SUBORDINATED CONVERTIBLE NOTE DUE MARCH 31, 2010

Exhibit 10.2

THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) TO THE COMPANY, (II) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS 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 THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.

THIS NOTE DOES NOT REQUIRE PHYSICAL SURRENDER OF THE NOTE IN THE EVENT OF A CONVERSION. AS A RESULT, FOLLOWING ANY CONVERSION OF ANY PORTION OF THIS NOTE, THE OUTSTANDING PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE MAY BE LESS THAN THE PRINCIPAL AMOUNT SET FORTH BELOW.

PURSUANT TO SECTION 2 HEREIN, THE OBLIGATIONS UNDER THIS NOTE ARE SUBJECT TO CERTAIN SUBORDINATION PROVISIONS.

SUBORDINATED CONVERTIBLE NOTE DUE MARCH 31, 2010

      This N ote ( “Note” ) is a duly authorized note of HORIZON OFFSHORE, INC. , a corporation duly organized and existing under the laws of the State of Delaware (the “Company” ), designated as the Company’s Subordinated Convertible Notes Due March 31, 2010 ( “Maturity Date” ).

      For Value Received, the Company hereby promises to pay to the order of                                          , or its permitted registered assigns or successors-in-interest ( “Holder” ) the

principal sum of [PRINCIPAL] (U.S. $                      ) on the Maturity Date. No interest shall accrue on the principal amount hereunder.

     All payments on this Note shall be made in lawful money of the United States of America by wire transfer of immediately available funds to such account as the Holder may from time to time designate by written notice in accordance with the provisions of this Note or by Company check. This Note may not be prepaid in whole or in part except as otherwise provided herein. Whenever any amount expressed to be due by the terms of this Note is due on any day which his not a Business Day (as defined below), the same shall instead be due on the next succeeding day which is a Business Day.

     Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Exchange Agreement dated December ___, 2005, pursuant to which the Note was originally issued (the “Exchange Agreement” ). For purposes hereof the following terms shall have the meanings ascribed to them below:

      Section 1. Definitions . For purposes hereof the following terms shall have the meanings ascribed to them below:

     “ Act ” shall mean the Securities Act of 1933, as amended.

     “ Business Day ” shall mean any day other than a Saturday, a Sunday or a day on which commercial banks in the City of New York are authorized or required by law or executive order to remain closed.

     “ Capitalized Lease Liabilities ” means all monetary obligations of the Company and its Subsidiaries under any leasing or similar arrangement which, in accordance with GAAP, are or would be classified as capitalized leases.

     “ Conversion Price ” shall equal, subject to the adjustments set forth herein, $0.38 provided that, subject to adjustment set forth herein, the Conversion Price shall be increased to $.48 on January 1, 2006.

     “ Convertible Securities ” means any convertible securities, warrants, options or other rights to subscribe for or to purchase or exchange for, shares of Common Stock.

     “ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.

     “ Indebtedness ” of any Person means, without duplication:

          (a) all obligations of such Person for borrowed money (including all notes payable and drafts accepted representing extensions of credit) and all obligations of such Person evidenced by bonds, Notes, notes or other similar instruments on which interest charges are customarily paid;

          (b) all obligations, contingent or otherwise, relative to the face amount of all letters of credit, whether or not drawn, and banker’s acceptances issued for the account of such Person;

          (c) all Capitalized Lease Liabilities of such Person (to the extent required by GAAP to be included on the balance sheet of such Person);

          (d) whether or not so included as liabilities in accordance with GAAP (i) all obligations of such Person to pay the deferred purchase price of property or services (excluding trade accounts payable for other than borrowed money arising in the ordinary course of business) and indebtedness secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse, and (ii) all obligations (contingent or otherwise) to guarantee, purchase or otherwise acquire, or otherwise assure a creditor against loss in respect of, Indebtedness of another Person;

          (e) all net obligations of such Person under Interest Rate Contracts; and

          (f) all obligations of such Person to redeem, purchase or otherwise retire or extinguish any of its Stock, or any warrants, options or rights to acquire its Stock, at a fixed or determinable date (whether by operation of a sinking fund or otherwise), at another’s option or upon the occurrence of a condition not solely within the control of such Person (e.g., redemption from future earnings).

      “Instrument” means any contract, agreement, letter of credit, indenture, mortgage, deed, certificate of title, document or writing (whether by formal agreement, letter or otherwise) under which any obligation is evidenced, assumed or undertaken, any Lien (or right or interest therein) is granted or perfected, or any property (or right or interest therein) is conveyed.

     “ Interest Rate Contract ” means any interest rate cap agreement, interest rate collar agreement, interest rate swap agreement or other agreement or arrangement designed to protect against fluctuations in interest rates.

     “ Lien ” means any mortgage, pledge, hypothecation, assignment, charge, deposit arrangement, encumbrance, lien (statutory or other), adverse claim or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any financing lease involving substantially the same economic effect as any of the foregoing and the filing of any financing statement under the UCC or comparable law of any jurisdiction).

     “ 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.

     “ Principal Amount ” means the principal amount of this Note.

     “ Proceeding ” means (a) any insolvency, bankruptcy, receivership, liquidation, reorganization, readjustment, composition or other similar proceeding relating to any of the Company or its Subsidiaries, its properties or its creditors as such, (b) any proceeding for any liquidation, dissolution or other winding-up of any of the Company or its Subsidiaries, whether voluntary or involuntary, and whether or not involving insolvency or bankruptcy proceedings, or (any assignment for the benefit of creditors or marshaling of assets of any of the Company or its

Subsidiaries or the appointment of a trustee, receiver, sequestrator or other custodian for any of the Company or its Subsidiaries any of their properties.

     “ Senior Debt ” means the principal of and accrued interest on all Indebtedness incurred by any of the Company or its Subsidiaries under any of the Senior Debt Documents, reduced by the amount of all principal repayments of any such Indebtedness consisting of term loans and, without duplication, the amount of all permanent reductions of commitments under any revolving facilities under which Senior Debt may be incurred. Senior Debt shall also include any refinancing of Indebtedness

     “ Senior Debt Documents ” means those documents set forth in Schedule 1 .

     “ Senior Lender ” means any holder of Senior Debt and “ Senior Lenders ” means the holders, collectively, of Senior Debt.

     “ Stock ” means all shares of capital stock of or in a corporation, whether voting or non voting, and including, without limitation, common stock and preferred stock.

     “ Subsidiary ” means, with respect to any Person, (1) any corporation of which the outstanding Stock having a least a majority of the votes entitled (without regard to the occurrence of any contingency) to be cast in the election of directors under ordinary circumstances shall at the time be owned, directly or indirectly, by such Person; or (2) any other Person of which at least a majority of the voting interest under ordinary circumstances is at the time, directly or indirectly, owned by such Person. Except as otherwise indicated herein, references to Subsidiaries shall refer to Subsidiaries of the Issuer.

      Section 2. Subordination .

          (a) Subordination . This Note shall be and hereby is expressly made subordinate for all purposes to the Senior Debt to the extent and in the manner provided herein.

          (b) Subordination in Event of Insolvency or Liquidation, Etc . (i) In the event of any Proceeding, (1) the Senior Debt shall first be paid in full before any payment or distribution, whether in cash, securities or other property, shall be made in respect of this Note, and (2) any payment or distribution of assets which would otherwise (but for this provision) be payable or deliverable in respect of this Note shall be paid or delivered directly to the Senior Lenders for application to and payment of the Senior Debt until all Senior Debt shall have been paid in full.

               (ii) The Holder agrees that if it has not filed appropriate claims or proofs of claim in respect of the Note in any Proceeding within thirty (30) days of any bar date, the Senior Lenders may file such claims or proofs of claim on its behalf.

          (c) Turnover of Improper Payments . If any payment or distribution, whether in cash, securities or other property, shall be received by the Holder in contravention of any of the terms hereof, such payment or distribution shall be received and held in trust for the benefit of the Senior Lenders, and shall be promptly paid over and delivered to the Senior Lenders for

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application to the payment of the Senior Debt to the extent necessary to cause the Senior Debt to be paid in full.

          (d) Subrogation . At such time as the Senior Debt has been paid in full, the Holder shall be subrogated to any rights of the Senior Lenders in and to the Senior Debt and any security therefor, to the extent paid by or on behalf of the Holder, and to receive any further payments or distributions of assets of the Company applicable to the Senior Debt until the Note shall be paid in full. For purposes of such subrogation, no payments or distributions to the Senior Lenders of any cash, property or securities to which the Holder would be entitled except for the provisions of this Section 2 shall, as among the Company and its creditors other than the Senior Lenders on the one hand and the Holder on the other hand, be deemed to have been made as a payment by any of them to or on account of the Senior Debt.

          (e) Reinstatement . The provisions of this Section 2 shall continue to be effective or be reinstated, as the case may be, if at any time any payment in respect of the Senior Debt is rescinded or must otherwise be returned by the Senior Lenders in the event of a Proceeding, all as though such payment had not been made.

          (f) Company Obligations Absolute . Nothing contained herein shall impair, as among the Company and the Holder, the obligation of the Company to pay to the Holder all amounts payable in respect of this Note as and when the same shall become due and payable in accordance with the terms hereof, or prevent the Holder from exercising all rights, powers and remedies otherwise permitted by applicable law or upon an Event of Default with respect to this Note.

          (g) Certain Payments and Distributions . Nothing contained herein shall prohibit the payment or distribution on account of this Note that is made in the form of equity securities of the Company, or in the form of debt securities or other evidences of Indebtedness that are subordinated in right of payment to the Senior Debt at least to the extent and the same terms as provided for in this Note.

          (h) No Waiver or Impairment of Subordination Provisions . The subordination effected by this Section 2 is a continuing subordination, and the Holder hereby agrees that at any time and from time to time, without notice to it, but subject in each case to any limitation set forth in the definition of Senior Debt: (a) the time for the Company’s performance of or compliance with any of its agreements contained in any Senior Debt Document may be extended or such performance or compliance may be waived by the applicable Senior Lenders; (b) a Senior Debt agreement may be amended for the purpose of adding any provisions thereto or increasing the amount of, or changing the terms of, the Senior Debt or changing in any manner the rights of any Senior Lender or any obligor thereunder; (c) payment of any Senior Debt or any portion thereof may be extended; (d) the maturity of the Senior Debt may be accelerated on a default or an event of default; and (e) any collateral security therefor may be exchanged, sold, surrendered, released or otherwise dealt with, in accordance with the terms of any Senior Debt Agreements; all without impairing or affecting the obligations of the Holder. The Holder hereby unconditionally waives notice of the incurrence of Senior Debt or any part thereof and reliance by any Senior Lender upon the subordination of this Note to the Senior Debt.

          (i) Reliance by Senior Lenders on Subordination Provisions . Holder, by accepting this Note, and the Company acknowledge and agree that the subordination provisions contained in this Section 2 are, and are intended to be, an inducement and a consideration to each holder of any Senior Debt, whether such Senior Debt was created or acquired before or after the issuance of the Notes, to acquire and continue to hold, or to continue to hold, such Senior Debt and such holder of such Senior Debt shall be deemed conclusively to have relied on such subordination provisions in acquiring and continuing to hold, or in continuing to hold, such Senior Debt.

Section 3. Conversion .

          (a) Conversion Right of Holder . Subject to the terms hereof, the Holder shall have the right, at such Holder’s option, at any time and from time to time on or prior to 5:00 p.m., New York City time, on February 28, 2006, to convert the outstanding Princi