EXHIBIT 10.9
HOLLY ENERGY PARTNERS, L.P.
LONG-TERM INCENTIVE PLAN
SECTION 1. Purpose of the Plan.
The Holly Energy Partners, L.P. Long-Term Incentive Plan (the "Plan") is
intended to promote the interests of Holly Energy Partners, L.P., a Delaware
limited partnership (the "Partnership"), by providing to employees, consultants,
and directors of Holly Logistic Services, L.L.C., a Delaware limited liability
company (the "Company"), and its Affiliates who perform services for the
Partnership and its subsidiaries incentive compensation awards for superior
performance that are based on Units. The Plan is also contemplated to enhance
the ability of the Company and its Affiliates to attract and retain the services
of individuals who are essential for the growth and profitability of the
Partnership and to encourage them to devote their best efforts to advancing the
business of the Partnership and its subsidiaries.
SECTION 2. Definitions.
As used in the Plan, the following terms shall have the meanings set forth
below:
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with, the Person in question. As used
herein, the term "control" means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or
otherwise.
"Award" means an Option, Restricted Unit, Phantom Unit or Unit
Appreciation Right granted under the Plan, and shall include any tandem DERs
granted with respect to a Phantom Unit.
"Award Agreement" means the written agreement by which an Award shall be
evidenced.
"Board" means the Board of Directors of the Company.
"Change of Control" means, and shall be deemed to have occurred upon the
occurrence of one or more of the following events: (i) any sale, lease, exchange
or other transfer (in one transaction or a series of related transactions) of
all or substantially all of the assets of Holly, the Partnership, the General
Partner, or the Company to any Person and/or its Affiliates, other than to
Holly, the Partnership, the General Partner, the Company and/or any of their
Affiliates; or (ii) the consolidation, reorganization, merger or other
transaction pursuant to which more than 50% of the voting power of the
outstanding equity interests in Holly, the Partnership, the General Partner, or
the Company cease to be owned by the Persons who own such interests as of the
effective date of the initial public offering of Units.
"Committee" means the Compensation Committee of the Board or such other
committee of the Board appointed by the Board to administer the Plan.
"Consultant" means an individual who performs services for the Partnership
and is not an Employee or a Director.
"DER" means a contingent right, granted in tandem with a specific Phantom
Unit, to receive an amount in cash equal to, and at the same time as, the cash
distributions made by the Partnership with respect to a Unit during the period
such Phantom Unit is outstanding.
"Director" means a member of the Board who is not an Employee.
"Employee" means any employee of the Company or an Affiliate who performs
services for the Partnership.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means the closing sales price of a Unit on the date of
determination (or if there is no trading in the Units on such date, on the next
preceding date on which there was trading) as reported in The Wall Street
Journal (or other reporting service approved by the Committee). In the event
Units are not publicly traded at the time a determination of Fair Market Value
is required to be made hereunder, the determination of Fair Market Value shall
be made in good faith by the Committee.
"General Partner" means HEP Logistics Holding, L.P., a Delaware limited
partnership.
"Holly" means Holly Corporation, a Delaware corporation.
"Option" means an option to purchase Units granted under the Plan.
"Participant" means any Employee, Consultant or Director granted an Award
under the Plan.
"Partnership Agreement" means the First Amended and Restated Agreement of
Limited Partnership of Holly Energy Partners, L.P., as it may be amended or
amended and restated from time to time.
"Person" means an individual or a corporation, limited liability company,
partnership, joint venture, trust, unincorporated organization, association,
government agency or political subdivision thereof or other entity.
"Phantom Unit" means a phantom (notional) Unit granted under the Plan
which upon vesting entitles the Participant to receive a Unit or an amount of
cash equal to the Fair Market Value of a Unit, as determined by the Committee in
its discretion.
"Restricted Period" means the period established by the Committee with
respect to an Award during which the Award remains subject to forfeiture and is
either not exercisable by or payable to the Participant, as the case may be.
"Restricted Unit" means a Unit granted under the Plan that is subject to a
Restricted Period.
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"Rule 16b-3" means Rule 16b-3 promulgated by the SEC under the Exchange
Act, or any successor rule or regulation thereto as in effect from time to time.
"SEC" means the Securities and Exchange Commission, or any successor
thereto.
"UDR" means a distribution made by the Partnership with respect to a
Restricted Unit.
"Unit" means a Common Unit of the Partnership.
"Unit Appreciation Right" means an Award that, upon exercise, entitles the
holder to receive the excess of the Fair Market Value of Unit on the exercise
date over the exercise price established for such Unit Appreciation Right. Such
excess may be paid in cash and/or in Units as determined by the Committee in its
discretion.
SECTION 3. Administration.
The Plan shall be administered by the Committee. A majority of the
Committee shall constitute a quorum, and the acts of the members of the
Committee who are present at any meeting thereof at which a quorum is present,
or acts unanimously approved by the members of the Committee in writing, shall
be the acts of the Committee. Subject to the following and any applicable law,
the Committee, in its sole discretion, may delegate any or all of its powers and
duties under the Plan, including the power to grant Awards under the Plan, to
the Chief Executive Officer of the Company, subject to such limitations on such
delegated powers and duties as the Committee may impose, if any. Upon any such
delegation all references in the Plan to the "Committee", other than in Section
7, shall be deemed to include the Chief Executive Officer; provided, however,
that such delegation shall not limit the Chief Executive Officer's right to
receive Awards under the Plan. Notwithstanding the foregoing, the Chief
Executive Officer may not grant Awards to, or take any action with respect to
any Award previously granted to, a person who is an officer subject to Rule
16b-3 or who is a member of the Board. Subject to the terms of the Plan and
applicable law, and in addition to other express powers and authorizations
conferred on the Committee by the Plan, the Committee shall have full power and
authority to: (i) designate Participants; (ii) determine the type or types of
Awards to be granted to a Participant; (iii) determine the number of Units to be
covered by Awards; (iv) determine the terms and conditions of any Award; (v)
determine whether, to what extent, and under what circumstances Awards may be
settled, exercised, canceled, or forfeited; (vi) interpret and administer the
Plan and any instrument or agreement relating to an Award made under the Plan;
(vii) establish, amend, suspend, or waive such rules and regulations and appoint
such agents as it shall deem appropriate for the proper administration of the
Plan; and (viii) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the Plan.
Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations, and other decisions under or with respect to
the Plan or any Award shall be within the sole discretion of the Committee, may
be made at any time and shall be final, conclusive, and binding upon all
Persons, including the Company, the Partnership, any Affiliate, any Participant,
and any beneficiary of any Award.
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SECTION 4. Units.
(a) Limits on Units Deliverable. Subject to adjustment as provided in
Section 4(c), the number of Units with respect to which Awards may be granted
under the Plan is 350,000. However, there shall not be any limitation on the
number of Awards that may be granted and paid in cash. If any Award is forfeited
or otherwise terminates or is canceled without the delivery of Units, then the
Units covered by such Award, to the extent of such forfeiture, termination, or
cancellation, shall again be Units with respect to which Awards may be granted.
(b) Sources of Units Deliverable Under Awards. Any Units delivered
pursuant to an Award shall consist, in whole or in part, of Units acquired in
the open market, from any Affiliate, the Partnership or any other Person, or any
combination of the foregoing.
(c) Adjustments. In the event that the Committee determines that any
distribution (whether in the form of cash, Units, other securities, or other
property), recapitalization, split, reverse split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, or exchange of Units
or other securities of the Partnership, issuance of warrants or other rights to
purchase Units or other securities of the Partnership, or other similar
transaction or event affects the Units such that an adjustment is determined by
the Committee to be appropriate in order to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available under the Plan,
then the Committee shall, in such manner as it may deem equitable, adjust any or
all of (i) the number and type of Units (or other securities or property) with
respect to which Awards may be granted, (ii) the number and type of Units (or
other securities or property) subject to outstanding Awards, and (iii) the grant
or exercise price with respect to any Award or, if deemed appropriate, make
provision for a cash payment to the holder of an outstanding Award; provided,
that the number of Units subject to any Award shall always be a whole number.
SECTION 5. Eligibility.
Any Employee, Consultant or Director shall be eligible to be designated a
Participant and receive an Award under the Plan.
SECTION 6. Awards.
(a) Options. The Committee shall have the authority to determine the
Employees, Consultants and Directors to whom Options shall be granted, the
number of Units to be covered by each Option, the purchase price therefor and
the conditions and limitations applicable to the exercise of the Option,
including the following terms and conditions and such additional terms and
conditions, as the Committee shall determine, that are not inconsistent with the
provisions of the Plan.
(i) Exercise Price. The purchase price per Unit purchasable under
an Option shall be determined by the Committee at the time the Option is
granted and may be equal to, more than or less than its Fair Market Value
as of the date of grant.
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(ii) Time and Method of Exercise. The Committee shall determine the
Restricted Period, i.e., the time or times at which an Option may be
exercised in whole or in part, which may include, without limitation,
accelerated vesting upon the achievement of specified performance goals,
and the method or methods by which payment of the exercise price with
respect thereto may be made or deemed to have been made, which may
include, without limitation, cash, check acceptable to the Company, a
"cashless-broker" exercise through procedures approved by the Company,
other securities or other property, or any combination thereof, having a
Fair Market Value on the exercise date equal to the relevant exercise
price.
(iii) Forfeiture. Except as otherwise provided in the terms of the
Option grant, upon termination of a Participant's employment with or
consulting services to the Company and its Affiliates or membership on the
Board, whichever is applicable, for any reason during the applicable
Restricted Period, all Options shall be forfeited by the Participant
unless otherwise provided in a written employment agreement between the
Participant and the Company or its affiliates. The Committee may, in its
discretion, waive in whole or in part such forfeiture with respect to a
Participant's Options.
(b) Restricted Units and Phantom Units. The Committee shall have the
authority to determine the Employees, Consultants and Directors to whom
Restricted Units or Phantom Units shall be granted, the number of Restricted
Units or Phantom Units to be granted to each such Participant, the duration of
the Restricted Period, the conditions under which the Restricted Units or
Phantom Units may become vested or forfeited, which may include, without
limitation, the accelerated vesting upon the achievement of specified
performance goals, and such other terms and conditions as the Committee may
establish with respect to such Awards, including whether DERs are granted with
respect to the Phantom Units.
(i) DERs. To the extent provided by the Committee, in its
discretion, a grant of Phantom Units may include a tandem DER grant, which
may provide that such DERs shall be paid directly to the Participant, be
credited to a bookkeeping account (with or without interest in the
discretion of the Committee) subject to the same vesting restrictions as
the tandem Phantom Unit Award, or be subject to such other provisions or
restrictions as determined by the Committee in its discretion.
(ii) UDRs. To the extent provided by the Committee, in its
discretion, a grant of Restricted Units may provide that distributions
made by the Partnership with respect to the Restricted Units shall be
subject to the same forfeiture and other restrictions as the Restricted
Unit and, if restricted, such distributions shall be held, without
interest, until the Restricted Unit vests or is forfeited with the UDR
being paid or forfeited at the same time, as the case may be. Absent such
a restriction on the UDRs in the grant agreement, UDRs shall be paid to
the holder of the Restricted Unit without restriction.
(iii) Forfeitures. Except as otherwise provided in the terms of the
Restricted Units or Phantom Units grant, upon termination of a
Participant's employment with the Company and its Affiliates or membership
on the Board, whichever is applicable, for any reason during the
applicable Restricted Period, all outstanding Restricted Units and Phantom
Units awarded the Participant shall be automatically forfeited on such
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termination unless otherwise provided in a written employment agreement
between the Participant and the Company or its Affiliates. The Committee
may, in its discretion, waive in whole or in part such forfeiture with
respect to a Participant's Restricted Units and/or Phantom Units.
(iv) Lapse of Restrictions.
(A) Phantom Units. Unless a different payment time is
specified in the Award agreement, upon or as soon as reasonably
practical following the vesting of each Phantom Unit, subject to the
provisions of Section 8(b), the Participant shall be entitled to
receive from the Company one Unit or cash equal to the Fair Market
Value of a Unit, as determined by the Committee in its discretion.
(B) Restricted Units. Upon or as soon as reasonably
practical following the vesting of each Restricted Unit, subject to
the provisions of Section 8(b), the Participant shall be entitled to
have the restrictions removed from his or her Unit certificate so
that the Participant then holds an unrestricted Unit.
(c) Unit Appreciation Rights. The Committee shall have the authority to
determine the Employees, Consultants and Directors to whom Unit Appreciation
Rights shall be granted, the number of Units to be covered by each grant, the
exercise price therefor and the conditions and limitations applicable to the
exercise of the Unit Appreciation Right, including the following terms and
conditions and such additional terms and conditions, as the Committee shall
determine, that are not inconsistent with the provisions of the Plan.
(i) Exercise Price. The exercise price per Unit Appreciation Right
shall be determined by the Committee at the time the Unit Appreciation
Right is granted and may be more or less than its Fair Market Value as of
the date of grant.
(ii) Time of Exercise. The Committee shall determine the Restricted
Period, i.e., the time or times at which a Unit Appreciation Right may be
exercised in whole or in part, which may include, without limitation,
accelerated vesting upon the achievement of specified performance goals.
(iii) Forfeitures. Except as otherwise provided in the terms of the
Unit Appreciation Right grant, upon termination of a Participant's
employment with or services to the Company and its Affiliates or
membership on the Board, whichever is applicable, for any reason during
the applicable Restricted Period, all outstanding Unit Appreciation Rights
awarded the Participant shall be automatically forfeited on such
termination. The Committee may, in its discretion, waive in whole or in
part such forfeiture with respect to a Participant's Unit Appreciation
Rights.
(d) General.
(i) Awards May Be Granted Separately or Together. Awards may, in
the discretion of the Committee, be granted either alone or in addition
to, in tandem with, or in substitution for any other Award granted under
the Plan or any award granted under any other plan of the Company or any
Affiliate. Awards granted in addition to or in
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tandem with other Awards or awards granted under any other plan of the
Company or any Affiliate may be granted either at the same time as or at a
different time from the grant of such other Awards or awards.
(ii) Limits on Transfer of Awards.
(A) Except as provided in (C) below or as provided in the
Award Agreement, each Option and Unit Appreciation Right shall be
exercisable only by the Participant during the Participant's
lifetime, or by the person to whom the Participant's rights shall
pass by will or the laws of descent and distribution.
(B) Except as provided in (C) below, no Award and no right
under any such Award may be assigned, alienated, pledged, attached,
sold or otherwise transferred or encumbered by a Participant and any
such purported assignment, alienation, pledge, attachment, sale,
transfer or encumbrance shall be void and unenforceable against the
Company, the Partnership or any Affiliate.
(C) To the extent specifically provided by the Committee
with respect to an Option or Unit Appreciation Right grant, an
Option or Unit Appreciation Right may be transferred by a
Participant without consideration to immediate family members or
related family trusts, limited partnerships or similar entities or
on such terms and conditions as the Committee may from time to time
establish.
(iii) Term of Awards. The term of each Award shall be for such
period as may be determined by the Committee.
(iv) Unit Certificates. All certificates for Units or other
securities of the Partnership delivered under the Plan pursuant to any
Award or the exercise thereof shall be subject to such stop transfer
orders and other restrictions as the Committee may deem advisable under
the Plan or the rules, regulations, and other requirements of the SEC, any
stock exchange upon which such Units or other securities are then listed,
and any applicable federal or state laws, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
(v) Consideration for Grants. Awards may be granted for such
consideration, including services, as the Committee determines.
(vi) Delivery of Units or other Securities and Payment by
Participant of Consideration. Notwithstanding anything in the Plan or any
grant agreement to the contrary, delivery of Units pursuant to the
exercise or vesting of an Award may be deferred for any period during
which, in the good faith determination of the Committee, the Company is
not reasonably able to obtain Units to deliver pursuant to such Award
without violating the rules or regulations of any applicable law or
securities exchange. No Units or other securities shall be delivered
pursuant to any Award until payment in full of any amount required to be
paid pursuant to the Plan or the applicable Award grant agreement
(including, without limitation, any exercise price or tax withholding) is
received by the Company. Such payment may be made by such method or
methods and in such form or forms as the Committee shall determine,
including, without limitation,
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cash, other Awards, withholding of Units, cashless broker exercises with
simultaneous sale, or any combination thereof; provided, however, that the
combined value, as determined by the Committee, of all cash and cash
equivalents and the Fair Market Value of any such Units or other property
so tendered to the Company, as of the date of such tender, is at least
equal to the full amount required to be paid to the Company pursuant to
the Plan or the applicable Award agreement.
(vii) Change in Control. Unless specifically provided otherwise in
the Award agreement, upon a Change of Control all outstanding Awards shall
automatically vest and be payable or become exercisable in full, as the
case may be. In this regard, all Restricted Periods shall terminate and
all performance criteria, if any, shall be deemed to have been achieved at
the maximum level.
SECTION 7. Amendment and Termination.
Except to the extent prohibited by applicable law:
(a) Amendments to the Plan. Except as required by the rules of the
principal securities exchange on which the Units are traded and subject to
Section 7(b) below, the Board or the Committee may amend, alter, suspend,
discontinue, or terminate the Plan in any manner, including increasing the
number of Units available for Awards under the Plan, without the consent
of any partner, Participant, other holder or beneficiary of an Award, or
other Person.
(b) Amendments to Awards. Subject to Section 7(a), the Committee
may waive any conditions or rights under, amend any terms of, or alter any
Award theretofore granted, provided no change, other than pursuant to
Section 7(c), in any Award shall materially reduce the benefit to
Participant without the consent of such Participant.
(c) Adjustment of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events. The Committee is hereby authorized to make
adjustments in the terms and conditions of, and the criteria included in,
Awards in recognition of unusual or nonrecurring events (including,
without limitation, the events described in Section 4(c) of the Plan)
affecting the Partnership or the financial statements of the Partnership,
or of changes in applicable laws, regulations, or accounting principles,
whenever the Committee determines that such adjustments are appropriate in
order to prevent dilution or enlargement of the benefits or potential
benefits intended to be made available under the Plan or such Award.
SECTION 8. General Provisions.
(a) No Rights to Award. No Person shall have any claim to be granted any
Award under the Plan, and there is no obligation for uniformity of treatment of
Participants. The terms and conditions of Awards need not be the same with
respect to each recipient.
(b) Tax Withholding. The Company or any Affiliate is authorized to
withhold from any Award, from any payment due or transfer made under any Award
or from any compensation or other amount owing to a Participant the amount (in
cash, Units, other securities, Units that
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would otherwise be issued pursuant to such Award or other property) of any
applicable taxes payable in respect of the grant of an Award, its exercise, the
lapse of restrictions thereon, or any payment or transfer under an Award or
under the Plan and to take such other action as may be necessary in the opinion
of the Company to satisfy its withholding obligations for the payment of such
taxes.
(c) No Right to Employment or Services. The grant of an Award shall not
be construed as giving a Participant the right to be retained in the employ of
the Company or any Affiliate, to continue as a Consultant, or to remain on the
Board, as applicable. Further, the Company or an Affiliate may at any time
dismiss a Participant from employment or terminate a consulting relationship,
free from any liability or any claim under the Plan, unless otherwise expressly
provided in the Plan, any Award agreement or other agreement.
(d) Governing Law. The validity, construction, and effect of the Plan
and any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of [DELAWARE] without regard to its
conflict of laws principles.
(e) Severability. If any provision of the Plan or any award is or
becomes or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction or as to any Person or Award, or would disqualify the Plan or any
award under any law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform to the applicable laws, or if it cannot
be construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan or the Award, such provision shall be
stricken as to such jurisdiction, person or award and the remainder of the Plan
and any such Award shall remain in full force and effect.
(f) Other Laws. The Committee may refuse to issue or transfer any Units
or other consideration under an Award if, in its sole discretion, it determines
that the issuance or transfer of such Units or such other consideration might
violate any applicable law or regulation, the rules of the principal securities
exchange on which the Units are then traded, or entitle the Partnership or an
Affiliate to recover the same under Section 16(b) of the Exchange Act, and any
payment tendered to the Company by a Participant, other holder or beneficiary in
connection with the exercise of such Award shall be promptly refunded to the
relevant Participant, holder or beneficiary.
(g) No Trust or Fund Created. Neither the Plan nor any award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any participating Affiliate and a
Participant or any other Person. To the extent that any Person acquires a right
to receive payments from the Company or any participating Affiliate pursuant to
an Award, such right shall be no greater than the right of any general unsecured
creditor of the Company or any participating Affiliate.
(h) No Fractional Units. No fractional Units shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash, other securities, or other property shall be paid or transferred
in lieu of any fractional Units or whether such fractional Units or any rights
thereto shall be canceled, terminated, or otherwise eliminated.
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(i) Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.
(j) Facility Payment. Any amounts payable hereunder to any person under
legal disability or who, in the judgment of the Committee, is unable to properly
manage his financial affairs, may be paid to the legal representative of such
person, or may be applied for the benefit of such person in any manner which the
Committee may select, and the Company and its Affiliates shall be relieved of
any further liability for payment of such amounts.
(k) Participation by Affiliates. In making Awards to Consultants and
Employees employed by an entity other than by the Company, the Committee shall
be acting on behalf of the Affiliate, and to the extent the Partnership has an
obligation to reimburse the Company for compensation paid to Consultants and
Employees for services rendered for the benefit of the Partnership, such
payments or reimbursement payments may be made by the Partnership directly to
the Affiliate, and, if made to the Company, shall be received by the Company as
agent for the Affiliate.
(l) Gender and Number. Words in the masculine gender shall include the
feminine gender, the plural shall include the singular and the singular shall
include the plural.
SECTION 9. Term of the Plan.
The Plan shall be effective on the date of its approval by the Board and
shall continue until the earlier of the date terminated by the Board, the date
Units are no longer available for the payment of Awards under the Plan. However,
unless otherwise expressly provided in the Plan or in an applicable Award
Agreement, any Award granted prior to such termination, and the authority of the
Board or the Committee to amend, alter, adjust, suspend, discontinue, or
terminate any such Award or to waive any conditions or rights under such Award,
shall extend beyond such termination date.
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