EXHIBIT 10.10
HOLLY LOGISTIC SERVICES, L.L.C.
ANNUAL INCENTIVE PLAN
1. INTENT.
The purpose of this Annual Incentive Plan (the "Plan") is to motivate
management and the employees of Holly Logistic Services, L.L.C. (the "Company")
and its affiliates who perform services for the Company and for Holly Energy
Partners, L.P., a Delaware limited partnership, and its subsidiaries (the
"Partnership") to collectively produce outstanding results, encourage superior
performance, increase productivity, and aid in attracting and retaining key
employees.
2. PLAN GUIDELINES.
The administration of the Plan and any potential awards granted pursuant
to the Plan is subject to the determination by the Compensation Committee of the
Company's Board of Directors (the "Compensation Committee") that the performance
goals for the applicable periods have been achieved. The Plan is an additional
compensation program designed to encourage Plan participants (designated by the
Compensation Committee) to exceed specified objective performance targets for
the designated period. The Compensation Committee will review performance
results for the designated performance period, and thereafter will determine
whether or not to approve awards under the Plan.
3. PERFORMANCE TARGETS.
3.1 DESIGNATION OF PERFORMANCE TARGETS. The Company's Chief Executive
Officer shall recommend, subject to the Compensation Committee's approval, the
performance measures and performance targets to be used for each calendar year
(a "Plan Year") in determining the bonus amounts to be paid as a result of the
Plan. Performance targets may be based on Partnership, business unit and/or
individual achievements, or any combination of these, or on such other factors
as the Company's Chief Executive Officer, subject to the approval of the
Compensation Committee, may determine. Different performance targets may be
established for different participants for any Plan Year. Satisfactory results,
as determined by the Compensation Committee in its sole discretion, must be
achieved in order for an award to be made pursuant to the Plan.
3.2 EQUITABLE ADJUSTMENT TO PERFORMANCE TARGETS. At its discretion, the
Compensation Committee may adjust performance measure results for extraordinary
events or accounting adjustments resulting from significant asset purchases or
dispositions or other events not contemplated or otherwise considered by the
Compensation Committee when the performance measures and targets were set.
4. PARTICIPANTS.
The Compensation Committee, in consultation with the Company's Chief
Executive Officer, will designate members of management and employees of the
Company and its affiliates as eligible to participate in the Plan. Employees so
designated shall be referred to as "Participants."
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5. PARTICIPATION LEVELS.
A Participant's designated level of participation in the Plan, or target
bonus, will be determined under criteria established or approved by the
Compensation Committee for that Plan Year or designated performance period.
Levels of participation in the Plan may vary according to a Participant's
position and the relative impact such Participant can have on the Company's
and/or affiliates' operations. Care will be used in communicating to any
participant his performance targets and potential performance amount for a Plan
Year. The amount of target bonus a participant may receive for any Plan Year, if
any, will depend upon the performance level achieved (unless waived) for that
Plan Year, as determined by the Compensation Committee. No Participant 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 respecting each Participant.
6. AWARD PAYOUT.
Awards typically will be determined after the end of the Plan Year or
designated performance period. Awards will be paid in cash annually, unless
otherwise determined by the Compensation Committee. The Compensation Committee
will have the discretion, by Participant and by grant, to reduce (but not to
increase) some or all of the amount of any award that otherwise would be payable
by reason of the satisfaction of the applicable performance targets. In making
any such determination, the Compensation Committee is authorized to take into
account any such factor or factors it determines are appropriate, including but
not limited to Company, business unit and individual performance; provided,
however, that the exercise of such negative discretion with respect to one
Participant may not be used to increase the amount of any award otherwise
payable to another Participant.
7. TERMINATION OF EMPLOYMENT.
Termination of a Participant's employment for any reason prior to payout
of an award under the Plan will result in the Participant's forfeiture of any
right, title or interest in any such award, unless and to the extent waived by
the Compensation Committee in its sole discretion.
8. AMENDMENT AND TERMINATION.
The Compensation Committee, at its sole discretion, may amend the Plan or
terminate the Plan at any time.
9. ADMINISTRATION.
The Compensation Committee may delegate the responsibility for the
administration and operation of the Plan to the Chief Executive Officer (or
designee) of the Company or any participating affiliate. The Compensation
Committee (or the person(s) to which administrative authority has been
delegated) shall have the authority to interpret and construe any and all
provisions of the Plan, including all performance targets and whether and to
what extent achieved. Any determination made by the Compensation Committee (or
the person(s) to which administrative authority has been delegated) shall be
final and conclusive and binding on all persons.
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10. INDEMNIFICATION.
Neither the Company, nor any participating affiliate, nor the Board of
Directors of the Company or any participating affiliate, nor any member of any
committee of the Board of Directors or any participating affiliate, nor any
employee of the Company or any participating affiliate shall be liable for any
act, omission, interpretation, construction or determination made in connection
with the Plan in good faith; and the members of the Company's Board of
Directors, the Compensation Committee and/or the employees of the Company or any
participating affiliate shall be entitled to indemnification and reimbursement
by the Company to the maximum extent permitted by law in respect of any claim,
loss, damage or expense (including counsel's fees) arising from their acts,
omission and conduct in their official capacity with respect to the Plan.
11. GENERAL PROVISIONS.
11.1 NON-GUARANTEE OF EMPLOYMENT. Nothing contained in this Plan shall be
construed as a contract of employment between the Company and/or a participating
affiliate and a Participant, and nothing in this Plan shall confer upon any
Participant any right to continued employment with the Company or a
participating affiliate, or to interfere with the right of the Company or a
participating affiliate to terminate a Participant's employment, with or without
cause.
11.2 INTERESTS NOT TRANSFERABLE. No benefits under the Plan shall be
subject in any manner to alienation, sale, transfer, assignment, pledge,
attachment or other legal process, or encumbrance of any kind, and any attempt
to do so shall be void.
11.3 FACILITY PAYMENT. Any amounts payable hereunder to any person under
legal disability or who, in the judgment of the Compensation Committee or its
designee, is unable to properly manage his or her 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 Compensation Committee or its designee may
select, and each participating affiliate shall be relieved of any further
liability for payment of such amounts.
11.4 CONTROLLING LAW. To the extent not superseded by federal law, the
law of the State of [DELAWARE], without regard to its choice of law principles,
shall be controlling in all matters relating to the Plan.
11.5 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.
11.6 SEVERABILITY. If any Plan provision 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 the law deemed
applicable by the Compensation 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 Compensation Committee,
materially altering the intent of the Plan or the award, such provision
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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.
11.7 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.
11.8 HEADINGS. Headings are given to the sections 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 of it.
11.9 TAX WITHHOLDING. The Company and/or any participating affiliate may
deduct from any payment otherwise due under this Plan to a Participant (or
beneficiary) amounts required by law to be withheld for purposes of federal,
state or local taxes.
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