<PAGE>   1
                                                                    EXHIBIT 10.2

                              TORCH OFFSHORE, INC.
                          2001 LONG-TERM INCENTIVE PLAN

                    (ADOPTED EFFECTIVE AS OF APRIL 27, 2001)

         1. OBJECTIVES. This Torch Offshore, Inc. 2001 Long-Term Incentive Plan
(this "Plan") is intended as an incentive to retain and attract persons of
training, experience and ability to serve as employees, consultants and
directors of Torch Offshore, Inc., a Delaware corporation (the "Company"), to
encourage the sense of proprietorship of such persons and to stimulate the
active interest of such persons in the development and financial success of the
Company and its Subsidiaries.

         2. DEFINITIONS. As used herein, the terms set forth below shall have
the following respective meanings:

                  "ACT" means the Securities Act of 1933, as amended from time
to time.

                  "ANNUAL DIRECTOR AWARD DATE" means, for each calendar year
beginning on or after the IPO Closing Date, the first business day of the month
next following the date on which the annual meeting of the stockholders of the
Company is held in that year.

                  "AWARD" means any Option, Restricted Stock, Performance Stock
Award, Phantom Stock, Cash Award, Stock Award or Stock Appreciation Right,
whether granted singly, in combination or in tandem, granted to a Participant
pursuant to any applicable terms, conditions and limitations as the Committee
may establish in order to fulfill the objectives of this Plan.

                  "AWARD AGREEMENT" means a written agreement between the
Company and a Participant that sets forth the terms, conditions and limitations
applicable to an Award.

                  "BOARD" means the Board of Directors of the Company.

                  "CASH AWARD" means an Award payable in cash.

                  "CODE" means the United States Internal Revenue Code of 1986,
as amended from time to time.

                  "COMMITTEE" means the Compensation Committee of the Board or
such other committee of the Board as is designated by the Board to administer
this Plan.

                  "COMMON STOCK" means the common stock, par value $0.01 per
share, of the Company.

                  "COMPANY" means Torch Offshore, Inc., a Delaware corporation.

                  "DIRECTOR" means a nonemployee member of the Board.
<PAGE>   2

                  "EFFECTIVE DATE" means April 27, 2001.

                  "EMPLOYEE" means an individual employed by the Company or a
Subsidiary. For purposes of this Plan, an Employee also includes a consultant
providing services to the Company or a Subsidiary.

                  "EXERCISE PRICE" means the price at which the Option Shares
may be purchased under the terms of the Award Agreement.

                  "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time.

                  "FAIR MARKET VALUE" of a share of Common Stock means, as of a
particular date, (a) if shares of Common Stock are listed on a national
securities exchange, the mean between the highest and lowest sales price per
share of Common Stock on the consolidated transaction reporting system for the
principal national securities exchange on which shares of Common Stock are
listed on that date or, if there shall have been no such sale so reported on
that date, on the next succeeding date on which such a sale was so reported; (b)
if shares of Common Stock are not so listed but are quoted on the Nasdaq
National Market, the mean between the highest and lowest sales price per share
of Common Stock reported by the Nasdaq National Market on that date or, if there
shall have been no such sale so reported on that date, on the next succeeding
date on which such a sale was so reported; (c) if the Common Stock is not so
listed or quoted, the mean between the closing bid and asked price on that date
or, if there are no quotations available for such date, on the next succeeding
date on which such quotations shall be available, as reported by the Nasdaq
Stock Market or, if not reported by the Nasdaq Stock Market, by the National
Quotation Bureau Incorporated; or (d) if none of the above is applicable, then
such amount as may be determined by the Committee or the Board in such a manner
as it deems in good faith appropriate to be the fair market value per share of
Common Stock.

                  "GRANT DATE" means the date on which an Award is granted by
the Committee.

                  "IPO" shall mean the first date that: (a) the Company shall
have completed an underwritten public offering of Common Stock under the Act, as
amended, and such Common Stock is listed or quoted on a national securities
exchange or the Nasdaq National Market; or (b) the Common Stock has been
exchanged or converted for or into common stock of, or securities exchangeable
for or convertible into the common stock of, another corporation that is
registered under the Exchange Act, as amended, and securities of which are
listed or quoted on a national securities exchange or the Nasdaq National
Market.

                  "IPO CLOSING DATE" means the date on which the Company first
receives payment for the shares of Common Stock it sells in the IPO.

                  "IPO PRICE" means the initial public offering price per share
of Common Stock as set forth in the final prospectus for the IPO.

                  "ISO" means an incentive stock option within the meaning of
Code Section 422.




                                      -2-
<PAGE>   3

                  "OPTION" means a right to purchase a particular number of
shares of Common Stock at a particular Exercise Price, subject to certain terms
and conditions as provided in this Plan and Award Agreement. An Option may be in
the form of an ISO or a nonqualified stock option within the meaning of Code
Section 83.

                  "OPTION SHARES" means the shares of Common Stock covered by a
particular Option.

                  "PARTICIPANT" means an Employee or a Director to whom an Award
has been granted under this Plan.

                  "PERFORMANCE STOCK AWARD" means an Award that is contingent on
the achievement of certain performance objectives established by the Board,
valued by reference to the Fair Market Value of the Common Stock, or increase
thereof, by reference to performance measures other than the Common Stock, or a
combination of both, over a specified period of time.

                  "PHANTOM STOCK" means a right to receive the value of a
specified number of shares of Common Stock.

                  "PLAN" means the Torch Offshore, Inc. 2001 Long-Term Incentive
Plan, as amended from time to time.

                  "RESTRICTED STOCK" means shares of Common Stock that are
restricted or subject to forfeiture provisions.

                  "RULE 16b-3" means Rule 16b-3 promulgated under the Exchange
Act or any successor rule.

                  "STOCK APPRECIATION RIGHTS" or "SARS" means the right to
receive an amount in cash or Common Stock equal to the appreciation in value of
a specified number of shares of Common Stock over a particular period of time.

                  "STOCK AWARD" means an Award payable in shares of Common
Stock, which may be Restricted Stock.

                  "SUBSIDIARY" means (a) with respect to any Awards other than
ISOs, (i) in the case of a corporation, any corporation of which the Company
directly or indirectly owns shares representing 50% or more of the combined
voting power of the shares of all classes or series of capital stock of such
corporation that have the right to vote generally on matters submitted to a vote
of the stockholders of such corporation and (ii) in the case of a partnership or
other business entity not organized as a corporation, any such business entity
of which the Company directly or indirectly owns 50% or more of the voting,
capital or profits interests (whether in the form of partnership interests,
membership interests or otherwise), and (b) with respect to Awards of ISOs, any
subsidiary within the meaning of Section 424(f) of the Code.




                                      -3-
<PAGE>   4

         3. PLAN ADMINISTRATION AND DESIGNATION OF PARTICIPANTS. All Employees
of the Company and its Subsidiaries and all Directors are eligible for Awards
under this Plan. The Committee shall select the Participants from time to time
by the grant of Awards under this Plan and, subject to the terms and conditions
of this Plan, shall determine all terms and conditions of the Awards. This Plan
shall be administered by the Committee, which shall have full and exclusive
power to interpret this Plan and to adopt such rules, regulations and guidelines
for carrying out this Plan as it may deem necessary or appropriate. The
Committee may delegate its duties hereunder to the Chief Executive Officer or
other executive officers of the Company subject to such rules and regulations as
the Committee establishes. The Committee may, in its discretion, provide for the
extension of the exercisability of an Award, accelerate the vesting or
exercisability of an Award, eliminate or make less restrictive any restrictions
contained in an Award Agreement, waive any restriction or other provision of
this Plan or an Award Agreement or otherwise amend or modify an Award in any
manner that is either (a) not adverse to the Participant holding the Award or
(b) consented to by such Participant.

         4. AWARD AGREEMENT. Each Award granted hereunder shall be described in
an Award Agreement, which shall be subject to the terms and conditions of this
Plan and shall be signed by the Participant and by the appropriate officer for
and on behalf of the Company.

         5. SHARES OF COMMON STOCK RESERVED FOR THIS PLAN. Subject to adjustment
as provided in Section 12 hereof, a total of 3,000,000 shares of Common Stock
shall be reserved for issuance upon the exercise or payment of Awards granted
pursuant to this Plan.

                  Notwithstanding anything herein to the contrary, no
Participant may be granted Awards consisting of Options or Stock Appreciation
Rights exercisable for more than 25% of the shares of Common Stock authorized
for Awards under this Plan, subject to adjustment as provided in Section 12
hereof. In the event of an increase in the number of shares authorized under
this Plan, the 25% limitation will apply to the number of shares authorized.

                  The Committee and the appropriate officers of the Company
shall from time to time take whatever actions are necessary to execute,
acknowledge, file and deliver any documents required to be filed with or
delivered to any governmental authority or any stock exchange or transaction
reporting system on which shares of Common Stock are listed or quoted in order
to make shares of Common Stock available for issuance pursuant to this Plan.
Awards that are forfeited or terminated or expire unexercised in such a manner
that all or some of the shares of Common Stock subject thereto are not issued to
a Participant shall immediately become available for the granting of Awards
under this Plan.

         6. AWARDS TO EMPLOYEES.

                  (a) INCENTIVE STOCK OPTIONS. Options granted to Employees
         (other than consultants) hereunder may be incentive stock options
         within the meaning of Section 422 of the Code (an "ISO"). An ISO shall
         consist of a right to purchase a specified number of shares of Common
         Stock at a price specified by the Committee in the Award Agreement or
         otherwise, which shall not be less than the Fair Market Value of the
         Common Stock on



                                      -4-
<PAGE>   5

         the Grant Date. Any ISO granted shall expire not later than ten (10)
         years after the Grant Date, with the expiration date to be specified by
         the Committee in the Award Agreement. Any ISO granted must, in addition
         to being subject to applicable terms, conditions and limitations
         established by the Committee, comply with Section 422 of the Code.
         Pursuant to the ISO requirements of Code Section 422, notwithstanding
         anything herein to the contrary, (i) no ISO can be granted under this
         Plan on or after the tenth (10th) anniversary of the Effective Date of
         this Plan (or the fifth anniversary of the Effective Date of this Plan
         if the ISO is awarded to any person who, at the time of grant, owns
         stock representing more than 10% of the combined voting power of all
         classes of stock of the Company or any Subsidiary), (ii) no Optionee
         may be granted an ISO to the extent that, upon the grant of the ISO,
         the aggregate Fair Market Value (determined as of the date the Option
         is granted) of the Common Stock with respect to which ISOs (including
         Options hereunder) are exercisable for the first time by the Optionee
         during any calendar year (under all plans of the Company and any
         Subsidiary) would exceed $100,000, and (iii) the Exercise Price of the
         ISO may not be less than 100% of the Fair Market Value of the Common
         Stock at the time of grant (or not less than 110% of such of the Fair
         Market Value if the ISO is awarded to any person who, at the time of
         grant, owns stock representing more than 10% of the combined voting
         power of all classes of stock of the Company or any Subsidiary). All
         other terms, conditions and limitations applicable to ISOs shall be
         determined by the Committee.

                  (b) NONQUALIFIED STOCK OPTIONS. Options granted to Employees
         (including consultants) may be nonqualified stock options within the
         meaning of Section 83 of the Code. A nonqualified stock option shall
         consist of a right to purchase a specified number of shares of Common
         Stock at a price specified by the Committee in the Award Agreement or
         otherwise. The expiration date of the nonqualified stock option shall
         be specified by the Committee in the Award Agreement. All other terms,
         conditions and limitations applicable to nonqualified stock options
         shall be determined by the Committee.

                  (c) PERFORMANCE STOCK AWARD. An Award may be in the form of a
         Performance Stock Award. The terms, conditions and limitations
         applicable to any Performance Stock Award shall be determined by the
         Committee.

                  (d) STOCK AWARD (INCLUDING RESTRICTED STOCK). An Award may
         consist of Common Stock or may be denominated in units of Common Stock.
         All or part of any Stock Award may be subject to conditions established
         by the Committee and set forth in the Award Agreement, which conditions
         may include, but are not limited to, continuous service with the
         Company and its Subsidiaries, achievement of specific business
         objectives, increases in specified indices, attaining specified growth
         rates and other comparable measurements of performance. Such Awards may
         be based on Fair Market Value or other specified valuations. The
         certificates evidencing shares of Common Stock issued in connection
         with a Stock Award shall contain appropriate legends and restrictions
         describing the terms and conditions of the restrictions applicable
         thereto. The terms, conditions and limitations applicable to any Stock
         Award pursuant to this Plan shall be determined by the Committee.




                                      -5-
<PAGE>   6

                  (e) PHANTOM STOCK. An Award may be in the form of Phantom
         Stock or other bookkeeping account tied to the value of shares of
         Common Stock. The terms, conditions and limitations applicable to any
         Awards of Phantom Stock shall be determined by the Committee.

                  (f) STOCK APPRECIATION RIGHTS. An Award may be in the form of
         SARs. The terms, conditions and limitations applicable to any Awards of
         SARs shall be determined by the Committee.

                  (g) CASH AWARDS. An Award may be in the form of a Cash Award.
         The terms, conditions and limitations applicable to any Cash Awards
         shall be determined by the Committee.

         7. AWARDS TO DIRECTORS.

                  (a) IPO DIRECTOR AWARD. On the IPO Closing Date, each Director
         shall be automatically awarded a nonqualified stock option to purchase
         2,500 shares of Common Stock (the "IPO Director Award").

                  (b) ANNUAL DIRECTOR AWARD. On each Annual Director Award Date,
         each Director shall be automatically awarded a nonqualified stock
         option to purchase 1,000 shares of Common Stock (the "Annual Director
         Award").

                  (c) EXERCISE SCHEDULE.

                           (i) The IPO Director Award and the Annual Director
                  Award granted to each Director shall become 100% vested and
                  exercisable six (6) months and one (1) day from the Grant Date
                  for such Award. The Director must be in continuous service as
                  a member of the Board from the Grant Date through the date of
                  exercisability in order for the IPO Director Award or the
                  Annual Director Award to become 100% vested and exercisable.

                           (ii) The IPO Director Award and the Annual Director
                  Award granted shall become fully exercisable, irrespective of
                  the limitations set forth in clause (i) above, provided that
                  the Director has been in continuous service as a member of the
                  Board since the Grant Date for such Award, upon the occurrence
                  of (A) a Change in Control or (B) the Director's termination
                  of service due to death or Disability.

                                    For purposes of this Section 7, "Disability"
                  means the inability to perform services as a Director for a
                  period of six (6) consecutive months or for an aggregate of
                  six (6) months during any twelve (12)-month period after the
                  Grant Date by reason of any medically determinable physical or
                  mental impairment, as determined by the Committee in the
                  Committee's sole discretion.




                                      -6-
<PAGE>   7

                  (d) TERMINATION OF AWARDS. The IPO Director Award and the
         Annual Director Award granted to each Director shall terminate and be
         of no force and effect with respect to any shares of Common Stock not
         previously purchased by the Director upon the first to occur of:

                           (i)      the tenth (10th) anniversary of the Grant
                                    Date for such Award or

                           (ii)     with respect to

                                    (A) the portion of the IPO Director Award or
                           the Annual Director Award exercisable upon
                           termination of service, the expiration of (1) ninety
                           (90) days following the Director's termination of
                           service for reasons other than due to death or
                           Disability or (2) one (1) year following the
                           Director's termination of service by reason of death
                           or Disability; and

                                    (B) the portion of the IPO Director Award or
                           the Annual Director Award not exercisable upon
                           termination of service, the date of the Director's
                           termination of service.

                  (e) EXERCISE PRICE.

                           (i) IPO DIRECTOR AWARD. The exercise price of the
                  Common Stock under the IPO Director Award granted to each
                  Director shall be equal to the IPO Price for such shares.

                           (ii) ANNUAL DIRECTOR AWARD. The exercise price of the
                  Common Stock under the Annual Director Award granted to each
                  Director shall be no less than the Fair Market Value of the
                  shares of Common Stock subject to such Annual Director Award
                  on the Grant Date for such Award.

                  (f) AWARD AGREEMENT. Each IPO Director Award and Annual
         Director Award granted to a Director shall be evidenced by a written
         agreement between the Company and such Director that sets forth the
         terms, conditions and limitations described above and any additional
         terms, conditions and limitations applicable to the IPO Director Award
         or the Annual Director Award. Such written agreements shall be
         consistent with the terms and conditions of this Plan.

         8. PAYMENT OF AWARDS.

                  (a) GENERAL. Payment of Awards may be made in the form of cash
         or Common Stock or combinations thereof and may include such
         restrictions as the Committee shall determine, including, in the case
         of Common Stock, restrictions on transfer and forfeiture provisions.




                                      -7-
<PAGE>   8

                  (b) DEFERRAL. The Committee may, in its discretion, (i) permit
         selected Participants to elect to defer payments of some or all types
         of Awards in accordance with procedures established by the Committee or
         (ii) provide for the deferral of an Award in an Award Agreement or
         otherwise. Any such deferral may be in the form of installment payments
         or a future lump-sum payment. Any deferred payment, whether elected by
         the Participant or specified by the Award Agreement or by the
         Committee, may be forfeited if and to the extent that the Award
         Agreement so provides.

                  (c) DIVIDENDS AND INTEREST. Dividends or dividend equivalent
         rights may be extended to and made part of any Award denominated in
         Common Stock or units of Common Stock, subject to such terms,
         conditions and restrictions as the Committee may establish. The
         Committee may also establish rules and procedures for the crediting of
         interest on deferred cash payments and dividend equivalents for
         deferred payment denominated in Common Stock or units of Common Stock.

                  (d) SUBSTITUTION OF AWARDS. At the discretion of the
         Committee, a Participant may be offered an election to substitute an
         Award for another Award or Awards of the same or different type.

         9. STOCK OPTION EXERCISE. The price at which shares of Common Stock may
be purchased under an Option shall be paid in full at the time of exercise in
cash or, if permitted by the Committee, by means of tendering Common Stock or
surrendering all or part of that or any other Award, including Restricted Stock,
that has been held by the Participant for at least six (6) months and that is
valued at Fair Market Value on the date of exercise, or any combination thereof.
The Committee shall determine acceptable methods for tendering Common Stock or
Awards to exercise an Option as it deems appropriate. The Committee may provide
for procedures to permit the exercise or purchase of Awards by (a) loans from
the Company or (b) use of the proceeds to be received from the sale of Common
Stock issuable pursuant to an Award. Unless otherwise provided in the applicable
Award Agreement, in the event shares of Restricted Stock are tendered as
consideration for the exercise of an Option, a number of the shares issued upon
the exercise of the Option, equal to the number of shares of Restricted Stock
used as consideration therefor, shall be subject to the same restrictions as the
Restricted Stock so submitted as well as any additional restrictions that may be
imposed by the Committee.

         10. TERMINATION OF EMPLOYMENT OR SERVICE. Upon the termination of
employment or service by a Participant, any unexercised, deferred or unpaid
Awards shall be treated as provided in the specific Award Agreement evidencing
the Award or, in the case of Awards to Directors, as provided in this Plan.
Unless otherwise specifically provided in the Award Agreement, each Award
granted pursuant to this Plan that is an Option shall immediately terminate to
the extent the Option is not vested (or does not become vested as a result of
such termination of employment or service) on the date the Participant
terminates employment or service with the Company or its Subsidiaries.

         11. ASSIGNABILITY. Except as otherwise provided herein, no Award
granted under this Plan shall be sold, transferred, pledged, assigned or
otherwise alienated or hypothecated by a Participant other than by will or the
laws of descent and distribution, and during the lifetime of a




                                      -8-
<PAGE>   9

Participant, any Award shall be exercisable only by him, or in the case of a
Participant who is mentally incapacitated, the Award shall be exercisable by his
guardian or legal representative. The Committee may prescribe and include in
applicable Award Agreements other restrictions on transfer. Any attempted
assignment or transfer in violation of this Section 11 shall be null and void.
Upon the Participant's death, the personal representative or other person
entitled to succeed to the rights of the Participant (the "Successor
Participant") may exercise such rights. A Successor Participant must furnish
proof satisfactory to the Company of his or her right to exercise the Award
under the Participant's will or under the applicable laws of descent and
distribution.

                  Subject to approval by the Committee in its sole discretion,
other than with respect to ISOs, all or a portion of the Awards granted to a
Participant under this Plan may be transferable by the Participant, to the
extent and only to the extent specified in such approval, to (a) the spouse,
parent, brother, sister, children or grandchildren (including adopted and
stepchildren and grandchildren) of the Participant ("Immediate Family Members"),
(b) a trust or trusts for the exclusive benefit of such Immediate Family Members
or (c) a partnership or partnerships in which such Immediate Family Members have
at least 99% of the equity, profit and loss interests; provided that the Award
Agreement pursuant to which such Awards are granted (or an amendment thereto)
must expressly provide for transferability in a manner consistent with this
Section. Subsequent transfers of transferred Awards shall be prohibited except
by will or the laws of descent and distribution, unless such transfers are made
to the original Participant or a person to whom the original Participant could
have made a transfer in the manner described herein. No transfer shall be
effective unless and until written notice of such transfer is provided to the
Committee, in the form and manner prescribed by the Committee. Following
transfer, any such Awards shall continue to be subject to the same terms and
conditions as were applicable immediately prior to transfer, and except as
otherwise provided herein, the term "Participant" shall be deemed to refer to
the transferee. The consequences of termination of employment shall continue to
be applied with respect to the original Participant, following which the Awards
shall be exercisable by the transferee only to the extent and for the periods
specified in this Plan and the Award Agreement.

         12. ADJUSTMENTS.

                  (a) The existence of outstanding Awards shall not affect in
         any manner the right or power of the Company or its stockholders to
         make or authorize any or all adjustments, recapitalization,
         reorganizations or other changes in the ownership of the Company or its
         business or any merger or consolidation of the Company, or any issue of
         bonds, debentures or other obligations, or the dissolution or
         liquidation of the Company, or any sale or transfer of all or any part
         of its assets or business, or any other Company act or proceeding of
         any kind, whether or not of a character similar to that of the acts or
         proceedings enumerated above.

                  (b) In the event of any Common Stock distribution or split,
         recapitalization, extraordinary distribution, merger, consolidation,
         combination or exchange of shares of Common Stock or similar change or
         upon the occurrence of any other event that the Committee, in its sole
         discretion, deems appropriate, (i) the number of shares of Common



                                      -9-
<PAGE>   10

         Stock reserved under this Plan and covered by outstanding Awards; (ii)
         the Exercise Price in respect of such Awards; and (iii) the appropriate
         Fair Market Value and other price determinations for such Awards shall
         be adjusted as appropriate.

                  (c) In the event of a corporate merger, consolidation,
         acquisition of property or stock, separation, reorganization or
         liquidation, the Board shall be authorized (i) to issue or assume
         Awards by means of substitution of new Awards, as appropriate, for
         previously issued Awards or to assume previously issued Awards as part
         of such adjustment or (ii) to cancel Awards that are Options or SARs
         and give the Participants who are the holders of such Awards notice and
         opportunity to exercise for thirty (30) days prior to such
         cancellation.

         13. PURCHASE FOR INVESTMENT. Unless the Awards and shares of Common
Stock covered by this Plan have been registered under the Act, as amended, each
person receiving shares of Common Stock pursuant to an Award under this Plan may
be required by the Company to give a representation in writing in form and
substance satisfactory to the Company to the effect that he is acquiring such
shares for his own account for investment and not with a view to, or for sale in
connection with, the distribution of such shares or any part thereof.

         14. TAX WITHHOLDING. The Company shall have the right to deduct
applicable taxes from any Award payment and withhold, at the time of delivery or
vesting of cash or shares of Common Stock under this Plan, an appropriate amount
of cash or number of shares of Common Stock or a combination thereof for payment
of taxes required by law or to take such other action as may be necessary in the
opinion of the Company to satisfy all obligations for withholding of such taxes.
The Committee may also permit withholding to be satisfied by the transfer to the
Company of shares of Common Stock theretofore owned by the holder of the Award
with respect to which withholding is required. If shares of Common Stock are
used to satisfy tax withholding, such shares shall be valued based on the Fair
Market Value when the tax withholding is required to be made.

         15. AMENDMENTS OR TERMINATION. The Company may amend, alter or
discontinue this Plan, except that no amendment or alteration that would impair
the rights of any Participant under any Award that he has been granted shall be
made without his consent, and no amendment or alteration shall be effective
prior to approval by the Company's stockholders to the extent such approval is
determined by the Board to be required by applicable laws, regulations or
exchange requirements.

         16. RESTRICTIONS. No shares of Common Stock or other form of payment
shall be issued with respect to any Award unless the Company shall be satisfied
based on the advice of its counsel that such issuance will be in compliance with
applicable federal and state securities laws. The Award Agreement may include
provisions for the repurchase by the Company of Common Stock acquired pursuant
to an Award and repurchase of the Participant's Option rights.

         17. UNFUNDED PLAN. Insofar as it provides for Awards of cash, Common
Stock or rights thereto, this Plan shall be unfunded. Although bookkeeping
accounts may be established with respect to Participants who are entitled to
cash, Common Stock or rights thereto under this



                                      -10-
<PAGE>   11

Plan, any such accounts shall be used merely as a bookkeeping convenience. The
Company shall not be required to segregate any assets that may at any time be
represented by cash, Common Stock or rights thereto, nor shall this Plan be
construed as providing for such segregation, nor shall the Company, the Board or
the Committee be deemed to be a trustee of any cash, Common Stock or rights
thereto to be granted under this Plan. Any liability or obligation of the
Company to any Participant with respect to a grant of cash, Common Stock or
rights thereto under this Plan shall be based solely upon any contractual
obligations that may be created by this Plan and any Award Agreement, and no
such liability or obligation of the Company shall be deemed to be secured by any
pledge or other encumbrance on any property of the Company. None of the Company,
the Board or the Committee shall be required to give any security or bond for
the performance of any obligation that may be created by this Plan.

         18. INDEMNIFICATION. The Company shall indemnify and hold harmless any
member of the Board or any committee appointed by the Board to administer this
Plan and other individuals, including Employees and Directors, performing
services on behalf of the Committee, against any liability, cost or expense
arising as a result of any claim asserted by any person or entity under the laws
of any state or of the United States with respect to any action or failure to
act of such individuals taken in connection with this Plan, except claims or
liabilities arising on account of the willful misconduct or bad faith of such
Board member, committee member or individual.

         19. RULE 16B-3. It is intended that this Plan and any grant of an Award
made to a person subject to Section 16 of the Exchange Act meet all of the
requirements of Rule 16b-3. If any provision of this Plan or any such Awards
would disqualify this Plan or such Award under, or would otherwise not comply
with, Rule 16b-3, such provision or Award shall be construed or deemed amended
to conform to Rule 16b-3.

         20. MISCELLANEOUS. The granting of any Award shall not impose upon the
Company any obligation to maintain any Participant as an Employee or a Director
and shall not diminish the power of the Company to discharge any Participant at
any time.

         21. GOVERNING LAW. This Plan and all determinations made and actions
taken pursuant hereto, to the extent not otherwise governed by mandatory
provisions of the Code or the securities laws of the United States, shall be
governed by and construed in accordance with the laws of the State of Delaware.




                                      -11-
<PAGE>   12

         22. EFFECTIVE DATE OF PLAN. This Plan shall be effective as of the
Effective Date, subject to the approval of this Plan by the stockholders of the
Company within twelve (12) months of the adoption of this Plan by the Board.
Unless terminated earlier by the Board, this Plan shall terminate as of the
tenth (10th) anniversary of the Effective Date and no further Awards shall be
made after such date. Termination of this Plan shall not affect Awards made
prior to the termination date.

                              Attested to by the Secretary of Torch Offshore,
                              Inc., as adopted by the Board of Directors
                              effective as of the 27th day of April, 2001.


                              /s/ Lana J. Hingle Stockstill
                                  Lana J. Hingle Stockstill
                                  Secretary






                                      -12-