EXHIBIT 10.10
AMENDED AND RESTATED INDEMNITY AGREEMENT
This Amended And Restated Indemnity Agreement ("Agreement"), dated as of
January 31, 2003 (the "Effective Date"), is made by and between GRANITE
CONSTRUCTION INCORPORATED, a Delaware corporation (the "Company"),
and ________________, a Director [Officer] of the Company (the "Indemnitee").
RECITALS
A. The Company and Indemnitee are parties to that certain Indemnity
Agreement dated _______________________ (the "Original Indemnity Agreement").
The parties now wish to amend and restate the Original Indemnity Agreement to be
in the form of this Agreement.
B. 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;
C. 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;
D. 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;
E. 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;
F. 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;
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G. 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;
H. 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;
I. 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;
J. 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
K. 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. Amendment and Restatement. The Original Indemnity Agreement is hereby
amended and restated in the form of this Agreement as of the Effective Date.
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2. 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.
3. 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.
4. 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 4(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.
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(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.
5. 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 5(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
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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.
6. 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.
7. Mandatory Advancement of Expenses. Subject to Section 12(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 9 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.
8. 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
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commencement of a proceeding pursuant to Section 8(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.
9. 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 5(a), 5(b), or 5(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 9(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 9(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 9(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
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(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 9(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 9(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 9 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.
10. 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 10 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.
11. 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
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Agreement shall be void.
12. 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 8(a) hereof unless the Company consents to such
settlement.
13. 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.
14. 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.
15. 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 14 hereof.
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16. 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.
17. 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.
18. 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.
19. 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.
20. 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: 585 West Beach Street
Watsonville, California 95076
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David H. Watts
President and CEO
INDEMNITEE:
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Address:
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