Document:

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EXHIBIT 10.5

SEVENTH AMENDMENT TO EXIM GUARANTEED LOAN AGREEMENT

     This SEVENTH AMENDMENT TO EXIM GUARANTEED LOAN AGREEMENT (the “Seventh
Amendment”), dated as of the 4th day of November, 2004, is made by and among
HORIZON OFFSHORE CONTRACTORS, INC. (“Contractors”), HORIZON SUBSEA SERVICES,
INC. (“Subsea”), HORIZON VESSELS, INC. (“Vessels”), and HORIZEN, L.L.C. (“LLC”,
and together with Contractors, Subsea and Vessels, the “Borrowers”), jointly
and severally, each of the financial institutions which is or may from time to
time become a party to such Agreement (as defined below) (collectively,
“Lenders,” and each a “Lender”), and SOUTHWEST BANK OF TEXAS, N.A., as agent
(in such capacity, the “Agent”).

W I T N E S S E T H:

     WHEREAS, Borrowers, Lenders and Agent are parties to that certain EXIM
Guaranteed Loan Agreement dated as of August 15, 2001 (as the same has been or
may hereafter be amended, supplemented or otherwise modified, the “Agreement”);

     WHEREAS, pursuant to the Amendment No. 1 to May Purchase Agreement
attached hereto as Exhibit B, the Borrowers propose to sell approximately
$9,625,000 aggregate principal amount of 18% Subordinated Secured Notes due
March 31, 2007, for a purchase price of approximately $7,700,000; and

     WHEREAS, Borrowers, Lenders and Agent now desire to amend the Agreement as
herein set forth.

     NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants and premises contained herein, together with other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
and subject to the conditions to effectiveness set forth in Section 7 hereof,
the parties hereto agree as follows:

     1. Terms. Capitalized terms used in this Seventh Amendment (including the
recitals hereof) shall have the meanings assigned to them in the Agreement, as
amended by this Seventh Amendment.

     2. Amendments.

     (a) Section 1.1 of the Agreement is hereby amended by adding the following
definitions thereto in the correct alphabetical order:

“Borrowing Base Eligible Receivables” means any accounts receivable of
the Borrowers and its Subsidiaries which are or previously were eligible
for inclusion in the Borrowing Base on a gross basis without giving
effect to advance rate percentages.

“Cash Interest” means, for any period, the consolidated Interest Expense
of the Parent and its Subsidiaries for such period, determined in
accordance with GAAP applied consistently, less (a) interest related to
the Subordinated Debt (which is in fact paid-in-

 

 

kind) and (b) all amounts
included in Interest Expense, in accordance with GAAP, for amortization
of debt fees, discounts and warrant expense.

“Subordinated Debt” means indebtedness of the Parent incurred pursuant to
(a) that certain Purchase Agreement dated March 11, 2004, among the
Parent, the guarantors listed therein and the purchasers listed therein,
pursuant to which those certain 16% subordinated secured notes due March
31, 2007, in an aggregated principal amount equal to $65,400,000.00 were
issued, as the same may be amended, supplemented or modified from time to
time with the consent of Majority Lenders, and (b) that certain Purchase
Agreement dated May 27, 2004, among the Parent, the guarantors listed
therein and the purchasers listed therein, pursuant to which (i) those
certain 18% subordinated secured notes due March 31, 2007, in an
aggregated principal amount equal to $18,750,000.00 were issued on May
27, 2004, (ii) those certain additional 18% subordinated secured notes
due March 31, 2007, in an aggregated principal amount equal to
$5,291,865.00 were issued on September 17, 2004 (the debt referred to in
the foregoing clauses (i) and (ii) is referred to herein as the
“Additional Sub Debt”), and (iii) those certain additional 18%
subordinated secured notes due March 31, 2007, in an aggregated principal
amount equal to $9,625,000 were issued on November 4, 2004 (the “New
Additional Subordinated Debt”), as the same may be amended, supplemented
or modified from time to time with the consent of Majority Lenders.

     (b) The following definitions set forth in Section 1.1 of the Agreement
are hereby amended and restated in their entirety as follows:

“Borrowing Base Excess” means, at any time, the amount equal to (a) the
Borrowing Base-Tested for Dominion of Funds as of such time minus (b) the
sum of (i) the outstanding Advances at such time, plus (ii) the Letter of
Credit Liabilities at such time.

“Combined Commitments” means, as to all Lenders, the obligations of
Lenders to make Advances and issue Letters of Credit in an aggregate
principal amount at any time outstanding up to and not exceeding (a)
$30,000,000 through November 29, 2004, (b) $25,000,000 on and from
November 30, 2004, through December 30, 2004, and (c) $21,000,000 on and
from December 31, 2004 and thereafter.

“EBITDA” means for Parent and its Subsidiaries, on a consolidated basis,
for any period, the sum of (a) Net Income before gains and losses on
sales of assets (to the extent such gains and losses are included in
earnings), plus (b) Tax Expense, plus (c) depreciation and amortization
(including accelerated amortization of prepaid loan fees, discounts and
warrant expense for the purpose of loss on debt extinguishment, in
accordance with GAAP), plus (d) Interest Expense.

“EBITDAR” means for Parent and its Subsidiaries, on a consolidated basis,
for any period, the sum of (a) Net Income before gains and losses on
sales of assets (to the extent such gains and losses are included in
earnings), plus (b) Tax Expense, plus (c)
depreciation and amortization (including accelerated amortization of
prepaid loan fees, discounts and warrant expense for the purpose of loss
on debt extinguishment, in accordance with GAAP), plus (d) Interest
Expense, plus (e) restructuring charges,

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including costs of professional
advisors to the Parent and its Subsidiaries (including costs of
professional advisors to the Parent’s lenders and other creditors which
are required to be paid by the Parent or its subsidiaries) not to exceed
$3,250,000 for the fiscal year ending December 31, 2004.

“Fixed Charge Coverage Ratio” means for Parent and its Subsidiaries, on a
consolidated basis, (a) as of September 30, 2004, (i) EBITDA for the
quarter ended as of September 30, 2004, divided by (ii) the sum of (A)
Current Maturities of Long Term Debt as of September 30, 2004 divided by
four, plus (B) Cash Interest for the quarter ended September 30, 2004,
plus (C) Tax Expense for the quarter ended as of September 30, 2004, and
(b) as of December 31, 2004, (i) EBITDA for the quarters ended as of
September 30, 2004 and December 31, 2004, divided by (ii) the sum of (A)
Current Maturities of Long Term Debt as of December 31, 2004 divided by
two, plus (B) Cash Interest for the quarters ended as of September 30,
2004 and December 31, 2004, plus (C) Tax Expense for the quarters ended
as of September 30, 2004 and December 31, 2004.

“Holding Lockbox” means any post office box designated in the Holding
Account Agreement or otherwise established with Agent for collection of
receivables.

“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 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 Parent or any Subsidiary appear as an asset on
Parent’s or such 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 Parent or any
Subsidiary or any Affiliate, and (e) all other assets which are properly
classified as intangible assets.

     “Total Funded Debt” means, for Parent and its Subsidiaries, on a
consolidated basis, the sum of (a) all indebtedness for borrowed money,
whether or not evidenced by notes, bonds, debentures, notes or similar
instruments, (b) all Capital Lease Obligations, (c) all obligations to
pay the deferred purchase price of property or services (but excluding
trade accounts payable or trade notes in the ordinary course of
business), (d) all indebtedness secured by a Lien on the property of
Parent or any of its Subsidiaries, and (e) all letter of credit
liabilities (including the Letter of Credit Liabilities).

     (c) Section 2.5 of the Agreement is hereby amended to require three (3)
Business Days notice before the requested date of any Advance.

     (d) Section 8.1(d) of the Agreement is hereby amended and restated in its
entirety as follows:

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“(d) letter of credit, performance and bid bonds obtained by Borrowers in
the ordinary course of their business, other than the Letters of Credit,
up to an aggregate amount of $33,545,000.00 at any time;”

     (e) Section 10.1(a) of the Agreement is hereby amended and restated to
read in its entirety as follows:

“(a) Any Borrower shall default in the payment or prepayment when due of
any principal or interest on the Obligations or any portion thereof, or
shall default in the payment or prepayment when due of any fees or other
amounts payable by any of them under this Agreement or under any other
Loan Documents and, in respect of fees or other amounts only, such
default shall continue for three (3) Business Days after such amount is
due.”

     (f) Section 10.1(r) of the Agreement is hereby amended and restated to
read in its entirety as follows:

“(r) Parent (or any Borrower or any Subsidiary) pays any principal,
interest or fees on (1) the New Subordinated Debt in cash, except for
cash payments of principal of the New Subordinated Debt which are paid
from (i) the proceeds of Pemex Contract EPC-64 or the Williams Contract,
or (ii) the proceeds of the issuance of equity at any time after March 1,
2004, (2) the Additional Sub Debt or the New Additional Subordinated Debt
in cash, except for cash payments of principal or interest of the
Additional Sub Debt or the New Additional Subordinated Debt to the extent
expressly permitted pursuant to that certain Collateral Sharing Agreement
dated October 29, 2004 and that certain Consent Letter dated May 25,
2004, or (3) any other Subordinated Debt in cash, except to the extent of
proceeds of collateral securing the same to the extent the Liens with
respect to such collateral are expressly permitted hereunder or under any
Lender consent and subject to any priority of Lenders in respect of such
collateral.”

     (g) Section 10.1 of the Agreement is hereby amended to insert the
following subsection (s) thereto:

“(s) Any document or instrument evidencing any Subordinated Debt shall be
amended or modified without the prior written consent of the Majority
Lenders.”

     3. Cash Sweep and Combined Commitment Reductions. Notwithstanding
anything to the contrary in the Loan Documents and without limitation of any
terms thereof, commencing on January 2, 2005, through the Termination Date,
Borrowers shall cause all funds consisting of Borrowing Base Eligible
Receivables to be paid directly to the Holding Lockbox or deposited directly
into the Holding Account. If for any reason such funds are not paid directly
to the Holding Lockbox or deposited directly into the Holding Account, Borrower
shall immediately transfer such funds into the Holding Account. Agent shall
transfer daily to the Collateral Account all such funds received in the Holding
Lockbox or deposited directly into or transferred into the Holding Account.
All such funds consisting of Borrowing Base Eligible Receivables shall be
applied by Agent as follows: (a) until such time as the aggregate amount of
such funds deposited in the Collateral Account equals $9,000,000, Agent shall
apply 30% of such funds to the Obligations, and Agent shall transfer 70% of
such funds to the Holding

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Account, and (b) all such funds in excess of $9,000,000 in aggregate
deposited into the Collateral Account shall be applied 50% to the Obligations
and the remaining 50% transferred to the Holding Account. Any amounts applied
to the Obligations pursuant to this Section 3 shall automatically reduce the
Combined Commitments by a corresponding equal amount. Borrowers shall deliver
to Agent daily a report showing the sources of amounts received in the Holding
Lockbox and deposited in the Holding Account on the prior day.

     4. Consent. The Agent and the Lenders hereby consent to (a) the issuance
of the New Additional Subordinated Debt pursuant to that certain Amendment No.
1 to May Purchase Agreement dated November 4, 2004 and attached
as Exhibit B
hereto, (b) the issuance of Series A Redeemable Participating Preferred Stock
pursuant to the documents attached hereto as Exhibit C provided that any cash
redemption rights with respect thereto are subordinated to the Obligations as
provided in that certain Subordination Agreement of even date herewith among
Agent and the Subordinate Parties listed on the signature pages thereto, and
(c) the recapitalization of the subordinated debt on terms consistent in all
material respects with Section 11 of the draft investment proposal dated
October 21, 2004, and attached hereto as Exhibit A and any change of control
with respect to Parent in connection therewith provided further that (i) the
terms of any new Subordinated Debt contemplated thereby (A) has subordination
provisions no less favorable to Lenders than the existing terms of
subordination of the New Subordinated Debt, (B) is not secured by any
collateral other than collateral permitted to secure the New Subordinated Debt,
(C) does not have a maturity date or any mandatory payment, prepayment,
redemption or defeasance provisions with respect to interest or principal
requiring any payment, redemption or defeasance prior to January 21, 2005,
except for permitted payments of interest or principal from proceeds of
Collateral permitted to secure the same and (D) does not provide for the set
aside of any funds for any payment, prepayment, redemption or defeasance of any
portion thereof, (ii) there are no commitment fees, underwriting fees or
similar fees (other than reimbursements for actual out-of-pocket third party
fees and expenses) payable to the holders of any Subordinated Debt or to any
Affiliate thereof in connection with the recapitalization other than those
payable solely in the form of common stock of Parent, (iii) there occurs no
change of control as a result thereof with respect to any Borrower or any other
Guarantor other than as a result of the issuance of equity in Parent, (iv)
there are no management agreements, servicing agreements or similar agreements
providing for the payment of any cash management fees, servicing fees, or
similar fees to any Affiliate in connection therewith by Borrowers or any
Guarantor, (iv) there are no mandatory redemption rights with respect to any
capital stock issued in connection with such recapitalization, and (v) there
are no covenants placed on the Borrowers or any Guarantor in connection
therewith that would restrict the ability of any such party to grant Liens on
its assets or to pay and perform their respective Obligations in accordance
with the terms of the Loan Documents. This consent is a limited, one-time
consent with respect to the matters set forth herein and shall not create any
obligation of Agent or Lenders to consent to, or be deemed a consent to, any
other matter not expressly contemplated hereby. Reference to the Proposal for
purposes of this Section 4 shall not be deemed to be a consent to or agreement
of the Agent or Lenders to any other matters not expressly set forth herein,
including, without limitation, any extension of the Termination Date or the
making of any restricted payment or the payment of any amounts in respect of
debt which are not permitted under the Loan Documents. This Seventh Amendment
and the consents in this Section 4 shall not create any implicit agreement of
the Agent or Lenders to agree to any extension of the Termination Date.

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     5. Waiver. The borrowers under the Domestic Loan Agreement submitted a
Borrowing Base Certificate thereunder dated June 30, 2004, which contained
receivables payable in excess of 30 days from invoice date and retention under
a contract with Taylor Energy Company as part of receivables under the
Borrowing Base. The borrowers under the Domestic Loan Agreement have not
acknowledged that the submission of such Borrowing Base Certificate constitutes
an Event of Default under the Domestic Loan Agreement and they submitted a
revised Borrowing Base Certificate upon learning of the issue of the inclusion
of such Taylor Energy Company receivable in the Borrowing Base. Agent and
Lenders hereby waive any Unmatured Event of Default or any Event of Default, if
any, that may have occurred under the Agreement as a result thereof, subject to
the terms and conditions contained herein. The Agent and Lenders have no
actual knowledge of any other Event of Default or Unmatured Event of Default
disputed by the Borrowers, or otherwise in existence as of the date hereof.

     6. Increases in Contractual Work. Borrowers acknowledge that, in
connection with its approval of the matters set forth in this Seventh
Amendment, Eximbank has instructed that accounts receivable attributable to
increases in Contractual Work related to current approved contracts, shall not
be eligible for inclusion in the Borrowing Base and that the Loan Agreement is
hereby modified in that respect.

     7. Conditions Precedent. The effectiveness of this Seventh Amendment is
subject to the satisfaction of the following:

     (a) this Seventh Amendment shall have been duly executed and delivered by
each of the parties set forth on the signature pages hereto;

     (b) the transactions contemplated by the Proposal in connection with the
issuance of Subordinated Debt shall have been consummated to the satisfaction
of Agent and Lenders and Agent shall have received satisfactory evidence that
the Borrowers have received in immediately available U.S. Dollars not less than
$7,700,000 in connection therewith;

     (c) Agent and Lenders shall have received such other documents,
instruments and agreements as they may require to evidence the closing and
funding of the transaction contemplated in connection with the issuance of
Subordinated Debt under the Proposal;

     (d) Agent shall have received evidence satisfactory to it that the
conditions precedent to effectiveness of the Eighth Amendment to Domestic Loan
Agreement shall have been satisfied; and

     (e) all fees and expenses of Vinson & Elkins, LLP, as counsel to Agent,
and all other professional fees of Agent’s consultants, in each case incurred
in connection with the Agreement and this Seventh Amendment, shall have been
paid in full.

     The Lenders’ obligations to fund any Advances or issue any Letters of Credit
under the Agreement is subject to the satisfaction of the foregoing.

     8. Release and Covenant Not to Sue. EACH BORROWER (IN ITS OWN RIGHT AND
ON BEHALF OF ITS DIRECTORS, OFFICERS, EMPLOYEES, INDEPENDENT CONTRACTORS,
ATTORNEYS AND AGENTS) AND EACH

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GUARANTOR (IN ITS OWN RIGHT AND ON BEHALF OF ITS RESPECTIVE ATTORNEYS AND
AGENTS) (THE “RELEASING PARTIES”) JOINTLY AND SEVERALLY RELEASE, ACQUIT, AND
FOREVER DISCHARGE AGENT AND EACH LENDER AND THEIR RESPECTIVE DIRECTORS,
OFFICERS, EMPLOYEES, INDEPENDENT CONTRACTORS, ATTORNEYS AND AGENTS,
(COLLECTIVELY, THE “RELEASED PARTIES”), TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE STATE AND FEDERAL LAW, FROM ANY AND ALL ACTS AND OMISSIONS OF THE
RELEASED PARTIES, AND FROM ANY AND ALL CLAIMS, CAUSES OF ACTION, COUNTERCLAIMS,
DEMANDS, CONTROVERSIES, COSTS, DEBTS, SUMS OF MONEY, ACCOUNTS, RECKONINGS,
BONDS, BILLS, DAMAGES, OBLIGATIONS, LIABILITIES, OBJECTIONS, AND EXECUTIONS OF
ANY NATURE, TYPE, OR DESCRIPTION WHICH THE RELEASING PARTIES HAVE AGAINST THE
RELEASED PARTIES, INCLUDING, BUT NOT LIMITED TO, NEGLIGENCE, GROSS NEGLIGENCE,
USURY, FRAUD, DECEIT, MISREPRESENTATION, CONSPIRACY, UNCONSCIONABILITY, DURESS,
ECONOMIC DURESS, DEFAMATION, CONTROL, INTERFERENCE WITH CONTRACTUAL AND
BUSINESS RELATIONSHIPS, CONFLICTS OF INTEREST, MISUSE OF INSIDER INFORMATION,
CONCEALMENT, DISCLOSURE, SECRECY, MISUSE OF COLLATERAL, WRONGFUL RELEASE OF
COLLATERAL, FAILURE TO INSPECT, ENVIRONMENTAL DUE DILIGENCE, NEGLIGENT LOAN
PROCESSING AND ADMINISTRATION, WRONGFUL SETOFF, VIOLATIONS OF STATUTES AND
REGULATIONS OF GOVERNMENTAL ENTITIES, INSTRUMENTALITIES AND AGENCIES (BOTH
CIVIL AND CRIMINAL), RACKETEERING ACTIVITIES, SECURITIES AND ANTITRUST LAWS
VIOLATIONS, TYING ARRANGEMENTS, DECEPTIVE TRADE PRACTICES, BREACH OR ABUSE OF
ANY ALLEGED FIDUCIARY DUTY, BREACH OF ANY ALLEGED SPECIAL RELATIONSHIP, COURSE
OF CONDUCT OR DEALING, ALLEGED OBLIGATION OF FAIR DEALING, ALLEGED OBLIGATION
OF GOOD FAITH, AND ALLEGED OBLIGATION OF GOOD FAITH AND FAIR DEALING, WHETHER
OR NOT IN CONNECTION WITH OR RELATED TO THE AGREEMENT, THE LOAN DOCUMENTS AND
THIS SEVENTH AMENDMENT, AT LAW OR IN EQUITY, IN CONTRACT IN TORT, OR OTHERWISE,
KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED (COLLECTIVELY, THE “RELEASED
CLAIMS”). THE RELEASING PARTIES FURTHER JOINTLY AND SEVERALLY AGREE TO LIMIT
ANY DAMAGES THEY MAY SEEK IN CONNECTION WITH ANY CLAIM OR CAUSE OF ACTION, IF
ANY, TO EXCLUDE ALL PUNITIVE AND EXEMPLARY DAMAGES, DAMAGES ATTRIBUTABLE TO
LOST PROFITS OR OPPORTUNITY, AND THE RELEASING PARTIES DO HEREBY JOINTLY AND
SEVERALLY WAIVE AND RELEASE ALL SUCH DAMAGES WITH RESPECT TO ANY AND ALL CLAIMS
OR CAUSES OF ACTION WHICH MAY ARISE AT ANY TIME AGAINST ANY OF THE RELEASED
PARTIES. THE RELEASING PARTIES REPRESENT AND WARRANT THAT NO FACTS EXIST WHICH
COULD PRESENTLY SUPPORT THE ASSERTION OF ANY OF THE RELEASED CLAIMS AGAINST THE
RELEASED PARTIES. THE RELEASING PARTIES FURTHER COVENANT NOT TO SUE THE
RELEASED PARTIES ON ACCOUNT OF ANY OF THE RELEASED CLAIMS, AND EXPRESSLY WAIVE
ANY AND ALL DEFENSES THEY MAY HAVE IN

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CONNECTION WITH THEIR DEBTS AND OBLIGATIONS UNDER THE AGREEMENT, THE LOAN
DOCUMENTS AND THIS SEVENTH AMENDMENT. THIS SECTION 8 IS IN ADDITION TO AND
SHALL NOT IN ANY WAY LIMIT ANY OTHER RELEASE, COVENANT NOT TO SUE, OR WAIVER BY
THE RELEASING PARTIES IN FAVOR OF THE RELEASED PARTIES. NOTWITHSTANDING ANY
PROVISION OF THE AGREEMENT, THIS SEVENTH AMENDMENT OR ANY OTHER LOAN DOCUMENT,
THIS SECTION 8 SHALL REMAIN IN FULL FORCE AND EFFECT AND SHALL SURVIVE THE
DELIVERY AND PAYMENT ON THE OBLIGATIONS, THE AGREEMENT, THIS SEVENTH AMENDMENT
AND THE OTHER LOAN DOCUMENTS.

     9. Reaffirmation of Guarantees. By their execution hereof, each of the
Guarantors acknowledges and agrees (a) to the terms of the release and covenant
not to sue set forth in the foregoing Section 8, and (b) that all of the terms
and provisions of their respective guarantees shall remain in full force and
effect and that the amendments and modifications herein contained shall in no
manner adversely affect or impair any Guarantor’s obligations under such
guaranty.

     10. Binding Effect. It is further understood and agreed by and among the
parties hereto that all terms and conditions of the Agreement, except as herein
modified, shall remain in full force and effect.

     11. Counterparts. This Seventh Amendment may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

[Remainder of page intentionally left blank.]

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

	 	 	 	 	 
	 	BORROWERS:

HORIZON OFFSHORE CONTRACTORS, INC.

 	 
	 	By:  	/s/ David W. Sharp	 
	 	 	David W. Sharp 	 
	 	 	Executive Vice President 	 
	 
	 	HORIZEN, L.L.C.

 	 
	 	By:  	/s/ David W. Sharp	 
	 	 	David W. Sharp 	 
	 	 	Executive Vice President 	 
	 
	 	HORIZON SUBSEA SERVICES, INC.

 	 
	 	By:  	/s/ David W. Sharp	 
	 	 	David W. Sharp 	 
	 	 	Executive Vice President 	 
	 
	 	HORIZON VESSELS, INC.

 	 
	 	By:  	/s/ David W. Sharp	 
	 	 	David W. Sharp 	 
	 	 	Executive Vice President 	 
	 
	 	AGENT:

SOUTHWEST BANK OF TEXAS, N.A., as Agent

 	 
	 	By:  	/s/ Brian Duncan	 
	 	 	Name:  Brian Duncan	 	 
	 	 	Title: Vice President	 
	 

[Signatures continued on next page]

SIGNATURE PAGE - 1

 

	 	 	 	 	 
	 	LENDERS:

SOUTHWEST BANK OF TEXAS, N.A.

 	 
	 	By:  	/s/ Brian Duncan	 
	 	 	Name:  Brian Duncan	 	 
	 	 	Title: Vice President	 
	 
	 	DRESDNER BANK LATEINAMERIKA AG

 	 
	 	By:  	/s/ Don
Knowlton	 
	 	 	Name:  Don Knowlton	 	 
	 	 	Title: Vice President	 
	 
	 	BANK OF SCOTLAND

 	 
	 	By:  	/s/ Joseph Fratus	 
	 	 	Name:  Joseph Fratus	 	 
	 	 	Title: First Vice President	 
	 
	 	HIBERNIA NATIONAL BANK

 	 
	 	By:  	/s/
Tommy Boyd	 
	 	 	Name:  Tommy Boyd	 	 
	 	 	Title: Senior Vice President	 

SIGNATURE PAGE - 2

 

	 	 	 	 	 

Acknowledged and Agreed to this 4th day of November, 2004.

GUARANTORS:

HORIZON OFFSHORE, INC.

PROGRESSIVE PIPELINE CONTRACTORS, INC.

AFFILIATED MARINE CONTRACTORS, INC.

TEXAS OFFSHORE CONTRACTORS CORP.

FLEET PIPELINE SERVICES, INC.

GULF OFFSHORE CONSTRUCTION, INC.

BAYOU MARINE CONTRACTORS, INC.

HORIZON OFFSHORE, S. DE R.L. DE C.V.

HORIZON OFFSHORE CONTRACTORS, LTD.

HORIZON GROUP L.D.C.

HORIZON OFFSHORE NIGERIA LTD.

TIBURON INGENERIA Y CONSTRUCCION, S. DE R.L. DE C.V.

HORIZON VESSELS INTERNATIONAL LTD.

PT HORIZON INDONESIA

HORIZON OFFSHORE INTERNATIONAL LTD.

HORIZON MARINE CONSTRUCTION LTD.

HORIZON OFFSHORE PTE. LTD.

HORIZON OFFSHORE CONTRACTORS (MAURITIUS) LTD.

HORIZON MARINE CONSTRUCTION (MAURITIUS) LTD.

HORIZON C-BAY COSTA AFUERA, S. DE R.L. DE C.V.

HOC OFFSHORE, S. DE R.L. DE C.V.

PT ARMANDI PRANAUPAYA

HORIZON MARINE CONTRACTORS (MALAYSIA) SDN BHD

HORIZON OFFSHORE SERVICES, LTD.

MARINE LEASING (LABUAN) PTE LTD.

		
	By: 	
/s/ David W. Sharp

		
	Name: 	
David W. Sharp

		
	Title: 	
Executive Vice President

ECH OFFSHORE, S. DE R.L. DE C.V.

		
	By: 	
/s/ Bill Lam
Bill Lam
Sole Member

SIGNATURE PAGE - 3

 

EXHIBIT A

PROPOSAL

[Follows This Page]

A-1

 

EXHIBIT B

AMENDMENT NO. 1 TO MAY PURCHASE AGREEMENT

[Follows This Page]

B-1

 

EXHIBIT C

DOCUMENTS EVIDENCING SERIES A REDEEMABLE PARTICIPATING PREFERRED STOCK

	1.	 	Form of Warrant Certificate
	 
	2.	 	Form of Registration Rights Agreement
	 
	3.	 	Certificates of Designation, Preferences and Rights of Series A
Redeemable Participating Preferred Stock
	 
	4.	 	Purchase Agreement – Series A Redeemable Participating Preferred
Stock

C-1exv10w6

 

EXHIBIT 10.6

EIGHTH AMENDMENT TO LOAN AGREEMENT

     This EIGHTH AMENDMENT TO LOAN AGREEMENT (the “Eighth Amendment”), dated as
of the 4th day of November, 2004, is made by and among HORIZON OFFSHORE
CONTRACTORS, INC. (“Contractors”), HORIZON SUBSEA SERVICES, INC. (“Subsea”),
and HORIZON VESSELS, INC. (“Vessels,” and together with Contractors and Subsea,
the “Borrowers”), jointly and severally, each of the financial institutions
which is or may from time to time become a party to such Agreement (as defined
below) (collectively, “Lenders”, and each a “Lender”), and SOUTHWEST BANK OF
TEXAS, N.A., as agent (in such capacity, the “Agent”).

W I T N E S S E T H:

     WHEREAS, Borrowers, Lenders and Agent are parties to that certain Loan
Agreement dated as of March 26, 2001 (as the same has been or may hereafter be
amended, supplemented or otherwise modified, the “Agreement”);

     WHEREAS, pursuant to the Amendment No. 1 to May Purchase Agreement
attached hereto as Exhibit B, the Borrowers propose to sell approximately
$9,625,000 aggregate principal amount of 18% Subordinated Secured Notes due
March 31, 2007, for a purchase price of approximately $7,700,000; and

     WHEREAS, Borrowers, Lenders and Agent now desire to amend the Agreement as
herein set forth.

     NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants and premises contained herein, together with other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
and subject to the conditions to effectiveness set forth in Section 6 hereof,
the parties hereto agree as follows:

     1. Terms. Capitalized terms used in this Eighth Amendment (including the
recitals hereof) shall have the meanings assigned to them in the Agreement, as
amended by this Eighth Amendment.

     2. Amendments.

     (a) Section 1.1 of the Agreement is hereby amended by adding the following
definitions thereto in the correct alphabetical order:

“Cash Interest” means, for any period, the consolidated Interest Expense
of Guarantor and its Subsidiaries for such period, determined in
accordance with GAAP applied consistently, less (a) interest related to
the Subordinated Debt (which is in fact paid-in-kind) and (b) all amounts
included in Interest Expense, in accordance with GAAP, for amortization
of debt fees, discounts and warrant expense.

 

 

“Subordinated Debt” means indebtedness of Guarantor incurred pursuant to
(a) that certain Purchase Agreement dated March 11, 2004, among
Guarantor, the guarantors listed therein and the purchasers listed
therein, pursuant to which those certain 16% subordinated secured notes
due March 31, 2007, in an aggregated principal amount equal to
$65,400,000.00 were issued, as the same may be amended, supplemented or
modified from time to time with the consent of Majority Lenders, and (b)
that certain Purchase Agreement dated May 27, 2004, among Guarantor, the
guarantors listed therein and the purchasers listed therein, pursuant to
which (i) those certain 18% subordinated secured notes due March 31,
2007, in an aggregated principal amount equal to $18,750,000.00 were
issued on May 27, 2004, (ii) those certain additional 18% subordinated
secured notes due March 31, 2007, in an aggregated principal amount equal
to $5,291,865.00 were issued on September 17, 2004 (the debt referred to
in the foregoing clauses (i) and (ii) is referred to herein as the
“Additional Sub Debt”), and (iii) those certain additional 18%
subordinated secured notes due March 31, 2007, in an aggregated principal
amount equal to $9,625,000 were issued on November 4, 2004 (the “New
Additional Subordinated Debt”), as the same may be amended, supplemented
or modified from time to time with the consent of Majority Lenders.

     (b) The following definitions set forth in Section 1.1 of the Agreement
are hereby amended and restated in their entirety as follows:

“Borrowing Base” means, at any particular time, an amount equal to the
sum of (a) eighty percent (80%) of Eligible Accounts, and (b) thirty-five
percent (35%) of amounts shown as retention billings with respect to
Manta Ray on the September 30, 2004, Borrowing Base Certificate, provided
that (i) such amounts meet all other criteria necessary to constitute an
Eligible Account, (ii) such amounts represent a final billing with
respect to the contract in question and not any progress billing, and
(iii) the chief financial officer of the Borrower certifies in writing to
the Agent and Lenders that all contractual requirements for payment of
such amounts have been met and that such amounts meet the foregoing
criteria and that such amounts are not subject to any dispute, claim,
offset, recoupment or any other contingency for payment or reduction in
amounts payable on account of liquidated damages, claims or liens of
subcontractors or otherwise. No other amounts constituting or relating
to retention, whether billed or unbilled, shall be included in the
Borrowing Base without the express written consent of the Lenders.

“Combined Commitments” means as to all Lenders, the obligations of
Lenders to make Advances and issue Letters of Credit in an aggregate
principal amount at any time outstanding up to but not exceeding
$6,300,000.

“EBITDA” means for Guarantor and its Subsidiaries, on a consolidated
basis, for any period, the sum of (a) Net Income before gains and losses
on sales of assets (to the extent such gains and losses are included in
earnings), plus (b) Tax Expense, plus (c) depreciation and amortization
(including accelerated amortization of prepaid loan fees, discounts and
warrant expense for the purpose of loss on debt extinguishment, in
accordance with GAAP), plus (d) Interest Expense.

2

 

“EBITDAR” means for Guarantor and its Subsidiaries, on a consolidated
basis, for any period, the sum of (a) Net Income before gains and losses
on sales of assets (to the extent such gains and losses are included in
earnings), plus (b) Tax Expense, plus (c) depreciation and amortization
(including accelerated amortization of prepaid loan fees, discounts and
warrant expense for the purpose of loss on debt extinguishment, in
accordance with GAAP), plus (d) Interest Expense, plus (e) restructuring
charges, including costs of professional advisors to Guarantor and its
Subsidiaries (including costs of professional advisors to Guarantor’s
lenders and other creditors which are required to be paid by Guarantor or
its Subsidiaries) not to exceed $3,250,000 for the fiscal year ending
December 31, 2004.

“Fixed Charge Coverage Ratio” means for Guarantor and its Subsidiaries,
on a consolidated basis, (a) as of September 30, 2004, (i) EBITDA for the
quarter ended as of September 30, 2004, divided by (ii) the sum of (A)
Current Maturities of Long Term Debt as of September 30, 2004 divided by
four, plus (B) Cash Interest for the quarter ended September 30, 2004,
plus (C) Tax Expense for the quarter ended as of September 30, 2004, and
(b) as of December 31, 2004, (i) EBITDA for the quarters ended as of
September 30, 2004 and December 31, 2004, divided by (ii) the sum of (A)
Current Maturities of Long Term Debt as of December 31, 2004 divided by
two, plus (B) Cash Interest for the quarters ended as of September 30,
2004 and December 31, 2004, plus (C) Tax Expense for the quarters ended
as of September 30, 2004 and December 31, 2004.

“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 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 therefrom (a) any amount at which shares
of capital stock of Guarantor or any Subsidiary appear as an asset on
Guarantor’s or such 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 Guarantor
or any Subsidiary or any Affiliate, and (e) all other assets which are
properly classified as intangible assets.

“Total Funded Debt” means, for Guarantor and its Subsidiaries, on a
consolidated basis, the sum of (a) all indebtedness for borrowed money,
whether or not evidenced by notes, bonds, debentures, notes or similar
instruments, (b) all Capital Lease Obligations, (c) all obligations to
pay the deferred purchase price of property or services (but excluding
trade accounts payable or trade notes in the ordinary course of
business), (d) all indebtedness secured by a Lien on the property of
Guarantor or any of its Subsidiaries, and (e) all letter of credit
liabilities (including the Letter of Credit Liabilities).

     (c) The definition of Eligible Accounts set forth in Section 1.1 of the
Agreement is hereby amended to add the following sentence at the end thereof:

3

 

“For purposes of calculating Eligible Accounts, amounts related to
retention shall include any amounts that previously constituted retention
whether billed or unbilled and, therefore, shall not constitute Eligible
Accounts.”

     (d) Section 8.1(d) of the Agreement is hereby amended and restated in its
entirety as follows:

“(d) letter of credit, performance and bid bonds obtained by
Borrowers in the ordinary course of their business, other than the
Letters of Credit, up to an aggregate amount of $33,545,000.00 at
any time;”

     (e) Section 10.1(a) of the Agreement is hereby amended and restated to
read in its entirety as follows:

“(a) Any Borrower shall default in the payment or prepayment when due of
any principal or interest on the Obligations or any portion thereof, or
shall default in the payment or prepayment when due of any fees or other
amounts payable by any of them under this Agreement or under any other
Loan Documents and, in respect of fees or other amounts only, such
default shall continue for three (3) Business Days after such amount is
due.”

     (f) Section 10.1(o) of the Agreement is hereby amended and restated to
read in its entirety as follows:

“(o) Guarantor (or any Borrower or any Subsidiary) pays any principal,
interest or fees on (1) the New Subordinated Debt in cash, except for
cash payments of principal of the New Subordinated Debt which are paid
from (i) the proceeds of Pemex Contract EPC-64 or the Williams Contract,
or (ii) the proceeds of the issuance of equity at any time after March 1,
2004, (2) the Additional Sub Debt or the New Additional Subordinated Debt
in cash, except for cash payments of principal or interest of the
Additional Sub Debt or the New Additional Subordinated Debt to the extent
expressly permitted pursuant to that certain Collateral Sharing Agreement
dated October 29, 2004 and that certain Consent Letter dated May 25,
2004, or (3) any other Subordinated Debt in cash, except to the extent of
proceeds of collateral securing the same to the extent the Liens with
respect to such collateral are expressly permitted hereunder or under any
Lender consent and subject to any priority of Lenders in respect of such
collateral.”

     (g) Section 10.1 of the Agreement is hereby amended to insert the
following subsection (p) thereto:

“(p) Any document or instrument evidencing any Subordinated Debt shall be
amended or modified without the prior written consent of the Majority
Lenders.”

     3. Consent. The Agent and the Lenders hereby consent to (a) the issuance
of the New Additional Subordinated Debt pursuant to that certain Amendment No.
1 to May Purchase Agreement dated November 4, 2004 and attached
as Exhibit B
hereto, (b) the issuance of Series A Redeemable Participating Preferred Stock
pursuant to the documents attached hereto as Exhibit C provided that any cash
redemption rights with respect thereto are subordinated to the Obligations as
provided in that certain Subordination Agreement of even date herewith among

4

 

Agent and the Subordinate Parties listed on the signature pages thereto,
and (c) the recapitalization of the subordinated debt on terms consistent in
all material respects with Section 11 of the draft investment proposal dated
October 21, 2004, and attached hereto as Exhibit A and any change of control
with respect to Parent in connection therewith provided further that (i) the
terms of any new Subordinated Debt contemplated thereby (A) has subordination
provisions no less favorable to Lenders than the existing terms of
subordination of the New Subordinated Debt, (B) is not secured by any
collateral other than collateral permitted to secure the New Subordinated Debt,
(C) does not have a maturity date or any mandatory payment, prepayment,
redemption or defeasance provisions with respect to interest or principal
requiring any payment, redemption or defeasance prior to January 21, 2005,
except for permitted payments of interest or principal from proceeds of
Collateral permitted to secure the same and (D) does not provide for the set
aside of any funds for any payment, prepayment, redemption or defeasance of any
portion thereof, (ii) there are no commitment fees, underwriting fees or
similar fees (other than reimbursements for actual out-of-pocket third party
fees and expenses) payable to the holders of any Subordinated Debt or any
Affiliate thereof in connection with the recapitalization other than those
payable solely in the form of common stock of Parent, (iii) there occurs no
change of control as a result thereof with respect to any Borrower or any other
Guarantor other than as a result of the issuance of equity in Parent, (iv)
there are no management agreements, servicing agreements or similar agreements
providing for the payment of any cash management fees, servicing fees, or
similar fees to any Affiliate in connection therewith by Borrowers or any
Guarantor, (iv) there are no mandatory redemption rights with respect to any
capital stock issued in connection with such recapitalization, and (v) there
are no covenants placed on the Borrowers or any Guarantor in connection
therewith that would restrict the ability of any such party to grant Liens on
its assets or to pay and perform their respective Obligations in accordance
with the terms of the Loan Documents. This consent is a limited, one-time
consent with respect to the matters set forth herein and shall not create any
obligation of Agent or Lenders to consent to, or be deemed a consent to, any
other matter not expressly contemplated hereby. Reference to the Proposal for
purposes of this Section 3 shall not be deemed to be a consent to or agreement
of the Agent or Lenders to any other matters not expressly set forth herein,
including, without limitation, any extension of the Termination Date or the
making of any restricted payment or the payment of any amounts in respect of
debt which are not permitted under the Loan Documents. This Eighth Amendment
and the consents in this Section 3 shall not create any implicit agreement of
the Agent or Lenders to agree to any extension of the Termination Date.

     4. Waiver. The Borrowers submitted a Borrowing Base Certificate dated
June 30, 2004, which contained receivables payable in excess of 30 days from
invoice date and retention under a contract with Taylor Energy Company as part
of receivables under the Borrowing Base. The Borrowers have not acknowledged
that the submission of such Borrowing Base Certificate constitutes an Event of
Default under the Agreement. The Borrower submitted a revised Borrowing Base
Certificate upon learning of the issue of the inclusion of such Taylor Energy
Company receivables in the Borrowing Base. Agent and Lenders hereby waive any
Unmatured Event of Default or any Event of Default, if any, that may have
occurred under the Agreement as a result thereof, subject to the terms and
conditions contained herein. The Agent and Lenders have no actual knowledge of
any other Event of Default or Unmatured Event of Default disputed by the
Borrowers, or otherwise in existence as of the date hereof.

5

 

     5. Advances. Notwithstanding anything to the contrary contained in the
Agreement, from and after the date hereof the Borrowers shall have no right to
receive any further Advances under the Agreement. Furthermore, the Lenders
shall not be required to issue any new Letters of Credit or increase any
existing Letters of Credit under the Agreement. Any payments received by
Lenders on the Obligations shall automatically reduce the line of credit
provided under the Agreement by the principal amount thereof and the Combined
Commitments amount shall be reduced accordingly. A reduction of the Combined
Commitments pursuant to this Section 5 shall reduce each Lender’s Commitment
pro rata.

     6. Conditions Precedent. The effectiveness of this Eighth Amendment is
subject to the satisfaction of the following:

     (a) this Eighth Amendment shall have been duly executed and delivered by
each of the parties set forth on the signature pages hereto;

     (b) the transactions contemplated by the Proposal in connection with the
issuance of Subordinated Debt shall have been consummated to the satisfaction
of Agent and Lenders and Agent shall have received satisfactory evidence that
the Borrowers have received in immediately available U.S. Dollars not less than
$7,700,000 in connection therewith;

     (c) Agent and Lenders shall have received such other documents,
instruments and agreements as they may require to evidence the closing and
funding of the transaction contemplated in connection with the issuance of
Subordinated Debt under the Proposal;

     (d) Agent shall have received evidence satisfactory to it that the
conditions precedent to effectiveness of the Seventh Amendment to the Foreign
Loan Agreement shall have been satisfied; and

     (e) all fees and expenses of Vinson & Elkins, LLP, as counsel to Agent,
and all other professional fees of Agent’s consultants, in each case incurred
in connection with the Agreement and this Eighth Amendment, shall have been
paid in full.

     7. Release and Covenant Not to Sue. EACH BORROWER (IN ITS OWN RIGHT AND
ON BEHALF OF ITS DIRECTORS, OFFICERS, EMPLOYEES, INDEPENDENT CONTRACTORS,
ATTORNEYS AND AGENTS) AND EACH OF THE GUARANTOR AND THE ADDITIONAL GUARANTORS
(IN ITS OWN RIGHT AND ON BEHALF OF ITS RESPECTIVE ATTORNEYS AND AGENTS) (THE
“RELEASING PARTIES”) JOINTLY AND SEVERALLY RELEASE, ACQUIT, AND FOREVER
DISCHARGE AGENT AND EACH LENDER AND THEIR RESPECTIVE DIRECTORS, OFFICERS,
EMPLOYEES, INDEPENDENT CONTRACTORS, ATTORNEYS AND AGENTS, (COLLECTIVELY, THE
“RELEASED PARTIES”), TO THE FULLEST EXTENT PERMITTED BY APPLICABLE STATE AND
FEDERAL LAW, FROM ANY AND ALL ACTS AND OMISSIONS OF THE RELEASED PARTIES, AND
FROM ANY AND ALL CLAIMS, CAUSES OF ACTION, COUNTERCLAIMS, DEMANDS,
CONTROVERSIES, COSTS, DEBTS, SUMS OF MONEY, ACCOUNTS, RECKONINGS, BONDS, BILLS,
DAMAGES, OBLIGATIONS, LIABILITIES, OBJECTIONS, AND EXECUTIONS OF ANY NATURE,
TYPE, OR

6

 

DESCRIPTION WHICH THE RELEASING PARTIES HAVE AGAINST THE RELEASED PARTIES,
INCLUDING, BUT NOT LIMITED TO, NEGLIGENCE, GROSS NEGLIGENCE, USURY, FRAUD,
DECEIT, MISREPRESENTATION, CONSPIRACY, UNCONSCIONABILITY, DURESS, ECONOMIC
DURESS, DEFAMATION, CONTROL, INTERFERENCE WITH CONTRACTUAL AND BUSINESS
RELATIONSHIPS, CONFLICTS OF INTEREST, MISUSE OF INSIDER INFORMATION,
CONCEALMENT, DISCLOSURE, SECRECY, MISUSE OF COLLATERAL, WRONGFUL RELEASE OF
COLLATERAL, FAILURE TO INSPECT, ENVIRONMENTAL DUE DILIGENCE, NEGLIGENT LOAN
PROCESSING AND ADMINISTRATION, WRONGFUL SETOFF, VIOLATIONS OF STATUTES AND
REGULATIONS OF GOVERNMENTAL ENTITIES, INSTRUMENTALITIES AND AGENCIES (BOTH
CIVIL AND CRIMINAL), RACKETEERING ACTIVITIES, SECURITIES AND ANTITRUST LAWS
VIOLATIONS, TYING ARRANGEMENTS, DECEPTIVE TRADE PRACTICES, BREACH OR ABUSE OF
ANY ALLEGED FIDUCIARY DUTY, BREACH OF ANY ALLEGED SPECIAL RELATIONSHIP, COURSE
OF CONDUCT OR DEALING, ALLEGED OBLIGATION OF FAIR DEALING, ALLEGED OBLIGATION
OF GOOD FAITH, AND ALLEGED OBLIGATION OF GOOD FAITH AND FAIR DEALING, WHETHER
OR NOT IN CONNECTION WITH OR RELATED TO THE AGREEMENT, THE LOAN DOCUMENTS AND
THIS EIGHTH AMENDMENT, AT LAW OR IN EQUITY, IN CONTRACT IN TORT, OR OTHERWISE,
KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED (COLLECTIVELY, THE “RELEASED
CLAIMS”). THE RELEASING PARTIES FURTHER JOINTLY AND SEVERALLY AGREE TO LIMIT
ANY DAMAGES THEY MAY SEEK IN CONNECTION WITH ANY CLAIM OR CAUSE OF ACTION, IF
ANY, TO EXCLUDE ALL PUNITIVE AND EXEMPLARY DAMAGES, DAMAGES ATTRIBUTABLE TO
LOST PROFITS OR OPPORTUNITY, AND THE RELEASING PARTIES DO HEREBY JOINTLY AND
SEVERALLY WAIVE AND RELEASE ALL SUCH DAMAGES WITH RESPECT TO ANY AND ALL CLAIMS
OR CAUSES OF ACTION WHICH MAY ARISE AT ANY TIME AGAINST ANY OF THE RELEASED
PARTIES. THE RELEASING PARTIES REPRESENT AND WARRANT THAT NO FACTS EXIST WHICH
COULD PRESENTLY SUPPORT THE ASSERTION OF ANY OF THE RELEASED CLAIMS AGAINST THE
RELEASED PARTIES. THE RELEASING PARTIES FURTHER COVENANT NOT TO SUE THE
RELEASED PARTIES ON ACCOUNT OF ANY OF THE RELEASED CLAIMS, AND EXPRESSLY WAIVE
ANY AND ALL DEFENSES THEY MAY HAVE IN CONNECTION WITH THEIR DEBTS AND
OBLIGATIONS UNDER THE AGREEMENT, THE LOAN DOCUMENTS AND THIS EIGHTH AMENDMENT.
THIS SECTION 7 IS IN ADDITION TO AND SHALL NOT IN ANY WAY LIMIT ANY OTHER
RELEASE, COVENANT NOT TO SUE, OR WAIVER BY THE RELEASING PARTIES IN FAVOR OF
THE RELEASED PARTIES. NOTWITHSTANDING ANY PROVISION OF THE AGREEMENT, THIS
EIGHTH AMENDMENT OR ANY OTHER LOAN DOCUMENT, THIS SECTION 7 SHALL REMAIN IN
FULL FORCE AND EFFECT AND SHALL SURVIVE THE DELIVERY AND PAYMENT ON THE
OBLIGATIONS, THE AGREEMENT, THIS EIGHTH AMENDMENT AND THE OTHER LOAN DOCUMENTS.

7

 

     8. Reaffirmation of Guarantees. By their execution hereof, each of the
Guarantor and the Additional Guarantors acknowledges and agrees (a) to the
terms of the release and covenant not to sue set forth in the foregoing Section
7, and (b) that all of the terms and provisions of their respective guarantees
shall remain in full force and effect and that the amendments and modifications
herein contained shall in no manner adversely affect or impair the Guarantor’s
or any Additional Guarantor’s obligations under such guaranty.

     9. Binding Effect. It is further understood and agreed by and among the
parties hereto that all terms and conditions of the Agreement, except as herein
modified, shall remain in full force and effect.

     10. Counterparts. This Eighth Amendment may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

[Remainder of page intentionally left blank.]

8

 

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

	 	 	 	 	 
	 	BORROWERS:

HORIZON OFFSHORE CONTRACTORS, INC.

 	 
	 	By:  	
/s/ David W. Sharp	 
	 	 	David W. Sharp 	 
	 	 	Executive Vice President 	 
	 
	 	HORIZON SUBSEA SERVICES, INC.

 	 
	 	By:  	
/s/ David W. Sharp	 
	 	 	David W. Sharp 	 
	 	 	Executive Vice President 	 
	 
	 	HORIZON VESSELS, INC.

 	 
	 	By:  	
/s/ David W. Sharp	 
	 	 	David W. Sharp 	 
	 	 	Executive Vice President 	 
	 
	 	AGENT:

SOUTHWEST BANK OF TEXAS, N.A., as Agent

 	 
	 	By:  	
/s/ Brian Duncan	 
	 	 	Name:  	Brian Duncan	 
	 	 	Title:	Vice President	 
	 
	 	LENDERS:

SOUTHWEST BANK OF TEXAS, N.A.

 	 
	 	By:  	
/s/ Brian Duncan	 
	 	 	Name:  	Brian Duncan	 
	 	 	Title:	Vice President	 
	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 

[Signatures continued on next page.]

SIGNATURE PAGE - 1

 

	 	 	 	 	 
	 	DRESDNER BANK LATEINAMERIKA AG

 	 
	 	By:  	
/s/ Don Knowlton	 
	 	 	Name:  	Don Knowlton	 
	 	 	Title:  Vice President	 
	 
	 	BANK OF SCOTLAND

 	 
	 	By:  	
/s/ Joseph Fratus	 
	 	 	Name:  	Joseph Fratus	 
	 	 	Title:  First Vice President	 
	 
	 	HIBERNIA NATIONAL BANK
 
	 
	 	By:  	
/s/ Tommy Boyd	 
	 	 	Name:  	Tommy Boyd	 
	 	 	Title:  Senior Vice President	 

SIGNATURE PAGE - 2

 

	 	 	 	 	 

Acknowledged and Agreed to this 4th day of November, 2004.

HORIZON OFFSHORE, INC.

PROGRESSIVE PIPELINE CONTRACTORS, INC.

AFFILIATED MARINE CONTRACTORS, INC.

TEXAS OFFSHORE CONTRACTORS CORP

FLEET PIPELINE SERVICES, INC.

GULF OFFSHORE CONSTRUCTION, INC.

BAYOU MARINE CONTRACTORS, INC.

HOC OFFSHORE, S. DE R.L. DE C.V.

PT ARMANDI PRANAUPAYA

ECH OFFSHORE, S. DE R.L. DE C.V.

HORIZON OFFSHORE NIGERIA LTD.

HORIZON C-BAY COSTA AFUERA, S. DE R.L. DE C.V.

HORIZON OFFSHORE PTE. LTD.

HORIZON OFFSHORE CONTRACTORS (MAURITIUS) LTD.

HORIZON MARINE CONSTRUCTION (MAURITIUS) LTD.

TIBURON INGENIERIA Y CONSTRUCCION, S. DE R.L. DE C.V.

HORIZON VESSELS INTERNATIONAL LTD.

HORIZON OFFSHORE INTERNATIONAL LTD.

HORIZON MARINE CONSTRUCTION LTD.

HORIZON GROUP L.D.C.

PT HORIZON INDONESIA

HORIZON OFFSHORE CONTRACTORS LTD.

HORIZON MARINE CONTRACTORS (MALASIA) SDN BHD

HORIZON OFFSHORE SERVICES, LTD.

MARINE LEASING (LABUAN) PTE LTD.

		
	By: 	
/s/ David W. Sharp 

		
	Name: 	
David W. Sharp

		
	Title: 	
Executive Vice President

ECH OFFSHORE, S. DE R.L. DE C.V.

		
	By: 	
/s/ Bill Lam
Bill Lam
Sole Member

SIGNATURE PAGE - 3

 

EXHIBIT A

PROPOSAL

[Follows This Page]

A-1

 

EXHIBIT B

AMENDMENT NO. 1 TO MAY PURCHASE AGREEMENT

[Follows This Page]

B-1

 

EXHIBIT C

DOCUMENTS EVIDENCING SERIES A REDEEMABLE PARTICIPATING PREFERRED STOCK

	1.	 	Form of Warrant Certificate
	 
	2.	 	Form of Registration Rights Agreement
	 
	3.	 	Certificates of Designation, Preferences and Rights of Series A
Redeemable Participating Preferred Stock
	 
	4.	 	Purchase Agreement – Series A Redeemable Participating Preferred
Stock

C-1

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