<PAGE>   1

                                                                    EXHIBIT 10.3

                                 AMENDMENT NO. 2

                                       TO

                                CREDIT AGREEMENT


         AMENDMENT NO. 2 ("Amendment No. 2") dated as of March __, 2000 (the
"Amendment Date") to the Credit Agreement dated as of November 3, 1999 (the
"Credit Agreement"), among FRIEDE GOLDMAN HALTER, INC., a corporation organized
and existing under the laws of the State of Mississippi (the "Borrower"), the
financial institutions from time to time party thereto (the "Lenders"), WELLS
FARGO BANK (TEXAS), NATIONAL ASSOCIATION, a national banking association, as
Administrative Agent and Co-Arranger (the "Agent"), and BANK ONE CAPITAL
MARKETS, INC., as Co-Arranger and Syndication Agent.

                              W I T N E S S E T H:

         WHEREAS, pursuant to the Credit Agreement, the Lenders made available
to the Borrower a loan facility of up to USD 164,218,250, as evidenced by the
promissory note of the Borrower dated November 3, 1999; and

         WHEREAS, the parties wish to amend certain provisions of the Credit
Agreement as set forth herein.

         NOW THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree to amend the Credit Agreement as follows:

         1.       Section 1.1 is hereby amended as follows:

                   1.1     The definition of "Amendment Date" is hereby added to
                           Section 1.1 and reads as follows:

                  "`Amendment Date' means the date of Amendment No. 2 to this
                  Credit Agreement."

                   1.2     The second sentence of the definition of "Applicable
                           Commitment Fee Percentage" is deleted in its entirety
                           and the following shall be substituted in place
                           thereof:

                          "Notwithstanding the foregoing table or anything else
                           herein contained to the contrary, from and after
                           April 1, 2000, the Applicable Commitment Fee
                           Percentage shall be 1.0% until the delivery to the
                           purchaser of each and every vessel to be delivered
                           under the Ocean Rig Contracts and the Petrodrill Rig
                           Contracts, after which date, and provided that no
                           Default or Event of Default has occurred and is
                           continuing, the Applicable Commitment Fee Percentage
                           shall be reduced to the rate


<PAGE>   2


                   of 0.75%, until the earlier of (x) December 31, 2000 and (y)
                   the Voluntary Step Down Date after which date the foregoing
                   table shall be applicable."

                   1.3     The table set forth in the definition of "Applicable
                           Margin Amount" is deleted in its entirety and the
                           following shall be substituted in place thereof:


<TABLE>
<CAPTION>
                                                                              Applicable Margin
                                                                               (basis points)
                                                                              -----------------
                                          Borrower's                  LIBOR                    Base Rate
                                        Leverage Ratio                Margin                    Margin
                                       ----------------               ------                   ---------
<S>                                    <C>                            <C>                      <C>
                      Level I:         <  1.0                          137.5                      25.0

                      Level II:        => 1.00 to 1.50                 175.0                      50.0

                      Level III:       => 1.50 to 2.00                 212.5                      75.0

                      Level IV:        => 2.00 to 2.50                 250.0                     100.0

                      Level V:         => 2.50 to 3.25                 275.0                     125.0

                      Level VI:        => 3.25                         300.0                     150.0
</TABLE>

                   1.4     The second sentence of the definition of "Applicable
                           Margin Amount" is deleted in its entirety and the
                           following shall be substituted in place thereof:

                           "Notwithstanding the foregoing table or anything else
                           herein contained to the contrary, from and after
                           April 1, 2000 for any new Advances and Base Rate
                           Advances and from and after the expiration of any
                           LIBOR Advances outstanding on the Amendment Date, the
                           Applicable Margin Amount for Base Rate Advances shall
                           be 2.0% until the delivery to the purchaser of each
                           and every vessel to be delivered under the Ocean Rig
                           Contracts and the Petrodrill Rig Contracts, after
                           which date the Applicable Margin Amount shall be
                           determined in accordance with the foregoing table,
                           provided that no Default or Event of Default has
                           occurred and is continuing."

                   1.5     The second sentence of the definition of "Asset
                           Sales" shall be deleted in its entirety and the
                           following shall be substituted in place thereof:

                           "Notwithstanding the foregoing, the following
                           transactions will be deemed not to be Asset Sales:
                           (A) a sale of assets by the Borrower to a Guarantor
                           or by a Guarantor to the Borrower or to another
                           Guarantor and (B) a sale of assets if either the
                           sales price or the appraised value of such assets is
                           $1,000,000 or less, and if such assets are promptly
                           replaced thereafter by assets of a similar type and
                           value."


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<PAGE>   3



                   1.6     A new definition is hereby added to the Credit
                           Agreement, which reads as follows:

                           "`Commitment Reduction Fee' shall mean a fee equal to
                           two and one-half percent (2.5%) of the Commitment as
                           of the Amendment Date, payable to the Agent for the
                           ratable benefit of the Lenders, subject to a single
                           reduction in accordance with the following table:

<TABLE>
<CAPTION>
                                                                  Reduction in Commitment Reduction Fee
                                                                  -------------------------------------
                          Commitment Amount              By 6/30/00     By 7/31/00    By 8/31/00      By 9/30/00
                          -----------------              ----------     ----------    ----------      ----------
                          <S>                            <C>            <C>           <C>             <C>
                          Less than $100,000,000            20%            15%           10%              5%
                          Less than $75,000,000             30%            25%           20%             15%
                          Less than $50,000,000             40%            35%           30%             25%
                          $0                                50%            45%           40%             35%
</TABLE>

                           The Commitment Reduction Fee shall be reduced in
                           accordance with the highest percentage corresponding
                           to the level of the reduction of the Commitment
                           attained by the Borrower. As an example, if the
                           Borrower reduces the Commitment by June 30, 2000 to
                           an amount less than $100,000,000 but greater than
                           $75,000,000, the Commitment Reduction Fee shall be
                           reduced by 20%. If the Borrower then reduces the
                           Commitment to less than $75,000,000 but greater than
                           $50,000,000 by July 31, 2000, the total aggregate
                           reduction in the Commitment Reduction Fee shall be
                           25%."

                   1.7     A new definition is hereby added to the Credit
                           Agreement, which reads as follows:

                           "`Contract Loss' shall mean a loss under any contract
                           of the Borrower or any Subsidiary in which the stated
                           contract amount is USD 10,000,000 or greater, such
                           loss being measured at the time the Borrower or such
                           Subsidiary becomes aware that it must recognize a
                           contract loss in respect of such contract in
                           accordance with GAAP."

                   1.8     A new definition is hereby added to the Credit
                           Agreement, which reads as follows:

                           "`Documentation Agent' shall mean Royal Bank of
                           Canada."

                   1.9     The definition of "Fixed Charge Coverage Ratio" shall
                           be deleted in its entirety and the following shall be
                           substituted in place thereof:

                           "`Fixed Charge Coverage Ratio' shall mean, for any
                           period, (A) the sum of (i) GAAP Cash Flow from
                           Operations, (ii) unrestricted cash balances, and
                           (iii) the available Commitment under the Revolving
                           Credit Facility, less capital expenditures used for
                           the maintenance or repair of existing assets, divided
                           by the sum total of cash payments in respect of
                           required principal payments on Indebtedness and
                           required payments under capital leases.


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<PAGE>   4


              1.10 A new definition is hereby added to the Credit Agreement,
                   which reads as follows:

                           "`GAAP Cash Flow from Operations' means, for any
                           period, the amount set forth in the quarterly and
                           annual consolidated financial statements of the
                           Borrower on the line in the statement of cash flows
                           which summarizes the Borrower's cash flow from
                           operating activities."

                   1.11    The definition of "Leverage Ratio" is amended to add
                           the following language:

                           "; provided that EBITDA shall be determined for
                           purposes of this definition as follows:

                              (a) for the fiscal quarter ending March 31, 2000,
                              EBITDA shall mean the Borrower's EBITDA for the
                              fiscal quarter then ending, multiplied by four;

                              (b) for the fiscal quarter ending June 30, 2000,
                              EBITDA shall mean the Borrower's EBITDA for the
                              two fiscal quarters then ending, multiplied by
                              two;

                              (c) for the fiscal quarter ending September 30,
                              2000, EBITDA shall mean the Borrower's EBITDA for
                              the three quarters then ending, multiplied by one
                              and one-third; and

                              (d) thereafter on a rolling four-quarter basis."

                   1.12    The definition of "Majority Lenders" shall be amended
                           and revised so that all references to "fifty-one
                           percent (51%)" are changed to "sixty-six and
                           two-thirds percent (66.66%)".

                   1.13    The definitions of "Material adverse effect" and
                           "materially adversely affected" shall be amended and
                           revised so that all references to "USD 2,000,000" are
                           changed to "USD 1,000,000."

                   1.14    The definition of "Mortgages" is hereby amended to
                           include any leasehold mortgages the Agent may request
                           the Borrower or any Subsidiary to execute and deliver
                           to the Agent from time to time.

                   1.15    A new definition is hereby added to the Credit
                           Agreement, which reads as follows:

                           "`Ocean Rig Contracts' shall mean those contracts
                           between the Borrower (or one of its Subsidiaries) and
                           Ocean Rig ASA, Inc. concerning the construction,
                           delivery and price of the Bingo 9001 and Bingo 9002
                           drilling rigs."

                   1.16    A new definition is hereby added to the Credit
                           Agreement, which reads as follows:


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<PAGE>   5


                           "`Petrodrill Rig Contracts' shall mean those
                           contracts between the Borrower and _________
                           concerning the construction, delivery and price of
                           the B103 and B104 drilling rigs."

                   1.17    A new definition is hereby added to the Credit
                           Agreement, which reads as follows:

                           "`Settlement' shall mean, any revision, extension or
                           renegotiation of an existing contract whether entered
                           into through the mutual consent of the contracting
                           parties or by court order or direction of an
                           arbitration panel where the amended contract amount
                           represents a change of greater than $10,000,000.00
                           from the original contract amount."

              2.   Section 2 is hereby amended as follows:

                   2.1     The following sentence is hereby added as the
                           penultimate sentence of Section 2.1(c):

                           "The Agent may terminate the Swing Line in its sole
                           discretion upon two (2) weeks' prior written notice
                           to the Borrower, setting forth in such notice the
                           date upon which the Swing Line shall terminate, at
                           which time all outstanding Swing Line Advances, plus
                           interest accrued thereon and any fees incurred in
                           connection therewith, shall be repaid in full."

                   2.2     Section 2.1(d) is deleted in its entirety and the
                           following shall be substituted in place thereof:

                           "(d) The Revolving Loan Commitment shall be reduced
                                by seventy-five percent (75%) of the Net
                                Proceeds of any Asset Sales."

                   2.3     A new sentence is hereby added to Section 2.3(c)
                           which reads as follows:

                           "The LC Facility will be reduced by the face amount
                           of any expiring, drawn or canceled Tranche B Letters
                           of Credit, excluding, however, those expiring Tranche
                           B Letters of Credit with automatic renewals which are
                           actually renewed."

              3.   A new Section 5.1(e) is hereby added to the Credit Agreement,
which reads as follows:


                           "(e)    Notwithstanding anything herein contained to
                                   the contrary, from and after the Amendment
                                   Date, no Advance shall be a LIBOR Advance
                                   until the delivery to the purchaser of each
                                   and every vessel to be delivered under the
                                   Ocean Rig Contracts and the Petrodrill Rig
                                   Contracts."


                                       5
<PAGE>   6


              4.   Section 9.1(b) is deleted in its entirety and the following
added in substitution thereof:

                      "(b) The Borrower shall pay to the Agent for distribution
                      to the Issuing Lender an annual letter of credit fee equal
                      to the face amount of each Letter of Credit (including the
                      Dollar Equivalent of the face amounts of outstanding
                      Offshore Currency Letters of Credit) outstanding times (i)
                      three percent (3%) per annum for the period from April 1,
                      2000 until the delivery to the purchaser of each and every
                      vessel to be delivered under the Ocean Rig Contracts and
                      the Petrodrill Rig Contracts, and (ii) the Applicable
                      Margin Amount then in effect for LIBOR Advances for all
                      other periods hereunder, each such fee to be payable
                      quarterly in arrears; provided that the Agent shall deduct
                      from such fee, for payment to the Issuing Lender, an
                      amount equal to one-tenth of one percent (0.10%) of the
                      face amount of each such Letter of Credit (including the
                      Dollar Equivalent of the face amounts of outstanding
                      Offshore Currency Letters of Credit); and provided
                      further, that if any Existing Letter of Credit is not
                      replaced with a new Letter of Credit within ninety (90)
                      days following the date hereof, the Borrower shall pay to
                      the Issuing Lender for such Existing Letters of Credit an
                      additional letter of credit fee equal to one-tenth of one
                      percent (0.10%) of the face amount of each such Letter of
                      Credit, payable quarterly in arrears."

         5.   A new Section 9.1(d) is hereby added to the Credit Agreement,
which reads as follows:

                      "(d)      The Borrower will pay to the Agent for ratable
                                distribution to the Lenders, the Commitment
                                Reduction Fee on the earlier of (a) the
                                termination of the Commitment and (b) September
                                30, 2000."

         6.   Section 11 is hereby amended as follows:

              6.1     Section  11.1(a)(iv)  shall be deleted in its entirety and
                      the following shall be substituted in place thereof:

                      "(iv)     as soon as available and in any event within
                                thirty (30) days after the end of each month, a
                                profit and loss report by contract for projects
                                where the total contract amount is in excess of
                                $10,000,000, in form and substance satisfactory
                                to the Agent."

              6.2     The following sentence is hereby added to Section 11.1(b)
                      as the second sentence thereof:

                      "The Agent may order audits and examinations by outside
                      auditing or consulting firms that may include the review
                      and testing of the Borrower's business plan and any items
                      relating to its business plan including underlying
                      contract assumptions, expense projections, revenue timing,
                      Eligible Accounts (including, without limitation, test
                      verifications, aging and reconciliations thereof, and
                      trial balances


                                       6
<PAGE>   7


                      therefor), Eligible Inventory and other related items, the
                      costs of which shall be borne by the Borrower."

              6.3     A new Section 11.1(g) is hereby added to the Credit
                      Agreement, which reads as follows:

                      "(g)    The Borrower will furnish to the Agent, as soon as
                              available and in any event within thirty (30) days
                              after the end of each month, a statement of
                              Borrower's consolidated cash receipts for such
                              month and a consolidating cash receipts projection
                              for the subsequent three months, setting forth by
                              contract the payments to the Borrower and its
                              Subsidiaries under each of their contracts for the
                              repair, construction and refurbishment of vessels
                              and other equipment, and the costs to the Borrower
                              and its Subsidiaries of the goods and services
                              required thereunder for such period; provided that
                              such statement shall not include or take into
                              account any changes or adjustments to balance
                              sheet items."

              6.4     A new Section 11.1(h) is hereby added to the Credit
                      Agreement, which reads as follows:

                      "(h)    Promptly upon the occurrence of each Contract
                              Loss, and no less than five (5) Business Days
                              prior to the Borrower's or any Subsidiary's
                              entering into any Settlement, the Borrower shall
                              provide to the Agent a statement of projected
                              expenses and revenues of the Borrower (on a
                              consolidated basis), which statement shall give
                              effect to each Settlement (including without
                              limitation the proposed Settlement) and each
                              Contract Loss."

              6.5     A new Section 11.11 is hereby added to the Credit
                      Agreement, which reads as follows:

                      "11.11 Field Audits and Environmental Audits. The Borrower
                      shall, and shall cause each Subsidiary to, within thirty
                      (30) days following the date of Amendment No. 2:

                         (a) commence Phase I environmental audits for each
                         parcel of real property owned by the Borrower or any
                         Subsidiary; and

                         (b) cooperate fully with the Agent and the Lenders to
                         commence an audit of the Borrower's and the
                         Subsidiaries' books, records and accounts."

         7.   Section 12 is hereby amended as follows:


                                       7
<PAGE>   8





              7.1     Section 12.5(h) of the Credit Agreement shall be deleted
                      in its entirety and the following shall be substituted in
                      place thereof:

                      "(h)    other Indebtedness not otherwise permitted by this
                              Section 12.5 in the principal amount outstanding
                              of up to USD 5,000,000 in any year, and up to an
                              aggregate of USD 10,000,000 from the date hereof
                              through the Maturity Date."

              7.2     Section 12.10 of the Credit Agreement shall be deleted in
                      its entirety and the following shall be substituted in
                      place thereof:

                      "Sale of Fixed Assets or Accounts. Sell, transfer or
                      assign any fixed assets or any account receivable;
                      provided, however, that the Borrower may sell, transfer or
                      assign any assets in the ordinary course of business in an
                      amount of up to an aggregate of USD 5,000,000 from the
                      date of this Credit Agreement through the Maturity Date;
                      provided, further, that one hundred percent (100%) of the
                      Net Proceeds from such sales shall be applied first to
                      repay the any amounts outstanding under the Revolving
                      Credit Facility and second to cash collateralize Tranche B
                      Letters of Credit to the extent the aggregate face amount
                      of such Letters of Credit exceeds eighty percent (80%) of
                      the orderly liquidation value of the Equipment."

              7.3     Section 12.11 of the Credit Agreement shall be deleted in
                      its entirety and the following shall be substituted in
                      place thereof:

                      "Leverage Ratio. Permit the Leverage Ratio to be greater
                       than the Required Ratio set forth below:

<TABLE>
<CAPTION>
                      Quarter Ending                Required Ratio
                      --------------                --------------
<S>                                                 <C>
                      March 31, 2000                4.50 to 1.00
                      June 30, 2000                 4.00 to 1.00
                      September 30, 2000            4.00 to 1.00
                      December 31, 2000             3.00 to 1.00
                      March 31, 2001                3.00 to 1.00
                      June 30, 2001 and             2.25 to 1.00"
                      each quarter thereafter
</TABLE>

              7.4     Section 12.12 of the Credit Agreement shall be deleted in
                      its entirety and the following shall be substituted in
                      place thereof:

                      "Fixed Charge Coverage Ratio. Permit its Fixed Charge
                      Coverage  Ratio to be less than the Required Ratio set
                      forth below:

                                       8
<PAGE>   9

<TABLE>
<CAPTION>
                              Quarter Ending             Required Ratio
                              --------------             --------------
<S>                                                      <C>
                              March 31, 2000                1.10
                              June 30, 2000                 1.50
                              September 30, 2000            1.35
                              December 31, 2000             1.25
                              March 31, 2001                1.50
                              June 30, 2001                 1.50
                              September 30, 2001            1.35
                              December 31, 2001             1.25
                              March 31, 2002 and            1.50
                              thereafter
</TABLE>

              7.5     Section 12.13 of the Credit Agreement shall be deleted in
                      its entirety and the following shall be substituted in
                      place thereof:

                      "Net Worth. Permit its Net Worth, as measured on a
                      quarterly basis, to be less than the aggregate of (a)
                      ninety-five percent (95%) of Net Worth at December 31,
                      1999, plus (b) seventy-five percent (75%) of positive net
                      income for each fiscal quarter and (c) seventy-five
                      percent (75%) of the Net Proceeds of future offerings of
                      common stock or other equity of the Borrower."

              7.6     Section 12.15(a) shall be amended and revised such that
                      the following shall be added to the end of the existing
                      paragraph:

                      "; provided further, that, until delivery to the purchaser
                      of each and every vessel to be delivered under the Ocean
                      Rig Contracts and the Petrodrill Rig Contracts, neither
                      the Borrower nor any Subsidiary shall make any
                      Acquisition."

              7.7     Section 12.15(d) shall be deleted in its entirety and the
                      following shall be substituted in place thereof:

                      "(d)    present and future investments in joint ventures
                              or similar arrangements, including guarantees of
                              joint venture obligations, up to USD 13,000,000 in
                              respect of any one such investment, not to exceed
                              USD 20,000,000 in respect of all such investments;
                              and"

              7.8     Section 12.15(e) shall be deleted in its entirety and the
                      following shall be substituted in place thereof:

                      "(e)    capitalized fixed asset additions, not to exceed
                              USD 12,000,000 per calendar year; provided that,
                              notwithstanding anything herein to the contrary,
                              neither the Borrower nor any of its U.S.
                              subsidiaries shall make advances or loans to any
                              one non-U.S. subsidiary in excess of USD 5,000,000
                              and to all non-U.S. subsidiaries which exceed, in
                              the aggregate, USD 10,000,000."


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<PAGE>   10


              7.9     Section 12.17 shall be deleted in its entirety and the
                      following shall be substituted in place thereof:

                      "Dividends. Without the consent of the Majority Lenders,
                      make any dividend payments (other than dividends payable
                      in stock) or other distributions to its stockholders or
                      redeem or otherwise acquire any of its stock."

         8.   A new Section 13.1(l) is hereby added to the Credit Agreement,
which reads as follows:

                      "(l)    The Borrower or any Subsidiary incurs a Contract
                              Loss or enters into a Settlement, and after giving
                              effect to such Settlement or Contract Loss and all
                              other Settlements and Contract Losses, the cash
                              flow projections of the Borrower in any statement
                              required to be delivered under Section 11.1(h)
                              indicate such Settlement or Contract Loss shall or
                              is likely to result in a Default or Event of
                              Default under Sections 13.1 (a) through (h)."

         9.   Conditions Precedent.

              9.1 Documents and Other Items Required as Conditions Precedent to
              Amendment No. 2. The effectiveness of the modifications to the
              Credit Agreement contemplated by this Amendment No. 2 is subject
              to the condition precedent that the Agent shall have received at
              or prior to the Amendment Date all of the following, each dated on
              or before the Amendment Date and each in form and substance
              satisfactory to the Agent and its counsel:

                      (a) Each of the following documents (the "Amendment
              Documents") shall have been duly authorized and executed with
              original counterparts thereof delivered to the Agent:

                           (i)      This Amendment No. 2;

                           (ii)     Amendment No. 2 to the U.S. Preferred Fleet
                                    Mortgage;

                           (iii)    Ratifications of Security Agreements;

                           (iv)     Ratifications of Pledges;

                           (v)      Ratification of Guaranty;

                           (vi)     Legal Opinion of Jones Walker Waechter
                                    Poitevent Carrere & Denegre L.L.P.,

                           (vii)    Ratification by the Board of Directors of
                                    Friede Goldman Halter, Inc.;


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<PAGE>   11


                           (viii)   Leasehold Mortgages on properties designated
                                    by the Agent;

                           (ix)     A Borrowing Base Certificate with respect to
                                    the Borrowing Base for the month ending
                                    February 29, 2000; and

                           (x)      such further documents as the Lenders may
                                    reasonably request;

                      (b) The Lenders shall have received satisfactory evidence
              that all amounts of principal, interest and fees outstanding under
              or in connection with the Swing Line Loans have been repaid by the
              Borrower in full.

                      (c) The Agent shall have received satisfactory evidence
              that the Borrower shall have paid all reasonable fees and expenses
              of Agent's counsel.

                      (d) The Agent shall have received from the Borrower
              payment of an amendment fee equal to 0.5% of the Commitment.

                      (e) The representations and warranties contained in
              Section 10 of the Credit Agreement shall be true on the Amendment
              Date with the same effect as though such representations and
              warranties had been made on and as of such date, and no Event of
              Default specified in Section 13 of the Credit Agreement and no
              event which, with the lapse of time or the giving of notice and
              the lapse of time specified in Section 13 of the Credit Agreement,
              would become such an Event of Default, shall have occurred and be
              continuing.

              9.2 Waiver of Conditions Precedent. All of the conditions
              precedent contained in this Section 9 are for the sole benefit of
              the Agent and the Lenders and the Agent may waive any of them in
              its absolute discretion, and on such conditions as it deems
              proper.

         10.  Representations. The Borrower represents and warrants that:

              (a) The Borrower is a corporation, duly organized and validly
         existing in good standing under the laws of the State of Mississippi,
         and has the requisite power and authority (i) to carry on its business
         as presently conducted; and (ii) to enter into and perform its
         obligations under the Amendment Documents.

              (b) The execution, delivery and performance by Borrower and the
         Guarantors of the Amendment Documents and any other instrument or
         agreement provided for by this Amendment No. 2 to which it is a party,
         have been duly authorized by all necessary corporate action, do not
         require stockholder approval other than such as has been duly obtained
         or given, do not or will not contravene any of the terms of its
         Certificate of Incorporation or Bylaws, or similar such organizational
         documentation, and will not violate any provision of law or of any
         order of any court or governmental agency or constitute (with or
         without notice or lapse of time or both) a default under, or result
         (except as contemplated


                                       11
<PAGE>   12


         by this Amendment No. 2) in the creation of any security interests,
         lien, charge or encumbrance upon any of its properties or assets
         pursuant to, any agreement, indenture or other instrument to which it
         is a party or by which it may be bound other than is in favor of the
         Agent; the Amendment Documents have been duly executed and delivered by
         the Borrower and the Guarantors and constitute the respective legal,
         valid and binding agreements, enforceable in accordance with the
         respective terms thereof as to which each of the Borrower and the
         Guarantors is a party. The enforceability of this Amendment No. 2,
         however, is subject to all applicable bankruptcy, insolvency,
         reorganization, moratorium, and other laws affecting the rights or
         creditors and to general equity principles.

              (c) Except as set forth in the Credit Agreement, there are no
         suits or proceedings pending or to its knowledge threatened against or
         affecting Borrower or any Guarantor which if adversely determined would
         have a material adverse effect upon its business, financial condition
         or operations.

              (d) Other than such as have been obtained, no license, consent or
         approval of any Governmental Agency or other regulatory authority is
         required for the execution, delivery or performance of this Amendment
         No. 2 or any other Amendment Document or any instrument contemplated
         herein or therein.

              11. Expenses. The Borrower agrees to promptly, whether or not the
         modifications to the Credit Agreement contemplated by this Amendment
         No. 2 become effective, (x) reimburse the Agent for all fees and
         disbursements of external counsel to the Agent and all reasonable out
         of pocket fees and disbursements of the Agent incurred in connection
         with the preparation, execution and delivery of this Amendment No. 2
         and all other documents referred to herein, and all amendments or
         waivers to or termination of this Amendment No. 2 or any agreement
         referred to herein; and (y) reimburse the Agent for all fees and
         disbursements of internal and external counsel to the Agent and all
         reasonable out of pocket fees, disbursements and travel-related
         expenses of the Agent incurred in connection with the protection of the
         rights of the Agent under this Amendment No. 2 and all other documents
         referred to herein, whether by judicial proceedings or otherwise. The
         obligations of the Borrowers under this Section 11 shall survive
         payment of the Loan.

         12. Wherever and in each such place the term "Credit Agreement" is used
         throughout the Credit Agreement, such term shall be read to mean the
         Credit Agreement as amended by this Amendment No. 2.

         13. Except as specifically amended by this Amendment No. 2, all of the
         terms and provisions of the Credit Agreement shall remain in full force
         and effect.

         14. All capitalized terms used herein but not defined herein shall have
         the meanings given to them in the Credit Agreement.


                                       12
<PAGE>   13


         15. THIS AMENDMENT NO. 2 TO CREDIT AGREEMENT SHALL BE GOVERNED BY AND
         CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS.




              [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]


                                       13
<PAGE>   14


         IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment No. 2 to Credit Agreement on the date first written above.

                                            BORROWER:
                                            --------

                                            FRIEDE GOLDMAN HALTER, INC.


                                            By:
                                               ---------------------------------
                                            Name:
                                                 -------------------------------
                                            Title:
                                                  ------------------------------

                                            LENDERS:

                                            WELLS FARGO BANK (TEXAS), NATIONAL
                                            ASSOCIATION


                                            By:

                                            Name: Joseph P. Maxwell
                                            Title: Vice President

                                            ROYAL BANK OF CANADA


                                            By:

                                            Name:

                                            Title:


                                            HIBERNIA NATIONAL BANK


                                            By:

                                            Name:

                                            Title:



                                       14
<PAGE>   15


                                           BANK ONE, N.A.


                                           By:

                                           Name:

                                           Title:



                                           ADMINISTRATIVE AGENT AND CO-ARRANGER:

                                           WELLS FARGO BANK (TEXAS), NATIONAL
                                           ASSOCIATION


                                           By:

                                           Name: Joseph P. Maxwell
                                           Title: Vice President

                                           SYNDICATION AGENT AND CO-ARRANGER:

                                           BANC ONE CAPITAL MARKETS, INC.


                                           By:

                                           Name:

                                           Title:



                                       15