Indemnity Agreement
Indemnity
Agreement
This
indemnity agreement, dated as of January 22, 2004 (the “Effective Date”), is
made by and between Granite
Construction Incorporated,
a
Delaware corporation (the "Company"), and Xxxxxxx
X. Xxxxxxx,
an
Officer of the Company (the "Indemnitee"). This indemnity agreement, amended
and
re-drafted in substantially the form of the original form of indemnity agreement
approved by the shareholders of the Company on February 22, 1990, is referred
to
hereinafter as the “Agreement.”
Recitals
A. The
Company is aware that competent and experienced persons are increasingly
reluctant to serve as directors or officers of corporations unless they are
protected by comprehensive liability insurance or indemnification, due to
increased exposure to litigation costs and risks resulting from their service
to
such corporations, and due to the fact that the exposure frequently bears no
reasonable relationship to the compensation of such directors and
officers;
B. The
statutes and judicial decisions regarding the duties of directors and officers
are often difficult to apply, ambiguous, or conflicting, and therefore fail
to
provide such directors and officers with adequate, reliable knowledge of legal
risks to which they are exposed or information regarding the proper course
of
action to take;
C. Plaintiffs
often seek damages in such large amounts and the costs of litigation may be
so
enormous (whether or not the case is meritorious), that the defense and/or
settlement of such litigation is often beyond the personal resources of officers
and directors;
D. The
Company believes that it is unfair for its directors and officers and the
directors and officers of its subsidiaries to assume the risk of huge judgments
and other expenses which may occur in cases in which the director or officer
received no personal profit and in cases where the director or officer was
not
culpable;
E. The
Company recognizes that the issues in controversy in litigation against a
director or officer of a corporation such as the Company or a subsidiary of
the
Company are often related to the knowledge, motives and intent of such director
or officer, that he/she is usually the only witness with knowledge of the
essential facts and exculpating circumstances regarding such matters, and that
the long period of time which usually elapses before the trial or other
disposition of such litigation often extends beyond the time that the director
or officer can reasonably recall such matters and may extend beyond the normal
time for retirement for such director or officer with the result that he/she,
after retirement or in the event of his/her death, his/her spouse, heirs,
executors or administrators may be faced with limited ability and undue hardship
in maintaining an adequate defense, which may discourage such a director or
officer from serving in that position;
F. Based
upon their experience as business managers, the Board of Directors of the
Company (the "Board") has concluded that, to retain and attract talented and
experienced individuals to serve as officers and directors of the Company and
its subsidiaries and to encourage such individuals to take the business risks
necessary for the success of the Company and its subsidiaries, it is necessary
for the Company to contractually indemnify its officers and directors and the
officers and directors of its subsidiaries, and to assume for itself maximum
liability for expenses and damages in connection with claims against such
officers and directors in connection with their service to the Company and
its
subsidiaries, and has further concluded that the failure to provide such
contractual indemnification could result in great harm to the Company and its
subsidiaries and the Company's shareholders;
G. Section
145 of the General Corporation Law of Delaware, under which the Company is
organized ("Section 145"), empowers the Company to indemnify its officers,
directors, employees and agents by agreement and to indemnify persons who serve,
at the request of the Company, as the directors, officers, employees or agents
of other corporations or enterprises, and expressly provides that the
indemnification provided by Section 145 is not exclusive;
H. The
Company, after reasonable investigation prior to the date hereof, has determined
that the liability insurance coverage available to the Company and its
subsidiaries as of the date hereof is inadequate and/or unreasonably expensive.
The Company believes, therefore, that the interests of the Company's
shareholders would best be served by a combination of such insurance as the
Company may obtain, or request a subsidiary to obtain, pursuant to the Company's
obligations hereunder and the indemnification by the Company of the directors
and officers of the Company and its subsidiaries;
I. The
Company desires and has requested the Indemnitee to serve or continue to serve
as a director or officer of the Company and/or one or more subsidiaries of
the
Company free from undue concern for claims for damages arising out of or related
to such services to the Company and/or one or more subsidiaries of the Company;
and
J. The
Indemnitee is willing to serve, or to continue to serve, the Company and/or
one
or more subsidiaries of the Company, provided that he/she is furnished the
indemnity provided for herein.
Agreement
NOW,
THEREFORE, the parties hereto, intending to be legally bound, hereby agree
as
follows:
1. Definitions.
(a) Agent. For
the
purposes of this Agreement, "agent" of the Company means any person who is
or
was a director, officer, employee or other agent of the Company or a subsidiary
of the Company; or is or was serving at the request of, for the convenience
of,
or to represent the interests of the Company or a subsidiary of the Company
as a
director, officer, employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust or other enterprise; or was a director,
officer, employee or agent of a foreign or domestic corporation which was a
predecessor corporation of the Company or a subsidiary of the Company, or was
a
director, officer, employee or agent of another enterprise at the request of,
for the convenience of, or to represent the interests of such predecessor
corporation.
(b) Expenses.
For
purposes of this Agreement, "expenses" includes all out-of-pocket and indirect
costs of any type or nature whatsoever (including, without limitation, all
attorneys' fees and related disbursements, other out-of-pocket costs actually
and reasonably incurred by the Indemnitee in connection with either the
investigation, defense or appeal of a proceeding or establishing or enforcing
a
right to indemnification under this Agreement, Section 145 or otherwise;
provided, however, that “expenses” shall not include any judgments, fines, ERISA
excise taxes or penalties or amounts paid in settlement of a
proceeding.
(c) Proceeding.
For the
purposes of this Agreement, "proceeding" means any threatened, pending, or
completed action, suit or other proceeding, whether civil, criminal,
administrative, investigative or any other type whatsoever.
(d) Subsidiary.
For
purposes of this Agreement, "subsidiary" means any corporation of which more
than 50% of the outstanding voting securities is owned directly or indirectly
by
the Company, by the Company and one or more other subsidiaries, or by one or
more other subsidiaries.
2. Agreement
to Serve.
The
Indemnitee agrees to serve and/or continue to serve as an agent of the Company,
at its will (or under separate agreement, if such agreement exists), in the
capacity Indemnitee currently serves as an agent of the Company, so long
as
he/she is duly appointed or elected and qualified in accordance with the
applicable provisions of the bylaws of the Company or any subsidiary of the
Company or until such time as he/she tenders his/her resignation in writing,
provided, however, that nothing contained in this Agreement is intended to
create any right to continued employment by Indemnitee.
3. Liability
Insurance.
(a) Maintenance.
The
Company hereby covenants and agrees that, so long as the Indemnitee shall
continue to serve as an agent of the Company and thereafter so long as the
Indemnitee shall be subject to any possible proceeding by reason of the fact
that the Indemnitee was an agent of the Company, the Company, subject to Section
3(c), shall promptly obtain and maintain in full force and effect directors'
and
officers' liability insurance ("D&O Insurance") in reasonable amounts from
established and reputable insurers.
(b) Rights
and Benefits.
In all
policies of D&O Insurance, the Indemnitee shall be named as an insured in
such a manner as to provide the Indemnitee the same rights and benefits as
are
accorded to the most favorably insured of the Company's directors, if the
Indemnitee is a director; or of the Company's officers, if the Indemnitee is
not
a director of the Company but is an officer; or of the Company's key employees,
if the Indemnitee is not an officer or director but is a key
employee.
(c) Limitations.
Notwithstanding the foregoing, the Company shall have no obligation to obtain
or
maintain D&O Insurance if the Company determines in good faith that such
insurance is not reasonably available, the premium costs for such insurance
are
disproportionate to the amount of coverage provided, the coverage provided
by
such insurance is limited by exclusions so as to provide an insufficient
benefit, or the Indemnitee is covered by similar insurance maintained by a
subsidiary of the Company.
4. Mandatory
Indemnification.
The
Company shall indemnify the Indemnitee as follows:
(a) Third
Party Actions.
If the
Indemnitee is a person who was or is a party or is threatened to be made a
party
to any proceeding (other than an action by or in the right of the Company)
by
reason of the fact that he/she is or was an agent of the Company, or by reason
of anything done or not done by him/her in any such capacity, the Company shall
indemnify the Indemnitee against any and all expenses and liabilities of any
type whatsoever (including, but not limited to, judgments, fines, ERISA excise
taxes or penalties, and amounts paid in settlement) actually and reasonably
incurred by him/her in connection with the investigation, defense, settlement
or
appeal of such proceeding if he/she acted in good faith and in a manner he/she
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his/her conduct was unlawful; and
(b) Derivative
Actions.
If the
Indemnitee is a person who was or is a party or is threatened to be made a
party
to any proceeding by or in the right of the Company to procure a judgment in
its
favor by reason of the fact that he/she is or was an agent of the Company,
or by
reason of anything done or not done by him/her in any such capacity, the Company
shall indemnify the Indemnitee against all expenses actually and reasonably
incurred by him/her in connection with the investigation, defense, settlement,
or appeal of such proceeding if he/she acted in good faith and in a manner
he/she reasonably believed to be in or not opposed to the best interests of
the
Company; except that no indemnification under this subsection 4(b) shall be
made
in respect of any claim, issue or matter as to which such person shall have
been
finally adjudged to be liable to the Company unless and only to the extent
that
the Court of Chancery or the court in which such proceeding was brought shall
determine upon application that, despite the adjudication of liability but
in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such amounts which the Court of Chancery or such
other
court shall deem proper; and
(c) Actions
where Indemnitee is Deceased.
If the
Indemnitee is a person who was or is a party or is threatened to be made a
party
to any proceeding by reason of the fact that he/she is or was an agent of the
Company, or by reason of anything done or not done by him/her in any such
capacity, and, if prior to, during the pendency or after completion of such
proceeding Indemnitee becomes deceased, the Company shall indemnify the
Indemnitee’s heirs, executors and administrators against any and all expenses
and liabilities of any type whatsoever (including, but not limited to,
judgments, fines, ERISA excise taxes and penalties, and amounts paid in
settlement) actually and reasonably incurred by or for him/her in connection
with the investigation, defense, settlement or appeal of such proceeding if
he/she acted in good faith and in a manner he/she reasonably believed to be
in
or not opposed to the best interests of the Company, except that in a proceeding
by or in the right of the Company no indemnification shall be due under the
provisions of this subsection in respect of any claim issue or matter as to
which such person shall have been finally adjudged to be liable to the Company,
unless and only to the extent that the Court of Chancery or the court in which
such proceeding was brought shall determine upon application that, despite
the
adjudication of liability but in view of all the circumstances of the case,
such
person is fairly and reasonably entitled to indemnity for such amounts which
the
Court of Chancery or such other court shall deem proper; and
(d) Limitations.
Notwithstanding the foregoing, the Company shall not be obligated to indemnify
the Indemnitee for expenses or liabilities of any type whatsoever (including,
but not limited to, judgments, fines, ERISA excise taxes or penalties, and
amounts paid in settlement) which have been paid directly to Indemnitee by
D&O Insurance.
5. Partial
Indemnification.
If the
Indemnitee is entitled under any provision of this Agreement to indemnification
by the Company for some or a portion of any expenses or liabilities of any
type
whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes
or penalties, and amounts paid in settlement) incurred by him/her in the
investigation, defense, settlement or appeal of a proceeding but not entitled,
however, to indemnification for all of the total amount thereof, the Company
shall nevertheless indemnify the Indemnitee for such total amount except as
to
the portion thereof to which the Indemnitee is not entitled.
6. Mandatory
Advancement of Expenses.
Subject
to Section 11(a) below, the Company shall advance all expenses incurred by
the
Indemnitee in connection with the investigation, defense, settlement or appeal
of any proceeding to which the Indemnitee is a party or is threatened to be
made
a party by reason of the fact that the Indemnitee is or was an agent of the
Company. The Indemnitee hereby undertakes to repay such amounts advanced only
if, and to the extent that, it shall ultimately be determined pursuant to
Section 8 hereof that the Indemnitee is not entitled to be indemnified by the
Company as authorized hereby. The advances to be made hereunder shall be paid
by
the Company to the Indemnitee within twenty (20) days following delivery of
a
written request therefor by the Indemnitee to the Company.
7. Notice
and Other Indemnification Procedures.
(a) Notice
by Indemnitee.
Promptly after receipt by the Indemnitee of notice of the commencement of or
the
threat of commencement of any proceeding, the Indemnitee shall, if the
Indemnitee believes that indemnification with respect thereto may be sought
from
the Company under this Agreement, notify the Company of the commencement or
threat of commencement thereof.
(b) Notice
by Company.
If, at
the time of the receipt of a notice of the commencement of a proceeding pursuant
to Section 7(a) hereof, the Company has D&O Insurance in effect, the Company
shall give prompt notice of the commencement of such proceeding to the insurers
in accordance with the procedures set forth in the respective policies. The
Company shall thereafter take all necessary or desirable action to cause such
insurers to pay, on behalf of the Indemnitee, all amounts payable as a result
of
such proceeding in accordance with the terms of such policies.
(c) Defense.
In the
event the Company shall be obligated to pay the expenses of any proceeding
against the Indemnitee, the Company, if appropriate, shall be entitled to assume
the defense of such proceeding, with counsel approved by the Indemnitee, upon
the delivery to the Indemnitee of written notice of its election so to do.
After
delivery of such notice, approval of such counsel by the Indemnitee and the
retention of such counsel by the Company, the Company will not be liable to
the
Indemnitee under this Agreement for any fees of counsel subsequently incurred
by
the Indemnitee with respect to the same proceeding, provided that (i) the
Indemnitee shall have the right to employ his/her counsel in any such proceeding
at the Indemnitee's expense; and (ii) if (A) the employment of counsel by the
Indemnitee has been previously authorized by the Company, (B) the Indemnitee
shall have reasonably concluded that there may be a conflict of interest between
the Company and the Indemnitee in the conduct of any such defense or (C) the
Company shall not, in fact, have employed counsel to assume the defense of
such
proceeding, the fees and expenses of Indemnitee's counsel shall be at the
expense of the Company.
8. Determination
of Right to Indemnification.
(a) Successful
Defense.
To the
extent the Indemnitee has been successful on the merits or otherwise in defense
of any proceeding referred to in subsections 4(a), 4(b), or 4(c) of this
Agreement or in the defense of any claim, issue or matter described therein,
the
Company shall indemnify the Indemnitee against expenses actually and reasonably
incurred by him/her in connection with the investigation, defense, or appeal
of
such proceeding.
(b) In
the event that Section 8(a) is inapplicable,
the
Company shall also indemnify the Indemnitee unless, and except to the extent
that, the Company shall prove by clear and convincing evidence to a forum listed
in Section 8(c) below that the Indemnitee has not met the applicable standard
of
conduct required to entitle the Indemnitee to such indemnification.
(c) Selection
of Forum.
The
Indemnitee shall be entitled to select the forum in which the validity of the
Company's claim under Section 8(b) hereof that the Indemnitee is not entitled
to
indemnification will be heard from among the following:
(1) A
quorum
of the Board consisting of directors who are not parties to the proceeding
for
which indemnification is being sought;
(2) The
shareholders of the Company;
(3) Legal
counsel selected by the Indemnitee, and reasonably approved by the Board, which
counsel shall make such determination in a written opinion; or
(4) A
panel
of three arbitrators, one of whom is selected by the Company, another of whom
is
selected by the Indemnitee and the last of whom is selected by the first two
arbitrators so selected.
(d) Submission
to Forum.
As soon
as practicable, and in no event later than thirty (30) days after written notice
of the Indemnitee's choice of forum pursuant to Section 8(c) above, the Company
shall, at its own expense, submit to the selected forum in such manner as the
Indemnitee or the Indemnitee's counsel may reasonably request, its claim that
the Indemnitee is not entitled to indemnification; and the Company shall act
in
the utmost good faith to assure the Indemnitee a complete opportunity to defend
against such claim.
(e) Application
to Court of Chancery.
Notwithstanding a determination by any forum listed in Section 8(c) hereof
that
the Indemnitee is not entitled to indemnification with respect to a specific
proceeding, the Indemnitee shall have the right to apply to the Court of
Chancery of Delaware, the court in which that proceeding is or was pending
or
any other court of competent jurisdiction, for the purpose of enforcing the
Indemnitee's right to indemnification pursuant to this Agreement.
(f) Expenses
Related to this Agreement.
Notwithstanding any other provision in this Agreement to the contrary, the
Company shall indemnify the Indemnitee against all expenses incurred by the
Indemnitee in connection with any hearing or proceeding under this Section
8
involving the Indemnitee and against all expenses incurred by the Indemnitee
in
connection with any other proceeding between the Company and the Indemnitee
involving the interpretation or enforcement of the rights of the Indemnitee
under this Agreement unless a court of competent jurisdiction finds that each
of
the claims and/or defenses of the Indemnitee in any such proceeding was
frivolous or made in bad faith.
9. Limitation
of Actions and Release of Claims.
No
proceeding shall be brought and no cause of action shall be asserted by or
on
behalf of the Company or any subsidiary against the Indemnitee, his/her spouse,
heirs, estate, executors or administrators after the expiration of one year
from
the act or omission of the Indemnitee upon which such proceeding is based;
however, in a case where the Indemnitee fraudulently conceals the facts
underlying such cause of action, no proceeding shall be brought and no cause
of
action shall be asserted after the expiration of one year from the earlier
of
(i) the date the Company or any subsidiary of the Company discovers such facts,
or (ii) the date the Company or any subsidiary of the Company could have
discovered such facts by the exercise of reasonable diligence. Any claim or
cause of action of the Company or any subsidiary of the Company, including
claims predicated upon the negligent act or omission of the Indemnitee, shall
be
extinguished and deemed released unless asserted by filing of a legal action
within such period. This Section 9 shall not apply to any cause of action which
has accrued on the date hereof and of which the Indemnitee is aware on the
date
hereof, but as to which the Company has no actual knowledge apart from the
Indemnitee's knowledge.
10. Shareholder
Ratification.
Unless
the form of this Agreement has been approved by the shareholders of the Company,
this Agreement shall be expressly subject to ratification by such shareholders.
If the form of this Agreement is not so ratified and/or approved by such
shareholders before the effective date of this Agreement, or within one year
after the effective date hereof, this Agreement shall be void.
11. Exceptions.
Any
other provision herein to the contrary notwithstanding, the Company shall not
be
obligated pursuant to the terms of this Agreement:
(a) Claims
Initiated by Indemnitee.
To
indemnify or advance expenses to the Indemnitee with respect to proceedings
or
claims initiated or brought voluntarily by the Indemnitee and not by way of
defense, except with respect to proceedings brought to establish or enforce
a
right to indemnification under this Agreement or any other statute or law or
otherwise as required under Section 145, but such indemnification or advancement
of expenses may be provided by the Company in specific cases if the Board of
Directors finds it to be appropriate; or
(b) Lack
of Good Faith.
To
indemnify the Indemnitee for any expenses incurred by the Indemnitee with
respect to any proceeding instituted by the Indemnitee to enforce or interpret
this Agreement, if a court of competent jurisdiction determines that each of
the
material assertions made by the Indemnitee in such proceeding was not made
in
good faith or was frivolous; or
(c)
Unauthorized
Settlements.
To
indemnify the Indemnitee under this Agreement for any amounts paid in settlement
of a proceeding effected within seven (7) calendar days after delivery by the
Indemnitee to the Company of the notice provided for in Section 7(a) hereof
unless the Company consents to such settlement.
12. Non-exclusivity.
The
provisions for indemnification and advancement of expenses set forth in this
Agreement shall not be deemed exclusive of any other rights which the Indemnitee
may have under any provision of law, the Company's Certificate of Incorporation
or Bylaws, the vote of the Company's shareholders or disinterested directors,
other agreements, or otherwise, both as to action in his/her official capacity
and to action in another capacity while occupying his/her position as an agent
of the Company, and the Indemnitee's rights hereunder shall continue after
the
Indemnitee has ceased acting as an agent of the Company and shall inure to
the
benefit of the heirs, executors and administrators of the
Indemnitee.
13. Interpretation
of Agreement.
It is
understood that the parties hereto intend this Agreement to be interpreted
and
enforced so as to provide indemnification to the Indemnitee to the fullest
extent now or hereafter permitted by law.
14. Severability.
If any
provision or provisions of this Agreement shall be held to be invalid, illegal
or unenforceable for any reason whatsoever, (i) the validity, legality and
enforceability of the remaining provisions of the Agreement (including without
limitation, all portions of any paragraphs of this Agreement containing any
such
provision held to be invalid, illegal or unenforceable, that are not themselves
invalid, illegal or unenforceable) shall not in any way be affected or impaired
thereby, and (ii) to the fullest extent possible, the provisions of this
Agreement (including, without limitation, all portions of any paragraph of
this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable) shall
be construed so as to give effect to the intent manifested by the provision
held
invalid, illegal or unenforceable and to give effect to Section 13
hereof.
15. Modification
and Waiver.
No
supplement, modification or amendment of this Agreement shall be binding unless
executed in writing by both of the parties hereto. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of
any
other provision hereof (whether or not similar) nor shall such waiver constitute
a continuing waiver.
16. Successors
and Assigns.
The
terms of this Agreement shall bind, and shall inure to the benefit of, the
successors and assigns of the parties hereto.
17. Notice.
All
notices, requests, demands and other communications under this Agreement shall
be in writing and shall be deemed duly given (i) if delivered by hand and
receipted for by the party addressee, or (ii) if mailed by certified or
registered mail with postage prepaid, on the third business day after the
mailing date. Addresses for notice to either party are as shown on the signature
page of this Agreement or as subsequently modified by written
notice.
18. Governing
Law.
This
Agreement shall be governed exclusively by and construed according to the laws
of the State of Delaware, as applied to contracts between Delaware residents
entered into and to be performed entirely within Delaware.
19. Consent
to Jurisdiction.
The
Company and the Indemnitee each hereby irrevocably consent to the jurisdiction
of the courts of the State of Delaware for all purposes in connection with
any
action or proceeding which arises out of or relates to this Agreement and agree
that any action instituted under this Agreement shall be brought only in the
state courts of the State of Delaware.
The
parties hereto have entered into this Agreement effective as of the Effective
Date.
Granite
Construction Incorporated
Address:
000
Xxxx
Xxxxx Xxxxxx
Xxxxxxxxxxx,
Xxxxxxxxxx 00000
By:
/s/
Xxxxxxx X. Xxxxx
Xxxxxxx
X. Xxxxx
President
and CEO
Indemnitee:
/s/
Xxxxxxx Xxxxxxx
Xxxxxxx
X. Xxxxxxx
Address:
0000
Xxxxxxx Xxxxx
Xxxxxx
Xxxxx, XX 00000
