Document:

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                                                                   EXHIBIT 10.31

  PROMISSORY NOTE DATED OCTOBER 2, 2002, BETWEEN R. CLAY ETHERIDGE AND HORIZON
                                 OFFSHORE, INC.

                                 PROMISSORY NOTE

$142,000 Houston, Texas
October 2, 2000

FOR VALUE RECEIVED, R. Clay Etheridge (the "Maker") hereby promises to pay to
the order of Horizon Offshore, Inc. (the "Payee") the principal amount of
$142,000, upon the terms and subject to the conditions set forth in this Note.

Section 1. Maturity. The principal amount of this Note, together with all
accrued but unpaid interest, is due and payable in full on the earlier to occur
of (a) October 2, 2010 and (b) 90 days after the termination of Maker's
employment with Horizon Offshore, Inc. or any of its subsidiaries (such date,
the "Maturity Date"). Section 5 of this Note provides that the payment of the
principal amount and all accrued but unpaid interest may be accelerated upon the
occurrence of an Event of Default.

Section 2. Interest. Interest will accrue on the outstanding principal amount of
this Note at 6.1% per annum. Accrued but unpaid interest will be payable on the
Maturity Date. Interest will be calculated on the basis of the actual number of
days elapsed over a year of 365 days.

Section 3. Principal. Unless the outstanding principal amount is accelerated
upon the occurrence of an Event of Default, the outstanding principal amount
will be due and payable on the Maturity Date.

Section 4. Mandatory Prepayments. The Maker must prepay this Note with the net
cash proceeds (i.e., the cash proceeds received less the aggregate option
exercise price) of the sale of the 20,000 shares of common stock, $1 par value
(the "Common Stock"), of Horizon Offshore, Inc. that may be acquired upon the
exercise of the options granted to him on October 8, 1999 (the "Option") under
the 1998 Stock Incentive Plan of Horizon Offshore, Inc. The Maker agrees to
cooperate with the reasonable requests of the Payee in connection with any
decision of whether or not to exercise the Option with the objective of the
Maker and Payee being that the Option will be exercised at a time, consistent
with applicable law and the policies and procedures of Horizon Offshore, Inc.
regarding sales of Common Stock by its executive officers, that is intended to
maximize the payment of principal and interest under this Note. Any mandatory
prepayments must be accompanied by the payment of all accrued and unpaid
interest through the date of prepayment with respect to the principal amount
prepaid.

Section 5. Default. The occurrence of any of the following shall constitute an
"Event of Default" hereunder: (i) subject to the provisions of Section 7, Maker
defaults in the payment when due of any principal amount, and such failure shall
continue for 10 days after notice is given by Payee to Maker of such failure;
(ii) Maker applies for or consents to the imposition of any insolvency relief;
or (iii) Maker is unable or admits in writing his inability to pay his debts as
they become due.

Subject to the provisions of Section 7, upon the occurrence of an Event of
Default the Payee will have (a) all rights and remedies granted to it under this
Note, and (b) all rights of a creditor under applicable law. All of these rights
and remedies and the exercise of them will be cumulative. No exercise of any
rights and remedies will be deemed to be exclusive or constitute an election of
remedies.

No Event of Default may be waived or will be deemed to have been waived except
in writing by the Payee to the Maker, and any waiver will be applicable only to
the specific Event of Default expressly identified. No course of dealing by the
Payee, or the failure, forbearance or delay by the Payee in exercising any of
its rights or remedies under this Note will operate as a waiver of any Event of
Default or of any right of the Payee under this Note.

Section 6. Waivers by Maker. To the fullest extent permitted by applicable law,
Maker waives with respect to this Note, presentment, protest and demand, notice
of protest, demand and dishonor and diligence in collection.

Section 7. Limited Recourse Obligation. Except upon the occurrence of an Event
of Default (other than following the exercise of the Option in accordance with
Section 5 and the net cash proceeds being insufficient to pay all principal and
interest due under this Note) and as provided in Section 5, this Note is
expressly made a non-recourse obligation. Except as provided in this Section 7,
collection of the indebtedness represented by this Note is limited to the net
cash proceeds received by Maker upon the sale of Common Stock acquired upon
exercise of the Option pursuant to Section 5. The Payee acknowledges that the
Maker has executed this Note for the sole purpose of establishing the existence
of his obligations under it and, except as provided in this Section 7, the Maker
will not be held personally liable for any of those obligations.

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Section 8. Collection and Assessment for Costs. The Maker will reimburse the
Payee for all reasonable out of pocket costs and expenses (including reasonable
legal fees and disbursements) incurred by the Payee in connection with the
collection or attempted collection of the payment of this Note through legal
proceedings or otherwise.

Section 9. Amendment. This Note may not be amended, restated, supplemented or
otherwise modified except by an express written agreement executed and delivered
by the Maker and the Payee. Compliance with the covenants and other provisions
of this Note may not be waived except by an express written waiver signed and
delivered by the Payee.

Section 10. Governing Law. This Note will be governed by and construed under the
laws of the State of Texas, without regard to conflicts of laws principles.

IN WITNESS WHEREOF, this Note has be executed and delivered by Maker, effective
as of the date of the Note set forth above.

MAKER:

R. Clay Etheridge
Accepted:
HORIZON OFFSHORE, INC.

By:
David W. Sharp
Chief Financial Officer
Date: October 2, 2000<PAGE>
                                                                 EXHIBIT 10.AA.1

                                 AMENDMENT NO. 1

                                       to

         FIXED PRICE ENGINEERING, PROCUREMENT AND CONSTRUCTION AGREEMENT

         THIS AMENDMENT is made, entered into and effective as of December 1,
2001 amending the Fixed Price Engineering, Procurement and Construction
Agreement (the "Agreement") dated as of June 2, 2000 by and between East Coast
Power, L.L.C. ("East Coast Power"), a Delaware limited liability company, and
National Energy Production Corporation ("Contractor"), a Delaware corporation,
as assigned by East Coast Power to JEDI Linden NB, L.L.C. ("Owner"), a Delaware
limited liability company, under the terms of the Assignment and Assumption
Agreement dated as of June 2, 2000 by and between East Coast Power, as Assignor,
and Owner, as Assignee.

                                    RECITALS

         A. Owner and Contractor executed the Agreement for the engineering and
construction of the Facility (as defined in the Agreement) on certain real
property in Linden, New Jersey.

         B. Owner and Contractor desire to amend the Agreement.

                                    AGREEMENT

         THEREFORE, in consideration of the covenants and agreements set forth
herein and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto, intending to be legally bound hereby agree as
follows:

         1. The Agreement is revised as described in Attachment A hereto.

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         2. As of the date hereof, pursuant to Section 7.1 of the Agreement,
Contractor has delivered to Owner a Notice of Mechanical Completion.

         3. As of the date hereof, pursuant to Section 7.5 of the Agreement,
Contractor has delivered to Owner a Notice of Substantial Completion.

         4. All other terms and conditions of the Agreement not changed in
Attachment A remain in effect as originally executed.

         5. This Amendment shall be effective as of 12:01 AM CST December 1,
2001; provided, however, that if this Amendment is not approved by Lenders (as
defined in the Agreement), to the extent such approval is required, prior to
December 31, 2001, Owner may declare this Amendment to be null and void ab
initio.

         IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed by their duly authorized representatives as of the date first shown
above.

                                         OWNER:

                                         JEDI LINDEN NB, L.L.C.

                                         By: /s/ Larry M. Kellerman
                                             Larry M. Kellerman
                                             Vice President
                                             and Senior Managing Director

                                         CONTRACTOR:

                                         National Energy Production Corporation

                                         By: /s/ John H. Gillis
                                             John H. Gillis
                                             President

                                       2

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                                 AMENDMENT NO. 1

                      FIXED PRICE ENGINEERING, PROCUREMENT
                           AND CONSTRUCTION AGREEMENT

                                  ATTACHMENT A

1. By this Amendment No.1, the definition of "Mechanical Completion" is amended
such that the last clause of the first sentence thereof reads "and ensuring that
such equipment and related operating systems, except for that certain start up
vent silencer exhaust system, are ready for initial operation, adjustment and
testing and may be so operated, adjusted and tested without damage thereto or to
any other property and without any injury to any person."

2. By this Amendment No. 1, each of Sections 4.5, 6.2, 8.3, 8.4, 8.6, 8.7, 9.18,
10.3, 17.1, Section 1.0 of Exhibit G, Exhibit G-4, and Section 8 of Exhibit N is
hereby amended by changing all references therein from "Substantial Completion"
to "Final Completion."

3. By this Amendment No. 1, Section 6.3 is hereby amended by changing all
references in the heading and the first sentence from "month" to "week" and
"monthly" to "weekly."

4. By this Amendment No.1, the language in the first paragraph of Section 6.4.
Monthly Payments. as set forth below is deleted in its entirety:

                  On or before the first Business Day of the calendar month
         following the month in which Owners receives an invoice pursuant to
         Section 6.3, Owner shall pay to Contractor the full amount specified in
         such invoice less retention provided for in Section 6.2 and less any
         disputed amount, and except that Owner shall pay to Contractor an
         amount equal to the GE Turbine Payment, less retention, and an amount
         equal to the HRSG Payment, less retention, not later than twenty-four
         (24) hours prior to the due date of Contractor's obligation to make
         each GE Turbine Payment to General Electric Company and not later than
         twenty-four (24) hours prior to the due date of Contractor's obligation
         make each HRSG Payment to the HRSG vendor, respectively. All payments
         made by Owner to Contractor hereunder shall be, for purposes of this
         Agreement, made by wire transfer of immediately available funds to the
         account of Contractor designated by written notice to Owner.

And the following language is inserted in its place:

         Section 6.4 Weekly Payments.

                  Owner shall pay Contractor the Contract Price set forth in
         Section 6.1 hereof in accordance with the Payment Schedule subject to
         Sections 6.2 and 6.3 hereof and the procedure set forth in this Article
         6. The Payment Schedule shall be used as the basis for preparation of
         progress Invoices, and, except as otherwise set forth herein, shall
         establish the amount to be paid by Owner to Contractor and
         Subcontractor on an aggregate basis through each week until Final
         Completion. Each progress Invoice shall categorize and be supported by
         Payable Invoices and Direct Cost information related to the Work where
         (a) "Payable Invoices" shall include all invoices for equipment
         procurement commitments and from Subcontractors for Work performed from
         and after December 1, 2001 and (b) "Direct Cost" shall include all
         substantiated cost incurred by the Contractor for direct hire field
         supervision staff, field craft labor, field general labor, field
         indirect cost, home office project management staff, home office
         project engineering staff, home office project procurement staff,
         general home office project clerical staff and a contribution to home
         office general administration and overhead, to the extent not covered
         by the

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         Payable Invoice and Direct Cost. The contribution to home office
         general administration shall be a fixed sum equal to $5,000 per week.
         Partial milestone payments shall not be allowed.

                  As of the effective date of Amendment No. 1, Owner and
         Customer shall have the right to inspect all Contractor project cost
         records, including but not limited to, all invoices, time records,
         purchase orders, purchase order payment records, labor payment records,
         subcontracts and records of payments to Subcontractors.

                  No progress payment nor any partial or entire use of the Work
         by Owner, shall constitute an acceptance of any Work.

                  Owner shall promptly pay directly to the Subcontractors the
         Payable Invoices and pay directly to the Contractor the Direct Cost
         approved by Owner. All Payable Invoice amounts paid to the
         Subcontractors and all Direct Cost amounts paid to the Contractor shall
         be credited as Owner payments against the Contract Price. Upon Final
         Completion, where the total amount paid by Owner to Contractor and
         Subcontractors does not exceed the Contract Price, Owner shall pay to
         Contractor the difference between the total amount paid by Owner to
         Contractor and Subcontractors and the Contract Price. Contractor shall
         reimburse Owner for any and all Payable Invoice and Direct Cost amounts
         paid by Owner that, in the aggregate, exceed the Contract Price and any
         amounts paid by Owner to discharge any legally valid claim or claims
         which have become or which could become mechanic's and materialmen's
         liens that have been or could be filed by Subcontractors against the
         Facility or the real property on which the Facility is situated as a
         result of Contractor's failure to pay Subcontractors for work completed
         and invoiced prior to December 1, 2001. Owner reserves the right to
         pursue any and all remedies available to it at law or in equity to
         recoup from Contractor such payments made by Owner in excess of the
         Contract Price and such payments made by Owner to discharge the above
         described liens.

5. By this Amendment No. 1, the following language in Section 6.6. Payment of
Subcontractors. is deleted in its entirety:

                  Contractor shall promptly pay, in accordance with the terms
         and conditions set forth in the respective Subcontract, each
         Subcontractor the amount to which said Subcontractor is entitled.

6. By this Amendment No. 1, the following language in Section 7.4 Substantial
Completion Criteria. is deleted in its entirety:

                  (iii) the Facility has been demonstrated during a Performance
         Test to meet the Minimum Performance Guarantees and Contractor has so
         certified to Owner pursuant to a Performance Test Certificate in
         accordance with the terms of Section 1.3 of Exhibit G;

                  the Facility has met the requirements of the Steam Purity
                  Test;

                  the Facility has met the requirements of the Reliability Test;

                  completed turnover packages for all plant systems have been
                  delivered to Owner; and

                  all Punch List items, except those identified for completion
                  after Substantial Completion, including those provided
                  pursuant to Section 7.1 to be completed after Substantial
                  Completion, have been completed.

7. By this Amendment No. 1, Section 7.5 is amended such that the second sentence
thereof reads "The Notice of Substantial Completion shall include documentation
that verifies that Contractor has achieved Substantial Completion."

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8. By this Amendment No. 1, Section 7.6 is deleted in its entirety and the
following is substituted therefore:

         Section 7.6 Notice of Final Completion.

                  Following Substantial Completion, Contractor shall perform all
         remaining Work to achieve Final Completion. On the date that Final
         Completion of the Work has been achieved, Contractor shall deliver to
         Owner notice that Final Completion has been achieved as of that date
         ("Notice of Final Completion"). Contractor shall deliver with the
         Notice of Final Completion the items listed on Exhibit L. "Final
         Completion" shall mean that the following shall have occurred:

                  (a) Substantial Completion has been achieved,

                  (b) the Facility has been demonstrated during a Performance
                  Test to meet the Minimum Performance Guarantees and Contractor
                  has so certified to Owner pursuant to a Performance Test
                  Certificate in accordance with the terms of Section 1.3 of
                  Exhibit G;

                  (c) the Facility has met the requirements of the Steam Purity
                  Test;

                  (d) the Facility has met the requirements of the Reliability
                  Test;

                  (e) completed turnover packages for all plant systems have
                  been delivered to Owner; and

                  (f) all Punch List items have been completed.

                  (g) Contractor has achieved the Performance Guarantees - NG or
                  the Minimum Performance Guarantees - NG and no further
                  corrective actions pursuant to Section 8.3 are required,

                  (h) Contractor has achieved the Performance Guarantees - LSFO
                  or the Minimum Performance Guarantees - LSFO and no further
                  corrective actions pursuant to Section 8.3 are required,

                  (i) Contractor has paid to Owner all Electrical Output
                  Liquidated Damages-NG, Electrical Output Liquidated Damages -
                  LSFO, Steam Output Liquidated Damages-NG, Steam Output
                  Liquidated Damages-LSFO, Heat Rate Liquidated Damages-NG and
                  Heat Rate Liquidated Damages-LSFO,

                  (j) Contractor has submitted its final waiver of liens and the
                  waiver of liens from Subcontractors pursuant to Section 6.4,

                  (k) Contractor has completed the Punch List items pursuant to
                  Section 7.1,

                  (l) Contractor has submitted the documentation as set out in
                  Exhibit L which is required to be submitted prior to Final
                  Completion,

                  (m) Contractor has performed all other requirements, which are
                  specifically stated in the Contract Documents to be
                  accomplished prior to Final Completion,

                  (n) Contractor has delivered to Owner all vendor manuals
                  provided by equipment suppliers to the Project, and

                  (o) Contractor has moved start up vent silencer exhaust as
                  required by Owner.

9. By this Amendment No. 1, Section 7.8(c) is hereby amended by adding the
following language as the new first sentence before the existing first sentence
of the section:

                  Owner shall have unrestricted use, care, custody and control
         of the Work upon Substantial Completion, subject only to such access as
         Contractor shall reasonably require to achieve Final Completion.

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10. By this Amendment No. 1, Section 8.5. Failure to Meet Performance Guarantees
and Substantial Completion Prior to the Guaranteed Completion Date. is hereby
deleted in its entirety and the following is substituted therefore:

         Section 8.5  Failure to Meet Guarantees.

                  Subject to and except as otherwise provided by the terms of
         this Agreement, if Contractor fails upon Final Completion to meet the
         Performance Guarantees, Contractor shall be assessed Liquidated Damages
         as set forth in Exhibit F. Contractor shall be assessed Delay
         Liquidated Damages as set forth in Section 1.1 of Exhibit F.

11. By this Amendment No. 1, the first sentence of Section 10.2 shall be revised
to read as follows:

                  The warranty set forth in Section 10.1 shall commence upon
         satisfactory completion by the Contractor of the Performance Test, the
         Steam Purity Test and the Reliability Test and shall extend to a period
         of 365 days (the "Warranty Period").

12. By this Amendment No. 1, the following language in Section 17.1 Termination
Events. is deleted in its entirety:

                  Owner's right to terminate the Agreement following the
         occurrence of the events or circumstances described in this Section
         17.1 shall be subject to Owner having first given Contractor thirty
         (30) days' prior written notice of its intention to terminate the
         Agreement, during which period Contractor shall have failed in the case
         of paragraph (c), (d), (e) and (f) to remedy or to take all reasonable
         steps to remedy of the default.

And the following language is inserted in its place:

                  Owner's right to terminate the Agreement following the
         occurrence of the events or circumstances described in this Section
         17.1 shall be subject to Owner having first given Contractor one (1)
         day prior written notice of its intention to terminate the Agreement.

13. By this Amendment No. 1, the following language in Section 17.1 Termination
Events is deleted in its entirety:

                  (c) fails to achieve Substantial Completion within 90 days
         after the Guaranteed Completion Date and upon or after the 90th day is
         not applying all reasonable effort to achieve Substantial Completion,
         notwithstanding having used all reasonable efforts to achieve
         Substantial Completion, fails to do so within one (1) year after the
         Guaranteed Completion Date,

And the following language is inserted in its place:

                  (c) (i) fails to diligently prosecute the Work and/or (ii)
         fails to achieve Final Completion by April 30, 2002

14. By this Amendment No. 1, the following language in Section 18.2 Substitute
Performance. is deleted in its entirety:

                  If Contractor fails to perform any part of the Work in
         accordance with the Contract Documents, Owner may, without limiting any
         other remedy of Owner, stop the Work, subject to the Owner having first
         given the Contractor at least twenty one (21) days prior written notice
         of its intention to stop the Work (which notice shall describe, with
         specificity, each item which Owner believes Contractor has failed to
         perform and provide reference to the applicable provision of this
         Agreement under which performance is required), and Contractor shall
         promptly commence action to correct such deficiencies. If Contractor
         fails to promptly commence action to correct such deficiencies, Owner
         may make good such deficiencies and a Change Order shall be issued

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         deducting from payments then or thereafter due Contractor the cost of
         correcting such deficiencies.

And the following language is inserted in its place:

                  If Contractor fails to perform any part of the Work in
         accordance with the Contract Documents, Owner may, without limiting any
         other remedy of Owner, stop the Work, subject to the Owner having first
         given the Contractor at least one (1) day prior written notice of its
         intention to stop the Work. Owner may make good such deficiencies in
         Work and a Change Order shall be issued deducting from payments then or
         thereafter due Contractor the cost of correcting such deficiencies.

15. By this Amendment No. 1, Section 1.1 of Exhibit F, Liquidated Damages is
amended such that the first sentence is deleted in its entirety and the
following is substituted therefore:

                  Owner may assess and Contractor agrees to pay liquidated
         damages (the "Delay Liquidated Damages") in an amount equal to
         $2,196,000 if Contractor fails to cause the Facility to achieve Final
         Completion by the Guaranteed Completion Date.

16. By this Amendment No., Sections 19.12, 19.13, 19.14, 19.15, 19.16, and 19.17
are, respectively, renumbered as Sections 19.13, 19.14, 19.15, 19.16, 19.17, and
19.18.

17. By this Amendment No. 1, the following language is added as a new Section
19.12 Delay of Claims.:

                  Owner shall not assert any claims arising in connection with
         or as may be required to discharge mechanic's and materialmen's liens
         arising in connection with certain amounts due and owing as of the date
         hereof to Subcontractors for work performed prior to December 1, 2001
         and otherwise shall not assert any claims arising under this Agreement
         against Contractor before the earlier of (i) April 30, 2002 and (ii)
         the date upon which Contractor shall commence a voluntary proceeding
         (or an involuntary proceeding shall be commenced against Contractor
         which remains not stayed or not discharged for more than thirty (30)
         days after Contractor receives notice of such involuntary proceeding)
         seeking liquidation, reorganization or other relief with respect to
         Contractor or its debts under any bankruptcy, insolvency, or other
         similar laws now or hereinafter in effect or seeking the appointment of
         a trustee, receiver, liquidator, custodian or other similar official of
         Contractor or a substantial part of its property, or if Contractor
         shall consent to any such relief or to the appointment of or taking
         possession by any such official in any such proceeding commenced by or
         against Contractor.

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