EMPLOYMENT AGREEMENT
 
 
       This Employment Agreement ("Agreement") between Tidewater Inc., a
Delaware corporation ("Company"), and William C. O'Malley ("Employee") is
effective as of September 19, 1997 (the "Agreement Date") and supersedes the
employment agreement between the Company and the Employee dated June 13, 1994.
 
       The Company and the Employee agree as follows:
 
       1.     EMPLOYMENT CAPACITY AND TERM.
 
              (a)    CAPACITY AND TERM.  The Employee will serve as the
President and Chief Executive Officer of the Company for the period beginning
September 19, 1997 through September 19, 2000.  The period from September 19,
1997 through September 19, 2000 is referred to in this Agreement as the
"Employment Term."
 
              (b)    DUTIES.  As the President and Chief Executive Officer, the
Employee shall perform such duties, consistent with the Employee's job title,
as may be prescribed from time to time by the Board of Directors of the Company
(the "Board") and shall perform such duties as are described in the Company's
Bylaws.
 
              (c)    CHAIRMAN.  Employee has been elected a director of the
Company and serves as the Chairman of the Board.  If the Employee hereafter
ceases for any reason to be the President and Chief Executive Officer of the
Company, the Employee will, if requested by the Company, resign as the Chairman
of the Board and as a director of the Company.
 
       2.     TERM OF AGREEMENT.  The term of this Agreement shall commence on
the Agreement Date and shall continue through the  last day of the Employment
Term, subject to any earlier termination of Employee's status as an employee
pursuant to the terms of this Agreement.  Following the term of this Agreement,
each party shall have the right to enforce all rights, and shall be bound by
all obligations, of such party that are continuing rights and obligations under
the terms of this Agreement.
 
       3.     DEVOTION TO RESPONSIBILITIES.
 
       During the Employment Term, the Employee will devote all of his time and
attention to the business of the Company, and he will not engage in or be
employed by any other business activity or business, whether or not such
business activity or business is for gain, profit or other pecuniary advantage;
provided, however, that nothing herein contained shall prohibit the Employee
from (i) serving as a member of the Board of Directors, Board of Trustees or
the like of any for profit or non-profit entity, or performing services of any
type for any civic or community entity, whether or not the Employee receives
compensation therefor, (ii) investing his assets in such form or manner as will
require no more than nominal services on the part of the Employee in the
operation of the
 
 
                                     -1-
 
<PAGE>   2
business of the entity in which such investment is made, or (iii) serving in
various capacities with, and attending meetings of, industry or trade groups
and associations, including without limitation the industry or trade groups and
associations with which the Employee is currently involved, as long as the
Employee's engaging in any activities permitted by virtue of clauses (i), (ii)
and (iii) above does not materially and unreasonably interfere with the ability
of the Employee to perform the services and discharge the responsibilities
required of him under this Agreement.  Notwithstanding clause (ii) above,
during the Employment Term, the Employee may not beneficially own more than 2%
of the outstanding shares of any class of equity security of a business
organization required to file periodic reports with the Securities and Exchange
Commission under the Securities Exchange Act of 1934 (the "Exchange Act") and
may not beneficially own more than 5% of the outstanding shares of any class of
equity security of a business organization that competes with the Company.  For
purposes of this paragraph, "beneficially own" shall have the same meaning
ascribed to that term in Rule 13d-3 under the Exchange Act.
 
       4.     COMPENSATION AND BENEFITS.  The Company will provide the Employee
with the compensation and benefits described below:
 
              (a)    SALARY.  An annual salary during the Employment Term of
$700,000 ("Annual Base Compensation"), payable to the Employee in equal semi-
monthly installments.
 
              (b)    BONUS.  An annual incentive bonus, payable, if at all,
only with respect to services provided by the Employee during the Employment
Term.  The annual incentive bonus will be determined, accrued and paid in
accordance with the terms of the Company's Executive Officer Annual Incentive
Plan (the "Incentive Plan") that covers certain executive officers designated
by the Compensation Committee of the Board (the "Committee") or any incentive
or bonus compensation plan that is a successor or substitute therefor.  The
parties acknowledge and agree that this Section 4(b) imposes no obligation on
the Company to award a bonus to the Employee.  A copy of the Incentive Plan in
effect for fiscal year 1998 is attached as Appendix A.
 
              (c)    RESTRICTED STOCK.  On the date the Employee executes this
Agreement, and pursuant to the Tidewater 1997 Stock Incentive Plan (the "1997
Plan"), a copy of which is attached as Appendix B, the Employee will be granted
50,000 shares of the Company's common stock.  In accordance with the terms of
the 1997 Plan, such shares will be deemed to be "restricted shares", with such
restrictions on transferability, vesting and risks of forfeiture as are
consistent with the terms of the 1997 Plan and are specified in an agreement
(the "Restricted Share Agreement") to be entered into between the Company and
Employee that is substantially in the form of Appendix C hereto.  The
Restricted Share Agreement will have the following vesting restrictions:   (i)
16,667 shares will vest and become freely transferable on the first day
following the date that the "Average Sales Price" of the Company's common stock
on the New York Stock Exchange exceeds 120% of the "Grant Price;" (ii) an
additional 16,667 shares will vest and become freely transferable on the first
day following the date that the Average Sales Price of the Company's common
stock on the New York Stock Exchange exceeds 140% of the Grant Price, and;
(iii) the remaining 16,666 shares will vest and become freely transferable on
the first day following the date that the Average Sales Price of the Company's
common stock on the New York Stock Exchange exceeds 160% of the Grant
 
 
                                     -2-
<PAGE>   3
Price; provided, however, that no shares will vest under this paragraph until
one year following the date Employee executes this Agreement.  As used herein,
the term "Average Sales Price" means the average of the high and low sales
prices of the Company's common stock reported on the New York Stock Exchange
over a 20 consecutive trading day period and the term "Grant Price" means the
average of the high and low sales prices of the Company's common stock as
reported on the New York Stock Exchange on the date the Employee executes this
Agreement (or if no shares of the Company's common stock are traded on that
date, on the most recent preceding date on which such shares are traded).  The
50,000 "restricted shares" to be granted to Employee by virtue of this Section
are hereinafter referred to as the "Restricted Shares."
 
       The Restricted Share Agreement will also provide that, to the extent
Restricted Shares have not otherwise become vested and freely transferable in
accordance with the terms of the immediately preceding paragraph, the
Restricted Shares will become fully vested and freely transferable by the
Employee at the earliest of (i) the termination of the Employee's employment
during the Employment Term by the Employee for Good Reason or by the Employer
without Cause, (ii) the death of the Employee or a determination by the Board
that the Employee has become disabled pursuant to Section 6(a), (iii) the
attainment by the Employee of age 65 or (iv) in the event of a change of
control of the Company as provided in the Plan (each of (i), (ii), (iii) and
(iv) a "Vesting Event"); provided however that in each case the Restricted
Shares will become fully vested and freely transferable by the Employee only if
the Employee has been continually employed by the Company from the Agreement
Date through the occurrence of the Vesting Event.  If the Employee does not
perform the services required under Section 1(a) through the end of the
Employment Term for any reason other than the termination of his employment
without Cause by the Company, his voluntary retirement for Good Reason, or his
death or disability (as determined pursuant to Section 6(a) of this Agreement),
or if the employment of Employee is terminated by the Company for Cause, then
all of the Restricted Shares, which have not otherwise become fully vested and
freely transferable in accordance with the terms of the immediately preceding
paragraph, will be forfeited to the Company.
 
              (d)    STOCK OPTIONS.  On the date the Employee executes this
Agreement, and pursuant to the 1997 Plan, the Employee will be granted
nonqualified options to purchase 200,000 shares of the Company's common stock.
The per share exercise price of any shares subject to the options will be equal
to the "fair market value," as defined in the 1997 Plan, of one share of the
Company's common stock on the date the option is granted, and on the date the
options are granted, the Company and the Employee shall execute a Stock Option
Agreement substantially in the form of Appendix D hereto.
 
              (e)    COMPENSATING RETIREMENT BENEFIT.  In addition to any
benefits payable to Employee after his retirement by virtue of his
participation in the Tidewater defined benefit pension plan and Supplemental
Executive Retirement Plan, the Company shall, from and after the date of the
Employee's normal retirement on or after age 65 (the "Retirement Date"), pay to
the Employee, from time to time, such additional amounts as are necessary to
make the Employee's total retirement benefits payable after the Retirement Date
(including retirement benefits provided by Employee's prior employer and
benefits paid prior to the Retirement Date under the Tidewater defined benefit
 
 
                                     -3-
<PAGE>   4
plan and Supplemental Executive Retirement Plan) not less in amount than the
retirement benefits to which the Employee would have been entitled under the
terms of any qualified and non-qualified defined benefit pension plans of his
immediate prior employer.  In addition to any benefits payable to Employee by
virtue of his participation in the Tidewater defined benefit pension plan and
Supplemental Executive Retirement Plan, in the event his employment with the
Company is terminated for any reason (including his death) prior to age 65, the
Company shall pay to the Employee from time to time, such additional amounts as
are necessary to make the Employee's total retirement benefits payable after
such termination of employment (including retirement benefits provided by
Employee's prior employer and benefits paid prior to the date of termination of
employment under the Tidewater defined benefit plan and Supplemental Executive
Retirement Plan) not less than the amount that the Employee would have been
entitled to receive under the defined benefit pension plans of his immediate
prior employer assuming that Employee's employment by his immediate prior
employer had terminated on the same date his employment with the Company is
terminated.  In making any benefit calculation contemplated hereby, it shall be
assumed that the Employee's compensation for purposes of such plans was, for
periods prior to the date his employment with the Company commenced (the
"Commencement Date"), his covered compensation with such prior employer and,
for periods after the Commencement Date, his compensation under this Agreement
or a predecessor agreement between the Company and the Employee.  This
compensating retirement benefit will be paid in the same manner as payments are
made under the Company's Supplemental Executive Retirement Plan and will be
based on calculations using the same actuarial assumptions used in the
Company's defined benefit plan.  The Employee has provided the Company with
copies of all documents related to retirement compensation available to the
Employee from the prior employer, which documents are attached hereto as
Appendix E.
 
              (f)    INDEMNIFICATION.  Under its Bylaws, the Company provides,
as of the Agreement Date, certain indemnification rights to its officers and
directors that will be applicable to the Employee with respect to his acts and
omissions in his capacity as an officer and director of the Company.  The
Company agrees to provide indemnification rights to the Employee identical to
those provided for in its Bylaws as in existence on the Agreement Date as to
all suits or proceedings to which the Employee is or is threatened to be made a
party that arise out of or are connected to his services during the Employment
Term, without regard to whether such actions, suits or proceedings are made,
asserted or arise during or after the Employment Term.
 
              (g)    OTHER BENEFITS.  During the Employment Term, the Employee
shall be entitled to all benefits and perquisites provided to senior executive
employees of the Company, including but not limited to the benefits referred to
in Appendix F hereof.
 
       5.     EXPENSES.  The Employee will be reimbursed for out-of-pocket
expenses incurred from time to time on behalf of the Company or any subsidiary
in the performance of his duties under
 
 
                                     -4-
<PAGE>   5
this Agreement, upon the presentation of such supporting invoices, documents
and forms as the Company reasonably requests.
 
       6.     TERMINATION OF EMPLOYMENT.
 
              (a)    DEATH OR DISABILITY.  The Employee's status as an employee
will terminate immediately and automatically upon the Employee's death during
the Employment Term.  If (i) the Employee is rendered incapable because of
physical or mental illness of satisfactorily discharging his duties and
responsibilities under this Agreement for a period of 60 consecutive days and
(ii) a duly qualified physician chosen by the Company and acceptable to the
Employee or his legal representatives so certifies in writing, the Board shall
have the power to determine that the Employee has become disabled.  If the
Board makes such a determination, the Company shall have the continuing right
and option, during the period that such disability continues, and by notice
given in the manner provided in Section 15, to terminate the status of Employee
as an employee.  Any such termination shall become effective thirty days after
such notice of termination is given (the "Disability Effective Date"), unless
within such thirty day period, the Employee becomes capable of rendering
services of the character contemplated hereby (and a physician chosen by the
Company and acceptable to the Employee or his legal representatives so
certifies in writing) and the Employee in fact resumes such services.  The
Employee's death or the Employee's incapacity due to physical or mental illness
to discharge the responsibilities assigned by this Agreement shall not
constitute a breach of this Agreement by the Employee.
 
              (b)    CAUSE.  The Company may terminate the Employee's status as
an employee for Cause.  As used herein, termination by the Company of the
Employee's status as an employee for "Cause" shall mean termination as a result
of (i) the willful and continuing failure by the Employee to perform the
services contemplated by this Agreement (other than any such failure resulting
from the Employee's disability of the type specified in Section 6(a)), (ii) the
Employee's breach of or failure to comply with the covenants set forth in
Sections 8, 9 or 11 of this Agreement, or (iii) the willful engaging by the
Employee in gross misconduct injurious to the Company; provided that, no act,
or failure to act, on the Employee's part shall be considered "willful" for
purposes of this Agreement unless done, or omitted to be done, without a
reasonable belief that such action or omission was in, or not opposed to, the
best interests of the Company.  Any act, or failure to act, by the Employee
that is based upon authority given pursuant to a resolution duly adopted by the
Board or based upon the advice of counsel for the Company shall be presumed to
be done, or omitted to be done, by the Employee in good faith and in the best
interests of the Company.
 
              (c)    GOOD REASON.  The Employee may terminate his status as an
employee for Good Reason.  The termination by the Employee of his status as an
employee for Good Reason shall be deemed to be a justifiable termination and
shall excuse the Employee from the obligation to render services under or
relating to this Agreement.  As used herein, the term "Good Reason" shall mean:
 
                     (i)    The occurrence of any of the following during the
Employment Term:
 
                                     -5-
<PAGE>   6
                            (A)    the assignment by the Board to the Employee
of any duties or responsibilities which are inconsistent with the Employee's
status, title and position as President and Chief Executive Officer of the
Company;
 
                            (B)    any removal of the Employee from, or any
failure to reappoint or reelect the Employee to, the position of President and
Chief Executive Officer of the Company, except in connection with a termination
by the Company of the Employee's employment for Cause or on account of
disability or death of the Employee, or the termination by the Employee of his
employment other than for Good Reason;
 
                            (C)    the Company's requiring the Employee to be
based anywhere other than in New Orleans, Louisiana, except for required travel
in the ordinary course of the Company's business;
 
                     (ii)   a reduction in the Employee's annual salary or a
failure by the Company to pay to the Employee any installment of the annual
salary or to pay any other amounts required to be paid under this Agreement,
which failure continues for a period of ten days after written notice thereof
is given by the Employee to the Company;
 
                     (iii)  the failure by the Company to obtain the assumption
of its obligations under this Agreement by any successor or assign as
contemplated in Paragraph 13 of the Agreement;
 
                     (iv)   any purported termination by the Company of the
Employee's status as an employee which is not effected pursuant to a Notice of
Termination satisfying the requirements of Paragraph 6(d) hereof, or which is
not justified as a termination based on Cause; or
 
                     (v)    any breach of this Agreement by the Company.
 
              (d)    NOTICE OF TERMINATION.  Any purported notice of
termination of the Employee's status as an employee must be communicated in a
writing delivered to the other party as provided in Paragraph 15 hereof (a
notice of termination complying with this sentence is referred to in this
Agreement as a "Notice of Termination").  Any such Notice of Termination that
purports to terminate Employee's employment for Cause or for Good Reason shall
specify the provision or provisions of this Agreement relied upon by the party
giving such notice and shall set forth in reasonable detail the facts and
circumstances claimed by such party to provide a basis for termination of the
Employee's employment under the provision(s) so indicated.
 
              (e)    DATE OF TERMINATION.  "Date of Termination" means (i) if
Employee's employment is terminated by the Company for Cause, or by Employee
for Good Reason, the date of delivery of the Notice of Termination or any later
date specified therein, as the case may be, (ii) if the Employee's employment
is terminated by the Company other than for Cause or disability, the Date of
Termination shall be the date on which the Company notifies the Employee of
such termination and (iii) if Employee's employment is terminated by reason of
his death or disability,
 
 
                                     -6-
<PAGE>   7
the Date of Termination shall be the date of death of Employee or the
Disability Effective Date, as the case may be.
 
       7.     OBLIGATIONS OF THE COMPANY UPON TERMINATION.
 
              (a)    GOOD REASON, OTHER THAN FOR CAUSE, DEATH OR DISABILITY.
If (i) the Company terminates the Employee's status as an employee other than
for Cause, death or disability, or (ii) the Employee shall terminate his
employment for Good Reason, then the Company shall pay to the Employee in a
lump sum in cash within 30 days after the Date of Termination the aggregate of
the following amounts:
 
                            (A)    the sum of (1) the amount of the Employee's
Annual Base Compensation earned through the Date of Termination, to the extent
not theretofore paid and (2) any compensation previously deferred by the
Employee (together with any accrued interest on earnings thereon) and any
accrued vacation pay, in each case to the extent not previously paid (the sum
of the amounts described in clauses (1) and (2) being hereinafter referred to
as the "Accrued Obligations").
 
                            (B)    the aggregate amount of the Employee's
Annual Base Compensation for the period beginning the day of the Date of
Termination and continuing through the last day of the Employment Term (such
amount being referred to herein as the "Non-Accrued Compensation").
 
                            (C)    to the extent not theretofore paid or
provided, the Company shall timely pay or provide to the Employee any other
amounts required to be paid or provided or which the Employee is eligible to
receive under any plan, program, policy or practice of the Company (such other
amounts being referred to herein as the "Other Benefits").
 
       The rights and obligations of the Employee and the Company following a
change of control of the Company are as provided in the Change of Control
Agreement between the Employee and the Company dated effective September 30,
1996 and any amendments thereto or any subsequent change of control agreement
between Employee and the Company (the "Change of Control Agreement") and in
Section 7(e) hereof.
 
       As used in this Section, the phrase "change in control of the Company"
shall mean a change of control of the Company as defined in the Change of
Control Agreement or a change in control of the type that would be required to
be reported in response to Item 6(e) of Schedule 14A promulgated under the
Exchange Act, whether or not the Company is then subject to such reporting
requirement; provided that, without limitation, such a change of control shall
be deemed to have occurred if (A) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act), other than a trustee or
fiduciary holding securities under an employee benefit plan of the Company, is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act) directly or indirectly, of securities of the Company representing 35% or
more of the Company's combined voting power of the Company's then outstanding
securities, (B) during any period of two consecutive years (not including any
period prior to the execution of this Agreement), a majority of the Board is
not
 
 
                                     -7-
<PAGE>   8
comprised of (1) individuals who at the beginning of such period were members
of the Board plus (2) any new directors whose nomination for election by the
Board or the Company's stockholders was approved by the vote of two-thirds of
the directors then in office who either were directors at the beginning of the
period or whose nomination was previously so approved.)
 
              (b)    DEATH.  If the Employee's status as an employee is
terminated by reason of the Employee's death, this Agreement shall terminate
without further obligations to the Employee's legal representatives under this
Agreement, other than for payment of (i) Accrued Obligations, (ii) 50% of the
Non-Accrued Compensation (the "Death Cash Payment") and (iii) the timely
payment or provision of Other Benefits.  The sum of the Accrued Obligations and
the Death Cash Payment shall be paid to the Employee's estate or beneficiary,
as applicable, in a lump sum in cash within 30 days of the Date of Termination.
With respect to the provision of Other Benefits, the term Other Benefits as
used in this Section 7(b) shall include, without limitation, and the Employee's
estate and/or beneficiaries shall be entitled to receive, benefits at least
equal to the most favorable benefits provided by the Company to the estates and
beneficiaries of its senior executive officers under such plans, programs,
practices and policies relating to death benefits, if any, as in effect on the
date of Employee's death.
 
              (c)    DISABILITY.  If Employee's status as an employee is
terminated by reason of Employee's disability, this Agreement will terminate
without further obligation to the Employee, other than the payment of (i)
Accrued Obligations, (ii) 50% of the Non-Accrued Compensation (the "Disability
Cash Payment") and (iii) the timely payment or provision of Other Benefits.
The sum of Accrued Obligations and the Disability Cash Payment will be paid to
the Employee in a lump sum in cash within 30 days of the Date of Termination.
With respect to the provision of Other Benefits, the term Other Benefits as
used in this Section 7(c) shall include, and the Employee will be entitled
after the Disability Effective Date to receive, disability and other benefits
at least equal to the most favorable of those generally provided by the Company
to disabled executive officers and their families in accordance with such
plans, programs, practices and policies related to disability that are in
effect on the Disability Effective Date.
 
              (d)    CAUSE, OTHER THAN FOR GOOD REASON.  If the Employee's
status as an employee shall be terminated for Cause by Employer, or voluntarily
terminated by Employee other than for Good Reason, this Agreement shall
terminate without further obligation to the Employee other than for (i) Accrued
Obligations, which shall be paid in a lump sum in cash within 30 days of the
Date of Termination, and (ii) to the extent not theretofore paid or provided,
the Company shall timely pay or provide to the Employee his accrued, vested
benefits under any benefit plan or program of the Company.
 
              (e)    CHANGE OF CONTROL BENEFIT.  In addition to all benefits to
which Employee is entitled under the Change of Control Agreement, if Employee
is subjected to an excise tax as a result of the golden parachute provisions of
section 4999 of the Internal Revenue Code of 1986, as amended, the Company
shall pay to Employee such amounts as are necessary to place Employee in the
same after-tax position as he would have been had such golden parachute
provisions not been applicable to him. This tax gross-up provision shall take
into account any such applicable excise tax,
 
 
                                     -8-
<PAGE>   9
any state or federal interest and penalties and any state or federal income tax
and excise tax payable with respect to the additional payment provided by this
Section 7(e).
 
       8.     TRADE SECRETS, ETC.  The Employee shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its subsidiaries or
corporate affiliates and their respective businesses and operations, which
shall have been obtained by the Employee during the Employee's employment
(whether prior to or after the Commencement Date) and which shall not have
become public knowledge (other than by acts of the Employee or any of his
representatives in violation of this Agreement).  At the end of the Employment
Term, the Employee agrees (i) not, without the prior written consent of the
Company or as may be otherwise required by law or legal process, to communicate
or divulge any such information, knowledge or data to any party other than the
Company and (ii) to deliver promptly to the Company any confidential
information, knowledge or data in his possession, whether produced by the
Company or any of its subsidiaries and corporate affiliates or by the Employee,
that relates to the business of the Company or any of its subsidiaries and
joint ventures or any past, current or prospective activity of the Company or
any of its subsidiaries and joint ventures.  The Employee shall be permitted to
retain copies of such data as are necessary in order to enable the Employee to
assert any rights under this Agreement, provided that such data shall be used
solely for such purpose.
 
       9.     CUSTOMER LISTS.  The Employee recognizes and acknowledges that
any written list or lists of the customers of the Company or any of its
subsidiaries and joint ventures ("customer lists"), as such customer lists may
exist from time to time, are valuable, special and unique assets of the
Company.  The Employee agrees that he will not use for his own personal benefit
or disclose such customer lists to any person, firm, corporation, association
or other entity for any reason or purpose whatsoever.  Personal and social
contacts with past, present or future customers of the Company shall not be
prohibited hereby.
 
       10.    LIMITED COVENANT NOT TO COMPETE.  For a period of two years
commencing with the expiration of the term of this Agreement, the Employee will
not, directly or indirectly, own, manage, operate, control, be employed by,
participate in, or be connected in any manner with the ownership, management,
operation or control of any company or other business enterprise engaged in the
business of providing vessel services for the offshore oil and gas industry,
within any parish of the State of Louisiana (as set forth in Appendix G), or
any other jurisdiction (whether within or outside the United States), in which
the Company or any of its subsidiaries or joint ventures carries on the
business of vessel services for the offshore oil and gas industry, so long as
the Company or any of its subsidiaries or joint ventures carries on a like line
of business therein; provided, however, that nothing contained herein shall (a)
prohibit the Employee from making investments in any publicly held company
which do not exceed in the aggregate two percent of the equity interest of such
company or (b) prohibit the Employee from continuing to hold any of the
director or officer positions held by him as of the date of this Agreement that
are disclosed on Appendix H hereto.
 
       11.    CERTAIN PROPRIETARY RIGHTS.  The Employee agrees to and hereby
does assign to the Company all his right, title and interest in and to all
inventions, business plans, work models or procedures, whether or not
patentable, which are made or conceived solely or jointly by him:
 
 
                                     -9-
<PAGE>   10
              (a)    At any time during the term of his employment by the
Company, or
 
              (b)    With the use of time or materials of the Company.  The
Employee agrees to communicate to the Company or its representatives all facts
known to him concerning such matters, to sign all necessary instruments, make
all necessary oaths and generally, at the Company's expense, to do everything
reasonably practicable (without expense to the Employee) to aid the Company in
obtaining and enforcing proper legal protection for all such matters in all
countries and in vesting title to such matters in the Company.  At the
Company's request (during or after the term of this Agreement) and expense, the
Employee will promptly execute a specific assignment of title to the Company,
and perform any other acts reasonably necessary to implement the foregoing
assignment.
 
       12.    INJUNCTIVE RELIEF.  In the event of a breach or threatened breach
by the Employee of the provisions of Sections 8, 9, 10 or 11 of this Agreement
during or after the term of this Agreement, the Company shall be entitled to
injunctive relief restraining the Employee from violation of such paragraph.
Nothing herein shall be construed as prohibiting the Company from pursuing any
other remedy at law or in equity it may have in the event of breach or
threatened breach of this Agreement by the Employee.
 
       13.    BINDING EFFECT.
 
              (a)    This Agreement shall be binding upon and inure to the
benefit of the Company and any of its successors or assigns.
 
              (b)    This Agreement is personal to the Employee and shall not
be assignable by the Employee without the consent of the Company (there being
no obligation to give such consent) other than such rights or benefits as are
transferred by will or the laws of descent and distribution.
 
              (c)    The Company will require any successor or assign (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the assets or businesses of the Company (i) to assume
unconditionally and expressly this Agreement and (ii) to agree to perform all
of the obligations under this Agreement in the same manner and to the same
extent as would have been required of the Company had no assignment or
succession occurred, such assumption to be set forth in a writing reasonably
satisfactory to the Employee.  In the event of any such assignment or
succession, the term "Company" as used in this Agreement shall refer also to
such successor or assign.
 
       14.    NOTICES.  Any notice or other communication required under this
Agreement shall be in writing, shall be deemed to have been given and received
when delivered in person, or, if mailed, shall be deemed to have been given
when deposited in the United States mail, first class, registered or certified,
return receipt requested, with proper postage prepaid, and shall be deemed to
have been received on the third business day thereafter, and shall be addressed
as follows:
 
                                    -10-
<PAGE>   11
       If to the Company, addressed to:
 
       Tidewater Inc.
       1440 Canal Street, Suite 2100
       New Orleans, Louisiana  70112
       Attn:  Cliffe F. Laborde
              Senior Vice President and Secretary
 
       If to the Employee, addressed to:
 
       William C. O'Malley
       1440 Canal Street, Suite 2100
       New Orleans, Louisiana 70112
 
or such other address as to which any party hereto may have notified the other
in writing.
 
       15.    GOVERNING LAW.  This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Louisiana.
 
       16.    ENTIRE AGREEMENT.  This Agreement, including Appendices A through
I, inclusive, all of which are herein incorporated by reference and made a part
hereof, and the documents referred to herein, contain or refer to the entire
arrangement or understanding between the Employee and the Company relating to
the employment of the Employee by the Company.  No provision of the Agreement,
including the Appendices, may be modified or amended except by an instrument in
writing signed by or for both parties hereto.
 
       17.    SEVERABILITY.  If any term or provision of this Agreement, or the
application thereof to any person or circumstance, shall at any time or to any
extent be invalid or unenforceable, the remainder of this Agreement, or the
application of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby and each term and provision of this Agreement shall be valid and
enforced to the fullest extent permitted by law.
 
       18.    WAIVER OF BREACH.  The waiver by either party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach thereof.
 
       19.    REMEDIES NOT EXCLUSIVE.  No remedy specified herein shall be
deemed to be such party's exclusive remedy, and accordingly, in addition to all
of the rights and remedies provided for in this Agreement, the parties shall
have all other rights and remedies provided to them by applicable law, rule or
regulation.
 
       20.    BENEFICIARIES.  Whenever this Agreement provides for any payment
to be made to the Employee or his estate, such payment may be made instead to
such beneficiary or beneficiaries as the Employee may have designated in
writing and filed with the Company.  The Employee shall
 
 
                                    -11-
<PAGE>   12
have the right to revoke any such designation from time to time and to
redesignate any beneficiary or beneficiaries by written notice to the Company.
 
       21.    COMPANY'S RESERVATION OF RIGHTS.  Employee acknowledges and
understands that the Employee serves at the pleasure of the Board and that the
Company has the right at any time to terminate Employee's status as an employee
of the Company, or to change or diminish his status as the Chief Executive
Officer during the Employment Term, subject to the rights of the Employee to
claim the benefits conferred by Section 7(a) hereof if such action constitutes
a termination by the Company without Cause or a termination by the Employee for
Good Reason.
 
       22.    COUNTERPARTS.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
 
                                           TIDEWATER INC.
 
 
 
Date of Execution: 9/23/97         By: /s/ ROBERT H. BOH                     
                   -------            ---------------------------------------
                                       Name:      Robert H. Boh
                                       Title:     Director and Chairman of the
                                                  Compensation Committee of the
                                                  Board of Directors
 
                                   EMPLOYEE:
 
 
Date of Execution: 9/25/97          /s/ WILLIAM C. O'MALLEY                     
                   -------         -------------------------------------------
                                   Name:   William C. O'Malley