<PAGE>   1
                                                                    EXHIBIT 10.5


                              AMENDED AND RESTATED
                              EMPLOYMENT AGREEMENT

                  This Amended and Restated Employment Agreement ("Agreement")
made and entered into as of June 1, 1999, by and between FRIEDE GOLDMAN
INTERNATIONAL INC. (the "Company"), a Mississippi corporation, and John F.
Alford (the "Executive");

                  WHEREAS, the Company and the Employee entered into an
Employment and Non-Competition Agreement, effective as of January 1, 1997, as
amended (the "Original Agreement"), and the Executive is currently serving as
Executive Vice President of the Company;

                  WHEREAS, pursuant to the Agreement and Plan of Merger (the
"Merger Agreement"), dated as of June 1, 1999, by and between Halter Marine
Group, Inc., a Delaware corporation ("Halter Marine"), and the Company, the
parties thereto have agreed to a merger (the "Merger") pursuant to the terms
thereof;

                  WHEREAS, the Company desires to secure the continued
employment of the Executive in accordance herewith and the Executive is willing
to commit himself to be employed by the Company on the terms and conditions
herein set forth and thus to forego opportunities elsewhere; and

                  WHEREAS, the parties desire to amend and restate the Original
Agreement and enter into this Agreement, as of the Effective Date (as defined
below), setting forth the terms and conditions for the employment relationship
of the Executive with the Company during the Employment Period (as defined
below);

                  NOW, THEREFORE, IN CONSIDERATION of the mutual premises,
covenants and agreements set forth below, it is hereby agreed as follows:

         1.       Employment and Term.

                  (a) Employment. The Company agrees to employ the Executive,
and the Executive agrees to be employed by the Company, in accordance with the
terms and provisions of this Agreement during the Employment Period (as defined
below).

                  (b) Term. The term of the Executive's employment under this
Agreement shall commence (the "Effective Date") as of the Effective Time of the
Merger as defined in the Merger Agreement, and shall continue until the third
anniversary of the Effective Date (such term being referred to hereinafter as
the "Employment Period"); provided, however, that commencing on the second
anniversary of the Effective Date (and each anniversary of the Effective Date
thereafter) the Employment Period shall automatically be extended for one
additional year,


<PAGE>   2
                                       2


unless, 90 days prior to such date, the Company or the Executive shall give
written notice to the other party that it or he, as the case may be, does not
wish to so extend this Agreement. Notwithstanding the foregoing, in the event
that the Merger Agreement is terminated, this Agreement shall be deemed canceled
and of no force or effect and the Executive shall continue to be subject to such
agreements and arrangements that were in effect on the date hereof, including,
without limitation, the Original Agreement.

         2.       Duties and Powers of Executive.

                  (a) Position. During the Employment Period, the Executive
shall serve as an Executive Vice President of the Company with such authority,
duties and responsibilities with respect to such position as set forth in
subsection (b) hereof.

                  (b) Duties. The Executive shall perform such reasonable duties
as may be delineated in the Company's By-laws, as the same may be amended from
time to time, or as may be determined by the Board of Directors of the Company
(the "Board") from time to time. In such capacity, the Executive shall report
directly to JLH and to the Board.

                  (c) Attention. Except as provided below, during the Employment
Period, and excluding any periods of vacation and sick leave to which the
Executive is entitled, the Executive shall devote full attention and time during
normal business hours to the business and affairs of the Company and, to the
extent necessary to discharge the responsibilities assigned to the Executive
under this Agreement, use the Executive's best efforts to carry out such
responsibilities faithfully and efficiently. The Executive shall be entitled to
fulfill his duties under this Agreement from the Company's offices in Jackson,
Mississippi, Gulfport, Mississippi or such other location as shall be the
Company's principal executive office. It shall not be considered a violation of
the foregoing for the Executive to serve on corporate, industry, civic or
charitable boards or committees, as long as such activities do not interfere
with the performance of the Executive's responsibilities as an employee of the
Company in accordance with this Agreement.

         3.       Compensation.

                  (a) Base Salary. During the Employment Period, the Executive's
annual base salary ("Annual Base Salary") shall be payable in accordance with
the Company's general payroll practices. The Executive's Annual Base Salary
shall be at least $300,000. The Executive's Annual Base Salary (as increased
from time to time) may not be decreased during the Employment Period. Any
increase in Annual Base Salary shall not serve to limit or reduce any other
obligation of the Company under this Agreement.

                  (b) Annual Bonus. During the Employment Period, the Executive
shall participate in the Company's annual bonus plans and shall be awarded
bonuses thereunder that provide him, on a year-by-year basis, an annual bonus
(the "Annual Bonus"). The Company's


<PAGE>   3
                                       3


annual bonus plans shall, as necessary, be amended to provide that Executive may
earn an Annual Bonus of up to 1-1/2 times his Annual Base Salary; provided,
however, that Executive's Annual Bonus shall be at least equal to the highest
annual bonus granted to any other executive of the Company for such year other
than JLH and JD3.

                  (c) Equity Compensation. During the Employment Period, the
Executive shall participate in the Company's equity compensation plans (the
"Incentive Compensation Plans") and will be granted awards thereunder providing
him, on a year-by-year basis, long-term incentive compensation (the "Incentive
Compensation Awards") at least equal to the highest amount of Incentive
Compensation Awards granted to any other officer or employee of the Company for
such year (other than JLH and JD3), with the exception of new hires. In addition
to the annual Incentive Compensation Awards described above, on the Effective
Date, the Executive shall receive a grant of an option to purchase 500,000
shares of the Company's common stock, at an exercise price equal to the closing
price of the Company's common stock on the Effective Date. Options to purchase
175,000 of such shares shall be immediately exercisable. Subject to the further
provisions of this Agreement, the options to purchase the remaining 325,000
shares shall vest ratably over the next three years on each successive
anniversary of the Effective Date.

                  (d) Existing Options. All of the Executive's existing options
to purchase shares of the Company's common stock shall remain outstanding
following the consummation of the Merger.

                  (e) Retirement and Welfare Benefit Plans. During the
Employment Period, the Executive shall be eligible to participate in all
savings, retirement and welfare plans, practices, policies and programs
applicable generally to employees and/or senior executive officers of the
Company.

                  (f) Deferred Compensation. During the Employment Period, the
Executive shall be credited with an amount equal to 10% of his Annual Base
Salary and Annual Bonus which shall be contributed to a non-qualified deferred
compensation plan of the Company.

                  (g) Expenses. The Company shall reimburse the Executive for
all expenses, including those for travel and entertainment, properly incurred by
him in the performance of his duties hereunder in accordance with policies
established from time to time by the Company.

                  (h) Fringe Benefits and Perquisites. During the Employment
Period, the Executive shall be entitled to receive fringe benefits and
perquisites in accordance with the plans, practices, programs and policies of
the Company from time to time in effect, commensurate with his position.


<PAGE>   4
                                       4


         4.       Termination of Employment.

                  (a) Death or Disability. The Executive's employment shall
terminate upon the Executive's death or, at the election of the Board of
Directors of the Company ("Board") or the Executive, by reason of Disability (as
defined below) during the Employment Period; provided, however, that the Board
may not terminate the Executive's employment hereunder by reason of Disability
unless at the time of such termination there is no reasonable expectation that
the Executive will return to work within the next one hundred eighty (180) day
period. For purposes of this Agreement, disability ("Disability") shall have the
same meaning as set forth in the Halter Marine long-term disability plan or its
successor.

                  (b) By the Company for Cause. The Company may terminate the
Executive's employment during the Employment Period for Cause (as defined
below). For purposes of this Agreement, "Cause" shall mean (i) the Executive's
gross negligence in the performance or intentional nonperformance (continuing
for ten days after receipt of written notice of need to cure) of any of the
Executive's material duties hereunder (other than such failure resulting from
the Executive's incapacity due to physical or mental illness or any such actual
or anticipated failure after the issuance of a Notice of Termination for Good
Reason by the Executive pursuant to Section 4(d)) or (ii) the Executive's
commission of one or more acts of moral turpitude that constitutes a felony,
which have or result in an adverse effect on the Company, monetarily or
otherwise or one or more significant acts of dishonesty, fraud or misconduct
with respect to the business or affairs of the Company which materially and
adversely affects the operations or reputation of the Company. The determination
of whether Cause exists must be made by a resolution that is passed upon the
affirmative vote of at least two-thirds (2/3) of the membership of the Board.

                  (c) By the Company without Cause. Notwithstanding any other
provision of this Agreement, the Company may terminate the Executive's
employment other than by a termination for Cause during the Employment Period,
but only upon the affirmative vote of at least one-half (1/2) of the membership
of the Board.

                  (d) By the Executive for Good Reason. The Executive may
terminate his employment during the Employment Period for Good Reason (as
defined below). For purposes of this Agreement, "Good Reason" shall mean the
occurrence without the written consent of the Executive of any one of the
following acts by the Company, or failures by the Company to act, unless such
act or failure to act is corrected prior to the Date of Termination (as defined
below) specified in the Notice of Termination (as defined below) given in
respect thereof:

                  (i)   an adverse change in the Executive's title, authority,
         duties, responsibilities or reporting lines as specified in Sections
         2(a) and 2(b) of this Agreement;

                  (ii)  a reduction by the Company in the Executive's Annual
         Base Salary below the amounts set forth in Section 3(a) above;


<PAGE>   5
                                       5


                  (iii)  any failure by the Company to continue in effect any
         benefit plan or arrangement (including, without limitation, the
         Company's tax-qualified and supplemental retirement plans, deferred
         compensation plans, group life insurance plan, and medical, dental,
         accident and disability plans or any other plans providing the
         Executive with similar benefits (herein referred to as "Benefit
         Plans")) without replacing such Benefit Plan with a plan providing for
         substantially similar benefits or the taking of any action by the
         Company that would adversely affect the Executive's participation in
         any Benefit Plan or deprive the Executive of any material fringe
         benefit enjoyed by the Executive;

                  (iv)   any failure by the Company to continue in effect any
         incentive plan or arrangement, as amended and supplemented, in which
         the Executive is participating from time to time without replacing such
         incentive plan with a plan providing for substantially similar
         benefits, or the taking of any action by the Company that would
         adversely affect the Executive's opportunity to participate in any such
         plan or reduce the Executive's ability to obtain benefits under any
         such plan, expressed as a percentage of Annual Base Salary, in any
         fiscal year as compared to the immediately preceding fiscal year;

                  (v)    any failure by the Company to continue in effect any
         plan or arrangement to receive securities of the Company without
         replacing such plan with a plan providing for substantially similar
         benefits or the taking of any action by the Company that would
         adversely affect the Executive's opportunity to participate in or
         materially reduce the Executive's ability to obtain benefits under any
         such plan;

                  (vi)   any failure by the Company to provide the Executive
         with the number of paid vacation days to which he is entitled under the
         Company's vacation policies as in effect from time to time;

                  (vii)  the relocation of the Company's principal executive
         offices to a location outside of Gulfport, Mississippi, unless the
         Company's principal executive offices are relocated outside of
         Gulfport, Mississippi for a valid business reason. In the event the
         Company's principal executive offices are so relocated, the Company
         will, at the option of the Executive, either (A) provide an apartment
         for the Executive in the new location and will reimburse the Executive
         for his reasonable costs in commuting from either Jackson, Mississippi
         or Gulfport, Mississippi to such new location or (B) allow the
         Executive to work out of any of the Company's Jackson, Mississippi,
         Gulfport, Mississippi or New Orleans, Louisiana offices. If the Company
         does not provide the Executive with such option, any such relocation
         shall constitute Good Reason;

                  (viii) the failure by the Company to pay to the Executive any
         portion of the Executive's current compensation and benefits or to pay
         to the Executive any portion of


<PAGE>   6
                                       6


         an installment of deferred compensation under any deferred compensation
         program of the Company within thirty (30) days of the date such
         compensation is due;

                  (ix)   a substantial increase in the Executive's business
         travel obligations or an adverse change in the Executive's manner of
         travel as of the Effective Date;

                  (x)    any purported termination of the Executive's employment
         that is not effected pursuant to a Notice of Termination satisfying the
         requirements of Section 4(e); for purposes of this Agreement, no such
         purported termination shall be effective;

                  (xi)   the failure of the Company to obtain a satisfactory
         agreement from any successor of the Company requiring such successor to
         assume and agree to perform the Company's obligations under this
         Agreement, as contemplated in Section 13; or

                  (xii)  the failure by the Company to comply with any material
         provision of this Agreement.

                  (e) Determination of Good Reason Upon a Change in Control.
Following a Change in Control (as defined in Exhibit A hereto), the Executive's
determination that an act or failure to act constitutes Good Reason shall be
presumed to be valid unless such determination is deemed to be unreasonable by
an arbitrator. The Executive's right to terminate the Executive's employment for
Good Reason shall not be affected by the Executive's incapacity due to physical
or mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any act or failure to act
constituting Good Reason hereunder.

                  (f) Notice of Termination. During the Employment Period, any
purported termination of the Executive's employment (other than by reason of
death) shall be communicated by written Notice of Termination from one party
hereto to the other party hereto in accordance with Section 15(b). For purposes
of this Agreement, a "Notice of Termination" shall mean a notice that shall
indicate the specific termination provision in this Agreement relied upon, if
any, and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated. Further, a Notice of Termination for Cause is
required to include a copy of a resolution duly adopted by the affirmative vote
of not less than two-thirds (2/3) of the entire membership of the Board at a
meeting of the Board that was called and held no more than ninety (90) days
after the date the Board had knowledge of the most recent act or omission giving
rise to such breach for the purpose of considering such termination (after
reasonable notice to the Executive and an opportunity for the Executive,
together with the Executive's counsel, to be heard before the Board and, if
possible, to cure the breach that was the basis for the Notice of Termination
for Cause) finding that, in the good faith opinion of the Board, the Executive
was guilty of conduct set forth in clause (i) or (ii) of the definition of
Cause, and specifying the particulars thereof in detail. Unless the Board
determines otherwise, a Notice of Termination by the Executive


<PAGE>   7
                                       7


alleging a termination for Good Reason must be made within thirty (30) days of
the act or failure to act that the Executive alleges to constitute Good Reason.

                  (g) Date of Termination. "Date of Termination" with respect to
any purported termination of the Executive's employment during the Employment
Period, shall mean the date specified in the Notice of Termination (which, in
the case of a termination by the Company, for reasons other than Cause, shall
not be less than thirty days and, in the case of a termination by the Executive,
shall not be less than thirty (30) days nor more than sixty (60) days, from the
date such Notice of Termination is given).

         5.       Obligations of the Company Upon Termination.

                  (a) Termination other than for Cause, Death or Disability.
During the Employment Period, if the Company shall terminate the Executive's
employment (other than for Cause, death or Disability) or the Executive shall
terminate his employment for Good Reason (termination in any such case being
referred to as "Termination") the Company shall pay to the Executive the
amounts, and provide the Executive with the benefits, described in this Section
5 (hereinafter referred to as the "Severance Payments"). The amounts specified
in this Section 5(a) shall be paid within thirty (30) days after the Date of
Termination. Such payments shall be in addition to those rights and benefits to
which the Executive may be entitled under the relevant Company employee benefit
plans or programs.

                  (i)   Lump Sum Payment. The Company shall pay to the Executive
         a lump sum cash payment of $750,000.00. Furthermore, if at the Date of
         Termination the fair market value (as defined below) of the stock
         option granted to the Executive pursuant to Section 3(c) of this
         Agreement is less than $2,500,000.00, then the Company shall pay to the
         Executive an additional lump sum cash payment, not to exceed
         $750,000.00, in an amount equal to the excess of $2,500,000.00 over the
         fair market value of the stock option granted to the Executive pursuant
         to Section 3(c). Solely for the purposes of computing this additional
         cash payment, it shall be assumed that (A) the Executive still owns and
         has not yet exercised the option to purchase 500,000 shares of the
         Company's common stock granted pursuant to Section 3(c) and (B) the
         fair market value of the stock option is equal to the excess, if any,
         of the closing price of the Company's common stock on the Date of
         Termination as such price is reported by the exchange upon which the
         Company's common stock is then traded over the exercise price of the
         stock option as determined pursuant to Section 3(c) of this Agreement.

                  (ii)  Accrued Obligations. The Company shall pay the Executive
         a lump sum amount in cash equal to the sum of (A) the Executive's
         Annual Base Salary through the Date of Termination to the extent not
         theretofore paid, (B) an amount equal to any Annual Bonus earned with
         respect to fiscal years ended prior to the year that includes the Date
         of Termination to the extent not theretofore paid and (C) an amount
         equal to the


<PAGE>   8
                                       8


         target amount payable under any Annual Bonus for the fiscal year that
         includes the Date of Termination or, if greater, the average of the
         three years' highest gross bonus awards, not necessarily consecutive,
         paid by the Company to the Executive in the five years preceding the
         year of Termination multiplied by a fraction the numerator of which
         shall be the number of days from the beginning of such fiscal year to
         and including the Date of Termination and the denominator of which
         shall be 365, in each case to the extent not theretofore paid. (The
         amounts specified in clauses (A), (B) and (C) shall be hereinafter
         referred to as the "Accrued Obligations.")

                  (iii) Deferred Compensation. The Company shall vest or provide
         for the lapse of all restrictions on any compensation previously
         deferred by the Executive and shall pay the Executive a lump sum
         payment in an amount equal to any compensation previously deferred by
         the Executive (together with any accrued interest or earnings thereon).

                  (iv)  Accelerated Vesting and Payment of Long-Term Incentive
         Awards. All equity-based Incentive Compensation Awards held by the
         Executive under any Incentive Compensation Plan maintained by the
         Company or any affiliate and all of the Executive's options, whether
         granted hereunder or otherwise, shall immediately vest and become
         exercisable as of the Date of Termination. In addition, all of the
         Executive's options shall remain outstanding and exercisable until the
         expiration of the original term of such option. Moreover, the
         restrictions on the transfer of the underlying shares of such options
         described in the fifth sentence of Section 3 (c) shall lapse.

                  (v) Continuation of Welfare Benefits. For three years
         following the Date of Termination, the Company shall provide or arrange
         to provide the Executive and his dependants with life, disability,
         accident and health insurance benefits substantially similar to those
         provided to similarly situated senior executive officers of the Company
         during such period, with the Executive charged a monthly premium(s) for
         such coverage(s) that does not exceed the premium(s) charged to a
         similarly situated senior executive officers of the Company for such
         coverage(s); provided, however, the Executive must elect continuation
         coverage under such group health plans in accordance with COBRA,
         effective as of the Date of Termination; provided, further, benefits
         otherwise receivable by the Executive pursuant to this Section 5(a)(v)
         shall be reduced to the extent other comparable benefits are actually
         received by the Executive and his dependants during the three-year
         period following the Date of Termination, and any such benefits
         actually received by the Executive or his dependants shall be reported
         to the Company.

                  (b) Failure of the Company to Renew the Agreement. Subject to
the provisions of Section 7 of this Agreement, in the event that the Company
notifies the Executive that it does not intent to extend the Employment Period,
as contemplated in Section 1(b), the Executive shall be entitled to receive all
of the Severance Payments described in Section 5(a)


<PAGE>   9
                                       9


above, except that the period of continuation of welfare benefits in Section
5(a)(v) shall be for two years instead of three. Such payments shall be in
addition to those rights and benefits to which the Executive may be entitled
under the relevant Company employee benefit plans or programs.

                  (c) Termination by the Company for Cause or by the Executive
Other than for Good Reason. Subject to the provisions of Section 7 of this
Agreement, if the Executive's employment shall be terminated for Cause during
the Employment Period, or if the Executive terminates employment during the
Employment Period other than for Good Reason, the Company shall have no further
obligations to the Executive under this Agreement other than the Accrued
Obligations and deferred compensation and such rights and benefits to which the
Executive may be entitled under the relevant Company employee benefit plans or
programs. The Company hereby agrees to provide the Executive with an additional
180-day period following the Date of Termination in which to exercise any
options that were vested as of his Date of Termination. Such 180-day period
shall be extended by a number of days equal to the number of days in any
"blackout" periods, if any, imposed by the Company during which such options are
unexercisable.

                  (d) Termination due to Death and Disability. If the
Executive's employment shall terminate by reason of death or Disability, the
Company shall pay the Executive or his estate, as the case may be, the Accrued
Obligations and deferred compensation. Such payments shall be in addition to
those rights and benefits to which the Executive or his estate may be entitled
under the relevant Company employee benefit plans or programs.

                  (e) Gross-Up Payment. In the event that any payment or benefit
received or to be received by the Executive (whether pursuant to the terms of
this Agreement or any other plan, arrangement or agreement with (A) the Company
or (B) any Person (as defined in Section 4 (e)) whose actions result in a Change
in Control or (C) any Person affiliated with the Company or such Person) (all
such payments and benefits, including the Severance Payments, being hereinafter
called "Total Payments") would not be deductible (in whole or in part) by the
Company, an affiliate or Person making such payment or providing such benefit as
a result of Section 280G of the Code, then, the Company shall pay to the
Executive such additional amounts (the "Gross-Up Payment") such that the net
amount retained by the Executive, after deduction of any excise tax imposed
under Section 4999 of the Code (the "Excise Tax") on the Total Payments and any
federal, state and local income and employment taxes and Excise Tax upon the
Gross-Up Payment, shall be equal to the Total Payments. For purposes of
determining the amount of the Gross-Up Payment, the Executive shall be deemed to
pay federal income tax at the highest marginal rate of federal income taxation
in the calendar year in which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rate of taxation in the state and
locality of the Executive's residence on the date on which the Gross-Up Payment
is calculated for purposes of this Section 5(e), net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state and
local taxes. In the event that the


<PAGE>   10
                                       10


Excise Tax is subsequently determined to be less than the amount taken into
account hereunder, the Executive shall repay to the Company, at the time that
the amount of such reduction in Excise Tax is finally determined, the portion of
the Gross-Up Payment attributable to such reduction (plus that portion of the
Gross-Up Payment attributable to the Excise Tax and federal, state and local
income tax imposed on the Gross-Up Payment being repaid by the Executive to the
extent that such repayment results in a reduction in Excise Tax and/or a
federal, state or local income tax deduction) plus interest on the amount of
such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the
event that the Excise Tax is determined to exceed the amount taken into account
hereunder (including by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), the Company shall
make an additional Gross-Up Payment in respect of such excess (plus any
interest, penalties or additions payable by the Executive with respect to such
excess) at the time that the amount of such excess is finally determined. The
Executive and the Company shall each reasonably cooperate with the other in
connection with any administrative or judicial proceedings concerning the
existence or amount of liability for Excise Tax with respect to the Total
Payments.

         6. Indemnification. In the event the Executive is made party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by the Company
against the Executive), by reason of the fact that he is or was performing
services under this Agreement, then the Company shall indemnify the Executive
against all expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement, as actually and reasonably incurred by the Executive in
connection therewith. In the event that both the Executive and the Company are
made a party to the same third-party action, complaint, suit or proceeding, the
Company agrees to engage competent legal representation, and the Executive
agrees to use the same representation, provided that if counsel selected by the
Company shall have a conflict of interest that prevents such counsel from
representing the Executive, the Executive may engage separate counsel and the
Company shall pay all attorneys' fees of such separate counsel. Further, while
the Executive is expected at all times to use his best efforts to faithfully
discharge his duties under this Agreement, the Executive cannot be held liable
to the Company for errors or omissions made in good faith where the Executive
has not exhibited gross, willful and wanton negligence and misconduct or
performed criminal and fraudulent acts which materially damage the business and
the Company.

         7. Nonexclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any benefit, plan,
program, policy or practice provided by the Company and for which the Executive
may qualify (except with respect to any benefit to which the Executive has
waived his rights in writing), nor shall anything herein limit or otherwise
affect such rights as the Executive may have under any other contract or
agreement entered into after the Effective Date with the Company. Amounts which
are vested benefits or which the Executive is otherwise entitled to receive
under any benefit, plan, policy, practice or program of, or any contract or
agreement entered into with, the Company shall be payable in


<PAGE>   11
                                       11


accordance with such benefit, plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.

         8. Full Settlement; Mitigation. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others, provided that nothing herein shall preclude the Company
from separately pursuing recovery from the Executive based on any such claim. In
no event shall the executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts (including amounts for damages
for breach) payable to the Executive under any of the provisions of this
Agreement and such amounts shall not be reduced whether or not the Executive
obtains other employment.

         9. Arbitration. Any dispute or controversy about the validity,
interpretation, effect or alleged violation of this Agreement (an "arbitrable
dispute") must be submitted to confidential arbitration in [GULFPORT,
MISSISSIPPI]. Arbitration shall take place before an experienced employment
arbitrator licensed to practice law in such state and selected in accordance
with the Model Employment Arbitration Procedures of the American Arbitration
Association. Arbitration shall be the exclusive remedy of any arbitrable
dispute. Judgement may be entered on the arbitrator's award in any court having
jurisdiction. The parties hereby agree that the arbitrator shall be empowered to
enter an equitable decree mandating specific enforcement of the terms of this
Agreement. Should any party to this Agreement pursue any arbitrable dispute by
any method other than arbitration, the other party shall be entitled to recover
from the party initiating the use of such method all damages, costs, expenses
and attorneys' fees incurred as a result of the use of such method.
Notwithstanding anything herein to the contrary, nothing in this Agreement shall
purport to waive or in any way limit the right of any party to seek to enforce
any judgment or decision on an arbitrable dispute in a court of competent
jurisdiction.

         10.      Non-competition Agreement.

                  (a) The Executive recognizes that the willingness of the
Company to enter into this Agreement is based in material part on the
Executive's agreement to the provisions of this Section 10, and that Executive's
breach of the provisions of this Section 10 could materially damage the Company
and its subsidiaries (the Company and its subsidiaries are hereinafter
collectively referred to as the "Affiliates" and individually as an
"Affiliate"). Therefore, in consideration of the benefits to be received by
Executive as a result of this employment with the Company, Executive agrees that
Executive shall not, for a period of two years immediately following the
Effective Date, for any reason whatsoever, directly or indirectly, for himself
or on behalf of or in conjunction with any other person, persons, company,
partnership, corporation or business of whatever nature:


<PAGE>   12
                                       12


                           (i)   contact any customer of any Affiliate or other
                  person for the purpose of including or attempting to induce
                  such customer or other person to cease doing business with any
                  Affiliate;

                           (ii)  induce or attempt to trade any agent or
                  employee of any Affiliate to terminate employment with an
                  Affiliate or to commence work with any competitor of any
                  Affiliate;

                           (iii) call on, solicit, attempt to obtain, accept, or
                  in any way secure business from any of the customers of any
                  Affiliate, nor, directly or indirectly, aid or assist any
                  other person, firm or corporation in the solicitation of such
                  customer; and

                           (iv)  engage, as an officer, director, shareholder,
                  owner, partner, joint venture, or in a managerial capacity,
                  whether as an employee, independent contractor, consultant or
                  advisor, or as a sales representative, in any business selling
                  any products or services in direct competition with any
                  Affiliate in the states of Texas, Louisiana or Mississippi.

                  (b) Because of the difficulty of measuring economic losses to
the Affiliates as a result of a breach of the foregoing covenant and because of
the immediate and irreparable damage that could be caused to the Affiliates for
which they would have no other adequate remedy, the Executive agrees that the
foregoing covenant may be enforced by the Affiliates, or any of them, in the
event of breach by him, by injunctions and restraining orders without the
necessity of posting any bond or other security therefor.

                  (c) The covenants in this Section 10 are severable and
separate, and the unenforceability of any specific covenant shall not affect the
provisions of any other covenant. Moreover, in the event any court of competent
jurisdiction shall determine that any restrictions set forth in this Section 10
are unreasonable, then it is the intention of the parties that such restrictions
be enforced to the fullest extent which the court deems reasonable, and this
Agreement shall thereby be reformed.

                  (d) Each of the covenants in this Section 10 shall be
construed as an agreement independent of any other provision in this Agreement,
and the existence of any claim or cause of action of the Executive against the
Company or any Affiliate, whether predicated on this Agreement or otherwise
shall not constitute defense to the enforcement by the Company or any Affiliate
of such covenants.


<PAGE>   13
                                       13


         11.      Confidentiality.

                  (a) The Executive acknowledges and agrees that all
Confidential Information (as defined below) of the Company and any Affiliate is
confidential and a valuable, special, and unique asset of the Company that gives
the Company an advantage over its actual and potential, current, and future
competitors. The Executive further acknowledges and agrees that the Executive
owes the Company and any Affiliate a fiduciary duty to preserve and the protect
all Confidential Information from unauthorized disclosure or unauthorized use,
certain Confidential Information constitutes "trade secrets" under the laws of
the state of Mississippi; and unauthorized disclosure or unauthorized use of the
Company's or any Affiliate's Confidential Information would irreparably injure
the Company and its Affiliates.

                  (b) Both during the term of the Executive's employment and
after the termination of the Executive's employment for any reason (including
wrongful termination), the Executive shall hold all Confidential Information in
strict confidence, and shall not use any Confidential Information except for the
benefit of the Company, in accordance with the duties assigned to the Executive.
The Executive shall not at any time (either during or after the term of the
Executive's employment), disclose any Confidential Information to any person or
entity (except other employees of the Company who have a need to know the
information in connection with the performance of their employment duties), or
copy, reproduce, modify, decompile, or reverse engineer any Confidential
Information, or remove any Confidential Information from the Company's premises,
without the prior written consent of the Board of Directors of the Company or
permit any other person to do so, except as may otherwise be required by law or
legal process. The Executive shall take reasonable precautions to protect the
physical security of all documents and other material containing Confidential
Information (regardless of the medium on which the Confidential Information is
stored). This Agreement applies to all Confidential Information, whether now
known or later to become known to the Executive.

                  (c) Upon the termination of the Executive's employment with
the Company for any reason, and upon request of the Company at any other time,
the Executive shall promptly surrender and deliver to the Company all documents
and other written material regardless of the form or medium of any nature
containing or pertaining to any Confidential Information and shall not retain
any such document or other material. Within five days of any such request, the
Executive shall certify to the Company in writing that all such materials have
been returned.

                  (d) As used in this Agreement, the term "Confidential
Information" shall mean any information or material known to or used by or for
the Company or any Affiliate (whether or not owned or developed by the Company
or any Affiliate and whether or not developed by the Executive) that is not
generally known to the public. Confidential Information includes, without
limitation, the following: all trade secrets of the Company or any Affiliate;
all information that the Company or any Affiliate has marked as confidential or
has otherwise described to the Executive (either in writing or orally) as
confidential; all non-public information concerning the Company's or any
Affiliate's products, services, prospective products or services, research,
product designs, prices, discounts, costs, marketing plans, marketing
techniques, market


<PAGE>   14
                                       14


studies test data, customers, customer lists and records, suppliers and
contracts; all Company and Affiliate business records and plans; all Company and
Affiliate personnel files; all financial information of or concerning the
Company or any Affiliate; all information relating to operating system software,
applications software, software and system methodology, hardware platforms,
technical information, inventions, computer programs and listings, source codes,
object codes, copyrights, patents, trademarks, service marks, and other
intellectual property; all technical specifications; any proprietary information
belonging to the Company or any Affiliate; all computer hardware or software
manuals; all training or instruction manuals; all data and all computer system
passwords and user codes.

         12. Cooperation of the Executive. During and after the Executive's
employment with the Company, the Executive shall reasonably cooperate with the
Company in the defense or prosecution of any claims or actions now in existence
or which may be brought in the future against or on behalf of the Company and in
connection with any investigation or review of any federal, state or local
regulatory authority as any such investigation or review relates to events or
occurrences that transpired while the Executive was employed by the Company. The
Company shall reimburse the Executive for all reasonable costs and expenses
incurred in connection with his performance under this Section 12, including,
without limitation, all reasonable attorneys' fees and costs.

         13. Legal Fees. Subject to Section 9 and Section 12, the Company shall
pay to the Executive all legal fees and expenses (including, without limitation,
fees and expenses in connection with any arbitration) incurred by the Executive
in disputing in good faith any issue arising under this Agreement relating to
the Termination of the Executive's employment or in seeking in good faith to
obtain or enforce any benefit or right provided by this Agreement.
Notwithstanding the foregoing, in the event that any arbitrator or court
determines that the legal fees incurred by the Executive are not payable by the
Company, the Company shall not be obligated with respect thereto.

         14.      Successors.

                  (a) Assignment by Executive. This Agreement is personal to the
Executive and without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representative.

                  (b) Successors and Assigns of Company. This Agreement shall
inure to the benefit of and be binding upon the Company, its successors and
assigns.

                  (c) Assumption. The Company shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement


<PAGE>   15
                                       15


in the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any successor to
its businesses and/or assets as aforesaid that assumes and agrees to perform
this Agreement by operation of law or otherwise.

         15.      Miscellaneous.

                  (a) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Mississippi, without
reference to its principles of conflict of laws. The captions of this Agreement
are not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended, modified, repealed, modified, waived, extended or
discharged, except by an agreement in writing signed by the party against whom
enforcement of such amendment, modification, repeal, waiver, extension or
discharge is being sought. No person, other than pursuant to a resolution of the
Board or a committee thereof, shall have authority on behalf of the Company to
agree to amend, modify, repeal, waive, extend or discharge any provision of this
Agreement or anything in reference thereto.

                  (b) Notices. All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed, in either case, to the Company's headquarters or to such other
address as either party shall have furnished to the other in writing in
accordance herewith. Notices and communications shall be effective when actually
received by the addressee.

                  (c) Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.

                  (d) Taxes. The Company may withhold from any amounts payable
under this Agreement such federal, state or local taxes as shall be required to
be withheld pursuant to any applicable law or regulation.

                  (e) No Waiver. The Executive's or the Company's failure to
insist upon strict compliance with any provision hereof or any other provision
of this Agreement or the failure to assert any right that the Executive or the
Company may have hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant to Section 4 of this
Agreement, or the right of the Company to terminate the Executive's employment
for Cause pursuant to Section 4 of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.

                  (f) Entire Agreement. This instrument contains the entire
agreement of the Executive, the Company or any predecessor or subsidiary
thereof, with respect to the subject matter hereof, and all promises,
representations, understandings, arrangements and prior agreements are merged
herein and superseded hereby including, without limitation, the Original
Agreement.

                                    * * * * *


<PAGE>   16
                                       16



                  IN WITNESS WHEREOF, the Executive and, pursuant to due
authorization from its Board of Directors, the Company have caused this
Agreement to be executed as of the day and year first above written.


                                            FRIEDE GOLDMAN INTERNATIONAL INC.


                                            By: /s/ J. L. Holloway
                                               ---------------------------------
                                               Name: J. L. Holloway
                                               Title: President

                                            EXECUTIVE


                                                 /s/ John F. Alford
                                            ------------------------------------
                                            John F. Alford


<PAGE>   17


                                    EXHIBIT A

                  For purposes of this Agreement, a "Change in Control" shall
mean the occurrence of any of the following events from and after the Effective
Date:

                           (i) Any Person is or becomes the Beneficial Owner,
                  directly or indirectly, of securities of the Company (not
                  including in the securities beneficially owned by such Person
                  any securities acquired directly from the Company or its
                  affiliates other than in connection with the acquisition by
                  the Company or its affiliates of a business) representing
                  twenty percent (20%) or more of the combined voting power of
                  the Company's then outstanding securities; or

                           (ii) The following individuals cease for any reason
                  to constitute a majority of the number of directors then
                  serving: individuals who, on the Effective Date, constitute
                  the Board and any new director (other than a director whose
                  initial assumption of office is in connection with an actual
                  or threatened election contest, including, without limitation,
                  a consent solicitation, relating to the election of directors
                  of the Company) whose appointment or election by the Board or
                  nomination for election by the Company's shareholders was
                  approved or recommended by a vote of at least two-thirds (2/3)
                  of the directors then still in office who either were
                  directors on the Effective Date or whose appointment, election
                  or nomination for election was previously so approved or
                  recommended; or

                           (iii) There is consummated a merger or consolidation
                  of the Company or any direct or indirect subsidiary of the
                  Company with any other corporation, other than (A) a merger or
                  consolidation which would result in the voting securities of
                  the Company outstanding immediately prior to such merger or
                  consolidation continuing to represent (either by remaining
                  outstanding or by being converted into voting securities of
                  the surviving entity or any parent thereof), in combination
                  with the ownership of any trustee or other fiduciary holding
                  securities under an employee benefit plan of the Company or
                  any subsidiary of the Company, at least sixty percent (60%) of
                  the combined voting power of the securities of the Company or
                  such surviving entity or any parent thereof outstanding
                  immediately after such merger or consolidation, or (B) a
                  merger or consolidation effected to implement a
                  recapitalization of the Company (or similar transaction) in
                  which no Person is or becomes the beneficial owner, directly
                  or indirectly, of securities of the Company (not including in
                  the securities beneficially owned by such Person any
                  securities acquired directly from the Company or its
                  affiliates other than in connection with the acquisition by
                  the Company or its affiliates of a business) representing
                  twenty percent (20%) or more of the combined voting power of
                  the Company's then outstanding securities; or


<PAGE>   18

                                      A-2


                           (iv) The shareholders of the Company approve a plan
                  of complete liquidation or dissolution of the Company or there
                  is consummated an agreement for the sale or disposition by the
                  Company of all or substantially all of the Company's assets,
                  other than a sale or disposition by the Company of all or
                  substantially all of the Company's assets to an entity, at
                  least sixty percent (60%) of the combined voting power of the
                  voting securities of which are owned by shareholders of the
                  Company in substantially the same proportions as their
                  ownership of the Company immediately prior to such sale.

                  "Person" shall have the meaning given in Section 3(a)(9) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
modified and used in Sections 13(d) and 14(d) thereof, except that such term
shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or
other fiduciary holding securities under an employee benefit plan of the Company
or any of its affiliates, (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities, (iv) a corporation owned, directly
or indirectly, by the shareholders of the Company in substantially the same
proportions as their ownership of stock of the Company, or (v) a person or group
as used in Rule 13d-l(b) under the Exchange Act.

                  "Beneficial Owner" shall have the meaning set forth in Rule
13d-3 under the Exchange Act.

                  Notwithstanding the foregoing, any event or transaction which
would otherwise constitute a Change in Control (a "Transaction") shall not
constitute a Change in Control for purposes of this Agreement if, in connection
with the Transaction, the Executive participates as an equity investor in the
acquiring entity or any of its affiliates (the "Acquiror"). For purposes of the
preceding sentence, the Executive shall not be deemed to have participated as an
equity investor in the Acquiror by virtue of (i) obtaining beneficial ownership
of any equity interest in the Acquiror as a result of the grant to the Executive
of an incentive compensation award under one or more incentive plans of the
Acquiror (including, without limitation, the conversion in connection with the
Transaction of incentive compensation awards of the Company into incentive
compensation awards of the Acquiror), on terms and conditions substantially
equivalent to those applicable to other executives of the Company immediately
prior to the Transaction, after taking into account normal differences
attributable to job responsibilities, title and the like, (ii) obtaining
beneficial ownership of any equity interest in the Acquiror on terms and
conditions substantially equivalent to those obtained in the Transaction by all
other shareholders of the Company, or (iii) obtaining beneficial ownership of
any equity interest in the Acquiror in a manner unrelated to a Transaction.

         NOTWITHSTANDING THE FOREGOING, THE SALE OF SHARES OF THE COMPANY'S
COMMON STOCK BY J. L. HOLLOWAY IN ACCORDANCE WITH THE STOCKHOLDER'S AGREEMENT BY
AND BETWEEN THE COMPANY AND J. L. HOLLOWAY, DATED JUNE 1, 1999, SHALL NOT
CONSTITUTE A CHANGE IN CONTROL FOR PURPOSES OF THIS AGREEMENT; PROVIDED SUCH
SHARES ARE NOT SOLD IN A TRANSACTION OR A SERIES OF TRANSACTIONS DESCRIBED IN
SUBSECTIONS (A) OR (C) ABOVE.