<PAGE>

                                                                    EXHIBIT 10.8

                                                               EXECUTION VERSION


================================================================================


                       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



<PAGE>


                                TABLE OF CONTENTS


<Table>
<Caption>
                                                                                                             Page
                                                                                                             ----
<S>               <C>                                                                                        <C>
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
</Table>


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



                                      -i-

                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


                        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.



                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


         "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.



                                      -2-

                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


         "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



                                      -3-

                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


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).



                                      -4-

                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


         "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.



                                      -5-

                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


         "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.



                                      -6-

                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


         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



                                      -7-

                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


         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



                                      -8-

                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


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.



                                      -9-

                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


                  (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



                                      -10-

                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


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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                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


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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                        PIPELINES AND TERMINALS AGREEMENT



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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



                                      -13-

                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


         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



                                      -14-

                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


         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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                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


         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.



                                      -16-

                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


         (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



                                      -17-

                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


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



                                      -18-

                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


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



                                      -19-

                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


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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                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


         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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                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


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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                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


         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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                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


                  (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



                                      -24-

                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


         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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                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


         (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,



                                      -26-

                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


         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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                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


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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                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


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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                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


         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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                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


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



                                      -31-

                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


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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                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


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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                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


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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                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


         (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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                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


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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                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


         (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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                        PIPELINES AND TERMINALS AGREEMENT



<PAGE>


         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



                        PIPELINES AND TERMINALS AGREEMENT