support Document[s] specified in Part 4(e) of
this Schedule
At execution of this Agreement
Yes

 
 
4
 
 
Part 4.  Miscellaneous.

(a)        Addresses for Notices. For the purpose of Section 12(a):

Address for notices or communications to Party A:-

Address:                       Shell Energy North America (US), L.P.
    909 Fannin, Plaza Level 1
    Houston, Texas 77010
Attention:                      Contracts North America
Facsimile
No.:               713-230-7580                                        Telephone
No.:  713-767-5400

With a copy of notices or communications pursuant to Sections 5 or 6 to:
Address:                       Shell Energy North America (US), L.P.
    909 Fannin, Plaza Level 1
    Houston, Texas 77010
Attention:                      General Counsel
Facsimile
No.:               713-230-2900                                  Telephone
No.:  713-767-5400

With a copy of notices, demands or communications pursuant to the Credit Support
Annex to:
Address:                       Shell Energy North America (US), L.P.
    909 Fannin, Plaza Level 1
    Houston, Texas 77010
Attention:                      Vice President – Credit
Facsimile
No.:               713-265-3030                                        Telephone
No.:  713-767-5329

Address for notices or communications to Party B:-

Address:                        585 W. Beach Street
    Watsonville, CA  95076
Attention:                       Ms. Ananya Mukherjee
Facsimile
No.:                831.768.4363                                         Telephone
No.: 831.707.4787

(b)           Process Agent. For the purpose of Section 13(c):-

Party A appoints as its Process Agent: N/A
Party B appoints as its Process Agent: N/A

(c)           Offices; Multibranch Parties.

(i)           The provisions of Section 10(a) will be applicable.

(ii)           For the purpose of Section 10(c):-

Party A is not a Multibranch Party.
Party B is not a Multibranch Party.

(d)           Calculation Agent. The Calculation Agent is Party A, unless
otherwise specified in a
 
 
5
 
 
Confirmation in relation to the relevant Transaction; provided, however, if an
Event of Default has occurred and is continuing with respect to Party A, then
Party B shall be Calculation Agent.  If any party disputes a calculation or
determination, the appropriate party will pay the undisputed amount to the other
party on the date that the payment originally was due, and the parties shall
endeavor to resolve the amount in dispute.  If they are unable to do so within a
commercially reasonable time, they shall mutually select a dealer in
transactions involving the applicable commodity to act as Calculation Agent with
respect to the issue in dispute.

(e)           Credit Support Document. Each of the following is a Credit Support
Document and is incorporated by reference in, and constitutes part of, this
Agreement and each Confirmation (unless provided otherwise in a Confirmation) as
if set forth in full in this Agreement or such Confirmation:
 
(i)  ISDA Credit Support Annex, of even date herewith, between Party A and Party
B;

(f)           Credit Support Provider.

(i)           Credit Support Provider means in relation to Party A:  Not
Applicable

(ii)           Credit Support Provider means in relation to Party B:  Not
Applicable

(g)           Governing Law.  This Agreement and each Confirmation will be
governed by, and construed and enforced in accordance with, the substantive law
of the State of New York (without reference to its choice of law doctrine, other
than Section 5-1401 of the New York General Obligations Law).

(h)           Netting of Payments. The limitation set forth in Section 2(c)(ii)
will not apply to any Transactions

(i)           “Affiliate” will have the meaning specified in Section 14 of this
Agreement; provided, however, for purposes of Section 3(c), "Affiliate" will
mean a party's Credit Support Provider, if any.

(j)           “Local Business Day” will have the meaning specified in Section 14
of this Agreement; provided, however, Local Business Day shall not include a
Saturday, Sunday, the Friday immediately following the Thanksgiving holiday or a
Federal Reserve Bank Holiday.

Part 5.                      Other Provisions.

(a)           Accuracy of Specified Information.  Section 3(d) is hereby amended
by adding in the third line thereof after the word “respect” and before the
period the words “or, in the case of audited or unaudited financial statements
or balance sheets, a fair presentation of the financial condition of the
relevant person”.

(b)           Reference Market-makers.  The definition of “Reference
Market-makers” in Section 14 is hereby amended by adding in the fourth line
thereof after the word “credit” the words “or to enter into transactions similar
in nature to Transactions”.

(c)           Jurisdiction.  The provisions of Section 13(b) shall apply subject
to the following:
 
 
6
 
 
    WAIVER OF JURY TRIAL.  EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT,
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY CREDIT SUPPORT
DOCUMENT.  EACH PARTY (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
THE OTHER PARTY OR ANY CREDIT SUPPORT PROVIDER HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF SUCH A SUIT, ACTION
OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) 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 AND CERTIFICATIONS IN THIS SECTION.

(d)           Definitions.  This Agreement, each Confirmation and each
Transaction are subject to the 2000 ISDA Definitions, as amended, and any other
definitions specified in the relevant Confirmation for such Transaction
(collectively, the “2000 Definitions”), each as published by the International
Swaps and Derivatives Association, Inc. (“ISDA”), and will be governed in all
respects by the 2000 Definitions (except that any references to “Swap
Transactions” in the 2000 Definitions will be deemed to be references to
“Transactions”).  The 2000 Definitions are incorporated by reference in, and
made part of, this Agreement and each relevant Confirmation as if set forth in
full in this Agreement and such Confirmation.  In the event of any inconsistency
between the 2000 Definitions and any other definitions incorporated into a
Confirmation, the definitions incorporated in the Confirmation will prevail for
the purpose of the relevant Transaction.  In the event of any inconsistency
between the provisions of this Agreement and the 2000 Definitions, this
Agreement will prevail.  In the event of any inconsistency between the
provisions of any Confirmation, this Agreement and the applicable 2000
Definitions, such Confirmation will prevail for the purpose of the relevant
Transaction.

(e)           Procedures for Entering into a Transaction.

(i) Section 9(e)(ii) is hereby amended by deleting “(whether orally or
otherwise”) and replacing it with “(whether directly or indirectly via brokers
or other intermediaries, orally, in writing, through an electronic marketplace,
or otherwise)”.

(ii) For each Transaction entered into hereunder, Party A shall promptly after
the date the parties reach agreement on the terms of a Transaction as
contemplated by the first sentence of Section 9(e)(ii), send to Party B a
Confirmation via facsimile transmission.  Party B agrees to respond to such
Confirmation within three (3) Local Business Days after receipt thereof by Party
B either confirming agreement thereto or requesting a correction for any
error(s) contained therein.  Failure by Party B to respond within such period
shall not affect the validity or enforceability of such Transaction and shall be
deemed to be an affirmation of the terms contained in such Confirmation, absent
manifest error on the Confirmation.  The Parties agree that any exchange of
facsimile transmissions shall constitute a Confirmation for all purposes
hereunder.

(f)           Set-off and Terminated Transactions.

(i) Upon the designation or deemed designation of an Early Termination Date, in
addition to and not in limitation of any other right or remedy (including any
right to setoff, counterclaim, or otherwise withhold payment) under applicable
law, the Non-defaulting Party or the non-Affected Party (in either case, “X”)
may, at its option and in its discretion, setoff any amounts payable by X (or
any of X’s Affiliates) to the Defaulting Party or Affected Party (in either
case, “Y”) under this Agreement or
 
 
7
 
 
otherwise, against any amounts payable by Y to X  (or any of X’s Affiliates)
under this Agreement or otherwise (irrespective of currency, place of payment or
booking office of obligation).  The obligations of Y and X under this Agreement
in respect of such amounts shall be deemed satisfied and discharged to the
extent of any such setoff. To the extent necessary, X may convert the amounts
subject to the setoff into the Termination Currency at the applicable prevailing
exchange rate.   X will give Y notice of any setoff effected under this section
as soon as practicable after the setoff is effected provided that failure to
give such notice shall not affect the validity of the setoff.

(ii)           Nothing herein shall be effective to create a charge or other
security interest.  This setoff provision shall be without prejudice and in
addition to any right of setoff, 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).  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.

(iii)           Notwithstanding any provision to the contrary contained in the
Agreement, X shall not be required to pay to Y any amount under Section 6(e)
until X receives confirmation satisfactory to it in its reasonable discretion
that all other obligations of any kind whatsoever (whether pursuant to Specified
Indebtedness as defined herein or otherwise) of Y to make any payments to X (or
any of X’s Affiliates) under this Agreement or otherwise, which are due and
payable as of the Early Termination Date hereof, have been fully and finally
performed.

(g)           Absence of Litigation.  Section 3(c) of this Agreement is hereby
amended by adding in the second line thereof, after the word “governmental”, the
words “or regulatory”.

(h)           Notice by Facsimile Transmission.  Section 12(a) of this Agreement
is hereby amended by inserting the words “or 13(c)” between the number “6” and
the word “may” in the second line thereof.

(i)           Recording of Conversations.  Each party to this Agreement
acknowledges and agrees to the tape or electronic recording of conversations
between the parties to this Agreement whether by one or both of the parties, and
that any such recordings may be submitted in evidence in any action or
proceeding relating to this Agreement or any Transaction.

(j)           Default Rate, Highest Lawful Rate.  The definition of “Default
Rate” set forth in Section 14 of the Agreement is hereby deleted in its entirety
and replaced with the following definition:

“Default Rate” means a per annum rate of interest equal to two percent (2%) over
the prime lending rate as may from time to time be published in The Wall Street
Journal under “Money Rates”.

Notwithstanding any provision to the contrary contained in this Agreement, in no
event shall the Default Rate, Non-default Rate or Termination Rate exceed the
Highest Lawful Rate (as defined in Part 5(p) hereof).

      (k)           LIMITATION OF LIABILITY.  NO PARTY SHALL BE REQUIRED TO PAY
OR BE LIABLE FOR SPECIAL, PUNITIVE, EXEMPLARY, INCIDENTAL, CONSEQUENTIAL OR
INDIRECT DAMAGES (WHETHER OR NOT ARISING FROM ITS NEGLIGENCE) TO ANY OTHER
PARTY; PROVIDED, HOWEVER, THAT NOTHING IN THIS PROVISION SHALL AFFECT THE
ENFORCEABILITY OF SECTION 6(e) OF THIS AGREEMENT.  IF AND TO THE
 
 
8
 
 
EXTENT ANY PAYMENT REQUIRED TO BE MADE PURSUANT TO THIS AGREEMENT IS DEEMED TO
CONSTITUTE LIQUIDATED DAMAGES, THE PARTIES ACKNOWLEDGE AND AGREE THAT SUCH
DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO DETERMINE AND THAT SUCH PAYMENT IS
INTENDED TO BE A REASONABLE APPROXIMATION OF THE AMOUNT OF SUCH DAMAGES AND NOT
A PENALTY.

(l)           Transfers.  Section 7 is hereby amended by (1) adding in the third
line thereof after the word “party” the words “which consent shall not be
unreasonably withheld or delayed” and (2) adding the following after subsection
(b) as a new paragraph:

(c)           Notwithstanding the foregoing, either party may transfer its
rights, obligations and interests (including rights to payments) hereunder, in
whole but not in part, without the consent of the other party, to any Affiliate
of such party provided that (i) the transferee is an entity formed or organized
under state law within the United States; and (ii) (A) the transferee is
assigned a Credit Rating equal to or better than the transferor; or (B) the
obligations of the transferee are guaranteed by the transferor, if the
transferor has no Credit Support Provider under this Agreement, or the
transferor’s Credit Support Provider, if any, in accordance with a guarantee
agreement (and any other applicable documentation) in form and substance
satisfactory to the non-transferring party.  The right of each party to transfer
its rights and obligations pursuant to this provision is subject to the
additional conditions that such transfer shall not give rise to a Potential
Event of Default, an Event of Default or Termination Event with respect to any
transferee, party, or Specified Entity.  Furthermore, promptly following the
transfer, the transferee shall give written notice to the other Party of its
Credit Rating as applicable.

(m)           Representations.  Section 3 of this Agreement is hereby amended by
adding the following additional Subsections:

(g)           No Agency.  It is entering into this Agreement and each
Transaction for its own account, as principal, and not as agent or in any other
capacity, fiduciary or otherwise.

(h)           Eligible Contract Participant.  It is an “eligible contract
participant” as such term is defined in Section 1a(12) of the Commodity Exchange
Act, as amended (the “Act”).

(i)           Electronic Trading Facility.  With respect to any Transaction
entered into by means of an electronic trading facility, it is an “eligible
commercial entity”, as defined in Section 1a(11) of the Act, it is acting as a
principal in such Transaction, and such Transaction is in an “exempt commodity”,
as defined in Section 1a(14) of the Act.

(j)           Line of Business.  It has entered into this Agreement (including
each Transaction evidenced hereby) in connection with the conduct of its
business or to manage the risk associated with an asset or liability owned or
incurred or reasonably likely to be owned or incurred by it in the conduct of
its business.

    (k)           No Reliance.  In connection with the negotiation of, the
entering into, and the confirming of the execution of, this Agreement, any
Credit Support Document to which it is a party, and each Transaction: (i) the
other party is not acting as a fiduciary or financial or investment advisor for
it; (ii) it is not relying upon any representations (whether written or oral) of
the other party other than the representations expressly set forth in this
Agreement and in such
 
 
9
 
 
 
Credit Support Document; (iii) it has consulted with its own legal, regulatory,
tax, business, investment, financial, and accounting advisors to the extent it
has deemed necessary, and it has made its own investment, hedging, and trading
decisions based upon its own judgment and upon any advice from such advisors as
it has deemed necessary and not upon any view expressed by the other party; (iv)
it has not been given by the other party (directly or indirectly through any
other person) any advice, counsel, assurance, guarantee, or representation
whatsoever as to the expected or projected success, profitability, return,
performance, result, effect, consequence, or benefit (either legal, regulatory,
tax, financial, accounting, or otherwise) of this Agreement, such Credit Support
Document, or such Transaction; (v) its decisions have been the result of arm's
length, individual negotiations between the parties; and (vi) it is entering
into this Agreement, such Credit Support Document, and such Transaction with a
full understanding of all of the risks hereof and thereof (economic and
otherwise), and it is capable of assuming and willing to assume (financially and
otherwise) those risks.

(n)           Merger Without Assumption.

(i) Section 5(a)(viii) is hereby amended by deleting the introductory paragraph
in its entirety and replacing it with the following:

“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, or reorganizes, incorporates, reincorporates, or reconstitutes
into or as, another entity and, at the time of such consolidation, amalgamation,
merger, transfer, reorganization, incorporation, reincorporation, or
reconstitution;”.

(ii)           Section 5(a)(viii) is hereby amended by adding in the first line
of Subparagraph (1) thereof and in the second line of Subparagraph (2) thereof
between the words “surviving” and “or” the words “, reorganized, reincorporated,
reconstituted,”.

(o)           Evidence of Market Quotations.  Section 6(d)(i) of this Agreement
is amended by changing the word “conclusive” in the seventh line to read “prima
facie”.

(p)           Additional Definitions.  Section 14 of the Agreement is hereby
amended to add the following definitions in their appropriate alphabetical
order:

(i) “Credit Rating” shall mean with respect to a party, on any date of
determination, the lower of its long-term senior unsecured debt rating (not
supported by third party credit enhancement) or its issuer rating by the
specified rating agency.

(ii) “Credit Watch” means the S&P or Moody’s ratings outlook, i.e., “Watch
Negative”, “Possible Downgrade”, “Review for Downgrade”, “Review for Possible
Downgrade” or other similar terminology.

            (iii) “Highest Lawful Rate” shall mean, with respect to each party,
the maximum non-usurious interest rate, if any, that at any time or from time to
time may be contracted for, taken, reserved, charged or received on the subject
indebtedness under the law applicable to such party which is presently in effect
or, to the extent allowed by law, may hereafter be in effect and which allows a
higher maximum non-usurious interest rate than applicable law presently allows.
 
 
10
 
 
                     (iv)  “Materially Weaker” shall be deemed to mean (i) the
Credit Rating (as defined in Part 5(p) hereof) of the Resulting Entity is less
than BBB- (Credit Watch) by S & P or Baa3 (Credit Watch) by Moody's (as defined
in Part 5(p) hereof), or ii the Resulting Entity is not rated by at least one of
the foregoing rating agencies and the other Party has a commercially reasonable
good faith insecurity, based on the financial condition of the Resulting Entity,
with regard to the ability of the Resulting Entity to meet the obligations
required of it under this Agreement immediately following the completion of the
transaction.

(v) “Moody's” shall mean Moody's Investors Service, Inc., or its successor.
 
            (vi) “Permitted Partnership Event” shall mean any reconstitution or
reformation of, withdrawal of a partner from, death of a partner of, or
admission of a partner to any of such entities, in each case after giving effect
to which (a) such entity continues to be a partnership organized under the laws
of the United States, (b) such entity continues to conduct substantially the
same business in which it was engaged immediately prior thereto, (c) no Event of
Default or Additional Event of Default shall have occurred hereunder, and (d)
the creditworthiness of such entity is not Materially Weaker than it was
immediately prior to such action.

   (vii) “S & P” shall mean Standard & Poor's Ratings Services, a division of
McGraw-Hill, Inc., or its successor.
 
      (q)           Confidentiality.  The terms of this Agreement any
Transaction under this Agreement and any financial statements delivered pursuant
to this Agreement are confidential and neither Party shall disclose them to any
third party (other than the Party’s directors, officers, employees, counsel,
accountants, consultants, independent contractors, subcontractors, agents,
auditors or lenders (collectively, “Representatives”) who have a need to know
such information), except for such information (i) as may become generally
available to the public, other than as a result of a violation of this
Agreement, (ii) as may be requested or required in connection with
any  litigation or any court or regulatory proceeding, or to comply with any
applicable law, order, regulation, ruling, or accounting disclosure rule or
standard, (iii) as may be obtained from a non-confidential source that disclosed
such information in a manner that did not violate its obligations to the
disclosing party or its Credit Support Provider in making such disclosure, (iv)
as may be furnished to the non-disclosing party’s Affiliates, and to their
Representatives who have a need to know such information, or (v)  constituting
the specific terms of a Transaction which may be disclosed to an entity for the
sole purpose of that entity aggregating and reporting to the public on an
aggregate basis price data for purchases and sales of financial derivative
products, so long as the counterparty identity is not disclosed.  .  With
respect to information provided in connection with a Transaction, this
obligation shall survive for a period of one (1) year following the expiration
or termination of such Transaction.  With respect to information provided in
connection with this Agreement, this obligation shall survive for a period of
one (1) year following the expiration or termination of this Agreement.  With
respect to any financial statements provided pursuant to this Agreement, this
obligation shall survive for a period of three (3) years following the date that
such financial information was provided.

      (r)           Existing Transactions.  To the extent that Party A and Party
B have entered into financial swaps, options or other financial derivative
transactions (“Existing Transactions”) prior to the execution of this Agreement,
they hereby agree that such Existing Transactions shall for all purposes be
deemed to be Transactions hereunder and shall be subject to all of the terms of
this Agreement.  The
 
 
11
 
 
provisions of this Agreement shall amend and supersede any conflicting
provisions set forth in any confirmation or other agreements governing the
Existing Transactions.
 
      (s)           Termination of the Agreement.  Unless an event described in
Section 5 has occurred and is continuing or an Early Termination Date has
occurred or been deemed to have occurred, each of the parties hereto may
terminate the Agreement at any time by at least thirty days' prior written
notice to the other party, provided that such termination will not affect any
outstanding Transaction and the provisions of this Agreement will continue to
apply until all the obligations of the parties under this Agreement have been
performed fully.

Part 6.                      Commodity Transactions.

The 1993 ISDA Commodity Derivatives Definitions, as supplemented by the 2000
Supplement (the “1993 Definitions”), are hereby incorporated by reference with
respect to any “Transactions”, as defined in the 1993 Definitions, in
commodities, except as otherwise specifically provided in the relevant
Confirmation.  In the event that there is any inconsistency between the 2000
Definitions and the 1993 Definitions, the 1993 Definitions will prevail with
respect to any Transaction in commodities.  The Confirmation for each such
Transaction shall be substantially in the form of either (a) one of the Exhibits
to the 1993 Definitions or, (b) in such other form as the parties may agree.

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.

SHELL ENERGY NORTH AMERICA (US), L.P.

By:  /s/ Glenn T.
Wright                                                                
Name:  Glenn T. Wright
Title:     Senior Vice President
Date:     3/25/10

GRANITE CONSTRUCTION INCORPORATED
 

By:  /s/ Jigisha
Desai                                                                
Name:  Jigisha Desai
Title:    Vice President
Date:     April 1, 2010
 
 
12
 
 
(Bilateral
Form)                                                                                                                                    (ISDA
Agreements Subject to New York Law Only)

ISDAâ
International Swaps and Derivatives Association, Inc.

CREDIT SUPPORT ANNEX

TO THE SCHEDULE TO THE

ISDA MASTER AGREEMENT

dated as of   3/16/2010

between

SHELL ENERGY NORTH AMERICA (US), L.P.
and                                                GRANITE CONSTRUCTION
INCORPORATED
    ("Party
A")                                                                                                           ("Party
B")

This Annex supplements, forms part of, and is subject to, the above-referenced
Agreement, is part of its Schedule and is a Credit Support Document under this
Agreement with respect to each party.

Accordingly, the parties agree as follows:

Paragraph 1.  Interpretation

(a)           Definitions and Inconsistency . Capitalized terms not otherwise
defined herein or elsewhere in this Agreement have the meanings specified
pursuant to Paragraph 12, and all references in this Annex to Paragraphs are to
Paragraphs of this Annex. In the event of any inconsistency between this Annex
and the other provisions of this Schedule, this Annex will prevail, and in the
event of any inconsistency between Paragraph 13 and the other provisions of this
Annex, Paragraph 13 will prevail.

(b)           Secured Party and Pledgor.  All references in this Annex to the
"Secured Party" will be to either party when acting in that capacity and all
corresponding references to the "Pledgor" will be to the other party when acting
in that capacity; provided, however, that if Other Posted Support is held by a
party to this Annex, all references herein to that party as the Secured Party
with respect to that Other Posted Support will be to that party as the
beneficiary thereof and will not subject that support or that party as the
beneficiary thereof to provisions of law generally relating to security
interests and secured parties.

Paragraph 2.  Security Interest

Each party, as the Pledgor, hereby pledges to the other party, as the Secured
Party, as security for its Obligations, and grants to the Secured Party a first
priority continuing security interest in, lien on and right of Set-off against
all Posted Collateral Transferred to or received by the Secured Party
hereunder.  Upon the Transfer by the Secured Party to the Pledgor of Posted
Collateral, the security interest and lien granted hereunder on that Posted
Collateral will be released immediately and, to the extent possible, without any
further action by either party.
 
 
 
 
 
Paragraph 3.  Credit Support Obligations

(a)           Delivery Amount.  Subject to Paragraphs 4 and 5, upon a demand
made by the Secured Party on or promptly following a Valuation Date, if the
Delivery Amount for that Valuation Date equals or exceeds the Pledgor's Minimum
Transfer Amount, then the Pledgor will Transfer to the Secured Party Eligible
Credit Support having a Value as of the date of Transfer at least equal to the
applicable Delivery Amount (rounded pursuant to Paragraph 13).  Unless otherwise
specified in Paragraph 13, the "Delivery Amount" applicable to the Pledgor for
any Valuation Date will equal the amount by which:

(i)           the Credit Support Amount
exceeds
(ii)           the Value as of that Valuation Date of all Posted Credit Support
held by the Secured Party.

(b)           Return Amount.  Subject to Paragraphs 4 and 5, upon a demand made
by the Pledgor on or promptly following a Valuation Date, if the Return Amount
for that Valuation Date equals or exceeds the Secured Party's Minimum Transfer
Amount, then the Secured Party will Transfer to the Pledgor Posted Credit
Support specified by the Pledgor in that demand having a Value as of the date of
Transfer as close as practicable to the applicable Return Amount (rounded
pursuant to Paragraph 13).  Unless otherwise specified in Paragraph 13, the
"Return Amount" applicable to the Secured Party for any Valuation Date will
equal the amount by which:

(i)           the Value as of that Valuation Date of all Posted Credit Support
held by the Secured Party
exceeds
(ii)           the Credit Support Amount.

"Credit Support Amount" means, unless otherwise specified in Paragraph 13, for
any Valuation Date (i) the Secured Party's Exposure for that Valuation Date plus
(ii) the aggregate of all Independent Amounts applicable to the Pledgor, if any,
minus (iii) all Independent Amounts applicable to the Secured Party, if any,
minus (iv) the Pledgor's Threshold; provided, however, that the Credit Support
Amount will be deemed to be zero whenever the calculation of Credit Support
Amount yields a number less than zero.

Paragraph 4.  Conditions Precedent, Transfer Timing, Calculations and
Substitutions

(a)           Conditions Precedent.  Each Transfer obligation of the Pledgor
under Paragraphs 3 and 5 and of the Secured Party under Paragraphs 3, 4(d)(ii),
5 and 6(d) is subject to the conditions precedent that:

(i)   no Event of Default, Potential Event of Default or Specified Condition has
occurred and is continuing with respect to the other party; and

(ii)   no Early Termination Date for which any unsatisfied payment obligations
exist has occurred or been designated as the result of an Event of Default or
Specified Condition with respect to the other party.

(b)           Transfer Timing.  Subject to Paragraphs 4(a) and 5 and unless
otherwise specified, if a demand for the Transfer of Eligible Credit Support or
Posted Credit Support is made by the Notification Time, then the relevant
Transfer will be made not later than the close of business on the next Local
Business Day; if a demand is made after the Notification Time, then the relevant
Transfer will be made not later than the close of business on the second Local
Business Day thereafter.

(c)           Calculations.  All calculations of Value and Exposure for purposes
of Paragraphs 3 and 6(d) will be made by the Valuation Agent as of the Valuation
Time.  The Valuation Agent will notify each party (or the other party, if the
Valuation Agent is a party) of its calculations not later than the Notification
Time on the Local Business Day following the applicable Valuation Date (or in
the case of Paragraph 6(d), following the date of calculation).
 
 
2
 
 
(d)           Substitutions.

(i)    Unless otherwise specified in Paragraph 13, upon notice to the Secured
Party specifying the items of Posted Credit Support to be exchanged, the Pledgor
may, on any Local Business Day, transfer to the Secured Party substitute
Eligible Credit Support (the "Substitute Credit Support"); and

(ii)   subject to Paragraph 4(a), the Secured Party will Transfer to the Pledgor
the items of Posted Credit Support specified by the Pledgor in its notice not
later than the Local Business Day following the date on which the Secured Party
receives the Substitute Credit Support, unless otherwise specified in Paragraph
13 (the "Substitution Date"); provided that the Secured Party will only be
obligated to Transfer Posted Credit Support with a Value as of the date of
Transfer of that Posted Credit Support equal to the Value as of that date of the
Substitute Credit Support.

Paragraph 5.  Dispute Resolution

If a party (a "Disputing Party") disputes (I) the Valuation Agent's calculation
of a Delivery Amount or a Return Amount or (II) the Value of any Transfer of
Eligible Credit Support or Posted Credit Support, then (1) the Disputing Party
will notify the other party and the Valuation Agent (if the Valuation Agent is
not the other party) not later than the close of business on the Local Business
Day following (X) the date that the demand is made under Paragraph 3 in the case
of (I) above or (Y) the date of Transfer in the case of (II) above, (2) subject
to Paragraph 4(a), the appropriate party will Transfer the undisputed amount to
the other party not later than the close of business on the Local Business Day
following (X) the date that the demand is made under Paragraph 3 in the case of
(I) above or (Y) the date of Transfer in the case of (II) above, (3) the parties
will consult with each other in an attempt to resolve the dispute and (4) if
they fail to resolve the dispute by the Resolution Time, then:

(i)   In the case of a dispute involving a Delivery Amount or Return Amount,
unless otherwise specified in Paragraph 13, the Valuation Agent will recalculate
the Exposure and the Value as of the Recalculation Date by:

(A) utilizing any calculations of Exposure for the Transactions (or Swap
Transactions) that the parties have agreed are not in dispute;

(B)calculating the Exposure for the Transactions (or Swap Transactions) in
dispute by seeking four actual quotations at mid-market from Reference
Market-makers for purposes of calculating Market Quotation, and taking the
arithmetic average of those obtained; provided that if four quotations are not
available for a particular Transaction (or Swap Transaction), then fewer than
four quotations may be used for that Transaction (or Swap Transaction); and if
no quotations are available for a particular Transaction (or Swap Transaction),
then the Valuation Agent's original calculations will be used for that
Transaction (or Swap Transaction); and

(C) utilizing the procedures specified in Paragraph 13 for calculating the
Value, if disputed, of Posted Credit Support.

(ii)   In the case of a dispute involving the Value of any Transfer of Eligible
Credit Support or Posted Credit Support, the Valuation Agent will recalculate
the Value as of the date of Transfer pursuant to Paragraph 13.

Following a recalculation pursuant to this Paragraph, the Valuation Agent will
notify each party (or the other party, if the Valuation Agent is a party) not
later than the Notification Time on the Local Business Day following the
Resolution Time.  The appropriate party will, upon demand following that notice
by the Valuation Agent or a resolution pursuant to (3) above and subject to
Paragraphs 4(a) and 4(b), make the appropriate Transfer.

 
3
 
 
Paragraph 6.  Holding and Using Posted Collateral

(a)           Care of Posted Collateral.  Without limiting the Secured Party's
rights under Paragraph 6(c), the Secured Party will exercise reasonable care to
assure the safe custody of all Posted Collateral to the extent required by
applicable law, and in any event the Secured Party will be deemed to have
exercised reasonable care if it exercises at least the same degree of care as it
would exercise with respect to its own property. Except as specified in the
preceding sentence, the Secured Party will have no duty with respect to Posted
Collateral, including, without limitation, any duty to collect any
Distributions, or enforce or preserve any rights pertaining thereto.

(b)           Eligibility to Hold Posted Collateral; Custodians.

(i)   General.  Subject to the satisfaction of any conditions specified in
Paragraph 13 for holding Posted Collateral, the Secured Party will be entitled
to hold Posted Collateral or to appoint an agent (a "Custodian") to hold Posted
Collateral for the Secured Party.  Upon notice by the Secured Party to the
Pledgor of the appointment of a Custodian, the Pledgor's obligations to make any
Transfer will be discharged by making the Transfer to that Custodian.  The
holding of Posted Collateral by a Custodian will be deemed to be the holding of
that Posted Collateral by the Secured Party for which the Custodian is acting.

(ii)   Failure to Satisfy Conditions.  If the Secured Party or its Custodian
fails to satisfy any conditions for holding Posted Collateral, then upon a
demand made by the Pledgor, the Secured Party will, not later than five Local
Business Days after the demand, Transfer or cause its Custodian to Transfer all
Posted Collateral held by it to a Custodian that satisfies those conditions or
to the Secured Party if it satisfies those conditions.

(iii)   Liability.  The Secured Party will be liable for the acts or omissions
of its Custodian to the same extent that the Secured Party would be liable
hereunder for its own acts or omissions.

(c)           Use of Posted Collateral.  Unless otherwise specified in Paragraph
13 and without limiting the rights and obligations of the parties under
Paragraphs 3, 4(d)(ii), 5, 6(d) and 8, if the Secured Party is not a Defaulting
Party or an Affected Party with respect to a Specified Condition and no Early
Termination Date has occurred or been designated as the result of an Event of
Default or Specified Condition with respect to the Secured Party, then the
Secured Party will, notwithstanding Section 9-207 of the New York Uniform
Commercial Code, have the right to:

(i)   sell, pledge, rehypothecate, assign, invest, use, commingle or otherwise
dispose of, or otherwise use in its business any Posted Collateral it holds,
free from any claim or right of any nature whatsoever of the Pledgor, including
any equity or right of redemption by the Pledgor; and

(ii)           register any Posted Collateral in the name of the Secured Party,
its Custodian or a nominee for either.

For purposes of the obligation to Transfer Eligible Credit Support or Posted
Credit Support pursuant to Paragraphs 3 and 5 and any rights or remedies
authorized under this Agreement, the Secured Party will be deemed to continue to
hold all Posted Collateral and to receive Distributions made thereon, regardless
of whether the Secured Party has exercised any rights with respect to any Posted
Collateral pursuant to (i) or (ii) above.

(d)           Distributions and Interest Amount.

(i)           Distributions.  Subject to Paragraph 4(a), if the Secured Party
receives or is deemed to receive Distributions on a Local Business Day, it will
Transfer to the Pledgor not later than the following Local Business Day any
Distributions it receives or is deemed to receive to the extent that a Delivery
Amount would not be created or increased by that Transfer, as calculated by the
Valuation Agent (and the date of calculation will be deemed to be a Valuation
Date for this purpose).
 
 
4
 
 
(ii)   Interest Amount.  Unless otherwise specified in Paragraph 13 and subject
to Paragraph 4(a), in lieu of any interest, dividends or other amounts paid or
deemed to have been paid with respect to Posted Collateral in the form of Cash
(all of which may be retained by the Secured Party), the Secured Party will
Transfer to the Pledgor at the times specified in Paragraph 13 the Interest
Amount to the extent that a Delivery Amount would not be created or increased by
that Transfer, as calculated by the Valuation Agent (and the date of calculation
will be deemed to be a Valuation Date for this purpose).  The Interest Amount or
portion thereof not Transferred pursuant to this Paragraph will constitute
Posted Collateral in the form of Cash and will be subject to the security
interest granted under Paragraph 2.

Paragraph 7.  Events of Default

For purposes of Section 5(a)(iii)(1) of this Agreement, an Event of Default will
exist with respect to a party if:

(i)   that party fails (or fails to cause its Custodian) to make, when due, any
Transfer of Eligible Collateral, Posted Collateral or the Interest Amount, as
applicable, required to be made by it and that failure continues for two Local
Business Days after notice of that failure is given to that party;

(ii)   that party fails to comply with any restriction or prohibition specified
in this Annex with respect to any of the rights specified in Paragraph 6(c) and
that failure continues for five Local Business Days after notice of that failure
is given to that party; or

(iii)   that party fails to comply with or perform any agreement or obligation
other than those specified in Paragraphs 7(i) and 7(ii) and that failure
continues for 30 days after notice of that failure is given to that party.

Paragraph 8.  Certain Rights and Remedies

(a)           Secured Party's Rights and Remedies.  If at any time (1) an Event
of Default or Specified Condition with respect to the Pledgor has occurred and
is continuing or (2) an Early Termination Date has occurred or been designated
as the result of an Event of Default or Specified Condition with respect to the
Pledgor, then, unless the Pledgor has paid in full all of its Obligations that
are then due, the Secured Party may exercise one or more of the following rights
and remedies:

(i)   all rights and remedies available to a Secured Party under applicable law
with respect to Posted Collateral held by the Secured Party;

(ii)   any other rights and remedies available to the Secured Party under the
terms of Other Posted Support, if any;

(iii)   the right to Set-off any amounts payable by the Pledgor with respect to
any Obligations against any Posted Collateral or the Cash equivalent of any
Posted Collateral held by the Secured Party (or any obligation of the Secured
Party to Transfer that Posted Collateral); and

(iv)   the right to liquidate any Posted Collateral held by the Secured Party
through one or more public or private sales or other dispositions with such
notice, if any, as may be required under applicable law, free from any claim or
right of any nature whatsoever of the Pledgor, including any equity or right of
redemption by the Pledgor (with the Secured Party having the right to purchase
any or all of the Posted Collateral to be sold) and to apply the proceeds (or
the Cash equivalent thereof) from the liquidation of the Posted Collateral to
any amounts payable by the Pledgor with respect to any Obligations in that order
as the Secured Party may elect.

Each party acknowledges and agrees that Posted Collateral in the form of
securities may decline speedily in value and is of a type customarily sold on a
recognized market, and, accordingly, the Pledgor is not entitled to prior notice
of any sale of that Posted Collateral by the Secured Party, except any notice
that is required under applicable law and cannot be waived.
 
 
5
 
 
(b)           Pledgor's Rights and Remedies.  If at any time an Early
Termination Date has occurred or been designated as the result of an Event of
Default or Specified Condition with respect to the Secured Party, then (except
in the case of an Early Termination Date relating to less than all Transactions
(or Swap Transactions) where the Secured Party has paid in full all of its
obligations that are then due under Section 6(e) of this Agreement):

(i)   the Pledgor may exercise all rights and remedies available to a Pledgor
under applicable law with respect to Posted Collateral held by the Secured
Party;

(ii)   the Pledgor may exercise any other rights and remedies available to the
Pledgor under the terms of Other Posted Support, if any;

(iii)   the Secured Party will be obligated immediately to Transfer all Posted
Collateral and the Interest Amount to the Pledgor; and

(iv)   to the extent that Posted Collateral or the Interest Amount is not so
Transferred pursuant to (iii) above, the Pledgor may:

(A)Set-off any amounts payable by the Pledgor with respect to any Obligations
against any Posted Collateral or the Cash equivalent of any Posted Collateral
held by the Secured Party (or any obligation of the Secured Party to Transfer
that Posted Collateral); and

(B)to the extent that the Pledgor does not Set-off under (iv)(A) above, withhold
payment of any remaining amounts payable by the Pledgor with respect to any
Obligations, up to the Value of any remaining Posted Collateral held by the
Secured Party, until that Posted Collateral is Transferred to the Pledgor.

(c)           Deficiencies and Excess Proceeds.  The Secured Party will Transfer
to the Pledgor any proceeds and Posted Credit Support remaining after
liquidation, Set-off and/or application under Paragraphs 8(a) and 8(b) after
satisfaction in full of all amounts payable by the Pledgor with respect to any
Obligations; the Pledgor in all events will remain liable for any amounts
remaining unpaid after any liquidation, Set-off and/or application under
Paragraphs 8(a) and 8(b).

(d)           Final Returns.  When no amounts are or thereafter may become
payable by the Pledgor with respect to any Obligations (except for any potential
liability under Section 2(d) of this Agreement), the Secured Party will Transfer
to the Pledgor all Posted Credit Support and the Interest Amount, if any.

Paragraph 9.  Representations

Each party represents to the other party (which representations will be deemed
to be repeated as of each date on which it, as the Pledgor, Transfers Eligible
Collateral) that:

(i)   it has the power to grant a security interest in and lien on any Eligible
Collateral it Transfers as the Pledgor and has taken all necessary actions to
authorize the granting of that security interest and lien;

(ii)   it is the sole owner of or otherwise has the right to Transfer all
Eligible Collateral it Transfers to the Secured Party hereunder, free and clear
of any security interest, lien, encumbrance or other restrictions other than the
security interest and lien granted under Paragraph 2;

(iii)   upon the Transfer of any Eligible Collateral to the Secured Party under
the terms of this Annex, the Secured Party will have a valid and perfected first
priority security interest therein (assuming that any central clearing
corporation or any third-party financial intermediary or other entity not within
the control of the Pledgor involved in the Transfer of that Eligible Collateral
gives the notices and takes the action required of it under applicable law for
perfection of that interest); and

 
6
 
 
(iv)   the performance by it of its obligations under this Annex will not result
in the creation of any security interest, lien or other encumbrance on any
Posted Collateral other than the security interest and lien granted under
Paragraph 2.

Paragraph 10.  Expenses

(a)           General.  Except as otherwise provided in Paragraphs 10(b) and
10(c), each party will pay its own costs and expenses in connection with
performing its obligations under this Annex and neither party will be liable for
any costs and expenses incurred by the other party in connection herewith.

(b)           Posted Credit Support.  The Pledgor will promptly pay when due all
taxes, assessments or charges of any nature that are imposed with respect to
Posted Credit Support held by the Secured Party upon becoming aware of the same,
regardless of whether any portion of that Posted Credit Support is subsequently
disposed of under Paragraph 6(c), except for those taxes, assessments and
charges that result from the exercise of the Secured Party's rights under
Paragraph 6(c).

(c)           Liquidation/Application of Posted Credit Support.  All reasonable
costs and expenses incurred by or on behalf of the Secured Party or the Pledgor
in connection with the liquidation and/or application of any Posted Credit
Support under Paragraph 8 will be payable, on demand and pursuant to the
Expenses Section of this Agreement, by the Defaulting Party or, if there is no
Defaulting Party, equally by the parties.

Paragraph 11.  Miscellaneous

(a)           Default Interest.  A Secured Party that fails to make, when due,
any Transfer of Posted Collateral or the Interest Amount will be obligated to
pay the Pledgor (to the extent permitted under applicable law) an amount equal
to interest at the Default Rate multiplied by the Value of the items of property
that were required to be Transferred, from (and including) the date that Posted
Collateral or Interest Amount was required to be Transferred to (but excluding)
the date of Transfer of that Posted Collateral or Interest Amount.  This
interest will be calculated on the basis of daily compounding and the actual
number of days elapsed.

(b)           Further Assurances. Promptly following a demand made by a party,
the other party will execute, deliver, file and record any financing statement,
specific assignment or other document and take any other action that may be
necessary or desirable and reasonably requested by that party to create,
preserve, perfect or validate any security interest or lien granted under
Paragraph 2, to enable that party to exercise or enforce its rights under this
Annex with respect to Posted Credit Support or an Interest Amount or to effect
or document a release of a security interest on Posted Collateral or an Interest
Amount.

(c)           Further Protection.  The Pledgor will promptly give notice to the
Secured Party of, and defend against, any suit, action, proceeding or lien that
involves Posted Credit Support Transferred by the Pledgor or that could
adversely affect the Security interest and lien granted by it under Paragraph 2,
unless that suit, action, proceeding or lien results from the exercise of the
Secured Party's rights under Paragraph 6(c).

(d)           Good Faith and Commercially Reasonable Manner.  Performance of all
obligations under this Annex, including, but not limited to, all calculations,
valuations and determinations made by either party, will be made in good faith
and in a commercially reasonable manner.

(e)           Demands and Notices.  All demands and notices made by a party
under this Annex will be made as specified in the Notices Section of this
Agreement, except as otherwise provided in Paragraph 13.

(f)           Specifications of Certain Matters.  Anything referred to in this
Annex as being specified in Paragraph 13 also may be specified in one or more
Confirmations or other documents and this Annex will be construed accordingly.
 
 
7
 
 
Paragraph 12.  Definitions

As used in this Annex:

"Cash" means the lawful currency of the United States of America.

"Credit Support Amount" has the meaning specified in Paragraph 3.

"Custodian" has the meaning specified in Paragraphs 6(b)(i) and 13.

"Delivery Amount" has the meaning specified in Paragraph 3(a).

"Disputing Party" has the meaning specified in Paragraph 5.

"Distributions" means with respect to Posted Collateral other than Cash, all
principal, interest and other payments and distributions of cash or other
property with respect thereto, regardless of whether the Secured Party has
disposed of that Posted Collateral under Paragraph 6(c). Distributions will not
include any item of property acquired by the Secured Party upon any disposition
or liquidation of Posted Collateral or, with respect to any Posted Collateral in
the form of Cash, any distributions on that collateral, unless otherwise
specified herein.

"Eligible Collateral" means, with respect to a party, the items, if any,
specified as such for that party in Paragraph 13.

"Eligible Credit Support" means Eligible Collateral and Other Eligible Support.

"Exposure" means for any Valuation Date or other date for which Exposure is
calculated and subject to Paragraph 5 in the case of a dispute, the amount, if
any, that would be payable to a party that is the Secured Party by the other
party (expressed as a positive number) or by a party that is the Secured Party
to the other party (expressed as a negative number) pursuant to Section
6(e)(ii)(2)(A) of this Agreement as if all Transactions (or Swap Transactions)
were being terminated as of the relevant Valuation Time; provided that Market
Quotation will be determined by the Valuation Agent using its estimates at
mid-market of the amounts that would be paid for Replacement Transactions (as
that term is defined in the definition of "Market Quotation").

"Independent Amount" means, with respect to a party, the  amount specified as
such for that party in Paragraph 13; if no amount is specified, zero.

"Interest Amount" means, with respect to an Interest Period, the aggregate sum
of the amounts of interest calculated for each day in that Interest Period on
the principal amount of Posted Collateral in the form of Cash held by the
Secured Party on that day, determined by the Secured Party for each such day as
follows:

(x) the amount of that Cash on that day; multiplied by
(y) the Interest Rate in effect for that day; divided by
(z) 360.

"Interest Period" means the period from (and including) the last Local Business
Day on which an Interest Amount was Transferred (or, if no Interest Amount has
yet been Transferred, the Local Business Day on which Posted Collateral in the
form of Cash was Transferred to or received by the Secured Party) to (but
excluding) the Local Business Day on which the current Interest Amount is to be
Transferred.

"Interest Rate" means the rate specified in Paragraph 13.

"Local Business Day", unless otherwise specified in Paragraph 13, has the
meaning specified in the Definitions Section of this Agreement, except that
references to a payment in clause (b) thereof will be deemed to include a
Transfer under this Annex.
 
 
8
 
 
"Minimum Transfer Amount" means, with respect to a party, the amount specified
as such for that party in Paragraph 13; if no amount is specified, zero.

"Notification Time" has the meaning specified in Paragraph 13.

"Obligations" means, with respect to a party, all present and future obligations
of that party under this Agreement and any additional obligations specified for
that party in Paragraph 13.

"Other Eligible Support" means, with respect to a party, the items, if any,
specified as such for that party in Paragraph 13.

"Other Posted Support" means all Other Eligible Support Transferred to the
Secured Party that remains in effect for the benefit of that Secured Party.

"Pledgor" means either party, when that party (i) receives a demand for or is
required to Transfer Eligible Credit Support under Paragraph 3(a) or (ii) has
Transferred Eligible Credit Support under Paragraph 3(a).

"Posted Collateral" means all Eligible Collateral, other property,
Distributions, and all proceeds thereof that have been Transferred to or
received by the Secured Party under this Annex and not Transferred to the
Pledgor pursuant to Paragraph 3(b), 4(d)(ii) or 6(d)(i) or released by the
Secured Party under Paragraph 8. Any Interest Amount or portion thereof not
Transferred pursuant to Paragraph 6(d)(ii) will constitute Posted Collateral in
the form of Cash.

"Posted Credit Support" means Posted Collateral and Other Posted Support.

"Recalculation Date" means the Valuation Date that gives rise to the dispute
under Paragraph 5; provided, however, that if a subsequent Valuation Date occurs
under Paragraph 3 prior to the resolution of the dispute, then the
"Recalculation Date" means the most recent Valuation Date under Paragraph 3.

"Resolution Time" has the meaning specified in Paragraph 13.

"Return Amount" has the meaning specified in Paragraph 3(b).

"Secured Party" means either party, when that party (i) makes a demand for or is
entitled to receive Eligible Credit Support under Paragraph 3(a) or (ii) holds
or is deemed to hold Posted Credit Support.

"Specified Condition" means, with respect to a party, any event specified as
such for that party in Paragraph 13.

"Substitute Credit Support" has the meaning specified in Paragraph 4(d)(i).

"Substitution Date" has the meaning specified in Paragraph 4(d)(ii).

"Threshold" means, with respect to a party, the amount specified as such for
that party in Paragraph 13; if no amount is specified, zero.

"Transfer" means, with respect to any Eligible Credit Support, Posted Credit
Support or Interest Amount, and in accordance with the instructions of the
Secured Party, Pledgor or Custodian, as applicable:

(i)           in the case of Cash, payment or delivery by wire transfer into one
or more bank accounts specified by the recipient;

(ii)           in the case of certificated securities that cannot be paid or
delivered by book-entry, payment or delivery in appropriate physical form to the
recipient or its account accompanied by any duly executed instruments of
 
 
9
 
 
transfer, assignments in blank, transfer tax stamps and any other documents
necessary to constitute a legally valid transfer to the recipient;

(iii)   in the case of securities that can be paid or delivered by book-entry,
the giving of written instructions to the relevant depository institution or
other entity specified by the recipient, together with a written copy thereof to
the recipient, sufficient if complied with to result in a legally effective
transfer of the relevant interest to the recipient; and

(iv)           in the case of Other Eligible Support or Other Posted Support, as
specified in Paragraph 13.

"Valuation Agent" has the meaning specified in Paragraph 13.

"Valuation Date" means each date specified in or otherwise determined pursuant
to Paragraph 13.

"Valuation Percentage" means, for any item of Eligible Collateral, the
percentage specified in Paragraph 13.

"Valuation Time" has the meaning specified in Paragraph 13.

"Value" means for any Valuation Date or other date for which Value is calculated
and subject to Paragraph 5 in the case of a dispute, with respect to:

(i)   Eligible Collateral or Posted Collateral that is:

(A) Cash, the amount thereof; and

(B) a security, the bid price obtained by the Valuation Agent multiplied by the
applicable Valuation Percentage, if any;

(ii)           Posted Collateral that consists of items that are not specified
as Eligible Collateral, zero; and

(iii)           Other Eligible Support and Other Posted Support, as specified in
Paragraph 13.
 
 
10
 
 
CREDIT SUPPORT ANNEX
TO THE SCHEDULE TO THE
ISDA MASTER AGREEMENT

dated as of 16th March, 2010
between

SHELL ENERGY NORTH AMERICA (US), L.P.(“Party A”).

and

GRANITE CONSTRUCTION INCORPORATED (Party “B”)

Paragraph 13.                                Elections and Variables

 
(a)
Security Interest for “Obligations”.  The term “Obligations” as used in this
Annex includes the following additional obligations:

 
With respect to Party A: None

With respect to Party B: None

 
(b)
Credit Support Obligations.

(i)         Delivery Amount, Return Amount and Credit Support Amount:

(A)           “Delivery Amount” has the meaning specified in Paragraph 3(a).

(B)           “Return Amount” has the meaning specified in Paragraph 3(b).

(C)           “Credit Support Amount” has the meaning specified in Paragraph 3.

(ii)         Eligible Collateral.  The following items will qualify as “Eligible
Collateral” for the party specified:

Eligible Collateral
Party A
Party B
Valuation Percentage
(A)Cash
[X]
[X]
100%
(B)Other:
N/A
N/A
N/A

  (iii)           Other Eligible Support.  The following items will qualify as
“Other Eligible Support” for the party specified:
 
 
 
 
 
 
Other
Eligible Support
Party A
Party B
Valuation
Percentage
Letter of Credit (as described in Paragraph 13(j)).
[X]
[X]
100% of the Value of the Other Eligible Support unless (i) a Letter of Credit
Default shall apply with respect to such Letter of Credit, or (ii) fifteen or
fewer Business Days remain prior to the expiration of such Letter of Credit, in
either of which case the Valuation Percentage shall be zero.

 
(iv)
Thresholds.

(A)           “Independent Amount” means with respect to Party A: Not
Applicable.
“Independent Amount” means with respect to Party B: Not Applicable.
 
(B)           “Threshold” means, with respect to Party A on any date of
determination, the lower of , , (i) the amount set forth in the following table
opposite the lowest applicable Credit Rating for Party A, or (ii) zero if on
that date an Event of Default has occurred and is continuing with respect to
Party A;
 

 
Moody’s
S&P
Security Threshold
Baa1 or above
BBB+ or above
$30,000,000
Baa2
BBB
$15,000,000
Baa3
                  BBB-
$10,000,000
Baa3 (Credit Watch)
 BBB- (Credit Watch)
$0
Below Baa3
Below BBB-
$0

 
“Threshold” means, with respect to Party B, the lower of (i) U.S. $5,000,000,
(ii) if Party B’s Credit Support Provider is providing a guaranty as a Credit
Support Document to this Agreement, the amount of any dollar limit contained in
such guaranty, or (iii) if an Event of Default or Additional Termination Event
has occurred and is continuing with respect to Party B, then the Threshold for
Party B will be zero:
 

(C) “Minimum Transfer Amount” means $100,000

(D)  Rounding.  The Delivery Amount will be rounded up, and the Return Amount
will be rounded down, to the nearest integral multiple of $100,000.

 
(c)
Valuation and Timing.

(i)           “Valuation Agent” means, for purposes of Paragraphs 3 and 5, the
party making the demand under Paragraph 3, and for the purposes of Paragraph
6(d), the Secured Party receiving or deemed to receive the Distributions or the
Interest Amount, as applicable; provided, however, that in all cases, if an
Event of Default, or Potential Event of Default, has occurred and is continuing
with respect to the party designated as the Valuation Agent, then, in such case,
and for so long as the Event of Default or Potential Event of Default continues,
the other party will be the Valuation Agent.
 
 
 
 
 
(ii)           “Valuation Date” means any Local Business Day.

(iii)           “Valuation Time” means:

[X]           the close of business in the city of the Valuation Agent on the
Valuation Date or date of calculation, as applicable;

[   ]           the close of business on the Local Business Day before the
Valuation Date or date of calculation, as applicable;

provided, that the calculations of Value and Exposure will be made as of
approximately the same time on the same date.

(iv)           “Notification Time” means 1:00 p.m., New York time, on a Local
Business Day.

(d)           Conditions Precedent and Secured Party's Rights and Remedies.  The
following Termination Event(s) will be a “Specified Condition” for the party
specified (that party being the Affected Party if the Termination Event occurs
with respect to that party):

Termination Event
 
Party A
Party B
Illegality
Not Applicable
Not Applicable
Tax Event
Not Applicable
Not Applicable
Tax Event Upon Merger
Not Applicable
Not Applicable
Credit Event Upon Merger
Applicable
Applicable
Additional Termination Event(s)
Applicable
Applicable

(e)
Substitution.

 
(i)
“Substitution Date” has the meaning specified in Paragraph 4(d)(ii).

(ii)           Consent.  Inapplicable, which means that no consent of the
Secured Party is required for any substitution pursuant to Paragraph 4(d).

(f)           Dispute Resolution.

(i)           “Resolution Time” means 1:00 p.m., New York time, on the Local
Business Day following the date on which the notice is given that gives rise to
a dispute under Paragraph 5.

(ii)           Value.  For the purpose of Paragraphs 5(i)(C) and 5(ii), the
Value of Posted Credit Support in the form of Cash will be the face amount
thereof.

(iii)           Alternative.  The provisions of Paragraph 5 will apply.

(g)
Holding and Using Posted Collateral.

(i)           Eligibility to Hold Posted Collateral; Custodians.
 
 
 
 
 
Party A and its Custodian will be entitled to hold Posted Collateral pursuant to
Paragraph 6(b); provided that the following conditions applicable to it are
satisfied:

(1)      No Event of Default or Additional Termination Event has occurred and is
continuing with respect to Party A.

(2)      Posted Collateral may be held only in the following jurisdictions:
United States of America.

(3)      Party A maintains a Credit Rating of at least A3 by Moody’s or at least
A- by S & P.

(4)      The Custodian, if applicable, for Party A is a Qualified Institution
and shall hold all Posted Collateral in a Collateral Account (as defined in
Paragraph 13(k) hereof).

If the conditions in g(i)(1), (2) and (3) are not satisfied with respect to
Party A, then Party A shall be required to hold Posted Collateral with a
Custodian.

Initially, the Custodian for Party A is not applicable.

Party B and its Custodian will be entitled to hold Posted Collateral pursuant to
Paragraph 6(b); provided that the following conditions applicable to it are
satisfied:

(1)      No Event of Default or Additional Termination Event has occurred and is
continuing with respect to Party B.

(2)      Posted Collateral may be held only in the following jurisdictions:
United States of America.

(3)      Party B or its Credit Support Provider, as applicable, maintains a
Credit Rating of at least A3 by Moody’s or at least A- by S & P.

(4)      The Custodian, if applicable, for Party B is a Qualified Institution
and shall hold all Posted Collateral in a Collateral Account.

If the conditions in g(i)(1), (2) and (3) are not satisfied with respect to
Party B, then Party B shall be required to hold Posted Collateral with a
Custodian.

Initially, the Custodian for Party B is not applicable.

In the event a party eligible to hold Posted Collateral no longer satisfies the
conditions set forth in g(i)(1),(2) and (3) (a “Downgrade Event”), it shall hold
all Posted Collateral in a Collateral Account with a Custodian and shall deliver
(or cause to be delivered), not later than the close of business on the second
Local Business Day following such Downgrade Event, all Posted Collateral in its
possession or held on its behalf to a Collateral Account in a Custodian.

The Secured Party may direct the Pledgor to transfer or deliver Eligible
Collateral directly into the Secured Party's Collateral Account(s).  The Secured
Party may move the Collateral Accounts from one Custodian to another upon
reasonable notice to the Pledgor.
 
 
 
 
 
The Secured Party shall have no interest in the Posted Collateral except the
security interest, lien and right of Set-off granted in Paragraph 2 until it has
acquired some greater interest by exercise of its rights pursuant to Paragraph
8.  The Secured Party shall cause statements concerning the Posted Collateral
transferred or delivered by the Pledgor to be sent to the Pledgor on request,
which may not be made more frequently than once in each calendar month.

The Custodian, if applicable, for a party must be a Qualified Institution and
shall hold all Posted Collateral in a Collateral Account.  In the event the
Custodian holding Posted Collateral for the Secured Party ceases to meet the
requirements to be a Qualified Institution, the Secured Party shall transfer the
Posted Collateral to another Custodian within ten (10) Local Business Days after
it receives notice of such event.

(ii)           Use of Posted Collateral.  The provisions of Paragraph 6(c) will
apply to Party A and Party B; provided, however, if a party is required to hold
Posted Collateral with a Custodian because conditions 13(g)(i)(1), (2) and (3)
are not satisfied, then Paragraph 6(c) will not apply to such party.

(h)
Distributions and Interest Amount.

(i)           Interest Rate.  The “Interest Rate” will be at a rate per annum
equal to the Federal Funds Rate determined daily as provided in the Definitions
for USD - Federal Funds- H.15.  Such interest shall be calculated on the basis
of the actual number of days elapsed and on the basis of a year of 360 days.

(ii)           Transfer of Interest Amount.  Upon request, the Transfer of the
Interest Amount will be made monthly on the last Local Business Day of each
calendar month and on any Local Business Day that Posted Collateral in the form
of Cash is Transferred to the Pledgor pursuant to Paragraph 3(b).

(iii)           Alternative to Interest Amount.  The provisions of Paragraph
6(d)(ii) will apply.

(i)
Additional Representation(s).

Party A/Party B represents to the other party (which representation(s) will be
deemed to be repeated as of each date on which it, as the Pledgor, Transfers
Eligible Collateral) that:  Not Applicable.

(j)
Other Eligible Support and Other Posted Support.

(i)           “Value” with respect to Other Eligible Support and Other Posted
Support means the stated amount (undrawn portion) of any Letter of Credit
maintained by or on behalf of the Pledgor (or its Credit Support Provider) for
the benefit of the Secured Party, multiplied by the applicable Valuation
Percentage.

(ii)           “Transfer” with respect to Other Eligible Support and Other
Posted Support means:

(1)           For purposes of Paragraph 3(a), delivery of the Letter of Credit
by the Pledgor or issuer of the Letter of Credit to the Secured Party at the
address of the Secured Party specified in the Notices Section of this Agreement,
or delivery of an executed amendment to such Letter of Credit (extending the
term or increasing the amount available to the Secured Party thereunder) by
 
 
 
 
 
the Pledgor or the issuer of the Letter of Credit to the Secured Party at
address of the Secured Party specified in the Notices Section of this Agreement;
and

(2)           For purposes of Paragraph 3(b), by the return of an outstanding
Letter of Credit by the Secured Party to the Pledgor, at the address of the
Pledgor specified in the Notices Section of this Agreement, or delivery of an
executed amendment to the Letter of Credit in form and substance satisfactory to
the Pledgor (reducing the amount available to the Secured Party thereunder) by
the Pledgor or the issuer of the Letter of Credit to the Secured Party at the
Secured Party's address specified in the Notices Section of this Agreement.  If
a Transfer is to be effected by a reduction in the amount of an outstanding
Letter of Credit previously issued for the benefit of the Secured Party, the
Secured Party shall not unreasonably withhold its consent to a commensurate
reduction in the amount of such Letter of Credit and shall take such action as
is reasonably necessary to effectuate such reduction.

(iii)           Letter of Credit Provisions.  Other Eligible Support and Other
Posted Support provided in the form of a Letter of Credit (as defined in
Paragraph 13(k) hereof) shall be subject to the following provisions:

(1)           A Letter of Credit shall provide that a drawing may be made on the
Letter of Credit in an amount (up to the face amount for which the Letter of
Credit has been issued) that is equal to all amounts that are due and owing from
the Pledgor but have not been paid to the Secured Party within the time allowed
for such payments under this Agreement (including any related notice or grace
period or both).  A drawing may be made on the Letter of Credit in this instance
upon submission to the bank issuing the Letter of Credit of one or more
certificates specifying the amounts due and owing to the Secured Party in
accordance with the specific requirements of the Letter of Credit.  The Pledgor
shall remain liable for any amounts due and owing to the Secured Party and
remaining unpaid after the application of the amounts so drawn by the Secured
Party.

(2)           A Letter of Credit shall also provide that a drawing may be made
of the entire, undrawn portion of such Letter of Credit if the Pledgor shall
fail to renew or cause the renewal of each outstanding Letter of Credit at least
ten (10) Business Days prior to the expiration of the relevant Letter of Credit.
A drawing may be made on the Letter of Credit in this instance upon submission
to the bank issuing such Letter of Credit of one or more certificates that such
failure has occurred in accordance with the specific requirements of the Letter
of Credit.  The cash proceeds from any such draw on a Letter of Credit shall be
held by the Secured Party as Eligible Collateral under this
Annex.  Notwithstanding the foregoing, the Secured Party shall not be entitled
to make such a drawing unless the Delivery Amount applicable to the Pledgor at
such time equals or exceeds the Pledgor's Minimum Transfer Amount.

(3)           As one method of providing Eligible Credit Support, the Pledgor
may increase the amount of an outstanding Letter of Credit or establish one or
more additional Letters of Credit.
 
     (4)           If a party's Credit Support Provider shall furnish a Letter
of Credit hereunder, the amount otherwise required under such Letter of Credit
may at the option of such Credit Support Provider be reduced by the amount of
any Letter of Credit established by such party (but only for such time as such
party's Letter of Credit shall be in effect).  In the event a party shall be
required to furnish a Letter of Credit hereunder, the amount otherwise required
under such Letter of Credit may at the option of such party be reduced by the
amount of any Letter of Credit
 
 
 
 
 
established by such party's Credit Support Provider (but only for such time as
such Credit Support Provider's Letter of Credit shall be in effect).

(5)           Upon the occurrence of a Letter of Credit Default, the Pledgor
agrees to deliver a substitute Letter of Credit or other Eligible Credit Support
to the Secured Party in an amount at least equal to that of the Letter of Credit
to be replaced on or before the first (1st) Business Day after written demand by
the Secured Party (or the fifth (5th) Business Day if only clause (i) under the
definition of Letter of Credit Default applies).

(6)           Notwithstanding Paragraph 10, in all cases, the costs and expenses
(including but not limited to the reasonable costs, expenses, and external
attorneys' fees of the Secured Party) of establishing, renewing, substituting,
canceling, increasing and reducing the amount of (as the case may be) one or
more Letters of Credit shall be borne by the Pledgor.

(7)           Section 7 (i) of the Credit Support Annex is hereby amended to
delete the words “Eligible Collateral, Posted Collateral” and replace them with
the words “Eligible Credit Support, Posted Credit Support”.

(8)           For purposes of Paragraph 8(a)(ii), the Secured Party may draw on
any outstanding Letter of Credit (Other Posted Support) in an amount equal to
any amounts payable by the Pledgor with respect to any Obligations.

 
(9)           For purposes of Paragraph 8(b)(ii), the Secured Party will be
obligated immediately to Transfer any Letter of Credit to the Pledgor. To the
extent that the Letter of Credit is not so Transferred to the Pledgor, the
Pledgor may do any one or more of the following: (x)(i) Set-off any amounts
payable by the Pledgor with respect to any Obligations against any such Letter
of Credit held by the Secured Party, and (ii) to the extent its rights to
Set-off are not exercised, withhold payment of any remaining amounts payable by
the Pledgor with respect to any Obligations, up to the Value of any remaining
Posted Collateral and the Value of any Letter of Credit held by the Secured
Party, until any such Posted Collateral and such Letter of Credit is Transferred
to the Pledgor; and (y) exercise rights and remedies available to the Pledgor
under the terms of the Letter of Credit.

(k)           Additional Definitions.  As used in this Annex:

“Collateral Account” shall mean one or more accounts with a Qualified
Institution, each of which accounts  shall be located in the U.S. and may
include property of other parties but will bear a title indicating the Pledgor's
interest in said account and the Posted Collateral in such account and that all
property entered in such Collateral Account was delivered as security.

“Credit Rating” shall mean, on any date of determination, (A) with respect to a
party, (i) the lower of its long-term senior unsecured debt rating (not
supported by third party credit enhancement) or its issuer rating by Moody’s or
S & P, and (B) with respect to a financial institution, its long-term senior
unsecured debt rating or its deposit rating by Moody’s, S&P or the specified
rating agency.

“Credit Watch” means the S&P or Moody’s ratings outlook, i.e., “Watch Negative”,
“Possible Downgrade”, “Review for Downgrade”, “Review for Possible Downgrade” or
other similar terminology.
 
 
 
 
 
“Letter of Credit” shall mean an irrevocable, transferable, standby letter of
credit maintained for the benefit of the Secured Party that is issued by a
Qualified Institution containing the terms set forth in Paragraph 13(j) hereof,
and such additional terms as are required by the issuing bank and are
satisfactory to the Secured Party.

“Letter of Credit Default” shall mean with respect to an outstanding Letter of
Credit, the occurrence of any of the following events:  (i) the issuer of such
Letter of Credit shall fail to maintain Credit Ratings of at least A- by S & P
and A3 by Moody's; (ii) the issuer of the Letter of Credit shall fail to comply
with or perform its obligations under such Letter of Credit, including but not
limited to a failure to honor the Secured Party’s properly documented request to
draw on such Letter of Credit, if such failure shall be continuing after the
lapse of any applicable grace period; (iii) the issuer of such Letter of Credit
shall disaffirm, disclaim, repudiate or reject, in whole or in part, or
challenge the validity of, such Letter of Credit; (iv) such Letter of Credit
shall expire or terminate, or shall fail or cease to be in full force and effect
at any time during the term of the Agreement; or (v) any event analogous to an
event specified in Section 5(a)(vii) of this Agreement shall occur with respect
to the issuer of such Letter of Credit; provided, however, that no Letter of
Credit Default shall occur in any event with respect to a Letter of Credit after
the time such Letter of Credit is required to be canceled or returned to the
Pledgor in accordance with the terms of this Annex.

“Moody's” shall mean Moody's Investors Service, Inc., or its successor.

“Qualified Institution” means (i) the U.S. office of a commercial bank or trust
company (which is not an Affiliate of either party) organized under the laws of
the U.S. (or any state or a political subdivision thereof), or (ii) the U.S
branch of a foreign bank, (which is not an Affiliate of either party), in each
case having assets of at least U.S. $10 billion, and having Credit Ratings of at
least A3 by Moody's and at least A- by S & P.

“S&P” shall mean Standard & Poor's Ratings Services (a division of McGraw-Hill,
Inc.) or its successor.

(l)           Demands and Notices.  All demands, specifications, and notices
under this Annex will be made pursuant to the Section 12 (“Notices”) of this
Agreement.

(m)           Power of Attorney.  If the Pledgor fails (a) to execute and
deliver to the Secured Party such financing statements, assignments, or other
documents or (b) to do such other things relating to the Posted Collateral as
the Secured Party may reasonably request in order to protect and maintain its
security interest in the Posted Collateral and to protect, preserve, and realize
upon the Posted Collateral, then the Secured Party is hereby authorized by the
Pledgor (but not required) to complete and execute such financing statements,
assignments, and other documents as the Secured Party deems appropriate for such
purposes.  The Pledgor hereby appoints the Secured Party, during the term of
this Agreement, as the Pledgor's agent and attorney-in-fact to complete and
execute such financing statements, assignments and other documents and to
perform all other acts which the Secured Party may deem appropriate to protect
and maintain its security interest in the Posted Collateral and to protect,
preserve, and realize upon the Posted Collateral.  The power-of-attorney granted
herein to the Secured Party is coupled with an interest and is irrevocable
during the term of this Agreement.

(n)            Accounts.  If a Confirmation does not state that account to
which, or the currency in which, payments are to be made, they shall be made in
United States Dollars to the following accounts; provided, however, either party
may change accounts upon written notification to the other party,
 
 
 
 
 
including pursuant to an invoice or other payment notification:

Party A
Pay:           Citibank, N.A.
For the Account of: Shell Energy North America (US), L.P.
Account No.: 30603857
Fed ABA No.: 021000089

Party B
Pay:  Bank of America
For the Account of:  Granite Construction Incorporated
Account No.:  12334-16946
Fed ABA No.: 026009593

 
(o)
Other Provisions. None.

SHELL ENERGY NORTH AMERICA (US), L.P.

By:  /s/ Glenn T.
Wright                                                                
Name:  Glenn T. Wright
Title:     Senior Vice President
Date:     3/25/10

GRANITE CONSTRUCTION INCORPORATED
 

By:  /s/ Jigisha
Desai                                                                
Name:  Jigisha Desai
Title:    Vice President
Date:     April 1, 2010