Stock Exchange Agreement

STOCK EXCHANGE AGREEMENT


This Stock Exchange Agreement (the "Agreement") is made and entered into as of March 31, 1998 by and among Conrad Industries, Inc., a Delaware corporation ("Conrad DE"), Conrad Industries, Inc., a Louisiana corporation ("Conrad LA"), John Parker Conrad ("Parker Conrad"); John Parker Conrad, Jr. ("John Conrad, Jr."), appearing herein individually and as trustee of The John Parker Conrad, Jr. Trust ("John Conrad, Jr. Trust"), as trustee of The Glenn Alan Conrad Trust ("Glenn Conrad Trust"), as trustee of The Kenneth Charles Conrad Trust ("Kenneth Conrad Trust"), and as trustee of The Daniel Thomas Conrad Trust ("Daniel Conrad Trust"); Katherine Conrad Court ("Katherine Court"), appearing herein individually and as trustee of The Katherine Conrad Court Trust ("Katherine Court Trust") and as trustee of The James Patrick Court Trust ("Patrick Court Trust"); William H. Hidalgo; and Cecil A. Hernandez.


WITNESSETH:
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WHEREAS, Conrad DE has been organized to serve as a holding company for Conrad LA;


WHEREAS, Parker Conrad, John Conrad, Jr., John Conrad, Jr. Trust, Glenn Conrad Trust, Kenneth Conrad Trust, Daniel Conrad Trust, Katherine Court, Katherine Court Trust, Patrick Court Trust, William H. Hidalgo and Cecil A. Hernandez (the "Participants") are the sole owners of the $.01 par value common stock of Conrad LA (the "Conrad LA Common Stock");


WHEREAS, pursuant to Section 351 of the Internal Revenue Code of 1986, as amended (the "Code"), each of the Participants desires to exchange all of their shares of Conrad LA Common Stock for shares of common stock, par value $0.01 per share, of Conrad DE (the "Conrad DE Common Stock"), it being the intent of Conrad DE and each Participant that such exchange of shares pursuant to this Agreement (the "Stock Exchange") shall satisfy the requirements of such section;


WHEREAS, as part of the transaction qualifying under Section 351 of the Code, it is contemplated that following the Stock Exchange, Conrad DE will make a public offering of Conrad DE Common Stock (the "Public Offering") pursuant to the Securities Act of 1933, as amended (the "Securities Act");


NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter set forth, the parties hereto hereby agree as follows:


ARTICLE I


REPRESENTATIONS, WARRANTIES AND COVENANTS


Section 1.1. Representation of Conrad DE. (a) Conrad DE hereby represents and warrants to each of the Participants that it is a corporation duly incorporated under the laws of Delaware and that it has 1,000 shares of its capital stock issued and outstanding consisting of 1,000 shares of Conrad DE Common Stock issued to John Conrad, Jr.


(b) Conrad DE hereby represents and warrants to each of the Participants that the shares of Conrad DE Common Stock to be issued pursuant to the Stock Exchange, when issued in exchange for the shares of Conrad LA Common Stock as set forth in this Agreement, will be duly issued, fully paid and nonassessable.


Section 1.2. Representations of Conrad LA and the Participants. Conrad LA represents and warrants to Conrad DE that Conrad LA is a corporation duly incorporated under the laws of Louisiana. Conrad LA and each of the Participants represent and warrant to Conrad DE that the only shares of the capital stock issued and outstanding consist of 2,265 shares of Conrad LA Common Stock issued to the following persons in the amounts set forth opposite their names:


Number of Shares
Shareholders Issued and Outstanding


J. Parker Conrad 508 John P. Conrad, Jr. 248 John Conrad, Jr. Trust 163 Glenn Conrad Trust 117 Kenneth Conrad Trust 117 Daniel Conrad Trust 117 Katherine Conrad Court 440 Katherine Court Trust 200 Patrick Court Trust 120 William H. Hidalgo 168 Cecil A. Hernandez 67
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Total 2,265
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Each of the Participants represents and warrants to Conrad DE that the shares set forth opposite his name are owned by such Participant and upon the consummation of the Stock Exchange shall be free and clear of all liens, encumbrances, options, calls, voting trusts and other charges ("Encumbrances") (other than shares owned by William H. Hidalgo and Cecil A. Hernandez, which


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shares are currently pledged as collateral in connection with notes payable by such Participants to Conrad LA), and no other person has any ownership interest in such shares.


Section 1.3. Representations of Participants. (a) Each Participant represents and warrants that such Participant (i) has the requisite authority to enter into this Agreement and to perform his obligations under this Agreement, (ii) he has duly executed and delivered this Agreement, (iii) all filings, approvals and consents necessary for the execution, delivery and performance of this Agreement by such Participant have been made or obtained or shall have been made or obtained prior to the Closing (as defined in Section 4.1 hereof), (iv) this Agreement, when executed and delivered by such Participant, will be a valid and binding agreement of such Participant, (v) the execution, delivery and performance of this Agreement by such Participant and the consummation of the transactions contemplated hereby by such Participant will not (A) conflict with or result in a breach of any of the terms and provisions of, or constitute a default (or an event which with notice or lapse of time, or both, would constitute a default) or require consent under the terms of any agreement, instrument, franchise, license or permit to which such Participant is a party or by which such Participant may be bound or (B) violate or conflict with any provision of any judgment, decree, order, statute, rule or regulation of any court or any public, governmental or regulatory agency or body having jurisdiction over such Participant, and (vi) no consent, approval, authorization, order, registration, filing, qualification, license or permit of or with any court or any public governmental or regulatory agency or body having jurisdiction over such Participant is required for the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, except such as have been obtained or will be obtained by such Participant prior to the Closing (as defined herein).


(b) Each Participant acknowledges receipt of (i) a copy of the Certificate of Incorporation and Bylaws of Conrad DE, (ii) the historical financial statements of Conrad LA for the three years ended December 31, 1995, 1996 and 1997, (iii) the historical financial statements of Orange Shipbuilding Company, Inc., a Texas corporation ("Orange"), for the twelve-month period ended December 31, 1997, (iv) the pro forma financial statements of Conrad DE for the year ended December 31, 1997 that give effect to the Stock Exchange as if it had occurred on January 1, 1997 and (v) certain other information concerning Conrad DE and the Stock Exchange, and each Participant acknowledges that he received all information necessary in order to make an informed decision concerning his participation in the Stock Exchange.


(c) Each Participant acknowledges that such Participant has such knowledge and experience in financial and business matters so that such Participant is capable of evaluating the merits and risks of an investment in Conrad DE. Based upon such Participant's own knowledge, such Participant recognizes the speculative nature of such an investment.


(d) Each Participant hereby acknowledges that the issuance of the shares of Conrad DE Common Stock being acquired or received by such Participant hereunder is not and will not be registered under the Securities Act. Each Participant represents that the shares of Conrad DE Common Stock being acquired or received hereunder is being acquired or received for such


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Participant's own account, for investment purposes only and not with a view for distribution or resale to others, except as set forth in paragraph (e) below. Each Participant agrees that such Participant will not sell or otherwise transfer any shares of Conrad DE Common Sto ...