Exhibit 10.1
LOAN AGREEMENT
AMONG
THE CIT GROUP/EQUIPMENT FINANCING INC.,
MERRILL LYNCH CAPITAL, a Division of Merrill Lynch Business Financial Services,
Inc.
ABLECO FINANCE LLC,
A3 FUNDING LP,
AIG COMMERCIAL EQUIPMENT FINANCE, INC., and
GATX FINANCIAL CORPORATION,
as Lenders,
THE CIT GROUP/EQUIPMENT FINANCING, INC.,
as Agent for the Lenders,
and
HORIZON VESSELS, INC.
as Borrower
Dated as of March 9, 2006

 

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TABLE OF CONTENTS

                              Page   ARTICLE I.       The Loan     10  
 
  Section 1.1   Amount.     10  
 
  Section 1.2   Notice of Drawing     10  
 
  Section 1.3   Repayment.     10  
 
  Section 1.4   Interest.     10  
 
  Section 1.5   Payments.     12  
 
  Section 1.6   Prepayment.     13  
 
  Section 1.7   Security     16  
 
  Section 1.8   Fees.     16  
 
  Section 1.9   Sharing of Payments, Etc     16  
 
                ARTICLE II.       Conditions Precedent     17  
 
  Section 2.1   Conditions Precedent to Advance     17  
 
  Section 2.2   Waiver of Conditions Precedent     19  
 
                ARTICLE III.       Representations, Warranties and Covenants    
19  
 
  Section 3.1   Representations of the Borrower     19  
 
  Section 3.2   Affirmative Covenants of Borrower     21  
 
  Section 3.3   Negative Covenants of Borrower     27  
 
                ARTICLE IV.       Events of Default     31  
 
                ARTICLE V.       The Agent     33  
 
  Section 5.1   Appointment and Duties of Agent.     33  
 
  Section 5.2   Discretion and Liability of Agent     33  
 
  Section 5.3   Event of Default.     34  
 
  Section 5.4   Consultation     34  
 
  Section 5.5   Communications to and from Agent     34  
 
  Section 5.6   Limitations of Agency     34  
 
  Section 5.7   No Representations or Warranty.     35  
 
  Section 5.8   Lender Credit Decision     35  
 
  Section 5.9   Indemnity     35  
 
  Section 5.10   Resignation     35  
 
  Section 5.11   Disbursements and Distributions     35  
 
  Section 5.12   Limitation of Suits     35  
 
  Section 5.13   Right of Setoff     36  
 
                ARTICLE VI.       Miscellaneous     36  
 
  Section 6.1   Notices     36  
 
  Section 6.2   No Waiver     38  
 
  Section 6.3   Applicable Law and Jurisdiction.     38  
 
  Section 6.4   Severability     39  
 
  Section 6.5   Amendment.     39  
 
  Section 6.6   Assignment and Participation.     40  
 
  Section 6.7   Costs, Expenses and Taxes     41  
 
  Section 6.8   Counterparts     42  
 
  Section 6.9   Section Headings     42  

(i)

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              Page  
 
  Section 6.10   Merger     42  
 
  Section 6.11   Customer Identification – USA Patriot Act Notice; OFAC and Bank
Secrecy Act     42  

         
Schedule 1
  -   Lender Commitments
Schedule 2
  -   Vessels
Schedule 3.1(c)
  -   Litigation
Schedule 3.3(e)
  -   Indebtedness
Schedule 3.1(g)
  -   Subsidiaries
Exhibit A
  -   Note
Exhibit B
  -   Notice of Drawing
Exhibit C
  -   Compliance Certificate

(ii)

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LOAN AGREEMENT
     THIS LOAN AGREEMENT dated as of March 9, 2006, among HORIZON VESSELS, INC.,
a Delaware corporation (the “Borrower”), THE CIT GROUP/EQUIPMENT FINANCING,
INC., a Delaware corporation, as agent for the Lenders (the “Agent”), and each
of the lenders that is a signatory hereto or which becomes a signatory hereto
pursuant to Section 6.6 hereof (individually, together with its successors and
assigns, a “Lender” and, collectively, the “Lenders”). Capitalized terms used
herein and not otherwise defined herein are used with the meanings ascribed
thereto in the Definitions Section of this Agreement.
R E C I T A L S:
     1. The Borrower is in the business of owning offshore construction vessels.
     2. The Borrower has requested financing from the Lenders in the principal
amount of up to USD 77,403,827.05 in order to repay certain of the Borrower’s
and its Affiliates existing indebtedness.
     3. The Loan shall be evidenced by the secured promissory note of the
Borrower, substantially in the form of Exhibit A attached hereto and made a part
hereof.
     NOW, THEREFORE, in consideration of the above recitals, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
DEFINITIONS:
     The following terms shall have the following meanings for all purposes of
this Agreement and shall be equally applicable to both the singular and the
plural forms of the terms herein defined.
     “Accounts Receivable Security Agreements” means, collectively (i) that
certain Security Agreement executed by the Borrower for the benefit of the
Agent, (ii) that certain Security Agreement, executed by the Parent Guarantor
for the benefit of the Agent and (iii) that certain Security Agreement, executed
by Horizon Offshore Contractors, Inc. for the benefit of the Agent, each of
which documents creates a first priority security interest in the accounts
receivable and related property of the party creating such security interest and
is otherwise satisfactory to the Agent in its sole discretion.
     “Advance” means the Loan by the Lenders to the Borrower under this Loan
Agreement.
     “Affiliate” of any Person means (i) any Person directly or indirectly
controlled by, controlling or under common control with such first Person and
(ii) any director or officer of such first Person or of any Person referred to
in clause (i) above. For the purposes of this definition “control” of any Person
includes (a) with respect to any corporation or other Person having voting
shares or the equivalent and elected directors, managers, or Persons performing
similar functions, the ownership or power to vote, directly or indirectly shares
or the equivalent representing 50% or more of the power to vote in the election
of directors, managers or Persons performing similar functions, (b) ownership of
50% or more of the equity or beneficial interest in any other entity and (c) the
ability to direct the business and affairs of any Person by acting as a general
partner, manager or otherwise.

 

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     “Agreement”, “this Agreement”, “herein”, “hereunder"' or other like words
mean this Loan Agreement as originally executed or as modified, amended or
supplemented from time to time pursuant to the provisions hereof.
     “Anti-Terrorism Laws” means any laws related to terrorism or money
laundering, including Executive Order 13224 and the USA Patriot Act, and any
regulations promulgated under either of them.
     “Approved Fund” means, with respect to any Lender, any Person (other than a
natural person) that is engaged in making, purchasing, holding or investing in
bank loans and similar extensions of credit in the ordinary course of its
business and that is administered or managed by (a) such Lender, (b) an
Affiliate of such Lender or (c) an entity or an Affiliate of an entity that
administers or manages such Lender.
     “Assignment and Acceptance” means an agreement by which an assignment is
made pursuant to Section 6.6 hereof, in form and substance reasonably
satisfactory to the Agent.
     “Borrower” means Horizon Vessels, Inc. and its successors and permitted
assigns.
     “Business Day” means a day other than a Saturday or a Sunday or a day on
which commercial banks are authorized to be closed in the State of New York or
the State of Texas.
     “Capital Lease” means a lease of any property by the Parent Guarantor or
any of its Subsidiaries as lessee that is, or should be in accordance with GAAP
(including Financial Accounting Standards Board Statement No. 13, as amended or
superseded from time to time), recorded as a ‘capital lease’ on the balance
sheet of the Parent Guarantor or its Subsidiaries prepared in accordance with
GAAP.
     “Cash Equivalents” means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof having maturities of not more than one (1) year from the
date of acquisition, (ii) time deposits (including Eurodollar time deposits) and
certificates of deposit of any bank meeting the qualifications specified in
clause (iv) below with maturities of not more than 90 days from the date of
acquisition, (iii) fully secured repurchase obligations with a term of not more
than 90 days for underlying securities of the types described in clause
(i) entered into with any bank meeting the qualifications specified in clause
(iv) below, (iv) commercial paper issued by the parent corporation of any bank
referred to in this clause (iv) or any commercial bank of recognized standing
having capital and surplus in excess of USD 300,000,000.00 and commercial paper
rated at least A-2 or the equivalent thereof by Standard & Poor’s Corporation or
at least P-2 or the equivalent thereof by Moody’s Investor Services, Inc., and
in each case maturing within 90 days after the date of acquisition, and (v)
remarketed certificates of participation issued through any bank meeting the
qualifications specified in clause (iv) above rated at least A-2 or the
equivalent thereof by Standard & Poor’s Corporation or at least P-2 or the
equivalent thereof by Moody’s Investor Services, Inc. and maturing within
90 days after the date of acquisition.
     “Cash Interest” means the cash portion of consolidated interest expense,
including interest which may be required to be capitalized.
     “CIT Term Loan” means the loan made to Borrower and Horizon Offshore
Contractors, Inc. pursuant to that certain Loan Agreement dated December 30,
1998, among the Borrower, the Guarantors, The CIT Group/Equipment Financing,
Inc, as Agent, and the lenders party thereto, as amended.
     “Closing Date” means any Business Day on or prior to March 10, 2006 on
which the Advance is made.

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     “Collateral Value” has the meaning set forth in Section 1.6(a)(ii) hereof.
     “Commitment” means the lesser of (i) USD 77,403,827.05 and (ii) the sum of
(A) the aggregate outstanding amounts under (and prepayments and other fees
payable upon the payment of) the Manchester Term Loans and the CIT Term Loan on
the Closing Date, (B) the amount of fees described in Sections 1.8(a) and
(b) hereof and (C) the amount of the ECS Fees.
     “Compliance Certificate” a certificate signed by the chief financial
officer or chief accounting officer of the Parent Guarantor substantially in the
form attached hereto as Exhibit C.
     “Controlled Group” means a “controlled group of corporations” as defined in
Section 1563(a) of the Internal Revenue Code of 1986, as amended, without regard
to Section 1563(a)(4) and (e)(3)(c) of such Code, of which Borrower is a part.
     “Current Assets” means the assets of the Parent Guarantor on a consolidated
basis which would in accordance with GAAP be classified as current assets of a
corporation conducting a business the same as or similar to the Borrower and the
Parent Guarantor.
     “Current Liabilities” means indebtedness of the Parent Guarantor on a
consolidated basis which would in accordance with GAAP be classified as current
liabilities of a corporation conducting a business the same as or similar to the
Borrower and the Parent Guarantor, excluding (a) the principal amount
outstanding under the Working Capital Loan, (b) the principal payment due
hereunder on the Maturity Date and (c) other funded debt that is specifically
subordinated to the Loan on terms reasonably acceptable to the Agent.
     “Current Maturities of Long Term Debt” means for the Parent Guarantor and
its Subsidiaries on a consolidated basis, the principal amount due and payable
during the next succeeding twelve month period on Total Funded Debt of the
Parent Guarantor and its Subsidiaries, excluding (a) the principal amount due
under the Working Capital Loan and the principal payment due hereunder on the
Maturity Date and (b) mandatory principal prepayments required by Section 1.6(a)
of this Agreement.
     “Current Ratio” means the ratio of Current Assets to Current Liabilities.
     “Debt Ratio” means the ratio of Total Funded Debt to the sum of Total
Funded Debt plus the Parent Guarantor’s stockholders’ equity.
     “DOC” means a Document of Compliance issued in accordance with
Regulation 4.1 of SOLAS Chapter IX, Management for the Safe Operation of Ships.
     “Dollars” or “USD” means lawful currency of the United States of America.
     “Drawdown Date” means the date upon which the Advance is made.
     “EBITDA” means, for any period, for the Parent Guarantor and its
Subsidiaries, on a consolidated basis during such period, the sum of (a) Net
Income for such period before gains and losses on sales of assets, asset
impairment, and debt extinguishment (to the extent such gains and losses are
included in Net Income), plus (b) Tax Expense for such period, plus
(c) depreciation and amortization (including accelerated amortization of prepaid
loan fees, discounts and warrant expense, as required by GAAP) for such period,
plus (d) Interest Expense for such period.
     “ECH Offshore” means ECH Offshore S. de R.L. de C.V., a Subsidiary of the
Parent Guarantor.

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     “ECH Offshore Security Agreement” means that certain Security Agreement
dated of even date herewith, executed by ECH Offshore for the benefit of the
Agent, whereby ECH Offshore grants a security interest in the PEMEX Amount to
the Agent as security for the Loan.
     “ECS Fees” means the fees payable by the Borrower to Energy Capital
Solutions, financial advisor to the Borrower in an amount equal to one and
one-half percent (1.5%) of the portion of the Commitment described in clause
(ii)(A) of the definition of such term herein, for services provided by Energy
Capital Solutions to the Borrower in connection with obtaining the Commitment.
     “Eligible Assignee” means (a) a commercial bank organized under the laws of
the United States, or any state thereof, and having total assets in excess of
USD 250,000,000, (b) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic Cooperation and
Development or a political subdivision of any such country and which has total
assets in excess of USD 250,000,000, provided that such bank is acting through a
branch or agency located in the United States, (c) a finance company, insurance
company, or other financial institution or fund that is engaged in making,
purchasing, or otherwise investing in commercial loans in the ordinary course of
its business and having (together with its Affiliates) total assets in excess of
USD 250,000,000, (d) a Lender, any Affiliate (other than individuals) or
Approved Fund of a Lender, and (e) during the continuation of an Event of
Default, any other Person so long as the assigning Lender provides at least five
(5) Business Days prior written notice to the Agent of such assignment.
     “Equipment” shall have the meaning set forth in Section 1.01 of the
Security Agreement.
     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended.
     “Event of Default” has the meaning set forth in Article IV hereof.
     “Excluded Income Taxes” has the meaning set forth in Section 1.5(a) hereof.
“Executive Order 13224” means Executive Order Number 13224 on Terrorism
Financing, effective September 24, 2001.
     “First Lien Vessels” means the four (4) U.S. flag vessels and the three
(3) Vanuatu flag vessels listed on Schedule 2 attached hereto.
     “Fixed Charge Coverage Ratio” means for the Parent Guarantor and its
Subsidiaries on a consolidated basis as of the last day of any fiscal quarter of
the Parent Guarantor, (a) EBITDA for the four (4) quarters then ended divided by
(b) the sum of (i) Current Maturities of Long Term Debt as of the last day of
such quarter, plus (ii) Cash Interest paid during the four (4) quarters then
ended, plus (iii) Tax Expense for the four (4) quarters then ended.
     “Fixed Rate” means the sum of (i) the Treasury Rate, plus (ii) 5.25% per
annum.
     “GAAP” means generally accepted accounting principles in effect from time
to time in the United States of America.
     “GE Credit TN” means General Electric Credit Corporation of Tennessee.
     “Governmental Agencies” means any government or any state, department or
other political subdivision thereof or governmental body, agency, authority,
department or commission having jurisdiction over the Borrower or its properties
(including without limitation any court or tribunal) exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any corporation, partnership or other entity directly or
indirectly owned by the foregoing.

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     “Guaranty” means each guaranty executed by a Guarantor in favor of the
Agent, in form and substance reasonably acceptable to the Agent.
     “Guarantors” means the Parent Guarantor and Horizon Offshore Contractors,
Inc., a Delaware corporation.
     “Gulf Horizon Insurance Proceeds” means all of the proceeds and/or awards
recovered by the Borrower in connection with the loss or damage to the United
States flag vessel Gulf Horizon, Official Number 514595.
     “Hazardous Substances” means petroleum and used oil, or any other pollutant
or contaminant, hazardous, dangerous or toxic waste, substance or material as
defined in the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, 42 U.S.C. § 9601, et seq. (hereinafter called
“CERCLA”); the Resource Conservation and Recovery Act, as amended, 42 U.S.C. §
6901, et seq. (hereinafter called “RCRA”); the Toxic Substances Control Act, as
amended, 15 U.S.C. § 2601, et seq. (hereinafter called “TSCA”); the Hazardous
Materials Transportation Act, as amended, 49 U.S.C. § 1801, et seq. (hereinafter
called “HMTA”); the Oil Pollution Act of 1990, Pub.L. No. 101380, 104 Stat. 484
(1990) (hereinafter called “OPA”); or any other statute, law, ordinance, code or
regulation of any Governmental Agency relating to or imposing liability or
standards of conduct concerning the use, production, generation, treatment,
storage, recycling, handling, transportation, release, threatened release or
disposal of any hazardous, dangerous or toxic waste, substance or material,
currently in effect or at any time hereafter adopted.
     “Indebtedness” of the Borrower or the Guarantors means all items of
indebtedness which, in accordance with GAAP, would be included in determining
liabilities as shown on the liability side of a balance sheet of the Borrower or
the Guarantors, as of the date as of which indebtedness and liabilities is to be
determined and shall include all indebtedness and liabilities of others assumed
or guaranteed by the Borrower or the Guarantors or in respect of which the
Borrower or the Guarantors are secondarily or contingently liable (other than by
endorsement of instruments in the course of collection and performance
guarantees and similar transactions entered into in the ordinary course of
business) whether by reason of any agreement to acquire such indebtedness or to
supply or advance sums or otherwise but shall exclude deferred Taxes.
     “Indemnitee” means the Agent, the Lenders and their officers, directors,
employees, representatives, agents and Affiliates.
     “Intercreditor Agreement” means an intercreditor agreement between the
Agent (and possibly the Lenders) and the Working Capital Lender on terms and
conditions satisfactory to the Agent and the Lenders in their sole discretion,
and consented to by the Borrower and the Guarantors, as the same may be amended
from time to time.
     “Interest Expense” means interest expense determined in accordance with
GAAP.
     “Interest Period” has the meaning set forth in Section 1.4(c) hereof.
     “Interest Rate” has the meaning set forth in Section 1.4(b) hereof.
     “ISPS Code” means the International Ship and Port Facility Security Code
adopted by the International Maritime Organization; in accordance with
Regulation 1.12 of SOLAS Chapter X1-2; Special Measures to Enhance Maritime
Security.

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     “ISSC” means a valid and current International Ship Security Certificate
issued under the ISPS Code.
     “LIBO Rate” means, for an Interest Period, the one month rate of interest
per annum in the London interbank market as reported and published on the Dow
Jones Telerate System on the day that is two (2) Business Days prior to the
first day of such Interest Period or, if such day is not a day on which such
rate is reported and published on the Dow Jones Telerate System, then on the
first preceding day on which such rate is reported and published on the Dow
Jones Telerate System; provided that if on such day no such rate is reported and
published on such system, the LIBO Rate for such Interest Period shall be the
per annum yield for 1-month Eurodollar deposits (London) shown on the most
recent (as of 5:00 p.m. Eastern time) H.15 Release posted by the Federal Reserve
Board at www.federalreserve.gov/release/H15/update on the day that is two
(2) Business Days prior to the first day of such Interest Period.
     “Loan” means the current principal amount and unpaid interest outstanding
under this Agreement.
     “Loan Documents” means the Note, this Agreement, the Mortgages, the
Security Agreement, the Guarantys, the ECH Offshore Security Agreement, the
Second Lien Maritime Security Agreement, and the Accounts Receivable Security
Agreements.
     “Majority Lenders” shall mean those Lenders holding at least 66% of the
Loan.
     “Manchester” means Manchester Securities Corp. as administrative agent on
behalf of the lenders a party to the Manchester Term Loans.
     “Manchester Term Loans” means the USD 30,000,000.00 Term Loan A from
certain lenders to the Parent Guarantor and certain of its Subsidiaries, as to
which Manchester acts as administrative agent and the USD 40,000,000.00 Term
Loan B from certain lenders to the Parent Guarantor and certain of its
Subsidiaries, as to which Manchester acts as administrative agent, each of which
shall be repaid by the Advance.
     “Material Adverse Effect” means having a material adverse effect on the
business, properties or condition (financial or otherwise) of the Borrower and
the Guarantors taken as a whole.
     “Maturity Date” means the date sixty (60) months after the date of the
Advance, but in no event later than March 9, 2011.
     “Mortgages” means the U.S. Mortgage, the Vanuatu Mortgage and the Second
Mortgage.
     “MTSA” means the Maritime Transportation Security Act of 2002, as amended,
Public Law 107-295.
     “Net Income” means, for any period, with respect to the Parent Guarantor
and its Subsidiaries, the consolidated net income (or loss) of the Parent
Guarantor and its Subsidiaries for such period, determined in accordance with
GAAP applied consistently (excluding any extraordinary items during such
period).
     “Note” means the Promissory Note of the Borrower in favor of the Agent,
substantially in the form of Exhibit A attached hereto and made a part hereof.
     “Notice of Drawing” means the Notice of Drawing from the Borrower to the
Agent, substantially in the form of Exhibit B attached hereto and made a part
hereof.

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     “Orderly Liquidation Value” has the meaning set forth in
Section 1.6(a)(iii) hereof.
     “Other Taxes” has the meaning set forth in Section 1.5 hereof.
     “Parent Guarantor” means Horizon Offshore, Inc., a Delaware corporation.
     “Participant Register” has the meaning set forth in Section 6.6(d) hereof.
     “Payment Date” has the meaning set forth in Section 1.3(a) hereof.
     “Pecos Horizon” means the U.S. flag vessel Pecos Horizon, Official Number
528068, owned by the Borrower.
     “PEMEX Amount” means all proceeds and/or awards recovered by ECH Offshore
arising from or in connection with ECH Offshore’s existing arbitration
proceeding with PEMEX concerning its claims in connection with the EPC-64
contract.
     “Permitted Liens” has the meaning set forth in Section 3.3(a) of this
Agreement.
     “Person” means any natural person, corporation, partnership, limited
liability company, firm, association, government, Governmental Agency or any
other entity other than the Borrower and whether acting in an individual,
fiduciary or other capacity.
     “Plan” means any employee pension benefit plan subject to Title IV of ERISA
and maintained by Borrower or any member of a Controlled Group, or any such
plan, to which Borrower or any member of a Controlled Group is required to
contribute on behalf of any of its employees.
     “Prepayment Premium” means the prepayment premiums required by
Section 1.6(b) hereof.
     “Prime Rate” means with respect to any Interest Period, the rate publicly
announced in New York, New York from time to time as the prime rate of JPMorgan
Chase Bank N.A. (or any successor thereof) (“JPMorgan”). The Prime Rate shall be
determined by the Agent at the close of business two (2) Business Days before a
Payment Date, and shall be effective to but not including the next applicable
Payment Date. The Prime Rate is not intended to be the lowest rate of interest
charged by JPMorgan or the Lenders in connection with extensions of credit to
debtors.
     “Prohibited Person” means (a) a person or entity subject to the provisions
of Executive Order 13224; (b) a person or entity owned or controlled by, or
acting for or on behalf of, an entity that is subject to the provisions of
Executive Order 13224; (c) a person or entity with whom Borrower or Lender is
prohibited from dealing by any of the Anti-Terrorism Laws; (d) a person or
entity that commits, threatens or conspires to commit or supports “terrorism” as
defined in Executive Order 13224; (e) a person or entity that is named as a
“specially designated national and blocked person” on the most current list
published by the U.S. Treasury Department’s Office of Foreign Assets Control; or
(f) a person or entity who is affiliated with a person or entity described in
clauses (a) through (e) of this definition.
     “Related Lender Assignment” shall mean an assignment of all or any portion
of a Loan made by a Lender to an Affiliate of such Lender or an Approved Fund of
such Lender.
     “Reportable Event” means a reportable event as defined in Section 4043 of
ERISA (29 U.S.C. §1343), except events for which the notice provision has been
waived by the Pension Benefit Guaranty Corporation.

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     “Responsible Officer” means the Borrower’s chief executive officer, the
Borrower’s chief financial officer or any other officer having principal
responsibility for the financial affairs of the Borrower.
     “Sea Horizon” means the Vanuatu flag vessel Sea Horizon, Official Number
1340, owned by Horizon Vessels International, Ltd., a Cayman Islands
corporation, a Subsidiary of the Parent Guarantor.
     “Second Lien Maritime Security Agreement” means the Security Agreement
between Horizon Vessels International, Ltd., a Cayman Islands corporation and a
Subsidiary of the Parent Guarantor, and the Agent, covering the earnings,
equipment and insurances with respect to the Sea Horizon, and otherwise
satisfactory to the Agent in its sole discretion.
     “Second Mortgage” means that certain Preferred Ship Mortgage, executed by
Horizon Vessels International, Ltd., a Cayman Islands corporation and a
Subsidiary of the Parent Guarantor, for the benefit of the Agent, covering the
Sea Horizon and having a second priority, junior only to the existing mortgage
of GE Credit TN on such vessel, and otherwise in form and substance satisfactory
to the Agent in its sole discretion.
     “Security Agreement” means the Security Agreement between the Borrower and
the Agent, dated as of the date hereof, covering the charters, earnings,
equipment and insurances with respect to the First Lien Vessels.
     “SMC” means the Safety Management Certificate issued to a Vessel in
accordance with Regulation 4.3 of SOLAS Chapter IX; Management for the Safe
Operation of Ships.
     “Subsidiaries” means, as to any Person, all corporations, partnerships
(general or limited), limited liability companies or partnerships, and other
entities (whether now existing or hereafter organized or acquired) in which
fifty percent (50%) or more of the outstanding equity ownership interests having
voting rights as of any applicable date of determination shall be owned
directly, or indirectly through one or more Subsidiaries, by such Person.
     “Tangible Net Worth” means, at any particular date, all amounts which, in
conformity with GAAP, would be included as stockholder’s equity on a
consolidated balance sheet of the Parent Guarantor and its Subsidiaries;
including without limitation adjustments for the addition of paid-in-kind
interest, discounts and warrant amortization on subordinated debt; provided,
however, there shall be excluded from Tangible Net Worth (a) any amount at which
shares of capital stock of the Parent Guarantor or any of its Subsidiaries
appear as an asset on the Parent Guarantor’s or Subsidiary’s balance sheet,
(b) goodwill, including any amounts, however designated, that represent the
excess of the purchase price paid for assets or stock over the value assigned
thereto, (c) patents, trademarks, trade names, and copyrights, (d) loans and
advances to any stockholder, director, officer, or employee of the Parent
Guarantor or any of its Subsidiaries or any Affiliate thereof and (e) all other
assets which are properly classified as intangible assets.
     “Taxes” has the meaning set forth in Section 1.5(a) of this Agreement.
     “Tax Expense” means, for any period respecting the Parent Guarantor and its
Subsidiaries on a consolidated basis, the sum of all income tax expense for such
period determined in accordance with GAAP applied consistently.
     “Total Funded Debt” means, as of any date of determination, without
duplication, the sum of (a) all principal indebtedness of the Parent Guarantor
and its Subsidiaries for borrowed money on that date

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(other than intercompany indebtedness), plus (b) the aggregate amount of all
monetary obligations of the Parent Guarantor and its Subsidiaries under any and
all Capital Leases on such date.
     “Total Loss” means in respect of a Vessel or an item of Equipment (i) the
actual or constructive or compromised or arranged total loss of such Vessel or
item of Equipment; or (ii) the requisition for title or other compulsory
acquisition of such Vessel or any item of Equipment otherwise than by
requisition for hire; or (iii) the capture, seizure, attachment, detention or
confiscation of such Vessel or any item of Equipment by any government or by
persons acting or purporting to act on behalf of any government unless such
Vessel or any item of Equipment is released from such seizure, attachment,
detention or confiscation within thirty (30) days of the occurrence thereof. A
Total Loss shall be deemed to have occurred (a) in the event of an actual total
loss of a Vessel or any item of Equipment on the date of such loss, (b) in the
event of damage to a Vessel or any item of Equipment which results in a
constructive or compromised or arranged total loss of such Vessel or any item of
Equipment on the date of the occurrence of the event giving rise to such damage,
or (c) in the case of any event referred to in clauses (ii) or (iii) above, on
the date of the occurrence of such event.
     “Treasury Rate” means the rate per annum for a Five Year U.S. Treasury
security on the Closing Date, determined based on the yields to maturity for
U.S. Treasury securities reported on page 5 (“U.S. Treasury and Money Markets”)
of the information ordinarily provided by Dow Jones Telerate System.
     “U.S. Mortgage” means that certain First Preferred Fleet Mortgage, executed
by the Borrower for the benefit of the Agent, covering the First Lien Vessels
documented under the laws of the United States of America.
     “USA Patriot Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, H.R.
3162, Public Law 107-56, as may be amended from time to time.
     “Vanuatu Mortgage” means that certain First Preferred Fleet Mortgage,
executed by the Borrower for the benefit of the Agent, covering the First Lien
Vessels documented under the laws of Vanuatu.
     “Vessels” means the First Lien Vessels and the Sea Horizon.
     “Working Capital” means the excess of Current Assets over Current
Liabilities.
     “Working Capital Lender” means PNC Bank, National Association, as
administrative agent on behalf of itself and other lenders a party to a Working
Capital Loan, or any other lender or administrative agent satisfactory to Agent
in its reasonable discretion.
     “Working Capital Loan” means a working capital loan from a Working Capital
Lender to the Borrower subject to the Intercreditor Agreement and otherwise on
terms that are satisfactory to the Agent in its reasonable discretion.
     Any financial terms not specifically defined hereon or in the Loan
Documents are used herein and therein as defined in GAAP.

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ARTICLE I.
The Loan
     Section 1.1 Amount.
     (a) Subject to the terms and conditions of Section 2.1 of this Agreement,
each Lender agrees, severally and not jointly, to make its percentage share of
the Commitment available to the Borrower by making an Advance to the Borrower in
the principal amount of its percentage share of the Commitment.
     (b) The Loan shall be made in a single Advance on the Closing Date.
     Section 1.2 Notice of Drawing. The Borrower shall make a request for the
Advance by sending to the Agent a written Notice of Drawing not later than
11:00 a.m., Arizona Time, two (2) Business Days prior to the date the Advance is
requested setting forth the date the Advance is required and the bank account or
accounts to which the Advance is to be remitted. The Notice of Drawing shall be
received by the Agent no later than two (2) Business Days immediately preceding
the Drawdown Date. The Notice of Drawing shall be irrevocable.
     Section 1.3 Repayment.
     (a) In addition to interest payments due hereunder, beginning on the date
which is the last day of the month in which the Closing Date occurs, and
continuing on the last day of each successive calendar month thereafter (each
such date a “Payment Date”) until the Maturity Date, Borrower shall pay to the
Agent, for the ratable benefit of the Lenders, a principal installment on the
Loan, each in the amount of (i) USD 900,000.000 in consecutive monthly
installments on each of the first twenty-four (24) Payment Dates and (ii) USD
600,000.00 in consecutive monthly installments on each of the final thirty-six
(36) Payment Dates. Additionally, on the Maturity Date, Borrower shall pay to
the Agent, for the ratable benefit of the Lenders, the remaining principal
balance of the Note, all accrued and unpaid interest on the Note and all other
amounts due under the Note. If the last day of any calendar month is not a
Business Day, then the Payment Date for such calendar month shall be the next
succeeding Business Day.
     (b) The Loan shall be evidenced by and repayable in accordance with the
terms hereof and of the Note.
     Section 1.4 Interest.
     (a) The Borrower shall pay interest, in arrears, on the unpaid principal
amount of the Loan from the Closing Date until the principal amount of the Loan
is paid in full, on each Payment Date at a rate of interest per annum (computed
on the basis of a 360 day year and actual days elapsed) equal to the Interest
Rate; provided, however, that all interest accrued on the Loan and unpaid on the
Maturity Date shall be paid on the Maturity Date.
     (b) The term “Interest Rate” shall mean, (i) if the Borrower has exercised
the option contained in Section 1.4(f) below, the Fixed Rate, or otherwise
(ii) for each Interest Period, an interest rate per annum equal to the rate
certified by the Agent to be the LIBO Rate for such Interest Period, plus four
and one-half percent (4.50%).

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     (c) If at any time the Agent shall determine that by reason of
circumstances affecting the London interbank market adequate and reasonable
means do not exist for ascertaining the Interest Rate based on the LIBO Rate for
the succeeding Interest Period or that the making or continuance of the Loan at
an Interest Rate based on the LIBO Rate has become impracticable as a result of
a contingency occurring after the date of this Agreement which materially and
adversely affects the London interbank market, the Agent shall notify the
Borrower that the Interest Rate shall be the Prime Rate, plus one and sixty five
hundredths percent (1.65%) per annum. As used in this Agreement, “Interest
Period” shall mean each respective and successive calendar month commencing on
the Closing Date; provided, however, that no Interest Period shall commence or
extend past the Maturity Date.
     (d) If any payment required under this Agreement or the Note is not paid
within five (5) days after such payment is due, then, unless waived pursuant to
Section 6.5 hereof, the Borrower shall pay a late charge equal to two and one
half percent (2.50%) of the amount of such payment to compensate the Lenders for
administrative expenses and other costs of delinquent payments. Each such late
charge may be assessed without notice, shall be immediately due and payable and
shall be in addition to all other rights and remedies available to the Agent and
the Lender. In addition, upon the occurrence of an Event of Default, any amount
of principal or any other amount due hereunder, whether at stated maturity, by
acceleration or otherwise, shall bear interest from the date when due until such
amount is paid in full, payable on demand, at a rate per annum equal at all
times to two and one-half percent (2.50%) per annum above the Interest Rate in
effect on the first day of such Event of Default.
     (e) In no event shall any interest rate provided for in this Agreement or
the Note exceed the maximum rate permitted by the then applicable law. It is the
intention of the parties hereto to strictly comply with applicable usury laws;
accordingly, it is agreed that, notwithstanding any provision to the contrary in
this Agreement, in the Notes, or in the other Loan Documents, in no event shall
this Agreement, the Note, or the other Loan Documents be construed to charge,
contract for or 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 Agreement, the Note
or the other Loan Documents, or in the event that all of the principal balance
shall be prepaid, so that under any of such circumstances the amount of interest
contracted for, charged or received on the principal balance shall exceed the
maximum amount of interest permitted by applicable law, then in such event
(i) the provisions of this Section 1.4(e) shall govern and control, (ii) neither
the Borrower, any Guarantor or any other person or entity now or hereafter
liable for the payment thereof 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, (iii) any such excess which may have been collected
shall be either applied as a credit against the then unpaid principal balance or
refunded to the Borrower, at the option of the Lenders, and (iv) 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 Agreement, the Note and the other Loan Documents 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, 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 the Borrower or otherwise by
the Lenders 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 Lenders to
receive a greater simple interest

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per annum rate than is presently allowed, the Borrower 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 simple interest per annum
rate allowed by the higher of the amended state law or the law of the United
States of America.
     (f) Upon irrevocable written notice to the Agent received not later than
five (5) Business Days prior to the Closing Date, the Borrower may elect to pay
interest on the Loan at the Fixed Rate. Upon such timely election, Borrower
shall not have the right to any additional interest rate election and, subject
to the provisions of clauses (d) and (e) of this Section 1.4, interest on the
Loan shall thereafter accrue at the Fixed Rate through the Maturity Date.
     Section 1.5 Payments.
     (a) The payment obligations of the Borrower under the Note and all other
amounts payable under this Agreement shall be paid to the Agent at such address
as the Agent may designate (not less than one (1) Business Day prior to the due
date therefor), not later than 2:00 p.m. eastern standard time on the due date
thereof, in lawful money of the United States. All amounts received by the Agent
hereunder or under the Note shall be disbursed ratably to the Lenders on the
first Business Day immediately following the date the Agent receives such amount
and in accordance with the provisions of this Agreement. All payments shall be
made (i) without setoff, counterclaim or condition and (ii) free and clear of,
and without deduction for or on account of, any present or future taxes, levies,
duties, imposts, charges, fees, deductions or withholdings of any nature
(including interest, penalties and additions to tax or other liabilities with
respect thereto) (“Taxes”), unless the Borrower is required by law or regulation
to make payment subject to any Taxes. In the event that the Borrower is required
by law or regulation to make any deduction or withholding on account of any
Taxes from any payment due under this Agreement, then: (a) the Borrower shall
notify the Agent promptly as soon as it becomes aware of such requirement and
shall remit promptly the amount of such Taxes to the appropriate taxation
authority, and in any event prior to the date on which penalties attach thereto;
and (b) such payment shall be increased by such amount as may be necessary to
ensure that the Agent receives a net amount, free and clear of all Taxes, equal
to the full amount which the Agent would have received had such payment not been
subject to such Taxes (other than Excluded Income Taxes as such term is defined
below). Notwithstanding the foregoing, the Borrower shall not be liable for, or
required to pay, any Taxes which are (i) imposed on the net income (before
taxes) of either the Agent or Lenders or (ii) franchise taxes imposed, for both
clauses (i) and (ii), by any jurisdiction in which such Lender is organized or
has its principal lending office, or (iii) franchise taxes imposed by the State
of Texas on either the Agent or Lenders doing business in the State of Texas, at
any time on either the Agent or the Lenders by any Governmental Agency
(“Excluded Income Taxes”). In addition, the Borrower agrees to pay to the
relevant Governmental Authority in accordance with applicable law any present or
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies that arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or under the Note (“Other Taxes”). The Borrower shall deliver to the
Agent and each Lender an official receipt (or, if an official receipt is not
available, such other evidence of payment as shall be satisfactory to the Agent
or Lenders) in respect of any Other Taxes payable hereunder promptly after
payment of such Other Taxes. The Borrower shall indemnify the Agent and the
Lenders in respect of Taxes (other than Excluded Income Taxes) paid by the Agent
or any Lender whether or not such Taxes or Other Taxes were correctly or legally
asserted and shall supply copies of applicable tax receipts. Such
indemnification shall be paid within 10 days from the date on which the Agent or
Lender makes written demand therefor specifying in reasonable detail the nature
and amount of such Taxes or Other Taxes.

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     (b) If any payment to be made by the Borrower shall become due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day.
     (c) Each payment to be made on a Payment Date and all prepayments, and
other payments shall be applied first to the payment of accrued and unpaid
interest on the Loan, then to the payment of all other amounts due under this
Agreement and the other Loan Documents, and the balance shall be applied to the
payment of principal due under the Note in inverse order of maturity.
     (d) The Borrower shall indemnify the Lenders and the Agent on demand
against all costs, expenses, liabilities and losses (including funding losses)
actually incurred by the Lenders and the Agent as a result of or in connection
with: (a) the occurrence and/or continuance of any Event of Default (or event
which, with the giving of notice and/or lapse of time or other applicable
condition would constitute an Event of Default); and/or (b) any judgment or
order which relates to any sum due hereunder being expressed in a currency other
than the currency expressed to be due hereunder and as a result of a variation
in rates of exchange between the rate at which such amount is converted into
such other currency for the purposes of such judgment or order and the rate
prevailing on the date of actual payment of such amount pursuant thereto; and/or
(c) any postponement of the Closing Date occurring because of one or more of the
conditions precedent set forth in Article II shall not have been satisfied or
waived as a result of the Borrower’s failure to satisfy such condition; and/or
(d) any payment of principal of or interest on the Note made on a Business Day
which is not a Payment Date. The above indemnities are separate and independent
obligations of the Borrower and apply irrespective of any indulgence granted by
the Lenders or the Agent.
     Section 1.6 Prepayment.
     (a) Mandatory Prepayments.
     (i) (1) USD 5,000,000.00 Prepayment. The Borrower shall make, on or prior
to the twenty-fourth (24th) Payment Date, an aggregate of at least USD
5,000,000.00 in principal prepayments in addition to scheduled payments under
Section 1.3(a) hereof. Such prepayments shall consist of (i) an additional
principal installment in the amount of the Gulf Horizon Insurance Proceeds (up
to, but not in excess of, when aggregated with any payment made pursuant to
clause (ii) below, USD 5,000,000.00), which, if not paid directly to the Agent,
shall be due and payable on the Business Day after receipt by the Borrower of
the Gulf Horizon Insurance Proceeds, (ii) an additional principal installment in
the amount of the PEMEX Amount (up to, but not in excess of, when aggregated
with any payment made pursuant to clause (i) above, USD 5,000,000.00), which, if
not paid directly to the Agent, shall be due and payable on the fifth (5th)
Business Day after receipt by ECH Offshore S. de R.L. de C.V. of the PEMEX
Amount, and (iii) an additional principal installment in the amount, if any, by
which USD 5,000,000.00 exceeds the amounts, if any, that have been paid pursuant
to clauses (i) and (ii) above, which remaining amount, if any, shall be due and
payable on the twenty-fourth (24th) Payment Date together with all other amounts
then due and owing hereunder or under the Note.
          (2) Total Loss. If a Total Loss shall occur, the Borrower shall have
the option, subject to the following conditions and provisions, to provide
additional collateral for the Loan in lieu of prepaying the Loan in the amount
of the insurance proceeds payable with respect to such Total Loss. In order for
the Borrower to elect the

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option to provide such additional collateral, (A) the additional collateral must
consist of a vessel and/or equipment acceptable to all of the Lenders, (B) the
Orderly Liquidation Value of such additional collateral, based upon a physical
appraisal prepared by an appraiser acceptable to the Majority Lenders, must be
equal to or higher than the Orderly Liquidation Value of the lost Vessel or
Equipment, as shown on the most recent appraisal thereof prepared for the Agent,
(C) all insurance proceeds payable with respect to the lost Vessel or Equipment
shall be delivered to the Agent, as and when paid, to be held by the Agent as
cash collateral for the Loan in a non-interest-bearing account, (D) such
additional collateral shall be added to the lien of the Mortgages and the
Security Agreement within one hundred eighty (180) days after the date of the
occurrence of such Total Loss, (E) no Event of Default or event, which with the
giving of notice, the passage of time, or both, would constitute an Event of
Default, shall exist at the time such additional collateral is proposed to be
added to, or on the date such additional collateral is added to, the lien of the
Mortgages and the Security Agreement, (F) all costs associated with the addition
of such collateral, including all costs of appraisal, documentation and filing,
shall be borne by the Borrower and, to the extent any of such costs have been
paid for by Agent or any Lender, such costs shall be reimbursed by the Borrower
to the Agent and/or the Lenders on the date such additional collateral is added
to the lien of the Mortgages and the Security Agreement, and (G) all of the
representations and warranties set forth in Section 3.1 of this Agreement with
respect to any collateral for the Loan shall be deemed made by the Borrower,
with respect to such additional collateral, on the date the same is added to the
lien of the Mortgages and the Security Agreement, and the Borrower shall issue
its certificate to the Agent and the Lenders certifying as to such matters on
such date. If insurance proceeds paid with respect to the Total Loss giving rise
to the addition of such collateral shall have been delivered to the Agent prior
to the time additional collateral meeting the requirements of the preceding
sentence has been added to the lien of the Mortgages and the Security Agreement,
the Agent shall pay over such insurance proceeds to or at the direction of the
Borrower upon addition of such collateral to the lien of the Mortgages and the
Security Agreement. If insurance proceeds paid with respect to such Total Loss
shall have been delivered to the Agent, and the Borrower has not provided
satisfactory replacement collateral meeting the requirements of the second
sentence of this Section 1.6(a)(i)(2) within one hundred eighty (180) days after
the date of the occurrence of such Total Loss, the Agent shall apply such
insurance proceeds as a prepayment on the Loan. If neither additional collateral
meeting the requirements of the second sentence of this Section 1.6(a)(i)(2) nor
insurance proceeds paid with respect to such Total Loss have been received by
the Agent by the date that is one hundred eighty (180) days after the date of
such Total Loss, the Borrower, on such date, shall make a prepayment on the Loan
in the amount necessary to restore the ratio of Collateral Value to the
outstanding principal amount of the Loan to not less than 1.25 to 1, and shall
pay accrued interest thereon to the date of such prepayment together with any
other amount due hereunder or under any Loan Document; provided, however, that
notwithstanding such prepayment, the Borrower shall remain obligated to make an
additional prepayment on the Loan, within one (1) Business Day after receipt of
such insurance proceeds, in the amount, if any, by which the amount of the
insurance proceeds payable with respect to such Total Loss exceeds the amount of
such prepayment made by the Borrower described in this sentence.
          (3) Partial Loss. If there shall have occurred loss or damage to a
Vessel or any item of Equipment which does not rise to the level of a Total
Loss, the underwriters may pay direct for the repair, salvage or other charges
or, if the Borrower shall have first fully repaired the damage or paid all of
the salvage or other charges, may

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pay the Borrower as reimbursement therefore; provided, however, that if such
amounts are greater than USD 500,000.00 and the Borrower shall not have fully
repaired the damage or paid all of the salvage or other charges or if an Event
of Default has occurred and is continuing, the underwriters shall not make such
payment without first obtaining the written consent of the Agent. If the Agent
does not so consent, all such proceeds shall be paid to the Agent, for the
ratable benefit of the Lenders, for the purpose of prepaying amounts outstanding
hereunder or under any other Loan Document.
          (4) Gulf Horizon Insurance Proceeds and PEMEX Amount. Once the
aggregate principal prepayment required by Section 1.6(a)(i)(1) above has been
paid, and provided no Event of Default exists at such time, the Agent shall make
available to the Borrower, within fifteen (15) days after receipt thereof by the
Agent, all other amounts received by the Agent with respect to the Gulf Horizon
Insurance Proceeds and the PEMEX Amount. For the sake of clarification, the
amount made available to the Borrower under this Section does not constitute
proceeds of the Loan and is not subject to the provisions of Section 3.3(cc) of
this Agreement.
     (ii) Collateral Value. On or about each anniversary of this Agreement, the
Agent shall arrange to have the Orderly Liquidation Value of each of the Vessels
determined at the Borrower’s expense by an independent appraisal firm chosen by
the Agent (with the consent of the Lenders) and reasonably acceptable to the
Borrower. The most recent determination of the aggregate Orderly Liquidation
Values of all of the Vessels is hereinafter referred to as the “Collateral
Value”. If the ratio of the Collateral Value to the outstanding principal amount
of the Loan shall be less than 1.25 to 1, then the Borrower shall either prepay
within five (5) days of the Agent’s demand the amount of the Loan necessary to
restore the ratio referred to herein together with payment of accrued interest
thereon and all other amounts contractually due at that time or provide
additional security for the Loan which shall be acceptable to the Agent (with
the consent of the Lenders) for these purposes.
     (iii) Orderly Liquidation Value. The “Orderly Liquidation Value” of any
Vessel shall have the meaning customarily attributed to it in the equipment
appraisal industry at the time of the valuation, less the estimated marshalling,
reconditioning and sale expenses designed to maximize the resale value of such
Vessel (as determined by the appraisal firm referred to above). The appraisal
firm’s valuation shall be made with or without physical inspection at the
Agent’s discretion.
     (iv) Application of Mandatory Prepayments; No Prepayment Premium. The Agent
shall apply payments received pursuant to this Section 1.6(a) in accordance with
Section 1.5(c) hereof. No Prepayment Premium shall be payable with respect to
any mandatory prepayment made by the Borrower pursuant to this Section 1.6(a).
     (b) Voluntary Prepayment.
     (i) The Borrower may prepay in full or in part amounts outstanding under
the Note and this Agreement on any Payment Date after giving at least three
(3) Business Days prior notice of such prepayment and payment to the Lender of
accrued and unpaid interest under the Note and all other amounts due under this
Agreement and the other Loan Documents, including the Prepayment Premium
referred to below. Any notice of prepayment hereunder shall be irrevocable.

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     (ii) The Lender shall apply payments received pursuant to this
Section 1.6(b) in accordance with Section 1.5(c) above.
     (iii) Prepayments made under this Section 1.6(b) shall include a Prepayment
Premium as follows:
          (A) If made on or before the first anniversary of the Closing Date -
four percent (4%) of the aggregate principal amount prepaid;
          (B) If made after the first anniversary of the Closing Date, but on or
before the date that is twenty-three months after the Closing Date — three
percent (3%) of the aggregate principal amount prepaid;
          (C) If made after the date that is twenty-three months after the
Closing Date, but on or before the third anniversary of the Closing Date - two
percent (2%) of the aggregate principal amount prepaid;
          (D) If made after the third anniversary of the Closing Date, but on or
before the fourth anniversary of the Closing Date — one percent (1%) of the
aggregate principal amount prepaid; or
          (E) If made after the fourth anniversary of the Closing Date — no
Prepayment Premium shall be due.
     Section 1.7 Security. All amounts due hereunder and under the Note shall be
secured by the Guaranty, the Mortgages and the Security Agreement. Simultaneous
with the execution of documents evidencing the Working Capital Loan, and upon
receipt by the Agent of counterparts thereof executed by the Working Capital
Lender, the Borrower and the Guarantors, the Agent (and, if requested by any
party thereto, the Lenders) will execute and deliver the Intercreditor Agreement
to the Working Capital Lender.
     Section 1.8 Fees.
     (a) Upon execution of this Agreement, the Borrower shall pay to the Agent
for the benefit of the Lenders (in such proportions as the Lenders may agree in
accordance with their respective shares of the Commitment) a non-refundable
facility fee of one percent (1.00%) of the Commitment.
     (b) Upon execution of this Agreement, the Borrower shall pay to the Agent,
for its account, a non-refundable agency fee of one quarter percent (0.25%) of
the Commitment.
     Section 1.9 Sharing of Payments, Etc. The Borrower agrees that, in addition
to (and without limitation of) any right of set-off, bankers’ lien or
counterclaim a Lender may otherwise have, each Lender shall be entitled, at its
option after an Event of Default has occurred and is continuing to offset
balances held by it for the account of the Borrower at any of its offices
against any principal of or interest on any portion of the Loan attributable to
such Lender hereunder or any other obligation of the Borrower hereunder which is
not paid (regardless of whether such balances are then due to the Borrower), in
which case it shall promptly notify the Borrower and the Agent thereof, provided
that such Lender’s failure to give such notice shall not affect the validity
thereof. If a Lender shall obtain payment of any principal of or interest on any
portion of the Loan attributable to it under this Agreement or other obligation
then due hereunder to such Lender, through the exercise of any right of set-off
or lien granted under Section 5.13 below), bankers’ lien, counterclaim or
similar right, or otherwise, it shall promptly purchase from the

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other Lenders participations in the Loan attributable to it, or the other
obligations of the Borrower hereunder of, the other Lenders in such amounts, and
make such other adjustments from time to time as shall be equitable to the end
that all the Lenders shall share the benefit of such payment (net of any
expenses which may be incurred by such Lender in obtaining or preserving such
benefit) pro-rata in accordance with their respective portions of the Loan. To
such end all the Lenders shall make appropriate adjustments among themselves (by
the resale of participations sold or otherwise) if such payment is rescinded or
must otherwise be restored. The Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that any Lender so purchasing a
participation in the Loan may exercise all rights of set-off, bankers’ lien,
counterclaim or similar rights with respect to such participation as fully as if
such Lender were a direct holder of the Loan or other obligations in the amount
of such participation. Nothing contained herein shall require any Lender to
exercise any such right or shall affect the right of any Lender to exercise, and
retain the benefits of exercising, any such right with respect to any other
indebtedness or obligations of the Borrower to such Lender.
ARTICLE II.
Conditions Precedent
     Section 2.1 Conditions Precedent to Advance. The Lenders’ execution and
delivery of this Agreement and the making of the Advance are subject to the
following conditions having been satisfied in the reasonable opinion of the
Lenders on or prior to the Closing Date:
     (a) Each of this Agreement and the other Loan Documents shall have been
duly authorized and executed with original counterparts thereof delivered to the
Agent or its counsel.
     (b) The Borrower, the Guarantors, Horizon Vessels International, Ltd. and
ECH Offshore shall have delivered to the Lenders evidence of good standing,
certificates of incumbency and duly certified resolutions of their Boards of
Directors and all such other corporate documentation authorizing them to enter
into the transactions contemplated by this Agreement and the other Loan
Documents.
     (c) The Lenders shall have received opinions from Jones, Walker, Waechter,
Poitevent, Carrere & Denegre, L.L.P, counsel to the Borrower and the Guarantors,
an opinion of Solomon Harris, counsel to Horizon Vessels International, Ltd., an
opinion of Goodrich, Riquelme y Asociados, counsel to ECH Offshore and an
opinion of Agent’s counsel, Gardere Wynne Sewell LLP, each in form and substance
satisfactory to the Lenders.
     (d) The representations and warranties contained in Article III of this
Agreement and in each other Loan Document shall be true on the Closing Date with
the same effect as though such representations and warranties had been made on
and as of such date, and no Event of Default specified in Article IV hereof and
no event which, with the lapse of time or the notice and lapse of time specified
in Article IV hereof, would become such an Event of Default, shall have occurred
and be continuing or shall have occurred at the completion of the making of the
Loan, and the Lenders shall have received satisfactory certificates signed by
Responsible Officers of the Borrower and the Guarantors, as to all questions of
fact involved in this condition.
     (e) There shall have been no material adverse change in the business,
financial condition or operations of the Borrower and of the Guarantors as
reported in the Parent Guarantor’s September 30, 2005 consolidated financial
statements and the financial guidance for calendar year 2005 as provided for in
the Parent Guarantor’s October 31, 2005 press release.

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     (f) The Lenders shall have received evidence that the person specified to
act as agent for service of process for the Borrower and the Guarantors pursuant
to Section 6.3 has agreed to so act.
     (g) The Lenders shall have received certificates of the Borrower and the
Guarantors signed by an officer in charge of environmental affairs and safety as
to compliance by the Borrower and the Guarantors with all environmental, safety
and public health laws and regulations applicable to the Borrower and the
Guarantors, including without limitation of the foregoing, all other laws and
regulations affecting or relating to the Vessels, in each case the noncompliance
with which would have a Material Adverse Effect.
     (h) The Borrower shall have provided evidence of insurance maintained by
the Borrower and Horizon Vessels International, Ltd. on the Vessels as required
by the Mortgages and Article 5 of the Security Agreement and Second Lien
Maritime Security Agreement, accompanied by a report of the Borrower’s insurance
broker that such insurance complies with the terms of the Mortgages, the
Security Agreement and Second Lien Maritime Security Agreement.
     (i) All actions necessary to perfect the security interests created by the
U.S. Mortgage, the Vanuatu Mortgage, the Security Agreement, the ECH Offshore
Security Agreement and the Accounts Receivable Security Agreements shall have
been taken.
     (j) If GE Credit TN has consented to the execution thereof on or prior to
such date, the Second Mortgage shall have been duly executed and delivered and
all actions necessary to perfect the security interests created thereby shall
have been taken, and the Second Lien Maritime Security Agreement shall have been
duly executed and delivered.
     (k) All orders, consents, approvals, licenses, authorizations and
validations of, and filings, recordings and registrations with and exemptions by
any Governmental Agency or any Person (other than any routine filings which may
be required after the date hereof with appropriate governmental authorities in
connection with the operation of the Vessels) required to (i) authorize the
execution, delivery and performance by the Borrower and the Guarantors of the
Loan Documents to which they are parties or (ii) prevent the execution, delivery
and performance by the Borrower and the Guarantors of the Loan Documents to
which they are parties from resulting in a breach of any of the terms or
conditions of, or resulting in the imposition of any lien, charge or encumbrance
upon any properties of the Borrower or the Guarantors pursuant to, or
constituting a default (with due notice or lapse of time or both), or resulting
in an occurrence of any event for which any holder or holders of Indebtedness
may declare the same due and payable under, any indenture, agreement, order,
judgment or instrument under which the Borrower or the Guarantors are a party
(other than the Mortgages, or the Security Agreement) or to the Borrower’
knowledge after due inquiry by which the Borrower or the Guarantors or their
property may be bound or affected, or under the Certificates of Incorporation or
By-Laws of the Borrower or the Guarantors, shall have been obtained or made.
     (l) The Agent shall have received a report appraising the Orderly
Liquidation Value of the Vessels prepared by Merrill Marine Services, Inc. in
form and substance satisfactory to the Lenders.
     (m) The Agent shall have been paid the fees required under Section 1.8 and
all other fees, costs and expenses then due and payable by Borrower or pursuant
to Section 6.7 hereof.

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     (n) The Agent shall have received evidence satisfactory to the Agent that
the Manchester Term Loans and the CIT Term Loan are being satisfied and
discharged with proceeds of the Loan, and all liens and security interests
securing such loans have been or will be released.
     (o) The Lenders shall have received such other documents and instruments
they reasonably request necessary to consummate the transactions described in
this Agreement, in each case in form and substance reasonably satisfactory to
them.
     Section 2.2 Waiver of Conditions Precedent. All of the conditions precedent
contained in this Article II are for the sole benefit of the Lenders and the
Lenders may waive any or all of them in their absolute discretion.
ARTICLE III.
Representations, Warranties and Covenants
     Section 3.1 Representations of the Borrower. The Borrower represents and
warrants that:
     (a) It is a corporation duly organized and validly existing, in good
standing under the laws of the State of Delaware and has the requisite power and
authority (i) to carry on its business as presently conducted, (ii) to enter
into and perform its obligations under each Loan Document to which it is a
party, and (iii) to borrow moneys and guarantee the debts of others.
     (b) The execution, delivery and performance by it of each Loan Document to
which it is a party, and any other instrument or agreement provided for by this
Agreement, have been duly authorized by all necessary corporate action, do not
require stockholder approval other than such as has been duly obtained or given,
do not or will not contravene any of the terms of its certificate of
incorporation or bylaws, and will not violate any provision of law or of any
order of any court or governmental agency if such violation would result in a
Material Adverse Effect, or constitute (with or without notice or lapse of time
or both) a default under, or result (except as contemplated by this Agreement)
in the creation of any security interest, lien, charge or encumbrance upon any
of its properties or assets pursuant to, any agreement, indenture or other
instrument to which it is a party or by which it may be bound; this Agreement
and each Loan Document to which it is a party has been duly executed and
delivered by such Borrower and constitutes its legal, valid and binding
agreement or instrument, enforceable in accordance with the respective terms
thereof.
     (c) Other than as set forth on Schedule 3.1(c) hereto, there are no suits
or proceedings pending or to its knowledge threatened against or affecting the
Borrower or the Guarantors which if adversely determined would have a Material
Adverse Effect.
     (d) The principal place of business of the Borrower and the Guarantors and
the place where all records relating to the transactions contemplated hereby,
including records relating to the operations of the Vessels are kept is 2500
CityWest Blvd., Suite 2200, Houston, Texas 77042.
     (e) Other than such as have been obtained, no license, consent, approval of
or filing or registration with any Governmental Agency or other regulatory
authority is required for the execution, delivery and performance of this
Agreement or any Loan Document or any instrument contemplated herein or therein.
The Borrower and the Guarantors are the holders of all

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certificates and authorizations of governmental authorities required by law to
enable them to engage in the business transacted by them.
     (f) No part of the proceeds of the Loan will be used for any purpose that
violates the provisions of any of Regulation T, U or X of the Board of Governors
of the Federal Reserve System or any other regulation of such Board of
Governors. The Borrower is not engaged in the business of extending credit to
others for the purpose of purchasing or carrying margin stock within the meaning
of Regulations T, U and X of the Board of Governors of the Federal Reserve
System. If requested by the Agent, the Borrower will furnish to the Lenders in
connection with the Loan hereunder a statement in conformity with the
requirements of Federal Reserve Form U1 referred to in said Regulation U.
Borrower is not an “investment company” or a company “controlled” by an
“investment company” (as each of such terms is defined or used in the Investment
Company Act of 1940, as amended). No proceeds of the Loan will be used to
acquire any security in any transaction which is subject to Sections 13 and 14
of the Securities Exchange Act of 1934, as amended.
     (g) Neither the Borrower, the Parent Guarantor nor Horizon Offshore
Contractors, Inc. has any Subsidiaries except as set forth on the organizational
charts set forth on Schedules 3.1(g)-A through C attached hereto and made a part
hereof.
     (h) Each of the Borrower and each of the Guarantors has filed or caused to
be filed all tax returns required by the United States of America, the state of
its principal place of business and the states where its business or operations
require such filings which are required to be filed and has paid or caused to be
paid all taxes as shown on such returns or on any assessment received by it to
the extent that such taxes have become due and except as to such taxes being
contested in good faith by appropriate proceedings for which adequate reserves
are being maintained. Each of the Borrower and the Guarantors has established
reserves to the extent believed by it to be adequate for the payment of
additional taxes for years which have not been audited by the respective tax
authorities.
     (i) The Parent Guarantor is the sole shareholder of the Borrower.
     (j) (i) Each of the Borrower and the Guarantors has duly complied with, and
the Vessels and their other properties and operations are in compliance with,
the provisions of all applicable environmental, health and safety laws, codes
and ordinances and all rules and regulations promulgated thereunder of all
Governmental Agencies, the non-compliance with which would have a Material
Adverse Effect.
     (ii) As of the date of this Agreement, neither the Borrower nor the
Guarantors has received notice from any Governmental Agency, and has no
knowledge, of any fact(s) which constitute a violation of any applicable
environmental, health or safety laws, codes or ordinances, and any rules or
regulations promulgated thereunder of all Governmental Agencies, which relate to
the use or ownership of the Vessels or properties owned or operated by the
Borrower or the Guarantors.
     (iii) Each of the Borrower and the Guarantors has been issued all required
permits, licenses, certificates and approvals of all Governmental Agencies
relating to (a) air emissions, (b) discharges to surface water or ground water,
(c) noise emissions, (d) solid or liquid waste disposal, (e) the use,
generation, storage, transportation, treatment, recycling or disposal of
Hazardous Substances or (f) other environmental, health or safety matters which
are material and necessary for the ownership or operation of the Vessels or
other properties owned or operated by

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the Borrower or the Guarantors and such permits, licenses, certificates and
approvals are in full force and effect on the date of this Agreement, except for
such permits, licenses, certificates and approvals as to which the failure to
have issued or to have in effect would not result in a Material Adverse Effect.
          (iv) Except in accordance with a valid governmental permit, license,
certificate or approval, there has been no spill or unauthorized discharge or
release of any material amount of Hazardous Substances to the environment at,
from, or as a result of any operations on the Vessels or other properties and
operations owned or operated by Borrower or the Guarantors, whether or not
required to be reported to any Governmental Agency by Borrower or a Guarantor.
          (v) There has been no material complaint, compliance order, compliance
schedule, notice letter, notice of citation or other similar notice from any
applicable environmental agency delivered to Borrower or the Guarantors which
concerns the operations of the Vessels or other properties owned or operated by
Borrower or the Guarantors and which would result in a Material Adverse Effect.
     (k) All representations and warranties made by the Borrower herein or by
Borrower or the Guarantors pursuant to any Loan Document or made in any
certificate or written statement delivered pursuant hereto or thereto (i) do not
contain any untrue statement of or omit to state a material fact necessary to
make the statements contained herein or therein not misleading and (ii) shall
survive the making of the Loan hereunder and the execution and delivery to the
Agent of the Note and any other Loan Document.
     (l) As of the date of this Agreement, no Vessel is subject to any bareboat
charter with any Person other than a Subsidiary of Parent Guarantor.
     Section 3.2 Affirmative Covenants of Borrower. Until the payment in full of
all amounts due under this Agreement and the Note by the Borrower, unless
compliance shall have been waived by the Lenders in the Lenders’ sole
discretion, the Borrower and the Guarantors agree that:
     (a) Financial Statements, Reports and Inspection.
     (i) The Borrower and the Guarantors will furnish to the Agent:
     (A) as soon as possible and in any event within two (2) Business Days after
an officer of the Borrower has knowledge of the occurrence of any Event of
Default, or any event which with the giving of notice or lapse of time, or both,
would constitute an Event of Default, which is continuing on the date of such
statement, the statement of the chief financial officer of the Borrower setting
forth the details of such Event of Default or event and the action which the
Borrower proposes to take with respect thereto;
     (B) as soon as available and in any event within forty-five (45) days after
the last day of each month, a copy of the Parent Guarantor’s consolidated
financial statements for such month, prepared in accordance with GAAP and
certified by the chief financial officer or chief accounting officer of the
Parent Guarantor;

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     (C) as soon as available and in any event within forty-five (45) days after
the end of each fiscal quarter of the Parent Guarantor, a copy of the Parent
Guarantor’s consolidated and consolidating financial statements for such
quarter, prepared in accordance with GAAP and certified by the chief financial
officer or chief accounting officer of the Parent Guarantor;
     (D) as soon as available and in any event within ninety (90) days after the
close of each fiscal year of the Parent Guarantor, (i) a copy of the Parent
Guarantor’s consolidated audited financial statements for such year, prepared in
accordance with GAAP and certified by Grant Thornton LLP or other independent
public accountants of recognized standing acceptable to the Agent and (ii) a
copy of the Parent Guarantor’s consolidating audited financial statements for
such year, prepared in accordance with GAAP and certified by the chief financial
officer or chief accounting officer of the Parent Guarantor;
     (E) as soon as available and in any event within thirty (30) days after the
end of each month, a barge location report in form and substance satisfactory to
the Agent;
     (F) a barge activity schedule containing such information and delivered as
often as is reasonably requested by the Agent;
     (G) as soon as available and in any event within thirty (30) days after the
end of each calendar quarter, a work on hand report and a bidding schedule, each
being effective as of the last day of such quarter, in a form and containing
such information as is reasonably requested by the Agent;
     (H) as soon as possible and in any event by December 31 of each year an
annual business plan for the Parent Guarantor for the coming year, including
projections of utilization of the Vessels, expenses and revenues; and
     (I) (x) as soon as possible, and in any event, within 30 days after the
Borrower or either of the Guarantors knows that any Reportable Event with
respect to any Plan has occurred, a statement of an officer of the Borrower or
either of the Guarantors setting forth details as to such Reportable Event and
the action which the Borrower or the Guarantors propose to take with respect
thereto, together with a copy of the notice of such Reportable Event given to
the Pension Benefit Guaranty Corporation if a copy of such notice is available
to the Borrower or the Guarantor and (y) promptly after receipt thereof a copy
of any notice relating to a Reportable Event received by the Borrower, any
Guarantor or any other member of the Controlled Group from the Pension Benefit
Guaranty Corporation or the Internal Revenue Service with respect to any Plan;
provided, however, this Section 3.2(a)(i)(I)(y) shall not apply to notice of
general application promulgated by the Department of Labor.
     (ii) With respect to the items to be delivered to Agent in
Sections 3.2(a)(i) (C) and (D)(i) above, the Parent Guarantor shall be deemed to
have furnished the information required thereby if the Parent Guarantor shall
have timely made the same available on “EDGAR” and/or on its home page on the
worldwide web (at the date of this Agreement located at
http://www.horizonoffshore.com); provided, however, that if the Agent or any
Lender is unable to access EDGAR or the Parent Guarantor’s home page on

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the worldwide web or is unable to access such information from such sources, the
Parent Guarantor agrees to provide such party with paper copies of the
information required to be furnished pursuant to Sections 3.2(a)(i) (C) and/or
(D)(i) above promptly following notice from such party. Information required to
be delivered pursuant to Sections 3.2(a)(i) (C) and (D)(i) above shall be deemed
to have been delivered on the date on which the Parent Guarantor provides notice
to the Agent that such information has been posted on “EDGAR” or the Parent
Guarantor’s website or another website identified in such notice and accessible
by the Agent without charge (and the Parent Guarantor hereby agrees to provide
such notice). In the event that the Parent Guarantor is no longer required to
file quarterly or annual reports with the SEC or any successor agency, the
Parent Guarantor agrees to provide the Agent with paper copies of the
information required to be furnished pursuant to Sections 3.2(a)(i) (C) and
(D)(i) above when and as required above.
     (iii) The Borrower or the Guarantors will, upon request, furnish to the
Agent such information as the Agent may reasonably request with respect to the
business, affairs or condition (financial or otherwise) of the Borrower or the
Guarantors and will permit the Lenders or their representatives at any
reasonable time or times during normal business hours upon three (3) Business
Days’ prior notice, to inspect the properties of the Borrower or the Guarantors,
to inspect, audit and examine the books or records of the Borrower or the
Guarantors and to take extracts therefrom and will reimburse the Lenders for all
reasonable expenses incurred in connection therewith.
     (iv) Within forty-five (45) days of the close of the first three quarters
of the Borrower’s fiscal year and on the dates that the annual reports required
pursuant to Section 3.2(a)(i)(D) above are provided to the Lenders, the Parent
Guarantor shall furnish to the Agent a Compliance Certificate.
     (b) Insurance. The Borrower shall insure, or cause to be insured, the
Vessels pursuant to the terms of the Mortgages and the Equipment pursuant to the
terms of Article 5 of the Security Agreement. The Borrower will promptly notify
the Lenders of any material changes in such insurances or any change in the
underwriters or clubs providing such insurances. The Borrower shall annually but
no later than the anniversary of the date of this Agreement furnish the Lenders
with evidence of all such insurance policies currently in force. Within sixty
(60) days after the Closing Date, the Borrower shall provide the Agent with a
waiver from the underwriter of the mortgagee’s interest insurance policy
required by Section 15 of the Mortgages of any present or future assertion that
a claim by the Agent under such insurance policy shall be denied, invalidated or
unenforceable based on the Borrower’s purchase and payment for such insurance
policy.
     (c) Other Debt. The Borrower and the Guarantors will promptly pay and
discharge any and all Indebtedness, liens, charges, and all Taxes imposed upon
them or upon their income or profits, or upon any of their properties prior to
the date on which penalties accrue thereon, and lawful claims which, if unpaid,
might become a lien or charge upon the property of the Borrower or the
Guarantors, except such as may in good faith be contested or disputed, provided
appropriate reserves are maintained in accordance with GAAP.
     (d) Maintenance of Existence; Conduct of Business. The Borrower and the
Guarantors will preserve and maintain their corporate existence, their business
as presently conducted, and all of their rights, privileges and franchises
necessary or desirable in the normal conduct of said business, and will conduct
their businesses in an orderly, efficient and regular

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manner, in compliance with all laws and all licenses and material agreements to
which they are a party.
     (e) Financial Records. The Borrower and the Guarantors will keep books of
record and account in which proper entries will be made of their transactions in
accordance with GAAP.
     (f) Maintenance of Vessels. The Borrower will maintain, or cause to be
maintained, the Vessels in the highest classification for such vessels with the
American Bureau of Shipping, Lloyds Register of Shipping or such other
classification society as the Agent may approve.
     (g) Environmental Compliance.
     (i) The Borrower will comply with, will cause the Guarantors to comply with
and will use their best efforts to cause their agents, contractors and
sub-contractors (while such Persons are acting within the scope of their
contractual relationship with the Borrower) to so comply with (i) all applicable
environmental, health and safety laws, codes and ordinances, and all rules and
regulations promulgated thereunder of all Governmental Agencies and (ii) the
terms and conditions of all applicable permits, licenses, certificates and
approvals of all Governmental Agencies now or hereafter granted or obtained with
respect to the Vessels or other properties owned or operated by the Borrower and
the Guarantors unless such compliance would violate the laws or regulations of
the jurisdictions in which the Vessels are located or operating.
     (ii) The Borrower will use its and will cause the Guarantors to use their
best efforts and safety practices to prevent the unauthorized release,
discharge, disposal, escape or spill of Hazardous Substances on or about the
Vessels or other properties owned or operated by the Borrower or the Guarantors.
     (h) Environmental Notifications. The Borrower shall notify the Agent, in
writing, within five (5) Business Days of any of the following events occurring
after the date of this Agreement:
     (i) Any written notification made by the Borrower or the Guarantors to any
U.S. or foreign federal, state or local environmental agency required under any
federal, state or local environmental statute, regulation or ordinance relating
to a spill or unauthorized discharge or release of any Hazardous Substance to
the environment at, from, or as a result of any operations on, the Vessels or
other properties owned or operated by the Borrower or the Guarantors;
     (ii) Knowledge by an officer of the Borrower of receipt of service by the
Borrower or the Guarantors of any complaint, compliance order, compliance
schedule, notice letter, notice of violation, citation or other similar notice
or any judicial demand by any U.S. or foreign court, federal, state or local
environmental agency, alleging (A) any spill, unauthorized discharge or release
of any Hazardous Substance to the environment from, or as a result of the
operations on, the Vessels or other properties owned or operated by the Borrower
or the Guarantors, or (B) violations of applicable laws, regulations or permits
regarding the generation, storage, handling, treatment, transportation,
recycling, release or disposal of Hazardous Substances on or as a result of
operations on the Vessels or other properties owned or operated by the Borrower
or the Guarantors.

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     (iii) It is understood by the parties hereto that the above mentioned
notices are solely for the Agent’s and the Lenders’ information, may not
otherwise be required by any U.S. or foreign federal, state or local
environmental laws, regulations or ordinances, and are to be considered
confidential information by the Agent and the Lenders.
     (iv) The term “environmental agency” as used herein shall include, but not
be limited to, the United States Environmental Protection Agency, the United
States Coast Guard, the United States Minerals Management Service, the United
States Department of Transportation (in its administration of the Hazardous
Materials Transportation Act, 49 U.S.C. Sec. 1801, et seq.) and other analogous
or similar Governmental Agencies regulating or administering statutes,
regulations or ordinances relating to or imposing liability or standards of
conduct concerning the generation, storage, use, production, transportation,
handling, treatment, recycling, release or disposal of any Hazardous Substance.
     (i) Environmental Indemnification.
     (i) The Borrower hereby agrees to indemnify and hold the Indemnitees
harmless from and against any and all claims, losses, liability, damages and
injuries of any kind whatsoever asserted against any Indemnitee with respect to
or as a direct result of the presence, escape, seepage, spillage, release,
leaking, discharge or migration from the Vessels or other properties owned or
operated by the Borrower or the Guarantors of any Hazardous Substance, including
without limitation, any claims asserted or arising under any applicable
environmental, health and safety laws, codes and ordinances, and all rules and
regulations promulgated thereunder of all Governmental Agencies, whether or not
caused by or within the control of the Borrower.
     (ii) It is the parties’ understanding that neither the Agent, the Lenders
nor any other Indemnitee does now, has never and does not intend in the future
to exercise any operational control or maintenance over the Vessels or any other
properties owned or operated by the Borrower or the Guarantors, nor has any of
them in the past, presently, or intends in the future to, maintain an ownership
interest in the Vessels or any other properties owned or operated by the
Borrower or the Guarantors except as may arise upon enforcement of the Agent’s
rights under the Mortgages or the Security Agreement.
     (iii) Should, however, the Agent, the Lenders or any other Indemnitee
hereafter exercise any ownership interest in or operational control over the
Vessels or any other properties owned or operated by the Borrower or the
Guarantors, e.g., including but not limited to, through foreclosure, then the
above stated indemnity and hold harmless shall be limited with respect to any
actions or failures to act by the Agent, the Lenders or other Indemnitee
subsequent to exercising such interest or operational control, to the extent
such action or inaction by the Agent, the Lenders or other Indemnitee is
admitted by the Agent, the Lenders or other Indemnitee or is found by a court of
competent jurisdiction to have caused or made worse any condition for which
liability is asserted, including but not limited to, the presence, escape,
seepage, spillage, leaking, discharge or migration on or from the Vessels or
other properties owned or operated by the Borrower or the Guarantors of any
Hazardous Substance.
     (iv) The indemnity and hold harmless contained in this Section 3.2(i) shall
not extend to the Agent, the Lenders or any other Indemnitee in its capacity as
an equity investor in the Borrower or the Guarantors or as an owner of any
property or interest as to

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which the Borrower or the Guarantors are also an owner but only to the such
Indemnitee’s capacity as a lender or a holder of security interests.
     (j) Notification of Total Loss. In the event of any Total Loss of any
Vessel or any item of Equipment, the Borrower shall give written or telefax
notice to the Agent not later than five (5) Business Days after they have actual
knowledge of such occurrence.
     (k) Second Mortgage. Borrower agrees to use its best efforts to cause GE
Credit TN (and all other persons whose consent is required) to consent to the
execution and delivery by Horizon Vessels International, Ltd. of the Second
Mortgage and the Second Lien Maritime Security Agreement. If such documents are
not executed on or prior to the Closing Date, the Borrower shall continue to use
its best efforts to obtain such consent, and, if obtained, shall promptly
thereafter execute such documents, and undertake such related action as the
Agent may reasonably require.
     (l) Anti-Terrorism. Borrower represents, warrants, covenants and agrees
that as of the date of this Agreement and continuing throughout the Term, the
following statements are and shall be true, correct and complete without
material misrepresentation or omission:
     (i) Borrower is and will continue to be in compliance with the
Anti-Terrorism Laws.
     (ii) Borrower has established policies and procedures designed to prevent
and detect money laundering, including processes to meet all applicable
anti-money laundering requirements of the USA Patriot Act.
     (iii) Borrower has identified, and will continue to identify, the entities
with whom it does business, and will retain all documentation necessary to
identify those entities and their sources of funds.
     (iv) Borrower is not, and will not be, a Prohibited Person.
     (v) Borrower does not and will not (i) conduct any business or engage in
any transaction or dealing with any Prohibited Person or (ii) deal in, or
otherwise engage in any transaction relating to, any property or interests in
property blocked pursuant to Executive Order 13224.
Borrower will promptly notify Agent and each Lender in the event that it has
reason to believe that (i) any of the warranties and representations contained
in this Section 3.2(l) are no longer correct and/or (ii) Borrower is in default
of any of the covenants and agreements contained in this Section 3.2(l).
     (m) Supplemental Legal Opinions. Within thirty (30) days after the date of
this Agreement, the Borrower will cause (i) Jones, Walker, Waechter, Poitevent,
Carrere & Denegre, L.L.P. to deliver to the Agent and the Lenders its opinion
with respect to the valid recording and first priority status (except with
respect to the Mortgage covering the SEA HORIZON, which shall be a second
priority mortgage) of the Mortgages, satisfactory in form and substance to the
Agent and Majority Lenders and (ii) Solomon Harris to deliver to the Agent and
the Lenders its opinion as to the recording of the charge of the Second Lien
Maritime Security Agreement on the records of Horizon Vessels International,
Ltd., and the perfection of the security interest created

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thereby under the laws of the Cayman Islands, satisfactory in form and substance
to the Agent and Majority Lenders.
     Section 3.3 Negative Covenants of Borrower. Until the payment in full of
all amounts due under this Agreement and the Note by the Borrower, the Borrower
and the Guarantors agree that they will not without the prior written consent of
all the Lenders:
     (a) Liens on Vessels and Equipment. Create, incur, assume or suffer to
exist any lien (including any encumbrance or security interest) of any kind upon
the Vessels or the Equipment, except for the liens and other encumbrances set
forth below (the “Permitted Liens”):
     (i) liens for Taxes not at the time delinquent or thereafter payable
without penalty or being contested in good faith, provided provision is made to
the extent required by GAAP for the eventual payment thereof in the event it is
found that such are payable by the Borrower or the Guarantors;
     (ii) liens of carriers, warehousemen, mechanics, materialmen and landlords
incurred in the ordinary course of business for sums not overdue or being
contested in good faith, provided provision is made to the extent required by
GAAP for the eventual payment thereof in the event it is found that such sums
are payable by the Borrower or the Guarantors;
     (iii) maritime liens:
     (A) arising in the ordinary course of business by operation of law that are
not paid within thirty (30) days of the date claimed or, if later, within terms
provided by the applicable vendor or supplier, or that are being contested in
good faith by appropriate proceedings and for which reserves have been made to
the reasonable satisfaction of the Lenders; or
     (B) arising in connection with salvage and general average; or
     (C) arising in connection with crew wages claimed but not paid within
thirty (30) days of the date claimed;
     (iv) liens incurred in the ordinary course of business in connection with
workmen’s compensation, unemployment insurance or other forms of governmental
insurance or benefits, or to secure performance of tenders and statutory
obligations entered into in the ordinary course of business or to secure
obligations on surety or appeal bonds in the ordinary course of business or
easements, rights of way and similar encumbrances incurred in the ordinary
course of business and not interfering with the ordinary conduct of the business
of the Borrower and the Guarantors;
     (v) judgment liens in existence less than thirty (30) days after the entry
thereof or with respect to which execution has been stayed or the payment of
which is covered in full by insurance;
     (vi) liens required by the terms of this Agreement;
     (vii) purchase money security interests in connection with capital
expenditures permitted by Section 3.3(x) below; and

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     (viii) the mortgage of GE Credit TN on the Sea Horizon.
     (b) Liens on Other Collateral. Create, incur, assume, or suffer to exist
any lien (including any encumbrance or security interest) of any kind upon any
other collateral for the Loan (other than Vessels and Equipment), except for
Permitted Liens and liens and encumbrances of the Working Capital Lender that
may be permitted in the Intercreditor Agreement.
     (c) Consolidation, Merger, Etc. Consolidate with or merge with, or sell
(whether in one transaction or in a series of transactions) all or substantially
all of their assets to any Person, except that one or more of Borrower and the
Guarantors may merge with each other upon (i) not less than thirty (30) days
prior written notice to the Agent, and (ii) the execution by the surviving
entity of any and all documents and agreements as may be requested by the Agent.
     (d) Modification of Agreements. Amend, modify or otherwise change any of
the Loan Documents.
     (e) Indebtedness. Incur any Indebtedness, except:
     (i) the Loan;
     (ii) accounts payable and accrued liabilities incurred in the ordinary
course of business;
     (iii) letters of credit, performance and bid bonds obtained by the Borrower
or the Guarantors in the ordinary course of their business in an aggregate
amount not to exceed USD 40,000,000.00;
     (iv) supersedeas bonds obtained by the Borrower or the Guarantors in the
ordinary course of their business;
     (v) purchase money indebtedness in connection with capital expenditures
permitted by Section 3.3(x);
     (vi) the Working Capital Loan; and
     (vii) the Indebtedness listed on Schedule 3.3(e) attached hereto and made a
part hereof.
     (f) Reportable Event. Cause or allow to occur a Reportable Event which
could reasonably be expected to have a Material Adverse Effect.
     (g) Change of Legal Structure. Cause or allow to occur any material change
in their present Certificate of Incorporation or By-Laws that would adversely
affect the rights of the Lenders or change their jurisdiction of incorporation.
     (h) Change of Place of Business. Make any change in the address of their
principal place of business or their chief executive office except upon thirty
(30) days’ prior written notice to the Agent.
     (i) Management of Vessels. Subject to subsection (j) below, change the
flag, class, ownership, management or control of any Vessel.

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     (j) Charter. Cause or allow any Vessel to be bareboat chartered for a
period longer than six (6) months to any Person, other than a Subsidiary of the
Parent Guarantor in the ordinary course of business, without the prior written
consent of the Agent, which consent shall not be unreasonably withheld.
     (k) Modifications to Vessels. Other than the upgrades and modifications
commenced on or before the date of this Agreement, cause or allow any change in
the physical characteristics of any Vessel that would, in the reasonable
judgment of the Agent, materially interfere with the suitability of such Vessel
for normal commercial offshore construction operations; the consent of the Agent
to any such modification not to be unreasonably withheld.
     (l) Sale of Vessel, Etc. Sell, transfer or assign any Vessel or Equipment,
or any right to receive the revenue from any Vessel provided, however, that:
     (i) the Borrower and the Guarantors may sell, transfer or assign any
surplus or scrap equipment from the Vessels or Vessel’s Equipment in the
ordinary course of business in an amount of up to USD 500,000.00 annually; and
     (ii) the Borrower and the Guarantors may sell, transfer or assign any item
of Equipment or any other equipment from the Vessels if they first replace such
items with equipment of equal or greater value.
     (m) Current Ratio. Permit the Current Ratio to be less than 1.1 to 1 at the
end of any fiscal quarter of the Parent Guarantor.
     (n) Working Capital. Permit Working Capital to be less than USD
3,000,000.00 at the end of any fiscal quarter of the Parent Guarantor.
     (o) Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage Ratio to
be less than 1.33 to 1 at the end of any fiscal quarter of the Parent Guarantor.
     (p) Debt Ratio. Permit the Debt Ratio to be greater than 55% at the end of
any fiscal quarter of the Parent Guarantor.
     (q) Tangible Net Worth. Permit Tangible Net Worth at the end of any fiscal
quarter of the Parent Guarantor to be less than the sum of (i) USD 140,000,000
plus (ii) 50% of quarterly positive net income for each fiscal quarter of the
Parent Guarantor, commencing with respect to the fiscal quarter ended
December 31, 2005, plus (iii) 50% of the sum of (A) the amount of net proceeds
received by the Borrower or any Guarantor from any future public or private
sales of the common stock of any of them after the date of this Agreement, and
(B) to the extent not already included in any of the foregoing, the amount of
other increases in shareholder equity occurring after the date of this
Agreement.
     (r) Payments on Subordinated Debt. Pay any Cash Interest or any principal
on any debt subordinated to the Loan (it being agreed that for purposes of this
paragraph, the Working Capital Loan is not considered subordinated to the Loan);
provided that, with respect to permitted Indebtedness of the Parent Guarantor
which is subordinated to the Loan, the foregoing prohibition does not preclude
the Parent Guarantor from converting any of such Indebtedness into, or
exchanging any of such indebtedness for, equity of the Parent Guarantor.

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     (s) Compliance with Federal Reserve Board Regulations. Permit any part of
the proceeds of the Loan to be used, directly or indirectly, for the purpose of
purchasing or carrying any margin security within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System, or for the purpose of
purchasing or carrying or trading in any securities under such circumstances as
to involve the Borrower or the Guarantors in a violation of Regulation X of said
Board or the Lenders in a violation of Regulation U of said Board. In
particular, without limitation of the foregoing, neither the Borrower nor the
Guarantors will use any part of the proceeds of the Loan to be made hereunder to
acquire for itself or for any other person any publicly-held securities of any
kind. The assets of the Borrower and the Guarantors do not and will not include
any margin securities, and the Borrower and the Guarantors have no present
intention of acquiring any margin securities. As used in this Section 3.3(s),
the terms “margin security” and “purpose of purchasing or carrying” shall have
the meanings assigned to them in the aforesaid Regulation U, and the term
“publicly-held”, in respect of securities, shall have the meaning assigned to it
in Section 220.7(a) of Regulation T of said Board. If requested by the Lenders,
the Borrower will furnish to the Lenders a statement or statements in conformity
with the requirements of Federal Reserve Form U-1 referred to in said
Regulation U.
     (t) Loans and Investments. Excluding investments in Cash Equivalents,
advance funds to, or make investments in, (whether by way of loan, stock
purchase or capital contribution) any Person other than advances to or
investments in any wholly-owned Subsidiary of the Parent Guarantor.
     (u) Contracts with Affiliates. Enter into any transaction with any
director, officer, employee, shareholder or Affiliate of the Borrower or the
Guarantors except on terms no less favorable to the Borrower than the Borrower
could obtain in an arms length transaction with Persons not affiliated with the
Borrower.
     (v) Change of Management. Cause or allow to occur any material change in
their present executive management.
     (w) Lease Expense. Excluding Capital Leases and rental for their principal
place of business referred to in Section 3.1(d) above, incur or pay more than
USD 5,000,000.00 per year in the aggregate for the lease, charter or rental of
equipment, vessels or real property pursuant to leases, charters or rental
agreements having a term in excess of six (6) months.
     (x) Capital Expenditures. Make any capital expenditures other than those
for the purpose of the acquisition or upgrading of marine construction vessels
and the acquisition of equipment and accessories related to such vessels, or
other equipment in the ordinary course of the Borrower’s business.
     (y) Dividends. Allow the Parent Guarantor to make any dividend payments or
other distributions to its stockholders or redeem or otherwise acquire any of
its stock.
     (z) Use of Vessels. Except for the use of the Brazos Horizon in offshore
West Africa until approximately May 1, 2006, and its relocating thereafter in
due course to the Gulf of Mexico, cause or allow any First Lien Vessel to be
used outside of the Gulf of Mexico basin (including U.S. waters, Mexican waters
and international waters therein), unless expressly consented to in writing by
the Agent, in its reasonable discretion.
     (aa) Fiscal Years. Change or allow to change the fiscal year of Borrower or
any Guarantor from one ending on December 31.

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     (bb) Line of Business. Enter into any new line of business unrelated to
their present activities after the date of this Agreement.
     (cc) Purpose. Use proceeds of the Loan for any purpose other than (i) to
refinance the Manchester Term Loans and the CIT Loan, (ii) if Borrower elects,
to pay the fees described in Section 1.8(a) and (b) of this Agreement and
(iii) to pay the ECS Fees, and for no other purpose.
ARTICLE IV.
Events of Default
If any of the following events shall occur and be continuing (each an “Event of
Default”):
     (a) the Borrower shall fail to pay any principal of or interest on the Note
or any other amount due hereunder or thereunder, which failure shall continue
for three (3) Business Days after the date when due;
     (b) any insurance required by this Agreement, or any other Loan Document
lapses, is cancelled or is not renewed, or there is any modification to the
terms of any hull or machinery policy, war risk policy or other policy insuring
physical aspects of the Vessels and Equipment that, in the sole discretion of
the Agent, has a material and adverse effect on the insurance of such Vessel
and/or Equipment, or there is any modification to the terms of any other
insurance required by this Agreement that, in the sole discretion of the Agent,
is a material and adverse modification thereto;
     (c) (i) default in the performance of any agreement, covenant, term or
condition contained in any Mortgage to be performed by the Borrower or Horizon
Vessels International, Ltd., after giving effect to any applicable grace period
contained therein;
          (ii) default in the performance of any agreement, covenant, term or
condition contained herein or in any Loan Document to be performed by the
Borrower, the Guarantors or Horizon Vessels International, Ltd., other than as
described in (a), (b) or (c)(i) above, if such default has continued for ten
(10) days after notice thereof by the Agent to the Borrower;
     (d) any representation or warranty made by the Borrower or the Guarantors
herein or made in any certificate or financial statement furnished to the
Lenders or the Agent hereunder or under any of the Loan Documents shall prove to
have been incorrect in any material respect when made;
     (e) an event of default under the Working Capital Loan, any indebtedness
described in Schedule 3.3(e) hereto, or any other loan agreement, credit
agreement, security agreement, guaranty agreement or lease agreement now
existing or hereafter entered into by the Borrower or the Guarantors in an
aggregate amount in excess of USD 1,000,000.00 that is not remedied within any
stated grace periods.
     (f) Any of the following events shall occur:
          (1) the entry by a court of competent jurisdiction of one or more
final judgments against Borrower, Horizon Vessels International, Ltd. or any
Guarantor in an uninsured or unindemnified aggregate amount in excess of USD
500,000.00 which

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is not discharged, waived, appealed, stayed, bonded or satisfied for a period of
thirty (30) consecutive days;
          (2) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of Borrower, Horizon Vessels
International, Ltd. or any Guarantor in an involuntary case or proceeding under
U.S. bankruptcy laws, as now or hereafter constituted, or any other applicable
Federal, state, or foreign bankruptcy, insolvency, or other similar law or (B) a
decree or order adjudging Borrower, Horizon Vessels International, Ltd. or any
Guarantor a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in respect
of Borrower, Horizon Vessels International, Ltd. or any Guarantor under U.S.
bankruptcy laws, as now or hereafter constituted, or any other applicable
Federal, state or foreign bankruptcy, insolvency, or similar law, or appointing
a custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of Borrower, Horizon Vessels International, Ltd. or any
Guarantor or of any substantial part of the property or assets of Borrower,
Horizon Vessels International, Ltd. or any Guarantor, or ordering the winding up
or liquidation of the affairs of Borrower, Horizon Vessels International, Ltd.
or any Guarantor, and the continuance of any such decree or order for relief or
any such other decree or order unstayed and in effect for a period of sixty
(60) consecutive days;
          (3) (A) the commencement by Borrower, Horizon Vessels International,
Ltd. or any Guarantor of a voluntary case or proceeding under U.S. bankruptcy
laws, as now or hereafter constituted, or any other applicable Federal, state or
foreign bankruptcy, insolvency or other similar law or of any other case or
proceeding to be adjudicated a bankrupt or insolvent; or (B) the consent by
Borrower, Horizon Vessels International, Ltd. or any Guarantor to the entry of a
decree or order for relief in respect of Borrower, Horizon Vessels
International, Ltd. or such Guarantor in an involuntary case or proceeding under
U.S. bankruptcy laws, as now or hereafter constituted, or any other applicable
Federal, state, or foreign bankruptcy, insolvency or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against
Borrower, Horizon Vessels International, Ltd. or any Guarantor; or (C) the
filing by Borrower, Horizon Vessels International, Ltd. or any Guarantor of a
petition or answer or consent seeking reorganization or relief under U.S.
bankruptcy laws, as now or hereafter constituted, or any other applicable
Federal, state or foreign bankruptcy, insolvency or other similar law; or
(D) the consent by Borrower, Horizon Vessels International, Ltd. or any
Guarantor to the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator
or similar official of Borrower, Horizon Vessels International, Ltd. or any
Guarantor or of any substantial part of the Property or assets of Borrower,
Horizon Vessels International, Ltd. or any Guarantor, or the making by Borrower,
Horizon Vessels International, Ltd. or any Guarantor of an assignment for the
benefit of creditors; or (E) the admission by Borrower, Horizon Vessels
International, Ltd. or any Guarantor in writing of its inability to pay its
debts generally as they become due; or (F) the taking of corporate action by
Borrower, Horizon Vessels International, Ltd. or any Guarantor in furtherance of
any such action; or
     (g) any Guaranty shall for any reason cease to be, or be asserted by
Borrower or any Guarantor not to be, in full force and effect (except pursuant
to the release of a Guaranty in accordance herewith),

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then the Agent may, and upon instruction of the Majority Lenders shall, by
written notice to the Borrower (1) immediately terminate the commitment of the
Lenders hereunder; (2) declare the principal of, and interest accrued to the
date of such declaration on, the Note together with all other amounts due
hereunder or under any of the Loan Documents, to be forthwith due and payable,
whereupon the same shall become forthwith due and payable (provided, however, no
notice or declaration shall be required and such amounts shall be immediately
due and payable upon the occurrence of an event described in Article IV(f)(2) or
(3) hereof) and (3) exercise any remedies to which it may be entitled by any
Loan Document or by applicable law.
ARTICLE V.
The Agent
     Section 5.1 Appointment and Duties of Agent.
     (a) The parties hereto agree that The CIT Group/Equipment Financing, Inc.
shall act, subject to the terms and conditions of this Article V, as the Agent
and, in respect of the Mortgages, as trustee, for the Lenders in connection with
the Loan, and to the extent set forth herein each Lender hereby irrevocably
appoints, authorizes, empowers and directs the Agent to take such action on its
behalf and to exercise such powers as are specifically delegated to the Agent
herein or are reasonably incidental thereto in connection with the
administration of and the enforcement of any rights or remedies with respect to
this Agreement, the Note and the other Loan Documents. It is expressly
understood and agreed that the obligations of the Agent under the Loan Documents
are only those expressly set forth in this Agreement. The Agent shall use
reasonable diligence to examine the face of each document received by it
hereunder to determine whether such documents, on their face, appear to be what
they purport to be. However, the Agent shall not under any duty to examine into
and pass upon the validity or genuineness of any documents received by it
hereunder and the Agent shall be entitled to assume that any of the same which
appears regular on its face is genuine and valid and what it purports to be.
     (b) Subject to the provisions of Section 6.5 of this Agreement, the Agent
shall act pursuant to the instructions of the Majority Lenders in all matters
relating to the Loan Documents; provided, that this Section 5.1(b) shall not
permit any amendment, waiver, modification, termination or discharge of any Loan
Document or any provisions thereof except pursuant to the terms of Section 6.5
hereof.
     Section 5.2 Discretion and Liability of Agent. Subject to Sections 5.1(b)
above and 5.3 and 5.5 below, the Agent shall be entitled to use its discretion
with respect to exercising or refraining from exercising any rights which may be
vested in it under any of the Loan Documents or otherwise, or with respect to
taking or refraining from taking any action or actions which it may be able to
take under any of the Loan Documents. Neither the Agent nor any of its
directors, officers, employees, agents or representatives shall be liable for
any action taken or omitted by it hereunder or in connection herewith, except
for its own gross negligence or willful misconduct. The Agent shall incur no
liability under, or in respect of this Agreement or the other Loan Documents by
acting upon a notice, certificate, warranty or other paper or instrument
reasonably believed by it to be genuine or authentic or to be signed by the
proper party or parties, or with respect to anything which it may do or refrain
from doing in the reasonable exercise of its judgment, or which may seem to it
to be necessary or desirable in the premises.

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     Section 5.3 Event of Default.
     (a) The Agent shall be entitled to assume that no Event of Default or event
which would constitute an Event of Default after notice or lapse of time, or
both, has occurred and is continuing, unless the Agent has actual knowledge of
such facts or has received notice from the Borrower or a Guarantor or from a
Lender in writing that such Lender considers that an Event of Default or event
which would constitute an Event of Default after notice or lapse of time, or
both, has occurred and is continuing and which specifies the nature thereof.
     (b) In the event that the Agent shall acquire actual knowledge of any Event
of Default or event which would constitute an Event of Default after notice or
lapse of time, or both, or shall have received notice from the Borrower, a
Guarantor or a Lender as provided in Section 5.3(a) above, the Agent shall
promptly notify (either orally, confirmed in writing, or in writing) the Lenders
of such Event of Default or event and shall take such action and assert such
rights as are contemplated under this Agreement and in an emergency, or if
requested in writing by the Majority Lenders shall, take such action and assert
such rights as are contemplated under this Agreement. To the extent not
otherwise paid by the Borrower, the Agent shall be indemnified pro rata by the
Lenders against any liability or expenses (except for any liability or expenses
caused by Agent’s gross negligence or willful misconduct), including, but not
limited to, travel expenses and external counsel fees and expenses, incurred in
connection with taking such action as Agent, and not as a Lender. The Agent may
refrain from acting in accordance with any instructions from the Majority
Lenders until it shall have been indemnified to its satisfaction against any and
all costs and expenses which it will or may expend or incur in complying with
such instructions.
     Section 5.4 Consultation. When acting in connection with this Agreement, or
the other Loan Documents, the Agent may, with the consent of the Majority
Lenders, engage and pay for the advice and services of any lawyers, accountants,
surveyors, appraisers or other experts whose advice or services may to it appear
necessary, expedient or desirable and the Agent shall be entitled to fully rely
upon any opinion or such advice so obtained.
     Section 5.5 Communications to and from Agent. When any notice, approval,
consent, waiver or other communication or action is required or may be delivered
by the Lenders hereunder or the other Loan Documents, action by the Agent (upon
the direction, approval or consent of each Lender, all Lenders or the Majority
Lenders, as applicable pursuant to the requirements set forth in this Agreement)
shall be effective for all purposes hereunder. The Borrower and the Guarantors
may rely on any communication from the Agent hereunder or the other Loan
Documents, and need not inquire into the propriety of or authorization for such
communication. Upon receipt by the Agent from the Borrower, the Guarantors or
any Lender of any communication it will, in turn, promptly forward such
communication to the Lenders; provided, however, that the Agent shall not be
liable for any costs, expenses or losses arising from any failure to so forward
any such communication unless caused by the gross negligence or willful
misconduct of the Agent.
     Section 5.6 Limitations of Agency. Notwithstanding anything in the Loan
Documents, expressed or implied, it is agreed by the parties hereto, that the
Agent will act under the Loan Documents as Agent solely for the Lenders and only
to the extent specifically set forth herein, and will, under no circumstances,
be considered to be an agent or fiduciary of any nature whatsoever in respect to
any other person. The Agent, in its individual capacity, may generally engage in
any business with the Borrower and the Guarantors or any of their Affiliates as
if it was not the Agent.

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     Section 5.7 No Representations or Warranty.
     (a) No Lender (including the Agent) makes to any other Lender any
representation or any warranty, expressed or implied, or assumes any
responsibility with respect to the Loan or the execution, construction or
enforceability of the Loan Documents or any instrument or agreement executed by
the Borrower, the Guarantors or any other Person in connection therewith.
     (b) The Agent takes no responsibility for the accuracy or completeness of
any information concerning the Borrower and the Guarantors distributed by the
Agent in connection with the Loan nor for the truth of any representation or
warranty given or made herein, nor for the validity, effectiveness, adequacy or
enforceability of this Agreement or any of the other Loan Documents.
     Section 5.8 Lender Credit Decision. Each Lender acknowledges that it has
independent of and without reliance upon any other Lender (including the Agent)
or any information provided by any other Lender (including the Agent) and based
on the financial statements of the Borrower and the Guarantors and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independent of and without reliance upon any other
Lender (including the Agent) and based on such documents and information as it
shall deem appropriate at that time, continue to make its own credit decisions
in taking or not taking action under this Agreement and any other documents
relating thereto.
     Section 5.9 Indemnity. Notwithstanding any of the provisions hereof, to the
extent the Agent has not been so indemnified by the Borrower, the Lenders shall
severally, pro-rata in respect of their respective Commitments, indemnify the
Agent against any and all losses, costs, liabilities, damages or expenses,
including but not limited to, reasonable travel expenses and external counsel’s
reasonable fees and expenses, arising from, or in connection with, its
performance as Agent hereunder and not caused by its gross negligence or willful
misconduct.
     Section 5.10 Resignation. The Agent may resign as such at any time upon at
least thirty (30) days’ prior notice to the Borrower and the Lenders, provided
that such resignation shall not take effect until a successor agent has been
appointed. In the event of a resignation by the Agent, the Lenders shall
promptly appoint a successor agent from among the Lenders.
     Section 5.11 Disbursements and Distributions. On the date of the Advance,
the Agent shall disburse each Lender’s pro rata portion of the Commitment to or
at the direction of the Borrower pursuant to this Agreement, to the extent
received by the Agent from such Lender. The Agent shall be responsible for
promptly distributing, on the Business Day immediately following the date
received by the Agent, each Lender’s share of all net amounts received by the
Agent under any of the Loan Documents pursuant to the letter agreements among
the Agent and the Lenders dated the date hereof. Each Lender shall be
responsible for designating by written notice to the Agent the account to which
such distribution shall be deposited.
     Section 5.12 Limitation of Suits. All rights of action and claims under
this Agreement, the Mortgages and the Security Agreement of the Lenders shall be
prosecuted and enforced only by the Agent. The Lenders agree that they shall not
independently institute any proceedings, judicial or otherwise, to enforce their
rights against the Borrower under this Agreement, the Mortgages or the Security
Agreement. However, notwithstanding anything contained in this Section 5.12, the
Lenders shall always retain their ability to retain independent counsel and to
protect their rights under this Agreement and the other Loan Documents.

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     Section 5.13 Right of Setoff. Subject to the provisions of Section 1.9
hereof, upon the occurrence and during the continuation of any Event of Default,
the Lenders each are hereby authorized at any time and from time to time,
without notice to the Borrower (any such notice being expressly waived by the
Borrower), to setoff and apply any and all deposits (general or special, time or
demand, provisional or final, whether or not such setoff results in any loss of
interest or other penalty, and including without limitation all certificates of
deposit) at any time held by the Lenders and all of the indebtedness arising in
connection with this Agreement irrespective of whether or not such Lender will
have made any demand under this Agreement, the Note or any other Loan Document.
The Borrower also hereby grants to each of the Lenders a security interest in
and hereby transfers, assigns, sets over and conveys to each of the Lenders, as
security for payment of the Loan, all such deposits, funds or property of the
Borrower or indebtedness of any Lender to the Borrower. Should the right of any
Lender to realize funds in any manner set forth hereinabove be challenged and
any application of such funds be reversed, whether by court order or otherwise,
the Lenders shall make restitution or refund to the Borrower pro rata in
accordance with their respective portions of the Loan. Each Lender agrees to
promptly notify the Borrower and the Agent after any such setoff and
application, provided that the failure to give such notice will not affect the
validity of such setoff and application. The rights of the Agent and the Lenders
under this Section 5.13 are in addition to other rights and remedies (including
without limitation other rights of setoff) which the Agent or the Lenders may
have. Nothing contained herein shall affect the right of any Lender to exercise,
and retain the benefits of exercising, any such right with respect to any other
indebtedness or obligation of the Borrower to such Lender.
ARTICLE VI.
Miscellaneous
     Section 6.1 Notices. All notices, requests and demands shall be in writing
(including via email or telecopier transmission) given to or made upon the
respective parties hereto as follows:
     In the case of the Borrower, at
Horizon Vessels, Inc.
2500 CityWest Blvd., Ste. 2200
Houston, Texas 77042
Attention: David Sharp, President and CEO
Telecopier: (713) 361-2677
E-mail:                                         
     In the case of the Lenders, at
The CIT Group/Equipment Financing, Inc.
P.O. Box 27248
Tempe, Arizona 85282-7248
Attention: Vice President - Credit
Telecopier:                                         
E-mail:                                                            

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Merrill Lynch Capital,
a Division of Merrill Lynch Business Financial Services Inc.
101 California Street, Suite. 1310
San Francisco, California 94111
Attention: Mr. David Buccolo
Telecopier:                                        
E-mail:                                                             
Ableco Finance LLC
c/o Cerberus Capital Management, L.P.
299 Park Avenue, 23rd Floor
New York, New York 10171
Attention: Mr. Timothy D. Fording
Telecopier:                                        
E-mail:                                                             
A3 Funding LP
c/o Cerberus Capital Management, L.P.
299 Park Avenue, 23rd Floor
New York, New York 10171
Attention: Mr. Timothy D. Fording
Telecopier:                                        
E-mail:                                                             
AIG Commercial Equipment Finance, Inc.
5700 Granite Parkway, Suite 850
Plano, Texas 75024
Attention: Funding and Administration Manager
Telecopier:                                        
E-mail:                                                             
GATX Financial Corporation
4 Embarcadero Center, Suite 2200
San Francisco, California 94111
Attention: Specialty Portfolio Management
Telecopier: (415) 955-3288
E-mail: gwen.campbell@gatx.com
     In the case of the Agent, at
The CIT Group/Equipment Financing, Inc.
1540 Fountainhead Parkway
Tempe, Arizona 85282
Attention: Vice President-Credit
Telecopier:                                        
E-mail:                                                             

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     With a copy to:
Mr. Randall L. Jones
Gardere Wynne Sewell LLP
1000 Louisiana, Suite 3400
Houston, Texas 77002
Telecopier: (713) 276-6766
E-mail: RJones@gardere.com
or in such other manner as any party hereto shall designate by written notice to
the other parties hereto. All such notices shall be effective upon delivery or
three (3) days after being deposited in the United States mail with postage
prepaid certified, return receipt requested in a correctly addressed wrapper, or
upon receipt if delivered to Federal Express or similar courier company or
transmitted by telefax during normal business hours. All notices, demands,
requests, communications and other documents delivered hereunder or under the
Loan Documents, unless submitted in the English language, shall be accompanied
by certified English translation thereof.
     Section 6.2 No Waiver. No failure on the part of the Lenders or the Agent
to exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by the Lenders or the
Agent of any right hereunder preclude any other or further exercise thereof or
the exercise of any other right.
     Section 6.3 Applicable Law and Jurisdiction.
     (a) THIS AGREEMENT AND THE LOAN DOCUMENTS PROVIDED FOR HEREIN (INCLUDING,
BUT NOT LIMITED TO, THE VALIDITY AND ENFORCEABILITY HEREOF AND THEREOF) SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
OTHER THAN CONFLICT OF LAWS RULES THEREOF. Any legal action or proceeding
against the Borrower or the Guarantors with respect to this Agreement or any
Loan Document may be brought in the courts of the State of New York, the U.S.
Federal Courts in such state, sitting in the County of New York, or in the
courts of any other jurisdiction where such action or proceeding may be properly
brought, and the Borrower and the Guarantors hereby irrevocably accept the
jurisdiction of such courts for the purpose of any action or proceeding. The
Borrower and the Guarantors hereby designate and irrevocably appoint and empower
CT Corporation System (the “Process Agent”), currently located at 1633 Broadway,
New York, New York 10019 in each case as its authorized agent to accept, receive
and acknowledge for and on behalf of each and its property service of any and
all process which may be served but only in any action, suit or proceeding of
the nature referred to above in the State of New York and further agree that
failure of such firm to give the Borrower or the Guarantors any notice of any
such service shall not impair or affect the validity of such service or of any
judgment rendered in any action or proceeding based thereon. The Borrower and
the Guarantors hereby irrevocably authorize and direct the Process Agent to
accept such service on their behalf. The Borrower and the Guarantors further
irrevocably consent to the service of process out of said courts by the mailing
thereof by the Agent by U.S. registered or certified mail postage prepaid to the
party to be served at its address designated in Section 6.1. The Borrower and
the Guarantors agree that a final judgment in any action or proceeding shall be
conclusive and may be enforced in any other jurisdiction by suit on the judgment
or in any other manner provided by law. Nothing in this Section 6.3 shall affect
the right of the Lenders or the Agent to serve legal process in any other manner
permitted by law or affect the right of the Lenders or the Agent to bring any
action or proceeding against the Borrower or the Guarantors or their properties
in the courts of any other jurisdiction. To the

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extent that the Borrower or the Guarantors has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service of notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to either itself or its
property, the Borrower and the Guarantors hereby irrevocably waive such immunity
in respect of their obligations under this Agreement and the other Loan
Documents. The Borrower and the Guarantors hereby irrevocably waive any
objection which they may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement or any
Loan Document brought in the Supreme Court of the State of New York, County of
New York or the U.S. District Court for the Southern District of New York, and
hereby further irrevocably waive any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.
     (b) THE LENDERS, THE AGENT, THE BORROWER AND THE GUARANTORS IRREVOCABLY
WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTE OR THE OTHER LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
     Section 6.4 Severability. In the event that any provision of this Agreement
is held to be void or unenforceable in any jurisdiction, all other provisions
shall remain unaffected and be enforceable in accordance with their terms in
such jurisdiction, and all provisions of this Agreement shall remain unaffected
and shall be enforceable in accordance with their terms in all other
jurisdictions.
     Section 6.5 Amendment.
     (a) Neither this Agreement nor any other Loan Document, nor any provision
hereof or thereof, including without limitation this Section 6.5, may be
amended, modified, waived, discharged or terminated, or any consent related
thereto granted, orally, but only by an instrument in writing signed by the
Borrower and Majority Lenders; provided, however, that no such amendment,
modification, waiver, discharge, termination or consent shall, without the
consent of each Lender (1) extend the Maturity Date, extend the time of payment
for or reduce the amount of any scheduled principal repayment, or reduce the
rate or extend the time of payment of interest on the Loan or Note (except that
the Agent may, in its discretion, without the consent of any of the Lenders, but
upon notice to the Lenders, so long as no other Event of Default then exists
hereunder, waive (A) the applicability of up to two (2) late charges during the
term of the Loan, so long as the payment to which such late charge relates was
paid within ten (10) days after such payment was due and (B) the applicability
of a post-default interest rate increase for up to thirty (30) days if the
Borrower has paid a late charge with respect to the past-due payment giving rise
to such otherwise increased interest rate) or reduce the principal amount
thereof, (2) release any Vessel or other material amount of collateral for the
Loan (except as expressly provided in the Loan Documents), (3) amend, modify or
waive any provision of this Section 6.5, (4) change the percentage specified in
the definition of Majority Lenders, (5) consent to the assignment or transfer by
the Borrower of any of its rights or obligations under this Agreement or the
other Loan Documents, (6) amend, modify or waive any provision in this Agreement
or in any other Loan Document to the extent providing for payments or
prepayments on the Note to be applied pro rata among the Lenders, or (7) release
any Guarantor from its Guaranty; provided, further, that no such amendment,
modification, waiver, discharge, termination or consent shall (y) increase the
Commitment of any Lender over the amount thereof then in effect without the
consent of such Lender or (z) without the consent of the Agent, amend, modify or
waive any provision relating to the rights or obligations of the Agent.

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     (b) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Guarantors, the Agent and the Lenders, and their respective
successors and assigns, except that the Borrower and the Guarantors shall not
have the right to assign their rights hereunder or any interest herein without
the prior written consent of the Agent and all the Lenders.
     Section 6.6 Assignment and Participation.
     (a) Each Lender shall have the right to assign or grant participation in
all or any portion of its portion of the Loan outstanding under this Agreement
or the Note to any Eligible Assignee, so long as, at least five (5) Business
Days prior to the effectiveness of such assignment (except in the case of a
Related Lender Assignment, which shall be governed by the provisions of
Section 6.6(b) below) (i) an Assignment and Acceptance with respect to such
assignment is delivered to the Agent and (ii) the assigning Lender or the
assignee pays to the Agent a transfer fee in an amount equal to USD 3,500.00
(the “Assignment Fee”), at which time such Eligible Assignee shall become
entitled to the benefits, and subject to the requirements and obligations, of
this Agreement and the other Loan Documents.
     (b) A Lender may effect a Related Lender Assignment without paying the
Assignment Fee and without delivering an Assignment and Acceptance to the Agent
or to any other Person; provided, however, that (i) the Borrower and the Agent
may continue to deal solely and directly with such assigning Lender until the
date that is five (5) Business Days after an Assignment and Acceptance has been
delivered to the Agent for recordation in the Register, (ii) the failure of such
assigning Lender to deliver an Assignment and Acceptance to the Agent shall not
affect the legality, validity, or binding effect of such assignment as between
such assigning Lender and such assignee, and (iii) an Assignment and Acceptance
between the assigning Lender and an Affiliate of such Lender or Approved Fund of
such Lender shall be effective as of the date specified in such Assignment and
Acceptance, once recorded on the Related Party Register (as defined below).
Subject to the provisions of this Section 6.6, the Borrower agrees that each
assignee party to a Related Lender Assignment shall be entitled to the benefits,
and subject to the requirements and obligations, of this Agreement and the other
Loan Documents to the same extent as if it had consummated such assignment and
acceptance by delivery of an Assignment and Acceptance to the Agent.
     (c) The Agent shall, on behalf of and acting solely for this purpose as the
non-fiduciary agent of the Borrower, maintain, or cause to be maintained at the
Agent’s office where the Borrower makes payments due hereunder, a copy of each
Assignment and Acceptance delivered to and accepted by it and a register (the
“Register”) for the recordation of the names and addresses of the Lenders and
the Commitments of, and the principal amount of the Loans (and stated interest
thereon) (the “Registered Loans”). In the case of any Related Lender Assignment,
the Lender making such Related Lender Assignment shall, on behalf of and acting
solely for this purpose as the non-fiduciary agent of the Borrower, maintain a
comparable register (the “Related Party Register”). The entries in the Register
(or, in the case of a Related Lender Assignment, the Related Party Register)
shall be conclusive and binding for all purposes, absent manifest error. The
Borrower, the Agent and the Lenders shall treat each Person whose name is
recorded in the Register (and any Lender that makes a Related Lender Assignment
shall treat each Person whose name is recorded in the Related Party Register) as
a Lender hereunder for all purposes of this Agreement, including, without
limitation, the right to receive payments of principal and interest hereunder.
The Register and the Related Party Register shall be available for inspection by
the Borrower at any reasonable time and from time to time upon reasonable prior
notice. A Registered Loan may be assigned or sold in whole or in part only by
registration of such assignment or sale on the Register or the Related Party
Register. Any assignment or sale of all or

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part of such Registered Loan may be effected only by registration of such
assignment or sale on the Register or the Related Party Register. Within thirty
(30) days (five (5) Business Days in the event of a Related Lender Assignment)
after its receipt of a completed Assignment and Acceptance executed by an
assigning Lender and an assignee, and the Assignment Fee if required by the
provisions of this Section 6.6, the Agent shall record the information contained
therein in the Register.
     (d) Each Lender may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Agreement and the other Loan Documents (including, without limitation, all or a
portion of its Commitments, the Loans made by it); provided, that (i) such
Lender’s obligations under this Agreement (including without limitation, its
Commitments hereunder) and the other Loan Documents shall remain unchanged;
(ii) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, and the Borrower, the Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement and
the other Loan Documents; and (iii) a participant shall not be entitled to
require such Lender to take or omit to take any action hereunder except that a
participant that is an Affiliate or Approved Fund of the participating Lender
may require such Lender to obtain such participant’s approval before such
participating Lender approves any (A) action directly effecting an extension of
the maturity dates or decrease in the principal amount of the Loans, (B) action
directly effecting an extension of the due dates or a decrease in the rate of
interest payable on the Loans or the fees payable under this Agreement, or
(C) actions directly effecting a release of all or a substantial portion of the
collateral or any Loan Party (except as set forth in this Agreement or any other
Loan Document). The Loan Parties agree that any participant that is an Affiliate
or Approved Fund of the participating Lender (but not other participants) shall
be entitled to the benefits of Section 1.5(a) of this Agreement with respect to
its participation in any portion of the Commitments and the Loans as if it was a
Lender.
     (e) In the event that any Lender sells participations in a Registered Loan,
such Lender shall maintain a register on which it enters the name of all
participants in the Registered Loans held by it and the principal amount (and
stated interest thereon) of the portion of the Registered Loan which is the
subject of the participation (the “Participant Register”). A Registered Loan may
be participated in whole or in part only by registration of such participation
on the Participant Register (and each registered note shall expressly so
provide). Any participation of such Registered Loan may be effected only by the
registration of such participation on the Participant Register. The Participant
Register shall be available for inspection by the Borrower at any reasonable
time and from time to time upon reasonable prior notice. Further, any Lender
shall have the right, without notice or the payment of an Assignment Fee, to
encumber or hypothecate its interest to any funding source or participant
(collectively, for purposes of this paragraph, a “Funding Source”) as long as
such Funding Source maintains a “blind” status and such Lender continues to act
in its capacity as a Lender hereunder notwithstanding the Funding Source.
     (f) Except to the extent set forth in Section 6.5(d) above, neither any
participant of a Registered Loan nor any Funding Source shall be entitled to the
benefits, or subject to the requirements and obligations, of this Agreement, and
the Borrower and the Agent may continue to deal solely and directly with the
participating, encumbering or hypothecating Lender.
     Section 6.7 Costs, Expenses and Taxes. The Borrower agrees to pay on demand
all reasonable fees, costs and expenses in connection (i) with the preparation,
execution, delivery, administration, amendment and enforcement of this
Agreement, the Note, the other Loan Documents and

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any other documents to be delivered hereunder and thereunder (including, without
limitation, the appraisal and inspection reports required hereunder) and any
amendment, modification or supplement hereto or thereto, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Lenders and the Agent, and any special counsel associated with them, and with
respect thereto and the filing of any document or instrument in connection with
any of the foregoing, (ii) with respect to reasonable fees and out of pocket
expenses of counsel for advising the Lenders and the Agent as to their rights
and responsibilities under this Agreement and the transactions contemplated
thereby after an Event of Default or an event which, with the giving of notice
or lapse of time, or both, shall have occurred, and (iii) with any filing or
recording of any document or instrument. In addition, the Borrower shall jointly
and severally pay any and all stamp and other taxes (including, without
limitation penalties and interest assessed thereon) other than Excluded Income
Taxes payable or determined to be payable in connection with the execution,
delivery or performance of this Agreement and the Loan Documents and any other
documents to be delivered hereunder and thereunder and agrees to save the Agent
and Lenders harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes. The Borrower
has delivered to the Agent a deposit in the amount of USD 100,000.00, to be
applied against costs and expenses described in this Section.
     Section 6.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument.
     Section 6.9 Section Headings. The headings of the various Sections and
subsections of this Agreement are for convenience of reference only and shall
not define or limit any of the terms or provisions hereof.
     Section 6.10 Merger. THIS AGREEMENT AND THE LOAN DOCUMENTS EMBODY THE
ENTIRE AGREEMENT AMONG THE BORROWER, THE AGENT, THE LENDERS AND THE GUARANTORS
AND SUPERSEDE ALL PRIOR AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, IF ANY,
RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF.
     Section 6.11 Customer Identification – USA Patriot Act Notice; OFAC and
Bank Secrecy Act. The Agent, on behalf of each of the Lenders, hereby notifies
the Borrower and each of the Guarantors that pursuant to the requirements of
Anti-Terrorism Laws, and the policies and the practices of the Lenders, each
Lender is required to obtain, verify and record certain information and
documentation that identifies Borrower and each Guarantor, which information
includes the names and address of Borrower and each Guarantor and such other
information that will allow the Lenders to identify such parties in accordance
with Anti-Terrorism Laws. In addition, the Borrower and each Guarantor shall:
(a) ensure that no Person who owns a controlling interest in or otherwise
controls Borrower or any Guarantor, or any of their respective Subsidiaries, is
or shall be listed on the Specially Designated Nationals and Blocked Person List
or other similar lists maintained by the Office of Foreign Assets Control
(“OFAC”), the Department of the Treasury or included in any Executive Orders,
(b) not use or permit the use of the proceeds of the Loan to violate any of the
Foreign Asset Control Regulations of OFAC or any enabling statute or Executive
Order relating thereto, and (c) comply, and cause all of its Subsidiaries to
comply with all applicable Bank Secrecy Act laws and regulations, as amended.

42

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

                          HORIZON VESSELS, INC.        
 
                   
 
  By:       /s/ David W. Sharp                       
 
      Name:   David W. Sharp                          
 
      Title:   President and CEO                          

[SIGNATURE PAGE TO HORIZON VESSELS, INC. LOAN AGREEMENT]

 

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

                          THE CIT GROUP/EQUIPMENT FINANCING, INC.    
 
                   
 
  By:   /s/ Don A. Luttenegger                       
 
      Name:   Don A. Luttenegger                          
 
      Title:   VP—Special Funding                          

[SIGNATURE PAGE TO HORIZON VESSELS, INC. LOAN AGREEMENT]

 

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

                          MERRILL LYNCH CAPITAL, a Division of Merrill        
Lynch Business Financial Services Inc.    
 
                   
 
  By:   /s/ Richard Pondel                       
 
      Name:   Richard Pondel                           
 
      Title:   Vice President                           

[SIGNATURE PAGE TO HORIZON VESSELS, INC. LOAN AGREEMENT]

 

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

                          ABLECO FINANCE LLC        
 
                   
 
  By:   /s/ Kevin Genda                       
 
      Name:   Kevin Genda                          
 
      Title:   Senior Vice President                          

[SIGNATURE PAGE TO HORIZON VESSELS, INC. LOAN AGREEMENT]

 

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

                              A3 FUNDING LP        
 
                            By:   A3 Fund Management LLC, its general partner  
 
 
                       
 
                       
 
      By:   /s/ Kevin Genda                           
 
          Name:   Kevin Genda                              
 
          Title:   Vice President                              

[SIGNATURE PAGE TO HORIZON VESSELS, INC. LOAN AGREEMENT]

 

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

                      AIG COMMERCIAL EQUIPMENT FINANCE, INC.
 
               
 
  By:   /s/ James R. Bates                       
 
      Name:   James R. Bates                         
 
      Title:   Vice President - Credit     
 
         
 
   

[SIGNATURE PAGE TO HORIZON VESSELS, INC. LOAN AGREEMENT]

 

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

                      GATX FINANCIAL CORPORATION    
 
               
 
  By:   /s/ Curt F. Glenn                      
 
      Name:   Curt F. Glenn                         
 
      Title:   EVP     
 
         
 
   

[SIGNATURE PAGE TO HORIZON VESSELS, INC. LOAN AGREEMENT]

 

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

                      THE CIT GROUP/EQUIPMENT FINANCING, INC., As Agent    
 
               
 
  By:   /s/ Don A. Luttenegger                       
 
      Name:   Don A. Luttenegger                         
 
      Title:   VP - Special Funding     
 
         
 
   

[SIGNATURE PAGE TO HORIZON VESSELS, INC. LOAN AGREEMENT]
Schedules and Exhibits have been intentionally omitted, and will be made
available to the Securities and Exchange Commission upon request.