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Put/Call Agreement, Dated As of July 7, 2004

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Exhibit 10.27


EXECUTION VERSION


PUT/CALL AGREEMENT

by and among


H-LINES HOLDING CORP.

and the


OPTIONHOLDERS


signatory hereto


Dated as of July 7, 2004.


PUT/CALL AGREEMENT


PUT/CALL AGREEMENT, dated as of July 7, 2004 (this " Agreement" ), by and among H-LINES HOLDING CORP., a Delaware corporation (" H-Lines" ) and each of the optionholders signatory hereto (each, an " Optionholder" ). H-Lines and the Optionholders are each individually referred to herein as a " Party" and together collectively referred to herein as the " Parties" .


WHEREAS, reference is made to that certain Agreement and Plan of Merger, dated May 22, 2004, by and among H-Lines, H-Lines Subcorp., a Delaware corporation and a wholly-owned subsidiary of H-Lines, Horizon Lines Holding Corp. (" Horizon" ), and TC Group, L.L.C., a Delaware limited liability company (such agreement, as amended or modified, the " Merger Agreement" );


WHEREAS, reference is made to that certain voting trust agreement, dated as of July 7, 2004, by and among Horizon and the Optionholders (such agreement, as amended or modified, the " Horizon Voting Trust Agreement" ).

WHEREAS, pursuant to the Merger Agreement, as a condition to any right to elect to retain all or any portion of such Optionholder' s options to purchase shares of common stock, par value $.01, of Horizon (the " Rollover Options" ) in lieu of such Optionholder' s right to receive a portion of the Merger Consideration, such Optionholder shall agree to enter into this Agreement;


WHEREAS, the Rollover Options provide for the Optionholder to purchase shares of common stock, par value $.01, of Horizon (the " Horizon Common Stock" ) at the exercise price stated therein (the " Exercise Price" ).

NOW, THEREFORE, the parties hereto hereby agree as follows:

1. Definitions . Capitalized terms used in this Agreement and not otherwise defined herein shall have their respective meanings set forth in the Merger Agreement.

2. Put Right; Call Right .

(a) Put Right . H-Lines hereby grants to each Optionholder, individually, the right and option (but not the obligation) to require H-Lines to exchange, at any time and from time to time, all or any portion of the shares of Horizon Common Stock issued upon exercise of the Rollover Options (such shares issued upon exercise, the " Horizon Shares" ) held by such Optionholder for shares of redeemable preferred stock, par value $0.01 per share, of H-Lines (the " H-Lines Preferred Stock" ) and shares of common stock, par value $0.01 per share, of H-Lines (the " H-Lines Common Stock" ) (such shares of H-Lines Preferred Stock and H-Lines Common Stock together, the " H-Lines Shares" ) in the ratio determined in accordance with Section 2(e) (such right of Optionholder, the " Put Right" ).

(b) Call Right . Each Optionholder, on behalf of itself only, hereby grants to H-Lines the right and option (but not the obligation) to require such Optionholder to surrender, at

any time and from time to time, all or any portion of the Horizon Shares held by such Optionholder in exchange for H-Lines Shares in the ratio determined in accordance with Section 2(e) (such right and option of H-Lines, the " Call Right" ).

(c) Dividend Payments . Upon exercise of the Put Right or Call Right, in addition to the H-Lines Shares to be received by the Optionholder in exchange for Horizon Shares, such Optionholder shall receive from H-Lines any dividends or distributions that would have been received by such Optionholder if such Optionholder owned the H-Lines Shares being received pursuant to the exercise of the Put Right or Call Right on the date hereof (the " Past Dividend Payments" ).


(d) Notice . (i) An Optionholder may exercise its Put Right by providing written notice to H-Lines indicating the number of Horizon Shares which are to be exchanged and the effective date of such exercise; provided , that such effective date shall not be less than one business day after the date of receipt of the written notice.

(ii) H-Lines may exercise its Call Right with respect to any Optionholder by providing written notice to such Optionholder indicating the number of Horizon Shares which are to be exchanged and the effective date of such exercise; provided , that such effective date shall not be less than one business day after the date of receipt of the written notice.

(e) Exchange Ratio . Upon exercise of either the Put Right or the Call Right, the number of H-Lines Shares which the applicable Optionholder shall receive in exchange for the Horizon Shares shall be determined in the following manner. The value attributable to each share of H-Lines Common Stock and H-Lines Preferred Stock shall be $8 and $10, respectively. The ratio of shares of H-Lines Common Stock and H-Lines Preferred Stock to be received by such Optionholder shall equal 1 share of H-Lines Common Stock to 15 shares of H-Lines Preferred Stock (together, a " Unit" ). The value attributable to each Horizon Share (the " Horizon Common Stock Value" ) being exchanged shall equal the Cash Per Fully Diluted Share (as defined in the Merger Agreement). Each Horizon Share shall be exchangeable into a number of Units equal to the Horizon Common Stock Value divided by $158.

(f) Reservation of Shares and Agreement to be Bound . H-Lines shall at all times keep reserved such number of H-Lines Common Stock H-Lines Preferred Stock into which all the Horizon Shares held by the Optionholders at such time could be exchanged if all the Roll-Over Options were exercised and the Put Rights or the Call Rights are exercised in full.

(e) Closing . (i) The closing of the redemption and exchange of Horizon Shares for H-Lines Shares pursuant to exercise of the Put Right or Call Right as set forth in this Section (the " Closing" ) shall take place at the offices of Schulte Roth & Zabel LLP, 919 Third Avenue, New York, New York 10022, on the Business Day (the " Closing Date" ) set forth in the written notice.


(ii) At the Closing, (A) H-Lines shall issue and deliver to the applicable Optionholder, certificates representing the Units to be issued by it pursuant to this Agreement and cash representing the Past Dividend Payments (without any interest therefor), (B) the applicable Optionholder shall deliver to H-Lines certificates representing the Horizon Shares


2

to be exchanged therefor, (C) such Optionholder shall deliver duly executed copies of each of the Stockholders Agreement and the Voting Trust Agreement, dated July 7 2004, by and among H-Lines and the stockholders listed on the signature pages thereto (as amended or modified, the " H-Lines Voting Trust Agreement" and together with the Horizon Voting Trust Agreement, the " Voting Trust Agreements" ), and (D) each party to this Agreement shall deliver to the other such other documents, instruments and writings as may be required to be delivered in accordance with this Agreement or as may be reasonably requested by such other party.


3. Representations and Warranties of Optionholder . Each Optionholder, on behalf of itself only, makes the following representations and warranties.

(a) Such Optionholder is, and will be, acquiring Horizon Shares and H-Lines Shares for investment for its own account and not with a view to, or for resale in connection with, the distribution or other disposition thereof in violation of the Securities Act. Such Optionholder agrees that it will not, directly or indirectly, offer, transfer, sell, pledge, hypothecate or otherwise dispose of any Horizon Shares or H-Lines Shares (or solicit any offers to buy, purchase, or otherwise acquire or take a pledge of any Horizon Shares or H-Lines Shares), except in compliance with the Securities Act, the rules and regulations promulgated thereunder, applicable state securities laws, the provisions of this Agreement, the Stockholders Agreement and the Voting Trust Agreements. Such Optionholder represents
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