INDEMNITY AGREEMENT
This Agreement is made as of ________________, 1997, by and
between Gulf Island Fabrication, Inc., a Louisiana corporation
(the "Corporation"), and _______________ ("Indemnitee").
In consideration of Indemnitee's continued service after the
date hereof, the Corporation and Indemnitee do hereby agree as
follows:
1. Agreement to Serve. Indemnitee agrees to serve as a
[director/officer] of the Corporation for so long as he is
elected or appointed or until such earlier time as he tenders his
resignation in writing.
2. Definitions. As used in this Agreement:
(a) The term "Expenses" shall mean any expenses or
costs (including, without limitation, attorney's fees, judgments,
punitive or exemplary damages, fines and amounts paid in
settlement). If any of the foregoing amounts paid on behalf of
Indemnitee are not deductible by Indemnitee for federal or state
income tax purposes, the Corporation will reimburse Indemnitee
for tax liability with respect thereto by paying to Indemnitee an
amount which, after taking into account taxes on such amount,
equals Indemnitee's incremental tax liability.
(b) The term "Claim" shall mean any threatened,
pending or completed claim, action, suit, or proceeding, whether
civil, criminal, administrative or investigative and whether made
judicially or extra-judicially, or any separate issue or matter
therein, as the context requires.
(c) The term "Determining Body" shall mean (i) those
members of the Board of Directors who are not named as parties to
the Claim for which indemnification is being sought ("Impartial
Directors"), if there are at least three Impartial Directors, or
(ii) a committee of at least three directors appointed by the
Board of Directors (regardless whether the members of the Board
of Directors voting on such appointment are Impartial Directors)
and composed of Impartial Directors or (iii) if there are fewer
than three Impartial Directors or if the Board of Directors or a
committee appointed thereby so directs (regardless whether the
members thereof are Impartial Directors), independent legal
counsel, which may be the regular outside counsel of the Corpora-
tion.
3. Limitation of Liability.
To the fullest extent permitted by Article VIII of the
Articles of Incorporation of the Corporation in effect on the
date hereof and, if and to the extent such Article VIII is
amended to permit further limitations, in effect at any time
prior to the determination of liability that would exist but for
the provisions of this Agreement, Indemnitee shall not be liable
for breach of his fiduciary duty as a director or officer.
4. Maintenance of Insurance and Self-Insurance.
(a) The Corporation represents that it presently main-
tains in force and effect the following directors and officers
liability insurance ("D&O Insurance") policies (the "Insurance
Policies"):
Insurer Policy No. Coverage
------- ---------- --------
Subject only to the provisions of Section 4(b) hereof, the Corpo-
ration hereby agrees that, so long as Indemnitee shall continue
to serve as a [director or officer] (or shall continue at the
request of the Corporation to serve in any capacity referred to
in Section 5(a) hereof) and thereafter so long as Indemnitee
shall be subject to any possible Claim, the Corporation shall use
its best efforts to purchase and maintain in effect for the
benefit of Indemnitee one or more valid and enforceable policy or
policies of D&O Insurance providing, in all respects, coverage at
least comparable to that currently provided pursuant to the
Insurance Policies, provided that the Corporation shall have no
obligation to provide primary coverage in excess of $_____
million or excess coverage in excess of $_____ million.
(b) The Corporation shall not be required to purchase
and maintain the Insurance Policies in effect if D&O Insurance is
not reasonably available or if, in the reasonable business judg-
ment of the then directors of the Corporation, either (i) the
premium cost for such insurance is excessive in light of the
amount of coverage or (ii) the coverage provided by such insur-
ance is so limited by exclusions, retentions, deductibles or
otherwise that there is insufficient benefit from such insurance.
(c) If the Corporation does not purchase and maintain
in effect the Insurance Policies pursuant to the provisions of
Section 4(b) hereof, the Corporation agrees to hold harmless and
indemnify Indemnitee to the full extent of the coverage that
would otherwise have been provided for the benefit of Indemnitee
pursuant to the Insurance Policies.
5. Additional Indemnity.
(a) To the extent any Expenses incurred by Indemnitee
are in excess of the amounts reimbursed or indemnified pursuant
to the provisions of Section 4 hereof, the Corporation shall
indemnify and hold harmless Indemnitee against any such Expenses
actually and reasonably incurred, as they are incurred, in
connection with any Claim against Indemnitee (whether as a
subject of or party to, or a proposed or threatened subject of or
party to, the Claim) or in which Indemnitee is involved solely as
a witness or person required to give evidence, by reason of his
position
(i) as a director or officer of the Corporation
(ii) as a director or officer of any subsidiary of
the Corporation or as a fiduciary with respect to any employee
benefit plan of the Corporation or
(iii) as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
for profit or not for profit entity or enterprise, if such
position is or was held at the request of the Corporation,
whether relating to service in such position before or after the
effective date of this Agreement, if (i) the Indemnitee is
successful in his defense of the Claim on the merits or otherwise
or (ii) the Indemnitee has been found by the Determining Body
(acting in good faith) to have met the Standard of Conduct;
provided that (a) the amount of Expenses for which the
Corporation shall indemnify Indemnitee may be reduced by the
Determining Body to such amount as it deems proper if it
determines in good faith that the Claim involved the receipt of a
personal benefit by Indemnitee and (b) no indemnification shall
be made in respect of any Claim as to which Indemnitee shall have
been adjudged by a court of competent jurisdiction, after
exhaustion of all appeals therefrom, to be liable for willful or
intentional misconduct in the performance of his duty to the
Corporation or to have obtained an improper personal benefit,
unless, and only to the extent that, a court shall determine upon
application that, despite the adjudication of liability but in
view of all the circumstances of the case, Indemnitee is fairly
and reasonably entitled to indemnity for such Expenses as the
court shall deem proper; and provided further that, if the Claim
involves Indemnitee by reason of his position with an entity or
enterprise described in clause (ii) or (iii) of this Section 5(a)
and if Indemnitee may be entitled to indemnification with respect
to such Claim from such entity or enterprise, Indemnitee shall be
entitled to indemnification hereunder only (x) if he has applied
to such entity or enterprise for indemnification with respect to
the Claim and (y) to the extent that indemnification to which he
would be entitled hereunder but for this proviso exceeds the
indemnification paid by such other entity or enterprise.
(b) For purposes of this Agreement, the Standard of
Conduct is met when conduct by an Indemnitee with respect to
which a Claim is asserted was conduct that he reasonably believed
to be in, or not opposed to, the best interest of the
Corporation, and, in the case of a Claim which is a criminal
action or proceeding, conduct that the Indemnitee had no
reasonable cause to believe was unlawful. The termination of any
Claim by judgment, order, settlement, conviction, or upon a plea
of nolo contendere or its equivalent, shall not, of itself,
create a presumption that Indemnitee did not meet the Standard of
Conduct.
(c) Promptly upon becoming aware of the existence of
any Claim, Indemnitee shall notify the Chief Executive Officer of
the existence of the Claim, who shall promptly advise the members
of the Board of Directors and that establishing the Determining
Body will be a matter presented at the next regularly scheduled
meeting of the Board of Directors. After the Determining Body
has been established the Chief Executive Officer shall inform
Indemnitee thereof and Indemnitee shall immediately notify the
Determining Body of all facts relevant to the Claim known to such
Indemnitee. Within 60 days of the receipt of such notice and
information, together with such additional information as the
Determining Body may request of Indemnitee, the Determining Body
shall report to Indemnitee of its determination whether
Indemnitee has met the Standard of Conduct. The Determining Body
may extend the period of time for determining whether the
Standard of Conduct has been met, but in no event shall such
period of time be extended beyond an additional sixty days.
(d) If, after determining that the Standard of Conduct
has been met, the Determining Body obtains facts of which it was
not aware at the time it made such determination, the Determining
Body on its own motion, after notifying Indemnitee and providing
him an opportunity to be heard, may, on the basis of such facts,
revoke such determination, provided that, in the absence of
actual fraud by Indemnitee, no such revocation may be made later
than thirty days after final disposition of the Claim.
(e) Indemnitee shall promptly inform the Determining
Body upon his becoming aware of any relevant facts not
theretofore provided by him to the Determining Body, unless the
Determining Body has obtained such facts by other means.
(f) In the case of any Claim not involving a proposed,
threatened or pending criminal proceeding,
(i) if Indemnitee has, in the good faith judgment
of the Determining Body, met the Standard of Conduct, the
Corporation may, in its sole discretion, assume all
responsibility for the defense of the Claim, and, in any event,
the Corporation and Indemnitee each shall keep the other informed
as to the progress of the defense of the Claim, including prompt
disclosure of any proposals for settlement; provided that if the
Corporation is a party to the Claim and Indemnitee reasonably
determines that there is a conflict between the positions of the
Corporation and Indemnitee with respect to the Claim, then
Indemnitee shall be entitled to conduct his defense with counsel
of his choice; and provided further that Indemnitee shall in any
event be entitled at his expense to employ counsel chosen by him
to participate in the defense of the Claim; and
(ii) the Corporation shall fairly consider any
proposals by Indemnitee for settlement of the Claim. If the
Corporation proposes a settlement of the Claim and such
settlement is acceptable to the person asserting the Claim or the
Corporation believes a settlement proposed by the person
asserting the Claim should be accepted, it shall inform
Indemnitee of the terms of such proposed settlement and shall fix
a reasonable date by which Indemnitee shall respond. If
Indemnitee agrees to such terms, he shall execute such documents
as shall be necessary to make final the settlement. If
Indemnitee does not agree with such terms, Indemnitee may proceed
with the defense of the Claim in any manner he chooses, provided
that if Indemnitee is not successful on the merits or otherwise,
the Corporation's obligation to indemnify such Indemnitee as to
any Expenses incurred following his disagreement shall be limited
to the lesser of (A) the total Expenses incurred by Indemnitee
following his decision not to agree to such proposed settlement
or (B) the amount that the Corporation would have paid pursuant
to the terms of the proposed settlement. If, however, the
proposed settlement would impose upon Indemnitee any requirement
to act or refrain from acting that would materially interfere
with the conduct of Indemnitee's affairs, Indemnitee shall be
permitted to refuse such settlement and proceed with the defense
of the Claim, if he so desires, at the Corporation's expense in
accordance with the terms and conditions of this Agreement
without regard to the limitations imposed by the immediately
preceding sentence. In any event, the Corporation shall not be
obligated to indemnify Indemnitee for an amount paid in a
settlement that the Corporation has not approved.
(g) In the case of a Claim involving a proposed,
threatened or pending criminal proceeding, Indemnitee shall be
entitled to conduct the defense of the Claim and to make all
decisions with respect thereto, with counsel of his choice;
provided that the Corporation shall not be obligated to indemnify
Indemnitee for an amount paid in settlement that the Corporation
has not approved.
(h) After notification to the Corporation of the ex-
istence of a Claim, Indemnitee may from time to time request of
the Chief Executive Officer or, if the Chief Executive Officer is
a party to the Claim as to which indemnification is being sought,
any officer who is not a party to the Claim and who is designated
by the Chief Executive Officer (the "Disbursing Officer"), which
designation shall be made promptly after receipt of the initial
request, that the Corporation advance to Indemnitee the Expenses
(other than fines, penalties, judgments or amounts paid in
settlement) that he incurs in pursuing a defense of the Claim
prior to the time that the Determining Body determines whether
the Standard of Conduct has been met. The Disbursing Officer
shall pay to Indemnitee the amount requested (regardless of
Indemnitee's apparent ability to repay the funds) upon receipt of
an undertaking by or on behalf of Indemnitee to repay such amount
if it shall ultimately be determined that he is not entitled to
be indemnified by the Corporation under the circumstances,
provided that if the Disbursing Officer does not believe such
amount to be reasonable, he shall advance the amount deemed by
him to be reasonable and Indemnitee may apply directly to the
Determining Body for the remainder of the amount requested.
(i) After a determination that the Standard of Conduct
has been met, for so long as and to the extent that the
Corporation is required to indemnify Indemnitee under this
Agreement, the provisions of Paragraph (h) shall continue to
apply with respect to Expenses incurred after such time except
that (i) no undertaking shall be required of Indemnitee and (ii)
the Disbursing Officer shall pay to Indemnitee the amount of any
fines, penalties or judgments against him which have become final
for which the Corporation is obligated to indemnify him or any
amount of indemnification ordered to be paid to him by a court.
(j) Any determination by the Corporation with respect
to settlement of a Claim shall be made by the Determining Body.
(k) The Corporation and Indemnitee shall keep
confidential to the extent permitted by law and their fiduciary
obligations all facts and determinations provided pursuant to or
arising out of the operation of this Agreement and the
Corporation and Indemnitee shall instruct its or his agents and
employees to do likewise.
6. Enforcement.
(a) The rights provided by this Agreement shall be en-
forceable by Indemnitee in any court of competent jurisdiction.
(b) If Indemnitee seeks a judicial adjudication of his
rights under, or to recover damages for breach of, this
Agreement, Indemnitee shall be entitled to recover from the
Corporation, and shall be indemnified by the Corporation against,
any and all Expenses actually and reasonably incurred by him in
connection with such proceeding, but only if he prevails therein.
If it shall be determined that Indemnitee is entitled to receive
part but not all of the relief sought, then Indemnitee shall be
entitled to be reimbursed for all Expenses incurred by him in
connection with such proceeding if the indemnification amount to
which he is determined to be entitled exceeds 50% of the amount
of his claim. Otherwise, the Expenses incurred by Indemnitee in
connection with such judicial adjudication shall be appropriately
prorated.
(c) In any judicial proceeding described in this Sec-
tion 6, the Corporation shall bear the burden of proving that
Indemnitee is not entitled to Expenses sought with respect to any
Claim.
7. Saving Clause. If any provision of this Agreement is
determined by a court having jurisdiction over the matter to re-
quire the Corporation to do or refrain from doing any act that is
in violation of applicable law, the court shall be empowered to
modify or reform such provision so that, as modified or reformed,
such provision provides the maximum indemnification permitted by
law and such provision, as so modified or reformed, and the
balance of this Agreement, shall be applied in accordance with
their terms. Without limiting the generality of the foregoing,
if any portion of this Agreement shall be invalidated on any
ground, the Corporation shall nevertheless indemnify Indemnitee
to the full extent permitted by any applicable portion of this
Agreement that shall not have been invalidated and to the full
extent permitted by law with respect to that portion that has
been invalidated.
8. Non-Exclusivity.
(a) The indemnification and payment of Expenses
provided by or granted pursuant to this Agreement shall not be
deemed exclusive of any other rights to which Indemnitee is or
may become entitled under any statute, article of incorporation,
by-law, authorization of shareholders or directors, agreement or
otherwise.
(b) It is the intent of the Corporation by this Agree-
ment to indemnify and hold harmless Indemnitee to the fullest ex-
tent permitted by law, so that if applicable law would permit the
Corporation to provide broader indemnification rights than are
currently permitted, the Corporation shall indemnify and hold
harmless Indemnitee to the fullest extent permitted by applicable
law notwithstanding that the other terms of this Agreement would
provide for lesser indemnification.
9. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall constitute the origi-
nal.
10. Applicable Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of
Louisiana.
11. Successors and Assigns. This Agreement shall be
binding upon Indemnitee and upon the Corporation, its successors
and assigns, and shall inure to the benefit of Indemnitee's
heirs, personal representatives, and assigns and to the benefit
of the Corporation, its successors and assigns.
12. Amendment. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless made in
writing signed by the Corporation and Indemnitee. Notwithstand-
ing any amendment or modification to or termination or cancella-
tion of this Agreement or any portion hereof, Indemnitee shall be
entitled to indemnification in accordance with the provisions
hereof with respect to any acts or omissions of Indemnitee which
occur prior to such amendment, modification, termination or can-
cellation.
13. Gender. All pronouns and variations thereof used in
this Agreement shall be deemed to refer to the masculine,
feminine or neuter gender, singular or plural, as the identity of
the person, persons, entity or entities refer to may require.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and signed as of the date and year
first above written.
GULF ISLAND FABRICATION, INC.
By:______________________________
Name:
Office:
_________________________________
Name:
