Document:

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EXHIBIT 10.1

Holly Corporation

Change in Control Agreement Policy

February 19, 2008

     This Change in Control Agreement Policy reflects the terms and procedures as approved at the
February 9, 2007, February 13, 2008 and February 19, 2008 meetings of the Board of Directors
(“Board”) of Holly Corporation (“Holly”) based upon the recommendation of the Compensation
Committee of the Board.

      1. Eligibility

          Employees of Holly Corporation and Holly Logistic Services, L.L.C. (“HLS”) at pay grades 34
and above will receive CIC Agreements either upon hire or promotion to an eligible pay grade level
at the benefit level described in Section 2 below. However, no eligible individual will be
entitled to the benefits described in Section 2 below unless or until the individual timely
executes a CIC Agreement in accordance with the procedures established by the Chief Executive
Officer of Holly.

      2. Severance Benefits under CIC Agreements

          The CIC Agreements contain a double trigger, meaning that severance benefits only become
payable if a “Change in Control” occurs and an executive experiences a “Termination Event” during
the “Protection Period.” The severance benefits potentially payable under the CIC Agreements
contain three components:

	 	•	 	Accrued but unpaid salary, reimbursement of expenses, and accrued vacation pay;
	 
	 	•	 	A lump sum amount equal to the sum of an executive’s base salary plus annual bonus
multiplied by the applicable multiplier (see chart below); and
	 
	 	•	 	Continuation of medical and dental benefits for a specified number of years (see
chart below).

          The applicable multiplier and number of years that medical and dental benefits will be
continued will be determined based on the executive’s pay grade classification in accordance with
the following chart:

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Years of Medical and Dental
	 	 	Lump Sum Multiplier	 	Continuation
	Grades 34 and 35
	 	 	1X	 	 	1 Year
	Grades 36 and 37
	 	 	2X	 	 	2 Years
	Grade 38 and Above
	 	 	3X	 	 	3 Years

 

 

          The pay grade classifications correspond with the following titles:

	 	 	 
	Pay Grades	 	Titles
	Grades 34 and 35
	 	Numerous titles as determined by management from time to
time

	 	 	 

	Grade 36
	 	Chief Financial Officer, Chief Accounting Officer,
General Counsel, and various other titles as determined
by management from time to time

	 	 	 

	Grade 37
	 	President and other titles as determined by management
from time to time

	 	 	 

	Grade 38
	 	Chairman of the Board and Chief Executive Officer

      3. Term of CIC Agreements

          The initial term of each and every CIC Agreement ends on May 15, 2010, regardless of the date
on which an executive enters into a CIC Agreement with Holly. On May 15, 2009 (and on each
subsequent May 15th) the term of the CIC Agreements will be automatically extended for one
additional year, unless Holly gives notice to each executive 60 days prior to the automatic
extension date. For example, if an eligible executive is hired on and enters into a CIC Agreement
on March 1, 2008, the initial term of his CIC Agreement will last until May 15, 2010, and if Holly
does not give a notice of nonextension by March 16, 2009, then the term of the CIC Agreements will
be automatically extended to May 15, 2011 on May 15, 2009. The occurrence of a “Change in Control”
will extend or reduce the term of the CIC Agreements through the end of the “Protection Period.”

      4. Applicable Definitions

	 	•	 	“Change in Control” — the CIC Agreements use the same definition used under Holly’s
Long Term Incentive Plan (“LTIP”) with certain modifications (intended to comply with
section 409A of the Internal Revenue Code) as specified below:

	 	•	 	A third party acquisition of more than 50% (versus 60% under
the LTIP) of the outstanding stock of Holly (or, for executives employed by HLS
or HEP, of the outstanding membership interests of Holly or HLS) or of the
combined voting power of outstanding securities of Holly (or, for executives
employed by HLS or HEP, of the voting power of Holly, HLS or HEP); or

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	 	•	 	A majority of the Board is replaced during any 12 month period
with directors who are not endorsed by a majority of the existent Board (versus
no time limitation under the LTIP); or
	 
	 	•	 	A merger or consolidation of Holly (or, for executives employed
by HLS or HEP, of Holly, HLS or HEP), except if:

	 	•	 	Holly’s (or, for executives employed by HLS or
HEP, Holly’s, HLS’ or HEP’s) voting securities continue to represent at
least 50% (versus 60% under the LTIP) of the combined voting power of
the voting securities of the surviving entity; or
	 
	 	•	 	The event is a recapitalization of Holly (or,
for executives employed by HLS or HEP, of Holly, HLS or HEP) and no one
person owns more than 50% (versus 40% under the LTIP) of Holly’s (or,
for executives employed by HLS or HEP, Holly’s, HLS’ or HEP’s) voting
securities following the transaction; or

	 	•	 	A liquidation or sale of Holly (or, for executives employed by
HLS or HEP, of Holly, HLS or HEP), except to an entity owned 60% by Holly (or
by Holly, HLS or HEP, if applicable).

	 	•	 	“Protection Period” is the 24 month period beginning on the date a Change in Control
occurs.
	 
	 	•	 	“Termination Event” means a termination of an executive’s employment without
“Cause,” for “Good Reason,” or as a condition to the consummation of or entry into a
“Change in Control” transaction.

	 	•	 	“Cause” means an executive’s (1) engagement in an act of
willful gross negligence or willful misconduct on a matter that is not
inconsequential, or (2) conviction of a felony.
	 
	 	•	 	“Good Reason” means, without an executive’s consent, (1) a
material reduction in the executive’s authority, duties or responsibilities (or
in the authority, duties or responsibilities of the executive’s supervisor),
(2) a material reduction in executive’s base compensation, or (3) relocation of
an executive to an office more than 50 miles away from the location at which
executive normally performs his duties. An executive must give notice of the
occurrence of a “Good Reason” event within 90 days and give the company 30 days
to cure.

      5. Additional Provisions

	 	•	 	Gross Up Payments — If the severance benefits paid under the CIC Agreement (when
combined with any other change in control payments, including but not limited to the
accelerated vesting of equity compensation awards, received by the executive) exceed
the limits imposed by section 280G of the Internal Revenue Code by more than 10%, then
Holly will make a gross up payment to the executive. If the severance benefits (when
combined with other change in control payments) exceed the section 280G limits by less
than 10%, then the

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	 	 	 	executive’s severance benefits will be cut back to an amount within the section 280G
limits. The determination of whether either a gross up payment or a cut back is
required under these provisions will be made by an independent public accounting
firm.

	 	•	 	Release — Payment of the lump sum amount and continuation of medical and dental
benefits are conditioned on the execution and nonrevocation by an executive of a
release agreement.
	 
	 	•	 	Arbitration — The CIC Agreements are subject to binding arbitration in the event of
any dispute.

      6. Form Agreements

          The CIC Agreement forms for both Holly and HLS are attached as Appendix A and B, respectively.

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Holly Corporation Employee

Form of Change in Control Agreement

EXHIBIT 10.2

CHANGE IN CONTROL AGREEMENT

     This CHANGE IN CONTROL AGREEMENT (the “Agreement”) is entered into effective as of ______,
200__ (the “Effective Date”), by and between HOLLY CORPORATION, a Delaware corporation (the
“Company”) and ___________ (the “Employee”).

WITNESSETH:

     WHEREAS, the Employee is currently employed as the __________ of the Company and is an
integral part of its management;

     WHEREAS, the Company considers it essential to the best interests of its shareholders to
foster the continuous employment of key management personnel such as Employee;

     WHEREAS, the Company recognizes that the possibility of a change in control of the Company
will cause uncertainty and distract the Employee from his assigned duties to the detriment of the
Company and its shareholders; and

     WHEREAS, the Board of Directors of the Company (the “Board”) has determined that appropriate
steps should be taken to reinforce and encourage the Employee’s continued attention and dedication
to the Employee’s assigned duties in the event of a change in control of the Company.

     NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in this
Agreement and other good and valuable consideration, the Employee and the Company hereby agree as
follows:

Section 1: Definitions

     The following terms shall have the meanings set forth below whenever used herein:

     (a) “Affiliate” shall mean a person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with, a specified person.

     (b) “Base Salary” shall mean the amount Employee was entitled to receive as salary on an
annualized basis immediately prior to termination of Employee’s employment (or, if greater,
immediately prior to a Change in Control), including any amounts deferred pursuant to any deferred
compensation program, but excluding all bonus, overtime, welfare benefit premium

 

 

reimbursement and incentive compensation, payable by the Company as consideration for the
Employee’s services.

     (c) “Beneficial Owner” shall mean the beneficial owner of a security as determined pursuant to
Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended.

     (d) “Bonus” shall mean an amount equal to the average of the annual bonus amount actually paid
to the Employee for the previous three (3) years (or if employed for less than 3 years, the average
bonus amount actually paid to the Employee for the years employed).

     (e) “Cause” shall mean the Employee’s (i) engagement in any act of willful gross negligence or
willful misconduct on a matter that is not inconsequential, as reasonably determined by the Board
in good faith, or (ii) conviction of a felony. For purposes hereof, no act or failure to act, on
the Employee’s part, shall be deemed “willful” if the Employee reasonably believed such acts or
omissions were in the best interests of the Company.

     (f) “Change in Control” shall mean the occurrence of one of the following:

          (i) Any Person, or more than one Person acting as a group (as defined in Treasury regulation
1.409A-3(g)(5)(v)(B)), other than (1) the Company or any of its Subsidiaries, (2) a trustee or
other fiduciary holding securities under an employee benefit plan of the Company or any of its
Affiliates, (3) an underwriter temporarily holding securities pursuant to an offering of such
securities, or (4) a corporation (or other entity) owned, directly or indirectly, by stockholders
of the Company in substantially the same proportions as their ownership of stock of the Company,
becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including
in the securities beneficially owned by such Person any securities acquired directly from the
Company or its Affiliates) representing (A) more than fifty percent (50%) of the combined voting
power of the Company’s then outstanding securities, or (B) more than fifty percent (50%) of the
then outstanding common stock of the Company, excluding any Person who becomes such a Beneficial
Owner in connection with a transaction described in Section 1(f)(iii)(A) below.

          (ii) A majority of the members of the Board are replaced during any twelve-month period by
directors whose appointment or election is not endorsed by a majority of the members of the Board
prior to the date of the appointment or election.

          (iii) There is consummated a merger or consolidation of the Company or any direct or indirect
Subsidiary of the Company with any other corporation or entity, except if:

               (A) the merger or consolidation results in the voting securities of the Company 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 fifty
percent (50%) of the combined voting power of the voting securities of the Company or such
surviving entity or any parent thereof outstanding immediately after such merger or consolidation;
or

               (B) the merger or consolidation is effected to implement a recapitalization of the Company (or
similar transaction) in which no Person becomes the

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Beneficial Owner, directly or indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities acquired directly from the Company or
its Affiliates other than in connection with the acquisition by the Company or its Affiliates of a
business) representing more than fifty percent (50%) of the combined voting power of the Company’s
then outstanding securities.

          (iv) The stockholders of the Company approve a plan of complete liquidation or dissolution of
the Company 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 the Company of all or substantially
all of the Company’s assets to an entity at least sixty percent (60%) of the combined voting power
of the voting securities of which is owned by the stockholders of the Company in substantially the
same proportions as their ownership of the Company immediately prior to such sale.

     The definition of Change in Control set forth in this Section 1(f) shall, for all purposes, be
interpreted in compliance with the Nonqualified Deferred Compensation Rules, and the Board is
permitted to use its good faith discretion in determining whether a Change in Control has occurred
under this Section 1(f). No transaction is intended to constitute a Change in Control for purposes
of the Agreement unless it would also constitute a change in control under the Nonqualified
Deferred Compensation Rules.

     (g) “Code” shall mean the Internal Revenue Code of 1986, as amended.

     (h) “Good Reason” shall mean, without the express written consent of the Employee, the
occurrence of any of the following:

          (i) the material reduction in the Employee’s authority, duties or responsibilities from those
in effect immediately prior to the Change in Control, or a material reduction in the authority,
duties or responsibilities of the supervisor to whom Employee is required to report;

          (ii) a material reduction in the Employee’s base compensation in effect immediately before the
Change in Control; or

          (iii) the relocation of the Employee to an office or location more than fifty (50) miles from
the location at which the Employee normally performed Employee’s services immediately prior to the
occurrence of a Change in Control, except for travel reasonably required in the performance of the
Employee’s responsibilities.

     Notwithstanding the foregoing, in the case of the Employee’s allegation of Good Reason: (A)
Employee shall provide notice to the Company of the event alleged to constitute Good Reason within
ninety (90) days of the occurrence of such event, and (B) the Company shall be given the
opportunity to remedy the alleged Good Reason event within thirty (30) days from receipt of notice
of such allegation.

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     (i) “Nonqualified Deferred Compensation Rules” shall mean the limitations and requirements set
forth in section 409A of the Code, the regulations promulgated thereunder, and any additional
guidance issued by the Internal Revenue Service related thereto.

     (j) “Person” shall mean any individual, group, partnership, corporation, association, trust,
or other entity or organization.

     (k) “Protection Period” shall mean the twenty-four (24) month period beginning on the date of
the Change in Control.

     (l) “Subsidiary” shall mean, as to any Person, a corporation or other entity of which a
majority of the combined voting power of the outstanding voting securities is owned, directly or
indirectly, by that Person.

     (m) “Termination Event” shall mean the Employee’s Termination of Employment either:

          (i) by the Company or its successor without Cause;

          (ii) by the Company or its successor as a condition to the consummation of (or entry into,
provided the transaction is consummated) the Change in Control transaction; or

          (iii) by the Employee for Good Reason.

     (n) “Termination of Employment” shall mean a termination of Employee’s employment within the
meaning of Treas. Reg. § 1.409A-1(h)(1)(ii).

Section 2: Term of Agreement

     The term of this Agreement (the “Term”) shall be for the period which commences on the
Effective Date and which terminates on May 15, 20___; provided, however, that the Term of this
Agreement will be automatically extended for an additional one (1) year period as of May 15, 20___
and on each May 15 date occurring thereafter, unless the Board cancels further extension of this
Agreement by giving notice to the Employee at least sixty (60) days prior to the applicable
extension date. Upon a Change in Control during the Term, the Term will be extended (or reduced,
as the case may be) through the end of the Protection Period, immediately following which time this
Agreement will terminate. If, prior to a Change in Control, the Employee ceases for any reason to
be an employee of the Company (other than pursuant to a Termination Event), thereupon the Term
shall be deemed to have expired and this Agreement shall immediately terminate and be of no further
effect. Notwithstanding the expiration of the Term or other termination of this Agreement, (i)
Sections 5(a), 6(d) and 6(k) of this Agreement shall survive any expiration or termination of this
Agreement, and (ii) if a Change in Control shall occur prior to the expiration of the Term or other
termination of this Agreement, the terms of this Agreement shall survive to the extent necessary to
enable Employee to enforce his rights under Sections 3 and 4 of this Agreement.

Section 3: Severance Benefits

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     (a) Termination due to a Termination Event. In the event that the Employee’s
employment with the Company or its successor is terminated due to the occurrence of a Termination
Event in connection with or within two years after a Change in Control, the Employee shall be
entitled to the following payments and other benefits:

          (i) The Company shall pay to the Employee a lump sum cash amount equal to the sum of (A) the
Employee’s accrued and unpaid salary as of his date of termination plus (B) reimbursement for all
expenses reasonably and necessarily incurred by the Employee (in accordance with Company policy)
prior to termination in connection with the business of the Company plus (C) any accrued vacation
pay, to the extent not theretofore paid. This amount shall be paid within ten (10) days of the
Employee’s Termination of Employment.

          (ii) Company shall pay to the Employee an additional lump sum cash amount equal to ___
times the sum of Employee’s Base Salary plus Employee’s Bonus. Subject to the requirements of
Section 3(c), this amount shall be paid within fifteen (15) days after the Employee’s Termination
of Employment.

          (iii) The Company shall provide the Employee (and the Employee’s dependents, if applicable),
for a period of ___ years following his Termination of Employment, with a similar level of
medical and dental insurance benefits upon substantially the same terms and conditions as existed
immediately prior to the Employee’s termination subject to the following:

               (A) To the extent that any such medical or dental benefits are self-funded and during the
period Employee would, but for the continued coverage provided pursuant to this Section 3(a)(iii),
be entitled to continuation coverage with respect to such benefits pursuant to the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), if Employee elected such coverage
and paid the applicable premiums (the “COBRA Continuation Period”), the costs of the continued
benefit coverage provided under this Section 3(a)(iii) will be imputed as income to the Employee
and reported on Form W-2. Following the COBRA Continuation Period, to the extent Employee is still
entitled to continued coverage pursuant to this Section 3(a)(iii), the medical and dental coverage
to be continued under such self-funded arrangement shall be provided in accordance with the
provisions of Treas. Reg. § 1.409A-3(i)(1)(iv)(A) as it applies to the provision of in-kind
benefits.

               (B) Notwithstanding the foregoing provisions of this Section 3(a)(iii), in the event the
Company is unable to provide any of the promised medical or dental benefits under its benefit
plans, the Company will reimburse Employee for amounts necessary to enable the Employee to obtain
medical and dental benefits substantially equal to what was provided to the Employee immediately
prior to the Employee’s termination; provided, that any such reimbursement will be made in
accordance with the provisions of Treas. Reg. § 1.409A-3(i)(1)(iv), including but not limited to
the requirements that (I) the expenses eligible for reimbursement will be determined by reference
to the objective and nondiscretionary criteria set forth in the Company’s medical and dental
benefit plans, (II) the expenses eligible for reimbursement during one taxable year of the Employee
will not affect the expenses eligible for reimbursement in any other taxable year (provided, that a
limit imposed on the amount of expenses that may be reimbursed over some or all of the continuation
period described in this

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Section 3(a)(iii) shall not in and of itself cause the reimbursement arrangement described
herein to fail to satisfy the requirements of Treas. Reg. § 1.409A-3(i)(1)(iv)), (III) the
reimbursement of an eligible expense will be made on or before the last day of the Employee’s
taxable year following the taxable year in which the expense was incurred, and (IV) the right to
reimbursement will not be subject to liquidation or exchange for another benefit.

               (C) Notwithstanding the foregoing provisions of this Section 3(a)(iii), in the event the
Employee becomes reemployed with another employer and becomes eligible to receive medical and
dental benefits similar to the benefits described herein from such employer, the medical and dental
benefit coverage provided for herein shall terminate. Benefit continuation provided pursuant to
this Section 3(a)(iii) will be applied towards any continuation coverage to which the Employee is
entitled pursuant to COBRA.

     (b) Other Severance Pay. The Employee shall not be entitled to receive payment under
any severance plan, policy or arrangement maintained by the Company (other than this Agreement).
If the Employee is entitled to any notice or payment in lieu of any notice of termination of
employment required by Federal, state or local law, including but not limited to the Worker
Adjustment and Retraining Notification Act, the amounts to which the Employee would otherwise be
entitled under this Agreement shall be reduced by the amount of any such payment in lieu of notice.
If the Employee is entitled to any severance or termination payments under any employment or other
agreement (other than award agreements issued pursuant to the Holly Corporation Long-Term Incentive
Compensation Plan) with, or any plan or arrangement of, the Company, the payments to which the
Employee would otherwise be entitled under this Agreement shall be reduced by the amount of such
payment. Except as set forth above, the foregoing payments and benefits shall be in addition to
and not in lieu of any payments or benefits to which the Employee and his dependents may otherwise
be entitled to under the Company’s compensation and employee benefit plans. Nothing herein shall
be deemed to restrict the right of the Company to amend or terminate any such plan in a manner
generally applicable to similarly situated active employees of the Company, in which event the
Employee shall be entitled to participate on the same basis (including payment of applicable
contributions) as similarly situated active employees of the Company.

     (c) Release. Payments under Sections 3(a)(ii) and (iii) shall be conditioned upon the
execution, non-revocation, and delivery of a Release Agreement in the form attached hereto as
Exhibit A (the “Release”) by Employee within 45 days of the date of Employee’s Termination
of Employment. Notwithstanding the times of payment otherwise set forth in Section 3(a), the
payments due under Sections 3(a)(ii) and (iii) shall be made (or commenced, in the case of the
payments due under Section 3(a)(iii)) to the Employee within fifteen (15) days following receipt by
the Company of the Release properly executed (and not revoked) by the Employee. If the Employee
fails to properly execute and deliver the Release (or revokes the Release), the Employee agrees
that he shall not be entitled to receive the benefits described in Sections 3(a)(ii) and (iii).

     (d) Insurance Policies. In the event of the Employee’s Termination of Employment or
in the event the Company intends to discontinue maintaining certain life insurance policies, the
Company shall, at the request of the Employee, assign and transfer to the Employee (or his nominee)
each insurance policy insuring the life of the Employee and owned by the Company

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which has no cash surrender value, to the extent that the Company is permitted to do so by the
terms of such insurance policy.

Section 4: Certain Additional Payments by the Company

     (a) Gross Up Payment. In the event it shall be determined, according to the procedure
set forth in Section 4(b), that any part of any payment or benefit received pursuant to the terms
of this Agreement, (the “Contract Payments”) or any part of any payment or benefit received or to
be received by the Employee throughout or for the Employee’s benefit pursuant to any other plan,
arrangement or agreement of the Company or any Affiliate (together with the Contract Payments, the
“Payments”) would be subject to the excise tax imposed by section 4999 of the Code, or if any
interest or penalties are incurred by the Employee with respect to such excise tax (such excise
tax, together with any such interest and penalties, are hereinafter collectively referred to as the
“Excise Tax”), it shall then be determined to what extent the aggregate present value of the
Payment equals or exceeds an amount equal to three (3) times the Employee’s Base Amount (as defined
in section 280G(b)(3)(A) of the Code). If the amount of the Payment would need to reduced by ten
percent (10%) or more of its total value in order to equal an amount less than three (3) times the
Base Amount, then the Employee shall be entitled to receive an additional payment (a “Gross Up
Payment”) from the Company in an amount such that the net amount retained by the Employee, after
deduction of the Excise Tax on the Payment and any federal, state and local income tax and the
Excise Tax on the Gross Up Payment, and any interest, penalties or additions to tax payable by the
Employee with respect thereto, shall be equal to the total present value (using the applicable
federal rate as defined in section 1274(d) of the Code in such calculation) of the Payment at the
time such Payment is to be made. If, on the other hand, after a reduction of less than ten percent
(10%) of its total value, the Payment equals an amount less than three (3) times the Base Amount,
then the amount of the Payment will be accordingly reduced and the Employee will not be entitled to
a Gross Up Payment.

     (b) Calculation of Gross Up Payment. Subject to the provisions of paragraph (c) of
this Section 4, all determinations required to be made under Section 4, including whether and when
a Gross Up Payment is required and the amount of such Gross Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by a certified public accounting firm
selected by the Company and reasonably acceptable to the Employee (the “Accounting Firm”), which
shall be retained to provide detailed supporting calculations both to the Company and the Employee
within fifteen (15) business days of the receipt of notice from the Company that there has been a
Payment, or such earlier time as is requested by the Company. All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross Up Payment, as determined pursuant
to this Section 4, shall be paid by the Company to the Employee as of the later to occur of (i)
five (5) days prior to the due date for the payment of any Excise Tax or (ii) five (5) days after
the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall
be binding upon the Company and the Employee. As a result of the uncertainty in the application of
section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder,
it is possible that Gross Up Payments

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which should have been made will not have been made by the Company (“Underpayment”),
consistent with the calculations required to be made hereunder. In the event that the Company
exhausts its remedies pursuant to paragraph (c) of this Section 4 and the Employee thereafter is
required to make payment of any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to
or for the benefit of the Employee.

     (c) Contested Taxes. The Employee shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would result in an Underpayment. Such
notification shall be given as soon as practicable but no later than ten (10) business days after
the Employee is informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid or appealed. The Employee
shall not pay such claim prior to the expiration of the 30 day period following the date on which
it gives such notice to the Company (or such shorter period ending on the date than any payment of
taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to
the expiration of such period that it desires to contest such claim, the Employee shall:

          (i) give the Company any information reasonably requested by the Company relating to such
claim;

          (ii) take such action in connection with contesting such claim as the Company shall reasonably
request in writing from time to time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by the Company; and

          (iii) permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest and shall indemnify and
hold the Employee harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such representation and payment
of costs and expenses. Without limiting the foregoing provisions of this paragraph (c), the
Company shall control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its sole option, either
direct the Employee to pay the tax claimed and sue for a refund or to contest the claim in any
permissible manner, and the Employee agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as
the Company shall determine; provided, however, that if the Company directs the Employee to pay
such claim and sue for a refund, the Company shall advance the amount of such payment to the
Employee, on an interest-free basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with respect to any imputed
income with respect to such advance; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the Employee with respect to which
such contested amount is claimed to be due

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is limited solely to such contested amount. Furthermore, the Company’s control of the contest
shall be limited to issues with respect to which a Gross Up Payment would be payable hereunder and
the Employee shall be entitled to settle or contest, as the case may be, any other issue raised by
the Internal Revenue Service or any other taxing authority. Notwithstanding the foregoing, the
Employee shall not be entitled to any advance that would be deemed a violation of section 402(a)
(Enhanced Conflict of Interest Provisions) of the Sarbanes-Oxley Act of 2002.

     (d) Refunds. If, after the receipt by the Employee of an amount advanced by the
Company pursuant to this Section 4, the Employee becomes entitled to receive any refund with
respect to such claim, the Employee shall (subject to the Company’s complying with the requirements
of Section 4(c)) promptly pay to the Company the amount of such refund (together with any interest
paid or credited thereon after taxes applicable thereto).

Section 5: Certain Covenants by the Employee

     (a) Protection of Confidential Information. The Employee acknowledges that in the
course of his employment with the Company, the Employee has obtained confidential, proprietary
and/or trade secret information of the Company, relating to, among other things, (i) programs,
strategies, information or materials related to the business, services, manner of operation and
activities of the Company, (ii) customers, clients or prospects of the Company, (iii) computer
hardware or software used in the course of the Company business, and (iv) marketing strategies or
other activities of the Company from or on behalf of any of its clients, (hereinafter collectively
referred to as “Confidential Information”); provided, however, that, for purposes of this
Agreement, the term Confidential Information shall not include any information that is known
generally to the public or accessible to a third party on an unrestricted basis. The Employee
recognizes that such Confidential Information has been developed by the Company at great expense;
is a valuable, special and unique asset of the Company which it uses in its business to obtain
competitive advantage over its competitors; is and shall be proprietary to the Company; is and
shall remain the exclusive property of the Company; and, is not to be transmitted to any other
person, entity or thing. Accordingly, as a material inducement to the Company to enter into this
Agreement with the Employee and in partial consideration for the compensation payable hereunder to
the Employee, the Employee hereby:

          (i) warrants and represents that he has not disclosed, copied, disseminated, shared or
transmitted any Confidential Information to any person, firm, corporation or entity for any reason
or purpose whatsoever, except in the course of carrying out the Employee’s duties and
responsibilities of employment with the Company;

          (ii) agrees not to so disclose, copy, disseminate, share or transmit any Confidential
Information in the future;

          (iii) agrees not to make use of any Confidential Information for his own purposes or for the
benefit of any person, firm, corporation or other entity, except that, in the course of carrying
out the Employee’s duties and responsibilities of employment, the Employee may use Confidential
Information for the benefit of any Affiliate of the Company;

9

 

          (iv) warrants and represents that all Confidential Information in his possession, custody or
control that is or was a property of the Company has been or shall be returned to the Company by or
on the date of the Employee’s termination; and

          (v) agrees that he will not reveal, or cause to be revealed, this Agreement or its terms to
any third party (other than the Employee’s attorney, tax advisor, or spouse), except as required by
law.

The Employee’s covenants in this Section 5(a) are in addition to, and do not supercede, the
Employee’s obligations under any confidentiality, invention or trade secret agreements executed by
the Employee, or any laws protecting the Confidential Information.

     (b) Extent of Restrictions. The Employee acknowledges that the restrictions contained
in Section 5(a) correctly set forth the understanding of the parties at the time this Agreement is
entered into, are reasonable and necessary to protect the legitimate interests of the Company, and
that any violation will cause substantial injury to the Company. In the event of any such
violation, the Company shall be entitled, in addition to any other remedy, to preliminary or
permanent injunctive relief. If any court having jurisdiction shall find that any part of the
restrictions set forth in this Agreement are unreasonable in any respect, it is the intent of the
parties that the restrictions set forth herein shall not be terminated, but that this Agreement
shall remain in full force and effect to the extent (as to time periods and other relevant factors)
that the court shall find reasonable.

Section 6: Miscellaneous

     (a) Tax Withholding. All payments required to be made to the Employee under this
Agreement shall be subject to withholding of amounts relating to income tax, excise tax, employment
tax and other payroll taxes to the extent required to be withheld pursuant to applicable law or
regulation.

     (b) No Mitigation; Offset. The Employee shall be under no obligation to minimize or
mitigate damages by seeking other employment, and the obtaining of any such other employment shall
in no event effect any reduction of obligations hereunder for the payments or benefits required to
be provided to the Employee, except as specifically provided in Section 3(a)(iii) above with
respect to medical and dental benefits coverage. The obligations of the Company hereunder shall
not be affected by any set-off or counterclaim rights which any party may have against the
Employee; provided, however, that the Company may offset any amounts owed to the Company by the
Employee against any amounts owed to the Employee by the Company hereunder.

     (c) Overpayment. If, due to mistake or any other reason, the Employee receives
benefits under this Agreement in excess of what this Agreement provides, the Employee shall repay
the overpayment to the Company in a lump sum within thirty (30) days of notice of the amount of
overpayment. If the Employee fails to so repay the overpayment, then without limiting any other
remedies available to the Company, the Company may deduct the amount of the overpayment from any
other benefits which become payable to the Employee under this Agreement or otherwise.

10

 

     (d) Severability. In the event that any provision of this Agreement is determined to
be partially or wholly invalid, illegal or unenforceable, then such provision shall be modified or
restricted to the extent necessary to make such provision valid, binding and enforceable, or if
such provision cannot be modified or restricted, then such provision shall be deemed to be excised
from this Agreement, provided that the binding effect and enforceability of the remaining
provisions of this Agreement shall not be affected or impaired in any manner. No waiver by a party
of any provisions or conditions of this Agreement shall be deemed a waiver of similar or dissimilar
provisions and conditions at the same time or any prior or subsequent time.

     (e) Successors and Assigns. This Agreement and all rights hereunder are personal to
the Employee and shall not be assignable by the Employee; provided, however, that any amounts that
shall have become payable under this Agreement prior to the Employee’s death shall inure to the
benefit of the Employee’s heirs or other legal representatives, as the case may be. This Agreement
shall be binding upon and inure to the benefit of the Company and any successor of the Company. The
Company shall require any successor to all or substantially all of the business and/or assets of
the Company to expressly assume and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform if no succession had taken place. Upon
such assumption by the successor, the Company automatically shall be released from all liability
hereunder (and all references to the Company herein shall be deemed to refer to such successor).
In the event a successor does not assume this Agreement, the benefits payable pursuant to Section
3(a) will be paid immediately prior to the Change in Control.

     (f) Entire Agreement. Except as otherwise specifically provided herein, this
Agreement constitutes the entire agreement between the parties respecting the subject matter hereof
and supersedes any prior agreements respecting severance benefits upon a Change in Control. No
amendment to this Agreement shall be deemed valid unless in writing and signed by the parties. A
waiver of any term, covenant, agreement or condition contained in this Agreement shall not be
deemed a waiver of any other term, covenant, agreement or condition, and any waiver of any default
in any such term, covenant, agreement or condition shall not be deemed a waiver of any later
default thereof or of any other term, covenant, agreement or condition.

     (g) Notices. Any notice required or permitted to be given by this Agreement shall be
effective only if in writing, delivered personally or by courier or by facsimile transmission or
sent by express, registered or certified mail, postage prepaid, to the parties at the addresses
hereinafter set forth, or at such other places that either party may designate by notice to the
other.

     Notice to the Employee shall be addressed to:

_____________

_____________

_____________

     Notice to the Company shall be addressed to:

11

 

Holly Corporation

100 Crescent Court

Suite 1600

Dallas, Texas 75201

Attn: ________

     (h) Governing Law. Notwithstanding any conflicts of law or choice of law provision to
the contrary, this Agreement shall be construed and interpreted according to the laws of the State
of Texas.

     (i) No Right to Continued Employment. Nothing in this Agreement shall confer on the
Employee any right to continue in the employ of the Company or interfere in any way (other than by
virtue of requiring payments or benefits as expressly provided herein) with the right of the
Company to terminate the Employee’s employment at any time.

     (j) Unfunded Obligation. Any payments hereunder shall be made out of the general
assets of the Company. The Employee shall have the status of general unsecured creditor of the
Company, and the Agreement constitutes a mere promise by the Company to make payments under this
Agreement in the future as and to the extent provided herein.

     (k) Arbitration. All claims, demands, causes of action, disputes, controversies or
other matters in question (“Claims”), whether or not arising out of this Agreement or the
Employee’s service (or termination from service) with the Company, whether arising in contract,
tort or otherwise and whether provided by statute, equity or common law, that the Company may have
against the Employee or that the Employee may have against the Company or its parents, Subsidiaries
or Affiliates, or against each of the foregoing entities’ respective officers, directors, employees
or agents in their capacity as such or otherwise, shall be submitted to binding arbitration, if
such Claim is not resolved by the mutual written agreement of the Employee and the Company, or
otherwise, within 30 days after notice of the dispute is first given. Claims covered by this
Section 6(k) include, without limitation, claims by the Employee for breach of this Agreement,
wrongful termination, discrimination (based on age, race, sex, disability, national origin, sexual
orientation, or any other factor), harassment and retaliation. Any arbitration shall be conducted
in accordance with the Federal Arbitration Act (“FAA”) and, to the extent an issue is not addressed
by the FAA, with the then-current National Rules for the Resolution of Employment Disputes of the
American Arbitration Association (“AAA”) or such other rules of the AAA as are applicable to the
claims asserted. If a party refuses to honor its obligations under this Section 6(k), the other
party may compel arbitration in either federal or state court. The arbitrator shall apply the
substantive law of Texas (excluding choice-of-law principles that might call for the application of
some other jurisdiction’s law) or federal law, or both as applicable to the claims asserted. The
arbitrator shall have exclusive authority to resolve any dispute relating to the interpretation,
applicability or enforceability or formation of this Agreement (including this Section 6(k)),
including any claim that all or part of the Agreement is void or voidable and any claim that an
issue is not subject to arbitration. The results of arbitration will be binding and conclusive on
the parties hereto. Any arbitrator’s award or finding or any judgment or verdict thereon will be
final and unappealable. All parties agree that

12

 

venue for arbitration will be in Dallas, Texas, and that any arbitration commenced in any
other venue will be transferred to Dallas, Texas, upon the written request of any party to this
Agreement. In the event that an arbitration is actually conducted pursuant to this Section 6(k),
the party in whose favor the arbitrator renders the award shall be entitled to have and recover
from the other party all costs and expenses incurred, including reasonable attorneys’ fees,
reasonable costs and other reasonable expenses pertaining to the arbitration and the enforcement
thereof and such attorneys fees, costs and other expenses shall become a part of any award,
judgment or verdict. Any and all of the arbitrator’s orders, decisions and awards may be
enforceable in, and judgment upon any award rendered by the arbitrator may be confirmed and entered
by any federal or state court having jurisdiction. All privileges under state and federal law,
including attorney-client, work product and party communication privileges, shall be preserved and
protected. The decision of the arbitrator will be binding on all parties. Arbitrations will be
conducted in such a manner that the final decision of the arbitrator will be made and provided to
the Employee and the Company no later than 120 days after a matter is submitted to arbitration.
All proceedings conducted pursuant to this agreement to arbitrate, including any order, decision or
award of the arbitrators, shall be kept confidential by all parties. EMPLOYEE ACKNOWLEDGES THAT,
BY SIGNING THIS AGREEMENT, EMPLOYEE IS WAIVING ANY RIGHT THAT EMPLOYEE MAY HAVE TO A JURY TRIAL OR
A COURT TRIAL OF ANY SERVICE RELATED CLAIM ALLEGED BY EMPLOYEE.

     (l) Injunctive Relief. The Employee recognizes and acknowledges that, in the event of
a breach or threatened breach by the Employee of the provisions of this Agreement, the Company
shall be entitled to an injunction to enforce the provisions hereof, without any requirement for
the securing or posting of any bond in connection with such remedy, in addition to pursuing its
other legal remedies.

     (m) Captions and Headings. Captions and paragraph headings are for convenience only,
are not a part of this Agreement and shall not be used to construe any provision of this Agreement.

     (n) Counterparts. This Agreement may be executed in counterparts, each of which shall
constitute an original, but both of which when taken together shall constitute one Agreement.

13

 

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first
above written.

	 	 	 	 	 
	 	HOLLY CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Its: 	 	 
	 
	 	EMPLOYEE

 	 
	 	 	 
	 	Name:  	 	 
	 	 	 

14

 

	 	 	 	 	 

EXHIBIT A

Agreement and Release

     This Agreement and Release (“Release”) is entered into between you, the undersigned employee,
and Holly Corporation, a Delaware corporation (the “Company”), in connection with the Change in
Control Agreement between you and the Company dated ________ ___, 200__ (the “Change in Control
Agreement”). You have [ ___ ] days to consider this Release, which you agree is a reasonable amount
of time. While you may sign this Release prior to the expiration of this [ ___ ]-day period, you are
not to sign it prior to ________ ___, 20__.

     1. Definitions.

          (a) “Released Parties” means the Company and its past, present and future parents,
subsidiaries, divisions, successors, predecessors, employee benefit plans and affiliated or related
companies, and also each of the foregoing entities’ past, present and future owners, officers,
directors, stockholders, investors, partners, managers, principals, members, committees,
administrators, sponsors, executors, trustees, fiduciaries, employees, agents, assigns,
representatives and attorneys, in their personal and representative capacities. Each of the
Released Parties is an intended beneficiary of this Release.

          (b) “Claims” means all theories of recovery of whatever nature, whether known or unknown,
recognized by the law or equity of any jurisdiction. It includes but is not limited to any and all
actions, causes of action, lawsuits, claims, complaints, petitions, charges, demands, liabilities,
indebtedness, losses, damages, rights and judgments in which you have had or may have an interest.
It also includes but is not limited to any claim for wages, benefits or other compensation;
provided, however that nothing in this Release will affect your entitlement to benefits pursuant to
the terms of any employee benefit plan (as defined in the Employee Retirement Income Security Act
of 1974, as amended) sponsored by the Company in which you are a participant. The term Claims also
includes but is not limited to claims asserted by you or on your behalf by some other person,
entity or government agency.

     2. Consideration. The Company agrees to pay you the consideration set forth in Section
3(a) of the Change in Control Agreement. The Company will make this payment to you within 15
business days of the date you sign this Release (and return it to the Company), unless Section 3(a)
of the Change in Control Agreement provides a longer time before payment must be made. You
acknowledge that the payment that the Company will make to you under this Release is in addition to
anything else of value to which you are entitled and that the Company is not otherwise obligated to
make this payment to you.

 

 

     3. Release of Claims.

          (a) You, on behalf of yourself and your heirs, executors, administrators, legal
representatives, successors, beneficiaries, and assigns, unconditionally release and forever
discharge the Released Parties from, and waive, any and all Claims that you have or may have
against any of the Released Parties arising from your employment with the Company, the termination
thereof, and any other acts or omissions occurring on or before the date you sign this Release.

          (b) The release set forth in Paragraph 3(a) includes, but is not limited to, any and all
Claims under (i) the common law (tort, contract or other) of any jurisdiction; (ii) the
Rehabilitation Act of 1973, the Age Discrimination in Employment Act, the Americans with
Disabilities Act, Title VII of the Civil Rights Act of 1964, and any other federal, state and local
statutes, ordinances, employee orders and regulations prohibiting discrimination or retaliation
upon the basis of age, race, sex, national original, religion, disability, or other unlawful
factor; (iii) the National Labor Relations Act; (iv) the Employee Retirement Income Security Act;
(v) the Family and Medical Leave Act; (vi) the Fair Labor Standards Act; (vii) the Equal Pay Act;
(viii) the Worker Adjustment and Retraining Notification Act; and (ix) any other federal, state or
local law.

          (c) In furtherance of this Release, you promise not to bring any Claims against any of the
Released Parties in or before any court or arbitral authority.

     5. Acknowledgment. You acknowledge that, by entering into this Release, the Company does
not admit to any wrongdoing in connection with your employment or termination, and that this
Release is intended as a compromise of any Claims you have or may have against the Released
Parties. You further acknowledge that you have carefully read this Release and understand its
final and binding effect, have had a reasonable amount of time to consider it, have had the
opportunity to seek the advice of legal counsel of your choosing, and are entering this Release
voluntarily. In addition, you hereby certify your understanding that you may revoke the Release by
providing written notice thereof to the Company within seven (7) days following execution of the
Release and that, upon such revocation, this Release will not have any further legal effect.

     6. Applicable Law. This Release shall be construed and interpreted pursuant to the laws of
the State of Texas without regard to its choice of law rules and shall be subject to the
arbitration clause set forth in Section 6(k) of the Change in Control Agreement.

     7. Severability. Each part, term, or provision of this Release is severable from the
others. Notwithstanding any possible future finding by a duly constituted authority that a
particular part, term, or provision is invalid, void, or unenforceable, this Release has been made
with the clear intention that the validity and enforceability of the remaining parts, terms and provisions shall not be affected
thereby. If any part, term, or provision is so found invalid, void or unenforceable, the
applicability of any such part, term, or provision shall be modified to the minimum extent
necessary to make it or its application valid and enforceable.

 

 

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year set forth
below.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	HOLLY CORPORATION	 	 	 	EMPLOYEE	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	 	 	 
	 	 	 	Name:
	 	 	 	 
	 

	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	Title:
	 	 	 	 	 	 	 	Date:	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Date:

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