Horizon Lines, Inc.
Performance Grant Agreement
THIS AGREEMENT,
dated May 14, 2009, between HORIZON LINES, INC., (the
“Company”) and Charles G. Raymond (the
“Participant”), is made pursuant and subject to the
provisions of the Horizon Lines, Inc. 2009 Incentive Compensation
Plan (the “Plan”) to the extent provided below. All
terms used in this Agreement that are defined in the Plan have the
same meaning given them in the Plan. The Performance Grant will be
administered by the Compensation Committee
(“Committee”) of the Board.
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1.
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Performance Grant.
Subject to approval of
the Plan at the Company’s 2009 annual meeting of
stockholders, the Participant is granted on May 14, 2009 a
Performance Grant with a target payment amount of $___ (the
“Target Amount”). The Performance Grant is subject to
the terms of the Plan and the terms and conditions set forth in
this Agreement. The amount payable under the Performance Grant may
be from 0% to 150% of the Target Amount, subject to the
Committee’s exercise of negative discretion pursuant to
Section 3 of this Agreement to reduce or eliminate such
amount. Any payment under this Performance Grant will be made in
accordance with Section 6 of this Agreement.
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2.
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Net Income Performance
Condition. The Target Amount shall be
determined based on Net Income Performance, as defined in
Appendix A. The period for determining Net Income Performance
begins on March 23, 2009 and ends on December 20, 2009
(the “Performance Period”). The percentage of the
Target Amount attained as a result of Net Income Performance for
the Performance Period (the “Attained Amount”) shall be
determined according to the following table:
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Net Income
Performance
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Attained Amount
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150% of Target
Amount
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100% of Target
Amount
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50% of Target
Amount
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0%
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If the Net
Income Performance for the Performance Period is between $### and
$###, the percentage for determining the Attained Amount shall be
determined by interpolating on a straight-line basis between the
top and bottom of the percentage of Target Amount range set forth
above.
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a.
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As
soon as practicable after December 26, 2010, the Committee may
exercise negative discretion to reduce (but not to increase) the
Attained Amount, or to eliminate the Attained Amount in its
entirety, if the Committee determines that the Participant has
failed to successfully achieve any or all of the strategic
objectives set forth in Appendix A. Such a determination shall
be made in the Committee’s sole discretion and shall be
deemed reasonable and be binding in all respects.
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b.
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After determining whether and the
amount by which the Attained Amount will be reduced for failure to
successfully achieve the strategic objectives, the Committee may
exercise negative discretion to further reduce the Attained Amount,
or to eliminate the Attained Amount in its entirety, if the
Committee determines that a Material Adverse Condition then exists
or has occurred since March 23, 2009. For purposes of this
Performance Grant, a “Material Adverse Condition” shall
mean any change, development, or event which materially and
adversely affects (or which the Committee determines could
reasonably be expected to materially and adversely affect) the
assets, liabilities, financial condition, results of operations,
business, or prospects of the Company and its Related Companies
taken as one enterprise, and as determined in the discretion of the
Committee. For the foregoing purpose, the Committee’s
determination shall be deemed reasonable and shall be binding in
all respects without regard to whether such determination was based
on a consideration of the financial statements of the Company or
its Related Companies, or whether expected results are quantifiable
or susceptible of measurement. The Committee shall not treat a
change, development, or condition relating to the economy in
general, and not specifically relating to the Company or any of its
Related Companies, as a Material Adverse Condition.
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a.
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Employment. Except as provided in
Section 5, the Participant’s rights in this Performance
Grant shall be forfeited if his employment with the Company
terminates or he is placed on an involuntary leave of absence
before December 26, 2010.
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b.
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Share Retention
Requirement .
As a condition to receiving this Performance Grant, the Participant
agrees that he will not sell, assign, transfer, pledge or otherwise
dispose of or encumber any of his Covered Shares during the period
from March 23, 2009 to
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December 25, 2011 (the “Share
Retention Period”). For purposes of this Agreement, the term
“Covered Shares” shall mean all shares of Company
common stock that the Participant currently owns or which he
acquires during the Share Retention Period (including through the
lapse of vesting or performance conditions on incentive awards),
but shall not include any shares subject to a transactions that the
Participant entered into prior to September 1, 2008. The
foregoing share retention requirement shall not prohibit the
Participant from continuing to sell shares of Company common stock
under the Securities and Exchange Commission Rule 10b5-1
trading plan he has is in effect on May 14, 2009; provided
that such trading plan may not be modified or extended during the
Share Retention Period. The Participant shall forfeit all rights in
this Performance Grant if the Participant does not comply with
these share retention requirements. Notwithstanding the foregoing,
the Committee may in its discretion wa
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