Document:

<PAGE>

                                 LOAN AGREEMENT

         This Loan Agreement (this "Agreement") is effective as of March ____,
2003 by and among GENERAL ELECTRIC CAPITAL CORPORATION ("Lender"), a Delaware
corporation, TORCH OFFSHORE, L.L.C. ("Borrower"), a Delaware limited liability
company, and TORCH OFFSHORE, INC., a Delaware corporation ("Guarantor").

         1. LOAN; PROMISSORY NOTE. Lender hereby agrees, on or before March 31,
2003, to make a term loan to Borrower in an aggregate principal amount not to
exceed $9,250,000 (hereinafter, the "Loan"). Lender shall disburse the principal
on the Loan on the Acceptance Date specified under the Lender's signature at the
end of this Agreement. Reference is made to the Promissory Note in the original
principal amount of $9,250,000, made by the Borrower payable to the order of the
Lender in substantially the form of Exhibit "A" hereto (together with all
amendments and supplements thereto, the "Note"). Borrower promises to pay all
amounts due and payable under the Note to the order of Lender.

         2. FIRST PREFERRED SHIP MORTGAGE, SECURITY AGREEMENT, SECURITY DEPOSIT
PLEDGE AGREEMENT AND ASSIGNMENT OF INSURANCE POLICIES. In connection with the
Note and the above-described Loan, Borrower agrees to execute and deliver to
Lender a First Preferred Ship Mortgage (the "Mortgage") and a Master Security
Agreement (the "Security Agreement"), a Security Deposit Pledge Agreement
("Pledge") and an Assignment of Insurance Policies ("Assignment"), each of which
shall be in form and substance acceptable to Lender (collectively, the Note, the
Mortgage, the Security Agreement, the Pledge and the Assignment, as the same may
be amended, supplemented, extended or otherwise modified from time to time are
referred to as the "Debt Documents.") The term "Vessel" as used herein shall
refer to the term "Vessel" as defined in the Mortgage and the term "Collateral"
as used herein shall collectively refer to the term "Collateral" as defined in
the Security Agreement.

         3. GUARANTY. In order to further secure the Note and the
above-described Loan, the Guarantor shall execute and deliver to Lender a
guaranty guaranteeing, jointly and severally and in solido, all of the
obligations of the Borrower (the "Guaranty") in form and substance acceptable to
Lender.

         4. TAXES. Borrower and Guarantor will pay promptly when due all taxes,
assessments and governmental charges upon or against Borrower and Guarantor or
the property or operations of Borrower and Guarantor, in each case before same
becomes delinquent and before penalties accrue thereon, unless and to the extent
that same are being contested in good faith by appropriate proceedings.

         5. GENERAL INDEMNITY. Borrower and Guarantor assume all risk and
liability for, and shall defend, indemnify and keep Lender harmless on an
after-tax basis from, any and all liabilities, obligations, losses, damages,
penalties, claims, actions, suits, costs and expenses (collectively, the
"Claims"), including reasonable attorneys' fees and expenses, of whatsoever kind
and nature imposed on, incurred by or asserted against Lender, in any way
relating to or arising out of the manufacture, purchase, acceptance, rejection,
ownership, possession, use, selection, delivery, operation, condition, sale,
return or other disposition of the Vessel or any part thereof (including,
without limitation, any claim for latent or other defects, whether or not
discoverable by Borrower or Guarantor or any other person, any claim for
negligence, tort or strict liability, any claim under any environmental
protection or hazardous waste law and any claim for patent, trademark or
copyright infringement and INCLUDING ANY AND ALL SUCH CLAIMS ARISING AS A RESULT
OF LENDER'S OWN NEGLIGENCE, but excluding any such Claims caused by Lender's
gross negligence or willful misconduct). In this section, "Lender" also includes
any director, officer, employee, agent, successor or assign of Lender. Borrower
and Guarantor's obligations under this section shall survive the expiration,
cancellation or termination of this Agreement.

<PAGE>

      6. FINANCIAL REPORTS. Borrower and Guarantor each agree to furnish to
Lender: (a) as soon as available, and in any event within 120 days after the end
of each fiscal year of Borrower and Guarantor a balance sheet of Borrower and
Guarantor as of the end of such fiscal year and the related statement of income
and retained earnings for such fiscal year, audited by independent public
accountants of nationally recognized standing selected by Borrower, all in
reasonable detail and setting forth in comparative form the corresponding
figures for the preceding fiscal year; (b) as soon as available, and in any
event within 45 days after the end of each of the first three quarters
accounting period in each fiscal year of Borrower and Guarantor, an unaudited
balance sheet of Borrower and Guarantor as of the end of such period and the
related statement of income and retained earnings for such period, all in
reasonable detail certified as true and complete by the president, vice
president, controller or the chief financial officer of Borrower and Guarantor;
and (c) such other financial information as Lender may from time to time
reasonably request including, without limitation, financial reports filed by
Borrower and Guarantor with federal or state regulatory agencies. All such
financial information shall be prepared in accordance with generally accepted
accounting principles except for certain adjustments for the quarterly financial
statements. Guarantor will deliver to Lender copies of all Forms 10-K and 10-Q,
if any, within 30 days after the dates on which they are filed with the
Securities and Exchange Commission.

         7. NO CHANGES IN BORROWER AND GUARANTOR. Neither Borrower nor Guarantor
shall: (a) liquidate, dissolve, terminate or suspend its business; (b) transfer
all or any substantial part of its operations or assets outside of the United
States of America; (c) sell, transfer or otherwise dispose of all or a majority
of its assets; or (d) undergo any change in the ownership of membership
interests or shares in Borrower or undergo any event or series of events as a
result of which any "person" or "group" (as such terms are used in Sections
13(d)(3) and 14(d) of the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated by the Securities Exchange Commission
(collectively, the "Exchange Act")) (excluding Guarantor or any Subsidiary (as
hereinafter defined)) is or becomes, directly or indirectly, the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, whether or
not applicable) of more than 45% of the combined voting power of the then
outstanding securities entitled to vote generally in elections of directors,
managers or trustees, as applicable, of Guarantor or any successor entity. If
Borrower intends to enter into any merger, consolidation or similar
reorganization (each a "Merger") where Borrower will not be the surviving
business entity, then (i) Borrower agrees that it will notify Lender in writing
no less than 30 days before the intended effective date of such Merger and such
notice will include information about the parties to such Merger, (ii) Borrower
agrees that such Merger will be subject to the prior written consent of Lender,
and (iii) Lender agrees that its consent to such Merger will not be unreasonably
withheld or delayed; provided, if not given in 21 days or less, Lender's consent
shall be deemed to be denied. If Lender withholds its consent (deemed or
otherwise) to any Merger as described above in this section or as described in
any guaranty executed by the Guarantor in connection with all or any part of
Borrower's obligations under this Agreement (whether now existing or hereafter
arising) and if Borrower or Guarantor, as the case may be, intends to complete
any such Merger, then Borrower shall prepay its obligations under the Note by
paying to Lender on the intended effective date of the applicable Merger (the
"Merger Payment Date") the total of the following: (1) all accrued interest,
taxes, late charges and other amounts then due and payable under the Note and
the other Debt Documents; plus (2) the remaining principal balance payable by
Borrower under the Note as of said Merger Payment Date according to the simple
interest method together with any sales or transfer taxes due in connection with
such amounts (provided however, that no prepayment premium shall accrue under
the Note in connection with a prepayment under this Section of the Agreement).

         8. REPRESENTATIONS. Borrower and/or Guarantor, as applicable, represent
and warrant that: (a) Borrower is a limited liability company duly organized and
legally existing under the laws of the State of Delaware and is qualified to do
business in and is in good standing under the laws of each other state in which
it conducts its business; (b) Guarantor is a corporation duly organized, legally
existing and in good

                                      -2-
<PAGE>

standing under the laws of the State of Delaware and is qualified to do business
in and is in good standing under the laws of each other state in which it
conducts its business; (c) Borrower has the power and is duly authorized to
enter into the Debt Documents and to execute and deliver to Lender, now and from
time to time hereafter, additional instruments, resolutions, agreements and
other instruments or documents relating to the foregoing agreements; (d)
Guarantor has the power and is duly authorized to enter into this Agreement and
the Guaranty, and to execute and deliver to Lender, now and from time to time
hereafter, additional instruments, resolutions, agreements and other instruments
or documents relating to the foregoing agreements; (e) Borrower has, by proper
action, authorized and empowered those persons whose signatures appear in the
Debt Documents, and any instruments, documents and exhibits that have been
delivered in connection herewith, to execute the same for and on its behalf; (f)
Guarantor has, by proper action, authorized and empowered those persons whose
signatures appear in this Agreement and the Guaranty, and any instruments,
documents and exhibits that have been delivered in connection herewith, to
execute the same for and on its behalf; (g) each of the Debt Document(s)
constitute(s) the legal, valid, and binding obligations of Borrower enforceable
in accordance with their terms; (h) this Agreement, the Guaranty, and each
related document constitutes a legal, valid, and binding obligation of Guarantor
enforceable in accordance with its terms; (i) this Agreement and the Note
evidence a loan made primarily for business, commercial or agricultural purposes
and not primarily for personal, family, or household purposes; and (j) Borrower
is, and will continue to be, the legal and beneficial owner of the Vessel, free
and clear of any Lien (hereinafter defined), except for the security interest
created by any agreement executed by Borrower for the benefit of Lender and such
Liens as are expressly permitted by the Mortgage. "Lien" means any security
interest, lien, mortgage, pledge, encumbrance, judgment, execution, attachment,
warrant, writ, levy, other judicial process or claim of any nature whatsoever by
or of any person.

         9. FINANCIAL COVENANTS. (a) Guarantor will have and maintain, as of the
end of each fiscal quarter, a Consolidated Current Ratio of at least 1.30; (b)
Guarantor will have and maintain, as of the end of each fiscal quarter, a
Consolidated Debt Service Coverage Ratio of at least 1.20; (c) Guarantor will
have and maintain, as of the end of each fiscal quarter, a Consolidated Leverage
Ratio of no more than 2.00; and (d) Guarantor will have and maintain, as of the
end of each fiscal quarter, Consolidated Adjusted Tangible Net Worth of at least
$60,000,000. For purposes of this section, the following definitions apply:

         (a) "Consolidated Current Ratio" shall mean, as of any date for which
it is being determined, the ratio of (a) current assets of Guarantor and its
Subsidiaries as of such date, as determined on a consolidated basis in
accordance with GAAP, to (b) current liabilities of Guarantor and its
Subsidiaries as of such date, as determined on a consolidated basis in
accordance with GAAP; provided that, for purposes of determining the
Consolidated Current Ratio, during the Line of Credit Period, the MIDNIGHT
EXPRESS will be classified as a current asset up to the principal amount of the
Line of Credit Loans outstanding on such date (with any residual amount to be
classified in accordance with GAAP).

         (b) "Consolidated Debt Service Coverage Ratio" shall mean, as of any
date for which it is being determined, the ratio of (a) Consolidated Net Income
for the immediately preceding four (4) fiscal quarters (including any fiscal
quarter ending on such date of determination) plus all depreciation and
amortization expenses and all other non-cash items of Guarantor and its
Subsidiaries during the immediately preceding four (4) fiscal quarters
(including any fiscal quarter ending on such date of determination) to the
extent included in the computation of Net Income, minus all cash Distributions
made by Guarantor or any Subsidiary which is not wholly owed by Guarantor during
the immediately preceding four (4) fiscal quarters (including any fiscal quarter
ending on such date), to (b) Consolidated Scheduled Principal Payments for the
immediately preceding four (4) fiscal quarters (including any fiscal quarter
ending on such date) plus the principal portion of Capitalized Lease Obligations
payable by Guarantor and its Subsidiaries in respect of the immediately

                                      -3-
<PAGE>

preceding four (4) fiscal quarters (including any fiscal quarter ending on such
date), determined on a consolidated basis in accordance with GAAP.

         (c) "Consolidated Indebtedness" shall mean, as of the date of any
determination thereof, the sum of (a) all Indebtedness of Guarantor and its
Subsidiaries as of such date, determined on a consolidated basis in accordance
with GAAP plus (b) all unfunded but available lines of credit of Guarantor and
its Subsidiaries as of such date.

..

         (d) "Consolidated Leverage Ratio" shall mean, as of any date for which
it is being determined, the ratio of (a) Consolidated Indebtedness as of such
date to (b) Consolidated Adjusted Tangible Net Worth as of such date, provided
that for purposes of determining the Consolidated Leverage Ratio, the $1,250,000
non interest bearing deposit pledged to Lender pursuant to the Pledge will be
deducted from Consolidated Indebtedness.

         (e) "Consolidated Net Income" shall mean, for the period in question,
the after-tax net income or loss of Guarantor and its Subsidiaries during such
period, but excluding in any event the following to the extent included in the
computation of net income: (i) any gains or losses resulting from any
reappraisal, revaluation or write-up or write-down of assets; (ii) any equity of
Guarantor or any Subsidiary in the undistributed earnings of any corporation
which is not a Subsidiary and is accounted for on the equity method; (iii) gains
or losses from the acquisition or disposition of Investments; (iv) gains from
the retirement or extinguishment of any Indebtedness; (v) gains on collections
from insurance policies or settlements (net of premiums paid or other expenses
incurred with respect to such gains during the fiscal period in which the gain
occurs, to the extent such premiums or other expenses are not already reflected
in Consolidated Net Income for such period); (vi) any gains or losses during
such period from any change in accounting principles, from any discontinued
operations or the disposition thereof or from any prior period adjustments; and
(vii) any extraordinary gains or losses; all determined on a consolidated basis
in accordance with GAAP.

         (f) "Consolidated Tangible Net Worth" of any Person shall mean, at a
particular date, the excess, if any, of (a) all amounts which would be included
under shareholders' equity on a consolidated balance sheet of such Person as of
such date, determined on a consolidated basis in accordance with GAAP
(including, without limitation, capital stock, additional paid-in-capital and
retained earnings) minus (b) all assets of such Person as of such date,
determined on a consolidated basis in accordance with GAAP, that would be
classified as intangible assets in accordance with GAAP, but in any event
including, without limitation, the following intangible assets: unamortized
organization and reorganization expense, patents, trade or service marks,
franchises, trade names and goodwill; all determined on a consolidated basis in
accordance with GAAP.

         (g) "Consolidated Scheduled Principal Payments" shall mean, for the
period in question, without duplication, all scheduled principal payments of
Guarantor and its Subsidiaries on Indebtedness for the applicable period, all
determined on a consolidated basis as determined in accordance with GAAP;
provided that any balloon principal payment on Indebtedness of Guarantor and its
Subsidiaries which is extended to a maturity date beyond the applicable period
shall not be included in the calculation of Consolidated Scheduled Principal
Payments.

         (h) "Distribution" in respect of any personal shall mean(a) dividends
or other distributions of cash, stock assets or other property on or in respect
of any shares of stock, membership interest or other equity interest in such
person; and (b) the redemption, repurchase or other acquisition of any shares of
stock, membership interest or other equity interest in such person or of any
warrants, rights or other options to

                                      -4-
<PAGE>

purchase any stock, membership interest or other equity interest (except when
solely in exchange for such stock, membership interest or other equity
interest); provided that, the issuance of granting of stocks, warrants, rights
or other options to purchase stock of Guarantor shall not be considered a
Distribution.

         (i) "Indebtedness" shall mean, with respect to any Person, without
duplication, all indebtedness, liabilities and obligations of such Person, but
in any event including, without limitation, all (i) obligations of such Person
for borrowed money or for the deferred purchase price of Property or services
(including, without limitation, all notes payable and all obligations evidenced
by bonds, debentures, notes or other similar instruments), (ii) obligations
secured by any Lien on, or payable out of the proceeds of production from, any
Property or assets owned by such Person, whether or not such Person has assumed
or become liable for the payment of such obligations, (iii) indebtedness,
liabilities and obligations of third parties, including joint ventures and
partnerships of which such Person is a venturer or general partner, recourse to
which may be had against such Person, (iv) obligations created or arising under
any conditional sale or other title retention agreement with respect to Property
acquired by such Person, notwithstanding the fact that the rights and remedies
of the seller, lender or lessor under such agreement in the event of default are
limited to repossession or sale of such Property, (v) Capitalized Lease
Obligations of such Person, (vi) all accounts payables of such Person, (vii) all
indebtedness, liabilities and obligations of such Person under guarantees, and
(viii) all obligations of such Person, contingent or otherwise, relative to the
face amount of letters of credit (as may be reduced pursuant to their terms),
whether or not drawn.

         (j) "Subsidiary" shall mean (a) any corporation of which more than
fifty percent (50%) of the issued and outstanding capital stock entitled to vote
for the election of directors is at the time owned directly or indirectly by
Guarantor and/or any one or more Subsidiaries, or (b) any partnership, limited
liability company, business trust, or any other similar entity of which more
than fifty percent (50%) of the voting interests is at the time owned directly
or indirectly by Guarantor and/or any one or more Subsidiaries, and specifically
including, but not limited to, Torch Offshore, L.L.C., a Delaware limited
liability company, Torch Express, L.L.C., a Louisiana limited liability company,
and Torch Deepwater, Inc., a Louisiana corporation.

         (k) "Capitalized Lease Obligations" of any Person shall mean, as of the
date of any determination therof, the amount at which the aggregate rental
obligations due and to become due under all Capitalized Leases under which such
person is a lessee would be reflected as a liability on a balance sheet of such
Person as determined in accordance with GAAP.

         (l) "Capitalized Lease" shall mean any lease of Property, whether real
and/or personal, by a Person as lessee which as determined in accordance with
GAAP is required to be capitalized on the balance sheet of such person.

         (m) "GAAP" shall mean generally accepted accounting principles at the
time in the United States of America.

         (n) "Line of Credit Period" shall mean the period commencing on the
date hereof and ending April 30, 2004.

         (o) "Line of Credit Loan" and "Line of Credit Loans" shall mean the
Loan Agreement, dated July 19, 2002, between Regions Bank, Guarantor, as the
same may be amended or replaced from time to time, including without limitation,
any replacement thereof under or pursuant to a certain Credit Agreement among
Guarantor, Regions Bank and Export Development Canada, and their respective
successors and assigns to lend to Guarantor from time to time on a non-revolving
basis amounts as set forth in the Credit Agreement.

                                      -5-
<PAGE>

         (p) "Consolidated Adjusted Tangible Net Worth" shall mean, at a
particular date, (a) the Consolidated Tangible Net Worth of Borrower and its
Subsidiaries as of such date minus (b) all Indebtedness due to Borrower and its
Subsidiaries as of such date from any officer, shareholder or affiliate (other
than a Subsidiary) of such Person or any Subsidiary of such Person; all
determined on a consolidated basis in accordance with GAAP.

         (q) "Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, limited liability company, institution, entity or government
(whether national, federal, state, county, city, municipal or otherwise,
including, without limitation, any instrumentality, division, agency, body or
department thereof).

         (r) "Investment" shall mean any investment by Guarantor or any
Subsidiary in any Person, whether payment therefor is made in cash or capital
stock of Guarantor or any Subsidiary, and whether such investment is by
acquisition of stock or Indebtedness, or by loan, advance, transfer of property
out of the ordinary course of business, capital contribution, equity or profit
sharing interest, extension of credit on terms other than those normal in the
ordinary course of business, guarantee or otherwise becoming liable
(contingently or otherwise) in respect of the Indebtedness of any Person, or
otherwise.

         (s) "Property" shall mean any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible. "Properties"
shall mean the plural of Property.

         (t) "MIDNIGHT EXPRESS" shall mean the vessel MIDNIGHT EXPRESS, Official
Number 1450, documented under the laws of Vanuatu, owned by Torch Express,
L.L.C.

         (u) Guarantor covenants and agrees that, so long as any portion of the
Loan remains outstanding Guarantor will deliver to Lender simultaneously with
the delivery of each set of financial statements of Guarantor referred to above,
a certificate of the Guarantor's Chief Financial Officer in a form satisfactory
to Lender, accompanied by supporting financial worksheets where appropriate, (A)
evidencing Guarantor's compliance with the financial covenants contained in this
Section 9 as calculated on a consolidated basis for Guarantor and its
Subsidiaries (and including, without limitation, a computation of the
Consolidated Leverage Ratio as of the end of the immediately preceding fiscal
quarter), (B) stating whether there exists on the date of such certificate any
Event of Default, and if an Event of Default then exists, setting forth the
details thereof and the action which Guarantor is taking or proposes to take
with respect thereto.

         10. OTHER DOCUMENTS; EXPENSES; CLOSING FEE; APPOINTMENT OF
ATTORNEY-IN-FACT. Borrower and Guarantor hereby irrevocably appoint Lender and
any designee of Lender as Borrower and Guarantor's attorney in fact, with full
authority in the place and stead of Borrower or Guarantor, from time to time in
Lender's discretion upon, during, and after an Event of Default, to take any
action and to execute any instrument which Lender may deem reasonably necessary
or advisable to accomplish the purposes of this Agreement. Borrower and
Guarantor shall pay upon Lender's request any out-of-pocket costs and expense
paid or incurred by Lender in connection with this Agreement or the funding and
closing of this Agreement. In addition, Borrower shall pay Lender on the
Acceptance Date a Closing Fee in the amount of $2,500.00, plus all attorneys'
fees incurred by the Lender in connection with making the Loan. Borrower and
Guarantor authorize Lender and Lender's agents to correct any typographical
errors in Borrower or Guarantor's name in any documents to be filed in public
records and to conform the dates of this Agreement, the Note, the Mortgage, the
Security Agreement and/or any document executed in connection therewith.

                                      -6-
<PAGE>

         11. EVENTS OF DEFAULT. Each of the following events shall constitute an
"Event of Default" hereunder and under the Debt Documents: (a) Borrower fails to
pay any amount due under the Note when due; or (b) there shall be an event of
default under any of the Debt Documents; or (c) Borrower or Guarantor fails to
pay any amount due under this Agreement within ten (10) days of request by
Lender; or (d) Borrower or Guarantor fails to perform or observe any of its or
their other obligations in this Agreement for more than 30 days after Lender
notifies Borrower of such failure; or (e) Borrower or Guarantor defaults (and
such default shall not have been waived or cured) in the payment, performance or
observance of any obligation under any loan, credit agreement or lease in which
Lender, the parent company of Lender, or any subsidiary (direct or indirect) of
Lender (or its successors or assigns) is the creditor or lessor; or (f) Borrower
or Guarantor defaults (and such default shall not have been waived or cured) in
the payment, performance or observance of any obligation under any other loan,
credit agreement or lease; (g) any statement, representation or warranty made by
Borrower or Guarantor in this Agreement or in any document, certificate or
financial statement in connection with this Agreement, including the Debt
Documents, proves at any time to have been untrue or misleading in any material
respect as of the time when made; or (h) Borrower or Guarantor becomes insolvent
or bankrupt, or Borrower or Guarantor admits its inability to pay its debts as
they mature, or Borrower or Guarantor makes an assignment for the benefit of
creditors, or Borrower or Guarantor applies for, institutes or consents to the
appointment of a receiver, trustee or similar official for Borrower or Guarantor
or any substantial part of their respective property or any such official is
appointed without the consent of Borrower or Guarantor, or Borrower or Guarantor
applies for, institutes or consents to any bankruptcy, insolvency,
reorganization, debt moratorium, liquidation or similar proceeding relating to
Borrower or Guarantor or any substantial part of their respective property under
the laws of any jurisdiction or any such proceeding is instituted against
Borrower or Guarantor without stay or dismissal for more than 30 days, or
Borrower or Guarantor commences any act amounting to a business failure or a
winding up of its affairs, or Borrower or Guarantor ceases to do business as a
going concern; or (i) the Mortgage shall be declared to be null, void, invalid
or unenforceable by Borrower; or (j) with respect to any guaranty executed by
Guarantor in connection with all or any part of Borrower's obligations under
this Agreement or the Note (whether now existing or hereafter arising),
Guarantor fails to perform or observe any of its obligations thereunder or the
Guaranty shall cease to be in full force and effect or shall be declared to be
null, void, invalid or unenforceable by Guarantor; or (k) there shall be any
change in the ownership of membership interests or shares in Borrower or
Guarantor shall undergo any event described in Section 7(d) of this Agreement;
or (l) Guarantor is in default under that certain Loan Agreement by and between
Regions Bank and Guarantor dated July 19, 2002, as same may be amended and/or
replaced from time to time including, but not limited to, amendment or
replacement thereof under or pursuant to a certain Credit Agreement to be
entered into by and among any Guarantor, Regions Bank and Export Development
Canada.

         12. RIGHTS UPON DEFAULT. If any Event of Default exists, Lender may
exercise in any order one or more of the remedies described in the lettered
subparagraphs of this section, and each Borrower and Guarantor shall perform its
obligations imposed thereby:

         (a) Lender may require Guarantor to perform any obligation required to
be performed under the Mortgage, the Security Agreement, the Guaranty and the
other documents evidencing or securing the Loan.

         (b) Lender may require Borrower to pay to Lender on a date specified by
Lender, (i) all accrued and unpaid interest, late charges and other amounts due
under this Agreement and the Note, as of such date, plus (ii) the remaining
principal balance due under the Note as of such date, plus (iii) interest at the
Overdue Rate on the total of the foregoing ("Overdue Rate" means an interest
rate per annum equal to the greater of 18% per annum or 2% over the Interest
Rate (as defined in the Note), but not to exceed the highest rate permitted by
applicable law). If an Event of Default under Section 10(h) of this Agreement
exists, then

                                      -7-
<PAGE>

Borrower will be automatically liable to pay Lender the foregoing amounts as of
the next installment payment date under the Note unless Lender otherwise elects
in writing.

         (c) Borrower shall pay all reasonable costs, expenses and damages
incurred by Lender because of the Event of Default or its actions under this
section, including, without limitation any reasonable collection agency and/or
attorneys' fees incurred in collection efforts.

         (d) Lender may sue to enforce Borrower's performance of its obligations
under the Note and this Agreement and/or may exercise any other right or remedy
then available to Lender under the Debt Documents, at law or in equity.

         (e) Lender may sue to enforce Guarantor's performance of their
obligations, individually or collectively, under the Guaranty.

         Except as otherwise expressly required by the terms of this Agreement
or the Debt Documents or by applicable law, Lender is not required to take any
legal process or give Borrower or Guarantor any notice before exercising any of
the above remedies. If Lender is required to give notice, 5 calendar days
advance notice is reasonable notification. None of the above remedies is
exclusive, but each is cumulative and in addition to any other remedy available
to Lender. Lender's exercise of one or more remedies shall not preclude its
exercise of any other remedy. No action taken by Lender shall release Borrower
or Guarantor from any of their obligations to Lender. No delay or failure on the
part of Lender to exercise any right hereunder shall operate as a waiver
thereof, nor as an acquiescence in any default, nor shall any single or partial
exercise of any right preclude any other exercise thereof or the exercise of any
other right. After any default, Lender's acceptance of any payment by Borrower
or Guarantor under this Agreement or any of the Debt Documents, the Guaranty or
any related agreement shall not constitute a waiver by Lender of such default,
regardless of Lender's knowledge or lack of knowledge at the time of such
payment, and shall not constitute a reinstatement of this Agreement, or any of
the Debt Documents, the Guaranty or any related agreement if this Agreement has
been declared in default by Lender, unless Lender has agreed in writing to
reinstate this Agreement and to waive the default.

         13. LATE CHARGES. If any installment payment or other amount payable
under this Agreement, the Mortgage, the Security Agreement, the Guaranty or the
Note is not paid within ten days of its due date, then as compensation for the
administration and enforcement of Borrower and Guarantor's obligation to make
timely payments, Borrower or Guarantor shall pay with respect to each overdue
payment on demand interest at the Overdue Rate (as defined in clause (b) of
Section 12 hereof) on each overdue payment for the time period from the due date
until such overdue payment is made.

         14. LENDER'S RIGHT TO PERFORM. If Borrower or Guarantor fail to make
any payment under this Agreement or any of the Debt Documents, or the Guaranty
or fails to perform any of its other obligations in this Agreement or any of the
Debt Documents (including, without limitation, its agreement to provide
insurance coverage), or the Guaranty, Lender may itself make such payment or
perform such obligation, and the amount of such payment and the amount of the
expenses of Lender incurred in connection with such payment or performance shall
be deemed to be additional principal under the Note which is payable by Borrower
on demand.

         15. NOTICES; POWER OF ATTORNEY. (a) All notices, requests and other
communications hereunder shall be in writing and shall be sufficient if
delivered in person, telegraphed, telefaxed, telecopied, cabled, sent by
overnight courier or sent by registered or certified mail, return receipt
requested, postage prepaid to Lender, Borrower, or Guarantor as follows:

                                      -8-
<PAGE>

         Lender:                    General Electric Capital Corporation
                                    44 Old Ridgebury Road
                                    Danbury, Connecticut  06810
                                    Attn:   Risk Analyst

                                    With a copy to:

                                    General Electric Capital Corporation
                                    14679 Dallas Parkway, Suite 300
                                    Addison, Texas  75001-2512
                                    Attn:   Risk Analyst
                                    Fax No.: 972-713-2596

         Borrower:                  Torch Offshore, L.L.C.
                                    c/o Torch Offshore, Inc.
                                    401 Whitney Avenue
                                    Suite 400
                                    Gretna, Louisiana 70056
                                    Attn:  Chief Financial Officer
                                    Fax No.: (504) 367-7075

         Guarantor:                 Torch Offshore, Inc.
                                    401 Whitney Avenue
                                    Suite 400
                                    Gretna, Louisiana  70056
                                    Attn:  Chief Financial Officer
                                    Fax No.: (504) 367-7075

Any such notice mailed to such address shall be effective upon its delivery to
the applicable party. (b) With respect to any power of attorney covered by this
Agreement or any of the Debt Documents, the powers conferred on Lender thereby:
are powers coupled with an interest; are irrevocable; are solely to protect
Lender's interests under this Agreement; and do not impose any duty on Lender to
exercise such powers. Lender shall be accountable solely for amounts it actually
receives as a result of its exercise of such powers.

         16. PARTICIPATION AND ASSIGNMENT BY LENDER. Lender may, without the
consent of or notice to the Borrower or Guarantor, in the ordinary course of its
commercial banking business and in accordance with applicable law, at any time
sell to one or more banks or other entities ("Participants") participating
interests in any Loan or any other interest of Lender hereunder and under any
documents relating to the Loan ("Loan Documents"). In the event of any such sale
by Lender of a participating interest to a Participant, Lender's obligations
under this Agreement to the other parties to this Agreement shall remain
unchanged, Lender shall remain solely responsible for the performance thereof,
Lender shall remain the holder of any such Loan for all purposes under this
Agreement and the other Loan Documents, and the Borrower and Guarantor shall
continue to deal solely and directly with Lender in connection with Lender's
rights and obligations under this Agreement and the other Loan Documents. The
Borrower and Guarantor agree that if amounts outstanding under this Agreement
are due or unpaid, or shall have been declared or shall have become due and
payable upon the occurrence of an Event of Default, each Participant shall, to
the maximum extent permitted by applicable law, be deemed to have the right of
setoff in respect of its participating interest in amounts owing under this
Agreement to the same extent as if the amount of its participating interest were
owing directly to it as Lender under this Agreement.

                                      -9-
<PAGE>

         Borrower and Guarantor authorize Lender to disclose to any Participant
and any prospective Participant any and all financial information in Lender's
possession concerning the Borrower and/or Guarantor which has been delivered to
Lender by or on behalf of the Borrower and/or Guarantor pursuant to this
Agreement or which has been delivered to Lender by or on behalf of the Borrower
and Guarantor in connection with Lender's credit evaluation of the Borrower and
Guarantor prior to becoming a party to this Agreement.

         In addition, all rights of Lender hereunder and under the Debt
Documents, the Guaranty and in the Vessel may be assigned, pledged, mortgaged,
transferred or otherwise disposed in whole or in part, without notice to
Borrower or Guarantor; provided that, neither Borrower nor Guarantor shall be
under any obligation to any assignee of Lender except upon receipt of written
notice of such assignment from Lender. Upon notice to Borrower and Guarantor of
any such assignment, the principal, interest and other sums payable by Borrower
hereunder and under the Debt Documents which are the subject matter of the
assignment shall be paid to or upon the written order of the assignee; provided
that, no such assignment of Lender's rights shall alter in any way the
obligations of Borrower or Guarantor under this Agreement or the Debt Documents.
No such assignee shall be obligated to perform any duty, covenant or condition
required to be performed by Lender under the terms of this Agreement or under
the Debt Documents or the Guaranty unless such assignee expressly assumes such
obligation, and, if all of Lender's obligations hereunder and thereunder are
assumed by such assignee, then Lender shall be relieved of any further liability
hereunder and thereunder. Any such assignee upon assignment and assumption of
this Agreement shall become the "Lender" hereunder and shall have all rights,
powers and remedies given to Lender by this Agreement and the Debt Documents and
the Guaranty, and shall be named as loss payee or additional insured under all
policies of insurance maintained by the Borrower pursuant to the Mortgage and
Security Agreement. Borrower and the Guarantor agree to execute related
acknowledgements and other documents that may be reasonably requested by Lender
or any assignee.

         17. NO ASSIGNMENT OR LEASING BY BORROWER OR GUARANTOR. NEITHER BORROWER
NOR GUARANTOR SHALL, DIRECTLY OR INDIRECTLY, MORTGAGE, ASSIGN, SELL, TRANSFER,
OR OTHERWISE DISPOSE OF ANY INTEREST IN THIS AGREEMENT, THE NOTE, THE MORTGAGE,
THE SECURITY AGREEMENT OR THE VESSEL, OR ANY PART THEREOF, EXCEPT FOR TIME
CHARTERS OF THE VESSELS ENTERED INTO IN THE ORDINARY COURSE OF BORROWER'S
BUSINESS AND PURSUANT TO THE TERMS OF THE MORTGAGE.

         18. DEFINITIONS. All terms defined herein are equally applicable to
both the singular and plural form of such terms.

         19. CONDITIONS. Lender is not obligated to make any loan or disburse
any principal hereunder unless: (a) Lender has received evidence of all required
insurance; (b) in Lender's sole judgment, there has been no material adverse
change in the financial condition or business of Borrower or Guarantor; (c)
Borrower has signed and delivered to Lender this Agreement and the Note and
Lender has received and accepted the same; (d) Lender has received resolutions
or appropriate authorization and incumbency certificates from Borrower and
Guarantor, all of which shall be satisfactory to Lender in form and substance;
(e) Lender has received an absolute and unconditional guaranty of all of
Borrower's obligations to Lender that is executed by Guarantor; (f) Lender has
received satisfactory United States Coast Guard lien searches and Uniform
Commercial Code lien searches of state and local lien records on the Vessel, the
Borrower and Guarantor; (g) Lender has received terminations or releases of lien
in recordable form from all creditors with a lien on any part of the Vessel as
shown in United States Coast Guard, state or local lien records; (h) Lender has
received copies of documentation satisfactory to Lender that evidences that
Borrower possesses good and

                                      -10-
<PAGE>

marketable title to the Vessel free and clear of any liens; (i) Lender has
received such documentation as Lender reasonably requests regarding the
documentation of the Vessel with the United States Coast Guard and the recording
of the Mortgage with the United States Coast Guard; and (j) Lender has received,
in form and substance satisfactory to Lender, such other documents and
information as Lender shall reasonably request.

         20. USURY. It is not the intention of the parties to this Agreement or
the Debt Documents to make an agreement violative of the laws of any applicable
jurisdiction relating to usury ("Usury Laws"). Regardless of any provision in
this Agreement or the Debt Documents, Lender shall not be entitled to receive,
collect or apply, as interest on any indebtedness, any amount in excess of the
Maximum Amount (the "Excess"). As used herein, "Maximum Amount" shall mean the
maximum amount of interest that would have accrued if the unpaid principal
amount of the indebtedness outstanding from time to time had borne interest each
day at the maximum amount of interest that Lender is permitted to charge on the
indebtedness under the Usury Laws. If Lender ever receives, collects or applies
as interest any Excess, such Excess shall be deemed a partial repayment of
principal and treated hereunder as such; and if principal is paid in full, any
remaining Excess shall be paid to Borrower. In determining whether or not the
interest paid or payable under any specific contingency exceeds the Maximum
Amount, Borrower and Lender shall, to the maximum extent permitted under the
Usury Laws, (i) characterize any nonprincipal payment as an expense, fee or
premium rather than as interest, (ii) exclude voluntary prepayments and the
effect thereof, and (iii) amortize, prorate, allocate and spread in equal parts,
the total amount of interest throughout the entire contemplated term of the
indebtedness so that the interest rate is uniform throughout the entire term of
the indebtedness; provided that if the indebtedness is paid and performed in
full prior to the full contemplated term thereof, and if the interest received
for the actual period of existence thereof exceeds the Maximum Amount, Lender
shall refund to Borrower the Excess, and such event shall not be subject to any
penalties provided by the Usury Laws.

         21. GOVERNING LAW. THE INTERPRETATION, CONSTRUCTION AND VALIDITY OF
THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

         22. MISCELLANEOUS. (a) Subject to the limitations herein, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, administrators, successors and assigns. (b) This
Agreement may be executed in any number of counterparts, which together shall
constitute a single instrument. (c) Section and paragraph headings in this
Agreement are for convenience only and have no independent meaning. (d) The
terms of this Agreement shall be severable and if any term thereof is declared
unconscionable, invalid, illegal or void, in whole or in part, the decision so
holding shall not be construed as impairing the other terms of this Agreement
and this Agreement shall continue in full force and effect as if such invalid,
illegal, void or unconscionable term were not originally included herein. (e)
All indemnity obligations of Borrower or Guarantor under this Agreement or the
Debt Documents and all rights, benefits and protections provided to Lender by
warranty disclaimers shall survive the cancellation, expiration or termination
of this Agreement or the Debt Documents. (f) Lender shall not be liable to
Borrower or Guarantor for any indirect, consequential or special damages for any
reason whatsoever. (g) This Agreement may be amended, but only by a written
amendment signed by the parties hereto. (h) EXCEPT FOR THE DEBT DOCUMENTS AND
EXCEPT FOR ANY OTHER WRITTEN INSTRUMENTS SIGNED BY THE PARTIES TO BE BOUND, THIS
AGREEMENT REPRESENTS THE FINAL, COMPLETE AND ENTIRE AGREEMENT BETWEEN THE
PARTIES HERETO, AND THERE ARE NO ORAL OR UNWRITTEN AGREEMENTS OR UNDERSTANDINGS
AFFECTING THIS AGREEMENT OR THE VESSEL. (i) Borrower and Guarantor agree that
Lender is not the agent of any manufacturer or supplier of the Vessel, that no
such manufacturer or supplier is an agent of Lender, and that any
representation, warranty or agreement made by any such manufacturer, supplier or
by their employees, sales representatives or agents shall not be binding on
Lender.

                                      -11-
<PAGE>

         23. PROHIBITION OF FUNDAMENTAL CHANGES. Borrower and Guarantor shall
not, without the prior written consent of Lender: (a) engage in any business
activities substantially different that those in which the Borrower and
Guarantor are presently engaged, (b) convey, sell, lease, assign, transfer or
otherwise dispose of any of their property, business or assets (including,
without limitation, receivables and leasehold interests), whether now owned or
hereafter acquired except in the ordinary course of business, (c) cease
operations, liquidate, merge, transfer, acquire or consolidate with any other
entity, change ownership, dissolve or transfer or sell Collateral out of the
ordinary course of business, (d) pay any dividends or distributions on the
Borrower or Guarantor's stock or membership interests (other than dividends
payable in the Borrower or Guarantor's stock or membership interests) or
purchase or retire any of the Borrower or Guarantor's outstanding shares or
membership interests or alter or amend the Borrower or Guarantor's capital
structure; provided, that the Borrower and Guarantor may, as long as no Default
has occurred and is continuing, distribute each fiscal year as cash dividends up
to the amount of the current fiscal year tax liability of the Borrower or
Guarantor's members.

         24. FLAG; HAILING PORT. Without the prior written consent of Lender,
Borrower shall not change the flag of the Vessel. In addition, without the prior
written consent of Lender, Borrower shall not change the name of the Vessel or
the hailing port and port of documentation of the Vessel, and any such written
consent to any one change of the name of the Vessel or the hailing port or port
of documentation shall not be construed to be a waiver of this provision with
respect to any subsequent proposed change of the name of the Vessel or the
hailing port or port of documentation.

THE PARTIES IRREVOCABLY CONSENT TO THE JURISDICTION AND VENUE OF ANY STATE OR
FEDERAL COURT IN LOUISIANA.

BORROWER AND GUARANTOR HEREBY UNCONDITIONALLY WAIVE THEIR RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR
INDIRECTLY, THE DEBT DOCUMENTS, ANY AMOUNTS SECURED THEREBY, ANY DEALINGS
BETWEEN BORROWER AND GUARANTOR AND LENDER RELATING TO THE SUBJECT MATTER OF THIS
AGREEMENT OR ANY RELATED TRANSACTIONS. THE SCOPE OF THIS WAIVER IS INTENDED TO
BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT
(INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS). THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT, OR TO ANY OTHER DOCUMENTS OR GUARANTY
RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY. IN
THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.

         EXECUTED as of the date first set forth above.

TORCH OFFSHORE, L.L.C.
(Borrower)

By:      Torch Offshore, Inc., its sole member

         By:
              -----------------------------------------
              Robert E. Fulton, Chief Financial Officer

                                      -12-
<PAGE>

TORCH OFFSHORE, INC.
(Guarantor)

By:
   -----------------------------------------
   Robert E. Fulton, Chief Financial Officer

GENERAL ELECTRIC CAPITAL CORPORATION

By:
   -----------------------------------------

Acceptance Date:
                  -----------------------

                                      -13-
<PAGE>

                                                                       EXHIBIT A

                             FORM OF PROMISSORY NOTE

                                      -14-

<PAGE>
                                 PROMISSORY NOTE

                              --------------------
                                     (DATE)

   FOR VALUE RECEIVED, TORCH OFFSHORE, L.L.C., a Delaware limited liability
   company located at the address stated below ("MAKER") promises, jointly and
   severally if more than one, to pay to the order of GENERAL ELECTRIC CAPITAL
   CORPORATION or any subsequent holder hereof (each, a "PAYEE") at its office
   located at 16479 DALLAS PARKWAY #300 , ADDISON, TX 75001-2512 or at such
   other place as Payee or the holder hereof may designate, the principal sum of
   NINE MILLION TWO HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($9,250,000.00),
   with interest on the unpaid principal balance, from the date hereof through
   and including dates of payment, at a floating per annum simple interest rate
   ("Contract Rate") as hereinafter calculated.

   Prior to election to convert, the Contract Rate for any given period
   ("Effective Period") following the first Effective Period shall be equal to
   the sum of (i) two and 3/100 percent (2.03%) per annum plus (ii) a variable
   per annum interest rate ("Current CPR"), which shall be equal to the rate
   listed for "1-Month" Commercial Paper (Non-Financial) under the column
   indicating the daily rate as stated in the Federal Reserve Statistical
   Release H.15 (519) published on the first Business Day of the current month
   in which the applicable Effective Period ends. If, for any reason whatsoever,
   the Federal Reserve Statistical Release H.15 (519) is no longer published,
   the Current CPR shall be equal to the latest commercial paper rate for high
   grade unsecured notes of 30 days maturity sold through dealers by major
   corporations in multiples of $1,000 as indicated in the "Money Rate" column
   of the Wall Street Journal, Eastern Edition, published on the first Business
   Day of the calendar month in which the applicable Effective Period ends. As
   used herein, the term "Business Day" shall mean and include any calendar day
   other than a day on which all commercial banks in the City of New York, New
   York are required or authorized to be closed.

   The first Effective Period shall begin on the date hereof, and shall continue
   through the earlier of (w) the date the first Periodic Installment (or part
   thereof) is received by Payee and (x) the date on which the first Periodic
   Installment is due. Each subsequent Effective Period shall begin on the day
   after the last day of the previous Effective Period and shall continue
   through the earlier of (y) the date the earliest due and unpaid Periodic
   Installment (or part thereof) is received by Payee and (z) the date on which
   the next Periodic Installment is due. The Contract Rate for the first
   Effective Period shall be equal to the sum of (i) two and 03/100 percent
   (2.03%) per annum plus (ii) a variable per annum interest rate, which shall
   be equal to the rate listed for "1-Month" Commercial Paper (Non-Financial)
   under the column indicating the daily rate as stated in the Federal Reserve
   Statistical Release H.15 (519) published as of the first Business Day of the
   current month in which the first Effective Period ends.

   So long as no default exists hereunder or under any security agreement (as
   hereinafter defined) and all of the terms and conditions of this Note are
   fulfilled, Maker may elect to convert, one time only, (the "Option to
   Convert") the Contract Rate to a fixed per annum simple interest rate as of
   any date on which a Periodic Installment is due upon at least 30 but no more
   than 60 days prior written notice (the "Notice Date") to Payee accompanied by
   a Conversion Fee of $500.00. The notice shall be irrevocable and shall be
   sent to the attention of Payee's Customer Support Operations Center Manager,
   40 Old Ridgebury Road, Danbury, CT 06810-5105. Such notice shall state the
   due date of a Periodic Installment on which Maker elects the fixed Contract
   Rate to apply. Maker shall pay to Payee, prior to the effective date of the
   fixed Contract Rate, an additional sum, if any, sufficient to amortize the
   unpaid principal over the balance of the original term hereof at the Contract
   Rate applicable for the first Periodic Installment. If Maker elects to
   exercise this Option to Convert, the fixed Contract Rate shall be equal to:

   (a) If there are 18 months or fewer remaining before the Final Installment of
   this Note is due the sum of two and 35/100 percent (2.35%) per annum plus the
   "Current Rate" which shall be the per annum interest rate listed for "1-Year"
   Treasury, constant maturity under the column indicating the daily rate as
   stated in the Federal Reserve Statistical Release H.15 (519) published on the
   first Business Day of the second calendar month preceding the calendar month
   in which the first payment will be due under the fixed Contract Rate. If, for
   any reason whatsoever, the Federal Reserve Statistical Release H.15 (519) is
   no longer published, the Current Rate shall be equal to the latest annualized
   interest rate for "one year" U.S. Treasury Bills as reported by the Federal
   Reserve Board on a weekly average basis as adjusted for constant maturity as
   indicated in the "Money Rates" column of the Wall Street Journal, Eastern
   Edition, published on the first Business Day of the calendar month in which
   the fixed Contract Rate will be effective.

   (b) If there are more than eighteen (18) but forty-two (42) months or less
   remaining before the Final Installment of this Note is due, the sum of two
   and 64/100 percent (2.64%) per annum plus the "Current Rate" which shall be
   determined in the same manner as noted in subparagraph (a) above except it
   shall be based upon the rate listed for "2-Year" Treasury bills.

   (c) If there are more than forty-two (42) but sixty (60) months or less
   remaining before the Final Installment of this Note is due, the sum of two
   and 78/100 percent (2.78%) per annum plus the "Current Rate" which shall be
   determined in the same manner as noted in subparagraph (a) above except it
   shall be based upon the rate listed for "3-Year" Treasury bills.

   (d) If there are more than sixty (60) but eighty-four (84) months or less
   remaining before the Final Installment of this Note is due, the sum of two
   and 85/100 percent (2.85%) per annum plus the "Current Rate" which shall be
   determined in the same manner as noted in subparagraph (a) above except it
   shall be based upon the average rate listed for "3-Year" Treasury bills and
   "5-Year" Treasury Bills.

                                      -15-
<PAGE>

   Subject to the other provisions hereof, the principal and interest on this
   Note is payable in lawful money of the United States in eighty-four (84)
   consecutive monthly installments as follows:

<Table>
<Caption>
       Periodic
      Installment               Amount
      -----------               ------
<S>                          <C>
         1 - 12              $130,222.54
        13 - 83              $122,028.39
</Table>

   each ("Periodic Installment") and a final installment which shall be in the
   amount of the total outstanding unpaid principal and interest. The first
   Periodic Installment shall be due and payable on May 1, 2003 and the
   following Periodic Installments shall be due and payable on the same day of
   each succeeding month (each, a "Payment Date"). All payments shall be applied
   first to interest and then to principal. The acceptance by Payee of any
   payment which is less than payment in full of all amounts due and owing at
   such time shall not constitute a waiver of Payee's right to receive payment
   in full at such time or at any prior or subsequent time. Interest shall be
   calculated on the basis of a 365 day year (366 day leap year) and will be
   charged at the Contract Rate for each calendar day on which any principal is
   outstanding.

   The amount and number of the Periodic Installments will not change with
   fluctuations in the Contract Rate. Any increase in the Contract Rate shall be
   reflected by a corresponding decrease in the portion of the Periodic
   Installment credited to the remaining unpaid principal balance. Any decrease
   in the Contract Rate shall be reflected as a corresponding increase in the
   portion of the Periodic Installment credited to the remaining unpaid
   principal balance. Notwithstanding the foregoing, at the end of each three
   (3) month period commencing with the first Payment Date hereof, Maker agrees
   to pay to Payee forthwith an additional sum ("Quarterly Payment") sufficient
   to amortize the unpaid principal over the balance of the original term hereof
   at the Contract Rate applicable for the first Periodic Installment.

   If, and for so long as, the amount of interest due exceeds the amount of the
   Periodic Installment, Maker agrees to pay forthwith, in addition to (i) any
   Periodic Installment then due and (ii) any Quarterly Payment, the amount by
   which said interest exceeds the Periodic Installment. In the event interest
   only is required to be paid during any period, the interest for such period
   shall be due and payable monthly as it accrues and shall be calculated on the
   unpaid principal balance existing at the commencement of such period.

   The Maker hereby expressly authorizes the Payee to insert the date value is
   actually given in the blank space on the face hereof and on all related
   documents pertaining hereto.

   This Note may be secured by a security agreement, chattel mortgage, preferred
   ship mortgage, pledge agreement or like instrument (each of which is
   hereinafter called a "SECURITY AGREEMENT"). This Note is executed and
   delivered by Maker pursuant to that certain Loan Agreement dated the date
   hereof ("Loan Agreement") between Maker, Payee and Torch Offshore, Inc.

   Time is of the essence hereof. If any installment or any other sum due under
   this Note, the Loan Agreement or any Security Agreement is not received
   within ten (10) days after its due date, the Maker agrees to pay, in addition
   to the amount of each such installment or other sum, a late payment charge of
   five percent (5%) of the amount of said installment or other sum, but not
   exceeding any lawful maximum. If (i) Maker fails to make payment of any
   amount due hereunder within ten (10) days after the same becomes due and
   payable; or (ii) Maker is in default under, or fails to perform under any
   term or condition contained in the Loan Agreement or any Security Agreement,
   then the entire principal sum remaining unpaid, together with all accrued
   interest thereon and any other sum payable under this Note, the Loan
   Agreement or any Security Agreement, at the election of Payee, shall
   immediately become due and payable, with interest thereon at the lesser of
   eighteen percent (18%) per annum or the highest rate not prohibited by
   applicable law from the date of such accelerated maturity until paid (both
   before and after any judgment).

   The Maker may prepay in full, but not in part, its entire indebtedness
   hereunder upon payment of the entire indebtedness plus an additional sum as a
   premium equal to the following percentages of the original principal balance
   for the indicated period:

   Prior to the first annual anniversary date of this Note: two percent (2%)

   Thereafter and prior to the second annual anniversary date of this Note: one
   percent (1%) and zero percent (0%) thereafter, plus all other sums due
   hereunder, or under the Loan Agreement or any Security Agreement.

   It is the intention of the parties hereto to comply with the applicable usury
   laws; accordingly, it is agreed that, notwithstanding any provision to the
   contrary in this Note or any Security Agreement, in no event shall this Note,
   Loan Agreement or any Security Agreement require the payment or permit the
   collection of interest in excess of the maximum amount permitted by
   applicable law. If any such excess interest is contracted for, charged or
   received under this Note, Loan Agreement or any Security Agreement, or if all
   of the principal balance shall be prepaid, so that under any of such
   circumstances the amount of interest contracted for, charged or received
   under this Note, Loan Agreement or any Security Agreement on the principal
   balance shall exceed the maximum amount of interest permitted by applicable
   law, then in such event (a) the provisions of this paragraph shall govern and
   control, (b) neither Maker nor any other person or entity now or hereafter
   liable for the payment hereof shall be obligated to pay the amount of such
   interest to the extent that it is in excess of the maximum amount of interest
   permitted by applicable law, (c) any such excess which may have been
   collected shall be either applied as a credit against the then unpaid
   principal balance or refunded to Maker, at the option of the Payee, and (d)
   the effective rate of interest shall be automatically reduced to the maximum
   lawful contract rate allowed under applicable law as now or hereafter
   construed by the courts having jurisdiction thereof. It is further agreed
   that without limitation of the foregoing, all calculations of the rate of
   interest contracted for, charged or received under this Note, Loan Agreement
   or any Security Agreement which are made for the purpose of determining
   whether such rate exceeds the maximum lawful contract rate, shall be made, to
   the extent permitted by applicable law, by amortizing, prorating,

                                      -16-
<PAGE>

   allocating and spreading in equal parts during the period of the full stated
   term of the indebtedness evidenced hereby, all interest at any time
   contracted for, charged or received from Maker or otherwise by Payee in
   connection with such indebtedness; provided, however, that if any applicable
   state law is amended or the law of the United States of America preempts any
   applicable state law, so that it becomes lawful for the Payee to receive a
   greater interest per annum rate than is presently allowed, the Maker agrees
   that, on the effective date of such amendment or preemption, as the case may
   be, the lawful maximum hereunder shall be increased to the maximum interest
   per annum rate allowed by the amended state law or the law of the United
   States of America.

   The Maker and all sureties, endorsers, guarantors or any others (each such
   person, other than the Maker, an "OBLIGOR") who may at any time become liable
   for the payment hereof jointly and severally consent hereby to any and all
   extensions of time, renewals, waivers or modifications of, and all
   substitutions or releases of, security or of any party primarily or
   secondarily liable on this Note, Loan Agreement or any Security Agreement or
   any term and provision of either, which may be made, granted or consented to
   by Payee, and agree that suit may be brought and maintained against any one
   or more of them, at the election of Payee without joinder of any other as a
   party thereto, and that Payee shall not be required first to foreclose,
   proceed against, or exhaust any security hereof in order to enforce payment
   of this Note. The Maker and each Obligor hereby waives presentment, demand
   for payment, notice of nonpayment, protest, notice of protest, notice of
   dishonor, and all other notices in connection herewith, as well as filing of
   suit (if permitted by law) and diligence in collecting this Note or enforcing
   any of the security hereof, and agrees to pay (if permitted by law) all
   expenses incurred in collection, including Payee's actual attorneys' fees.
   Maker and each Obligor agrees that fees not in excess of twenty percent (20%)
   of the amount then due shall be deemed reasonable.

   THE MAKER HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY
   CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR
   INDIRECTLY, THIS NOTE, ANY OF THE RELATED DOCUMENTS, INCLUDING THE LOAN
   AGREEMENT OR ANY SECURITY AGREEMENT, ANY DEALINGS BETWEEN MAKER AND PAYEE
   RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED
   TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN MAKER
   AND PAYEE. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY
   AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT
   LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
   OTHER COMMON LAW AND STATUTORY CLAIMS.) THIS WAIVER IS IRREVOCABLE MEANING
   THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL
   APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
   THIS NOTE, ANY RELATED DOCUMENTS, INCLUDING THE LOAN AGREEMENT OR ANY
   SECURITY AGREEMENT, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS
   TRANSACTION OR ANY RELATED TRANSACTION. IN THE EVENT OF LITIGATION, THIS NOTE
   MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

   This Note, Security Agreement and the Loan Agreement constitute the entire
   agreement of the Maker and Payee with respect to the subject matter hereof
   and supercedes all prior understandings, agreements and representations,
   express or implied.

   No variation or modification of this Note, or any waiver of any of its
   provisions or conditions, shall be valid unless in writing and signed by an
   authorized representative of Maker and Payee. Any such waiver, consent,
   modification or change shall be effective only in the specific instance and
   for the specific purpose given.

   Any provision in this Note, the Loan Agreement or any Security Agreement
   which is in conflict with any statute, law or applicable rule shall be deemed
   omitted, modified or altered to conform thereto.

 ----------------------------------             TORCH OFFSHORE, L.L.C.
 (Witness)                                      (Borrower)

 ----------------------------------
 (Print name)                                   By: Torch Offshore, Inc., its
                                                    sole member
 ----------------------------------
 (Address)
                                                    By:
                                                        ------------------------
                                                        Robert E. Fulton, Chief
                                                        Financial Officer

                                                    Federal Tax ID #: 72-1471586
                                                                      ----------
                                                    Address: 401 Whitney Avenue,
                                                             Suite 400, Gretna,
                                                             LA 70056

                                      -17-<PAGE>

                               CONTINUING GUARANTY

         THIS CONTINUING GUARANTY (this "Guaranty") made and entered as of March
_____, 2003 by TORCH OFFSHORE, INC., a corporation organized and existing under
the laws of the State of Delaware (hereinafter referred to as "Guarantor"), in
favor of GENERAL ELECTRIC CAPITAL CORPORATION ("Lender"), guarantying the
Indebtedness (as hereinafter defined) of TORCH OFFSHORE, L.L.C. (the
"Borrower").

         SECTION 1. Continuing Guaranty of Borrower's Indebtedness. Guarantor
hereby, jointly and severally, absolutely and unconditionally agrees to, and by
these presents does hereby, jointly and severally, irrevocably guarantee the
full and punctual payment, performance and satisfaction of any and all
indebtedness, liabilities and obligations that Borrower may now and/or in the
future owe to and/or incur in favor of Lender, or any successor or transferee
thereof, under or pursuant to that certain Loan Agreement of even date herewith
(the "Loan Agreement") among the Borrower, Lender, and the Guarantor, including,
without limitation, any and all indebtedness, liabilities and obligations of the
Borrower to Lender under and pursuant to all of the Debt Documents (as such term
is defined in the Loan Agreement), whether said indebtedness, liabilities or
obligations are liquidated or unliquidated, now existing or hereafter arising,
including without limitation, all principal, interest, deferral and delinquency
charges, costs and attorneys' fees, and under and pursuant to all amendments,
supplements, renewals and restatements to any such documents (collectively, the
"Indebtedness"). Guarantor hereby further agrees that its guarantee may not be
revoked in whole or in part. Capitalized terms used in this Guaranty and not
defined herein shall have the meaning given to such terms in the Loan Agreement.

         SECTION 2. Joint, Several and Solidary Liability. Guarantor further
agrees that its obligations and liabilities for the full and punctual payment,
performance and satisfaction of all the Indebtedness shall be on a "joint and
several" and "solidary" basis along with Borrower to the same degree and extent
as if Guarantor had been and/or will be a co-borrower, co-principal obligor
and/or co-maker of all of the Indebtedness. In the event that there is more than
one guarantor under this Guaranty, or in the event that there are other
guarantors, endorsers or sureties of all or any portion of the Indebtedness,
Guarantor's obligations and liabilities hereunder shall be on a "joint and
several" and "solidary" basis along with such other guarantor or guarantors,
endorsers and/or sureties.

         SECTION 3. Duration; Cancellation of Guaranty. This Guaranty and
Guarantor's obligations and liabilities hereunder shall remain in full force and
effect until such time as each and every Indebtedness of Borrower shall be paid,
performed and/or satisfied in full, in principal, interest, costs and attorneys'
fees, or until such time as this Guaranty may be canceled or otherwise
terminated by Lender under a written cancellation instrument in favor of
Guarantor (subject to the automatic reinstatement provisions hereinbelow);
provided, however, that (a) if a claim is made upon Lender at any time for
repayment or recovery of any amounts or any property received by Lender from any
source on account of any of the Indebtedness and Lender repays or returns any
amounts or property so received (including interest thereon to the extent
required to be paid by Lender) or (b) if Lender becomes liable for any part of
such claim by reason of (i) any judgment or

<PAGE>

order of any court or administrative authority having competent jurisdiction; or
(ii) any settlement or compromise of any such claim, then Guarantor shall remain
liable under this Guaranty for the amounts so repaid or returned or the amounts
for which Lender becomes liable (such amounts being deemed part of the
Indebtedness) to the same extent as if such amounts had never been received by
Lender, notwithstanding any termination hereof or the cancellation of any
instrument or Guaranty evidencing any of the Indebtedness. Guarantor shall, not
later than five (5) days after receipt of notice from Lender, pay to Lender an
amount equal to the amount of such repayment or return for which Lender has so
become liable. Payments hereunder by Guarantor may be required by Lender on any
number of occasions. Unless otherwise indicated under such a written
cancellation instrument, Lender's agreement to terminate or otherwise cancel
this Guaranty shall only affect and shall be expressly limited to Guarantor's
continuing obligations and liabilities to guarantee the prompt and punctual
payment, performance and satisfaction of the Indebtedness incurred, originated
and/or extended or committed to by Lender after the date of such a written
cancellation instrument; with Guarantor remaining fully obligated and liable
under this Guaranty for the prompt and punctual payment, performance and
satisfaction of any and all of Borrower's then outstanding Indebtedness
(together with continuing assessment of interest thereon) that was incurred,
originated, extended or committed to prior to the date of such a written
cancellation instrument. Nothing under this Guaranty or under any other guaranty
or understanding by and between Guarantor and Lender shall in any way obligate,
or be construed to obligate, Lender to agree to the subsequent termination or
cancellation of Guarantor's obligations and liabilities hereunder; it being
fully understood and agreed by Guarantor that Lender may, within its sole and
uncontrolled discretion and judgment, refuse to release Guarantor from any of
its obligations and liabilities under this Guaranty for any reason whatsoever as
long as any of the Indebtedness remains unpaid and outstanding.

         SECTION 4. Default of Borrower. Should Borrower default under any of
the Indebtedness in favor of Lender, Guarantor hereby, jointly and severally,
unconditionally and absolutely agrees to pay the full then unpaid amount of all
Borrower's Indebtedness guaranteed hereunder, in principal, interest, costs and
attorneys' fees. Such payment or payments shall be made immediately following
demand by Lender at Lender's offices as indicated in the Loan Agreement.
Guarantor hereby waives notice of acceptance of this Guaranty and of any
Indebtedness to which it applies or may apply. Guarantor further waives
presentation and demand for payment of the Indebtedness, notice of dishonor and
of nonpayment, notice of intention to accelerate, notice of acceleration,
protest and notice of protest, collection or institution of any suit or other
action by Lender in connection thereof, including any notice of default in
payment thereof or other notice to, or demand for payment thereof on any party.
Guarantor additionally waives any and all rights and pleas of division and
discussion as provided under New York law, as well as, to the degree applicable,
any similar rights as may be provided under the laws of any other state.

         SECTION 5. Subrogation. Until such time as the Indebtedness has been
paid and performed in full and the provisions of this Guaranty are no longer in
effect, Guarantor shall not exercise any right to subrogation, reimbursement or
contribution against Borrower or any other obligor on the Indebtedness resulting
from the payment of Indebtedness nor any right to subrogation, reimbursement and
indemnity against any property or other security serving at any time as
collateral for any or all of the Indebtedness resulting from the payment of the
Indebtedness, all of which rights of subrogation, reimbursement, contribution
and indemnity the Guarantor subordinates

                                      -2-
<PAGE>

to the full and punctual payment and performance of the Indebtedness.
Notwithstanding any provision of this Guaranty to the contrary, if Guarantor is
or becomes at any time an "insider" (as defined from time to time in the Federal
Bankruptcy Code) with respect to Borrower or any other obligor on the
Indebtedness or any affiliates thereof, then Guarantor irrevocably and
unconditionally waives any rights of subrogation, reimbursement, contribution,
indemnification or any similar rights against Borrower and/or any such obligor
or any affiliates thereof with respect to this Guaranty, whether such rights
arise by an express or implied contract or by operation of law, it being the
intention of the parties that the Guarantor shall not be deemed to be a
"creditor" (as defined from time to time in the Federal Bankruptcy Code) of
Borrower or any such obligor or any affiliates thereof by reason of the
existence of this Guaranty in the event that Borrower or any such obligor
becomes a debtor in any proceeding under the Federal Bankruptcy Code. Guarantor
agrees not to execute any indemnity, contribution or other guaranty of any kind
which establishes in favor of Borrower or any other obligor on the Indebtedness
or affiliates thereof any rights waived by the preceding sentence so long as any
of the Indebtedness remains outstanding.

         SECTION 6. Guarantor's Subordination of Rights to Lender. In the event
that Guarantor should for any reason (i) advance or lend monies to Borrower for
any reason whatsoever, whether or not such funds are used by Borrower to make
payment or payments under Borrower's Indebtedness; and/or (ii) make any payment
for and on behalf of Borrower under any of Borrower's Indebtedness; and/or (iii)
make any payments to Lender in total or partial satisfaction of Guarantor's
obligations and Liabilities hereunder, Guarantor hereby agrees that any and all
rights that Guarantor may have or acquire to collect or to be reimbursed by
Borrower (or by any guarantor, endorser or surety of Borrower's Indebtedness),
whether Guarantor's rights of collection or reimbursement arise by way of
subrogation to the rights of Lender or otherwise, shall in all respects be
subordinate, inferior and junior to Lender's rights to collect and enforce
payment, performance and satisfaction of Borrower's then remaining Indebtedness,
until such time as all of Borrower's Indebtedness is fully paid and satisfied.
Guarantor further agrees to refrain from attempting to collect and/or enforce
any of Guarantors aforesaid rights against Borrower (or any other guarantor,
surety or endorser of Borrower's Indebtedness), arising by way of subrogation or
otherwise, until such time as all of Borrower's then remaining Indebtedness in
favor of Lender is fully paid and satisfied, in principal, interest, costs and
attorneys' fees.

         In the event that Guarantor should for any reason whatsoever receive
any payment or payments from Borrower (or any other guarantor, surety, or
endorser of Borrower's Indebtedness) on any such amount or amounts that Borrower
(or such third party) may owe to Guarantor for any of the reasons stated above,
Guarantor agrees to accept such payment or payments for and on behalf of Lender,
advising Borrower (or such third party payee) of such a fact, and Guarantor
unconditionally agrees to immediately deliver such funds to Lender, with such
funds being held by Guarantor during any interim period, in trust for Lender. In
the event that Guarantor should, for any reason receive any such funds from
Borrower (or any third party payee), and Guarantor should deposit such funds in
one or more of Guarantor's deposit accounts, no matter where located, Lender
shall have the right to attach any and all of Guarantor's deposit accounts in
which such funds were deposited, whether or not such funds were commingled with
other monies of Guarantor, and whether or not such funds then remain on deposit
in such an account or accounts. To this end, Guarantor collaterally assigns and
pledges to Lender any and all of Guarantor's present and future rights, title
and interest in and to

                                      -3-
<PAGE>

all monies that Guarantor may now and/or in the future maintain in deposit with
banks, savings and loan associations and other entities, to the extent that
Guarantor may at any time deposit any such funds that may be received from
Borrower (or any other guarantor, endorser or surety of Borrower's Indebtedness)
in favor of Lender in such an account or accounts.

         SECTION 7. Additional Covenants. Guarantor further agrees that Lender
may, at its sole option, at any time, and from time to time, without the consent
of or notice to Guarantor, or any one of them, or to any other party, and
without incurring any responsibility to Guarantor or to any other party, and
without impairing or releasing the obligations of Guarantor under this Guaranty:

         (A) Discharge or release any party (including, but not limited to,
Borrower or any co-guarantor under this Guaranty) who is or may be liable to
Lender for any of the Indebtedness;

         (B) Sell, exchange, release, surrender, realize upon or otherwise deal
with, in any manner and in any order, any collateral directly or indirectly
securing repayment of any of the Indebtedness;

         (C) Change the manner, place or terms of payment, or change or extend
the time of payment of or renew, as often and for such periods as Lender may
determine, or alter, any of the Indebtedness;

         (D) Settle or compromise any of the Indebtedness;

         (E) Subordinate and/or agree to subordinate the payment of all or any
of the Indebtedness or Lender's security rights in and/or to any collateral
directly or indirectly securing any such indebtedness, to the payment and/or
security rights of any other present and/or future creditors of Borrower;

         (F) Apply any sums paid to any of the Indebtedness, with such payments
being applied in such priority or with such preferences as Lender may determine
in its sole discretion, regardless of what Indebtedness of Borrower remains
unpaid;

         (G) Take or accept any other security for any or all of the
Indebtedness; and/or

         (H) Enter into, deliver, modify, amend or waive compliance with, any
instrument or arrangement evidencing, securing or otherwise affecting, all or
any part of the Indebtedness.

         Guarantor shall not: (a) liquidate, dissolve, terminate or suspend its
business; or (b) sell, transfer or otherwise dispose of all or a majority of its
assets. If Guarantor intends to enter into any merger, consolidation or similar
reorganization (each a "Merger") where Guarantor will not be the surviving
business entity, then (i) Guarantor agrees that it will notify Lender in writing
no less than 30 days before the intended effective date of such Merger and such
notice will include information about the parties to such Merger, (ii) Guarantor
agrees that such Merger will be subject to the prior written consent of Lender,
and (iii) Lender agrees that its consent to such Merger will not be unreasonably
withheld or delayed; provided, if not given in 21 days or less, Lender's consent
shall be deemed to be denied.

                                      -4-
<PAGE>

         In addition, no course of dealing between Lender and Borrower (or any
other guarantor, surety or endorser of Borrower's Indebtedness), nor any failure
or delay on the part of Lender to exercise any of Lender's rights and remedies,
or any other guaranty or guaranties by and between Lender and Borrower (or any
other guarantor, surety or endorser) shall have the effect of impairing or
releasing Guarantor's obligations and liabilities to Lender or of waiving any of
Lender's rights and remedies. Any partial exercise of any rights and remedies
granted to Lender shall furthermore not constitute a waiver of any of Lender's
other rights and remedies, it being Guarantor's intent and guaranty that
Lender's rights and remedies shall be cumulative in nature. Guarantor further
agrees that, should Borrower default under any of its Indebtedness, any waiver
or forbearance on the part of Lender to pursue the rights and remedies available
to Lender shall be binding upon Lender only to the extent that Lender
specifically agrees to such waiver or forbearance in writing. A waiver or
forbearance on the part of Lender as to one event of default shall not
constitute a waiver or forbearance as to any other default.

         SECTION 8. No Release of Guarantor. Guarantor's obligations and
liabilities under this Guaranty shall not be released, impaired, reduced or
otherwise affected by, and shall continue in full force and effect,
notwithstanding the occurrence of any event, including without limitation any
one of the following events:

         (A) Death, insolvency, bankruptcy, arrangement, adjustment,
composition, liquidation, disability, dissolution or lack of authority (whether
corporate, partnership or trust) of Borrower (or any person acting on Borrower's
behalf), or any other guarantor, surety or endorser of any of the Indebtedness;

         (B) Partial payment or payments of any amount due and/or outstanding
under any of the Indebtedness;

         (C) Any payment of Borrower or any other party to Lender is held to
constitute a preferential transfer or a fraudulent conveyance under any
applicable law, or for any reason, Lender is required to refund such payment or
pay such amount to Borrower or to any other person;

         (D) Any dissolution of Borrower or any sale, lease or transfer of all
or any part of Borrower's assets; and/or

         (E) Any failure of Lender to notify Guarantor of the acceptance of this
Guaranty or of the making of loans or other extensions of credit in reliance on
this Guaranty or of the failure of Borrower to make any payment due by Borrower
to Lender.

         This Guaranty and Guarantor's obligations and liabilities hereunder
shall continue to be effective, and/or shall automatically and retroactively be
reinstated if a release or discharge has occurred, as the case may be, if at any
time any payment or part thereof to Lender with respect to any of the
Indebtedness is rescinded or must otherwise be restored by Lender pursuant to
any insolvency, bankruptcy, reorganization, receivership, or any other debt
relief granted to Borrower or to any other party. In the event that Lender must
rescind or restore any payment received by Lender

                                      -5-
<PAGE>

in satisfaction of the Indebtedness, any prior release or discharge from the
terms of this Guaranty given to Guarantor shall be without effect, and this
Guaranty and Guarantor's obligations and liabilities hereunder shall
automatically be renewed or reinstated and shall remain in full force and effect
to the same degree and extent as if such a release or discharge was never
granted. It is the intention of Lender and Guarantor that Guarantor's
obligations and liabilities hereunder shall not be discharged except by
Guarantor's full and complete performance of such obligations and liabilities
and then only to the extent of such performance.

         SECTION 9. Enforcement of Guarantor's Obligations and Liabilities.
Guarantor agrees that, should Lender deem it necessary to file an appropriate
collection action to enforce Guarantor's obligations and liabilities under this
Guaranty, Lender may commence such a civil action against Guarantor without the
necessity of first (i) attempting to collect the Indebtedness from Borrower or
from any other guarantor, surety or endorser, whether through filing of suit or
otherwise; (ii) attempting to exercise against any collateral directly or
indirectly securing repayment of any of the Indebtedness, whether through the
filing of an appropriate foreclosure action or otherwise; or (iii) including
Borrower or any other guarantor, surety or endorser of any of the Indebtedness
as an additional party defendant in-such a collection action against Guarantor.
If there is more than one guarantor under this Guaranty, each guarantor
additionally agrees that Lender may file an appropriate collection and/or
enforcement action against any one or more of them, without impairing the rights
of Lender against any other guarantor under this Guaranty. In the event that
Lender should ever deem it necessary to refer this Guaranty to an
attorney-at-law for the purpose of enforcing Guarantor's obligations and
liabilities hereunder, or of protecting or preserving Lender's rights hereunder,
Guarantor (and each of them, on a joint, several and solidary basis) agrees to
reimburse Lender for the reasonable fees of such an attorney. Guarantor
additionally agrees that Lender shall not be liable for failure to use diligence
in the collection of any of the Indebtedness or any collateral security
therefor, or in creating or preserving the liability of any person liable on any
such Indebtedness, or in creating, perfecting or preserving any security for any
such Indebtedness.

         SECTION 10. Representations and Warranties by Guarantor. Guarantor
represents and warrants to Lender that:

         (A) Guarantor is a corporation organized and existing under the laws of
the laws of the State of Delaware and has the lawful power to own its property.

         (B) Guarantor's guaranty of the Indebtedness and Guarantor's execution,
delivery and performance of this Guaranty is not in violation of any laws, its
Articles of Incorporation or Bylaws and will not result in a default under any
contract, guaranty or instrument to which Guarantor is a party or by which
Guarantor or its property may be bound.

         (C) Guarantor will receive a direct material benefit from the
transactions contemplated herein and/or arising out of the Indebtedness.

         (D) This Guaranty, when executed and delivered by Guarantor, will
constitute a valid, legal and binding obligation of Guarantor enforceable
against the Guarantor in accordance with its terms.

                                      -6-
<PAGE>

         (E) All actions and consents required to be performed, obtained and/or
satisfied prior to the execution and delivery of this Guaranty, and to
constitute this Guaranty as the valid and binding obligation of Guarantor in
accordance with its terms, have been performed, obtained and satisfied in due
and strict compliance with all applicable laws.

         SECTION 11. Additional Documents. Upon the reasonable request of
Lender, Guarantor will, at any time, and from time to time, duly execute and
deliver to Lender any and all such further instruments and documents, and supply
such additional information as may be necessary or advisable in the opinion of
Lender, to obtain the full benefits of this Guaranty.

         SECTION 12. [Intentionally omitted.]

         SECTION 13. Transfer of Indebtedness. This Guaranty is for the benefit
of Lender and for such other person or persons as may from time to time become
or be the holders of any of the Indebtedness hereby guaranteed, and this
Guaranty shall be transferable and negotiable with the same force and effect and
to the same extent as the Indebtedness may be transferable, it being understood
that, upon the transfer or assignment by Lender of any of the Indebtedness
hereby guaranteed, the legal holder of such Indebtedness shall have all the
rights granted to Lender under this Guaranty. Guarantor hereby recognizes and
agrees that Lender may, from time to time, one or more times, transfer all or
any portion of the Indebtedness to one or more third parties. Such transfers may
include, but are not limited to, sales of a participation interest in such
Indebtedness in favor of one or more third parties. Guarantor specifically
agrees and consents to all such transfers and assignments, and Guarantor further
waives any subsequent notice of and right to consent to any such transfers and
assignments as may be provided under applicable New York law. Guarantor
additionally agrees that the purchaser of a participation interest in the
Indebtedness will be considered as the absolute owner of a percentage interest
of such Indebtedness and that such a purchaser will have all of the rights
granted to the purchaser under any participation Guaranty governing the sale of
such a participation interest. Guarantor further waives any right of offset that
Guarantor may have against Lender and/or any purchaser of such a participation
interest in the Indebtedness and Guarantor unconditionally agrees that either
Lender or such a purchaser may enforce Guarantor's obligations and liabilities
under this Guaranty, irrespective of the failure or insolvency of Lender or any
such purchaser. Guarantor further agrees that, upon any transfer of all or any
portion of the Indebtedness, Lender may transfer and deliver any and all
collateral securing repayment of such Indebtedness (including, but not limited
to, any collateral provided by Guarantor) to the transferee of such Indebtedness
and such collateral (again, including but not limited to Guarantor's collateral)
shall secure any and all of the Indebtedness in favor of such a transferee.
Guarantor additionally agrees that, after any such transfer or assignment has
taken place, Lender shall be fully discharged from any and all liability and
responsibility to Borrower (and Guarantor) with respect to such collateral, and
the transferee thereafter shall be vested with all the powers and rights with
respect to such collateral.

         SECTION 14. Right of Offset. As collateral security for the repayment
of Guarantor's obligations and liabilities under this Guaranty, Guarantor hereby
grants Lender, as well as its successors and assigns, the right to apply, at any
time and from time to time, whether or not

                                      -7-
<PAGE>

Borrower is then in default under any of its Indebtedness guaranteed hereunder,
any and all funds that Guarantor may then have on deposit with or in the
possession or control of Lender and its successors or assigns (with the
exception of funds deposited in IRA, pension or other tax-deferred deposit
accounts), towards repayment of any of the Indebtedness subject to this
Guaranty.

         SECTION 15. Notices.

         (A) To give Guarantor any notice required under this Guaranty, Lender
may hand deliver the notice to Guarantor, or mail the notice to Guarantor by
first-class mail, or by registered or certified mail. Lender will deliver or
mail the notice to Guarantor at Guarantor's address contained in the Loan
Agreement, or any other address which Guarantor may have given Lender by written
notice as provided in this Section.

         (B) To give Lender any notice required under this Guaranty, Guarantor
shall mail the notice to Lender by first-class mail, or by registered or
certified mail at 16479 Dallas Parkway, Suite 300, Addison, Texas 75001-2512,
Attn: Senior Risk Analyst, or at such other address as Lender may have given to
Guarantor by written notice as provided in this Section.

         (C) Any notice provided in this Guaranty must be in writing and will be
considered as given on the day it is delivered by hand or deposited in the U.S.
mail, as provided above.

         SECTION 16. Construction. The provisions of this Guaranty shall be in
addition to and cumulative of, and not in substitution, novation or discharge
of, any and all prior or contemporaneous guaranty or other guaranties by
Guarantor, in favor of Lender or assigned to Lender by others, all of which
shall be construed as complementing each other. Nothing herein contained shall
prevent Lender from enforcing any and all such guaranties or Guaranty in
accordance with their respective terms.

         SECTION 17. Amendment. No amendment, modification, consent or waiver of
any provision of this Guaranty, and no consent to any departure by Guarantor
therefrom, shall be effective unless the same shall be in writing signed by a
duly authorized officer of Lender, and then shall be effective only to the
specific instance and for the specific purpose for which given.

         SECTION 18. Successors and Assigns Bound. Guarantor's obligations and
liabilities under this Guaranty shall be binding upon Guarantor's successors,
heirs, legatees, devisees, administrators, executors and assigns. The rights and
remedies granted to Lender under this Guaranty shall also inure to the benefit
of Lender's successors and assigns, as well as to any and all subsequent holder
or holders of any of the Indebtedness subject to this Guaranty.

                                      -8-
<PAGE>

         SECTION 19. Caption Heading. Caption headings of the section of this
Guaranty are for convenience purposes only and are not to be used to interpret
or to define their provisions. In this Guaranty, whenever the context so
requires, the singular includes the plural and the plural also includes the
singular.

         SECTION 20. Governing Law. This Guaranty shall be governed and
construed in accordance with the substantive laws of the State of New York.

         SECTION 21. Severability. If any provision of this Guaranty is held to
be illegal, invalid or unenforceable under present or future laws effective
during the term hereof, such provision shall be fully severable, this Guaranty
shall be construed and enforceable as if the illegal, invalid or unenforceable
provision had never comprised a part of it, and the remaining provisions of this
Guaranty shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance herefrom.
Furthermore, in lieu of such illegal, invalid or unenforceable provision, there
shall be added automatically as a part of this Guaranty, a provision as similar
in terms to such illegal, invalid or unenforceable provision as may be possible
and legal, valid and enforceable.

         SECTION 22. WAIVERS OF JURY TRIAL. THE GUARANTOR HEREBY UNCONDITIONALLY
WAIVE ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS GUARANTY, ANY AMOUNTS SECURED
HEREBY, ANY DEALINGS BETWEEN THE GUARANTOR AND LENDER RELATING TO THE SUBJECT
MATTER OF THIS GUARANTY OR ANY RELATED TRANSACTIONS. THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY
COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF
DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS). THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS GUARANTY, OR TO ANY OTHER DOCUMENTS OR GUARANTIES
RELATING TO THIS GUARANTY OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY. IN THE
EVENT OF LITIGATION, THIS GUARANTY MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
BY THE COURT.

         SECTION 23. JURISDICTION AND VENUE. GUARANTOR AND LENDER IRREVOCABLY
CONSENT TO THE JURISDICTION AND VENUE OF ANY STATE OR FEDERAL COURT IN LOUISIANA
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY AGAINST ANY OTHER
PARTY ON ANY MATTER WHATSOEVER ARISING OUT OF, IN CONNECTION WITH OR IN ANY WAY
RELATED TO THIS GUARANTY.

                                      -9-
<PAGE>

         IN WITNESS WHEREOF, the Guarantor has executed this Guaranty in favor
of Lender effective as of the day and year first above written.

WITNESS:                               TORCH OFFSHORE, INC.

                                       By:
-----------------------------------       -------------------------------------

                                          -------------------------------
                                             Its:
                                                 ------------------------

-----------------------------------

                                      -10-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00049-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00049-of-00352.parquet"}]]