8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 1, 2011 (February 23, 2011)

HOLLY CORPORATION

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation) 001-03876
(Commission File Number) 75-1056913
(I.R.S. Employer
Identification Number)

100 Crescent Court,
Suite 1600
Dallas, Texas
(Address of principal
executive offices) 75201-6915
(Zip code)

Registrant’s telephone number, including area code: (214) 871-3555

Not applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.02 Termination of a Material Definitive Agreement.

     On February 14, 2011, the Board of Directors of Holly Logistics Services, L.L.C. (“HLS”) adopted a form of indemnification agreement to be entered into by Holly Energy Partners, L.P. (“HEP”) with certain officers and each director of HLS (the “HEP Indemnification Agreements”). In connection with the adoption of the HEP Indemnification Agreements, on February 23, 2011, Holly Corporation (the “Company”) entered into an agreement terminating the Indemnification Agreement, dated as of December 31, 2006, by and between the Company and David G. Blair (the “Indemnification Agreement”). The material terms and conditions of the Indemnification Agreement are described in the Company’s Current Report on Form 8-K filed December 13, 2006, and are incorporated herein by reference. No material early termination penalties were incurred by the Company in connection with the termination of the Indemnification Agreement.

Item 5.02(e)  Compensatory Arrangements of Certain Officers.

     The Company has historically provided certain change in control benefits to certain employees of HLS to provide for management continuity in the event of a change in control and to provide competitive benefits for the recruitment and retention of certain employees that dedicate all or substantially all of their business time to the performance of services for HEP and its subsidiaries. In addition to adopting the HEP Indemnification Agreements, on February 14, 2011, the Board of Directors of HLS adopted (a) the Holly Energy Partners, L.P. Change in Control Agreement Policy (the “HEP CIC Policy”) and (b) a related form of Change in Control Agreement to be entered into between HEP and certain officers of HLS (the “HEP CIC Agreements”). In connection with the adoption of the HEP CIC Policy and the HEP CIC Agreements, on February 23, 2011, the Company entered into agreements terminating (i) the Change in Control Agreement, dated as of January 10, 2008, by and between the Company and David G. Blair, President of HLS (the “Blair CIC Agreement”), and (ii) the Change in Control Agreement, dated as of January 10, 2008, by and between the Company and Mark T. Cunningham, Vice President, Operations of HLS (together with the Blair CIC Agreement, the “CIC Agreements”). The material terms and conditions of the CIC Agreements are described in the Company’s Current Report on Form 8-K filed February 20, 2008, and are incorporated herein by reference. No material early termination penalties were incurred by the Company in connection with the termination of the CIC Agreements.

     In connection with the adoption of the HEP CIC Policy and the HEP CIC Agreements, on February 23, 2011, the Board of Directors of the Company (the “Board”) approved and adopted the Amended and Restated Holly Corporation Change in Control Agreement Policy (the “Policy”), including the related form of Change in Control Agreement (each an “Agreement” and, collectively, the “Agreements”) to be entered into between the Company and certain officers of the Company. The Policy amends and restates the Company’s existing Change in Control Agreement Policy in its entirety. The purpose of the new Policy is to exclude from eligibility employees of HLS or HEP or their subsidiaries, who will now be covered under the HEP CIC Policy and HEP CIC Agreements. The new Policy does not in any way modify or affect existing Change in Control Agreements between the Company and eligible Company officers (each, an “Existing Agreement”), which contain the same payment and benefit terms as the Agreements and which will continue in full force and effect in accordance with their terms.

     The terms and procedures of the Policy reflect the recommendation of the Board’s Compensation Committee. Under the Policy, employees of the Company and any subsidiary or affiliate of the Company, (but excluding employees of HLS, HEP and any subsidiary of HLS and HEP) at pay grades 34 and above will receive an Agreement either upon hire or promotion to an eligible pay grade level at the benefit level described in

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the table below. However, no eligible individual will be entitled to the benefits described in the table below unless or until the individual timely executes an Agreement in accordance with the procedures established by the chief executive officer of the Company. Employees of any subsidiary or affiliate of the Company, including but not limited to HLS, will not receive an Agreement and are ineligible to receive any benefits under the Policy.

     The term of each Agreement will end on the first May 15 following the effective date of the Agreement, regardless of the date on which an officer entered into an Agreement. On that date and on each subsequent May 15^th, the term of each Agreement will be automatically extended for one additional year, unless the Company gives notice to each officer 60 days prior to the automatic extension date. The Agreements provide that if in connection with or within two years after a “Change in Control” (as defined in the Agreements), an officer is terminated without “Cause,” leaves voluntarily for “Good Reason” (as each such term is defined in the Agreements), or is terminated as a condition of the occurrence of the transaction constituting the “Change in Control,” the officer will receive the following cash severance amounts paid by the Company: (i) a cash payment equal to his accrued and unpaid salary, reimbursement of expenses, and accrued vacation pay, and (ii) a lump sum amount equal to the multiple applicable to his pay grade specified in the table below times (A) his annual base salary as of his date of termination or the date immediately prior to the “Change in Control,” whichever is greater, and (B) his annual bonus amount, calculated as the average annual bonus paid to him for the prior three years. In addition, the officer (and his dependents, as applicable) will receive a continuation of medical and dental benefits for the number of years applicable to the officer’s pay grade indicated in the table below. All payments and benefits due under the Agreement are conditioned on execution and nonrevocation by the officer of a release for the benefit of the Company and its related entities and agents.

     If amounts payable to an officer under the Agreement (or pursuant to any other arrangement or agreement with the Company that are payable as a result of a change in ownership or control) (collectively, the “Payments”) exceed the amount allowed under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), for such officer by 10% or more, the Company will pay the officer a tax gross up (a “Gross Up”) in an amount necessary to allow the officer to retain (after all regular income and any excise taxes imposed on golden parachute payments) a net amount equal to the total present value of the Payments on the date they are to be paid (after all regular income taxes but without reduction for any excise taxes imposed on golden parachute payments). Conversely, the Payments will be cut back if they exceed the Code Section 280G limit for the officer by less than 10%. The determination of whether a Gross Up will be paid will be determined by an independent public accounting firm selected by the Company and reasonably acceptable to the officer.

     The applicable multiplier and number of years that medical and dental benefits will be continued will be determined based on the officer’s pay grade classification in accordance with the following chart:

			Years of Medical and Dental
	Lump Sum Multiplier		Continuation
Grades 34 and 35		1 X	1 Year
Grades 36 and 37		2 X	2 Years
Grade 38 and Above		3 X	3 Years

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The foregoing description of the Policy and the Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Policy and the Agreement, copies of which are attached hereto as Exhibit 10.1 and Exhibit 10.2, respectively, and are incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

10.1	—	Amended and Restated Change in Control Agreement Policy
10.2	—	Holly Corporation Form of Change in Control Agreement (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed February 20, 2008)

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

HOLLY CORPORATION
By:	/s/Bruce R. Shaw
	Bruce R. Shaw
	Senior Vice President and Chief Financial Officer

Date: March 1, 2011

EXHIBIT INDEX

Exhibit
Number			Exhibit Title
	10.1	—	Amended and Restated Change in Control Agreement Policy
	10.2	—	Holly Corporation Form of Change in Control Agreement (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed February 20, 2008)

EX-10.1

Exhibit 10.1

Holly Corporation

Amended and Restated Change in Control Agreement Policy

February 23, 2011

     This Amended and Restated Change in Control Agreement Policy reflects the terms and procedures as approved at the February 23, 2011 meeting of the Board of Directors (“Board”) of Holly Corporation (“Holly”) based upon the recommendation of the Compensation Committee of the Board. This Amended and Restated Change in Control Agreement Policy supersedes and replaces all prior or contemporaneous policies concerning such subject matter.

     1. Eligibility

     Employees of Holly and any subsidiary or affiliate of Holly (but excluding employees of Holly Logistics Services, L.L.C.(“HLS”), Holly Energy Partners, L.P. (“HEP”) and any subsidiary of HLS and HEP) at pay grades 34 and above will receive CIC Agreements either upon hire or promotion to an eligible pay grade level at the benefit level described in Section 2 below. However, no eligible individual will be entitled to the benefits described in Section 2 below unless or until the individual timely executes a CIC Agreement in accordance with the procedures established by the Chief Executive Officer of Holly.

     2. Severance Benefits under CIC Agreements

     The CIC Agreements contain a double trigger, meaning that severance benefits only become payable if a “Change in Control” occurs and an executive experiences a “Termination Event” during the “Protection Period.” The severance benefits potentially payable under the CIC Agreements contain three components:

• Accrued but unpaid salary, reimbursement of expenses, and accrued vacation pay;

• A lump sum amount equal to the sum of an executive’s base salary plus annual bonus multiplied by the applicable multiplier (see chart below); and

• Continuation of medical and dental benefits for a specified number of years (see chart below).

     The applicable multiplier and number of years that medical and dental benefits will be continued will be determined based on the executive’s pay grade classification in accordance with the following chart:

			Years of Medical and Dental
	Lump Sum Multiplier		Continuation
Grades 34 and 35		1X	1 Year
Grades 36 and 37		2X	2 Years
Grade 38 and Above		3X	3 Years

     3. Term of CIC Agreements

     The initial term of each and every CIC Agreement will end on the first May 15th following the effective date of the CIC Agreement, regardless of the date on which an executive entered into a CIC Agreement with Holly. On that date and on each subsequent May 15th, the term of each CIC Agreement will be automatically extended for one additional year, unless Holly gives notice to each executive 60 days prior to the automatic extension date. For example, if an eligible executive is hired on and enters into a CIC Agreement on March 1, 2011, the initial term of his CIC Agreement will last until May 15, 2011, and if Holly does not give a notice of nonextension by March 16, 2011, then the term of the CIC Agreements will be automatically extended to May 15, 2012 on May 15, 2011. The occurrence of a “Change in Control” will extend or reduce the term of the CIC Agreements through the end of the “Protection Period.”

     4. Applicable Definitions

• “Change in Control” — the CIC Agreements use the same definition used with respect to awards issued under Holly’s Long Term Incentive Plan (“LTIP”) with certain modifications (intended to comply with section 409A of the Internal Revenue Code) as specified below:

• A third party acquisition of more than 50% (versus 40% under the LTIP awards) of the outstanding stock of Holly or of the combined voting power of outstanding securities of Holly; or

• A majority of the Board is replaced during any 12 month period with directors who are not endorsed by a majority of the existent Board (versus no time limitation under the LTIP awards); or

• A merger or consolidation of Holly, except if:

• Holly’s voting securities continue to represent at least 50% (versus 60% under the LTIP awards) of the combined voting power of the voting securities of the surviving entity; or

• The event is a recapitalization of Holly and no one person owns more than 50% (versus 40% under the LTIP awards) of Holly’s voting securities following the transaction; or

• A liquidation or sale of Holly, except to an entity owned 60% by Holly.

• “Protection Period” is the 24 month period beginning on the date a Change in Control occurs.

• “Termination Event” means a termination of an executive’s employment without “Cause,” for “Good Reason,” or as a condition to the consummation of or entry into a “Change in Control” transaction.

• “Cause” means an executive’s (1) engagement in an act of willful gross negligence or willful misconduct on a matter that is not inconsequential, or (2) conviction of a felony.

• “Good Reason” means, without an executive’s consent, (1) a material reduction in the executive’s authority, duties or responsibilities (or in the authority, duties or responsibilities of the executive’s supervisor), (2) a material reduction in executive’s base compensation, or (3) relocation of an executive to an office more than 50 miles away from the location at which executive normally performs his duties. An executive must give notice of the occurrence of a “Good Reason” event within 90 days and give the company 30 days to cure.

     5. Additional Provisions

• Gross Up Payments — If the severance benefits paid under the CIC Agreement (when combined with any other change in control payments, including but not limited to the accelerated vesting of equity compensation awards, received by the executive) exceed the limits imposed by section 280G of the Internal Revenue Code by more than 10%, then Holly will make a gross up payment to the executive. If the severance benefits (when combined with other change in control payments) exceed the section 280G limits by less than 10%, then the executive’s severance benefits will be cut back to an amount within the section 280G limits. The determination of whether either a gross up payment or a cut back is required under these provisions will be made by an independent public accounting firm.

• Release — Payment of the lump sum amount and continuation of medical and dental benefits are conditioned on the execution and nonrevocation by an executive of a release agreement.

• Arbitration — The CIC Agreements are subject to binding arbitration in the event of any dispute.

     6. Form Agreements

     The CIC Agreement form for Holly is attached as Appendix A.