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EXHIBIT 10.3
[FORM]
HOLLY LOGISTIC SERVICES, L.L.C.
PERFORMANCE UNIT AGREEMENT
UNDER THE HOLLY ENERGY PARTNERS, L.P.
LONG-TERM INCENTIVE PLAN
This Performance Unit Agreement (the "Agreement") is made and
entered
into by and between HOLLY LOGISTIC
SERVICES, L.L.C. (the "Company"), and
___________________ (the "Employee"). This
Agreement is entered into as of the
____ day of ___, ____ (the "Date of
Grant").
WITNESSETH:
WHEREAS, the Company has adopted the HOLLY ENERGY PARTNERS
LONG-TERM
INCENTIVE PLAN (the "Plan") to attract,
retain and motivate employees, directors
and consultants; and
WHEREAS, the Company believes that a grant to the Employee of
restricted units of Holly Energy Partners,
L.P. (the "Partnership") as part of
the Executive's compensation for services
provided to the Company 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 units (the
"Units"), subject to the terms and
conditions set forth in this Agreement.
Depending upon the performance of Holly
Energy Partners, L.P. (the
"Partnership"), the Employee may earn from
___ percent (__%) to ______ percent
(____%) of the Units, based on the total
unitholder return ("TUR") of the
Partnership's common units (the "Units"),
as compared to the TUR 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
TUR of the Partnership compared to
the TUR of a select group of peer companies
designated by the Committee for
performance measurement purposes (the "Peer
Group"), which for this Performance
Period shall be
_______________________________________________________________
_______________________________________________________________________________.
TUR includes both appreciation in unit
price during the Performance Period and
the assumed reinvestment of any
distributions declared into additional Units at
the time distributions are paid. The Unit
price for the TUR calculation of the
Company shall be the
1
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average Unit price for the final thirty-
(30-) day trading period of the
Performance Period (the "Unit Price"). The
amount payable to the 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
Partnership's TUR ranking as compared to
the ranking of the Peer Group)
multiplied by the Unit Price. The
Performance Percentage will be determined in
accordance with the following "Performance
Schedule."
<Table>
<Caption>
PERFORMANCE SCHEDULE
PERFORMANCE PERCENTAGE (%)
TO BE MULTIPLIED BY UNITS
BASED UPON THE PARTNERSHIP'S TUR AS COMPARED TO THE PEER GROUP
--------------------------------------------------------------------------------
THE PARTNERSHIP'S TSR AS COMPARED
TO
PERFORMANCE PERCENTAGE (%) TO BE
THE PEER GROUP TSR - PERCENTILE RANKING
MULTIPLIED
BY UNITS
<S>
<C>
____ Percentile or
Less
__%
Greater than ___ and
equal to or less
than ___ Percentile
__%
Greater than ___ and
equal to or less
than ___ Percentile
__%
Greater than ___ and
equal to or less
than ___ Percentile
__%
Greater than ___ and
equal to or less
than ___ Percentile
__%
Greater than ___
Percentile
__%
</Table>
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 _______ days. 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 TUR
calculation
determined
pursuant to Section 2 for the entire
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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
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 Unit Price, and multiplied by a
Performance Percentage of ______ percent (____%); provided,
however,
the Unit Price shall be calculated using the average Unit 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 Holly Corporation
("Holly") or any of its wholly-owned subsidiaries,
HEP
Logistics Holdings, L.P. (the "General Partner"),
the Partnership, the Company, or any of their
subsidiaries, a trustee or other fiduciary holding
securities under an employee benefit plan of Holly,
the Partnership, the Company or any of their
"Affiliates" (as defined in Section 3(c)(v) below),
an underwriter temporarily holding securities
pursuant to an offering of such securities, or an
entity owned, directly or indirectly, by the holders
