<PAGE>

                                 EXHIBIT 10.1

                                AMENDMENT NO. 2
                                      TO
                               CREDIT AGREEMENT

     AMENDMENT NO. 2 ("Amendment No. 2") dated as of March 28, 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 notes 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 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."


<PAGE>


          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:

                                             Applicable Margin
                                              (basis points)
                                        -------------------------
                       Borrower's        LIBOR          Base Rate
                     Leverage Ratio      Margin          Margin
                   ------------------   ---------     -----------

Level I:           (less than) 1.0        137.5           25.0

Level II:          (3) 1.00 to 1.50       175.0           50.0

Level III:         (3) 1.50 to 2.00       212.5           75.0

Level IV:          (3) 2.00 to 2.50       250.0          100.0

Level V:           (3) 2.50 to 3.25       275.0          125.0

Level VI:          (3) 3.25               300.0          150.0

          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."
<PAGE>

          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 in excess of USD 1,000,000 under any
       contract of the Borrower or any Subsidiary, 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.

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


                                       3
<PAGE>


       "'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 consolidated 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 consolidated 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 consolidated 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. or one of its
       subsidiaries concerning the construction, delivery and price of the Bingo
       9001 and Bingo 9002 drilling rigs."

                                       4
<PAGE>


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

       "'Petrodrill Rig Contracts' shall mean those contracts between the
       Borrower (or one of its Subsidiaries) and Petrodrill 4, Ltd. and
       Petrodrill 5, Ltd., concerning the construction, delivery and price of
       the B103 (Amethyst 4) and B104 (Amethyst 5) 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 Section 2.1(c) is deleted in its entirety and the following shall
     be substituted in place thereof:

          A(c) On the terms and conditions set forth in this Credit Agreement,
          the Agent shall from time to time on any Business Day during the
          period from the date of this Credit Agreement until the Maturity Date
          make advances ("Swing Line Advances") under the Swing Note to the
          Borrower in an aggregate outstanding principal amount not to exceed
          Twelve Million and No/100 Dollars ($12,000,000) with such payment
          terms and principal maturities as the Agent and the Borrower may
          agree; provided that (i) Swing Line Advances shall bear interest (X)
          at the Base Rate plus two Percent (2%) per annum 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 (Y) at the one-
          month LIBOR Rate as in effect from time to time plus the then
          applicable LIBOR Margin as set forth in the Applicable Margin Amount
          at all other times hereunder, (ii) no Swing Line Advances shall mature
          after the Maturity Date, and (iii) no Swing Line Advances shall have a
          maturity longer than ten (10) days, at which time Borrower shall repay
          the Swing Line Advances with the proceeds of Advances under the
          Revolving Credit Facility. 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. Upon the date of such
          payment all accrued but unpaid interest on the Swing Note to such date
          shall be due and payable by the Borrower to Agent. Upon the Agent's
          written request or upon the acceleration of the Maturity Date pursuant
          to this Credit Agreement, each Lender shall pay to Agent such Lender's
          pro rata share based on their respective Commitment Percentage of all
          outstanding Swing Line Advances as a Base Rate Advance under such
          Lender's Commitment, but in no event shall any Lender be obligated to
          fund more than its Commitment Percentage.


                                       5
<PAGE>


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

       "(e)  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."

     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).

     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:


                                       6
<PAGE>


            "(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 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 consolidating 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) for
                    the period following such occurrence or Settlement through
                    (1) the projected completion of the contract subject to the
                    Contract Loss or Settlement or (2) the subsequent twelve
                    (12) months, whichever period is greater, which statement
                    shall give effect to each Settlement (including without
                    limitation the proposed Settlement) and each Contract Loss."

                                       7
<PAGE>


       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 domestic 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:

       7.1  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 any
            amounts outstanding under the Swing line, second to repay any
            amounts outstanding under the Revolving Credit Facility and third 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."


                                       8
<PAGE>


       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:


            Quarter Ending                      Required Ratio
            --------------                      --------------
            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

       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:

              Quarter Ending                  Required
                                                Ratio
              --------------                  --------
              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 thereafter      1.50"

       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."

                                       9
<PAGE>


       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."

       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:


                                       10
<PAGE>


            (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)  Legal Opinion of Watkins & Eager;

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

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

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

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

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

            (c) The Agent shall have received from the Borrower, for ratable
       distribution to the Lenders, payment of an amendment fee equal to 0.5% of
       the Commitment.

            (d) 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.

            (e) The Leasehold Mortgages referenced in Section 9.1(a)(ix) above
       shall not be filed with respect to properties for which the applicable
       lease agreement contains a prohibition on the lessee's ability to
       mortgage its leasehold interests until such time as
                                       11
<PAGE>

       the consent of the applicable lessor is obtained; provided that the
       Borrower shall use its best efforts to obtain each such consent within
       ninety (90) days from the date hereof.

       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 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 on Schedule 10(c) hereto, 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

                                       12
<PAGE>

            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.

       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.



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                                13
<PAGE>
     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: /S/ Emile J. Dumesnil
                            ----------------------
                         Name:   Emile J. Dumesnil
                         Title:  Senior Vice President and Treasurer


                         LENDERS:

                         WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION


                         By: /S/ Joseph P. Maxwell
                         Name:  Joseph P. Maxwell
                         Title: Vice President


                         ROYAL BANK OF CANADA


                         By:

                         Name:

                         Title:

                         HIBERNIA NATIONAL BANK


                         By:

                         Name:

                         Title:


                                       14
<PAGE>



                         BANK ONE, N.A.


                         By:

                         Name:

                         Title:

                         ADMINISTRATIVE AGENT AND CO-ARRANGER:

                         WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION


                         By:/S/ Joseph P. Maxwell
                            ----------------------
                         Name:  Joseph P. Maxwell
                         Title: Vice President

                         SYNDICATION AGENT AND CO-ARRANGER:

                         BANC ONE CAPITAL MARKETS, INC.


                         By:

                         Name:

                         Title:

                                       15