WARRANT  AGREEMENT  (the  "Agreement"),  dated as of December 15, 1999,  between
Hvide Marine Incorporated,  a Delaware corporation (together with any successors
and  assigns,  the  "Company"),  and  STATE  STREET  BANK AND TRUST  COMPANY,  a
Massachusetts chartered trust company, as Warrant Agent (the "Warrant Agent").

WHEREAS,  the  Company  proposes  to  issue  and  sell  pursuant  to a  Purchase
Agreement,  dated as of December 15, 1999,  among the  Company,  the  Guarantors
named  therein  (the   "Guarantors")  and  the  Purchasers  named  therein  (the
"Purchasers"),  $95,000,000  in  aggregate  principal  amount at maturity of the
Company's 12 1/2% Senior Secured Notes due 2007, issued under an Indenture dated
as of the date hereof among the Company,  the  Guarantors  and STATE STREET BANK
AND TRUST COMPANY,  as Trustee (the  "Indenture"),  along with 536,193  Warrants
(each,  including any additional  Warrants as described  below, a "Warrant," and
collectively, the "Warrants") for the purchase of an aggregate of 536,193 shares
of the Company's Common Stock, par value $.01 per share (the "Common Stock," and
the shares of Common Stock issuable upon exercise of the Warrants, including any
additional warrants as described below, being referred to herein as the "Warrant
Shares");  and the Company has also  delivered on the date hereof an  additional
187,668  Warrant  to  purchase  187,668  Warrant  Shares  to the  Purchasers  as
compensation  for certain  advisory fees; and

WHEREAS,  the Company  desires the Warrant Agent to act on behalf of the Company
and the  Warrant  Agent is  willing  to act in  connection  with  the  issuance,
transfer, exchange and exercise of Warrants as provided herein; and

WHEREAS,  the holders of Warrants and Warrant  Shares shall,  from time to time,
have certain  rights and  obligations  with respect  thereto as set forth in the
Common Stock Registration Rights Agreement, dated as of December 15, 1999, among
the Company and the Purchasers;

NOW,  THEREFORE,  in consideration of the premises and mutual agreements herein,
the Company and the Warrant Agent hereby agree as follows:

SECTION 1. Appointment of Warrant Agent. The Company hereby appoints the Warrant
Agent  to act as agent  for the  Company  in  accordance  with the  instructions
hereinafter  set forth in this  Agreement,  and the Warrant Agent hereby accepts
such appointment.

SECTION 2. Warrant Certificates. The Warrants will initially be issued either in
global  form (the  "Global  Warrants"),  substantially  in the form of Exhibit A
hereto  (including  footnote  1 thereto)  or in  registered  form as  definitive
Warrant certificates (the "Definitive  Warrants"),  substantially in the form of
Exhibit A hereto  (excluding  footnote 1 thereto).  Such Global  Warrants  shall
represent  such of the  outstanding  Warrants as shall be specified  therein and
each shall provide that it shall  represent the aggregate  amount of outstanding
Warrants  from time to time endorsed  thereon and that the  aggregate  amount of
outstanding  Warrants  represented  thereby  may from time to time be reduced or
increased,  as  appropriate.  Any endorsement of a Global Warrant to reflect the
amount  of any  increase  or  decrease  in the  amount of  outstanding  Warrants
represented  thereby  shall be made by the  Warrant  Agent  and  Depository  (as
defined below) in accordance with instructions given by the holder thereof.  The
Depository  Trust Company (the  "Depository")  shall act as the Depository  with
respect to the Global  Warrants  until a  successor  shall be  appointed  by the
Company.  Upon written request, a Warrant holder may receive from the Depository
and Warrant Agent Definitive Warrants as set forth in Section 6 below.

SECTION  3.   Execution   of  Warrant   Certificates.   Certificates   ("Warrant
Certificates")  evidencing the Global Warrants or the Definitive  Warrants to be
delivered pursuant to this Agreement shall be signed on behalf of the Company by
its  Chairman of the Board or its  President,  Chief  Executive  Officer,  Chief
Operating  Officer,  Chief  Financial  Officer  or a Vice  President  and by its
Secretary  or an  Assistant  Secretary.  Each such  signature  upon the  Warrant
Certificates  may be in the form of a facsimile  signature of the present or any
future  Chairman  of  the  Board,  President,  Chief  Executive  Officer,  Chief
Operating  Officer,  Chief Financial  Officer,  a Vice  President,  Secretary or
Assistant Secretary and may be imprinted or otherwise  reproduced on the Warrant
Certificates  and for that  purpose the Company may adopt and use the  facsimile
signature  of any  person  who shall  have been  Chairman  of the  Board,  Chief
Executive Officer,  President, Chief Financial Officer, Chief Operating Officer,
Vice President, Secretary or Assistant Secretary,  notwithstanding the fact that
at the time the Warrant  Certificates  shall be  countersigned  and delivered or
disposed  of such  person  shall have  ceased to hold such  office.  In case any
officer of the Company  who shall have  signed any of the  Warrant  Certificates
shall cease to be such officer before the Warrant  Certificates  so signed shall
have been  countersigned  by the Warrant  Agent,  or disposed of by the Company,
such Warrant  Certificates  nevertheless may be  countersigned  and delivered or
disposed  of as though  such  person  had not  ceased to be such  officer of the
Company;  and any Warrant  Certificate may be signed on behalf of the Company by
any person who, at the actual date of the execution of such Warrant Certificate,
shall be a proper  officer  of the  Company  to sign such  Warrant  Certificate,
although at the date of the execution of this Warrant  Agreement any such person
was  not  such  officer.  Warrant  Certificates  shall  be  dated  the  date  of
countersignature by the Warrant Agent.

SECTION 4. Registration and Countersignature. The Warrants shall be numbered and
shall be  registered  on the books of the Company  maintained  at the  principal
office of the Warrant Agent in the Borough of  Manhattan,  City of New York (the
"Warrant Register") as they are issued.  Warrant  Certificates shall be manually
countersigned by the Warrant Agent and shall not be valid for any purpose unless
so  countersigned.  The Warrant Agent shall,  upon written  instructions  of the
Chairman of the Board, the President,  Chief Executive Officer,  Chief Operating
Officer,  Chief  Financial  Officer,  a  Vice  President,  the  Secretary  or an
Assistant Secretary of the Company,  initially  countersign and deliver Warrants
entitling  the holders  thereof to purchase  not more than the number of Warrant
Shares  referred  to above in the first  recital  hereof  and  shall  thereafter
countersign and deliver  Warrants as otherwise  provided in this Agreement.  The
Company and the  Warrant  Agent may deem and treat the  registered  holders,(the
"Holders",  as listed on Schedule 1) of the Warrant Certificates as the absolute
owners  thereof  (notwithstanding  any notation of  ownership  or other  writing
thereon  made by anyone)  for all  purposes,  and  neither  the  Company nor the
Warrant Agent shall be affected by any notice to the contrary.

SECTION 5. Transfer and Exchange of Warrants.  The Warrant Agent shall from time
to time,  subject to the  limitations of Section 6, register the transfer of any
outstanding  Warrants  upon the records to be maintained by it for that purpose,
upon surrender  thereof duly endorsed or accompanied (if so required by it) by a
written instrument or instruments of transfer in form reasonably satisfactory to
the Warrant Agent,  duly executed by the registered Holder or Holders thereof or
by the duly  appointed  legal  representative  thereof  or by a duly  authorized
attorney.  Subject to the terms of this Agreement,  each Warrant Certificate may
be  exchanged  for another  certificate  or  certificates  entitling  the Holder
thereof to purchase a like aggregate number of Warrant Shares as the certificate
or  certificates  surrendered  then entitle each Holder to purchase.  Any Holder
desiring  to  exchange a Warrant  Certificate  or  Certificates  shall make such
request in writing  delivered to the Warrant Agent,  and shall  surrender,  duly
endorsed or  accompanied  (if so  required  by the  Warrant  Agent) by a written
instrument or instruments of transfer in form satisfactory to the Warrant Agent,
the Warrant Certificate or Certificates to be so exchanged. Upon registration of
transfer,  the Warrant Agent shall countersign and deliver by certified or first
class mail a new Warrant  Certificate or  Certificates  to the persons  entitled
thereto.  The Warrant  Certificates may be exchanged at the option of the Holder
thereof,  when surrendered at the office or agency of the Company maintained for
such purpose,  which initially will be the corporate trust office of the Warrant
Agent in New York, New York for another  Warrant  Certificate,  or other Warrant
Certificates of different  denominations,  of like tenor and representing in the
aggregate  the right to  purchase a like  number of Warrant  Shares.  No service
charge  shall be made for any  exchange or  registration  of transfer of Warrant
Certificates,  but the Company may require  payment of a sum sufficient to cover
any  stamp  or  other  tax or  other  governmental  charge  that is  imposed  in
connection with any such exchange or registration of transfer. The Warrant Agent
shall  have no  obligation  or duty  to  monitor,  determine  or  inquire  as to
compliance  with any  restrictions  on transfer  imposed under this Agreement or
under applicable law with respect to any transfer of any interest in any Warrant
(including any transfers between or among Depository  participants or beneficial
owners of interests  in any Global  Warrant)  other than to require  delivery of
such certificates and other  documentation or evidence as are expressly required
by, and to do so if and when  expressly  required by the terms of this Agreement
and to examine the same to determine substantial  compliance as to form with the
express requirements thereof.

SECTION 6. Registration of Transfers and Exchanges. (a) Transfer and Exchange of
Definitive Warrants. When Definitive Warrants are presented to the Warrant Agent
with a request:

         (i)  to register the transfer of the Definitive Warrants; or
         (ii) to  exchange  such  Definitive  Warrants  for an equal  number  of
Definitive Warrants of other authorized  denominations,  the Warrant Agent shall
register the  transfer or make the  exchange as  requested  if its  requirements
under this Agreement are met; provided,  however,  that the Definitive  Warrants
presented or surrendered for registration of transfer or exchange:

                  (x)  shall  be  duly  endorsed  or  accompanied  by a  written
         instruction of transfer in form reasonably  satisfactory to the Warrant
         Agent,  duly  executed  by  the  Holder  thereof  or by  such  Holder's
         attorney, duly authorized in writing; and

                  (y) in the case of Warrants (the  "Restricted  Warrants") that
         constitute  Restricted  Securities  (as such  term is  defined  in Rule
         144(a)(3) of the  Securities  Act of 1933, as amended (the  "Securities
         Act")),  such Warrants shall be accompanied,  in the sole discretion of
         the Company, by the following additional information and documents,  as
         applicable;  it being understood,  however, that the Warrant Agent need
         not determine whether any Warrants are Restricted  Warrants and, if so,
         which clause (A) through (C) below is applicable:

(A)  if such  Restricted  Warrant is being  delivered to the Warrant  Agent by a
     Holder for  registration in the name of such Holder,  without  transfer,  a
     certification from such holder to that effect (in substantially the form of
     Exhibit B hereto); or

(B)  if  such   Restricted   Warrant  is  being   transferred   to  a  qualified
     institutional  buyer (as defined in Rule 144A under the  Securities  Act, a
     "QIB") in accordance with Rule 144A under the Securities Act or pursuant to
     an  exemption  from  registration  in  accordance  with  Rule 144 under the
     Securities  Act or Regulation S under the  Securities Act or pursuant to an
     effective  registration statement under the Securities Act, a certification
     to that effect (in  substantially  the form of Exhibit B hereto) and,  with
     respect to transfers  pursuant to Rule 144 or  Regulation  S, an opinion of
     counsel  reasonably  acceptable to the Company and the Warrant Agent to the
     effect  that  such  transfer  does  not  require   registration  under  the
     Securities Act; or

(C)  if such  Restricted  Warrant is being  transferred  in  reliance on another
     exemption  from the  registration  requirements  of the  Securities  Act, a
     certification  to that  effect  (in  substantially  the form of  Exhibit  B
     hereto) and an opinion of counsel reasonably  acceptable to the Company and
     to the  Warrant  Agent to the effect  that such  transfer  does not require
     registration  under the Securities  Act. (b)  Restrictions on Transfer of a
     Definitive  Warrant  for a  Beneficial  Interest  in a  Global  Warrant.  A
     Definitive  Warrant may not be  exchanged  for a  beneficial  interest in a
     Global  Warrant  except upon  satisfaction  of the  requirements  set forth
     below.  Upon  receipt by the Warrant  Agent of a Definitive  Warrant,  duly
     endorsed or  accompanied by  appropriate  instruments of transfer,  in form
     satisfactory to the Warrant Agent, together with:

(A)  if such Definitive Warrant constitutes Restricted Warrants,  certification,
     substantially in the form of Exhibit B hereto, that such Definitive Warrant
     is being  transferred  to a QIB in  accordance  with  Rule  144A  under the
     Securities Act; and

(B)  written instructions  directing the Warrant Agent to make, or to direct the
     Depository  to make,  an  endorsement  on the Global  Warrant to reflect an
     increase in the aggregate amount of the Warrants  represented by the Global
     Warrant,  then the Warrant Agent shall cancel such  Definitive  Warrant and
     cause,  or direct the Depository to cause,  in accordance with the standing
     instructions and procedures existing between the Depository and the Warrant
     Agent, the number of Warrant Shares represented by the Global Warrant to be
     increased  accordingly,  or, if no Global Warrant is then outstanding,  the
     Company  shall issue and the Warrant  Agent shall  countersign a new Global
     Warrant in the appropriate amount.

(c)  Transfer  and  Exchange of Global  Warrants.  The  transfer and exchange of
     Global Warrants or beneficial  interests  therein shall be effected through
     the  Depository,   in  accordance   with  this  Agreement   (including  the
     restrictions  on  transfer  set forth  herein)  and the  procedures  of the
     Depository  therefor.

(d)  Transfer  of a  Beneficial  Interest in a Global  Warrant for a  Definitive
     Warrant.

         (i) Any person  having a  beneficial  interest in a Global  Warrant may
upon request exchange such beneficial  interest for a Definitive  Warrant.  Upon
receipt  by the  Warrant  Agent of  written  instructions  or such other form of
instructions  as is customary  for the  Depository  from the  Depository  or its
nominee on behalf of any person having a beneficial interest in a Global Warrant
and upon receipt by the Warrant  Agent of a written  order or such other form of
instructions as is customary for the Depository or the person  designated by the
Depository  as  having  such  a  beneficial  interest  containing   registration
instructions and, in the case of a beneficial  interest in Restricted  Warrants,
the  following  additional  information  and  documents;  it  being  understood,
however,  that the Warrant Agent need not determine which clause (A) through (C)
below is applicable:

(A)  If such beneficial  interest is being  transferred to the person designated
     by the Depository as being the beneficial owner, a certification  from such
     person to that effect (in substantially the form of Exhibit B hereto); or

(B)  if such  beneficial  interest is being  transferred  to a QIB in accordance
     with Rule 144A under the  Securities  Act or pursuant to an exemption  from
     registration  in  accordance  with  Rule  144 or  Regulation  S  under  the
     Securities Act or pursuant to an effective registration statement under the
     Securities Act, a certification  to that effect from the transferee  and/or
     transferor (in substantially the form of Exhibit B hereto), as requested by
     the Company and the Warrant Agent, and, with respect to transfers  pursuant
     to Rule 144 or Regulation S, an opinion of counsel reasonably acceptable to
     the Company and the Warrant Agent to the effect that such transfer does not
     require registration under the Securities Act; or

(C)  if such  beneficial  interest is being  transferred  in reliance on another
     exemption  from the  registration  requirements  of the  Securities  Act, a
     certification  to that effect from the  transferee  and/or  transferor,  as
     requested by the Company and the Warrant Agent (in  substantially  the form
     of Exhibit B hereto),  and an opinion  of counsel  from the  transferee  or
     transferor reasonably acceptable to the Company and to the Warrant Agent to
     the effect  that such  transfer  does not  require  registration  under the
     Securities  Act, then the Warrant Agent will cause,  in accordance with the
     standing  instructions  and procedures  existing between the Depository and
     the Warrant Agent, the aggregate amount of the Global Warrant to be reduced
     and,  following such reduction,  the Company will execute and, upon receipt
     of appropriate  instructions  in the form of an Officers'  Certificate  (as
     defined in the Indenture),  the Warrant Agent will  countersign and deliver
     to the transferee a Definitive Warrant.

         (ii) Definitive  Warrants issued in exchange for a beneficial  interest
in a Global  Warrant  pursuant to this Section 6(d) shall be  registered in such
names  and in such  authorized  denominations  as the  Depository,  pursuant  to
instructions  from its  direct or  indirect  participants  or  otherwise,  shall
instruct  the  Warrant  Agent  in  writing,  provided  such  designation  is  in
accordance  with this  Section  6(d).  The  Warrant  Agent  shall  deliver  such
Definitive  Warrants to the persons in whose names such Definitive  Warrants are
registered.  (e)  Restrictions  on Transfer  and  Exchange  of Global  Warrants.
Notwithstanding  any other provisions of this Warrant  Agreement (other than the
provisions  set forth in subsection (f) of this Section 6), a Global Warrant may
not be  transferred  as a whole  except by the  Depository  to a nominee  of the
Depository  or by a nominee  of the  Depository  to the  Depository  or  another
nominee  of  the  Depository  or by the  Depository  or any  such  nominee  to a
successor Depository or a nominee of such successor Depository.

(f)  Authentication of Definitive Warrants in Absence of Depository.  If at any
time:

         (i) the  Depository for the Global  Warrants  notifies the Company that
the  Depository is unwilling or unable to continue as depository  for the Global
Warrant and a successor  depository  for the Global  Warrant is not appointed by
the Company within 90 days after delivery of such notice; or

         (ii) the Company, at its sole discretion, notifies the Warrant Agent in
writing that it elects to cause the issuance of Definitive  Warrants  under this
Warrant  Agreement,  then the Company will execute,  and the Warrant Agent, upon
receipt of an Officers' Certificate (as defined in the Indenture) requesting the
countersignature  and delivery of  Definitive  Warrants,  will  countersign  and
deliver  Definitive  Warrants,  in an aggregate  number  equal to the  aggregate
number of Warrants  represented  by the Global  Warrant,  in  exchange  for such
Global Warrant.

(g)  Legends.
         (i) Except as permitted by the following  paragraph  (ii), each Warrant
Certificate  evidencing the Global Warrants and the Definitive Warrants (and all
Warrants  issued in exchange  therefor  or  substitution  thereof)  shall bear a
legend substantially as set forth in Exhibit C.

         (ii) Upon any sale or transfer of a Warrant  pursuant to Rule 144 under
the Securities Act or an effective  registration  statement under the Securities
Act:

(A)  in the case of any Warrant that is a Definitive Warrant,  the Warrant Agent
     shall permit the Holder thereof to exchange such  Restricted  Warrant for a
     Definitive  Warrant that does not bear the legend set forthin Exhibit C and
     rescind any related  restriction on the transfer of such Warrant (i) in the
     case of a sale or  transfer  pursuant  to Rule 144,  after  delivery by the
     Holder thereof of a certificate to that effect  (substantially  in the form
     of Exhibit B hereto) and  accompanied by an opinion of counsel,  reasonably
     satisfactory  to the Company and the Warrant Agent, to the effect that such
     transfer does not require  registration under the Securities Act or (ii) in
     the  case of a sale  or  transfer  pursuant  to an  effective  registration
     statement,  after  delivery  of  evidence  of such  effective  registration
     statement; and

(B)  any such Warrant  represented  by a Global  Warrant shall not be subject to
     the  provisions  set  forth in (i) above  (such  sales or  transfers  being
     subject only to the provisions of Section 6(c) hereof); provided,  however,
     that with  respect to any  request  for an  exchange  of a Warrant  that is
     represented by a Global Warrant for a Definitive Warrant that does not bear
     the legend set forth in Exhibit C, which  request is made in reliance  upon
     Rule 144, the Holder  thereof shall certify in writing to the Warrant Agent
     that such request is being made pursuant to Rule 144 (such certification to
     be  substantially  in the form of  Exhibit  B hereto)  and shall  obtain an
     opinion of counsel,  reasonably  acceptable  to the Company and the Warrant
     Agent, to the effect that such transfer does not require registration under
     the Securities Act.

 (h) Cancellation  and/or Adjustment of a Global Warrant. At such
time as all beneficial  interests in a Global Warrant have either been exchanged
for Definitive Warrants, redeemed, repurchased or cancelled, such Global Warrant
shall be returned to or retained and cancelled by the Warrant Agent. At any time
prior to such  cancellation,  if any beneficial  interest in a Global Warrant is
exchanged for  Definitive  Warrants,  redeemed,  repurchased  or cancelled,  the
number of Warrants  represented  by such Global  Warrant shall be reduced and an
endorsement  shall  be made on such  Global  Warrant,  by the  Warrant  Agent to
reflect such reduction.  (i) Obligations with Respect to Transfers and Exchanges
of Definitive Warrants.

         (i) To permit  registrations  of transfers  and exchanges in accordance
with the terms of this  Agreement,  the Company shall  execute,  and the Warrant
Agent,  upon  receipt of  appropriate  instructions  in the form of an Officers'
Certificate, shall countersign, Definitive Warrants and Global Warrants.

         (ii) All  Definitive  Warrants  and  Global  Warrants  issued  upon any
registration,  transfer or exchange of  Definitive  Warrants or Global  Warrants
shall be the valid  obligations  of the Company,  entitled to the same  benefits
under this  Warrant  Agreement  as the  Definitive  Warrants or Global  Warrants
surrendered upon the registration of transfer or exchange.

         (iii)  Prior to due  presentment  for  registration  of transfer of any
Warrant,  the  Warrant  Agent and the  Company  may deem and treat the person in
whose name any Warrant is registered as the absolute owner of such Warrant,  and
neither  the Warrant  Agent nor the  Company  shall be affected by notice to the
contrary.  SECTION 7. Terms of  Warrants;  Exercise of  Warrants  Subject to the
terms of this Agreement,  each Warrant Holder shall have the right, which may be
exercised commencing on or after the original date of issue of the Warrants (the
"Issue  Date") and until 5:00 p.m.,  New York City time,  on June 30,  2007 (the
"Expiration  Date"),  to receive  from the  Company the number of fully paid and
nonassessable  Warrant  Shares  that the Holder may at the time be  entitled  to
receive on  exercise of such  Warrants  and  payment of the  Exercise  Price (as
defined  below)  then in effect  for such  Warrant  Shares.  Subject to the next
paragraph of this Section,  each Warrant not exercised  prior to the  Expiration
Date  shall  become  void and all  rights  thereunder  and all rights in respect
thereof  under this  Agreement  and  otherwise  shall cease as of such time.  No
adjustments  as to dividends  will be made upon  exercise of the  Warrants.  The
initial  price per  share at which  Warrant  Shares  shall be  purchasable  upon
exercise of Warrants (the "Exercise Price") shall be $.01. The number of Warrant
Shares for which a Warrant may be exercised is subject to adjustment as provided
in Section 12 hereof. A Warrant may be exercised upon surrender at the office or
agency of the Company  maintained for such purpose,  which initially will be the
corporate  trust  office  of the  Warrant  Agent in New York,  New York,  of the
certificate  or  certificates  evidencing  the Warrants to be exercised with the
form of election to purchase on the reverse  thereof  duly filled in and signed,
which signature  shall be guaranteed by a participant in a recognized  Signature
Guarantee  Medallion  Program,  and upon  payment to the  Warrant  Agent for the
account of the Company of the Exercise  Price,  as adjusted as herein  provided,
for the number of Warrant  Shares in  respect  of which such  Warrants  are then
exercised.  Payment of the Exercise Price may be made, in the sole discretion of
the  Holder,  in the form of any of the  following:  (a) cash or a check or bank
draft in New York Clearing House funds,  (b) by the surrender to the Company for
cancellation  of a portion of the Warrants  held by a Holder  representing  that
number of unissued  Warrant  Shares  having a Current  Market Value equal to the
aggregate  Exercise  Price of the Warrant  Shares  being  obtained or (c) by the
surrender  of the  applicable  Warrant and  without the payment of the  Exercise
Price in cash, for such number of Warrant Shares equal to the product of (1) the
number of Warrant Shares for which such Warrants are exercisable with payment in
cash of the  Exercise  Price as of the  date of  exercise  and (2) the  Cashless
Exercise Ratio or (d) by any combination of (a), (b) and (c) above. For purposes
of this Agreement,  the "Cashless  Exercise  Ratio" shall equal a fraction,  the
numerator of which is the excess of the Current Market Value of the Common Stock
on the date of  exercise  over the  Exercise  Price  Per Share as of the date of
exercise and the  denominator of which is the Current Market Value of the Common
Stock on the date of exercise.  An exercise of a Warrant in accordance  with the
immediately  preceding  sentences through the surrender of Warrants and not with
cash is  herein  called a  "Cashless  Exercise."  Upon  surrender  of a  Warrant
Certificate  representing  more than one Warrant in connection with the Holder's
option to elect a Cashless  Exercise,  the number of Warrant Shares  deliverable
upon a  Cashless  Exercise  shall be equal to the  number of  Warrants  that the
holder specifies is to be exercised  pursuant to a Cashless Exercise  multiplied
by the Cashless  Exercise  Ratio.  All  provisions  of this  Agreement  shall be
applicable  with respect to an exercise of a Warrant  Certificate  pursuant to a
Cashless Exercise for less than the full number of Warrants represented thereby.
"Exercise  Price Per Share"  means the Exercise  Price  divided by the number of
Warrant Shares for which a Warrant is then exercisable (without giving effect to
the Cashless Exercise option).

Subject to the  provisions of Section 6 hereof,  upon such surrender of Warrants
and  payment of the  Exercise  Price,  the  Company  shall issue and cause to be
delivered  with all  reasonable  dispatch  to or upon the  written  order of the
Holder  and in such  name  or  names  as the  Warrant  Holder  may  designate  a
certificate or certificates  for the number of full Warrant Shares issuable upon
the  exercise  of such  Warrants  together  with cash as provided in Section 13;
provided, however, that if any consolidation,  merger or lease or sale of assets
and  subsequent  liquidation  of the  Company is  proposed to be effected by the
Company as described in subsection  (k) of Section 12 hereof,  or a tender offer
or an exchange  offer for shares of Common Stock of the Company  shall have been
made and not  terminated,  upon such  surrender  of Warrants  and payment of the
Exercise Price as aforesaid,  the Company shall, as soon as possible, but in any
event not later than  three  days,  other than a Saturday  or Sunday or a day on
which  banking  institutions  in the State of New York are not open for business
("Business Day") thereafter,  issue and cause to be delivered the full number of
Warrant  Shares  issuable  upon the  exercise  of such  Warrants  in the  manner
described in this  sentence  together  with cash as provided in Section 13. Such
certificate or  certificates  shall be deemed to have been issued and any person
so named  therein  shall be  deemed  to have  become a holder  of record of such
Warrant  Shares as of the date of the  surrender of such Warrants and payment of
the Exercise Price.

The  Warrants  shall be  exercisable,  at the  election of the Holders  thereof,
either in full or from time to time in part and, in the event that a certificate
evidencing  Warrants  is  exercised  in respect of fewer than all of the Warrant
Shares  issuable on such exercise at any time prior to the date of expiration of
the Warrants,  a new  certificate  evidencing the remaining  Warrant or Warrants
will be  issued,  and the  Warrant  Agent is hereby  irrevocably  authorized  to
countersign and to deliver the required new Warrant  Certificate or Certificates
pursuant to the  provisions  of this Section 7 and of Section 3 hereof,  and the
Company,  whenever  required  by the Warrant  Agent,  will  promptly  supply the
Warrant Agent with Warrant  Certificates  duly executed on behalf of the Company
for such purpose.

All  Warrant  Certificates  surrendered  upon  exercise  of  Warrants  shall  be
cancelled by the Warrant Agent. Such cancelled Warrant  Certificates  shall then
be  disposed  of by the Warrant  Agent in a manner  consistent  with the Warrant
Agent's  customary  procedure  for  such  disposal  and in a  manner  reasonably
satisfactory  to the Company.  The Warrant Agent shall  account  promptly to the
Company with respect to Warrants  exercised and  concurrently pay to the Company
all monies  received by the Warrant Agent for the purchase of the Warrant Shares
through the exercise of such Warrants.

The Warrant Agent shall keep copies of this  Agreement  available for inspection
by the Holders  during normal  business  hours at its office.  The Company shall
supply the Warrant  Agent from time to time with such  numbers of copies of this
Agreement as the Warrant Agent may request.

SECTION 8. Payment of Taxes.  The Company will pay all  documentary  stamp taxes
attributable  to the  initial  issuance of Warrant  Shares upon the  exercise of
Warrants;  provided,  however, that the Company shall not be required to pay any
tax or taxes that may be payable in  respect  of any  transfer  involved  in the
issue of any Warrant  Certificates or any  certificates  for Warrant Shares in a
name  other  than  that  of  the  registered  Holder  of a  Warrant  Certificate
surrendered  upon the  exercise  of a  Warrant,  and the  Company  shall  not be
required  to issue or  deliver  such  Warrant  Certificates  unless or until the
person or persons requesting the issuance thereof shall have paid to the Company
the  amount of such tax or shall have  established  to the  satisfaction  of the
Company that such tax has been paid.

SECTION 9. Mutilated or Missing Warrant Certificates. In case any of the Warrant
Certificates shall be mutilated,  lost, stolen or destroyed,  the Company may in
its discretion  issue and the Warrant Agent upon written  instructions  from the
Company in the form of an Officers'  Certificate,  may countersign,  in exchange
and substitution for and upon cancellation of the mutilated Warrant Certificate,
or in lieu of and  substitution  for the  Warrant  Certificate  lost,  stolen or
destroyed,  a  new  Warrant  Certificate  of  like  tenor  and  representing  an
equivalent number of Warrants, but only upon receipt of evidence satisfactory to
the Company and the Warrant  Agent of such loss,  theft or  destruction  of such
Warrant Certificate and a bond or indemnity, if requested,  also satisfactory to
them. Applicants for such substitute Warrant Certificates shall also comply with
such other reasonable  regulations and pay such other reasonable  charges as the
Company or the Warrant Agent may prescribe.

SECTION 10. Reservation of Warrant Shares. The Company will at all times reserve
and keep  available,  free from preemptive  rights,  out of the aggregate of its
authorized  but unissued  Common Stock or its authorized and issued Common Stock
held in its treasury,  for the purpose of enabling it to satisfy any  obligation
to issue Warrant Shares upon exercise of Warrants,  the maximum number of shares
of  Common  Stock  which  may  then be  deliverable  upon  the  exercise  of all
outstanding Warrants.

The Company or, if appointed,  the transfer agent for the Common Stock and every
subsequent transfer agent for any shares of the Company's capital stock issuable
upon the  exercise of any of the rights of  purchase  aforesaid  (the  "Transfer
Agent") will be  authorized  and directed at all times to reserve such number of
authorized shares as shall be required for such purpose. The Company will keep a
copy of this Agreement on file with the Transfer Agent and with every subsequent
transfer  agent for any shares of the Company's  capital stock issuable upon the
exercise  of the rights of purchase  represented  by the  Warrants.  The Warrant
Agent is hereby  irrevocably  authorized to  requisition  from time to time from
such  Transfer  Agent  the  stock  certificates  required  to honor  outstanding
Warrants upon exercise  thereof in accordance  with the terms of this Agreement.
The Company will supply such Transfer Agent with duly executed  certificates for
such purposes and will provide or otherwise make available any cash which may be
payable as provided in Section 13. The Company will furnish such Transfer  Agent
a  copy  of  all  notices  of  adjustments  and  certificates   related  thereto
transmitted to each Holder pursuant to Section 14 hereof.

The Company  covenants that all Warrant Shares which may be issued upon exercise
of Warrants  will,  upon payment of the Exercise  Price  therefor and issue,  be
validly  authorized and issued,  fully paid,  nonassessable,  free of preemptive
rights and free from all taxes,  liens,  charges  and  security  interests  with
respect to the issuance thereof. The Company will take no action to increase the
par value of the Common Stock to an amount in excess of the Exercise Price,  and
the Company  will not enter into any  agreements  inconsistent  in any  material
respect  with  the  rights  of  Holders  hereunder.  The  Company  will  use its
reasonable  best  efforts  to  obtain  all such  authorizations,  exemptions  or
consents from any public regulatory body having  jurisdiction  thereof as may be
necessary to enable the Company to perform its obligations under this Agreement.

SECTION 11. Public Equity Offering of Common Stock;  PORTAL.  In the event that,
at any time during the period in which the Warrants are exercisable,  the Common
Stock is not listed on any principal  securities or exchanges or markets  within
the United States of America,  the Company will use its reasonable  best efforts
to permit the Warrant  Shares to be designated  PORTAL  securities in accordance
with the rules and regulations adopted by the National Association of Securities
Dealers, Inc. relating to trading in the Private Offerings,  Resales and Trading
through Automated Linkages market.

SECTION 12.  Adjustment of Exercise Price and Number of Warrant Shares Issuable.
The Exercise  Price and the number of shares of Common Stock  issuable  upon the
exercise of each Warrant (the  "Exercise  Rate") is subject to  adjustment  from
time to time upon the occurrence of the events enumerated in this Section 12.

(a)  Adjustment for Change in Capital Stock.  If the Company:

         (1) pays a dividend  or makes a  distribution  on its  Common  Stock in
         shares of its Common Stock or other  capital  stock of the Company;  or

         (2)  subdivides,  combines or reclassifies  its  outstanding  shares of
         Common Stock,

then the  Exercise  Rate in effect  immediately  prior to such  action  shall be
proportionately  adjusted so that the Holder of any Warrant thereafter exercised
may  receive  the  aggregate  number and kind of shares of capital  stock of the
Company that such Holder would have owned  immediately  following such action if
such Warrant had been exercised  immediately prior to such action or immediately
prior to the record date applicable  thereto,  if any (regardless of whether the
Warrants are then exercisable and without giving effect to the Cashless Exercise
Option).  The Exercise Price in effect immediately prior to such action shall be
adjusted to a price  determined  by  multiplying  the  Exercise  Price in effect
immediately prior to such action by a fraction,  the numerator of which shall be
the number of shares of Common Stock  outstanding  before  giving effect to such
action  and the  denominator  of which  shall be the  number of shares of Common
Stock and/or such other capital stock  outstanding  referred to in the foregoing
clause (a)(1) after giving effect to such action.

The adjustment shall become effective  immediately  after the record date in the
case of a dividend or distribution  and immediately  after the effective date in
the  case  of a  subdivision,  combination  or  reclassification.  If  after  an
adjustment a Holder of a Warrant upon  exercise of it may receive  shares of two
or more classes of capital  stock of the Company,  the board of directors of the
Company shall  determine the  allocation of the adjusted  Exercise Price between
the classes of capital stock. After such allocation,  the exercise privilege and
the Exercise Price of each class of capital stock shall thereafter be subject to
adjustment  on terms  comparable  to those  applicable  to Common  Stock in this
Section 12.

Such adjustment shall be made successively whenever any event listed above shall
occur.  (b)  Adjustment  for Certain  Issuances of Common Stock.  If the Company
issues  or sells to any  holder of its  Common  Stock or any  Affiliate  of such
holder or  distributes to any holder or any Affiliate of such holder any rights,
options or  warrants  entitling  them to  purchase  shares of Common  Stock,  or
securities convertible into or exchangeable for Common Stock, in each case, at a
price per share  less  than the  Current  Market  Value on the  record  date for
determining  entitlements  of any such holder of Common Stock to  participate in
such issuance, sale or distribution (the "Time of Determination"),  the Exercise
Rate shall be adjusted in accordance with the formula:

and the Exercise Price shall be adjusted in accordance with the following
formula:
where:

                  E'  =      the adjusted Exercise Rate.

                  E          = the Exercise Rate  immediately  prior to the Time
                             of  Determination  for any such  issuance,  sale or
                             distribution.

                  EP' =      the adjusted Exercise Price.

                  EP         = the Exercise Price  immediately prior to the Time
                             of  Determination  for any such  issuance,  sale or
                             distribution.

                  O          = the number of Fully  Diluted  Shares (as  defined
                             below) outstanding immediately prior to the Time of
                             Determination  for  any  such  issuance,   sale  or
                             distribution.

                  N          = the number of  additional  shares of Common Stock
                             issued,  sold or  issuable  upon  exercise  of such
                             rights, options or warrants.

                  P          = the offering price per share received in the case
                             of any  issuance or sale of Common Stock or rights,
                             options or warrants inclusive of the exercise price
                             per share of Common Stock  payable upon exercise of
                             such rights, options or warrants.

                  M          = the  Current  Market  Value  per  share of Common
                             Stock  on the  Time of  Determination  for any such
                             issuance, sale or distribution.

For purposes of this Section 12 the term "Fully  Diluted  Shares" shall mean (i)
the shares of Common  Stock  outstanding  as of a specified  date,  and (ii) the
shares of Common  Stock into or for which  rights,  options,  warrants  or other
securities  outstanding as of such date are  exercisable  or convertible  (other
than the Warrants). The adjustments shall be made successively whenever any such
rights,  options or warrants are issued and shall become  effective  immediately
after the relevant Time of  Determination.  Notwithstanding  the foregoing,  the
Exercise  Rate and the  Exercise  Price  shall not be subject to  adjustment  in
connection  with (i) the issuance of any shares of Common Stock upon exercise of
any such rights,  options or warrants which (x) have previously been the subject
of an adjustment under this Agreement for which the required adjustment has been
made or (y) are outstanding on the date hereof and have already been included in
the number of Fully Diluted Shares and (ii) the exercise of the Warrants.  If at
the end of the period  during  which any such  rights,  options or warrants  are
exercisable,  not all rights, options or warrants shall have been exercised, the
Warrant  shall be  immediately  readjusted  to what it would have been if "N" in
each of the above formulas had been the number of shares actually issued.

No adjustment  shall be made under this paragraph (b) if the  application of the
formula stated above in this paragraph (b) would result in a value of E' that is
lower than the value of E. (c) Adjustment for Other Distribution. If the Company
distributes  to any holder of its Common  Stock or any  Affiliate of such holder
(i) any  evidences of  indebtedness  of the Company or any of its  subsidiaries,
(ii) any  assets of the  Company  or any of its  subsidiaries  (other  than cash
dividends or other cash  distributions  that do not constitute an  Extraordinary
Cash Dividend),  or (iii) any rights,  options or warrants to acquire any of the
foregoing or to acquire any other  securities of the Company,  the Exercise Rate
shall be adjusted in accordance with the formula:

                                                  E' = E x   M
                                                           M - F

and the Exercise Price shall be decreased (but not increased) in accordance with
the following formula:

                                                   EP' = EP x E
                                                                  E'
where:

                  E'  =      the adjusted Exercise Rate.

                  E = the current  Exercise  Rate on the record date referred to
in this paragraph (c) below.

                  EP' =      the adjusted Exercise Price.

                  EP         = the  current  Exercise  Price on the record  date
                             referred to in this paragraph (c) below.

                  M          = the  Current  Market  Value  per  share of Common
                             Stock  on  the  record  date  referred  to in  this
                             paragraph (c) below.

                  F          = the fair market value on the record date referred
                             to in this paragraph (c) below of the indebtedness,
                             assets,  rights,  options or warrants distributable
                             in respect of one share of Common Stock.

The adjustments  shall be made  successively  whenever any such  distribution is
made and  shall  become  effective  immediately  after the  record  date for the
determination  of  stockholders  entitled  to receive the  distribution.  If any
adjustment  is made pursuant to clause (iii) above of this  subsection  (c) as a
result of the  issuance  of rights,  options or  warrants  and at the end of the
period during which any such rights,  options or warrants are  exercisable,  not
all such  rights,  options or warrants  shall have been  exercised,  the Warrant
shall be  immediately  readjusted  as if "F" in the above  formula  was the fair
market  value  on  the  record  date  of the  indebtedness  or  assets  actually
distributed  upon  exercise of such rights,  options or warrants  divided by the
number of shares of Common Stock outstanding on the record date.

This  subsection  does not apply to rights,  options or warrants  referred to in
subsection  (b) of this Section 12. (d) Current  Market Value.  "Current  Market
Value" per share of Common Stock or of any other security  (herein  collectively
referred to as a "Security") at any date shall be:

         (1) if the Security is not registered under the Securities Exchange Act
         of 1934, as amended (the "Exchange Act"), (i) the value of the Security
         determined  in good faith by the board of  directors of the Company and
         certified in a board resolution,  based on the most recently  completed
         arm's length transaction between the Company and a person other than an
         Affiliate  of the Company and the closing of which  occurs on such date
         or shall have  occurred  within the six months  preceding  such date or
         (ii) if no such transaction  shall have occurred on such date or within
         such six-month  period,  the value of the Security  preceding such date
         determined  by the  disinterested  members of the board of directors of
         the  Company  and  certified  in a  board  resolution  adopted  by  the
         disinterested  members of the Company's board of directors delivered to
         the  Holders  unless  the  Holders  of at least 33 1/3  percent  of the
         outstanding  Warrants shall object to such  determination in which case
         the value shall be determined by an  Independent  Financial  Expert (as
         defined  below)  in all  other  instances,  or (2) if the  Security  is
         registered under the Exchange Act, the average of the daily closing bid
         prices for each  Business Day during the period  commencing 15 Business
         Days before such date and ending on the date one day prior to such date
         or, if the Security has been registered under the Exchange Act for less
         than 15 consecutive Business Days before such date, then the average of
         the daily closing bid prices (as defined below) for all of the Business
         Days before such date for which daily closing bid prices are available.
         If the closing bid price is not  determinable  for at least 10 Business
         Days in such period,  the Current Market Value of the Security shall be
         determined  as if the  Security was not  registered  under the Exchange
         Act.

The "closing bid price" for any Security on each Business Day means: (A) if such
Security  is listed or  admitted  to trading  on any  securities  exchange,  the
closing price,  regular way, on such day on the principal exchange on which such
Security is traded,  or if no sale takes  place on such day,  the average of the
closing  bid and  asked  prices on such day,  (B) if such  Security  is not then
listed or admitted to trading on any securities exchange, the last reported sale
price on such day, or if there is no such last  reported sale price on such day,
the average of the closing bid and the asked  prices on such day, as reported by
a reputable  quotation source designated by the Company or (C) if neither clause
(A) nor (B) is  applicable,  the average of the reported  high bid and low asked
prices on such day, as reported by a reputable quotation service, or a newspaper
of  general  circulation  in  the  Borough  of  Manhattan,  City  of  New  York,
customarily  published on each Business Day, designated by the Company. If there
are no such  prices  on a  Business  Day,  then the  market  price  shall not be
determinable for such Business Day.

"Independent  Financial Expert" shall mean any nationally  recognized investment
banking firm  reasonably  acceptable to the Warrant Agent (i) that does not (and
whose  directors,  officers,  employees and  Affiliates do not) have a direct or
indirect  material  financial  interest in the Company,  (ii) that has not been,
and, at the time it is called upon to serve as an Independent  Financial  Expert
under this Agreement is not (and none of whose directors, officers, employees or
Affiliates  is) a promoter,  director or officer of the Company,  (iii) that has
not been  retained  by the  Company  for any  purpose,  other than to perform an
equity  valuation,  within the  preceding  twelve  months and (iv) that,  in the
reasonable  judgment of the board of  directors of the Company  (certified  by a
board resolution),  is otherwise qualified to serve as an independent  financial
advisor. Any such person may receive customary  compensation and indemnification
by the Company for opinions or services it provides as an Independent  Financial
Expert.

"Affiliate"  of any  specified  person means any other person which  directly or
indirectly through one or more  intermediaries  controls or is controlled by, or
is under common control with,  such specified  person.  For the purposes of this
definition,   "control"   (including  with  correlative   meanings,   the  terms
"controlling,"  "controlled  by" and "under common  control  with") as used with
respect to any person,  means the  possession,  directly or  indirectly,  of the
power to direct or cause the  direction of the  management  and policies of such
person,  whether  through the  ownership of voting  securities,  by agreement or
otherwise.

"Extraordinary  Cash  Dividend"  means any cash  dividends  with  respect to the
Common  Stock the  aggregate  amount of which in any  fiscal  year  exceeds  the
greater of (i) 5.0% of the net income of the  Company and its  subsidiaries  for
the fiscal year  immediately  preceding  the payment of such  dividend  and (ii)
$100,000.  (e) When De Minimis Adjustment May Be Deferred.  No adjustment in the
Exercise Rate or Exercise Price need be made unless the adjustment would require
an increase or decrease of at least 1% in the Exercise  Rate or Exercise  Price,
as the case may be. Notwithstanding the foregoing,  any adjustments that are not
made  shall  be  carried  forward  and  taken  into  account  in any  subsequent
adjustment,  provided that no such adjustment  shall be deferred beyond the date
on which a Warrant is exercised.

All  calculations  under  this  Section  12  shall be made to the  nearest  cent
(one-half a cent being rounded up) or to the nearest  1/100th (5/1000 of a share
being  rounded  up) of a  share,  as the case  may be.  (f)  When No  Adjustment
Required. If an adjustment is made upon the establishment of a record date for a
distribution subject to subsections (a), (b) or (c) hereof and such distribution
is subsequently  cancelled,  the Exercise Rate and Exercise Price then in effect
shall be  readjusted,  effective  as of the date  when  the  board of  directors
determines to cancel such distribution,  to that which would have been in effect
if such  record date had not been fixed.  If the  Company  includes  the Warrant
Holders in any  distribution  subject to  subsection  (a), (b) or (c) hereof and
such  inclusion  results in the  Warrant  Holders  maintaining  their  ownership
percentage of the Company on a fully diluted basis,  then no adjustment shall be
necessary.  If an adjustment  would be required  under two or more of paragraphs
(a), (b) and (c), such adjustments will be determined  without  duplication.  To
the extent the Warrants become convertible into cash, no adjustment need be made
thereafter  as to the amount of cash into which such  Warrants are  exercisable.
Interest  will not accrue on the cash.  (g) Notice of  Adjustment.  Whenever the
Exercise  Rate or Exercise  Price is  adjusted,  the Company  shall  provide the
notices required by Section 14 hereof.

(h) Voluntary Reduction. The Company from time to time may increase the Exercise
Rate  or  reduce  the  Exercise  Price  by any  amount  for any  period  of time
(including,  without  limitation,  permanently)  if the  period  is at  least 20
Business Days.

An increase of the Exercise  Rate or reduction of the Exercise  Price under this
subsection (h) (other than a permanent increase or reduction) does not change or
adjust the Exercise Rate or Exercise  Price  otherwise in effect for purposes of
subsections (a), (b) or (c) of this Section 12.

(i) Minimum Exercise Price.  Notwithstanding  anything to the contrary contained
in this Agreement, if the Exercise Price, as adjusted pursuant to this Agreement
(other than this Section 12(i)),  shall be less than the aggregate par values of
the related  Warrant Shares,  then such Exercise Price, as so adjusted,  for all
purposes of this Agreement,  shall be an amount equal to the aggregate par value
of such related Warrant Shares. (j) When Issuance or Payment May Be Deferred. In
any case in which  this  Section  12 shall  require  that an  adjustment  in the
Exercise  Rate or  Exercise  Price be made  effective  as of a record date for a
specified  event,  the Company may elect to defer until the  occurrence  of such
event (i) issuing to the Holder of any Warrant  exercised after such record date
the Warrant Shares and other capital stock of the Company, if any, issuable upon
such exercise  over and above the Warrant  Shares and other capital stock of the
Company,  if any,  issuable upon such exercise on the basis of the Exercise Rate
prior to such  adjustment,  and (ii) paying to such Holder any amount in cash in
lieu of a fractional share pursuant to Section 13; provided,  however,  that the
Company shall deliver to the Warrant Agent and shall cause the Warrant Agent, on
behalf of and at the  expense of the  Company,  to deliver to such  Holder a due
bill or other appropriate  instrument  evidencing such Holder's right to receive
such additional Warrant Shares, other capital stock and cash upon the occurrence
of the event requiring such adjustment.

(k) Reorganizations.  In case of any capital  reorganization,  other than in the
cases referred to in Sections 12(a), (b) or (c) hereof,  or the consolidation or
merger of the Company with or into another  corporation  (other than a merger or
consolidation in which the Company is the continuing  corporation and which does
not result in any  reclassification  of the  outstanding  shares of Common Stock
into shares of other stock or other securities or property)  (collectively  such
actions being hereinafter referred to as "Reorganizations"),  or the sale of the
property of the Company as an entirety or  substantially  as an entirety,  there
shall  thereafter  be  deliverable  upon exercise of any Warrant (in lieu of the
number of shares of Common Stock  theretofore  deliverable) the number of shares
of stock or other  securities  or  property,  if any,  to which a holder  of the
number of shares of Common Stock that would otherwise have been deliverable upon
the exercise of such Warrant would have been  entitled upon such  Reorganization
or sale if such  Warrant had been  exercised in full  immediately  prior to such
Reorganization.  In case of any Reorganization or sale, appropriate  adjustment,
as  determined  in good faith by the board of directors  of the  Company,  whose
determination  shall be described in a duly adopted resolution  certified by the
Company's Secretary or Assistant Secretary,  shall be made in the application of
the  provisions  herein set forth with  respect to the rights and  interests  of
Holders so that the provisions set forth herein shall  thereafter be applicable,
as nearly as  possible,  in relation to any such shares or other  securities  or
property thereafter deliverable upon exercise of Warrants.

The  Company  shall  not  effect  any  such  Reorganization  unless  prior to or
simultaneously with the consummation thereof the successor corporation (if other
than the Company) resulting from such Reorganization or the corporation or other
appropriate  corporation  or entity  purchasing  such assets shall (i) expressly
assume, by a supplemental warrant agreement or other acknowledgment executed and
delivered to the Warrant  Agent the  obligation  to deliver to the Warrant Agent
and to cause the  Warrant  Agent to deliver to each such  Holder  such shares of
stock,  securities  or assets as, in accordance  with the foregoing  provisions,
such Holder may be entitled to purchase,  and the due and  punctual  performance
and observance of each and every covenant,  condition,  obligation and liability
under this  Agreement to be performed  and observed by the Company in the manner
prescribed  herein and (ii) enter into an  agreement  providing  to the  Holders
rights and benefits  substantially similar to those enjoyed by the Holders under
the Common  Stock  Registration  Rights  Agreement  of even date  herewith.  The
foregoing   provisions   of  this  Section   12(k)  shall  apply  to  successive
Reorganization  transactions.   (l)  Form  of  Warrants.   Irrespective  of  any
adjustments in the number or kind of shares purchasable upon the exercise of the
Warrants,  Warrants theretofore or thereafter issued may continue to express the
same price and number and kind of shares as are stated in the Warrants initially
issuable pursuant to this Agreement. (m) Warrant Agent's Disclaimer. The Warrant
Agent has no duty to determine  when an adjustment  under this Section 12 should
be made,  how it should be made or what it should be. The  Warrant  Agent has no
duty to determine  whether any  provisions of a supplemental  warrant  agreement
under subsection (k) of this Section 12 are correct.  The Warrant Agent makes no
representation  as to the validity or value of any  securities  or assets issued
upon exercise of Warrants.  The Warrant Agent shall not be  responsible  for the
Company's failure to comply with this Section 12.

(n) Miscellaneous. (i) For purpose of this Section 12 the term "shares of Common
Stock" shall mean (a) the Company's  Common Stock,  par value $.01 per share, as
of the  date of this  Agreement,  and (b)  shares  of any  other  class of stock
resulting from successive changes or  reclassification of such shares consisting
solely of changes in par  value,  or from par value to no par value,  or from no
par  value to par  value.  In the  event  that at any  time,  as a result  of an
adjustment  made  pursuant to this  Section  12, the  Holders of Warrants  shall
become  entitled to purchase any  securities  of the Company  other than,  or in
addition to,  shares of Common  Stock,  thereafter  the number or amount of such
other  securities so purchasable  upon exercise of each Warrant shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent as
practicable  to the provisions  with respect to the Warrant Shares  contained in
subsections (a) through (m) of this Section 12, inclusive, and the provisions of
Sections 7, 8, 10 and 13 with respect to the Warrant  Shares or the Common Stock
shall apply on like terms to any such other securities generally.

(ii) The Company shall provide Holders,  within 15 days after it files them with
the SEC, copies of its annual report and of the information, documents and other
reports (or copies of such  portions of any of the  foregoing  as the SEC may by
rules and  regulations  prescribe) that the Company is required to file with the
SEC pursuant to Section 13(a) or 15(d) of the Exchange Act. Notwithstanding that
the Company may not be required to remain subject to the reporting  requirements
of Section 13 or 15(d) of the Exchange Act, the Company  shall  continue to file
such annual  reports and  information,  documents and other reports with the SEC
and to provide  the  Holders  with such  annual  reports  and such  information,
documents and other reports as the Company provides to the holders of its Common
Stock or other securities.

SECTION 13.  Fractional  Interests.  The Company  shall not be required to issue
fractional Warrant Shares on the exercise of Warrants.  If more than one Warrant
shall be presented for exercise in full at the same time by the same Holder, the
number of full Warrant Shares which shall be issuable upon the exercise  thereof
shall be  computed  on the  basis of the  aggregate  number  of  Warrant  Shares
purchasable  on exercise  of the  Warrants so  presented.  If any  fraction of a
Warrant Share would,  except for the  provisions of this Section 13, be issuable
on the exercise of any  Warrants (or  specified  portion  thereof),  the Company
shall pay an amount in cash equal to the excess of the value (as  determined  by
the Board of Directors in good faith) of a Warrant Share over the Exercise Price
on the day immediately preceding the date the Warrant is presented for exercise,
multiplied by such fraction.

SECTION 14. Notices to Warrant Holders.  Upon any adjustment pursuant to Section
12 hereof,  the Company shall give prompt written  notice of such  adjustment to
the Warrant  Agent and shall cause the  Warrant  Agent,  on behalf of and at the
expense of the  Company,  within 10 days after  notification  is received by the
Warrant Agent of such adjustment,  to mail by first class mail, postage prepaid,
to each Holder a notice of such  adjustment(s)  and shall deliver to the Warrant
Agent a certificate of the Chief Financial  Officer of the Company setting forth
in  reasonable  detail  (i) the number of Warrant  Shares  purchasable  upon the
exercise  of each  Warrant and the  Exercise  Price of such  Warrant  after such
adjustment(s),  (ii) a brief statement of the facts requiring such adjustment(s)
and  (iii)  the  computation  by  which  such   adjustment(s)  was  made.  Where
appropriate,  such notice may be given in advance and  included as a part of the
notice required under the other provisions of this Section 14. In case:

(a)  the Company shall authorize the issuance to all holders of shares of Common
     Stock of rights, options or warrants to subscribe for or purchase shares of
     capital stock of the Company; or

(b)  the Company shall  authorize the  distribution  to all holders of shares of
     Common Stock of evidences of its indebtedness or assets; or

(c)  of any  consolidation  or merger to which  the  Company  is a party and for
     which approval of any  shareholders  of the Company is required,  or of the
     conveyance  or  transfer  of the  properties  and  assets  of  the  Company
     substantially  as an  entirety,  or of any  reclassification  or  change of
     Common Stock issuable upon exercise of the Warrants (other than a change in
     par value,  or from par value to no par value,  or from no par value to par
     value, or as a result of a subdivision or  combination),  or a tender offer
     or exchange offer for shares of capital stock of the Company; or

(d)  of the voluntary or involuntary  dissolution,  liquidation or winding up of
     the Company; or

(e)  the Company proposes to take any action that would require an adjustment to
     the Exercise Rate and/or Exercise Price pursuant to Section 12;

then the Company shall give prompt  written notice to the Warrant Agent at least
ten days prior to the date the Warrant  Agent  should give notice to the holders
of the Warrant Certificate,  and shall cause the Warrant Agent, on behalf of and
at the expense of the Company,  to give to each of the registered holders of the
Warrant Certificates at his or its address appearing on the Warrant Register, at
least 20 days prior to the applicable record date hereinafter specified,  or the
date of the event in the case of events for which  there is no record  date,  by
first-class mail,  postage prepaid,  a written notice stating (i) the date as of
which the holders of record of shares of Common  Stock to be entitled to receive
any such rights, options, warrants or distribution are to be determined, or (ii)
the initial  expiration date set forth in any tender offer or exchange offer for
shares of  Common  Stock,  or (iii)  the date on which  any such  consolidation,
merger, conveyance, transfer, dissolution, liquidation or winding up is expected
to become effective or consummated, and the date as of which it is expected that
holders of record of shares of Common  Stock shall be entitled to exchange  such
shares  for  securities  or  other  property,  if  any,  deliverable  upon  such
reclassification,  consolidation,  merger,  conveyance,  transfer,  dissolution,
liquidation  or winding up. The  failure by the Company or the Warrant  Agent to
give such notice or any defect therein shall not affect the legality or validity
of any distribution, right, option, warrant, consolidation,  merger, conveyance,
transfer, dissolution, liquidation or winding up, or the vote upon any action.

The Company shall give prompt written notice to the Warrant Agent,  at least ten
days prior to the date the  Warrant  Agent  should give notice to the holders of
the Warrant  Certificate  and shall cause the Warrant Agent, on behalf of and at
the  expense  of the  Company,  to give to each  Holder  written  notice  of any
determination  to make a distribution or dividend to the holders of any class of
its Common Stock of any assets  (including  cash),  debt  securities,  preferred
stock, or any rights or warrants to purchase debt  securities,  preferred stock,
assets or other  securities  (other than Common Stock,  or rights,  options,  or
warrants to purchase Common Stock) of the Company,  which notice shall state the
nature and amount of such planned  dividend or distribution  and the record date
therefor, and shall be sent to the Holders at least 20 days prior to such record
date therefor. Nothing contained in this Agreement or in any Warrant Certificate
shall be  construed  as  conferring  upon the  Holders  the  right to vote or to
consent or to receive  notice as  shareholders  in  respect of the  meetings  of
shareholders or the election of directors of the Company or any other matter, or
any rights whatsoever as shareholders of the Company.

In all  cases,  the text of any  notice to  Holders  provided  pursuant  to this
Section  shall be prepared  by the  Company and the Warrant  Agent shall have no
responsibility with regard to such notice being accurate. SECTION 15. Notices to
the Company and Warrant Agent. Any notice or demand authorized by this Agreement
to be given or made by the  Warrant  Agent or by any Holder to or on the Company
shall be  sufficiently  given or made when received at the office of the Company
expressly designated by the Company as its office for purposes of this Agreement
(until the Warrant Agent is otherwise  notified in accordance  with this Section
15 by the Company), as follows:

                           Hvide Marine Incorporated
                           2200 Eller Drive
                           P.O. Box 13038
                           Fort Lauderdale, Florida 33316

                           Attention: Robert B. Lamm
                           Fax Number: (954) 527-1772

                           with a copy to:

                           Kronish Lieb Weiner & Hellman LLP
                           1114 Avenue of the Americas
                           New York, New York 10036-7798

                           Attention:  Robert J. Feinstein, Esq.
                           Fax Number: (212) 479-6275

                           and to:

                           Dyer Ellis & Joseph
                           Watergate, Eleventh Floor
                           600 New Hampshire Ave., N.W.
                           Washington, D.C. 20034
                           Attention: James B. Ellis, Esq.
                           Fax Number: 202-944-3068

Any  notice  pursuant  to this  Agreement  to be given by the  Company or by any
Holder(s) to the Warrant Agent shall be sufficiently  given when received by the
Warrant  Agent at the address  appearing  below  (until the Company is otherwise
notified in accordance with this Section by the Warrant Agent).

                           STATE STREET BANK AND TRUST COMPANY
                           Goodwin Square
                           225 Asylum Street, 23rd Floor
                           Hartford, CT 06103
                           Attention:  Cauna Silva
                           Fax Number: (860) 244-1881

SECTION 16.  Supplements and  Amendments.  The Company and the Warrant Agent may
from time to time supplement or amend this Agreement without the approval of any
holders of Warrants in order to cure any  ambiguity or to correct or  supplement
any provision  contained herein which may be defective or inconsistent  with any
other provision  herein, or to make any other provisions in regard to matters or
questions  arising  hereunder  which the Company and the Warrant  Agent may deem
necessary or desirable and all other  supplements  or  amendments,  except those
that have a material  adverse effect on the interests of any holder of Warrants.
Any amendment or supplement to this Agreement that has a material adverse effect
on the  interests of holders  shall  require the written  consent of  registered
holders of a majority  of the then  outstanding  Warrants.  Notwithstanding  the
foregoing,  the consent of each holder of a Warrant  affected  shall be required
for any amendment pursuant to which the Exercise Price would be increased or the
number  of  Warrant  Shares  purchasable  upon  exercise  of  Warrants  would be
decreased (not including adjustments contemplated hereunder).  The Warrant Agent
shall be  entitled to receive and shall be fully  protected  in relying  upon an
Officers'  Certificate  and opinion of counsel as  conclusive  evidence that any
such  amendment or supplement is authorized or permitted  hereunder,  that it is
not  inconsistent  herewith,  and that it will be  valid  and  binding  upon the
Company in accordance with its terms.

SECTION 17.  Concerning  the Warrant  Agent.  The Warrant Agent  undertakes  the
duties and  obligations  imposed by this Agreement upon the following  terms and
conditions,  by all of which the Company and the Holders, by their acceptance of
Warrants, shall be bound:

                  (a)  The  statements  contained  herein  and  in  the  Warrant
         Certificate  shall be  taken  as  statements  of the  Company,  and the
         Warrant Agent assumes no  responsibility  for the correctness of any of
         the same except such as describe the Warrant  Agent or any action taken
         by it. The Warrant Agent assumes no responsibility  with respect to the
         distribution of the Warrants except as herein otherwise provided.

                  (b) The Warrant Agent shall not be responsible for any failure
         of the Company to comply with the covenants contained in this Agreement
         or in the Warrants to be complied with by the Company.

                  (c) The  Warrant  Agent may execute  and  exercise  any of the
         rights or powers  hereby  vested in it or  perform  any duty  hereunder
         either itself (through its employees) or by or through its attorneys or
         agents  (which  shall  not  include  its  employees)  and  shall not be
         responsible for the misconduct of any agent appointed with due care.

                  (d) The  Warrant  Agent may  consult  at any time  with  legal
         counsel  satisfactory  to it (who may be counsel for the Company),  and
         the Warrant  Agent shall incur no  liability or  responsibility  to the
         Company or to any Holder in respect of any action  taken,  suffered  or
         omitted  by it  hereunder  in good  faith  and in  accordance  with the
         opinion or the advice of such counsel.

                  (e)  Whenever  in the  performance  of its  duties  under this
         Agreement the Warrant  Agent shall deem it necessary or desirable  that
         any fact or matter be proved or  established  by the  Company  prior to
         taking or suffering any action  hereunder,  such fact or matter (unless
         such evidence in respect thereof be herein specifically prescribed) may
         be deemed to be  conclusively  proved and  established by a certificate
         signed by the  Chairman  of the Board,  Chief  Executive  Officer,  the
         President, Chief Financial Officer, Chief Operating Officer, one of the
         Vice Presidents, the Treasurer, the Secretary or an Assistant Secretary
         of the Company and delivered to the Warrant Agent; and such certificate
         shall be full  authorization  to the Warrant Agent for any action taken
         or suffered in good faith by it under the  provisions of this Agreement
         in reliance upon such certificate.

                  (f) The  Company  agrees to pay the Warrant  Agent  reasonable
         compensation  for all  services  rendered by the  Warrant  Agent in the
         performance  of its  duties  under this  Agreement,  to  reimburse  the
         Warrant  Agent for all  expenses  and  governmental  charges  and other
         charges of any kind and nature incurred by the Warrant Agent (including
         reasonable fees and expenses of the Warrant Agent's counsel and agents)
         in the performance of its duties under this Agreement, and to indemnify
         the Warrant Agent and its officers, directors, employees and agents and
         save  them  harmless  against  any  and  all   liabilities,   including
         judgments,  costs and counsel fees, for anything done or omitted by the
         Warrant Agent in the  performance  of its duties under this  Agreement,
         except as a result  of the  Warrant  Agent's  gross  negligence  or bad
         faith.

                  (g) The Warrant Agent and any stockholder,  director,  officer
         or employee of the  Warrant  Agent may buy,  sell or deal in any of the
         Warrants  or other  securities  of the  Company  or become  pecuniarily
         interested in any  transactions in which the Company may be interested,
         or contract with or lend money to the Company or otherwise act as fully
         and freely as though it were not Warrant Agent under this  Agreement or
         such stockholder,  director,  officer or employee. Nothing herein shall
         preclude  the Warrant  Agent from acting in any other  capacity for the
         Company or for any other legal entity  including,  without  limitation,
         acting as Transfer Agent, Trustee under the Indenture or as a lender to
         the Company or an affiliate thereof.

                  (h) The Warrant Agent shall act hereunder solely as agent, and
         its duties shall be determined  solely by the  provisions  hereof.  The
         Warrant  Agent  shall not be  liable  for  anything  which it may do or
         refrain from doing in connection with this Agreement except for its own
         gross negligence or bad faith.

                  (i)  The  Warrant  Agent  will  not  incur  any  liability  or
         responsibility  to the Company or to any Holder for any action taken in
         reliance   on  any  notice,   resolution,   waiver,   consent,   order,
         certificate, or other paper, document or instrument reasonably believed
         by it to be genuine and to have been  signed,  sent or presented by the
         proper party or parties.

                  (j) The Warrant Agent shall not be under any responsibility in
         respect of the validity of this Agreement or the execution and delivery
         hereof  (except the due  execution  hereof by the Warrant  Agent) or in
         respect  of the  validity  or  execution  of any  Warrant  (except  its
         countersignature  thereof);  nor  shall  the  Warrant  Agent by any act
         hereunder  be deemed to make any  representation  or warranty as to the
         authorization  or reservation of any Warrant Shares (or other stock) to
         be issued  pursuant to this Agreement or any Warrant,  or as to whether
         any Warrant  Shares (or other  stock)  will,  when  issued,  be validly
         issued,  fully paid and  nonassessable,  or as to the Exercise Price or
         the number or amount of  Warrant  Shares or other  securities  or other
         property issuable upon exercise of any Warrant.

                  (k) The Warrant  Agent is hereby  authorized  and  directed to
         accept  instructions  with  respect  to the  performance  of its duties
         hereunder from the Chairman of the Board, Chief Executive Officer,  the
         President, Chief Financial Officer, Chief Operating Officer, one of the
         Vice Presidents, the Treasurer, the Secretary or Assistant Secretary of
         the Company,  and to apply to such officers for advice or  instructions
         in connection  with its duties,  and shall not be liable for any action
         taken or  suffered  to be taken by it in good faith and  without  gross
         negligence  in  accordance  with  instructions  of any such  officer or
         officers.

                  The   provisions   of  this  Section  17  shall   survive  the
         termination  of this  Agreement and any  resignation  or removal of the
         Warrant Agent.

SECTION 18.  Change of Warrant  Agent.  The Warrant Agent may resign at any time
and be discharged  from its duties under this Agreement by giving to the Company
30 days' notice in writing.  The Warrant  Agent may be removed by like notice to
the Warrant  Agent from the  Company.  If the Warrant  Agent shall  resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a  successor  to the  Warrant  Agent.  If the  Company  shall  fail to make such
appointment  within a period of 60 days after such  removal or after it has been
notified  in writing of such  resignation  or  incapacity  by the  resigning  or
incapacitated  Warrant Agent or by any Holder (who shall with such notice submit
his Warrant for inspection by the Company), then the Warrant Agent or any Holder
may  apply to any  court of  competent  jurisdiction  for the  appointment  of a
successor  to the Warrant  Agent.  Pending  appointment  of a successor  warrant
agent,  either by the Company or by such court,  the duties of the Warrant Agent
shall be carried  out by the  Company.  Any  successor  warrant  agent,  whether
appointed  by the Company or such a court,  shall be a bank or trust  company in
good  standing,  incorporated  under the laws of the United States of America or
any State  thereof or the  District  of  Columbia  and having at the time of its
appointment  as  warrant  agent a  combined  capital  and  surplus  of at  least
$10,000,000. After appointment, the successor warrant agent shall be vested with
the  same  powers,  rights,  duties  and  responsibilities  as  if it  had  been
originally  named as Warrant Agent without  further act or deed;  but the former
Warrant  Agent shall  deliver and transfer to the  successor  warrant  agent any
property at the time held by it  hereunder,  and execute and deliver any further
assurance,  conveyance,  act or deed necessary for such purpose. Failure to file
any notice  provided for in this  Section 18,  however,  or any defect  therein,
shall not affect the legality or validity of the  resignation  or removal of the
Warrant Agent or the appointment of the successor warrant agent, as the case may
be. In the event of such  resignation  or removal,  the Company or the successor
warrant agent shall mail by first class mail,  postage prepaid,  to each Holder,
written notice of such removal or  resignation  and the name and address of such
successor warrant agent.

SECTION 19.  Identity of Transfer  Agent.  Forthwith upon the appointment of any
Transfer  Agent  for the  Common  Stock,  or any other  shares of the  Company's
capital  stock  issuable  upon the exercise of the  Warrants,  the Company shall
promptly  file with the  Warrant  Agent a statement  setting  forth the name and
address of such Transfer Agent.

SECTION 20.  Registration  Rights.  The Holders  shall be entitled to all of the
benefits under that certain Common Stock Registration Rights Agreement among the
Company and the parties named therein dated as of December 15, 1999.

SECTION 21. Successors. All the covenants and provisions of this Agreement by or
for the  benefit of the  Company,  the  Warrant  Agent or any holder of Warrants
shall bind and inure to the benefit of their  respective  successors and assigns
hereunder.

SECTION 22.  Termination.  This Agreement  shall terminate at 5:00 p.m. New York
City time on June 30, 2007.  Notwithstanding the foregoing,  this Agreement will
terminate on any earlier date if all  Warrants  have been  exercised or redeemed
pursuant to this Agreement.


SECTION 23.  GOVERNING LAW. THIS AGREEMENT AND EACH WARRANT  CERTIFICATE  ISSUED
HEREUNDER  SHALL BE DEEMED TO BE A CONTRACT  MADE UNDER THE LAWS OF THE STATE OF
NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN  ACCORDANCE  WITH THE LAWS OF
SAID STATE, WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF.

SECTION  24.  Benefits of This  Agreement.  Nothing in this  Agreement  shall be
construed  to give to any  person or  corporation  other than the  Company,  the
Warrant Agent and the registered  Holders of the Warrant  Certificates any legal
or equitable  right,  remedy or claim under this  Agreement;  but this Agreement
shall be for the sole and  exclusive  benefit of the Company,  the Warrant Agent
and  the   registered   Holders  of  the  Warrant   Certificates.

SECTION  25.  Counterparts.  This  Agreement  may be  executed  in any number of
counterparts and each of such  counterparts  shall for all purposes be deemed to
be an original,  and all such counterparts shall together constitute but one and
the same instrument.

SECTION 26.  Headings.  The headings in this  Agreement are for  convenience  of
reference only and shall not limit or otherwise affect the meaning hereof.


<PAGE>



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

                            HVIDE MARINE INCORPORATED



                            By:______________________________
                                     Name:
                                     Title:


                           STATE STREET BANK AND TRUST COMPANY, as Warrant Agent



                            By:______________________________
                                     Name:
                                     Title: