Senior Secured Revolving Credit Facility

Exhibit 10.1

Manchester Securities Corp.

March 16, 2005
 

Mr. David Sharp

Vice President & Chief Financial Officer

Horizon Offshore, Inc.

2500 Citywest Boulevard, Suite 2200

Houston, Texas 77042

Dear David:

In accordance with our recent discussions, set forth below is an outline of the terms pursuant to which Manchester Securities Corp. (" Manchester ") is prepared to provide the Senior Credit Facility to Horizon Offshore, Inc. (" Horizon ") for the purpose of (i) refinancing certain existing senior secured indebtedness including the revolving credit facility provided by CIT; (ii) providing for fees and expenses related to this transaction; and (iii) providing for working capital needs. Manchester has agreed to provide and received approval to provide the Senior Credit Facility substantially on the terms and conditions set forth in this letter and the Summary of Terms attached hereto as Exhibit A (the " Summary of Terms "). Subject to the conditions precedent set forth in this commitment letter and the Summary of Terms, this letter and the Summary of Terms are intended to be binding on Manchester. Unless otherwise defined herein, all capitalized terms have the meanings specified in the Summary of Terms.

Manchester will attempt to form a group of lenders (the " Lenders ") to provide the Senior Credit Facility composed of the holders of Horizon's existing subordinated debt or their respective affiliates. Notwithstanding the foregoing, Manchester will underwrite 100% of the commitment to the Senior Credit Facility.

By acceptance of this commitment letter, Horizon agrees to use commercially reasonable efforts to actively assist Manchester in obtaining participation in the commitment to the Senior Credit Facility of the holders of all of Horizon's outstanding subordinated debt and in seeing that the conditions precedent set forth in this commitment letter and the Summary of Terms are fulfilled in a manner that is satisfactory to Manchester. Such assistance shall include, without limitation: (a) Horizon providing and using reasonable efforts to cause its advisors to provide Manchester, the Lenders and their counsel upon reasonable request with all information reasonably deemed necessary by Manchester, the Lenders and their counsel to complete the transactions contemplated in the Summary of Terms; (b) Horizon using commercially reasonable efforts to ensure that the transactions contemplated in the Summary of Terms benefit materially from its existing lending and investment banking relationships; and (c) Horizon causing its senior management to otherwise generally assist Manchester, the Lenders and their counsel in completing the transactions contemplated in the Summary of Terms.

Manchester's commitment hereunder is subject to Horizon's covenants herein and the satisfaction of each of the following conditions precedent in a manner acceptable to Manchester in its sole discretion: (a) satisfaction of each of the terms and conditions set forth herein and in the Summary of Terms; (b) the absence of a material breach of any representation, warranty or agreement of Horizon set forth herein; (c) no change, occurrence or development that could have a material adverse effect on the business, assets, liabilities (actual or contingent), operations, prospects or condition (financial or otherwise) of Horizon and its subsidiaries taken as a whole shall have occurred or become known to Manchester; and (d) Manchester not becoming aware after the date hereof of any information or other matter which is inconsistent in a material and adverse manner, with any information or other matter disclosed to its representatives by Horizon's representatives prior to the date hereof. If any of the foregoing conditions precedent at any time shall fail to be satisfied, Manchester may, in its sole discretion, suggest alternative financing amounts or structures that ensure adequate protection for Manchester and the Lenders or terminate this letter and any commitment or undertaking hereunder without liability to Horizon or any other person.

Horizon hereby represents, warrants and covenants that: (a) all information (other than projections) which has been or is hereafter made available to Manchester or the Lenders by Horizon or any of its representatives in connection with the transactions contemplated hereby (the " Information ") is and will be complete and correct in all material respects and does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein not misleading, and (b) all financial projections, if any, that have been or are hereafter made available to Manchester or the Lenders by Horizon or any of its representatives (the " Projections ") have been or will be prepared in good faith based upon reasonable assumptions (it being understood that such projections are subject to significant uncertainties and contingencies, many of which are beyond the Horizon's control, and that no assurances can be given that the projections will be realized). Horizon agrees to furnish Manchester with such Information and Projections as it may reasonably request and to supplement the Information and the Projections from time to time until the closing date of the Senior Credit Facility so that the representations, warranties and covenants in the preceding sentence are correct on such closing date. Horizon understands that in arranging the Senior Credit Facility Manchester will be using and relying on the Information and the Projections without independent verification thereof.

By acceptance of this commitment letter, Horizon agrees to reimburse Manchester and the Lenders upon demand for all reasonable out-of-pocket costs and expenses (including reasonable legal fees and expenses) incurred in connection with the negotiation, preparation, execution and delivery of the Senior Credit Facility, and all reasonable out-of-pocket costs and expenses incurred by Manchester and the Lenders in connection with performing their due diligence in connection with the Senior Credit Facility.

Horizon agrees to indemnify and hold harmless Manchester and its affiliates and each director, officer, employee and agent thereof (the " Indemnified Parties ") from and against any and all losses, claims, damages, expenses or liabilities to which any thereof may become subject, insofar as such losses, claims, damages, expenses or liabilities (or actions, suits or proceeding, including any inquiry or investigation or claims in respect thereof) arise out of, in any way relate to, or result from a claim in respect of, the transactions described herein or the financing contemplated hereby (whether or not any Indemnified Party is a party to any action or proceeding out of which any such losses, claims, damages, expenses or liabilities arise), and to reimburse the Indemnified Parties, upon demand, for any reasonable expenses (legal or otherwise) incurred by any thereof in connection with investigating, preparing to defend, defending or otherwise participating in any such claim, action or proceeding related to any such loss, claim, damage, expense or liability (INCLUDING ANY LOSS, CLAIM, DAMAGE, EXPENSE OR LIABILITY ARISING OUT, IN ANY WAY RELATING TO, OR RESULTING FROM A CLAIM IN RESPECT OF THE ORDINARY NEGLIGENCE OF ANY INDEMNIFIED PARTY) , except that Horizon shall not be obligated to indemnify, hold