Document:

exv10w1

    EXHIBIT 10.1

 

    FIRST
    INDUSTRIAL REALTY TRUST, INC.

    

 

    2011
    STOCK INCENTIVE PLAN

 

    

    1

 

 

    TABLE
    OF CONTENTS

 

	 	 	 	 	 	 	 	 	 
	
 
	
 
	
 
	
 
	
    Page

	 

	 
	

    Section 1

	 
	
 
	
    General Purpose of the Plan; Definitions
	
 
	 
	
    3
	 

	 
	

    Section 2

	 
	
 
	
    Administration of Plan; Committee Authority to Select
    Participants and Determine Awards
	
 
	 
	
    5
	 

	 
	

    Section 3

	 
	
 
	
    Shares Issuable under the Plan; Mergers; Substitution
	
 
	 
	
    7
	 

	 
	

    Section 4

	 
	
 
	
    Awards
	
 
	 
	
    8
	 

	 
	

    Section 5

	 
	
 
	
    Eligibility
	
 
	 
	
    8
	 

	 
	

    Section 6

	 
	
 
	
    Stock Options
	
 
	 
	
    8
	 

	 
	

    Section 7

	 
	
 
	
    Restricted Stock Awards and Restricted Stock Unit Awards
	
 
	 
	
    10
	 

	 
	

    Section 8

	 
	
 
	
    Performance Share Awards
	
 
	 
	
    11
	 

	 
	

    Section 9

	 
	
 
	
    Stock Appreciation Rights
	
 
	 
	
    12
	 

	 
	

    Section 10

	 
	
 
	
    Dividend Equivalents
	
 
	 
	
    13
	 

	 
	

    Section 11

	 
	
 
	
    Performance Awards
	
 
	 
	
    13
	 

	 
	

    Section 12

	 
	
 
	
    Tax Withholding
	
 
	 
	
    14
	 

	 
	

    Section 13

	 
	
 
	
    Amendments and Termination
	
 
	 
	
    14
	 

	 
	

    Section 14

	 
	
 
	
    Status of Plan
	
 
	 
	
    15
	 

	 
	

    Section 15

	 
	
 
	
    Change of Control Provisions
	
 
	 
	
    15
	 

	 
	

    Section 16

	 
	
 
	
    General Provisions
	
 
	 
	
    16
	 

	 
	

    Section 17

	 
	
 
	
    Clawback Policy
	
 
	 
	
    16
	 

	 
	

    Section 18

	 
	
 
	
    Effective Date of Plan
	
 
	 
	
    17
	 

	 
	

    Section 19

	 
	
 
	
    Governing Law
	
 
	 
	
    17
	 

    

    2

 

    FIRST
    INDUSTRIAL REALTY TRUST, INC.

    

 

    2011
    STOCK INCENTIVE PLAN

 

    Section 1     General
    Purpose of the Plan; Definitions.

 

    The name of the plan is the First Industrial Realty Trust, Inc.
    2011 Stock Incentive Plan (the “Plan”). The
    purpose of the Plan is to encourage and enable the officers,
    employees and Directors of, and service providers to, First
    Industrial Realty Trust, Inc. (the “Company”)
    and its Affiliates and Subsidiaries upon whose judgment,
    initiative and efforts the Company largely depends for the
    successful conduct of its business to acquire a proprietary
    interest in the Company. It is anticipated that providing such
    persons with a direct stake in the Company’s welfare will
    assure a closer identification of their interests with those of
    the Company, thereby stimulating their efforts on the
    Company’s behalf and strengthening their desire to remain
    with the Company.

 

    The following terms shall be defined as set forth below:

 

    “Act” means the Securities Exchange Act of
    1934, as amended, and any successor act, and related rules,
    regulations and interpretations.

 

    “Affiliate” means any entity other than the
    Company and its Subsidiaries that is designated by the Board or
    the Committee as a participating employer under the Plan,
    provided that the Company directly or indirectly owns at least
    20% of the combined voting power of all classes of stock of such
    entity or at least 20% of the ownership interests in such entity.

 

    “Award” or “Awards,” except
    where referring to a particular category of grant under the
    Plan, shall include Incentive Stock Options, Non-Qualified Stock
    Options, Stock Appreciation Rights, Restricted Stock Awards,
    Restricted Stock Unit Awards, Performance Share Awards, Dividend
    Equivalents and Performance Awards.

 

    “Board” means the Board of Directors of the
    Company.

 

    “Cause” means the participant’s dismissal
    as a result of (i) any material breach by the participant
    of any agreement to which the participant and the Company or an
    Affiliate or Subsidiary are parties, (ii) any act (other
    than retirement) or omission to act by the participant,
    including without limitation, the commission of any crime (other
    than ordinary traffic violations), that may have a material and
    adverse effect on the business of the Company or any Affiliate
    or Subsidiary or on the participant’s ability to perform
    services for the Company or any Affiliate or Subsidiary, or
    (iii) any material misconduct or neglect of duties by the
    participant in connection with the business or affairs of the
    Company or any Affiliate or Subsidiary.

 

    “Change of Control” is defined in
    Section 15 below.

 

    “Code” means the Internal Revenue Code of 1986,
    as amended, and any successor code, and related rules,
    regulations and interpretations.

 

    “Committee” means any Committee of the Board
    referred to in Section 2 below.

 

    “Company” means First Industrial Realty Trust,
    Inc.

 

    “Deferred Compensation” means a “deferral
    of compensation” as defined in Section 409A of the
    Code.

 

    “Director” means a member of the Board.

 

    “Disability” means “disability” as
    defined in Section 22(e)(3) of the Code.

 

    “Dividend Equivalent” means a right, granted
    under Section 10 below, to receive cash, Stock, or
    other property equal in value to dividends paid with respect to
    a specified number of shares of Stock or the excess of dividends
    paid over a specified rate of return. Dividend Equivalents may
    be awarded on a free-standing basis or in connection with
    another Award, and may be paid currently or on a deferred basis.

 

    “Effective Date” means the date on which the
    Plan is approved by the stockholders of the Company as set forth
    in Section 18 below.

    

    3

 

    “ERISA” means the Employee Retirement Income
    Security Act of 1974, as amended, and any successor act, and
    related rules, regulations and interpretations.

 

    “Fair Market Value” on any given date means the
    last reported sale price at which Stock is traded on such date
    or, if no Stock is traded on such date, the most recent date on
    which Stock was traded, as reflected on the New York Stock
    Exchange or, if applicable, any other national stock exchange
    that is the principal trading market for the Stock.

 

    “Incentive Stock Option” means any Stock Option
    designated and qualified as an “incentive stock
    option” as defined in Section 422 of the Code.

 

    “Non-Qualified Stock Option” means any Stock
    Option that is not an Incentive Stock Option.

 

    “Option” or “Stock Option”
    means any option to purchase shares of Stock granted pursuant to
    Section 6 below.

 

    “Parent” means a “parent corporation”
    as defined in Section 424(e) of the Code.

 

    “Performance Award” means an Award granted
    pursuant to Section 11 below.

 

    “Performance Share Award” means an Award
    granted pursuant to Section 8 below.

 

    “Plan” means the First Industrial Realty Trust,
    Inc. 2011 Stock Incentive Plan.

 

    “Prior Plan(s)” means the First Industrial
    Realty Trust, Inc. 2009 Stock Incentive Plan, the First
    Industrial Realty Trust, Inc. 2001 Stock Incentive Plan and the
    First Industrial Realty Trust, Inc. 1997 Stock Incentive Plan.

 

    “Restricted Stock” is defined in
    Section 7(a)(i) below.

 

    “Restricted Stock Award” means an Award granted
    pursuant to Section 7(a)(i) below.

 

    “Restricted Stock Units” is defined in
    Section 7(a)(ii) below.

 

    “Restricted Stock Unit Award” means an Award
    granted pursuant to Section 7(a)(ii) below.

 

    “Service Provider” means an officer, employee
    or Director of, or other service provider to, the Company or an
    Affiliate or Subsidiary.

 

    “Stock” means the common stock, $.01 par
    value per share, of the Company, subject to adjustment pursuant
    to Section 3 below.

 

    “Stock Appreciation Right” or
    “SAR” means an Award granted pursuant to
    Section 9 below.

 

    “Subsidiary” means any corporation (other than
    the Company) in an unbroken chain of corporations, beginning
    with the Company if each of the corporations (other than the
    last corporation in the unbroken chain) owns stock possessing
    50% or more of the total combined voting power of all classes of
    stock in one of the other corporations in the chain.

 

    “Termination of Service” means the first day
    occurring on or after a grant date on which the participant
    ceases to be a Service Provider, regardless of the reason for
    such cessation, subject to the following:

 

    (i)  The participant’s cessation as Service
    Provider shall not be deemed to occur by reason of the transfer
    of the participant between the Company and an Affiliate or
    Subsidiary or between an Affiliate and a Subsidiary.

 

    (ii)  The participant’s cessation as a Service
    Provider shall not be deemed to occur by reason of the
    participant’s approved leave of absence for military
    service or sickness, or for any other purpose approved by the
    Company, if the Service Provider’s right to re-employment
    is guaranteed either by a statute or by contract or under the
    policy pursuant to which the leave of absence was granted or if
    the Committee otherwise so provides in writing.

 

    (iii)  A service provider other than an officer,
    employee or Director whose services to the Company or an
    Affiliate or a Subsidiary are governed by a written agreement
    with such service provider will cease to be a service provider
    at the time the term of such written agreement ends (without
    renewal); and a service provider other than an

    

    4

 

    officer, employee or Director whose services to the Company or
    an Affiliate or a Subsidiary are not governed by a written
    agreement with such service provider will cease to be a service
    provider upon the earlier of (A) written notice from the
    Company, an Affiliate or a Subsidiary or (B) the date that
    is 90 days after the date the service provider last
    provides services requested by the Company or an Affiliate or a
    Subsidiary (as determined by the Committee).

 

    (iv)  Unless otherwise provided by the Committee, an
    employee who ceases to be an employee, but become or remains a
    Director, or a Director who ceases to be a Director, but becomes
    or remains an employee, shall not be deemed to have incurred a
    Termination of Service.

 

    (v)  Notwithstanding the foregoing, in the event that
    any Award constitutes Deferred Compensation, the term
    Termination of Service shall be interpreted by the Committee in
    a manner not to be inconsistent with the definition of
    “separation from service” as defined under
    Section 409A of the Code.

 

    “10% Shareholder” is defined in
    Section 6(i) below.

 

		
	
    Section 2     
	
    Administration
    of Plan; Committee Authority to Select Participants and
    Determine Awards.

 

    (a)  Committee. The Plan shall be administered
    by a committee of not less than two Directors, as appointed by
    the Board from time to time (the “Committee”).
    Unless otherwise determined by the Board, each member of the
    Committee shall qualify as a “non-employee director”
    under
    Rule 16b-3
    of the Act and an “outside director” under
    Section 162(m) of the Code. Subject to applicable stock
    exchange rules, if the Committee does not exist, or for any
    other reason determined by the Board, the Board may take any
    action under the Plan that would otherwise be the responsibility
    of the Committee.

 

    (b)  Powers of Committee. The Committee shall
    have the power and authority to grant Awards consistent with the
    terms of the Plan, including the power and authority:

 

    (i)  to select the Service Providers to whom Awards
    may from time to time be granted;

 

    (ii)  to determine the time or times of grant, and the
    extent, if any, of Incentive Stock Options, Non-Qualified Stock
    Options, Stock Appreciation Rights, Restricted Stock, Restricted
    Stock Units, Performance Shares and Dividend Equivalents, or any
    combination of the foregoing, granted to any Service Provider;

 

    (iii)  to determine the number of shares to be covered
    by any Award granted to a Service Provider;

 

    (iv)  to determine the terms and conditions, including
    restrictions, not inconsistent with the terms of the Plan, of
    any Award granted to a Service Provider, which terms and
    conditions may differ among individual Awards and participants,
    and to approve the form of written instruments evidencing the
    Awards;

 

    (v)  to accelerate the exercisability or vesting of
    all or any portion of any Award granted to a participant;

 

    (vi)  subject to the provisions of
    Section 6(ii) below, to extend the period in which
    Stock Options granted may be exercised;

 

    (vii)  to determine whether, to what extent and under
    what circumstances Stock and other amounts payable with respect
    to an Award granted to a participant shall be deferred either
    automatically or at the election of the participant and whether
    and to what extent the Company shall pay or credit amounts equal
    to interest (at rates determined by the Committee) or dividends
    or deemed dividends on such deferrals;

 

    (viii)  to adopt, alter and repeal such rules,
    guidelines and practices for administration of the Plan and for
    its own acts and proceedings as it shall deem advisable; to
    interpret the terms and provisions of the Plan and any Award
    (including related written instruments) granted to a
    participant; and to decide all disputes arising in connection
    with and make all determinations it deems advisable for the
    administration of the Plan; and

 

    (ix)  to grant Awards, in its sole discretion, to
    Service Providers who are residing in jurisdictions outside of
    the United States. For purposes of the foregoing, the Committee
    may, in its sole discretion, vary the terms of the Plan in order
    to conform any Awards to the legal and tax requirements of each
    non-U.S. jurisdiction
    where such individual resides or any such
    non-U.S. jurisdiction
    that would apply its laws to such Award. The

    

    5

 

    Committee may, in its sole discretion, establish one or more
    sub-plans of
    the Plan
    and/or may
    establish administrative rules and procedures to facilitate the
    operation of the Plan in such
    non-U.S. jurisdictions.
    For purposes of clarity, any terms contained herein that are
    subject to variation in a
    non-U.S. jurisdiction
    and any administrative rules and procedures established for a
    non-U.S. jurisdiction
    shall be reflected in a written addendum to the Plan. To the
    extent permitted under applicable law, the Committee may
    delegate its authority and responsibilities under this
    Section 2(b)(ix) to any one or more officers of the
    Company, an Affiliate or a Subsidiary.

 

    All decisions and interpretations of the Committee shall be
    final and binding on all persons, including the Company and Plan
    participants and other beneficiaries under the Plan.

 

    (c)  Delegation by Committee. Except to the
    extent prohibited by applicable law, the applicable rules of a
    stock exchange or the Plan, or as necessary to comply with the
    exemptive provisions of
    Rule 16b-3
    of the Act, the Committee may allocate all or any portion of its
    responsibilities and powers to any one or more of its members
    and may delegate all or any part of its responsibilities and
    powers to any person or persons selected by it, including:
    (i) delegating to a committee of one or more members of the
    Board who are not “outside directors” within the
    meaning of Section 162(m) of the Code, the authority to
    grant Awards to eligible persons who are either: (A) not
    then “covered employees,” within the meaning of
    Section 162(m) of the Code and are not expected to be
    “covered employees” at the time of recognition of
    income resulting from such Award; or (B) not persons with
    respect to whom the Company wishes to comply with
    Section 162(m) of the Code;
    and/or
    (ii) delegating to a committee of one or more members of
    the Board who are not “non-employee directors,” within
    the meaning of
    Rule 16b-3
    of the Act, the authority to grant Awards to eligible persons
    who are not then subject to Section 16 of the Act. The acts
    of such delegates shall be treated hereunder as acts of the
    Committee and such delegates shall report regularly to the
    Committee regarding the delegated duties and responsibilities
    and any Awards so granted. Any such allocation or delegation may
    be revoked by the Committee at any time.

 

    (d)  Information to be Furnished to Committee.
    As may be permitted by applicable law, the Company and any
    Affiliate or Subsidiary shall furnish the Committee with such
    data and information as it determines may be required for it to
    discharge its duties. The records of the Company and any
    Affiliate or Subsidiary as to a Service Provider’s
    employment or service, Termination of Service, leave of absence,
    reemployment and compensation shall be conclusive on all persons
    unless determined by the Committee to be manifestly incorrect.
    Subject to applicable law, participants and other persons
    entitled to benefits under the Plan must furnish the Committee
    such evidence, data or information as the Committee considers
    desirable to carry out the terms of the Plan.

 

    (e)  Expenses and Liabilities. All expenses and
    liabilities incurred by the Committee in the administration and
    interpretation of the Plan or any Award agreement shall be borne
    by the Company. The Committee may employ attorneys, consultants,
    accountants or other persons in connection with the
    administration and interpretation of the Plan. The Company, and
    its officers and Directors, shall be entitled to rely upon the
    advice, opinions or valuations of any such persons.

 

    (f)  Indemnification. To the fullest extent
    permitted by law, each person who is or shall have been a member
    of the Committee, or of the Board, or an officer of the Company
    to whom authority was delegated in accordance with the Plan, or
    an employee of the Company shall be indemnified and held
    harmless by the Company against and from any loss (including
    amounts paid in settlement), cost, liability or expense
    (including reasonable attorneys’ fees) that may be imposed
    upon or reasonably incurred by him or her in connection with or
    resulting from any claim, action, suit, or proceeding to which
    he or she may be a party or in which he or she may be involved
    by reason of any action taken or failure to act under the Plan
    and against and from any and all amounts paid by him or her in
    settlement thereof, with the Company’s approval, or paid by
    him or her in satisfaction of any judgment in any such action,
    suit, or proceeding against him or her; provided,
    however, that he or she shall give the Company an
    opportunity, at its own expense, to handle and defend the same
    before he or she undertakes to handle and defend it on his or
    her own behalf, unless such loss, cost, liability, or expense is
    a result of his or her own willful misconduct or except as
    expressly provided by statute. The foregoing right of
    indemnification shall not be exclusive of any other rights of
    indemnification to which such persons may be entitled under the
    Company’s charter or bylaws, as a matter of law, or
    otherwise, or any power that the Company may have to indemnify
    them or hold them harmless.

    

    6

 

    Section 3     Shares Issuable
    under the Plan; Mergers; Substitution.

 

    (a)  Shares Issuable. Subject to
    adjustment as provided in Section 3(d) below, the
    maximum number of shares of Stock reserved and available for
    issuance under the Plan shall be 1,100,000 (all of which may be
    issued through Incentive Stock Options). For purposes of this
    limitation, the shares of Stock underlying any Awards that are
    forfeited, canceled, reacquired by the Company, satisfied
    without the issuance of Stock or otherwise terminated shall not
    be deemed to have been delivered and shall be added back to the
    shares of Stock available for issuance under the Plan;
    provided, however, that any shares (i) tendered to
    pay the exercise price of an Award or (ii) withheld for
    taxes by the Company or an Affiliate or a Subsidiary will not be
    available for future issuance under the Plan. Shares issued
    under the Plan may be authorized but unissued shares or shares
    reacquired by the Company. Subject to adjustment as provided in
    Section 3(d) below, with respect to Performance
    Share Awards, Restricted Stock Awards and Restricted Stock Unit
    Awards, the maximum number of shares of Stock subject to such
    Awards shall be 1,100,000.

 

    (b)  Share Limitation. Subject to adjustment as
    provided in Section 3(d) below, (i) the maximum
    number of shares of Stock with respect to which Stock Options
    and Stock Appreciation Rights may be granted during a calendar
    year to any participant under the Plan and are intended to be
    “performance-based compensation” (as that term is used
    for purposes of Section 162(m) of the Code) and then only
    to the extent such limitation is required by Section 162(m)
    of the Code, shall be 500,000 shares and (ii) with
    respect to Performance Share Awards, Restricted Stock Awards and
    Restricted Stock Unit Awards, the maximum number of shares of
    Stock subject to such Awards granted during a calendar year to
    any participant under the Plan and are intended to be
    “performance-based compensation” (as that term is used
    for purposes of Section 162(m) of the Code) and then only
    to the extent such limitation is required by Section 162(m)
    of the Code, shall be 500,000 shares.

 

    (c)  Partial Performance. Notwithstanding the
    provisions of Section 3(b) above, if in respect of
    any performance period or restriction period, the Committee
    grants to a participant Awards having an aggregate dollar value
    and/or
    number of shares less than the maximum dollar value
    and/or
    number of shares that could be paid or awarded to such
    participant based on the degree to which the relevant
    performance measures were attained, the excess of such maximum
    dollar value
    and/or
    number of shares over the aggregate dollar value
    and/or
    number of shares actually subject to Awards granted to such
    participant shall be carried forward and shall increase the
    maximum dollar value
    and/or the
    number of shares that may be awarded to such participant in
    respect of the next performance period in respect of which the
    Committee grants to such participant an Award intended to
    qualify as “performance-based compensation” (as that
    term is used for purposes of Section 162(m) of the Code),
    subject to adjustment as provided in Section 3(d)
    below.

 

    (d)  Corporate Transactions. To the extent
    permitted under Section 409A of the Code, if applicable, in
    the event of a corporate transaction involving the Company or
    the shares of Stock (including any stock dividend, stock split,
    extraordinary cash dividend, recapitalization, reorganization,
    merger, consolidation,
    split-up,
    spin-off, combination or exchange of shares), all outstanding
    Awards, the number of shares reserved for issuance under the
    Plan under Section 3(a) above and the specified
    limitations set forth in Section 3(b) above shall
    automatically be adjusted to proportionately and uniformly
    reflect such transaction (but only to the extent that such
    adjustment will not affect the status of an Award intended to
    qualify as “performance-based compensation” under
    Section 162(m) of the Code, if applicable); provided,
    however, that the Committee may otherwise adjust Awards (or
    prevent such automatic adjustment) as it deems necessary, in its
    sole discretion, to preserve the benefits or potential benefits
    of the Awards and the Plan. Action by the Committee may include:
    (i) adjustment of the number and kind of shares that may be
    delivered under the Plan; (ii) adjustment of the number and
    kind of shares subject to outstanding Awards;
    (iii) adjustment of the exercise price of outstanding
    Options and SARs; and (iv) any other adjustments that the
    Committee determines to be equitable (which may include,
    (A) replacement of Awards with other awards that the
    Committee determines have comparable value and that are based on
    stock of a company resulting from the corporate transaction, and
    (B) cancellation of the Award in return for cash payment of
    the current value of the Award, determined as though the Award
    were fully vested at the time of payment, provided that in the
    case of an Option or SAR, the amount of such payment shall be
    the excess of the value of the Stock subject to the Option or
    SAR at the time of the corporate transaction over the exercise
    price; provided, however, that no such payment
    shall be required in consideration of the Award if the exercise
    price is greater than the value of the Stock at the time of such
    corporate transaction).

    

    7

 

    Section 4     Awards.

 

    (a)  General. Any Award may be granted
    singularly, in combination with another Award (or Awards), or in
    tandem whereby the exercise or vesting of one Award held by a
    participant cancels another Award held by the participant. Each
    Award shall be subject to the terms and conditions of the Plan
    and such additional terms, conditions, limitations and
    restrictions as the Committee shall provide with respect to such
    Award and as evidenced in the Award agreement. An Award may be
    granted as an alternative to or replacement of an existing Award
    under (i) the Plan; (ii) any other plan of the Company
    or any Affiliate or Subsidiary; (iii) any Prior Plan; or
    (iv) as the form of payment for grants or rights earned or
    due under any other compensation plan or arrangement of the
    Company or any Affiliate or Subsidiary, including without
    limitation the plan of any entity acquired by the Company or any
    Affiliate or Subsidiary.

 

    (b)  Substitute Awards. The Committee may grant
    Awards in substitution for stock and stock-based awards held by
    employees of another corporation who concurrently become
    employees of the Company, an Affiliate or a Subsidiary as the
    result of a merger or consolidation of the employing corporation
    with the Company, an Affiliate or a Subsidiary or the
    acquisition by the Company, an Affiliate or a Subsidiary of
    property or stock of the employing corporation. The Committee
    may direct that the substitute Awards be granted on such terms
    and conditions as the Committee considers appropriate in the
    circumstances.

 

    Section 5     Eligibility.

 

    Participants in the Plan will be such full or part-time Service
    Providers who are responsible for or contribute to the
    management, growth or profitability of the Company, its
    Affiliates and Subsidiaries and who are selected from time to
    time by the Committee, in its sole discretion. Notwithstanding
    any provision of the Plan to the contrary, an Award (other than
    an Incentive Stock Option) may be granted to a person, in
    connection with his or her hiring as an employee, prior to the
    date the employee first performed services for the Company, an
    Affiliate or a Subsidiary; provided, however, that
    any such Award shall not become exercisable or vested prior to
    the date the employee first performs such services as an
    employee.

 

    Section 6     Stock
    Options.

 

    Any Stock Option shall be in such form as the Committee may from
    time to time approve.

 

    Stock Options may be either Incentive Stock Options or
    Non-Qualified Stock Options. To the extent that any Option does
    not qualify as an Incentive Stock Option, it shall constitute a
    Non-Qualified Stock Option. No Incentive Stock Option may be
    granted under the Plan after the tenth anniversary of the
    Effective Date. Incentive Stock Options may only be granted to
    employees of the Company, a Parent of the Company or a
    Subsidiary.

 

    The Committee in its discretion may grant Stock Options to
    Service Providers. Stock Options shall be subject to the
    following terms and conditions and shall contain such additional
    terms and conditions, not inconsistent with the terms of the
    Plan, as the Committee shall deem desirable:

 

    (i)  Exercise Price. The per share exercise
    price of a Stock Option shall be determined by the Committee at
    the time of grant. The per share exercise price of a Stock
    Option shall not be less than 100% of Fair Market Value on the
    date of grant. Unless specifically designated in writing by the
    Committee, any Stock Option shall be designed to be exempt from
    Section 409A of the Code. If an employee owns or is deemed
    to own (by reason of the attribution rules of
    Section 424(d) of the Code) more than 10% of the combined
    voting power of all classes of stock of the Company or any
    Subsidiary or Parent corporation (a “10%
    Shareholder”) and an Incentive Stock Option is granted
    to such employee, the exercise price of such Incentive Stock
    Option shall not be less than 110% of the Fair Market Value.

 

    (ii)  Option Term. The term of each Stock
    Option shall be fixed by the Committee, but no Stock Option
    shall be exercisable more than 10 years after the date the
    Option is granted. For 10% Shareholders, the terms of an
    Incentive Stock Option shall be no more than five years from the
    date of grant.

 

    (iii)  Exercisability; Rights of a Shareholder.
    Stock Options shall become exercisable at such time or times,
    whether or not in installments, as shall be determined by the
    Committee at or after the grant date. The

    

    8

 

    Committee may at any time accelerate the exercisability of all
    or any portion of any Stock Option. An optionee shall have the
    rights of a shareholder only as to shares acquired upon the
    exercise of a Stock Option and not as to unexercised Stock
    Options.

 

    (iv)  Method of Exercise. Stock Options may be
    exercised in whole or in part, by giving written notice of
    exercise to the Company, specifying the number of shares to be
    purchased. Payment of the purchase price may be made by one or
    more of the following methods:

 

    (A)  In cash, by certified or bank check or other
    instrument acceptable to the Committee or by wire transfer to an
    account designated by the Company;

 

    (B)  In the form of shares of Stock (by actual
    delivery or by attestation) that are not then subject to
    restrictions under any Company plan, if permitted by the
    Committee in its discretion. Such surrendered shares shall be
    valued at Fair Market Value on the exercise date;

 

    (C)  Payment through a net exercise such that, without
    the payment of any funds, the optionee may exercise the Option
    and receive the net number of shares of Stock equal in value to
    (y) the number of shares of Stock as to which the Option is
    being exercised, multiplied by (z) a fraction, the
    numerator of which is the Fair Market Value (on such date as is
    determined by the Committee) less the purchase price, and the
    denominator of which is such Fair Market Value;

 

    (D)  By the optionee delivering to the Company a
    properly executed exercise notice together with irrevocable
    instructions to a broker to promptly deliver to the Company cash
    or a check payable and acceptable to the Company to pay the
    purchase price; provided, however, that in the
    event the optionee chooses to pay the purchase price as so
    provided, the optionee and the broker shall comply with such
    procedures and enter into such agreements of indemnity and other
    agreements as the Committee shall prescribe as a condition of
    such payment procedure. Payment instruments will be received
    subject to collection; or

 

    (E)  Other such method as may be determined by the
    Committee from time to time.

 

    The delivery of shares of Stock to be purchased pursuant to the
    exercise of the Stock Option will be contingent upon receipt
    from the optionee (or a purchaser acting in his stead in
    accordance with the provisions of the Stock Option) by the
    Company of the full purchase price for such shares and the
    fulfillment of any other requirements contained in the Stock
    Option or applicable provisions of laws (including satisfaction
    of applicable tax withholding requirements).

 

    (v)  Non-transferability of Options. No
    Incentive Stock Option shall be transferable by the optionee
    otherwise than by will or by the laws of descent and
    distribution, and all Incentive Stock Options shall be
    exercisable, during the optionee’s lifetime, only by the
    optionee. Non-Qualified Stock Options may be assigned or
    otherwise transferred by the participant only in the following
    circumstances: (i) by will or the laws of descent and
    distribution; (ii) by the participant to members of his or
    her “immediate family,” to a trust established for the
    exclusive benefit of solely one or more members of the
    participant’s “immediate family”
    and/or the
    participant, or to a partnership, limited liability company or
    corporation pursuant to which the only partners, members or
    shareholders, as the case may be, are one or more members of the
    participant’s “immediate family”
    and/or the
    participant; provided, however, that such
    transfers are not made for consideration to the participant; or
    (iii) pursuant to a certified domestic relations order. Any
    Non-Qualified Stock Option held by a transferee will continue to
    be subject to the same terms and conditions that were applicable
    to the Option immediately prior to the transfer, except that the
    Option will be transferable by the transferee only by will or
    the laws of descent and distribution. For purposes hereof,
    “immediate family” means the participant’s
    children, stepchildren, grandchildren, parents, stepparents,
    grandparents, spouse, siblings (including half brothers and
    sisters), in-laws, and relationships arising because of legal
    adoption.

 

    (vi)  Termination by Death. If any
    optionee’s Termination of Service occurs by reason of
    death, the Stock Option may thereafter be exercised, to the
    extent exercisable at the date of death, by the legal
    representative or legatee of the optionee, for a period of six
    months (or such longer period as the Committee

    

    9

 

    shall specify at any time) from the date of death, or until the
    expiration of the stated term of the Option, if earlier.

 

    (vii)  Termination by Reason of Disability.

 

    (A)  Any Stock Option held by an optionee who incurs a
    Termination of Service by reason of Disability may thereafter be
    exercised, to the extent it was exercisable at the time of such
    termination, for a period of 12 months (or such longer
    period as the Committee shall specify at any time) from such
    Termination of Service, or until the expiration of the stated
    term of the Option, if earlier.

 

    (B)  The Committee shall have sole authority and
    discretion to determine whether a participant’s Termination
    of Service is by reason of Disability.

 

    (C)  Except as otherwise provided by the Committee at
    the time of grant or otherwise, the death of an optionee during
    a period provided in this Section 6(vii) for the
    exercise of a Non-Qualified Stock Option, shall extend such
    period for six months from the date of death, subject to
    termination on the expiration of the stated term of the Option,
    if earlier.

 

    (viii)  Termination for Cause. If any
    optionee’s Termination of Service is for Cause, any Stock
    Option held by such optionee shall immediately terminate and be
    of no further force and effect; provided, however,
    that the Committee may, in its sole discretion, provide that
    such Stock Option can be exercised for a period of up to
    30 days from the Termination of Service or until the
    expiration of the stated term of the Option, if earlier.

 

    (ix)  Other Termination. Unless otherwise
    determined by the Committee, if an optionee’s Termination
    of Service is for any reason other than death, Disability, or
    for Cause, any Stock Option held by such optionee may thereafter
    be exercised, to the extent it was exercisable as of the
    Termination of Service, for three months (or such longer period
    as the Committee shall specify at any time) from the Termination
    of Service or until the expiration of the stated term of the
    Option, if earlier.

 

    (x)  Annual Limit on Incentive Stock Options.
    To the extent required for “incentive stock option”
    treatment under Section 422 of the Code, the aggregate Fair
    Market Value (determined as of the time of grant) of the Stock
    with respect to which Incentive Stock Options granted under the
    Plan and any other plan of the Company or its Subsidiaries
    become exercisable for the first time by an optionee during any
    calendar year shall not exceed $100,000.

 

    (xi)  Form of Settlement. Shares of Stock
    issued upon exercise of a Stock Option shall be free of all
    restrictions under the Plan, except as otherwise provided in the
    Plan or the applicable Stock Option Award agreement.

 

    Section 7     Restricted
    Stock Awards and Restricted Stock Unit Awards.

 

    (a)  Nature of Awards. The Committee may grant
    Restricted Stock Awards or Restricted Stock Unit Awards to
    Service Providers.

 

    (i)  Restricted Stock Award. A Restricted Stock Award
    is an Award entitling the recipient to acquire, at no cost or
    for a purchase price determined by the Committee, shares of
    Stock subject to such restrictions and conditions as the
    Committee may determine at the time of grant
    (“Restricted Stock”). Conditions may be based
    on continuing service
    and/or
    achievement of pre-established performance goals and objectives.
    In addition, a Restricted Stock Award may be granted to a
    Service Provider by the Committee in lieu of any compensation
    due to such Service Provider.

 

    (ii)  Restricted Stock Unit Award. A Restricted Stock
    Unit Award is an Award evidencing the right of the recipient to
    receive an equivalent number of shares of Stock on a specific
    date or upon the attainment of pre-established performance
    goals, objectives, and other conditions as specified by the
    Committee, with the units being subject to such restrictions and
    conditions as the Committee may determine at the time of grant
    (“Restricted Stock Units”). Conditions may be
    based on continuing service
    and/or
    achievement of pre-established performance goals and objectives.
    In addition, a Restricted Stock Unit Award may be granted to a
    Service Provider by the Committee in lieu of any compensation
    due to such Service Provider.

    

    10

 

    (b)  Acceptance of Award. A participant who is
    granted a Restricted Stock Award or a Restricted Stock Unit
    Award shall have no rights with respect to such Award unless the
    participant shall have accepted the Award within 60 days
    (or such shorter date as the Committee may specify) following
    the grant date by making payment to the Company, if required, by
    certified or bank check or other instrument or form of payment
    acceptable to the Committee in an amount equal to the specified
    purchase price, if any, of the shares covered by the Award and
    by executing and delivering to the Company a written instrument
    that sets forth the terms and conditions of the Restricted Stock
    or the Restricted Stock Units in such form as the Committee
    shall determine.

 

    (c)  Rights as a Shareholder. Upon complying
    with Section 7(b) above:

 

    (i)  With respect to Restricted Stock, a participant
    shall have all the rights of a shareholder including voting and
    dividend rights, subject to transferability restrictions and
    Company repurchase or forfeiture rights described in this
    Section 7 and subject to such other conditions
    contained in the written instrument evidencing the Restricted
    Stock Award. Unless the Committee shall otherwise determine, if
    certificates are issued to evidence shares of Restricted Stock,
    such certificates shall remain in the possession of the Company
    until such shares are vested as provided in
    Section 7(e)(i) below; and

 

    (ii)  With respect to Restricted Stock Units, a
    participant shall have no voting rights or dividend rights prior
    to the time shares of Stock are received in settlement of such
    Restricted Stock Units. Unless otherwise provided by the
    Committee and reflected in the Award agreement, in lieu of
    actual dividend rights in connection with Restricted Stock
    Units, a participant shall have the right to receive additional
    Restricted Stock Units equal in value to any cash dividends and
    property dividends paid with respect to the shares underlying
    the Restricted Stock Units, subject to the same terms and
    conditions as contained in the written instrument evidencing the
    Restricted Stock Unit Award.

 

    (d)  Restrictions. Restricted Stock Units and
    shares of Restricted Stock may not be sold, assigned,
    transferred, pledged or otherwise encumbered or disposed of
    except as specifically provided herein.

 

    (e)  Vesting of Restricted Stock and Restricted
    Stock Units. The Committee at the time of grant shall
    specify the date or dates
    and/or the
    attainment of pre-established performance goals, objectives and
    other conditions on which the non-transferability of the
    Restricted Stock and the Restricted Stock Units and the
    Company’s right of repurchase or forfeiture shall lapse.

 

    (i)  Vesting of Restricted Stock. Subsequent to such
    date or dates
    and/or the
    attainment of such pre-established performance goals, objectives
    and other conditions, the shares of Restricted Stock on which
    all restrictions have lapsed shall no longer be Restricted Stock
    and shall be deemed “vested.”

 

    (ii)  Vesting of Restricted Stock Units. Upon such
    date or dates
    and/or the
    attainment of such pre-established performance goals, objectives
    and other conditions, the Restricted Stock Units on which all
    restrictions have lapsed shall no longer be Restricted Stock
    Units and shall be deemed “vested”, and, unless
    otherwise provided by the Committee and reflected in the Award
    agreement, the participant shall be entitled to shares of Stock
    equal to the number of vested Restricted Stock Units. Unless
    otherwise provided by the Committee and reflected in the Award
    agreement, the newly acquired shares of Stock shall be acquired
    by the participant free and clear of any restrictions except
    such imposed under applicable law, if any.

 

    (f)  Waiver, Deferral and Reinvestment of
    Dividends. The written instrument evidencing the Restricted
    Stock Award or the Restricted Stock Unit Award may require or
    permit the immediate payment, waiver, deferral or investment of
    dividends paid on the Restricted Stock or the Restricted Stock
    Units; provided, however, that any such deferral
    may be permitted only to the extent that such deferral would
    satisfy the requirements of Section 409A of the Code.

 

    Section 8     Performance
    Share Awards.

 

    (a)  Nature of Performance Shares. A
    Performance Share Award is an Award entitling the recipient to
    acquire shares of Stock upon the attainment of specified
    performance goals. The Committee may make Performance Share
    Awards independent of or in connection with the granting of any
    other Award. Performance Share Awards may be granted to Service
    Providers, including those who qualify for awards under other
    performance plans of the

    

    11

 

    Company. The Committee in its sole discretion shall determine
    whether and to whom Performance Share Awards shall be made, the
    performance goals applicable under each such Award, the periods
    during which performance is to be measured, and all other
    limitations and conditions applicable to the awarded Performance
    Shares; provided, however, that the Committee may
    rely on the performance goals and other standards applicable to
    other performance based plans of the Company in setting the
    standards for Performance Share Awards.

 

    (b)  Restrictions on Transfer. Performance
    Share Awards and all rights with respect to such Awards may not
    be sold, assigned, transferred, pledged or otherwise encumbered.

 

    (c)  Rights as a Shareholder. A participant
    receiving a Performance Share Award shall have the rights of a
    shareholder only as to shares actually received by the
    participant under the Plan and not with respect to shares
    subject to the Award but not actually received by the
    participant. A participant shall be entitled to receive shares
    of Stock under a Performance Share Award only upon satisfaction
    of all conditions specified in the written instrument evidencing
    the Performance Share Award (or in a performance plan adopted by
    the Committee).

 

    (d)  Termination. Except as may otherwise be
    provided by the Committee at any time prior to Termination of
    Service, a participant’s rights in all Performance Share
    Awards shall automatically terminate upon the participant’s
    Termination of Service for any reason (including, without
    limitation, due to death or Disability and for Cause).

 

    (e)  Acceleration, Waiver, Etc. At any time
    prior to the participant’s Termination of Service, the
    Committee may in its sole discretion accelerate, waive or,
    subject to Section 13 below, amend any or all of the
    goals, restrictions or conditions imposed under any Performance
    Share Award; provided, however, that in no event
    shall any provision of the Plan be construed as granting to the
    Committee any discretion to increase the amount of compensation
    payable under any Performance Share Award intended to qualify as
    a Performance Award under Section 11 below to the
    extent such an increase would cause the amounts payable pursuant
    to the Performance Share Award to be nondeductible in whole or
    in part pursuant to Section 162(m) of the Code, and the
    Committee shall have no such discretion notwithstanding any
    provision of the Plan to the contrary.

 

    Section 9     Stock
    Appreciation Rights.

 

    (a)  Notice of Stock Appreciation Rights. A
    Stock Appreciation Right is a right entitling the participant to
    receive cash or Stock having a fair market value equal to the
    appreciation in the Fair Market Value of a stated number of
    shares from the date of grant, or in the case of rights granted
    in tandem with or by reference to an Option granted prior to the
    grant of such rights, from the date of grant of the related
    Option to the date of exercise. SARs may be granted to Service
    Providers.

 

    (b)  Terms of Awards. SARs may be granted in
    tandem with or with reference to a related Option, in which
    event the participant may elect to exercise either the Option or
    the SAR, but not both, as to the same share subject to the
    Option and the SAR, or the SAR may be granted independently. In
    the event of an Award with a related Option, the SAR shall be
    subject to the terms and conditions of the related Option. In
    the event of an independent Award, the SAR shall be subject to
    the terms and conditions determined by the Committee;
    provided, however, that no SAR shall be
    exercisable more than 10 years after the date the SAR is
    granted.

 

    (c)  Restrictions on Transfer. SARs shall not
    be transferred, assigned or encumbered, except that SARs may be
    exercised by the executor, administrator or personal
    representative of the deceased participant within six months of
    the death of the participant (or such longer period as the
    Committee shall specify at any time) and transferred pursuant to
    a certified domestic relations order.

 

    (d)  Payment Upon Exercise. Upon exercise of an
    SAR, the participant shall be paid the excess of the then Fair
    Market Value of the number of shares to which the SAR relates
    over the Fair Market Value of such number of shares at the date
    of grant of the SAR, or of the related Option, as the case may
    be. Such excess shall be paid in cash or in Stock having a Fair
    Market Value equal to such excess or in such combination thereof
    as the Committee shall determine.

    

    12

 

    Section 10     Dividend
    Equivalents.

 

    The Committee is authorized to grant Dividend Equivalents to
    Service Providers. The Committee may provide, at the date of
    grant or thereafter, that Dividend Equivalents shall be paid or
    distributed when accrued or shall be deemed to have been
    reinvested in additional Shares, or other investment vehicles as
    the Committee may specify; provided, however, that
    Dividend Equivalents (other than freestanding Dividend
    Equivalents) shall be subject to all conditions and restrictions
    of the underlying Awards to which they relate unless otherwise
    provided by the Committee. Any grant of Dividend Equivalents
    made to a participant hereunder shall be permitted only to the
    extent that such grant would satisfy the requirements of
    Section 409A of the Code. To the extent that a grant of
    Dividend Equivalents would be deemed, under Section 409A of
    the Code, to reduce the exercise price of an Option or SAR below
    the Fair Market Value (determined as of the date of grant) of
    the share of Stock underlying such Award, no grant of Dividend
    Equivalents shall be allowed with respect to such Option or SAR.
    No Dividend Equivalents shall be transferable by the holder
    other than by will or by the laws of descent and distribution.

 

    Section 11     Performance
    Awards.

 

    If the Committee determines that a Performance Share Award,
    Restricted Stock Award or Restricted Stock Unit Award to be
    granted to a participant should qualify as
    “performance-based compensation” for purposes of
    Section 162(m) of the Code, the grant, vesting
    and/or
    settlement of such Award shall be contingent upon achievement of
    pre-established performance goals and other terms set forth in
    this Section 11 and such Award shall be considered a
    “Performance Award” under the Plan.

 

    (a)  Performance Goals Generally. The
    performance goals for Performance Awards shall consist of one or
    more business criteria and a targeted level or levels of
    performance with respect to each of such criteria, as specified
    by the Committee consistent with this Section 11.
    Performance goals shall be objective and shall otherwise meet
    the requirements of Section 162(m) of the Code. The
    Committee may determine that such Performance Awards shall be
    granted, vested
    and/or
    settled upon achievement of any one performance goal or that two
    or more of the performance goals must be achieved as a condition
    to grant, vesting
    and/or
    settlement of such Performance Awards. Performance goals may
    differ for Performance Awards granted to any one participant or
    to different participants. Any Performance Award shall be
    settled as soon as administratively practicable following the
    date on which such Award vests, but in no event later than sixty
    (60) days after the date on which such Performance Award
    vests.

 

    (b)  Business Criteria. One or more of the
    following business criteria for the Company, on a consolidated
    basis,
    and/or for
    specified Affiliates, Subsidiaries or business units of the
    Company (except with respect to the total stockholder return and
    earnings per share criteria), shall be used by the Committee in
    establishing performance goals for such Performance Awards:
    (1) earnings, including funds from operations; (2)
    revenues; (3) cash flow; (4) cash flow return on
    investment; (5) return on assets; (6) return on
    investment; (7) return on capital; (8) return on
    equity; (9) economic value added; (10) operating
    margin; (11) net income; (12) pretax earnings;
    (13) pretax earnings before interest, depreciation and
    amortization; (14) pretax operating earnings after interest
    expense and before incentives, service fees, and extraordinary
    or special items; (15) operating earnings; (16) total
    stockholder return; (17) market share; (18) debt load
    reduction; (19) expense management; (20) stock price;
    (21) book value; (22) overhead; (23) assets;
    (24) assessment of balance sheet or income statement
    objectives; and (25) strategic business objectives,
    consisting of one or more objectives based on meeting specific
    cost targets, business expansion goals and goals relating to
    acquisitions or divestitures. Any of the above goals may be
    compared to the performance of a peer group, business plan or a
    published or special index deemed applicable by the Committee
    including, but not limited to, the Standard &
    Poor’s 500 Stock Index.

 

    (c)  Performance Period; Timing for Established
    Performance Goals. Achievement of performance goals in
    respect of such Performance Awards shall be measured over a
    performance period, as specified by the Committee. Performance
    goals shall be established not later than 90 days after the
    beginning of any performance period applicable to such
    Performance Awards, or at such other date as may be required or
    permitted for “performance-based compensation” under
    Section 162(m) of the Code.

 

    (d)  Settlement of Performance Awards; Other
    Terms. Settlement of Performance Awards shall be in cash,
    Stock or other property, in the discretion of the Committee. The
    Committee may, in its discretion, reduce the amount

    

    13

 

    of a settlement otherwise to be made in connection with
    Performance Awards, but may not exercise discretion to increase
    any such amount payable to a participant in respect of a
    Performance Award. The Committee shall specify the circumstances
    in which Performance Awards shall be paid or forfeited in the
    event of a Termination of Service of the participant prior to
    the end of a performance period or settlement of Performance
    Awards.

 

    (e)  Written Determination. All determinations
    by the Committee as to the establishment of performance goals or
    potential individual Performance Awards and as to the
    achievement of performance goals relating to Performance Awards
    shall be made in writing in the case of any Award intended to
    qualify under Section 162(m) of the Code.

 

    (f)  Partial Achievement. The terms of any
    Performance Award may provide that partial achievement of the
    business criteria may result in a payment or vesting based upon
    the degree of achievement. In addition, partial achievement of
    business criteria shall apply toward a participant’s
    individual limitations as set forth in Section 3(b)
    above.

 

    (g)  Extraordinary Items. In establishing any
    business criteria, the Committee may provide for the exclusion
    of the effects of the following items, to the extent identified
    in the audited financial statements of the Company, including
    footnotes, or in the Management’s Discussion and Analysis
    section of the Company’s annual report:
    (i) extraordinary, unusual,
    and/or
    nonrecurring items of gain or loss; (ii) gains or losses on
    the disposition of a business; (iii) changes in tax or
    accounting principles, regulations or laws; or (iv) mergers
    or acquisitions. To the extent not specifically excluded, such
    effects shall be included in any applicable business criteria.

 

    Section 12     Tax
    Withholding.

 

    (a)  Payment by Participant. Each participant
    shall, no later than the date as of which the value of an Award
    or of any Stock or other amounts received thereunder first
    becomes includible in the gross income of the participant for
    federal income tax purposes, pay to the Company, or make
    arrangements satisfactory to the Committee regarding payment of,
    any federal, state, or local taxes of any kind required by law
    to be withheld with respect to such income. The Company, its
    Affiliates and Subsidiaries shall, to the extent permitted by
    law, have the right to deduct any such taxes from any payment of
    any kind otherwise due to the participant.

 

    (b)  Payment in Shares. A participant may
    elect, subject to such rules and limitations as may be
    established by the Committee from time to time, to have such tax
    withholding obligation satisfied, in whole or in part, by
    (i) authorizing the Company to withhold from shares of
    Stock to be issued pursuant to any Award a number of shares with
    an aggregate Fair Market Value (as of the date the withholding
    is effected) that would satisfy the withholding amount due
    (based on the minimum statutory rates), or
    (ii) transferring to the Company shares of Stock owned by
    the participant with an aggregate Fair Market Value (as of the
    date the withholding is effected) that would satisfy the
    withholding amount due (based on the minimum statutory rates).

 

    Section 13     Amendments
    and Termination.

 

    (a)  General. The Board may, as permitted by
    law, at any time amend or discontinue the Plan and the Committee
    may at any time amend or cancel any outstanding Award, but no
    such action shall adversely affect rights under any outstanding
    Award without the holder’s consent and, except as set forth
    in Section 3(d) above, no amendment shall
    (i) materially increase the benefits accruing to
    participants under the Plan; (ii) materially increase the
    aggregate number of securities that may be issued under the
    Plan, or (iii) materially modify the requirements for
    participation in the Plan, unless the amendment under (i),
    (ii) or (iii) immediately above is approved by the
    Company’s stockholders. It is the intention of the Company
    that the Plan and any Awards made hereunder comply with or are
    exempt from the requirements of Section 409A of the Code
    and the Plan shall be administered and interpreted in accordance
    with such intent. The Company does not guarantee that the
    Awards, payments and benefits that may be made or provided under
    the Plan will satisfy all applicable provisions of
    Section 409A or any other Section of the Code.

 

    (b)  Deferred Compensation. If any Award would
    be considered Deferred Compensation, the Committee reserves the
    absolute right (including the right to delegate such right) to
    unilaterally amend the Plan or the Award agreement, without the
    consent of the participant, to avoid the application of, or to
    maintain compliance with,

    

    14

 

    Section 409A of the Code. Any amendment by the Committee to
    the Plan or an Award agreement pursuant to this section shall
    maintain, to the extent practicable and permissible, the
    original intent of the applicable provision without violating
    Section 409A of the Code. A participant’s acceptance
    of any Award constitutes acknowledgement and consent to such
    rights of the Committee, without further consideration or
    action. Any discretionary authority retained by the Committee
    pursuant to the terms of the Plan or pursuant to an Award
    agreement shall not be applicable to an Award that is determined
    to constitute Deferred Compensation, if such discretionary
    authority would contravene Section 409A of the Code.

 

    (c)  Amendment to Conform to Law.
    Notwithstanding any provision in the Plan or any Award agreement
    to the contrary, the Committee may amend the Plan or an Award
    agreement, to take effect retroactively or otherwise, as deemed
    necessary or advisable for the purpose of conforming the Plan or
    the Award agreement to any present or future law relating to
    plans of this or similar nature (including, but not limited to,
    Section 409A of the Code). By accepting an Award, each
    participant agrees and consents to any amendment made pursuant
    to this Section 13(c) or Section 13(b)
    above to any Award without further consideration or action.

 

    Section 14     Status
    of Plan.

 

    With respect to the portion of any Award that has not been
    exercised and any payments in cash, Stock or other consideration
    not received by a participant, a participant shall have no
    rights greater than those of a general unsecured creditor of the
    Company unless the Committee shall otherwise expressly determine
    in connection with any Award or Awards. In its sole discretion,
    the Committee may authorize the creation of trusts or other
    arrangements to meet the Company’s obligations to deliver
    Stock or make payments with respect to Awards hereunder,
    provided that the existence of such trusts or other arrangements
    is consistent with the provision of the foregoing sentence.

 

    Section 15     Change
    of Control Provisions.

 

    Upon the occurrence of a Change of Control as defined in this
    Section 15:

 

    (a)  Each Stock Option and each Stock Appreciation
    Right shall automatically become fully exercisable unless the
    Committee shall otherwise expressly provide at the time of grant.

 

    (b)  Restrictions and conditions on Awards of
    Restricted Stock, Restricted Stock Units, Performance Shares and
    Dividend Equivalents shall automatically be deemed waived, and
    the recipients of such Awards shall become entitled to receipt
    of the maximum amount of Stock subject to such Awards unless the
    Committee shall otherwise expressly provide at the time of grant.

 

    (c)  “Change of Control” shall mean
    the occurrence of any one of the following events:

 

    (i)  any “person”, as such term is used in
    Sections 13(d) and 14(d) of the Act (other than the
    Company, any of its Subsidiaries, any trustee, fiduciary or
    other person or entity holding securities under any employee
    benefit plan of the Company or any of its Subsidiaries),
    together with all “affiliates” and
    “associates” (as such terms are defined in
    Rule 12b-2
    of the Act) of such person, becomes the “beneficial
    owner” (as such term is defined in
    Rule 13d-3
    of the Act), directly or indirectly, of securities of the
    Company representing 40% or more of either (A) the combined
    voting power of the Company’s then outstanding securities
    having the right to vote in an election of the Board
    (“Voting Securities”) or (B) the then
    outstanding shares of Stock of the Company (in either such case
    other than as result of acquisition of securities directly from
    the Company); or

 

    (ii)  persons who, as of the Effective Date,
    constitute the Board (the “Incumbent
    Directors”) cease for any reason, including without
    limitation, as a result of a tender offer, proxy contest, merger
    or similar transaction, to constitute at least a majority of the
    Board, provided that any person becoming a director of the
    Company subsequent to the Effective Date whose election or
    nomination for election was approved by a vote of at least a
    majority of the Incumbent Directors shall, for purposes of the
    Plan, be considered an Incumbent Director; or

 

    (iii)  the consummation of: (A) any consolidation
    or merger of the Company or any Subsidiary where the
    stockholders of the Company, immediately prior to the
    consolidation or merger, would not, immediately after

    

    15

 

    the consolidation or merger, beneficially own (as such term is
    defined in
    Rule 13d-3
    of the Act), directly or indirectly, shares representing in the
    aggregate 50% or more of the voting stock of the corporation
    issuing cash or securities in the consolidation or merger (or of
    its ultimate parent corporation, if any), (B) any sale,
    lease, exchange or other transfer (in one transaction or a
    series of transactions contemplated or arranged by any party as
    a single plan) of all or substantially all of the assets of the
    Company or (C) any plan or proposal for the liquidation or
    dissolution of the Company.

 

    Notwithstanding the foregoing, a “Change of Control”
    shall not be deemed to have occurred for purposes of the
    foregoing clause (i) solely as the result of an acquisition
    of securities by the Company that, by reducing the number of
    shares of Stock or other Voting Securities outstanding,
    increases (x) the proportionate number of shares of Stock
    beneficially owned by any person to 40% or more of the shares of
    Stock then outstanding or (y) the proportionate voting
    power represented by the Voting Securities beneficially owned by
    any person to 40% or more of the combined voting power of all
    then outstanding Voting Securities; provided,
    however, that if any person referred to in
    clause (x) or (y) of this sentence shall thereafter
    become the beneficial owner of any additional shares of Stock or
    other Voting Securities (other than pursuant to a stock split,
    stock dividend, or similar transaction), then a “Change of
    Control” shall be deemed to have occurred for purposes of
    the foregoing clause (i). In the event that any Award
    constitutes Deferred Compensation, and the settlement of, or
    distribution of benefits under such Award is to be triggered by
    a Change of Control, then such settlement or distribution shall
    be subject to the event constituting the Change of Control also
    constituting a change in the ownership or effective control or
    change in ownership of a substantial portion of assets of a
    corporation as permitted under Section 409A of the Code.

 

    Section 16     General
    Provisions.

 

    (a)  No Distribution; Compliance with Legal
    Requirements. The Committee may require each person
    acquiring shares pursuant to an Award to represent to and agree
    with the Company in writing that such person is acquiring the
    shares without a view to distribution thereof. No shares of
    Stock shall be issued pursuant to an Award until all applicable
    securities laws and other legal and stock exchange requirements
    have been satisfied. The Company may, as it deems appropriate:
    (i) require the placing of such stop-orders and restrictive
    legends on certificates, if any, for Stock and Awards,
    (ii) make a notation within any electronic recordation
    system for ownership of shares, or (iii) utilize other
    reasonable means to evidence such shares have not been
    registered under the Securities Act of 1933.

 

    (b)  Certificates. To the extent that the Plan
    provides for the issuance of shares of Stock, the issuance may
    be effected on a non-certificated basis, in accordance with
    applicable law and the applicable rules of any stock exchange.
    If stock certificates are issued to evidence shares awarded
    under the Plan, delivery of stock certificates to participants
    under the Plan shall be deemed effected for all purposes when
    the Company or a stock transfer agent of the Company shall have
    delivered such certificates in the United States mail, addressed
    to the participant, at the participant’s last known address
    on file with the Company.

 

    (c)  Other Compensation Arrangements; No Employment
    Rights. Nothing contained in the Plan shall prevent the
    Board from adopting other or additional compensation
    arrangements, including trusts, subject to stockholder approval
    if such approval is required; and such arrangements may be
    either generally applicable or applicable only in specific
    cases. The adoption of the Plan and the grant of Awards do not
    confer upon any Service Provider any right to continued
    employment or service with the Company or any Affiliate or
    Subsidiary.

 

    Section 17     Clawback
    Policy.

 

    Any Award, amount or benefit received under the Plan shall be
    subject to potential cancellation, recoupment, rescission,
    payback or other action in accordance with the terms of any
    applicable Company clawback policy, as it may be amended from
    time to time (the “Policy”) or any applicable
    law. A Service Provider’s receipt of an Award constitutes
    the Service Provider’s acknowledgment of and consent to the
    Company’s application, implementation and enforcement of
    (a) the Policy or any similar policy established by the
    Company that may apply to the Service Provider and (b) any
    provision of applicable law relating to cancellation,
    rescission, payback or recoupment of compensation, as well as
    the Service Provider’s express agreement that the Company
    may take such actions as are

    

    16

 

    necessary to effectuate the Policy, any similar policy (as
    applicable to the Service Provider) or applicable law without
    further consideration or action.

 

    Section 18     Effective
    Date of Plan.

 

    The Plan shall become effective upon approval by the
    stockholders of the Company.

 

    Section 19     Governing
    Law.

 

    THIS PLAN SHALL BE GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS
    WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF,
    EXCEPT TO THE EXTENT SUCH LAWS ARE PREEMPTED BY FEDERAL LAWS.

    

    17exv10w1

EXECUTION VERSION

Exhibit 10.1

Form of Restructuring

Support Agreement

RESTRUCTURING SUPPORT AGREEMENT

     This RESTRUCTURING SUPPORT AGREEMENT (this “RSA”), dated as of June 1, 2011, is by and
between Horizon Lines, Inc. (the “Parent”), a corporation duly organized and existing under
the laws of the State of Delaware, and all of its subsidiaries and any successors thereto
(collectively with the Parent, the “Company”) and the holder set forth on the signature
page hereto (the “Exchanging Holder”) of the 4.25% convertible senior notes due 2012 (the
“Notes”) issued under the Indenture, dated as of August 8, 2007 (as amended, supplemented,
or modified from time to time, the “Indenture”), by and between the Parent, as issuer, and
The Bank of New York Trust Company, N.A., as Trustee, in the aggregate principal amount of
$330,000,000.00. The principal amount of Notes held by the Exchanging Holders (as defined below)
is set forth on a confidential schedule maintained by Paul, Weiss, Rifkind, Wharton & Garrison LLP
(“Paul, Weiss”). The Exchanging Holder, the Company, and each other person that becomes a
party hereto in accordance with the terms hereof shall be referred to herein individually as a
“Party” and, collectively, as the “Parties.” Capitalized terms not herein defined
shall have the meanings set forth in the Restructuring Term Sheet (as defined below). References
herein to percentage of Exchanging Holders refer to the principal amount of the Notes held by such
Exchanging Holders.

RECITALS

     WHEREAS, prior to the date hereof, representatives of the Company and certain Exchanging
Holders have discussed consummating a financial restructuring (the “Restructuring”) of the
Company’s consolidated indebtedness and other obligations on principal terms consistent with those
set forth in this RSA and the Restructuring Term Sheet, attached hereto as Exhibit A and
expressly incorporated by reference herein and made a part of this RSA as if fully set forth herein
(as it may be amended, supplemented or otherwise modified as provided herein, the
“Restructuring Term Sheet”);

     WHEREAS, the Restructuring contemplates a potential issuance of $350 million of new Secured
Notes (as defined below) to the Exchanging Holders and an exchange offer consisting of an issuance
of $200 million of new Convertible Secured Notes (as defined below), the issuance of $50 million of
common stock and $80 million in cash in exchange for $330 million of the outstanding Notes;

     WHEREAS, the Restructuring also contemplates that a $100 million revolving credit facility
would be provided by third party lenders to be used by the Company for the payment of fees and
expenses in connection with the Restructuring and for working capital and other general corporate
purposes;

     WHEREAS, the Parties have engaged in good faith negotiations with the objective of reaching an
agreement with respect to the Restructuring. Each Party has reviewed or has had the opportunity to
review this RSA and the Restructuring Term Sheet with the assistance of professional legal advisors
of its own choosing;

 

 

     WHEREAS, subject to the execution of the Definitive Documentation (as defined below), the
following sets forth the agreement among the Parties concerning their support, subject to the terms
and conditions hereof and thereof, to implement the Restructuring. In the event the terms and
conditions as set forth in the Restructuring Term Sheet and this RSA are inconsistent, the terms
and conditions contained in the Restructuring Term Sheet shall control.

AGREEMENT

     NOW, THEREFORE, in consideration of the covenants and agreements contained herein, and for
other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each
Party, intending to be legally bound hereby, agrees as follows:

1. Definitions. The following terms shall have the following definitions:

“Affiliate” means, with respect to any Person, any other Person which directly or
indirectly controls, or is under common control with, or is controlled by, such Person.
As used in this definition, “control” (including, with its correlative meanings,
“controlled by” and “under common control with”) shall mean, with respect
to any Person, the possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership, limited liability company or other ownership interests, by contract or
otherwise) of such Person.

“Affiliated Transferee” means with respect to the Exchanging Holder, any entity
that, as of the date an Exchanging Holder becomes a Party to this RSA, is an Affiliate of
such Exchanging Holder and, as of the date of any transfer of such Exchanging Holder’s
Notes to such Affiliate, continues to be an Affiliate of that Exchanging Holder.

“Bankruptcy Code” means Title 11 of the United States Code, 11 U.S.C. §§ 101—1532.

“Business Day” means any day other than Saturday, Sunday and any day that is a
legal holiday or a day on which banking institutions in New York, New York are authorized
by law or other governmental action to close.

“Company” has the meaning set forth in the preamble hereof.

“Company Released Party” has the meaning set forth in Section 9.2 hereof.

“Confidentiality Agreement” means the separate Confidentiality Agreements dated as
of April 12, 2011, between each Exchanging Holder and the Parent.

2

 

“Consent Solicitation” means the proposed solicitation of consents from Noteholders
in connection with the Exchange Offer to amend certain covenants, events of default, and
related provisions of the Indenture.

“Critical Dates” has the meaning set forth in Section 5.4 hereof.

“Definitive Documentation” means this RSA and such other documentation relating to
the Restructuring, Consent Solicitation, and Exchange Offer as is necessary to consummate
the Restructuring, all on the same economic terms and otherwise in all material respects
consistent with the terms set forth in the Restructuring Term Sheet.

“Effective Date” means the date on which the Exchange Offer is completed and the
transactions described herein are consummated.

“Exchange Offer” means the proposed tender offer, exempt from registration under
Section 3(a)(9) of the Securities Act, of the Notes in exchange for up to $200 million in
aggregate principal amount of Convertible Secured Notes and up to $50 million in common
stock at $1.30 per share (up to approximately 38.5 million shares) and $80 million in cash
plus accrued interest on the outstanding Notes paid in cash, in exchange for the $330
million of outstanding Notes, as provided for in the Restructuring Term Sheet and, as
applicable, the Consent Solicitation.

“Exchanging Holder” has the meaning set forth in the preamble hereof.

“Exchanging Holders” means each Noteholder that becomes a party to a Similar RSA.

“Exchanging Holder Released Party” has the meaning set forth in Section 9.1 hereof.

“Indenture” has the meaning set forth in the preamble herein.

“Jones Act” means 46 U.S.C. §§ 50101 et seq.

“Launch Date” means the date on which the Company shall commence the Exchange
Offer, which shall be at least twenty (20) Business Days prior to the anticipated Effective
Date.

“Noteholders” means each of the entities that is the beneficial holder of the
Parent’s Notes.

“Note Claims” means the Noteholders’ rights and the Parent’s obligations under the
Notes, including any other obligations related thereto, including any accrued and accruing
unpaid interest, costs, fees and indemnities thereunder.

“Notes” has the meaning set forth in the preamble hereto.

3

 

“Parent” has the meaning set forth in the preamble hereto.

“Party” or “Parties” has the meaning set forth in the preamble hereto.

“Person” means an individual, a partnership, a joint venture, a limited liability
company, a corporation, a trust, an unincorporated organization, a group or any legal
entity or association.

“Restructuring Term Sheet” has the meaning set forth in the recitals hereto.

“Restructuring” has the meaning set forth in the recitals hereto.

“Securities Act” means Securities Act of 1933, as amended.

“Secured Notes” means $350 million in aggregate principal amount of newly-issued
senior secured notes issued in connection with the Secured Notes Subscription on terms set
forth in the Restructuring Term Sheet.

“Secured Notes Subscription” means subscription by the Exchanging Holders, each
acting in their own capacity, who are “qualified institutional buyers” (as defined in Rule
144A under the Securities Act), in cash for $350 million in aggregate principal amount of
the Secured Notes.

“Similar RSA” means a restructuring support agreement with identical terms to this
RSA entered into by the Company and a Noteholder.

“Termination Date” has the meaning set forth in Section 5.4 hereof.

“Termination Event” has the meaning set forth in Section 5 hereof.

“Transfer” has the meaning set forth in Section 3(b).

“Trustee” means the Trustee to the Notes.

2. Effectuating the Restructuring. As long as a Termination Event has not occurred,
subject to the (i) terms and conditions of this RSA and (ii) the terms and conditions set forth in
the Restructuring Term Sheet, as applicable, the Parties shall use their commercially reasonable
efforts to:

	 	(a)	 	     effectuate and consummate the Restructuring on the terms described in this
RSA and the Restructuring Term Sheet;

	 	(b)	 	     implement the Secured Notes Subscription or the Third Party Credit Facility,
as applicable, the Exchange Offer and the Consent Solicitation;

	 	(c)	 	     obtain all necessary approvals and consents for the Restructuring from all
requisite governmental authorities and third parties;

4

 

	 	(d)	 	     complete each of the other transactions as contemplated by the Restructuring
Term Sheet; and

	 	(e)	 	     take no actions inconsistent with this RSA, the Restructuring Term Sheet, and
any other Definitive Documentation or the expeditious consummation of the
Restructuring.

     Without limiting any other provision hereof, as long as a Termination Event has not occurred,
each Party hereby agrees to negotiate and cooperate in good faith in respect of all matters
concerning the implementation and consummation of the Restructuring. Furthermore, each Party shall
take such action (including executing and delivering any other agreement and making and filing any
required regulatory filings) as may be reasonably necessary to carry out the purposes and intent of
this RSA.

3. Support of Exchanging Holder. Subject to the (i) terms and conditions of this RSA and
(ii) the terms and conditions set forth in the Restructuring Term Sheet, as applicable, the
Exchanging Holder agrees that:

	 	(a)	 	     as long as a Termination Event (as defined herein) has not occurred or has
occurred but has been duly waived in accordance with the terms hereof, so long as it
is the legal owner, beneficial owner and/or the investment advisor or manager of or
with power and/or authority to bind any Noteholder, it shall (and shall cause each of
its affiliates, subsidiaries, representatives, agents and employees to) use its
commercially reasonable efforts to support the Restructuring and to (i) validly tender
and not withdraw such tender in the Exchange Offer of all Notes as to which it is the
legal owner, beneficial owner or otherwise has the power and/or authority to bind any
Noteholder; (ii) deliver consents with respect to all such Notes in the Consent
Solicitation if consistent with the terms set forth in the Restructuring Term Sheet;
and (iii) take no actions inconsistent with the RSA, the Restructuring Term Sheet, and
any other related documents or the expeditious consummation of the Restructuring;

	 	(b)	 	     as long as a Termination Event (as defined herein) has not occurred or has
occurred but has been duly waived in accordance with the terms hereof, it shall not
(and shall cause each of its affiliates, subsidiaries, representatives, agents, and
employees not to) sell, transfer or assign, or grant, issue or sell any option, right
to acquire, voting participation or other interest in (each, a “Transfer”) any
Notes, unless the following three criteria are met: (i) the Transfer is to occur
after June 10, 2011; (ii) the transferor Exchanging Holder notifies Paul, Weiss of the
Transfer and the principal amount of Notes to be transferred thereby; and (iii) the
transferee party first agrees in writing to be subject to the terms and conditions of
this RSA or a Similar RSA as an “Exchanging Holder,” and executes a counterpart
signature page to a Similar RSA. Any Transfer that does not comply with the foregoing
shall be deemed void ab initio. This RSA shall in no way be construed to preclude the
Exchanging Holder from acquiring

5

 

	 	 	 	additional Notes, provided that any such additional Notes shall automatically be
deemed to be subject to the terms of this RSA. In addition, for so long as this
RSA has not been terminated in accordance with its terms, an Exchanging Holder may
offer, sell or otherwise transfer any or all of its Notes to any Affiliated
Transferee, who shall be automatically deemed bound by this RSA as an Exchanging
Holder; provided, however, Paul, Weiss shall be provided prompt
notice of any such offer, sale, or transfer. The confidential schedule of the
principal amount of Notes held by the Exchanging Holders and any transfer notices
provided to Paul, Weiss in connection with the foregoing will be made available on
a name redacted basis to counsel for the Company on a confidential basis and shall
not be disclosed by such counsel to the Company or any third party.

     (c)       all Definitive Documentation shall be in form and substance acceptable to the Company in
its reasonable discretion.

     Notwithstanding anything to the contrary herein, this RSA shall not, and shall not be deemed
to, impair, prohibit, limit or restrict, any Exchanging Holder or its Affiliates, or their
respective officers or representatives, from:

	 	(a)	 	     making any vote, objection, approval, decision, election, tender, consent,
determination or other choice (i) if a Termination Event has occurred or (ii) that is
consistent with this RSA and the Restructuring Term Sheet, including without
limitation, those permitted or contemplated by this RSA or the documents for,
reflecting, or relating to the Restructuring, including, any of: (x) the Exchange
Offer and the Consent Solicitation and (y) the Secured Notes Subscription; or

	 	(b)	 	     exercising or asserting through litigation or otherwise any right, power or
privilege under or term or provision of (including any dispute regarding the extent,
terms, enforceability, or meaning of any such right, term or provision) this RSA or
the documents for, reflecting, or relating to, the Restructuring.

     The Company agrees that this RSA and the Restructuring Term Sheet do not constitute a
commitment to, nor shall they obligate any of the Parties to, purchase any Secured Notes or provide
any other new financing or credit support, in connection with the Restructuring. The Exchanging
Holder has agreed to work in good faith to negotiate a mutually satisfactory commitment letter or
subscription agreement with the Company with respect to the purchase of a portion of the Secured
Notes by June 10, 2011 on the terms and subject to the conditions set forth in this RSA and the
Restructuring Term Sheet but entry into any such commitment or agreement is subject to subscription
of the entire $350 million commitment and the Exchanging Holder shall have no obligation to the
Company or to any other Exchanging Holder, nor shall it be deemed to have made any commitment to
the Company or to any other Exchanging Holder to provide any funding, until such time as (i) it has
entered into a commitment letter or subscription

6

 

agreement in form and substance satisfactory to it in its sole discretion and (ii) the portion
of $350 million in Secured Notes in excess of any commitment or subscription that it may make is
committed or subscribed to in full by other Exchanging Holders or third parties.

4. Support of the Company.

	 	(a)	 	     The Company agrees that from and after the date hereof, it will not directly
or indirectly, seek, pursue, propose, support, or encourage the pursuit, proposal, or
support, of any offer of restructuring of the Company, including any alternative
proposals that are inconsistent with and could reasonably be expected to prevent,
delay or impede the Restructuring of the Company in accordance with the terms set
forth in the Restructuring Term Sheet, nor shall the Company solicit or direct any
person or entity, including, without limitation, any member of the Company’s board of
directors or any holder of equity in the Company, to undertake any of the foregoing.

	 	(b)	 	     From and after June 10, 2011, the Company agrees that it will take no action,
other than actions in furtherance of the Restructuring, direct or indirect, outside
the ordinary course of business prior to the Effective Date without the consent of at
least 50% of the Exchanging Holders (such consent not be unreasonably withheld), nor
shall the Company solicit or direct any person or entity, including, without
limitation, any member of the Company’s board of directors or any holder of equity in
the Company, to undertake any of the foregoing.

	 	(c)	 	     The Company agrees that all Definitive Documentation shall be in form and
substance acceptable to the Exchanging Holder in such Exchanging Holder’s reasonable
discretion.

5. Termination.

     Subject to Sections 5.4 and 5.6, this RSA (and Similar RSAs) may be terminated upon written
notice of the occurrence of any of the following events by the Parties asserting termination to the
other Parties (each a “Termination Event”):

          5.1 by 50% of the Exchanging Holders:

	 	(a)	 	     if the Company shall have breached any of its material obligations under the
RSA or Similar RSA as set forth herein or therein;

	 	(b)	 	     upon acceleration of debt or leases in excess of $20 million by any creditor
and any exercise of remedies by any creditor in connection therewith which is likely
to have a material adverse effect on the Company’s ability to complete the
Restructuring or is likely to materially delay the consummation of the Restructuring,
to the extent such

7

 

	 	 	 	acceleration is not withdrawn, revoked, or stayed within ten (10) days thereof;

	 	(c)	 	     if Parent’s common stock is de-listed from a national securities exchange;

	 	(d)	 	     if the Company has not received commitments for the entire $350 million
Secured Notes Subscription or Third Party Credit Facility by June 10, 2011;

	 	(e)	 	     if there shall have occurred and be continuing a MAC;

	 	(f)	 	     if the Company fails to launch the Secured Notes Subscription and the
Exchange Offer, each on terms and conditions described herein and in the Restructuring
Term Sheet, by June 24, 2011;

	 	(g)	 	     if the Company fails to consummate the Secured Notes Subscription and the
Exchange Offer, each on terms and conditions described herein and in the Restructuring
Term Sheet, by August 15, 2011;

	 	(h)	 	     if the Trustee objects in any respect to or takes action that could adversely
affect the consummation of any of the transactions contemplated by the Restructuring
and takes action that challenges the validity or effectiveness of the procedures used
by the Company in the making of the Exchange Offer or the Consent Solicitation; or

	 	(i)	 	     if any court of competent jurisdiction or other competent governmental or
regulatory authority shall have issued an order making illegal or otherwise
restricting, preventing, or prohibiting the Restructuring in a material way that
cannot be reasonably remedied by the Parties.

     5.2 by the Company:

	 	(a)	 	     if an Exchanging Holder has failed to comply with its obligations in Section
3(a) of this RSA or any Similar RSA;

	 	(b)	 	     if the Company has not received commitments for the entire $350 million
Secured Notes Subscription or Third Party Credit Facility by June 10, 2011;

	 	(c)	 	     if any court of competent jurisdiction or other competent governmental or
regulatory authority shall have issued an order making illegal or otherwise
restricting, preventing, or prohibiting the Restructuring in a material way that
cannot be reasonably remedied by the Parties; or

	 	(d)	 	     if the directors of the Parent determine in good faith that continued
performance under this RSA would be inconsistent with the exercise of

8

 

	 	 	 	fiduciary duties under applicable law; provided, however, that upon any such
termination which occurs after the execution of a commitment letter
or subscription agreement with respect to the Secured Notes, any commitment or
other fees due thereunder shall be paid in full; or

     5.3 by the mutual consent of 50% of the Exchanging Holders and the Company for any reason.

     5.4 The date on which this RSA is terminated in accordance with the foregoing Section 5.1,
5.2, 5.3 or 5.5 and Section 5.6 or 5.7 hereof shall be referred to as the “Termination
Date”. Notwithstanding any provision in this RSA to the contrary, upon written consent of 50%
of the Exchanging Holders, the dates set forth in section 5.1 (d), (f), and (g) (the “Critical
Dates”) may be extended prior to or upon such date and such later dates agreed to in lieu
thereof and shall be of the same force and effect as the dates provided herein, and such consent
shall not be unreasonably withheld so long as good faith progress is being made towards meeting
such Critical Date, provided, however, that any requested extension of more than
ten (10) days may be denied for any reason; provided further that consent of
two-thirds of the Exchanging Holders is required to extend any date longer than ninety (90) days
beyond the original date.

     5.5 This RSA shall terminate automatically in the event cases under the Bankruptcy Code are
commenced by or against the Company in any jurisdiction, and solely in the event of an involuntary
filing against the Company, such involuntary case is not dismissed within fifteen (15) days of
filing.

     5.6 If a Termination Event occurs, this RSA shall terminate automatically unless 75% of the
Exchanging Holders provide the Company written notice within three (3) Business Days (such 3
Business Day period to start on the day such Termination Event occurs, if such day is a Business
Day, and on the first Business Day after the day such Termination Event occurs, if such day is not
a Business Day) that such Termination Event has been waived, cured, modified or the time to perform
the requirements herein extended.

     5.7 The Exchanging Holder may terminate this RSA if Jones Act restrictions prevent the
Restructuring to be structured in form and substance satisfactory to such Exchanging Holder in its
reasonable discretion.

     5.8 In the event 50% of the Exchanging Holders or any other Party to this RSA asserts that a
Termination Event has occurred, any Party may seek expedited relief with a court of competent
jurisdiction, challenging such assertion, and no Party to this RSA shall be permitted to challenge
such request for expedited relief.

     5.9 In the event that a bankruptcy filing is commenced by or against the Company, the Company
hereby waives any requirement under section 362 of the Bankruptcy Code to lift the automatic stay
(the “Automatic Stay”) thereunder in connection with the giving of any notice of
termination under Section 5.6 of this RSA

9

 

(and agrees not to object to any non-breaching Party
seeking to lift the Automatic Stay in connection with giving any such notice, if necessary).

6. Good Faith Cooperation; Further Assurances; Transaction Documents. As long as a
Termination Event has not occurred, the Exchanging Holder and the Company hereby covenant and agree
to negotiate in good faith the Definitive Documentation, each of which shall (i) contain the same
economic terms as, and other terms consistent in all material respects with, the terms set forth in
the Restructuring Term Sheet, (ii) except as otherwise provided for herein, be in form and
substance acceptable in all respects to the Parties in their reasonable discretion; and (iii) be
consistent with this RSA and the Restructuring Term Sheet in all material respects.

7. Effectiveness. This RSA will be effective and binding upon the Company and the
undersigned Exchanging Holder as of the date on which: (i) the Company shall have executed and
delivered counterpart signature pages of this RSA and the Similar RSAs described in clause (iii)
below to counsel to the Exchanging Holders, (ii) the Exchanging Holder shall have executed and
delivered counterpart signature pages of this RSA to counsel to the Company, and (iii) the
Exchanging Holders representing the percentage of outstanding Notes agreed to by counsel for the
Company and counsel for the Exchanging Holders shall have executed and delivered counterpart
signature pages of this RSA and the Similar RSAs to counsel to the Company.

8. Representations and Warranties. Each Party hereby represents and warrants to the other
Parties that the following statements are true and correct as of the date hereof:

	 	(a)	 	     it has all requisite corporate, partnership, limited liability company, or
similar authority to enter into this RSA and carry out the transactions contemplated
hereby and perform its obligations contemplated hereunder; and the execution and
delivery of this RSA and the performance of such Party’s obligations hereunder have
been duly authorized by all necessary corporate, partnership, limited liability
company, or other similar action on its part;

	 	(b)	 	     the execution, delivery, and performance by such Party of this RSA does not
and shall not (i) violate (A) any provision of law, rule, or regulation applicable to
it or any of its subsidiaries or (B) its charter or bylaws (or other similar governing
documents) or those of any of its subsidiaries or (ii) conflict with, result in a
breach of, or constitute (with due notice or lapse of time or both) a default under
any material contractual obligation to which it or any of its subsidiaries is a party;

	 	(c)	 	     the execution, delivery, and performance by such Party of this RSA does not
and shall not require any registration or filing with, consent or approval of, notice
to, or other action to, with or by, any federal, state, or governmental authority or
regulatory body;

10

 

	 	(d)	 	     this RSA is the legally valid and binding obligation of such Party,
enforceable against it in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or limiting creditors’ rights generally or by
equitable principles relating to enforceability or a ruling of a court of competent
jurisdiction; and

	 	(e)	 	     If such Party is an Exchanging Holder, such Exchanging Holder, as of the date
of this RSA:

	 	(i)	 	     is the beneficial owner of the principal amount of the Notes
set forth on the confidential schedule maintained by Paul, Weiss, or is the
nominee, investment manager, or advisor for one or more beneficial holders
thereof, and has voting power or authority or discretion with respect to, the
Notes including, without limitation, to vote, exchange, assign, and transfer
such Notes;

	 	(ii)	 	     holds its Notes free and clear, other than pursuant to this
RSA, of any claim, equity, option, proxy, voting restriction, right of first
refusal, or other limitation on disposition or encumbrances of any kind that
could adversely affect in any way such Exchanging Holder’s performance of its
obligations contained in this RSA at the time such obligations are required to
be performed (except that a non-material portion of Notes may be on loan); and

	 	(iii)	 	     is a “qualified institutional buyer” (as defined in Rule
144A under the Securities Act.

9. Mutual Release.

     9.1 On the Effective Date, the Company and its subsidiaries will release the Exchanging Holder
and managers, advisors, representatives, Affiliates, owners, employees, and partners thereof (each
an “Exchanging Holder Released Party”) from and against any and all claims, demands, causes
of actions, or liabilities, of any and every character, kind, and nature whatsoever, in law or in
equity, whether known or unknown, past, present or future, accrued or unaccrued, contingent or
fixed, whether based on the law of torts, conspiracy, breach of fiduciary duty, negligence, strict
liability, real property rights, personal property rights or any other theories, in whole or in
part, arising out of, resulting from, based upon, or related in any way to an Exchanging Holder
Released Party’s ownership, management, operation, status, tenure, actions, inactions, and conduct
at any time as Noteholders, stockholder, director, officer, employee, servant, agent,
representative, manager, advisor, attorney, creditor, insurer, successor, assign, or any other
relationship with the Company, at any time from the beginning of time to the consummation and
effectiveness of the Restructuring; except that (i) no Exchanging Holder Released Party
shall be released from any claims, demands, causes of action or liabilities arising out of any act
or omission of an Exchanging Holder Released Party that

11

 

constitutes gross negligence, fraud, or
willful misconduct; and (ii) without limiting or otherwise altering the release of claims, demands,
causes of action, or liability provided for above, the foregoing releases shall not apply to any
contractual obligations owed by any Exchanging Holder Released Party or any right or obligation
arising under or that are part of any written agreement that is expressly entered into pursuant to,
in connection with, or contemplated by, the Restructuring, including, without limitation, this RSA, the
Restructuring Term Sheet, or any Definitive Documentation.

     9.2 The Definitive Documentation will provide that on the Effective Date, each Exchanging
Holder and any other Noteholder participating in the Exchange Offer and their respective managers,
advisors, representatives, Affiliates, owners, employees, and partners thereof will release the
Company and its managers, advisors, representatives, Affiliates, owners, employees, and partners
thereof (each a “Company Released Party”) from and against any and all claims, demands,
causes of actions, or liabilities, of any and every character, kind, and nature whatsoever, in law
or in equity, whether known or unknown, past, present or future, accrued or unaccrued, contingent
or fixed, whether based on the law of torts, conspiracy, breach of fiduciary duty, negligence,
strict liability, real property rights, personal property rights or any other theories, in whole or
in part, arising out of, resulting from, based upon, or related in any way to the Notes;
except that (i) no Company Released Party shall be released from any claims, demands,
causes of action or liabilities arising out of any act or omission of a Company Released Party that
constitutes gross negligence, fraud, or willful misconduct; and (ii) without limiting or otherwise
altering the release of claims, demands, causes of action, or liability provided for above, the
foregoing releases shall not apply to any contractual obligations owed by any Company Released
Party or any right or obligation arising under or that are part of any written agreement that is
expressly entered into pursuant to, in connection with, or contemplated by, the Restructuring,
including, without limitation, this RSA, the Restructuring Term Sheet, or any Definitive
Documentation.

10. Access. At all times prior to the Launch Date, the Exchanging Holders and their
advisors shall have, upon reasonable advance notice and subject to the Confidentiality Agreement or
entry into another confidentiality agreement in form and substance satisfactory to the Company,
complete and timely access to the Company’s books and records, as well as the Company’s management
and professional advisors, for the purpose of completing due diligence and negotiating the
Definitive Documentation. At all times following the Launch Date and prior to the Effective Date,
the Exchanging Holders and their advisors shall have, upon reasonable advance notice and subject to
the Confidentiality Agreement or entry into another confidentiality agreement in form and substance
satisfactory to the Company, complete and timely access to the Company’s books and records, as well
as the Company’s management and professional advisors, for the purpose of conducting reasonable due
diligence and negotiating the Definitive Documentation.

11. Entire Agreement. This RSA, including any exhibits, schedules and annexes hereto
constitutes the entire agreement of the Company and the Exchanging Holder with respect to the
subject matter of this RSA, and supersedes all other prior negotiations, agreements and
understandings, whether written or oral, among the Parties with respect

12

 

to the subject matter of
this RSA, other than the Confidentiality Agreement which remains unaltered.

12. Reservation of Rights. Except as expressly provided in this RSA, nothing herein is
intended to, or does, in any manner waive, limit, impair or restrict the ability of each
Party to protect and preserve its rights, remedies, and interests, including, without limitation,
its claims against other Parties or their respective Affiliates. Nothing herein shall be deemed an
admission of any kind. Nothing contained herein effects a modification of the Parties’ or the
Trustee’s rights under the Notes, the Indenture, or other documents and agreements unless and until
the Effective Date has occurred. If the transactions contemplated herein are not consummated, or
if this RSA terminates for any reason prior to the Effective Date, the Parties fully reserve any
and all of their rights.

13. Waiver. This RSA and the Restructuring Term Sheet are part of a proposed settlement of
matters that could otherwise be the subject of litigation among the Parties hereto. If the
transactions contemplated herein are not consummated, or following the occurrence of the
Termination Date, if applicable, nothing shall be construed herein as a waiver by any Party of any
or all of such Party’s rights and the Parties expressly reserve any and all of their respective
rights. Pursuant to Federal Rule of Evidence 408 and any other applicable rules of evidence, this
RSA and all negotiations relating hereto shall not be admissible into evidence in any proceeding
other than a proceeding to enforce its terms.

14. Payment of Fees and Expenses. The Company agrees to pay all reasonable fees and
expenses of Paul, Weiss, Houlihan Lokey, and any other specialty shipping advisors and other
specialists, as reasonably required and engaged upon advance written notice to the Company, in
connection with conducting due diligence and negotiating, documenting and consummating the
Restructuring.

15. Counterparts. This RSA may be executed in one or more counterparts, each of which,
when so executed, shall constitute the same instrument and the counterparts may be delivered by
facsimile transmission or by electronic mail in portable document format (.pdf).

16. Amendments. Except as otherwise provided herein, this RSA, the Restructuring Term
Sheet, the Exchange Offer and the Definitive Documentation may not be modified, amended or
supplemented, or any provisions herein or therein waived without the prior written consent of at
least two-thirds of the Exchanging Holders (and may be modified, amended or supplemented with such
consent). Any modification, amendment or supplement to the terms of the Secured Notes Subscription
or Secured Notes shall require the prior written consent of at least two-thirds of the Exchanging
Holders, provided, however, that no such modification, amendment or supplement
shall treat any Exchanging Holder in a different manner than any other Exchanging Holder without
first obtaining the consent of such Exchanging Holder.

17. Headings. The headings of the sections, paragraphs and subsections of this RSA are
inserted for convenience only and shall not affect the interpretation hereof.

13

 

18. Relationship Among Parties. It is understood and agreed that any Exchanging Holder may
trade in the Notes or other debt or equity securities of the Company without the consent of the
Company or any Exchanging Holder, subject to applicable securities laws and Section 3(b)
hereof. No Party shall have any responsibility for any such trading
by any other entity by virtue of this RSA. No prior history, pattern or practice of sharing
confidences among or between Parties shall in any way affect or negate this understanding and
agreement. For the avoidance of doubt, (i) the execution of this RSA by any Exchanging Holder
shall not create, or be deemed to create, any fiduciary or other duties (actual or implied) to any
other Exchanging Holder other than as expressly set forth in this RSA and (ii) no Exchanging
Holder shall be responsible for, or have any obligation with respect to, any duties or obligations
of any other Exchanging Holder under a Similar RSA.

19. Specific Performance. It is understood and agreed by the Parties that money damages
would be an insufficient remedy for any breach of this RSA by any Party and each non-breaching
Party shall be entitled to seek specific performance and injunctive or other equitable relief as a
remedy of any such breach, including, without limitation, an order of a court of competent
jurisdiction requiring any Party to comply promptly with any of its obligations hereunder.

20. Survival. Notwithstanding (i) any Transfer of the Notes in accordance with Section
3(b) of this RSA or (ii) the termination of this RSA in accordance with its terms, the agreements
and obligations of the Parties in Section 9, 12, 13, 14, 18, 24 and 25 shall survive such Transfer
and/or termination and shall continue in full force and effect for the benefit of the Exchanging
Holder in accordance with the terms hereof.

21. Governing Law. This RSA shall be governed by, and construed in accordance with, the
laws of the State of New York, without regard to such state’s choice of law provisions which would
require the application of the law of any other jurisdiction.

22. Notices. All notices, requests and other communications hereunder must be in writing
and will be deemed to have been duly given only if delivered personally or by electronic mail
transmission with first class mail confirmation to the Parties at the following addresses or email
addresses:

If to the Company:

Horizon Lines, LLC

Michael T. Avara

4064 Colony Road, Suite 200

Charlotte, North Carolina 28211

with a copy to (which shall not constitute notice):

Edward O. Sassower

Joshua A. Sussberg

Kirkland & Ellis LLP

14

 

601 Lexington Avenue

New York, New York 10022

If to the Exchanging Holder:

To the addresses and email addresses set forth on the

signature pages hereto.

with a copy to (which shall not constitute notice):

Andrew Rosenberg

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, New York 10019

23. No Third-Party Beneficiaries. The terms and provisions of this RSA are intended solely
for the benefit of the Parties and their respective successors and permitted assigns, and it is not
the intention of the Parties to confer third-party beneficiary rights upon any other Person. No
Exchanging Holder shall have any right to enforce the terms of any Similar RSA against any other
Exchanging Holder.

24. Public Disclosure. The Company will submit to the Exchanging Holder all press releases
and public filings relating to this RSA or the transactions contemplated hereby and thereby and any
amendments thereof. The Company shall not (a) use the name of the Exchanging Holder or its
manager, advisor, or Affiliates in any press release without the Exchanging Holder’s prior written
consent or (b) disclose holdings of the Exchanging Holder to any Person; provided,
however, that the Company shall be permitted to disclose at any time the aggregate
principal amount of and aggregate percentage of Notes held by the Exchanging Holders.

25. Indemnification. The Company will reimburse and indemnify the Exchanging Holder and
managers, advisors, representatives, Affiliates, owners, employees, and partners thereof for and
against any and all liabilities, obligations, losses, damages, penalties, claims, actions,
judgments, costs, expenses or disbursements of whatsoever kind or nature which may be imposed on,
asserted against or incurred by the Exchanging Holder (and managers, advisors, representatives,
Affiliates, owners, employees, and partners thereof) in performing its duties hereunder or under
any other related document, or in any way relating to or arising out of the Restructuring, this RSA
or any other related document; provided that the Company shall not be liable for any portion of
such liabilities, obligations, losses, damages, penalties, claims, actions, judgments, suits,
costs, expenses or disbursements resulting from the Exchanging Holder’s (or such Affiliate’s)
gross negligence, bad faith or willful misconduct (as determined by a court of competent
jurisdiction in a final and non-appealable decision).

15

 

     IN WITNESS WHEREOF, the Parties hereto have caused their duly authorized officers to execute
and deliver this RSA as of the date first above written.

	 	 	 	 	 
	 	HORIZON LINES, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	HORIZON LINES HOLDING CORP.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	HORIZON LINES, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	HORIZON LINES OF PUERTO RICO, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	HAWAII STEVEDORES, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Signature Page to Restructuring Support Agreement

16

 

	 	 	 	 	 
	 	HORIZON LOGISTICS, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	H-L DISTRIBUTION SERVICE, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	HORIZON LINES OF ALASKA, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	HORIZON LOGISTICS OF GUAM, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	HORIZON LINES VESSELS, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Signature Page to Restructuring Support Agreement

17

 

	 	 	 	 	 
	 	SEA-LOGIX, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	AERO LOGISTICS, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	HORIZON SERVICES GROUP, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Signature Page to Restructuring Support Agreement

18

 

	 	 	 	 	 
	 	EXCHANGING HOLDER:

[INSERT NAME OF EXCHANGING HOLDER ]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Signature Page to Restructuring Support Agreement

19

 

EXHIBIT A

Restructuring Term Sheet

Summary of Proposed Terms and Conditions

for Horizon Lines, Inc.

     This term sheet (the “Term Sheet”) summarizing the principal terms of certain potential
transactions concerning the Company (as defined below) is not legally binding or a complete list of
all the terms and conditions of the potential transactions described herein. This Term Sheet shall
not constitute an offer to sell or buy, nor the solicitation of an offer to sell or buy any of the
securities referred to herein. Furthermore, nothing herein constitutes a commitment to lend funds
to the Company or to negotiate, agree to or otherwise engage in, the Exchange Offer (as defined
below). Without limiting the generality of the foregoing, this Term Sheet and the undertakings
contemplated herein are subject in all respects to due diligence concerning the Company’s business,
operations (foreign and domestic), financial condition, customer arrangements, joint venture
arrangements, purchasing agreements, capital expenditures and other related matters, and to the
negotiation, execution and delivery of mutually acceptable definitive documentation. This Term
Sheet is proffered in the nature of a settlement proposal in furtherance of settlement discussions
and is entitled to protection from any use or disclosure to any party or person pursuant to Federal
Rule of Evidence 408 and any other rule of similar import. This Term Sheet contemplates the
consummation of the Exchange Offer through an out-of-court transaction, on the terms and subject
to, among other things, the conditions described below.

	 	 	 	 	 	 	 	 	 

	Company:	 	Horizon Lines, Inc. (“Parent,” and together with its
subsidiaries, the “Company”).
	 
	 	 	 	 	 	 	 	 
	Noteholders:	 	Each of the entities (each, a “Noteholder”) that is the
beneficial holder of the Company’s Notes (as defined below).
	 
	 	 	 	 	 	 	 	 
	Current Capital Structure:	 	The following outstanding indebtedness of the Company shall be
restructured in connection with the Exchange Offer:
	 
	 	 	 	 	 	 	 	 
	 	 	(a)	 	Indebtedness under the Credit Agreement dated as of
August 8, 2007 (including any refinancing, replacement,
extension, renewal, amendment (including the First Amendment
and Waiver dated as of June 11, 2009 and the Second Amendment
dated as of March 9, 2011), supplement, or modification
thereof, the “First Lien Facility”), by and among the Parent,
as borrower, certain guarantors thereunder, certain lenders and
Wells Fargo Bank, N.A., as administrative agent, comprised of
the term loan (the “First Lien Term Loan”), the revolving loan
(the “First Lien Revolving Loan”) and letter of credit
obligations (the “LOC Obligations”). As of February 28, 2011,
the aggregate outstanding principal amount of (i) the First
Lien Revolving	 	 

-20-

 

	 	 	 	 	 	 	 	 	 

	 	 	 	 	Loan was $163,500,000.00, (ii) the First Lien
Term Loan was $89,062,500.00 and (iii) LOC Obligations was
$11,272,388.00.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(b)	 	4.25% convertible senior notes due 2012 (the “Notes”)
issued under the Indenture dated as of August 8, 2007 (as
amended, supplemented or modified from time to time, the
“Indenture”), by and between the Parent, as issuer, and The
Bank of New York Trust Company, N.A., as Indenture Trustee, in
the aggregate principal amount of $330,000,000.00.	 	 
	 
	 	 	 	 	 	 	 	 
	Transaction:	 	As described below, the proposed transaction (the
“Transaction”) contemplates a $600 million refinancing
backstopped by certain Noteholders who subscribe to the new
Secured Notes (as defined below) (the “Participating Holders”)
through (i) an issuance of $350 million of new Secured Notes
(as defined below), to the Participating Holders; and (ii) an
exchange offer consisting of an issuance of $200 million of new
Convertible Secured Notes (as defined below), the issuance of
$50 million of common stock and $80 million in cash in exchange
for $330 million of the outstanding Notes. It is also
contemplated that a $100 million revolving credit facility
would be raised to be used by the Company for the payment of
fees and expenses in connection with the Refinancing and the
Exchange Offer (as such terms are defined below) and for
working capital and other general corporate purposes.
	 
	 	 	 	 	 	 	 	 
	 	 	Secured Notes
	 	 	Subscription:
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	The Participating Holders, each acting in their own capacity,
who are a “qualified institutional buyers” (as defined in Rule
144A under the Securities Act) will commit to subscribe in cash
(the “Secured Notes Subscription”) for $350 million in
aggregate principal amount of newly-issued senior secured notes
(the “Secured Notes”). The proceeds of the Secured Notes
Subscription will be used to refinance the First Lien Facility
and $80 million will be used for the cash consideration and the
consent fee in connection with the Exchange Offer. The
Participating Holders shall execute and deliver a subscription
agreement for the Secured Notes prior to commencement of the
Exchange Offer.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	The Company will have the option to raise the $350 million
contemplated by the Secured Notes Subscription from third party
term debt lenders (including by means of an amendment to, and
upsizing of the funded loans under, the First Lien Facility, in
which case the applicable references herein to the Secured
Notes and the New ABL Facility and the collateral therefor
shall mean (unless the context otherwise requires) such third
party credit	 	 

-21-

 

	 	 	 	 	 	 	 	 	 

	 

	 	 	 	 	 	facility and the collateral securing such facility
(the “Third Party Credit Facility”).	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Exchange Offer:
	 

	 	 	 	 	 	Concurrently with the Secured Notes Subscription, the Parent
will also make an offer (the “Exchange Offer”), exempt from
registration under Section 3(a)(9) of the Securities Act of
1933 (the “Securities Act”), to issue to the Noteholders up to
$200 million in aggregate principal amount of Convertible
Secured Notes (the “Convertible Secured Notes”) and up to $50
million in common stock at $1.30 per share (up to approximately
38.5 million shares) and distribute $80 million in cash, in
exchange for the $330 million of outstanding Notes. Payment of
accrued and unpaid interest on the Notes will be made on the
date on which the Exchange Offer is completed (the “Closing
Date”). The number of shares issued and corresponding $50
million value are subject to adjustment on a pro rata basis to
the extent less than 100% of the Noteholders participate in the
Exchange Offer provided that the Minimum Condition (as defined
below) is met. The Exchange Offer will be subject to Rule
13e-4 under the Securities Exchange Act of 1934. No party can
be paid to solicit the Exchange Offer.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	The Participating Holders, each acting in their own capacity,
will have the option to purchase at par their individual pro
rata allocable share of the remaining Convertible Secured Notes
that have not been subscribed to as part of the Exchange Offer.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	All Noteholders participating in the exchange of the
Convertible Secured Notes, including the Participating Holders,
are hereinafter referred to collectively as the “Exchanging
Holders,” and each an “Exchanging Holder.”	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	In the event that less than $330 million is exchanged (i) the
Exchanging Holders will still receive an aggregate $80 million
paydown and (ii) the amount of Convertible Secured Notes issued
to the Exchanging Holders will equal the	 	 

-22-

 

	 	 	 	 	 	 	 	 	 

	 

	 	 	 	 	 	amount of Notes
exchanged by such Exchanging Holders less $80 million and the
common stock (such Convertible Secured Notes and common stock
subject to adjustment on a pro rata basis). As an example, if
95% of the holders of Notes participate in the exchange, the
distribution of cash and Convertible Secured Notes would be as
follows: (i) $80 million of cash distributed pro rata among
the Exchanging Noteholders; (ii) $186.8 million of Convertible
Secured Notes; and (iii) $46.7 million of common stock.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Asset Based
	 	 	Revolving
	 	 	Loan Facility:
	 

	 	 	 	 	 	Concurrently with the Secured Notes Subscription and the
Exchange Offer, a new asset-based revolving loan facility (“New
ABL Facility”) will be provided by third party lenders to the
Parent to be used by the Company for the payment of fees and
expenses in connection with the Refinancing and the Exchange
Offer and for working capital and other general corporate
purposes. The Participating Holders are not committing to
backstop or otherwise subscribe to the New ABL Facility.	 	 
	 
	 	 	 	 	 	 	 	 
	Participating Holders’
Commitment:	 	Participating Holders will commit to fund $350 million of
Secured Notes.
	 
	 	 	 	 	 	 	 	 
	Description of New
ABL Facility:	 	Description: $100 million maximum commitment amount
including an up to $30 million letter of credit sub-facility
and a swingline subfacility up to a sublimit to be mutually
agreed upon. The Parent, as the borrower under the New ABL
Facility, will have the option to request increases in the
maximum commitment by up to $25,000,000 in the aggregate;
however, such incremental facility increase is not committed.
The principal documentation for the New ABL Facility will be
agreed upon prior to commencement of the Exchange Offer,
although the definitive documentation will be executed and
delivered and the commitments for the extension of credit
thereunder shall become effective and available only
substantially concurrently with successful consummation of the
Refinancing and Exchange Offer.
	 
	 	 	 	 	 	 	 	 
	 	 	Guarantees: Guaranteed by the Parent’s present and future
material subsidiaries subject to certain exceptions in respect
of controlled foreign corporations.
	 
	 	 	 	 	 	 	 	 
	 	 	Maturity: Five year anniversary of the issuance of the new
Convertible Secured Notes (but 90 days earlier if the Senior
Notes are not repaid or refinanced as of such date), subject to
the initial lender’s

-23-

 

	 	 	 	 	 	 	 	 	 

	 	 	exercise of its limited right to reduce
the term by no more than one year for purposes of achieving a
successful syndication.
	 
	 	 	 	 	 	 	 	 
	 	 	Interest: L + applicable margin ranging from 2.25% to 4.00%,
based on leverage and excess availability grid.
	 
	 	 	 	 	 	 	 	 
	 	 	Collateral: Subject to permitted liens and except for
certain excluded assets and customary exceptions, a first
priority lien on accounts, deposit accounts, securities
accounts, investment property (other than equity interests),
cash, tax refunds and similar tax payments, and certain
intercompany loans, chattel paper, documents, instruments,
letter-of-credit rights, supporting obligations, contract
rights, general intangibles, commercial tort claims and related
books and records (“ABL Priority Collateral”) of the Company
and the guarantors and a third priority lien on all or
substantially all other non-current assets of the Company and
the guarantors securing the Secured Notes, subject in each case
to customary exceptions (“Secured Notes Priority Collateral”).
The parties will discuss (but shall have no obligation to agree
to) (i) additional collateral to be included in the New ABL
Facility once the advance rates for such collateral are
determined prior to closing and (ii) possible additional $25
million incremental increase in the New ABL Facility.
	 
	 	 	 	 	 	 	 	 
	Description of New
Secured Notes:	 	Description: $350 million of new Secured Notes issued by
Horizon Lines, LLC (“Opco”).
	 
	 	 	 	 	 	 	 	 
	 	 	Guarantees: Guaranteed by Parent and all current and future
domestic subsidiaries of Parent, subject to the same
exceptions as are set forth in the New ABL Facility.
	 
	 	 	 	 	 	 	 	 
	 	 	Maturity: Five years from anniversary of the issuance of the
new Convertible Secured Notes.
	 
	 	 	 	 	 	 	 	 
	 	 	Call Protection: Callable at par at any time.
	 
	 	 	 	 	 	 	 	 
	 	 	Commitment Fee: 2.0% cash fee payable 50% upfront and 50% upon
closing. The Commitment Fee will be paid even if the Company
obtains a Third Party Credit Facility.
	 
	 	 	 	 	 	 	 	 
	 	 	Interest: 9.0% per annum, payable semi-annually in cash, in
arrears.
	 
	 	 	 	 	 	 	 	 
	 	 	Amortization: 1.0% per annum paid quarterly, following a one
year amortization holiday. In addition, there will be an
annual free cash flow sweep of 50% of the Excess Cash Flow
generated during the fiscal year. Excess Cash Flow definition
to be negotiated, but to include debt service and amortization,
capital expenditures and dry dock expenses among other items.
	 
	 	 	 	 	 	 	 	 
	 	 	Collateral: A first priority lien on all Secured Notes
Priority Collateral and a second priority lien on all ABL
Priority Collateral.

-24-

 

	 	 	 	 	 	 	 	 	 

	 	 	Covenants: Typical for senior secured high-yield notes with no
maintenance based covenants. Other covenants to be negotiated.
Covenants will include:
	 
	 	 	 	 	 	 	 	 
	 	 	•	 	Change of control put at 101% (subject to
Permitted Holder exception);	 	 
	 
	 	 	•	 	Limitation on asset sales;	 	 
	 
	 	 	•	 	Limitation on incurrence of indebtedness and preferred
stock;	 	 
	 
	 	 	•	 	Amount drawn on New ABL Facility subject to agreed upon
leverage test, if any;	 	 
	 
	 	 	•	 	Limitation on restricted payments;	 	 
	 
	 	 	•	 	Limitation on restricted investments;	 	 
	 
	 	 	•	 	Limitation on liens;	 	 
	 
	 	 	•	 	Limitation on dividend blockers;	 	 
	 
	 	 	•	 	Limitation on affiliate transactions;	 	 
	 
	 	 	•	 	Limitation on sale/leaseback transactions materially
consistent with such limitations currently in place under the
Company’s existing loan documentation;	 	 
	 
	 	 	•	 	Limitation on guarantees by restricted subsidiaries; and	 	 
	 
	 	 	•	 	Limitation on mergers, consolidations and sales of
all/substantially all of the assets of the Company.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	These covenants will be subject to important exceptions and
qualifications.
	 
	 	 	 	 	 	 	 	 
	 	 	Registration Rights: Standard A/B Exchange Offer. Parent
shall complete the A/B Exchange Offer as soon as practicable
but in no event later than 180 days after issuance of the
Secured Notes. Registration default will result in 0.25% of
additional interest per 90 days of registration default, up to
a maximum of 1.00%.
	 
	 	 	 	 	 	 	 	 
	 	 	Credit Rating: Rating from at a least one credit rating agency.

	 
	 	 	 	 	 	 	 	 
	 	 	Settlement: DTC-eligible.

	 
	 	 	 	 	 	 	 	 
	Description of
Convertible Secured Notes:	 	Description:$200 million of new Convertible Secured Notes
issued by Parent
	 
	 	 	 	 	 	 	 	 
	 	 	Guarantees: Guaranteed by all current and future domestic
subsidiaries of Parent, subject to the same exceptions as
are set forth in the New ABL Facility.
	 
	 	 	 	 	 	 	 	 
	 	 	Maturity: Five and a half years from anniversary of the
issuance of the Convertible Secured Notes.

	 
	 	 	 	 	 	 	 	 
	 	 	Interest: 6.00% per annum.
	 
	 	 	 	 	 	 	 	 
	 	 	Conversion Price: The Convertible Secured Notes will be
convertible into shares of common stock of Parent, par value
$0.01 per share (“Common Stock”), at a price of $1.70 per share
(the “Conversion Price”).

-25-

 

	 	 	 	 	 	 	 

	 	 	Collateral: Subject to permitted liens and except for
certain excluded assets, a second priority lien on all Secured
Notes Priority Collateral and a third priority lien on all ABL
Priority Collateral.
	 
	 	 	 	 	 	 
	 	 	Covenants: Subject to similar covenants, as for the new
Secured Notes, with mutually agreed upon changes. Market
covenants for a second lien high yield indenture if a Third
Party Credit Facility is obtained.
	 
	 	 	 	 	 	 
	 	 	Optional Conversion: So long as the issuance of the shares of
Common Stock upon conversion of the Convertible Secured Notes
is permitted by all applicable laws, rules and regulations,
holders of Convertible Secured Notes shall have the right to
convert the Convertible Secured Notes at their option at any
time and from time to time prior to maturity thereof into 117.5
million shares of Common Stock, subject to adjustment on a pro
rata basis based on amount of Notes exchanged above the Minimum
Condition. In connection with any such optional conversion,
holders of Convertible Secured Notes shall also have the right
to receive accrued and unpaid interest on the Convertible
Secured Notes to, but excluding, the date of conversion,
payable in cash.
	 
	 	 	 	 	 	 
	Jones Act Compliance:	 	The parties will agree upon certain restrictions on the
conversion, ownership or transfer of shares of Common Stock in
order to comply with the Jones Act, Title 46 U.S.C. §§ 50101 et
seq., and work in good faith, if necessary, to adjust this Term
Sheet accordingly to comply with such restrictions.
	 
	 	 	 	 	 	 
	Other Terms of
Convertible Secured
Notes:	 	Conversion

Event:	 	So long as the issuance of the full number of shares of
Common Stock upon conversion of the Convertible Secured Notes
is permitted by all applicable law, rule and regulation, Parent
may convert into Common Stock the Convertible Secured Notes at
its option, in whole or in part from time to time, on not more
than 60 days and not less than 20 days prior notice at the
Conversion Price plus accrued and unpaid interest thereon up to
(but excluding) the date set for conversion, provided that (i)
3 months have passed since the issuance of the new Convertible
Secured Notes and (ii) the 30 trading days volume weighted
average price of the Common Stock is at least $2.00 per share
at the initial conversion date, $2.10 per share for the second
conversion, $2.30 per share for the third conversion and $2.40
per share thereafter; provided, however, that the Parent may
only set a conversion date and may only convert up to $50
million of Convertible Secured Notes on the initial conversion
date. After the initial

-26-

 

	 	 	 	 	 	 	 

	 

	 	 	 	 	 	conversion date, the Parent may
convert up to $50 million of the Convertible Secured Notes at
each subsequent conversion date, which shall be at least 3
months after the previous conversion date.
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Interest shall cease to accrue on any Convertible Secured Notes
on the date such Convertible Secured Notes have been converted
(the “Conversion Date”). All accrued and unpaid interest will
be paid in cash on any Conversion Date.
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Conversion will be subject to continued listing on a national
securities exchange and other customary conditions.
	 
	 	 	 	 	 	 
	 	 	Fundamental
Change of
Control:	 	Upon a change of control, the holders shall have the
right to require Parent to repurchase for cash the outstanding
Convertible Secured Notes at 101% of the aggregate principal
amount, plus accrued and unpaid interest thereon.
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	A “change of control” will be deemed to occur at such time as:
	 

	 	 	 	 	 	(i) any “person” or “group” (as such terms are used for
purposes of Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended, whether or not applicable), other than
Parent or any of its subsidiaries, any employee benefit plan of
it or such subsidiary or any Permitted Holder (which will
include certain holders of Convertible Secured Notes and any of
their Affiliates), is or becomes the “beneficial owner,” as
determined in accordance with Rule 13d-3 under the Exchange
Act, directly or indirectly, of more than 50% of the total
voting power in the aggregate of all classes of Parent’s
capital stock then outstanding and entitled to vote generally
in elections of directors; (ii) Parent consolidates with or
merges with or into another person (other than any subsidiary
of Parent or a Permitted Holder) and its outstanding voting
securities are reclassified into, converted for or converted
into the right to receive any other property or security, or
Parent sells, conveys, transfers or leases all or substantially
all of its properties and assets to any person; (iii) during
any period of 12 consecutive months after the date of original
issuance of the Convertible Secured Notes, persons who at the
beginning of such 12 month period constituted Parent’s Board

-27-

 

	 	 	 	 	 	 	 

	 

	 	 	 	 	 	of Directors, together with any new persons whose election was
approved by a vote of a majority of the persons then still
comprising its Board of Directors who were either members of
the Board of Directors at the beginning of such period or whose
election, designation or nomination for election was previously
so approved, cease for any reason to constitute a majority of
Parent’s Board of Directors; or (iv) Parent is liquidated or
dissolved or holders of Parent’s Common Stock approve any plan
or proposal for Parent’s liquidation or dissolution.
	 
	 	 	 	 	 	 
	 	 	Fundamental

Change

Make-Whole:	 	The conversion rate of the Convertible Secured
Notes shall be increased to compensate the holders thereof for
the loss of the time value of the conversion right (i) if at
any time the Common Stock is not listed on the NYSE or the
NASDAQ Stock Market or (ii) if a Change of Control occurs,
unless at least 90% of the consideration received or to be
received by holders of Common Stock, excluding cash payments
for fractional shares, in connection with the transaction or
transactions constituting the Change of Control, consists of
shares of Common Stock, American Depositary Receipts or
American Depositary Shares traded on a national securities
exchange in the United States or which will be so traded or
quoted when issued or exchanged in connection with such Change
of Control (these securities being referred to as “publicly
traded securities”).
	 
	 	 	 	 	 	 
	 	 	Registration

Rights:	 	As soon as is practicable following the issuance of the
Convertible Secured Notes, Parent shall file a shelf
registration statement for the resale of both the Convertible
Secured Notes and the underlying Common Stock, using
commercially reasonable efforts to do so concurrently or
immediately after the issuance of the Convertible Secured
Notes, and to have such registration statement declared
effective as soon as practicable thereafter but in no event
later than 120 days after filing. Failure to have such
registration statement declared effective within 120 days after
issuance of the Convertible Secured

-28-

 

	 	 	 	 	 	 	 

	 

	 	 	 	 	 	Notes will result in
payment of 0.25% of additional interest per 90 days of
registration default, up to a maximum of 1.00%.
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	In addition, the Convertible Secured Notes will be DTC eligible
at issuance.
	 
	 	 	 	 	 	 
	 	 	Adjustments to
Conversion
Price:	 	Adjustments for (i) issuances of Common Stock or
derivatives below the Conversion Price or below market, (ii)
stock splits, combinations or dividends in the form of Common
Stock, (iii) other dividends or distributions on Common Stock
(including cash dividends and spinoffs), and (iv) repurchases
of Common Stock above the Conversion Price or market (including
by way of a tender offer), in each case, subject to certain
customary exceptions.
	 
	 	 	 	 	 	 
	 	 	Conversion Cap:	 	In no event will a Convertible Secured Note
be forcibly convertible into a number of shares of Common Stock
of Parent that would cause a holder to “beneficially own” (as
such term is used in the Exchange Act) more than 9.9% of the
Common Stock of Parent at any time outstanding (the “Conversion
Cap”); provided, however, that such Conversion Cap shall not
apply during such time as effective registration statement is
in effect and Noteholders are free to sell thereunder.
	 
	 	 	 	 	 	 
	 	 	Redemption/

Conversion:	 	Other than as provided under “Conversion Event”,
the Convertible Secured Notes shall not be converted or
redeemed by Parent.
	 
	 	 	 	 	 	 
	Closing Date:	 	 	 	Concurrently with the Exchange Offer, Parent will
undertake a consent solicitation (the “Consent Solicitation”)
in which it will seek consents from the Noteholders to amend
the Indenture governing the Notes, to remove substantially all
of the restrictive covenants and certain events of default from
the Indenture governing the Notes upon consummation of the
Exchange Offer. A portion of the total consideration in the
Exchange Offer (equal to 0.5% of the total consideration
described herein) will constitute a consent payment that is
available only to Noteholders who give their consents in the
Consent Solicitation. The consent payment will not be paid to
Noteholders who do not so consent.
	 
	 	 	 	 	 	 
	Conditions Precedent
to Closing:	 	The Participating Holders’ support for the Secured Notes
Subscription and the Exchanging Holders support for the
Exchange Offer shall be contingent upon customary conditions
precedent, including, but not limited to, the following:

-29-

 

	 	 	 	 	 	 	 
	 

	 
	 	 	•	 	amendment and upsizing of the First Lien Facility to
$350 million funded debt plus a $100 million unfunded revolver
(subject to an additional $25million upsizing) and any other
material financing documents to (i) permit the transactions
contemplated hereby and (ii) cure any defaults under the
documents, with such amendments to be reasonably satisfactory
to the Participating Holders; alternatively, the Company may
accept the commitment from the Participating Holders to provide
$350 million of Secured Notes and raise the New ABL Facility;
	 
	 	 	•	 	definitive documentation reasonably acceptable to
Participating Holders;
	 
	 	 	•	 	after March 31, 2011, except as specifically set forth
on Schedule I attached hereto, no material adverse change
(“MAC”) in the business, affairs, properties, condition
(financial or otherwise) or prospects of the Company shall have
occurred on or prior to the Closing Date;
	 
	 	 	•	 	delivery of due diligence satisfactory to the
Participating Holders and their advisors concerning the
Company’s antitrust issues, business and business plan,
operations, financial condition, customer matters and other
related matters, which due diligence shall be completed by June
15, 2011 (plus customary “bring down” due diligence prior to
funding);
	 
	 	 	•	 	continued listing of Parent’s Common Stock on a
national securities exchange, i.e., NYSE;
	 
	 	 	•	 	NYSE’s approval of the Exchange Offer without requiring
shareholder approval;
	 
	 	 	•	 	payment of reasonable documented fees and expenses of
one counsel and one financial advisor to the Participating
Holders (such counsel to be augmented by any specialty shipping
advisors and other specialists, as reasonably required and
engaged upon advance written notice to the Company);
	 
	 	 	•	 	launch of the Secured Notes Subscription by June 24,
2011 and the Exchange Offer by June 24, 2011;
	 
	 	 	•	 	closing of the Secured Notes Subscription by August 15,
2011 and the Exchange Offer by August 15, 2011;
	 
	 	 	•	 	there shall not have occurred (i) any general
suspension of, or limitation on prices for, trading in
securities in the United States securities or financial
markets, (ii) any material impairment in the trading market for
debt securities, (iii) any declaration of a banking moratorium
or any suspension of payments in respect to banks in the United
States or other major financial markets, (iv) any limitation
(whether or not mandatory) by any stock exchange, government or
governmental, administrative or regulatory authority or
	 

-30-

 

	 	 	 	 	 	 	 

	 	 	 	 	agency, domestic or foreign, or other event that might affect the
extension of credit by banks or other lending institutions, (v)
a commencement of a war, armed hostilities, terrorist acts or
other national or international calamity directly or indirectly
involving the United States or (vi) in the case of any of the
foregoing existing on the date hereof, a material acceleration
or worsening thereof;
	 
	 	 	•	 	all requisite governmental authorities and third
parties shall have approved or consented to the Transaction
(other than approvals by the SEC in connection with the
Securities Act registration of the Convertible Secured Notes
and the underlying Common Stock) and, to the extent required,
all applicable appeal periods shall have expired;
	 
	 	 	•	 	Company shall not have entered into any agreement with
any of the class action optouts that is materially different as
to its aggregate value from agreements previously disclosed to
Paul, Weiss in connection with the optout settlements; and
	 
	 	 	•	 	other conditions typical for transactions of this nature.
	 
	 	 	 	 	 	 
	Minimum Condition:	 	The Exchange Offer will be conditioned upon Noteholders of not
less than 95% in aggregate principal amount of the Notes having
validly tendered (and not validly withdrawn) their Notes into
the Exchange Offer (the “Minimum Condition”); provided,
however, the Parent with more than 66-2/3% of the Participating
Holders consent may lower the Minimum Condition.
	 
	 	 	 	 	 	 
	Corporate Governance:	 	The Participating Holders shall have the right to designate
nominees to comprise a majority of the Board, provided that any
existing directors who wish to remain on the Board will be
considered. The parties shall work in good faith to make other
agreed upon changes to amend the Parent’s organizational
documents consistent with best practices. The Parent will
request a 1 to 8 reverse share split at the first shareholder
meeting after the Closing Date.
	 
	 	 	 	 	 	 
	Management/Employee 

Incentive Plan:	 	The Participating Holders and the Company will work in good
faith to negotiate a management incentive plan (taking into
account tax implications and potential need for a shareholder
approval) for Parent, which will provide for grants of options
and/or restricted stock/equity reserve for management,
directors, and employees, for which 10% (on a fully-diluted and
fully distributed basis) of Parent’s equity will be reserved.
The amount, form, exercise price, allocation and vesting of
such equity-based awards shall be approved by the new Board of
Directors. The amount, form, exercise price, allocation and
vesting of such equity-based awards shall be approved by the
Board of Directors immediately prior to the closing and
implemented thereafter; provided, however, prior to the launch

-31-

 

	 	 	 	 	 	 	 

	 	 	of the Exchange Offer the parties shall agree upon the
percentage of initial grants, amounts of restricted stock and
SARs and vesting terms of the foregoing.
	 
	 	 	 	 	 	 
	Section 16 Officer
Severance	 	The Participating Holders and the Company will work in good
faith to negotiate, and the Company will adopt and maintain, a
severance plan (the “Severance Plan”) for each of the Company’s
officers designated under section 16 of the Securities Exchange
Act of 1934, 15 U.S.C. § 78a, et seq. (each, an “Officer”),
which Officers do not currently have severance benefits. The
Severance Plan will provide for severance benefits equal to one
year’s salary and non-equity benefits in the event the Officer
is terminated without cause. The Severance Plan shall be
approved by the Board of Directors prior to the closing. It is
anticipated that such Severance Plan will include five officers
as of the date hereof.
	 
	 	 	 	 	 	 
	Transaction and Legal
Fees and Expenses:	 	The Company shall pay the reasonable out of pocket documented
costs and expenses incurred by the Participating Holders in
connection with the Transaction, including the reasonable fees
and disbursements of one outside counsel and one financial
advisor to the Participating Holders (plus any specialty
shipping advisors and other specialists, as reasonably required
and engaged upon advance written notice to the Company), for
the negotiation and documentation related to the Transaction.
	 
	 	 	 	 	 	 
	Indemnification:	 	The definitive documentation for the Secured Notes
Subscription shall contain customary provisions limiting
liability for, and indemnifying and holding harmless,
Participating Holders (and their affiliates and their
respective officers, directors, employees and agents) for any
losses, claims, damages, liabilities or expenses incurred in
respect of the exchange contemplated hereby, except to the
extent they are found by a final, non-appealable judgment of a
court to arise primarily from the gross negligence or willful
misconduct of the relevant indemnified person or such person’s
affiliates and their respective officers, directors, employees
and agents.
	 
	 	 	 	 	 	 
	Governing Law:	 	New York governing law and consent to exclusive New York
jurisdiction.

-32-

 

Schedule I

The following items shall not constitute MACs under the Term Sheet:

Notice of delisting of the Company’s stock on the New York Stock Exchange (NYSE).

Settlement of non-antitrust litigation in the aggregate amount not to exceed $7.5 million.

Events described in the Company Form 10-Q for the quarterly period ended March 27, 2011 filed on
April 29, 2011, including those described in Section 15 (Commitment and Contingencies) and Section
17 (Subsequent Events) of Part I, and in Section 1 (Legal Proceedings) and Section 5 (Other
Information) of Part II.

-33-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00190-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00190-of-00352.parquet"}]]