INDEMNIFICATION
AGREEMENT
This
INDEMNIFICATION AGREEMENT (the “ Agreement ”) is
made and entered into as of the
day of
2006, by and between Holly Corporation, a Delaware corporation
(including any successors thereto, the “ Company
”), and
(“ Indemnitee ”).
1. Competent
and experienced persons are reluctant to serve or to continue to
serve corporations as directors, officers, or in other capacities
unless they are provided with adequate protection through insurance
or indemnification (or both) against claims and actions against
them arising out of their service to and activities on behalf of
those corporations.
2. The
current uncertainties relating to the availability of adequate
insurance for directors and officers have increased the difficulty
for corporations to attract and retain competent and experienced
persons.
3. The Board
of Directors of the Company (the “ Board ”) has
determined that the continuation of present trends in litigation
will make it more difficult to attract and retain competent and
experienced persons, that this situation is detrimental to the best
interests of the Company’s stockholders, and that the Company
should act to assure its directors and officers that there will be
increased certainty of adequate protection in the
future.
4. It is
reasonable, prudent, and necessary for the Company to obligate
itself contractually to indemnify its directors and officers to the
fullest extent permitted by applicable law in order to induce them
to serve or continue to serve the Company.
5. Indemnitee
is willing to serve and continue to serve the Company or its
Subsidiaries on the condition that he be indemnified to the fullest
extent permitted by law.
6. Concurrently
with the execution of this Agreement, Indemnitee is agreeing to
serve or to continue to serve as a director or officer of the
Company and/or one or more of its Subsidiaries.
NOW, THEREFORE, in
consideration of the foregoing premises, Indemnitee’s
agreement to serve or continue to serve as a director or officer of
the Company and/or one or more of its Subsidiaries, and the
covenants contained in this Agreement, the Company and Indemnitee
hereby covenant and agree as follows:
For
purposes of this Agreement:
(a)
Acquiring Person : shall mean (i) any Person other than
the Company, any Subsidiary, any employee benefit plan of the
Company or any Subsidiary or any trustee or other
fiduciary
holding securities under an employee benefit plan of the Company or
any Subsidiary of the Company and (ii) members of a group
(within the meaning of Section 13(d)(3) or
Section 14(d)(2) of the Securities Exchange Act of 1934) of
which any Person described in clause (i) is a member with
respect to the Company’s Voting Securities.
(b)
Affiliate : shall mean any Person that directly, or
indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with the Person
specified.
(c)
Change of 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 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 more than fifty percent (50%) of the
combined voting power of the Company’s then outstanding
securities, or 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(c)(iii)(A) below.
(ii) During
any period of 24 consecutive months, a majority of the members of
the Board cease to be composed of individuals (1) who were
members of the Board on the first day of such period,
(2) whose election or nomination to the Board was approved by
individuals referred to in clause (1) above constituting at the
time of such election or nomination at least a majority of the
Board or (3) whose election or nomination to the Board was
approved by individuals referred to in clauses (1) and
(2) above constituting at the time of such election or
nomination at least a majority of the Board (excluding, in the case
of both clause (2) and clause (3), any individual whose
initial nomination for, or assumption of office as, a member of the
Board occurs as a result of an actual or threatened solicitation of
proxies or consents for the election or removal of one or more
directors by any person or group other than a solicitation for the
election of one or more directors by or on behalf of the
Board).
(iii) 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:
(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
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(B) the
merger or consolidation is effected to implement a recapitalization
of the Company (or similar transaction) in which no Person 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
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.
(d)
Claim : shall mean any threatened, pending, or completed
action, suit, or proceeding (including, without limitation,
securities laws actions, suits, and proceedings and also any cross
claim or counterclaim in any action, suit, or proceeding), whether
civil, criminal, arbitral, administrative, or investigative in
nature, or any inquiry or investigation (including discovery),
whether conducted by the Company or any other Person, that
Indemnitee in good faith believes might lead to the institution of
any action, suit, or proceeding.
(e)
Expenses : shall mean all costs, expenses (including
attorneys’ and expert witnesses’ fees), and obligations
paid or incurred in connection with investigating, defending
(including affirmative defenses and counterclaims), being a witness
in, or participating in (including on appeal), or preparing to
defend, be a witness in, or participate in, any Claim relating to
any Indemnifiable Event.
(f)
Indemnifiable Event : shall mean any actual or alleged act,
omission, statement, misstatement, event, or occurrence related to
the fact that Indemnitee is or was a director, officer, employee,
agent, or fiduciary of the Company, or is or was serving at the
request of the Company as a director, officer, employee, agent, or
fiduciary of any of the Company’s parent(s) or Subsidiaries
and/or any other corporation, partnership, joint venture, employee
benefit plan, trust, or other enterprise, or by reason of any
actual or alleged thing done or not done by Indemnitee in any such
capacity. For purposes of this Agreement, the Company agrees that
Indemnitee’s service on behalf of or with respect to any
Subsidiary or employee benefits plan of the Company or any
Subsidiary of the Company shall be deemed to be at the request of
the Company.
(g)
Indemnifiable Liabilities : shall mean all Expenses and all
other liabilities, damages (including, without limitation,
punitive, exemplary, and the multiplied portion of any damages),
judgments, payments, fines, penalties, amounts paid in settlement,
and awards paid or incurred that arise out of, or in any way relate
to, any Indemnifiable Event.
(h)
Person : shall mean any individual, partnership,
corporation, limited liability company, trust or other
entity.
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(i)
Potential Change of Control : shall be deemed to have
occurred if (i) the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change of
Control; (ii) any Person (including the Company) publicly
announces an intention to take or to consider taking actions that,
if consummated, would constitute a Change of Control;
(iii) any Acquiring Person who is or becomes the beneficial
owner, directly or indirectly, of securities of the Company
representing 10% or more of the combined voting power of the then
outstanding Voting Securities of the Company, increases his
beneficial ownership of such securities by 5% or more over the
percentage so owned by that Person on the date hereof; or
(iv) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change of Control has
occurred.
(j)
Reviewing Party : shall mean (i) a member or members of
the Board who are not parties to the particular Claim for which
Indemnitee is seeking indemnification or (ii) if a Change of
Control has occurred and Indemnitee so requests, or if the members
of the Board so elect, or if all of the members of the Board are
parties to such Claim, Special Counsel.
(k)
Special Counsel : shall mean special, independent legal
counsel selected by Indemnitee and approved by the Company (which
approval shall not be unreasonably withheld), and who has not
otherwise performed material services for the Company or for
Indemnitee within the last three years (other than as Special
Counsel under this Agreement or similar agreements).
(l)
Subsidiary : shall mean, with respect to any Person, any
corporation or other entity of which a majority of the voting power
of the Voting Securities is owned, directly or indirectly, by that
Person.
(m)
Voting Securities : any securities or other equity interests
that vote generally in the election of directors, in the admission
of general partners, or in the selection of any other similar
governing body, or, in the case of a partnership or limited
liability company, that manage the partnership or limited liability
company.
2.
Indemnification and Expense Advancement .
(a) The
Company shall indemnify Indemnitee and hold Indemnitee harmless to
the fullest extent permitted by law, as soon as practicable but in
any event no later than 30 days after written demand is
presented to the Company, from and against any and all
Indemnifiable Liabilities. Notwithstanding the foregoing, the
obligations of the Company under Section 2(a) shall be subject to
the condition that the Reviewing Party shall not have determined
(in a written opinion, in any case in which Special Counsel is
involved) that Indemnitee is not permitted to be indemnified under
applicable law. Any determination under this Section 2(a) shall be
made promptly by the Reviewing Party.
(b) If
so requested by Indemnitee, the Company shall advance to Indemnitee
all reasonable Expenses incurred by Indemnitee to the fullest
extent permitted by law (or, if applicable, reimburse Indemnitee
for any and all reasonable Expenses incurred by Indemnitee and
previously paid by Indemnitee) within ten business days after such
request (an “ Expense Advance ”). The Company
shall be obligated from time to time at the request of Indemnitee
to
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make or pay an
Expense Advance in advance of the final disposition or conclusion
of any Claim. In connection with any request for an Expense
Advance, if requested by the Company, Indemnitee or
Indemnitee’s counsel shall submit an affidavit stating that
the Expenses to which the Expense Advances relate are reasonable.
Any dispute as to the reasonableness of any Expense shall not delay
an Expe
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