Document:

exv10w6

 

Exhibit 10.6

[ONE-YEAR FORM]

HOLLY CORPORATION

PERFORMANCE SHARE UNIT AGREEMENT

     This Performance Share Unit Agreement (the “Agreement”) is made and
entered into by and between HOLLY CORPORATION, a Delaware corporation (the
“Company”), and                      (the “Employee”). If the Employee
presently is or subsequently becomes employed by a subsidiary of the Company,
the term “Company” shall be deemed to refer collectively to the Company and the
subsidiary or subsidiaries which employ the Employee. This Agreement is
entered into as of the       day of                     ,       (the “Date of Grant”).

W I T N E S S E T H:

     WHEREAS, the Company has adopted the HOLLY CORPORATION LONG-TERM INCENTIVE
COMPENSATION PLAN (the “Plan”) to attract, retain and motivate employees,
directors and consultants; and

     WHEREAS, the Long-Term Incentive Compensation Plan Committee (the
“Committee”) believes that entering into this Agreement with the Employee 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 as of the Date of Grant a
Performance Award (as defined in the Plan) of                      performance share
units (the “Units”), subject to the terms and conditions set forth in this
Agreement. Depending upon the Company’s performance, the Employee may
earn from                      percent (     %) to                      percent (     %) of the
Units, based on the total shareholder return (“TSR”) of the Company’s
common stock, par value $.01 per share (the “Shares”), as compared to the
TSR of a peer group of companies as provided in Section 2.

     2. Nature of Award. The Units represent an award for the
“Performance Period” described in this Section 2. The Performance Period
begins on                     ,       and ends on                     ,      . At the end of the
Performance Period, the Employee shall be entitled to a cash payment
equal to the value of the Units as determined under this Section 2 and
payable at the time indicated in Section 4 or Section 3(b), as
applicable. At the end of the Performance Period, the amount paid with
respect to the Units will be based upon the TSR of the Company compared
to the TSR of a select group of peer companies designated by the
Committee for performance measurement purposes (the “Peer Group”). TSR
includes both appreciation in share price during the Performance Period
and the assumed reinvestment of any dividends declared into additional
Shares at the time dividends are paid. The Share price for the TSR
calculation of the Company shall be the average Share price for the final
thirty- (30-) day trading period of the Performance Period (the “Share
Price”). The amount payable to the Employee pursuant

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to the Agreement shall be an amount equal to the number of Units (as
specified in Section 1 and after any applicable adjustment under Section
3) multiplied by a “Performance Percentage” (which will be based upon the
Company’s TSR ranking as compared to the ranking of the Peer Group)
multiplied by the Share Price. The Performance Percentage will be
determined in accordance with the following “Performance Schedule.”

Performance Schedule

Performance Percentage (%)

to be Multiplied by Units

Based Upon the Company’s TSR as Compared to the Peer Group

	 	 	 	 	 
	The Company's TSR as Compared to	 	Performance Percentage (%) to be
	the Peer Group TSR – Percentile Ranking	 	Multiplied by Units
	 

	 	      Percentile or Less
	 	      %
	

	 	      –       Percentile
	 	      %
	

	 	      –       Percentile
	 	      %
	

	 	      –       Percentile
	 	      %
	

	 	      –       Percentile
	 	      %
	

	 	      Percentile and Higher
	 	      %

     3. Early Termination. In the event of separation from employment of
the Employee prior to the end of the Performance Period on account of an
event described in this Section 3, the number of Units with respect to
which payment at the end of the Performance Period is based shall be
determined as follows:

     (a) (i) In the event that the Employee separates from
employment for any reason other than voluntary separation or Cause,
as defined in Section 3(c)(vii), or (ii) in the event of the
Employee’s death or (iii) in the event of the Employee’s total and
permanent disability as determined by the Committee in its sole
discretion, or (iv) in the event that the Employee shall retire
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 Units that shall be earned by and paid to
the Employee or his beneficiary, in accordance with and at the time
specified in Section 4, shall be determined as follows: the
Employee shall forfeit a percentage of the Units 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 the number of full months in the
Performance Period. The Committee shall determine the number of
Units earned and the amount to be paid to the Employee or his
beneficiary as soon as administratively practicable after the end
of the Performance Period based upon the TSR calculation determined
pursuant to Section 2 for the entire Performance Period. In its
sole discretion, the Committee may make a payment to the

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Employee assuming a Performance Percentage of up to                     
percent (     %) of the Units instead of the pro-rata number of
Units as determined pursuant to this Section 3(a). Unless the
Committee determines otherwise, the Employee will have no right to
any other Units and those other 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 Units hereunder will be forfeited.

     (b) In the event of a Special Involuntary Termination, as
defined in Section 3(c)(vi), before the end of the Performance
Period, no Units shall be forfeited, and payment with respect to
                     percent (     %) of the Units shall be made as soon as
administratively practicable following the Special Involuntary
Termination. In the event of a Special Involuntary Termination,
the amount payable with respect to this Agreement will equal the
number of Units granted pursuant to Section 1, multiplied by the
Share Price, and multiplied by a Performance Percentage of
                     percent (     %); provided, however, the Share Price shall
be calculated using the average Share price for the thirty- (30-)
day trading period preceding the date of the Special Involuntary
Termination. Payment pursuant to this Section 3(b) is in-lieu of
payment pursuant to Section 3(a) and if the Employee receives
payment pursuant to this Section 3(b) the Employee will not be
entitled to any payment pursuant to Section 3(a).

     (c) Definitions. For purposes of this Section 3,

     (i) “Change in Control” shall mean:

     A. Any “Person” (as defined in Section 3(c)(ii)
below), 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” (as defined in
Section 3(c)(v) below), (3) an underwriter temporarily
holding securities pursuant to an offering of such
securities, or (4) a corporation owned, directly or
indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership
of stock of the Company, is or becomes the “Beneficial
Owner” (as defined in Section 3(c)(iii) below),
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 more than forty
percent (40%) of the combined voting power of the
Company’s then outstanding securities, or more than
forty percent (40%) 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 3(c)(i)(C)(I) below.

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     B. The individuals who as of the Date of Grant
constitute the Board of Directors of the Company and
any “New Director” (as defined in Section 3(c)(iv)
below) cease for any reason to constitute a majority of
the Board of Directors.

     C. There is consummated a merger or consolidation
of the Company or any direct or indirect subsidiary of
the Company with any other corporation, except if:

     (I) 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 sixty
percent (60%) 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

     (II) the merger or consolidation is effected
to implement a recapitalization of the Company
(or similar transaction) in which no Person is or
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 other than in
connection with the acquisition by the Company or
its Affiliates of a business) representing more
than forty percent (40%) of the combined voting
power of the Company’s then outstanding
securities.

     D. The shareholders 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.

     (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.

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     (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 the Company’s Board of Directors or nomination
for election by the Company’s shareholders 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 Company.

     (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 3(c)(i)), where (1) is termination of the Employee’s
employment with the Company (including subsidiaries of the
Company) by the Company for any reason other than “Cause” (as
defined in Section 3(c)(vii)) and (2) is a resignation by the
Employee from employment with the Company (including
subsidiaries of the Company) within ninety (90) days after an
“Adverse Change” (as defined in Section 3(c)(viii)) by the
Company (including subsidiaries of the Company) in the terms
of the Employee’s employment.

     (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 (A) a change in the
city in which the Employee is required to work regularly, (B)
a substantial increase in travel requirements of employment,
(C) a substantial reduction in duties of the type previously
performed by the Employee, or (D) a significant reduction in
compensation or benefits (other than bonuses and

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other discretionary items of compensation) that does not
apply generally to executives of the Company or its
successor.

     4. Payment of Units. The value of the Units earned shall be
converted to a fully equivalent cash value at the end of the Performance
Period (or such earlier time as specified under Section 3(b)) and shall
be payable in cash as soon as reasonably practicable following the close
of the Performance Period (or such earlier time as specified under
Section 3(b)) in the amount determined in accordance with Section 2, as
adjusted by Section 3, if applicable. Such cash 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.

     5. Adjustment in Number of Units. Except as provided below, in the
event that the outstanding Shares of the Company are increased, decreased
or exchanged for a different number of kind of shares or other
securities, or if additional, new or different shares or securities are
distributed with respect to the Shares through merger, consolidation,
sale of all or substantially all of the assets of the Company,
reorganization, recapitalization, stock dividend, stock split, reverse
stock split or other distribution with respect to such Shares, the number
of Units subject to this Agreement shall be adjusted, in the sole
discretion of the Committee, to reflect the change in outstanding Shares,
and, to the extent Shares are replaced or exchanged for different
securities, the Committee shall, in its sole discretion, cause the Units
to be valued in accordance with Sections 2 and 3 of this Agreement, but
with respect to such new securities.

     6. 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.

     7. 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.

     8. 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.

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     9. 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.

     10. 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.

     11. 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 Units granted hereunder.

     12. No Guarantee of Interests. The Board and the Company do not
guarantee the Shares (as defined in the Plan) from loss or depreciation.

     13. Nontransferability. 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.

     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 CORPORATION
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	
 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	
 
	

	 	Employee	 	 

7exv10w7

 

Exhibit 10.7

[THREE-YEAR FORM]

HOLLY CORPORATION

PERFORMANCE SHARE UNIT AGREEMENT

     This Performance Share Unit Agreement (the “Agreement”) is made and
entered into by and between HOLLY CORPORATION, a Delaware corporation (the
“Company”), and                        (the “Employee”). If the Employee
presently is or subsequently becomes employed by a subsidiary of the Company,
the term “Company” shall be deemed to refer collectively to the Company and the
subsidiary or subsidiaries which employ the Employee. This Agreement is
entered into as of the       day of                       ,          (the “Date of Grant”).

WITNESSETH:

     WHEREAS, the Company has adopted the HOLLY CORPORATION LONG-TERM INCENTIVE
COMPENSATION PLAN (the “Plan”) to attract, retain and motivate employees,
directors and consultants; and

     WHEREAS, the Long-Term Incentive Compensation Plan Committee (the
“Committee”) believes that entering into this Agreement with the Employee 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 as of the Date of Grant a
Performance Award (as defined in the Plan) of                performance share
units (the “Units”), subject to the terms and conditions set forth in this
Agreement. Depending upon the Company’s performance, the Employee may
earn from                percent
(       %) to        
percent
(       %) of the
Units, based on the total shareholder return (“TSR”) of the Company’s
common stock, par value $.01 per share (the “Shares”), as compared to the
TSR of a peer group of companies as provided in Section 2.

     2. Nature of Award. The Units represent an award for the
“Performance Period” described in this Section 2. The Performance Period
begins on

              
,       and ends on               ,       . At the end of
the Performance Period, the Employee shall be entitled to a cash payment
equal to the value of the Units as determined under this Section 2 and
payable at the time indicated in Section 4 or Section 3(b), as
applicable. At the end of the Performance Period, the amount paid with
respect to the Units will be based upon the TSR of the Company compared
to the TSR of a select group of peer companies designated by the
Committee for performance measurement purposes (the “Peer Group”). TSR
includes both appreciation in share price during the Performance Period
and the assumed reinvestment of any dividends declared into additional
Shares at the time dividends are paid. The Share price for the TSR
calculation of the Company shall be the average Share price for the final
thirty- (30-) day trading period of the Performance Period (the “Share
Price”). The amount payable to the

1

 

Employee pursuant to the Agreement shall be an amount equal to the
number of Units (as specified in Section 1 and after any applicable
adjustment under Section 3) multiplied by a “Performance Percentage”
(which will be based upon the Company’s TSR ranking as compared to the
ranking of the Peer Group) multiplied by the Share Price. The
Performance Percentage will be determined in accordance with the
following “Performance Schedule.”

Performance Schedule

Performance Percentage (%)

to be Multiplied by Units

Based Upon the Company’s TSR as Compared to the Peer Group

	 	 	 	 	 	 
	 	The Company's TSR as Compared to	 	Performance Percentage (%) to be
	 	the Peer Group TSR – Percentile Ranking	 	Multiplied by Units
	 	        Percentile or Less
	 	 	       	%
	 	        –         Percentile
	 	 	       	%
	 	        –         Percentile
	 	 	       	%
	 	        –         Percentile
	 	 	       	%
	 	        –         Percentile
	 	 	       	%
	 	        Percentile and Higher
	 	 	       	%

     3. Early Termination. In the event of separation from employment of
the Employee prior to the end of the Performance Period on account of an
event described in this Section 3, the number of Units with respect to
which payment at the end of the Performance Period is based shall be
determined as follows:

          (a) (i) In the event that the Employee separates from
employment for any reason other than voluntary separation or Cause,
as defined in Section 3(c)(vii), or (ii) in the event of the
Employee’s death or (iii) in the event of the Employee’s total and
permanent disability as determined by the Committee in its sole
discretion, or (iv) in the event that the Employee shall retire
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 Units that shall be earned by and paid to
the Employee or his beneficiary, in accordance with and at the time
specified in Section 4, shall be determined as follows: the
Employee shall forfeit a percentage of the Units 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 Units earned and the amount to be paid to
the Employee or his beneficiary as soon as administratively
practicable after the end of the Performance Period based upon the
TSR calculation determined pursuant to Section 2 for the entire
Performance Period. In its sole discretion, the Committee may make
a payment to the Employee assuming a Performance Percentage of up
to                     percent (       %) of the Units instead of the pro-rata
number of Units as determined pursuant to this Section 3(a).
Unless the Committee

2

 

determines otherwise, the Employee will have no right to any
other Units and those other 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 Units hereunder will be forfeited.

          (b) In the event of a Special Involuntary Termination, as
defined in Section 3(c)(vi), before the end of the Performance
Period, no Units shall be forfeited, and payment with respect to                      
percent (       %) of the Units shall be made as soon as
administratively practicable following the Special Involuntary
Termination. In the event of a Special Involuntary Termination,
the amount payable with respect to this Agreement will equal the
number of Units granted pursuant to Section 1, multiplied by the
Share Price, and multiplied by a Performance Percentage of                      percent (       %); provided, however, the Share Price
shall be calculated using the average Share price for the thirty-
(30-) day trading period preceding the date of the Special
Involuntary Termination. Payment pursuant to this Section 3(b) is
in-lieu of payment pursuant to Section 3(a) and if the Employee
receives payment pursuant to this Section 3(b) the Employee will
not be entitled to any payment pursuant to Section 3(a).

          (c) Definitions. For purposes of this Section 3,

               (i) “Change in Control” shall mean:

                    A. Any “Person” (as defined in Section 3(c)(ii)
below), 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” (as defined in
Section 3(c)(v) below), (3) an underwriter temporarily
holding securities pursuant to an offering of such
securities, or (4) a corporation owned, directly or
indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership
of stock of the Company, is or becomes the “Beneficial
Owner” (as defined in Section 3(c)(iii) below),
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 more than forty
percent (40%) of the combined voting power of the
Company’s then outstanding securities, or more than
forty percent (40%) 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 3(c)(i)(C)(I) below.

                    B. The individuals who as of the Date of Grant
constitute the Board of Directors of the Company and
any “New Director” (as defined in Section 3(c)(iv)
below) cease for any reason to constitute a majority of
the Board of Directors.

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                    C. There is consummated a merger or consolidation
of the Company or any direct or indirect subsidiary of
the Company with any other corporation, except if:

                              (I) 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 sixty
percent (60%) 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

                              (II) the merger or consolidation is effected
to implement a recapitalization of the Company
(or similar transaction) in which no Person is or
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 other than in
connection with the acquisition by the Company or
its Affiliates of a business) representing more
than forty percent (40%) of the combined voting
power of the Company’s then outstanding
securities.

                    D. The shareholders 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.

                    (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 the Company’s Board of Directors or nomination
for election by the Company’s shareholders was approved by a
vote of at least two-thirds

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(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 Company.

                    (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 3(c)(i)), where (1) is termination of the Employee’s
employment with the Company (including subsidiaries of the
Company) by the Company for any reason other than “Cause” (as
defined in Section 3(c)(vii)) and (2) is a resignation by the
Employee from employment with the Company (including
subsidiaries of the Company) within ninety (90) days after an
“Adverse Change” (as defined in Section 3(c)(viii)) by the
Company (including subsidiaries of the Company) in the terms
of the Employee’s employment.

                    (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 (A) a change in the
city in which the Employee is required to work regularly, (B)
a substantial increase in travel requirements of employment,
(C) a substantial reduction in duties of the type previously
performed by the Employee, or (D) a significant reduction in
compensation or benefits (other than bonuses and other
discretionary items of compensation) that does not apply
generally to executives of the Company or its successor.

     4. Payment of Units. The value of the Units earned shall be
converted to a fully equivalent cash value at the end of the Performance
Period (or such earlier time as specified under Section 3(b)) and shall
be payable in cash as soon as reasonably

5

 

practicable following the close of the Performance Period (or such
earlier time as specified under Section 3(b)) in the amount determined in
accordance with Section 2, as adjusted by Section 3, if applicable. Such
cash 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.

     5. Adjustment in Number of Units. Except as provided below, in the
event that the outstanding Shares of the Company are increased, decreased
or exchanged for a different number of kind of shares or other
securities, or if additional, new or different shares or securities are
distributed with respect to the Shares through merger, consolidation,
sale of all or substantially all of the assets of the Company,
reorganization, recapitalization, stock dividend, stock split, reverse
stock split or other distribution with respect to such Shares, the number
of Units subject to this Agreement shall be adjusted, in the sole
discretion of the Committee, to reflect the change in outstanding Shares,
and, to the extent Shares are replaced or exchanged for different
securities, the Committee shall, in its sole discretion, cause the Units
to be valued in accordance with Sections 2 and 3 of this Agreement, but
with respect to such new securities.

     6. 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.

     7. 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.

     8. 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.

     9. 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.

     10. Amendments. This Agreement may be amended only by a written
agreement executed by the Company and the Employee. Any such amendment
shall be

6

 

made only upon the mutual consent of the parties, which consent (of
either party) may be withheld for any reason.

     11. 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 Units granted hereunder.

     12. No Guarantee of Interests. The Board and the Company do not
guarantee the Shares (as defined in the Plan) from loss or depreciation.

     13. Nontransferability. 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.

     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 CORPORATION

 	 
	 	By:  	 	 
	 	 	 	 
	 	 	 	 
	 	 	 Employee 	 	 
	 

7

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