Exhibit 10.1

PIPELINES AND TERMINALS AGREEMENT

by and among

ALON USA, LP,
a Texas limited partnership

and

Holly Energy Partners, L.P.,
a Delaware limited partnership

Dated: February 28, 2005

 
 

 

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Table of Contents

                  Page
Section 1.
  Definitions   1
Section 2.
  Throughput and Storage Commitment.   7
Section 3.
  Tariffs, Fees and Surcharges.   9
Section 4.
  Billing   12
Section 5.
  Taxes.   12
Section 6.
  Transportation and Delivery of Product   13
Section 7.
  Product Quality Standards and Requirements   16
Section 8.
  Product Measurements; Inventory Reports; Audit Rights   17
Section 9.
  Title to Product and Product Losses   18
Section 10.
  Exceptions to Obligations   18
Section 11.
  Agreement to Remain Shipper   21
Section 12.
  Agreement Not to Challenge Tariffs or Terminal Charges; Governmental Actions  
21
Section 13.
  Term and Renewal; Right to Enter New Agreement   22
Section 14.
  Construction of Upgrades; Expansion of Pipeline   22
Section 15.
  Contract Quarter Adjustments   24
Section 16.
  Events of Default   26
Section 17.
  Remedies   27
Section 18.
  ALON Right of First Refusal   30
Section 19.
  Insurance; Indemnification   31
Section 20.
  Notices.   32
Section 21.
  Miscellaneous   33

Exhibits

         
Exhibit A
  –   Refined Product Pipelines
Exhibit B
  –   Refined Product Terminals
Exhibit C
  –   Terminals Fee Schedule
Exhibit D
  –   Interstate Tariff (Rates, Rules and Regulations)
Exhibit E
  –   Intrastate Tariff (Rates, Rules and Regulations (Public))
Exhibit F
  –   Intentionally Omitted
Exhibit G
  –   Intrastate Tariff (Rates, Rules and Regulations (Private))
Exhibit H
  –   Insurance
Exhibit I
  –   Schedule of Settlement Procedures
Exhibit J
  –   Access Agreement

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PIPELINES AND TERMINALS AGREEMENT

     This Pipelines and Terminals Agreement (this “Agreement”) is dated as of
February 28, 2005, by and among ALON USA, LP, a Texas limited partnership and
Holly Energy Partners, L.P., a Delaware limited partnership.

RECITALS:

     Pursuant to that certain Contribution Agreement dated as of January 25,
2005 (the “Contribution Agreement”) by and among HEP, Holly Energy
Partners-Operating, L.P., a Delaware limited partnership, T&R Assets, Inc., a
Texas corporation, Fin-Tex Pipeline Company, a Texas corporation, and ALON USA
Refining, Inc., a Delaware corporation (together with T&R Assets, Inc. and
Fin-Tex Pipeline Company, “Transferors”), and ALON Pipeline Logistics, LLC, a
Delaware limited liability company, ALON USA, INC., a Delaware corporation,
ALON, and ALON Pipeline Assets, LLC, a Texas limited liability company, and an
Affiliate of ALON (“Newco1”), Transferors have agreed to contribute to HEP,
through Newco1, and HEP has agreed to acquire, certain pipelines and terminals
which historically have been utilized by ALON to transport and terminal Refined
Products.

     ALON desires to continue to transport and terminal Refined Products in the
Transferred Assets and HEP desires to provide transportation and terminalling
services to ALON, all on the terms set forth in this Agreement.

     NOW, THEREFORE, in consideration of the mutual obligations, covenants and
conditions contained herein, the parties to this Agreement hereby agree as
follows:

     Section 1. Definitions

     (a) As used herein, the following terms shall have the meaning specified
below:

     “Abilene Pipeline” has the meaning set forth in Section 2(b)(ii).

     “Activity Notice” has the meaning set forth in Section 15(a).

     “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.

     “ALON” means ALON USA, LP, a Texas limited partnership.

     “ALON Events of Default” has the meaning set forth in Section 16(b).

     “ALON Indemnified Parties” has the meaning set forth in Section 19(c).

     “Ancillary Documents” has the meaning set forth in the Contribution
Agreement.

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     “Applicable Law” means any applicable statute, law, regulation, ordinance,
rule, judgment, rule of law, order, decree, permit, approval, concession, grant,
franchise, license, agreement, requirement, or other governmental restriction or
any similar form of decision of, or any provision or condition of any permit,
license or other operating authorization issued under any of the foregoing by,
or any determination by any Governmental Authority having or asserting
jurisdiction over the matter or matters in question, whether now or hereafter in
effect and in each case as amended (including, without limitation, all of the
terms and provisions of the common law of such Governmental Authority), as
interpreted and enforced at the time in question.

     “Arbitrable Dispute” means any and all disputes, Claims, controversies and
other matters in question between ALON, on the one hand, and HEP, on the other
hand, arising out of or relating to this Agreement or the alleged breach hereof,
or in any way relating to the subject matter of this Agreement regardless of
whether (a) allegedly extra-contractual in nature, (b) sounding in contract,
tort or otherwise, (c) provided for by Applicable Law or otherwise or
(d) seeking damages or any other relief, whether at law, in equity or otherwise.

     “bpd” means barrels per day.

     “Capital Amortization Period” has the meaning set forth in
Section 14(a)(iv).

     “Capital Improvement” means (a) any modification, improvement, expansion or
increase in the capacity of the Refined Product Pipelines or Refined Product
Terminals or any portion thereof, or (b) any connection, or new point of receipt
or delivery for Refined Products, including any terminals, lateral pipelines or
extensions of Refined Products Pipelines.

     “Claim” means any existing or threatened future claim, demand, suit,
action, investigation, proceeding, governmental action or cause of action of any
kind or character (in each case, whether civil, criminal, investigative or
administrative), known or unknown, under any theory, including those based on
theories of contract, tort, statutory liability, strict liability, employer
liability, premises liability, products liability, breach of warranty or
malpractice.

     “Claimant” has the meaning set forth in Section 21(g).

     “Chevron Segment” means the approximately 38-mile, 6-inch pipeline from
Coahoma Station to Midland, Texas, leased by ALON.

     “Common Carrier Requirements” means duties relating to the provision of
shipping rights and prorationing which are required under Applicable Law with
respect to any Refined Product Pipeline.

     “Construction Capital Expenditure” has the meaning set forth in
Section 14(a)(iii).

     “Contract Quarter” means a three-month period that commences on January 1,
April 1, July 1, or October 1, and ends on March 31 June 30, September 30, or
December 31, respectively, except that the initial Contract Quarter shall
commence on the Effective Date.

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     “Contract Year” means a year that commences on January 1 and ends on the
last day of December, except that the initial Contract Year shall commence on
the Effective Date.

     “Contribution Agreement” has the meaning set forth in the first recital.

     “Control” (including with correlative meaning, the term “Controlled by”)
means, as used with respect to any Person, the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise.

     “Control Center” has the meaning set forth in Section 6(a)(ix).

     “Controlled Affiliates” means with respect to any Person, any other Person
that directly or indirectly through one or more intermediaries is Controlled by
such Person.

     “Deficiency Payment” has the meaning set forth in Section 15(a)(v).

     “Deficient Volumes” has the meaning set forth in Section 15(a)(i).

     “Disputed Amount” has the meaning set forth in Section 15(a)(v).

     “Due Date” has the meaning set forth in Section 4(b).

     “Dyess Pipeline” Section 2(b)(ii).

     “Effective Date” means the date of the closing of the Contribution
Agreement.

     “Escrow Agent” has the meaning set forth in Section 15(a)(v).

     “Excess Volumes” has the meaning set forth in Section 15(a)(i).

     “Exercise Period” has the meaning set forth in Section 18(b).

     “Extended HEP Cure Period” has the meaning set forth in Section 16(a)(ii).

     “Fin-Tex Pipeline” has the meaning set forth in Section 2(b)(ii).

     “Force Majeure” means acts of God, strikes, lockouts or other industrial
disturbances, acts of the public enemy, wars, blockades, insurrections, riots,
storms, floods, washouts, arrests, the order of any court or Governmental
Authority having jurisdiction while the same is in force and effect, civil
disturbances, explosions, breakage, accident to machinery, storage tanks,
terminals, or lines of pipe, inability to obtain or unavoidable delay in
obtaining material or equipment, and any other causes, whether of the kind
herein specifically enumerated or otherwise, which is not reasonably within the
control of the party claiming suspension and which by the exercise of due
diligence such party is unable to prevent or overcome. For avoidance of doubt,
the unavailability of any segment of a Refined Product Pipeline leased by ALON
or its

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Affiliates that is due to the termination, expiration or nonrenewal of such
lease shall not be included within the meaning of Force Majeure.

     “Governmental Authority” means any federal, state, local or foreign
government or any provincial, departmental or other political subdivision
thereof, or any entity, body or authority exercising executive, legislative,
judicial, regulatory, administrative or other governmental functions or any
court, department, commission, board, bureau, agency, instrumentality or
administrative body of any of the foregoing.

     “HEP” means Holly Energy Partners, L.P., a Delaware limited partnership,
and its operating affiliates.

     “HEP Events of Default” has the meaning set forth in Section 16(a).

     “HEP Indemnified Parties” has the meaning set forth in Section 19(b).

     “Incentive Adjustment” has the meaning set forth in Section 15(a)(vi).

     “Incentive Amount” means $22,891,000, subject to adjustment pursuant to
Section 3(b).

     “Incentive Revenues” has the meaning set forth in Section 3(b).

     “Initial HEP Cure Period” Section 16(a)(ii).

     “Initial Term” has the meaning set forth in Section 13(a).

     “Intervention Period” has the meaning set forth in Section 17(c).

     “Losses” has the meaning set forth in Section 19(b).

     “Maintenance Activities” has the meaning set forth in Section 10(c).

     “Maintenance Standards” has the meaning set forth in Section 6(a)(vii).

     “Minimum Volume Commitment” has the meaning set forth in Section 2(a)(i).

     “Minimum Volumes Revenue” has the meaning set forth in Section 15(a)(iii).

     “Monthly Capital Construction Amount” has the meaning set forth in
Section 14(a)(iv).

     “Monthly Services Charge” has the meaning set forth in Section 3(f).

     “Navajo Pipeline Lease” means that certain Pipeline Lease Agreement dated
February 21, 1997 between Navajo Pipeline Company and ALON (as successor in
interest to American Petrofina Pipe Line Company).

     “Net Excess Revenues” has the meaning set forth in Section 15(d).

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     “Newco1” has the meaning set forth in the first recital.

     “Objection Notice” has the meaning set forth in Section 15(a)(v).

     “Operations” has the meaning set forth in Section 18(b).

     “Other Products” means heating oil, distillates, transmix, liquified
petroleum gas, natural gas liquids, blend stocks, crude oil and any other
hydrocarbons which may hereafter be transported or stored in the Transferred
Assets.

     “PPI” means the inflationary adjustment index utilized by the Federal
Energy Regulatory Commission from time to time, which currently is the Producer
Price Index for Finished Goods, seasonally adjusted, as published by the
Department of Labor.

     “Person” means an individual or a corporation, limited liability company,
partnership, joint venture, trust, unincorporated organization, association,
Governmental Authority or political subdivision thereof or other entity.

     “Pipeline Easements” has the meaning set forth in Section 6(a)(x).

     “Prime Rate” means a rate per annum equal to the sum of (i) 3% plus
(ii) the prime rate per annum announced by Union Bank of California, N.A., or if
Union Bank of California, N.A. no longer announces a prime rate for any reason,
the prime rate per annum announced by the largest U.S. bank measured by deposits
from time to time as its base rate on corporate loans, automatically fluctuating
upward or downward with each announcement of such prime rate.

     “Private Tariff” means each of the tariffs on Exhibits D, E, or G which is
not designated as a “Public Tariff”.

     “Proposed Terms” has the meaning set forth in Section 18(b).

     “Public Tariff” means each of the tariffs listed on Exhibits D, E, or G
which is designated as a “Public Tariff” and each other tariff which may
hereafter be filed publicly with respect to a Refined Product Pipeline in
accordance with the terms of this Agreement.

     “Quarterly Minimum Volume” has the meaning set forth in Section 15(a)(i).

     “Refined Products” means gasolines, diesel fuel, jet fuel and kerosene.

     “Refined Product Pipelines” means the pipelines described on Exhibit A
attached hereto.

     “Refined Product Terminals” means the terminals and tank farm described on
Exhibit B attached hereto.

     “Refinery” means the refining facilities owned and operated by ALON and its
Affiliates in Big Spring, Texas.

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     “Renewal Terms” has the meaning set forth in Section 13(b).

     “Respondent” has the meaning set forth in Section 21(g).

     “River Pipeline” has the meaning set forth in Section 2(b)(ii).

     “Services Agreement” has the meaning given to such term in the Contribution
Agreement.

     “Statement” has the meaning set forth in Section 4(a).

     “Third Party Sale Period” has the meaning set forth in Section 18(b).

     “Total Activity” has the meaning set forth in Section 15(a)(i).

     “Total Deficient Revenues” has the meaning set forth in Section 15(a)(v).

     “Total Excess Revenues” has the meaning set forth in Section 15(a)(v).

     “Total Volumes” has the meaning set forth in Section 15(a)(i).

     “Total Revenues” has the meaning set forth in Section 15(a)(i).

     “Transaction Notice” has the meaning set forth in Section 18(b).

     “Transfer” including the correlative term “Transferring” or “Transferred”
means any direct or indirect transfer, assignment, sale, gift, pledge,
hypothecation or other encumbrance, or any other disposition (whether voluntary,
involuntary or by merger, operation of law, or sale of equity interests) of all
or any portion of the Refined Product Pipelines and the Refined Product
Terminals (including any Capital Improvement).

     “Transferred Assets” has the meaning set forth in Section 2(a)(iii).

     “Transferors” has the meaning set forth in the first recital.

     “Wichita Falls Pipeline” has the meaning set forth in Section 2(b)(ii).

     (b) Other Terms. If other terms are defined elsewhere in the text of this
Agreement, such terms shall have the meaning so indicated.

     (c) Interpretation. Unless the context of this Agreement clearly requires
otherwise, (i) the references to the plural include the singular, the singular
the plural, the part the whole, (ii) “or” has the inclusive meaning frequently
identified with the phrase “and/or”, (iii) “including” has the meaning
frequently identified with the phrase “but not limited to”, (iv) references to
“hereunder” or “herein” relate to this Agreement, and (v) references to
“Dollars” or “$” refer to U.S. dollars. Section, Schedule and Exhibit references
are to this Agreement unless otherwise specified.

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     Section 2. Throughput and Storage Commitment.

     (a) Minimum Volume Commitment. During the term of this Agreement and
subject to the terms and conditions of this Agreement (including, without
limitation, Section 10 hereof), ALON agrees as follows:

     (i) Commencing on the Effective Date, ALON will transport on the Refined
Product Pipelines and terminal in the Refined Product Terminals volumes of
Refined Products equal to or greater than the minimum volumes per day specified
for each Refined Product Pipeline and Refined Product Terminal on Exhibits A and
B hereto (collectively, the “Minimum Volume Commitment”).

     (ii) Without prejudice to any other remedy available to ALON, if for any
period of time ALON is unable to transport on the Refined Product Pipelines or
terminal in the Refined Product Terminals the volumes of Refined Products which
are required to meet the Minimum Volume Commitment and for which ALON is ready,
willing and able to transport or terminal, whether such inability is due to
HEP’s operational difficulties, prorationing, difficulties with pipeline
connections, or otherwise, then the Minimum Volume Commitment will be reduced
for such period of time by the volume of Refined Products that ALON is unable to
transport on the Refined Product Pipelines or terminal in the Refined Product
Terminals as reasonably determined and communicated by ALON to HEP in writing
from time to time during such period.

     (iii) The parties acknowledge and agree that all volumes of Refined
Products and Other Products transported or stored in the Refined Product
Pipelines, the Refined Product Terminals and/or the related assets transferred
to HEP pursuant to the Contribution Agreement (the “Transferred Assets”),
whether transported or stored for or on behalf of ALON or any other party, shall
apply toward satisfaction of the Minimum Volume Commitment.

     (iv) The Minimum Volume Commitment shall not be reduced and ALON shall be
responsible for providing alternative transportation, at ALON’s sole cost and
expense, should the Chevron Segment be unavailable due to the termination,
expiration, or nonrenewal of the lease.

     (v) Minimum Volume Adjustments. If for any reason ALON shall not utilize a
Refined Product Pipeline or a Refined Product Terminal for a period of 60
consecutive days and the Minimum Volume Commitment applicable to such Refined
Product Pipeline or Refined Product Terminal shall not otherwise be excused
pursuant to this Agreement with respect thereto, then from and after such 60th
day (and only during such non-utilization), the minimum volume commitment then
applicable to such Refined Product Pipeline or Refined Product Terminal shall be
discounted by the rate set forth for such pipeline or terminal in the column
labeled “Section 2(a)(v) 60 Day Discount Rate” on Exhibit A. At such time as the
Refined Product Pipeline or Refined Product Terminal is returned to use, then
the discount rate shall no longer apply. In the event the period of

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non-utilization described in the foregoing sentence shall exceed 180 days or if
ALON shall notify HEP that such non-utilization shall be permanent and such
non-utilization is not otherwise excused pursuant to this Agreement, then, from
and after such 180th day or from and after such notice, whichever is earlier
(and only during such non-utilization), the minimum volume commitment then
applicable to such Refined Product Pipeline or Refined Product Terminal (without
giving effect to any discount pursuant to the foregoing sentence) shall be
discounted by the rate set forth for such pipeline or terminal in the column
labeled “Section 2(a)(v) 180 Day Discount Rate” on Exhibit A. At such time as
the Refined Product Pipeline or Refined Product Terminal is returned to use,
then the discount rate shall no longer apply.

     (b) Obligations of HEP.

     (i) During the term of this Agreement and subject to the terms and
conditions of this Agreement, HEP agrees to own or lease, operate and maintain
the assets necessary to receive the Refined Products from ALON and to provide
the services required under this Agreement. Notwithstanding the preceding
sentence, subject to Section 17(c), Section 17(d), Section 18, and Section 21(c)
of this Agreement and Section 11.6 of the Contribution Agreement, HEP is free
(A) to sell any of its assets, including assets that provide services under this
Agreement, (B) to merge with another entity (whether or not HEP is the surviving
entity in such merger) or (C) to sell all of its assets or all of its equity to
another entity at any time.

     (ii) At the request of ALON and subject in each case to Common Carrier
Requirements and to Section 10 of this Agreement, HEP agrees to transport by
pipeline for ALON each month during the term of this Agreement: (A) up to 20,000
bpd of Refined Products on the 6” line from Big Spring to Abilene (the “Abilene
Pipeline”), (B) up to 25,000 bpd of Refined Products on the 8” line from Midland
to Orla (the “Fin-Tex Pipeline”), (C) up to 23,000 bpd of Refined Products on
the 8” line from Big Spring to Wichita Falls (the “Wichita Falls Pipeline”),
(D) up to 21,000 bpd of Refined Products on the 6” line from Wichita Falls to
Duncan, OK (the “River Pipeline”), and (E) up to 53,000 bpd of Refined Products
on the 8” line from Abilene to Dyess Air Force Base (the “Dyess Pipeline”). ALON
represents that as of the Effective Date, the respective lines set forth above
have the capacity to transport the volumes set forth above.

     (iii) HEP agrees to provide terminalling services for all ALON volumes of
Refined Products transported to the Refined Product Terminals.

To the extent that ALON is entitled to an exception under Section 10(a) or
Section 10(b) of this Agreement to its obligations under Section 2(a) of this
Agreement, the corresponding obligations of HEP under this Section 2(b) will be
proportionately reduced.

     (c) Ancillary Services. HEP will provide ancillary services to ALON with
respect to the Refined Product Pipelines and Refined Product Terminals,
including batch tracking, truck

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rack blending, tank sampling, truck sampling, tank-to-tank transfers,
information reporting, customer support services, monitoring and storing
additives and such other services requested by ALON that (i) reasonably relate
to ALON’s Refined Products and activities at the Refined Product Pipelines and
the Refined Product Terminals, (ii) are not materially inconsistent with the
scope and nature of ancillary services customarily provided by operators of
Refined Product pipelines and terminals, and (iii) do not impose a material
burden on HEP; provided, however, that irrespective of the foregoing clauses
(i) through (iii), HEP shall in any event provide to ALON such ancillary
services as HEP provides from time to time to Holly Corporation without
additional charge under that certain Pipelines and Terminals Agreement dated
July 13, 2004 (as may be amended from time to time). The fees for such ancillary
services are included in the fees provided for in Section 3. All fuel additives,
dyes, de-icers and other additives requested to be added to ALON’s Refined
Products will be provided by ALON at no cost to HEP. If any additional ancillary
services are requested by ALON that are different in kind, scope or frequency
from the services set forth above, then HEP and ALON shall negotiate in good
faith to determine the appropriate rates to be charged for such ancillary
services and the capital costs, if any, that HEP may reasonably incur to address
such new requirements. Each party shall be responsible for maintaining the
integrity of its operations and the quality of its products so as to not cause
additional operating costs related to ancillary services to be incurred by the
other party.

     Section 3. Tariffs, Fees and Surcharges.

     (a) Tariffs.

     (i) The rules and regulations applicable to (A) interstate service on the
Refined Product Pipelines shall be as set forth in the pro forma rules and
regulations tariffs attached hereto as Exhibit D, and (B) intrastate service
(public line) and intrastate service (private line) on the Refined Product
Pipelines shall be as set forth in the pro forma rules and regulations tariffs
attached hereto as Exhibit E and Exhibit G, respectively; provided that, as
between HEP and ALON, the parties agree in the case of any conflict between the
terms of this Agreement and the rules and regulations tariffs, the terms of this
Agreement shall control. The initial tariff rates for interstate service on the
Refined Product Pipelines shall be as set forth in the pro forma tariffs
attached hereto as Exhibit D and the initial tariff rates for intrastate
services (public line) and intrastate service (private line) shall be as set
forth in the pro forma tariffs attached hereto as Exhibit E and Exhibit G,
respectively. In the event that any Governmental Authority having jurisdiction
over HEP or the Refined Product Pipelines takes any action under Applicable Law
which requires the tariff rates set forth in Exhibits D, E and G to be
decreased, then the Minimum Volume Commitment shall be proportionately adjusted
in such a manner as may be necessary to take into account the economic benefits
and obligations that would have otherwise been realized and borne by the parties
had there not been a decrease in the tariff rates. If HEP and ALON are unable to
agree, such proportionate adjustments will be determined by binding arbitration
in accordance with Section 21(g) of this Agreement.

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     (ii) Subject to Common Carrier Requirements and the annual adjustments
contemplated by this Section 3(a)(ii), no tariff rates or incentive tariff rates
set forth in Exhibits D, E or G shall be amended or modified and no new tariff
shall be filed by HEP with respect to the Refined Product Pipelines, in each
case, without the prior written consent of ALON. The initial tariff rates and
incentive tariff rates set forth in Exhibits D, E and G (without consideration
of any previous adjustment pursuant to this Section 3(a)) shall be adjusted on
March 1 of each Contract Year commencing on or after January 1, 2006, by an
amount equal to the percentage change, if any, in the PPI from the month of
December 2004 to the month of December immediately preceding such Contract Year,
but in no event shall such adjustment ever lower the tariff rates below the
initial tariff rates. HEP will deliver a copy of the Public Tariffs and the
Private Tariffs, if any, to ALON setting forth the adjusted tariff rates and
incentive tariff rates. If the PPI index is no longer published, ALON and HEP
shall negotiate in good faith to agree on a new index that is recognized in the
refined product pipeline and terminal industry or which otherwise gives
comparable protection against inflation or deflation in such industry and the
same method of adjustment for increases or decreases in the new index shall be
used to calculate increases or decreases in the tariff rates. If ALON and HEP
are unable to agree, a new index will be determined by binding arbitration in
accordance with Section 21(g) of this Agreement, and the same method of
adjustment for increases or decreases in the new index shall be used to
calculate increases or decreases in the tariff rates.

     (iii) The applicable fees, tariff rates and other charges provided for in
this Agreement will become effective as of the date of this Agreement, or in the
case of Public Tariff rates relating to the Refined Product Pipelines, as soon
thereafter as those rates become effective. HEP will use commercially reasonable
efforts to obtain the necessary regulatory approvals for the Public Tariff rates
set forth in Exhibit D and Exhibit E to become effective on the date of this
Agreement or as soon as possible thereafter.

     (b) Incentive Tariffs. The incentive tariff rates applicable to the Refined
Product Pipelines shall initially be as set forth in Exhibits D, E and G. The
incentive tariff rates will be adjusted each Contract Year as provided in
Section 3(a)(ii). In consideration of ALON’s commitments set forth in Section 2,
ALON shall be entitled to the incentive tariff rates for transportation of
Refined Products on the Refined Product Pipelines pursuant to this Agreement.
Notwithstanding the foregoing, ALON hereby waives any claim to the incentive 2
tariff rates until the aggregate revenues (not including any surcharges, charges
or tariff increases pursuant to Section 3(d), Section 3(e) and Section 3(f), and
any Monthly Capital Construction Amount pursuant to Section 14(a)(iv)) generated
by the transportation and storage of Refined Products or Other Products on the
Transferred Assets by ALON (including transportation and storage by ALON on
behalf of third parties where ALON is the shipper of record) exceed the
Incentive Amount in any Contract Year (such excess being the “Incentive
Revenues”). At such time as ALON has satisfied the Incentive Revenues
requirement, then ALON will be entitled to receive the incentive 2 tariff rates
applicable during such Contract Year for volumes of Refined Products or Other
Products transported by ALON (including transportation by ALON on behalf of
third parties where ALON is the shipper of record) on each Refined Product
Pipeline during such

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Contract Year in excess of the incentive volume requirement for such Refined
Product Pipeline for such Contract Year (which Contract Year incentive volume
requirement shall equal the per day incentive volume requirement as set forth in
Exhibit A multiplied by the actual number of days in such Contract Year).
Settlement of any amounts due to ALON with respect to incentive 2 tariff rates
shall be calculated as soon as practicable following the end of each Contract
Year and shall be set forth in the Activity Notice for the fourth Contract
Quarter in such Calendar Year, with actual settlement made pursuant to
Section 15(a)(vi). The Incentive Amount (without consideration of any previous
adjustment pursuant to this Section 3(b) shall be adjusted on March 1 of each
Contract Year commencing on or after January 1, 2006, by an amount equal to the
percentage change, if any, in the PPI from the month of December 2004 to the
month of December immediately preceding such Contract Year.

     (c) Terminal Fees. The initial service fees (as well as the method for
subsequent adjustments in such fees) for terminalling the Refined Products in
the Refined Product Terminals are set forth on the fee schedule attached hereto
as Exhibit C.

     (d) New Laws Monthly Surcharge. If new laws or regulations are enacted that
require HEP to make substantial and unanticipated capital expenditures with
respect to one or more Refined Product Terminals, HEP may impose a monthly
surcharge to cover ALON’s pro rata share of HEP’s cost of complying with these
laws or regulations; provided, however, that ALON shall have the option to elect
not to incur such monthly surcharge whereupon ALON shall, from and after the
date on which a Refined Product Terminal shall have to satisfy such new law or
regulation, no longer be entitled to utilize such Refined Product Terminal until
such time as ALON shall agree to incur such monthly surcharge; provided further,
that (i) during the Initial Term, no such election shall affect ALON’s Minimum
Volume Commitment and (ii) during any Renewal Term, any such election by ALON
shall decrease ALON’s Minimum Volume Commitment by the minimum volume applicable
to such Refined Product Terminal. ALON and HEP shall negotiate in good faith to
mitigate the impact of these laws and regulations and to determine the level of
the monthly surcharge. If ALON and HEP are unable to agree on the level of the
monthly surcharge, such surcharge will be determined by binding arbitration in
accordance with Section 21(g) of this Agreement.

     (e) Increases in Pipeline Tariff Rates. If new laws or regulations are
enacted that require HEP to make substantial and unanticipated capital
expenditures with respect to one or more Refined Product Pipelines, HEP may
increase the tariff rates set forth on Exhibits D, E and G to cover ALON’s pro
rata share of HEP’s cost (including cost of capital) of complying with these
laws or regulations; provided, however, that ALON shall have the option to elect
not to incur such increased tariff rates whereupon ALON shall, from and after
the date on which a Refined Product Pipeline shall have to satisfy such new law
or regulation, no longer be entitled to utilize such Refined Product Pipeline
until such time as ALON shall agree to incur such increased tariff rates;
provided further, that (i) during the Initial Term, no such election shall
affect ALON’s Minimum Volume Commitment and (ii) during any Renewal Term, any
such election by ALON shall decrease ALON’s Minimum Volume Commitment by the
minimum volume applicable to such Refined Product Pipeline. ALON and HEP shall
negotiate in good faith to mitigate the impact of these laws and regulations and
to determine the amount of the new

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tariff rates. If ALON and HEP are unable to agree on the amount of the new
tariff rates that HEP will file, such tariff rates will be determined by binding
arbitration in accordance with Section 21(g) of this Agreement.

     (f) Terminal Access and Services Charge. The parties agree that a monthly
terminal access and services charge in the amount of $50,000 (“Monthly Services
Charge”) shall be billed each month to ALON with respect to monitoring, control,
reporting and other services to be provided to ALON at the Refined Product
Terminals pursuant to this Agreement. The Monthly Services Charge (without
consideration of any previous adjustments pursuant to this Section 3(f)) shall
be adjusted on March 1 of each Contract Year commencing on or after January 2006
by an amount equal to the percentage increase, if any, in the PPI from the month
of December 2004 to the month of December immediately preceding such Contract
Year; provided, however, the Monthly Services Charge will not decrease as a
result of any decrease in the PPI.

     Section 4. Billing

     (a) Monthly Statement. Each month during the term of this Agreement, HEP
will deliver a statement (the “Statement”) to ALON on or before the 20th day of
each month setting forth the fees due to HEP by ALON for the services rendered
under this Agreement for the prior month, net of the amount of any adjustments
due to ALON pursuant to Section 15(a)(vi).

     (b) Due Date. ALON will pay HEP the amount specified on the Statement in
the form of immediately available federal funds by wire transfer to the bank
account specified on the Statement, or any other mutually agreed upon method,
within 10 days after receipt of the Statement (the “Due Date”).

     (c) Late Payments. Payments not received by HEP on or prior to the Due Date
will accrue interest at the Prime Rate from the Due Date until the date actual
payment is received by HEP.

     Section 5. Taxes.

     ALON will pay all taxes, import duties, license fees and other charges by
any Governmental Authority levied on the Refined Products delivered by ALON for
transportation or storage by HEP in the Refined Product Pipelines and Refined
Product Terminals. HEP will pay all taxes, import duties, license fees, users
fees and other charges by any Governmental Authority levied on the
transportation and storage services provided by HEP to ALON under this Agreement
or on the Refined Product Pipelines or the Refined Product Terminals. Should
either party be required to pay or collect any taxes, duties, charges and or
assessments pursuant to any federal, state, county or municipal law or authority
now in effect or hereafter to become effective which are payable by the other
party pursuant to this Section 5, the proper party shall promptly reimburse the
other party therefor.

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     Section 6. Transportation and Delivery of Product

     (a) Refined Product Pipelines.

     (i) Origin and Destination. HEP will receive Refined Products from ALON at
each of the Refined Product Pipelines origins as set forth in the applicable
tariff. HEP will deliver the Refined Products shipped pursuant to this Agreement
to the destination point set forth in the applicable tariff. Except as provided
by Section 6(a)(vi) or Section 14, or as may be otherwise agreed to by the
parties, HEP will not be required to receive Refined Products from any other
origin point, nor deliver Refined Products to any destination other than as
provided in the tariff. Subject to Common Carrier Requirements, during the term
of this Agreement, HEP shall not add or remove any origin or destination points
to the Refined Product Pipelines without ALON’s prior written consent.

     (ii) Flow Rate. HEP shall ship Refined Products tendered by ALON and as
scheduled by ALON pursuant to Section 6(a)(v), in accordance with the tariff
rules and regulations set forth on Exhibits D, E, and G.

     (iii) Minimum Batch Size. No Refined Products will be received or moved
through the Refined Product Pipelines except in compliance with the tariff rules
and regulations set forth on Exhibits D, E, and G. The minimum batch size on the
Refined Product Pipelines shall be 3,000 barrels.

     (iv) Notification of Utilization. When requested by HEP, ALON will, within
ten (10) days of such request, provide to HEP written notification of ALON’s
reasonable good faith estimate of its anticipated future utilization of the
Refined Product Pipelines of HEP.

     (v) Scheduling of Product Movements. Subject to Common Carrier Requirements
and the terms of this Agreement, ALON will have the right and responsibility to
schedule all movements of Refined Products transported for or at the direction
of ALON on the Refined Product Pipelines. HEP will ship such Refined Products at
the times, in the specific pipelines and from the origin and to the destination
points as set forth in the applicable tariffs as scheduled by ALON. Prior to or
at the time of scheduling HEP’s shipment of any Refined Products, ALON will
provide a notice to HEP setting forth in detail the specifications of each
shipment of Refined Products; provided that ALON, may change the scheduling
and/or specifications of any shipment of Refined Products up to the time of such
shipment so long as ALON agrees to be responsible for any reasonable additional
costs incurred by HEP as a direct result of such change and which would not have
been incurred by HEP but for such scheduling change. In the event there shall
occur any scheduling conflict between ALON and another shipper on any Refined
Product Pipeline, the parties agree that the proration provisions contained in
the document entitled, “Holly Energy Partners-Operating, L.P. Proration Policy,”
effective February 28, 2005, will control, and, to the extent such policy does
not resolve

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the conflict, the party with the greater historical usage over the preceding
24 months shall have priority.

     (vi) Pipeline Direction and Connections. Without ALON’s prior written
consent, HEP will not reverse the direction of any Refined Product Pipelines or,
connect any other pipeline to the Refined Product Pipelines or the Refined
Product Terminals; provided, however, that HEP may take any (A) emergency action
reasonably necessary to prevent or remedy a release of Refined Products from a
Refined Product Pipeline or Refined Product Terminal, or (B) take any action
that may be required by Common Carrier Requirements without obtaining the
consent required by this clause. ALON shall have the right to reverse the
direction of any Refined Product Pipelines so long as (A) ALON agrees to
reimburse HEP for reasonable additional costs and expenses incurred by HEP as a
direct result of changing the direction of the Refined Product on the Refined
Product Pipelines (both to reverse and re-reverse) and which would not have been
incurred by HEP but for such change of direction, and (B) such reversal does not
conflict with any of HEP’s other capacity commitments on the Refined Product
Pipelines.

     (vii) Maintenance. Except as set forth below, HEP, at its sole cost and
expense, shall maintain the Refined Product Pipelines in good condition and
repair (A) in accordance with all Applicable Laws, (B) in accordance with
accepted industry practices and procedures in the repair and maintenance of
pipeline facilities, and (C) in accordance with provisions of clauses
(i) through (iv) of Section 10(c) (the foregoing clauses (A) through (C) of this
Section 6(a)(vii) are collectively referred to herein as the “Maintenance
Standards”). ALON, for so long as ALON is shipping Refined Products on the
Refined Product Pipelines pursuant to this Agreement, at its sole cost and
expense, shall maintain in good condition and repair all connections, valves,
tank farm and mainline pumps and other pipeline equipment that connects the
Refinery to the Refined Product Pipelines, in accordance with all Applicable
Laws and in accordance with applicable industry standards. Subject to
Section 14, HEP, in its sole discretion, will make the determination if any
capital expenditures or improvements are needed to the Refined Product
Pipelines, and, except as provided in Section 3(e) and Section 14, HEP will be
responsible for all costs to implement such capital expenditures and
improvements.

     (viii) Shippers. HEP agrees that, without ALON’s prior written consent,
neither HEP nor any of its Affiliates shall be a shipper of any Refined Products
or Other Products in any Refined Product Pipeline, and HEP further agrees that,
subject to Common Carrier Requirements, only ALON and such shippers as ALON
shall designate shall be permitted to ship Refined Products on the Refined
Product Pipelines.

     (ix) Control Center. Without ALON’s prior written consent, the control
center for the Refined Product Pipelines (the “Control Center”) shall not be
moved from Big Spring, Texas. HEP shall, during the term of this Agreement,
provide ALON such level of communications with respect to the Refined Product
Pipelines and the Refined Product Terminals as has been historically provided
and such additional communications

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services as ALON shall reasonably request so long as same does not impose a
material burden on HEP. In addition, ALON shall retain access to the Control
Center for purposes relating to any asset owned or operated by ALON pursuant to
the Services Agreement. Notwithstanding the foregoing provisions, ALON shall not
have access to any information pertaining to any other shippers, if any.

     (x) No Additional Pipelines. HEP shall not construct or grant any right to
construct any pipeline for transporting Refined Products on any easement, right
of way or other parcel of real property transferred to HEP under the
Contribution Agreement (the “Pipeline Easements”), nor shall HEP permit any
pipeline controlled by HEP and currently or hereafter located or constructed on
any Pipeline Easement, other than the Refined Products Pipelines or Capital
Improvements, to transport any Refined Products; provided, however, HEP shall
have the right to construct tanks and connecting lines at the Orla Tank Farm and
the right to utilize any pipelines HEP currently utilizes at the Orla Tank Farm
so long as such use does not interfere with (x) HEP’s service to ALON pursuant
to the terms of this Agreement or (y) ALON’s rights pursuant to the terms of the
Navajo Pipeline Lease.

     (b) Refined Product Terminals.

     (i) Deliveries to the Terminal. Deliveries of Refined Products to the
Refined Product Terminals will be made through existing pipeline connections at
the Refined Product Terminals. At the beginning of each month, ALON will
schedule the pipeline deliveries into the Refined Product Terminals, which may
include deliveries of Refined Products from the Refined Product Pipelines or
deliveries of third party Refined Products through existing pipeline connections
at the Refined Product Terminals. ALON will provide HEP with a notice of
scheduled deliveries, which notice will include details as to type, grade,
quantity and quality of each Refined Product; provided that ALON may change the
scheduling or specification of any scheduled delivery up to the time of such
delivery so long as ALON agrees to be responsible for any reasonable additional
costs incurred by HEP as a direct result of such change and which would not have
been incurred by HEP but for such change. Deliveries of Refined Products to the
Refined Product Terminals may be made 24 hours per day, seven days per week. HEP
agrees that, without ALON’s prior written consent, neither HEP nor any of its
Affiliates will make any deliveries for their own account into the Refined
Product Terminals and, subject to Common Carrier Requirements, deliveries to the
Refined Product Terminals will be limited to deliveries from ALON or from third
parties designated by ALON; provided, however, HEP shall have the right to
utilize the Orla Tank Farm, so long as such use does not interfere with
(x) HEP’s service to ALON pursuant to the terms of this Agreement or (y) ALON’s
rights pursuant to the terms of the Navajo Pipeline Lease.

     (ii) Deliveries from the Terminal. Deliveries of Refined Product from the
Refined Product Terminals will be made to ALON, or to such third parties as ALON
may direct, in accordance with HEP’s operating procedures. HEP may require ALON
and each of its employees, agents and representatives to execute an access
agreement in the

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form attached as Exhibit J hereto (and as may be subsequently revised as
mutually agreeable to HEP and ALON) prior to loading Refined Products at the
Refined Product Terminals, to comply with rules and procedures posted at the
Refined Product Terminals, and to undergo training regarding loading at the
Refined Product Terminals. HEP may exclude anyone from the Refined Product
Terminals who fails to execute or to comply with an access agreement, fails to
comply with the rules and procedures posted at the Refined Product Terminals,
fails to attend or comply with training, or, in HEP’s reasonable opinion, poses
a risk to the Refined Product Terminals, its personnel, the public, or the
environment. Deliveries of Refined Products to trucks from the Refined Product
Terminals may be made 24 hours per day, 7 days per week, unless otherwise
notified by HEP due to maintenance-type activities or emergencies. Unless
otherwise consented in writing by the other party hereto, which consent shall
not be unreasonably withheld, each party agrees that it shall continue the
utilization of the terminal operating systems put in place by ALON, including
systems to monitor and control customer identification, credit, access and
loading volumes. Subject to Common Carrier Requirements, HEP agrees to comply
with and use commercially reasonable efforts to enforce the limitations
instituted by ALON from time to time with respect to such systems.

     (iii) Terminal Operations and Maintenance. Except as otherwise provided in
this Agreement, control and operation of the Refined Product Terminals will rest
exclusively with HEP. HEP shall operate and manage the Refined Product Terminals
in accordance with industry standards and customs. Except as otherwise provided
in this Agreement, HEP, at its sole cost and expense, shall maintain the Refined
Product Terminals in good condition and repair, in accordance with all
Applicable Laws, and in accordance with accepted industry practices and
procedures in the repair and maintenance of storage facilities. HEP shall inform
ALON promptly of any adverse event or circumstance affecting the Refined Product
Terminals.

     Section 7. Product Quality Standards and Requirements

     (a) Product Quality. ALON warrants that all Refined Products transported or
terminalled by or at the request of ALON will conform to the specifications for
such Refined Products set forth in the rules and regulations of the tariffs
attached hereto as Exhibits D, E, or G when initially tendered by ALON or at the
request of ALON. HEP will not be required to receive Refined Products into the
Refined Product Terminals that are contaminated or otherwise fail to meet those
specifications, nor will HEP be required to accept any Refined Products that
fail to meet the quality specifications set forth in the notice. With respect to
the Refined Product Terminals, HEP will not commingle any Refined Product of
ALON with any Refined Product of any other party without ALON’s prior written
consent. In addition, unless ALON shall direct otherwise, HEP will not permit
any product or other substance not meeting the definition of “Refined Product”
in this Agreement and the specifications therefore in the rules and regulations
tariffs attached hereto as Exhibits D, E, or G to be transported, terminalled or
otherwise introduced into the Refined Product Pipelines or Refined Product
Terminals.

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     (b) Verification of Quality. HEP may require the quality of the Refined
Products initially tendered into the Refined Product Terminals by ALON, its
customers or Affiliates (other than by Refined Product Pipelines) to be verified
either by ALON’s laboratory analysis, or by an independent inspector’s analysis
indicating that the Refined Products meet HEP’s minimum Refined Products quality
specifications. All costs for such analysis are to be borne by ALON. HEP may
sample any Refined Products tendered to HEP for ALON’s account for the purpose
of confirming the accuracy of the analysis. The cost of such confirmation shall
be borne by HEP.

     (c) Delivery of Product. HEP will (i) deliver to ALON the identical Refined
Products that are stored in any segregated Refined Product Terminals, and
(ii) comply with the rules and regulations of the tariffs attached hereto as
Exhibits D, E, or G with respect to delivery of any Refined Product tendered by
ALON into a Refined Product Pipeline. Any delivery by HEP to ALON will include
its allocable share of transmix as specified in the rules and regulations
tariffs attached hereto as Exhibits D, E, or G.

     (d) Tank Cleaning. If any Refined Product Terminals tank or line requires
cleaning due to the written request of ALON to change the type of Refined
Products stored therein, HEP shall clean or arrange for cleaning of such tank
and remove or arrange for removal of any Refined Products and disposal of any
waste; provided, however, ALON agrees to reimburse HEP for all costs and
expenses reasonably incurred by HEP in connection with such cleaning and removal
within 10 days of receipt of an invoice therefor.

     Section 8. Product Measurements; Inventory Reports; Audit Rights

     (a) All shipments of Refined Products shall be gauged or measured pursuant
to the rules and regulations tariffs attached hereto as Exhibits D, E, or G.
Quantities of Refined Products received into and delivered from the Refined
Product Terminals will be determined by pipeline meter or other appropriate
quantity measuring devices, as mutually determined by HEP and ALON and shall
include the volumes of transmix allocable to ALON in accordance with the rules
and regulations tariffs attached hereto as Exhibits D, E, or G. Meter
calibration shall be conducted on a monthly basis. Gauging of Refined Products
received, delivered or stored in the Refined Product Terminals will be taken
jointly by representatives of the parties at such times and places as shall be
indicated in a notice to ALON at least five days prior to such gauging; provided
if ALON does not have a representative present for gauging, HEP’s gauging will
be conclusive, absent manifest error. HEP shall provide ALON with records of all
of ALON’s transportation and storage transactions on the Transferred Assets.

     (b) HEP shall maintain accurate inventory records of ALON’s Refined
Products at each Refined Product Terminal. HEP shall forward to ALON copies of
receipt and delivery tickets five times per week or as otherwise requested by
ALON. Within five days of the end of each calendar month during the term of this
Agreement, HEP shall provide to ALON for each Refined Product Terminal a monthly
inventory report showing separately, for each Refined Product stored at such
Refined Product Terminal, the beginning physical inventory, receipts into
inventory, deliveries from inventory, the ending book inventory, the ending
physical inventory and any gain or loss in inventory for such month. The ending
physical inventory of one month

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shall be the beginning inventory for the next month. During the term of this
Agreement, HEP agrees to provide to ALON all information that is currently
reported on ALON’s terminal gain/loss report summary and product balancing
system. HEP agrees to provide such information within five days of the end of
each calendar month.

     (c) ALON shall have the right, on a quarterly basis and upon written notice
to HEP, to audit HEP’s books and records with respect to the inventory services
provided by HEP under Section 8(b). Such audits may be performed by employees,
independent accounting firms, and other designated representatives of ALON
(including internal auditing personnel) at its sole cost and expense. HEP agrees
to fully cooperate with ALON to accomplish the audit as expeditiously as
possible. Any audit shall be conducted at HEP’s offices during normal business
hours, at ALON’s sole cost and expense, and in a manner that does not
unreasonably interfere with HEP’s normal business operations. ALON shall
maintain in strict confidence the content of any and all books and records
reviewed by ALON pursuant to this Section 8(c).

     Section 9. Title to Product and Product Losses

     Title to the Refined Products transported or stored in the Transferred
Assets for or on behalf of ALON will remain with ALON at all times subject to
any lien created under Applicable Law. In no event shall HEP make any delivery
of any of ALON’s Refined Product to any third party unless ALON shall have
directed HEP to make such delivery or ALON shall have otherwise previously
consented in writing to such delivery. With respect to the Refined Product
Terminals, HEP will be responsible to compensate ALON for all product losses
other than product losses arising out of ALON’s acts or omissions as determined
on an annual basis on a terminal by terminal basis, that are greater than 0.05%
of the product terminalled in accordance with this Agreement and pursuant to the
Schedule attached hereto as Exhibit I. All product gains and losses, if any,
with respect to each respective Refined Product Terminals will be allocated on a
monthly basis to ALON and each other customer, if any, of the terminal based on
their percentage of total receipts into the terminal. HEP’s responsibility for
product losses on the Refined Product Pipelines will be determined pursuant to
the tariffs set forth as Exhibits D, E, or G.

     Section 10. Exceptions to Obligations

     (a) Shutdown or Reconfiguration of Refinery. During any Renewal Term, ALON
must deliver to HEP at least twelve months advance written notice of any planned
shut down or reconfiguration (excluding planned maintenance turnarounds) of the
Refinery or any portion of the Refinery that would reduce the Refinery’s output.
ALON will use its commercially reasonable efforts to mitigate any reduction in
the Minimum Volume Commitment that would result from such a shut down or
reconfiguration. If ALON shuts down or reconfigures the Refinery or any portion
of the Refinery (excluding planned maintenance turnarounds) and reasonably
believes in good faith that such shutdown or reconfiguration will jeopardize its
ability to satisfy the Minimum Volume Commitment, then within 90 days of the
delivery of the written notice of the planned shut down or reconfiguration, ALON
shall (i) propose a new Minimum Volume Commitment, such that the ratio of the
volumes of Refined Products to be transported

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on the Refined Product Pipelines following such shut down or reconfiguration to
the anticipated production level of the Refinery following the shut down or
reconfiguration will be approximately equal to the ratio of the original volumes
of Refined Products transported on the Refined Product Pipelines under this
Agreement to the original production level of the Refinery under this Agreement
and (ii) propose the date on which the new Minimum Volume Commitment shall take
effect. Unless objected to by HEP within 60 days of receipt by HEP of such
proposal, such new Minimum Volume Commitment shall become effective as of the
date proposed by ALON. To the extent that HEP does not agree with ALON’s
proposal, any changes in ALON’s obligations under this Agreement, or the date on
which such changes take effect, the parties will negotiate in good faith to
resolve such disagreement within 30 days of notice thereof by HEP. In the event
the parties are unable to resolve such disagreement(s) within such time period,
the new Minimum Volume Commitment shall be determined by binding arbitration in
accordance with Section 21(g) of this Agreement and the arbitrators shall
consider the factors set forth in this Section 10(a) in resolving such
disagreement. The provisions of this Section 10(a) shall only apply during a
Renewal Term and do not apply to the Initial Term of this Agreement.

     (b) Force Majeure. In the event that any party is rendered unable, in whole
or in part, by a Force Majeure event from performing its obligations under this
Agreement, then upon the delivery of notice and full particulars of the Force
Majeure event in writing within a reasonable time after the occurrence of the
Force Majeure event relied on, the obligations of the parties, so far as they
are affected by the Force Majeure event, shall be suspended for the duration of
any inability so caused. Any period during which the obligations of the parties
are suspended as a result of this Section 10(b) shall extend the term of this
Agreement. ALON will be required to pay any amounts accrued and due under this
Agreement at the time of the Force Majeure event. The cause of the Force Majeure
event shall so far as possible be remedied with all reasonable dispatch, except
that no party shall be compelled to resolve any strikes, lockouts or other
industrial disputes other than as it shall determine to be in its best
interests. In the event a Force Majeure event prevents ALON from performing its
obligations under this Agreement for a period of more than twelve months, this
Agreement may be terminated by HEP as to the Refined Product Pipeline(s) or
Refined Product Terminal(s) as to which ALON’s performance is prevented as a
result of such Force Majeure event. In the event a Force Majeure event prevents
HEP from performing its obligations under this Agreement for a period of more
than 90 days, then this Agreement may be terminated by ALON as to the Refined
Product Pipeline(s) or Refined Product Terminal(s) as to which HEP’s performance
is prevented as a result of such Force Majeure event; provided, however, that
ALON agrees to extend such 90 day period to up to twelve months from the date
the Force Majeure event first occurred if, and for so long as, HEP shall
(i) provide alternative transportation and storage service to ALON commensurate
to the services suspended by such Force Majeure event and reasonably acceptable
to ALON, and (ii) shall reimburse ALON for all costs and expenses incurred by
ALON in accepting such alternative services and which would not have otherwise
been incurred by ALON absent such Force Majeure event; and provided further
that, in the event that the Force Majeure event preventing performance by HEP
arises (x) solely from an order, decree, regulation or similar requirement of a
Governmental Authority with jurisdiction over HEP or the affected Refined
Product Pipeline(s) or Refined Product Terminal(s), and (y) such order, decree,
regulation or

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similar requirement does not relate to and is not otherwise attributable to any
negligent failure by HEP, any of its Affiliates or any of their respective
assets, including the Transferred Assets, to comply with Applicable Law (for the
purpose of this Section, “negligent failure” shall mean the failure of HEP or
its Affiliates to act as a reasonable prudent operator in accordance with
standard industry practice), then ALON’s right to terminate this Agreement
pursuant to this Section 10(b) with respect to the affected Refined Product
Pipeline(s) or Refined Product Terminal(s) shall not be exercisable by ALON
until the date that is twelve months following the date on which HEP’s
performance was first prevented by such order, decree, regulation or other
requirement, provided that, during the pendency of such Force Majeure event, HEP
uses its commercially reasonable efforts to have such order, decree, regulation
or other requirements, to the extent applicable to HEP or the Transferred
Assets, dissolved or eliminated, if possible, and to otherwise minimize the
impact thereof on HEP’s obligations hereunder. Any termination pursuant to any
provision of this Section 10(b) shall not limit the liability of either party
for any breach of this Agreement prior to such termination. Nothing in this
Section 10(b) shall alter the liability of HEP as set forth in the rules and
regulations tariffs for the Refined Product Pipelines attached hereto as
Exhibits D, E, or G.

     (c) HEP’s Right to Temporarily Suspend Operations. In the event that HEP is
required temporarily to suspend pipeline operations, in order to effect any
construction or repairs to or any maintenance of any portion of the Refined
Product Pipelines or the Refined Product Terminals, or to perform pipeline
integrity testing (or repairs related thereto) (collectively, “Maintenance
Activities”), HEP shall have the right to do so, provided that (i) HEP shall use
its commercially reasonable efforts to schedule and perform any Maintenance
Activities so as to minimize interference with ALON’s transportation schedule,
(ii) if ALON provides HEP with at least 120 days advance written notice of the
date of any Refinery turnaround, HEP shall use its best efforts to schedule and
perform any Maintenance Activities during the Refinery’s turnarounds provided
such scheduling does not materially increase HEP’s cost of performing such
Maintenance Activities, (iii) HEP shall provide ALON with a minimum of 60 days
advance written notice of any scheduled Maintenance Activities, and (iv) HEP
shall complete any Maintenance Activities (scheduled or unscheduled) with
reasonable dispatch. The provisions set forth in clauses (ii) through (iii) of
the immediately preceding sentence of this Section 10(c) shall not apply to the
extent HEP determines in good faith that emergency Maintenance Activities are
required in connection with the Refined Product Pipelines or Refined Product
Terminals. In addition, in the event Maintenance Activities are required to be
performed within time periods that do not permit HEP to provide ALON with
60 days advance written notice of such activities, HEP shall provide ALON with
notice of such Maintenance Activities as soon as is reasonably practical under
the circumstances. If ALON is unable to transport on the Refined Product
Pipelines or terminal in the Refined Product Terminals the volumes of Refined
Products required to meet the Minimum Volume Commitment for any period of time
as a result of HEP’s activities under this Section 10(c), then the Minimum
Volume Commitment will be reduced as provided by Section 2(a)(ii).

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     Section 11. Agreement to Remain Shipper

     With respect to any Refined Products that are produced at the Refinery and
transported in any Refined Product Pipeline or handled at any Refined Product
Terminal, ALON agrees that it will continue its historical commercial practice
of owning such Refined Products from such point as such Refined Products leave
the Refinery until at least such point as they will not be further transported
in a Refined Product Pipeline or handled at a Refined Product Terminal and to
continue acting in the capacity of the shipper of any such Refined Products for
its own account at all times that such Refined Products are in a Refined Product
Pipeline or being handled at the Refined Product Terminals.

     Section 12. Agreement Not to Challenge Tariffs or Terminal Charges;
Governmental Actions

     (a) ALON agrees to any tariff rate changes for the Refined Product
Pipelines determined in accordance with this Agreement. ALON agrees (a) not to
challenge, nor to cause its Controlled Affiliates to challenge, nor to encourage
or recommend to any other Person that it challenge, or voluntarily assist in any
way any other Person in challenging, in any forum, interstate or intrastate
tariffs (including joint tariffs) of HEP relating to the Refined Product
Pipelines that HEP has filed or may file containing rates, rules or regulations
that are in effect at any time during the term of this Agreement and regulate
the transportation of Refined Products, (b) not to protest or file a complaint,
nor cause their Controlled Affiliates to protest or file a complaint, nor
encourage or recommend to any other Person that it protest or file a complaint,
or voluntarily assist in any way any other Person in protesting or filing a
complaint, with respect to regulatory filings that HEP has made or may make at
any time during the term of this Agreement to change interstate or intrastate
tariffs (including joint tariffs) for transportation of Refined Products on the
Refined Product Pipelines and (c) not to seek, nor cause their Controlled
Affiliates to seek, nor encourage or recommend to any other Person that it seek,
or voluntarily assist in any way any other Person in seeking, regulatory review
of, or regulatory jurisdiction over, the contractual rates charged at any time
during the term of this Agreement by HEP for terminalling services at the
Refined Product Terminals or to challenge, in any forum, such rates or changes
to such rates, in each case so long as such tariffs, regulatory filings or rates
changed are made in accordance with, and do not otherwise conflict with, the
terms of this Agreement.

     (b) Should any Common Carrier Requirement or any action by any Governmental
Authority require HEP to implement a change in HEP’s obligations with respect to
the provision of shipping or prorationing as stated in this Agreement or any
Exhibit hereto, HEP will provide notice to ALON of such action and will consult
with ALON pursuant to Section 21(p) prior to implementing any change required as
a result of such action. HEP further agrees (i) to provide ALON with any
non-privileged information HEP may have to assist ALON if it chooses to
challenge such action, and (ii) to abstain, at ALON’s request, from implementing
any change required as a result of such action until ALON has exhausted any such
challenge, subject, however, to HEP’s right to implement a change upon a good
faith determination by HEP, after consulting with its counsel (and prior notice
to ALON), that legal obligations imposed upon HEP require such action. ALON
agrees to be responsible for and reimburse HEP for any fees, fines,

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penalties, or other expenses incurred by HEP in connection with HEP’s
non-compliance with such required action to the extent such non-compliance
results from any request by ALON pursuant to this paragraph 12(b).

     Section 13. Term and Renewal; Right to Enter New Agreement

     (a) Term. This Agreement shall be effective as of the Effective Date and
shall terminate at 12:01 a.m. Dallas, Texas, time on February 28, 2020, (the
“Initial Term”) unless earlier terminated pursuant to the provisions of this
Agreement or extended by ALON’s exercise of its renewal options as set forth in
this Section 13; provided, however, that Section 12, Section 13(c), Section 17,
Section 18, Section 19, Section 20, and Section 21 shall survive the termination
of this Agreement.

     (b) Renewal Options. Unless this Agreement shall have been earlier
terminated pursuant to the provisions set forth herein, ALON, so long as no ALON
Event of Default shall have occurred and be continuing, shall have the right to
extend the term of this Agreement for three additional five year periods
(“Renewal Terms”) commencing on the first day immediately following the
expiration of the Initial Term or any Renewal Term by giving notice to HEP of
its desire to exercise such option at least 180 days prior to the end of the
Initial Term or any Renewal Term, as applicable. At ALON’s option, such renewal
option may apply to only such Refined Product Pipelines or Refined Product
Terminals as ALON shall designate and shall then still be subject to this
Agreement.

     (c) New Agreement. For a period of one year following the termination
without renewal of this Agreement, ALON will have the right to enter into a new
pipelines and terminals agreement with HEP with respect to the Refined Product
Pipelines or Refined Product Terminals designated by ALON on commercial terms
which the parties agree are substantially similar to the terms which HEP could
enter into an agreement with a third party for similar services. In furtherance
of the foregoing rights of ALON, in the event that HEP proposes to enter into
any pipelines and terminals agreement or similar agreement with any third party
with respect to any Refined Product Pipeline or Refined Product Terminal after
termination without renewal of this Agreement, HEP shall give ALON 45 days prior
written notice of such proposed agreement, which notice shall include the fee
schedules, tariffs, throughput volumes, duration and any other terms proposed in
such agreement.

     Section 14. Construction of Upgrades; Expansion of Pipeline

     (a) Capital Improvements. During the term of this Agreement, ALON shall be
entitled to designate Capital Improvements to be made to the Refined Product
Pipelines and the Refined Product Terminals. The following provisions shall set
forth the procedures pursuant to which Capital Improvements designated by ALON
may be constructed:

     (i) For any Capital Improvement designated by ALON, ALON shall submit a
written proposal, including all specifications then available to it, of the
nature of

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the proposed Capital Improvement to the Refined Product Pipelines and/or the
Refined Product Terminals.

     (ii) HEP will review such proposal to determine, in its sole discretion,
whether it will consent to proceed with the proposed Capital Improvement.

     (iii) Should HEP determine to proceed and construct or cause to be
constructed the approved Capital Improvement, HEP will obtain bids from two or
more general contractors reasonably acceptable to ALON for the construction of
the Capital Improvement. Based upon the bids, HEP will notify ALON of the total
estimated cost of the amount necessary to construct such Capital Improvement
(which amount shall include the costs of capital and any other costs necessary
to place such Capital Improvement in service) (“Construction Capital
Expenditure”). Within 30 days of such notice, ALON will notify HEP whether or
not ALON agrees to such Construction Capital Expenditure. In the event ALON does
not agree with such Construction Capital Expenditure, the parties shall work
together in good faith to reach agreement on the Construction Capital
Expenditure; provided that, in the event the parties do not reach such agreement
within 30 days, ALON shall be entitled to proceed with the construction of the
Capital Improvement in accordance with Section 14(a)(v) below.

     (iv) Prior to beginning any construction on the Capital Improvement,
(x) HEP shall have received all necessary regulatory approvals, and (y) HEP and
ALON shall agree on an additional monthly revenue amount (the “Monthly Capital
Construction Amount”) which amount (1) shall be payable over a mutually agreed
to term not to exceed the then remaining balance of the Initial Term (or the
then current Renewal Term) plus any Renewal Term to which ALON is then committed
or shall then commit (the “Capital Amortization Period”), and (2) shall be
sufficient to provide HEP the equivalent of a rate of return equal to prime rate
plus an additional rate of return to be agreed to by the parties over the
Capital Amortization Period on the Construction Capital Expenditure after taking
into account the increased cash flows to HEP committed to by ALON and otherwise
reasonably anticipated to be received by HEP from ALON (or from a third party
pursuant to a direct contractual commitment to HEP) in connection with such
Capital Improvement. The Monthly Capital Construction Amount shall be billed and
paid monthly following ALON’s acceptance (which shall not be unreasonably
withheld) of the Capital Improvement as meeting the specifications delivered to
HEP pursuant to Section 14(a)(i) and ALON’s obligation to pay the Monthly
Capital Construction Amount shall survive the termination of this Agreement due
to an ALON Event of Default. In connection with the construction of any Capital
Improvement pursuant to this Section 14(a)(iv), ALON shall be entitled to
participate in all stages of planning, scheduling, implementing, and oversight
of the construction. ALON shall also be entitled to audit all expenditures
incurred in connection with the Capital Improvement and HEP shall provide all
invoices and other documentation reasonably requested by ALON for this purpose.

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     (v) If for any reason the Capital Improvement shall not be constructed
pursuant to Section 14(a)(iv) above, and such Capital Improvement is in
accordance with applicable required engineering and regulatory standards, and
could not reasonably be expected to have a material adverse impact on the
operations or efficiency of the Refined Product Pipelines or the Refined Product
Terminals or result in any material additional unreimbursed costs to HEP, then
ALON may proceed with the construction and financing of the Capital Improvement
and, upon completion of construction, ALON shall be the owner and operator of
such Capital Improvement. The parties agree that any Capital Improvement
constructed by ALON shall be treated as the separate property of ALON. HEP shall
cooperate with ALON in insuring that the Capital Improvement shall operate as
intended, including by operating and maintaining all necessary connections to
the Refined Product Pipelines and the Refined Product Terminals, subject to
ALON’s reimbursing HEP on a monthly basis for any incremental expenses arising
from operating or maintaining such connections.

     (b) Ownership and Operation. Upon completion of the construction, HEP or
ALON, as applicable, will own all Capital Improvements to the Refined Product
Pipelines and the Refined Product Terminals, and will operate and maintain the
Capital Improvements in accordance with Applicable Law and recognized industry
standards.

     Section 15. Contract Quarter Adjustments

     (a) Activity Notice. As soon as practicable following the end of each
Contract Quarter under this Agreement, HEP shall deliver to ALON a written
notice in a form mutually agreed by the parties hereto (the “Activity Notice”)
which shall set forth the following:

     (i) The total volumes of Refined Products and Other Products, if any,
transported by ALON and any other party on each Refined Product Pipeline or
stored by ALON or any other party in each Refined Product Terminal during such
Contract Quarter (the “Total Volumes”), together with the total revenues
attributable to such volumes (the “Total Revenues” and, together with the Total
Volumes, the “Total Activity”);

     (ii) A statement of the amount by which the Total Volumes for each Refined
Product Pipeline and Refined Product Terminal were greater than (“Excess
Volumes”) or less than (“Deficient Volumes”) an amount equal to the Minimum
Volume Commitment for such Refined Product Pipeline or Refined Product Terminal
multiplied by the actual number of days in such Contract Quarter (such product
being referred to herein as the “Quarterly Minimum Volume”);

     (iii) For each Refined Product Pipeline or Refined Product Terminal with
Excess Volumes for such Contract Quarter, the amount (the “Excess Revenues”) by
which the Total Revenues for such Refined Product Pipeline or Refined Product
Terminal exceeded the product obtained by multiplying (1) the Quarterly Minimum
Volume for such Refined Product Pipeline or Refined Product Terminal, by (2) the
tariff rate set forth in Exhibits D, E, or G, as adjusted pursuant to this
Agreement, which is then applicable

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to such Refined Product Pipeline, or the terminal fees then applicable to such
Refined Product Terminal (the “Minimum Volumes Revenue”);

     (iv) For each Refined Product Pipeline or Refined Product Terminal with
Deficient Volumes for such Contract Quarter, the revenue due to HEP with respect
to such Deficient Volumes (the “Deficient Revenues”), which shall be calculated
by multiplying the Deficient Volumes by the tariff rates set forth in Exhibits
D, E and G, as adjusted pursuant to this Agreement, which are then applicable to
such Refined Product Pipeline, or the terminal fees, as adjusted pursuant to
this Agreement, then applicable to such Refined Product Terminal;

     (v) The total amount of Deficient Revenues with respect to such Contract
Quarter (the “Total Deficient Revenues”), the total amount of Excess Revenues
with respect to such Contract Quarter (the “Total Excess Revenues”), and the
difference obtained by subtracting the Total Excess Revenues from the Total
Deficient Revenues which difference, if positive, shall be the “Deficiency
Payment” required to be paid by ALON to HEP pursuant to this Section 15. If ALON
agrees with the Activity Notice, ALON shall pay the Deficiency Payment to HEP
within 10 days after its receipt of the Activity Notice. If ALON disagrees with
the Activity Notice, then ALON shall (i) notify HEP of its objection(s) to the
Activity Notice (the “Objection Notice”), (ii) pay to HEP the amount, if any, of
the Deficiency Payment which ALON does not dispute and (iii) deliver the amount
of the Deficiency Payment that ALON disputes (the “Disputed Amount”) to a
mutually agreeable escrow agent (the “Escrow Agent”) with instructions to
distribute such Disputed Amount pursuant to the terms of this Section 15; and

     (vi) Any adjustment due to ALON with respect to (A) Incentive Tariffs in
accordance with Section 3(b) (the “Incentive Adjustment”) and (B) any Deficiency
Payments in accordance with Section 15(d) below to the extent such Deficiency
Payments shall not have previously been applied pursuant to Section 15(d). For
each adjustment due to ALON in accordance with this clause (vi), ALON shall be
entitled to a credit on the next monthly invoice delivered by HEP pursuant to
Section 4(a) in an amount equal to such adjustment plus interest thereon at the
Prime Rate from the last day of the preceding Contract Quarter to the date of
such invoice.

     (b) Payment and Dispute. If ALON disagrees with the Activity Notice, then
following the delivery of the Objection Notice, the chief financial officers of
ALON and HEP shall meet or communicate by telephone at a mutually acceptable
time and place, and thereafter as often as they reasonably deem necessary and
shall negotiate in good faith to attempt to resolve any differences that they
may have with respect to matters specified in the Activity Notice. During the
30-day period following the delivery of the Objection Notice, ALON shall have
access to the working papers of HEP relating to the Activity Notice. If such
differences are not resolved within 30 days following delivery of the Objection
Notice, ALON and HEP shall, within 45 days following the delivery of the
Objection Notice, submit any and all matters which remain in dispute and which
were properly included in the Activity Notice to arbitration in accordance with
Section 21(g).

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     (c) Refund. Upon final resolution of the disputed Activity Notice, HEP and
ALON shall promptly (i) amend the disputed Activity Notice and (ii) direct the
Escrow Agent to distribute the Disputed Amount, if any, together with any
interest earned thereon, in immediately available funds to HEP and/or ALON, each
in accordance with the terms of such resolution. With respect to any portion of
the Disputed Amount to be paid to HEP, ALON shall pay to HEP an amount equal to
(i) interest on such portion of the Disputed Amount at the Prime Rate, less
(ii) any interest earned on such portion of the Disputed Amount and paid to HEP
by the Escrow Agent pursuant to the preceding sentence. With respect to any
portion of the Disputed Amount to be paid to ALON, HEP shall pay to ALON an
amount equal to (i) interest on such portion of the Disputed Amount at the Prime
Rate, less (ii) any interest earned on such portion of the Disputed Amount and
paid to ALON by the Escrow Agent pursuant to the first sentence of this
Section 15(c).

     (d) Deficiency Payment Adjustments. For each Contract Quarter for which the
Total Revenues shall exceed the Minimum Volumes Revenue (such excess being the
“Net Excess Revenues”), ALON shall be entitled to a credit solely against any
payments owed by ALON for such Net Excess Revenues for such Contract Quarter
equal to any Deficiency Payments made in the prior four Contract Quarters and
not previously so credited.

     Section 16. Events of Default

     (a) Events of Default by HEP. The occurrence of any of the following events
shall constitute “HEP Events of Default”:

     (i) Any failure to make any payment required to be made by HEP hereunder,
where such failure continues for 10 days after receipt of written notice from
ALON, subject to the right of HEP, reasonably exercised, to contest any such
payment. In the event HEP withholds any such payment, and it is determined that
such withholding was wrongful, HEP agrees to pay interest to ALON on such monies
wrongfully withheld at the Prime Rate;

     (ii) A failure by HEP to observe and perform any material provision or
covenant of this Agreement (other than the obligation to pay amounts when due as
the result of same being covered by clause (i) preceding) to be observed or
performed by HEP where such failure continues unremedied for a period of 30 days
after receipt of written notice thereof from ALON to HEP (the “Initial HEP Cure
Period”); provided, however, in the event a breach specified in this clause
(ii) cannot be reasonably cured within such 30-day period and HEP is diligently
proceeding to cure such breach, HEP shall have an additional period of time as
is reasonably necessary to cure such breach, not to exceed 180 days after HEP’s
receipt of notice from ALON regarding such breach (the “Extended HEP Cure
Period”);

     (iii) The making by HEP of any general assignment for the benefit of
creditors, the filing by or against HEP of a petition to have HEP adjudged a
bankrupt, or a petition for reorganization or arrangement under any law relating
to bankruptcy (unless,

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in the case of a petition filed against HEP, the same is dismissed within
60 days), or the appointment of a trustee or receiver to take possession that is
not restored to HEP within 30 days; and

     (iv) Any default by HEP or its Affiliates under any mortgage, or other
security document or instrument to which it is a party which default would
entitle any third party (other than a third party who is bound by a
Non-Disturbance Agreement with ALON), to acquire all or any material portion of
the Refined Product Pipelines or the Refined Product Terminals.

     (b) Events of Default by ALON. The occurrence of any of the following shall
constitute “ALON Events of Default”:

     (i) Any failure to make any payment required to be made by ALON hereunder,
where such failure continues for 10 days after receipt of written notice from
HEP, subject to the right of ALON, reasonably exercised, to contest any such
payment. In the event ALON withholds any such payment, and it is determined that
such withholding was wrongful, ALON agrees to pay interest to HEP on such monies
wrongfully withheld at the Prime Rate;

     (ii) A failure by ALON to observe and perform any material provision or
covenant of this Agreement (other than the obligation to pay amounts when due as
the result of same being covered by clause (i) preceding) to be observed or
performed by ALON where such failure continues unremedied for a period of
30 days after receipt of written notice thereof to ALON; provided, however, in
the event a breach specified in this clause (ii) cannot be reasonably cured
within such 30-day period and ALON has diligently proceed to cure such breach,
ALON shall have such period of time, not to exceed 180 days, as is reasonably
necessary to cure such breach; and

     (iii) The making by ALON of any general assignment for the benefit of
creditors, the filing by or against ALON of a petition to have ALON adjudged a
bankrupt, or a petition for reorganization or arrangement under any law relating
to bankruptcy (unless, in the case of a petition filed against ALON, the same is
dismissed within 60 days), or the appointment of a trustee or receiver to take
possession that is not restored to ALON within 30 days.

     Section 17. Remedies

     (a) Remedies of HEP. In the event an ALON Event of Default occurs and is
not cured, HEP shall have the right to enforce performance by ALON of this
Agreement and recover damages for the breach thereof and with respect to an ALON
Event of Default specified in Section 16(b)(i), HEP shall have the right to
refuse receipts and deliveries by or on behalf of ALON on 10 days prior written
notice to ALON; provided, however, that HEP shall not (i) with respect to an
ALON Event of Default, specified in Section 16(b)(i), be entitled to terminate
this Agreement unless such ALON Event of Default is not cured within 60 days
after receipt of

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written notice from HEP; provided further that to the extent ALON has
enforceable rights to receive insurance proceeds which are sufficient to cure
such default, ALON shall be entitled to an additional 60 days to cure such
default so long as it is using commercially reasonable efforts to collect such
insurance proceeds and pay them to HEP; and (ii) with respect to an ALON Event
of Default specified in Section 16(b)(ii) or Section 16(b)(iii), be entitled to
refuse receipts and deliveries by or on behalf of ALON or to terminate this
Agreement until such time as HEP shall have been awarded any such right pursuant
to a final binding and nonappealable decision of an Arbitrable Dispute pursuant
to Section 21(g). Notwithstanding any other provision of this Agreement to the
contrary, HEP agrees to subordinate any lien or other possessory interest of HEP
in any Refined Products to any lien held by ALON’s lenders.

     (b) Remedies of ALON. In the event an HEP Event of Default occurs and is
not cured, ALON shall have the right to enforce performance by HEP of this
Agreement and recover damages for the breach thereof in accordance with the
provisions of Section 21(g). In addition, if an HEP Event of Default specified
in Section 16(a)(i), Section 16(a)(iii) or Section 16(a)(iv) occurs and is not
cured, ALON shall have the right to terminate this Agreement on 30 days written
notice to HEP; provided, however, that ALON shall not, with respect to an HEP
Event of Default specified in Section 16(a)(i), be entitled to terminate this
Agreement unless such HEP Event of Default is not cured within 60 days after
receipt of written notice from ALON; and provided, further that to the extent
HEP has enforceable rights to receive insurance proceeds which are sufficient to
cure such default, HEP shall be entitled to an additional 60 days to cure such
default so long as it is using all commercially reasonable efforts to collect
such insurance proceeds and pay them to ALON. In the event an HEP Event of
Default specified in Section 16(a)(ii) occurs and is not cured, ALON shall have
the right to terminate this Agreement by written notice to HEP following
expiration of the Extended HEP Cure Period.

     (c) ALON’s Option to Operate. In the event (x) an HEP Event of Default
described in Section 16(a)(ii) occurs and is not cured before the expiration of
the Initial HEP Cure Period, (y) an HEP Event of Default pursuant to
Section 16(a)(iii) or Section 16(a)(iv) occurs and is not cured, or (z) a Force
Majeure event prevents HEP from substantially performing its obligations under
this Agreement for more than 30 days, then ALON shall have the option (1) to
exercise the remedies in Section 17(b), and/or (2) to directly or indirectly
through a designee, enter the Refined Product Terminals and the control center
for the Refined Product Pipelines and (at ALON’s election) commence (and
thereafter continue during the Intervention Period) the operation and
maintenance thereof or the taking of such actions as may be necessary to obtain
substitute performance for those obligations of HEP hereunder that are not being
performed by HEP; provided, however, that with respect to clause (x) above, if
the HEP Event of Default results directly from a breach by ALON of any
representation, warranty or covenant under the Contribution Agreement (without
giving effect to any limitations on the survival period, if any) or any
Ancillary Document, then ALON’s rights pursuant to clause (2) above shall be
limited to the performance and provision of transportation or terminalling
services in compliance with Section 2(b) which HEP is unable to perform or
provide as a result of such HEP Event of Default and for which ALON is then
capable of performing or providing. The period of ALON’s operations pursuant to
clause (2) above (the “Intervention Period”) shall commence upon ALON’s entry
into the Refined Product Terminals and control center and shall extend until the

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earlier of (i) the expiration of this Agreement (including any Renewal Terms),
(ii) the election by ALON in its sole discretion to terminate the Intervention
Period, and (iii) the date upon which such Force Majeure Event ends or HEP cures
such HEP Event of Default. All costs reasonably incurred by ALON in exercise of
its rights and remedies under this Section 17(c) shall be reimbursed or paid by
HEP no later than 10 days following written demand from ALON (which demand may
be given by ALON periodically as such costs are incurred) or ALON may set-off
all or any part of such costs against any amounts owed by ALON to HEP under this
Agreement.

     (d) ALON’s Option to Purchase. Upon the occurrence of a failure by HEP
described in Section 16(a)(ii) which is not cured before the expiration of the
Extended HEP Cure Period (other than a failure that results directly from a
breach by ALON of any representation, warranty or covenant under the
Contribution Agreement (without giving effect to any limitations on the survival
period, if any) or any Ancillary Document), the occurrence and continuance for
over 180 days of an HEP Event of Default under Section 16(a)(iii) or
Section 16(a)(iv), or upon any termination of this Agreement pursuant to Section
10(b) due to a Force Majeure event affecting HEP, ALON shall have the option,
and HEP hereby grants to ALON such option, to purchase (or to cause an Affiliate
of ALON to purchase) all, or such portion as ALON shall designate, of the
Refined Product Pipelines and Refined Product Terminals from HEP by delivering
notice of the exercise of such option to HEP within 60 days of the end of such
180-day period or such termination. Such purchase shall be made pursuant to an
asset purchase agreement containing the same terms and conditions as the
Contribution Agreement except that (i) ALON, or its designated Affiliate, shall
be the purchaser and HEP shall be the seller, (ii) any terms or conditions in
the Contribution Agreement that are clearly inapplicable to the purchase by ALON
shall be omitted, (iii) the purchase price for the Refined Product Pipelines and
Refined Product Terminals to be purchased by ALON shall be paid in cash and in
an amount determined by an appraisal of the fair market value of the assets to
be purchased at the time of exercise of ALON’s option, which appraisal shall
(x) take into account all factors relevant to determining the purchase price for
such assets including, without limitation, the condition of the assets, the
purpose intended for the assets, any repairs required to be made, and the terms
and nature of the transaction to be effected pursuant to this Section 17(d), and
(y) shall be performed by an independent third party appraiser with substantial
experience in valuing petroleum product pipelines and terminals, (iv) such
purchase shall be free and clear of any liens or security interests relating to
indebtedness for borrowed money, but shall otherwise be on an “as-is, where-is”
basis, and (v) shall close within 180 days of the notice of exercise of the
option. In addition, ALON shall have the right, at its own expense, to conduct a
due diligence investigation of the Refined Product Pipelines and the Refined
Product Terminals and HEP shall provide ALON reasonable access to such assets
and all related records and documents for the purpose of such investigation.
ALON shall have the right to terminate its purchase option if it is dissatisfied
with the results of such due diligence investigation.

     (e) Further Obligations. Each party shall make commercially reasonable
efforts to mitigate any of the damages to which it may be entitled under any
provision of this Agreement.

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     Section 18. ALON Right of First Refusal

     (a) HEP hereby grants to ALON a right of first refusal on any proposed
Transfer (excluding (i) a Transfer to a Controlled Affiliate made solely for the
purpose of such Controlled Affiliate thereafter owning and operating the
Transferred Assets in accordance with this Agreement, or (ii) the grant of
security interest to a bona fide third party lender which complies with the
provisions of Section 21(c), but not excluding any foreclosure or other
realization on such security interest) of all or any portion of the Refined
Product Pipelines or the Refined Product Terminals. ALON’s right of first
refusal granted hereunder shall survive any Transfer of the Refined Product
Pipelines or the Refined Product Terminals or any assignment of this Agreement
and shall be binding upon all successors or permitted assigns of HEP.

     (b) If (1) HEP desires to (x) Transfer all or part of its interest in the
Refined Product Pipelines or in the Refined Product Terminals (collectively, the
“Operations”) or (y) Transfer title to all or a part of its interests in the
Operations to its mortgagee in lieu of foreclosure; or (2) all or a part of
HEP’s interest in the Operations will be Transferred pursuant to foreclosure of
a mortgage of any such interest, and any such Transfer is subject to the right
of first refusal in Section 18(a) above; HEP shall promptly give written notice
to ALON or its successors and assigns with full information concerning such
transaction (the “Transaction Notice”).

     The Transaction Notice shall (a) include the name and address of the
prospective transferee (who must be a bona fide purchaser), the purchase price,
the form of consideration proposed, and all other terms of the proposed
transaction (collectively, the “Proposed Terms”), (b) include a complete copy of
any proposed or executed written agreement that sets forth the Proposed Terms,
including all exhibits, schedules and related agreements; and (c) in the event
the Transfer of HEP’s interest in the Operations is to be made pursuant to
subsections (b)(1)(y) or (b)(2) above, the Transaction Notice shall include all
material notices received by HEP from its mortgagee relating to the Transfer in
lieu of foreclosure or foreclosure of a mortgage on any such interest.

     ALON shall then have the right for a period of thirty (30) days (the
“Exercise Period”) after the Transaction Notice is delivered, to elect to
purchase all of the Operations which HEP proposes to Transfer on the Proposed
Terms. ALON shall have the right, at its own expense, to conduct a due diligence
investigation of the Operations during the Exercise Period and HEP shall provide
ALON reasonable access to conduct such investigation. In the event that ALON
shall exercise its right of first refusal by delivery of written notice of such
exercise to HEP within the Exercise Period, ALON shall close the Transfer of the
Operations within 90 days of the end of the Exercise Period and HEP shall use
all commercially reasonable efforts to cooperate with ALON in effecting such
closing on the Proposed Terms. ALON shall have the right to confirm the fair
market value of any non-cash consideration included within the purchase price
set forth in the Proposed Terms by an independent appraisal by a generally
recognized valuation firm. If the proposed Transfer includes other assets of HEP
or is structured as a non-simultaneous, like-kind exchange under Section 1031 of
the Internal Revenue Code of 1986, as amended, the interest that is subject to
ALON’s right of first refusal pursuant to Section 18(a) shall be

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separately valued and the Transaction Notice shall state the value attributed to
such interest by the prospective transferee.

     If ALON does not exercise its right of first refusal granted pursuant to
this Section 18 within the Exercise Period, HEP may enter into a binding
agreement or proceed to close on any such agreement already executed to Transfer
its interests in the Operations on terms and conditions in the aggregate no less
favorable to HEP than the Proposed Terms to the prospective transferee, during a
period (“Third Party Sale Period”) ending 90 days after the Exercise Period. If
however, no such binding agreement is entered into or no closing occurs with the
prospective transferee during the Third Party Sale Period, then no Transfer may
thereafter be entered into by HEP without first again complying with this
Section 18. Notwithstanding the application of this Section 18, any Transfer
made pursuant to this paragraph must comply with the provisions of
Section 21(c). Notwithstanding the foregoing, any Transfer made pursuant to the
last proviso under Section 21(c) shall not give rise to a right of first refusal
under this Section 18.

     Section 19. Insurance; Indemnification

     (a) Insurance. In connection with this Agreement, each party shall maintain
insurance providing for coverage and minimum limits contained in Exhibit H
attached hereto and incorporated herein by reference. Each party shall furnish
the other party with certificates of insurance sufficient to establish that such
party is maintaining the coverage so specified. Said certificates shall not be
canceled or otherwise materially altered without at least 30 days prior written
notice to the other party. Insurance covering the Refined Products, if any,
shall be carried by ALON at its own expense.

     (b) Indemnification by ALON. To the extent permitted by Applicable Law and
except as otherwise specifically provided in this Agreement, ALON agrees to
defend and indemnify HEP, its Subsidiaries and Affiliates and their respective
directors, officers, employees, agents and other representatives (the “HEP
Indemnified Parties”), from and against all liabilities, losses, damages,
Claims, suits, penalties, fines, judgments, costs and expense (including
reasonable attorney fees and other costs of litigation) (collectively “Losses”),
resulting from, associated with or arising out of (i) ALON’s failure to comply
with applicable governmental or quasi-governmental laws, regulations or rules,
(ii) bodily injury or death of any Person, including, without limitation, ALON’s
and HEP’s employees, agents and representatives, (iii) damage to natural
resources or to property of any nature, including, without limitation, that
involving the Refined Products and other property of ALON and the Refined
Product Terminals, Refined Product Pipelines and other property of HEP, or
(iv) discharges, spills, or leaks of products; in each case (x) regardless of
the negligence of any of the HEP Indemnified Parties, but (y) only to the extent
caused by the negligent, gross negligent or willful acts or omissions of ALON,
its employees, agents, representatives or contractors in the exercise of any of
the rights granted under this Agreement.

     (c) Indemnification by HEP. To the extent permitted by Applicable Law and
as otherwise specifically provided in this Agreement, HEP agrees to defend and
indemnify ALON, its Subsidiaries and Affiliates and their respective directors,
officers, employees, agents and

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other representatives (the “ALON Indemnified Parties”), from and against any
Losses resulting from, associated with or arising out of (i) HEP’s failure to
comply with applicable governmental or quasi-governmental laws, regulations or
rules, (ii) bodily injury or death of any Person, including, without limitation,
ALON’s and HEP’s employees, agents or representatives, (iii) damage to natural
resources or to property of any nature, including, without limitation, that
involving Refined Products and the Refined Product Terminals, Refined Product
Pipelines or other property of HEP, or (iv) discharges, spills, or leaks of
products; in each case (x) regardless of the negligence of any of the ALON
Indemnified Parties, but (y) only to the extent caused by the negligent, gross
negligent or willful acts or omissions of HEP, its employees, agents,
representatives or contractors in the exercise of any of the rights granted
under this Agreement.

     (d) Joint Liability. Under the foregoing indemnities, where the personal
injury to or death of any Person, or loss of or damage to property is the result
of the joint or concurrent negligence or willful acts or omissions of ALON and
HEP, each party’s duty of indemnification will be in proportion to its share of
such joint or concurrent negligence, or willful misconduct.

     (e) Procedures relating to Indemnification. To receive the foregoing
indemnities, the party seeking indemnification must notify the other in writing
of a Claim or suit promptly (provided that any failure to provide such notice
shall not limit a party’s right to indemnification except to the extent that the
indemnifying party shall have been materially prejudiced thereby) and provide
reasonable cooperation (at the indemnifying party’s expense) and full authority
to defend the Claim or suit. Notwithstanding the foregoing, no indemnifying
party shall be entitled to settle any Claim or suit without the consent of the
indemnified party unless such settlement contains a full release of the
indemnified party without any liability for any monetary damages or any type of
equitable relief. Neither party shall have any obligation to indemnify the other
under any settlement made without its written consent.

     (f) Administration of Indemnity Claims. Notwithstanding anything else in
this Section 19, any claims for indemnification pursuant to this Section 19,
(i) on behalf of an ALON Indemnified Party must be made and administered by
ALON, or its successors or assigns as permitted herein, and (ii) on behalf of an
HEP Indemnified Party must be made and administered by HEP, or its successors
and assigns as permitted herein.

     Section 20. Notices.

     All notices or requests or consents provided for by, or permitted to be
given pursuant to, this Agreement must be in writing and must be given by
depositing same in the United States mail, addressed to the Person to be
notified, postpaid, and registered or certified with return receipt requested or
by delivering such notice in Person or by telecopier or telegram to such party.
Notice given by Personal delivery or mail shall be effective upon actual
receipt. Notice given by telegram or telecopier shall be effective upon actual
receipt if received during the recipient’s normal business hours or at the
beginning of the recipient’s next business day after receipt if not received
during the recipient’s normal business hours. All notices to be sent to a party
pursuant to this Agreement shall be sent to or made at the address set forth
below or at such

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other address as such party may stipulate to the other parties in the manner
provided in this Section 20:

         

  if to ALON:   ALON USA, LP

      7616 LBJ Freeway, Suite 300

      Dallas, Texas 75251

      Attn: Chief Executive Officer

      Copy to: General Counsel

      Telecopy: (972) 367-3723
 
       

  if to HEP:   Holly Energy Partners, L.P.

      100 Crescent Court

      Suite 1600

      Dallas, Texas 75201

      Attn: Bruce Shaw

      Telecopy: 214-615-9371

     Section 21. Miscellaneous

     (a) Intention as to Refineries. ALON represents to HEP that, as of the date
of this Agreement, they are not considering a shut down of the Refinery, other
than a scheduled maintenance turnaround in the first quarter of 2005, or any
changes to the Refinery that would have a material adverse effect on the
operation of the Refinery.

     (b) Amendments and Waivers. No amendment or modification of this Agreement
shall be valid unless it is in writing and signed by the parties hereto. No
waiver of any provision of this Agreement shall be valid unless it is in writing
and signed by the party against whom the waiver is sought to be enforced. No
failure or delay in exercising any right hereunder, and no course of conduct,
shall operate as a waiver of any provision of this Agreement. No single or
partial exercise of a right hereunder shall preclude further or complete
exercise of that right or any other right hereunder.

     (c) Successors and Assigns. This Agreement shall inure to the benefit of,
and shall be binding upon, ALON, HEP and their respective successors and
permitted assigns. Neither this Agreement nor any of the rights or obligations
hereunder shall be assigned without the prior written consent of the other
parties, which consent may not be unreasonably withheld; provided, however, that
(i) HEP may make such an assignment (including a partial pro rata assignment) to
a Controlled Affiliate of HEP provided that HEP continues to remain liable for
its obligations hereunder, (ii) ALON may make such an assignment (including a
partial pro rata assignment) to a Controlled Affiliate of ALON provided that
ALON continues to remain liable for its obligations hereunder, (iii) ALON may
make such an assignment to any Person to which ALON has sold its Refinery which
relies on the services provided by HEP under this Agreement if such Person
(A) is reasonably capable of performing ALON’s obligations under this Agreement
assigned to such Person, which determination shall be made by ALON in its
reasonable

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judgment and (B) has agreed in writing with HEP to assume the obligations of
ALON assigned to such Person, (iv) ALON may make a collateral assignment of its
rights and obligations hereunder to any bona fide third party lender of ALON,
(v) HEP may make a collateral assignment of its rights and obligations hereunder
and/or grant a security interest in all or a portion of the Refined Product
Pipelines and the Refined Product Terminals to a bona fide third party lender or
debt holder, or a trustee or representative for any of them of HEP if such third
party lender, debt holder or trustee shall have executed and delivered to ALON a
non-disturbance agreement in substantially the form attached to the Contribution
Agreement or in such other form as is reasonably satisfactory to ALON and ALON
executes an acknowledgment of such collateral assignment in such form as may
from time to time be reasonably requested, and (vi) subject to Section 11.6 of
the Contribution Agreement, HEP may assign its rights in connection with a sale
of all or substantially all its assets to a person who (A) is reasonably capable
of performing HEP’s obligations under this Agreement assigned to such person,
which determination shall be made by HEP in its reasonable judgment, and (B) has
agreed in writing with ALON to assume the obligations of HEP assigned to such
person. Any attempt to make an assignment of this Agreement otherwise than as
permitted by the foregoing shall be null and void. For purposes of this
Section 21(c), an “assignment” shall include any direct or indirect assignment,
transfer, sale, pledge, hypothecation or other disposition of this Agreement or
any rights and obligations hereunder; provided, however, that the consent
requirements set forth in this Section 21(c) shall not apply to any merger, sale
of equity interests, or change of control involving a party hereto. The parties
hereto agree to require their respective successors (including any Person to
which all or any portion of the Refined Product Pipelines or Refined Product
Terminals are to be Transferred), if any, to expressly assume, in a form of
agreement acceptable to the other parties, their obligations under this
Agreement. From and after any assignment permitted or consented to hereunder,
all references to HEP or ALON, as applicable, shall be deemed to refer to such
party’s assignee.

     (d) Severability. If any provision of this Agreement shall be held invalid
or unenforceable by a court or regulatory body of competent jurisdiction, the
remainder of this Agreement shall remain in full force and effect. Upon
determination that any term or other provision is invalid or unenforceable, the
parties agree to negotiate in good faith to modify this Agreement to effect the
original intent of the parties as closely as possible in an acceptable manner so
that the transactions contemplated hereby are fulfilled to the extent possible.

     (e) Choice of Law. This Agreement shall be subject to and governed by the
laws of the State of Texas, excluding any conflicts-of-law rule or principle
that might refer the construction or interpretation of this Agreement to the
laws of another state. Each party hereby submits to the jurisdiction of the
state and federal courts in the State of Texas and to venue in Dallas, Texas.

     (f) Exclusion of Punitive Damages. NEITHER PARTY SHALL BE LIABLE TO THE
OTHER PARTY FOR PUNITIVE OR EXEMPLARY DAMAGES, BY STATUTE, IN TORT OR CONTRACT.

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     (g) Arbitration Provision. Any and all Arbitrable Disputes must be resolved
through the use of binding arbitration using three arbitrators, in accordance
with the Commercial Arbitration Rules of the American Arbitration Association,
as supplemented to the extent necessary to determine any procedural appeal
questions by the Federal Arbitration Act (Title 9 of the United States Code). If
there is any inconsistency between this Section and the Commercial Arbitration
Rules or the Federal Arbitration Act, the terms of this Section will control the
rights and obligations of the parties. Arbitration must be initiated within the
time limits set forth in this Agreement, or if no such limits apply, then within
a reasonable time or the time period allowed by the applicable statute of
limitations. Arbitration may be initiated by a party (“Claimant”) serving
written notice on the other party (“Respondent”) that the Claimant elects to
refer the Arbitrable Dispute to binding arbitration. Claimant’s notice
initiating binding arbitration must identify the arbitrator Claimant has
appointed. The Respondent shall respond to Claimant within 30 days after receipt
of Claimant’s notice, identifying the arbitrator Respondent has appointed. If
the Respondent fails for any reason to name an arbitrator within the 30-day
period, Claimant shall petition the American Arbitration Association for
appointment of an arbitrator for Respondent’s account. The two arbitrators so
chosen shall select a third arbitrator within 30 days after the second
arbitrator has been appointed. The Claimant will pay the compensation and
expenses of the arbitrator named by or for it, and the Respondent will pay the
compensation and expenses of the arbitrator named by or for it. The costs of
petitioning for the appointment of an arbitrator, if any, shall be paid by
Respondent. The Claimant and Respondent will each pay one-half of the
compensation and expenses of the third arbitrator. All arbitrators must (a) be
neutral parties who have never been officers, directors or employees of any of
ALON, HEP or any of their Affiliates and (b) have not less than seven years
experience in the energy industry. The hearing will be conducted in Dallas,
Texas and commence within 30 days after the selection of the third arbitrator.
ALON, HEP and the arbitrators shall proceed diligently and in good faith in
order that the award may be made as promptly as possible. Except as provided in
the Federal Arbitration Act, the decision of the arbitrators will be binding on
and non-appealable by the parties hereto. The arbitrators shall have no right to
grant or award punitive damages.

     (h) Entire Agreement. This Agreement and the Exhibits hereto constitute the
complete understanding of the parties relating to the subject matter hereof and
supersede all prior oral and written discussions, negotiations, representations
or agreements relating thereto. There are no understandings or commitments
relating to the present subject matter not expressly set forth herein.

     (i) Drafting. As between the parties, it shall be conclusively presumed
that each and every provision of this Agreement was drafted jointly by the
parties.

     (j) Headings. Section headings contained in this Agreement are for
convenient reference only and shall not in any way affect the meaning or
interpretation of this Agreement.

     (k) Expenses. Except as otherwise set forth herein, each party shall pay
and discharge all liabilities and expenses incurred by or on behalf of it in
connection with the preparation, authorization, execution and performance of
this Agreement and the transactions

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contemplated herein, including all fees and expenses of agents, representatives,
counsel and accountants.

     (l) Further Assurances. In connection with this Agreement and all
transactions contemplated by this Agreement, each signatory party hereto agrees
to execute and deliver such additional documents and instruments and to perform
such additional acts as may be necessary or appropriate to effectuate, carry out
and perform all of the terms, provisions and conditions of this Agreement and
all such transactions.

     (m) No Personal Liability. Each party acknowledges and agrees that that in
no event shall any Affiliate of either party or any partner, member,
shareholder, owner, officer, director or employee of either party or of any such
Affiliate be personally liable to the other party for any payments, obligations
or performance due under this Agreement or any breach or failure of performance
of either party and the sole recourse for payment or performance of the
obligations under this Agreement shall be against HEP or ALON (as applicable)
and each such party’s respective assets and not against any other Person, except
for such liability as expressly assumed by an assignee pursuant to an assignment
of this Agreement in accordance with the terms hereof.

     (n) Counterparts. This Agreement may be executed in two or more
counterparts, each of which when delivered (which deliveries may take place by
facsimile) shall be deemed an original, but all of which shall constitute one
and the same instrument.

     (o) Confidentiality. Each party hereto shall cause, and shall cause each of
its Affiliates and each of their respective officers, directors and employees,
to hold confidential all information relating to the business of the other party
disclosed to it by reason of this Agreement and not disclose any of such
information to any party unless (i) such party obtains the prior written consent
of the other party, or (ii) required to disclose such information by operation
of Applicable Law (including pursuant to the rules of the Securities Exchange
Commission) or pursuant to rules of any securities exchange. If either party or
any of its representatives or affiliates is requested or required by operation
of Applicable Law (including pursuant to the Exchange Act of 1934 or the rules
of the SEC) or pursuant to the rules of any securities exchange to disclose any
Confidential Information, such party shall provide the other party with prompt
written notice of such request or requirement (which shall be treated as
Confidential Information hereunder), which notice shall be at least 48 hours
prior to making such disclosure (or in the case of a disclosure pursuant to the
Exchange Act, the rules of the SEC or the rules of any securities exchange, such
time period (which may be shorter than 48 hours but shall not be longer than 48
hours) as may be reasonably possible), so that the other party hereto may seek a
protective order or other appropriate assurance of confidential treatment of the
information required to be so disclosed and/or waive compliance with the
provisions of this Section 21(o). Notwithstanding the foregoing, either party
shall be entitled to disclose each other’s confidential information with its
advisors (legal and accounting), bankers, lenders, underwriters/purchasers and
their respective advisors, provided that they are notified of the requirements
of this Section 21(o) and instructed to keep such information confidential.

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     (p) Unlawful Actions. Notwithstanding anything in this Agreement to the
contrary, the parties acknowledge and agree that in no event will HEP or ALON
ever be deemed to be in breach of this Agreement for any failure of HEP or ALON
to observe or perform any provision or covenant of this Agreement if such
failure to perform is attributable to any provision in this Agreement, any
tariff, or any Ancillary Document, which is invalid or in violation of
Applicable Law. In such event, or in the event of any action described in
Section 12(b), the parties shall negotiate in good faith in an attempt to agree
to another provision (instead of the provision which is invalid or in violation
of Applicable Law) that is valid and legal and carries out the parties’
intentions under this Agreement.

     (q) Memorandum of Agreement. HEP acknowledges and agrees that ALON shall
have the right to record a memorandum of this Agreement (the form of which shall
be mutually agreed to by the parties) with respect to ALON’s rights under
Section 17 and Section 18 in such jurisdictions as ALON shall deem appropriate.

[Remainder of page intentionally left blank. Signature pages follow.]

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     IN WITNESS WHEREOF, the undersigned parties have executed this Agreement as
of the date first written above.

            ALON USA, LP
      By:   ALON USA GP, LLC,            its General Partner   

            By:     /s/ Jeff D. Morris           Jeff D. Morris,          
President and Chief Executive Officer   

            HOLLY ENERGY PARTNERS, L.P.
      By:   HEP LOGISTICS HOLDINGS, L.P.,            its General Partner     

            By:   HOLLY LOGISTIC SERVICES, L.L.C.,         its General Partner 
           

                  By:      /s/ Mathew P. Clifton         Mathew P. Clifton     
  Chairman of the Board and Chief Executive Officer     

Signature Page
Pipelines And Terminals Agreement

 

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EXHIBIT A

REFINED PRODUCT PIPELINES

                                                                               
      Minimum     Incentive     Section 2(a)(v)     Section 2(a)(v)       Miles
of                     Volume     Volume     60 Day     180 Day   Origin and
Destination   Pipeline     Diameter     Capacity     Commitment     Requirement
    Discount Rate     Discount Rate               (inches)     (bpd)     (bpd)  
  (bpd)                  
Big Spring, TX to Abilene, TX (6”)
    105.2       6       20,000       7,580       8,843       6.8 %     32.6 %
Midland, TX to Orla, TX*
    136.5       8/10       25,000       14,040       16,380       8.5 %     27.5
%
Big Spring, TX to Wichita Falls, TX
    226.5       6/8       23,000       15,815       18,451       3.7 %     16.1
%
Wichita Falls, TX to Duncan, OK
    46.7       6       21,000       4,844       5,652       16.8 %     57.3 %
Abilene, TX to Dyess AFB
    1.6       8       53,000       1,167       1,362       4.6 %     22.4 %

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    *Excludes 38 mile, 6-inch leased Chevron pipeline from Coahoma Station to
Midland, TX and 3.4 miles of ALON owned pipeline from the Refinery to Coahoma
Station.

A-1

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EXHIBIT B

REFINED PRODUCT TERMINALS AND TANK FARMS

                                              Minimum Volume                    
  Commitment   Location   Storage Capacity (barrels)     Number of Tanks    
(bpd)  
Refined Product Terminals
                       
Abilene, TX
    127,000       5       7,523  
Wichita Falls, TX
    220,000 *     11       5,586  
 
                       
Refined Product Tank Farm
                       
Orla, TX
    134,782       7       13,853  

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*   Includes 50,000 barrels of storage capacity that is currently out of
service.

B-1

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EXHIBIT C

TERMINALS FEE SCHEDULE

1.   ALON will pay a terminal service fee of (a) $0.30 per barrel for deliveries
out of the Refined Product Terminals into trucks, and (b) $0.10 per barrel for
deliveries out of the Refined Product Terminals into any adjacent pipelines.

2.   Each of the service fees listed on this Exhibit C will adjust at the
beginning of each Contract Year by an amount equal to the percentage change
between the two preceding Contract Years in the index comprised of comparable
fees posted by Conoco, Wichita Falls; Equilon, Odessa; Pride, Abilene; and
Valero, Abernathy terminals.

C-1

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EXHIBIT D

INTERSTATE TARIFF (RATES, RULES AND REGULATIONS)

D-1

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EXHIBIT E

INTRASTATE TARIFF (RATES, RULES AND REGULATIONS (PUBLIC))

E-1

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EXHIBIT F

INTENTIONALLY OMITTED

F-1

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EXHIBIT G

INTRASTATE TARIFF (RATES, RULES AND REGULATIONS (PRIVATE))

G-1

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EXHIBIT H

INSURANCE

     Each party’s insurance coverage as stated on this Exhibit H shall be
primary in all instances regardless of like coverage maintained by the other
party.

     (a) Workmen’s Compensation Coverage in the statutory amount as prescribed
under the Workmen’s Compensation Acts of Texas, and Employer’s Liability
insurance in the amount of $1,000,000.

     (b) Comprehensive General Liability

         

  Bodily Injury:   $1,000,000 Per Person
 
       

      $1,000,000 Per Occurrence
 
       

  Property Damage:   $1,000,000 Per Occurrence
 
            Including but not limited to the following with the same above limit
of liability for bodily injury and property damage:

  (i)   Contractual Liability     (ii)   Contingent Liability (if contractors
are to be used)     (iii)   Owner Contractors Protective Liability (if
contractors are to be used)     (iv)   Completed Operations     (v)   Broad
Form Care, Custody and Control     (vi)   Explosion, collapse and underground
$1,000,000 Per Occurrence

     (c) Comprehensive vehicle liability to cover all licensed or unlicensed
vehicles and/or automotive equipment owned, leased or rented when used in
connection with the performance of this Agreement.

              Coverage limits shall be:
 
       

  Bodily Injury:   $1,000,000 Per Person
 
       

      $1,000,000 Per Occurrence
 
       

  Property Damage:   $1,000,000 Per Occurrence

H-1

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     (d) Umbrella/Excess Insurance over that required in (a), (b) and (c) above
with minimum limits of $50,000,000.

H-2

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EXHIBIT I

SCHEDULE OF
SETTLEMENT PROCEDURES
REFINED PRODUCT TERMINALS

If in any year the overall product losses at any Refined Product Terminal exceed
0.05%, then the amount to be paid by HEP to ALON as compensation for such
product losses shall be an amount equal to (A) the sum of the volumes of losses
(in barrels) for each type of product having an overall loss at such Refined
Product Terminal in such year multiplied by the yearly average of the daily high
and low price per barrel for such product for (i) Abilene, Texas (with respect
to the Abilene Terminal), (ii) Wichita Falls, Texas (with respect to the Wichita
Falls Terminal),and (iii) El Paso, Texas (with respect to the Orla Tank Farm)
for the year in which the loss occurred as set forth in publications of Oil
Price Information Service (“OPIS”), less (B) the sum of the volumes of gains (in
barrels) for each type of product having an overall gain at such Refined Product
Terminal in such year multiplied by the yearly average of the daily high and low
price per barrel for such product for (i) Abilene, Texas (with respect to the
Abilene Terminal), (ii) Wichita Falls, Texas (with respect to the Wichita Falls
Terminal),and (iii) El Paso, Texas (with respect to the Orla Tank Farm) for the
year in which the gain occurred as set forth in publications of OPIS. In the
case of the following products, the product price used to determine the required
payment shall be as follows:

                product     opis product price used    
On-Road Diesel Fuel
    Unbranded    
Unleaded Regular Gasoline
    Unbranded    
Unleaded Premium Gasoline
    Unbranded    
Kerosene
    On-Road Diesel plus $.05    
Jet Fuel — JP8 Military Grade
    On-Road Diesel plus $.07    

In the event of a loss or gain with respect to a product type not specified
above, the OPIS product price used to determine the payment amount shall be the
price for the OPIS product category for Abilene, Texas (with respect to the
Abilene Terminal), Wichita Falls, Texas (with respect to the Wichita Falls
Terminal), and El Paso, Texas (with respect to the Orla Tank Farm), that is most
similar to the product type as adjusted for differences in quality. For purposes
of these settlement procedures, the term “OPIS” shall mean the entity that
performs the price reporting functions now performed by OPIS in the event that
OPIS ceases to perform these functions. In the event required price levels cease
to be reported for any of the foregoing markets, then the prices for the major
market nearest to the terminal for which such loss occurred and for which
petroleum product prices are reported shall be used in place of such market
prices.

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EXHIBIT J

TERMINAL ACCESS AGREEMENT

     This Terminal Access Agreement (this “Agreement”) is entered into this
___day of ______, 2005, by ______(“Carrier”) located at ______, who will be
obtaining product from the Abilene and Wichita Falls Terminals (collectively,
the “Terminal”) operated by Holly Energy Partners-Operating, L.P.
(“HEP-Operating”) on behalf of Holly Energy Partners, L.P. and its affiliate
companies (collectively referred to herein as “Holly Energy Partners”) which
Carrier represents and warrants it has legal rights to obtain from the Terminal.

For good consideration, the sufficiency of which is hereby acknowledged, the
parties do hereby agree as follows:

A. HEP-Operating routinely stores various petroleum products, petroleum
byproducts and other substances (hereinafter referred to as “Petroleum
Products”) at the Terminal. The purpose of this Agreement is to afford Carrier
access to such Terminal and to protect and safeguard the interests of Holly
Energy Partners and all shippers in permitting Carrier to have such access. This
Agreement shall be applicable to the Terminal identified herein.

B. Carrier shall have access to the Terminal for the sole purpose of either
making or taking delivery of Petroleum Products. Carrier agrees that the
permission granted by HEP-Operating to Carrier to enter the Terminal under this
Agreement is non-exclusive, and may be revoked at any time (i) for Carrier’s
failure to comply with this Agreement, (ii) for Carrier’s failure to comply with
the rules and procedures posted at the Terminal, (iii) for Carrier’s failure to
attend or comply with training, and (iv) if HEP-Operating believes in its
reasonable opinion, that Carrier poses a risk to the Terminal, its personnel,
the public or the environment.

C. Access to the Terminal is or will be controlled by a card-lock or key system
activated by proximity cards (“Access Card(s)” and/or “Access Code(s)”). Carrier
desires to have Access Card(s) and/or Access Code(s) to the Terminal to obtain
Petroleum Products.

D. Carrier agrees to comply with all Terminal operating rules promulgated by
HEP-Operating and its agents, including those promulgated (whether communicated
verbally or in writing) for security or safety reasons, and any amendments or
supplements thereto that HEP-Operating in its discretion, may issue from time to
time. Carrier agrees to comply with all applicable federal, state, and local
laws and regulations, including but not limited to pertinent provisions of the
“Hazardous Materials Transportation Act”, as fully set forth as 49 U.S.C. 1801,
et seq., its amendments and implementing regulations. Carrier shall take steps,
including providing instruction, to ensure that its drivers and other authorized
representatives observe any rules, laws and regulations governing use of the
Terminal at all times while on any premises owned or operated by Holly Energy
Partners.

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E. Carrier agrees to be solely liable for, and to indemnify, defend and save
harmless Holly Energy Partners, its affiliates and their respective directors,
officers, employees and agents of from any and all loss, damage, claims demands
or liabilities (including reasonable attorneys’ fees), from any cause
whatsoever, for the injury to or death of any person or persons or for the
damage to or loss of any real or personal property, whether it be that of the
parties hereto or of third persons, caused by or in any manner arising out of or
connected with the Carrier’s presence and activities in the Terminal or of any
other person or persons who might gain entry into the Terminal by means of the
misappropriation or unauthorized use or duplication of any Access Card(s) or
Access Code(s) delivered by HEP–Operating to Carrier or by any other means
caused in whole or in part by Carrier, whether through negligence or otherwise.

F. Carrier will provide to HEP–Operating certificates of insurance issued by
acceptable underwriters and insurance companies evidencing satisfactory
insurance coverage of Carrier. Said certificates will be provided by Carrier to
HEP–Operating before any automotive equipment operated by Carrier enters the
Terminal for the purpose of loading Petroleum Products. The insurance coverage
will be in the minimum amounts set forth below and will be maintained in force
by Carrier at its own expense at all times during the term of this Agreement.
Insurance carried by Carrier shall be primary to any other insurance similar or
not, that may be acquired, managed, or maintained by Holly Energy Partners.
(Carrier agrees to notify HEP–Operating in writing immediately upon knowledge of
an occurrence that might materially diminish the minimum amounts of insurance
coverage set forth below). The certificates will provide that the insurance
coverage may be cancelled or materially modified by the issuing underwriters and
insurance companies only upon their giving 30 days’ prior written notice to
HEP–Operating:

     1. Worker’s Compensation and Occupational Disease Insurance as required by
the laws of the State in which the Terminal(s) is/are located, and Employers’
Liability Insurance with a limit of not less than $1,000,000.00 per occurrence;
such coverage to be endorsed waiving right of subrogation against the Holly
Energy Partners entities as permitted by the respective state law.

     2. Comprehensive General liability Insurance with bodily injury limits of
not less than $2,000,000.00 per occurrence, and property damage limits of not
less than $2,000,000.00 per occurrence. Carrier own certificates of insurance
will be endorsed to cover the indemnity provisions of Paragraph B above. Such
coverage to also be endorsed naming the Holly Energy Partners entities as
additional insureds as respects operations of or on behalf of Carrier under this
Agreement.

     3. Automotive Liability Insurance with limits of not less than
$1,000,000.00 applicable to bodily injury, sickness or death, to each person,
and $1,000,000.00 for more than one person per occurrence, and $1,000,000.00 for
the loss or damage to property per occurrence. Such coverage to be endorsed
naming the Holly Energy Partners entities as additional insureds as respects
operations of or on behalf of Carrier under this Agreement.

     4. All policies herein described shall include coverage for all liability
assumed by Carrier under the terms of this Terminal Access Agreement and for all
claims caused by or arising from Carrier’s exercise of the rights and privileges
granted herein, including the loading and unloading operations by Carrier and
its agents, representatives, and employees at the Terminal.

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G. Carrier acknowledges that the dispensing of Petroleum Products at the
Terminal is controlled by the Access Card(s) or Access Code(s) that activate a
system which controls the Terminal’s entry and exit gates, truck loading racks
and automated accounting equipment. Carrier hereby requests such Access Card(s)
and/or Access Code(s) for its use at the Terminal. Carrier agrees to accept such
Access Card(s) and/or Access Code(s) subject to the following terms and
conditions:

     1. By its execution of attached Addendum A, entitled “Receipt for Cards,”
incorporated herein by reference, Carrier acknowledges receipt from
HEP–Operating of the Access Card(s) and/or Access Code(s) specified in Addendum
A.

     2. Carrier understands that such Access Card(s) and/or Access Code(s) are
to cause the Terminal’s automated accounting equipment to charge to the
HEP–Operating account number(s) specified in attached Addendum A for all
Petroleum Products withdrawn from the Terminal by means of such Access Card(s)
and/or Access Code(s).

     3. Carrier agrees to indemnify Holly Energy Partners, its affiliates and
their respective employees, officers and directors against and hold harmless
from any claims, obligations or liabilities, including claims based on the value
of any Petroleum Products lost, stolen or misappropriated at a Terminal and
charged to HEP–Operating or any other Holly Energy Partners entity by means of
the misappropriation or unauthorized use or duplication of any Access Card(s) or
Access Code(s) delivered to Carrier under this Agreement or by any other means
caused in whole or in part by Carrier, whether through negligence or otherwise.

     4. Carrier will notify HEP–Operating in writing within 24 hours of any
lost, misplaced or misappropriated Access Card(s).

     5. Any Access Card(s) or Access Code(s) delivered by HEP–Operating to
Carrier hereunder is for the exclusive purpose of enabling Carrier to gain
access to a Terminal and its truck-loading racks in order to load or unload
Petroleum Products. The Access Card(s) or Access Code(s) is not a means by which
HEP–Operating extends credit to Carrier and Carrier’s obligation of payment to
shipper for any Petroleum Products purchased from a shipper is separate and
apart from this Agreement.

H. HEP–Operating shall have the right, in its sole discretion, to terminate this
Agreement upon any notification, either telephonic or otherwise, to Carrier.
Carrier agrees that, upon such termination, it will immediately surrender to
HEP–Operating any Access Card(s) or Access Code(s) obtained by Carrier through
HEP–Operating.

I. Notwithstanding anything else contained in this Agreement, it is the purpose
of this Agreement that Holly Energy Partners, and/or employees, officers or
directors of any Holly Energy Partners entity, shall incur no risk, obligation
or liability of any kind whatsoever by reason of HEP–Operating’s delivery to
Carrier of an Access Card(s) to any Terminal, as such delivery is made by
HEP–Operating solely as an accommodation and for the convenience of Carrier.
Accordingly, upon request of HEP-Operating, Carrier agrees to execute and
deliver to

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HEP–Operating such further and additional documents or instruments as
HEP–Operating may request from time to time to safeguard its interests.

J. Any Access Card(s) or Access Code(s) delivered by HEP–Operating to Carrier
shall be used only by Carrier. Any attempt by Carrier to permit the use of the
Access Card(s) or Access Code(s) by anyone other than an authorized employee
shall be void and shall constitute a material breach of this Agreement
permitting HEP–Operating at its option to terminate the same without any
obligation to Carrier.

K. It is hereby understood that Carrier is an independent contractor and that no
liability of Carrier, or of its agents and/or employees becomes an obligation of
Holly Energy Partners by reason of this Agreement.

L. This Agreement shall be binding upon and shall inure to the benefits of the
parties, their successors and assigns, provided that this Agreement may not be
assigned by Carrier without the prior written consent of HEP–Operating.

M. This Agreement shall be subject to and governed by the laws of the State of
Texas, excluding any conflicts-of-law rule or principle that might refer the
construction or interpretation of this Agreement to the laws of another state.
Each party hereby submits to the jurisdiction of the state and federal courts in
the State of Texas and to venue in Dallas, Texas.

N. This Agreement may be amended only in a writing signed by each of the parties
hereto. No waiver of any provision of this Agreement shall be valid unless it is
in writing and signed by the party against whom the waiver is sought to be
enforced. No failure or delay in exercising any right hereunder, and no course
of conduct, shall operate as a waiver of any provision of this Agreement.

O. This Agreement constitutes the entire agreement of the parties hereto
concerning terminal access, and supercedes any previous agreements or
understanding.

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     IN WITNESS WHEREOF, this Agreement has been executed on behalf of Holly
Energy Partners–Operating, L.P. and Carrier by their respective representatives
hereunto duly signed as of the day and year first written above.

     
                                                                               
  Holly Energy Partners–Operating, L.P.
 
   
By:                                                                         
  By:
                                                                           
 
   
Title:                                                                      
  Title:
                                                                        

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