Exhibit 10.1

Execution Copy

SEPARATION AND TRANSITION AGREEMENT

This Separation Agreement (the “Agreement”), by and between Gulf Island
Fabrication, Inc., a Louisiana corporation (the “Company” and, together with its
affiliates and subsidiaries, the “Company Group”), and Kirk J. Meche (the
“Executive” and, together with the Company, the “Parties”) is effective
October 18, 2019 (the “Effective Date”).

RECITALS

WHEREAS, the Executive currently serves the Company as its President and Chief
Executive Officer;

WHEREAS, the Parties have agreed that the Executive will retire on December 31,
2019, or such earlier date as may occur pursuant to Section 1(c) (the
“Separation Date”); and

WHEREAS, the Parties desire to enter into a mutually satisfactory arrangement
concerning, among other matters, the orderly transition of the Executive’s
duties and the status of certain preexisting agreements between the Parties and
certain payments, rights, and benefits that the Company has agreed to make or
confer upon the Executive in exchange for certain post-employment covenants by
the Executive and the Executive’s general release of claims against the Company
Group and related parties.

NOW, THEREFORE, in consideration of the promises and mutual covenants contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are mutually acknowledged, the Parties hereby agree as
follows:

1. Employment Period.

(a) Employment and Duties. During the period between the Effective Date and the
Separation Date (the “Employment Period”), the Executive agrees to continue to
serve as an employee with the title of President and Chief Executive Officer of
the Company, with the same duties and authority as this position warrants. The
Executive agrees that, during the Employment Period, he will devote such time as
is reasonably necessary to effectively assist Company with regard to these
matters.

(b) Compensation. During the period between the Effective Date and December 31,
2019, the Executive’s salary and benefits, including without limitation,
Executive’s monthly car allowance, shall remain unchanged. In particular, during
such period, the Executive shall continue to receive the same base salary that
was in effect for him on the Effective Date.

(c) Company’s Right to Terminate. The Company shall have the right at any time
before the Separation Date to notify the Executive that his continued services
are no longer required, subject to the Company’s obligation to make the payments
and provide the benefits set forth in this Agreement. If the Company exercises
its right under this Section 1(c) to terminate the Executive’s services prior to
December 31, 2019, then the “Separation Date” shall mean the actual date on
which the Company terminates the Executive’s services.

 

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(d) Board Membership. On the Effective Date, the Parties agree that Executive
shall resign as a member of the Board of Directors of the Company (the “Board”)
and shall cease serving in any other capacity with the Company Group as of the
Separation Date.

(e) Continued Compliance with Company Policies. The Executive agrees that,
during the Employment Period, he will continue to comply with all company
policies to the extent relevant to his activities, including but not limited to:
(i) the Code of Ethics for CEO and Senior Financial Officers, (ii) the Code of
Business Conduct and Ethics, and (iii) the Policy on Insider Trading, which
prohibits, among other things, trading in the Company’s securities while in
possession of material nonpublic information.

2. Compensation and Benefits following the Employment Period.

(a) Accrued Obligations. As soon as practicable following the Separation Date
(but in no event later than such date required by applicable law or the terms of
the applicable Company benefit plan), regardless of whether this Agreement
becomes effective, the Executive will be paid or provided (i) all accrued but
unpaid base salary and vacation pay and any reimbursable-but-unreimbursed
business expenses through and including the Separation Date; and (ii) all other
benefits payable to the Executive upon a separation from service under the
Company’s benefit plans, in accordance with the terms of such plans, or as
required by applicable law.

(b) Annual Incentive Plan. Provided the Executive remains employed with the
Company through the Separation Date, the Executive shall remain eligible to
receive an annual cash incentive for fiscal 2019 under the Company’s annual
incentive plan (the “AIP”), which shall be calculated in accordance with the
terms and conditions of the AIP based on achievement of the applicable
performance metrics. Any payout under the AIP due to the Executive shall be paid
to him in 2020 at the same time any such incentives are paid to officers of the
Company under the plan and shall not be subject to pro ration if the Separation
Date occurs prior to December 31, 2019.

(c) Impact of Separation on Outstanding Long-Term Incentive Awards. The Parties
agree and acknowledge that as of the Effective Date, the Executive holds (i)
82,689 unvested time-based restricted stock units (the “RSUs”) that were granted
to him under the Company’s stock incentive plans, which RSUs will be forfeited
as of the Separation Date, and (ii) outstanding performance awards granted
during 2017, 2018 and 2019, a pro rata portion of which will remain outstanding
following the Separation Date and will pay out following the end of each
applicable performance period based on the level of achievement of the
applicable metrics, at the times and as otherwise set forth in the performance
award agreements.

(d) Severance Payment. Notwithstanding anything to the contrary contained in
this Agreement, provided that the Executive remains employed with the Company
through the Separation Date and in consideration for, and subject to, his
(1) timely execution and non-revocation of the Release (as defined in Section 3)
and (2) continued compliance with the terms of this Agreement following the
Effective Date, including but not limited to the restrictive covenants in
Section 4, the Executive shall be eligible to receive severance payments in the
aggregate amount of $958,000 (the “Severance Payment”), payable as follows and
subject to the conditions set forth in Section 3:

 

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(i) $468,000 to be paid in a lump sum on the Payment Date (as defined in
Section 3); and

(ii) the remaining $490,000 to be paid in equal installments as salary
continuation payments over a 12-month period commencing on the Payment Date.

(e) No Further Benefits. The Executive hereby acknowledges and agrees that, as
of the Separation Date, the payments and benefits described in this Section 2
will be in full discharge of any and all liabilities and obligations of the
Company Group to him, monetarily or with respect to employee benefits or
otherwise, including but not limited to any and all obligations arising under
any written or oral employment agreement, policy, plan, or procedure of the
Company Group or any understanding or arrangement between the Executive and the
Company Group.

(f) Taxes. The payments referenced in this Section 2 shall be subject to
reduction for applicable tax and other withholding obligations.

3. Release Condition. Payment of the Severance Payment shall commence on the
Company’s first regularly scheduled pay date that is on or after the date that
the Release (as defined below) becomes effective, which by the terms of this
Agreement will be prior to March 15, 2020 (the “Payment Date”), but only if the
Executive (a) executes and delivers to the Company on or before the Release
Expiration Date (as defined below) a release of all claims in a form provided by
the Company (the “Release”), and (b) does not revoke the Release during the
applicable revocation period. As used herein, the “Release Expiration Date” is
that date that is twenty-one (21) days following the date upon which the Company
delivers the Release to the Executive (which shall occur no later than five
(5) days after the Separation Date). The first installment payment shall include
all amounts that would otherwise have been paid to the Executive during the
period beginning on the Separation Date and ending on the Payment Date if no
delay had been imposed.

4. Restrictive Covenants.

(a) For purposes of Section 4, the following terms shall have the following
meanings:

(i) “Business” shall mean the business and operations that are the same as those
performed by the Company and its affiliates, and any successors thereto, for
which the Executive provides or provided services or about which the Executive
obtains or has obtained Confidential Information during his Employment, which
business and operations are defined as the fabrication, maintenance and
servicing of structures, modules and marine vessels used in energy extraction,
production, petrochemical and industrial facilities, power generation,
alternative energy and shipping and marine transportation operations.

(ii) “Business Opportunity” shall mean any commercial, investment or other
business opportunity relating to the Business of which the Executive was aware
during his employment with the Company or about which the Executive received
Confidential Information.

 

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(iii) “Company” as used in this Section 4 shall include the Company and its
subsidiaries and any successors thereto.

(iv) “Confidential Information” means information that is not generally known to
the public (but for purposes of clarity, Confidential Information shall never
exclude any such information that becomes known to the public because of the
Executive’s unauthorized disclosure) and that is used, developed or obtained by
the Company in connection with its business, including, but not limited to,
information, observations and data obtained by the Executive while employed by
the Company concerning (A) the business or affairs of the Company, (B) products
or services, (C) fees, costs and pricing structures, (D) designs, (E) analyses,
(F) drawings, photographs and reports, (G) computer software, including
operating systems, applications and program listings, (H) flow charts, manuals
and documentation, (I) databases, (J) accounting and business methods,
(K) inventions, devices, new developments, methods and processes, whether
patentable or unpatentable and whether or not reduced to practice, (L) customers
and clients and customer or client lists, (M) other copyrightable works, (N) all
production methods, processes, technology and trade secrets, and (O) all similar
and related information in whatever form. Confidential Information will not
include any information that has been published in a form generally available to
the public (except as a result of the Executive’s unauthorized disclosure) prior
to the date the Executive proposes to disclose or use such information.
Confidential Information will not be deemed to have been published or otherwise
disclosed merely because individual portions of the information have been
separately published, but only if all material features comprising such
information have been published in combination.

(v) “Market Area” shall mean states of Texas and Louisiana, the Gulf of Mexico
Outer Continental Shelf, and any additional areas in which the Company had
operations or created plans to expand its operations. The Market Area includes,
but is not limited to, (i) the following counties and in the state of Texas:
Aransas, Chambers, Fort Bend, Harris, Montgomery, Nueces and San Patricio; and
(ii) the following parishes in the state of Louisiana: Calcasieu, East Baton
Rouge, Iberia, Jefferson, Jefferson Davis, Lafayette, Lafourche, Orleans, St.
Mary, Terrebonne and Vermillion

(vi) “Non-Compete Period” shall mean the Effective Date to the first anniversary
of the Separation Date.

(vii) “Non-Solicit Period” shall mean the Effective Date to the first
anniversary of the Separation Date.

(viii) “Work Product” means all inventions, innovations, improvements, technical
information, systems, software developments, methods, designs, analyses,
drawings, reports, service marks, trademarks, trade names, logos and all similar
or related information (whether patentable or unpatentable) that relates to the
Company’s actual or anticipated Business, research and development or existing
or future products or services

 

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and that are conceived, developed or made by the Executive (whether or not
during usual business hours and whether or not alone or in conjunction with any
other person) while employed by the Company together with all patent
applications, letters patent, trademark, trade name and service mark
applications or registrations, copyrights and reissues thereof that may be
granted for or upon any of the foregoing.

(b) Generally. The Company has provided the Executive access to Confidential
Information for use during his employment, and the Executive acknowledges and
agrees that the Company entrusted the Executive, in the Executive’s unique and
special capacity, with developing the goodwill of the Company, and in
consideration of the Company providing the Executive with access to Confidential
Information and the consideration detailed in this Agreement, the Executive
voluntarily agrees to the covenants set forth in this Section 4. The Executive
further agrees and acknowledges that the limitations and restrictions set forth
herein, including geographical and temporal restrictions on certain competitive
activities, are reasonable in all respects and not oppressive, shall not cause
the Executive undue hardship, and are material and substantial parts of this
Agreement intended and necessary to prevent unfair competition and to protect
the Company’s Confidential Information, goodwill and substantial and legitimate
business interests.

(c) Non-Competition. The Executive agrees that, during the Non-Compete Period,
the Executive shall not, without the prior written approval of the Chairman of
the Board, directly or indirectly, for the Executive or on behalf of or in
conjunction with any other person or entity of any nature:

(i) engage in or participate in competition with any member of the Company in
any aspect of the Business within the Market Area, which prohibition shall
prevent the Executive from directly or indirectly owning, managing, operating,
joining, becoming an officer, director, employee or consultant of, or loaning
money to, or selling or leasing equipment or real estate to or otherwise being
affiliated with any person or entity engaged in, or planning to engage in, the
Business in the Market Area in competition, or anticipated competition, with any
member of the Company (which, for this purpose, includes any company that
directly competes with the Company as of the date hereof or in the future); or

(ii) appropriate any Business Opportunity of, or relating to, the Company
located in the Market Area.

(d) Non-Solicitation. The Executive agrees that, during the Non-Solicit Period,
the Executive shall not, without the prior written approval of the Board,
directly or indirectly, for the Executive or on behalf of or in conjunction with
any other person or entity:

(i) solicit, canvass, approach, encourage, entice or induce in the Market Area
any known customer or supplier of any member of the Company to cease or lessen
such customer’s or supplier’s business with the Company; or

 

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(ii) solicit, canvass, approach, encourage, entice or induce any employee or
contractor of the Company to terminate his, her or its employment or engagement
with any member of the Company.

(e) Non-Disclosure; Non-Use of Confidential Information. The Executive shall not
disclose or use at any time any Confidential Information of which the Executive
became aware, regardless of whether or not such information was developed by the
Executive. The Executive will take all appropriate steps to safeguard
Confidential Information that may remain within the Executive’s knowledge and to
protect it against disclosure, misuse, espionage, loss and theft. The Executive
shall deliver to the Company at the Separation Date all memoranda, notes, plans,
records, reports, computer tapes and software and other documents and data (and
copies thereof) relating to the Confidential Information or the “Work Product”
of the business of the Company that the Executive may then possess or have under
the Executive’s control. Nothing in this Agreement or any other agreement or
policy of the Company is intended to interfere with or restrain the immunity
provided under 18 U.S.C. §1833(b). The Executive cannot be held criminally or
civilly liable under any federal or state trade secret law for the disclosure of
a trade secret that is made (x) (A) in confidence to federal, state or local
government officials, directly or indirectly, or to an attorney, and (B) for the
purpose of reporting or investigating a suspected violation of law; (y) in a
complaint or other document filed in a lawsuit or other proceeding, if filed
under seal; or (z) in connection with a lawsuit alleging retaliation for
reporting a suspected violation of law, if filed under seal and does not
disclose the trade secret, except pursuant to a court order. The foregoing
provisions regarding protected disclosures are intended to comply with all
applicable laws. If any laws are adopted, amended or repealed after the
execution of this Agreement, this Agreement shall be deemed to be amended to
reflect the same.

(f) Proprietary Rights. The Executive recognizes that the Company possesses a
proprietary interest in all Confidential Information and Work Product and has
the exclusive right and privilege to use, protect by copyright, patent or
trademark, or otherwise exploit the processes, ideas and concepts described
therein to the exclusion of the Executive, except as otherwise agreed between
the Company and the Executive in writing. The Executive expressly agrees that
any Work Product made or developed by the Executive or the Executive’s agents
during the course of the Executive’s employment, including any Work Product
which is based on or arises out of Work Product, shall be the property of and
inure to the exclusive benefit of the Company. The Executive further agrees that
all Work Product developed by the Executive (whether or not able to be protected
by copyright, patent or trademark) during the course of the Executive’s
employment with the Company, or involving the use of the time, materials or
other resources of the Company, has been promptly disclosed to the Company and
is the exclusive property of the Company, and the Executive shall execute and
deliver any and all documents necessary or appropriate to implement the
foregoing.

(g) Non-Disparagement. Neither the Executive nor the Executive’s agents shall
directly or indirectly issue or communicate any public statement, or statement
likely to become public, that maligns, denigrates or disparages the Company
(including, in the case of communications by the Executive or the Executive’s
agents, the Company, any of the Company’s officers, directors or employees). The
foregoing shall not be violated by truthful responses to legal process or
governmental inquiry.

 

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(h) Enforcement. Because of the difficulty of measuring economic losses to the
Company as a result of a breach of the covenants set forth in this Section 4 and
because of the immediate and irreparable damage that would be caused to the
members of the Company for which they would have no other adequate remedy, the
Company and each other member of the Company shall be entitled to enforce the
foregoing covenants, in the event of a breach as determined by a court of law,
by (i) ceasing any further consideration payments contemplated in this Agreement
and/or (ii) obtaining injunctions and restraining orders from any court of
competent jurisdiction, without the necessity of showing any actual damages or
that money damages would not afford an adequate remedy, and without the
necessity of posting any bond or other security. The aforementioned equitable
relief shall not be the Company’s or any other member of the Company’s exclusive
remedy for a breach but instead shall be in addition to all other rights and
remedies available to the Company and each other member of the Company at law
and equity.

(i) Blue Pencil. If, at any time, the provisions of this Section 4 shall be
determined to be invalid or unenforceable under any applicable law, by reason of
being vague or unreasonable as to area, duration or scope of activity, this
Agreement shall be considered divisible and shall become and be immediately
amended to only such area, duration and scope of activity as shall be determined
to be reasonable and enforceable by the court or other body having jurisdiction
over the matter and the Executive and the Company agree that this Agreement as
so amended shall be valid and binding as though any invalid or unenforceable
provision had not been included herein.

(j) Tolling. The periods during which the covenants set forth in this Section 4
shall survive shall be tolled during (and shall be deemed automatically extended
by) any period during which the Executive is found by a judge residing in a
court of competent jurisdiction to be in violation of any such covenants, to the
extent permitted by applicable law.

5. Assistance with Claims. The Executive agrees that after the Separation Date
he will assist the Company Group in the defense of any claims, or potential
claims that may be made or threatened to be made against them in any legal,
arbitration or governmental proceeding or investigation (a “Proceeding”), and
will assist the Company Group in the prosecution of any claims that have been or
may be made by the Company Group in any Proceeding. The Company shall reimburse
the Executive for all reasonable out-of-pocket expenses associated with such
assistance, including travel expenses and any attorneys’ fees, and shall pay a
per diem fee of $1,500 per day with respect to any day the Executive is required
to provide services related to a Proceeding in excess of 2 hours.

6. Successors and Assigns. The parties acknowledge and agree that this Agreement
shall be binding upon and inure to the benefit of the Parties and their
respective heirs, legal representatives, successors, and permitted assigns.

7. Severability. If any provision of this Agreement is held by any court of
competent jurisdiction to be illegal, void, or unenforceable, such provision
will be of no force or effect. The illegality or unenforceability of such
provision, however, will have no effect upon and will not impair the
enforceability of any other provision of this Agreement.

 

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8. Notices. All notices under this Agreement must be in writing and will be
deemed to have been given upon receipt of delivery by: (a) hand (against a
receipt for such delivery), (b) certified or registered mail, postage prepaid,
return receipt requested, (c) a nationally recognized overnight courier service
(against a receipt for such service), or (d) facsimile transmission with
confirmation of receipt. All notices to the Company related to this Agreement
should be sent to the Company’s principal executive offices as disclosed in its
filings with the Securities and Exchange Commission, addressed to the Chairman
of the Board. All notices to the Executive should be delivered to the most
recent address as provided by the Executive to the human resources department of
the Company. Either Party may update its address for receipt of notices by
providing written notice to the other Party as provided under this Section 8.

9. Entire Agreement. Except for the references to other agreements and plans set
forth in this Agreement, including Section 2, and as set forth in the next
sentence, this Agreement constitutes the entire understanding and agreement
between the Executive and the Company regarding the Executive’s separation from
service and supersedes all prior negotiations, discussions, correspondence,
communications, understandings, and agreements between the Executive and any
member of the Company Group and all benefit plans of the Company Group relating
to the subject matter of this Agreement. Notwithstanding the above, to the
extent a Change of Control (as defined in that certain Change of Control
Agreement between the Executive and the Company dated March 1, 2018 (the “COC
Agreement”)) occurs prior to the Separation Date, the COC Agreement will govern
instead of this Agreement and the Executive will be entitled to the payments and
benefits provided under the COC Agreement in lieu of any payments and benefits
under this Agreement. Any changes or amendments of this Agreement can be made
only in a writing signed by the Parties.

10. Governing Law Jurisdiction; Waiver of Jury Trial. This Agreement shall be
governed by, interpreted, and enforced in accordance with the laws of the State
of Texas (without regard to any choice of law principles which might otherwise
require the application of the law of another jurisdiction). The parties hereby
agree that any action brought with respect to this Agreement and the
transactions contemplated hereunder, including, but not limited, to any action
for injunctive relief for the breach or threatened breach of any covenant under
Section 4 of this Agreement (including the restrictive covenants), shall be
brought in state or federal court in Harris County, Texas, and further that such
venue shall be the exclusive venue for resolving any such disputes. The parties
consent to personal jurisdiction in state or federal court in Harris County,
Texas, and further waive any objection they may have as to such venue. By
execution of this Agreement, the parties are waiving any right to trial by jury
in connection with any suit, action, or proceeding under or in connection with
this Agreement.

11. Section 409A of the Code. The payments provided pursuant to this Agreement
are intended to comply with Section 409A of the Internal Revenue Code of 1986,
as amended (“Section 409A”), including the short-term deferral and separation
pay exceptions thereto, and this Agreement shall be construed and administered
in accordance with such intent. Provided these exceptions to Section 409A apply
as expected, neither the Company nor its affiliates will report any amounts
payable in accordance with the terms of this Agreement or any plan or agreement
referenced herein in box 12 of IRS Form W-2 using code Z. Notwithstanding any
other provision of this Agreement, payments provided under this Agreement may
only be made upon an event and in a manner that complies with Section 409A or an
applicable exemption. Any

 

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payments under this Agreement that may be excluded from Section 409A either as
separation pay due to an involuntary separation from service or as a short-term
deferral shall be excluded from Section 409A to the maximum extent possible. For
purposes of Section 409A, any installment payments provided under this Agreement
shall each be treated as a separate payment. To the extent required under
Section 409A, any payments to be made under this Agreement in connection with a
termination of employment shall only be made if such termination constitutes a
“separation from service” under Section 409A. If and to the extent that any
payment under this Agreement is determined by the Company (1) to constitute
“non-qualified deferred compensation” subject to Section 409A and (2) such
payment must be delayed for six months from the Separation Date (or an earlier
date) in order to comply with Section 409A(a)(2)(B)(i) in order to prevent the
imposition of any additional tax on the Executive under Section 409A, then the
Company will delay making any such payment until the expiration of such
six-month period (or, if earlier, Executive’s death). Notwithstanding the
foregoing, the Company makes no representations that the payments and benefits
provided under this Agreement comply with Section 409A and in no event shall the
Company be liable for all or any portion of any taxes, penalties, interest, or
other expenses that may be incurred by you on account of non-compliance with
Section 409A.

12. Counterparts. This Agreement may be executed in separate counterparts, each
of which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective
Date.

 

GULF ISLAND FABRICATION, INC.

/s/ John P. (“Jack”) Laborde

By: John P. (“Jack”) Laborde Title: Chairman of the Board of Directors EXECUTIVE

/s/ Kirk J. Meche

Kirk J. Meche

[Signature Page to Separation and Transition Agreement]