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): March 13, 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:

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

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

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

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

Item 5.02(e) Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

2009 Cash Incentive Plan

On March 13, 2009, the Compensation Committee (the “Compensation Committee”) of the Company’s Board of Directors approved the performance measures, percentage weightings and percentage of base salary targets that will be used to determine awards for the Company’s Annual Cash Incentive Plan (the “Cash Incentive Plan”) for the fiscal year ending December 20, 2009 (“fiscal 2009”). The Company’s named executive officers, as well as all other non-union, full-time employees, participate in the Cash Incentive Plan. The annual bonus opportunities for each named executive officer are based on certain measures of Company financial performance and individual performance, percentage weightings for each performance measure and percentage of a participant’s base salary target, each as established by the Compensation Committee.

The Company financial performance measures established by the Compensation Committee vary by position and, if applicable, the specific line of business for which the executive is responsible. The bonus opportunities for the chief executive officer (the “CEO”), the chief financial officer (the “CFO”) and each vice president of a corporate function (a “VP”) are based on Company EBITDA and the amount by which the Company’s net debt is reduced in fiscal 2009. In addition, the bonus opportunities for the CFO and for VPs are affected by their individual performance for the year. The bonus opportunity for the president of the Company’s liner business (“Liner President”) and logistic business (“Logistics President”) are based on a combination of Company-wide performance measures, similar to the CEO, CFO and the VPs, as well as certain measures of the financial performance of their specific lines of business and individual performance. For this purpose, EBITDA is a non-GAAP financial measure defined as net income plus net interest expense, income taxes, depreciation and amortization.

The performance measures for the named executive officers and the relative weighting of those measures is described in the following table:

	Corporate		Liner Business		Logistics Business		Individual
				EBITDA
Named Executive		Debt		Operating		Revenue	Performance
Officer	EBITDA	Reduction	EBITDA	Margin	EBITDA	Growth	Evaluation
CEO	50%	50%
CFO	40%	40%					20%
Liner President	10%	20%	30%	20%			20%
Logistics President	10%	10%			25%	35%	20%

The funding levels established by the Compensation Committee depend upon meeting a minimum threshold level of Company-wide and/or business unit EBITDA for the year, depending on which EBITDA target or targets apply to the officer. If the appropriate threshold is not met, no participant will be entitled to receive a bonus under the plan, even if thresholds are met with respect to one or more of the other financial or individual performance measures applicable to that participant. If the applicable EBITDA threshold is met, funding is computed for each financial and/or individual performance measure applicable to a participant. Each named executive officer has a prescribed target bonus amount under the plan, quantified as a percentage of base salary for fiscal 2009, as follows: 95% for the CEO, 70% for the CFO, 70% for the Liner President and 70% for the Logistics President. Funding is determined as follows:

• funding of at least 50% of the named executive officer’s target opportunity, but less than 100% of target opportunity, if the minimum threshold for the performance measure is obtained but the target level is not achieved;

• funding of at least 100% of the named executive officer’s target opportunity, but less than 200% of target opportunity, if the target level for the performance measure is achieved or exceeded; and

• funding of up to 200% of the named executive officer’s target opportunity if the maximum level is met or exceeded for that performance measure.

The funding level for individual performance is 100% of target opportunity if the named executive officer met individual performance objectives, and up to 125% of target opportunity for performance that exceeds those objectives. The amount funded for each performance measure is then multiplied by the percentage weighting applicable to the named executive officer for that performance measure. The sum of those weighted amounts equals the named executive officer’s earned bonus for the year.

After Compensation Committee approval, incentive awards earned under the plan will be paid as lump-sum cash distributions as soon as practicable after the end of the Company’s fiscal year. A named executive officer must be employed by the Company on the last day of fiscal 2009 and on the date of bonus payment (expected within 90 days of fiscal year end) to receive a bonus under the plan.

Restricted Stock Awards

On March 18, 2009, the Compensation Committee awarded shares of restricted stock to each named executive officer other than the CEO. Some of the restricted stock will be earned if the named executive officer satisfies a three year service requirement (“Service-Based Awards”), while the other restricted stock will be earned if specified Company performance goals are achieved for fiscal 2009 and the named executive officer satisfies a three year service requirement (“Performance-Based Awards”). These restricted stock awards were granted under the Company’s Amended and Restated Equity Incentive Plan.

The Service-Based Awards entitle the named executive officers to receive a specified number of shares of Company common stock if they are continuously employed by the Company until March 18, 2012. These shares are forfeited if the executive terminates employment before that date, unless termination is on account of retirement and the sum of the executive’s age and service is 75 or more, in which case the executive will vest in a pro-rated portion of the shares.

The Performance-Based Awards entitle the named executive officers to receive shares of Company common stock based on the level of the Company’s net income for the fiscal 2009. In the event that the Company does not achieve a minimum threshold net income level, the executives will not be entitled to receive any shares of Company stock. If the Company achieves a net income level greater than a threshold level, the executives will be entitled to receive at least 50% and up to 200% of the number of shares awarded to them under their Performance-Based Awards, depending on the actual net income achieved for fiscal 2009. In addition to the Company achieving at least a threshold net income level, the named executive officers must remain continuously employed by the Company until March 18, 2012 to receive any shares under their Performance-Based Awards. Shares are forfeited if the executive terminates employment before that date, unless termination is on account of retirement and the sum of the executive’s age and service is 75 or more, in which case the executive will vest in a pro-rated portion of the shares payable based on the net income level achieved for fiscal 2009.

Dividends on the shares underlying both the Service-Based Awards and the Performance-Based Awards will be accrued and paid, without interest, at the time that underlying shares vest, and will be forfeited if the underlying shares are forfeited. The number of shares of restricted stock underlying each named executive officer’s awards are as follows:

Named Executive Officer	Service-Based Award	Performance-Based Award
CEO	N/A	N/A
CFO	25,000	25,000
Liner President	25,000	25,000
Logistics President	25,000	25,000

The foregoing summary of the Service-Based Awards and the Performance-Based Awards is qualified in its entirety by reference to the form of award agreement for each type of award, which are attached as Exhibits 10.1 and 10.2 and are incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d)      Exhibits

10.1    Form of Service Based Award

10.2    Form of Performance Based Award

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: March 19, 2009	By:	/s/ Michael T. Avara
		Michael T. Avara Senior Vice President and Chief Financial Officer

Exhibit Index

10.1      Form of Service Based Award

10.2      Form of Performance Based Award

EX-10.1

Exhibit 10.1

FORM OF TIME-VESTED
RESTRICTED STOCK AWARD

TO BE PRINTED ON COMPANY LETTERHEAD

March ____, 2009

[Name]
[Street]
[City, State]

Dear [Employee’s Name]:

     Horizon Lines, Inc. (the “Company”) has designated you to be a recipient of shares of common stock of the Company, par value $.01 per share (the “Company Stock”), subject to the restrictions and other terms set forth in this letter agreement (the “Agreement”) and in the Horizon Lines, Inc. Amended and Restated Equity Incentive Plan (the “Plan”).

     The grant of these shares is made pursuant to the Plan. The Plan is administered by the Compensation Committee (the “Committee”) appointed by the Board of Directors of the Company. The terms of the Plan are incorporated into this letter and in the case of any conflict between the Plan and this letter, the terms of the Plan shall control. A copy of the Plan is attached to this letter.

     1. Grant. In consideration of your agreements contained in this letter, the Company hereby grants you _________ shares of Company Stock (the “Restricted Shares”) as of March 18, 2009 (the “Grant Date”), the date on which the Committee met and approved the granting of this award. The Restricted Shares are subject to service-based restrictions as set forth below. Until these restrictions lapse, the Restricted Shares are forfeitable and nontransferable.

     2. Vesting. The Restricted Shares shall vest, and become freely transferable, as follows:

     (a) 100% of the Restricted Shares will vest and become freely transferable on March 18, 2012 (the “Vesting Date”).

     (b) You must be continuously employed by the Company (or any Subsidiary) from the Grant Date until the Vesting Date for any Restricted Shares to vest. If your employment with the Company (and its Subsidiaries, as applicable) terminates prior to the Vesting Date for any reason, any rights you may have with regard to unvested Restricted Shares shall be forfeited at that time, notwithstanding

your return to active employment with the Company or any Subsidiary prior to the Vesting Date.

     (c) Notwithstanding anything in this Section 2 to the contrary, if, prior to the Vesting Date, (i) your employment with the Company (or any Subsidiary) terminates due to your voluntary retirement, and (ii) your age plus your number of years of service with the Company (or any Subsidiary) equals or exceeds 75, a portion of the Restricted Shares will vest and become freely transferable as of the Vesting Date. The vested portion shall be determined by multiplying the total number of Restricted Shares by a fraction, the numerator of which is the number of days from the Grant Date through the date of your retirement and the denominator of which is the number of days from the Grant Date through the Vesting Date.

     3. Dividends.

     (a) During the period beginning with the Grant Date and ending with the Vesting Date (or the earlier forfeiture of your Restricted Shares), you will have the right to receive dividends on the Restricted Shares to the extent dividends are paid by the Company on its authorized and issued shares of Company Stock to its shareholders of record. These dividends, if any, will be paid at the same rate and at the same time as such dividends are paid by the Company on its authorized and issued shares. However, these dividends, if any, will be paid into a non-interest bearing account to be held until you shall have met the requirements for the vesting of the Restricted Shares as provided in Section 2 above, at which time the accumulated dividends attributable to the Restricted Shares that have vested and become transferable on the Vesting Date shall be paid to you in a single lump sum distribution within 90 days following the Vesting Date. Any dividends attributable to Restricted Shares that do not vest as of the Vesting Date shall be forfeited.

     (b) The Company’s obligation under this Section 3 shall be an unfunded and unsecured promise to pay. The Company shall not be obligated under any circumstances to fund its financial obligations under this Section 3 prior to the date any dividends become payable pursuant to the terms of this Agreement. All dividends held in the non-interest bearing account described in subsection (a) will remain general assets of the Company subject to the claims of its general creditors. This Agreement does not give to you any ownership interest in any assets of the Company, and all rights of ownership in the accumulated dividends are and remain in the Company. Your right to receive payment of accumulated dividends attributable to vested Restricted Shares shall be solely those of an unsecured general creditor of the Company.

     4. Power of Attorney. You hereby appoint the Corporate Secretary of the Company as your attorney in fact, with full power of substitution, and authorize him or her to provide instructions to the Company’s registrar and transfer agent for Company Stock as the Company may deem necessary or proper to comply with the intent and purposes of this letter

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and the Plan, including, upon the occurrence of a forfeiture pursuant to Section 2 above, to notify the registrar and transfer agent of the forfeiture of such shares, together with instructions to cancel the shares forfeited. The registrar and transfer agent shall be entitled to rely upon any notices and instructions delivered by your attorney in fact under the terms of the Plan and this letter.

     5. Book Entry Form; Delivery of Shares. The Company shall, as soon as administratively feasible after your execution of this letter, direct the Company’s transfer agent for Company Stock to make a book entry record showing ownership for the Restricted Shares in your name, subject to the terms and conditions of the Plan and this letter. As soon as practicable following the date on which the Restricted Shares become nonforfeitable and fully transferable pursuant to Section 2 above, the Company will issue appropriate instructions to that effect to the transfer agent for Company Stock.

     6. Rights as a Shareholder. Subject to the provisions of this letter, you generally will have all of the rights of a holder of Company Stock with respect to all of the Restricted Shares awarded to you under this letter from and after the Grant Date until the shares either vest or are forfeited, including the right to vote such shares and to receive dividends or other distributions paid thereon, as provided in Section 3.

     7. Transfer Restrictions. You may not sell, assign, transfer, pledge, hypothecate or encumber your right to receive Restricted Shares under this letter prior to the time such Restricted Shares become fully vested in accordance with this letter.

     8. Fractional Shares. A fractional share of Company Stock will not be issued and any fractional shares will be disregarded.

     9. Adjustments. If the number of outstanding shares of Company Stock is increased or decreased as a result of a stock dividend, stock split or combination of shares, recapitalization, merger in which the Company is the surviving corporation, or other change in the Company’s capitalization without the receipt of consideration by the Company, the number and kind of your unvested Restricted Shares shall be proportionately adjusted by the Committee, whose determination shall be binding.

     10. Notices. Any notice to be given under the terms of this letter shall be addressed to the Corporate Secretary at Horizon Lines, Inc., Attn. Corporate Secretary, 4064 Colony Road, Suite 200, Charlotte, NC 28211. Any notice to be given to you shall be given to you and shall be addressed to you at your last known address at the time notice is sent. Notices shall be deemed to have been duly given if mailed first class, postage prepaid, addressed as above.

     11. Applicable Withholding Taxes.

     (a) No Restricted Shares that have become vested and fully transferable pursuant to Section 2 above shall be delivered to you until you have paid to the

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Company the amount that must be withheld with respect to those Restricted Shares under federal, state and local income and employment tax laws (the “Applicable Withholding Taxes”) or you and the Company have made satisfactory arrangements for the payment of such taxes. As an alternative to making a cash payment to satisfy the Applicable Withholding Taxes, the Committee may in its discretion (i) permit you to deliver shares of Company Stock which you already own (valued at their Fair Market Value as of the delivery date) in whole or partial satisfaction of such taxes or (ii) have the Company retain that number of Restricted Shares (valued at their Fair Market Value as of the delivery date) that would satisfy the Applicable Withholding Taxes.

     (b) The Company shall withhold Applicable Withholding Taxes with respect to accumulated dividends directly from the amount of accumulated dividends payable to you pursuant to Section 3.

     12. Applicable Securities Laws. The Company may delay delivery of Restricted Shares that have become vested and fully transferable pursuant to Section 2 above until (i) the admission of such shares to listing on any stock exchange on which the Company Stock may then be listed, (ii) receipt of any required representation by you or completion of any registration or other qualification of such shares under any state or federal law or regulation that the Company’s counsel shall determine as necessary or advisable, and (iii) receipt by the Company of advice by counsel that all applicable legal requirements have been complied with. Additionally, you may be required to execute a customary written indication of your investment intent and such other agreements the Company deems necessary or appropriate to comply with applicable securities laws.

     13. Acceptance of Restricted Shares. By signing below, you indicate your acceptance of these Restricted Shares and your agreement to the terms and conditions set forth in this letter agreement, which, together with the terms of the Plan, shall become the Company’s Restricted Stock Award Agreement with you. You also hereby acknowledge receipt of a copy of the Plan and agree to all of the terms and conditions of the Plan, as it may be amended from time to time. Unless the Company otherwise agrees in writing, this letter will not be effective as a Restricted Stock Award Agreement if you do not sign and return a copy.

     14. Compliance with Section 409A of the Code. It is intended that this Agreement comply with Section 409A of the Code and Treasury Regulations thereunder to the extent it is subject to Section 409A, and other guidance and transition rules issued thereunder (“Section 409A”), and this Agreement will be interpreted and operated consistently with that intent. If the Company determines that any provisions of this Agreement do not comply with the requirements of Section 409A of the Code, the Company has the authority to amend this Agreement to the extent necessary (including retroactively) in order to preserve compliance with said Section 409A. The Company also has express discretionary authority to take such other actions as may be permissible to correct any failures to comply in operation with the requirements of Section 409A. Neither the Company nor you have any discretion to accelerate the timing or schedule of any benefit payment under this Agreement that is subject to Section 409A, except as specifically provided herein or as may be permitted pursuant to Section 409A.

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     IN WITNESS WHEREOF, the Company has caused this Restricted Stock Award Agreement to be signed, as of this ___ date of March, 2009.

	HORIZON LINES, INC.
	By:
	Its:
Agreed and Accepted:
[Name of Grant Recipient]
[Date]

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EX-10.2

Exhibit 10.2

FORM OF PERFORMANCE-BASED
RESTRICTED STOCK AWARD

TO BE PRINTED ON COMPANY LETTERHEAD

March ___, 2009

[Name]
[Street]
[City, State]

Dear [Employee’s Name]:

     Horizon Lines, Inc. (the “Company”) has designated you to be a recipient of shares of common stock of the Company, par value $.01 per share (the “Company Stock”), subject to the performance restrictions and other terms set forth in this letter agreement (the “Agreement”) and in the Horizon Lines, Inc. Amended and Restated Equity Incentive Plan (the “Plan”).

     The grant of these shares is made pursuant to the Plan. The Plan is administered by the Compensation Committee (the “Committee”) appointed by the Board of Directors of the Company. The terms of the Plan are incorporated into this letter and in the case of any conflict between the Plan and this letter, the terms of the Plan shall control. A copy of the Plan is attached to this letter.

     1. Grant. In consideration of your agreements contained in this letter, the Company hereby grants you _________ shares of Company Stock (the “Restricted Shares”) as of March 18, 2009 (the “Grant Date”), the date on which the Committee met and approved the granting of this award. The Restricted Shares are subject to performance and service restrictions as set forth below. The actual number of shares of Company Stock you receive will be subject to the satisfaction of the performance restrictions set forth below and may be greater or less than the number of Restricted Shares awarded to you and set forth in this Section 1. Until the restrictions set forth in Section 2 and Section 3 lapse, the Restricted Shares are forfeitable and nontransferable.

     2. Performance Restrictions. The number of shares of Company Stock you may receive are subject to the satisfaction of the performance restrictions set forth below (this number is referred to as your “Earned Restricted Shares”). Should the Company’s net income for the fiscal year ending December 20, 2009 equals less than $7,000,000, you will not receive any of the Restricted Shares.

     (a) In the event that the Company achieves a net income of $7,000,000 for the fiscal year ending December 20, 2009 (the “Minimum Net Income”), your Earned Restricted Shares will be 50% of the Restricted Shares described in Section 1.

     (b) In the event that the Company achieves a net income of $14,000,000 for the fiscal year ending December 20, 2009 (the “Target Net Income”), your Earned Restricted Shares will be 100% of the Restricted Shares described in Section 1.

     (c) In the event that the Company achieves a net income of $21,000,000 for the fiscal year ending December 20, 2009 (the “Maximum Net Income”), your Earned Restricted Shares will be 200% of the Restricted Shares described in Section 1.

     (d) In the event that the Company achieves a net income for the fiscal year ending December 20, 2009 that is (i) between the Minimum Net Income amount and the Target Net Income amount or (ii) between the Target Net Income amount and the Maximum Net Income amount, your Earned Restricted Shares will be a percentage of the Restricted Shares described in Section 1, which percentage shall be determined based on a linear interpolation between the applicable net income amounts described above.

     Notwithstanding the foregoing, you must also satisfy the service restrictions described in Section 3 below to be eligible to receive your Earned Restricted Shares, if any.

     3. Vesting. The Earned Restricted Shares shall vest, and become freely transferable, as follows:

     (a) 100% of the Earned Restricted Shares will vest and become freely transferable as of March 18, 2012 (the “Vesting Date”). Earned Restricted Shares (and any dividends accumulated thereon pursuant to Section 4) that do not vest as of the Vesting Date shall be forfeited.

     (b) You must be employed by the Company (or any Subsidiary) on the Vesting Date for any Earned Restricted Shares to vest. If your employment with the Company (or any Subsidiary) terminates prior to the Vesting Date for any reason, any rights you may have with regard to unvested Earned Restricted Shares (and any dividends accumulated thereon pursuant to Section 4) shall be forfeited at that time, notwithstanding your return to active employment prior to the Vesting Date.

     (c) Notwithstanding anything in this Section 3 to the contrary, if, prior to the Vesting Date, (i) your employment with the Company (and its Subsidiaries, as applicable) terminates due to your voluntary retirement, and (ii) your age plus your number of years of service with the Company (or any Subsidiary) equals or exceeds 75, a portion of the Earned Restricted Shares will vest and become freely transferable as of the Vesting Date. The vested portion shall be determined by multiplying the total

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number of Earned Restricted Shares by a fraction, the numerator of which is the number of days from the Grant Date through the date of your retirement and the denominator of which is the number of days from the Grant Date through the Vesting Date.

     4. Dividends.

     (a) During the period beginning with the Grant Date and ending with the Vesting Date (or the earlier forfeiture of your Restricted Shares), you will have the right to receive dividends on the Earned Restricted Shares to the extent dividends are paid by the Company on its authorized and issued shares of Company Stock to its shareholders of record. These dividends, if any, will be paid at the same rate and at the same time as such dividends are paid by the Company on its authorized and issued shares. However, these dividends, if any, will be paid into a non-interest bearing account to be held until you shall have met the requirements for the vesting of the Earned Restricted Shares as provided in Section 3 above, at which time the accumulated dividends attributable to the Earned Restricted Shares that have vested and become transferable on the Vesting Date shall be paid to you in a single lump sum distribution within 90 days following the Vesting Date. Any dividends attributable to Earned Restricted Shares that do not vest as of the Vesting Date shall be forfeited.

     (b) The Company’s obligation under this Section 4 shall be an unfunded and unsecured promise to pay. The Company shall not be obligated under any circumstances to fund its financial obligations under this Section 4 prior to the date any dividends become payable pursuant to the terms of this Agreement. All dividends held in the non-interest bearing account described in subsection (a) will remain general assets of the Company subject to the claims of its general creditors. This Agreement does not give to you any ownership interest in any assets of the Company, and all rights of ownership in the accumulated dividends are and remain in the Company. Your right to receive payment of accumulated dividends attributable to vested Earned Restricted Shares shall be solely those of an unsecured general creditor of the Company.

     5. Forfeiture of Earned Restricted Shares. To facilitate the cancellation of any Earned Restricted Shares pursuant to Section 2 or Section 3 above, you hereby appoint the Corporate Secretary of the Company as your attorney in fact, with full power of substitution, and authorize him or her, upon the occurrence of a forfeiture pursuant to Section 2 or Section 3 above, to notify the Company’s registrar and transfer agent of the forfeiture of such shares and to deliver to the registrar and transfer agent the certificate representing such shares together with instructions to cancel the shares forfeited. The registrar and transfer agent shall be entitled to rely upon any notices and instructions delivered by your attorney in fact concerning a forfeiture under the terms of this letter.

     6. Custody of Certificates. At the option of the Company, custody of stock certificates evidencing Earned Restricted Shares shall be retained by the Company or held in uncertificated form. The Company shall deliver to you one or more stock certificates free of all

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restrictions evidencing your Earned Restricted Shares if and when they become fully vested as of the Vesting Date.

     7. Rights as a Shareholder. Subject to the provisions of this letter, you generally will have all of the rights of a holder of Company Stock with respect to all of the Restricted Shares awarded to you under this letter from and after the Grant Date until the shares either vest or are forfeited, including the right to vote such shares and to receive dividends or other distributions paid thereon, subject to the provisions of Section 4.

     8. Transfer Restrictions. You may not sell, assign, transfer, pledge, hypothecate or encumber your right to receive Restricted Shares under this letter prior to the time such Earned Restricted Shares become fully vested in accordance with this letter.

     9. Fractional Shares. A fractional share of Company Stock will not be issued and any fractional shares will be disregarded.

     10. Adjustments. If the number of outstanding shares of Company Stock is increased or decreased as a result of a stock dividend, stock split or combination of shares, recapitalization, merger in which the Company is the surviving corporation, or other change in the Company’s capitalization without the receipt of consideration by the Company, the Performance Target and the number and kind of your unvested Restricted Shares shall be proportionately adjusted by the Committee, whose determination shall be binding.

     11. Notices. Any notice to be given under the terms of this letter shall be addressed to the Corporate Secretary at Horizon Lines, Inc., Attn. Corporate Secretary, 4064 Colony Road, Suite 200, Charlotte, NC 28211. Any notice to be given to you shall be given to you and shall be addressed to you at your last known address at the time notice is sent. Notices shall be deemed to have been duly given if mailed first class, postage prepaid, addressed as above.

     12. Applicable Withholding Taxes.

     (a) No stock certificates evidencing Earned Restricted Shares free from a restrictive legend shall be delivered to you until you have paid to the Company the amount that must be withheld with respect to those Earned Restricted Shares under federal, state and local income and employment tax laws (the “Applicable Withholding Taxes”) or you and the Company have made satisfactory arrangements for the payment of such taxes. As an alternative to making a cash payment to satisfy the Applicable Withholding Taxes, you may elect to (i) deliver shares of Company Stock which you already own (valued at their Fair Market Value as of the delivery date) in whole or partial satisfaction of such taxes or (ii) have the Company retain that number of Earned Restricted Shares (valued at their Fair Market Value as of the delivery date) that would satisfy the Applicable Withholding Taxes. Applicable Withholding Taxes with respect to any dividends payable pursuant to Section 4 shall be withheld by the Company directly from such dividends.

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     (b) The Company shall withhold Applicable Withholding Taxes with respect to accumulated dividends directly from the amount of accumulated dividends payable to you pursuant to Section 4.

     13. Applicable Securities Laws. The Company may delay delivery of the stock certificates evidencing Earned Restricted Shares until (i) the admission of such shares to listing on any stock exchange on which the Company Stock may then be listed, (ii) receipt of any required representation by you or completion of any registration or other qualification of such shares under any state or federal law or regulation that the Company’s counsel shall determine as necessary or advisable, and (iii) receipt by the Company of advice by counsel that all applicable legal requirements have been complied with. Additionally, you may be required to execute a customary written indication of your investment intent and such other agreements the Company deems necessary or appropriate to comply with applicable securities laws.

     14. Acceptance of Restricted Shares. By signing below, you indicate your acceptance of these Restricted Shares and your agreement to the terms and conditions set forth in this letter agreement, which, together with the terms of the Plan, shall become the Company’s Restricted Stock Award Agreement with you. You also hereby acknowledge receipt of a copy of the Plan and agree to all of the terms and conditions of the Plan, as it may be amended from time to time. Unless the Company otherwise agrees in writing, this letter will not be effective as a Restricted Stock Award Agreement if you do not sign and return a copy.

     15. Power of Attorney. You hereby appoint the Corporate Secretary of the Company as your attorney in fact, with full power of substitution, and authorize him or her to provide instructions to the Company’s registrar and transfer agent for Company Stock as the Company may deem necessary or proper to comply with the intent and purposes of this letter and the Plan, including, upon the occurrence of a forfeiture pursuant to Section 2 above, to notify the registrar and transfer agent of the forfeiture of such shares, together with instructions to cancel the shares forfeited. The registrar and transfer agent shall be entitled to rely upon any notices and instructions delivered by your attorney in fact under the terms of the Plan and this letter.

     16. Compliance with Section 409A of the Code. It is intended that this Agreement comply with Section 409A of the Code and Treasury Regulations thereunder to the extent it is subject to Section 409A (“Section 409A”), and other guidance and transition rules issued thereunder, and this Agreement will be interpreted and operated consistently with that intent. If the Company determines that any provisions of this Agreement do not comply with the requirements of Section 409A of the Code, the Company has the authority to amend this Agreement to the extent necessary (including retroactively) in order to preserve compliance with said Section 409A. The Company also has express discretionary authority to take such other actions as may be permissible to correct any failures to comply in operation with the requirements of Section 409A. Neither the Company nor you have any discretion to accelerate the timing or schedule of any benefit payment under this Agreement that is subject to Section 409A, except as specifically provided herein or as may be permitted pursuant to Section 409A.

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     IN WITNESS WHEREOF, the Company has caused this Restricted Stock Award Agreement to be signed, as of this ___ date of March, 2009.

	HORIZON LINES, INC.
	By:
	Its:
Agreed and Accepted:
[Name of Grant Recipient]
[Date]

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