exv10w3



 






Exhibit 10.3





AMENDMENT NO. 11

TO LOAN AGREEMENT




     AMENDMENT NO. 11 (“Amendment No. 11”, and together with the documents listed in Section 10
hereof, the “2005 Amendment Documents”) dated as of March 31, 2005 (the “2005 Amendment Date”) to
the Loan Agreement dated as of December 30, 1998, as amended (the “Loan Agreement”), among HORIZON
VESSELS, INC., a Delaware corporation, HORIZON OFFSHORE CONTRACTORS, INC., a Delaware corporation
(together, the “Borrowers”), HORIZON OFFSHORE, INC., a Delaware corporation (the “Parent
Guarantor”), THE CIT GROUP/EQUIPMENT FINANCING, INC., a New York corporation (“CIT”), HELLER
FINANCIAL LEASING, INC., a Delaware corporation, U.S. BANCORP EQUIPMENT FINANCE, INC., an Oregon
corporation, SAFECO CREDIT COMPANY, INC., a Washington corporation, TRANSAMERICA EQUIPMENT
FINANCIAL SERVICE CORPORATION, a Delaware corporation, PHOENIXCOR, INC., a Delaware corporation,
and LASALLE NATIONAL LEASING CORPORATION, an Oregon corporation (collectively, the “Lenders”) and
CIT as Agent for the Lenders (the “Agent”).



W I T N E S S E T H:




     WHEREAS, pursuant to the Loan Agreement, the Lenders made available to the Borrowers a loan
facility of up to USD 91,397,845.00; and



     WHEREAS, the parties wish to amend the Loan Agreement to amend certain covenants thereof.



     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.  	The Definitions of the Loan Agreement are hereby amended as follows:






	 	(a)  	The definition of “Intercreditor Agreement” is hereby amended
to read as follows:
	 
	 	   	“Intercreditor Agreement” means the Intercreditor Agreement dated the 2005
Amendment Date between the Agent and Manchester Securities Corp. in form and
substance satisfactory to the Agent, as amended, from time to time.
	 
	 	(b)  	The definition of “Maturity Date” is hereby amended to read as
follows:
	 
	 	   	“Maturity Date” means March 31, 2006.
	 
	 	(c)  	“Mortgages” means the United States First Preferred Fleet
Mortgage and Preferred Fleet Mortgage on the U.S. flag Vessels, the Vanuatu
First Preferred Fleet Mortgage and Preferred Fleet Mortgage on the Vanuatu




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	 	   	flag Vessels and the Bahamian Statutory Mortgages and collateral Deeds of
Covenant concerning the Bahamas flag Vessel.
	 
	 	(d)  	The definition of “Note” is hereby amended to read as follows:
	 
	 	   	“Note” means the amended and restated promissory note of the Borrowers in
favor of the Agent, substantially in the form of Exhibit A attached to
Amendment No. 11 and made a part thereof.
	 
	 	(e)  	The definition of “Tangible Net Worth” is hereby amended to
read as follows:
	 
	 	   	“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 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 therefrom (a) any amount at which shares of
capital stock of the Parent or any subsidiary appear as an asset on the
Parent’s or such subsidiary’s balance sheet, (b) goodwill, including any
amount, however designated, that represent the excess of 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 or any subsidiary
or any affiliate, and (e) all other assets which are properly classified as
intangible assets; provided further that non-cash losses due to asset
impairment may be added back to the calculation of Tangible Net Worth.
	 
	 	(f)  	The definition of “Vessels” is hereby amended to read as
follows:
	 
	 	   	“Vessels” means the five (5) U.S. flag vessels, the five (5) Vanuatu flag
vessels and the one (1) Bahamas flag Vessel listed on Schedule 1 attached
hereto.
	 
	 	(g)  	A definition of “2005 Manchester Loans” is hereby added to the
Loan Agreement and reads as follows:
	 
	 	   	“2005 Manchester Loans” means the USD 30,000,000.00 Term Loan A and the USD
40,000,000.00 Term Loan B to be provided to the Parent Guarantor and its
Subsidiaries by Manchester Securities Corp.






	2.  	Section 1.3(a) of the Loan Agreement is hereby amended to read as follows:






“(a) Commencing on April 10, 2005, the Borrowers shall jointly and severally repay
the principal amount of the Loan outstanding on that date in twelve (12) consecutive
monthly installments of USD 500,000.00 each, and a final installment
of the remaining principal balance on the Maturity Date, with each such



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installment
to be paid by the Borrowers to the Agent on the same day of each month thereafter
and ending on the Maturity Date (each such date a “Payment Date”); provided,
however, that the final installment shall include an amount sufficient to discharge
the accrued and unpaid interest and principal in respect of the Note.”




	3.  	Section 1.6(a)(i) of the Loan Agreement is hereby amended by adding the following new
subparagraph:






“(4) Notwithstanding anything else contained in this Agreement to the contrary, (a)
in accordance with the Assignment of Insurances, the insurance proceeds arising from
the damage incurred by the GULF HORIZON on May 18, 2004 as a result of a fire on
board such Vessel (the “Gulf Claim”), shall be paid to the Agent and shall be used
to prepay amounts due under this Agreement in accordance with Section 1.6(a)(i)(3)
above (provided that if the Borrowers shall receive any such proceeds, they shall be
paid over to the Agent immediately), and (b) the Borrowers shall not settle or
compromise the Gulf Claim for an amount less than USD 12,000,000 without the prior
written consent of the Agent.”




	4.  	Section 1.4(b)(ii) of the Loan Agreement is hereby amended to read as follows:






“(ii) certified by the Lender to be the LIBOR Rate, plus six percent (6%) or”




	5.  	Section 1.6(b)(ii) of the Loan Agreement is hereby amended by adding the following
additional sentence at the end:






“For purposes of determining Collateral Value and the ratio of Collateral Value to
the outstanding principal amount of the Loan referred to above, (i) only the value
of those Vessels encumbered by first priority mortgages in favor of the Agent shall
be considered and (ii) the amount of USD 2,000,000 will be allocated to the value of
the GULF HORIZON and its proceeds.”




	6.  	In connection with the determination of Collateral Value provided for in Section
1.6(a)(ii) of the Loan Agreement, the Borrowers agree that they will have all the Vessels
appraised by Marcon, Inc. at the Borrowers’ expense, the final report thereof to be delivered
to the Agent not later than September 15, 2005.






	7.  	Section 3.3(z) of the Loan Agreement is amended by adding thereto the following:






“... provided that (i) the DSND STEPHANITURM may remain at its current location in the United
Kingdom, and (ii) the CANYON HORIZON may remain at its current location in Cyprus, provided
further that the CANYON HORIZON may be moved to Israel for builder’s risk repairs for June
2005 and July 2005, if it is then promptly returned to its location in Cyprus, or other
jurisdiction to which the Agent consents in writing; and provided further that the Borrowers
shall obtain all necessary endorsements to the War Risk policies with respect to the
transfer of the CANYON HORIZON to Israel so as to maintain war risk coverage at all times.”



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	8.  	Conditions Precedent.






	 	8.1  	Documents Required as Conditions Precedent to Amendment No. 11. The
effectiveness of the modifications to the Loan Agreement contemplated by this Amendment
No. 11 is subject to the condition precedent that the Agent shall have received at or
prior to the 2005 Amendment Date all of the following, each dated on or before the 2005
Amendment Date and each in form and substance satisfactory to the Agent and its
counsel:






	 	(a)  	Each of the following documents and other items shall have been
duly authorized and executed with original counterparts thereof delivered to
the Agent:






	 	(i)  	This Amendment No. 11, the Note, the Mortgages, the Second
Priority Security Agreement, Second Assignment of Charter Hire and
Earnings, Second Assignment of Insurances, and the Intercreditor
Agreement.
	 
	 	(ii)  	Evidence sufficient to the Agent that the Borrowers and the
Parent Guarantor have received proceeds from the 2005 Manchester Loans
of no less than USD 70,000,000 (less the amount of any indebtedness
under the 2001 Loan Agreement referred to below purchased by Manchester
and thereupon converted into (and deemed made as) a portion of the 2005
Manchester Loans).
	 
	 	(iii)  	Copies of all relevant documentation respecting the issuance
of the 2005 Manchester Loans, including without limitation any loan
agreements, mortgages, guaranties, security agreements and notes.
	 
	 	(iv)  	The Borrowers and the Guarantors shall have delivered to the
Agent 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 Amendment No. 11.
	 
	 	(v)  	The Agent shall have received an opinion from Jones, Walker,
Waechter, Poitevent, Carrere & Denegre, L.L.P, counsel to the Borrowers
and the Guarantors, in form and substance satisfactory to the Agent.
	 
	 	(vi)  	The representations and warranties contained in Section 8 of
this Amendment No. 11 and in Section 3.1 of the Loan Agreement shall be
true on the 2005 Amendment 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 of the Loan Agreement
and no event which, with the lapse of time or the notice and lapse of
time specified in Article IV hereof, would




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	 	   	become such an Event of Default, shall have occurred and be
continuing, unless specifically waived in writing by the Agent.
	 
	 	(vii)  	The Borrowers shall have provided evidence of insurance
maintained by the Borrowers or the Guarantors on the Vessels required
by Article I, Section 15 of the U.S. and Vanuatu Mortgages and Part III
Section 5 of the Bahamas Deed of Covenants and Article 5 of the
Security Agreement accompanied by a report of the Borrowers’ insurance
broker that such insurance complies with the terms of the Mortgages and
the Security Agreement.
	 
	 	(viii)  	The Mortgages shall have been duly executed and delivered
and all actions necessary to perfect or to continue such perfection,
respectively, the security interests created by the Mortgages shall
have been taken.
	 
	 	(ix)  	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 Borrowers and the Guarantors of the Loan Documents
to which they are parties or (ii) prevent the execution, delivery and
performance by the Borrowers 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 Borrowers 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 any of the Borrowers or the Guarantors is a
party (other than the Mortgages, or the Security Agreement) or to the
Borrowers’ knowledge after due inquiry by which the Borrowers or the
Guarantors or their property may be bound or affected, or under the
Certificates of Incorporation or By-Laws of the Borrowers or the
Guarantors, shall have been obtained or made.
	 
	 	(x)  	Confirmation of class certificates for the Vessels from the
American Bureau of Shipping or Lloyds Register of Shipping,
respectively, showing such Vessels to be in the highest class with such
classification society for similar type of vessels, without




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	 	   	recommendations affecting class, dated within ten (10) days of the
Closing Date.
	 
	 	(xi)  	The Borrowers shall provide to the Agent a report as to (x)
the location of each Vessel, (y) whether it is working or laid-up and,
(z) if laid-up, the maintenance program in place for such Vessel or
Vessels.
	 
	 	(xii)  	Ratifications of Guaranty executed by each of the
Guarantors.
	 
	 	(xiii)  	Such further documents as the Agent may reasonably request.






	 	(b)  	The Borrowers shall have fully repaid all amounts outstanding
under the Loan Agreement dated as of May 1, 2001 among the Borrowers, the
Parent Guarantor and CIT (“2001 Loan Agreement”).
	 
	 	(c)  	The Borrowers shall have paid the amendment fee to the Agent
referred to in Section 10(a)(i) below.
	 
	 	(d)  	The Borrower shall have made a prepayment of the principal
amounts outstanding under the Loan on the 2005 Amendment Date of not less than
USD 2,000,000.00.






	 	8.2  	Waiver of Conditions. All of the conditions contained in this Section
8 are for the sole benefit of the Agent and the Lenders and the Agent may waive any of
them in its absolute discretion, and on such conditions as it deems proper.






	9.  	Representations of the Borrowers and Guarantors. The Borrowers and the
Guarantors represent and warrant that:






	 	(a)  	Each of the Borrowers and the Guarantors 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; and (ii) to enter into and perform its
obligations under the 2005 Amendment Documents.
	 
	 	(b)  	The execution, delivery and performance by each of the
Borrowers and the Guarantors of the 2005 Amendment Documents and any other
instrument or agreement provided for by this Amendment No. 11 to which it is a
party, 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 or constitute (with or without notice
or lapse of time or both) a default under, or result (except as contemplated by
this Amendment No. 11) in the creation of any security interests, lien, charge
or encumbrance upon any of its properties or assets pursuant to, any agreement,
indenture or other instrument to




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	 	   	which it is a party or by which it may be bound other than is in favor of
the Agent; the 2005 Amendment Documents have been duly executed and
delivered by the Borrowers and the Guarantors and constitute the respective
legal, valid and binding agreements, enforceable in accordance with the
respective terms thereof as to which each of the Borrowers and the
Guarantors is a party. The enforceability of this Amendment No. 11,
however, is subject to all applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws affecting the rights or creditors
and to general equity principles.
	 
	 	(c)  	Except as set forth in the Loan Agreement, there are no suits
or proceedings pending or to its knowledge threatened against or affecting any
Borrower or any Guarantor which if adversely determined would have a material
adverse effect upon its business, financial condition or operations.
	 
	 	(d)  	Other than such as have been obtained, no license, consent or
approval of any Governmental Agency or other regulatory authority is required
for the execution, delivery or performance of this Amendment No. 11 or any
other Amendment Document or any instrument contemplated herein or therein. The
Borrowers are the holder of all certificates and authorizations of governmental
authorities required by law to enable it to engage in the business transacted
by them.






	10.  	Fees and Expenses.






	 	(a)  	The Borrowers shall pay to the Agent for ratable distribution
to the Lenders an amendment fee as follows:






	 	(i)  	On the 2005 Amendment Date, 3/4% of the outstanding principal of
the Loan on such date; and
	 
	 	(ii)  	On the Maturity Date, 3/4% of the outstanding principal of the
Loan on the 2005 Amendment Date.






	 	(b)  	The Borrowers and the Guarantors agree to promptly, whether or
not the modifications to the Loan Agreement contemplated by this Amendment No.
11 become effective, (x) reimburse the Agent for all fees and disbursements of
external counsel to the Agent and all reasonable out of pocket fees and
disbursements of the Agent incurred in connection with the preparation,
execution and delivery of this Amendment No. 11 and all other documents
referred to herein, and all amendments or waivers to or termination of this
Amendment No. 11 or any agreement referred to herein; and (y) reimburse the
Agent for all fees and disbursements of internal and external counsel to the
Agent and all reasonable out of pocket fees, disbursements and travel-related
expenses of the Agent incurred in connection with the protection of the rights
of the Agent under this




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	 	   	Amendment No. 11 and all other documents referred to herein, whether by
judicial proceedings or otherwise.
	 
	 	(c)  	The obligations of the Borrowers and the Guarantors under this
Section 10 are joint and several and shall survive payment of the Loan.






	11.  	Waiver and Amendment.






	 	(a)  	The Lenders hereby consent to the making of the 2005 Manchester
Loans, the incurrence by the Borrowers and the Parent Guarantor of the
indebtedness evidenced thereby, the guaranties by the Subsidiaries of the
Parent Guarantor guaranteeing the 2005 Manchester Loans of the indebtedness
evidenced thereby, and the grant of liens by Parent Guarantor and its
Subsidiaries securing the 2005 Manchester Loans, as set forth in the
documentation therefor as of the date of this Amendment No. 11. This provision
shall not be construed as a waiver of any other provision of the Loan
Agreement, nor shall this provision be construed as precedent for any future
request by the Borrowers or any Guarantor for a waiver of any provision of the
Loan Agreement.
	 
	 	(b)  	Wherever and in each such place the term “Loan Agreement” is
used throughout the Loan Agreement, such term shall be read to mean the Loan
Agreement as amended by this Amendment No. 11.
	 
	 	(c)  	Except as specifically amended by this Amendment No. 11, all of
the terms and provisions of the Loan Agreement shall remain in full force and
effect.






	12.  	Capitalized Terms. All capitalized terms used herein but not defined herein
shall have the meanings given to them in the Loan Agreement.






	13.  	GOVERNING LAW. THIS AMENDMENT NO. 11 TO LOAN AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.




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     IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment No. 11 to Loan
Agreement on the date first written above.



	 	 	 	 	 
	 	 	BORROWERS:
	 
	 	 	 	 
	 	 	HORIZON OFFSHORE CONTRACTORS, INC.
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Name:	 	 
	

	 	 	 	

	

	 	Tile:	 	 
	

	 	 	 	

	 
	 	 	 	 
	 	 	HORIZON VESSELS, INC.
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Name:	 	 
	

	 	 	 	

	

	 	Title:	 	 
	

	 	 	 	

	 
	 	 	 	 
	 	 	GUARANTORS:
	 
	 	 	 	 
	 	 	HORIZON OFFSHORE, INC.
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Name:	 	 
	

	 	 	 	

	

	 	Title:	 	 
	

	 	 	 	

	 
	 	 	 	 
	 	 	HORIZON SUBSEA SERVICES, INC.
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Name:	 	 
	

	 	 	 	

	

	 	Title:	 	 
	

	 	 	 	







9









 






	 	 	 	 	 
	 	 	AFFILIATED MARINE CONTRACTORS, INC.
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Name:	 	 
	

	 	 	 	

	

	 	Title:	 	 
	

	 	 	 	

	 
	 	 	 	 
	 	 	PROGRESSIVE PIPELINE CONTRACTORS, INC.
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Name:	 	 
	

	 	 	 	

	

	 	Title:	 	 
	

	 	 	 	

	 
	 	 	 	 
	 	 	TEXAS OFFSHORE CONTRACTORS CORP.
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Name:	 	 
	

	 	 	 	

	

	 	Title:	 	 
	

	 	 	 	







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	 	 	LENDERS:
	 
	 	 	 	 
	 	 	THE CIT GROUP/EQUIPMENT FINANCING, INC., SAFECO
CREDIT COMPANY, INC., U.S. BANCORP EQUIPMENT FINANCE,
INC., HELLER FINANCIAL LEASING, INC., TRANSAMERICA
EQUIPMENT FINANCIAL SERVICE CORPORATION, PHOENIXCOR,
INC., LASALLE NATIONAL LEASING CORPORATION,
	 
	 	 	 	 
	

	 	By:
	 	THE CIT GROUP/EQUIPMENT FINANCING, INC., as Agent
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Name:	 	 
	

	 	 	 	

	

	 	Title:	 	 
	

	 	 	 	

	 
	 	 	 	 
	 	 	THE CIT GROUP/EQUIPMENT FINANCING, INC., as Agent
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Name:	 	 
	

	 	 	 	

	

	 	Title:	 	 
	

	 	 	 	








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Exhibit a to amendment no. 11




SCHEDULE 1 TO AMENDMENT NO. 11




Vessels




	 	 	 	 	 	 	 	 	 
	Name	 	Flag	 	Official No.	 	First or Second Mortgage
	1. Cajun Horizon

	 	U.S.
	 	620491	 	 	First
	2. American Horizon

	 	U.S.
	 	294383	 	 	First
	3. Gulf Horizon

	 	U.S.
	 	514595	 	 	First
	4. Atlantic Horizon

	 	U.S.
	 	652734	 	 	Second
	5. Pacific Horizon

	 	U.S.
	 	537871	 	 	Second
	6. Canyon Horizon

	 	Vanuatu
	 	1093	 	 	First
	7. Pearl Horizon

	 	Vanuatu
	 	1156	 	 	First
	8. Phoenix Horizon

	 	Vanuatu
	 	1037	 	 	Second
	9. Lone Star Horizon

	 	Vanuatu
	 	1157	 	 	Second
	10. Brazos Horizon

	 	Vanuatu
	 	1194	 	 	Second
	11. DSND Stephaniturm

	 	Bahamas
	 	725330	 	 	First