June 28, 2007
EXHIBIT 10.1
June 28, 2007
Xx. Xxxxxxx X. Xxxxxxx
9015 Winged Xxxxxx
Xxxxxxxxx, XX 00000
9015 Winged Xxxxxx
Xxxxxxxxx, XX 00000
Dear Xx. Xxxxxxx:
In exchange for the termination of your employment agreement with the Company dated July 7,
2004 (the “Employment Agreement”) without the payment of any severance amount or any other amounts
thereunder and in consideration of your agreements contained in this letter, Horizon Lines, Inc.
(the “Company”) hereby grants to you 75,965 shares of common stock of the Company, par value $.01
per share (the “Company Stock”), as of June 28, 2007, subject to the terms set forth in this letter
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
“Board”). 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. As noted above, the Company hereby grants you 75,965 shares of Company
Stock (the “Restricted Shares”) as of June 28, 2007 (the “Grant Date”). The Restricted Shares are
subject to service restrictions 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 December 31,
2009 (the “Vesting Date”) provided that you have been in continuous employment with the Company (or
any Subsidiary) for the period beginning on the Grant Date and ending on the Vesting Date. If you
terminate employment prior to the Vesting Date for any reason other than described in subsection
(b) below, you will forfeit all rights in the Restricted Shares at that time, notwithstanding your
return to active service prior to the Vesting Date.
(b) Notwithstanding subsection (a) above, if, prior to the Vesting Date, the Company (or any
Subsidiary) terminates your employment other than for Cause, 100% of the Restricted Shares will
vest and become freely transferable as of the date of your termination.
Restricted Shares that do not vest as of the date of your termination shall be forfeited at that time.
(c) For purposes of subsection (b) above, “Cause” shall mean (i) your willful and continued
failure to attempt in good faith (other than as a result of incapacity due to mental or physical
impairment) to substantially perform your duties; (ii) your failure to attempt in good faith to
carry out, or comply with, in any material respect any lawful and reasonable directive of the
Board; (iii) your material breach of the Company’s code of ethics; provided which,
for each of (i) through (iii), is not remedied within 30 days after receipt of written notice from
the Board specifying such failure or breach; (iv) your conviction, plea of no contest or plea of
nolo contendere, or imposition of unadjudicated probation for any felony (other than a traffic
violation or arising purely as a result of the Executive’s title or position with the Company); (v)
your knowing unlawful use (including being under the influence) or possession of illegal drugs; or
(vi) your commission of a material bad faith act of fraud, embezzlement, misappropriation, willful
misconduct, gross negligence, or breach of fiduciary duty, in each case against the Company.
3. Dividends. During the period beginning with the Grant Date and ending with the
Vesting Date or the earlier forfeiture of your Restricted Shares, you will be entitled to receive
dividends and other distributions (collectively, “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 to you at the same rate and at
the same time as such dividends are paid by the Company with respect to authorized and issued
shares held by its other shareholders of record.
4. Forfeiture of Restricted Shares. To facilitate the cancellation of any Restricted
Shares pursuant to Section 2 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 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.
5. Custody of Certificates. At the option of the Company, custody of stock
certificates evidencing 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
restrictions evidencing your Restricted Shares if and when they become fully vested under the terms
of this letter.
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 paid thereon in
accordance with the provisions of Section 3.
7. Transfer Restrictions. You may not sell, assign, transfer, pledge, hypothecate or
encumber the Restricted Shares awarded to you 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 0000 Xxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, XX 00000. 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. No stock certificates evidencing Restricted Shares
shall be delivered to you until you have paid to the Company the amount that must be withheld 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) 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) that would satisfy the Applicable Withholding
Taxes.
12. Applicable Securities Laws. The Company may delay delivery of the stock
certificates evidencing 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.
13. Termination of Employment Agreement. The grant of these Restricted Shares is made
in exchange for the termination of your Employment Agreement. Effective as of the Date of Grant,
your Employment Agreement shall be null and void, shall cease to be of any force or effect and
neither you nor the Company shall have any further obligation or right under the Employment
Agreement. The termination of your Employment Agreement is not subject to, or conditioned in any
way, on the Restricted Shares vesting.
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 agree to and acknowledge the
termination of your Employment Agreement as provided herein. You 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 to Xxxx Xxxxxxxxxxx, Vice
President of Human Resources, by July 6, 2007.
IN WITNESS WHEREOF, the Company has caused this Restricted Stock Award
Agreement to be signed, as of this 28th date of June, 2007.
| HORIZON LINES, INC. |
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| By: | /s/ Xxxx Xxxxxxxxxxx | |||
| Its: | Vice President - Human Resources | |||
Agreed and Accepted:
/s/ Xxxxxxx X. Xxxxxxx |
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Xxxxxxx X. Xxxxxxx
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June
28, 2007 |
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Date
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