Delek US Holdings, Inc. (Form: 10-Q, Received: 05/08/2020 17:26:20)

Approval Date

Dividend Amount Per Share

Record Date

Payment Date

February 24, 2020

March 10, 2020

March 24, 2020

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)



☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended	March 31, 2020



☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the transition period from to

Commission file number 001-38142

DELEK US HOLDINGS, INC.

(Exact name of registrant as specified in its charter)



Delaware			35-2581557
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

7102 Commerce Way	Brentwood	Tennessee	37027
(Address of principal executive offices)			(Zip Code)

(615) 771-6701

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☑	Accelerated filer	☐	Non-accelerated filer	☐	Smaller reporting company	☐	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Securities registered pursuant to Section 12(b) of the Act:



Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, par value $0.01	DK	New York Stock Exchange

At May 1, 2020, there were 73,517,571 shares of common stock, $0.01 par value, outstanding (excluding securities held by, or for the account of, the Company or its subsidiaries).

Table of Contents

Delek US Holdings, Inc.

Quarterly Report on Form 10-Q

For the Quarterly Period Ended March 31, 2020



PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)	3
Condensed Consolidated Balance Sheets	3
Condensed Consolidated Statements of Income	4
Condensed Consolidated Statements of Comprehensive Income	5
Condensed Consolidated Statement of Changes in Stockholders' Equity	6
Condensed Consolidated Statements of Cash Flows	8
Notes to Condensed Consolidated Financial Statements	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3. Quantitative and Qualitative Disclosures about Market Risk	65
Item 4. Controls and Procedures	67

PART II. OTHER INFORMATION
Item 1. Legal Proceedings	68
Item 1A. Risk Factors	68
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	69
Item 5. Other Information	69
Item 6. Exhibits	72
Signatures	73



2 \|

Financial Statements

Part I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Delek US Holdings, Inc.

Condensed Consolidated Balance Sheets (Unaudited)

(In millions, except share and per share data)



	March 31, 2020			December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	784.9		$	955.3
Accounts receivable, net	436.0			792.6
Inventories, net of inventory valuation reserves	473.1			946.7
Other current assets	262.1			268.7
Total current assets	1,956.1			2,963.3
Property, plant and equipment:
Property, plant and equipment	3,539.8			3,362.8
Less: accumulated depreciation	(975.4		)	(934.5		)
Property, plant and equipment, net	2,564.4			2,428.3
Operating lease right-of-use assets	177.1			183.6
Goodwill	855.7			855.7
Other intangibles, net	111.5			110.3
Equity method investments	365.2			407.3
Other non-current assets	63.4			67.8
Total assets	$	6,093.4		$	7,016.3
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,102.3		$	1,599.7
Current portion of long-term debt	31.4			36.4
Obligation under Supply and Offtake Agreements	97.9			332.5
Current portion of operating lease liabilities	40.6			40.5
Accrued expenses and other current liabilities	354.7			346.8
Total current liabilities	1,626.9			2,355.9
Non-current liabilities:
Long-term debt, net of current portion	2,185.5			2,030.7
Obligation under Supply and Offtake Agreements	179.5			144.8
Environmental liabilities, net of current portion	136.3			137.9
Asset retirement obligations	67.1			68.6
Deferred tax liabilities	242.2			267.9
Operating lease liabilities, net of current portion	137.3			144.3
Other non-current liabilities	28.7			30.9
Total non-current liabilities	2,976.6			2,825.1
Stockholders’ equity:
Preferred stock, $0.01 par value, 11,000,000 shares and 10,000,000 shares authorized at March 31,2020 and December 31, 2019, respectively, no shares issued and outstanding	—			—
Common stock, $0.01 par value, 110,000,000 shares authorized, 91,089,920 shares and 90,987,025 shares issued at March 31, 2020 and December 31, 2019, respectively	0.9			0.9
Additional paid-in capital	1,157.4			1,151.9
Accumulated other comprehensive income	1.2			0.1
Treasury stock, 17,575,527 shares and 17,516,814 shares, at cost, as of March 31, 2020 and December 31, 2019, respectively	(694.1		)	(692.2		)
Retained earnings	861.6			1,205.6
Non-controlling interests in subsidiaries	162.9			169.0
Total stockholders’ equity	1,489.9			1,835.3
Total liabilities and stockholders’ equity	$	6,093.4		$	7,016.3

See accompanying notes to condensed consolidated financial statements



3 \|

Financial Statements

Delek US Holdings, Inc.

Condensed Consolidated Statements of Income (Unaudited)

(In millions, except share and per share)



	Three Months Ended
	March 31,
	2020			2019
Net revenues	$	1,821.2		$	2,199.9
Cost of sales:
Cost of materials and other	1,910.6			1,699.4
Operating expenses (excluding depreciation and amortization presented below)	129.2			140.9
Depreciation and amortization	47.0			39.3
Total cost of sales	2,086.8			1,879.6
Operating expenses related to retail and wholesale business (excluding depreciation and amortization presented below)	25.3			25.8
General and administrative expenses	65.7			62.2
Depreciation and amortization	5.6			7.5
Other operating (income) expense, net	(0.7		)	2.4
Total operating costs and expenses	2,182.7			1,977.5
Operating (loss) income	(361.5		)	222.4
Interest expense	36.3			28.7
Interest income	(1.7		)	(2.5		)
Income from equity method investments	(5.1		)	(2.6		)
Other income, net	(0.9		)	(1.4		)
Total non-operating expenses, net	28.6			22.2
(Loss) income before income tax (benefit) expense	(390.1		)	200.2
Income tax (benefit) expense	(83.1		)	45.8
Net (loss) income	(307.0		)	154.4
Net income attributed to non-controlling interests	7.4			5.1
Net (loss) income attributable to Delek	$	(314.4	)	$	149.3
Basic (loss) income per share	$	(4.28	)	$	1.92
Diluted (loss) income per share	$	(4.28	)	$	1.90
Dividends declared per common share outstanding	$	0.31		$	0.27

See accompanying notes to condensed consolidated financial statements



4 \|

Financial Statements

Delek US Holdings, Inc.

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(In millions)



	Three Months Ended March 31,
	2020			2019
Net (loss) income	$	(307.0	)	$	154.4
Other comprehensive income (loss):
Commodity contracts designated as cash flow hedges:
Net gains related to commodity cash flow hedges	1.8			13.1
Income tax expense	0.4			2.8
Net comprehensive income on commodity contracts designated as cash flow hedges	1.4			10.3
Foreign currency translation (loss) gain, net of taxes	(0.3		)	0.2
Gains related to postretirement benefit plans, net of taxes	—			0.2
Total other comprehensive income	1.1			10.7
Comprehensive (loss) income	$	(305.9	)	$	165.1
Comprehensive income attributable to non-controlling interest	7.4			5.1
Comprehensive (loss) income attributable to Delek	$	(313.3	)	$	160.0

See accompanying notes to condensed consolidated financial statements



5 \|

Financial Statements

Delek US Holdings, Inc.

Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited)

(In millions, except share and per share data)



		Three Months Ended March 31, 2020
		Common Stock			Additional Paid-in Capital			Accumulated Other Comprehensive Income			Retained Earnings			Treasury Stock					Non-Controlling Interest in Subsidiaries			Total Stockholders' Equity
		Shares	Amount		Additional Paid-in Capital			Accumulated Other Comprehensive Income			Retained Earnings			Shares		Amount			Non-Controlling Interest in Subsidiaries			Total Stockholders' Equity
Balance at	December 31, 2019	90,987,025	$	0.9	$	1,151.9		$	0.1		$	1,205.6		(17,516,814	)	$	(692.2	)	$	169.0		$	1,835.3
Cumulative effect of adopting accounting principle regarding measurement of credit losses on financial instruments, net		—	—		—			—			(6.5		)	—		—			—			(6.5		)
Net (loss) income		—	—		—			—			(314.4		)	—		—			7.4			(307.0		)
Other comprehensive income related to commodity contracts, net		—	—		—			1.4			—			—		—			—			1.4
Foreign currency translation loss, net		—	—		—			(0.3		)	—			—		—			—			(0.3		)
Common stock dividends ($0.31 per share)		—	—		—			—			(23.1		)	—		—			—			(23.1		)
Distributions to non-controlling interests		—	—		—			—			—			—		—			(8.6		)	(8.6		)
Equity-based compensation expense		—	—		6.2			—			—			—		—			0.1			6.3
Repurchase of common stock		—	—		—			—			—			(58,713	)	(1.9		)	—			(1.9		)
Repurchases of non-controlling interests		—	—		—			—			—			—		—			(5.0		)	(5.0		)
Taxes paid due to the net settlement of equity-based compensation		—	—		(0.7		)	—			—			—		—			—			(0.7		)
Exercise of equity-based awards		102,895	—		—			—			—			—		—			—			—
Balance at	March 31, 2020	91,089,920	$	0.9	$	1,157.4		$	1.2		$	861.6		(17,575,527	)	$	(694.1	)	$	162.9		$	1,489.9



6 \|

Financial Statements

Delek US Holdings, Inc.

Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) (Continued)

(In millions, except share and per share data)



		Three Months Ended March 31, 2019
		Common Stock			Additional Paid-in Capital			Accumulated Other Comprehensive Income		Retained Earnings			Treasury Stock					Non-Controlling Interest in Subsidiaries			Total Stockholders' Equity
		Shares	Amount		Additional Paid-in Capital			Accumulated Other Comprehensive Income		Retained Earnings			Shares		Amount			Non-Controlling Interest in Subsidiaries			Total Stockholders' Equity
Balance at	December 31, 2018	90,478,075	$	0.9	$	1,135.4		$	28.6	$	981.8		(12,477,780	)	$	(514.1	)	$	175.5		$	1,808.1
Net income		—	—		—			—		149.3			—		—			5.1			154.4
Other comprehensive income related to commodity contracts, net		—	—		—			10.3		—			—		—			—			10.3
Other comprehensive income related to postretirement benefit plans, net		—	—		—			0.2		—			—		—			—			0.2
Foreign currency translation gain, net		—	—		—			0.2		—			—		—			—			0.2
Common stock dividends ($0.27 per share)		—	—		—			—		(21.0		)	—		—			—			(21.0		)
Distribution to non-controlling interest		—	—		—			—		—			—		—			(7.7		)	(7.7		)
Equity-based compensation expense		—	—		4.9			—		—			—		—			0.1			5.0
Repurchase of common stock		—	—		—			—		—			(1,291,644	)	(46.2		)	—			(46.2		)
Taxes paid due to the net settlement of equity-based compensation		—	—		(4.5		)	—		—			—		—			—			(4.5		)
Exercise of equity-based awards		244,566	—		—			—		—			—		—			—			—
Other		—	—		(0.3		)	—		—			—		—			—			(0.3		)
Balance at	March 31, 2019	90,722,641	$	0.9	$	1,135.5		$	39.3	$	1,110.1		(13,769,424	)	$	(560.3	)	$	173.0		$	1,898.5

See accompanying notes to condensed consolidated financial statements



7 \|

Financial Statements

Delek US Holdings, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In millions)



	Three Months Ended March 31,
	2020			2019
Cash flows from operating activities:
Net (loss) income	$	(307.0	)	$	154.4
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization	52.6			46.8
Other amortization/accretion	2.2			2.6
Non-cash lease expense	13.3			9.3
Deferred income taxes	(24.5		)	10.9
Income from equity method investments	(5.1		)	(2.6		)
Dividends from equity method investments	4.9			1.9
Loss on disposal of assets	0.5			5.6
Equity-based compensation expense	6.3			5.0
Excess tax deficiency (benefit) of equity-based compensation	0.6			(1.4		)
Changes in assets and liabilities:
Accounts receivable	351.6			(265.8		)
Inventories and other current assets	531.7			(192.5		)
Fair value of derivatives	(36.1		)	43.5
Accounts payable and other current liabilities	(546.3		)	292.4
Obligation under Supply and Offtake Agreement	(199.9		)	22.6
Non-current assets and liabilities, net	1.1			0.7
Net cash (used in) provided by operating activities	(154.1		)	133.4
Cash flows from investing activities:
Equity method investment contributions	(27.1		)	(4.8		)
Distributions from equity method investments	69.4			0.8
Purchases of property, plant and equipment	(189.2		)	(124.0		)
Proceeds from sale of property, plant and equipment	0.3			1.0
Net cash used in investing activities	(146.6		)	(127.0		)

Delek US Holdings, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited) (continued)

(In millions)



	Three Months Ended March 31,
	2020			2019
Cash flows from financing activities:
Proceeds from long-term revolvers	$	1,230.2		$	437.8
Payments on long-term revolvers	(1,053.5		)	(433.3		)
Payments on term debt	(27.9		)	(26.8		)
Proceeds from product financing agreements	42.0			15.6
Repayments of product financing agreements	(21.0		)	(9.0		)
Taxes paid due to the net settlement of equity-based compensation	(0.7		)	(4.5		)
Repurchase of common stock	(1.9		)	(46.2		)
Repurchase of non-controlling interest	(5.0		)	—
Distribution to non-controlling interest	(8.6		)	(7.7		)
Dividends paid	(23.1		)	(21.0		)
Deferred financing costs paid	(0.2		)	(0.9		)
Net cash provided by (used in) financing activities	130.3			(96.0		)
Net decrease in cash and cash equivalents	(170.4		)	(89.6		)
Cash and cash equivalents at the beginning of the period	955.3			1,079.3
Cash and cash equivalents of continuing operations at the end of the period	$	784.9		$	989.7



Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of capitalized interest of $0.2 million and $0.3 million in the 2020 and 2019 periods, respectively	$	32.2	$	25.1
Income taxes	$	0.2	$	0.1
Non-cash investing activities:
Increase in accrued capital expenditures	$	1.1	$	4.4
Non-cash financing activities:
Non-cash lease liability arising from recognition of right of use assets upon adoption of Accounting Standards Update ("ASU") 2016-02	$	—	$	211.0
Non-cash lease liability arising from obtaining right of use assets during the period	$	6.8	$	—

See accompanying notes to condensed consolidated financial statements



8 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 1 - Organization and Basis of Presentation

Delek US Holdings, Inc. operates through its consolidated subsidiaries, which include Delek US Energy, Inc. ("Delek Energy") (and its subsidiaries) and Alon USA Energy, Inc. ("Alon") (and its subsidiaries). The terms "we," "our," "us," "Delek" and the "Company" are used in this report to refer to Delek and its consolidated subsidiaries. Delek's Common Stock is listed on the New York Stock Exchange ("NYSE") under the symbol "DK."

Our condensed consolidated financial statements include the accounts of Delek and its subsidiaries. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. Generally Accepted Accounting Principles ("GAAP") have been condensed or omitted, although management believes that the disclosures herein are adequate to make the financial information presented not misleading. Our unaudited condensed consolidated financial statements have been prepared in conformity with GAAP applied on a consistent basis with those of the annual audited consolidated financial statements included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on February 28, 2020 (the "Annual Report on Form 10-K") and in accordance with the rules and regulations of the SEC. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2019 included in our Annual Report on Form 10-K.

Our condensed consolidated financial statements include Delek Logistics Partners, LP ("Delek Logistics"), which is a variable interest entity. As the indirect owner of the general partner of Delek Logistics, we have the ability to direct the activities of this entity that most significantly impact its economic performance. We are also considered to be the primary beneficiary for accounting purposes for this entity and are Delek Logistics' primary customer. As Delek Logistics does not derive an amount of gross margin material to us from third parties, there is limited risk to Delek associated with Delek Logistics' operations. However, in the event that Delek Logistics incurs a loss, our operating results will reflect such loss, net of intercompany eliminations, to the extent of our ownership interest in this entity.

In the opinion of management, all adjustments necessary for a fair presentation of the financial condition and the results of operations for the interim periods have been included. All significant intercompany transactions and account balances have been eliminated in consolidation. All adjustments are of a normal, recurring nature. Operating results for the interim period should not be viewed as representative of results that may be expected for any future interim period or for the full year.

Accounting Policies

With the exception of the policy updates below, there have been no new or material changes to the significant accounting policies discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

Risks and Uncertainties Arising from the COVID-19 Pandemic and the OPEC Production Disputes

The recent outbreak of COVID-19 and its development into a pandemic in March 2020 (the "COVID-19 Pandemic") has resulted in significant economic disruption globally, including in the U.S. and specific geographic areas where we operate. Actions taken by various governmental authorities, individuals and companies around the world to prevent the spread of COVID-19 through social distancing have restricted travel, many business operations, public gatherings and the overall level of individual movement and in-person interaction across the globe. This has in turn significantly reduced global economic activity and resulted in airlines dramatically cutting back on flights and a decrease in motor vehicle use at a time when seasonal driving patterns typically result in an increase of consumer demand for gasoline. As a result, there has also been a decline in the demand for, and thus also the market prices of, crude oil and certain of our products. In addition, recent events concerning the dispute over production levels between Russia and the members of the Organization of Petroleum Exporting Countries ("OPEC"), particularly Saudi Arabia, and the subsequent actions taken by such countries as a result thereof, including Saudi Arabia discounting the price of its crude oil exports (the "OPEC Production Disputes"), have exacerbated the decline in crude oil prices and have contributed to an increase in crude oil price volatility.

Uncertainties related to the impact of the COVID-19 Pandemic and OPEC Production Disputes exist that could impact our future results of operations and financial position, the nature of which and the extent to which are currently unknown. To the extent these uncertainties have been identified and are believed to have an impact on our current period results of operations or financial position based on the requirements for assessing such financial statement impact under GAAP, we have considered them in the preparation of our unaudited financial statements as of and for the three months ended March 31, 2020. The application of accounting policies impacted by such considerations include (but are not necessarily limited to) the following:


•	The interim evaluation of the risk of credit losses and the determination of our allowance for credit losses, pursuant to GAAP;


•	The interim evaluation of long-lived assets for potential impairment, where indicators exist, as defined by GAAP;


•	The interim evaluation of indefinite-lived intangibles and goodwill for potential impairment, where indicators exist, as defined by GAAP;


•	The interim evaluation of joint ventures for potential impairment, where indicators exist, as defined by GAAP;



9 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)


•	The evaluation of derivatives and hedge accounting for counterparty risk and changes in forecasted transactions, as provided for under GAAP;


•	The evaluation of inventory valuation allowances that may be warranted under the lower of cost or net realizable value analysis (for FIFO) and the lower of cost or market analysis (for LIFO), pursuant to GAAP;


•	The consideration of debt modifications and/or covenant requirements, as applicable;


•	The evaluation of commitments and contingencies, including changes in concentrations, as applicable;


•	The interim evaluation of the impact of changing forecasts on our assessment of deferred tax asset valuation allowances and annual effective tax rates; and


•	The interim evaluation of our ability to continue as a going concern.

Credit Losses

Under ASU 2016-13, Financial Instruments - Measurement of Credit Losses on Financial Instruments (as codified in ASC 326), we have applied the expected credit loss model for recognition and measurement of impairments in financial assets measured at amortized cost or at fair value through other comprehensive income including accounts receivables. The expected credit loss model is also applied for notes receivables and contractual holdbacks to which ASU 2016-13 applies and which are not accounted for at fair value through profit or loss. The loss allowance for the financial asset is measured at an amount equal to the lifetime expected credit losses. If the credit risk on the financial asset has decreased significantly since initial recognition, the loss allowance for the financial asset is re-measured. Changes in loss allowances are recognized in profit and loss. For trade receivables, a simplified impairment approach is applied recognizing expected lifetime losses from initial recognition.

Reclassifications

Certain prior period amounts have been reclassified in order to conform to the current period presentation.

New Accounting Pronouncements Adopted During 2020

ASU 2018-15, Intangible - Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

In August 2018, the Financial Accounting Standards Board (the "FASB") issued guidance related to customers’ accounting for implementation costs incurred in a cloud computing arrangement that is considered a service contract. This pronouncement aligns the requirements for capitalizing implementation costs in such arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. We adopted this guidance on January 1, 2020 and the adoption did not have a material impact on our business, financial condition or results of operations.

ASU 2018-13, Fair Value Measurement - Changes to the Disclosure Requirements for Fair Value Measurement

In August 2018, the FASB issued guidance related to disclosure requirements for fair value measurements. The pronouncement eliminates, modifies and adds disclosure requirements for fair value measurements. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. We adopted this guidance on January 1, 2020 and the adoption did not have a material impact on our business, financial condition or results of operations. See Note 10.

ASU 2016-13, Financial Instruments - Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB issued guidance requiring the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Organizations will now use forward-looking information to better inform their credit loss estimates. This guidance is effective for interim and annual periods beginning after December 15, 2019. We adopted this guidance on January 1, 2020 using the modified retrospective approach as of the adoption date. The adoption did not have a material impact on the Company’s operating results, financial position or disclosures.



10 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)

Accounting Pronouncements Not Yet Adopted

ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848)

In March 2020, the FASB issued an amendment which is intended to provide temporary optional expedients and exceptions to GAAP guidance on contracts, hedge accounting and other transactions affected by the expected market transition from the London Interbank Offered Rate ("LIBOR") and other interbank rates. This guidance is effective for all entities at anytime beginning on March 12, 2020 through December 31, 2022 and may be applied from the beginning of an interim period that includes the issuance date of the ASU. The Company is currently evaluating the impact this guidance may have on its consolidated financial statements and related disclosures.

ASU 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)—Clarifying the Interactions between Topic 321, Topic 323, and Topic 815

In January 2020, the FASB issued ASU 2020-01 which is intended to clarify interactions between the guidance to account for certain equity securities under Topics 321, 323 and 815, and improve current GAAP by reducing diversity in practice and increasing comparability of accounting. The pronouncement is effective for fiscal years and interim periods within those fiscal years beginning December 15, 2020, and early adoption is permitted. The Company is currently evaluating the impact this guidance may have on its consolidated financial statements and related disclosures.

ASU 2019-12, Simplifying the Accounting for Income Taxes

In December 2019, the FASB issued guidance intended to simplify various aspects related to accounting for income taxes, eliminate certain exceptions within ASC 740 and clarify certain aspects of the current guidance to promote consistency among reporting entities. The pronouncement is effective for fiscal years and for interim periods within those fiscal years beginning after December 15, 2020, with early adoption permitted. We expect to adopt this guidance on the effective date and are currently evaluating the impact that adopting this new guidance will have on our business, financial condition and results of operations.

ASU 2018-14, Compensation - Changes to the Disclosure Requirements for Defined Benefit Plans

In August 2018, the FASB issued guidance related to disclosure requirements for defined benefit plans. The pronouncement eliminates, modifies and adds disclosure requirements for defined benefit plans. The pronouncement is effective for fiscal years ending after December 15, 2020, and early adoption is permitted. We expect to adopt this guidance on the effective date and do not expect adopting this new guidance will have a material impact on our business, financial condition or results of operations.

Note 2 - Segment Data

We aggregate our operating units into three reportable segments: Refining, Logistics, and Retail. Operations that are not specifically included in the reportable segments are included in Corporate, Other and Eliminations, which consist of the following:


•	our corporate activities;


•	results of certain immaterial operating segments, including our Canadian crude trading operations (as discussed in Note 9);


•	Alon's asphalt terminal operations; and


•	intercompany eliminations.

Decisions concerning the allocation of resources and assessment of operating performance are made based on this segmentation. Management measures the operating performance of each of the reportable segments based on the segment contribution margin. Segment contribution margin is defined as net revenues less cost of materials and other and operating expenses, excluding depreciation and amortization.

During the first quarter of 2020, we revised the structure of the internal financial information reviewed by management and began allocating the results of hedging activity associated with managing risks of our refineries, previously reported in corporate, other and eliminations, to our refining segment. The historical results of this hedging activity have been reclassified to conform to the current presentation. The assets and/or liabilities associated with this hedging activity have not been allocated to the refining segment.

Refining Segment

The refining segment processes crude oil and other feedstocks for the manufacture of transportation motor fuels, including various grades of gasoline, diesel fuel and aviation fuel, asphalt and other petroleum-based products that are distributed through owned and third-party product terminals. The refining segment has a combined nameplate capacity of 302,000 barrels per day ("bpd") as of March 31, 2020, including the following:


•	75,000 bpd Tyler, Texas refinery (the "Tyler refinery");


•	80,000 bpd El Dorado, Arkansas refinery (the "El Dorado refinery");


•	73,000 bpd Big Spring, Texas refinery (the "Big Spring refinery");



11 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)


•	74,000 bpd Krotz Springs, Louisiana refinery (the "Krotz Springs refinery"); and


•	a non-operating refinery located in Bakersfield, California.

The refining segment also owns and operates three biodiesel facilities involved in the production of biodiesel fuels and related activities, located in Crossett, Arkansas, Cleburne, Texas and New Albany, Mississippi (acquired in October 2019). The biodiesel industry has historically been substantially aided by federal and state tax incentives. One tax incentive program that has been significant to our renewable fuels facilities is the federal blender's tax credit (also known as the biodiesel tax credit or "BTC"). The BTC provides a $1.00 refundable tax credit per gallon of pure biodiesel to the first blender of biodiesel with petroleum-based diesel fuel. The blender's tax credit was re-enacted in December 2019 for the years 2020 through 2022 and was retroactively reinstated for 2018 and 2019.

The refining segment's petroleum-based products are marketed primarily in the south central, southwestern and western regions of the United States, and also ships and sells gasoline into wholesale markets in the southern and eastern United States. Motor fuels are sold under the Alon or Delek brand through various terminals to supply Alon or Delek branded retail sites. In addition, Alon sells motor fuels through its wholesale distribution network on an unbranded basis.

Logistics Segment

Our logistics segment owns and operates crude oil and refined products logistics and marketing assets. The logistics segment generates revenue by charging fees for gathering, transporting and storing crude oil and for marketing, distributing, transporting and storing intermediate and refined products in select regions of the southeastern United States and West Texas for our refining segment and third parties, and sales of wholesale products in the West Texas market.

Retail Segment

Our retail segment consists of 253 owned and leased convenience store sites as of March 31, 2020, located primarily in central and West Texas and New Mexico. These convenience stores typically offer various grades of gasoline and diesel primarily under the Alon or Delek brand name and food products, food service, tobacco products, non-alcoholic and alcoholic beverages, general merchandise as well as money orders to the public, primarily under the 7-Eleven and Alon brand names. Substantially all of the motor fuel sold through our retail segment is supplied by our Big Spring refinery, which is transferred to the retail segment at prices substantially determined by reference to published commodity pricing information. In November 2018, we terminated the license agreement with 7-Eleven, Inc. and the terms of such termination require the removal of all 7-Eleven branding on a store-by-store basis by the earlier of December 31, 2021 or the date upon which our last 7-Eleven store is de-identified or closed. Merchandise sales at our convenience store sites will continue to be sold under the 7-Eleven brand name until 7-Eleven branding is removed at such convenience store sites pursuant to the termination.

Significant Inter-segment Transactions

All inter-segment transactions have been eliminated in consolidation and consist primarily of the following:


•	refining segment refined product sales to the retail segment to be sold through the store locations;


•	refining segment sales of asphalt and refined product to entities included in corporate, other and eliminations;


•	logistics segment service fee revenue under service agreements with the refining segment based on the number of gallons sold and to share a portion of the margin achieved in return for providing marketing, sales and customer services;


•	logistics segment sales of wholesale finished product to our refining segment; and


•	logistics segment crude transportation, terminalling and storage fee revenue from our refining segment for the utilization of pipeline, terminal and storage assets.

Business Segment Operating Performance

The following is a summary of business segment operating performance as measured by contribution margin for the period indicated (in millions):



12 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)



	Three Months Ended March 31, 2020
(In millions)	Refining			Logistics		Retail		Corporate, Other and Eliminations			Consolidated
Net revenues (excluding inter-segment fees and revenues)	$	1,569.3		$	56.8	$	178.6	$	16.5		$	1,821.2
Inter-segment fees and revenues	158.6			106.6		—		(265.2		)	—
Operating costs and expenses:
Cost of materials and other	1,906.6			101.3		144.1		(241.4		)	1,910.6
Operating expenses (excluding depreciation and amortization presented below)	111.7			14.8		22.2		5.8			154.5
Segment contribution margin	$	(290.4	)	$	47.3	$	12.3	$	(13.1	)	(243.9		)
Depreciation and amortization	$	37.2		$	6.3	$	2.9	$	6.2		52.6
General and administrative expenses											65.7
Other operating income, net											(0.7		)
Operating loss											$	(361.5	)
Capital spending (excluding business combinations)	$	168.1		$	3.0	$	6.2	$	12.9		$	190.2



	Three Months Ended March 31, 2019
	Refining ⁽¹⁾		Logistics		Retail		Corporate, Other and Eliminations ⁽¹⁾			Consolidated
Net revenues (excluding inter-segment fees and revenues)	$	1,907.4	$	89.6	$	197.2	$	5.7		$	2,199.9
Inter-segment fees and revenues	184.6		62.9		—		(247.5		)	—
Operating costs and expenses:
Cost of materials and other	1,669.1		96.3		163.4		(229.4		)	1,699.4
Operating expenses (excluding depreciation and amortization presented below)	121.0		16.1		23.6		6.0			166.7
Segment contribution margin	$	301.9	$	40.1	$	10.2	$	(18.4	)	333.8
Depreciation and amortization	$	31.1	$	6.5	$	4.3	$	4.9		46.8
General and administrative expenses										62.2
Other operating expense, net										2.4
Operating income										$	222.4
Capital spending (excluding business combinations)	$	81.7	$	0.9	$	5.1	$	40.7		$	128.4


⁽¹⁾	The refining segment results of operations for the three months ended March 31, 2019, includes hedging gains, a component of cost of materials and other, of $7.6 million which was previously included and reported in corporate, other and eliminations.

Other Segment Information

Total assets by segment were as follows as of March 31, 2020:



	Refining			Logistics		Retail		Corporate, Other and Eliminations			Consolidated
Total assets	$	5,949.5		$	946.3	$	312.1	$	(1,114.5	)	$	6,093.4
Less:
Inter-segment notes receivable	(1,584.3		)	—		—		1,584.3			—
Inter-segment right of use lease assets	(418.1		)	—		—		418.1			—
Total assets, excluding inter-segment notes receivable and right of use assets	$	3,947.1		$	946.3	$	312.1	$	887.9		$	6,093.4



13 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)

Property, plant and equipment and accumulated depreciation as of March 31, 2020 and depreciation expense by reporting segment for the three months ended March 31, 2020 are as follows (in millions):



	Refining			Logistics			Retail			Corporate, Other and Eliminations			Consolidated
Property, plant and equipment	$	2,601.8		$	665.7		$	162.7		$	109.6		$	3,539.8
Less: Accumulated depreciation	(684.3		)	(186.2		)	(39.4		)	(65.5		)	(975.4		)
Property, plant and equipment, net	$	1,917.5		$	479.5		$	123.3		$	44.1		$	2,564.4
Depreciation expense for the three months ended March 31, 2020	$	35.6		$	6.3		$	2.7		$	6.2		$	50.8

In accordance with Accounting Standards Codification ("ASC") 360, Property, Plant and Equipment ("ASC 360"), Delek evaluates the realizability of property, plant and equipment as events occur that might indicate potential impairment. There were no indicators of impairment related to our property, plant and equipment as of March 31, 2020 (see Note 1 for further discussion on the impact of COVID-19 Pandemic and OPEC Production Disputes).

Note 3 - Earnings (Loss) Per Share

Basic earnings per share (or "EPS") is computed by dividing net income (loss) by the weighted average common shares outstanding. Diluted earnings per share is computed by dividing net income (loss), as adjusted for changes to income that would result from the assumed settlement of the dilutive equity instruments included in diluted weighted average common shares outstanding, by the diluted weighted average common shares outstanding. For all periods presented, we have outstanding various equity-based compensation awards that are considered in our diluted EPS calculation (when to do so would be dilutive), and is inclusive of awards disclosed in Note 15 to these condensed consolidated financial statements. For those instruments that are indexed to our common stock, they are generally dilutive when the market price of the underlying indexed share of common stock is in excess of the exercise price.

The following table sets forth the computation of basic and diluted earnings per share.



	Three Months Ended
	March 31,
	2020			2019
Numerator:
Numerator for EPS
Net (loss) income	$	(307.0	)	$	154.4
Less: Income attributed to non-controlling interest	7.4			5.1
Numerator for basic and diluted EPS - attributable to Delek	$	(314.4	)	$	149.3
Denominator:
Weighted average common shares outstanding (denominator for basic EPS)	73,437,730			77,793,278
Dilutive effect of stock-based awards	—			653,412
Weighted average common shares outstanding, assuming dilution (denominator for diluted EPS)	73,437,730			78,446,690
EPS:
Basic (loss) income per share	$	(4.28	)	$	1.92
Diluted (loss) income per share	$	(4.28	)	$	1.90
The following equity instruments were excluded from the diluted weighted average common shares outstanding because their effect would be antidilutive:
Antidilutive stock-based compensation (because average share price is less than exercise price)	3,684,935			2,173,510
Antidilutive due to loss	433,488			—
Total antidilutive stock-based compensation	4,118,423			2,173,510



14 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 4 - Delek Logistics

Delek Logistics is a publicly traded limited partnership that was formed by Delek in 2012 to own, operate, acquire and construct crude oil and refined products logistics and marketing assets. A substantial majority of Delek Logistics' assets are integral to Delek’s refining and marketing operations. As of March 31, 2020, we owned a 69.1% limited partner interest in Delek Logistics, consisting of 20,745,868 common units, and a 94.6% interest in Delek Logistics GP, LLC, which owns the entire 2.0% general partner interest, consisting of 600,523 general partner units, in Delek Logistics and all of the incentive distribution rights.

The limited partner interests in Delek Logistics not owned by us are reflected in net income attributable to non-controlling interest in the accompanying condensed consolidated statements of income and in non-controlling interest in subsidiaries in the accompanying condensed consolidated balance sheets.

We have agreements with Delek Logistics that, among other things, establish fees for certain administrative and operational services provided by us and our subsidiaries to Delek Logistics, provide certain indemnification obligations and establish terms for fee-based commercial logistics and marketing services provided by Delek Logistics and its subsidiaries to us. The revenues and expenses associated with these agreements are eliminated in consolidation.

Delek Logistics is a variable interest entity, as defined under GAAP, and is consolidated into our condensed consolidated financial statements, representing our logistics segment. The assets of Delek Logistics can only be used to settle its own obligations and its creditors have no recourse to our assets. Exclusive of intercompany balances and the marketing agreement intangible asset between Delek Logistics and Delek which are eliminated in consolidation, the Delek Logistics condensed consolidated balance sheets as presented below are included in the condensed consolidated balance sheets of Delek (unaudited, in millions).



	March 31, 2020			December 31, 2019
	March 31, 2020			December 31, 2019
ASSETS
Cash and cash equivalents	$	4.2		$	5.5
Accounts receivable	12.4			13.2
Inventory	5.1			12.6
Other current assets	0.9			2.3
Property, plant and equipment, net	479.5			295.0
Equity method investments	255.7			247.0
Operating lease right-of-use assets	3.5			3.7
Goodwill	12.2			12.2
Intangible assets, net	166.5			146.6
Other non-current assets	6.2			6.3
Total assets	$	946.2		$	744.4
LIABILITIES AND DEFICIT
Accounts payable	$	4.4		$	12.5
Accounts payable to related parties	2.1			8.9
Current portion of operating lease liabilities	1.5			1.4
Accrued expenses and other current liabilities	14.6			12.2
Long-term debt	940.0			833.1
Asset retirement obligations	5.7			5.6
Deferred tax liabilities	1.0			0.2
Operating lease liabilities, net of current portion	2.0			2.3
Other non-current liabilities	19.3			19.3
Deficit	(44.4		)	(151.1		)
Total liabilities and deficit	$	946.2		$	744.4

Effective March 31, 2020, Delek Logistics, through its wholly-owned subsidiary DKL Permian Gathering, LLC, acquired the Big Spring Gathering System, located in Howard, Borden and Martin Counties, Texas, from Delek, which included the execution of related commercial agreements. In connection with the closing of the transaction, Delek, Delek Logistics and various of their respective subsidiaries entered into a Throughput and Deficiency Agreement (the “T&D Agreement”). Under the T&D Agreement, Delek Logistics will operate and maintain the Big Spring Gathering System connecting our interests in and to certain crude oil production with the Delek Logistics' Big Spring, Texas terminal and provide gathering, transportation and other related services. The total consideration was subject to certain post-closing adjustments and was comprised of $100.0 million in cash and 5.0 million common units representing limited partner interest in Delek Logistics. The cash component of this dropdown was financed with borrowings on the DKL Credit Facility (as defined in Note 8). Prior periods have not been recast in our



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Notes to Condensed Consolidated Financial Statements (Unaudited)

Segment Data Note 2, as these assets did not constitute a business in accordance with ASU 2017-01, Clarifying the Definition of a Business, and the transaction was accounted for as an acquisition of assets between entities under common control.

Additionally, in March 2020, we purchased 451,822 of Delek Logistics limited partner units from an investor pursuant to a Common Unit Purchase Agreement between Delek Marketing & Supply, LLC and such investor. The purchase price of the units amounted to approximately $5.0 million. As a result of the transaction, our ownership in Delek Logistics' outstanding common limited partner units increased to 64.5% from 62.6%. Our ownership in Delek Logistics' common limited partner units was further increased to 70.5% as a result of the issuance of 5.0 million common units in connection with the Big Spring Gathering Assets Acquisition described above.

Note 5 - Equity Method Investments

On July 30, 2019, we, through our wholly-owned direct subsidiary Delek US Energy, Inc. ("Delek Energy" or "Delek Member"), entered into a limited liability company agreement (the “LLCA”) and related agreements with multiple joint venture members of Wink to Webster Pipeline LLC (“WWP”). Pursuant to the LLCA, Delek Energy acquired a 15% ownership interest in WWP. WWP intends to construct and operate a crude oil pipeline system from Wink, Texas to Webster, Texas along with certain pipelines from Webster, Texas to other destinations in the Gulf Coast area. Pursuant to the LLCA, Delek Energy will be required to contribute its percentage interest of the applicable construction costs (including certain costs previously incurred by WWP) and it is anticipated that Delek Energy’s capital contributions will total approximately $340 million to $380 million over the course of construction (expected to be two to three years). During the three months ended March 31, 2020, we made capital contributions totaling $18.9 million.

On February 21, 2020, we, through our wholly-owned direct subsidiary Delek Energy, entered into the W2W Holdings LLC ("HoldCo") Agreement with MPLX Operations LLC ("MPLX") (collectively, with its wholly-owned subsidiaries, the "WWP Project Financing Joint Venture" or the "WWP Project Financing JV"). The WWP Project Financing JV was created for the specific purpose of obtaining financing, through its wholly-owned subsidiary, W2W Finance LLC, to fund the majority of our combined capital calls resulting from and occurring during the construction period of the pipeline system under the WWP Joint Venture, and to service that debt. In connection with the arrangement, both Delek Energy and MPLX contributed their respective 15% ownership interests to the WWP Project Financing JV as collateral for and in service of the related project financing. Accordingly, distributions received from WWP through the WWP Project Financing JV will first be applied in service of the related project financing debt, with excess distributions being made to the members of the WWP Project Financing JV as provided for in the W2W Holdings LLC Agreement and as allowed under the project financing debt. The obligations of the members under the W2W Holdings LLC Agreement are guaranteed by the parents of the members of the WWP Project Financing JV.

The Company evaluated Delek Member's investment in HoldCo and determined that HoldCo is a variable interest entity. The Company determined it is not the primary beneficiary since it does not have the power to direct activities that most significantly impact HoldCo. The Company does not hold a controlling financial interest in HoldCo because no single party has the power to direct the activities that most significantly impact HoldCo’s economic performance since power to make the decisions about the significant activities is shared equally with MPLX and all significant decisions require unanimous consent of the Board of Directors. The Company accounts for its investment in HoldCo using the equity method of accounting due to its significant influence with its 50% membership interest.

The Company's maximum exposure to any losses incurred by HoldCo is limited to its investment. As of March 31, 2020, except for the guarantee of member obligations under the W2W Holdings LLC Agreement, the Company does not have other existing guarantees with or to HoldCo, or any third-party work contracted with it.

As of March 31, 2020 and December 31, 2019, Delek's investment balance in WWP Project Financing Joint Venture totaled $73.9 million and $125.3 million, respectively. We received distributions of $69.3 million from WWP Project Financing Joint Venture to return excess contributions made. In addition, we recognized $1.1 million loss on the investment for the three months ended March 31, 2020. This investment is accounted for using the equity method and is included as part of total assets in corporate, other and eliminations in our segment disclosure.

Red River Pipeline Company LLC ("Red River")

In May 2019, Delek Logistics, through its wholly owned indirect subsidiary DKL Pipeline, LLC (“DKL Pipeline”), entered into a Contribution and Subscription Agreement (the “Contribution Agreement”) with Plains Pipeline, L.P. (“Plains”) and Red River Pipeline Company LLC (“Red River”). Pursuant to the Contribution Agreement, DKL Pipeline contributed $124.7 million, substantially all of which was financed under the Delek Logistics Credit Facility (as defined in Note 8), to Red River in exchange for a 33% membership interest in Red River and DKL Pipeline’s admission as a member of Red River (the "Red River Pipeline Joint Venture"). Red River owns a 16-inch crude oil pipeline running from Cushing, Oklahoma to Longview, Texas, with an expansion project planned to increase the pipeline capacity, which is expected to be completed during the first half of 2020. Delek Logistics contributed an additional $3.5 million related to such expansion project in May 2019. As of March 31, 2020 and December 31, 2019, Delek's investment balance in Red River totaled $140.9 million and $131.0 million, respectively, and we recognized income on the investment totaling $1.8 million for the three months ended March 31, 2020. This investment is accounted for using the equity method and is included as part of total assets in our logistics segment.

Other Investments



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Notes to Condensed Consolidated Financial Statements (Unaudited)

In addition to Red River, Delek Logistics has two joint ventures that own and operate logistics assets, and which serve third parties and subsidiaries of Delek. As of March 31, 2020 and December 31, 2019, Delek Logistics' investment balances in these joint ventures totaled $114.9 million and $116.0 million, respectively, and were accounted for using the equity method.

Delek Renewables, LLC, a wholly-owned subsidiary of Delek, has a joint venture that owns, operates and maintains a terminal consisting of an ethanol unit train facility with an ethanol tank in North Little Rock, Arkansas. As of March 31, 2020 and December 31, 2019, Delek Renewables, LLC's investment balance in this joint venture was $4.5 million and $4.3 million, respectively, and was accounted for using the equity method. The investment in this joint venture is reflected in the refining segment.

We have a 50% interest in a joint venture that owns an asphalt terminal located in Brownwood, Texas. As of March 31, 2020 and December 31, 2019, Delek's investment balance in this joint venture was $31.1 million and $30.7 million, respectively. This investment is accounted for using the equity method and is included as part of total assets in corporate, other and eliminations in our segment disclosure.

Note 6 - Inventory

Crude oil, work in process, refined products, blendstocks and asphalt inventory for all of our operations, excluding the Tyler refinery and merchandise inventory in our retail segment, are stated at the lower of cost determined using the first-in, first-out (“FIFO”) basis or net realizable value. Cost of all inventory at the Tyler refinery is determined using the last-in, first-out ("LIFO") inventory valuation method and inventory is stated at the lower of cost or market. Retail merchandise inventory consists of cigarettes, beer, convenience merchandise and food service merchandise and is stated at estimated cost as determined by the retail inventory method.

Carrying value of inventories consisted of the following (in millions):



	March 31, 2020		December 31, 2019
Refinery raw materials and supplies	$	179.6	$	400.4
Refinery work in process	58.7		109.1
Refinery finished goods	202.5		397.5
Retail fuel	4.7		7.3
Retail merchandise	22.5		19.8
Logistics refined products	5.1		12.6
Total inventories	$	473.1	$	946.7

At March 31, 2020, we recorded a pre-tax inventory valuation reserve of $282.5 million, $149.6 million of which related to LIFO inventory, due to a market price decline below our cost of certain inventory products. At December 31, 2019, we recorded a pre-tax inventory valuation reserve of $1.7 million, $1.2 million of which related to LIFO inventory, which reversed in the first quarter of 2020 due to the sale of inventory quantities that gave rise to the December 31, 2019 reserve. We recognized a net (increase) reduction in cost of materials and other in the accompanying condensed consolidated statements of income related to the change in pre-tax inventory valuation of $(280.8) million and $52.1 million for the three months ended March 31, 2020 and 2019, respectively.

Note 7 - Crude Oil Supply and Inventory Purchase Agreement

Delek has Supply and Offtake Agreements with J. Aron & Company ("J. Aron") in connection with its El Dorado, Big Spring and Krotz Springs refineries (collectively, the "Supply and Offtake Agreements"). Pursuant to the Supply and Offtake Agreements, (i) J. Aron agrees to sell to us, and we agree to buy from J. Aron, at market prices, crude oil for processing at these refineries and (ii) we agree to sell, and J. Aron agrees to buy, at market prices, certain refined products produced at these refineries. The Supply and Offtake Agreements also provide for the lease to J. Aron of crude oil and refined product storage facilities, and the identification of prospective purchasers of refined products on J. Aron’s behalf. At the inception of the Supply and Offtake Agreements, we transferred title to a certain number of barrels of crude and other inventories to J. Aron (the "Step-In"), and the Supply and Offtake Agreements require the repurchase of remaining inventory (including certain "Baseline Volumes") at the termination of those Agreements (the "Step-Out"). The Supply and Offtake Agreements are accounted for as inventory financing arrangements under the fair value election provided by ASC 815 Derivatives and Hedging ("ASC 815") and ASC 825, Financial Instruments ("ASC 825").



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Barrels subject to the Supply and Offtake Agreements are as follows:



(in millions)	El Dorado	Big Spring	Krotz Springs
Baseline Volumes pursuant to the respective Supply and Offtake Agreements	2.0	0.8	1.3
Barrels of inventory consigned under the respective Supply and Offtake Agreements as of March 31, 2020 ⁽¹⁾	3.5	1.8	1.5
Barrels of inventory consigned under the respective Supply and Offtake Agreements as of December 31, 2019 ⁽¹⁾	3.5	2.0	1.7


⁽¹⁾	Includes Baseline Volumes plus/minus over/short quantities.

The Supply and Offtake Agreements have certain termination provisions, which may include requirements to negotiate with third parties for the assignment to us of certain contracts, commitments and arrangements, including procurement contracts, commitments for the sale of product, and pipeline, terminalling, storage and shipping arrangements.

The Supply and Offtake Agreements were amended in December 2018 for Big Spring and in January 2019 for El Dorado and Krotz Springs so that the Baseline Step-Out Liabilities, as defined below, were based upon a fixed price. As a result, we recorded gains on the change in fair value resulting from the modification in cost of materials and other in the periods in which the amendments occurred, including a gain of $7.6 million which was recognized in the first quarter of 2019. As a result of these amendments, the changes in fair value of the Baseline Step-Out Liabilities were recorded in interest expense.

In January 2020, we amended and restated our three Supply and Offtake Agreements so that the repurchase of Baseline Volumes at the end of the Supply and Offtake Agreement term (representing the "Baseline Step-Out Liability" or, collectively, the "Baseline Step-Out Liabilities") would be based on market-indexed prices subject to commodity price risk. As a result of the amendment, such Baseline Step-Out Liabilities will continue to be recorded at fair value under the fair value election provided by ASC 815 and ASC 825, where the fair value will now reflect changes in commodity price risk rather than interest rate risk with such changes in fair value being recorded in cost of materials and other. We recognized a loss in the first quarter of 2020 of $1.5 million on the change in fair value resulting from the modification.

The Baseline Step-Out Liabilities are reflected as non-current liabilities on our consolidated balance sheet to the extent that they are not contractually due within twelve months. Monthly activity resulting in over and short volumes continue to be valued using market-indexed pricing, and are included in current liabilities (or receivables) on our consolidated balance sheet.

Net balances payable (receivable) under the Supply and Offtake Agreements were as follows as of the balance sheet dates:



(in millions)	El Dorado		Big Spring		Krotz Springs			Total
Balances as of March 31, 2020:
Baseline Step-Out Liability	$	78.7	$	41.7	$	59.1		$	179.5
Revolving over/short product financing liability	58.9		30.3		8.7			97.9
Total Obligations Under Supply and Offtake Agreements	137.6		72.0		67.8			277.4
Less: Current portion	58.9		30.3		8.7			97.9
Obligations Under Supply and Offtake Agreements - Noncurrent portion	$	78.7	$	41.7	$	59.1		$	179.5
Other current payable (receivable) for monthly activity true-up	$	11.4	$	10.7	$	(18.2	)	$	3.9



(in millions)	El Dorado			Big Spring			Krotz Springs			Total
Balances as of December 31, 2019:
Baseline Step-Out Liability	$	125.5		$	57.2		$	87.6		$	270.3
Revolving over/short product financing liability	93.0			73.5			40.5			207.0
Total Obligations Under Supply and Offtake Agreements	218.5			130.7			128.1			477.3
Less: Current portion	218.5			73.5			40.5			332.5
Obligations Under Supply and Offtake Agreements - Noncurrent portion	$	—		$	57.2		$	87.6		$	144.8
Other current receivable for monthly activity true-up	$	(16.4	)	$	(3.1	)	$	(3.5	)	$	(23.0	)



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The El Dorado Supply and Offtake Agreement has a maturity date of April 30, 2020. The Big Spring and Krotz Springs Supply and Offtake Agreements expire in May 2021, except that J. Aron or Delek may elect to terminate in May 2020 on prior notice, as defined in those Agreements. The Big Spring and Krotz Springs Supply and Offtake Agreements were amended in November 2019 to require such notice prior to February 2020, and again in January, February and March 2020 to ultimately require such notice in April 2020. Subsequent to March 31, 2020, in April 2020, we amended and restated our three Supply and Offtake Agreements to renew and extend the terms to December 30, 2022, with J. Aron having the sole discretion to further extend to May 30, 2025. As part of this amendment, there were changes to the underlying market index, annual fee and the crude purchase fee.

The Supply and Offtake Agreements require payments of fees which are factored into the interest rate yield under the fair value accounting model. Recurring cash fees paid during the periods presented were as follows:



(in millions)	El Dorado		Big Spring		Krotz Springs		Total
Recurring cash fees paid during the three months ended March 31,2020	$	3.2	$	1.0	$	1.0	$	5.2
Recurring cash fees paid during the three months ended March 31, 2019	$	2.4	$	1.4	$	2.3	$	6.1

Interest expense recognized under the Supply and Offtake Agreements includes the yield attributable to recurring cash fees, one-time cash fees (e.g., in connection with amendments), as well as other changes in fair value, which may increase or decrease interest expense. Total interest expense incurred during the periods presented was as follows:



(in millions)	El Dorado		Big Spring			Krotz Springs		Total
Interest expense for the three months ended March 31, 2020	$	3.6	$	4.1		$	1.4	$	9.1
Interest expense for the three months ended March 31, 2019	$	3.1	$	(0.1	)	$	3.0	$	6.0

Reflected in interest expense are losses totaling $3.9 million and gains totaling $5.1 million for the three months March 31, 2020 and 2019, respectively, related to the changes in fair value in the Baseline Step-Out Liabilities component of Obligations Under Supply and Offtake Agreements.

We maintained letters of credit under the Supply and Offtake Agreements as follows:



(in millions)	El Dorado		Big Spring and Krotz Springs
Letters of credit outstanding as of March 31, 2020	$	150.0	$	10.0
Letters of credit outstanding as of December 31. 2019	$	180.0	$	44.0

In connection with the Krotz Springs Supply and Offtake Agreement, prior to September 30, 2019, we granted a security interest to J. Aron in certain assets (including all of its accounts receivable and inventory) to secure our obligations to J. Aron. Pursuant to an amendment to the security agreement effective September 30, 2019, no cash, deposit accounts or accounts receivable constitute collateral.



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Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 8 - Long-Term Obligations and Notes Payable

Outstanding borrowings, net of unamortized debt discounts and certain deferred financing costs, under Delek’s existing debt instruments are as follows (in millions):



	March 31, 2020		December 31, 2019
Revolving Credit Facility	$	100.0	$	30.0
Term LoanCredit Facility ⁽¹⁾	1,067.5		1,069.5
Delek Logistics Credit Facility	695.0		588.4
Hapoalim Term Loan ⁽²⁾	39.4		39.5
Delek Logistics Notes ⁽³⁾	245.0		244.7
Reliant Bank Revolver	50.0		50.0
Promissory Notes	20.0		45.0
	2,216.9		2,067.1
Less: Current portion of long-term debt and notes payable	31.4		36.4
	$	2,185.5	$	2,030.7


⁽¹⁾	Net of deferred financing costs of $3.4 million and $3.5 million and debt discount of $11.9 million and $12.5 million at March 31, 2020 and December 31, 2019, respectively.


⁽²⁾	Net deferred financing costs of $0.3 million and $0.3 million and debt discount of $0.2 million and $0.2 million at March 31, 2020 and December 31, 2019, respectively.


⁽³⁾	Net of deferred financing costs of $3.8 million and $4.0 million and debt discount of $1.2 million and $1.3 million at March 31, 2020 and December 31, 2019, respectively.

Delek Revolver and Term Loan

On March 30, 2018 (the "Closing Date"), Delek entered into (i) a new term loan credit agreement with Wells Fargo Bank, National Association, as administrative agent (the "Term Administrative Agent"), Delek, as borrower, certain subsidiaries of Delek, as guarantors, and the lenders from time to time party thereto, providing for a senior secured term loan facility in an amount of $700.0 million (the "Term Loan Credit Facility") and (ii) a second amended and restated credit agreement with Wells Fargo Bank, National Association, as administrative agent (the "Revolver Administrative Agent"), Delek, as borrower, certain subsidiaries of Delek, as guarantors, and the other lenders party thereto, providing for a senior secured asset-based revolving credit facility with commitments of $1.0 billion (the "Revolving Credit Facility" and, together with the Term Loan Credit Facility, the "New Credit Facilities").

The Revolving Credit Facility permits borrowings in Canadian dollars of up to $50.0 million. The Revolving Credit Facility also permits the issuance of letters of credit of up to $400.0 million, including letters of credit denominated in Canadian dollars of up to $10.0 million. Delek may designate restricted subsidiaries as additional borrowers under the Revolving Credit Facility.

The Term Loan Credit Facility was drawn in full for $700.0 million on the Closing Date at an original issue discount of 0.50%. Proceeds under the Term Loan Credit Facility, as well as proceeds of approximately $300.0 million in borrowings under the Revolving Credit Facility on the Closing Date, were used to repay certain indebtedness of Delek and its subsidiaries (the “Refinancing”), as well as certain fees, costs and expenses in connection with the closing of the New Credit Facilities, with any remaining proceeds held in cash. Proceeds of future borrowings under the Revolving Credit Facility will be used for working capital and general corporate purposes of Delek and its subsidiaries.

On May 22, 2019 (the "First Incremental Effective Date"), we amended the Term Loan Credit Facility agreement pursuant to the terms of the First Incremental Amendment to Term Loan Credit Agreement (the "Incremental Amendment"). Pursuant to the Incremental Amendment, the Company borrowed $250.0 million in aggregate principal amount of incremental term loans (the “Incremental Term Loans”) at an original issue discount of 0.75%, increasing the aggregate principal amount of loans outstanding under the Term Loan Credit Facility on the First Incremental Effective Date to $943.0 million. On November 12, 2019 (the "Second Incremental Effective Date"), we amended the Term Loan Credit facility agreement pursuant to the terms of the Second Incremental Amendment to the Term Loan Credit Agreement (the "Second Incremental Amendment") and borrowed $150.0 million in aggregate principal amount of incremental term loans (the "Incremental Loans") at an original issue discount of 1.21%, increasing the aggregate principal amount of loans outstanding under the Term Loan Credit Facility on the Second Incremental Effective Date to $1,088.3 million.The terms of the Incremental Term Loans and Incremental Loans are substantially identical to the terms applicable to the initial term loans under the Term Loan Credit Facility borrowed in March 2018. There are no restrictions on the Company's use of the proceeds of the Incremental Term Loans and Incremental Term Loans. The proceeds for the Incremental Term Loans may be used for (i) reducing utilizations under the Revolving Credit Facility, (ii) general corporate purposes and (iii) paying transaction fees and expenses associated with the Incremental Amendment. The proceeds for the Incremental Loans may be used for (i) for general corporate purposes (including growth capital expenditures) and (ii) to pay fees and expenses associated with the Second Incremental Amendment.

Interest and Unused Line Fees

The interest rates applicable to borrowings under the Term Loan Credit Facility and the Revolving Credit Facility are based on a fluctuating rate of interest measured by reference to either, at Delek’s option, (i) a base rate, plus an applicable margin, or (ii) a reserve-adjusted LIBOR,



20 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)

plus an applicable margin (or, in the case of Revolving Credit Facility borrowings denominated in Canadian dollars, the Canadian dollar bankers' acceptances rate ("CDOR")). The initial applicable margin for all Term Loan Credit Facility borrowings was 1.50% per annum with respect to base rate borrowings and 2.50% per annum with respect to LIBOR borrowings.

On October 26, 2018, Delek entered into an amendment to the Term Loan Credit Facility (the “First Amendment”) to reduce the margin on certain borrowings under the Term Loan Credit Facility and incorporate certain other changes. The First Amendment decreased the applicable margins for borrowings under (i) Base Rate Loans from 1.50% to 1.25% and (ii) LIBOR Rate Loans from 2.50% to 2.25%, as such terms are defined in the Term Loan Credit Facility.

The initial applicable margin for Revolving Credit Facility borrowings was 0.25% per annum with respect to base rate borrowings and 1.25% per annum with respect to LIBOR and CDOR borrowings, and the applicable margin for such borrowings after September 30, 2018 is based on Delek’s excess availability as determined by reference to a borrowing base, ranging from 0.25% to 0.75% per annum with respect to base rate borrowings and from 1.25% to 1.75% per annum with respect to LIBOR and CDOR borrowings.

In addition, the Revolving Credit Facility requires Delek to pay an unused line fee on the average amount of unused commitments thereunder in each quarter, which the fee is at a rate of 0.25% or 0.375% per annum, depending on average commitment usage for such quarter. As of March 31, 2020, the unused line fee was 0.375% per annum.

Maturity and Repayments

The Revolving Credit Facility will mature and the commitments thereunder will terminate on March 30, 2023. The Term Loan Credit Facility matures on March 30, 2025 and requires scheduled quarterly principal payments on the last business day of the applicable quarter. Pursuant to the Incremental Amendment, quarterly payments increased from $1.75 million to $2.38 million. Pursuant to the Second Incremental Amendment, the quarterly payments increased to $2.75 million commencing with December 31, 2019. Additionally, the Term Loan Credit Facility requires prepayments by Delek with the net cash proceeds from certain debt incurrences, asset dispositions and insurance or condemnation events with respect to Delek’s assets, subject to certain exceptions, thresholds and reinvestment rights. The Term Loan Credit Facility also requires annual prepayments with a variable percentage of Delek’s excess cash flow, ranging from 50.0% to 0% depending on Delek’s consolidated fiscal year end secured net leverage ratio. Delek may also make voluntarily prepayments under the Term Loan Credit Facility at any time, subject to a prepayment premium of 1.0% in connection with certain customary repricing events that may occur within six months after the Second Incremental Effective Date, with no such premium applied after six months.

Guarantee and Security

The obligations of the borrowers under the New Credit Facilities are guaranteed by Delek and each of its direct and indirect, existing and future, wholly-owned domestic subsidiaries, subject to customary exceptions and limitations, and excluding Delek Logistics Partners, LP, Delek Logistics GP, LLC, and each subsidiary of the foregoing (collectively, the "MLP Subsidiaries"). Borrowings under the New Credit Facilities are also guaranteed by DK Canada Energy ULC, a British Columbia unlimited liability company and a wholly-owned restricted subsidiary of Delek.

The Revolving Credit Facility is secured by a first priority lien over substantially all of Delek’s and each guarantor's receivables, inventory, renewable identification numbers, instruments, intercompany loan receivables, deposit and securities accounts and related books and records and certain other personal property, subject to certain customary exceptions (the "Revolving Priority Collateral"), and a second priority lien over substantially all of Delek's and each guarantor's other assets, including all of the equity interests of any subsidiary held by Delek or any guarantor (other than equity interests in certain MLP Subsidiaries) subject to certain customary exceptions, but excluding real property (such real property and equity interests, the "Term Priority Collateral").

The Term Loan Credit Facility is secured by a first priority lien on the Term Priority Collateral and a second priority lien on the Revolving Priority Collateral, all in accordance with an intercreditor agreement between the Term Administrative Agent and the Revolver Administrative Agent and acknowledged by Delek and the subsidiary guarantors. Certain excluded assets are not included in the Term Priority Collateral and the Revolving Priority Collateral.

Additional Information

At March 31, 2020, the weighted average borrowing rate under the Revolving Credit Facility was 3.50% and was comprised entirely of a base rate borrowing, and the principal amount outstanding thereunder was $100.0 million. Additionally, there were letters of credit issued of approximately $193.6 million as of March 31, 2020 under the Revolving Credit Facility. Unused credit commitments under the Revolving Credit Facility, as of March 31, 2020, were approximately $681.7 million.

At March 31, 2020, the weighted average borrowing rate under the Term Loan Credit Facility was approximately 3.24% comprised entirely of a LIBOR borrowing, and the principal amount outstanding thereunder was $1,082.8 million. As of March 31, 2020, the effective interest rate related to the Term Loan Credit Facility was 3.55%.

Delek Hapoalim Term Loan

On December 31, 2019, Delek entered into a term loan credit and guaranty agreement (the "Agreement") with Bank Hapoalim B.M. ("BHI")



21 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)

as the administrative agent. Pursuant to the Agreement, on December 31, 2019, Delek borrowed $40.0 million (the "BHI Term Loan"). The interest rate under the Agreement is equal to LIBOR plus a margin of 3.00%. The Agreement has a current maturity of December 31, 2022 and requires quarterly loan amortization payments of $0.1 million, commencing March 31, 2020. Proceeds may be used for general purposes. The Agreement has an accordion feature that allows increasing the term loan to maximum size of $100.0 million, subject to receiving increased or new commitments from lenders and the satisfaction of certain other conditions precedent. Any such additional borrowings must be completed by December 31, 2021.

At March 31, 2020, the weighted average borrowing rate under the term loan was approximately 3.99% comprised entirely of a LIBOR borrowing and the principal amount outstanding thereunder was $39.9 million. As of March 31, 2020, the effective interest rate related to the BHI Term Loan was 4.43%.

Delek Logistics Credit Facility

Prior to its amendment and restatement on September 28, 2018, Delek Logistics had a $700.0 million senior secured revolving credit agreement with Fifth Third Bank ("Fifth Third"), as administrative agent, and a syndicate of lenders (the "2014 Facility") with a $100.0 million accordion feature, bearing interest at either a U.S. dollar prime rate, Canadian dollar prime rate, LIBOR, or a CDOR rate, in each case plus applicable margins, at the election of the borrowers and as a function of draw down currency. On September 28, 2018, Delek Logistics and all of its subsidiaries entered into a third amended and restated senior secured revolving credit agreement with Fifth Third as administrative agent and a syndicate of lenders (hereafter, the "Delek Logistics Credit Facility"). Under the terms of the Delek Logistics Credit Facility, among other things, the lender commitments were increased from $700.0 million to $850.0 million. The Delek Logistics Credit Facility also contains an accordion feature whereby Delek Logistics can increase the size of the credit facility to an aggregate of $1.0 billion, subject to receiving increased or new commitments from lenders and the satisfaction of certain other conditions precedent.

The obligations under the Delek Logistics Credit Facility remain secured by first priority liens on substantially all of Delek Logistics' tangible and intangible assets. Additionally, a subsidiary of Delek provided a limited guaranty of Delek Logistics' obligations under the Delek Logistics Credit Facility. The guaranty was (i) limited to an amount equal to the principal amount, plus unpaid and accrued interest, of a promissory note made by Delek in favor of the subsidiary guarantor (the "Holdings Note") and (ii) secured by the subsidiary guarantor's pledge of the Holdings Note to the Delek Logistics Credit Facility lenders. Effective March 30, 2020, the limited guaranty and pledge of the Holdings Note was terminated pursuant to a guaranty and pledge release approved by the required lenders under the Delek Logistics Credit Facility.

The Delek Logistics Credit Facility has a maturity date of September 28, 2023. Borrowings under the Delek Logistics Credit Facility bear interest at either a U.S. dollar prime rate, Canadian dollar prime rate, LIBOR, or a CDOR rate, in each case plus applicable margins, at the election of the borrowers and as a function of draw down currency. The applicable margin in each case and the fee payable for the unused revolving commitments vary based upon Delek Logistics' most recent total leverage ratio calculation delivered to the lenders, as called for and defined under the terms of the Delek Logistics Credit Facility. At March 31, 2020, the weighted average borrowing rate was approximately 3.70%. Additionally, the Delek Logistics Credit Facility requires Delek Logistics to pay a leverage ratio dependent quarterly fee on the average unused revolving commitment. As of March 31, 2020, this fee was 0.40% per year.

As of March 31, 2020, Delek Logistics had $695.0 million of outstanding borrowings under the Delek Logistics Credit Facility, with no letters of credit in place. Unused credit commitments under the Delek Logistics Credit Facility, as of March 31, 2020, were $155.0 million.

Delek Logistics Notes

On May 23, 2017, Delek Logistics and Delek Logistics Finance Corp. (collectively, the “Issuers”) issued $250.0 million in aggregate principal amount of 6.75% senior notes due 2025 (the “Delek Logistics Notes”) at a discount. The Delek Logistics Notes are general unsecured senior obligations of the Issuers. The Delek Logistics Notes are unconditionally guaranteed jointly and severally on a senior unsecured basis by Delek Logistics' existing subsidiaries (other than Delek Logistics Finance Corp., the "Guarantors") and will be unconditionally guaranteed on the same basis by certain of Delek Logistics' future subsidiaries. The Delek Logistics Notes rank equal in right of payment with all existing and future senior indebtedness of the Issuers, and senior in right of payment to any future subordinated indebtedness of the Issuers. Interest on the Delek Logistics Notes is payable semi-annually in arrears on each May 15 and November 15, commencing November 15, 2017.

At any time prior to May 15, 2020, the Issuers may redeem up to 35% of the aggregate principal amount of the Delek Logistics Notes with the net cash proceeds of one or more equity offerings by Delek Logistics at a redemption price of 106.750% of the redeemed principal amount, plus accrued and unpaid interest, if any, subject to certain conditions and limitations. Prior to May 15, 2020, the Issuers may redeem all or part of the Delek Logistics Notes at a redemption price of the principal amount plus accrued and unpaid interest, if any, plus a "make whole" premium, subject to certain conditions and limitations. In addition, beginning on May 15, 2020, the Issuers may, subject to certain conditions and limitations, redeem all or part of the Delek Logistics Notes, at a redemption price of 105.063% of the redeemed principal for the twelve-month period beginning on May 15, 2020, 103.375% for the twelve-month period beginning on May 15, 2021, 101.688% for the twelve-month period beginning on May 15, 2022 and 100.00% beginning on May 15, 2023 and thereafter, plus accrued and unpaid interest, if any.

In the event of a change of control, accompanied or followed by a ratings downgrade within a certain period of time, subject to certain conditions and limitations, the Issuers will be obligated to make an offer for the purchase of the Delek Logistics Notes from holders at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest.



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Notes to Condensed Consolidated Financial Statements (Unaudited)

In May 2018, the Delek Logistics Notes were exchanged for new notes with terms substantially identical in all material respects with the 2025 Notes except the new notes do not contain terms with respect to transfer restrictions.

As of March 31, 2020, we had $250.0 million in outstanding principal amount under the Delek Logistics Notes. As of March 31, 2020, the effective interest rate related to the Delek Logistics Notes was 7.23%.

Reliant Bank Revolver

Delek has an unsecured revolving credit agreement with Reliant Bank (the "Reliant Bank Revolver"). On December 16, 2019, we amended the Reliant Bank Revolver to extend the maturity date from June 28, 2020 to June 30, 2022, reduce the fixed interest rate from 4.75% to 4.50% per annum and increase the revolver commitment amount from $30.0 million to $50.0 million. There were no other significant changes to the agreement. The revolving credit agreement requires us to pay a quarterly fee of 0.50% per year on the average unused revolving commitment. As of March 31, 2020, we had $50.0 million outstanding and had no unused credit commitments under the Reliant Bank Revolver.

Promissory Notes

Delek has four notes payable (the "Promissory Notes") with various assignees of Alon Israel Oil Company, Ltd., the holder of a predecessor consolidated promissory note, which bear interest at a fixed rate of 5.50% per annum and which, collectively, require annual principal amortization payments of $25.0 million through 2020 followed by a final principal amortization payment of $20.0 million at maturity on January 4, 2021. As of March 31, 2020, a total principal amount of $20.0 million was outstanding under the Promissory Notes.

Restrictive Covenants

Under the terms of our Revolving Credit Facility, Term Loan Credit Facility, Delek Logistics Credit Facility, Delek Logistics Notes, Reliant Bank Revolver and BHI Agreement, we are required to comply with certain usual and customary financial and non-financial covenants. The terms and conditions of the Revolving Credit Facility include periodic compliance with a springing minimum fixed charge coverage ratio financial covenant if excess availability under the revolver borrowing base is below certain thresholds, as defined in the credit agreement. The Term Loan Credit Facility does not have any financial maintenance covenants. We believe we were in compliance with all covenant requirements under each of our credit facilities as of March 31, 2020.

Certain of our debt facilities contain limitations on the incurrence of additional indebtedness, making of investments, creation of liens, dispositions and acquisitions of assets, and making of restricted payments and transactions with affiliates. Specifically, these covenants may limit the payment, in the form of cash or other assets, of dividends or other distributions, or the repurchase of shares with respect to the equity of our subsidiaries. Additionally, certain of our debt facilities limit our ability to make investments, including extensions of loans or advances to, or acquisitions of equity interests in, or guarantees of obligations of, any other entities.

Note 9 - Derivative Instruments

We use the majority of our derivatives to reduce normal operating and market risks with the primary objective of reducing the impact of market price volatility on our results of operations. As such, our use of derivative contracts is aimed at:


•	limiting the exposure to price fluctuations of commodity inventory above or below target levels at each of our segments;


•	managing our exposure to commodity price risk associated with the purchase or sale of crude oil, feedstocks and finished grade fuel products at each of our segments;


•	managing the cost of our credits for commitments required by the U.S. Environmental Protection Agency ("EPA") to blend biofuels into fuel products ("RINs Obligation") using future commitments to purchase or sell renewable identification numbers ("RINs") at fixed prices and quantities; and


•	limiting the exposure to interest rate fluctuations on our floating rate borrowings.

We primarily utilize commodity swaps, futures, forward contracts and options contracts, generally with maturity dates of three years or less, and from time to time interest rate swap or cap agreements, to achieve these objectives. Futures contracts are standardized agreements, traded on a futures exchange, to buy or sell the commodity at a predetermined price at a specified future date. Options provide the right, but not the obligation to buy or sell the commodity at a specified price in the future. Commodity swap and futures contracts require cash settlement for the commodity based on the difference between a fixed or floating price and the market price on the settlement date, and options require payment of an upfront premium. Because these derivatives are entered into to achieve objectives specifically related to our inventory and production risks, such gains and losses (to the extent not designated as accounting hedges and recognized on an unrealized basis in other comprehensive income) are recognized in cost of materials and other.

Forward contracts are agreements to buy or sell a commodity at a predetermined price at a specified future date, and for our transactions, generally require physical delivery. Forward contracts where the underlying commodity will be used or sold in the normal course of business qualify as normal purchases and normal sales pursuant to ASC 815 and are not accounted for as derivative instruments. Rather, such forward contracts are accounted for under other applicable GAAP. Forward contracts entered into for trading purposes that do not meet the normal



23 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)

purchases, normal sales exception are accounted for as derivative instruments at fair value with changes in fair value recognized in earnings in the period of change. As of March 31, 2020 and December 31, 2019, and for the three months ended March 31, 2020 and March 31, 2019, all of our forward contracts that were accounted for as derivative instruments primarily consisted of contracts related to our Canadian crude trading operations. Since Canadian crude trading activity is not related to managing supply or pricing risk of the actual inventory that will be used in production, such unrealized and realized gains and losses are recognized in other operating income, net rather than cost of materials and other on the accompanying condensed consolidated statements of income.

Futures, swaps or other commodity related derivative instruments that are utilized to specifically provide economic hedges on our Canadian forward contract or investment positions are recognized in other operating income, net because that is where the related underlying transactions are reflected.

From time to time, we also enter into future commitments to purchase or sell RINs at fixed prices and quantities, which are used to manage the costs associated with our RINs Obligation. These future RIN commitment contracts meet the definition of derivative instruments under ASC 815, and are recorded at estimated fair value in accordance with the provisions of ASC 815. Changes in the fair value of these future RIN commitment contracts are recorded in cost of materials and other on the condensed consolidated statements of income.

As of March 31, 2020, we do not believe there is any material credit risk with respect to the counterparties to any of our derivative contracts.

In accordance with ASC 815, certain of our commodity swap contracts have been designated as cash flow hedges and the change in fair value between the execution date and the end of period has been recorded in other comprehensive income. The fair value of these contracts is recognized in income in the same financial statement line item as hedged transaction at the time the positions are closed and the hedged transactions are recognized in income.

The following table presents the fair value of our derivative instruments as of March 31, 2020 and December 31, 2019. The fair value amounts below are presented on a gross basis and do not reflect the netting of asset and liability positions permitted under our master netting arrangements, including cash collateral on deposit with our counterparties. We have elected to offset the recognized fair value amounts for multiple derivative instruments executed with the same counterparty in our financial statements. As a result, the asset and liability amounts below differ from the amounts presented in our condensed consolidated balance sheets. See Note 10 for further information regarding the fair value of derivative instruments (in millions).



		March 31, 2020					December 31, 2019
Derivative Type	Balance Sheet Location	Assets		Liabilities			Assets		Liabilities
Derivatives not designated as hedging instruments:
Commodity derivatives⁽¹⁾	Other current assets	$	2,159.2	$	(2,087.9	)	$	188.9	$	(202.1	)
Commodity derivatives⁽¹⁾	Other current liabilities	244.1		(275.7		)	24.4		(34.0		)
Commodity derivatives⁽¹⁾	Other long-term assets	152.8		(149.6		)	—		—
Commodity derivatives⁽¹⁾	Other long-term liabilities	23.3		(24.4		)	23.4		(24.8		)
RIN commitment contracts⁽²⁾	Other current assets	2.2		—			0.6		—
RIN commitment contracts⁽²⁾	Other current liabilities	—		(1.7		)	—		(1.9		)

Derivatives designated as hedging instruments:
Commodity derivatives ⁽¹⁾	Other current assets	7.3		(5.2		)	3.4		(2.0		)
Commodity derivatives⁽¹⁾	Other current liabilities	4.5		(3.2		)	—		—
Commodity derivatives⁽¹⁾	Other long-term assets	—		—			0.2		(0.1		)
Total gross fair value of derivatives		$	2,593.4	$	(2,547.7	)	$	240.9	$	(264.9	)
Less: Counterparty netting and cash collateral⁽³⁾		2,505.5		(2,512.5		)	210.7		(249.5		)
Total net fair value of derivatives		$	87.9	$	(35.2	)	$	30.2	$	(15.4	)

⁽¹⁾

As of March 31, 2020 and December 31, 2019, we had open derivative positions representing 185,713,596 and 86,484,065 barrels, respectively, of crude oil and refined petroleum products. Of these open positions, contracts representing 450,000 and 600,000 barrels were designated as cash flow hedging instruments as of March 31, 2020 and December 31, 2019, respectively. Additionally, as of March 31, 2020 and December 31, 2019, we had open derivative positions representing 91,502,500 and 40,050,000 One Million British Thermal Units, ("MMBTU") of natural gas products, respectively.


⁽²⁾	As of March 31, 2020 and December 31, 2019, we had open RIN commitment contracts representing 86,300,000 and 147,000,000 RINs, respectively.


⁽³⁾	As of March 31, 2020 and December 31, 2019, $7.0 million and $38.8 million, respectively, of cash collateral held by counterparties has been netted with the derivatives with each counterparty.

Total gains on our hedging derivatives and RIN commitment contracts recorded in the condensed consolidated statements of income are as follows (in millions):



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Notes to Condensed Consolidated Financial Statements (Unaudited)



	Three Months Ended March 31,
	2020		2019
Gains on commodity derivatives not designated as hedging instruments recognized in cost of materials and other ⁽¹⁾	$	77.2	$	38.9
Losses on commodity derivatives not designated as hedging instruments recognized in other operating income (expense), net ^{(1) (2)}	—		(2.3		)
Realized gains (losses) reclassified out of accumulated other comprehensive income and into cost of materials and other on commodity derivatives designated as cash flow hedging instruments	0.7		(19.1		)
Total gains	$	77.9	$	17.5

⁽¹⁾

Gains (losses) on commodity derivatives that are economic hedges but not designated as hedging instruments include unrealized gains (losses) of $52.0 million and $(27.1) million for the three months ended March 31, 2020 and 2019, respectively. Of these amounts, approximately $37.6 million and $(5.6) million for three months ended March 31, 2020 and 2019, respectively, represent unrealized gains (losses) where the instrument has matured but where it has not cash settled as of period end, excluding the reversal of prior period settlement differences. Derivative instruments that have matured but not cash settled at the balance sheet date continue to be reflected in derivative assets or liabilities on our balance sheet.


⁽²⁾	See separate table below for disclosures about "trading derivatives."

The effect of cash flow hedge accounting on the condensed consolidated statements of income is as follows (in millions):



	Three Months Ended March 31,
	2020			2019
Gain (loss) on cash flow hedging relationships recognized in cost of materials and other:
Commodity contracts:
Hedged items	$	(0.7	)	$	19.1
Derivative designated as hedging instruments	0.7			(19.1		)
Total	$	—		$	—

For cash flow hedges, no component of the derivative instruments’ gains or losses was excluded from the assessment of hedge effectiveness for the three months ended March 31, 2020 or 2019. Gains (losses) of $0.6 million and $(15.1) million, net of tax, on settled commodity contracts were reclassified into cost of materials and other in the condensed consolidated statements of income during the three months ended March 31, 2020 and 2019, respectively. As of March 31, 2020, we estimate that $3.3 million of deferred gains related to commodity cash flow hedges will be reclassified into cost of materials and other over the next 12 months as a result of hedged transactions that are forecasted to occur.

Total (losses) gains on our trading physical forward contract derivatives (none of which were designated as hedging instruments) recorded in other operating income (expense), net on the condensed consolidated statements of income are as follows (in millions):



	Three Months Ended March 31,
	2020			2019
Realized (losses) gains	$	(1.7	)	$	3.9
Unrealized (losses) gains	(1.0		)	2.1
Total	$	(2.7	)	$	6.0



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Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 10 - Fair Value Measurements

Delek applies the provisions of ASC 820, Fair Value Measurements ("ASC 820"), which defines fair value, establishes a framework for its measurement and expands disclosures about fair value measurements. ASC 820 requires disclosures that categorize assets and liabilities measured at fair value into one of three different levels depending on the observability of the inputs employed in the measurement. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are observable inputs other than quoted prices included within Level 1 for the asset or liability, either directly or indirectly through market-corroborated inputs. Level 3 inputs are unobservable inputs for the asset or liability reflecting our assumptions about pricing by market participants.

Our commodity derivative contracts, which consist of commodity swaps, exchange-traded futures, options and physical commodity forward purchase and sale contracts (that do not qualify as normal purchases or normal sales exception under ASC 815), are valued based on exchange pricing and/or price index developers such as Platts or Argus and are, therefore, classified as Level 2.

Investment commodities, which represent those commodities (generally crude oil) physically on hand as a result of trading activities with physical forward contracts, are valued using published market prices of the commodity on the applicable exchange and are, therefore, classified as Level 1. Such investment stores, included in other current assets on the condensed consolidated balance sheets, are maintained on a weighted average cost basis for determining realized gains and losses on physical sales under forward contracts, and ending balances are adjusted to fair value at each reporting date. The unrealized loss on commodity investments for the three months ended March 31, 2020 and 2019 totaled $7.9 million and $1.0 million, respectively.

Our RIN commitment contracts are future commitments to purchase or sell RINs at fixed prices and quantities, which are used to manage the costs associated with our RINs Obligation. These RIN commitment contracts are categorized as Level 2, and are measured at fair value based on quoted prices from an independent pricing service.

Our environmental credits obligation surplus or deficit is based on the amount of RINs or other emissions credits we must purchase, net of amounts internally generated and purchased and the price of those RINs or other emissions credits as of the balance sheet date, by refinery/obligor. The environmental credits obligation surplus or deficit is categorized as Level 2, and is measured at fair value either directly through observable inputs or indirectly through market-corroborated inputs.

The fair values of financial instruments are estimated based upon current market conditions and quoted market prices for the same or similar instruments. Management estimates that the carrying value approximates fair value for all of Delek's assets and liabilities that fall under the scope of ASC 825. As of and for the three months ended March 31, 2020 and 2019, we elected to account for our J. Aron step-out liability at fair value in accordance with ASC 825, as it pertains to the fair value option. This standard permits the election to carry financial instruments and certain other items similar to financial instruments at fair value on the balance sheet, with all changes in fair value reported in earnings. With respect to the amended and restated Supply and Offtake Agreements, such amendments being effective January 2020 for all the agreements, we apply fair value measurement as follows: (1) we determine fair value for our amended variable step-out liability based on changes in fair value related to market volatility based on a floating commodity-index price, where such obligation is categorized as Level 2 and is presented in the current or long-term portion, based on maturity of the agreement, of the Obligation under Supply and Offtake Agreements on our condensed consolidated balance sheets, and where gains (losses) related to changes in fair value are recorded as a component of cost of materials and other in the condensed consolidated statements of income; and (2) we determine fair value of the short-term commodity-indexed financing facility based on the market prices for the consigned crude oil and refined products collateralizing the financing/funding where such obligation is categorized as Level 2 and is presented in the current portion of the Obligation under Supply and Offtake Agreements on our condensed consolidated balance sheets, and where gains (losses) related to the change in fair value are recorded as a component of cost of materials and other in the condensed consolidated statements of income. Before the January 2020 amendments, we determined the fair value for the fixed price step-out liability based on changes to interest rates reflecting changes to the interest rate risk, with obligation categorized as Level 2.



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Notes to Condensed Consolidated Financial Statements (Unaudited)

The fair value hierarchy for our financial assets and liabilities accounted for at fair value on a recurring basis was as follows (in millions):



	March 31, 2020
	Level 1		Level 2			Level 3		Total
Assets
Commodity derivatives	$	—	$	2,591.2		$	—	$	2,591.2
Commodity investments	4.6		—			—		4.6
RIN commitment contracts	—		2.2			—		2.2
Environmental credits obligation surplus	—		11.1			—		11.1
Total assets	4.6		2,604.5			—		2,609.1
Liabilities
Commodity derivatives	—		(2,546.0		)	—		(2,546.0		)
RIN commitment contracts	—		(1.7		)	—		(1.7		)
Environmental credits obligation deficit	—		(50.2		)	—		(50.2		)
J. Aron supply and offtake obligations	—		(277.4		)	—		(277.4		)
Total liabilities	—		(2,875.3		)	—		(2,875.3		)
Net assets (liabilities)	$	4.6	$	(270.8	)	$	—	$	(266.2	)



	December 31, 2019
	Level 1		Level 2			Level 3		Total
Assets
Commodity derivatives	$	—	$	240.3		$	—	$	240.3
Investment commodities	12.1		—			—		12.1
RIN commitment contracts	—		0.6			—		0.6
Environmental credits obligation surplus	—		16.8			—		16.8
Total assets	12.1		257.7			—		269.8
Liabilities
Commodity derivatives	—		(263.0		)	—		(263.0		)
RIN commitment contracts	—		(1.9		)	—		(1.9		)
Environmental credits obligation deficit	—		(18.5		)	—		(18.5		)
J. Aron supply and offtake obligations	—		(477.3		)	—		(477.3		)
Total liabilities	—		(760.7		)	—		(760.7		)
Net assets (liabilities)	$	12.1	$	(503.0	)	$	—	$	(490.9	)

The derivative values above are based on analysis of each contract as the fundamental unit of account as required by ASC 820. In the table above, derivative assets and liabilities with the same counterparty are not netted where the legal right of offset exists. This differs from the presentation in the financial statements which reflects our policy, wherein we have elected to offset the fair value amounts recognized for multiple derivative instruments executed with the same counterparty and where the legal right of offset exists. As of March 31, 2020 and December 31, 2019, $7.0 million and $38.8 million, respectively, of cash collateral was held by counterparty brokerage firms and has been netted in the financial statements with the net derivative positions with each counterparty. See Note 9 for further information regarding derivative instruments.

Note 11 - Commitments and Contingencies

Litigation

In the ordinary conduct of our business, we are from time to time subject to lawsuits, investigations and claims, including environmental claims and employee-related matters. Although we cannot predict with certainty the ultimate resolution of lawsuits, investigations and claims asserted against us, including civil penalties or other enforcement actions, we do not believe that any currently pending legal proceeding or



27 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)

proceedings to which we are a party will have a material adverse effect on our financial statements. Certain environmental matters that have or may result in penalties or assessments are discussed below in the "Environmental, Health and Safety" section of this note.

One of our Alon subsidiaries was the defendant in a legal action related to an easement dispute arising from a purchase of property that occurred in October 2013. In June 2019, the court found in favor of the plaintiffs and assessed damages against such subsidiary totaling $6.7 million, which is included as of March 31, 2020 in accrued expenses and other current liabilities on the accompanying condensed consolidated balance sheet.

Self-insurance

Delek records a self-insurance accrual for workers’ compensation claims up to a $4.0 million deductible on a per accident basis, general liability claims up to $4.0 million on a per occurrence basis and medical claims for eligible full-time employees up to $0.3 million per covered individual per calendar year. We also record a self-insurance accrual for auto liability up to a $4.0 million deductible on a per accident basis.

We have umbrella liability insurance available to each of our segments in an amount determined reasonable by management.

Environmental, Health and Safety

We are subject to extensive federal, state and local environmental and safety laws and regulations enforced by various agencies, including the EPA, the United States Department of Transportation, the Occupational Safety and Health Administration, as well as numerous state, regional and local environmental, safety and pipeline agencies. These laws and regulations govern the discharge of materials into the environment, waste management practices, pollution prevention measures and the composition of the fuels we produce, as well as the safe operation of our plants and pipelines and the safety of our workers and the public. Numerous permits or other authorizations are required under these laws and regulations for the operation of our refineries, renewable fuels facilities, terminals, pipelines, underground storage tanks, trucks, rail cars and related operations, and may be subject to revocation, modification and renewal.

These laws and permits raise potential exposure to future claims and lawsuits involving environmental and safety matters which could include soil and water contamination, air pollution, personal injury and property damage allegedly caused by substances which we manufactured, handled, used, released or disposed of, transported, or that relate to pre-existing conditions for which we have assumed responsibility. We believe that our current operations are in substantial compliance with existing environmental and safety requirements. However, there have been and will continue to be ongoing discussions about environmental and safety matters between us and federal and state authorities, including notices of violations, citations and other enforcement actions, some of which have resulted or may result in changes to operating procedures and in capital expenditures. While it is often difficult to quantify future environmental or safety related expenditures, we anticipate that continuing capital investments and changes in operating procedures will be required for the foreseeable future to comply with existing and new requirements, as well as evolving interpretations and more strict enforcement of existing laws and regulations.

As of March 31, 2020, we have recorded an environmental liability of approximately $144.5 million, primarily related to the estimated probable costs of remediating or otherwise addressing certain environmental issues of a non-capital nature at our refineries, as well as terminals, some of which we no longer own. This liability includes estimated costs for ongoing investigation and remediation efforts for known contamination of soil and groundwater, as well as estimated costs for additional issues which have been identified subsequent to the acquisitions. Approximately $8.2 million of the total liability is expected to be expended over the next 12 months, with most of the balance expended by 2032, although some costs may extend up to 30 years. In the future, we could be required to extend the expected remediation period or undertake additional investigations of our refineries, pipelines and terminal facilities, which could result in the recognition of additional remediation liabilities.



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Notes to Condensed Consolidated Financial Statements (Unaudited)

Crude Oil and Other Releases

We have experienced several crude oil and other releases involving our assets. There were no material releases that occurred in the first quarter of 2020 and five releases that occurred throughout the year 2019. Cleanup operations and site maintenance and remediation efforts on these and other releases are at various stages of completion. The majority of the remediation efforts for these releases are substantially completed or have received regulatory closure. With the exception of the Sulphur Springs release defined below, we expect regulatory closure in 2020 for the release sites that have not yet received it.

On October 3, 2019, a finished product release involving one of our pipelines occurred near Sulphur Springs, Texas (the "Sulphur Springs Release"). Cleanup operations and site maintenance and remediation on this release have been substantially completed where such costs incurred totaled $7.1 million during 2019. During the first quarter of 2020, we incurred approximately $0.2 million of additional costs related to final clean-up of this release. The release is currently in boom maintenance. Ground water wells for monitoring activities are expected to be installed in 2020. We expect the monitoring period to last for at least a year. We have filed suit in January 2020 against a third party contractor, seeking damages related to this release. We have not received notification that any legal action with respect to fines and penalties will be pursued by the regulatory agencies.

Expenses incurred for the remediation of these crude oil and other releases are included in operating expenses in our consolidated statements of income.

Letters of Credit

As of March 31, 2020, we had in place letters of credit totaling approximately $193.6 million with various financial institutions securing obligations primarily with respect to our commodity transactions for the refining segment and certain of our insurance programs. There were no amounts drawn by beneficiaries of these letters of credit at March 31, 2020.

Note 12 - Income Taxes

Under ASC 740, Income Taxes (“ASC 740”) we used an estimated annual tax rate to record income taxes for the three months ended March 31, 2020 and March 31, 2019. Our effective tax rate was 21.3% and 22.9% for the three months ended March 31, 2020 and 2019, respectively. The difference between the effective tax rate and the statutory rate is generally attributable to permanent differences and discrete items. The change in our effective tax rate for the three months ended March 31, 2020 as compared to the three months ended March 31, 2019 was primarily due to tax benefit for federal tax credits attributable to the Company’s biodiesel blending operations that were re-enacted in December 2019, and reversal of a valuation allowance for deferred tax assets in partnership investments due to changes in the future realizability of deferred tax basis differences which was reported as a discrete benefit in the quarter.

On March 27, 2020, the president of the United States signed the Coronavirus Aid Relief, and Economic Security (CARES) Act into law. The Act includes several significant provisions for corporations, including the usage of net operating losses, interest deductions and payroll benefits. There was not a material impact on the consolidated financial statements as of and for the three months ended March 31, 2020 as a result of the enactment.

Note 13 - Related Party Transactions

Our related party transactions consist primarily of transactions with our equity method investees (See Note 5 ). Transactions with our related parties were as follows for the periods presented:



	Three Months Ended March 31,
(in millions)	2020		2019
Revenues ⁽¹⁾	$	7.7	$	7.1
Cost of materials and other ⁽²⁾	$	9.1	$	5.2


⁽¹⁾	Consists primarily of asphalt sales which are recorded in corporate, other and eliminations segment.


⁽²⁾	Consists primarily of pipeline throughput fees paid by the refining segment and asphalt purchases.



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Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 14 - Other Assets and Liabilities

The detail of other current assets is as follows (in millions):



Other Current Assets	March 31, 2020		December 31, 2019
Short-term derivative assets (see Note 9)	$	84.8	$	30.2
Income and other tax receivables	74.1		61.9
RINs assets	38.9		14.5
Prepaid expenses	21.0		21.9
Biodiesel tax credit (see Note 2)	12.4		97.5
Environmental Credits Obligation surplus (see Note 10)	11.1		16.8
Note receivable - current portion, net of allowance of $3.1 million	8.7		6.2
Investment commodities	4.6		12.1
Other	6.5		7.6
Total	$	262.1	$	268.7

The detail of other non-current assets is as follows (in millions):



Other Non-Current Assets	March 31, 2020		December 31, 2019
Supply and Offtake receivable	$	32.7	$	32.7
Other equity Investments	9.4		8.9
Deferred financing costs	8.1		8.5
Note receivable - non-current portion	—		6.2
Long-term derivative assets (see Note 9)	3.2		0.1
Other	10.0		11.4
Total	$	63.4	$	67.8

The detail of accrued expenses and other current liabilities is as follows (in millions):



Accrued Expenses and Other Current Liabilities	March 31, 2020		December 31, 2019
Crude purchase liabilities	$	79.4	$	72.1
Income and other taxes payable	75.4		119.6
Environmental Credits Obligation deficit (see Note 10)	50.2		18.5
Product financing agreements	42.0		21.1
Short-term derivative liabilities (see Note 9)	34.2		14.1
Employee costs	22.2		47.6
Interest payable	11.3		8.8
Environmental liabilities (see Note 11)	8.2		8.2
Tank inspection liabilities	5.2		5.6
Accrued utilities	2.3		4.4
Other	24.3		26.8
Total	$	354.7	$	346.8



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Notes to Condensed Consolidated Financial Statements (Unaudited)

The detail of other non-current liabilities is as follows (in millions):



Other Non-Current Liabilities	March 31, 2020		December 31, 2019
Liability for unrecognized tax benefits	$	12.5	$	12.1
Tank inspection liabilities	9.9		9.9
Pension and other postemployment benefit liabilities, net	4.6		5.3
Long-term derivative liabilities (see Note 9)	1.1		1.4
Other	0.6		2.2
Total	$	28.7	$	30.9

Note 15 - Equity-Based Compensation

Delek US Holdings, Inc. 2006 and 2016 and Alon USA Energy, Inc. 2005 Long-Term Incentive Plans (collectively, the "Incentive Plans")

Compensation expense related to equity-based awards granted under the Incentive Plans amounted to $5.8 million and $4.8 million for the three months ended March 31, 2020 and 2019, respectively. These amounts are included in general and administrative expenses in the accompanying condensed consolidated statements of income.

As of March 31, 2020, there was $47.8 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements, which is expected to be recognized over a weighted-average period of 2.1 years.

We issued 102,895 and 244,566 shares of common stock as a result of exercised or vested equity-based awards during the three months ended March 31, 2020 and 2019, respectively. These amounts are net of 61,505 and 169,991 shares withheld to satisfy employee tax obligations related to the exercises and vestings during the three months ended March 31, 2020 and 2019, respectively.

Delek Logistics GP, LLC 2012 Long-Term Incentive Plan

The Delek Logistics GP, LLC 2012 Long-Term Incentive Plan (the "LTIP") was adopted by the Delek Logistics GP, LLC board of directors in connection with the completion of Delek Logistics' initial public offering in November 2012. The LTIP is administered by the Conflicts Committee of the board of directors of Delek Logistics' general partner.

Note 16 - Shareholders' Equity

Dividends

During the three months ended March 31, 2020, our Board of Directors declared the following dividends:

Stock Repurchase Program

On November 6, 2018, our Board of Directors authorized a share repurchase program for up to $500.0 million of Delek common stock. Any share repurchases under the repurchase program may be implemented through open market transactions or in privately negotiated transactions, in accordance with applicable securities laws. The timing, price and size of repurchases are made at the discretion of management and will depend on prevailing market prices, general economic and market conditions and other considerations. The repurchase program does not obligate us to acquire any particular amount of stock and does not expire. During the three months ended March 31, 2020, 58,713 shares of our common stock were repurchased for a total of $1.9 million compared to repurchases of 1,291,644 shares during the three months ended March 31, 2019 for a total of $46.2 million. As of March 31, 2020, there was $229.7 million of authorization remaining under Delek's aggregate stock repurchase program.

Stockholder Rights Plan

On March 20, 2020, our Board of Directors declared a dividend of one preferred share purchase right (a “Right”) for each outstanding share of Delek’s common stock and adopted a stockholder rights plan (the “Rights Agreement”). The dividend was distributed in a non-cash transaction on March 30, 2020 to the stockholders of record on that date. The Rights initially trade with, and are inseparable from, Delek’s common stock.



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Notes to Condensed Consolidated Financial Statements (Unaudited)

Once the Rights become exercisable, each Right will allow its holder to purchase one one-thousandth of a share of Series A Junior Participating Preferred Stock, par value $0.01 per share (a “Preferred Share”) for $92.24, subject to adjustment (the “Exercise Price”). This portion of a Preferred Share will give the stockholder approximately the same dividend, voting and liquidation rights as would one share of Delek’s common stock. Prior to exercise, the Right does not give its holder any dividend, voting or liquidation rights.

The Rights will not be exercisable until 10 days after the public announcement that a person or group that has become an “Acquiring Person” (as defined in the Rights Agreement). The point at which these terms are met is otherwise referred to as the "Distribution Date." If a person or group becomes an Acquiring Person, all holders of Rights except the Acquiring Person may, for the Exercise Price, purchase shares of the Company’s common stock with a market value of two times the Exercise Price, based on the market price of the common stock prior to such acquisition. In addition, subject to certain conditions set forth in the Rights Agreement, the Board may extinguish the Rights. If the Company is later acquired in a merger or similar transaction after the Distribution Date, all holders of Rights except the Acquiring Person may, for the Exercise Price, purchase shares of the acquiring corporation with a market value of two times the Exercise Price, based on the market price of the acquiring corporation’s stock prior to such merger.

In the event the Company receives a fully financed, all-cash tender offer satisfying the conditions set forth in the Rights Agreement (a “Qualifying Offer”), and certain other events occur, the Rights Agreement provides a mechanism for stockholders holding more than 20% of the shares of Delek common stock then outstanding (excluding shares beneficially owned by the person making the Qualifying Offer) to demand a special meeting of the stockholders of the Company to vote on a resolution exempting such Qualifying Offer from the provisions of the Rights Agreement.

The Rights will expire on March 19, 2021, subject to a possible earlier expiration to the extent provided in the Rights Agreement.

Preferred Stock

On March 20, 2020, our Board of Directors authorized 1,000,000 shares of preferred stock with a par value of $0.01 per share as Series A Junior Participating Preferred Stock.

Note 17 - Employees

Postretirement Benefits

The net periodic (benefit) cost for our postretirement benefit plans was not material for the three months ended March 31, 2020 or 2019. Additionally, our estimated contributions to our pension plans during 2020 have not changed significantly from amounts previously disclosed in the notes to the consolidated financial statements for the year ended December 31, 2019.

Note 18 - Leases

We lease certain retail stores, land, building and various equipment from others. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to 15 years or more. The exercise of existing lease renewal options is at our sole discretion. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

Some of our lease agreements include a rate based on equipment usage and others include a rate with fixed increases or inflationary indices based increase. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. We rent or sublease certain real estate and equipment to third parties. Our sublease portfolio consists primarily of operating leases within our retail stores and crude storage equipment.

As of March 31, 2020, $23.0 million of our net property, plant, and equipment balance is subject to an operating lease. This agreement does not include options for the lessee to purchase our leasing equipment, nor does it include any material residual value guarantees or material restrictive covenants. The agreement includes a one year renewal option and certain variable payment based on usage.



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Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table presents additional information related to our operating leases in accordance ASC 842, Leases ("ASC 842"):



	Three Months Ended March 31,
(in millions)	2020			2019
Lease Cost
Operating lease costs	$	15.7		$	13.5
Short-term lease costs ⁽¹⁾	7.6			3.6
Sublease income	(1.9		)	(1.7		)
Net lease costs	$	21.4		$	15.4

Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(15.7	)	$	(13.5	)
Leased assets obtained in exchange for new operating lease liabilities	$	6.8		$	—

	March 31, 2020
Weighted-average remaining lease term (years) operating leases	6.6
Weighted-average discount rate operating leases ⁽²⁾	6.0		%

⁽¹⁾Includes an immaterial amount of variable lease cost.

⁽²⁾ Our discount rate is primarily based on our incremental borrowing rate in accordance with ASC 842.

Note 19 - Subsequent Events

Dividend Declaration

On May 4, 2020, our Board of Directors voted to declare a quarterly cash dividend of $0.31 per share of our common stock, payable on June 3, 2020 to shareholders of record on May 20, 2020.

2020 Amendments to Supply and Offtake Agreements

In April 2020, we amended our three Supply and Offtake Agreements with J. Aron to extend the respective terms to December 30, 2022, with J. Aron having the sole discretion to further extend the agreements to May 30, 2025. As part of this amendment, there were changes to the underlying market index, annual fee and the crude purchase fee. See Note 7 for further discussion.

COVID-19 Pandemic and OPEC Production Disputes Subsequent Events

Subsequent to quarter end, steps taken to address the COVID-19 Pandemic and developments in the OPEC Production Disputes significantly impacted supply and demand in global oil and gas markets, causing oil prices to decline sharply, as well as other changes to the economic outlook in the near term. Such subsequent developments included but are not limited to government-imposed temporary business closures and voluntary shelter-at-home directives as well as developments in production discussions between global oil producers, and the effect thereof. Oil prices as well as demand are expected to continue to be volatile as a result of the near-term over-supply and the ongoing COVID-19 Pandemic as changes in oil inventories, industry demand and global and national economic performance are reported, and we cannot predict when prices and demand will improve and stabilize. We are currently unable to estimate the impact these events will have on our future financial position and results of operations. Accordingly, we can give no assurances that the events will not have a material adverse effect on our financial position or results of operations, and the information presented in this Quarterly Report on Form 10-Q should be considered in light of these events.

Sale of Bakersfield Non-Operating Refinery

On May 7, 2020, we sold our equity interests in Alon Bakersfield Property, Inc., an indirect wholly-owned subsidiary that owns our non-operating refinery located in Bakersfield, California, to a subsidiary of Global Clean Energy Holdings, Inc. (“GCE”), a southern California-based renewable energy company, for total cash consideration of $40 million. GCE intends to repurpose the refinery to produce renewable diesel and possibly renewable jet fuel. As part of the transaction, GCE granted a call option to Delek to acquire up to a 33 1/3% interest in the acquiring subsidiary, GCE Acquisitions, exercisable by Delek through the 90th day after GCE demonstrates commercial operations, as contractually defined.



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Notes to Condensed Consolidated Financial Statements (Unaudited)



34 \|

Management's Discussion and Analysis

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is management’s analysis of our financial performance and of significant trends that may affect our future performance. The MD&A should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and in the Annual Report on Form 10-K as filed with the Securities and Exchange Commission ("SEC") on February 28, 2020 (the "Annual Report on Form 10-K"). Those statements in the MD&A that are not historical in nature should be deemed forward-looking statements that are inherently uncertain.

Unless otherwise noted or the context requires otherwise, the terms "we," "our," "us," "Delek" and the "Company" are used in this report to refer to Delek and its consolidated subsidiaries for all periods presented. You should read the following discussion of our financial condition and results of operations in conjunction with our historical condensed consolidated financial statements and notes thereto.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. These forward-looking statements reflect our current estimates, expectations and projections about our future results, performance, prospects and opportunities. Forward-looking statements include, among other things, statements regarding the effect, impact, potential duration or other implications of, or expectations expressed with respect to, the recent outbreak COVID-19 and the actions of members of the Organization of Petroleum Exporting Countries (“OPEC”) and Russia with respect to oil production and pricing, and statements regarding our efforts and plans in response to such events, the information concerning our possible future results of operations, business and growth strategies, financing plans, expectations that regulatory developments or other matters will or will not have a material adverse effect on our business or financial condition, our competitive position and the effects of competition, the projected growth of the industry in which we operate, and the benefits and synergies to be obtained from our completed and any future acquisitions, statements of management’s goals and objectives, and other similar expressions concerning matters that are not historical facts. Words such as "may," "will," "should," "could," "would," "predicts," "potential," "continue," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "appears," "projects" and similar expressions, as well as statements in future tense, identify forward-looking statements.

Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking information is based on information available at the time and/or management’s good faith belief with respect to future events, and is subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. Important factors that, individually or in the aggregate, could cause such differences include, but are not limited to:


•	volatility in our refining margins or fuel gross profit as a result of changes in the prices of crude oil, other feedstocks and refined petroleum products and the impact of the COVID-19 Pandemic on such demand;


•	reliability of our operating assets;


•	actions of our competitors and customers;


•	changes in, or the failure to comply with, the extensive government regulations applicable to our industry segments;


•	our ability to execute our strategy of growth through acquisitions and capital projects and changes in the expected value of and benefits derived therefrom, including any ability to successfully integrate acquisitions, realize expected synergies or achieve operational efficiency and effectiveness;


•	diminishment in value of long-lived assets may result in an impairment in the carrying value of the assets on our balance sheet and a resultant loss recognized in the statement of operations;


•	general economic and business conditions affecting the southern, southwestern and western United States, particularly levels of spending related to travel and tourism;


•	volatility under our derivative instruments;


•	deterioration of creditworthiness or overall financial condition of a material counterparty (or counterparties);


•	unanticipated increases in cost or scope of, or significant delays in the completion of, our capital improvement and periodic turnaround projects;


•	risks and uncertainties with respect to the quantities and costs of refined petroleum products supplied to our pipelines and/or held in our terminals;


•	operating hazards, natural disasters, casualty losses and other matters beyond our control;


•	increases in our debt levels or costs;


•	changes in our ability to continue to access the credit markets;


•	compliance, or failure to comply, with restrictive and financial covenants in our various debt agreements;


•	the inability of our subsidiaries to freely make dividends, loans or other cash distributions to us;


•	seasonality;


•	acts of terrorism (including cyber-terrorism) aimed at either our facilities or other facilities that could impair our ability to produce or transport refined products or receive feedstocks;


•	future decisions by OPEC members and Russia regarding production and pricing and disputes between OPEC members and Russia regarding such;



35 \|

Management's Discussion and Analysis


•	disruption, failure, or cybersecurity breaches affecting or targeting our IT systems and controls, our infrastructure, or the infrastructure of our cloud-based IT service providers;


•	changes in the cost or availability of transportation for feedstocks and refined products; and


•	other factors discussed under the headings "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" and in our other filings with the SEC.

In light of these risks, uncertainties and assumptions, our actual results of operations and execution of our business strategy could differ materially from those expressed in, or implied by, the forward-looking statements, and you should not place undue reliance upon them. In addition, past financial and/or operating performance is not necessarily a reliable indicator of future performance, and you should not use our historical performance to anticipate future results or period trends. We can give no assurances that any of the events anticipated by any forward-looking statements will occur or, if any of them do, what impact they will have on our results of operations and financial condition.

All forward-looking statements included in this report are based on information available to us on the date of this report. We undertake no obligation to revise or update any forward-looking statements as a result of new information, future events or otherwise.

Executive Summary

Business Overview

We are an integrated downstream energy business focused on petroleum refining, the transportation, storage and wholesale distribution of crude oil, intermediate and refined products and convenience store retailing. Our operating segments consist of refining, logistics, and retail, and are discussed in the sections that follow.

The recent outbreak of COVID-19 and its development into a pandemic in March 2020 (the "COVID-19 Pandemic") has resulted in significant economic disruption globally, including in the U.S. and specific geographic areas where we operate. Actions taken by various governmental authorities, individuals and companies around the world to prevent the spread of COVID-19 through social distancing have restricted travel, many business operations, public gatherings and the overall level of individual movement and in-person interaction across the globe. This has in turn significantly reduced global economic activity and resulted in airlines dramatically cutting back on flights and a decrease in motor vehicle use at a time when seasonal driving patterns typically result in an increase of consumer demand for gasoline. As a result, there has also been a decline in the demand for, and thus also the market prices of, crude oil and certain of our products, particularly our refined petroleum products and most notably gasoline and jet fuel. In addition, recent events concerning the dispute over production levels between Russia and the members of OPEC, particularly Saudi Arabia, and the subsequent actions taken by such countries as a result thereof, including Saudi Arabia discounting the price of its crude oil exports (the "OPEC Production Disputes"), have exacerbated the decline in crude oil prices and have contributed to an increase in crude oil price volatility.

We have identified the following known uncertainties resulting from the COVID-19 Pandemic and the OPEC Production Disputes:


•	Significant declines and/or volatility in prices of refined products we sell and the feedstocks we purchase as well as in crack spreads resulting from the COVID-19 Pandemic and the OPEC Production Disputes could have a significant impact on our revenues, cost of sales, operating income and liquidity, as well to the carrying value of or long-lived or indefinite-lived assets;


•	A decline in the market prices of refined products and feedstocks below the carrying value in our inventory may result in the adjustment of the value of our inventories to the lower market price and a corresponding loss on the value of our inventories;


•	The decline in demand for refined product could significantly impact the demand for throughput at our refineries, unfavorably impacting operating results at our refineries, and could impact the demand for storage, which could impact our logistics segment;


•	A significant reduction or suspension in U.S. crude oil production could adversely affect our suppliers and sources of crude oil;


•	The restrictions on travel and requirements for social distancing could significantly impact the traffic at our convenience stores, particularly the demand for fuel;


•	Customers of the refining segment as well as third-party customers of the logistics segment may experience financial difficulties which could interrupt the volumes ordered by those customers and/or could impact the credit worthiness of such customers and the collectability of their outstanding receivables;


•	Equity method investees may be significantly impacted by the COVID-19 Pandemic and/or the OPEC Production Disputes, which may increase the risk of impairment of those investments;


•	While our current liquidity needs are managed by existing facilities, sources of future liquidity needs may be impacted by the volatility in the debt market and the availability and pricing of such funds as a result of the COVID-19 Pandemic and the OPEC Production Disputes; and


•	The U.S. Federal Government has enacted certain stimulus and relief measures, including the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") passed on March 27, 2020, which, among its provisions, provides companies certain income and



36 \|

Management's Discussion and Analysis

payroll tax-related relief. To the extent that the provisions do not directly impact Delek in the current period or are intended to stimulate or provide relief to the greater U.S. economy and/or consumer, the impact and success of such efforts remains unknown.

Other uncertainties related to the impact of the COVID-19 Pandemic and the OPEC Production Disputes may exist that have not been identified or that are not specifically listed above, and could impact our future results of operations and financial position, the nature of which and the extent to which are currently unknown. Additionally, subsequent to March 31, 2020, developments have occurred which may impact the extent to which the risk underlying these uncertainties are realized, including the April 2020 oil supply talks between global oil producers including OPEC and Russia which resulted in preliminary agreement for management of crude oil supply in the hopes of contributing to market stabilization (the "Oil Supply Talks"), as well as the U.S. Federal Government's recent passage and/or enactment of additional stimulus and relief measures. To the extent these uncertainties have been identified and are believed to have an impact on our current period results of operations or financial position based on the requirements for assessing such financial statement impact under U.S. generally accepted accounting principles ("GAAP"), we have considered them in the preparation of our unaudited financial statements as of and for the three months ended March 31, 2020, which are included in Item 1. of this Quarterly Report on Form 10-Q.

In addition,management has and continues to actively respond to the impact of the COVID-19 Pandemic and the OPEC Production Disputes on our business. Such efforts include (but are not limited to) the following:


•	Reviewing planned production throughputs at our refineries and planning for the possibility of reductions;


•	Coordinating planned maintenance activities with possible downtime as a result of possible reductions in throughputs;


•	Searching for additional storage capacity if needed to store potential builds in crude oil or refined product inventories;


•	Reducing planned capital expenditures for 2020;


•	Suspending the share repurchase program until our internal parameters are met for resuming such repurchases;


•	Taking advantage of the income and payroll tax relief afforded to us by the CARES Act;


•	Reviewing dividend strategy to align with market changes and current economic conditions;


•	Identifying alternative financing solutions to enhance our access to sources of liquidity; and


•	Enacting other cost reduction measures across the organization, including reducing contract services, reducing overtime and reducing or eliminating non-critical travel which serves the dual purpose of also complying with recommendations made by the state and federal governments because of the COVID-19 Pandemic.

See also 'Risk Factors' in Part II, Item 1A. of this Quarterly Report on Form 10-Q for further discussion of risks associated with the COVID-19 Pandemic and the OPEC Production Disputes.

Refining Overview

The refining segment processes crude oil and other feedstocks for the manufacture of transportation motor fuels, including various grades of gasoline, diesel fuel and aviation fuel, asphalt and other petroleum-based products that are distributed through owned and third-party product terminals. The refining segment has a combined nameplate capacity of 302,000 barrels per day as of March 31, 2020. A high-level summary of the refinery activities is presented below:



	Tyler, Texas refinery (the "Tyler refinery")	El Dorado, Arkansas refinery (the "El Dorado refinery")	Big Spring,Texas refinery (the "Big Spring refinery")	Krotz Springs, Louisiana refinery (the "Krotz Springs refinery")
Total Nameplate Capacity (barrels per day ("bpd"))	75,000	80,000	73,000	74,000
Primary Products	Gasoline, jet fuel, ultra-low-sulfur diesel, liquefied petroleum gases, propylene, petroleum coke and sulfur	Gasoline, ultra-low-sulfur diesel, liquefied petroleum gases, propylene, asphalt and sulfur	Gasoline, jet fuel, ultra-low-sulfur diesel, liquefied petroleum gases, propylene, aromatics and sulfur	Gasoline, jet fuel, high-sulfur diesel, light cycle oil, liquefied petroleum gases, propylene and ammonium thiosulfate
Relevant Crack Spread Benchmark (1)	Gulf Coast 5-3-2	Gulf Coast 5-3-2 (2)	Gulf Coast 3-2-1 (3)	Gulf Coast 2-1-1 (4)
Marketing and Distribution	The refining segment's petroleum-based products are marketed primarily in the south central, southwestern and western regions of the United States, and the refining segment also ships and sells gasoline into wholesale markets in the southern and eastern United States. Motor fuels are sold under the Alon or Delek brand through various terminals to supply Alon or Delek branded retail sites. In addition, we sell motor fuels through our wholesale distribution network on an unbranded basis.



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Management's Discussion and Analysis


⁽¹⁾	The term "crack spread" is a measure of the difference between market prices for crude oil and refined products.


⁽²⁾	While there is variability in the crude slate and the product output at the El Dorado refinery, we compare our per barrel refined product margin to the U.S. Gulf Coast ("Gulf Coast") 5-3-2 crack spread because we believe it to be the most closely aligned benchmark.

⁽³⁾

Our Big Spring refinery is capable of processing substantial volumes of sour crude oil, which has historically cost less than intermediate, and/or substantial volumes of sweet crude oil, and therefore the West Texas Intermediate ("WTI") Cushing/ West Texas Sour ("WTS") price differential, taking into account differences in production yield, is an important measure for helping us make strategic, market-respondent production decisions.


⁽⁴⁾	The Krotz Springs refinery has the capability to process substantial volumes of light sweet crude oil to produce a high percentage of refined light products

Our refining segment also owns and operates three biodiesel facilities involved in the production of biodiesel fuels and related activities, located in Crossett, Arkansas, Cleburne, Texas, and New Albany, Mississippi.

Logistics Overview

Our logistics segment gathers, transports and stores crude oil and markets, distributes, transports and stores refined products in select regions of the southeastern United States and West Texas for our refining segment and third parties. It is comprised of the consolidated balance sheet and results of operations of Delek Logistics Partners, LP ("Delek Logistics", NYSE:DKL), where we owned a 69.1% limited partner interest (at March 31, 2020) in Delek Logistics and a 94.6% interest in the entity that owns the entire 2.0% general partner interest in Delek Logistics and all of the incentive distribution rights. Delek Logistics was formed by Delek in 2012 to own, operate, acquire and construct crude oil and refined products logistics and marketing assets. A substantial majority of Delek Logistics' assets are currently integral to our refining and marketing operations. The logistics segment's pipelines and transportation business owns or leases capacity on approximately 400 miles of crude oil transportation pipelines, approximately 450 miles of refined product pipelines, an approximately 700-mile crude oil gathering system and associated crude oil storage tanks with an aggregate of approximately 10.2 million barrels of active shell capacity. Our logistics segment owns and operates nine light product terminals and markets light products using third-party terminals. The logistics segment also has strategic investments in pipeline joint ventures that provide access to pipeline capacity as well as the potential for earnings from joint venture operations. Additionally, on March 31, 2020, the logistics segment acquired from another of our segments approximately 200 miles of gathering and ancillary assets located in Howard, Borden and Martin Counties, Texas.

Retail Overview

Our retail segment at March 31, 2020 includes the operations of 253 owned and leased convenience store sites located primarily in Central and West Texas and New Mexico. Our convenience stores typically offer various grades of gasoline and diesel under the DK or Alon brand name and food products, food service, tobacco products, non-alcoholic and alcoholic beverages, general merchandise as well as money orders to the public, primarily under the 7-Eleven and DK or Alon brand names pursuant to a license agreement with 7-Eleven, Inc. In November 2018, we terminated the license agreement with 7-Eleven, Inc. and the terms of such termination require the removal of all 7-Eleven branding on a store-by-store basis by December 31, 2021. As of March 31, 2020, we have removed the 7-Eleven brand name at 57 of our store locations. Merchandise sales at our convenience store sites will continue to be sold under the 7-Eleven brand name until 7-Eleven branding is removed pursuant to the termination. Substantially all of the motor fuel sold through our retail segment is supplied by our Big Spring refinery, which is transferred to the retail segment at prices substantially determined by reference to published commodity pricing information. In connection with our retail strategic initiatives, as of March 31, 2020, we have closed or sold 46 under-performing or non-strategic store locations of which one was closed during the three months ended March 31, 2020.

The cost to acquire the refined fuel products we sell to our wholesale customers in our logistics segment and at our convenience stores in our retail segment depends on numerous factors beyond our control, including the supply of, and demand for, crude oil, gasoline and other refined petroleum products which, in turn, depend on, among other factors, changes in domestic and foreign economies, weather conditions, domestic and foreign political affairs, production levels, the availability of imports, the marketing of competitive fuels and government regulation. Our retail merchandise sales are driven by convenience, customer service, competitive pricing and branding. Motor fuel margin is sales less the delivered cost of fuel and motor fuel taxes, measured on a cents per gallon basis. Our motor fuel margins are impacted by local supply, demand, weather, competitor pricing and product brand.

Corporate and Other Overview

Our corporate activities, results of certain immaterial operating segments, including our asphalt terminal operations, and intercompany eliminations are reported in corporate, other and eliminations in our segment disclosures. Additionally, our corporate activities include certain of our commodity and other hedging activities.



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Management's Discussion and Analysis

Strategic Overview

The Company's overall strategy has been to take a disciplined approach that looks to balance returning cash to our shareholders and prudently investing in the business to support safe and reliable operations, while exploring opportunities for growth. Our goal has been to balance the different aspects of this program based on evaluations of each opportunity and how it matches our strategic goals for the company, while factoring in market conditions and expected cash generation.

In the face of the economic impact of the COVID-19 Pandemic and the OPEC Production Disputes, our overall strategy remains unchanged and continues to be focused on the following objectives:

I. Safety and wellness.

II. Reliability and integrity.

III. Systems and processes.

IV. Risk-based decision making.

V. Positioning for growth.

In addition to the above, it continues to be a strategic and operational objective to manage price and supply risk related to crude oil that is used in refinery production, and to develop strategic sourcing relationships. For that purpose, from a pricing perspective, we enter into commodity derivative contracts to manage our price exposure to our inventory positions, future purchases of crude oil and ethanol, future sales of refined products or to fix margins on future production. We also enter into future commitments to purchase or sell RINs at fixed prices and quantities, which are used to manage the costs associated with our RINs obligations. Additionally, from a sourcing perspective, we often enter into purchase and sale contracts with vendors and customers or take financial commodity positions for crude oil that may not be used immediately in production, but that may be used to manage the overall supply and availability of crude expected to ultimately be needed for production and/or to meet minimum requirements under strategic pipeline arrangements, and also to optimize and hedge availability risks associated with crude that we ultimately expect to use in production. Such transactions are inherently based on certain assumptions and judgments made about the current and possible future availability of crude. Therefore, when we take physical or financial positions for optimization purposes, our intent is generally to take offsetting positions in quantities and at prices that will advance these objectives while minimizing our positional and financial statement risk. However, because of the volatility of the market in terms of pricing and availability, it is possible that we may have material positions with timing differences or, more rarely, that we are unable to cover a position with an offsetting position as intended. Such differences could have a material impact on the classification of resulting gains/losses, assets or liabilities, and could also significantly impact net earnings.

With these objectives serving as our guiding principles, we are applying the short-term measures to mitigate the impact of the COVID-19 Pandemic and the OPEC Production Disputes described in the 'Business Overview' above. And with these objectives in mind, we have achieved the following successes to date in 2020:

2020 Developments

Transactions designed to maximize shareholder return

Dividend Declaration

On May 4, 2020, Delek's Board of Directors voted to declare a quarterly cash dividend of $0.31 per share, payable on June 3, 2020, to stockholders of record on May 20, 2020. Our previous quarterly cash dividend amounts ranged between $0.27 to $0.30 per share for dividends paid throughout 2019 and was $0.31 per share for the dividend paid during the first quarter of 2020.

Share Repurchases

During the three months ended March 31, 2020, Delek repurchased 58,713 shares for an aggregate purchase price of $1.9 million under the most recent share repurchase plan which provided for repurchases of up to $500.0 million and was approved by the board on November 6, 2018. As of March 31, 2020, there remained $229.7 million available for repurchases under the most recent repurchase plan.

Transactions designed to maximize return on assets

Investment in Midstream Ventures

In July 2019, we acquired a 15% ownership interest in Wink to Webster Pipeline ("WWP"). WWP intends to construct and operate a crude oil pipeline system from Wink, Texas to Webster, Texas along with certain pipelines from Webster, Texas to other destinations in the Gulf Coast area. It is expected to span approximately 650 miles at completion. Under the agreements governing the joint venture, we must contribute our percentage interest of the applicable construction costs (including certain costs previously incurred by WWP), and it is anticipated that our capital contributions will total approximately $340 million to $380 million over the course of construction (expected to be two to three years).



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Management's Discussion and Analysis

See further discussion in Note 5 of our condensed consolidated financial statements included in Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.

Increased Investment in Delek Logistics

Effective March 31, 2020, Delek Logistics, through its wholly-owned subsidiary DKL Permian Gathering, LLC, acquired the Big Spring Gathering System, located in Howard, Borden and Martin Counties, Texas, from Delek. Delek Logistics will operate and maintain the Big Spring Gathering System connecting our interests in and to certain crude oil production with the Delek Logistics' Big Spring, Texas terminal and provide gathering, transportation and other related services. The total consideration was subject to certain post-closing adjustments and was comprised of $100.0 million in cash and 5.0 million common units representing limited partner interest in Delek Logistics. The cash component of this dropdown was financed with borrowings on the DKL Credit Facility. Additionally, in March 2020, we purchased 451,822 of Delek Logistics limited partner units from a public investor for approximately $5.0 million. As a result of these transaction, our ownership in Delek Logistics' common limited partner units was increased to 70.5%. These continued investments enhance our ability to maximize the value of our logistics assets.

See further discussion in Note 4 of our condensed consolidated financial statements included in Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.

Sale of Bakersfield Non-Operating Refinery

See Note 19 of our condensed consolidated financial statements included in Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.

Transactions designed to minimize the cost of capital/manage financial risk exposures

2020 Amendments to Supply and Offtake Agreements

In January 2020, we amended and restated our three Supply and Offtake Agreements with J. Aron which applies to the El Dorado refinery, the Big Spring refinery and the Krotz Springs refinery so that the repurchase of Baseline Volumes at the end of the Supply and Offtake Agreement term (representing the "Baseline Step-Out Liability" or, collectively, the "Baseline Step-Out Liabilities") will be based on market-indexed price subject to commodity price risk with corresponding changes to underlying market-based indices and certain differentials. The amendments resulted in Baseline Step-Out Liabilities for which the fair value is no longer subject to interest rate risk but is now subject to commodity price volatility.

Subsequent to March 31, 2020, in April 2020, we further amended and restated our three Supply and Offtake Agreements with J. Aron to extend the term of each to December 30, 2022, with J. Aron having the sole discretion to further extend to May 30, 2025. As part of these amendments, there were changes to the underlying market index, annual fee and the crude purchase fee. The changes are expected to result in a more favorable effective interest rate on the inventory financing arrangement compared to what they were previously.

See further discussion in Note 7 of our condensed consolidated financial statements included in Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.



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Management's Discussion and Analysis

Market Trends

Commodity Prices

Our results of operations are significantly affected by fluctuations in the prices of certain commodities, including, but not limited to, crude oil, gasoline, distillate fuel, biofuels, natural gas and electricity, among others. Historically, our profitability has been affected by commodity price volatility, specifically as it relates to the price of crude oil and refined products. We have significant sources of WTI Midland crude because of our gathering system, and so accordingly favorable pricing of WTI Midland crude compared to other WTI crude can favorably impact our cost of materials and other and therefore our margins compared to other refiners.

The table below reflects the quarterly average prices of WTI Midland and WTI Cushing crude oil for each of the quarterly periods in 2019 and for the first quarterly period in 2020. As shown in the historical graph, WTI Midland crude prices have generally been favorable as compared to WTI Cushing, though that trend has reversed slightly in the fourth quarter 2019.

Crack Spreads

Crack spreads are used as benchmarks for predicting and evaluating a refinery's product margins by measuring the difference between the market price of feedstocks and crude oil and refined products. Generally, crack spreads represent the approximate refining margin resulting from processing one barrel of crude oil into its outputs, generally gasoline and diesel fuel.

The table below reflects the quarterly average Gulf Coast 5-3-2, 3-2-1 and 2-1-1 crack spreads for each of the quarterly periods in 2019 and for the first quarterly period in 2020. As the chart illustrates, the 3-2-1 crack spread has consistently outperformed the 5-3-2 and the 2-1-1 crack spreads. In such conditions, things being equal (i.e., near-capacity throughputs and no significant outages), our Big Spring refinery, whose benchmark is the 3-2-1 crack spread, should outperform our other refineries in terms of refining margin.



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Management's Discussion and Analysis

Refined Product Prices

Our refineries produce the following products:



	Tyler Refinery	El Dorado Refinery	Big Spring Refinery	Krotz Springs Refinery
Primary Products	Gasoline, jet fuel, ultra-low-sulfur diesel, liquefied petroleum gases, propylene, petroleum coke and sulfur	Gasoline, ultra-low-sulfur diesel, liquefied petroleum gases, propylene, asphalt and sulfur	Gasoline, jet fuel, ultra-low-sulfur diesel, liquefied petroleum gases, propylene, aromatics and sulfur	Gasoline, jet fuel, high-sulfur diesel, light cycle oil, liquefied petroleum gases, propylene and ammonium thiosulfate

The charts below illustrate the quarterly average prices of Gulf Coast Gasoline, U.S. High Sulfur Diesel and U.S. Ultra Low Sulfur Diesel for each of the quarterly periods in 2019 and for the first quarterly period in 2020.

Crude Pricing Differentials

As U.S. crude oil production has increased, we have seen the discount for WTI Cushing compared to Brent, a global benchmark crude, widen. This generally leads to higher margins in our refineries, as refined product prices are influenced by Brent crude prices and the majority of our crude supply is WTI-linked. As these discounts shrink or, as in the case of the WTI Midland/WTI Cushing differential, become a premium, without taking into account changes in inventory, as they did at the end of 2019, our reliance on WTI-linked crude pricing, and specifically WTI Midland crude can negatively impact our results. Conversely, as these price discounts increase, so does our competitive advantage, created by our access to WTI-linked crude oil pricing, and specifically WTI Midland crude sources through our gathering systems.

The chart below illustrates the differentials of both Brent crude oil and WTI Midland crude oil as compared to WTI Cushing crude oil as well as WTI Cushing as compared to Louisiana Light Sweet crude oil ("LLS") for each of the quarterly periods in 2019 and for the first quarterly period in 2020.



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Management's Discussion and Analysis

RIN Volatility

Environmental regulations continue to affect our margins in the form of volatility in the cost of renewable identification numbers ("RINs"). On a consolidated basis, we work to balance the cost of our credits for commitments required by the EPA to blend biofuels into fuel products ("RINs Obligation") in order to minimize the effect of RINs on our results. While we generate RINs in both our refining and logistics segments through our ethanol blending and biodiesel production, our refining segment needs to purchase additional RINs to satisfy its obligations. As a result, increases in the price of RINs generally adversely affect our results of operations. It is not possible at this time to predict with certainty what future volumes or costs may be, but given the volatile price of RINs, the cost of purchasing sufficient RINs could have an adverse impact on our results of operations if we are unable to recover those costs in the price of our refined products. The chart below illustrates the volatility in RINs prices over several quarterly periods, beginning with the first quarter of 2019 through the first quarter of 2020.



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Management's Discussion and Analysis

Contractual Obligations

There have been no material changes to our contractual obligations and commercial commitments during the three months ended March 31, 2020, from those disclosed in our Annual Report on Form 10-K.

Critical Accounting Policies

The preparation of our consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. The SEC has defined critical accounting policies as those that are both most important to the portrayal of our financial condition and results of operations, and require our most difficult, subjective or complex judgments or estimates. Based on this definition and as further described in our 2019 Annual Report on Form 10-K, we believe our critical accounting policies include the following: (i) estimating our quarterly inventory adjustments using the last-in, first-out valuation method for the Tyler refinery, (ii) evaluating impairment for property, plant and equipment and definite life intangibles, (iii) evaluating potential impairment of goodwill, (iv) estimating environmental expenditures, and (v) estimating asset retirement obligations.

During the three months ended March 31, 2020, we updated our critical accounting policies to include accounting policies that have become critical as a result of new transactions. Accordingly, we are adding a critical accounting policy related to evaluating variable interest entities to reflect the significant judgment that is involved when determining whether an entity is a variable interest entity ("VIE") and evaluating whether we are the primary beneficiary in connection with our new investment in W2W Holdings LLC. See Note 5 of the condensed consolidated financial statements in Item 1, Financial Statements for discussion of our investment in W2W Holdings LLC and the related accounting treatment.

Evaluation of Variable Interest Entities

Our consolidated financial statements include the financial statements of our subsidiaries and VIEs, of which we are the primary beneficiary. We evaluate all legal entities in which we hold an ownership or other pecuniary interest to determine if the entity is a VIE. Variable interests can be contractual, ownership or other pecuniary interests in an entity that change with changes in the fair value of the VIE’s assets. If we are not the primary beneficiary, the general partner or another limited partner may consolidate the VIE, and we record the investment as an equity method investment. Significant judgment is exercised in determining that a legal entity is a VIE and in evaluating whether we are the primary beneficiary in a VIE. Generally, the primary beneficiary is the party that has both the power to direct the activities that most significantly impact the VIE’s economic performance and the right to receive benefits or obligation to absorb losses that could be potentially significant to the VIE. We evaluate the entity’s need for continuing financial support; the equity holder’s lack of a controlling financial interest; and/or if an equity holder’s voting interests are disproportionate to its obligation to absorb expected losses or receive residual returns. We evaluate our interests in a VIE to determine whether we are the primary beneficiary. We use a primarily qualitative analysis to determine if we are deemed to have a controlling financial interest in the VIE, either on a standalone basis or as part of a related party group. We continually monitor our interests in legal entities for changes in the design or activities of an entity and changes in our interests, including our status as the primary beneficiary to determine if the changes require us to revise our previous conclusions.

Additionally, due to the economic and industry impact of the COVID-19 Pandemic and the OPEC Production Disputes, we also modified the application of certain of our critical accounting policies during and as of the three months ended March 31, 2020 as follows:

Goodwill and Potential Impairment

Our annual goodwill impairment analysis is performed during the fourth quarter of each year. Under ASC 350, Intangibles - Goodwill and Other, goodwill of a reporting unit shall be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

We have identified two significant events that arose during the three months ended March 31, 2020 that adversely affected the global economy and the oil and gas industry. These two events are the COVID-19 Pandemic and the OPEC Production Disputes (previously defined), both of which had the secondary effect of impacting prices of crude oil and refined products as well as supply and demand for crude oil and refined products, and triggered several identified uncertainties, as discussed in the 'Business Overview' section of Management's Discussion and Analysis. Our assessment was performed based on the events that had occurred through March 31, 2020 and excluded developments that occurred in the subsequent period, including but not limited to government-imposed temporary business closures and voluntary shelter-at-home directives as well as developments in production discussions between global oil producers, and the effect thereof. In order to determine whether these events, including the developments around such events that had occurred through March 31, 2020 and our assumptions about future periods based on those events and related developments, would more likely than not reduce the fair value of a reporting unit below its carrying amount, we performed certain analyses on the most significant inputs in our valuation model to evaluate the impact of these events on the fair value of our reporting units. This included sensitivity analysis and stress testing on certain of our inputs to our valuation model, including the weighted-average cost of capital, the throughput volume, and the crack spread, which is based on the crude and refined product markets. Based on our analyses (which, as noted above, were based on the conditions and events that had occurred as of March 31, 2020), we determined that there is not an indicator that fair value is more likely than not to have declined below carrying value as of March 31, 2020.



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Management's Discussion and Analysis

Additionally, because conditions and events are rapidly changing, we continue to monitor developments with these events and their impact on our valuation. However, there is uncertainty in and around the impact of the COVID-19 Pandemic and the OPEC Production Disputes that have not yet occurred or for existing conditions and events that may have future ramifications that cannot yet be anticipated. Continued or sustained adverse change to these factors may result in potential future impairment of some or all of our goodwill balance.

Other than as described above, for all financial statement periods presented, there have been no material modifications to the application of these critical accounting policies or estimates since our most recently filed Annual Report on Form 10-K. See Note 1 of the condensed consolidated financial statements in Item 1, Financial Statements for discussion of updates to our accounting policies.

Non-GAAP Measures

Our management uses certain “non-GAAP” operational measures to evaluate our operating segment performance and non-GAAP financial measures to evaluate past performance and prospects for the future to supplement our GAAP financial information presented in accordance with U.S. GAAP. These financial and operational non-GAAP measures are important factors in assessing our operating results and profitability and include:


•	Refining margin - calculated as the difference between net refining revenues and total cost of materials and other;


•	Refined product margin - calculated as the difference between net revenues attributable to refined products (produced and purchased) and related cost of materials and other (which is applicable to both the refining segment and the west Texas wholesale marketing activities within our logistics segment); and


•	Refining margin per barrels sold - calculated as refining margin divided by our average refining sales in barrels per day (excluding purchased barrels) multiplied by 1,000 and multiplied by the number of days in the period.

We believe these non-GAAP operational and financial measures are useful to investors, lenders, ratings agencies and analysts to assess our ongoing performance because, when reconciled to their most comparable GAAP financial measure, they provide improved comparability between periods through the exclusion of certain items that we believe are not indicative of our core operating performance and they may obscure our underlying results and trends.

Non-GAAP measures have important limitations as analytical tools, because they exclude some, but not all, items that affect net earnings and operating income. These measures should not be considered substitutes for their most directly comparable U.S. GAAP financial measures.

Non-GAAP Reconciliations

The following table provides a reconciliation of refining margin to the most directly comparable U.S.GAAP measure, gross margin:

Reconciliation of refining margin to gross margin



Refining Segment
	Three Months Ended March 31,
	2020			2019
Net revenues	$	1,727.9		$	2,092.0
Cost of sales	2,055.5			1,821.2
Gross margin	(327.6		)	270.8
Add back (items included in cost of sales):
Operating expenses (excluding depreciation and amortization)	111.7			121.0
Depreciation and amortization	37.2			31.1
Refining margin	$	(178.7	)	$	422.9



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Management's Discussion and Analysis

Summary Financial and Other Information

The following table provides summary financial data for Delek:

Statement of Operations Data (in millions)



Consolidated
	Three Months Ended March 31,
	2020			2019
Net revenues	$	1,821.2		$	2,199.9
Total operating costs and expenses	2,182.7			1,977.5
Operating income	(361.5		)	222.4
Total non-operating expenses, net	28.6			22.2
(Loss) income before income tax (benefit) expense	(390.1		)	200.2
Income tax (benefit) expense	(83.1		)	45.8
Net (loss) income	(307.0		)	154.4
Net income attributed to non-controlling interests	7.4			5.1
Net (loss) income attributable to Delek	$	(314.4	)	$	149.3

We report operating results in three reportable segments:


•	Refining


•	Logistics


•	Retail

Decisions concerning the allocation of resources and assessment of operating performance are made based on this segmentation. Management measures the operating performance of each of its reportable segments based on the segment contribution margin which is defined as net revenues less costs of materials and other and operating expenses, excluding depreciation and amortization.



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Management's Discussion and Analysis

Results of Operations

Consolidated Results of Operations — Comparison of the Three Months Ended March 31, 2020 versus the Three Months Ended March 31, 2019

Net Loss

Consolidated net loss for the first quarter of 2020 was $307.0 million compared to a net income of $154.4 million for the first quarter of 2019. Consolidated net loss attributable to Delek for the first quarter of March 31, 2020 was $314.4 million, or $(4.28) per basic share, compared to a net income of $149.3 million, or $1.92 per basic share, for the first quarter 2019. Explanations for significant drivers impacting net loss as compared to the comparable period of the prior year are discussed in the sections below.

Net Revenues

In the first quarters of 2020 and 2019, we generated net revenues of $1,821.2 million and $2,199.9 million, respectively, a decrease of $378.7 million, or 17.2%. The decrease in net revenues was primarily driven by the following factors:


•	in our refining segment, decreased sales volumes partially due to turnaround activities at our Big Spring refinery and decreases in the average price of U.S. Gulf Coast gasoline of 17.8%, ultra-low sulfur diesel of 21.8%, and high-sulfur diesel of 22.3%; and


•	in our retail segment, decreases in fuel sales volumes and merchandise sales partially attributable to reduction in the average number of stores, as well as a $0.03 decrease in average price charged per gallon quarter over quarter.

Such decreases were partially offset by:


•	in our logistics segment, increased volumes sold in West Texas marketing operations, increased rates and change in fee structure for Paline pipeline, and increased throughputs at our SALA gathering system and Magnolia pipeline.

Cost of Materials and Other

Cost of materials and other was $1,910.6 million for the first quarter of 2020 compared to $1,699.4 million for the first quarter of 2019, an increase of $211.2 million, or 12.4%. The net increase in cost of materials and other was primarily driven by the following:


•	a narrowing of crude oil differentials during the first quarter where the Midland WTI crude oil differential to Brent crude oil was an average discount of $5.31 per barrel compared to $10.13 per barrel in the prior-year period, and the WTI Midland to WTI Cushing discount averaged $0.06 per barrel in the first quarter 2020 compared to a discount of $1.17 per barrel in the prior-year period;


•	the net reversal (expense) benefit of $(280.8) million related to inventory valuation reserves recognized during the first quarter of 2020 compared to $52.1 million recognized during the first quarter of 2019;


•	increases in ethanol RIN prices which averaged $0.47 per RIN in first quarter 2020 compared to $0.20 per RIN in the prior-year period; and


•	increases in the volume of refined products in the logistics segment were partially offset by decreases in the average cost per gallon of gasoline and diesel purchased.

Such increases were partially offset by the following:


•	decreases in volume partially due to turnaround activities at Big Spring refinery and cost of crude oil feedstocks at the refineries, including a decrease in the cost of WTI Cushing crude oil from an average of $54.87 per barrel to an average of $45.57;


•	an increase in hedging gains to $77.9 million recognized during the first quarter of 2020 from $19.8 million recognized during the first quarter of 2019; and


•	a decrease in retail fuel cost of materials and other attributable to a reduction in number of stores and a decrease in average cost per gallon of $0.14.

Operating Expenses

Operating expenses were $154.5 million for the first quarter of 2020 compared to $166.7 million for the first quarter of 2019, a decrease of $12.2 million, or 7.3%. The decrease in operating expenses was primarily driven by the following:


•	decreases in the refining segment related to lower employee, utilities and maintenance costs;


•	decrease in outside service costs across all segments; and


•	decrease in retail operating expenses due to reduction in number of stores.



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Management's Discussion and Analysis

General and Administrative Expenses

General and administrative expenses were $65.7 million for the first quarter of 2020 compared to $62.2 million for the first quarter of 2019, an increase of $3.5 million, or 5.6%. The increase in general and administrative expense was primarily driven by the following:


•	an increase in employee, insurance and subscriptions costs driven by increased headcount in corporate and other.

Such increases were partially offset by a decrease in contract services.

Depreciation and Amortization

Depreciation and amortization (included in both cost of sales and other operating expenses) was $52.6 million for the first quarter of 2020 compared to $46.8 million for the first quarter of 2019, an increase of $5.8 million, or 12.4%.

Other Operating Income, Net

Other operating income, net increased by $3.1 million in the first quarter of 2020 to income of $0.7 million compared to expense of $2.4 million in the first quarter of 2019.

Non-operating Expenses, Net

Interest Expense

Interest expense increased by $7.6 million, or 26.5%, to $36.3 million in the first quarter of 2020 compared to $28.7 million in the first quarter of 2019, primarily driven by the following:

•

an increase in net average borrowings outstanding (including the obligations under the Supply and Offtake Agreements which have an associated interest charge) of approximately $373.7 million in the first quarter of 2020 (calculated as a simple average of beginning borrowings/obligations and ending borrowings/obligations for the period) compared to the first quarter of 2019, and an increase in the average effective interest rate of 0.41% in the first quarter of 2020 compared to the first quarter of 2019 (where effective interest rate is calculated as interest expense divided by the net average borrowings/obligations outstanding).

Results from Equity Method Investments

We recognized income of $5.1 million from equity method investments during the first quarter of 2020, compared to $2.6 million for the first quarter of 2019, an increase of $2.5 million. This increase was primarily driven by the following:


•	the addition of the Red River Joint Venture in May 2019 which contributed income of $1.8 million in the first quarter of 2020; and


•	an increase in income from our other logistics joint ventures from $2.0 million in the first quarter of 2019 to $3.8 million in the first quarter of 2020.

Such increases were partially offset by losses attributable to our investment in WWP and the WWP Project Financing JV, which is still in the construction period.

Other

Other income decreased $0.5 million, to $0.9 million in first quarter of 2019 compared to $1.4 million in the first quarter of 2020.

Income Taxes

Income tax expense decreased by $128.9 million in the first quarter of 2020 compared to the first quarter of 2019, primarily driven by the following:


•	pre-tax loss of $390.1 million in the first quarter of 2020, as compared to pre-tax income of $200.2 million for the first quarter of 2019; and


•	a decrease in our effective tax rate which was 21.3% for the first quarter of 2020, compared to 22.9% for the first quarter of 2019 primarily due to the following:


◦	reversal of a valuation allowance attributable to book-tax basis differences in partnership investments reported as a discrete benefit for the quarter; and


◦	offsetting impact of tax expense for permanent differences due to application of the estimated annual tax rate to year-to-date loss for the quarter.



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Management's Discussion and Analysis

Refining Segment

The tables and charts below set forth certain information concerning our refining segment operations ($ in millions, except per barrel amounts):



Refining Segment Margins
	Three Months Ended March 31,
	2020			2019
Net revenues	$	1,727.9		$	2,092.0
Cost of materials and other	1,906.6			1,669.1
Refining margin	(178.7		)	422.9
Operating expenses (excluding depreciation and amortization)	111.7			121.0
Contribution margin	$	(290.4	)	$	301.9

Factors Impacting Refining Profitability

Our profitability in the refining segment is substantially determined by the difference between the cost of the crude oil feedstocks we purchase and the price of the refined products we sell, referred to as the "crack spread", "refining margin" or "refined product margin". Refining margin is used as a metric to assess a refinery's product margins against market crack spread trends, where "crack spread" is a measure of the difference between market prices for crude oil and refined products and is a commonly used proxy within the industry to estimate or identify trends in refining margins.

The cost to acquire feedstocks and the price of the refined petroleum products we ultimately sell from our refineries depend on numerous factors beyond our control, including the supply of, and demand for, crude oil, gasoline and other refined petroleum products which, in turn, depend on, among other factors, changes in domestic and foreign economies, weather conditions such as hurricanes or tornadoes, local, domestic and foreign political affairs, global conflict, production levels, the availability of imports, the marketing of competitive fuels and government regulation. Other significant factors that influence our results in the refining segment include operating costs (particularly the cost of natural gas used for fuel and the cost of electricity), seasonal factors, refinery utilization rates and planned or unplanned maintenance activities or turnarounds. Moreover, while the fluctuations in the cost of crude oil are typically reflected in the prices of light refined products, such as gasoline and diesel fuel, the price of other residual products, such as asphalt, coke, carbon black oil and liquefied petroleum gas ("LPG") are less likely to move in parallel with crude cost. This could cause additional pressure on our realized margin during periods of rising or falling crude oil prices.

Additionally, our margins are impacted by the pricing differentials of the various types and sources of crude oil we use at our refineries and their relation to product pricing. Our crude slate is predominantly comprised of WTI crude oil. Therefore, favorable differentials of WTI compared to other crude will favorably impact our operating results, and vice versa. Additionally, because of our gathering system presence in the Midland area and the significant source of crude specifically from that region into our network, a widening of the WTI Cushing less WTI Midland spread will favorably influence the operating margin for our refineries. Alternatively, a narrowing of this differential will have an adverse effect on our operating margins. Global product prices are influenced by the price of Brent crude which is a global benchmark crude. Global product prices influence product prices in the U.S. As a result, our refineries are influenced by the spread between Brent crude and WTI Midland. The Brent less WTI Midland spread represents the differential between the average per barrel price of Brent crude oil and the average per barrel price of WTI Midland crude oil. A widening of the spread between Brent and WTI Midland will favorably influence our refineries' operating margins. Also, the Krotz Springs refinery is influenced by the spread between Brent crude and LLS. The Brent less LLS spread represents the differential between the average per barrel price of Brent crude oil and the average per barrel price of LLS crude oil. A discount in LLS relative to Brent will favorably influence the Krotz Springs refinery operating margin.

As part of our overall business strategy, we regularly evaluate opportunities to expand our portfolio of businesses and may at any time be discussing or negotiating a transaction that, if consummated, could have a material effect on our business, financial condition, liquidity or results of operations.



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Management's Discussion and Analysis



Refinery Statistics
	Three Months Ended March 31,
	2020			2019
	(Unaudited)
Tyler, TX Refinery
Days in period	91			90
Total sales volume - refined product (average barrels per day)⁽¹⁾	74,981			70,028
Products manufactured (average barrels per day):
Gasoline	40,041			39,341
Diesel/Jet	27,403			27,383
Petrochemicals, LPG, natural gas liquids ("NGLs")	1,992			2,056
Other	1,242			1,166
Total production	70,678			69,946
Throughput (average barrels per day):
Crude Oil	65,966			64,479
Other feedstocks	5,741			6,471
Total throughput	71,707			70,950
Per barrel of refined product sales:
Tyler refining margin	(21.51		)	$	22.26
Direct operating expenses	3.73			$	4.70
Crude Slate: (% based on amount received in period)
WTI crude oil	92.6		%	89.6		%
East Texas crude oil	7.4		%	9.1		%
Other	—		%	1.3		%

El Dorado, AR Refinery
Days in period	91			90
Total sales volume - refined product (average barrels per day)⁽¹⁾	77,551			52,440
Products manufactured (average barrels per day):
Gasoline	36,407			20,490
Diesel	27,637			15,451
Petrochemicals, LPG, NGLs	2,061			806
Asphalt	6,641			4,825
Other	972			639
Total production	73,718			42,211
Throughput (average barrels per day):
Crude Oil	71,621			41,112
Other feedstocks	2,643			2,192
Total throughput	74,265			43,304
Per barrel of refined product sales:
El Dorado refining margin	$	(8.45	)	$	13.45
Direct operating expenses	$	4.42		$	6.69
Crude Slate: (% based on amount received in period)
WTI crude oil	34.4		%	41.3		%
Local Arkansas crude oil	19.2		%	27.7		%
Other	46.4		%	31.0		%



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Management's Discussion and Analysis



Refinery Statistics (continued)
	Three Months Ended March 31,
	2020			2019
	(Unaudited)
Big Spring, TX Refinery
Days in period	91			90
Total sales volume - refined product (average barrels per day)⁽¹⁾	38,086			81,849
Products manufactured (average barrels per day):
Gasoline	14,607			38,900
Diesel/Jet	9,796			28,359
Petrochemicals, LPG, NGLs	1,381			3,848
Asphalt	850			1,512
Other	480			1,237
Total production	27,114			73,856
Throughput (average barrels per day):
Crude oil	29,905			72,329
Other feedstocks	(1,327		)	1,890
Total throughput	28,579			74,219
Per barrel of refined product sales:
Big Spring refining margin	$	(12.60	)	$	18.16
Direct operating expenses	$	7.37		$	3.81
Crude Slate: (% based on amount received in period)
WTI crude oil	56.3		%	79.5		%
WTS crude oil	43.7		%	20.5		%

Krotz Springs, LA Refinery
Days in period	91			90
Total sales volume - refined product (average barrels per day) ⁽¹⁾	81,016			78,231
Products manufactured (average barrels per day):
Gasoline	29,933			38,062
Diesel/Jet	30,932			30,391
Heavy Oils	731			1,090
Petrochemicals, LPG, NGLs	3,006			7,269
Other	—			105
Total production	64,602			76,917
Throughput (average barrels per day):
Crude Oil	72,481			72,330
Other feedstocks	(8,383		)	3,166
Total throughput	64,098			75,496
Per barrel of refined product sales:
Krotz Springs refining margin	$	(1.49	)	$	11.95
Direct operating expenses	$	3.43		$	3.89
Crude Slate: (% based on amount received in period)
WTI Crude	66.1		%	65.0		%
Gulf Coast Sweet Crude	33.9		%	35.0		%


⁽¹⁾	Includes inter-refinery sales and sales to other segments which are eliminated in consolidation. See tables below.



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Management's Discussion and Analysis

Included in the refinery statistics above are the following inter-refinery and sales to other segments:



Inter-refinery Sales
	Three Months Ended March 31,
(in barrels per day)	2020	2019
	(Unaudited)

Tyler refined product sales to other Delek refineries	763	197
El Dorado refined product sales to other Delek refineries	1,466	847
Big Spring refined product sales to other Delek refineries	1,025	1,296
Krotz Springs refined product sales to other Delek refineries	293	797



Refinery Sales to Other Segments
	Three Months Ended March 31,
(in barrels per day)	2020	2019
	(Unaudited)

Tyler refined product sales to other Delek segments	3,207	540
El Dorado refined product sales to other Delek segments	328	253
Big Spring refined product sales to other Delek segments	25,112	26,862



Pricing Statistics (average for the period presented)
	Three Months Ended March 31,
	2020		2019
	(Unaudited)

WTI — Cushing crude oil (per barrel)	$	45.57	$	54.87
WTI — Midland crude oil (per barrel)	$	45.51	$	53.70
WTS -- Midland crude oil (per barrel) ⁽¹⁾	$	44.99	$	53.93
LLS (per barrel) ⁽¹⁾	$	47.63	$	62.36
Brent crude oil (per barrel)	$	50.82	$	63.83

U.S. Gulf Coast 5-3-2 crack spread (per barrel) ⁽¹⁾	$	8.76	$	13.02
U.S. Gulf Coast 3-2-1 crack spread (per barrel) ⁽¹⁾	$	11.41	$	15.18
U.S. Gulf Coast 2-1-1 crack spread (per barrel) ⁽¹⁾	$	8.12	$	7.33

U.S. Gulf Coast Unleaded Gasoline (per gallon)	$	1.25	$	1.52
Gulf Coast Ultra low sulfur diesel (per gallon)	$	1.47	$	1.88
U.S. Gulf Coast high sulfur diesel (per gallon)	$	1.36	$	1.75
Natural gas (per MMBTU) ⁽²⁾	$	1.87	$	2.87

⁽¹⁾

For our Tyler and El Dorado refineries, we compare our per barrel refining product margin to the Gulf Coast 5-3-2 crack spread consisting of WTI Cushing crude, U.S. Gulf Coast CBOB and U.S. Gulf Coast Pipeline No. 2 heating oil (high sulfur diesel). For our Big Spring refinery, we compare our per barrel refined product margin to the Gulf Coast 3-2-1 crack spread consisting of WTI Cushing crude, Gulf Coast 87 Conventional gasoline and Gulf Coast ultra low sulfur diesel, and for our Krotz Springs refinery, we compare our per barrel refined product margin to the Gulf Coast 2-1-1 crack spread consisting of LLS crude oil, Gulf Coast 87 Conventional gasoline and U.S, Gulf Coast Pipeline No. 2 heating oil (high sulfur diesel). The Tyler refinery's crude oil input is primarily WTI Midland and east Texas, while the El Dorado refinery's crude input is primarily a combination of WTI Midland, local Arkansas and other domestic inland crude oil. The Big Spring refinery’s crude oil input is primarily comprised of WTS and WTI Midland. The Krotz Springs refinery’s crude oil input is primarily comprised of LLS and WTI Midland.


⁽²⁾	One Million British Thermal Units ("MMBTU").



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Management's Discussion and Analysis

Refining Segment Operational Comparison of the Three Months Ended March 31, 2020 versus the Three Months Ended March 31, 2019

Net Revenues

Net revenues for the refining segment decreased by $364.1 million, or 17.4%, in the first quarter of 2020 compared to the first quarter of 2019, primarily driven by the following:


•	decreases in the average price of U.S. Gulf Coast gasoline of 17.8%, ULSD of 21.8%, and HSD of 22.3%; and


•	decreases in sales volume of refined product totaling 0.7 million barrels partially due to scheduled turnaround activities at our Big Spring refinery,and a 0.8 million barrel decrease in purchased product sales.

Net revenues included sales to our retail segment of $68.6 million and $90.2 million, and sales to our logistics segment of $80.7 million and $79.5 million. Also included was a reduction in sales to our other segment of $9.3 million and sales of $14.9 million for the three months ended March 31, 2020 and March 31, 2019, respectively. We eliminate this intercompany revenue in consolidation.

Cost of Materials and Other

Cost of materials and other increased by $237.5 million, or 14.2%, in the first quarter of 2020 compared to the first quarter of 2019, primarily driven by the following:


•	the net reversal (expense) benefit of $(277.8) million related to inventory valuation reserves recognized during the first quarter of 2020 compared to $52.2 million recognized during the first quarter of 2019; and


•	increases in RIN expense, where ethanol RIN prices from an average of $0.47 per RIN in first quarter 2020 compared to $0.20 per RIN in the prior year period.

These increases were partially offset by the following:


•	an increase in hedging gains to $80.4 million recognized during the first quarter of 2020 from $18.6 million recognized during the first quarter of 2019;


•	decreases in the cost of WTI Cushing crude oil, from an average of $54.87 per barrel to an average of $45.57, or 16.95%; and


•	decreases in the cost of WTI Midland crude oil, from an average of $53.70 per barrel to an average of $45.51, or 15.3%.



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Management's Discussion and Analysis

Our refining segment purchases finished product from our logistics segment and has multiple service agreements with our logistics segment which, among other things, require the refining segment to pay terminalling and storage fees based on the throughput volume of crude and finished product in the logistics segment pipelines and the volume of crude and finished product stored in the logistics segment storage tanks, subject to minimum volume commitments. These costs and fees were $96.7 million and $52.2 million during the first quarters of 2020 and 2019, respectively. We eliminate these intercompany fees in consolidation.

Refining Margin

Refining margin decreased by $601.6 million, or 142.3%, in the first quarter of 2020 compared to the first quarter of 2019, primarily driven by the following:


•	a narrowing of the average WTI Cushing crude oil differential to WTS crude oil to $0.58 per barrel during the first quarter of 2020 compared to $0.94 during the first quarter of 2019 and narrowing of the average WTI Midland crude oil differential to WTI Cushing crude oil to $0.06 per barrel during the first quarter of 2020 compared to $1.17 during the first quarter of 2019; and


•	a narrowing of the discount between WTI Midland crude oil and Brent crude oil where, during the first quarter of 2020, the WTI Midland crude oil differential to Brent crude oil was an average discount of $5.31 per barrel compared to $10.13 per barrel during the first quarter of 2019;


•	a 32.72% decline in the 5-3-2 crack spread (the primary measure for the Tyler refinery and El Dorado refinery);


•	a 24.84% decline in the average Gulf Coast 3-2-1 crack spread (the primary measure for the Big Spring refinery); and


•	an increase in inventory valuation reserve of during the first quarter of 2020 compared to prior year period.

These decreases were partially offset by the following:


•	an increase in hedging gains to $80.4 million recognized during the first quarter of 2020 from $18.6 million recognized during the first quarter of 2019; and


•	a 10.78% improvement in the average Gulf Coast 2-1-1 crack spread (the primary measure for the Krotz Springs refinery).



54 \|

Management's Discussion and Analysis

Operating Expenses

Operating expenses decreased by $9.3 million, or 7.7%, in the first quarter of 2020 compared to the first quarter of 2019, primarily driven by the following:


•	decreases in employee related costs primarily related to decrease in incentive plan and workforce optimization to reduce overtime rates;


•	decreases in utilities and catalyst costs, primarily at our Big Spring refinery related to reduced throughput due to turnaround; and


•	decreases in contractor and materials costs partially due to cost reduction measures taken in the first quarter of 2020.

Contribution Margin

Contribution margin decreased by $592.3 million, or a 31.2% reduction in contribution margin percentage, in the first quarter of 2020 compared to the first quarter of 2019, primarily driven by the following:


•	the decline of the Midland WTI crude oil differential to Brent crude oil compared to the prior-year period;


•	reduced performance at our Big Spring refinery due to turnaround;



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Management's Discussion and Analysis


•	a 32.72% decline in the 5-3-2 crack spread (the primary measure for the Tyler and El Dorado refineries) and a 24.84% decline in the average Gulf Coast 3-2-1 crack spread (the primary measure for the Big Spring refinery);


•	an increase in inventory valuation reserve of during the first quarter of 2020 compared to prior year period; and


•	a narrowing of the discount between WTI Cushing and WTS crude oil compared to the first quarter of 2019.

These decreases were partially offset by the following:


•	an increase in hedging gains during the first quarter of 2020 compared to prior year period;


•	a 10.78% improvement in the average Gulf Coast 2-1-1 crack spread (the primary measure for the Krotz Springs refinery); and


•	decreases in operating expenses across all refineries.



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Management's Discussion and Analysis

Logistics Segment

The table below sets forth certain information concerning our logistics segment operations ($ in millions, except per barrel amounts):



Logistics Contribution Margin and Operating Information
	Three Months Ended March 31,
	2020		2019
Net revenues	$	163.4	$	152.5
Cost of materials and other	101.3		96.3
Operating expenses (excluding depreciation and amortization)	14.8		16.1
Contribution margin	$	47.3	$	40.1
Operating Information:
East Texas - Tyler Refinery sales volumes (average bpd) ⁽¹⁾	72,650		68,577
Big Spring wholesale marketing throughputs (average bpd)	66,386		87,741
West Texas wholesale marketing throughputs (average bpd)	16,081		13,314
West Texas wholesale marketing margin per barrel	$	2.70	$	3.56
Terminalling throughputs (average bpd) ⁽²⁾	135,329		152,469
Throughputs (average bpd):
Lion Pipeline System:
Crude pipelines (non-gathered)	55,471		28,683
Refined products pipelines to Enterprise Systems	54,106		23,092
SALA Gathering System	34,906		16,998
East Texas Crude Logistics System	14,174		18,113


⁽¹⁾	^{Excludes jet fuel and petroleum coke.}


⁽²⁾	^{Consists of terminalling throughputs at our Tyler, Big Spring, Big Sandy and Mount Pleasant, Texas, El Dorado and North Little Rock, Arkansas and Memphis and Nashville, Tennessee terminals.}

Logistics Segment Operational Comparison of the Three Months Ended March 31, 2020 versus the Three Months Ended March 31, 2019

Net Revenues

Net revenues increased by $10.9 million, or 7.1%, in the first quarter of 2020 compared to the first quarter of 2019, primarily driven by the following:


•	increases in the average volumes sold partially offset by decreases in the average sales prices per gallon of gasoline and diesel in our West Texas marketing operations.


◦	the average volumes of gasoline sold increased 13.3 million gallons, partially offset by a 1.3 million decrease of diesel gallons sold.


◦	the average sales prices per gallon of gasoline and diesel sold decreased $0.12 per gallon and $0.37 per gallon, respectively.


•	increased revenues associated with our Paline Pipeline as a result of increased rates and a change in the fee structure from the three months ended March 31, 2019, during which the capacity of the Paline Pipeline was contracted to separate parties for a monthly fee, compared to the three months ended March 31, 2020, during which the pipeline was subject to a FERC tariff; and


•	increased revenues at our SALA Gathering and Magnolia Pipeline as result of increased throughput during the three months ended March 31, 2020 when compared to the three months ended March 31, 2019.

Net revenues included sales to our refining segment of $105.7 million and $61.1 million for the three months ended March 31, 2020 and March 31, 2019, respectively, and sales to our other segment of $0.9 million and $1.8 million for the three months ended March 31, 2020 and 2019, respectively. We eliminate this intercompany revenue in consolidation.



57 \|

Management's Discussion and Analysis

Cost of Materials and Other

Cost of materials and other for the logistics segment increased $5.0 million, or 5.2%, in the first quarter of 2020 compared to the first quarter of 2019. This increase was primarily driven by the following:


•	increases in the average volumes sold, partially offset by decreases in the average cost per gallon of gasoline and diesel sold in our West Texas marketing operations.


◦	the average volumes of gasoline and diesel sold increased 13.3 million gallons, partially offset by 1.3 million decrease of diesel gallons sold.


◦	the average cost per gallon of gasoline and diesel sold decreased $0.10 per gallon and $0.30 per gallon, respectively.


•	inventory net realizable value charge amounting to $2.9 million due to $0.92 per barrel markdown on inventory; and


•	an increase in hedging gains to $3.1 million recognized during the first quarter of 2020 from a loss of $1.0 million recognized during the first quarter of 2019.

Our logistics segment purchased product from our refining segment of $80.7 million and $79.5 million for the three months ended March 31, 2020 and March 31, 2019, respectively. We eliminate these intercompany costs in consolidation.

Operating Expenses

Operating expenses decreased by $1.3 million, or 8.1%, in the first quarter of 2020 compared to the first quarter of 2019, driven by the following:


•	lower operating costs associated with allocated contract services pertaining to certain of our assets; and



58 \|

Management's Discussion and Analysis


•	decrease in utilities expense.

These decreases were partially offset by:


•	higher employee costs allocated to us as a result of an increase in allocated employee headcount in various operational groups as the Partnership continues to experience growth.

Contribution Margin

Contribution margin increased by $7.2 million, or 18.0%, in the first quarter of 2020 compared to the first quarter of 2019, primarily driven by the following:


•	increases in revenues associated with Paline Pipeline, SALA Gathering system and West Texas Marketing operations;


•	decreases in operating expenses; and


•	increase in hedging gains.

Such increases were partially offset by the following:


•	decrease in gross margin of $0.86 per barrel of our gasoline and diesel sold in our West Texas marketing operations.



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Management's Discussion and Analysis

Retail Segment

The table below sets forth certain information concerning our retail segment operations (gross sales $ in millions):



Retail Contribution Margins
	Three Months Ended March 31,
	2020			2019
Net revenues	$	178.6		$	197.2
Cost of materials and other	144.1			163.4
Operating expenses (excluding depreciation and amortization)	22.2			23.6
Contribution margin	$	12.3		$	10.2

Operating Information
Number of stores (end of period)	253			281
Average number of stores	253			281
Average number of fuel stores	248			271
Retail fuel sales	$	106.9		$	121.9
Retail fuel sales (thousands of gallons)	47,959			53,890
Average retail gallons sold per average number of fuel stores (in thousands)	194			199
Average retail sales price per gallon sold	$	2.23		$	2.26
Retail fuel margin ($ per gallon) ⁽¹⁾	$	0.307		$	0.194
Merchandise sales (in millions)	$	71.7		$	75.3
Merchandise sales per average number of stores (in millions)	$	0.3		$	0.3
Merchandise margin %	31.6		%	31.0		%



Same-Store Comparison (2)
	Three Months Ended March 31,
	2020		2019
Change in same-store fuel gallons sold	(8.2	)%	4.1	%
Change in same-store merchandise sales	1.7	%	0.8	%


⁽¹⁾	Retail fuel margin represents gross margin on fuel sales in the retail segment, and is calculated as retail fuel sales revenue less retail fuel cost of sales. The retail fuel margin per gallon calculation is derived by dividing retail fuel margin by the total retail fuel gallons sold for the period.


⁽²⁾	Same-store comparisons include period-over-period increases or decreases in specified metrics for stores that were in service at both the beginning of the earliest period and the end of the most recent period used in the comparison.

Retail Segment Operational Comparison of the Three Months Ended March 31, 2020 versus the Three Months Ended March 31, 2019

Net Revenue

Net revenues for the retail segment decreased by $18.6 million, or 9.4%, in the first quarter of 2020 compared to the first quarter of 2019, primarily driven by the following:


•	total fuel sales were $106.9 million in the first quarter of 2020 compared to $121.9 million in the first quarter of 2019, attributable to the following:


◦	$4.1 million decrease related to reduction in number of stores period over period;


◦	a decrease in total retail fuel gallons sold for the retail segment to 47,959 thousand gallons in the first quarter of 2020 compared to 53,890 thousand gallons in the first quarter of 2019 associated with the reduction in average number of stores period over period, and a same-store sales decrease in fuel volumes of 8.2%; and


◦	a $0.03 decrease in average price charged per gallon;



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Management's Discussion and Analysis


•	merchandise sales were $71.7 million in the first quarter of 2020 compared to $75.3 million in the first quarter of 2019 attributable to the following:


◦	$5.8 million decrease related to reduction in number of stores; and


◦	partially offset by a same-store sales increase of 1.7%.

Cost of Materials and Other

Cost of materials and other for the retail segment decreased by $19.3 million, or 11.8%, in the first quarter of 2020 compared to the first quarter of 2019, primarily driven by the following:


•	$8.3 million decrease due to reduction in number of stores period over period; and


•	a decrease in average cost per gallon of $0.14 or 6.7% applied to fuel sales volumes that decreased period over period.

Our retail segment purchased finished product from our refining segment of $68.6 million and $90.2 million for the three months ended March 31, 2020 and March 31, 2019. We eliminate this intercompany cost in consolidation.



61 \|

Management's Discussion and Analysis

Operating Expenses

Operating expenses for the retail segment decreased by $1.4 million, or 5.9% in the first quarter of 2020 compared to the first quarter of 2019. This decrease is primarily attributable to a decrease in operating costs associated with the reduction in the number of stores.

Contribution Margin

Contribution margin for the retail segment increased by $2.1 million, or 20.6%, in the first quarter of 2020 compared to the first quarter of 2019, primarily driven by a $0.113 per gallon improvement in the retail fuel margin and a slight increase in merchandise margin.



62 \|

Management's Discussion and Analysis

Liquidity and Capital Resources

Our primary sources of liquidity and capital resources are


•	cash generated from our operating activities;


•	borrowings under our debt facilities; and


•	potential issuances of additional equity and debt securities.

Historically, we have generated adequate cash from operations to fund ongoing working capital requirements, pay quarterly cash dividends and operational capital expenditures and expect the same in the foreseeable future. Other funding sources including issuance of equity and debt securities have been utilized to meet our funding requirements and support our growth capital projects and acquisitions. In addition we have historically been able to source funding at terms that reflect market conditions, our financial position and our credit ratings. We continue to monitor market conditions, our financial position and our credit ratings and expect future funding sources to be at terms that are sustainable and profitable for the Company. However, there can be no assurances regarding the availability of any future debt or equity financings or whether such financings can be made available on terms that are acceptable to us. Nevertheless, our ability to satisfy working capital requirements, to service our debt obligations, to fund planned capital expenditures, or to pay dividends will depend upon future operating performance, which will be affected by prevailing economic conditions in the oil industry and other financial and business factors, including the current COVID-19 Pandemic and oil prices, some of which are beyond our control.

If market conditions were to change, for instance due to the significant decline in oil prices or uncertainty created by the COVID-19 Pandemic, and our revenue was reduced significantly or operating costs were to increase significantly, our cash flows and liquidity could be reduced.

As of March 31, 2020, we believe we were in compliance with all of our debt covenants. After considering the current and potential effect of the significant decline in oil prices and uncertainty created by the COVID-19 Pandemic on our operations, we currently expect to remain in compliance with our debt covenants.

Cash Flows

The following table sets forth a summary of our consolidated cash flows (in millions):



Consolidated
	Three Months Ended March 31,
	2020			2019
Cash Flow Data:
Operating activities	$	(154.1	)	$	133.4
Investing activities	(146.6		)	(127.0		)
Financing activities	130.3			(96.0		)
Net decrease	$	(170.4	)	$	(89.6	)

Cash Flows from Operating Activities

Net cash used in operating activities was $154.1 million for the three months ended March 31, 2020, compared to cash provided by operating activities of $133.4 million for the comparable period of 2019. Cash receipts from customers and cash payments to suppliers and for salaries decreased resulting in a net $283.3 million decrease in cash from operating activities mainly due to a decline in the volume of refined product sold. Additionally, cash paid for debt interest increased by $7.1 million. This decrease was partially offset by a $3.0 million increase in cash received for dividends.

Cash Flows from Investing Activities

Net cash used in investing activities was $146.6 million for the first three months of 2020, compared to $127.0 million in the comparable period of 2019. The increase in cash flows used in investing activities was primarily due to an increase in cash purchases of property, plant and equipment which increased from $124.0 million in 2019, to $189.2 million in 2020 predominantly attributable to capital expenditures related to turnaround and other sustaining maintenance activities in our refining segment, partially offset by reduced discretionary spending in other segment. Additionally, contributing to the increase in cash used was a $22.3 million increase in equity method investment contributions in the current year, $8.2 million of which related to our interest in Red River Red River Pipeline Joint Venture and $18.9 million of which related to our interest in the WWP and WWP Project Financing JV, both of which did not exist in the comparable prior year period. Such increases in cash used were partially offset by distributions received from our WWP Project Financing JV in the amount of $69.3 million for which there was no comparable activity in the prior year period.



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Cash Flows from Financing Activities

Net cash provided by financing activities was $130.3 million for the three months ended March 31, 2020, compared to net cash used of $96.0 million in the comparable 2019 period. This increase in cash provided was predominantly due to net proceeds received from long-term revolvers of $176.7 million during the three months ended March 31, 2020 compared to $4.5 million in the comparable 2019 period. Additionally contributing to this increase were a decrease in repurchases of common stock to $1.9 million for the three months ended March 31, 2020 compared to $46.2 million in the comparable 2019 period due to management suspending our share repurchase program, and an increase in net proceeds from inventory financing arrangements to $21.0 million for the three months ended March 31, 2020 compared to $6.6 million in the comparable 2019 period.

Cash Position and Indebtedness

As of March 31, 2020, our total cash and cash equivalents were $784.9 million and we had total indebtedness of approximately $2,216.9 million. The total indebtedness is net of deferred financing costs and debt discount of $7.5 million and $13.3 million, respectively. Additionally, we had letters of credit issued of approximately $193.6 million. Total unused credit commitments or borrowing base availability, as applicable, under our revolving credit facilities was approximately $836.7 million. We believe we were in compliance with our covenants in all debt facilities as of March 31, 2020. Our total indebtedness consisted of the following:


•	an aggregate principal amount of $100.0 million under the Revolving Credit Facility, due on March 30, 2023, with average borrowing rate of 3.50%;


•	an aggregate principal amount of $1,082.8 million under the Term Loan Credit Facility, due on March 30, 2025, with effective interest of 3.55%;


•	an aggregate principal amount of $39.9 million in outstanding borrowings under the Delek Hapoalim Term Loan, due on December 31, 2022, with effective interest of 4.43%;


•	an aggregate principal amount of $695.0 million under the Delek Logistics Credit Facility, due on September 28, 2023, with average borrowing rate of 3.70%;


•	an aggregate principal amount of $250.0 million under the Delek Logistics Notes, due in 2025, with effective interest rate of 7.23%;


•	an aggregate principal amount of $50.0 million under the Reliant Bank Revolver, due on June 30, 2022, with fixed interest rate of 4.50%; and


•	an aggregate principal amount of $20.0 million under the Promissory Notes, due on January 04, 2021, with fixed interest rate of 5.50%.

See Note 8 of the condensed consolidated financial statements in Item 1, Financial Statements, for additional information about our separate credit facilities.



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Management's Discussion and Analysis

Capital Spending

A key component of our long-term strategy is our capital expenditure program. Our capital expenditures for the three months ended March 31, 2020 were $190.2 million, of which approximately $168.1 million was spent in our refining segment, $3.0 million in our logistics segment, $6.2 million in our retail segment and $12.9 million at the holding company level. The following table summarizes our actual capital expenditures for the three months ended March 31, 2020 and planned capital expenditures for the full year 2020 by operating segment and major category (in millions):



	Full Year 2020 Forecast		Three Months Ended March 31, 2020
Refining
Sustaining maintenance, including turnaround activities	$	155.2	$	129.5
Regulatory	49.0		38.4
Discretionary projects	1.5		0.2
Refining segment total	205.7		168.1

Logistics
Regulatory	2.2		0.9
Sustaining maintenance	3.7		0.7
Discretionary projects	11.7		1.4
Logistics segment total	17.6		3.0

Retail
Regulatory	0.1		0.1
Sustaining maintenance	2.5		0.7
Discretionary projects	6.0		5.4
Retail segment total	8.6		6.2

Other
Regulatory	0.4		—
Sustaining maintenance	0.8		—
Discretionary projects	16.9		12.9
Other total	18.1		12.9
Total capital spending	$	250.0	$	190.2

The amount of our capital expenditure budget is subject to change due to unanticipated increases in the cost, scope and completion time for our capital projects. For example, we may experience increases in the cost of and/or timing to obtain necessary equipment required for our continued compliance with government regulations or to complete improvement projects or scheduled maintenance activities. Additionally, the scope and cost of employee or contractor labor expense related to installation of that equipment could exceed our projections. Our capital expenditure budget may also be revised as management continues to evaluate projects for reliability or profitability.

We have no material off-balance sheet arrangements through the date of the filing of this Quarterly Report on Form 10-Q.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

These disclosures should be read in conjunction with the condensed consolidated financial statements, "Management's Discussion and Analysis of Financial Condition and Results of Operations," and other information presented herein, as well as in the "Quantitative and Qualitative Disclosures About Market Risk" section contained in our Annual Report on Form 10-K, as filed on February 28, 2020.



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Management's Discussion and Analysis

Price Risk Management Activities

At times, we enter into the following instruments/transactions in order to manage our market-indexed pricing risk: commodity derivative contracts which we use to manage our price exposure to our inventory positions, future purchases of crude oil and ethanol, future sales of refined products or to fix margins on future production; and future commitments to purchase or sell RINs at fixed prices and quantities, which are used to manage the costs associated with our RINs obligations and meet the definition of derivative instruments under ASC 815, Derivatives and Hedging ("ASC 815"). In accordance with ASC 815, all of these commodity contracts and future purchase commitments are recorded at fair value, and any change in fair value between periods has historically been recorded in the profit and loss section of our condensed consolidated financial statements. Occasionally, at inception, the Company will elect to designate the commodity derivative contracts as cash flow hedges under ASC 815. Gains or losses on commodity derivative contracts accounted for as cash flow hedges are recognized in other comprehensive income on the condensed consolidated balance sheets and, ultimately, when the forecasted transactions are completed, in net revenues or cost of materials and other in the condensed consolidated statements of income.

The following table sets forth information relating to our open commodity derivative contracts as of March 31, 2020 ($ in millions):



	Total Outstanding				Notional Contract Volume by Year of Maturity
Contract Description	Fair Value			Notional Contract Volume	2020	2021	2022
Contracts not designated as hedging instruments:
Crude oil price swaps - long⁽¹⁾	$	(266.0	)	66,463,000	56,071,000	9,584,000	308,000
Crude oil price swaps - short⁽¹⁾	262.4			65,372,000	54,678,000	9,574,000	750,000
Inventory, refined product and crack spread swaps - long⁽¹⁾	(192.7		)	26,799,000	26,534,000	265,000	—
Inventory, refined product and crack spread swaps - short⁽¹⁾	227.7			24,862,000	24,477,000	385,000	—
Natural gas swaps - long⁽²⁾	13.4			46,577,500	46,577,500	—	—
Natural gas swaps - short⁽²⁾	(25.0		)	44,925,000	44,925,000	—	—
RIN commitment contracts - long⁽³⁾	(0.5		)	38,800,000	38,800,000	—	—
RIN commitment contracts - short⁽³⁾	1.0			47,500,000	47,500,000	—	—
Total	$	20.3		361,298,500	339,562,500	19,808,000	1,058,000
Contracts designated as cash flow hedging instruments:
Crude oil price swaps - long⁽¹⁾	$	—		—	—	—	—
Crude oil price swaps - short⁽¹⁾	—			—	—	—	—
Inventory, refined product and crack spread swaps - long⁽¹⁾	(8.5		)	225,000	225,000	—	—
Inventory, refined product and crack spread swaps - short⁽¹⁾	11.8			225,000	225,000	—	—
Total	$	3.3		450,000	450,000	—	—

(1)Volume in barrels

(2)Volume in MMBTU

(3)Volume in RINs

Interest Risk Management Activities

We have market exposure to changes in interest rates relating to our outstanding floating rate borrowings, which totaled approximately $1,917.7 million as of March 31, 2020. The annualized impact of a hypothetical one percent change in interest rates on our floating rate debt as of March 31, 2020 would be to change interest expense by approximately $19.2 million.

Commodity Derivatives Trading Activities

In the first half of 2018, we began entering into active trading positions in a variety of commodity derivatives, which include forward physical contracts, swap contracts, and futures contracts. These contracts are classified as held for trading and are recognized at fair value with



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Management's Discussion and Analysis

changes in fair value recognized in the income statement. Trading activities are undertaken by using a range of contract types in combination to create incremental gains by capitalizing on crude oil supply and pricing seasonality. These contracts had remaining durations of less than one year as of March 31, 2020.

The following table sets forth information relating to commodity derivative contracts held for trading purposes as of March 31, 2020:



Contract Description	Less than 1 year
Over the counter forward sales contracts
Notional contract volume ⁽¹⁾	930,422
Weighted-average market price (per barrel)	$	9.78
Contractual volume at fair value (in millions)	$	9.1
Over the counter forward purchase contracts
Notional contract volume ⁽¹⁾	837,174
Weighted-average market price (per barrel)	$	9.75
Contractual volume at fair value (in millions)	$	8.2


⁽¹⁾	Volume in barrels

ITEM 4. CONTROLS AND PROCEDURES

Our disclosure controls and procedures are designed to provide reasonable assurance that the information that we are required to disclose in reports we file under the Securities Exchange Act of 1934, as amended ("the Exchange Act"), is accumulated and appropriately communicated to management. We carried out an evaluation required by Rule 13a-15(b) of the Exchange Act, under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures at the end of the reporting period. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the reporting period.

There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the first quarter of 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



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Legal Proceedings, Risk Factors, Unregistered Sales of Equity Securities and Other Information

Part II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In the ordinary conduct of our business, we are from time to time subject to lawsuits, investigations and claims, including, environmental claims and employee-related matters. Although we cannot predict with certainty the ultimate resolution of lawsuits, investigations and claims asserted against us, including civil penalties or other enforcement actions, we do not believe that any currently pending legal proceeding or proceedings to which we are a party will have a material adverse effect on our business, financial condition or results of operations. See Note 11 to our accompanying condensed consolidated financial statements, which is incorporated by reference in this Item1, for additional information. Aside from the disclosure in Note 11, there have been no material developments to the proceedings previously reported in our Annual Report on Form 10-K, as amended and filed on February 28, 2020.

ITEM 1A. RISK FACTORS

There were no material changes during the first quarter of 2020 to the risk factors identified in the Company’s fiscal 2019 Annual Report on Form 10-K, except as noted below.

The current COVID-19 Pandemic and certain developments in the global oil markets have had, and may continue to have, an adverse impact on our business, our future results of operations and our overall financial performance.

The COVID-19 Pandemic could materially adversely affect our business and operations during 2020 and possibly beyond. In early 2020, global health care systems and economies began to experience strain from the spread of the COVID-19 coronavirus. As the virus spread, global economic activity began to slow and future economic activity was forecast to slow with a resulting forecast of a decline in oil and gas demand. The global pandemic has resulted in a dramatic reduction in airline flights and has reduced the number of cars on the road. In response to the decline in demand, OPEC participating countries have agreed to adjust downwards their overall production of crude oil through April 30, 2022, with the agreement to be reassessed in December 2021. These declines have been exacerbated by a production dispute between Russia and the members of OPEC, particularly Saudi Arabia, and the subsequent actions taken by such countries as a result thereof. A sustained reduction in crude oil production will potentially affect the global supply, prices of oil and refined products in our market. Additionally, a significant reduction or freeze in crude oil production in the United States will adversely affect our suppliers and source of crude oil.

Global economic growth drives demand for energy from all sources, including fossil fuels. Should the U.S. and global economies experience weakness, demand for energy may decline. Similarly, should growth in global energy production outstrip demand, excess supplies may arise. Declines in demand and excess supplies may result in accompanying declines in commodity prices and deterioration of our financial position along with our ability to operate profitably and our ability to obtain financing to support operations. With respect to our business, we have experienced periodic declines in demand thought to be associated with slowing economic growth in certain markets, including the effects of the COVID-19 Pandemic, coupled with new oil and gas supplies coming on line and other circumstances beyond our control that resulted in oil and gas supply exceeding global demand which, in turn, resulted in steep declines in prices of oil and natural gas. There can be no assurance as to how low the current price decline will persist or that a recurrence of price weakness will not arise in the future.

The ultimate extent of the impact of COVID-19 on our business, financial condition, results of operation and liquidity will depend largely on future developments, including the duration and spread of the virus outbreak, particularly within the geographic areas where we operate, and the related impact on overall economic activity, all of which are uncertain and cannot be predicted with certainty at this time. The ultimate extent of the impact of the volatile conditions in the oil and gas industry on our business, financial condition, results of operation and liquidity will also depend largely on future developments, including the extent and duration of any price reductions, any additional decisions by OPEC and the lack of resolution of disputes between Russia and the members of OPEC.

To the extent COVID-19 and the developments in the global oil markets adversely affects our business, financial condition, results of operation and liquidity, they may also have the effect of heightening many of the other risks described in the “Risk Factors” section included in our Annual Report on Form 10-K for the year ended December 31, 2019 and in this Quarterly Report on Form 10-Q, as those risk factors are amended or supplemented by subsequent Quarterly Reports on Form 10-Q and other reports and documents we file with the SEC after the date hereof.

We are particularly vulnerable to disruptions to our refining operations because our refining operations are concentrated in four facilities.

Because all of our refining operations are concentrated in the Tyler, El Dorado, Big Spring and Krotz Springs refineries, significant disruptions at one of these facilities could have a material adverse effect on our consolidated financial results. Refining segment contribution margin comprised approximately 79.4%, 84.2% and 88.3% of our consolidated contribution margin for the 2019, 2018 and 2017 fiscal years, respectively.

Our refineries consist of many processing units, a number of which have been in operation for many years. These processing units undergo periodic shutdowns, known as turnarounds, during which routine maintenance is performed to restore the operation of the equipment to a higher level of performance. Depending on which units are affected, all or a portion of a refinery's production may be halted or disrupted during a



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maintenance turnaround. We completed a maintenance turnaround at our El Dorado refinery in 2014 and a shortened turnaround that allowed work to be completed on the majority of the process units in March 2019. In addition, we completed a maintenance turnaround at our Tyler refinery in 2015 and plan for a maintenance turnaround for our Big Spring refinery beginning January of 2020. We are also subject to unscheduled down time for unanticipated maintenance or repairs.

Refinery operations may also be disrupted by external factors, such as a suspension of feedstock deliveries, cyber-attacks, a global pandemic such as the recent outbreak of the novel coronavirus, or an interruption of electricity, natural gas, water treatment or other utilities. Other potentially disruptive factors include natural disasters, severe weather conditions, workplace or environmental accidents, interruptions of supply, work stoppages, losses of permits or authorizations or acts of terrorism.

The stockholder rights plan adopted by our Board may impair an attempt to acquire control of Delek.

On March 20, 2020, our Board of Directors adopted a stockholder rights plan and declared a dividend of one preferred share purchase right for each outstanding share of our common stock to stockholders of record on March 30, 2020. In the event that a person or group acquires beneficial ownership of 15% or more of our then-outstanding common stock, subject to certain exceptions, each right would entitle its holder (other than such person or members of such group) to purchase one one-thousandth of a share of Series A Junior Participating Preferred Stock. In addition, at any time after a person or group acquires 15% or more of our common stock (unless such person or group acquires 50% or more), the Board may exchange one share of our common stock for each outstanding right (other than rights owned by such person or group, which would have become void). The stockholder rights plan could make it more difficult for a third party to acquire control of Delek or a large block of our common stock without the approval of our Board of Directors. Unless extended by the Board prior to expiration, the rights will expire on March 19, 2021.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On November 6, 2018, our Board of Directors authorized a share repurchase program for up to $500.0 million of Delek common stock. Any share repurchases under the repurchase program may be implemented through open market transactions or in privately negotiated transactions, in accordance with applicable securities laws. The timing, price, and size of repurchases will be made at the discretion of management and will depend on prevailing market prices, general economic and market conditions and other considerations. The repurchase program does not obligate us to acquire any particular amount of stock and does not expire. The following table sets forth information with respect to the purchase of shares of our common stock made during the three months ended March 31, 2020 by or on behalf of us or any “affiliated purchaser,” as defined by Rule 10b-18 of the Exchange Act (inclusive of all purchases that have settled as of March 31, 2020):



Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
January 1 - January 31, 2020	58,713	$	33.40	58,713	$	229,724,248
February 1 - February 29, 2020	—	—		—	229,724,248
March 1 - March 31, 2020	—	—		—	229,724,248
Total	58,713	$	33.40	58,713	N/A

ITEM 5. OTHER INFORMATION

Dividend Declaration

On May 4, 2020, our Board of Directors voted to declare a quarterly cash dividend of $0.31 per share of our common stock, payable on June 3, 2020 to shareholders of record on June 3, 2020.

Submission of Matters to a Vote of Security Holders

On May 5, 2020, Delek held its 2020 Annual Meeting of Stockholders. A quorum was present at the meeting. The matters presented to stockholders for vote and the final voting results on such matters are set forth below:

Proposal 1: Election of the seven nominees named in the Proxy Statement as directors of Delek to serve until the 2021 Annual Meeting of Stockholders or until their respective successors are appointed, elected and qualified:



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Director Nominee	For	Withheld	Broker Non-Votes
Ezra Uzi Yemin	52,286,428	8,197,684	4,135,688
William J. Finnerty	49,824,919	10,659,193	4,135,688
Richard J. Marcogliese	54,941,799	5,542,313	4,135,688
Gary M. Sullivan, Jr.	49,861,679	10,622,433	4,135,688
Vicky Sutil	51,176,959	9,307,153	4,135,688
David Wiessman	54,528,512	5,955,600	4,135,688
Shlomo Zohar	51,171,259	9,312,853	4,135,688

Proposal 2: Adoption of the advisory resolution approving Delek's executive compensation program for our named executive officers as described in the Proxy Statement:



For	Against	Abstain	Broker Non-Votes
54,774,051	1,995,120	3,714,941	4,135,688

Proposal 3: Ratification of the appointment of Ernst & Young LLP as Delek’s independent registered public accounting firm for the 2020 fiscal year:



For	Against	Abstain	Broker Non-Votes
59,444,645	1,160,865	4,014,290	—

Proposal 4: Approval of an amendment to our 2016 Long-Term Incentive Plan to increase the number of shares available for issuance thereunder:



For	Against	Abstain	Broker Non-Votes
55,058,852	1,712,364	3,712,896	4,135,688

Amendment to 2016 Long-Term Incentive Plan

On May 5, 2020, upon approval by our stockholders, Delek amended its 2016 Long-Term Incentive Plan to increase the number of shares of Delek common stock reserved for issuance under the plan by 2,120,000 shares.

Amendments to Bylaws

On May 6, 2020, our Board of Directors amended and restated Delek’s bylaws (as so amended and restated, the “Bylaws”), effective immediately. The amendments to the Bylaws were as follows:


•	Update various aspects of the advance notice and stockholder meeting provisions;


•	Expand the information required in connection with a stockholder nomination of a person for election as a director or a matter of business to be considered at a meeting of stockholders, and to require that such information be updated as of the record date of the meeting and again prior to the meeting;


•	Require that proposed nominees for election as a director complete a written representation and agreement regarding undisclosed voting agreements and compensation arrangements of the proposed nominee, compliance with applicable regulations, corporate policies and fiduciary duties, and the provision of information to the Company, among other matters, in the form required by the Company;


•	Shorten the notice period for calling meetings of the Board of Directors;


•	Provide for the adoption of emergency bylaws, as permitted by Delaware law; and


•	Other clarifying and conforming amendments throughout the Bylaws.

The foregoing description is qualified in its entirety by reference to the full text of the Bylaws, a copy of which is attached hereto as Exhibit 3.2 and is incorporated by reference herein.

Amended Employment Agreement

On May 6, 2020, the Board of Directors of the Company approved an amended and restated employment agreement between the Company and Ezra Uzi Yemin dated May 8, 2020 (the "Employment Agreement") which, among other things, provides for the following: an annual base salary of $1,075,000; an annual bonus opportunity with a target amount of 140% of base salary and a maximum payout opportunity of 200% of



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the target amount; and annual grants under the Company’s 2016 Long-Term Incentive Plan in a target amount of $6,300,000 per year split evenly between time-vesting restricted stock units (“RSUs”) and performance-based RSUs. The Employment Agreement has an initial term expiring May 8, 2023, and will automatically renew for one year terms unless terminated by prior written notice by either Mr. Yemin or the Company.

In the event Mr. Yemin is terminated without cause (as defined in the Employment Agreement), terminates his employment with good reason (as defined in the Employment Agreement), or in the event of a failure to renew (as defined in the Employment Agreement), Mr. Yemin would be entitled to (i) an amount equal to two times the sum of his then current base salary and target annual bonus as in effect immediately before any notice of termination, (ii) the costs of continuing family health insurance coverage for 18 months following termination of employment, (iii) any annual bonus Mr. Yemin would have otherwise been entitled to if his employment had continued through the end of the bonus year based upon the actual performance of the Company, prorated for the period of actual employment during the bonus year, and paid upon the payment of the annual bonuses to senior executives of the Company pursuant to the Company’s annual bonus programs, and (iv) the immediate vesting and settlement, if applicable, of all unvested equity awards as follows: (A) for unvested performance awards, on a prorated basis through the termination of employment based on actual results evaluated after the close of the applicable performance period and payable in a lump sum at the same time as performance awards are paid to executives of the Company generally and (B) for full value equity awards (e.g., restricted stock, restricted stock units and phantom units) and appreciation equity awards (e.g., non-qualified stock options and stock appreciation rights), only to the extent that such awards would have vested if Mr. Yemin’s employment had continued during a period equal to the lesser of six months following termination of employment or the balance of the term of the Employment Agreement. In addition, Mr. Yemin’s existing unvested equity options will vest upon a change in control regardless of whether his employment terminates.

If Mr. Yemin terminates his employment for any reason, other than with good reason or upon his death or disability, and provides at least six months’ advance written notice of termination, Mr. Yemin would be entitled to an amount equal to his annual base salary at the time notice is delivered, plus the costs of continuing family health insurance coverage for 18 months following the termination of his employment.

If, within the period beginning six months prior to and ending three years following a change in control of the Company (as defined in the Employment Agreement), Mr. Yemin’s employment is terminated by the Company without cause or he terminates his employment for good reason, Mr. Yemin would be entitled to receive (i) an amount equal to three times the sum of his then-current base salary and target annual bonus as in effect immediately before any notice of termination, (ii) the costs of continuing family health insurance coverage for 18 months following termination of employment, (iii) any annual bonus Mr. Yemin would have otherwise been entitled if his employment had continued through the end of the bonus year based upon the actual performance of the Company, prorated for the period of actual employment during the bonus year, and paid upon the payment of the annual bonuses to senior executives of the Company pursuant to the Company’s annual bonus programs, and (iv) the immediate vesting of all unvested equity awards.

All payments to be made by the Company upon termination as described above are subject to Mr. Yemin executing a release of claims in favor of the Company. Under the Employment Agreement, Mr. Yemin also leases his residence from the Company at fair market value and holds an option to purchase the resident at fair market value. In addition to benefits available to the Company’s senior executive officers generally, the Employment Agreement also provides reimbursement for the reasonable costs of professional preparation of his personal income tax returns, not to exceed $25,000 in any calendar year, and the personal use of a Company-owned automobile.

The Employment Agreement includes a noncompetition clause which provides that Mr. Yemin will not compete with the Company, directly or indirectly, in the territory (as defined in the Employment Agreement) during the term of the Employment Agreement and for one year thereafter. The Employment Agreement also includes non-solicitation provisions with respect to the customers and employees of the Company during the term of the Employment Agreement and for one year thereafter.

The above description of the Employment Agreement does not purport to be complete and is qualified in its entirety by reference to the Employment Agreement itself, a copy of which is filed with this report as Exhibit 10.4 and is incorporated herein in its entirety by reference.

Separation Payment

On May 6, 2020, the Board of Directors of the Company approved a Separation Agreement between the Company and Assaf Ginzburg in connection with Mr. Ginzburg’s departure from the Company. Under the Separation Agreement, Mr. Ginzburg will receive a payment of $750,000 in exchange for Mr. Ginzburg’s general release of claims for the benefit of the Company and its affiliates.



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Exhibits

ITEM 6. EXHIBITS



Exhibit No.		Description
2.1	~	Contribution, Conveyance and Assumption Agreement, dated as of March 31, 2020, by and among Delek Big Spring South Mainline, LLC, Delek Permian Gathering, LLC, Delek Big Spring North Gathering, LLC, Delek Big Spring Gathering, LLC, DKL Permian Gathering, LLC, Delek Logistics Partners, LP and Delek US Holdings, Inc. (incorporated by reference to Exhibit 2.1 of the Company’s Form 8-K filed on April 6, 2020).

3.1	#	Amended and Restated Certificate of Incorporation, as amended by that certain Certificate of Designations of Series A Junior Participating Preferred Stock of Delek US Holdings, Inc., dated March 23, 2020.

3.2	#	Amended and Restated Bylaws of Delek US Holdings, Inc.

4.1		Rights Agreement, dated as of March 20, 2020, by and between Delek US Holdings, Inc. as the Company, and American Stock Transfer & Trust Company, LLC as Rights Agent, incorporated by reference to Exhibit 4.1 of the Company’s Form 8-K filed on March 24, 2020).

10.1	~	Throughput and Deficiency Agreement, dated and effective as of March 31, 2020, by and between Lion Oil Trading & Transportation, LLC and DKL Permian Gathering, LLC (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on April 6, 2020).

10.2		Second Amendment and Restatement of Schedules to Third Amended and Restated Omnibus Agreement, dated and effective as of March 31, 2020 (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed on April 6, 2020).

10.3	#	Second Amendment to the Delek US Holdings, Inc. 2016 Long-Term Incentive Plan, effective as of May 5, 2020.

10.4	#	Amended and Restated Executive Employment Agreement, dated as of May 8, 2020, by and between Delek US Holdings, Inc. and Ezra Uzi Yemin.

10.5		Amended and Restated Executive Employment Agreement, dated April 6, 2020, between Delek US Holdings, Inc. and Avigal Soreq (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on April 9, 2020).

10.6		Offer Letter, dated April 6, 2020, between Delek US Holdings, Inc. and Reuven Spiegel (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on April 9, 2020).

31.1	#	Certification of the Company’s Chief Executive Officer pursuant to Rule 13a-14(a)/15(d)-14(a) under the Securities Exchange Act of 1934, as amended.

31.2	#	Certification of the Company’s Chief Financial Officer pursuant to Rule 13a-14(a)/15(d)-14(a) under the Securities Exchange Act of 1934, as amended.

32.1	##	Certification of the Company’s Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2	##	Certification of the Company’s Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101		The following materials from Delek US Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019 (Unaudited), (ii) Condensed Consolidated Statements of Income for the three months ended March 31, 2020 and 2019 (Unaudited), (iii) Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2020 and 2019 (Unaudited), (iv) Condensed Consolidated Statements of Changes in Stockholders' Equity for the three months ended March 31, 2020 and 2019 (Unaudited), (v) Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019 (Unaudited), and (vi) Notes to Condensed Consolidated Financial Statements (Unaudited).
104		The cover page from Delek US Holdings, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, has been formatted in Inline XBRL.



#		Filed herewith
##		Furnished herewith
~		Certain information contained in these exhibits has been omitted because it is not material and would likely cause competitive harm to the Company if publicly disclosed.



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SIGNATURES

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



Delek US Holdings, Inc.

By:	/s/ Ezra Uzi Yemin
	Ezra Uzi Yemin
	Director (Chairman), President and Chief Executive Officer (Principal Executive Officer)

By:	/s/ Assaf Ginzburg
	Assaf Ginzburg
	Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

Dated: May 8, 2020



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Exhibit 3.1

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

DELEK US HOLDINGS, INC.

Delek Holdco, Inc., a corporation organized and existing under and by virtue of the provisions of the General Corporation Law of the State of Delaware (the “GCL”), DOES HEREBY CERTIFY:


1.	The date of filing of the corporation’s original Certificate of Incorporation (the “Original Certificate”) with the Secretary of State of the State of Delaware was December 29, 2016.


2.	This Amended and Restated Certificate of Incorporation restates and integrates and further amends the provisions of the Original Certificate and has been duly adopted in accordance with Sections 228, 242 and 245 of the GCL.

FIRST: The name of the corporation is Delek US Holdings, Inc.

SECOND: The address of the registered office of the corporation in the State of Delaware is at 874 Walker Road, Suite C, City of Dover, County of Kent, Delaware 19904; and the name of its registered agent at such address is United Corporate Services, Inc.

THIRD: The purpose of the corporation is to engage in any lawful act or activity for which a corporation may be organized under GCL as set forth therein.

FOURTH: The total number of shares of stock of all classes of stock which the corporation shall have the authority to issue is 120,000,000 shares, consisting solely of 110,000,000 shares of common stock, par value $0,01 per share (the “Common Stock”), and 10,000,000 shares of preferred stock, par value $0.01 per share (the “Preferred Stock”).

Preferred Stock. Shares of Preferred Stock may be issued from time to time in one or more series. The Board of Directors is hereby authorized by resolution or resolutions to provide, out of the unissued shares of Preferred Stock, for series of Preferred Stock and, with respect to each such series, to fix the voting powers, if any, designations, preferences and the relative, participating, optional or other special rights, if any, and any qualifications, limitations or restrictions thereof, of any such series, and to fix the number of shares constituting such series, and to increase or decrease the number of shares of any such series (but not below the number of shares thereof then issued and outstanding). The authority of the Board of Directors with respect to each series of Preferred Stock shall include, but not be limited to, determination of the. following:


(a)	the designation of the series, which may be by distinguishing number, letter or title;


(b)	the number of shares of the series, which number the Board of Directors may thereafter increase or decrease (but not below the number of shares thereof then issued and outstanding);


(c)	whether dividends, if any, shall be cumulative or noncumulative, the dividend rate of the series, and the dates and preferences of the dividends of such series;


(d)	the redemption rights and price or prices, if any, for shares of the series;


(e)	the terms and amount of any sinking find provided for the purchase or redemption of shares of the series;


(f)	the amounts payable on, and the preferences, if any, of shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the corporation;

(g)

whether the shares of the series shall be convertible into shares of any other class or series, or any other security, of the corporation or any other entity, and, if so, the specification of such other class or series of such other security, the conversion price or prices or rate or rates, any adjustments thereof, the date or dates at which such shares shall be convertible and all other terms and conditions upon which such conversion may be made;


(h)	the right, if any, to subscribe for or to purchase any securities of the corporation or any other corporation or other entity;


(i)	the voting rights, if any, of the holders of shares of the series; and


(j)	any other relative, participating, optional, or other special powers, preferences or rights and qualifications, limitations, or restrictions thereof.


2.	Common Stock. Subject to the rights of the holders of any series of Preferred Stock, the holders of Common Stock will be entitled to one vote on each matter submitted to a vote at a meeting of stockholders for each share of Common Stock held of record by such holder as of the record date of such meeting.

FIFTH: The corporation is to have perpetual existence.

SIXTH: In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to adopt, alter, amend or repeal any and all of the bylaws of the corporation. In addition, notwithstanding any other provisions of this Certificate of Incorporation or the bylaws of the corporation (and notwithstanding the fact that a lesser percentage or separate class vote may be specified by law, this Certificate of Incorporation or the bylaws of the corporation), the bylaws of the corporation may be adopted, altered, amended or repealed by the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3%) of all of the issued and outstanding shares of capital stock of the corporation entitled to vote thereon, voting together as a single class.

SEVENTH: Meetings of stockholders may be held within or without the State of Delaware, as the bylaws may provide. The books of the corporation may be kept (subject to any provision of the GCL) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the bylaws of the corporation. Election of directors need not be by written ballot unless the bylaws of the corporation shall so provide.

EIGHTH: Whenever a compromise or arrangement is proposed between this corporation and its creditors or any class of them and/or between this corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this corporation under the provisions of Section 291 of the GCL or on the application of trustees in dissolution or of any receiver or receivers appointed for this corporation under the provisions of Section 279 of the GCL, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this corporation, as the case may be, and also on this corporation.

NINTH: Subject to the rights of holders of Preferred Stock, if any, the number of directors that shall constitute the whole Board of Directors shall be as provided in the bylaws of the corporation, as the same may be amended from time to time. Such number of directors shall from time to time be fixed and determined by the directors as set forth in the bylaws of the corporation. The directors shall be elected at the annual meeting of stockholders, and each director elected shall hold office until his or her successor shall be elected and qualified. Directors need not fee residents

of the State of Delaware or stockholders of the corporation. Any director may resign at any time upon notice given in writing or by electronic transmission to the corporation.

If any vacancy occurs in the Board of Directors caused by death, resignation, retirement, disqualification, or removal from office of any director, or otherwise, or if any new directorship is created by an increase in the authorized number of directors as provided in the bylaws or otherwise, a majority of the directors then in office, though less than a quorum, or a sole remaining director, may choose a successor or fill the newly created directorship. Any director so chosen shall hold office until the next election and until his or her successor shall be duly elected and qualified, unless sooner displaced.

Advance notice of stockholder nominations for the election of directors must be given in the manner provided in the bylaws of the corporation.

TENTH: The corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or thereafter prescribed by statute, and all rights conferred on the stockholders herein are granted subject to this reservation.

ELEVENTH: A director of this corporation shall not be personally liable to the corporation or its stockholders for monetary damages for the breach of any fiduciary duty as a director, except (a) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (b) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (c) under Section 174 of the GCL, as the same exists or hereafter may be amended, or (d) for any transaction from which the director derived an improper personal benefit. If the GCL is amended after the date of incorporation of this Certificate of Incorporation to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the corporation shall be eliminated or limited to the fullest extent permitted by the GCL, as so amended.

Any repeal or modification of the foregoing paragraph by the stockholders of the corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director of the corporation existing at the time of such repeal or modification.

TWELFTH: The corporation shall, to the fullest extent permitted by the GCL (including, without limitation. Section 145 thereof), as amended from time to time, indemnify any officer or director whom it shall have power to indemnify from and against any and all of the expenses, liabilities or other losses of any nature. The indemnification provided herein shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his or her official

capacity and as to action in another capacity, while holding such office, and shall continue as to a person who has ceased to be an officer or director and shall inure to the benefit of the heirs, executors and administrators of such a person.

THIRTEENTH: The corporation may purchase and maintain insurance on behalf of any person who was or is a director, officer, employee or agent of the corporation or serving at the request of the corporation as director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability, whether or not the corporation would have the power to indemnify such person against such liability under the GCL.

FOURTEENTH: Any action required or permitted to be taken at any annual or special meeting of stockholders may be taken only upon the vote of the stockholders at an annual or special meeting duly noticed and called in accordance with the provisions of this Certificate of Incorporation and the bylaws of the corporation, and may not be taken by a written consent of the stockholders.

FIFTEENTH: Notwithstanding any other provisions of this Certificate of Incorporation or the bylaws of the corporation (and notwithstanding the fact that some lesser percentage may be specified by law, this Certificate of Incorporation or the bylaws of the Corporation), any director or the entire Board of Directors may be removed from office at any time, with or without cause, but only by the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3%) of all of the issued and outstanding shares of capital stock of the corporation entitled to vote on the election of directors at a meeting of stockholders called for that purpose, except that if the Board of Directors, by an affirmative vote of at least sixty-six and two-thirds percent (66 2/3%) of the entire Board of Directors, recommends the removal of a director to the stockholders, such removal may be effected by the affirmative vote of the holders of at least a majority of all of the issued and outstanding shares of capital stock of the corporation entitled to vote on the election of directors at a meeting of stockholders for that purpose.

SIXTEENTH: Notwithstanding any other provisions of this Certificate of Incorporation or the bylaws of the corporation (and notwithstanding the fact that a lesser percentage or separate class vote may be specified by law, this Certificate of Incorporation or the bylaws of the corporation), the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3%) of all of the issued and outstanding shares of capital stock of the corporation entitled to vote thereon, voting together as a single class, shall be required to amend, repeal, or adopt any provisions inconsistent with Articles Sixth, Eleventh, Twelfth, Thirteenth, Fifteenth, or this Article Sixteenth, provided, that this Article Sixteenth shall not apply to, and such sixty-six and two-thirds percent (66 2/3%) vote shall not be required for any amendment, repeal or adoption unanimously recommended to the stockholders by the Board of Directors, in which case such amendment, repeal, or adoption maybe effected by the affirmative vote of the holders of at least a majority of all of the issued and

outstanding shares of capital stock of the corporation entitled to vote on the election of directors at a meeting of stockholders for that purpose.

SEVENTEENTH: Unless the corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the corporation, (b) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, or other employee of the corporation to the corporation or the corporation’s stockholders, (c) any action asserting a claim arising pursuant to any provision of Delaware law or the corporation’s certificate of incorporation or bylaws, or (d) any action asserting a claim against the corporation governed by the internal affairs doctrine.IN WITNESS WHEREOF, Delek Holdco, Inc. has caused this Amended and Restated Certificate of Incorporation to be executed by its Vice President-Legal Affairs this 20th day of April, 2017.

CERTIFICATE OF DESIGNATIONS

SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

OF
DELEK US HOLDINGS, INC.

(Pursuant to Section 151 of the Delaware General Corporation Law)

In accordance with Section 151 of the Delaware General Corporation Law, the undersigned corporation hereby certifies that the following resolution was adopted by the Board of Directors of the Corporation at a meeting duly called and held:

RESOLVED, that pursuant to the authority granted to and vested in the Board of Directors of this Corporation (the “Board of Directors”) in accordance with the provisions of the Amended and Restated Certificate of Incorporation of the Corporation, as amended, the Board of Directors hereby creates a series of Preferred Stock, par value $0.01 per share, of the Corporation (the “Preferred Stock”), and hereby states the designation and number of shares, and fixes the relative rights, preferences, and limitations thereof as follows:

Series A Junior Participating Preferred Stock:

(1) Designation and Amount. The shares of such series shall be designated as “Series A Junior Participating Preferred Stock” (the “Series A Preferred Stock”) and the number of shares constituting the Series A Preferred Stock shall be 1,000,000. Such number of shares may be increased or decreased by resolution of the Board of Directors; provided, that no decrease shall reduce the number of shares of Series A Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into Series A Preferred Stock.

(2) Dividends and Distributions.

(a) Subject to the rights of the holders of any shares of any series of Preferred Stock (or any similar stock) ranking prior and superior to the Series A Preferred Stock with respect to dividends, the holders of shares of Series A Preferred Stock, in preference to the holders of Common Stock, par value $0.01 per share (the “Common Stock”), of the Corporation, and of any other junior stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the first day of

March, June, September and December in each year (each such date being referred to herein as a “Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (1) $1.00 and (2) subject to the provision for adjustment hereinafter set forth, 1,000 times the aggregate per share amount of all cash dividends, and 1,000 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions, other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Preferred Stock. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under clause (2) of the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(b) The Corporation shall declare a dividend or distribution on the Series A Preferred Stock as provided in paragraph (a) of this subsection immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided, that in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Series A Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.

(c) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment

Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more than sixty (60) days prior to the date fixed for the payment thereof.

(3) Voting Rights. The holders of shares of Series A Preferred Stock shall have the following voting rights:

(a) Subject to the provision for adjustment hereinafter set forth, each share of Series A Preferred Stock shall entitle the holder thereof to 1,000 votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the number of votes per share to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(b) Except as otherwise provided herein, in any other certificate of designations creating a series of Preferred Stock or any similar stock, or by law, the holders of shares of Series A Preferred Stock and the holders of shares of Common Stock and any other capital stock of the Corporation having general voting rights shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.

(c) Except as set forth herein, or as otherwise provided by law, holders of Series A Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action.

(4) Certain Restrictions.

(a) Whenever quarterly dividends or other dividends or distributions payable on the Series A Preferred Stock as provided in Section (2) are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Preferred Stock outstanding shall have been paid in full, the Corporation shall not:

(1) declare or pay dividends, or make any other distributions, on any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock;

(2) declare or pay dividends, or make any other distributions, on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except dividends paid ratably on the Series A Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;

(3) redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock other than (A) such redemptions or purchases that may be deemed to occur upon the exercise of stock options, warrants or similar rights or grant, vesting or lapse of restrictions on the grant of any other performance shares, restricted stock, restricted stock units or other equity awards to the extent that such shares represent all or a portion of (x) the exercise or purchase price of such options, warrants or similar rights or other equity awards and (y) the amount of withholding taxes owed by the recipient of such award in respect of such grant, exercise, vesting or lapse of restrictions; (B) the repurchase, redemption, or other acquisition or retirement for value of any such shares from employees, former employees, directors, former directors, consultants or former consultants of the Corporation or their respective estate, spouse, former spouse or family member, pursuant to the terms of the agreements pursuant to which such shares were acquired, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Preferred Stock; or

(4) redeem or purchase or otherwise acquire for consideration any shares of Series A Preferred Stock, or any shares of stock ranking on a parity with the Series A Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights

and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.

(b) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (a) of this Section (4), purchase or otherwise acquire such shares at such time and in such manner.

(5) Reacquired Shares. Any shares of Series A Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock subject to the conditions and restrictions on issuance set forth herein, in the Amended and Restated Certificate of Incorporation, as amended, or in any other certificate of designations creating a series of Preferred Stock or any similar stock or as otherwise required by law.

(6) Liquidation, Dissolution or Winding Up. Upon any liquidation, dissolution or winding up of the Corporation, voluntary or otherwise, no distribution shall be made (1) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock unless, prior thereto, the holders of shares of Series A Preferred Stock shall have received the greater of (A) $1,000.00 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, and (B) an amount, subject to the provision for adjustment hereinafter set forth, equal to 1,000 times the aggregate amount to be distributed per share to holders of shares of Common Stock, or (2) to the holders of shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except distributions made ratably on the Series A Preferred Stock and all such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the aggregate amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under the proviso in clause (1) of the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(7) Consolidation, Merger, Etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case each share of Series A Preferred Stock shall at the same time be similarly exchanged or changed into an amount per share, subject to the provision for adjustment hereinafter set forth, equal to 1,000 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(8) No Redemption. The shares of Series A Preferred Stock shall not be redeemable.

(9) Rank. The Series A Preferred Stock shall rank, with respect to the payment of dividends and the distribution of assets, junior to all series of any other class of the Corporation’s Preferred Stock, and shall rank senior to the Common Stock as to such matters.

(10) Amendment. The Amended and Restated Certificate of Incorporation of the Corporation, as amended, shall not be amended in any manner which would materially alter or change the powers, preferences or special rights of the Series A Preferred Stock so as to affect them adversely without the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series A Preferred Stock, voting together as a single class.

(11) Fractional Shares. The Series A Preferred Stock may be issued in fractions of a share, which fractions shall entitle the holder, in proportion to such holder’s fractional shares, to exercise voting rights, receive dividends, participate in distributions, and to have the benefit of all other rights of holders of Series A Preferred Stock

Exhibit 3.2

Second Amended and Restated Bylaws

Delek US Holdings, Inc.

Adopted as of May 7, 2020

Article I.
OFFICES

Section 1.01 Registered Office. The registered office of the corporation in the State of Delaware shall be in the City of Dover, County of Kent, Delaware 19904 and the name of its registered agent shall be United Corporate Services, Inc.

Section 1.02 Other Offices. The corporation also may have offices at such other places, both within and without the State of Delaware, as the Board of Directors may from time to time determine or the business of the corporation may require.

Article II.
MEETINGS OF STOCKHOLDERS

Section 2.01 Place of Meeting. All meetings of stockholders shall be held at such place, either within or without the State of Delaware, as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. The Board of Directors may, in its sole discretion and subject to such guidelines and procedures as the Board of Directors may from time to time adopt, determine that the meeting shall not be held at any specific place, but may instead be held solely by means of remote communication.

Section 2.02 Annual Meeting. The annual meeting of stockholders shall be held at such date and time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. The Board of Directors may, for any reason and at any time prior to the holding of any annual meeting of stockholders, postpone, reschedule or cancel any previously scheduled annual meeting of stockholders.

(a) Nominations of persons for election to the Board of Directors and the proposal of business to be considered by the stockholders shall be made at an annual meeting of stockholders (i) pursuant to the corporation’s notice of such meeting, (ii) by or at the direction of the Board of Directors or (iii) by any stockholder of the corporation who was a stockholder of record at the time of giving of the notice provided for in this Section 2.02, who is entitled to vote at such meeting and who complies with the notice procedures set forth in this Section 2.02. For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of this subsection (a), the stockholder must have given timely notice thereof in writing to the Secretary of the corporation and such other business must be a proper matter for stockholder action. To be timely, a stockholder’s notice shall be delivered to the Secretary not earlier than the close of

Exhibit 3.2

business on the 120th calendar day nor later than the close of business on the 90th calendar days prior to the one-year anniversary of the preceding year’s annual meeting. In the event that no annual meeting was held in the previous year or the date of any annual meeting is more than 30 days before or more than 60 days after the one-year anniversary of the previous year’s annual meeting, notice by a stockholder, to be timely, must be so delivered not earlier than 90 calendar days prior to such annual meeting and not later than 10 days following the day on which public announcement of the date of such meeting is first made by the corporation. In no event shall an adjournment or postponement of an annual meeting, or the public announcement of an adjournment or postponement of an annual meeting, commence a new time period for the giving of a stockholder’s notice as described above.

(b) A stockholder’s notice to the Secretary must set forth


(i)	as to each person whom the stockholder proposes to nominate for election or reelection as a director (each, a “Proposed Nominee”):


A.	the name, age, business address and residence address of such Proposed Nominee;


B.	the principal occupation and employment of such Proposed Nominee;

a completed and signed Director Questionnaire (as defined in Section 3.02 herein) in the form required by the corporation (which form the stockholder giving notice shall request in writing from the Secretary of the corporation and which the Secretary shall provide to such stockholder within 10 days of receiving such request), and each such Proposed Nominee must attest to the accuracy of the information provided in such Director Questionnaire;


D.	such Proposed Nominee’s written consent to be named in the proxy statement as a nominee to the Board of Directors;


E.	such Proposed Nominee’s written representation and agreement in the form required by the corporation (which form the stockholder shall request in writing from the Secretary of the corporation and which the Secretary shall provide to such stockholder within 10 days of receiving such request) that:


I.	such Proposed Nominee is not and will not become party to any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if

Exhibit 3.2

elected as a director of the corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the corporation or any voting commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the corporation, with such person’s fiduciary duties under applicable law;


II.	such Proposed Nominee is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed to the corporation;

III.

such Proposed Nominee would, if elected as a director, comply with applicable regulations of the exchanges upon which the corporation’s shares of common stock trade, all of the corporation’s corporate governance, ethics, conflict of interest, confidentiality and stock ownership and trading policies and guidelines applicable generally to the corporation’s directors, and applicable fiduciary duties under state law and, if elected as a director of the corporation, such person currently would be in compliance with any such policies and guidelines that have been publicly disclosed; and


IV.	such Proposed Nominee will provide facts, statements, and other information in all communications with the corporation and its stockholders that or will be true and correct in all material respects, and that do not and will not omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading;


F.	any material monetary agreements, arrangements or understandings during the past three years, and any other material relationships, between or among the stockholder or any Stockholder Associated Person, on the one hand, and such Proposed Nominee, his or her respective affiliates or

Exhibit 3.2

associates, and any other person or persons (including their names) acting in concert therewith, on the other hand, including all information that would be required to be disclosed pursuant to Item 404 promulgated under Regulation S-K under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as if the stockholder making the nomination and any beneficial owner on whose behalf the nomination is made, if any, or any Affiliate or Associate thereof or person acting in concert therewith, were the “registrant” for purposes of such regulation and the Proposed Nominee were a director or executive officer of such registrant; and


G.	any other information relating to such Proposed Nominee that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for a contested election of directors pursuant to Section 14 of the Exchange Act;


(ii)	as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the Stockholder Associated Persons, if any, on whose behalf the proposal is made;


(iii)	as to the stockholder giving the notice, Proposed Nominee and each Stockholder Associated Person:


A.	the name and address of such stockholder, Proposed Nominee and Stockholder Associated Person (including, if applicable, the name and address that appear on the corporation’s books and records);

the class, series and number of all shares of stock or other securities of the corporation or any affiliate thereof (collectively, “Corporation Securities”), if any, which are owned (beneficially or of record) by such stockholder, Proposed Nominee or Stockholder Associated Person, the date on which each such Corporation Security was acquired and the investment intent of such acquisition, together with evidence of such beneficial or record ownership;

Exhibit 3.2


C.	the nominee holder for, and number of, any Corporation Securities owned beneficially but not of record by such stockholder, Proposed Nominee or Stockholder Associated Person;

any agreement, arrangement, understanding or relationship including any repurchase or so-called “stock borrowing” agreement or arrangement, involving such stockholder, Proposed Nominee or Stockholder Associated Person, directly or indirectly, the purpose or effect of which is to mitigate loss to, reduce the economic risk (of ownership or otherwise) of any class or series of the shares of the corporation by, manage the risk of share price changes for or increase or decrease the voting power of, such stockholder, Proposed Nominee or Stockholder Associated Person with respect to any class or series of the shares of the corporation, or which provides, directly or indirectly, the opportunity to profit or share in any profit derived from any decrease in the price or value of any class or series of the shares of the corporation (any of the foregoing, a “Short Interest”);

any option, warrant, convertible security, stock appreciation right or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of the corporation or with a value derived in whole or in part from the value of any class or series of shares of the corporation, or any derivative or synthetic arrangement having the characteristics of a long position in any class or series of shares of the corporation, or any contract, derivative, swap or other transaction or series of transactions designed to produce economic benefits and risk that correspond substantially to the ownership of any class or series of shares of the corporation, including due to the fact that the value of such contract, derivative, swap or other transaction or series of transactions is determined by reference to the price, value or volatility of any class or series of shares of the corporation, whether or not such instrument, contract or right shall be subject to settlement in the underlying class or series of shares of the corporation, through the delivery of cash or other property, or otherwise, and without regard to whether such stockholder, Proposed Nominee or Stockholder Associated Person may have entered into transactions that

Exhibit 3.2

hedge or mitigate the economic effect of such instrument, contract or right, or any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of the shares of the corporation (any of the foregoing, a “Derivative Instrument”) that is directly or indirectly owned beneficially by such stockholder, Proposed Nominee or Stockholder Associated Person and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the corporation;


F.	any rights to dividends of the shares of the corporation owned beneficially by such stockholder, Proposed Nominee or Stockholder Associated Person;

any proportionate interest in shares of capital stock of the corporation or Derivative Instruments, held, directly or indirectly, by a general or limited partnership or similar entity in which such stockholder, Proposed Nominee or Stockholder Associated Person (I) is the general partner or, directly or indirectly, beneficially owns an interest in a general partner, or (II) is the manager, managing member or directly or indirectly beneficially owns an interest in the manager or managing member of a limited liability company or similar entity;


H.	any significant equity interest or any Derivative Instruments or Short Interests in any entity that provides products or services that compete with or are alternatives to the principal products produced or services provided by the corporation or any affiliate thereof held by such stockholder, Proposed Nominee or Stockholder Associated Person (collectively, a “Competitor”);


I.	any significant equity interest or any Derivative Instruments or Short Interests in any affiliates of the corporation;


J.	any direct or indirect interest of such stockholder, Proposed Nominee or Stockholder Associated Person in any contract with the corporation or any affiliate thereof, or any Competitor (including, in such case, any employment agreement, collective bargaining agreement or consulting agreement);

Exhibit 3.2

any substantial interest, direct or indirect (including any existing or prospective commercial, business or contractual relationship with the corporation), by security holdings or otherwise, of such stockholder, Proposed Nominee or Stockholder Associated Person, in the corporation or any affiliate thereof, other than an interest arising from the ownership of Corporation Securities where such stockholder, Proposed Nominee or Stockholder Associated Person receives no extra or special benefit not shared on a pro rata basis with holders of the same class or series;

a complete and accurate description of all agreements, arrangements and understandings, written or oral and formal or informal, (I) between or among the stockholder giving the notice and any of the Stockholder Associated Persons or (II) between or among the stockholder giving the notice or any of the Stockholder Associated Persons and any other person or entity (naming each such person or entity) in connection with or related to the foregoing or the proposal of business by a stockholder or any proposed Nominee, including (x) any proxy, contract, arrangement, understanding or relationship pursuant to which such proposing stockholder or Stockholder Associated Persons has the right to vote any shares of any security of the corporation; (y) any understanding, formal or informal, written or oral, that the stockholder giving the notice or any of the Stockholder Associated Persons may have reached with any stockholder of the corporation (including their names) with respect to how much such stockholder will vote its shares in the corporation at any meeting of the corporation’s stockholders or take other action in support of or related to any business proposed or any Proposed Nominee, or other action to be taken, by the proposing stockholder or any of the Stockholder Associated Persons, and (z) any other agreements that would be required to be disclosed by the stockholder giving the notice or any Stockholder Associated Person or any other person or entity pursuant to Item 5 or Item 6 of a Schedule 13D that would be filed pursuant to the Exchange Act and the rules and regulations promulgated thereunder (regardless of whether the requirement to file a Schedule 13D is applicable to the stockholder giving the notice or any Stockholder Associated Person or other person or entity); and

Exhibit 3.2


M.	a complete and accurate description of any performance-related fees (other than an asset-based fee) to which such stockholder, Proposed Nominee or Stockholder Associated Person may be entitled as a result of an increase or decrease in the value of the shares of the corporation or any derivate instruments;


(iv)	a complete and accurate description of any pending, or to such stockholder’s knowledge, threatened legal proceeding in which such stockholder or Proposed Nominee or any Stockholder Associated Person is a party or participant involving the corporation or any officer, affiliate or associate of the corporation;

(v)

any other information relating to such stockholder and any Stockholder Associated Person, if any, that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies for, as applicable, the proposal or for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder;

(vi)

a representation as to whether the stockholder or any Stockholder Associated Person intends to deliver a proxy statement or form of proxy to holders of at least the percentage of the corporation’s beneficial or record owners of outstanding shares of stock entitled to vote on and required to approve the proposed business described in such stockholder’s notice or to elect any Proposed Nominee; and

(vii)

a representation that such stockholder is a holder of record of the capital stock of the corporation and intends to appear in person or by proxy at the annual meeting to bring such business or nomination (as applicable) before the meeting is so requested and acknowledgement that if such stockholder does not appear to present such business or nomination (as applicable) at such annual meeting, the corporation need not present such business or nominee for a vote at such meeting, notwithstanding that proxies in respect of such vote may have been received by the corporation. In addition to the foregoing, the corporation may require any Proposed Nominee to furnish other information as may be reasonably be required by the corporation to determine the eligibility of such Proposed Nominee to serve as an independent director of the corporation or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such nominee, under the listing standards of each

Exhibit 3.2

principal securities exchange upon which the shares of the corporation are listed, any applicable rules of the Securities and Exchange Commission and any publicly disclosed standards used by the Board of Directors in determining and disclosing the independence of the Corporation’s directors, including those applicable to a director’s service on any of the committees of the Board of Directors.

(c) A stockholder providing notice under this Section 2.02 shall update such notice, if necessary, so that the information provided or required to be provided in such notice shall continue to be true and correct (i) as of the record date for the meeting and (ii) as of the date that is 10 business days prior to the meeting (or any postponement or adjournment thereof), and such update shall be delivered to, or mailed and received by, the Secretary of the corporation no later than five business days after the record date for the meeting (in the case of an update required to be made as of the record date) and not later than seven business days prior to the date of the meeting, if practicable or, if not practicable, on the first practicable date prior to the meeting or any adjournment or postponement thereof (in the case of an update required to be made as of 10 business days prior to the meeting or any adjournment or postponement thereof).

(d) If information submitted pursuant to this Section 2.02 by any stockholder proposing a nominee for election as a director or any proposal for other business at a meeting of stockholders shall be inaccurate in any respect, such information may be deemed not to have been provided in accordance with this Section 2.02. Any such stockholder shall notify the corporation of any inaccuracy or change in any such information within two business days of becoming aware of such inaccuracy or change. Upon written request by the Secretary or the Board of Directors, any such stockholder shall provide, within five business days of delivery of such request (or such other period as may be specified in such request), (i) written verification, reasonably satisfactory to the Board of Directors or any authorized officer of the corporation, to demonstrate the accuracy of information submitted by the stockholder pursuant to this Section 2.02, and (ii) update any information (including, if requested by the corporation, written confirmation by such stockholder that such stockholder continues to intend to bring such nomination or other business proposal before the meeting) submitted by the stockholder pursuant to this Section 2.02 as of an earlier date. If a stockholder fails to provide such written verification or written update within such period, the information as to which written verification or a written update was requested shall be deemed not to have been provided in accordance with this Section 2.02.

(e) For purposes of this Section 2.02, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to the Exchange Act or furnished by the corporation to stockholders.

Exhibit 3.2

(f) Notwithstanding the foregoing provisions of this Section 2.02, a stockholder also shall comply with all applicable legal requirements and the Exchange Act and the rules and regulations thereunder with respect to the nomination of persons for election to the Board of Directors or the proposal of business to be considered by the stockholders at a meeting of stockholders. Nothing in this Section 2.02 shall be deemed to affect any right of a stockholder to request inclusion of a proposal in, or the right of the corporation to omit the proposal from, any proxy statement filed by the corporation with the Securities and Exchange Commission pursuant to Rule 14a-8 (or any successor provision) under the Exchange Act. Nothing in this Section 2.02 shall require disclosure of revocable proxies received by the stockholder or Stockholder Associated Person pursuant to a solicitation of proxies after the filing of an effective Schedule 14A by such stockholder or Stockholder Associated Person under Section 14(a) of the Exchange Act.

(g) Notwithstanding anything in these bylaws to the contrary, except as otherwise determined by the chairman of the meeting, if the stockholder giving notice as provided for in this Section 2.02 does not appear in person or by proxy at such meeting to present each nominee for election as a director or the proposed business, as applicable, such matter shall not be considered at the meeting.

(h) Only such persons who are nominated in accordance with the procedures set forth in these bylaws shall be eligible to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth herein. Except as otherwise provided by law, the corporation’s certificate of incorporation, as amended or restated (the “Certificate of Incorporation”) or these bylaws, the chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth herein and, if any proposed nomination or business was not made or proposed in compliance these bylaws, to declare that such non-compliant proposal or nomination be disregarded.

(i) As used in these bylaws, “affiliate” and “associate” each have the respective meanings set forth in Rule 12b-2 promulgated under the Exchange Act. A “Stockholder Associated Person” of any stockholder shall mean (i) any person who is a member of a “group” (as such term is used in Rule 13d-5 of the Exchange Act) with or otherwise acting in concert with such stockholder, (ii) any beneficial owner of shares of stock of the corporation owned of record or beneficially by such stockholder (other than a stockholder that is a depositary), (iii) any person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such stockholder or such Stockholder Associated Person and beneficially owns, directly or indirectly, shares of stock of the corporation, (iv) any person that directly or indirectly through one or more intermediaries, controls such stockholder or any Stockholder Associated Person, and (v) any participant (as defined in paragraphs (a)(ii)-(vi) of Instruction 3 to Item 4 of Schedule 14A promulgated under the Exchange Act, or any successor instructions) with such stockholder or other Stockholder Associated Person in respect of any proposals or nominations, as applicable.

Exhibit 3.2

Section 2.03 Voting List. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least 10 days prior to the meeting (a) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (b) during ordinary business hours, at the principal place of business of the corporation. In the event that the corporation determines to make the list available on an electronic network, the corporation may take reasonable steps to ensure that such information is available only to stockholders of the corporation. If the meeting is to be held at a specific place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting.

Section 2.04 Special Meeting. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by applicable law or by the Certificate of Incorporation, may be called by the Chairman of the Board or the President from time to time, and shall be called by the Secretary upon written request by a majority of the Board of Directors. Such request shall state the purposes of the proposed meeting. No business other than that stated in the corporation’s notice of a special meeting of stockholders shall be transacted at such special meeting.

Section 2.05 Notice of Meeting. Written notice of the annual meeting of stockholders and each special meeting of stockholders, stating the place, if any, date and hour of the meeting, the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meetings, and, in the case of a special meeting, the purpose or purposes thereof, shall be given to each stockholder entitled to vote thereat, not less than 10 nor more than 60 days before the meeting, unless allowed by applicable law and in accordance with Section 5.01 herein.

Section 2.06 Quorum; Adjournment. The holders of a majority of the shares of all classes of the corporation’s capital stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at any meeting of stockholders, except as otherwise provided by applicable law or by the Certificate of Incorporation. Notwithstanding the other provisions of the Certificate of Incorporation or these bylaws, the Board, the chairman of the stockholders meeting or the holders of a majority of the shares of the corporation’s capital stock entitled to vote thereat, present in person or represented by proxy, whether or not a quorum is present, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each

Exhibit 3.2

stockholder of record entitled to vote at the meeting. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. If a quorum is present at the original duly organized meeting of stockholders, it shall also be deemed present at an adjourned session of such meeting.

Section 2.07 Voting. When a quorum is present at any meeting of the stockholders, all elections of directors shall be determined by a plurality of the votes cast, and, except as otherwise required by law, the Certificate of Incorporation or these bylaws, all other matters shall be determined by a majority of the votes cast affirmatively or negatively. In determining the number of votes cast, shares abstaining from voting or otherwise not voted on a matter (including elections) will not be treated as votes cast. The provisions of this Section 2.07 will govern with respect to all votes of the stockholders unless the matter is one upon which, by express provision of applicable law, of the Certificate of Incorporation or of these bylaws, a different vote is required, in which case such express provision shall govern and control the decision of such matter. Every stockholder having the right to vote shall be entitled to vote in person, or by proxy appointed by an instrument in writing subscribed by such stockholder or by a transmission permitted by law and filed with the Secretary of the corporation before, or at the time of, the meeting, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. Every proxy must be appointed in accordance with the Delaware General Corporation Law. Each proxy shall be revocable unless expressly provided therein to be irrevocable or unless made irrevocable by law. If such instrument shall designate two or more persons to act as proxies, unless such instrument shall provide the contrary, a majority of such persons present at any meeting at which their powers thereunder are to be exercised shall have and may exercise all the powers of voting or giving consents thereby conferred, or if only one be present, then such powers may be exercised by that one; or, if an even number attend and a majority do not agree on any particular issue, each proxy so attending shall be entitled to exercise such powers in respect of the same portion of the shares as he is of the proxies representing such shares.

Section 2.08 Voting of Stock of Certain Holders. Shares of the corporation’s capital stock standing in the name of another corporation, domestic or foreign, may be voted by such officer, agent, or proxy as the bylaws or equivalent organizational documents of such corporation may prescribe, or in the absence of such provision, as the Board of Directors of such corporation may determine. Shares standing in the name of a deceased person may be voted by the executor or administrator of such deceased person, either in person or by proxy. Shares standing in the name of a guardian, conservator, or trustee may be voted by such fiduciary, either in person or by proxy, but no such fiduciary shall be entitled to vote shares held in such fiduciary capacity without a transfer of such shares into the name of such fiduciary. Shares standing in the name of a receiver may be voted by such receiver. A stockholder whose shares are pledged shall be entitled to vote such shares, unless in the transfer by the pledgor on the books of the corporation, the stockholder has expressly empowered the pledgee to vote thereon, in which case only the pledgee, or the stockholder’s proxy, may represent the stock and vote thereon.

Exhibit 3.2

Section 2.09 Treasury Stock. The corporation shall not vote, directly or indirectly, shares of its own capital stock owned by it; and such shares shall not be counted in determining the total number of outstanding shares of the corporation’s capital stock and for quorum purposes.

Section 2.10 Record Date. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders, or to receive payment of any dividend or other distribution or allotment of any rights or to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may, except as otherwise required by law, fix a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted by the Board of Directors and which record date shall not be more than 60 nor less than 10 days before the date of such meeting of stockholders, nor more than 60 days prior to the time for such other action as described above. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held, and, for determining stockholders entitled to receive payment of any dividend or other distribution or allotment of rights or to exercise any rights of change, conversion or exchange of stock or for any other purpose, the record date shall be at the close of business on the day on which the Board of Directors adopts a resolution relating thereto.

A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

Section 2.11 Inspectors of Elections; Opening and Closing the Polls. The Board of Directors by resolution shall appoint one or more inspectors, which inspector or inspectors may include individuals who serve the corporation in other capacities, including, without limitation, as officers, employees, agents or representatives, to act at each meeting of stockholders and make a written report thereof. One or more persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate has been appointed to act or is able to act at a meeting of stockholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before discharging his or her duties, shall take and sign an oath to faithfully execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors shall have the duties prescribed by law.

Section 2.12 Conduct of Meetings. Meetings of stockholders shall be presided over by any person determined by the Board or, in the absence of such determination, by the Chairman of the Board or the Chairman of the Board’s designee. The Secretary shall act as secretary of the meeting, but in the Secretary’s absence the chairman of the meeting may appoint any person to act as secretary of the meeting. The Board may adopt such rules and regulations for the conduct of the meeting of stockholders as it deems appropriate. Except to the extent inconsistent with such rules and regulations, the chairman of the meeting may prescribe such rules, regulations and procedures

Exhibit 3.2

and take such action as, in the discretion of the chairman of the meeting and without any action by the stockholders, are appropriate for the conduct of the meeting, including (i) restricting admission to the time set for the commencement of the meeting; (ii) limiting attendance at the meeting to stockholders of record, their duly authorized proxies and such other individuals as the chairman of the meeting may determine; (iii) limiting participation at the meeting on any matter to stockholders of record entitled to vote on such matter, their duly authorized proxies and other such individuals as the chairman of the meeting may determine; (iv) limiting the time allotted to questions or comments; (v) determining when and for how long the polls should be open and when the polls should be closed; (vi) maintaining order and security at the meeting; (vii) removing any stockholder or any other individual who refuses to comply with the meeting procedures, rules or guidelines as set forth by the chairman of the meeting; (viii) concluding the meeting or adjourning the meeting, whether or not a quorum is present, to a later date and time and at the same or a different place, which may be announced at the meeting; (ix) restricting the use of audio/video recording devices, cell phones and other electronic device; and (x) complying with any state or local laws and regulations concerning safety and security. Unless otherwise determined by the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

Article III.
BOARD OF DIRECTORS

Section 3.01 Powers. The business and affairs of the corporation shall be managed by or under the direction of its Board of Directors, which may exercise all such powers of the corporation and do all such lawful acts and things as are not by applicable law or by the Certificate of Incorporation or by these bylaws directed or required to be exercised or done by the stockholders.

Section 3.02 Number, Election and Term. Except as otherwise provided in the Certificate of Incorporation, the number of directors that shall constitute the whole Board of Directors shall be not fewer than three nor more than fifteen. Such number of directors shall from time to time be fixed and determined by the directors and shall be set forth in the notice of any meeting of stockholders held for the purpose of electing directors. The directors shall be elected at the annual meeting of stockholders, except as provided in Section 3.03, and each director elected shall hold office until his or her successor shall be elected and qualified or until such director’s earlier resignation or removal. Directors need not be residents of the State of Delaware or stockholders of the corporation. Any director may resign at any time upon notice given in writing or by electronic transmission to the corporation. Upon request of the corporation, each nominee for director shall provide the Secretary of the corporation a signed a completed written questionnaire with respect to the background and qualifications of such nominee in the form required by the corporation (the “Director Questionnaire”), and each nominee for director must attest to the accuracy of information provided in the Director Questionnaire.

“Electronic transmission,” as used in these bylaws, means any form of communication not directly involving the physical transmission of paper that creates a record that may be retained,

Exhibit 3.2

retrieved and reviewed by the recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.

Section 3.03 Vacancies, Additional Directors, and Removal From Office. If any vacancy occurs in the Board of Directors caused by death, resignation, retirement, disqualification, or removal from office of any director, or otherwise, or if any new directorship is created by an increase in the authorized number of directors as provided in Section 3.02 or otherwise, a majority of the directors then in office, though less than a quorum, or a sole remaining director, may choose a successor or fill the newly created directorship. Any director so chosen shall hold office until the next election and until his or her successor shall be duly elected and qualified, unless sooner displaced.

Section 3.04 Regular Meeting. A regular meeting of the Board of Directors shall be held each year, without other notice than this bylaw, at the place of, and immediately following, the annual meeting of stockholders; and other regular meetings of the Board of Directors shall be held each year, at such time and place as the Board of Directors may provide, by resolution, either within or without the State of Delaware, without other notice than such resolution. Unless otherwise restricted by the Certificate of Incorporation, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors or such committee by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation shall constitute presence in person at the meeting.

Section 3.05 Special Meeting. A special meeting of the Board of Directors may be called by the Chairman of the Board or by the President of the corporation and shall be called by the Secretary on the written request of any two directors. The Chairman of the Board or President so calling, or the directors so requesting, any such meeting shall fix the time and any place, either within or without the State of Delaware, as the place for holding such meeting. Special meeting may also be held by means of conference telephone or other communications equipment as set forth in Section 3.04.

Section 3.06 Notice of Special Meeting. Notice of special meetings of the Board of Directors shall be given to each director in writing by hand delivery, first-class mail, overnight mail or courier service, confirmed facsimile transmission or electronic transmission or orally by telephone at least 24 hours prior to the time of such meeting; provided, however, that if the Chairman of the Board determines in good faith that it is necessary to hold a special meeting sooner, the Chairman of the Board may provide less than 24 hours’ notice. Notice shall be given in accordance with Section 5.01. Any director may waive notice of any meeting in accordance with Section 5.02. Neither the business to be transacted at, nor the purpose of, any special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting, except that notice shall be given of any proposed amendment to the bylaws if it is to be adopted at any special meeting or with respect to any other matter where notice is required under applicable law.

Exhibit 3.2

Section 3.07 Quorum. A majority of the Board of Directors shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, and the vote of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by law, by the Certificate of Incorporation or by these bylaws. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

Section 3.08 Action Without Meeting. Unless otherwise restricted by the Certificate of Incorporation or these bylaws, any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof as provided in Article IV of these bylaws, may be taken without a meeting if all the members of the Board of Directors or of such committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board of Directors or such committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

Section 3.09 Compensation. The Board of Directors shall have authority to determine from time to time the amount of compensation, if any, that shall be paid to its members for their services as directors and as members of standing or special committees of the Board of Directors. The Board of Directors shall also have power, in its discretion, to provide for and to pay to directors rendering services to the corporation not ordinarily rendered by directors as such, special compensation appropriate to the value of such services as determined by the Board of Directors from time to time. No provision of these bylaws shall be construed to preclude any director from serving the corporation in any other capacity and receiving compensation therefor.

Section 3.10 Emergency Bylaws. Notwithstanding anything to the contrary in the Certificate of Incorporation or these bylaws, in the event there is any emergency, disaster or catastrophe, as referred to in Section 110 of the Delaware General Corporation Law (or any successor section), or other similar emergency condition (each, an “emergency”), and a quorum of the Board of Directors cannot readily be convened for action, this Section 3.10 shall apply.

(a) Any director may call a meeting of the Board of Directors by any feasible means and with such advance notice as circumstances permit in the judgment of the person calling the meeting. Neither the business to be transacted nor the purpose of any such meeting need be specified in the notice thereof.

(b) One-third of the directors shall constitute a quorum, which may in all cases act by majority vote.

(c) Directors may take action to appoint one or more of the director or directors to membership on any standing or temporary committees of the Board of Directors as they deem advisable. Directors may also take action to designate one or more of the officers of the corporation to serve as directors of the corporation while this Section 3.10 applies.

Exhibit 3.2

(d) To the extent that it considers it practical to do so, the Board of Directors shall manage the business of the corporation during an emergency in a manner that is consistent with the Certificate of Incorporation and these bylaws. It is recognized, however, that in an emergency it may not always be practical to act in this manner and this Section 3.10 is intended to and does hereby empower the Board of Directors with the maximum authority possible under the Delaware General Corporation Law, and all other applicable law, to conduct the interim management of the affairs of the corporation in an emergency in what it considers to be in the best interests of the corporation.

(e) No director, officer or employee acting in good faith in accordance with this Section 3.10 or otherwise pursuant to Section 110 of the Delaware General Corporation Law (or any successor section) shall be liable except for willful misconduct.

(f) This Section 3.10 shall continue to apply until such time following the emergency when it is feasible for at least a majority of the directors of the corporation immediately prior to the emergency to resume management of the business of the corporation.

(g) The Board of Directors may modify, amend or add to the provisions of this Section 3.10 in order to make any provision that may be practical or necessary given the circumstances of the emergency.

(h) The provisions of this Section 3.10 shall be subject to repeal or change by further action of the Board of Directors or by action of the stockholders, but no such repeal or change shall modify the provisions of paragraph (e) hereof with regard to action taken prior to the time of such repeal or change.

Article IV.
COMMITTEES OF THE BOARD OF DIRECTORS

Section 4.01 Designation, Powers and Name. The Board of Directors may, by resolution passed by a majority of the whole Board of Directors, designate one or more committees of the Board of Directors, including, if the Board of Directors shall so determine, an Executive Committee, each such committee to consist of one or more of the directors of the corporation in accordance with applicable laws. The committee shall have and may exercise such of the powers of the Board of Directors in the management of the business and affairs of the corporation as may be provided in such resolution but no such committee shall have the power or authority to (a) approve, adopt or recommend to the stockholders any action or matter (other than the election or removal of directors) required by applicable law to be submitted to the stockholders for approval or (b) adopt, amend or repeal any of these bylaws. The committee may authorize the seal of the corporation to be affixed to all papers that may require it. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of any member of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint

Exhibit 3.2

another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.

Section 4.02 Minutes. Each committee of the Board of Directors shall keep regular minutes of its proceedings and report the same to the Board of Directors when required.

Section 4.03 Compensation. Members of committees may be allowed compensation for serving on such committees, if the Board of Directors shall so determine, in accordance with Section 3.09.

Article V.
NOTICE

Section 5.01 General. Whenever under the provisions of applicable law, the Certificate of Incorporation or these bylaws, notice is required to be given to any director, member of any committee, or stockholder, such notice need not be delivered personally, but may be given in writing and or mailed to such director, member, or stockholder; provided, however, that in the case of a director or a member of any committee such notice may be given orally by telephone, overnight mail or courier service, facsimile transmission, electronic mail or similar medium of communication; provided further that in the case of a stockholder, notice may be given by a form of electronic transmission consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to the corporation. If mailed, notice to a director, member of a committee, or stockholder shall be deemed to be given five days after deposit in the United States mail first class in a sealed envelope, with postage thereon prepaid, addressed, in the case of a stockholder, to the stockholder at the stockholder’s address as it appears on the records of the corporation or, in the case of a director or a member of a committee, to such person at his or her business address. If given by overnight mail or courier service, such notice shall be deemed adequately delivered 24 hours after it was delivered to the overnight mail or courier service company. If sent by facsimile transmission, notice to a director or member of a committee shall be deemed to be given when the facsimile is transmitted and notice to a stockholder shall be deemed to be given when directed to a number at which the stockholder has consented to receive notice. If sent by e-mail transmission, notice to a director or member of a committee shall be deemed to be given when the e-mail is transmitted and notice to a stockholder shall be deemed to be given when directed to an electronic mail address at which the stockholder has consented to receive notice. If posted on an electronic network together with separate notice to the stockholder of such specific posting, notice to a stockholder shall be deemed given upon the later of (a) such posting and (b) the giving of such separate notice; and if sent by any other form of electronic transmission, notice shall be deemed given to a stockholder when directed to the stockholder, in accordance with the stockholder’s consent.

Section 5.02 Waiver. Whenever notice is required to be given under applicable law, the Certificate of Incorporation, or these bylaws, a written waiver, signed by the person or persons entitled to said notice, or a waiver by electronic transmission by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent to such notice.

Exhibit 3.2

Attendance of a person at a meeting shall constitute waiver of notice of such meeting except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any annual or special meeting of the stockholders or the Board of Directors or a committee thereof need be specified in any waiver of notice of such meeting.

Article VI.
OFFICERS

Section 6.01 Officers. The officers of the corporation shall be a Chairman of the Board and a Vice Chairman of the Board (if such offices are created by the Board of Directors), a Chief Executive Officer, a President, a Chief Financial Officer, one or more Vice Presidents, any one or more of which may be designated Executive Vice President or Senior Vice President, a Secretary and a Treasurer. The Board of Directors may appoint such other officers and agents, including Chief Operating Officer, Assistant Vice Presidents, Assistant Secretaries, and Assistant Treasurers, in each case as the Board of Directors shall deem necessary, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined by the Board. Any two or more offices may be held by the same person. No officer shall execute, acknowledge, verify or countersign any instrument on behalf of the corporation in more than one capacity, if such instrument is required by law, by these bylaws or by any act of the corporation to be executed, acknowledged, verified, or countersigned by two or more officers. The Chairman of the Board and Vice Chairman of the Board shall be elected from among the directors. With the foregoing exceptions, none of the other officers need be a director, and none of the officers need be a stockholder of the corporation.

Section 6.02 Election and Term of Office. The officers of the corporation shall be elected annually by the Board of Directors at its first regular meeting held after the annual meeting of stockholders or as soon thereafter as conveniently possible. Each officer shall hold office until his or her successor shall have been elected and qualified or until the effective date of his or her earlier resignation or removal, or until he or she shall cease to be a director in the case of the Chairman of the Board and the Vice Chairman of the Board.

Section 6.03 Removal and Resignation. Any officer or agent elected or appointed by the Board of Directors may be removed without cause by the affirmative vote of a majority of the Board of Directors whenever, in its judgment, the best interests of the corporation shall be served thereby, but such removal shall be without prejudice to the contractual rights, if any, of the person so removed. Any officer may resign at any time upon written notice to the corporation. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein, and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

Section 6.04 Vacancies. Any vacancy occurring in any office of the corporation by death, resignation, removal, or otherwise, may be filled by the Board of Directors.

Exhibit 3.2

Section 6.05 Salaries. The salaries of all officers and agents of the corporation shall be fixed by the Board of Directors or a committee thereof or pursuant to the direction of the Board of Directors or a committee thereof; and no officer shall be prevented from receiving such salary by reason of his or her also being a director.

Section 6.06 Chairman of the Board. The Chairman of the Board (if such office is created by the Board of Directors) shall preside at all meetings of the Board of Directors or of the stockholders of the corporation. The Chairman of the Board shall formulate and submit to the Board of Directors or the Executive Committee matters of general policy for the corporation and shall perform such other duties as usually appertain to the office or as may be prescribed by the Board of Directors or the Executive Committee.

Section 6.07 Vice Chairman of the Board. The Vice Chairman of the Board (if such office is created by the Board of Directors) shall, in the absence or disability of the Chairman of the Board, perform the duties and exercise the powers of the Chairman of the Board. The Vice Chairman of the Board shall perform such other duties as from time to time may be prescribed by the Board of Directors or the Executive Committee or assigned by the Chairman of the Board.

Section 6.08 Chief Executive Officer. The Chief Executive Officer shall be the chief executive officer of the corporation and, subject to the control of the Board of Directors, shall in general supervise and control the business and affairs of the corporation. In the absence of the Chairman of the Board or the Vice Chairman of the Board (if such offices are created by the Board), the Chief Executive Officer shall preside at all meetings of the Board of Directors and of the stockholders. The Chief Executive Officer may also preside at any such meeting attended by the Chairman of the Board or Vice Chairman of the Board if he or she is so designated by the Chairman of the Board or, in the Chairman of the Board’s absence, by the Vice Chairman. The Chief Executive Officer shall have the power to appoint and remove subordinate officers, agents and employees, except those elected or appointed by the Board of Directors. The Chief Executive Officer shall keep the Board of Directors and the Executive Committee fully informed and shall consult them concerning the business of the corporation. He or she may sign, with the Treasurer, Secretary or any other officer of the corporation thereunto authorized by the Board of Directors, certificates for shares of the corporation and any deeds, bonds, mortgages, contracts, checks, notes, drafts, or other instruments that the Board of Directors has authorized to be executed, except in cases where the signing and execution thereof has been expressly delegated by these bylaws or by the Board of Directors to some other officer or agent of the corporation, or shall be required by law to be otherwise executed. The Chief Executive Officer shall vote, or give a proxy to any other officer of the corporation to vote, all shares of stock of any other corporation standing in the name of the corporation and in general he or she shall perform all other duties normally incident to the office of Chief Executive Officer and such other duties as may be prescribed by the stockholders, the Board of Directors, or the Executive Committee from time to time.

Section 6.09 President. The President shall be the chief operating officer of the corporation, subject to the control of the Board of Directors, and shall have general and active

Exhibit 3.2

management and control of the day-to-day business and affairs of the corporation and shall report directly to the Chief Executive Officer, if the Board of Directors creates such a position. The President shall perform such other duties as from time to time are assigned to him or her by the Chief Executive Officer, the Board of Directors or the Executive Committee. In the absence of the Chief Executive Officer, or in the event of his or her inability or refusal to act, the President shall perform the duties and exercise the powers of the Chief Executive Officer. The President shall perform such other duties as from time to time may be assigned to him or her by the Chief Executive Officer, the Board of Directors or the Executive Committee.

Section 6.10 Chief Financial Officer. The Chief Financial Officer shall serve as the principal advisor to the corporation in all matters relating to financial risks, financial planning and record-keeping. The Chief Financial Officer shall report directly to the Chief Executive Officer. The Chief Financial Officer shall be responsible for and shall direct agents and employees in the performance of all financial duties and services for and on behalf of the corporation. The Chief Financial Officer shall perform such other duties and exercise such other powers as are commonly incidental to the office of the Chief Financial Officer, and such other duties as from time to time are assigned to him or her by the Chief Executive Officer, the Board of Directors or the Executive Committee.

Section 6.11 Vice Presidents. In the absence of the President, or in the event of his or her inability or refusal to act, the Executive Vice President (or in the event there shall be no Vice President designated Executive Vice President, any Vice President designated by the Board) shall perform the duties and exercise the powers of the President. Any Vice President may sign, with the Secretary or Assistant Secretary, certificates for shares of the corporation. The Vice Presidents shall perform such other duties as from time to time may be assigned to them by the Chief Executive Officer, the President, the Board of Directors or the Executive Committee.

Section 6.12 Secretary. The Secretary shall (a) keep the minutes of the meetings of the stockholders, the Board of Directors and committees of the Board of Directors; (b) see that all notices are duly given in accordance with the provisions of these bylaws and as required by law; (c) be custodian of the corporate records and of the seal of the corporation, and see that the seal of the corporation or a facsimile thereof is affixed to all certificates for shares prior to the issue thereof and to all documents, the execution of which on behalf of the corporation under its seal is duly authorized in accordance with the provisions of these bylaws; (d) keep or cause to be kept a register of the post office address of each stockholder which shall be furnished by such stockholder; (e) sign with the President, or an Executive Vice President or Vice President, certificates for shares of the corporation, the issue of which shall have been authorized by resolution of the Board of Directors; (f) have general charge of the stock transfer books of the corporation; and (g) in general, perform all duties normally incident to the office of Secretary and such other duties as from time to time may be assigned to him by the Chief Executive Officer, the President, the Board of Directors or the Executive Committee.

Exhibit 3.2

Section 6.13 Treasurer. If required by the Board of Directors, the Treasurer shall give a bond for the faithful discharge of his or her duties in such sum and with such surety or sureties as the Board of Directors shall determine. The Treasurer shall (a) have charge and custody of and be responsible for all funds and securities of the corporation; (b) receive and give receipts for moneys due and payable to the corporation from any source whatsoever and deposit all such moneys in the name of the corporation in such banks, trust companies, or other depositories as shall be selected in accordance with the provisions of Section 7.03 of these bylaws; (c) prepare, or cause to be prepared, for submission at each regular meeting of the Board of Directors, at each annual meeting of the stockholders, and at such other times as may be required by the Board of Directors, the Chief Executive Officer, the President or the Executive Committee, a statement of financial condition of the corporation in such detail as may be required; and (d) in general, perform all the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him by the Chief Executive Officer, the President, the Chief Financial Officer, the Board of Directors or the Executive Committee.

Section 6.14 Assistant Secretary and Treasurer. The Assistant Secretaries and Assistant Treasurers shall, in general, perform such duties as shall be assigned to them by the Chief Financial Officer, the Secretary or the Treasurer, respectively, or by the President, the Board of Directors, or the Executive Committee. The Assistant Secretaries and Assistant Treasurers shall, in the absence of the Secretary or Treasurer, respectively, perform all functions and duties which such absent officers may delegate, but such delegation shall not relieve the absent officer from the responsibilities and liabilities of his or her office. The Assistant Secretaries may sign, with the President or a Vice President, certificates for shares of the corporation, the issue of which shall have been authorized by a resolution of the Board of Directors. The Assistant Treasurers shall respectively, if required by the Board of Directors, give bonds for the faithful discharge of their duties in such sums and with such sureties as the Board of Directors shall determine.

Article VII.
CONTRACTS, CHECKS AND DEPOSITS

Section 7.01 Contracts. Subject to the provisions of Section 6.01, the Board of Directors may authorize any officer, officers, agent, or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances.

Section 7.02 Checks. All checks, demands, drafts, or other orders for the payment of money, notes, or other evidences of indebtedness issued in the name of the corporation, shall be signed by such officer or officers or such agent or agents of the corporation, and in such manner, as the Board of Directors may determine.

Section 7.03 Deposits. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies, or other depositories as the Board of Directors may select.

Exhibit 3.2

Article VIII.
CERTIFICATES OF STOCK

Section 8.01 Issuance. Each stockholder of this corporation shall be entitled to a certificate or certificates representing the number of shares of capital stock registered in his or her name on the books of the corporation unless the Board of Directors has provided by resolution or resolutions that some or all of any or all classes of shares of the corporation stock shall be uncertificated shares. The certificates shall be in such form as may be determined by the Board of Directors, shall be issued in numerical order and shall be entered in the books of the corporation as they are issued. They shall exhibit the holder’s name and number of shares and shall be signed by the President or a Vice President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary. If any certificate is countersigned (1) by a transfer agent other than the corporation or any employee of the corporation or (2) by a registrar other than the corporation or any employee of the corporation, any other signature on the certificate may be a facsimile.

If the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences, and relative, participating, optional, or other special rights of each class of stock or series thereof and the qualifications, limitations, or restrictions of such preferences and rights shall be set forth in full or summarized on the face or back of the certificate which the corporation shall issue to represent such class of stock; provided that, except as otherwise provided by applicable law, in lieu of the foregoing requirements, there may be set forth on the face or back of such certificate, a statement that the corporation will furnish such information without charge to each stockholder who so requests. All certificates surrendered to the corporation for transfer shall be canceled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and canceled, except that in the case of a lost, stolen, destroyed, or mutilated certificate a new one may be issued therefor upon such terms and with such indemnity, if any, to the corporation as the Board of Directors may prescribe. Certificates shall not be issued representing fractional shares of stock.

Section 8.02 Lost Certificates. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen, or destroyed certificate or certificates, or his or her legal representative, to give the corporation a bond sufficient to indemnity it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.

Section 8.03 Transfers. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment, or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate, and record the transaction upon its books. Transfers of shares shall be made only on the books of the corporation by the registered

Exhibit 3.2

holder thereof, or by his or her attorney thereunto authorized by power of attorney and filed with the Secretary of the corporation or the transfer agent.

Section 8.04 Registered Stockholders. The corporation shall be entitled to treat the holder of record of any share or shares of the corporation’s capital stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Delaware.

Article IX.
DIVIDENDS

Section 9.01 Declaration. Subject to the provisions of the Certificate of Incorporation, the Board of Directors may declare dividends with respect to the shares of the corporation’s capital stock at any regular or special meeting, pursuant to applicable law. Dividends may be paid in cash, in property, or in shares of the corporation’s capital stock, subject to the provisions of the Certificate of Incorporation.

Section 9.02 Reserve. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, deems proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the Board of Directors shall think conducive to the interest of the corporation, and the Board of Directors may modify or abolish any such reserve in the manner in which it was created.

Article X.
INDEMNIFICATION AND INSURANCE

Section 10.01 Third Party Actions. The corporation shall indemnify any director or officer of the corporation, and may indemnify any other person, who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, or conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the corporation, and,

Exhibit 3.2

with respect to any criminal action or proceeding, had reasonable cause to believe that the person’s conduct was unlawful.

Section 10.02 Actions by or in the Right of the Corporation. The corporation shall indemnify any director or officer and may indemnify any other person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses as the Court of Chancery or such other court shall deem proper.

Section 10.03 Mandatory Indemnification. To the extent that a present or former director or officer of the corporation has been successful on the merits or otherwise in defense of any action, suit, or proceeding referred to in Section 10.01 and Section 10.02, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection therewith.

Section 10.04 Determination of Conduct. Any indemnification under Section 10.01 or Section 10.02 (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the present or former director, officer, employee or agent is proper in the circumstances because the person has met the applicable standard of conduct set forth in Section 10.01 or Section 10.02. Such determination shall be made (a) by a majority vote of directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (b) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (c) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (d) by the stockholders.

Section 10.05 Payment of Expenses in Advance. Expenses (including attorney’s fees) incurred by an officer or director in defending a civil, criminal, administrative or investigative action, suit, or proceeding shall be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the corporation as authorized in this Article X. Any such expenses incurred by an employee or agent of the corporation at its discretion may be paid by the corporation upon receipt of such an undertaking.

Exhibit 3.2

Section 10.06 Indemnity Not Exclusive. The indemnification and advancement of expenses provided or granted hereunder shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under the Certificate of Incorporation, any other bylaw, agreement, vote of stockholders, or disinterested directors or otherwise, both as to action in a person’s official capacity and as to action in another capacity while holding such office.

Section 10.07 Definitions. For purposes of this Article X:

(a) “the corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee, or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this Article X with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued;

(b) “other enterprises” shall include employee benefit plans;

(d) “serving at the request of the corporation” shall include any service as a director, officer, employee, or agent of the corporation that imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants or beneficiaries; and

(e) a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the corporation” as referred to in this Article X.

Section 10.08 Continuation of Indemnity. The indemnification and advancement of expenses provided by or granted pursuant to this Article X shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

Section 10.09 Insurance, Contracts and Funding. The corporation may purchase and maintain insurance on behalf of any person who was or is a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the corporation would have the power to indemnify

Exhibit 3.2

such person against such liability under the Delaware General Corporation Law. The corporation, without further stockholder approval, may enter into contracts with any director, officer, employee or agent in furtherance of the provisions of this Section 10.09 and may create a trust fund, grant a security interest or use other means (including, without limitation, a letter of credit) to ensure that payment of such amounts as may be necessary to effect indemnification as provided in this Section 10.09.

Article XI.
MISCELLANEOUS

Section 11.01 Seal. The corporate seal, if one is authorized by the Board of Directors, shall have inscribed thereon the name of the corporation, and the words “Corporate Seal, Delaware.” The seal may be used by causing it or a facsimile thereof to be impressed or affixed or otherwise reproduced.

Section 11.02 Books. The books of the corporation may be kept (subject to applicable law) outside the State of Delaware at the offices of the corporation, or at such other place or places as may be designated from time to time by the Board of Directors.

Article XII.
AMENDMENT

Except as otherwise provided by the Certificate of Incorporation, the Board of Directors is expressly authorized to adopt, alter, amend or repeal any and all of the bylaws of the corporation and the bylaws of the corporation may be adopted, altered, amended or repealed by the affirmative vote of the holders of at least sixty-six and two-thirds percent (66⅔%) of all of the outstanding shares of capital stock of the corporation entitled to vote thereon, voting together as a single class.

Exhibit 10.3

SECOND AMENDMENT

TO THE

DELEK US HOLDINGS, INC.

2016 LONG-TERM INCENTIVE PLAN

THIS SECOND AMENDMENT TO THE DELEK US HOLDINGS, INC. 2016 LONG-TERM INCENTIVE PLAN (this “Second Amendment”) is effective as of May 5, 2020. Capitalized terms used and not defined herein shall have the meanings ascribed to them in the Plan (as defined below), and all section references shall refer to the Plan.

RECITALS

WHEREAS, Delek US Holdings, Inc. (the “Company”) currently awards long-term compensation to certain nonemployee directors, employees and consultants under its 2016 Long-Term Incentive Plan, as amended by that certain First Amendment dated as of May 8, 2018 (as amended, the “Plan”);

WHEREAS, the Plan reserves 8,900,000 shares of Common Stock for issuance in connection with awards granted thereunder;

WHEREAS, the Company desires to increase the number of shares of Common Stock reserved for issuance under the Plan by 2,120,000 shares;

WHEREAS, such increase requires the approval of the Company’s stockholders; and

WHEREAS, the Board, based upon the recommendation of the Compensation Committee of the Board, which committee has previously been appointed by the Board pursuant to Section 5 to administer the Plan (the “Committee”), has determined that it is in the best interests of the Company, subject to the approval of the Company’s stockholders at the Company’s 2020 Annual Meeting of Stockholders, to amend the Plan to increase the number of shares of Common Stock reserved for issuance under the Plan by an additional 2,120,000 shares, from 8,900,000 shares to 11,020,000 shares, pursuant to this Second Amendment.

NOW, THEREFORE, the Plan shall be amended effective as of the date hereof as follows:

1. Paragraph 4 of the Plan is deleted in its entirety and replaced with the following:

4. Common Stock Available for Awards. Subject to the provisions of Paragraph 16 hereof, there shall be available for Awards granted wholly or partly in Common Stock (including rights or options which may be exercised for or settled in Common Stock) during the term of this Plan an aggregate of 11,020,000 shares of Common Stock (the “Maximum Share Limit”), all of which may be used for the granting of ISOs. The Board and the appropriate officers of the Company are authorized to take from time to time whatever actions are necessary, and to file required documents with governmental authorities and stock exchanges and transaction reporting systems, to make shares of Common Stock available for issuance pursuant to Awards. Each Award settled in shares of Common Stock other than a Stock Option or SAR shall be counted against the Maximum Share Limit as 2.28 shares and each Stock Option or SAR shall be counted against the Maximum Share Limit as one share. Common Stock related to Awards under this Plan or the Prior Plan that are forfeited or terminated, expire unexercised, are settled in cash in lieu of Common Stock or in a manner such that all or some of the shares covered by an Award are not issued to a Participant, or are exchanged for Awards that do not involve Common Stock, shall immediately become available for Awards hereunder and the Maximum Share Limit shall be increased by the same amount as such shares of Common Stock were

counted against the Maximum Share Limit (or with respect to Awards granted under the Prior Plan, as one share of Common Stock per share subject to the Award). Shares of Common Stock that are tendered by a Participant or withheld as full or partial payment of the exercise price or minimum withholding taxes related to the vesting or settlement of an Award shall become available again for Awards under the Plan. For the avoidance of doubt, only the net number of shares of Common Stock issued on the settlement of a SAR or the net settlement of a Stock Option will count against the Maximum Share Limit. Shares of Common Stock delivered under the Plan as an Award or in settlement of an Award issued or made (a) upon the assumption, substitution, conversion or replacement of outstanding awards under a plan or arrangement of an entity acquired in a merger or other acquisition or (b) as a post-transaction grant under such a plan or arrangement of an acquired entity shall not reduce or be counted against the maximum number of shares of Common Stock available for delivery under the Plan, to the extent that the exemption for transactions in connection with mergers and acquisitions from the stockholder approval requirements of the New York Stock Exchange for equity compensation plans applies. The Committee may from time to time adopt and observe such rules and procedures concerning the counting of shares against the Maximum Share Limit or any sub limit as it may deem appropriate, including rules more restrictive than those set forth above to the extent necessary to satisfy the requirements of any national stock exchange on which the Common Stock is listed or any applicable regulatory requirement.


2.	Except as modified herein, all other terms and conditions of the Plan shall remain in full force and effect. In the event of a conflict between this Second Amendment and the Plan, this Second Amendment shall control.

IN WITNESS WHEREOF, the undersigned has executed this Second Amendment to the Plan, to be effective as of the date first written above.

DELEK US HOLDINGS, INC.

By: /s/ Abigail K. Yates

Name: Abigail K. Yates

Title: Executive Vice President, General Counsel and Corporate Secretary

Exhibit 10.4

AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT

This Amended and Restated Executive Employment Agreement (the “Agreement”) is entered into effective May 8, 2020 (the “Effective Date”), by and between Ezra Uzi Yemin (“Executive”) and DELEK US HOLDINGS, INC. (the “Company”), who, in return for the mutual promises set forth herein, agree as follows:


1.	Prior Agreement; Term.

(a)

Prior Agreement. Executive and the Company are parties to that certain Executive Employment Agreement, effective as of November 1, 2017 (the “Prior Agreement”), which is amended and restated as set forth herein. The Company shall continue to employ Executive on the terms and conditions set forth in the Agreement, which supersedes and replaces the Prior Agreement in its entirety other than with respect to any amounts otherwise due and owing under the Prior Agreement which have not been paid prior to the Effective Date.

(b)

Term. The term of this Agreement shall commence upon the Effective Date and expire on May 8, 2023 (the “Initial Term”) unless terminated earlier as provided for herein. On each anniversary of the Initial Term (each a “Term Extension Date”), the term of Executive’s employment hereunder will automatically, without further action by Executive or the Company, be extended for one year (each such one year period an “Extended Term”); provided, however, that either Executive or the Company may, by written notice to the other given not less than 180 days prior to the then-applicable Term Extension Date, cause the term to cease to extend automatically, in which case Executive’s employment hereunder (if not earlier terminated as provided for herein) shall automatically terminate upon the next Term Extension Date. The Initial Term and any Extended Term are referred to herein as the “Term.”

Scope of Employment. During the Term, the Company shall employ Executive and Executive shall render services to the Company in the capacity as the Company’s principal executive officer with the title of Chairman of the Board, President and Chief Executive Officer of the Company and shall render services to Delek Logistics Partners, LP (“DKL”) in the capacity as DKL’s principal executive officer with the title of Chairman of the Board, President and Chief Executive Officer of DKL and such other titles as may be established from time to time. During the Term, Executive shall also serve as the principal executive officer of any subsidiary of the Company required to be listed by the Company under Item 601(b)(21) of Regulation S-K of the United States Securities and Exchange Commission (the “SEC”). Executive shall devote Executive’s full business time and best efforts to the successful functioning of the Company’s business and shall faithfully and industriously perform all duties pertaining to Executive’s position, including such additional duties as may be assigned from time to time, to the best of Executive’s ability, experience and talent; provided, however, that Executive may pursue charitable or civic activities, engage in passive personal investments, participate in industry association and trade groups, and serve as an

executor, trustee or in other similar fiduciary capacities; provided that any such activities do not materially interfere with the performance of his responsibilities and US 7013273 obligations pursuant to this Agreement; provided, further that Executive shall be allowed to join up to one board of directors (or other governing bodies and inclusive of any board or governing body that Executive is a member of as of the Effective Date) and the Company shall have the right to approve (and Executive shall have the obligation to obtain the Company’s approval of) such appointment in advance of Executive’s appointment. The Company shall be commercially reasonable in granting such approval and will act in good faith. Executive shall be subject at all times during the Term hereof to the lawful direction and control of the Company’s Board of Directors (the “Board”) in respect of the work to be done.


3.	Compensation.

(a)

Base Compensation. During the Term and effective as of the Effective Date, Executive’s annualized base salary (the “Base Compensation”) shall be (i) the Base Salary specified in the “Terms of Employment” (attached hereto as “Exhibit A”), (ii) subject to all appropriate federal and state withholding taxes and (iii) payable at the same times and under the same conditions as salaries are paid to the Company’s other employees in accordance with the normal payroll practices of the Company. The Base Compensation shall be reviewed and may be increased from time to time following the Effective Date by the Board (or any applicable committee thereof) in its sole discretion applied consistent with this Section 3(a). For the avoidance of doubt, Executive’s Base Compensation shall not be reduced except as expressly agreed to by Executive in writing. The Base Compensation shall at all times during the Term be, and remain, more than the compensation of Executive’s subordinates at such times. If the Base Compensation is adjusted after the Effective Date, the Base Compensation defined above shall also be adjusted for all purposes of this Agreement; provided, that, no reduction in Base Compensation not otherwise agreed to by Executive in writing shall have any effect for purposes of this Agreement.

(b)

Annual Bonus. Executive will be eligible to participate in the Company’s annual cash incentive plan at a level that is commensurate with Executive’s position as determined by the Board (or any applicable committee thereof) in its sole and reasonable discretion. Executive’s Annual Bonus (as defined below) target for service during the 2020 fiscal year shall be equivalent to a stated percentage of Executive’s Base Compensation as specified in the Terms of Employment (the “Bonus Target”) and, for 2021 and thereafter, the Bonus Target shall not be reduced without Executive’s prior written consent. The Annual Bonus may be based upon achievement of performance measures and objectives on terms no less favorable than other senior executive officers as established by the Board from time to time; provided that the performance metrics for the Annual Bonus in respect of the 2020 fiscal year will be as specified in the Terms of Employment. The Annual Bonus is

typically paid in the first fiscal quarter of the year following the applicable bonus year. Notwithstanding any other provisions herein contain or in any bonus plan or policy, unless Executive’s employment is terminated for Cause (as defined below), upon Executive’s termination of employment following the end of any applicable bonus year, the Company shall pay Executive the Annual Bonus for such applicable bonus year when it otherwise pays such bonuses, but no later than 90-days following the end of such bonus year. For purposes of this Agreement, an “Annual Bonus” shall mean a cash bonus, if any, awarded by the Board (or any applicable committee thereof) to Executive in recognition of Executive’s service during the preceding fiscal year and in a manner consistent with the Company’s annual bonus programs for senior executives.

(c)

Long-Term Incentive Compensation. Executive shall be eligible to participate in the Company’s long-term incentive plans that may be in effect from time to time for the Company and its subsidiaries including, without limitation, the Company’s 2016 Long-Term Incentive Plan (the “Plan”), on terms commensurate with Executive’s position and duties and at such time and on such terms specified in the Terms of Employment, as determined by the Board or any other authorized administrator of the Plan (the “Plan Administrator”) in their sole discretion, but not otherwise inconsistent with this Agreement. Except as provided herein, including the Terms of Employment, program design, including, without limitation, performance measures and weighting, is at the sole discretion of the Plan Administrator.


4.	Fringe Benefits / Reimbursement of Business Expenses.

(a)

General Employee Benefits. The Company shall make available to Executive, or cause to be made available to Executive, throughout the period of Executive’s employment hereunder, such benefits as may be put into effect from time to time by the Company generally for other senior executives of the Company. The Company expressly reserves the right to modify such benefits available to Executive at any time provided that such modifications apply to other similarly situated employees.


(b)	Business Expenses. Executive will be reimbursed for all reasonable out-of-pocket business, business entertainment and travel expenses paid by Executive in connection with the performance of Executive’s duties for the Company, in accordance with and subject to Section 20(c) and all applicable Company expense incurrence and reimbursement policies.

(c)

Other Benefits. During the Term, the Company will pay Executive’s reasonable costs of professional tax and financial counseling and provide him with the use of an automobile including fuel and maintenance, provided that, the cost of each such benefit does not exceed $25,000 in any calendar year. Perquisites and other personal benefits that are not integrally and directly related to the performance of Executive’s duties and confer a direct or indirect benefit upon Executive that has a personal

aspect may, in the Company’s reasonable discretion, be recorded as taxable compensation to Executive and disclosed in public filings according to SEC regulations.

(d)

Residence. During the Term, the Company shall offer to lease Executive’s primary residence as of the Effective Date (the “Residence”) to Executive for residential use at fair market rental value. For a period of 12 months following the Effective Date, Executive shall also have the exclusive option (the “Residence Option”) to purchase the Residence from the Company upon the terms set forth below.

(i)

Term/Exercise of Option. The Residence Option may be exercised by Executive’s delivery of written notice to the Company pursuant to the notice provisions of this Agreement at any time during the Residence Option Term. The Residence Option Term shall begin on the Effective Date and end at 5:00 p.m. U.S. Central Time 12 months following the Effective Date. The Residence Option shall expire immediately, automatically and without notice, and shall be of no further force or effect, if (A) Executive’s employment is terminated by the Company for Cause, (B) the Residence ceases to be used by Executive as a personal residence or (C) Executive does not exercise the Residence Option during the Residence Option Term.

(ii)

Purchase Price. The price to be paid by Executive to the Company to purchase the Residence (the “Purchase Price”) shall be equal to the fair market value (the “FMV”) of the Residence at the time of purchase as determined by a reputable MAI appraiser chosen by the Company who has at least six years of experience appraising improved residential properties in the county where the Residence is located. The determination of FMV by this appraiser shall be binding and conclusive. The fee of any such appraiser selected hereunder above shall be borne equally by the parties.

(iii)

More Definitive Agreement. If Executive exercises the Residence Option, the parties shall promptly negotiate in good faith a written purchase and sale agreement for the Residence containing a commitment to close the transaction within 60 days following the full execution of the agreement, an earnest money deposit of at least five percent of the Purchase Price and such other terms, conditions, representations and warranties that are not inconsistent with the terms hereof and that are reasonable and customary for similar transactions.


5.	Vacation Time / Sick Leave. Executive will be granted 25 business days of vacation per calendar year. Unused vacation will accrue and carry over into a new calendar year during the Term and the amount attributed to accrued and unused vacation will be paid to Executive upon the termination of employment. Executive will be provided with sick leave according to the Company’s standard policies.

Compliance with Company Policies. Executive shall comply with and abide by all applicable lawful policies and directives of the Company and its subsidiaries including, without limitation, the Codes of Business Conduct & Ethics for the Company and its subsidiaries, the Supplemental Insider Trading Policies for the Company and its subsidiaries and any applicable employee handbooks or manuals. The Company and its subsidiaries may, in their sole discretion, change, modify or adopt new policies and directives affecting Executive’s employment which shall be provided to Executive in writing and shall not be on a basis more burdensome than applicable to other officers or otherwise require any additional financial commitment from Executive. In the event of any conflict between the terms of this Agreement and the employment policies and directives of the Company and its subsidiaries, the terms of this Agreement will control, subject to the Company Clawback Policy as modified or amended which shall not be abrogated and shall take precedence over any inconsistent terms in this Agreement. Executive acknowledges that the Company and its subsidiary, DKL, are currently subject to SEC reporting requirements pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the continued listing requirements of the New York Stock Exchange or any other securities exchange on which the securities of the Company may be listed from time to time for public trading (collectively, a “Securities Market”), and other federal securities laws and regulations applicable to publicly traded companies in the United States. As an employee, officer and director of the Company and as an officer and director of DKL, Executive will, in such capacities, be required to comply with applicable federal securities laws and regulations (including, without limitation, the reporting requirements under Exchange Act Section 16(a) and related SEC rules and regulations), Securities Market listing requirements as well as certain policies of the Company and its subsidiaries designed to comply with such laws and regulations.

Confidentiality. Executive recognizes that during the course of Executive’s employment hereunder, Executive will be exposed to information or ideas of a confidential or proprietary nature that pertain to Company’s business, financial, legal, marketing, administrative, personnel, technical or other functions or which constitute trade secrets (including, without limitation, business strategy, strategic plans, investment and growth plans and opportunities, client and customer needs and strategies, the identity of sources and markets, marketing information and strategies, business and financial plans and strategies, methods of doing business, data processing and technical systems, specifications, designs, plans, drawings, software, data, prototypes, programs and practices, sales history, financial health or material non-public information as defined under federal securities law) (collectively “Confidential Information”). Confidential Information also includes such information of third parties that has been provided to Company in confidence, and Confidential Information includes such information provided to Executive both before and after the date he enters into this Agreement. All such information is deemed “confidential” or “proprietary” whether or not it is so marked. Information will not be considered Confidential Information to the extent that it is or becomes generally available to the public other than through any breach of this Agreement by or at the discretion of Executive. Nothing in this Section will prohibit the use

or disclosure by Executive of knowledge that is in general use in the industry or general business knowledge that was known to Executive prior to Executive’s service to the Company or which enters the public domain other than through any breach of this Agreement by or at the discretion of Executive. Executive may also disclose such information if required by court order or applicable law provided that Executive (a) uses Executive’s reasonable best efforts to give the Company written notice as far in advance as is practicable to allow the Company to seek a protective order or other appropriate remedy (except to the extent that Executive’s compliance with the foregoing would cause Executive to violate a court order or other legal requirement), (b) discloses only such information as is required by law, and (c) uses Executive’s reasonable best efforts to obtain confidential treatment for any Confidential Information so disclosed. During Executive’s employment and for so long as the Confidential Information remains confidential or proprietary thereafter, Executive shall hold Confidential Information in strict confidence, shall use it only in connection with the performance of Executive’s duties on behalf of the Company, shall restrict its disclosure to those directors, employees or independent contractors of the Company with a need to know such Confidential Information, and shall not disclose, copy or use Confidential Information for the benefit of anyone other than the Company without the Company’s prior written consent. However, nothing in this Agreement shall prohibit Executive from reporting possible violations of law to any governmental agency or entity in accordance with applicable whistleblower protection provisions including, without limitation, the rules promulgated under Section 21F of the Exchange Act or Section 806 of the Sarbanes-Oxley Act of 2002, or require Executive to notify the Company (or obtain its prior approval) of any such reporting. Executive shall, at any time, upon Company’s request and at Company’s sole discretion or immediately upon Executive’s separation from employment, return to the Company and certify in a form satisfactory to the Company, the destruction of any and all written or electronic documents or data containing Confidential Information in Executive’s possession, custody or control. Further, pursuant to the federal Defend Trade Secrets Act of 2016, an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (A) is made (1) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney and (2) solely for the purpose of reporting or investigating a suspected violation of law; (B) is made to the individual’s attorney in relation to a lawsuit for retaliation against the individual for reporting a suspected violation of law; or (C) is made in a complaint or other document filed in a lawsuit or proceeding, if such filing is made under seal. For the avoidance of doubt, Executive shall not retain any copy, in any form of any Confidential Information following such request or separation.


8.	Restrictive Covenants.


(a)	Non-Competition.


(i)	As a condition of the Company’s entry into this Agreement in which it will provide Executive with Confidential Information and the other benefits set

forth herein, Executive agrees that, if his employment ends during the Term, then, during the Non-Compete Period (as defined below), he will not, without the prior written consent of the Company (which shall not be unreasonably withheld), directly or indirectly, either as an individual or as an employee, officer, director, shareholder, partner, equity participant, sole proprietor, independent contractor, consultant or in any other capacity conduct any business, or assist any person in conducting any business, that is directly in competition with the Company’s Business (as defined below) in the Territory (as defined below). The terms of this Section 8(a) shall not apply to the passive ownership by Executive of less than 5% of a class of equity securities of an entity, which securities are publicly traded on any national securities exchange.


(ii)	The “Non-Compete Period” shall commence upon the date that Executive’s employment with the Company ends and continue until the first anniversary of such date.

(iii)

For purposes of this Section 8(a), the “Company’s Business” means the businesses conducted by the Company or any of its subsidiaries at the time of the termination of Executive’s employment for which he has material responsibility at the time of the termination of his employment or in the twelve months prior thereto (which businesses, for the avoidance of doubt, include without limitation the midstream and downstream energy businesses focused on petroleum refining and the transportation, storage and wholesale distribution of crude oil intermediate and refined products).

(iv)

For purposes of Section 8(a), the “Territory” shall mean the following geographic areas as of the commencement of the Non-Compete Period (A) a 75-mile radius from any of the Company’s or any of its subsidiaries’ petroleum and biodiesel refining facilities, (B) a 75-mile radius from any of the Company’s or its subsidiaries’ wholesale refined products distribution facilities and (C) a 50-mile radius from any of the Company’s or its subsidiaries’ retail fuel and/or convenience merchandise facilities.

(b)

Non-Interference with Commercial Relationships. During Executive’s employment with the Company, and for a period of one year thereafter, Executive will not, directly or indirectly, either as an individual or as an employee, officer, director, shareholder, partner, equity participant, sole proprietor, independent contractor, consultant or in any other capacity whatsoever approach or solicit any customer or vendor of Company with whom or which Executive had contact on behalf of the Company or any of its subsidiaries for the purpose of causing, directly or indirectly, any such customer or vendor to cease or lessen doing business with the Company or its affiliates, nor will Executive engage in any other activity that interferes or could

reasonably be expected to interfere in any material way with the commercial relationships between the Company and its affiliates and such customers or vendors. The foregoing covenant shall be in addition to all other covenants or agreements to which Executive may be subject.

(c)

Non-Interference with Employment Relationships. During Executive’s employment with the Company, and for a period of one year thereafter, Executive shall not, without the Company’s prior written consent, directly or indirectly: (i) induce or attempt to induce any Company employee to terminate his/her employment with the Company; or (ii) interfere with or disrupt the Company’s relationship with any of its employees or individuals providing services as independent contractors. The foregoing does not prohibit Executive (personally or as an employee, officer, director, shareholder, partner, equity participant, sole proprietor, independent contractor, consultant or in any other capacity) from hiring or employing an individual that contacts Executive on his/her own initiative without any direct or indirect solicitation by Executive, nor does it prevent Executive from engaging in customary forms of general solicitation such as newspaper advertisements or internet postings so long as such general solicitation is not targeted at employees or independent contractors of the Company.

(d)

It is understood and agreed that the scope of each of the covenants contained in this Section 8 is reasonable as to time, area, and persons and all other respects, and is necessary to protect the legitimate business interests of the Company. Executive acknowledges and agrees that the restrictions in this Section 8 do not interfere with public interests, will not prevent Executive from earning a living or create undue hardship, and are material and substantial parts of this Agreement intended and necessary to prevent unfair competition, protect the Confidential Information, preserve the Company’s interest in retaining customers, and protect the Company’s goodwill. The covenants in this Section 8, and each provision and portion hereof, are severable and separate, and the unenforceability of any specific covenant (or portion thereof) shall not affect the provisions of any other covenant (or portion thereof). Moreover, in the event any arbitrator or court of competent jurisdiction shall determine that the scope, time or territorial restrictions set forth are unreasonable, then it is the intention of the parties that such restrictions be enforced to the fullest extent which such arbitrator or court deems reasonable, and this Agreement shall thereby be reformed.

Copyright, Inventions, Patents. The Company shall have all right, title and interest to all intellectual property (including, without limitation, graphic designs, copyrights, trademarks and patents) created by Executive during the course of Executive’s employment with the Company. Executive hereby assigns to Company all copyright ownership and rights to any work product developed by Executive or at Executive’s discretion and reduced to practice for or on behalf of the Company or which relate to the Company’s business during the course of the employment relationship. At the Company’s expense and for a period beginning on

the Effective Date and continuing for three years following the termination of Executive’s employment, Executive shall use Executive’s reasonable best efforts to assist or support the Company to obtain, maintain, and assert its rights in such intellectual property and work product including, without limitation, the giving of evidence in suits and proceedings, and the furnishing and/or assigning of all documentation and other materials relative to the Company’s intellectual property rights.


10.	Termination of Employment.

(a)

Termination by Company for Cause. The Company may immediately terminate this Agreement and/or Executive’s employment at any time for Cause (as defined below). Upon any such termination, except for the Accrued Benefits (as defined below), the Company shall be under no further obligation to Executive hereunder except as otherwise required by law, and the Company will reserve all further rights and remedies available to it at law or in equity. For purposes hereof, “Accrued Benefits” shall mean: (i) earned, but unpaid Base Compensation through the date of termination, (ii) payment for any accrued, but unused vacation time, (iii) reimbursement for business expenses incurred prior to the date of termination, (iv) vested benefits under any employee benefit plan and (v) continued rights to indemnification and directors and officers insurance for any acts related to Executive’s service to the Company, DKL or any of their subsidiaries and affiliates prior to the termination date and for which indemnification and/or insurance would apply.

(b)

Termination by Executive for Good Reason. Executive may terminate this Agreement (and Executive’s employment hereunder) by providing 30 calendar days’ advance written notice of termination and provided that the condition remains uncured through the end of such 30-day period. In the event of any such termination, Executive shall be entitled to the Accrued Benefits and separation benefits under Section 10(c) as if the Company had terminated Executive’s employment without Cause. This provision shall not apply if Executive is terminated by reason of death or Disability (as defined below).

(c)

Termination At-Will by Company or Failure to Renew. Subject to the provisions of Section 10(f), the Company may terminate this Agreement (and Executive’s employment hereunder) at any time and for any reason. If the termination occurs during the Term and is other than for Cause or in the event of a Failure to Renew, Executive, if Executive timely executes and does not revoke the Separation Release (as that term is defined in Section 10(f) of this Agreement), shall be entitled to the following (in addition to the Accrued Benefits): (i) the Separation Payment, (ii) the costs of continuing family health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), for 18 months following termination of employment, provided, that the Company may, in

its sole discretion, (A) pay such amounts directly to the applicable provider or (B) pay an equivalent amount directly to Executive, (iii) the Post-Employment Annual Bonus and (iv) Accelerated Vesting upon termination. This provision shall not apply if Executive is terminated by reason of death or Disability.

(d)

Termination At-Will by Executive. Executive may terminate this Agreement (and Executive’s employment hereunder) at any time and for any reason. If Executive terminates this Agreement and Executive’s employment hereunder during the Term (other than due to Executive’s death or Disability), Executive must provide the Company with advance written notice of termination equal to the lesser of six months or the balance of the Term (the “Required Notice”).

(i)

If Executive terminates Executive’s employment during the Term other than for a Good Reason and provides at least six months’ advance written notice of termination (even if the Required Notice is less than six months), and if Executive timely executes and does not revoke the Separation Release, and Executive fully complies with the material ongoing obligations of Section 8 (above), Executive shall be entitled to receive a single lump sum payment equal to Executive’s Base Compensation at the time the notice of termination is delivered, subject to all appropriate federal and state withholding taxes, and the costs of continuing family health insurance coverage under COBRA for 18 months following termination of employment, provided, that the Company may, in its sole discretion, (A) pay such amounts directly to the applicable provider or (B) pay an equivalent amount directly to Executive. For the avoidance of doubt, Executive shall continue to vest in any equity awards he has been granted during such notice period. This Section 10(d)(i) shall not apply if Executive is terminated by reason of death or Disability.

(ii)

If Executive (A) terminates Executive’s employment during the Term other than for a Good Reason without providing the Required Notice or (B) fails to render services to the Company in a diligent and good faith manner after the delivery of the Required Notice and continues or repeats such failure after receiving written notice of such failure, Executive shall receive compensation only in the manner stated in Section 10(a) and the Company may immediately terminate Executive’s employment, which termination shall not be deemed a termination without Cause under Section 10(c). This Section 10(d)(ii) shall not apply if Executive is terminated by reason of death or Disability.


(e)	Accelerated Termination After Notice. Nothing herein shall limit the Company’s right to terminate this Agreement and/or Executive’s employment after the Company receives notice of termination from Executive, which termination shall not be deemed a termination without Cause under Section 10(c). However, if the Company

receives the Required Notice from Executive and then terminates this Agreement and/or Executive’s employment for any reason other than for Cause or under Section 10(d)(ii), Executive’s employment shall terminate on (and post‑employment provisions of Sections 7, 8(b), 8(c) and 9 shall be effective from) the date on which the Company terminates Executive’s employment, but Executive shall be entitled to a single lump sum payment of the amount of such compensation, bonuses, vesting and other benefits as if Executive’s termination had been effective on the earlier of (i) the termination date specified in Executive’s notice of termination or (ii) six months following Executive’s notice of termination.

(f)

Separation Release. Notwithstanding anything to the contrary, provided that Executive does not willfully violate his ongoing obligations of Section 8 (above), and any applicable six-month delay required by Section 20 hereof and Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the applicable Treasury regulations and administrative guidance issued thereunder (collectively, “Section 409A”), if a payment is otherwise payable to Executive hereunder upon Executive’s termination of employment, such payment shall be payable in cash to Executive on the Company’s first payroll date that is on or after the 60^th day following Executive’s “separation from service” (within the meaning of Section 409A) (or such later date as may be required by law or Section 11(a)). However, Executive’s right to receive the Separation Payment, and any other separation benefits provided by Section 10(c) or Section 10(d) shall be conditioned upon (i) Executive’s execution and delivery to the Company of a Separation Release (and the expiration of any statutorily mandated revocation period without Executive revoking the Separation Release) within the time provided by the Company to do so and (ii) Executive’s continued material compliance with this Agreement, including no willful violations of Sections 7 and 8, and any other restrictive covenants to which Executive is bound. If Executive fails to timely execute and deliver the Separation Release or if Executive timely revokes Executive’s acceptance of the Separation Release thereafter (if such revocation is permitted), Executive shall not be entitled to the Separation Payment or any other separation benefits and shall repay any Separation Payment or other separation benefits received. If the foregoing consideration and revocation periods begin in one taxable year and end in a second taxable year, payment will be made in the second taxable year.

(g)

Termination upon Disability or Death. In the event that Executive’s employment ceases due to Executive’s death or Disability, Executive shall be entitled to the following (in addition to all accrued compensation and benefits through the date of termination): (i) the costs of continuing family health insurance coverage under COBRA for 18 months following termination of employment, provided, that the Company may, in its sole discretion, (A) pay such amounts directly to the applicable provider or (B) pay an equivalent amount directly to Executive, (ii) the Post-

Employment Annual Bonus; (iii) Accelerated Vesting upon termination and (iv) the Accrued Benefits.


(h)	Definitions. The following terms shall have the following meanings as used in this Agreement:

(i)

“Accelerated Vesting” means the immediate 100% vesting and settlement, if applicable, of all unvested equity awards granted to Executive by the Company under the Plan or otherwise which are (A) outstanding as of the date of termination with respect to awards which do not contain performance-based vesting condition and (B) outstanding as of the Effective Date with respect to awards which do contain performance-based vesting condition; provided, that, any equity awards under clause (B) shall 100% vest and be settled (to the extent such awards had not vested prior to such termination) with respect to a number of such performance based equity awards equal to the greater of (1) the target number of such performance based equity awards, or (2) the actual number of such performance based equity awards that would have vested if the date of the termination of employment were the end of the performance period and the actual performance as of that date had been the actual performance for the entire performance period. However, any Accelerated Vesting that occurs other than in the Context of a Change in Control (as defined below) will apply to unvested (A) performance awards on a prorated basis through the termination of employment, based on actual results evaluated after the close of the applicable performance period and payable in a lump sum at the same time as performance awards are paid to executives of the Company generally and (B) full value equity awards (e.g., restricted stock, restricted stock units and phantom units) and appreciation equity awards (e.g., non‑qualified stock options and stock appreciation rights) only to the extent that such awards that would have vested if Executive’s employment had continued during a period equal to the lesser of six months following termination of employment or the balance of the Term.

(ii)

“Cause” means Executive’s: (A) fraud, gross negligence, willful misconduct involving the Company or its affiliates, willful breach of a fiduciary duty, including, without limitation, Section 7 hereof, owed to the Company or its affiliates, or any intentional and willful violation of the Company’s material and written policies against discrimination or harassment which causes both material and demonstrable economic harm to the Company; (B) conviction of, or plea of nolo contendere to, a felony or serious crime involving moral turpitude (other than traffic offenses); or (C) deliberate and continual refusal to perform Executive’s duties in any material respect on substantially a full-time basis or to act in accordance with any specific and lawful instruction of

the Board which are consistent with his duties and position provided that Executive has been given written notice of such conduct and such conduct is not cured within 30 days thereafter.

(iii)

“Failure to Renew” means that (A) the Company provides Executive with the notice contemplated in Section 1(b) not to renew the Term and (B) the Company does not otherwise provide Executive with payments and benefits upon termination of employment (through another plan, agreement or arrangement) that are no less favorable than the payments and benefits available under this Agreement upon termination of employment.

(iv)

“Good Reason” means (A) the Company materially breaches this Agreement (it being acknowledged that any failure to pay any significant compensation or benefits at the times due under this Agreement shall be deemed a material breach), (B) the Company significantly reduces the scope of Executive’s duties under Section 2 or requires Executive to perform any illegal or unethical activities, (C) the Company reduces Executive’s compensation under Section 3 other than as part of a base compensation reduction plan generally applicable to other similar senior executive employees or reductions under nondiscriminatory employee benefit programs applicable to full time employees generally, (D) the Company pays base compensation to any of Executive’s subordinates or any other director or officer at an annualized rate in excess of Executive’s then-current Base Compensation, (E) Executive is removed, or not reelected or appointed, as the Chief Executive Officer or Chairman of the Board of the Company or DKL unless such removal or failure to be reelected or appointed is required by applicable law, including, without limitation, SEC rules and regulations and Securities Market listing requirements or (F) the Company requires Executive to relocate to any location that increases his commuting distance by more than 50 miles.


(v)	“Release Expiration Date” shall mean the date of the expiration of any and all waiting and revocation periods in the Separation Release.


(vi)	“Disability” means the inability of Executive to perform the customary duties of Executive’s employment or other service with the Company or its affiliates by reason of a physical or mental incapacity or illness that is expected to result in death or to be of indefinite duration, as determined by a duly licensed physician selected by the Company.


(vii)	“Post-Employment Annual Bonus” shall mean the Annual Bonus to which Executive would have otherwise been entitled if Executive’s employment had continued through the end of the bonus year based upon the actual performance of the Company, prorated for the period of actual employment

during the bonus year, and paid upon the payment of the annual bonuses to senior executives of the Company pursuant to the Company’s annual bonus programs.

(viii)

“Separation Release” means the general release of employment related claims attached hereto as Exhibit B. Notwithstanding the foregoing or any other provision in Separation Release or the Agreement to the contrary, the Company and Executive further agree that nothing in the Separation Release or the Agreement (A) will limit Executive’s ability to file a charge or complaint with the EEOC, the NLRB, OSHA, the SEC or any other federal, state or local governmental agency or commission (each a “Government Agency” and collectively “Government Agencies”); (B) will limit Executive’s ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information and reporting possible violations of law or regulation or other disclosures protected under the whistleblower provisions of applicable law or regulation, without notice to the Company; or (C) will limit Executive’s right to receive an award for information provided to any Government Agencies.

(ix)

“Separation Payment” shall mean an amount equal to the sum of Executive’s then current Base Compensation (without regard to any reduction therein which otherwise breached this Agreement) and Executive’s target Annual Bonus as in effect immediately before any notice of termination (which shall never be less than 140% of Base Compensation), multiplied by (A) three in the Context of a Change in Control and (B) two in all other cases. In each case, the Separation Payment shall be payable in a cash lump sum pursuant to Section 10(f). Executive shall have no responsibility for mitigating the amount of any payment provided for herein by seeking other employment or otherwise, and any such payment will not be reduced in the event such other employment is obtained.


11.	Change in Control.

(a)

If Executive’s employment is terminated by the Company without Cause or by Executive for Good Reason within the period beginning six months prior to and ending three years following a Change in Control, in each case, the termination of Executive’s employment shall be deemed to have occurred in the “Context of a Change in Control”, and Executive shall be entitled to the separation benefits set forth in Section 10(c) with the enhanced Separation Payment as contemplated in the definition thereof for a termination in the Context of a Change in Control and Executive’s equity shall vest as provided in this Section 11(a) below. Except as

provided below, upon the earlier to occur of either (i) the termination of Executive’s employment in the Context of Change in Control or (ii) a Change in Control regardless of whether Executive’s employment is terminated (in either case an “Acceleration Event”) and regardless of any contrary provision in any award agreement issued prior to the Effective Date, upon the occurrence of the Acceleration Event, all equity awards granted by the Company and outstanding as of the Effective Date shall 100% vest and be settled (if applicable) upon such Acceleration Event; provided, however, any such equity awards vesting upon the achievement of performance conditions that were outstanding as of the Effective Date shall vest and be settled (to the extent such awards had not vested prior to the Acceleration Event) with respect to a number of such performance based equity awards equal to the greater of (A) the target number of such performance based equity awards, or (B) the actual number of such performance based equity awards that would have vested if the date of the Acceleration Event were the end of the performance period and the actual performance as of that date had been the actual performance for the entire performance period. With respect to any equity awards granted after the Effective Date, the Board (or any applicable committee thereof) will determine, in its sole discretion, the Change in Control vesting provisions of such awards.

(b)

Anything in this Agreement to the contrary notwithstanding, if it shall be determined that any payment or distribution by the Company or its affiliates to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, all such payments and benefits being hereinafter referred to as the “Total Payments”) would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, collectively the “Excise Tax”), then, after taking into account any reduction in the Total Payments provided by reason of Section 280G of the Code in any other plan, arrangement or agreement providing for a payment or benefit, the payments under this Agreement shall be reduced in the order specified below, to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax but only if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income taxes on such reduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such reduced Total Payments) is greater than or equal to (ii) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state and local income taxes on such Total Payments and the amount of Excise Tax to which the Executive would be subject in respect of such unreduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such unreduced Total Payments). The payments and benefits under this Agreement shall be reduced in the following order: (A) reduction of any cash severance payments otherwise

payable to the Executive that are exempt from Section 409A of the Code; (B) reduction of any other cash payments or benefits otherwise payable to the Executive that are exempt from Section 409A of the Code, but excluding any payments attributable to any acceleration of vesting or payments with respect to any equity award that are exempt from Section 409A of the Code; (C) reduction of any other payments or benefits otherwise payable to the Executive on a pro-rata basis or such other manner that complies with Section 409A of the Code, but excluding any payments attributable to any acceleration of vesting and payments with respect to any equity award that are exempt from Section 409A of the Code; and (D) reduction of any payments attributable to any acceleration of vesting or payments with respect to any equity award that are exempt from Section 409A of the Code, in each case beginning with payments that would otherwise be made last in time.


(c)	For purposes of this Agreement, a “Change in Control” of the Company shall mean any of the following:

(i)

Any “person” (as defined in Section 13(h)(8)(E) of the Exchange Act), other than the Company or any of its subsidiaries or any employee benefit plan of the Company or any of its subsidiaries, becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company (or any successor to all or substantially all of the Company’s assets) representing more than 30% of the combined voting power of the Company’s (or such successor’s) then outstanding voting securities that may be cast for the election of directors of the Company (other than as a result of an issuance of securities initiated by the Company (or such successor) in the ordinary course of business);

(ii)

As the result of, or in connection with, any cash tender or exchange offer, merger or other business combination or contested election, or any combination of the foregoing transactions, less than 51% of the combined voting power of the then outstanding securities of the Company or any successor company or entity entitled to vote generally in the election of the directors of the Company or such other corporation or entity after such transaction are held in the aggregate by the holders of the Company’s securities entitled to vote generally in the election of directors of the Company immediately prior to such transaction;


(iii)	All or substantially all of the assets of the Company are sold, exchanged or otherwise transferred;


(iv)	The Company’s stockholders approve a plan of liquidation or dissolution of the Company; or

(v)

During any 12-month period within the Term, Continuing Directors cease for any reason to constitute at least a majority of the Board. For this purpose, a “Continuing Director” is any person who at the beginning of the Term was a member of the Board, or any person first elected to the Board during the Term whose election, or the nomination for election by the Company’s shareholders, was approved by a vote of at least two-thirds of the Continuing Directors then in office, but excluding any person (A) initially appointed or elected to office as result of either an actual or threatened election and/or proxy contest by or on behalf of any “person” or “group” (within the meaning of Section 13( d) of the Exchange Act) other than the Board, or (B) designated by any “person” or “group” (within the meaning of Section 13(d) of the Exchange Act)) who has entered into an agreement with the Company to effect a transaction described in Section 11(c)(i) through (iv).

For the avoidance of doubt, to the extent any payment or benefit which constitutes nonqualified deferred compensation under Section 409A is accelerated upon a Change in Control, then a Change in Control shall not be deemed to have occurred under subparagraphs (i)-(v) above unless such event also constitutes a “change in control event” as such term is defined in Section 409A; provided, that, any such acceleration and/or payment shall then be deemed to occur at the next permissible event of any nature which would not result in a violation of Section 409A.

12.

Survival of Terms. The provisions of Sections 7, 8(b), 8(c), 9 and 10 (and those additional provisions necessary to interpret or apply them, including, without limitation, rights to indemnity and directors and officers insurance) shall survive the termination or expiration of this Agreement and will continue in effect following the termination of Executive’s employment for the periods described therein. If a Change or a Change in Control occurs during the Term, the provisions of Section 11 shall survive the termination or expiration of this Agreement and will continue in effect following the Change in Control for the periods described therein. The provisions of Section 8(a) shall survive the termination (but not the expiration) of this Agreement.

13.

Assignment. This Agreement shall not be assignable by either party without the written consent of the other party except that the Company may assign this Agreement to a subsidiary, affiliate or, subject to the terms of this Section 13, a third-party successor of the Company. Any failure by the Company to assign this Agreement to an unaffiliated third‑party successor upon the Company’s sale or transfer of all or substantially all of its business will be considered the termination of Executive’s employment in the Context of a Change in Control effective upon the closing of the applicable transaction without an assignment to the successor, which closing constitutes a Change in Control. Any failure by Executive to consent to the assignment of this Agreement to such unaffiliated third-party successor will be considered the termination of Executive’s employment for a Good Reason other than in the Context of a Change in Control effective upon the closing of the applicable

Change in Control transaction without any assignment to the successor. For the avoidance of doubt, the parties acknowledge that the payment of any benefits under this Section 13 shall be made in accordance with the applicable provision of Section 10 or 11 of this Agreement within 60 days of the closing date of the Change in Control transaction, provided that Executive has executed a Separation Release, the Release Expiration Date has expired, and Executive has not revoked the Separation Release, and no payments will be made pursuant to this Section 13 if a Change in Control transaction does not occur.

14.

No Inducement / Agreement Voluntary. Executive represents that (a) Executive has not been pressured, misled, or induced to enter into this Agreement based upon any representation by Company or its agents not contained herein, (b) Executive has entered into this Agreement voluntarily, after having the opportunity to consult with legal counsel and other advisors of Executive’s own choosing, and (c) Executive’s assent is freely given.

15.

Interpretation. Any Section, phrase or other provision of this Agreement that is determined by a court, arbitrator or arbitration panel of competent jurisdiction to be unreasonable or in conflict with any applicable statute or rule, shall be deemed, if possible, to be modified or altered so that it is not unreasonable or in conflict or, if that is not possible, then it shall be deemed omitted from this Agreement. The invalidity of any portion of this Agreement shall not affect the validity of the remaining portions. Unless expressly stated to the contrary, all references to “days” in this Agreement shall mean calendar days.

16.

Prior Agreements / Amendments. This Agreement (a) represents the entire agreement between the parties in relation to the employment of Executive by the Company on, and subsequent to, the Effective Date and (b) revokes and supersedes all prior agreements pertaining to the subject matter herein, whether written and oral (including, for the avoidance of doubt, the Prior Agreement and the employment agreement between the parties dated November 1, 2013). However, this Agreement does not nullify or otherwise affect any prior equity awards granted to Executive. This Agreement shall not be subject to modification or amendment by any oral representation, or any written statement by either party, except for a dated writing signed by Executive and the Company.

17.

Notices. All notices of any kind to be delivered in connection with this Agreement shall be in writing and shall be deemed to have been duly given if personally delivered or if sent by nationally-recognized overnight courier (e.g., FedEx, UPS, DHL, etc.) or by registered or certified mail, return receipt requested and postage prepaid, addressed to the Company at 7102 Commerce Way, Brentwood, Tennessee 37027, Attn: General Counsel, to Executive at Executive’s then-existing payroll address, or to such other address as the party to whom notice is to be given may have furnished to the other in writing in accordance with the provisions of this Section. Any such notice or communication shall be deemed to have been received: (a) if by personal delivery or nationally-recognized overnight courier, on the date of such delivery; and (b) if by registered or certified mail, on the third postal service day following the date postmarked.


18.	Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Tennessee without giving effect to its principles of conflicts of law.

The state and federal courts for Davidson County, Tennessee shall be the exclusive venue for any litigation based in significant part upon this Agreement.


19.	Mediation / Arbitration.

(a)

Any dispute concerning a legally cognizable claim arising out of this Agreement or in connection with the employment of Executive by Company, including, without limitation, claims of breach of contract, fraud, unlawful termination, discrimination, harassment, retaliation, defamation, tortious infliction of emotional distress, unfair competition, arbitrability and conversion (collectively a “Legal Dispute”) shall be resolved according to the following protocol:


(i)	The parties shall first submit the Legal Dispute to mediation under the auspices of the American Arbitration Association (“AAA”) and pursuant to the mediation rules and procedures promulgated by the AAA. The Company shall pay the expenses associated with the mediation, including Executive’s reasonable and customary legal expenses.

(ii)

In the event mediation is unsuccessful in fully resolving the Legal Dispute, binding arbitration shall be the method of final resolution. The parties expressly waive their rights to bring action against one another in a court of law except as expressly provided herein. In addition to remedies at law, the parties acknowledge that failure to comply with this provision shall entitle the non-breaching party to injunctive relief to enjoin the actions of the breaching party. Any Legal Dispute submitted to Arbitration shall be under the auspices of the AAA and pursuant to the “National Rules for the Resolution of Employment Disputes,” or any similar identified rules promulgated at such time the Legal Dispute is submitted for resolution. All mediation and arbitration hearings shall take place in either Davidson or Williamson County, Tennessee. The Company shall pay all expenses associated with the arbitration, including Executive’s reasonable and customary legal expenses, unless the Company prevails on all of the material claims raised in such arbitration in which case, Executive shall be solely responsible for his legal expenses.


(b)	Notice of submission of any Legal Dispute to mediation shall be provided no later than one year following the date the submitting party became aware, or should have become aware of, the conduct constituting the alleged claims. Failure to do so shall result in the irrevocable waiver of the claim made in the Legal Dispute.


(c)	Notwithstanding that mediation and arbitration are established as the exclusive procedures for resolution of any Legal Dispute, (i) either party may apply to an

appropriate judicial or administrative forum for injunctive relief and (ii) claims by Company arising in connection with Sections 7, 8 and/or 9 may be brought in any court of competent jurisdiction.

(d)

With respect to any breach or attempted breach of Sections 7, 8 and/or 9 of this Agreement, each party acknowledges that a remedy at law will be inadequate, agrees that the Company will be entitled to specific performance and injunctive and other equitable relief (in addition to all other remedies to which the Company is entitled, at law and equity) and agrees not to use as a defense that any party has an adequate remedy at law. This Agreement shall be enforceable in a court of equity, or other tribunal with jurisdiction, by a decree of specific performance, and appropriate injunctive relief may be applied for and granted in connection herewith. Such remedy shall not be exclusive and shall be in addition to any other remedies now or hereafter existing at law or in equity, by statute or otherwise. No delay or omission in exercising any right or remedy set forth in this Agreement shall operate as a waiver thereof or of any other right or remedy and no single or partial exercise thereof shall preclude any other or further exercise thereof or the exercise of any other right or remedy.


20.	Section 409A.

(a)

It is intended that each installment of the payments provided under this Agreement, if any, is a separate “payment” for purposes of Section 409A and the payments satisfy, to the greatest extent possible, the exemptions from the application of Section 409A provided under Treasury Regulations 1.409A-1(b)(4), 1.409A‑1(b)(9)(iii) and 1.409A-1(b)(9)(v). Notwithstanding any other provision to the contrary, a termination of employment with the Company shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of “deferred compensation” (as such term is defined in Section 409A and the Treasury Regulations promulgated thereunder) upon or following a termination of employment unless such termination is also a “separation from service” from the Company within the meaning of Section 409A and Section 1.409A-1(h) of the Treasury Regulations and, for purposes of any such provision of this Agreement, references to a “separation,” “termination,” “termination of employment” or like terms shall mean “separation from service.”

(b)

Notwithstanding anything to the contrary in this Agreement, if the Company determines (i) that on the date Executive’s employment with the Company terminates or at such other time that the Company determines to be relevant, Executive is a “specified employee” (as such term is defined under Treasury Regulation 1.409A-1(i)(1)) of the Company and (ii) that any payments to be provided to Executive pursuant to this Agreement are or may become subject to the additional tax under Section 409A(a)(1)(B) or any other taxes or penalties imposed under Section 409A if provided at the time otherwise required under this Agreement, then

such payments shall be delayed until the date that is six months after the date of Executive’s “separation from service” (as such term is defined under Treasury Regulation 1.409A-1(h)) with the Company, or, if earlier, the date of Executive’s death. Any payments delayed pursuant to this Section shall be made in a lump sum on the first business day of the seventh month following Executive’s “separation from service” (as such term is defined under Treasury Regulation 1.409A-1(h)), or, if earlier, the date of Executive’s death.

(c)

In addition, to the extent that any reimbursement, fringe benefit or other, similar plan or arrangement in which Executive participates during the term of Executive’s employment under this Agreement or thereafter provides for a “deferral of compensation” within the meaning of Section 409A, then such amount shall be reimbursed in accordance with Section 1.409A-3(i)(1)(iv) of the Treasury Regulations, including (i) the amount eligible for reimbursement or payment under such plan or arrangement in one calendar year may not affect the amount eligible for reimbursement or payment in any other calendar year (except that a plan providing medical or health benefits may impose a generally applicable limit on the amount that may be reimbursed or paid), (ii) subject to any shorter time periods provided herein or the applicable plans or arrangements, any reimbursement or payment of an expense under such plan or arrangement must be made on or before the last day of the calendar year following the calendar year in which the expense was incurred, and (iii) the right to any reimbursement or in-kind benefit is not subject to liquidation or exchange for another benefit.


(d)	For the avoidance of doubt, any payment due under this Agreement within a period following Executive’s termination of employment or other event, shall be made on a date during such period as determined by the Company in its sole discretion.


(e)	Notwithstanding any other provision to the contrary, in no event shall any payment under this Agreement that constitutes “deferred compensation” for purposes of Section 409A be subject to offset by any other amount unless otherwise permitted by Section 409A.

(f)

This Agreement is intended to comply with the applicable requirements under Section 409A, as modified from time to time, including exceptions and exemptions provided for therein (the “409A Requirements”). Accordingly, this Agreement shall be administered, construed and interpreted in a manner to comply with the 409A Requirements. Specifically, and without limiting the foregoing, if any terms set forth in this Agreement are considered to be ambiguous, such terms shall be administered, construed and interpreted in a manner to comply with the 409A Requirements.


21.	Indemnification and D&O. During the Term and thereafter, the Company agrees, to the maximum extent permitted by law, to indemnify and hold Executive harmless (including providing for advancement of expenses on a basis no less favorable than any other officer

or director of the Company) from and against any and all losses, claims, suits or actions to which Executive becomes subject arising from his performance of his duties to the Company and its affiliates and subsidiaries, including, DKL. In addition, during the Term and for at least 1-day following the applicable end of the statute of limitations, Executive will be eligible for coverage under the Company’s Director’s and Officer’s liability insurance policy on terms which are no less favorable than provided to any other employee, officer or director of the Company.


22.	Legal Fees. As soon as reasonably practical following Executive’s presentation of adequate substantiating documentation in accordance with the Company’s then applicable policies, the Company shall reimburse Executive (or pay directly) all reasonable legal fees and expenses incurred by him in the negotiation of this Agreement.

[Remainder of Page Intentionally Blank;
Signature Page Follows]

In witness whereof, the parties have executed this Agreement as of the date set forth above.

COMPANY: DELEK US HOLDINGS, INC. EXECUTIVE:

/s/ Jared Serff /s/ Ezra Uzi Yemin

By: Jared Serff Ezra Uzi Yemin

Title: Executive Vice President

/s/ Abigail K. Yates

By: Abigail K. Yates

Title: Executive Vice President

Uzi Yemin
Exhibit A
Terms of Employment



Title	President, Chairman, and Chief Executive Officer

Base Salary	$1,075,000 annually to be paid out bi-weekly

Term	3 years

Short Term Bonus	Executive will be eligible for an annual bonus, which at target would equal to 140% of base salary up to a maximum of 200% of the target. The annual bonus will be based on 60% Company’s financial (EPS) and 40% non-financial metrics (HSE & Refinery Utilization and Availability)

Long Term Incentive (Equity Plan)	Executive will be eligible for the company’s long-term incentive plan, which would consist of annual grants, which at target would be equal to $6,300,000 split 50% time vested restricted stock units and 50% performance based restricted stock units.

Change in Control	3x base + bonus 18 months COBRA Accelerated equity vest Prorated bonus for year of termination Unused vacation

Severance	2x base + bonus 18 months COBRA 6 month equity vest

Non-Compete	1 year

Resignation	6 month required notice, 1x base salary and 18 months COBRA

DELEK REFINING * DK CANADA * DELEK LOGISTICS PARTNERS * LION OIL COMPANY

Exhibit 31.1

Certification by Chief Executive Officer pursuant to

Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934,

As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Ezra Uzi Yemin, certify that:

1. I have reviewed quarterly report on Form 10-Q of Delek US Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



By:	/s/ Ezra Uzi Yemin
	Ezra Uzi Yemin,
	President and Chief Executive Officer (Principal Executive Officer)

Dated: May 8, 2020

Exhibit 31.2

Certification by Chief Financial Officer pursuant to

Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934,

As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Assaf Ginzburg, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Delek US Holdings, Inc.;

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



By:	/s/ Assaf Ginzburg
	Assaf Ginzburg,
	Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

Dated: May 8, 2020

Exhibit 32.1

Certification Pursuant to

18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the quarterly report of Delek US Holdings, Inc. (the “Company”) on Form 10-Q for the three months ended March 31, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ezra Uzi Yemin, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, and to the best of my knowledge, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



By:	/s/ Ezra Uzi Yemin
	Ezra Uzi Yemin,
	President and Chief Executive Officer (Principal Executive Officer)

Dated: May 8, 2020

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained and furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 32.2

Certification Pursuant to

18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the quarterly report of Delek US Holdings, Inc. (the “Company”) on Form 10-Q for the three months ended March 31, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Assaf Ginzburg, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, and to the best of my knowledge, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



By:	/s/ Assaf Ginzburg
	Assaf Ginzburg,
	Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

Dated: May 8, 2020