William J.
Flynn
[ADDRESS]
[ADDRESS]
Horizon Lines,
Inc. (the “Company”) has designated you to be a
recipient of shares of common stock of the Company, par value $.01
per share (the “Company Stock”), subject to the service
restrictions and other terms set forth in this letter agreement and
in the Horizon Lines, Inc. 2009 Incentive Compensation Plan (the
“Plan”).
The grant of these
shares is made pursuant to the Plan. The Plan is administered by
the Compensation Committee (the “Committee”) appointed
by the Board of Directors of the Company (the “Board”).
The terms of the Plan are incorporated into this letter and in the
case of any conflict between the Plan and this letter, the terms of
the Plan shall control. A copy of the Plan is attached to this
letter.
1.
Grant . In consideration of your agreements contained in
this letter, the Company hereby grants you 15,235 shares of Company
Stock (the “Restricted Shares”) effective on
June 19, 2009 (the “Grant Date”). The Restricted
Shares are subject to service restrictions set forth below. Until
these restrictions lapse, the Restricted Shares are forfeitable and
nontransferable.
2.
Vesting . The Restricted Shares shall vest, and become
freely transferable, as follows:
(a) 100% of the
Restricted Shares will vest and become freely transferable as of
the first anniversary of the Grant Date (the “Vesting
Date”), provided that you have been in continuous service as
a member of the Board for the period beginning on the Grant Date
and ending on the Vesting Date. If you separate from service prior
to the Vesting Date for any reason other than as described in
subsections (b) or (c) below, you will forfeit all rights
in the Restricted Shares at that time, notwithstanding your return
to active service prior to the Vesting Date.
(b)
Notwithstanding subsection (a) above, if, prior to the Vesting
Date, you separate from service due to your death or Disability,
your rights in a pro-rated portion of the Restricted Shares will
vest and become freely transferable as of the date of your
separation from service. The pro-rated portion shall be determined
by multiplying the number of your Restricted Shares by a fraction,
the numerator of which shall be the number of days from the Grant
Date through the date of your separation from service due to death
or Disability, and the denominator of which shall be the total
number of days from the Grant Date through the Vesting Date. Any
resulting fractional shares will be rounded down to the nearest
whole share. Any Restricted Shares that do not vest as of the date
of your separation from service due to death or Disability shall be
forfeited at that time.
(c)
Notwithstanding subsection (a) to the contrary, the Board
shall have the discretion to accelerate the vesting of Restricted
Shares awarded pursuant to this letter agreement if you should
experience an approved separation from service as a Board member.
The Board will in its sole discretion determine whether or not to
apply this provision and if so, any additional terms or conditions
applicable to its application, including, but not limited to, the
facts and circumstances that may give rise to an approved
separation from service and the number of Restricted Shares with
respect to which vesting may be accelerated.
(a) During the
period beginning with the Grant Date and ending with the Vesting
Date (or the earlier forfeiture of your Restricted Shares), you
will have the right to receive dividends on the Restricted Shares
to the extent dividends are paid by the Company on its authorized
and issued shares of Company Stock to its shareholders of record.
These dividends, if any, will be paid at the same rate and at the
same time as such dividends are paid by the Company on its
authorized and issued shares. However, these dividends, if any,
will be paid into a non-interest bearing account to be held until
you shall have met the requirements for the vesting of the
Restricted Shares as provided in Section 2 above, at which
time the accumulated dividends attributable to the Restricted
Shares that have vested and become transferable on the Vesting Date
shall be paid to you in a single lump sum distribution within
90 days following the Vesting Date. Any dividends attributable
to Restricted Shares that do not vest as of the Vesting Date shall
be forfeited.
(b) The
Company’s obligation under this Section 3 shall be an
unfunded and unsecured promise to pay. The Company shall not be
obligated
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