HOLLY CORPORATION PERFORMANCE SHARE UNIT AGREEMENT
Exhibit 10.5
XXXXX CORPORATION
PERFORMANCE SHARE UNIT AGREEMENT
PERFORMANCE SHARE UNIT AGREEMENT
This Performance Share Unit Agreement (the “Agreement”) is made and entered into by and
between XXXXX 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 7th
day of March, 2008 (the “Date of Grant”).
WITNESSETH:
WHEREAS, the Company has adopted the XXXXX CORPORATION LONG-TERM INCENTIVE COMPENSATION PLAN
(the “Plan”) to attract, retain and motivate employees, directors and consultants; and
WHEREAS, the Compensation 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 to the Employee as of the Date of Grant a
Performance Award (as defined in the Plan) of _________ performance share units (the “Performance
Share Units”), subject to the terms and conditions set forth in this Agreement. Depending on the
Company’s performance, the Employee may earn from zero percent (0%) to two hundred percent (200%)
of the Performance Share Units, based on the Company’s performance on three measures set forth in
Section 2 over a designated performance period compared to the performance of a group of peer
companies selected by the Committee.
2. Performance Period and Measures. This Section 2 sets forth the details of the
Performance Award for the “Performance Period,” which begins on January 1, 2008 and ends on
September 30, 2010. If employed by the Company on December 31, 2010, the Employee shall be
entitled to a payment in shares of the Company’s Common Stock par value $0.1 per share (the “Common
Stock”) in the amount determined under Section 2(c) or pursuant to Section 3 or 4, as applicable,
and payable at the time indicated in Section 5.
(a) Performance Measures. The number of Performance Share Units earned for the
Performance Period is determined by comparing the Company’s performance on the three measures
listed below over the Performance Period to the performance of the Peer Group (as defined in
Section 2(b)) over the Performance Period on the same three measures. The three performance
measures are EPS Growth, Return on Assets, and Return on Investment, all as defined in Section
2(d).
(b) Peer Group. The Peer Group consists of Alon USA Energy, Inc., Xxxxxx Xxxxxxx
Corporation, Crosstex Energy, Inc., El Paso Corp., FMC Technologies, Inc., Frontier
Oil Corporation, Giant Industries Inc., Hanover Compressor, Marathon Oil Corporation, Maverick
Tube Corporation, Xxxxxx Oil Corporation, Sunoco Inc., Tesoro Corporation, Valero Energy
Corporation, Western Gas Resources, and Xxxxxxxx Companies Inc. If a member of the Peer Group
ceases to be a public company during the Performance Period (whether by merger, consolidation,
liquidation or otherwise) or it fails to file financial statements with the Securities and Exchange
Commission in a timely manner, it shall be treated as if it had not been a Peer Group member for
the entire Performance Period.
(c) Shares Payable. The number of shares of Common Stock payable is equal to the
result of multiplying the total number of Performance Share Units awarded by the “Peer Group
Performance Percentage,” which is the average of the percentile ranking of the Company’s
performance on the three performance measures over the Performance Period as compared to the Peer
Group’s performance on such performance measures over the Performance Period multiplied by two.
The average shall be determined by adding the Company’s percentile ranking on each performance
measure and dividing the sum thereof by three.
(d) Definitions. For purposes of this Agreement, the following terms will have the
meanings assigned below:
(i) “EPS Growth” shall mean compound annual growth rate in earnings per share (“EPS”)
before extraordinary items and discontinued operations, and after the effect of conversion
of convertible preferred stock, convertible debentures, and options and warrants that have
been identified as common stock equivalents.
(ii) “Return on Assets” shall mean net income before extraordinary items, divided by
total assets (i.e., the sum of current assets, net plant, and other non-current assets).
(iii) “Return on Investment” shall mean net income before extraordinary items, divided
by the sum of long-term debt, preferred stock and total common equity.
Each of the performance measures set forth above shall exclude unusual or non-recurring items and
the cumulative effect of tax and accounting changes. In addition, the elements of each performance
measure shall be as identified in the Company’s financial statements, notes to the financial
statements, management’s discussion and analysis or other Company filing with the Securities and
Exchange Commission.
3. Termination of Employment.
(a) In the event that the Employee’s employment with the Company terminates prior to December
31, 2010, (i) due to Employee’s death, (ii) on account of the Employee’s total and permanent
disability as determined by the Committee in its sole discretion, or (iii) for any other reason
other than voluntary separation, Cause (as defined below), or as a result of a Special Involuntary
Termination (as defined below), the Employee (or his beneficiary, if applicable) shall forfeit a
percentage of the total Performance Share Units awarded equal to the percentage that the number of
full months from the date of such termination until December 31, 2010 bears to thirty-six (36), and
the number of shares of Common Stock payable hereunder
shall be equal to the result of multiplying the number of remaining Performance Share Units by
the “Peer Group Performance Percentage” determined as of December 31, 2010 in accordance with
Section 2 and will be paid to the Employee at the time specified in Section 5. Notwithstanding the
foregoing, in the event the Employee’s employment is terminated on account of death or disability,
the Committee, in its sole discretion, may make a payment to the Employee pursuant to this Section
3(a) assuming a Peer Group Performance Percentage of up to two hundred percent (200%) instead of
the Peer Group Performance Percentage determined in accordance with Section 2.
(b) If, prior to December 31, 2010, the Employee voluntarily separates from employment or is
terminated by the Company for Cause, all Performance Share Units awarded hereunder will be
forfeited.
4. Special Involuntary Termination.
(a) In the event the Employee’s employment with the Company and its subsidiaries terminates
due to a Special Involuntary Termination (as defined below) before December 31, 2010, the Employee
shall remain eligible to receive full payment hereunder (i.e., the Employee shall be treated as
remaining continuously employed through December 31, 2010), and the number of shares of Common
Stock payable to the Employee, in accordance with and at the time specified in Section 5, shall be
that number determined pursuant to Section 2(c) hereof.
(b) For purposes of this Agreement, the following terms shall have the meanings assigned
below:
(i) “Special Involuntary Termination” shall mean the occurrence of (A) or (B) below
within sixty (60) days prior to, or at any time after, a Change in Control (as defined
below), where (A) is termination of the Employee’s employment with the Company by the
Company for any reason other than Cause (as defined below) and (B) is a resignation by the
Employee from employment with the Company within ninety (90) days after an Adverse Change
(as defined below) in the terms of the Employee’s employment.
(ii) “Adverse Change” shall mean, without the express written consent of the Employee,
(A) a material change in the geographic location at which the Employee is required to work
regularly, (B) a material reduction in duties of the type previously performed by the
Employee, or (C) a material reduction in the Employee’s base compensation (other than
bonuses and other discretionary items of compensation) that does not apply generally to
executives of the Company or its successor. The Employee shall provide notice to the
Company of the event alleged to constitute an Adverse Change within ninety (90) days of the
occurrence of such event, and the Company shall be given the opportunity to remedy the
alleged Adverse Change within thirty (30) days from receipt of such notice.
(iii) “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.
(iv) “Change in Control” shall mean:
A. Any Person (as defined below), other than (I) the Company or any of its
subsidiaries, (II) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any of its Affiliates (as defined below), (III) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (IV) an entity owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their ownership of stock of the
Company, is or becomes the Beneficial Owner (as defined 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 4(b)(iv)(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 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 entity, 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 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.
(v) “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.
(vi) “Beneficial Owner” shall have the meaning provided in Rule 13d-3 under the 1934
Act.
(vii) “New Director” shall mean an individual whose election by the Company’s Board of
Directors or nomination for election by the Company’s stockholders 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, the term “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.
(viii) “Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under
section 12 of the 1934 Act.
5. Payment of Performance Share Units. The number of shares of Common Stock payable
hereunder shall be paid as soon as reasonably practicable after December 31, 2010, but in no event
later than two and one-half months after the end of the calendar year in which the Performance
Period closes, in the amount determined in accordance with Section 2, as adjusted by Section 3(a),
if applicable. Such 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.
6. Adjustment in Number of Performance Share Units. The number of Performance Share
Units subject to this Agreement shall be adjusted to reflect stock dividends, stock splits or other
changes in the capital structure of the Company, all in accordance with the Plan. In the event
that the outstanding Shares (as defined in the Plan) of the Company are exchanged for a different
number or kind of shares or other securities, or if additional, new or different shares are
distributed with respect to the Shares (as defined in the Plan) through merger, consolidation, or
sale of all or substantially all of the assets of the Company, there shall be substituted for the
shares of Common Stock under the Performance Share Units subject to this Agreement the appropriate
number and kind of shares of new or replacement securities as determined in the sole discretion of
the Committee, subject to the terms and provisions of the Plan.
7. Delivery of Shares. No shares of Common Stock shall be delivered pursuant to this
Agreement until the approval of any governmental authority required in connection with this
Agreement, or the issuance of shares of Common Stock hereunder, has been received by the Company.
8. Securities Act. The Company shall have the right, but not the obligation, to cause
the shares of Common Stock payable under this Agreement to be registered under the appropriate
rules and regulations of the Securities and Exchange Commission. The Company shall not be required
to deliver any shares of Common Stock hereunder if, in the opinion of counsel for the Company, such
delivery would violate the Securities Act of 1933 or any other applicable federal or state
securities laws or regulations.
9. Federal and State Taxes. The Employee may incur certain liabilities for Federal,
state or local taxes and the Company may be required by law to withhold such taxes for payment to
taxing authorities. Upon the determination by the Company of the amount of taxes required to be
withheld, if any, the Employee shall either pay to the Company, in cash or by certified or
cashier’s check, an amount equal to the taxes required to be withheld, or the Employee shall
authorize the Company to withhold from monies owing by the Company to the Employee an amount equal
to the federal, state or local taxes required to be withheld. Authorization of the Employee to the
Company to withhold taxes pursuant to this Section shall be in form and content acceptable to the
Committee. An authorization to withhold taxes pursuant to this provision shall be irrevocable
unless and until the tax liability of the Employee has been fully paid. In the discretion of the
Committee, the required taxes may be withheld in kind from the shares of Common Stock payable under
this Agreement. In the event that the Employee fails to make arrangements that are acceptable to
the Committee for providing to the Company, at the time or times required, the amounts of federal,
state and local taxes required to be withheld with respect to the shares of Common Stock payable to
the Employee under this Agreement, the Company shall have the right to purchase at current market
price as determined by the Committee and/or to sell to one or more third parties in either market
or private transactions sufficient shares of Common Stock payable under this Agreement to provide
the funds needed for the Company to make the required tax payment or payments.
10. 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.
11. 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.
12. 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.
13. 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.
14. 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.
15. 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 Performance Share Units granted hereunder.
16. No Guarantee of Interests. The Board and the Company do not guarantee the Shares
(as defined in the Plan) from loss or depreciation.
17. Nontransferability of Agreement. 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 Performance Share 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.
(Signatures on following page)
| XXXXX CORPORATION |
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| By: | ||||
| Xxxxxxx X. Xxxxxxx | ||||
| Chief Executive Officer | ||||
| Employee | ||||
