exv10w2



 





EXHIBIT 10.2




PURCHASE AGREEMENT




Series A Redeemable Participating Preferred Stock




     This Purchase Agreement (this “Agreement”) is entered into as of November
4, 2004 (the “Effective Date”) by and among HORIZON OFFSHORE, INC., a Delaware
corporation (the “Company”) and the purchasers listed on the signature pages
hereof (the “Purchasers”).



     In consideration of the mutual promises, covenants and conditions
hereinafter set forth, the parties hereto agree as follows:



     1. DEFINITIONS.



     1.1 Certain Defined Terms. As used in this Agreement, the following terms
shall have the following respective meanings:



          “Business Day” shall mean any day on which commercial banks are not
authorized or required to close in New York, New York or in Houston, Texas.



          “Common Stock” shall mean the Company’s common stock, par value $1.00 per
share, as constituted from time to time; provided, however, the Common Stock as
constituted from time to time shall have only the voting powers and rights
appurtenant to the Common Stock existing at the date hereof.



          “Effective Date” shall mean November 4, 2004.



          “March 2004 Registration Rights Agreement” has the meaning set forth in
the Registration Rights Agreement.



          “NASDAQ” shall mean the Listing Qualifications Department of The Nasdaq
Stock Market, Inc.



          “New Notes” shall mean $9,625,000 in aggregate principal amount of 18%
subordinated secured notes, to be issued and sold by the Company to the
Purchasers on the Effective Date contemporaneously with the issuance of the
Shares.



          “Redemption” shall mean a redemption by the Company of all of the Shares
with the issuance of the Warrants pursuant to Section 6(a)(ii)(B) of the
Certificate of Designation.



          “Redemption Date” shall mean the date on which the Redemption occurs.



          “Registration Rights Agreement” shall mean the Registration Rights
Agreement in the form of Exhibit C attached hereto.



          “Required Holders” has the meaning set forth in the Registration Rights
Agreement.



 









 





          “Shares” shall mean shares of the Company’s Series A Redeemable
Participating Preferred Stock, par value $1.00 per share.



          “Warrants” shall mean the Common Stock purchase warrants described in the
Certificate of Designation to be issued by the Company in a Redemption, each of
which shall be issued pursuant to a warrant certificate in the form of Exhibit
B attached hereto (“Warrant Certificate”) with the blanks filled in
appropriately.



     1.2 Index of Other Defined Terms. In addition to the terms defined above,
the following terms shall have the respective meanings given thereto in the
Sections indicated below:



	 	 	 	 	 
	Defined Term
	 	Section

	“Bylaws”

	 	 	4.4	 
	“Certificate of Designation”

	 	 	2.1	 
	“Closing”

	 	 	3.1	 
	“Commission”

	 	 	4.5	 
	“Company Certificate”

	 	 	4.4	 
	“Company Stockholder Meeting”

	 	 	6.2	 
	“Exchange Act”

	 	 	4.7	 
	“Securities Act”

	 	 	4.3	 







     2. AGREEMENT TO PURCHASE AND SELL STOCK



          2.1. Authorization.



               (a) The Company has authorized the issuance, pursuant to the terms and
conditions of this Agreement, of 1,400 shares of the Company’s Series A
Redeemable Participating Preferred Stock, par value $1.00 per share, having the
rights, preferences, privileges and restrictions set forth in the Certificate
of Designation, Preferences and Rights of the Series A Redeemable Participating
Preferred Stock attached to this Agreement as Exhibit A (the “Certificate of
Designation”).



               (b) The Board of Directors of the Company has authorized and approved the
form of Warrant Certificate that the Company would issue and deliver to, and
the form of Registration Rights Agreement that the Company would enter into
with, the holders of Shares in a Redemption.



          2.2. Agreement to Purchase and Sell.



               (a) Subject to the terms and conditions hereof, on the Effective Date, the
Company will issue and sell to the Purchasers, and the Purchasers, acting
severally and not jointly, agree to purchase from the Company, in the aggregate
1,400 Shares at a price of $1.00 per share for an aggregate purchase price of
$1,400.00.



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               (b) The number of Shares to be purchased by each Purchaser at the Closing,
and the aggregate purchase price to be paid therefor by such Purchaser, are set
forth on Schedule 1 hereto.



               (c) The purchase price for the Shares to be purchased by each Purchaser
shall be paid by such Purchaser by delivery to the Company of its corporate or
personal check.



     3. CLOSING; DELIVERIES.



          3.1. The Closing. The purchase and sale of the Shares hereunder shall be
held at the offices of Akin Gump Strauss Hauer & Feld LLP, 1111 Louisiana,
Suite 4400, Houston, Texas 77002, on the Effective Date (the “Closing”).



          3.2. Closing Deliveries. At the Closing, the following shall occur:



               (a) The Company will deliver to each Purchaser a certificate representing
the Shares to be purchased by such Purchaser hereunder bearing the legend set
forth in Section 5(d).



               (b) Each Purchaser shall deliver payment to the Company of the full
purchase price for the Shares purchased by such Purchaser by corporate or
personal check.



               (c) The Company shall deliver to the Purchasers certified or other copies
of all documents and instruments, in substance and form satisfactory to the
Purchasers, incident to all corporate or other proceedings taken in connection
with the transactions contemplated hereby.



               (d) The Company shall deliver to the Purchasers evidence satisfactory to
the Purchasers that the Certificate of Designation shall have been duly adopted
by the Company by all necessary corporate action of its Board of Directors and
shall have been filed with and accepted by the Secretary of State of the State
of Delaware.



               (e) Each of Haynes and Boone, LLP (as to matters of enforceability under
New York law) and Jones, Walker, Waechter, Poitevent, Carrère & Denègre, L.L.P.
(as to all other matters), counsel to the Company, shall have delivered to the
Purchasers an opinion addressed to the Purchasers, each dated the date of
Closing, and each in form and substance reasonably acceptable to each
Purchaser.



     4. COMPANY REPRESENTATIONS AND WARRANTIES. The Company hereby represents
and warrants to each Purchaser that:



          4.1. Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under, and by
virtue of, the laws of the State of Delaware and has all requisite corporate
power and authority to own its properties and assets and to carry on its
business as now conducted and as presently proposed to be conducted. The
Company is qualified to do business as a foreign corporation in each



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jurisdiction where failure to be so qualified would have a material adverse
effect on its financial condition, business, prospects or operations.



          4.2. Due Authorization. All corporate action on the part of the Company,
its officers, directors and shareholders necessary for the authorization,
execution and delivery of, and the performance of all obligations of the
Company under, this Agreement, and the authorization, issuance, reservation for
issuance and delivery of all of the Shares being sold under this Agreement has
been taken. This Agreement is a valid and binding obligation of the Company
enforceable in accordance with its terms, subject, as to enforcement of
remedies, to applicable bankruptcy, insolvency, moratorium, reorganization and
similar laws affecting creditors’ rights generally and to general equitable
principles. The Shares are not subject to any preemptive rights or rights of
first refusal.



          4.3. Valid Issuance. The Shares, when issued, sold and delivered in
accordance with the terms of this Agreement, will be duly and validly issued,
fully paid and non assessable. The outstanding shares of the capital stock of
the Company are duly and validly issued, fully paid and non assessable, and
such shares of such capital stock, and except as previously disclosed by the
Company to the Purchasers in writing, all outstanding stock, options and other
securities of the Company have been issued in full compliance with the
registration and prospectus delivery requirements of the Securities Act of
1933, as amended (the “Securities Act”), and the registration and qualification
requirements of all applicable state securities laws, or in compliance with
applicable exemptions therefrom, and all other provisions of applicable federal
and state securities laws, including, without limitation, anti-fraud
provisions.



          4.4. Compliance with Other Instruments. The Company is not in, nor shall
the conduct of its business as proposed to be conducted result in, any
violation, breach or default of any term of the Company’s Certificate of
Incorporation (the “Company Certificate”) or the Company’s bylaws (the
“Bylaws”). The execution, delivery and performance of and compliance with this
Agreement and the consummation of the transactions contemplated hereby will not
result in any such violation, breach or default, or be in conflict with or
constitute, with or without the passage of time or the giving of notice or
both, either a default under the Company Certificate or Bylaws, or any
mortgage, indenture, contract, agreement or instrument to which the Company or
any of its subsidiaries is a party or by which it or any such subsidiary may be
bound, or result in a violation of any statutes, laws, regulations or orders,
or, subject to receipt of the stockholder approval contemplated by Section 6.2,
the NASDAQ Marketplace Rules, or in the creation of any lien, charge or
encumbrance upon any asset of the Company or any of its subsidiaries. The
Company has obtained all agreements and waivers necessary or appropriate for
the sale and purchase of the Shares.



          4.5. Accuracy of Information. All factual information heretofore or
contemporaneously furnished by or on behalf of the Company or any subsidiary
thereof in writing to any Purchaser for purposes of or in connection with this
Agreement or any transaction contemplated hereby together with all information
that has been
furnished to or filed with the Securities and Exchange Commission (the
“Commission”) by or on behalf of the Company or any subsidiary thereof pursuant
to the Securities Act or the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), is true and accurate in every material respect on the date as
of which such information is dated or certified, in the case of any such
information furnished in



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writing to any Purchasers, and as of the date of
execution and delivery of this Agreement, and such information does not contain
any untrue statement of a material fact and is not incomplete by omitting to
state any material fact necessary to make such information not misleading.
None of this Agreement, any document or written statement furnished to any of
the Purchasers by or on behalf of the Company or any subsidiary thereof
contains any untrue statement of a material fact or omits to state any material
fact necessary in order to make the statements contained herein or therein not
materially misleading.



          4.6. Registration Rights.



               (a) Except as disclosed in the Registration Rights Agreement, the Company
has not granted or agreed to grant any person or entity any rights (including
piggyback registration rights) to have any securities of the Company registered
with the Commission or any other governmental authority.



               (b) The Holders (as defined in the March 2004 Registration Rights
Agreement) have validly and effectively (i) consented to the execution,
delivery and performance by the Company of the Registration Rights Agreement
and (ii) waived the requirements as to subordination in clause (b) of Section 7
of the March 2004 Registration Rights Agreement as such requirements would
otherwise be applicable to the rights granted in the Registration Rights
Agreement to the Holders (as defined therein).



          4.7 Securities Laws. Assuming the accuracy of the representations and
warranties of the Purchasers set forth in Section 5 below, the offer and sale
of the Shares to the Purchasers are exempt from the registration requirements
of the Securities Act and the registration and/or qualification requirements of
all applicable state securities laws.



     5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each of the
Purchasers, severally and not jointly, represents and warrants to the Company:



          5.1 Securities Laws Matters.



               (a) It (i) is knowledgeable, sophisticated and experienced in making, and
is qualified to make, decisions with respect to investments in securities
representing an investment decision like that involved in the purchase of the
Shares, and has requested, received, reviewed and considered all information it
deems relevant in making an informed decision to purchase the Shares; (ii) is
acquiring the Shares set forth in Schedule 1 attached hereto in the ordinary
course of its business and for its own account for investment only and with no
present intention of distributing any of such Shares or any arrangement or
understanding with any other persons regarding the distribution of such Shares;
(iii) will not, directly or indirectly, offer, sell, pledge, transfer or
otherwise dispose of (or solicit any offers to buy, purchase or otherwise
acquire or take a pledge of) any of the Shares except in compliance with the
Securities Act and
any applicable state securities laws; (iv) or its representatives, if any, have
been furnished with, or have had access to, all materials relating to the
business, finances and operations of the Company (including all reports filed
with the Commission) and materials relating to the offer and sale of the Shares
which have been requested by such Purchaser; such Purchaser, or its
representatives, if any, have been afforded the opportunity to ask questions of
the Company;



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provided, however, neither such inquiries nor any other due
diligence investigations conducted by such Purchaser, or its representatives,
if any, shall modify, amend or affect such Purchaser’s right to rely on the
Company’s representations and warranties contained in Section 4 above; and (v)
understands that its investment in the Shares involves a significant degree of
risk, including a risk of total loss of its investment, and it is fully aware
of and understands all the risks related to its purchase of the Shares.



               (b) It has all necessary power and authority to execute and deliver this
Agreement; this Agreement has been duly authorized by it; assuming that this
Agreement is the valid and binding agreement of each of the parties thereto,
other than such Purchaser, this Agreement constitutes a valid and binding
agreement of such Purchaser, enforceable against such Purchaser 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.



               (c) It understands that the Shares are being offered in transactions not
involving any public offering within the meaning of the Securities Act, that
the Shares have not been and will not be registered under the Securities Act
and that (i) if in the future it decides to offer, resell, pledge or otherwise
transfer any of the Shares, such Shares may be offered, resold, pledged or
otherwise transferred only (A) to the Company, (B) pursuant to an exemption
from registration under the Securities Act provided by Rule 144 thereunder (if
available), (C) to an accredited investor in a transaction exempt from the
registration requirements of the Securities Act, or (D) pursuant to an
effective registration statement under the Securities Act, in each of cases (A)
through (D) in accordance with any applicable securities laws of the states and
other jurisdictions of the United States, and (ii) such Purchaser will, and
each subsequent holder is required to, notify any subsequent purchaser of the
Shares from it of the resale restrictions referred to in (i) above.



               (d) It understands that each certificate representing Shares will bear a
legend to the following effect unless the Company determines otherwise in
compliance with applicable law:




THE SECURITIES REPRESENTED BY THIS CERTIFICATE (OR ITS PREDECESSOR)
WERE ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND SAID SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE

EXEMPTION THEREFROM.




THE HOLDER OF SAID SECURITIES AGREES FOR THE BENEFIT OF THE ISSUER
THAT (A) SAID SECURITIES MAY BE OFFERED, RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) TO THE ISSUER THEREOF,
(II) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE),
(III) TO AN ACCREDITED INVESTOR IN A TRANSACTION EXEMPT FROM THE
REGISTRATION REQUIREMENTS



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OF THE SECURITIES ACT OR (IV) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN
EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF THE STATES AND OTHER JURISDICTIONS OF THE UNITED
STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER OF SAID SECURITIES FROM IT OF THE
RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.




THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
TERMS OF A PURCHASE AGREEMENT, DATED EFFECTIVE AS OF NOVEMBER 4,
2004, AMONG HORIZON OFFSHORE, INC. (THE “COMPANY”) AND THE
PURCHASERS LISTED ON THE SIGNATURE PAGES THEREOF, A COPY OF WHICH
IS ON FILE AT THE MAIN OFFICE OF THE COMPANY. ANY SALE OR TRANSFER
OF THE SECURITIES EVIDENCED BY THIS CERTIFICATE IS SUBJECT TO THE
TERMS OF THIS AGREEMENT AND ANY SALE OR TRANSFER OF SUCH SECURITIES
IN VIOLATION OF THIS AGREEMENT SHALL BE INVALID.



               (e) It understands that no United States federal or state agency or any
other government or governmental agency has passed upon or made any
recommendation or endorsement of the Shares or the fairness or suitability of
the investment in the Securities nor have such authorities passed upon or
endorsed the merits of the offering of the Securities.



               (f) Its principal executive offices are in the jurisdiction set forth
immediately below such Initial Purchaser’s signature on the signature pages
hereto.



               (g) It is an “accredited investor” (as defined in Rule 501(a) of
Regulation D promulgated by the Commission under the Securities Act).



               (h) It acknowledges that the Company will rely upon the truth and accuracy
of the foregoing acknowledgements, representations and agreements; it agrees
that if any of the acknowledgements, representations or agreements such
Purchaser is deemed to have made in connection with its purchase of Shares is
no longer accurate, it shall promptly notify the Company; if any Purchaser is
purchasing Shares as a fiduciary or agent for one or more investor accounts,
such Purchaser represents that it has sole investment discretion with respect
to each of those accounts and full power to make the above acknowledgements,
representations and agreements on behalf of each account.



          5.2 Removal of Restrictive Legend. The legend set forth above shall be
removed by the Company from any certificate evidencing Shares at such time that
a registration statement under the Securities Act is in effect
with respect to the legended security or upon delivery to the Company of
an opinion of counsel, reasonably satisfactory to the Company, that such
security can be freely transferred in a public sale without such a registration
statement being in effect and that such transfer will not jeopardize the
exemption or exemptions from registration pursuant to which the Company issued
the Shares.



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     6. COVENANTS OF THE COMPANY. The Company covenants to the Purchasers as
follows:



          6.1. Form D. The Company agrees to file Forms D with respect to the
Shares as required under Regulation D promulgated by the Commission under the
Securities Act and to provide copies thereof to the Initial Purchasers promptly
after such filing.



          6.2. Company Stockholder Meeting. The Company shall, promptly after the
Effective Date, take all actions necessary in accordance with federal
securities laws, the Delaware General Corporation Law and the Company
Certificate and the Bylaws to call, give notice of, convene and hold a special
meeting of Company’s stockholders to be held on the earliest reasonably
practicable date determined in consultation with the Purchasers to consider and
vote on approval of the Redemption (the “Company Stockholder Meeting”), and the
Company shall consult with the Purchasers in connection therewith; provided,
however, if, prior to obtaining such approval, NASDAQ notifies the Company that
it will suspend or terminate the inclusion of the Common Stock on the NASDAQ
National Market because of the Company’s non-compliance with the NASDAQ
Marketplace Rules as a result of the terms of the Shares, the Company shall not
be required to obtain such stockholder approval. The Board of Directors of the
Company shall recommend to the stockholders of the Company the approval of the
Redemption and the issuance of the Warrants to the Purchasers and shall not
withdraw or modify such recommendation in a manner adverse to the Purchasers or
propose publicly to withdraw or so modify such proposal unless NASDAQ notifies
the Company of its intent described in the foregoing sentence. The Company and
the Board of Directors of the Company shall use all reasonable efforts to
solicit from stockholders of Company proxies in favor of the approval of the
Redemption and the issuance of the Warrants and Warrant Shares to the
Purchasers and to secure such approval by the requisite vote.



          6.3 Redemption. If the Redemption is approved at the Company Stockholder
Meeting, prior to issuing Warrant Certificates upon such Redemption, the
Company shall enter into the Registration Rights Agreement with each holder of
Shares to be issued Warrants and shall issue to each such holder a Warrant
Certificate with the blanks filled in appropriately.



     8. MISCELLANEOUS




          8.1. Governing Law. This Agreement shall be governed in all respects by
the laws of the State of New York without regard to provisions regarding choice
of laws.



          8.2. Survival. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by any party hereto and the
Closing.



          8.3. Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto including, in the case of each the Purchaser, any direct or
indirect transferee of its Shares. This Agreement and the rights and
obligations therein may not be assigned by the Company without the written
consent of each Purchaser.



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          8.4. Entire Agreement. This Agreement, the Exhibits and Schedule 1
hereto, which are hereby expressly incorporated herein by this reference,
constitute the entire understanding and agreement among the parties with regard
to the subject hereof and thereof; provided, however, that nothing in this
Agreement shall be deemed to terminate or supersede the provisions of any
confidentiality agreements executed by the parties hereto prior to the
Effective Date, which agreements shall continue in full force and effect until
terminated in accordance with their respective terms.



          8.5. Notices. All notices hereunder shall be in writing or by telecopy
(confirmed in writing) and shall be sufficiently given to the Purchasers or the
Company if addressed or delivered to them at the following addresses:



	 	 	 
	If to any Purchaser:

	 	To the address listed underneath such Purchaser’s name in the signature pages hereof.
	 
	 	 
	with copies to:

	 	Akin Gump Strauss Hauer & Feld LLP
	

	 	1111 Louisiana, Suite 4400
	

	 	Houston, Texas 77002
	

	 	Attention: James L. Rice III
	

	 	Telecopier No.: (713) 236-0822
	 
	 	 
	and:

	 	King & Spalding LLP
	

	 	1185 Avenue of the Americas
	

	 	New York, New York 10036
	

	 	Attention: Alexander G. Simpson
	

	 	Telecopier No.: (212) 556-2222
	 
	 	 
	If to the Company:

	 	Horizon Offshore, Inc.
	

	 	2500 CityWest Boulevard, Suite 2200
	

	 	Houston, Texas 77042
	

	 	Attention: Executive Vice President and Chief Financial Officer
	

	 	Telecopier No.: (713) 361-2677
	 
	 	 
	with copies to:

	 	Jones, Walker, Waechter, Poitevent, Carrère & Denègre, L.L.P.
	

	 	201 St. Charles Avenue, Suite 5100
	

	 	New Orleans, Louisiana 70170
	

	 	Attention: William B. Masters
	

	 	Telecopier No.: (504) 582-8012







or at such other address as any party may designate to any other party by
written notice. All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; when
received, if deposited in the mail postage prepaid; when transmission is
verified, if telecopied; and on the next Business Day, if timely delivered to
an air courier guaranteeing overnight delivery.



          8.6. Amendments and Waivers. Any term of this Agreement may be amended
only with the written consent of the Company and the Required Holders.



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          8.7. Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to the Company or to any Purchaser, upon any breach or
default of any party hereto under this Agreement, shall impair any such right,
power or remedy of the Company or any such Purchaser, nor shall it be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of
any similar breach of default thereafter occurring; nor any waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of the Company or any
Purchaser of any breach or default under this Agreement or any waiver on the
part of the Company or any Purchaser of any provisions or conditions of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, or by law or otherwise afforded to the Company or the Purchasers
shall be cumulative and not alternative.



          8.8. Titles and Subtitles. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.



          8.9. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original and no one of which need be
executed by all parties, but all of which together shall constitute one
instrument.



          8.10. Severability. Should any provision of this Agreement be determined
to be illegal or unenforceable, such determination shall not affect the
remaining provisions of this Agreement.



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



	 	 	 	 	 	 	 
	 	 	HORIZON OFFSHORE, INC.
	 
	 	 	 	 	 	 
	

	 	By:	 	/s/ David W. Sharp
	 	 	 	 	
 
	

	 	 	 	Name:	 	David W. Sharp
	

	 	 	 	 	 	
 
	

	 	 	 	Title:	 	Executive Vice President
	

	 	 	 	 	 	
 







[Preferred Stock Purchase Agreement]




 









 








	 	 	 	 	 	 	 	 	 
	 	 	PURCHASERS:
	 
	 	 	 	 	 	 	 	 
	 	 	ELLIOTT ASSOCIATES, L.P.
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Elliott Capital Advisors, L.P.,

as General Partner
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Braxton Associates, Inc.,

as General Partner
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	By:	 	/s/ Elliot Greenberg
	

	 	 	 	 	 	 	 	
 
	

	 	 	 	 	 	 	 	Elliot Greenberg
	

	 	 	 	 	 	 	 	Vice President
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	Address: 712 Fifth Ave.
	

	 	 	 	 	 	 	 	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
	

	 	 	 	 	 	
 
	

	 	 	 	 	 	Elliot Greenberg
	

	 	 	 	 	 	Vice President
	 
	 	 	 	 	 	 
	

	 	 	 	 	 	Address: 712 Fifth Avenue
	

	 	 	 	 	 	36th Floor
	

	 	 	 	 	 	New York, NY 10019






[Preferred Stock Purchase Agreement]


 









 






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

General Partner
	 
	 	 	 	 	 	 
	

	 	 	 	By:	 	/s/ Eric Rogoff
	

	 	 	 	 	 	
 
	

	 	 	 	 	 	Eric Rogoff
	

	 	 	 	 	 	Director
	 
	 	 	 	 	 	 
	

	 	 	 	 	 	Address: 60 Kendrick St.
	

	 	 	 	 	 	Needham, MA 02494






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	 	 	SACC PARTNERS, LP
	 
	 	 	 	 
	

	 	By:	 	/s/ Tom Kelleher
	

	 	 	 	
 
	

	 	 	 	Tom Kelleher
	

	 	 	 	General Partner
	 
	 	 	 	 
	

	 	 	 	Address: 11100 Santa Monica Blvd.,
	

	 	 	 	Ste. 800
	

	 	 	 	Los Angeles, CA 90025






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	 	 	B. RILEY & CO., INC.
	 
	 	 	 	 
	

	 	By:	 	/s/ Bryant Riley
	

	 	 	 	
 
	

	 	 	 	Bryant Riley
	

	 	 	 	Chairman
	 
	 	 	 	 
	

	 	 	 	Address: 11100 Santa Monica Blvd.,
	

	 	 	 	Ste 800
	

	 	 	 	Los Angeles, CA 90025






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	 	LLOYD I. MILLER
	

	 	 
	 
	 	/s/ Lloyd I. Miller
	

	 	
 
	

	 	Address: 4550 Gordon Drive
	

	 	Naples, FL 34102






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	 	 	MILFAM I, L.P.
	 
	 	 	 	 
	

	 	By:	 	/s/ LLOYD I. MILLER
	

	 	 	 	
 
	

	 	 	 	Lloyd I. Miller
	

	 	 	 	Limited Partner
	 
	 	 	 	 
	

	 	 	 	Address: 4550 Gordon Drive

Naples, FL 34102





[Preferred Stock Purchase Agreement]



 









 





EXHIBIT B



FORM OF




HORIZON OFFSHORE, INC.




WARRANT CERTIFICATE



THE SECURITIES REPRESENTED BY THIS CERTIFICATE (OR ITS PREDECESSOR) WERE
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND SAID SECURITIES
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.



THE HOLDER OF SAID SECURITIES AGREES FOR THE BENEFIT OF THE ISSUER THAT (A)
SAID SECURITIES MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY
(I) TO THE ISSUER THEREOF, (II) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (III)
TO AN ACCREDITED INVESTOR IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OR (IV) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH
(IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF THE STATES AND OTHER
JURISDICTIONS OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF SAID SECURITIES FROM
IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.



THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF A
PURCHASE AGREEMENT, DATED AS OF OCTOBER    , 2004, AMONG HORIZON OFFSHORE, INC.
(THE “COMPANY”) AND THE PURCHASERS LISTED ON THE SIGNATURE PAGES THEREOF, AND A
REGISTRATION RIGHTS AGREEMENT, DATED AS OF OCTOBER    , 2004, AMONG THE COMPANY
AND THE PURCHASERS LISTED ON THE SIGNATURE PAGES THEREOF, COPIES OF EACH OF
WHICH ARE ON FILE AT THE MAIN OFFICE OF THE COMPANY. ANY SALE OR TRANSFER OF
THE SECURITIES EVIDENCED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS OF THOSE
AGREEMENTS AND ANY SALE OR TRANSFER OF SUCH SECURITIES IN VIOLATION OF SAID
AGREEMENTS SHALL BE INVALID.




 









 





					
	Certificate No.                   
	 	WARRANT
	 	                   , 20                   







To Purchase _________ Shares of Common Stock of

Horizon Offshore, Inc. (the “Company”)




          
1. Number of Shares; Exercise Price; Term. This certifies that
                 
               
                        (“Holder”)
is entitled, upon the terms and other
conditions set forth herein, to acquire from the Company, in whole or in part,
from time to time up to            
        fully
paid and nonassessable shares (the
“Shares”) of common stock, $    par value per share, of the
Company (“Common Stock”) at a purchase price per Share (the “Exercise
Price”) equal to $[.     ],
subject to adjustment as set forth below. The right to purchase the shares of
Common Stock under this Warrant is exercisable immediately and shall remain
exercisable until [insert the fifth anniversary of the issue date] (the
“Exercise Period”).



          2. Exercise of Warrant. The purchase rights represented by this Warrant
are exercisable by the Holder, in whole or in part, at any time during the
Exercise Period by the surrender of this Warrant and the Notice of Exercise
annexed hereto, all duly completed and executed on behalf of the Holder, at the
office of the Company as set forth below the Company’s signature hereon (or
such other office or agency of the Company as it may designate by notice in
writing to the Holder at the address of the Holder appearing on the books of
the Company). Payment of the Exercise Price for the shares of Common Stock
thereby purchased shall be made by cash, certified or cashier’s check or wire
transfer payable to the order of the Company, at 10:00 a.m., Central Time, upon
surrender of this Warrant and the Notice of Exercise. Thereupon, the Holder
shall be entitled to receive from the Company a stock certificate in proper
form representing the number of shares of Common Stock so purchased, and a new
Warrant in substantially identical form and dated as of such exercise for the
purchase of that number of Shares equal to the difference, if any, between the
number of shares of Common Stock subject hereto and the number of Shares of
Common Stock as to which this Warrant is so exercised.



          3. Issuance of Shares. Certificates for Shares purchased hereunder shall
be delivered to the Holder promptly after the date on which this Warrant shall
have been exercised in accordance with the terms hereof. The Company hereby
represents and warrants that all Shares that may be issued upon the exercise of
this Warrant will, upon such exercise, be duly and validly authorized and
issued, fully paid and nonassessable and free from all taxes, liens and charges
in respect of the issuance thereof (other than liens or charges created by or
imposed upon the Holder as the holder of the Warrant or taxes in respect of any
transfer occurring contemporaneously or otherwise specified herein). The
Company agrees that the Shares so issued shall be and shall for all purposes be
deemed to have been issued to the Holder as the record owner of such Shares as
of the close of business on the date on which this Warrant shall have been
exercised or converted in accordance with the terms hereof.



          4. No Fractional Shares or Scrip. No fractional Shares or scrip
representing fractional Shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional Share to which the Holder would otherwise be
entitled, the Holder shall be entitled to receive a cash payment equal to the
excess of fair market value for such fractional Share above the Exercise Price
for such fractional share (as determined in good faith by the Company).



 









 





          5. Purchase Agreement. The Warrants evidenced by this Warrant Certificate
are part of a duly authorized issue of Warrants, and were issued in redemption
of outstanding shares of the Company’s Series A Redeemable Participating
Preferred Stock (the “Series A Preferred Stock”) pursuant to Section 6 of the
Certificate of Designation, Preferences and Rights of the Series A Redeemable
Participating Preferred Stock (the “Certificate of Designation”), which Series
A Preferred Stock was issued by the Company under a Purchase Agreement dated as
of October    , 2004 (the “Purchase Agreement”), among the Company and the
purchasers listed on the signature pages thereof, which Purchase Agreement is
hereby incorporated by reference in and made a part of this instrument and is
hereby referred to for a description of the rights, obligations and duties
hereunder of the Company and the Holders of the Warrants. A copy of the
Purchase Agreement may be obtained by the holder hereof upon written request to
the Company. Capitalized terms used herein and not defined herein shall have
the meanings assigned to them in the Purchase Agreement.



          6. Registration Rights. The holders of the Warrants are entitled to
certain registration rights as set forth in a Registration Rights Agreement
dated as of October    , 2004, among the Company and the purchasers listed on
the signature pages thereof (the “Registration Rights Agreement”). A copy of
the Registration Rights Agreement may be obtained by the holder hereof upon
written request to the Company.



          7. No Rights as Stockholders. This Warrant does not entitle the Holder as
a holder hereof to any voting rights or other rights as a stockholder of the
Company prior to the exercise hereof.



          8. Charges; Taxes and Expenses; Compliance with Securities Laws.
Certificates for Shares issued upon exercise of this Warrant shall be issued in
the name of the Holder. Issuance of certificates for Shares upon the exercise
of this Warrant shall be made without charge to the Holder for any issue or
transfer tax or other incidental expense in respect of the issuance of such
certificates, all of which taxes and expenses shall be paid by the Company. By
its acceptance of this Warrant Certificate, the Holder recognizes and agrees
that the transfer of the Shares issued upon exercise of this Warrant will be
subject to restrictions on transfer contained in the form of Notice of Exercise
annexed hereto; upon the exercise of this Warrant, such restrictions will be
binding and effective on the Holder to the same degree as if stated in their
entirety herein; and certificates for such Shares shall bear the legend set
forth in the form of Notice of Exercise annexed hereto.



          9. Transfer and Exchange of Warrant. The Company shall from time to time
register the transfer of this Warrant, in whole or in part, in the registry
maintained therefor in accordance with the terms of the Purchase Agreement. In
the event that this Warrant is transferred in part, a new Warrant evidencing
the portion of this Warrant that is not transferred shall be issued and
delivered to the Holder hereof pursuant to the provisions of the Purchase
Agreement. The registered holder of a Warrant will be treated as its owner for
all purposes.



     If any transfer of all or a portion of this Warrant is not made pursuant
to an effective registration statement under the Securities Act of 1933, as
amended (the “Securities Act”), (i) the Holder will, if reasonably requested by
the Company, deliver to the Company an opinion of counsel, which may be counsel
to the Holder but which must be reasonably satisfactory to the



 









 







Company, reasonably satisfactory in form, scope and substance to the
Company, that this Warrant (or portion thereof) may be sold without
registration under the Securities Act; (ii) the proposed transferee shall make
an investment covenant reasonably satisfactory to the Company; and (iii) the
proposed transferee shall agree that the Warrant issued to such transferee
shall bear the legend set forth in Section 1.3(e) of the Purchase Agreement.



     Notwithstanding the foregoing provisions of this Section 9, the
restrictions upon the transferability of this Warrant and the requirement to
include the first two paragraphs of the legend set forth in Section 1.3(e) of
the Purchase Agreement shall terminate as to this Warrant (i) when and so long
as this Warrant shall have been effectively registered under the Securities Act
and disposed of pursuant thereto or (ii) when the Company shall have received
an opinion of counsel reasonably satisfactory to it that such restrictive
legend is not required in order to ensure compliance with the Securities Act.
Whenever the restrictions imposed by this Section 10 shall terminate as to this
Warrant, the Holder thereof shall be entitled to receive from the Company a new
Warrant bearing a legend consisting only of the third paragraph of the legend
set forth in Section 1.3(e) of the Purchase Agreement.



     This Warrant is exchangeable, upon the surrender hereof by the Holder as
the registered holder at the above-mentioned office or agency of the Company,
for a new Warrant in substantially identical form and dated as of such
exchange, in accordance with the terms of the Purchase Agreement.



          10. Loss; Theft: Destruction or Mutilation of Warrant. The Company will
replace Warrants upon loss, theft, destruction or mutilation in accordance with
the terms of the Purchase Agreement.



          11. Reservation of Common Stock; Rights. The Company will at all times
that this Warrant is exercisable reserve and keep available, free from
preemptive or similar rights, solely for issuance, sale and delivery upon the
exercise of this Warrant, a number of shares of Common Stock equal to 120% of
the maximum number of Warrant Shares which may then be deliverable upon the
exercise of this Warrant. All such Shares shall be duly authorized and, when
issued upon exercise of this Warrant in accordance with the terms hereof, will
be validly issued and fully paid and nonassessable, with no liability on the
part of the Holder. The Company or, if appointed, the transfer agent for
shares of Common Stock, (the “Transfer Agent”) and every subsequent transfer
agent for any Shares issuable upon the exercise of this Warrant will be
irrevocably 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 Warrant Certificate 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 this
Warrant. 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 15. Before taking any action which would cause an
adjustment pursuant to Section 15 to the maximum number of Shares deliverable
upon the exercise of all outstanding Warrants to exceed the then authorized
number of shares of Common Stock, the Company shall cause to be authorized
additional shares of Common Stock such that such maximum number of shares of
Common Stock deliverable upon exercise of all outstanding Warrants issued in
redemption of the Series A Preferred Stock does not exceed the number of shares
of Common Stock authorized pursuant to the Company’s



 









 







Certificate of Incorporation. Before taking any action which would cause
an adjustment pursuant to Section 15 to reduce the Exercise Price of this
Warrant below the then par value (if any) of the Shares, the Company will take
any corporate action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid and
nonassessable Shares at the Exercise Price as so adjusted. Each Share shall be
accompanied by any rights (“Rights”) to which shares of Common Stock are then
entitled, pursuant to the Rights Agreement dated as of January 11, 2002 between
the Company and Mellon Investor Services, LLC, as Rights Agent, as amended,
supplemented, modified or replaced from time to time (the “Rights Agreement”).
The Company will at all times keep authorized, solely for issuance, sale and
delivery upon the exercise of this Warrant, such number of Rights equal to the
number of Rights issuable upon exercise of this Warrant. All such Rights shall
be duly authorized and, when issued upon exercise of this Warrant in accordance
with the terms hereof, will be validly issued.



          12. Listing on Securities Exchanges, etc. The Company will maintain the
listing of all Shares issuable or issued from time to time upon exercise of
this Warrant on each securities exchange or market or trading system on which
any shares of Common Stock are then or at any time thereafter listed or traded,
but only to the extent and for such period of time as such shares of Common
Stock are so listed.



          13. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday in New York,
New York, or Houston, Texas, then such action may be taken or such right may be
exercised on the next succeeding day not a Saturday or a Sunday or a legal
holiday in New York, New York, or Houston, Texas (a “Business Day”).



          14. Adjustments and Termination of Rights. The Exercise Price and the
number of Shares purchasable hereunder are subject to adjustment from time to
time as follows:





	 	(a)	 	Merger or Consolidation. If at any time there
shall be a merger or a consolidation of the Company with or
into another corporation when the Company is not the surviving
corporation, then, as part of such merger or consolidation,
lawful provision shall be made so that the Holder as the
holder of this Warrant shall thereafter be entitled to receive
upon exercise of this Warrant, during the period specified
herein and upon payment of the aggregate Exercise Price then
in effect, the number of shares of stock or other securities
or property (including cash) of the successor corporation
resulting from such merger or consolidation, to which the
Holder as the holder of the stock deliverable upon exercise of
this Warrant would have been entitled in such merger or
consolidation if this Warrant had been exercised immediately
before such merger or consolidation. In any such case,
appropriate adjustment shall be made in the application of the
provisions of this Warrant with respect to the rights and
interests of the Holder as the holder of this Warrant after
the merger or consolidation. This provision shall apply to
successive mergers or consolidations.





 









 






	 	(b)	 	Reclassification, Recapitalization, etc. If the
Company at any time shall, by subdivision, combination or
reclassification of securities, recapitalization, automatic
conversion, or other similar event affecting the number or
character of outstanding shares of Common Stock, or otherwise,
change any of the securities as to which purchase rights under
this Warrant exist into the same or a different number of
securities of any other class or classes, this Warrant shall
thereafter represent the right to acquire such number and kind
of securities as would have been issuable as the result of
such change with respect to the securities that were subject
to the purchase rights under this Warrant immediately prior to
such subdivision, combination, reclassification or other
change.
	 
	 	(c)	 	Split, Subdivision or Combination of Shares. If
the Company at any time while this Warrant remains outstanding
and unexpired, in whole or in part, shall split, subdivide or
combine the securities as to which purchase rights under this
Warrant exist, the Exercise Price shall be proportionately
decreased in the case of a split or subdivision or
proportionately increased in the case of a combination.
	 
	 	(d)	 	Common Stock Dividends. If the Company at any
time while this Warrant is outstanding and unexpired, in whole
or in part, shall pay a dividend with respect to Common Stock
payable in shares of Common Stock, then the Exercise Price
shall be adjusted, from and after the date of determination of
the shareholders entitled to receive such dividend, to that
price determined by multiplying the Exercise Price in effect
immediately prior to such date of determination by a fraction
(i) the numerator of which shall be the total number of shares
of Common Stock outstanding immediately prior to such
dividend, and (ii) the denominator of which shall be the total
number of shares of Common Stock outstanding immediately after
such dividend or distribution.
	 
	 	(e)	 	Adjustments for Other Dividends and
Distributions. In the event the Company at any time or from
time to time while this Warrant remains outstanding and
unexpired, in whole or in part, shall make or issue, or fix a
record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable
in securities of the Company (other than shares of Common
Stock) or in cash, evidences or indebtedness or other
property, then and in each such event provision shall be made
so that the Holder shall receive upon exercise hereof, in
addition to the number of shares of Common Stock issuable
hereunder, the kind and amount of securities of the Company
and/or cash, evidences of indebtedness or other property which
the Holder would have been entitled to receive had this
Warrant been exercised into Common Stock on the date of such
event and had the Holder thereafter, during the period from
the date of such event to and including the date a Notice of
Exercise is delivered by the Holder, retained any such
securities receivable, giving




 









 







	 	 	 	application to all adjustments called for during such period
under this Section 14 with respect to the rights of the
Holder.
	 	(f)	 	Adjustments for Deemed Issuance of Additional
Shares of Common Stock. If at any time the Company shall take
a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any
manner (whether directly or by assumption in a merger in which
the Company is the surviving corporation) issue or sell, any
rights, warrants, options, securities or indebtedness or other
rights, exercisable for or convertible or exchangeable into,
directly or indirectly, shares of Common Stock, whether at the
time of issuance or upon the passage of time or the occurrence
of some future event (collectively, “Common Stock
Equivalents”), whether or not the rights to exchange or
convert thereunder are immediately exercisable, and the price
per share for which Common Stock is issuable upon the
conversion or exchange of such Common Stock Equivalents shall
be less than the current Exercise Price in effect immediately
prior to the time of such issue or sale, then the number of
shares of Common Stock for which this Warrant is exercisable
and the current Exercise Price shall be adjusted as provided
in Section 14(g) on the basis that the maximum number of
additional shares of Common Stock necessary to effect the
conversion or exchange of all such Common Stock Equivalents
shall be deemed to have been issued and outstanding as of the
date of issuance of such Common Stock Equivalents. No further
adjustments of the number of shares of Common Stock for which
this Warrant is exercisable and the current Exercise Price
shall be made upon the actual issue of such Common Stock upon
conversion or exchange of such Common Stock Equivalents.
	 
	 	(g)	 	Adjustment of Exercise Price Upon Issuance of
Additional Shares of Common Stock. In the event the Company
at any time while this Warrant remains outstanding and
unexpired in whole or in part shall issue additional shares of
Common Stock (including additional shares of Common Stock
deemed to be issued pursuant to Section 14(f)) without
consideration or for consideration per share less than the
Exercise Price in effect on the date of and immediately prior
to such issue, then (i) the current Exercise Price as to the
number of shares for which this Warrant is exercisable prior
to such adjustment shall be reduced, concurrently with such
issue, to the lowest price per share for which any one
additional share of Common Stock has been issued or deemed
issued, with the value of any non-cash consideration for
purposes of this adjustment to be as determined in good faith
by resolution of the Company’s Board of Directors; provided,
however, if such valuation is disputed by the Holder, and the
Company and the Holder cannot by agreement resolve such
dispute, the Company shall submit the dispute to an
independent, reputable investment bank or valuation firm
selected by the Company and approved by the Holder to make, at
the Company’s expense, a determination of such valuation for
purposes of this adjustment, which shall be binding upon the




 









 







	 	 	 	Company and the Holder; and (ii) the number of shares of
Common Stock for which this Warrant is exercisable shall be
adjusted to equal the product obtained by multiplying the
current Exercise Price in effect immediately prior to such
issue or sale by the number of shares of Common Stock for
which this Warrant is exercisable immediately prior to such
issue or sale and dividing the product thereof by the
Exercise Price resulting from the adjustment made pursuant to
clause (i) of this Section 14(g) above.
	 	(h)	 	Other Events. If any event occurs that would
adversely affect the Holder’s rights but is not expressly
provided for by this Section 14 (including the granting of
stock appreciation rights, phantom stock rights or other
rights with equity features), then the Board of Directors will
make an appropriate adjustment in the Exercise Price and
number of shares of Common Stock issuable upon exercise of
this Warrant so as to protect the Holder’s rights; provided,
however, that no such adjustment will increase the Exercise
Price or decrease the number of shares of Common Stock
obtainable as otherwise determined pursuant to this Section
14.
	 
	 	(i)	 	Adjustment of Number of Shares. Upon each
adjustment in the Exercise Price pursuant to Section 14(c) or
Section 14(d) hereof, the number of shares of Common Stock
purchasable hereunder shall be adjusted, to the nearest whole
share, to the product obtained by multiplying the number of
shares of Common Stock purchasable immediately prior to such
adjustment in the Exercise Price by a fraction (i) the
numerator of which shall be the Exercise Price immediately
prior to such adjustment, and (ii) the denominator of which
shall be the Exercise Price immediately after such adjustment.
	 
	 	(j)	 	Excluded Issuances. Notwithstanding anything in
this Section 14 to the contrary, no adjustment shall be made
pursuant to this Section 14 with respect to any (i) issuance
of shares of Common Stock upon exercise by holders of warrants
issued on March 11, 2004, by the Company to purchasers of the
Company’s 16% Subordinated Secured Notes or (ii) sale or
issuance (including by exercise or conversion) of any Common
Stock or Common Stock Equivalents in connection with any stock
option plan, stock purchase plan or any other “employee
benefit plan” as such term is defined in Section 3 (3) of the
Employee Retirement Income Security Act of 1974, as amended
(“ERISA”) including, but not limited to, any employee benefit
plan that may be exempted from some or all of the provisions
of ERISA which plan is for the benefit of employees of the
Company, in each case that has been approved by the Company’s
stockholders after the date this Warrant is issued.
Furthermore, no further adjustment to the number of shares for
which this Warrant is exercisable and the current Exercise
Price shall be made pursuant to Section 14(g) for any issuance
of shares of Common Stock pursuant to any event described in
Section 14(c) or (d) following the adjustment to the current
Exercise Price and number of shares for which this Warrant is
exercisable pursuant




 









 







	 	 	 	to such Sections 14(c) and (d) and Section 14(i) in
connection with any such event.





          15. Notice of Adjustments; Notices. Whenever the Exercise Price or number
or type of securities issuable hereunder shall be adjusted pursuant to Section
14 hereof, the Company shall issue and provide to the Holder a certificate
signed by an officer of the Company setting forth, in reasonable detail, the
event requiring the adjustment, the amount of the adjustment, the method by
which such adjustment was calculated and the Exercise Price and number of
shares of Common Stock purchasable hereunder after giving effect to such
adjustment. The Company shall, upon the written request at any time of any
Holder, promptly furnish or cause to be furnished to the Holder a certificate
signed by its Chief Executive Officer and Chief Financial Officer setting forth
(i) the Exercise Price then in effect and (ii) the number of shares of Common
Stock and the amount, if any, of other securities, cash or evidences of
indebtedness or other property which then would be received upon the exercise
of this Warrant, and shall cause a copy of such certificate to be mailed (by
first-class mail, postage prepaid) to the Holder.



          16. Governing Law. This Warrant shall be binding upon any successors or
assigns of the Company. This Warrant shall constitute a contract under the laws
of New York and for all purposes shall be construed in accordance with and
governed by the laws of said state without giving effect to the conflict of
laws principles thereof



          17. Attorneys’ Fees. In any litigation, arbitration or court proceeding
between the Company and the Holder as the holder of this Warrant relating
hereto, the prevailing party shall be entitled to reasonable attorneys’ fees
and expenses incurred in enforcing this Warrant.



          18. Amendments. This Warrant may be amended and the observance of any term
of this Warrant may be waived only with the written consent of the Company and
the Holder.



          19. Notices. All notices hereunder shall be in writing and shall be
effective: at the time delivered by hand, if personally delivered; when
received, if deposited in the mail postage prepaid; when transmission is
verified, if telecopied; and on the next Business Day, if timely delivered to
an air courier guaranteeing overnight delivery, and addressed to the party to
be notified at the address indicated in Section 8.5 of the Purchase Agreement.



          20. Entire Agreement. This Warrant, the forms attached hereto and any
agreements specifically incorporated herein by reference contain the entire
agreement between the parties with respect to the subject matter hereof and
supersede all prior and contemporaneous arrangements or undertakings with
respect thereto.



 









 





     IN WITNESS WHEREOF, Horizon Offshore, Inc. has caused this Warrant to be
executed by its duly authorized officer.



Dated:                    , 20                   



	 
	HORIZON OFFSHORE, INC.

	 

	By:

	


	      Name:

	      Title:

	 

	Address:

	2500 CityWest Boulevard

	Suite 2200

	Houston, Texas 77042








 









 





NOTICE OF EXERCISE




To: Horizon Offshore, Inc.





	 	1.	 	The undersigned hereby elects to purchase
              shares
(the “Shares”) of common stock, $   par value per share, of Horizon
Offshore, Inc. (the “Company”) pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price and any
transfer taxes payable pursuant to the terms of the Warrant,
together with an investment representation statement in form and
substance satisfactory to legal counsel to the Company.
	 
	 	2.	 	The Shares to be received by the undersigned upon exercise of
the Warrant are being acquired for the undersigned’s own account,
not as a nominee or agent, and not with a view to resale or
distribution of any part thereof, and the undersigned has no present
intention of selling, granting any participation in, or otherwise
distributing the same, except in compliance with applicable federal
and state securities laws. The undersigned further represents that
it does not have any contract, undertaking, agreement or arrangement
with any person to sell, transfer or grant participation to such
person or to any third person, with respect to the Shares. The
undersigned believes the undersigned has received all the
information it considers necessary or appropriate for deciding
whether to purchase the Shares.
	 
	 	3.	 	The undersigned understands that the Shares are characterized
as “restricted securities” under the federal securities laws
inasmuch as they are being acquired from the Company in transactions
not involving a public offering and that under such laws and
applicable regulations such securities may be resold without
registration under the Securities Act of 1933, as amended (the
“Act”), only in certain limited circumstances. In this connection,
the undersigned represents that it is familiar with Rule 144 of the
Act, as presently in effect, and understands the resale limitations
imposed thereby and by the Act.
	 
	 	4.	 	The undersigned understands the certificates evidencing the
Shares may bear the following legend:







	 	(a)	 	THE SECURITIES REPRESENTED BY THIS CERTIFICATE
(OR ITS PREDECESSOR) WERE ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), AND SAID SECURITIES MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
	 
	 	 	 	THE HOLDER OF SAID SECURITIES AGREES FOR THE BENEFIT OF THE
ISSUER THAT (A) SAID SECURITIES MAY BE OFFERED, RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) TO THE ISSUER
THEREOF, (II) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT PROVIDED BY




1









 







	 	 	 	RULE I44 THEREUNDER (IF AVAILABLE), (III) TO AN ACCREDITED
INVESTOR IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OR (IV) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN
EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF THE STATES AND OTHER
JURISDICTIONS OF THE UNITED STATES, AND (B) THE HOLDER WILL,
AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER OF SAID SECURITIES FROM IT OF THE RESALE
RESTRICTIONS REFERRED TO IN (A) ABOVE.
	 
	 	 	 	THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE TERMS OF A PURCHASE AGREEMENT, DATED AS OF OCTOBER    ,
2004, AMONG HORIZON OFFSHORE, INC. (THE “COMPANY”) AND THE
PURCHASERS LISTED ON THE SIGNATURE PAGES THEREOF, AND A
REGISTRATION RIGHTS AGREEMENT, DATED AS OF OCTOBER    , 2004,
AMONG THE COMPANY AND THE PURCHASERS LISTED ON THE SIGNATURE
PAGES THEREOF, COPIES OF EACH OF WHICH ARE ON FILE AT THE
MAIN OFFICE OF THE COMPANY. ANY SALE OR TRANSFER OF THE
SECURITIES EVIDENCED BY THIS CERTIFICATE IS SUBJECT TO THE
TERMS OF THOSE AGREEMENTS AND ANY SALE OR TRANSFER OF SUCH
SECURITIES IN VIOLATION OF SAID AGREEMENTS SHALL BE INVALID.
	 
	 	(b)	 	Any legend required by applicable state law.







	 	5.	 	Please issue a certificate or certificates representing said
Shares in the name of the undersigned.





	 	 	 
	

	 	

	
	 	[Name of Holder]









	 	6.	 	Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned.





	 	 	 
	
	 	

	
	 	[Name of Holder]
	
	 	 
	
	 	 
	
	 	

	
	 	[Signature]








2










 





EXHIBIT C




 




FORM OF




REGISTRATION RIGHTS AGREEMENT




AMONG




HORIZON OFFSHORE, INC.




AND




THE PURCHASERS LISTED ON




THE SIGNATURE PAGES HEREOF




Dated as of ___________, 200___





 




 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page

	SECTION 1.
	 	Definitions.	 	 	1	 
	SECTION 2.
	 	Registration of Securities by the Company.	 	 	4	 
	SECTION 3.
	 	Registration Expenses.	 	 	12	 
	SECTION 4.
	 	Conditions to Registration.	 	 	13	 
	SECTION 5.
	 	Indemnification.	 	 	14	 
	SECTION 6.
	 	Exchange Act Registration; Rule 144 Reporting.	 	 	17	 
	SECTION 7.
	 	Limitation on Registration Rights of Others.	 	 	18	 
	SECTION 8.
	 	Mergers, etc.	 	 	18	 
	SECTION 9.
	 	Notices, etc.	 	 	19	 
	SECTION 10.
	 	Entire Agreement.	 	 	19	 
	SECTION 11.
	 	Amendments; Waivers and Further Agreements.	 	 	19	 
	SECTION 12.
	 	Assignment; Successors and Assigns.	 	 	20	 
	SECTION 13.
	 	Severability.	 	 	20	 
	SECTION 14.
	 	Counterparts.	 	 	20	 
	SECTION 15.
	 	Gender; Usage.	 	 	20	 
	SECTION 16.
	 	Governing Law.	 	 	21	 
	SECTION 17.
	 	Survival.	 	 	21	 
	SECTION 18.
	 	Expenses.	 	 	21	 
	SECTION 19.
	 	Specific Performance.	 	 	21	 







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FORM OF REGISTRATION RIGHTS AGREEMENT




     THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered
into as of    , 200   by and among HORIZON OFFSHORE, INC., a Delaware
corporation (the “Company”), and the purchasers listed on the signature pages
hereof (collectively, the “Purchasers”).



W I T N E S S E T H:




RECITALS.



     A. The Company, Highwood Partners, L.P. and Westgate International, L.P.
have previously entered into a Registration Rights Agreement dated as of
December 4, 1997. Such agreement is being amended as of the date hereof (as
amended from time to time, the “1997 Registration Rights Agreement”).



     B. The Company and the holders of warrants to purchase Common Stock listed
on the signature pages thereof have previously entered into a Registration
Rights Agreement dated as of March 11, 2004 (as amended from time to time, the
“March 2004 Registration Rights Agreement”).



     C. The Company and the purchasers listed on the signature pages thereof
entered into the Purchase Agreement (as defined in Section 1), pursuant to
which, among other things, such purchasers purchased the Preferred Stock (as
defined in Section 1).



     D. In the Purchase Agreement, the Company agreed to execute and deliver
this Agreement with the holders of Warrants (as defined in Section 1) upon the
Redemption (as defined in Section 1).



     NOW, THEREFORE, in consideration of the recitals, of the Purchasers
proceeding with the consummation of the transactions contemplated by the
Purchase Agreement, and the mutual covenants hereinafter set forth, the
parties, intending to be legally bound, hereby agree as follows:



                         SECTION 1. Definitions.



          (a) Defined Terms. The following terms (whether or not underscored) when
used in this Agreement, including its preamble and recitals, shall, except
where the context otherwise requires, have the following meanings (such
meanings to be equally applicable to the singular and plural forms thereof):



     “1997 Registration Rights Agreement” is defined in the recitals.



     “Agreement” means this Registration Rights Agreement as in effect on the
date hereof and as hereafter amended, supplemented, restated or otherwise
modified.



     “Available Securities” is defined in Section 2(a).



 









 





     “Business Day” means any day which is neither a Saturday, a Sunday nor a
legal holiday on which banks are authorized or required to be closed in New
York, New York.



     “Common Stock” means the Common Stock, par value $.01 per share, of the
Company.



     “Company” is defined in the Preamble.



     “Current Market Price” means the daily market price of the Common Stock on
any Trading Day. The daily market price for each such Trading Day shall be (i)
the last sale price on such day on the principal stock exchange or the NASDAQ
National Market on which such Common Stock is then listed or admitted to
trading, (ii) if no sale takes place on such day on any such exchange or
market, the average of the last reported closing bid and asked prices on such
day as officially quoted on any such exchange or market, (iii) if the Common
Stock is not then listed or admitted to trading on any stock exchange or such
market, the average of the last reported closing bid and asked prices on such
day in the over-the-counter market, as furnished by NASDAQ or Pink Sheets LLC
(formerly the National Quotation Bureau, Inc.), (iv) if neither such
corporation at the time is engaged in the business of reporting such prices, as
furnished by any similar firm then engaged in such business, or (v) if there is
no such firm, as furnished by any member of the National Association of
Securities Dealers (“NASD”) selected mutually by the Required Holders and
Company or, if they cannot agree upon such selection, as selected by two such
members of the NASD, one of which shall be selected by the Required Holders and
one of which shall be selected by Company.



     “Exchange Act” means the Securities Exchange Act of 1934, as amended from
time to time.



     “Holders” means, collectively, the registered holders (including,
initially, the Purchasers), from time to time, of Warrant Securities. Whenever
the phrase “Holder of Registrable Securities” or any similar phrase is used
herein, it shall also include any holders of the Warrants.



     “Indemnified Person” is defined in Section 5(a).



     “Indemnifying Person” is defined in Section 5(c).



     “Initial Request” is defined in Section 2(b).



     “Initial Requesting Holders” is defined in Section 2(b).



     “March 2004 Registration Rights Agreement” is defined in the Recitals.



     “NASD” means the National Association of Securities Dealers, Inc.



     “Person” means any natural person, corporation, partnership, limited
liability company, firm, association, government, governmental agency or any
other entity, whether acting in an individual, fiduciary or other capacity.



     “Preferred Stock” means the Series A Redeemable Participating Preferred
Stock, par value $1.00 per share, of the Company.



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     “Prospectus” means each prospectus included as part of any Registration
Statement, as amended or supplemented, including each preliminary prospectus
and all material incorporated by reference in such prospectus.



     “Purchase Agreement” means the Purchase Agreement, dated as of October
   , 2004, by and among the purchasers named therein and the Company, as
amended, supplemented, restated or otherwise modified as of the date hereof.



     “Purchasers” is defined in the Preamble.



     “Redemption” means the redemption by the Company of all of the outstanding
Preferred Stock with the Warrants pursuant to Section 6(a)(ii)(B) of the
Certificate of Designations, Preferences and Rights of the Series A Redeemable
Participating Preferred Stock filed with the office of the Secretary of State
of the State of Delaware on October    , 2004.



     “Registrable Securities” means the Warrant Shares issued upon exercise or
conversion of any Warrants, but excluding (i) shares that have been disposed of
under a Registration Statement or any other effective registration statement,
including in a transaction contemplated by Section 8, and (ii) shares sold
pursuant to Rule 144 under the Securities Act.



     “Registration Expenses” is defined in Section 3(c).



     “Registration Request” is defined in Section 2(a).



     “Registration Statement” means any registration statement of the Company
which covers Registrable Securities pursuant to Section 2 of this Agreement,
including the Prospectus, amendments (including post-effective amendments) and
supplements to such registration statement and Prospectus and all exhibits and
all material incorporated by reference in such registration statement.



     “Required Holders” means the Holders of Warrant Securities which when
fully exercised or converted would represent at least two-thirds of the voting
power of the Warrant Securities held by all of the Holders. The “Required
Holders” of any subset of the Warrant Securities (or the Registrable
Securities) shall mean the Holders of Warrant Securities which when fully
exercised or converted would represent at least two-thirds of the voting power
of such subset of the Warrant Securities (or Registrable Securities).



     “SEC” means the United States Securities and Exchange Commission.



     “Secondary Request” is defined in Section 2(b).



     “Securities Act” means the Securities Act of 1933, as amended from time to
time.



     “Specified Registrable Securities” is defined in Section 2(a).



     “Stock” means any capital stock of the Company.



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     “Trading Day” shall mean a day on which the principal stock exchange or
the NASDAQ National Market on which the Common Stock is listed or admitted to
trading is open for the transaction of business.



     “Warrant Securities” means, collectively, the Warrants and the Warrant
Shares.



     “Warrant Shares” means the securities which a Holder may acquire upon
exercise or conversion of a Warrant, together with any other securities which
such Holder may acquire on account of any such Warrant Shares whether upon the
making or paying of any dividend or other distribution on Common Stock, upon
any split up of such Common Stock, upon a recapitalization, merger,
consolidation, share exchange, reorganization or other transaction or series of
related transactions in which shares of Common Stock are changed into or
exchanged for securities of another corporation, upon exercise of any
preemptive right (or the exercise or conversion of any security which such
Holder may acquire in connection with the exercise of any preemptive right)
with respect to any such Common Stock or otherwise.



     “Warrants” means, collectively, each warrant to purchase one share of
Common Stock for the Exercise Price (as defined in the Warrant Certificates
evidencing such Warrants), together with any warrants issued in substitution
therefor or replacement thereof.



          (b) Cross-References; Headings. Unless otherwise specified, references in
this Agreement to any Article or Section are references to such Article or
Section of this Agreement, and unless otherwise specified, references in any
Article, Section or definition to any clause are references to such clause of
such Section, Article or definition. The headings contained in this Agreement
are for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.



                         SECTION 2. Registration of Securities by the Company.



          (a) Piggyback Registration. If at any time or from time to time the
Company shall propose to file on its behalf or on behalf of any of its security
holders a registration statement under the Securities Act on Form S-1, S-2 or
S-3 (or on any other form for the general registration of securities) with
respect to the class of securities represented by the Warrant Shares, the
Company shall in each case:




          (i) promptly give written notice to each Holder at least thirty (30)
days before the anticipated filing date, indicating the proposed offering
price and describing the plan of distribution;




          (ii) include in such registration (and any related qualification
under blue sky or other state securities laws or other compliance) and,
at the request of any Holder, in any underwriting involved therein (and
with respect to any offering pursuant to the 1997 Registration Rights
Agreement), all the Registrable Securities specified by any Holder or
Holders of Registrable Securities (the “Specified Registrable
Securities”) in a written request (the “Registration Request”) delivered
to the Company within twenty (20) days after receipt of such written
notice from the Company; and



4









 






          (iii) if such offering is proposed to be underwritten, use its best
efforts to cause the managing underwriter(s) of such proposed
underwritten offering to permit the Specified Registrable Securities to
be included in the Registration Statement for such offering on the same
terms and conditions as any similar securities of the Company included
therein.


Notwithstanding the foregoing, if the managing underwriter(s) of such an
underwritten offering advise(s) the Holders of Specified Registrable Securities
in writing that marketing considerations require a limitation on the
securities, other than the securities the Company intends to sell, to be
included in any Registration Statement filed under this Section 2 to a certain
number of shares (the “Available Securities”), then the Company shall in such
case be obligated to such Holders only with respect to such number of Available
Securities; provided, however, that with respect to cutbacks in connection with
an offering pursuant to the 1997 Registration Rights Agreement or the March
2004 Registration Rights Agreement, the Holders shall be treated on a pari
passu basis with Holders under the 1997 Registration Rights Agreement and the
March 2004 Registration Rights Agreement. The limitation on the number of
Specified Registrable Securities will be imposed pro rata (based upon the ratio
of the number of shares of Specified Registrable Securities which the managing
underwriter(s) propose(s) to include at the anticipated offering price to the
number of Specified Registrable Securities owned by each Holder) among all
Holders of Specified Registrable Securities.




     Each Registration Request shall set forth the number or amount of
Specified Registrable Securities. Except as provided by Section 2(b),
notwithstanding any other provision of this Agreement to the contrary, neither
the delivery of the notice by the Company nor of the Registration Request by
any Holder shall in any way obligate the Company to file a Registration
Statement and, notwithstanding such filing, the Company may, at any time prior
to the effective date thereof, in its sole discretion, determine not to offer
the securities to which the Registration Statement relates without liability to
any of the Holders. No registration of Registrable Securities effected under
this Section 2(a) shall relieve the Company of its obligation to effect the
registration of Registrable Securities pursuant to Section 2(b).



          (b) Registration at Holder’s Request. Upon the written request (an
“Initial Request”) of one or more Holders (the “Initial Requesting Holders”) of
Warrant Securities constituting 25% or more of all Warrant Securities then
outstanding made at any time requesting that the Company effect the
registration under the Securities Act of all or part of the Registrable
Securities held by such Holders and specifying the intended method or methods
of disposition of such Registrable Securities, the Company will give prompt
(and in any case within ten (10) days) written notice of such requested
registration and the intended method or methods of disposition thereof to all
Holders of Warrant Securities and thereupon will expeditiously prepare and file
a Registration Statement with respect to, and use its best efforts to effect
the registration under the Securities Act, of:




          (i) the Registrable Securities which the Company has been so
requested to register by the Initial Requesting Holders, for disposition
in accordance with the intended method of disposition stated in such
request, and



5









 






          (ii) all other Registrable Securities which the Company has been
requested to register by the Holders of Warrant Securities by written
request (a “Secondary Request”) delivered to the Company within twenty
(20) days after receipt of such written notice from the Company.



     In any case where the Initial Requesting Holders specify that the intended
method of disposition is to be an underwritten offering, the underwriter(s) for
such offering shall be selected by the Company and shall be reasonably
acceptable to the Initial Requesting Holders. Each registration requested
pursuant to this Section 2(b) shall be effected by the filing of a Registration
Statement on Form S-1, S-2 or S-3 (or on any other form for the general
registration of securities) unless the use of a different form has been agreed
upon in writing by the Company and the Initial Requesting Holders. The Company
shall be obligated to cause a Registration Statement to be filed pursuant to
the provisions of this Section 2(b) and to become effective under the
Securities Act only three times with respect to one or more Initial Requesting
Holders under this Section 2(b), provided, however, that the Company shall not
be deemed to have caused a Registration Statement to be so filed and effective,
and the Initial Requesting Holders shall not be deemed to have made such
request, (1) unless a Registration Statement covering all Registrable
Securities requested to be registered for sale in accordance with the method or
methods of disposition specified shall have become effective or (2) if, after
such Registration Statement has become effective, it is interfered with by any
stop order, injunction or other order or requirement of the SEC, any other
governmental agency or any court. The parties hereto agree that the Company
shall be deemed to have been given an Initial Request by all Holders (and the
period for giving a Secondary Request with respect thereto shall be deemed to
have expired) on the date hereof with respect to a resale shelf registration
statement covering the resale of all Warrant Shares from time to time. Whenever
a registration requested by one or more Holders pursuant to this Section 2(b)
is for an underwritten offering, unless the underwriter(s) of an underwritten
offering object(s), the Company may include securities for offering by the
Company or any other securityholders in such Registration Statement, it being
understood that the Company’s right and such other securityholders’ right to
inclusion shall be subordinate to, and not pari passu with, the rights of the
Holders under this Section 2(b). If the managing underwriter(s) of any such
underwritten offering advise(s) the Holders proposing to sell Registrable
Securities in writing that marketing considerations require a limitation on the
securities to be included in any Registration Statement filed under this
Section 2 to a certain number of shares, then such Holders shall share pro rata
in the number of Registrable Securities to be included in such underwritten
offering, such sharing to be based on the respective numbers of Warrant
Securities owned by such Holders and proposed to be included in such
Registration Statement. From the date of receipt of a notice from requesting
Holders pursuant to this Section 2(b) indicating that such Holders intend to
sell securities in an underwritten offering until the completion of the period
of distribution of the registration contemplated thereby, the Company will not
effect any other registration of its Stock (whether for its account or that of
any other securityholder).



          (c) Registration Procedures. If and when the Company shall be required by
the provisions of this Section 2 to effect the registration of Registrable
Securities under the Securities Act, the Company will use its best efforts to
effect such registration to permit the sale of such Registrable Securities in
accordance with the intended method or methods of disposition thereof, and
pursuant thereto it will, as expeditiously as possible:



6









 






          (i) before filing a Registration Statement or Prospectus or any
amendments or supplements thereto, furnish to the Holders of the
Registrable Securities covered by such Registration Statement and the
underwriter(s), if any, copies of all such documents proposed to be
filed, which documents will be made available, on a timely basis, for
review by such Holders and underwriters;




          (ii) prepare and, as expeditiously as possible but in any event
within 30 days (60 days in the case of an underwritten offering) after
the end of the applicable period within which requests for registration
may be given to the Company pursuant to this Section 2, file with the SEC
a Registration Statement and Prospectus covering such Registrable
Securities; prepare and file such amendments and post-effective
amendments to any Registration Statement, and such supplements to the
Prospectus, as may be reasonably requested by any Holder of Registrable
Securities or the managing underwriter(s), if any, or as may be required
by the Securities Act, the Exchange Act or by the rules, regulations or
instructions applicable to the registration form utilized by the Company
or as may otherwise be necessary to cause such Registration Statement to
become effective or to keep such Registration Statement effective until
such time as all of the Registrable Securities covered by such
Registration Statement have been disposed of in accordance with the
intended method or methods of disposition set forth in such Registration
Statement or Prospectus; and cause the Prospectus as so supplemented to
be filed pursuant to Rule 424 (or any successor rule) under the
Securities Act; and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the intended
method or methods of disposition by the Holders thereof set forth in such
Registration Statement or Prospectus;




          (iii) promptly notify the selling Holders of Registrable Securities
and the managing underwriter(s), if any, and if requested by any such
Person, confirm such advice in writing:




     (a) of the filing of the Prospectus or any supplement to
the Prospectus and of the effectiveness of the Registration
Statement and/or any post-effective amendment,




     (b) of any request by the SEC for amendments or
supplements to the Registration Statement or the Prospectus
or for additional information,




     (c) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or
the initiation of any proceedings for that purpose,




     (d) of the Company’s becoming aware at any time that the
representations and warranties of the Company contemplated by
paragraph (xiv)(a) below have ceased to be true and correct,



7









 






     (e) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the
initiation or threat of any proceeding for such purpose, and




     (f) of the existence of any fact which, to the knowledge
of the Company, results in the Registration Statement, the
Prospectus or any document incorporated therein by reference
containing an untrue statement of material fact or omitting
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading,




          (iv) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the Registration Statement or any
qualification referred to in paragraph (iii)(e) at the earliest possible
moment;




          (v) if reasonably requested by the managing underwriter(s) or the
Required Holders of the Registrable Securities being sold in connection
with an underwritten offering, immediately incorporate in a supplement
to the Prospectus or post-effective amendment to the Registration
Statement such information as the managing underwriter(s) or the Required
Holders of the Registrable Securities being sold reasonably request to
have included therein relating to the plan of distribution with respect
to such Registrable Securities, including, without limitation,
information with respect to the amount of Registrable Securities being
sold to such underwriters, the purchase price being paid therefor by such
underwriters and any other terms of the underwritten offering of the
Registrable Securities to be sold in such offering; and make all required
filings of such supplement to the Prospectus or post effective amendment
to the Registration Statement as soon as notified of the matters to be
incorporated in such supplement to the Prospectus or post-effective
amendment to the Registration Statement;




          (vi) at the request of any selling Holder of Registrable Securities,
furnish to such selling Holder of Registrable Securities and the managing
underwriter(s), if any, without charge, at least one signed copy of the
Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, all documents incorporated
therein by reference and all exhibits thereto (including those
incorporated by reference);




          (vii) deliver to each selling Holder of Registrable Securities and
the managing underwriter(s), if any, without charge, as many copies of
the Registration Statement, each Prospectus (including each preliminary
prospectus) and any amendment or supplement thereto (in each case
including all exhibits), as such Persons may reasonably request, together
with all documents incorporated by reference in such Registration
Statement or Prospectus, and such other documents as such selling Holder
may reasonably request in order to facilitate the disposition of its
Registrable Securities covered by such Registration Statement; the
Company consents to the use of each Prospectus and any supplement thereto
by each of the selling Holders of Registrable Securities and the managing
underwriter(s), if any, in connection with the offering and sale of the
Registrable Securities covered by each Prospectus or any supplement
thereto;



8









 






          (viii) prior to any public offering of Registrable Securities,
register or qualify or reasonably cooperate with the selling Holders of
Registrable Securities, the managing underwriter(s), if any, and their
respective counsel in connection with the registration or qualification
of such Registrable Securities for offer and sale under the securities
or blue sky laws of such jurisdictions as any selling Holder or managing
underwriter(s) reasonably request(s) and do any and all other acts or
things necessary to enable the disposition in such jurisdictions of the
Registrable Securities covered by the Registration Statement;




          (ix) cooperate with the selling Holders of Registrable Securities
and the managing underwriter(s), if any, to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any legends restricting the
transfer thereof; and enable such Registrable Securities to be in such
denominations and registered in such names as the managing underwriters
may request at least two Business Days prior to any sale of Registrable
Securities to the underwriters;




          (x) use its best efforts to cause the Registrable Securities covered
by the applicable Registration Statement to be registered with or
approved by such United States, state and local governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof
or the underwriters, if any, to consummate the disposition of such
Registrable Securities;




          (xi) if any fact contemplated by paragraph (iii)(b) or (iii)(f)
above shall exist, promptly notify each Holder on whose behalf
Registrable Securities have been registered and promptly prepare and
furnish to such Holders a supplement or post-effective amendment to the
Registration Statement or the related Prospectus or any document
incorporated therein by reference and promptly file any other required
document so that, as thereafter delivered to the purchasers of the
Registrable Securities, neither the Registration Statement nor the
Prospectus will contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however, that if
the Company shall furnish to the Requesting Holders a certificate signed
by the Company’s Chairman of the Board stating that in his good faith
judgment such actions would be detrimental or otherwise disadvantageous
to the Company or its stockholders, the Company may delay such actions
for as short a period as reasonably necessary to remove such detrimental
condition, not to exceed 30 days in any instance.




          (xii) cause all Registrable Securities covered by the Registration
Statement to be (A) listed on each securities exchange on which
securities of the same class are then listed or (B) admitted for trading
in any inter-dealer quotation system on which securities of the same
class are then traded;




          (xiii) not later than the effective date of the applicable
Registration Statement, provide a CUSIP number for all Registrable
Securities covered by the Registration Statement and provide the
applicable transfer agent with printed certificates for such Registrable
Securities which are in a form eligible for deposit with The Depository
Trust Company;



9









 






          (xiv) enter into customary agreements (including underwriting
agreements) and take all other reasonable actions in order to expedite or
facilitate the disposition of such Registrable Securities; and in such
connection, except as otherwise provided:




     (a) in an underwritten offering, make such
representations and warranties to the Holders selling such
Registrable Securities and the underwriters, in form,
substance and scope as are customarily made by issuers to
selling securityholders and underwriters in similar
underwritten offerings;




     (b) obtain opinions of counsel to the Company and
updates thereof addressed to each selling Holder and the
underwriters, if any, covering the matters customarily
covered in opinions requested in similar underwritten
offerings and such other matters as may be reasonably
requested by such Holders and underwriters, which counsel and
opinions shall be reasonably satisfactory (in form, scope and
substance) to the managing underwriters, if any, and the
Required Holders of the Registrable Securities being sold;




     (c) in connection with any underwritten offering, obtain
so called “cold comfort” letters and updates thereof from the
Company’s independent certified public accountants addressed
to the selling Holders of Registrable Securities and the
underwriters, such letters to be in customary form and
covering matters of the type customarily covered in “cold
comfort” letters to underwriters in connection with similar
underwritten offerings;




     (d) if an underwriting agreement is entered into, cause
the same to include indemnification and contribution
provisions and procedures substantially similar to those set
forth in Section 5, subject to revisions the underwriters
shall reasonably request, with respect to all parties to be
indemnified pursuant to said Section 5; and




     (e) deliver such documents and certificates as may
reasonably be requested by the Required Holders of the
Registrable Securities being sold, or the managing
underwriter(s), if any, to evidence compliance with this
paragraph (xiv) and with any customary conditions contained
in the underwriting agreement or other agreement entered into
by the Company;




the foregoing to be done upon each closing under any underwriting or
similar agreement as and to the extent required thereunder and from time
to time as may reasonably be requested by any selling Holder of
Registrable Securities in connection with the disposition of Registrable
Securities pursuant to such Registration Statement, all in a manner
consistent with customary industry practice;



10









 






          (xv) upon execution and delivery of such confidentiality agreements
as the Company may reasonably request, make available to the Holders of
the Registrable Securities being sold, any underwriter participating in
any disposition pursuant to such Registration Statement, and any attorney
or accountant retained by such Holders or underwriter, all financial and
other records, pertinent corporate documents and properties of the
Company, and cause the Company’s officers, directors and employees to
supply all information reasonably requested by any such Holder,
underwriter, attorney or accountant in connection with the registration,
at such time or times as the Person requesting such information shall
reasonably determine;




          (xvi) otherwise use its best efforts to comply with the Securities
Act, the Exchange Act, all applicable rules and regulations of the SEC
and all applicable state blue sky and other securities laws, rules and
regulations, and make generally available to its security holders an
earnings statement satisfying the provisions of Section 11(a) of the
Securities Act, as soon as practicable, but in no event later than thirty
(30) days after the end of the 12 calendar month period commencing after
the effective date of the Registration Statement;




          (xvii) cooperate and assist in any filings required to be made with
the NASD and in the performance of any due diligence investigation by any
underwriter; and




          (xviii) prior to the filing of any document which is being prepared
for incorporation by reference into the Registration Statement or the
Prospectus (other than a Registration Statement or Prospectus relating to
a “shelf” offering) , upon receipt of such confidentiality agreements as
the Company may reasonably request, provide copies of such document to
counsel to the selling Holders of Registrable Securities, and to the
managing underwriter(s), if any, and make the Company’s representatives
available for discussion of such document.



          (d) Registration Default. If any of the following events occurs (each, a
“Registration Default”), the Company shall make payments to the Purchasers
(“Registration Default Payments”), pro rata based upon the number of Warrants
held by each, calculated at a per annum rate equal to the one-year Libor, as
published in the “Money Rates” column in The Wall Street Journal, as of the day
such default commences plus 3.0% (based upon a year of 360 days) on the daily
average Current Market Price during the period from and including the date the
Registration Default occurs until the date that such default is cured, of the
aggregate Warrant Shares of each such holder:




          (i) If by the date which is 60 days after the date hereof, the
resale shelf registration statement deemed requested pursuant to Section
2(b) has not been filed with the Commission;




          (ii) If by the date which is 120 days after such registration
statement has been filed with the Commission, such registration statement
is not declared effective by the Commission; or



11









 






          (iii) If after such registration statement is declared effective (A)
such registration statement thereafter ceases to be effective; or (B)
such registration statement or the related prospectus ceases to be usable
(except as permitted in Section 2(e)) in connection with resales of
Warrant Shares because either (1) any event occurs as a result of which
the related prospectus forming part of such registration statement would
include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in the light of
the circumstances under which they were made not misleading, or (2) it
shall be necessary to amend such registration statement or supplement the
related prospectus, to comply with the Securities Act or the Exchange Act
or the respective rules thereunder.



     Registration Default Payments shall be due and payable in cash upon demand
from any Purchaser.



          (e) No Payments in Certain Circumstances. A Registration Default referred
to in Section 2(d)(iii)(B) hereof shall be deemed not to have occurred and be
continuing in relation to the resale registration statement referred to in
Section 2(d) or the related prospectus if (i) such Registration Default has
occurred solely as a result of material events with respect to the Company that
would need to be described in such registration statement or the related
prospectus and, in such case, the Company is proceeding promptly and in good
faith to amend or supplement such registration statement and related prospectus
to describe such events; provided, however, that in any case if such
Registration Default occurs for a continuous period in excess of 30 days,
Registration Default Payments shall be payable in accordance with Section 2(d)
from and including the first day such Registration Default occurs until such
Registration Default is cured.



                         SECTION 3. Registration Expenses.



          (a) All expenses incident to the Company’s performance of or compliance
with its obligations under this Agreement (excluding underwriting discounts,
selling commissions and brokerage fees, which will be paid by the selling
Holders) will be paid by the Company, regardless of whether Registrable
Securities are sold pursuant to any Registration Statement, including, without
limitation:




          (i) all registration, filing and listing fees;




          (ii) fees and expenses of compliance with securities or blue sky
laws (including, without limitation, the fees and disbursements of
counsel for the underwriters, if any, or selling Holders in connection
with blue sky and state securities qualifications of Registrable
Securities and determination of their eligibility for investment under
the laws of such jurisdictions as the managing underwriter(s), if any, or
the Required Holders of the Registrable Securities covered by such
Registration Statement may reasonably designate);




          (iii) printing (including, without limitation, expenses of printing
or engraving certificates for the Registrable Securities in a form
eligible for deposit with



12









 






The Depository Trust Company and of printing prospectuses), word
processing, duplicating, messenger, telephone and delivery expenses;




          (iv) fees and disbursements of counsel for the Company and, subject
to Section 3(b), counsel for the selling Holders of the Registrable
Securities;




          (v) fees and disbursements of all independent certified public
accountants of the Company or any other Persons for which financial
statements are required or otherwise included in such Registration
Statement (including, without limitation, the expenses of any special
audit and, in connection with any underwritten offering, “cold comfort”
letters required by or incident to such performance);




          (vi) fees and expenses of other Persons (including special experts)
retained by the Company; and




          (vii) fees and expenses associated with any NASD filing required to
be made in connection with any Registration Statement.



     The Company will, in any event, pay its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, the
fees and expenses incurred in connection with the listing of the securities to
be registered on each securities exchange on which securities of the same class
are then listed or the admission for trading of the securities to be registered
in each inter-dealer quotation system on which securities of the same class are
then traded, and rating agency fees.



          (b) In connection with each Registration Statement required hereunder, the
Company will reimburse the Holders of Registrable Securities being registered
pursuant to such Registration Statement for the reasonable fees and
disbursements of not more than one counsel chosen by the Required Holders of
the Registrable Securities being sold; the expense of any additional counsel
for the Holders shall be paid by the Holders.



          (c) The term “Registration Expenses” shall mean the expenses payable by
the Company pursuant to the provisions of this Section 3.



                         SECTION 4. Conditions to Registration.



     Each Holder’s right to have Registrable Securities included in any
Registration Statement filed by the Company in accordance with the provisions
of Section 2 shall be subject to the following conditions:



          (a) The Holders on whose behalf such Registrable Securities are to be
included shall be required to furnish the Company in a timely manner with all
information required by the applicable rules and regulations of the SEC
concerning the proposed method or methods of disposition of such securities,
the identity of and compensation to be paid to any proposed underwriters to be
employed in connection therewith, and such other information as may be
reasonably required by the Company properly to prepare and file such
Registration Statement in accordance with applicable provisions of the
Securities Act;



13









 





          (b) If any such Holder desires to sell and distribute Registrable
Securities over a period of time, or from time to time, at then prevailing
market prices, then any such Holder shall execute and deliver to the Company
such written undertakings as the Company and its counsel may reasonably require
in order to assure full compliance with relevant provisions of the Securities
Act and the Exchange Act;



          (c) In the case of any registration requested pursuant to the provisions
of Section 2, the offering price for any Registrable Securities to be so
registered shall be no less than for any securities of the same class then to
be registered for sale for the account of the Company or other security
holders, unless such Registrable Securities are to be offered from time to time
based on the prevailing market price; and



          (d) In the case of any underwritten offering on behalf of the Holders of
Registrable Securities, such Holders will enter into such agreements (including
underwriting agreements and lock-up agreements) as the managing underwriters
shall reasonably request and as are customary in similar circumstances,
provided, however, that no such agreements shall require any Holder to make any
representations or warranties to, or agreements with, the Company or the
underwriters other than representations, warranties or agreements regarding
such Holder, the ownership of such Holder’s Registrable Securities and such
Holder’s intended method of distribution.



                         SECTION 5. Indemnification.



          (a) Indemnification by the Company. In the event of the registration of
any Registrable Securities under the Securities Act pursuant to the provisions
hereof, the Company will indemnify and hold harmless each seller of such
Registrable Securities, its partners, directors, officers, employees and
agents, each underwriter, broker and dealer, if any, who participates in the
offering or sale of such securities, and each other Person, if any, who
controls such seller or any such underwriter, broker or dealer within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act (each such Person being hereinafter sometimes referred to as an
“Indemnified Person,” provided, however, that for purposes of clauses (b), (c)
and (d) of this Section 5, “Indemnified Person” shall also include the Company,
its partners, directors, officers, employees and agents, and each other Person,
if any, who controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act) from and against any losses,
claims, damages, liabilities or expenses, joint or several, to which such
Indemnified Person may become subject under the Securities Act, the Exchange
Act or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained or
incorporated by reference in any Registration Statement or Prospectus or any
amendment or supplement thereto or any document incorporated by reference
therein, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse each such
Indemnified Person for any legal or other expenses reasonably incurred by such
Indemnified Person in connection with investigating or defending any such loss,
claim, damage, liability, expense or action; provided, however, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage, liability, expense or action (i) arises out of or is based upon
an untrue statement or alleged untrue



14









 




statement or omission or alleged omission made or incorporated by
reference in the Registration Statement or Prospectus or any amendment or
supplement thereto, in reliance upon and in conformity with written information
furnished to the Company by such Indemnified Person specifically stating it is
for use in preparation thereof or (ii) arises out of the use of any Prospectus
by an Indemnified Party after the Company has provided such Indemnified Party
with the notice and supplement referred to in Section 2(c)(xi) if such
Prospectus is the subject of such notice. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
Indemnified Person and shall survive the transfer of such Registrable
Securities by such seller.




          (b) Indemnification by Holders of Registrable Securities. In the event of
the registration of any Registrable Securities under the Securities Act
pursuant to the provisions hereof, each Holder on whose behalf such Registrable
Securities shall have been registered will indemnify and hold harmless each and
every Indemnified Person against any losses, claims, damages, liabilities or
expenses, joint or several, to which such Indemnified Person may become subject
under the Securities Act, the Exchange Act or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained or incorporated by reference in any
Registration Statement or Prospectus or any amendment or supplement thereto or
any document incorporated by reference therein, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, which untrue statement or alleged untrue statement or omission or
alleged omission has been made or incorporated therein in reliance upon and in
conformity with written information furnished to the Company by such Holder
specifically stating that it is for use in preparation thereof, and will
reimburse each such Indemnified Person for any legal or other expenses
reasonably incurred by such Indemnified Person in connection with investigating
or defending any such loss, claim, damage, liability, expense or action;
provided, however, that the liability of each Holder hereunder shall be limited
to the proceeds received by such Holder from the sale of Registrable Securities
covered by such Registration Statement.



          (c) Procedure. Promptly after receipt by an Indemnified Person of notice
of the commencement of any action (including any governmental investigation or
inquiry), such Indemnified Person will, if such Indemnified Person intends to
make a claim in respect thereof against the party agreeing to indemnify such
Indemnified Person pursuant to paragraph (a) or (b) hereof (each such Person
being hereinafter referred to as an “Indemnifying Person”), give written notice
to such Indemnifying Person of the commencement thereof, but the omission so to
notify the Indemnifying Person shall not relieve the Indemnifying Person from
any of its obligations pursuant to the provisions of this Section 5 except to
the extent that the Indemnifying Person is actually prejudiced by such failure
to give notice. In case any such action is brought against any Indemnified
Person and it notifies an Indemnifying Person of the commencement thereof, the
Indemnifying Person shall be entitled to participate in, and to the extent that
it may wish, jointly with any other Indemnifying Person similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
Indemnified Person, and after notice from the Indemnifying Person to such
Indemnified Person, the Indemnifying Person shall not, except as hereinafter
provided, be responsible for any legal or other expenses subsequently incurred
by such Indemnified Person in connection with the defense thereof. No
Indemnifying Person will



15









 




consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Person of a release from all liability in respect
of such claim or litigation.




     Such Indemnified Person shall have the right to employ separate counsel in
any such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be the expense of such Indemnified Person unless
(a) the Indemnifying Person has agreed to pay such fees and expenses or (b) the
Indemnifying Person shall have failed to assume the defense of such action or
proceeding or has failed to employ counsel reasonably satisfactory to such
Indemnified Person in any such action or proceeding or (c) the named parties to
any such action or proceeding (including any impleaded parties) include both
such Indemnified Person and the Indemnifying Person and such Indemnified Person
shall have been advised by counsel that representation of both parties by the
same counsel would be inappropriate due to actual or potential material
differing interests between them (in which case, if such Indemnified Person
notifies the Indemnifying Person in writing that it elects to employ separate
counsel at the expense of the Indemnifying Person, the Indemnifying Person
shall not have the right to assume the defense of such action or proceeding on
behalf of such Indemnified Person). The Indemnifying Person shall not be
liable for any settlement of any such action or proceeding effected without its
written consent, which consent shall not unreasonably be withheld, delayed or
conditioned, but if settled with its written consent, or if there is a final
judgment for the plaintiff in any such action or proceeding, the Indemnifying
Person agrees to indemnify and hold harmless such Indemnified Persons from and
against any loss or liability by reason of such settlement or judgment.



          (d) Contribution. To the extent that the indemnification provided for in
this Section 5 is unavailable to a party that would have been an Indemnified
Person under this Section 5 in respect of any losses, claims, damages,
liabilities or expenses (or actions in respect thereof) referred to herein,
then each party that would have been an Indemnifying Person thereunder shall,
in lieu of indemnifying such Indemnified Person, contribute to the amount paid
or payable by such Indemnified Person as a result of such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Person on the one hand and the Indemnified Person on the other in connection
with the statement or omission which resulted in such losses, claims, damages,
liabilities or expenses (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission of a material
fact relates to information supplied by the Indemnifying Person or the
Indemnified Person and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 5(c), any legal or other fees
or expenses reasonably incurred by such party in connection with the
investigation or defense of any action or claim. The Company and each Holder
of Registrable Securities agrees that it would not be just and equitable if
contribution pursuant to this Section 5 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 5. Notwithstanding the
provisions of this Section 5(d), no Holder of Registrable Securities shall be
required to contribute any amount in excess of the



16









 




amount by which the total price at which the Registrable Securities sold
by it exceeds the amount of any damages which such Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission.




     No Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation.



     Indemnification or, if appropriate, contribution, similar to that
specified in the preceding provisions of this Section 5 (with appropriate
modifications) shall be given by the Company and each seller of Registrable
Securities with respect to any required registration or other qualification of
such securities under any federal or state law or regulation or governmental
authority other than the Securities Act.



     In the event of any underwritten offering of Registrable Securities under
the Securities Act pursuant to the provisions of Section 2, the Company and
each Holder on whose behalf such Registrable Securities shall have been
registered agree to enter into an underwriting agreement, in customary form,
with the underwriters, which underwriting agreement may contain additional
provisions with respect to indemnification and contribution in lieu thereof.



                         SECTION 6. Exchange Act Registration; Rule 144 Reporting.



     The Company covenants and agrees that until such time as the Holders no
longer hold any Registrable Securities it will:



          (a) if required by law, maintain an effective registration statement
(containing such information and documents as the SEC shall specify) with
respect to the Common Stock of the Company under Section 12(g) of the Exchange
Act;



          (b) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, even if the
Company subsequently ceases to be subject to the reporting requirements of the
Exchange Act;



          (c) file with the SEC in a timely manner all reports and documents
required of the Company under the Securities Act and the Exchange Act;



          (d) furnish to any Holder promptly upon request (i) a written statement by
the Company as to its compliance with the reporting requirements of Rule 144
(and any similar or successor rules) and of the Securities Act and the Exchange
Act, (ii) a copy of the most recent annual or quarterly report of the Company
and (iii) such other reports and documents of the Company and other information
in the possession of or reasonably obtainable by the Company as such Holder may
reasonably request in availing itself of any rule or regulation of the SEC
allowing such Holder to sell any such securities without registration; and



          (e) take such further action as any Holder of Registrable Securities may
from time to time reasonably request to enable such Holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (i) Rule



17









 




144 under the Securities Act, as such rule may be amended from time to
time, or (ii) any similar rule or regulation hereafter adopted by the SEC.




     The Company represents and warrants that such registration statement or
any information, document or report filed with the SEC in connection therewith
or any information so made public shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements contained therein not misleading.
The Company agrees to indemnify and hold harmless (or to the extent the same is
not enforceable, make contribution to) the Holders, their partners, officers,
directors, employees and agents, each broker, dealer or underwriter (within the
meaning of the Securities Act) acting for any Holder in connection with any
offering or sale by such Holder of Registrable Securities or any Person
controlling (within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act) such Holder and any such broker, dealer or
underwriter from and against any and all losses, claims, damages, liabilities
or expenses (or actions in respect thereof) arising out of or resulting from
any breach of the foregoing representation or warranty, all on terms and
conditions comparable to those set forth in Section 5.



                         SECTION 7. Limitation on Registration Rights of Others.



     The Company represents and warrants that, except as provided in the 1997
Registration Rights Agreement and the March 2004 Registration Rights Agreement,
it has not granted to any Person the right to request or require the Company to
register any securities issued by the Company. The Company covenants and
agrees that after the date hereof, so long as any Holder holds any Warrant
Securities, the Company will not, directly or indirectly, grant to any Person
or agree to or otherwise become obligated in respect of (a) any registration
rights of securities of the Company upon the demand of any Person (including
any shelf registration) without the prior written consent of the Required
Holders; or (b) rights of registration in the nature or substantially in the
nature of those set forth in Section 2(a) unless such rights are expressly
subject and subordinated to the rights of registration of the Holders pursuant
to Section 2(a) hereof on terms reasonably satisfactory to the Required
Holders.



                         SECTION 8. Mergers, etc.



     In addition to any other restrictions on mergers, consolidations and
reorganizations contained in the Purchase Agreement or in the certificate of
incorporation, bylaws or agreements of the Company, the Company covenants and
agrees that it shall not, directly or indirectly, enter into any merger,
consolidation or reorganization in which the Company shall not be the surviving
corporation and in which the Holders shall not have had the right to receive
cash for all their Registrable Securities, unless the surviving corporation
shall, prior to such merger, consolidation or reorganization, agree in a
writing satisfactory in form, scope and substance to the Required Holders to
assume the obligations of the Company under this Agreement, and for such
purpose references hereunder to “Registrable Securities” shall be deemed to
include the securities which such Holders would be entitled to receive in
exchange for Registrable Securities pursuant to any such merger, consolidation
or reorganization.



     If, and as often as, there are any changes in the Registrable Securities
by way of stock split, stock dividend, combination or classification, or
through merger, consolidation,



18









 




reorganization or recapitalization, or by any other means, appropriate
adjustments shall be made in the provisions hereof as may be required, so that
the rights and privileges granted hereby shall continue with respect to the
Registrable Securities as so changed.




                         SECTION 9. Notices, etc.



     All notices, consents, approvals, agreements and other communications
provided hereunder shall be in writing or by telex or telecopy and shall be
sufficiently given to the Purchasers, the Holders or the Company if addressed
or delivered to them: (i) if to the Company or any Purchaser, as set forth in
the Purchase Agreement, (ii) if to any other Holder, at its last known address
appearing on the books of the Company maintained for such purpose, or in any
such case, at such other address as any party may designate to any other party
by written notice. All such notices and communications shall be deemed to have
been duly given: (i) at the time delivered by hand, if personally delivered,
(ii) when received, if deposited in the mail, postage prepaid, (iii) when
transmission is verified, if telecopied, and (iv) on the next Business Day, if
timely delivered to an air courier guaranteeing overnight delivery.



                         SECTION 10. Entire Agreement.



     The parties hereto agree that this Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings between them as to such
subject matter; and there are no restrictions, agreements, arrangements, oral
or written, between any or all of the parties relating to the subject matter
hereof which are not fully expressed or referred to herein or therein.



                         SECTION 11. Amendments; Waivers and Further Agreements.



     This Agreement may not be amended nor shall any waiver, change,
modification, consent or discharge be effected except by an instrument in
writing executed by or on behalf of the party or parties against whom
enforcement of any amendment, waiver, change, modification, consent or
discharge is sought; provided, however, that any waiver sought from the Holders
of any provision of this Agreement which affects the Holders generally, and any
action required to be taken by the Holders as a group pursuant to this
Agreement, shall be given or taken by the Required Holders, and any such waiver
or action so given or taken shall be binding on all Holders. No failure or
delay by any party in exercising any right or remedy hereunder shall operate as
a waiver thereof, and a waiver of a particular right or remedy on one occasion
shall not be deemed a waiver of any other right or remedy or a waiver of the
same right or remedy on any subsequent occasion.



     Any waiver of any terms or conditions of this Agreement shall not operate
as a waiver of any other breach of such terms or conditions or any other term
or condition, nor shall any failure to enforce any provision hereof operate as
a waiver of such provision or of any other provision hereof; provided, however,
that no such written waiver, unless it by its own terms explicitly provides to
the contrary, shall be construed to effect a continuing waiver of the provision
being waived and no such waiver in any instance shall constitute a waiver in
any other instance or for any other purpose or impair the right of the party
against whom such waiver is claimed in all other instances or for all other
purposes to require full compliance with such provision. Each of



19









 




the parties hereto agrees to execute all such further instruments and
documents and to take all such further action as the other parties may
reasonably require in order to effectuate the terms and purposes of this
Agreement.




                         SECTION 12. Assignment; Successors and Assigns.



     This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective heirs, executors, legal representatives,
successors and permitted assigns, including, without limitation, any Holders
from time to time of the Registrable Securities. Anything in this Agreement to
the contrary notwithstanding, the term “Holders” as used in this Agreement
shall be deemed to include the registered Holders from time to time of the
Warrant Securities. Nothing herein shall be construed as requiring the Holders
of Warrants to exercise their warrants for, or convert their Warrants into,
shares of Common Stock prior to exercising the rights conferred upon such
Holders under this Agreement.



                         SECTION 13. Severability.



     If any provision of this Agreement shall be held or deemed to be, or shall
in fact be, invalid, inoperative or unenforceable as applied to any particular
case in any jurisdiction or jurisdictions, or in all jurisdictions or in all
cases, because any provision conflicts with any constitution, statute, rule or
public policy, or for any other reason, such circumstance shall not have the
effect of rendering the provision or provisions in question invalid,
inoperative or unenforceable in any other jurisdiction or in any other case or
circumstance or of rendering any other provision or provisions herein contained
invalid, inoperative or unenforceable to the extent that such other provisions
are not themselves actually in conflict with such constitution, statute, rule
or public policy, but this Agreement shall be reformed and construed in any
such jurisdiction or case as if such invalid, inoperative or unenforceable
provision had never been contained herein and such provision reformed so that
it would be valid, operative and enforceable to the maximum extent permitted in
such jurisdiction or in such case.



                         SECTION 14. Counterparts.



     This Agreement may be executed in two or more counterparts (each of which
need not be executed by each of the parties), each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument, and in pleading or proving any provision of this Agreement, it
shall not be necessary to produce more than one such counterpart.



                         SECTION 15. Gender; Usage.



     Whenever used herein the singular number shall include the plural, the
plural shall include the singular, and the use of any gender shall include all
genders. The words “hereof,” “herein” and “hereunder,” and words of similar
import, when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement.



20









 





                         SECTION 16. Governing Law.



     THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK OTHER THAN THE CONFLICTS OF
LAWS PRINCIPLES THEREOF.



                         SECTION 17. Survival.



     The indemnification and contribution provisions of Section 5 shall
survive, notwithstanding the fact that any Warrant Shares shall cease to be
Registrable Securities.



                         SECTION 18. Expenses.



     Supplementing the provisions of Section 5, the Company shall be obligated
to pay to the Holders, on demand, all costs and expenses (including, without
limitation, court costs and attorneys’ fees and expenses and interest to the
extent permitted by applicable law on overdue amounts) paid or incurred in
collecting any sums due from, or enforcing any other obligations of, the
Company.



                         SECTION 19. Specific Performance.



     The Company recognizes that the rights of the Holders under this Agreement
are unique and, accordingly, the Holders shall, in addition to such other
remedies as may be available to any of them at law or in equity, have the right
to enforce their rights hereunder by actions for injunctive relief and specific
performance to the extent permitted by law. The Company agrees that monetary
damages would not be adequate compensation for any loss incurred by reason of a
breach by it of the provisions of this Agreement and hereby agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate. This Agreement is not intended to limit or abridge any rights of the
Holders which may exist apart from this Agreement.



21









 





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



	 	 	 	 	 	 	 
	 	 	HORIZON OFFSHORE, INC.
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	

	 	By:	 	 	 	 
	 	 	 	 	
 
	

	 	 	 	Name:	 	 
	

	 	 	 	 	 	
 
	

	 	 	 	Title:	 	 
	

	 	 	 	 	 	
 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	PURCHASERS:
	 
	 	 	 	 	 	 
	 	 	[to be determined upon redemption]








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