exv10w1



 





EXHIBIT 10.1




Execution
Copy



 





Granite
Construction Incorporated




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




 






Note
Purchase Agreement




 






Dated as of December 12, 2007



 




The information set forth on Schedules 5.15 and 5.16 to this Note Purchase Agreement is
“Confidential Information” subject to the requirements of
Section 20 hereof.




 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 
	Section	 	 	 	Heading	 	Page
	SECTION 1. Authorization of Notes	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	SECTION 2. Sale and Purchase of Notes; Guaranty	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 2.1
	 	Series 2007-A Notes
	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 2.2
	 	Additional Series of Notes
	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 2.3
	 	Guaranty of Notes
	 	 	3	 
	 
	 	 	 	 	 	 	 	 
	SECTION 3. Closing	 	 	4	 
	 
	 	 	 	 	 	 	 	 
	SECTION 4. Conditions to Closing	 	 	4	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 4.1
	 	Representations and Warranties
	 	 	4	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 4.2
	 	Performance; No Default
	 	 	4	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 4.3
	 	Compliance Certificates
	 	 	4	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 4.4
	 	Guaranty Agreement
	 	 	5	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 4.5
	 	Opinions of Counsel
	 	 	5	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 4.6
	 	Purchase Permitted by Applicable Law, Etc
	 	 	5	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 4.7
	 	Sale of Other Series 2007-A Notes
	 	 	5	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 4.8
	 	Payment of Special Counsel Fees
	 	 	6	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 4.9
	 	Private Placement Number
	 	 	6	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 4.10
	 	Changes in Corporate Structure
	 	 	6	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 4.11
	 	Funding Instructions
	 	 	6	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 4.12
	 	Proceedings and Documents
	 	 	6	 
	 
	 	 	 	 	 	 	 	 
	SECTION 5. Representations and Warranties of the Company	 	 	6	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 5.1
	 	Organization; Power and Authority
	 	 	6	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 5.2
	 	Authorization, Etc
	 	 	7	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 5.3
	 	Disclosure
	 	 	7	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 5.4
	 	Organization and Ownership of Shares of Subsidiaries;
Affiliates
	 	 	7	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 5.5
	 	Financial Statements; Material Liabilities
	 	 	8	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 5.6
	 	Compliance with Laws, Other Instruments, Etc
	 	 	8	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 5.7
	 	Governmental Authorizations, Etc
	 	 	9	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 5.8
	 	Litigation; Observance of Agreements, Statutes and Orders
	 	 	9	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 5.9
	 	Taxes
	 	 	9	 






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TABLE OF CONTENTS

(continued)




	 	 	 	 	 	 	 	 	 
	Section	 	 	 	Heading	Page
	 

	 	Section 5.10
	 	Title to Property; Leases
	 	 	9	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 5.11
	 	Licenses, Permits, Etc
	 	 	10	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 5.12
	 	Compliance with ERISA
	 	 	10	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 5.13
	 	Private Offering by the Company
	 	 	11	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 5.14
	 	Use of Proceeds; Margin Regulations
	 	 	11	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 5.15
	 	Existing Debt
	 	 	11	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 5.16
	 	Existing Investments
	 	 	12	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 5.17
	 	Foreign Assets Control Regulations, Etc
	 	 	12	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 5.18
	 	Status under Certain Statutes
	 	 	12	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 5.19
	 	Environmental Matters
	 	 	13	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 5.20
	 	Notes and Guaranty Agreement Rank Pari Passu
	 	 	13	 
	 
	 	 	 	 	 	 	 	 
	SECTION 6. Representations of the Purchasers	 	 	13	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 6.1
	 	Purchase for Investment
	 	 	13	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 6.2
	 	Source of Funds
	 	 	14	 
	 
	 	 	 	 	 	 	 	 
	SECTION 7. Information as to Company	 	 	15	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 7.1
	 	Financial and Business Information
	 	 	15	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 7.2
	 	Officer’s Certificate
	 	 	18	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 7.3
	 	Visitation
	 	 	19	 
	 
	 	 	 	 	 	 	 	 
	SECTION 8. Prepayment of the Notes	 	 	19	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 8.1
	 	Required Prepayments
	 	 	19	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 8.2
	 	Optional Prepayments with Make-Whole Amount
	 	 	20	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 8.3
	 	Offer to Prepay Notes in the Event of a Change in Control
	 	 	20	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 8.4
	 	Allocation of Partial Prepayments
	 	 	22	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 8.5
	 	Maturity; Surrender, Etc
	 	 	22	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 8.6
	 	Purchase of Notes
	 	 	22	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 8.7
	 	Make-Whole Amount
	 	 	23	 
	 
	 	 	 	 	 	 	 	 
	SECTION 9. Affirmative Covenants	 	 	24	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 9.1
	 	Compliance with Law
	 	 	24	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 9.2
	 	Insurance
	 	 	25	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Section 9.3
	 	Maintenance of Properties
	 	 	25	 






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TABLE OF CONTENTS

(continued)




	 	 	 	 	 	 	 	 	 
	Section	 	 	 	Heading	Page
	 
	 	Section 9.4	 	Payment of Taxes and Claims	 	 	25	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 9.5	 	Corporate Existence, Etc	 	 	25	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 9.6	 	Books and Records	 	 	25	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 9.7	 	Guaranty Agreement	 	 	26	 
	 
	 	 	 	 	 	 	 	 
	SECTION 10. Negative Covenants	 	 	27	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 10.1	 	Nature of Business	 	 	28	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 10.2	 	Consolidated Net Worth	 	 	28	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 10.3	 	Consolidated Total Debt to Consolidated Total Capitalization	 	 	28	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 10.4	 	Priority Debt	 	 	28	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 10.5	 	Liens	 	 	28	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 10.6	 	Restrictions on Dividends of Subsidiaries, Etc	 	 	30	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 10.7	 	Mergers, Consolidations, Etc	 	 	30	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 10.8	 	Sale of Assets, Etc	 	 	31	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 10.9	 	Disposal of Ownership of a Subsidiary	 	 	31	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 10.10	 	Sale-and-Leasebacks	 	 	32	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 10.11	 	Transactions with Affiliates	 	 	32	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 10.12	 	Terrorism Sanctions Regulations	 	 	32	 
	 
	 	 	 	 	 	 	 	 
	SECTION 11. Events of Default	 	 	32	 
	 
	 	 	 	 	 	 	 	 
	SECTION 12. Remedies on Default, Etc	 	 	35	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 12.1	 	Acceleration	 	 	35	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 12.2	 	Other Remedies	 	 	35	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 12.3	 	Rescission	 	 	35	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 12.4	 	No Waivers or Election of Remedies, Expenses, Etc	 	 	36	 
	 
	 	 	 	 	 	 	 	 
	SECTION 13. Registration; Exchange; Substitution of Notes	 	 	36	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 13.1	 	Registration of Notes	 	 	36	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 13.2	 	Transfer and Exchange of Notes	 	 	36	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 13.3	 	Replacement of Notes	 	 	37	 
	 
	 	 	 	 	 	 	 	 
	SECTION 14. Payments on Notes	 	 	37	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 14.1	 	Place of Payment	 	 	37	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 14.2	 	Home Office Payment	 	 	37	 






-iii-









 






TABLE OF CONTENTS

(continued)




	 	 	 	 	 	 	 	 	 
	Section	 	 	 	Heading	Page
	SECTION 15. Expenses, Etc	 	 	38	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 15.1	 	Transaction Expenses	 	 	38	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 15.2	 	Survival	 	 	38	 
	 
	 	 	 	 	 	 	 	 
	SECTION 16. Survival of Representations and Warranties;
Entire Agreement	 	 	38	 
	 
	 	 	 	 	 	 	 	 
	SECTION 17. Amendment and Waiver	 	 	39	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 17.1	 	Requirements	 	 	39	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 17.2	 	Solicitation of Holders of Notes	 	 	39	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 17.3	 	Binding Effect, Etc	 	 	40	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 17.4	 	Notes Held by Company, Etc	 	 	40	 
	 
	 	 	 	 	 	 	 	 
	SECTION 18. Notices	 	 	40	 
	 
	 	 	 	 	 	 	 	 
	SECTION 19. Reproduction of Documents	 	 	41	 
	 
	 	 	 	 	 	 	 	 
	SECTION 20. Confidential Information	 	 	41	 
	 
	 	 	 	 	 	 	 	 
	SECTION 21. Substitution of Purchaser or Additional Purchaser	 	 	42	 
	 
	 	 	 	 	 	 	 	 
	SECTION 22. Miscellaneous	 	 	43	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 22.1	 	Successors and Assigns	 	 	43	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 22.2	 	Payments Due on Non-Business Days	 	 	43	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 22.3	 	Accounting Terms	 	 	43	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 22.4	 	Severability	 	 	43	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 22.5	 	Construction	 	 	44	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 22.6	 	Counterparts	 	 	44	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 22.7	 	Governing Law	 	 	44	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 22.8	 	Jurisdiction and Process; Waiver of Jury Trial	 	 	44	 






-iv-









 






Attachments to the Note Purchase Agreement:




	 	 	 	 	 
	Schedule A

	 	—
	 	Information Relating to Purchasers
	 
	 	 	 	 
	Schedule B

	 	—
	 	Defined Terms
	 
	 	 	 	 
	Schedule 5.3

	 	—
	 	Disclosure Materials
	 
	 	 	 	 
	Schedule 5.4

	 	—
	 	Subsidiaries and Affiliates of the Company; Ownership of
Subsidiary Stock; Directors and Executive Officers
	 
	 	 	 	 
	Schedule 5.5

	 	—
	 	Financial Statements
	 
	 	 	 	 
	Schedule 5.15

	 	—
	 	Existing Debt
	 
	 	 	 	 
	Schedule 5.16

	 	—
	 	Existing Investments
	 
	 	 	 	 
	Exhibit 1

	 	—
	 	Form of 6.11% Series 2007-A
Senior Note due December 12, 2019
	 
	 	 	 	 
	Exhibit 2

	 	—
	 	Form of Guaranty Agreement
	 
	 	 	 	 
	Exhibit 3

	 	—
	 	Investment Policy Guidelines
	 
	 	 	 	 
	Exhibit 4.5(a)

	 	—
	 	Form of Opinion of General Counsel for the Company and the
Guarantors
	 
	 	 	 	 
	Exhibit 4.5(b)

	 	—
	 	Form of Opinion of Special Counsel for the Company and the
Guarantors
	 
	 	 	 	 
	Exhibit 4.5(c)

	 	—
	 	Form of Opinion of Special Counsel for the Purchasers
	 
	 	 	 	 
	Exhibit S

	 	—
	 	Form of Supplement to Note Purchase Agreement







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Granite Construction Incorporated

585 West Beach Street

Watsonville,California 95076




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




Dated as of

December 12, 2007




To
the Purchasers listed in





the
attached Schedule A:



Ladies and Gentlemen:




     Granite
Construction Incorporated, a Delaware corporation (the “Company”), agrees with each of
the institutional investors whose names appear at the end hereof (each, a “Purchaser” and,
collectively, the “Purchasers”) as follows:



SECTION
1. Authorization of Notes.




     The Company will authorize the issue and sale of $200,000,000 aggregate principal amount of
its 6.11% Series 2007-A Senior Notes due December 12, 2019 (the “Series 2007-A Notes”). The Series
2007-A Notes, together with each Series of Additional Notes which may from time to time be issued
pursuant to the provisions of Section 2.2 are collectively referred to herein as the “Notes.” As
used herein, the term “Notes” shall mean all notes (irrespective of Series or tranche unless
otherwise specified) originally delivered pursuant to this Agreement or any Supplement and any such
notes issued in substitution therefor pursuant to Section 13. The Series 2007-A Notes shall be
substantially in the form set out in Exhibit 1. Certain capitalized and other terms used in this
Agreement are defined in Schedule B; and references to a “Section,” a “Schedule” or an “Exhibit”
are, unless otherwise specified, to a Section of or a Schedule or an Exhibit attached to this
Agreement.



SECTION
2. Sale and Purchase of Notes;
Guaranty.




     Section 2.1 Series 2007-A Notes. Subject to the terms and conditions of this Agreement, the
Company will issue and sell to each Purchaser and each Purchaser will purchase from the Company, at
the Closing provided for in Section 3, Series 2007-A Notes in the principal amount specified
opposite such Purchaser’s name in Schedule A at the purchase price of 100% of the principal amount
thereof. Each Purchaser’s obligations hereunder are several and not joint obligations and no
Purchaser shall have any liability to any Person for the performance or non-performance by any
other Purchaser hereunder.



     Section 2.2 Additional Series of Notes.




     (a) The Company may, from time to time, in its sole discretion but subject to the terms
hereof, issue and sell one or more additional Series of its unsecured promissory notes under
the provisions of this Agreement pursuant to a supplement (a



 









 






“Supplement”) substantially in the form of Exhibit S, provided that the aggregate principal amount
of Notes of all Series issued pursuant to all Supplements in accordance with the terms of this
Section 2.2 shall not exceed $100,000,000.




     (b) Each additional Series of Notes (the “Additional Notes”) issued pursuant to a Supplement
shall be subject to the following terms and conditions:




     (1) each Series of Additional Notes, when so issued, shall be differentiated from all
previous Series by sequential alphabetical designation inscribed thereon;




     (2) Additional Notes of the same Series may consist of more than one different and
separate tranches and may differ with respect to outstanding principal amounts, maturity
dates, interest rates and premiums, if any, and price and terms of redemption or payment
prior to maturity, but all such different and separate tranches of the same Series shall, if
and to the extent this Agreement requires or permits voting by Series, vote as a single class
and constitute one Series;




     (3) each Series of Additional Notes shall be dated the date of issue, bear interest at
such rate or rates, mature on such date or dates, be subject to such put rights and mandatory
and optional prepayment on the dates and at the premiums, if any, have such additional or
different conditions precedent to closing, such representations and warranties and such
additional covenants and defaults as shall be specified in the Supplement under which such
Additional Notes are issued and upon execution of any such Supplement, this Agreement shall
be deemed amended (i) to reflect such additional put rights, covenants and defaults without
further action on the part of the holders of the Notes outstanding under this Agreement or
any other Supplement, provided, that any such additional put rights, covenants and defaults
shall inure to the benefit of all holders of the Notes only for so long as any Additional
Notes issued pursuant to such Supplement remain outstanding and (ii) to reflect such
representations and warranties as are contained in such Supplement for the benefit of the
holders of such Additional Notes in accordance with the provisions of Section 16;




     (4) each Series of Additional Notes issued under this Agreement shall be in
substantially the form of Exhibit 1 to Exhibit S with such variations, omissions and
insertions as are necessary or permitted hereunder;




     (5) the minimum principal amount of any Note issued under a Supplement shall be
$1,000,000, except as may be necessary to evidence the outstanding amount of any Note
originally issued in a denomination of $1,000,000 or more;




     (6) all Additional Notes shall constitute unsecured Senior Debt of the Company and shall
rank pari passu with all other outstanding Notes (other than in



-2-









 






connection with a non-ratable voluntary prepayment or purchase of a Series of Notes
pursuant to Section 8.2 or Section 8.6); and




     (7) no Additional Notes shall be issued hereunder if at the time of issuance
thereof and after giving effect to the application of the proceeds thereof, (i) any
Default or Event of Default shall exist or (ii) a waiver of Default or Event of
Default shall be in effect (unless such waiver expressly permits the issuance of
Additional Notes).




     (c) The right of the Company to issue, and the obligation of the Additional Purchasers
to purchase, any Additional Notes shall be subject to the following conditions precedent, in
addition to the conditions specified in the Supplement pursuant to which such Additional
Notes may be issued:




     (1) a duly authorized Senior Financial Officer shall execute and deliver to each
Additional Purchaser and each holder of Notes an Officer’s Certificate dated the date
of issue of such Series of Additional Notes stating that such officer has reviewed the
provisions of this Agreement (including all Supplements) and setting forth the
information and computations (in sufficient detail) required to establish whether
after giving effect to the issuance of the Additional Notes and after giving effect to
the application of the proceeds thereof, the Company is in compliance with the
requirements of Section 10.3;




     (2) the Company and each such Additional Purchaser shall execute and deliver a
Supplement substantially in the form of Exhibit S;




     (3) each Additional Purchaser shall have confirmed in the Supplement that the
representations set forth in Section 6 are true with respect to such Additional
Purchaser on and as of the date of issue of such Additional Notes; and




     (4) each Guarantor shall execute and deliver a Guaranty Accession Agreement in
the form attached to the Guaranty Agreement.



     Section 2.3 Guaranty of Notes. The payment by the Company of all amounts due with respect to
the Notes and the performance by the Company of its obligations under this Agreement (including all
Supplements) are fully and unconditionally guaranteed by Granite Construction Company, a California
corporation, Granite Land Company, a California corporation, Granite Construction Northeast, Inc.,
a New York corporation, Granite Northwest, a Washington corporation, Intermountain Slurry Seal,
Inc., a Wyoming corporation, Pozzolan Products Company, a Utah corporation and GILC Incorporated, a
California corporation, and each other from time to time Material Subsidiary (collectively, the
“Guarantors”) pursuant to that certain Subsidiary Guaranty Agreement dated as of December 12, 2007
(as from time to time amended or supplemented, the “Guaranty Agreement”) from the initial
Guarantors to each Purchaser and each other from time to time holder of Notes substantially in the
form attached hereto as Exhibit 2.



-3-









 





SECTION
3. Closing.




     The sale and purchase of the Series 2007-A Notes to be purchased by each Purchaser shall occur
at the offices of Schiff Hardin LLP, 900 Third Avenue, 23rd Floor, New York, New York 10022, at
11:00 a.m. New York, New York time, at a closing (the “Closing”) on December 12, 2007 or on such
other Business Day thereafter on or prior to December 31, 2007 as may be agreed upon by the Company
and the Purchasers. At the Closing, the Company will deliver to each Purchaser the Series 2007-A
Notes to be purchased by such Purchaser in the form of a single 2007-A Note (or such greater number
of Series 2007-A Notes in denominations of at least $1,000,000 as such Purchaser may request) dated
the date of the Closing and registered in such Purchaser’s name (or in the name of its nominee),
against delivery by such Purchaser to the Company or its order of immediately available funds in
the amount of the purchase price therefor by wire transfer of immediately available funds for the
account of the Company in accordance with the funding instructions described in Section 4.11. If at
the Closing the Company shall fail to tender such Series 2007-A Notes to any Purchaser as provided
above in this Section 3, or any of the conditions specified in Section 4 shall not have been
fulfilled to any Purchaser’s satisfaction, such Purchaser shall, at its election, be relieved of
all further obligations under this Agreement, without thereby waiving any rights such Purchaser may
have by reason of such failure or such nonfulfillment.



SECTION
4. Conditions to Closing.




     Each Purchaser’s obligation to purchase and pay for the Series 2007-A Notes to be sold to such
Purchaser at the Closing is subject to the fulfillment to such Purchaser’s satisfaction, prior to
or at the Closing, of the following conditions:



     Section 4.1 Representations and Warranties.




     (a) The representations and warranties of the Company in this Agreement shall be
correct when made and at the time of the Closing.




     (b) The representations and warranties of each Guarantor in the Guaranty Agreement
shall be correct when made and at the time of the Closing.



     Section 4.2 Performance; No Default. The Company shall have performed and complied with all
agreements and conditions contained in this Agreement required to be performed or complied with by
it prior to or at the Closing, and after giving effect to the issue and sale of the Series 2007-A
Notes (and the application of the proceeds thereof as contemplated by Section 5.14), no Default or
Event of Default shall exist. Neither the Company nor any Subsidiary shall have entered into any
transaction since the date of the Memorandum that would have been prohibited by Section 10 had such
Section applied since such date.



     Section 4.3 Compliance Certificates.




     (a) Officer’s Certificate. (1) The Company shall have delivered to such Purchaser an
Officer’s Certificate, dated the date of the Closing, certifying that the conditions
specified in Sections 4.1, 4.2 and 4.10 have been fulfilled.



-4-









 






     (2) Each Guarantor shall have delivered to such Purchaser a certificate of an
authorized officer, dated the date of the Closing, certifying that the condition
specified in Section 4.1(b) has been fulfilled.




     (b) Secretary’s Certificate. (1) The Company shall have delivered to such Purchaser a
certificate of its Secretary or Assistant Secretary, dated the date of the Closing,
certifying as to the resolutions attached thereto and other corporate proceedings relating
to the authorization, execution and delivery of the Series 2007-A Notes and this Agreement.




     (2) Each Guarantor shall have delivered to such Purchaser a certificate of its
Secretary or Assistant Secretary, dated the date of the Closing, certifying as to the
resolutions attached thereto and the other corporate proceedings relating to the
authorization, execution and delivery of the Guaranty Agreement.



     Section 4.4 Guaranty Agreement. The Guaranty Agreement shall have been duly authorized,
executed and delivered by each Guarantor and shall be in full force and effect.



     Section 4.5 Opinions of Counsel. Such Purchaser shall have received opinions in form and
substance satisfactory to such Purchaser, dated the date of the Closing (a) from Michael Futch,
Esq., General Counsel for the Company and the Guarantors, covering the matters set forth in Exhibit
4.5(a) and covering such other matters incident to the transactions contemplated hereby as such
Purchaser or special counsel to the Purchasers may reasonably request, (b) from DLA Piper US LLP,
special counsel for the Company and the Guarantors, covering the matters set forth in Exhibit
4.5(b) and covering such other matters incident to the transactions contemplated hereby as such
Purchaser or special counsel to the Purchasers may reasonably request (and the Company hereby
instructs its counsel to deliver such opinion to such Purchaser) and (c) from Schiff Hardin LLP,
special counsel to the Purchasers in connection with such transactions, substantially in the form
set forth in Exhibit 4.5(c) and covering such other matters incident to such transactions as such
Purchaser may reasonably request.



     Section 4.6 Purchase Permitted by Applicable Law, Etc. On the date of the Closing, such
Purchaser’s purchase of Notes shall (a) be permitted by the laws and regulations of each
jurisdiction to which such Purchaser is subject, without recourse to provisions (such as Section
1405(a)(8) of the New York Insurance Law) permitting limited investments by insurance companies
without restriction as to the character of the particular investment, (b) not violate any
applicable law or regulation (including, without limitation, Regulation T, U or X of the Board of
Governors of the Federal Reserve System) and (c) not subject such Purchaser to any tax, penalty or
liability under or pursuant to any applicable law or regulation. If requested by any Purchaser,
such Purchaser shall have received an Officer’s Certificate certifying as to such matters of fact
as such Purchaser may reasonably specify to enable such Purchaser to determine whether such
purchase is so permitted.



     Section 4.7 Sale of Other Series 2007-A Notes. Contemporaneously with the Closing, the Company
shall sell to each other Purchaser and each other Purchaser shall purchase the Series 2007-A Notes
to be purchased by it at the Closing as specified in Schedule A.



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     Section 4.8 Payment of Special Counsel Fees. Without limiting the provisions of Section 15.1,
the Company shall have paid on or before the Closing the fees, charges and disbursements of Schiff
Hardin LLP, special counsel to the Purchasers referred to in Section 4.5(c) and the only counsel
retained by the Purchasers in connection with the preparation, negotiation, execution and delivery
of this Agreement, to the extent reflected in a statement of such counsel rendered to the Company
at least one Business Day prior to the Closing.



     Section 4.9 Private Placement Number. A Private Placement Number issued by Standard & Poor’s
CUSIP Service Bureau (in cooperation with the SVO) shall have been obtained for the Series 2007-A
Notes.



     Section 4.10 Changes in Corporate Structure. The Company shall not have changed its
jurisdiction of incorporation or been a party to any merger or consolidation or succeeded to all or
any substantial part of the liabilities of any other entity, at any time following the date of the
most recent financial statements referred to in Schedule 5.5, except to the extent that any such
transaction would have been permitted by Section 10 had such section applied at the date of such
transaction.



     Section 4.11 Funding Instructions. At least three Business Days prior to the date of the
Closing, each Purchaser shall have received written instructions signed by a Responsible Officer on
letterhead of the Company directing the manner of the payment of the purchase price for the Series
2007-A Notes and setting forth (a) the name and address of the transferee bank, (b) such transferee
bank’s ABA number, (c) the account name and number into which such funds are to be deposited and
(d) the name and telephone number of the account representative responsible for verifying receipt
of such funds.



     Section 4.12 Proceedings and Documents. All corporate and other proceedings in connection
with the transactions contemplated by this Agreement and all documents and instruments incident to
such transactions shall be satisfactory to such Purchaser and special counsel to the Purchasers,
and such Purchaser and special counsel to the Purchasers shall have received all such counterpart
originals or certified or other copies of such documents as such Purchaser or special counsel to
the Purchasers may reasonably request.



SECTION
5. Representations and
Warranties of the Company.




     The Company represents and warrants to each Purchaser that:



     Section 5.1 Organization; Power and Authority. The Company is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of incorporation, and is
duly qualified as a foreign corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the failure to be so
qualified or in good standing could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. The Company has the corporate power and authority to own or
hold under lease the properties it purports to own or hold under lease, to transact the business it
transacts and proposes to transact, to execute and



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deliver this Agreement and the Series 2007-A Notes and to perform the provisions hereof and
thereof.




     Section 5.2 Authorization, Etc.




     (a) This Agreement and the Series 2007-A Notes have been duly authorized by all
necessary corporate action on the part of the Company, and this Agreement constitutes, and
upon execution and delivery thereof each Series 2007-A Note will constitute, a legal, valid
and binding obligation of the Company enforceable against the Company in accordance with its
terms, except as such enforceability may be limited by (1) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the enforcement of
creditors’ rights generally and (2) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).




     (b) The Guaranty Agreement has been duly authorized by all necessary corporate action
on the part of each Guarantor and the Guaranty Agreement constitutes a legal, valid and
binding obligation of each Guarantor enforceable against each Guarantor in accordance with
its terms, except as such enforceability may be limited by (1) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the enforcement of
creditors’ rights generally and (2) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).



     Section 5.3 Disclosure. The Company, through its agent, Banc of America Securities LLC, has
delivered to each Purchaser a copy of a Private Placement Memorandum, dated November 2007 (the
“Memorandum”), relating to the transactions contemplated hereby. The Memorandum fairly describes,
in all material respects, the general nature of the business and principal properties of the
Company and its Subsidiaries. This Agreement, the Memorandum and the documents, certificates or
other writings delivered to the Purchasers by or on behalf of the Company in connection with the
transactions contemplated hereby and identified in Schedule 5.3 and the financial statements listed
in Schedule 5.5 (this Agreement, the Memorandum and such documents, certificates or other writings
and such financial statements delivered to each Purchaser prior to November 13, 2007 being referred
to, collectively, as the “Disclosure Documents”), taken as a whole, do not contain any untrue
statement of a material fact or omit to state any material fact necessary to make the statements
therein not misleading in light of the circumstances under which they were made. Except as
disclosed in the Disclosure Documents, since December 31, 2006, there has been no adverse Material
change in the financial condition, operations, business, properties or prospects of the Company and
its Subsidiaries, taken as a whole.



     Section 5.4 Organization and Ownership of Shares of Subsidiaries; Affiliates.




     (a) Schedule 5.4 contains (except as noted therein) complete and correct lists (1) of
the Company’s Subsidiaries, showing, as to each Subsidiary, the correct name thereof, the
jurisdiction of its organization, and the percentage of shares of each class of its capital
stock or similar equity interests outstanding owned by the Company and each



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other Subsidiary, (2) of the Company’s Affiliates and (3) of the Company’s directors and
executive officers.




     (b) All of the outstanding shares of capital stock or similar equity interests of each
Subsidiary shown in Schedule 5.4 as being owned by the Company and its Subsidiaries have
been validly issued, are fully paid and nonassessable and are owned by the Company or
another Subsidiary free and clear of any Lien (except as otherwise disclosed in Schedule
5.4).




     (c) Each Subsidiary identified in Schedule 5.4 is a corporation or other legal entity
duly organized, validly existing and in good standing under the laws of its jurisdiction of
organization, and is duly qualified as a foreign corporation or other legal entity and is in
good standing in each jurisdiction in which such qualification is required by law, other
than those jurisdictions as to which the failure to be so qualified or in good standing
could not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each such Subsidiary has the corporate or other power and authority to own
or hold under lease the properties it purports to own or hold under lease and to transact
the business it transacts and proposes to transact and, in the case of each Subsidiary that
is a Guarantor, to execute and deliver the Guaranty Agreement and to perform the provisions
thereof.




     (d) No Subsidiary is a party to, or otherwise subject to, any legal, regulatory,
contractual or other restriction (other than this Agreement, the agreements listed on
Schedule 5.4 and customary limitations imposed by corporate law or similar statutes)
restricting the ability of such Subsidiary to pay dividends out of profits or make any other
similar distributions of profits to the Company or any of its Subsidiaries that own
outstanding shares of capital stock or similar equity interests of such Subsidiary.



     Section 5.5 Financial Statements; Material Liabilities. The Company has delivered to each
Purchaser copies of the consolidated financial statements of the Company listed on Schedule 5.5.
All of said financial statements (including in each case the related schedules and notes) fairly
present in all material respects the consolidated financial position of the Company and its
Subsidiaries as of the respective dates specified in such financial statements and the consolidated
results of their operations and cash flows for the respective periods so specified and have been
prepared in accordance with GAAP consistently applied throughout the periods involved except as set
forth in the notes thereto (subject, in the case of any interim financial statements, to normal
year-end adjustments and the absence of certain footnotes). The Company and its Subsidiaries do not
have any Material liabilities that are not disclosed on such financial statements or otherwise
disclosed in the Disclosure Documents.



     Section 5.6 Compliance with Laws, Other Instruments, Etc. The execution, delivery and
performance by the Company of this Agreement and the Series 2007-A Notes and the execution,
delivery and performance by each Guarantor of the Guaranty Agreement will not (a) contravene,
result in any breach of, or constitute a default under, or result in the creation of any Lien in
respect of any property of the Company or any Subsidiary under, any indenture, mortgage, deed of
trust, loan, purchase or credit agreement, lease, corporate charter or by-laws, or any other
agreement or instrument to which the Company or any Subsidiary is bound or by



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which the Company or any Subsidiary or any of their respective properties may be bound or affected,
(b) conflict with or result in a breach of any of the terms, conditions or provisions of any order,
judgment, decree or ruling of any court, arbitrator or Governmental Authority applicable to the
Company or any Subsidiary or (c) violate any provision of any statute or other rule or regulation
of any Governmental Authority applicable to the Company or any Subsidiary.




     Section 5.7 Governmental Authorizations, Etc. No consent, approval or authorization of, or
registration, filing or declaration with, any Governmental Authority is required in connection with
the execution, delivery or performance (a) by the Company of this Agreement or the Series 2007-A
Notes or (b) by any Guarantor of the Guaranty Agreement.



     Section 5.8 Litigation; Observance of Agreements, Statutes and Orders.




     (a) There are no actions, suits, investigations or proceedings pending or, to the
knowledge of the Company, threatened against or affecting the Company or any Subsidiary or
any property of the Company or any Subsidiary in any court or before any arbitrator of any
kind or before or by any Governmental Authority that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.




     (b) Neither the Company nor any Subsidiary is in default under any term of any
agreement or instrument to which it is a party or by which it is bound, or any order,
judgment, decree or ruling of any court, arbitrator or Governmental Authority or is in
violation of any applicable law, ordinance, rule or regulation (including, without
limitation, Environmental Laws, ERISA or the USA Patriot Act) of any Governmental Authority,
which default or violation, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect.



     Section 5.9 Taxes. The Company and its Subsidiaries have filed all income tax returns that are
required to have been filed in any jurisdiction, and have paid all taxes shown to be due and
payable on such returns and all other taxes and assessments payable by them, to the extent such
taxes and assessments have become due and payable and before they have become delinquent, except
for any taxes and assessments (a) the amount of which is not individually or in the aggregate
Material or (b) the amount, applicability or validity of which is currently being contested in good
faith by appropriate proceedings and with respect to which the Company or a Subsidiary, as the case
may be, has established adequate reserves in accordance with GAAP. The Company knows of no basis
for any other tax or assessment that could reasonably be expected to have a Material Adverse
Effect. The charges, accruals and reserves on the books of the Company and its Subsidiaries in
respect of federal, state or other taxes for all fiscal periods are adequate. The federal income
tax liabilities of the Company and its Subsidiaries have been finally determined (whether by reason
of completed audits or the statute of limitations having run) for all fiscal years up to and
including the fiscal year ended December 31, 2003.



     Section 5.10 Title to Property; Leases. The Company and its Subsidiaries have good and
sufficient title to their respective properties that individually or in the aggregate are Material,
including all such properties reflected in the most recent audited balance sheet referred to in
Section 5.5 or purported to have been acquired by the Company or any Subsidiary after said date
(except as sold or otherwise disposed of in the ordinary course of business), in each case free and



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clear of Liens prohibited by this Agreement. All leases that individually or in the aggregate are
Material are valid and subsisting and are in full force and effect in all material respects.




     Section 5.11 Licenses, Permits, Etc.




     (a) The Company and its Subsidiaries own or possess all Material licenses, permits,
franchises, authorizations, patents, copyrights, proprietary software, service marks,
trademarks, trade names and domain names, or other rights with respect thereto.




     (b) To the best knowledge of the Company, no product of the Company or any of its
Subsidiaries infringes in any material respect any license, permit, franchise,
authorization, patent, copyright, proprietary software, service mark, trademark, trade name,
domain name or other right with respect thereto owned by any other Person.




     (c) To the best knowledge of the Company, there is no Material violation by any Person
of any right of the Company or any of its Subsidiaries with respect to any patent,
copyright, proprietary software, service mark, trademark, trade name or other right with
respect thereto owned or used by the Company or any of its Subsidiaries.



     Section 5.12 Compliance with ERISA.




     (a) The Company and each ERISA Affiliate have operated and administered each Plan in
compliance with all applicable laws in all material respects. Neither the Company nor any
ERISA Affiliate has incurred any Material liability pursuant to Title I or IV of ERISA or
the penalty or excise tax provisions of the Code relating to employee benefit plans (as
defined in Section 3 of ERISA), and no event, transaction or condition has occurred or
exists that could reasonably be expected to result in the incurrence of any such Material
liability by the Company or any ERISA Affiliate, or in the imposition of any Material Lien
on any of the rights, properties or assets of the Company or any ERISA Affiliate, in either
case pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions or to
Section 401(a)(29) or 412 of the Code or Section 4068 of ERISA.




     (b) The present value of the aggregate benefit liabilities under each of the Plans
(other than Multiemployer Plans), determined as of the end of such Plan’s most recently
ended plan year on the basis of the actuarial assumptions specified for funding purposes in
such Plan’s most recent actuarial valuation report, did not exceed the aggregate current
value of the assets of such Plan allocable to such benefit liabilities by more than
$5,000,000 in the aggregate for all Plans. The term “benefit liabilities” has the meaning
specified in Section 4001 of ERISA and the terms “current value” and “present value” have
the meanings specified in Section 3 of ERISA.




     (c) The Company and its ERISA Affiliates have not incurred Material withdrawal
liabilities (and are not subject to Material contingent withdrawal liabilities) under
Section 4201 or 4204 of ERISA in respect of Multiemployer Plans.




     (d) The expected postretirement benefit obligation (determined as of the last day of
the Company’s most recently ended fiscal year in accordance with Financial



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Accounting Standards Board Statement No. 106, without regard to liabilities attributable to
continuation coverage mandated by Section 4980B of the Code) of the Company and its
Subsidiaries is not Material.




     (e) The execution and delivery of this Agreement and the issuance and sale of the
Series 2007-A Notes hereunder will not involve any transaction that is subject to the
prohibitions of Section 406 of ERISA or in connection with which a tax could be imposed
pursuant to Section 4975(c)(1)(A)-(D) of the Code. The representation by the Company to each
Purchaser in the first sentence of this Section 5.12(e) is made in reliance upon and subject
to the accuracy of such Purchaser’s representation in Section 6.2 as to the sources of the
funds used to pay the purchase price of the Series 2007-A Notes to be purchased by such
Purchaser.



     Section 5.13 Private Offering by the Company. Neither the Company nor anyone acting on its
behalf has offered the Series 2007-A Notes or the Guaranty Agreement or any similar Securities for
sale to, or solicited any offer to buy any of the same from, or otherwise approached or negotiated
in respect thereof with, any Person other than the Purchasers and not more than 60 other
Institutional Investors of the type described in clause (c) of the definition thereof, each of
which has been offered the Series 2007-A Notes and the Guaranty Agreement at a private sale for
investment pursuant to an exemption from the registration requirements under the Securities Act.
Neither the Company nor anyone acting on its behalf has taken, or will take, any action that would
subject the issuance or sale of the Series 2007-A Notes or the delivery of the Guaranty Agreement
to the registration requirements of Section 5 of the Securities Act or to the registration
requirements of any Securities or blue sky laws of any applicable jurisdiction.



     Section 5.14 Use of Proceeds; Margin Regulations. The Company will apply the proceeds of the
sale of the Series 2007-A Notes to refinance existing Debt, repurchase common stock of the Company
pursuant to the Company’s publicly announced share repurchase authorization and for other general
corporate purposes. No part of the proceeds from the sale of the Series 2007-A Notes hereunder will
be used, directly or indirectly, for the purpose of buying or carrying or trading in any Securities
under such circumstances as to involve any Purchaser in a violation of Regulation U of the Board of
Governors of the Federal Reserve System (12 CFR 221) or the Company in a violation of Regulation X
of said Board (12 CFR 224) or to involve any broker or dealer in a violation of Regulation T of
said Board (12 CFR 220). Margin stock does not constitute more than 25% of the value of
Consolidated Total Assets and the Company has no present intention that margin stock will
constitute more than 25% of the value of such assets. As used in this Section, the terms “margin
stock” and “purpose of buying or carrying” shall have the meanings assigned to them in said
Regulation U.



     Section 5.15 Existing Debt.




     (a) Except as described therein, Schedule 5.15 sets forth a complete and correct list
of all outstanding Debt of the Company and its Subsidiaries as of October 31, 2007
(including a description of the obligors and obligees, principal amount outstanding and
collateral therefor, if any, and Guaranty thereof, if any) since which date there has been
no Material change in the amounts, interest rates, sinking funds, installment payments or
maturities of the Debt of the Company or its Subsidiaries. Neither the



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Company nor any Subsidiary is in default and no waiver of default is currently in effect, in
the payment of any principal or interest on any Debt of the Company or such Subsidiary and
no event or condition exists with respect to any Debt of the Company or any Subsidiary that
would permit (or that with notice or the lapse of time, or both, would permit) one or more
Persons to cause such Debt to become due and payable before its stated maturity or before
its regularly scheduled dates of payment.




     (b) Except as disclosed in Schedule 5.15, neither the Company nor any Subsidiary has
agreed or consented to cause or permit in the future (upon the happening of a contingency or
otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a
Lien not permitted by Section 10.5.




     (c) Neither the Company nor any Subsidiary is a party to, or otherwise subject to any
provision contained in, any instrument evidencing Debt of the Company or such Subsidiary,
any agreement relating thereto or any other agreement (including, but not limited to, its
charter or other organizational document) which limits the amount of, or otherwise imposes
restrictions on the incurring of, Debt of the Company or any Guarantor, except as
specifically indicated in Schedule 5.15.



     Section 5.16 Existing Investments. Schedule 5.16 sets forth a complete and correct list of all
outstanding Investments of the Company and its Subsidiaries as of October 31, 2007, since which
date there has been no Material change in the amounts of such Investments.



     Section 5.17 Foreign Assets Control Regulations, Etc.




     (a) Neither the sale of the Series 2007-A Notes by the Company hereunder nor its use of
the proceeds thereof will violate the Trading with the Enemy Act, as amended, or any of the
foreign assets control regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating
thereto.




     (b) Neither the Company nor any Subsidiary (1) is a Person described or designated in
the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets
Control or in Section 1 of the Anti-Terrorism Order or (2) knowingly engages in any dealings
or transactions with any such Person. The Company and its Subsidiaries are in compliance,
in all material respects, with the USA Patriot Act.




     (c) No part of the proceeds from the sale of the Series 2007-A Notes hereunder will be
used, directly or indirectly, for any payments to any governmental official or employee,
political party, official of a political party, candidate for political office, or anyone
else acting in an official capacity, in order to obtain, retain or direct business or obtain
any improper advantage, in violation of the United States Foreign Corrupt Practices Act of
1977, as amended, assuming in all cases that such Act applies to the Company.



     Section 5.18 Status under Certain Statutes. Neither the Company nor any Subsidiary is an
“investment company” registered or required to be registered under the Investment Company Act of
1940, as amended, or is subject to regulation under the Public Utility Holding Company



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Act of 2005, as amended, the ICC Termination Act of 1995, as amended, or the Federal Power Act, as
amended.




     Section 5.19 Environmental Matters.




     (a) Neither the Company nor any Subsidiary has knowledge of any Material claim or has
received any notice of any Material claim, and no proceeding has been instituted raising any
Material claim against the Company or any of its Subsidiaries or any of their respective
real properties now or formerly owned, leased or operated by any of them or other assets,
alleging any damage to the environment or violation of any Environmental Laws.




     (b) Neither the Company nor any Subsidiary has knowledge of any facts which would give
rise to any Material claim, public or private, or Material violation of Environmental Laws
or damage to the environment emanating from, occurring on or in any way related to real
properties now or formerly owned, leased or operated by any of them or to other assets or
their use.




     (c) Neither the Company nor any Subsidiary (1) has stored any Hazardous Materials on
real properties now or formerly owned, leased or operated by any of them in a manner
contrary to any Environmental Laws, or (2) has disposed of any Hazardous Materials in a
manner contrary to any Environmental Laws; in each case in any manner that could reasonably
be expected to result in a Material Adverse Effect.




     (d) All buildings on all real properties now owned, leased or operated by the Company
or any Subsidiary are in material compliance with applicable Environmental Laws.



     Section 5.20 Notes and Guaranty Agreement Rank Pari Passu.




     (a) Other than in connection with a non-ratable prepayment or purchase of Notes
pursuant to Sections 8.2 or 8.6, the Series 2007-A Notes and all other obligations of the
Company under this Agreement shall at all times remain direct and unsecured obligations of
the Company ranking pari passu with all other Notes from time to time issued and outstanding
hereunder without any preference among themselves and pari passu in right of payment with
all other unsecured Senior Debt (actual or contingent) of the Company, including, without
limitation, all unsecured Senior Debt (actual or contingent) of the Company described in
Schedule 5.15.




     (b) The obligations of each Guarantor under the Guaranty Agreement rank pari passu in
right of payment with all other unsecured Senior Debt (actual or contingent) of such
Subsidiary Guarantor, including, without limitation, all unsecured Senior Debt of such
Guarantor described in Schedule 5.15.



SECTION 6. Representations of the Purchasers.




     Section 6.1 Purchase for Investment. Each Purchaser severally represents that it is
purchasing the Series 2007-A Notes for its own account or for one or more separate accounts



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maintained by such Purchaser or for the account of one or more pension or trust funds and not with
a view to the distribution thereof, provided that the disposition of such Purchaser’s or such
pension or trust funds’ property shall at all times be within such Purchaser’s or such pension or
trust funds’ control. Each Purchaser understands that the Series 2007-A Notes have not been
registered under the Securities Act and may be resold only if registered pursuant to the provisions
of the Securities Act or if an exemption from registration is available, except under circumstances
where neither such registration nor such an exemption is required by law, and that the Company is
not required to register the Series 2007-A Notes.




     Section 6.2 Source of Funds. Each Purchaser severally represents that at least one of the
following statements is an accurate representation as to each source of funds (a “Source”) to be
used by such Purchaser to pay the purchase price of the Series 2007-A Notes to be purchased by such
Purchaser hereunder:




     (a) the Source is an “insurance company general account” (as the term is defined in the
United States Department of Labor’s Prohibited Transaction Exemption (“PTE”) 95-60) in
respect of which the reserves and liabilities (as defined by the annual statement for life
insurance companies approved by the NAIC (the “NAIC Annual Statement”)) for the general
account contract(s) held by or on behalf of any employee benefit plan together with the
amount of the reserves and liabilities for the general account contract(s) held by or on
behalf of any other employee benefit plans maintained by the same employer (or affiliate
thereof as defined in PTE 95-60) or by the same employee organization in the general account
do not exceed 10% of the total reserves and liabilities of the general account (exclusive of
separate account liabilities) plus surplus as set forth in the NAIC Annual Statement filed
with such Purchaser’s state of domicile; or




     (b) the Source is a separate account that is maintained solely in connection with such
Purchaser’s fixed contractual obligations under which the amounts payable, or credited, to
any employee benefit plan (or its related trust) that has any interest in such separate
account (or to any participant or beneficiary of such plan (including any annuitant)) are
not affected in any manner by the investment performance of the separate account; or




     (c) the Source is either (1) an insurance company pooled separate account, within the
meaning of PTE 90-1 or (2) a bank collective investment fund, within the meaning of PTE
91-38 and, except as disclosed by such Purchaser to the Company in writing pursuant to this
clause (c), no employee benefit plan or group of plans maintained by the same employer or
employee organization beneficially owns more than 10% of all assets allocated to such pooled
separate account or collective investment fund; or




     (d) the Source constitutes assets of an “investment fund” (within the meaning of Part V
of PTE 84-14 (the “QPAM Exemption”)) managed by a “qualified professional asset manager” or
“QPAM” (within the meaning of Part V of the QPAM Exemption), no employee benefit plan’s
assets that are included in such investment fund, when combined with the assets of all other
employee benefit plans established or



-14-









 






maintained by the same employer or by an affiliate (within the meaning of Section V(c)(1) of
the QPAM Exemption) of such employer or by the same employee organization and managed by
such QPAM, exceed 20% of the total client assets managed by such QPAM, the conditions of
Part I(c) and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a Person
controlling or controlled by the QPAM (applying the definition of “control” in Section V(e)
of the QPAM Exemption) owns a 5% or more interest in the Company and (1) the identity of
such QPAM and (2) the names of all employee benefit plans whose assets are included in such
investment fund have been disclosed to the Company in writing pursuant to this clause (d);
or




     (e) the Source constitutes assets of a “plan(s)” (within the meaning of Section IV of
PTE 96-23 (the “INHAM Exemption”)) managed by an “in-house asset manager” or “INHAM” (within
the meaning of Part IV of the INHAM Exemption), the conditions of Part I(a), (g) and (h) of
the INHAM Exemption are satisfied, neither the INHAM nor a Person controlling or controlled
by the INHAM (applying the definition of “control” in Section IV(d) of the INHAM Exemption)
owns a 5% or more interest in the Company and (1) the identity of such INHAM and (2) the
name(s) of the employee benefit plan(s) whose assets constitute the Source have been
disclosed to the Company in writing pursuant to this clause (e); or




     (f) the Source is a governmental plan; or




     (g) the Source is one or more employee benefit plans, or a separate account or trust
fund comprised of one or more employee benefit plans, each of which has been identified to
the Company in writing pursuant to this clause (g); or




     (h) the Source does not include assets of any employee benefit plan, other than a plan
exempt from the coverage of ERISA.



     As used in this Section 6.2, the terms “employee benefit plan,” “governmental plan,” and
“separate account” shall have the respective meanings assigned to such terms in Section 3 of ERISA.



SECTION 7. Information as to Company.




     Section 7.1 Financial and Business Information. The Company shall deliver to each holder of
Notes that is an Institutional Investor:




     (a) Quarterly Statements — within 60 days after the end of each quarterly fiscal period
in each fiscal year of the Company (other than the last quarterly fiscal period of each such
fiscal year), duplicate copies of,




     (1) a consolidated balance sheet of the Company and its Subsidiaries as at the
end of such quarter, and




     (2) consolidated statements of income, stockholders’ equity and cash flows of the
Company and its Subsidiaries, for such quarter and (in the case of the



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second and third quarters) for the portion of the fiscal year ending with such quarter,




setting forth in each case in comparative form the figures for the corresponding periods in the
previous fiscal year, all in reasonable detail, prepared in accordance with GAAP applicable to
quarterly financial statements generally, and certified by a Senior Financial Officer as fairly
presenting, in all material respects, the financial position of the companies being reported on and
their results of operations and cash flows, subject to changes resulting from year-end adjustments,
provided that delivery within the time period specified above of copies of the Company’s Quarterly
Report on Form 10-Q prepared in compliance with the requirements therefor and filed with the SEC
shall be deemed to satisfy the requirements of this Section 7.1(a), provided, further, that the
Company shall be deemed to have made such delivery of such Quarterly Report on Form 10-Q if it
shall have timely made such Quarterly Report on Form 10-Q available on “EDGAR” and on its home page
on the worldwide web (at the date of this Agreement located at: http//www.graniteconstruction.com)
and shall have given each such holder of Notes prior notice of such availability on EDGAR and on
its home page in connection with each delivery, such notice to be provided in the manner specified
in Section 18 or, if the holder shall have previously provided the Company with an electronic mail
address for such purpose, by electronic mail (such availability and notice thereof being referred
to as “Electronic Delivery”);




     (b) Annual Statements — within 105 days after the end of each fiscal year of the Company,
duplicate copies of,




     (1) a consolidated balance sheet of the Company and its Subsidiaries, as at the end of
such year, and




     (2) consolidated statements of income, stockholders’ equity and cash flows of the
Company and its Subsidiaries, for such year,




setting forth in each case in comparative form the figures for the previous fiscal year, all in
reasonable detail, prepared in accordance with GAAP, and accompanied by an opinion thereon of
independent certified public accountants of recognized national standing, which opinion shall state
that such financial statements present fairly, in all material respects, the financial position of
the companies being reported upon and their results of operations and cash flows and have been
prepared in conformity with GAAP, and that the examination of such accountants in connection with
such financial statements has been made in accordance with generally accepted auditing standards,
and that such audit provides a reasonable basis for such opinion in the circumstances, provided
that the delivery within the time period specified above of the Company’s Annual Report on Form
10-K for such fiscal year (together with the Company’s annual report to shareholders, if any,
prepared pursuant to Rule 14a-3 under the Exchange Act) prepared in accordance with the
requirements therefor and filed with the SEC shall be deemed to satisfy the requirements of this
Section 7.1(b), provided, further, that the Company shall be deemed to have made such delivery of
such Annual Report on Form 10-K if it shall have timely made Electronic Delivery thereof;



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     (c) SEC and Other Reports — promptly upon their becoming available, one copy of (1) each
financial statement, report, notice or proxy statement sent by the Company or any Subsidiary to
its principal lending banks as a whole (excluding information sent to such banks in the ordinary
course of administration of a bank facility, such as information relating to pricing and borrowing
availability) or its public Securities holders generally, (2) each regular or periodic report,
each registration statement that shall have become effective (without exhibits except as expressly
requested by such holder), and each final prospectus and all amendments thereto filed by the
Company or any Subsidiary with the SEC, provided that the Company shall be deemed to have made
such delivery of any such report, registration statement, prospectus or amendment if it shall have
timely made Electronic Delivery thereof, and (3) all press releases and other statements made
available generally by the Company or any Subsidiary to the public concerning developments that
are Material which press releases and other statements may be made by Electronic Delivery;




     (d) Notice of Default or Event of Default — promptly, and in any event within five Business
Days after a Responsible Officer becoming aware of the existence of any Default or Event of
Default or that any Person has given any notice or taken any action with respect to a claimed
default hereunder or that any Person has given any notice or taken any action with respect to a
claimed default of the type referred to in Section 11(f), a written notice specifying the nature
and period of existence thereof and what action the Company is taking or proposes to take with
respect thereto;




     (e) ERISA Matters — promptly, and in any event within five Business Days after a Responsible
Officer becoming aware of any of the following, a written notice setting forth the nature thereof
and the action, if any, that the Company or an ERISA Affiliate proposes to take with respect
thereto:




     (1) with respect to any Plan, any reportable event, as defined in Section 4043(c) of
ERISA and the regulations thereunder, for which notice thereof has not been waived pursuant
to such regulations as in effect on the date thereof; or




     (2) the taking by the PBGC of steps to institute, or the threatening by the PBGC of the
institution of, proceedings under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or the receipt by the Company or any ERISA
Affiliate of a notice from a Multiemployer Plan that such action has been taken by the PBGC
with respect to such Multiemployer Plan; or




     (3) any event, transaction or condition that could result in the incurrence of any
liability by the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or the
penalty or excise tax provisions of the Code relating to employee benefit plans, or in the
imposition of any Lien on any of the rights, properties or assets of the Company or any ERISA
Affiliate pursuant to Title I or IV of ERISA or such penalty or excise tax provisions, if
such liability or Lien,



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taken together with any other such liabilities or Liens then existing, would exceed
$10,000,000 in the aggregate;




     (f) Notices from Governmental Authority — promptly, and in any event within 30 days of
receipt thereof, copies of any notice to the Company or any Subsidiary from any federal or
state Governmental Authority relating to any order, ruling, statute or other law or
regulation that could reasonably be expected to have a Material Adverse Effect;




     (g) Rule 144A — except at such times as the Company is a reporting company under
Section 13 or 15(d) of the Exchange Act or has complied with the requirements for the
exemption from registration under the Exchange Act set forth in Rule 12g3-2(b) under the
Exchange Act, such financial or other information as any holder of Notes or any Person
designated by such holder may reasonably determine is required to permit such holder to
comply with the requirements of Rule 144A promulgated under the Exchange Act in connection
with the resale by it of the Notes, in any such case promptly after the same is requested;




     (h) Supplements — promptly and in any event within 10 Business Days after the execution
and delivery of any Supplement, a copy thereof; and




     (i) Requested Information — with reasonable promptness, such other data and information
relating to the business, operations, affairs, financial condition, assets or properties of
the Company or any of its Subsidiaries (including, but without limitation, actual copies of
the Company’s Quarterly Report on Form 10-Q and Annual Report on Form 10-K) or relating to
the ability of the Company to perform its obligations hereunder and under the Notes as from
time to time may be reasonably requested by any such holder of Notes.



     Section 7.2 Officer’s Certificate. Each set of financial statements delivered to a holder of
Notes pursuant to Section 7.1(a) or Section 7.1(b) shall be accompanied by a certificate of a
Senior Financial Officer, such certificate to be provided in the manner specified in Section 18 or,
if the holder shall have previously provided the Company with an electronic mail address for such
purpose, by electronic mail (which, in the case of Electronic Delivery of any such financial
statements, shall be by separate delivery of such certificate to each such holder of Notes no later
than the earlier of the third Business Day following such Electronic Delivery and the last day upon
which the Company is required to deliver the corresponding financial statements pursuant to Section
7.1(a) or Section 7.1(b), as applicable) setting forth:




     (a) Covenant Compliance — the information (including detailed calculations) required in
order to establish whether the Company was in compliance with the requirements of Section
10.2 through Section 10.5, inclusive, Section 10.8 and Section 10.10 and any covenant in a
Supplement which specifically provides that it shall have the benefit of this clause (a)
during the quarterly or annual period covered by the statements then being furnished
(including with respect to each such Section and covenant, where applicable, the
calculations of the maximum or minimum amount, ratio



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or percentage, as the case may be, permissible under the terms of such Sections and
covenants, and the calculation of the amount, ratio or percentage then in existence); and




     (b) Event of Default — a statement that such Senior Financial Officer has reviewed the
relevant terms hereof (including all Supplements) and has made, or caused to be made, under
his or her supervision, a review of the transactions and conditions of the Company and its
Subsidiaries from the beginning of the quarterly or annual period covered by the statements
then being furnished to the date of the certificate and that such review shall not have
disclosed the existence during such period of any condition or event that constitutes a
Default or an Event of Default or, if any such condition or event existed or exists
(including, without limitation, any such event or condition resulting from the failure of
the Company or any Subsidiary to comply with any Environmental Law), specifying the nature
and period of existence thereof and what action the Company shall have taken or proposes to
take with respect thereto.



     Section 7.3 Visitation. The Company shall permit the representatives of each holder of Notes
that is an Institutional Investor:




     (a) No Default — if no Default or Event of Default then exists, at the expense of such
holder and upon reasonable prior notice to the Company, to visit the principal executive
office of the Company, to discuss the affairs, finances and accounts of the Company and its
Subsidiaries with the Company’s officers, and (with the consent of the Company, which
consent will not be unreasonably withheld) to visit the other offices and properties of the
Company and each Subsidiary, all at such reasonable times and as often as may be reasonably
requested in writing; and




     (b) Default — if a Default or Event of Default then exists, at the expense of the
Company, to visit and inspect any of the offices or properties of the Company or any
Subsidiary, to examine all their respective books of account, records, reports and other
papers, to make copies and extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers and independent public accountants (and
by this provision the Company authorizes said accountants to discuss the affairs, finances
and accounts of the Company and its Subsidiaries), all at such times and as often as may be
requested.



SECTION
8. Prepayment of the Notes.




     Section 8.1 Required Prepayments.




     (a) Series 2007–A Notes. On December 12, 2015 and on each December 12 thereafter to and
including December 12, 2018, the Company will prepay $40,000,000 principal amount (or such
lesser principal amount as shall then be outstanding) of the Series 2007-A Notes at par and
without payment of the Make-Whole Amount or any premium, provided that upon any partial
prepayment of the Series 2007-A Notes pursuant to Section 8.2 or Section 8.3 or purchase of
any Series 2007-A Notes pursuant to Section 8.6, the principal amount of each required
prepayment of the Series 2007-A Notes becoming due under this Section 8.1(a) on and after
the date of such prepayment



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or purchase shall be reduced in the same proportion as the aggregate unpaid principal amount
of the Series 2007-A Notes is reduced as a result of such prepayment.




     (b) Required Prepayment of Additional Notes. Each Series and tranche, if applicable,
of Additional Notes shall be subject to required prepayments as specified in the Supplement
pursuant to which such Series and tranche, if applicable, of Additional Notes were issued.



     Section 8.2 Optional Prepayments with Make-Whole Amount. The Company may, at its option, upon
notice as provided below, prepay at any time all, or from time to time any part of, any Series of
Notes, in an amount not less than $5,000,000 of the aggregate principal amount of such Series of
Notes then outstanding in the case of a partial prepayment (or in an amount equal to the entire
outstanding principal amount of such Series of Notes if at the time of such prepayment the
remaining aggregate outstanding balance is less than $5,000,000), at 100% of the principal amount
so prepaid, together with interest accrued thereon to the date of such prepayment, plus the
applicable Make-Whole Amount determined for the prepayment date with respect to such principal
amount. Notwithstanding the foregoing, the Company may not prepay any Series of Notes under this
Section 8.2 if a Default or Event of Default shall exist or would result from such optional
prepayment unless all Notes at the time outstanding are prepaid on a pro rata basis. The Company
will give each holder of Notes of the Series to be prepaid (with a copy to each other holder of
Notes) written notice of each optional prepayment under this Section 8.2 not less than 30 days and
not more than 60 days prior to the date fixed for such prepayment. Each such notice shall specify
such date (which shall be a Business Day), the aggregate principal amount of the Notes of each
Series to be prepaid on such date, the principal amount of each Note held by such holder to be
prepaid (determined in accordance with Section 8.4), and the interest to be paid on the prepayment
date with respect to such principal amount being prepaid, and shall be accompanied by a certificate
of a Senior Financial Officer as to the estimated applicable Make-Whole Amount due in connection
with such prepayment (calculated as of the date of such notice as if the date of such notice were
the date of the prepayment), setting forth the details of such computation. Two Business Days
prior to such prepayment, the Company shall deliver to each holder of Notes being prepaid a
certificate of a Senior Financial Officer specifying the calculation of such Make-Whole Amount as
of the specified prepayment date.



     Section 8.3 Offer to Prepay Notes in the Event of a Change in Control.




     (a) Notice of Change in Control or Control Event. The Company will, within five
Business Days after any Responsible Officer has knowledge of the occurrence of any Change in
Control or Control Event, give written notice of such Change in Control or Control Event to
each holder of Notes unless notice in respect of such Change in Control (or the Change in
Control contemplated by such Control Event) shall have been given pursuant to Section
8.3(b). If a Change in Control has occurred, such notice shall contain and constitute an
offer to prepay Notes as described in Section 8.3(c) and shall be accompanied by the
certificate described in Section 8.3(g).




     (b) Condition to Company Action. The Company will not take any action that consummates
or finalizes a Change in Control unless (1) at least 30 days prior to



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such action it shall have given to each holder of Notes written notice containing and constituting
an offer to prepay Notes as described in Section 8.3(c), accompanied by the certificate described
in Section 8.3(g), and (2) contemporaneously with such action, the Company prepays all Notes
required to be prepaid in accordance with this Section 8.3.




     (c) Offer to Prepay Notes. The offer to prepay Notes contemplated by Sections 8.3(a) and (b)
shall be an offer to prepay, in accordance with and subject to this Section 8.3, all, but not less
than all, Notes held by each holder (in this case only, “holder” in respect of any Note registered
in the name of a nominee for a disclosed beneficial owner shall mean such beneficial owner) on a
date specified in such offer (the“Change in Control Proposed Prepayment Date”). If such Change in Control Proposed Prepayment Date
is in connection with an offer contemplated by Section 8.3(a), such date shall be a Business Day
not less than 30 days and not more than 60 days after the date of such offer (or if the Change in
Control Proposed Prepayment Date shall not be specified in such offer, the Change in Control
Proposed Prepayment Date shall be the Business Day nearest to the 30th day after the date of such
offer).




     (d) Acceptance; Rejection. A holder of Notes may accept or reject the offer to prepay made
pursuant to this Section 8.3 by causing a notice of such acceptance or rejection to be delivered
to the Company at least five Business Days prior to the Change in Control Proposed Prepayment
Date. A failure by a holder of Notes to so respond to an offer to prepay made pursuant to this
Section 8.3 shall be deemed to constitute a rejection of such offer by such holder.




     (e) Prepayment. Prepayment of the Notes to be prepaid pursuant to this Section 8.3 shall be
at 100% of the principal amount of such Notes, together with accrued and unpaid interest on such
Notes accrued to the date of prepayment but without any Make-Whole Amount or any other penalty or
premium. The prepayment shall be made on the Change in Control Proposed Prepayment Date, except as
provided by Section 8.3(f).




     (f) Deferral Pending Change in Control. The obligation of the Company to prepay Notes
pursuant to the offers required by Section 8.3(c) and accepted in accordance with Section 8.3(d)
is subject to the occurrence of the Change in Control in respect of which such offers and
acceptances shall have been made. In the event that such Change in Control does not occur on the
Change in Control Proposed Prepayment Date in respect thereof, the prepayment shall be deferred
until, and shall be made on the date on which, such Change in Control occurs. The Company shall
keep each holder of Notes reasonably and timely informed of (1) any such deferral of the date of
prepayment, (2) the date on which such Change in Control and the prepayment are expected to occur
and (3) any determination by the Company that efforts to effect such Change in Control have ceased
or been abandoned (in which case the offers and acceptances made pursuant to this Section 8.3 in
respect of such Change in Control automatically shall be deemed rescinded without penalty or other
liability).




     (g) Officer’s Certificate. Each offer to prepay the Notes pursuant to this Section 8.3 shall
be accompanied by a certificate, executed by a Senior Financial Officer




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and dated the date of such offer, specifying (1) the Change in Control Proposed Prepayment
Date, (2) that such offer is made pursuant to this Section 8.3, (3) the principal amount of
each Note offered to be prepaid, (4) the interest that would be due on each Note offered to
be prepaid, accrued to the Change in Control Proposed Prepayment Date, (5) that the
conditions of this Section 8.3 have been fulfilled and (6) in reasonable detail, the nature
and date of the Change in Control.




(h) “Change in Control” shall mean, if any person (as such term is used in Section
13(d) and Section 14(d)(2) of the Exchange Act as in effect on the date of the Closing) or
related persons or persons acting in concert constituting a group (as such term is used in
Rule 13d-5 under the Exchange Act as in effect on the date of the Closing) become the
“beneficial owners” (as such term is used in Rule 13d-3 under the Exchange Act as in effect
on the date of the Closing), directly or indirectly, of more than 50% of the total voting
power of all classes then outstanding of the Company’s voting equity interests.




(i) “Control Event” shall mean (1) the execution of any binding written agreement
which, when fully performed by the parties thereto, would result in a Change in Control or
(2) the making of any written offer by any “person” or “group” (as such terms are used in
Section 13(d) and Section 14(d) of the Exchange Act) to the holders of equity interests of
the Company, which offer, if accepted by the requisite number of holders, would result in a
Change in Control.



          Section 8.4 Allocation of Partial Prepayments. In the case of each partial prepayment of the
Notes of a Series pursuant to Section 8.2, the principal amount of the Notes of such Series to be
prepaid shall be allocated among all of the Notes of such Series at the time outstanding in
proportion, as nearly as practicable, to the respective unpaid principal amounts thereof not
theretofore called for prepayment. All partial prepayments of the Notes pursuant to Section 8.3
shall be applied only to the Notes of the holders who have elected to participate in such
prepayment.




          Section 8.5 Maturity; Surrender, Etc. In the case of each prepayment of Notes pursuant to
this Section 8, the principal amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment (which shall be a Business Day), together with
interest on such principal amount accrued to such date and the applicable Make-Whole Amount, if
any. From and after such date, unless the Company shall fail to pay such principal amount when so
due and payable, together with the interest and Make-Whole Amount, if any, as aforesaid, interest
on such principal amount shall cease to accrue. Any Note paid or prepaid in full shall be
surrendered to the Company and cancelled and shall not be reissued, and no Note shall be issued in
lieu of any prepaid principal amount of any Note.




          Section 8.6 Purchase of Notes. The Company will not, and will not permit any Subsidiary or
Affiliate to, purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of the
outstanding Notes of any Series except (a) upon the payment or prepayment of the Notes of such
Series in accordance with the terms of this Agreement (including any Supplement) and the Notes of
such Series or (b) pursuant to an offer to purchase made by the Company or an Affiliate pro rata to
the holders of all Notes of any Series at the time outstanding upon the same




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terms and conditions. Any such offer shall provide each holder of Notes of the Series being
offered for purchase with sufficient information to enable it to make an informed decision with
respect to such offer, and shall remain open for at least 30 Business Days. If the holders of more
than 10% of the principal amount of the Notes of the Series being offered for purchase then
outstanding accept such offer, the Company shall promptly notify the remaining holders of such
Series of such fact and the expiration date for the acceptance by such holders of such offer shall
be extended by the number of days necessary to give each such remaining holder at least 30 Business
Days from its receipt of such notice to accept such offer. The Company will promptly cancel all
Notes acquired by it or any Subsidiary or Affiliate pursuant to any payment, prepayment or purchase
of Notes pursuant to any provision of this Agreement (including any Supplement) and no Notes may be
issued in substitution or exchange for any such Notes. Notwithstanding the foregoing, neither
Company nor any Subsidiary or Affiliate may offer to purchase any Series of Notes if a Default or
Event of Default shall exist or would result therefrom unless such Person shall offer to purchase
all outstanding Notes on a pro rata basis upon the same terms and conditions.




          Section 8.7 Make-Whole Amount. The term “Make-Whole Amount” shall mean with respect to any
Series 2007-A Note, an amount equal to the excess, if any, of the Discounted Value of the Remaining
Scheduled Payments with respect to the Called Principal of such Series 2007-A Note over the amount
of such Called Principal, provided that the Make-Whole Amount may in no event be less than zero.
For the purposes of determining the Make-Whole Amount, the following terms have the following
meanings:





          “Called Principal” shall mean, with respect to any Series 2007-A Note, the principal of
such Note that is to be prepaid pursuant to Section 8.2 or has become or is declared to be
immediately due and payable pursuant to Section 12.1, as the context requires.




          “Discounted Value” shall mean, with respect to the Called Principal of any Series
2007-A Note, the amount obtained by discounting all Remaining Scheduled Payments with
respect to such Called Principal from their respective scheduled due dates to the Settlement
Date with respect to such Called Principal, in accordance with accepted financial practice
and at a discount factor (applied on the same periodic basis as that on which interest on
the Series 2007-A Notes is payable) equal to the Reinvestment Yield with respect to such
Called Principal.




          “Reinvestment Yield” shall mean, with respect to the Called Principal of any Series
2007-A Note, .50% over the yield to maturity implied by (a) the yields reported, as of 10:00
a.m. (New York City time) on the second Business Day preceding the Settlement Date with
respect to such Called Principal, on the display designated as “Page PX1” (or such other
display as may replace Page PX1) on Bloomberg Financial Markets for the most recently issued
actively traded on the run U.S. Treasury Securities having a maturity equal to the Remaining
Average Life of such Called Principal as of such Settlement Date, or (b) if such yields are
not reported as of such time or the yields reported as of such time are not ascertainable
(including by way of interpolation), the Treasury Constant Maturity Series Yields reported,
for the latest day for which such yields have been so reported as of the second Business Day
preceding the Settlement Date with respect to such Called



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Principal, in Federal Reserve Statistical Release H.15 (or any comparable successor
publication) for U.S. Treasury Securities having a constant maturity equal to the Remaining
Average Life of such Called Principal as of such Settlement Date.




          In the case of each determination under clause (a) or (b), as the case may be, of the
preceding paragraph, such implied yield will be determined, if necessary, by (1) converting
U.S. Treasury bill quotations to bond-equivalent yields in accordance with accepted
financial practice and (2) interpolating linearly between (i) the applicable U.S. Treasury
Security with the maturity closest to and greater than such Remaining Average Life and (ii)
the applicable U.S. Treasury Security with the maturity closest to and less
than such Remaining Average Life. The Reinvestment Yield shall be rounded to the
number of decimal places as appears in the interest rate of such Series 2007-A Note.




          “Remaining Average Life” shall mean, with respect to any Called Principal of any Series
2007-A Note, the number of years (calculated to the nearest one-twelfth year) obtained by
dividing (a) such Called Principal into (b) the sum of the products obtained by multiplying
(1) the principal component of each Remaining Scheduled Payment with respect to such Called
Principal by (2) the number of years (calculated to the nearest one-twelfth year) that will
elapse between the Settlement Date with respect to such Called Principal and the scheduled
due date of such Remaining Scheduled Payment.




          “Remaining Scheduled Payments” shall mean, with respect to the Called Principal of any
Series 2007-A Note, all payments of such Called Principal and interest thereon that would be
due after the Settlement Date with respect to such Called Principal if no payment of such
Called Principal were made prior to its scheduled due date, provided that if such Settlement
Date is not a date on which interest payments are due to be made under the terms of the
Series 2007-A Notes, then the amount of the next succeeding scheduled interest payment will
be reduced by the amount of interest accrued to such Settlement Date and required to be paid
on such Settlement Date pursuant to Section 8.2 or 12.1.




          “Settlement Date” shall mean, with respect to the Called Principal of any Series 2007-A
Note, the date on which such Called Principal is to be prepaid pursuant to Section 8.2 or
has become or is declared to be immediately due and payable pursuant to Section 12.1, as the
context requires.



SECTION 9. Affirmative Covenants.




          The Company covenants that so long as any of the Notes are outstanding:




          Section 9.1 Compliance with Law. Without limiting Section 10.12, the Company will, and will
cause each of its Subsidiaries to, comply with all laws, ordinances or governmental rules or
regulations to which each of them is subject, including, without limitation, Environmental Laws,
ERISA and the USA Patriot Act and will obtain and maintain in effect all licenses, certificates,
permits, franchises and other governmental authorizations necessary to the ownership of their
respective properties or to the conduct of their respective businesses, in each case to the extent
necessary to ensure that non-compliance with such laws, ordinances or




-24-









 







governmental rules or regulations or failures to obtain or maintain in effect such licenses,
certificates, permits, franchises and other governmental authorizations could not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.




          Section 9.2 Insurance. The Company will, and will cause each of its Subsidiaries to, maintain,
with financially sound and reputable insurers, insurance with respect to their respective
properties and businesses against such casualties and contingencies, of such types, on such terms
and in such amounts (including deductibles, co-insurance and self-insurance, if adequate reserves
are maintained with respect thereto) as is customary in the case of entities of established
reputations engaged in the same or a similar business and similarly situated.




          Section 9.3 Maintenance of Properties. The Company will, and will cause each of its
Subsidiaries to, maintain and keep, or cause to be maintained and kept, their respective properties
in good repair, working order and condition (other than ordinary wear and tear), so that the
business carried on in connection therewith may be properly conducted at all times, provided that
this Section shall not prevent the Company or any Subsidiary from discontinuing the operation
and the maintenance of any of its properties if such discontinuance is desirable in the
conduct of its business and the Company has concluded that such discontinuance could not reasonably
be expected, individually or in the aggregate, to have a Material Adverse Effect.




          Section 9.4 Payment of Taxes and Claims. The Company will, and will cause each of its
Subsidiaries to, file all tax returns required to be filed in any jurisdiction and to pay and
discharge all taxes shown to be due and payable on such returns and all other taxes, assessments,
governmental charges or levies imposed on them or any of their properties, assets, income or
franchises, to the extent the same have become due and payable and before they have become
delinquent and all claims for which sums have become due and payable that have or might become a
Lien on properties or assets of the Company or any Subsidiary, provided that neither the Company
nor any Subsidiary need pay any such tax, assessment, charge, levy or claim if (a) the amount,
applicability or validity thereof is contested by the Company or such Subsidiary on a timely basis
in good faith and in appropriate proceedings, and the Company or a Subsidiary has established
adequate reserves therefor in accordance with GAAP on the books of the Company or such Subsidiary
or (b) the nonpayment of all such taxes, assessments, charges, levies and claims in the aggregate
could not reasonably be expected, individually or in the aggregate, to have a Material Adverse
Effect.




          Section 9.5 Corporate Existence, Etc. Subject to Section 10.7, the Company will at all times
preserve and keep in full force and effect its corporate existence. Subject to Sections 10.7, 10.8
and 10.9, the Company will at all times preserve and keep in full force and effect the corporate
existence of each of its Subsidiaries (unless merged into the Company or a Wholly-Owned Subsidiary)
and all rights and franchises of the Company and its Subsidiaries unless, in the good faith
judgment of the Company, the termination of or failure to preserve and keep in full force and
effect such corporate existence, right or franchise would not, individually or in the aggregate,
have a Material Adverse Effect.




          Section 9.6 Books and Records. The Company will, and will cause each of its Subsidiaries to,
maintain proper books of record and account in conformity with GAAP and all



-25-









 






applicable requirements of any Governmental Authority having legal or regulatory jurisdiction over
the Company or such Subsidiary, as the case may be.




          Section 9.7 Guaranty Agreement.





          (a)(1) The Company shall promptly, and in any event within 10 Business Days after (i) a
Subsidiary becomes a Material Subsidiary, (ii) the formation or acquisition of a new
Subsidiary that is a Material Subsidiary or (iii) the occurrence of any other event creating
a new Subsidiary that is a Material Subsidiary, cause such Material Subsidiary to execute
and deliver a supplement to the Guaranty Agreement in the form of Exhibit A to the Guaranty
Agreement. Notwithstanding the foregoing, (x) any Subsidiary formed under the laws of a
jurisdiction other than the United States, any State thereof or the District of Columbia
shall not be required to execute a supplement to the Guaranty Agreement or otherwise
Guaranty the Notes if doing so would result in adverse tax consequences to the Company,
unless such Subsidiary is or shall become an obligor or guarantor of any Debt existing under
the Bank Credit Agreement and (y) Wilder shall not be required to execute a supplement to
the Guaranty Agreement or otherwise Guaranty the Notes until the earliest to occur of: (A)
Wilder becoming an obligor or guarantor of any Debt existing under the Bank Credit
Agreement, (B)(I) the total net revenues of Wilder and its Subsidiaries for the period of
the immediately preceding four fiscal quarters is equal to or greater than 15% of the
consolidated total net revenues of the Company and its Subsidiaries for such period
determined in accordance with GAAP, in each case as
reflected in the most recent annual or quarterly financial statements of the Company
and its Subsidiaries; or (II) the total assets of Wilder and its Subsidiaries, as of the
last day of the immediately preceding fiscal quarter, is equal to or greater than 15% of
Consolidated Total Assets as of such date, in each case as reflected in the most recent
annual or quarterly financial statements of the Company and its Subsidiaries and (C) Wilder
becoming a Wholly-Owned Subsidiary of the Company.




          (b) Within 10 Business Days of any Material Subsidiary being required to execute and
deliver a supplement to the Guaranty Agreement pursuant to Section 9.7(a)(1), the Company
shall cause such Material Subsidiary to deliver to each holder of Notes (i) such documents
and evidence with respect to such Material Subsidiary as any holder may reasonably request
in order to establish the existence and good standing of such Material Subsidiary and
evidence that the Board of Directors of such Material Subsidiary has adopted resolutions
authorizing the execution and delivery of a supplement to the Guaranty Agreement, (ii)
evidence of compliance with such Material Subsidiary’s outstanding debt instruments in the
form of (A) a compliance certificate from such Material Subsidiary to the effect that such
Material Subsidiary has complied with all terms and conditions of its outstanding debt
instruments, (B) consents or approvals of the holder or holders of any evidence of Debt or
Security, and/or (C) amendments of agreements pursuant to which any evidence of Debt or
Security may have been issued, all as may be reasonably deemed necessary by the holders of
Notes to permit the execution and delivery of a supplement to the Guaranty Agreement by
such Material Subsidiary, (iii) an opinion of counsel to the effect that (A) such Material
Subsidiary is a corporation or other business entity, duly organized, validly existing and
in good standing, if applicable, under the laws of its jurisdiction of organization, has
the



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power and the authority to execute and deliver a supplement to the Guaranty Agreement and
to perform the Guaranty Agreement, (B) the execution and delivery of a supplement to the
Guaranty Agreement and performance of the Guaranty Agreement has been duly authorized by
all necessary action on the part of such Material Subsidiary, a supplement to the Guaranty
Agreement has been duly executed and delivered by such Material Subsidiary and the Guaranty
Agreement constitutes the legal, valid and binding contract of such Material Subsidiary
enforceable against such Material Subsidiary in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent conveyance or similar laws affecting creditors’ rights
generally, and general principles of equity (regardless of whether the application of such
principles is considered in a proceeding in equity or at law), (C) the execution and
delivery of a supplement to the Guaranty Agreement and the performance by such Material
Subsidiary of the Guaranty Agreement do not conflict with or result in any breach of any
law, rule or regulation or any of the provisions of or constitute a default under or result
in the creation of a Lien upon any of the property of such Material Subsidiary pursuant to
the provisions of its charter documents or any agreement or other instrument known to such
counsel to which such Material Subsidiary is a party to or by which such Material
Subsidiary may be bound and (D) no approval, consent or withholding of objection on the
part of, or filing, registration or qualification with, any governmental body, federal or
state, is necessary in connection with the lawful execution and delivery of a supplement to
the Guaranty Agreement by such Material Subsidiary or the performance of the Guaranty
Agreement by such Material Subsidiary, which opinion may contain such assumptions and
qualifications as are reasonably acceptable to the Required Holders, and (iv) all other
documents and showings reasonably requested by the holders of Notes in connection with the
execution and delivery of a supplement to the Guaranty Agreement, which documents shall be
satisfactory in form and substance to such holders and their special counsel, and each
holder of Notes shall have received a copy (executed or certified as may be appropriate)
of all of the foregoing legal documents.




          (c) If at any time, pursuant to the terms and conditions of the Bank Credit Agreement,
any Guarantor is released from its liability under the Bank Guaranty and (1) such Guarantor
is not a co-obligor in respect of any Debt existing under the Bank Credit Agreement or a
guarantor or co-obligor in respect of any Debt existing under the Existing Note Agreements,
(2) such Guarantor does not qualify as a Material Subsidiary under clause (a) or (b) of the
definition thereof and (3) the Company shall have delivered to each holder of Notes an
Officer’s Certificate certifying that (i) the conditions specified in clauses (1) and (2)
above have been satisfied and (ii) immediately preceding the release of such Guarantor from
the Guaranty Agreement and after giving effect thereto, no Default or Event of Default
shall have existed or would exist, then, upon receipt by the holders of Notes of such
Officer’s Certificate, such Guarantor shall be discharged from its obligations under the
Guaranty Agreement.



SECTION 10. Negative Covenants.




          The Company covenants that so long as any of the Notes are outstanding:




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          Section 10.1 Nature of Business. The Company will not, and will not permit any Subsidiary to,
engage in any business if, as a result thereof, the general nature of the business, taken on a
consolidated basis, which would then be engaged in by the Company and its Subsidiaries would be
substantially changed from the general nature of the business engaged in by the Company and its
Subsidiaries on the date of the Closing.




          Section 10.2 Consolidated Net Worth. The Company will not, at any time, permit Consolidated
Net Worth to be less than the sum of (a) $550,000,000, plus (b) an aggregate amount equal to 50% of
its Consolidated Net Income (but, in each case, only if a positive number) for each completed
fiscal quarter beginning with the fiscal quarter ended March 31, 2008.




          Section 10.3 Consolidated Total Debt to Consolidated Total Capitalization. The Company will
not, at any time, permit the ratio of (a) Consolidated Total Debt to (b) Consolidated Total
Capitalization to exceed 0.55 to 1.00.




          Section 10.4 Priority Debt. The Company will not, at any time, permit the aggregate amount of
all Priority Debt to exceed an amount equal to 20% of Consolidated Net Worth determined as of the
end of the then most recently ended fiscal quarter of the Company.




          Section 10.5 Liens. The Company will not, and will not permit any Subsidiary to, directly or
indirectly create, incur, assume or permit to exist (upon the happening of a contingency or
otherwise) any Lien on or with respect to any property or asset (including, without limitation, any
document or instrument in respect of goods or accounts receivable) of the Company or such
Subsidiary, whether now owned or held or hereafter acquired, or any income or profits therefrom, or
assign or otherwise convey any right to receive income or profits, except:





          (a) Liens for taxes, assessments or other governmental charges which are not yet due
and payable or the payment of which is not at the time required by Section 9.4;




          (b) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics,
materialmen and other similar Liens, in each case, incurred in the ordinary course of
business for sums not yet due and payable;




          (c) Liens (other than any Lien imposed by ERISA) incurred or deposits made in the
ordinary course of business (1) in connection with workers’ compensation, unemployment
insurance and other types of social security or retirement benefits, or (2) to secure (or
to obtain letters of credit that secure) the performance of tenders, statutory obligations,
surety bonds, appeal bonds, bids, leases (other than Capital Leases), performance bonds,
purchase, construction or sales contracts and other similar obligations, in each case not
incurred or made in connection with the borrowing of money, the obtaining of advances or
credit or the payment of the deferred purchase price of property;




          (d) any attachment or judgment Lien, unless the judgment it secures shall not, within
60 days after the entry thereof, have been discharged or execution thereof stayed pending
appeal, or shall not have been discharged within 60 days after the expiration of any such
stay;



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          (e) leases or subleases granted to others, easements, rights-of-way, restrictions and other
similar charges or encumbrances, in each case incidental to, and not interfering with, the
ordinary conduct of the business of the Company or any of its Subsidiaries, provided that such
Liens do not, in the aggregate, materially detract from the value of such property;




          (f) Liens on property or assets of the Company or any of its Subsidiaries securing Debt owing
to the Company or to a Wholly-Owned Subsidiary;




          (g) Liens existing on the date of the Closing and securing the Debt of the Company and its
Subsidiaries referred to on Schedule 5.15;




          (h) any Lien created to secure all or any part of the purchase price, or to secure Debt
incurred or assumed to pay all or any part of the purchase price or cost of construction, of
property acquired or constructed by the Company or a Subsidiary after the date of the Closing,
provided that




          (1) any such Lien shall extend solely to the item or items of such property so acquired
or constructed,




          (2) the principal amount of the Debt secured by any such Lien shall at no time exceed
an amount equal to the lesser of (i) the cost to the Company or such Subsidiary of the
property so acquired or constructed and (ii) the Fair Market Value (as determined in good
faith by the Board of Directors of the Company) of such property at the time of such
acquisition or construction,




          (3) any such Lien shall be created contemporaneously with, or within 180 days after,
the acquisition or construction of such property, and




          (4) immediately after giving effect the creation of such Lien and giving effect
thereto, no Default or Event of Default would exist;



          (i) any Lien existing on property of a Person immediately prior to its being consolidated
with or merged into the Company or a Subsidiary, or any Lien existing on any property acquired by
the Company or any Subsidiary at the time such property is so acquired (whether or not the Debt
secured thereby shall have been assumed), provided that (1) no such Lien shall have been created
or assumed in contemplation of such consolidation or merger or such acquisition of property, (2)
each such Lien shall extend solely to the item or items of property so acquired and (3)
immediately after giving effect to the acquisition of the property
subject to such Lien and giving effect thereto, no Default or Event of Default would exist;




          (j) any Lien renewing, extending or refunding any Lien permitted by paragraphs (g), (h) or
(i) of this Section 10.5, provided that (1) the principal amount of Debt secured by such Lien
immediately prior to such extension, renewal or refunding is not increased or the maturity thereof
reduced, (2) such Lien is not extended to any other property and (3) immediately after such
extension, renewal or refunding no Default or Event of Default would exist; and




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          (k) other Liens not otherwise permitted by paragraphs (a) through (j) of this Section
10.5, provided that the aggregate principal amount of all Debt secured by such Liens shall
be permitted by the limitation set forth in Section 10.4.



          Section 10.6 Restrictions on Dividends of Subsidiaries, Etc. The Company will not, and will
not permit any Subsidiary to, enter into any agreement which would restrict any Subsidiary’s
ability or right to pay dividends to, or make advances to or Investments in, the Company or, if
such Subsidiary is not directly owned by the Company, the “parent” Subsidiary of such Subsidiary.




          Section 10.7 Mergers, Consolidations, Etc. The Company will not, and will not permit any
Subsidiary to, consolidate with or merge with any other Person or convey, transfer or lease all or
substantially all of its assets in a single transaction or series of transactions to any Person;
provided that the foregoing restriction does not apply to:





          (a) the consolidation or merger of a Subsidiary with, or the conveyance, transfer or
lease of all or substantially all of the assets of a Subsidiary to, the Company or a
Wholly-Owned Subsidiary; or




          (b) the consolidation or merger of a Subsidiary with any Person other than the Company
or a Wholly-Owned Subsidiary; provided that such Subsidiary shall be the surviving Person
and immediately after giving effect to such transaction (1) no Default or Event of the
Default would exist and (2) the Company shall own the same percentage of the equity or
voting interests in such Subsidiary as the Company owned in such Subsidiary immediately
preceding such transaction; or




          (c) the conveyance, transfer or lease of all of the assets of a Subsidiary to a Person
other than the Company or a Wholly-Owned Subsidiary in compliance with the provisions of
Section 10.8 and Section 10.9; or




          (d) the consolidation or merger of the Company with, or the conveyance, transfer or
lease of all or substantially all of the assets of the Company in a single transaction or
series of transactions to, any Person so long as:




          (1) the successor formed by such consolidation or the survivor of such merger
or the Person that acquires by conveyance, transfer or lease all or substantially
all of the assets of the Company as an entirety, as the case may be (the “Successor
Corporation”), shall be a solvent corporation organized and existing under the laws
of the United States of America, any State thereof or the District of Columbia;




          (2) if the Company is not the Successor Corporation, (i) such corporation shall
have executed and delivered to each holder of the Notes its assumption of the due
and punctual performance and observance of each covenant and condition of this
Agreement (including all Supplements) and the Notes
(pursuant to such agreements and instruments as shall be reasonably
satisfactory to the Required Holders), (ii) the Company shall have caused to be
delivered to each holder of the Notes an opinion of nationally recognized
independent counsel,



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or other independent counsel reasonably satisfactory to the Required Holders, to the
effect that all agreements or instruments effecting such assumption are enforceable
in accordance with their terms and comply with the terms hereof and (iii) each
Guarantor shall have delivered to each holder of the Notes a certificate whereby
such Guarantor shall have reaffirmed its obligations under the Guaranty Agreement;
and




          (3) immediately after giving effect to such transaction, no Default or Event of
Default would exist.



          No such conveyance, transfer or lease of all or substantially all of the assets of the Company
shall have the effect of releasing the Company or any Successor Corporation from its liability
under this Agreement or the Notes.




          Section 10.8 Sale of Assets, Etc. Except as permitted under Section 10.7, Section 10.9 and
Section 10.10, the Company will not, and will not permit any Subsidiary to, make any Asset
Disposition unless:





          (a) in the good faith opinion of the Company, the Asset Disposition is in exchange for
consideration having a Fair Market Value at least equal to that of the property exchanged
and is in the best interest of the Company or such Subsidiary;




          (b) immediately after giving effect to the Asset Disposition, no Default or Event of
Default would exist; and




          (c) immediately after giving effect to the Asset Disposition, the Disposition Value of
all property that was the subject of any Asset Disposition occurring during the immediately
preceding 12 consecutive calendar month period would not exceed 15% of Consolidated Total
Assets determined as of the end of the then most recently ended fiscal year of the Company.



          If the Net Proceeds Amount for any Transfer is applied to a Debt Prepayment Application or a
Property Reinvestment Application within 180 days after such Transfer, then such Transfer, only for
the purpose of determining compliance with subsection (c) of this Section 10.8 as of any date on or
after the Net Proceeds Amount is so applied, shall be deemed not to be an Asset Disposition.




          Section 10.9 Disposal of Ownership of a Subsidiary. The Company will not, and will not permit
any Subsidiary to, sell or otherwise dispose of any shares of Subsidiary Stock, nor will the
Company permit any such Subsidiary to issue, sell or otherwise dispose of any shares of its own
Subsidiary Stock, provided that the foregoing restrictions do not apply to:





          (a) the issue of directors’ qualifying shares by any such Subsidiary;




          (b) any such Transfer of Subsidiary Stock constituting a Transfer described in clause
(a) of the definition of “Asset Disposition”; and



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          (c) the Transfer of all of the Subsidiary Stock of a Subsidiary owned by the Company
and its other Subsidiaries if:




          (1) such Transfer satisfies the requirements of Section 10.8 hereof,




          (2) in connection with such Transfer the entire Investment (whether represented
by stock, Debt, claims or otherwise) of the Company and its other Subsidiaries in
such Subsidiary is sold, transferred or otherwise disposed of to a Person other than
(i) the Company, (ii) another Subsidiary not being simultaneously disposed of or
(iii) an Affiliate, and




          (3) the Subsidiary being disposed of has no continuing Investment in any other
Subsidiary of the Company not being simultaneously disposed of or in the Company.



          Section 10.10 Sale-and-Leasebacks. The Company will not, and will not permit any Subsidiary
to, enter into any Sale-and-Leaseback Transaction unless, (a) the lease which is the subject of
such Sale-and-Leaseback Transaction is not a Long-Term Lease or (b) immediately after giving effect
to such Sale-and-Leaseback Transaction, the aggregate amount of Debt attributable to such
Sale-and-Leaseback Transaction shall be permitted by the limitation set forth in Section 10.4.




          Section 10.11 Transactions with Affiliates. The Company will not, and will not permit any
Subsidiary to, enter into directly or indirectly any Material transaction or Material group of
related transactions (including, without limitation, the purchase, lease, sale or exchange of
properties of any kind or the rendering of any service) with any Affiliate (other than the Company
or another Subsidiary), except upon fair and reasonable terms no less favorable to the Company or
such Subsidiary than would be obtainable in a comparable arm’s-length transaction with a Person not
an Affiliate.




          Section 10.12 Terrorism Sanctions Regulations. The Company will not, and will not permit any
Subsidiary to, (a) become a Person described or designated in the Specially Designated Nationals
and Blocked Persons List of the Office of Foreign Assets Control or in Section 1 of the
Anti-Terrorism Order or (b) knowingly engage in any dealings or transactions with any such Person.




SECTION 11. Events of Default.




          An “Event of Default” shall exist if any of the following conditions or events shall occur and
be continuing:





          (a) the Company defaults in the payment of any principal or Make-Whole Amount, if any,
on any Note when the same becomes due and payable, whether at maturity or at a date fixed
for prepayment or by declaration or otherwise; or




          (b) the Company defaults in the payment of any interest on any Note for more than five
Business Days after the same becomes due and payable; or



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          (c) the Company defaults in the performance of or compliance with any term contained in
Sections 10.2 through 10.4, inclusive, or Sections 10.6 through 10.10, inclusive, or Section 10.12
or any covenant in a Supplement which specifically provides that it shall have the benefit of this
paragraph (c); or




          (d) the Company defaults in the performance of or compliance with any term contained herein
or in any Supplement (other than those referred to in paragraphs (a), (b) and (c)
of this Section 11) and such default is not remedied within 30 days after the earlier of (1)
a Responsible Officer obtaining actual knowledge of such default and (2) the Company receiving
written notice of such default from any holder of a Note (any such written notice to be identified
as a “notice of default” and to refer specifically to this paragraph (d) of Section 11); or




          (e) any representation or warranty made in writing by or on behalf of the Company or any
Guarantor or by any officer of the Company or any Guarantor in this Agreement or any Supplement
under which Additional Notes are then outstanding or in the Guaranty Agreement, respectively, or
in any writing furnished in connection with the transactions contemplated hereby or thereby proves
to have been false or incorrect in any material respect on the date as of which made; or




          (f) (1) the Company or any Subsidiary is in default (as principal or as guarantor or other
surety) in the payment of any principal of or premium or make-whole amount or interest on any Debt
that is outstanding in an aggregate principal amount of at least $10,000,000 beyond any period of
grace provided with respect thereto, or (2) the Company or any Subsidiary is in default in the
performance of or compliance with any term of any evidence of any Debt in an aggregate outstanding
principal amount of at least $10,000,000 or of any mortgage, indenture or other agreement relating
thereto or any other condition exists, and as a consequence of such default or condition such Debt
has become, or has been declared due and payable before its stated maturity or before its
regularly scheduled dates of payment or (3) as a consequence of the occurrence or continuation of
any event or condition (other than the passage of time or the right of the holder of Debt to
convert such Debt into equity interests), the Company or any Subsidiary has become obligated to
purchase or repay Debt before its regular maturity or before its regularly scheduled dates of
payment in an aggregate outstanding principal amount of at least $10,000,000; or




          (g) the Company or any Subsidiary (1) is generally not paying, or admits in writing its
inability to pay, its debts as they become due, (2) files, or consents by answer or otherwise to
the filing against it of, a petition for relief or reorganization or arrangement or any other
petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium or other similar law of any jurisdiction, (3) makes an assignment for
the benefit of its creditors, (4) consents to the appointment of a custodian, receiver, trustee or
other officer with similar powers with respect to it or with respect to any substantial part of
its property, (5) is adjudicated as insolvent or to be liquidated or (6) takes corporate action
for the purpose of any of the foregoing; or



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          (h) a court or Governmental Authority of competent jurisdiction enters an order
appointing, without consent by the Company or any of its Subsidiaries, a custodian,
receiver, trustee or other officer with similar powers with respect to it or with respect
to any substantial part of its property, or constituting an order for relief or approving a
petition for relief or reorganization or any other petition in bankruptcy or for
liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction,
or ordering the dissolution, winding-up or liquidation of the Company or any of its
Subsidiaries, or any such petition shall be filed against the Company or any of its
Subsidiaries and such petition shall not be dismissed within 60 days; or




          (i) a final judgment or judgments for the payment of money aggregating in excess of
$10,000,000 are rendered against one or more of the Company and its Subsidiaries and which
judgments are not fully covered by insurance or, within 60 days after entry thereof,
bonded, discharged or stayed pending appeal, or are not discharged within 60 days after the
expiration of such stay; or




          (j) If (1) any Plan shall fail to satisfy the minimum funding standards of
ERISA or the Code for any plan year or part thereof or a waiver of such standards or
extension of any amortization period is sought or granted under Section 412 of the Code,
(2) a notice of intent to terminate any Plan shall have been or is reasonably expected to
be filed with the PBGC or the PBGC shall have instituted proceedings under ERISA Section
4042 to terminate or appoint a trustee to administer any Plan or the PBGC shall have
notified the Company or any ERISA Affiliate that a Plan may become a subject of any such
proceedings, (3) the aggregate “amount of unfunded benefit liabilities” (within the meaning
of Section 4001(a)(18) of ERISA) under all Plans, determined in accordance with Title IV of
ERISA, shall exceed $10,000,000, (4) the Company or any ERISA Affiliate shall have incurred
or is reasonably expected to incur any liability pursuant to Title I or IV of ERISA or the
penalty or excise tax provisions of the Code relating to employee benefit plans, (5) the
Company or any ERISA Affiliate withdraws from any Multiemployer Plan or (6) the Company or
any ERISA Affiliate establishes or amends any employee welfare benefit plan that provides
post-employment welfare benefits in a manner that would increase the liability of the
Company or any ERISA Affiliate thereunder; and any such event or events described in
clauses (1) through (6) above, either individually or together with any other such event or
events, would reasonably be expected to have a Material Adverse Effect; or




          (k) (1) default shall occur under the Guaranty Agreement and such default shall
continue beyond the period of grace, if any, allowed with respect thereto or (2) the
Guaranty Agreement shall cease to be in full force and effect with respect to any Guarantor
for any reason whatsoever, including, without limitation, a determination by any
Governmental Authority or court that such agreement is invalid, void or unenforceable or
any Guarantor shall contest or deny in writing the validity or enforceability of any of its
obligations under the Guaranty Agreement.


As used in Section 11(j), the terms “employee benefit plan” and “employee welfare benefit plan”
shall have the respective meanings assigned to such terms in Section 3 of ERISA.




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SECTION 12. Remedies on Default, Etc.




          Section 12.1 Acceleration.





          (a) If an Event of Default with respect to the Company described in paragraph (g) or
(h) of Section 11 (other than an Event of Default described in clause (1) of paragraph (g)
or described in clause (6) of paragraph (g) by virtue of the fact that such clause
encompasses clause (1) of paragraph (g)) exists, all the Notes then outstanding shall
automatically become immediately due and payable.




          (b) If any other Event of Default exists, the Required Holders may at any time at its
or their option, by notice or notices to the Company, declare all the Notes then
outstanding to be immediately due and payable.




          (c) If any Event of Default described in paragraph (a) or (b) of Section 11 exists,
any holder or holders of Notes at the time outstanding affected by such Event of Default
may at any time, at its or their option, by notice or notices to the Company, declare all
the Notes held by it or them to be immediately due and payable.



          Upon any Note becoming due and payable under this Section 12.1, whether automatically or by
declaration, such Note will forthwith mature and the entire unpaid principal amount of such Note,
plus (1) all accrued and unpaid interest thereon (including, but not limited to, interest accrued
thereon at the Default Rate) and (2) the applicable Make-Whole Amount, if any,
determined in respect of such principal amount (to the full extent permitted by applicable
law), shall all be immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived. The Company acknowledges, and the
parties hereto agree, that each holder of a Note has the right to maintain its investment in the
Notes free from repayment by the Company (except as herein specifically provided for) and that the
provision for payment of a Make-Whole Amount by the Company in the event that the Notes are prepaid
or are accelerated as a result of an Event of Default, is intended to provide compensation for the
deprivation of such right under such circumstances.




          Section 12.2 Other Remedies. If any Event of Default exists, and irrespective of whether any
Notes have become or have been declared immediately due and payable under Section 12.1, the holder
of any Note at the time outstanding may proceed to protect and enforce the rights of such holder by
an action at law, suit in equity or other appropriate proceeding, whether for the specific
performance of any agreement contained herein or in any Note, or for an injunction against a
violation of any of the terms hereof or thereof, or in aid of the exercise of any power granted
hereby or thereby or by law or otherwise.




          Section 12.3 Rescission. At any time after any Notes have been declared due and payable
pursuant to clause (b) or (c) of Section 12.1, the Required Holders, by written notice to the
Company, may rescind and annul any such declaration and its consequences if (a) the Company has
paid all overdue interest on the Notes, all principal of and applicable Make-Whole Amount, if any,
on any Notes that are due and payable and are unpaid other than by reason of such declaration, and
all interest on such overdue principal and applicable Make-Whole Amount, if any, and (to the extent
permitted by applicable law) any overdue interest in respect of the




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Notes, at the Default Rate, (b) neither the Company nor any other Person shall have paid any
amounts which have become due solely by reason of such declaration, (c) all Events of Default and
Defaults, other than non-payment of amounts that have become due solely by reason of such
declaration, have been cured or have been waived pursuant to Section 17 and (d) no judgment or
decree has been entered for the payment of any monies due pursuant hereto or to the Notes. No
rescission and annulment under this Section 12.3 will extend to or affect any subsequent Event of
Default or Default or impair any right consequent thereon.




          Section 12.4 No Waivers or Election of Remedies, Expenses, Etc. No course of dealing and no
delay on the part of any holder of any Note in exercising any right, power or remedy shall operate
as a waiver thereof or otherwise prejudice such holder’s rights, powers or remedies. No right,
power or remedy conferred by this Agreement (including any Supplement) or by any Note upon any
holder thereof shall be exclusive of any other right, power or remedy referred to herein or therein
or now or hereafter available at law, in equity, by statute or otherwise. Without limiting the
obligations of the Company under Section 15, the Company will pay to the holder of each Note on
demand such further amount as shall be sufficient to cover all costs and expenses of such holder
incurred in any enforcement or collection under this Section 12, including, without limitation,
reasonable attorneys’ fees, expenses and disbursements.




SECTION 13. Registration; Exchange; Substitution of Notes.




          Section 13.1 Registration of Notes. The Company shall keep at its principal executive office a
register for the registration and registration of transfers of Notes (the “Note Register”). The
name and address of each holder of one or more Notes, each transfer thereof and the name and
address of each transferee of one or more Notes shall be registered in such Note Register. Prior to
due presentment for registration of transfer, the Person in whose name any Note shall be registered
shall be deemed and treated as the owner and holder thereof for all purposes hereof, and the
Company shall not be affected by any notice or knowledge to the contrary. The
Company shall give to any holder of a Note that is an Institutional Investor promptly upon
request therefor, a complete and correct copy of the names and addresses of all registered holders
of Notes.




          Section 13.2 Transfer and Exchange of Notes. Upon surrender of any Note at the address and to
the attention of the designated officer (all as specified in Section 18(4)) for registration of
transfer or exchange (and in the case of a surrender for registration of transfer accompanied by a
written instrument of transfer duly executed by the registered holder of such Note or such holder’s
attorney duly authorized in writing and accompanied by the relevant name, address and other
information for notices of each transferee of such Note or part thereof), within
10 Business Days thereof, the Company shall execute and deliver, at the Company’s expense (except
as provided below), one or more new Notes (as requested by the holder thereof) of the same Series
(and of the same tranche if such Series has separate tranches) in exchange therefor, in an
aggregate principal amount equal to the unpaid principal amount of the surrendered Note. Each such
new Note shall be payable to such Person as such holder may request and shall be substantially in
the form of the Note of such Series and tranche, if applicable, originally issued hereunder or
pursuant to the applicable Supplement. Each such new Note shall be dated and bear interest from
the date to which interest shall have been paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid thereon. The Company




-36-









 







may require payment of a sum sufficient to cover any stamp tax or governmental charge imposed in
respect of any such transfer of Notes. Notes shall not be transferred in denominations of less than
$1,000,000, provided that if necessary to enable the registration of transfer by a holder of its
entire holding of Notes of a Series or, tranche, if applicable, one Note of such Series or tranche,
if applicable, may be in a denomination of less than $1,000,000. Any transferee, by its acceptance
of a Note registered in its name (or the name of its nominee), shall be deemed to have made the
representation set forth in Section 6.2.




          Section 13.3 Replacement of Notes. Upon receipt by the Company at the address and to the
attention of the designated officer (all as specified in Section 18(4)) of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note
(which evidence shall be, in the case of an Institutional Investor, notice from such Institutional
Investor of such ownership and such loss, theft, destruction or mutilation), and





          (a) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to
it (provided that if the holder of such Note is, or is a nominee for, an original Purchaser
or an Additional Purchaser or another holder of a Note with a minimum net worth of at least
$50,000,000 or a Qualified Institutional Buyer, such Person’s own unsecured agreement of
indemnity shall be deemed to be satisfactory) or




          (b) in the case of mutilation, upon surrender and cancellation thereof,


within 10 Business Days thereafter, the Company at its own expense shall execute and deliver, in
lieu thereof, a new Note of the same Series (and of the same tranche if such Series has separate
tranches), dated and bearing interest from the date to which interest shall have been paid on such
lost, stolen, destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or
mutilated Note if no interest shall have been paid thereon.




SECTION
14. Payments on Notes.




          Section 14.1 Place of Payment. Subject to Section 14.2, payments of principal, Make-Whole
Amount, if any, and interest becoming due and payable on the Notes shall be made in
New York, New York at the principal office of Bank of America, N.A. in such jurisdiction. The
Company may at any time, by notice to each holder of a Note, change the place of payment of the
Notes so long as such place of payment shall be either the principal office of the Company in such
jurisdiction or the principal office of a bank or trust company in such jurisdiction.




          Section 14.2 Home Office Payment. So long as any Purchaser or Additional Purchaser or such
Person’s nominee shall be the holder of any Note, and notwithstanding anything contained in Section
14.1 or in such Note to the contrary, the Company will pay all sums becoming due on such Note for
principal, Make-Whole Amount, if any, and interest by the method and at the address specified for
such purpose below such Purchaser’s name in Schedule A or below such Additional Purchaser’s name in
Schedule A to the applicable Supplement, or by such other method or at such other address as such
Purchaser or Additional Purchaser shall have from time to time specified to the Company in writing
for such purpose, without the presentation or surrender of such Note or the making of any notation
thereon, except that upon written request of the Company made concurrently with or reasonably
promptly after




-37-









 







payment or prepayment in full of any Note, such Purchaser or Additional Purchaser shall surrender
such Note for cancellation, reasonably promptly after any such request, to the Company at its
principal executive office or at the place of payment most recently designated by the Company
pursuant to Section 14.1. Prior to any sale or other disposition of any Note held by a Purchaser,
an Additional Purchaser or such Person’s nominee, such Person will, at its election, either endorse
thereon the amount of principal paid thereon and the last date to which interest has been paid
thereon or surrender such Note to the Company in exchange for a new Note or Notes pursuant to
Section 13.2. The Company will afford the benefits of this Section 14.2 to any Institutional
Investor that is the direct or indirect transferee of any Note purchased by a Purchaser or an
Additional Purchaser under this Agreement or any Supplement and that has made the same agreement
relating to such Note as the Purchasers and the Additional Purchasers have made in this Section
14.2.




SECTION 15. Expenses, Etc.




          Section 15.1 Transaction Expenses. Whether or not the transactions contemplated hereby are
consummated, the Company will pay all reasonable costs and expenses (including reasonable
attorneys’ fees of a special counsel for the Purchasers and any Additional Purchasers and, if
reasonably required by the Required Holders, local or other counsel) incurred by the Purchasers,
any Additional Purchasers and each other holder of a Note in connection with such transactions and
in connection with any amendments, waivers or consents under or in respect of this Agreement
(including any Supplement), the Guaranty Agreement or the Notes (whether or not such amendment,
waiver or consent becomes effective), including, without limitation: (a) the costs and expenses
incurred in enforcing or defending (or determining whether or how to enforce or defend) any rights
under this Agreement (including any Supplement), the Guaranty Agreement or the Notes or in
responding to any subpoena or other legal process or informal investigative demand issued in
connection with this Agreement (including any Supplement), the Guaranty Agreement or the Notes, or
by reason of being a holder of any Note or a beneficiary of the Guaranty Agreement, and (b) the
costs and expenses, including financial advisors’ fees, incurred in connection with the insolvency
or bankruptcy of the Company or any Subsidiary or in connection with any work-out or restructuring
of the transactions contemplated hereby (including all Supplements), by the Guaranty Agreement and
by the Notes. The Company will pay, and will save each Purchaser, each Additional Purchaser and
each other holder of a Note harmless from, all claims in respect of any fees, costs or expenses, if
any, of brokers and finders (other than those, if any, retained by a Purchaser, an Additional
Purchaser or other holder in connection with its purchase of its Notes).




          Section 15.2 Survival. The obligations of the Company under this Section 15 will survive the
payment or transfer of any Note, the enforcement, amendment or waiver of any provision of this
Agreement (including any Supplement) or the Notes, and the termination of this Agreement (including
any Supplement).




SECTION
16. Survival of
Representations and
Warranties;
Entire Agreement.




          All representations and warranties contained herein or in any Supplement shall survive the
execution and delivery of this Agreement, such Supplement and the Notes, the purchase or transfer
by any Purchaser or any Additional Purchaser of any Note or portion thereof or interest




-38-









 








therein and the payment of any Note, and may be relied upon by any subsequent holder of a Note,
regardless of any investigation made at any time by or on behalf of such Purchaser, such Additional
Purchaser or any other holder of a Note. All statements contained in any certificate or other
instrument delivered by or on behalf of the Company pursuant to this Agreement or any Supplement
shall be deemed representations and warranties of the Company under this Agreement; provided, that
the representations and warranties contained in any Supplement shall be made for the benefit of all
holders of Notes so long as any Additional Notes issued pursuant to such Supplement remain
outstanding. Subject to the preceding sentence, this Agreement (including all Supplements) and the
Notes embody the entire agreement and understanding between the Purchasers, the Additional
Purchasers and the Company and supersede all prior agreements and understandings relating to the
subject matter hereof.




     SECTION
17. Amendment and Waiver.



          Section 17.1 Requirements.





          (a) This Agreement (including any Supplement) and the Notes may be amended, and the
observance of any term hereof (including any Supplement) or of the Notes may be waived
(either retroactively or prospectively), with (and only with) the written consent of the
Company and the Required Holders, except that (a) no amendment or waiver of any of the
provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof (or a corresponding provision of any
Supplement), or any defined term (as it is used in any such Section or corresponding
provision of any Supplement), will be effective as to any holder of a Note unless consented
to by such holder in writing, and (b) no such amendment or waiver may, without the written
consent of the holder of each Note at the time outstanding affected thereby, (1) subject to
the provisions of Section 12 relating to acceleration or rescission, change the amount or
time of any prepayment or payment of principal of, or reduce the rate or change the time of
payment or method of computation of interest or of the applicable Make-Whole Amount on, the
Notes, (2) change the percentage of the principal amount of the Notes the holders of which
are required to consent to any such amendment or waiver or (3) amend any of Sections 8,
11(a), 11(b), 12, 17 or 20 (or a corresponding provision of any Supplement).




          (b) Supplements. Notwithstanding anything to the contrary contained herein, the
Company may enter into any Supplement providing for the issuance of one or more Series of
Additional Notes consistent with Section 2.2 hereof without obtaining the consent of any
holder of any other Series of Notes.



          Section 17.2 Solicitation of Holders of Notes.





          (a) Solicitation. The Company will provide each holder of the Notes (irrespective of
the amount of Notes then owned by it) with sufficient information,
sufficiently far in advance of the date a decision is required, to enable such holder
to make an informed and considered decision with respect to any proposed amendment, waiver
or consent in respect of any of the provisions hereof (including any Supplement) or of the
Notes. The Company will deliver executed or true and correct copies of each amendment,
waiver or consent effected pursuant to the provisions of this Section 17 to



-39-









 






each holder of outstanding Notes promptly following the date on which it is executed and
delivered by, or receives the consent or approval of, the requisite holders of Notes.




          (b) Payment. The Company will not directly or indirectly pay or cause to be paid any
remuneration, whether by way of supplemental or additional interest, fee or otherwise, or
grant any security or provide other credit support, to any holder of Notes as consideration
for or as an inducement to the entering into by any holder of Notes of any waiver or
amendment of any of the terms and provisions hereof unless such remuneration is
concurrently paid, or security is concurrently granted or other credit support concurrently
provided, on the same terms, ratably to each holder of Notes then outstanding even if such
holder did not consent to such waiver or amendment.




          (c) Consent in Contemplation of Transfer. Any consent made pursuant to this Section
17 by a holder of Notes that has transferred or has agreed to transfer its Notes to the
Company, any Subsidiary or any Affiliate of the Company and has provided or has agreed to
provide such written consent as a condition to such transfer shall be void and of no forced
or effect except solely as to such holder, and any amendments effected or waivers granted
or to be effected or granted that would not have been or would not be so effected or
granted but for such consent (and the consents of all other holders of Notes that were
acquired under the same or similar conditions) shall be void and of no force or effect
except solely as to such holder.



          Section 17.3 Binding Effect, Etc. Any amendment or waiver consented to as provided in this
Section 17 applies equally to all holders of Notes and is binding upon them and upon each future
holder of any Note and upon the Company without regard to whether such Note has been marked to
indicate such amendment or waiver. No such amendment or waiver will extend to or affect any
obligation, covenant, agreement, Default or Event of Default not expressly amended or waived or
impair any right consequent thereon. No course of dealing between the Company and the holder of any
Note nor any delay in exercising any rights hereunder (including any Supplement) or under any Note
shall operate as a waiver of any rights of any holder of such Note. As used herein, the term “this
Agreement” and references thereto shall mean this Agreement as it may from time to time be amended
or supplemented.




          Section 17.4 Notes Held by Company, Etc. Solely for the purpose of determining whether the
holders of the requisite percentage of the aggregate principal amount of Notes then outstanding
approved or consented to any amendment, waiver or consent to be given under this Agreement
(including any Supplement) or the Notes, or have directed the taking of any action provided herein
(including all Supplements) or in the Notes to be taken upon the direction of the holders of a
specified percentage of the aggregate principal amount of Notes then outstanding, Notes directly or
indirectly owned by the Company or any of its Subsidiaries or Affiliates shall be deemed not to be
outstanding.




SECTION 18. Notices.




          All notices and communications provided for hereunder or under any Supplement shall be in
writing and sent (a) by telecopy if the sender on the same day sends a confirming copy of such
notice by a recognized overnight delivery service (charges prepaid) (b) by registered or




-40-









 




certified mail with return receipt requested (postage prepaid) or (c) by a recognized overnight
delivery service (charges prepaid) or (d) to the extent specifically permitted hereunder, by
Electronic Delivery or electronic mail. Any such notice or communication (other than a notice or
communication delivered by Electronic Delivery or electronic mail) must be sent:





          (1) if to any Purchaser or its nominee, to such Purchaser or nominee at the
address specified for such communications in Schedule A, or at such other address as
such Purchaser or nominee shall have specified to the Company in writing;




          (2) if to any Additional Purchaser or its nominee, to such Additional Purchaser
or nominee at the address specified for such communications in Schedule A to the
applicable Supplement, or at such other address as such Additional Purchaser or
nominee shall have specified to the Company in writing;




          (3) if to any other holder of any Note, to such holder at such address as such
other holder shall have specified to the Company in writing; or




          (4) if to the Company, to the Company at its address set forth at the beginning
hereof to the attention of Chief Financial Officer, or at such other address as the
Company shall have specified to the holder of each Note in writing.


Notices under this Section 18 will be deemed given only when actually received.




SECTION 19. Reproduction of Documents.




          This Agreement and all documents relating hereto, including, without limitation, (a) all
Supplements, (b) consents, waivers and modifications that may hereafter be executed, (c) documents
received by any Purchaser at the Closing or by any Additional Purchaser on the date of purchase of
its Additional Notes (except the Notes themselves) and (d) financial statements, certificates and
other information previously or hereafter furnished to any holder of Notes, may be reproduced by
such holder by any photographic, photostatic, electronic, digital or other similar process and such
holder may destroy any original document so reproduced. The Company agrees and stipulates that, to
the extent permitted by applicable law, any such reproduction shall be admissible in evidence as
the original itself in any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by such holder of Notes in the regular
course of business) and any enlargement, facsimile or further reproduction of such reproduction
shall likewise be admissible in evidence. This Section 19 shall not prohibit the Company or any
other holder of Notes from contesting any such reproduction to the same extent that it could
contest the original, or from introducing evidence to demonstrate the inaccuracy of any such
reproduction.



SECTION
20. Confidential Information.






          For the purposes of this Section 20, “Confidential Information” means information delivered to
any Purchaser or Additional Purchaser by or on behalf of the Company or any Subsidiary in
connection with the transactions contemplated by or otherwise pursuant to this Agreement (including
any Supplement) that is proprietary in nature and that was clearly marked




-41-









 




or labeled or otherwise adequately identified when received by such Purchaser or Additional
Purchaser as being confidential information of the Company or such Subsidiary, provided that such
term does not include information that (a) was publicly known or otherwise known to such
Purchaser or Additional Purchaser prior to the time of such disclosure, (b) subsequently becomes
publicly known through no act or omission by such Purchaser or Additional Purchaser or any Person
acting on such Purchaser’s or Additional Purchaser’s behalf, (c) otherwise becomes known to such
Purchaser or Additional Purchaser other than through disclosure by the Company or any Subsidiary or
(d) constitutes financial statements delivered to such Purchaser or Additional Purchaser under
Section 7.1 that are otherwise publicly available. Each Purchaser and Additional Purchaser will
maintain the confidentiality of such Confidential Information in accordance with procedures adopted
by such Purchaser or Additional Purchaser in good faith to protect confidential information of
third parties delivered to such Purchaser or Additional Purchaser, provided that such Purchaser or
Additional Purchaser may deliver or disclose Confidential Information to (1) its directors,
officers, employees, agents, attorneys, trustees and affiliates (to the extent such disclosure
reasonably relates to the administration of the investment represented by such Purchaser’s or
Additional Purchaser’s Notes), (2) such Purchaser’s or Additional Purchaser’s financial advisors
and other professional advisors who agree to hold confidential the Confidential Information
substantially in accordance with the terms of this Section 20, (3) any other holder of any Note,
(4) any Institutional Investor to which it sells or offers to sell such Note or any part thereof or
any participation therein (if such Person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this Section 20), (5) any Person from
which it offers to purchase any Security of the Company (if such Person has agreed in writing prior
to its receipt of such Confidential Information to be bound by the provisions of this Section 20),
(6) any federal or state regulatory authority having jurisdiction over such Purchaser or Additional
Purchaser, (7) the NAIC or the SVO or, in each case, any similar organization, or any nationally
recognized rating agency that requires access to information about such Purchaser’s or Additional
Purchaser’s investment portfolio or (8) any other Person to which such delivery or disclosure may
be necessary or appropriate (i) to effect compliance with any law, rule, regulation or order
applicable to such Purchaser or Additional Purchaser, (ii) in response to any subpoena or other
legal process, (iii) in connection with any litigation to which such Purchaser or Additional
Purchaser is a party or (iv) if an Event of Default exists, to the extent such Purchaser or
Additional Purchaser may reasonably determine such delivery and disclosure to be necessary or
appropriate in the enforcement or for the protection of the rights and remedies under such
Purchaser’s or Additional Purchaser’s Notes and this Agreement (including any Supplement). Each
holder of a Note, by its acceptance of a Note, will be deemed to have agreed to be bound by and to
be entitled to the benefits of this Section 20 as though it were a party to this Agreement. On
reasonable request by the Company in connection with the delivery to any holder of a Note of
information required to be delivered to such holder under this Agreement (including any Supplement)
or requested by such holder (other than a holder that is a party to this Agreement or any
Supplement or its nominee), such holder will enter into an agreement with the Company embodying the
provisions of this Section 20.




SECTION 21. Substitution of Purchaser or Additional Purchaser.




          Each Purchaser and Additional Purchaser shall have the right to substitute any one of such
Purchaser’s or Additional Purchaser’s Affiliates as the purchaser of the Notes that such Purchaser
or Additional Purchaser has agreed to purchase hereunder or under a Supplement, by




-42-









 




written notice to the Company, which notice shall be signed by both such Purchaser or Additional
Purchaser and such Purchaser’s or Additional Purchaser’s Affiliate, shall contain such Affiliate’s
agreement to be bound by this Agreement or such Supplement, as the case may be, and shall contain a
confirmation by such Affiliate of the accuracy with respect to it of the representations set forth
in Section 6. Upon receipt of such notice, any reference to such Purchaser or Additional Purchaser
in this Agreement or such Supplement (other than in this Section 21), shall be deemed to refer to
such Affiliate in lieu of such original Purchaser or Additional Purchaser. In the event that such
Affiliate is so substituted as a purchaser hereunder or under such Supplement and such
Affiliate thereafter transfers to such original Purchaser or Additional Purchaser all of the Notes
then held by such Affiliate, upon receipt by the Company of notice of such transfer, any reference
to such Affiliate in this Agreement or such Supplement (other than in this Section 21), shall no
longer be deemed to refer to such Affiliate, but shall refer to such original Purchaser or
Additional Purchaser, and such Purchaser or Additional Purchaser shall again have all the rights of
an original holder under this Agreement or such Supplement.




SECTION 22. Miscellaneous.




          Section 22.1 Successors and Assigns. All covenants and other agreements contained in this
Agreement (including all covenants and other agreements contained in any Supplement) by or on
behalf of any of the parties hereto bind and inure to the benefit of their respective successors
and assigns (including, without limitation, any subsequent holder of a Note) whether so expressed
or not.




          Section 22.2 Payments Due on Non-Business Days. Anything in this Agreement or any Supplement
or the Notes to the contrary notwithstanding (but without limiting the requirement in Section 8.4
that the notice of any optional prepayment specify a Business Day as the date fixed for such
prepayment), any payment of principal of or applicable Make-Whole Amount or interest on any Note
that is due on a date other than a Business Day shall be made on the next succeeding Business Day
without including the additional days elapsed in the computation of the interest payable on such
next succeeding Business Day; provided that if the maturity date of any Note is a date other than a
Business Day, the payment otherwise due on such maturity date shall be made on the next succeeding
Business Day and shall include the additional days elapsed in the computation of interest payable
on such next succeeding Business Day.




          Section 22.3 Accounting Terms. All accounting terms used herein or in any Supplement which
are not expressly defined in this Agreement or in such Supplement have the meanings respectively
given to them in accordance with GAAP. Except as otherwise specifically provided herein or in any
Supplement, (a) all computations made pursuant to this Agreement or in such Supplement shall be
made in accordance with GAAP and (b) all financial statements shall be prepared in accordance with
GAAP.




          Section 22.4 Severability. Any provision of this Agreement (including any Supplement) that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall (to the full extent
permitted by law) not invalidate or render unenforceable such provision in any other jurisdiction.




-43-









 








          Section 22.5 Construction. Each covenant contained herein (including any Supplement) shall be
construed (absent express provision to the contrary) as being independent of each other covenant
contained herein (including any Supplement), so that compliance with any one covenant shall not
(absent such an express contrary provision) be deemed to excuse compliance with any other covenant.
Where any provision herein refers to action to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether such action is taken directly or
indirectly by such Person.




          For the avoidance of doubt, all Schedules and Exhibits attached to this Agreement or any
Supplement shall be deemed to be a part hereof or of such Supplement.




          Section 22.6 Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be an original but all of which together shall constitute one instrument. Each
counterpart may consist of a number of copies hereof, each signed by less than
all, but together signed by all, of the parties hereto.




          Section 22.7 Governing Law. This Agreement shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the law of the State of New York
excluding choice-of-law principles of the law of such State that would require the application of
the laws of a jurisdiction other than such State.




          Section 22.8 Jurisdiction and Process; Waiver of Jury Trial.





          (a) The Company irrevocably submits to the non-exclusive jurisdiction of any New York
State or federal court sitting in the Borough of Manhattan, The City of New York, over any
suit, action or proceeding arising out of or relating to this Agreement, any Supplement or
the Notes. To the fullest extent permitted by applicable law, the Company irrevocably
waives and agrees not to assert, by way of motion, as a defense or otherwise, any claim
that it is not subject to the jurisdiction of any such court, any objection that it may now
or hereafter have to the laying of the venue of any such suit, action or proceeding brought
in any such court and any claim that any such suit, action or proceeding brought in any
such court has been brought in an inconvenient forum.




          (b) The Company consents to process being served by or on behalf of any holder of
Notes in any suit, action or proceeding of the nature referred to in Section 22.8(a) by
mailing a copy thereof by registered or certified mail (or any substantially similar form
of mail), postage prepaid, return receipt requested, to it at its address specified in
Section 18(4) or at such other address of which such holder shall then have been notified
pursuant to said Section. The Company agrees that such service upon receipt (1) shall be
deemed in every respect effective service of process upon it in any such suit, action or
proceeding and (2) shall, to the fullest extent permitted by applicable law, be taken and
held to be valid personal service upon and personal delivery to it. Notices hereunder shall
be conclusively presumed received as evidenced by a delivery receipt furnished by the
United States Postal Service or any reputable commercial delivery service.



-44-









 






          (c) Nothing in this Section 22.8 shall affect the right of any holder of a Note to
serve process in any manner permitted by law, or limit any right that the holders of any of
the Notes may have to bring proceedings against the Company in the courts of any
appropriate jurisdiction or to enforce in any lawful manner a judgment obtained in one
jurisdiction in any other jurisdiction.




          (d) The parties hereto hereby waive trial by
jury in any action brought on or with respect to this Agreement, any Supplement,
the Notes or any other document executed in connection herewith or therewith.



*     *     *     *     *




-45-









 








          The execution hereof by the Purchasers shall constitute a contract among the Company and the
Purchasers for the uses and purposes hereinabove set forth.




	 	 	 	 	 
	 	Very truly yours,



Granite Construction Incorporated

 	 
	 	By  	/s/ William G. Dorey
 	 
	 	 	William G. Dorey 	 
	 	 	President 	 
	 
	 	 	 
	 	By  	                                                   /s/ William E. Barton
 	 
	 	 	William E. Barton 	 
	 	 	 Sr. Vice President 	 
	 




-46-









 





The
foregoing is hereby accepted and agreed to as of the date thereof.




	 	 	 	 	 
	 	The Prudential Life Insurance Company of

  America

 	 
	 	By:  	     
/s/ [ILLEGIBLE]
 	 
	 	 	     Vice President 	 
	 	 	 	 
	 	Prudential Retirement Insurance and Annuity

Company

 	 
	 	By:  	     Prudential Investment Management, Inc.,
 	 
	 	 	     as investment manager 	 
	 	 	 	 



					
	 	  	By:       
/s/ [ILLEGIBLE]
 	 
	 	 	              Vice President 	 
	 	 	 	 
	 	Universal Prudential Arizona Reinsurance

Company

 	 
	 	By:  	     Prudential Investment Management, Inc.,
 	 
	 	 	     as investment manager 	 
	 	 	 	 
	 	  	By:        
/s/ [ILLEGIBLE]
 	 
	 	 	              Vice President 	 
	 	 	 	 
	 	Zurich American Insurance Company

 	 
	 	By:  	     Prudential Private Placement Investors, L.P.
 	 
	 	 	     (as Investment Advisor) 	 
	 	 	 	 
	 	By:  	     Prudential Private Placement Investors, Inc.
 	 
	 	 	     (as its General Partner) 	 
	 	 	 	 
	 	  	By:        
/s/ [ILLEGIBLE]
 	 
	 	 	              Vice President 	 
	 	 	 	 














 





The
foregoing is hereby accepted and agreed to as of the date thereof.




	 	 	 	 	 
	 	American International Group, Inc.

 	 
	 	By:  	     AIG-Global Investment Corp.,
 	 
	 	 	     Investment Advisor 	 
	 	 	 	 
	 	By:  	     /s/ Lorri J. White
 	 
	 	Nane:	         Lorri J. White 	 
	 	Title:	     Vice President 	 
	 














 





The
foregoing is hereby accepted and agreed to as of the date thereof.




	 	 	 	 	 
	 	ING Life Insurance and Annuity Company 
ING
USA Annuity and Life Insurance
Company Reliastar Life Insurance Company 
Reliastar Life Insurance
Company of New York
 Security Life of Denver Insurance Company 

 	 
	 	By:  	ING Investment Management LLC,
 	 
	 	 	as Agent 	 
	 	 	 	 
	 	By:  	/s/ Christopher P. Lyons
 	 
	 	 	Christopher P. Lyons 	 
	 	 	Senior Vice President 	 
	 














 





The
foregoing is hereby accepted and agreed to as of the date thereof.




	 	 	 	 	 
	 	The Guardian Life Insurance Company of

America

 	 
	 	By:  	     /s/ Thomas M. Donohue
 	 
	 	Name:	     Thomas M. Donohue  	 
	 	Title:	     Managing Director 	 
	 




\









 





The
foregoing is hereby accepted and agreed to as of the date thereof.




	 	 	 	 	 
	 	Principal Life Insurance Company

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



	 	 	 	 	 
	 	  	By: 	/s/ Joellen J. Watts
 	 
	 	 	Its: 	Joellen J. Watts, Counsel 	 
	 	 	 	 
	 	  	By: 	/s/ Alan P. Kress
 	 
	 	 	Its: 	Alan P. Kress, Counsel 	 
	 	 	 	 
	 
















 





The foregoing is hereby accepted and
agreed to as of the date thereof.



	 	 	 	 	 	 	 
	 	 	United of Omaha Life Insurance Company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Curtis R. Caldwell	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Curtis R. Caldwell	 	 
	 

	 	Title:
	 	 Vice President	 	 






 









 





The foregoing is hereby accepted and agreed to as of the date thereof.



	 	 	 	 	 	 	 
	 	 	Allianz Life Insurance Company of North America	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Allianz of America, Inc., as the authorized signatory and investment manager	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Gary Brown	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Gary Brown	 	 
	 

	 	Title:
	 	Assistant Treasurer	 	 






 









 





The foregoing is hereby accepted and
agreed to as of the date thereof.



	 	 	 	 	 	 	 	 	 
	 	 	THE STATE LIFE INSURANCE COMPANY	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	American United Life
Insurance Company, 
its agent
	 	 
	 	 	 	 	/s/ Kent R. Adams	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	Kent R. Adams	 	 
	 

	 	 	 	Its:
	 	V.P. Fixed Income Securities	 	 






 









 





The foregoing is hereby accepted and
agreed to as of the date thereof.



	 	 	 	 	 	 	 	 	 
	 	 	FARM BUREAU LIFE INSURANCE COMPANY OF MICHIGAN	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	American United Life Insurance Company,
 its agent
	 	 
	 	 	 	 	/s/ Kent R. Adams	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	Kent R. Adams	 	 
	 

	 	 	 	Its:
	 	V.P. Fixed Income Securities	 	 







 









 








The foregoing is hereby accepted and agreed to as of the date thereof.



	 	 	 	 	 	 	 	 	 
	 	 	LAFAYETTE LIFE INSURANCE COMPANY	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	American United Life Insurance Company, 
its agent
	 	 
	 	 	 	 	/s/ Kent R. Adams	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	Kent R. Adams	 	 
	 

	 	 	 	Its:
	 	V.P. Fixed Income Securities	 	 






 









 





The foregoing is hereby accepted and agreed
to as of the date thereof.



	 	 	 	 	 	 	 
	 	 	AMERICAN UNITED LIFE INSURANCE COMPANY  
	 
	 	 	 	 	 	 
	 	 	/s/ Kent R. Adams	 	 
	 	 	 	 	 
	 

	 	By:
	 	Kent R. Adams	 	 
	 

	 	Its:
	 	V.P. Fixed Income Securities	 	 






 









 





The foregoing is hereby accepted and
agreed to as of the date thereof.



	 	 	 	 	 	 	 
	 	 	American Family Life Insurance Company  
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Phillip Hannifan	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Phillip Hannifan	 	 
	 

	 	 	 	Investment Director	 	 






 









 





The foregoing is hereby accepted and agreed to as of the date thereof.



	 	 	 	 	 	 	 
	 	 	Assurity Life Insurance Company  
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Victor Weber	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Victor Weber	 	 
	 

	 	Title:
	 	Senior Director	 	 







 












 





Information Relating to Purchasers




	 	 	 	 	 
	Name and Address of Purchaser

	 	 
	 	Principal Amount of
	 

	 	Series
	 	Notes to be Purchased
	 
	 	 	 	 
	The Prudential Insurance Company of America

	 	2007-A
	 	 $19,965,000






c/o Prudential Capital Group

4 Embarcadero Center, Suite 2700

San Francisco, CA 94111

Attention: Managing Director



Payments



All payments on or in respect of the Notes to be by bank wire transfer of Federal or other
immediately available funds (identifying each payment as “Granite Construction Incorporated, 6.11%
Series 2007-A Senior Notes due December 12, 2019, PPN 387328 A#4, principal, premium or interest”)
to:



JPMorgan Chase Bank

New York, New York

ABA No.: 021-000-021

Account Name: Prudential Managed Portfolio

Account No.: P86188 (please do not included spaces)



Notices



All notices with respect to payments to be addressed to:



The Prudential Insurance Company of America

c/o Investment Operations Group

Gateway Center Two, 10th Floor

100 Mulberry Street

Newark, New Jersey 07102-4077

Attention: Manager, Billings and Collections



All telephonic notices with respect to prepayments to be addressed to:



Manager, Trade Management Group

Telephone: (973) 367-3141

Facsimile: (888) 889-3832



All other notices and communications to be addressed as first provided above.




Schedule A

(to Note Purchase Agreement)






 









 








Name of Nominee in which Note is to be issued: None




Tax Identification No.: 22-1211670




A-2









 





	 	 	 	 	 
	Name and Address of Purchaser

	 	 
	 	Principal Amount of
	 

	 	Series
	 	Notes to be Purchased
	 
	 	 	 	 
	The Prudential Insurance Company of America

	 	2007-A
	 	 $15,770,000






c/o Prudential Capital Group

4 Embarcadero Center, Suite 2700

San Francisco, CA 94111

Attention: Managing Director



Payments



All payments on or in respect of the Notes to be by bank wire transfer of Federal or other
immediately available funds (identifying each payment as “Granite Construction Incorporated, 6.11%
Series 2007-A Senior Notes due December 12, 2019, PPN 387328 A#4, principal, premium or interest”)
to:



JPMorgan Chase Bank

New York, New York

ABA No.: 021-000-021

Account Name: The Prudential — Privest Portfolio

Account No.: P86189 (please do not included spaces)



Notices



All notices with respect to payments to be addressed to:



The Prudential Insurance Company of America

c/o Investment Operations Group

Gateway Center Two, 10th Floor

100 Mulberry Street

Newark, New Jersey 07102-4077

Attention: Manager, Billings and Collections



All telephonic notices with respect to prepayments to be addressed to:



Manager, Trade Management Group

Telephone: (973) 367-3141

Facsimile: (888) 889-3832



All other notices and communications to be addressed as first provided above.




A-3









 







Name of Nominee in which Note is to be issued: None



Tax Identification No.: 22-1211670




A-4









 








	 	 	 	 	 
	Name and Address of Purchaser

	 	 
	 	Principal Amount of
	 

	 	Series
	 	Notes to be Purchased
	 
	 	 	 	 
	Prudential Retirement Insurance and Annuity Company

	 	2007-A
	 	 $13,000,000






c/o Prudential Capital Group

4 Embarcadero Center, Suite 2700

San Francisco, CA 94111

Attention: Managing Director



Payments



All payments on or in respect of the Notes to be by bank wire transfer of Federal or other
immediately available funds (identifying each payment as “Granite Construction Incorporated, 6.11%
Series 2007-A Senior Notes due December 12, 2019, PPN 387328 A#4, principal, premium or interest”)
to:



JPMorgan Chase Bank

New York, New York

ABA No.: 021-000-021

Account Name: PRIAC

Account No.: P86329 (please do not included spaces)



Notices



All notices with respect to payments to be addressed to:



Prudential Retirement Insurance and Annuity Company

c/o Prudential Investment Management, Inc.

Private Placement Trade Management

PRIAC Administration

Gateway Center Four, 7th Floor

100 Mulberry Street

Newark, New Jersey 07102-4077

Telephone: (973) 802-8107

Facsimile: (888) 889-3832



All other notices and communications to be addressed as first provided above.



Name of Nominee in which Note is to be issued: None



Tax Identification No.: 06-1050034




A-5









 








	 	 	 	 	 
	Name and Address of Purchaser

	 	 	 	Principal Amount of
	 

	 	Series
	 	Notes to be Purchased
	 
	 	 	 	 
	Universal Prudential Arizona Reinsurance Company

	 	2007-A
	 	$5,065,000






c/o Prudential Capital Group

4 Embarcadero Center, Suite 2700

San Francisco, CA 94111

Attention: Managing Director



Payments



All payments on or in respect of the Notes to be by bank wire transfer of Federal or other
immediately available funds (identifying each payment as “Granite Construction Incorporated, 6.11%
Series 2007-A Senior Notes due December 12, 2019, PPN 387328 A#4, principal, premium or interest”)
to:



JPMorgan Chase Bank

New York, New York

ABA No.: 021-000-021

Account Name: UPRAC PLAZ Trust 2 — Privates

Account No.: P86393 (please do not included spaces)



Notices



All notices with respect to payments to be addressed to:



Universal Prudential Arizona Reinsurance Company

c/o The Prudential Insurance Company of America

c/o Investment Operations Group

Gateway Center Two, 10th Floor

100 Mulberry Street

Newark, New Jersey 07102-4077

Attention: Manager, Billings and Collections



All other notices and communications to be addressed as first provided above.



Name of Nominee in which Note is to be issued: None



Tax Identification No.: 41-2214052




A-6









 








	 	 	 	 	 
	Name and Address of Purchaser

	 	 	 	Principal Amount of
	 	 	Series	 	Notes to be Purchased
	 
	 	 	 	 
	Zurich American Insurance Company

	 	2007-A
	 	 $6,200,000






c/o Prudential Capital Group

4 Embarcadero Center, Suite 2700

San Francisco, CA 94111

Attention: Managing Director



Payments



All payments on or in respect of the Notes to be by bank wire transfer of Federal or other
immediately available funds (identifying each payment as “Granite Construction Incorporated, 6.11%
Series 2007-A Senior Notes due December 12, 2019, PPN 387328 A#4, principal, premium or interest”)
to:



Hare & Co.

c/o The Bank of New York
New York, New York

ABA No.: 021-000-018

BNF: IOC566

Attention: William Cashman

Reference: ZAIC Private Placements #399141



Notices



All notices with respect to payments and written confirmations of such wire transfers to be
addressed to:



Zurich North America

Attention: Treasury T1-19

1400 American Lane

Schaumberg, Illinois 60196-1056



Contact: Mary Fran Callahan, Vice President-Treasurer

Telephone: (847) 605-6447

Facsimile: (847) 605-7895

E-mail: mary.callahan@zurichna.com



All other notices and communications to be addressed as first provided above.



Name of Nominee in which Note is to be issued: Hare & Co.



Tax Identification No.: 13-6062916





A-7











 





	 	 	 	 	 
	Name and Address of Purchaser

	 	 	 	Principal Amount of
	 

	 	Series
	 	Notes to be Purchased
	 
	 	 	 	 
	American International Group, Inc.

	 	2007-A
	 	$40,000,000
	c/o AIG Investments
	 	 	 	 
	2929 Allen Parkway, A36-04
	 	 	 	 
	Houston, Texas 77019-2155
	 	 	 	 
	Attention: Private Placements — Portfolio
	 	 	 	 
	Operations
	 	 	 	 
	Facsimile: (713) 831-1072
	 	 	 	 






Payments



All payments on or in respect of the Notes to be by bank wire transfer of Federal or other
immediately available funds (identifying each payment as “Granite Construction Incorporated, 6.11%
Series 2007-A Senior Notes due December 12, 2019, PPN 387328 A#4, principal, premium or interest”)
to:



The Bank of New York

ABA # 021-000-018

Account #: GL111566

For Further Credit to: AIG, INC. — MATCHED INVESTMENT PROGRAM;

                                   Account No. 260765

Ref: PPN # and Prin: $                    ; Int: $                    




Notices



All notices regarding payment of the Notes, audit confirmations and related correspondence to be
addressed to:



AIG, Inc. — Matched Investment Program (260765)

c/o AIG Investments

2929 Allen Parkway, A36-04

Houston, Texas 77019-2155

Attention: Private Placements — Portfolio Operations

Facsimile: (713) 831-1072 OR

Email:AIGGIGPVTPLACEMENTOPERATIONS@aig.com



With a duplicate copy of all notices regarding payment information to be addressed to:



AIG, Inc. — Matched Investment Program (260765)

c/o The Bank of New York

Attention: P & I Department

Facsimile: (718) 315-3076




A-8









 







All notices regarding compliance information to:



AIG Global Investment Corporation

2929 Allen Parkway, A36-04

Houston, Texas 77019-2155

Attention: Private Placements — Compliance

Email: Compliance-AIGGIG@aig.com



Note: Only two (2) complete sets of compliance information are required for all companies

for which AIG Global Investment Corp. serves an investment adviser.



All other notices and communications to be addressed as first provided above.




Name of Nominee in which Notes are to be issued: None



Taxpayer I.D. Number: 13-2592361




A-9









 








	 	 	 	 	 
	Name and Address of Purchaser

	 	 	 	Principal Amount of
	 

	 	Series
	 	Notes to be Purchased
	 
	 	 	 	 
	ING USA Annuity and Life Insurance
Company

	 	2007-A
	 	$12,000,000
	c/o ING Investment Management LLC
	 	 	 	 
	5780 Powers Ferry Road NW, Suite 300
	 	 	 	 
	Atlanta, Georgia 30327-4347
	 	 	 	 
	Attention: Private Placements
	 	 	 	 
	Facsimile: (770) 690-5057
	 	 	 	 






Payments



All payments on or in respect of the Notes to be by bank wire transfer of Federal or other
immediately available funds for credit to:



The Bank of New York Mellon

ABA # 021-000-018




	 	 	 	 	 
	 

	 	Account:
	 	IOC 566/INST’L CUSTODY (for scheduled principal and interest payments)
	 
	 	 	 	 
	 

	 	or	 	 
	 
	 	 	 	 
	 

	 	 	 	IOC 565/INST’L CUSTODY (for all payments other than scheduled principal
and interest)





For further credit to: ING USA/Acct. 136373

Reference: PPN 387328 A#4



Each such wire transfer should set forth the name of the issuer, the full title (including the
coupon rate, issuance date, and final maturity date) of the Notes on account of which such payment
is made, and the due date and application (as among principal, premium and interest) of the payment
being made.




Notices



All notices regarding payment of the Notes to be addressed to:



ING Investment Management LLC

5780 Powers Ferry Road NW, Suite 300

Atlanta, Georgia 30327-4347

Attention: Operations/Settlements

Facsimile: (770) 690-4886




A-10









 







All other notices and communications to be addressed as first provided above.



With a duplicate copy to be addressed to:



ING Investment Management LLC

100 Washington Avenue South, Suite 1635

Minneapolis, Minnesota 55401-2121

Attention: Robert Boucher

Facsimile: (612) 372-5368



Name of Nominee in which Notes are to be issued: None



Taxpayer I.D. Number: 41-0991508




A-11









 








	 	 	 	 	 
	Name and Address of Purchaser

	 	 	 	Principal Amount of
	 

	 	Series
	 	Notes to be Purchased
	 
	 	 	 	 
	ING USA Annuity and Life Insurance
Company

	 	2007-A
	 	$6,000,000
	c/o ING Investment Management LLC
	 	 	 	 
	5780 Powers Ferry Road NW, Suite 300
	 	 	 	 
	Atlanta, Georgia 30327-4347
	 	 	 	 
	Attention: Private Placements
	 	 	 	 
	Facsimile: (770) 690-5057
	 	 	 	 






Payments



All payments on or in respect of the Notes to be by bank wire transfer of Federal or other
immediately available funds for credit to:



The Bank of New York Mellon

ABA # 021-000-018




	 	 	 	 	 
	 

	 	Account:
	 	IOC 566/INST’L CUSTODY (for scheduled principal and interest payments)
	 
	 	 	 	 
	 

	 	or	 	 
	 
	 	 	 	 
	 

	 	 	 	IOC 565/INST’L CUSTODY (for all payments other than scheduled
principal and interest)





For further credit to: ING USA/Acct. 136374

Reference: PPN 387328 A#4



Each such wire transfer should set forth the name of the issuer, the full title (including the
coupon rate, issuance date, and final maturity date) of the Notes on account of which such payment
is made, and the due date and application (as among principal, premium and interest) of the payment
being made.



Notices



All notices regarding payment of the Notes to be addressed to:



ING Investment Management LLC

5780 Powers Ferry Road NW, Suite 300

Atlanta, Georgia 30327-4347

Attention: Operations/Settlements

Facsimile: (770) 690-4886




A-12









 







All other notices and communications to be addressed as first provided above.



With a duplicate copy to be addressed to:



ING Investment Management LLC

100 Washington Avenue South, Suite 1635

Minneapolis, Minnesota 55401-2121

Attention: Robert Boucher

Facsimile: (612) 372-5368



Name of Nominee in which Notes are to be issued: None



Taxpayer I.D. Number: 41-0991508



A-13









 







	 	 	 	 	 
	Name and Address of Purchaser

	 	 	 	Principal Amount of
	 

	 	Series
	 	Notes to be Purchased
	 
	 	 	 	 
	Reliastar Life Insurance Company

	 	2007-A
	 	$1,200,000
	c/o ING Investment Management LLC
	 	 	 	 
	5780 Powers Ferry Road NW, Suite 300
	 	 	 	 
	Atlanta, Georgia 30327-4347
	 	 	 	 
	Attention: Private Placements
	 	 	 	 
	Facsimile: (770) 690-5057
	 	 	 	 






Payments



All payments on or in respect of the Notes to be by bank wire transfer of Federal or other
immediately available funds for credit to:




The Bank of New York Mellon

ABA # 021-000-018



	 	 	 	 	 
	 

	 	Account:
	 	IOC 566/INST’L CUSTODY (for scheduled principal and interest payments)
	 
	 	 	 	 
	 

	 	or	 	 
	 
	 	 	 	 
	 

	 	 	 	IOC 565/INST’L CUSTODY (for all payments other than scheduled principal
and interest)





For further credit to: RLIC/Acct. 187035

Reference: PPN 387328 A#4



Each such wire transfer should set forth the name of the issuer, the full title (including the
coupon rate, issuance date, and final maturity date) of the Notes on account of which such payment
is made, and the due date and application (as among principal, premium and interest) of the payment
being made.



Notices



All notices regarding payment of the Notes to be addressed to:



ING Investment Management LLC

5780 Powers Ferry Road NW, Suite 300

Atlanta, Georgia 30327-4347

Attention: Operations/Settlements

Facsimile: (770) 690-4886




A-14









 







All other notices and communications to be addressed as first provided above.



With a duplicate copy to be addressed to:



ING Investment Management LLC

100 Washington Avenue South, Suite 1635

Minneapolis, Minnesota 55401-2121

Attention: Robert Boucher

Facsimile: (612) 372-5368



Name of Nominee in which Notes are to be issued: None



Taxpayer I.D. Number: 41-0451140




A-15









 








	 	 	 	 	 
	Name and Address of Purchaser

	 	 	 	Principal Amount of
	 

	 	Series
	 	Notes to be Purchased
	 
	 	 	 	 
	Reliastar Life Insurance Company

	 	2007-A
	 	$1,000,000
	c/o ING Investment Management LLC
	 	 	 	 
	5780 Powers Ferry Road NW, Suite 300
	 	 	 	 
	Atlanta, Georgia 30327-4347
	 	 	 	 
	Attention: Private Placements
	 	 	 	 
	Facsimile: (770) 690-5057
	 	 	 	 






Payments



All payments on or in respect of the Notes to be by bank wire transfer of Federal or other
immediately available funds for credit to:



The Bank of New York Mellon

ABA # 021-000-018




	 	 	 	 	 
	 

	 	Account:
	 	IOC 566/INST’L CUSTODY (for scheduled principal and interest payments)
	 
	 	 	 	 
	 

	 	or	 	 
	 
	 	 	 	 
	 

	 	 	 	IOC 565/INST’L CUSTODY (for all payments other than scheduled principal
and interest)





For further credit to: RLIC REIN/Acct. 301612

Reference: PPN 387328 A#4



Each such wire transfer should set forth the name of the issuer, the full title (including the
coupon rate, issuance date, and final maturity date) of the Notes on account of which such payment
is made, and the due date and application (as among principal, premium and interest) of the payment
being made.




Notices



All notices regarding payment of the Notes to be addressed to:



ING Investment Management LLC

5780 Powers Ferry Road NW, Suite 300

Atlanta, Georgia 30327-4347

Attention: Operations/Settlements

Facsimile: (770) 690-4886




A-16









 







All other notices and communications to be addressed as first provided above.



With a duplicate copy to be addressed to:



ING Investment Management LLC

100 Washington Avenue South, Suite 1635

Minneapolis, Minnesota 55401-2121

Attention: Robert Boucher

Facsimile: (612) 372-5368



Name of Nominee in which Notes are to be issued: None



Taxpayer I.D. Number: 41-0451140




A-17









 








	 	 	 	 	 
	Name and Address of Purchaser

	 	 	 	Principal Amount of
	 

	 	Series
	 	Notes to be Purchased
	 
	 	 	 	 
	Security Life of Denver Insurance
Company

	 	2007-A
	 	$2,700,000
	c/o ING Investment Management LLC
	 	 	 	 
	5780 Powers Ferry Road NW, Suite 300
	 	 	 	 
	Atlanta, Georgia 30327-4347
	 	 	 	 
	Attention: Private Placements
	 	 	 	 
	Facsimile: (770) 690-5057
	 	 	 	 






Payments



All payments on or in respect of the Notes to be by bank wire transfer of Federal or other
immediately available funds for credit to:



The Bank of New York Mellon

ABA # 021-000-018




	 	 	 	 	 
	 

	 	Account:
	 	IOC 566/INST’L CUSTODY (for scheduled principal and interest payments)
	 
	 	 	 	 
	 

	 	or	 	 
	 
	 	 	 	 
	 

	 	 	 	IOC 565/INST’L CUSTODY (for all payments other than scheduled principal
and interest)
	 
	 

	 	For further credit to: SLD/Acct. 178157

Reference: PPN 387328 A#4





Each such wire transfer should set forth the name of the issuer, the full title (including the
coupon rate, issuance date, and final maturity date) of the Notes on account of which such payment
is made, and the due date and application (as among principal, premium and interest) of the payment
being made.



Notices



All notices regarding payment of the Notes to be addressed to:



ING Investment Management LLC

5780 Powers Ferry Road NW, Suite 300

Atlanta, Georgia 30327-4347

Attention: Operations/Settlements

Facsimile: (770) 690-4886




A-18









 







All other notices and communications to be addressed as first provided above.



With a duplicate copy to be addressed to:



ING Investment Management LLC

100 Washington Avenue South, Suite 1635

Minneapolis, Minnesota 55401-2121

Attention: Robert Boucher

Facsimile: (612) 372-5368



Name of Nominee in which Notes are to be issued: None



Taxpayer I.D. Number: 84-0499703




A-19









 








	 	 	 	 	 
	Name and Address of Purchaser

	 	 	 	Principal Amount of
	 

	 	Series
	 	Notes to be Purchased
	 
	 	 	 	 
	ING Life Insurance and Annuity Company

	 	2007-A
	 	$3,000,000
	c/o ING Investment Management LLC
	 	 	 	 
	5780 Powers Ferry Road NW, Suite 300
	 	 	 	 
	Atlanta, Georgia 30327-4347
	 	 	 	 
	Attention: Private Placements
	 	 	 	 
	Facsimile: (770) 690-5057
	 	 	 	 






Payments



All payments on or in respect of the Notes to be by bank wire transfer of Federal or other
immediately available funds for credit to:



The Bank of New York Mellon

ABA # 021-000-018




	 	 	 	 	 
	 

	 	Account:
	 	IOC 566/INST’L CUSTODY (for scheduled principal and interest payments)
	 
	 	 	 	 
	 

	 	or	 	 
	 
	 	 	 	 
	 

	 	 	 	IOC 565/INST’L CUSTODY (for all payments other than scheduled principal
and interest)





For further credit to: ILIAC/Acct. 216101

Reference: PPN 387328 A#4



Each such wire transfer should set forth the name of the issuer, the full title (including the
coupon rate, issuance date, and final maturity date) of the Notes on account of which such payment
is made, and the due date and application (as among principal, premium and interest) of the payment
being made.



Notices



All notices regarding payment of the Notes to be addressed to:



ING Investment Management LLC

5780 Powers Ferry Road NW, Suite 300

Atlanta, Georgia 30327-4347

Attention: Operations/Settlements

Facsimile: (770) 690-4886




A-20









 







All other notices and communications to be addressed as first provided above.



With a duplicate copy to be addressed to:



ING Investment Management LLC

100 Washington Avenue South, Suite 1635

Minneapolis, Minnesota 55401-2121

Attention: Robert Boucher

Facsimile: (612) 372-5368



Name of Nominee in which Notes are to be issued: None



Taxpayer I.D. Number: 71-0294708




A-21









 








	 	 	 	 	 
	Name and Address of Purchaser

	 	 	 	Principal Amount of
	 

	 	Series
	 	Notes to be Purchased
	 
	 	 	 	 
	Reliastar Life Insurance Company of
New York

	 	2007-A
	 	$1,100,000
	c/o ING Investment Management LLC
	 	 	 	 
	5780 Powers Ferry Road NW, Suite 300
	 	 	 	 
	Atlanta, Georgia 30327-4347
	 	 	 	 
	Attention: Private Placements
	 	 	 	 
	Facsimile: (770) 690-5057
	 	 	 	 






Payments



All payments on or in respect of the Notes to be by bank wire transfer of Federal or other
immediately available funds for credit to:



The Bank of New York Mellon

ABA # 021-000-018




	 	 	 	 	 
	 

	 	Account:
	 	IOC 566/INST’L CUSTODY (for scheduled principal and interest payments)
	 
	 	 	 	 
	 

	 	or	 	 
	 
	 	 	 	 
	 

	 	 	 	IOC 565/INST’L CUSTODY (for all payments other than scheduled principal
and interest)





For further credit to: RLNY/Acct. 187038

Reference: PPN 387328 A#4



Each such wire transfer should set forth the name of the issuer, the full title (including the
coupon rate, issuance date, and final maturity date) of the Notes on account of which such payment
is made, and the due date and application (as among principal, premium and interest) of the payment
being made.



Notices



All notices regarding payment of the Notes to be addressed to:



ING Investment Management LLC

5780 Powers Ferry Road NW, Suite 300

Atlanta, Georgia 30327-4347

Attention: Operations/Settlements

Facsimile: (770) 690-4886





A-22












 




All other notices and communications to be addressed as first provided above.



With a duplicate copy to be addressed to:



ING Investment Management LLC

100 Washington Avenue South, Suite 1635

Minneapolis, Minnesota 55401-2121

Attention: Robert Boucher

Facsimile: (612) 372-5368




Name of Nominee in which Notes are to be issued: None




Taxpayer I.D. Number: 53-0242530




A-23









 





	 	 	 	 	 	 	 	 
	Name and Address of Purchaser
	 	 	 	 	Principal Amount of

	 
	 	Series	Notes to be Purchased

	 
	 	 	 	 	 	 	 
	The Guardian Life Insurance Company of
America
	 	 	2007-A	 	$20,000,000	 
	7 Hanover Square
	 	 	 	 	 	 	 
	New York, New York 10004-2616
	 	 	 	 	 	 	 
	Attention: Thomas Donohue
	 	 	 	 	 	 	 
	Investment Department 20-D
	 	 	 	 	 	 	 
	Facsimile: (212) 919-2658/2656
	 	 	 	 	 	 	 






Payments



All payments on or in respect of the Notes to be by bank wire transfer of Federal or other
immediately available funds (identifying each payment as “Granite Construction Incorporated, 6.11%
Series 2007-A Senior Notes due December 12, 2019, PPN 387328 A#4, principal, premium or interest”)
to:



JP Morgan Chase

FED ABA #021000021

Chase/NYC/CTR/BNF

A/C 900-9-000200

Reference A/C #G05978, Guardian Life, PPN # 387328 A#4, Granite Construction




Notices



All notices and communications to be addressed as first provided above.



Name of Nominee in which Notes are to be issued: None.



Tax Identification No.: 13-5123390




A-24









 








	 	 	 	 	 	 	 	 	 
	Name and Address of Purchaser
	 	 	 	 	 	Principal Amount of

	 
	 	Series	 	Notes to be Purchased

	 
	 	 	 	 	 	 	 	 
	Principal Life Insurance Company
	 	 	2007-A	 	 	$	17,000,000	 
	c/o Principal Global Investors, LLC
	 	 	 	 	 	  Denominations

	Attention: Fixed Income Private Placements
	 	 	 	 	 	$	9,350,000	 
	711 High Street, G-26
	 	 	 	 	 	$	2,925,000	 
	Des Moines, Iowa 50392-0800
	 	 	 	 	 	$	1,100,000	 
	 
	 	 	 	 	 	$	850,000	 
	 
	 	 	 	 	 	$	200,000	 
	 
	 	 	 	 	 	$	525,000	 
	 
	 	 	 	 	 	$	400,000	 
	 
	 	 	 	 	 	$	250,000	 
	 
	 	 	 	 	 	$	165,000	 
	 
	 	 	 	 	 	$	560,000	 
	 
	 	 	 	 	 	$	575,000	 
	 
	 	 	 	 	 	$	100,000	 






Payments



All payments on or in respect of the Notes to be made by 12:00 noon (New York City time) by wire
transfer of immediately available funds to:



ABA No.: 121000248

Wells Fargo Bank, N.A.

San Francisco, CA

For credit to Principal Life Insurance Company

Account No.: 0000014752

OBI PFGSE (S) B0070036( )

Attention: (PPN number 387328 A#4 — Granite Construction Company)





With sufficient information (including PPN number, interest rate, maturity date, interest
amount, principal amount and premium amount, if applicable) to identify the source and
application of such funds.



Notices



All notices with respect to scheduled payments, prepayments and rate reset notices, to be addressed
to:




A-25









 







Principal Global Investors, LLC

Attention: Fixed Income Private Placements

711 High Street, G-26

Des Moines, Iowa 50392-0960





With a copy to be addressed as first provided above, with a duplicate electronic copy to
Privateplacements2@exchange.principal.com.


All other notices and communications to be addressed as first provided above, with a duplicate
electronic copy to Privateplacements2@exchange.principal.com.




Name of Nominee in which Notes are to be issued: None




Taxpayer I.D. Number: 42-0127290




A-26









 





	 	 	 	 	 	 	 	 	 
	Name and Address of Purchaser
	 	 	 	 	 	Principal Amount of

	 
	 	Series	 	Notes to be Purchased

	 
	 	 	 	 	 	 	 	 
	United of Omaha Life Insurance
Company
	 	 	2007-A	 	 	$	10,000,000	 
	4 - Investment Accounting
	 	 	 	 	 	 	 	 
	Mutual of Omaha Plaza
	 	 	 	 	 	 	 	 
	Omaha, Nebraska 68175-1011
	 	 	 	 	 	 	 	 






Payments



All payments on or in respect of the Notes to be by bank wire transfer of Federal or other
immediately available funds (identifying each payment as “Granite Construction Incorporated, 6.11%
Series 2007-A Senior Notes due December 12, 2019, PPN 387328 A#4, principal, premium or interest”)
to:



JP Morgan Chase

FED ABA #021000021

Private Income Processing



For credit to:

United of Omaha Life Insurance Company

Account # 900-9000200

a/c: G07097

PPN: 387328 A#4

Interest Amount:

Principal Amount:




Notices



All notices with respect to payment of principal and interest, corporate actions and reorganization
notifications to be addressed to:



JPMorgan Chase Bank



14201 Dallas Parkway – 13th Floor

Dallas, Texas 75254-2917

Attention: Income Processing – G. Ruiz

a/c: G07097




All other notices and communications to be addressed as first provided above.




Name of Nominee in which Notes are to be issued: None.




Tax Identification No.: 47-0322111




A-27









 





	 	 	 	 	 	 	 	 	 
	Name
and Address of Purchaser
	 	 	 	 	 	Principal
Amount of

	 
	 	Series	 	Notes
to be Purchased

	 
	 	 	 	 	 	 	 	 
	Allianz Life Insurance Company of
North America
	 	 	2007-A	 	 	$10,000,000
	c/o Allianz of America, Inc.
	 	 	 	 	 	 	 	 
	Attention: Private Placements
	 	 	 	 	 	 	 	 
	55 Greens Farms Road
	 	 	 	 	 	 	 	 
	P.O. Box 5160
	 	 	 	 	 	 	 	 
	Westport, Connecticut 06881-5160
	 	 	 	 	 	 	 	 
	Telephone: (203) 221-8580
	 	 	 	 	 	 	 	 
	Facsimile:
(203) 221-8539
	 	 	 	 	 	 	 	 
	E-mail: blandry@azoa.com
	 	 	 	 	 	 	 	 






Payments



All payments on or in respect of the Notes to be by bank wire transfer of Federal or other
immediately available funds (identifying each payment as “Granite Construction Incorporated, 6.11%
Series 2007-A Senior Notes due December 12, 2019, PPN 387328 A#4, principal, premium or interest”)
to:



MAC & CO.

Mellon Bank, N.A.

ABA # 011001234

Mellon Bank Account No. AZAF6700012

DDA 125261

Cost Center 1253

Re: “Accompanying Information” below

For Credit to Portfolio Account: AZLife AZAF6700012



Accompanying Information:



Name of Issuer: Granite Construction Incorporated

Description of Security: 6.11% Series 2007-A Senior Notes due December 12, 2019

PPN: 387328 A#4

Due Date and Application (as among principal, make whole and interest) of the payment being made:




Notices



All notices with respect to payments on account of the Notes to be addressed to:




A-28









 







Allianz Life Insurance Company of North America

c/o Allianz of America, Inc.



Attention: Private Placements

55 Greens Farms Road

P.O. Box 5160

Westport, Connecticut 06881-5160

Telephone: (203) 221-8580

Facsimile: (203) 221-8539

E-mail: blandry@azoa.com





With a duplicate copy of all notices regarding payment information and all other notices
and communications to:


Kathy Muhl

Supervisor — Income Group

Mellon Bank, N.A.

Three Mellon Center — Room 3418

Pittsburgh, Pennsylvania 15259

Telephone: (412) 234-5192

E-mail: muhl.kl@mellon.com



Name of Nominee in which Notes are to be issued: Mac & Co.



Tax Identification No.: 41-1366075




A-29









 








	 	 	 	 	 	 	 	 	 
	Name
and Address of Purchaser
	 	 	 	 	 	Principal
Amount of

	 
	 	Series	 	Notes
to be Purchased

	 
	 	 	 	 	 	 	 	 
	The
State Life Insurance Company
	 	 	2007-A	 	 	$2,000,000
	c/o American United Life Insurance Company
	 	 	 	 	 	 	 	 
	One American Square
	 	 	 	 	 	 	 	 
	Post Office Box 368
	 	 	 	 	 	 	 	 
	Indianapolis, Indiana 46206
	 	 	 	 	 	 	 	 
	Attention: Mike Bullock, Securities Department
	 	 	 	 	 	 	 	 






Payments



All payments on or in respect of the Notes to be by bank wire transfer of Federal or other
immediately available funds to:



Bank Name: Bank of New York

ABA Routing #: 021000018

Account No.: GLA111566

A/C Name: Institutional Custody Insurance Division

FFC Custody #: 343761

Custody Name: The State Life Insurance Co.

RE: (PPN# 387328 A#4 and Granite Construction Incorporated)



with sufficient information to identify the source and application of such funds, including issuer,
PPN#, interest rate, maturity and whether payment is of principal, interest, make whole amount or
otherwise.




Notices




All notices and communications to be addressed as first provided above.




Name of Nominee in which Notes are to be issued: None




Tax Identification No.: 35-0684263




A-30









 





	 	 	 	 	 	 	 	 	 
	Name
and Address of Purchaser
	 	 	 	 	 	Principal
Amount of

	 
	 	Series	 	Notes
to be Purchased

	 
	 	 	 	 	 	 	 	 
	Farm Bureau Life Insurance Company of
Michigan
	 	 	2007-A	 	 	$3,300,000
	c/o American United Life Insurance Company
	 	 	 	 	 	 	 	 
	One American Square
	 	 	 	 	 	 	 	 
	Post Office Box 368
	 	 	 	 	 	 	 	 
	Indianapolis, Indiana 46206
	 	 	 	 	 	 	 	 
	Attention: Mike Bullock, Securities Department
	 	 	 	 	 	 	 	 






Payments



All payments on or in respect of the Notes to be by bank wire transfer of Federal or other
immediately available funds to:



Comerica Bank/Trust Operations

AC: 2158598532

BNF: Farm Bureau Life Insurance Company of Michigan

AC: 1085001633

BBI: Trade Settlement (313) 222-4757

Bank Routing Number: 0720-0009-6



with sufficient information to identify the source and application of such funds, including issuer,
PPN#, interest rate, maturity and whether payment is of principal, interest, make whole amount or
otherwise.




Notices




All notices with respect to payments and written confirmation of payments to be addressed to:



Farm Bureau Life Insurance Company of Michigan

Attention: Steve Harkness

P.O. Box 30400

Lansing, Michigan 48909




All other notices and communications to be addressed as first provided above.




Name of Nominee in which Notes are to be issued: None




Tax Identification No.: 38-6056370




A-31









 





	 	 	 	 	 	 	 	 	 
	Name
and Address of Purchaser
	 	 	 	 	 	Principal
Amount of

	 
	 	Series	 	Notes
to be Purchased

	 
	 	 	 	 	 	 	 	 
	Lafayette
Life Insurance Company
	 	 	2007-A	 	 	$1,700,000
	c/o American United Life Insurance Company
	 	 	 	 	 	 	 	 
	One American Square
	 	 	 	 	 	 	 	 
	Post Office Box 368
	 	 	 	 	 	 	 	 
	Indianapolis, Indiana 46206
	 	 	 	 	 	 	 	 
	Attention: Mike Bullock, Securities Department
	 	 	 	 	 	 	 	 






Payments



All payments on or in respect of the Notes to be by bank wire transfer of Federal or other
immediately available funds to:



Bank Name: JPMorgan Chase Bank

ABA Routing #: 021000021

SWIFT CODE CHASUS33 (for international payors)

Account No.: 631557105

Beneficiary: Lafayette Life Insurance Company



with sufficient information to identify the source and application of such funds, including issuer,
PPN#, interest rate, maturity and whether payment is of principal, interest, make whole amount or
otherwise.




Notices




All notices and communications to be addressed as first provided above.




Name of Nominee in which Notes are to be issued: None




Tax Identification No.: 35-0457540




A-32









 





	 	 	 	 	 	 	 	 	 
	Name
and Address of Purchaser
	 	 	 	 	 	Principal
Amount of

	 
	 	Series	 	Notes
to be Purchased

	 
	 	 	 	 	 	 	 	 
	American United Life Insurance
Company
	 	 	2007-A	 	 	$3,000,000
	One American Square
	 	 	 	 	 	 	 	 
	Post Office Box 368
	 	 	 	 	 	 	 	 
	Indianapolis, Indiana 46206
	 	 	 	 	 	 	 	 
	Attention: Mike Bullock, Securities Department
	 	 	 	 	 	 	 	 






Payments



All payments on or in respect of the Notes to be by bank wire transfer of Federal or other
immediately available funds to:



Bank Name: Bank of New York

ABA Routing #: 021000018

Account No.: GLA111566

A/C Name: Institutional Custody Insurance Division

FFC Custody #: 186683

Custody Name: American United Life Insurance Co.

RE: (PPN # 387328 A#4 and Granite Construction Incorporated)



with sufficient information to identify the source and application of such funds, including issuer,
PPN#, interest rate, maturity and whether payment is of principal, interest, make whole amount or
otherwise.




Notices




All notices and communications to be addressed as first provided above.




Name of Nominee in which Notes are to be issued: None




Tax Identification No.: 35-0145825




A-33









 





	 	 	 	 	 	 	 	 	 
	Name
and Address of Purchaser
	 	 	 	 	 	Principal
Amount of

	 
	 	Series	 	Notes
to be Purchased

	 
	 	 	 	 	 	 	 	 
	American Family Life Insurance
Company
	 	 	2007-A	 	 	$4,000,000
	6000 American Parkway
	 	 	 	 	 	 	 	 
	Madison, Wisconsin 53783-0001
	 	 	 	 	 	 	 	 
	Attention: Investment Division — Private
	 	 	 	 	 	 	 	 
	Placements
	 	 	 	 	 	 	 	 






Payments



All payments on or in respect of the Notes to be by bank wire transfer of Federal or other
immediately available funds to:



US Bank, N.A.

Trust Services

60 Livingston Avenue

St. Paul, Minnesota 55107-2292

ABA#: 091000022

Beneficiary Account #: 180183083765

FFC to American Family Trust Account # 000018012500 for AFLIC-Traditional

Credit for PPN #387328 A#4



Each such wire shall set forth the name of the Company, the full title (including the coupon rate
and final maturity date) of the Notes, and the due date and applicable among principal and interest
of the payment being made.




Notices



All notices and communications with respect to payments and written confirmation of each such
payment, as well as quarterly and annual financial statements to be addressed as first provided
above.



All audit confirmations should sent to “Attention: Treasury Department” at the address first
provided above.




Name of Nominee in which Notes are to be issued: BAND & Co.




Tax Identification No.: 39-6040365




A-34









 





	 	 	 	 	 	 	 	 	 
	Name
and Address of Purchaser
	 	 	 	 	 	Principal
Amount of

	 
	 	Series	 	Notes
to be Purchased

	 
	 	 	 	 	 	 	 	 
	Assurity
Life Insurance Company
	 	 	2007-A	 	 	$2,000,000
	4000 Pine Lake Road
	 	 	 	 	 	 	 	 
	P.O. Box 82533
	 	 	 	 	 	 	 	 
	Lincoln, Nebraska 68501-2533
	 	 	 	 	 	 	 	 






Payments



All payments on or in respect of the Notes to be by bank wire transfer of Federal or other
immediately available funds (identifying each payment as “Granite Construction Incorporated, 6.11%
Series 2007-A Senior Notes due December 12, 2019, PPN 387328 A#4, principal, premium or interest”)
to:



US BANK NATIONAL ASSOCIATION

13th & M Streets 

Lincoln, Nebraska 68058

ABA No. 104000029



Account of: Assurity Life Insurance Company

General Fund Account: 1-494-0092-9092




Notices



All notices with respect to payment and written confirmations of such wire transfers should be
addressed to:



Assurity Life Insurance Company

4000 Pine Lake Road

P.O. Box 82533

Lincoln, Nebraska 68156

Attention: Investment Division

Facsimile: (402) 458-2170

Telephone: (402) 437-3682




All other notices and communications to be addressed as first provided above.




Name of Nominee in which Notes are to be issued: None.




Tax Identification No.: 38-1843471




A-35









 





Defined Terms




     As used herein, the following terms have the respective meanings set forth below or set forth
in the Section hereof following such term:



     “Additional Notes” is defined in Section 2.2(b).



     “Additional Purchasers “ shall mean purchasers of Additional Notes.



     “Affiliate” shall mean, at any time, and with respect to any Person, (a) any other Person that
at such time directly or indirectly through one or more intermediaries Controls, or is Controlled
by, or is under common Control with, such first Person, (b) any other Person beneficially owning or
holding, directly or indirectly, 10% or more of any class of voting or equity interests of such
first Person or any other Person of which such first Person beneficially owns or holds, in the
aggregate, directly or indirectly, 10% or more of any class of voting or equity interests and (c)
any officer or director of such first Person and any Person fulfilling an equivalent function of an
officer or director; provided that “Affiliate,” in relation to the Company, shall not include any
Subsidiary, As used in this definition, “Control” means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a Person, whether
through the ownership of voting Securities, by contract or otherwise. Unless the context otherwise
clearly requires, any reference to an “Affiliate” is a reference to an Affiliate of the Company.



     “Anti-Terrorism Order” shall mean Executive Order No. 13,224 of September 24, 2001, Blocking
Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit or Support
Terrorism, 66 U.S. Fed. Reg. 49,079 (2001), as amended.



     “Asset Disposition “ shall mean any Transfer except:




     (a) any




     (1) Transfer from a Subsidiary to the Company or to a Wholly-Owned
Subsidiary; and




     (2)
Transfer from the  Company to a Wholly-Owned Subsidiary




so long as immediately before and immediately after the consummation of any such Transfer
and after giving effect thereto, no Default or Event of Default would exist;




     (b) any Transfer made in the ordinary course of business and involving only
property that is either (1) inventory held for sale or (2) equipment, fixtures,
supplies or
materials no longer required in the operation of the business of the Company or any of
its Subsidiaries or that is obsolete; and




     (c) any Transfer in one lot of all of the voting Securities of TIC, directly or
indirectly, owned or held by the Company to TIC pursuant to that certain Stock Purchase



Schedule 
B 
(to Note Purchase Agreement)




 









 






Agreement dated as of December 23, 1996 between the Company and TIC, as amended,
supplemented, restated or otherwise modified from time to time.



     “Attributable Debt” shall mean, as to any particular Long-Term Lease relating to a
Sale-and-Leaseback Transaction, the present value of all Lease Rentals required to be paid by the
Company or any Subsidiary under such lease during the remaining term thereof (determined in
accordance with generally accepted financial practice using a discount factor equal to the
interest rate implicit in such lease if known or, if not known, of 12% per annum).



     “Bank Credit Agreement” shall mean that certain Credit Agreement dated as of June 24, 2005
among the Company, Bank of America, N.A., as Administrative Agent, as Swing Line Lender, as L/C
Issuer, and as a Lender, BNP Paribas, Harris N.A., Union Bank of California, N.A. and U.S. Bank,
N.A., as Co-Syndication Agents and the other Lenders party thereto and Bane of America Securities
LLC, as Sole Lead Arranger and Sole Book Manager, as amended by that certain Amendment No. 1 to
Credit Agreement dated as of June 23, 2006, as the same may be further amended, supplemented,
restated or otherwise modified from time to time, and any credit agreement or other like agreement
entered into by the Company which is substantially similar to or replaces the Credit Agreement.



     “Bank Guaranty” shall mean any Guaranty of me Debt outstanding under the Bank Credit
Agreement by a Subsidiary.



     “Business Day” shall mean (a) for the purposes of Section 8.7 only, any day other than a
Saturday, a Sunday or a day on which commercial banks in New York City are required or authorized
to be closed and (b) for the purposes of any other provision of this Agreement, any day other than
a Saturday, a Sunday or a day on which commercial banks in San Francisco, California or New York,
New York are required or authorized to be closed.



     “Capital Lease” shall mean, at any time, a lease with respect to which the lessee is required
concurrently to recognize the acquisition of an asset and the incurrence of a liability in
accordance with GAAP.



     “Capital Lease Obligation” shall mean, with respect to any Person and a Capital Lease, the
amount of the obligation of such Person as the lessee under such Capital Lease which would, in
accordance with GAAP, appear as a liability on a balance sheet of such Person.



     “Change in Control Proposed Prepayment Date” is defined in Section 8.3(c).



     “Closing” is defined in Section 3.



     “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and the
rules and regulations promulgated thereunder from time to time.



     “Company” shall mean Granite Construction Incorporated, a Delaware corporation, or any
successor that becomes such in the manner prescribed in Section 10.7.



     “Confidential
Information ” is defined in Section 20.



B-2









 





     “Consolidated Net Income” for any period shall mean the gross revenues of the Company and its
Subsidiaries for such period less all expenses and other proper charges (including taxes on
income), determined on a consolidated basis after eliminating earnings or losses attributable to
outstanding Minority Interests.



     “Consolidated
Net Worth ” shall mean, as of the date of any determination thereof,




     (a) the sum of (1) the par value (or value stated on the books of the
corporation) of the capital stock (but excluding treasury slock and capital stock
subscribed and unissued) of the Company and its Subsidiaries plus (2) the amount of
the
paid-in capital and retained earnings of the Company and its Subsidiaries, in each
case
as such amounts would be shown on a consolidated balance sheet of the Company and
its Subsidiaries as of such time prepared in accordance with GAAP, minus




     (b) unearned compensation, minus




     (c) to the extent included in clause (a) above, all amounts properly
attributable to Minority Interests, if any, in the stock and surplus of Subsidiaries,
minus




     (d) the value of all Restricted Investments of the Company and its
Subsidiaries acquired after the date of the Closing in excess of an amount equal to
10%
of the amount determined pursuant to clauses (a), (b) and (c) of this definition.



     “Consolidated Total Assets” shall mean, as of the date of any determination thereof, (a) the
total assets of the Company and its Subsidiaries which would be shown as assets on a consolidated
balance sheet of the Company and its Subsidiaries as of such time prepared in accordance with
GAAP, after eliminating all amounts properly attributable to Minority Interests, if any, in the
stock and surplus of Subsidiaries.



     “Consolidated
Total Capitalization ” shall mean, as the date of any determination thereof,
the sum of (a) Consolidated Net Worth and (b) Consolidated Total Debt.



     “Consolidated Total Debt” shall mean, as of the date of any determination thereof, the total
of all Debt of the Company and its Subsidiaries (including, without limitation, all Subsidiaries
that are organized as joint ventures) outstanding on such date, after eliminating all offsetting
debits and credits between the Company and its Subsidiaries, and all other items required to be
eliminated in the course of the preparation of consolidated financial statements of the Company and
its Subsidiaries in accordance with GAAP.



     “Debt” shall mean, with respect to any Person, without duplication,




     (a) its liabilities for borrowed money and its redemption obligations in
respect of mandatorily redeemable Preferred Stock;




     (b) its liabilities for the deferred purchase price of property acquired by such
Person (excluding accounts payable arising in the ordinary course of business but
including, without limitation, all liabilities created or arising under any
conditional sale
or other title retention agreement with respect to any such property);



B-3









 






     (c) its Capitalized Lease Obligations;




     (d) all liabilities for borrowed money secured by any Lien with respect to
any property owned by such Person (whether or not it has assumed or otherwise become
liable for such liabilities);




     (e)
its recourse obligations under Receivables Securitization Transactions;




     (f) in respect of the Company or any Subsidiary, its Attributable Debt; and




     (g) any Guaranty of such Person with respect to liabilities of a type described
in any of clauses (a) through (f) hereof in an amount equal to the amount guaranteed.



     Debt of any Person shall include all obligations of such Person of the character described in
clauses (a) through (g) to the extent such Person remains legally liable in respect thereof
notwithstanding that any such obligation is deemed to be extinguished under GAAP.



     “Debt Prepayment Application” shall mean, with respect to any Transfer of property, the
application by the Company or its Subsidiaries of cash in an amount equal to the Net Proceeds
Amount with respect to such Transfer to pay Senior Debt (other than Senior Debt owing to the
Company, any of its Subsidiaries or any Affiliate).



     “Default” shall mean an event or condition the occurrence or existence of which would, with
the lapse of time or the giving of notice or both, become an Event of Default.



     “Default Rate” shall mean (a) with respect to the Series 2007-A Notes, that rate of interest
that is the greater of (1) 2.00% per annum above the rate of interest stated in clause (a) of the
first paragraph of the Notes and (2) 2.00% over the rate of interest publicly announced by Bank of
America, N.A. in San Francisco, California as its “reference” rate and (b) with respect to the
Notes of any Series or tranche of Additional Notes, as set forth in the Supplement pursuant to
which such Series or tranche of Additional Notes was issued.



     “Disclosure Documents” is defined in Section 5.3.



     “Disposition Value” shall mean, as of any date of determination, with respect to any property




     (a) in the case of property that does not constitute Subsidiary Stock, the Fair
Market Value thereof, valued at the time of such disposition in good faith by the
Company, and




     (b) in the case of property that constitutes Subsidiary Stock, an amount equal
to that percentage of book value of the assets of the Subsidiary that issued such
stock as
is equal to the percentage that the book value of such Subsidiary Stock represents of
the
book value of all of the outstanding capital stock of such Subsidiary (assuming, in
making such calculations, that all Securities convertible into such capital stock are
so
converted and giving full effect to all transactions that would occur or be required
in



B-4









 






connection with such conversion) determined at the time of the disposition thereof in good
faith by the Company.



     “Electronic Delivery” is defined in Section 7.1(a).



     “Environmental
Laws” shall mean any and all federal, state, local, and foreign statutes,
laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants,
franchises, licenses, agreements or governmental restrictions relating to pollution and the
protection of the environment or the release of any materials into
the environment, including but
not limited to those related to Hazardous Materials.



     “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from
time to time, and the rules and regulations promulgated thereunder
from time to time in effect.



     “ERISA Affiliate” shall mean any trade or business (whether or not incorporated) that is
treated as a single employer together with the Company under Section 414 of the Code.



     “Event of Default” is defined in Section 11.



     “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.



     “Existing Note Agreements” shall mean that certain Note Purchase Agreement dated as of May 1,
2001 between the Company and the purchasers listed on Schedule A
thereto and that certain Amended
and Restated Note Agreement dated as of November 1, 2001 between the Company and the purchasers
listed on Schedule A thereto, in each case, as amended, supplemented, restated or otherwise
modified from time to time.



     “Fair Market Value” shall mean, as of any date of determination and with respect to any
property, the sale value of such property that would be realized in an arm’s-length sale at such
time between an informed and willing buyer and an informed and willing seller (neither being under
a compulsion to buy or sell).



     “GAAP” shall mean generally accepted accounting principles as in effect from time to time in
the United States of America.



     “Governmental Authority” shall mean




     (a) the government of




     (1)
the United States of America or any State or other political
subdivision thereof, or




     (2) any jurisdiction in which the Company or any Subsidiary conducts
all or any part of its business, or which asserts jurisdiction over any
properties of
the Company or any Subsidiary, or



B-5









 






     (b) any entity exercising executive, legislative, judicial, regulatory
or administrative functions of, or pertaining to, any such government.



     “Guarantors” is defined in Section 2.3.



     “Guaranty”
shall mean, with respect to any Person, any obligation (except
the endorsement in
the ordinary course of business of negotiable instruments for deposit or collection) of such
Person guaranteeing or in effect guaranteeing any Debt, dividend or other obligation of any other
Person in any manner, whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:




     (a) to purchase such Debt or obligation or any property constituting security
therefor;




     (b) to advance or supply funds (1) for the purchase or payment of such Debt
or obligation, or (2) to maintain any working capital or other balance sheet condition
or
any income statement condition of any other Person or otherwise to advance or make
available funds for the purchase or payment of such Debt or obligation;




     (c) to lease properties or to purchase properties or services primarily for the
purpose of assuring the owner of such Debt or obligation of the ability of any other
Person to make payment of the Debt or obligation; or




     (d) otherwise to assure the owner of such Debt or obligation against loss in
respect thereof.



     In any computation of the Debt or other liabilities of the obligor under any Guaranty, the Debt or
other obligations that are the subject of such Guaranty shall be assumed to be direct obligations
of such obligor.



     “Guaranty Accession Agreement” shall mean a Guaranty Accession Agreement in the form
attached as Exhibit B to the Guaranty Agreement.



     “Guaranty
Agreement” is defined in Section 2.3.



     “Hazardous Material” shall mean any and all pollutants, toxic or hazardous wastes or other
substances that might pose a hazard to health and safety, the removal of which may be required or
the generation, manufacture, refining, production, processing, treatment, storage, handling,
transportation, transfer, use, disposal, release, discharge, spillage, seepage or filtration of
which is or shall be restricted, prohibited or penalized by any applicable law including, but not
limited to, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum,
petroleum products, lead based paint, radon gas or similar restricted, prohibited or penalized
substances.



     “holder” shall mean, with respect to any Note, the Person in whose name such Note is
registered in the Note Register maintained by the Company pursuant to Section 13.1.



     “INHAM
Exemption” is defined in Section 6.3(e).



B-6









 





     “Institutional Investor” shall mean (a) any Purchaser or Additional Purchaser, (b) any holder
of a Note holding (together with one or more of its affiliates) more than 5% of the aggregate
principal amount of the Notes then outstanding, (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment company, any
insurance company, any broker or dealer, or any other similar financial institution or entity,
regardless of legal form and (d) any Related Fund of any holder of any Note.



     “Investment” shall mean any investment, made in cash or by delivery of property, by the
Company or any of its Subsidiaries (a) in any Person, whether by acquisition of stock, Debt or
other obligation or Security, or by loan, Guaranty, advance, capital contribution or otherwise, or
(b) in any property.



     “Lease Rentals” shall mean, with respect to any period, the sum of the rental and other
obligations required to be paid during such period by the Company or any Subsidiary, as lessee,
under all leases of real or personal property (other than Capital Leases), excluding any amount
required to be paid by the lessee (whether or not therein designated as rental or additional
rental) on account of maintenance and repairs, insurance, taxes, assessments, water rates and
similar charges, provided that, if at the date of determination, any such rental or other
obligations (or portion thereof) are contingent or not otherwise definitely determinable by the
terms of the related lease, the amount of such obligations (or such portion thereof) (1) shall be
assumed to be equal to the amount of such obligations for the period of 12 consecutive calendar
months immediately preceding the date of determination or (2) if the related lease was not in
effect during such preceding 12-month period, shall be the amount estimated by a Senior Financial
Officer on a reasonable basis and in good faith.



     “Lien” shall mean, with respect to any Person, any mortgage, lien, pledge, charge, security
interest or other encumbrance, or any interest or title of any vendor, lessor, lender or other
secured party to or of such Person under any conditional sale or other title retention agreement or
Capital Lease, upon or with respect to any property or asset of such Person (including in the case
of stock, stockholder agreements, voting trust agreements and all similar arrangements).



     “Long-Term Lease” shall mean any lease of property having an original term, including any
period for which the lease may be renewed or extended at the option of the lessee, of more than
three years.



     “Make-Whole Amount” shall have the meaning (a) set forth in Section 8.7 with respect to the
Series 2007-A Notes and (b) set forth in the applicable Supplement with respect to any other
Series or tranche of Additional Notes.



     “Material” shall mean material in relation to the business, operations, affairs, financial
condition, assets, properties or prospects of the Company and its Subsidiaries, taken as a whole.



     “Material Adverse Effect” shall mean a material adverse effect on (a) the business,
operations, affairs, financial condition, assets, properties or prospects of the Company and its
Subsidiaries, taken as a whole, or (b) the ability of the Company to perform its obligations under




B-7












 




this Agreement (including all Supplements) and the Notes, or (c) the validity or enforceability of
this Agreement (including all Supplements), the Guaranty Agreement or the Notes.




     “Material Subsidiary” shall mean each Subsidiary identified as a Material Subsidiary on
Schedule 5.4, each Subsidiary that is an obligor or guarantor of any Debt existing under the Bank
Credit Agreement or an Existing Note Agreement and each other Subsidiary which meets either of the
following conditions:




     (a) such Subsidiary’s total net revenues for the period of the immediately preceding
four fiscal quarters is equal to or greater than 10% of the consolidated total net
revenues of the Company and its Subsidiaries for such period determined in accordance with
GAAP, in each case as reflected in the most recent annual or quarterly financial
statements of the Company and its Subsidiaries; or




     (b) such Subsidiary’s total assets, as of the last day of the immediately preceding
fiscal quarter, is equal to or greater than 10% of Consolidated Total Assets, in each case
as reflected in the most recent annual or quarterly financial statements of the Company
and its Subsidiaries.



     “Memorandum” is defined in Section 5.3.



     “Minority Interests” shall mean any shares of stock of any class of a Subsidiary (other than
directors’ qualifying shares as required by law) that are not owned by the Company and/or one or
more of its Subsidiaries. Minority Interests shall be valued by valuing Minority Interests
constituting preferred stock at the voluntary or involuntary liquidating value of such preferred
stock, whichever is greater, and by valuing Minority Interests constituting common stock at the
book value of capital and surplus applicable thereto adjusted, if necessary, to reflect any
changes from the book value of such common stock required by the foregoing method of valuing
Minority Interests in preferred stock.



     “Multiemployer Plan” shall mean any Plan that is a “multiemployer plan” (as such term is
defined in Section 4001(a)(3) of ERISA).



     “NAIC” shall mean the National Association of Insurance Commissioners or any successor
thereto.



     “NAIC Annual Statement” is defined in Section 6.2(a).



     “Net Proceeds Amount” shall mean, with respect to any Transfer of any property by any Person,
an amount equal to the difference of




     (a) the aggregate amount of the consideration (valued at the Fair Market Value of
such consideration at the time of the consummation of such Transfer) allocated to such
Person in respect of such Transfer, net of any applicable taxes incurred in connection
with such Transfer, minus




     (b) all ordinary and reasonable out-of-pocket costs and expenses actually incurred by
such Person in connection with such Transfer.



B-8









 





     “Note Register” is defined in Section 13.1.



     “Notes” is defined in Section 1.



     “Officer’s Certificate” shall mean a certificate of a Senior Financial Officer or of any
other officer of the Company whose responsibilities extend to the subject matter of such
certificate.



     “PBGC” shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA
or any successor thereto.



     “Person” shall mean an individual, partnership, corporation, limited liability company,
association, trust, unincorporated organization, business entity or Governmental Authority.



     “Plan” shall mean an “employee benefit plan” (as defined in Section 3(3) of ERISA) subject to
Title I of ERISA that is or, within the preceding five years, has been established or maintained,
or to which contributions are or, within the preceding five years, have been made or required to
be made, by the Company or any ERISA Affiliate or with respect to which the Company or any ERISA
Affiliate may have any liability.



     “Preferred Stock” shall mean any class of capital stock of a corporation that is preferred
over any other class of capital stock of such corporation as to the payment of dividends or the
payment of any amount upon liquidation or dissolution of such corporation.



     “Priority Debt” shall mean (without duplication), as of the date of any determination thereof,
the sum of (a) all unsecured Debt of Subsidiaries (including Attributable Debt of Subsidiaries and
all guaranties of Debt of the Company) but excluding (1) unsecured Debt owing to the Company or any
Wholly-Owned Subsidiary, (2) unsecured Debt outstanding at the time such Person became a
Subsidiary, provided that such Debt shall have not been incurred in contemplation of such Person
becoming a Subsidiary and (3) all guaranties of Debt of the Company by any Subsidiary which has
also guaranteed the Notes pursuant to the Guaranty Agreement, (b) all Debt of the Company and its
Subsidiaries secured by Liens other than Debt secured by Liens permitted by subparagraphs (a)
through (j), inclusive, of Section 10.5 and (c) all Attributable Debt of the Company.



     “property” or “properties” shall mean, unless otherwise specifically limited, real or
personal property of any kind, tangible or intangible, choate or inchoate.



     “Property Reinvestment Application” shall mean, with respect to any Transfer of property, the
application of an amount equal to the Net Proceeds Amount with respect to such Transfer to the
acquisition by the Company or any Subsidiary of operating assets of the Company or any Subsidiary
to be used in the principal business of such Person.



     “PTE” is defined in Section 6.2(a).



     “Purchaser” or “Purchasers” is defined in the first paragraph of this Agreement.



     “QPAM
Exemption” is defined in Section 6.2(d).



B-9









 





     “Qualified Institutional Buyer” shall mean any Person who is a qualified institutional buyer
within the meaning of such term as set forth in Rule 144(a)(1) under the Securities Act.



     “Receivables Securitization Transaction” shall mean any transaction pursuant to which (a)
accounts receivables are sold or transferred and (b) the seller either (1) retains an interest in
the receivables so sold or transferred or (2) assumes any liability in connection with such sale
or transfer.



     “Related Fund” shall mean, with respect to any holder of any Note, any fund or entity that
(a) invests in Securities or bank loans and (b) is advised or managed by such holder, the same
investment advisor as such holder or by an affiliate of such holder or such investment advisor.



     “Required Holders” shall mean, at any time, the holders of at least 51% in principal amount
of the Notes at the time outstanding (exclusive of Notes then owned by the Company, any of its
Subsidiaries or any of its Affiliates).



     “Responsible Officer” shall mean any Senior Financial Officer and any other officer of the
Company with responsibility for the administration of the relevant portion of this Agreement.



     “Restricted Investments” (a) shall mean all Investments except the following:




     (1) property to be used in the ordinary course of business of the Company and
its Subsidiaries;




     (2) current assets arising from the sale of goods and services in the ordinary
course of business of the Company and its Subsidiaries;




     (3) Investments in one or more Subsidiaries or any Person that concurrently
with such Investment becomes a Subsidiary;




     (4) Investments existing on the date of the Closing and disclosed in Schedule
5.16; and




     (5) Investments permitted by the Company’s “Investment Policy Guidelines” set
forth on Exhibit 3 attached hereto and such additional Investments as may from time
to time be permitted under the Company’s investment policy guidelines; provided
that the Required Holders shall have consented to such additional Investments.




     (b) As of any date of determination, each Restricted Investment shall be valued
at the greater of:




     (1) the amount at which such Restricted Investment is shown on the books of the
Company or any of its Subsidiaries (or zero if such Restricted Investment is not
shown on any such books); and




     (2) either



B-10









 






     (i) in the case of any Guaranty of the obligation of any Person, the amount
which the Company or any of its Subsidiaries has paid on account of such obligation
less any recoupment by the Company or such Subsidiary of any such payments, or




     (ii) in the case of any other Restricted Investment, the excess of (A) the
greater of (I) the amount originally entered on the books of the Company or any of
its Subsidiaries with respect thereto and (II) the cost thereof to the Company or
its Subsidiary over (B) any return of capital (after income taxes applicable
thereto) upon such Restricted Investment through the sale or other liquidation
thereof or part thereof or otherwise.



     “Sale-and-Leaseback Transaction” shall mean a transaction or series of transactions pursuant
to which the Company or any Subsidiary shall sell or transfer to any Person (other than the
Company or a Subsidiary) any property, whether now owned or hereafter acquired, and, as part of
the same transaction or series of transactions, the Company or any Subsidiary shall, within 180
days of such sale or transfer, rent or lease, as lessee, (other than pursuant to a Capital Lease),
or similarly acquire the right to possession or use of, such property or one or more properties
which it intends to use for the same purpose or purposes as such property.



     “SEC” shall mean the Securities and Exchange Commission of the United States, or any
successor thereto.



     “Securities Act” means the Securities Act of 1933, as amended from time to time and the rules
and regulations promulgated thereunder from time to time in effect.



     “Security” has the meaning set forth in Section 2(1) of the Securities Act.



     “Senior Debt” shall mean all Debt of the Company, other than Subordinated Debt.



     “Senior Financial Officer” shall mean the chief financial officer, principal accounting
officer, treasurer or controller of the Company.



     “Series” shall mean any series of Notes issued pursuant to this Agreement or any Supplement.



     “Series 2007-A Notes” is defined in Section 1.



     “Source” is defined in Section 6.2.



     “Subordinated Debt” shall mean any Debt of the Company that is in any manner subordinated in
right of payment or security in any respect to the Debt evidenced by the Notes.



     “Subsidiary” shall mean, as to any Person, any corporation, association or other business
entity in which such Person or one or more of its Subsidiaries or such Person and one or more of
its Subsidiaries owns sufficient equity or voting interests to enable it or them (as a group)
ordinarily, in the absence of contingencies, to elect a majority of the directors (or Persons
performing similar functions) of such entity, and any partnership or joint venture if more than a



B-11









 







50% interest in the profits or capital thereof is owned by such Person or one or more of its
Subsidiaries or such Person and one or more of its Subsidiaries (unless such partnership can and
does ordinarily take major business actions without the prior approval of such Person or one or
more of its Subsidiaries). Unless the context otherwise clearly requires, any reference to a
“Subsidiary” is a reference to a Subsidiary of the Company.



     “Subsidiary Stock” shall mean, with respect to any Person, the stock (or any options or
warrants to purchase stock or other Securities exchangeable for or convertible into stock) of any
Subsidiary of such Person.



     “Successor Corporation” is defined in Section 10.7(d).



     “Supplement” is defined in Section 2.2(a).



     “SVO” shall mean the Securities Valuation Office of the NAIC or any successor to such office.



     “TIC” shall mean TIC Holdings, Inc., a Delaware corporation.



     “tranche” shall mean all Notes of a Series having the same maturity, interest rate and
schedule for mandatory prepayments.



     “Transfer” shall mean, with respect to any Person, any transaction in which such Person sells,
conveys, transfers or leases (as lessor) any of its property, including, without limitation,
Subsidiary Stock. For purposes of determining the application of the Net Proceeds Amount in respect
of any Transfer, the Company may designate any Transfer as one or more separate Transfers each
yielding a separate Net Proceeds Amount. In any such case, (a) the Disposition Value of any
property subject to each such separate Transfer and (b) the amount of Consolidated Total Assets
attributable to any property subject to each such separate Transfer shall be determined by ratably
allocating the aggregate Disposition Value of, and the aggregate Consolidated Total Assets
attributable to, all property subject to all such separate Transfers to each such separate Transfer
on a proportionate basis.



     “USA Patriot Act” shall mean United States Public Law 107-56, Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT
ACT) Act of 2001, as amended from time to time, and the rules and regulations promulgated
thereunder from time to time in effect.



     “Wilder” shall mean Wilder Construction Co., a Washington corporation, and any successor
thereto.



     “Wholly-Owned” when used in connection with any Subsidiary shall mean, at any time, any
Subsidiary one hundred percent (100%) of all of the equity interests (except directors’ qualifying
shares) and voting interests of which are owned by any one or more of the Company and the Company’s
other Wholly-Owned Subsidiaries at such time.




B-12









 








Disclosure Materials



The following documents, together with the Agreement and the Memorandum, constitute Disclosure
Documents for purposes of the Agreement:



The following reports and other documents previously filed with the SEC (the “SEC Reports”):




     (a) The Company’s annual report on Form 10-K for the year ended December 31, 2006;



     (b) The Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2007;



     (c) The Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2007;



     (d) The Company’s quarterly report on Form 10-Q for the quarter ended September 30, 2007; and



     (e) The definitive proxy statement for the annual meeting of the Company’s shareholders
held on May 21, 2007.



Schedule 5.3

(to Note Purchase Agreement)




 









 








Subsidiaries and affiliates of the Company;

Ownership of Subsidiary Stock*;

Directors and executive officers




Granite Construction Incorporated

Schedule 5.4

Subsidiaries and Affiliates of the Company; Ownership of Subsidiary Stock; Directors and Executive Officers




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Ownership by Company and/or Subsidiary
	 	 	Jurisdiction	 	 	 	 	 	 	 	 	 	 	 	Capital
	 	 	of	 	 	 	 	 	 	 	 	 	 	 	Structure
	Name	 	Organization	 	Capital Structure	 	Name	 	Ownership	 	 	Position	 	Type
	GILC, Incorporated (“GILC”) *
	 	California	 	C Corp	 	GCI	 	 	100.00	%	 	investor	 	MS
	Granite Construction Company (“GCCo”) *
	 	California	 	C Corp	 	GCI	 	 	100.00	%	 	investor	 	MS
	ABC Marine LLC
	 	Louisiana	 	Joint Venture	 	GCCo	 	 	41.00	%	 	member	 	A
	Audubon Bridge Constructors, a Joint Venture
	 	Louisiana	 	Joint Venture	 	GCCo	 	 	25.00	%	 	partner	 	A
	Brosamer/Granite, a Joint Venture
	 	California	 	Joint Venture	 	GCCo	 	 	100.00	%	 	partner	 	S
	California Corridor Constructors, a Joint Venture
	 	California	 	LLC	 	GCCo	 	 	30.00	%	 	partner	 	A
	FCI Constructors/Granite, a Joint Venture
	 	California	 	Joint Venture	 	GCCo	 	 	60.00	%	 	sponsor	 	S
	Gateway Constructors
	 	California	 	Joint Venture	 	GCCo	 	 	50.00	%	 	sponsor	 	S
	GKS Constructors
	 	Florida	 	Joint Venture	 	GCCo	 	 	60.00	%	 	sponsor	 	S
	Granite-Archer Western, a Joint Venture
	 	Mississippi	 	Joint Venture	 	GCCo	 	 	82.00	%	 	sponsor	 	S
	Granite-Brosamer, a Joint Venture
	 	California	 	Joint Venture	 	GCCo	 	 	67.50	%	 	sponsor	 	S
	Granite Construction Company and J.D. Abrams,
	 	Texas	 	Limited Partnership	 	GCCo	 	 	62.00	%	 	sponsor	 	S
	Granite-Frontier Kemper, a Joint Venture
	 	Arkansas	 	Joint Venture	 	GCCo	 	 	60.00	%	 	sponsor	 	S
	Granite-Meyers, a Joint Venture
	 	California	 	Joint Venture	 	GCCo	 	 	41.20	%	 	sponsor	 	S
	Granite-Meyers-Rados, a Joint Venture
	 	California	 	Joint Venture	 	GCCo	 	 	55.00	%	 	sponsor	 	S
	Granite-PCL, a Joint Venture
	 	Florida	 	Joint Venture	 	GCCo	 	 	64.70	%	 	sponsor	 	S
	Granite/Q&D, a Joint Venture
	 	Nevada	 	Joint Venture	 	GCCo	 	 	71.40	%	 	sponsor	 	S
	Granite-Rizzani de Eccher, a Joint Venture
	 	Florida	 	Joint Venture	 	GCCo	 	 	60.00	%	 	sponsor	 	S
	Granite2-Sundt, a Joint Venture
	 	Arizona	 	Joint Venture	 	GCCo	 	 	65.00	%	 	sponsor	 	S
	Hill Country Constructors
	 	Texas	 	Joint Venture	 	GCCo	 	 	70.00	%	 	sponsor	 	S
	Intercounty Constructors
	 	Maryland	 	Joint Venture	 	GCCo	 	 	55.00	%	 	sponsor	 	S
	K-G-W Leasing, a Joint Venture
	 	Utah	 	Joint Venture	 	GCCo	 	 	23.00	%	 	partner	 	A
	Kiewit-Granite, a Joint Venture
	 	California	 	Joint Venture	 	GCCo	 	 	25.00	%	 	partner	 	A
	Largo Properties, LLC
	 	Maryland	 	Limited Liability Company	 	GCCo	 	 	33.30	%	 	member	 	A
	Las Vegas Monorail Team, a Joint Venture
	 	Nevada	 	Joint Venture	 	GCCo	 	 	44.80	%	 	sponsor	 	A
	LGS, a Joint Venture
	 	Maryland	 	Joint Venture	 	GCCo	 	 	30.00	%	 	partner	 	A
	Market Street Constructors
	 	Pennslyvania	 	Joint Venture	 	GCCo	 	 	99.00	%	 	sponsor	 	S
	Minnesota Transit Constructors, a Joint Venture
	 	Minnesota	 	Joint Venture	 	GCCo	 	 	56.50	%	 	sponsor	 	S








 




			
	*	 	Material Subsidiary





Schedule 5.4

(to Note Purchase Agreement)





 











 






	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Ownership by Company and/or Subsidiary
	 	 	Jurisdiction	 	 	 	 	 	 	 	 	 	Capital
	 	 	of	 	 	 	 	 	 	 	 	 	Structure
	Name	 	Organization	 	Capital Structure	 	Name	 	Ownership	 	Position	 	Type
	Riverside Motorsports Park, LLC
	 	California	 	Limited Liability Company	 	GCCo	 	2.50%	 	member	 	A
	Sierra Blanca Constructors, a Joint
Venture
	 	New Mexico	 	Joint Venture	 	GCCo	 	52.00%	 	sponsor	 	S
	South Corridor Constructors, a Joint
Venture
	 	Oregon	 	Joint Venture	 	GCCo	 	25.00%	 	partner	 	A
	TGM Constructors
	 	Kentucky	 	Joint Venture	 	GCCo	 	25.00%	 	partner	 	A
	Tri-County Rail Constructors, a Joint
Venture
	 	Florida	 	Joint Venture	 	GCCo	 	30.00%	 	partner	 	A
	Virginia Approach Constructors
	 	Maryland	 	Joint Venture	 	GCCo	 	79.00%	 	partner	 	S
	Wasatch Constructors, a Joint Venture
	 	Utah	 	Joint Venture	 	GCCo	 	23.00%	 	partner	 	A
	Washington-Granite, a Joint Venture
	 	California	 	Joint Venture	 	GCCo	 	40.00%	 	partner	 	A
	Weber County Constructors
	 	Utah	 	Joint Venture	 	GCCo	 	75.00%	 	sponsor	 	S
	Wilder Construction Company (“Wilder”)
	 	Washington	 	C Corp	 	GCCo	 	75.00%	 	investor	 	S
	Wilder Realty
	 	Washington	 	C Corp	 	Wilder	 	100.00%	 	investor	 	S
	Axton Aggregate Partnership
	 	Washington	 	General Partnership	 	Wilder	 	50.00%	 	GP	 	A
	Axton Aggregate Company
	 	Washington	 	General Partnership	 	Wilder	 	50.00%	 	GP	 	A
	HLA /Wilder, a Joint Venture
	 	Washington	 	Joint Venture	 	Wilder	 	55.00%	 	partner	 	A
	Yaquina River Constructors, a Joint
Venture
	 	Oregon	 	Joint Venture	 	GCCo	 	90.00%	 	sponsor	 	S
	Yonkers/Granite, a Joint Venture
	 	New Jersey	 	Joint Venture	 	GCCo	 	60.00%	 	sponsor	 	S
	Granite Northwest, Inc. *
	 	Washington	 	C Corp	 	GCI	 	100.00%	 	investor	 	MS
	Granite Construction International
	 	California	 	C Corp	 	GCI	 	100.00%	 	investor	 	S
	Granite Road Builders, Ltd.
	 	BC, Candada	 	Subsidiary	 	GCIntl	 	100.00%	 	investor	 	S
	Granite Construction Northeast, Inc. *
	 	New York	 	C Corp	 	GCI	 	100.00%	 	investor	 	MS
	Granite Halmar-Fujitec America, a
Joint Venture
	 	New York	 	Joint Venture	 	GHC	 	100.00%	 	partner	 	S
	Granite Halmar/Schiavone, a Joint
Venture
	 	New York	 	Joint Venture	 	GHC	 	60.00%	 	partner	 	S
	Phoenix Constructors
	 	New York	 	Joint Venture	 	GHC	 	20.00%	 	partner	 	A
	Schiavone/Granite Halmar, a Joint
Venture
	 	New York	 	Joint Venture	 	GHC	 	40.00%	 	partner	 	A
	Granite Land Company (“GLC”) *
	 	California	 	C Corp	 	GCI	 	100.00%	 	investor	 	MS
	GGV Greenwood, LLC
	 	California	 	Limited Liability Company	 	GLC	 	90.00%	 	managing	 	S
	GLC Argyle 114, Ltd.
	 	Texas	 	Limited Liability Company	 	GLC	 	99.80%	 	LP	 	S
	Realty Capital Argyle 114, Ltd
	 	Texas	 	Limited Liability Company	 	GLC Argyle 114, Ltd.	 	41.67%	 	LP	 	A
	GLC Belmont, LTD.
	 	Texas	 	Limited Partnership	 	GLC	 	99.80%	 	LP	 	S
	Realty Capital Belmont, Ltd
	 	Texas	 	Limited Partnership	 	GLC Belmont	 	41.67%	 	LP	 	A
	GLC Brandywine, LLC
	 	California	 	Limited Liability Company	 	GLC	 	90.00%	 	managing	 	S
	GLC/Corpac Pine Grove, LLC
	 	California	 	Limited Liability Company	 	GLC	 	90.00%	 	managing	 	S
	GLC/Duc La Quinta LLC
	 	California	 	Limited Liability Company	 	GLC	 	90.00%	 	managing	 	S
	GLC/EPC McCormick Woods, LLC
	 	Washington	 	Limited Liability Company	 	GLC	 	100.00%	 	managing	 	S
	GEM1, LLC
	 	Washington	 	Limited Liability Company	 	GLC/EPC	 	70.00%	 	LLC	 	S
	GLC/Foothill Monterey, LLC
	 	California	 	Limited Liability Company	 	GLC	 	99.00%	 	LLC	 	S






 5.4-2 




 









 





	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Ownership by Company and/or Subsidiary
	 	 	Jurisdiction	 	 	 	 	 	 	 	 	 	Capital
	 	 	of	 	 	 	 	 	 	 	 	 	Structure
	Name	 	Organization	 	Capital Structure	 	Name	 	Ownership	 	Position	 	Type
	GLC Fort Worth, LLC (“GLCFW, LLC”)
	 	Texas	 	Limited Liability Company	 	GLC	 	100.00%	 	GP	 	S
	Presidio Vista I, LTD
	 	Texas	 	Limited Partnership	 	GLC	 	89.00%	 	L.P	 	S
	 
	 	 	 	 	 	GLCFW, LLC	 	1.00%	 	GP	 	 
	GLC/LP Rancho Road, LLC
	 	California	 	Limited Liability Company	 	GLC	 	99.00%	 	managing	 	S
	GLC/LP Shasta View, LLC
	 	California	 	Limited Liability Company	 	GLC	 	100.00%	 	managing	 	S
	GLC Summer Creek, LLC
	 	Texas	 	Limited Liability Company	 	GLC	 	100.00%	 	managing	 	S
	Summer Sycamore I, LTD
	 	Texas	 	Limited Partnership	 	GLC, LLC	 	89.00%	 	LP	 	S
	GLC Vista Crossroads, LLC
	 	Texas	 	Limited Liability Company	 	GLC	 	100.00%	 	managing	 	S
	Vista Crossroads I, LTD
	 	Texas	 	Limited Partnership	 	GLC, LLC	 	89.00%	 	LP	 	S
	Granite Grado Ventures, LLC (“GGV, LLC”)
	 	California	 	Limited Liability Company	 	GLC	 	90.00%	 	managing	 	S
	Granite Grado Ventures Project I, LLC
	 	California	 	Limited Liability Company	 	GGV, LLC	 	100.00%	 	managing	 	S
	Granite Grado Ventures Project II, LLC
	 	California	 	Limited Liability Company	 	GGV, LLC	 	90.00%	 	managing	 	S
	Granite/Mandalay Bay Finance, LLC
	 	California	 	Limited Liability Company	 	GLC	 	70.00%	 	member	 	S
	Granite/Mandalay, LLC (“GM, LLC “)
	 	California	 	Limited Liability Company	 	GLC	 	90.00%	 	member	 	S
	Oly/Granite General Partnership
	 	California	 	Limited Partnership	 	GM, LLC	 	10.00%	 	LP	 	A
	Oly/Mandalay Bay General Partnership
	 	California	 	Limited Partnership	 	GM, LLC	 	10.00%	 	LP	 	A
	Granite/PBC Pajaro, LLC
	 	California	 	Limited Liability Company	 	GLC	 	66.265%	 	LP	 	S
	Highpoint Oaks, LTD
	 	Texas	 	Limited Partnership	 	GLC	 	66.265%	 	LP	 	S
	Lodi Victor Ventures, LLC
	 	California	 	Limited Liability Company	 	GLC	 	90.00%	 	managing	 	S
	Main Street Ventures, LLC
	 	California	 	Limited Liability Company	 	GLC	 	90.00%	 	managing	 	S
	Main Street Ventures-Project I, LLC
	 	California	 	Limited Liability Company	 	MSV, LLC	 	10.00%	 	LP	 	A
	Main Street Ventures-Project II, LLC
	 	California	 	Limited Liability Company	 	MSV, LLC	 	10.00%	 	LP	 	A
	Regional Park Limited
	 	California	 	Limited Partnership	 	GLC	 	25.00%	 	LP	 	A
	VAC, LLC
	 	California	 	Limited Liability Company	 	GLC	 	90.00%	 	LLC	 	S
	Villebois Village Center, LLC
	 	Oregon	 	Limited Liability Company	 	GLC	 	48.00%	 	LLC	 	A
	XS Ranch Fund VI, L.P.
	 	Delaware	 	Limited Partnership	 	GLC	 	6.70%	 	LP	 	A
	Granite SR 91 Corporation (“GSR91”)
	 	California	 	C Corp	 	GCI	 	100.00%	 	investor	 	S
	Granite SR 91, LP (“SR91, LP”)
	 	California	 	Limited Partnership	 	GCI	 	99.00%	 	LP	 	S
	 
	 	 	 	 	 	GSR91	 	1.00%	 	GP	 	 
	California Private Transportation Company, LP
	 	California	 	Limited Partnership	 	SR91, LP	 	22.22%	 	LP	 	A
	GTC, Inc. (“GTC”)
	 	Texas	 	C Corp	 	GCI	 	100.00%	 	investor	 	S
	Intermountain Slurry Seal, Inc. *
	 	Wyoming	 	C Corp	 	GCI	 	100.00%	 	investor	 	MS
	Paramount-Nevada Asphalt Company, LLC
	 	Nevada	 	Limited Liability   Company	 	GCI	 	50.00%	 	member	 	A
	Pozzolan Products Company (P.P.C.) *
	 	Utah	 	C Corp	 	GCI	 	100.00%	 	investor	 	MS
	TIC Holdings, Inc
	 	Delaware	 	C Corp	 	GCI	 	10.00%	 	investor	 	A
	Wilcott Corporation
	 	Colorado	 	C Corp	 	GCI	 	100.00%	 	investor	 	S







 5.4-3 





 












 





*MS: Material Subsidiary




S: Subsidiary




A: Affiliate




The Company’s Directors and Officers




	 	 	 	 	 	 	 
	DIRECTO	 	 	 	 
	RS	 	 	 	OFFICERS
	 
	 	 	 	 	 	 
	Watts, David H.

	 	Niebla, J. F.
	 	Watts, David H.
	 	Franich, John
	 

	 	Cusumano, Gary M.
	 	Dorey, William G.	 	 
	Dorey, William G.

	 	 	 	 	 	Futch, Michael
	 

	 	 	 	Barton, William E.	 	 
	McDonald, Rebecca

	 	Kelsey, David H.
	 	 	 	Grazian, David R.
	 

	 	Bradford, James W.	 	 	 	 
	Powell, William H.

	 	 
	 	Boitano, Mark E.
	 	Kramer, Randy
	 
	 	 	 	 	 	 
	Bjork, Claes G.

	 	 	 	Desai, Jigisha
	 	Marshall, Kent
	 

	 	 	 	Donnino,
	 	McCann-Jenni, Mary
	 

	 	 	 	Michael F.
	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	Dowd, Brian
	 	Roberts, James H.






Agreements Restricting Dividend Payments




None




5.4-4 









 








Financial Statements




All of the financial statements contained in the SEC Reports identified on Schedule 5.3.




Schedule 5.5

(to Note Purchase Agreement)




 









 





Existing Debt




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
		 	 	 	 	 	 	 	 	 	 
	Item	 		 		 	Interest	 		 	Balance
	No.	 	Lender’s Name	 	Description	 	Rate	 	Maturity	 	10/31/07
	1

	 	Benna Investments
	 	Real Estate property
	 	 	6.50	%	 	12/01/07
	 	 	21,875	 
	2

	 	Rosemary’s Mountain
	 	Aggregate property
	 	 	8.82	%	 	06/01/01
	 	 	800,000	 
	3

	 	Wells - Anderson/Watson
	 	Aggregate property
	 	 	6.50	%	 	12/15/19
	 	 	162,234	 
	4

	 	Wells - Linda Watson

Private Placement Due
	 	Aggregate property

Refinance debt & general corporate
	 	 	6.50	%	 	12/22/19
	 	 	100,415	 
	5

	 	03/15/10

Private Placement Due
	 	purposes

Refinance debt & general corporate
	 	 	6.54	%	 	03/15/10
	 	 	20,000,000	 
	6

	 	05/01/13

Bank of America Letter of
	 	purposes

Self insured Worker’s
	 	 	6.96	%	 	05/01/13
	 	 	50,000,000	 
	7

	 	Credit

Bank of America Letter of
	 	Compensation
	 	 	5.96	%	 	03/15/08
	 	 	220,000	 
	8

	 	Credit

Bank of America Letter of
	 	City of Patterson
	 	 	5.96	%	 	02/04/08
	 	 	200,000	 
	9

	 	Credit

Syndicated Bank
	 	Silica deposit
	 	 	5.96	%	 	10/01/08
	 	 	4,000,000	 
	10

	 	Facility(Revolver)
	 	For general corporate purposes
	 	 	5.96	%	 	06/24/11
	 	 	75,000,000	 
	11

	 	Main St. Ventures
	 	Land development property
	 	 	8.06	%	 	07/21/09
	 	 	2,667,319	 
	12	 	Main St. Ventures II

GLC/EPC McCormick -
	 	Land development property
	 	 	9.00

variable
	%	 	08/17/08
	 	 	888,660	 
	14

	 	GEM1 #1

GLC/EPC McCormick -
	 	Land development property
	 	 	9.75

variable
	%	 	06/30/08
	 	 	1,912,152	 
	15

	 	GEM1 #2
	 	Land development property
	 	 	9.75

variable
	%	 	10/15/07	 	 	2,622,579	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	16

	 	GLC/CORPAC Pine Grove
	 	Land development property
	 	 	9.25

variable
	%	 	03/15/08
	 	 	2,499,367	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	17

	 	GLC/CORPAC Pine Grove II
	 	Land development property
	 	 	9.25	%	 	01/15/09
	 	 	609,633	 
	18

	 	GGV Greenwood
	 	Land development property
	 	 	9.00	%	 	09/10/09
	 	 	500,000	 
	19

	 	Foothill Monterey
	 	Land development property
	 	 	8.65	%	 	02/18/08
	 	 	2,074,449	 
	20

	 	Granite Grado Ventures II
	 	Land development property
	 	 	9.00	%	 	05/02/08
	 	 	880,000	 
	21

	 	Bradywine - Kash
	 	Land development property
	 	 	12.00	%	 	02/01/11
	 	 	1,950,000	 
	22

	 	Bradywine - Souza
	 	Land development property
	 	 	9.00
variable	%	 	11/15/09
	 	 	3,300,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	24

	 	Summer Sycamore
	 	Land development property
	 	 	9.25	%	 	02/01/08
	 	 	1,972,675	 
	 

	 	 	 	 	 	 	 	 	 	 	 	$	172,381,358	 






Schedule 5.15

(to Note Purchase Agreement)




 









 





Existing Investments




	 	 	 	 	 	 	 
	 	 	 	 	Market
	Company	 	Descriptions	 	10/31/07
	Paramount-Nevada Asphalt

	 	LLP
	 	 	3,422,191	 
	TIC Holdings, Inc.

	 	Minority Interest
	 	 	4,173,096	 
	Realty Capital Argyle

	 	LP
	 	 	1,379,469	 
	Highpoint Oaks, Ltd.

	 	LP
	 	 	1,707,872	 
	ABC Marine, LLC

	 	LLC
	 	 	211,881	 
	Realty Capital Belmont

	 	LP
	 	 	4,943,565	 
	GLC Vollebois Village

	 	LLC
	 	 	5,047,824	 
	XS Ranch Fund VI

	 	LP
	 	 	1,724,835	 
	Granite Regional Park

	 	LP
	 	 	918,652	 
	 

	 	 	 	$	23,529,385	 






Schedule 5.16

(to Note Purchase Agreement)




 









 





Form of Series 2007-A Note




Granite Construction Incorporated 




6.11% Series 2007-A Senior Note due December 12, 2019




			
	No. 2007-AR-
	 	                               , 20 ___
	$                                        
	 	PPN 387328 A# 4






     For value received, the undersigned, Granite Construction Incorporated
(herein called the “Company”), a corporation organized and existing under the laws of
the State of Delaware, hereby promises to pay to                                                              or registered assigns, the
principal sum of                                          Dollars (or so much thereof as shall not have been prepaid)
on December 12, 2019 with interest (computed on the basis of a 360-day year of twelve
30-day months) (a) on the unpaid balance hereof at the rate of 6.11% per annum from the
date hereof, payable semiannually, on the twelfth day of June and December in each year,
commencing with the June 12th or December 12th next succeeding the date hereof, until the
principal hereof shall have become due and payable, and (b) to the extent permitted by law
on any overdue payment (including any overdue prepayment) of principal, any overdue
payment of interest and any overdue payment of any Make-Whole Amount, payable semiannually
as aforesaid (or, at the option of the registered holder hereof, on demand), at a rate per
annum from time to time equal to the greater of (i) 8.11% and (ii) 2.00% over the rate of
interest publicly announced by Bank of America, N.A. from time to time in San Francisco,
California as its “reference” rate.



     Payments of principal of, interest on and any Make-Whole Amount with respect to this
Note are to be made in lawful money of the United States of America at the principal
office of Bank of America, N.A. in New York, New York or at such other place as the
Company shall have designated by written notice to the holder of this Note as provided in
the Note Purchase Agreement referred to below.



     This Note is one of the 6.11% Series 2007-A Senior Notes (herein called the “Notes”)
issued pursuant to the Note Purchase Agreement, dated as of December 12, 2007 (as from
time to time amended, the “Note Purchase Agreement”), between the Company and the
respective Purchasers named therein and is entitled to the benefits thereof. Each holder
of this Note will be deemed, by its acceptance hereof, to have (i) agreed to the
confidentiality provisions set forth in Section 20 of the Note Purchase Agreement and (ii)
made the representation set forth in Section 6.2 of the Note Purchase Agreement. Unless
otherwise indicated, capitalized terms used in this Note shall have the respective
meanings ascribed to such terms in the Note Purchase Agreement.



     This Note is a registered Note and, as provided in the Note Purchase Agreement, upon
surrender of this Note for registration of transfer, accompanied by a written instrument
of transfer duly executed, by the registered holder hereof or such holder’s attorney duly
authorized in writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for registration of
transfer, the Company may treat the person in whose name this Note is registered as the
owner hereof for the purpose of receiving



Exhibit 1

(to Note Purchase Agreement)




 









 




payment and for all other purposes, and the Company will not be affected by any notice to the
contrary.




     This Note and the holders hereof are entitled equally and ratably with the holders of all
other Notes to the rights and benefits provided pursuant to the terms and provisions of the
Guaranty Agreement. Reference is hereby made to the Guaranty Agreement for a statement of the
nature and extent of the benefits and security for the Notes afforded thereby and the rights of the
holders of the Notes and the Company in respect thereof.



     The Company will make required prepayments of principal on the dates and in the amounts
specified in the Note Purchase Agreement. This Note is also subject to optional prepayment, in
whole or from time to time in part, at the times and on the terms specified in the Note Purchase
Agreement, but not otherwise.



     If an Event of Default exists, the principal of this Note may be declared or otherwise become
due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with
the effect provided in the Note Purchase Agreement.



     This Note shall be construed and enforced in accordance with, and the rights of the parties
shall be governed by, the law of the State of New York excluding choice of law principles of the
law of such State that would require the application of the laws of a jurisdiction other than such
State.



	 	 	 	 	 	 	 
	 	 	Granite Construction Incorporated	 	 
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Its	 	 
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Its	 	 






E-1-2









 






Form of Subsidiary Guaranty Agreement




Subsidiary Guaranty Agreement




Re: $200,000,000 6.11% Series 2007-A Senior Notes

Due December 12, 2019

and

Additional Notes

of

Granite Construction Incorporated




     This Subsidiary Guaranty Agreement dated as of December 12, 2007 (the or this
“Guaranty”) is entered into on a joint and several basis by each of the undersigned, together with
any entity which may become a party hereto by execution and delivery of a Subsidiary Guaranty
Supplement in substantially the form set forth as Exhibit A
hereto (a “Guaranty Supplement”)
(which parties are hereinafter referred to individually as a “Guarantor” and collectively as the
“Guarantors ”).



Recitals




     A. Each Guarantor is a subsidiary of Granite Construction Incorporated, a Delaware
corporation (the “Company”), and a Material Subsidiary (as defined in the hereinafter defined
Note Agreement).



     B. The Company has entered into that certain Note Purchase Agreement dated as of
December 12, 2007 (as the same may be amended, supplemented, restated or otherwise modified
from time to time, the “Note Agreement”) between the Company and each of the purchasers
named on Schedule A attached to said Note Agreement (the
“2007-A Note Purchasers”),
providing for, among other things, the issue and sale by the Company to the 2007-A Note
Purchasers of $200,000,000 aggregate principal amount of its 6.11% Series 2007-A Senior
Notes, due December 12, 2019 (as amended, modified, supplemented or restated from time to
time, the “Series 2007-A Notes”).



     C. Pursuant
to the Note Agreement, the Company may, from time to time, issue one
or more additional Series (as defined in the Note Agreement) of its unsecured promissory notes
(as amended, modified, supplemented or restated from time to time,
the “Additional Notes, ”
and collectively with the Series 2007-A Notes, the
“Notes ”) to purchasers (“Additional
Purchasers ”) pursuant to a supplement (a
“Supplement”), provided that the aggregate principal amount of
Additional Notes issued pursuant to Supplements in accordance with the terms of Section 2.2 of
the Note Agreement shall not exceed $100,000,000. In  connection with the issuance of each
Series of Additional Notes, the Guarantors will execute and deliver a Guaranty Accession
Agreement in the form attached hereto as Exhibit B confirming that such Series of Additional
Notes constitutes Notes hereunder and are entitled to the benefits hereof. The 2007-A Note



Exhibit 2

(to Note Purchase Agreement)




 









 




Purchasers and the Additional Purchasers together with their respective successors and assigns are
collectively referred to herein as the “Holders.”




     D. The 2007-A Note Purchasers have required as a condition of their purchase of the Series
2007-A Notes and it is a condition of each Additional Purchaser’s purchase of Additional Notes
that the Company cause each of the undersigned to enter into this Guaranty and to cause from time
to time each Material Subsidiary to enter into a Guaranty Supplement, in each case as security for
the Notes, and the Company has agreed to cause each of the undersigned to execute this Guaranty
and to cause each from time to time Material Subsidiary to execute a Guaranty Supplement, in each
case in order to induce the 2007-A Note Purchasers and the Additional Purchasers to purchase the
Notes and thereby benefit the Company and its Subsidiaries (as defined in the Note Agreement) by
providing funds to the Company for the purposes described in Section 5.14 of the Note Agreement or
in the case of any Additional Notes, for the purposes described in the related Supplement.



     NOW, THEREFORE, as required by Section 4.4 of the Note Agreement and in consideration of the
premises and other good and valuable consideration, the receipt and sufficiency whereof are hereby
acknowledged, each Guarantor does hereby covenant and agree, jointly and severally, as follows:



SECTION 1. DEFINITIONS.




     Capitalized terms used herein shall have the meanings set forth in the Note Agreement unless
herein defined or the context shall otherwise require.



SECTION 2. GUARANTY OF NOTES AND NOTE AGREEMENT.




     (a) Each Guarantor jointly and severally does hereby irrevocably, absolutely and
unconditionally guarantee unto the Holders: (1) the full and prompt payment of the principal of,
premium, if any, and interest on the Notes from time to time outstanding, as and when such payments
shall become due and payable whether by lapse of time, upon redemption or prepayment, by extension
or by acceleration or declaration or otherwise (including (to the extent legally enforceable)
interest due on overdue payments of principal, premium, if any, or interest at the rate set forth
in the Notes) in federal or other immediately available funds of the United States of America which
at the time of payment or demand therefor shall be legal tender for the payment of public and
private debts, (2) the full and prompt performance and observance by the Company of each and all of
the obligations, covenants and agreements required to be performed or owed by the Company under the
terms of the Notes and the Note Agreement (including any Supplement) and (3) the full and prompt
payment, upon demand by any Holder of all costs and expenses, legal or otherwise (including
reasonable attorneys’ fees), if any, as shall have been expended or incurred in the protection or
enforcement of any rights, privileges or liabilities in favor of the Holders under or in respect of
the Notes, the Note Agreement (including any Supplement) or under this Guaranty or in any
consultation or action in connection therewith or herewith.



E-2-2









 





     (b) To the extent that any Guarantor shall make a payment hereunder (a “Payment”) which,
taking into account all other Payments previously or concurrently made by any of the other
Guarantors, exceeds the amount which such Guarantor would otherwise have paid if each Guarantor
had paid the aggregate obligations satisfied by such Payment in the same proportion as such
Guarantor’s Allocable Amount (as hereinafter defined) in effect immediately prior to such Payment
bore to the Aggregate Allocable Amount (as hereinafter defined) of all of the Guarantors in effect
immediately prior to the making of such Payment, then such Guarantor shall be entitled to
contribution and indemnification from, and be reimbursed by, each of the other Guarantors for the
amount of such excess, pro rata based upon their respective Allocable Amounts in effect
immediately prior to such Payment; provided that each Guarantor covenants and agrees that such
right of contribution and indemnification and any and all claims of such Guarantor against any
other Guarantor, any endorser or against any of their property shall be junior and subordinate in
right of payment to the prior indefeasible final payment in cash in full of all of the Notes and
satisfaction by the Company of its obligations under the Note Purchase Agreement (including each
Supplement) and by the Guarantors of their obligations under this Guaranty and the Guarantors
shall not take any action to enforce such right of contribution and indemnification, and the
Guarantors shall not accept any payment in respect of such right of contribution and
indemnification, until all of the Notes and all amounts payable by the Guarantors hereunder have
indefeasibly been finally paid in cash in full and all of the obligations of the Company under the
Note Purchase Agreement (including each Supplement) and of the Guarantors under this Guaranty have
been satisfied



     As of any date of determination, (1) the “Allocable Amount” of any Guarantor shall be equal
to the maximum amount which could then be claimed by the Holders under this Guaranty without
rendering such claim voidable or avoidable under Section 548 of Chapter 11 of the United States
Bankruptcy Code (11 U.S.C. Sec. 101 et. seq.) or under any applicable state Uniform Fraudulent
Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law; and (2) the
“Aggregate Allocable Amount” shall be equal to the sum of each Guarantor’s Allocable Amount.



     This clause (b) is intended only to define the relative rights of the Guarantors, and nothing
set forth in this clause (b) is intended to or shall impair the obligations of the Guarantors,
jointly and severally, to pay any amounts to the Holders as and when the same shall become due and
payable in accordance herewith.



     Each Guarantor acknowledges that the rights of contribution and indemnification hereunder
shall constitute an asset in favor of any Guarantor to which such contribution and indemnification
is owing.



Section 3. Guaranty of Payment and Performance.




     This is a guarantee of payment and performance and each Guarantor hereby waives, to the
fullest extent permitted by law, any right to require that any action on or in respect of any Note
or the Note Agreement (including any Supplement) be brought against the Company or any other Person
or that resort be had to any direct or indirect security for the Notes or for this Guaranty or any
other remedy. Any Holder may, at its option, proceed hereunder against any Guarantor in the



E-2-3









 




first instance to collect monies when due, the payment of which is guaranteed hereby, without
first proceeding against the Company or any other Person and without first resorting to any direct
or indirect security for the Notes or for this Guaranty or any other remedy. The liability of each
Guarantor hereunder shall in no way be affected or impaired by any acceptance by any Holder of any
direct or indirect security for, or other guaranties of, any Debt, liability or obligation of the
Company or any other Person to any Holder or by any failure, delay, neglect or omission by any
Holder to realize upon or protect any such guarantees, Debt, liability or obligation or any notes
or other instruments evidencing the same or any direct or indirect security therefor or by any
approval, consent, waiver, or other action taken, or omitted to be taken by any such Holder.




     The covenants and agreements on the part of the Guarantors herein contained shall take effect
as joint and several covenants and agreements, and references to the Guarantors shall take effect
as references to each of them and none of them shall be released from liability hereunder by
reason of the guarantee ceasing to be binding as a continuing security on any other of them.



Section 4. General Provisions Relating to the Guaranty.




     (a) Each Guarantor hereby consents and agrees that any Holder or Holders from time to time,
with or without any further notice to or assent from any other Guarantor may, without in any
manner affecting the liability of any Guarantor under this Guaranty, and upon such terms and
conditions as any such Holder or Holders may deem advisable:




     (1) extend in whole or in part (by renewal or otherwise), modify, change,
compromise, release or extend the duration of the time for the performance or payment
of any Debt, liability or obligation of the Company or of any other Person secondarily or
otherwise liable for any Debt, liability or obligations of the Company on the Notes, or
waive any Default with respect thereto, or waive, modify, amend or change any provision
of any other agreement or waive this Guaranty; or




     (2) sell, release, surrender, modify, impair, exchange or substitute any and all
property, of any nature and from whomsoever received, held by, or for the benefit of,
any such Holder as direct or indirect security for the payment or performance of any Debt,
liability or obligation of the Company or of any other Person secondarily or otherwise
liable for any Debt, liability or obligation of the Company on the Notes; or




     (3) settle, adjust or compromise any claim of the Company against any other
Person secondarily or otherwise liable for any Debt, liability or obligation of the
Company on the Notes.



     Each Guarantor hereby ratifies and confirms any such extension, renewal, change, sale,
release, waiver, surrender, exchange, modification, amendment, impairment, substitution,
settlement, adjustment or compromise and that the same shall be binding upon it, and hereby waives,
to the fullest extent permitted by law, any and all defenses, counterclaims or offsets which it
might or could have by reason thereof, it being understood that such Guarantor shall at all times
be bound by this Guaranty and remain liable hereunder.



E-2-4









 





     (b) Each Guarantor hereby waives, to the fullest extent permitted by law:




     (1) notice of acceptance of this Guaranty by the Holders or of the creation,
renewal or accrual of any liability of the Company, present or future, or of the
reliance of such Holders upon this Guaranty (it being understood that every Debt, liability and
obligation described in Section 2 hereof shall conclusively be presumed to have been
created, contracted or incurred in reliance upon the execution of this Guaranty);




     (2) notice of the issuance of any Additional Notes pursuant to the Note
Agreement or any Supplement thereto;




     (3) demand of payment by any Holder from the Company or any other Person
indebted in any manner on or for any of the Debt, liabilities or obligations hereby
guaranteed; and




     (4) presentment for the payment by any Holder or any other Person of the
Notes or any other instrument, protest thereof and notice of its dishonor to any party
thereto and to such Guarantor.



     The obligations of each Guarantor under this Guaranty and the rights of any Holder to enforce
such obligations by any proceedings, whether by action at law, suit in equity or otherwise, shall
not be subject to any reduction, limitation, impairment or termination, whether by reason of any
claim of any character whatsoever or otherwise and shall not be subject to any defense, set-off,
counterclaim (other than any compulsory counterclaim), recoupment or termination whatsoever.



     (c) The obligations of the Guarantors hereunder shall be binding upon the Guarantors
and their successors and assigns, and shall remain in full force and effect irrespective of:




     (1) the genuineness, validity, regularity or enforceability of the Notes, the
Note Agreement, any Supplement or any other agreement or any of the terms of any
thereof, the continuance of any obligation on the part of the Company or any other
Person on or in respect of the Notes or under the Note Agreement, any Supplement or any other
agreement or the power or authority or the lack of power or authority of the Company to
issue the Notes or the Company to execute and deliver the Note Agreement, any
Supplement or any other agreement or of any Guarantor to execute and deliver this
Guaranty or to perform any of its obligations hereunder or the existence or continuance
of the Company or any other Person as a legal entity; or




     (2) any default, failure or delay, willful or otherwise, in the performance by
the Company, any Guarantor or any other Person of any obligations of any kind or
character whatsoever under the Notes, the Note Agreement, any Supplement, this
Guaranty or any other agreement; or



E-2-5









 






     (3)
any creditors’ rights, bankruptcy, receivership or other insolvency
proceeding of the Company, any Guarantor or any other Person or in respect of the
property of the Company, any Guarantor or any other Person or any merger,
consolidation, reorganization, dissolution, liquidation, the sale of all or substantially all
of the assets of or winding up of the Company, any Guarantor or any other Person; or




     (4) impossibility or illegality of performance on the part of the Company, any
Guarantor or any other Person of its obligations under the Notes, the Note Agreement,
any Supplement, this Guaranty or any other agreements; or




     (5) in respect of the Company or any other Person, any change of
circumstances, whether or not foreseen or foreseeable, whether or not imputable to the
Company or any other Person, or other impossibility of performance through fire,
explosion, accident, labor disturbance, floods, droughts, embargoes, wars (whether or not
declared), civil commotion, acts of God or the public enemy, delays or failure of suppliers
or carriers, inability to obtain materials, action of any federal or state regulatory body or
agency, change of law or any other causes affecting performance, or any other force
majeure, whether or not beyond the control of the Company or any other Person and
whether or not of the kind hereinbefore specified; or




     (6) any attachment, claim, demand, charge, Lien, order, process, encumbrance
or any other happening or event or reason, similar or dissimilar to the foregoing, or any
withholding or diminution at the source, by reason of any taxes, assessments, expenses,
Debt, obligations or liabilities of any character, foreseen or unforeseen, and whether or
not valid, incurred by or against the Company, any Guarantor or any other Person or any
claims, demands, charges or Liens of any nature, foreseen or unforeseen, incurred by the
Company, any Guarantor or any other Person, or against any sums payable in respect of
the Notes or under the Note Agreement, any Supplement or this Guaranty, so that such
sums would be rendered inadequate or would be unavailable to make the payments herein
provided; or




     (7) any order, judgment, decree, ruling or regulation (whether or not valid) of
any court of any nation or of any political subdivision thereof or any body, agency,
department, official or administrative or regulatory agency of any thereof or any other
action, happening, event or reason whatsoever which shall delay, interfere with, hinder or
prevent, or in any way adversely affect, the performance by the Company, any Guarantor
or any other Person of its respective obligations under or in respect of the Notes, the Note
Agreement, any Supplement, this Guaranty or any other agreement; or




     (8) the failure of any Guarantor to receive any benefit from or as a result of its
execution, delivery and performance of this Guaranty; or




     (9) any failure or lack of diligence in collection or protection, failure in
presentment or demand for payment, protest, notice of protest, notice of default and of
nonpayment, any failure to give notice to any Guarantor of failure of the Company, any
Guarantor or any other Person to keep and perform any obligation, covenant or agreement



E-2-6









 




under the terms of the Notes, the Note Agreement, any Supplement, this Guaranty or any
other agreement or failure to resort for payment to the Company, any Guarantor or to any
other Person or to any other guaranty or to any property, security, Liens or other rights
or remedies; or





     (10) the acceptance of any additional security or other guaranty, the advance of
additional money to the Company or any other Person, the renewal or extension of the
Notes or amendments, modifications, consents or waivers with respect to the Notes, the
Note Agreement, any Supplement or any other agreement, or the sale, release,
substitution or exchange of any security for the Notes; or




     (11) the failure to execute a Guaranty Accession Agreement in connection with
the issuance of any Series of Additional Notes; or




     (12) any merger or consolidation of the Company, any Guarantor or any other
Person into or with any other Person or any sale, lease, transfer or other disposition
of any of the assets of the Company, any Guarantor or any other Person to any other Person, or
any change in the ownership of any shares of the Company, any Guarantor or any other
Person; or




     (13) any defense whatsoever that: (i) the Company or any other Person might
have to the payment of the Notes (principal, premium, if any, or interest), other than
payment thereof in federal or other immediately available funds or (ii) the Company or
any other Person might have to the performance or observance of any of the provisions
of the Notes, the Note Agreement, any Supplement or any other agreement, whether through
the satisfaction or purported satisfaction by the Company or any other Person of its
debts due to any cause such as bankruptcy, insolvency, receivership, merger, consolidation,
reorganization, dissolution, liquidation, winding-up or otherwise; or




     (14) any act or failure to act with regard to the Notes, the Note Agreement, any
Supplement, this Guaranty or any other agreement or anything which might vary the risk
of any Guarantor or any other Person; or




     (15) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, any Guarantor or any other Person in respect of the
obligations of any Guarantor or other Person under this Guaranty or any other
agreement;


provided that the specific enumeration of the above-mentioned acts, failures or omissions shall
not be deemed to exclude any other acts, failures or omissions, though not specifically mentioned
above, it being the purpose and intent of this Guaranty and the parties hereto that the
obligations of each Guarantor shall be absolute and unconditional and shall not be discharged,
impaired or varied except by the payment of the principal of, premium, if any, and interest on the
Notes in accordance with their respective terms whenever the same shall become due and payable as
in the Notes provided, at the place specified in and all in the manner and with the effect
provided in the Notes and the Note Agreement, as each may be amended or modified from time to
time. Without limiting the foregoing, it is understood that repeated and successive demands may be
made and




E-2-7









 







recoveries may be had hereunder as and when, from time to time, the Company shall default under or
in respect of the terms of the Notes or the Note Agreement (including any Supplement) and that
notwithstanding recovery hereunder for or in respect of any given default or defaults by the
Company under the Notes or the Note Agreement (including any Supplement), this Guaranty shall
remain in full force and effect and shall apply to each and every subsequent default.




     (d) All rights of any Holder may be transferred or assigned at any time and shall be
considered to be transferred or assigned at any time or from time to time upon the transfer of
such Note whether with or without the consent of or notice to the Guarantors under this
Guaranty or to the Company.



     (e) To the extent of any payments made under this Guaranty, the Guarantors shall be
subrogated to the rights of the Holder or Holders upon whose Notes such payment was made, but
each Guarantor covenants and agrees that such right of subrogation shall be junior and
subordinate in right of payment to the prior indefeasible final payment in cash in full of all
amounts due and owing by the Company with respect to the Notes and the Note Agreement
(including each Supplement) and by the Guarantors under this Guaranty, and the Guarantors
shall not take any action to enforce such right of subrogation, and the Guarantors shall not accept
any payment in respect of such right of subrogation, until all amounts due and owing by the
Company under or in respect of the Notes and the Note Agreement (including each Supplement) and all
amounts due and owing by the Guarantors hereunder have indefeasibly been finally paid in cash
in full. If any amount shall be paid to any Guarantor in violation of the preceding sentence
at any time prior to the later of the indefeasible payment in cash in full of the Notes and all other
amounts payable under the Notes, the Note Agreement (including each Supplement) and this
Guaranty, such amount shall be held in trust for the benefit of the Holders and shall
forthwith be paid to the Holders to be credited and applied to the amounts due or to become due with
respect to the Notes and all other amounts payable under the Note Agreement (including each
Supplement) and this Guaranty, whether matured or unmatured.



     (f) Each Guarantor agrees that to the extent the Company or any other Person makes
any payment on any Note, which payment or any part thereof is subsequently invalidated,
voided, declared to be fraudulent or preferential, set aside, recovered, rescinded or is required to
be retained by or repaid to a trustee, receiver, or any other Person under any bankruptcy code,
common law, or equitable cause, then and to the extent of such payment, the obligation or the
part thereof intended to be satisfied shall be revived and continued in full force and effect
with respect to the Guarantors’ obligations hereunder, as if said payment had not been made. The
liability of the Guarantors hereunder shall not be reduced or discharged, in whole or in part,
by any payment to any Holder from any source that is thereafter paid, returned or refunded in
whole or in part by reason of the assertion of a claim of any kind relating thereto, including, but
not limited to, any claim for breach of contract, breach of warranty, preference, illegality,
invalidity or fraud asserted by any account debtor or by any other Person.



     (g) No Holder shall be under any obligation: (1) to marshal any assets in favor of the
Guarantors or in payment of any or all of the liabilities of the Company under or in respect
of the Notes or the obligations of the Guarantors hereunder or (2) to pursue any other remedy that
the



E-2-8









 




Guarantors may or may not be able to pursue themselves and that may lighten the Guarantors’
burden, any right to which each Guarantor hereby expressly waives.




SECTION 5. Representations and Warranties of the Guarantors.




     Each Guarantor represents and warrants to each Holder that:



     (a) Such Guarantor is a corporation or other legal entity duly organized, validly
existing and in good standing under the laws of its jurisdiction of organization, and is duly
qualified as a foreign corporation or other legal entity and is in good standing in each
jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing could not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on (1) the business, operations,
affairs, financial condition, assets, properties or prospects of such Guarantor and its subsidiaries,
taken as a whole, or (2) the ability of such Guarantor to perform its obligations under this Guaranty
or (3) the validity or enforceability of this Guaranty (herein in this Section 5, a “Material
Adverse Effect”). Such Guarantor has the power and authority to own or hold under lease the properties
it purports to own or hold under lease, to transact the business it transacts and proposes to
transact, to execute and deliver this Guaranty and to perform the provisions hereof.



     (b) Each subsidiary of such Guarantor is a corporation or other legal entity duly
organized, validly existing and in good standing under the laws of its jurisdiction of
organization, and is duly qualified as a foreign corporation or other legal entity and is in good standing
in each jurisdiction in which such qualification is required by law, other than those jurisdictions as
to which the failure to be so qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Each subsidiary of such
Guarantor has the power and authority to own or hold under lease the properties it purports to
own or hold under lease and to transact the business it transacts and proposes to transact.



     (c) This Guaranty has been duly authorized by all necessary action on the part of such
Guarantor, and this Guaranty constitutes a legal, valid and binding obligation of such
Guarantor enforceable against such Guarantor in accordance with its terms, except as such enforceability
may be limited by (1) applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors’ rights generally and (2) general
principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or
at law).



     (d) This Guaranty, the documents, certificates or other writings identified in
Schedule 5.3 to the Note Agreement and the financial statements listed in Schedule 5.5 to the
Note Agreement, taken as a whole, do not contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein not misleading in light of
the circumstances under which they were made. Except as disclosed in the Disclosure Documents,
since December 31, 2006, there has been no adverse Material (as hereinafter defined) change in
the financial condition, operations, business, properties or prospects of such Guarantor or
any of its subsidiaries, taken as a whole.



E-2-9









 





     (e) The execution, delivery and performance by such Guarantor of this Guaranty will
not (1) contravene, result in any breach of, or constitute a default under, or result in the
creation of any Lien in respect of any property of such Guarantor or any of its subsidiaries under any
indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, charter
document or by-law, or any other agreement or instrument to which such Guarantor or any of its
subsidiaries is bound or by which such Guarantor or any of its subsidiaries or any of their respective
properties may be bound or affected, (2) conflict with or result in a breach of any of the
terms, conditions or provisions of any order, judgment, decree or ruling of any court, arbitrator or
Governmental Authority applicable to such Guarantor or any of its subsidiaries or (3) violate
any provision of any statute or other rule or regulation of any Governmental Authority applicable
to such Guarantor or any of its subsidiaries.



     (f) No consent, approval or authorization of, or registration, filing or declaration
with, any Governmental Authority is required in connection with the execution, delivery or
performance by such Guarantor of this Guaranty.



     (g) (1) There are no actions, suits, investigations or proceedings pending or, to the
knowledge of such Guarantor, threatened against or affecting such Guarantor or any of its
subsidiaries or any property of such Guarantor or any of its subsidiaries in any court or
before any arbitrator of any kind or before or by any Governmental Authority that, individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect.



          (2) Neither such Guarantor nor any of its subsidiaries is in default under any term of any
agreement or instrument to which it is a party or by which it is bound, or any order, judgment,
decree or ruling of any court, arbitrator or Governmental Authority or is in violation of any
applicable law, ordinance, rule or regulation (including without limitation Environmental Laws,
ERISA or the USA Patriot Act) of any Governmental Authority, which default or violation,
individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.




     (h) Such Guarantor and its subsidiaries have filed all income tax returns that are required to
have been filed in any jurisdiction, and have paid all taxes shown to be due and payable on such
returns and all other taxes and assessments payable by them, to the extent such taxes and
assessments have become due and payable and before they have become delinquent, except for any
taxes and assessments (1) the amount of which is not individually or in the aggregate material to
the business, operations, affairs, financial condition, assets, properties or prospects of such
Guarantor and its subsidiaries, taken as a whole (herein in this Section 5, “Material”) or (2) the
amount, applicability or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which such Guarantor or one of its subsidiaries, as the
case may be, has established adequate reserves in accordance with
GAAP. Such Guarantor knows of no basis for any other tax or assessment that could reasonably be
expected to have a Material Adverse Effect. The charges, accruals and reserves on the books of such
Guarantor and its subsidiaries in respect of federal, state or other taxes for all fiscal periods
are adequate. The federal income tax liabilities of such Guarantor and its subsidiaries have been
finally determined (whether by reason of completed audits or the statute of limitations having run)
for all fiscal years up to and including the fiscal year ended December 31, 2003.




E-2-10











 





     (i) Such Guarantor and its subsidiaries have good and sufficient title to their respective
properties that individually or in the aggregate are Material, including all such properties
reflected in the most recent audited balance sheet referred to in Section 5.5 of the Note
Agreement or purported to have been acquired by such Guarantor or any of its subsidiaries after
said date (except as sold or otherwise disposed of in the ordinary course of business), in each
case free and clear of Liens prohibited by the Note Agreement. All leases that individually or in
the aggregate are Material are valid and subsisting and are in full force and effect in all
material respects.



     (j) (1) Such Guarantor and its subsidiaries own or possess all Material licenses, permits,
franchises, authorizations, patents, copyrights, proprietary software, service marks, trademarks,
trade names and domain names, or other rights with respect thereto.



          (2) To the best knowledge of such Guarantor, no product of such Guarantor or
any of its subsidiaries infringes in any material respect any license, permit,
franchise, authorization, patent, copyright, proprietary software, service mark, trademark, trade name,
domain name or other right with respect thereto owned by any other Person.




          (3) To the best knowledge of such Guarantor, there is no Material violation by
any Person of any right of such Guarantor or any of its subsidiaries with respect to any
patent, copyright, proprietary software, service mark, trademark, trade name or other right with
respect thereto owned or used by such Guarantor or any of its subsidiaries.




     (k) (1) Such Guarantor and each ERISA Affiliate have operated and administered each Plan in
compliance with all applicable laws in all material respects. Neither such Guarantor nor any ERISA
Affiliate has incurred any Material liability pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit plans (as defined in Section 3 of
ERISA), and no event, transaction or condition has occurred or exists that could reasonably be
expected to result in the incurrence of any such Material liability by such Guarantor or any ERISA
Affiliate, or in the imposition of any Material Lien on any of the rights, properties or assets of
such Guarantor or any ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to
such penalty or excise tax provisions or to Section 401(a)(29) or 412 of the Code or Section 4068
of ERISA.



          (2) The present value of the aggregate benefit liabilities under each of the
Plans (other than Multiemployer Plans), determined as of the end of such Plan’s most recently
ended plan year on the basis of the actuarial assumptions specified for funding purposes in
such Plan’s most recent actuarial valuation report, did not exceed the aggregate current value of
the assets of such Plan allocable to such benefit liabilities by more than $5,000,000 in the
aggregate for all Plans. The term “benefit liabilities” has the meaning specified in Section 4001 of
ERISA and the terms “current value” and “present value” have the meanings specified in Section 3 of
ERISA.




          (3) Such Guarantor and its ERISA Affiliates have not incurred Material
withdrawal liabilities (and are not subject to Material contingent withdrawal liabilities)
under Section 4201 or 4204 of ERISA in respect of Multiemployer Plans.




E-2-11 









 





          (4) The expected postretirement benefit obligation (determined as of the last
day of such Guarantor’s most recently ended fiscal year in accordance with Financial
Accounting Standards Board Statement No. 106, without regard to liabilities attributable to continuation
coverage mandated by Section 4980B of the Code) of such Guarantor and its subsidiaries is not
Material.




          (5) The execution and delivery of this Guaranty will not involve any
transaction that is subject to the prohibitions of Section 406 of ERISA or in connection with
which a tax could be imposed pursuant to Section 4975(c)(l)(A)-(D) of the Code. The
representation by such Guarantor in the first sentence of this Section 5(k)(5) is made in
reliance upon and subject to the accuracy of each Holder’s representation in Section 6.2 of the Note
Agreement as to the sources of the funds used to pay the purchase price of the Notes to be
purchased by such Holder.




     (1) Neither
such Guarantor nor any of its subsidiaries is an “investment company” registered
or required to be registered under the Investment Company Act of 1940, as amended, or is subject
to regulation under the Public Utility Holding Company Act of 2005, as amended, the ICC
Termination Act of 1995, as amended, or the Federal Power Act, as amended.



     (m) Neither such Guarantor nor any of its subsidiaries has knowledge of any Material claim or
has received any notice of any Material claim, and no proceeding has been instituted raising any
Material claim against such Guarantor or any of its subsidiaries or any of their respective real
properties now or formerly owned, leased or operated by any of them or other assets, alleging any
damage to the environment or violation of any Environmental Laws.




     (1) Neither such Guarantor nor any of its subsidiaries has knowledge of any
facts which would give rise to any Material claim, public or private, or Material
violation of Environmental Laws or damage to the environment emanating from, occurring on or in
any way related to real properties now or formerly owned, leased or operated by any of
them or to other assets or their use.




     (2) Neither the Company nor any of its subsidiaries (i) has stored any
Hazardous Materials on real properties now or formerly owned, leased or operated by any
of them or (ii) has disposed of any Hazardous Materials in a manner contrary to any
Environmental Laws; in each case in any manner that could reasonably be expected to
result in a Material Adverse Effect.




     (3) All buildings on all real properties now owned, leased or operated by such
Guarantor or any of its subsidiaries are in material compliance with applicable
Environmental Laws.



     (n) Such Guarantor, when viewed on a consolidated basis with the Company and its other
Subsidiaries, is solvent, has capital not unreasonably small in relation to its business or any
contemplated or undertaken transaction and has assets having a value both at fair valuation and at
present fair salable value greater than the amount required to pay its debts as they become due
and greater than the amount that will be required to pay its probable liability on its existing
debts



E-2-12 









 




as they become absolute and matured. Such Guarantor does not intend to incur, or believe or should
have believed that it will incur, debts beyond its ability to pay such debts as they become due.
Such Guarantor, when viewed on a consolidated basis with the Company and its other Subsidiaries,
will not be rendered insolvent by the execution and delivery of, and performance of its
obligations under, this Guaranty. Such Guarantor does not intend to hinder, delay or defraud its
creditors by or through the execution and delivery of, or performance of its obligations under,
this Guaranty.




     (o) The
obligations of such Guarantor under this Guaranty rank pari passu in right of
payment with all other unsecured Senior Debt (actual or contingent) of such Guarantor, including,
without limitation, all unsecured Senior Debt of such Guarantor described in Schedule 5.15 to the
Note Agreement.



SECTION 6. Amendments, Waivers and Consents.




     (a) This Guaranty may be amended, and the observance of any term hereof may be
waived (either retroactively or prospectively), with (and only with) the written consent of
each Guarantor and the Required Holders, except that (1) no amendment or waiver of any of the
provisions of Sections 3, 4 or 5, or any defined term (as it is used therein), will be
effective as to any Holder unless consented to by such Holder in writing, and (2) no such amendment or waiver
may, without the written consent of each Holder, (i) change the percentage of the principal
amount of the Notes the Holders of which are required to consent to any such amendment or
waiver, or (ii) amend Section 2 or this Section 6. No consent of the Holders or the
Guarantors shall be required in connection with the execution and delivery of a Guaranty Supplement or
other addition of any additional Guarantor, and each Guarantor, by its execution and delivery
of this Guaranty (or Guaranty Supplement) consents to the addition of each additional Guarantor.
No consent of the Guarantors shall be required in connection with the issuance and sale of
Additional Notes, and each Guarantor, by its execution and delivery of this Guaranty (or
Guaranty Supplement) consents to the issuance of Additional Notes pursuant to the Note
Purchase Agreement.



     (b) The Guarantors will provide each Holder (irrespective of the amount of Notes
then owned by it) with sufficient information, sufficiently far in advance of the date a
decision is required, to enable such Holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions hereof. The
Guarantors will deliver executed or true and correct copies of each amendment, waiver or
consent effected pursuant to the provisions of this Section 6 to each Holder promptly
following the date on which it is executed and delivered by, or receives the consent or approval of, the
requisite Holders. The Guarantors will deliver executed copies of each executed Guaranty
Supplement to each Holder promptly following the date on which it is executed.



     (c) No Guarantor will directly or indirectly pay or cause to be paid any remuneration,
whether by way of fee or otherwise, or grant any security, to any Holder as consideration for
or as an inducement to the entering into by such Holder of any waiver or amendment of any of the
terms and provisions hereof unless such remuneration is concurrently paid, or security is



E-2-13 









 




concurrently granted, on the same terms, ratably to each Holder even if such Holder did not
consent to such waiver or amendment.




     (d) Any amendment or waiver consented to as provided in this Section 6 applies
equally to all Holders and is binding upon them and upon each future holder and upon the
Guarantors. No such amendment or waiver will extend to or affect any obligation, covenant or
agreement not expressly amended or waived or impair any right consequent thereon. No course
of dealing between the Guarantors and any Holder nor any delay in exercising any rights
hereunder shall operate as a waiver of any rights of any Holder. As used herein, the term
“this Guaranty” and references thereto shall mean this Guaranty as it may from time to time be
amended or supplemented.



     (e) Solely for the purpose of determining whether the Holders of the requisite
percentage of the aggregate principal amount of Notes then outstanding approved or consented
to any amendment, waiver or consent to be given under this Guaranty, Notes directly or indirectly
owned by any Guarantor, the Company or any of their respective subsidiaries or Affiliates
shall be deemed not to be outstanding.



SECTION 7. Notices.




     All notices and communications provided for hereunder shall be in writing and sent (a) by
telefacsimile if the sender on the same day sends a confirming copy of such notice by a recognized
overnight delivery service (charges prepaid), or (b) by registered or certified mail with return
receipt requested (postage prepaid) or (c) by a recognized overnight delivery service (charges
prepaid). Any such notice must be sent:




     (1) if to a 2007-A Note Purchaser or its nominee, to such 2007-A Note
Purchaser or its nominee at the address specified for such communications in Schedule A
to the Note Agreement or at such other address as such 2007-A Note Purchaser or its
nominee shall have specified to any Guarantor or the Company in writing,




     (2) if to an Additional Purchaser or its nominee, to such Additional Purchaser
or its nominee at the address specified for such communications in Schedule A to the
applicable Supplement or at such other address as such Additional Purchaser or its
nominee shall have specified to any Guarantor or the Company in writing,




     (3) if to any other Holder, to such Holder at such address as such Holder shall
have specified to any Guarantor or the Company in writing, or




     (4) if to any Guarantor, to such Guarantor c/o the Company at its address set
forth at the beginning of the Note Agreement to the attention of Chief Financial
Officer, or at such other address as such Guarantor shall have specified to the Holders in
writing.


Notices under this Section 7 will be deemed given only when actually received.




E-2-14 









 





Section
8. Miscellaneous.




     (a) No remedy herein conferred upon or reserved to any Holder is intended to be
exclusive of any other available remedy or remedies, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy given under this Guaranty now or
hereafter existing at law or in equity. No delay or omission to exercise any right or power
accruing upon any default, omission or failure of performance hereunder shall impair any such
right or power or shall be construed to be a waiver thereof but any such right or power may be
exercised from time to time and as often as may be deemed expedient. In order to entitle any
Holder to exercise any remedy reserved to it under the Guaranty, it shall not be necessary for
such Holder to physically produce its Note in any proceedings instituted by it or to give any
notice, other than such notice as may be herein expressly required.



     (b) The Guarantors will pay all sums becoming due under this Guaranty by the
method and at the address specified for such purpose for such Holder, in the case of a Holder
that is a 2007-A Note Purchaser, on Schedule A to the Note Agreement, and in the case of a Holder
that is an Additional Purchaser, on Schedule A to the corresponding Supplement or by such
other method or at such other address as any Holder shall have from time to time specified to the
Guarantors in writing for such purpose, without the presentation or surrender of this Guaranty
or any Note.



     (c) Any provision of this Guaranty that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by law) not
invalidate or render unenforceable such provision in any other jurisdiction.



     (d) If the whole or any part of this Guaranty shall be now or hereafter become
unenforceable against any one or more of the Guarantors for any reason whatsoever or if it is
not executed by any one or more of the Guarantors, this Guaranty shall nevertheless be and remain
fully binding upon and enforceable against each other Guarantor as if it had been made and
delivered only by such other Guarantors.



     (e) This Guaranty shall be binding upon each Guarantor and its successors and
assigns and shall inure to the benefit of each Holder and its successors and assigns so long
as its Notes remain outstanding and unpaid.



     (f) This Guaranty may be executed in any number of counterparts, each of which
shall be an original but all of which together shall constitute one instrument. Each
counterpart may consist of a number of copies hereof, each signed by less than all, but together signed by
all, of the parties hereto.



     (g) This Guaranty shall be construed and enforced in accordance with, and the rights
of the parties shall be governed by, the law of the State of New York excluding choice-of-law
principles of the law of such State that would require the application of the laws of a
jurisdiction other than such State.



E-2-15 









 





     IN WITNESS WHEREOF, the undersigned has caused this Subsidiary Guaranty Agreement to be duly
executed by an authorized representative as of this 12th day of December, 2007.



	 	 	 	 	 
	 	Granite Construction Company

 	 
	 	By  	 	 
	 	 	Its 	 
	 
	 	By  	 	 
	 	 	Its 	 
	 	 	 	 
	 
	 	Granite Construction Northeast, Inc.

 	 
	 	By  	 	 
	 	 	Its 	 
	 
	 	By  	 	 
	 	 	Its 	 
	 
	 	Granite Land Company

 	 
	 	By  	 	 
	 	 	Its 	 
	 
	 	By  	 	 
	 	 	Its 	 
	 




E-2-16 









 





	 	 	 	 	 
	 	Granite Northwest

 	 
	 	By  	 	 
	 	 	Its 	 
	 
	 	By  	 	 
	 	 	Its 	 
	 	 	 	 
	 
	 	Intermountain
Slurry Seal, Inc.

 	 
	 	By  	 	 
	 	 	Its 	 
	 
	 	Pozzolan Products Company

 	 
	 	By  	 	 
	 	 	Its 	 
	 
	 	GILC Incorporated

 	 
	 	By  	 	 
	 	 	Its 	 
	 
	 	By  	 	 
	 	 	Its 	 
	 




E-2-17 









 





Subsidiary Guaranty Supplement




To the Holders (as defined in the

     hereinafter defined Guaranty Agreement)




Ladies and Gentlemen:




     WHEREAS, Granite Construction Incorporated, a corporation organized under the laws of the
State of Delaware (the “Company”), (i) issued (1) $200,000,000 aggregate principal amount of its
6.11% Series 2007-A Senior Notes due December 12, 2019 (the “Series 2007-A Notes”) pursuant to a
Note Purchase Agreement dated as of December 12, 2007 (the “Note Agreement”) between the Company
and each of the purchasers named on Schedule A attached to said Note Purchase Agreement (the
“Series 2007-A Note Purchasers”) for the purposes described in Section 5.14 of the Note Purchase Agreement [and (2)                      [insert
information regarding any prior issuances of Additional Notes] and (ii) may, from time to time,
issue and sell one or more additional Series of its unsecured promissory notes under the
provisions of the Note Agreement pursuant to a supplement (a “Supplement”), provided that the
aggregate principal amount of Notes of all Series issued pursuant to all Supplements (the
“Additional Notes,” and collectively with the Series 2007-A Notes, the “Notes”) in accordance with
the terms of Section 2.2 of the Note Purchase Agreement shall not exceed $100,000,000. Capitalized
terms used herein shall have the meanings set forth in the hereinafter defined Guaranty Agreement
unless herein defined or the context shall otherwise require.



     WHEREAS, as a condition precedent to their purchase of the Notes, the Holders required that
from time to time certain subsidiaries of the Company enter into a Subsidiary Guaranty Agreement
dated as of December 12, 2007 as security for the Notes (as amended, supplemented, restated or
otherwise modified from time to time, the “Subsidiary Guaranty”).



     Pursuant to Section 9.7 of the Note Agreement, the Company has agreed to cause the
undersigned,
                    , a corporation organized under the laws of                      (the “Additional Guarantor”), to join in the Subsidiary Guaranty. In accordance with the
requirements of the Subsidiary Guaranty, the Additional Guarantor desires to amend the definition
of Guarantor (as the same may have been heretofore amended) set forth in the Subsidiary Guaranty
attached hereto so that at all times from and after the date hereof, the Additional Guarantor shall
be jointly and severally liable as set forth in the Subsidiary Guaranty for the obligations of the
Company under the Note Agreement (including each Supplement) and the Notes to the extent and in the
manner set forth in the Subsidiary Guaranty.



     The undersigned is the duly elected                      of the Additional Guarantor, a
subsidiary of the Company, and is duly authorized to execute and deliver this Guaranty



E-2-18 









 




Supplement to each of you. The execution by the undersigned of this Guaranty Supplement shall
evidence its consent to and acknowledgment and approval of the terms set forth herein and in the
Subsidiary Guaranty and by such execution the Additional Guarantor shall be deemed to have made in
favor of the Holders the representations and warranties set forth in Section 5 of the Subsidiary
Guaranty.




     Upon execution of this Subsidiary Guaranty Supplement, the Subsidiary Guaranty shall be
deemed to be amended as set forth above. Except as amended herein, the terms and provisions of the
Subsidiary Guaranty are hereby ratified, confirmed and approved in all
respects.



     Any and all notices, requests, certificates and other instruments (including the Notes) may
refer to the Subsidiary Guaranty without making specific reference to this Subsidiary Guaranty
Supplement, but nevertheless all such references shall be deemed to include this Subsidiary
Guaranty Supplement unless the context shall otherwise require.



     Dated:                                          , 20___.



	 	 	 	 	 
	 	[Name of Additional Guarantor]

 	 
	 	By  	 	 
	 	 	Its 	 
	 	 	 	 
	 




E-2-19 









 





Form of Accession Agreement




     Reference is hereby made to the Subsidiary Guaranty Agreement dated as of December 12, 2007
(as amended, supplemented, restated or otherwise modified from time to time, the “Subsidiary
Guaranty”), entered into on a joint and several basis by each of the undersigned. Capitalized terms
used herein and not otherwise defined shall have the meanings given to such terms in the Subsidiary
Guaranty.



     The undersigned hereby confirm that the Additional Purchasers of the Additional Notes
issued pursuant to the [Number] Supplement dated as of 

, ___20 ___ are Holders as defined
in the Subsidiary Guaranty and as such, are entitled to the full rights and benefits of Holders
under the Subsidiary Guaranty. The undersigned acknowledge the terms of the Subsidiary Guaranty
and agree to be bound thereby.



Date:




	 	 	 	 	 
	 	 	[Guarantors]
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 





E-2-20 









 





GRANITE CONSTRUCTION INCORPORATED

INVESTMENT POLICY GUIDELINES

For Working Capital Portfolio




Effective: January 1, 2008





	1.0	 	Purpose






	 	 	The purpose of this policy is to set guidelines for the parameters, responsibilities and
controls for working capital investment of corporate funds. These investments provide
earnings on corporate funds while maintaining liquidity and working funds for the present
and future operations.






	2.0	 	Scope






	 	 	This policy applies to Granite Construction Incorporated and all of its subsidiaries
(collectively “Granite”). The Board of Directors must approve any changes to this policy.






	3.0	 	Investment Objectives






	 	 	In order to provide control of all investments and cash, Granite has established the
following objectives (in the order of importance) regarding its investment policy:






	 	u 	 	Safety — the primary objective of the investment activities of the
Corporation is protection of capital. Each investment transaction shall seek to first
ensure that capital losses are avoided, whether they are from securities defaults or
erosion of market value.
	 
	 	u	 	Liquidity — the investment portfolio must be structured in a manner that will
provide sufficient liquidity to pay the obligations of the Corporation. Any excess cash above
the aforementioned requirements may be invested in instruments with longer
maturity.
	 
	 	u	 	Diversification — the investment activity must ensure diversification of
investments that minimizes risk exposure to any one security and/or issuer.
	 
	 	u	 	Investment Return — the Corporation seeks to maximize the return on all
investments within the constraints of safety and liquidity.






	4.0	 	Duration






	 	 	The duration of the portfolio including escrows and deposits shall be consistent with the
cash needs as determined by the cash forecast. Cash investments are restricted to average





Exhibit 3

(to Note Purchase Agreement)




 









 






	 	 	maturity of one (1) year from date of settlement. Any investments with longer maturity than
one year must be invested in instruments issued by, guaranteed by, or insured by the U.S.
Government or any of its agencies and Municipal Bonds as specified on the Exhibit A.
	 
	 	 	The average maturity of the escrow portfolio and escrow deposit agreements shall not exceed
five (5) years.
	 
	 	 	Per GAAP, Cash Equivalent investments shall be defined as instruments maturing within 90
days. Short-term investments shall be defined as instruments maturing in ninety-one (91)
days or more. Long-term investments shall be defined as instruments maturing in 367 days or
more.






	5.0	 	Marketability






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






	6.0	 	Authorized Traders






	 	 	The following individuals are authorized traders:
	 
	 	 	Jigisha Desai, Vice President/Treasurer

Mary McCann-Jenni, Vice President/Controller

Ananya Mukherjee, Assistant Treasurer






	7.0	 	Authorized Dealers and Banks for Trading






	 	The following institutions are authorized dealers:





Banc of America Securities





	 	 	BMO Capital 

BNP Paribas 

Lehman Brothers 

Merrill Lynch 

Smith Barney






	 	 	All purchased investments will be delivered to Union Bank of California for safekeeping and
paid for upon receipt.






	8.0	 	Custody of Securities





E-3-2 









 






	 	 	The following financial institution is authorized to hold all of the fixed income
instruments in which the company is eligible to invest in custody on behalf of the company:
	 
	 	 	Union Bank of California
	 
	 	 	All of the money market funds in which the company is eligible to invest are also
authorized to hold investments in custody on behalf of the company. The company will not
take physical possession of investment securities.
	 
	 	 	Each financial institution must provide timely confirmation/safekeeping receipts on all
investment transactions and provide monthly transaction reports.






	9.0	 	Escrow Portfolio (Securities held in escrow in lieu of retention)






	 	 	Escrows in lieu of retention are allowed at the following:






	 	 	Comerica Bank*

Bank of America*

Nevada Highway Fund (State of Nevada Treasury)*

Union Bank of California

US Bank Trust

Wells Fargo Bank*





*Required by Owner





	 	 	The types of investments will be guided by the terms of the escrow, but in all cases the
investment will be governed by the investment policy. Banks not listed, but required by
escrow agreement, will also be acceptable.







	10.	 	Reporting
	 
	 	§   	Any individual transaction conforming to the policy shall be approved by one of
the following officers. Any transaction not conforming to the policy must be approved
by any two of the following officers:






	 	      W. G. Dorey	 	                      W. E. Barton                        M. F. Donnino
	 
	 	      M. E. Boitano	 	                       J. H. Roberts






	 	§	 	Any individual transaction down-graded causing the policy to fall out of
compliance shall be approved by the Chief Financial Officer and Treasurer.
	 
	 	§	 	All new types of investment must pass a thorough credit review process that
evaluates all related risks to insure that it conforms to the investment policy guidelines.




E-3-3 









 






	 	§	 	Daily — An investment transaction sheet, sequentially numbered will be processed for
approval by an authorized officer.
	 
	 	§	 	Weekly and Monthly — A portfolio will be provided to the President, Chief Operating
Officer, Chief Financial Officer and all traders.
	 
	 	§	 	Monthly — A reconciliation of investment statements to the Treasury reports then to
the general ledger accounts will be performed by the designated deadlines.
	 
	 	§	 	For FASB 115 purposes, the Corporation classifies all fixed income investments as
“Held-to-Maturity.”






	11.	 	Performance Measurement






	 	 	Monthly — Depending on the weighted-average composition of the portfolio, the performance of
the investment portfolio shall be measured against the Lipper Money Market Funds, Merrill
Lynch 1-3 Year Government/Corporate Index, and iMoneyNet (IBC/Donoghue).






	12.	 	Investment Guidelines






	 	 	The following table provides a list of permitted investments.






E-3-4 











 





GRANITE CONSTRUCTION INCORPORATED

INVESTMENT POLICY GUIDELINES




For Working Capital Portfolio




Effective: January 1, 2008




     At the time of purchase



	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Investment	 	 
	 	 	 	 	 	 	Maximum	 	Limit by	 	Other
	 	 	Rating	 	Minimum Rating	 	Maturity	 	Security	 	Investment
	Eligible Investments	 	Agency	 	Quality	 	Limit	 	Type	 	Limits
	U.S. Treasury and
Direct Agency
Obligations

	 	N/A
	 	N/A
	 	2 Years
	 	Up to 100% of Total
Portfolio
	 	No limit
	 
	 	 	 	 	 	 	 	 	 	 
	Indirect Federal Agency Obligations of the U.S. Government	 	Moody’s
	 	Aaa
	 	2 Years
	 	Up to 40% of Total
Portfolio
	 	Per issuer limit - the greater of 10%
of portfolio OR
$5,000,000
	 
	 	 	 	 	 	 	 	 	 	 
	Obligations issued by
U.S. owned domestic
commercial banks
limited to:

Banker’s
Acceptance
Certificate of Deposit

	 	S&P, &
Moody’s
	 	A-l/P-1 (for BA’s)

A-l+P-1 (for CD’s)
	 	1 Year
	 	50% of Total
Portfolio
	 	Per issuer limit
- the greater of 10%
of portfolio OR
$5,000,000
	 
	 	 	 	 	 	 	 	 	 	 
	Obligations issued by
U.S. bank subsidiaries
of Non U.S. Bank
limited to:

Yankee/Eurodollar
Banker’s Acceptance

	 	S&P &
Moody’s
	 	A-l/P-1 (for BA’s)


A-l+P-1 (for CD’s)
	 	1 Year
	 	40% of Total
Portfolio
	 	Per issuer limit
- the greater of 10%
of portfolio OR
$5,000,000
	 
	Yankee/Eurodollar
Certificates of
Deposit (all
securities U.S. dollar
denominated)

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Commercial Paper - Top 

Tier

	 	S&P &
Moody’s
	 	A-l/P-1
	 	270 Days
	 	75% of Total
Portfolio
	 	Per issuer limit
- the greater of 10%
of portfolio OR
$5,000,000






E-3-5 









 






	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Investment	 	 
	 	 	 	 	 	 	Maximum	 	Limit by	 	Other
	 	 	Rating	 	Minimum Rating	 	Maturity	 	Security	 	Investment
	Eligible Investments	 	Agency	 	Quality	 	Limit	 	Type	 	Limits
	Commercial Paper —

Split Rated

	 	S&P &
Moody ’s	 	A-l/P-2orA2-Pl
Must be publicly
trade Corporation.
Must have at least
$20B in Market
Capitalization at the
time of purchase.
	 	270 Days
	 	30% of
Overall
Commercial
Paper
Portfolio OR
22.5% of
Total
Portfolio
	 	Per issuer limit -
the greater of 10%
of Commercial
Paper Portfolio
OR $5,000,000
	 
	 	 	 	 	 	 	 	 	 	 
	Commercial Paper —

Second Tier

	 	S&P, &
Moody’s
	 	A-2/P-2
Must be publicly
trade Corporation.
Must have at least
$20B in Market
Capitalization at the
time of purchase.
	 	270 Days
	 	20% of
Overall
Commercial
Paper
Portfolio OR
15% of
Total
Portfolio
	 	Per issuer limit -
the greater of 10%
of Commercial
Paper Portfolio
OR $5 ,000,000
	 
	 	 	 	 	 	 	 	 	 	 
	Asset Backed Securities

	 	S&P &
Moody’s
	 	A-1+/P-1 or

equivalent for short

term, or AA/Aa2 for

long term
	 	1 Year
	 	10% of
Total
Portfolio
	 	Per issuer limit -
the greater of 10%
of portfolio OR
$5,000,000
	 

	 	 	 	 	 	 	 	 	 	Bonds or notes
backed by loan
paper or accounts
receivable
originated by
banks, credit card
companies, or
other providers of
credit, but
excluding
collateralized
mortgage
obligations
(CMO’s).
	 
	 	 	 	 	 	 	 	 	 	 
	Municipal Securities
(Taxable and Tax-Exempt)

	 	S&P &
Moody’s,
	 	A-l, AA or better,

Sp-1 AND

P-l, Aa or better,

MIG1/VMIG1
	 	2 Years
	 	30% of
Total
Portfolio
	 	Per issuer limit -
the greater of 10%
of portfolio OR
$5,000,000
	 
	 	 	 	 	 	 	 	 	 	 
	Money Market Funds
(Taxable and Tax-
Exempt) — Including the
passive sweep accounts
offered by commercial
banks

	 	S&P &
Moody’s
	 	AAAm/Aaa
	 	Average
Maturity of
90 Days or
Less
	 	50% of
Total
Portfolio
	 	Up to $30 million
may be invested
in any single well-
diversified money
market fund that
invests
exclusively in
securities
authorized under
this investment
policy.






Note: The credit rating of issuer will be superseded by that of the guarantor where applicable.




E-3-6 









 





Form of Opinion of General Counsel

to the Company and the Guarantors




See Attached




Exhibit 4.5(a)

(to Note Purchase Agreement)




 









 










December 12, 2007




To the Purchasers Listed in Schedule “A” to the Note Purchase Agreement




Ladies and Gentlemen:




     I am general counsel of Granite Construction Incorporated, a Delaware corporation (the
“Company”), and its subsidiaries and affiliates. I have represented the Company in connection with
the execution and delivery of the Note Purchase Agreement, dated as of December 12, 2007 (the “Note
Purchase Agreement”) by and among the Company and the Purchasers listed on Schedule “A” thereto
(collectively, the “Purchasers”). I have also represented each of Granite Construction Company, a
California corporation, Granite Land Company, a California corporation, Granite Construction
Northeast, Inc, a New York corporation, Granite Northwest, Inc. a Washington corporation,
Intermountain Slurry Seal, Inc. a Wyoming corporation, Pozzolan Products Company, a Utah
corporation, and GILC Incorporated, a California corporation (each a “Subsidiary”, collectively the
Subsidiaries”), each of which is a direct or indirect wholly-owned subsidiary of the Company, in
connection with the execution and delivery by the Subsidiaries (each executing subsidiary a
“Guarantor” and collectively the “Guarantors” of that certain Subsidiary Guaranty Agreement (the
“Guaranty”), dated as of December 12, 2007, executed by the Guarantors guaranteeing the obligations
of the Company under the Note Purchase Agreement and the Notes issued in connection therewith to
the respective Purchasers (each a “Note”, collectively the “Notes”: the Note Purchase Agreement,
the Guaranty and the Notes, and all documents required to be executed in connection therewith, are
referred to herein collectively as the “Transaction Documents”). Intermountain Slurry Seal, Inc.
(ISS) and Pozzolan Products Company (PPC) are hereinafter referred to singularly as a
“Non-California Subsidiary.” I am rendering these opinions pursuant to Section 4.5(a) of the Note
Purchase Agreement. Capitalized terms used herein and not otherwise defined shall have the meanings
given to them in the Note Purchase Agreement.



I. BASIS OF OPINIONS




     In rendering the opinions set forth herein, I have examined originals, or copies
identified to me as being true copies, of the following records, documents and instruments.



     1. The Certificate or Articles of Incorporation, as the case may be, of each Subsidiary,
and the Bylaws of each such Subsidiary;



     2. The agreements and instruments of the Company and each Subsidiary;



     3. A certificate issued by the Secretary of State for the state of Wyoming certifying to
the good standing and existence as a domestic corporation of ISS and dated as of November 30, 2007.



	 	 	 
	 

	 	Box 50085
	 

	 	Watsonville, CA 95077-5085
	 

	 	Phone 831/724-1011
	 

	 	FAX 831/722-9657






E-4.5(a)-2









 





The Purchasers Listed in Schedule A

December 12, 2007

Page 2 of 3




     4. A certificate issued by the Secretary of State for the state of Utah certifying to the
good standing and existence as a domestic corporation of PPC and dated as of November 30, 2007.



     5. The resolutions or Unanimous Written Consents of the Boards of Directors of
the Company and each Subsidiary.



     6. The Transaction Documents.



     In addition, I have examined and relied upon originals or copies certified to my satisfaction
of such records, documents, opinions, memoranda and other instruments as in my judgement are
necessary or appropriate to enable me to render the opinions expressed below.



II. ASSUMPTIONS




     With your permission, and without my verification, I have assumed the following for the
purpose of rendering the opinions set forth herein:



     1. The genuineness and authenticity of all documents submitted to me as originals, and the
conformity to authentic originals of all documents submitted to me as copies.



III. OPINIONS




     1. The Company is duly licensed or qualified and is in good standing as a foreign corporation
in each jurisdiction in which the character of the properties owned or leased by it or the nature
of the business transacted by it makes such licensing or qualification necessary.



     2. Each Non-California Subsidiary is a corporation or other business entity duly organized,
validly existing and in good standing under the laws of its jurisdiction or organization and is
duly licensed or qualified and is in good standing in each jurisdiction in which the character of
the properties owned or leased by it or the nature of the business transacted by it makes such
licensing or qualifications necessary.



     3. The issuance and sale of the Notes and the execution, delivery and performance by
the Company of the Note Purchase Agreement do not conflict with or result in any breach of any
of the provisions of or constitute a default under or result in the creation or imposition of any
Lien upon any of the property of the Company pursuant to the provisions of any material agreement
or other instrument to which the Company is a party or by which the Company may be bound.



     4. The execution, delivery and performance by each Guarantor of the Guaranty Agreement do not
conflict with or result in any breach of any of the provisions of or constitute a default under or
result in the creation or imposition of any Lien upon any of the property of such



E-4.5(a)-3









 





The Purchasers Listed in Schedule A

December 12, 2007

Page 3 of 3



Guarantor pursuant to the provisions of the charter documents or bylaws of such Guarantor or any
material agreement or other instrument to which such Guarantor is a party or by which such
Guarantor may be bound.




     5. Each Non-California Subsidiary has the corporate power and the authority to
execute, deliver and perform the Guaranty and to conduct the activities in which it is now engaged.



     6. The Guaranty has been duly authorized by all necessary corporate action on the part of each
Non-California Subsidiary and has been duly executed and delivered by each Non- California
Subsidiary.



     7. All of the issued and outstanding shares of capital stock or other equity interests of
each Subsidiary have been duly issued, are fully paid and non-assessable and are owned by
the Company, by one or more Subsidiaries, or by the Company and one or more Subsidiaries.



     This opinion letter is furnished to you solely for your benefit and may not be relied upon
other than by you or subsequent holders of the Notes for any purpose without my prior written
consent, given in my sole discretion. In addition, this opinion letter may be provided to
Governmental Authorities including, without limitation, the NAIC. I expressly disclaim any
obligation to update this opinion after the date hereof for any reason, including, but not limited
to, any new or changed facts or laws which come to my attention after the date hereof.



Very truly yours,




MF/cmc





E-4.5(a)-4









 








Form of Opinion of Special Counsel

to the Company and the Guarantors




See Attached




Exhibit 4.5(b)

(to Note Purchase Agreement)





 









 













DLA Piper US LLP

2000 University Avenue

East Palo Alto, California 94303-2214

www.dlapiper.com




T 650.833.2000

F 650.833.2001




December 12, 2007




To The Purchasers Listed in Schedule “A” to the Note Purchase Agreement




	 	 	 	 	 
	 

	 	Re:
	 	Granite Construction Incorporated-
	 

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






Ladies and Gentlemen:



We have acted as special counsel to Granite Construction Incorporated, a Delaware corporation (the
“Company”), in connection with the execution and delivery of the Note Purchase Agreement, dated as
of December 12, 2007 (the “Note Purchase
Agreement”), by and among the Company and the
Purchasers listed on Schedule “A” thereto (collectively,
the “Purchasers”). We have also acted as
special counsel to each of Granite Construction Company, a California corporation, Granite Land
Company, a California corporation, Granite Construction Northeast, Inc., a New York corporation
(“Granite Northeast”). Granite Northwest, Inc., a Washington corporation (“Granite Northwest”).
Intermountain Slurry Seal, Inc., a Wyoming corporation, Pozzolan Products Company (P.P.C.), a Utah
corporation, and GILC Incorporated, a California corporation (each a “Subsidiary”, collectively the
“Subsidiaries”), each of which is a direct or indirect wholly-owned subsidiary of the Company, in
connection with the execution and delivery by the Subsidiaries (each executing subsidiary a
“Guarantor” and collectively the “Guarantors”) of that certain Subsidiary Guaranty Agreement (the
“Guaranty”), dated as of December 12, 2007, executed by the Guarantors guaranteeing the obligations
of the Company under the Note Purchase Agreement and the Notes issued in connection therewith to
the respective Purchasers (each a “Note”, collectively the “Notes”: the Note Purchase Agreement,
the Guaranty and the Notes, and all documents required to be executed in connection therewith, are
referred to herein collectively as the “Transaction Documents”). Granite Construction
Company, Granite Land Company and GILC Incorporated are each referred to herein individually as a
“California Subsidiary” and collectively as the “California Subsidiaries.” Granite
Northeast, Granite Northwest and the California Subsidiaries are referred to herein collectively as
the “Covered Subsidiaries”. We are rendering this opinion pursuant to Section 4.5(b) of the
Note Purchase Agreement. Capitalized terms used herein and not otherwise defined shall have the
meanings given to them in the Note Purchase Agreement.




I. BASIS OF OPINIONS



In rendering the opinion set forth herein, we have examined originals, or copies identified to us a
being true copies, of the following records, documents and instruments:





	 	1.	 	The Note Purchase Agreement;





E-4.5(b)-2









 










To The Purchasers Listed in Schedule “A” to

the Note Purchase Agreement

December 12, 2007

Page Two





	 	2.	 	The Notes;
	 
	 	3.	 	The Guaranty;
	 
	 	4.	 	The Certificate or Articles of Incorporation, as the case may be, of the
Company and of each Covered Subsidiary, in each case certified as true and correct by
the Secretary of State or other applicable governmental authority of the state
of incorporation of the applicable entity, and the Bylaws of the Company and of
each Covered Subsidiary, in each case, certified to us by an officer of the Company
as being in force as of the date of this opinion;
	 
	 	5.	 	The resolutions of the Company’s Board of Directors adopted at its meeting
on December 6, 2007; the resolutions of the Executive Committee of the Board
of Directors of Granite Construction Company adopted by unanimous written consent, and
the resolutions of the Boards of Directors of each other Guarantor adopted by unanimous
written consent, in each case authorizing the Transaction Documents;
	 
	 	6.	 	The Officers’ Certificate (as defined below);
	 
	 	7.	 	A certificate issued by the Secretary of State for the State of Delaware
certifying to the good standing and existence as a domestic corporation of the Company
as of November 30, 2007;
	 
	 	8.	 	A certificate of status issued by the Secretary of State for the State of
California certifying the status as a foreign corporation of the Company as of November
30, 2007;
	 
	 	9.	 	A certificate of status issued by the Secretary of State for the State of
California certifying the good standing and status as a domestic corporation of
Granite Construction Company as of November 30, 2007;
	 
	 	10.	 	A certificate of status issued by the Secretary of State for the State of
California certifying the good standing and status as a domestic corporation of
GILC Incorporated November 30, 2007;
	 
	 	11.	 	A certificate of status issued by the Secretary of State for the State of
California certifying the good standing and status as a domestic corporation of Granite
Land Company as of November 30, 2007;
	 
	 	12.	 	A certificate issued by the Secretary of State for the State of New York
certifying the good standing and status as a domestic corporation of Granite
Construction Northeast, Inc. as of November 29, 2007;





E-4.5(b)-3









 










To The Purchasers Listed in Schedule “A” to

the Note Purchase Agreement

December 12, 2007

Page Three





	 	13.	 	A certificate of existence/authorization issued by the Secretary of State for
the State of Washington certifying the existence and authorization as a domestic
corporation of Granite Northwest, Inc. as of November 30, 2007;
	 
	 	14.	 	The agreements filed by the Company as exhibits to its annual report on Form
10-K for the fiscal year ended December 31, 2006, as filed with the United
States Securities and Exchange Commission (the “Material Agreements”): and
	 
	 	15.	 	Amendment No. 2 to Credit Agreement, dated as of December 7, 2007, by and among
the Company, the guarantors named therein, Bank of America, N.A. as administrative
agent, and each of the lenders party thereto (the “Credit Agreement Consent”).




In addition, we have examined and relied upon originals or copies certified to our
satisfaction of such records, documents, certificates, opinions, memoranda and other
instruments as in our judgment are necessary or appropriate to enable us to render the
opinions expressed below.




II. ASSUMPTIONS



With your permission, and without our verification, we have assumed the following for the purpose
of rendering the opinions set forth herein:





	 	(A)	 	The genuineness and authenticity of all signatures on original documents (other
than signatures on behalf of the Company and the Covered Subsidiaries on
the Transaction Documents) and that all natural persons who are signatories are
legally competent to execute and deliver such documents.
	 
	 	(B)	 	The genuineness and authenticity of all documents submitted to us as originals,
and the conformity to authentic originals of all documents submitted to us as copies.
	 
	 	(C)	 	The due authorization, execution and delivery of the Note Purchase Agreement
by each Purchaser, and that the Note Purchase Agreement is the legal, valid and binding
obligation of each Purchaser, enforceable against such Purchaser in accordance with its
terms, and that the representations and warranties as to factual matters made by the
Purchasers in the Note Purchase Agreement are true and correct.
	 
	 	(D)	 	As to factual matters, we have relied solely upon, and assumed the
accuracy, completeness and genuineness of a certificate signed by an officer of the
Company and each Subsidiary concerning certain matters set forth therein and attached
hereto as Exhibit “A” (the “Officers’ Certificate”), certificates of public
officials and oral and written representations made to us by officers of the Company
and the Subsidiaries. In addition, we have assumed that the representations and
warranties as to factual matters made by the Company and the Subsidiaries in the
Transaction Documents





E-4.5(b)-4









 










To The Purchasers Listed in Schedule “A”

to the Note Purchase Agreement

December 12, 2007

Page Four





	 	 	 	and any certificate delivered in connection therewith are true and correct. We have
made no independent investigation of any of the facts stated in any such certificate
or representation and warranty; however, to our knowledge, there is nothing which
would lead us to believe that such facts are inaccurate.
	 
	 	(E)	 	That the Purchasers possess all required authority, licenses and permits and
have satisfied all requirements respecting their power and authority to perform
their obligations pursuant to the Transaction Documents and to enter into the
Transaction Documents and to derive the intended benefits thereof.
	 
	 	(F)	 	The reference in Paragraph II.D above, “to our knowledge”, is intended to refer
to the current actual knowledge of those attorneys in this firm who have rendered or
are rendering substantive legal services to the Company and the Subsidiaries in
the transactions contemplated by the Transaction Documents. However, except
as otherwise expressly indicated, we have not undertaken any independent investigation
to determine the accuracy of such statement and any limited inquiry undertaken by us
during the preparation of this opinion letter should not be regarded as such an
investigation; no inference as to our knowledge of any matters bearing on the accuracy
of any such statement should be drawn from the fact of our representation of the
Company and/or the Subsidiaries.
	 
	 	(G)	 	With respect to our opinions in Paragraphs III.1 and III.2 regarding the good
standing and/or existence and qualification of the Company and the Covered Subsidiaries
in their respective states of incorporation and certain foreign jurisdictions, we
have relied exclusively on good standing and other certificates of public officials
identified in Paragraph I above.
	 
	 	(H)	 	With respect to our opinion in Paragraph III.8 that the Guaranty is a
legal, valid and binding contract of the Guarantors enforceable in accordance with its
terms, we have assumed that (i) each Guarantor other than the Covered Subsidiaries (the
“Other Guarantors”) has been duly organized and is in good standing in its
jurisdiction of incorporation, (ii) the execution, delivery and performance of the
Guaranty has been duly authorized by all necessary corporate action on the part of each
Other Guarantor and is within the corporate power of each Other Guarantor, (iii) no
approval, consent or withholding of objection on the part of, or filing, registration
or qualification with, any governmental body, federal or state (other than those
required under the Applicable Laws), is necessary in connection with the execution and
delivery by any Other Guarantor of the Guaranty; and (iv) the execution, delivery and
performance by each Other Guarantor of the Guaranty do not conflict with or result in
any breach of any of the provisions of or constitute a default under or result in the
creation or imposition of any Lien upon any of the property of such Other Guarantor
pursuant to the provisions of the charter documents or by-laws of such Other Guarantor.





E-4.5(b)-5









 










To The Purchasers Listed in Schedule “A” to

the Note Purchase Agreement

December 12, 2007

Page Five





	 	(I)	 	With respect to our opinions in Paragraphs III.5 and III.9 regarding the
necessity for approvals, consents or withholding of objections on the part of, or
filing, registration or qualification with, any governmental body, federal or state,
under the Applicable Laws, we have not conducted any special investigation of statutes,
laws, ordinances, rules or regulations, and our opinions with respect thereto are
limited to the Applicable Laws.
	 
	 	(J)	 	With respect to our opinions in Paragraphs III.6 and III.10 regarding conflicts, breaches, defaults or creation of Liens under agreements or other instruments to
which the Company or any Guarantor is a party or by which the Company or any
Guarantor, or any of their assets, respectively, are bound, arising in connection
with the execution, delivery and performance of the Note Purchase Agreement, Notes
and Guaranty to which any of them are a party, we have relied solely upon our review
of the Material Agreements. With respect to the Material Agreements, we have relied
solely upon representations made to us in the Officers’ Certificate regarding the
absence of any conflict, breach, or default and any creation or imposition of any
Lien, except to the extent that such conflict, breach, default or creation or
imposition of a Lien, would be apparent solely from an examination of the documents
or agreements we have reviewed and not based upon facts not set forth expressly in
the Material Agreements or the Transaction Documents. To the extent that any of the
agreements and instruments identified in the Officers’ Certificate is governed by
laws other than the Applicable Laws, our opinion relating to those agreements and
instruments is based solely upon the plain meaning of their language without regard
to interpretation or construction that might be indicated by the laws governing those
agreements and instruments and without consideration of any parol evidence. Moreover,
we have not reviewed, and express no opinion on (i) financial covenants or similar
provisions requiring financial calculations or determinations to ascertain compliance
or (ii) provisions relating to the occurrence of a “material adverse event” or words
of similar import contained in any such agreement or instrument. Without limiting the
generality of the foregoing, we express no opinion with respect to whether the
Company’s or any Guarantor’s execution and delivery of, or performance under, the
Transaction Documents to which it is a party, will conflict with or result in any
breach of any of the provisions of, or constitute a default under, or result in the
creation or imposition of any Lien under Sections 10.3 or 10.4 of the Note Purchase
Agreement, dated as of May 1, 2001, by and among the Company and the purchasers
listed in the Schedule A attached thereto or under Sections 10.3 or 10.4 of the
Amended and Restated Note Purchase Agreement, dated as of November 1, 2001, by and
among the Company and the purchasers listed in the Schedule A attached thereto, in
each case as amended, supplemented, modified or restated as of the date hereof. We
call your attention to the fact that compliance with certain provisions of those
agreements require financial calculations that may change from time to time, and that
the ability of the Company and its Subsidiaries to achieve or maintain compliance
with those provisions may be impaired by events and circumstances that they do not
control.





E-4.5(b)-6









 










To The Purchasers Listed in Schedule “A” to

the Note Purchase Agreement

December 12, 2007

Page Six





	 	(K)	 	With respect to our opinions in Paragraphs III.6 and III.10 we have
assumed that the Credit Agreement Consent is in full force and effect and is the legal,
valid and binding contract and obligation of each of the parties thereto and
enforceable in accordance with its terms.
	 
	 	(L)	 	With respect to our opinion in Paragraphs III.12, we have assumed, without independent investigation, of the accuracy of the representations set forth in
Section 5.14 of the Note Purchase Agreement: (i) that the proceeds of the Notes will
be applied as specified in Section 5.14 of the Note Purchase Agreement, and (ii) the
representations set forth in the second to last sentence of Section 5.14 of the Note
Purchase Agreement are true, correct and accurate. We have further relied on the
statement in the Officers’ Certificate that all common stock of the Company
repurchased pursuant to the Company’s publicly announced share repurchase
authorization prior to the date hereof, has been cancelled and retired, and that all
such stock repurchased after the date hereof will be cancelled and retired
immediately upon repurchase.





III. OPINIONS





	 	1.	 	The Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, has the corporate power and
the corporate authority to execute and perform the Note Purchase Agreement and to issue
the Notes and has the full corporate power and the corporate authority to conduct the
activities in which it is now engaged and is duly licensed or qualified and in good
standing as a foreign corporation in California.
	 
	 	2.	 	Each California Subsidiary is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of California. Granite Northeast is
a corporation duly incorporated, validly existing and in good standing under the laws
of the State of New York. Granite Northwest is a corporation duly incorporated
and validly existing under the laws of the State of Washington.
	 
	 	3.	 	The Note Purchase Agreement has been duly authorized by all necessary
corporate action on the part of the Company, has been duly executed and delivered by
the Company and constitutes the legal, valid and binding obligation of the
Company enforceable in accordance with its terms.
	 
	 	4.	 	The Notes have been duly authorized by all necessary corporate action on the
part of the Company, have been duly executed and delivered by the Company
and constitute the legal, valid and binding obligations of the Company enforceable
in accordance with their terms.
	 
	 	5.	 	No approval, consent or withholding of objection on the part of, or filing,
registration or qualification with, any governmental body, federal or state, is
required under the





E-4.5(b)-7









 










To The Purchasers Listed in Schedule “A” to

the Note Purchase Agreement

December 12, 2007

Page Seven





	 	 	 	Applicable Laws in connection with the execution and delivery by the Company of the
Note Purchase Agreement or the Notes.
	 
	 	6.	 	The issuance and sale of the Notes and the execution, delivery and performance
by the Company of the Note Purchase Agreement do not: (a) violate the Applicable Laws
that are binding on the Company, or (b) conflict with or result in any breach of any of
the provisions of or constitute a default under, or result in the creation
or imposition of any Lien upon any of the property of the Company pursuant to,
the provisions of, the Certificate of Incorporation or By-laws of the Company or
any Material Agreement to which the Company is a party or by which the Company may be
bound.
	 
	 	7.	 	Each Covered Subsidiary has the corporate power and the authority to
execute, deliver and perform the Guaranty and to conduct the activities in which
it is now engaged.
	 
	 	8.	 	The Guaranty has been duly authorized by all necessary corporate action on the
part of each Covered Subsidiary, has been duly executed and delivered by each
Covered Subsidiary and constitutes the legal, valid and binding contract of each
Guarantor enforceable in accordance with its terms.
	 
	 	9.	 	No approval, consent or withholding of objection on the part of, or filing,
registration or qualification with, any governmental body, federal or state, is
required under the Applicable Laws, in connection with the execution and delivery by
any Guarantor of the Guaranty.
	 
	 	10.	 	The execution, delivery and performance by each Covered Subsidiary of
the Guaranty do not: (a) violate the Applicable Laws that are binding on such
Covered Subsidiary, or (b) conflict with or result in any breach of any of the
provisions of or constitute a default under, or result in the creation or imposition of
any Lien upon any of the property of such Covered Subsidiary pursuant to the provisions
of, the charter documents or by-laws of such Covered Subsidiary. The execution,
delivery and performance by each Guarantor of the Guaranty do not conflict with or
result in any breach of any of the provisions of or constitute a default under, any
Material Agreement to which such Guarantor is a party or by which such Guarantor may
be bound.
	 
	 	11.	 	The issuance, sale and delivery of the Notes and the issuance and delivery of
the Guaranty under the circumstances contemplated by the Note Purchase Agreement do
not, under existing law, require the registration of the Notes or the Guaranty
under the Securities Act of 1933, as amended, or the qualification of an indenture
under the Trust Indenture Act 1939, as amended.





E-4.5(b)-8









 










To The Purchasers Listed in Schedule “A” to

the Note Purchase Agreement

December 12, 2007

Page Eight





	 	12.	 	The issuance of the Notes and such application of proceeds will not
result in a violation of the margin requirements of Regulations T, U or X of the
Board of Governors of the Federal Reserve System.





IV. QUALIFICATIONS




The opinions expressed in this letter are subject to the following qualifications:





	 	(A)	 	Enforcement of the Transaction Documents may be subject to applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other
similar laws now or hereafter in effect limiting the validity or enforceability of
creditors’ rights and remedies generally.
	 
	 	(B)	 	Enforcement of the Transaction Documents may be subject to the effects of
general principles of equity, regardless of whether considered in proceedings in equity
or at law.
	 
	 	(C)	 	Certain provisions of the Transaction Documents providing for penalties,
forfeitures or late payment charges upon delinquency in payment or the occurrence of a
default, or unspecified fees or charges imposed in the sole discretion of the
Purchasers, may be unenforceable in whole or in part.
	 
	 	(D)	 	Enforceability may be limited by any unconscionable, inequitable, or
unreasonable conduct on the part of the party seeking enforcement, defenses arising
from such party’s failure to act in accordance with the terms and conditions of the
Transaction Documents, defenses arising as a consequence of the passage of time, or
defenses arising as a result of such party’s failure to act reasonably or in good faith
or to comply with the terms of the Transaction Documents.
	 
	 	(E)	 	We express no opinion herein as to the applicability or effect of any
fraudulent transfer or similar law on the Transaction Documents or any of the
transactions contemplated thereby.
	 
	 	(F)	 	We express no opinion as to the effect on the opinions herein stated of (i)
the compliance or noncompliance of any Purchaser with any state, federal or other
laws or regulations applicable to it, or (ii) the legal or regulatory status or nature
of any Purchaser.
	 
	 	(G)	 	We express no opinion on the enforceability of any provisions of the
Transaction Documents requiring any party to waive any procedural, judicial, or
substantive rights or defenses, such as rights to notice, statutes of limitation,
appraisal or valuation rights, redemption rights, and marshaling of assets, or any
provisions purporting to authorize or consent to a confessed judgment, or any
provisions purporting to waive any right to consequential or other damages, or any
provisions purporting to require





E-4.5(b)-9









 










To The Purchasers Listed in Schedule “A” to

the Note Purchase Agreement

December 12, 2007

Page Nine





	 	 	 	the Company or any Subsidiary to give notice to any Purchaser of any acts or
omissions of any Purchaser or any Purchaser’s employees.
	 
	 	(H)	 	We express no opinion on the enforceability of any provisions
stating that the provisions of the Transaction Documents are severable.
	 
	 	(I)	 	We express no opinion as to the enforceability of any rights to
indemnification or contribution provided for in the Transaction Documents which
are violative of the public policy underlying any law, rule or regulation
(including any federal or state securities law, rule or regulation) or the
enforceability of any rights to specific performance contained in any Transaction
Document.
	 
	 	(J)	 	We express no opinion on the enforceability of any provisions of the
Transaction Documents that entitle any Purchaser, as a matter of right, to the
appointment of a receiver after the occurrence of a default.
	 
	 	(K)	 	The provisions of the Transaction Documents which provide for jurisdiction
of the courts of any particular jurisdiction other than New York may not be binding on
the courts in the forums selected or excluded.
	 
	 	(L)	 	Enforceability of the Transaction Documents may be limited by the effect of applicable statutes and judicial decisions which provide, among other things, that a
court may limit the granting of attorneys’ fees to those attorneys’ fees which are
determined by the court to be reasonable and that attorneys’ fees may be granted only
to a prevailing party and that a contractual provision for attorneys’ fees is deemed
to extend to both parties (notwithstanding that such provision by its express terms
benefits only one party).
	 
	 	(M)	 	Enforceability of the Transaction Documents may be limited by the effect of any
New York or federal law or court decisions that requires a lender to enforce its
remedies in a commercially reasonable manner.
	 
	 	(N)	 	We call to your attention that our opinion on the enforceability of the
Note Purchase Agreement, Notes and Guaranty does not mean that every provision
contained in the Transaction Documents is valid or enforceable, but to the extent one
or more provisions of the Transaction Documents may be invalid or unenforceable, such
invalidity or unenforceability will not render the Transaction Documents invalid as a
whole nor will it preclude or otherwise impair (x) the provisions of the Note Purchase
Agreement pertaining to acceleration of the Notes or the Provisions of the Guaranty
pertaining to demand for payment thereunder, in each case, upon a material default
under the Transaction Documents, or (y) the judicial enforcement of the payment
obligations of the Company and the Subsidiaries under the Transaction Documents.





E-4.5(b)-10









 










To The Purchasers Listed in Schedule “A” to

the Note Purchase Agreement

December 12, 2007

Page Ten





	 	(O)	 	Except as expressly set forth in Paragraph III.11 and Paragraph III.12, we
express no opinion as to any securities, anti-trust, tax, land use, safety, insurance
company or banking rules or regulations, or any laws, rules or regulations applicable
to any of the parties to the Transaction Documents other than the Company and the
Guarantors.
	 
	 	(P)	 	We express no opinion as to whether the members of the board of directors
of the Company or any Guarantor have complied with any applicable fiduciary duties in
connection with the authorization, execution and delivery of the Transaction Documents.





We further advise you that:





	 	(A)	 	The enforceability of the Guaranty against any Guarantor may be subject to
statutory provisions and case law to the effect that a guarantor may be exonerated if
the beneficiary of the guaranty alters the original obligation of the principal, fails
to inform the guarantor of material information pertinent to the principal or any
collateral, elects remedies that may impair the subrogation rights of the guarantor
against the principal or that may impair the value of the collateral, fails to accord
the guarantor the protections afforded a debtor under the Uniform Commercial Code or
otherwise takes any action that materially prejudices the guarantor. However, there is
also authority to the effect that a guarantor may validly waive such rights if the
waivers are expressly set forth in the guaranty. While we believe that a New York
court should hold that the explicit language contained in the guaranty waiving such
rights should be enforceable, we express no opinion with respect to the effect of
(i) any modification to or amendment of the obligations of the Company that
materially increases such obligations; or (ii) any other action by a holder of a Note
that materially prejudices a Guarantor, if, in any such instance, such
modification, election, or action occurs without notice to the Guarantor and without
granting to the Guarantor an opportunity to cure any default by Company.
	 
	 	(B)	 	It could be contended that the Guaranty was not given for a fair or
reasonably equivalent consideration, that a Guarantor is, or, by entering into the
Guaranty, may become, insolvent, and that such Guaranty be voidable by creditors of
such Guarantor or by a trustee or receiver of such Guarantor in bankruptcy or
similar proceedings pursuant to applicable bankruptcy, fraudulent conveyance or
similar laws. Because of these possible contentions, our opinions are further limited
by and subject to the effect of such laws.





E-4.5(b)-11









 










To The Purchasers Listed in Schedule “A” to

the Note Purchase Agreement

December 12, 2007

Page Eleven



We express no opinion concerning any law other than the Applicable Laws (as defined below). As used
herein, “Applicable Laws” means the law of the State of California, the law of the State of
New York, the law of the State of Washington (excluding those rules, regulations, provisions,
statutes, rulings, orders, ordinances and other laws of the regional or local governmental bodies,
municipalities, and special political subdivisions within the States of California, New York or
Washington and the judicial and administrative decisions relating to the foregoing), the law of the
United States of America and the General Corporation Law of Delaware (“Delaware Corporate
Law”) that are binding on the Company and the Guarantors, and in our experience, are normally
applicable to the transactions of the type contemplated by the Note Purchase Agreement, the Notes
and the Guaranty, without our having made any special investigation as to the applicability of any
specific law. With respect to Delaware Corporate Law, we have based our opinion solely upon our
examination of such laws as reported in standard, unofficial compilations. Our opinions in
Paragraphs III.3 and III.4 as to the enforceability of the Note Purchase Agreement and the Notes,
and our opinion in Paragraph III.8 as to the enforceability of the Guaranty, are each limited to
the Applicable Laws of the State of New York. Opinions of counsel licensed to practice law in
states other than the State of California, the State of New York and the State of Washington have
not been obtained to support the opinions contained herein.



This opinion letter is furnished to you solely for your benefit and may not be relied upon other
than by you or subsequent transferees of the Notes for any purpose without our prior written
consent, given in our sole discretion. We expressly disclaim any obligation to update this opinion
after the date hereof for any reason, including, but not limited to, any new or changed facts or
laws which come to our attention after the date hereof.




Sincerely yours,





E-4.5(b)-12









 








Form of Opinion of Special Counsel

to the Purchasers




     The closing opinion of Schiff Hardin LLP, special counsel to the Purchasers, called for by
Section 4.5(c) of the Agreement, shall be dated the date of the Closing and addressed to the
Purchasers, shall be satisfactory in form and substance to the Purchasers and shall be to the
effect that:



     1. The Company is a corporation validly existing and in good standing under the laws of the
State of Delaware.



     2. The Agreement and the 2007-A Notes being delivered on the date hereof constitute the legal,
valid and binding contracts of the Company enforceable in accordance with their respective terms.



     3. The issuance, sale and delivery of the Series 2007-A Notes under
the circumstances contemplated by the Agreement do not, under existing law, require the
registration of such Series 2007-A Notes under the Securities Act or the qualification of an
indenture under the Trust Indenture Act of 1939, as amended.



     The opinion of Schiff Hardin LLP shall also state that the opinions of Michael Futch, Esq.,
and DLA Piper US LLP are satisfactory in scope and form to Schiff Hardin LLP and that, in their
opinion, the Purchasers are justified in relying thereon.



     In rendering the opinion set forth in paragraph 1 above, Schiff Hardin LLP may rely, as to
matters referred to in paragraph 1, solely upon an examination of the Certificate of Incorporation
certified by, and a certificate of good standing of the Company from, the Secretary of State of the
State of Delaware. The opinion of Schiff Hardin LLP is limited to the laws of the State of New York
and the federal laws of the United States.



     With respect to matters of fact upon which such opinion is based, Schiff Hardin LLP may rely
on appropriate certificates of public officials and officers of the Company and upon
representations of the Company and the Purchasers delivered in connection with the issuance and
sale of the Series 2007-A Notes.



Exhibit 4.5(c)

(to Note Purchase Agreement)





 











 





Form of Supplement to Note Purchase Agreement




 





Granite Construction Incorporated




[Number] Supplement to Note Purchase Agreement




Dated as of                                          , 20                    




Re: $                                          .                     % Series      
               Senior Notes,[Tranche                      ,]

Due                                           , 20                    




 





Exhibit S

(to Note Purchase Agreement)




 









 




Granite Construction Incorporated

585 West Beach Street

Watsonville, California 95076




Dated as of

                                         ,20                    




To the Purchaser(s) listed in

  the attached Schedule A hereto




Ladies and Gentlemen:




     This [Number] Supplement to Note Purchase Agreement (this “Supplement”) is between
Granite Construction Incorporated, a Delaware corporation (the “Company”), and the
institutional investors named on Schedule A attached hereto (the “Purchasers”).



     Reference is hereby made to that certain Note Purchase Agreement dated as of December 12,
2007 (the “Note Purchase Agreement”) between the Company and the purchasers listed on Schedule A
thereto. All capitalized terms not otherwise defined herein shall have the same meaning as
specified in the Note Purchase Agreement. Reference is further made to Section 2.2(c)(2) of the
Note Purchase Agreement which requires that, prior to the delivery of any Additional Notes, the
Company and each Additional Purchaser shall execute and deliver a Supplement.



     The Company hereby agrees with the Purchaser(s) as follows:



     1. The Company has authorized the issue and sale of $                     aggregate
principal amount of its                     .                    % Series                      Senior Notes [, Tranche        
             ,] due                                          ,
20                      (the “Series                      Notes”). The Series                      Notes, together with the Series 2007-A
Notes [and the Series                      Notes] initially issued pursuant to the Note Purchase Agreement [and
the                      Supplement, respectively,] and each Series of Additional Notes which may from
time to time hereafter be issued pursuant to the provisions of Section 2.2 of the Note Purchase
Agreement, are collectively referred to as the “Notes” (such term shall also include any such notes
issued in substitution therefor pursuant to Section 13 of the Note Purchase Agreement).
The Series                      Notes shall be. substantially in the form set out in Exhibit 1 hereto with such
changes therefrom, if any, as may be approved by the Purchaser(s) and the Company.



     2. Subject to the terms and conditions hereof and as set forth in the Note Purchase
Agreement and on the basis of the representations and warranties hereinafter set forth, the
Company will issue and sell to each Purchaser, at the Closing provided for in Section 3, and
each Purchaser will purchase from the Company, Series                      Notes in the principal amount
specified opposite such Purchaser’s name in Schedule A hereto at a price of 100% of the principal
amount thereof. Each Purchaser’s obligations hereunder are several and not joint



E-S-2




 









 




obligations and no Purchaser shall have any liability to any Person for the performance or
non-performance of any obligation by any other Purchaser hereunder.




     3. The sale and purchase of the Series                      Notes to be purchased by each
Purchaser shall occur at the offices of Schiff Hardin LLP, 900 Third Avenue, 23rd Floor, New York,
New York 10022 at 11:00 a.m. New York, New York time, at a closing (the “Closing”)
on                                          , 20                     or on such other Business Day thereafter on or prior to      
               , 20                     as
may be agreed upon by the Company and the Purchasers. At the Closing, the Company will
deliver to each Purchaser the Series                      Notes to be purchased by such Purchaser in the form
of a single Series                      Note (or such greater number of Series                      Notes in denominations
of at least $1,000,000 as such Purchaser may request) dated the date of the Closing and registered
in such Purchaser’s name (or in the name of its nominee), against delivery by such Purchaser to the
Company or its order of immediately available funds in the amount of the purchase price therefor by
wire transfer of immediately available funds for the account of the
Company. If, at the Closing, the Company shall fail to tender such Series                      Notes to any
Purchaser as provided above in this Section 3, or any of the conditions specified in Section 4
shall not have been fulfilled to any Purchaser’s satisfaction, such Purchaser shall, at its
election, be relieved of all further obligations under this Supplement, without thereby waiving any
rights such Purchaser may have by reason of such failure or such nonfulfillment.



     4. Except as supplemented, amended or superseded by any conditions to Closing set
forth below, each Purchaser’s obligation to purchase and pay for the Series                      Notes to be
sold to such Purchaser at the Closing is subject to the fulfillment to such Purchaser’s
satisfaction, prior to or at the Closing, of the conditions set forth in Section 4 of the Note
Purchase Agreement with respect to the Series                      Notes to be purchased at the Closing, and to the following
additional conditions:




     (a) Except as supplemented, amended or superseded by the representations
and warranties set forth in Exhibit A hereto, each of the representations and
warranties of the Company set forth in Section 5 of the Note Purchase Agreement shall be correct as
of the date of the Closing and the Company shall have delivered to each Purchaser an
Officer’s Certificate, dated the date of the Closing, certifying that such condition
has been fulfilled.




     (b) Contemporaneously with the Closing, the Company shall sell to each other
Purchaser and each other Purchaser shall purchase the Series              Notes to be purchased by
it at the Closing as specified in Schedule A.




     [(c) Here insert a description of any changes to, deletions of or additions to,
any of the conditions set forth in Section 4 of the Note Purchase Agreement.]



     5. [Here insert special provisions for Series                      Notes including prepayment
provisions applicable to Series                      Notes (including Make-Whole Amount) and closing
conditions applicable to Series                      Notes.]



E-S-3




 









 





     6. Each Purchaser represents and warrants that the representations and warranties set
forth in Section 6 of the Note Purchase Agreement are true and correct on the date hereof with
respect to the purchase of the Series                      Notes by such Purchaser.



     7. The Company and each Purchaser agree to be bound by and comply with the
terms and provisions of the Note Purchase Agreement as fully and completely as if such
Purchaser were an original signatory to the Note Purchase Agreement.



     8. All references in the Note Purchase Agreement and all other instruments,
documents and agreements relating to, or entered into in connection with the foregoing
documents and agreements, to the Note Purchase Agreement shall be deemed to refer to the Note
Purchase Agreement, as supplemented by this                      Supplement.



     9. Except as expressly supplemented by this                      Supplement, all terms and
provisions of the Note Purchase Agreement remain unchanged and continue, unabated, in full force
and effect and the Company hereby reaffirms its obligations and liabilities under the Note Purchase
Agreement.



     10. This                      Supplement shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the law of the State of New York
excluding choice-of-law principles of the law of such State that would permit the application of
the laws of a jurisdiction other than such State.



     11. Any provision of this Supplement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by law) not
invalidate or render unenforceable such provision in any other jurisdiction.



     12. All covenants and other agreements contained in this                      Supplement by
or on behalf of any of the parties hereto bind and inure to the benefit of their respective
successors and assigns (including, without limitation, any subsequent holder of a Note) whether so
expressed or not.



     13. This                      Supplement may be executed in any number of counterparts,
each of which shall be an original but all of which together shall constitute one instrument. Each
counterpart may consist of a number of copies hereof, each signed by less than all, but together
signed by all, of the parties hereto.



E-S-4




 









 





     The execution hereof shall constitute a contract between the Company and the Purchaser(s)
for the uses and purposes hereinabove set forth.



	 	 	 	 	 
	 	Granite Construction Incorporated

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	 	 
	 	By  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



Accepted as of                                          , 20                    




	 	 	 	 	 
	 	[Variation]

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



E-S-5





 









 





Information Relating to Purchasers




	 	 	 
	 	 	Principal
	Name and Address of Purchaser	 	Amount of Series
	 

	 	            Notes to
	 	 	be Purchased
	 
	[Name of Purchaser]	 	$







	(1)	 	All payments by wire transfer of immediately available funds to:
	 
	 	 	with sufficient information to identify the source and application of
such funds.
	 
	(2)	 	All notices of payments and written confirmations of such wire
transfers:
	 
	(3)	 	All other communications:





Schedule A

(to                      Supplement to Note Purchase Agreement)




 









 





Supplemental Representations




     The Company represents and warrants to each Purchaser that except as hereinafter set forth in
this Exhibit A, each of the representations and warranties set forth in Section 5 of the
Note Purchase Agreement is true and as of the date hereof with respect to the Series            Notes with the same force and effect as if each reference to “Series 2007-A Notes” set forth
therein was modified to refer the “Series                      Notes,” each reference to “this Agreement”
therein was modified to refer to “the Note Purchase Agreement as supplemented by the                     
Supplement” and each reference to “the Purchasers” set forth therein was modified to refer to
“the institutional investors named on Schedule A to the                      Supplement.” The Section
references hereinafter set forth correspond to the similar sections of the Note Purchase Agreement
which are supplemented hereby:



     Section 5.3 Disclosure. The Company, through its agent, [Banc of America Securities
LLC] has delivered to each Purchaser a copy of a [Private Placement Memorandum],
dated                      (the “Memorandum”), relating to the transactions contemplated by the
                     Supplement. The Memorandum fairly describes, in all material respects, the general
nature of the business and principal properties of the Company and its Subsidiaries. The Note
Purchase Agreement, the                      Supplement, the Memorandum and the documents,
certificates or other writings delivered to the Purchasers by or on behalf of the Company in
connection with the transactions contemplated by the                      Supplement and identified
in Schedule 5.3 to the            Supplement and the financial statements listed in Schedule 5.5 to the
           Supplement (the Note Purchase Agreement, the                      Supplement, the Memorandum
and such documents, certificates or other writings and such financial statements delivered to each
Purchaser prior to                     , 20                     * being referenced to, collectively, as the “Disclosure
Documents”) taken as a whole, do not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not misleading in the light of
the circumstances under which they were made. Except as disclosed in the Disclosure Documents
since                     , there has been no adverse Material change in the financial condition,
operations, business, properties or prospects of the Company and its Subsidiaries, taken as a
whole.



     Section 5.4 Organization and Ownership of Shares of Subsidiaries. (a) Schedule 5.4
to the                      Supplement contains (except as noted therein) complete and correct lists (1) of the
Company’s Subsidiaries, showing, as to each Subsidiary, the correct name thereof, the jurisdiction
of its organization and the percentage of shares of each class of its capital stock or similar
equity interests outstanding owned by the Company and each other Subsidiary, (2) of the Company’s
Affiliates and (3) the Company’s directors and executive officers.



     Section 5.5 Financial Statements; Material Liabilities. The Company has delivered to each
Purchaser copies of the consolidated financial statements of the Company listed on
Schedule 5.5 to the                      Supplement. All of said financial statements (including, in each
case, the related schedules and notes) fairly present in all material respects the consolidated
financial position of the Company and its Subsidiaries as of the respective dates specified in such
financial statements and the consolidated results of their operations and cash flows for the



Exhibit A

(to                      Supplement to Note Purchase Agreement)




 









 




respective periods so specified and have been prepared in accordance with GAAP consistently
applied throughout the periods involved except as set forth in the notes thereto (subject, in the
case of any interim financial statements, to normal year-end adjustments and the absence of
certain footnotes). The Company and its Subsidiaries do not have any Material liabilities that are
not disclosed on such financial statements or otherwise disclosed in the Disclosure Documents.




     Section 5.13 Private Offering by the Company. Neither the Company nor anyone
acting on its behalf has offered the Series                      Notes or the Guaranty Agreement or any similar
Securities for sale to, or solicited any offer to buy any of the same from, or otherwise
approached or negotiated in respect thereof with, any Person other than the Purchasers and not
more than                      other Institutional Investors of the type described in clause (c) of the definition thereof,
each of which has been offered the Series                      Notes and the Guaranty Agreement at a private
sale for investment pursuant to an exemption from the registration requirements under the
Securities Act. Neither the Company nor anyone acting on its behalf has taken, or will take, any
action that would subject the issuance or sale of the Series                      Notes or the Guaranty Agreement
to the registration requirements of Section 5 of the Securities Act or to the registration
requirements of any securities or blue sky laws of any applicable jurisdiction.



     Section 5.14 Use of Proceeds; Margin Regulations. The Company will apply the
proceeds of the sale of the Series                      Notes as set forth in Section                      of the Memorandum.
No part of the proceeds from the sale of the Series                      Notes pursuant to the                     
Supplement will be used, directly or indirectly, for the purpose of buying or carrying any margin
stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System
(12 CFR 221), or for the purpose of buying or carrying or trading in any securities under such
circumstances as to involve the Company in a violation of Regulation X of said Board (12 CFR 224)
or to involve any broker or dealer in a violation of Regulation T of said Board (12 CFR 220).
Margin stock does not constitute more than 25% of the value of Consolidated Total Assets and the
Company does not have any present intention that margin stock will constitute more than 25% of
such assets. As used in this Section, the terms “margin stock” and “purpose of buying or carrying”
shall have the meanings assigned to them in said Regulation U.



     Section 5.15 Existing Debt; Future Liens.



     (a) Except as described therein, Schedule 5.15 to the                      Supplement sets forth a
complete and correct list of all outstanding Debt of the Company and its Subsidiaries as of
                                         , 20                     (including a description of the obligors and obligees, principal amount
outstanding and collateral therefor, if any, and Guaranty thereof, if any), since which date there
has been no Material change in the amounts, interest rates, sinking funds, installment payments or
maturities of such Debt of the Company and its Subsidiaries. Neither the Company nor any Subsidiary
is in default and no waiver of default is currently in effect, in the payment of any principal or
interest on any Debt of the Company or such Subsidiary and no event or condition exists with
respect to any Debt of the Company or any Subsidiary that would permit (or that with notice or the
lapse of time, or both, would permit) one or more Persons to cause such Debt to become due and
payable before its stated maturity or before its regularly scheduled dates of payment.



E-A-2




 









 





     (b) Except as disclosed in Schedule 5.15 to the                      Supplement, neither the
Company nor any Subsidiary has agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its property, whether now owned or hereafter
acquired, to be subject to a Lien not permitted by Section 10.5 of the Note Purchase Agreement.



     (c) Neither the Company nor any Subsidiary is a party to, or otherwise subject to any provision contained in, any instrument evidencing Debt of the Company or such Subsidiary, any
agreement relating thereto or any other agreement (including, but not limited to, its charter
or other organizational document) which limits the amount of, or otherwise imposes restrictions
on the incurring of, Debt of the Company, except as specifically indicated in Schedule 5.15 to
the                      Supplement.



[Add any additional Sections as appropriate at the time the Series                      Notes are issued]




E-A-3




 









 





Form of Series 20                     —                      Senior Note
[, Tranche       ]



Granite Construction Incorporated


                 .                     % Series 20               -           
Senior Note [, Tranche                     ], due                                        ,
20       




	 	 	 
	No. 20                    -                    R-                    

	 	                                         , 20                     
	$                     	 	     PPN                                         






     For value received, the undersigned, Granite Construction Incorporated
(herein called the “Company”), a corporation organized and existing under the laws of the
State of Delaware, hereby promises to pay to                                         , or registered assigns, the principal
sum of                                         DOLLARS (or so much thereof as shall not have been prepaid) on
                                         , 20                    , with interest (computed on the basis of a 360-day year of twelve 30-day
months) (a) on the unpaid balance hereof at the rate of                     .                    % per annum from the date hereof,
payable [semiannually], on the                      day of                      and                      in each year, commencing with the     
                                     ,
or                                           next succeeding the date hereof, until
the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on
any overdue payment (including any overdue prepayment) of principal, any overdue payment of
interest and any overdue payment of any Make-Whole Amount, payable [semiannually] as aforesaid
(or, at the option of the registered holder hereof, on demand), at a rate per annum from
time to time equal to the greater of (1)                    .                     % and (2) 2.00% over the rate of interest publicly
announced by Bank of America, N.A., in San Francisco, California as its “reference” rate.



     Payments of principal of, interest on and any Make-Whole Amount with respect to this Note are
to be made in lawful money of the United States of America at the principal offices of [Bank of
America, N.A.] in New York, New York or at such other place as the Company shall have designated by
written notice to the holder of this Note as provided in the Note Purchase Agreement referred to
below.



     This Note is one of the                     .                     % Series 20                     -                     Senior Notes [, Tranche                     ,] (herein called
the “Notes”) issued pursuant to the                      Supplement dated as of                      (the
“Supplement”) which supplements that certain Note Purchase Agreement dated as of December 12, 2007
(as from time to time amended, supplemented or otherwise modified, the “Note Purchase Agreement”),
originally between the Company and the respective Purchasers named therein and is entitled to the
benefits of the Note Purchase Agreement. Each holder of this Note will be deemed, by its acceptance
hereof, to have (i) agreed to the confidentiality provisions set forth in Section 20 of the Note
Purchase Agreement and (ii) made the representation set forth in Section 6.2 of the Note Purchase
Agreement. Unless otherwise indicated, capitalized terms used in this Note shall have the
respective meanings ascribed to such terms in the Note Purchase Agreement.



     This Note is a registered Note and, as provided in the Note Purchase Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written
instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney



Exhibit A

(to                      Supplement to Note Purchase Agreement)




 









 




duly authorized in writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for registration of
transfer, the Company may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the Company will not
be affected by any notice to the contrary.




     This Note and the holders hereof are entitled equally and ratably with the holders of all
other Notes to the rights and benefits provided pursuant to the terms and provisions of the
Guaranty Agreement. Reference is hereby made to the Guaranty Agreement for a statement of the
nature and extent of the benefits and security for the Notes afforded thereby and the rights of
the holders of the Notes and the Company in respect thereof.



     [The Company will make required prepayments of principal on the dates and in the amounts
specified in the Supplement.] [This Note is not subject to regularly scheduled prepayments of
principal.] This Note is [also] subject to [optional] prepayment, in whole or from time to time
in part, at the times and on the terms specified in the Supplement and/or the Note Purchase
Agreement, but not otherwise.



     If an Event of Default exists, the principal of this Note may be declared or otherwise
become due and payable in the manner, at the price (including any applicable Make-Whole Amount)
and with the effect provided in the Note Purchase Agreement.



     This Note shall be construed and enforced in accordance with, and the rights of the parties
shall be governed by, the law of the State of New York excluding choice of law principles of the
law of such State that would require the application of the laws of a jurisdiction other than
such State.



	 	 	 	 	 
	 	Granite Construction Incorporated

 	 
	 	By  	

 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	 	 
	 	By  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



E-A-2