Exhibit 10.2

AMENDMENT NO. 1 TO LOAN AGREEMENT

          This AMENDMENT NO. 1 (“Amendment No, 1”) to the Loan Agreement dated
June 4, 2003, between HORIZON VESSELS, INC., a Delaware corporation,
(“Borrower”) and ELLIOTT ASSOCIATES, L,P., a Delaware limited partnership
(“Lender”), (the “Loan Agreement”) is dated as of June 30,2003.

               WHEREAS, pursuant to the Loan Agreement, the Leader has made
available to the Borrower a loan facility of up to USD 15,000,000.00 (the
“Loan”), and

               WHEREAS, the Borrower and the Lender wish to amend the Loan
Agreement as herein provided.

          NOW THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree to amend the Loan Agreement as follows:

          1.0    Section 1.1    Definitions shall be amended by adding the
following:

          “Fixed Charge Coverage Ratio” means the sum of the Guarantor’s
earnings on a consolidated basis before interest, taxes, depreciation and
amortization less the the greater of the Guarantor’s actual consolidated capital
expenditures or USD 10,000,000.00 on an annualized basis divided by the sum of
the Guarantor’s consolidated (i) cash interest expenses and (ii) the current
portion of long term debt and capitalized lease expenses. For purposes of this
definition, the current portion of long term debt and capitalized leases will be
determined as of the last day of the calculation period. The Fixed Charge
Coverage Ratio will be calculated at the end of each of the Guarantor’s fiscal
quarters using the results of that quarter and each of the three immediately
preceding quarters.

          2.0    Section 2.1    Commitment to Make Loan is hereby amended to add
the following at the end thereof:

          As consideration for Lender agreeing to this Amendment No. 1 to Loan
Agreement, Borrower agrees to pay Lender a commitment fee of S150,000 on or
before July 15, 2003.

          3.0    Section 2.3    Interest Rates shall be deleted in its entirety
and replaced by the following:

The Term Note shall bear interest at the fixed rate of twelve percent (12%) per
annum (but in no event to exceed the maximum rate permitted by law) (the
“Interest Rate”), except that in the event Borrower does not (i) procure
cancellation of the preferred ship mortgage on the Vessel in favor of General
Electric Capital Corporation on or before August 15, 2003, (ii) procure the
cancellation of the first and second Deed of Trust in favor of SouthTrust Bank
on the property located at 8200 Yacht Club Road, Port Arthur Texas on or before
October 1, 2003, and (iii) pay the Overadvance of $5,000,000 from CIT
Group/Equipment Financing, Inc. (“CIT”) pursuant to

 

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

 

the Credit Agreement among the Borrower, certain guarantors and CIT dated May
10, 2001, on or before July 30, 2003, the Interest Rate shall be increased to
the lesser of eighteen percent (18%) per annum or the highest lawful rate
permitted by applicable law the “Maximum Rate”. Any overdue principal of and, to
the extent permitted by law, overdue interest on the Term Note shall bear
interest, payable on demand, for each day until paid at a rate per annum (the
“Default Rate”) equal to the lesser of (a) three percent (3%) above the Interest
Rate or (b) the maximum rale permitted by applicable law. In the event the
Maximum Rate becomes applicable under clauses (i) or (ii) above, the Maximum
Rate shall remain in effect until Borrower complies with requirements of clauses
(i) and (ii) at which time the Interest Rate shall return to twelve percent
(12%) per annum. In the event the Maximum Rate becomes applicable under clause
(iii) above, the Maximum Rate shall remain applicable for the entire term of the
Agreement.

          4.0    Section 2.4    Payment. Shall be deleted in its entirety and
replaced by the following:

The balance of the Term Note plus accrued interest shall be payable on or before
June 30, 2004, or such earlier time as provided below and Borrower shall pay
interest monthly on the 4th day of each and every month until the Term Note is
paid. In the event Borrower is unable to pay the balance of the Term Note, plus
accrued interest, on or before June 30, 2004 as a result of fixed Charge
Coverage Ratio being less than 1.1 to 1.0 based on the aggregate result of any
four consecutive quarters, Lender shall have the irrevocable option from such
time to convert up to $5,000,000 of the loan into freely tradable unledgeded
common stock of Horizon Offshore, Inc. at a conversion price which is the
greater of 100% of the volume weighted average price of Horizon Offshore, Inc.
(“Horizon”) common stock for the 30 trading days preceding the receipt by
Horizon of a conversion notice from the Lender or $3.50 per share. For the
avoidance of doubt, the lender will have the right to convert up to $5,000,000
of the loan from July 1, 2004 in the event that the above test is not met. The
lender will have the right to convert minimum tranches of $250,000 at any one
time. Horizon shall deliver freely tradable unledgeded stock within 2 business
days of receiving a conversion notice. In the event that Horizon does not
deliver such stock, the Term Note shall immediately be due and payable.

In the event the Fixed Charge Coverage Ratio test is less that 1.1 to 1 based on
the aggregate result of any four consecutive quarters on June 30, 2004, and the
Borrower has been unable to pay the balance of the term note prior to that time,
then the balance of the loan then outstanding shall mature 3 months from such
time and shall continue to roll 3 months forward until the Fixed Charge Coverage
Ratio test is greater than 1.1 to 1 based on the aggregate result of any four
consecutive quarters.

          5.0    Section 2.8    Prepayment shall be amended by deleting the
first sentence and by inserting the following:

          In the event that Borrower or any of the Guarantors or any of their
affiliates or subsidiaries receives a payment from Petroleos de Mexico pursuant
to the EPC 64 contract of at least $40,000,000, Borrower shall make a mandatory
prepayment of the Term Loan of $5,000,000.

 

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

 

          Borrower shall make a mandatory prepayment of the outstanding loan
balance when the Horizon Offshore, Inc.’s Fixed Charge Coverage Ratio is greater
than 1.1 to 1.0 based on the aggregate result of any four consecutive quarters.

          In the event Horizon Offshore, Inc. is in receipt of proceeds from the
sale of new common equity or convertible securities the Borrower shall make a
mandatory prepayment of an amount equal to the lesser of the entire amount of
such proceeds or the then outstanding loan balance.

          6.0    Section 7.01    Events of Default is hereby amended by deleting
sub-section (xi) and substituting in lieu thereof the following:

          (xi) the occurrence of a default under any of the Collateral Documents
or under any contract or agreement for the borrowing of money in which the
Borrower or any of the Guarantors is a party.

          7.0    Except as specifically amended by this Amendment No. 1, all of
the terms and provisions of the Loan Agreement shall remain in full force and
effect.

          8.0    All capitalized terms used herein but not defined herein shall
have the meanings given to them in the Loan Agreement

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

              HORIZON VESSELS, INC.                   By: [ILLEGIBLE]          

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

      Title: [ILLEGIBLE]                             ELLIOTT ASSOCIATES L.P.    
              By: [ILLEGIBLE]          

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

      Title:  Senior Portfolio Manager