EXHIBIT 10.2

 

AMENDMENT NO. 1 AND WAIVER TO

PURCHASE AGREEMENT

THIS AMENDMENT NO. 1 (this "Amendment"), dated as of May 27, 2004, to
the Purchase Agreement, dated as of March 11, 2004 (the "Original Agreement"),
is made and entered into by and among HORIZON OFFSHORE, INC., a Delaware
corporation (the "Issuer") and the Holders (as defined in the Original
Agreement) listed on the signature pages hereof.


W I T N E S S 
E T H:

WHEREAS, the Issuer and the Holders listed on the signature pages hereof
desire to waive or amend certain provisions of the Original Agreement, as more
particularly set forth below, in order to permit the issuance by the Issuer of
its 18% Subordinated Secured Notes due March 31, 2007 (the "New Subordinated
Notes"; such term to include (i) any such notes issued in exchange or
substitution therefor or renewal thereof pursuant to Section 10.2 or 
Section 10.3 of the New Purchase Agreement (as defined below), (ii) any
Additional Notes (as defined in the New Purchase Agreement) and (iii) unless the
context indicates otherwise, the related Guarantees (as defined in the New
Purchase Agreement)) pursuant to a Purchase Agreement (the "New Purchase
Agreement"), dated as of May 27, 2004, among the Issuer, the guarantors
listed on the signature pages thereof, and the purchasers listed on the
signature pages thereof; and

WHEREAS, such waivers and amendments require the approval of the Required
Holders.

NOW THEREFORE, in consideration of the foregoing and the mutual covenants
contained herein, the parties hereto agree as follows:

1.        
    Definitions. Except as otherwise provided in this Amendment,
    capitalized terms used in this Amendment shall have the meanings set forth
    for such terms in the Original Agreement. The Notes, as defined in the
    Original Agreement, are referred to herein as the "Old Notes." 

2.        Effectiveness.
This Amendment shall be effective upon the execution
    hereof by the Issuer and the Required Holders; provided, however,
    that in the event that the Closing under the New Purchase Agreement does not
    occur on or before May 27, 2004, then this Amendment shall be null and void
    and of no further force and effect. 

3.        Representation and Warranty of each Holder. Each party hereto (other
    than the Issuer) represents and warrants that it is currently the Holder as
    of the date hereof of the aggregate principal amount of Old Notes set forth
    under its name on the signature pages hereof. 

4.        Due Authorization. The Issuer represents and warrants that the
    execution and delivery by the Issuer of this Amendment and of each other
    Document executed or to be executed by it have been duly authorized by all
    necessary corporate action, do not require any Approval (except those
    Approvals already obtained), do not and will not conflict with, result in
    any violation of, or constitute any default under, any provision of any
    Organic Document or Contractual Obligation of the Issuer or any law or
    governmental regulation or court decree or order, and will not result in or
    require the creation or imposition of any Lien on the properties of the
    Issuer pursuant to the provisions of any Contractual Obligation of any
    Obligor, except for Liens imposed pursuant to this Amendment, the Original
    Agreement or any other Document. 

5.        Validity, etc. The Issuer represents and warrants that each of this
    Amendment and the Amendment Payment (as defined below) constitutes, the
    legal, valid and binding obligation of the Issuer, enforceable in accordance
    with its terms subject, as to enforcement of remedies, to bankruptcy,
    insolvency, reorganization, moratorium, or similar laws affecting rights of
    creditors generally and to the effect of general principles of equity. 

6.        Amendment Payment. The Issuer agrees, if the Closing under the New
    Purchase Agreement occurs, to make an additional cash payment (the
    "Amendment Payment") on the Old Notes currently held by the Holders party
    hereto on a pro rata basis to the Holders thereof at Maturity
    in an aggregate amount equal to (i) $3,700,000 (such amount to be reduced by
    a percentage equal to the percentage of the aggregate principal amount of
    outstanding Old Notes held on the date hereof by Holders who are not parties
    to this Amendment) if the Maturity date is the Stated Maturity Date or (ii)
    if the Maturity date is earlier than the Stated Maturity Date, the present
    value of $3,700,000 (such amount to be reduced by a percentage equal to the
    percentage of the aggregate principal amount of outstanding Old Notes held
    on the date hereof by Holders who are not parties to this Amendment) on such
    Maturity date, discounted from the Stated Maturity Date using a rate of 16%,
    compounded quarterly. For purposes of the immediately preceding sentence,
    "Maturity" shall include with respect to any Old Note any issuance by the
    Issuer or any of its Subsidiaries of equity securities in exchange for such
    Old Note. Each Old Note held by a Holder party hereto will, following the
    Closing under the New Purchase Agreement, also represent the Issuer’s pro
    rata obligation with respect to the Amendment Payment. Promptly following
    the Closing under the New Purchase Agreement, each Old Note held by a Holder
    party hereto will be replaced by a replacement Old Note so reflecting. The
    Amendment Payment will be subordinated Indebtedness of the Issuer and the
    Guarantors, subject to all provisions of the Original Agreement to the same
    extent as the Old Notes, except as follows:

	 	
		(a)	for the avoidance of doubt, the amount of any Amendment Payment shall
    not be considered outstanding principal under the Original Agreement prior
    to Maturity except for purposes of Sections 2.1.2, 2.2(b), 2.2(c) and 2.5
    thereof (each as described below);
	 	 	 
	 	
		(b)	for the avoidance of doubt, the Amendment Payment will not accrue
    interest pursuant to the Original Agreement, except during the occurrence of
    an event described in Section 2.1.2 thereof, at which time the Amendment
    Payment will accrue interest at the Post-Default Rate then applicable to the
    Old Notes, as set forth in Section 2.1 of the Original Agreement; and
	 	 	 
	 	
		(c)	any principal payments pursuant to Section 2.2(b) or (c) or Section 2.5
    of the Original Agreement shall be applied first to the payment of the
    principal of the Old Notes and then to the payment of the Amendment Payment.


7.       
    
    Amendment of Section
    2.2(b). Section 2.2(b) of the Original
    Agreement is hereby amended and restated in its entirety as follows:
    

(b)        Prior to the Stated Maturity Date, the Issuer may from time to time
    on any Business Day, make a voluntary prepayment (allocated on a pro rata
    basis to each Noteholder), in whole or in part, of the outstanding principal
    amount of the Notes; provided, however, that (i) the Issuer shall allocate
    the amount of any such voluntary prepayment between the Notes and the New
    Subordinated Notes on a pro rata basis based on the aggregate
    principal amount of the Notes and New Subordinated Notes then outstanding;
    (ii) all such voluntary prepayments shall require at least three (3)
    Business Days prior written notice to the Noteholders, (iii) all such
    voluntary prepayments shall be in a minimum amount of $1,000,000 (subject to
    the Issuer’s right to prepay in full the entire unpaid principal amount of
    the Notes), and (iv) as to the voluntary prepayment in full of the Notes,
    such prepayment shall require at least five (5) Business Days prior written
    notice to the Noteholders.

8.        Amendment of Section 2.4(a). Section 2.4(a) of the Original
    Agreement is hereby amended to add the following sentence after the first
    sentence thereof:
    

In addition, the Obligors may issue Additional Notes to the Noteholders
    (allocated on a pro rata basis to each Noteholder) in
    compliance with the terms of this Agreement.

9.        
Amendment of Section 6.1.8. The first sentence of Section 6.1.8 of
    the Original Agreement is hereby amended and restated in its entirety as
    follows:
    

If (1) any Obligor transfers or causes to be transferred, in one
    transaction or a series of related transactions, any Collateral to any
    Subsidiary that, following such transaction or series of related transactions, is not a Guarantor, (2) if any Subsidiary that is a
    "significant subsidiary" (as defined in Rule 1-02(w) of Regulation S-X
    promulgated by the Commission) is not at such time a Guarantor or (3) if any
    Subsidiary that is not at such time a Guarantor is or becomes a guarantor of
    the subordinated secured notes issued by the Issuer pursuant to the terms of
    the New Purchase Agreement, then such transferee, significant subsidiary or
    other Subsidiary shall:

10.      Amendment of Section 9.1. Section 9.1 of the Original Agreement
    shall be amended by adding alphabetically therein the following defined
    terms:
    

"New Purchase
Agreement" means the Purchase Agreement, dated as of
    May 27, 2004, among the Issuer, the guarantors listed on the signature pages
    thereof, and the purchasers listed on the signature pages thereof.

"New Subordinated
Notes" means the 18% Subordinated Secured Notes
    due March 31, 2007 issued from time to time by the Issuer pursuant to the
    New Purchase Agreement and guaranteed by the guarantors as set forth
    therein.

11.      Collateral-Related Amendments. (a) Schedule 3 of the Original
    Agreement shall be amended by adding at the end thereof:
    

(24) Upon the conditions and as more fully described in
Section
    6.1.11(b) of the New Purchase Agreement, an escrow and security
    agreement or other appropriate agreement or document, in form and substance
    satisfactory to the Noteholders, pursuant to which the escrow agent holds
    the monies thereunder first in favor of RLI Insurance Company, second in
    favor of the Collateral Agent on behalf of the Noteholders (as defined in
    the New Purchase Agreement) and third in favor of the Noteholders

(25) Time Deposit Account Pledge and Control Agreement, dated May 27,
    2004, by and among Horizon Offshore Contractors, Inc. and Elliott
    Associates, L.P., as Collateral Agent, and Southwest Bank of Texas, N.A.

(b)       Schedule 5 of the Original Agreement shall be amended by amending and
    restating paragraph (2) therein as follows: 

(2) "Contrato de Fianza" (Guaranty Agreement), dated as of May 27, 2004,
    granted by ECH Offshore, S. de R.L. de C.V. in favor of Elliott Associates,
    L.P.

Schedule 5 of the Original Agreement is further amended to add at the end
    thereof:

(4) "Contrato de Fianza" (Guaranty Agreement), dated as of May 27, 2004,
    granted by HOC Offshore S. de R.L. de C.V. in favor of Elliott Associates,
    L.P.

12.        Tax Treatment. For U.S. federal income tax purposes, the Issuer and
    each Holder listed on the signature pages hereof agree (i) to treat the
    amendments made pursuant to this Amendment as not resulting in a
    "significant modification" of the Old Notes within the meaning of U.S.
    Treasury regulations section 1.1001-3, (ii) solely for purposes of Sections
    1272 and 1273 of the Internal Revenue Code of 1986, as amended (relating to
    the computation of original issue discount), to treat the amendment set
    forth in paragraph 6 hereof as resulting in the retirement and reissuance of
    the Old Notes on the date hereof for an amount equal to the adjusted issue
    price of the Old Notes on such date, resulting in a yield-to-maturity of
    34.84748% and (iii) not to take any position on any return or report filed
    with the Internal Revenue Service or any other Governmental Authority that
    is inconsistent with the foregoing. 

13.        Waivers. Each of the Holders hereby consents to the issuance of the
    New Subordinated Notes and all of the other transactions contemplated by the
    New Purchase Agreement, including, without limitation, the taking of any
    action with respect to collateral and the issuance of additional New
    Subordinated Notes, and in furtherance thereof hereby waives compliance with
    all of the provisions contained in the Original Agreement and the other
    Documents to the fullest extent necessary to permit the execution and
    delivery of the New Purchase Agreement, the issuance of the New Subordinated
    Notes and all of the other transactions contemplated by the New Purchase
    Agreement. 

14.        Ratification of Original Agreement. The parties hereto hereby ratify
    and confirm all of the terms and conditions of the Original Agreement, as
    amended hereby, and except as modified, amended or supplemented by this
    Amendment, all of the terms and provisions of the Original Agreement shall
    remain in full force and effect. 

15.        Counterparts; Effectiveness. This Amendment may be executed by the
    parties hereto in several counterparts, each of which shall be deemed to be
    an original and all of which shall constitute together but one and the same
    agreement. This Amendment shall become effective when counterparts hereof
    have been executed by the Issuer and each Holder listed on the signature
    pages hereof. 

16.        Headings. The various Headings of this Amendment are inserted for
    convenience only and shall not affect the meaning or interpretation of this
    Amendment or any provisions hereof.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the date
first above written.

	 	
                        
                        HORIZON OFFSHORE, INC.
	 	 	 
	 	 	 
	 	By: 
			
		
/s/ David W. Sharp

		
	 	 	Name:
		David W. Sharp
	 	 	Title:
		Executive Vice President and Chief Financial Officer
	 	 	 
	 	 	 
	 	 	 


 



 

	 	
                        INITIAL PURACHASERS:
	 	 	 
	 	ELLIOTT ASSOCIATES, L.P.
	 	 
	 	By: 
			
		
Elliott Capital Advisors, L.P.,
as General Partner

		
	 	 	 
	 	
		By: 	Braxton
		Associates, Inc.,
as General Partner
	 	 	 
	 	
		By: 	
		
/s/ Elliot Greenberg

		
	 	 	Name:
		Elliot Greenberg
	 	 	Title:
		Vice President
	 	 	 
	 	
		Aggregate Principal Amount:     $5,000,000.00
	 	 
	 	
		Address:   	712 Fifth Avenue
36th Floor
New York, New York 10019


 


	 	 	 
	 	ELLIOTT INTERNATIONAL, L.P.
	 	 
	 	By: 
			
		
Elliott International Capital Advisors Inc.,
as Attorney-in-Fact

		
	 	 	 
	 	
		By: 	
		
/s/ Elliot Greenberg

		
	 	 	Name:
		Elliot Greenberg
	 	 	Title:
		Vice President
	 	 	 
	 	
		Address:   	712 Fifth Avenue
36th Floor
New York, New York 10019
	 	 	 
	 	
		Aggregate Principal Amount:     $10,000,000.00
	 	 


 



 

	 	 	 
	 	FALCON MEZZANINE PARTNERS, LP
	 	 
	 	By: 
			
		
Falcon Mezzanine Investments, LLC, its General Partner

		
	 	 	 
	 	
		By: 	
		
/s/ Eric Rogoff

		
	 	 	Name:
		Eric Rogoff
	 	 	Title:
		Vice President
	 	 	 
	 	
		Address:   	
		60 Kendrick Street
Needham, Massachusetts 02494
	 	Telecopier
		No.:	(781) 247-7299
	 	 	 
	 	
		Aggregate Principal Amount:     $17,850,000.00
	 	 


 



 

	 	 	 
	 	D. E. SHAW LAMINAR PORTFOLIOS, L.L.C.
	 	 
	 	
		By: 	
		
/s/ Max Holmes

		
	 	 	Name:
		Max Holmes
	 	 	Title:
		Authorized Signatory
	 	 	 
	 	
		Address:   	
		120 West 45th St.
New York, New York 10036
	 	Telecopier
		No.:	(781) 247-7299
	 	 	 
	 	
		Aggregate Principal Amount:     $3,150,000.00
	 	 


 



 

	 	 	 
	 	SACC PARTNERS, LP
	 	 
	 	
		By: 	
		
/s/ Tom Kelleher

		
	 	 	Name: 
		Tom Kelleher
	 	 	Title: 
		General Partner
	 	 	 
	 	
		Address:   	
		11150 Santa Monica Blvd., Suite 750
Los Angeles, CA 90025
	 	Telecopier
		No.:	(781) 247-7299
	 	 	 
	 	
		Aggregate Principal Amount:     $4,095,000.00
	 	 


 



 

	 	KEVIN G. DOUGLAS AND MICHELLE M. DOUGLAS, JTWROS
	 	 
	 	
		By: 	
		
/s/ Kevin Douglas

		
	 	 	Name: 
		Kevin Douglas
	 	 	in his capacity as joint tenant with right of
                          survivorship
	 	 
	 	
		By: 	
		
/s/ Michelle Douglas

		
	 	 	Name: 
		Michelle Douglas
	 	 	in her capacity as joint tenant with right of
                          survivorship
	 	 
	 	
		Address:   	
		1101 5th Ave., Suite 360
San Rafael, CA 94901
	 	 	 
	 	Aggregate Principal Amount: $2,100,000.00


 



 

	 	DOUGLAS FAMILY TRUST
	 	 
	 	
		By: 	
		
/s/ James E. Douglas Jr.

		
	 	 	Name: 
		James E. Douglas Jr.
	 	 	Title: Trustee
	 	 
	 	
		By: 	
		
/s/ Jean A. Douglas

		
	 	 	Name: 
		Jean A. Douglas
	 	 	Title: Trustee
	 	 
	 	
		Address:   	
		1101 5th Ave., Suite 360
San Rafael, CA 94901
	 	 	 
	 	
		Aggregate Principal Amount: $1,050,000.00


 



 

	 	JAMES DOUGLAS AND JEAN DOUGLAS IRREVOCABLE
                        DESCENDANT’S TRUST
	 	 
	 	
		By: 	
		
/s/ Kevin Douglas

		
	 	 	Name: 
		Kevin Douglas
	 	 	Title: Trustee
	 	 
	 	
		By: 	
		
/s/ Michelle Douglas

		
	 	 	Name: 
		Michelle Douglas
	 	 	Title: Trustee
	 	 
	 	
		Address:   	
		1101 5th Ave., Suite 360
San Rafael, CA 94901
	 	 	 
	 	
		Aggregate Principal Amount: $1,050,000.00


 



 

	 	 	 
	 	B. RILEY & CO. PROFIT SHARING, INC.
	 	 
	 	
		By: 	
		
/s/ Bryant Riley

		
	 	 	Name: 
		Bryant Riley
	 	 	Title: 
		Trustee
	 	 	 
	 	
		Address:   	
		11150 Santa Monica Blvd., Suite 750
Los Angeles, CA 90025
	 	 	 
	 	
		Aggregate Principal Amount:     $105,000.00
	 	 


 



 

	 	 	 
	 	B. RILEY & CO., INC.
	 	 
	 	
		By: 	
		
/s/ Bryant Riley

		
	 	 	Name: 
		Bryant Riley
	 	 	Title: 
		Chairman
	 	 	 
	 	
		Address:   	
		11150 Santa Monica Blvd., Suite 750
Los Angeles, CA 90025
	 	 	 
	 	
		Aggregate Principal Amount:     $682,500.00
	 	 


 



 

	 	 	 
	 	L. MILLER III GST dtd 12/31/91
	 	 
	 	
		By: 	
		
/s/ Lloyd I. Miller

		
	 	 	Name: 
		Lloyd I. Miller
	 	 	Title: 
		Trustee
	 	 	 
	 	
		Address:   	
		4550 Gordon Drive
Naples, FL 34102
	 	 	 
	 	
		Aggregate Principal Amount:     $262,500.00
	 	 


 



 

	 	 	 
	 	MILFAM, LLC
	 	 
	 	
		By: 	
		
/s/ Lloyd I. Miller

		
	 	 	Name: 
		Lloyd I. Miller
	 	 	Title: 
		General Partner
	 	 	 
	 	
		Address:   	
		4550 Gordon Drive
Naples, FL 34102
	 	 	 
	 	
		Aggregate Principal Amount:     $262,500.00
	 	 


 



 

	 	 	 
	 	CATHERINE C. MILLER IRREV TR DTD 3/26/91
	 	 
	 	
		By: 	
		
/s/ Lloyd I. Miller

		
	 	 	Name: 
		Lloyd I. Miller
	 	 	Title: 
		Trustee
	 	 	 
	 	
		Address:   	
		4550 Gordon Drive
Naples, FL 34102
	 	 	 
	 	
		Aggregate Principal Amount:     $262,500.00
	 	 


 



 

	 	 	 
	 	ALEXANDRA B. MILLER
	 	 
	 	
		By: 	
		
/s/ Lloyd I. Miller

		
	 	 	Name: 
		Lloyd I. Miller
	 	 	Title: 
		Custodian FL/UTMA
	 	 	 
	 	
		Address:   	
		4550 Gordon Drive
Naples, FL 34102
	 	 	 
	 	
		Aggregate Principal Amount:     $262,500.00
	 	 


 



 

	 	 	 
	 	LLOYD I. MILLER
	 	 
	 	
		By: 	
		
/s/ Lloyd I. Miller

		
	 	 	Name: 
		Lloyd I. Miller
	 	 	in his individual capacity
	 	 	 
	 	
		Address:   	
		4550 Gordon Drive
Naples, FL 34102
	 	 	 
	 	
		Aggregate Principal Amount:     $262,500.00
	 	 


 



 

	 	 	 
	 	LLOYD I. MILLER TRUST A-4
	 	 
	 	
		
														By: 
														
														PNC Bank
	 	 
	 	
		By: 	
		
/s/ Alan Goldman

		
	 	 	Name: 
		Alan Goldman
	 	 	iTitle: Trustee
	 	 	 
	 	
		Address:   	
		4550 Gordon Drive
Naples, FL 34102
	 	 	 
	 	
		Aggregate Principal Amount:     $2,100,000.00
	 	 


 



 

	 	 	 
	 	MILFAM I, L.P.
	 	 
	 	
		By: 	
		
/s/ Lloyd I. Miller

		
	 	 	Name: 
		Lloyd I. Miller
	 	 	iTitle:
		Limited Partner
	 	 	 
	 	
		Address:   	
		4550 Gordon Drive
Naples, FL 34102
	 	 	 
	 	
		Aggregate Principal Amount:     $2,100,000.00
	 	 


 



 

	 	 	 
	 	MILFAM II, L.P.
	 	 
	 	
		By: 	
		
/s/ Lloyd I. Miller

		
	 	 	Name: 
		Lloyd I. Miller
	 	 	iTitle:
		Limited Partner
	 	 	 
	 	
		Address:   	
		4550 Gordon Drive
Naples, FL 34102
	 	 	 
	 	
		Aggregate Principal Amount:     $2,100,000.00
	 	 


 



 

	 	 	 
	 	MILGRAT II PREMIUM
	 	 
	 	
		By: 	
		
/s/ Lloyd I. Miller

		
	 	 	Name: 
		Lloyd I. Miller
	 	 	iTitle:
		Trustee
	 	 	 
	 	
		Address:   	
		4550 Gordon Drive
Naples, FL 34102
	 	 	 
	 	
		Aggregate Principal Amount:    $525,000.00
	 	 


 



 

	 	 	 
	 	HIGHLAND CRUSADER OFFSHORE PARTNERS
	 	 
	 	
		By: 	
		
/s/ Kurt Plumer

		
	 	 	Name:
		Kurt Plumer
	 	 	iTitle:
		General Partner
	 	 	 
	 	
		Address:   	
		13455 Noel Road, Suite 1300
Dallas, TX 75240
	 	 	 
	 	
		Aggregate Principal Amount:    $4,200,000.00
	 	 


 



 

	 	 	 
	 	RICHARD RILEY
	 	 
	 	
		By: 	
		
/s/ Richard Riley

		
	 	 	Name:
		Richard Riley
	 	 	in his individual capacity
	 	 	 
	 	
		Address:   	
		133 Shoreclifff Road,
															
Corona del Mar, CA 92625
	 	 	 
	 	
		Aggregate Principal Amount:   $262,500.00
	 	 


 



 

	 	 	 
	 	BRYANT AND CARLEEN RILEY
	 	 
	 	
		By: 	
		
/s/ Bryant Riley

		
	 	 	Name:
		Bryant Riley
	 	 	in his capacity as joint tenant with right of
                          survivorship
	 	 
	 	
		By: 	
		
/s/ Carleen Riley

		
	 	 	Name: Carleen Riley
	 	 	in her capacity as joint tenant with right of
                          survivorship
	 	 	 
	 	
		Address:   	
		12710 Marlboro Street
Brentwood, CA 9004
	 	 	 
	 	
		Aggregate Principal Amount:   $105,000.00