Document:

exv10w1

 

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

 

 

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)

 

	 	 	 	 	 	 	 	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)

 

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.

 

 

     “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.

2

 

     “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.

3

 

     “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.

4

 

     “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.

5

 

     “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.

6

 

     “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.

7

 

     “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

8

 

(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.

9

 

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%).

10

 

     (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

11

 

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.

12

 

     (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

13

 

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

14

 

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.

15

 

     (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

16

 

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

19

 

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

20

 

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;

21

 

     (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

22

 

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

23

 

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.

24

 

     (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

25

 

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

26

 

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

27

 

     (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.

28

 

     (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.

29

 

     (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.

30

 

     (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

31

 

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),

32

 

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.

33

 

     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.

34

 

     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:                                                            

36

 

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

38

 

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.

39

 

     (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

40

 

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

41

 

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

 

     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]

 

 

     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]

 

 

     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]

 

 

     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]

 

 

     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]

 

 

     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]

 

 

     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]

 

 

     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.exv10w2

 

Exhibit 10.2

GUARANTY

     GUARANTY, dated as of March ___, 2006, made by HORIZON OFFSHORE, INC., a Delaware corporation
(the “Guarantor”) in favor of THE CIT GROUP/EQUIPMENT FINANCING, INC., a corporation organized and
existing under the laws of the State of Delaware, as Agent for the Lenders described below (the
“Agent”).

     WHEREAS, Horizon Vessels, Inc., a Delaware corporation (the “Borrower”), wishes to borrow up
to USD 78,798,178.00 (the “Loan”) from the Lenders pursuant to the terms of the Loan Agreement
dated of even date herewith (as the same may be amended, supplemented or otherwise modified from
time to time, the “Loan Agreement”) among the Borrower, the Lenders named therein (the “Lenders”)
and the Agent; and

     WHEREAS, the Borrower is a wholly owned subsidiary of the Guarantor and it is to the corporate
benefit of the Guarantor that the Borrower obtain the Loan; and

     WHEREAS, the Loan will be evidenced by the promissory note of the Borrower in favor of the
Agent (as the same may be amended, supplemented as otherwise modified from time to time, the
“Note”); and

     WHEREAS, in order to induce the Lenders to make the Loan, the Guarantor is prepared to
guarantee the payment by the Borrower of its obligations under the Loan Agreement, the Note and the
other Loan Documents (as defined in the Loan Agreement); and

     WHEREAS, the Lenders are prepared to make the Loan in consideration, among other things, of
such guaranty by the Guarantor;

     NOW, THEREFORE, in consideration of the premises, the Guarantor hereby agrees as follows:

     Section 1. Guaranty. As independent and additional security for the Loan, the
Guarantor hereby unconditionally and irrevocably guarantees the payment by the Borrower of all
amounts due and to become due from the Borrower under the Loan Agreement, the Note and the other
Loan Documents (the “Obligations”) and agrees to pay any and all expenses incurred by the Agent in
enforcing any of its or the Lenders’ respective rights under this Guaranty and pursuant to the
Obligations..

     Section 2. Guaranty Absolute.

     (a) The Guarantor hereby guarantees that the Obligations will be paid strictly in
accordance with the terms of the Loan Agreement, the Note and the other Loan Documents (as
applicable), regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the Lenders or the Agent with
respect thereto. The liability of the Guarantor under this Guaranty shall be absolute and
unconditional irrespective of:

     (i) any lack of validity or enforceability of the Loan Agreement, the Note any
other Loan Document or any other agreement or instrument entered into between the
Borrower, the Lenders, the Agent or the Guarantor;

 

 

     (ii) any change in the time, manner or place of payment of, or in any other
term of, all or any of the Obligations, or any other amendment or waiver of or any
consent to departure from the Loan Agreement, the Note or any other Loan Document;

     (iii) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, the Borrower in respect of the Obligations or the
Guarantor in respect of this Guaranty.

     (b) This Guaranty shall continue to be effective or be reinstated, as the case may be,
if at any time any payment of any of the Obligations is rescinded or must otherwise be
returned by the Lenders or the Agent upon the insolvency, bankruptcy or reorganization of
the Borrower or otherwise, all as though such payment had not been made.

     Section 3. Waiver. The Guarantor hereby waives promptness, diligence, notice of
acceptance and any other notice with respect to any of the Obligations and this Guaranty and any
requirement that the Agent or the Lenders or any other person exhaust any right or take any action
against the Borrower, any other Guarantor of any of the Obligations or any other person or entity
or any collateral. This is a guaranty of payment and performance and not of collection only.

     Section 4. Subrogation. The Guarantor will not exercise any rights which it may
acquire by way of subrogation under this Guaranty, by any payment made hereunder or otherwise,
until all the Obligations shall have been paid in full. If any amount shall be paid to the
Guarantor on account of such subrogation rights at any time when all the Obligations shall not have
been paid in full, such amount shall be forthwith paid to the Agent to be credited and applied
against the Obligations. If (i) the Guarantor shall make payment to the Agent, of all or any part
of the Obligations and (ii) all the Obligations shall be paid in full, the Agent will, at the
Guarantor’s request, execute and deliver to the Guarantor appropriate documents, without recourse
and without representation or warranty, transferring to the Guarantor any and all rights the Agent,
may have against the Borrower or necessary to evidence the transfer by subrogation to the Guarantor
of any interest in the Obligations resulting from such payment by the Guarantor.

     Section 5. Payments Free and Clear of Taxes, Etc.

     (a) All sums payable by the Guarantor under this Guaranty, whether of principal,
interest, fees or otherwise, shall be paid in full without set-off or counterclaim and in
such amounts as may be necessary in order that all such payments (after deduction or
withholding for or on account of any present or future taxes, levies, imposts, duties or
other charges of whatsoever nature imposed by any Governmental Agency or taxing authority
thereof, other than any income tax or franchise tax or other tax or fee on or measured by
the gross receipts or net income of the Lenders or the Agent; collectively the “Taxes”)
shall not be less than the amounts otherwise specified to be paid under this Guaranty.

     (b) A certificate as to any additional amounts payable to the Lenders under this
Section 5 submitted to the Guarantor by the Agent shall show in reasonable detail the amount
payable and the calculations used to determine in good faith such amount and shall be deemed
prima facie correct.

     (c) With respect to each deduction or withholding for or on account of any Taxes, the
Guarantor shall promptly furnish to the Lenders such certificates, receipts and other
documents as may be required (in the reasonable judgment of each Lender) to establish any
income tax credit to which any of the Lenders may be entitled.

2

 

     Section 6. APPLICABLE LAW AND JURISDICTION. THIS GUARANTY (INCLUDING, BUT NOT LIMITED
TO, THE VALIDITY AND ENFORCEABILITY HEREOF) 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 GUARANTOR WITH RESPECT TO THIS GUARANTY 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.

     Section 7. Representations and Warranties. The Guarantor hereby represents and
warrants to the Agent as follows:

     (a) It is a corporation duly incorporated, validly existing and in good standing under
the laws of the jurisdiction of its incorporation duly qualified to do business wherever its
business or ownership of property requires it to be so qualified.

     (b) The execution, delivery and performance by the Guarantor of this Guaranty and any
other documents contemplated herein and the completion of all other transactions herein
contemplated are within the Guarantor’s authority, are in furtherance of the Guarantor’s
purposes, have been duly authorized by all necessary action and will not contravene any
applicable law or regulation nor violate the Guarantor’s Articles of Incorporation or
By-Laws nor any agreement binding on the Guarantor nor any applicable law or regulation or
order or decree of any governmental authority or agency of the State of Texas, the State of
New York or the United States of America.

     (c) This Guaranty is supported by adequate and sufficient consideration, has been
validly signed by or on behalf of the Guarantor and represents the valid and binding
obligation of the Guarantor, enforceable in accordance with its terms and will not result in
the Guarantor’s liabilities (including the maximum amount of liabilities that may be
reasonably expected to result from all contingent liabilities and giving effect to rights of
contribution and subrogation) exceeding the fair market value of its assets. The
enforceability of this Guaranty, however, is subject to all applicable bankruptcy,
insolvency, reorganization, moratorium and other laws affecting the rights of creditors
generally and to general equity principles.

     (d) The legality, validity, enforceability or admissibility of this Guaranty are not
subject to or conditional upon this Guaranty being filed, recorded or enrolled with any
governmental authority or agency or stamped with any stamp, duty or similar transaction tax
of the State of Texas, the United States of America or the State of New York.

     (e) There are no pending, or to the best of the Guarantor’s knowledge, any threatened
actions or proceedings affecting the Guarantor before any court, governmental agency or
arbitrator in any country, which may materially adversely affect the financial condition or
operations of the Guarantor.

     Section 8. The Loan Agreement and the Note. The Guarantor hereby acknowledges receipt
of the Loan Documents in execution form and hereby consents and agrees to each Loan Document and to
all the terms and provisions thereof.

     Section 9. Amendments, Etc. No amendment or waiver of any provision of this Guaranty
nor consent to any departure by the Guarantor therefrom shall in any event be effective unless the
same shall

3

 

be in writing and signed by the Agent, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.

     Section 10. Notices. All notices, requests and demands shall be in writing (including
telecopier transmission) given to or made upon the respective parties hereto as follows:

In the case of the Guarantor at:

Horizon Offshore, Inc.

2500 CityWest Blvd., Suite 2200

Houston, Texas 77042

Attention: Chief Financial Officer

Telecopier: (713) 361-2677

In the case of the Agent, at:

The CIT Group/Equipment Financing, Inc., as Agent

1450 West Fountainhead Parkway

Tempe, Arizona 85282

Attention: William Sarver

Telecopier: (480) 379-3466

or in other manner as any party hereto shall designate by written notice to the other parties
hereto. All 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, except that all notices, requests and demands
to the Agent shall not be effective until received by the Agent. 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 11. No Waiver; Remedies. No failure on the part of the Agent or the Lenders
to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.

     Section 12. Continuing Guaranty. This Guaranty is a continuing guaranty and shall (i)
remain in full force and effect until payment in full of the Obligations and payment in full of all
other amounts due under this Guaranty, (ii) be binding upon the Guarantor, its successors or
assigns, as the case may be, and (iii) inure to the benefit of and be enforceable by the Agent and
its respective successors, transferees and assigns, provided, however, that the
Guarantor may not transfer its obligations under this Guaranty or any part of it without the prior
written consent of the Agent.

     Section 13. Capitalized Terms. All capitalized terms used in this Guaranty which are
not defined herein shall have the meanings given to them in the Loan Agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK -

SIGNATURE PAGE FOLLOWS]

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     IN WITNESS WHEREOF, the Guarantor has duly executed and delivered this Guaranty, as of the
date first above written.

	 	 	 	 	 	 	 	 	 
	 	 	HORIZON OFFSHORE, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title:

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