Document:

<PAGE>

                                                                    EXHIBIT 10.4

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

                        GRANITE CONSTRUCTION INCORPORATED

                          -----------------------------

                                 FIRST AMENDMENT
                            Dated as of June 15, 2003

                                       to

                             NOTE PURCHASE AGREEMENT
                             Dated as of May 1, 2001

                          -----------------------------

          Re:      $75,000,000 6.96% Senior Notes due May 1, 2013

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

<PAGE>

                   FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT

         THIS FIRST AMENDMENT dated as of June 15, 2003 (the or this "First
Amendment") to that certain Note Purchase Agreement dated as of May 1, 2001 is
between GRANITE CONSTRUCTION INCORPORATED, a Delaware corporation (the
"Company"), and each of the institutional investors listed on the signature
pages hereto (collectively, the "Noteholders")

                                    RECITALS:

         A.       The Company and each of the Noteholders have heretofore
entered into that certain Note Purchase Agreement dated as of May 1, 2001 (the
"Note Purchase Agreement). The Company has heretofore issued $75,000,000
aggregate principal amount of its 6.96% Senior Notes due May 1, 2013 (the
"Notes") pursuant to the Note Purchase Agreement. The Noteholders are the
holders of 100% of the outstanding principal amount of the Notes.

         B.       The Company and the Noteholders now desire to amend the Note
Purchase Agreement in the respects, but only in the respects, hereinafter set
forth.

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

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

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

SECTION 1. AMENDMENTS.

         1.1.     Section 9.6(a)(1) of the Note Purchase Agreement shall be and
is hereby amended by inserting the following new sentence at the end of such
Section.

         "Notwithstanding the foregoing, Wilder shall not be required to execute
         a supplement to the Guaranty Agreement or otherwise Guaranty the Notes
         until the earliest to occur of: (A) Wilder becoming an obligor or
         guarantor of any Debt existing under the Bank Credit Agreement, (B)(I)
         the total net revenues of Wilder and its Subsidiaries for the period of
         the immediately preceding four fiscal quarters is equal to or greater
         than 15% of the consolidated total net revenues of the Company and its
         Subsidiaries for such period determined in accordance with GAAP, in
         each case as reflected in the most recent annual or quarterly financial
         statements of the Company and its Subsidiaries; or (II) the total
         assets of Wilder and its Subsidiaries, as of the last day of the
         immediately preceding

<PAGE>

         fiscal quarter, is equal to or greater than 15% of consolidated total
         assets of the Company and its Subsidiaries as of such date determined
         in accordance with GAAP, in each case as reflected in the most recent
         annual or quarterly financial statements of the Company and its
         Subsidiaries and (C) Wilder becoming a Wholly-Owned Subsidiary of the
         Company."

         1.2.     SCHEDULE B to the Note Purchase Agreement shall be and is
hereby amended by inserting the following new definition in the proper
alphabetical order:

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

SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

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

                  (a)      this First Amendment has been duly authorized,
         executed and delivered by it and this First Amendment constitutes the
         legal, valid and binding obligation, contract and agreement of the
         Company enforceable against it in accordance with its terms, except as
         enforcement may be limited by bankruptcy, insolvency, reorganization,
         moratorium or similar laws or equitable principles relating to or
         limiting creditors' rights generally;

                  (b)      the Note Purchase Agreement, as amended by this First
         Amendment, constitutes the legal, valid and binding obligation,
         contract and agreement of the Company enforceable against it in
         accordance with its terms, except as enforcement may be limited by
         bankruptcy, insolvency, reorganization, moratorium or similar laws or
         equitable principles relating to or limiting creditors' rights
         generally;

                  (c)      the execution, delivery and performance by the
         Company of this First Amendment (i) has been duly authorized by all
         requisite corporate action and, if required, shareholder action, (ii)
         does not require the consent or approval of any governmental or
         regulatory body or agency, and (iii) will not (A) violate (1) any
         provision of law, statute, rule or regulation or its certificate of
         incorporation or bylaws, (2) any order of any court or any rule,
         regulation or order of any other agency or government binding upon it,
         or (3) any provision of any indenture, agreement or other instrument to
         which it is a party or by which its properties or assets are or may be
         bound, or (B) result in a breach or constitute (alone or with due
         notice or lapse of time or both) a default under any indenture,
         agreement or other instrument referred to in clause (iii)(A)(3) of this
         Section 2.1(c);

                  (d)      as of the date hereof and after giving effect to this
         First Amendment, no Default or Event of Default has occurred which is
         continuing and no waiver of Default or Event of Default is in effect;
         and

                                      - 2 -

<PAGE>

                  (e)      except as set forth on SCHEDULE 2 hereto, all the
         representations and warranties contained in Section 5 of the Note
         Purchase Agreement are true and correct in all material respects with
         the same force and effect as if made by the Company on and as of the
         date hereof.

SECTION 3. CONDITIONS TO EFFECTIVENESS OF THIS FIRST AMENDMENT.

         3.1.     Upon satisfaction of each and every one of the following
conditions, this First Amendment shall become effective as of June 27, 2003:

                  (a)      executed counterparts of this First Amendment, duly
         executed by the Company and the holders of at least 51% of the
         outstanding principal of the Notes, shall have been delivered to the
         Noteholders;

                  (b)      each Guarantor shall have duly executed the
         reaffirmation of Guaranty Agreement attached hereto;

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

                  (d)      each Noteholder shall have received evidence
         satisfactory to it that (i) Wilder Construction Co. is not an obligor
         or guarantor of Debt under the Credit Agreement dated as of June 27,
         2003 among the Company, each lender from time to time party thereto and
         Bank of America, N.A., as Administrative Agent, Swing Line Lender and
         L/C Issuer and (ii) the Amended and Restated Note Purchase Agreement
         dated as of November 1, 2001 by and among the Company and the
         institutional investors named therein has been amended in the same
         manner as the Note Purchase Agreement has been amended by this First
         Amendment;

                  (e)      each Noteholder shall have received, by payment in
         immediately available funds to the account of such holder set forth in
         SCHEDULE A to the Note Purchase Agreement the amount set forth opposite
         such holder's name in SCHEDULE 1 attached hereto; and

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

Upon receipt of all of the foregoing, this First Amendment shall become
effective.

SECTION 4. MISCELLANEOUS.

         4.1.     This First Amendment shall be construed in connection with and
as part of the Note Purchase Agreement, and except as modified and expressly
amended by this First

                                      - 3 -

<PAGE>

Amendment, all terms, conditions and covenants contained in the Note Purchase
Agreement and the Notes are hereby ratified and shall be and remain in full
force and effect.

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

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

         4.4.     This First Amendment shall he governed by and construed in
accordance with the laws of the State of Illinois.

                  [Remainder of page intentionally left blank.]

                                      - 4 -

<PAGE>

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

                                         GRANITE CONSTRUCTION INCORPORATED

                                         By /s/ William G. Dorey
                                            --------------------------
                                            William G. Dorey
                                            President

                                         By /s/ William E. Barton
                                            --------------------------
                                            William E. Barton
                                            Chief Financial Officer

SIGNATURE PAGE TO THE
FIRST AMENDMENT

<PAGE>

                                         NATIONWIDE MUTUAL INSURANCE COMPANY

                                         By /s/ MARK W. POEPPELMAN
                                            ---------------------------
                                            Name: MARK W. POEPPELMAN
                                            Title: VICE PRESIDENT

                                         ALLSTATE LIFE INSURANCE COMPANY

                                         By _____________________________
                                         Name:

                                         By _____________________________
                                         Name:
                                           Authorized Signatories

                                         ALLSTATE LIFE INSURANCE COMPANY OF NEW
                                           YORK

                                         By ____________________________
                                         Name:

                                         By ____________________________
                                         Name:
                                            Authorized Signatories

                                         UNITED OF OMAHA LIFE INSURANCE COMPANY

                                         By ____________________________
                                            Its

SIGNATURE PAGE TO THE
FIRST AMENDMENT

<PAGE>

                                         NATIONWIDE MUTUAL INSURANCE COMPANY

                                         By _____________________________
                                            Name:
                                            Title:

                                         ALLSTATE LIFE INSURANCE COMPANY

                                         By   /s/   Rhonda L. Hopps
                                            -----------------------------
                                         Name:

                                         By   /s/   Jerry D. Zinkula
                                            -----------------------------
                                         Name:
                                            Authorized Signatories

                                         ALLSTATE LIFE INSURANCE COMPANY OF NEW
                                            YORK

                                         By   /s/   Rhonda L. Hopps
                                            -----------------------------
                                         Name:

                                         By   /s/   Jerry D. Zinkula
                                            -----------------------------
                                         Name:
                                            Authorized Signatories

                                         UNITED OF OMAHA LIFE INSURANCE COMPANY

                                         By _____________________________
                                            Its

SIGNATURE PAGE TO THE
FIRST AMENDMENT

<PAGE>

                                         NATIONWIDE MUTUAL INSURANCE COMPANY

                                         By _____________________________
                                            Name:
                                            Title:

                                         ALLSTATE LIFE INSURANCE COMPANY

                                         By _____________________________
                                         Name:

                                         By _____________________________
                                         Name:
                                            Authorized Signatories

                                         ALLSTATE LIFE INSURANCE COMPANY OF NEW
                                            YORK

                                         By _____________________________
                                         Name:

                                         By _____________________________
                                         Name:
                                            Authorized Signatories

                                         UNITED OF OMAHA LIFE INSURANCE COMPANY

                                         By /s/ Curtis R. Caldwell
                                            -----------------------------
                                            Its Vice President

SIGNATURE PAGE TO THE
FIRST AMENDMENT

<PAGE>

Accepted and Agreed to:

                                         CONNECTICUT GENERAL LIFE INSURANCE
                                            COMPANY

                                            By: Cigna Investments, Inc.
                                                (authorized agent)

                                         By /s/ Donald F. Rieger, Jr.
                                            ------------------------------
                                            Its Donald F. Rieger, Jr.
                                                Managing Director

                                         NATIONWIDE LIFE INSURANCE COMPANY

                                         By ______________________________
                                            Name:
                                            Title:

                                         NATIONWIDE INDEMNITY COMPANY

                                         By ______________________________
                                            Name:
                                            Title:

                                         NATIONWIDE MUTUAL FIRE INSURANCE
                                            COMPANY

                                         By ______________________________
                                            Name:
                                            Title:

SIGNATURE PAGE TO THE
FIRST AMENDMENT

<PAGE>

Accepted and Agreed to:

                                         CONNECTICUT GENERAL LIFE INSURANCE
                                            COMPANY

                                            By: Cigna Investments, Inc.
                                                (authorized agent)

                                         By ______________________________
                                            Its

                                         NATIONWIDE LIFE INSURANCE COMPANY

                                         By /s/ MARK W. POEPPELMAN
                                            ------------------------------
                                            Name: MARK W. POEPPELMAN
                                            Title: VICE PRESIDENT

                                         NATIONWIDE INDEMNITY COMPANY

                                         By /s/ MARK W. POEPPELMAN
                                            ------------------------------
                                            Name: MARK W. POEPPELMAN
                                            Title: VICE PRESIDENT

                                         NATIONWIDE MUTUAL FIRE INSURANCE
                                            COMPANY

                                         By /s/ MARK W. POEPPELMAN
                                            ------------------------------
                                            Name: MARK W. POEPPELMAN
                                            Title: VICE PRESIDENT

SIGNATURE PAGE TO THE
FIRST AMENDMENT

<PAGE>

                                         COMPANION LIFE INSURANCE COMPANY

                                         By /s/ Curtis R. Caldwell
                                            ------------------------------
                                            Name:  Curtis R. Caldwell
                                            Title: Authorized Signer

                                         THRIVENT FINANCIAL FOR LUTHERANS,
                                            successor by merger to Lutheran
                                            Brotherhood

                                         By ______________________________
                                            Name:  Glen J. Vanic
                                            Title: Portfolio Manager

SIGNATURE PAGE TO THE
FIRST AMENDMENT

<PAGE>

                                         COMPANION LIFE INSURANCE COMPANY

                                         By ______________________________
                                            Name:
                                            Title:

                                         THRIVENT FINANCIAL FOR LUTHERANS,
                                            successor by merger to Lutheran
                                            Brotherhood

                                         By /s/ Glen J. Vanic
                                            ------------------------------
                                            Name:  Glen J. Vanic
                                            Title: Portfolio Manager

SIGNATURE PAGE TO THE
FIRST AMENDMENT

<PAGE>

                       REAFFIRMATION OF GUARANTY AGREEMENT

The undersigned Guarantors hereby acknowledge and agree to the foregoing First
Amendment to Note Purchase Agreement and reaffirm the Guaranty Agreement dated
as of May 1, 2001 given in favor of each Noteholder and their respective
successors and assigns:

                                         GRANITE CONSTRUCTION COMPANY

                                         By /s/ William G. Dorey
                                            -------------------------------
                                            William G. Dorey
                                            President

                                         By /s/ William E. Barton
                                            -------------------------------
                                            William E. Barton
                                            Chief Financial Officer

                                         GRANITE LAND COMPANY

                                         By /s/ Scott D. Wolcott
                                            -------------------------------
                                            Scott D. Wolcott
                                            President

                                         By /s/ William G. Dorey
                                            -------------------------------
                                            William G. Dorey
                                            President, Granite Construction
                                            Incorporated

                                         GRANITE HALMAR CONSTRUCTION COMPANY,
                                         INC.

                                         By /s/ William G. Dorey
                                            -------------------------------
                                            William G. Dorey
                                            President

                                         By /s/ William E. Barton
                                            -------------------------------
                                            William E. Barton
                                            Chief Financial Officer

<PAGE>

                                         INTERMOUNTAIN SLURRY SEAL, INC.

                                         By /s/ Michael L. Thomas
                                            -------------------------------
                                            Michael L. Thomas
                                            President

                                         By /s/ David J. Brunton
                                            -------------------------------
                                            David J. Brunton
                                            Chief Financial Officer

                                         POZZOLAN PRODUCTS COMPANY (P.P.C.)

                                         By /s/ Michael L. Thomas
                                            -------------------------------
                                            Michael L. Thomas
                                            President

                                         By /s/ David J. Brunton
                                            -------------------------------
                                            David J. Brunton
                                            Chief Financial Officer

                                         GILC, L.P.

                                         By: GILC Incorporated, its sole
                                               General Partner

                                         By /s/ William E. Barton
                                            -------------------------------
                                            William E. Barton
                                            Chief Executive Officer

                                         By /s/ R.C. Allbritton
                                            -------------------------------
                                            R.C. Allbritton
                                            Chief Financial Officer

SIGNATURE PAGE TO
REAFFIRMATION OF GUARANTY AGREEMENT

<PAGE>

                                  FEE SCHEDULE

<TABLE>
<S>                                                            <C>
Connecticut General Life Insurance Company                     $ 11,000.00
Nationwide Life Insurance Company                              $  5,000.00
Nationwide Indemnity Company                                   $  2,500.00
Nationwide Mutual Fire Insurance Company                       $  2,000.00
Nationwide Mutual Insurance Company                            $  1,500.00
Allstate Life Insurance Company                                $  4,500.00
Allstate Life Insurance Company of New York                    $  4,500.00
United of Omaha Life Insurance Company                         $  3,000.00
Companion Life Insurance Company                               $  1,000.00
Thrivent Financial For Lutherans                               $  2,500.00

                                             Total:            $ 37,500.00
</TABLE>

                                   SCHEDULE 1
                              (to First Amendment)

<PAGE>

                   VARIANCES TO REPRESENTATIONS AND WARRANTIES

         The Company represents and warrants to each holder that except as
hereinafter set forth in this Schedule 2, each of the representations and
warranties set forth in Section 5 of the Note Purchase Agreement is true and
correct as of the date hereof. The Section references hereinafter set forth
correspond to the similar sections of the Note Purchase Agreement which are
supplemented hereby:

         Section 5.4.      Organization and Ownership of Shares of
Subsidiaries; Affiliates. (a) Schedule 5.4 to the First Amendment contains
(except as noted therein) complete and correct lists (1) of the Company's
Subsidiaries, showing, as to each Subsidiary, the correct name thereof, the
jurisdiction of its organization, and the percentage of shares of each class of
its capital stock or similar equity interests outstanding owned by the Company
and each other Subsidiary, (2) of the Company's Affiliates, other than
Subsidiaries and (3) of the Company's directors and senior officers.

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

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

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

         Section 5.8.      Litigation; Observance of Agreements, Statutes and
Orders. (a) Except as disclosed in Schedule 5.8 to the First Amendment, there
are no actions, suits or proceedings pending or, to the knowledge of the
Company, threatened against or affecting the Company or

                                   SCHEDULE 2
                              (to First Amendment)

<PAGE>

any Subsidiary or any property of the Company or any Subsidiary in any court or
before any arbitrator of any kind or before or by any Governmental Authority
that, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

         Section 5.15.     Existing Debt. Except as described therein,
Schedule 5.15 to the First Amendment sets forth a complete and correct list of
all outstanding Debt of the Company and its Subsidiaries as of May 31, 2003
(other than with respect to the Debt of Wilder and Presidio Vista which are as
of April 30, 2003), since which date there has been no Material change in the
amounts, interest rates, sinking funds, installment payments or maturities of
the Debt of the Company or its Subsidiaries. Neither the Company nor any
Subsidiary is in default and no waiver of default is currently in effect, in the
payment of any principal or interest on any Debt of the Company or such
Subsidiary and no event or condition exists with respect to any Debt of the
Company or any Subsidiary that would permit (or that with notice or the lapse of
time, or both, would permit) one or more Persons to cause such Debt to become
due and payable before its stated maturity or before its regularly scheduled
dates of payment.

         Section 5.16.     Existing Investments. Schedule 5.16 to the First
Amendment sets forth a complete and correct list of all outstanding Investments
of the Company and its Subsidiaries as of May 31, 2003, since which date there
has been no Material change in the amounts of such Investments.

         Section 5.18.     Environmental Matters. Neither the Company nor any
Subsidiary has knowledge of any Material claim or has received any notice of any
Material claim, and no proceeding has been instituted raising any Material claim
against the Company or any of its Subsidiaries or any of their respective real
properties now or formerly owned, leased or operated by any of them or other
assets, alleging any damage to the environment or violation of any Environmental
Laws. Except as otherwise disclosed in Schedule 5.18 to the First Amendment:

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

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

                  (c)      all buildings on all real properties now owned,
         leased or operated by the Company or any of its Subsidiaries are in
         material compliance with applicable Environmental Laws.

                                      S-2-2
<PAGE>

                        GRANITE CONSTRUCTION INCORPORATED
                                  SCHEDULE 5.4
           SUBSIDIARIES, OTHER AFFILIATES, AND DIRECTORS AND OFFICERS

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

                                  Schedule 5.4

                                   Page 1 of 2

<PAGE>

                        GRANITE CONSTRUCTION INCORPORATED
                                  SCHEDULE 5.4
           SUBSIDIARIES, OTHER AFFILIATES, AND DIRECTORS AND OFFICERS

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

3  DIRECTORS
      David H. Watts - Chairman of the          David H. Kelsey - Director
      Board & CEO
      Joseph J. Barclay - Director              Rebecca A. McDonald - Director
      Richard M. Brooks - Director              Raymond E. Miles - Director
      Linda Griego - Director                   J. Fernando Niebla - Director
      Brian C. Kelly - Director                 George B. Searle - Director

   SENIOR OFFICERS

      William G. Dorey - President & COO
      Mark E. Boitano - Executive Vice President & Branch Division Manager
      Patrick M. Costanzo - Senior Vice President & Heavy Construction Division
        Manager
      William E. Barton - Senior Vice President & CFO
      R.C. Allbritton - Vice President & Treasurer
      Michael Futch - Vice President, Secretary & General Counsel
      Garry M. Higdem - Vice President & Heavy Construction Division Asstistant
        Manager
      James H. Roberts - Vice President & Branch Division Assistant Manager
      Michael L. Thomas - Vice President & Director of Human Resources

                                  Schedule 5.4

                                   Page 2 of 2

<PAGE>

                        GRANITE CONSTRUCTION INCORPORATED
                                  SCHEDULE 5.8
                                   LITIGATION

5.8(a)

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

5.8(b)

                      NONE

                                  Schedule 5.8

<PAGE>

                        GRANITE CONSTRUCTION INCORPORATED
                                  SCHEDULE 5.15
                              EXISTING INDEBTEDNESS

<TABLE>
<CAPTION>
                                                                                              INTEREST
            BORROWER                 LENDER'S NAME               DESCRIPTION                    RATE         MATURITY     BALANCE
<S>                               <C>                 <C>                                <C>                 <C>       <C>
Granite Construction Company      Benna Investments   Glendale NV property                          6.50%    12/01/07     1,043,652
Granite Construction Company      Rosemary's Mountain Southern CA Aggregate property                8.82%    06/01/04     1,400,000
Granite Construction Incorporated Private Placement   Refinance debt & general corporate
                                    Due 03/15/10      purposes                                      6.54%    03/15/10    46,666,668

Granite Construction Incorporated Private Placement   Refinance debt & general corporate
                                    Due 05/01/13      purposes                                      6.96%    05/01/13    75,000,000

Granite Construction Incorporated Lenders under       Self insured Worker's Compensation           100.0 bps 04/30/02     1,293,390
                                    existing Bank
                                    Credit Agreement
Granite Construction Company      Bank of America     City of Patterson Performance
                                    Letter of Credit  Guarantee                                     32.5 bps 02/04/04       200,000
Wilder Construction Company (1)   Gebhardt            Promisory Note - stock repurchase            prime     05/16/07       180,997
Wilder Construction Company (1)   Hesell              Promisory Note - stock repurchase            prime     03/15/10     2,607,761
Wilder Construction Company (1)   Ross                Promisory Note - stock repurchase            prime     04/29/05     2,588,757
Wilder Construction Company (1)   Fulton              Promisory Note - stock repurchase            prime     12/20/07       104,317
Wilder Construction Company (1)   Gent                Promisory Note - stock repurchase            prime     12/20/07       948,333
Wilder Construction Company (1)   Jonasson            Promisory Note - stock repurchase            prime     12/20/07       569,000
Wilder Construction Company (1)   Suhadolnik          Promisory Note - stock repurchase            prime     12/20/07       246,567
Wilder Construction Company (1)   Giammalva           Promisory Note - stock repurchase            prime     03/15/06       897,083
Wilder Construction Company (1)   Bank of America     Priority Debt - Construction
                                                      Equipment                                     3.90%    06/01/05       975,000
Wilder Construction Company (1)   Bank of America     Priority Debt - Alaska Yard &
                                                      Office                                        7.40%    12/01/08       799,938
Wilder Construction Company (1)   Bank of America     Priority Debt - Line of Credit     prime minus 100 bp  06/01/04     1,000,000
Presidio Vista I, LTD (2)         Dell USA, L.P.      Priority Debt - Presidio Vista
                                                      Development                                   7.50%    02/08/11     4,003,877
                                                                                                                       $140,525,340
Granite Construction Incorporated BNP Paribas         $30MM notional amount floating        6 Mth LIBOR +    09/15/05      (559,168)
                                                      interest rate swap agreement            386.75 bps

Granite Construction Incorporated BNP Paribas         $20MM notional amount floating        6 Mth LIBOR +    11/05/05      (369,914)
                                                      interest rate swap agreement            418.00 bps
                                                                                                                          ($929,082)
</TABLE>

(1) - Wilder debt is not guaranteed by Granite Construction Incorporated or any
of it non-Wilder Subsidiaries or Affiliates

(2) - This debt is non-recourse debt secured by the assets of the development
project and is not guaranteed by Granite Construction Incorporated or any of its
Subsidiaries or Affiliates.

                                  Schedule 5.15

<PAGE>

                        GRANITE CONSTRUCTION INCORPORATED
                                  SCHEDULE 5.16
                              EXISTING INVESTMENTS

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

                                  Schedule 5.16

                                   Page 3 of 6

<PAGE>

                        GRANITE CONSTRUCTION INCORPORATED
                                  SCHEDULE 5.16
                              EXISTING INVESTMENTS

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

                                  Schedule 5.16

                                   Page 4 of 6

<PAGE>

                        GRANITE CONSTRUCTION INCORPORATED
                                  SCHEDULE 5.18
                              ENVIRONMENTAL MATTERS

5.18(a)

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

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

                                  Schedule 5.18

                                   Page 5 of 6

<PAGE>

                        GRANITE CONSTRUCTION INCORPORATED
                                  SCHEDULE 5.18
                              ENVIRONMENTAL MATTERS

5.18(a)

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

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

5.18 (b) AND (c)

                      NONE

                                  Schedule 5.18

                                   Page 6 of 6<PAGE>

                                                                    EXHIBIT 10.5

(MULTICURRENCY--CROSS BORDER)

                                 [ISDA(R) LOGO]

                  INTERNATIONAL SWAP DEALERS ASSOCIATION, INC.

                                MASTER AGREEMENT

                          DATED AS OF FEBRUARY 10, 2003

BNP PARIBAS AND GRANITE CONSTRUCTION INCORPORATED

have entered and/or anticipate entering into one or more transactions (each a
"Transaction") that are or will be governed by this Master Agreement, which
includes the schedule (the "Schedule"), and the documents and other confirming
evidence (each a "Confirmation") exchanged between the parties confirming those
Transactions.

Accordingly, the parties agree as follows:--

1.       INTERPRETATION

(a)      DEFINITIONS. The terms defied in Section 14 and in the Schedule will
have the meanings therein specified for the purpose of this Master Agreement.

(b)      INCONSISTENCY. In the event of any inconsistency between the provisions
of the Schedule and the other provisions of this Master Agreement, the Schedule
will prevail. In the event of any inconsistency between the provisions of any
Confirmation and this Master Agreement (including the Schedule), such
Confirmation will prevail for the purpose of the relevant Transaction.

(c)      SINGLE AGREEMENT. All Transactions are entered into in reliance on the
fact that this Master Agreement and all Confirmations form a single agreement
between the parties (collectively referred to as this "Agreement"), and the
parties would not otherwise enter into any Transactions.

2.       OBLIGATIONS

(a)      GENERAL CONDITIONS.

         (i)      Each party will make each payment or delivery specified in
         each Confirmation to be made by it, subject to the other provisions of
         this Agreement.

         (ii)     Payments under this Agreement will be made on the due date for
         value on that date in the place of the account specified in the
         relevant Confirmation or otherwise pursuant to this Agreement, in
         freely transferable funds and in the manner customary for payments in
         the required currency. Where settlement is by delivery (that is, other
         than by payment), such delivery will be made for receipt on the due
         date in the manner customary for the relevant obligation unless
         otherwise specified in the relevant Confirmation or elsewhere in this
         Agreement.

         (iii)    Each obligation of each party under Section 2(a)(i) is subject
         to (1) the condition precedent that no Event of Default or Potential
         Event of Default with respect to the other party has occurred and is
         continuing, (2) the condition precedent that no Early Termination Date
         in respect of the relevant Transaction has occurred or been effectively
         designated and (3) each other applicable condition precedent specified
         in this Agreement.

       COPYRIGHT (C) 1992 BY INTERNATIONAL SWAP DEALERS ASSOCIATION, INC.

<PAGE>

(b)      CHANGE OF ACCOUNT. Either party may change its account for receiving a
payment or delivery by giving notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to which
such change applies unless such other party gives timely notice of a reasonable
objection to such change.

(c)      NETTING. If on any date amounts would otherwise be payable:--

         (i)      in the same currency; and

         (ii)     in respect of the same Transaction,

by each party to the other, then, on such date, each party's obligation to make
payment of any such amount will be automatically satisfied and discharged and,
if the aggregate amount that would otherwise have been payable by one party
exceeds the aggregate amount that would otherwise have been payable by the other
party, replaced by an obligation upon the party by whom the larger aggregate
amount would have been payable to pay to the other party the excess of the large
aggregate amount over the smaller aggregate amount.

The parties may elect in respect of two or more Transaction that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be made
in the Schedule or a Confirmation by specifying that subparagraph (ii) above
will not apply to the Transactions identified as being subject to the election,
together with the starting date (in which case subparagraph (ii) above will not,
or will cease to, apply to such Transactions from such date). This election may
be made separately for different groups of Transactions and will apply
separately to each pairing of Offices through which the parties make and receive
payments or deliveries.

(d)      DEDUCTION OR WITHHOLDING FOR TAX.

         (i)      GROSS-UP. All payment under this Agreement will be made
         without any deduction or withholding for or on account of any Tax
         unless such deduction or withholding is required by any applicable law,
         as modified by the practice of any relevant governmental revenue
         authority, then in effect. If a party is so required to deduct or
         withhold, then that party ("X") will:--

                  (1)      promptly notify the other party ("Y") of such
                  requirement;

                  (2)      pay to the relevant authorities the full amount
                  required to be deducted or withheld (including the full amount
                  required to be deducted or withheld from any additional amount
                  paid by X to Y under this Section 2(d)) promptly upon the
                  earlier of determining that such deduction or withholding is
                  required or receiving notice that such amount has been
                  assessed against Y;

                  (3)      promptly forward to Y an official receipt (or a
                  certified copy), or other documentation reasonably acceptable
                  to Y, evidencing such payment to such authorities; and

                  (4)      if such Tax is an Indemnifiable Tax, pay to Y, in
                  addition to the payment to which Y is otherwise entitled under
                  this Agreement, such additional amount as is necessary to
                  ensure that the net amount actually received by Y (free and
                  clear of Indemnifiable Taxes, whether assessed against X or Y)
                  will equal the full amount Y would have received had no such
                  deduction or withholding been required. However, X will not be
                  required to pay any additional amount to Y to the extent that
                  it would not be required to be paid but for:--

                           (A)      the failure by Y to comply with or perform
                           any agreement contained in Section 4(a)(i), 4(a)(iii)
                           or 4(d); or

                           (B)      the failure of a representation made by Y
                           pursuant to Section 3(f) to be accurate and true
                           unless such failure would not have occurred but for
                           (I) any action taken by a taxing authority, or
                           brought in a court of competent jurisdiction, on or
                           after the date on which a Transaction is entered into
                           (regardless of whether such action is taken or
                           brought with respect to a party this Agreement) or
                           (II) a Change in Tax Law.

                                       2

<PAGE>

         (ii)     LIABILITY. If:--

                  (1)      X is required by any applicable law, as modified by
                  the practice of any relevant governmental revenue authority,
                  to make any deduction or withholding in respect of which X
                  would not be required to pay an additional amount to Y under
                  Section 2(d)(i)(4);

                  (2)      X does not so deduct or withhold; and

                  (3)      a liability resulting from such Tax is assessed
                  directly against X,

         then, except to the extent Y has satisfied or then satisfies the
         liability resulting from such Tax, Y will promptly pay to X the amount
         of such liability (including any related liability for interest, but
         including any related liability for penalties only if Y has failed to
         comply with or perform any agreement contained in Section 4(a)(i),
         4(a)(iii) or 4(d)).

(e)      DEFAULT INTEREST; OTHER AMOUNTS. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant Transaction,
a party that defaults in the performance of any payment obligation will, to the
extent permitted by law and subject to Section 6(c), be required to pay interest
(before as well as after judgment) on the overdue amount to the other party on
demand in the same currency as such overdue amount, for the period from (and
including) the original due date for payment to (but excluding) the date of
actual payment, at the Default Rate. Such interest will be calculated on the
basis of daily compounding and the actual number of days elapsed. If, prior to
the occurrence or effective designation of an Early Termination Date in respect
of the relevant Transaction, a party defaults in the performance of any
obligation required to be settled by delivery, it will compensate the other
party on demand if and to the extent provided for in the relevant Confirmation
or elsewhere in this Agreement.

(3)      REPRESENTATIONS

Each party represents to the other party (which representations will be deemed
to be repeated by each party on each date on which a Transaction entered into
and, in the case of the representations in Section 3(f), at is all times until
the termination of this Agreement) that:--

(a)      BASIC REPRESENTATIONS.

         (i)      STATUS. It is duly organised and validly existing under the
         laws of the jurisdiction of its organisation or incorporation and, if
         relevant under such laws, in good standing;

         (ii)     POWERS. It has the power to execute this Agreement and any
         other documentation relating to this Agreement to which it is a party,
         to deliver this Agreement and any other documentation relating to this
         Agreement that it is required by this Agreement to deliver and to
         perform its obligations under this Agreement and any obligations it has
         under any Credit Support Document to which it is a party and has taken
         all necessary action to authorise such execution, delivery and
         performance;

         (iii)    NO VIOLATION OR CONFLICT. Such execution, delivery and
         performance do not violate or conflict with any law applicable to it,
         any provision of its constitutional documents, any order or judgment of
         any court or other agency of government applicable to it or any of its
         assets or any contractual restriction binding on or affecting it or any
         of its assets;

         (iv)     CONSENTS. All governmental and other consents that are
         required to have been obtained by it with respect to this Agreement or
         any Credit Support Document to which it is a party have been obtained
         and are in full force and effect and all conditions of any such
         consents have been complied with; and

         (v)      OBLIGATIONS BINDING. Its obligations under this Agreement and
         any Credit Support Document to which it is a party constitute its
         legal, valid and binding obligations, enforceable in accordance with
         their respective terms (subject to applicable bankruptcy,
         recorganisation, insolvency, moratorium or similar laws affecting
         creditors' rights generally and subject, as to enforceability, to
         equitable principles of general application (regardless of whether
         enforcement is sought in a proceeding in equity or at law)).

                                       3
<PAGE>

(b)      ABSENCE OF CERTAIN EVENTS. No Event of Default or Potential Event of
Default or, to its knowledge, Termination Event with respect to it has occurred
and is continuing and no such event or circumstance would occur as a result of
its entering into or performing its obligations under this Agreement or any
Credit Support Document to which it is a party.

(c)      ABSENCE OF LITIGATION. There is not pending or, to its knowledge,
threatened against it or any of its Affiliates any action, suit or proceeding at
law or in equity or before any court, tribunal, governmental body, agency or
official or any arbitrator that is likely to affect the legality, validity or
enforceability against it of this Agreement or any Credit Support Document to
which it is a party or its ability to perform its obligations under this
Agreement or such Credit Support Document.

(d)      ACCURACY OF SPECIFIED INFORMATION. All applicable information that is
furnished in writing by or on behalf of it to the other party and is identified
for the purpose of this Section 3(d) in the Schedule is, as of the date of the
information, true, accurate and complete in every material respect.

(e)      PAYER TAX REPRESENTATION. Each representation specified in the Schedule
as being made by it for the purpose of this Section 3(e) is accurate and true.

(f)      PAYEE TAX REPRESENTATION. Each representation specified in the Schedule
as being made by it for the purpose of this Section 3(f) is accurate and true.

4.       AGREEMENTS

Each party agrees with the other that, so long as either party has or may have
any obligation under this Agreement or under any Credit Support Document to
which it is a party:--

(a)      FURNISH SPECIFIED INFORMATION. It will deliver to the other party or,
in certain cases under subparagraph (iii) below, to such government or taxing
authority as the other party reasonably directs:--

         (i)      any forms, documents or certificates relating to taxation
         specified in the Schedule or any Confirmation.

         (ii)     any other documents specified in the Schedule or any
         Confirmation; and

         (iii)    upon reasonable demand by such other party, any form or
         document that may be required or reasonably requested in writing in
         order to allow such other party or its Credit Support Provider to make
         a payment under this Agreement or any applicable Credit Support
         Document without any deduction or withholding for or on account of any
         Tax or with such deduction or withholding at a reduced rate (so long as
         the completion, execution or submission of such form or document would
         not materially prejudice the legal or commercial position of the party
         in receipt of such demand), with any such form or document to be
         accurate and completed in a manner reasonably satisfactory to such
         other party and to be executed and to be delivered with any reasonably
         required certification,

in each case by the date specified in the Schedule or such Confirmation or, if
none is specified, as soon as reasonably practicable.

(b)      MAINTAIN AUTHORISATIONS. It will use all reasonable efforts to maintain
in full force and effect all consents of any governmental or other authority
that are required to be obtained by it with respect to this Agreement or any
Credit Support Document to which it is a party and will use all reasonable
efforts to obtain any that may become necessary in the future.

(c)      COMPLY WITH LAWS. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Agreement or any Credit Support Document to which it is a party.

(d)      TAX AGREEMENT. It will give notice of any failure of a representation
made by it under Section 3(f) to be accurate and true promptly upon learning of
such failure.

(e)      PAYMENT OF STAMP TAX. Subject to Section II, it will pay any Stamp Tax
levied or imposed upon it or in respect of its execution or performance of this
Agreement by a jurisdiction in which it is incorporated,

                                       4
<PAGE>

organised, managed and controlled, or considered to have its seat, or in which a
branch or office through which it is acting for the purpose of this Agreement is
located ("Stamp Tax Jurisdiction") and will indemnify the other party against
any Stamp Tax levied or imposed upon the other party or in respect of the other
party's execution or performance of this Agreement by any such Stamp Tax
Jurisdiction which is not also a Stamp Tax Jurisdiction with respect to the
other party.

5.       EVENTS OF DEFAULT AND TERMINATION EVENTS

(a)      EVENTS OF DEFAULT. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any of the following events constitutes an event of
default (an "Event of Default") with respect to such party:--

         (i)      FAILURE TO PAY OR DELIVER. Failure by the party to make, when
         due, any payment under this Agreement or delivery under Section 2(a)(i)
         or 2(e) required to be made by it if such failure is not remedied on or
         before the third Local Business Day after notice of such failure is
         given to the party;

         (ii)     BREACH OF AGREEMENT. Failure by the party to comply with or
         perform any agreement or obligation (other than an obligation to make
         any payment under this Agreement or delivery under Section 2(a)(i) or
         2(e) or to give notice of a Termination Event or any agreement or
         obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied
         with or performed by the party in accordance with this Agreement if
         such failure is not remedied on or before the thirtieth day after
         notice of such failure is given to the party;

         (iii)    CREDIT SUPPORT DEFAULT.

                  (1)      Failure by the party or any Credit Support Provider
                  of such party to comply with or perform any agreement or
                  obligation to be complied with or performed by it in
                  accordance with any Credit Support Document if such failure is
                  continuing after any applicable grace period has elapsed;

                  (2)      the expiration or termination of such Credit Support
                  Document or the failing or ceasing of such Credit Support
                  Document to be in full force and effect for the purpose of
                  this Agreement (in either case other than in accordance with
                  its terms) prior to the satisfaction of all obligations of
                  such party under each Transaction to which such Credit Support
                  Document relates without the written consent of the other
                  party; or

                  (3)      the party or such Credit Support Provider disaffirms,
                  disclaims, repudiates or rejects, in whole or in part, or
                  challenges the validity of, such Credit Support Document;

         (iv)     MISREPRESENTATION. A representation (other than a
         representation under Section 3(e) or (f)) made or repeated or deemed to
         have been made or repeated by the party or any Credit Support Provider
         of such party in this Agreement or any Credit Support Document proves
         to have been incorrect or misleading in any material respect when made
         or repeated or deemed to have been made or repeated;

         (v)      DEFAULT UNDER SPECIFIED TRANSACTION. The party, any Credit
         Support Provider of such party or any applicable Specified Entity of
         such party (1) defaults under a Specified Transaction and, after giving
         effect to any applicable notice requirement or grace period, there
         occurs a liquidation of, an acceleration of obligations under, or an
         early termination of, that Specified Transaction, (2) defaults, after
         giving effect to any applicable notice requirement or grace period, in
         making any payment or delivery due on the last payment, delivery or
         exchange date of, or any payment on early termination of, a Specified
         Transaction (or such default continues for at least three Local
         Business Days if there is no applicable notice requirement or grace
         period) or (3) disaffirms, disclaims, repudiates or rejects, in whole
         or in part, a Specified Transaction (or such action is taken by any
         person or entity appointed or empowered to operate it or act on its
         behalf);

         (vi)     CROSS DEFAULT. If "Cross Default" is specified in the Schedule
         as applying to the party, the occurrence or existence of (1) a default,
         event of default or other similar condition or event (however

                                       5

<PAGE>

         described) in respect of such party, any Credit Support Provider of
         such party or any applicable Specified Entity of such party under one
         or more agreements or instruments relating to Specified Indebtedness of
         any of them (individually or collectively) in an aggregate amount of
         not less than the applicable Threshold Amount (as specified in the
         Schedule) which has resulted in such Specified Indebtedness becoming,
         or becoming capable at such time of being declared, due and payable
         under such agreements or instruments, before it would otherwise have
         been due and payable or (2) a default by such party, such Credit
         Support Provider or such Specified Entity (individually or
         collectively) in making one or more payments on the due date thereof in
         an aggregate amount of not less than the applicable Threshold Amount
         under such agreements or instruments (after giving effect to any
         applicable notice requirement or grace period);

         (vii)    BANKRUPTCY. The party, any Credit Support Provider of such
         party or any applicable Specified Entity of such party:--

                  (1) is dissolved (other than pursuant to a consolidation,
                  amalgamation or merger); (2) becomes insolvent or is unable to
                  pay its debts or fails or admits in writing its inability
                  generally to pay its debts as they become due; (3) makes a
                  general assignment, arrangement or composition with or for the
                  benefit of its creditors; (4) institutes or has instituted
                  against it a proceeding seeking a judgment of insolvency or
                  bankruptcy or any other relief under any bankruptcy or
                  insolvency law or other similar law affecting creditors'
                  rights, or a petition is presented for its winding-up or
                  liquidation and, in the case of any such proceeding or
                  petition instituted or presented against it, such proceeding
                  or petition (A) results in a judgment of insolvency or
                  bankruptcy or the entry of an order for relief or the making
                  of an order for its winding-up or liquidation or (B) is not
                  dismissed, discharged, stayed or restrained in each case
                  within 30 days of the institution or presentation thereof; (5)
                  has a resolution passed for its winding-up, official
                  management or liquidation (other than pursuant to a
                  consolidation, amalgamation or merger); (6) seeks or becomes
                  subject to the appointment of an administrator, provisional
                  liquidator, conservator, receiver, trustee, custodian or other
                  similar official for it or for all or substantially all its
                  assets; (7) has a secured party take possession of all or
                  substantially all its assets or has a distress, execution,
                  attachment, sequestration or other legal process levied,
                  enforced or sued on or against all or substantially all its
                  assets and such secured party maintains possession, or any
                  such process is not dismissed, discharged, stayed or
                  restrained, in each case within 30 days thereafter; (8) causes
                  or is subject to any event with respect to it which, under the
                  applicable laws of any jurisdiction, has an analogous effect
                  to any of the events specified in clauses (1) to (7)
                  (inclusive); or (9) takes any action in furtherance of, or
                  indicating its consent to, approval of, or acquiescence in,
                  any of the foregoing acts; or

         (viii)   MERGER WITHOUT ASSUMPTION. The party or any Credit Support
         Provider of such party consolidates or amalgamates with, or merges with
         or into, or transfers all or substantially all its assets to, another
         entity and, at the time of such consolidation, amalgamation, merger or
         transfer:--

                  (1)      the resulting, surviving or transferee entity fails
         to assume all the obligations of such party or such Credit Support
         Provider under this Agreement or any Credit Support Document to which
         it or its predecessor was a party by operation of law or pursuant to an
         agreement reasonably satisfactory to the other party to this Agreement;
         or

                  (2)      the benefits of any Credit Support Document fail to
         extend (without the consent of the other party) to the performance by
         such resulting, surviving or transferee entity of its obligations under
         this Agreement.

(b)      TERMINATION EVENTS. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any event specified below constitutes an Illegality if
the event is specified in (i) below, a Tax Event if the event is specified in
(ii) below or a Tax Event Upon Merger if the event is specified in (iii) below,
and, if specified to be applicable, a Credit Event

                                       6

<PAGE>

Upon Merger if the event is specified pursuant to (iv) below or an Additional
Termination Event if the event is specified pursuant to (v) below:--

         (i)      ILLEGALITY. Due to the adoption of, or any change in, any
         applicable law after the date on which a Transaction is entered into,
         or due to the promulgation of, or any change in, the interpretation by
         any court, tribunal or regulatory authority with competent jurisdiction
         of any applicable law after such date, it becomes unlawful (other than
         as a result of a breach by the party of Section 4(b)) for such party
         (which will be the Affected Party):--

                  (1)      to perform any absolute or contingent obligation to
                  make a payment or delivery or to receive a payment or delivery
                  in respect of such Transaction or to comply with any other
                  material provision of this Agreement relating to such
                  Transaction; or

                  (2)      to perform, or for any Credit Support Provider of
                  such party to perform, any contingent or other obligation
                  which the party (or such Credit Support Provider) has under
                  any Credit Support Document relating to such Transaction;

         (ii)     TAX EVENT. Due to (x) any action taken by a taxing authority,
         or brought in a court of competent jurisdiction, on or after the date
         on which a Transaction is entered into (regardless of whether such
         action is taken or brought with respect to a party to this Agreement)
         or (y) a Change in Tax Law, the party (which will be the Affected
         Party) will, or there is a substantial likelihood that it will, on the
         next succeeding Scheduled Payment Date (1) be required to pay to the
         other party an additional amount in respect of an Indemnifiable Tax
         under Section 2(d)(i)(4) (except in respect of interest under Section
         2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which an amount
         is required to be deducted or withheld for or on account of a Tax
         (except in respect of interest under Section 2(e),6(d)(ii) or 6(e)) and
         no additional amount is required to be paid in respect of such Tax
         under Section 2(d)(i)(4) (other than by reason of Section 2(d)(i)(4)(A)
         or (B));

         (iii)    TAX EVENT UPON MERGER. The party (the "Burdened Party") on the
         next succeeding Scheduled Payment Date will either (1) be required to
         pay an additional amount in respect of an Indemnifiable Tax under
         Section 2(d)(i)(4) (except in respect of interest under Section 2(e),
         6(d)(ii) or 6(e)) or (2) receive a payment from which an amount has
         been deducted or withheld for or on account of any Indemnifiable Tax in
         respect of which the other party is not required to pay an additional
         amount (other than by reason of Section 2(d)(i)(4)(A) or (B)), in
         either case as a result of a party consolidating or amalgamating with,
         or merging with or into, or transferring all or substantially all its
         assets to, another entity (which will be the Affected Party) where such
         action does not constitute an event described in Section 5(a)(viii);

         (iv)     CREDIT EVENT UPON MERGER. If "Credit Event Upon Merger" is
         specified in the Schedule as applying to the party, such party ("X"),
         any Credit Support Provider of X or any applicable Specified Entity of
         X consolidates or amalgamates with, or merges with or into, or
         transfers all or substantially all its assets to, another entity and
         such action does not constitute an event described in Section
         5(a)(viii) but the creditworthiness of the resulting, surviving or
         transferee entity is materially weaker than that of X, such Credit
         Support Provider or such Specified Entity, as the case may be,
         immediately prior to such action (and, in such event, X or its
         successor or transferee, as appropriate, will be the Affected Party);
         or

         (v)      ADDITIONAL TERMINATION EVENT. If any "Additional Termination
         Event" is specified in the Schedule or any Confirmation as applying,
         the occurrence of such event (and, in such event, the Affected Party or
         Affected Parties shall be as specified for such Additional Termination
         Event in the Schedule or such Confirmation).

(c)      EVENT OF DEFAULT AND ILLEGALITY. If an event or circumstance which
would otherwise constitute or give rise to an Event of Default also constitutes
an Illegality, it will be treated as an Illegality and will not constitute an
Event of Default.

                                        7

<PAGE>

6.       EARLY TERMINATION

(a)      RIGHT TO TERMINATE FOLLOWING EVENT OF DEFAULT. If at any time an Event
of Default with respect to a party (the "Defaulting Party") has occurred and is
then continuing, the other party (the "Non-defaulting Party") may, by not more
than 20 days notice to the Defaulting Party specifying the relevant Event of
Default, designate a day not earlier than the day such notice is effective as an
Early Termination Date in respect of all outstanding Transactions. If, however,
"Automatic Early Termination" is specified in the Schedule as applying to a
party, then an Early Termination Date in respect of all outstanding Transactions
will occur immediately upon the occurrence with respect to such party of an
Event of Default specified in Section 5(a)(vii)(1),(3),(5),(6) or, to the extent
analogous thereto, (8), and as of the time immediately preceding the institution
of the relevant proceeding or the presentation of the relevant petition upon the
occurrence with respect to such party of an Event of Default specified in
Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).

(b)      RIGHT TO TERMINATE FOLLOWING TERMINATION EVENT.

         (i)      NOTICE. If a Termination Event occurs, an Affected Party will,
         promptly upon becoming aware of it, notify the other party, specifying
         the nature of that Termination Event and each Affected Transaction and
         will also give such other information about that Termination Event as
         the other party may reasonably require.

         (ii)     TRANSFER TO AVOID TERMINATION EVENT. If either an Illegality
         under Section 5(b)(i)(l) or a Tax Event occurs and there is only one
         Affected Party, or if a Tax Event Upon Merger occurs and the Burdened
         party is the Affected Party, the Affected Party will, as a condition to
         its right to designate an Early Termination Date under Section
         6(b)(iv), use all reasonable efforts (which will not require such party
         to incur a loss, excluding immaterial, incidental expenses) to transfer
         within 20 days after it gives notice under Section 6(b)(i) all its
         rights and obligations under this Agreement in respect of the Affected
         Transactions to another of its Offices of Affiliates so that such
         Termination Event ceases to exist.

         If the Affected Party is not able to make such a transfer it will give
         notice to the other party to that effect within such 20 day period,
         whereupon the other party may effect such a transfer within 30 days
         after the notice is given under Section 6(b)(i).

         Any such transfer by a party under this Section 6(b)(ii) will be
         subject to and conditional upon the prior written consent of the other
         party, which consent will not be withheld if such other party's
         policies in effect at such time would permit it to enter into
         transactions with the transferee on the terms proposed.

         (iii)    TWO AFFECTED PARTIES. If an Illegality under Section
         5(b)(i)(1) or a Tax Event occurs and there are two Affected Parties,
         such party will use all reasonable efforts to reach agreement within
         30 days after notice thereof is given under Section 6(b)(i) on action
         to avoid that Termination Event.

         (iv)     RIGHT TO TERMINATE IF:--

                  (1)      a transfer under Section 6(b)(ii) or an agreement
                  under Section 6(b) (iii), as the case may be has not been
                  effected with respect to all Affected Transactions within 30
                  days after an Affected Party gives notice under Section
                  6(b)(i); or

                  (2)      an Illegality under Section 5(b)(i)(2), a credit
                  Event Upon Merger or an Additional Termination Event occurs,
                  or a Tax Event Upon Merger occurs and the Burdened Party is
                  not the Affected Party.

         either party in the case of an Illegality ,the Burdened Party in the
         case of a Tax Event Upon Merger, any Affected Party in the case of a
         Tax Event or an Additional Termination Event if there is more than one
         Affected Party, or the party which is not the Affected Party in the
         case of a Credit Event Upon Merger or an Additional Termination Event
         if there is only one Affected Party may, be not more than 20 days
         notice to the other party and provided that the relevant Termination
         Event is then

                                       8

<PAGE>

         continuing, designate a day not earlier than the day such notice is
         effective as an Early Termination Date in respect of all Affected
         Transactions.

(c)      EFFECT OF DESIGNATION.

         (i) If notice designating an Early Termination Date is given under
         Section 6(a) or (b), the Early Termination Date will occur on the date
         so designated, whether or not the relevant Event of Default or
         Termination Event is then continuing.

         (ii) Upon the occurrence or effective designation of an Early
         Termination Date, no further payments or deliveries under Section
         2(a)(i) or 2(e) in respect of the Terminated Transactions will be
         required to be made, but without prejudice to the other provisions of
         this Agreement. The amount, if any, payable in respect of an Early
         Termination Date shall be determined pursuant to Section 6(e).

(d)      CALCULATIONS.

         (i) STATEMENT. On or as soon as reasonably practicable following the
         occurrence of an Early Termination Date, each party will make the
         calculations on its part, if any, contemplated by Section 6(e) and will
         provide to the other party a statement (1) showing, in reasonable
         detail, such calculations (including all relevant quotations and
         specifying any amount payable under Section 6(e)) and (2) giving
         details of the relevant account to which any amount payable to it is to
         be paid. In the absence of written confirmation from the source of a
         quotation obtained in determining a Market Quotation, the records of
         the party obtaining such quotation will be conclusive evidence of the
         existence and accuracy of such quotation.

         (ii) PAYMENT DATE. An amount calculated as being due in respect of any
         Early Termination Date under Section 6(e) will be payable on the day
         that notice of the amount payable is effective (in the case of an Early
         Termination Date which is designated or occurs as a result of an Event
         of Default) and on the day which is two Local Business Days after the
         day on which notice of the amount payable is effective (in the case of
         an Early Termination Date which is designated as a result of a
         Termination Event). Such amount will be paid together with (to the
         extent permitted under applicable law) interest thereon (before as well
         as after judgment) in the Termination Currency, from (and including)
         the relevant Early Termination Date to (but excluding) the date such
         amount is paid, at the Applicable Rate. Such interest will be
         calculated on the basis of daily compounding and the actual number of
         days elapsed.

(e)      PAYMENTS ON EARLY TERMINATION. If an Early Termination Date occurs, the
following provisions shall apply based on the parties' election in the Schedule
of a payment measure, either "Market Quotation" or "Loss", and a payment method,
either the "First Method" or the "Second Method". If the parties fail to
designate a payment measure or payment method in the Schedule, it will be deemed
that "Market Quotation" or the "Second Method", as the case may be, shall apply.
The amount, if any, payable in respect of an Early Termination Date and
determined pursuant to this Section will be subject to any Set-off.

         (i) EVENTS OF DEFAULT. If the Early Termination Date results from an
             Event of Default:--

             (1) First Method and Market Quotation. If the First Method and
             Market Quotation apply, the Defaulting Party will pay to the
             Non-defaulting Party the excess, if a positive number, of (A) the
             sum of the Settlement Amount (determined by the Non-defaulting
             Party) in respect of the Terminated Transactions and the
             Termination Currency Equivalent of the Unpaid Amounts owing to the
             Non-defaulting Party over (B) the Termination Currency Equivalent
             of the Unpaid Amounts owing to the Defaulting Party.

             (2) First Method and Loss. If the First Method and Loss apply, the
             Defaulting Party will pay to the Non-defaulting Party, if a
             positive number, the Non-defaulting Party's Loss in respect of this
             Agreement.

             (3) Second Method and Market Quotation. If the Second Method and
             Market Quotation apply, an amount will be payable equal to (A) the
             sum of the Settlement Amount (determined by the

                                        9
<PAGE>

     Non-defaulting Party) in respect of the Terminated Transactions and the
     Termination Currency Equivalent of the Unpaid Amounts owing to the
     Non-defaulting Party less (B) the Termination Currency Equivalent of the
     Unpaid Amounts owing to the Defaulting Party. If that amount is a positive
     number, the Defaulting Party will pay it to the Non-defaulting Party; if it
     is a negative number, the Non-defaulting Party will pay the absolute value
     of that amount to the Defaulting Party.

     (4) Second Method and Loss. If the Second Method and Loss apply, an amount
     will be payable equal to the Non-defaulting Party's Loss in respect of this
     Agreement. If that amount is a positive number, the Defaulting Party will
     pay it to the Non-defaulting Party; if it is a negative number, the
     Non-defaulting Party will pay the absolute value of that amount to the
     Defaulting, Party.

(ii) TERMINATION EVENTS. If the Early Termination Date results from a
     Termination Event:--

     (1)  One Affected Party. If there is one Affected Party, the amount payable
     will be determined in accordance with Section 6(e)(i)(3), if Market
     Quotation applies, or Section 6(e)(i)(4), if Loss applies, except that, in
     either case, references to the Defaulting Party and to the Non-defaulting
     Party will be deemed to be references to the Affected Party and the party
     which is not the Affected Party, respectively, and, if Loss applies and
     fewer than all the Transactions are being terminated, Loss shall be
     calculated in respect of all Terminated Transactions.

     (2)  Two Affected Parties. If there are two Affected Parties:--

          (A) if Market Quotation applies, each party will determine a
          Settlement Amount in respect of the Terminated Transactions, and an
          amount will be payable equal to (I) the sum of (a) one-half of the
          difference between the Settlement Amount of the party with the higher
          Settlement Amount ("X") and the Settlement Amount of the party with
          the lower Settlement Amount ("Y") and (b) the Termination Currency
          Equivalent of the Unpaid Amounts owing to X less (II) the Termination
          Currency Equivalent of the Unpaid Amounts owing to Y; and

          (B) if Loss applies, each party will determine its Loss in respect of
          this Agreement (or, if fewer than all the Transactions are being
          terminated, in respect of all Terminated Transactions) and an amount
          will be payable equal to one-half of the difference between the Loss
          of the party with the higher Loss ("X") and the Loss of the party with
          the lower Loss ("Y").

     If the amount payable is a positive number, Y will pay it to X; if it is a
     negative number, X will pay the absolute value of that amount to Y.

(iii) ADJUSTMENT FOR BANKRUPTCY. In circumstances where an Early Termination
Date occurs because "Automatic Early Termination" applies in respect of a party,
the amount determined under this Section 6(e) will be subject to such
adjustments as are appropriate and permitted by law to reflect any payments or
deliveries made by one party to the other under this Agreement (and retained by
such other party) during the period from the relevant Early Termination Date to
the date for payment determined under Section 6(d)(ii).

(iv) PRE-ESTIMATE. The parties agree that if Market Quotation applies an amount
recoverable under this Section 6(e) is a reasonable pre-estimate of loss and not
a penalty. Such amount is payable for the loss of bargain and the loss of
protection against future risks and except as otherwise provided in this
Agreement neither party will be entitled to recover any additional damages as a
consequence of such losses.

                                       10
<PAGE>

7.       TRANSFER

Subject to Section 6(b)(ii), neither this Agreement nor any interest or
obligation in or under this Agreement may be transferred (whether by way of
security or otherwise) by either party without the prior written consent of the
other party, except that:--

(a)      a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to any
other right or remedy under this Agreement); and

(b)      a party may make such a transfer of all or any part of its interest in
any amount payable to it from a Defaulting Party under Section 6(e).

Any purported transfer that is not in compliance with this Section will be void.

8.       CONTRACTUAL CURRENCY

(a)      PAYMENT IN THE CONTRACTUAL CURRENCY. Each payment under this Agreement
will be made in the relevant currency specified in this Agreement for that
payment (the "Contractual Currency"). To the extent permitted by applicable law,
any obligation to make payments under this Agreement in the Contractual Currency
will not be discharged or satisfied by any tender in any currency other than the
Contractual Currency, except to the extent such tender results in the actual
receipt by the party to which payment is owed, acting in a reasonable manner and
in good faith in converting the currency so tendered into the Contractual
Currency, of the full amount in the Contractual Currency of all amounts payable
in respect of this Agreement. If for any reason the amount in the Contractual
Currency so received falls short of the amount in the Contractual Currency
payable in respect of this Agreement, the party required to make the payment
will, to the extent permitted by applicable law, immediately pay such additional
amount in the Contractual Currency as may be necessary to compensate for the
shortfall. If for any reason the amount in the Contractual Currency so received
exceeds the amount in the Contractual Currency payable in respect of this
Agreement, the party receiving the payment will refund promptly the amount of
such excess.

(b)      JUDGMENTS. To the extent permitted by applicable law, if any judgment
or order expressed in a currency other than the Contractual Currency is rendered
(i) for the payment of any amount owing in respect of this Agreement, (ii) for
the payment of any amount relating to any early termination in respect of this
Agreement or (iii) in respect of a judgment or order of another court for the
payment of any amount described in (i) or (ii) above, the party seeking
recovery, after recovery in full of the aggregate amount to which such party is
entitled pursuant to the judgment or order, will be entitled to receive
immediately from the other party the amount of any shortfall of the Contractual
Currency received by such party as a consequence of sums paid in such other
currency and will refund promptly to the other party any excess of the
Contractual Currency received by such party as a consequence of sums paid in
such other currency if such shortfall or such excess arises or results from any
variation between the rate of exchange at which the Contractual Currency is
converted into the currency of the judgment or order for the purposes of such
judgment or order and the rate of exchange at which such party is able, acting
in a reasonable manner and in good faith in converting the currency received
into the Contractual Currency, to purchase the Contractual Currency with the
amount of the currency of the judgment or order actually received by such party.
The term "rate of exchange" includes, without limitation, any premiums and costs
of exchange payable in connection with the purchase of or conversion into the
Contractual Currency.

(c)      SEPARATE INDEMNITIES. To the extent permitted by applicable law, these
indemnities constitute separate and independent obligations from the other
obligations in this Agreement, will be enforceable as separate and independent
causes of action, will apply notwithstanding any indulgence granted by the party
to which any payment is owed and will not be affected by judgment being obtained
or claim or proof being made for any other sums payable in respect of this
Agreement.

(d)      EVIDENCE OF LOSS. For the purpose of this Section 8, it will be
sufficient for a party to demonstrate that it would have suffered a loss had an
actual exchange or purchase been made.

                                       11
<PAGE>

9.       MISCELLANEOUS

(a)      ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings with respect thereto.

(b)      AMENDMENTS. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing evidenced by
a facsimile transmission) and executed by each of the parties or confirmed by an
exchange of telexes or electronic messages on an electronic messaging system.

(c)      SURVIVAL OF OBLIGATIONS. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive
the termination of any Transaction.

(d)      REMEDIES CUMULATIVE. Except as provided in this Agreement, the rights,
powers, remedies and privileges provided in this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by law.

(e)      COUNTERPARTS AND CONFIRMATIONS.

         (i)      This Agreement (and each amendment, modification and waiver in
         respect of it) may be executed and delivered in counterparts (including
         by facsimile transmission), each of which will be deemed an original.

         (ii)     The parties intend that the are legally bound by the terms of
         each Transaction from the moment they agree to those terms (whether
         orally or otherwise). A Confirmation shall be entered into as soon as
         practicable and may be executed and delivered in counterparts
         (including by facsimile transmission) or be created by an exchange of
         telexes or by an exchange of electronic messages on an electronic
         messaging system, which in each case will be sufficient for all
         purposes to evidence a binding supplement to this Agreement. The
         parties will specify therein or through another effective means that
         any such counterpart, telex or electronic message constitutes a
         Confirmation.

(f)      NO WAIVER OF RIGHTS. A failure or delay in exercising any right, power
or privilege in respect of this Agreement will not be presumed to operate as a
waiver, and a single or partial exercise of any right, power or privilege will
not be presumed to preclude any subsequent or further exercise, of that right,
power or privilege or the exercise of any other right, power or privilege.

(g)      HEADINGS. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.

10.      OFFICES; MULTIBRANCH PARTIES

(a)      If Section 10(a) is specified in the Schedule as applying, each party
that enters into a Transaction through an Office other than its head or home
office represents to the other party that, notwithstanding the place of booking
office or jurisdiction of incorporation or organisation of such party, the
obligations of such party are the same as if it had entered into the Transaction
through its head or home office. This representation will be deemed to be
repeated by such party on each date on which a Transaction is entered into.

(b)      Neither party may change the Office through which it makes and receives
payments or deliveries for the purpose of a Transaction without the prior
written consent of the other party.

(c)      If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office through
which it makes and receives payments or deliveries with respect to a Transaction
will be specified in the relevant Confirmation.

11.      EXPENSES

A Defaulting Party will, on demand, indemnify and hold harmless the other party
for and against all reasonable out-of-pocket expenses, including legal fees and
Stamp Tax, incurred by such other party by reason of the enforcement and
protection of its rights under this Agreement or any Credit Support Document

                                       12

<PAGE>

to which the Defaulting Party is a party or by reason of the early termination
of any Transaction, including, but not limited to, costs of collection.

12.      NOTICES

(a)      EFFECTIVENESS. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated:--

         (i)      if in writing and delivered in person or by courier, on the
         date it is delivered;

         (ii)     if sent by telex, on the date the recipient's answerback is
         received;

         (iii)    if sent by facsimile transmission, on the date that
         transmission is received by a responsible employee of the recipient in
         legible form (it being agreed that the burden of proving receipt will
         be on the sender and will not be met by a transmission report generated
         by the sender's facsimile machine);

         (iv)     if sent by certified or registered mail (airmail, if overseas)
         or the equivalent (return receipt requested), on the date that mail is
         delivered or its delivery is attempted; or

         (v)      if sent by electronic messaging system, on the date that
         electronic message is received,

unless the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.

(b)      CHANGE OF ADDRESSES. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system details at
which notices or other communications are to be given to it.

13.      GOVERNING LAW AND JURISDICTION

(a)      GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.

(b)      JURISDICTION. With respect to any suit, action or proceedings relating
to this Agreement ("Proceedings"), each party irrevocably:--

         (i)      submits to the jurisdiction of the English courts, if this
         Agreement is expressed to be governed by English law, or to the
         non-exclusive jurisdiction of the courts of the State of New York and
         the United States District Court located in the Borough of Manhattan in
         New York City, if this Agreement is expressed to be governed by the
         laws of the State of New York; and

         (ii)     waives any objection which it may have at any time to the
         laying of venue of any Proceedings brought in any such court, waives
         any claim that such Proceedings have been brought in an inconvenient
         forum and further waives the right to object, with respect to such
         Proceedings, that such court does not have any jurisdiction over such
         party.

Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the Civil
Jurisdiction and Judgments Act 1982 or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.

(c)      SERVICE OF PROCESS. Each party irrevocably appoints the Process Agent
(if any) specified opposite its name in the Schedule to receive, for it and on
its behalf, service of process in any Proceedings. If for any

                                       13

<PAGE>

reason any party's Process Agent is unable to act as such, such party will
promptly notify the other party and within 30 days appoint a substitute process
agent acceptable to the other party. The parties irrevocably consent to service
of process given in the manner provided for notices in Section 12. Nothing in
this Agreement will affect the right of either party to serve process in any
other manner permitted by law.

(d)      WAIVER OF IMMUNITIES. Each party irrevocably waives, to the fullest
extent permitted by applicable law, with respect to itself and its revenues and
assets (irrespective of their use or intended use), all immunity on the grounds
of sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any
court, (iii) relief by way of injunction, order for specific performance or for
recovery of property, (iv) attachment of its assets (whether before or after
judgment) and (v) execution or enforcement of any judgment to which it or its
revenues or assets might otherwise be entitled in any Proceedings in the courts
of any jurisdiction and irrevocably agrees, to the extent permitted by
applicable law, that it will not claim any such immunity in any Proceedings.

14.      DEFINITIONS

As used in this Agreement:--

"ADDITIONAL TERMINATION EVENT" has the meaning specified in Section 5(b).

"AFFECTED PARTY" has the meaning specified in Section 5(b).

"AFFECTED TRANSACTIONS" means (a) with respect to any Termination Event
consisting of an Illegality, Tax Event or Tax Event Upon Merger, all
Transactions affected by the occurrence of such Termination Event and (b) with
respect to any other Termination Event, all Transaction.

"AFFILIATE" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control" of
any entity or person means ownership of a majority of the voting power of the
entity or person.

"APPLICABLE RATE" means:--

(a)      in respect of obligations payable or deliverable (or which would have
been but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;

(b)      in respect of an obligation to pay an amount under Section 6(e) of
either party from and after the date (determined in accordance with Section
6(d)(ii)) on which that amount is payable, the Default Rate;

(c)      in respect of all other obligations payable or deliverable (or which
would have been but for Section 2(a)(iii)) by a Non-defaulting party, the
Non-default Rate; and

(d)      in all other cases, the Termination Rate.

"BURDENED PARTY" has the meaning specified in Section 5(b).

"CHANGE IN TAX LAW" means the enactment, promulgation, execution or ratification
of, or any change in or amendment to, any law (or in the application or official
interpretation of any law) that occurs on or after the date on which the
relevant Transaction is entered into.

"CONSENT" includes a consent, approval, action, authorisation, exemption,
notice, filing, registration or exchange control consent.

"CREDIT EVENT UPON MERGER" has the meaning specified in Section 5(b).

"CREDIT SUPPORT DOCUMENT" means any agreement or instrument that is specified as
such in this Agreement.

"CREDIT SUPPORT PROVIDER" has the meaning specified in the Schedule.

"DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if it
were to fund or of funding the relevant amount plus 1% per annum.

                                       14

<PAGE>

"DEFAULTING PARTY" has the meaning specified in Section 6(a).

"EARLY TERMINATION DATE" means the date determined in accordance with Section
6(a) or 6(b)(iv).

"EVENT OF DEFAULT" has the meaning specified in Section 5(a) and, if applicable,
in the Schedule.

"ILLEGALITY" has the meaning specified in Section 5(b).

"INDEMNIFIABLE TAX" means any Tax other than a Tax that would not be imposed in
respect of a payment under this Agreement but for a present or former connection
between the jurisdiction of the government or taxation authority imposing such
Tax and the recipient of such payment or a person related to such recipient
(including, without limitation, a connection arising from such recipient or
related person being or having been a citizen or resident of such jurisdiction,
or being or having been organised, present or engaged in a trade or business in
such jurisdiction, or having or having had a permanent establishment or fixed
place of business in such jurisdiction, but excluding a connection arising
solely from such recipient or related person having executed, delivered,
performed its obligations or received a payment under, or enforced, this
Agreement or a Credit Support Document).

"LAW" includes any treaty, law, rule or regulation (as modified, in the case of
tax matters, by the practice of any relevant governmental revenue authority) and
"lawful" and "unlawful" will be construed accordingly.

"LOCAL BUSINESS DAY" means, subject to the Schedule, a day on which commercial
banks are open for business (including dealings in foreign exchange and foreign
currency deposits) (a) in relation to any obligation under Section 2(a)(i), in
the place(s) specified in the relevant Confirmation or, if not so specified, as
otherwise agreed by the parties in writing or determined pursuant to provisions
contained, or incorporated by reference, in this Agreement, (b) in relation to
any other payment, in the place where the relevant account is located and, if
different, in the principal financial centre, if any, of the currency of such
payment, (c) in relation to any notice or other communication, including notice
contemplated under Section 5(a)(i), in the city specified in the address for
notice provided by the recipient and, in the case of a notice contemplated by
Section 2(b), in the place where the relevant new account is to be located and
(d) in relation to Section 5(a)(v)(2), in the relevant locations for performance
with respect to such Specified Transaction.

"LOSS" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party reasonably determines in good faith to be its
total losses and costs (or gain, in which case expressed as a negative number)
in connection with this Agreement or that Terminated Transaction or group of
Terminated Transactions, as the case may be, including any loss of bargain, cost
of funding or, at the election of such party but without duplication, loss or
cost incurred as a result of its terminating, liquidating, obtaining or
reestablishing any hedge or related trading position (or any gain resulting from
any of them). Loss includes losses and costs (or gains) in respect of any
payment or delivery required to have been made (assuming satisfaction of each
applicable condition precedent) on or before the relevant Early Termination Date
and not made, except, so as to avoid duplication, if Section 6(e)(i)(l) or (3)
or 6(e)(ii)(2)(A) applies. Loss does not include a party's legal fees and
out-of-pocket expenses referred to under Section 11. A party will determine
its Loss as of the relevant Early Termination Date, or, if that is not
reasonably practicable, as of the earliest date thereafter as is reasonably
practicable. A party may (but need not) determine its Loss by reference to
quotations of relevant rates or prices from one or more leading dealers in the
relevant markets.

"MARKET QUOTATION" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or by
such party (expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support Document
with respect to the obligations of such party) and the quoting Reference
Market-maker to enter into a transaction (the "Replacement Transaction") that
would have the effect of preserving for such party the economic equivalent of
any payment or delivery (whether the underlying obligation was absolute or
contingent and assuming the satisfaction of each applicable condition precedent)
by the parties under Section 2(a)(i) in respect of such Terminated Transaction
or group of Terminated Transactions that would, but for the occurrence of the
relevant Early Termination Date, have

                                       15

<PAGE>

been required after that date. For this purpose, Unpaid Amounts in respect of
the Terminated Transaction or group of Terminated Transactions are to be
excluded but, without limitation, any payment or delivery that would, but for
the relevant Early Termination Date, have been required (assuming satisfaction
of each applicable condition precedent) after that Early Termination Date is to
be included. The Replacement Transaction would be subject to such documentation
as such party and the Reference Market-maker may, in good faith, agree. The
party making the determination (or its agent) will request each Reference
Market-maker to provide its quotation to the extent reasonably practicable as of
the same day and time (without regard to different time zones) on or as soon as
reasonably practicable after the relevant Early Termination Date. The day and
time as of which those quotations are to be obtained will be selected in good
faith by the party obliged to make a determination under Section 6(e), and, if
each party is so obliged, after consultation with the other. If more than three
quotations are provided, the Market Quotation will be the arithmetic mean of the
quotations, without regard to the quotations having the highest and lowest
values. If exactly three such quotations are provided, the Market Quotation will
be the quotation remaining after disregarding the highest and lowest quotations.
For this purpose, if more than one quotation has the same highest value or
lowest value, then one of such quotations shall be disregarded. If fewer than
three quotations are provided, it will be deemed that the Market Quotation in
respect of such Terminated Transaction or group of Terminated Transactions
cannot be determined.

"NON-DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it) if
it were to fund the relevant amount.

"NON-DEFAULTING PARTY" has the meaning specified in Section 6(a).

"OFFICE" means a branch or office of a party, which may be such party's head or
home office.

"POTENTIAL EVENT OF DEFAULT" means any event which, with the giving of notice or
the lapse of time or both, would constitute an Event of Default.

"REFERENCE MARKET-MAKERS" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria that
such party applies generally at the time in deciding whether to offer or to make
an extension of credit and (b) to the extent practicable, from among such
dealers having an office in the same city.

"RELEVANT JURISDICTION" means, with respect to a party, the jurisdictions (a) in
which the party is incorporated, organised, managed and controlled or considered
to have its seat, (b) where an Office through which the party is acting for
purposes of this Agreement is located, (c) in which the party executes this
Agreement and (d) in relation to any payment, from or through which such payment
is made.

"SCHEDULED PAYMENT DATE" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.

"SET-OFF" means set-off, offset, combination of accounts, right of retention or
withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract, applicable law or otherwise) that is exercised by, or imposed
on, such payer.

"SETTLEMENT AMOUNT" means, with respect to a party and any Early Termination
Date, the sum of:--

(a)      the Termination Currency Equivalent of the Market Quotations (whether
positive or negative) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation is determined; and

(b)      such party's Loss (whether positive or negative and without reference
to any Unpaid Amounts) for each Terminated Transaction or group of terminated
Transactions for which a Market Quotation cannot be determined or would not (in
the reasonable belief of the party making the determination) produce a
commercially reasonable result.

"SPECIFIED ENTITY" has the meaning specified in the Schedule.

                                       16

<PAGE>

"SPECIFIED INDEBTEDNESS" means, subject to the Schedule, any obligation (whether
present or future, contingent or otherwise, as principal or surety or otherwise)
in respect of borrowed money.

"SPECIFIED TRANSACTION" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter entered
into between one party to this Agreement (or any Credit Support Provider of such
party or any applicable Specified Entity of such party) and the other party to
this Agreement (or any Credit Support Provider of such other party or any
applicable Specified Entity of such other party) which is a rate swap
transaction, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction cap transaction, floor
transaction, collar transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions), (b) any combination of
these transactions and (c) any other transaction identified as a Specified
Transaction in this Agreement or the relevant confirmation.

"STAMP TAX" means any stamp, registration, documentation or similar tax.

"TAX" means any present or future tax levy, impost, duty, charge, assessment or
fee of any nature (including interest, penalties and additions thereto that is
imposed by any government or other taxing authority in respect of any payment
under this Agreement other than a stamp, registration, documentation or similar
tax.

"TAX EVENT" has the meaning specified in Section 5(b).

"TAX EVENT UPON MERGER" has the meaning specified in Section 5(b).

"TERMINATED TRANSACTIONS" means with respect to any Early Termination Date (a)
if resulting from a Termination Event, all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either case) in effect
immediately before the effectiveness of the notice designating that Early
Termination Date (or, if "Automatic Early Termination" applies, immediately
before that Early Termination Date).

"TERMINATION CURRENCY" has the meaning specified in the Schedule.

"TERMINATION CURRENCY EQUIVALENT" means, in respect of any amount denominated in
the Termination Currency, such Termination Currency amount and, in respect of
any amount denominated in a currency other than the Termination Currency (the
"Other Currency"), the amount in the Termination Currency determined by the
party making the relevant determination as being required to purchase such
amount of such Other Currency as at the relevant Early Termination Date, or, if
the relevant Market Quotation or Loss (as the case, may be), is determined as of
a later date that later date, with the Termination Currency at the rate equal to
the spot exchange rate of the foreign exchange agent (selected as provided
below) for the purchase of such Other Currency with the Termination currency at
or about 11:00 a.m. (in the city in which such foreign exchange agent is
located) on such date as would be customary for the determination of such a rate
for the purchase of such Other Currency for value on the relevant Early
Termination Date or that later date. The foreign exchange agent will, if only
one party is obliged to make a determination under Section 6(e), be selected in
good faith by that party and otherwise will be agreed by the parties.

"TERMINATION EVENT" means an Illegality, a Tax Event or a Tax Event Upon Merger
or, if specified to be applicable, a Credit Event Upon Merger or an Additional
Termination Event.

"TERMINATION RATE" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as certified
by such party) if it were to fund or of funding such amounts.

"UNPAID AMOUNTS" owing to any party means, with respect to an Early Termination
Date, the aggregate of (a) in respect of all Terminated Transactions, the
amounts that became payable (or that would have become payable but for Section
2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early
Termination Date and which remain unpaid as at such Early Termination Date and
(b) in respect of each Terminated Transaction, for each obligation under Section
2(a)(i) which was (or would have been but for Section 2(a)(iii)) required to be
settled by delivery to such party on or prior to such Early Termination Date and
which has not been so settled as at such Early Termination Date, an amount equal
to the fair market

                                       17
<PAGE>

value of that which was (or would have been) required to be delivered as of the
originally scheduled date for delivery, in each case together with to the extent
permitted under applicable law) interest, in the currency of such amounts, from
(and including) the date such amounts or obligations were or would have been
required to have been paid or performed to (but excluding) such Early
Termination Date, at the Applicable Rate. Such amounts of interest will be
calculated on the basis of daily compounding and the actual number of days
elapsed. The fair market value of any obligation referred to in clause (b) above
shall be reasonably determined by the party obliged to make the determination
under Section 6(e) or, if each party is so obliged, it shall be the average of
the Termination Currency Equivalents of the fair market values reasonably
determined by both parties.

IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.

BNP PARIBAS SECURITIES CORP.
ON BEHALF OF BNP PARIBAS                 GRANITE CONSTRUCTION INCORPORATED
--------------------------------         ---------------------------------
     (Name of Party)                             (Name of Party)

By : /s/ Christine Smith Howard         By : /s/ WILLIAM E. BARTON,
    ----------------------------        ------------------------------
    Name: Christine Smith Howard        Name: WILLIAM E. BARTON,
    Title: Authorized Signatory         Title: SR. VICE PRESIDENT
    Date:  February 18, 2003            Date:

By : /s/ Mindy Sperling                    By : /s/ R.C. ALLBRITTON,
    ----------------------------           -----------------------------
    Name: Mindy Sperling                   R.C. ALLBRITTON, VICE PRESIDENT
    Title:  Authorized Signatory
    Date:   February 18, 2003

                                       18

<PAGE>

EXECUTION COPY

                                    SCHEDULE

                                     TO THE

                                MASTER AGREEMENT

                         DATED AS OF FEBRUARY 10, 2003

                                     BETWEEN

                            BNP PARIBAS ("PARTY A ")

                                       AND

                  GRANITE CONSTRUCTION INCORPORATED ("PARTY B")

                                     PART 1
                             TERMINATION PROVISIONS

(a)      "SPECIFIED ENTITY " means in relation to Party A and Party B for the
         purpose of:-
         Section 5(a)                        None
         Section 5(a)(v),                    None
         Section 5(a)(vi),                   None
         Section 5(a)(vii),                  None
         Section 5(b)                        None
         Section 5(b)(iv),                   None

(b)      "SPECIFIED TRANSACTION" will have the meaning specified in Section 14
         of this Agreement.

(c)      The "CROSS DEFAULT" provisions of Section 5(a)(vi) will apply to Party
         A and will apply to Party B.

         If such provisions apply:-

         "SPECIFIED INDEBTEDNESS" will have the meaning specified in Section 14
         of this Agreement but will exclude deposits received by a party in the
         ordinary course of its banking business.

         "THRESHOLD AMOUNT" means USD 10,000,000 (or the equivalent thereof in
         any other currency or currencies) with respect to Party A and Party B.

(d)      The "CREDIT EVENT UPON MERGER" provisions of Section 5(b)(iv) will
         apply to Party A and will apply to Party B.

(e)      The "AUTOMATIC EARLY TERMINATION" provision of Section 6(a) will not
         apply to Party A and will not apply to Party B.

(f)      PAYMENTS ON EARLY TERMINATION. For the purpose of Section 6(e) of this
         Agreement:-

         (i)      Loss will apply.

         (ii)     The Second Method, incorporating the set-off provisions set
                  out in paragraph (a) of Part 5 hereof, will apply.

                                       19

<PAGE>

 EXECUTION COPY

(g)      "TERMINATION CURRENCY" means United States Dollars.

(h)      "ADDITIONAL TERMINATION EVENT" will apply.

         The following shall constitute an Additional Termination Event:-

         If at any time Party A ceases to be a Lender under the Credit Agreement
         dated as of June 29, 2001 among Party B, as the Borrower, Bank of
         America, N.A., as Administrative Agent, as a Lender, and as L/C Issuer
         and the other Lenders party thereto, as such agreement may from time to
         time be restated, amended or otherwise modified or any substitute or
         replacement agreement with respect thereto (the "Credit Agreement").
         Capitalized terms used herein and not defined shall have the meaning
         assigned to such term in the Credit Agreement.

         For the purpose of the foregoing Termination Event, the Affected Party
         or Affected Parties shall be:-

         Party B

                                     PART 2
                               TAX REPRESENTATIONS

(a)      PAYER REPRESENTATIONS. For the purpose of Section 3(e) of this
         Agreement, Party A will make the following representation and Party B
         will make the following representation:-

         It is not required by any applicable law, as modified by the practice
         of any relevant governmental revenue authority, of any Relevant
         Jurisdiction to make any deduction or withholding for or on account of
         any Tax from any payment (other than interest under Section 2(e),
         6(d)(ii) or 6(e) of this Agreement) to be made by it to the other party
         under this Agreement. In making his representation, it may rely on:-

         (i)      the accuracy of any representations made by the other party
                  pursuant to Section 3(f) of this Agreement;

         (ii)     the satisfaction of the agreement contained in Section 4(a)(i)
                  or 4(a)(iii) of this Agreement and the accuracy and
                  effectiveness of any document provided by the other party
                  pursuant to Section 4(a)(i) or 4(a)(iii) of this Agreement;
                  and

         (iii)    the satisfaction of the agreement of the other party contained
                  in Section 4(d) of this Agreement,

         provided that it shall not be a breach of this representation where
         reliance is placed on clause (ii) and the other party does not deliver
         a form or document under Section 4(a)(iii) by reason of material
         prejudice to its legal or commercial position.

(b)      PAYEE TAX REPRESENTATIONS. For the purpose of Section 3(f) of this
         Agreement, Party A and Party B will not make any representations.

                                     PART 3
                         AGREEMENT TO DELIVER DOCUMENTS

For the purpose of Sections 4(a)(i) and (ii) of this Agreement, each party
agrees to deliver the following documents, as applicable:-

(a)      Tax forms, documents or certificates to be delivered are: None

                                       20

<PAGE>

EXECUTION COPY

(B)      OTHER DOCUMENTS TO BE DELIVERED ARE:

<TABLE>
<CAPTION>
                                                                                          DATE BY WHICH        COVERED BY
PARTY REQUIRED TO                                                                             TO BE            SECTION 3(D)
DELIVER DOCUMENT                FORM/DOCUMENT/CERTIFICATE                                   DELIVERED        REPRESENTATION

<S>                       <C>                                                           <C>                   <C>
    Party A               such proof as Party B may reasonably                          on signing                 Yes
                          request of the names, true signatures and
                          authority of persons signing this
                          Agreement or its behalf and any other
                          document referred to herein to which it is a
                          party

    Party B               Certified copies of all corporate                             on signing                 Yes
                          authorizations and any other documents
                          with respect to the execution, delivery and
                          performance of this Agreement; together
                          with a certificate of authority and
                          specimen signatures of the persons
                          executing this Agreement;

    Party B               A copy of its most recently available                         promptly after a           Yes
                          annual report containing audited financial                    request by Party
                          statements for its most recently ended                        A
                          fiscal year certified by its independent
                          public accountants as fairly presenting its
                          financial condition and results of
                          operations for and as at the close of such
                          fiscal year;

    Party B               A copy of its most recently available                         promptly after a
                          unaudited financial statements for its most                   request by
                          recently ended fiscal quarter certified by                    Party A
                          its chief financial officer as fairly
                          presenting its financial condition and
                          results of operations for and as at the close
                          of such quarter;

    Party B               Each regular financial and/or business                        promptly after a           Yes
                          reporting document that is distributed or is                  request by
                          generally available to its partners,                          Party A
                          shareholders, creditors or investors or is
                          filed with any regulatory authorities and is
                          publicly available or relates to its financial
                          condition;

    Party B               Such other information respecting Party                       promptly after             Yes
                          B's condition or operations, financial or                     a request by
                          otherwise, as Party A may reasonably                          Party A
                          request from time to time; and

    Party B               Opinion of general counsel for Party B in                     upon execution             Yes
                          the form of Exhibit I                                         and delivery of
                                                                                        this Agreement
</TABLE>

                                       21

<PAGE>

EXECUTION COPY

                                     PART 4
                                  MISCELLANEOUS

(a)      ADDRESSES FOR NOTICES. For the purpose of Section 12(a) of this
         Agreement:-

         Address for notices or communications to Party A:-

<TABLE>
<S>              <C>
Address:         BNP Paribas, 20 Boulevard des Italiens, 75009 Paris, France
Attention:       BFI/BOLTIT
Telex No.        282919 Answerback: BNP 282919F

copy to:         BNP Paribas, 10 Harewood Avenue, London NWI 6AA, England
Attention:       Legal and Transaction Management Group
Telex No:        296723 Answerback: PARCAP
</TABLE>

         Electronic Messaging System Details: BPCMGB2X
         (For all purposes)

         Address for notices or communications to Party B:-

<TABLE>
<S>              <C>
Address:         Granite Construction Incorporated, P.O. Box 50085 Watsonville,
                 CA 95077-5085

Attention:       Jigisha Desai, Director of Corporate Treasury

Telex No:        831-761-4784
                 Jigisha.Desai@goinc.com

copy to:         Granite Construction Incorporated, P.O. Box 50085 Watsonville,
                 CA 95077-5085
Attention:       R. C. Allbritton, Vice President & Treasurer
Telex No.        831-761-4772
                 R.C.Allbritton@goinc.com
</TABLE>

         Electronic Messaging System Details:
         (For all purposes)

(b)      "PROCESS AGENT". For the purpose of Section 13(c) of this Agreement:-

         Party A appoints as its Process Agent:
         its New York Branch at 787 Seventh Avenue, New York, New York 10019.

         Party B appoints as its Process Agent:
         Michael FutchGranite Construction Incorporated
         P.O. Box 50085
         Watsonville, CA 95077-5085

(c)      OFFICES. The provisions of Section 10(a) will apply to this Agreement.

                                       22
<PAGE>

EXECUTION COPY

(d)      MULTIBRANCH PARTY. For the purpose of Section 10(c)of this Agreement:-

         Party A is a Multibranch Party and may act through the following
         Offices:-

<TABLE>
<S>                                 <C>                            <C>
BNP Paribas Head Office             Its New York Branch at         Its other United States
20, Boulevard des Italiens          The Equitable Tower            Branches
75009 Paris                         31st Floor
France                              787 Seventh Avenue
                                    New York, NY 10019
                                    USA

Its Tokyo Branch at                 Its London Branch at           Its Hong Kong Branch at 11th
Sankei Building 18F                 10 Harewood Avenue             Floor
1-7-2, Otemachi,                    London NW16AA                  Central Tower
Chiyoda-ku                          England                        28 Queen's Road Central
Tokyo 100-0004                                                     Hong Kong
Japan

Its Singapore Branch                Its Dublin Branch              Its Sydney Branch
Tung Centre                         5 George's Dock                12 Castlereagh Street
20 Collyer Quay                     IFSC                           Sydney NSW 2001
Singapore 0104                      Dublin I                       Australia
                                    Ireland
</TABLE>

         Its Grand Caymon Branch

         Party B is not a Multibranch Party.

(e)      CALCULATION AGENT. The Calculation Agent is Party A, unless otherwise
         specified in a Confirmation in relation to the relevant Transaction.
         The Calculation Agent's calculation and determinations shall be
         conclusive and binding in the absence of manifest error. The failure by
         Party A to perform its obligations as Calculation Agent hereunder shall
         not be construed as an Event of Default or Termination Event.

(f)      CREDIT SUPPORT DOCUMENT. With respect to Party A: Not Applicable.

         With respect to Party B:

         (i)      The Credit Agreement, the Guaranty, and any other material
                  document in which Party A is a beneficiary of or may become a
                  beneficiary of at any time after the date hereof which
                  expressly provides that it guarantees or secures the material
                  obligations of Party B under this Agreement.

(g)      CREDIT SUPPORT PROVIDER. With respect to Party A: Not Applicable.

         With respect to Party B:

                  All pledgors and guarantors, or other persons or parties
                  providing collateral or security, however such term may be
                  defined in the Credit Agreement, the Guaranty, or any other
                  Credit Support Document, including without limitation any
                  guarantors thereto.

(h)      GOVERNING LAW. This Agreement will be governed by and construed in
         accordance with the laws of the State of New York without reference to
         choice of law doctrine.

(i)      NETTING OF PAYMENTS. Subparagraph (ii) of Section 2(c) of this
         Agreement will apply unless otherwise stated in any Confirmation.

                                       23

<PAGE>

EXECUTION COPY

(j)      AFFILIATE" will have the meaning specified in Section 14 of this
         Agreement.

                                     PART 5
                                OTHER PROVISIONS

(a)      SET-OFF. Section 6 of this Agreement shall be amended by the insertion
         of the following additional provision:

         "(f) Set-off. Any amount (the "Early Termination Amount") payable to
         one party (the "Payee") by the other party (the "Payer") under Section
         6(e), in circumstances where there is a Defaulting Party or one
         Affected Party where a Termination Event under Section 5(b)(iv) has
         occurred, will, at the option of the party ("X") other than the
         Defaulting Party or the Affected Party (and without prior notice to the
         Defaulting Party or the Affected Party),be reduced by its Set-off
         against any amount(s) (the "Other Agreement Amount") payable (whether
         at such time or in the future or upon the occurrence of a contingency)
         by the Payee to the Payer (irrespective of the currency, place of
         payment or booking office of the obligation) under any other
         agreement(s) between the Payee and the Payer or instrument(s) or
         undertaking(s) issued or executed by one party to, or in favor of, the
         other party (the "Other Agreement") (and the Other Agreement Amount
         will be discharged pro tanto). X will give notice to the other party of
         any set-off so effected.

         For this purpose, either the Early Termination Amount or the Other
         Agreement Amount (or the relevant part of such amounts) may be
         converted at the applicable prevailing exchange rate into the currency
         in which the other is denominated.

         If an obligation is unascertained, X may in good faith estimate that
         obligation and set-off in respect of the estimate, subject to the
         relevant party accounting to the other when the obligation is
         ascertained.

         Nothing in this Section 6(f) shall be effective to create a charge or
         other security interest. This Section shall be without prejudice and in
         addition to any right of set-off, combination of accounts, lien or
         other right to which any party is at any time otherwise entitled
         (whether by operation of law, contract or otherwise).

(b)      ISDA DEFINITIONS. The definitions and provisions contained in the 2000
         ISDA Definitions, the 1999 ISDA Credit Derivatives Definitions, , each
         as published by the International Swaps and Derivatives Association,
         Inc. (collectively, the "Definitions", as such Definitions may be
         further amended) are incorporated into any Confirmation which
         supplements and forms part of this Agreement, and all capitalized terms
         used in a Confirmation shall have the meaning set forth in the
         Definitions, unless otherwise defined in a Confirmation. In the event
         of any conflict between the provisions of this Agreement and the
         provisions of the Definitions, the provisions of the Agreement shall
         apply and in the event of any conflict between the provisions of this
         Agreement and a Confirmation, the provisions of the Confirmation shall
         apply.

(c)      CONFIRMATIONS. A new Section l(d) is hereby added to the Agreement as
         follows

         (d) CONFIRMATIONS. Any transaction entered into by the parties, whether
         or not prior to the date hereof, which would otherwise constitute a
         "Specified Transaction" under this Agreement [excluding Repo
         Transactions] shall be deemed to be a Transaction for the purposes of
         this Agreement, even where not so specified in the documentation for
         such transaction. Any document or other writing (including telexes,
         faxes and electronic messages) evidencing the terms of such a
         Transaction shall, unless otherwise specified in such writing, be
         deemed to be a Confirmation for the purposes of this Agreement and,
         unless otherwise agreed by the parties, each such Confirmation shall
         supplement, form a part of, and be subject to this Agreement and all
         provisions in the Agreement will govern the Confirmation except as
         modified therein."

(d)      REPRESENTATIONS. Each party will be deemed represent to the other party
         on the date on which it enters into a Transaction that (absent a
         written agreement between the parties that expressly imposes
         affirmative obligations to the contrary for that Transaction:

                                       24
<PAGE>
EXECUTION COPY

         (i) NON-RELIANCE. It is acting for its own account and it has made its
         own independent decisions to enter into that Transaction and as to
         whether that Transaction is appropriate or proper for it based upon its
         own judgment and upon advice from such advisers as it has deemed
         necessary. It is not relying on any communication (written or oral) of
         the other party as investment advice or as a recommendation to enter
         into that Transaction; it being understood that information and
         explanations related to the terms and conditions of a Transaction shall
         not be considered investment advice or a recommendation to enter into
         that Transaction. It has not received from the other party any
         assurance or guarantee as to the expected results of the Transaction.

         (ii) EVALUATIONS AND UNDERSTANDING. It is capable of evaluating and
         understanding (on its own behalf or through professional advice), and
         understands and accepts, the terms, conditions and risks of that
         Transaction. It is also capable of assuming, and assumes, the financial
         and other risks of that Transaction.

         (iii) STATUS OF PARTIES. The other party is not acting as a fiduciary
         or an adviser for it in respect of that Transaction.

         (iv) ACTING AS PRINCIPAL. It is acting as principal and not as agent or
         in any other capacity, fiduciary or otherwise.

         (v) BENEFICIAL OWNER. With respect to any physically settled
         Transactions, it shall at the time of delivery be the legal and
         beneficial owner free of liens and other encumbrances of any securities
         or commodities it delivers to the other party.

         (vi) ELIGIBLE CONTRACT PARTICIPANT. It is an "eligible contract
         participant" within the meaning of the Commodity Exchange Act".

(e)      ADDITIONAL PARTY B REPRESENTATIONS. Party B will be deemed to represent
         to the other party on the date hereof and each date on which it enters
         into a Transaction that this Agreement is a Swap Contract (as defined
         in the Credit Agreement), and this Agreement and any Transaction ranks
         pari passu with Party B's obligations under all senior secured credit
         facilities.

(f)      DEFAULT INTEREST. Section 2(e) of this Agreement is hereby amended by
         the deletion of the final sentence and the subsitution of the following
         thereof;

         "If, prior to the occurrence or effective designation of an Early
         Termination Date, a party defaults in the performance of any obligation
         required to be settled by delivery, it will indemnify the other party
         on demand for any costs, losses or expenses (including the costs of
         borrowing the shares or other equity securities, bonds or other debt
         securities or other instrument or commodity as the case may be, if
         applicable) resulting from such default. A certificate signed by the
         deliveree setting out such costs, losses or expenses in reasonable
         detail will be conclusive evidence that they have been incurred."

(g)      DEFAULT CAUSED BY ILLEGALITY. An Event of Default pursuant to Section
         5(a)(vi) shall not be deemed to have occurred if it is caused by an
         event that would constitute an Illegality if it occurred in connection
         with this Agreement.

(h)      EVENTS OF DEFAULT. Section 5 (a) of the Agreement is amended by
         inserting the following at the end of subsection (vii) (3) thereof:

         "or a notice is sent convening a meeting to propose a voluntary
         arrangement of its creditors"

(i)      EXPENSES. Section 11 of the Agreement is amended by inserting the word
         "reasonable" between the words "including" and "legal" in the second
         line thereof.

(j)      NOTICES. Section 12(a) of the Agreement is amended by (i) removing the
         words "or its delivery is attempted" in the thirteenth line; (ii)
         removing the words "(or attempted delivery)" in the fifteenth line; and
         (iii) removing the words "(or attempted)" in the sixteenth line.

                                       25

<PAGE>

(k)      WAIVER OF JURY TRIAL. Each party waives to the fullest extent permitted
         by applicable law any right it may have to have a trial by jury in
         respect of any Proceedings and acknowledges that it and the other party
         have been induced to enter into this Agreement (and provide for any
         Credit Support Document, as applicable) by, among other things, the
         mutual waivers in this Section.

(l)      NOTIFICATION OF THE RECORDING OF TELEPHONE CONVERSATIONS. Each Party
         (i) consents to the recording of telephone conversations of trading and
         marketing personnel of the parties in connection with this Agreement
         and any Transactions hereunder and to the submission of such recordings
         in evidence in any Proceedings and (ii) agrees to obtain any necessary
         consent of, and give notice of such recording to, such personnel.

IN WITNESS WHEREOF the parties have executed this Schedule to the Agreement with
effect from the date specified on the first page of this document.

BNP PARIBAS SECURITIES CORP.           GRANITE CONSTRUCTION INCORPORATED

ON BEHALF OF BNP PARIBAS

By: /s/ Christine Smith Howard         By: /s/ William E. Barton
    --------------------------             ----------------------

Name: Christine Smith Howard           Name: WILLIAM E. BARTON

Title: Authorized Signatory            Title: SR. VICE PRESIDENT

By: /s/ Mindy Sperling                 By: /s/ R.C. Allbritton
   ---------------------------           -----------------------

Name: Mindy Sperling                   Name: R.C. ALLBRITTON

Title: Authorized Signatory            Title: VICE PRESIDENT

                                       26

<PAGE>

                     OPINION OF COUNSEL FOR THE COUNTERPARTY

                                                              ____________, 2003

BNP Paribas
20 Boulevard des Italiens
75009 Paris
France

Dear Sirs

I have acted as counsel for Granite Construction Incorporated (the
"Counterparty") in connection with the ISDA Master Agreement (the "Agreement")
dated as of February 10, 2003 between the Counterparty and BNP Paribas ("BNP
Paribas"), pursuant to which this opinion is furnished.

I have examined originals or copies, certified or otherwise identified to my
satisfaction, of such documents, corporate records, certificates of public
officials and other instruments and have conducted such other investigations of
fact and law as I have deemed necessary or advisable for purposes of this
opinion.

I express no opinion as to any laws other than the laws and regulations
of________________as currently in effect. In addition, I have assumed that the
Agreement has been, and any Confirmation exchanged between the parties
confirming the Transaction which supplements and is subject to the Agreement (a
"Confirmation") will be, duly authorized, executed and delivered (or, in the
case of a Confirmation, entered into, as provided for therein) by BNP Paribas
[and that the Agreement constitutes, and when confirmed, as provided for
therein, any Confirmation will constitute, a valid and binding obligation under
the laws of the State of New York.

Upon the basis of the foregoing, I am of the opinion that:

1.       The Counterparty is a _________duly incorporated, validly existing and
         in good standing under the laws of ________________ and has full power
         and authority to execute, deliver and perform the Agreement and to
         confirm, as provided for therein, and perform any Confirmation.

2.       The execution, delivery and performance by the Counterparty of the
         Agreement and the entering into, as provided for therein, and
         performance of any Confirmation have been duly authorized by all
         necessary corporate action, require no action by or in respect of, or
         filing with, any governmental body, agency or official and do not
         contravene, or constitute a default under, any provision of applicable
         law or regulation or of the certificate of incorporation or by-laws of
         the Counterparty or of any agreement, judgement, injunction, order,
         decree or other instrument binding upon the Counterparty.

3.       The Agreement constitutes and, when confirmed, as provided for therein,
         any Confirmation, together with the Agreement, will constitute, a valid
         and binding obligation of the Counterparty enforceable in accordance
         with its terms except as enforcement may be limited by the provisions
         of any applicable bankruptcy, liquidation, insolvency and
         reorganization or other laws, relating to or affecting, generally the
         enforcement of creditor's rights.

4.       No authorization, approvals or consents are required under the laws of
         _________ to permit the purchase by the Counterparty of any currency
         which may be needed to make payment pursuant to the Agreement.

5.       The submission to the non exclusive jurisdiction of the State and
         Federal courts in New York City for all purposes in connection with,
         and the consent to service of process in, the Agreement are valid and
         binding upon the Counterparty and not subject to revocation. There are
         no provisions in the Agreement which are repugnant to the public
         thereof. If any final and conclusive judgement of a State or Federal
         court sitting in New York City

                                       27
<PAGE>

         is rendered against the Counterparty in connection with any action
         arising out of or relating to the Agreement, such judgement would be
         recognized and enforced by the courts of ______________ without any
         re-trial or re-examination of the merits of action; provided that the
         ______________ court in which enforcement is sought determines that:
         [brief description of the grounds under which such judgement would be
         recognized without a re-examination of the merits]

                                                               Very truly yours,

                                       28

<PAGE>

                            CERTIFICATE OF AUTHORITY

I, Dominique Hoenn, Chief Operating Officer of BNP PARIBAS, hereby confirm that
BNP PARIBAS has consented to and has delegated authority to BNP PARIBAS
SECURITIES Corporation,

New York to:

(i)      arrange on behalf of and in the name of BNP PARIBAS (A) any transaction
         or agreement which is a rate swap transaction, swap option, basis swap,
         forward rate transaction, commodity swap, commodity option, equity or
         equity index swap, equity or equity index option, bond option, interest
         rates option, foreign exchange transaction, cap transaction, floor
         transaction, collar transaction, currency swap transaction,
         cross-currency rate swap transaction, currency option, credit
         protection transaction, credit swap, credit default swap, credit
         default option, total return swap, credit spread transaction,
         repurchase transaction, reverse repurchase transaction, buy-sell back
         transaction or securities lending transaction or any transaction
         similar to the foregoing (including any option with respect to any of
         these transactions or any combination of such transactions or
         agreements) including any margin or collateral provisions related
         thereto or (B) the purchase and/or sale of any securities (including
         but not limited to government securities), bank debt (including but not
         limited to floating rate par/near par and distressed bank debt),
         participations in and options on the foregoing, and any other items as
         may be related to the foregoing as may be approved by BNP PARIBAS from
         time to time: (all of the foregoing in (A) or (B) referred to as a
         transaction) and

(ii)     execute in connection with such authority any confirmation or agreement
         or documentation evidencing any such transaction specified above or
         margin or collateral arrangement or any agreement to which such
         transaction or margin or collateral arrangement is subject and to take
         any other action or execute any other instrument or paper necessary or
         proper in relation thereto.

Any transaction undertaken or agreement executed by BNP PARIBAS SECURITIES
Corporation on behalf of BNP PARIBAS in respect of the foregoing prior to or
subsequent to the date hereof is hereby ratified.

By /s/ Dominique Hoenn
   -------------------
Dominique Hoenn

Dated the 22nd day of January 2001.

<PAGE>

                               PARIBAS CORPORATION

         I, David L. Brummer, President of Paribas Corporation (the
"Corporation"), pursuant to Resolutions duly adopted by the Board of Directors
of the Corporation on February 25, 2000, hereby appoint and authorize the
employees of the Corporation whose names are listed below to prepare, negotiate,
execute and deliver any contract or agreement (including any margin or
collateral provisions related thereto) necessary, advisable or convenient in
connection with the business for the Corporation's account in (A) currencies,
securities, and financial instruments and contracts of every type, (B) credit
default swaps or credit default options and other credit derivative
transactions, total return swaps, rate swaps, basis swaps, forward rate
agreements, commodity swaps or commodity options, equity or equity index swaps,
equity or equity index options, bond options, interest rate options, foreign
exchange, caps, floors, collars, cross-currency rate swaps, currency swaps or
currency option transactions and any combination of these transactions or
contracts of every type, (C) forward contracts of every type and (D) repurchase
agreements, reverse repurchase agreements, and buy/sell back agreements of every
type. The foregoing appointment and authorization shall include the authority of
such persons to exercise the foregoing powers on behalf of BNP Paribas with
respect to its business pursuant to the authority granted to the Corporation by
BNP Paribas.

                              Authorized Employees

                                  Douglas Cook
                                 James Lettiere
                                   John Powers
                                 Mindy Sperling
                               Christine M. Smith

         The appointments and authorizations granted hereunder supersede all
appointments and authorizations previously granted by the President of Paribas
Corporation with respect to the foregoing.

         IN WITNESS WHEREOF, I have hereunto set my hand this 25th day of
August, 2000.

/s/ David L. Brummer
--------------------
David L. Brummer
President

<PAGE>

                           [PARIBAS CORPORATION LOGO]

                             /s/ Christine M. Smith
                             ----------------------
                               Christine M. Smith

                     787 Seventh Avenue, New York, NY 10019

<PAGE>

                           [PARIBAS CORPORATION LOGO]

                               /s/ Mindy Sperling
                               -------------------
                                 Mindy Sperling

                     787 Seventh Avenue, New York, NY 10019

<PAGE>

                                        [GRANITE CONSTRUCTION INCORPORATED LOGO]

                    OPINION OF COUNSEL FOR THE COUNTERPARTY

                                                               February 11, 2003

BNP Paribas
20 Boulevard des Italiens
75009 Paris
France

Dear Sirs

I have acted as counsel for Granite Construction Incorporate (the
"Counterparty") in connection with the ISDA Master Agreement (the "Agreement")
dated as of February 10, 2003 between the Counterparty and BNP Paribas ("BNP
Paribas"), pursuant to which this opinion is furnished.

I have examined originals or copies, certified or otherwise identified to my
satisfaction, of such documents, corporate records, certificates of public
officials and other instruments and have conducted such other investigations of
fact and law as I have deemed necessary or advisable for purposes of this
opinion.

I express no opinion as to any laws other than the laws and regulations of
California, the Delaware General Corporation Law and the federal laws of the
United States of America as currently in effect. In addition, I have assumed
that the Agreement has been, and any Confirmation exchanged between the parties
confirming the Transaction which supplements and is subject to the Agreement (a
"Confirmation") will be, duly authorized, executed and delivered (or, in the
case of a Confirmation, entered into, as provided for therein) by BNP Paribas
and that the Agreement constitutes, and when confirmed, as provided for therein,
any Confirmation will constitute, a valid and binding obligation under the laws
of the state of New York.

Upon the basis of the foregoing, I am of the opinion that:

1.       The Counterparty is a corporation duly incorporated, validly existing
         and in good standing under the laws of Delaware and has full power and
         authority to execute, deliver and perform the Agreement and to confirm,
         as provided for therein, and perform any Confirmation.

                                                      Box 50085
                                                      Watsonville, CA 95077-5085
                                                      Phone 831/724-1011
                                                      FAX 831/722-9657

<PAGE>

BNP Paribas
February 10, 2003
Page 2

2.       The execution, delivery and performance by the Counterparty of the
         Agreement and the entering into, as provided for therein, and
         performance of any confirmation have been duly authorized by all
         necessary corporate action, require no action by or in respect of, or
         filing with, any government body, agency or official and do not
         contravence, or constitute a default under, any provision of applicable
         law or regulation or of the certificate of incorporation or by-laws of
         the Counterparty or of any agreement, judgement, injunction, order
         decree or other instrument binding upon the Counterparty.

3.       The Agreement constitutes and, when confirmed, as provided for therein,
         any Confirmation, together with the Agreement, will constitute, a valid
         and binding obligation of the Counterparty enforceable in accordance
         with its terms except as enforcement may be limited by the provisions
         of any applicable bankruptcy, liquidation, insolvency and
         reorganization or other laws, relating to or affecting, generally the
         enforcement of creditor's rights.

4.       No authorizations, approvals or consents are required under the laws of
         California to permit the purchase by the Counterparty of any currency
         which may be needed to make payment pursuant to the Agreement.

5.       The submission to the non-exclusive jurisdiction of the State and
         Federal courts in New York City for all purposes in connection with,
         and the consent to service of process in, the Agreement are valid and
         binding upon the Counterparty and not subject to revocation. There are
         no provisions in the Agreement which are repugnant to the public policy
         thereof. If any final and conclusive judgement of a State or Federal
         court sitting in New York City is rendered against the Counterparty in
         connection with any action arising out of or relating to the Agreement,
         such judgement would be recognized and enforced by the courts of
         California without any re-trial or re-examination of the merits of
         action; provided that the California court in which enforcement is
         sought determines that the judgment should not be vacated pursuant to
         C.C.P. Section 1710.40.

                                   Sincerely,

                                /s/ Michael Futch
                                -----------------
                               Michael Futch, Esq.
                       Vice President and General Counsel

MF\pac

<PAGE>

                        GRANITE CONSTRUCTION INCORPORATED

         WHEREAS, the Company is obligated to pay fixed rates of 6.54% and 6.96%
to holders of its Senior Notes purchased on March 1, 1998 and May 1, 2001
respectively; and

         WHEREAS, the Company desires to enter into swap transactions with BNP
Paribas wherein it will swap its fixed rates for floating rates of 6m LIBOR +
386.75 bps and 6m LIBOR + 418 bps respectively pursuant to a ISDA Master
Agreement and related schedules and exhibits pertaining thereto (collectively
the "Agreement"); and

         WHEREAS, Management has reviewed the Agreement and found it to be
acceptable in form and substance.

         NOW, THEREFORE, BE IT RESOLVED, that the Executive Committee does
hereby approve the Agreement and the schedules, exhibits and other related
documents pertaining to the transaction described above and attached to the
Agreement.

         FURTHER RESOLVED, that any two Responsible Officers of the Company (as
defined in the Company's Credit Agreement dated June 29, 2001) be, and each of
them acting together are hereby authorized, empowered and directed, for and on
behalf of the Company, to take or cause to be taken any and all actions,
including, without limitation, the execution, acknowledgment, filing, amendment
and delivery of any and all papers, agreements, documents, instruments and
certificates, and the payment of such sums, as such officers may deem necessary
or advisable to carry out and perform the obligations of the Company under the
Agreement and consummate the transaction contemplated therein.

                            CERTIFICATE OF SECRETARY

         I certify that:

         I am duly qualified as Secretary of GRANITE CONSTRUCTION INCORPORATED,
a Delaware corporation, (the "Company").

         The foregoing is a true copy of resolution adopted by the Board of
Directors at a regular meeting held on February 11, 2003 and entered in the
Minute Book of the Company.

         The action is in conformity with the Articles of Incorporation and
Bylaws of the Company, has not been modified or repealed, and is now in full
force and effect.

Dated: February 21, 2003                   /s/ Michael Futch
                                           -----------------
                                           Michael Futch

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