Exhibit 10.4

RESTRICTED STOCK UNIT AGREEMENT

RESTRICTED STOCK UNIT AGREEMENT (this “Agreement”), dated as of July 25, 2012
(the “Grant Date”), by and between                     (the “Participant”) and
Horizon Lines, Inc., a Delaware corporation (the “Company”), is made pursuant to
and subject to the provisions of the Company’s 2012 Incentive Compensation Plan
(the “Plan”). The Plan, as it may be amended from time to time, is incorporated
herein by reference. All terms used herein that are defined in the Plan shall
have the meanings given to them in the Plan.

1. Grant of Restricted Stock Units. Pursuant to the provisions of the Plan and
this Restricted Stock Unit Agreement (the “Agreement”), the Company hereby
grants to the Participant                     restricted stock units (the
“RSUs”) subject to the terms and conditions of the Plan and subject further to
the restrictions, terms and conditions herein set forth.

2. Vesting. The RSUs shall vest and cease to be subject to any restrictions in
accordance with the provisions of this Section 2.

 

  (a) Time-Based RSUs. Fifty percent (50%) of the RSUs shall be “Time-Based
RSUs” and shall vest in accordance with the following schedule:

 

  (i) Twenty percent (20%) of the Time-Based RSUs will vest if the Participant
remains in continuous employment with the Company from the Grant Date to
March 31, 2013;

 

  (ii) Forty percent (40%) of the Time-Based RSUs will vest if the Participant
remains in continuous employment with the Company from the Grant Date to
March 31, 2014; and

 

  (iii) Forty percent (40%) of the Time-Based RSUs will vest if the Participant
remains in continuous employment with the Company from the Grant Date to
March 31, 2015.

Any Time-Based RSUs that are unvested upon the Participant’s termination of
employment shall be forfeited.

 

  (b) Performance-Based RSUs. The remaining fifty percent (50%) of the RSUs
shall be “Performance-Based RSUs” and shall vest on the dates set forth below
(each, a “Performance Vesting Date”) in accordance with the following schedule:

 

  (i) Twenty percent (20%) of the Performance-Based RSUs will vest on March 31,
2013 if the Participant remains in continuous employment with the Company from
the Grant Date to that date and the performance goals established by the
Committee for the Company’s 2012 fiscal year (the “2012 Performance Year”) are
fully achieved;

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  (ii) Forty percent (40%) of the Performance-Based RSUs will vest on March 31,
2014 if the Participant remains in continuous employment with the Company from
the Grant Date to that date and the performance goals established by the
Committee for the Company’s 2013 fiscal year (the “2013 Performance Year”) are
fully achieved; and

 

  (iii) Forty percent (40%) of the Performance-Based RSUs will vest on March 31,
2015 if the Participant remains in continuous employment with the Company from
the Grant Date to that date and the performance goals established by the
Committee for the Company’s 2014 fiscal year (the “2014 Performance Year”) are
fully achieved.

The Committee shall in its sole discretion establish the performance goals for a
fiscal year (a “Performance Year”), and also may provide for vesting of less
than the full number of RSUs eligible to vest for such Performance Year based on
lower levels of performance goal achievement for that Performance Year. The
Committee shall establish the performance goals for the 2013 Performance Year
and the 2014 Performance Year as soon as practicable following the first day of
each such Performance Year, and shall establish the performance goals for the
2012 Performance Year by no later than the Grant Date. The Committee shall
determine the number of RSUs that may vest for a particular Performance Year,
contingent upon the Participant’s continued employment with the Company through
March 31st of the year following the applicable Performance Year, after the
Audit Committee of the Board has completed its final review of the Company’s
audited financial statement for such Performance Year.

Notwithstanding the vesting schedule described above, if any Performance-Based
RSUs do not vest on their assigned Performance Vesting Date solely because the
performance goals for the Performance Year were not fully achieved, such
Performance-Based RSUs will not be forfeited, but will remain outstanding and
shall be eligible to vest on any following Performance Vesting Date (each, a
“Following Vesting Date”) if the Participant remains in continuous employment
with the Company to the Following Vesting Date and to the extent that the
performance goals established by the Committee for the Performance Year ending
immediately before the Following Vesting Date are achieved.

Except as otherwise specifically provided in this Agreement, unvested
Performance-Based RSUs shall be forfeited upon the Participant’s termination of
employment; provided, however, that if the Participant’s employment terminates
after March 31st following the end of a Performance Year but before the
Committee has determined the extent to which the performance goals for

 

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such Performance Year have been met, unvested Performance-Based RSUs shall not
be forfeited until the Committee has made its determination of performance goal
achievement for that Performance Year. In addition, the Participant shall
forfeit all remaining unvested Performance-Based RSUs that do not vest based on
the achievement of the performance goals for the 2014 Performance Year.

 

  (c) Additional Vesting Events. Notwithstanding the foregoing, all outstanding
and unvested RSUs shall become vested and no longer subject to restriction
immediately prior to a Change of Control.

3. Settlement of RSUs.

 

  (a) Each vested RSU shall be settled by lump sum delivery of shares of Company
Stock (and potentially in cash, as described below), within thirty (30) days
following termination of the Participant’s employment with the Company or, if a
Change of Control occurs before the Participant’s termination of employment,
immediately prior to the occurrence of such Change of Control. Fifty percent
(50%) of the vested RSUs shall be settled in shares of Company Stock and the
remaining fifty percent (50%) of such vested RSUs shall be settled, in the
discretion of the Committee, either in shares of Company Stock, cash or any
combination thereof (the amount of any cash to be determined based on the value
of a share of Company Stock on the settlement date). All settlements of the
vested RSUs shall be made in a single lump-sum payment.

 

  (b)

Notwithstanding the foregoing, if the Committee determines pursuant to
Section 2(b) that any Performance-Based RSUs have vested following the
Participant’s termination of employment with the Company occurring after the
March 31st immediately following the end of a Performance Year, then such vested
RSUs shall be settled by lump sum delivery of shares of Company Stock and, if
applicable, cash in accordance with the requirements of subsection (a).
Settlement shall occur during the Company’s fiscal year that immediately follows
the Performance Year to which such vesting relates (and within no later than
thirty (30) days following the final review by the Audit Committee of the Board
of the Company’s audited financial statements for such Performance Year).

 

  (c) The lump sum delivery described above shall include an additional amount
of cash equal to the amount of dividend equivalents credited to the RSU (if
any). The Company shall cause to be delivered to the Participant one or more
unlegended, freely-transferable stock certificates in respect of the shares of
Company Stock issued upon settlement of vested RSUs.

 

  (d) No fractional shares of Company Stock will be issued pursuant to this
Agreement. The Company will pay the Participant an amount in cash equal to the
value of any fractional share of Company Stock that would have been issued to
the Participant. Such cash payment shall be made at the same time as the other
cash payments required pursuant to this Section 3.

 

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4. Dividend Equivalent Rights. The RSUs do not provide the Participant with the
rights of a shareholder of Company Stock. However, the Participant shall
accumulate dividend equivalent rights on all RSUs in an amount equal to the cash
dividends paid with respect to a share of Company Stock on each date prior to
payment of the Participant’s RSUs that a cash dividend is paid on the Company
Stock. The dividend equivalent rights shall be held by the Company as a
bookkeeping account and shall be subject to the same terms and conditions
(including vesting terms) as the corresponding RSUs and shall accumulate and be
paid in the form of a single cash lump-sum payment if and when payment for the
corresponding RSUs is made.

5. No Ownership. Other than the right to receive dividend equivalents, the
Participant shall not have any rights of a stockholder with respect to the RSUs
(including, without limitation, voting rights) until shares of Company Stock
have been distributed to the Participant in connection with the Participant’s
vested RSUs.

6. Nontransferability of the RSUs. The RSUs and any interest therein may not be
sold, assigned, transferred, pledged, hypothecated or otherwise disposed of,
except by will or the laws of descent and distribution and subject to the
conditions set forth in this Agreement. Any attempt to transfer RSUs in
contravention of this section is void ab initio. The RSUs shall not be subject
to execution, attachment or other process.

7. Other Restrictions.

 

  (a) The RSUs shall be subject to the terms of any compensation recoupment
policy now in effect or subsequently adopted by the Board (or the Committee).
The terms of any such compensation recoupment policy shall be made a part of
this Agreement.

 

  (b) The Participant acknowledges that the Participant is subject to the
Company’s policies regarding compliance with securities laws (as in effect from
time to time), and, pursuant to these policies, if the Participant is on the
Company’s insider list, the Participant shall be required to obtain
pre-clearance from the Company’s General Counsel prior to purchasing or selling
any of the Company’s securities, including any shares issued upon vesting of the
RSUs, and may be prohibited from selling such shares other than during an open
trading window. The Participant further acknowledges that, in its discretion,
the Company may prohibit the Participant from selling such shares even during an
open trading window if the Company has concerns over the potential for insider
trading.

 

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8. Equitable Adjustment. If the number of outstanding shares of Company Stock is
increased or decreased as a result of a Stock dividend, stock split or
combination of shares, recapitalization, merger in which the Company is the
surviving corporation, or other change in the Company’s capitalization without
receipt of consideration by the Company, the number and kind of the RSUs shall
be proportionally adjusted by the Committee as contemplated by the Plan, whose
determination shall be binding.

9. Taxes. The Participant shall be required to pay to the Company, or make
arrangements satisfactory to the Company regarding the payment by the
Participant to the Company of, an amount equal to all Applicable Withholding
Taxes. The parties may provide for payment of Applicable Withholding Taxes by
having the Company retain that number of shares of Company Stock (valued at
their Fair Market Value as of the date of retention) that would satisfy all or a
specified portion of such taxes. No payment with respect to the RSUs granted
under this Agreement shall be made until the Participant has paid or has made
arrangements approved by the Company to satisfy in full all Applicable
Withholding Taxes.

10. No Right to Continued Employment. Nothing contained in this Agreement shall
be deemed to confer upon the Participant any right to continue in the employment
of the Company or any Affiliate.

11. Miscellaneous.

 

  (a) Governing Law/Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of North Carolina without
reference to principles of conflict of laws.

 

  (b) Notices. Any notice required or permitted under this Agreement shall be
deemed given when delivered in accordance with the notice provisions of the
Plan.

 

  (c) Failure to Enforce Not a Waiver. The failure of either party hereto to
enforce at any time any provision of this Agreement shall in no way be construed
to be a waiver of such provision or of any other provision hereof.

 

  (d) Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be an original but all of which together shall represent one
and the same agreement.

 

  (e) Modifications; Entire Agreement; Headings. This Agreement cannot be
changed or terminated orally. This Agreement and the Plan contain the entire
agreement between the parties relating to the subject matter hereof. The section
headings herein are intended for reference only and shall not affect the
interpretation hereof.

12. Internal Revenue Code Section 409A.

 

  (a)

It is intended that any amounts payable under this Agreement shall either be
exempt from or comply with Section 409A of the Code (including the Treasury

 

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  regulations and other published guidance relating thereto) (“Code
Section 409A”) so as not to subject the Participant to payment of any interest
or additional tax imposed under Code Section 409A, and shall be consistently
interpreted in accordance with such intent. To the extent that any amount
payable under this Agreement would trigger the additional tax, penalty or
interest imposed by Code Section 409A, this Agreement shall be modified to avoid
such additional tax, penalty or interest yet preserve (to the nearest extent
reasonably possible) the intended benefit payable to the Participant. No
provision of this Agreement shall be interpreted or construed to transfer any
liability for failure to comply with the requirements of Section 409A from
Participant or any other individual to the Company or any of their respective
Affiliates, employees or agents.

 

  (b) To the extent a payment or benefit under this Agreement is nonqualified
deferred compensation subject to Code Section 409A, a termination of employment
by the Participant shall not be deemed to have occurred for purposes of any
provision of this Agreement providing for the payment of any amounts upon or
following a termination of employment unless such termination is also a
“separation from service” within the meaning of Code Section 409A and, for
purposes of any such provision of this Agreement, references to a “termination,”
“termination of employment” or like terms shall mean “separation from service”
within the meaning of Code Section 409A. If the Participant is deemed on the
date of a separation from service (within the meaning of Code Section 409A) to
be a “specified employee” (within the meaning of that term under
Section 409A(a)(2)(B) of the Code and determined using any identification
methodology and procedure selected by the Company from time to time, or, if
none, the default methodology and procedure specified under Code Section 409A),
then with regard to any payment or the provision of any benefit that is
“nonqualified deferred compensation” within the meaning of Code Section 409A and
which is paid as a result of the Participant’s “separation from service,” such
payment or benefit shall not be made or provided prior to the date which is the
earlier of (i) the expiration of the six (6)-month period measured from the date
of such “separation from service” of the Participant, and (ii) the date of the
Participant’s death (the “Delay Period”). Upon the expiration of the Delay
Period, all payments and benefits delayed pursuant to this clause (whether they
would have otherwise been payable in a single sum or in installments in the
absence of such delay) shall be paid to the Participant in a lump sum, and any
remaining payments and benefits due under this Agreement shall be paid or
provided in accordance with the normal payment dates specified for them herein.

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.

 

HORIZON LINES, INC. By:      

Samuel A. Woodward

President and Chief Executive Officer

PARTICIPANT

 

[NAME]

 

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