8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 11, 2009

HORIZON LINES, INC.

(Exact name of registrant as specified in its Charter)

Delaware	001-32627	74-3123672
(State or Other Jurisdiction	(Commission File Number)	(I.R.S. Employer
of Organization)		Identification No.)

4064 Colony Road, Suite 200
Charlotte, North Carolina 28211
(Address of Principal Executive Offices, including Zip Code)

(704) 973-7000
(Registrant’s telephone number, including area code)

N/A
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement

Puerto Rico Class Action Settlement Agreement

On June 11, 2009, Horizon Lines, Inc. (the “Company”) entered into a Settlement Agreement (the “Agreement”) providing for the settlement of the outstanding class action litigation related to ocean shipping services in the Puerto Rico tradelane. The plaintiffs allege price-fixing in violation of the Sherman Act and Puerto Rican antitrust laws. The Agreement is subject to the approval of the United States District Court for the District of Puerto Rico (the “Court”) and the Company’s right to terminate the Agreement under certain circumstances. There can be no assurance that the Agreement will be approved by the Court or that it will not be terminated by the Company.

Under the Agreement, the Company has agreed to pay $20 million and to certain base-rate freezes. The payment terms would require the Company to pay into an escrow account $20 million as follows:

• $5 million within five business days following execution of the Agreement and submission of a motion for preliminary approval to the Court;

• $5 million within 90 days after preliminary approval of the Agreement by the Court; and

• $10 million within five business days after final approval of the Agreement by the Court.

The base-rate freeze component of the Agreement provides that class members who have contracts in the Puerto Rico trade with the Company as of the effective date of the settlement would have the option, in lieu of receiving cash, to have their “base rates” frozen for a period of two years. The base-rate freeze would run for two years from the expiration of the contract in effect on the effective date of the settlement. All class members would be eligible to share in the $20 million cash component, but only contract customers of the Company would be eligible to elect the base-rate freeze in lieu of receiving cash.

As previously reported, the Company received a grand jury subpoena and search warrant from the U.S. District Court for the Middle District of Florida seeking information regarding an investigation by the Antitrust Division of the U.S. Department of Justice into possible antitrust violations in the domestic ocean shipping business, including Puerto Rico. The Company is cooperating with the Antitrust Division in that investigation. Also, several class action lawsuits relating to ocean shipping services in the Hawaii and Guam tradelanes and the Alaska tradelane have been filed against the Company. The Company intends to vigorously defend itself against those purported class action lawsuits.

The above summary of the material terms of the Agreement is qualified in its entirety by reference to the complete text of the Agreement filed herewith as Exhibit 10.1 and is incorporated in this Item 1.01 by reference. The Company also issued a press release on June 12, 2009, announcing the Agreement, a copy of which is attached as Exhibit 99.1 and is incorporated in this Item 1.01 by reference.

Credit Agreement Amendment

On June 11, 2009, the Company entered into the First Amendment to Credit Agreement (the “Credit Agreement Amendment”) amending certain provisions of the Credit Agreement, dated as of August 8, 2007 (the “Credit Agreement”), among the Company, as borrower, certain of the Company’s subsidiaries, as guarantors, a consortium of lenders (the “Lenders”) and Wachovia Bank, National Association, as administrative agent for the Lenders (the “Administrative Agent”).

The Credit Agreement Amendment is intended to provide the Company the flexibility that it needs to effect the settlement of the Puerto Rico class action litigation by amending the definitions of Consolidated EBITDA. Pursuant to the terms of the Credit Agreement Amendment, the definition of Consolidated EBITDA is amended to add certain charges (i) related to the Puerto Rico settlement and (ii) for litigation expenses related to antitrust litigation matters in an amount not to exceed $25 million in the aggregate and $15 million over a 12-month period, back to the calculation of Consolidated EBITDA. The definition of Consolidated EBITDA is used to determine whether the Company is in compliance with its secured leverage ratio and interest coverage ratio, as well as its ability to make certain restricted payments.

The pricing under the Credit Agreement has been adjusted as a result of the Credit Agreement Amendment. The interest rate for borrowings under the Credit Agreement has been increased by 1.50% and there has been an increase in the commitment fee. In addition, the Credit Agreement Amendment resulted in a reduction in the senior revolving credit facility to $225 million from $250 million and the elimination of the $150 million incremental facility. Also, certain other covenants have been modified in connection with the Credit Agreement Amendment.

The above summary of the material terms of the Credit Agreement Amendment is qualified in its entirety by reference to the complete text of the Credit Agreement Amendment filed herewith as Exhibit 10.2 and is incorporated in this Item 1.01 by reference.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	HORIZON LINES, INC. (Registrant)
Date: June 12, 2009	By:	/s/ Robert S. Zuckerman
		Robert S. Zuckerman
		Vice President, General Counsel and Secretary

Exhibit Index

Item 9.01 Financial Statements and Exhibits.

(d)	Exhibits
10.1	Settlement Agreement, dated June 11, 2009
10.2	First Amendment to Credit Agreement, dated June 11, 2009
99.1	Press Release, dated June 12, 2009

EX-10.1

Exhibit 10.1

SETTLEMENT AGREEMENT

          This agreement (“Settlement Agreement”) is made and entered into as of the 11^th day of June 2009, by and between Horizon Lines, Inc., Horizon Lines, LLC, Horizon Logistics Holdings, LLC, Horizon Logistics, LLC and Horizon Lines of Puerto Rico, Inc. (collectively, “Horizon Defendants”) and the Named Plaintiff Class Representatives (as defined herein), both individually and on behalf of the Settlement Class (as defined herein), (collectively, “the Parties”) to resolve claims asserted by a class against the Released Defendants (as defined herein) in the matter entitled In re Puerto Rican Cabotage Antitrust Litigation, MDL 1960 (the “Class Action”), pending in the United States District Court for the District of Puerto Rico;

          WHEREAS, the Settlement Class has alleged violations of law including, but not limited to, a combination and conspiracy among all of the companies and individuals who are named as Defendants in the Class Action to raise, fix, and maintain the prices of Puerto Rican Cabotage (as defined herein);

          WHEREAS, the Horizon Defendants deny the substantive allegations of the Class Action and have asserted and would continue to assert a number of defenses to the claims asserted by the Settlement Class;

          WHEREAS, the Settlement Class and the Horizon Defendants agree that this Settlement Agreement shall not be deemed or construed to be an admission or evidence of the truth of any of the claims or allegations asserted in the Class Action;

          WHEREAS, the Horizon Defendants have made confidential, material information available to Interim Co-Lead Counsel for the Class with respect to the amount of commerce of their Puerto Rican Cabotage at issue in the Class Action and their market share with respect to such services;

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          WHEREAS, the Horizon Defendants have agreed to cooperate with Named Plaintiff Class Representatives and the Settlement Class and, as the first to settle, the Horizon Defendants’ cooperation will save the Settlement Class substantial burden and expense of litigation;

          WHEREAS, a material consideration of Named Plaintiff Class Representatives in entering into this Settlement Agreement is their desire promptly to obtain cooperation from the Released Defendants;

          WHEREAS, Interim Co-Lead Counsel for the Class, on behalf of the Settlement Class, have agreed to enter into this Settlement Agreement in reliance on (1) information provided by the Horizon Defendants, including, but not limited to, information regarding the Horizon Defendants’ financial condition; and (2) the value of promised cooperation to be provided by the Horizon Defendants to Named Plaintiff Class Representatives and the Settlement Class;

          WHEREAS, arm’s-length settlement negotiations have taken place between Interim Co-Lead Counsel for the Class and counsel for the Horizon Defendants, and this Settlement Agreement, including its exhibits, which embodies all of the terms and conditions of the Settlement between the Settlement Class and the Horizon Defendants, has been reached, subject to preliminary and Final Approval by the Court (as defined herein), as provided herein;

          WHEREAS, Interim Co-Lead Counsel for the Class have concluded, after due investigation and careful consideration of the relevant circumstances, including the claims asserted in the Second Amended Consolidated Class Action Complaint filed in MDL 1960, the legal and factual defenses thereto, the applicable law, the ongoing investigation by the United States Department of Justice, and the financial condition of the Horizon Defendants and their

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ability to pay any judgment that might be entered against them in this Class Action, that it would be in the best interests of the Settlement Class to enter into this Settlement Agreement in order to avoid the uncertainties of litigation and to assure that the benefits reflected herein are obtained for the Settlement Class and, further, that Interim Co-Lead Counsel for the Class consider the Settlement to be fair, reasonable and adequate and in the best interests of the Named Plaintiff Class Representatives and the Settlement Class;

          WHEREAS, the Named Plaintiff Class Representatives shall continue to litigate the Class Action against the remaining Defendants who are not Released Defendants pursuant to this Settlement Agreement; and

          WHEREAS, the Horizon Defendants have concluded, despite their belief that they have good defenses to the claims asserted, that they will enter into this Settlement Agreement to avoid the further expense, inconvenience and burden of litigation, and the distraction and diversion of their personnel and resources, and thereby put to rest this controversy and avoid the risks and uncertainty inherent in complex litigation;

          NOW, THEREFORE, it is agreed by and among the undersigned, on behalf of the Horizon Defendants and the Settlement Class, that the claims asserted by the Settlement Class be settled, compromised and dismissed on the merits and with prejudice as to the Released Defendants, subject to the approval of the Court, on the following terms and conditions:

          1. Settlement Class Certification. Subject to Court approval, the following Settlement Class shall be certified for settlement purposes only as to the Horizon Defendants:

All persons (excluding governmental entities, Defendants, co-conspirators, and the present and former parents, predecessors, subsidiaries and affiliates of the foregoing) who purchased Puerto Rican Cabotage directly from any of the Defendants or their co-conspirators, or any present or former parent, subsidiary or affiliate thereof, at any time during the period from at least May 1, 2002, until April 17, 2008.

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The Named Plaintiff Class Representatives are members of the Settlement Class.

          2. Definitions. The following terms shall have the following meanings for purposes of this Settlement Agreement:

     2.1 “Antitrust Laws” for purposes of this Settlement Agreement, means any and all federal, state, local, or foreign antitrust, unfair competition, unfair practices, trade practices, consumer protection, fraud protection, price discrimination, unitary pricing, RICO, or similar laws, including without limitation, the Sherman Act, 15 U.S.C. §1 et seq., and the antitrust law of Puerto Rico, P.R. Laws Ann. tit. 10 § 258.

     2.2 “Co-Lead Class Counsel” or “Interim Co-Lead Counsel for the Class” means those Plaintiffs’ attorneys appointed by the Court’s December 12, 2008, Pretrial Order as Plaintiffs’ Interim Lead Class Counsel.

     2.3 “Class Member” means any person falling within the definition of the Settlement Class defined in paragraph 1 hereof that has not timely and validly excluded itself from the Settlement Class pursuant to the notice and exclusion procedure approved by the Court.

     2.4 “Court” means the United States District Court for the District of Puerto Rico.

     2.5 “Defendants” means the Defendants in the Class Action, including Horizon Lines, Inc., Horizon Lines, LLC, Horizon Logistics Holdings, LLC, Horizon Logistics, LLC, Horizon Lines of Puerto Rico, Inc., Gabriel Serra, R. Kevin Gill, Gregory Glova, Sea Star Line, LLC, Peter Baci, Alexander G. Chisholm, Crowley Maritime Corporation, Crowley Liner Services, Inc., Trailer Bridge, Inc., Saltchuk Resources, Inc. and Leonard Shapiro.

     2.6 “Depository Bank” means the financial institution at which the Escrow Account is established, or its successor.

     2.7 “Effective Date” means the first date upon which all of the following three conditions have been satisfied:

a.	The Settlement has received Final Approval by the Court pursuant to Rule 23 of the Federal Rules of Civil Procedure;
b.	Entry has been made, as provided in paragraph 6 hereof, of an order and final judgment substantially in the form of Exhibit A hereto; and
c.	Either (i) the time to appeal, or to seek permission to appeal, the Court’s approval of the Settlement as described in subparagraph (a) and entry of an order and final judgment as described in subparagraph (b) has expired with no appeal having been taken or permission to appeal having been sought; or (ii) such approval and final judgment have been affirmed in their entirety by the court of last resort to which any appeal has been taken or petition for review has been presented, and such affirmance has become no longer subject to the possibility of further appeal or review.

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     2.8 “Escrow Account” means the escrow account established pursuant to the Escrow Agreement.

     2.9 “Escrow Agent” means the escrow agent under the Escrow Agreement.

     2.10 “Escrow Agreement” means the escrow agreement substantially in the form attached as Exhibit B hereto.

     2.11 “Escrow Funds” means the funds in the Escrow Account.

     2.12 “Excluded Members” means all members of the Settlement Class who have requested to be excluded from the Settlement Class.

     2.13 “Final Approval by the Court” means entry of an order by the Court at the conclusion of the Settlement Hearing (as defined herein) finding that the Settlement is fair, reasonable and adequate under Rule 23 of the Federal Rules of Civil Procedure.

     2.14 “Horizon Defendants” means Horizon Lines, Inc., Horizon Lines, LLC, Horizon Logistics Holdings, LLC, Horizon Logistics, LLC and Horizon Lines of Puerto Rico, Inc.

     2.15 “Horizon Settlement Fund” means the payment made by the Horizon Defendants pursuant to paragraphs 7(a) and 10 hereof and any interest earned or accrued on such payment after payment is made.

     2.16 “Net Settlement Fund” means the amount remaining in the Horizon Settlement Fund for distribution to authorized claimant Class Members after the payment of reasonable notice expenses, taxes and tax-related expenses, bank escrow charges, settlement administration expenses, and such attorneys’ fees and litigation expenses as may be awarded by the Court to Class Counsel.

     2.17 “Named Plaintiff Class Representative” means any individual or entity named as a Plaintiff in the Second Amended Consolidated Class Action Complaint filed in MDL 1960.

     2.18 “Puerto Rican Cabotage” means shipping services provided in the noncontiguous ocean trade between the continental United States and Puerto Rico.

     2.19 “Released Claims” shall have the meaning set forth in paragraph 17 hereof.

     2.20 “Released Defendants” means the Horizon Defendants, Gabriel Serra, R. Kevin Gill and Gregory Glova.

     2.21 “Released Parties” means the Horizon Defendants; present and former direct and indirect parents, subsidiaries, divisions, affiliates or associates (as defined in SEC Rule 12b-2 promulgated pursuant to the Securities Exchange Act of 1934) of the Horizon Defendants; Gabriel Serra, R. Kevin Gill, Gregory Glova and all other present and former stockholders, officers, directors, members, employees, agents and legal representatives of any of the foregoing entities (with respect to any conduct of any of those entities); and the predecessors, heirs, executors, administrators, successors and assigns of any of the foregoing persons or entities.

     2.22 “Releasing Party” means any Class Member, on its own behalf and on behalf of its present and former officers, directors, stockholders, agents, employees, legal

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representatives, trustees, parents, associates, affiliates, subsidiaries, partners, heirs, executors, administrators, purchasers, predecessors, successors and assigns.

     2.23 “Settlement” means the settlement set forth herein.

     2.24 “Settlement Amount” means the amount stated in paragraph 7(a) and 10 hereof.

     2.25 “United States” means the fifty states of the United States, the District of Columbia, the Commonwealth of Puerto Rico and any other United States territories.

          3. Efforts to Effectuate the Settlement. Interim Co-Lead Counsel for the Class agree to recommend approval of the Settlement to the Court. Interim Co-Lead Counsel for the Class and counsel for the Horizon Defendants agree to employ all reasonable efforts to effectuate the terms of this Settlement Agreement, including the taking of all steps contemplated by this Settlement Agreement, and any other related steps that may be necessary or appropriate.

          4. Motion for Preliminary Approval. As soon as possible, and in no event later than twenty (20) business days after execution of this Settlement Agreement, Interim Co-Lead Counsel for the Class shall submit to the Court a motion for preliminary approval of the Settlement and for a stay of all proceedings in the Class Action against the Released Defendants, except as otherwise provided herein, until such time as the Court has considered the Settlement and, in the event the Court preliminarily and finally approves the Settlement, the Effective Date occurs. The motion shall include: (1) the proposed form of order and final judgment substantially in the form attached as Exhibit A hereto; (2) the proposed form of mailed notice to the Class substantially in the form attached as Exhibit C hereto; (3) the proposed form of order preliminarily approving the Settlement and staying all proceedings against the Released Defendants substantially in the form attached as Exhibit D hereto; (4) the proposed form of summary notice to the Class substantially in the form attached as Exhibit E hereto; and (5) the proposed form of order regarding the plan of distribution in the form attached as Exhibit F. The Parties hereto shall request that a decision be made promptly on the papers or that a hearing on

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the motion for preliminary approval of the Settlement and stay be held at the earliest date available to the Court.

          5. Notice to Settlement Class. In the event that the Court preliminarily approves the Settlement, Interim Co-Lead Counsel for the Class shall, in accordance with Rule 23 of the Federal Rules of Civil Procedure and the Court’s order preliminarily approving the Settlement, arrange for the publication of the summary notice and for the sending of the mailed notice by first-class mail to all members of the Settlement Class who have been identified by reasonable means and efforts, which mailed notice shall, among other things, inform the recipient of preliminary approval of the proposed Settlement and the date of the hearing scheduled by the Court to consider the fairness, adequacy and reasonableness of the Settlement (the “Settlement Hearing”). Interim Co-Lead Counsel for the Class, with approval of the Horizon Defendants’ counsel, may withdraw monies from the Escrow Funds in a reasonable amount for the purposes of such notice. In no event shall the Horizon Defendants be responsible for giving notice of the Settlement to members of the Settlement Class, or for the expense of such notice.

          6. Proposed Order and Final Judgment. At the Settlement Hearing, the parties to the Settlement shall jointly submit to the Court, and request entry of, an order and final judgment substantially in the form attached hereto as Exhibit A:

a.	finally approving the Settlement as being a fair, reasonable and adequate settlement under Rule 23 of the Federal Rules of Civil Procedure;
b.	directing that the Class Action be dismissed with prejudice as to the Released Defendants and, except as provided for herein, without costs to any Party;
c.	discharging and releasing the Released Parties from all Released Claims;
d.	reserving continuing and exclusive jurisdiction over the Settlement and its administration; and

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e. determining pursuant to Fed. R. Civ. P. 54(b) that there is no just reason for delay and directing that the judgment of dismissal of the Class Action as to the Released Defendants shall be final and appealable.

          7. Consideration. Subject to the provisions hereof, and in full, complete and final settlement of the claims of the Class Members with respect to Released Defendants as provided herein, it is agreed as follows:

a.

The Horizon Defendants agree to pay the amount of $20,000,000 (the “Settlement Amount”) as set forth below in Paragraph 10.

b.

Any Class Member who is a party to a Transportation Service Agreement with Horizon Lines, LLC for Puerto Rican Cabotage (“Contract”) as of the Effective Date of this Settlement Agreement shall have the option to elect, in lieu of receiving a cash payment from the Horizon Settlement Fund, a freeze of its then-existing contract “base rates” for a period of two years (“Base-Rate Freeze”). If elected, the Base-Rate Freeze shall remain in effect for a period of two years commencing on the date of expiration of the Contract in effect on the Effective Date of this Settlement Agreement.

For purposes of example, without in any way limiting the operation of the Base-Rate Freeze as provided herein: Assume that Customer X and Horizon Lines, LLC enter into a one-year Contract for Puerto Rican Cabotage effective June 1, 2009, and the Effective Date of the Settlement Agreement is November 1, 2009. If Customer X elects the “Base-Rate Freeze” option, then it may renew the Contract as of June 1, 2010, for up to two years (i.e., until June 1, 2012) at the same base rates as provided in the Contract in effect on June 1, 2009.

c.	Eligible Class Members shall be required to elect either a pro rata portion of the Net Settlement Fund or the Base-Rate Freeze as part of the claims process. These two options are mutually exclusive. Nothing provided in subparagraph (b) above shall be construed to reduce the Horizon Defendants’ obligation to pay the Settlement Amount.
d.	Class Members who elect the Base-Rate Freeze option shall not be required to renew any Contract with Horizon Lines, LLC. The Base-Rate Freeze shall operate only as a ceiling on the Contract base rates, and Class Members shall remain free to enter into contracts with other carriers or to negotiate lower base rates with Horizon Lines, LLC.
e.	For purposes of the Base-Rate Freeze, the term “base rate” includes the base rate and ancillary charges for terminal handling, port security,

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hazardous materials, documentation, and other items included in the bill of lading, but not fuel surcharges or wharfage charges.

f.

Horizon Lines, LLC assesses two fuel surcharges (FSCs), one related to bunker fuel purchased by Horizon Lines, LLC to power its vessels (“BSC”) and one related to payment by Horizon Lines, LLC of fuel surcharges assessed by railroads and/or motor carriers in connection with intermodal shipments (“ISC”). With respect to any Class Member electing the Base-Rate Freeze, during the period of the Base-Rate Freeze applicable to such Class Member, Horizon Lines, LLC will not assess that Class Member a BSC or ISC that is greater than the applicable FSC tariff rates filed by Horizon Lines, LLC with the Surface Transportation Board. Nothing herein shall prevent a Class Member from negotiating a lower BSC or ISC with Horizon Lines, LLC.

          8. Escrow Account. The Escrow Account shall be established at the Depository Bank and administered under the Court’s continuing supervision and control pursuant to the Escrow Agreement.

          9. Qualified Settlement Fund. The Escrow Funds in the Escrow Account are intended by the Parties hereto to constitute and be treated as a “qualified settlement fund” for federal income tax purposes pursuant to I.R.C. § 468B and the regulations promulgated thereunder (including Treas. Reg. §1.468B-1 or any successor regulation) and, to that end, the Parties hereto shall cooperate and not take a position in any filing or before any tax authority that is inconsistent with such treatment. At the request of the Horizon Defendants, a “relation back election” as described in Treas. Reg. §1.468B-1(j) shall be made so as to enable the Escrow Account to be treated as a qualified settlement fund from the earliest date possible, and the Escrow Agent shall take all actions as may be necessary or appropriate to that end. The Escrow Agent shall arrange for the payment from the Escrow Funds of the taxes or estimated taxes on any income earned on the Escrow Funds and tax-related expenses. In the event that federal or state income tax liability is finally assessed against and paid by the Horizon Defendants as a result of any income earned on the funds in the Escrow Account, the Horizon Defendants shall

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be entitled to reimbursement of such payment from any funds remaining in the Escrow Account, whether or not the Effective Date has occurred. The Horizon Defendants will use reasonable efforts to resist any such assessment or payment.

          10. Payment of the Settlement Amount. The Horizon Defendants shall pay to the Settlement Class a total of $20,000,000 (the “Settlement Amount”), to be transferred by wire to the Escrow Account at the Depository Bank in three cash installments as follows:

a.	$5,000,000 within five (5) business days following execution of this Settlement Agreement and submission of a motion for preliminary approval to the Court;
b.	$5,000,000 within ninety (90) days after preliminary approval of the Settlement Agreement by the Court; and
c.	$10,000,000 within five (5) business days after Final Approval by the Court of this Settlement Agreement, such payment not to await the Effective Date of this Settlement Agreement as defined in paragraph 2.7 hereof.

          11. Termination by Horizon Defendants. The Horizon Defendants may terminate this Settlement Agreement, as set forth below, if they reasonably conclude that the conditions set forth in a separate Opt-Out Contingency Letter that has been signed by Interim Co-Lead Counsel for the Class and counsel for the Horizon Defendants have been met.

a. Within the later of (i) ten (10) business days after expiration of the time for members of the Settlement Class to request exclusion from the Settlement Class or (ii) any additional Court-ordered deadline by which members of the Settlement Class may request exclusion from the Settlement Class, Interim Co-Lead Counsel for the Class shall serve on counsel for the Horizon Defendants a list of all members of the Settlement

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	Class who have requested to be excluded from the Settlement Class (“Excluded Members”).
b.	Within ten (10) business days following receipt of the list, the Horizon Defendants shall determine whether they reasonably believe that the conditions set forth in the Opt-Out Contingency Letter have been met. If the Horizon Defendants reasonably conclude that the conditions set forth in the Opt-Out Contingency Letter have been met, they shall notify Interim Co-Lead Counsel for the Class in writing and with an explanation of the basis for that conclusion.
c.	The Horizon Defendants shall have the option to terminate this Settlement Agreement if they reasonably conclude that the conditions set forth in the Opt-Out Contingency Letter have been met, and if they determine to do so, they shall exercise such option by giving notice to Interim Co-Lead Counsel for the Class within ten (10) business days after the notice specified in subparagraph (b) above. If the Horizon Defendants exercise the option in accordance with the foregoing, Interim Co-Lead Counsel for the Class shall cause any Escrow Funds (less reasonable notice expenses, administrator expenses, bank escrow charges, taxes and tax-related expenses paid or incurred) to be returned immediately to the Horizon Defendants. If the option is not exercised in accordance with the foregoing, the option shall be null and void and the Opt-Out Contingency Letter shall be of no further effect.

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d. The Opt-Out Contingency Letter shall be deemed incorporated in this Settlement Agreement, but shall remain confidential unless and until a dispute arises concerning its application or interpretation, except as otherwise required by order of the Court.

          12. All Claims Satisfied by the Horizon Settlement Fund or Base-Rate Freeze. Each Class Member shall look solely to the Horizon Settlement Fund or Base-Rate Freeze for settlement and satisfaction, as provided herein, of all Released Claims as defined in paragraph 17 hereof. Except as provided by order of the Court pursuant to this Settlement Agreement, including an order approving a plan of distribution, no Class Member shall have any interest in the Horizon Settlement Fund or any portion thereof.

          13. All Expenses and Attorneys’ Fees Paid from the Horizon Settlement Fund. The Released Defendants shall not be liable for any attorneys’ fees or expenses of litigation on behalf of the Named Plaintiff Class Representatives and the Settlement Class, or for Settlement-related fees and expenses, including (a) those of any of Plaintiffs’ counsel, experts, consultants, agents and representatives; (b) those incurred in providing notice to the Settlement Class; or (c) those incurred in administering the Settlement or distributing the Net Settlement Fund. All such expenses and fees shall be paid only from the Horizon Settlement Fund. Interim Co-Lead Counsel for the Class intend to submit on behalf of class counsel one or more applications for attorneys’ fees and expenses incurred in litigating this Class Action that seek a total award of attorneys’ fees not in excess of one-third of the Horizon Settlement Fund. The Horizon Defendants shall take no position with respect to any application consistent with the foregoing. Any attorneys’ fees and expenses paid to class counsel from the Horizon Settlement Fund shall be paid only to the extent awarded by the Court and only after the Effective Date has occurred.

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In the event of future settlements involving other Defendants, Interim Co-Lead Counsel for the Class reserve the right to submit one or more supplemental applications for attorneys’ fees not in excess of one-third of the value of the non-cash portion of this Settlement.

          14. Attorneys’ Fees and Reimbursement of Expenses and Costs Separate. The procedure for and the allowance or disallowance by the Court of any attorneys’ fees and/or reimbursement of expenses and costs shall be considered by the Court separately from the Court’s consideration of the fairness, reasonableness and adequacy of the Settlement set forth in this Settlement Agreement. Any order or proceedings relating to the payment of any attorneys’ fees, expenses and costs, or any fee and/or expense application, or any appeal from any order relating thereto, or a reversal or modification thereof shall not operate to terminate or cancel this Settlement Agreement or affect or delay the finality of the judgment approving this Settlement Agreement and the settlement of the Class Action set forth herein.

          15. Distribution of the Horizon Settlement Fund Conditioned Upon Occurrence of the Effective Date. Except as provided herein, no distribution to any Class Member may be made from the Horizon Settlement Fund until after the Effective Date. In the period between preliminary approval of the Settlement Agreement and the distribution of the Net Settlement Fund, disbursements may be made from the Horizon Settlement Fund to pay, as incurred and at the direction of Interim Co-Lead Counsel for the Class and counsel for Horizon Defendants, reasonable expenses of notice, administrator expenses, bank escrow charges, taxes and tax-related expenses paid or incurred. Ultimately, the Net Settlement Fund shall be distributed to authorized claimant Class Members pursuant to a plan of distribution to be approved by the Court. In no event shall the Horizon Defendants have any liability or responsibility with respect to the distribution and administration of the Horizon Settlement Fund

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including, but not limited to, the expenses of such distribution and administration. After the Effective Date, the Horizon Defendants shall have no further interest in the Horizon Settlement Fund.

          16. Plan of Distribution. Interim Co-lead Counsel for the Class plan to submit to the Court a plan of distribution that will provide for the distribution of the Net Settlement Fund to each Class Member electing to participate in the Horizon Settlement Fund who submits a claim accepted by the settlement administrator in direct proportion to such claimant’s qualified purchases of Puerto Rican cabotage during the Class Period. The plan of distribution will further provide for the disposition of any reserved or residual net settlement funds or net recoveries, pursuant to approval of the Court, for the benefit of the Class or a charitable institution. In any event, after the Effective Date has occurred, no part of the Horizon Settlement Fund or Net Settlement Fund shall revert to the Horizon Defendants. The submission and consideration of the plan of distribution shall be considered by the Court separately from the Court’s consideration of the fairness, reasonableness and adequacy of the Settlement set forth in this Settlement Agreement. Any order or proceedings relating to the plan of distribution, or any appeal from any order relating thereto, or a reversal or modification thereof shall not operate to terminate or cancel this Settlement Agreement or affect or delay the finality of the judgment approving this Settlement Agreement.

          17. Released Claims. In addition to the effect of any final judgment entered in accordance with this Settlement Agreement, on the Effective Date, the Class Members, as Releasing Parties, release and forever discharge each and all of the Released Parties from all manner of claims, demands, actions, suits, causes of action, counterclaims, affirmative defenses, or rights of set off, damages whenever incurred, liabilities of any nature whatsoever, including

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costs, expenses, penalties and attorneys’ fees, known or unknown, derivative or direct, suspected or unsuspected, accrued or non-accrued, asserted or unasserted in law or equity (including, without limitation, claims which have been asserted or could have been asserted in the Class Action or any litigation against the Released Parties or any one of them arising out of the matters alleged in the Class Action) that any Releasing Party now has, ever had, or may have had as of the date of this Settlement Agreement (whether or not the Class Member objects to the Settlement and whether or not the Class Member submits a claim seeking to share in the Horizon Settlement Fund or elects the Base-Rate Freeze), whether directly, representatively, derivatively or in any other capacity, based on direct purchases of Puerto Rican Cabotage or relating in any way to the supplying, pricing, or distribution of Puerto Rican Cabotage (hereinafter the “Released Claims”); provided, however, that this release does not release claims set forth in paragraph 19.

          18. Waiver of Release Limitations. To the extent permitted by law, each Class Member shall also be deemed to have expressly waived, released and forever discharged any and all defenses, provisions, rights and benefits that may be available under:

a. Section 1542 of the California Civil Code, which provides:

A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor;

     and/or,

b. Any law of any state, the District of Columbia, Commonwealth, territories, or principle of common law, which is similar, comparable or equivalent to Section 1542 of the California Civil Code (each a “Comparable Law”).

15

With respect to Released Claims, each Class Member hereby: (i) assumes all risks for claims heretofore and hereafter arising, whether known or unknown, suspected or unsuspected, contingent or non-contingent; (ii) releases and forever discharges such claims as part of the Released Claims; and (iii) expressly and irrevocably waives any rights he, she or it may have under Section 1542 of the California Civil Code and any Comparable Law.

          19. Reservation of Claims. Pursuant to this Settlement Agreement, each Class Member settles and releases only the Released Parties, and the Parties do not intend this Settlement Agreement, or any part hereof or any other aspect of the proposed Settlement, to release or otherwise affect in any way any claims or rights any Class Member has or may have against any non-settling Defendant or any Party or entity whatsoever other than the Released Parties. More particularly, the fact or terms of this Settlement with the Horizon Defendants and the releases contained herein shall not be construed to release or limit in any way the joint or several liability or damage responsibility of any non-settling Defendant or any alleged co-conspirator other than the Released Parties arising from the alleged combination and conspiracy, or from sales or other acts alleged in the Second Consolidated Amended Class Action Complaint in MDL 1960, including, but not limited to, any alleged damage or responsibility for any of the acts of the Released Parties. In addition, neither this Settlement Agreement nor the releases set forth in paragraph 17 above shall limit in any way any claims the Horizon Defendants may have against any Class Member for or arising out of accounts receivable, contract obligations, or claims and defenses in existing litigation or bankruptcy proceedings; nor shall this Settlement Agreement or the releases set forth in paragraph 17 above release or have any legal or other effect on ordinary commercial or product liability claims arising from the purchase or sale of the

16

Horizon Defendants’ Puerto Rican Cabotage that do not involve any claims alleged under the Antitrust Laws.

          20. Enforcement of Settlement Agreement and Releases. Once effective, this Settlement Agreement may be pleaded as a full and complete defense to any action, suit or other proceeding that has been or may be instituted, prosecuted or attempted with respect to any of the Released Claims. The Parties agree that for any such proceeding, the Court or any court of competent jurisdiction may enter an injunction restraining prosecution of such proceeding. The Parties further agree that this Settlement Agreement may be pleaded as necessary for the purpose of enforcing the Settlement Agreement.

          21. Effect of Disapproval. If the Court declines to approve the Settlement, or any significant part thereof, or if the Court modifies the Settlement, or if the Court’s approval of the Settlement is modified or set aside on appeal, or if the Court does not enter the order and final judgment described in paragraph 6 hereof, or if the Court enters the order and final judgment and appellate review is sought and, on such review, such order and final judgment are not affirmed in their entirety, then this Settlement Agreement shall be terminated and shall become null and void, and the Escrow Funds (including all income or interest earned thereon, less reasonable notice expenses, administrator expenses, bank escrow charges, taxes and tax-related expenses paid or incurred) shall be returned to the Horizon Defendants. The Parties expressly reserve all of their rights in the event that Effective Date does not occur, and they agree to take all reasonable steps to restore the pre-settlement status of the Class Action as to Horizon Defendants.

          22. Consent to Jurisdiction. The Horizon Defendants and all Class Members submit to the exclusive jurisdiction of the Court for any suit, action, proceeding or dispute

17

arising out of or relating to this Settlement Agreement or the applicability of this Settlement Agreement and its exhibits. Nothing herein shall be construed as a submission to jurisdiction for any purpose other than matters relating to this Settlement Agreement.

          23. Retention of Jurisdiction. The Court shall retain jurisdiction over the implementation and enforcement of this Settlement Agreement.

          24. Cooperation Agreement. The Horizon Defendants will cooperate with the Named Plaintiff Class Representatives with respect to Puerto Rican Cabotage as set forth in this paragraph.

a. With respect to documents, promptly following preliminary approval of the Settlement Agreement, the Horizon Defendants agree to begin making available to Interim Co-Lead Counsel for the Class non-privileged documents that have been seized by, or produced to, the U.S. Department of Justice relating to Puerto Rican Cabotage and such other documents related to Puerto Rican Cabotage that Interim Co-Lead Counsel for the Class may reasonably request. The documents will be made available to Interim Co-Lead Counsel for the Class at a time and in a manner reasonably agreeable to them. The production of such documents will be subject to execution of a reasonable confidentiality agreement and contractual or statutory confidentiality limitations on disclosure. The Horizon Defendants agree to produce a person(s) sufficiently qualified to authenticate company documents, including electronic data, as may reasonably be requested by Interim Co-Lead Counsel for the Class.

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b. With respect to witnesses, promptly following the Effective Date of the Settlement Agreement:

i.	The Horizon Defendants agree to use all reasonable efforts to make current or former officers or employees available for interviews, as may reasonably be requested by Interim Co-Lead Counsel for the Class.
ii.	The Horizon Defendants agree to use all reasonable efforts to make current or former officers or employees available for depositions, as may reasonably be requested by Interim Co-Lead Counsel for the Class.
iii.	The Horizon Defendants agree to use all reasonable efforts to make current or former officers or employees available for trial testimony, as may reasonably be requested by Interim Co-Lead Counsel for the Class.
iv.	The Horizon Defendants agree to make corporate designees available to testify at deposition or trial, as may be reasonably requested by Interim Co-Lead Counsel for the Class.

c.	The Parties agree that counsel for Horizon Defendants may be present at all interviews, depositions and trial testimony.
d.	Promptly following preliminary approval of the Settlement Agreement, the Horizon Defendants agree to make their counsel available upon reasonable request to meet with Interim Co-Lead Counsel for the Class to

19

provide information concerning documents, witnesses, and events not covered by any privilege, work product or other protection.

e.

Named Plaintiffs’ Class Representatives and Interim Co-Lead Counsel for the Class agree that they will not assert that the Horizon Defendants have waived any attorney-client privilege, work-product immunity, or any other privilege or protection, with respect to documents or information provided to, or identified to, them in connection with the Class Action, including pursuant to the Settlement Agreement.

Notwithstanding anything in this paragraph 24, the Parties understand that cooperation of individuals shall be subject to their individual rights and obligations. The failure of any individual to agree to make himself or herself available to, or otherwise cooperate with the Named Plaintiff Class Representatives, shall not constitute a breach of the Horizon Defendants’ obligations under this Settlement Agreement.

          25. Document Authentication Issues. If a dispute arises in the future between Plaintiffs’ Interim Co-Lead Counsel for the Class and any Defendants other than the Horizon Defendants regarding the authenticity of documents or ESI produced by the Horizon Defendants and that dispute cannot be resolved by declaration, stipulation or other means prior to trial, the Horizon Defendants shall, to the extent they are able to do so, make available for deposition prior to trial, if requested to do so by Interim Co-Lead Counsel for the Class, and at trial, if required by the Court, a knowledgeable employee to testify about the foundation issues relating to such documents or ESI.

          26. Binding Effect. This Settlement Agreement shall be binding upon, and inure to the benefit of, the successors and assigns of the Parties hereto. Without limiting the

20

generality of the foregoing, each covenant and agreement made herein on behalf of Named Plaintiff Class Representatives and the Settlement Class shall be binding upon all Class Members.

          27. Authorization to Enter into Settlement Agreement. The undersigned representatives of the Horizon Defendants covenant and represent that they are fully authorized to enter into and to execute this Settlement Agreement on behalf of the Horizon Defendants. Interim Co-Lead Counsel for the Class covenant and represent that they are authorized to conduct settlement negotiations with defense counsel and to enter into and execute this Settlement Agreement on behalf of the Settlement Class, subject to Court approval of the Settlement pursuant to Rule 23 of the Federal Rules of Civil Procedure.

          28. Notices. All required notices to the Parties to this Settlement Agreement shall be in writing. Each such notice shall be given either by (a) hand delivery; or (b) an overnight express delivery service and shall be addressed, if directed to Interim Co-Lead Counsel for the Class or counsel for the Horizon Defendants, to the addresses set forth on the signature pages hereof, or such other address as any of them may subsequently provide, pursuant to notice in the manner described in this paragraph.

          29. No Admission. Whether or not the Settlement becomes final or is terminated, neither this Settlement Agreement nor its contents and exhibits, nor the associated statements, negotiations, documents and discussions, may be deemed or construed to be an admission or evidence of any violation by any of the Released Parties of any statute or law, or of any liability or wrongdoing, or of the truth of any of the claims or allegations or any other pleading, and evidence thereof shall not be discoverable or used, directly or indirectly, in any way against any of the Released Parties.

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          30. Intended Beneficiaries. No provision of this Settlement Agreement shall provide any rights to, or be enforceable by, any person or entity not a Class Member, a Released Party or plaintiffs’ counsel. Absent Court order, no Class Member or plaintiffs’ counsel may assign or otherwise convey any right to participate in or enforce any provision of this Settlement Agreement.

          31. No Conflict Intended; Headings. Any inconsistency between this Settlement Agreement and the exhibits attached hereto shall be resolved in favor of this Settlement Agreement, except that any inconsistency between this Settlement Agreement and the Escrow Agreement shall be resolved in favor of the Escrow Agreement. The headings used in this Settlement Agreement are intended for the convenience of the reader only and shall not affect the meaning or interpretation of this Settlement Agreement.

          32. No Party Is the Drafter. No Party or signatory shall be considered the drafter of this Settlement Agreement for the purpose of any statute, case law or rule of interpretation or construction that would or might cause any provision to be construed against the drafter.

          33. Choice of Law. All terms of this Settlement Agreement and the exhibits attached hereto shall be governed by and interpreted according to the substantive laws of the State of Florida without regard to its choice of law or conflict of laws principles.

          34. Amendment; Waiver. This Settlement Agreement shall not be modified in any respect except by a writing executed by all the Parties hereto, and the waiver of any rights conferred hereunder shall be effective only if made by written instrument of the waiving Party. The waiver by any Party of any breach of this Settlement Agreement shall not be deemed or

22

construed as a waiver of any other breach, whether prior to, subsequent to or contemporaneous with, of this Settlement Agreement.

          35. Execution in Counterparts. This Settlement Agreement may be executed in counterparts. Scanned signatures shall be considered valid signatures made on the date transmitted.

          36. Integrated Agreement. This Settlement Agreement, including the Opt-Out Contingency Letter referred to in paragraph 11 hereof, contains an entire, complete, and integrated statement of each and every term and provision agreed to by and among the Parties hereto, and it is not subject to any condition not provided for herein.

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IN WITNESS WHEREOF, the Parties hereto, through their authorized representatives, have agreed and entered into this Settlement Agreement as of the date first written above.

ON BEHALF OF THE NAMED PLAINTIFF CLASS REPRESENTATIVES AND THE SETTLEMENT CLASS:

LABATON SUCHAROW LLP		HEINS MILLS & OLSON, P.L.C.
By:	/s/ Hollis L. Salzman	By:	/s/ Vincent J. Esades
Hollis L. Salzman		Vincent J. Esades
140 Broadway		310 Clifton Avenue
New York, NY 10005		Minneapolis, MN 55403
Tel: (212) 907-0700		Tel: (612) 338-4605
Fax: (212) 818-0477		Fax: (612) 338-4692
hsalzman@labaton.com		vesades@heinsmills.com
PIETRANTONI MENDEZ &		SALAS & CO., L.C.
ALVAREZ LLP
By:	/s/ Nestor M. Mendez-Gomez	By:	/s/ Camilo K. Salas, III
Nestor M. Mendez-Gomez		Camilo K. Salas, III
Banco Popular Center, 19th Floor		650 Poydras, Suite 1660
209 Munoz Rivera Ave.		New Orleans, LA 70130
San Juan, PR 00918		(Orleans Parish)
Tel: (787) 274-1212		Tel: (504) 799-3080
Fax: (787) 274-1470		Fax: (504) 799-3085
nmendez@pmalaw.com		csalas@salaslaw.com
KAPLAN FOX & KILSHEIMER, LLP		WHATLEY DRAKE & KALLAS, LLC
By:	/s/ Linda P. Nussbaum	By:	/s/ Joe R. Whatley Jr.
Linda P. Nussbaum		Joe R. Whatley Jr.
850 Third Avenue, 14th Floor		1540 Broadway, 37th Floor
New York, NY 10022		New York, NY 10036
Tel: (212) 687-1980		Tel: (212) 447-7070
Fax: (2120 687-7714		Fax: (212) 447-7077
lnussbaum@kaplanfox.com		jwhatley@wdklaw.com

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BECNEL LAW FIRM, LLC
By:	/s/Daniel E. Becnel, Jr.
Daniel E. Becnel, Jr.
106 W. Seventh St.
P.O. Box Drawer H
Reserve, LA 70084
Tel: (985) 535-1186
Fax: (985) 536-6445
dbecnel@becnellaw.com

Interim Co-Lead Counsel for the Class

25

ON BEHALF OF DEFENDANTS HORIZON LINES, INC., HORIZON LINES, LLC, HORIZON LOGISTICS HOLDINGS, LLC, HORIZON LOGISTICS, LLC, AND HORIZON LINES OF PUERTO RICO, INC.:

MCGUIREWOODS LLP		O’NEILL & BORGES
By:	/s/ Richard J. Rappaport	By:	/s/ Salvador J. Antonetti-Stutts
Richard J. Rappaport		Salvador J. Antonetti-Stutts
Amy B. Manning		American International Plaza
Tammy L. Adkins		Suite 800
77 West Wacker Drive		250 Muñoz Rivera Avenue
Suite 4100		San Juan, PR 00918-1813
Chicago, IL 60601-1818		Tel: (787) 282-5748
Tel: (312) 750-8618		Fax: (787) 753-8944
Fax: (312) 920-3696		salvador.antonetti@oneillborges.com
rrappaport@mcguirewoods.com
amanning@mcguirewoods.com
tadkins@mcguirewoods.com
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
By:	/s/ John M. Nannes
John M. Nannes
Tiffany Rider
1440 New York Avenue, N.W.
Washington, DC 20005
Tel: (202) 371-7500
Fax: (202) 661-9191
john.nannes@skadden.com
tiffany.rider@skadden.com

Attorneys for Horizon Lines, Inc., Horizon Lines, LLC, Horizon Logistics Holdings, LLC,
Horizon Logistics, LLC, and Horizon Lines of Puerto Rico, Inc.

EX-10.2

Exhibit 10.2

FIRST AMENDMENT TO CREDIT AGREEMENT

     THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of June 11, 2009, is by and among HORIZON LINES, INC., a Delaware corporation (the “Borrower”), the Subsidiaries of the Borrower as may from time to time become a party hereto (collectively, the “Guarantors”), and WACHOVIA BANK, NATIONAL ASSOCIATION, as administrative agent on behalf of the Lenders under the Credit Agreement (as hereinafter defined) (in such capacity, the “Administrative Agent”). Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement.

W I T N E S S E T H

     WHEREAS, the Borrower, the Guarantors, certain banks and financial institutions from time to time party thereto (the “Lenders”) and the Administrative Agent are parties to that certain Credit Agreement dated as of August 8, 2007 (as amended, modified, extended, restated, replaced, or supplemented from time to time, the “Credit Agreement”); and

     WHEREAS, the Credit Parties and the Required Lenders have agreed to amend the Credit Agreement in accordance with and subject to the terms and conditions set forth herein.

     NOW, THEREFORE, in consideration of the agreements hereinafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I
AMENDMENTS TO CREDIT AGREEMENT

     1.1 New Definitions. The following definitions are hereby added to Section 1.1 of the Credit Agreement in the appropriate alphabetical order:

     “Deposit Account Control Agreement” shall mean an agreement, among a Credit Party, a depository institution, and the Administrative Agent, which agreement is in a form reasonably acceptable to the Administrative Agent and the depository institution and which provides the Administrative Agent with “control” (as such term is used in Article 9 of the UCC) over the deposit account(s) described therein (which control is exercisable upon the occurrence and continuance of an Event of Default), as the same may be amended, modified, extended, restated, replaced, or supplemented from time to time.

     “DOJ Investigation” shall mean the investigation by the Antitrust Division of the United States Department of Justice regarding possible antitrust violations by the Credit Parties or their Subsidiaries with respect to the ocean shipping business.

     “First Amendment” shall mean the First Amendment to Credit Agreement, dated as of the First Amendment Effective Date, among the Credit Parties and the Administrative Agent, on behalf of the Lenders.

     “First Amendment Effective Date” shall mean June 11, 2009.

     “Litigation Matters” shall mean any civil action, criminal action or investigation, including related shareholder litigation, involving any allegation of a violation of federal, state or other antitrust law by any of the Credit Parties or their Subsidiaries with respect to the ocean shipping business.

     “Puerto Rico Settlement” shall mean the settlement of certain class action lawsuits (which were consolidated into a single multidistrict litigation proceeding (case no. MDL1960) in the District of Puerto Rico), in each case involving any allegation of a violation of federal, state or other antitrust law by any of the Credit Parties or their Subsidiaries with respect to the ocean shipping business in the Puerto Rico trade lanes.

     “Securities Account Control Agreement” shall mean an agreement among a Credit Party, a securities intermediary, and the Administrative Agent, which agreement is in a form reasonably acceptable to the Administrative Agent and the securities intermediary and which provides the Administrative Agent with “control” (as such term is used in Articles 8 and 9 of the UCC) over the securities account(s) described therein (which control is exercisable upon the occurrence and continuance of an Event of Default), as the same may be as amended, modified, extended, restated, replaced, or supplemented from time to time.

     1.2 Deleted Definitions. The definitions of “Additional Loan”, “Incremental Facility”, “Incremental Revolver” and “Incremental Term Loan” are hereby deleted from Section 1.1 of the Credit Agreement.

     1.3 Amendments to Definition of Applicable Percentage. The definition of “Applicable Percentage” set forth in Section 1.1 of the Credit Agreement is hereby amended in the following respects:

     (a) The pricing grid contained therein is hereby amended and restated in its entirety to read as follows:

	Consolidated Senior Secured	Base Rate	LIBOR Margin	Commitment
Level	Leverage Ratio	Margin	and L/C Fee	Fee
I	< 1.25 to 1.00	1.75%	2.75%	0.375%
II	³ 1.25 to 1.00 but < 2.00 to 1.00	2.00%	3.00%	0.50%
III	³ 2.00 to 1.00 but < 2.75 to 1.00	2.25%	3.25%	0.50%
IV	³ 2.75 to 1.00	2.50%	3.50%	0.50%

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     (b) A new sentence is hereby added to the end of such definition to read as follows:

     Notwithstanding the foregoing, the Applicable Percentage shall be as set forth above opposite Level III beginning on the First Amendment Effective Date through (but not including) the first Interest Determination Date after the First Amendment Effective Date.

     1.4 Amendment to Definition of Consolidated EBITDA. The definition of Consolidated EBITDA set forth in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

     “Consolidated EBITDA” shall mean, as of any date of determination for the four consecutive fiscal quarter period ending on such date, without duplication, (a) Consolidated Net Income for such period plus (b) the sum of the following to the extent deducted in calculating Consolidated Net Income (all as determined in accordance with GAAP): (i) Consolidated Interest Expense for such period, (ii) tax expense (including, without limitation, any federal, state, local and foreign income and similar taxes (including tonnage taxes)) of the Credit Parties and their Subsidiaries for such period, (iii) depreciation and amortization expense of the Credit Parties and their Subsidiaries for such period, (iv) any extraordinary charges or impairment charges, in each case to the extent non-cash, or other non-cash charges or non-cash expenses, in each case incurred other than in the ordinary course of business (including non-cash charges for the cumulative effect of accounting changes and non-cash charges with respect to the resolution of Litigation Matters in excess of the $25,000,000 permitted to be added back pursuant to clause (b)(xvi) below) for such period, (v) the interest component of rent expense for such period associated with all Capital Lease Obligations and Synthetic Leases under which any Credit Party or Subsidiary is the lessee, (vi) Transaction Costs incurred by a Credit Party or any Subsidiary during such period, (vii) transaction costs and expenses incurred in connection with Permitted Acquisitions, (viii) any expense or loss associated with (A) any proposed or completed equity or debt financing on or prior to the Closing Date and (B) the early retirement, extinguishment or refinancing of debt, including bonuses paid with respect to the completion of any of the foregoing, (ix) any cash or non-cash fees, expenses or charges incurred other than in the ordinary course of business associated with any restructuring of the Borrower and changes in the Borrower’s method of operations pursuant to its cost reduction programs in an aggregate amount not to exceed, with respect to such cash fees, expenses or charges, 10% of Consolidated EBITDA during such period, (x) non-cash charges resulting from the application of purchase accounting, (xi) non-cash compensation charges, including any such charges arising from stock options, restricted stock grants or other equity-incentive programs or from the forgiveness of loans made to employees in connection with the purchase of equity and related tax gross-up payments made in cash on or prior to the Closing Date, (xii) non-cash expenses resulting from the granting of stock options, restricted stock or restricted stock unit awards under equity compensation programs solely with respect to Capital Stock, (xiii) expenses incurred as a result of the repurchase, redemption or retention by the Borrower of Capital Stock earned under equity

3

compensation programs solely in order to make withholding tax payments, (xiv) expenses incurred as a result of the Share Repurchase Program (but excluding the actual cost of any share repurchase), (xv) the amount of any non-controlling (minority) interest expense attributable to non-controlling (minority) equity interests of the Credit Parties and their Subsidiaries in any joint venture thereof, (xvi) any cash or non-cash charges for such period relating to the Puerto Rico Settlement and lawsuits of claimants that opt out of the class action lawsuits that are subject to the Puerto Rico Settlement, or the DOJ Investigation; provided that the aggregate amount of such cash and non-cash charges shall not exceed $25,000,000 (net of any insurance proceeds received in connection therewith) during the term of this Agreement and (xvii) legal and professional fees and expenses incurred by the Credit Parties during such period relating to Litigation Matters in an aggregate amount not to exceed (A) $15,000,000 during any twelve-month period and (B) $25,000,000 during the term of this Agreement; minus (c) non-cash charges and non-cash expenses previously added back to Consolidated Net Income in determining Consolidated EBITDA (including non-cash charges with respect to Litigation Matters added back to Consolidated Net Income pursuant to clause (b)(iv) above) to the extent such non-cash charges and non-cash expenses have become cash charges and cash expenses during such period; minus (d) any extraordinary cash gains, extraordinary non-cash gains and other non-cash gains during such period; minus (e) the amount of any non-controlling (minority) interest income attributable to non-controlling (minority) equity interests of the Credit Parties and their Subsidiaries in any joint venture thereof to the extent included in the calculation of Consolidated Net Income.

     1.5 Amendment to Definition of Consolidated Net Income. The definition of Consolidated Net Income set forth in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

     “Consolidated Net Income” shall mean, as of any date of determination for any period ending on such date, the net income or loss (excluding extraordinary losses and gains and all non-cash income expense, interest income and tax credits) of the Credit Parties and their Subsidiaries on a Consolidated basis for such period, all as determined in accordance with GAAP.

     1.6 Amendment to Definition of Restricted Payment. The definition of Restricted Payment set forth in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

     “Restricted Payment” shall mean (a) any dividend or other distribution, direct or indirect, on account of any shares (or equivalent) of any class of Capital Stock of any Credit Party or any of its Subsidiaries, now or hereafter outstanding, (b) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares (or equivalent) of any class of Capital Stock of any Credit Party or any of its Subsidiaries, now or hereafter outstanding, (c) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of Capital Stock of any Credit Party or any of its Subsidiaries, now or hereafter outstanding, (d) any payment with respect to any earn out

4

obligation, (e) any payment or prepayment of principal of, premium, if any, or interest on, redemption, purchase, retirement, defeasance, sinking fund or similar payment with respect to, any Subordinated Debt of any Credit Party or any of its Subsidiaries, (f) the payment by any Credit Party or any of its Subsidiaries of any management, advisory or consulting fee to any Person or the payment of any extraordinary salary, bonus or other form of compensation to any Person who is directly or indirectly a significant partner, shareholder, owner or executive officer of any such Person, to the extent such extraordinary salary, bonus or other form of compensation is not included in the corporate overhead of such Credit Party or such Subsidiary, (g) any cash payment with respect to Indebtedness convertible into Capital Stock due upon the conversion thereof and (h) any prepayment of principal or any redemption, purchase, retirement, defeasance, sinking fund or similar payment prior to maturity with respect to any unsecured Indebtedness, Indebtedness convertible into Capital Stock or other Indebtedness junior to the Loans of any Credit Party or any of its Subsidiaries.

     1.7 Amendment to Definition of Transaction Costs. The definition of Transaction Costs set forth in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

     “Transaction Costs” shall mean the fees and expenses incurred by the Borrower and its Subsidiaries in connection with (a) the Transactions and (b) the First Amendment.

     1.8 Amendment to Section 2.5. Section 2.5 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

     Section 2.5 [Reserved].

     1.9 Amendment to Section 4.2. Subsection (g) contained in Section 4.2 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

     (g) [Reserved].

     1.10 Amendment to Section 5.14. The last sentence contained in Section 5.14(a) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

     Without limiting the foregoing, the Credit Parties hereby agree that upon entering into any Bank Product after the Closing Date, they will execute, deliver and cause to be recorded an amendment to the Vessel Fleet Mortgage as reasonably requested by the Administrative Agent.

     1.11 Amendment to Section 6.1. Section 6.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

5

     Section 6.1 Consolidated Senior Secured Leverage Ratio.

     The Consolidated Senior Secured Leverage Ratio for the twelve (12) month period ending as of each fiscal quarter end shall be less than or equal to (a) at all times from the Closing Date through and including the fiscal quarter ended on or around September 30, 2009, 3.00 to 1.00 and (b) at all times thereafter, 2.75 to 1.00.

     1.12 Amendment to Section 7.1. Subsection (e) contained in Section 7.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

     (e) Indebtedness and obligations owing under Bank Products (including, without limitation, Secured Hedging Agreements and other Hedging Agreements entered into not for speculative purposes);

     1.13 Amendment to Section 7.10. Subsection (f) contained in Section 7.10 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

     (f) to make any other Restricted Payments; provided that, on a Pro Forma Basis after giving effect to any such Restricted Payment, (i) no Default or Event of Default shall exist or would result therefrom, (ii) there shall be at least $20,000,000 of Accessible Borrowing Availability, (iii) if such Restricted Payment is a dividend or other distribution, direct or indirect, on account of any shares (or equivalent) of any class of Capital Stock of any Credit Party or any of its Subsidiaries, now or hereafter outstanding, (A) the Consolidated Senior Secured Leverage Ratio shall be less than 2.50 to 1.00 and (B) the aggregate amount of all such dividends and distributions during any twelve-month period shall not exceed $14,000,000 and (iv) if such Restricted Payment is not a dividend or distribution subject to clause (iii) above, the Consolidated Senior Secured Leverage Ratio shall be less than 1.50 to 1.00.

     1.14 Amendment to Article VII. A new Section 7.14 is hereby added at the end of Article VII of the Credit Agreement to read as follows:

     Section 7.14 Account Control Agreements; Bank Accounts.

     (a) Within sixty (60) days after the First Amendment Effective Date (or such extended period of time as agreed to by the Administrative Agent), the Administrative Agent shall have received evidence satisfactory to the Administrative Agent that the cash concentration account and the money market account of Horizon Lines, LLC held at JPMorgan Chase Bank, N.A. are subject to a Deposit Account Control Agreement and a Securities Account Control Agreement, respectively, or have been closed (with the funds and financial assets contained in such accounts having been transferred to a deposit account that is subject to a Deposit Account Control Agreement or a securities account that is subject to a Securities Account Control Agreement).

     (b) Subject to the terms of Section 7.14(a), each of the Credit Parties will not, nor will it permit any Subsidiary to, open, maintain or otherwise have any checking,

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savings or other accounts (including securities accounts) at any bank or other financial institution, or any other account where cash or Cash Equivalents is or may be deposited or maintained with any Person, other than (i) deposit accounts that are subject to a Deposit Account Control Agreement, (ii) securities accounts that are subject to a Securities Account Control Agreement, (iii) deposit accounts established solely as payroll, zero balance and imprest accounts and (iv) other deposit accounts, so long as (A) the balance of each such account is transferred to a deposit account that is subject to a Deposit Account Control Agreement not less than once during every ten (10) business days and (B) the balance in any such account does not exceed $4,000,000 at any time and the balance in all such accounts does not exceed $10,000,000 at any time.

     1.15 Amendments to Section 8.1. Section 8.1(f) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

     (f) Judgment Default. (i) One or more judgments, decrees, settlements or fines (individually a “Judgment” and collectively the “Judgments”) shall be entered by or entered or levied against a Credit Party or any of its Subsidiaries relating to the Puerto Rico Settlement (other than Judgments with respect to lawsuits of claimants that opt out of the class action lawsuits that are subject to the Puerto Rico Settlement) and shall require aggregate cash payments in excess of $20,000,000; (ii) one or more Judgments (other than Judgments referenced in clause (i)) shall be entered by or entered or levied against a Credit Party or any of its Subsidiaries involving in the aggregate for all such Judgments a liability (to the extent not covered by insurance) of $15,000,000 or more, and all such Judgments shall not have been paid and satisfied in full, vacated, discharged in full, stayed or bonded pending appeal within 45 days from the entry thereof; provided that, in the event any such Judgment with respect to the DOJ Investigation allows for payment or other satisfaction over a period greater than 45 days, such Judgment shall not constitute an Event of Default hereunder if (A) the amount of cash payments with respect to such Judgment does not exceed (1) $10,000,000 in the aggregate during any fiscal year of the Borrower and (2) $30,000,000 in the aggregate for all such cash payments, and (B) each payment with respect to such Judgment is made within 15 days of the due date with respect to such payment; (iii) any injunction, temporary restraining order or similar decree shall be issued against a Credit Party or any of its Subsidiaries that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect; or (iv) any default or event of default shall occur under Section 5.10(h) (judgment default) or any successor section of the Indenture, dated as of August 8, 2007, between the Borrower, as issuer, and The Bank of New York Trust Company, N.A., as trustee, relating to the 2007 Senior Unsecured Convertible Notes; or

     1.16 Amendments to Section 9.12. The words “or Incremental Facility” appearing in the last sentence of Section 9.12 of the Credit Agreement are hereby deleted in their entirety .

ARTICLE II
REVOLVING COMMITTED AMOUNT

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     Pursuant to Section 2.7(a) of the Credit Agreement, the Borrower hereby elects to permanently reduce the Revolving Committed Amount to TWO HUNDRED TWENTY FIVE MILLION DOLLARS ($225,000,000). The Credit Parties and the Administrative Agent, on behalf of the Lenders, hereby agree that, after giving effect to this Amendment (a) the notice requirement set forth in Section 2.7(a) for any voluntary reduction of the Revolving Committed Amount is hereby waived, (b) the Revolving Committed Amount shall be reduced to $225,000,000 and (c) the Revolving Commitments of each Revolving Lender shall be reduced pro rata to accommodate such reduction of the Revolving Committed Amount in accordance with Section 2.12(a) of the Credit Agreement.

ARTICLE III
CONDITIONS TO EFFECTIVENESS

     3.1 Closing Conditions. This Amendment shall become effective as of the day and year set forth above (the “Amendment Effective Date”) upon satisfaction of the following conditions (in each case, in form and substance reasonably acceptable to the Administrative Agent):

     (a) Executed Amendment. The Administrative Agent shall have received a copy of this Amendment duly executed by each of the Credit Parties and the Administrative Agent, on behalf of the Lenders.

     (b) Executed Lender Consents. The Administrative Agent shall have received executed consents, in substantially the form of Exhibit A attached hereto (each a “Lender Consent”), from the Required Lenders (including Revolving Lenders holding in the aggregate more than 50% of the outstanding Revolving Commitments) authorizing the Administrative Agent to enter into this Amendment on their behalf. The delivery by the Administrative Agent of its signature page to this Amendment shall constitute conclusive evidence that the consents from the Required Lenders have been obtained.

     (c) Default. After giving effect to this Amendment, no Default or Event of Default shall exist.

     (d) Fees and Expenses.

     (i) The Administrative Agent shall have received from the Borrower, for the account of each Lender that executes and delivers a Lender Consent to the Administrative Agent by 5 p.m. (EST) on or before May 28, 2009 (each such Lender, a “Consenting Lender”, and collectively, the “Consenting Lenders”), an amendment fee in an amount equal to 50 basis points on (A) the aggregate Revolving Commitment of such Consenting Lender (prior to giving effect to the reduction in the Revolving Committed Amount contemplated by Article II hereof) and (B) the outstanding principal amount of the Term Loan held by such Consenting Lenders.

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     (ii) The Administrative Agent and Wachovia Capital Markets, LLC and Banc of America Securities LLC, as joint lead arrangers (collectively, the “Lead Arrangers”), shall have received from the Borrower such other fees and expenses that are payable in connection with the consummation of the transactions contemplated hereby and Moore & Van Allen PLLC shall have received from the Borrower payment of all outstanding fees and expenses previously incurred and all fees and expenses incurred in connection with this Amendment.

     (e) Puerto Rico Settlement. The Administrative Agent shall have received a copy of the settlement agreement with respect to the Puerto Rico Settlement (which shall not differ in any material respects from the final, fully executed settlement agreement), in form and substance reasonably acceptable to the Administrative Agent (which acceptance shall not be unreasonably withheld or delayed), which settlement agreement shall limit the cash payment liabilities and obligations of the Credit Parties and their Subsidiaries with respect to the Puerto Rico Settlement to no more than $20,000,000 (it being understood and agreed that the final, fully executed settlement agreement shall be delivered to the Administrative Agent promptly upon becoming available).

     (f) Organizational Documents. The Administrative Agent shall have received:

     (i) Articles and Bylaws. A certificate of a secretary or assistant secretary of the Borrower (in form and substance reasonably satisfactory to the Administrative Agent) certifying that the articles of incorporation, bylaws and/or other organizational documents, as applicable, of each Credit Party that were delivered on the Closing Date (as defined in the Credit Agreement) or the date on which any Credit Party was joined as a Guarantor pursuant to the terms of the Credit Agreement (the “Joinder Date”), or certified updates as applicable, remain true and correct and in force and effect as of the Amendment Effective Date.

     (ii) Resolutions. A copy of resolutions of the board of directors of the Borrower approving and adopting this Amendment, the transactions contemplated herein and authorizing execution and delivery thereof, certified by a secretary or assistant secretary of the Borrower (pursuant to a secretary’s certificate in form and substance reasonably satisfactory to the Administrative Agent) as of the Amendment Effective Date to be true and correct and in force and effect as of such date.

     (iii) Good Standing. A copy of certificates of good standing, existence or its equivalent with respect to each Credit Party certified as of a recent date by the appropriate Governmental Authorities of the state of its incorporation or organization.

     (iv) Incumbency. A certificate of a secretary or assistant secretary of the Borrower (in form and substance reasonably satisfactory

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to the Administrative Agent) certifying that each Person listed in the incumbency certification contained in the Borrower’s Secretary’s Certificate delivered on the Closing Date remains the duly elected and qualified officer of the Borrower indicated in such Secretary’s Certificate.

     (g) Legal Opinion. The Administrative Agent shall have received an opinion of counsel for the Borrower, dated the Amendment Effective Date and addressed to the Administrative Agent and the Lenders, in form and substance reasonably acceptable to the Administrative Agent.

     (h) Miscellaneous. All other documents and legal matters in connection with the transactions contemplated by this Amendment shall be reasonably satisfactory in form and substance to the Administrative Agent and its counsel.

ARTICLE IV
MISCELLANEOUS

     4.1 Amended Terms. On and after the Amendment Effective Date, all references to the Credit Agreement in each of the Credit Documents shall hereafter mean the Credit Agreement as amended by this Amendment. Except as specifically amended hereby or otherwise agreed, the Credit Agreement is hereby ratified and confirmed and shall remain in full force and effect according to its terms.

     4.2 Representations and Warranties of Credit Parties. Each of the Credit Parties represents and warrants as follows:

     (a) It has taken all necessary action to authorize the execution, delivery and performance of this Amendment.

     (b) This Amendment has been duly executed and delivered by such Person and constitutes such Person’s legal, valid and binding obligation, enforceable in accordance with its terms, except as such enforceability may be subject to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).

     (c) No consent, approval, authorization that has not been obtained, or order of, or filing, registration or qualification with, any court or governmental authority or third party is required in connection with the execution, delivery or performance by such Person of this Amendment.

     (d) The representations and warranties set forth in Article III of the Credit Agreement (i) that contain a materiality qualification are true and correct as of the date hereof and (ii) that do not contain a materiality qualification are true and correct in all material respects as of the date hereof, in each case except for those which expressly relate to an earlier date.

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     (e) After giving effect to this Amendment, no event has occurred and is continuing which constitutes a Default or an Event of Default.

     (f) The Security Documents continue to create a valid security interest in, and Lien upon, the Collateral, in favor of the Administrative Agent, for the benefit of the Lenders, which security interests and Liens are perfected in accordance with the terms of the Security Documents and prior to all Liens other than Permitted Liens.

     (g) The Credit Party Obligations are not reduced or modified by this Amendment and are not subject to any offsets, defenses or counterclaims.

     4.3 Reaffirmation of Credit Party Obligations. Each Credit Party hereby ratifies the Credit Agreement and acknowledges and reaffirms (a) that it is bound by all terms of the Credit Agreement applicable to it and (b) that it is responsible for the observance and full performance of its respective Credit Party Obligations.

     4.4 Credit Document. This Amendment shall constitute a Credit Document under the terms of the Credit Agreement.

     4.5 Expenses. The Borrower agrees to pay all reasonable costs and out-of-pocket expenses of the Administrative Agent in connection with the preparation, execution and delivery of this Amendment, including without limitation the reasonable fees and expenses of the Administrative Agent’s legal counsel.

     4.6 Further Assurances. The Credit Parties agree to promptly take such action, upon the request of the Administrative Agent, as is necessary to carry out the intent of this Amendment.

     4.7 Entirety. This Amendment and the other Credit Documents embody the entire agreement among the parties hereto and supersede all prior agreements and understandings, oral or written, if any, relating to the subject matter hereof.

     4.8 Counterparts; Telecopy. This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument. Delivery of an executed counterpart to this Amendment by telecopy or other electronic means shall be effective as an original and shall constitute a representation that an original will be delivered.

     4.9 No Actions, Claims, Etc. As of the date hereof, each of the Credit Parties hereby acknowledges and confirms that it has no knowledge of any actions, causes of action, claims, demands, damages and liabilities of whatever kind or nature, in law or in equity, against the Administrative Agent, the Lead Arrangers, the Bookrunners, the Lenders, or the Administrative Agent’s, the Lead Arrangers’, the Bookrunners’, or the Lenders’ respective officers, employees, representatives, agents, counsel or directors arising from any action by such Persons, or failure of such Persons to act under the Credit Documents on or prior to the date hereof.

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     4.10 GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

     4.11 Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

     4.12 General Release. In consideration of the Administrative Agent’s, on behalf of the Lenders, willingness to enter into this Amendment, each Credit Party hereby releases and forever discharges the Administrative Agent, the Lead Arrangers, the Bookrunners, the Lenders and the Administrative Agent’s, the Lead Arrangers’, the Bookrunners’ and the Lender’s respective predecessors, successors, assigns, officers, managers, directors, employees, agents, attorneys, representatives, and affiliates (hereinafter all of the above collectively referred to as the “Released Parties”), from any and all claims, counterclaims, demands, damages, debts, suits, liabilities, actions and causes of action of any nature whatsoever, including, without limitation, all claims, demands, and causes of action for contribution and indemnity, whether arising at law or in equity, whether known or unknown, whether liability be direct or indirect, liquidated or unliquidated, whether absolute or contingent, foreseen or unforeseen, and whether or not heretofore asserted, which any Credit Party may have or claim to have against any of the Released Parties in any way related to or connected with the Credit Documents and the transactions contemplated thereby.

     4.13 Consent to Jurisdiction; Service of Process; Waiver of Jury Trial. The jurisdiction, service of process and waiver of jury trial provisions set forth in Sections 10.14 and 10.17 of the Credit Agreement are hereby incorporated by reference, mutatis mutandis.

     4.14 Reservation of Rights. The Administrative Agent and the Lenders expressly reserve all rights they may have under the Credit Documents or applicable law with respect to the Litigation Matters.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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HORIZON LINES, INC.
FIRST AMENDMENT TO CREDIT AGREEMENT

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

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

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

14

HORIZON LINES HOLDING CORP., a Delaware corporation
By:	/s/ Robert S. Zuckerman
Name: Robert S. Zuckerman
Title: Secretary

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ADMINISTRATIVE AGENT:	WACHOVIA BANK, NATIONAL ASSOCIATION, as a Lender and as Administrative Agent on behalf of the Lenders
	By:	/s/ Andrew G. Payne
	Name: Andrew G. Payne
	Title: Director

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EXHIBIT A

FORM OF
LENDER CONSENT

See Attached.

LENDER CONSENT

     This Lender Consent is given pursuant to the Credit Agreement, dated as of August 8, 2007 (as amended, restated, modified or supplemented from time to time, the “Credit Agreement”), by and among HORIZON LINES, INC., a Delaware corporation (the “Borrower”), those certain Subsidiaries of the Borrower party thereto (collectively, the “Guarantors”), the lenders and other financial institutions from time to time party thereto (the “Lenders”) and WACHOVIA BANK, NATIONAL ASSOCIATION, as administrative agent on behalf of the Lenders (in such capacity, the “Administrative Agent”). Capitalized terms used herein shall have the meanings ascribed thereto in the Credit Agreement unless otherwise defined herein.

     The undersigned hereby approves the First Amendment to Credit Agreement, to be dated on or about [May ___], 2009, by and among the Borrower, the Guarantors party thereto, and the Administrative Agent, on behalf of the Lenders (the “Amendment”) and hereby authorizes the Administrative Agent to execute and deliver the Amendment on its behalf and, by its execution below, the undersigned agrees to be bound by the terms and conditions of the Amendment and the Credit Agreement.

     Delivery of this Lender Consent by telecopy or other electronic means shall be effective as an original.

     A duly authorized officer of the undersigned has executed this Lender Consent as of the ___ day of May, 2009

	,
as a Lender
By:
Name:
Title:

EX-99.1

Exhibit 99.1

PRESS RELEASE

For information contact:
Mike Avara
Senior Vice President and Chief Financial Officer
704.973.7027
mavara@horizonlines.com

HORIZON LINES REACHES PUERTO RICO CLASS ACTION SETTLEMENT AGREEMENT AND
SUCCESSFULLY AMENDS CREDIT AGREEMENT

CHARLOTTE, N.C. (JUNE 12, 2009) — Horizon Lines, Inc. (NYSE:HRZ) today reported that it has entered into a settlement agreement with the plaintiffs in the Puerto Rico class action antitrust litigation, and also entered into a credit agreement amendment with its lender group.

Puerto Rico Class Action Settlement Agreement

As previously reported, several purported class action lawsuits were filed against Horizon Lines and other domestic shipping carriers on behalf of a class of individuals and entities who purchased domestic ocean shipping services from various domestic ocean carriers in the Puerto Rico tradelane between 2002 and 2008. Those lawsuits were consolidated into a single multidistrict litigation proceeding in the United States District Court for the District of Puerto Rico. The complaints allege price-fixing in violation of the Sherman Act and Puerto Rican antitrust laws and seek treble monetary damages, costs, attorneys’ fees, and an injunction against the allegedly unlawful conduct.

On June 11, 2009, Horizon Lines entered into a settlement agreement with the plaintiffs in the Puerto Rico class action antitrust litigation. Under the settlement agreement, which is subject to Court approval, Horizon has agreed to pay $20 million and to certain base-rate freezes, to resolve claims for alleged antitrust violations in the Puerto Rico tradelane. The payment terms would require Horizon Lines to pay into an escrow account $20 million as follows:

• $5 million within five business days following execution of a settlement agreement and submission of a motion for preliminary approval to the district court;

• $5 million within 90 days after preliminary approval of the settlement agreement by the district court; and

• $10 million within five business days after final approval of the settlement agreement by the district court.

The base-rate freeze component of the settlement agreement provides that class members who have contracts in the Puerto Rico trade with Horizon Lines as of the effective date of the settlement would have the option, in lieu of receiving cash, to have their “base rates” frozen for a period of two years. The base-rate freeze would run for two years from the expiration of the contract in effect on the effective date of the settlement. All class members would be eligible to

share in the $20 million cash component, but only contract customers of Horizon Lines would be eligible to elect the base-rate freeze in lieu of receiving cash.

The settlement agreement is subject to Court approval. In addition, Horizon Lines has the right to terminate the settlement agreement under certain circumstances.

As previously reported, Horizon Lines received a grand jury subpoena and search warrant from the U.S. District Court for the Middle District of Florida seeking information regarding an investigation by the Antitrust Division of the U.S. Department of Justice into possible antitrust violations in the domestic ocean shipping business, including Puerto Rico. Horizon Lines is cooperating with the Antitrust Division in that investigation. Also, several class action lawsuits relating to ocean shipping services in the Hawaii and Guam tradelanes and the Alaska tradelane have been filed against Horizon Lines. Horizon Lines intends to vigorously defend itself against those purported class action lawsuits.

Credit Agreement Amendment

Horizon Lines also reached an agreement with its lenders to amend the existing credit agreement in conjunction with the Puerto Rico settlement.

The agreement will amend the definition of Consolidated EBITDA by:

• Adding certain charges related to the Puerto Rico settlement back to to the calculation of Consolidated EBITDA, and

• Adding certain charges for litigation expenses related to antitrust litigation matters in an amount not to exceed $25 million in the aggregate and $15 million over a 12-month period back to the calculation of Consolidated EBITDA.

The definition of Consolidated EBITDA is used to determine whether Horizon Lines is in compliance with its secured leverage ratio and interest coverage ratio, as well as its ability to make certain restricted payments.

As consideration for the amendment, Horizon Lines has agreed to provide the following economic and structural changes for the benefit of the lenders:

• Increase loan and letter of credit pricing by 150bps and an increase in the commitment fee;

• A reduction in the size of the revolving facility from $250 million to $225 million;

• The elimination of the $150 million incremental facility;

• An amendment to the definition of Consolidated EBITDA that clarifies “non-recurring charges”; and

• Other structural enhancements, including a step-down in the secured leverage ratio and further limitations on the ability to make certain restricted payments.

In addition, Horizon Lines has agreed to pay consent fees of $1.8 million. A copy of the Credit Agreement amendment is filed as an exhibit to a current report that Horizon Lines filed with the SEC on June 12, 2009.

‘We appreciate the support of our lender group in the amendment process that provided the clarity and flexibility necessary to effect this settlement,” said Mike Avara, Senior Vice President and Chief Financial Officer. “Although the cost of debt on both our $150 million revolver balance and $115.6 million term loan outstanding as of June 11^th has increased by 1.50%, our revised blended total cost of debt remains fairly low at 4.47%, up from the previous 3.81%. The 4.25% interest rate on our convertible notes remains unchanged. We have worked closely with our banks and expect to remain in compliance with our financial covenants,” said Mike Avara.

About Horizon Lines

Horizon Lines, Inc. is the nation’s leading domestic ocean shipping and integrated logistics company comprised of two primary operating subsidiaries. Horizon Lines, LLC, owns or leases a fleet of 21 U.S.-flag containerships and operates 5 port terminals linking the continental United States with Alaska, Hawaii, Guam, Micronesia and Puerto Rico. Horizon Logistics, LLC, offers customized logistics solutions to shippers from a suite of transportation and distribution management services, information technology developed by Horizon Services Group and intermodal trucking and warehousing services provided by Sea-Logix. Horizon Lines, Inc. is based in Charlotte, NC, and trades on the New York Stock Exchange under the ticker symbol HRZ.

Forward Looking Statements

The information contained in this press release contains “forward-looking statements” within the meaning of the federal securities laws. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those that do not relate solely to historical fact. They include, but are not limited to, any statement that may predict, forecast, indicate or imply future performance, achievements or events. Words such as, but not limited to, “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “target,” “projects,” “likely,” “will,” “would,” “could,” and similar expressions or phrases identify forward-looking statements.

All forward-looking statements involve risk and uncertainties. In light of these risks and uncertainties, expected results or other anticipated events or circumstances discussed in this press release might not occur. We undertake no obligation, and specifically decline any obligation, to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. See the section entitled “Risk Factors” in our Form 10-K filed with the SEC on February 5, 2009, for a more complete discussion of these risks and uncertainties and for other risks and uncertainties. Those factors and the other risk factors described therein are not necessarily all of the important factors that could cause actual results or developments to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could harm our results. Consequently, there can be no assurance that actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences.