Document:

EXHIBIT 10.1

                                 LEASE AGREEMENT

            THIS LEASE AGREEMENT, made this 31st day of January, 2000 by and
between JAMES JAGODZINSKI d/b/a JAGODZINSKI PROPERTIES ("Landlord") and
MEDAMICUS, INC., a Minnesota corporation ("Tenant");

WITNESSETH THAT:

1. DEFINITIONS. For purposes of this Lease Agreement the following words or
phrases shall have the following meanings:

      "Building". That certain office/warehouse building situated at the
      following described address: 15301 Highway 55 West, Plymouth, Minnesota
      55447 (the "Building").

      "Leased Premises". That portion of the Building containing approximately
      31,337 square feet measured from the exterior surface of the exterior
      walls to the center of the interior walls.

      "Rentable Area". Approximately 31,337 square feet, being the sum of the
      square footage contained in the Leased Premises including Tenant's
      proportionate share of the common areas such as lobbies, entry ways,
      toilets, hallways, loading docks and mechanical rooms that Tenant shares
      in common with other tenants.

      "Tenant's Percentage". Sixty-eight and six-tenths percent (68.6%) being
      the percentage of the total area of the Building contained within the
      Rentable Area.

2. DEMISE AND PREMISES. Subject to the terms and conditions hereof, Landlord
leases to Tenant, and Tenant hires and takes of and from Landlord the Leased
Premises.

3. TERM. The Term of this Lease shall commence on June 1, 2000, and shall
terminate on May 31, 2005, unless earlier terminated as hereinafter provided.

4. BASE RENT. Tenant agrees to pay Landlord, at 15301 Highway 55 West, Plymouth,
Minnesota 55447, or such other place as Landlord may from time to time designate
in writing, an initial monthly base rent of $14,187.00 per month, subject to
adjustment as provided in paragraph 29 below, payable in advance on the first
day of each month during the term of this Lease without demand therefore or
deduction or set off. In the event the commencement date of this Lease falls on
a date other than the first day of the month, the rent payable for the first
month shall be adjusted on a pro rata basis and shall be payable on or before
the commencement date.

5. ADDITIONAL RENT. Tenant agrees to pay to Landlord as additional rent
hereunder payable at the same time and location as the base rent, the following:

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      (a)   Taxes and Special Assessments. Tenant's Percentage is sixty-eight
            and six-tenths percent (68.6%) of combined annual real estate taxes
            and installments of special assessments payable with respect to the
            Building and the real estate upon which it is situated (whether or
            not the same are levied or pending) on the date hereof. Tenant will
            receive a copy of annual tax and special assessment statement and
            Tenant shall pay its pro rata share on a monthly basis concurrent
            with Base Rental Payments. Real estate taxes are currently estimated
            to be $1.70 per square foot.

      (b)   Common Area Maintenance (Operating Expenses) - The Tenant's
            Percentage is sixty-eight and six-tenths percent (68.6%) of the
            total operating expenses for the Building and the real estate upon
            which it is situated. For purposes of this Lease, operating expenses
            shall mean all costs which, for federal tax purposes, may be
            expensed rather than capitalized and which Landlord will incur in
            owning, maintaining and operating the Building and real estate
            including, but not by way of limitation, charges for cutting,
            fertilizing and maintaining grass, shrubbery and trees, roofs,
            downspouts, sewer, water; management fees, building insurance,
            scheduled HVAC maintenance, sprinkler alarm system, plumbing and
            other utility service (gas and electric) to the Building and grounds
            payable by Landlord; cleaning, maintaining, repairing, resurfacing
            and snow removal of driveways and parking areas; lighting, sodding,
            planting,; operating and policing the grounds. Operating expenses
            shall not include depreciation or interest or principal payments on
            any mortgage or encumbrance on the Building or real estate.
            Currently, operating expenses and common area maintenance charges
            are approximately $.80 per square. Common area maintenance
            (operating expenses) charges shall be payable monthly concurrent
            with Base Rental Payments and shall be $25,069.60 or $2,089.13 per
            month.

6. SERVICE AND UTILITIES. Tenant agrees that it shall pay all costs incurred in
operating maintaining and repairing all heating, ventilating, air conditioning,
plumbing and other utility systems serving the Leased Premises in as good order
and condition as they were at the outset of the Lease, provided that Landlord
warrants the condition of and will repair or replace all HVAC, plumbing,
electrical and other systems during the first thirty (30) days of the Lease in
that area not previously occupied by Tenant prior to the commencement of this
lease. Tenant agrees to pay all charges for heat, air conditioning and utility
services furnished to the Leased Premises during the term of this Lease
including, but not by way of limitation, gas, electric, sewer, water, telephone,
sprinkler alarm system and rubbish removal. Payments for utility services shall
be paid by Tenant directly to the appropriate utility authorities, when due, if
such utility authorities permit or accept direct payment. If any HVAC unit
should require replacement due to normal wear and tear or as caused by Acts of
God, during the term of the Lease, Landlord shall pay for the cost of such
replacement. Landlord's service technician shall determine replacement needs,
but in any case in which repair estimates exceed 50% of replacement costs, the
unit shall be replaced and the cost shall be Landlords.

      All payments to be made by Tenant pursuant to this Section 6 shall be in
addition to payments for repair, maintenance and utility services furnished to
the grounds and common areas and payable by Landlord which are included in the
operating expenses to be paid by Tenant. Landlord shall not be liable for
failure to furnish, or for delay or suspension in furnishing, lighting, heat,
air conditioning, water service or other utilities if such failure or suspension
is caused by breakdown, maintenance, repairs, strikes, scarcity of labor or
materials, acts of third parties or causes beyond Landlord's control.

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7. USE OF PREMISES. Tenant agrees that it will use and occupy the Leased
Premises solely for office/warehouse and processing purposes. Tenant will not
use or occupy the Leased Premises for any unlawful purpose and will comply with
all present and future laws, ordinances, regulations and orders of all
governmental units having jurisdiction over the Leased Premises. Tenant shall
not cause or permit any unusual noise, odors or nuisance in or about the Leased
Premises and the Building and grounds nor shall Tenant permit any debris,
property or merchandise of Tenant, its officers, employees or agents to be
placed or left upon the grounds. Tenant, its officers and employees shall
observe all reasonable rules and regulations adopted by landlord for the general
safety, comfort and convenience of landlord, Tenant and other Tenants including
the reasonable assignment of parking spaces for the exclusive use of Tenant or
other tenants of landlord in the Building. Landlord disclaims any warranty that
the premises are suitable for Tenant's use and Tenant acknowledges that it has
had full opportunity to make its own determination in this regard.

      Tenant warrants that the operation of its business will not be harmful to
the Building or the mechanical equipment within the Building and Tenant shall be
liable in the event of damage arising from such harmful operation. In the event
Landlord's insurance premiums are increased above the standard building rate as
a result of Tenant's use of the Leased Premises, Tenant will pay to Landlord as
additional rent the amount of such increase.

      In the event Tenant shall cause or permit any unusual noise, odor or
nuisance or the storage of any debris, property or merchandise of Tenant, its
officers, employees or agents, in or about the Leased Premises, Building or
grounds in violation of the terms of this Section 7, and has not corrected the
condition within a reasonable time after written notice from the Landlord of the
violation, Landlord will be entitled to take any steps it deems reasonably
necessary to correct or remove such violation and Tenant shall pay Landlord, as
additional rent hereunder, all costs and expenses incurred in such correction or
removal including all costs and expenses incurred in ascertaining which Tenant
is responsible for such violation.

8. ASSIGNMENT AND SUBLETTING. Tenant will not assign, transfer, mortgage or
encumber its interest in this Lease, nor sublet, rent, nor permit occupancy or
use of the Leased Premises, or any part thereof by any third party, nor shall
any assignment or transfer of this Lease be effectuated by operation of law or
otherwise, without in each such case obtaining the prior written consent of
Landlord. Landlord's consent will not be unreasonably withheld. Tenant shall
seek such consent of Landlord by a written request, setting forth such
information as Landlord may deem necessary. The consent by Landlord to any
assignment or subletting shall not be construed as a waiver or release of Tenant
from the terms of any covenant or obligation under this Lease, nor shall the
collection or acceptance of rent from any transferee under an assignment
constitute an acceptance of the assignment or a waiver or release of Tenant from
any covenant or obligation contained in this Lease, nor shall any assignment be
construed to relieve Tenant from the requirement of obtaining the consent in
writing of Landlord of any further assignment or subletting. No assignment or
sublease or other transfer of this Lease shall be effective unless the assignee,
sub-lessee or transferee shall at the time of such assignment, sublease or
transfer, assume in writing, all of the terms, covenants and conditions of this
Lease to be performed by Tenant.

      Whether or not Landlord has consented to an assignment or sublease, Tenant
shall pay directly to Landlord the amount by which the rent or other payments
received by Tenant pursuant to such assignment or sublease exceeds, in any
month, the base rent and additional rent payable by Tenant to landlord
hereunder. Should the Tenant improve its space (at its own expense) which is
then assigned or subleased to a third party at a rental rate higher than tenant
is paying landlord under this lease or any future lease or extension of this
lease, Tenant shall have the right to keep the difference between rent it pays
to Landlord and rent it collects from the third party until tenants expense for
improvements are amortized. Tenant shall he allowed to add interest at prime
rate plus two (2) percent to its cost of improvements on behalf of such third
party. Interest rate shall be prime rate plus 2% (two percent) set on the date
of first day of construction of said improvements.

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9. SUBORDINATION. Tenant agrees that this Lease is subject and subordinate to
the lien of all first mortgages which may now or hereafter encumber the Building
or real estate and to all renewals, extensions, modifications or re-financings
thereof. Tenant shall, at Landlord's request, promptly execute any reasonable
certificate or other document requested by any first mortgagee. Tenant agrees
that in the event that any proceedings are brought for the foreclosure of any
first mortgage, Tenant shall attorn to the purchaser, at such foreclosure sale,
if requested to do so by such purchaser and Tenant waives the provisions of any
statute or rule of law, now or hereafter in effect, which may give or purport to
give Tenant any right to terminate or otherwise adversely affect this Lease and
the obligations of Tenant hereunder in the event that any such foreclosure
proceeding is prosecuted or completed. Notwithstanding anything to the contrary
in this Lease, this Lease shall remain in full force and effect and the
mortgagee shall not disturb Tenant's possession hereunder.

10. SALE OR MORTGAGE OF THE BUILDING. In the event of a sale of the Building,
Landlord shall be relieved of all liability under this Lease accruing from and
after the date of sale, provided Landlord has obtained the written agreement of
its transferee or assignee to assume and carry out all of the covenants and
obligations of the Landlord hereunder.

      The Tenant agrees at any time and from time to time, upon not less than
ten (10) days prior written request by Landlord, to execute, acknowledge and
deliver to Landlord a statement in writing certifying that the Lease is not
modified (or if modified, stating the modification) that the Lease is in full
force and affect, stating the dates to which the base rent and additional rents
have been paid in advance and stating whether the Landlord is in default
hereunder. It is intended that any such statement may be relied upon by any
prospective purchaser of the fee or mortgagee or assignee of any mortgage upon
the Building or real estate.

11. TENANT INSURANCE. Tenant agrees that it shall purchase in advance and carry
the following insurance at its own expense: (a) fire and extended coverage
insurance insuring Tenant's personal property, furniture, trade fixtures,
inventory, business record and leasehold improvements against loss from all
insurable events for the full replacement value thereof; (b) insurance against
interruption of Tenant's business activities; and (c) comprehensive liability
insurance covering all acts of Tenant, its employees, agents, representatives
and guests and insuring against all claims arising from injury to persons or
damage to property in or about the Leased Premises, Building or real estate in a
single limit amount of not less than $500,000.00 for personal injury or death
and not less than $100,000.00 for property damage and fire legal liability.

      All such insurance shall name Landlord as an additional insured and shall
provide for thirty (30) days written notice to Landlord prior to cancellation,
non-renewal or material modification. Certificates of all such insurance shall
be delivered to Landlord prior to occupancy of the premises by Tenant and at
least thirty (30) days prior to the termination date of any existing policy.
Tenant shall pay to Landlord, upon demand, as additional rent the cost of
securing such insurance in the event Tenant fails to furnish certificates of
insurance to Landlord. However, it is not Landlord's duty nor obligation to
secure such insurance for Tenant.

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12. FIRE OR OTHER CASUALTY. If the Leased Premises or the Building shall be
damaged or destroyed by fire or other cause, without the fault or neglect of
Tenant, Landlord may (taking into account the time necessary to effectuate a
satisfactory settlement with any insurance company) undertake to repair such
damage at its own expense, provided, however, in the event the Leased Premises
or the Building are damaged by fire or other cause to such extent that the
damage cannot, in the Landlord's sole judgment, be economically repaired within
a reasonable time after the date of such damage, Landlord shall have the option,
by notice given to Tenant within ninety (90) days of the date of the damage, to
terminate this Lease as of the date of the damage. This Lease shall, unless
terminated by Landlord pursuant to this Section 12, remain in full force and
effect following such damage, and the Base Rent and additional rent, prorated to
the extent that the Leased Premises are rendered untenantable, shall be
equitably abated until such repairs are completed. If the destruction or damage
was wholly or partially caused by negligence or breach of the terms of this
Lease by Tenant, its officers, agents or employees, the rent shall not abate and
the Tenant shall remain liable for the same.

13. CONDEMNATION. If the whole or any part of the Leased Premises shall be taken
or condemned or purchased under threat of condemnation by any governmental
authority, then the Term of this Lease shall cease and terminate as of the date
when the interference with possession, enjoyment or value of the Leased Premises
occurs and Tenant shall have no claim against the condemning authority, Landlord
or otherwise for any portion of the amount that may be awarded as damages as a
result of such taking or condemnation or for the value of any unexpired Term of
this Lease, provided, however, that Landlord shall not be entitled to any award
made to Tenant for loss of business or the fair value of and the cost of removal
of stock and trade fixtures. In the event part of the Building, but not the
Leased Premises, is condemned to the extent that it cannot, in Landlord's sole
judgment, be economically restored within a reasonable time, Landlord shall have
the option, by notice given to Tenant within ninety (90) days of the date of
interference with possession, to terminate this Lease as of the date of such
interference with possession.

14. ALTERATIONS AND SIGNS. Tenant will not make or permit anyone to make any
alterations, decorations, additions or improvements, structural or otherwise
with a cost in excess of $1,000, in or to the Leased Premises or the Building
without the prior written consent of Landlord, except as set forth in Section
29. Any alterations shall be out of identical or improved building materials and
construction methods as was used in original structure. As a condition precedent
to written consent of Landlord hereunder, Tenant agrees to obtain and deliver to
Landlord such security against mechanic's liens as Landlord shall reasonably
request. If any mechanic's lien is filed against any part of the Building or
real estate for work claimed to have been done for or labor or materials claimed
to have been furnished to or authorized by Tenant, such mechanic's lien shall be
discharged by Tenant within ten (10) days thereafter, at Tenant's sole cost and
expense, by the payment and satisfaction thereof or by filing any bond required
or permitted by law. Should Tenant fail to obtain the discharge of any such
mechanic's lien within ten (10) days of the filing thereof, Landlord shall be
entitled to obtain such discharge by whatever reasonable means Landlord deems
expedient, and all costs incurred by Landlord in obtaining such discharge
including reasonable attorneys fees, shall be paid by Tenant as additional rent
hereunder.

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      All alterations, decorations, additions or improvements in or to the
Leased Premises or the Building made by either party shall immediately become
the property of Landlord and shall remain upon and be surrendered with the
Leased Premises as a part thereof at the end of the term hereof without
disturbance, molestation or injury; provided, however, that if Tenant is not in
default in the performance of any of its obligations under this Lease, and
further provided that if any and all damage resulting therefrom be repaired,
Tenant shall have the right to remove at its own expense, prior to the
expiration or termination of the term of this lease, all movable furniture,
trade fixtures and manufacturing equipment installed in the Leased Premises,
provided such removal is completed with no damage to the Leased Premises or the
Building.

      Tenant shall have the right to remodel any existing monument signs at
Tenant's expense, subject to the approval by the City of Plymouth, other
building tenants, and Landlord. Tenant agrees not to place or maintain any sign,
advertisement or notice on any part of the outside or the inside of the Building
without Landlord's prior written approval. Any such approved use shall be at the
sole expense and cost of Tenant.

15. WAIVER OF SUBROGATION. Notwithstanding any other provision in this Lease to
the contrary, Landlord and Tenant hereby release one another, their respective
officers, agents, partners and employees, from any and all liability or
responsibility (to the other or anyone claiming through or under them by way of
subrogation or otherwise) for any loss or damage covered by casualty insurance
actually carried or coverable by the insurance required by Section 11 hereof.

16. WAIVER AND INDEMNITY. Tenant agrees that Landlord, its officers, agents,
partners and employees shall not be liable to Tenant or those claiming through
or under Tenant for any injury, death or property damage occurring in, on or
about the Leased Premises, the Building or grounds. Without limitation of the
foregoing, Landlord shall not be liable to Tenant for any damage, compensation
or claims arising from: loss or damage to books, records, files, money,
securities, negotiable instruments or other papers in or about the Leased
Premises; the necessity of repairing any portion of the Building; the
interruption in the use of the Premises; accident or damage resulting from the
use or operation by Landlord, Tenant, or any other person or persons whatsoever
of elevators, or heating, cooling, electrical or plumbing equipment or
apparatus; the termination of this Lease by reason of the destruction or
condemnation of the Leased Premises; any fire, robbery, theft, or any other
casualty; any leakage or bursting of pipes or water vessels or any roof or wall
leakage, in any part or portion of the leased Premises or the Building; water,
rain, snow or underground water that may leak into, flow on, or flow from, any
part of the Leased Premises or the Building.

      Tenant agrees to indemnify and hold harmless Landlord from and against all
claims of whatever nature arising or resulting from any act, omission or
negligence of Tenant, its officers, employees and agents in or about the Leased
Premises, Building or grounds or in connection with its use of the Leased
Premises and to indemnify and hold harmless Landlord against all costs, expenses
and liabilities, including reasonable attorneys fees, incurred in connection
with any such claim or proceeding brought thereon, and the defense thereof.

<PAGE>

17. REPAIRS. Tenant shall put, keep, repair and maintain the Leased Premises at
all times in a good, neat, clean and sanitary condition and state of repair,
reasonable wear and tear excepted, free of debris and other similar
obstructions, and shall repair and replace broken plate and window glass and
damage caused by the negligence or intentional act of Tenant, its officers,
employees and agents. Tenant shall allow Landlord access to the Leased Premises
during all reasonable hours to make repairs required to be made by Tenant which
Tenant fails or refuses to make, and shall pay Landlord as additional rent the
cost of such repairs made for Tenant by Landlord. Landlord shall make all
necessary repairs to the outer walls, roof, and structural elements of the
Building. Landlord shall keep the plumbing, sewage, heating, air conditioning,
electrical and ventilating systems of the Building outside the perimeter of the
Leased Premises in good repair, ordinary wear and tear and casualty damage
covered by insurance excepted. Landlord shall maintain and keep the common
areas, grounds, driveways and parking areas in a neat and clean condition.
Notwithstanding the foregoing, any cost of repairs or improvements to the
Building, to the Leased Premises or to any common areas which are occasioned by
the negligence or default of Tenant, its officers, employees, agents or
invitees, or by requirements of law, ordinance or other governmental directive
and which arise out of the nature of Tenant's use and occupancy of the Leased
Premises or the installations of Tenant in the Leased Premises shall be paid for
by Tenant, as additional rent hereunder, immediately upon billing unless covered
by Landlord's Insurance.

18. ENTRY AND INSPECTION. Tenant shall permit Landlord, its agents or
representatives to enter the Leased Premises to examine and inspect the same or,
with Tenant's written permission, to make such alterations, renovations or
repairs to the Leased Premises or the Building as Landlord may deem necessary or
desirable, or to exhibit the Leased Premises to prospective Tenants during the
last ninety (90) days of the term of this Lease or to prospective purchasers at
any time during the term, upon reasonable notice during normal business hours.

19. MAINTENANCE. Tenant shall keep the Leased Premises, and the fixtures and
equipment therein, in good, safe and sanitary condition, will suffer no waste or
injury thereto and will, at the expiration or termination of the term of this
Lease, surrender the same with all walls, carpets and other improvements in the
same order and condition as on the commencement date of this Lease, ordinary
wear and tear and casualty damage covered by insurance excepted.

20. IMPROVEMENTS. Tenant agrees that it has had ample opportunity to inspect the
Leased Premises, and agrees to take the same on an "as is" basis and agrees that
Landlord shall not be obligated to do any work in the Leased Premises. The
taking of possession of the Leased Premises or renewal of this Lease by Tenant
shall be conclusive evidence that the Leased Premises and the Building are in
good and satisfactory condition at the time of such taking of possession or
renewal, (Subject to Paragraph 6).

21. WAIVER. No waiver by either party of any breach of any covenant, condition
or agreement herein contained shall operate as a waiver of such covenant,
condition, or agreement itself, or of any subsequent breach thereof. No payment
by Tenant or receipt by Landlord of a lesser amount than the monthly
installments of rent herein stipulated shall be deemed to be other than on
account of the earliest stipulated rent nor shall any endorsement or statement
on any check or letter accompanying a check for payment of rent be deemed an
accord and satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance of such rent, to terminate
this Lease, to repossess the Leased Premises or to pursue any other remedy
provided in this Lease. No re-entry by Landlord, and no acceptance by Landlord
of keys from Tenant, shall be considered an acceptance of a surrender of the
Lease.

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22. COVENANTS OF LANDLORD. Landlord covenants that it has the right to make this
Lease for the term aforesaid and covenants that if Tenant shall pay the rent and
perform all of the covenants, terms and conditions of this Lease to be performed
by Tenant, Tenant shall, during the term of this Lease freely, peaceably and
quietly occupy and enjoy the full possession of the Leased Premises without
molestation or hindrance.

23. DEFAULT.

      (a)   Any one of the following events shall constitute an Event of
            Default:

            (i)   Tenant shall fail to pay any monthly installment of Base Rent
                  or additional rent as herein provided

            (ii)  Tenant shall violate or fail to perform any of the other
                  terms, covenants or conditions of this Lease and such default
                  shall continue for thirty (30) days after notice from
                  Landlord;

            (iii) Tenant shall file or have filed against it or any guarantor of
                  this Lease any bankruptcy or other creditor's action, or make
                  an assignment for the benefit of its creditors.

            (iv)  Tenant shall vacate all or a substantial portion of the Leased
                  Premises, whether or not Tenant is in default of the payments
                  due under this Lease.

      (b)   If an Event of Default shall have occurred and be continuing,
            Landlord may at its sole option by written notice to Tenant
            terminate this Lease. Neither the passage of time after the
            occurrence of the Event of Default nor exercise by Landlord or any
            other remedy with regard to such Event of Default shall limit
            Landlord's right under this Paragraph 23 (b).

      (c)   If an Event of Default shall have occurred and be continuing,
            whether or not Landlord elects to terminate this Lease, Landlord may
            enter upon and repossess the Leased Premises (said repossession
            being hereinafter referred to as "Repossession") by force, summary
            proceedings, ejectment or otherwise, and may remove Tenant and all
            other persons and property therefrom.

      (d)   From time to time after Repossession of the Leased Premises, whether
            or not this Lease has been terminated, Landlord may attempt to relet
            the Leased Premises for the account of Tenant in the name of
            Landlord or otherwise, for such term or terms (which may be greater
            or less than the period which would otherwise have constituted the
            balance of the Term) and for such terms (which may include
            concessions or free rent) and for such uses as Landlord, in its sole
            and unqualified discretion, may determine, and may collect and
            receive the rent therefor. Landlord shall not be responsible or
            liable for any failure to collect any rent due upon any such
            reletting.

<PAGE>

      (e)   No termination of this Lease pursuant to paragraph 23 (b) and no
            Repossession of the Leased Premises pursuant to paragraph 23(c) or
            otherwise shall relieve Tenant of its liabilities and obligations
            under this Lease, all of which shall survive any such termination or
            Repossession.

            In the event of any such termination or Repossession, whether or not
            the Leased Premises shall have been relet, Tenant shall pay to
            Landlord the Base Rent and other sums and charges to be paid by
            Tenant up to the time of such termination or Repossession, and
            thereafter Tenant, until the end of what would have been the term in
            the absence of such termination or Repossession, shall pay to
            Landlord, as and for liquidated and agreed current damages for
            Tenant's default, the equivalent of the amount of the Base Rent,
            additional rent and such other sums and charges which would be
            payable under this Lease by Tenant if this Lease were still in
            effect, less the net proceeds, if any, of any reletting effected
            pursuant to the provisions of paragraph 23(d) after deducting all of
            Landlord's expenses in connection with such reletting, including
            without limitation, all repossession costs, brokerage and management
            commissions, operating expenses, legal expenses, reasonable
            attorneys' fees, alteration costs, and expenses of preparation for
            such reletting. Tenant shall pay such current damages to Landlord
            monthly on the days on which the Base Rent would have been payable
            under this Lease if this Lease were still in effect, and Landlord
            shall be entitled to recover the same from Tenant on each such day.
            At any time, after such termination or Repossession, whether or not
            Landlord shall have collected any current damages as aforesaid,
            Landlord shall be entitled to recover from Tenant, and Tenant shall
            pay to Landlord on demand, as and for liquidated and agreed final
            damage for Tenant's default, an amount equal to the then present
            worth of the excess of the Base Rent and other sums or charges
            reserved under this Lease from the day of such termination or
            Repossession for what would be the then unexpired term if the same
            had remained in effect, over the then net fair rental value of the
            Leased Premises for the same period.

      (f)   If an Event of Default shall have occurred and Landlord places in
            the hands of an attorney the enforcement of all or any of the terms,
            covenants, agreements or conditions of this Lease, the collection of
            any rent due or to become due, or the recovery of possession of the
            Leased Premises, Tenant agrees to reimburse Landlord, as additional
            rent hereunder, for Landlord's reasonable attorneys fees, together
            with the actual cost of maintaining any action commenced in law or
            equity by said attorneys for the services of the attorneys, whether
            suit is actually filed or not. Such reimbursement shall be payable
            within thirty (30) days of demand therefor.

24. SURRENDER. Tenant shall surrender the Leased Premises to Landlord upon
termination of this Lease, whether such termination occurs at the end of the
lease term or sooner, together with all utility systems, improvements,
replacements, alterations and decorations thereto and operating bulbs or tubes
in all light fixtures, broom clean and in good order, condition and repair
except for ordinary wear and tear. Tenant shall remove promptly, upon request by
Landlord, alterations, modifications and the like to the Leased Premises made by
Tenant, or on behalf of Tenant, and not consented to by Landlord, and shall
restore and repair damage caused by such removal. Should Tenant fail to
surrender the Leased Premises in the condition required by this section,
Landlord shall be entitled to take whatever steps may, in Landlord's sole
discretion, be required to restore the Leased Premises to said condition and
Tenant agrees that it shall pay to Landlord all costs incurred by Landlord in so
restoring the premises.

<PAGE>

25. HOLDING OVER. Should the Tenant continue to occupy the Leased Premises, or
any part thereof, after the expiration or termination of the Term of this Lease
whether with or against the consent of the Landlord, such Tenancy shall be from
month to month and Tenant shall pay Landlord the additional rent set forth in
Section 5 plus two times the Base Rent set forth in Section 4 during the entire
period that Tenant continues to so occupy the Leased Premises after the term of
this Lease.

26. LATE PAYMENT. Other remedies for nonpayment of rent notwithstanding and
without prejudice to such remedies, if Tenant fails to pay the monthly base
rent, additional rent or any other payment due hereunder within the seven days
immediately following the date on which such payment is due, Tenant shall pay
the following amounts to Landlord as additional rent hereunder:

      (a)   Interest on all such past due payments at the rate of one and
            one-half % per month or at the maximum rate permitted by law
            whichever rate is lower. Interest shall accrue from the date each
            such late-payment became due and shall be payable to the date of
            payment thereof by Tenant;

      (b)   A service charge equal to the costs actually incurred by Landlord as
            a result of Tenant's failure to make payments due hereunder
            including, but not limited to, reasonable attorney's fees and costs
            incurred in the collection or attempted collection of such past due
            amounts.

27. HAZARDOUS SUBSTANCES/ENVIRONMENTAL REGULATIONS. Tenant warrants and
represents that: (a) its use of the Leased Premises and the operation of its
business thereon shall not violate any law, statute, ordinance, rule,
regulation, order or determination of any governmental authority pertaining to
hazardous substances, toxic waste, asbestos, health or the environment
(hereinafter if sometimes collectively called "Environmental Regulations")
including, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 ("CERCLA'1), as amended by the Superfund
Amendments and Reauthorization Act of 1986 ("SARA") (collectively "CERCLA/SARA")
and the Resource Conservation and Recovery Act of 1976 (1'RCRA") and the
Minnesota Environmental Response and Liability Act ("MERLA"); (b) Tenant has
obtained and shall continue to maintain all permits, licenses or similar
authorizations required by Environmental Regulations to conduct its business on
the Leased Premises; and (c) Tenant's use of the Leased Premises will not result
in the disposal or release of any hazardous substance, toxic waste, asbestos or
other substance regulated by Environmental Regulations on or about the Leased
Premises, Building or the real property on which it is situated. In the event
Tenant1 its officers, agents or employees shall breach or fail to perform any of
the warranties and representations contained in this Section: (d) upon notice
from Landlord, Tenant shall remove from the Leased Premises, Building or real
property on which it is situated, at Tenant's sole expense, any hazardous
substance, toxic waste, asbestos or other substance regulated by Environmental
Regulations introduced by Tenant which is not in compliance with Environmental
Regulations or this Lease; (e) Landlord and such Environmental Engineers as it
may employ shall be entitled to enter upon the Leased Premises for the purpose
of conducting such environmental audits or similar tests as Landlord may deem
necessary and the cost and expense of such environmental audits or tests
incurred by Landlord shall be paid by Tenant as additional rent hereunder with
the next installment of base rent; and (e) Tenant shall protect, indemnify and
save Landlord harmless from all costs, fines, claims, demands, actions,
proceedings, judgments and damages, including court costs and reasonable
attorneys' fees, resulting from or arising out of any breach or non-performance
by Tenant of the representations and warranties contained in this Section
including, without limitation, the cost of removal or remediation of any
disposal, release or contamination on or about the Leased Premises, Building or
the real property on which it is situated. It is expressly acknowledged by
Tenant that all of the terms, covenants and conditions of this paragraph
pertaining to Environmental Regulations including, but not by way of limitation,
the indemnifications herein provided shall survive the termination of this
Lease.

<PAGE>

28. BASE RENT ADJUSTMENT On June 1, 2002, and on subsequent yearly anniversary
dates of this Lease, including any renewal term thereof, the monthly base rent
may be adjusted by the increase in the Consumers Price Index of the Bureau of
Labor Statistics of the U.S. Department of Labor for All Urban Consumers,
Minneapolis-St. Paul Metropolitan Area, "All-Items Index", herein referred to as
"C.P.I.U".

29. TENANT IMPROVEMENTS. Landlord will provide Tenant a remodeling allowance up
to an amount not to exceed $150,000. The allowance shall be used for, but not
limited to: (1) new paint, wallpaper, floor tile replacement and bathroom and
office upgrades to Tenant's existing space, and (2) upgrade of new space to
Tenant's specifications. Tenant shall use contractors satisfactory to Landlord.
Tenant shall provide invoices of completed work to Landlord and Landlord shall
promptly pay each invoice according to the terms of the invoice.

      Tenant agrees to commence repayment to Landlord of all disbursed amounts,
with interest on the unpaid balance calculated at 8% per annum, and amortized
over the remaining life of the Lease, exclusive of renewal periods. Payments
will commence concurrent with the payment of monthly rent on the first of the
month following Landlords disbursement. Tenant shall have the right to prepay
the outstanding balance of this loan at any time.

30. EXPANSION SPACE. If Tenant is not in default under the terms of this Lease,
Tenant shall have an option to lease part or all of any space in the Building
which is or becomes available during the Lease term. Should such an expansion
space become available for rent, Landlord or Landlord's agent shall notify
Tenant in writing and Tenant shall have thirty (30) days to notify Landlord or
Landlord's agent in writing whether or not it intends to exercise this option.
Should Tenant elect to exercise the option, Tenant and Landlord shall enter into
a mutually acceptable agreement for the lease of the expansion space within
thirty (30) days after Tenant's notice of its intent to exercise the option.
Should Landlord and Tenant be unable to reach an agreement within that thirty
(30) day period, Tenant's option shall expire and become null and void.

31. OPTION TO RENEW. If Tenant is not in default under the terms of this Lease,
Landlord shall grant Tenant the option to renew the term of this Lease for three
(3) successive one-year periods. Tenant shall have deemed to have exercised the
next one-year option to extend the term of this lease unless if one hundred
eighty (180) days prior to the termination of the initial term of this Lease or
the then current extended term of this Lease, as the case may be, Tenant gives
written notice to Landlord of its intention to terminate this Lease at the end
of the initial term or the then current renewal term, as the case may be. Said
extended term shall be upon all of the terms and condition contained herein.

<PAGE>

32. MISCELLANEOUS.

      (a)   All notices or other communications hereunder shall be in writing
            and shall be hand delivered or sent by first class United States
            mail to the following address:

            Landlord:                                Tenant:
            --------                                 ------
            James Jagodzinski d/b/a Jagodzinski      MedAmicus, Inc
             Properties                              15301 Highway 55 W
            100 Gideon Point Road                    Plymouth, Minnesota 55447
            Tonka Bay, Minnesota 55331

            Mailed notice shall be effective the day following the day of
            mailing;

      (b)   This Lease Agreement is made and executed in the State of Minnesota,
            and shall be constructed according to the laws of Minnesota;

      (c)   The invalidity or unenforceability of any provision of this
            agreement shall not affect or impair the validity of any other
            provisions; and section titles and captions in this Agreement are
            for convenience only and do not define, limit or construe the
            contents of such paragraphs;

      (d)   If more than one person or entity shall sign this Lease as Tenant,
            the obligations set forth herein shall be deemed joint and several
            obligations of each such party;

      (e)   This Lease shall be binding upon and inure to the benefit of the
            parties thereto and, subject to the restrictions and limitations
            herein contained, their respective heirs, successors and assigns.

IN WITNESS WHEREOF, the parties hereto have executed this Lease Agreement as of
the day and year so indicated below.

JAMES JAGODZINSKI d/b/a                   MEDAMICUS, INC.
JAGODZINSKI PROPERTIES

                                          By:
----------------------------------            ----------------------------------
James Jagodzinski
                                          Its:
                                               ---------------------------------

Date:                                     Date:
      ----------------------------              --------------------------------<PAGE>

                                                               EXHIBIT 10.1

                     EIGHTH AMENDED AND RESTATED REVOLVING

                                CREDIT AGREEMENT

                                     Among

                         GULF ISLAND FABRICATION, INC.,
                                  AS BORROWER,

                              GULF ISLAND, L.L.C.,

                            DOLPHIN SERVICES, INC.,

                        VANGUARD OCEAN SERVICES, L.L.C.,

                                SOUTHPORT, INC.,
                           AS EXISTING SUBSIDIARIES,

                   BANK ONE, LOUISIANA, NATIONAL ASSOCIATION,

                                      AND

                             WHITNEY NATIONAL BANK,
                                   AS BANKS,

                                      AND

                   BANK ONE, LOUISIANA, NATIONAL ASSOCIATION
                                    AS AGENT

                     Dated effective as of January 1, 2000
<PAGE>

                     EIGHTH AMENDED AND RESTATED REVOLVING
                                CREDIT AGREEMENT

     THIS EIGHTH AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT (the
"Agreement"), dated effective as of the 1st day of January, 2000, by and among
GULF ISLAND FABRICATION, INC., a Louisiana corporation ("Borrower"), GULF
ISLAND, L.L.C., a Louisiana limited liability company ("Gulf Island
Subsidiary"), DOLPHIN SERVICES, INC., a Louisiana corporation ("Dolphin"),
SOUTHPORT, INC., a Louisiana corporation ("Southport"), VANGUARD OCEAN SERVICES,
L.L.C., a Louisiana limited liability company ("VOS" and together with Gulf
Island Subsidiary, Dolphin, and Southport, each an "Existing Subsidiary" and,
collectively, the "Existing Subsidiaries"), WHITNEY NATIONAL BANK, a national
banking association ("Whitney"), BANK ONE, LOUISIANA, N.A., a national banking
association, in its individual capacity ("Bank One") (each of Whitney and Bank
One being sometimes referred to individually as a "Bank" and collectively as the
"Banks"), and BANK ONE, LOUISIANA, N.A., a national banking association, in its
capacity as agent for Banks as set forth hereinafter (the "Agent").

                                   RECITALS:

     A.  Borrower, Dolphin, Southport, Banks, and Agent entered into that
certain Seventh Amended and Restated Revolving Credit and Term Loan Agreement,
dated effective as of August 21, 1998 (the "Credit Agreement") which amended and
restated the then existing credit arrangements among Borrower, Dolphin,
Southport, Banks and Agent.  Borrower, Dolphin, Southport, Banks,  and Agent
entered into that certain First Amendment to Seventh Amended and Restated
Revolving Credit Agreement dated effective as of June 23, 1999 (the "First
Amendment").

                                       1
<PAGE>

     B.  Since the date of the First Amendment, Borrower has created Gulf Island
Subsidiary and VOS as new Subsidiaries.

     C.  Contemporaneously herewith and with the consent of Banks and Agent,
Borrower has contributed substantially all of its corporeal operating assets to
Gulf Island Subsidiary.

     D.  Borrower, Banks and Agent desire to amend and restate their existing
credit arrangements in order, among other reasons, to acknowledge Borrower's
transfer of its operating assets to Gulf Island Subsidiary, to permit Borrower
to begin to implement its business plan for VOS, and to add Gulf Island
Subsidiary and VOS as parties to the Credit Agreement.

     NOW, THEREFORE, for and in consideration of the mutual covenants,
agreements and undertakings herein contained, Borrower, the Existing
Subsidiaries, Banks and Agent hereby agree as follows:

     Section 1.  Relation to Prior Credit Arrangements.  Subject to the terms
and conditions hereof, each Bank severally agrees that Borrower's obligations as
evidenced by the Credit Agreement, as amended by the First Amendment (as so
amended, the "Prior Credit Agreement")  and the notes issued thereunder
(together with all other notes previously issued to evidence the Revolving
Credit Facility, the "Prior Notes")  shall be modified and restated in their
entirety on the terms and conditions set forth herein.  To the extent there is
any conflict between the Prior Credit Agreement and this Agreement or the Prior
Notes and the Notes, the provisions of this Agreement and the Notes shall
govern.  To the extent this Agreement or the Notes is or are silent on any
matter or provision contained in the Prior Credit Agreement or the Prior Notes,
such matter or provision of the Prior Credit Agreement or the Prior Notes shall
be deemed to be revoked.  Borrower,

                                       2
<PAGE>

the Existing Subsidiaries and Banks acknowledge and agree that (i) the
modification and restatement of the Obligations under the terms and conditions
set forth herein do not constitute a payment, prepayment or novation of the
Obligations evidenced by the Prior Credit Agreement and the Prior Notes and (ii)
the Obligations continue to be secured by the Existing Security with the
original rank and priority thereof.

     1.1 Revolving Credit Facility. Banks shall make available to Borrower a
revolving line of credit (the "Revolving Credit Facility") in the maximum
principal amount of TWENTY MILLION AND NO/100 DOLLARS ($20,000,000) (as modified
pursuant to Section 4.4 below, the "Revolving Commitment"), which Revolving
Credit Facility may be drawn upon by Borrower on any Business Day of Banks
during the period from the date hereof until and including December 31, 2001, or
such earlier date as may be fixed by Borrower on at least one (1) Business Day's
telephonic notice to Agent, to be confirmed in writing by Borrower, in the form
of the issuance by Banks on behalf of and for the account of Borrower or one of
its Subsidiaries, other than the Excluded Subsidiaries, of irrevocable stand-by
letters of credit in the form provided for by, and containing such terms and
conditions as are acceptable to Banks and in such amounts as Borrower may from
time to time request (each such letter of credit, as well as any letters of
credit issued pursuant to and in accordance with the Prior Credit Agreement or
any predecessor agreement which remain outstanding on the date hereof, being
hereinafter referred to individually as a "Letter of Credit" and collectively as
the "Letters of Credit") or in the form of actual fundings to Borrower by Banks
in such amounts as Borrower may from time to time request (each such funding, as
well as the aggregate amount of the Prior Notes previously funded by Banks and
outstanding on the date hereof, being

                                       3
<PAGE>

hereinafter referred to individually as an "Advance" and collectively as the
"Advances"), so long as (a) the aggregate principal amount of all Letters of
Credit outstanding at any one time does not exceed the LC Commitment and (b) the
aggregate principal amount of all Letters of Credit and of all Advances
outstanding at any one time does not exceed the Revolving Commitment. The
Revolving Commitment available to Borrower and its Subsidiaries, other than the
Excluded Subsidiaries, from time to time under the Revolving Credit Facility
shall be reduced by the aggregate of the face amount of any outstanding Letters
of Credit and of all unpaid Advances made by Banks to Borrower pursuant to this
Agreement and the remaining amount of the Revolving Commitment shall constitute
the "Unused Commitment". Any draws made under the Letters of Credit by the
beneficiaries thereof shall constitute Advances as defined in this Agreement. If
a draw is made under a Letter of Credit issued for the account of a Subsidiary,
Borrower shall immediately reimburse Banks for the full amount of such draw. The
Unused Commitment available under the Revolving Credit Facility shall be
restored but simultaneously reduced by the amount of any Advances which are made
to Borrower to reimburse Banks for draws under the Letters of Credit. No
Subsidiary shall be entitled to actual fundings by Banks under the Revolving
Commitment, and all Letters of Credit issued on behalf of Subsidiaries shall
only be issued at Borrower's request. The Excluded Subsidiaries shall not be
entitled to have Letters of Credit issued in their names.

     1.2 Borrowing Procedure Under the. Agent shall receive at least one (1)
Revolving Credit Facility Business Day's prior telephonic notice from Borrower
(to be confirmed in writing by Borrower) of each proposed Letter of Credit and
of each LIBO Rate Advance to be issued under the Revolving Credit Facility. If
notice is received by

                                       4
<PAGE>

Agent by 1:00 p.m., New Orleans time, Borrower may obtain a Prime Rate Advance
under the Revolving Credit Facility on the same Business Day Borrower requests
such Prime Rate Advance by telephonic notice (to be subsequently confirmed in
writing by Borrower). If all conditions precedent to the issuance of any such
Letter of Credit or any such Advance have been met, Agent will, without any
further consent or approval from Banks, or either one of them, on the date
requested make each Letter of Credit or Advance available to Borrower at Agent's
office at 201 St. Charles Avenue, New Orleans, Louisiana 70170, and each Letter
of Credit or Advance shall be shared equally by Banks.

     1.3 Terms and Conditions Governing. The terms and conditions governing the
Letters of Credit issuance of Letters of Credit by Banks on behalf of and for
the account of Borrower and its Subsidiaries, other than the Excluded
Subsidiaries (which shall not be entitled to have Letters of Credit in their
names), shall be provided for by Agent in its standard form of Application for
Stand-By Letter of Credit, a copy of which is attached hereto as Exhibit "A",
with appropriate insertions and such additional terms and conditions governing
the issuance of specific Letters of Credit as may be agreed upon by Borrower and
Agent at the time of Borrower's request to Agent for the issuance thereof. All
such Applications for Letters of Credit to be issued on behalf of a Subsidiary
shall be executed by an authorized officer of such Subsidiary, as applicant, and
shall also be executed by an authorized officer of Borrower, in Borrower's
capacity as guarantor. Upon Agent's issuance of a Letter of Credit, one-half
(1/2) of the amount of such Letter of Credit shall automatically be deemed to
have been provided by Whitney, and, without the necessity of further
documentation transferring an interest in the Letter of Credit to

                                       5
<PAGE>

Whitney, Whitney shall possess a one-half ( 1/2) interest in all rights and
obligations accruing to and incurred by Agent with respect to such Letter of
Credit. Whitney shall record its one-half ( 1/2) share of any draws on the
Letter of Credit on the schedule attached to its Revolving Note as provided in
Section 2.1 below.

     1.4 Liability of Subsidiaries. Although Borrower shall be the sole entity
to receive actual fundings under the Revolving Credit Commitment, Borrower and
each of its Subsidiaries, other than the Excluded Subsidiaries, shall be liable
in solido to the Banks for all Advances made by Banks to Borrower under this
Agreement and for all obligations with respect to Letters of Credit issued under
the Revolving Credit Commitment. Each Subsidiary other than the Excluded
Subsidiaries shall execute and deliver the Continuing Subsidiary Guaranty to the
Agent on behalf of the Banks in the form attached as Exhibit "B" (the
"Guaranty"). Borrower shall promptly notify Agent of Borrower's creation or
acquisition of any new Subsidiary after the effective date of this Agreement and
shall cause such new Subsidiary to sign a continuing guaranty and such
documentation as Agent requests to make such new Subsidiary a party to this
Agreement. Until such new Subsidiary signs the requested documentation, Banks
shall not issue any Letters of Credit on behalf of such new Subsidiary.

     1.5 Obligations Absolute. Although Borrower and its Subsidiaries, other
than the Excluded Subsidiaries, are liable in solido for the payment and
performance of all Obligations pursuant to Section 1.4, the obligations of each
Subsidiary, other than the Excluded Subsidiaries, shall, with respect to all
Obligations under this Agreement other than the repayment of any draws under
Letters of Credit issued in such Subsidiary's name, be deemed those of a
guarantor, and the Obligations of Borrower shall, with

                                       6
<PAGE>

respect to the repayment of draws on Letters of Credit issued in a Subsidiary's
name, likewise be deemed those of a guarantor. Each party's liability for the
Obligations, whether as a primary obligor or as a guarantor, is, however,
absolute and shall not be affected by, modified or impaired upon the happening
from time to time of any event, including, without limitation, any of the
following, whether or not such event shall occur with notice to, or the consent
of, the party affected: (i) the waiver, surrender, compromise, settlement,
discharge, release or termination of any portion of the Obligations, (ii) the
bankruptcy, other insolvency, dissolution or liquidation of any other party
liable on the Obligations, (iii) the discharge or release of any other party
liable on the Obligations from its liability to pay or perform such Obligations
(whether with Banks' consent or otherwise), (iv) the release of any Collateral
securing the Obligations, (v) Banks' taking or failing to take any action
referred to in any Loan Document, or any other documents executed in connection
therewith or evidencing any other portion of the Obligations or (vi) any
failure, omission, delay or lack of diligence on the part of Banks in the
enforcement, assertion or exercise of any right, power or remedy conferred on
Banks in any Loan Document, or any other documents executed in connection
therewith or evidencing any portion of the Obligations, or the inability of
Banks to enforce any provision of any such documents or Obligations for any
other reason, or any other act or omission on the part of Banks.

Section 2.  Notes Evidencing Borrowings.

     2.1 Notes. The Advances (including, without limitation, the outstanding
indebtedness of Borrower to Banks under the Prior Notes which, as provided in
Section 1.1, shall be deemed an "Advance" hereunder) shall be evidenced by two
(2) promissory

                                       7
<PAGE>

notes of Borrower payable to the order of Bank One and Whitney, respectively,
each in the original principal amount of TEN MILLION AND NO/100 DOLLARS
($10,000,000) and in the forms set forth as Exhibits "C" and "D" to this
Agreement (each such note, together with any and all renewals, modifications,
extensions, amendments, supplements and/or substitutions therefor, being
sometimes referred to herein individually as a "Note" and collectively as the
"Notes"), with appropriate insertions, each of which shall be dated the date
hereof and shall be payable in full on December 31, 2001. All Advances made by
Banks to Borrower pursuant to this Agreement and all payments of principal shall
be recorded by Banks on the schedule attached to each Note, but Banks' failure
to record or to record correctly such Advances shall in no way affect Borrower's
obligation to repay same.

     2.2 No Novation. The execution and delivery of the Notes shall not
constitute a payment, prepayment or novation of the obligations of Borrower
heretofore evidenced by the Prior Notes, but does constitute a renewal and
restatement of the Prior Notes in their entirety.

I. Section 3. Interest and Fees.

     3.1 Interest -- Revolving Credit Facility. In the absence of an Event of
Default, the unpaid principal of the Notes shall bear interest until paid at the
Prime Rate, adjusted daily, or the LIBO Rate, or some combination thereof, as
specified in Section 3.6 below. Interest prior to maturity shall be payable
quarterly in arrears on the last day of each March, June, September and December
commencing March 31, 2000, and continuing until maturity. Interest after
maturity of the Notes for any reason whatsoever shall be increased to the Prime
Rate plus three percent (3%) and shall be payable

                                       8
<PAGE>

on demand. Upon the issuance of a Letter of Credit by Agent on behalf of and for
the account of Borrower or one of its Subsidiaries, a fee of one percent (1%)
per annum on the principal amount of such Letter of Credit shall be payable by
Borrower for the number of days such Letter of Credit is to remain outstanding.
A fee on the Unused Commitment of three-sixteenths (3/16) of one percent (1%)
per annum shall be payable by Borrower quarterly in arrears on the last day of
each March, June, September and December commencing March 31, 2000, and
continuing until maturity.

     3.2 Default Rate. If an Event of Default shall occur in the payment on or
before the due date of any principal or interest due hereunder or under any of
the other Loan Documents, including, without limitation, the Notes, Borrower
will pay interest thereon (retroactively) from the date of the Event of Default
on such payment up to the date of the actual payment (as well after as before
judgment) at the Prime Rate plus three percent (3%) (the "Default Rate"),
without regard to whether there has been an acceleration of the payment of
principal. Such interest at the Default Rate shall be payable on demand.

     3.3 Prime Rate. "Prime Rate" means a rate per annum equal to the prime rate
of interest announced from time to time by the Agent or its parent (which is not
necessarily the lowest rate charged to any customer), changing when and as said
Prime Rate changes.

     3.4 Origination Fee. No origination fee shall be payable by Borrower.

     3.5 Method of Calculating Interest and Fees. Interest at the Prime Rate and
any fee shall be computed on the basis of a year consisting of 365 days and paid
for

                                       9
<PAGE>

actual days elapsed, and interest at the LIBO Rate shall be computed on the
basis of a year consisting of 360 days.

     3.6 Interest Rate Options. Until an Event of Default occurs, Borrower shall
have the following interest rate options:

          (a) Advances to Borrower under the Revolving Credit Facility may from
     time to time be (i) LIBO Rate Advances, (ii) Prime Rate Advances, or (iii)
     any combination thereof, as determined by Borrower with respect to its
     Advances and noticed to Agent in accordance with paragraphs (b), (c), and
     (d) below; provided that no Advance shall be made to Borrower as a LIBO
     Rate Advance under the Revolving Credit Facility after the day that is one
     month prior to the Termination Date. For purposes of this paragraph (a), an
     Advance shall be deemed "made" upon an initial borrowing by Borrower under
     paragraph (b) below, any conversion of such Advance under paragraph (c)
     below, and upon any continuation of such Advance under paragraph (d) below.

          (b) With respect to any new Advance, Borrower shall provide Agent with
     telephonic notice of its intended borrowing, which notice for LIBO Rate
     Advances must be received by Agent prior to 10:00 A.M., New Orleans time,
     at least one (1) Business Day prior to the requested Borrowing Date and for
     Prime Rate Advances must be received by Agent prior to 1:00 p.m., New
     Orleans time, on the Business Day for which the Prime Rate Advance is
     requested, and which notice shall specify (i) the amount to be borrowed,
     (ii) the requested Borrowing Date, (iii) whether the borrowing is to be of
     LIBO Rate Advances or Prime Rate Advances or a combination thereof, (iv)
     the respective amounts of each such type

                                       10
<PAGE>

     of Advance, and (v) if the borrowing is to be entirely or partly of LIBO
     Rate Advances, the respective lengths of the Interest Periods therefor.

          (c) Borrower may elect from time to time to convert any of its LIBO
     Rate Advances to Prime Rate Advances by giving Agent telephonic notice of
     such election, which notice must be received by Agent prior to 10:00 A.M.,
     New Orleans time, at least one (1) Business Day prior to the requested
     conversion; provided that any such conversion, of LIBO Rate Advances shall
     only be made on the last day of an Interest Period with respect thereto.
     Borrower may elect from time to time to convert any of its Prime Rate
     Advances to LIBO Rate Advances by giving Agent telephonic notice of such
     election, which notice must be received by Agent prior to 10:00 A.M., New
     Orleans time, at least one (1) Business Day prior to the requested
     conversion. Any such notice of conversion to LIBO Rate Advances shall
     specify the length of the initial Interest Period thereof and the amount of
     the Prime Rate Advance to be converted. All or any part of Borrower's
     outstanding LIBO Rate Advances and Prime Rate Advances may be converted as
     provided herein; provided that (i) no Prime Rate Advance may be converted
     into a LIBO Rate Advance when any Event of Default has occurred and is
     continuing, (ii) partial conversions of Prime Rate Advances to LIBO Rate
     Advances shall be in an aggregate principal amount of $500,000 or a whole
     multiple of $100,000 in excess thereof, (iii) partial conversions of LIBO
     Rate Advances to Prime Rate Advances shall be in an aggregate principal
     amount of $500,000 or a whole multiple of $100,000 in excess thereof, (iv)
     no Prime Rate Advance under the Revolving Credit Facility may be converted
     into a LIBO Rate Advance after the date that is one month prior to the
     Termination Date, and (v) any such conversion may only be made if, after
     giving effect thereto, paragraph (e) shall not have been contravened.

                                       11
<PAGE>

          (d) Any LIBO Rate Advances may be continued as such upon the
     expiration of an Interest Period with respect thereto by Borrower giving
     Agent telephonic notice, which notice must be received by Agent prior to
     10:00 A.M., New Orleans time, at least one (1) Business Day prior to the
     requested continuation; provided, that (i) no LIBO Rate Advance may be
     continued as such when any Event of Default has occurred and is continuing,
     (ii) no LIBO Rate Advances under the Revolving Credit Facility may be
     continued as such after the date which is one month prior to the
     Termination Date, and (iii) any such continuation shall be made only if,
     after giving effect thereto, paragraph (e) shall not be contravened. If
     Borrower shall fail to give such notice or if such continuation is not
     permitted, then Borrower shall be deemed to have requested that the LIBO
     Rate Advance be converted automatically to a Prime Rate Advance on the last
     day of the then current Interest Period with respect thereto.

          (e) All borrowings, conversions and continuations of Advances
     hereunder by Borrower and all selections of Interest Periods hereunder by
     Borrower shall be in such amounts and be made pursuant to such elections so
     that, after giving effect thereto, the aggregate principal amount of the
     Advances to Borrower constituting each LIBO Rate tranche (i.e., LIBO Rate
     Advances made on the same day and having the same Interest Period) shall be
     equal to $500,000 or a whole multiple of $100,000 in excess thereof. If
     Borrower has no Prime Rate Advances outstanding, Borrower may have a
     maximum of five (5) LIBO Rate tranches in aggregate in effect at any one
     time, and, if Borrower has Prime Rate Advances outstanding, Borrower may
     have a maximum of four (4) LIBO Rate tranches in aggregate in effect at any
     one time.

          (f) Each determination of an interest rate by Agent pursuant to any
     provision of this Agreement shall be conclusive and binding on Borrower in
     the absence of manifest error.  Agent shall, at the request of Borrower,
     deliver to

                                       12
<PAGE>

     Borrower a statement showing the quotations used by Agent in determining
     the LIBO Rate.

          (g) If prior to the first day of any Interest Period, Agent shall have
     determined (which determination shall be conclusive and binding upon
     Borrower) that either:

          (i)  adequate and reasonable means do not exist for ascertaining the
               LIBO Rate for such Interest Period; or

          (ii) the interest rate determined for such Interest Period does not
               adequately and fairly reflect the cost to Banks (as conclusively
               certified by Agent) of making, maintaining or funding their LIBO
               Rate Advances during such Interest Period, in either case with
               respect to (i) proposed Advances that Borrower has requested be
               made as LIBO Rate Advances, (ii) LIBO Rate Advances that will
               result from the requested conversion of Prime Rate Advances  into
               LIBO Rate Advances, or (iii) the continuation of LIBO Rate
               Advances beyond the expiration of the then current Interest
               Period with respect thereto;

     Agent shall give telephonic notice thereof to Borrower as soon as
     practicable thereafter.  Unless Borrower notifies Agent upon receipt of
     such notice that it wishes to rescind or modify its request, Agent shall
     arrange that (x) any affected LIBO Rate Advances requested by Borrower
     shall be made as Prime Rate Advances, (y) any Prime Rate Advances to
     Borrower that were to have been converted to LIBO Rate Advances shall be
     continued as, or converted to, Prime Rate Advances, and (z) all outstanding
     LIBO Rate Advances to Borrower shall be converted, on the last day of the
     then current Interest Period with respect thereto, to Prime Rate Advances.
     Until such notice has been withdrawn by Agent, no further LIBO Rate
     Advances shall be made to Borrower, nor shall Borrower have the right to
     convert Prime Rate Advances to LIBO Rate Advances.

          (h) Notwithstanding any other provision in this Agreement, if the
     adoption of or any change in any law or regulation or in the interpretation
     or application thereof (whether or not having the force of law) shall make
     it unlawful

                                       13
<PAGE>

     or impossible for Bank to make, maintain or fund LIBO Rate Advances as
     contemplated by this Agreement: (a) the commitment of Banks hereunder to
     make LIBO Rate Advances, continue LIBO Rate Advances as such and convert
     Prime Rate Advances to LIBO Rate Advances shall forthwith be cancelled; (b)
     the Advances then outstanding as LIBO Rate Advances, if any, shall be
     converted automatically to Prime Rate Advances on the respective last days
     of the then current Interest Periods with respect to such Advances or
     within such earlier period as required by law; and (c) Borrower shall pay
     Banks such amounts, if any, as may be required pursuant to paragraph (i)
     below.

          (i) Borrower agrees to indemnify Banks and to hold Banks harmless from
     any loss or expense which Banks may sustain or incur as a consequence of
     (a) the making by Borrower of a prepayment (whether mandatory or optional)
     or any other payment of a LIBO Rate Advance on a day which is not the last
     day of the Interest Period with respect thereto, and/or (b) the conversion,
     whether voluntary or involuntary, of a LIBO Rate Advance into a Prime Rate
     Advance pursuant to this Section 3.6 or otherwise on a day which is not the
     last day of an Interest Period with respect thereto, including, without
     limitation, in each case any such loss or expense arising from the
     reemployment of funds obtained by it to maintain its LIBO Rate Advances
     hereunder or from fees payable to terminate the deposits from which such
     funds were obtained. This covenant shall survive the termination of this
     Agreement and the payment of the Advances and all other obligations
     hereunder.

                                       14
<PAGE>

     Section 4. Payments, Prepayments, and Reduction or Termination of the
Revolving Credit Facility.

     4.1 Method of Payment. All payments of principal, interest and other
amounts to be made by Borrower under this Agreement or any of the Notes or other
Loan Documents shall be made to Agent for the account of Banks at Agent's office
at 201 St. Charles Avenue, New Orleans, Louisiana 70170 (or at such other
address as Agent or either of Banks may notify Borrower in writing), in
immediately available funds, without setoff, deduction or counterclaim, not
later than 2:00 p.m. (New Orleans, Louisiana time) on the date on which such
payment shall become due (each such payment made after such time on such due
date to be deemed to have been made on the next succeeding Business Day) and, in
the case of payments of principal under the Revolving Credit Facility, in an
amount of at least $100,000, or an integral multiple thereof. Borrower shall, at
the time of making each such payment, specify to Agent the sums payable by
Borrower under this Agreement, the Notes or other Loan Documents to which such
payment is to be applied. Notwithstanding the foregoing sentence, unless and
until an Event of Default shall have occurred and be continuing (in which event
such payments shall be applied by Agent as Banks in their sole discretion shall
determine), all payments received by Agent shall be applied first to the payment
of all amounts (except principal and interest) at the time due and unpaid
hereunder or under any of the other Loan Documents, then to interest hereon or
thereon accrued to the date of payment and finally to the unpaid principal
hereunder or thereunder. Whenever any payment under this Agreement, the Notes or
any other Loan Document shall be stated to be due on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in

                                       15
<PAGE>

such case be included in the computation of the payment of interest. Upon
receipt of each such payment, Agent shall make prompt payment within three (3)
Business Days to each Bank in like funds of all amounts received by Agent for
the account of such Bank.

     4.2 Sharing of Payments. Banks shall share equally all payments made
pursuant to this Agreement and the benefits of and from the Collateral and all
proceeds from the sale thereof. If either Bank shall receive at any time any
payment hereunder, or interest thereon, or receive any Collateral (or proceeds
thereof) in respect thereof (whether voluntarily or involuntarily, by setoff or
otherwise), or interest in any of the foregoing, in a greater proportion than
the other Bank (such Bank receiving the greater proportion being referred to
herein as the "Benefitted Bank"), such Benefitted Bank shall purchase for cash
from the other Bank such portion of such other Bank's Notes or Letters of
Credit, or shall provide such other Bank with the benefit of any such Collateral
or the proceeds thereof, as the case may be, as shall be necessary to cause such
Benefitted Bank to share the excess payment or benefits of such Collateral or
proceeds equally with the other Bank; provided, however, that if all or any
portion of such excess payment or benefits is thereafter recovered from such
Benefitted Bank, such purchases shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery. Borrower agrees that each
Bank so purchasing a portion of another Bank's Notes or Letters of Credit, as
the case may be, may exercise all rights of payment (including, without
limitation, rights of setoff) with respect to such portion as fully as if such
Bank were the direct holder of such portion.

     4.3 Payments Without Deduction. Borrower shall pay principal, interest and
other amounts under, and in accordance with the terms of, this Agreement, the
Notes and

                                       16
<PAGE>

the other Loan Documents free and clear of and without deduction for any and all
present and future taxes, levies, imposts, deductions, charges, withholdings and
all other liabilities whatsoever.

     4.4 Reduction of Credit. Subject to Section 3.6(i) above, Borrower may from
time to time, upon at least three (3) Business Day's prior telephonic notice
(confirmed in writing) to Agent, permanently reduce the amount of the maximum
Revolving Commitment available under the Revolving Credit Facility, but only
upon payment of the outstanding principal amount of each Note in excess of one-
half (1/2) of the then reduced amount of the maximum Revolving Commitment
available under the Revolving Credit Facility. Any such reduction of the
Revolving Commitment shall be in an amount of $100,000 or an integral multiple
thereof. Subject to Section 3.6(i) above, Borrower may at any time on like
notice terminate the entire Revolving Commitment available under the Revolving
Credit Facility upon payment in full of the Notes and other liabilities of
Borrower relating to the Revolving Credit Facility.

     Section 5. Representations and Warranties of Borrower.

     Borrower represents and warrants to Banks and Agent that:

     5.1 Corporate Existence. Each of Borrower and its Subsidiaries is a
corporation or limited liability company duly organized, validly existing and in
good standing under the laws of the state of its incorporation or organization;
and each of Borrower and its Subsidiaries has all necessary corporate or limited
liability company power and authority to acquire, own and hold the property and
all other properties it purports to own and hold and to carry on its business as
now conducted.

                                       17
<PAGE>

     5.2 Authorization; Validity. Each of Borrower and its Subsidiaries is
and/or has been duly authorized to execute and deliver this Agreement and all
other Loan Documents to which such Borrower or Subsidiary is a party and to
perform its obligations under this Agreement and all other Loan Documents to
which such Borrower or Subsidiary is a party. Borrower is duly authorized and
will continue to be duly authorized to borrow money hereunder. Upon receipt of
Borrower's approval, each Subsidiary, other than the Excluded Subsidiaries, is
duly authorized and will continue to be duly authorized to request the issuance
of Letters of Credit. Each of this Agreement and the other Loan Documents to
which Borrower or one of its Subsidiaries is a party, as executed and delivered,
constitutes the legal, valid and binding obligation of Borrower and/or such
Subsidiary, enforceable in accordance with the respective terms thereof.

     5.3 No Conflicts. The execution and delivery of the Loan Documents and the
performance by each of Borrower and its Subsidiaries of its obligations
thereunder do not and will not conflict with any provision of law or of the
articles of incorporation or organization, by-laws, or operating agreement, as
the case may be, of Borrower or such Subsidiary or of any agreement binding upon
Borrower or such Subsidiary, as the case may be.

     5.4 Financial Statements. Borrower's audited financial statement as of
December 31, 1998, a copy of which has been furnished to Banks, has been
prepared in conformity with GAAP applied on a basis consistent with that of the
preceding fiscal year and period, presents fairly the financial condition of
Borrower as of such date and the results of its operations for the periods then
ended. Borrower's unaudited financial statement as of September 30, 1999, a copy
of which has been previously furnished to

                                       18
<PAGE>

Banks has been prepared in conformity with GAAP and presents fairly the
financial condition of Borrower as of such date and the results of its
operations for the periods then ended. Since December 31, 1998, there has been
no material adverse change in Borrower's financial condition. Since December 31,
1998, there has been no material adverse change in the financial condition of
any of Borrower's Subsidiaries.

     5.5 Litigation. To the best of Borrower's knowledge, after due inquiry, no
litigation or governmental proceedings are pending or threatened against
Borrower or any of its Subsidiaries, the results of which might materially
affect Borrower's or such Subsidiary's financial condition or operations, except
those referred to in a schedule furnished contemporaneously herewith and
attached hereto as Schedule 1. Other than any liability incident to such
litigation or proceedings or provided for or disclosed in the financial
statements referred to in Section 5.4, Borrower does not have any material
contingent liabilities. No Subsidiary has any material contingent liability
other than those imposed by the Collateral Documents.

     5.6 Liens. None of the assets of Borrower or any of its Subsidiaries with a
net book value of greater than $250,000 is subject to any Lien, except for the
Liens created pursuant to the Collateral Documents and Permitted Liens.

     5.7 Subsidiaries. Other than the Excluded Subsidiaries, Borrower has no
Subsidiaries which are not parties to this Agreement.

     5.8 Purpose. The proceeds of the Revolving Credit Facility shall be used by
Borrower for general corporate purposes.

     5.9 Use of Proceeds; Margin. Borrower is not engaged in the business of
purchasing or selling margin stock Securities (as defined in Regulation U of the
Board of

                                       19
<PAGE>

Governors of the Federal Reserve System) or extending credit to others for the
purpose of purchasing or carrying margin stock and, notwithstanding Section 5.8
hereof, no part of the proceeds of any borrowing hereunder will be used to
purchase or carry any margin stock or for any other purpose which would violate
any of the margin regulations of such Board of Governors.

     5.10 Compliance with ERISA. Each of Borrower and its Subsidiaries is in
compliance with all statutes and governmental rules and regulations applicable
to it, including, without limitation, the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"). No condition exists or event or transaction
has occurred in connection with any plan, as defined in Sections 3(3) and 3(37)
of ERISA, maintained by Borrower or any of its Subsidiaries (any such plan being
hereinafter called the "Plan"), which could result in Borrower's or such
Subsidiary's incurring any material liability, fine or penalty. No Reportable
Event (as defined in ERISA) has occurred with respect to any such Plan. Neither
Borrower nor any of its Subsidiaries has withdrawn from any such Plan or
initiated steps to do so and no steps have been taken to terminate any such
Plan.

     5.11 Consents. No consent, approval or authorization of, or registration or
declaration with, any federal or state governmental authority or other
regulatory agent for the validity of the execution and delivery or for the
performance by Borrower or any of its Subsidiaries of the Loan Documents is
required.

     5.12 Tax Returns. Each of Borrower and its Subsidiaries has filed all tax
returns which are required to be filed by any jurisdiction, and has paid all
taxes which have become due pursuant to said returns or pursuant to any
assessments.

                                       20
<PAGE>

     5.13 Operation of Business. Each of Borrower and its Subsidiaries possesses
all licenses, permits, franchises, patents, copyrights, trademarks and trade
names, or rights thereto, to conduct its business substantially as now conducted
and as presently proposed to be conducted, and neither Borrower nor any of its
Subsidiaries is in violation of any valid rights of others with respect to any
of the foregoing.

     5.14 Rights in Properties; Liens. Each of Borrower and its Subsidiaries has
good and indefeasible title to its properties and assets, real and personal,
including the properties and assets reflected in the financial statements
described in Section 5.4 hereof, and none of the properties, assets or leasehold
interests of Borrower or any Subsidiary is subject to any Lien, except as
permitted by Section 6.11 hereof.

     5.15 Debt. Borrower has no Debt, except as disclosed in the financial
statements described in Section 5.4 hereof and as otherwise permitted by this
Agreement. No Subsidiary of Borrower has any Debt except as owed to Borrower or
as otherwise permitted by Section 6.12 of this Agreement.

     5.16 Disclosure. No statement, information, report, representation or
warranty made by Borrower or any of its Subsidiaries in this Agreement or in any
of the other Loan Documents or furnished by Borrower or any of its Subsidiaries
to Banks or Agent in connection with the negotiation or preparation of this
Agreement, or any amendment hereto, contains any untrue statement of a material
fact or omits to state any material fact necessary to make the statements herein
or therein not misleading. There is no fact known to Borrower or to any of its
Subsidiaries that has not been disclosed in writing to Banks which has a
material adverse effect, or which might in the future have a material

                                       21
<PAGE>

adverse effect, on the business, assets, financial condition or operations of
Borrower, any of its Subsidiaries or on the Collateral.

     5.17 Registered Office; Principal. The principal place of business, chief
executive office and registered office Place of Business; Location of Borrower
and the place where Borrower keeps its books and records and all of Collateral
Collateral owed by Borrower is in Terrebonne Parish, Louisiana. The principal
place of business, chief executive office and registered office of Gulf Island
Subsidiary and the place where Gulf Island Subsidiary keeps its books and
records and all Collateral owned by Gulf Island Subsidiary is located on the
Real Property. The principal place of business, chief executive office and
registered office of Dolphin Services and the place where Dolphin Services keeps
its books and records and all Collateral owned by Dolphin Services and
encumbered by the Collateral Documents is located in Terrebonne Parish,
Louisiana (with the exception of certain such Collateral which is, from time to
time and in the ordinary course of Dolphin Services' business, temporarily
located at job sites outside of Terrebonne Parish). Borrower has always
maintained its registered office in either Terrebonne or East Baton Rouge
Parish, Louisiana, and each of Dolphin Services and Gulf Island Subsidiary has
always maintained its registered office in Terrebonne Parish, Louisiana. No
Person other than Borrower, Dolphin Services, Gulf Island Subsidiary, Agent and
Banks has possession of any of the Collateral.

     5.18 Investment Company Act. Neither Borrower nor any of its Subsidiaries
is an "Investment Company" within the meaning of the Investment Company Act of
1940, as amended.

                                       22
<PAGE>

     5.19  Other Agreements.  With the exception of (i) construction contracts
entered into by Borrower or one of its Subsidiaries in the ordinary course of
Borrower's or such Subsidiary's business, and (ii) loan agreements, bond
indentures, promissory notes, and similar agreements and documents relating
solely to Permitted Debt incurred by VOS and solely binding upon VOS, neither
Borrower nor any of its Subsidiaries is a party to any indenture, loan or credit
agreement, or to any lease or other agreement or instrument, or subject to any
charter of corporate restriction which could have a material adverse effect on
the business, properties, assets, operations or conditions, financial or
otherwise, of Borrower or such Subsidiary, or the ability of Borrower or such
Subsidiary to pay and perform its obligations under the Loan Documents to which
it is a party.  Neither Borrower nor any of its Subsidiaries is in default in
any respect in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any agreement or instrument
material to its business to which it is a party.

     5.20  Compliance with Law.  Each of Borrower and its Subsidiaries is in
compliance with all laws, rules, regulations, orders and decrees which are
applicable to Borrower, its Subsidiaries or any of their respective properties.
Without limiting the generality of the foregoing:

          (a) Employment Matters. Each of Borrower and its Subsidiaries is in
     full compliance with all applicable laws, rules, regulations and
     governmental standards regarding employment, including, without limitation,
     the minimum wage and overtime provisions of the Fair Labor Standards Act,
     as amended (29 U.S.C. (S)(S) 201-219), and the regulations promulgated
     thereunder.

          (b)  Environmental Matters.

                                       23
<PAGE>

               (i)  Except as provided on Schedule II, Each of Borrower and its
                    Subsidiaries  and all of their respective properties, assets
                    and operations are in full compliance with all Environmental
                    Laws.  Neither Borrower nor any of its Subsidiaries is
                    aware of or has received notice of, any past, present or
                    future conditions, events, activities, practices or
                    incidents which may interfere with or prevent the compliance
                    or continued compliance of Borrower or any of its
                    Subsidiaries with all Environmental Laws.

               (ii) Once Borrower transfers all permits, licenses, and
                    authorizations relating to the Real Property to Gulf Island
                    Subsidiary, each of Borrower and its Subsidiaries has
                    obtained all permits, licenses and authorizations and has
                    filed all plans which are required under Environmental Laws
                    in order to conduct its business and/or own its properties
                    and assets including without limitation all Louisiana air
                    emission permits required under any Environmental Law in
                    order to conduct Borrower's or such Subsidiary's business
                    and/or own its assets or properties.

              (iii) Each of Borrower and its Subsidiaries has on file an SPCC
                    Plan as required under applicable Environmental Laws in
                    connection with Borrower's or any Subsidiary's storage of
                    petroleum on the Real Property.

               (iv) No Hazardous Substances or Solid Wastes exist on, about or
                    within or have been used, generated, stored, transported,
                    disposed of on, or released from any of the properties or
                    assets of Borrower or any of its Subsidiaries except in
                    compliance with Environmental Laws.

               (v)  There is no action, suit, proceeding, investigation or
                    inquiry before any court, administrative agency or other
                    governmental authority pending or, to the knowledge of
                    Borrower or any of its Subsidiaries, threatened against
                    Borrower or any of its Subsidiaries relating in any way to
                    any Environmental Law.  Neither Borrower nor any of its
                    Subsidiaries has (A) been notified of any liability

                                       24
<PAGE>

                    for remedial action under any Environmental Law, (B)
                    received any request for information by any governmental
                    authority with respect to the condition, use or operation of
                    any of its properties or assets, or (C) received any notice
                    from any governmental authority or other Person with respect
                    to any violation of or liability under any Environmental
                    Law.

     5.21 Corporate Name. The exact corporate name of Borrower as it appears in
its articles of incorporation is as set forth in the introduction of this
Agreement and, with the exception of doing business under the name GIFI, Inc.,
Borrower has never done any business in any location under any other name. The
exact limited liability company name of Gulf Island Subsidiary as it appears in
its articles of organization is as set forth in the recitals of this Agreement,
and Gulf Island Subsidiary has never done any business in any location in any
other name. The exact corporate name of Dolphin Services as it appears in its
articles of incorporation is as set forth in the recitals of this Agreement, and
Dolphin Services has never done any business in any location under any other
name.

     5.22 Collateral. The Collateral Documents create in favor of Banks, and/or
Agent for the benefit of Banks, valid, enforceable and perfected Liens on the
properties described therein, which Liens secure the payment and performance of
the obligations of Borrower and its Subsidiaries to Banks described in the
Collateral Documents, and which Liens are superior to the rights of all third
Persons, whether now existing or hereafter arising.

     Section 6. Borrower's Covenants.

     From the date of this Agreement and thereafter until the expiration or
termination of the Revolving Commitment, and until the Notes and other
liabilities of Borrower

                                       25
<PAGE>

hereunder are paid in full and all other obligations and liabilities under the
Loan Documents are performed and paid in full, Borrower agrees that it will:

     6.1  Financial Statements.  Furnish to Agent:

          (a) promptly after the sending or filing thereof, copies of all
     reports which Borrower sends to any of its public security holders, and
     copies of all Forms 10-K, 10-Q and 8-K, Schedules 13E-4 (including all
     exhibits filed therewith) and registration statements, and any other
     filings or statements that Borrower files with the Securities and Exchange
     Commission or any national securities exchange;

          (b) together with all Forms 10-K, 10-Q and 8-K, a certificate of the
     president or chief financial officer of Borrower, in the form of Exhibit
     "E" hereto, to the effect that no Event of Default with respect to
     Borrower, or event which might mature into an Event of Default with respect
     to Borrower, has occurred and is continuing;

          (c) forthwith upon the occurrence of an Event of Default, a
     certificate of the president or chief financial officer of Borrower
     specifying the nature and the period of existence thereof and what action
     Borrower proposes to take with respect thereto;

          (d) written notice of any and all litigation affecting Borrower or any
     of its Subsidiaries, directly or indirectly; provided, however, this
     requirement shall not apply to litigation involving Borrower or one of its
     Subsidiaries and any other party if such litigation involves, in the
     aggregate, less than $500,000; and

                                       26
<PAGE>

          (e) from time to time, such other information as Banks may reasonably
     request.

     6.2 Access. Permit access, and cause its Subsidiaries to permit access, by
Banks and Agent to the books and records and other property of Borrower and its
Subsidiaries during normal business hours and upon reasonable notice and permit,
and cause its Subsidiaries to permit, Banks to make copies of said books and
records.

     6.3 Insurance. Maintain, and cause its Subsidiaries to maintain, with
financially sound and reputable insurance companies workmen's compensation
insurance, liability insurance and insurance on Borrower's and its Subsidiaries'
property, assets and business at least to such extent and against such hazards
and liabilities as is commonly maintained by similar companies and, in addition
to the foregoing insurance, such insurance as may be required in the Collateral
Documents. In the case of property (whether owned by Borrower or by one of its
Subsidiaries) on which Banks or Agent has a Lien, Borrower shall provide, and
shall cause its Subsidiaries to provide, Agent with duplicate originals or
certified copies of such policies of insurance naming Banks as additional loss
payees and as additional insureds as their interests may appear and providing
that such policies will not be canceled without thirty (30) days' prior written
notice to Banks.

     6.4 Repair. Maintain, preserve and keep, and cause its Subsidiaries to
maintain, preserve, and keep, Borrower's and such Subsidiaries' properties in
good repair, working order and condition, and make, and cause its Subsidiaries
to make, necessary and proper repairs, renewals and replacements so that
Borrower's and its

                                       27
<PAGE>

Subsidiaries' business carried on in connection therewith may be properly
conducted at all times.

     6.5 Taxes. Pay or discharge, and cause its Subsidiaries to pay and
discharge, at or before maturity or before becoming delinquent (a) all taxes,
levies, assessments and governmental charges imposed on Borrower or any of its
Subsidiaries or its income or profits or any of its property, and (b) all lawful
claims for labor, materials and supplies which, if unpaid, might become a Lien
upon any of Borrower's property or the property of any of its Subsidiaries;
provided, however, that neither Borrower nor any Subsidiary shall be required to
pay or discharge any tax, levy, assessment or governmental charge which is being
contested in good faith by appropriate proceedings diligently pursued.

     6.6 Corporate and Limited Liability Company Existence. Maintain its
corporate existence in good standing and cause its Subsidiaries to maintain
their respective corporate existences and limited liability company in good
standing.

     6.7 Merger. Without the prior written consent of Banks, not, and cause each
of its Subsidiaries not to:

          (a) be a party to any merger or consolidation (other than a merger of
     one or more of the Subsidiaries into another Subsidiary or a merger of one
     or more of the Subsidiaries into Borrower, in either event followed by
     notice to Banks of the merger delivered within ten (10) days after the
     merger becomes effective);

          (b) except in the normal course of its business, sell, transfer,
     convey, or lease all or any substantial part of Borrower's or a
     Subsidiary's assets;

                                       28
<PAGE>

          (c) sell or assign, except in the normal course of Borrower's business
     or the business of one of its Subsidiaries, with or without recourse, any
     accounts receivable or chattel paper.

Agent and Banks hereby acknowledge that Borrower, with the consent of Agent and
Banks, has transferred substantially all of its operating assets to Gulf Island
Subsidiary on the date of this Agreement and such transfer does not violate
Section 6.7(b).

     6.8 Compliance. Comply, and cause its Subsidiaries to comply, with all
statutes, laws, ordinances, orders, rules and regulations applicable to Borrower
or such Subsidiary, including, without limitation, all Environmental Laws and
ERISA; provided, however, Borrower and its Subsidiaries shall be deemed to be in
compliance with this requirement for such time as Borrower or one of its
Subsidiaries may be contesting, in good faith and with diligence by appropriate
proceedings, any alleged violation of any statute, rule or regulation. Borrower
shall not permit, and shall cause each of its Subsidiaries not to permit, any
condition to exist in connection with any Plan which might constitute grounds
for the PBGC to institute proceedings to have such Plan terminated or a trustee
appointed to administer such Plan, and Borrower shall not engage in, or permit
to exist or occur, and shall cause its Subsidiaries not to engage in or permit
to occur or exist, any other condition, event or transaction with respect to,
any such Plan which could result in Borrower or one of its Subsidiaries
incurring any material liability, fine or penalty.

     Without limiting the generality of the foregoing, Borrower shall comply,
and shall cause each of its Subsidiaries to comply, fully with and maintain in
effect any and all environmental permits and licenses required under any
Environmental Law in order to

                                       29
<PAGE>

conduct Borrower's or such Subsidiary's business. To the extent such permits are
required but have not been obtained, or to the extent such existing permits must
be modified or renewed, Borrower shall make, and shall cause its Subsidiaries to
make, timely application for and obtain all such permits, modifications or
renewals thereof, as the case may be, including, but not limited to, necessary
federal and/or state water discharge, air emission and waste management permits.

     As often as Banks or Agent may require, Borrower shall submit to Agent
written progress reports addressing the status of environmental permits and
plans required of Borrower or any of its Subsidiaries, including pending permit
applications.

     Anything contained herein to the contrary notwithstanding, Borrower shall
not use, or permit any of its Subsidiaries to use, any of the properties of
Borrower or of one of Borrower's Subsidiaries or allow such properties to be
used for the storage, treatment or disposal of Solid Waste or Hazardous
Substances except in the ordinary course of Borrower's or such Subsidiary's
business and in compliance with the terms of any applicable Environmental Law or
permit.

     6.9  Use of Proceeds.  Not use or permit any proceeds of the Advances to
be used, either directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of "purchasing or carrying any margin stock" within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System,
as amended from time to time, and furnish to Banks, upon either of their
requests, a statement in conformity with the requirements of Federal Reserve
Form U-1 referred to in Regulation U of the Board of Governors of the Federal
Reserve System.

                                       30
<PAGE>

     6.10  Financial Covenants.  Maintain, on a consolidated basis with all of
its Subsidiaries,

           (a) a ratio of current assets to current liabilities, as determined
     in accordance with GAAP, in excess of 1.50 to 1.00;

           (b) a minimum Net Worth of SEVENTY MILLION AND NO/100 DOLLARS
     ($70,000,000) plus (1) fifty percent (50%) of the net income of Borrower
     and its Subsidiaries on a consolidated basis, as determined in accordance
     with GAAP, accruing after September 30, 1999 and (2) one hundred percent
     (100%) of the proceeds of any future public equity offering by Borrower,
     net of any fees, commissions, expenses and other costs incurred by Borrower
     in connection with such public equity offering;

           (c) a ratio of Debt (other than Permitted Debt owed by VOS) to Net
     Worth no greater than .50 to 1.00; and

           (d) a ratio of EBIT to Interest Expense of at least 4.00 to 1.00,
     such ratio to be determined as of the end of each fiscal quarter by giving
     effect to such fiscal quarter and the three (3) immediately preceding
     fiscal quarters; provided that there shall be no Event of Default under
     this Section 6.10(d) unless Borrower fails to meet the ratio described in
     this Section 6.10(d) for three (3) successive fiscal quarters.

     6.11  Liens.  Not create, incur, or suffer to exist, and not permit any
of Borrower's Subsidiaries to create, incur or suffer to exist, any Lien on any
of Borrower's property or on the property of Borrower's Subsidiaries except
Permitted Liens.

                                       31
<PAGE>

     6.12  Debt.  Not create or permit to exist, and not allow any of
Borrower's Subsidiaries to create or permit to exist,  any Debt without the
prior written consent of Banks, if, as a result thereof, exclusive of (i) the
Debt contemplated by this Agreement, (ii) Permitted Debt incurred by VOS, and
(iii) Debt owed by a Subsidiary to Borrower, the aggregate amount of Debt of
Borrower and its Subsidiaries would exceed the sum of $1,000,000.

     6.13  Shareholder or Employee Loans.  Not make, and not permit any
Subsidiary to make, advances or loans to employees of Borrower or any Subsidiary
or shareholders of Borrower which exceed the aggregate amount of $100,000.

     6.14  Change in Business.  Carry on and conduct, and cause its
Subsidiaries to carry on and conduct, the business of Borrower and each of its
Subsidiaries in substantially the same manner and in substantially the same
fields of enterprise as  such businesses are presently conducted; provided,
however, that the foregoing shall not prevent (i) Borrower or one of its
Subsidiaries from engaging in new and additional activities as long as said
activities are in substantially the same fields of enterprise as are currently
being engaged in by Borrower and the Existing Subsidiaries or (ii) VOS from
engaging in a business to construct, own, lease, or sell floating offshore
petroleum exploration and production platforms.

     6.15  Compliance with Agreements.  Comply with, and cause each of its
Subsidiaries to comply with, all indentures, mortgages, deeds of trust and other
agreements binding on Borrower or any Subsidiary or affecting its properties or
business.

     6.16  Further Assurances.  Execute and deliver, and cause its
Subsidiaries to execute and deliver, such further documentation as may be
requested by Banks or Agent

                                       32
<PAGE>

to carry out the provisions and purposes of this Agreement and the other Loan
Documents and to preserve and perfect the Liens of Banks or Agent for the
benefit of Banks, as the case may be, in the Collateral.

     6.17  Disposition of Assets.  Not sell, lease, assign, transfer or
otherwise dispose of, and shall cause each of its Subsidiaries not to sell,
lease, assign, transfer or otherwise dispose of, any of its assets, except
dispositions of inventory, equipment, and scrap in the ordinary course of
business and as otherwise provided in this Agreement.

     6.18  Change Tax I.D. Number.  Not change, and cause Dolphin Services and
Gulf Island Subsidiary not to change, its Federal Taxpayer Identification Number
without giving Agent at least sixty (60) days' prior written notice.

     6.19  Indemnity.  Indemnify, defend and hold Agent and Banks and their
respective directors, officers, agents, attorneys and employees harmless from
and against all claims, demands, causes of action, liabilities, losses, costs
and expenses (including, without limitation, costs of suit, reasonable legal
fees and fees of expert witnesses) arising from or in connection with (a) the
presence in, on or under any property of Borrower or of any Subsidiary of
Borrower (including, without limitation, the Real Property) of any Hazardous
Substance or Solid Waste, or any releases or discharges (as the terms "release"
and "discharge" are defined under any applicable Environmental Law) of any
Hazardous Substance or Solid Waste on, under or from such property, (b) any
activity carried on or undertaken on or off such property of Borrower or of any
of its Subsidiaries, whether prior to or during the term of this Agreement, and
whether by Borrower, any of its Subsidiaries or any predecessor in title to
Borrower's or such Subsidiary's property or any officers, employees, agents,
contractors or subcontractors of

                                       33
<PAGE>

Borrower, any Subsidiary of Borrower or any predecessor in title to the property
of Borrower or such Subsidiary, or any third persons at any time occupying or
present on such property, in connection with the handling, use, generation,
manufacture, treatment, removal, storage, decontamination, clean-up,
transportation or disposal of any Hazardous Substance or Solid Waste at any time
located or present on or under any of the aforedescribed property, or (c) any
breach of any representation, warranty or covenant under the terms of this
Agreement. The foregoing indemnity shall further apply to any residual
contamination on or under any or all of the aforedescribed property, or
affecting any natural resources, and to any contamination of any property or
natural resources arising in connection with the use, handling, storage,
transportation or disposal of any Hazardous Substance or Solid Waste, and
irrespective of whether any of such activities were or will be undertaken in
accordance with applicable laws, regulations, codes and ordinances. The
indemnity described in this Section shall survive the termination of this
Agreement for any reason whatsoever.

     6.20  Real Property.  Not create a Lien on any of the Real Property, or
permit any Subsidiary to create a Lien on any of the Real Property, in favor of,
or, except as permitted in Section 6.7 with respect to Borrower's conveyance of
the Real Property to Gulf Island Subsidiary, otherwise convey, or permit a
Subsidiary to convey, any portion of the Real Property to any Person without the
prior written consent of Banks.

     6.21  Restricted Investments.  Not make Investments in the Excluded
Subsidiaries exceeding $3,000,000 in the aggregate for all such Investments, as
determined on a cumulative basis from the date of organization of the first of
the Excluded Subsidiaries to be organized.

                                       34
<PAGE>

     Section 7.  Conditions Precedent to Extensions of Credit.

     The obligation of Banks to extend credit to Borrower under this Agreement
is subject to the satisfaction of the conditions precedent, in addition to the
applicable conditions precedent set forth in Section 8 below with respect to
Advances and/or Letters of Credit, that Borrower shall have delivered, or caused
to be delivered, to Banks in form and substance satisfactory to Banks:

     7.1   Borrower's Resolutions.  Copies, duly certified by the secretary or
assistant secretary of Borrower, of (a) the resolutions of Borrower's Board of
Directors authorizing the borrowings hereunder and the execution and delivery of
all of the Loan Documents to which Borrower is a party, (b) all documents
evidencing other necessary corporate action and (c) all approvals or consents,
if any, with respect to the Loan Documents.

     7.2   Subsidiaries' Resolutions.  Copies, duly certified by the secretary
or assistant secretary of each Subsidiary (other than the Excluded
Subsidiaries), of (a) the resolutions of such Subsidiary's Board of Directors,
managers, or members as the case may be, authorizing the borrowings hereunder
and the execution and delivery of all of the Loan Documents to which such
Subsidiary is a party, (b) all documents evidencing other necessary corporate or
limited liability company action and (c) all approvals or consents, if any, with
respect to the Loan Documents.

     7.3   Notes.  The duly authorized Notes executed by Borrower and payable
to the order of Banks.

     7.4   Guaranty.  The duly authorized Guaranty executed by each of the
Existing Subsidiaries.

                                       35
<PAGE>

     7.5   Gulf Island Subsidiary.  The duly authorized Gulf Island Subsidiary
 Mortgage executed by Gulf Island Mortgage Subsidiary and any other public
 filings requested by Agent to evidence the Gulf Island Subsidiary Mortgage.

     7.6   Gulf Island Subsidiary.  The duly authorized Gulf Island Subsidiary
Security Agreement executed by Gulf Security Agreement Island Subsidiary and
Borrower, together with a UCC-1 financing statement to file in connection with
the Gulf Island Subsidiary Security Agreement.

     7.7   Opinion.  The opinion of Jones, Walker, Waechter, Poitevent,
Carrere & Denegre, L.L.P., counsel to Banks and Agent, addressed to Banks and
Agent, to the effect that (a) Borrower and the Existing Subsidiaries are
corporations or limited liability companies duly organized, validly existing and
in good standing under the laws of the State of Louisiana; (b) Borrower has full
power to execute, deliver and perform its obligations under this Agreement, the
Notes and the Collateral Documents to which it is a party; (c) each of the
Existing Subsidiaries has full power to execute, deliver and perform its
obligations under this Agreement and the Collateral Documents to which each is a
party; (d) such actions have been duly authorized by all necessary corporate or
limited liability company action, and are not in conflict with any provision of
law or of the articles of incorporation or organization, by-laws, or operating
agreement, as the case may be, of Borrower or the Existing Subsidiaries; (e)
this Agreement and the Notes are the legal and binding obligations of Borrower
enforceable in accordance with their respective terms, except as enforcement may
be limited by applicable bankruptcy, reorganization, moratorium or similar laws;
and (f) the Guaranty is the legal and binding obligation of the Existing
Subsidiaries enforceable in accordance with its terms, except as

                                       36
<PAGE>

its enforcement may be limited by applicable bankruptcy reorganization,
moratorium, or similar laws.

     Section 8.   Additional Conditions Precedent to Advances and/or Letters
of Credit

     The obligation of Banks to make any Advance and/or issue any Letter of
Credit under the Revolving Credit Facility is subject to, in addition to the
satisfaction of all other conditions precedent applicable to the Revolving
Credit Facility and set forth in Section 7 above, the satisfaction of each of
the following conditions precedent:

     8.1  Default.  Before and after giving effect to such Advance and/or
Letter of Credit, no Event of Default shall have occurred and be continuing.

     8.2  Warranties.  Before and after giving effect to such Advance and/or
Letter of Credit, the representations and warranties in Section 5 hereof shall
be true and correct as though made on the date of such Advance and/or Letter of
Credit except for such changes as are specifically permitted hereunder.

     Section 9.  Events of Default.

     The following events shall constitute Events of Default hereunder and under
the Revolving Credit Facility, individually and collectively, and under all
other Loan Documents:

     9.1  Payment.  Default in the payment of principal on any one or more of
the Notes when due, or default in the payment of any interest on any one or more
of the Notes or any expense or fee hereunder or under any of the other Loan
Documents, which default shall continue for a period of five (5) days following
written notice thereof to Borrower from Banks or Agent;

                                       37
<PAGE>

     9.2  Other Indebtedness.  Any other indebtedness of Borrower to Banks is
not paid at maturity or becomes due and payable prior to its expressed maturity
by reason of any default by Borrower in the performance or observance of any
obligation or condition thereunder which default shall continue for a period of
thirty (30) days following written notice thereof to Borrower from Banks or
Agent;

     9.3  Other Default.  Any default of any other obligation of Borrower or
any Subsidiary to Banks under the terms of any note or notes, mortgage,
indenture, loan agreement or security document of Borrower or any Subsidiary to
Banks, including, without limitation, any of the Loan Documents, which default
shall continue for a period of thirty (30) days following written notice thereof
to Borrower from Banks or Agent, it being expressly understood and agreed that a
default under any note, mortgage, indenture, loan agreement or security document
of Borrower or any Subsidiary in favor of Banks, including, without limitation,
any of the Loan Documents, shall constitute a default under all other notes,
mortgages, indentures, loan agreements and security documents held by Banks or
Agent, including, without limitation, the Loan Documents;

     9.4  Insolvency.  Borrower or any Subsidiary of Borrower becomes
insolvent or admits in writing its inability to pay its debts as they mature or
applies for, consents to, or acquiesces in the appointment of a trustee or
receiver for Borrower, such Subsidiary or any property of Borrower or of such
Subsidiary; or, in the absence of such application, consent or acquiescence, a
trustee or receiver is appointed for Borrower, for any Subsidiary of Borrower or
for a substantial part of any property of either Borrower or of any of its
Subsidiaries and is not discharged within thirty (30) days; or any bankruptcy,
reorganization, debt arrangement, or other proceeding under any bankruptcy or

                                       38
<PAGE>

insolvency law, or any dissolution or liquidation proceeding is instituted by or
against Borrower or any of Borrower's Subsidiaries, and if instituted against
Borrower or one of Borrower's Subsidiaries, it is consented to or acquiesced in
by Borrower or such Subsidiary, or remains for thirty (30) days undismissed; or
any warrant of attachment is issued against any substantial portion of the
property of Borrower or of any Subsidiary of Borrower which is not released
within thirty (30) days of service;

     9.5  ERISA.  The PBGC applies to a United States District Court for the
appointment of a trustee to administer any Plan adopted, established or
maintained by Borrower, or for a decree adjudicating that any such Plan must be
terminated; a trustee is appointed pursuant to ERISA to administer any such
Plan; any action is taken to terminate any such Plan or any such Plan is
permitted or caused to be terminated if, at the time such action is taken or
such termination of such Plan occurs, the Plan's "vested liabilities," as
defined in Section 3(25) of ERISA, exceed the then value of its assets at the
time of such termination;

     9.6  Agreements.  Default in the performance of any of Borrower's or any
Subsidiary's covenants and/or agreements set forth in this Agreement and/or any
of the other Loan Documents (and not constituting an Event of Default under any
of the preceding subsections of this Section 9), which default shall continue
for a period of thirty (30) days after written notice thereof to Borrower from
Banks or Agent;

     9.7  Representation or Warranty.  Any representation or warranty made by
Borrower or by any Subsidiary of Borrower herein or any Loan Document is untrue
in any material respect, or any schedule, statement, report, notice or writing
furnished by Borrower or any Subsidiary to Banks is untrue in any material
respect on the date as of

                                       39
<PAGE>

which the facts set forth are stated or certified which default shall continue
for a period of thirty (30) days after written notice thereof to Borrower from
Banks or Agent;

     9.8  Cross-Default.  Borrower or any Subsidiary of Borrower shall be in
default under any Debt owed by Borrower or such Subsidiary to a party other than
Banks, and such party shall commence exercising its remedies against Borrower or
such Subsidiary, under law or by contract, with respect to such Debt; and

     9.9  Judgments and Attachments.  Any property of Borrower or any of its
Subsidiaries shall become subject to a judgment which is not bonded or paid
prior to the expiration of the period following which the judgment creditor may
commence exercising its remedies with respect to such judgment, or any material
asset of Borrower or any of its Subsidiaries becomes subject to a writ of
attachment or other form of judicial seizure which is not released within 10
days.

     9.10  Remedies. Upon the occurrence of any Event of Default, Banks, or
Agent upon the direction of Banks, in addition to all of the remedies conferred
upon Agent and/or Banks under law, in equity or under any of the Loan Documents,
may declare the Revolving Commitment to be terminated and the Notes to be due
and payable, whereupon the Revolving Commitment shall immediately terminate, and
the Notes shall become immediately due and payable, without notice of any kind,
except that if an event described in Section 9.4 occurs, the Revolving
Commitment shall immediately terminate, and the Notes shall become immediately
due and payable without declaration or notice of any kind.

     Section 10.  Agent.

                                       40
<PAGE>

     10.1  Authorization and Action.  Each Bank hereby appoints and authorizes
Agent to execute the Collateral Documents on behalf of each such Bank and to
take such action as Agent on such Bank's behalf, and to exercise such powers
under the Loan Documents, as are delegated to Agent by the terms thereof,
together with such other powers as are reasonably incidental thereto, including,
without limitation, the enforcement of the Loan Documents in accordance with the
terms thereof (including, without limitation, the collection of the Notes), and
Agent hereby accepts such appointment.  As to any matters not expressly provided
for by the Loan Documents (including, without limitation, enforcement or
collection of the Notes), Agent shall not be required to exercise any discretion
or take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the
instructions of Banks and such instructions shall be binding upon Banks;
provided, however, that Agent shall not be required to take any action which
exposes Agent to personal liability or which is contrary to any of the Loan
Documents or applicable law.  Agent shall not consent to any amendment of this
Agreement or any of the other Loan Documents (and no amendment by Banks shall be
effective without consent of Agent), the effect of which would be to increase
the amount of the Obligations or extend the maturity of any obligation, reduce
the bases on which any interest is computed, release any Collateral, waive any
provision regarding covenants or obligations of Borrower or the Subsidiaries or
Events of Default, without the express written consent of all Banks.

     10.2  Agent's Reliance, Etc  .  Neither Agent nor any of its directors,
officers, agents or employees shall be liable for any action taken or omitted to
be taken by it or

                                       41
<PAGE>

them under or in connection with any of the Loan Documents except for its or
their own gross negligence or willful misconduct. Without limitation of the
generality of the foregoing, Agent: (i) may treat the payee of any Note as the
holder thereof until Agent receives written notice of the assignment or transfer
thereof signed by such payee and in form satisfactory to Agent; (ii) may consult
with legal counsel (including counsel for Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (iii) makes no warranty or
representation to any Bank and shall not be responsible to any Bank for any
statements, warranties or representations made in or in connection with any of
the Loan Documents; (iv) shall not have any duty to ascertain or to inquire as
to the performance or observance of any of the terms, covenants or conditions of
any of the Loan Documents on the part of Borrower or to inspect the property
(including the books and records) of Borrower; (v) shall not be responsible to
any Bank for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of any of the Loan Documents or any other instruments or
document furnished pursuant hereto; and (vi) shall incur no liability under or
in respect of any of the Loan Documents by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telegram, cable or
telex) believed by it to be genuine and signed by the proper party or parties.

     10.3  Bank One and Affiliates.  With respect to the Note payable to the
order of Bank One and the portion of the Revolving Commitment applicable to Bank
One, Bank One shall have the same rights and powers under the Loan Documents as
the other Bank and may exercise the same as though it were not Agent; and the
term "Bank" or "Banks"

                                       42
<PAGE>

shall, unless otherwise expressly indicated, include Bank One in its individual
capacity. Without limiting the generality of the foregoing, Bank One and its
affiliates may accept deposits from, and generally engage in any kind of
business with, Borrower, and any person, firm or corporation who may do business
with or own securities of Borrower, all as if Bank One were not Agent and
without any duty to account therefor to Banks.

     10.4  Bank Credit Decision.  Each Bank acknowledges that it has,
independently and without reliance upon Agent or any other Bank and based on the
financial statements furnished by Borrower and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement.  Each Bank also acknowledges that it
will, independently and without reliance upon Agent or any other Bank and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Loan Documents.  Each Bank acknowledges that a copy of this Agreement has
been made available to it and each Bank acknowledges that it is satisfied with
the form and substance of this Agreement.

     10.5  Indemnification.  Banks agree to indemnify and hold Agent harmless
(to the extent not reimbursed by Borrower), ratably according to the respective
principal amounts of the Notes then held by each of them (or if no Notes are at
the time outstanding, ratably according to the respective amounts of their
commitments hereunder), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against Agent in any way relating to or arising out of any of
the Loan Documents or any action taken or omitted by Agent

                                       43
<PAGE>

under any of the Loan Documents (including, without limitation, attorneys' fees
and other costs associated with defending Agent against any of the foregoing),
provided that no Bank shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from Agent's gross negligence or wilful
misconduct. Without limitation of the foregoing, each Bank agrees to reimburse
Agent promptly upon demand for its ratable share of any out-of-pocket expenses
(including attorneys' fees) incurred by Agent in connection with the
preparation, execution, administration, or enforcement of, or the preservation
of any rights under, the Loan Documents, to the extent that Agent is not
reimbursed for such expenses by Borrower.

     10.6  Successor Agent.  Agent may resign at any time by giving written
notice thereof to Banks and Borrower and may be removed at any time with or
without cause by Banks by notice to Borrower.  Upon any such resignation or
removal, Banks shall have the right to appoint a successor agent by notice to
Borrower.  If no successor agent shall have been so appointed by Banks, and
shall have accepted such appointment, within thirty (30) days after Agent's
giving of notice of its resignation, then Agent may, on behalf of Banks, appoint
a successor agent, by notice to Borrower and Banks, which successor agent shall
be a commercial bank organized under the laws of the United States of America or
any state thereof having a combined capital and surplus of at least $5,000,000.
Upon the acceptance of any appointment as Agent by a successor agent, such
successor agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of Agent, and Agent shall be discharged
from its duties and obligations under the Loan Documents.  After Agent's
resignation or removal hereunder

                                       44
<PAGE>

as Agent, the provisions of this Section 10 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under the Loan
Documents.

     10.7  Benefits of Section.  None of the provisions of this Section shall
inure to the benefit of Borrower or any Person other than Banks; consequently,
neither Borrower nor any other Person shall be entitled to rely upon, or to
raise as a defense, in any manner whatsoever, the failure of any Bank to comply
with such provisions.

     10.8  Change in Specified Percentage.  No Bank shall assign outright its
entire interest in the Revolving Credit Facility or the Revolving Commitment or
make any participation without the consent of the other Bank and Agent.

     Section 11.  General.

     11.1  Definitions.  As used in this Agreement, terms used herein with
initial capital letters shall have the following meanings, unless defined
elsewhere in this Agreement or unless the context clearly indicates otherwise:

           "Advance" has the meaning ascribed to the term in Section 1.1 of this
     Agreement.

           "Agent" means Bank One.

           "Agreement" means this Eighth Amended and Restated Revolving Credit
     Agreement, as it may be further amended, restated, modified and/or
     supplemented from time to time in the future.

           "Bank" and "Banks" have the meanings ascribed to the terms on the
     first page hereof.

           "Bank One LIBO Rate" means, for each Interest Period, the
     applicable London interbank offered rate for deposits in United States
     Dollars appearing on Dow Jones Markets (Telerate) Page 3750 or 3740, as the
     case may be, as of 11:00 a.m. (London time) two Business Days prior to the
     first day of such Interest Period and having maturity equal to such
     Interest Period; provided, however, that if Dow Jones Markets (Telerate)
     Page 3750 or 3740, as the case may be, is not available for any reason, the
     applicable Bank One LIBO Rate for the relevant Interest Period shall
     instead be the applicable London interbank offered rate for

                                       45
<PAGE>

     deposits in United States Dollars appearing on Reuters Screen FRBD as of
     11:00 a.m. (London time) two Business Days prior to the first day of such
     Interest Period and having a maturity equal to such Interest Period. The
     Bank One LIBO Rate determined by Agent with respect to a particular
     Interest Period shall be fixed at such rate for the duration of such
     Interest Period.

           "Benefitted Bank" has the meaning ascribed to the term in Section 4.2
     hereof.

           "Borrower" has the meaning provided on the first page hereof.

           "Borrowing Date" means any Business Day specified in a notice
     pursuant to Section 3.6 as a date on which Borrower requests Banks to make
     Advances hereunder.

           "Business Day" means each Monday, Tuesday, Wednesday, Thursday and
     Friday which is not a legal holiday for commercial banks in the State of
     Louisiana.

           "Capitalized Construction Interest" means, with respect to each
     floating offshore petroleum exploration and production platform constructed
     by VOS, interest expense accrued by VOS on any construction loan incurred
     by VOS to build such platform; provided that to qualify construction loan
     interest as Capitalized Construction Interest, VOS must (i) capitalize the
     construction loan interest on its books and (ii) reasonably anticipate
     recouping the construction loan interest within 36 months of the first
     accrual of any construction loan interest relating to such platform through
     VOS's sale of long-term bonds qualifying as Permitted Debt.

           "Capitalized Leases" means capital leases and subleases, as defined
     in the Financial Accounting Standards Board Statement of Financial
     Accounting Standard No. 13, dated November 1976, as amended.

           "Collateral" means all property described in and subject to the
     Collateral Documents and any and all other property hereafter made subject
     to a Lien to secure the payment and performance of the Obligations.

           "Collateral Documents" means the documents listed on Exhibit "F"
     annexed hereto and any and all other documents, instruments and agreements
     delivered to Agent or Banks to secure the Obligations and/or any other
     obligations described in this Agreement, as the foregoing may be amended,
     modified or supplemented from time to time.

           "Credit Agreement" has the meaning ascribed in the recital
     paragraphs of this Agreement.

                                       46
<PAGE>

           "Debt" means:  (a) all obligations of Borrower or of any of
     Borrower's Subsidiaries for borrowed money, (b) all obligations of Borrower
     or of any of Borrower's Subsidiaries evidenced by bonds, notes, debentures
     or other similar instruments, (c) all obligations of Borrower or of any of
     Borrower's Subsidiaries to pay the deferred purchase price of property or
     services, except trade accounts payable by Borrower or by any of Borrower's
     Subsidiaries arising in the ordinary course of business which are not past
     due by more than sixty (60) days unless such trade accounts payable are
     being contested in good faith by appropriate proceedings, (d) all
     obligations of Borrower or of any of Borrower's Subsidiaries under any
     Capitalized Leases, (e) all obligations of Borrower or of any of Borrower's
     Subsidiaries under guaranties, endorsements (other than for collection or
     deposit in the ordinary course of business), assumptions or other
     contingent obligations, in respect of, or to purchaser or otherwise
     acquire, any obligation or indebtedness of Borrower or of any of Borrower's
     Subsidiaries, or any other obligations, contingent or otherwise, (f) all
     obligations secured by a Lien (except trade accounts payable by Borrower or
     by any of Borrower's Subsidiaries arising in the ordinary course of
     business which are not past due by more than sixty (60) days unless such
     trade accounts payable are being contested in good faith by appropriate
     proceedings secured by a vendor's lien) existing on property owned by
     Borrower or by any of Borrower's Subsidiaries, whether or not the
     obligations secured thereby have been assumed by Borrower or by any of
     Borrower's Subsidiaries or are non-recourse to the credit of Borrower or of
     any of Borrower's Subsidiaries, (g) all reimbursement obligations of
     Borrower or of any of Borrower's Subsidiaries, other than performance bonds
     of Borrower or of any of Borrower's Subsidiaries (whether contingent or
     otherwise), relating to letters of credit, bankers' acceptances and similar
     instruments, and (h) all liabilities of Borrower or of any of Borrower's
     Subsidiaries in respect of unfunded vested benefits under any Plan;
     provided, however, the term "Debt" shall not include money borrowed by
     Borrower or by any of Borrower's Subsidiaries to pay premiums on insurance
     policies obtained by Borrower or by any of Borrower's Subsidiaries in the
     ordinary course of Borrower's or of any of Borrower's Subsidiaries'
     business and shall further not include any type of obligation of a
     Subsidiary to Borrower.

           "Default Rate" has the meaning provided in Section 3.2 hereof.

           "Dolphin" has the meaning provided on the first page hereof.

           "EBIT" means, with respect to any Person for any period,
     consolidated net income of such Person for such period, plus (i) interest
     expense for such Person for such period, and (ii) tax expense for such
     period for taxes which have been provided for by such Person for such
     period, to the extent that any of the same are deducted from net revenues
     in determining such Person's consolidated net income for such period.

                                       47
<PAGE>

           "Environmental Laws" means any and all federal, state and local laws,
     regulations, ordinances, orders and requirements pertaining to health,
     safety or the environment, including, without limitation, the Comprehensive
     Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
     (S) 9601 et seq., the Resource Conservation and Recovery Act of 1976, 42
     U.S.C. (S) 6901 et seq., the Clean Air Act, 42 U.S.C. (S) 7401 et seq., the
     Clean Water Act, 33 U.S.C. (S) 1251 et seq., the Toxic Substances Control
     Act, 15 U.S.C. (S) 2601 et seq., the Louisiana Environmental Quality Act,
     La. R.S. 30:2001, et seq., and all similar laws, regulations and
     requirements of any governmental authority or agency having jurisdiction
     over Borrower, any of its Subsidiaries or any of the property or assets of
     Borrower or of any of its Subsidiaries, as such laws, regulations and
     requirements may be amended or supplemented from time to time.

           "Event of Default" means the occurrence of any event described in
     Section 9 hereof or the occurrence of any other event which with the lapse
     of time, or lapse of time and notice to Borrower would constitute an Event
     of Default.

           "Excluded Subsidiaries" means MINDOC, L.L.C., Southport L.L.C., GIFI
     Properties, L.L.C., Deep Ocean Services, L.L.C., and all foreign sales
     corporations (as such term is defined in Section 922(a) of the United
     States Internal Revenue Code) owned by Borrower or one of its Subsidiaries.

           "Existing Security" means all security previously granted by
     Borrower or by one of its Subsidiaries to Banks pursuant to the Collateral
     Documents and other Loan Documents.

           "GAAP" means generally accepted accounting principles, applied on a
     consistent basis, as set forth in Opinions of the Accounting Principles
     Board of the American Institute of Certified Public Accountants and/or in
     statements of the Financial Accounting Standards Board and/or their
     respective successors and which are applicable in the circumstances as of
     the date in question.  Accounting principles are applied on a "consistent
     basis" when the accounting principles observed in a current period are
     comparable in all material respects to those accounting principles applied
     in a preceding period.

           "Gulf Island Subsidiary" has the meaning provided in the preamble of
     this Agreement.

           "Gulf Island Subsidiary Mortgage" means that certain Mortgage to
     Secure Future Advances by Gulf Island Subsidiary, as mortgagor, in favor of
     Agent, as mortgagee, encumbering the Real Property, in the form attached as
     Exhibit "G."

           "Gulf Island Subsidiary Security Agreement" means that certain
     Security Agreement between Gulf Island Subsidiary, as debtor, and Agent, as
     secured party, in the form attached as Exhibit "H".

                                       48
<PAGE>

           "Hazardous Substance" has the meaning specified in any applicable
     Environmental Law and means any substance, product, waste, pollutant,
     material, chemical, contaminant, constituent or other material which is or
     becomes listed, regulated or addressed under any Environmental Law,
     including, without limitation, asbestos, petroleum and polychlorinated
     biphenyls.

           "Interest Expense" means  with respect to any period, Borrower's
     consolidated interest expense for such period, determined in accordance
     with GAAP but excluding Capitalized Construction Interest.

           "Interest Period" means with respect to any LIBO Rate Advance:

           (i)   initially, the period commencing on the borrowing or conversion
                 date, as the case may be, with respect to such LIBO Rate
                 Advance and ending one, two, or three months thereafter, as
                 selected by Borrower in its notice to Agent of borrowing or
                 notice of conversion, as the case may be, given with respect
                 thereto; and

           (ii)  thereafter, each period commencing on the day immediately
                 following the last day of the next preceding Interest Period
                 applicable to such LIBO Rate Advance and ending one, two or
                 three months thereafter, as selected by Borrower by notice to
                 Agent not less than one (1) Business Day prior to the last day
                 of the then current Interest Period with respect thereto; and

           provided, that:

                 (x)  if any Interest Period would otherwise end on a day which
                      is not a Business Day, that Interest Period shall be
                      extended to the next succeeding Business Day unless the
                      result of such extension would be to carry such Interest
                      Period into another calendar month in which event such
                      Interest Period shall end on the immediately preceding
                      Business Day;

                 (y)  any Interest Period which, with respect to a LIBO Rate
                      Advance under the Revolving Credit Facility, would
                      otherwise extend beyond the Termination Date shall end on
                      the Termination Date; and

                 (z)  any Interest Period that begins on the last Business Day
                      of a calendar month (or on a day for which there is no
                      numerically corresponding day in the calendar month at the
                      end of such Interest Period) shall end on the last
                      Business Day of a calendar month.

                                       49
<PAGE>

           "Investment" means all investments in other Persons in the form of
     loans, advances or capital contributions of cash or other assets, purchases
     of capital stock or other securities, and guaranties of such Person's
     Debts.

           "LC Commitment" means the lesser of (a) TEN MILLION AND NO/100
     DOLLARS ($10,000,000) or (b) the Revolving Commitment at the time in
     question.

           "Letters of Credit" has the meaning ascribed to the term in
     Section 1.1 hereof.

           "LIBO Rate" means with respect to each day during an Interest Period
     for a LIBO Rate Advance, an interest rate per annum equal to the sum of (a)
     one and one-half percent (1.50%) plus (b) the Bank One LIBO Rate.

           "LIBO Rate Advance" means an Advance made under the Revolving Credit
     Facility which bears interest at the LIBO Rate.

           "Lien" means any lien, judgment, mortgage, deed of trust, security
     interest, tax lien, financing statement, pledge, charge, hypothecation,
     assignment, preference, priority or other encumbrance of any kind or nature
     whatsoever (including, without limitation, any conditional sale or title
     retention agreement), whether arising by contract, operation of law or
     otherwise.

           "Loan Documents" means, collectively, this Agreement, the Notes, the
     Collateral Documents, the Assignment and Assumption Agreement, and any and
     all other documents, instruments and agreements executed in connection with
     the Advances or the Letters of Credit, as the foregoing may be modified,
     supplemented and/or amended from time to time.

           "Net Worth" means the sum of the common stock, additional paid-in
     capital and retained earnings accounts of Borrower and its Subsidiaries on
     a consolidated basis, as shown in conformity with GAAP on its balance sheet
     at the time of such determination, less the amount of any treasury stock
     shown thereon.

           "Notes" has the meaning ascribed to the term in Section 2.1 of this
     Agreement.

           "Obligations" means all obligations, indebtedness and liabilities of
     Borrower or its Subsidiaries to Agent and/or either or both of Banks, now
     existing or hereafter arising, whether direct, indirect, related,
     unrelated, fixed, contingent, liquidated, unliquidated, joint, several, or
     joint and several, including, without limitation, the obligations,
     indebtedness, and liabilities of Borrower or its Subsidiaries under this
     Agreement, the Notes, the Letters of Credit and the other Loan Documents,
     and all interest accruing thereon and all attorneys' fees and other
     expenses incurred in the enforcement or collection thereof.

                                       50
<PAGE>

           "PBGC" means the Pension Benefit Guaranty Corporation or any entity
     succeeding to all or any of its functions under ERISA.

           "Permitted Debt" means Debt owed by VOS to the United States Maritime
     Administration or which is guaranteed by the United States Maritime
     Administration and which Debt is (i) non-recourse to Borrower or any of its
     other Subsidiaries other than VOS and (ii) secured by Liens only on VOS's
     assets.

           "Permitted Liens" means:

           (i)    those for taxes, assessments or governmental charges or levies
                  if the same shall not at the time be delinquent or thereafter
                  can be paid without penalty, or are being contested in good
                  faith and by appropriate proceedings;

           (ii)   those imposed by law, such as carriers', warehousemen's and
                  mechanics' liens and other similar liens arising in the
                  ordinary course of business which secure payment of
                  obligations not more than sixty (60) days past due;

           (iii)  those arising out of pledges or deposits under workmen's
                  compensation laws, unemployment insurance, old age pensions,
                  or other social security or retirement benefits, or similar
                  legislation;

           (iv)   utility easements, building restrictions and such other
                  encumbrances or charges against real property as are of a
                  nature generally existing with respect to properties of a
                  similar character and which do not in any material way affect
                  the marketability of the same or interfere with the use
                  thereof in the business of Borrower or of any of Borrower's
                  Subsidiaries;

           (v)    lessors' interests under financing leases;

           (vi)   liens on assets of Borrower and its Subsidiaries not covered
                  by the Loan Documents which liens secure obligations of
                  Borrower or its Subsidiaries in the ordinary course of
                  business which in the aggregate for all such obligations of
                  Borrower and its Subsidiaries do not exceed $250,000;

           (vii)  liens encumbering only VOS's assets and which only secure
                  Permitted Debt; and

           (viii) the Liens created pursuant to the Loan Documents.

                                       51
<PAGE>

           "Person" means any individual, corporation, business, trust,
     association, company, partnership, joint venture, governmental authority or
     other entity.

           "Plan" has the meaning ascribed to the term in Section 5.10
     hereof.

           "Prime Rate" has the meaning ascribed to the term in Section 3.3
     hereof.

           "Prime Rate Advance" means an Advance made under the Revolving
     Credit Facility which bears interest at the Prime Rate.

           "Prior Credit Agreement" has the meaning provided in Section 1.1
     hereof.

           "Prior Notes" has the meaning provided in Section 1.

           "Real Property" means the property described on Exhibit "I"
     hereto, whether owned by Borrower or by one of its Subsidiaries.

           "Revolving Commitment" means TWENTY MILLION AND NO/100 DOLLARS
     ($20,000,000), as such amount may be reduced by Borrower in accordance with
     Section 4.4 of this Agreement.

           "Revolving Credit Facility" has the meaning ascribed to the term
     in Section 1.1 of this Agreement.

           "Solid Waste" has the meaning specified in any applicable
     Environmental Law.

           "Southport" has the meaning provided on the first page hereof.

           "Subsidiary" means, as to any Person, a corporation, partnership
     or other entity of which shares of stock or other ownership interests
     having ordinary voting power (other than stock or such other ownership
     interests having such power only by reason of the happening of a
     contingency) to elect a majority of the board of directors or other
     managers of such corporation, partnership or other entity, or the
     management of which is otherwise controlled, directly or indirectly through
     one or more intermediaries, or both, by such Person.

           "Termination Date" means December 31, 2001.

           "UCC" means the Uniform Commercial Code, as in effect from time
     to time in each state where any of the Collateral is located or otherwise
     has a situs; provided, however, if the Uniform Commercial Code in no
     particular state is ascertainable or applicable, UCC shall mean the Uniform
     Commercial Code, as in effect from time to time in the State of Louisiana.

                                       52
<PAGE>

           "Unused Commitment" has the meaning ascribed to the term in
     Section 1.1 hereof.

           "Whitney" has the meaning ascribed to the term in the recitals to
     this Agreement.

     All definitions contained in this Agreement are equally applicable to the
singular and plural forms of the terms defined. The words "hereof," "herein" and
"hereunder" and words of similar import referring to this Agreement refer to
this Agreement as a whole and not to any particular provision of this Agreement.
Unless otherwise specified, all Section references pertain to this Agreement.

     11.2  Financial Terms.  Unless otherwise defined or the context otherwise
requires, all financial and accounting terms shall be defined under GAAP.

     11.3  Delay.  No delay on the part of Banks, Agent or any holder of any
one or more of the Notes, in the exercise of any power or right shall operate as
a waiver thereof, nor shall any single or partial exercise of any power or right
preclude other or further exercise thereof, or the exercise of any other power
or right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.

     11.4  Notices.  All notices, statements, requests and demands given
to or made under any party hereto in accordance with the provisions of this
Agreement shall be deemed to have been given or made when deposited in the mail,
postage pre-paid, registered or certified mail return receipt requested
addressed:

     If to Banks:

                    Bank One, Louisiana, N.A.
                    201 St. Charles Avenue, 29th Floor
                    New Orleans, Louisiana 70170
                    Attention:  Mr. J. Charles Freel, Jr.
                                First Vice President

                                       53
<PAGE>

                           and

                    Whitney National Bank
                    228 St. Charles Avenue
                    New Orleans, Louisiana  70130
                    Attention:  Mr. Harry C. Stahel
                                Senior Vice President

                  With a copy to:

                    F. Rivers Lelong, Jr., Esq.
                    Jones, Walker, Waechter, Poitevent, Carrere &
                     Denegre, L.L.P.
                    Place St. Charles
                    201 St. Charles Avenue
                    New Orleans, Louisiana  70170

               If to Agent:

                    Bank One, Louisiana, N.A.
                    201 St. Charles Avenue, 29th Floor
                    New Orleans, Louisiana 70170
                    Attention:  Mr. J. Charles Freel, Jr.
                                First Vice President

                  With a copy to:

                    F. Rivers Lelong, Jr., Esq.
                    Jones, Walker, Waechter, Poitevent, Carrere &
                     Denegre, L.L.P.
                    Place St. Charles
                    201 St. Charles Avenue
                    New Orleans, Louisiana  70170

               If to Borrower or any of its Subsidiaries:

                    Gulf Island Fabrication, Inc.
                    583 Thompson Road
                    Houma, Louisiana 70363
                    Attention:  Kerry J. Chauvin, President

                              or

                    Gulf Island Fabrication, Inc.
                    P.O. Box 310
                    Houma, Louisiana  70361
                    Attention:  Kerry J. Chauvin, President

                                       54
<PAGE>

     With respect to notices to Borrower, such notices shall, if sent by
overnight courier or other means requiring a street address, be sent to the
first address provided above.  If such notices are sent by means not requiring a
street address, such notices shall be sent to the second address provided above.

     11.5  Expenses.  Whether or not the Advances are made, Borrower agrees to
reimburse Banks and Agent, upon demand, for all expenses (including reasonable
attorneys' fees and legal expenses incurred by Banks and/or Agent) incurred by
Banks and/or Agent in the preparation, negotiation and/or execution of the Loan
Documents, and in enforcing the obligations of Borrower hereunder or under any
of the other Loan Documents, and to pay, and save Banks and Agent harmless from
all liability for, any stamp or other taxes which may be payable with respect to
the execution or delivery of this Agreement, the execution, delivery or issuance
of the Notes, and/or the execution, delivery and recordation of the other Loan
Documents, which obligations of Borrower shall survive any termination of this
Agreement.

          11.6  Severability.  Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining portions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.

          11.7  Counterparts.  This Agreement may be executed in as many
counterparts as may be deemed necessary or convenient, and by the different
parties hereto on separate counterparts, each of which, when so executed, shall
be deemed an original but all such counterparts shall constitute but one and the
same instrument.

                                       55
<PAGE>

          11.8  Law.  The Loan Documents, and each of them, shall be contracts
made under and governed by the laws of the State of Louisiana.

          11.9  Successors.  This Agreement shall be binding upon Borrower,
its Existing Subsidiaries, Banks, Agent and their respective successors and
assigns, and shall inure to the benefit of Borrower, its Existing Subsidiaries,
Banks and the successors and assigns of Banks and Agent.  Borrower and its
Subsidiaries shall not assign their rights, obligations or duties hereunder or
under any of the Loan Documents without the prior written consent of Banks.
Banks shall give Borrower written notice of any assignment of its interests
hereunder to any other Person, upon which assignment Borrower and its Existing
Subsidiaries shall perform all of their respective obligations under the Loan
Documents in favor of Banks' assignee(s) as though such assignee(s) were
originally a party or parties to this Agreement.

          11.10  Amendments.  No amendment or waiver of any provision of this
Agreement or consent to any departure therefrom by Borrower, its Existing
Subsidiaries, Banks or Agent shall be effective unless the same shall be in
writing and signed by Borrower, its Existing Subsidiaries, Banks and Agent and,
in the case of a waiver or consent, such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.

          11.11  Entire Agreement.  This Agreement constitutes the entire
agreement among the parties and supersedes any and all prior agreements with
respect to the transactions contemplated hereby.

          11.12  Conflicts.  This Agreement is in addition to and supplements
the provisions of the other Loan Documents.  To the extent that the provisions
of this

                                       56
<PAGE>

Agreement are in conflict with, and not merely in addition to, the provisions of
the other Collateral Documents, the provisions of this Agreement shall govern.

          11.13  Reaffirmation of Collateral Documents.  Borrower and each of
the Existing Subsidiaries hereby reaffirms its obligations under each of the
Collateral Documents to which it is a party and agrees and confirms that all
such Collateral Documents continue to secure all Obligations under this
Agreement.

          11.14  VOS Name Change.  Following the effective date of this
Agreement, VOS shall change its  name to Gulf Island MinDOC Company, L.L.C.

          IN WITNESS WHEREOF, the parties hereto and intervenors herein have
caused this Agreement to be executed by their respective officers thereunto duly
authorized effective as of the date first written above.

                                             BORROWER:

                                             GULF ISLAND FABRICATION, INC.

                                             By: /s/Kerry J. Chauvin
                                                 _______________________________
                                                    Kerry J. Chauvin, President

                                             EXISTING SUBSIDIARIES:

                                             GULF ISLAND, L.L.C.

                                             By: /s/William A. Downey
                                                 _______________________________
                                                   William A. Downey, President

                                             DOLPHIN SERVICES, INC.

                                             By: /s/James Stewart
                                                 _______________________________
                                                  James Stewart, President

                                       57
<PAGE>

                                             SOUTHPORT, INC.

                                             By: /s/Kirk Meche
                                                 _______________________________
                                                    Kirk Meche, President

                                             VANGUARD OCEAN SERVICES, L.L.C.

                                             By: /s/Kerry J. Chauvin
                                                 _______________________________
                                                   Kerry J. Chauvin, President

                                             BANKS:

                                             BANK ONE, LOUISIANA, N.A.

                                             By: /s/J. Charles Freel, Jr.
                                                 _______________________________
                                                    J. Charles Freel, Jr.
                                                    First Vice President

                                             WHITNEY NATIONAL BANK

                                             By: /s/Harry C. Stahel
                                                 _______________________________
                                                    Harry C. Stahel
                                                    Senior Vice President

                                             AGENT:

                                             BANK ONE, LOUISIANA, N.A.

                                             By: /s/J. Charles Freel, Jr.
                                                 _______________________________
                                                    J. Charles Freel, Jr.
                                                    First Vice President

                                       58
<PAGE>

                                   EXHIBITS
                                   --------

A.  Bank One's form of Application for Stand-By Letter of Credit

B.  Form of Continuing Subsidiary Guaranty

C.  $10,000,000 Revolving Promissory Note made payable to the order of Bank One

D.  $10,000,000 Revolving Promissory Note made payable to the order of Whitney

E.  Borrower's Default and Warranty Certificate

F.  List of Collateral Documents

G.  Gulf Island Subsidiary Mortgage

H.  Gulf Island Subsidiary Security Agreement

I.  Description of Real Property

                                   SCHEDULES
                                   ---------

Schedule I - Litigation Pending Against Borrower

A.   Case No. H-94-3547, AGIP Petroleum, Inc. vs. Gulf Island Fabrication, Inc.,
     et al; In the U.S. District Court of Texas, Houston Division.

B.   Case No. 125786 (Civil Action) Alvin Sawyer vs. Gulf Island Fabrication,
     Inc.; In the 32nd Judicial District Court for the Parish of Terrebonne,
     State of Louisiana.

C.   Case No. 534,897, Stephen G. Benton, Jr. vs. Southport, Inc. consolidated
     with Gulf Island Fabrication, Inc.; In the 24th Judicial District Court,
     Division "D," Jefferson Parish, State of Louisiana.

D.   Case No. 125186 (Civil Action) Robbie Sauce vs. Dolphin Services, Inc.; In
     the 32nd Judicial District Court for Parish of Terrebonne, State of
     Louisiana.

Schedule II - Environmental Citations

A.   Gulf Island Fabrication, Inc. - Received Notice of Violation on 3/16/99
     from LADEQ for permit violations.  Presently waiting on determination from
     enforcement.  Gulf Island Fabrication, Inc.  Title V permit application
     submitted to LADEQ in January 2000.

B.   Southport, Inc. - On 11/17/99, notified LADEQ that it exceeded permitted
     limits.  Permit modification was submitted to LADEQ in December of 1999.
     Currently anticipate a new permit to be issued in February of 2000.

                                       59
<PAGE>

                                  EXHIBIT "I"

TRACT ONE:
---------

Owner: Gulf Island, L.L.C.

ALL  OF THAT CERTAIN TRACT OR PARCEL OF LAND, together with all of the buildings
and improvements thereon, and all of the rights, ways, privileges, servitudes,
appurtenances and advantages thereunto belonging or in anywise appertaining,
situated in the Parish of Terrebonne, State of Louisiana, in Sections 1 and 15,
T18S, R17E, and according to survey of T. Baker Smith & Son, Inc., dated
September 19, 1991, said property measures as follows, to-wit:

     Commencing at the intersection of the centerline of Thompson Road with the
     centerline of Grand Caillou Road (La.  Hwy. 57); thence, S 81(degrees)
     03'50" W a distance of 4831.76 feet to the point of beginning;

     Thence, S 8(degrees)56'10" E  a distance of 1300.00 feet to a point;

     Thence, S 8l(degrees)03'5O" W a distance of 1779.09 feet to a point;

     Thence, S 8(degrees)56'10" E a distance of 650.00 feet to a point;

     Thence, S 81(degrees)03'50" W a distance of 2323.21 feet to the centerline
     of the Houma Navigation Canal right-of-way;

     Thence, N 7(degrees)45'19" E on and along said centerline a distance of
     187.31 feet to a point;

     Thence, N 5(degrees)31"22" E on and along said centerline a distance of
     485.97 feet to a point;

     Thence, N 5(degrees)33'33" E on and along said centerline a distance of
     404.43 feet to a point;

     Thence, N 1(degrees)18'58" E on and  along said centerline a distance of
     889-50 feet to a point;

     Thence, N 0(degrees)58'37" W on and  along said centerline a distance of
     33.43 feet to a point;

     Thence, N 8l(degrees)03'50" E on and along the centerline of Thompson
     Road a distance of 3662.99 feet to the point of beginning, containing
     146.243 acres.

Together with all the buildings and improvements now or hereafter situated on
the aforedescribed property and appurtenances, rights, ways, privileges,
servitudes,

                                       60
<PAGE>

prescriptions, natural increases, accessions and advantages now or
hereafter belonging or in anywise appertaining thereto, including, without
limitation, all component parts of the aforedescribed property, and all
component parts of any building or other construction located on the
aforedescribed property, now or hereafter forming a part of or attached to the
aforedescribed property or used in connection therewith.

TRACT TWO:
---------

Owner: Gulf Island, L.L.C.

ALL OF THAT CERTAIN TRACT OR PARCEL OF LAND, together with all of the buildings
and improvements located thereon and all of the rights, ways, privileges,
servitudes, appurtenances and advantages thereunto belonging or in any way
appertaining, situated in the Parish of Terrebonne, State of Louisiana, in
Sections 11, 47 and 48, T17S-Rl7E and Sections 15 and 17, T18S-Rl7E of said
Parish, all as more fully shown on a plat and survey entitled "Gulf Island
Fabrication, Inc.. - Survey of A 437.014 Acre Tract Located in Sections 11, 47
and 48, T17S-Rl7E and Sections 15 and 17, T18S-Rl7E, Terrebonne Parish,
Louisiana" dated September 19, 1991 prepared by T. Baker Smith & Son, Inc., and
according to which plat and survey said property measures as follows, to-wit:

     Commencing at the northwest corner being the intersection of the northerly
property line and the easterly right-of-way line of Louisiana State Highway 315,
proceed N 84(degrees)23'47" E a distance of 3335.89 feet to a point;

     Thence along a curve to the right having a delta of 5(degrees)l6'27"
     with chord bearing S 24(degrees)03'28" E a distance of 1046.89 feet to
     a point;

     Thence S 19(degrees)07'32" E a distance of 469.15 feet to a point;

     Thence S 15(degrees)01'40"E a distance of 1078.97 feet to a point;

     Thence S 13(degrees)24'38"E a distance of 791.67 feet  to a point;

     Thence S 07(degrees)35'11"E a distance of 813.04 feet to a point;

     Thence S 08(degrees)20'28"E a distance of 59.49 feet to a point;

     Thence S 03(degrees)06'15"E a distance of 889.93 feet to a point;

     Thence S 00(degrees)52'48"E a distance of 369.78 feet to a point;

     Thence N 80(degrees)43'28"W a distance of 1567.06 feet to a point;

     Thence N 82(degrees)32'28" W a distance of 2563.86 feet to a point;

                                       61
<PAGE>

     Thence N 05(degrees)44'37" W a distance of 4445.67 feet to the point of
     beginning of a 437.014 acre tract.

Together with all the buildings and improvements now or hereafter situated on
the aforedescribed property and appurtenances, rights, ways, privileges,
servitudes, prescriptions, natural increases, accessions and advantages now or
hereafter belonging or in anywise appertaining thereto, including, without
limitation, all component parts of the aforedescribed property, and all
component parts of any building or other construction located on the
aforedescribed property, now or hereafter forming a part of or attached to the
aforedescribed property or used in connection therewith.

TRACT THREE:
-----------

Owner: Dolphin Services, Inc. as successor to Dolphin Sales & Rentals, Inc.

Commencing at a point S 81(degrees)03' 50" W, a distance of 3,360.00 feet from
the intersection of the centerline of La. State Highway No. 57 with the
centerline of Thompson Road; said point being the southeast corner of the tract
being conveyed and being on the centerline of Thompson Road, and also being the
point of beginning;

Thence S 81(degrees)03' 50" W, along the centerline of Thompson Road, a distance
of 330.00 feet to a point;

Thence N 8(degrees)56' 10" W, a distance of 1,320.00 feet to a point in the
centerline of Munson Slip;

Thence N 81(degrees)03' 50" E, along said centerline, a distance of 330.00 feet
to a point;

Thence S 8(degrees)56' 10" E, a distance of 1,320.00 feet from the point of
beginning and containing an area of 10.000 acres, more or less, all as more
fully shown on a map prepared by Southern Surveyors, dated May 4, 1976, and
titled "Plat of Survey Showing a Proposed Purchase from Walter Land Company
located in Section 12, T17S, R17E, and Section 1, T18S, R17E, Terrebonne Parish,
Louisiana".

Together with all the buildings and improvements now or hereafter situated on
the aforedescribed property and appurtenances, rights, ways, privileges,
servitudes, prescriptions, natural increases, accessions and advantages now or
hereafter belonging or in anywise appertaining thereto, including, without
limitation, all component parts of the aforedescribed property, and all
component parts of any building or other construction located on the
aforedescribed property, now or hereafter forming a part of or attached to the
aforedescribed property or used in connection therewith.

TRACT FOUR:
----------

Owner: Dolphin Services, Inc.

                                       62
<PAGE>

A certain lot or parcel of ground, together with all buildings and improvements
thereon, located in Section 12, Township 17 South, Range 17 East, and Section 1,
Township 18 South, Range 17 East, Terrebonne Parish, Louisiana, being Lot 27 of
Houma-Terrebonne Industrial Park as shown on a plat of survey of Robert C. Reed,
Registered Land Surveyor, dated March 22, 1972, revised July 11, 1973, said plat
attached to document dated February 17, 1975, and registered in COB 608, folio
670, Entry No. 482726, and said Lot 27 being more particularly described as
follows, to-wit:

Commencing at a point S 81(degrees)03'50" W, a distance of 1,150 feet from the
intersection of the centerline of Roland Road with the centerline of Thompson
Road; said point being the southeasterly corner of Lot 27 and also being the
point of beginning.

Thence S 81(degrees)03'50" W along the centerline of Thompson Road, a distance
of 330.00 feet to a point on the property line between Lots 27 and 26;

Thence N 8(degrees)56'10" W along said property line, a distance of 1,320.00
feet to a point in the centerline of Munson Slip;

Thence N 81(degrees)03'50" E, along the centerline of Munson Slip, a distance of
330.00 feet to a point on the property line between Lots 27 and 28 of said
Houma-Terrebonne Industrial Park;

Thence S 8(degrees)56'10" E, along said line between Lots 27 and 28, a distance
of 1,320.00 feet to the point of beginning, containing an area of 10.100 acres,
more or less. Said Lot 27 is shown on a plat prepared by Euclid Engineering Co.,
Inc. dated November 13, 1978.

Together with all the buildings and improvements now or hereafter situated on
the aforedescribed property and appurtenances, rights, ways, privileges,
servitudes, prescriptions, natural increases, accessions and advantages now or
hereafter belonging or in anywise appertaining thereto, including, without
limitation, all component parts of the aforedescribed property, and all
component parts of any building or other construction located on the
aforedescribed property, now or hereafter forming a part of or attached to the
aforedescribed property or used in connection therewith.

                                       63

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