Exhibit 10.1
SECOND AMENDMENT TO CREDIT AGREEMENT AND WAIVER
     This SECOND AMENDMENT TO CREDIT AGREEMENT AND WAIVER (this “Agreement”),
dated as of March 9, 2011, is by and among HORIZON LINES, INC., a Delaware
corporation (the “Borrower”), certain Subsidiaries of the Borrower as
Guarantors, certain Lenders and WELLS FARGO BANK, N.A. (successor-by-merger to
Wachovia Bank, National Association), as administrative agent (in such capacity,
the “Administrative Agent”). Capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed thereto in the Credit Agreement.
RECITALS
     A. The Borrower, the Guarantors, certain banks and financial institutions
from time to time party thereto (the “Lenders”) and the Administrative Agent are
parties to that certain Credit Agreement dated as of August 8, 2007 (as amended
by that certain First Amendment to Credit Agreement dated as of June 11, 2009
and as further amended and otherwise modified from time to time, the “Credit
Agreement”).
     B. Certain Defaults and Events of Default may be construed to have occurred
or are anticipated to occur, under (x) Section 8.1(f) of the Credit Agreement as
a result of the entry and deferral of payment of the Judgment with respect to
the DOJ Investigation (such judgment and deferral, the “DOJ Judgment and Payment
Deferral”) in excess of the amounts set forth in clauses (ii)(A)(1) and
(ii)(A)(2) of such section, (y) Section 8.1(d) and Section 8.1(f)(iv) of the
Credit Agreement as a result of the occurrence of any default or event of
default under the 2007 Senior Unsecured Convertible Notes arising solely in
connection with the DOJ Judgment and Payment Deferral (any such default or event
of default, only to the extent that such default or event of default has not
resulted, or does not result, in the 2007 Senior Unsecured Convertible Notes
being declared due and payable prior to the stated maturity thereof, the
“Convertible Notes Default”), and (z) Section 8.1(c) of the Credit Agreement as
a result of failure to give notice required under Section 5.7(a) and
Section 5.7(e) of the Credit Agreement of the occurrence of any Default or Event
of Default as described in subclause (x) or (y) above (collectively, the
Defaults and Events as described in subclauses (x), (y) and (z) above being the
“Specified Defaults”).
     C. The Credit Parties have requested that the Administrative Agent and the
Required Lenders (i) waive the Specified Defaults and (ii) make certain
modifications to the Credit Agreement.
     D. The Administrative Agent and the Required Lenders have agreed to do so,
but only pursuant to the terms and conditions set forth herein.
     NOW, THEREFORE, in consideration of the agreements hereinafter set forth,
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
     1. Estoppel, Acknowledgement and Reaffirmation. The Credit Parties hereby
acknowledge and agree that, as of February 28, 2011, the aggregate outstanding
principal amount of (i) the Revolving Loans was $163,500,000.00, (ii) the Term
Loan was $89,062,500.00 and (iii) LOC Obligations was $11,272,388.00, each of
which amounts constitute a valid and subsisting obligation of the Credit Parties
to the Lenders that is not subject to any credits, offsets, defenses, claims,
counterclaims or adjustments of any kind. The Credit Parties hereby acknowledge
their obligations under the respective Credit Documents to which they are party,
reaffirm that each of the liens and security interests created and granted in or
pursuant to the Security Documents is valid and subsisting and agree that this
Agreement

 

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shall in no manner impair or otherwise adversely affect such obligations, liens
or security interests, except as explicitly set forth herein.
     2. Waiver of Specified Defaults. The Administrative Agent and the Lenders
hereby waive the Specified Defaults; provided that the foregoing waiver shall
not be deemed to modify or affect the obligations of the Credit Parties to
comply with each and every other obligation, covenant, duty, or agreement under
the Credit Documents from and after the date hereof. This waiver is a one-time
waiver of each Specified Default and shall not be construed to be a waiver of or
in any way obligate the Administrative Agent or the Lenders to waive any other
Default or Event of Default that may currently exist or occur hereafter.
     3. Amendments to Credit Agreement. Effective as of the Second Amendment
Effective Date (as defined below) upon the terms and subject to the conditions
herein, and in reliance on the representations and warranties contained herein,
the Credit Agreement shall be amended as follows:
     (a) Section 1.1 of the Credit Agreement is hereby amended by adding the
following definitions to such section in the appropriate alphabetical order:
     “Cash Liquidity” means, on any date of determination, the sum of cash and
Cash Equivalents and Short-Term Investments of the Borrower and the other Credit
Parties on a consolidated basis, excluding amounts on deposit in the
court-sanctioned class action third-party escrow account for the Puerto Rico
Settlement and amounts on deposit in any third-party escrow account for the
related settlement with indirect purchasers.
     “DOJ Judgment and Payment Deferral” means the entry and deferral of payment
of the Judgment with respect to the DOJ Investigation in substantially similar
form and on substantially similar terms to those represented to the Lenders on
the Second Amendment Effective Date.
     “DOJ Judgment Summary” means a summary of the material terms of the plea
agreement entered into as a result of the DOJ Investigation, which summary shall
have been provided by the Borrower to the Lenders in connection with the Second
Amendment.
     “Second Amendment” shall mean the Second Amendment to Credit Agreement and
Waiver, dated as of the Second Amendment Effective Date, among the Credit
Parties, the Administrative Agent, and the Required Lenders.
     “Second Amendment Effective Date” means March 9, 2011.
     (b) The pricing grid contained in the definition of “Applicable Percentage”
in Section 1.1 of the Credit Agreement is hereby amended and restated to read as
follows:

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                      Consolidated Senior Secured   Base Rate   LIBOR Margin and
    Level   Leverage Ratio   Margin   L/C Fee   Commitment Fee
I
  < 1.25 to 1.00   4.25%   5.25%   0.375%
II
  ≥ 1.25 to 1.00 but < 2.00 to 1.00   4.50%   5.50%   0.50%
III
  ≥ 2.00 to 1.00 but < 2.75 to 1.00   4.75%   5.75%   0.50%
IV
  ≥ 2.75 to 1.00   5.00%   6.00%   0.50%

     (c) The final sentence in the definition of “Asset Disposition” in
Section 1.1 of the Credit Agreement is hereby amended and restated to read as
follows:
     The term “Asset Disposition” shall not include (a) the sale, lease,
transfer or other disposition of assets permitted by Subsections 7.4(a)(i)
through (v) and (vii) through (xiv) or (b) any Equity Issuance.
     (d) The definition of “Consolidated EBITDA” in Section 1.1 of the Credit
Agreement is hereby amended (i) by amending and restating clause (b)(ix) thereof
to read as follows:
     (ix) any cash or non-cash fees, expenses or charges incurred prior to the
Second Amendment Effective Date (except with respect to (A) severance costs and
(B) losses incurred in connection with the discontinued operations of the
Logistics Business (as defined in Section 7.4(a)(xvi)), each of which, to the
extent incurred on or after the Second Amendment Effective Date, may be included
in this clause (ix) subject to the other limitations contained in this clause
(ix)) other than in the ordinary course of business associated with any
restructuring of the Borrower and changes in the Borrower’s method of operations
pursuant to its cost reduction programs in an aggregate amount not to exceed,
with respect to such cash fees, expenses or charges, 10% of Consolidated EBITDA
during such period
and (ii) by replacing the amount of “$25,000,000” in clause (b)(xvii)(B) with
the words “$28,000,000 (for the avoidance of doubt, from and after the Second
Amendment Effective Date, the Borrower shall be permitted to elect to fully or
partially apply the amount of any add-backs to Consolidated EBITDA permitted
pursuant to this clause (b)(xvii)(B) in any period, and any add-back of the
additional $3,000,000 of legal and professional expenses permitted to be added
back to Consolidated EBITDA pursuant to this clause (b)(xvii)(B) as a result of
the Second Amendment may be applied commencing with the fourth fiscal quarter of
2010 (provided that, once the Borrower has elected to apply a portion of such
add-back with respect to any fiscal quarter and has reported the same, the
Borrower shall not be permitted to elect thereafter to alter the amount of such
add-back applied or not applied in such fiscal quarter))”.
     (e) The definition of “Immaterial Subsidiary” in Section 1.1 of the Credit
Agreement is hereby amended (i) by replacing the words “2.50% of the aggregate
net sales of the Credit Parties during such period” in clause (c)(i) of such
definition with the amount “$5,000,000” and (ii) by replacing the words “5.0% of
the aggregate book value of the tangible assets of the Credit Parties” in clause
(c)(ii) of such definition with the amount “$5,000,000”.

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     (f) The final sentence in the definition of “Indebtedness” in Section 1.1
of the Credit Agreement is hereby amended by inserting the following new clause
(w) after the words “in respect of”:
     (w) amounts owed with respect to the DOJ Judgment and Payment Deferral,
     (g) The definition of “Interest Coverage Ratio” in Section 1.1 of the
Credit Agreement is hereby amended by deleting the period at the end thereof and
replacing it with the words “; provided that for the purposes of calculating
such ratio, Consolidated Interest Expense shall not include (x) fees paid in
connection with the Second Amendment or any consent or waiver of the holders of
the 2007 Senior Unsecured Convertible Notes in connection with the DOJ Judgment
and Payment Deferral to the extent that any such fees are treated as interest
for purposes of such calculation or (y) for any period ending on or after the
first fiscal quarter of 2010, bank fees, merchant card fees and third-party
payer fees, in each case to the extent classified in accordance with GAAP as
operating expense rather than interest expense.”
     (h) The definition of “Material Adverse Effect” in Section 1.1 of the
Credit Agreement is hereby amended by adding the following sentence to the end
of such definition:
     Notwithstanding anything herein to the contrary, the occurrence of (i) the
DOJ Judgment and Payment Deferral, (ii) the occurrence of any default or event
of default under the 2007 Senior Unsecured Convertible Notes arising solely in
connection with the DOJ Judgment and Payment Deferral (only to the extent that
such default or event of default has not resulted, or does not result, in the
2007 Senior Unsecured Convertible Notes being declared due and payable prior to
the stated maturity thereof) and (iii) the Borrower’s senior management changes
announced on February 24, 2011 shall not be construed, individually or in the
aggregate, as causing or being reasonably expected to cause a Material Adverse
Effect on any Credit Party or any of their Subsidiaries.
     (i) The definition of “Permitted Acquisition” in Section 1.1 of the Credit
Agreement is hereby amended by replacing the ratio “2.75 to 1.00” in clause
(vi) of such definition with the ratio “2.00 to 1.00”.
     (j) The definition of “Permitted Investment” in Section 1.1 of the Credit
Agreement is hereby amended (i) by replacing the amount “20,000,000” in clause
(k) of such definition with the amount “$1,000,000” and (ii) by replacing the
amount “25,000,000” in clause (r) of such definition with the amount
“$1,000,000”.
     (k) The definition of “Permitted Liens” in Section 1.1 of the Credit
Agreement is hereby amended (i) by replacing clause (r) of such definition with
“[Reserved.]”, (ii) by replacing the amount “$2,500,000” in clause (cc) of such
definition with the amount “$1,000,000” and (iii) by replacing the amount
“$10,000,000” in clause (dd) of such definition with the amount “$1,000,000”.
     (l) The definition of “Restricted Payment” in Section 1.1 of the Credit
Agreement is hereby amended by inserting the words “any payment of any amount
owed with respect to the DOJ Judgment and Payment Deferral prior to the date on
which such payment is due, or” immediately prior to the words “any prepayment of
principal or any redemption” at the beginning of clause (h) of such definition.

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     (m) The following definitions in Section 1.1 of the Credit Agreement are
hereby amended and restated to read as follows:
     “Debt Issuance” shall mean the issuance of any Indebtedness by any Credit
Party or any of its Subsidiaries (excluding any Indebtedness of any Credit Party
and its Subsidiaries permitted to be incurred pursuant to Section 7.1 (other
than subsection 7.1(j) and Funded Debt incurred pursuant to subsection 7.1(t)).
     “Transaction Costs” shall mean the fees and expenses, including but not
limited to professional fees and expenses, incurred by the Borrower and its
Subsidiaries in connection with (a) the Transactions, (b) the First Amendment,
(c) the Second Amendment, (d) any consent or waiver of the holders of the 2007
Senior Unsecured Convertible Notes in connection with the DOJ Judgment and
Payment Deferral or otherwise and (e) any proposed refinancing of the Credit
Party Obligations or the Indebtedness under the 2007 Senior Unsecured
Convertible Notes; provided that any fees and expenses incurred by the Borrower
and its Subsidiaries in connection with the foregoing clauses (c), (d) and
(e) in excess of an aggregate amount of $5,000,000 shall be deemed not to
constitute “Transaction Costs” for purposes of this Agreement.
     (n) Clause (i) of Section 2.3(a) of the Credit Agreement is hereby amended
and restated to read as follows:
     (i) the aggregate amount of LOC Obligations shall not at any time from and
after the Second Amendment Effective Date exceed TWENTY MILLION DOLLARS
($20,000,000) (the “LOC Committed Amount”),
     (o) Clause (i) of Section 2.4(a) of the Credit Agreement is hereby amended
and restated to read as follows:
     (i) the aggregate amount of Swingline Loans outstanding at any time from
and after the Second Amendment Effective Date shall not exceed FIVE MILLION
DOLLARS ($5,000,000) (the “Swingline Committed Amount”),
     (p) Section 2.8(b)(ii) of the Credit Agreement is hereby amended and
restated to read as follows:
     (ii) Asset Dispositions. Promptly following any Asset Disposition (or
related series of Asset Dispositions) in excess of $5,000,000 in the aggregate
during any fiscal year, the Borrower shall prepay the Loans and/or cash
collateralize the LOC Obligations in an aggregate amount equal to one hundred
percent (100%) of the Net Cash Proceeds derived from such Asset Disposition (or
related series of Asset Dispositions) (such prepayment to be applied as set
forth in clause (v) below).
     (q) Section 2.8(b) of the Credit Agreement is hereby amended by adding the
following new clause (vi) to such section:
     (vi) Excess Cash Liquidity. If at any time after the Second Amendment
Effective Date, the Cash Liquidity of the Borrower and the other Credit Parties
exceeds $17,500,000 for a period of longer than three (3) consecutive Business
Days, the Borrower shall immediately prepay the Revolving Loans and (after all
Revolving Loans have been repaid) cash collateralize the LOC Obligations in an
amount equal to the lesser

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of (a) the amount necessary to eliminate such excess and (b) the aggregate
principal amount of all outstanding Revolving Loans and LOC Obligations (such
prepayment to be applied as set forth in clause (v)(A) above). Any such
prepayment shall be applied without any reduction of the Revolving Commitments,
the Swingline Commitment or the LOC Commitment, and any such amounts applied to
cash collateralize the LOC Obligations shall be promptly refunded to the
Borrower so long as no Default has occurred and is continuing and the Borrower
shall have certified to the Administrative Agent that immediately after giving
effect to such refund the Cash Liquidity of the Borrower and the other Credit
Parties shall not be more than $17,500,000.
     (r) Section 4.2(g) of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:
     (g) Cash Liquidity. Immediately after giving effect to the making of any
such Extension of Credit (and the application of the proceeds thereof), the Cash
Liquidity of the Borrower and the other Credit Parties shall not exceed
$17,500,000.
     (s) Section 5.1(a) of the Credit Agreement is hereby amended by inserting
the parenthetical “(except with respect to such annual financial statements for
the fiscal year 2010)” after the words “reported on without” in clause (ii) of
such section.
     (t) Section 5.1 of the Credit Agreement is hereby amended by adding the
following new clauses (d) and (e) thereto:
     (d) Monthly Reports. No later than thirty (30) days after the end of each
fiscal month, (i) a copy of the Consolidated balance sheet of the Credit Parties
and their Subsidiaries as of the end of such fiscal month and related
Consolidated statements of income and retained earnings and of cash flows for
the Credit Parties and their Subsidiaries for such fiscal month and for the
portion of the fiscal year ending with such fiscal month, in each case setting
forth in comparative form Consolidated figures for the corresponding period or
periods of the preceding fiscal year (subject to normal recurring year-end audit
adjustments and the absence of footnotes) and (ii) a comparison of the
Consolidated balance sheet and related Consolidated statements of income and
retained earnings and of cash flows for the Credit Parties and their
Subsidiaries for such fiscal month and for the portion of the fiscal year ending
with such fiscal month to the annual operating budget or plan of the Credit
Parties and their Subsidiaries for such periods.
     (e) Cash Flow Forecasts. Commencing (i) on the Second Amendment Effective
Date and continuing on the last Business Day of each month thereafter (each such
date, a “Forecast Date”), a Consolidated forecast of cash flows for the Credit
Parties for the thirteen (13) weeks following such Forecast Date in form and
detail reasonably satisfactory to the Administrative Agent (a “Forecast”),
(ii) on the last Business Day of the first week following the first week covered
in the first Forecast and continuing on the last Business Day of each week
thereafter (each such date, a “Reconciliation Date”), a reconciliation between
actual cash flows for the week ending one week before such Reconciliation Date
(or, in the case of the first Reconciliation Date, since the commencement of the
first Forecast through the last Business Day of the week ending one week before
such Reconciliation Date) and the projected cash flows for such week as set
forth in the most recent previous Forecast and (iii) commencing on the second
Reconciliation Date following the end of the first week covered by the most
recent previous Forecast and continuing on each Reconciliation Date thereafter,
a reconciliation

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between actual cash flows for the period commencing with the first day covered
by the applicable Forecast through the last Business Day of the week ending one
week before such Reconciliation Date and the projected cash flows for such
period as set forth in such Forecast. In the event that the projected cash flows
set forth in any Forecast contain material differences from the projected cash
flows for any period in such Forecast that was covered in the immediately
preceding Forecast, the Borrower would be required to provide descriptions of
such material differences and the rationale therefor.
     (u) Section 6.1 of the Credit Agreement is hereby amended and restated in
its entirety to read as follows:
     The Consolidated Senior Secured Leverage Ratio for the twelve (12) fiscal
month period ending as of each fiscal quarter end shall be less than or equal to
(a) 3.50 to 1.00 for the fiscal quarters ending March 27, 2011 and June 26,
2011, (b) 3.00 to 1.00 for the fiscal quarter ending September 25, 2011 and
(c) 2.75 to 1.00 at all times thereafter.
     (v) Section 6.2 of the Credit Agreement is hereby amended and restated in
its entirety to read as follows:
     The Interest Coverage Ratio for the twelve (12) fiscal month period ending
as of each fiscal quarter end shall be greater than or equal to (a) 2.50 to 1.00
for the fiscal quarters ending March 27, 2011 and June 26, 2011, (b) 2.75 to
1.00 for the fiscal quarter ending September 25, 2011, (c) 3.00 to 1.00 for the
fiscal quarter ending December 25, 2011 and (d) 3.50 to 1.00 at all times
thereafter.
     (w) Section 7.1 of the Credit Agreement is hereby amended (i) by replacing
the amount “$5,000,000” in clause (k) of such section with the amount
“$2,500,000”, (ii) by replacing the amount “$20,000,000” in clause (s) of such
section with the amount “$2,000,000” and (iii) by replacing the amount
“$50,000,000” in clause (t) of such section with the amount “$25,000,000”.
     (x) Section 7.4(a) of the Credit Agreement is hereby amended (i) by
replacing clause (xiv) of such section with “[Reserved.]”, (ii) by replacing the
amount “$25,000,000” in clause (xv) of such section with the amount
“$2,500,000”, (iii) by deleting the word “and” at the end of clause (xiv) at the
end of such section, (iv) by replacing the period at the of clause (xv) of such
section with “; and”, (v) by adding a new clause (xvi) to such section to read
as follows:
     (xvi) the sale (in one or more transactions) of all or substantially all of
the current business of Horizon Logistics, LLC and its subsidiary Aero
Logistics, LLC as integrated third-party logistics providers of transportation
and distribution solutions (including transportation management, full truckload
and less-than truckload transportation brokerage, international ocean
transportation as a Non-Vessel Operating Common Carrier, expedited ground and
international air, and warehousing and distribution services) to client-shippers
requiring transportation services principally to, from and within North America
(such business, the “Logistics Business”), whether such sale or sales are
consummated via one or more dispositions of the Capital Stock in such
Subsidiaries and/or via one or more dispositions of the assets and liabilities
of the Logistics Business.
and (vi) by amending and restating clause (C) of the first proviso at the end of
such section to read as follows: “(C) with respect to clauses (iii), (vi),
(vii), (viii), (ix) and (xvi) above, no Default

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or Event of Default shall exist or shall result therefrom”.
     (y) Section 7.10 of the Credit Agreement is hereby amended (i) by inserting
the word “and” immediately prior to clause (e) of such section and (ii) by
deleting clause (f) of such section in its entirety so that such section ends
after the words “in each case pursuant to the terms thereof” in clause (e) of
such section.
     (z) Section 7.11 of the Credit Agreement is hereby amended by adding the
following sentence at the end of such section:
     The Credit Parties will not, nor will they permit any Subsidiary to,
without the prior written consent of the Required Lenders, amend, modify or
extend or permit the amendment, modification, or extension of any term of any
document governing or relating to the 2007 Senior Unsecured Convertible Notes;
provided that a waiver of any default or event of default arising under the 2007
Senior Unsecured Convertible Notes as a result of the DOJ Judgment and Payment
Deferral, by itself (i.e., a waiver absent other material terms, including
without limitation fee terms), shall not constitute a breach of this
Section 7.11.
     (aa) Section 7.12 of the Credit Agreement is hereby amended by replacing
the amount “$20,000,000” in such section with the amount “$2,000,000”.
     (bb) Section 8.1 of the Credit Agreement is hereby amended (i) by replacing
the words “Section 5.10(h) (judgment default)” in clause (f)(iv) of such section
with the words “Section 5.01(h) (judgment default)”, (ii) by replacing the
period at the end of clause (o) of such section with “; or” and (iii) by adding
the following new clause (p) thereto:
     (p) DOJ Judgment and Payment Deferral. (i) One or more Judgments shall be
entered or levied against a Credit Party or any of its Subsidiaries arising
directly from the DOJ Investigation that contain (A) terms that deviate
unfavorably to the Borrower or to the Lenders, other than in a de minimis
respect, from those terms disclosed in the DOJ Judgment Summary or (B) other
terms that are materially adverse to the Borrower or to the Lenders or (ii) any
Credit Party or any of its Subsidiaries shall fail to comply with the DOJ
Judgment and Payment Deferral.
     4. Additional Guarantors. The Borrower shall as soon as practicable, and in
any event within sixty (60) calendar days after the Second Amendment Effective
Date, cause any Domestic Subsidiary that is no longer an Immaterial Subsidiary
after giving effect to this Agreement to become a Guarantor under the Credit
Agreement by way of execution of a Joinder Agreement and comply with the
requirements of Section 5.9 of the Credit Agreement; provided that such sixty
(60) calendar day period may be extended by the Administrative Agent in its sole
discretion. Notwithstanding anything in the Credit Agreement to the contrary,
the Credit Parties and each such Domestic Subsidiary shall not be deemed to have
breached any requirement to have such Subsidiary become an obligor with respect
to the Obligations or to grant any Liens on its assets so long as the Borrower
shall have timely complied with this Section 4.
     5. Perfection Certificate. Within thirty (30) days of the Second Amendment
Effective Date, the Credit Parties shall provide an updated perfection
certificate, in form reasonably satisfactory to the Administrative Agent, duly
executed by a Responsible Officer of each Credit Party (other than the
additional Guarantors referenced in Section 4 above) certifying such Credit
Party’s compliance with Section 5.11 of the Credit Agreement.

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     6. Entry of DOJ Judgment and Payment Deferral. The Credit Parties hereby
covenant with the Administrative Agent and the Lenders that the DOJ Judgment and
Payment Deferral, reflecting only (i) terms that do not deviate unfavorably to
the Borrower or to the Lenders, other than in a de minimis respect, from those
terms disclosed in the DOJ Judgment Summary and (ii) other terms that are not
materially adverse to the Borrower or to the Lenders, shall be entered and
approved by an unstayed order of the applicable United States District Court no
later than May 31, 2011.
     7. Lender Advisor. If counsel to the Administrative Agent engages a
financial advisor to monitor the Credit Parties’ financial and operational
performance and conduct (or subcontract) an appraisal or field exam of the
Collateral, the Credit Parties shall provide commercially reasonable cooperation
with such financial advisor and provide such financial advisor with reasonable
access to any non-privileged information reasonably necessary for it to perform
the services for which it was engaged. The Borrower shall promptly reimburse
counsel to the Administrative Agent for all reasonable documented fees and
out-of-pocket expenses incurred in connection with counsel’s engagement of such
financial advisor promptly after written demand therefor.
     8. Amendment Fee. As a condition to the effectiveness of this Agreement,
the Borrower shall pay to the Administrative Agent, for the account of each
Lender that executes this Agreement and returns a signature page hereto to the
Administrative Agent no later than 12:00 pm Eastern time on March 9, 2011, a fee
of twenty-five (25) basis points on the sum of (i) the amount of such Lender’s
Revolving Commitment plus (ii) the amount of the Term Loan held by such Lender
(the “Amendment Fee”). The Amendment Fee shall be fully earned and
non-refundable as of the Second Amendment Effective Date.
     9. Conditions Precedent. This Agreement shall be and become effective as of
the date of satisfaction, provided that such date of satisfaction occurs on or
before March 9, 2011 (the “Second Amendment Effective Date”), of the following
conditions in form and substance satisfactory to the Administrative Agent:
     (a) The Administrative Agent shall have received counterparts of this
Agreement duly executed by each of the Credit Parties, the Administrative Agent
and the Required Lenders.
     (b) The Lenders shall have received and reviewed to their satisfaction (in
the Required Lenders’ sole discretion) a summary of the material terms of the
plea agreement entered into as a result of the DOJ Investigation (the “DOJ
Judgment Summary”), which summary shall have been provided by the Borrower to
the Lenders on a non-public and confidential basis.
     (c) The Administrative Agent shall have received the initial Forecast as
required pursuant to Section 5.1(e) of the Credit Agreement.
     (d) The Administrative Agent shall have received such certificates of
resolutions or other action, incumbency certificates and/or other certificates
of Responsible Officers of each Credit Party as the Administrative Agent may
require evidencing the identity, authority and capacity of each Responsible
Officer thereof authorized to act as a Responsible Officer in connection with
this Agreement and the other Credit Documents to which such Credit Party is a
party.
     (e) The Administrative Agent shall have received customary favorable
opinions of counsel to the Borrower, addressed to the Administrative Agent and
each Lender, dated the Second Amendment Effective Date, and in form and
substance, including without limitation opinions as to corporate authority and
no conflicts with customarily applicable laws or

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organizational documents, satisfactory to the Administrative Agent.
     (f) The Administrative Agent shall have received the Amendment Fee (for the
account of each Lender that executes the Amendment and Waiver) and all other
fees due and payable to the Administrative Agent in each case in connection with
the arrangement, negotiation, preparation, execution and delivery of this
Agreement.
     (g) The Administrative Agent shall have received reimbursement from the
Borrower for all costs (including without limitation reasonable fees and costs
of counsel to the Administrative Agent) incurred in connection with the Credit
Documents and this Agreement and invoiced through the Second Amendment Effective
Date.
     10. Representations of the Credit Parties. Each of the Credit Parties
hereby represents and warrants to the Administrative Agent and the Lenders as
follows:
     (a) It has not made any Restricted Payment on or after December 26, 2010
through the Second Amendment Effective Date pursuant to Section 7.10(f) of the
Credit Agreement.
     (b) As of the Second Amendment Effective Date, (i) the aggregate net sales
of all Immaterial Subsidiaries (except for those Domestic Subsidiaries that will
cease to be Immaterial Subsidiaries on the Second Amendment Effective Date after
giving effect to this Agreement) do not exceed $5,000,000 and (ii) the aggregate
book value of the tangible assets of all Immaterial Subsidiaries (except for
those Domestic Subsidiaries that will cease to be Immaterial Subsidiaries on the
Second Amendment Effective Date after giving effect to this Agreement) does not
exceed $5,000,000.
     (c) Each of the Credit Parties has the full power and authority to enter,
execute and deliver this Agreement and perform its obligations hereunder, under
the Credit Agreement, as amended hereby, and under each of the Credit Documents.
The execution, delivery and performance by each of the Credit Parties of this
Agreement, and the performance by each of the Credit Parties of the Credit
Agreement, as amended hereby, and each other Credit Document to which it is a
party, in each case, are within such Person’s powers and have been authorized by
all necessary corporate, limited liability or partnership action of such Person.
     (d) This Agreement has been duly executed and delivered by it and
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms, except as such enforceability may be subject to
(i) bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer,
moratorium or similar laws affecting creditors’ rights generally and
(ii) general principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity).
     (e) No consent, approval, authorization or order of, or filing,
registration or qualification with, any court or Governmental Authority or third
party is required in connection with its execution, delivery or performance of
this Agreement and the transactions contemplated hereby.
     (f) The execution and delivery of this Agreement does not (i) violate,
contravene or conflict with any provision of its organization documents or
(ii) materially violate, contravene or conflict with any laws applicable to it
or any of its Subsidiaries.

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     (g) As of the date hereof after giving effect to this Agreement, no Default
or Event of Default exists under the Credit Agreement or any of the other Credit
Documents.
     11. Release. In consideration of the Administrative Agent’s and the
Lenders’ willingness to enter into this Agreement, each of the Credit Parties
hereby releases and forever discharges the Administrative Agent, the Lenders and
each of the Administrative Agent’s and the Lenders’ predecessors, successors,
assigns, officers, managers, directors, employees, agents, attorneys,
representatives, and affiliates (hereinafter all of the above collectively
referred to as the “Lender Group”), from any and all claims, counterclaims,
demands, damages, debts, suits, liabilities, actions and causes of action of any
nature whatsoever, in each case to the extent arising in connection with the
Credit Documents through the date of this Agreement, whether arising at law or
in equity, whether known or unknown, whether liability be direct or indirect,
liquidated or unliquidated, whether absolute or contingent, foreseen or
unforeseen, and whether or not heretofore asserted, which each of the Credit
Parties may have or claim to have against any of the Lender Group.
     12. Reaffirmation of Guaranty. Each Guarantor (a) acknowledges and consents
to all of the terms and conditions of this Agreement, (b) affirms all of its
obligations under the Credit Documents after giving effect to the transactions
contemplated hereby and (c) agrees that except as expressly provided herein,
this Agreement and all documents executed in connection herewith do not operate
to reduce or discharge such Guarantor’s obligations under the Credit Documents.
     13. Expenses. Upon written demand therefor, the Credit Parties shall pay
all reasonable out-of-pocket expenses incurred by the Administrative Agent
(including without limitation the reasonable fees and out-of-pocket expenses of
counsel) in connection with or related to the negotiation, drafting, and
execution of this Agreement and the closing of the transactions contemplated
hereby.
     14. Reference to and Effect on Credit Documents. Except as specifically
modified herein, the Credit Documents shall remain in full force and effect. The
execution, delivery and effectiveness of this Agreement shall not operate as a
waiver of any right, power or remedy of the Administrative Agent and the Lenders
under any of the Credit Documents, or constitute a waiver or amendment of any
provision of any of the Credit Documents, except as expressly set forth herein.
This Agreement shall constitute a Credit Document.
     15. Further Assurances. The Credit Parties each agree to execute and
deliver, or to cause to be executed and delivered, all such instruments as may
reasonably be requested to effectuate the intent and purposes, and to carry out
the terms, of this Agreement.
     16. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE
UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF, EXCEPT AS SET FORTH IN SECTION
5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW. The jurisdiction, service of
process and waiver of jury trail provisions set forth in Sections 10.14 and
10.17 of the Credit Agreement are hereby incorporated by reference, mutatis
mutandis.
     17. Miscellaneous.
     (a) This Agreement shall be binding on and shall inure to the benefit of
the Credit Parties, the Administrative Agent, the Lenders and their respective
successors and permitted assigns. The terms and provisions of this Agreement are
for the purpose of defining the relative rights and obligations of the Credit
Parties, the Administrative Agent and the Lenders with

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respect to the transactions contemplated hereby and there shall be no third
party beneficiaries of any of the terms and provisions of this Agreement.
     (b) Section headings in this Agreement are included herein for convenience
of reference only and shall not constitute a part of this Agreement for any
other purpose.
     (c) Wherever possible, each provision of this Agreement shall be
interpreted in such a manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
     (d) Except as otherwise provided in this Agreement, if any provision
contained in this Agreement is in conflict with, or inconsistent with, any
provision in the Credit Documents, the provision contained in this Agreement
shall govern and control.
     (e) This Agreement may be executed in any number of separate counterparts,
each of which shall collectively and separately constitute one agreement.
Delivery of an executed counterpart of this Agreement by telecopy or other
electronic imaging means (including .pdf) shall be effective as an original.
     18. Entirety. This Agreement and the other Credit Documents embody the
entire agreement between the parties and supersede all prior agreements and
understandings, if any, relating to the subject matter hereof. This Agreement
and the other Credit Documents represent the final agreement between the parties
and may not be contradicted by evidence of prior, contemporaneous or subsequent
oral agreements of the parties.
[remainder of page intentionally left blank]

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     IN WITNESS WHEREOF the parties hereto have caused this Second Amendment to
Credit Agreement and Waiver to be duly executed on the date first above written.

          BORROWER: HORIZON LINES, INC.,
a Delaware corporation
      By:   /s/ Robert S. Zuckerman       Name: Robert S. Zuckerman    
Title: Secretary    GUARANTORS: HORIZON LOGISTICS, LLC,
a Delaware limited liability company
      By:   /s/ Robert S. Zuckerman       Name: Robert S. Zuckerman    
Title: Secretary      HORIZON LINES OF PUERTO RICO, INC.,
a Delaware corporation
      By:   /s/ Robert S. Zuckerman       Name: Robert S. Zuckerman    
Title: Secretary      HORIZON LINES OF ALASKA, LLC,
a Delaware limited liability company
      By:   /s/ Robert S. Zuckerman       Name: Robert S. Zuckerman    
Title: Secretary      SEA-LOGIX, LLC,
a Delaware limited liability company
      By:   /s/ Robert S. Zuckerman       Name: Robert S. Zuckerman    
Title: Secretary   

HORIZON LINES, INC.
SECOND AMENDMENT TO CREDIT AGREEMENT AND WAIVER

 

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            HORIZON LINES, LLC,
a Delaware limited liability company
      By:   /s/ Robert S. Zuckerman       Name: Robert S. Zuckerman    
Title: Secretary      HORIZON SERVICES GROUP, LLC,
a Delaware limited liability company
      By:   /s/ Robert S. Zuckerman       Name: Robert S. Zuckerman    
Title: Secretary      HAWAII STEVEDORES, INC.,
a Hawaiian corporation
      By:   /s/ Robert S. Zuckerman       Name: Robert S. Zuckerman    
Title: Secretary      AERO LOGISTICS, LLC,
a Delaware limited liability company
      By:   /s/ Robert S. Zuckerman       Name: Robert S. Zuckerman    
Title: Secretary      HORIZON LINES HOLDING CORP.,
a Delaware corporation
      By:   /s/ Robert S. Zuckerman       Name: Robert S. Zuckerman    
Title: Secretary   

HORIZON LINES, INC.
SECOND AMENDMENT TO CREDIT AGREEMENT AND WAIVER

 

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          ADMINISTRATIVE AGENT: WELLS FARGO BANK, N.A.
(successor-by-merger to Wachovia Bank,
National Association), as a Lender
and as Administrative Agent
      By:   /s/ Rondald F. Bentien, Jr.       Name: Rondald F. Bentien, Jr.  
Title: Director  

HORIZON LINES, INC.
SECOND AMENDMENT TO CREDIT AGREEMENT AND WAIVER

 

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LENDERS:
           
 
                          [INSERT NAME OF LENDER ABOVE]    
 
           
 
  By:    
 
        Name:         Title:    

HORIZON LINES, INC.
SECOND AMENDMENT TO CREDIT AGREEMENT AND WAIVER