REGISTRATION RIGHTS AGREEMENT
This registration rights agreement (this "Agreement") is
entered into this 6th day of March, 1997 by and between the
undersigned and Gulf Island Fabrication, Inc. (the "Company").
WHEREAS, the undersigned was a founder of the Company and
holds 1,725,500 shares of common stock, no par value per share
(the "Common Stock"), of the Company.
WHEREAS, the Company desires to grant certain registration
rights to the undersigned;
NOW, THEREFORE, in consideration of the mutual promises and
covenants herein contained, the undersigned and the Company agree
as follows:
1. Certain Defined Terms. Certain terms used in this
Agreement are defined as follows:
"Holder" means anyone holding Registrable Securities.
"Person" means and includes natural persons, corporations,
limited partnerships, general partnerships, limited liability
companies, joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business
trusts or other organizations, whether or not legal entities, and
governments and agencies and political subdivisions thereof.
"Qualified Public Offering" means the closing of an
underwritten public offering by the Company pursuant to a
Registration Statement filed and declared effective under the
Securities Act covering the offer and sale of Common Stock for
the account of the Company in which the aggregate gross proceeds
to the Company equal at least fifteen million dollars
($15,000,000).
"Register," "registered" and "registration" refer to a
registration effected by preparing and filing a Registration
Statement with the SEC in compliance with the Securities Act for
the purpose of effecting a public sale of securities.
"Registrable Securities" means (a) all shares of Common
Stock held by the undersigned as of the date hereof and (b) any
other securities issued by the Company after the date hereof with
respect to such shares (and with respect to the Common Stock
generally) by means of exchange, reclassification, dividend,
distribution, split up, combination, subdivision,
recapitalization, merger, spin-off, reorganization or otherwise;
provided, however, that as to any Registrable Securities, such
securities shall cease to constitute Registrable Securities for
the purposes of this Agreement if and when (i) a Registration
Statement with respect to the sale of such securities shall have
been declared effective by the SEC and such securities shall have
been sold pursuant thereto in accordance with the intended plan
and method of distribution therefor set forth in the final
prospectus forming a part of such Registration Statement; (ii)
such securities shall have been sold in satisfaction of all
applicable resale provisions of Rule 144 under the Securities
Act; (iii) as expressed in an opinion of counsel delivered to and
satisfactory to the Company and the transfer agent for the Common
Stock, such securities no longer constitute "restricted
securities" within the meaning of Rule 144 under the Securities
Act and the transfer of such securities neither requires
registration under the Securities Act or qualification under any
state securities or "blue sky" laws then in effect, or (iv) such
securities cease to be issued and outstanding for any reason.
"Registration Statement" means a registration statement
filed by the Company with the SEC for a public offering and sale
of securities of the Company (other than a registration statement
on Form S-8 or Form S-4 or their successors or any other form for
a limited purpose or any registration statement covering only
securities proposed to be issued in exchange for securities or
assets of another Person).
"Securities Act" means the Securities Act of 1933, as
amended.
2. Representations and Warranties of the Company. The
Company hereby represents and warrants to the undersigned as
follows:
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Louisiana;
(b) The Company has the full legal right, power and
authority to enter into and perform this Agreement, and this
Agreement has been duly authorized, executed and delivered
by the Company and constitutes the legal, valid and binding
obligation of the Company enforceable in accordance with its
terms; subject, however, to any approvals that may be
required under the Securities Act of 1933, as amended (the
"Securities Act") and under state securities laws in
connection with the registration and sale of any Registrable
Securities; and
(c) The execution, delivery and performance of this
Agreement by the Company will not violate any provision of
law, any order of any court or agency of government, the
Articles of Incorporation or By-laws of the Company, each as
amended through the date hereof, or any provision of any
indenture or other agreement to which it or any of its
properties or assets is bound, or conflict with, result in a
breach or constitute (with due notice or lapse of time or
both) a default under any such indenture or other agreement,
result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon the properties or
assets of the Company.
3. Registration Rights
(a) Demand Registration Rights. (i) After the date on
which the Company has first effected a Qualified Public Offering,
the Holders of 50% or more of the Registrable Securities may
request in writing that the Company register all or any portion
of the Registrable Securities held by such requesting Holder or
Holders (the "Initiating Holders") for sale in the manner
specified in such request. The Company shall promptly and in any
event not later than ten days after such request, notify in
writing all other Holders of such request and thereupon the
Company will, at its sole cost and expense as provided in Section
4 below, use its best efforts to register (on the appropriate
registration form reasonably acceptable to the Initiating
Holders) that number of Registrable Securities specified in such
request and all other Registrable Securities that the Company has
been requested to register by such other Holder or Holders in a
written response given to the Company by such other Holder or
Holders (who, together with the Initiating Holders, are
hereinafter referred to as the "Requesting Holders") within 30
days after receipt of the written notice of the proposed
registration from the Company. The Company agrees to include in
any such Registration Statement all information which, the
opinion of counsel to the Requesting Holders, is required to be
included.
(ii) The Company shall be obligated to effect two
registrations of the Registrable Securities pursuant to this
Section 3(a). The obligation of the Company under this Section
3(a) shall be deemed satisfied only if a Registration Statement
registering all Registrable Securities specified in the requests
received pursuant to subsection 3(a)(i) for sale in accordance
with the method of disposition specified by the Initiating
Holders shall have become effective and, if such method of
disposition is a firm commitment underwritten public offering,
all such Registrable Securities included therein have been sold
pursuant thereto.
(iii) The Company shall be entitled to include in
any Registration Statement referred to in this Section 3(a), for
sale in accordance with the methods of disposition specified by
the Initiating Holders, securities to be sold by the Company for
its own account, except as and to the extent that, in the opinion
of the managing underwriter or underwriters (if the method of
disposition requested by the Initiating Holders is an
underwritten public offering), such inclusion would have a
material adverse effect on the efforts to sell the Registrable
Securities included in the Registration Statement pursuant to
Section 3(a)(i).
(iv) If the managing underwriter shall (A) certify
in writing that the inclusion of some or all of the Registrable
Securities would materially and adversely affect the market for
the Company's securities, (B) state the basis of such opinion and
(C) state the maximum number of Registrable Securities, if any,
that may be distributed without such adverse effect, then the
Company may, upon written notice to the Requesting Holders
allocate such an offering pro rata among the Requesting Holders.
(v) If at the time of any request to register
Registrable Securities pursuant to this Section 3(a), the Company
is engaged (or its Board of Directors has made a determination to
engage within ninety days of the time of such request) in a
registered public offering of securities for its own account in
which the Requesting Holders may include Registrable Securities
pursuant to Section 3(b) hereof, or is engaged in any other
activity which, in the good faith determination of the Company's
Board of Directors, would be adversely affected by the requested
registration to the material detriment of the Company, then the
Company may at its option direct that the filing of a
Registration Statement pursuant to such a request be delayed for
a period not in excess of 90 days from the effective date of such
offering or the date of commencement of such other material
activity, as the case may be.
(vi) If requested by the underwriters for any
underwritten offering by the Requesting Holders pursuant to a
registration requested under this Section 3(a), the Company shall
enter into an underwriting agreement with such underwriters in a
form reasonably satisfactory in substance and form to each
Requesting Holder and the underwriters that shall contain such
representations and warranties by the Company and such other
terms as are generally prevailing in an agreement of this type,
including, without limitation, indemnities to the effect and to
the extent provided in Section 8 hereof. The Requesting Holders
will cooperate with the Company in the negotiation of the
underwriting agreement and shall give consideration to the
reasonable suggestions of the Company regarding the form thereof.
The Requesting Holders shall be parties to such underwriting
agreement and may, in their discretion, require that any or all
of the representations and warranties by, and other agreements on
the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of such
Requesting Holders and that any or all of the conditions
precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations
of such Requesting Holders. In the case of a firm commitment
public offering pursuant to this Section 3(a), the Initiating
Holders shall choose the managing underwriter or underwriters;
provided that this selection shall be subject to the approval of
the Company, which approval shall not be unreasonably withheld.
(vii) The Holders' rights under this Section 3(a)
are in addition to registration rights of the Holders under
Section 3(b) hereof.
(b) Piggy-back Registration
(i) If the Company proposes to file a
Registration Statement, whether or not for its own account (other
than pursuant to Section 3(a)), it will, at least thirty days
prior to such a filing, give written notice to all Holders of its
intention to do so and, upon the written request of any Holder or
Holders given within fifteen days of the receipt of such notice
(which request shall state the intended method of disposition of
such Registrable Securities), the Company will use its best
efforts to cause all Registrable Securities that the Holder or
Holders requested the Company to register to be registered under
the Securities Act to the extent necessary to permit their sale
or other disposition in accordance with the intended methods of
distribution specified in the request of the Holder or Holders;
provided that the Company shall have the right to postpone or
withdraw any registration effected pursuant to this Section 3(b)
without obligation to the Holders.
(ii) In connection with any offering under this
Section 3(b) involving an underwriting, the Company shall not be
required to include any Registrable Securities in such
underwriting unless the Holders accept the terms of the
underwriting as agreed upon between the Company and the managing
underwriter or underwriters, selected by the Company, and then
only in such quantity as will not, in the written opinion of the
managing underwriter or underwriters, jeopardize the success of
the offering by the Company. Each Holder that has requested that
Registrable Securities held by him be included in such
Registration Statement shall (together with the Company and the
other Holders distributing the securities through such
underwriting) enter into such underwriting agreement as agreed
upon between the Company and the managing underwriter or
underwriters. If in the written opinion of the managing
underwriter or underwriters the registration of all, or part of,
the Registrable Securities that the Holders have requested to be
included would materially and adversely affect such public
offering, the Company shall be required to include in the
underwriting only that number of Registrable Securities, if any,
that the managing underwriter or underwriters believes may be
sold without causing such adverse effect. If the number of
Registrable Securities to be included in the registration in
accordance with the foregoing is less than the total number of
securities that the Holders have requested to be included, then
the number of Registrable Securities to be included in the
registration shall be reduced pro rata among the requesting
Holders based upon the number of Registrable Securities so
requested to be registered. If any Holder disapproves of the
terms of any such underwriting, he may elect to withdraw
therefrom by written notice to the Company and the managing
underwriter.
4. Registration Procedures. If and whenever the Company
is required by the provisions of this Agreement to use its best
efforts to effect the registration of any of the Registrable
Securities under the Securities Act, the Company shall as
expeditiously as reasonably possible:
(a) Prepare and file with the Securities and Exchange
Commission (the "SEC") a Registration Statement and otherwise
comply with the provisions of the Securities Act with respect to
such Registrable Securities and use its best efforts to cause
that Registration Statement to become effective;
(b) Prepare and file with the SEC any amendments and
supplements to the Registration Statement as may be necessary to
keep the Registration Statement effective until the earlier of
(i) the date on which all Registrable Securities included therein
have been sold pursuant to the plan of distribution included in
such Registration Statement and (ii) the thirtieth day from the
effective date of the Registration Statement;
(c) Furnish to the Holders whose Registrable
Securities have been included in such Registration Statement such
numbers of copies of the prospectus, including preliminary
prospectus, in conformity with the requirements of the Securities
Act, and such other documents as such Holders may reasonably
request in order to facilitate the public sale or other
disposition of the Registrable Securities;
(d) Use its best efforts to register or qualify the
Registrable Securities covered by the Registration Statement
under the securities or blue sky laws of such jurisdictions as
the Holders whose Registrable Securities have been included in
such Registration Statement shall reasonably request, and do any
and all other acts and things that may be necessary or advisable
to enable such Holders to consummate the public sale or other
disposition of such Registrable Securities in such jurisdictions;
provided, however, that the Company shall not be required to
qualify to do business as a foreign corporation or consent to
general service of process in any such jurisdiction;
(e) Before filing the Registration Statement or
prospectus or amendments or supplements thereto, furnish the
Holders whose Registrable Securities have been included in such
Registration Statement with copies of all such documents proposed
to be filed, which shall be subject to reasonable approval of
counsel designated by such Holders;
(f) Furnish to each Holder whose Registrable
Securities have been included in such Registration Statement a
signed counterpart, addressed to such Holder (and the
underwriters, if any), of (i) an opinion of the Company's legal
counsel dated the effective date of such Registration Statement
(and, if such registration includes an underwritten public
offering, dated the date of the closing under the underwriting
agreement), and (ii) a "comfort" letter dated the effective date
of such Registration Statement (and, if such registration
includes an underwritten public offering, dated the date of the
closing under the underwriting agreement), signed by the
independent public accountants who certified the Company's
financial statements included in such Registration Statement,
covering substantially the same matters with respect to such
Registration Statement (and the prospectus included therein, and
in the case of the accountants' letter with respect to events
subsequent to the date of such financial statements), as are
customarily included in opinions of issuer's counsel and an
accountant's letter delivered to the underwriters in underwritten
public offerings of securities, and in the case of the
accountant's letter, such other financial matters as such Holder
(or the underwriters, if any) may reasonably request; and
(g) At any time when a prospectus relating to the
Registrable Securities is required to be delivered under the
Securities Act, notify each Holder whose Registrable Securities
have been included in such Registration Statement upon discovery
of, or upon the happening of any event as a result of which, the
prospectus included in such Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light
of the circumstances under which they were made.
If the Company has delivered preliminary or final prospectuses to
the Holders whose Registrable Securities have been included in
such Registration Statement, and after having done so the
prospectus is amended to comply with the requirements of the
Securities Act, the Company shall promptly notify such Holders
and, if requested, such Holders shall immediately cease making
offers of Registrable Securities and return all prospectuses to
the Company. The Company shall promptly provide such Holders
with a revised prospectuses and following receipt of the revised
prospectuses such Holders shall be free to resume making offers
of the Registrable Securities.
5. Expenses of Registration. The costs and expenses
incurred in connection with any registration, qualification or
compliance pursuant to this Agreement, including, without
limitation, all registration, qualification and filing fees,
printing expenses, fees and disbursements of counsel for the
Company and the expenses of any special accounting services and
audits incidental to or required by such registration, shall be
paid by the Company; provided, however, the Company shall not be
required to pay legal fees of the Holders, or underwriters' fees,
discounts, commissions and broker-dealer charges relating to
Registrable Securities. All such expenses relating to the
Registrable Securities or to Holders' legal counsel shall be paid
by Holders.
6. Information by Holders. The Holders will furnish the
Company, upon the written request of the Company, all information
in their possession necessary to effect the registration and
qualifications under the Securities Act and the blue sky laws in
connection with any registration and will otherwise cooperate
with the Company in effecting such registration and
qualifications.
7. Rule 144 Requirements. After the date on which the
Company has effected a Qualified Public Offering, the Company
shall:
(a) make and keep public information available, as
those terms are understood and defined in Rule 144 under the
Securities Act;
(b) use its best efforts to file with the SEC in a
timely manner all reports and other documents required of
the Company under the Securities Act and Securities Exchange
Act of 1934, as amended (the "Exchange Act") (and any time
after it has become subject to such reporting requirements);
and
(c) furnish to any Holder upon request a written
statement by the Company as to its compliance with the
reporting requirements of Rule 144 (at any time after ninety
days following the closing of the first sale of securities
by the Company pursuant to a Registration Statement), and of
the Securities Act and the Exchange Act (at any time after
it has become subject to such reporting requirements), a
copy of the most recent annual or quarterly report of the
Company and such other reports and documents of the Company
as such Holder may reasonably request to avail itself of any
similar rule or regulation of the SEC allowing itself any
such securities without registration.
8. Indemnification.
(a) In the event of any registration of any of the
Registrable Securities under the Securities Act pursuant to this
Agreement, the Company shall indemnify and hold harmless the
Holders whose Registrable Securities have been included in such
registration and each underwriter of such Registrable Securities
and each other Person, if any, who controls such persons within
the meaning of the Securities Act or the Exchange Act, against
any losses, claims, damages or liabilities (including reasonable
legal and other expenses incurred in investigating and defending
against the same), joint or several, to which the Holders or such
underwriter or controlling person may become subject under the
Securities Act, the Exchange Act, state securities laws or
otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon
(1) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, or the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or (2) any untrue statement or alleged
untrue statement of a material fact contained in any preliminary
prospectus, if used prior to the effective date of the
Registration Statement, or contained in the prospectus (as
amended or supplemented if the Company files any amendment
thereof or supplement thereto with the SEC), if used within the
period during which the Company is required to keep the
Registration Statement to which such prospectus relates current
pursuant to the terms hereof, or the omission or alleged omission
to state therein (if so used) a material fact necessary in order
to make the statements therein, in light of the circumstances
under which they were made, not misleading; provided, however,
that (A) the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or omission made in such
Registration Statement, preliminary prospectus or prospectuses,
or any such amendment or supplement, in reliance upon and in
conformity with information furnished to the Company, in writing,
by or on behalf of such Holders, underwriter or controlling
person specifically for use in the preparation thereof or (B) the
Company shall not be required to indemnify any underwriter from
whom the Person asserting any such losses, claims, damages,
expenses or liabilities purchased the Registrable Securities that
are the subject thereof or to the benefit of any person
controlling such underwriter, if such underwriter failed to send
or give a copy of the prospectus or any amendment thereof or
supplement thereto to such person at or prior to the written
confirmation of the sale of such Registrable Securities to such
person.
(b) In the event of any registration of any of the
Registrable Securities under the Securities Act pursuant to this
Agreement, the Holders whose Registrable Securities have been
included in such registration shall indemnify and hold harmless
the Company, each of its directors and officers and each
underwriter (if any) and each person who controls the Company or
any such underwriter within the meaning of the Securities Act or
the Exchange Act, if any, against any losses, claims, damages or
liabilities, joint or several, to which the Company, such
directors and officers, underwriter or controlling person may
become subject under the Securities Act, the Exchange Act, state
securities or Blue Sky laws, or otherwise, insofar as such
losses, claims, damages, liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of material fact contained in any
Registration Statement under which such Registrable Securities
were registered under the Securities Act, any preliminary
prospectus or final prospectus or prospectuses contained in the
Registration Statement, or an amendment or supplement to the
Registration Statement, or arise out of or are based upon any
omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading, if the statement or omission was made in reliance
upon and in conformity with information furnished in writing to
the Company by or on behalf of such Holders specifically for use
in connection with the preparation of such Registration
Statement, prospectus, amendment or supplement.
(c) Each party entitled to indemnification under this
Agreement (the "Indemnified Party") shall give notice to the
party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual
knowledge of any claim as to which indemnity may be sought, and
shall permit the Indemnifying Party to assume the defense of any
such claim or litigation resulting therefrom; provided, that
counsel for the Indemnifying Party, who shall conduct the defense
of such claim or litigation, shall be approved by the Indemnified
Party (whose approval shall not be unreasonably withheld); and,
provided further, that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying
Party of its obligations under this Agreement. The Indemnified
Party may participate in such defense at such party's expense;
provided, however, that the Indemnifying Party shall pay such
expenses if (1) representation of such Indemnified Party by the
counsel retained by the Indemnifying Party would be inappropriate
due to actual or potential different interests between the
Indemnified Party and any other party represented by such counsel
in such proceeding, (2) the employment of counsel by the
Indemnified Party has been authorized by the Indemnifying Party,
or (3) the Indemnifying Party has not, in fact, employed counsel
to assume the defense of such action. No Indemnifying Party, in
the defense of any such claim or litigation shall, except with
the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all
liability in respect of such claim or litigation, and no Indemni-
fied Party shall consent to entry of any judgment or settle such
claim or litigation without the prior written consent of the
Indemnifying Party.
9. Miscellaneous.
(a) Notices. Any notice or other communication
required or permitted hereunder shall be in writing or by telex,
telephone or facsimile transmission with subsequent written
confirmation, and may be personally served or sent by United
States mail and shall be deemed to have been given upon receipt
by the party notified. For purposes hereof, the addresses of the
parties hereto (until notice of a change thereof is delivered as
provided in this Section 9) shall be as set forth opposite each
party's name on the signature page hereof.
(b) Transfer of Registration Rights. The rights to
cause the Company to register securities granted to Holders by
the Company under Section 3 hereof may be assigned by Holders to
a transferee or assignee of any Registrable Securities, provided,
that the Company is given written notice at the time of or within
a reasonable time after said transfer, stating the name and
address of such transferee or assignee and identifying the
securities with respect to which such registration rights are
being assigned.
(c) Waivers and Amendments; Noncontractual Remedies;
Preservation of Remedies. This Agreement may be amended, super-
seded, cancelled, renewed or extended, and the terms hereof may
be waived, only by a written instrument signed by the Company and
each of the Holders or, in the case of a waiver, by the party
waiving compliance. No delay on the part of any party in
exercising a right, power or privilege hereunder shall operate as
a waiver thereof, nor shall any waiver on the part of any party
of any such right, power or privilege, nor any single or partial
exercise of any such right, power or privilege, preclude a
further exercise thereof or the exercise of any other such right,
power or privilege. The rights and remedies herein provided are
cumulative and are not exclusive of any rights or remedies that
any party may otherwise have at law or in equity. The rights and
remedies of any party based upon, arising out of or otherwise in
respect of any breach of any provision of this Agreement shall in
no way be limited by the fact that the act, omission, occurrence
or other state of facts upon which any claim of any such breach
is based may also be the subject matter of any other provision of
this Agreement (or of any other Agreement between the parties) as
to which there is no breach.
(d) Severability. If any provision of this Agreement
or the applicability of any such provision to a person or circum-
stances shall be determined by any court of competent
jurisdiction to be invalid or unenforceable to any extent, the
remainder of this Agreement or the application of such provision
to persons or circumstances other than those for which it is so
determined to be invalid and unenforceable, shall not be affected
thereby, and each provision of this Agreement shall be valid and
shall be enforced to the fullest extent permitted by law. To the
extent permitted by applicable law each party hereto hereby
waives any provision or provisions of law which would otherwise
render any provision of this Agreement invalid, illegal or
unenforceable in any respect.
(e) Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts and when so executed
shall constitute one Agreement, notwithstanding that all parties
are not signatories to the same counterpart.
(f) Governing Law. This Agreement shall be governed
and construed in accordance with the laws of the State of
Louisiana applicable to agreements made and to be performed
entirely within such state.
(g) Termination. This Agreement will terminate upon
the earlier of (i) the date upon which the Company and each
Holder existing on that date mutually agree in writing to
terminate this Agreement and (ii) the first date on which there
ceases to be any Registrable Securities.
IN WITNESS WHEREOF, this Agreement has been executed as of
the date first above written.
Address: GULF ISLAND FABRICATION, INC.
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