**Exhibit 10.2**
**AMENDMENT NO. 1 TO LOAN AGREEMENT**
          This AMENDMENT NO. 1 (“Amendment No, 1”) to the Loan Agreement dated June4, 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 tothe 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 asherein provided.
          NOW THEREFORE, in consideration of the above recitals and for other goodand valuable consideration, the receipt and sufficiency of which is herebyacknowledged, the parties agree to amend the Loan Agreement asfollows:
          1.0    Section 1.1    Definitions shall be amended by adding thefollowing:
          “Fixed Charge Coverage Ratio” means the sum of the Guarantor’s earningson a consolidated basis before interest, taxes, depreciation and amortizationless the the greater of the Guarantor’s actual consolidated capitalexpenditures or USD 10,000,000.00 on an annualized basis divided by the sum ofthe Guarantor’s consolidated (i) cash interest expenses and (ii) the currentportion of long term debt and capitalized lease expenses. For purposes of thisdefinition, the current portion of long term debt and capitalized leases willbe determined as of the last day of the calculation period. The Fixed ChargeCoverage Ratio will be calculated at the end of each of the Guarantor’s fiscalquarters using the results of that quarter and each of the three immediatelypreceding quarters.
          2.0    Section 2.1    Commitment to Make Loan is hereby amended to add thefollowing at the end thereof:
          As consideration for Lender agreeing to this Amendment No. 1 to LoanAgreement, Borrower agrees to pay Lender a commitment fee of S150,000 on orbefore July 15, 2003.
          3.0    Section 2.3    Interest Rates shall be deleted in its entirety andreplaced by the following:
The Term Note shall bear interest at the fixed rate of twelve percent (12%) perannum (but in no event to exceed the maximum rate permitted by law) (the“Interest Rate”), except that in the event Borrower doesnot (i) procurecancellation of the preferred ship mortgage on the Vessel in favor of GeneralElectric Capital Corporation on or before August 15, 2003, (ii) procure thecancellation of the first and second Deed of Trust in favor ofSouthTrust Bankon the property located at 8200 Yacht Club Road, Port Arthur Texas on or beforeOctober 1, 2003, and (iii) pay the Overadvance of $5,000,000from CITGroup/Equipment Financing, Inc. (“CIT”) pursuant to
 

 

the Credit Agreement among the Borrower, certain guarantors and CIT dated May10, 2001, on or before July 30, 2003, the Interest Rate shall be increased tothe lesser of eighteen percent (18%) per annum or the highest lawful ratepermitted by applicable law the “Maximum Rate”. Any overdue principal of and,to the extent permitted by law, overdue interest on the Term Note shall bearinterest, payable on demand, for each day until paid at a rate perannum (the “Default Rate”) equal to the lesser of(a) three percent *(3%)*above theInterest Rate or (b) the maximum rale permitted by applicable law. In theevent the Maximum Rate becomes applicable under clauses (i) or (ii) above,the Maximum Rate shall remain in effect until Borrower complies withrequirements of clauses (i) and (ii) at which time theInterest Rate shallreturn to twelve percent (12%) per annum. In the event the Maximum Ratebecomes applicable under clause (iii) above, the Maximum Rate shall remainapplicable for the entire term of the Agreement.
          4.0    Section 2.4    Payment. Shall be deleted in its entirety andreplaced by the following:
The balance of the Term Note plus accrued interest shall be payable on orbefore June 30, 2004, or such earlier time as provided below and Borrower shallpay interest monthly on the 4th day of each and every month until the Term Noteis 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 offixed ChargeCoverage Ratio being less than 1.1 to 1.0 based on the aggregate result of anyfour consecutive quarters, Lender shall have the irrevocable option from suchtime to convert up to $5,000,000 of the loan into freely tradable unledgededcommon stock of Horizon Offshore, Inc. at a conversion price which is thegreater of 100% of the volume weighted average price of Horizon Offshore, Inc.(“Horizon”) common stock for the 30 trading days preceding the receipt byHorizon of a conversion notice from the Lender or $3.50 per share. For theavoidance of doubt, the lender will have the right to convert up to $5,000,000of the loan from July 1, 2004 in the event that the above test is notmet. Thelender will have the right to convert minimum tranches of $250,000 atany onetime. Horizon shall deliver freely tradable unledgeded stock within 2 businessdays of receiving a conversion notice. In the event that Horizon does notdeliver such stock, the Term Note shall immediately be due and payable.
In the event the Fixed Charge CoverageRatio test is less that 1.1 to 1 basedon the aggregate result of any four consecutive quarters on June 30, 2004, andthe Borrower has been unable to pay the balance of the term note prior tothat time, then the balance of the loan then outstanding shall mature 3 monthsfrom such time and shall continue to roll 3 months forward until the FixedCharge Coverage Ratio test is greater than 1.1 to 1 based on the aggregateresult of any four consecutive quarters.
          5.0    Section 2.8    Prepaymentshall be amended by deleting the firstsentence and by inserting the following:
          In the event that Borrower or any of the Guarantors or any of theiraffiliates or subsidiaries receives a payment from Petroleos de Mexicopursuant to the EPC 64 contract of at least $40,000,000, Borrower shall make amandatory prepayment of the Term Loan of $5,000,000.
 

 

          Borrower shall make a mandatory prepayment of the outstanding loanbalance when the Horizon Offshore, Inc.’s Fixed Charge Coverage Ratio isgreater than 1.1 to 1.0 based on the aggregate result of any four consecutivequarters.
          In the event Horizon Offshore, Inc. is in receipt of proceeds from thesale of new common equity or convertible securities the Borrower shall make amandatory prepayment of an amount equal to the lesser of the entire amount ofsuch proceeds or the then outstanding loan balance.
          6.0    Section 7.01    Events of Default is hereby amended by deletingsub-section (xi) and substituting in lieu thereof the following:
          (xi)the occurrence of a default under any of the Collateral Documents orunder any contract or agreement for the borrowing of money in which theBorrower or any of the Guarantors is a party.
          7.0    Exceptas specifically amended by this Amendment No. 1, all of theterms and provisions of the Loan Agreement shall remain in full force andeffect.
          8.0    All capitalized terms used herein but not defined herein shallhave the meanings given to them in the Loan Agreement
          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to beduly executed by their respective authorized officers as of the day and yearfirst above written.       HORIZON VESSELS, INC.         By: [ILLEGIBLE]        Title:  [ILLEGIBLE]              ELLIOTT ASSOCIATES L.P.         By: [ILLEGIBLE]        Title:  Senior Portfolio Manager