GRANITE CONSTRUCTION INCORPORATED

KEY MANAGEMENT DEFERRED COMPENSATION PLAN II

1.   Introduction .

(a)   The purpose of the Plan is to provide deferred compensation to a select group of executive employees and non-employee directors of the Company in recognition of their contributions to the Company and its affiliates.  This document constitutes the written instrument under which the Plan is maintained.

(b)   This Plan is the successor plan to the Granite Construction Incorporated Key Management Deferred Compensation Plan, as amended through December 31, 2004 and the Key Management Deferred Incentive Compensation Plan, as amended through December 31, 2004 (collectively, the “Prior Plans”).  Effective December 31, 2004, the Prior Plans are frozen and no new deferrals or Company contributions will be made to them; provided, however, that any deferrals or Company contributions made under the Prior Plans before January 1, 2005 shall continue to be governed by the terms and conditions of the Prior Plans as in effect on December 31, 2004.

(c)   Any deferrals and Company contributions made under the Prior Plans after December 31, 2004 are deemed to have been made under this Plan and all such deferrals and Company contributions shall be governed by the terms and conditions of this Plan as it may be amended from time to time; provided, however, that deferrals and Company contributions made in 2005 through 2007 are governed by the terms and conditions of this Plan along with the terms and conditions set forth in the Appendix.

(d)   This Plan is intended to be a plan that is unfunded and that is maintained by Granite Construction Incorporated primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees within the meaning of the Employee Retirement Income Security Act and for the benefit of the Company’s non-employee directors.  This Plan also is intended to comply with the requirements of Section 409A of the Code.

(e)   The Board approved the amendment and restatement of this Plan effective January 1, 2010.

2.   Definitions .

(a)   “ Account ” means as to any Participant the separate account(s) established and maintained by the Company in order to reflect his or her interest in the Plan.  Each Participant’s Account or Accounts will reflect (i) allocations and earnings credited (or debited) thereto in accordance with Section 5 and (ii) amounts payable at different times and in different forms.

(b)   “ Beneficiary ” means the person or persons designated by the Participant or by the Plan under Section 7(g) to receive payment of the Participant’s Account in the event of the Participant’s death.

(c)   “ Board ” means the Board of Directors of Granite Construction Incorporated.

(d)   “ Bonus ” means any cash bonus earned by a Participant, including, but not limited to, (i) the cash bonus payable under the Granite Construction Profit Sharing Cash Bonus Plan, if any and (ii) the Participant’s usual and customary annual cash incentive, if any.

(e)   “ Change in Control ” means the effective date of any one of the following events but only to the extent that such change in control transaction is a change in the ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company as defined in the regulations promulgated under Section 409A of the Code:

(i)   an acquisition, consolidation, or merger of the Company with or into any other corporation or corporations, unless the stockholders of the Company retain, directly or indirectly, at least a majority of the beneficial interest in the voting stock of the surviving or acquiring corporation or corporations; or

(ii)   the sale, exchange, or transfer of all or substantially all of the assets of the Company to a transferee other than a corporation or partnership controlled by the Company or the stockholders of the Company; or

(iii)   a transaction or series of related transactions in which stock of the Company representing more than thirty percent (30%) of the outstanding voting power of the Company is sold, exchanged, or transferred to any single person or affiliated persons leading to a change of a majority of the members of the Board.

The Board shall have final authority to determine, in accordance with Section 409A of the Code, whether multiple transactions are related and the exact date on which a Change in Control has been deemed to have occurred under subsections (i), (ii), and (iii) above.

(f)   “ Code ” means the Internal Revenue Code of 1986, as amended.

(g)   “ Committee ” means the Compensation Committee of the Company’s Board of Directors and its delegatee, as applicable.

(h)   “ Company ” means Granite Construction Incorporated, a Delaware corporation, and any other affiliated entity that is designated from time to time by the Board.  As to a particular Participant, “Company” refers to the corporate entity which is his or her employer. For purposes of Sections 2(e) and (g), 5 and 10, “Company” refers only to Granite Construction Incorporated.

(i)   “ Disability ” means that an individual is (i) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months or (ii) by reason of any medically determinable physical o mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than three months under an accident and health plan covering employees of the Company.

(j)   “ Equity Incentive Plan ” means the Granite Construction Incorporated Amended and Restated 1999 Equity Incentive Plan, as amended from time to time.

(k)   “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

(l)   “ Identification Date ” means each December 31.

(m)   “ Key Employee ” means a Participant who, on an Identification Date, is:

(i)   An officer of the Company having annual compensation greater than the compensation limit in Section 416(i)(1)(A)(i) of the Code, provided that no more than fifty officers of the Company shall be determined to be Key Employees as of any Identification Date;

(ii)   A five percent owner of the Company; or

(iii)   A one percent owner of the Company having annual compensation from the Company of more than $150,000.

If a Participant is identified as a Key Employee on an Identification Date, then such Participant shall be considered a Key Employee for purposes of the Plan during the period beginning on the first April 1 following the Identification Date and ending on the next March 31.

(n)   “ Participant ” means each employee and non-employee director of the Company who is designated as such from time to time by the Committee.

(o)   “ Performance Units ” means an award granted pursuant to a Performance Unit Agreement under the Equity Incentive Plan.

(p)   “ Plan ” means the Granite Construction Incorporated Key Management Deferred Compensation Plan II, as set forth in this instrument and as hereafter amended.

(q)   “ Plan Year ” means the calendar year.

(r)   “ Prior Plans ” means the Granite Construction Incorporated Key Management Deferred Compensation Plan and the Granite Construction Incorporated Key Management Deferred Incentive Compensation Plan.

(s)   “ Restricted Stock Units ” means an award granted pursuant to a Restricted Stock Units Agreement under the Equity Incentive Plan.

(t)   “ Retirement ” means an employee-Participant’s Separation from Service at or after (i) age 55 with ten years of service or (ii) age 65 with five years of service.  Retirement means a non-employee director-Participant’s Separation from Service at any time.

(u)   “ Separation from Service ” means termination of employment with the Company, other than by reason of death.

(i)   A Participant shall not be deemed to have Separated from Service if the Participant continues to provide services to the Company in a capacity other than as an employee and if the former employee is providing services at an annual rate that is fifty percent (50%) or more of the services rendered, on average, during the immediately preceding three full calendar years of employment with the Company (or if employed by the Company less than three years, such lesser period).

(ii)   A Participant shall be deemed to have Separated from Service if a Participant’s service with the Company is reduced to an annual rate that is less than twenty percent (20%) of the services rendered, on average, during the immediately preceding three full calendar years of employment with the Company (or if employed by the Company less than three years, such lesser period).

(v)   “ Unforeseeable Emergency ” means a severe financial hardship to the Participant or Beneficiary resulting from:

(i)   An illness or accident of the Participant or Beneficiary, the Participant’s or Beneficiary’s spouse, or the Participant’s or Beneficiary’s dependent (as defined in Section 152(a) of the Code); or

(ii)   Loss of the Participant’s or Beneficiary’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance); or

(iii)   Other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant or Beneficiary.

Hardship shall not constitute an Unforeseeable Emergency under the Plan to the extent that it is, or may be, relieved by:

(i)   Reimbursement or compensation, by insurance or otherwise;

(ii)   Liquidation of the Participant’s or Beneficiary’s assets to the extent that the liquidation of such assets would not itself cause severe financial hardship. Such assets shall include but not be limited to stock options, Company stock, and 401(k) plan balances; or

(iii)   Cessation of deferrals under the Plan.

An Unforeseeable Emergency under the Plan does not include (among other events):

(i)   Sending a child to college; or

(ii)   Purchasing a home.

3.   Eligibility to Participate .  The Committee will, from time to time, designate Company employees to be Participants.  Each employee-Participant selected by the Committee must belong to a select group of management or highly compensated employees of the Company. In addition, non-employee directors of the Company will become Participants upon notification of eligibility from the Committee.  Non-employee directors are not eligible for In-Service Distributions described in Section 7(c) or the survivor benefit under Section 8.

4.   Vesting .  Each Participant will always be 100% vested in his or her Account; provided, however, that if a Participant is Separated from Service for “Cause” (as such term is defined in Section 2.1(d) of the Equity Incentive Plan), the Participant will forfeit all amounts other than his or her own Bonus, Performance Units and Restricted Stock Units deferrals, if any.

5.   Additions to Accounts .

(a)   Participant Bonus Deferrals .  Each Participant may annually elect to defer the receipt of a whole percentage (up to 100% or such other percentage as may be determined by the Board) of his or her Bonus(es).

(b)   Participant Performance Unit Deferrals .  Effective June 15, 2007, each Participant who is at least 62 years of age on the last day of the performance period applicable to of his or her Performance Units award may elect to defer the receipt of the 100% of the stock payable under his or her Performance Unit agreement.

(c)   Participant Dividend Deferrals .  Each Participant may annually elect to defer the receipt of the full amount of the quarterly cash dividends t