Exhibit 10.1

January 25, 2005

ALON USA, LP

7616 LB J Freeway, Suite 300

Dallas, Texas 75251

Holly Energy Partners, L.P.

100 Crescent Court, Suite 1600

Dallas, Texas 75201

 

  Re: Letter Agreement with Respect to certain Refined Product Pipelines subject
to the Pipeline and Terminals Agreement (the “Agreement”) to be entered between
Holly Energy Partners, L.P. (“HEP”) and ALON USA, LP (“ALON”)

Ladies and Gentlemen:

The purpose of this letter agreement is to set forth certain agreements between
HEP and ALON with respect to the certain Refined Product Pipelines subject to
the Agreement. Capitalized terms used herein and not otherwise defined shall
have the meanings given to such terms in the Agreement.

1. The Refined Product Pipelines subject to the Agreement include (i) the 136
mile pipeline from Midland, Texas to Orla, Texas (the “Fin-Tex Pipeline”);
(ii) the 105 mile pipeline from Big Spring, Texas to Abilene, Texas and the 227
mile pipeline from Big Spring, Texas to Wichita Falls, Texas (together, the
“Trust Pipelines”); and (iii) the 47 mile pipeline from Wichita Falls, Texas to
Duncan, Oklahoma (the “River Pipeline”).

2. With respect to the Trust Pipelines, ALON is undertaking to use commercially
reasonable efforts to (i) purchase a right of way for a certain 9200 feet of
pipeline located in Throckmorton County, Texas; and (ii) correct the erroneous
designation of the Trust Pipelines as a common carrier pipeline in Form T-4
filings with the Texas Railroad Commission. ALON agrees to use commercially
reasonable efforts to complete the foregoing undertakings as soon as
practicable.

3. With respect to shipments of Refined Products, ALON represents that: (A) the
Refined Products shipped by ALON on the Fin-Tex Pipeline and the Trust Pipelines
will meet specifications for sale in the State of Texas; (B) ALON will use the
Refined Product Terminals at Abilene and Wichita Falls and the terminal in El
Paso as distribution facilities; and (C) when ALON ships Refined Products to El
Paso and Wichita Falls, it will not do so with the intent to ship the Refined
Products immediately out of state; and (D) ALON will arrange further shipments
from El Paso and Wichita Falls, including

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shipments to other states, only after the Refined Products have come to rest in
the terminal at El Paso or the Refined Product Terminal at Wichita Falls,
respectively. ALON represents that it will immediately inform HEP if any
circumstance or event causes any of the foregoing representations to change.

4. So long as ALON is complying with paragraph 2 above and if ALON is in
compliance with paragraph 3 above, HEP will treat the Trust Pipelines as private
pipelines. In the event it becomes reasonably apparent to HEP that ALON will be
unable to purchase the right of way and correct the Texas Railroad Commission
filing referred to in paragraph 2 above, then HEP will reasonably consult with
ALON in good faith to (i) consider and implement alternative actions that ALON
may take, at its sole cost and expense, to maintain the private status of the
Trust Pipelines or (ii) comply with Common Carrier Requirements, and thereafter
may, if required by Common Carrier Requirements, file a tariff with the Texas
Railroad Commission subject to the terms of the Agreement. In furtherance of the
foregoing, HEP further agrees that, subject to ALON’s compliance with paragraphs
2 and 3 above, HEP will not solicit or encourage any third party to initiate any
Public Tariff filing with respect to the Trust Pipelines.

In the event of any change in Applicable Law or the occurrence of any third
party petition or other event or circumstance which could potentially require a
Public Tariff to be filed with respect to the Trust Pipelines, HEP shall consult
with ALON to determine any actions that may be taken to avoid such public filing
requirement and shall reasonably cooperate with ALON to implement any such
actions.

5. The parties agree that subsequent to the date of this letter and in
connection with the closing of that certain Contribution Agreement of even date
herewith by and among HEP, Holly Energy Partners-Operating, L.P., T&R Assets,
Inc., Fin-Tex Pipeline Company, ALON USA Refining, Inc., ALON Pipeline Assets,
LLC, ALON Pipeline Logistics, LLC, ALON USA, Inc., and ALON, the parties will be
entering into the Agreement. Notwithstanding any provision contained in the
Agreement to the contrary, the parties agree that this letter agreement shall
survive the execution and delivery of the Agreement and shall thereafter
constitute an addition and supplement to the Agreement.

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By execution of this letter agreement, HEP and ALON confirm that the foregoing
accurately reflects their agreements with respect to the subject matter hereof.

 

ALON USA, LP By:   ALON USA GP, LLC, its general partner By:  

 

 

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:  

 

 

Matthew P. Clifton

 

Chairman of the Board and

 

Chief Executive Officer