Document:

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                  SECOND AMENDED AND RESTATED LOAN AGREEMENT

     This Second Amended and Restated Loan Agreement is dated as of December 31,
1999 and is by and among Whitney National Bank ("Lender"), a national banking
association, and Conrad Shipyard, Inc. ("Borrower"), a Louisiana corporation,
and Orange Shipbuilding Company, Inc. ("Orange"), a Texas corporation, and
Conrad Industries, Inc.("Conrad "), a Delaware corporation, (with Orange and
Conrad collectively referred to as "Guarantor").

                            WITNESSETH:

     WHEREAS, Lender, Borrower and Orange entered into a Loan Agreement, dated
as of March 19, 1998, which provided for a term loan in the sum of Twenty-Five
Million and No/100 ($25,000,000.00) Dollars (the "Initial Loan Agreement");

     WHEREAS, Lender, Borrower and Orange entered into an amended and restated
Loan Agreement, dated as of May 22, 1998, as amended by First Amendment to Loan
Agreement dated as of April 30, 1999, which provided for a line of credit in the
amount of Ten Million and No/100 ($10,000,000) Dollars in addition to the term
loan of $25,000,000.00 and amended and restated the Initial Loan Agreement (the
"First Amended and Restated Loan Agreement");

     WHEREAS, Borrower has requested Lender's consent to using up to $1,000,000
of the line of credit to repurchase shares of stock of Borrower upon terms and
conditions hereinafter set fort;

     NOW THEREFORE, in consideration of the premises, and for other good and
valuable consideration, the receipt of which is hereby acknowledged, Borrower,
Guarantor and Lender agree to amend, restate and supercede the First Amended and
Restated Loan Agreement and all other prior loan agreements as follows:

                            SECTION I. DEFINITIONS

     For the purpose of this Agreement, the following terms shall have the
meanings specified below:

     "Advance" shall mean a disbursement under the Line of Credit.

     "Advance Request" shall mean the Borrower's request for an Advance.

     "Agreement" shall mean this Second Amended and Restated Loan Agreement, as
it may be amended from time to time.

     "Base Rate" shall mean the Prime Rate minus the applicable margin of 50
basis points during any Interest Period. Prime Rate shall mean that rate of
interest as recorded by Whitney National Bank from time to time as its prime
lending rate with the rate of interest to change when and as said prime lending
rate changes. The Prime Rate is not necessarily the lowest interest rate charged
by Whitney National Bank. Each change in any interest rate provided for herein
based upon the Base Rate resulting from a change in the Prime Rate shall take
effect at the time of such change in the Prime Rate.

     "Borrower" shall mean Conrad Shipyard, Inc., a Louisiana corporation.
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     "Business Day" shall mean any day on which banks are required to be open to
carry on their normal business in the State of Louisiana.

     "Cash Flow" shall mean for any period the sum of net income after taxes
(including any applicable reserves for such taxes), plus depreciation,
amortization and any adjustments for noncash expenses, plus interest expense,
all determined in accordance with GAAP.

     "Closing Date" shall mean the effective date of this Agreement.

     "Company Agent" shall mean William H. Hidalgo or Cecil A. Hernandez.

     "Conrad" shall mean, Conrad Industries, Inc., a Delaware corporation, which
owns all of the capital stock of Borrower.

     "Conrad Shipyard" shall mean the approximately 11 acres of immovable
property on the Atchafalya River, Morgan City, Louisiana, owned by Conrad and
which is the Borrower's shipyard in Morgan City, Louisiana, as described on
Exhibit A.

     "Consolidated" refers to the consolidation of any Person, in accordance
with GAAP, with its properly consolidated subsidiaries. References herein to a
Person's consolidated financial statements, financial position, financial
condition, liabilities, etc. refer to the condition, liabilities, etc. of such
Person and its properly consolidated subsidiaries.

     "Consolidated Funded Debt" shall mean all obligations for borrowed money,
whether as maker or endorser, of Borrower, Guarantor and all their Subsidiaries
(including without limitation, all notes, debentures, bonds or similar
instruments shown on a balance sheet or financial statement of Borrower,
Guarantor and all their Subsidiaries).

     "Consolidated Funded Debt Payments" shall mean, for any period, all
principal and interest payments of Consolidated Funded Debt as required by the
terms of the documents evidencing such debt and other indebtedness and excluding
any prepayments of principal thereunder.

     "Current Assets" means, at a particular date, all amounts which would, in
conformity with GAAP, be included under current assets on a balance sheet of the
Borrower, Guarantor and all their Subsidiaries at such date.

     "Current Liabilities" means, at a particular date, all amounts which would,
in conformity with GAAP, be included under current liabilities on a balance
sheet of the Borrower, Guarantor and all their Subsidiaries as at such date.

     "Debt" of a Person shall mean at a particular date, the sum (without
duplication and in conformity with GAAP of (i) all indebtedness or other
obligations for borrowed money or for the deferred purchase price of property or
services, whether as maker or endorser, (including without limitation, all
notes, debentures, bonds or similar instruments and all liabilities shown on a
balance sheet or financial statement of Borrower, Guarantor and all their
Subsidiaries), (ii) capitalized lease obligations of such Person or any
subsidiary thereof, (iii) obligations with respect to any installment sale or
conditional sale agreement or title retention agreement, (iv) indebtedness
arising under acceptance facilities, (v) reimbursement obligations arising in
connection with surety, or performance or other

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similar bonds and in connection with letters of credit issued in lieu of such
bonds, (vi) the outstanding amount of all other letters of credit and (vii) any
withdrawal liability or obligation of such Person or an ERISA affiliate to a
multiemployer plan.

     "Debt Service Coverage Ratio" shall mean the ratio calculated on a rolling
four (4) quarter basis over the life of the Loan of Cash Flow to Consolidated
Funded Debt Payments.

     "Debt to Worth Ratio" shall mean the ratio for a given period of Debt to
Tangible Net Worth.

     "Default" shall mean the occurrence of any of the events specified in
Section VI.

     "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.

     "Financial Covenants" shall mean all of the financial covenants to be met
by Borrower on a consolidated basis as described in Section 5.01.

     "GAAP" shall mean generally accepted accounting principles in the United
States of America in effect from time to time and applied on a consistent basis.

     "Governmental Authority" means any sovereign state or nation or government,
or any state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including without limitation, the United States
Department of Defense, the United States Navy, the United States Coast Guard and
United States Army Corp of Engineers.

          "Government Contracts" shall have the meaning as provided in Section
     4.20.

     "Guarantor" shall mean Orange Shipbuilding Company, Inc. and Conrad
Industries, Inc., which term means individually, collectively, and
interchangeably any, each and/or all of them.

     "Hazardous Materials" shall mean:

     (a) any "hazardous waste" as defined by either the Resource Conservation
         and Recovery Act of 1976 (42 U.S.C. (S)6901 et. seq.), as amended from
         time to time, and regulations promulgated thereunder;

     (b) any "hazardous substance" as defined by either the Comprehensive
         Environmental Response, Compensation and Liability Act of 1980 (42
         U.S.C. (S)9601 et. seq.) ("CERCLA"), as amended from time to time, and
         regulations promulgated thereunder;

     (c) asbestos;

     (d) polychlorinated biphenyls;

     (e) any "regulated substance" as defined under Underground Storage Tank
         Regulations, 53 Fed. Reg. 37196 (Sept. 23, 1988), codified as 40 C.F.R.
         (S) 280.12, or La. Adm. Code 33:XI.103;

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     (f) any naturally occurring radioactive materials, the possession, use,
         transfer, processing, distribution, or disposal of which is subject to
         regulation by the Louisiana Department of Environmental Quality
         pursuant to the provisions of La. Adm. Code 33:XV, Chapter 14, as
         amended from time to time;

     (g) any non-hazardous oil field wastes ("Now") defined and regulated by the
         Commissioner of Conservation under La. R.S. 30:1, et seq., or the
         Louisiana Abandoned Oil field Waste Site Law, La. R.S. 30:71 et seq.,
         as amended from time to time, and regulations promulgated thereunder;

     (h) any substance the presence of which on the Property is prohibited by
         any lawful rules and regulations of legally constituted authorities
         from time to time in force and effect relating to the Property,
         including but not limited to any solid waste and underground storage
         tanks subject to the regulations of the Louisiana Department of
         Environmental Quality; and

     (i) any other substance which by any such rule or regulation requires
         special handling in its collection, storage, treatment, or disposal.

     "Hazardous Materials Contamination" shall mean (i) the contamination
(whether presently existing or hereafter occurring) of the Property, including
the improvements, facilities, soil, ground, water, air or other elements on, or
of, the Property by Hazardous Materials, (ii) the contamination of the Property,
including the buildings, facilities, soil, ground, water, air or other elements
on, or of, any other property as a result of Hazardous Materials at any time
(whether before or after the date of this Loan Agreement) emanating from the
Property or (iii) the existence of an underground storage tank which is out-of-
service or must be removed in accordance with La. Adm. Code 33:XI, et seq.

     "Interest Period" shall mean at the time the Borrower gives a Notice of
Conversion (as defined in Section 2.03) in respect of the making of, or
converting the interest rate on the Loan to accrue at Libor Rate or Base Rate on
the last Business Day prior to the expiration of the then applicable Interest
Period, the Borrower shall have the right to elect, by having the Borrower Agent
give Lender written notice of the interest period (each an "Interest Period")
applicable to Libor Rate or Base Rate, which Interest Period shall, at the
option of the Borrower, be one month, two month, three month or six month period
for Libor Rate or a thirty day period for Base Rate; provided that:

     (i)   the Loan shall at all times accrue interest at the rate chosen during
           the applicable Interest Period;

     (ii)  the Interest Period for any Libor Rate or Base Rate shall commence on
           the day on which the preceding Interest Period thereto expires;

     (iii) if any Interest Period would otherwise expire on a day which is not a
           Business Day, such Interest Period shall expire on the next
           succeeding Business Day; provided, however, that if any Interest
           Period would otherwise expire on a day which is not a Business Day
           but is a day of the month after which no further Business Day occurs
           in such month, such Interest Period shall expire on the next
           preceding Business Day;

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     (iv) no Interest Period may be selected nor the rate of interest be changed
          at any time when a Default is then in existence; and

     (v)  no Interest Period shall be selected which extends beyond the
          respective Maturity Date for the Loan.

     If upon the expiration of any Interest Period, the Borrower have failed to
elect, or are not permitted to elect, a new Interest Period, the Borrower shall
be deemed to have elected to have the Loan accrue interest equal to the Base
Rate effective as of the expiration date of such current Interest Period.

     "Libor Rate" shall mean, for any Interest Period, an interest rate per
annum (rounded upward to the nearest hundredths of a percent), as determined by
Lender, which is the offered quotation to Lender of the London interbank offered
rates for U.S. Dollar deposits of amounts in immediately available funds in the
London market for one month, two months, three months or six months as recorded
by the Dow Jones Telerate Service (presently displayed on telerate page 3875) or
such other service as may be nominated by the British Bankers' Association as
the information vendor for the purpose of displaying British Bankers'
Association interest settlement rates for U.S. Dollar Deposits, as of the
opening of business of Lender or as soon thereafter as practicable, plus the
applicable margin of 200 basis points (2.00% percent).

     "Lien" shall mean any mortgage, pledge, hypothecation, security interest,
encumbrance, lien, judgment, garnishment, seizure, tax lien or levy (statutory
or otherwise) or charge of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement, or any
capitalized lease, and the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction).

     "Line Note" shall mean the note evidencing the Line of Credit as described
in Article II.

     "Line of Credit" shall mean the $10,000,000.00 line of credit as described
in Article II.

     "Line of Credit Period" shall mean the period commencing on December 31,
1999 and ending on April 30, 2001.

     "Loan" shall mean collectively the Line of Credit and the Term Loan and
shall include all principal, interest, attorney's fees and costs owed thereon.

     "Net Tangible Assets" of any Person shall mean, as of any date, the
aggregate book value of the assets which would be reflected on a balance sheet
of such Person prepared as of such date in accordance with GAAP, less the
aggregate book value of such Person's intangible assets (i.e., patents,
copyrights, trademarks, trade names, goodwill, franchises and other similar
intangibles) as of such date.

     "Note" shall mean collectively the Line Note and the note evidencing the
Term Loan.

     "Obligations" shall mean all obligations (monetary or otherwise, including,
but not limited to, all representations, warranties and covenants contained in
this Agreement) of the Borrower to Lender, whether direct or contingent, due or
to become due, now existing or hereafter arising, including future advances,
with interest, attorneys' fees, expenses of collection and costs arising under
or in connection

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with this Agreement, the Loan, the Note, the Collateral Documents, promissory
notes, checks, overdrafts, letter of credit agreements, endorsements and
continuing guaranties.

     "Orange" shall mean Orange Shipbuilding Company, Inc., a Texas corporation.

     "Orange Shipyard" shall mean the shipyard owned by Guarantor which contains
approximately 12 acres of real property on the Sabine River, Orange, Texas, as
described on Exhibit B.

     "Permitted Liens" shall mean those presently outstanding Liens of the
Borrower in favor of Lender and (i) pledges or deposits by the Borrower under
workmen's compensation laws, unemployment insurance laws or similar legislation,
or good faith deposits in connection with bids, tenders, contracts (other than
for the payment of Debt of the Borrower) or leases (other than capitalized
leases) to which the Borrower is a party, or deposits to secure statutory
obligations of the Borrower or deposits of cash or U.S. Government Bonds to
secure surety or appeal bonds to which the Borrower is a party, or deposits as
security for contested taxes or import duties or for the payment of rent; (ii)
Liens imposed by law, such as carriers', warehousemen's, materialmen's and
mechanics' liens, incurred in the ordinary course of business for sums not
overdue or being contested in good faith by appropriate proceedings and for
which adequate reserves shall have been set aside on the Borrower's books; (iii)
judgment Liens in existence less than 30 days after the entry thereof or with
respect to which execution has been stayed or the payment of which is covered in
full (subject to a customary deductible) by insurance; (iv) Liens for property
taxes not yet delinquent and Liens for property taxes the payment of which is
being actively contested in good faith by appropriate proceedings and for which
adequate reserves shall have been set aside on the Borrower's books; and (v)
minor survey exceptions, minor encumbrances, easements or reservations of, or
rights of others for rights-of-way, highways and railroad crossings, sewers,
electric lines, telegraph and telephone lines and other similar purposes, or
zoning or other restrictions as to the use of real property or Liens incidental
to the conduct of the business of the Borrower or to the ownership of its
property which were not incurred in connection with Debt of the Borrower, which
Liens do not in the aggregate materially detract from the value of said
properties or materially impair their use in the operation of the business taken
as a whole of the Borrower.

     "Person" shall mean and include an individual, a partnership, a joint
venture, a corporation (including the Borrower), a trust, an unincorporated
organization, government or any department or agency thereof, each Affiliate and
each Subsidiary.

     "Plan" shall mean any employee benefit plan which is covered by ERISA and
in respect of which the Borrower is (or, if such plan were terminated at such
time, would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.

     "Property" shall mean the Conrad Shipyard and the Orange Shipyard and any
other immovable or real property owned by the Borrower, Guarantor or any of
their Subsidiaries.

     "Subsidiary" shall mean, with respect to any Person, any corporation,
association, partnership, joint venture or other business or corporate entity,
enterprise or organization which is directly or indirectly (through one or more
intermediaries) controlled by or owned 50% or more by such Person.

     "Tangible Net Worth" means, at a particular date, all amounts which would
be included under shareholders' equity on the balance sheet of Borrower,
Guarantor and all their Subsidiaries in conformity with generally accepted
accounting principles in the United States of America in effect from time to
time

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and applied on a consistent basis excluding any amount attributable to goodwill
or other intangibles of Borrower, Guarantor and all their Subsidiaries.

     "Term Loan" shall mean Borrower's existing term loan described in Section
2.02 (a).

     "Unused Line of Credit" shall mean $10,000,000.00 minus the outstanding
principal balance of the Line of Credit.

                                  SECTION II
                                  THE CREDIT

     SECTION 2.01. COMMITMENT TO LEND. Subject to and upon the terms and
conditions contained in this Agreement, and relying on the representations and
warranties contained in this Agreement, Lender agrees to make the Line of Credit
to the Borrower, said extension of credit being more particularly described
hereinafter.

     SECTION 2.02. (A) TERM LOAN. On March 15, 1998, Lender lent to the Borrower
the principal sum of Twenty-five Million and No/100 ($25,000,000.00) Dollars
(the "Term Loan") which was evidenced by a promissory note payable to the order
of Lender in the amount of $25,000,000.00, with interest to accrue at the Libor
Rate or Base Rate in accordance with Section 2.03. The Term Loan was initially
payable interest only on the last day of each month commencing March 31, 1998
and thereafter on the last day of each month until May 31, 1998. Thereafter, the
Term Loan shall be payable in 70 equal monthly principal payments of
$209,000.00, plus accrued interest with a final payment of all unpaid principal
and interest then due payable on April 30, 2004. The first installment of
principal and interest on the Term Loan shall be payable on June 30, 1998 with
the succeeding installments payable on the last day of each month until the Term
Loan has been paid in full. Borrower hereby acknowledges and affirms the Term
Loan.

     (B) LINE OF CREDIT. Subject to and upon the terms and conditions contained
in this Agreement, and relying on the representations and warranties contained
in this Agreement, the Lender agrees to make Advances to Borrower periodically
during the Line of Credit Period in an aggregate principal amount outstanding
not to exceed the sum of Ten Million and No/100 ($10,000,000.00) Dollars (the
"Line of Credit"). On April 30, 2001, Lender's obligations to make any Advance
on the Line of Credit shall cease. The Line of Credit shall be evidenced by a
promissory note executed by the Borrower in a form acceptable to Lender, dated
the Closing Date, in the principal sum of $10,000,000.00, payable to the order
of the Lender on April 30, 2001. During the Line of Credit Period, the Advances
shall accrue interest at Libor Rate or Base Rate in accordance with Section 2.03
and shall be payable interest only monthly in arrears on the last day of each
month, beginning the month of the initial Advance, and continuing on the last
day of each succeeding month until April 30, 2001.

     (C) ADVANCES. Upon the terms and subject to the conditions hereof, Borrower
may request an Advance under the Line of Credit during Lender's regular business
hours in accordance with the provisions of Section 2.03. Borrower shall make a
request for an Advance under the Line of Credit by delivering to Lender by mail,
hand-delivery, facsimile or by telephonic notice to Lender's applicable officer
specifying (i) the amount to be borrowed, and (ii) the date the funds will be
borrowed, and all Advance Requests shall be made by the Borrower's Agent.
Borrower hereby authorizes Company's Agent to borrow money and contract
obligations with Lender. Until Borrower notifies Lender in writing

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of the withdrawal of Company's Agent's rights and powers, Lender shall be able
to rely conclusively upon the right of Company's Agent to make Advances on
behalf of Borrower. Borrower agrees that only its duly authorized Company's
Agent shall make an Advance under the Line of Credit.

     All proceeds of any Advance shall be deposited to Borrower's account at
Lender.

     (D) CREDIT ADVICE. After the borrowing of any Advance in accordance with
this Agreement, Lender will mail to Borrower at the most recent address shown on
Lender's records a credit advice showing the amount of the Advance and the
amount of funds credited into Borrower's Account. Within ten (10) days after the
date of such advices, Borrower shall notify Lender of any inaccuracy in the
credit advices or the lack of authority to borrow the Advance. Failure by
Borrower to notify Lender timely shall preclude the Borrower from asserting
against Lender the inaccuracy of such advices and/or the lack of authorization
of such Advance. Lender's failure to mail the credit advice shall not alter
Borrower's obligation to repay the Line of Credit or make Lender liable to
Borrower for failure to mail the credit advice.

     (E) INTERNAL RECORDS SHALL CONTROL. The principal amount shown on the face
of the Line Note evidences the maximum aggregate principal amount that may be
outstanding on the Line of Credit. Borrower agrees that the internal records of
Lender shall constitute for all purposes prima facie evidence of (i) the amount
of principal and interest owing on the Loan from time to time, (ii) the amount
of each Advance made to Borrower under the Line of Credit and (iii) the amount
of each principal and/or interest payment received by Lender on the Loan, unless
such internal records of Lender are manifestly erroneous.

     SECTION 2.03. CONVERSION. (a) The Borrower has previously determined that
the Term Loan shall accrue interest at the Base Rate with an Interest Period to
expire on March 31, 2000. On the date of the initial Advance, Borrower will
determine the Interest Period and whether the Advance will accrue interest at
Libor Rate or the Base Period. Upon the expiration of such Interest Period and
any Interest Period thereafter, the Borrower shall have the option to convert
the interest rate accruing on all (but not less than all) of the outstanding
principal balance of the Term Loan or the Line of Credit, as applicable, into a
Libor Rate or Base Rate; provided that (i) a Loan can not be converted when any
Default has occurred and is continuing and in such event the Loan shall continue
to accrue interest at the rate in effect as of the date of such Default, and
(ii) no conversions of any Loan are allowed until the expiration of the Interest
Period applicable to the existing rate of interest has expired.

     (b) Each conversion shall be enacted by the Company Agent by giving Lender
at its main office prior to 11:00 a. m. (New Orleans time) on or before the last
Business Day of the applicable Interest Period written or telephone notice of
the conversion (each a "Notice of Conversion") specifying if the applicable Loan
is to be converted into accruing interest at Libor Rate or Base Rate and the
Interest Period to be applicable thereto. In the absence of any specific rate
election by the Borrower or if Borrower fails to provide such notice to the
Lender in a timely manner, the Loan shall accrue interest at the Base Rate.
Borrower may prepay the Loan without payment of premium or penalty.

     (c) Interest on the outstanding principal owed on the Loan shall be
computed and assessed on the basis of the actual number of days elapsed over a
year composed of 360 days.

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     SECTION 2.04. INCREASED COSTS, ILLEGALITY, ETC. (a) In the event that
Lender shall have determined in good faith (which determination shall, absent
manifest error, be final and conclusive and binding upon all parties hereto):

          (i) on any Interest Period or date of conversion that, by reason of
          any changes arising after the date of this Agreement affecting the
          London interbank market, adequate and fair means do not exist for
          ascertaining the applicable interest rate on the basis provided for in
          the definition of Libor Rate; or

          (ii) at any time, that Lender shall incur increased costs or
          reductions in the amounts received or receivable hereunder with
          respect to any Libor Rate because of any change since the date of this
          Agreement in any applicable law or governmental rule, regulation,
          order, guideline or request or in the interpretation or administration
          thereof and including the introduction of any new law or governmental
          rule, regulation, order, guideline or request, such as, for example,
          but not limited to: (A) a change in the basis of taxation of payment
          to Lender of the principal or interest on such Libor Rate (except for
          changes in the rate of tax on, or determined by reference to, the net
          income or profits of Lender) or (B) a change in official reserve
          requirements; or

          (iii) at any time, that the making or continuance of any Libor Rate
          has been made (x) unlawful by any law or governmental rule, regulation
          or order, (y) impossible by compliance by Lender in good faith with
          any governmental request (whether or not having force of law) or (z)
          impracticable as a result of a contingency occurring after the date of
          this Agreement which materially and adversely affects the London
          interbank market;

then, and in any such event, Lender shall promptly give notice (by telephone
confirmed in writing) to the Borrower. Thereafter (x) in the case of clause (i)
above, Libor Rate shall no longer be available until such time as Lender
notifies the Borrower that the circumstances giving rise to such notice no
longer exist, and any Notice of Conversion given by the Borrower with respect to
Libor Rate which have not yet been incurred (including by way of conversion)
shall be deemed rescinded by the Borrower, (y) in the case of clause (ii) above,
the Borrower agrees to pay to Lender, upon written demand therefor, such
additional amounts (in the form of an increased rate of, or a different method
of calculating, interest or otherwise as agreed to by Lender and the Borrower)
as shall be required to compensate Lender for such increased costs or reductions
in amounts received or receivable hereunder (a written notice as to the
additional amounts owed to Lender, showing the basis for the calculation
thereof, submitted to the Borrower by Lender in good faith shall, absent
manifest error, be final and conclusive and binding on all the parties hereto)
and (z) in the case of clause (iii) above, the Loan shall accrue interest at the
Base Rate. Lender agrees that if it gives notice to the Borrower of any of the
events described in clause (i) or (iii) above, it shall promptly notify the
Borrower and if such event ceases to exist. If any such event described in
clause (iii) above ceases to exist as to Lender, Lender's obligations to convert
the interest accruing on the Loan into Libor Rate on the terms and conditions
contained herein shall be reinstated.

     (b) At any time that any Libor Rate Loan is affected by the circumstances
described in Section 2.04 (a)(ii) or (iii), the Loan shall accrue interest at
the Base Rate.

     SECTION 2.05. USE OF PROCEEDS. Subject to the compliance with the terms and
conditions of this Agreement, Borrower may use the Line of Credit to fund the
general corporate operating needs of

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Borrower and/or the short term funding of Borrower's capital expenditures and
acquisitions on terms acceptable to Lender. In addition to the foregoing,
Borrower may use up to the aggregate principal amount of $1,000,000.00 of the
Line of Credit for the purchase by either Borrower or Conrad of up to 200,000
shares of Conrad's outstanding stock, which shall be owned and held as treasury
stock by Borrower or Conrad, whoever is the purchaser of such stock.

     SECTION 2.06. PREPAYMENT. Borrower shall be entitled to prepay the Loan in
whole or in part, without payment of premium or penalty.

     SECTION 2.07. COMMITMENT Fee. In consideration of Lender making the Line of
Credit, Borrower agrees to pay to Lender, in arrears, a fee within ten calendar
days of the last day of March, June, September and December in each year and on
the maturity day of the Line of Credit, a commitment fee per annum equal to one
quarter of one percent (1/4% or 25 basis points) of the average Unused Line of
Credit during the preceding fiscal quarter, or portion thereof. The average
Unused Line of Credit shall be determined by dividing the sum of the Unused Line
of Credit for each day of that quarter by 90.

                                  ARTICLE III
                         SECURITY FOR THE OBLIGATIONS

     SECTION 3.01. COLLATERAL. The Loan and the Obligations shall be secured by
a first Lien in favor of Lender on the following collateral (the "Collateral")
to be documented upon terms and conditions satisfactory to Lender (the
"Collateral Documents"):

          (a) Continuing Guaranty by Guarantor whereby Guarantor solidarily
agrees to repay all of the Obligations;

                                CONRAD SHIPYARD

          (b) A Collateral Note by Borrower in amount of $50,000,000.00 secured
by and paraphed for identification with a first, valid and enforceable
collateral mortgage mortgaging the Conrad Shipyard and all improvements and
component parts located thereon, which mortgage shall include an assignment of
leases and rents;

          (c) A Security Agreement executed by Borrower granting a security
interest in the Collateral Note;

          (d) A Security Agreement and Financing Statements by Borrower granting
a first lien and security interest in all furniture, equipment, inventory,
fixtures, accounts, documents and general intangibles, including without
limitation, franchise agreements, operating agreements, contract rights,
licenses, permits and parish and city ordinances and approvals relating to or
usable in connection with the use, occupancy, operation, ownership or
maintenance of the Conrad Shipyard;

                                ORANGE SHIPYARD

          (e) A deed of trust by Orange mortgaging the Orange Shipyard and all
improvements and component parts located thereon, which deed of trust shall
include an assignment of leases and rents; and

                                       10
<PAGE>

          (f) A Security Agreement and Financing Statements by Orange granting a
first lien and security interest in all furniture, equipment, inventory,
fixtures, accounts, documents and general intangibles, including without
limitation, franchise agreements, operating agreements, contract rights,
licenses, permits and parish and city ordinances and approvals relating to or
usable in connection with the use, occupancy, operation, ownership or
maintenance of the Orange Shipyard.

                               CONRAD INDUSTRIES

          (a) A Security Agreement and Financing Statements by Conrad granting a
first lien and security interest in all furniture, equipment, inventory,
accounts, documents and general intangibles.

     SECTION 3.02. GUARANTIES. Conrad and Orange shall jointly, severally and
solidarity guaranties the repayment of all Obligations of Borrower to Lender,
including but not limited to the Loan.

                                   SECTION IV
                        REPRESENTATIONS AND WARRANTIES

     In order to induce Lender to enter into this Agreement, the Borrower and
Guarantor represent and warrant to Lender as follows:

     SECTION 4.01. CORPORATE EXISTENCE. (a) Borrower is a validly organized
corporation duly existing and in good standing under the laws of the State of
Louisiana and is duly qualified as a foreign corporation in all jurisdictions
wherein the property owned or the business transacted by it make such
qualifications necessary. Orange is a validly organized corporation duly
existing and in good standing under the laws of the State of Texas and is duly
qualified as a foreign corporation in all jurisdictions wherein the property
owned or the business transacted by it make such qualifications necessary.
Conrad is a validly organized corporation duly existing and in good standing
under the laws of the State of Delaware and is duly qualified as a foreign
corporation in the State of Louisiana and in all jurisdictions wherein the
property owned or the business transacted by it make such qualifications
necessary.

          (b) Borrower has never done business under any name other than the
name of the Borrower set forth above, and as Conrad Industries, Inc. Borrower's
tax identification number is 72-0456758 and its principal place of business is
1501 Front Street, Morgan City, Louisiana 70380.

          (c) Orange has never done business under any name other than its name
set forth above and as Clary Industries, Inc. Orange's tax identification number
is 74-1789273 and its principal place of business is 710 Market Street, Orange,
Texas 77630.

          (d) Conrad has never done business under any name other than its name
set forth above. Conrad's tax identification number is 76-0475815 and its
principal place of business is 1501 Front Street, Morgan City, Louisiana 70380.

     SECTION 4.02. CORPORATE POWER AND AUTHORIZATION. The making and performance
by the Borrower of this Agreement, the borrowing by the Borrower and the
issuance of the Note and Collateral Documents by it hereunder, have been duly
authorized by all necessary corporate action and will not (i) violate any
provision of law or of the articles of incorporation or by-laws of the Borrower,
or (ii) result in

                                       11
<PAGE>

a breach of, or constitute a default under, any agreement, indenture or other
instrument to which the Borrower is a party or by which it is bound, the result
of which would be to have material and adverse effect on the business or
property of the Borrower. The making and performance by Guarantor of this
Agreement, the issuance of the Continuing Guaranty and the Collateral Documents
by it hereunder have been duly authorized by all necessary corporate action and
will not (i) violate any provision of law or of the articles of incorporation or
by-laws of Guarantor, or (ii) result in a breach of, or constitute a default
under, any agreement, indenture or other instrument to which Guarantor is a
party or by which it is bound, the result of which would be to have material and
adverse effect on the business or property of Guarantor.

     SECTION 4.03. NO CONSENT. No consent or approval of any governmental agency
or authority is required in connection with the execution, delivery and
performance by Borrower or Guarantor of this Agreement, the Note, the Collateral
Documents and all other documents required hereunder.

     SECTION 4.04. ENFORCEABLE OBLIGATIONS. This Agreement, the Collateral
Documents and the Note to which the Borrower and/or Guarantor, as applicable is
a party, when duly executed and delivered for value will be legal, valid and
binding obligations of the Borrower and/or Guarantor, as applicable, enforceable
against the Borrower and/or Guarantor, as applicable in accordance with their
respective terms.

     SECTION 4.05. NO MATERIAL LIABILITIES OR LITIGATION. Except for liabilities
incurred in the normal course of business, the Borrower and Guarantor do not
have any material (individually or in the aggregate) liabilities, direct or
contingent. In addition, there are no pending or threatened actions or
proceedings before any court or administrative agency which may materially and
adversely affect the Borrower's and/or Guarantor's business, operations, assets
conditions or property, financial or otherwise.

     SECTION 4.06. FINANCIAL CONDITION. The financial statements of Borrower as
heretofore furnished to Lender have been prepared in accordance with the
generally accepted accounting principles applied on a consistent basis and
fairly present the financial condition of Borrower as of those dates. To the
best of Borrower's knowledge and belief, Borrower does not have any contingent
obligation or liability for taxes not disclosed by or reserved against in said
financial statements, and there have been no material adverse changes in the
financial condition of Borrower from that set forth in said financial
statements. The financial statements of Guarantor as heretofore furnished to
Lender fairly present the financial condition of Guarantor as of the date
hereof. To the best of Guarantor's knowledge and belief, Guarantor has no
contingent obligation or liability for taxes not disclosed by or reserved
against in said financial statements, and there have been no material adverse
changes in the financial condition of Guarantor from that set forth in said
financial statements. Since the close of the period covered by the latest
financial statement delivered to Lender with respect to the Borrower and
Guarantor, there has been no material adverse change in the assets, liabilities
or financial condition of the Borrower or Guarantor. No event has occurred
(including, without limitation, any litigation or administrative proceedings)
and no condition exists or, to the knowledge of Borrower or Guarantor, is
threatened, which (i) might render Borrower or Guarantor unable to perform its
obligations under this Agreement, the Note or the Collateral Documents, or (ii)
would constitute a Default hereunder, or (iii) might adversely affect the
financial condition of the Borrower or Guarantor or the validity or priority of
the lien of the Collateral Documents. All parties acknowledge that Lender is
relying upon said financial statements in entering into this Agreement and the
Loan.

                                       12
<PAGE>

     SECTION 4.07. LIABILITIES AND LITIGATION. There is no litigation, legal or
administrative proceeding, investigation or other action of any nature pending
or, to the knowledge of Borrower and/or Guarantor, threatened against or
affecting Borrower or Guarantor which involves the possibility of any judgment
or liability not fully covered by insurance, and which may materially and
adversely affect the business or assets of the Borrower or Guarantor or their
respective ability to carry on business as now conducted.

     SECTION 4.08. TAXES AND GOVERNMENTAL CHARGES. Borrower and Guarantor have
filed all tax returns and reports required to be filed by all applicable
jurisdictions and have paid all taxes, assessments, fees and other governmental
charges levied upon it or upon any property owned by them or upon their income,
which are due and payable, including interest and penalties, or has provided
adequate reserves for the payment thereof.

     SECTION 4.09. TITLE TO PROPERTY. Borrower and Guarantor, as applicable,
have good, valid and merchantable title to the Property, free of all Liens
except (i) those created by the Collateral Documents, or (ii) those disclosed to
Lender in writing prior to date hereof, including those reflected on the title
commitment covering portions of the Property. Furthermore, neither Borrower nor
Guarantor has heretofore conveyed or agreed to convey or encumber any Collateral
in any way, except in favor of the Lender or as disclosed to Lender in writing
prior to date hereof. Neither Borrower nor Guarantor have any Liens on any of
their assets except Permitted Liens.

     SECTION 4.10. DEFAULT. Neither Borrower nor Guarantor is in default (in any
respect which materially and adversely affects its business, property,
operations or condition, financial or otherwise) under any indenture, mortgage,
deed of trust, agreement or other instrument to which Borrower and/or Guarantor
is a party or by which either is bound or subject to any charter or other
corporate restriction which materially and adversely affects its business,
properties or assets, operation or condition, whether financial or otherwise,
except as disclosed to the Lender in writing. No Default hereunder has occurred
and is continuing.

     SECTION 4.11. NO CONSENT. Borrower's and Guarantor's execution, delivery
and performance of this Agreement, the Note and the Collateral Documents, as
applicable, do not require the consent or approval of any other Person,
including without limitation any regulatory authority or governmental body of
the United States or any state thereof or any political subdivision of the
United States or any state thereof.

     SECTION 4.12. COMPLIANCE WITH THE LAW. Borrower and/or Guarantor (i) is not
in violation of any law, judgment, decree, order, ordinance or governmental rule
or regulation to which the Borrower or any of its property are subject; and (ii)
has not failed to obtain any license, permit, franchise or other governmental
authorization necessary to the ownership of any of its property or the conduct
of its business; in each case, which violation or failure could reasonably be
anticipated to materially and adversely affect the business, prospects, profits,
property or condition (financial or otherwise) of the Borrower.

     SECTION 4.13. OTHER INFORMATION. All information, reports, papers and data
given to Lender by the Borrower and Guarantor pursuant to this Agreement and in
connection with the Borrower's application for the Loan are accurate and correct
in all material respects. All financial projections given to Lender were
prepared in good faith based on facts and circumstances existing at the time of

                                       13
<PAGE>

preparation and were believed by the Borrower to be accurate in all material
respects. No information, exhibit or report furnished by the Borrower to Lender
in connection with the negotiation of this Agreement contains any material
misstatement of fact or fails to state a material fact or any fact necessary to
make the statement contained therein not materially misleading.

     SECTION 4.14. ENVIRONMENTAL MATTERS. (a) To the best of the Borrower's
knowledge, all operating facilities and property owned, leased, used, or
operated by the Borrower and/or Guarantor have been, and will continue to be,
owned, leased, used, or operated by the Borrower and/or Guarantor in substantial
compliance with applicable environmental laws, regulations, and guidelines.
There has been no claim, complaint, or notice received by the Borrower or
Guarantor with respect to a violation of environmental laws which remains
unsettled or unresolved as of the date hereof, including but not limited to, any
unsettled or unresolved liabilities relating to, arising out of or resulting
from (i) any emission, discharge or release of any pollutant, contaminant,
Hazardous Material, toxic material or other similar waste or (ii) any
processing, distribution, use, treatment, transport, removal, storage and/or
disposal of materials or wastes into or upon the ambient air, surface water,
ground water or land owned by the Borrower or any Guarantor or any alleged
violation of any federal, state, or local statute, regulation, or ordinance
relating to the environment. There has been no complaint or notice received by
the Borrower or Guarantor regarding potential liability under the Comprehensive
Environmental Response Compensation and Liability Act, as amended, the Resource
Conservation and Recovery Act, as amended, or any comparable state or local law
which is unsettled or remains unresolved as of the date hereof. To the
Borrower's knowledge, there has been no release of a Hazardous Material at any
facility or property owned, leased, used, or operated by the Borrower or
Guarantor which caused or could have cause a material adverse change in the
Borrower's financial condition, business or ability to pay or perform its
Obligations. For purposes of the last sentence of this Section III (k),
"release" shall have the meaning assigned to it under the Comprehensive
Environmental Response Compensation and Liability Act.

          (b) Borrower and Guarantor have obtained all permits, licenses or
similar authorizations to construct, occupy, operate or use any buildings,
improvements, fixtures and equipment forming a part of the Property by reason of
any Hazardous Materials. The use which the Borrower and Guarantor makes and
intends to make of the Property will not result in any Hazardous Materials
Contamination.

     SECTION 4.15. GOVERNMENTAL REQUIREMENTS. The Property is in compliance
with all current Governmental Requirements affecting the Property, including,
without limitation, all current zoning and land use regulations, building codes
and all restrictions and requirements imposed by applicable governmental
authorities with respect to the construction of any improvements on the Property
and the contemplated use of the Property.

     SECTION 4.16. CONTINUING ACCURACY. All of the representations and
warranties contained in this article or elsewhere in this Agreement shall be
true through and until the Obligations are fully satisfied, and Borrower shall
promptly notify Lender of any event which would render any of said
representations and warranties untrue or misleading.

     SECTION 4.17. AMERICANS WITH DISABILITIES ACT. The Property shall be
readily accessible to individuals with disabilities, and complies with all terms
and conditions of the Americans With Disabilities Act, 42 U.S.C. (S) 1210, et
seq. and all regulations and orders promulgated thereunder.

                                       14
<PAGE>

     SECTION 4.18. CLEAN AIR ACT. The Property now complies with and upon
completion of the Improvements shall continue to comply with all terms and
conditions of 42 U.S.C. (S) 7401, et seq. and all regulations and orders
promulgated thereunder.

     SECTION 4.19. LICENSES, PERMITS. The Borrower and Guarantor have all
permits, certificates, licenses (including patent and copyright licenses)
approvals and other authorizations required in connection with the operation of
their business.

     SECTION 4.20. GOVERNMENT CONTRACTS. Neither Borrower nor Guarantor has ever
been debarred or suspended from contracting (as a first tier or any other level
of subcontractor) for or bidding on any Governmental Contract (as such term is
defined below). Neither Borrower nor Guarantor is currently debarred or
suspended from (or has received notice that it is under investigation with
respect to a possible debarment or suspension from) bidding on or entering into
any contract with or for any Governmental Authority ( a "Government Contract").
Neither Borrower nor Guarantor has been given notice (i) that any Government
Contract may be or will be terminated for the convenience of a Governmental
Authority or a default by Borrower or Guarantor, as the case may be, (ii) that a
major program or contract of Borrower or Guarantor will be eliminated or
substantially reduced or suspended, (iii) requiring or resulting in, loss of use
or substantial impairment or interference of use by Borrower or Guarantor, as
the case may be, of any facilities owned by a Governmental Authority, or (iv)
that any relevant budget authority or contract authority has been exceeded with
respect to any material Government Contract. Neither the Borrower or Guarantor
anticipates incurring cost overruns on any Government Contracts which would have
a material adverse effect on the financial condition of Borrower or Guarantor.

     SECTION 4.21. FEDERAL REGULATIONS. No part of the proceeds of the Loan will
be used as "purpose credit" within the meaning of such term under Regulations U
or G of the Board of Governors of the Federal Reserve System as now and from
time to time hereafter in effect, if such use would violate the provisions of
Regulations U or G.

     SECTION 4.22. SUBSIDIARIES. At the Effective Date, the Borrower has no
Subsidiaries except Guarantor, and the Borrower owns all of the capital stock of
Orange and Conrad owns all of the capital stock of Borrower. There are no Liens
on any of the capital stock of Orange or of Borrower.

     SECTION 4.23. GOVERNMENT CONTRACTS. Borrower and Guarantor have the right
under their Government Contracts to grant a security interest to the proceeds
therefrom under the Collateral Documents and the Collateral Documents create a
non-perfected security interest in the Government Contracts. To the best of
Borrower's and Guarantor's respective knowledge, there are no offsets, and there
are not currently threatened or pending any claims or offsets against Borrower
or Guarantor by any Governmental Authority.

     SECTION 4.24. ASSETS MORTGAGED TO LENDER. All drydocks, barges and other
vessels and equipment of Borrower and Guarantor are not documented vessels with
the United States Coast Guard and are free and clear of any Liens, except the
Collateral Documents or Permitted Liens. In the event any asset of Borrower or
Guarantor becomes a documented vessel with the United States Coast Guard,
Borrower agrees to notify Lender and to execute a preferred maritime ship
mortgage encumbering such asset in favor of Lender upon terms and conditions
reasonably acceptable to Lender. All immovable and real property of Borrower and
Guarantor are mortgaged to Lender under the Collateral Documents,

                                       15
<PAGE>

except the shipyard owned by Borrower in Amelia, Louisiana. All equipment of
Borrower and Guarantor are subject to a perfected security interest in favor of
Lender in accordance with the terms of the Collateral Documents. Orange
acknowledges that the Collateral Documents executed by it continue to secure the
performance and payment of the Obligations, even though Borrower changed its
name from Conrad Industries, Inc. to Conrad Shipyard, Inc.

                                   SECTION V
                             AFFIRMATIVE COVENANTS

     The Borrower agrees that, so long the Loan remains unpaid, or any other
amount or any Obligations are owing to Lender hereunder, the Borrower and
Guarantor and all of its Subsidiaries, as applicable, shall comply with the
covenants in this Section.

     SECTION 5.01. FINANCIAL COVENANTS. Borrower shall comply with the following
Financial Covenants until the Loan has been paid in full, except as provided
herein:

     (a) DEBT TO TANGIBLE NET WORTH: The Borrower on a consolidated basis with
Guarantor and each Subsidiary shall maintain a Debt to Net Worth Ratio of no
greater than 1.75 to 1.0 until the Loan is paid in full.

     (b) DEBT SERVICE COVERAGE RATIO. Borrower on a consolidated basis with
Guarantor and each Subsidiary shall maintain at all times during the existence
of the Loan a Debt Service Coverage Ratio of at least 1.25 to 1.0 as of the end
of each fiscal quarter.

     (c) CURRENT RATIO. Borrower on a consolidated basis with Guarantor and each
Subsidiary shall maintain at all times during the existence of the Loan a ratio
of Current Assets (minus any prepaid expenses) to Current Liabilities of 1.25 to
1.0 or greater.

     SECTION 5.02. FINANCIAL STATEMENTS. (a) Borrower shall, from time to time,
promptly furnish to Lender as soon as available, but in any event within ninety
(90) days after the close of Borrower's fiscal year a copy of the audited
financial statements of Borrower, Guarantor and all of its Subsidiaries on a
consolidated basis, as of the close of such fiscal year prepared in reasonable
detail and in accordance with generally accepted accounting principles in the
United States in effect from time to time and applied consistently throughout
the period reflected therein, with such financial statements to include a
balance sheet of the Borrower and Guarantor and all of its Subsidiaries on a
consolidated basis, as of the end of such year and the related statement of
operations, of stockholder's equity and of cash flow prepared in reasonable
detail and in conformity with generally accepted accounting principles in the
United States in effect from time to time and applied on a basis consistent with
that of the preceding fiscal year, and audited by independent certified public
accountants selected by Borrower and satisfactory to Lender.

     (b) Borrower shall, from time to time, promptly furnish Lender as soon as
available, but in any event within sixty (60) days after the end of each quarter
of each fiscal year of Borrower, the consolidated unaudited balance sheet of
Borrower, Guarantor and all of its Subsidiaries as of the end of each such
quarter and the related unaudited statements of operations, of shareholder's
equity and of cash flow for such quarter and the portion of the fiscal year
throughout such date, all prepared in reasonable detail and in conformity with
good accounting practices in the United States in effect from time to time

                                       16
<PAGE>

and applied consistently throughout the period reflected therein and certified
by the chief financial officer of Borrower and Guarantor.

     (c) Immediately upon becoming aware of the occurrence of any event which
constitutes a Default or which could constitute a Default with the passage of
time or the giving of notice, or both, Borrower shall give written notice to
Lender describing such occurrence together with a detailed statement by the
Company Agent of the steps being taken by Borrower to cure the effect of such
event.

     (d) Borrower shall furnish to Lender concurrently with the delivery of the
financial statements referred to in subsections (a) and (b) above, a certificate
of the chief financial officer of Borrower (i) stating that such officer has no
knowledge of any Default, or any other event with which the passage of time
would become a Default under this Agreement or the Collateral Documents, except
as specified in such certificate and (ii) showing in detail the calculations
supporting such statements in respect to Section 5.01. The Borrower shall
furnish to Lender with reasonable promptness, such additional financial and
other information as Lender may from time to time reasonably request.

     SECTION 5.03. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. Borrower
and Guarantor shall continue to engage principally in the business of the same
general type now conducted by it and preserve, renew and keep in full force and
effect its corporate existence and take all reasonable action to maintain all
rights, privileges and franchises necessary in the normal conduct of its
business and comply with all laws.

     SECTION 5.04. INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. The
Borrower, Guarantor and their Subsidiaries shall keep proper books and records
in conformity in all material respects of GAAP and permit representatives of
Lender to visit and inspect any of its properties and examine the books and
records of the Borrower at any reasonable time during normal business hours and
as often as may reasonably be necessary, and to discuss the business,
operations, properties and financial and other condition of the Borrower,
Guarantor and their Subsidiaries with officers of the Borrower, Guarantor and
their Subsidiaries and with its independent certified public accountants.

     SECTION 5.05. NOTICE OF CERTAIN EVENTS. (a) The Borrower shall promptly
notify Lender of any change in location of the Borrower's and/or Guarantor'
principal places of business or the office where Borrower and/or Guarantor keeps
its records concerning accounts and contract rights.

          (b) The Borrower shall promptly notify Lender of the arising of any
litigation or dispute threatened against or affecting the Borrower, Guarantor
and/or any of their Subsidiaries or the Property which, if adversely determined,
would have a material adverse effect upon the financial condition or business of
the Borrower and/or Guarantor. In the event of such litigation, the Borrower
will cause such proceedings to be vigorously contested in good faith and, in the
event of any adverse ruling or decision, the Borrower shall prosecute all
allowable appeals. Lender may (but shall not be obligated to), without prior
notice to Borrower, commence, appear in or defend any action or proceeding
purporting to affect the Loan, or the respective rights and obligations of
Lender or Borrower and/or Guarantor pursuant to this Agreement. Lender may (but
shall not be obligated to) pay all necessary expenses, including reasonable
attorneys' fees and expenses incurred in connection with such proceedings or
actions, which Borrower agrees to repay to Lender upon demand.

     SECTION 5.06. ENVIRONMENTAL INDEMNITY. (a) Borrower and Guarantor agree to
(i) give notice to Lender immediately upon its acquiring knowledge of the
violation of any Governmental Requirement

                                       17
<PAGE>

regarding the presence of any Hazardous Materials on the Property and/or of any
Hazardous Materials Contamination with a full description thereof; and (ii)
promptly comply with any Governmental Requirement requiring removal, treatment
or disposal of such Hazardous Materials or Hazardous Materials Contamination and
provide Lender with satisfactory evidence of such compliance. Upon the discovery
of any Hazardous Materials Contamination, or upon the occurrence of a Default
and the expiration of the cure period provided in Section 7.02, Lender shall
have the right to cause an environmental audit or review of the Property to be
performed by a firm acceptable to Lender at the sole cost and expense of
Borrower.

          (b) Borrower and Guarantor shall solidarily defend, indemnify and hold
Lender, its directors, officers, agents and employees harmless from any and all
liabilities (including strict liability), actions, demands, penalties, losses,
costs or expenses (including, without limitation, reasonable attorneys' fees and
remedial costs), suits, costs of any settlement or judgment and claims of any
and every kind whatsoever which may now or in the future be paid, incurred, or
suffered by, or asserted against Lender by any person or entity or governmental
agency for, with respect to, or as a direct or indirect result of, the presence
on or under, or the escape, seepage, leakage, spillage, discharge, emission,
discharging or release from or onto the Property of any Hazardous Materials or
any Hazardous Materials Contamination, or arise out of, or result from, the
environmental condition of the Property or the applicability of any Governmental
Requirement relating to Hazardous Materials (including, without limitation,
CERCLA or any so called federal, state or local "super fund" or "super lien"
laws, statute, ordinance, code, rule, regulation, order or decree) regardless of
whether or not caused by or within the control of Borrower and/or Guarantor.
These representations, covenants and warranties contained in this Section 5.07
shall survive the termination of this Agreement.

     SECTION 5.07. INDEMNIFICATION. (a) Borrower and Guarantor shall solidarily
defend, indemnify Lender and hold Lender harmless from claims of brokers with
whom the Borrower and/or Guarantor has dealt in the execution hereof or the
consummation of the transactions contemplated hereby.

          (b) The Borrower and Guarantor shall solidarily defend, indemnify
Lender and hold Lender harmless from any and all liabilities, obligations,
losses, damages, penalties, claims, actions, suits, costs and expenses of
whatever kind or nature which may be imposed on, incurred by or asserted at any
time against Lender in any way relating to, or arising in connection with, the
use or occupancy of any of the Property.

          (c) Borrower and Guarantor solidarily agree to defend, indemnify, hold
harmless and fully protect Lender from any allegation or charge whatsoever of
negligence, misfeasance or nonfeasance of Lender in whole or in part, pertaining
to any, defect in the Property, and particularly, any failure of Lender or any
agent, officer, employee or representative of Lender, to note any defect in
materials or workmanship or of physical conditions or failure to comply with any
ordinances, statutes or other governmental requirements, or to call to the
attention of any person whatsoever, or take any action, or to demand that any
action be taken, with regard to any such defect or failure or lack of
compliance.

     SECTION 5.08. MAINTENANCE OF THE PROPERTY. Borrower and Guarantor shall
cause the Property to be maintained in good condition and repair and will not
commit or suffer to be committed any waste of the Property. The Property shall
not be removed, demolished or materially altered (except for normal
replacement), without the prior written consent of Lender. Borrower and
Guarantor shall promptly comply with all laws, orders, and ordinances affecting
the Property or the use thereof, and shall promptly repair, replace or rebuild
any part of the Property which may be damaged or destroyed by any casualty

                                       18
<PAGE>

(including any casualty for which insurance was not obtained or obtainable) and
shall complete and pay for, within a reasonable time, any structure at any time
in the process of construction or repair on the Property. Except with regard to
normal and customary utility servitudes, the Borrower and Guarantor will not,
without obtaining the prior written consent of Lender, initiate, join in, or
consent to any private restrictive covenant, zoning ordinance, or other public
or private restrictions, limiting or defining the uses which may be made of the
Property or any part thereof.

     SECTION 5.09. AMERICANS WITH DISABILITIES ACT. (a) Borrower and Guarantor
shall (i) maintain the Property to be readily accessible to individuals with
disabilities, (ii) provide goods, services, accommodations, access and
facilities without discrimination on the basis of disability, and (iii) comply
with all terms and conditions of the Americans With Disabilities Act, 42 U.S.C.
(S) 1210, et seq. and all regulations and orders promulgated thereunder.

     (b) Borrower and Guarantor shall defend, indemnify and hold Lender harmless
from any and all liabilities (including strict liability), actions, demands,
penalties, losses, costs or expenses (including, without limitation, reasonable
attorneys' fees and remedial costs), suits, costs of any settlement or judgment
and claims of any and every kind whatsoever which may now or in the future be
paid, incurred, or suffered by, or asserted against Lender by any person or
entity or governmental agency for, with respect to, or as a direct or indirect
result of, any violations of the Americans With Disabilities Act or any
regulations or orders promulgated thereunder resulting from the operation,
maintenance or renovation of the Property.

     SECTION 5.10. CLEAN AIR ACT. (a) Borrower and Guarantor shall maintain the
Property in full compliance with all terms and conditions of the Clean Air Act
42 U.S.C. (S)7401, et seq. and all regulations and orders promulgated
thereunder.

     (b) Borrower and Guarantor shall defend, indemnify and hold Lender harmless
from any and all liabilities (including strict liability), actions, demands,
penalties, losses, costs or expenses (including, without limitation, reasonable
attorneys' fees and remedial costs), suits, costs of any settlement or judgment
and claims of any and every kind whatsoever which may now or in the future be
paid, incurred, or suffered by, or asserted against Lender by any person or
entity or governmental agency for, with respect to, or as a direct or indirect
result of, any violations of the Clean Air Act or any regulations or orders
promulgated thereunder resulting from the operation, maintenance or renovation
of the Property.

     SECTION 5.11. ERISA. Borrower shall fulfill its obligations under the
minimum funding standards of ERISA and the Internal Revenue Code of 1986, as
amended, with respect to each Plan, and neither the Borrower nor any Affiliate
or Subsidiary shall take any action that would result in the termination of a
Plan by the Pension Benefit Guaranty Corporation.

     SECTION 5.12. TAXES AND OTHER LIENS. Borrower and Guarantor will pay and
discharge promptly when due all taxes, assessments and governmental charges or
levies imposed upon it or upon its income or upon the Property as well as all
claims of any kind (including claims for labor, materials, supplies and rent)
which, if unpaid, might become a Lien upon any or all of the Property; provided,
however, the Borrower and/or Guarantor shall not be required to pay any such
tax, assessment, charge, levy or claim if the amount, applicability or validity
thereof shall currently be contested in good faith by appropriate proceedings
diligently conducted and if Borrower and/or Guarantor have set up reserves
therefor adequate under generally accepted accounting principles or if the claim
is covered by insurance or the payment or performance bonds. Borrower shall
furnish Lender with proof of payment of all taxes,

                                       19
<PAGE>

assessments, charges, levies or claims not later than the date on which
penalties might attach thereto, or in the event that the Borrower and/or
Guarantor contests any such taxes, assessments, charges, levies or claims in
accordance with this section, Borrower and/or Guarantor shall furnish Lender
with a description of the contested matter and all actions taken by Borrower
and/or Guarantor in connection with such contest.

     SECTION 5.13. MAINTENANCE OF BORROWER'S AND ITS SUBSIDIARIES' EXISTENCE.
Borrower, Guarantor and their Subsidiaries will (i) maintain their respective
corporate existence and rights; (ii) observe and comply (to the extent necessary
so that any failure will not materially and adversely affect the business of the
Borrower, Guarantor and/or their Subsidiaries) with all applicable Governmental
Requirements applicable to Borrower, Guarantor and/or their Subsidiaries or the
Property (including without limitation applicable statutes, regulations, orders
and restrictions relating to environmental standards or controls or to energy
regulations); and (iii) maintain the Property in generally good and workable
condition at all times and make all repairs, replacements, additions,
betterments and improvements to the Property to the extent necessary so that any
failure will not materially and adversely affect the business of the Borrower,
Guarantor and/or their Subsidiaries.

     SECTION 5.14. FURTHER ASSURANCES. Borrower and Guarantor will promptly (and
in no event later than 30 days after written notice from Lender is received)
cure any defects in the creation, execution and delivery of this Agreement, the
Note or the Collateral Documents. Borrower and/or Guarantor at Borrower's
expense will promptly execute and deliver to Lender upon request all such other
and further documents, agreements and instruments in compliance with or
accomplishment of the covenants and agreements of the Borrower and/or Guarantor
in this Agreement, the Note or in the Collateral Documents or to further
evidence and more fully describe the Collateral, or to correct any omissions in
the Collateral Documents, or more fully state the security obligations set out
herein or in any of the Collateral Documents, or to perfect, protect or preserve
any Liens created pursuant to any of the Collateral Documents, or to make any
recordings, to file any notices, or obtain any consents as may be necessary or
appropriate in connection with the transactions contemplated by this Agreement.

     SECTION 5.15. REIMBURSEMENT OF EXPENSES. Borrower will pay all reasonable
legal fees incurred by Lender in connection with the preparation of this
Agreement, the Note and the Collateral Documents. Borrower will, upon request,
promptly reimburse Lender for all amounts expended, advanced or incurred by
Lender to satisfy any obligation of the Borrower under this Agreement, or to
protect the Property or business of the Borrower or to collect the Obligations,
or to enforce the rights of Lender under this Agreement, which amounts will
include all court costs, attorneys fees, fees of auditors and accountants and
investigation expenses reasonably incurred by Lender in connection with any such
matters, together with interest at the interest rate set forth in the Note on
each such amount from the date that the same is expended, advanced or incurred
by Lender until the date of reimbursement to Lender.

     SECTION 5.16. INSURANCE. (a) The Borrower shall procure and maintain for
the benefit of Lender original paid-up insurance policies from companies
satisfactory to Lender, in amounts, in form and substance, and with expiration
dates acceptable to Lender and containing a noncontributory standard mortgagee
clause or its equivalent in a form satisfactory to Lender, or the statutory
mortgagee clause, if any, required in the state where the Property is located,
or a mortgagee's loss payable endorsement, in favor of Lender, providing the
following types of insurance on the Property:

          (i) Multi-Peril Hazard Insurance. For the Property, multi-peril hazard
insurance. In each case, the policies will afford insurance against loss or
damage by fire, lightning, explosion,

                                       20
<PAGE>

earthquake, collapse, theft, sprinkler leakage, vandalism and malicious mischief
and such other perils as are included in so-called "all-risks" or "extended
coverage" and against such other insurable perils as, under good insurance
practices, from time to time are insured against for properties of similar
character and location; such insurance to be not less than 100% of the full
replacement cost of the improvements located on the Property, without deduction
for depreciation; said policies to contain replacement costs and stipulated
value endorsements.

               (ii) Comprehensive General Liability Insurance. Comprehensive
public liability insurance with respect to the Property and the operations
related thereto, whether conducted on or off the Property, against liability for
personal injury (including bodily injury and death) and property damage, of not
less than a total of $5,000,000.00 combined single limit bodily injury and
property damage; such comprehensive public liability insurance to be on a per
occurrence basis and to specifically include but not limited to water damage
liability, products liability, motor vehicle liability for all owned and
nonowned vehicles, including rented and leased vehicles, and contractual
indemnification.

               (iii) Workers' Compensation and General Liability. Workers'
compensation and general liability insurance against loss, damage or injury to
employees, agents or representatives of the Borrower, Guarantor and/or their
Subsidiaries or of any contractor and subcontractor, or insurance against loss,
damage or injury caused by any employees, agents or representatives of the
Borrower, Guarantor and/or their Subsidiaries or of any contractor or
subcontractor.

               (iv) Flood Insurance. Flood Insurance Policy in the amount of the
Loan or the maximum amount obtainable, whichever is less, if the property is
located in a Flood Hazard Area as defined by the Federal Emergency Management
Agency.

               (v) Other Insurance. Such other insurance on the Property or any
replacements or substitutions therefor and in such amounts as may from time to
time be reasonably required by Lender against other insurable casualties which
at the time are commonly insured against in the case of premises similarly
situated, due regard being given to the height and type of the improvements on
the Property, its construction, location, use and occupancy, or any replacements
or substitutions therefor.

          (b) All of the foregoing policies shall contain an agreement by the
insurer not to cancel or amend the policies without giving Lender at least
thirty (30) days' prior written notice of its intention to do so and shall
provide that the policies shall be payable not withstanding the acts of
Borrower, Guarantor or their Subsidiaries, as applicable.

          (c) At or before Closing, Borrower shall deliver original binders
evidencing the insurance and within 15 days of closing the original or certified
policies to Lender, and Borrower shall deliver original or certified renewal
policies with satisfactory evidence of payment not less than fifteen (15) days
in advance of the expiration date of the existing policy or policies. In the
event Borrower and/or its Subsidiaries should, for any reason whatsoever, fail
to keep the Property or any part thereof so insured, or to keep said policies so
payable, or fail to deliver to Lender the original or certified policies of
insurance and the renewals thereof upon demand, then Lender after giving written
notice to Borrower of that deficiency and if after 15 days after delivery of
such notice, there is still no insurance coverage, then Lender, if it so elects,
may itself have such insurance effected in such amounts and in such companies as
it may deem proper and may pay the premiums therefor. The Borrower shall
reimburse Lender upon demand for the amount of premium paid, together with
interest thereon at 15% percent per annum from date until paid.

                                       21
<PAGE>

          (d) Borrower and Guarantor agree to notify Lender immediately in
writing of any material fire or other casualty to or accident involving any of
the Property, whether or not such fire, casualty or accident is covered by
insurance. Borrower and Guarantor further agree to notify promptly Borrower's
and/or Guarantor insurance company and to submit an appropriate claim and proof
of claim to the respective insurance company if any of the Property is damaged
or destroyed by fire or other casualty.

          (e) Lender is hereby authorized and empowered, at its option, to
collect and receive the proceeds from any policy or policies of insurance, and
each insurance company is hereby authorized and directed to make payment of all
such losses directly to Lender instead of to the Borrower and/or Guarantor and
Lender jointly. Lender shall apply the net proceeds thereof, in accordance with
Subsections (f), (g) and/or (h) hereof.

          (f) If there is a fire or casualty loss which damages a portion (but
not all) of the improvements on any of the Property and as long as no Default
has occurred and is continuing, then the Proceeds of the insurance shall be
deposited into a cash collateral account and such proceeds will be applied to
the payment of the cost of restoration of the improvements upon such terms and
conditions as Lender may deem necessary or appropriate in its reasonable
discretion; provided, however, that (i) such insurance proceeds must be adequate
to cover the cost of restoration of the improvements, or if the proceeds are
insufficient, then the Borrower shall give Lender such adequate protection and
assurance as Lender may, in its reasonable discretion require, that additional
funds will be provided by the Borrower in order to complete the restoration of
the Improvements (ii) the Borrower shall have provided Lender with such adequate
protection and assurance as Lender may, in its reasonable discretion require,
that the Borrower has sufficient funds on hand to pay interest and principal on
the Loan during the restoration period, and (iii) the first priority of the
Collateral Documents in the Property is not impaired. In connection with any
restoration of any of the improvements, the Borrower and/or Guarantor shall
provide Lender with a detailed cost breakdown showing by line item all costs
projected for such restoration and a revised and updated cost breakdown shall be
furnished by the Borrower and/or Guarantor to Lender on a monthly basis.

          (g) If there is a fire or casualty loss which constitutes a total loss
or a constructive total loss of any of the Property, or if not all of the
conditions set forth in subclause (i) through (iv) of Subsection (f) above are
satisfied, then the insurance proceeds shall be applied to the payment of the
Obligations. If such insurance proceeds are not sufficient to pay the
Obligations in full, Lender shall have a right to accelerate the maturity of the
Obligations and proceed against the Borrower or the remainder of the property;
and if the proceeds exceed the amount necessary to pay the Obligations in full,
then such excess shall be paid to Borrower,

          (h) Upon demand of Lender and after the occurrence of a Default, the
Borrower shall pay to Lender, together with, at the same time as and in addition
to the payments of principal and/or interest due on the Note, a pro rata portion
of the property taxes, assessments, governmental charges, levies and insurance
premiums relating to the Property next to become due, as estimated by Lender, so
that Lender will have sufficient funds on hand to pay such taxes, assessments,
governmental charges, levies and premiums not less than thirty (30) days prior
to the due date thereof. All such amounts shall be held by Lender (not in trust)
without interest as further security for the Obligations. Lender may apply all
or a portion of the amounts so paid at such time and in such order as Lender, in
its uncontrolled discretion shall determine, to the payment of the taxes,
assessments, governmental charges, levies and insurance premiums, as the case
may be.

                                       22
<PAGE>

                                   SECTION VI
                               NEGATIVE COVENANTS

     Borrower agrees that, so long as the Loan remain unpaid, or any other
amount or any Obligations are owing to Lender hereunder, the Borrower, Guarantor
and all of their Subsidiaries, as applicable, shall comply with the applicable
covenants contained in this Section.

     SECTION 6.01. LIMITATIONS ON LIENS. Other than Permitted Liens, Borrower
and/or Guarantor or any of their Subsidiaries shall not create, encumber or
suffer any Lien, other than the Collateral Documents and Permitted Liens, to
exist on the Property, any other Collateral or upon any of the capital stock of
any Subsidiary of Borrower and/or Guarantor without the prior written consent of
Lender.

     SECTION 6.02. ENVIRONMENTAL LIABILITIES. Borrower, Guarantor and/or any of
their Subsidiaries shall not violate any Governmental Requirement regarding
Hazardous Materials and shall not create or allow any Hazardous Materials
Contamination; and, without limiting the foregoing, or otherwise dispose of (or
permit any Person to dispose of) any Hazardous Material (except in accordance
with applicable law) into or onto or from, the Property, nor allow any Lien
imposed pursuant to any Governmental Requirement relating to Hazardous Materials
or the disposal thereof to be imposed or to remain on the Property.

     SECTION 6.03. ERISA COMPLIANCE. Borrower, Guarantor and/or any of their
Subsidiaries shall not at any time permit any Plan maintained by it to engage in
any "prohibited transaction" as such term is defined in Section 4975 of the
Code; incur any "accumulated funding deficiency" as such term is defined in
Section 302 of ERISA; or terminate any such Plan in a manner which could result
in the imposition of a Lien on the property of the Borrower and/or Guarantor
pursuant to Section 4068 of ERISA.

     SECTION 6.04. CONSOLIDATION/MERGER. Neither Borrower, Guarantor nor any of
their Subsidiaries shall merge or consolidate with any other Person without the
written consent of Lender.

     SECTION 6.05. RESTRICTED PAYMENTS. Neither Borrower nor Conrad shall
declare or pay any dividend on, or declare or make any other distribution on
account of, any shares of any class of its stock now or hereafter outstanding,
or set apart any sum for such purpose without the Lender's prior written
consent. Neither Borrower, Guarantor nor any of their Subsidiaries shall
purchase any of the capital stock of Conrad other than the purchase of not more
than 200,000 shares of Conrad as authorized by Section 2.05 for a purchase price
of not greater than $1,000,000.00, which share of Conrad shall be held as
treasury stock by the purchaser thereof.

     SECTION 6.06. TRANSACTION WITH AFFILIATES. Neither Borrower, Guarantor nor
any of their Subsidiaries shall enter into any transaction (including the
purchase, sale or exchange of property or the rendering of any service) with any
Affiliate except upon fair and reasonable terms which are at least as favorable
to the Borrower, Guarantor or any Subsidiary as would be obtained in a
comparable arm's length transaction with a non-Affiliate.

     SECTION 6.07. TRANSFER OF BORROWER'S OR GUARANTOR'S STOCK. Neither the
capital stock of Borrower nor the capital stock of Orange shall be sold,
transferred, exchange, pledged or encumbered to or in favor of a third Person
without the prior written consent of Lender.

                                       23
<PAGE>

     SECTION 6.08. PARENT COMPANY. Without the prior written consent of Lender,
Conrad shall not ever have any employees, assets or liabilities (other than the
assets and liabilities of Borrower and its Subsidiaries on a consolidated basis)
and shall not ever create or incur any Debt.

                                  ARTICLE VII
                             CONDITIONS OF LENDING

     SECTION 7.01. CONDITIONS OF INITIAL ADVANCE. The obligation of the Lender
to make the initial Advance is subject to the accuracy of each and every
representation and warranty of the Borrower contained in this Agreement, and to
the receipt of the following on or before the Closing Date:

          (a) Agreement. A duly executed counterpart of this Agreement signed by
all the parties thereto.

          (b) Note. The duly executed Line Note signed by the Borrower.

          (c) Corporate Authorization. Such authorization by the Board of
Directors of Borrower's in form and substance satisfactory to the Lender with
respect to the authorization of this Agreement, the Note and the Collateral
Documents, as the case may be and the individuals authorized to sign such
instruments.

          (d) Fees. Pay all fees and expenses of Lender's counsel, appraisers,
inspectors and related experts.

          (e) Collateral Documents. Duly executed counterparts or originals of
the Collateral Documents and receipt of the Collateral.

          (f) Opinion. A legal opinion from counsel of Borrower addressed to
Lender in a form acceptable to Lender opining that this Agreement, the Note and
the Collateral Documents are the valid, legal and binding obligation of Borrower
enforceable in accordance with their terms, that the execution of this
Agreement, the Note, and the Collateral Documents are in conformity with and do
not violate any Governmental Requirements and that this Agreement, the Note and
the Collateral Documents were duly authorized and executed by the Borrower.

          (g) Representations. Each of the representations and warranties of the
Borrower contained in this Agreement shall be true and correct on and as of the
date of the initial advance, except as such representations and warranties
relate to matters that are permitted by this Agreement.

     SECTION 7.02. EACH ADDITIONAL ADVANCE. The obligation of the Lender to make
additional advances on the Line of Credit is subject to the satisfaction of each
of the following conditions:

          (a) Each of the representations and warranties of the Borrower
contained in this Agreement shall be true and correct on and as of the date of
such subsequent advance, except as such representations and warranties relate to
matters that are permitted by this Agreement.

                                       24
<PAGE>

          (b) At the time of each subsequent advance, no Default shall have
occurred and be continuing and no event with the passage of time or notice (or
both) would be a Default shall have occurred and be continuing.

          (c) There shall have occurred no material adverse charges, either
individually or in the aggregate, in the assets, liabilities, financial
conditions, business operations, affairs or circumstances of the Borrower and/or
Guarantor from those reflected in the most recent financial statements furnished
to the Lender prior to the Closing Date, except to the extent that such changes
are permitted by this Agreement; and

          (d) The satisfaction with any documentation or other conditions as
required herein.

                                  SECTION VIII
                               EVENTS OF DEFAULT

     SECTION 8.01. DEFAULTS. The occurrence of any one or more of the following
events shall constitute a default (a "Default") under this Agreement:

          (a) the failure of Borrower to pay promptly when due any interest or
principal on any of the Obligations, including but not limited to the Loan;

          (b) the failure of Borrower and/or Guarantor to observe or perform
promptly when due any covenant, agreement, or obligation due to the Lender;

          (c) the failure to pay on demand any amounts advanced by Lender for
the payment of taxes and assessments or the cost of obtaining the release of any
Collateral from any seizure, Lien, or attachment;

          (d) the inaccuracy at any time of any warranty, representation, or
statement made to Lender by Borrower and/or Guarantor, whether such warranty,
representation, or statement is made (i) in this Agreement, the Note, or the
Collateral Documents, or (ii) in any other agreement, document, or writing;

          (e) any default on or in connection with any Obligation;

          (f) any material discrepancy between any financial statement submitted
to Lender by Borrower and/or Guarantor and its actual financial condition;

          (g) any garnishment, seizure, or attachment of, or any tax lien or tax
levy against, any assets of Borrower and/or Guarantor, including, without
limitation, those assets that are Collateral, unless the same is being contested
in good faith and is secured by adequate reserves in an amount sufficient to
satisfy same;

          (h) one or more judgments, decrees, arbitration award, rulings or
decisions shall be entered against Borrower and/or Guarantor involving in the
aggregate a liability (not paid or fully covered by insurance including self-
insurance or the payment or performance bonds) of $100,000 or

                                       25
<PAGE>

more and all such judgments, decrees, awards and rulings shall not have been
vacated, paid, discharged, stayed or bonded pending appeal within 60 days from
the entry thereof;

          (i) Borrower shall default in any payment of principal of or interest
on any Debt other than the Loan in the aggregate principal amount of more than
$100,000, in each instance, beyond the period of grace, if any, provided in the
instrument or agreement under which such Debt or observance or performance of
any other agreement or condition relating to any such Debt or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders of such Debt or
beneficiary or beneficiaries of such (or a trustee, agent or other Person acting
on behalf of such holder or holders or beneficiary or beneficiaries) to cause,
with the giving of notice if required, such Debt to become due prior to its
stated maturity;

          (j) a receiver, conservator, liquidator or trustee of the Borrower
and/or Guarantor, or of any of their property (including the Property) is
appointed by order or decree of any court or agency or supervisory authority
having jurisdiction; or an order for relief is entered against the Borrower
and/or Guarantor under the Federal Bankruptcy Code; or the Borrower and/or
Guarantor is adjudicated bankrupt or insolvent; or any material portion of any
property of any of the Borrower and/or Guarantor (including the Property) is
sequestered by court order and such order remains in effect for more than thirty
(30) days after such party obtains knowledge thereof; or a petition is filed
against the Borrower and/or Guarantor under any state, reorganization,
arrangement, insolvency, readjustment of debt, dissolution, liquidation or
receivership law of any jurisdiction, whether now or hereafter in effect, and
such petition is not dismissed within sixty (60) days;

          (k) the Borrower and/or Guarantor files a case under the Federal
Bankruptcy Code or seeks relief under any provision of any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or hereafter in effect, or
consents to the filing of any case or petition against it under any such law;

          (1) the Borrower and/or Guarantor makes an assignment for the benefit
of its creditors, or admits in writing its inability to pay its debts generally
as they become due, or consents to the appointment of a receiver, trustee or
liquidator of the Borrower and/or Guarantor or of all or any part of its
property;

          (m) the entry of a final court order that enjoins or restrains
Borrower's and/or Guarantor's conduct of their business activities;

          (n) the existence or future enactment of any law, by any federal,
state, parish, county, municipal, or other taxing authority, requiring or
permitting Borrower to deduct any amount from any payments to be made on the
Loan or any other Obligation;

          (o) the failure of Borrower and/or Guarantor to pay any federal,
state, or local tax, fee, or duty, unless the same is being contested in good
faith and is secured by an adequate reserve in an amount sufficient to satisfy
same and enforcement proceedings have not begun;

          (p) any material adverse change in Borrower's financial condition,
business, or ability to pay or perform its obligations to Lender; or

                                       26
<PAGE>

          (q) the Collateral, or any material portion thereof, is condemned or
expropriated under power of eminent domain by any legally constituted
governmental authority.

     SECTION 7.02. NOTICE OF DEFAULT AND REMEDIES. Upon the happening of any
event of Default and such Default continues for a period of ten (10) days for a
payment default under the Loan or the Obligations or thirty (30) days for any
other type of default, after Lender has mailed or sent written notice of such
Default to the Borrower (but with no notice required in the event of a Default
under paragraphs (j), (k), or (1) of Section 7.01), Lender may declare the
entire principal amount of all Obligations then outstanding, including the Loan
and interest accrued thereon, to be immediately due and payable without
presentment, demand, protest, notice of protest or dishonor or other notice of
default of any kind, all of which are hereby expressly waived by the Borrower
and Lender is then authorized to exercise any and all of its rights and remedies
under the Collateral Documents and/or the Obligations.

     SECTION 7.03. RIGHT OF SET-OFF AND COMPENSATION. Upon the occurrence and
continuance of a Default and expiration of the notice provided in Section 7.02,
Lender is hereby authorized at any time and from time to time, without notice to
Borrower (any such notice being expressly waived by the Borrower) to set-off,
compensate and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held, and other indebtedness at any time owing
by the Lender to or for the credit or the account of the Borrower against any
and all of the Obligations of the Borrower, irrespective of whether or not the
Lender shall have made any demand under this Agreement or the Note and although
such Obligations may be unmatured. The Lender agrees promptly to notify the
Borrower after any such set-off, compensation and application, provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of the Lender under this Section are in addition to
other rights of set-off and compensation which the Lender may have under the
Collateral Documents or otherwise. Lender shall have the right to impute all
payments on the Obligations in any order as Lender may desire.

                                  SECTION VIII
                                 MISCELLANEOUS

     SECTION 8.01. NOTICES. All notices and other communications given hereunder
or in connection herewith shall be in writing, shall be sent by registered or
certified mail, return receipt requested, postage prepaid, or by hand delivery
with acknowledged receipt of delivery, shall be deemed given on the date of
acceptance or refusal of acceptance shown on such receipt; and shall be
addressed to the party to receive such notice at the following applicable
addresses:

     If to the Borrower:  Conrad Shipyard, Inc.
                          1501 Front Street
                          Morgan City, Louisiana 70380
                          Attn: William H. Hidalgo

     If to Lender:        Whitney National Bank
                          228 St. Charles Avenue
                          New Orleans, Louisiana 70130
                          Attn: Edgar W. Santa Cruz, III
                           Vice President

                                       27
<PAGE>

Any party may, by notice given as aforesaid, change its address for all
subsequent notices.

     SECTION 8.02. AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement or of the Note shall be effective unless the same shall be in writing
and signed by Lender and the Borrower. No waiver of Borrower's Obligations shall
be effective unless in writing and signed by Lender, and then such waiver shall
be effective only in the specific instance and for the specific purpose for
which given.

     SECTION 8.03. NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising, on the part of Lender, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges herein provided
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.

     SECTION 8.04. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made hereunder and in any document, certificate
or statement delivered pursuant hereto or in connection herewith shall survive
the execution and delivery of this Agreement, the Collateral Documents and the
Note.

     SECTION 8.05. HEADINGS. The section and other headings contained in this
Agreement are for reference purposes only and shall not control or affect the
construction of this Agreement or the interpretation hereof in any respect.

     SECTION 8.06. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and shall inure to the benefit of Lender, the Borrower and their respective
successors and assigns.

     SECTION 8.07. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable under applicable law shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof.

     SECTION 8.08. GOVERNING LAW. This Agreement, the Note and the rights and
obligations of the parties under this Agreement and the Note shall be governed
by, and construed and interpreted in accordance with, the law of the State of
Louisiana.

     SECTION 8.09. TIME OF THE ESSENCE. Time shall be deemed of the essence with
respect to the performance of all of the terms, provisions and conditions on the
part of the Borrower and the Lender to be performed hereunder.

     SECTION 8.10. SUCCESSORS AND ASSIGNS; PARTICIPANTS. (a) All covenants and
agreements contained by or on behalf of the Borrower in this Agreement, the Note
and the Collateral Documents shall bind its successors and assigns and shall
inure to the benefit of the Lender and its successors and assigns.

     (b) This Agreement is for the benefit of the Lender and for such other
Person or Persons as may from time to time become or be the holders of any of
the Obligations, and this Agreement shall be transferable and negotiable, with
the same force and effect and to the same extent as the Obligations may

                                       28
<PAGE>

be transferable, it being understood that, upon the transfer or assignment by
the Lender of any of the Obligations, the legal holder of such Obligations shall
have all of the rights granted to the Lender under this Agreement.

     (c) Borrower hereby recognizes and agrees that the Lender may, from time to
time, one or more times, transfer all or any portion of the Obligations to one
or more third parties. Such transfers may include, but are not limited to, sales
of participation interests in such Obligations in favor of one or more third-
party lenders. Borrower specifically (i) consents to all such transfers and
assignments, waives any subsequent notice of and right to consent to any such
transfers and assignments as may be provided under applicable Louisiana law;
(ii) agrees that the purchaser of a participation interest in the Obligations
will be considered as the absolute owner of a percentage interest of such
Obligations and that such a purchaser will have all of the rights granted to the
purchaser under any participation agreement governing the sale of such a
participation interest; (iii) waives any right of off-set that Borrower may have
against the Lender, and/or any purchaser of such a participation interest in the
Obligations and unconditionally agrees that either the Lender or such a
purchaser may enforce Borrower's Obligations under this Agreement, irrespective
of the failure or insolvency of the Lender or any such purchaser; (iv) agrees
that any purchaser of a participation interest in the Obligations may exercise
any and all rights of counterclaim, set-off, banker's lien and other liens with
respect to any and all monies owing to the Borrower in accordance with the terms
of the Obligations, including but not limited to this Agreement; and (v) agrees
that, upon any transfer of all or any portion of the Obligations, the Lender may
transfer and deliver any and all collateral securing repayment of such
Obligations to the transferee of such Obligations and such collateral shall
secure any and all of the Obligations in favor of such a transferee, and after
any such transfer has taken place, the Lender shall be fully discharged from any
and all future liability and responsibility to Borrower with respect to such
collateral, and the transferee thereafter shall be vested with all the powers,
rights and duties with respect to such collateral.

     SECTION 8.11. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, and it shall not be necessary that the signatures of all parties
hereto be contained on any one counterpart hereof; each counterpart shall be
deemed an original, but all of which together shall constitute one and the same
instrument.

     SECTION 8.12. PAYMENT OF EXPENSES AND INDEMNITY.

     (a) The Borrower agrees (i) to promptly pay or reimburse Lender for all of
Lender's reasonable out-of-pocket costs, expenses and attorneys' fees incurred
in connection with the preparation, execution and delivery of this Agreement,
the Note, the Collateral Documents and any other documents prepared in
connection herewith, and (ii) to promptly pay or reimburse Lender for all of
Lender's reasonable out-of-pocket costs and expenses incurred in connection with
the preparation, execution and delivery of any amendment, supplement or
modification to this Agreement, the Note, the Collateral Documents and any other
documents prepared in connection herewith, together with the reasonable fees and
disbursements of counsel to Lender and the reasonable costs and expenses
incurred in connection with the enforcement or preservation of any rights under
this Agreement, the Note, the Collateral Documents and any such other documents.

     (b) In consideration of the execution and delivery of this Agreement by
Lender, the Borrower hereby indemnifies, exonerates and holds Lender and its
respective officers, directors, employees, and agents, (herein collectively
called the "Bank Parties" and individually called a "Bank Party") free and
harmless from and against any and all actions, causes of action, suits, losses,
costs, liabilities and damages, and expenses actually incurred in connection
therewith (irrespective of whether such Bank

                                       29
<PAGE>

Party is a party to the action for which indemnification hereunder is sought),
including reasonable attorneys' fees and disbursements (collectively, the
"Indemnification Liabilities"), incurred by the Bank Parties or any of them as a
result of, or arising out of, or relating to:

               (i) any transaction financed or to be financed in whole or in
          part, directly or indirectly, with the proceeds of the Loan; or

               (ii) any investigation, litigation, or proceeding related to any
          acquisition or proposed acquisition by the Borrower or any of its
          Subsidiaries of all or any portion of the stock or all or
          substantially all of the assets of any Person, regardless of whether
          any Bank Party is a party thereto; or

               (iii) the presence on or under, or the escape, seepage leakage,
          spillage, discharge, emission, discharging or releases from, any real
          property owned or operated by the Borrower or any Subsidiary of any
          Hazardous Material (including, without limitation, any losses,
          liabilities, damages, injuries, costs, expenses or claims asserted or
          arising under the Comprehensive Environmental Response. Compensation
          and Liability Act, any so-called "Superfund" or "Superlien" law, or
          any other federal, state, local or other statute, law, ordinance,
          code, rule, regulation, order or decree regulating, relating to or
          imposing liability or standards on conduct concerning, any Hazardous
          Material), regardless of whether caused by, or within the control of,
          the Borrower or any Subsidiary;

except for any such Indemnification Liabilities arising for the account of a
particular Bank Party which a court of competent jurisdiction shall have
determined in a final proceeding to have arisen by reason of the relevant Bank
Party's gross negligence, bad faith, willful misconduct or breach of contractual
obligation arising under this Agreement and owed to the Borrower (which shall be
the sole responsibility of such Bank Party). The agreements in this Section
shall survive payment of the Loan and the Obligations and all other amounts
payable hereunder.

     SECTION 8.13. ENTIRE AGREEMENT. This Agreement, the Note, the Collateral
Documents and the other documents executed in connection herewith constitute the
entire agreement between the parties hereto with respect to the subject matter
hereof. To the extent the terms of the Collateral Documents conflict with the
terms of this Agreement, the terms of this Agreement shall control.

                          [Intentionally left blank]

                                       30
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.

                                  CONRAD SHIPYARD, INC.

                                  By: /s/ William H. Hidalgo
                                     --------------------------------
                                     William H. Hidalgo
                                     Its: President

                                  CONRAD INDUSTRIES, INC.

                                  By: /s/ William H.Hidalgo
                                     --------------------------------
                                     William H. Hidalgo
                                     Its: President

                                  ORANGE SHIPBUILDING COMPANY, INC.

                                  By: /s/ William H.Hidalgo
                                     --------------------------------
                                     William H. Hidalgo
                                     Its: President

                                  WHITNEY NATIONAL BANK

                                  By: /s/ Edgar W. Santa Cruz, III
                                     --------------------------------
                                     Edgar W. Santa Cruz, III
                                     Its: Vice President

                                       31
<PAGE>

                                   EXHIBIT A

1-a. That certain tract or parcel of land, lying and being situated in the CITY
     OF MORGAN CITY, PARISH OF ST. MARY, State of Louisiana, commencing at a
     point on the West boundary line of Front Street, One Hundred and Ten (110')
     feet North of its intersection with the North boundary line of the right-
     of-way owned by the municipal corporation of Morgan City, La., for
     waterworks pipe line to Berwick Bay (or Atchafalaya River), and thence
     extending northerly along the said west boundary line of Front Street a
     distance of Fifty (50') feet, and between the boundaries so established
     having a depth between parallel lines to the margin of Berwick Bay (or
     Atchafalaya River). Said tract of land being bounded on the North by
     property now or formerly Harry Adam Blanco, south by property of H. J.
     Boudreaux, east by Front Street, and west by Berwick Bay (or Atchafalaya
     River). Together with all the buildings and improvements, rights, ways,
     privileges and servitudes thereon situated and appertaining.

1-b. That certain piece of land, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, being a portion of the property acquired by Harry Adam Blanco
     from Miss Carrie I. Gathright, by an Act of Sale executed before Paul
     Schreier, Notary Public, St. Mary Parish, on the lst day of April, 1941,
     and duly recorded in the Conveyance Office of the Parish of St. Mary,
     Louisiana, situated in the City of Morgan City, La., described as
     commencing at a point on the north line of the property as acquired by
     Harry Adam Blanco from Miss Carrie I. Gathright One Hundred and Fifty
     (150') feet west of Front Street, thence southerly at right angles a
     distance of Fifty (50') feet and with such width the property has a depth
     between parallel lines to the Atchafalaya River, being bounded on the North
     by property now or formerly of Gloria White, east by remaining property of
     Harry Adam Blanco or assigns, on the South by the property firstly
     described herein and on the west by the Atchafalaya River.

     Being the same property acquired by Conrad Industries, Inc. by Act of Cash
     Sale from Walston Stout dated February 23,1988 and recorded February
     24,1988 in Book 31-D, Entry No. 222,156 of the Conveyance Records of St.
     Mary Parish, Louisiana.

2.   That certain tract or parcel of, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, land lying and being situated in the corporate limits of the
     CITY OF MORGAN CITY, PARISH OF ST. MARY, State of Louisiana, commencing at
     the intersection of the North boundary line of the right-of-way owned by
     the corporation of Morgan City, for waterworks pipe line to Berwick Bay (or
     Atchafalaya River) and the West line of Front Street and from thence
     extending northerly along the West line of Front Street for a distance of
     One Hundred and Ten (110') feet, and with such frontage having a depth
     between parallel lines to the margin of Berwick Bay (or Atchafalaya River).
     Being bounded on the North by property of Stoute, on the East by Front
     Street on the South
<PAGE>

     by the City of Morgan City right-of-way, and on the West by Berwick Bay (or
     Atchafalaya River).

     Being the same property acquired by Conrad Industries, Inc. by Act of Cash
     Deed from J. Parker Conrad, et ux dated May 5, 1987 and recorded in Book
     30-J, Entry No. 219,138 of the Conveyance Records of St. Mary Parish,
     Louisiana.

3.   That certain parcel of land, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, lying and being situated in the CITY OF MORGAN CITY, ST. MARY
     PARISH, Louisiana, designated as a trip of land thirty (30') feet wide
     being bound on the North now or formerly by property of Hanson Lopez, being
     bounded on the East by the floodside of Front Street, and being bounded on
     the West by the Atchafalaya River; said property having a front of thirty
     (30') feet on the West side of Front Street by a depth between parallel
     lines to the Atchafalaya River, all as shown on the attached Plan of Land
     attached hereto and made a part hereof; being the same property acquired as
     follows:

     The South Fifteen (S-15') feet being dedicated to the City of Morgan City
     as shown on Barnes Survey and as shown on that plat by Bourgeois
     Subdivision by S. A. Bradford, P.E. & City Engineer, recorded June 10, 1910
     at St. Mary Parish COB 3-B, Entry No. 38,853; the North fifteen (N-15')
     feet being acquired by that Act of Sale with map attached thereto at St.
     Mary Parish, COB 3-G, Entry No. 496, recorded July 16, 1912.

     Being the same property acquired by Conrad Industries, Inc. by Act of Cash
     Sale from Mayor and Councilmen of the City of Morgan City dated February
     15, 1988 and recorded in Book 31-C, Entry No. 222,082 of the Conveyance
     Records of St. Mary Parish, Louisiana.

4-a. That certain tract or parcel of land together with all buildings,
     improvements and appurtenances thereon and thereunto belonging, and all
     rights, ways, privileges and servitudes thereunto appertaining, lying and
     being situated in the TOWN OF MORGAN CITY, ST. MARY PARISH, State of
     Louisiana, more fully described as being LOT NUMBER ONE (1) IN SQUARE "B"
     OF BOURGEOIS SUBDIVISION, said lot having a frontage on the West side of
     Front Street of Sixty-six and eight-tenths (66.8') feet, and extending to
     the Atchafalaya River and being bounded on the North by property of unknown
     owners, on the East by Front Street, on the South by Lot 2 and on the West
     by the Atchafalaya River.

     Being the same property acquired by Conrad Industries, Inc. by Act of Cash
     Sale from Martha Garber Vidos, et al recorded September 4, 1986 in Book 29-
     T, Entry No. 216,761 of the Conveyance Records of St. Mary Parish,
     Louisiana.

4-b. That certain tract or parcel of land together with all buildings and
     improvements thereon and thereunto belonging, and all rights, ways,
     privileges and servitudes thereunto appertaining,

                                       2
<PAGE>

     lying and being situated in the CITY OF MORGAN CITY, PARISH OF ST. MARY,
     State of Louisiana, and more particularly described as being the North
     Sixteen (16') feet of LOT NUMBER TWO (2) OF SQUARE LETTER "B" OF BOURGEOIS
     SUBDIVISION of said City; the property having a frontage of sixteen (16')
     feet on the West side of Front Street, by a depth to the Atchafalaya River,
     and being bounded on the North by Lot Number One (1), on the East by Front
     Street, on the South by remaining portion of Lot Two (2) and on the West by
     the Atchafalaya River.

5.   That certain tract or parcel of land, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, lying and being situated in the CITY OF MORGAN CITY, ST. MARY
     PARISH, Louisiana, and more particularly described as being LOT NUMBER TWO
     (2) IN SQUARE LETTER "B" OF THE BOURGEOIS SUBDIVISION of said City, having
     a front on the West side of Front Street by a depth to the Atchafalaya
     River. Said property having a front of Fifty (50') feet more or less on the
     West side of Front Street by a depth to the Atchafalaya River.

     Being the same property acquired by Conrad Industries, Inc. by Act of
     Exchange from J. Parker Conrad, et ux dated July 16, 1987 and recorded
     July 17, 1987 in Book 30-N, Entry No. 219,839 of the Conveyance Records of
     St. Mary Parish, Louisiana.

6.   That certain tract of land, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, situated in lying and being situated in the CITY OF MORGAN
     CITY, PARISH OF ST. MARY, State of Louisiana, and more fully described as
     being LOT NUMBER THREE (3) IN SQUARE LETTER "B" OF BOURGEOIS ANNEX to said
     City. Said lot having a front of Sixty-six and 66/100 feet on the West side
     of Front Street, and extending back between parallel lines to Berwick Bay.
     Said lot or parcel of land being bounded on the North by Lot No. Two (2),
     Square Letter "B" of Bourgeois Annex, on the East by Front Street, on the
     South by Lot No. Four (4), Square Letter "B" of Bourgeois Annex and on the
     West by Berwick Bay. Together with all buildings and improvements thereon
     situated and all rights, ways, privileges and servitudes thereunto
     belonging and appertaining.

     Being the same property acquired in part by Conrad Industries, Inc. by Act
     of Cash Sale from Royal A. Mayon, et al recorded September 29, 1976 and
     recorded in Book 19-Y, Entry No. 167,335 of the Conveyance Records of
     St. Mary Parish, Louisiana; and by Conrad Industries, Inc. by Act of Cash
     Sale from Wallace Bergeron, et al recorded September 29, 1976 and recorded
     in Book 19-Y, Entry No. 167,336 of the Conveyance Records of St. Mary
     Parish, Louisiana.

7-a. That certain tract or parcel of land, lying and being situated in the
     corporate limits of the City of Morgan City, Parish of St. Mary, State of
     Louisiana, known, designated and described as

                                       3
<PAGE>

     being the South Thirty-three and Six-tenths (33.6') feet of Lot Number Five
     (5) and all of. Lots Numbers Six (6) and Seven (7) in Square "B" of the
     Bourgeois Subdivision of said City: The property having a front on the West
     side of Front Street of One Hundred Sixty-seven and two-tenths (167.2')
     feet, and having a depth between parallel lines to the Atchafalaya River of
     Berwick Bay. Said property being bounded on the North by property herein
     after described; on the South by property of Eddie Boudreaux or assigns.
     Together with all the batture, accretions, alluvion, build up or filled
     inland on or in Berwick Bay, adjoining and abutting upon the said lots, as
     well as any and all rights, ways and privileges and servitudes of any kind
     and every kind and character thereunto belonging or appertaining.

7-b. That certain tract or parcel of land, lying and being situated in the
     corporate limits of the City of Morgan City, Parish of St. Mary, State of
     Louisiana, known, designated and described as being all of Lot Number
     Four (4) and the North Thirty-three and two-tenths (33.2') feet of Lot
     Number Five (5) in Square "B" of the Bourgeois Subdivision of said City.
     The property having a front on the west side of Front Street of One Hundred
     (100') feet and having a depth between parallel lines to the Atchafalaya
     River or Berwick Bay. Said property being bounded on the North by Lot No. 3
     of Square "B" property of Elodie Mayon, on the South by the remaining
     portion of Lot No. 5 in Square "B" hereinabove described, on the East by
     Front Street and on the West by Atchafalaya River or Berwick Bay.

     Being the same property acquired by Conrad Industries, Inc. by Act of Sale
     recorded November 7, 1953 in Book 8-M, Entry No. 88,053 of the Conveyance
     Records of St. Mary Parish, Louisiana.

8.   That certain tract or parcel of land, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, lying and being situated in the CITY OF MORGAN CITY, ST. MARY
     PARISH, Louisiana, known, designated and described as being LOT NO.
     EIGHT (8) IN SQUARE "B" in the Bourgeois Annex to Morgan City and having a
     front on the West side of Front Street of Sixty-six feet and eight inches
     (66'8") by a depth between said Front Street and Berwick Bay of Two Hundred
     Eighty-five (285') feet, more or less, on the South line and Two Hundred
     Seventy (270') feet, more or less, on the North line. Said Lot No. Eight
     (8) in Square "B" of the Bourgeois Annex being more fully described as
     being bounded on the North by Lot Seven (7) of Square "B", on the East by
     Front Street, on the South by Lot Nine (9) of Square "B" and on the West by
     Berwick Bay.

     Being the same property acquired by Conrad Industries, Inc. by Act of Cash
     Sale from Olive Boudreaux Stephens, et al, dated December 29,1975 and
     recorded January 5,1976 in Book 19-L, Entry No. 164,488 of the Conveyance
     Records of St. Mary Parish, Louisiana.

9-a. That certain tract or parcel of land, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, lying and being situated in the TOWN OF MORGAN

                                       4
<PAGE>

     CITY, PARISH OF ST. MARY, State of Louisiana, and more particularly
     described as LOT NUMBER NINE (9) IN SQUARE LETTER "B" IN BOURGEOIS
     SUBDIVISION of said town, according to a map thereof recorded in the
     Recorder's Office at Franklin, Louisiana, in Book 3-B, Entry No. 38,855.

     Said property having a front on the West side of the public road (now Front
     Street of Morgan City, Louisiana) of Sixty-six and 8/10 (66.8') feet by a
     depth between parallel lines of Three Hundred (300') feet on the South side
     and Two Hundred Eighty Five (285') feet on the North line. Bounded North by
     Lot Number Eight (8) of said Square, East by said public road (nor Front
     Street of Morgan City, Louisiana) South by a lane, and West by Berwick Bay
     or the Atchafalaya River.

     Being the same property acquired by Conrad Industries, Inc. by Act of Cash
     Sale recorded January 13,1978 in Book 20-X, Entry No. 173,263 of the
     Conveyance Records of St. Mary Parish, Louisiana.

10.  That certain lot or parcel of land, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, lying and being situated in the CITY OF MORGAN CITY, ST. MARY
     PARISH, State of Louisiana and more particularly described as having a
     front of fifteen (15') feet on the west side of Front Street by a depth
     between parallel lines extending to Berwick Bay (Atchafalaya River). Said
     tract of land being shown and designated on the map of Bourgeois
     Subdivision to the City of Morgan City dated June 10, 1910 and recorded on
     June 10, 1910 in Book 3-B, Page 244, Entry No. 38,853 of the Conveyance
     Records of St. Mary Parish, Louisiana, and DESIGNATED THEREON AS A FIFTEEN
     (15') FOOT RIGHT-OF-WAY OR ALLEY ADJACENT TO AND IMMEDIATELY SOUTH OF LOT
     NINE (9) BLOCK B OF THE BOURGEOIS SUBDIVISION. The said tract of land being
     bounded on the west by Front Street on the East by Berwick Bay (Atchafalaya
     River), on the north by Lot Nine (9), Square B of Bourgeois Subdivision
     (now the property of Conrad Industries, Inc.) and on the south by property
     of Conrad Industries, Inc. acquired by Act of Sale recorded in Book 35-F,
     Entry No. 238,092 of the Conveyance Records of St. Mary Parish, Louisiana.

     Being the same property acquired by Conrad Industries, Inc. by an Ordinance
     of Abandonment adopted by the City of Morgan City on the 28th day of
     September, 1993, being Ordinance 93-10 of the City of Morgan City, which
     Ordinance is recorded in Book 36-K, Entry No. 248,156 of the Conveyance
     Records of St. Mary Parish, Louisiana and being the same property described
     in an Affidavit of Conrad Industries, Inc. recorded Book 36-K, Entry
     No. 243, 185 of the Conveyance Records of St. Mary Parish, Louisiana.

11.  That certain tract of land, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, lying and being situated in the CITY OF MORGAN CITY, PARISH
     OF ST. MARY, State of Louisiana, and forming part of what was formerly
     known

                                 5
<PAGE>

     as Tiger Island Plantation, measuring Eighty-six (86') feet on Front
     Street, by a depth of Two Hundred Eighty-six (286') feet, between parallel
     lines, more or less, from said Front Street to Berwick Bay; the tract being
     bounded, now or formerly, on the North by lands of A. A. Bourgeois, on the
     East by Front Street, on the South by the Clarence Hanson Subdivision,
     formerly Lawrence, and West by Berwick Bay, together with all improvements
     and appurtenances thereon situated, and thereunto belonging.

     Being the same property acquired by Conrad Industries, Inc. by Act of Cash
     Sale from Stella Gloriosa Henry, et al., recorded May 13, 1992 in Book
     35-F, Entry No. 238,092 of the Conveyance Records of St. Mary Parish,
     Louisiana.

12.  That certain lot or parcel of land, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, known, designated and described as LOT "F" IN BLOCK NUMBER
     THREE (3), HANSON ANNEX TO THE TOWN OF MORGAN CITY, PARISH OF ST. MARY,
     State of Louisiana, according to the map or plan of survey, of said
     subdivision of file and of record in the Recorder's Office in Book 22 of
     Conveyances at Page 516 and according to which said lot has a front on the
     North side of Belanger Street of Fifty (50') feet by a depth between
     parallel lines of One Hundred (100') feet; and

     That certain tract or parcel of land, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, lying and being situated in the CITY OF MORGAN CITY, PARISH
     OF ST. MARY, State of Louisiana, more fully described as being situated on
     the West side of Lot "F" in Block 3 of the Hanson Annex to Morgan City and
     extending West to the Atchafalaya River; bounded on the North by property
     now or formerly of Chester Henry and extending South to a point Six and
     One-half (6 1/2') feet front on the North side of Belanger Street, bounded
     on the East by the said Lot F, Block 3 of the Hanson Annex and West by the
     Atchafalaya River (Berwick Bay).

     Being the same property acquired by Conrad Industries, Inc. by Act of Cash
     Sale from Ronald J. Overhultz, et ux., dated July 9, 1993 and recorded July
     14, 1993 in Book 36-F, Entry No. 242,330 of the Conveyance Records of St.
     Mary Parish, Louisiana.

13.  That certain tract or parcel of land, together with all buildings and
     improvements thereon situated, and all rights, ways, privileges and
     appurtenances thereunto belonging or in anywise appertaining, lying and
     being situated in the CITY OF MORGAN CITY, ST. MARY PARISH, Louisiana, on
     the East side of the Atchafalaya River, and more fully described as being
     lot lettered "A" in Block No. Three (3) of Hanson's Annex to the City,
     according to the survey thereof as made by S. A. Bradford; the lot herein
     measuring Fifty (50') feet, fronting on the west side of Front Street by a
     uniform depth of One Hundred (100') feet.

                                       6
<PAGE>

     Being the same property acquired by Conrad Industries, Inc. by Act of Cash
     Sale from Dale A. Beadle dated October 21,1993 and recorded October 22,
     1993 in Book 36-K, Entry No. 242,271 of the Conveyance Records of St. Mary
     Parish, Louisiana.

14.  That certain tract or parcel of land, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, lying and being situated in the lower end of the PARISH OF
     ST. MARY, in Section 42, Township 16 South, Range 13 East, Southeastern
     Land District of Louisiana, forming part of the tract acquired by Biaggio
     Domino from the Jeanerette Lumber & Shingle Company, Ltd., by act dated
     August 6, 1918 and duly recorded in Book 3-T, Page 304, Entry No. 45,346 of
     Conveyance Records, St. Mary Parish, Louisiana. The tract herein being more
     particularly described as follows: Beginning at a Point "A" at the
     northeast corner thereof, on the west side of the right-of-way limits of
     U.S. Highway 90, thence a distance of 544.7' feet, more or less, to Point
     "F" on the water's edge of Bayou Boeuf; thence along the water's edge of
     Bayou Boeuf in a southeasterly direction to Point "E"; thence North 49
     degrees east 300 feet, more or less, to Point "D"; thence South 30 degrees
     27 minutes East 42 feet, more or less, to Point "C"; thence North 53
     degrees 28 minutes east 445.5 feet, more or less, to Point "B" on the
     right-of-way limits of U.S. Highway 90; thence North 41 degrees West along
     said right-of-way limits 1075.7 feet, more or less, to Point "A".

     The said tract containing a total acreage of 15.63 acres, all as shown and
     designated on survey of T.F. Kramer dated May 7, 1946 attached to that act
     recorded May 21, 1946 in St. Mary Parish COB 6-V, Folio 77, under Entry
     No. 74,242.

     Together with all of the property which Mortgagor owns to the water's edge.
     This includes the property which lies within the extension of the line
     between Points "D" and "E" to the water's edge and the extension of the
     line between Points "A" and "F" to the water's edge.

     Together with whatever reversionary rights Mortgagor may have in and to the
     old roadbed running across said property as shown on the survey described
     above.

     Municipal address of the above described property is: 9752 U.S. Highway 90
     East, Amelia, Louisiana.

     Being the same property acquired by Conrad Industries, Inc. from Marine
     Shale Processors, Inc., as per act registered on July 17, 1996, in
     Conveyance Book 39-C, folio 335, Entry No. 253379.

15.  THAT CERTAIN LOT OF GROUND, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, designated as LOT E, BLOCK 3, HANSON ANNEX TO THE CITY OF
     MORGAN CITY, ST. MARY PARISH,

                                       7
<PAGE>

     LOUISIANA, the said lot having a front on the north side of Belanger Street
     of Fifty (50') feet by a depth between parallel lines of One Hundred (100')
     feet; to include all buildings and improvements situated thereon.

     This property bears municipal number 103 Belanger Street, Morgan City,
     Louisiana 70380.

     Being the same property acquired by Conrad Industries, Inc. from Lydia
     Anslem Mayon and Evella Mayon Crochet, as per act passed before Dale H.
     Hayes, Notary Public, registered on November 20, 1996, in Conveyance Book
     39-0, Entry No. 254,965, St. Mary Parish, Louisiana.

16.  That certain lot of ground, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in, anywise
     appertaining, lying and being situated in the PARISH OF ST. MARY, State of
     Louisiana, on the East side of Atchafalaya River, and more particularly
     described as being LOT NUMBERED LETTER "D" OF HANSON'S ANNEX TO THE TOWN OF
     MORGAN CITY, according to the Map and Plan of Survey thereof recorded in
     Conveyance Book "SS" Entry No. 34,598, of the records of the Parish of St.
     Mary, LOT D measuring fifty (50') feet in width by a depth between parallel
     lines of one hundred (100') feet; and subject to the following correction
     of the plat of survey of said subdivision hereinabove referred to, to-wit:
     That the street marked on said map "Belanger Street" extends and is opened
     as a public thoroughfare only from the river on the west to the west
     boundary lines of Lots Number 38 in Block Two, and of Lot 10 in Block One
     of said subdivision.

     Being the same property acquired by Conrad Industries, Inc. from Howard L.
     Freeman, Sr., et al., as per act passed before Edward M. Leonard, Jr.,
     Notary Public, registered on June 6, 1994, in Conveyance Book 36-Z, Entry
     No. 245,401, St. Mary Parish, Louisiana.

17.  That certain tract or parcel of ground, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, lying and being situated in the corporate limits of the City
     of Morgan City, PARISH OF ST. MARY, State of Louisiana, on the East side of
     the Atchafalaya River, known, designated and described as being LOT
     NUMBERED LETTER "C" OF HANSON ANNEX TO THE TOWN OF MORGAN CITY (now City of
     Morgan City) according to the plan of survey thereof, of record in the
     Parish, in Conveyance Book SS, Entry No. 34,498. The said lot measures
     Fifty (50') feet in width by a depth between parallel lines of One Hundred
     (100') feet; and subject to the following correction of the. plan of survey
     and subdivision hereinabove mentioned, to-wit: That the street marked on
     said map "Belanger Street" extends and is opened as a public thoroughfare
     only from the river on the west, to the west boundary line of Lot No.
     Thirty-eight (38) in Block Two (2) and of Lot Ten (10) in Block One (1) of
     said subdivision.

                                       8
<PAGE>

     Being the same property acquired by Conrad Industries, Inc. from Garrett H.
     Gaudet and Beryl Lee Landry Gaudet, as per act passed before Dale H. Hayes,
     Notary Public, dated July 21, 1997, registered in Conveyance Book 40-L,
     Entry No. 258,180, St. Mary Parish, Louisiana.

                                       9
<PAGE>

                                   EXHIBIT B

TRACT NO. ONE:

     West One half (1/2) of Lots Nos. Five (5) and Six (6), Block No. (1) of the
     Calder Survey of the City of Orange, Orange County, Texas. SAVE AND EXCEPT
     THEREFROM the 70 foot x 70 foot tract conveyed to Leroy Conley by deed
     dated March 9, 1945 of record in Volume 82, page 377, Deed Records of
     Orange County, Texas.

TRACT NO. TWO:

     Being a part of Lots Five (5) and Six (6) in Block Number One (1), of the
     CALDER SURVEY to the City of Orange, Orange County, Texas, according to the
     plat thereof on file in the County Clerk's office in Orange County, Texas,
     and such part being described as follows:

     BEGINNING at an iron stake in the Southeast corner of the above described
     tract of land;

     THENCE West along and parallel with Georgia Street seventy (70) feet to an
     iron stake for corner;

     THENCE North seventy (70) feet to an iron stake for corner;

     THENCE East seventy (70) feet to an iron stake for corner;

     THENCE South seventy (70) feet to an iron stake for corner and to the PLACE
     OF BEGINNING.

TRACT NO. THREE-A:

     All that certain tract or parcel of land lying and being situated in Orange
     County, Texas, a part of the NATHAN CORDREY SURVEY, ABSTRACT NO. 59 and
     being a part of that certain "portion of the right-of-way of Bancroft
     Avenue located between Border Street and Market Street" which was
     "abandoned and vacated as a street" by the City of Orange Ordinance No.
     1982-2 "passed, approved and adopted on final reading" January 26, 1982,
     and the said tract herein described being more particularly described as
     follows:

     COMMENCING at an iron pin found for the westerly corner of Lot 1, Block 1
     of Calder Addition and northerly corner of Lot 8 of the said Block 1 of
     Calder Addition, the said corner being in the southeasterly right-of-way
     line of the said Moss Avenue, the said Calder Addition being indicated on
     that, certain plat of record in Volume 1, Page 76 of the Map Records of
     Orange County, Texas, and the said iron pin being South 43 deg. 21 min.
     30 sec. West along and with the northwesterly line of the said Lot 1,
     northwesterly line of the said Block 1, and said southeasterly right-of-way
     line of Moss Avenue a distance of 140.02 feet from another iron pin found
     for reference at the northerly corner of the said Lot 1 and northerly
     corner of the said Block 1 at the intersection of the said southeasterly
     right-of-way line of Moss Avenue with the southwesterly right-of-way line
     of Water Street;

<PAGE>

THENCE South 43 deg. 21 min. 30 sec. West along and with the northwesterly line
of the said Lot 8, said northwesterly line of Block 1, and said southeasterly
right-of-way line of Moss Avenue a distance of 140.00 feet to a point for the
westerly corner of the said Lot 8 and westerly corner of the said Block 1 at the
intersection of the said southeasterly right-of-way line of Moss Avenue with the
northeasterly right-of-way line of the said Market Street, the said point for
corner being North 46 deg. 47 min. 36 sec. West a distance of 279.27 feet from a
3/4-inch pipe found for reference;

THENCE North 46 deg. 38 min. 30 sec. West along and with a northwesterly
extension of the southwesterly line of the said Lot 8, southwesterly line of the
said Block 1 and said northeasterly right-of-way line of Market Street a
distance of 60.00 feet to an iron pin set for a corner at the intersection of
the said northeasterly right-of-way line of Market Street with the northwesterly
right-of-way line of the said Moss Avenue;

THENCE South 43 deg. 21 min. 30 sec. West along and with the said northwesterly
right-of-way line of Moss Avenue (as extended across the said Market Street) a
distance of 60.00 feet to an iron pin set for the easterly corner of Lot, 6,
Block 18 of the said Calder Addition and easterly corner of the said Block 18 at
the intersection of the said northwesterly right-of-way line of Moss Avenue with
the southwesterly right-of-way line of the said Market Street;

THENCE North 46 deg. 38 min. 30 sec. West along and with the northeasterly line
of the said Block 18 and said southwesterly right-of-way line of Market Street a
distance of 417.19 feet to an iron pin set for the southeast corner and POINT OF
BEGINNING of the said tract herein described, the said corner being a northerly
corner of Lot 1 of the said Block 18 of Calder Addition and northeast corner of
the said Block 18 and the southeast corner of the hereinbefore said portion of
the right-of-way of Bancroft Avenue located between Border Street and Market
Street which was "abandoned and vacated as a street" by the City of Orange
Ordinance No. 1982-2, the said corner being at the intersection of the said
southwesterly right-of-way line of Market Street with the southerly right-of-way
line of the said Bancroft Avenue;

THENCE North 89 deg. 46 min. 45 sec. West along and with the northerly lines of
the said Lot 1, Lot 13 of the said Block 18, Lot 14 of the said Block 18 and the
said Block 18 and said southerly right-of-way line of Bancroft Avenue a distance
of 195.71 feet to an iron pin set for the southwest corner of the said tract
herein described, the said corner being the northwest corner of the said Lot 14
and easterly corner of Lot 15 of the said Block 18;

THENCE North 43 deg. 21 min. 30 sec, East along and with a northeasterly
extension of the northwesterly line of the said Lot 14 and southeasterly line of
the said Lot 15 a distance of 13.70 feet to an iron pin set for an angle point
and an interior corner of the said tract herein described, the said corner being
50.00 feet southerly from (measured perpendicularly to) the northerly right-of-
way line of the said Bancroft Avenue;

THENCE North 36 deg. 36 min. 32 sec. West a distance of 62.47 feet to an iron
pin set for the northwest corner of the said tract herein described, the said
corner being in the said northerly right-of-way line of Bancroft Avenue, and the
said corner being the southwest corner of Lot 8 of Block 3 of the R. H. Jackson
Subdivision and southeast corner of Lot 9 of the said Block 3, the said R. H.
Jackson Subdivision being indicated on that certain plat titled "Gilmer's
Subdivision of

                                       2
<PAGE>

     the Jackson & Gates Surveys" of record in Volume 1, Page 10 of the Map
     Records of Orange County, Texas, and the said iron pin being South 0 deg.
     13 min. 15 sec. West along and with the westerly line of the said Lot 8 and
     easterly line of the said Lot 9 a distance of 50.00 feet from a square
     headed bolt found for the northwest corner of the said Lot 8, northeast
     comer of the said Lot 9, southeast comer of Lot 10 of the said Block 3,
     southwest comer of Lot 7 of the said Block 3 and southwest comer of that
     certain tract of land hereinafter referred to as the "Worthen" tract, which
     said Worthen tract being described in that certain instrument from Mary
     Jane Worthen to Wendell W. Worthen dated June 24, 1988 and recorded in
     Volume 691, Page 717 of the Official Public Records of Real Property of
     Orange County, Texas, the said square headed bolt found for the southwest
     corner of the said Worthen tract being South 0 deg. 19 min. 15 sec. West
     along and with the westerly line of the said Worthen tract, westerly line
     of the said Lot 7, Lot 6 of the said Block 3 and Lot 5 of the said Block 3
     and easterly lines of the said Lot 10, Lot 11 of the said Block 3 and Lot
     12 of the said Block 3 a total distance of 150.09 feet from another square
     headed bolt found for reference at the northwest corner of the said Worthan
     tract, the said northwest corner of the Worthan tract being the northwest
     comer of the said Lot 3, southwest corner of Lot 4 of the said Block 5,
     southeast comer of Lot 13 of the said Block 3 and northeast corner of the
     said Lot 12;

     THENCE South 89 deg. 46 min. 45 sec. East along and with the southerly line
     of the said Lot 8, southerly line of the said Block 3 and said northerly
     right-of-way line of Bancroft Avenue a distance of 165.00 feet to an iron
     pin set for the northeast corner of the said tract herein described, the
     said comer being the southeast corner of the said Lot 8, southeast comer of
     the said Block 3 and northeast corner of the said portion of the right-of-
     way of Bancroft Avenue "abandoned and vacated as a street" by the City of
     Orange Ordinance No. 1982-2, the said corner being at the intersection of
     the said northerly right-of-way line of Bancroft Avenue with the westerly
     right-of-way line of the hereinbefore said Market Street;

     THENCE South 0 deg. 13 min. 15 sec. West along and with a southerly
     extension of the easterly line of the said Block 3 and said westerly right-
     of-way line of Market Street a distance of 4.92 feet to an iron pin set for
     an angle point and an interior corner of the said tract herein described,
     the said comer being at the intersection of the said southerly extension of
     the easterly line of Block 3 and westerly right-of-way line of Market
     Street with the northwesterly extension of the hereinbefore said
     northeasterly line of Block 18 and southwesterly right-of-way line of
     Market Street;

     THENCE South 46 deg. 38 min. 30 sec. East along and with the said
     northwesterly extension of the northeasterly line of Block 18 and
     southwesterly right-of-way lice of Market Street a distance of 80.55 feet
     to the POINT OF BEGINNING and Containing 0.235 acre of land, more or less.

TRACT NO. THREE-B:

     All that certain tract or parcel of land lying and being situated in Orange
     County, Texas, a part of the ALEXANDER CALDER SURVEY, ABSTRACT NO. 56 and a
     part of the NATHAN CORDREY SURVEY, ABSTRACT NO. 59 and being a part of
     Market Street, and the said tract herein described being all of that
     portion of Market Street right-of-way which is located southerly from an
     easterly extension of the northerly line of Lot 8, Block 3 of the R. H.
     Jackson Subdivision and also northwesterly from the northwesterly right-of-
     way line of Moss Avenue (as

                                       3
<PAGE>

extended across the said Market Street right-of-way), the said R. H. Jackson
Subdivision being indicated on that certain plat titled "Gilmer's Subdivision of
the Jackson & Gates Surveys" of record in Volume 1, Page 10 of the Map Records
of Orange County, Texas, and the said tract herein described being more
particularly described as follows:

COMMENCING at an iron pin found for the westerly corner of Lot 1, Block 1 of
Calder Addition and northerly corner of Lot 8 of the said Block 1 of Calder
Addition, the said comer being in the southeasterly right-of-way line of the
said Moss Avenue, the said Calder Addition being indicated on that certain plat
of record in Volume 1, Page 76 of the Map Records of Orange County, Texas, and
the said iron pin being South 43 deg. 21 min. 30 sec. West along and with the
northwesterly line of the said Lot 1, northwesterly line of the said Block 1,
and said southeasterly right-of-way line of Moss Avenue a distance of 140.02
feet from another iron pin found for reference at the northerly corner of the
said Lot 1 and northerly corner of the said Block 1 at the intersection of the
said southeasterly right-of-way line of Moss Avenue with the southwesterly
right-of-way line of Water Street;

THENCE South 43 deg. 21 min. 30 sec. West along and with the northwesterly line
of the said Lot 8, said northwesterly line of Block 1, and said southeasterly
right-of-way line of Moss Avenue a distance of 140.00 feet to a point for the
westerly comer of the said Lot 8 and westerly corner of the said Block 1 at the
intersection of the said southeasterly right-of-way line of Moss Avenue with the
northeasterly right-of-way line of the said Market Street, the said point for
corner being North 46 deg. 47 min. 36 sec. West a distance of 279.27 feet from a
3/4-inch pipe found for reference;

THENCE North 46 deg. 38 min. 30 sec. West along and with a northwesterly
extension of the southwesterly line of the said Lot 8, southwesterly of the said
Block 1 and said northeasterly right-of-way line of Market Street a distance of
60.00 feet to an iron pin set for the most easterly corner and POINT OF
BEGINNING of the said tract herein described, the said corner being at the
intersection of the said northeasterly right-of-way line of Market Street with
the hereinbefore said northwesterly right-of-way line of Moss Avenue;

THENCE South 43 deg. 21 min. 30 sec. West along and with the said northwesterly
right-of-way line of Moss Avenue (as extended across the said Market Street) a
distance of 60.00 feet to an iron pin set for the most southerly corner of the
said tract herein described, the said corner being the easterly corner of Lot 6,
Block 18 of the said Calder Addition and easterly corner of the said Block 18 at
the intersection of the said northwesterly right-of-way line of Moss Avenue with
the southwesterly right-of-way line of the said Market Street; .

THENCE North 46 deg. 38 min. 30 sec. West along and with the northeasterly line
of the said Block 18 and said southwesterly right-of-way line of Market Street
passing at a distance of 417.19 feet an iron pin set. for a northerly corner of
Lot 1 of the said Block 18 of Calder Addition and northeast corner of the said
Block 18 and southeast corner of that certain portion of the right-of-way of
Bancroft Avenue located between Border Street and Market Street which was
"abandoned and vacated as a street" by the City of Orange Ordinance No. 1982-2
passed, approved and adopted on final reading January 26, 1982, the said corner
being at the intersection of the said southwesterly right-of-way line of Market
Street with the southerly right-of-way line of the said Bancroft Avenue, and
continuing (North 46 deg. 38 min. 30 sec. West) along and with

                                       4
<PAGE>

     a northwesterly extension of said northeasterly line of Block 18 and said
     southwesterly right-of-way line of Market Street a total distance of 497.74
     feet to an iron pin set an angle point and the most westerly corner of the
     said tract herein described, the said angle point and corner being at the
     intersection of the said northwesterly extension of the northeasterly line
     of Block 18 and southwesterly right-of-way line of Market Street with a
     southerly extension of the easterly line of the herein before said Block 3
     of the R. H. Jackson Subdivision and westerly right-of-way line of Market
     Street;

     THENCE North 0 deg. 13 min. 15 sec. East along and with the said extension
     of the easterly line of Block 3 and westerly right-of-way line of Market
     Street a distance of 4.92 feet to an iron pin set for the southeast corner
     of Lot 8 of the said Block 3, southeast corner of the said Block 3 and
     northeast corner of the said portion of the right-of-way of Bancroft Avenue
     "abandoned and vacated as a street" by the City of Orange Ordinance No.
     1982-2, the said corner being at the intersection of the said westerly
     right-of-way line of Market Street with the northerly right-of-way line of
     the said Bancroft Avenue;

     THENCE North 70 deg. 44 min. 22 sec. East a distance of 63.60 feet to an
     iron pin set for a corner and an angle point, the said corner and angle
     point being at the intersection of the said easterly right-of-way line of
     Market Street with the northeasterly right-of-way line of the said Market
     Street;

     THENCE South 46 deg. 38 min. 30 sec. East along and with the said
     northeasterly right-of-way line of Market Street a distance of 471.74 feet
     to the POINT OF BEGINNING and containing 0.672 acre of land, more or less.

TRACT NO. FOUR:

     (KNOWN AS OR-5)

     Being a part of the ALEXANDER CALDER SURVEY, ABSTRACT NO. 56, Orange
     County, Texas, and known as a part of the Miller-Link Mill Tract, as
     described in a deed dated December 10, 1940, from the Peavy Moore Lumber
     Company to The Lutcher and Moore Lumber Company, recorded in Volume 66,
     page 260, Deed Records of Orange County, Texas, and being known as Tract
     OR-5 in that certain deed dated November 3, 1970, from The Lutcher and
     Moore Lumber Company to Boise Southern Company and recorded in Volume 403,
     page 1, Deed Records of Orange County, Texas, reference being hereby made
     to said deeds for descriptive purposes, said Tract OR-5 containing 2.099
     acres of land.

     (KNOWN AS OR-6)

     Being a part of the NATHAN CORDUROY HEADRIGHT SURVEY, ABSTRACT NO. 59,
     Orange County, Texas, and known as a part of the Miller-Link Mill Tract, as
     described in a deed dated December 10, 1940, from Peavy-Moore Lumber
     Company to the Lutcher and Moore Lumber Company, and recorded in Volume 66,
     page 260, Deed Records of Orange County, Texas, SAVE AND EXCEPT:

                                       5
<PAGE>

(a) That 107.35 feet x 25 feet tract described in deed dated October 31, 1952,
from the Lutcher and Moore Lumber Company to Higman Towing Company, and recorded
in Volume 149, page 42, Deed Records of Orange County, Texas;

(b) That 3.781 acre tract as described in deed dated February 7, 1957, from The
Lutcher and Moore Lumber Company to W. E. Harding and T. W. Lawler and recorded
in Volume 202, page 556, Deed Records of Orange County, Texas;

(c) That 0.012 acre tract as described in deed dated March 5, 1957, from The
Lutcher and Moore Lumber Company to Higman Towing Company, and recorded in
Volume 211, page 105, Deed Records of Orange County, Texas:

said tract herein described containing 6.035 acres of land and being known as
Tract OR-6 in that certain deed dated November 3, 1970, from The Lutcher and
Moore Lumber Company to Boise Southern Company and recorded in Volume 403, page
1, Deed Records of Orange County, Texas, reference to said deed being hereby
made for descriptive purposes.

Said tracts of land hereinabove described as OR-5 and OR-6 are more particularly
described by metes and bounds as follows:

BEGINNING at the southeast corner of that certain tract or parcel of land
heretofore conveyed to T. W. Lawler and W. E. Harding by The Lutcher and Moore
Lumber Company by deed dated February 7, 1957, recorded in Volume 202, page 556,
Deed Records of Orange County, Texas, a two-inch iron pipe re-set on February
15, 1972;

THENCE South 77 degrees 00 minutes West, along the south line of said T. W.
Lawler and W. E. Harding tract, a distance of 419.25 feet to point for corner in
the west right-of-way line of Market Street, a 1" iron pipe for comer;

THENCE South 442.23 feet to point for corner, a 1" iron pipe;

THENCE South 46 degrees 57 minutes 30 seconds East, continuing along an Easterly
line of said Market Street, a distance of 474.0 feet to a 1" iron pipe for
corner;

THENCE North 43 degrees 21 minutes 30 seconds East, a distance of 415.45 feet to
point for 4" iron pipe in concrete with brass plaque, for the northeast corner
of the A. Calder Survey and the southeast corner of the Nathan Cordrey,Survey,
at its intersection with the west bank of the Sabine River;

THENCE meandering along and with the west bank of the Sabine River, as follows:

     North 23 degrees 28 minutes West, 158.32 feet to a 3" iron pipe in
     concrete;

     North 26 degrees 16 minutes 30 seconds West 152.89 feet to a 4" iron pipe
     in concrete;

     North 18 degrees 29 minutes 30 seconds West, a distance of 290.98 feet to
     the PLACE OF BEGINNING of the tract herein conveyed;

                                       6
<PAGE>

     containing 8.226 acres, more or less, lying east of Market Street right of
     way.

TRACT NO. FIVE-A:

     Being a part of the ALEXANDER CALDER SURVEY, ABS. 56, Orange County, Texas
     and being more particularly described as Block No. 18, Lots 1, 2, 3, 4, 9,
     10, 11, 12, 13 and 14, as described in Tract 1, and, Block 18, Lots 5, 6, 7
     and 8, as described in Tract 2, in Deed dated Dec. 17, 1964, from H. J. L.
     Stark to The Lutcher and Moore Lumber Co., recorded in Vol. 330, page 61 of
     the Deed Records of Orange County, Texas, said tract being the same as OR-3
     in Deed from Lutcher and Moore Lumber Co. to Boise So. Co., dated Nov. 3,
     1970, recorded in Vol. 403, page 1, Deed Records of Orange County, Texas.

TRACT NO. FIVE-B:

     Being a part of the N. CORDREY SURVEY, ABS. NO. 59, Orange County, Texas,
     and being Block 3, Lots 6, 7 and 8, R. H. JACKSON SUBDIVISION, as described
     in a Sheriff's deed dated May 15, 1945, from L. G. Stanfield, Sheriff, to
     The Lutcher and Moore Lumber Company and recorded in Vol. 84, page 105 of
     the Deed Records of Orange County, Texas, said tract being the same as OR-7
     in that deed from the Lutcher Moore Lbr. Co., recorded in Vol. 403, page 1
     of the Deed Records of Orange County, Texas.

     SAVE AND EXCEPT from the above described Tract No. Five-B that certain
     conveyance from R. M. Clary, and wife, Laura Clary, to Wendell Worthen, and
     wife, Jean Worthen, dated June 29, 1987, and recorded in Volume 659, Page
     673, Official Public Records of Real Property of Orange County, Texas, and
     conveying Lots 6 & 7, block 3, R. H. Jackson Subdivision.

TRACT NO. SIX:

     140' x 140' tract being lots 7 and 8, Block 1 of CALDER ADDITION, a
     subdivision in the city of Orange, Orange County, Texas, according to the
     map thereof of record in Vol. 1, page 76 of the Map Records of
     Orange County, Texas to which reference is made.

     Being the same property described in conveyance from Jackie Harmon to
     R. D. Nance dated March 20, 1969 of record in Vol. 388 page 244 of the Deed
     Records of Orange County, Texas, to which reference is made and is further
     described in Decree of Divorce between the said R. D. Nance and Virginia
     Faye Nance of record in Vol. 626, page 427 of the Deed Records of Orange
     County, Texas.
                                 7
<PAGE>

[LOGO OF WHITNEY APPEARS HERE]

                              CONTINUING GUARANTY

     The undersigned (hereinafter sometimes referred to as "Guarantor", which
term means individually, collectively, and interchangeably any, each and/or all
of them) hereby gives to Whitney National Bank ("Bank") this Continuing Guaranty
(this "Guaranty") for the purpose of guarantying the obligations of CONRAD
SHIPYARD, INC. (FORMERLY KNOWN AS CONRAD INDUSTRIES, INC.), a Louisiana
corporation,(hereinafter referred to as "Borrower", which term means
individually, collectively, and interchangeably any, each and/or all of them).
Guarantor agrees as follows:

1.   Guarantor jointly, severally, solidarily, and unconditionally guarantees to
     Bank the prompt payment in full of all obligations and liabilities of
     Borrower to Bank, direct or contingent, due or to become due, now existing
     or hereafter arising, including, without limitation, all future advances,
     with interest, attorneys' fees, expenses of collection and costs, and
     further including, without limitation, obligations to Bank on promissory
     notes, checks, overdrafts, letter-of-credit agreements, loan agreements,
     security documents, endorsements and continuing guaranties (collectively,
     the "Obligations"). Parties obligated on the Obligations are referred to
     herein as "Obligor", which term means individually, collectively, and
     interchangeably any, each and/or all of them.

2.   Guarantor shall be bound by all of the terms and conditions of any notes,
     agreements, or other obligations in favor of Bank signed or incurred by
     Borrower. Guarantor hereby waives all notice and pleas of presentment,
     demand, dishonor, protest, discussion and division. Guarantor shall not
     have any rights of subrogation until the payment in full of all Obligations
     and any subrogation rights shall relate only to the collateral then held by
     Bank.

3.   Notice of termination of this Guaranty WILL not be effective until ten (10)
     days after the notice is delivered to an officer of Bank at the office
     where the Obligations were borrowed and such officer acknowledges in
     writing receipt of the notice (the "Effective Date"). This Guaranty shall
     be continuing and binding on the person delivering such notice as to (a)
     any Obligations incurred or arising prior to the Effective Date of written
     notice of termination of this Guaranty, (b) all renewals, extensions, and
     modifications of Obligations existing prior to the Effective Date of
     written notice of termination of this Guaranty and (c) Obligations Bank is
     bound to permit to be incurred by agreement entered into prior to the
     Effective Date of written notice of termination of this Guaranty. A notice
     of termination shall not affect the liability of any person not giving such
     notice.

4.   To secure this Guaranty, Guarantor pledges, pawns and delivers to Bank, and
     grants to Bank a continuing security interest in, and a right of set-off
     and compensation against, all property of Guarantor or in which Guarantor
     has an interest that is now or hereafter on deposit with, in the possession
     of, under the control of or held by Bank, including, without limitation,
     all cash, deposit accounts, funds on deposit, stocks, bonds, treasury
     obligations and other securities, investment property, financial assets,
     securities accounts, notes, documents, instruments, certificates of
     deposit, items, chattel paper, and other property (except IRA, pension, and
     other tax-deferred retirement accounts), together with all property added
     to or substituted for any of the foregoing, and all interest, dividends,
     income, fruits, accessions and proceeds of any of the foregoing. The terms
     "deposit accounts," "instruments," "investment property," "documents,"
     "chattel paper," "securities accounts," "financial assets" and "proceeds"
     shall have the meanings provided in the Louisiana Commercial Laws.

5.   If this Guaranty is executed by more than one person, each person is bound
     by all of the provisions of this Guaranty and is jointly, severally and
     solidarily liable for the payment in full of the Obligations as if such
     person was the only person executing this Guaranty. This Guaranty is
     exclusive of and in addition to any other endorsements, guaranties, or
     obligations with respect to Borrower that are separate and apart from this
     instrument, whether signed by Guarantor or by any other Obligor. This
     Guaranty shall not be affected or limited by the amount of any other such
     endorsements, guaranties, or obligations with respect to Borrower. To the
     extent permitted by law, Guarantor's obligations under this Guaranty shall
     continue notwithstanding any set-off, counterclaim, reduction, or
     diminution of the Obligations or any defense of any kind or nature (other
     than performance by Guarantor of its obligations hereunder) that Borrower
     may have or assert against Bank.

6.   Without releasing or affecting Guarantor's obligations hereunder, Bank may,
     one or more times, in its sole discretion, without notice to or the consent
     of Guarantor or any other Obligor, take any one or more of the following
     actions: (a) release, renew or modify the obligations of Borrower or any
     other Obligor; (b) release, exchange, modify, or surrender in whole or in
     part Bank's rights with respect to any collateral for the Obligations; (c)
     modify or alter the term, interest rate or due date of any payment of any
     of the Obligations; (d) grant any postponements, compromises, indulgences,
     waivers, surrenders or discharges or modify the terms of its agreements
     with Guarantor, Borrower or any other Obligor; (e) change its manner of
     doing business with Guarantor, Borrower or any other party; (f) impute
     payments or proceeds of any collateral furnished for any of the
     Obligations, in whole or in part, to any of the Obligations, or retain the
     payments or proceeds as collateral for the Obligations without applying
     same toward payment of the Obligations; or (g) make loans to Borrower in
     excess of the present amount of the Obligations, and Guarantor hereby
     expressly waives any defenses arising from any such actions. The release of
     liability of any person shall not affect the liability hereunder of any
     person who is not specifically released.

7.   This Guaranty shall be binding on Guarantor and Guarantor's successors and
     assigns and shall inure to the benefit of Bank, its successors, assigns,
     endorsees, and any person or persons, or entities, including, without
     limitation, any banking or other financial institution, to whom Bank may
     grant an interest in the Obligations, or any of them, and this Guaranty
     shall be binding on Guarantor to the extent of such assignment or interest.
     Any such assignment or grant of interest shall not operate to release
     Guarantor from any obligation to Bank hereunder with respect to any
     unassigned Obligations.

8.   If Bank receives any payment or proceeds of collateral, which payment or
     proceeds or any part thereof are subsequently required, by any court of
     competent jurisdiction, to be repaid to Borrower, Borrower's estate,
     trustee, or any other party, then to the extent of such repayment by Bank,
     the Obligations or part thereof which has been paid, reduced or satisfied
     by such amount shall be reinstated and continued in full force and effect
     as of the date the initial payment, reduction or satisfaction occurred, and
     Guarantor shall remain solidarily liable to Bank for the repayment of such
     amount reinstated. Guarantor shall defend and indemnify Bank from any claim
     or loss to Bank arising under this paragraph, including, without
     limitation, Bank's attorneys' fees and expenses in the defense of any such
     action or suit.

9.   This Guaranty shall be governed and interpreted under the internal laws of
     the State of Louisiana. If any provision of this Guaranty shall be held to
     be legally invalid or unenforceable by any court of competent jurisdiction,
     all remaining provisions of this Guaranty shall remain in full force and
     effect. This Guaranty is effective as of the date shown below.

                                  ORANGE SHIPBUILDING  COMPANY, INC.

                                  By /s/ William H. Hidalgo
                                    ---------------------------------
                                    William H. Hidalgo
                                    Its: President
                                  Date: December 31, 1999
<PAGE>

STATE OF LOUISIANA

PARISH OF ST. MARY

     BEFORE ME, the undersigned Notary Public duly commissioned and qualified in
and for the aforesaid State and Parish (County), personally came and appeared
William H. Hidalgo, who being first duly sworn, declared and acknowledged unto
me, Notary, and the undersigned witnesses, that he is the President of ORANGE
SHIPBUILDING COMPANY, INC., a corporation, and that as such officer and on
behalf of such corporation, he signed and executed the above and foregoing
Continuing Guaranty, by authority of the Board of Directors of said corporation,
and said appearer acknowledged said instrument to be the free act and deed of
said corporation, for the purposes and considerations therein expressed.

     IN WITNESS WHEREOF, this instrument is executed in the presence of the
undersigned witnesses and me, Notary, on this 3rd day of May, 2000.

WITNESSES:

/s/ JANICE A. RATCLIFF                  /s/ WILLIAM H. HIDALGO
-----------------------------           --------------------------------
Janice A. Ratcliff                      William H. Hidalgo

/s/ DENISE AVCON
-----------------------------
Denise Avcon                            /s/ DALE H. HAYES
                                        --------------------------------
                                        Dale H. Hayes

                                                   NOTARY PUBLIC
                                          My Commission expires at death
<PAGE>

[LOGO OF WHITNEY APPEARS HERE]

                              SECURITY AGREEMENT

This Security Agreement is made this 1st day of May, 2000, by CONRAD INDUSTRIES,
INC. (hereinafter referred to as "Grantor," which term means individually,
collectively, and interchangeably any, each and/or all of them) in favor of
WHITNEY NATIONAL BANK ("Secured Party"). Grantor's social security number or
taxpayer identification number is 76-0475815. Additional information relating to
Grantor is set forth on Schedule 1 to this Security Agreement. "Borrower" shall
mean individually, collectively, and interchangeably any, each and/or all of
CONRAD SHIPYARD, INC.

To secure payment of all obligations and liabilities of Grantor and Borrower,
and of any one or more of them, to Secured Party, direct or contingent, due or
to become due, now existing or hereafter arising, including, without limitation,
all future advances, with interest, attorneys' fees, expenses of collection and
costs, and further including, without limitation, obligations to Secured Party
on promissory notes, checks, overdrafts, letter-of-credit agreements, loan
agreements, security documents, endorsements, continuing guaranties and this
Security Agreement (collectively, the "Obligations"), Grantor pledges and pawns
to Secured Party, and grants to Secured Party a continuing security interest in,
and a right of set-off and compensation against, (a) all property of Grantor or
in which Grantor has an interest that is now or hereafter on deposit with, in
the possession of, under the control of or held by Secured Party, including,
without limitation, all cash, deposit accounts, funds on deposit, stocks, bonds,
treasury obligations, and other securities, investment property, financial
assets, securities accounts, notes, documents, instruments, certificates of
deposit, items, chattel paper, and other property (except IRA, pension, and
other tax-deferred retirement accounts) and (b) the following described
property, now or hereafter owned by Grantor and wherever located:

   [X] ALL ACCOUNTS, ALL INVENTORY AND      [ ] all chattel paper
       ALL CHATTEL PAPER

   [X] ALL EQUIPMENT                        [X] ALL GENERAL INTANGIBLES

   [X] ALL DOCUMENTS                        [ ] all property described on
                                                Exhibit A

   [ ] all fixtures located on the property described
       on Exhibit B

together with all property added to or substituted for any of the foregoing, and
all interest, dividends, income, fruits, returns, accessions, profits, corporate
distributions (including, without limitation, stock splits and stock dividends),
products and proceeds of any of the foregoing (collectively, "Collateral"). The
terms "accounts," "instruments," "account debtor," "documents," "equipment,"
"general intangibles," "inventory," "chattel paper," "investment property,"
"deposit accounts," "securities accounts," "financial assets," "fixtures" and
"proceeds" shall have the meanings provided in the Louisiana Commercial Laws.
The term "Loan Agreement" shall mean that Second Amended and Restated Loan
Agreement dated as of December 31, 1999 by and among Whitney National Bank and
Conrad Shipyard, Inc. and Orange Shipbuilding Company, Inc. and Conrad
Industries, Inc. (Guarantors), as it may be amended from time to time.

Grantor further authorizes secured party at any time and without further consent
from Grantor to file a carbon, photographic, facsimile, or other reproduction of
this Security Agreement or Grantor's financing statement as a financing
statement. All Collateral shall remain subject to this Security Agreement until
all of the Obligations have been paid and any financing statements filed in
connection with this Security Agreement have been terminated. Secured Party may
renew certificates of deposit or other renewable items included in the
Collateral. All interest, dividends, income, fruits, returns, accessions,
profits, corporate distributions (including, without limitation, stock splits
and stock dividends), and proceeds with respect to the Collateral shall be
delivered upon receipt to Secured Party in negotiable form. Grantor shall
execute any endorsements, assignments, stock powers and financing statements
with respect to the Collateral, in form and substance satisfactory to Secured
Party, that Secured Party may request. Grantor represents and warrants that (a)
Secured Party shall at all times have a perfected first priority security
interest in the Collateral free of all other security interests, liens and
claims, and (b) the description and identification of the Collateral and
Grantor's name, social security or taxpayer identification number, and principal
residence or chief executive office are correctly stated herein. Grantor shall
prevent the accrual of prescription or statute of limitations with respect to
the Collateral no later than sixty (60) days prior to the date on which
enforcement would be barred, and shall execute any additional documents
reasonably required to perfect the security interest of Secured Party in the
Collateral. Should any Collateral decline in value after the date of this
Security Agreement, Grantor shall, within five (5) days after receiving notice
from Secured Party of such decline in value, grant a security interest in
additional property satisfactory to Secured Party. Grantor authorizes Secured
Party, in its sole discretion (a) to notify the obligor on any Collateral to
make payments directly to Secured Party; (b) to receive and recover any money or
other property at any time due with respect to the Collateral and in connection
therewith, endorse notes, checks, drafts or other evidence of payments; and (c)
to settle, adjust and compromise, in Secured Party's sole discretion, all
present and future claims arising with respect to the Collateral. To the extent
that any stocks, bonds or other securities are included in the Collateral,
Grantor (a) covenants not to vote any Collateral in any manner that would
adversely affect Secured Party's rights and (b) authorizes Secured Party, in its
discretion, to transfer to or register in its name or the name of its nominee
any of the Collateral, with or without indication of the security interest
herein created. Secured Party is not obligated to take any of the foregoing
actions or to preserve Grantor's rights with respect to the Collateral
including, without limitation, rights against prior parties and shall not be
liable in any manner with respect to the Collateral. Any responsibility of
Secured Party with respect to the Collateral, whether arising contractually or
as a matter of law, is hereby expressly waived.

If Grantor's accounts are subject to this Security Agreement, Grantor agrees to
administer its accounts and the proceeds thereof in a fiduciary capacity for
Secured Party, take all actions necessary to collect the accounts, and
immediately deposit all proceeds of the accounts into Grantor's deposit account
with Secured Party. Upon request, Grantor shall at any time (a) furnish to
Secured Party within ten (10) days a list of the accounts, showing the name,
address and the amount owed by each account debtor, and (b) mark on all bills,
invoices and statements issued in connection with the accounts that the account
is subject to a security agreement with Secured Party and is payable to Secured
Party at Secured Party's address. If Grantor accepts chattel paper or
instruments in payment of accounts, goods or services, Grantor shall promptly
deliver all such chattel paper and instruments to Secured Party in negotiable
form.

Grantor shall at all times permit Secured Party, its officers and agents, access
to the Collateral and to all books, records and data relating to the Collateral,
for inspection and for verification of the existence, condition and value of the
Collateral. Grantor shall furnish all assistance and information that Secured
Party may require to conduct such inspections and verifications. Upon request,
Grantor, at its expense, shall cause or permit an independent certified public
accountant, appraiser or other expert selected by Secured Party to prepare and
deliver to Secured Party a verification of the existence, condition or value of
the Collateral.

All corporeal Collateral shall be insured by solvent insurance companies for
full replacement value under policies acceptable to Secured Party, designating
Secured Party as lender loss payee. Grantor shall not alienate or encumber the
Collateral, except for sales of inventory, goods or services in the ordinary
course of Grantor's business. Grantor shall not create or permit to exist any
lien, claim or security interest on the Collateral except in favor of Secured
Party. Grantor shall not, without the prior written consent of Secured Party (a)
change Grantor's domicile, name, legal form or taxpayer identification number,
(b) move the location of its principal place of business or chief executive
office, or (c) move the Collateral from the locations disclosed on Schedule 1.

If Grantor or Borrower defaults in the timely payment or performance of any of
the Obligations, or if any warranty or representation of Grantor or Borrower to
Secured Party should br untrue at any time, then after the expiration of any
applicable notice and cure provision
<PAGE>

contained in the Loan Agreement, at the option of Secured Party, the Obligations
shall be immediately due and payable in full without notice or demand, and
Secured Party (a) may sell, assign, transfer and effectively deliver all or any
part of the Collateral at public or private sale, without recourse to judicial
proceedings and without demand, appraisement or advertisement, all of which are
hereby expressly waived by Grantor to the fullest extent permitted by law, and
(b) may cause all or any part of the Collateral to be seized and sold, under
executory process, under writ of fieri facias issued in execution of an ordinary
judgment obtained upon the Obligations, or under other legal procedure. For
purposes of executory process, Grantor acknowledges the indebtedness owed under
the Obligations, confesses judgment in favor of Secured Party for the full
amount of the Obligations, and agrees to enforcement by executory process.
Grantor waives (a) the benefit of appraisal provided in Art. 2723 of the
Louisiana Code of Civil Procedure and (b) the demand and three (3) days delay
provided by Articles 2639 and 2721, Louisiana Code of Civil Procedure. Secured
Party may, at its option, enforce any mortgage note pledged hereby and cause the
mortgaged property to be seized and sold by executory or other process in
accordance with law and the terms of the mortgage. Grantor grants to Secured
Party an irrevocable mandate and power of attorney (coupled with an interest) to
exercise, after default, at Secured Party's sole discretionary option and
without any obligation to do so, all rights that Grantor has with respect to the
Collateral, including, without limitation, the right to exercise all rights of
inspection, deriving from Grantor's ownership of or other interest in the
Collateral. If the proceeds from the sale or enforcement of the Collateral are
insufficient to satisfy all of the Obligations in full, all parties obligated
thereon shall remain fully obligated for any deficiency. The rights and remedies
of Secured Party hereunder are cumulative, may be exercised singly or
concurrently, and are in addition to any rights and remedies of Secured Party
under applicable law. Additionally, after the occurrence of a Default under the
Loan Agreement and the expiration of any applicable notice and cure provision
contained in the Loan Agreement.

Pursuant to Louisiana Revised Statutes 9:5136, et seq., Grantor hereby
designates Secured Party or any employee, agent, or other person named by
Secured Party at the time any seizure of the Collateral is effected by Secured
Party to serve as a keeper of the Collateral pending the judicial sale thereof.
The keeper's fees shall be determined by the Court before which the proceedings
are pending, and the payment of such fees shall be secured by this security
agreement.

Without releasing or affecting any of its rights, Secured Party may, one or more
times, in its sole discretion, without notice to or the consent of Grantor or
Borrower, take any one or more of the following actions: (a) release, renew or
modify the obligations of Grantor, Borrower or any other party; (b) release,
exchange, modify, or surrender in whole or in part Secured Party's rights with
respect to any collateral for the Obligations; (c) modify or alter the term,
interest rate or due date of any payment of any of the Obligations; (d) grant
any postponements, compromises, indulgences, waivers, surrenders or discharges
or modify the terms of its agreements with Grantor or Borrower; (e) change its
manner of doing business with Grantor, Borrower or any other party; or (f)
impute payments or proceeds of any collateral furnished for any of the
Obligations, in whole or in part, to any of the Obligations, or retain the
payments or proceeds as collateral for the Obligations without applying same
toward payment of the Obligations, and Grantor hereby expressly waives any
defenses arising from any such actions. The obligations of Grantor hereunder
shall be joint, several and solidary and shall bind and obligate Grantor's
successors, heirs and assigns. Secured Party may assign and transfer the
Collateral to an assignee of any of the Obligations, whereupon such transferee
shall become vested with all powers and rights granted to Secured Party under
this Security Agreement. This Security Agreement shall be governed by the
internal laws of the State of Louisiana, provided that where Collateral is
located in a jurisdiction other than Louisiana, remedies available to Secured
Party hereunder and under the laws of such jurisdiction shall be available to
Secured Party without regard to any restriction of Louisiana law. If any
provision of this Security Agreement shall be held to be legally invalid or
unenforceable by any court of competent jurisdiction, all remaining provisions
of this Security Agreement shall remain in full force and effect.

Secured Party hereby accepts this Security Agreement.

WHITNEY NATIONAL BANK,                  GRANTOR:
  SECURED PARTY                         CONRAD INDUSTRIES, INC.

BY: /s/ EDGAR W. SANTA CRUZ III         BY: WILLIAM H. HIDALGO
   ----------------------------            -------------------------------
   EDGAR W. SANTA CRUZ, III                WILLIAM H. HIDALGO
Title: Vice President                   Title: President

                                  SCHEDULE 1

Grantor's legal status: A Louisiana corporation

State or jurisdiction of Grantor's organization: Louisiana

Grantor's mailing address: 1501 Front St., Morgan City, LA. 70380

Grantor's chief executive office: 1501 Front St., Morgan City, LA. 70380

Location of Grantor's books and records: 1501 Front St., Morgan City, LA. 70380

Location of Grantor's inventory and equipment: 1501 Front St., Morgan City, LA.
70380

Other names and legal forms used by Grantor to conduct business within last ten
years: NONE

                                   EXHIBIT A
                                   ---------

                                      NONE
<PAGE>

[LOGO OF WHITNEY APPEARS HERE]

                              SECURITY AGREEMENT

This Security Agreement is made this 1st day of May, 2000, by CONRAD SHIPYARD,
INC. (hereinafter referred to as "Grantor," which term means individually,
collectively, and interchangeably any, each and/or all of them) in favor of
WHITNEY NATIONAL BANK ("Secured Party"). Grantor's social security number or
taxpayer Identification number is 72-0456758. Additional information relating to
Grantor is set forth on Schedule 1 to this Security Agreement. "Borrower" shall
mean individually, collectively, and interchangeably any, each and/or all of
CONRAD SHIPYARD, INC.

To secure payment of all obligations and liabilities of Grantor and Borrower,
and of any one or more of them, to Secured Party, direct or contingent, due or
to become due, now existing or hereafter arising, including, without limitation,
all future advances, with interest, attorneys' fees, expenses of collection and
costs, and further including, without limitation, obligations to Secured Party
on promissory notes, checks, overdrafts, letter-of-credit agreements, loan
agreements, security documents, endorsements, continuing guaranties and this
Security Agreement (collectively, the "Obligations"), Grantor pledges and pawns
to SECURED PARTY, AND GRANTS to Secured Party a continuing security interest in,
and a right of set-off and compensation against, (a) all property of Grantor or
in which Grantor has an interest that is now or hereafter on deposit with, in
the possession of, under the control of or held by Secured Party, including,
without limitation, all cash, deposit accounts, funds on deposit, stocks, bonds,
treasury obligations, and other securities, Investment property, financial
assets, securities accounts, notes, documents, instruments, certificates of
deposit, items, chattel paper, and other property (except IRA, pension, and
other tax-deferred retirement accounts) and (b) the following described
property, now or hereafter owned by Grantor and wherever located:

<TABLE>
    <S>                                                    <C>
    [X] ALL ACCOUNTS, ALL INVENTORY AND ALL CHATTEL PAPER  [ ] all chattel paper

    [X] ALL EQUIPMENT                                      [X] ALL GENERAL INTANGIBLES

    [X] ALL DOCUMENTS                                      [ ] all property described on Exhibit A

    [X] ALL FIXTURES LOCATED ON THE PROPERTY DESCRIBED
        ON EXHIBIT B
</TABLE>

together with all property added to or substituted for any of the foregoing, and
all interest, dividends, income, fruits, returns, accessions, profits, corporate
distributions (including, without limitation, stock splits and stock dividends),
products and proceeds of any of the foregoing (collectively, "Collateral"). The
terms "accounts," "Instruments," "account debtor," "documents," "equipment,"
"general Intangibles," "Inventory, "chattel paper," "Investment property,"
"deposit accounts;' "securities accounts," "financial assets," "fixtures" and
"proceeds" shall have the meanings provided in the Louisiana Commercial Laws.
The term "Loan Agreement" shall mean that Second Amended and Restated Loan
Agreement dated as of December 31, 1999 by and among Whitney National Bank and
Conrad Shipyard, Inc. and Orange Shipbuilding Company, Inc. and Conrad
Industries, Inc. (Guarantors), as it may be amended from time to time.

Grantor further authorizes secured party at any time and without further consent
from Grantor to file a carbon, photographic, facsimile, or other reproduction of
this Security Agreement or Grantor's financing statement as a financing
statement. All Collateral shall remain subject to this Security Agreement until
all of the Obligations have been paid and any financing statements filed in
connection with this Security Agreement have been terminated. Secured Party may
renew certificates of deposit or other renewable items included in the
Collateral. All interest, dividends, income fruits, returns, accessions,
profits, corporate distributions (including, without limitation, stock splits
and stock dividends), and proceeds with respect to the Collateral shall be
delivered upon receipt to Secured Party in negotiable form. Grantor shall
execute any endorsements, assignments, stock powers and financing statements
with respect to the Collateral, in form and substance satisfactory to Secured
Party, that Secured Party may request. Grantor represents and warrants that (a)
Secured Party shall at all times have a perfected first priority security
interest in the Collateral free of all other security interests, liens and
claims, and (b) the description and identification of the Collateral and
Grantor's name, social security or taxpayer identification number, and principal
residence or chief executive office are correctly stated herein. Grantor shall
prevent the accrual of prescription or statute of limitations with respect to
the Collateral no later than sixty (60) days prior to the date on which
enforcement would be barred, and shall execute any additional documents
reasonably required to perfect the security interest of Secured Party in the
Collateral. Should any Collateral decline in value after the date of this
Security Agreement, Grantor shall, within five (5) days after receiving notice
from Secured Party of such decline in value, grant a security interest in
additional property satisfactory to Secured Party. Grantor authorizes Secured
Party, in its sole discretion (a) to notify the obligor on any Collateral to
make payments directly to Secured Party; (b) to receive and recover any money or
other property at any time due with respect to the Collateral and in connection
therewith, endorse notes, checks, drafts or other evidence of payments; and (c)
to settle, adjust and compromise, in Secured Party's sole discretion, all
present and future claims arising with respect to the Collateral. To the extent
that any stocks, bonds or other securities are included in the Collateral,
Grantor (a) covenants not to vote any Collateral in any manner that would
adversely affect Secured Party's rights and (b) authorizes Secured Party, in its
discretion, to transfer to or register in its name or the name of its nominee
any of the Collateral, with or without indication of the security interest
herein created. Secured Party is not obligated to take any of the foregoing
actions or to preserve Grantor's rights with respect to the Collateral
including, without limitation, rights against prior parties and shall not be
liable in any manner with respect to the Collateral. Any responsibility of
Secured Party with respect to the Collateral, whether arising contractually or
as a matter of law, is hereby expressly waived.

If Grantor's accounts are subject to this Security Agreement, Grantor agrees to
administer its accounts and the proceeds thereof in a fiduciary capacity for
Secured Party, take all actions necessary to collect the accounts, and
immediately deposit all proceeds of the accounts into Grantor's deposit account
with Secured Party. Upon request, Grantor shall at any time (a) furnish to
Secured Party within ten (10) days a list of the accounts, showing the name,
address and the amount owed by each account debtor, and (b) mark on all bills,
invoices and statements issued in connection with the accounts that the account
is subject to a security agreement with Secured Party and is payable to Secured
Party at Secured Party's address. If Grantor accepts chattel paper or
instruments in payment of accounts, goods or services, Grantor shall promptly
deliver all such chattel paper and instruments to Secured Party in negotiable
form.

Grantor shall at all times permit Secured Party, its officers and agents, access
to the Collateral and to all books, records and data relating to the Collateral,
for inspection and for verification of the existence, condition and value of the
Collateral. Grantor shall furnish all assistance and information that Secured
Party may require to conduct such inspections and verifications. Upon request,
Grantor, at its expense, shall cause or permit an independent certified public
accountant, appraiser or other expert selected by Secured Party to prepare and
deliver to Secured Party a verification of the existence, condition or value of
the Collateral.

All corporeal Collateral shall be insured by solvent insurance companies for
full replacement value under policies acceptable to Secured Party, designating
Secured Party as lender loss payee. Grantor shall not alienate or encumber the
Collateral, except for sales of inventory, goods or services in the ordinary
course of Grantors business. Grantor shall not create or permit to exist any
lien, claim or security interest on the Collateral except in favor of Secured
Party. Grantor shall not, without the prior written consent of Secured Party (a)
change Grantor's domicile, name, legal form or taxpayer identification number,
(b) move the location of its principal place of business or chief executive
office, or (c) move the Collateral from the locations disclosed on Schedule 1.

If Grantor or Borrower defaults to the timely payment or performance of any of
the Obligations, or if any warranty or representation of Grantor or Borrower to
Secured Party should be untrue at any time, then after the expiration of any
applicable notice and cure provision
<PAGE>

contained in the Loan Agreement, at the option of Secured Party, the Obligations
shall be Immediately due and payable in full without notice or demand, and
Secured Party (a) may sell, assign, transfer and effectively deliver all or any
part of the Collateral at public or private sale, without recourse to judicial
proceedings and without demand, appraisement or advertisement, all of which are
hereby expressly waived by Grantor to the fullest extent permitted by law, and
(b) may cause all or any part of the Collateral to be seized and sold, under
executory process, under writ of fieri facias issued in execution of an ordinary
judgment obtained upon the Obligations, or under other legal procedure. For
purposes of executory process, Grantor acknowledges the indebtedness owed under
the Obligations, confesses judgment in favor of Secured Party for the full
amount of the Obligations, and agrees to enforcement by executory process.
Grantor waives (a) the benefit of appraisal provided in Art. 2723 of the
Louisiana Code of Civil Procedure and (b) the demand and three (3) days delay
provided by Articles 2639 and 2721, Louisiana Code of Civil Procedure. Secured
Party may, at its option, enforce any mortgage note pledged hereby and cause the
mortgaged property to be seized and sold by executory or other process in
accordance with law and the terms of the mortgage. Grantor grants to Secured
Party an irrevocable mandate and power of attorney (coupled with an interest) to
exercise, after default, at Secured Party's sole discretionary option and
without any obligation to do so, all rights that Grantor has with respect to the
Collateral, including, without limitation, the right to exercise all rights of
inspection, deriving from Grantor's ownership of or other interest in the
Collateral. If the proceeds from the sale or enforcement of the Collateral are
insufficient to satisfy all of the Obligations in full, all parties obligated
thereon shall remain fully obligated for any deficiency. The rights and remedies
of Secured Party hereunder are cumulative, may be exercised singly or
concurrently, and are in addition to any rights and remedies of Secured Party
under applicable law. Additionally, after the occurrence of a Default under the
Loan Agreement and the expiration of any applicable notice and cure provision
contained in the Loan Agreement.

Pursuant to Louisiana Revised Statutes 9:5136, et seq., Grantor hereby
designates Secured Party or any employee, agent, or other person named by
Secured Party at the time any seizure of the Collateral is effected by Secured
Party to serve as a keeper of the Collateral pending the judicial sale thereof.
The keeper's fees shall be determined by the Court before which the proceedings
are pending, and the payment of such fees shall be secured by this security
agreement.

Without releasing or affecting any of its rights, Secured Party may, one or more
times, in its sole discretion, without notice to or the consent of Grantor or
Borrower, take any one or more of the following actions: (a) release, renew or
modify the obligations of Grantor, Borrower or any other party; (b) release,
exchange, modify, or surrender in whole or in part Secured Party's rights with
respect to any collateral for the Obligations; (c) modify or alter the term,
interest rate or due date of any payment of any of the Obligations; (d) grant
any postponements, compromises, indulgences, waivers, surrenders or discharges
or modify the terms of its agreements with Grantor or Borrower; (e) change its
manner of doing business with Grantor, Borrower or any other party; or (f)
impute payments or proceeds of any collateral furnished for any of the
Obligations, in whole or in part, to any of the Obligations, or retain the
payments or proceeds as collateral for the Obligations without applying same
toward payment of the Obligations, and Grantor hereby expressly waives any
defenses arising from any such actions. The obligations of Grantor hereunder
shall be joint, several and solidary and shall bind and obligate Grantor's
successors, heirs and assigns. Secured Party may assign and transfer the
Collateral to an assignee of any of the Obligations, whereupon such transferee
shall become vested with all powers and rights granted to Secured Party under
this Security Agreement. This Security Agreement shall be governed by the
internal laws of the State of Louisiana, provided that where Collateral is
located in a jurisdiction other than Louisiana, remedies available to Secured
Party hereunder and under the laws of such jurisdiction shall be available to
Secured Party without regard to any restriction of Louisiana law. If any
provision of this Security Agreement shall be held to be legally invalid or
unenforceable by any court of competent jurisdiction, all remaining provisions
of this Security Agreement shall remain in full force and effect.

Secured Party hereby accepts this Security Agreement.

WHITNEY NATIONAL BANK,                  GRANTOR:
 SECURED PARTY                          CONRAD SHIPYARD, INC.

BY: /s/ EDGAR W. SANTA CRUZ, III        BY: /s/ WILLIAM H. HIDALGO
   ------------------------------          -----------------------------
    EDGAR W. SANTA CRUZ, III                WILLIAM H. HIDALGO
Title:  Vice President                  Title:   President

                                  SCHEDULE I

Grantor's legal status: A Louisiana corporation

State or jurisdiction of Grantor's organization: Louisiana

Grantor's mailing address: 1501 Front St., Morgan City, LA. 70380

Grantor's chief executive office: 1501 Front St., Morgan City, LA. 70380

Location of Grantor's books and records: 1501 Front St., Morgan City, LA. 70380

Location of Grantor's inventory and equipment: 1501 Front St., Morgan City, LA.
70380

Other names and legal forms used by Grantor to conduct business within last ten
years: CONRAD INDUSTRIES, INC.

                                   EXHIBIT A

                                     NONE

                                   EXHIBIT B

                    (Real Property Description for Fixture Filing)

1-a. That certain tract or parcel of land, lying and being situated in the CITY
     OF MORGAN CITY, PARISH OF ST. MARY, State of Louisiana, commencing at a
     point on the West boundary line of Front Street, One Hundred and Ten (110')
     feet North of its intersection with the North boundary line of the right-
     of-way owned by the municipal corporation of Morgan City, La., for
     waterworks pipe line to Berwick Bay (or Atchafalaya River), and thence
     extending northerly along the said west boundary line of Front Street a
     distance of Fifty (50') feet, and between the boundaries so established
     having a depth between parallel lines to the margin of Berwick Bay (or
     Atchafalaya River). Said tract of land being bounded on the North by
     property now or formerly Harry Adam Blanco, south by property of H. J.
     Boudreaux, east by Front Street,

                                     Page 2
<PAGE>

     and west by Berwick Bay (or Atchafalaya River). Together with all the
     buildings and improvements, rights, ways, privileges and servitudes thereon
     situated and appertaining.

1-b. That certain piece of land, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, being a portion of the property acquired by Harry Adam Blanco
     from Miss Carrie I. Gathright, by an Act of Sale executed before Paul
     Schreier, Notary Public, St. Mary Parish, on the 1st day of April, 1941,
     and duly recorded in the Conveyance Office of the Parish of St. Mary,
     Louisiana, situated in the City of Morgan City, La., described as
     commencing at a point on the north line of the property as acquired by
     Harry Adam Blanco from Miss Carrie I. Gathright One Hundred and Fifty
     (150') feet west of Front Street, thence southerly at right angles a
     distance of Fifty (50') feet and with such width the property has a depth
     between parallel lines to the Atchafalaya River, being bounded on the North
     by property now or formerly of Gloria White, east by remaining property of
     Harry Adam Blanco or assigns, on the South by the property firstly
     described herein and on the west by the Atchafalaya River.

     Being the same property acquired by Conrad Industries, Inc. by Act of Cash
     Sate from Walston Stout dated February 23, 1988 and recorded February 24,
     1988 in Book 31-D, Entry No. 222,156 of the Conveyance Records of St. Mary
     Parish, Louisiana.

2.   That certain tract or parcel of, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, land lying and being situated in the corporate limits of the
     CITY OF MORGAN CITY, PARISH OF ST. MARY, State of Louisiana, commencing at
     the intersection of the North boundary line of the right-of-way owned by
     the corporation of Morgan City, for waterworks pipe line to Berwick Bay (or
     Atchafalaya River) and the West line of Front Street and from thence
     extending northerly along the West line of Front Street for a distance of
     One Hundred and Ten (110') feet, and with such frontage having a depth
     between parallel lines to the margin of Berwick Bay (or Atchafalaya River).
     Being bounded on the North by property of Stoute, on the East by Front
     Street on the South by the City of Morgan City right-of-way, and on the
     West by Berwick Bay (or Atchafalaya River).

     Being the same property acquired by Conrad Industries, Inc. by Act of Cash
     Deed from J. Parker Conrad, et ux dated May 5, 1987 and recorded in Book
     30-J, Entry No. 219,138 of the Conveyance Records of St. Mary Parish,
     Louisiana.

3.   That certain parcel of land, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, lying and being situated in the CITY OF MORGAN CITY, ST. MARY
     PARISH, Louisiana, designated as a strip of land thirty (30') feet wide
     being bound on the North now or formerly by property of Hanson Lopez, being
     bounded on the East by the floodside of Front Street, and being bounded on
     the West by the Atchafalaya River; said property having a front of thirty
     (30') feet on the West side of Front Street by a depth between parallel
     lines to the Atchafalaya River, all as shown on the attached Plan of Land
     attached hereto and made a part hereof; being the same property acquired as
     follows:

     The South Fifteen (S-15') feet being dedicated to the City of Morgan City
     as shown on Barnes Survey and as shown on that plat by Bourgeois
     Subdivision by S. A. Bradford, P.E. & City Engineer, recorded June 10, 1910
     at St. Mary Parish COB 3-B, Entry No. 38,853; the North fifteen (N-15')
     feet being acquired by that Act of Sale with map attached thereto at St.
     Mary Parish, COB 3-G, Entry No. 496, recorded July 16, 1912.

     Being the same property acquired by Conrad Industries, Inc. by Act of Cash
     Sale from Mayor and Councilmen of the City of Morgan City dated February
     15, 1988 and recorded in Book 31-C, Entry No. 222,082 of the Conveyance
     Records of St. Mary Parish, Louisiana.

4-a. That certain tract or parcel of land together with all buildings,
     improvements and appurtenances thereon and thereunto belonging, and all
     rights, ways, privileges and servitudes thereunto appertaining, lying and
     being situated in the TOWN OF MORGAN CITY, ST. MARY PARISH, State of
     Louisiana, more fully described as being LOT NUMBER ONE (1) IN SQUARE "B"
     OF BOURGEOIS SUBDIVISION, said lot having a frontage on the West side of
     Front Street of Sixty-six and eight-tenths (66.8') feet, and extending to
     the Atchafalaya River and being bounded on the North by property of unknown
     owners, on the East by Front Street, on the South by Lot 2 and on the West
     by the Atchafalaya River.

     Being the same property acquired by Conrad Industries, Inc. by Act of Cash
     Sale from Martha Garber Vidos, et al recorded September 4, 1986 in Book
     29-T, Entry No. 216,761 of the Conveyance Records of St. Mary Parish,
     Louisiana.

4-b. That certain tract or parcel of land together with all buildings and
     improvements thereon and thereunto belonging, and all rights, ways,
     privileges and servitudes thereunto appertaining, lying and being situated
     in the CITY OF MORGAN CITY, PARISH OF ST. MARY, State of Louisiana, and
     more particularly described as being the North Sixteen (16') feet of LOT
     NUMBER TWO (2) OF SQUARE LETTER "B" OF BOURGEOIS SUBDIVISION of said City;
     the property having a frontage of sixteen (16') feet on the West side of
     Front Street, by a depth to the Atchafalaya River, and being bounded on the
     North by Lot Number One (1), on the East by Front Street, on the South by
     remaining portion of Lot Two (2) and on the West by the Atchafalaya River.

5.   That certain tract or parcel of land, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, lying and being situated in the CITY OF MORGAN CITY, ST. MARY
     PARISH, Louisiana, and more particularly described as being LOT NUMBER TWO
     (2) IN SQUARE LETTER "B" OF THE BOURGEOIS SUBDIVISION of said City, having
     a front on the West side of Front Street by a depth to the Atchafalaya
     River. Said property having a front of Fifty (50') feet more or less on the
     West side of Front Street by a depth to the Atchafalaya River.

     Being the same property acquired by Conrad Industries, Inc. by Act of
     Exchange from J. Parker Conrad, et ux dated July 16, 1987 and recorded
     July 17, 1987 in Book 30-N, Entry No. 219,839 of the Conveyance Records of
     St. Mary Parish, Louisiana.

                                     Page 3
<PAGE>

6.   That certain tract of land, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, situated in lying and being situated in the CITY OF MORGAN
     CITY, PARISH OF ST. MARY, State of Louisiana, and more fully described as
     being LOT NUMBER THREE (3) IN SQUARE LETTER "B" OF BOURGEOIS ANNEX to said
     City. Said lot having a front of Sixty-six and 66/100 feet on the West side
     of Front Street, and extending back between parallel lines to Berwick Bay.
     Said lot or parcel of land being bounded on the North by Lot No. Two (2),
     Square Letter "B" of Bourgeois Annex, on the East by Front Street, on the
     South by Lot No. Four (4), Square Letter "B" of Bourgeois Annex and on the
     West by Berwick Bay. Together with all buildings and improvements thereon
     situated and all rights, ways, privileges and servitudes thereunto
     belonging and appertaining.

     Being the same property acquired in part by Conrad Industries, Inc. by Act
     of Cash Sale from Royal A. Mayon, et al recorded September 29, 1976 and
     recorded in Book 19-Y, Entry No. 167,335 of the Conveyance Records of St.
     Mary Parish, Louisiana; and by Conrad Industries, Inc. by Act of Cash Sale
     from Wallace Bergeron, et al recorded September 29, 1976 and recorded In
     Book 19-Y, Entry No. 167,336 of the Conveyance Records of St. Mary Parish,
     Louisiana.

7-a. That certain tract or parcel of land, lying and being situated in the
     corporate limits of the City of Morgan City, Parish of St. Mary, State of
     Louisiana, known, designated and described as being the South Thirty-three
     and Six-tenths (33.6') feet of Lot Number Five (5) and all of Lots Numbers
     Six (6) and Seven (7) in Square "B" of the Bourgeois Subdivision of said
     City. The property having a front on the West side of Front Street of One
     Hundred Sixty-seven and two-tenths (167.2') feet, and having a depth
     between parallel lines to the Atchafalaya River of Berwick Bay. Said
     property being bounded on the North by property herein after described; on
     the South by property of Eddie Boudreaux or assigns. Together with all the
     batture, accretions, alluvion, build up or filled inland on or in Berwick
     Bay, adjoining and abutting upon the said lots, as well as any and all
     rights, ways and privileges and servitudes of any kind and every kind and
     character thereunto belonging or appertaining.

7-b. That certain tract or parcel of land, lying and being situated in the
     corporate limits of the City of Morgan City, Parish of St. Mary, State of
     Louisiana, known, designated and described as being all of Lot Number Four
     (4) and the North Thirty-three and two-tenths (33.2') feet of Lot Number
     Five (5) in Square "B" of the Bourgeois Subdivision of said City. The
     property having a front on the west side of Front Street of One Hundred
     (100') feet and having a depth between parallel lines to the Atchafalaya
     River or Berwick Bay. Said property being bounded on the North by Lot No. 3
     of Square "B" property of Elodie Mayon, on the South by the remaining
     portion of Lot No. 5 in Square "B" hereinabove described, on the East by
     Front Street and on the West by Atchafalaya River, or Berwick Bay.

     Being the same property acquired by Conrad Industries, Inc. by Act of Sale
     recorded November 7, 1953 in Book 8-M, Entry No. 88,053 of the Conveyance
     Records of St. Mary Parish, Louisiana.

8.   That certain tract or parcel of land, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, lying and being situated in the CITY OF MORGAN CITY, ST. MARY
     PARISH, Louisiana, known, designated and described as being LOT NO. EIGHT
     (8) IN SQUARE "B" in the Bourgeois Annex to Morgan City and having a front
     on the West side of Front Street of Sixty-six feet and eight inches (66'8")
     by a depth between said Front Street and Berwick Bay of Two Hundred Eighty-
     five (285') feet, more or less, on the South line and Two Hundred Seventy
     (270') feet, more or less, on the North line. Said Lot No. Eight (8) in
     Square "B" of the Bourgeois Annex being more fully described as being
     bounded on the North by Lot Seven (7) of Square "B", on the East by Front
     Street, on the South by Lot Nine (9) of Square "B" and on the West by
     Berwick Bay.

     Being the same property acquired by Conrad Industries, Inc. by Act of Cash
     Sale from Olive Boudreaux Stephens, et al, dated December 29, 1975 and
     recorded January 5, 1976 in Book 19-L, Entry No. 164,488 of the Conveyance
     Records of St. Mary Parish, Louisiana.

9-a. That certain tract or parcel of land, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, lying and being situated in the TOWN OF MORGAN CITY, PARISH
     OF ST. MARY, State of Louisiana, and more particularly described as LOT
     NUMBER NINE (9) IN SQUARE LETTER "B" IN BOURGEOIS SUBDIVISION of said town,
     according to a map thereof recorded in the Recorder's Office at Franklin,
     Louisiana, in Book 3-B, Entry No. 38,855.

     Said property having a front on the West side of the public road (now Front
     Street of Morgan City, Louisiana) of Sixty-six and 8/10 (66.8') feet by a
     depth between parallel lines of Three Hundred (300') feet on the South side
     and Two Hundred Eighty Five (285') feet on the North line. Bounded North by
     Lot Number Eight (8) of said Square, East by said public road (nor Front
     Street of Morgan City, Louisiana) South by a lane, and West by Berwick Bay
     or the Atchafalaya River.

     Being the same property acquired by Conrad Industries, Inc. by Act of Cash
     Sale recorded January 13, 1978 in Book 20-X, Entry No. 173,263 of the
     Conveyance Records of St. Mary Parish, Louisiana.

 10. That certain lot or parcel of land, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, lying and being situated in the CITY OF MORGAN CITY, ST. MARY
     PARISH, State of Louisiana and more particularly described as having a
     front of fifteen (15') feet on the west side of Front Street by a depth
     between parallel lines extending to Berwick Bay (Atchafalaya River). Said
     tract of land being shown and designated on the map of Bourgeois
     Subdivision to the City of Morgan City dated June 10, 1910 and recorded on
     June 10, 1910 in Book 3-B, Page 244, Entry No. 38,853 of the Conveyance
     Records of St. Mary Parish, Louisiana, and designated thereon as a fifteen
     (15') foot right-of-way or alley adjacent to and immediately south of Lot
     Nine (9) Block B of the Bourgeois Subdivision. The said tract of land being
     bounded on the west by Front Street on the East by Berwick Bay (Atchafalaya
     River), on the north by Lot Nine (9), Square B of Bourgeois Subdivision
     (now the property of Conrad Industries, Inc.) and on the south by property
     of Conrad Industries, Inc. acquired by Act of Sale recorded in Book 35-F,
     Entry No. 238,092 of the Conveyance Records of St. Mary Parish, Louisiana.

                              Page 4
<PAGE>

    Being the same property acquired by Conrad Industries, Inc. by an Ordinance
    of Abandonment adopted by the City of Morgan City on the 28th day of
    September, 1993, being Ordinance 93-10 of the City of Morgan City, which
    Ordinance is recorded in Book 36-K, Entry No. 248,156 of the Conveyance
    Records of St. Mary Parish, Louisiana and being the same property described
    in an Affidavit of Conrad Industries, Inc. recorded Book 36-K, Entry No.
    243,185 of the Conveyance Records of St. Mary Parish, Louisiana.

11. That certain tract of land, together with all the buildings and improvements
    thereon and all of the rights, ways, privileges, servitudes, appurtenances
    and advantages thereunto belonging or in anywise appertaining, lying and
    being situated in the CITY OF MORGAN CITY, PARISH OF ST. MARY, State of
    Louisiana, and forming part of what was formerly known as Tiger Island
    Plantation, measuring Eighty-six (86') feet on Front Street, by a depth of
    Two Hundred Eighty-six (286') feet, between parallel lines, more or less,
    from said Front Street to Berwick Bay; the tract being bounded, now or
    formerly, on the North by lands of A. A. Bourgeois, on the East by Front
    Street, on the South by the Clarence Hanson Subdivision, formerly Lawrence,
    and West by Berwick Bay, together with all improvements and appurtenances
    thereon situated, and thereunto belonging.

    Being the same property acquired by Conrad Industries, Inc. by Act of Cash
    Sale from Stella Gloriosa Henry, et al., recorded May 13, 1992 in Book 35-F,
    Entry No. 238,092 of the Conveyance Records of St. Mary Parish, Louisiana.

12. That certain lot or parcel of land, together with all the buildings and
    improvements thereon and all of the rights, ways, privileges, servitudes,
    appurtenances and advantages thereunto belonging or in anywise appertaining,
    known, designated and described as LOT "F" IN BLOCK NUMBER THREE (3), HANSON
    ANNEX TO THE TOWN OF MORGAN CITY, PARISH OF ST. MARY, State of Louisiana,
    according to the map or plan of survey, of said subdivision of file and of
    record in the Recorder's Office in Book 22 of Conveyances at Page 516 and
    according to which said lot has a front on the North side of Belanger Street
    of Fifty (50') feet by a depth between parallel lines of One Hundred (100')
    feet; and

    That certain tract or parcel of land, together with all the buildings and
    improvements thereon and all of the rights, ways, privileges, servitudes,
    appurtenances and advantages thereunto belonging or in anywise appertaining,
    lying and being situated in the CITY OF MORGAN CITY, PARISH OF ST. MARY,
    State of Louisiana, more fully described as being situated on the West side
    of Lot "F" in Block 3 of the Hanson Annex to Morgan City and extending West
    to the Atchafalaya River; bounded on the North by property now or formerly
    of Chester Henry and extending South to a point Six and One-half (6-1/2')
    feet front on the North side of Belanger Street, bounded on the East by the
    said Lot F, Block 3 of the Hanson Annex and West by the Atchafalaya River
    (Berwick Bay).

    Being the same property acquired by Conrad Industries, Inc. by Act of Cash
    Sale from Ronald J. Overhultz, et ux., dated July 9, 1993 and recorded
    July 14, 1993 in Book 36-F, Entry No. 242,330 of the Conveyance Records of
    St. Mary Parish, Louisiana.

13. That certain tract or parcel of land, together with all buildings and
    improvements thereon situated, and all rights, ways, privileges and
    appurtenances thereunto belonging or in anywise appertaining, lying and
    being situated in the CITY OF MORGAN CITY, ST. MARY PARISH, Louisiana, on
    the East side of the Atchafalaya River, and more fully described as being
    lot lettered "A" in Block No. Three (3) of Hanson's Annex to the City,
    according to the survey thereof as made by S. A. Bradford; the lot herein
    measuring Fifty (50') feet, fronting on the west side of Front Street by a
    uniform depth of One Hundred (100') feet.

    Being the same property acquired by Conrad Industries, Inc. by Act of Cash
    Sale from Dale A. Beadle dated October 21, 1993 and recorded October 22,
    1993 in Book 36-K, Entry No. 242,271 of the Conveyance Records of St. Mary
    Parish, Louisiana.

14. That certain tract or parcel of land, together with all the buildings and
    improvements thereon and all of the rights, ways, privileges, servitudes,
    appurtenances and advantages thereunto belonging or in anywise appertaining,
    lying and being situated in the lower end of the PARISH OF ST. MARY, in
    Section 42, Township 16 South, Range 13 East, Southeastern Land District of
    Louisiana, forming part of the tract acquired by Biaggio Domino from the
    Jeanerette Lumber & Shingle Company, Ltd., by act dated August 6, 1918 and
    duly recorded in Book 3-T, Page 304, Entry No. 45,346 of Conveyance Records,
    St. Mary Parish, Louisiana. The tract herein being more particularly
    described as follows: Beginning at a Point "A" at the northeast corner
    thereof, on the west side of the right-of-way limits of U.S. Highway 90,
    thence a distance of 544.7' feet, more or less, to Point "F" on the water's
    edge of Bayou Boeuf; thence along the water's edge of Bayou Boeuf in a
    southeasterly direction to Point "E"; thence North 49 degrees east 300 feet,
    more or less, to Point "D"; thence South 30 degrees 27 minutes East 42 feet,
    more or less, to Point "C"; thence North 53 degrees 28 minutes east 445.5
    feet, more or less, to Point "B" on the right-of-way limits of U.S. Highway
    90; thence North 41 degrees West along said right-of-way limits 1075.7 feet,
    more or less, to Point "A".

    The said tract containing a total acreage of 15.63 acres, all as shown and
    designated on survey of T.F. Kramer dated May 7, 1946 attached to that act
    recorded May 21, 1946 in St. Mary Parish COB 6-V, Folio 77, under Entry No.
    74,242.

    Together with all of the property which Mortgagor owns to the water's edge.
    This includes the property which lies within the extension of the line
    between Points "D" and "E" to the water's edge and the extension of the line
    between Points "A" and "F" to the water's edge.

    Together with whatever reversionary rights Mortgagor may have in and to the
    old roadbed running across said property as shown on the survey described
    above.

    Municipal address of the above described property is: 9752 U.S. Highway 90
    East, Amelia, Louisiana.

    Being the same property acquired by Conrad Industries, Inc. from Marine
    Shale Processors, Inc., as per act registered on July 17, 1996, in
    Conveyance Book 39-C, folio 335, Entry No. 253,379.

                                     Page 5
<PAGE>

15. THAT CERTAIN LOT OF GROUND, together with all the buildings and improvements
    thereon and all of the rights, ways, privileges, servitudes, appurtenances
    and advantages thereunto belonging or in anywise appertaining, designated as
    LOT E, BLOCK 3, HANSON ANNEX TO THE CITY OF MORGAN CITY, ST. MARY PARISH,
    LOUISIANA, the said lot having a front on the north side of Belanger Street
    of Fifty (50') feet by a depth between parallel lines of One Hundred (100')
    feet; to include all buildings and improvements situated thereon.

    This property bears municipal number 103 Belanger Street, Morgan City,
    Louisiana 70380.

    Being the same property acquired by Conrad Industries, Inc. from Lydia
    Anslem Mayon and Evella Mayon Crochet, as per act passed before Dale H.
    Hayes, Notary Public, registered on November 20, 1996, in Conveyance Book
    39-0, Entry No. 254,965, St. Mary Parish, Louisiana.

16. That certain lot of ground, together with all the buildings and improvements
    thereon and all of the rights, ways, privileges, servitudes, appurtenances
    and advantages thereunto belonging or in anywise appertaining, lying and
    being situated in the PARISH OF ST. MARY, State of Louisiana, on the East
    side of Atchafalaya River, and more particularly described as being LOT
    NUMBERED LETTER "D" OF HANSON'S ANNEX TO THE TOWN OF MORGAN CITY, according
    to the Map and Plan of Survey thereof recorded in Conveyance Book "SS" Entry
    No. 34,598, of the records of the Parish of St. Mary, LOT D measuring fifty
    (50') feet in width by a depth between parallel lines of one hundred (100')
    feet; and subject to the following correction of the plat of survey of said
    subdivision hereinabove referred to, to-wit: That the street marked on said
    map "Belanger Street" extends and is opened as a public thoroughfare only
    from the river on the west to the west boundary lines of Lots Number 38 in
    Block Two, and of Lot 10 in Block One of said subdivision.

    Being the same property acquired by Conrad Industries, Inc. from Howard L.
    Freeman, Sr., et al., as per act passed before Edward M. Leonard, Jr.,
    Notary Public, registered on June 6, 1994, in Conveyance Book 36-Z, Entry
    No. 245,401, St. Mary Parish, Louisiana.

17. That certain tract or parcel of ground, together with all the buildings
    and improvements thereon and all of the rights, ways, privileges,
    servitudes, appurtenances and advantages thereunto belonging or in anywise
    appertaining, lying and being situated in the corporate limits of the City
    of Morgan City, PARISH OF ST. MARY, State of Louisiana, on the East side of
    the Atchafalaya River, known, designated and described as being LOT NUMBERED
    LETTER "C" OF HANSON ANNEX TO THE TOWN OF MORGAN CITY (now City of Morgan
    City) according to the plan of survey thereof, of record in the Parish, in
    Conveyance Book SS, Entry No. 34,498. The said lot measures Fifty (50') feet
    in width by a depth between parallel lines of One Hundred (100') feet; and
    subject to the following correction of the plan of survey and subdivision
    hereinabove mentioned, to-wit: That the street marked on said map "Belanger
    Street" extends and is opened as a public thoroughfare only from the river
    on the west, to the west boundary line of Lot No. Thirty-eight (38) in Block
    Two (2) and of Lot Ten (10) in Block One (1) of said subdivision.

    Being the same property acquired by Conrad Industries, Inc. from Garrett H.
    Gaudet and Beryl Lee Landry Gaudet, as per act passed before Dale H. Hayes,
    Notary Public, dated July 21, 1997, registered in Conveyance Book 40-L,
    Entry No. 258,180, St. Mary Parish, Louisiana.

                                     Page 6
<PAGE>

SOS 0008

                         LOUISIANA SECRETARY OF STATE
             OFFICE OF UNIFORM COMMERCIAL CODE/CENTER OF REGISTRY
                            CONFIRMATION OF FILING

    CARVER, DARDEN, KORZETKY, TESSIER, FINN, BLOSSMAN & AREAUX
    1100 POYDRAS STREET, SUITE 2700
    NEW ORLEANS, LA 70163
    ATTN. JUDITH E. ZIMMERMAN, NOTARIAL ASSISTANT

Pursuant to La.R.S.10:9-403(6), this is a confirmation that the following
information has been received and included within the Secretary of State's
master index of Uniform Commercial Code filings. Note that this confirmation
does not constitute a determination of the legal sufficiency of the filing.

This filing will lapse on 5-11-2005 unless continued or terminated. We encourage
filers to take full advantage of the six-month window of opportunity in which to
file UCC-3 continuations. Submission of your documents at the onset of the six-
month window will allow ample time to rectify potential filing errors and help
to assure timely recording of your filing.

Any questions regarding the filing information contained herein should be
directed to the filing officer which accepted and recorded the filing. General
UCC assistance may be obtained by contacting our UCC Division at (225)342-5542.

                                                             W. Fox McKeithen

================================================================================
ORIGINAL FILE NUMBER 36-148215        FILED 5/11/00 2:52 PM
                                      PARISH IN WHICH FILED: ORLEANS
DEBTOR(S)
---------
  CONRAD SHIPYARD, INC.                                   720456758
  1501 FRONT STREET
  MORGAN CITY, LA 70380

  CONRAD INDUSTRIES, INC.                                 720456758
  1501 FRONT STREET
  MORGAN CITY, LA 70380

ORIGINAL SECURED PARTY
----------------------
  WHITNEY NATIONAL BANK                                   720352101
  228 ST. CHARLES AVENUE
  NEW ORLEANS, LA 70130
  ATTN. LOAN DOCUMENTATION DEPARTMENT
<PAGE>

SOS 0009

CARVER, DARDEN, KORZETKY, TESSIER, FINN, BLOSSMAN & AREAUX  (36-148215 ) PAGE  2

PROPERTY
--------

   THE FOLLOWING DESCRIBED PROPERTY, NOW OR HEREAFTER OWNED BY DEBTOR AND
   WHEREVER LOCATED: ALL ACCOUNTS, ALL INVENTORY AND CHATTEL PAPER; ALL
   EQUIPMENT; ALL GENERAL INTANGIBLES; ALL DOCUMENTS; ALL FIXTURES LOCATED ON
   THE PROPERTY (SEE ORIG.)
<PAGE>

<TABLE>
<S>                                             <C>                                               <C>
This FINANCING STATEMENT is presented for filing pursuant to Chapter 9 of the Louisiana Commercial Laws
---------------------------------------------------------------------------------------------------------------------
1A. DEBTOR (LAST NAME, FIRST, MIDDLE-IF AN INDIVIDUAL)                                    1B. SS# OR EMPLOYER I.D.#
CONRAD SHIPYARD, INC.                                                                             72-0456758
--------------------------------------     ---------------------------------------    -------------------------------
1C. MAILING ADDRESS
1501 FRONT STREET, MORGAN CITY, LA. 70380
---------------------------------------------------------------------------------------------------------------------
2A. ADDITIONAL DEBTOR (IF ANY) (LAST NAME, FIRST, MIDDLE-IF AN INDIVIDUAL)                 2B.SS# OR EMPLOYER I.D.#
CONRAD INDUSTRIES, INC.                                                                           72-0456758
---------------------------------------------------------------------------------------------------------------------
2C. MAILING ADDRESS
1501 FRONT STREET, MORGAN CITY, LA. 70380
---------------------------------------------------------------------------------------------------------------------
3A. ADDITIONAL DEBTOR OR DEBTOR'S TRADE NAME OR STYLES (IF ANY)                          3B. SS# OR EMPLOYER I.D.#

---------------------------------------------------------------------------------------------------------------------
3C. MAILING ADDRESS

=======================================SECURED PARTY INFORMATION=====================================================
4A. SECURED PARTY                                                                         4B. SS# OR EMPLOYER I.D.#
WHITNEY NATIONAL BANK                                                                             72-0352101
---------------------------------------------------------------------------------------------------------------------
4C. MAILING ADDRESS
228 St. Charles Avenue, New Orleans, LA 70130 Attn. Loan Documentation Department         5B. SS# OR EMPLOYER I.D.#
---------------------------------------------------------------------------------------------------------------------
5A. ASSIGNEE OF SECURED PARTY (IF ANY)

---------------------------------------------------------------------------------------------------------------------
5C. MAILING ADDRESS

=======================================PROPERTY INFORMATION==========================================================
6A. This FINANCING STATEMENT covers the following types or items of property:
the following described property, now or hereafter owned by Debtor and wherever located:
ALL ACCOUNTS, ALL INVENTORY AND ALL CHATTEL PAPER; ALL EQUIPMENT; ALL GENERAL INTANGIBLES; ALL DOCUMENTS; ALL
FIXTURES LOCATED ON THE PROPERTY DESCRIBED ON THE ATTACHMENT HERETO; together with all property added to or
substituted for any of the foregoing, and all interest, dividends, income, fruits, returns, accessions, profits,
corporate distributions (including, without limitation, stock splits and stock dividends), products and proceeds
of any of the foregoing

6B. X Products of collateral are also covered.
   ___
---------------------------------------------------------------------------------------------------------------------
7A. Check if applicable and attach legal description of real property:
  X    Fixture filing under R.S. 10:9-313.
_____
_____  Minerals or the like (including oil and gas) or accounts subject to R.S.>10:9-103(5) will be financed at the
       wellhead or minehead of the well or mine.
_____  THE DEBTOR(S) DO NOT HAVE AN INTEREST OF RECORD IN THE REAL PROPERTY. (ENTER NAME AND SOCIAL SECURITY/EMPLOYER
       I.D. # OR AN OWNER OF RECORD IN 7B AND 7C).
---------------------------------------------------------------------------------------------------------------------
7B. OWNER OF REAL PROPERTY (if other than named debtor)                                      7C. SS#/EMPLOYER I.D.#
     (Enter name and S#/Employer I.D.# of an owner of record

---------------------------------------------------------------------------------------------------------------------
8A. This statement is filed without the debtor's signature to perfect a security interest in collateral (check if any)
_____  already subject to a security interest in another jurisdiction when it was brought into this state or debtor's
       location changed to this state.
_____  which is proceeds of the original collateral described above in which a security interest was perfected.
_____  as to which the filing has lapsed.
_____  acquired after a change of debtor's name, identity or corporate structure AND social security/employer
       i.d. #.
---------------------------------------------------------------------------------------------------------------------
8B. _____ DEBTOR is a Transmitting Utility, Filing is effective until terminated pursuant to R. S. 10:9-403(8).
---------------------------------------------------------------------------------------------------------------------
9. SIGNATURE OF DEBTOR(S)
CONRAD SHIPYARD, INC.

BY:  /s/ WILLIAM H. HIDALGO
   ---------------------------------------
     WILLIAM H. HIDALGO, President
---------------------------------------------------------------------------------------------------------------------
10. SIGNATURE(S) OF SECURED PARTY(IES)   (if applicable)
WHITNEY NATIONAL BANK

BY:  /s/ EDGAR SANTA CRUZ, III
   ---------------------------------------
     EDGAR SANTA CRUZ, III, Vice President
=====================================================================================================================
11.  Return Copy to:
CARVER, DARDEN, KORETZKY, TESSIER, FINN, BLOSSMAN & AREAUX, L.L.C.
1100 Poydras Street, Suite 2700
New Orleans, LA 70163
Attn: Judith E. Zimmerman, Notarial Assistant
---------------------------------------------------------------------------------------------------------------------
12. FOR USE OF FILING OFFICER (DATE, TIME, ENTRY# AND FILING OFFICER)          13. NUMBER OF ADDITIONAL SHEETS   5
                                                                                                              -------
</TABLE>
<PAGE>

lA. DEBTOR (LAST NAME, FIRST, MIDDLE-               1B. SS# OR EMPLOYER I.D. #
IF AN INDIVIDUAL)                                       72-0456758
CONRAD SHIPYARD, INC.

7A. DESCRIPTION OF REAL PROPERTY FOR FIXTURE FILING

1-a. That certain tract or parcel of land, lying and being situated in the CITY
     OF MORGAN CITY, PARISH OF ST. MARY, State of Louisiana, commencing at a
     point on the West boundary line of Front Street, One Hundred and Ten (110')
     feet North of its intersection with the North boundary line of the right-
     of-way owned by the municipal corporation of Morgan City, La., for
     waterworks pipe line to Berwick Bay (or Atchafalaya River), and thence
     extending northerly along the said west boundary line of Front Street a
     distance of Fifty (50') feet, and between the boundaries so established
     having a depth between parallel lines to the margin of Berwick Bay (or
     Atchafalaya River). Said tract of land being bounded on the North by
     property now or formerly Harry Adam Blanco, south by property of H. J.
     Boudreaux, east by Front Street, and west by Berwick Bay (or Atchafalaya
     River). Together with all the buildings and improvements, rights, ways,
     privileges and servitudes thereon situated and appertaining.

1-b. That certain piece of land, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, being a portion of the property acquired by Harry Adam Blanco
     from Miss Carrie I. Gathright, by an Act of Sale executed before Paul
     Schreier, Notary Public, St. Mary Parish, on the lst day of April, 1941,
     and duly recorded in the Conveyance Office of the Parish of St. Mary,
     Louisiana, situated in the City of Morgan City, La., described as
     commencing at a point on the north line of the property as acquired by
     Harry Adam Blanco from Miss Carrie I. Gathright One Hundred and Fifty
     (150') feet west of Front Street, thence southerly at right angles a
     distance of Fifty (50') feet and with such width the property has a depth
     between parallel lines to the Atchafalaya River, being bounded on the North
     by property now or formerly of Gloria White, east by remaining property of
     Harry Adam Blanco or assigns, on the South by the property firstly
     described herein and on the west by the Atchafalaya River.

     Being the same property acquired by Conrad Industries, Inc. by Act of Cash
     Sale from Walston Stout dated February 23, 1988 and recorded February 24,
     1988 in Book 31-D, Entry No. 222,156 of the Conveyance Records of St. Mary
     Parish, Louisiana.

2.   That certain tract or parcel of, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, land lying and being situated in the corporate limits of the
     CITY OF MORGAN CITY, PARISH OF ST. MARY, State of Louisiana, commencing at
     the intersection of the North boundary line of the right-of-way owned by
     the corporation of Morgan City, for waterworks pipe line to Berwick Bay (or
     Atchafalaya River) and the West line of Front Street and from thence
     extending northerly along the West line of Front Street for a distance of
     One Hundred and Ten (110') feet, and with such frontage having a depth
     between parallel lines to the margin of Berwick Bay (or Atchafalaya River).
     Being bounded on the North by property of Stoute, on the East by Front
     Street on the South by the City of Morgan city right-of-way, and on the
     West by Berwick Bay (or Atchafalaya River).

     Being the same property acquired by Conrad Industries, Inc. by Act of Cash
     Deed from J. Parker Conrad, et ux dated May 5, 1987 and recorded in
     Book 30-J, Entry No. 219,138 of the Conveyance Records of St. Mary Parish,
     Louisiana.

3.   That certain parcel of land, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, lying and being situated in the CITY OF MORGAN CITY, ST. MARY
     PARISH, Louisiana, designated as a trip of land thirty (30') feet wide
     being bound on the North now or formerly by property of Hanson Lopez, being
     bounded on the East by the floodside of Front Street, and being bounded on
     the West by the Atchafalaya River; said property having a front of thirty
     (30') feet on the West side of Front Street by a depth between parallel
     lines to the Atchafalaya River, all as shown on the attached Plan of Land
     attached hereto and made a part hereof; being the same property acquired as
     follows:

     The South Fifteen (S-15') feet being dedicated to the City of Morgan City
     as shown on Barnes Survey and as shown on that plat by Bourgeois
     Subdivision by S. A. Bradford, P.E. & City Engineer, recorded June 10, 1910
     at St. Mary Parish COB 3-B, Entry No. 38,853; the North fifteen (N-15')
     feet being acquired by that Act of Sale with map attached thereto at St.
     Mary Parish, COB 3-G, Entry No. 496, recorded July 16, 1912.

     Being the same property acquired by Conrad Industries, Inc. by Act of Cash
     Sale from Mayor and Councilmen of the City of Morgan City dated February
     15, 1988 and recorded in Book 31-C, Entry No. 222,082 of the Conveyance
     Records of St. Mary Parish, Louisiana.

4-a. That certain tract or parcel of land together with all buildings,
     improvements and appurtenances thereon and thereunto belonging, and all
     rights, ways, privileges and Servitudes thereunto appertaining, lying and
     being situated in the TOWN OF MORGAN CITY, ST. MARY PARISH, State of
     Louisiana, more fully described as being LOT NUMBER ONE (1) IN SQUARE "B"
     OF BOURGEOIS SUBDIVISION, said lot having a frontage on the West side of
     Front Street of Sixty-six and eight-tenths (66.8') feet, and extending to
     the Atchafalaya River and being bounded on the North by property of unknown
     owners, on the East by Front Street, on the South by Lot 2 and on the West
     by the Atchafalaya River.

                                 Sheet 1 of 5
<PAGE>

lA. DEBTOR (LAST NAME, FIRST, MIDDLE-               1B. SS# OR EMPLOYER I.D. #
IF AN INDIVIDUAL)                                       72-0456758
CONRAD SHIPYARD, INC.

     Being the same property acquired by Conrad Industries, Inc. by Act of cash
     sale from Martha Garber Vidos, et al recorded September 4, 1986 in Book
     29-T, Entry No. 216,761 of the Conveyance Records of St. Mary Parish,
     Louisiana.

4-b. That certain tract or parcel of land together with all buildings and
     improvements thereon and thereunto belonging, and all rights, ways,
     privileges and servitudes thereunto appertaining, lying and being situated
     in the CITY OF MORGAN CITY, PARISH OF ST. MARY, State of Louisiana, and
     more particularly described as being the North Sixteen (16") feet of LOT
     NUMBER TYPO (2) OF SQUARE LETTER "B" OF BOURGEOIS SUBDIVISION of said City;
     the property having a frontage of sixteen (16') feet on the West side of
     Front Street, by a depth to the Atchafalaya River, and being bounded on the
     North by Lot Number one (1), on the East by Front Street, on the South by
     remaining portion of Lot Two (2) and on the West by the Atchafalaya River.

5.   That certain tract or parcel of land, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, lying and being situated in the CITY OF MORGAN CITY, ST. MARY
     PARISH, Louisiana, and more particularly described as being LOT NUMBER TWO
     (2) IN SQUARE LETTER "B" OF THE BOURGEOIS SUBDIVISION of said City, having
     a front on the West side of Front Street by a depth to the Atchafalaya
     River. Said property having a front of Fifty (50') feet more or less on the
     West side of Front Street by a depth to the Atchafalaya River.

     Being the same property acquired by Conrad Industries, Inc. by Act of
     Exchange from J. Parker Conrad, et ux dated July 16, 1987 and recorded July
     17, 1987 in Book 30-N, Entry No. 219,839 of the Conveyance Records of St.
     Mary Parish, Louisiana.

6.   That certain tract of land, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, situated in lying and being situated in the CITY OF MORGAN
     CITY, PARISH OF ST. MARY, State .of Louisiana, and more fully described as
     being LOT NUMBER THREE (3) IN SQUARE LETTER "B" OF BOURGEOIS ANNEX to said
     City. Said lot having a front of Sixty-six and 66/100 feet on the West side
     of Front Street, and extending back between parallel lines to Berwick Bay.
     Said lot or parcel of land being bounded on the North by Lot No. Two
     (2), Square Letter "B" of Bourgeois Annex, on the East by Front Street, on
     the South by Lot No. Four (4), Square Letter "B" of Bourgeois Annex and on
     the West by Berwick Bay. Together with all buildings and improvements
     thereon situated and all rights, ways, privileges and servitudes thereunto
     belonging and appertaining.

     Being the same property acquired in part by Conrad Industries, Inc. by Act
     of Cash Sale from Royal A. Mayon, et al recorded September 29, 1976 and
     recorded in Book 19-Y, Entry No. 167,335 of the Conveyance Records of St.
     Mary Parish, Louisiana; and by Conrad Industries, Inc. by Act of Cash Sale
     from Wallace Bergeron, et al recorded September 29, 1976 and recorded in
     Book 19-Y, Entry No. 167,336 of the Conveyance Records of St. Mary Parish,
     Louisiana.

7-a. That certain tract or parcel of land, lying and being situated in the
     corporate limits of the City of Morgan City, Parish of St. Mary, State of
     Louisiana, known, designated and described as being the South Thirty-three
     and Six-tenths (33.6') feet. of Lot Number Five (5) and all of Lots Numbers
     Six (6) and seven (7) in square "B" of the Bourgeois Subdivision of said
     City. The property having a front on the West side of Front Street of One
     Hundred Sixty-seven and two-tenths (167.2') feet, and having a depth
     between parallel lines to the Atchafalaya River of Berwick Bay. Said
     property being bounded on the North by property herein after described; on
     the South by property of Eddie Boudreaux or assigns. Together with all the
     batture, accretions, alluvion, build up or filled inland on or in Berwick
     Bay, adjoining and abutting upon the said lots, as well as any and all
     rights, ways and privileges and servitudes of any kind and every kind and
     character thereunto belonging or appertaining.

7-b. That certain tract or parcel of land, lying and being situated in the
     corporate limits of the City of Morgan City, Parish of St. Mary, State of
     Louisiana, known, designated and described as being all of Lot Number Four
     (4) and the North Thirty-three and two-tenths (33.2') feet of Lot Number
     Five (5) in Square "B" of the Bourgeois Subdivision of said City. The
     property having a front on the west side of Front Street of One Hundred
     (100') feet and having a depth between parallel lines to the Atchafalaya
     River or Berwick Bay. Said property being bounded on the North by Lot No. 3
     of Square "B" property of Elodie Mayon, on the South by the remaining
     portion of Lot No. 5 in Square "B" hereinabove described, on the East by
     Front Street and on the West by Atchafalaya River or Berwick Bay.

     Being the same property acquired by Conrad Industries, Inc. by Act of Sale
     recorded November 7, 1953 in Book 8-M, Entry No. 88,053 of the Conveyance
     Records of St. Mary Parish, Louisiana.

8.   That certain tract or parcel of land, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, lying and being situated in the CITY OF MORGAN CITY, ST. MARY
     PARISH, Louisiana, known, designated and described as being LOT NO. EIGHT
     (8) IN SQUARE "B" in the Bourgeois Annex to Morgan City and having a front
     on the West side of Front Street of Sixty-six feet and eight inches (66'8")
     by a depth between said Front Street and Berwick Bay of Two Hundred Eighty-
     five (285') feet, more or less, on the South line and Two Hundred Seventy
     (270') feet, more or less, on the North line.

                                 Sheet 2 of 5
<PAGE>

lA. DEBTOR (LAST NAME, FIRST, MIDDLE-               1B. SS# OR EMPLOYER I.D. #
IF AN INDIVIDUAL)                                       72-0456758
CONRAD SHIPYARD, INC.

     Said Lot No. Eight (8) in Square "B" of the Bourgeois Annex being more
     fully described as being bounded on the North by Lot Seven (7) of Square
     "B", on the East by Front Street, on the South by Lot Nine (9) of Square
     "B" and on the West by Berwick Bay.

     Being the same property acquired by Conrad Industries, Inc. by Act of Cash
     Sale from olive Boudreaux Stephens, et al, dated December 29, 1975 and
     recorded January 5, 1976 in Book 19-L, Entry No. 164,488 of the Conveyance
     Records of St. Mary Parish, Louisiana.

9-a. That certain tract or parcel of land, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, lying and being situated in the TOWN OF MORGAN CITY, PARISH
     OF ST. MARY, State of Louisiana, and more particularly described as LOT
     NUMBER NINE (9) IN SQUARE LETTER "B" IN BOURGEOIS SUBDIVISION of said town,
     according to a map thereof recorded in the Recorder's office at Franklin,
     Louisiana, in Book 3-B, Entry No. 38,855.

     Said property having a front on the West side of the public road (now Front
     Street of Morgan City, Louisiana) of Sixty-six and 8/10 (66.8') feet by a
     depth between parallel lines of Three Hundred (300') feet on the South side
     and Two Hundred Eighty Five (285') feet on the North line. Bounded North by
     Lot Number Eight (8) of said Square, East by said public road (nor Front
     Street of Morgan City, Louisiana) South by a lane, and West by Berwick Bay
     or the Atchafalaya River.

     Being the same property acquired by Conrad Industries, Inc. by Act of Cash
     Sale recorded January 13, 1978 in Book 20-X, Entry No. 173,263 of the
     Conveyance Records of St. Mary Parish, Louisiana.

10.  That certain lot or parcel of land, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, lying and being situated in the CITY OF MORGAN CITY, ST. MARY
     PARISH, State of Louisiana and more particularly described as having a
     front of fifteen (15') feet on the west side of Front street by a depth
     between parallel lines extending to Berwick Bay (Atchafalaya River). Said
     tract of land being shown and designated on the map of Bourgeois
     subdivision to the City of Morgan City dated June 10, 1910 and recorded on
     June 10, 1910 in Book 3-B, Page 244, Entry No. 38,853 of the Conveyance
     Records of St. Mary Parish, Louisiana, and DESIGNATED THEREON AS A FIFTEEN
     (15') FOOT RIGHT OF-WAY OR ALLEY ADJACENT TO AND IMMEDIATELY SOUTH OF LOT
     NINE (9) BLOCK B OF THE BOURGEOIS SUBDIVISION. The said tract of land being
     bounded on the west by Front Street on the East by Berwick Bay (Atchafalaya
     River), on the north by Lot Nine (9), Square B of Bourgeois subdivision
     (now the property of Conrad Industries, Inc.) and on the south by property
     of Conrad Industries, Inc. acquired by Act of Sale recorded in Book 35-F,
     Entry No. 238,092 of the Conveyance Records of St. Mary Parish, Louisiana.

     Being the same property acquired by Conrad Industries, Inc. by an Ordinance
     of Abandonment adopted by the city of Morgan City on the 28th day of
     September, 1993, being Ordinance 93-10 of the City of Morgan City, which
     Ordinance is recorded in Book 36-K, Entry No. 248,156 of the Conveyance
     Records of St. Mary Parish, Louisiana and being the same property described
     in an Affidavit of Conrad Industries, Inc. recorded Book 36-K, Entry No.
     243, 185 of the Conveyance Records of St. Mary Parish, Louisiana.

11.  That certain tract of land, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, lying and being situated in the CITY OF MORGAN CITY, PARISH
     OF ST. MARY, State of Louisiana, and forming part of what was formerly
     known as Tiger Island Plantation, measuring Eighty-six (86') feet on Front
     Street, by a depth of Two Hundred Eighty-six (286') feet, between parallel
     lines, more or less, from said Front Street to Berwick Bay; the tract being
     bounded, now or formerly, on the North by lands of A. A. Bourgeois, on the
     Bast by Front Street, on the South by the Clarence Hanson Subdivision,
     formerly Lawrence, and West by Berwick Bay, together with all improvements
     and appurtenances thereon situated, and thereunto belonging.

     Being the same property acquired by Conrad Industries, Inc. by Act of Cash
     Sale from Stella Gloriosa Henry, et al., recorded May 13, 1992 in Book 35-
     F, Entry No. 238,092 of the Conveyance Records of St. Mary Parish,
     Louisiana.

12.  That certain lot or parcel of land, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, known, designated and described as LOT "F" IN BLOCK NUMBER
     THREE (3), HANSON ANNEX TO THE TOWN OF MORGAN CITY, PARISH OF ST. MARY,
     State of Louisiana, according to the map or plan of survey, of said
     subdivision of file and of record in the Recorder's Office in Book 22 of
     Conveyances at Page 516 and according to which said lot has a front on the
     North side of Belanger Street of Fifty (50') feet by a depth between
     parallel lines of One Hundred (100') feet; and

     That certain tract or parcel of land, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, lying and being situated in the CITY OF MORGAN CITY, PARISH
     OF ST. MARY, State of Louisiana, more fully described as being situated on
     the West side of Lot "F" in Block 3 of the Hanson Annex to Morgan City and
     extending, West to the Atchafalaya River; bounded on the North by

                                 Sheet 3 of 5
<PAGE>

lA. DEBTOR (LAST NAME, FIRST, MIDDLE-               1B. SS# OR EMPLOYER I.D. #
IF AN INDIVIDUAL)                                       72-0456758
CONRAD SHIPYARD, INC.

     property now or formerly of Chester Henry and extending South to a point
     Six and One-half (6 1/2') feet front he North side of Belanger Street,
     bounded on the East by the said Lot F, Block 3 of the Hanson Annex and West
     by the Atchafalaya River (Berwick Bay).

     Being the same property acquired by Conrad Industries, Inc. by Act of Cash
     Sale from Ronald J. Overhultz, et ux., dated July 9, 1993 and recorded July
     14, 1993 in Book 36-F, Entry No. 242,330 of the Conveyance Records of St.
     Mary Parish, Louisiana.

13.  That certain tract or parcel of land, together with all buildings and
     improvements thereon situated, and all rights, ways, privileges and
     appurtenances thereunto belonging or in anywise appertaining, lying and
     being situated in the CITY OF MORGAN CITY, ST. MARY PARISH, Louisiana, on
     the East side of the Atchafalaya River, and more fully described as being
     lot lettered "A" in Block No. Three (3) of Hanson's Annex to the City,
     according to the survey thereof as made by S. A. Bradford; the lot herein
     measuring Fifty (50') feet, fronting on the west side of Front Street by a
     uniform depth of One Hundred (100') feet.

     Being the same property acquired by Conrad Industries, Inc. by Act of Cash
     Sale from Dale A. Beadle dated October 21, 1993 and recorded October 22,
     1993 in Book 36-K, Entry No. 242,271 of the Conveyance Records of St. Mary
     Parish, Louisiana.

14.  That certain tract or parcel of land, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, lying and being situated in the lower end of the PARISH OF
     ST. MARY, in Section 42, Township 16 South, Range 13 East, Southeastern
     Land District of Louisiana, forming part of the tract acquired by Biaggio
     Domino from the Jeanerette Lumber & Shingle Company, Ltd., by act dated
     August 6, 1918 and duly recorded in Book 3-T, Page 304, Entry No. 45,346 of
     Conveyance Records, St. Mary Parish, Louisiana. The tract herein being more
     particularly described as follows: Beginning at a Point "A" at the
     northeast corner thereof, on the west side of the right-of-way limits of
     U.S. Highway 90, thence a distance of 544.7' feet, more or less, to Point
     "F" on the water's edge of Bayou Boeuf; thence along the water's edge of
     Bayou Boeuf in a southeasterly direction to Point "E"; thence North 49
     degrees east 300 feet, more or less, to Point "D"; thence South 30 degrees
     27 minutes East 42 feet, more or less, to Point "C"; thence North 53
     degrees 28 minutes east 445.5 feet, more or less, to Point "B" on the
     right-of-way limits of U.S. Highway 90; thence North 41 degrees West along
     said right-of-way limits 1075.7 feet, more or less, to Point "A".

     The said tract containing a total acreage of 15.63 acres, all as shown and
     designated on survey of T.F. Kramer dated May 7, 1946 attached to that act
     recorded May 21, 1946 in St. Mary Parish COB 6-V, Folio 77, under Entry No.
     74,242.

     Together with all of the property which Mortgagor owns to the water's edge.
     This includes the property which lies within the extension of the line
     between Points "D" and "E" to the water's edge and the extension of the
     line between Points "A" and "F" to the water's edge.

     Together with whatever reversionary rights Mortgagor may have in and to the
     old roadbed running across said property as shown on the survey described
     above.

     Municipal address of the above described property is: 9752 U.S. Highway 90
     East, Amelia, Louisiana.

     Being the same property acquired by Conrad Industries, Inc. from Marine
     Shale Processors, Inc., as per act registered on July 17, 1996, in
     Conveyance Book 39-C, folio 335, Entry No.253379.

15. THAT CERTAIN LOT OF GROUND, together with all the buildings and improvements
    thereon and all of the rights, ways, privileges, servitudes, appurtenances
    and advantages thereunto belonging or in anywise appertaining, designated as
    LOT E, BLOCK 3, HANSON ANNEX TO THE CITY OF MORGAN CITY, ST. MARY PARISH,
    LOUISIANA, the said lot having a front on the north side of Belanger Street
    of Fifty (50') feet by a depth between parallel lines of One Hundred (100')
    feet; to include all buildings and improvements situated thereon.

     This property bears municipal number 103 Belanger Street, Morgan City,
     Louisiana 70380.

     Being the same property acquired by Conrad Industries, Inc. from Lydia
     Anslem Mayon and Evella Mayon Crochet, as per act passed before Dale H.
     Hayes, Notary Public, registered on November 20, 1996, in Conveyance Book
     39-0, Entry No. 254,965, St. Mary Parish, Louisiana.

16.  That certain lot of ground, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, lying and being situated in the PARISH OF ST. MARY, State of
     Louisiana, on the East side of Atchafalaya River, and more particularly
     described as being LOT NUMBERED LETTER "D" OF HANSON'S ANNEX TO THE TOWN OF
     MORGAN CITY, according to the Map and Plan of Survey thereof recorded in
     Conveyance Book "SS" Entry No. 34,598, of the records of the Parish of St.
     Mary, LOT D measuring fifty (50') feet in width by a depth between parallel
     lines of one hundred (100') feet; and subject to the following correction
     of the plat of survey of said subdivision hereinabove referred to, to-wit:
     That

                                 Sheet 4 of 5
<PAGE>

lA. DEBTOR (LAST NAME, FIRST, MIDDLE-               1B. SS# OR EMPLOYER I.D. #
IF AN INDIVIDUAL)                                       72-0456758
CONRAD SHIPYARD, INC.

     the street marked on said map "Belanger Street" extends and is opened as a
     public thoroughfare only from the river on the west to the west boundary
     lines of Lots Number 38 in Block Two, and of Lot 10 in Block One of said
     subdivision.

     Being the same property acquired by Conrad Industries, Inc. from Howard L.
     Freeman, Sr., et al., as per act passed before Edward M. Leonard, Jr.,
     Notary Public, registered on June 6, 1994, in conveyance Book 36-Z, Entry
     No. 245,401, St. Mary Parish, Louisiana.

 17. That certain tract or parcel of ground, together with all the buildings and
     improvements thereon and all of the rights, ways, privileges, servitudes,
     appurtenances and advantages thereunto belonging or in anywise
     appertaining, lying and being situated in the corporate limits of the City
     of Morgan City, PARISH OF ST. MARY, State of Louisiana, on the East side of
     the Atchafalaya River, known, designated and described as being LOT
     NUMBERED LETTER "C" OF HANSON ANNEX TO THE TOWN OF MORGAN CITY (now City of
     Morgan City) according to the plan of survey thereof, of record in the
     Parish, in Conveyance Book SS, Entry No. 34,498. The said lot measures
     Fifty (50') feet in width by a depth between parallel lines of one Hundred
     (100') feet; and subject to the following correction of the plan of survey
     and subdivision hereinabove mentioned, to-wit: That the street marked on
     said map "Belanger Street" extends and is opened as a public thoroughfare
     only from the river on the west, to the west boundary line of Lot No.
     Thirty-eight (38) in Block Two (2) and of Lot Ten (10) in Block One (1) of
     said subdivision.

     Being the same property acquired by Conrad Industries, Inc. from Garrett H.
     Gaudet and Beryl Lee Landry Gaudet, as per act passed before Dale H. Hayes,
     Notary Public, dated July 21, 1997, registered in Conveyance Book 40-L,
     Entry No. 258,180, St. Mary Parish, Louisiana.

                                 Sheet 5 of 5
<PAGE>

                         LOUISIANA SECRETARY OF STATE
                                   UCC SEARCH
                             CONRAD SHIPYARD, INC.
                               FILE NO. 2.11683
                         DATE OF SEARCH: MAY 12, 2000

 (Ctrl-U) or (Ctrl-D) to page or (Esc) for previous
 Enter selection or new search argument

 ===) - [KCONRAD SHIPYARD-[2J-[H

 1 CONRAD SHIPYARD, INC.
 2 CONRAD'S CRITTERS
 3 CONSELLTANT ADVERTISING & PUBLISHING LLC
 4 CONSELLTANT ADVERTISING AND PUBLISHING L L C
 5 CONSELLTANT GROUP CORPORATION
 6 CONSIDER IT DONE HAIR SALON
 7 CONSIGNEE: FRIEDMAN'S INC.
 8 CONSO, INC.
 9 CONSOER TOWNSEND ENVIRODYNE ENGINEERS INC

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--------------------------------------------------------------------------------
1 CONRAD SHIPYARD, INC.
 ===) - [K1- [2J- [H
NOTICE: ALL FILINGS AFTER 05-09-00 ARE SUBJECT TO CHANGE OR REMOVAL.
ORIGINAL FILE NUMBER 36-148215    STATUS: Active
FINANCING STATEMENT 36-148215 FILED 05-11-00 02:52P
   DEBTOR:       CONRAD SHIPYARD, INC./720456758
                 1501 FRONT STREET/ MORGAN CITY, LA 70380
   DEBTOR:       CONRAD INDUSTRIES, INC./720456758
                 1501 FRONT STREET/ MORGAN CITY, LA 70380
   SECURED PTY:  WHITNEY NATIONAL BANK/720352101
                 228 ST. CHARLES AVENUE/ NEW ORLEANS, LA 70130/ ATTN. LOAN
                 DOCUMENTATION DEPARTMENT
   PROPERTY:     THE FOLLOWING DESCRIBED PROPERTY, NOW OR HEREAFTER OWNED BY
                 DEBTOR AND WHEREVER LOCATED: ALL ACCOUNTS, ALL INVENTORY AND
                 CHATTEL PAPER; ALL EQUIPMENT; ALL GENERAL INTANGIBLES; ALL
                 DOCUMENTS; ALL FIXTURES LOCATED ON THE PROPERTY (SEE ORIG.)

 (Esc) for previous or (Ctrl-P) to print -[2J-[H
--------------------------------------------------------------------------------

                   Uniform Commercial Code inquiry menu

   1.  Search by business name
   2.  Search by individual name
   3.  Search by taxpayer ID (SSN or Employer ID)
  90.  Sign off

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<PAGE>

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<PAGE>

                                                                          PAGE 1

DATE:    May 12, 2000

                              STATE OF LOUISIANA
                                UCC CERTIFICATE

NAME:      CONRAD SHIPYARD, INC. FORMERLY CONRAD INDUSTRIES,INC.
TIN/SSN:   72-0456758
FROM:      January 1, 1990
THROUGH:   May 12, 2000

================================================================================

FILINGS:

NOTICE:  ALL FILINGS AFTER 05-09-00 ARE SUBJECT TO CHANGE OR REMOVAL.
ORIGINAL FILE NUMBER 51-11465   STATUS: Active
FINANCING STATEMENT 51-11465   FILED 09-02-97 08:40A
   DEBTOR:       CONRAD INDUSTRIES, INC/720456758
                 1501 FRONT STREET/ MORGAN CITY, LA. 70381
   SECURED PTY:  SAFECO CREDIT COMPANY, INC./910840847
                 4909 156TH AVE. N.E./ REDMOND, WA 98052
   PROPERTY:     ONE (1) 230' X 54' X 12' STEEL DECK BARGE, SHIPBUILDER'S
                 HULL NO. C-655
                 (FOR ADDITIONAL INFORMATION SEE ORIGINAL FILING)

--------------------------------------------------------------------------------
NOTICE:  ALL FILINGS AFTER 05-09-00 ARE SUBJECT TO CHANGE OR REMOVAL.
ORIGINAL FILE NUMBER 36-124217  STATUS:   Active
FINANCING STATEMENT 36-124217 FILED 12-15-97 02:56P
   DEBTOR:       CONRAD INDUSTRIES, INC./720456758
                 1501 FRONT STREET/ MORGAN CITY, LA 70380
   SECURED PTY:  WHITNEY NATIONAL BANK/720352101
                 228 ST. CHARLES AVENUE/NEW ORLEANS, LA 70130/ ATTN: LOAN
                 DOCUMENTATION DEPARTMENT

   PROPERTY:     ALL EQUIPMENT, ACCOUNTS RECEIVABLE, INVENTORY, CHATTEL PAPER
                 AND GENERAL INTANGIBLES TOGETHER WITH ALL PROPERTY ADDED TO OR
                 SUBSTITUTED FOR ANY OF THE FOREGOING, AND ALL INTEREST,
                 DIVIDENDS, INCOME, FRUITS, RETURNS, ACCESSIONS (SEE ORIG.)

--------------------------------------------------------------------------------
NOTICE:  ALL FILINGS AFTER 05-09-00 ARE SUBJECT TO CHANGE OR REMOVAL.
ORIGINAL FILE NUMBER 36-127130          STATUS: Active
FINANCING STATEMENT 36-127130 FILED 03-20-98 02:50P
   DEBTOR:       CONRAD INDUSTRIES, INC./720456758
                 1501 FRONT STREET/ MORGAN CITY, LA 70380
   SECURED PTY:  WHITNEY NATIONAL BANK/720352101
                 228 ST. CHARLES AVENUE/ NEW ORLEANS, LA 70130/ ATTN: LOAN
                 DOCUMENTATION DEPARTMENT
   PROPERTY:     THE FOLLOWING DESCRIBED PROPERTY, NOW OR HEREAFTER OWNED BY
                 DEBTOR AND WHEREVER LOCATED: ALL ACCOUNTS, ALL INVENTORY AND
                 ALL CHATTEL PAPER; ALL EQUIPMENT; ALL GENERAL INTANGIBLES; ALL
                 DOCUMENTS; ALL FIXTURES LOCATED ON THE (SEE ORIGINAL) Fixture
                 Filing
<PAGE>

                                                                          PAGE 2
--------------------------------------------------------------------------------
NOTICE:  ALL FILINGS AFTER 05-09-00 ARE SUBJECT TO CHANGE OR REMOVAL.
ORIGINAL FILE NUMBER 36-148214      STATUS:   Active
FINANCING STATEMENT 36-148214 FILED 05-11-00 02:51P
   DEBTOR:       CONRAD INDUSTRIES, INC./760475815
                 1501 FRONT STREET/ MORGAN CITY, LA 70380
   SECURED PTY:  WHITNEY NATIONAL BANK/720352101
                 228 ST. CHARLES AVENUE/ NEW ORLEANS, LA 70130/ ATTN. LOAN
                 DOCUMENTATION DEPARTMENT
   PROPERTY:     THE FOLLOWING DESCRIBED PROPERTY, NOW OR HEREAFTER OWNED BY
                 DEBTOR AND WHEREVER LOCATED: ALL ACCOUNTS, ALL INVENTORY AND
                 ALL CHATTEL PAPER; ALL EQUIPMENT; ALL GENERAL INTANGIBLES; ALL
                 DOCUMENTS TOGETHER WITH ALL (SEE ORIGINAL)

--------------------------------------------------------------------------------
NOTICE:  ALL FILINGS AFTER 05-09-00 ARE SUBJECT TO CHANGE OR REMOVAL.
ORIGINAL FILE NUMBER 36-148215       STATUS:   Active
FINANCING STATEMENT 36-148215 FILED 05-11-00 02:52P

   DEBTOR:       CONRAD SHIPYARD, INC./720456758
                 1501 FRONT STREET/ MORGAN CITY, LA 70380
   DEBTOR:       CONRAD INDUSTRIES, INC./720456758
                 1501 FRONT STREET/ MORGAN CITY, LA 70380
   SECURED PTY:  WHITNEY NATIONAL BANK/720352101
                 228 ST. CHARLES AVENUE/ NEW ORLEANS, LA 70130/ ATTN. LOAN
                 DOCUMENTATION DEPARTMENT
   PROPERTY:     THE FOLLOWING DESCRIBED PROPERTY, NOW OR HEREAFTER OWNED BY
                 DEBTOR AND WHEREVER LOCATED: ALL ACCOUNTS, ALL INVENTORY AND
                 CHATTEL PAPER; ALL EQUIPMENT; ALL GENERAL INTANGIBLES; ALL
                 DOCUMENTS; ALL FIXTURES LOCATED ON THE PROPERTY (SEE ORIG.)
--------------------------------------------------------------------------------
NOTICE:  ALL FILINGS AFTER 05-09-00 ARE SUBJECT TO CHANGE OR REMOVAL.
ORIGINAL FILE NUMBER 51-11464        STATUS:   Active
FINANCING STATEMENT 51-11464 FILED 09-02-97 08:35A
   DEBTOR:       CONRAD INDUSTRIES, INC./720456758
                 1501 FRONT STREET/ MORGAN CITY, LA. 70381
   SECURED PTY:  SAFECO CREDIT COMPANY, INC./910840847
                 4909 156TH AVE., N.E./ REDMOND, WA 98052
   PROPERTY:     ONE (1) 150' X 50' X 7' STEEL DECK BARGE, SHIPBUILDER'S
                 HULL NO. C-656
                 (FOR ADDITIONAL INFORMATION SEE ORIGINAL FILING)
--------------------------------------------------------------------------------
NOTICE:  ALL FILINGS AFTER 05-09-00 ARE SUBJECT TO CHANGE OR REMOVAL.
ORIGINAL FILE NUMBER 51-7592         STATUS:   Active
FINANCING STATEMENT 51-7592 FILED 09-25-95 08:50A
   DEBTOR:       CONRAD INDUSTRIES, INC./720456758
                 1501 FRONT STREET/ MORGAN CITY, LA. 70380
   SECURED PTY:  EDWARD DON AND COMPANY/362081964
                 2500 S. HARLEM AVE./ NORTH RIVERSIDE, IL 60546
   PROPERTY:     ALL KITCHEN EQUIPMENT AS FURTHER DESCRIBED IN THE ATTACHED
                 EXHIBIT.
                 (FOR ADDITIONAL INFORMATION SEE ORIGINAL FILING)
<PAGE>

                                                                          PAGE 3
DATE:   May 12, 2000

                              STATE OF LOUISIANA
                           UCC SUPPLEMENTAL LISTING

NAME:     CONRAD INDUSTRIES, INC.
TIN/SSN:  76-0475815
FROM:     January 1, 1990
THROUGH:  May 12, 2000

================================================================================

The search for information under the above name also revealed the following
filings for debtors with similar names and/or taxpayer identification numbers.

FILINGS:

760475815  05-11-00 02:51 PM   ORLEANS              36-148214
NOTICE:  ALL FILINGS AFTER 05-09-00 ARE SUBJECT TO CHANGE OR REMOVAL.
ORIGINAL FILE NUMBER 36-148214          STATUS: Active
FINANCING STATEMENT 36-148214 FILED 05-11-00 02:51P
   DEBTOR:       CONRAD INDUSTRIES, INC./760475815
                 1501 FRONT STREET/ MORGAN CITY, LA 70380
   SECURED PTY:  WHITNEY NATIONAL BANK/720352101
                 228 ST. CHARLES AVENUE/ NEW ORLEANS, LA 70130/ ATTN. LOAN
                 DOCUMENTATION DEPARTMENT
   PROPERTY:     THE FOLLOWING DESCRIBED PROPERTY, NOW OR HEREAFTER OWNED BY THE
                 DEBTOR AND WHEREVER LOCATED: ALL ACCOUNTS, ALL INVENTORY AND
                 ALL CHATTEL PAPER; ALL EQUIPMENT; ALL GENERAL INTANGIBLES; ALL
                 DOCUMENTS; TOGETHER WITH ALL (SEE ORIGINAL)
<PAGE>

                              CONTINUING GUARANTY

     The undersigned (hereinafter sometimes referred to as "Guarantor", which
term means individually, collectively, and interchangeably any, each and/or all
of them) hereby gives to Whitney National Bank ("Bank") this Continuing Guaranty
(this "Guaranty") for the purpose of guarantying the obligations of CONRAD
SHIPYARD, INC. (FORMERLY KNOWN AS CONRAD INDUSTRIES, INC.), a Louisiana
corporation, (hereinafter referred to as "Borrower", which term means
individually, collectively, and interchangeably any, each and/or all of them).
Guarantor agrees as follows:

1.   Guarantor jointly, severally, solidarily, and unconditionally guarantees to
     Bank the prompt payment in full of all obligations and liabilities of
     Borrower to Bank, direct or contingent, due or to become due, now existing
     or hereafter arising, including, without limitation, all future advances,
     with interest, attorneys' fees, expenses of collection and costs, and
     further including, without limitation, obligations to Bank on promissory
     notes, checks, overdrafts, letter-of-credit agreements, loan agreements,
     security documents, endorsements and continuing guaranties (collectively,
     the "Obligations"). Parties obligated on the Obligations are referred to
     herein as "Obligor", which term means individually, collectively, and
     interchangeably any, each and/or all of them.

2.   Guarantor shall be bound by all of the terms and conditions of any notes,
     agreements, or other obligations in favor of Bank signed or incurred by
     Borrower. Guarantor hereby waives all notice and pleas of presentment,
     demand, dishonor, protest, discussion and division. Guarantor shall not
     have any rights of subrogation until the payment in full of all Obligations
     and any subrogation rights shall relate only to the collateral then held by
     Bank.

3.   Notice of termination of this Guaranty will not be effective until ten (10)
     days after the notice is delivered to an officer of Bank at the office
     where the Obligations were borrowed and such officer acknowledges in
     writing receipt of the notice (the "Effective Date"). This Guaranty shall
     be continuing and binding on the person delivering such notice as to (a)
     any Obligations incurred or arising prior to the Effective Date of written
     notice of termination of this Guaranty, (b) all renewals, extensions, and
     modifications of Obligations existing prior to the Effective Date of
     written notice of termination of this Guaranty and (c) Obligations Bank is
     bound to permit to be incurred by agreement entered into prior to the
     Effective Date of written notice of termination of this Guaranty. A notice
     of termination shall not affect the liability of any person not giving
     such notice.

4.   To secure this Guaranty, Guarantor pledges, pawns and delivers to Bank, and
     grants to Bank a continuing security interest in, and a right of set-off
     and compensation against, all property of Guarantor or in which Guarantor
     has an interest that is now or hereafter on deposit with, in the possession
     of, under the control of or held by Bank, including, without limitation,
     all cash, deposit accounts, funds on deposit, stocks, bonds, treasury
     obligations and other securities, investment property, financial assets,
     securities accounts, notes, documents, instruments, certificates of
     deposit, items, chattel paper, and other property (except IRA, pension, and
     other tax-deferred retirement accounts), together with all property added
     to or substituted for any of the foregoing, and all interest, dividends,
     income, fruits, accessions and proceeds of any of the foregoing. The terms
     "deposit accounts," "instruments," "investment property," "documents,"
     "chattel paper" "securities accounts," "financial assets" and "proceeds"
     shall have the meanings provided in the Louisiana Commercial Laws.

5.   If this Guaranty is executed by more than one person, each person is bound
     by all of the provisions of this Guaranty and is jointly, severally and
     solidarily liable for the payment in full of the Obligations as if such
     person was the only person executing this Guaranty. This Guaranty is
     exclusive of and in addition to any other endorsements, guaranties, or
     obligations with respect to Borrower that are separate and apart from this
     instrument, whether signed by Guarantor or by any other Obligor. This
     Guaranty shall not be affected or limited by the amount of any other such
     endorsements, guaranties, or obligations with respect to Borrower. To the
     extent permitted by law, Guarantor's obligations under this Guaranty shall
     continue notwithstanding any set-off, counterclaim, reduction, or
     diminution of the Obligations or any defense of any kind or nature (other
     than performance by Guarantor of its obligations hereunder) that Borrower
     may have or assert against Bank.

6.   Without releasing or affecting Guarantor's obligations hereunder, Bank may,
     one or more times, in its sole discretion, without notice to or the consent
     of Guarantor or any other Obligor, take any one or more of the following
     actions: (a) release, renew or modify the obligations of Borrower or any
     other Obligor; (b) release, exchange, modify, or surrender in whole or in
     part Bank's rights with respect to any collateral for the Obligations; (c)
     modify or alter the term, interest rate or due date of any payment of any
     of the Obligations; (d) grant any postponements, compromises, indulgences,
     waivers, surrenders or discharges or modify the terms of its agreements
     with Guarantor, Borrower or any other Obligor, (e) change its manner of
     doing business with Guarantor, Borrower or any other party; (f) impute
     payments or proceeds of any collateral furnished for any of the
     Obligations, in whole or in part, to any of the Obligations, or retain the
     payments or proceeds as collateral for the Obligations without applying
     same toward payment of the Obligations; or (g) make loans to Borrower in
     excess of the present amount of the Obligations, and Guarantor hereby
     expressly waives any defenses arising from any such actions. The release of
     liability of any person shall not affect the liability hereunder of any
     person who is not specifically released.

7.   This Guaranty shall be binding on Guarantor and Guarantor's successors and
     assigns and shall inure to the benefit of Bank, its successors, assigns,
     endorsees, and any person or persons, or entities, including, without
     limitation, any banking or other financial institution, to whom Bank may
     grant an interest in the Obligations, or any of them, and this Guaranty
     shall be binding on Guarantor to the extent of such assignment or interest.
     Any such assignment or grant of interest shall not operate to release
     Guarantor from any obligation to Bank hereunder with respect to any
     unassigned Obligations.

8.   If Bank receives any payment or proceeds of collateral, which payment or
     proceeds or any part thereof are subsequently required, by any court of
     competent jurisdiction, to be repaid to Borrower, Borrower's estate,
     trustee, or any other party, then to the extent of such repayment by Bank,
     the Obligations or part thereof which has been paid, reduced or satisfied
     by such amount shall be reinstated and continued in full force and effect
     as of the date the initial payment, reduction or satisfaction occurred, and
     Guarantor shall remain solidarily liable to Bank for the repayment of such
     amount reinstated. Guarantor shall defend and indemnify Bank from any claim
     or loss to Bank arising under this paragraph, including, without
     limitation, Bank's attorneys' fees and expenses in the defense of any such
     action or suit.

9.   This Guaranty shall be governed and interpreted under the internal laws of
     the State of Louisiana. If any provision of this Guaranty shall be held to
     be legally invalid or unenforceable by any court of competent jurisdiction,
     all remaining provisions of this Guaranty shall remain in full force and
     effect. This Guaranty is effective as of the date shown below.

                                  CONRAD INDUSTRIES, INC.

                                  By: /s/ WILLIAM H. HIDALGO
                                      --------------------------
                                          William H. Hidalgo
                                          Its: President
                                  Date: December 31, 1999
<PAGE>

STATE OF LOUISIANA

PARISH OF ST. MARY

     BEFORE ME, the undersigned Notary Public duly commissioned and qualified in
and for the aforesaid State and Parish (County), personally came and appeared
WILLIAM H. HIDALGO, who being first duly sworn, declared and acknowledged unto
me, Notary, and the undersigned witnesses, that he is the President of CONRAD
INDUSTRIES, INC., a corporation, and that as such officer and on behalf of such
corporation, he signed and executed the above and foregoing Continuing Guaranty,
by authority of the Board of Directors of said corporation, and said appearer
acknowledged said instrument to be the free act and deed of said corporation,
for the purposes and considerations therein expressed.

     IN WITNESS WHEREOF, this instrument is executed in the presence of the
undersigned witnesses and me, Notary, on this 3rd day of May, 2000.

WITNESSES:

/s/ JANICE A. RATCLIFF                        /s/ WILLIAM H. HIDALGO
---------------------------                   --------------------------
    Janice A. Ratcliff                            William H. Hidalgo

/s/ DENISE AVCON
---------------------------
    Denise Avcon
                               /s/ DALE H. HAYES
                            -----------------------
                                   Dale H. Hayes

                                 NOTARY PUBLIC
                        My Commission expires at death
<PAGE>

                         LOUISIANA SECRETARY OF STATE
             OFFICE OF UNIFORM COMMERCIAL CODE/CENTER OF REGISTRY
                            CONFIRMATION OF FILING

    CARVER, DARDEN, KORETZKY, TESSIER, FINN, BLOSSMAN & AREAUX
    1100 POYDRAS STREET, SUITE 2700
    NEW ORLEANS, LA 70163
    ATTN: JUDITH E. ZIMMERMAN, NOTARIAL ASSISTANT

Pursuant to La.R.S.10:9-403(6), this is a confirmation that the following
information has been received and included within the Secretary of State's
master index of Uniform Commercial Code filings. Note that this confirmation
does not constitute a determination of the legal sufficiency of the filing.

This filing will lapse on 5-11-2005 unless continued or terminated. We encourage
filers to take full advantage of the six-month window of opportunity in which to
file UCC-3 continuations. Submission of your documents at the onset of the
six-month window will allow ample time to rectify potential filing errors and
help to assure timely recording of your filing.

Any questions regarding the filing information contained herein should be
directed to the filing officer which accepted and recorded the filing. General
UCC assistance may be obtained by contacting our UCC Division at (225)342-5542.

                                                            W. Fox McKeithen

================================================================================
ORIGINAL FILE NUMBER 36-148214      FILED 5/11/00   2:51 PM
                                    PARISH IN WHICH FILED:  ORLEANS
DEBTOR(S)
---------
 CONRAD INDUSTRIES, INC.                                 760475815
 1501 FRONT STREET
 MORGAN CITY, LA 70380

ORIGINAL SECURED PARTY
----------------------
 WHITNEY NATIONAL BANK                                   720352101
 228 ST. CHARLES AVENUE
 NEW ORLEANS, LA 70130
 ATTN. LOAN DOCUMENTATION DEPARTMENT

PROPERTY
--------
 THE FOLLOWING DESCRIBED PROPERTY, NOW OR HEREAFTER OWNED BY
 THE DEBTOR AND WHEREVER LOCATED: ALL ACCOUNTS, ALL INVENTORY
 AND ALL CHATTEL PAPER; ALL EQUIPMENT; ALL GENERAL INTANGIBLES;
 ALL DOCUMENTS; TOGETHER WITH ALL (SEE ORIGINAL)

<PAGE>

<TABLE>
<S>                                             <C>                                               <C>
This FINANCING STATEMENT is presented for filing pursuant to Delaware Commercial Laws
---------------------------------------------------------------------------------------------------------------------
1A. DEBTOR (LAST NAME, FIRST, MIDDLE-IF AN INDIVIDUAL)                                    1B. SS# OR EMPLOYER I.D.#
CONRAD INDUSTRIES, INC.                                                                           76-0475815
---------------------------------------------------------------------------------------------------------------------
1C. MAILING ADDRESS
1501 FRONT STREET, MORGAN CITY, LA. 70380
---------------------------------------------------------------------------------------------------------------------
2A. ADDITIONAL DEBTOR (IF ANY) (LAST NAME, FIRST, MIDDLE-IF AN INDIVIDUAL)                 2B.SS# OR EMPLOYER I.D.#

---------------------------------------------------------------------------------------------------------------------
2C. MAILING ADDRESS

---------------------------------------------------------------------------------------------------------------------
3A. ADDITIONAL DEBTOR OR DEBTOR'S TRADE NAME OR STYLES (IF ANY)                          3B. SS# OR EMPLOYER I.D.#

---------------------------------------------------------------------------------------------------------------------
3C. MAILING ADDRESS

=======================================SECURED PARTY INFORMATION=====================================================
4A. SECURED PARTY                                                                         4B. SS# OR EMPLOYER I.D.#
WHITNEY NATIONAL BANK                                                                             72-0352101
---------------------------------------------------------------------------------------------------------------------
4C. MAILING ADDRESS
228 St. Charles Avenue, New Orleans, LA 70130 Attn. Loan Documentation Department
---------------------------------------------------------------------------------------------------------------------
5A. ASSIGNEE OF SECURED PARTY (IF ANY)                                                    5B. SS# OR EMPLOYER I.D.#

---------------------------------------------------------------------------------------------------------------------
5C. MAILING ADDRESS

=======================================PROPERTY INFORMATION==========================================================
6A. This FINANCING STATEMENT covers the following types or items of property:
the following described property, now or hereafter owned by Debtor and wherever located:
ALL ACCOUNTS, ALL INVENTORY AND ALL CHATTEL PAPER; ALL EQUIPMENT; ALL GENERAL INTANGIBLES; ALL DOCUMENTS;
together with all property added to or substituted for any of the foregoing, and all interest, dividends, income,
fruits, returns, accessions, profits, corporate distributions (including, without limitation, stock splits and
stock dividends), products and proceeds of any of the foregoing

6B. X Products of collateral are also covered.
   ___
---------------------------------------------------------------------------------------------------------------------
7A. Check if applicable and attach legal description of real property:
  X    Fixture filing under R.S. 10:9-313.
_____
_____  Minerals or the like (including oil and gas) or accounts subject to R.S.>10:9-103(5) will be financed at the
       wellhead or minehead of the well or mine.
_____  THE DEBTOR(S) DO NOT HAVE AN INTEREST OF RECORD IN THE REAL PROPERTY. (ENTER NAME AND SOCIAL SECURITY/EMPLOYER
       I.D. # OR AN OWNER OF RECORD IN 7B AND 7C).
---------------------------------------------------------------------------------------------------------------------
7B. OWNER OF REAL PROPERTY (if other than named debtor)                                      7C. SS#/EMPLOYER I.D.#
     (Enter name and S#/Employer I.D.# of an owner of record

---------------------------------------------------------------------------------------------------------------------
8A. This statement is filed without the debtor's signature to perfect a security interest in collateral (check if any)
_____  already subject to a security interest in another jurisdiction when it was brought into this state or debtor's
       location changed to this state.
_____  which is proceeds of the original collateral described above in which a security interest was perfected.
_____  as to which the filing has lapsed.
_____  acquired after a change of debtor's name, identity or corporate structure AND social security/employer
       i.d. #.
---------------------------------------------------------------------------------------------------------------------
8B. _____ DEBTOR is a Transmitting Utility, Filing is effective until terminated pursuant to R. S. 10:9-403(8).
---------------------------------------------------------------------------------------------------------------------
9. SIGNATURE OF DEBTOR(S)
CONRAD SHIPYARD, INC.

BY:  /s/ WILLIAM H. HIDALGO
   ---------------------------------------
     WILLIAM H. HIDALGO, President
---------------------------------------------------------------------------------------------------------------------
10. SIGNATURE(S) OF SECURED PARTY(IES)   (if applicable)
WHITNEY NATIONAL BANK

BY:  /s/ EDGAR SANTA CRUZ, III
   ---------------------------------------
     EDGAR SANTA CRUZ, III, Vice President
=====================================================================================================================
11.  Return Copy to:
CARVER, DARDEN, KORETZKY, TESSIER, FINN, BLOSSMAN & AREAUX, L.L.C.
1100 Poydras Street, Suite 2700
New Orleans, LA 70163
Attn: Judith E. Zimmerman, Notarial Assistant
---------------------------------------------------------------------------------------------------------------------
12. FOR USE OF FILING OFFICER (DATE, TIME, ENTRY# AND FILING OFFICER)          13. NUMBER OF ADDITIONAL SHEETS
                                                                                                              -------
</TABLE>

<PAGE>

                         LOUISIANA SECRETARY OF STATE
                                  UCC SEARCH
                            CONRAD INDUSTRIES, INC.
                               FILE NO. 2.11683
                         DATE OF SEARCH: MAY 12, 2000

                             Business Name Search

 Enter search argument or (Esc) for previous
 ===) -[KCONRAD INDUSTRIES-[2J-[H

 1 CONRAD INDUSTRIES, INC
 2 CONRAD INDUSTRIES, INC.
 3 CONRAD L. CATHEY, INC.
 4 CONRAD L NEIL TTE
 5 CONRAD L NEIL TTEE
 6 CONRAD L NEIL TTTE
 7 CONRAD RICE MILL INC
 8 CONRAD RICE MILL, INC.
 9 CONRAD RIVERS & SON INC

 (Ctrl-U) or (Ctrl-D) to page or (Esc) for previous
 Enter selection or new search argument
--------------------------------------------------------------------------------
  1 CONRAD INDUSTRIES, INC
  ===) - [K1- [2J- [H
NOTICE: ALL FILINGS AFTER 05-09-00 ARE SUBJECT TO CHANGE OR REMOVAL.
ORIGINAL FILE NUMBER 51-11465       STATUS: Active
FINANCING STATEMENT 51-11465 FILED 09-02-97 08:40A
   DEBTOR:      CONRAD INDUSTRIES, INC/720456758
                1501 FRONT STREET/ MORGAN CITY, LA. 70381
   SECURED PTY: SAFECO CREDIT COMPANY, INC./910840847
                4909 156TH AVE. N.E./ REDMOND, WA 98052
   PROPERTY:    ONE (1) 230' X 54' X 12' STEEL DECK BARGE, SHIPBUILDER'S
                HULL NO. C-655
                (FOR ADDITIONAL INFORMATION SEE ORIGINAL FILING)

 (Esc) for previous or (Ctrl-P) to print -[2J-[H
--------------------------------------------------------------------------------
 2 CONRAD INDUSTRIES, INC.
 ===) - [K2- [2 J- [H

   6 FILINGS FOR CONRAD INDUSTRIES, INC.
NOTICE: ALL FILINGS AFTER 05-09-00 ARE SUBJECT TO CHANGE OR REMOVAL.
   TAX ID         DATE       TIME     PARISH        ORIG. FILE NUMBER
1 720456758     12-15-97   02:56 PM   ORLEANS       36-124217
2 720456758     03-20-98   02:50 PM   ORLEANS       36-127130
3 760475815     05-11-00   02:51 PM   ORLEANS       36-148214
4 720456758     05-11-00   02:52 PM   ORLEANS       36-148215
5 720456758     09-02-97   08:35 AM   ST. MARY      51-11464
6 720456758     09-25-95   08:50 AM   ST. MARY      51-7592

<PAGE>

(Ctrl-U) or (Ctrl-D) to page or (Ctrl-P) to print list
Select option or <Esc> for previous
--------------------------------------------------------------------------------
   6 FILINGS FOR CONRAD INDUSTRIES, INC.
 NOTICE: ALL FILINGS AFTER 05-09-00 ARE SUBJECT TO CHANGE OR REMOVAL.
   TAX ID          DATE       TIME     PARISH       ORIG. FILE NUMBER
   1 720456758   12-15-97   02:56 PM   ORLEANS      36-124217
===) - [K1- [2J- [H
NOTICE: ALL FILINGS AFTER 05-09-00 ARE SUBJECT TO CHANGE OR REMOVAL.
ORIGINAL FILE NUMBER 36-124217   STATUS: Active
FINANCING STATEMENT 36-124217 FILED 12-15-97 02:56P
   DEBTOR:        CONRAD INDUSTRIES, INC./720456758
                  1501 FRONT STREET/ MORGAN CITY, LA 70380
   SECURED PTY:   WHITNEY NATIONAL BANK/720352101
                  228 ST. CHARLES AVENUE/ NEW ORLEANS, LA 70130/ ATTN: LOAN
                  DOCUMENTATION DEPARTMENT
   PROPERTY:      ALL EQUIPMENT, ACCOUNTS RECEIVABLE, INVENTORY, CHATTEL PAPER
                  AND GENERAL INTANGIBLES TOGETHER WITH ALL PROPERTY ADDED TO
                  OR SUBSTITUTED FOR ANY OF THE FOREGOING, AND ALL INTEREST,
                  DIVIDENDS, INCOME, FRUITS, RETURNS, ACCESSIONS (SEE ORIG.)

 (Esc) for previous or (Ctrl-P) to print -[2J-[H
--------------------------------------------------------------------------------
   6 FILINGS FOR CONRAD INDUSTRIES, INC.
 NOTICE:   ALL FILINGS AFTER 05-09-00 ARE SUBJECT TO CHANGE OR REMOVAL.
   TAX ID           DATE    TIME       PARISH         ORIG. FILE NUMBER
   2 720456758    03-20-98 02:50 PM    ORLEANS        36-127130
===) - [K2- [2J- [H
NOTICE:   ALL FILINGS AFTER 05-09-00 ARE SUBJECT TO CHANGE OR REMOVAL.
ORIGINAL FILE NUMBER 36-127130   STATUS: Active
FINANCING STATEMENT 36-127130 FILED 03-20-98 02:50P
   DEBTOR:       CONRAD INDUSTRIES, INC./720456758
                 1501 FRONT STREET/ MORGAN CITY, LA 70380
   SECURED PTY:  WHITNEY NATIONAL BANK/720352101
                 228 ST. CHARLES AVENUE/ NEW ORLEANS, LA 70130/ ATTN: LOAN
                 DOCUMENTATION DEPARTMENT
   PROPERTY:     THE FOLLOWING DESCRIBED PROPERTY, NOW OR HEREAFTER OWNED BY
                 DEBTOR AND WHEREVER LOCATED: ALL ACCOUNTS, ALL INVENTORY AND
                 ALL CHATTEL PAPER; ALL EQUIPMENT; ALL GENERAL INTANGIBLES;
                 ALL DOCUMENTS; ALIT FIXTURES LOCATED ON THE (SEE ORIGINAL)
                 Fixture Filing

 (Esc) for previous or (Ctrl-P) to print -[2J-[H
--------------------------------------------------------------------------------
   6 FILINGS FOR CONRAD INDUSTRIES, INC.
 NOTICE:  ALL FILINGS AFTER 05-09-00 ARE SUBJECT TO CHANGE OR REMOVAL.
   TAX ID          DATE      TIME      PARISH         ORIG. FILE NUMBER
3 760475815       05-11-00 02:51 PM    ORLEANS        36-148214
  ===) - [K3- [2J- [H
NOTICE:   ALL FILINGS AFTER 05-09-00 ARE SUBJECT TO CHANGE OR REMOVAL.
ORIGINAL FILE NUMBER 36-148214    STATUS: Active
FINANCING STATEMENT 36-148214 FILED 05-11-00 02:51P
   DEBTOR:       CONRAD INDUSTRIES, INC./760475815
                 1501 FRONT STREET/ MORGAN CITY, LA 70380
<PAGE>

   SECURED PTY:  WHITNEY NATIONAL BANK/720352101
                 228 ST. CHARLES AVENUE/ NEW ORLEANS, LA 70130/ ATTN. LOAN
                 DOCUMENTATION DEPARTMENT
   PROPERTY:     THE FOLLOWING DESCRIBED PROPERTY, NOW OR HEREAFTER OWNED BY
                 THE DEBTOR AND WHEREVER LOCATED: ALL ACCOUNTS, ALL INVENTORY
                 AND ALL CHATTEL PAPER; ALL EQUIPMENT; ALL GENERAL
                 INTANGIBLES; ALL DOCUMENTS; TOGETHER WITH ALL (SEE ORIGINAL)

 (Esc) for previous or (Ctrl-P) to print -[2J-[H
--------------------------------------------------------------------------------
   6 FILINGS FOR CONRAD INDUSTRIES, INC.
 NOTICE:  ALL FILINGS AFTER 05-09-00 ARE SUBJECT TO CHANGE OR REMOVAL.
   TAX ID           DATE     TIME      PARISH         ORIG. FILE NUMBER
   4 720456758    05-11-00 02:52 PM    ORLEANS        36-148215
===) - [K4- [2J- [H
NOTICE:  ALL FILINGS AFTER 05-09-00 ARE SUBJECT TO CHANGE OR REMOVAL.
ORIGINAL FILE NUMBER 36-148215    STATUS: Active
FINANCING STATEMENT 36-148215 FILED 05-11-00 02:52P
   DEBTOR:       CONRAD SHIPYARD, INC./720456758
                 1501 FRONT STREET/ MORGAN CITY, LA 70380
   DEBTOR:       CONRAD INDUSTRIES, INC./720456758
                 1501 FRONT STREET/ MORGAN CITY, LA 70380
   SECURED PTY:  WHITNEY NATIONAL BANK/720352101
                 228 ST. CHARLES AVENUE/ NEW ORLEANS, LA 70130/ ATTN. LOAN
                 DOCUMENTATION DEPARTMENT
   PROPERTY:     THE FOLLOWING DESCRIBED PROPERTY, NOW OR HEREAFTER OWNED BY
                 DEBTOR AND WHEREVER LOCATED: ALL ACCOUNTS, ALL INVENTORY AND
                 CHATTEL PAPER; ALL EQUIPMENT; ALL GENERAL INTANGIBLES; ALL
                 DOCUMENTS; ALL FIXTURES LOCATED ON THE PROPERTY (SEE ORIG.)

 (Esc) for previous or (Ctrl-P) to print - [2J-[H
--------------------------------------------------------------------------------
   6 FILINGS FOR CONRAD INDUSTRIES, INC.
 NOTICE:  ALL FILINGS AFTER 05-09-00 ARE SUBJECT TO CHANGE OR REMOVAL.
   TAX ID           DATE    TIME       PARISH         ORIG. FILE NUMBER
   5 720456758    09-02-97 08:35 AM    ST. MARY       51-11464
===) - [K5- [2J- [H
NOTICE: ALL FILINGS AFTER 05-09-00 ARE SUBJECT TO CHANGE OR REMOVAL.
ORIGINAL FILE NUMBER 51-11464    STATUS: Active
FINANCING STATEMENT 51-11464 FILED 09-02-97 08:35A
   DEBTOR:       CONRAD INDUSTRIES, INC./720456758
                 1501 FRONT STREET/ MORGAN CITY, LA. 70381
   SECURED PTY:  SAFECO CREDIT COMPANY, INC./910840847
                 4909 156TH AVE., N.E./ REDMOND, WA 98052
   PROPERTY:     ONE (1) 150' X 50' X 7' STEEL DECK BARGE, SHIPBUILDER'S
                 HULL NO. C-656
                 (FOR ADDITIONAL INFORMATION SEE ORIGINAL FILING)

 (Esc) for previous or (Ctrl-P) to print - [2J- [H
--------------------------------------------------------------------------------
   6 FILINGS FOR CONRAD INDUSTRIES, INC.
 NOTICE:   ALL FILINGS AFTER 05-09-00 ARE SUBJECT TO CHANGE OR REMOVAL.
<PAGE>

   TAX ID           DATE    TIME       PARISH         ORIG. FILE NUMBER
6 720456758       09-25-95 08:50 AM    ST. MARY       51-7592
 ===) - [K6- [2J- [H
NOTICE: ALL FILINGS AFTER 05-09-00 ARE SUBJECT TO CHANGE OR REMOVAL.
ORIGINAL FILE NUMBER 51-7592   STATUS: Active
FINANCING STATEMENT 51-7592 FILED 09-25-95 08:50A
   DEBTOR:       CONRAD INDUSTRIES,INC./720456758
                 1501 FRONT STREET/ MORGAN CITY, LA. 70380
   SECURED PTY:  EDWARD DON AND COMPANY/362081964
                 2500 S. HARLEM AVE./ NORTH RIVERSIDE, IL 60546
   PROPERTY:     ALL KITCHEN EQUIPMENT AS FURTHER DESCRIBED IN THE ATTACHED
                 EXHIBIT.
                 (FOR ADDITIONAL INFORMATION SEE ORIGINAL FILING)
 (Esc) for previous or (Ctrl-P) to print -[2J-[H
================================================================================

<PAGE>

                                                                          PAGE 1
DATE: May 12, 2000
                              STATE OF LOUISIANA
                                UCC CERTIFICATE

NAME:        CONRAD INDUSTRIES, INC.
TIN/SSN:     76-0475815
FROM:        January 1, 1990
THROUGH:     May 12, 2000

===============================================================================

FILINGS:

760475815      05-11-00 02:51 PM    ORLEANS           36-148214
NOTICE: ALL FILINGS AFTER 05-09-00 ARE SUBJECT TO CHANGE OR REMOVAL.
ORIGINAL FILE NUMBER 36-148214   STATUS:   Active
FINANCING STATEMENT 36-148214 FILED 05-11-00 02:51P
    DEBTOR:      CONRAD INDUSTRIES, INC./760475815
                 1501 FRONT STREET/ MORGAN CITY, LA 70380
    SECURED PTY: WHITNEY NATIONAL BANK/720352101
                 228 ST. CHARLES AVENUE/ NEW ORLEANS, LA 70130/ ATTN. LOAN
                 DOCUMENTATION DEPARTMENT
    PROPERTY:    THE FOLLOWING DESCRIBED PROPERTY, NOW OR HEREAFTER OWNED BY THE
                 DEBTOR AND WHEREVER LOCATED: ALL ACCOUNTS, ALL INVENTORY AND
                 ALL CHATTEL PAPER; ALL EQUIPMENT; ALL GENERAL INTANGIBLES; ALL
                 DOCUMENTS; TOGETHER WITH ALL (SEE ORIGINAL)
<PAGE>

                                                                          PAGE 2
DATE:  May 12, 2000
                              STATE OF LOUISIANA
                           UCC SUPPLEMENTAL LISTING

NAME:      CONRAD SHIPYARD FORMERLY CONRAD INDUSTRIES, INC.
TIN/SSN:   72-0456758
FROM:      January 1, 1990
THROUGH:   May 12, 2000

================================================================================

The search for information under the above name also revealed the following
filings for debtors with similar names and/or taxpayer identification numbers.

FILINGS:

   6 FILINGS FOR CONRAD INDUSTRIES, INC.
NOTICE: ALL FILINGS AFTER 05-09-00 ARE SUBJECT TO CHANGE OR REMOVAL.
   TAX ID       DATE       TIME       PARISH     ORIG. FILE NUMBER
1 720456758    12-15-97  02:56 PM     ORLEANS    36-124217
2 720456758    03-20-98  02:50 PM     ORLEANS    36-127130
3 760475815    05-11-00  02:51 PM     ORLEANS    36-148214
4 720456758    05-11-00  02:52 PM     ORLEANS    36-148215
5 720456758    09-02-97  08:35 AM     ST. MARY   51-11464
6 720456758    09-25-95  08:50 AM     ST. MARY   51-7592<PAGE>

                                                                   EXHIBIT 10.1

                              SIXTH AMENDMENT TO
                 FOURTH AMENDED AND RESTATED CREDIT AGREEMENT

     THIS SIXTH AMENDMENT TO FOURTH AMENDED AND RESTATED CREDIT AGREEMENT (this
"Amendment") dated as of the 12th day of June, 2000, by and among PLAINS
 ---------
RESOURCES INC., a Delaware corporation (the "Company"), FIRST UNION NATIONAL
                                             -------
BANK (assignee of ING (U.S.) Capital LLC, successor in interest to ING (U.S.)
Capital Corporation), as Agent ("Agent"), and the Lenders named herein.
                                 -----

                             W I T N E S S E T H:

     WHEREAS, the Company, Agent and Lenders entered into that certain Fourth
Amended and Restated Credit Agreement dated as of May 22, 1998, as amended by a
First Amendment to Fourth Amended and Restated Credit Agreement dated November
17, 1998, a Second Amendment to Fourth Amended and Restated Credit Agreement
dated March 15, 1999, a Third Amendment to Fourth Amended and Restated Credit
Agreement dated June 21, 1999, a Fourth Amendment to Fourth Amended and Restated
Credit Agreement dated September 15, 1999, a Fifth Amendment to Fourth Amended
and Restated Credit Agreement dated December 1, 1999 and a Limited Waiver and
Consent dated as of January 28, 2000 (as amended, the "Original Agreement") for
                                                       ------------------
the purposes and consideration therein expressed, pursuant to which Lenders
became obligated to make and made loans to the Company as therein provided; and

     WHEREAS, the Company, Agent and Lenders desire to amend the Original
Agreement for the purposes described herein;

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein and in the Original Agreement, in consideration
of the loans which may hereafter be made by Lenders to the Company, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto do hereby agree as follows:

                   ARTICLE I. -- Definitions and References
                                  --------------------------

     (S) 1.1.  Terms Defined in the Original Agreement.  Unless the context
               ---------------------------------------
otherwise requires or unless otherwise expressly defined herein, the terms
defined in the Original Agreement shall have the same meanings whenever used in
this Amendment.

     (S) 1.2.  Other Defined Terms.  Unless the context otherwise requires, the
               -------------------
following terms when used in this Amendment shall have the meanings assigned to
them in this (S) 1.2.

               "Amendment" means this Sixth Amendment to Fourth Amended and
                ---------
      Restated Credit Agreement.

               "Amendment Documents" means this Amendment.
                -------------------

                                       1
<PAGE>

          "Credit Agreement" means the Original Agreement as amended hereby.
           ----------------

                           ARTICLE II. -- Amendments
                                          ----------

     (S) 2.1.   Definitions.  The definitions of "Revolving Credit Termination
                -----------
Date" and "Tangible Net Worth" set forth in Section 1.01 of the Original
Agreement are hereby amended in their entirety to read as follows:

               "Revolving Credit Termination Date" shall mean the earlier of (a)
                ---------------------------------
     July 1, 2002 and (b) the date on which the Commitment is reduced to zero or
     terminated pursuant to Section 2.03 hereof.

               "Tangible Net Worth" shall mean, as at any date, the sum for the
                ------------------
     Company and its Consolidated Subsidiaries (determined on a consolidated
     basis without duplication in accordance with GAAP), of the following:

                    (a) the amount of capital stock, plus
                                                     ----

                    (b) the amount of surplus and retained earnings (or in the
          case of a surplus or retained earnings deficit, minus the amount of
                                                          -----
          such deficit), minus
                         -----

                    (c) the sum of the following: cost of treasury shares and
          the book value of all assets which should be classified as intangibles
          (without duplication of deductions in respect of items already
          deducted in arriving at surplus and retained earnings) but in any
          event including goodwill, research and development costs, trademarks,
          trade names, copyrights, patents and franchises, unamortized debt
          discount and expense, all reserves and any write-up in the book value
          of assets resulting from a revaluation thereof subsequent to December
          31, 1997.

     The effect of any increase or decrease in net worth in any period as a
     result of items of income or loss not reflected in the determination of net
     income but reflected in the determination of comprehensive income (to the
     extent provided under GAAP (x) as in effect on June 12, 2000 or (y) to
     become effective after such date under rules currently proposed as of such
     date that become effective on or before January 1, 2001) shall be excluded
     in determining Tangible Net Worth.

     The following definition of "PAAI Transfer" is hereby added to Section 1.01
of the Original Agreement immediately following the definition of "PAAI":

          "PAAI Transfer" shall mean the occurrence of any of the following:
           -------------

     (i)  The Company, either directly or indirectly, shall cease to be the
          legal and beneficial owner of 100% of the outstanding capital stock of
          PAAI or 100% of the outstanding limited liability company interests of
          PAAI, LLC.

     (ii) PAAI shall cease to be the legal and beneficial owner of 75% or more
          of the general partner interests (including all securities which are
          convertible into

                                       2
<PAGE>

               general partner interests) of the MLP, Plains Marketing LP or All
               American Pipeline LP.

      (iii)    The Company or any of its Subsidiaries, PAAI or PAAI, LLC, or any
               successor (by conversion, merger or otherwise) of any of them, or
               any combination of the foregoing Persons, either directly or
               indirectly, shall cease to be the legal and beneficial owner of
               75% or more in the aggregate of the number of limited partner
               units of the MLP owned, either directly or indirectly, by the
               Company or any of its Subsidiaries, PAAI, PAAI, LLC or each
               successor (by conversion, merger or otherwise) of each of them,
               or any combination of the foregoing Persons, in the aggregate as
               of June 12, 2000.

     (S) 2.2.  Borrowing Base Redeterminations.  The first sentence of
               -------------------------------
Section 2.08(b) of the Original Agreement is hereby amended in its entirety to
read as follows:

               (b)  Supermajority Lenders shall endeavor on each May 1 and
     October 1, commencing on October 1, 1998, and may at any time upon the
     occurrence of any event or change which in the reasonable judgment of such
     Supermajority Lenders would have a Material Adverse Effect or a material
     adverse change in the value or nature of the Oil and Gas Properties
     included in the Borrowing Base from the most recent redetermination
     pursuant to this Section 2.08 or upon the incurrence of additional
     Subordinated Indebtedness, of not less than $10,000,000, or upon a PAAI
     Transfer, redetermine the amount of the Borrowing Base in accordance with
     this Section 2.08.

     (S) 2.3.  Repayment of Term Loans.  Section 3.01(b) of the Original
               -----------------------
Agreement is hereby amended in its entirety to read as follows:

               (b)  The Company will repay the principal of the Term Loans in
     twelve installments payable on each Quarterly Date beginning October 1,
     2002, with the final installment being due and payable on or before July 1,
     2005. Each such installment shall be equal to one-twelfth of the original
     principal amount of the Term Loans as of the Revolving Credit Termination
     Date. In any event all unpaid principal and interest shall be due and
     payable in full on the final maturity of July 1, 2005. As set forth in
     Section 2.07(c), all optional and mandatory prepayments made on the Term
     Loans shall be applied to the scheduled installments in inverse order of
     their maturity.

     (S) 2.4.  Investments.  Section 8.10(f) of the Original Agreement is
               -----------
hereby amended in its entirety to read as follows:

               (f)  in addition to any capital contributions permitted in
     subsection (e) above, the following Investments in Unrestricted
     Subsidiaries: (i) capital contributions of up to $85,000,000 of the
     proceeds of any preferred or common stock of the Company issued after
     January 1, 1998; and (ii) any Investment represented by, or required to
     comply with the obligations undertaken under, the Stock Purchase Agreement
     described in Section 8.35(c).

                                       3
<PAGE>

     (S) 2.5.  Dividend Payments.  Section 8.11 of the Original Agreement is
               -----------------
hereby amended by (i) deleting the term "and" at the end of clause (a) thereof,
(ii) deleting the period at the end of clause (b) thereof and substituting
therefor ", and", and (iii) adding clause (c) at the end thereof, to read as
follows:

               (c)  one or more Dividend Payments in cash of up to $50,000,000,
     in the aggregate, to purchase, redeem, retire or otherwise acquire any
     shares of any one or more classes of stock of the Company, provided, (i) if
                                                                --------
     the affected class of stock requires that a notice be given or similar
     condition otherwise be met prior to its purchase, redemption, retirement or
     other acquisition, no Default existed on the date that any such notice was
     given or similar condition otherwise was met, or (ii) if the affected class
     of stock does not require that a notice be given or similar condition
     otherwise be met prior to its purchase, redemption, retirement or other
     acquisition, no Default has occurred and is then continuing.

     (S) 2.6.  Tangible Net Worth.  The reference to "$85,000,000" set forth
               ------------------
in clause (a) of Section 8.12 of the Original Agreement is hereby amended to
refer instead to "$85,000,000 minus all Dividend Payments made pursuant to
Section 8.11(c)".

     (S) 2.7.  New Borrowing Base.  Pursuant to Section 2.08 of the Credit
               ------------------
Agreement, Agent hereby notifies the Company that Supermajority Lenders have
redetermined the Borrowing Base as $225,000,000, effective for the period
beginning on and including the date hereof and continuing until but not
including the next date as of which the Borrowing Base is redetermined.

                  ARTICLE III. -- Conditions of Effectiveness
                                  ---------------------------

     (S) 3.1.  Effective Date.  This Amendment shall become effective as of
               --------------
the date first above written when and only when (i) Agent shall have received,
at Agent's office, a counterpart of this Amendment executed and delivered by the
Company and each Lender, and (ii) Agent shall have additionally received all of
the following documents, each document (unless otherwise indicated) being dated
the date of receipt thereof by Agent, duly authorized, executed and delivered,
and in form and substance satisfactory to Agent:

               (A)  Officer's Certificate. A certificate of a duly authorized
                    ---------------------
     officer of the Company to the effect that all of the representations and
     warranties set forth in Article IV hereof are true and correct at and as of
     the date thereof.

               (B)  Supporting Documents. Such supporting documents as Agent may
                    --------------------
     reasonably request.

                 ARTICLE IV. -- Representations and Warranties
                                ------------------------------

     (S) 4.1.  Representations and Warranties of the Company.  In order to
               ---------------------------------------------
induce Agent and Lenders to enter into this Amendment, the Company represents
and warrants to Agent and Lenders that:

                                       4
<PAGE>

          (a)  The representations and warranties contained in Section 7 of the
     Original Agreement, are true and correct at and as of the time of the
     effectiveness hereof, except to the extent that such representation or
     warranty was made as of a specific date or updated, modified or
     supplemented as of a subsequent date with the consent of Majority Lenders,
     subject to (i) the amendment of certain of the Schedules to the Credit
     Agreement as attached hereto and (ii) in regard to the penultimate sentence
     of Section 7.02, the Unauthorized Trading Losses, as referred to in the
     Company's annual report on Form 10-K for the year ended December 31, 1999.
     No Default has occurred and is continuing.

          (b)  The Company and the Subsidiaries are duly authorized to execute
     and deliver this Amendment and the other Amendment Documents to the extent
     a party thereto, and the Company is and will continue to be duly authorized
     to borrow and perform its obligations under the Credit Agreement. The
     Company and the Subsidiaries have duly taken all corporate action necessary
     to authorize the execution and delivery of this Amendment and the other
     Amendment Documents, to the extent a party thereto, and to authorize the
     performance of their respective obligations thereunder.

          (c)  The execution and delivery by the Company and the Subsidiaries of
     this Amendment and the other Amendment Documents, to the extent a party
     thereto, the performance by the Company and the Subsidiaries of their
     respective obligations hereunder and thereunder, and the consummation of
     the transactions contemplated hereby and thereby, do not and will not
     conflict with any provision of law, statute, rule or regulation or of the
     certificate or articles of incorporation and bylaws of the Company or any
     Subsidiary, or of any material agreement, judgment, license, order or
     permit applicable to or binding upon the Company or any Subsidiary, or
     result in the creation of any lien, charge or encumbrance upon any assets
     or properties of the Company or any Subsidiary, except in favor of Agent
     for the benefit of Lenders.  Except for those which have been duly
     obtained, no consent, approval, authorization or order of any court or
     governmental authority or third party is required in connection with the
     execution and delivery by the Company or any Subsidiary of this Amendment
     or any other Amendment Document, to the extent a party thereto, or to
     consummate the transactions contemplated hereby and thereby.

          (d)  When this Amendment and the other Amendment Documents have been
     duly executed and delivered, each of the Basic Documents, as amended by
     this Amendment and the other Amendment Documents, will be a legal and
     binding instrument and agreement of the Company and the Subsidiaries, to
     the extent a party thereto, enforceable in accordance with its terms,
     (subject, as to enforcement of remedies, to applicable bankruptcy,
     insolvency and similar laws applicable to creditors' rights generally and
     to general principles of equity).

                          ARTICLE V. -- Miscellaneous
                                        -------------

     (S) 5.1.  Ratification of Agreements.  The Original Agreement, as hereby
               --------------------------
amended, is hereby ratified and confirmed in all respects.  The Basic Documents,
as they may be amended or affected by this Amendment and/or the other Amendment
Documents, are hereby ratified and confirmed in all respects.  Any reference to
the Credit Agreement in any Basic Document shall be deemed to refer to this
Amendment also.  The execution, delivery and effectiveness of this

                                       5
<PAGE>

Amendment and the other Amendment Documents shall not, except as expressly
provided herein or therein, operate as a waiver of any right, power or remedy of
Agent or any Lender under the Credit Agreement or any other Basic Document nor
constitute a waiver of any provision of the Credit Agreement or any other Basic
Document.

     (S) 5.2.  Ratification of Security Documents.  The Company, Agent and
               ----------------------------------
Lenders each acknowledge and agree that any and all indebtedness, liabilities or
obligations arising under or in connection with the Notes are Obligations and is
secured indebtedness under, and is secured by, each and every Security Document
to which the Company is a party.  The Company hereby re-pledges, re-grants and
re-assigns a security interest in and lien on every asset of the Company
described as collateral in any Security Document.

     (S) 5.3.  Survival of Agreements.  All representations, warranties,
               ----------------------
covenants and agreements of the Company herein and in the other Amendment
Documents shall survive the execution and delivery of this Amendment and the
other Amendment Documents and the performance hereof and thereof, including
without limitation the making or granting of each Loan, and shall further
survive until all of the Obligations are paid in full.  All statements and
agreements contained in any certificate or instrument delivered by the Company
or any Subsidiary hereunder, under the other Amendment Documents or under the
Credit Agreement to Agent or any Lender shall be deemed to constitute
representations and warranties by, or agreements and covenants of, the Company
under this Amendment and under the Credit Agreement.

     (S) 5.4.  Basic Documents.  This Amendment and each of the other
               ---------------
Amendment Documents is a Basic Document, and all provisions in the Credit
Agreement pertaining to Basic Documents apply hereto and thereto.

     (S) 5.5.  GOVERNING LAW.  THIS AMENDMENT AND THE OTHER AMENDMENT
     ----------------------------------------------------------------
DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
-------------------------------------------------------------------------------
STATE OF NEW YORK AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA IN ALL
--------------------------------------------------------------------------------
RESPECTS, INCLUDING CONSTRUCTION, VALIDITY AND PERFORMANCE.
-----------------------------------------------------------

     (S) 5.6.  Counterparts.  This Amendment and each of the other Amendment
               ------------
Documents may be separately executed in counterparts and by the different
parties hereto in separate counterparts, each of which when so executed shall be
deemed to constitute one and the same Amendment or Amendment Document, as the
case may be.

     IN WITNESS WHEREOF, this Amendment is executed as of the date first above
written.

                              PLAINS RESOURCES INC.

                              By: /s/ Phil Kramer
                                 --------------------------------------------
                                 Phil Kramer, Executive Vice President

                                       6
<PAGE>

                              FIRST UNION NATIONAL BANK,
                              as Agent, LC Issuer and a Lender

                              By: /s/ Robert R. Wetteroff
                                 -------------------------------------------
                                 Robert R. Wetteroff, Senior Vice President

                              FLEET NATIONAL BANK
                              (f/k/a BankBoston, N.A.), Lender

                              By: /s/ Terrence Ronan
                                 -------------------------------------------
                                 Terrence Ronan, Director

                              BANK OF AMERICA, N.A., Lender

                              By: /s/ Irene C. Rummel
                                 -------------------------------------------
                                 Name:  Irene C. Rummel
                                 Title: Vice President

                              WELLS FARGO BANK (TEXAS),
                              NATIONAL ASSOCIATION, Lender

                              By: /s/ John B. Lane
                                 -------------------------------------------
                                 Name:  John B. Lane
                                 Title: Vice President

                              CHASE BANK OF TEXAS, N.A., Lender

                              By:  /s/ Russell Johnson
                                 -------------------------------------------
                                 Name:  Russell Johnson
                                 Title: Vice President

                              COMERICA BANK-TEXAS, Lender

                              By: /s/ Martin W. Wilson
                                 -------------------------------------------
                                 Martin W. Wilson, Vice President

                                       7
<PAGE>

                              MEESPIERSON CAPITAL CORP., Lender

                              By: /s/ Darrell W. Holley
                                 -------------------------------------------
                                 Name:  Darrell W. Holley
                                 Title: Managing Director

                              By: /s/ Richard Herrick
                                 -------------------------------------------
                                 Name:  Richard Herrick
                                 Title: Senior Vice President

                              BANK OF SCOTLAND, Lender

                              By: /s/ Annie Glynn
                                 -------------------------------------------
                                 Name:  Annie Glynn
                                 Title: Senior Vice President

                              U.S. BANK NATIONAL ASSOCIATION, Lender

                              By: /s/ Monte E.. Deckerd
                                 -------------------------------------------
                                 Name:  Monte E. Deckerd
                                 Title: Vice President

                              HIBERNIA NATIONAL BANK

                              By: /s/ David R. Reid
                                 -------------------------------------------
                                 Name:  David R. Reid
                                 Title: Senior Vice President

                              GENERAL ELECTRIC CAPITAL CORPORATION

                              By: /s/ Paul A. Jordan
                                 -------------------------------------------
                                 Name:  Paul A. Jordan
                                 Title: Portfolio Manager

                                       8
<PAGE>

                             CONSENT AND AGREEMENT
                             ---------------------

     Each of the undersigned Subsidiary Guarantors hereby consents to the
provisions of this Amendment and the transactions contemplated herein and hereby
(i) acknowledges and agrees that any and all indebtedness, liabilities or
obligations arising under or in connection with the Notes are Obligations and
are secured indebtedness under, and are secured by, each and every Security
Document to which it is a party, (ii) re-pledges, re-grants and re-assigns a
security interest in and lien on all of its assets described as collateral in
any Security Document, (iii) ratifies and confirms its Amended and Restated
Guaranty dated May 22, 1998 made by it for the benefit of Agent and Lenders, and
(iv) expressly acknowledges and agrees that such Subsidiary Guarantor guarantees
all indebtedness, liabilities and obligations arising under or in connection
with the Notes pursuant to the terms of such Amended and Restated Guaranty, and
agrees that its obligations and covenants thereunder are unimpaired hereby and
shall remain in full force and effect.

                      PLAINS RESOURCES INTERNATIONAL INC.
                      STOCKER RESOURCES, INC.
                      PLAINS ILLINOIS INC.

                      By: /s/ Phil Kramer
                          ----------------------------------------------
                          Phil Kramer, Executive Vice President

                      STOCKER RESOURCES, L.P.

                      By:  Stocker Resources, Inc.,
                           its General Partner

                           By: /s/ Phil Kramer
                               -----------------------------------------
                               Phil Kramer, Executive Vice President

                                       9
<PAGE>

     The undersigned Subsidiary Guarantor hereby consents to the provisions of
this Amendment and the transactions contemplated herein and hereby (i)
acknowledges and agrees that any and all indebtedness, liabilities or
obligations arising under or in connection with the Notes are Obligations and
are secured indebtedness under, and are secured by, each and every Security
Document to which it is a party, (ii) re-pledges, re-grants and re-assigns a
security interest in and lien on all of its assets described as collateral in
any Security Document, (iii) ratifies and confirms its Guaranty dated July 1,
1999 made by it for the benefit of Agent and Lenders, and (iv) expressly
acknowledges and agrees that such Subsidiary Guarantor guarantees all
indebtedness, liabilities and obligations arising under or in connection with
the Notes pursuant to the terms of such Guaranty, and agrees that its
obligations and covenants thereunder are unimpaired hereby and shall remain in
full force and effect.

                                 ARGUELLO INC.

                                 By: /s/ Tim Moore
                                    ------------------------------
                                     Name:  Tim Moore
                                     Title: Vice President

                                       10

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