When he touches Terry, Ig sees what happened that night: Merrin left the car en route to her home and ran into the woods; Terry passed out in the car, and woke up the next morning with a bloody rock in his hand, finding Merrin dead under the treehouse. Afraid that he would be implicated, he fled. Infuriated, Ig assaults Terry until he is arrested by Eric Hannity, a police officer, and another childhood friend. The next morning Ig is released from jail with Lee's help. Ig notices Lee wearing Merrin's cross necklace and questions him about it; Lee insists that there are things about him and Merrin that Ig never knew. Later that night, Ig realizes that snakes are following him wherever he goes and uses them to exact vengeance against the waitress. He also gets Eric to act on his feelings for his police partner (who reciprocates his feelings) and forces Terry to overdose on drugs, causing Terry to be tormented by memories of Merrin's death. Ig meets Lee by the docks and pulls off Merrin's necklace; Ig realizes that Lee was unable to see Ig's horns because he was wearing Merrin's cross necklace. Exposed to the horns, Lee falls under their influence, admitting he killed Merrin. In flashbacks, it is shown that Lee was also in love with Merrin and was deeply jealous of Ig throughout their childhood. Lee followed Merrin into the woods, thinking that Merrin had been sending him signals for a long time and that she had broken up with Ig to be with him. When Merrin insisted that she loved Ig more than anyone in the world, Lee raped her in a jealous rage, then killed her with a rock, stole her necklace, and planted the bloody rock on Terry. In the ensuing confrontation, Lee overpowers him and lights him on fire in his car, causing Ig to drive into the bay. Lee claims that Ig confessed to the crime and committed suicide. The horns allow Ig to survive, horrifically burned and disfigured. Merrin's father, who now believes Ig innocent, gives Ig the key to Merrin's lockbox. When Ig puts on Merrin's cross, his body is restored and his horns disappear. In the box, he finds a note from Merrin that explains that she knew he was going to propose, but she was dying from cancer and didn't want him to suffer, so she pushed him away under the pretense of loving someone else. Ig confronts Lee, who does not remember their earlier fight, and leads him into the woods where Merrin was killed.