-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, V8S2VTIxfxLBWHjjF3OR19ukM4y7Tra70/wnBDwMILWZwoBomqorm8L1xgc5lSKF CG15HXLygBtN/gwb0Qew9w== 0001282695-06-000305.txt : 20060608 0001282695-06-000305.hdr.sgml : 20060608 20060608153551 ACCESSION NUMBER: 0001282695-06-000305 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20060608 DATE AS OF CHANGE: 20060608 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: HORIZON OFFSHORE INC CENTRAL INDEX KEY: 0001051431 STANDARD INDUSTRIAL CLASSIFICATION: OIL, GAS FIELD SERVICES, NBC [1389] IRS NUMBER: 760487309 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-53849 FILM NUMBER: 06894022 BUSINESS ADDRESS: STREET 1: HORIZON OFFSHORE INC STREET 2: 2500 CITY WEST BLVD., STE. 2200 CITY: HOUSTON STATE: TX ZIP: 77042 BUSINESS PHONE: 7133612600 MAIL ADDRESS: STREET 1: HORIZON OFFSHORE INC STREET 2: 2500 CITY WEST BLVD., STE. 2200 CITY: HOUSTON STATE: TX ZIP: 77042 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Falcon Mezzanine Investments LLC CENTRAL INDEX KEY: 0001284307 IRS NUMBER: 223741750 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 21 CUSTOM HOUSE STREET STREET 2: 10TH FLOOR CITY: BOSTON STATE: MA ZIP: 02110 BUSINESS PHONE: 617-412-2700 MAIL ADDRESS: STREET 1: 21 CUSTOM HOUSE STREET STREET 2: 10TH FLOOR CITY: BOSTON STATE: MA ZIP: 02110 FORMER COMPANY: FORMER CONFORMED NAME: FALCON MEZZANINE INVESTMENTS LLC DATE OF NAME CHANGE: 20040319 SC 13D 1 e65740_13d.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------- SCHEDULE 13D/A (Amendment No. 5) Horizon Offshore, Inc. - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock, par value $.00001 per share - -------------------------------------------------------------------------------- (Title of Class of Securities) 44043J105 - -------------------------------------------------------------------------------- (CUSIP number) William J. Kennedy Jr. Managing Director Falcon Mezzanine Investments, LLC 21 Custom House Street, 10th Floor Boston, Massachusetts 02110 (617) 412-2700 - -------------------------------------------------------------------------------- (Name, address and telephone number of person authorized to receive notices and communications) June 8, 2006 - -------------------------------------------------------------------------------- (Date of event which requires filing of this statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box. |_| (Continued on following pages) (Page 1 of 11) - -------------------------------------------------------------------------------- CUSIP No. 44043J105 13D Page 2 of 11 Pages - -------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) FALCON MEZZANINE INVESTMENTS, LLC I.R.S IDENTIFICATION NO. 22-3741750 - ------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) |_| (b) |X| - ------------------------------------------------------------------------------- 3. SEC Use Only - ------------------------------------------------------------------------------- 4. Source of Funds (See Instructions) OO - ------------------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) |_| - ------------------------------------------------------------------------------- 6. Citizenship or Place of Organization Delaware - ------------------------------------------------------------------------------- 7. Sole Voting Power Number of Shares 0 Beneficially ----------------------------------------------------------------- Owned by Each 8. Shared Voting Power Reporting Person With 0 - ------------------------------------------------------------------------------- 9. Sole Dispositive Power 0 - ------------------------------------------------------------------------------- 10. Shared Dispositive Power 0 - ------------------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person 0 - ------------------------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) |_| - ------------------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11) 0.0% - ------------------------------------------------------------------------------- 14. Type of Reporting Person (See Instructions) OO - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CUSIP No. 44043J105 13D Page 3 of 11 Pages - -------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) FALCON MEZZANINE PARTNERS, LP I.R.S IDENTIFICATION NO. 22-3742731 - ------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) |_| (b) |X| - ------------------------------------------------------------------------------- 3. SEC Use Only - ------------------------------------------------------------------------------- 4. Source of Funds (See Instructions) OO - ------------------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) |_| - ------------------------------------------------------------------------------- 6. Citizenship or Place of Organization Delaware - ------------------------------------------------------------------------------- 7. Sole Voting Power Number of Shares 0 Beneficially ----------------------------------------------------------------- Owned by Each 8. Shared Voting Power Reporting Person With 0 - ------------------------------------------------------------------------------- 9. Sole Dispositive Power 0 - ------------------------------------------------------------------------------- 10. Shared Dispositive Power 0 - ------------------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person 0 - ------------------------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) |_| - ------------------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11) 0.0% - ------------------------------------------------------------------------------- 14. Type of Reporting Person (See Instructions) PN - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CUSIP No. 44043J105 13D Page 4 of 11 Pages - -------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) FALCON INVESTMENT ADVISORS, LLC I.R.S IDENTIFICATION NO. 22-3734765 - ------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) |_| (b) |X| - ------------------------------------------------------------------------------- 3. SEC Use Only - ------------------------------------------------------------------------------- 4. Source of Funds (See Instructions) OO - ------------------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) |_| - ------------------------------------------------------------------------------- 6. Citizenship or Place of Organization Delaware - ------------------------------------------------------------------------------- 7. Sole Voting Power Number of Shares 0 Beneficially ----------------------------------------------------------------- Owned by Each 8. Shared Voting Power Reporting Person With 0 - ------------------------------------------------------------------------------- 9. Sole Dispositive Power 0 - ------------------------------------------------------------------------------- 10. Shared Dispositive Power 0 - ------------------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person 0 - ------------------------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) |_| - ------------------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11) 0.0% - ------------------------------------------------------------------------------- 14. Type of Reporting Person (See Instructions) IA - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CUSIP No. 44043J105 13D Page 5 of 11 Pages - -------------------------------------------------------------------------------- INTRODUCTION This Amendment No. 5 amends a Statement on Schedule 13D filed on April 11, 2005, Amendment No. 1 thereto filed on September 19, 2005, Amendment No. 2 thereto filed on November 29, 2005, Amendment No. 3 thereto filed on December 14, 2005, and Amendment No. 4 thereto filed on December 21, 2005. Falcon Mezzanine Investments, LLC, a Delaware limited liability company (the "General Partner"), hereby files this Amendment No. 5 to Statement on Schedule 13D (the "Statement") on behalf of the Reporting Persons identified in Item 2 of this Statement. The General Partner is the general partner of Falcon Mezzanine Partners, LP, a Delaware limited partnership (the "Fund"). Falcon Investment Advisors, LLC, a Delaware limited liability company (the "Advisor"), provides investment and administrative services to the General Partner pursuant to an investment management agreement. All share and per share numbers in this Amendment No. 5 reflect a 1:25 share split effected by Horizon Offshore, Inc. (the "Issuer") on April 12, 2006. Pursuant to a Recapitalization Letter Agreement (the "Recap Agreement"; filed as Exhibit 7(a) hereto), dated March 31, 2005, among the Issuer, the Fund and the other holders of the Issuer's subordinated notes (the "Subordinated Notes"), the holders (including the Fund) of the Subordinated Notes agreed to exchange $84,972,823 aggregate principal amount of Subordinated Notes and 1,400 shares of the Issuer's outstanding Series A redeemable participating preferred stock (the "Series A Preferred Stock") for 2.4 million shares of the Issuer's common stock, par value $0.001 per share (now $.00001 per share) (the "Common Stock"), and one million shares of a new series of the Issuer's Series B mandatorily convertible preferred stock (the "Series B Preferred Stock"). The Series B Preferred Stock was not entitled to any dividend or voting rights (except as required by the Delaware General Corporation Law), but was mandatorily convertible into shares of Common Stock upon the occurrence of certain conditions, as described below. The shares of Common Stock and Series B Preferred Stock were issued on June 10, 2005. The shares of Common Stock and Series B Preferred Stock were also issued in consideration of the holders of the Subordinated Notes having consented to a new $70 million term loan senior secured financing agreement (the "Financing Agreement"), dated as of March 31, 2005, among the Issuer, each of its subsidiaries party thereto, Manchester Securities Corp., as collateral and administrative agent, and the other lenders specified therein, release of all of the collateral securing the Subordinated Notes, amending the terms of the $25 million of Subordinated Notes that remain outstanding following the closing of the recapitalization transactions to extend their maturity to March 2010 and reducing their interest rate to 8% per annum payable-in-kind, and, if applicable, participating in the financing transaction as a lender. In addition, certain of the holders of the Subordinated Notes, including the Fund, participated in the Financing Agreement as lenders. The Fund agreed to provide $4.15 million of the $70 million pursuant to the Financing Agreement. In consideration for the above, the Fund received 291,214 shares of Common Stock and 121,338.99 shares of Series B Preferred Stock on June 10, 2005. The Preferred Stock automatically converted into Common Stock upon filing of an amendment to the Issuer's certificate of incorporation on December 12, 2005. The conversion rate was set such that the total outstanding Common Stock issued in the recapitalization transactions (the initial 2.4 million shares plus the shares to be issued upon conversion of the Series B Preferred Stock) would represent an aggregate of 95% of the Issuer's Common Stock on a fully diluted basis (which calculation excludes out-of-the-money director and employee stock options), pro forma for the recapitalization transactions and certain other - -------------------------------------------------------------------------------- CUSIP No. 44043J105 13D Page 6 of 11 Pages - -------------------------------------------------------------------------------- transactions described in the Recap Agreement. Each party to the Recap Agreement agreed to exercise any voting power it may have had to approve the amendments to the Issuer's certificate of incorporation, and to execute such documentation and take such other action as may reasonably be required in connection therewith. The parties to the Recap Agreement held a sufficient number of shares to ensure adoption of the amendments to the Issuer's certificate of incorporation. The Fund received 2,689,548 shares of Common Stock upon conversion of its Series B Preferred Stock. On December 19, 2005, the Fund exchanged $2,051,752.38 aggregate principal amount of Subordinated Notes (and accrued interest thereon) for $2,088,227.97 aggregate principal amount of new Subordinated Convertible Notes due March 31, 2010 (the "Convertible Notes") of the Issuer. The Fund continues to hold $4,991,248.02 aggregate principal amount of Subordinated Notes, as of May 31, 2006, including accrued interest. The Convertible Notes were immediately convertible into Common Stock at a conversion price of $9.50 per share (subject to adjustment). The Fund, as of December 21, 2005, converted all of its Convertible Notes into 219,814 shares of Common Stock. The Issuer also entered into a registration rights agreement covering resales of the remaining Subordinated Notes and all Common Stock issued in the recapitalization transactions and the December 19, 2005 exchange transaction. In connection with the exchange for the Convertible Notes, the Fund agreed to a lockup on all of its Common Stock, until the earlier of (i) effectiveness of the registration statement relating to the Common Stock issued upon conversion of the Convertible Notes and (ii) the 180th day following the exchange. The registration statement was declared effective on April 12, 2006. On May 25, 2006, the Fund entered into a Voting Trust Agreement (described more fully in Item 6(c) below). On such date, the Fund transferred 225,000 shares of Common Stock to the trust created by the Voting Trust Agreement, for no consideration. Pursuant to the terms of the Voting Trust Agreement, none of the Reporting Persons have any power to control or influence the voting or disposition of any of the shares transferred to the trust. As a result, each of the Reporting Persons ceased to be the beneficial owner of the shares of Common Stock transferred to the trust. As noted in Item 6(c) below, as the sole beneficiary of the trust, the Fund retains a pecuniary interest in the shares transferred to the trust. On May 30, 2006, the Fund entered into a Sales Agency Agreement (described more fully in Item 6(d) below). Under the Sales Agency Agreement, the Fund sold the remaining 2,975,576 shares of Common Stock held by it. The shares of Common Stock were sold for $21.65 per share (or an aggregate of $64,421,220.40). The Fund paid Raymond James & Associates, Inc. a commission of $1.41 per share, leaving the Fund with net proceeds of $20.24 per share (or an aggregate of $60,225,658.24). This transaction closed on June 8, 2006. Following this transaction, none of the Reporting Persons beneficially owned any shares of the Company's Common Stock. Item 1. Security and Issuer The class of equity securities to which this Statement relates is the Common Stock of the Issuer, the principal executive offices of which are located at 2500 CityWest Boulevard, Suite 2200, Houston, Texas 77042. Item 2. Identity and Background This Statement is filed on behalf of the Fund, the General Partner and the Advisor. The Fund, the General Partner and the Advisor are each referred to herein as a "Reporting Person" and are collectively referred to herein as the "Reporting Persons." a. The Fund. The principal business of Falcon Mezzanine Partners, LP, a Delaware limited partnership (the "Fund"), is making investments in subordinated debt and equity securities. The general partner of the Fund is Falcon Mezzanine Investments, LLC, which is described in Item 2.b. below. - -------------------------------------------------------------------------------- CUSIP No. 44043J105 13D Page 7 of 11 Pages - -------------------------------------------------------------------------------- b. The General Partner. Falcon Mezzanine Investments, LLC, a Delaware limited liability company (the "General Partner"), is the general partner of the Fund. The principal business of the General Partner is to manage and operate the Fund's activities. The General Partner is a wholly-owned subsidiary of Falcon Partners Holdings, LLC, a Delaware limited liability company ("Holdco"). The members of Holdco are Alva Falconer Holdings, LLC, a Delaware limited liability company ("Alva"), Rafael Fogel, William J. Kennedy Jr., Eric Y. Rogoff and John S. Schnabel. Alva is the Managing Member and holds a controlling interest in Holdco. Alva is controlled by Mr. Sandeep D. Alva. c. The Advisor. Falcon Investment Advisors, LLC (the "Advisor") is a Delaware limited liability company, the principal business of which is to manage the Fund. The Advisor is a wholly-owned subsidiary of Holdco, which is described in Item 2.b. above. The principal executive office of each of the Fund, the General Partner, Holdco, Alva, Mr. Alva and the Advisor is located at 21 Custom House Street, 10th Floor, Boston, Massachusetts 02110. During the last five years, none of the Reporting Persons, nor any of the executive officers, managers or managing directors of any of the Reporting Persons, has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) nor has any such person been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or State securities laws or finding any violation with respect to such laws. Item 3. Source and Amount of Funds or Other Consideration Not applicable. Item 4. Purpose of Transaction On June 8, 2006, each of the Reporting Persons sold all of the remaining shares of Common Stock beneficially owned by them, pursuant to the Sales Agency Agreement described in Item 6(d) below. Each of the Reporting Persons ceased to be the beneficial owner of more than five percent of the Issuer's Common Stock on June 8, 2006. Item 5. Interest in Securities of the Issuer (a) and (b) Each Reporting Person no longer is deemed to have sole power to vote or to direct the vote, shared power to vote or to direct the vote, sole power to dispose or to direct the disposition, or shared power to dispose or direct the disposition, of any shares of the Issuer's Common Stock. Each of the Fund, the General Partner and the Advisor shared power to vote and to dispose of the shares of Common Stock previously beneficially owned by them with each other. Although the Reporting Persons had interests which may have been generally aligned with other parties to the Recap Agreement (and - -------------------------------------------------------------------------------- CUSIP No. 44043J105 13D Page 8 of 11 Pages - -------------------------------------------------------------------------------- all such parties agreed to vote their shares in a particular manner), the Reporting Persons disclaim any beneficial interest in the shares held by any other parties to the Recap Agreement. (c) Except as noted in "Introduction" above, none of the Reporting Persons, described in paragraph (a) of this Item 5, has effected any transaction in the Common Stock of the Issuer during the past 60 days. (d) Not applicable. (e) Each of the Reporting Persons ceased to be the beneficial owner of more than five percent of the Issuer's Common Stock on June 8, 2006. Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer a. The Recap Agreement. The Recap Agreement is described/referred to in the Introduction and Items 3 and 5 of this Schedule 13D. b. The Financing Agreement. Pursuant to the Financing Agreement, the lenders under the Financing Agreement extended credit to the Issuer consisting of (a) a $30 million senior secured term loan A facility bearing interest at 15% per annum, payable monthly 10% in cash and 5% paid-in-kind, maturing on March 31, 2007, and requiring a monthly principal payment of $500,000 beginning July 2005 and (b) a $40 million senior secured term loan B facility, bearing interest at 10% per annum, payable monthly 8% in cash and 2% paid-in-kind and maturing on March 31, 2007. The Issuer paid a $1.4 million closing fee in connection with the Financing Agreement, and is required to pay quarterly, in cash, a loan servicing fee of 0.5% per annum based upon the aggregate unpaid principal balance of the loans. Upon an event of default under the Financing Agreement, the interest rate on each loan increases 2%, payable in cash on demand. The loans under the Financing Agreement are collateralized by the pledge of the Issuer's equity interests in its subsidiaries that are loan parties to the Financing Agreement, the Issuer's accounts receivable, first or second mortgages on all of the Issuer's vessels, second liens on the Issuer's Port Arthur and Sabine marine facilities, the cash securing the letter of credit under the Issuer's contract with the Israel Electric Corporation, the Issuer's outstanding claims and receivables from Pemex and Williams, and our future assets. The term loan A is repaid from the collateral securing the new senior secured credit facility in priority to the term loan B. The holders of the Subordinated Notes agreed to release the collateral that secured the Subordinated Notes in favor of the lenders under the Financing Agreement. The Financing Agreement has covenants that, among other things, subject to a few limited exceptions, require the Issuer to grant the lenders a security interest in any property the Issuer acquires and restrict the Issuer's ability to issue additional capital stock, create additional liens, incur additional indebtedness, enter into affiliate transactions, dispose of assets, make any investments, pay dividends, make payments and settle its Pemex claims without the consent of the lenders under the Financing Agreement. The Financing Agreement also has the same financial covenants as the Issuer's existing credit facilities, which were amended in connection with the recapitalization and financing transactions described above. In addition, any events of default under the Financing Agreement could result in acceleration of the Issuer's indebtedness. c. The Voting Trust Agreement. On May 25, 2006, the Fund, as Beneficiary, entered into a Voting Trust Agreement with David A. Balestrery, as Trustee. On May 25, 2006, the Fund transferred 225,000 shares of Common Stock to the trust created by the Voting Trust Agreement. Under the terms of the Voting Trust Agreement, the Fund is the sole beneficiary of the trust. However, none of the Reporting Persons have any power to control or influence the voting or disposition of any of the shares transferred to the trust. The Voting Trust Agreement terminates by its terms on June 30, 2007. - -------------------------------------------------------------------------------- CUSIP No. 44043J105 13D Page 9 of 11 Pages - -------------------------------------------------------------------------------- d. The Sales Agency Agreement. On May 30, 2006, the Fund entered into a Sales Agency Agreement with Raymond James & Associates, Inc. ("RJ"), pursuant to which RJ agreed to act as the Fund's exclusive selling agent with respect to the 2,975,576 shares of Common Stock held by the Fund on that date. The Sales Agency Agreement provides for the shares to be sold pursuant to the registration statement described under "Introduction" above. The Sales Agency Agreement provides for RJ to receive a commission of 6.5% of the sales price on any sales under the Sales Agency Agreement. The agreement also provides for indemnification of RJ by the Fund in certain circumstances. The Sales Agency Agreement terminates by its terms on June 12, 2006. The descriptions of the Recap Agreement, the Financing Agreement, the Voting Trust Agreement and the Sales Agency Agreement contained in this Schedule 13D are qualified in their entirety by the complete text of the documents, copies of which are filed as exhibits to this Schedule 13D. Item 7. Material to be Filed as Exhibits. Exhibit 7(a). Recapitalization Letter Agreement, dated as of March 31, 2005, by and among the Issuer and the holders of Subordinated Notes specified therein (incorporated by reference to Exhibit 10.2 to the Issuer's current report on Form 8-K filed on April 5, 2005). Exhibit 7(b). Financing Agreement, dated as of March 31, 2005, by and among the Issuer, Horizon Offshore Contractors, Inc. and Horizon Vessels, Inc., as borrowers, the guarantors specified therein, Manchester Securities Corp., as agent, and the other lenders specified therein (incorporated by reference to Exhibit 10.1 to the Issuer's current report on Form 8-K filed on April 5, 2005). Exhibit 7(c). Joint Filing Agreement, dated as of April 11, 2005, among Falcon Mezzanine Investments, LLC, Falcon Mezzanine Partners, LP and Falcon Investment Advisors, LLC. Exhibit 7(d). Voting Trust Agreement, dated as of May 25, 2006, between Falcon Mezzanine Partners, LP, as Beneficiary, and David A. Balestrery, as Trustee. Exhibit 7(e). Sales Agency Agreement, dated as of May 30, 2006, between Falcon Mezzanine Partners, LP and Raymond James & Associates, Inc. - -------------------------------------------------------------------------------- CUSIP No. 44043J105 13D Page 10 of 11 Pages - -------------------------------------------------------------------------------- SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: June 5, 2006 FALCON MEZZANINE INVESTMENTS, LLC By: /s/ William J. Kennedy Jr. ----------------------------------------------------- Name: William J. Kennedy Jr. Title: Managing Partner FALCON MEZZANINE PARTNERS, LP By: Falcon Mezzanine Investments, LLC, its General Partner By: /s/ William J. Kennedy Jr. ----------------------------------------------------- Name: William J. Kennedy Jr. Title: Managing Partner FALCON INVESTMENT ADVISORS, LLC By: /s/ William J. Kennedy Jr. ----------------------------------------------------- Name: William J. Kennedy Jr. Title: Managing Partner - -------------------------------------------------------------------------------- CUSIP No. 44043J105 13D Page 11 of 11 Pages - -------------------------------------------------------------------------------- JOINT FILING AGREEMENT In accordance with Rule 13d-1(k) under the Securities Exchange Act of 1934, as amended, the undersigned agree to the joint filing by Falcon Mezzanine Investments, LLC on behalf of all of the undersigned of a Statement on Schedule 13D (including any and all amendments thereto) with respect to the Common Stock, par value $1.00 per share, of Horizon Offshore, Inc., and further agree that this Agreement shall be included as an Exhibit to such joint filings. The undersigned further agree that each party hereto is responsible for the timely filing of such Statement on Schedule 13D and any amendments thereto, and for the accuracy and completeness of the information concerning such party contained therein; provided, however, that no party is responsible for the accuracy or completeness of the information concerning any other party, unless such party knows or has reason to believe that such information is inaccurate. This Agreement may be signed in counterparts with the same effect as if the signature on each counterpart were upon the same instrument. IN WITNESS WHEREOF, the undersigned have executed this Agreement as of April 11, 2005. FALCON MEZZANINE INVESTMENTS, LLC By: /s/ William J. Kennedy Jr. ----------------------------------------------------- Name: William J. Kennedy Jr. Title: Managing Director FALCON MEZZANINE PARTNERS, LP By: Falcon Mezzanine Investments, LLC, its General Partner By: /s/ William J. Kennedy Jr. ----------------------------------------------------- Name: William J. Kennedy Jr. Title: Managing Director FALCON INVESTMENT ADVISORS, LLC By: /s/ William J. Kennedy Jr. ----------------------------------------------------- Name: William J. Kennedy Jr. Title: Managing Director EX-7.(C) 2 e65740_ex-7c.txt TRUST AGREEMENT EXHIBIT 7(c) VOTING TRUST AGREEMENT, made as of the 25th day of May, 2006, between David A. Balestrery, with an address of 254 Mary Street, Winnetka, Illinois 60093, as Trustee (hereinafter the "Trustee") and Falcon Mezzanine Partners, LP, a Delaware limited partnership (hereinafter the "Beneficiary") with an address of 21 Custom House Street, 10th Floor, Boston, Massachusetts 02110. WITNESSETH: WHEREAS, the Beneficiary is the holder of two hundred and twenty five thousand (225,000) shares of common stock, par value US$0.001 per share (each a "Share" and collectively the "Shares") of Horizon Offshore, Inc., a Delaware corporation (the "Company"); and WHEREAS, in order to vest in the Trustee the sole right to vote the Shares and all investment authority and power with respect to the Shares, the Beneficiary is willing to deposit the number of Shares, referenced above, owned by it with the Trustee under this Agreement for the period commencing on the date hereof and ending upon the termination of this Agreement in accordance with its terms. NOW, THEREFORE, the parties hereto agree as follows: 1. Delivery to Trustee of Certificates for Shares. Simultaneously with the execution and delivery of this Agreement, the Beneficiary shall deliver to the Trustee certificates representing an aggregate of two hundred and twenty five thousand (225,000) Shares, representing the number of Shares, referenced above, held by the Beneficiary, endorsed in blank or accompanied by duly completed instruments of share transfer executed by the Beneficiary. Immediately subsequent to the execution and delivery of this Agreement and such instruments of share transfer, the Trustee shall deliver a copy of this Agreement to the Company, shall surrender to the Company said certificates and instruments of share transfer, and the Trustee and Beneficiary shall take all further necessary or appropriate actions to cause the Directors to enter the name of the Trustee in the register of Members in respect thereof and to cancel said certificates and to issue to the Trustee a new certificate, representing two hundred and twenty five thousand (225,000) Shares, in the name of the Trustee. Said new certificate shall be held by the Trustee, in trust, for the benefit of the Beneficiary and the heirs, executors, successors and/or assigns of the Beneficiary (each sometimes hereinafter referred to as a "Beneficiary"), subject to the terms and conditions hereinafter set forth. 2. Delivery to Trustee of Certificates for Additional Shares. Any and all certificates for additional shares of the Company issued to the Beneficiary while it is the Beneficiary under this Agreement shall be in like manner endorsed and delivered to the Trustee together with a duly completed and executed form of share transfer to be held by him subject to the terms and conditions hereof. All such additional shares shall be deemed to be "Shares" for all purposes of this Agreement. 3. Delivery of Trustee's Certificates. Upon the delivery to the Trustee of the certificates and forms of share transfer referred to in paragraph 1 hereof, the Trustee shall deliver to the Beneficiary a certificate (the "Trustee's Certificate") for the number of Shares delivered to the Trustee by the Beneficiary, substantially in the form hereinafter set forth. Upon each receipt -1- of certificates for additional shares issued to a Beneficiary, the Trustee shall deliver to such Beneficiary a Trustee's Certificate for the number of shares so deposited, substantially in the form hereinafter set forth. The Trustee's Certificate (the terms and provisions of which are a part of this Agreement) shall be substantially in the following form: TRUSTEE'S CERTIFICATE This is to certify that the undersigned Trustee has received a certificate or certificates issued in the name of David A. Balestrery, Trustee, evidencing the ownership of two hundred and twenty five thousand (225,000) shares of a nominal or par value of US$0.001 each of Horizon Offshore, Inc., a Delaware corporation (the "Shares"), and that the Shares are held subject to all the terms and conditions of that certain Agreement (the "Voting Trust Agreement"), dated as of May 25, 2006, by and between Falcon Mezzanine Partners, LP and David A. Balestrery, as Trustee. During the term of the Voting Trust Agreement, the Trustee shall, as provided in the Voting Trust Agreement, possess and be entitled to exercise the right to vote and otherwise represent all of the Shares for all purposes, and to exercise all investment authority and power with respect to all of the Shares for all purposes, it being agreed that no voting right and no investment authority or power shall pass to the holder hereof by virtue of the ownership of this Certificate. This Certificate is assignable with the right to issuance a new certificate of like tenor only upon the surrender to the Trustee of this certificate properly endorsed. Upon termination of the Voting Trust Agreement, this certificate shall be surrendered to the Trustee by the holder hereof upon delivery to the holder hereof of a certificate representing the Shares not sold or otherwise disposed of by the Trustee pursuant to the Voting Trust Agreement. IN WITNESS WHEREOF, the undersigned has executed this Certificate this _______________ day of _______________, ________. __________________________, Trustee Each Trustee's Certificate may be transferred by endorsement by the person to whom issued, or by his, her or its attorney-in-fact, or by the administrator or executor of his, her or its estate, by delivery of such Trustee's Certificate so endorsed to the Trustee; but such transfer shall not be evidence to or be binding upon the Trustee until such Trustee's Certificate is surrendered to the Trustee and the transfer is entered upon the "Trustee's Certificate Book," which shall be kept by the Trustee to show the names of the parties by whom and to whom transferred, the numbers of the certificates, the number of shares and the date of transfer. No new Trustee's Certificate shall be issued until the Trustee's Certificate for the shares represented thereby shall have been surrendered to and cancelled by the Trustee, and the Trustee shall preserve the certificates so cancelled as vouchers. In case any Trustee's Certificate shall be claimed to be lost or destroyed, a new Trustee's Certificate may be issued in lieu thereof, upon such proof of loss as may be required by the Trustee. -2- 4. Voting and Investment Authority and Power of Trustee. (a) During the term of this Agreement, the Trustee shall have the sole and exclusive voting and investment authority and power with respect to the Shares held by the Trustee hereunder. The Trustee shall have the power to vote the Shares held by the Trustee at all regular and special meetings of the shareholders of the Company and may vote for, do or assent or consent to and shall have all the powers, rights and privileges of a shareholder of the Company. (b) The Trustee may vote in person or by proxy, and a proxy in writing signed by the Trustee shall be sufficient authority to the person named therein to vote all the Shares held by the Trustee hereunder at any meeting, regular or special, of the shareholders of the Company. (c) The Trustee shall have complete investment authority and power with respect to the Shares held by the Trustee hereunder, including, without limitation, the authority and power to sell or otherwise dispose of any or all of the Shares on such terms and subject to such conditions, as the Trustee in his sole discretion shall deem appropriate. The Beneficiary and each holder of Trustee's Certificates hereby appoints the Trustee as his, her or its attorney-in-fact to execute any documents or instruments necessary (in the determination of the Trustee) to effect such sale or disposition. Without limiting the foregoing, each holder of Trustee's Certificates hereby agrees, following written notification from the Trustee of any such contemplated sale or other disposition of Shares, to surrender to the Trustee at the time and place indicated in such notice, his, her or its Trustee's Certificates. The Trustee, promptly following the closing of any such sale or other disposition of Shares, shall issue and deliver to each such holder of Trustee's Certificates: (a) a replacement Trustee's Certificate, reflecting such holder's pro rata interest in the unsold Shares, as shown on the books of the Trustee, and (b) such holder's pro rata interest in the net proceeds of any such sale or other disposition of Shares (after deduction of expenses incurred in connection with such sale or other disposition), as shown on the books of the Trustee. Upon such surrender of such Trustee's Certificates, and such payment of such net proceeds, this Agreement shall terminate as to the shares so sold or otherwise disposed of. 5. Distribution of Cash Dividends. (a) The Trustee shall distribute directly any cash dividends or distributions declared and paid on the Shares deposited hereunder (other than dividends or distributions made in the form of securities of the Company) to the holders of Trustee's Certificates in proportion to the respective interests therein as shown on the books of this Trustee, such distribution to be equivalent to the dividends or distribution which each respective holder would have been entitled to receive had the Shares not been deposited hereunder. If the Shares are held in a brokerage account, the Trustee shall instruct the relevant institution to wire transfer such funds directly to the account of the holder of a Trust Certificate. As of the date of this Agreement, such account for the Beneficiary (the sole holder of a Trust Certificate as of the date hereof) is: -3- Bank: Investors Bank & Trust Company 200 Clarendon Street Boston, MA 02116 ABA No.: 011-001-438 Account No.: [omitted] Account Name: Receipts Reference: Acct. [omitted] - (name of company sending wire) (b) The Trustee shall receive and hold, subject to terms of this Agreement, any voting securities of the Company issued in respect thereof by reason of any dividend, distribution, capital reorganization, stock split, combination or the like and shall issue and deliver Trustee's Certificates therefor to the holders of the Trustee's Certificates in proportion to their respective interests therein as shown on the books of the Trustee. 6. Term of Agreement. This Agreement and the trust hereby created shall terminate on June 30, 2007. Until termination in accordance with the terms of this Agreement, neither this Agreement nor the trust hereby created shall be revocable or amendable, in whole or in part. 7. Resignation of Trustee. The Trustee may resign, for any reason to be determined by Trustee in his sole discretion, upon 30 days prior written notice to the Beneficiary, provided that the Trustee first appoints a replacement trustee under the Agreement reasonably satisfactory to the Beneficiary. Upon any such resignation by the Trustee, the Trustee shall reimburse the Beneficiary for the portion of the Trustee's fees that have been paid but not yet earned, calculated pro rata on a daily basis. 8. Liability for Willful Misconduct; Indemnification. The Trustee shall not be liable for any error of judgment or mistake of fact or law, or for any act or omission undertaken in good faith in connection with his powers and duties under this Agreement, except for his own willful misconduct or gross negligence. The Trustee shall not be liable for acts or omissions of any employee or agent of the Company. The Trustee shall not be liable for acting in reliance on any notice, request, consent, certificate, instruction, or other paper or document or signature believed to be genuine and to have been signed by the proper party or parties. The Trustee may consult with legal and other counsel of his choosing, and any act or omission undertaken by the Trustee in good faith in accordance with the opinion of legal or other counsel shall be binding and conclusive on the parties to this Agreement. The Beneficiary shall defend, indemnify and hold Trustee and agents, successors and assigns (collectively, the "Indemnitees") harmless from and against and in respect of any and all claims, losses, liabilities, damages, expenses and deficiencies, including reasonable attorneys' fees, and all other reasonable costs of investigation and defending third-party claims (collectively, the "Losses"), asserted against, imposed upon or incurred by any Indemnitee which arise out of or in any way related to Trustee's performance under this Agreement; provided, however, that Losses shall not include any Losses arising out of a judicial determination of Trustee's willful misconduct or gross negligence. 9. Compensation and Expense Reimbursement. As compensation for services rendered hereunder, Beneficiary shall pay to the Trustee a fee of $25,000 on the date of execution of this Agreement by the parties hereto. The Beneficiary shall also reimburse the Trustee when appropriate upon submission of written invoices for its reasonable and documented out-of-pocket expenses incurred in connection with the execution of its duties under this -4- Agreement. Upon a resignation of the Trustee, the Trustee shall reimburse Beneficiary pro rata for a portion of the Trustee's fees as outlined in paragraph 7. 10. Binding Agreement. Every registered holder of a Trustee's Certificate, and every bearer of a Trustee's Certificate properly endorsed in blank or properly assigned, by the acceptance or holding thereof, shall be deemed conclusively for all purposes to have assented to this Agreement and to all of its terms, conditions and provisions and shall be bound thereby with the same force and effect as if such holder or bearer had executed this Agreement. Without limiting the foregoing, this Agreement shall be binding upon and inure to the benefit of each of the parties hereto and their respective heirs, executors, administrators, successors and assigns. 11. Severability. The invalidity of any term or provision of this Agreement shall not affect the validity of the remainder of this Agreement. 12. Governing Law; Attorneys' Fees. Regardless of the place of execution, delivery, performance or any other aspect of this Agreement, this Agreement and all of the rights of the parties under this Agreement shall be governed by, construed under and enforced in accordance with the substantive law of New York without regard to conflicts of law principles. In the event of any litigation arising out of this Agreement, the prevailing party shall be entitled to recover from the non-prevailing party all costs of litigation, including without limitation, reasonable attorneys' fees and customary and reasonable expenses. 13. No Waiver. No waiver of any covenant or condition or the breach of any covenant or condition of this Agreement shall be deemed to constitute a waiver of any subsequent breach of such covenant or condition nor justify or authorize a nonobservance upon any occasion of such covenant or condition or any other covenant or condition of this Agreement. 14. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with regard to the subject matter thereof, and shall not be modified or amended except in a writing executed by both of the parties hereto. -5- IN WITNESS WHEREOF, the Trustee and the Beneficiary have executed this Agreement as of the date set forth above. FALCON MEZZANINE PARTNERS, LP By: /s/ William J. Kennedy Jr. ---------------------------------------- FALCON MEZZANINE INVESTMENTS, LLC, its General Partner Name: William J. Kennedy Jr. Title: Managing Director By: /s/ David A. Balestrery ----------------------------------- Name: David A. Balestrery Title: Trustee EX-7.(D) 3 e65740_ex-7d.txt SALES AGENCY AGREEMENT EXHIBIT 7(d) SALES AGENCY AGREEMENT As of May 30, 2006 RAYMOND JAMES & ASSOCIATES, INC. 880 Carillon Parkway St. Petersburg, Florida 33716 Dear Sir or Madam: This agreement (the "Agreement") sets forth the terms and conditions upon which Falcon Mezzanine Partners, LP (the "Selling Stockholder") has engaged Raymond James & Associates, Inc. (the "Sales Agent") to serve as the Selling Stockholder's exclusive agent with respect to the placement of up to 2,975,576 shares (the "Shares") of common stock, $0.00001 par value per share, of Horizon Offshore, Inc. (the "Company") currently held by the Selling Stockholder. The Selling Stockholder and the Sales Agent agree as follows: 1. Agreement to Act as Sales Agent. On the basis of the representations, warranties, covenants and agreements herein contained, but subject to the terms and conditions herein set forth, the Selling Stockholder agrees to sell through the Sales Agent, as exclusive Sales Agent, and the Sales Agent agrees to sell, as Sales Agent for the Selling Stockholder, on a reasonable efforts basis, up to 2,975,576 shares of common stock (the "Maximum Amount") on the terms set forth herein. The execution of this Agreement by the parties hereto does not constitute a guarantee that the Sales Agent will be able to complete any sales of the Shares, nor shall this Agreement be construed to require the Sales Agent to purchase any Shares for its own account. 2. Delivery. The Shares, up to the Maximum Amount, may be sold in a single transaction, multiple transactions, or otherwise as agreed to between the Selling Stockholder and the Sales Agent. The sales prices for the Shares will be determined by negotiations between the Sales Agent and potential buyers and then presented to the Selling Stockholder. The Selling Stockholder shall have sole discretion to accept or decline each offer by a potential buyer to acquire all or any portion of the Shares. The Selling Stockholder agrees to sell such Shares up to the Maximum Amount through the Sales Agent. As compensation for its services hereunder, the Sales Agent shall receive a commission of 6.5% of the gross price of the Shares sold. After deducting the above-referenced commissions, the Sales Agent shall remit the net proceeds to the Selling Stockholder for such Shares (the "Net Proceeds"). The Selling Stockholder or the Sales Agent may, upon notice to the other party hereto by telephone (confirmed promptly by telecopy), suspend the Sales Agent's efforts hereunder with respect to any unsold Shares; provided, however, that such suspension or termination shall not affect or impair the parties' respective obligations with respect to Shares sold hereunder prior to the giving of such notice. 1 Unless otherwise agreed, settlement for sales of Shares will occur on the third business day following the date on which such sales are made (each a "Closing Date"). The amount of proceeds for such sales to be delivered to the Selling Stockholder against the receipt of the Shares sold shall be the Net Proceeds in respect of such sales. If the Selling Stockholder shall default on its obligation to deliver Shares on any Closing Date, the Selling Stockholder shall, in addition to the provisions of Section 3.6 below, (a) hold the Sales Agent harmless against any loss, claim or damage arising from or as a result of such default by the Selling Stockholder and (b) pay the Sales Agent any commission to which it would otherwise be entitled absent such default. 3. Representations and Warranties of the Selling Stockholder. The Selling Stockholder represents and warrants and covenants to the Sales Agent that: 3.1 Due Execution and Delivery. The Selling Stockholder has full power and authority to enter into this Agreement and to carry out all the terms and provisions hereof to be carried out by it. All authorizations and consents necessary for the execution and delivery by the Selling Stockholder of this Agreement have been given. This Agreement has been duly authorized, executed and delivered by or on behalf of the Selling Stockholder and constitutes a valid and binding agreement of the Selling Stockholder and is enforceable against the Selling Stockholder in accordance with the terms hereof, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws now or hereafter in effect relating to or affecting creditors' rights generally or by general principles of equity relating to the availability of remedies. 3.2 Good Title. The Selling Stockholder, at the time of delivery hereunder, will have (a) good and marketable title to the Shares to be sold by such Selling Stockholder hereunder, free and clear of all encumbrances, and (b) full legal right and power, and all authorizations and approvals required by law, to sell, transfer and deliver the Shares to any potential buyer and to make the representations, warranties, covenants and agreements made by such Selling Stockholder herein. 3.3 Consents. No consent, approval, authorization or order of, or any filing or declaration with, any governmental body is required for the consummation by the Selling Stockholder of the transactions on its part contemplated herein. 3.4 Registration Statement. The Company has filed with the Securities and Exchange Commission (the "Commission") a registration statement on Form S-3 (File No. 333-127640) (the "Resale Registration Statement"), which has become effective for the registration under the Securities Act of 1933, as amended (the "Securities Act") of the Shares. As of the date of this Agreement and as of the date of any transaction executed pursuant to this Agreement, the Selling Stockholder has, or will have, no knowledge that the Resale Registration Statement is subject to any stop order or any similar proceeding by the Commission. 2 3.5 Material Adverse Information. The sale of the Shares proposed to be sold by such Selling Stockholder is not prompted by the Selling Stockholder's knowledge of any material adverse information concerning the Company or the Shares. 1.1 The Company has not disclosed to the Selling Stockholder information that would constitute material non-public information other than the existence of the transaction contemplated hereby. 3.6 Failure to Deliver Certificates. In addition to any other rights available to the Sales Agent, if, with respect to each transaction effected pursuant to this Agreement, the Selling Stockholder fails to deliver the Shares to the Sales Agent by the Delivery Date (as defined below), and if after the Delivery Date the Sales Agent purchases (in an open market transaction or otherwise) shares of the Company's common stock to deliver in satisfaction of any transaction effected pursuant to this Agreement, then the Selling Stockholder shall immediately pay in cash to the Sales Agent (in addition to any remedies available to or elected by the Sales Agent) the amount by which (a) the Sales Agent's total purchase price (including brokerage commissions, if any) for the shares of the Company's common stock so purchased exceeds (b) the total purchase price for the Shares sold by the Selling Stockholder in the transaction for which the Selling Stockholder failed to make timely delivery (which amount shall be paid as liquidated damages and not as a penalty). "Delivery Date" shall mean the second trading day after Shares have been sold in a transaction pursuant to this Agreement. 3.7 Affiliate. The Selling Stockholder is not an "affiliate" of the Company as such term is defined in paragraph (a)(1) of Rule 144 ("Rule 144") promulgated under the Securities Act of 1933, as amended and has not been an affiliate during the preceding three months. 3.8 [RESERVED]. 3.9 [RESERVED]. 3.10 No Stabilization or Manipulation. The Selling Stockholder has not taken and will not take, directly or indirectly, any action which is designed to or which has constituted or which might reasonably be expected to cause or result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares. 4. Indemnification. (a) The Selling Stockholder agrees to indemnify and hold harmless the Sales Agent, the directors, officers, employees and agents of the Sales Agent and each person, if any, who controls the Sales Agent within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, liabilities, expenses and damages (including, but not limited to, any and all investigative, legal and other expenses reasonably incurred in connection with, and any and all amounts paid in settlement of, any action, suit or proceeding between any of the indemnified 3 parties and any indemnifying parties or between any indemnified party and any third party, or otherwise, or any claim asserted), as and when incurred, to which the Sales Agent, or any such person, may become subject under the Securities Act, the Exchange Act or other Federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, liabilities, expenses or damages arise out of or are based on (i) any untrue statement or alleged untrue statement of a material fact contained in or material omission in the Resale Registration Statement, or any prospectus constituting a part thereof, (ii) any breach of any representation, warranty, covenant or agreement made by the Selling Stockholder herein or (iii) the engagement of the Sales Agent pursuant to, and the performance by the Sales Agent of the services contemplated by, this Agreement; provided that this indemnity agreement shall not apply to the extent that such loss, claim, liability, expense or damage is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from the bad faith, willful misconduct or gross negligence of the Sales Agent. This indemnity agreement will be in addition to any liability that the Selling Stockholder might otherwise have. (b) If the Sales Agent proposes to assert the right to be indemnified under this Section 4, the Sales Agent will, promptly after receipt of notice of commencement of any action against such Sales Agent in respect of which a claim is to be made against the Selling Stockholder under this Section 4, notify the Selling Stockholder of the commencement of such action, enclosing a copy of all papers served, but the omission so to notify the Selling Stockholder will not relieve the Selling Stockholder from (i) any liability that it might have to any indemnified party otherwise than under this Section 4 and (ii) any liability that it may have to any indemnified party under the foregoing provision of this Section 4 unless, and only to the extent that, such omission results in the forfeiture of substantive rights or defenses by the Selling Stockholder. If any such action is brought against any indemnified party and it notifies the Selling Stockholder of its commencement, the Selling Stockholder will be entitled to participate in and, to the extent that it elects, by delivering written notice to the indemnified party promptly after receiving notice of the commencement of the action from the indemnified party, to assume the defense of the action, with counsel satisfactory to the indemnified party, and after notice from the Selling Stockholder to the indemnified party of its election to assume the defense, the Selling Stockholder will not be liable to the indemnified party for any legal or other expenses except as provided below and except for the reasonable costs of investigation subsequently incurred by the indemnified party in connection with the defense. The indemnified party will have the right to employ its own counsel in any such action, but the fees, expenses and other charges of such counsel will be at the expense of such indemnified party unless (1) the employment of counsel by the indemnified party has been authorized in writing by the Selling Stockholder, (2) the indemnified party has reasonably concluded (based on advice of counsel) that there may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to the Selling Stockholder, (3) a conflict or potential conflict exists (based on advice of counsel to the indemnified party) between the indemnified party and the Selling Stockholder (in which case the Selling Stockholder will not have the right to direct the defense of such action on behalf of the indemnified party) or (4) the 4 Selling Stockholder has not in fact employed counsel to assume the defense of such action within a reasonable time after receiving notice of the commencement of the action in each of which cases the reasonable fees, disbursements and other charges of counsel will be at the expense of the Selling Stockholder. It is understood that the Selling Stockholder shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements and other charges of more than one separate firm admitted to practice in such jurisdiction at any one time for all such indemnified party or parties. All such fees, disbursements and other charges will be reimbursed by the indemnifying party within 30 calendar days of receipt of a written request for reimbursement (which shall include reasonably detailed documentation supporting such fees, disbursements or other charges). The Selling Stockholder will not be liable for any settlement of any action or claim affected without its written consent (which consent will not be unreasonably withheld). The Selling Stockholder shall not, without the prior written consent of each indemnified party, settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding relating to the matters contemplated by this Section 4 (whether or not any indemnified party is a party thereto), unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising or that may arise out of such claim, action or proceeding. (c) In order to provide for just and equitable contribution in circumstances in which the indemnification provided for in the foregoing paragraphs of this Section 4 is applicable in accordance with its terms but for any reason is held to be unavailable from the Selling Stockholder, the Selling Stockholder will contribute to the total losses, claims, liabilities, expenses and damages (including any investigative, legal and other expenses reasonably incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claim asserted) to which the Selling Stockholder and the Sales Agent may be subject in such proportion as shall be appropriate to reflect the relative benefits received by the Selling Stockholder on the one hand and the Sales Agent on the other. The relative benefits received by the Selling Stockholder on the one hand and the Sales Agent on the other hand shall be deemed to be the same proportion as the total net proceeds from the sale of Shares (before deducting expenses) received by the Selling Stockholder bear to the total compensation (before deducting expenses) received by the Sales Agent from the sale of Shares on behalf of the Selling Stockholder. If, but only if, the allocation provided by the foregoing sentence is not permitted by applicable law, the allocation of contribution shall be made in such proportion as is appropriate to reflect not only the relative benefits referred to in the foregoing sentence but also the relative fault of the Selling Stockholder, on the one hand, and the Sales Agent, on the other hand, as well as any other relevant equitable considerations. The Selling Stockholder and the Sales Agent agree that it would not be just and equitable if contributions pursuant to this Section 4(c) were to be determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, liability, expense or damage or action in respect thereof, referred to above in this Section 4(c) shall be deemed to 5 include, for the purpose of this Section 4(c), any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the foregoing provisions of this Section 4(c), the Sales Agent shall not be required to contribute any amount in excess of the commissions received by it under the Agreement, and no person found guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 4(c), any person who controls a party to this Agreement within the meaning of the Securities Act and any officers, directors, employees or agents of the Sales Agent, will have the same rights to contribution as that party. Any party entitled to contribution, promptly after receipt of notice of commencement of any action against such party in respect of which a claim for contribution may be made under this Section 4(c), will notify any such party or parties from whom contribution may be sought, but the omission so to notify will not relieve that party or parties from whom contribution may be sought from any other obligation it or they may have under this Section 4(c). Except for a settlement entered into pursuant to the last sentence of Section 4(b) hereof, no party will be liable for contribution with respect to any action or claim settled without its written consent (which consent will not be unreasonably withheld). 5. Termination. This agreement shall expire on June 12, 2006 unless extended by mutual written consent of both parties. 6. Conditions Precedent to Sale. Each sale of Shares pursuant to this Agreement shall be subject to: (a) The Resale Registration Statement shall have become effective and no stop order suspending the effectiveness of the Resale Registration Statement shall have been issued and no proceeding for that purpose shall have been instituted or, to the knowledge of the Selling Stockholder, threatened by the Commission; (b) The Resale Registration Statement or prospectus constituting a part thereof, or any amendment or supplement thereto, shall not contain an untrue statement of fact that in the Sales Agent's opinion is material, or omits to state a fact that in the Sales Agent's reasonable opinion is material and is required to be stated therein or is necessary to make the statements therein not misleading; and (c) The Selling Stockholder shall have furnished to the Sales Agent such appropriate further information, certificates and documents as the Sales Agent may reasonably request. 7. Notices. Notice given pursuant to any of the provisions of this Agreement shall be in writing and, unless otherwise specified, shall be mailed or delivered (a) if to the Selling Stockholder, at the office of the Selling Stockholder, Falcon Mezzanine Partners, LP, 21 6 Custom House Street, 10th Floor, Boston, Massachusetts 02110, Attention: William J. Kennedy Jr. fax (617) 412-0299 or (b) if to the Sales Agent, at the office of Raymond James & Associates, Inc., 880 Carillon Parkway, St. Petersburg, Florida 33716, Attention: Jeffrey Fordham, fax (727) 575-5773. Any such notice shall be effective only upon receipt. Any notice under Section 7 may be made by facsimile or telephone, but if so made shall be subsequently confirmed in writing. 8. Survival. The respective representations, warranties, agreements, covenants, indemnities and other statements of the Selling Stockholder set forth in this Agreement or made by or on its behalf pursuant to this Agreement shall remain in full force and effect, regardless of (i) any investigation made by or on behalf of the Selling Stockholder, any of its officers or directors, the Sales Agent or any controlling person referred to in Section 4 hereof and (ii) delivery of and payment for the Shares. The respective agreements, covenants, indemnities and other statements set forth in the last paragraph of Section 2, Section 3.6, Section 4, Section 9 and Section 11 hereof shall remain in full force and effect, regardless of any termination or cancellation of this Agreement. 9. Successors. This Agreement shall inure to the benefit of and shall be binding upon the Sales Agent, the Selling Stockholder and their respective successors and legal representatives, and nothing expressed or mentioned in this Agreement is intended or shall be construed to give any other person any legal or equitable right, remedy or claim under or in respect of this Agreement, or any provisions herein contained, this Agreement and all conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of such persons and for the benefit of no other person except that the indemnification contained in Section 4 of this Agreement shall also be for the benefit of the directors, officers, employees and agents of the Sales Agent and any person or persons who control the Sales Agent within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act. 10. Applicable Law. The validity and interpretations of this Agreement, and the terms and conditions set forth herein, shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to any provisions relating to conflicts of laws. 11. Consent to Jurisdiction. The Selling Stockholder irrevocably consents to the jurisdiction of the courts of the State of New York and of any federal court located in such State in connection with any action or proceeding arising out of, or relating to, this Agreement, any document or instrument delivered pursuant to, in connection with, or simultaneously with this Agreement, or a breach of this Agreement or any such document or instrument. In any such action or proceeding, the Selling Stockholder waives personal service of any summons, complaint, or other process and agrees that service thereof may be made in accordance with Section 7. Within 30 days after such service, or such other time as may be mutually agreed 7 upon in writing by the attorneys for the parties to such action or proceeding, the Selling Stockholder shall appear or answer such summons, complaint, or other process. Should the Selling Stockholder fail to appear or answer within such 30-day period or such extended period, as the case may be, the Selling Stockholder shall be deemed in default and judgment may be entered against the Selling Stockholder for the amount as demanded in any summons, complaint, or other process so served. The Selling Stockholder hereby irrevocably appoints Cahill Gordon & Reindel LLP, counsel to the Selling Stockholder, as the Selling Stockholder's agent to receive service of process in any action against the Selling Stockholder in any federal or state court of the State of New York arising out of this offering. 12. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Facsimile signatures shall be deemed original signatures. 13. Entire Agreement. This Agreement constitutes the entire understanding between the parties hereto as to the matters covered hereby and supersedes all prior understandings, written or oral, relating to such subject matter. 8 Each party hereby indicates its agreement to the foregoing by executing this Agreement in the space provided below. Very truly yours, SELLING STOCKHOLDER FALCON MEZZANINE PARTNERS, LP By: Falcon Mezzanine Investments, LLC As General Partner By: /s/ Eric Y. Rogoff ----------------------------- Name: Eric Y. Rogoff Title: Vice President Confirmed as of the date first above mentioned: RAYMOND JAMES & ASSOCIATES, INC. By: /s/ Raj Singh ------------------------- Name: Raj Singh Title: Managing Director -----END PRIVACY-ENHANCED MESSAGE-----