Exhibit 10.49
HOLLY LOGISTIC SERVICES, L.L.C.
PERFORMANCE UNIT AGREEMENT
This Performance Unit Agreement (the “Agreement”) is made and entered into by
and between HOLLY LOGISTIC SERVICES, L.L.C., a Delaware limited partnership (the
“Company”), and                                          (the “Employee”). This
Agreement is entered into as of the 3rd day of March, 2009 (the “Date of
Grant”).
W I T N E S S E T H:
WHEREAS, the Company has adopted the HOLLY ENERGY PARTNERS, L.P. LONG-TERM
INCENTIVE PLAN (the “Plan”) to attract, retain and motivate employees,
executives directors and consultants; and
WHEREAS, the Company believes that a grant to the Employee of performance units
of Holly Energy Partners, L.P. (the “Partnership”) as part of the Employee’s
compensation for services provided to the Company and/or the Partnership is
consistent with the stated purposes for which the Plan was adopted.
NOW, THEREFORE, in consideration of the services rendered by the Employee, it is
agreed by and between the Company and the Employee, as follows:
1. Grant. The Company hereby grants to the Employee as of the Date of Grant an
Award of                      performance units (the “Performance Units”),
subject to the terms and conditions set forth in this Agreement. Depending on
the performance of the Partnership, the Employee may earn from fifty percent
(50%) to one hundred fifty percent (150%) of the Performance Units, based on the
increase in the Partnership’s cash distributions on the Common Units of the
Partnership (“Common Units”).
2. Distribution Equivalent Rights. As long as the Employee holds the Performance
Units granted pursuant to this Agreement, the Employee shall be entitled to
receive distribution equivalent rights (“DERs’) in accordance with this
Section 2. In the event the Partnership makes a distribution in respect of
outstanding Common Units and, on the record date for such distribution, the
Employee holds Performance Units that have not yet become earned and payable
under this Agreement, the Company shall pay the Employee an amount in cash equal
to the distribution amounts the Employee would have received if the Employee
were the holder of record, as of such record date, of a number of Common Units
equal to the number of such Performance Units that have not become earned and
payable as of such record date, such payment to be made on or promptly following
the date that the Partnership makes such distribution (however, in no event
shall the DERs be paid later than 30 days following the date on which the
Partnership makes such distribution to unitholders generally).
3. Nature of Award. The Performance Units represent an Award for the
“Performance Period” which begins on January 1, 2009 and ends on December 31,
2011. Following the completion of the Performance Period, the Employee shall be
entitled to a payment of Common Units as determined under this Section 3 and/or
Section 4, as applicable, and payable in Common Units at the time indicated in
Section 5 or Section 4(b), as applicable.

 

 

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(a) Performance Measure. The percentage of Performance Units earned for the
Performance Period is determined on the basis of the total increase in the cash
distribution per Common Unit during the Performance Period over an annualized
cash distribution of $3.06 per Common Unit.
(b) Common Units Payable. The number of Common Units payable is equal to the
result of multiplying Performance Units by the “Performance Percentage” set
forth below:

          3-Year Total Increase in Cash   Performance Percentage (%) to  
Distributions Per Common   be Multiplied by Performance   Unit over $3.06  
Units  
$0.000
    50 %
$0.658
    100 %
$1.346
    150 %

The percentages above shall be interpolated between points.
4. Early Termination. In the event Employee ceases to provide services to the
Partnership and the Company prior to the end of the Performance Period on
account of an event described in this Section 4, the number of Performance Units
with respect to which payment at the end of the Performance Period is based
shall be determined as follows:
(a) In the event that the Employee ceases to provide services to the Partnership
and the Company:
(i) for any reason other than voluntary separation, Cause (as defined in
Section 4(c)(vii)) or a Special Involuntary Separation (as defined in
Section 4(c)(vi)),
(ii) due to the Employee’s death,
(iii) due to the Employee’s total and permanent disability as determined by the
Compensation Committee of the Company’s Board of Directors (the “Committee”) in
its sole discretion, or

 

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(iv) due to the Employee’s retirement on or after attaining normal retirement
age of 62 or after attaining an earlier retirement age approved by the Committee
in its sole discretion, the number of Performance Units that shall be earned by
and paid to the Employee or his beneficiary, in accordance with and at the time
specified in Section 5, shall be determined as follows: the Employee shall
forfeit a percentage of the Performance Units earned equal to the percentage
that the number of full months following the date of separation, death,
disability or retirement to the end of the Performance Period bears to
thirty-six (36). The Committee shall determine the number of Performance Units
earned by the Employee or his beneficiary in accordance with Section 3 for the
entire Performance Period as soon as administratively practicable after the end
of the Performance Period. In its sole discretion, the Committee may make a
payment to the Employee assuming a Performance Percentage of up to one hundred
fifty percent (150%) of the Performance Units instead of the pro-rata number of
Performance Units as determined pursuant to this Section 4(a). Unless the
Committee determines otherwise, the Employee will have no right to any other
Performance Units and those other Performance Units granted under this Agreement
will be forfeited. If the Employee separates from employment prior to the end of
the Performance Period due to voluntary separation or on account of Cause, all
Performance Units hereunder will be forfeited.
(b) In the event of a Special Involuntary Termination, as defined in Section
4(c)(vi), before the end of the Performance Period, no Performance Units shall
be forfeited, and payment with respect to one hundred fifty percent (150%) of
the Performance Units shall be made as soon as administratively practicable
following the Special Involuntary Termination, but in no event later than two
and one-half months after the end of the calendar year in which the Special
Involuntary Termination occurs. Payment pursuant to this Section 4(b) is in lieu
of payment pursuant to Section 4(a) and if the Employee receives payment
pursuant to this Section 4(b) the Employee will not be entitled to any payment
pursuant to Section 4(a).
(c) Definitions. For purposes of this Section 4,
(i) “Change in Control” shall mean:
A. Any Person (as defined in Section 4(c)(ii) below), other than Holly
Corporation (“Holly”) or any of its wholly-owned subsidiaries, HEP Logistics
Holdings, L.P. (the “General Partner”), the Partnership, the Company, or any of
their subsidiaries, a trustee or other fiduciary holding securities under an
employee benefit plan of Holly, the Partnership, the Company or any of their
Affiliates (as defined in Section 4(c)(v) below), an underwriter temporarily
holding securities pursuant to an offering of such securities, or entity owned,
directly or indirectly, by the holders of the voting securities of Holly, the
Company, the General Partner or the Partnership in substantially the same
proportions as their ownership in Holly, the Company, the General Partner or the
Partnership, respectively, is or becomes the

 

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Beneficial Owner (as defined in Section 4(c)(iii) below), directly or
indirectly, of securities of Holly, the Company, the General Partner or the
Partnership (not including in the securities beneficially owned by such person
any securities acquired directly from Holly, the General Partner, the
Partnership, the Company or their Affiliates) representing more than forty
percent (40%) of the combined voting power of Holly’s, the Company’s, the
General Partner’s or the Partnership’s then outstanding securities, excluding
any Person who becomes such a Beneficial Owner in connection with a transaction
described in Section 4(c)(i)(C)(I) below.
B. The individuals who as of the Date of Grant constitute the Board of Directors
of Holly (the “Holly Board”) and any New Director (as defined in
Section 4(c)(iv) below) cease for any reason to constitute a majority of the
Holly Board.
C. There is consummated a merger or consolidation of Holly, the Company, the
General Partner or the Partnership with any other entity, except if:
(1) the merger or consolidation results in the voting securities of Holly, the
Company, the General Partner or the Partnership outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or any parent thereof)
at least sixty percent (60%) of the combined voting power of the voting
securities of Holly, the Company, the General Partner or the Partnership, as
applicable, or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation; or
(2) the merger or consolidation is effected to implement a recapitalization of
Holly, the Company, the General Partner or the Partnership (or similar
transaction) in which no Person is or becomes the Beneficial Owner, directly, or
indirectly, of securities of, as applicable, (not including in the securities
beneficially owned by such Person any securities acquired directly from Holly,
the Company, the General Partner or the Partnership or their Affiliates other
than in connection with the acquisition by Holly, the Company, the General
Partner or the Partnership or its Affiliates of a business) representing more
than forty percent (40%) of the combined voting power of Holly’s, the Company’s
the General Partner’s or the Partnership’s, as applicable, then outstanding
securities.

 

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D. The holders of the voting securities of Holly, the Company, the General
Partner or the Partnership approve a plan of complete liquidation or dissolution
of Holly, the Company, the General Partner or the Partnership or an agreement
for the sale or disposition by the Company of all or substantially all of the
Company’s assets, other than a sale or disposition by holders of the voting
securities of Holly, the Company, the General Partner or the Partnership of all
or substantially all of Holly’s, the Company’s the General Partner’s or the
Partnership’s assets, as applicable, to an entity at least sixty percent (60%)
of the combined voting power of the voting securities of which is owned by the
direct and indirect holders of the voting securities of Holly, the Company, the
General Partner or the Partnership in substantially the same proportions as
their ownership of the voting securities of Holly, the Company, the General
Partner or the Partnership, as applicable, immediately prior to such sale.
(ii) “Person” shall have the meaning given in section 3(a)(9) of the Securities
Exchange Act of 1934 (the “1934 Act”) as modified and used in sections 13(d) and
14(d) of the 1934 Act.
(iii) “Beneficial Owner” shall have the meaning provided in Rule 13d-3 under the
1934 Act.
(iv) “New Director” shall mean an individual whose election by Holly’s Board or
nomination for election by holders of the voting securities of Holly was
approved by a vote of at least two-thirds (2/3) of the directors then still in
office who either were directors at the Date of Grant or whose election or
nomination for election was previously so approved or recommended. However, New
Director shall not include a director whose initial assumption of office is in
connection with an actual or threatened election contest, including but not
limited to a consent solicitation relating to the election of directors of the
Holly.
(v) “Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under
section 12 of the 1934 Act.
(vi) “Special Involuntary Termination” shall mean the occurrence of (1) or
(2) within sixty (60) days prior to, or at any time after, a Change in Control
(as defined in Section 4(c)(i)), where (1) is termination by the Company of the
Employee’s (a) employment with the Company (including subsidiaries of the
Company) or (b) provision of executive services to the Partnership and the
Company, for any reason other than Cause (as defined in Section 4(c)(vii)) and
(2) is a resignation by the Employee from employment or service with the Company
(including subsidiaries of the Company) within ninety (90) days after an Adverse
Change (as defined in Section 4(c)(viii)) in the terms of the Employee’s
employment.

 

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(vii) “Cause” shall mean:
A. An act or acts of dishonesty on the part of the Employee constituting a
felony or serious misdemeanor and resulting or intended to result directly in
gain or personal enrichment at the expense of the Company;
B. Gross or willful and wanton negligence in the performance of the Employee’s
material and substantial duties of employment with the Company; or
C. Conviction of a felony involving moral turpitude.
The existence of Cause shall be determined by the Committee, in its sole and
absolute discretion.
(viii) “Adverse Change” shall mean, without the express written consent of the
Employee, (A) a change in the Employee’s principal office to a location more
than 25 miles from the Employee’s work address as of the Date of Grant, (B) a
material increase (without adequate consideration) or a material reduction in
duties of the type previously performed by the Employee, or (C) a material
reduction in the Employee’s base compensation (other than bonuses and other
discretionary items of compensation) that does not apply generally to employees
of the Company or its successor. Employee shall provide notice to the Company of
the event alleged to constitute an Adverse Change within ninety (90) days of the
occurrence of such event and the Company shall be given the opportunity to
remedy the alleged Adverse Change and/or to contest Employee’s assertion that an
Adverse Change event has occurred within thirty (30) days from receipt of such
notice.
5. Payment of Performance Units. The number of Common Units payable at the end
of the Performance Period (or such earlier time as specified under Section 4(b))
shall be payable as soon as reasonably practicable following the close of the
Performance Period, but in no event later than two and one-half months after the
end of the calendar year in which the Performance Period closes (or such earlier
time as specified under Section 4(b)), in the amount determined in accordance
with Section 3, as adjusted by Section 4, if applicable. Such payment will be
subject to withholding for taxes and other applicable payroll adjustments. The
Committee’s determination of the amount payable shall be binding upon the
Employee and his beneficiary or estate.
6. Adjustment in Number of Performance Units. Except as provided below, in the
event that the outstanding Common Units are increased, decreased or exchanged
for a different number or kind of units or other securities, or if additional,
new or different units or securities are distributed with respect to the Units
through merger, consolidation, sale of all or substantially all of the assets of
the Partnership, reorganization, recapitalization, unit dividend, unit split,
reverse unit split or other distribution with respect to such Common Units,
there shall be substituted for the Common Units under the Performance Units
subject to this Agreement the appropriate number and kind of Common Units or new
or replacement securities as determined in the sole discretion of the Committee.

 

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7. Delivery of Common Units. No Common Units shall be delivered pursuant to this
Agreement until the approval of any governmental authority required in
connection with this Agreement, or the issuance of Common Units hereunder, has
been received by the Company.
8. Securities Act. The Company shall have the right, but not the obligation, to
cause the Common Units payable under this Agreement to be registered under the
appropriate rules and regulations of the Securities and Exchange Commission. The
Company shall not be required to deliver any Common Units hereunder if, in the
opinion of counsel for the Company, such delivery would violate the Securities
Act of 1933 or any other applicable federal or state securities laws or
regulations.
9. Federal and State Taxes. The Employee may incur certain liabilities for
Federal, state or local taxes and the Company may be required by law to withhold
such taxes for payment to taxing authorities. Upon the determination by the
Company of the amount of taxes required to be withheld, if any, the Employee
shall either pay to the Company, in cash or by certified or cashier’s check, an
amount equal to the taxes required to be withheld, or the Employee shall
authorize the Company to withhold from the Common Units payable to the Employee
an amount necessary to satisfy the Federal, state or local taxes required to be
withheld. Authorization of the Employee to the Company to withhold taxes
pursuant to this Section 9 shall be in form and content acceptable to the
Committee. An authorization to withhold taxes pursuant to this provision shall
be irrevocable unless and until the tax liability of the Employee has been fully
paid. In the discretion of the Committee, the required taxes may be withheld in
kind from Common Units payable under this Agreement. In the event that the
Employee fails to make arrangements that are acceptable to the Committee for
providing to the Company, at the time or times required, the amounts of federal,
state and local taxes required to be withheld with respect to the Common Units
payable to the Employee under this Agreement, the Company shall have the right
to purchase at current market price as determined by the Committee and/or to
sell to one or more third parties in either market or private transactions
sufficient Common Units payable under this Agreement to provide the funds needed
for the Company to make the required tax payment or payments.
10. Definitions; Copy of Plan. To the extent not specifically provided herein,
all terms used in this Agreement shall have the same meanings ascribed to them
in the Plan. By the execution of this Agreement, the Employee acknowledges
receipt of a copy of the Plan. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any applicable law, then such provision
will be deemed to be modified to the minimum extent necessary to render it
legal, valid and enforceable; and if such provision cannot be so modified, then
this Agreement will be construed as if not containing the provision held to be
invalid, and the rights and obligations of the parties will be construed and
enforced accordingly.

 

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11. Administration. This Agreement shall at all times be subject to the terms
and conditions of the Plan. The Committee shall have sole and complete
discretion with respect to all matters reserved to it by the Plan and decisions
of the majority of the Committee with respect thereto and this Agreement shall
be final and binding upon the Employee and the Company. In the event of any
conflict between the terms and conditions of this Agreement and the Plan, the
provisions of the Plan shall control.
12. No Right to Continued Employment. This Agreement shall not be construed to
confer upon the Employee any right to continue as an Employee of the Company and
shall not limit the right of the Company, in its sole discretion, to terminate
the service of the Employee at any time.
13. Governing Law. This Agreement shall be interpreted and administered under
the laws of the State of Texas, without giving effect to any conflict of laws
provisions.
14. Amendments. This Agreement may be amended only by a written agreement
executed by the Company and the Employee. Any such amendment shall be made only
upon the mutual consent of the parties, which consent (of either party) may be
withheld for any reason.
15. No Liability for Good Faith Determinations. The Company and the members of
the Committee and the Board shall not be liable for any act, omission or
determination taken or made in good faith with respect to this Agreement or the
Performance Units granted hereunder.
16. No Guarantee of Interests. The Board and the Company do not guarantee the
Common Units from loss or depreciation.
17. Nontransferability of Agreement. This Agreement and all rights under this
Agreement shall not be transferable by the Employee during his life other than
by will or pursuant to applicable laws of descent and distribution. Any rights
and privileges of the Employee in connection herewith shall not be transferred,
assigned, pledged or hypothecated by the Employee or by any other person or
persons, in any way, whether by operation of law, or otherwise, and shall not be
subject to execution, attachment, garnishment or similar process. In the event
of any such occurrence, this Agreement shall automatically be terminated and
shall thereafter be null and void. Notwithstanding the foregoing, all or some of
the Units or rights under this Agreement may be transferred to a spouse pursuant
to a domestic relations order issued by a court of competent jurisdiction.

 

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17. Compliance with Section 409A of the Code. This Agreement is intended to
comply and shall be administered in a manner that is intended to comply with
section 409A of the Code and shall be construed and interpreted in accordance
with such intent. Payment under this Agreement shall be made in a manner that
will comply with section 409A of the Code, including regulations or other
guidance issued with respect thereto, except as otherwise determined by the
Committee. The applicable provisions of section 409A of the Code are hereby
incorporated by reference and shall control over any contrary provisions herein
that conflict therewith.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
officers thereunto duly authorized, and the Employee has set his hand effective
as of the date and year first above written.

                  HOLLY LOGISTIC SERVICES, L.L.C.    
 
           
 
  By:        
 
     
 
Name    
 
      Title    
 
                          Employee    

 

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