Delek US Holdings, Inc. (Form: 10-Q, Received: 08/07/2020 06:07:42)

false--12-31Q220200001694426168000000.3333P2Y0.280.550.310.620.010.011100000001100000009098702591232964000700000200000P1Y0.010.01100000001100000000001751681417575527 0001694426 2020-01-01 2020-06-30 0001694426 2020-07-31 0001694426 2020-06-30 0001694426 2019-12-31 0001694426 2020-04-01 2020-06-30 0001694426 2019-01-01 2019-06-30 0001694426 2019-04-01 2019-06-30 0001694426 us-gaap:CommodityContractMember 2020-01-01 2020-06-30 0001694426 us-gaap:CommodityContractMember 2020-04-01 2020-06-30 0001694426 us-gaap:CommodityContractMember 2019-01-01 2019-06-30 0001694426 us-gaap:CommodityContractMember 2019-04-01 2019-06-30 0001694426 us-gaap:CommonStockMember 2020-06-30 0001694426 us-gaap:NoncontrollingInterestMember 2019-12-31 0001694426 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-06-30 0001694426 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-31 0001694426 us-gaap:RetainedEarningsMember 2020-01-01 2020-06-30 0001694426 us-gaap:CommonStockMember 2020-01-01 2020-06-30 0001694426 us-gaap:NoncontrollingInterestMember 2020-01-01 2020-06-30 0001694426 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0001694426 us-gaap:NoncontrollingInterestMember 2020-06-30 0001694426 us-gaap:RetainedEarningsMember 2020-06-30 0001694426 us-gaap:TreasuryStockMember 2020-01-01 2020-06-30 0001694426 us-gaap:TreasuryStockMember 2019-12-31 0001694426 us-gaap:CommonStockMember 2019-12-31 0001694426 srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember us-gaap:RetainedEarningsMember 2019-12-31 0001694426 us-gaap:CommodityContractMember us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-01-01 2020-06-30 0001694426 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-06-30 0001694426 us-gaap:TreasuryStockMember 2020-06-30 0001694426 us-gaap:RetainedEarningsMember 2019-12-31 0001694426 us-gaap:AdditionalPaidInCapitalMember 2020-06-30 0001694426 srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember 2019-12-31 0001694426 2018-12-31 0001694426 us-gaap:TreasuryStockMember 2019-06-30 0001694426 us-gaap:AdditionalPaidInCapitalMember 2019-06-30 0001694426 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0001694426 us-gaap:TreasuryStockMember 2018-12-31 0001694426 us-gaap:NoncontrollingInterestMember 2019-01-01 2019-06-30 0001694426 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-06-30 0001694426 us-gaap:CommonStockMember 2019-01-01 2019-06-30 0001694426 us-gaap:RetainedEarningsMember 2019-06-30 0001694426 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0001694426 us-gaap:CommonStockMember 2019-06-30 0001694426 us-gaap:RetainedEarningsMember 2019-01-01 2019-06-30 0001694426 us-gaap:NoncontrollingInterestMember 2019-06-30 0001694426 us-gaap:TreasuryStockMember 2019-01-01 2019-06-30 0001694426 us-gaap:NoncontrollingInterestMember 2018-12-31 0001694426 2019-06-30 0001694426 us-gaap:CommonStockMember 2018-12-31 0001694426 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-06-30 0001694426 us-gaap:RetainedEarningsMember 2018-12-31 0001694426 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-06-30 0001694426 us-gaap:CommodityContractMember us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-06-30 0001694426 us-gaap:NoncontrollingInterestMember 2019-04-01 2019-06-30 0001694426 us-gaap:AdditionalPaidInCapitalMember 2019-03-31 0001694426 us-gaap:TreasuryStockMember 2019-04-01 2019-06-30 0001694426 us-gaap:TreasuryStockMember 2019-03-31 0001694426 us-gaap:RetainedEarningsMember 2019-04-01 2019-06-30 0001694426 us-gaap:CommodityContractMember us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-04-01 2019-06-30 0001694426 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-31 0001694426 us-gaap:RetainedEarningsMember 2019-03-31 0001694426 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-04-01 2019-06-30 0001694426 us-gaap:CommonStockMember 2019-03-31 0001694426 us-gaap:AdditionalPaidInCapitalMember 2019-04-01 2019-06-30 0001694426 us-gaap:NoncontrollingInterestMember 2019-03-31 0001694426 us-gaap:CommonStockMember 2019-04-01 2019-06-30 0001694426 2019-03-31 0001694426 us-gaap:NoncontrollingInterestMember 2020-03-31 0001694426 2020-03-31 0001694426 us-gaap:NoncontrollingInterestMember 2020-04-01 2020-06-30 0001694426 us-gaap:RetainedEarningsMember 2020-04-01 2020-06-30 0001694426 us-gaap:CommonStockMember 2020-04-01 2020-06-30 0001694426 us-gaap:AdditionalPaidInCapitalMember 2020-04-01 2020-06-30 0001694426 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-04-01 2020-06-30 0001694426 us-gaap:AdditionalPaidInCapitalMember 2020-03-31 0001694426 us-gaap:RetainedEarningsMember 2020-03-31 0001694426 us-gaap:CommonStockMember 2020-03-31 0001694426 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-03-31 0001694426 us-gaap:TreasuryStockMember 2020-03-31 0001694426 us-gaap:TreasuryStockMember 2020-04-01 2020-06-30 0001694426 us-gaap:CommodityContractMember us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-04-01 2020-06-30 0001694426 us-gaap:OperatingSegmentsMember us-gaap:RetailMember 2020-04-01 2020-06-30 0001694426 dk:CorporateAndEliminationsMember 2020-04-01 2020-06-30 0001694426 us-gaap:OperatingSegmentsMember us-gaap:ProductMember us-gaap:RetailMember 2020-04-01 2020-06-30 0001694426 us-gaap:CorporateNonSegmentMember 2020-04-01 2020-06-30 0001694426 us-gaap:OperatingSegmentsMember dk:LogisticsMember 2020-04-01 2020-06-30 0001694426 us-gaap:IntersegmentEliminationMember 2020-04-01 2020-06-30 0001694426 us-gaap:OperatingSegmentsMember dk:RefiningMember 2020-04-01 2020-06-30 0001694426 us-gaap:OperatingSegmentsMember us-gaap:ProductMember dk:RefiningMember 2020-04-01 2020-06-30 0001694426 us-gaap:RetailMember 2020-04-01 2020-06-30 0001694426 us-gaap:IntersegmentEliminationMember dk:RefiningMember 2020-04-01 2020-06-30 0001694426 us-gaap:IntersegmentEliminationMember us-gaap:RetailMember 2020-04-01 2020-06-30 0001694426 us-gaap:OperatingSegmentsMember us-gaap:ProductMember dk:LogisticsMember 2020-04-01 2020-06-30 0001694426 dk:RefiningMember 2020-04-01 2020-06-30 0001694426 us-gaap:CorporateNonSegmentMember us-gaap:ProductMember 2020-04-01 2020-06-30 0001694426 us-gaap:IntersegmentEliminationMember dk:LogisticsMember 2020-04-01 2020-06-30 0001694426 us-gaap:ProductMember 2020-04-01 2020-06-30 0001694426 dk:LogisticsMember 2020-04-01 2020-06-30 0001694426 us-gaap:OperatingSegmentsMember us-gaap:RetailMember 2020-06-30 0001694426 us-gaap:IntersegmentEliminationMember us-gaap:RetailMember 2020-06-30 0001694426 us-gaap:OperatingSegmentsMember dk:RefiningMember 2020-06-30 0001694426 us-gaap:IntersegmentEliminationMember 2020-06-30 0001694426 us-gaap:IntersegmentEliminationMember dk:RefiningMember 2020-06-30 0001694426 us-gaap:OperatingSegmentsMember dk:LogisticsMember 2020-06-30 0001694426 dk:CorporateAndEliminationsMember 2020-06-30 0001694426 srt:ConsolidationEliminationsMember 2020-06-30 0001694426 us-gaap:IntersegmentEliminationMember dk:LogisticsMember 2020-06-30 0001694426 us-gaap:OperatingSegmentsMember dk:RefiningMember 2019-04-01 2019-06-30 0001694426 us-gaap:OperatingSegmentsMember us-gaap:RetailMember 2019-04-01 2019-06-30 0001694426 us-gaap:OperatingSegmentsMember dk:LogisticsMember 2019-04-01 2019-06-30 0001694426 us-gaap:IntersegmentEliminationMember us-gaap:RetailMember 2019-04-01 2019-06-30 0001694426 us-gaap:OperatingSegmentsMember us-gaap:ProductMember dk:RefiningMember 2019-04-01 2019-06-30 0001694426 us-gaap:OperatingSegmentsMember us-gaap:ProductMember us-gaap:RetailMember 2019-04-01 2019-06-30 0001694426 us-gaap:CorporateNonSegmentMember 2019-04-01 2019-06-30 0001694426 dk:RefiningMember 2019-04-01 2019-06-30 0001694426 us-gaap:CorporateNonSegmentMember us-gaap:ProductMember 2019-04-01 2019-06-30 0001694426 us-gaap:IntersegmentEliminationMember 2019-04-01 2019-06-30 0001694426 us-gaap:ProductMember 2019-04-01 2019-06-30 0001694426 dk:LogisticsMember 2019-04-01 2019-06-30 0001694426 us-gaap:RetailMember 2019-04-01 2019-06-30 0001694426 dk:CorporateAndEliminationsMember 2019-04-01 2019-06-30 0001694426 us-gaap:OperatingSegmentsMember us-gaap:ProductMember dk:LogisticsMember 2019-04-01 2019-06-30 0001694426 us-gaap:IntersegmentEliminationMember dk:LogisticsMember 2019-04-01 2019-06-30 0001694426 us-gaap:IntersegmentEliminationMember dk:RefiningMember 2019-04-01 2019-06-30 0001694426 us-gaap:OperatingSegmentsMember dk:RefiningMember 2019-01-01 2019-06-30 0001694426 us-gaap:CorporateNonSegmentMember 2019-01-01 2019-06-30 0001694426 us-gaap:IntersegmentEliminationMember 2019-01-01 2019-06-30 0001694426 us-gaap:OperatingSegmentsMember dk:LogisticsMember 2019-01-01 2019-06-30 0001694426 us-gaap:IntersegmentEliminationMember dk:RefiningMember 2019-01-01 2019-06-30 0001694426 us-gaap:OperatingSegmentsMember us-gaap:ProductMember dk:LogisticsMember 2019-01-01 2019-06-30 0001694426 us-gaap:OperatingSegmentsMember us-gaap:RetailMember 2019-01-01 2019-06-30 0001694426 us-gaap:RetailMember 2019-01-01 2019-06-30 0001694426 us-gaap:OperatingSegmentsMember us-gaap:ProductMember dk:RefiningMember 2019-01-01 2019-06-30 0001694426 us-gaap:IntersegmentEliminationMember us-gaap:RetailMember 2019-01-01 2019-06-30 0001694426 us-gaap:OperatingSegmentsMember us-gaap:ProductMember us-gaap:RetailMember 2019-01-01 2019-06-30 0001694426 us-gaap:CorporateNonSegmentMember us-gaap:ProductMember 2019-01-01 2019-06-30 0001694426 dk:RefiningMember 2019-01-01 2019-06-30 0001694426 dk:LogisticsMember 2019-01-01 2019-06-30 0001694426 dk:CorporateAndEliminationsMember 2019-01-01 2019-06-30 0001694426 us-gaap:IntersegmentEliminationMember dk:LogisticsMember 2019-01-01 2019-06-30 0001694426 us-gaap:ProductMember 2019-01-01 2019-06-30 0001694426 dk:RefiningMember dk:TylerRefineryMember 2020-01-01 2020-06-30 0001694426 dk:RefiningMember dk:ElDoradoRefineryMember 2020-01-01 2020-06-30 0001694426 dk:RefiningMember 2020-01-01 2020-06-30 0001694426 dk:RefiningMember dk:BigSpringRefineryMember 2020-01-01 2020-06-30 0001694426 dk:AlonBakersfieldPropertyInc.Member 2020-05-07 2020-05-07 0001694426 us-gaap:CommodityContractMember dk:RefiningMember 2019-01-01 2019-06-30 0001694426 dk:AlonBakersfieldPropertyInc.Member 2020-05-07 0001694426 dk:RefiningMember dk:KrotzSpringRefineryMember 2020-01-01 2020-06-30 0001694426 us-gaap:CommodityContractMember dk:RefiningMember 2019-04-01 2019-06-30 0001694426 srt:ConsolidationEliminationsMember 2020-04-01 2020-06-30 0001694426 us-gaap:OperatingSegmentsMember us-gaap:RetailMember 2020-01-01 2020-06-30 0001694426 us-gaap:OperatingSegmentsMember dk:LogisticsMember 2020-01-01 2020-06-30 0001694426 dk:CorporateReconcilingItemsAndEliminationsMember 2020-06-30 0001694426 us-gaap:OperatingSegmentsMember dk:RefiningMember 2020-01-01 2020-06-30 0001694426 dk:CorporateReconcilingItemsAndEliminationsMember 2020-01-01 2020-06-30 0001694426 dk:LogisticsMember 2020-01-01 2020-06-30 0001694426 us-gaap:CorporateNonSegmentMember us-gaap:ProductMember 2020-01-01 2020-06-30 0001694426 us-gaap:CorporateNonSegmentMember 2020-01-01 2020-06-30 0001694426 us-gaap:IntersegmentEliminationMember dk:LogisticsMember 2020-01-01 2020-06-30 0001694426 us-gaap:IntersegmentEliminationMember 2020-01-01 2020-06-30 0001694426 us-gaap:IntersegmentEliminationMember us-gaap:RetailMember 2020-01-01 2020-06-30 0001694426 us-gaap:ProductMember 2020-01-01 2020-06-30 0001694426 dk:CorporateAndEliminationsMember 2020-01-01 2020-06-30 0001694426 us-gaap:IntersegmentEliminationMember dk:RefiningMember 2020-01-01 2020-06-30 0001694426 us-gaap:OperatingSegmentsMember us-gaap:ProductMember dk:LogisticsMember 2020-01-01 2020-06-30 0001694426 us-gaap:OperatingSegmentsMember us-gaap:ProductMember dk:RefiningMember 2020-01-01 2020-06-30 0001694426 us-gaap:RetailMember 2020-01-01 2020-06-30 0001694426 us-gaap:OperatingSegmentsMember us-gaap:ProductMember us-gaap:RetailMember 2020-01-01 2020-06-30 0001694426 dk:StockCompensationPlanExcludingLossMember 2019-01-01 2019-06-30 0001694426 dk:StockCompensationPlanExcludingLossMember 2019-04-01 2019-06-30 0001694426 dk:StockCompensationPlanExcludingLossMember 2020-01-01 2020-06-30 0001694426 us-gaap:StockCompensationPlanMember 2020-04-01 2020-06-30 0001694426 us-gaap:StockCompensationPlanMember 2019-04-01 2019-06-30 0001694426 dk:StockCompensationPlanExcludingLossMember 2020-04-01 2020-06-30 0001694426 dk:StockCompensationPlanLossMember 2020-04-01 2020-06-30 0001694426 us-gaap:StockCompensationPlanMember 2019-01-01 2019-06-30 0001694426 dk:StockCompensationPlanLossMember 2019-04-01 2019-06-30 0001694426 dk:StockCompensationPlanLossMember 2019-01-01 2019-06-30 0001694426 us-gaap:StockCompensationPlanMember 2020-01-01 2020-06-30 0001694426 dk:StockCompensationPlanLossMember 2020-01-01 2020-06-30 0001694426 dk:DelekLogisticsPartnersLPMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2019-12-31 0001694426 dk:DelekLogisticsPartnersLPMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2020-06-30 0001694426 dk:BigSpringGatheringAssetMember us-gaap:LimitedPartnerMember 2020-03-01 2020-03-31 0001694426 dk:DelekTruckingMember 2020-05-01 2020-05-01 0001694426 us-gaap:LimitedPartnerMember 2020-01-01 2020-02-29 0001694426 dk:BigSpringGatheringAssetMember 2020-03-31 2020-03-31 0001694426 dk:DelekLogisticsMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember dk:DelekLogisticsGPLLCMember 2020-01-01 2020-06-30 0001694426 dk:DelekLogisticsMember us-gaap:VariableInterestEntityPrimaryBeneficiaryMember 2020-06-30 0001694426 us-gaap:VariableInterestEntityPrimaryBeneficiaryMember dk:DelekLogisticsMember 2020-01-01 2020-06-30 0001694426 us-gaap:LimitedPartnerMember 2020-03-01 2020-03-31 0001694426 dk:DelekLogisticsPartnersLPMember dk:JointVenturesMember 2019-04-01 2019-06-30 0001694426 dk:WinktoWebsterPipelineLLCMember 2020-01-01 2020-06-30 0001694426 dk:RedRiverPipelineCompanyLLCMember 2019-12-31 0001694426 dk:DelekUSHoldingsInc.Member dk:JointVenturesMember 2019-04-01 2019-06-30 0001694426 dk:JointVenturesMember dk:DelekUSHoldingsInc.Member 2020-06-30 0001694426 dk:WinktoWebsterPipelineLLCMember 2019-12-31 0001694426 dk:RedRiverMember 2020-04-01 2020-06-30 0001694426 dk:RedRiverExpansionMember 2019-05-31 0001694426 dk:RedRiverPipelineCompanyLLCMember 2020-06-30 0001694426 dk:DelekUSHoldingsInc.Member dk:JointVenturesMember 2020-06-30 0001694426 dk:WinktoWebsterPipelineLLCMember 2020-04-01 2020-06-30 0001694426 dk:DelekUSHoldingsInc.Member dk:JointVenturesMember 2019-01-01 2019-06-30 0001694426 dk:DelekUSHoldingsInc.Member dk:JointVenturesMember 2020-01-01 2020-06-30 0001694426 dk:DelekRenewablesLLCMember dk:JointVenturesMember 2019-12-31 0001694426 srt:MinimumMember dk:WinktoWebsterPipelineLLCMember 2019-07-30 2019-07-30 0001694426 dk:DelekLogisticsPartnersLPMember dk:JointVenturesMember 2020-01-01 2020-06-30 0001694426 dk:WinktoWebsterPipelineLLCMember 2015-05-14 0001694426 dk:DelekLogisticsPartnersLPMember dk:JointVenturesMember 2019-01-01 2019-06-30 0001694426 dk:DelekUSHoldingsInc.Member dk:JointVenturesMember 2019-12-31 0001694426 dk:RedRiverPipelineCompanyLLCMember 2019-05-31 0001694426 dk:DelekLogisticsPartnersLPMember dk:JointVenturesMember 2019-12-31 0001694426 srt:MaximumMember dk:WinktoWebsterPipelineLLCMember 2019-07-30 2019-07-30 0001694426 dk:DelekLogisticsPartnersLPMember dk:JointVenturesMember 2020-04-01 2020-06-30 0001694426 dk:CPLLCMember 2020-06-30 0001694426 dk:DelekLogisticsPartnersLPMember dk:JointVenturesMember 2020-06-30 0001694426 dk:RangelandRioMember 2020-06-30 0001694426 dk:RedRiverExpansionMember 2020-01-01 2020-06-30 0001694426 dk:WinktoWebsterPipelineLLCMember 2020-06-30 0001694426 dk:RedRiverMember 2020-01-01 2020-06-30 0001694426 dk:DelekUSHoldingsInc.Member dk:JointVenturesMember 2020-04-01 2020-06-30 0001694426 dk:DelekRenewablesLLCMember dk:JointVenturesMember 2020-06-30 0001694426 dk:RefiningMember 2019-12-31 0001694426 dk:RefiningMember 2020-06-30 0001694426 dk:LogisticsMember 2019-12-31 0001694426 dk:LogisticsMember 2020-06-30 0001694426 dk:LIFOinventoryMember 2020-06-30 0001694426 us-gaap:CostOfSalesMember 2019-01-01 2019-06-30 0001694426 dk:LIFOinventoryMember 2019-12-31 0001694426 us-gaap:CostOfSalesMember 2020-01-01 2020-06-30 0001694426 us-gaap:CostOfSalesMember 2019-04-01 2019-06-30 0001694426 us-gaap:CostOfSalesMember 2020-04-01 2020-06-30 0001694426 dk:KrotzSpringRefineryMember 2020-06-30 0001694426 dk:ElDoradoRefineryMember 2020-06-30 0001694426 dk:BigSpringRefineryMember 2020-06-30 0001694426 dk:BaselineStepOutLiabilityMember 2020-06-30 0001694426 dk:KrotzSpringRefineryMember dk:BaselineStepOutLiabilityMember 2020-06-30 0001694426 dk:ElDoradoRefineryMember dk:BaselineStepOutLiabilityMember 2020-06-30 0001694426 dk:BigSpringRefineryMember dk:BaselineStepOutLiabilityMember 2020-06-30 0001694426 dk:J.AronCompanyMember dk:AlonRefineryMember dk:BaselineStepOutLiabilityMember 2019-01-01 2019-03-31 0001694426 dk:J.AronCompanyMember dk:BaselineStepOutLiabilityMember 2020-01-01 2020-03-31 0001694426 2020-01-01 2020-03-31 0001694426 2019-01-01 2019-03-31 0001694426 dk:BigSpringRefineryMember 2019-12-31 0001694426 dk:BigSpringRefineryMember dk:BaselineStepOutLiabilityMember 2019-12-31 0001694426 dk:ElDoradoRefineryMember 2019-12-31 0001694426 dk:KrotzSpringRefineryMember 2019-12-31 0001694426 dk:BaselineStepOutLiabilityMember 2019-12-31 0001694426 dk:J.AronCompanyMember us-gaap:InterestExpenseMember 2020-04-01 2020-06-30 0001694426 dk:J.AronCompanyMember dk:ElDoradoRefineryMember us-gaap:InterestExpenseMember 2019-01-01 2019-06-30 0001694426 dk:J.AronCompanyMember dk:KrotzSpringRefineryMember us-gaap:InterestExpenseMember 2019-04-01 2019-06-30 0001694426 dk:J.AronCompanyMember dk:ElDoradoRefineryMember us-gaap:InterestExpenseMember 2020-04-01 2020-06-30 0001694426 dk:J.AronCompanyMember dk:BigSpringRefineryMember us-gaap:InterestExpenseMember 2019-01-01 2019-06-30 0001694426 dk:J.AronCompanyMember dk:ElDoradoRefineryMember us-gaap:InterestExpenseMember 2019-04-01 2019-06-30 0001694426 dk:J.AronCompanyMember dk:KrotzSpringRefineryMember us-gaap:InterestExpenseMember 2020-01-01 2020-06-30 0001694426 dk:J.AronCompanyMember dk:KrotzSpringRefineryMember us-gaap:InterestExpenseMember 2019-01-01 2019-06-30 0001694426 dk:J.AronCompanyMember us-gaap:InterestExpenseMember 2019-04-01 2019-06-30 0001694426 dk:J.AronCompanyMember us-gaap:InterestExpenseMember 2019-01-01 2019-06-30 0001694426 dk:J.AronCompanyMember dk:KrotzSpringRefineryMember us-gaap:InterestExpenseMember 2020-04-01 2020-06-30 0001694426 dk:J.AronCompanyMember dk:BigSpringRefineryMember us-gaap:InterestExpenseMember 2020-04-01 2020-06-30 0001694426 dk:J.AronCompanyMember us-gaap:InterestExpenseMember 2020-01-01 2020-06-30 0001694426 dk:J.AronCompanyMember dk:ElDoradoRefineryMember us-gaap:InterestExpenseMember 2020-01-01 2020-06-30 0001694426 dk:J.AronCompanyMember dk:BigSpringRefineryMember us-gaap:InterestExpenseMember 2019-04-01 2019-06-30 0001694426 dk:J.AronCompanyMember dk:BigSpringRefineryMember us-gaap:InterestExpenseMember 2020-01-01 2020-06-30 0001694426 dk:J.AronCompanyMember dk:KrotzSpringRefineryMember dk:BaselineStepOutLiabilityMember 2020-06-30 0001694426 dk:J.AronCompanyMember dk:KrotzSpringRefineryMember 2020-06-30 0001694426 dk:J.AronCompanyMember dk:BigSpringRefineryMember 2019-12-31 0001694426 dk:J.AronCompanyMember dk:BigSpringRefineryMember 2020-06-30 0001694426 dk:J.AronCompanyMember dk:KrotzSpringRefineryMember 2019-12-31 0001694426 dk:J.AronCompanyMember dk:ElDoradoRefineryMember 2020-06-30 0001694426 dk:J.AronCompanyMember dk:ElDoradoRefineryMember dk:BaselineStepOutLiabilityMember 2020-06-30 0001694426 dk:J.AronCompanyMember dk:ElDoradoRefineryMember 2019-12-31 0001694426 dk:J.AronCompanyMember dk:BigSpringRefineryMember dk:BaselineStepOutLiabilityMember 2020-06-30 0001694426 dk:J.AronCompanyMember dk:BigSpringAndKrotzSpringMember 2020-06-30 0001694426 dk:J.AronCompanyMember dk:BigSpringAndKrotzSpringMember 2019-12-31 0001694426 dk:A2025NotesMember us-gaap:SeniorNotesMember 2020-06-30 0001694426 dk:DelekTermLoanCreditFacilityMember us-gaap:SecuredDebtMember 2019-12-31 0001694426 dk:HapoalimTermLoanMember us-gaap:SecuredDebtMember 2019-12-31 0001694426 dk:A2025NotesMember us-gaap:SeniorNotesMember 2019-12-31 0001694426 us-gaap:RevolvingCreditFacilityMember us-gaap:LineOfCreditMember 2020-06-30 0001694426 us-gaap:RevolvingCreditFacilityMember dk:ReliantBankRevolverMember us-gaap:LineOfCreditMember 2020-06-30 0001694426 dk:HapoalimTermLoanMember us-gaap:SecuredDebtMember 2020-06-30 0001694426 dk:DelekTermLoanCreditFacilityMember us-gaap:SecuredDebtMember 2020-06-30 0001694426 us-gaap:RevolvingCreditFacilityMember dk:DklRevolverMember us-gaap:LineOfCreditMember 2020-06-30 0001694426 dk:PromissoryNotesMember 2019-12-31 0001694426 us-gaap:RevolvingCreditFacilityMember dk:ReliantBankRevolverMember us-gaap:LineOfCreditMember 2019-12-31 0001694426 dk:PromissoryNotesMember 2020-06-30 0001694426 us-gaap:RevolvingCreditFacilityMember dk:DklRevolverMember us-gaap:LineOfCreditMember 2019-12-31 0001694426 us-gaap:RevolvingCreditFacilityMember us-gaap:LineOfCreditMember 2019-12-31 0001694426 us-gaap:SecuredDebtMember us-gaap:BaseRateMember 2018-03-30 2018-03-30 0001694426 us-gaap:RevolvingCreditFacilityMember us-gaap:LineOfCreditMember us-gaap:BaseRateMember 2018-03-30 2018-03-30 0001694426 dk:AlonUSAEnergyInc.Member dk:UnsecuredPromissoryNoteAlonMember us-gaap:LoansPayableMember 2020-06-30 0001694426 us-gaap:SecuredDebtMember 2018-03-30 0001694426 us-gaap:RevolvingCreditFacilityMember dk:DklRevolverMember dk:FifthThirdBankMember us-gaap:LineOfCreditMember 2020-06-30 0001694426 us-gaap:LetterOfCreditMember 2018-03-30 0001694426 srt:MinimumMember us-gaap:SecuredDebtMember us-gaap:BaseRateMember 2018-10-26 2018-10-26 0001694426 dk:HapoalimTermLoanMember us-gaap:LineOfCreditMember us-gaap:LondonInterbankOfferedRateLIBORMember 2019-12-31 2019-12-31 0001694426 dk:AlonUSAEnergyInc.Member dk:UnsecuredPromissoryNoteAlonMember us-gaap:LoansPayableMember 2015-05-14 0001694426 us-gaap:RevolvingCreditFacilityMember dk:ReliantBankRevolverMember us-gaap:LineOfCreditMember 2020-01-01 2020-06-30 0001694426 us-gaap:SecuredDebtMember 2020-06-30 0001694426 dk:IncrementalTermLoansMember us-gaap:SecuredDebtMember 2019-05-22 2019-05-22 0001694426 srt:MaximumMember us-gaap:RevolvingCreditFacilityMember us-gaap:LineOfCreditMember us-gaap:BaseRateMember 2020-04-01 2020-06-30 0001694426 dk:HapoalimTermLoanMember us-gaap:LineOfCreditMember 2019-12-31 2019-12-31 0001694426 dk:IncrementalTermLoansMember us-gaap:SecuredDebtMember 2019-11-12 0001694426 dk:IncrementalTermLoansMember us-gaap:SecuredDebtMember us-gaap:BaseRateMember 2020-05-19 2020-05-19 0001694426 srt:MaximumMember us-gaap:SecuredDebtMember 2018-03-30 0001694426 us-gaap:RevolvingCreditFacilityMember dk:ReliantBankRevolverMember us-gaap:LineOfCreditMember 2019-12-15 0001694426 us-gaap:RevolvingCreditFacilityMember us-gaap:LineOfCreditMember us-gaap:LondonInterbankOfferedRateLIBORMember 2018-03-30 2018-03-30 0001694426 dk:IncrementalTermLoansMember us-gaap:SecuredDebtMember 2020-05-19 2020-05-19 0001694426 dk:AlonUSAEnergyInc.Member dk:UnsecuredPromissoryNoteAlonMember us-gaap:LoansPayableMember 2015-05-14 2015-05-14 0001694426 dk:IncrementalTermLoansMember us-gaap:SecuredDebtMember 2018-03-30 2018-03-30 0001694426 srt:MinimumMember us-gaap:SecuredDebtMember 2018-03-30 0001694426 us-gaap:SecuredDebtMember 2018-03-30 2018-03-30 0001694426 dk:A2025NotesMember us-gaap:SeniorNotesMember 2017-05-23 0001694426 dk:HapoalimTermLoanMember us-gaap:LineOfCreditMember 2020-06-30 0001694426 us-gaap:RevolvingCreditFacilityMember dk:DklRevolverMember dk:FifthThirdBankMember us-gaap:LineOfCreditMember 2018-09-28 0001694426 us-gaap:RevolvingCreditFacilityMember dk:DklRevolverMember dk:FifthThirdBankMember us-gaap:LineOfCreditMember us-gaap:BaseRateMember 2020-01-01 2020-06-30 0001694426 dk:IncrementalTermLoansMember us-gaap:SecuredDebtMember 2019-11-12 2019-11-12 0001694426 us-gaap:SecuredDebtMember us-gaap:LondonInterbankOfferedRateLIBORMember 2018-03-30 2018-03-30 0001694426 dk:IncrementalTermLoansMember us-gaap:SecuredDebtMember 2020-05-19 0001694426 srt:MaximumMember us-gaap:RevolvingCreditFacilityMember us-gaap:LineOfCreditMember us-gaap:LondonInterbankOfferedRateLIBORMember 2020-04-01 2020-06-30 0001694426 dk:A2025NotesMember us-gaap:SeniorNotesMember 2020-01-01 2020-06-30 0001694426 srt:MinimumMember us-gaap:SecuredDebtMember us-gaap:LondonInterbankOfferedRateLIBORMember 2018-10-26 2018-10-26 0001694426 dk:IncrementalTermLoansMember us-gaap:SecuredDebtMember 2019-05-22 0001694426 srt:MaximumMember us-gaap:RevolvingCreditFacilityMember us-gaap:LineOfCreditMember 2018-03-30 2018-03-30 0001694426 srt:MinimumMember us-gaap:RevolvingCreditFacilityMember us-gaap:LineOfCreditMember 2018-03-30 2018-03-30 0001694426 srt:MaximumMember us-gaap:RevolvingCreditFacilityMember us-gaap:LineOfCreditMember 2020-01-01 2020-06-30 0001694426 us-gaap:RevolvingCreditFacilityMember us-gaap:LineOfCreditMember 2018-03-30 0001694426 dk:IncrementalTermLoansMember us-gaap:SecuredDebtMember 2018-03-30 0001694426 dk:IncrementalTermLoansMember us-gaap:SecuredDebtMember us-gaap:LondonInterbankOfferedRateLIBORMember 2020-05-19 2020-05-19 0001694426 us-gaap:RevolvingCreditFacilityMember dk:DklRevolverMember dk:FifthThirdBankMember us-gaap:LineOfCreditMember dk:CanadianprimerateMember 2020-01-01 2020-06-30 0001694426 dk:A2025NotesMember us-gaap:DebtInstrumentRedemptionPeriodFiveMember us-gaap:SeniorNotesMember 2017-05-23 2017-05-23 0001694426 dk:HapoalimTermLoanMember us-gaap:LineOfCreditMember 2019-12-31 0001694426 dk:HapoalimTermLoanMember us-gaap:SeniorNotesMember 2019-12-31 0001694426 dk:A2025NotesMember us-gaap:DebtInstrumentRedemptionPeriodTwoMember us-gaap:SeniorNotesMember 2017-05-23 2017-05-23 0001694426 us-gaap:RevolvingCreditFacilityMember dk:DklRevolverMember dk:FifthThirdBankMember us-gaap:LineOfCreditMember 2020-01-01 2020-06-30 0001694426 us-gaap:RevolvingCreditFacilityMember dk:DklRevolverMember dk:FifthThirdBankMember us-gaap:LineOfCreditMember 2018-09-27 0001694426 dk:HapoalimTermLoanMember us-gaap:SeniorNotesMember 2020-06-30 0001694426 dk:A2025NotesMember us-gaap:DebtInstrumentRedemptionPeriodFourMember us-gaap:SeniorNotesMember 2017-05-23 2017-05-23 0001694426 us-gaap:RevolvingCreditFacilityMember dk:DklRevolverMember dk:FifthThirdBankMember us-gaap:LineOfCreditMember us-gaap:LondonInterbankOfferedRateLIBORMember 2020-01-01 2020-06-30 0001694426 dk:A2025NotesMember us-gaap:DebtInstrumentRedemptionPeriodThreeMember us-gaap:SeniorNotesMember 2017-05-23 2017-05-23 0001694426 us-gaap:CommodityContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-12-31 0001694426 us-gaap:CommodityContractMember 2019-12-31 0001694426 us-gaap:CommodityContractMember us-gaap:CostOfSalesMember 2020-04-01 2020-06-30 0001694426 us-gaap:NondesignatedMember us-gaap:CostOfSalesMember 2019-01-01 2019-06-30 0001694426 us-gaap:NondesignatedMember us-gaap:CostOfSalesMember 2020-01-01 2020-06-30 0001694426 us-gaap:NondesignatedMember us-gaap:CostOfSalesMember 2020-04-01 2020-06-30 0001694426 dk:RINCommitmentContractsMember 2019-12-31 0001694426 us-gaap:NondesignatedMember us-gaap:CostOfSalesMember 2019-04-01 2019-06-30 0001694426 us-gaap:CommodityContractMember us-gaap:CostOfSalesMember 2020-01-01 2020-06-30 0001694426 dk:RINCommitmentContractsMember 2020-06-30 0001694426 us-gaap:CommodityContractMember 2020-06-30 0001694426 us-gaap:CommodityContractMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:CostOfSalesMember 2020-04-01 2020-06-30 0001694426 us-gaap:CommodityContractMember us-gaap:CostOfSalesMember 2019-01-01 2019-06-30 0001694426 us-gaap:CommodityContractMember us-gaap:CostOfSalesMember 2019-04-01 2019-06-30 0001694426 us-gaap:CommodityContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2020-06-30 0001694426 us-gaap:CommodityContractMember us-gaap:NondesignatedMember us-gaap:CostOfSalesMember 2020-01-01 2020-06-30 0001694426 us-gaap:CommodityContractMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:CostOfSalesMember 2020-01-01 2020-06-30 0001694426 us-gaap:CommodityContractMember us-gaap:NondesignatedMember us-gaap:OtherOperatingIncomeExpenseMember 2019-04-01 2019-06-30 0001694426 us-gaap:CommodityContractMember us-gaap:NondesignatedMember us-gaap:OtherOperatingIncomeExpenseMember 2020-04-01 2020-06-30 0001694426 us-gaap:CommodityContractMember us-gaap:NondesignatedMember us-gaap:CostOfSalesMember 2020-04-01 2020-06-30 0001694426 us-gaap:CommodityContractMember us-gaap:NondesignatedMember us-gaap:OtherOperatingIncomeExpenseMember 2019-01-01 2019-06-30 0001694426 us-gaap:CommodityContractMember us-gaap:NondesignatedMember us-gaap:CostOfSalesMember 2019-04-01 2019-06-30 0001694426 us-gaap:CommodityContractMember us-gaap:NondesignatedMember us-gaap:CostOfSalesMember 2019-01-01 2019-06-30 0001694426 us-gaap:CommodityContractMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:CostOfSalesMember 2019-01-01 2019-06-30 0001694426 us-gaap:CommodityContractMember us-gaap:NondesignatedMember us-gaap:OtherOperatingIncomeExpenseMember 2020-01-01 2020-06-30 0001694426 us-gaap:CommodityContractMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:CostOfSalesMember 2019-04-01 2019-06-30 0001694426 us-gaap:ForwardContractsMember 2019-01-01 2019-06-30 0001694426 us-gaap:ForwardContractsMember 2020-04-01 2020-06-30 0001694426 us-gaap:ForwardContractsMember 2020-01-01 2020-06-30 0001694426 us-gaap:ForwardContractsMember 2019-04-01 2019-06-30 0001694426 us-gaap:OtherCurrentAssetsMember us-gaap:CommodityContractMember us-gaap:NondesignatedMember 2020-06-30 0001694426 us-gaap:OtherCurrentLiabilitiesMember us-gaap:CommodityContractMember us-gaap:NondesignatedMember 2019-12-31 0001694426 us-gaap:OtherCurrentLiabilitiesMember dk:RINCommitmentContractsMember us-gaap:NondesignatedMember 2020-06-30 0001694426 us-gaap:OtherCurrentAssetsMember dk:RINCommitmentContractsMember us-gaap:NondesignatedMember 2019-12-31 0001694426 us-gaap:OtherCurrentAssetsMember dk:RINCommitmentContractsMember us-gaap:NondesignatedMember 2020-06-30 0001694426 us-gaap:OtherCurrentAssetsMember us-gaap:CommodityContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-12-31 0001694426 us-gaap:OtherCurrentAssetsMember us-gaap:CommodityContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2020-06-30 0001694426 us-gaap:OtherNoncurrentLiabilitiesMember us-gaap:CommodityContractMember us-gaap:NondesignatedMember 2020-06-30 0001694426 us-gaap:OtherCurrentLiabilitiesMember us-gaap:CommodityContractMember us-gaap:NondesignatedMember 2020-06-30 0001694426 us-gaap:OtherCurrentLiabilitiesMember dk:RINCommitmentContractsMember us-gaap:NondesignatedMember 2019-12-31 0001694426 us-gaap:OtherCurrentAssetsMember us-gaap:CommodityContractMember us-gaap:NondesignatedMember 2019-12-31 0001694426 us-gaap:OtherNoncurrentAssetsMember us-gaap:CommodityContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2020-06-30 0001694426 us-gaap:OtherNoncurrentAssetsMember us-gaap:CommodityContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-12-31 0001694426 us-gaap:OtherNoncurrentLiabilitiesMember us-gaap:CommodityContractMember us-gaap:NondesignatedMember 2019-12-31 0001694426 us-gaap:CommodityContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2020-01-01 2020-06-30 0001694426 us-gaap:CommodityContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2020-04-01 2020-06-30 0001694426 us-gaap:CommodityContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-04-01 2019-06-30 0001694426 us-gaap:CommodityContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-01-01 2019-06-30 0001694426 dk:RINCommitmentContractsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-06-30 0001694426 us-gaap:CommodityContractMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-06-30 0001694426 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-06-30 0001694426 dk:RINCommitmentContractsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-06-30 0001694426 dk:RightToReceiveCrudeOilBarrelsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-06-30 0001694426 us-gaap:CommodityContractMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-06-30 0001694426 us-gaap:CommodityContractMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-06-30 0001694426 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-06-30 0001694426 us-gaap:FairValueMeasurementsRecurringMember 2020-06-30 0001694426 dk:RINCommitmentContractsMember us-gaap:FairValueMeasurementsRecurringMember 2020-06-30 0001694426 dk:J.AronStepoutLiabilityMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-06-30 0001694426 dk:RINCommitmentContractsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-06-30 0001694426 us-gaap:CommodityContractMember us-gaap:FairValueMeasurementsRecurringMember 2020-06-30 0001694426 dk:EnvironmentalCreditsObligationMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-06-30 0001694426 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-06-30 0001694426 us-gaap:CommoditiesInvestmentMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-06-30 0001694426 dk:J.AronStepoutLiabilityMember us-gaap:FairValueMeasurementsRecurringMember 2020-06-30 0001694426 dk:RightToReceiveCrudeOilBarrelsMember us-gaap:FairValueMeasurementsRecurringMember 2020-06-30 0001694426 dk:RightToReceiveCrudeOilBarrelsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-06-30 0001694426 dk:EnvironmentalCreditsObligationMember us-gaap:FairValueMeasurementsRecurringMember 2020-06-30 0001694426 us-gaap:CommoditiesInvestmentMember us-gaap:FairValueMeasurementsRecurringMember 2020-06-30 0001694426 dk:J.AronStepoutLiabilityMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-06-30 0001694426 dk:EnvironmentalCreditsObligationMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-06-30 0001694426 us-gaap:CommoditiesInvestmentMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-06-30 0001694426 dk:J.AronStepoutLiabilityMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-06-30 0001694426 dk:EnvironmentalCreditsObligationMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-06-30 0001694426 us-gaap:CommoditiesInvestmentMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-06-30 0001694426 dk:RightToReceiveCrudeOilBarrelsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-06-30 0001694426 dk:RINCommitmentContractsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001694426 us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001694426 us-gaap:CommodityContractMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001694426 dk:EnvironmentalCreditsObligationMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001694426 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001694426 dk:J.AronStepoutLiabilityMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001694426 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001694426 dk:RINCommitmentContractsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001694426 us-gaap:CommoditiesInvestmentMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001694426 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001694426 dk:EnvironmentalCreditsObligationMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001694426 dk:EnvironmentalCreditsObligationMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001694426 us-gaap:CommodityContractMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001694426 dk:J.AronStepoutLiabilityMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001694426 dk:EnvironmentalCreditsObligationMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001694426 us-gaap:CommoditiesInvestmentMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001694426 us-gaap:CommodityContractMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001694426 us-gaap:CommodityContractMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001694426 dk:RINCommitmentContractsMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001694426 us-gaap:CommoditiesInvestmentMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001694426 dk:J.AronStepoutLiabilityMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001694426 dk:RINCommitmentContractsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001694426 dk:J.AronStepoutLiabilityMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001694426 us-gaap:CommoditiesInvestmentMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001694426 us-gaap:LetterOfCreditMember 2020-06-30 0001694426 dk:ElDoradoRefineryPriorOwnerCaseMember 2020-06-30 0001694426 2019-01-01 2019-12-31 0001694426 dk:ElDoradoRefineryPriorOwnerCaseMember 2020-01-01 2020-06-30 0001694426 dk:RelatedPartyTransactionsMember us-gaap:EquityMethodInvesteeMember 2020-04-01 2020-06-30 0001694426 dk:RelatedPartyTransactionsMember us-gaap:EquityMethodInvesteeMember 2019-01-01 2019-06-30 0001694426 dk:RelatedPartyTransactionsMember us-gaap:EquityMethodInvesteeMember 2019-04-01 2019-06-30 0001694426 dk:RelatedPartyTransactionsMember us-gaap:EquityMethodInvesteeMember 2020-01-01 2020-06-30 0001694426 us-gaap:CommonStockMember 2020-05-05 0001694426 dk:DelekUS2006and2016LongTermIncentivePlanMember 2020-01-01 2020-06-30 0001694426 us-gaap:GeneralAndAdministrativeExpenseMember dk:DelekUS2006and2016LongTermIncentivePlanMember 2020-01-01 2020-06-30 0001694426 dk:DelekUS2006and2016LongTermIncentivePlanMember 2020-06-30 0001694426 us-gaap:GeneralAndAdministrativeExpenseMember dk:DelekUS2006and2016LongTermIncentivePlanMember 2019-04-01 2019-06-30 0001694426 dk:DelekUS2006and2016LongTermIncentivePlanMember 2019-04-01 2019-06-30 0001694426 dk:DelekUS2006and2016LongTermIncentivePlanMember 2019-01-01 2019-06-30 0001694426 us-gaap:GeneralAndAdministrativeExpenseMember dk:DelekUS2006and2016LongTermIncentivePlanMember 2020-04-01 2020-06-30 0001694426 dk:DelekUS2006and2016LongTermIncentivePlanMember 2020-04-01 2020-06-30 0001694426 us-gaap:GeneralAndAdministrativeExpenseMember dk:DelekUS2006and2016LongTermIncentivePlanMember 2019-01-01 2019-06-30 0001694426 us-gaap:CommonStockMember 2020-05-04 0001694426 us-gaap:CommonStockMember 2018-11-06 0001694426 dk:StockPurchaseAgreementMember 2020-06-30 0001694426 2020-03-20 2020-03-20 0001694426 2020-03-20 0001694426 2020-02-24 2020-02-24 0001694426 2020-05-04 2020-05-04 0001694426 srt:MaximumMember 2020-06-30 0001694426 srt:MinimumMember 2020-06-30 0001694426 us-gaap:SubsequentEventMember 2020-08-03 2020-08-03 xbrli:pure iso4217:USD xbrli:shares utreg:bbl xbrli:pure dk:facility xbrli:shares dk:store iso4217:USD iso4217:CAD dk:rins utreg:MMBTU dk:oil_releases dk:joint_venture dk:note_payable utreg:bbl

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	June 30, 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 July 31, 2020, there were 73,657,437 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 June 30, 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	10
Notes to Condensed Consolidated Financial Statements	11
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3. Quantitative and Qualitative Disclosures about Market Risk	76
Item 4. Controls and Procedures	78

PART II. OTHER INFORMATION
Item 1. Legal Proceedings	79
Item 1A. Risk Factors	79
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	80
Item 5. Other Information	81
Item 6. Exhibits	82
Signatures	83



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)



	June 30, 2020			December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	849.0		$	955.3
Accounts receivable, net	480.4			792.6
Inventories, net of inventory valuation reserves	653.5			946.7
Other current assets	390.0			268.7
Total current assets	2,372.9			2,963.3
Property, plant and equipment:
Property, plant and equipment	3,514.9			3,362.8
Less: accumulated depreciation	(1,031.5		)	(934.5		)
Property, plant and equipment, net	2,483.4			2,428.3
Operating lease right-of-use assets	183.9			183.6
Goodwill	855.7			855.7
Other intangibles, net	110.0			110.3
Equity method investments	367.3			407.3
Other non-current assets	64.4			67.8
Total assets	$	6,437.6		$	7,016.3
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,004.2		$	1,599.7
Current portion of long-term debt	33.4			36.4
Obligation under Supply and Offtake Agreements	99.0			332.5
Current portion of operating lease liabilities	43.4			40.5
Accrued expenses and other current liabilities	409.3			346.8
Total current liabilities	1,589.3			2,355.9
Non-current liabilities:
Long-term debt, net of current portion	2,421.5			2,030.7
Obligation under Supply and Offtake Agreements	215.0			144.8
Environmental liabilities, net of current portion	106.3			137.9
Asset retirement obligations	36.8			68.6
Deferred tax liabilities	335.4			267.9
Operating lease liabilities, net of current portion	140.2			144.3
Other non-current liabilities	33.8			30.9
Total non-current liabilities	3,289.0			2,825.1
Stockholders’ equity:
Preferred stock, $0.01 par value, 11,000,000 shares and 10,000,000 shares authorized at June 30,2020 and December 31, 2019, respectively, no shares issued and outstanding	—			—
Common stock, $0.01 par value, 110,000,000 shares authorized, 91,232,964 shares and 90,987,025 shares issued at June 30, 2020 and December 31, 2019, respectively	0.9			0.9
Additional paid-in capital	1,160.1			1,151.9
Accumulated other comprehensive income	0.5			0.1
Treasury stock, 17,575,527 shares and 17,516,814 shares, at cost, as of June 30, 2020 and December 31, 2019, respectively	(694.1		)	(692.2		)
Retained earnings	926.4			1,205.6
Non-controlling interests in subsidiaries	165.5			169.0
Total stockholders’ equity	1,559.3			1,835.3
Total liabilities and stockholders’ equity	$	6,437.6		$	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						Six Months Ended
	June 30,						June 30,
	2020			2019			2020			2019
Net revenues	$	1,535.5		$	2,480.3		$	3,356.7		$	4,680.2
Cost of sales:
Cost of materials and other	1,277.8			2,067.7			3,188.4			3,767.1
Operating expenses (excluding depreciation and amortization presented below)	103.4			135.8			232.6			276.7
Depreciation and amortization	53.6			42.6			100.6			81.9
Total cost of sales	1,434.8			2,246.1			3,521.6			4,125.7
Operating expenses related to retail and wholesale business (excluding depreciation and amortization presented below)	24.4			26.5			49.7			52.3
General and administrative expenses	61.7			69.5			127.4			131.7
Depreciation and amortization	6.0			7.5			11.6			15.0
Other operating income, net	(14.2		)	(3.6		)	(14.9		)	(1.2		)
Total operating costs and expenses	1,512.7			2,346.0			3,695.4			4,323.5
Operating income (loss)	22.8			134.3			(338.7		)	356.7
Interest expense	29.8			32.8			66.1			61.5
Interest income	(0.5		)	(3.3		)	(2.2		)	(5.8		)
Income from equity method investments	(10.7		)	(9.3		)	(15.8		)	(11.9		)
Gain on sale of non-operating refinery	(56.9		)	—			(56.9		)	—
Other (income) expense, net	(1.5		)	4.9			(2.4		)	3.5
Total non-operating (income) expense, net	(39.8		)	25.1			(11.2		)	47.3
Income (loss) before income tax (benefit) expense	62.6			109.2			(327.5		)	309.4
Income tax (benefit) expense	(35.9		)	24.6			(119.0		)	70.4
Income (loss) from continuing operations, net of tax	98.5			84.6			(208.5		)	239.0
Discontinued operations:
Loss from discontinued operations, including gain (loss) on sale of discontinued operations	—			(1.0		)	—			(1.0		)
Income tax benefit	—			(0.2		)	—			(0.2		)
Loss from discontinued operations, net of tax	—			(0.8		)	—			(0.8		)
Net income (loss)	98.5			83.8			(208.5		)	238.2
Net income attributed to non-controlling interests	10.8			6.5			18.2			11.6
Net income (loss) attributable to Delek	$	87.7		$	77.3		$	(226.7	)	$	226.6
Basic income (loss) per share:
Income (loss) from continuing operations	$	1.19		$	1.02		$	(3.08	)	$	2.95
Loss from discontinued operations	—			$	(0.01	)	—			(0.01		)
Basic income (loss) per share	$	1.19		$	1.01		$	(3.08	)	$	2.94
Diluted income (loss) per share:
Income (loss) from continuing operations	$	1.18		$	1.01		$	(3.08	)	$	2.92
Loss from discontinued operations	—			(0.01		)	—			(0.01		)
Diluted income (loss) per share	$	1.18		$	1.00		$	(3.08	)	$	2.91
Dividends declared per common share outstanding	$	0.31		$	0.28		$	0.62		$	0.55

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 June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Net income (loss)	$	98.5		$	83.8		$	(208.5	)	$	238.2
Other comprehensive income (loss):
Commodity contracts designated as cash flow hedges:
Net gains (losses) related to commodity cash flow hedges	(1.4		)	(16.5		)	0.3			(3.4		)
Income tax expense (benefit)	(0.3		)	(3.5		)	—			(0.7		)
Net comprehensive income (loss) on commodity contracts designated as cash flow hedges	(1.1		)	(13.0		)	0.3			(2.7		)
Other income, net of taxes	0.4			—			0.1			0.4
Total other comprehensive income (loss)	(0.7		)	(13.0		)	0.4			(2.3		)
Comprehensive income (loss)	97.8			70.8			(208.1		)	235.9
Comprehensive income attributable to non-controlling interest	10.8			6.5			18.2			11.6
Comprehensive income (loss) attributable to Delek	$	87.0		$	64.3		$	(226.3	)	$	224.3

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 June 30, 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	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
Net income		—	—		—			—			87.7			—		—			10.8			98.5
Other comprehensive loss related to commodity contracts, net		—	—		—			(1.1		)	—			—		—			—			(1.1		)
Common stock dividends ($0.31 per share)		—	—		—			—			(22.9		)	—		—			—			(22.9		)
Distributions to non-controlling interests		—	—		—			—			—			—		—			(8.2		)	(8.2		)
Equity-based compensation expense		—	—		4.7			—			—			—		—			—			4.7
Repurchase of non-controlling interests		—	—		(0.8		)	—			—			—		—			—			(0.8		)
Taxes paid due to the net settlement of equity-based compensation		—	—		(1.2		)	—			—			—		—			—			(1.2		)
Exercise of equity-based awards		143,044	—		—			—			—			—		—			—			—
Other		—	—		—			0.4			—			—		—			—			0.4
Balance at	June 30, 2020	91,232,964	$	0.9	$	1,160.1		$	0.5		$	926.4		(17,575,527	)	$	(694.1	)	$	165.5		$	1,559.3



6 \|

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 June 30, 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	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
Net income		—	—		—			—			77.3			—		—			6.5			83.8
Other comprehensive loss related to commodity contracts, net		—	—		—			(13.0		)	—			—		—			—			(13.0		)
Common stock dividends ($0.28 per share)		—	—		—			—			(21.5		)	—		—			—			(21.5		)
Distribution to non-controlling interest		—	—		—			—			—			—		—			(7.9		)	(7.9		)
Equity-based compensation expense		—	—		6.7			—			—			—		—			0.1			6.8
Repurchase of common stock		—	—		—			—			—			(1,647,078	)	(58.6		)	—			(58.6		)
Taxes paid due to the net settlement of equity-based compensation		—	—		(2.4		)	—			—			—		—			—			(2.4		)
Exercise of equity-based awards		139,057	—		—			—			—			—		—			—			—
Other		—	—		0.5			—			—			—		—			—			0.5
Balance at	June 30, 2019	90,861,698	$	0.9	$	1,140.3		$	26.3		$	1,165.9		(15,416,502	)	$	(618.9	)	$	171.7		$	1,886.2



7 \|

Financial Statements

Delek US Holdings, Inc.

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

(In millions, except share and per share data)



		Six Months Ended June 30, 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		—	—		—			—		(226.7		)	—		—			18.2			(208.5		)
Other comprehensive income related to commodity contracts, net		—	—		—			0.3		—			—		—			—			0.3
Common stock dividends ($0.62 per share)		—	—		—			—		(46.0		)	—		—			—			(46.0		)
Distributions to non-controlling interests		—	—		—			—		—			—		—			(16.8		)	(16.8		)
Equity-based compensation expense		—	—		10.9			—		—			—		—			0.1			11.0
Repurchase of common stock		—	—		—			—		—			(58,713	)	(1.9		)	—			(1.9		)
Repurchases of non-controlling interests		—	—		(0.8		)	—		—			—		—			(5.0		)	(5.8		)
Taxes paid due to the net settlement of equity-based compensation		—	—		(1.9		)	—		—			—		—			—			(1.9		)
Exercise of equity-based awards		245,939	—		—			—		—			—		—			—			—
Other		—	—		—			0.1		—			—		—			—			0.1
Balance at	June 30, 2020	91,232,964	$	0.9	$	1,160.1		$	0.5	$	926.4		(17,575,527	)	$	(694.1	)	$	165.5		$	1,559.3



8 \|

Financial Statements

Delek US Holdings, Inc.

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

(In millions, except share and per share data)



		Six Months Ended June 30, 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		—	—		—			—			226.6			—		—			11.6			238.2
Other comprehensive loss related to commodity contracts, net		—	—		—			(2.7		)	—			—		—			—			(2.7		)
Common stock dividends ($0.55 per share)		—	—		—			—			(42.5		)	—		—			—			(42.5		)
Distribution to non-controlling interest		—	—		—			—			—			—		—			(15.6		)	(15.6		)
Equity-based compensation expense		—	—		11.6			—			—			—		—			0.2			11.8
Repurchase of common stock		—	—		—			—			—			(2,938,722	)	(104.8		)	—			(104.8		)
Taxes paid due to the net settlement of equity-based compensation		—	—		(6.9		)	—			—			—		—			—			(6.9		)
Exercise of equity-based awards		383,623	—		—			—			—			—		—			—			—
Other		—	—		0.2			0.4			—			—		—			—			0.6
Balance at	June 30, 2019	90,861,698	$	0.9	$	1,140.3		$	26.3		$	1,165.9		(15,416,502	)	$	(618.9	)	$	171.7		$	1,886.2

See accompanying notes to condensed consolidated financial statements



9 \|

Financial Statements

Delek US Holdings, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In millions)



	Six Months Ended June 30,
	2020			2019
Cash flows from operating activities:
Net (loss) income	$	(208.5	)	$	238.2
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization	112.2			96.9
Other amortization/accretion	4.8			4.6
Non-cash lease expense	21.9			16.5
Deferred income taxes	65.9			16.0
Income from equity method investments	(15.8		)	(11.9		)
Dividends from equity method investments	14.3			4.2
Loss on disposal of assets	—			3.6
Gain on sale of non-operating refinery	(56.9		)	—
Equity-based compensation expense	11.0			11.8
Excess tax deficiency (benefit) of equity-based compensation	1.6			(1.7		)
Loss from discontinued operations	—			0.8
Changes in assets and liabilities:
Accounts receivable	307.2			(332.6		)
Inventories and other current assets	200.1			(192.5		)
Fair value of derivatives	(23.6		)	22.3
Accounts payable and other current liabilities	(594.6		)	349.5
Obligation under Supply and Offtake Agreements	(163.3		)	18.3
Non-current assets and liabilities, net	0.6			(8.6		)
Net cash (used in) provided by operating activities	(323.1		)	235.4
Cash flows from investing activities:
Equity method investment contributions	(29.5		)	(136.4		)
Distributions from equity method investments	71.0			0.8
Purchases of property, plant and equipment	(235.4		)	(199.9		)
Purchase of intangible assets	(2.1		)	—
Proceeds from sale of property, plant and equipment	0.2			0.3
Proceeds from sale of retail stores	—			5.8
Proceeds from sale of non-operating refinery	39.9			—
Net cash used in investing activities	(155.9		)	(329.4		)

Delek US Holdings, Inc.

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

(In millions)



	Six Months Ended June 30,
	2020			2019
Cash flows from financing activities:
Proceeds from long-term revolvers	$	1,583.7		$	987.5
Payments on long-term revolvers	(1,352.1		)	(1,072.5		)
Proceeds from term debt	185.0			246.7
Payments on term debt	(31.2		)	(29.1		)
Proceeds from product financing agreements	86.4			19.8
Repayments of product financing agreements	(26.5		)	(15.6		)
Taxes paid due to the net settlement of equity-based compensation	(1.9		)	(6.9		)
Repurchase of common stock	(1.9		)	(104.8		)
Repurchase of non-controlling interest	(5.8		)	—
Distribution to non-controlling interest	(16.8		)	(15.6		)
Dividends paid	(46.0		)	(42.5		)
Deferred financing costs paid	(0.2		)	(0.9		)
Net cash provided by (used in) financing activities	372.7			(33.9		)
Net decrease in cash and cash equivalents	(106.3		)	(127.9		)
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	$	849.0		$	951.4



Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of capitalized interest of $0.2 million and $0.7 million in the 2020 and 2019 periods, respectively	$	66.1		$	60.4
Income taxes	$	0.2		$	66.1
Non-cash investing activities:
(Decrease) increase in accrued capital expenditures	$	(33.1	)	$	14.5
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	$	22.2		$	8.1

See accompanying notes to condensed consolidated financial statements



10 \|

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 April and June 2020, an agreement was reached to cut oil production between the members of the Organization of Petroleum Exporting Countries ("OPEC") and other leading oil producing countries (together with OPEC, “OPEC+”), as part of the efforts to resolve the oil production disputes ("OPEC Production Disputes") that significantly affected crude oil prices beginning in first quarter of 2020 and to provide stability in the oil markets. While OPEC+ have reached an agreement to cut oil production, uncertainty about the duration of the COVID-19 Pandemic has caused storage constraints in the United States resulting from over-supply of produced oil. Therefore, downward pressure on commodity prices has remained and could continue for the foreseeable future.

Uncertainties related to the impact of the COVID-19 Pandemic and other events 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 and six months ended June 30, 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;



11 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)


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


•	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 first-in, first-out (“FIFO”), and the lower of cost or market analysis, for last-in, first-out ("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 Accounting Standards Codification ("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.



12 \|

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 after 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 beginning 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);


•	wholesale crude operations;


•	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 June 30, 2020, including the following:


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


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



13 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)


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


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


•	a non-operating refinery located in Bakersfield, California, which was sold May 7, 2020.

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.

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”) for total cash consideration of $40 million. As a result of this sale, we recognized a gain of $56.9 million, largely due to the buyer assuming substantially all of the asset retirement obligations and environmental liabilities associated with this refinery, which is included in gain on sale of non-operating refinery on the accompanying condensed consolidated statements of income. 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 of GCE, exercisable by Delek through the 90th day after GCE demonstrates commercial operations, as contractually defined.

The refining segment's petroleum-based products are marketed primarily in the south central, southwestern and western regions of the United States. This 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, 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 June 30, 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. This agreement was amended in April 2020 to extend date for the required removal of all 7-Eleven branding on a store-by-store basis from December 31, 2021 to December 31, 2022. 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.

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.



14 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)

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):



	Three Months Ended June 30, 2020
(In millions)	Refining		Logistics		Retail		Corporate, Other and Eliminations			Consolidated
Net revenues (excluding inter-segment fees and revenues)	$	1,001.9	$	27.3	$	165.4	$	340.9		$	1,535.5
Inter-segment fees and revenues	75.1		90.4		—		(165.5		)	—
Operating costs and expenses:
Cost of materials and other	928.6		43.9		119.6		185.7			1,277.8
Operating expenses (excluding depreciation and amortization presented below)	88.7		12.4		21.5		5.2			127.8
Segment contribution margin	$	59.7	$	61.4	$	24.3	$	(15.5	)	129.9
Depreciation and amortization	$	44.8	$	8.7	$	3.3	$	2.8		59.6
General and administrative expenses										61.7
Other operating income, net										(14.2		)
Operating income										$	22.8
Capital spending (excluding business combinations)	$	12.2	$	0.7	$	1.3	$	0.8		$	15.0



	Three Months Ended June 30, 2019
	Refining ⁽¹⁾		Logistics		Retail		Corporate, Other and Eliminations ⁽¹⁾			Consolidated
Net revenues (excluding inter-segment fees and revenues)	$	2,152.5	$	93.1	$	224.5	$	10.2		$	2,480.3
Inter-segment fees and revenues	215.3		62.2		—		(277.5		)	—
Operating costs and expenses:
Cost of materials and other	2,054.7		93.8		182.1		(262.9		)	2,067.7
Operating expenses (excluding depreciation and amortization presented below)	115.0		17.3		24.8		5.2			162.3
Segment contribution margin	$	198.1	$	44.2	$	17.6	$	(9.6	)	250.3
Depreciation and amortization	$	33.2	$	6.7	$	4.2	$	6.0		50.1
General and administrative expenses										69.5
Other operating income, net										(3.6		)
Operating income										$	134.3
Capital spending (excluding business combinations)	$	48.9	$	1.3	$	5.4	$	30.4		$	86.0



	Six Months Ended June 30, 2020
(In millions)	Refining			Logistics		Retail		Corporate, Other and Eliminations			Consolidated
Net revenues (excluding inter-segment fees and revenues)	$	2,571.1		$	84.2	$	344.0	$	357.4		$	3,356.7
Inter-segment fees and revenues	233.8			196.9		—		(430.7		)	—
Operating costs and expenses:
Cost of materials and other	2,835.2			145.2		263.7		(55.7		)	3,188.4
Operating expenses (excluding depreciation and amortization presented below)	200.4			27.2		43.7		11.0			282.3
Segment contribution margin	$	(230.7	)	$	108.7	$	36.6	$	(28.6	)	(114.0		)
Depreciation and amortization	$	82.0		$	15.0	$	6.2	$	9.0		112.2
General and administrative expenses											127.4
Other operating income, net											(14.9		)
Operating loss											$	(338.7	)
Capital spending (excluding business combinations)	$	180.3		$	3.7	$	7.5	$	11.8		$	203.3



15 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)



	Six Months Ended June 30, 2019
	Refining ⁽¹⁾		Logistics		Retail		Corporate, Other and Eliminations ⁽¹⁾			Consolidated
Net revenues (excluding inter-segment fees and revenues)	$	4,059.9	$	182.9	$	421.7	$	15.7		$	4,680.2
Inter-segment fees and revenues	399.9		124.9		—		(524.8		)	—
Operating costs and expenses:
Cost of materials and other	3,723.8		190.1		345.5		(492.3		)	3,767.1
Operating expenses (excluding depreciation and amortization presented below)	236.0		33.4		48.4		11.2			329.0
Segment contribution margin	$	500.0	$	84.3	$	27.8	$	(28.0	)	584.1
Depreciation and amortization	$	64.3	$	13.2	$	8.5	$	10.9		96.9
General and administrative expenses										131.7
Other operating income, net										(1.2		)
Operating income										$	356.7
Capital spending (excluding business combinations)	$	130.5	$	2.2	$	10.5	$	71.1		$	214.3


⁽¹⁾	The refining segment results of operations for the three and six months ended June 30, 2019, includes hedging gains, a component of cost of materials and other, of $19.8 million and $27.4 million, respectively, which was previously included and reported in corporate, other and eliminations.

Other Segment Information

Total assets by segment were as follows as of June 30, 2020:



	Refining			Logistics		Retail		Corporate, Other and Eliminations			Consolidated
Total assets	$	6,142.9		$	973.8	$	256.3	$	(935.4	)	$	6,437.6
Less:
Inter-segment notes receivable	(1,440.3		)	—		—		1,440.3			—
Inter-segment right of use lease assets	(394.5		)	—		—		394.5			—
Total assets, excluding inter-segment notes receivable and right of use assets	$	4,308.1		$	973.8	$	256.3	$	899.4		$	6,437.6

Property, plant and equipment and accumulated depreciation as of June 30, 2020 and depreciation expense by reporting segment for the three and six months ended June 30, 2020 are as follows (in millions):



	Refining			Logistics			Retail			Corporate, Other and Eliminations			Consolidated
Property, plant and equipment	$	2,561.6		$	681.0		$	163.9		$	108.4		$	3,514.9
Less: Accumulated depreciation	(713.5		)	(207.2		)	(42.4		)	(68.4		)	(1,031.5		)
Property, plant and equipment, net	$	1,848.1		$	473.8		$	121.5		$	40.0		$	2,483.4
Depreciation expense for the three months ended June 30, 2020	$	43.2		$	8.6		$	3.1		$	2.8		$	57.7
Depreciation expense for the six months ended June 30, 2020	$	78.8		$	14.9		$	5.8		$	9.0		$	108.5

In accordance with 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 June 30, 2020 (see Note 1 for further discussion on the impact of COVID-19 Pandemic and OPEC Production Disputes).



16 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)

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					Six Months Ended
	June 30,					June 30,
	2020		2019			2020			2019
Numerator:
Numerator for EPS
Income (loss) from continuing operations, net of tax	$	98.5	$	84.6		$	(208.5	)	$	239.0
Less: Income from continuing operations attributed to non-controlling interest	10.8		6.5			18.2			11.6
Numerator for basic and diluted EPS - attributable to Delek	$	87.7	$	78.1		$	(226.7	)	$	227.4

Numerator for EPS - discontinued operations
Loss from discontinued operations attributable to Delek	$	—	$	(0.8	)	$	—		$	(0.8	)

Denominator:
Weighted average common shares outstanding (denominator for basic EPS)	73,547,582		76,598,846			73,492,656			77,192,763
Dilutive effect of stock-based awards	480,461		681,846			—			690,522
Weighted average common shares outstanding, assuming dilution (denominator for diluted EPS)	74,028,043		77,280,692			73,492,656			77,883,285

EPS:
Basic income (loss) per share:
Income (loss) from continuing operations	$	1.19	$	1.02		$	(3.08	)	$	2.95
Loss from discontinued operations	$	—	(0.01		)	$	—		(0.01		)
Basic income (loss) per share	$	1.19	$	1.01		$	(3.08	)	$	2.94
Diluted income (loss) per share:
Income (loss) from continuing operations	$	1.18	$	1.01		$	(3.08	)	$	2.92
Loss from discontinued operations	$	—	(0.01		)	$	—		(0.01		)
Diluted income (loss) per share	$	1.18	$	1.00		$	(3.08	)	$	2.91

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)	3,922,290		1,927,150			3,328,789			2,153,411
Antidilutive due to loss	—		—			372,220			—
Total antidilutive stock-based compensation	3,922,290		1,927,150			3,701,009			2,153,411



17 \|

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 June 30, 2020, we owned a 69.1% interest in Delek Logistics, consisting of 20,745,868 common limited partner units (representing a 70.5% interest), and a 94.8% interest in Delek Logistics GP, LLC, which owns the entire 2.0% general partner interest (consisting of 600,678 general partner units) in Delek Logistics as well as 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).



	June 30, 2020			December 31, 2019
	June 30, 2020			December 31, 2019
ASSETS
Cash and cash equivalents	$	16.2		$	5.5
Accounts receivable	15.9			13.2
Accounts receivable from related parties	8.8			—
Inventory	2.1			12.6
Other current assets	0.5			2.3
Property, plant and equipment, net	473.7			295.0
Equity method investments	255.3			247.0
Operating lease right-of-use assets	18.9			3.7
Goodwill	12.2			12.2
Intangible assets, net	163.1			146.6
Other non-current assets	7.0			6.3
Total assets	$	973.7		$	744.4
LIABILITIES AND DEFICIT
Accounts payable	$	1.8		$	12.5
Accounts payable to related parties	—			8.9
Current portion of operating lease liabilities	5.8			1.4
Accrued expenses and other current liabilities	10.3			12.2
Long-term debt	995.2			833.1
Asset retirement obligations	5.8			5.6
Deferred tax liabilities	1.2			0.2
Operating lease liabilities, net of current portion	13.1			2.3
Other non-current liabilities	18.8			19.3
Deficit	(78.3		)	(151.1		)
Total liabilities and deficit	$	973.7		$	744.4

Effective May 1, 2020, Delek through its wholly owned subsidiaries Lion Oil Company (“Lion Oil”) and Delek Refining, Ltd. (“Delek Refining”) contributed certain leased and owned tractors and trailers and related assets used in the provision of trucking and transportation services for crude oil, petroleum and certain other products throughout Arkansas, Oklahoma and Texas to Delek Trucking, LLC (“Delek Trucking”), a direct wholly owned subsidiary of Lion Oil. Following this contribution, Lion Oil sold all of the issued and outstanding membership interests in Delek Trucking (the “Acquisition”) to DKL Transportation, LLC (“DKL Transportation”), a wholly owned subsidiary of Delek Logistics. Promptly following the consummation of the Acquisition, Delek Trucking merged with and into DKL Transportation, with DKL Transportation continuing as the surviving entity. Total consideration for the Acquisition was approximately $48.0 million in cash, subject to certain post-closing adjustments,



18 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)

financed primarily with borrowings under Delek Logistics’ revolving credit facility. In connection with the Acquisition, Delek Refining, Lion Oil and DKL Transportation entered into a Transportation Services Agreement pursuant to which DKL Transportation will gather, coordinate the pickup of, transport and deliver petroleum products for Delek Refining and Lion Oil, as well as provide ancillary services as requested. Prior periods have not been recast in our 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.

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 Segment Data Note 2, as these assets did not constitute a business in accordance with ASU 2017-01 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 six months ended June 30, 2020, we made capital contributions totaling $18.9 million. As of December 31, 2019, Delek's investment balance in WWP totaled $125.3 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 June 30, 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 June 30, 2020 , Delek's investment balance in WWP Project Financing Joint Venture totaled $73.0 million. During the six months ended June 30, 2020, we received distributions of $69.3 million from WWP Project Financing Joint Venture to return excess contributions made. In addition, we recognized a loss on the investment totaling $0.9 million and $2.0 million for the three and six months ended June 30, 2020,



19 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)

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.

Delek Logistics Investments

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 third quarter of 2020. Delek Logistics contributed an additional $3.5 million related to such expansion project in May 2019 and, during the six months ended June 30, 2020, we made additional capital contributions totaling $10.5 million based on capital calls received. As of June 30, 2020 and December 31, 2019, Delek's investment balance in Red River totaled $142.0 million and $131.0 million, respectively, and we recognized income on the investment totaling $2.9 million and $4.7 million for the three and six months ended June 30, 2020, respectively. This investment is accounted for using the equity method and is included as part of total assets in our logistics segment.

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. We own a 50% membership interest in the entity formed with an affiliate of Plains All American Pipeline, L.P. to operate one of these pipeline systems (the "Caddo Pipeline") and a 33% membership interest in Andeavor Logistics RIO Pipeline LLC which operates the other pipeline system (the "RIO Pipeline"). As of June 30, 2020 and December 31, 2019, Delek Logistics' investment balances in these joint ventures totaled $113.3 million and $116.0 million, respectively, and were accounted for using the equity method. We recognized income on these investments totaling $3.5 million and $7.3 million for the three and six months ended June 30, 2020, respectively and $2.2 million and $4.1 million for the three and six months ended June 30, 2019, respectively.

Other Investments

We have a 50% interest in a joint venture that owns an asphalt terminal located in Brownwood, Texas. As of June 30, 2020 and December 31, 2019, Delek's investment balance in this joint venture was $35.3 million and $30.7 million, respectively. We recognized income on this investment totaling $5.0 million and $5.5 million for the three and six months ended June 30, 2020, respectively and $4.7 million and $5.2 million for the three and six months ended June 30, 2019, 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.

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 June 30, 2020 and December 31, 2019, Delek Renewables, LLC's investment balance in this joint venture was $3.7 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.

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 FIFO basis or net realizable value. Cost of all inventory at the Tyler refinery is determined using the 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):



	June 30, 2020		December 31, 2019
Refinery raw materials and supplies	$	304.5	$	400.4
Refinery work in process	75.3		109.1
Refinery finished goods	244.9		397.5
Retail fuel	5.4		7.3
Retail merchandise	21.3		19.8
Logistics refined products	2.1		12.6
Total inventories	$	653.5	$	946.7



20 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)

At June 30, 2020, we recorded a pre-tax inventory valuation reserve of $77.0 million, $76.3 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 $203.1 million and $(75.1) million for the three and six months ended June 30, 2020, respectively, and $(0.6) million and $51.5 million for the three and six months ended June 30, 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").

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 June 30, 2020 ⁽¹⁾	3.5	1.6	1.4
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 subsequent changes in fair value of the Baseline Step-Out Liabilities were recorded in interest expense.

In January 2020, we amended 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 subsequent 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.

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 by giving at least 6 months prior notice to the current maturity date. As part of this amendment, there were changes to the underlying market index, annual fee, the crude purchase fee, crude roll fees and timing of cash settlements related to periodic price adjustments (the "Periodic Price Adjustments"). The Baseline Step-Out Liabilities continue to be recorded at fair value under the fair value election included under ASC 815 and ASC 825. The Baseline Step-Out Liabilities have a floating component whose fair value reflects changes to commodity price risk with changes in fair value recorded in cost of materials and other and a fixed component whose fair value reflects changes to interest rate risk with changes in fair value recorded in interest expense. There was no amendment date 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.

Pursuant to the Periodic Price Adjustments provision in the Supply and Offtake Agreements, the Company may be required to pay down all or a portion of the fixed component of the Baseline Step-Out Liabilities or may receive additional proceeds depending on the change in fair value of the inventory collateral subject to a threshold at certain specified Periodic Pricing Dates, which occur on October 1st and May 1st, annually, not to extend beyond expiration of the Supply and Offtake Agreements. Additionally, at the Periodic Pricing Dates, if a Periodic Price Adjustment is triggered, the prospective pricing underlying the fixed component of the Baseline Step-Out Liabilities will be adjusted to reflect either the pay-down or the incremental proceeds, accordingly. As of June 30, 2020, the fixed component of the Baseline Step-Out Liabilities subject to the Periodic Price Adjustments amounted to approximately $58.8 million. All or some portion of that amount may become due or payable in periods occurring within twelve months, if Periodic Price Adjustments are triggered in October 2020 and May 2021.



21 \|

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 June 30, 2020:
Baseline Step-Out Liability	$	97.9	$	48.0		$	69.1	$	215.0
Revolving over/short inventory financing liability	63.6		30.7			4.7		99.0
Total Obligations Under Supply and Offtake Agreements	161.5		78.7			73.8		314.0
Less: Current portion	63.6		30.7			4.7		99.0
Obligations Under Supply and Offtake Agreements - Noncurrent portion	$	97.9	$	48.0		$	69.1	$	215.0
Other current payable (receivable) for monthly activity true-up	$	7.0	$	(8.8	)	$	7.4	$	5.6



(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 inventory 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	)

The Supply and Offtake Agreements require payments of fixed annual 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 June 30, 2020	$	2.7	$	1.1	$	1.0	$	4.8
Recurring cash fees paid during the three months ended June 30, 2019	$	3.2	$	1.5	$	2.6	$	7.3
Recurring cash fees paid during the six months ended June 30,2020	$	5.9	$	2.1	$	2.0	$	10.0
Recurring cash fees paid during the six months ended June 30, 2019	$	5.7	$	2.9	$	5.0	$	13.6

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 June 30, 2020	$	2.7	$	1.1	$	1.0	$	4.8
Interest expense for the three months ended June 30, 2019	$	4.1	$	1.7	$	2.9	$	8.7
Interest expense for the six months ended June 30, 2020	$	6.3	$	5.2	$	2.4	$	13.9
Interest expense for the six months ended June 30, 2019	$	7.3	$	1.6	$	6.0	$	14.9

Reflected in interest expense are losses totaling $3.9 million for the six months ended June 30, 2020, and losses totaling $1.4 million and gains totaling $3.7 million for the three and six months ended June 30, 2019, respectively, related to the changes in fair value in the Baseline Step-Out Liabilities component of Obligations Under Supply and Offtake Agreements. There were no such gains or losses for three months ended June 30, 2020.

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



22 \|



(in millions)		El Dorado		Big Spring and Krotz Springs
Letters of credit outstanding as of	June 30, 2020	$	170.0	$	10.0
Letters of credit outstanding as of	December 31, 2019	$	180.0	$	44.0

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):



	June 30, 2020		December 31, 2019
Revolving Credit Facility	$	100.0	$	30.0
Term LoanCredit Facility ⁽¹⁾	1,250.3		1,069.5
Delek Logistics Credit Facility	750.0		588.4
Hapoalim Term Loan ⁽²⁾	39.4		39.5
Delek Logistics Notes ⁽³⁾	245.2		244.7
Reliant Bank Revolver	50.0		50.0
Promissory Notes	20.0		45.0
	2,454.9		2,067.1
Less: Current portion of long-term debt and notes payable	33.4		36.4
	$	2,421.5	$	2,030.7


⁽¹⁾	Net of deferred financing costs of $3.2 million and $3.5 million and debt discount of $26.0 million and $12.5 million at June 30, 2020 and December 31, 2019, respectively.


⁽²⁾	Net deferred financing costs of $0.2 million and $0.3 million and debt discount of $0.2 million and $0.2 million at June 30, 2020 and December 31, 2019, respectively.


⁽³⁾	Net of deferred financing costs of $3.6 million and $4.0 million and debt discount of $1.2 million and $1.3 million at June 30, 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.



23 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)

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 Loans. The proceeds 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 amendments.

On May 19, 2020, we amended the Term Loan Credit Facility agreement and borrowed $200.0 million in aggregate principal amount of incremental term loans (the “Third Incremental Term Loan”) at an original issue discount of 7.00%. The Third Incremental Term Loan constitutes a separate class of term loan (the "Class B Loan") under the Term Loan Credit Facility from those initially borrowed in March 2018 and the incremental term loans borrowed in May 2019 and November 2019 (collectively, the "Class A Loans"). Delek will be required to pay a make-whole prepayment fee if the Third Incremental Term Loan is prepaid pursuant to an optional prepayment, in connection with a non-permitted debt issuance or in connection with an acceleration within one year of the incurrence of the Third Incremental Term Loan. Delek may voluntarily prepay the outstanding Third Incremental Term Loans at any time subject to customary “breakage” costs with respect to LIBOR loans and subject to a prepayment premium of 1.0% in connection with certain customary repricing events that may occur during the period from the day after the first anniversary of the Third Incremental Term Loan through the second anniversary of the Third Incremental Term Loan. The other terms of the Third Incremental Term Loan are substantially identical to the terms applicable to the Class A Loans. The proceeds of the Third Incremental Term Loan may be used (i) for general corporate purposes and (ii) to pay transaction fees and expenses associated with the Third Incremental Term Loan.

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, 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 Class A Loans 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. Class B Loans incurred under the Third Incremental Term Loan bear interest at a rate that is determined, at the Company’s election, at LIBOR or at base rate, in each case, plus an applicable margin of 5.50% with respect to LIBOR borrowings and 4.50% with respect to base rate borrowings. Additionally, Class B loans that are LIBOR borrowings are subject to a minimum LIBOR rate floor of 1.00%.

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 June 30, 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. The Third Incremental Term Loan requires quarterly payments on the Class B Loans of $0.5 million commencing June 30, 2020.



24 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)

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 June 30, 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 $204.6 million as of June 30, 2020 under the Revolving Credit Facility. Unused credit commitments under the Revolving Credit Facility, as of June 30, 2020, were approximately $695.4 million.

At June 30, 2020, the weighted average borrowing rate under the Term Loan Credit Facility was approximately 3.06% comprised entirely of LIBOR borrowings, and the principal amount outstanding thereunder was $1,279.5 million. As of June 30, 2020, the effective interest rate related to the Term Loan Credit Facility was 3.44%.

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") 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 corporate 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 June 30, 2020, the weighted average borrowing rate under the term loan was approximately 3.18% comprised entirely of a LIBOR borrowing and the principal amount outstanding thereunder was $39.8 million. As of June 30, 2020, the effective interest rate related to the BHI Term Loan was 3.61%.

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"). 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



25 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)

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 June 30, 2020, the weighted average borrowing rate was approximately 2.78%. 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 June 30, 2020, this fee was 0.40% on an annualized basis.

As of June 30, 2020, Delek Logistics had $750.0 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 June 30, 2020, were $100.0 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.

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.

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 June 30, 2020, we had $250.0 million in outstanding principal amount under the Delek Logistics Notes. As of June 30, 2020, the effective interest rate related to the Delek Logistics Notes was 7.22%.

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% on an annualized basis on the average unused revolving commitment. As of June 30, 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 to be made each January through 2020, followed by a final principal amortization payment of $20.0 million at maturity on January 4, 2021. As of June 30, 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 June 30, 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. These covenants may also 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 certain of our subsidiaries. Additionally, some 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, certain other entities.



26 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)

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 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 June 30, 2020 and December 31, 2019, and for the three and six months ended June 30, 2020 and June 30, 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 June 30, 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 June 30, 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).



27 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)



		June 30, 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	$	1,364.3	$	(1,316.4	)	$	188.9	$	(202.1	)
Commodity derivatives⁽¹⁾	Other current liabilities	407.3		(426.8		)	24.4		(34.0		)
Commodity derivatives⁽¹⁾	Other long-term liabilities	366.3		(369.1		)	23.4		(24.8		)
RIN commitment contracts⁽²⁾	Other current assets	4.1		—			0.6		—
RIN commitment contracts⁽²⁾	Other current liabilities	—		(4.3		)	—		(1.9		)

Derivatives designated as hedging instruments:
Commodity derivatives ⁽¹⁾	Other current assets	4.5		(2.7		)	3.4		(2.0		)
Commodity derivatives⁽¹⁾	Other long-term assets	—		—			0.2		(0.1		)
Total gross fair value of derivatives		$	2,146.5	$	(2,119.3	)	$	240.9	$	(264.9	)
Less: Counterparty netting and cash collateral⁽³⁾		2,081.2		(2,092.8		)	210.7		(249.5		)
Total net fair value of derivatives		$	65.3	$	(26.5	)	$	30.2	$	(15.4	)

⁽¹⁾

As of June 30, 2020 and December 31, 2019, we had open derivative positions representing 289,196,954 and 86,484,065 barrels, respectively, of crude oil and refined petroleum products. Of these open positions, contracts representing 180,000 and 600,000 barrels were designated as cash flow hedging instruments as of June 30, 2020 and December 31, 2019, respectively. Additionally, as of June 30, 2020 and December 31, 2019, we had open derivative positions representing 50,830,000 and 40,050,000 One Million British Thermal Units, ("MMBTU") of natural gas products, respectively.


⁽²⁾	As of June 30, 2020 and December 31, 2019, we had open RIN commitment contracts representing 103,400,000 and 147,000,000 RINs, respectively.


⁽³⁾	As of June 30, 2020 and December 31, 2019, $11.5 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):



	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
(Losses) gains on commodity derivatives not designated as hedging instruments recognized in cost of materials and other ⁽¹⁾	$	(156.6	)	$	45.5		$	(91.0	)	$	84.4
(Losses) gains on commodity derivatives not designated as hedging instruments recognized in other operating income, net ^{(1) (2)}	(3.7		)	2.8			7.9			0.5
Realized losses (gains) reclassified out of accumulated other comprehensive income and into cost of materials and other on commodity derivatives designated as cash flow hedging instruments	2.2			(14.8		)	2.9			(33.9		)
Total (losses) gains	$	(158.1	)	$	33.5		$	(80.2	)	$	51.0

⁽¹⁾

Gains (losses) on commodity derivatives that are economic hedges but not designated as hedging instruments include unrealized (losses) gains of $(23.4) million and $28.6 million for the three and six months ended June 30, 2020, respectively, and $(3.6) million and $(30.7) million for the three and six months ended June 30, 2019, respectively. Of these amounts, approximately $33.4 million and $(0.8) million as of June 30, 2020 and June 30, 2019, respectively, represent unrealized gains (losses) where the instrument has matured but where it has not cash settled as of period end. 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 June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Gain (loss) on cash flow hedging relationships recognized in cost of materials and other:
Commodity contracts:
Hedged items	$	(2.2	)	$	14.8		$	(2.9	)	$	33.9
Derivative designated as hedging instruments	2.2			(14.8		)	2.9			(33.9		)
Total	$	—		$	—		$	—		$	—



28 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)

For cash flow hedges, no component of the derivative instruments’ gains or losses was excluded from the assessment of hedge effectiveness for the three and six months ended June 30, 2020 or 2019. Gains (losses), net of tax, on settled commodity contracts of $1.7 and $2.3 million during the three and six months ended June 30, 2020, respectively, and $(11.7) million and $(26.8) million during the three and six months ended June 30, 2019, respectively, were reclassified into cost of materials and other in the condensed consolidated statements of income. As of June 30, 2020, we estimate that $1.9 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 June 30,					Six Months Ended June 30,
	2020			2019		2020			2019
Realized (losses) gains	$	(1.2	)	$	0.8	$	(2.9	)	$	4.7
Unrealized (losses) gains	0.3			—		(0.7		)	2.1
Total	$	(0.9	)	$	0.8	$	(3.6	)	$	6.8

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 gain (loss) on commodity investments for the three and six months ended June 30, 2020 totaled $8.9 million and $1.0 million, respectively, and totaled $(1.0) million and $(2.0) million for the three and six months ended June 30, 2019, respectively.

In April 2020, we entered into a contract with the Department of Energy to deposit one million barrels of crude oil into one of the Strategic Petroleum Reserve ("SPR") storage locations where they will be stored on our behalf until October 2020 for a fee of approximately 100,000 barrels. The fee of 100,000 barrels was recorded as a prepaid asset at cost, and the right to receive the 900,000 barrels was recorded as a financial asset (the "Right to receive crude oil barrels"), measured at fair value based on the value of the underlying commodity using published market prices of the commodity on the applicable exchange. Such asset is, therefore, classified as Level 2. The unrealized gain on the underlying commodity related to the SPR financial asset for the three and six months ended June 30, 2020 of $9.7 million was recorded in other (income) expense, net.

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 subject to fair value accounting that 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 if measured at fair value either directly through observable inputs or indirectly through market-corroborated inputs.



29 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)

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 six months ended June 30, 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 April 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, and for our amended fixed step-out liability based on changes to interest rates and the timing and amount of expected future cash settlements where such obligation is categorized as Level 2. Gains (losses) related to changes in fair value due to commodity-index price are recorded as a component of cost of materials and other, and changes in fair value due to interest rate risk are recorded as a component of interest expense in the condensed consolidated statements of income; and (2) we determine fair value of the commodity-indexed revolving over/short inventory financing liability 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. 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.

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



	June 30, 2020
	Level 1		Level 2			Level 3		Total
Assets
Commodity derivatives	$	—	$	2,142.4		$	—	$	2,142.4
Commodity investments	1.0		—			—		1.0
Right to receive crude oil barrels	—		35.7			—		35.7
RIN commitment contracts	—		4.1			—		4.1
Total assets	1.0		2,182.2			—		2,183.2
Liabilities
Commodity derivatives	—		(2,115.0		)	—		(2,115.0		)
RIN commitment contracts	—		(4.3		)	—		(4.3		)
Environmental credits obligation deficit	—		(56.6		)	—		(56.6		)
J. Aron supply and offtake obligations	—		(314.0		)	—		(314.0		)
Total liabilities	—		(2,489.9		)	—		(2,489.9		)
Net assets (liabilities)	$	1.0	$	(307.7	)	$	—	$	(306.7	)



	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	)



30 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)

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 June 30, 2020 and December 31, 2019, $11.5 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 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 June 30, 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 June 30, 2020, we have recorded an environmental liability of approximately $112.9 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. Approximately $6.6 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.



31 \|

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 during the six months ended June 30, 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 complete 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 three and six months ended June 30, 2020, we incurred approximately $0.1 million and $0.3 million of additional costs related to final clean-up of this release, respectively. The release is currently in boom maintenance. Ground water monitoring wells were installed in the second quarter of 2020. We expect to conduct quarterly ground water monitoring for at least a year. Additionally, we will be conducting creek bed sediment sampling in the third quarter of 2020. 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 June 30, 2020, we had in place letters of credit totaling approximately $204.6 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 June 30, 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 and six months ended June 30, 2020 and June 30, 2019. Our effective tax rate was (57.3)% and 36.3% for the three and six months ended June 30, 2020, respectively, compared to 22.5% and 22.8% for the three and six ended June 30, 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 and six months ended June 30, 2020 as compared to the three and six months ended June 30, 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, reversal of a valuation allowance for deferred tax assets in partnership investments due to changes in the future realizability of deferred tax basis differences, and expected net operating loss carryback provided under the CARES Act which allows the Company to recover federal taxes paid in prior years at a 35% tax rate creating a 14% tax rate benefit.

On March 27, 2020, the Coronavirus Aid Relief, and Economic Security Act (the "CARES Act") was enacted into law. The Act includes several significant provisions for corporations, including the usage of net operating losses, interest deductions and payroll benefits. The Company recognized $16.8 million of current federal income tax benefit for the three and six months ended June 30, 2020, attributable to anticipated tax refunds from net operating loss carryback to prior 35% tax rate years under the CARES Act. Additionally, we recorded an income tax receivable totaling $193 million as of June 30, 2020 related to the net operating loss carryback, which we expect to collect in the first half of 2021.

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 June 30,				Six Months Ended June 30,
(in millions)	2020		2019		2020		2019
Revenues ⁽¹⁾	$	22.2	$	21.2	$	29.9	$	28.2
Cost of materials and other ⁽²⁾	$	11.4	$	7.2	$	20.5	$	13.2


⁽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.



32 \|

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	June 30, 2020		December 31, 2019
Income and other tax receivables	$	198.5	$	61.9
Short-term derivative assets (see Note 9)	65.2		30.2
RINs assets	54.5		14.5
Right to receive crude oil barrels (see Note 10)	35.7		—
Prepaid expenses	20.1		21.9
Environmental Credits Obligation surplus (see Note 10)	6.8		16.8
Biodiesel tax credit (see Note 2)	1.5		97.5
Investment commodities	1.0		12.1
Other	6.7		13.8
Total	$	390.0	$	268.7

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



Other Non-Current Assets	June 30, 2020		December 31, 2019
Supply and Offtake receivable	$	32.7	$	32.7
Other equity Investments	10.4		8.9
Deferred financing costs	7.5		8.5
Long-term derivative assets (see Note 9)	—		0.1
Other	13.8		17.6
Total	$	64.4	$	67.8

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



Accrued Expenses and Other Current Liabilities	June 30, 2020		December 31, 2019
Income and other taxes payable	90.8		119.6
Product financing agreements	83.1		21.1
Crude purchase liabilities	70.0		72.1
Environmental Credits Obligation deficit (see Note 10)	68.6		18.5
Short-term derivative liabilities (see Note 9)	23.7		14.1
Employee costs	22.0		47.6
Environmental liabilities (see Note 11)	6.6		8.2
Interest payable	5.2		8.8
Tank inspection liabilities	5.1		5.6
Accrued utilities	4.1		4.4
Other	30.1		26.8
Total	$	409.3	$	346.8



33 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)

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



Other Non-Current Liabilities	June 30, 2020		December 31, 2019
Liability for unrecognized tax benefits	$	12.9	$	12.1
Tank inspection liabilities	9.9		9.9
Pension and other postemployment benefit liabilities, net	3.8		5.3
Long-term derivative liabilities (see Note 9)	2.8		1.4
Other	4.4		2.2
Total	$	33.8	$	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")

On May 5, 2020, the Company's stockholders approved an amendment to the Delek US Holdings, Inc. 2016 Long-Term Incentive Plan that increased the number of shares of Common Stock available for issuance under this plan by 2,120,000 shares to 11,020,000 shares.

Compensation expense related to equity-based awards granted under the Incentive Plans amounted to $5.0 million and $10.9 million for the three and six months ended June 30, 2020, respectively, and $6.6 million and $11.4 million for the three and six months ended June 30, 2019, respectively. These amounts are included in general and administrative expenses in the accompanying condensed consolidated statements of income.

As of June 30, 2020, there was $48.2 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 net shares of common stock of 143,044 and 246,463 as a result of exercised or vested equity-based awards during the three and six months ended June 30, 2020, respectively, and 139,057 and 383,623 for the three and six months ended June 30, 2019, respectively. These amounts are net of 68,944 and 130,449 shares withheld to satisfy employee tax obligations related to the exercises and vestings during the three and six months ended June 30, 2020, respectively, and 153,940 and 324,076 for the three and six months ended June 30, 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 six months ended June 30, 2020, our Board of Directors declared the following dividends:



Approval Date	Dividend Amount Per Share	Record Date	Payment Date
February 24, 2020	$0.31	March 10, 2020	March 24, 2020
May 4, 2020	$0.31	May 20, 2020	June 3, 2020

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 six months ended June 30, 2020, 58,713 shares of our common stock were repurchased for a total of $1.9 million. No repurchases of our common stock were made in the three months



34 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)

ended June 30, 2020. During the three and six months ended June 30, 2019, we repurchased 1,647,078 and 2,938,722 shares of our common stock for a total of $58.6 million and $104.8 million, respectively. As of June 30, 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. 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 and six months ended June 30, 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 June 30, 2020, $27.3 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.



35 \|

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 June 30,						Six Months Ended June 30,
(in millions)	2020			2019			2020			2019
Lease Cost
Operating lease costs	$	15.9		$	17.1		$	31.6		$	30.6
Short-term lease costs ⁽¹⁾	6.1			3.7			13.7			7.3
Sublease income	(2.0		)	(2.8		)	(3.9		)	(4.5		)
Net lease costs	$	20.0		$	18.0		$	41.4		$	33.4

Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(15.9	)	$	(17.1	)	$	(31.6	)	$	(30.6	)
Leased assets obtained in exchange for new operating lease liabilities	$	15.4		$	8.1		$	22.2		$	8.1

							June 30, 2020
Weighted-average remaining lease term (years) operating leases							6.4
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 August 3, 2020, our Board of Directors voted to declare a quarterly cash dividend of $0.31 per share of our common stock, payable on September 3, 2020 to shareholders of record on August 19, 2020.



36 \|

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.

The Company announces material information to the public about the Company, its products and services and other matters through a variety of means, including filings with the Securities and Exchange Commission, press releases, public conference calls, the Company’s website (www.delekus.com), the investor relations section of its website (ir.delekus.com), the news section of its website (www.delekus.com/news), and/or social media, including its Twitter account (@DelekUSHoldings). The Company encourages investors and others to review the information it makes public in these locations, as such information could be deemed to be material information. Please note that this list may be updated from time to time.

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,including current and future restrictions on commercial and economic activities in response to the COVID-19 Pandemic;


•	the possibility of inefficiencies, curtailments, or shutdowns in refinery operations or pipelines, whether due to infection in the workforce or in response to reductions in demand as a result of the COVID-19 Pandemic;


•	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;


•	the unprecedented market environment and economic effects of the COVID-19 pandemic, including uncertainty regarding the timing, pace and extent of economic recovery in the United States due to the COVID-19 Pandemic;


•	general economic and business conditions affecting the southern, southwestern and western United States, particularly levels of spending related to travel and tourism and the ongoing and future impacts of the COVID-19 Pandemic;


•	volatility under our derivative instruments;



37 \|

Management's Discussion and Analysis


•	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;


•	possibility of accelerated repayment on a portion of the J. Aron S&O liability if the purchase price adjustment feature triggers a change on the re-pricing dates;


•	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 regarding production and pricing and disputes between OPEC+ members regarding such;


•	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" or the "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 both voluntary and mandated social distancing, curfews, shutdowns and expanded safety measures 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 which has had a significant impact on the nature and extent of travel. The COVID-19 Pandemic has had a devastating impact on the airline industry, dramatically reducing the number of domestic flights and, due to foreign travel bans and immigration restrictions abroad as well as traveler concerns over exposure, virtually eliminating international travel originating from the U.S to many parts of the world. Additionally, the COVID-19 Pandemic has had a significant negative impact on 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 April and June 2020, agreements were reached to cut oil production between the members of the Organization of Petroleum Exporting Countries ("OPEC") and other leading oil producing countries (together with OPEC, “OPEC+”), as part of the efforts to resolve the oil production disputes that significantly affected crude oil prices beginning in the first quarter of 2020 (the "OPEC Production Disputes"), and to provide stability in the oil markets. While OPEC+ have reached an agreement to cut oil production, the uncertainty about the duration of the COVID-19 Pandemic has caused storage constraints in the United States resulting from over-supply of produced oil. Based on these conditions and events, downward pressure on commodity prices, crack spreads and demand remains a significant risk and could continue for the foreseeable future.



38 \|

Management's Discussion and Analysis

During the latter part of the second quarter of 2020, governmental authorities in various states across the U.S., particularly those in our Permian Basin and U.S. Gulf Coast regions, began to lift many of the restrictions created by actions taken to slow down the spread of COVID-19. These actions have resulted in an increase in the level of individual movement and travel and, in turn, an increase in the demand and market prices for some of our products relative to late March 2020. However, many of the states where such restrictions were lifted have recently experienced a marked increase in the spread of COVID-19 and many governmental authorities in such areas have responded by reimposing certain restrictions they had previously lifted. This response, as well as the increased infection rates, impacts regions that we serve and could significantly impact demand in ways that we cannot predict. Additionally, increased infection rates could impact our refining, logistics and retail operations, particularly in high-infection states, if our employees are personally affected by the illness, both through direct infection and quarantine procedures.

During the three and six months ended June 30, 2020, Delek has experienced the impact on demand and pricing of these unprecedented conditions, most notably in our refining segment. Our business and our second quarter 2020 results reflect the impact of decreased demand combined with crack spreads that are 62% to 76% lower, on average, compared to the same quarter in the prior year. We have also experienced operational constraints as well, including COVID-19 infections at certain of our company locations that have resulted in re-imposed or expanded remote policies and quarantine protocols. And we continue to be faced with risk from our suppliers and customers who are facing similar challenges.

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 (see also Note 1 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional discussion of specific financial statement risks);


•	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;

•

The decline in demand and margins impacting current results and forecasts could result in impairments in certain of our long-lived or indefinite-lived assets, including goodwill, or have other financial statement impacts that cannot currently be anticipated (see also Note 1 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional discussion of specific financial statement risks);


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


•	An outbreak in one of our refineries, exacerbated by a limited pool of qualified replacements as well as quarantine protocols, could cause significant disruption in our production or, worst case, temporary idling of the facility;


•	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;


•	Access to capital markets may be significantly impacted by the volatility and uncertainty in the oil and gas market specifically which could restrict our ability to raise funds;


•	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, and is continuing to consider additional relief legislation. Beyond the direct impact of existing legislation on Delek in the current period, the extent to which the provisions of the existing or any future legislation will achieve its intention to stimulate or provide relief to the greater U.S. economy and/or consumer, as well as the impact and success of such efforts, remains unknown.

Other uncertainties related to the impact of the COVID-19 Pandemic as well as global geopolitical factors 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



39 \|

Management's Discussion and Analysis

and the extent to which are currently unknown. Actions taken by OPEC+ in April and June 2020, including the agreement for management of crude oil supply in the hopes of contributing to market stabilization (the "Oil Production Cuts"), as well as the U.S. Federal Government's passage and/or enactment of additional stimulus and relief measures, as well as their future actions may impact the extent to which the risk underlying these uncertainties are realized. 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 six months ended June 30, 2020, which are included in Item 1, of this Quarterly Report on Form 10-Q.

In addition, management 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;


•	Implementing remote work measures and safety protocols at our refineries and other locations;


•	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 cost reduction measures across the organization, including reducing contract services, reducing overtime and other employee related costs 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.

The extent to which our future results are affected by the COVID-19 Pandemic will depend on various factors and consequences beyond our control, such as the duration and scope of the Pandemic; additional actions by businesses and governments in response to the Pandemic, and the speed and effectiveness of responses to combat the virus. The COVID-19 Pandemic, and the volatile regional and global economic conditions stemming from the Pandemic, could also exacerbate the risk factors identified in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and in this Form 10-Q. The COVID-19 Pandemic may also materially adversely affect our results in a manner that is either not currently known or that we do not currently consider to be a significant risk to our business.

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.

Pursuant to the provisions of the CARES Act, we recognized $16.8 million of current federal income tax benefit for the three and six months ended June 30, 2020, attributable to anticipated tax refunds from net operating loss carryback to prior 35% tax rate years. Additionally, we recorded an income tax receivable totaling $193 million as of June 30, 2020 related to the net operating loss carryback, which we expect to collect in the first half of 2021. Finally, we deferred $4.4 million of payroll tax payments under the provisions of the CARES Act during the six months ended June 30, 2020, which will be payable in equal installments in December 2021 and December 2022.



40 \|

Management's Discussion and Analysis

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 June 30, 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.


⁽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% interest (at June 30, 2020) in Delek Logistics and a 94.8% 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. In May 2020, the logistics segment acquired from another of our segments certain leased and owned tractors and trailers and related assets. The logistics segment owns or leases 273 tractors and 324 trailers used to haul primarily crude oil and other products for related and third parties.



41 \|

Management's Discussion and Analysis

Retail Overview

Our retail segment at June 30, 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. This agreement was amended in April 2020 to extend date for the required removal of all 7-Eleven branding on a store-by-store basis from December 31, 2021 to December 31, 2022. As of June 30, 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 June 30, 2020, we have closed or sold 46 under-performing or non-strategic store locations of which one was closed during the six months ended June 30, 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, our recently commenced wholesale crude 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.

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 renewable identification numbers ("RINs") at fixed prices and quantities, which are used to manage the costs of our credits for commitments required by the U.S. Environmental Protection Agency ("EPA") to blend biofuels into fuel products ("RINs Obligation"). 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



42 \|

Management's Discussion and Analysis

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 August 3, 2020, Delek's Board of Directors voted to declare a quarterly cash dividend of $0.31 per share, payable on September 3, 2020, to stockholders of record on August 19, 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 dividends paid during both the first and second quarters of 2020.

Share Repurchases

During the six months ended June 30, 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 June 30, 2020, there remained $229.7 million available for repurchases under the most recent repurchase plan. In our efforts to conserve capital, for the time being we have suspended the repurchase of shares.

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).

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



43 \|

Management's Discussion and Analysis

was financed with borrowings on the Delek Logistics Credit Facility (as defined in Note 8 of our condensed consolidated financial statements included in Item 1, Financial Statements).

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 transactions, 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 2 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 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.

In April 2020, we amended and restated our three Supply and Offtake Agreements to amend and extend the terms to December 30, 2022, with J. Aron having the sole discretion to further extend to May 30, 2025 by providing at least six months notice prior to the maturity date. As part of this amendment, there were changes to the underlying market index, annual fee, the crude purchase fee, crude roll fees and timing of cash settlements related to periodic price adjustments on the fixed differential component of the Baseline Volume Step-Out Liabilities. The amendments provide us dedicated financing for the barrels covered through at least December 2022, and certain specific market-indexed provisions improve our ability to manage our exposure to commodity price volatility during the term of the Agreements.

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.

2020 Amendment to the Term Loan Credit Facility

On May 19, 2020, we amended the Term Loan Credit Facility agreement (as defined in Note 8 of our condensed consolidated financial statements included in Item 1, Financial Statements) and borrowed $200.0 million in aggregate principal amount of incremental term loans (the “Third Incremental Term Loan”) at an original issue discount of 7.00%, requiring quarterly principal amortization payments of $0.5 million commencing with June 30, 2020. The Third Incremental Term Loan constitutes a separate class of term loans under the Term Loan Credit Facility from those initially borrowed in March 2018 and the incremental term loans borrowed in May 2019 and November 2019. There are no restrictions on the Company's use of the proceeds of the Third Incremental Term Loan, and the proceeds may be used (i) for general corporate purposes and (ii) to pay transaction fees and expenses associated with the Third Incremental Term Loan.

See further discussion in Note 8 of our condensed consolidated financial statements included in Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.



44 \|

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 two quarterly periods 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 Ultra Low Sulfur Diesel ("ULSD"), 3-2-1 and 2-1-1 crack spreads for each of the quarterly periods in 2019 and for the two quarterly periods 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.



45 \|

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 two quarterly periods in 2020.

Crude Pricing Differentials

As U.S. crude oil production has increased over recent years, domestic producers have benefited from the discount for WTI Cushing compared to Brent, a global benchmark crude. 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. Because of our positioning in the Permian basin, we are even further benefited by discounts in the WTI Midland/WTI Cushing differential. When these discounts shrink or become premiums, 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 two quarterly periods in 2020.



46 \|

Management's Discussion and Analysis

RIN Volatility

Environmental regulations continue to affect our margins in the form of volatility in the cost of RINs. On a consolidated basis, we work to balance the cost of our 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 second quarter of 2020.



47 \|

Management's Discussion and Analysis

Contractual Obligations

Information regarding our known contractual obligations and commercial commitments of the types described below as of June 30, 2020, is set forth in the following table (in millions):



	Payments Due by Period
	<1 Year		1-3 Years		3-5 Years		>5 Years		Total
Long term debt and notes payable obligations	$	33.4	$	215.4	$	2,240.5	$	—	$	2,489.3
Interest⁽¹⁾	85.2		164.2		97.5		—		346.9
Operating lease commitments⁽²⁾	53.2		74.1		42.9		54.2		224.4
Purchase commitments⁽³⁾	359.7		—		—		—		359.7
Transportation agreements⁽⁴⁾	106.1		212.1		101.4		62.5		482.1
J. Aron supply and offtake obligations⁽⁵⁾	15.5		238.3		—		—		253.8
Total	$	653.1	$	904.1	$	2,482.3	$	116.7	$	4,156.2

⁽¹⁾ Expected interest payments on debt outstanding at June 30, 2020. Floating interest rate debt is calculated using June 30, 2020 rates. For additional information, see Note 8 to of our condensed consolidated financial statements included in Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.

⁽²⁾ Amounts reflect future estimated lease payments under operating leases having remaining non-cancelable terms in excess of one year as of June 30, 2020.

⁽³⁾ We have supply agreements to secure certain quantities of crude oil, finished product and other resources used in production at both fixed and market prices. We have estimated future payments under the market-based agreements using current market rates. Excludes purchase commitments in buy-sell transactions which have matching notional amounts with the same counterparty and are generally net settled.

⁽⁴⁾ Balances consist of contractual obligations under agreements with third parties (not including Delek Logistics) for the transportation of crude oil to our refineries.

⁽⁵⁾ Balances consists of contractual obligations under the J. Aron Supply and Offtake Agreements, including annual fees and principal obligation for the Baseline Volume Step-Out Liability. For additional information, see Note 7 to of our condensed consolidated financial statements included in Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.

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 six months ended June 30, 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.



48 \|

Management's Discussion and Analysis

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 six months ended June 30, 2020 as follows:

Goodwill and Potential Impairment

Our annual goodwill impairment analysis is performed during the fourth quarter of each year. Under Accounting Standards Codification ("ASC") 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.

During the six months ended June 30, 2020, we have identified two significant events 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 June 30, 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 June 30, 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, we determined that there is not an indicator that fair value is more likely than not to have declined below carrying value as of June 30, 2020.

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.



49 \|

Management's Discussion and Analysis

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 June 30,				Six Months Ended June 30,
	2020		2019		2020			2019
Net revenues	$	1,077.0	$	2,367.8	$	2,804.9		$	4,459.8
Cost of sales	1,062.1		2,202.9		3,117.6			4,024.1
Gross margin	14.9		164.9		(312.7		)	435.7
Add back (items included in cost of sales):
Operating expenses (excluding depreciation and amortization)	88.7		115.0		200.4			236.0
Depreciation and amortization	44.8		33.2		82.0			64.3
Refining margin	$	148.4	$	313.1	$	(30.3	)	$	736.0

Summary Financial and Other Information

The following table provides summary financial data for Delek:

Statement of Operations Data (in millions)



Consolidated
	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Net revenues	$	1,535.5		$	2,480.3		$	3,356.7		$	4,680.2
Total operating costs and expenses	1,512.7			2,346.0			3,695.4			4,323.5
Operating income (loss)	22.8			134.3			(338.7		)	356.7
Total non-operating (income) expense, net	(39.8		)	25.1			(11.2		)	47.3
Income (loss) before income tax (benefit) expense	62.6			109.2			(327.5		)	309.4
Income tax (benefit) expense	(35.9		)	24.6			(119.0		)	70.4
Income (loss) from continuing operations, net of tax	98.5			84.6			(208.5		)	239.0
Loss from discontinued operations, net of tax	—			(0.8		)	—			(0.8		)
Net income (loss)	98.5			83.8			(208.5		)	238.2
Net income attributed to non-controlling interests	10.8			6.5			18.2			11.6
Net income (loss) attributable to Delek	$	87.7		$	77.3		$	(226.7	)	$	226.6

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.



50 \|

Management's Discussion and Analysis

Results of Operations

Consolidated Results of Operations — Comparison of the Three and Six Months Ended June 30, 2020 versus the Three and Six Months Ended June 30, 2019

Net Loss

Q2 2020 vs. Q2 2019

Consolidated net income for the second quarter of 2020 was $98.5 million compared to $83.8 million for the second quarter of 2019. Consolidated net income attributable to Delek for the second quarter of June 30, 2020 was $87.7 million, or $1.19 per basic share, compared to $77.3 million, or $1.01 per basic share, for the second quarter 2019. Explanations for significant drivers impacting net income as compared to the comparable period of the prior year are discussed in the sections below.

YTD 2020 vs. YTD 2019

Consolidated net loss for the six months ended June 30, 2020 was $208.5 million compared to net income of $238.2 million for the six months ended June 30, 2019. Consolidated net loss attributable to Delek for the six months ended June 30, 2020 was $226.7 million, or $(3.08) per basic share, compared to net income of $226.6 million, or $2.94 per basic share, for the six months ended June 30, 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

Q2 2020 vs. Q2 2019

In the second quarters of 2020 and 2019, we generated net revenues of $1,535.5 million and $2,480.3 million, respectively, a decrease of $944.8 million, or 38.1%. The decrease in net revenues was primarily driven by the following factors:


•	in our refining segment, decreases in the average price of U.S. Gulf Coast gasoline of 54.7%, ultra-low sulfur diesel of 53.1%, and high-sulfur diesel of 59.4% combined with a decrease in barrels sold (both refined and purchased) of 1.8 million barrels;


•	in our retail segment, decreases in fuel sales volumes due to demand slowdown as a result of COVID-19 Pandemic and reduction in average number of stores, as well as a 31.7% decrease in average price charged per gallon; partially offset by increase in merchandise sales; and


•	in our logistics segment, decreases in average price per gallon sold combined with decreases in sales volumes in our West Texas marketing operations; partially offset by increased revenues associated with agreements executed in connection with Big Spring Gathering System and Delek Trucking acquisitions.

YTD 2020 vs. YTD 2019

For the six months ended June 30, 2020 and 2019, we generated net revenues of $3,356.7 million and $4,680.2 million, respectively, a decrease of $1,323.5 million, or 28.3%. The decrease in net revenues was primarily driven by the following factors:


•	in our refining segment, decreases in the average price of U.S. Gulf Coast gasoline of 38.5%, ultra-low sulfur diesel of 37.7%, and high-sulfur diesel of 41.5%;


•	in our retail segment, decreases in fuel sales volumes due to demand slowdown as a result of COVID-19 Pandemic and reduction in average number of stores, as well as a 17.1% decrease in average price charged per gallon; partially offset by an increase in merchandise sales; and


•	in our logistics segment, decreases in average price per gallon sold in our West Texas marketing operations; partially offset increased revenues associated with agreements executed in connection with Big Spring Gathering System and Delek Trucking acquisitions, and increased throughputs at our SALA gathering system and Magnolia pipeline.

Cost of Materials and Other

Q2 2020 vs. Q2 2019

Cost of materials and other was $1,277.8 million for the second quarter of 2020 compared to $2,067.7 million for the second quarter of 2019, a decrease of $789.9 million, or 38.2%. The net decrease in cost of materials and other was primarily driven by the following:


•	a narrowing of crude oil differentials during the second quarter where the Midland WTI crude oil differential to Brent crude oil was an average discount of $3.58 per barrel compared to $10.88 per barrel in the prior-year period, and the WTI Midland to WTI Cushing discount averaged nearly zero in the second quarter 2020 compared to a discount of $2.24 per barrel in the prior-year period;



51 \|

Management's Discussion and Analysis

•

the net reversal (expense) benefit of $203.1 million related to inventory valuation reserves recognized during the second quarter of 2020 compared to $(0.6) million recognized during the second quarter of 2019, partially offset by a decrease in hedging gains to a loss of $154.4 million recognized during the second quarter of 2020 from a gain of $30.7 million recognized during the second quarter of 2019;


•	decreases in cost of crude oil feedstocks at the refineries, including a decrease in the cost of WTI Cushing crude oil from an average of $59.80 per barrel to an average of $29.77;


•	decreases in the diesel sales volumes and decreases in the average cost per gallon of gasoline and diesel purchased in the logistics segment; and


•	a decrease in retail fuel cost of materials and other attributable to demand slowdown, a reduction in average number of stores and a decrease in average cost per gallon of $0.98.

YTD 2020 vs. YTD 2019

Cost of materials and other was $3,188.4 million for the six months ended June 30, 2020 compared to $3,767.1 million for the six months ended June 30, 2019, a decrease of $578.7 million, or 15.4%. The net decrease in cost of materials and other was primarily driven by the following:

•

a narrowing of crude oil differentials during the six months ended June 30, 2020 where the Midland WTI crude oil differential to Brent crude oil was an average discount of $4.26 per barrel compared to $10.49 per barrel in the prior-year period, and the WTI Midland to WTI Cushing discount averaged $0.03 per barrel in the six months ended June 30, 2020 compared to a discount of $1.71 per barrel in the prior-year period;


•	increases in ethanol RIN prices which averaged $0.34 per RIN in six months ended June 30, 2020 compared to $0.18 per RIN in the prior-year period;


•	in the logistics segment, decreases in the diesel sales volumes and decreases in the average cost per gallon of gasoline and diesel purchased; and


•	a decrease in retail fuel cost of materials and other attributable to demand slowdown, a reduction in number of stores and a decrease in average cost per gallon of $0.54.

Such increases were partially offset by the following:


•	a decrease in hedging gains to a loss of $88.1 million recognized during the six months ended June 30, 2020 from a gain of $50.5 million recognized during the six months ended June 30, 2019.

Operating Expenses

Q2 2020 vs. Q2 2019

Operating expenses were $127.8 million for the second quarter of 2020 compared to $162.3 million for the second quarter of 2019, a decrease of $34.5 million, or 21.3%. The decrease in operating expenses was primarily driven by the following:


•	decrease in outside service costs across all segments due to cost reduction measures;


•	decreases in the refining segment related to catalyst and chemical costs, maintenance costs and cost reduction associated with the sale of our Bakersfield refinery during the quarter; and


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

YTD 2020 vs. YTD 2019

Operating expenses were $282.3 million for the six months ended June 30, 2020 compared to $329.0 million for the six months ended June 30, 2019, an decrease of $46.7 million, or 14.2%. The decrease in operating expenses was primarily driven by the following:


•	decrease in outside service costs across all segments due to cost reduction measures;


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


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

General and Administrative Expenses

Q2 2020 vs. Q2 2019

General and administrative expenses were $61.7 million for the second quarter of 2020 compared to $69.5 million for the second quarter of 2019, a decrease of $7.8 million, or 11.2%. The decrease in general and administrative expense was primarily driven by the following:



52 \|

Management's Discussion and Analysis


•	decrease in contract services due to cost reduction measures; and


•	decrease in loss allowance on a note receivable.

YTD 2020 vs. YTD 2019

General and administrative expenses were $127.4 million and $131.7 million for the six months ended June 30, 2020 and 2019, respectively, a decrease of $4.3 million, or 3.3%. The decrease in general and administrative expense was primarily driven by the following:


•	decrease in contract services due to cost reduction measures; and


•	decrease in loss allowance on a note receivable.

These decreases were partially offset by increases in salaried labor, including severance, partially offset by decrease in incentive accrual.

Depreciation and Amortization

Q2 2020 vs. Q2 2019

Depreciation and amortization (included in both cost of sales and other operating expenses) was $59.6 million for the second quarter of 2020 compared to $50.1 million for the second quarter of 2019, an increase of $9.5 million, or 19.0%, primarily due to depreciation associated with assets added during the Big Spring refinery turnaround in the first quarter of 2020, the El Dorado turnaround assets added in the second quarter of 2019 and the addition of the alkylation unit at our Krotz Springs refinery late in the second quarter of 2019.

YTD 2020 vs. YTD 2019

Depreciation and amortization (included in both cost of sales and other operating expenses) was $112.2 million compared to $96.9 million for the six months ended June 30, 2020 and 2019, respectively, a increase of $15.3 million, or 15.8%, primarily due to depreciation associated with assets added during the Big Spring refinery turnaround in the first quarter of 2020, the El Dorado turnaround assets added in the second quarter of 2019 and the addition of the alkylation unit at our Krotz Springs refinery late in the second quarter of 2019.

Other Operating Income, Net

Q2 2020 vs. Q2 2019

Other operating income, net increased by $10.6 million in the second quarter of 2020 to income of $14.2 million compared to $3.6 million in the second quarter of 2019.

YTD 2020 vs. YTD 2019

Other operating income, net increased by $13.7 million during the six months ended June 30, 2020 to $14.9 million compared to income of $1.2 million during the six months ended June 30, 2019.

Non-operating Expenses, Net

Interest Expense

Q2 2020 vs. Q2 2019

Interest expense decreased by $3.0 million, or 9.1%, to $29.8 million in the second quarter of 2020 compared to $32.8 million in the second quarter of 2019, primarily driven by the following:

•

a decrease in the average effective interest rate of 1.38% in the second quarter of 2020 compared to the second quarter of 2019 (where effective interest rate is calculated as interest expense divided by the net average borrowings/obligations outstanding), partially offset by an increase in net average borrowings outstanding (including the obligations under the Supply and Offtake Agreements which have an associated interest charge) of approximately $410.1 million in the second quarter of 2020 (calculated as a simple average of beginning borrowings/obligations and ending borrowings/obligations for the period) compared to the second quarter of 2019.

YTD 2020 vs. YTD 2019

Interest expense increased by $4.6 million, or 7.5%, to $66.1 million during the six months ended June 30, 2020 compared to $61.5 million during the six months ended June 30, 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 $435.3 million during the six months ended June 30, 2020 (calculated as a simple average of beginning borrowings/obligations and ending borrowings/obligations for the period) compared to the six months ended June 30, 2019, partially offset by a decrease in the average effective interest rate of 0.56% during the six months ended June 30, 2020 compared to the



53 \|

Management's Discussion and Analysis

six months ended June 30, 2019 (where effective interest rate is calculated as interest expense divided by the net average borrowings/obligations outstanding).

Results from Equity Method Investments

Q2 2020 vs. Q2 2019

We recognized income of $10.7 million from equity method investments during the second quarter of 2020, compared to $9.3 million for the second quarter of 2019, an increase of $1.4 million.

YTD 2020 vs. YTD 2019

During the six months ended June 30, 2020, we recognized income of $15.8 million from equity method investments, compared to $11.9 million for the six months ended June 30, 2019, an increase of $3.9 million. This increase was primarily driven by the following:


•	the addition of the Red River Joint Venture in May 2019 which contributed income of $4.7 million in the six months ended June 30, 2020 compared to $2.3 million in the six months ended June 30, 2019; and


•	an increase in income from our other logistics joint ventures from $4.1 million in the six months ended June 30, 2019 to $7.3 million in the six months ended June 30, 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

During the three and six months ended June 30, 2020, we recognized a gain of $56.9 million on the sale of our non-operating refinery located in Bakersfield, California. See Note 2 of the condensed consolidated financial statements in Item 1, Financial Statements, for additional information.

Q2 2020 vs. Q2 2019

Other income increased $6.4 million, to $1.5 million in second quarter of 2020 compared to a loss of $4.9 million in the second quarter of 2019.

YTD 2020 vs. YTD 2019

Other income increased $5.9 million, to $2.4 million in the six months ended June 30, 2020, compared to a loss of $3.5 million in the six months ended June 30, 2019.

Income Taxes

Q2 2020 vs. Q2 2019

Income tax expense decreased by $60.5 million in the second quarter of 2020 compared to the second quarter of 2019, primarily driven by the following:


•	pre-tax income of $62.6 million in the second quarter of 2020, as compared to $109.2 million for the second quarter of 2019; and


•	a decrease in our effective tax rate which was (57.3)% for the second quarter of 2020, compared to 22.5% for the second quarter of 2019 primarily due to the following:


◦	projected 2020 federal net operating loss carryback to a prior 35% tax rate year creating a 14% rate benefit; and


◦	an increase in the estimated annual effective tax rate applied to year-to-date loss for the quarter.

YTD 2020 vs. YTD 2019

Income tax expense decreased by $189.4 million during the six months ended June 30, 2020 compared to the same period for 2019, primarily driven by the following:


•	pre-tax loss of $327.5 million in the six months ended June 30, 2020, as compared to pre-tax income of $309.4 million for the six months ended June 30, 2019; and


•	an increase in our effective tax rate which was 36.3% for the six months ended June 30, 2020, compared to 22.8% for the six months ended June 30, 2019 primarily due to the following:


◦	projected 2020 federal net operating loss carryback to a prior 35% tax rate year creating a 14% tax rate arbitrage; and


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



54 \|

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 June 30,				Six Months Ended June 30,
	2020		2019		2020			2019
Net revenues	$	1,077.0	$	2,367.8	$	2,804.9		$	4,459.8
Cost of materials and other	928.6		2,054.7		2,835.2			3,723.8
Refining margin	148.4		313.1		(30.3		)	736.0
Operating expenses (excluding depreciation and amortization)	88.7		115.0		200.4			236.0
Contribution margin	$	59.7	$	198.1	$	(230.7	)	$	500.0

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.



55 \|

Management's Discussion and Analysis



Refinery Statistics
	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
	(Unaudited)						(Unaudited)
Tyler, TX Refinery
Days in period	91			91			182			181
Total sales volume - refined product (average barrels per day)⁽¹⁾	69,746			77,657			72,364			73,863
Products manufactured (average barrels per day):
Gasoline	37,225			39,997			38,633			39,671
Diesel/Jet	27,897			31,505			27,650			29,455
Petrochemicals, LPG, natural gas liquids ("NGLs")	3,216			3,318			2,604			2,690
Other	1,319			1,654			1,281			1,411
Total production	69,657			76,474			70,168			73,227
Throughput (average barrels per day):
Crude Oil	64,408			71,918			65,187			68,219
Other feedstocks	5,848			5,106			5,648			5,785
Total throughput	70,256			77,024			70,835			74,004
Per barrel of refined product sales:
Tyler refining margin ⁽²⁾	$	32.72		$	12.15		4.62			$	16.84
Direct operating expenses	$	3.00		$	3.65		3.38			$	4.15
Crude Slate: (% based on amount received in period)
WTI crude oil	94.2		%	87.7		%	93.3		%	89.3		%
East Texas crude oil	5.8		%	12.3		%	6.7		%	10.7		%

El Dorado, AR Refinery
Days in period	91			91			182			181
Total sales volume - refined product (average barrels per day)⁽¹⁾	76,059			51,002			76,805			51,717
Products manufactured (average barrels per day):
Gasoline	34,346			21,821			35,376			21,159
Diesel	30,060			17,802			28,849			16,633
Petrochemicals, LPG, NGLs	2,063			551			2,062			678
Asphalt	6,049			6,961			6,345			5,899
Other	605			683			788			661
Total production	73,123			47,818			73,420			45,030
Throughput (average barrels per day):
Crude Oil	71,406			47,935			71,514			44,542
Other feedstocks	2,369			359			2,506			1,270
Total throughput	73,775			48,294			74,020			45,812
Per barrel of refined product sales:
El Dorado refining margin	$	3.08		$	8.93		$	(2.74	)	$	11.21
Direct operating expenses	$	3.53		$	5.93		$	3.98		$	6.31
Crude Slate: (% based on amount received in period)
WTI crude oil	51.4		%	43.9		%	42.9		%	42.6		%
Local Arkansas crude oil	14.7		%	29.0		%	17.0		%	28.3		%
Other	33.9		%	27.1		%	40.1		%	29.1		%



56 \|

Management's Discussion and Analysis



Refinery Statistics (continued)
	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
	(Unaudited)						(Unaudited)
Big Spring, TX Refinery
Days in period	91			91			182			181
Total sales volume - refined product (average barrels per day)⁽¹⁾	70,679			78,158			54,382			79,993
Products manufactured (average barrels per day):
Gasoline	35,789			36,428			25,198			37,657
Diesel/Jet	27,924			26,638			18,860			27,494
Petrochemicals, LPG, NGLs	3,563			3,679			2,472			3,763
Asphalt	2,055			1,900			1,452			1,707
Other	1,208			1,354			844			1,296
Total production	70,539			69,999			48,826			71,917
Throughput (average barrels per day):
Crude oil	70,327			72,965			50,116			72,649
Other feedstocks	1,483			(581		)	78			648
Total throughput	71,810			72,384			50,194			73,297
Per barrel of refined product sales:
Big Spring refining margin	$	7.88		$	13.77		$	0.71		$	16.00
Direct operating expenses	$	3.55		$	3.69		$	4.89		$	3.75
Crude Slate: (% based on amount received in period)
WTI crude oil	83.9		%	73.3		%	75.1		%	76.3		%
WTS crude oil	16.1		%	26.7		%	24.9		%	23.7		%

Krotz Springs, LA Refinery
Days in period	91			91			182			181
Total sales volume - refined product (average barrels per day) ⁽¹⁾	61,441			75,283			71,229			76,749
Products manufactured (average barrels per day):
Gasoline	17,461			34,498			24,135			36,270
Diesel/Jet	21,742			29,776			26,337			30,082
Heavy Oils	215			1,110			473			1,100
Petrochemicals, LPG, NGLs	840			4,264			1,923			5,758
Other	18,871			—			14,704			52
Total production	59,129			69,648			67,572			73,262
Throughput (average barrels per day):
Crude Oil	59,468			70,162			65,975			71,240
Other feedstocks	1,114			(1,327		)	2,104			908
Total throughput	60,582			68,835			68,079			72,148
Per barrel of refined product sales:
Krotz Springs refining margin	$	(0.64	)	$	9.69		$	(1.12	)	$	10.84
Direct operating expenses	$	3.53		$	4.39		$	3.47		$	4.14
Crude Slate: (% based on amount received in period)
WTI Crude	69.7		%	61.0		%	67.7		%	62.0		%
Gulf Coast Sweet Crude	30.3		%	39.0		%	32.3		%	38.0		%


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

⁽²⁾

Tyler's refining margin per barrel and the adjusted refining margin per barrel for the second quarter 2020 both reflect the $111.0 million margin benefit of favorable fixed price crude cost transactions during the quarter, but exclude the offsetting realized hedging losses of approximately $(111.0) million. Giving effect to the related hedging losses, the refining margin per barrel would have decreased by $(17.49). Such margin impact was unusually large because of the historic volatility in the crude commodities market during the period.



57 \|

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 June 30,		Six Months Ended June 30,
(in barrels per day)	2019	2018	2020	2019
	(Unaudited)		(Unaudited)

Tyler refined product sales to other Delek refineries	2,190	914	1,477	557
El Dorado refined product sales to other Delek refineries	1,074	988	446	1,886
Big Spring refined product sales to other Delek refineries	1,269	653	1,147	903
Krotz Springs refined product sales to other Delek refineries	197	10,211	245	5,530



Refinery Sales to Other Segments
	Three Months Ended June 30,		Six Months Ended June 30,
(in barrels per day)	2019	2018	2020	2019
	(Unaudited)		(Unaudited)

Tyler refined product sales to other Delek segments	1,592	24	2,400	281
El Dorado refined product sales to other Delek segments	11	58	169	155
Big Spring refined product sales to other Delek segments	20,570	25,215	22,841	26,034



Pricing Statistics (average for the period presented)
	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
	(Unaudited)				(Unaudited)

WTI — Cushing crude oil (per barrel)	$	29.77	$	59.80	$	37.93	$	57.36
WTI — Midland crude oil (per barrel)	$	29.77	$	57.56	$	37.90	$	55.65
WTS -- Midland crude oil (per barrel) ⁽¹⁾	$	29.61	$	57.93	$	37.69	$	55.95
LLS (per barrel) ⁽¹⁾	$	31.30	$	67.06	$	39.73	$	64.73
Brent crude oil (per barrel)	$	33.35	$	68.44	$	42.16	$	66.14

U.S. Gulf Coast 5-3-2 crack spread (per barrel) - utilizing HSD	$	3.66	$	15.51	$	6.28	$	14.28
U.S. Gulf Coast 5-3-2 crack spread (per barrel) ⁽¹⁾	$	6.67	$	17.74	$	8.74	$	15.77
U.S. Gulf Coast 3-2-1 crack spread (per barrel) ⁽¹⁾	$	7.08	$	19.24	$	9.32	$	17.23
U.S. Gulf Coast 2-1-1 crack spread (per barrel) ⁽¹⁾	$	2.35	$	9.75	$	5.35	$	8.55

U.S. Gulf Coast Unleaded Gasoline (per gallon)	$	0.81	$	1.79	$	1.02	$	1.66
Gulf Coast Ultra low sulfur diesel (per gallon)	$	0.91	$	1.94	$	1.19	$	1.91
U.S. Gulf Coast high sulfur diesel (per gallon)	$	0.73	$	1.80	$	1.04	$	1.78
Natural gas (per MMBTU) ⁽²⁾	$	1.75	$	2.51	$	1.81	$	2.69

⁽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 (ultra low 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").



58 \|

Management's Discussion and Analysis

Refining Segment Operational Comparison of the Three and Six Months Ended June 30, 2020 versus the Three and Six Months Ended June 30, 2019

Net Revenues

Q2 2020 vs. Q2 2019

Net revenues for the refining segment decreased by $1,290.8 million, or 54.5%, in the second quarter of 2020 compared to the second quarter of 2019, primarily driven by the following:


•	decreases in the average price of U.S. Gulf Coast gasoline of 54.7%, ULSD of 53.1%, and HSD of 59.4%; and


•	decreases in sales volume of refined product totaling 0.1 million barrels and a 1.7 million barrel decrease in purchased product sales due to decreased demand, partially offset by increased sales volumes at our El Dorado refinery which was impacted by scheduled turnaround activities in the comparable prior year period.

Net revenues included sales to our retail segment of $40.4 million and $101.7 million, sales to our logistics segment of $29.7 million and $73.2 million, and sales to our other segment of $5.0 million and $40.4 million for the three months ended June 30, 2020 and June 30, 2019, respectively. We eliminate this intercompany revenue in consolidation.

YTD 2020 vs. YTD 2019

Net revenues for the refining segment decreased by $1,654.9 million, or 37.1%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily driven by the following:


•	decreases in the average price of U.S. Gulf Coast gasoline of 38.5%, ULSD of 37.7%, and HSD of 41.5%; and


•	decreases in sales volume of refined product totaling 0.9 million barrels partially due to scheduled turnaround activities at our Big Spring refinery, partially offset by increased sales volumes at our El Dorado refinery due to prior year scheduled turnaround activities, and a 2.5 million barrel decrease in purchased product sales due to decreased demand.

Net revenues included sales to our retail segment of $109.0 million and $191.9 million, sales to our logistics segment of $110.5 million and $152.6 million and sales to our other segment of $14.3 million and $55.4 million for the six months ended June 30, 2020 and 2019, respectively. We eliminate this intercompany revenue in consolidation.

Cost of Materials and Other

Q2 2020 vs. Q2 2019

Cost of materials and other decreased by $1,126.1 million, or 54.8%, in the second quarter of 2020 compared to the second quarter of 2019, primarily driven by the following:


•	the net reversal benefit (expense) of $193.7 million related to inventory valuation reserves recognized during the second quarter of 2020 compared to $(0.6) million recognized during the second quarter of 2019;


•	decreases in the cost of WTI Cushing crude oil, from an average of $59.80 per barrel to an average of $29.77, or (50.22)%; and


•	decreases in the cost of WTI Midland crude oil, from an average of $57.56 per barrel to an average of $29.77, or (48.28)%.



59 \|

Management's Discussion and Analysis

These decreases were partially offset by the following:


•	a decrease in hedging gains to a loss of $146.8 million recognized during the second quarter of 2020 from a gain of $25.6 million recognized during the second quarter of 2019.

YTD 2020 vs. YTD 2019

Cost of materials and other decreased by $888.6 million, or 23.9%, during the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily driven by the following:


•	the net reversal (expense) benefit of $(75.3) million related to inventory valuation reserves recognized during the six months ended June 30, 2020 compared to $51.4 million recognized during the six months ended June 30, 2019;


•	decreases in the cost of WTI Cushing crude oil, from an average of $57.36 per barrel to an average of $37.93, or (33.9)%; and


•	decreases in the cost of WTI Midland crude oil, from an average of $55.65 per barrel to an average of $37.90, or (31.9)%.

These decreases were partially offset by the following:


•	a decrease in hedging gains to a loss of $66.4 million recognized during the six months ended June 30, 2020 from a gain of $44.2 million recognized during the six months ended June 30, 2019;

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 $81.4 million and $52.2 million during the second quarters of 2020 and 2019, respectively, and $178.1 million and $104.4 million during the six months ended June 30, 2020 and 2019, respectively. We eliminate these intercompany fees in consolidation.

Refining Margin

Q2 2020 vs. Q2 2019

Refining margin decreased by $164.7 million, or 52.6%, in the second quarter of 2020 compared to the second quarter of 2019, primarily driven by the following:


•	a narrowing of the average WTI Cushing crude oil differential to WTS crude oil to $0.16 per barrel during the second quarter of 2020 compared to $1.87 during the second quarter of 2019 and narrowing of the average WTI Midland crude oil differential to WTI Cushing crude oil to nearly zero during the second quarter of 2020 compared to $2.24 per barrel during the second quarter of 2019;


•	a narrowing of the discount between WTI Midland crude oil and Brent crude oil where, during the second quarter of 2020, the WTI Midland crude oil differential to Brent crude oil was an average discount of $3.58 per barrel compared to $10.88 per barrel during the second quarter of 2019;


•	a 75.9% decline in the average Gulf Coast 2-1-1 crack spread (the primary measure for the Krotz Springs refinery);


•	a 76.4% decline in the 5-3-2 crack spread (the primary measure for the Tyler refinery and El Dorado refinery);



60 \|

Management's Discussion and Analysis


•	a 63.2% decline in the average Gulf Coast 3-2-1 crack spread (the primary measure for the Big Spring refinery); and


•	a decrease in hedging gains to a loss of $146.8 million recognized during the second quarter of 2020 from a gain of $25.6 million recognized during the second quarter of 2019.

These decreases were partially offset by the following:


•	an increase attributable to the reversal benefit of inventory valuation reserve totaling $193.7 million during the second quarter of 2020 compared to prior year period.



61 \|

Management's Discussion and Analysis

YTD 2020 vs. YTD 2019

Refining margin decreased by $766.3 million, or 104.1%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily driven by the following:


•	a narrowing of the average discount between WTI Midland crude oil compared to WTI Cushing where, during the six months of 2020, the average WTI Midland crude oil differential to WTI Cushing crude oil was $0.03 per barrel compared to $1.71 during the six months of 2019;


•	a narrowing of the average discount between WTI Midland crude oil and Brent crude oil where, during the six months of 2020, the WTI Midland crude oil differential to Brent crude oil was an average discount of $4.26 per barrel compared to $10.49 per barrel during the same period of 2019;


•	a narrowing of the average WTI Cushing crude oil differential to WTS crude oil to $0.24 per barrel during the six months of 2020 compared to $1.41 during the six months of 2019;


•	a narrowing of the discount between WTI Cushing crude oil compared to Brent where, during the six months of 2020, the average WTI Cushing crude oil differential to Brent crude oil was $4.62 per barrel compared to $8.78 during the six months of 2019;


•	a 56.0% decline in the 5-3-2 crack spread (the primary measure for the Tyler refinery and El Dorado refinery);


•	a 45.9% decline in the average Gulf Coast 3-2-1 crack spread (the primary measure for the Big Spring refinery);


•	a 37.4% decline in the average Gulf Coast 2-1-1 crack spread (the primary measure for the Krotz Springs refinery); and


•	a decrease in hedging gains to $(66.4) million recognized during the six months of 2020 from $44.2 million recognized during the six months of 2019.

These decreases were partially offset by the following:


•	an increase in reversal benefit of inventory valuation reserve of during the during the six months of 2020 compared to the prior year period.



62 \|

Management's Discussion and Analysis

Operating Expenses

Q2 2020 vs. Q2 2019

Operating expenses decreased by $26.3 million, or 22.9%, in the second quarter of 2020 compared to the second quarter of 2019, primarily driven by the following:


•	decreases in contractor and maintenance costs partially due to cost reduction measures taken in the second quarter of 2020; and


•	decreases in catalyst and chemicals costs in the second quarter of 2020, primarily at our Krotz Springs refinery related to scheduled unit downtime; and


•	reduced costs resulting from the sale of the Bakersfield refinery in May 2020.

YTD 2020 vs. YTD 2019

Operating expenses decreased by $35.6 million, or 15.1%, during the six months ended June 30, 2020 compared to the six months ended June 30, 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 and Krotz Springs refineries related to reduced throughput due to turnaround and unit downtime, respectively; and


•	decreases in contractor and maintenance costs partially due to cost reduction measures taken in the six months of 2020.

Contribution Margin

Q2 2020 vs. Q2 2019

Contribution margin decreased by $138.4 million, or a 2.8% reduction in contribution margin percentage, in the second quarter of 2020 compared to the second 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;


•	an overall decline in the average crack spreads;


•	an increase in reversal benefit related to inventory valuation reserve of during the second quarter of 2020 compared to prior year period; and


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

These decreases were partially offset by decreases in operating expenses across all refineries.



63 \|

Management's Discussion and Analysis

YTD 2029 vs. YTD 2019

Contribution margin decreased by $730.7 million for the six months ended June 30, 2020 compared to the six months ended June 30, 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;


•	an overall decline in the average crack spreads; ;


•	an increase in reversal benefit related to inventory valuation reserves recognized during the six months of 2020 compared to the prior year period; and


•	a narrowing of the discount between WTI Cushing and WTI crude oil compared to the prior-year period.

These decreases were partially offset by decreases in operating expenses across all refineries.



64 \|

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 June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Net revenues	$	117.7	$	155.3	$	281.1	$	307.8
Cost of materials and other	43.9		93.8		145.2		190.1
Operating expenses (excluding depreciation and amortization)	12.4		17.3		27.2		33.4
Contribution margin	$	61.4	$	44.2	$	108.7	$	84.3
Operating Information:
East Texas - Tyler Refinery sales volumes (average bpd) ⁽¹⁾	65,028		71,123		68,839		69,857
Big Spring wholesale marketing throughputs (average bpd)	76,004		82,964		71,195		85,339
West Texas wholesale marketing throughputs (average bpd)	9,143		11,404		12,612		12,418
West Texas wholesale marketing margin per barrel	$	0.64	$	6.25	$	1.96	$	4.84
Terminalling throughputs (average bpd) ⁽²⁾	138,593		156,922		136,961		154,643
Throughputs (average bpd):
Lion Pipeline System:
Crude pipelines (non-gathered)	79,066		37,625		75,995		33,179
Refined products pipelines to Enterprise Systems	56,093		29,893		55,110		26,511
SALA Gathering System	9,447		14,315		13,449		14,798
East Texas Crude Logistics System	10,275		19,550		12,224		18,835
Big Spring Gathering Assets ⁽³⁾	105,162		—		105,162		—


⁽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.


⁽³⁾	Throughputs for the Big Spring Gathering Assets are for the 91 days we owned the assets following the Big Spring Gathering Assets Acquisition effective March 31, 2020.

Logistics Segment Operational Comparison of the Three and Six Months Ended June 30, 2020 versus the Three and Six Months Ended June 30, 2019

Net Revenues

Q2 2020 vs. Q2 2019

Net revenues decreased by $37.6 million, or 24.2%, in the second quarter of 2020 compared to the second quarter of 2019, primarily driven by the following:


•	decreases 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 diesel sold decreased 10.2 million gallons, partially offset by a 1.1 million decrease of gasoline gallons sold.


◦	the average sales prices per gallon of diesel and gasoline sold decreased $1.11 per gallon and $1.09 per gallon, respectively.

Such decrease was partially offset by the following:


•	Increased revenues associated with agreements executed in connection with Big Spring Gathering System and Delek Trucking acquisitions, which were effective April 1, 2020 and May 1, 2020, respectively. Refer to Note 4 of the condensed consolidated financial statements in Item 1, Financial Statements, for additional information.

Net revenues included sales to our refining segment of $90.0 million and $61.1 million for the three months ended June 30, 2020 and June 30, 2019, respectively, and sales to our other segment of $0.4 million and $1.1 million for the three months ended June 30, 2020 and 2019, respectively. We eliminate this intercompany revenue in consolidation.



65 \|

Management's Discussion and Analysis

YTD 2020 vs. YTD 2019

Net revenues decreased by $26.7 million, or 8.7%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily driven by the following:


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


◦	the average volumes of gasoline sold increased 14.4 million gallons, partially offset by a 11.5 million decrease of diesel gallons sold.


◦	the average sales prices per gallon of gasoline and diesel sold decreased $0.47 per gallon and $0.68 per gallon, respectively.

Such decrease was partially offset by the following:


•	Increased revenues associated with agreements executed in connection with Big Spring Gathering System and Delek Trucking acquisitions, which were effective March 31, 2020 and May 1, 2020, respectively. Refer to Note 4 of the condensed consolidated financial statements in Item 1, Financial Statements, for additional information.


•	increased revenues at our SALA Gathering System and Magnolia Pipeline as result of increased throughput during the six months ended June 30, 2020 when compared to the six months ended June 30, 2019.

Net revenues included sales to our refining segment of $195.7 million and $122.1 million for the six months ended June 30, 2020 and 2019, respectively, and sales to our other segment of $1.2 million for the six months ended June 30, 2020 . We eliminate this intercompany revenue in consolidation.

Cost of Materials and Other

Q2 2020 vs. Q2 2019

Cost of materials and other for the logistics segment decreased $49.9 million, or 53.2%, in the second quarter of 2020 compared to the second quarter of 2019 primarily driven by the following:


•	decreases in the average diesel volumes sold and average cost per gallon of gasoline and diesel sold in our West Texas marketing operations:


◦	the average volumes of diesel sold decreased 10.2 million gallons, partially offset by 1.1 million increase of gasoline gallons sold.


◦	the average cost per gallon of gasoline and diesel sold decreased $0.96 per gallon and $1.03 per gallon, respectively.

Our logistics segment purchased product from our refining segment of $29.7 million and $73.2 million for the three months ended June 30, 2020 and June 30, 2019, respectively. We eliminate these intercompany costs in consolidation.

YTD 2020 vs. YTD 2019

Cost of materials and other for the logistics segment decreased $44.9 million, or 23.6%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019 primarily driven by the following:


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



66 \|

Management's Discussion and Analysis

◦the average volumes of diesel sold decreased 11.5 million gallons, partially offset by a 14.4 million increase in gasoline gallons sold.


◦	the average cost per gallon of gasoline and diesel sold decreased $0.41 per gallon and $0.61 per gallon, respectively.

Our logistics segment purchased product from our refining segment of $110.5 million and $152.6 million for the six months ended June 30, 2020 and June 30, 2019, respectively. We eliminate these intercompany costs in consolidation.

Operating Expenses

Q2 2020 vs. Q2 2019

Operating expenses decreased by $4.9 million, or 28.3%, in the second quarter of 2020 compared to the second quarter of 2019, driven by the following:


•	decrease in employee and outside services costs due to measures implemented to respond to COVID-19 including delaying non-essential projects; and


•	decrease in utilities and other variable expenses due to lower production.

YTD 2020 vs. YTD 2019

Operating expenses decreased by $6.2 million, or 18.6%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019, driven by the following:


•	decrease in employee and outside services costs due to measures implemented to respond to COVID-19 including delaying non-essential projects;


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


•	decreases in variable expenses such as utilities, maintenance and materials costs due to lower production.

Contribution Margin

Q2 2020 vs. Q2 2019

Contribution margin increased by $17.2 million, or 38.9%, in the second quarter of 2020 compared to the second quarter of 2019, primarily driven by the following:


•	increases in revenues associated with agreements executed in connection with Big Spring Gathering System and Delek Trucking acquisitions; and


•	decreases in operating expenses.

Such increases were partially offset by the following:


•	decreases in the volumes combined with a decrease in gross margin of $5.61 per barrel in our West Texas marketing operations.



67 \|

Management's Discussion and Analysis

YTD 2020 vs. YTD 2019

Contribution margin increased by $24.4 million, or 28.9%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily driven by the following:


•	increases in revenues associated with agreements executed in connection with Big Spring Gathering System and Delek Trucking acquisitions, Magnolia Pipeline, and SALA Gathering system; and


•	decreases in operating expenses.

Such increases were partially offset by the following:


•	decreases in gross margin per barrel sold of $2.88 in our West Texas marketing operations.



68 \|

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 June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Net revenues	$	165.4		$	224.5		$	344.0		$	421.7
Cost of materials and other	119.6			182.1			263.7			345.5
Operating expenses (excluding depreciation and amortization)	21.5			24.8			43.7			48.4
Contribution margin	$	24.3		$	17.6		$	36.6		$	27.8

Operating Information
Number of stores (end of period)	253			263			253			263
Average number of stores	253			277			253			279
Average number of fuel stores	248			268			248			270
Retail fuel sales	$	75.9		$	140.8		$	182.9		$	262.7
Retail fuel sales (thousands of gallons)	42,436			53,743			90,376			107,633
Average retail gallons sold per average number of fuel stores (in thousands)	171			201			365			399
Average retail sales price per gallon sold	$	1.79		$	2.62		$	2.02		$	2.44
Retail fuel margin ($ per gallon) ⁽¹⁾	$	0.445		$	0.292		$	0.372		$	0.246
Merchandise sales (in millions)	$	89.4		$	83.3		$	161.1		$	158.6
Merchandise sales per average number of stores (in millions)	$	0.4		$	0.3		$	0.6		$	0.6
Merchandise margin %	30.8		%	31.2		%	31.1		%	31.1		%



Same-Store Comparison ⁽²⁾
	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Change in same-store fuel gallons sold	(19.7	)%	1.7	%	(13.9	)%	3.1	%
Change in same-store merchandise sales	13.1	%	(2.5	)%	7.6	%	(0.5	)%


⁽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 and Six Months Ended June 30, 2020 versus the Three and Six Months Ended June 30, 2019

Net Revenue

Q2 2020 vs. Q2 2019

Net revenues for the retail segment decreased by $59.1 million, or 26.3%, in the second quarter of 2020 compared to the second quarter of 2019, primarily driven by the following:


•	total fuel sales were $75.9 million in the second quarter of 2020 compared to $140.8 million in the second quarter of 2019, attributable to the following:


◦	a decrease in total retail fuel gallons sold for the retail segment to 42,436 thousand gallons in the second quarter of 2020 compared to 53,743 thousand gallons in the second 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 19.7% primarily due to demand slowdown as a result of the COVID-19 Pandemic;



69 \|

Management's Discussion and Analysis


◦	a $0.83 decrease in average price charged per gallon; and


◦	$5.9 million decrease related to reduction in number of stores period over period.


•	merchandise sales were $89.4 million in the second quarter of 2020 compared to $83.3 million in the second quarter of 2019 attributable to the following:


◦	same-store sales increase of 13.1% primarily due to strong sales growth for key categories such as beer, cigarettes and packaged beverages; and


◦	partially offset by a $4.6 million decrease related to reduction in number of stores.

YTD 2020 vs. YTD 2019

Net revenues for the retail segment decreased by $77.7 million, or 18.4%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily driven by the following:


•	total fuel sales were $182.9 million in the six months of 2020 compared to $262.7 million in the six months of 2019, attributable to the following:

◦

a decrease in total retail fuel gallons sold of 90,376 thousand gallons in the six months of 2020 compared to 107,633 thousand gallons in the six months of 2019, attributable to a decrease in volumes associated with the reduction in average number of stores period over in addition to same-store sales decline in fuel volumes of 13.9% primarily due to demand slowdown in the second quarter of 2020 as a result of the COVID-19 Pandemic;


◦	a $0.42 decrease in average price charged per gallon; and


◦	$10.0 million decrease related to reduction in number of stores period over period.


•	merchandise sales were $161.1 million in the six months of 2020 compared to $158.6 million in the six months of 2019 primarily driven by the following:


◦	a same-store sales increase of 7.6%; and


◦	partially offset by $10.4 million decrease related to reduction in number of stores period over period.



70 \|

Management's Discussion and Analysis

Cost of Materials and Other

Q2 2020 vs. Q2 2019

Cost of materials and other for the retail segment decreased by $62.5 million, or 34.3%, in the second quarter of 2020 compared to the second quarter of 2019, primarily driven by the following:


•	$7.7 million decrease due to reduction in number of stores period over period; and


•	a decrease in average cost per gallon of $0.98 or 42.0% applied to fuel sales volumes that decreased period over period.

Our retail segment purchased finished product from our refining segment of $40.4 million and $101.7 million for the three months ended June 30, 2020 and June 30, 2019. We eliminate this intercompany cost in consolidation.

YTD 2020 vs. YTD 2019

Cost of materials and other for the retail segment decreased by $81.8 million, or 23.7%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily driven by the following:


•	$16.0 million decrease due to reduction in number of stores period over period; and


•	a decrease in average cost per gallon of $0.54 or 24.6% applied to fuel sales volumes that decreased slightly period over period.

Our retail segment purchased finished product from our refining segment of $109.0 million and $191.9 million for the six months ended June 30, 2020 and June 30, 2019. We eliminate this intercompany cost in consolidation.

Operating Expenses

Q2 2020 vs. Q2 2019

Operating expenses for the retail segment decreased by $3.3 million, or 13.3% in the second quarter of 2020 compared to the second quarter of 2019. This decrease is primarily attributable to a decrease in operating costs associated with the reduction in the number of stores.

YTD 2020 vs. YTD 2019

Operating expenses for the retail segment decreased by $4.7 million, or 9.7% in the six months ended June 30, 2020 compared to the six months ended June 30, 2019. This decrease is primarily attributable to a decrease in operating costs associated with the reduction in the number of stores.



71 \|

Management's Discussion and Analysis

Contribution Margin

Q2 2020 vs. Q2 2019

Contribution margin for the retail segment increased by $6.7 million, or 38.1%, in the second quarter of 2020 compared to the second quarter of 2019, primarily driven by a $0.153 per gallon improvement in the retail fuel margin and an increase in merchandise sales, offset by 0.4% decrease in merchandise margin.

YTD 2020 vs. YTD 2019

Contribution margin for the retail segment increased by $8.8 million, or 31.7%, in the six months ended June 30, 2020, compared to the six months ended June 30, 2019, primarily driven by a $0.126 per gallon improvement in the retail fuel margin and increase in merchandise sales.



72 \|

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 borrowings under existing credit agreements and 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; any execution of such financing activities will be dependent on the contemporaneous availability of functioning debt or equity markets. Additionally, new debt financing activities will be subject to the satisfaction of any debt incurrence limitation covenants in our existing financing agreements. Our debt limitation covenants in our existing financing documents are usual and customary for credit agreements of our type and reflective of market conditions at the time of their execution. Additionally, 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 unfavorably impacted.

As of June 30, 2020, we were in compliance with all of our debt maintenance covenants, where the most significant long-term obligation subject to such covenants was the Delek Logistics Credit Facility (see Note 8 of the condensed consolidated financial statements in Item 1, Financial Statements). After considering the current 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 existing debt maintenance covenants, though we can provide no assurances, particularly if conditions significantly worsen beyond our ability to predict. Additionally, we were in compliance with incurrence covenants during the quarter ended June 30, 2020 to the extent that any of our activities triggered these covenants. However, given the uncertainty around economic conditions arising from the COVID-19 Pandemic, it is at least reasonably possible that conditions could change significantly, and that such changes could adversely impact our ability to meet some of these incurrence covenants. Failure to meet the incurrence covenants could impose certain incremental restrictions on our ability to incur new debt and also may limit the extent to which we may pay dividends, as well as impose additional restrictions on our ability to repurchase our stock, make new investments and incur new liens (among others). Such restrictions would generally remain in place until such quarter that we return to compliance under the applicable incurrence based covenants. In the event that we are subject to these incremental restrictions, we believe that we have sufficient current and alternative sources of liquidity, including (but not limited to): available borrowings under our existing Wells Fargo Revolving Credit Facility (see Note 8 of the condensed consolidated financial statements in Item 1, Financial Statements); the option to incur an additional $200 million of secured debt under the Wells Fargo Term Loan Credit Facility (see Note 8 of the condensed consolidated financial statements in Item 1, Financial Statements); as well as the possibility of obtaining other secured and unsecured debt, raising capital through equity issuance, or taking advantage of transactional financing opportunities such as sale-leasebacks, as otherwise contemplated and allowed under incurrence covenants.



73 \|

Cash Flows

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



Consolidated
	Six Months Ended June 30,
	2020			2019
Cash Flow Data:
Operating activities	$	(323.1	)	$	235.4
Investing activities	(155.9		)	(329.4		)
Financing activities	372.7			(33.9		)
Net decrease	$	(106.3	)	$	(127.9	)

Cash Flows from Operating Activities

Net cash used in operating activities was $323.1 million for the six months ended June 30, 2020, compared to cash provided by operating activities of $235.4 million for the comparable period of 2019. Cash receipts from customers and cash payments to suppliers and for salaries decreased resulting in a net $628.8 million decrease in cash from operating activities mainly due to a decline in the prices and volume of refined product sold. Additionally, cash paid for debt interest increased by $5.7 million. This decrease was partially offset by a $10.1 million increase in cash received for dividends and $65.9 million decrease in cash paid for taxes.

Cash Flows from Investing Activities

Net cash used in investing activities was $155.9 million for the first six months of 2020, compared to $329.4 million in the comparable period of 2019. The decrease in cash flows used in investing activities was primarily due to a $106.9 million decrease in equity method investment contributions primarily due to our obtaining a 33% membership interest in the Red River Pipeline Joint Venture in May 2019 for $124.7 million. During the six months ended June 30, 2020, we contributed $10.5 million related to our Red River Pipeline Joint Venture and $18.9 million related to our interest in WWP and WWP Project Financing JV which did not exist in the comparable prior year period. Additionally, we received distributions 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. We also received proceeds of $39.9 million from the sale of our Bakersfield refinery in the six months ended June 30, 2020. These decreases in cash used investing activities were partially offset by an increase in cash purchases of property, plant and equipment which increased from $199.9 million in 2019, to $235.4 million in 2020 predominantly attributable to capital expenditures related to turnaround and other sustaining maintenance activities in our refining segment.

Cash Flows from Financing Activities

Net cash provided by financing activities was $372.7 million for the six months ended June 30, 2020, compared to net cash used of $33.9 million in the comparable 2019 period. This increase in cash provided was predominantly due to net proceeds received from long-term revolvers of $231.6 million during the six months ended June 30, 2020, compared to net payments of $85 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 six months ended June 30, 2020 compared to $104.8 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 $59.9 million for the six months ended June 30, 2020 compared to $4.2 million in the comparable 2019 period. Partially offsetting this increase was a decrease in net proceeds received from term debt to $153.8 million during the six months ended June 30, 2020, compared to $217.6 million in the comparable 2019 period.

Cash Position and Indebtedness

As of June 30, 2020, our total cash and cash equivalents were $849.0 million and we had total long-term indebtedness of approximately $2,454.9 million. The total long-term indebtedness is net of deferred financing costs and debt discount of $7.0 million and $27.4 million, respectively. Additionally, we had letters of credit issued of approximately $204.6 million. Total unused credit commitments or borrowing base availability, as applicable, under our revolving credit facilities was approximately $795.4 million. Our total long-term 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 $1,279.5 million under the Term Loan Credit Facility, due on March 30, 2025, with effective interest of 3.44%;


•	an aggregate principal amount of $39.8 million in outstanding borrowings under the Delek Hapoalim Term Loan, due on December 31, 2022, with effective interest of 3.61%;



74 \|


•	an aggregate principal amount of $750.0 million under the Delek Logistics Credit Facility, due on September 28, 2023, with average borrowing rate of 2.78%;


•	an aggregate principal amount of $250.0 million under the Delek Logistics Notes, due in 2025, with effective interest rate of 7.22%;


•	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.

Additionally, our obligation under the supply and offtake inventory financing agreements with J. Aron amounted to $314.0 million at June 30, 2020, $215.0 million of which is due on December 30, 2022, except that a portion (not to exceed $58.8 million) of this otherwise long-term component is subject to potential earlier payment under the Periodic Price Adjustment provision. See Note 7 of the condensed consolidated financial statements in Item 1, Financial Statements, for additional information about our supply and offtake facilities.

Capital Spending

A key component of our long-term strategy is our capital expenditure program. Our capital expenditures for the six months ended June 30, 2020 were $203.3 million, of which approximately $180.3 million was spent in our refining segment, $3.7 million in our logistics segment, $7.5 million in our retail segment and $11.8 million at the holding company level. The following table summarizes our actual capital expenditures for the six months ended June 30, 2020 and planned capital expenditures for the full year 2020 by operating segment and major category (in millions):



	Full Year 2020 Forecast		Six Months Ended June 30, 2020
Refining
Sustaining maintenance, including turnaround activities	$	162.7	$	138.6
Regulatory	42.8		41.5
Discretionary projects	0.9		0.2
Refining segment total	206.4		180.3

Logistics
Regulatory	3.0		1.3
Sustaining maintenance	2.7		0.5
Discretionary projects	12.5		1.9
Logistics segment total	18.2		3.7

Retail
Regulatory	0.2		0.2
Sustaining maintenance	2.2		1.0
Discretionary projects	6.5		6.3
Retail segment total	8.9		7.5

Other
Regulatory	0.6		0.3
Sustaining maintenance	0.8		—
Discretionary projects⁽¹⁾⁽²⁾	15.1		11.5
Other total	16.5		11.8
Total capital spending	$	250.0	$	203.3

⁽¹⁾The forecast excludes a $65 million discretionary project to complete a connector to the WWP pipeline, for which we have secured pre-approved committed financing from the WWP members.

⁽²⁾Excludes purchases of rights-of-way in the amount of $2.1 million in 2020.



75 \|

Management's Discussion and Analysis

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. As a result of the uncertainties associated with the COVID-19 Pandemic, we have decreased our capital spending forecast for 2020 to $250.0 million, down from the prior forecast as reported in our Annual Report on Form 10-K for the year ended December 31, 2019, of $325.7 million. Projects that are not essential to maintaining the current operations have been suspended and are expected to resume in 2021. We continue to evaluate the adverse effects of the COVID -19 Pandemic, and may further revise our forecast as a result of changing circumstances.

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.

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.



76 \|

Management's Discussion and Analysis

The following table sets forth information relating to our open commodity derivative contracts as of June 30, 2020 ($ in millions):



	Total Outstanding				Notional Contract Volume by Year of Maturity
Contract Description	Fair Value			Notional Contract Volume	2020	2021	2022	2023
Contracts not designated as hedging instruments:
Crude oil price swaps - long⁽¹⁾	$	211.4		63,562,000	46,043,000	17,519,000	—	—
Crude oil price swaps - short⁽¹⁾	(187.2		)	65,780,000	48,066,000	17,714,000	—	—
Inventory, refined product and crack spread swaps - long⁽¹⁾	38.7			79,419,000	27,054,000	22,765,000	22,200,000	7,400,000
Inventory, refined product and crack spread swaps - short⁽¹⁾	(55.6		)	78,967,000	26,602,000	22,765,000	22,200,000	7,400,000
Natural gas swaps - long⁽²⁾	16.9			19,927,500	19,927,500	—	—	—
Natural gas swaps - short⁽²⁾	(27.7		)	30,902,500	30,902,500	—	—	—
RIN commitment contracts - long⁽³⁾	3.5			44,900,000	44,900,000	—	—	—
RIN commitment contracts - short⁽³⁾	(3.8		)	58,500,000	58,500,000	—	—	—
Total	$	(3.8	)	441,958,000	301,995,000	80,763,000	44,400,000	14,800,000
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⁾	(2.7		)	90,000	90,000	—	—	—
Inventory, refined product and crack spread swaps - short⁽¹⁾	4.5			90,000	90,000	—	—	—
Total	$	1.8		180,000	180,000	—	—	—

(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 $2,169.3 million as of June 30, 2020. The annualized impact of a hypothetical one percent change in interest rates on our floating rate debt as of June 30, 2020 would be to change interest expense by approximately $21.7 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 changes in fair value recognized in the income statement. These 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 June 30, 2020.



77 \|

Management's Discussion and Analysis

The following table sets forth information relating to commodity derivative contracts held for trading purposes as of June 30, 2020:



Contract Description	Less than 1 year
Over the counter forward sales contracts
Notional contract volume ⁽¹⁾	722,871
Weighted-average market price (per barrel)	$	29.25
Contractual volume at fair value (in millions)	$	21.1
Over the counter forward purchase contracts
Notional contract volume ⁽¹⁾	566,083
Weighted-average market price (per barrel)	$	29.59
Contractual volume at fair value (in millions)	$	16.7


⁽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 second quarter of 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Although most of our corporate employees have shifted to a remote working environment due to the COVID-19 pandemic, we have not experienced a material impact to our internal control over financial reporting. We are continually monitoring and assessing the COVID-19 situation to minimize the impact on the design and operating effectiveness of our internal controls.



78 \|

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 six months ended June 30, 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. Governmental actions in response to the COVID-19 Pandemic have resulted in significant business and operational disruptions, including business closures, supply chain disruptions, travel restrictions, stay-at-home orders, and limitations on the availability and effectiveness of the workforce. These impacts have negatively impacted and will likely continue to negatively impact worldwide economic and commercial activity, financial markets, and demand for and prices of oil and gas products for the foreseeable future. These impacts may also precipitate a prolonged economic slowdown and recession.

In response to the decline in demand, OPEC participating countries 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 COVID-19 Pandemic has resulted in modifications to our business practices, including limiting employee and contractor presence at certain work locations, limiting travel, and reducing capital expenditures for 2020. We may take further actions as required by government authorities or that we determine are in the best interests of our employees, contractors, customers, suppliers and communities. However, there is no assurance that such measures will be sufficient to mitigate the risks posed by the virus, and our ability to successfully execute our business operations could be adversely impacted. In addition, while we have had no COVID-related impairments to date, the continued effects of the COVID-19 Pandemic could result in impairments of long-lived or indefinite-lived assets, including goodwill, at some point in the future. Such impairment charges could be material.

The full impact of the COVID-19 Pandemic is unknown and is rapidly evolving. 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, actions taken by national, state, and local governments and health officials to contain the virus or treat its effects, 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 disputes between the members of OPEC+.



79 \|

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 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 a maintenance turnaround for our Big Spring refinery which began 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.

The periodic price adjustment settlements on the J. Aron Supply and Offtake Agreement may affect our liquidity position.

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 by providing at least six months prior notice to the current maturity date. As part of this amendment, there were changes to the underlying market index, annual fee, the crude purchase fee, crude roll fees and timing of cash settlements related to periodic price adjustments ("PPA") on the differentials.The PPA are calculated semi-annually on October 01 and May 01 ("re-pricing dates") and will result in cash settlements, (either payments to J. Aron or receipts of additional funds from J. Aron), based on the market value of the underlying commodity differential compared to the contractual differential, subject to a set threshold amount. In the event that the periodic price adjustments are triggered on the re-pricing dates, we may be required to make earlier cash payments within three months following the re-pricing date.

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 June 30, 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 June 30, 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
April 1 - April 30, 2020	—	$	—	—	$	229,724,248
May 1 - May 31, 2020	—	—		—	229,724,248
June 1 - June 30, 2020	—	—		—	229,724,248
Total	—	$	—	—	N/A



80 \|

ITEM 5. OTHER INFORMATION

Dividend Declaration

On August 3, 2020, our Board of Directors voted to declare a quarterly cash dividend of $0.31 per share of our common stock, payable on September 3, 2020 to shareholders of record on August 19, 2020.

Executive Employment Agreement

On August 1, 2020, the Company entered into an executive employment agreement with Reuven Spiegel (the "Employment Agreement"). The Employment Agreement amends and replaces the offer letter the Company entered into with Mr. Spiegel in April 2020 in connection with his appointment as Chief Financial Officer. The Employment Agreement has a term expiring December 31, 2023, and provides for the following: an annual base salary of $500,000; the $500,000 cash bonus opportunity set forth in Mr. Spiegel’s offer letter, payable in April 2021; beginning in 2021, an annual bonus opportunity with a target amount of 75% of base salary and a maximum payout opportunity of 200% of the target amount; and, beginning in 2021, annual grants under the Company’s 2016 Long-Term Incentive Plan in an amount of $800,000 per year split evenly between time-vesting restricted stock units (“RSUs”) and performance-based RSUs.

In the event Mr. Spiegel is terminated without cause (as defined in the Employment Agreement) or terminates his employment with good reason (as defined in the Employment Agreement), Mr. Spiegel would be entitled to (i) an amount equal to 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 12 months following termination of employment, (iii) any annual bonus Mr. Spiegel 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 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. Spiegel’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.

If Mr. Spiegel terminates his employment for any reason, other than with good reason or upon his death or disability, and provides at least three months’ advance written notice of termination, Mr. Spiegel would be entitled to an amount equal to 50% of his annual base salary at the time notice is delivered, plus the costs of continuing family health insurance coverage for 12 months following the termination of his employment.

If, within two years of a change in control of the Company (as defined in the Employment Agreement), Mr. Spiegel’s employment is terminated by the Company without cause or he terminates his employment for good reason, Mr. Spiegel would be entitled to receive (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 12 months following termination of employment, (iii) any annual bonus Mr. Spiegel 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. In addition to the foregoing, Mr. Spiegel would receive an additional $500,000 cash bonus if the change in control occurs before March 10, 2021.

All payments to be made by the Company upon termination as described above are subject to Mr. Spiegel executing a release of claims in favor of the Company. 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.

The Employment Agreement includes a noncompetition clause which provides that Mr. Spiegel 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 10.5 and is incorporated herein in its entirety by reference.



81 \|

Exhibits

ITEM 6. EXHIBITS



Exhibit No.		Description

3.1		Amended and Restated Bylaws of Delek US Holdings, Inc. (incorporated by reference to Exhibit 3.2 of the Company’s Quarterly Report on Form 10-Q filed on May 8, 2020).

10.1		Second Amendment to the Delek US Holdings, Inc. 2016 Long-Term Incentive Plan, effective as of May 5, 2020 (incorporated by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q filed on May 8, 2020).

10.2		Amended and Restated Executive Employment Agreement, dated as of May 8, 2020, by and between Delek US Holdings, Inc. and Ezra Uzi Yemin (incorporated by reference to Exhibit 10.4 of the Company’s Quarterly Report on Form 10-Q filed on May 8, 2020).

10.3		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).

10.4		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).

10.5	#	Executive Employment Agreement, dated August 1, 2020, by and between Delek US Holdings, Inc. and Reuven Spiegel.

10.6		Transportation Services Agreement, dated May 15, 2020 and effective as of May 1, 2020, between Delek Refining, Ltd., Lion Oil Company and DKL Transportation, LLC (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on May 18, 2020).

10.7	~	Third Amendment and Restatement of Schedules to Third Amended and Restated Omnibus Agreement, dated and effective as of May 15, 2020 (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed on May 18, 2020).

10.8		Third Incremental Amendment to Term Loan Credit Agreement, dated as of May 19, 2020, among Delek US Holdings, Inc., as borrower, the guarantors party thereto, the lenders party thereto, and Wells Fargo Bank, National Association, as administrative agent (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on May 21, 2020).

10.9	~#	Third Amended and Restated Supply and Offtake Agreement, dated as of April 7, 2020, between J. Aron & Company LLC and Alon Refining Krotz Springs, Inc.

10.10	~#	Third Amended and Restated Supply and Offtake Agreement, dated as of April 7, 2020, among J. Aron & Company LLC, Lion Oil Company and Lion Oil Trading & Transportation, LLC.

10.11	~#	Third Amended and Restated Supply and Offtake Agreement, dated as of April 7, 2020, between J. Aron & Company LLC and Alon USA, LP.

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 June 30, 2020, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019 (Unaudited), (ii) Condensed Consolidated Statements of Income for the three and six months ended June 30, 2020 and 2019 (Unaudited), (iii) Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2020 and 2019 (Unaudited), (iv) Condensed Consolidated Statements of Changes in Stockholders' Equity for the three and six months ended June 30, 2020 and 2019 (Unaudited), (v) Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 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 June 30, 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.



82 \|

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/ Reuven Spiegel
	Reuven Spiegel
	Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

Dated: August 6, 2020



83 \|

Exhibit 10.5

EXECUTIVE EMPLOYMENT AGREEMENT

This Executive Employment Agreement (the “Agreement”) is entered into effective August 1, 2020 (the “Effective Date”), by and between Reuven Spiegel (the “Executive”) and DELEK US HOLDINGS, INC. (the “Company”), who, in return for the mutual promises set forth herein, agree as follows:


1.	Term.


(a)	Term. The term of this Agreement (the “Term”) shall commence upon the Effective Date and expire on December 31, 2023 unless terminated earlier as provided for herein.

Scope of Employment. During the Term, the Company shall employ Executive and Executive shall render services to the Company as its Executive Vice President, Chief Financial Officer, as well as to Delek US Holdings & Logistics and in such other capacities and positions as may be established by the Company from time to time. During the Term, Executive may also serve as an executive vice president and Chief Financial 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 interfere with the performance of his responsibilities and obligations pursuant to this Agreement. Executive shall be subject at all times during the Term hereof to the direction and control of the Company’s Chief Executive Officer 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 Company’s Board of Directors (the “Board”) (or any applicable committee thereof) in its sole discretion applied consistent with this Section 3(a). 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.


(b)	Annual Bonus. Commencing in calendar year 2021, 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

Exhibit 10.5

applicable committee thereof) in its sole and reasonable discretion. Executive’s Annual Bonus (as defined below) target for service during the 2021 fiscal year shall be equivalent to a stated percentage of Executive’s Base Compensation as specified in the Terms of Employment (the “Bonus Target”). The Annual Bonus may be based upon achievement of performance measures and objectives established by the Board from time to time; provided that the performance metrics for the Annual Bonus in respect of the 2021 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. 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 and the Delek Logistics GP, LLC 2012 Long-Term Incentive Plan (collectively the “Plans”), 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 a Plan (the “Plan Administrator”) in their sole discretion. 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, provided that, beginning in the 2016 calendar year, 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 sole discretion, be recorded as taxable compensation to Executive and disclosed in public filings according to SEC regulations.

Exhibit 10.5


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.

Compliance with Company Policies. Executive shall comply with and abide by all applicable 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 made available 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, Delek Logistics Partners, LP (“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, 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. 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

Exhibit 10.5

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)

In consideration of the Confidential Information provided to Executive and the other benefits provided to him pursuant to this Agreement, Executive agrees that, if his employment ends during the Term, then, during a one- year 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.

Exhibit 10.5

(ii)

For any termination except for a termination by the Company for Cause, the “Non-Compete Period” shall commence upon the date that notice of termination of employment is delivered or deemed delivered under the notice provisions of this Agreement, it being acknowledged and agreed that the Non-Compete Period may commence to run, or even completely run, during a period of time during which Executive remains employed by the Company (assuming that he continues to be so employed after the delivery of such notice of termination). In the event of a termination by the Company for Cause, the Non-Compete Period shall commence upon the date that Executive’s employment with the Company ends.

(iii)

For purposes of this Section 8(a), the “Company’s Business” means the businesses conducted by the Company or its subsidiaries at the time of the termination of Executive’s employment over which he has primary responsibility at the time of the termination of his employment (it being agreed and understood that other aspects of the businesses conducted by the Company or its subsidiaries is not within such definition).

(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 petroleum and biodiesel refining facilities, (B) a 75 mile radius from any of the Company’s wholesale refined products distribution facilities and (C) a 50 mile radius from any of the Company’s 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 for the purpose of causing, directly or indirectly, any such customer or vendor to cease 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 any 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 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

Exhibit 10.5

solicitation by Executive other than customary forms of general solicitation such as newspaper advertisements or internet postings.


(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 is necessary to protect the legitimate business interest of the Company. It is further agreed that such covenants will be regarded as divisible and will be operative as to time, area and persons to the extent that they may be so operative.

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, 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.

(b)

Termination by Executive for Good Reason. Within 30 calendar days after Executive becomes (or should have become) aware of the occurrence of a Good Reason (as defined below) during the Term, 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. After such 30-day period, Executive shall either resign Executive’s employment immediately or, if Executive continues in employment beyond such 30-day period, Executive shall have irrevocably waived and released any right to resign for Good Reason based upon the circumstances identified in Executive’s advance notice of termination. In the event of any such termination, Executive shall be entitled to the 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. 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

Exhibit 10.5

other than for Cause, Executive, if Executive timely executes and does not revoke the Separation Release (as that term is defined in Section 10(f) of this Agreement), in a form to be determined by the Company and provided to Executive at the time of Executive’s separation, shall be entitled to the following (in addition to all accrued compensation and benefits through the date of termination): (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 12 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 three 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 three months’ advance written notice of termination (even if the Required Notice is less than three months), Executive, if Executive timely executes and does not revoke the Separation Release, in a form to be determined by the Company and provided to Executive at the time of Executive’s separation and Executive fully complies with the ongoing obligations of Section 8 (above), Executive shall be entitled to receive a single lump sum payment equal to fifty percent (50%) of Executive’s annualized 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 12 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. 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.

Exhibit 10.5

(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) three months following Executive’s notice of termination.

(f)

Separation Release. Notwithstanding anything to the contrary, but subject to Executive’s compliance with the ongoing obligations of Section 8 (above), and any applicable six-month delay required by Section 18 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 60th day following Executive’s “separation from service” (within the meaning of Section 409A) (or such later date as may be required by law). 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 compliance with this Agreement, including 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 12 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 and (iii) Accelerated Vesting upon termination.

Exhibit 10.5


(h)	Definitions. The following terms shall have the following meanings as used in this Agreement:

(i)

“Accelerated Vesting” means the immediate vesting of all unvested equity awards granted to Executive under the Plans. However, any Accelerated Vesting that occurs other than in the context of a Change in Control 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 violation of the Company’s policies against discrimination or harassment; (B) conviction of, or plea of nolo contendere to, a felony or crime involving moral turpitude; 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 Executive’s supervisor provided that Executive has been given written notice of such conduct and such conduct is not cured within 30 days thereafter.

(iii)

“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, (C) the Company reduces Executive’s Base Compensation under Section 3 other than as part of a base compensation reduction plan generally applicable to other similar senior executive employees, (D) the Company pays base compensation to any of Executive’s subordinates at an annualized rate in excess of Executive’s then-current Base Compensation, or (E) the Company requires Executive to relocate to any location that increases his commuting distance by more than 50 miles.


(iv)	“Release Expiration Date” shall mean the date of the expiration of any and all waiting and revocation periods in the Separation Release.


(v)	“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

Exhibit 10.5

expected to result in death or to be of indefinite duration, as determined by a duly licensed physician selected by the Company.

(vi)

“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.


(vii)	“Separation Release” means a general release of claims against the Company (and its subsidiaries and affiliates) in a form reasonably satisfactory to the Company that pertains to all claims related to Executive’s employment and the termination of Executive’s employment and that contains appropriate anti-disparagement and continuing confidentiality covenants.

(viii)

“Separation Payment” shall mean an amount equal to the sum of Executive’s then current Base Compensation and Executive’s target Annual Bonus as in effect immediately before any notice of termination, multiplied by (A) two in the context of a Change in Control and (B) one 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 two 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).

(b)

In the event a Change in Control occurs prior to March 10, 2021, subject to Executive’s continued employment with the Company through such date, Executive shall be entitled to receive a one-time, lump sum cash payment of $500,000, payable in accordance with the Company’s standard payroll schedule as then in effect. The payment provided pursuant to this Section 11(b) is in addition to the severance benefits described in Section 11(a) above.


(c)	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

Exhibit 10.5

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.


(d)	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

Exhibit 10.5

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-third 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).

12.

Survival of Terms. The provisions of Sections 7, 8(b), 8(c), 9 and 10 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 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

Exhibit 10.5

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. However, this Agreement does not nullify or otherwise affect any prior equity awards granted to Executive nor does it nullify the Current Bonus set forth in the Term Sheet and which is incorporated by reference into this Agreement. For the avoidance of doubt, Executive acknowledges that the Company has fully and finally satisfied all obligations that it has had and could ever have under the Prior Agreement, as the Prior Agreement has been replaced in its entirety by this Agreement. In entering into this Agreement, Executive expressly acknowledges and agrees that Executive has received all sums and compensation that Executive has been owed, is owed or ever could be owed for services provided to the Company through the date that Executive signs this Agreement except for the payment of any unpaid base salary earned in the Company’s pay period that includes the Effective Date and the contingent right to the Current Bonus, if earned, in 2021. Notwithstanding anything else herein, Executive acknowledges that any other agreements between Employee and any Company Party that create obligations for Employee with respect to confidentiality, non-disclosure, non-competition or non-solicitation shall remain in full force and effect. 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.

Exhibit 10.5


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.

(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 the filing expenses associated with the arbitration. All other expenses and fees associated with the arbitration shall be determined in accordance with the AAA rules.


(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,

Exhibit 10.5

agrees that the Company will be entitled to specific performance and injunctive and other equitable relief 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

Exhibit 10.5

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.

[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/ Reuven Spiegel
By: Jared Serff	Reuven Spiegel
Title: Executive Vice President
/s/ Abby Yates
By: Abby Yates
Title: Executive Vice President

Reuven Spiegel

Terms of Employment,

Exhibit A to Executive Employment Agreement



Title:		EVP, Chief Financial Officer

Reports To:		Uzi Yemin, Chairman and CEO

Term:		3 years

Dates:		8/1/2020 – 12/31/2023

Base Salary:		$500,000 annually to be paid out (bi-weekly)

Annual Bonus:		Executive will be eligible for an annual bonus at target of 75% of your Base Salary beginning in 2021. The annual bonus percent may range from 0% to 200% based off of company performance. The annual bonus will be based on 60% Company’s financial (EPS) and 40% non-financial metrics

Current Bonus:		Company will honor $500,000 bonus payable April 2021 subject to the conditions set forth in the offer letter dated April 6, 2020

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 $800,000 annually split between time based Restricted Stock Units and Performance Based Restricted Stock Units according to the schedule below: Time Based RSU Award Vesting: • Grant Date: 3/10/2021 ($400,000) quarterly vest over 3 years (3/10/2021 – 3/10/2024) • Grant Date: 3/10/2022 ($400,000) quarterly vest over 2 years (3/10/2022 – 3/10/2024) • Grant Date: 3/10/2023 ($400,000) quarterly vest over 1 year (3/10/2023 – 3/10/2024) PRSUs Performance Period and Vesting Schedule: • Performance Metric: Relative TSR (Total Shareholder Return) • Grant Date: 3/10/2021 ($400,000) o Performance Period: 1/01/2021 - 12/31/2023, 0-200% Attainment • Grant Date: 3/10/2022 ($400,000) o Performance Period: 1/01/2022 - 12/31/2023, 0-200% Attainment • Grant Date: 3/10/2023 ($400,000) o Performance Period: 1/01/2023 - 12/31/2023, 0-200% Attainment

Vacation:		5 weeks of accrued vacation (Unused vacation carryover)

Accommodations:		Maximum 2 weeks per quarter for remote work


Change in Control:		$500,000 cash payment if change in control occurs prior to March 10 , 2021
Covenants:		Customary non-compete, non-solicit and confidentiality as applicable

Severance:		1 year for involuntary termination (refer to employment agreement for details)

Location:		Brentwood, TN

CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS AGREEMENT BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY DISCLOSED. [***] INDICATES THAT INFORMATION HAS BEEN REDACTED.

Exhibit 10.8

THIRD AMENDED AND RESTATED

SUPPLY AND OFFTAKE AGREEMENT

dated as of April 7, 2020

between

J. ARON & COMPANY LLC

and

ALON REFINING KROTZ SPRINGS, INC.

TABLE OF CONTENTS

Page

ARTICLE 1 DEFINITIONS AND CONSTRUCTION 1

ARTICLE 2 CONDITIONS PRECEDENT 24

ARTICLE 3 TERM OF AGREEMENT 27

ARTICLE 4 COMMENCEMENT DATE TRANSFER 27

ARTICLE 5 SUPPLY OF CRUDE OIL 28

ARTICLE 6 PURCHASE VALUE FOR CRUDE OIL 39

ARTICLE 7 TARGET INVENTORY LEVELS AND WORKING CAPITAL ADJUSTMENT 41

ARTICLE 8 PURCHASE AND DELIVERY OF PRODUCTS 46

ARTICLE 9 ANCILLARY COSTS; MONTH END INVENTORY; CERTAIN DISPOSITIONS 48

ARTICLE 10 PAYMENT PROVISIONS 50

ARTICLE 11 INDEPENDENT INSPECTORS; STANDARDS OF MEASUREMENT 57

ARTICLE 12 FINANCIAL INFORMATION; CREDIT SUPPORT; AND ADEQUATE ASSURANCES 58

ARTICLE 13 REFINERY TURNAROUND, MAINTENANCE AND CLOSURE 61

ARTICLE 14 TAXES 63

ARTICLE 15 INSURANCE 64

ARTICLE 16 FORCE MAJEURE 66

ARTICLE 17 REPRESENTATIONS, WARRANTIES AND COVENANTS 68

ARTICLE 18 DEFAULT AND TERMINATION 73

ARTICLE 19 SETTLEMENT AT TERMINATION 80

ARTICLE 20 INDEMNIFICATION 84

ARTICLE 21 LIMITATION ON DAMAGES 86

ARTICLE 22 AUDIT AND INSPECTION 86

ARTICLE 23 CONFIDENTIALITY 86

ARTICLE 24 GOVERNING LAW 87

ARTICLE 25 ASSIGNMENT 87

ARTICLE 26 NOTICES 88

ARTICLE 27 NO WAIVER, CUMULATIVE REMEDIES 88

ARTICLE 28 NATURE OF THE TRANSACTION AND RELATIONSHIP OF PARTIES 89

ARTICLE 29 MISCELLANEOUS 89

-i-

Schedules



Schedule	Description
Schedule A	Products and Product Specifications
Schedule B	Pricing Values
Schedule C	Monthly True-up Amounts
Schedule D	Operational Volume Range
Schedule E	Tank List
Schedule F	Existing Financing Agreements
Schedule G-1	Weekly Production and Invoice Schedule
Schedule G-2	Daily Settlement Schedule
Schedule H	Form of Tank Balance Volume Report and Form of Inventory Reports
Schedule I	Initial Target Month End Crude Volume
Schedule J	Scheduling and Communications Protocol
Schedule K	Monthly Excluded Transaction Fee Determination
Schedule L	Monthly Working Capital Adjustment
Schedule M	Notices
Schedule N	FIFO Balance Final Settlements
Schedule O	Form of Run-out Report
Schedule P	Pricing Group
Schedule Q	Form of Trade Sheet
Schedule R	Form of Step-out Inventory Sales Agreement
Schedule S	Form of Production Report
Schedule T	Excluded Transaction Trade Sheet
Schedule U	Holdback Schedule
Schedule V	Available Storage or Transportation Arrangements; Other Included Crude Locations
Schedule W	Nederland-Krotz Buy/Sell Confirmation
Schedule X	[Reserved]
Schedule Y	[Reserved]
Schedule Z	[Reserved]
Schedule AA	[Reserved]
Schedule BB	[Reserved]
Schedule CC	[Reserved]

-ii-

TABLE OF CONTENTS

(continued)

Page



Schedule DD	[Reserved]
Schedule EE	[Reserved]
Schedule FF	[Reserved]
Schedule GG	Periodic Price Adjustments
Schedule HH	Transition Adjustment Period Provisions

-iii-

THIRD AMENDED AND RESTATED
SUPPLY AND OFFTAKE AGREEMENT

This Third Amended and Restated Supply and Offtake Agreement (this “Agreement”) is made as of April 7, 2020 (the “Effective Date”), between J. Aron & Company LLC (“Aron”), a limited liability company organized under the laws of New York (formerly known as J. Aron & Company, a general partnership organized under the laws of New York) and located at 200 West Street, New York, New York 10282-2198, and Alon Refining Krotz Springs, Inc. (the “Company”), a Delaware corporation located at Hwy. 105 South, Krotz Springs, Louisiana 70750-0453 (each referred to individually as a “Party” or collectively as the “Parties”).

WHEREAS, the Company owns and operates a crude oil refinery located in Krotz Springs, Louisiana for the processing and refining of crude oil and other petroleum feedstocks and the recovery therefrom of refined products;

WHEREAS, the Company and Aron are parties to an Amended and Restated Supply and Offtake Agreement, (the “First Restated Agreement”) dated as of May 26, 2010, pursuant to which Aron agreed to deliver crude oil and other petroleum feedstocks to the Company for use at such Refinery and purchase all refined products produced by the Refinery (other than certain excluded products);

WHEREAS, the Parties amended and restated in its entirety the First Restated Agreement by entering into a Second Amended and Restated Supply and Offtake Agreement dated as of February 1, 2015 (the “Second Restated Agreement”); and

WHEREAS, the Parties wish to amend and restate in its entirety the Second Restated Agreement as hereinafter provided.

NOW, THEREFORE, in consideration of the premises and respective promises, conditions, terms and agreements contained herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties do agree that the Second Restated Agreement is hereby amended and restated in its entirety as of the date hereof and as follows:

ARTICLE 1
DEFINITIONS AND CONSTRUCTION

1.1 Definitions.

For purposes of this Agreement, including the foregoing recitals, the following terms shall have the meanings indicated below.

“Acceptable Financial Institution” means a U.S. commercial bank or a foreign bank with a U.S. branch office, with the respective rating then assigned to its unsecured and senior long-term debt or deposit obligations (not supported by third party credit enhancement) by S&P or Moody’s of at least “A” by S&P or “A2” by Moody’s.

“Actual Month End Crude Volume” has the meaning specified in Section 9.2(a).

“Actual Month End Product Volume” has the meaning specified in Section 9.2(a).

“Actual Net Crude Consumption” means, for any Delivery Month, the actual number of Crude Oil Barrels run by the Refinery for such Delivery Month minus the number of Other Barrels actually delivered into the Crude Storage Tanks during such Delivery Month.

“Additional Financing Agreement” has the meaning specified in Section 17.2(o).

“Additional Procurement Contract” means any Crude Oil purchase agreement between Aron and a Third Party Supplier entered into following the Commencement Date pursuant to Section 5.3(b), or such other contract to the extent the Parties deem such contract to be a Procurement Contract for purposes hereof.

“Additional Monthly Fee” has the meaning specified in the Fee Letter.

“Adequate Assurance” has the meaning specified in Section 12.5.

“Adjusted Month End Crude Volume” has the meaning specified in Section 7.2(d)(i).

“Adjusted Month End Product Volume” has the meaning specified in Section 7.3(e).

“Affected Party” has the meaning specified in Section 16.1.

“Affected Obligations” has the meaning specified in Section 16.3.

“Affiliate” means, in relation to any Person, any entity controlled, directly or indirectly, by such Person, any entity that controls, directly or indirectly, such Person, or any entity directly or indirectly under common control with such Person; provided that, without limiting the foregoing, it is acknowledged that Delek MLP constitutes an Affiliate of the Company for purposes hereof. For this purpose, “control” of any entity or Person means ownership of a majority of the issued shares or voting power or control in fact of the entity or Person.

“Aggregate Receipts” has the meaning specified in Section 7.5(d)(i).

“Agreement” or “this Agreement” means this Second Amended and Restated Supply and Offtake Agreement, as may be amended, modified, supplemented, extended, renewed or restated from time to time in accordance with the terms hereof, including the Schedules hereto.

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

“Alon USA Supply and Offtake Agreement” means the Second Amended and Restated Supply and Offtake Agreement between Aron and Alon USA, dated as of February 1, 2015, as may from time to time be amended, modified, supplemented and/or restated.

“Alternate Delivery Point” means the last permanent flange of the BSR Crude Storage Tanks located at the Big Spring Refinery that connects directly to the first permanent flange of the White Oil Connection.

“Ancillary Contract” has the meaning specified in Section 19.1(c).

“Ancillary Costs” means all freight, pipeline, transportation, storage, tariffs and other costs and expenses incurred as a result of the purchase, movement and storage of Crude Oil or Products undertaken in connection with or required for purposes of this Agreement (whether or not arising under Procurement Contracts and regardless of the point at which or terms upon which delivery is made under any Procurement Contract), including, ocean-going freight and other costs associated with waterborne movements, inspection costs and fees, wharfage, port and dock fees, vessel demurrage, lightering costs, ship’s agent fees, import charges, waterborne insurance premiums, fees and expenses, broker’s and agent’s fees, load or discharge port charges and fees, pipeline transportation costs, pipeline transfer and pumpover fees, pipeline throughput and scheduling charges (including any fees and charges resulting from changes in nominations undertaken to satisfy delivery requirements under this Agreement), pipeline and other common carrier tariffs, blending, tankage, linefill and throughput charges, pipeline demurrage, superfund and other comparable fees, processing fees (including fees for water or sediment removal or feedstock decontamination), merchandise processing costs and fees, importation costs, any charges imposed by any Governmental Authority (including transfer taxes (but not taxes on the net income of Aron) and customs and other duties), user fees, fees and costs for any credit support provided to any pipelines with respect to any transactions contemplated by this Agreement and any pipeline compensation or reimbursement payments that are not timely paid by the pipeline to Aron. Notwithstanding the foregoing, (i) Aron’s hedging costs in connection with this Agreement or the transactions contemplated hereby shall not be considered Ancillary Costs (but such exclusion shall not change or be deemed to change the manner in which Related Hedges are addressed under Article 19 below) and (ii) any Product shipping costs of Aron, to the extent incurred after Aron has removed such Product from the Product Storage Tanks for its own account, shall not be considered Ancillary Costs.

“Annual Fee” means the amount set forth as the “Annual Fee” in the Fee Letter.

“Applicable Law” means (i) any law, statute, regulation, code, ordinance, license, decision, order, writ, injunction, decision, directive, judgment, policy, decree and any judicial or administrative interpretations thereof, (ii) any agreement, concession or arrangement with any Governmental Authority and (iii) any license, permit or compliance requirement, including

Environmental Law, in each case as may be applicable to either Party or the subject matter of this Agreement.

“Aron’s Policies and Procedures” shall have the meaning specified in Section 13.4(a).

“Aron’s Property” has the meaning specified in Section 17.2(h).

“Assigned Sales Commitment” has the meaning specified in Section 8.8(a).

“Available Storage or Transportation Arrangements” means all of the storage and transportation facilities listed on Schedule V with respect to which the Company has certain transportation and/or storage rights.

“Average Monthly NYMEX Price” means, for any calendar month, the arithmetic average of the closing settlement prices of the trading days in the applicable calendar month on the New York Mercantile Exchange for the first nearby Light Sweet Crude Oil Contract.

“Bankrupt” means a Person that (i) is dissolved, other than pursuant to a consolidation, amalgamation or merger, (ii) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due, (iii) makes a general assignment, arrangement or composition with or for the benefit of its creditors, (iv) institutes a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation, (v) has a resolution passed for its winding-up, official management or liquidation, other than pursuant to a consolidation, amalgamation or merger, (vi) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for all or substantially all of its assets, (vii) has a secured party take possession of all or substantially all of its assets, or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all of its assets, (viii) files an answer or other pleading admitting or failing to contest the allegations of a petition filed against it in any proceeding of the foregoing nature, (ix) causes or is subject to any event with respect to it which, under Applicable Law, has an analogous effect to any of the foregoing events, (x) has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy under any bankruptcy or insolvency law or other similar law affecting creditors’ rights and such proceeding is not dismissed within fifteen (15) days or (xi) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing events.

“Bankruptcy Code” means chapter 11 of Title 11, U.S. Code.

“Barrel” means forty-two (42) net U.S. gallons, measured at 60° F.

“Base Agreement” means any agreement between the Company and a third party pursuant to which the Company has acquired rights to use any of the Included Locations.

“Base Price” has the meaning specified in Section 6.2(a)(i).

“Baseline Volume” means for each Product Group the respective minimum volume specified therefor under the “Baseline Volume” column on Schedule D.

“Big Spring Refinery” means the petroleum refinery located in Big Spring, Texas leased by Alon USA.

“BSR Acknowledgment Agreement” means the Acknowledgement Agreement, dated as of March 30, 2018, among Aron, Alon USA and Wells Fargo Bank, National Association (in its capacity as collateral agent for certain lenders).

“BSR Crude Storage Tanks” mean the Crude Oil storage tanks located at the Big Spring Refinery which have been leased to Aron in connection with the Alon USA Supply and Offtake Agreement.

“Business Day” means any day that is not a Saturday, Sunday, or other day on which banks are authorized or required to close in the State of New York.

“Change of Control” means (a) the failure of Guarantor to (i) hold and own, directly or indirectly, Equity Interests representing 100%, on a fully diluted basis, of the aggregate ordinary voting power of the Company or (ii) control the Company, or (b) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, but excluding any employee benefit plan of such person or its Subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a “person” or “group” shall be deemed to have “beneficial ownership” of all Equity Interests that such “person” or “group” has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “option right”)), directly or indirectly, of more than forty percent (40%) of the Equity Interests of Guarantor entitled to vote in the election of members of the board of directors of Guarantor. For the purpose of this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling”, “Controlled” and “under common Control with” have meanings correlative thereto.

“Collateral” means the “Collateral” as defined in the Lien Documents.

“Commencement Date” means May 26, 2010.

“Commencement Date Crude Oil Volumes” means the total quantity of Crude Oil owned by the Company at 00:00:01 a.m., CPT, on the Commencement Date that is then held at Crude Storage Tanks, which quantity shall be the volume of Crude Oil recorded in the Inventory Report prepared pursuant to the Inventory Sales Agreement.

“Commencement Date Purchase Value” means, with respect to the Commencement Date Volumes, initially the Estimated Commencement Date Value until the Definitive Commencement Date Value has been determined and thereafter the Definitive Commencement Date Value.

“Commencement Date Products Volumes” means the total quantities of the Products owned by the Company at 00:00:01 a.m., CPT, on the Commencement Date that are then held at Product Storage Tanks, which quantities shall be the volume of Products recorded in the Inventory Report prepared pursuant to the Inventory Sales Agreement.

“Commencement Date Volumes” mean, collectively, the Commencement Date Crude Oil Volumes and the Commencement Date Products Volumes.

“Company Acknowledgment Agreement” means the Acknowledgement Agreement, dated as of March 30, 2018, among Aron, the Company and Wells Fargo Bank, National Association (in its capacity as collateral agent for certain lenders).

“Company Purchase Agreement” has the meaning specified in the Marketing and Sales Agreement.

“Contract Cutoff Date” means, with respect to any Procurement Contract, the date and time by which Aron is required to provide its nominations to the Third Party Supplier thereunder for the next monthly delivery period for which nominations are then due.

“Contract Nomination” has the meaning specified in Section 5.4(b).

“CPT” means the prevailing time in the Central time zone.

“Credit Enhancement” means any credit enhancement or credit support arrangement in support of the obligations of Aron under or with respect to this Agreement, the Inventory Sales Agreement and the Step-out Inventory Sales Agreement, including any guarantee, collateral arrangement (including any pledge, charge, mortgage or other security interest in collateral or title transfer arrangement), trust or similar arrangement, letter of credit, transfer of margin or any similar arrangement.

“Crude Delivery Point” means the outlet flange of the Crude Storage Tanks.

“Crude Intake Point” means the inlet flange of the Crude Storage Tanks.

“Crude Oil” means crude oil of any type or grade.

“Crude Purchase Fee” has the meaning specified in Section 6.2(b)(iii).

“Crude Storage Tanks” means any of the tanks adjacent to the Refinery listed on Schedule E hereto that store Crude Oil.

“Customer” has the meaning specified in the Marketing and Sales Agreement.

“Daily Product Sales” means, for any day and Product Group, Aron’s estimate of the aggregate sales volume of such Product sold during such day, pursuant to (a) Included Transactions and Excluded Transactions (each as defined in the Marketing and Sales Agreement) or (b) any Company Purchase Agreements.

“Daily Product Value” has the meaning specified in Section 10.2(c).

“Daily Supply Value” has the meaning specified in Section 10.2(b).

“Daily Value” means, with respect to a particular grade of Crude Oil or type of Product, the applicable Index Amount plus the Crude Price or Product Price, as applicable, indicated on Schedule B as the relevant daily value.

“Default” means any event that, with notice or the passage of time, would constitute an Event of Default.

“Default Interest Rate” means the lesser of (i) the per annum rate of interest calculated on a daily basis using the prime rate published in the Wall Street Journal for the applicable day (with the rate for any day for which such rate is not published being the rate most recently published) plus two hundred (200) basis points and (ii) the maximum rate of interest permitted by Applicable Law.

“Defaulting Party” has the meaning specified in Section 18.2(a).

“Deferred Portion” has the meaning specified in Section 4.3.

“Definitive Commencement Date Value” has the meaning specified in the Inventory Sales Agreement.

“Delek Acknowledgment Agreement” means the Acknowledgement Agreement, dated as of March 30, 2018, among Aron, Lion Oil Company, Lion Oil Trading & Transportation, LLC and Wells Fargo Bank, National Association (in its capacity as collateral agent for certain lenders).

“Delek MLP” means Delek Logistics Partners, LP and its subsidiaries (individually and collectively).

“Delivered Quantity” has the meaning specified in Section 5.11(d)(i).

“Delivery Date” means any calendar day.

“Delivery Month” means the month in which Crude Oil is to be delivered to the Refinery.

“Designated Affiliate” means, in the case of Aron, Goldman, Sachs & Co, and in the case of the Company, Alon USA, Lion Oil Company, and Lion Oil Trading & Transportation, LLC, Delek Refining, Ltd. and Delek Marketing & Supply, LLC (collectively, the “Delek Entities”), provided that a Delek Entity shall be a Designated Affiliate of the Company only if and for so long as it is an Affiliate of the Company.

“Disposed Quantity” has the meaning specified in Section 9.3(a).

“Disposition Amount” has the meaning specified in Section 9.3(a).

“Eastbound Quantity” means, for any Supplemental Quantity that is an Eastbound Shipment, a quantity of Crude Oil equal to negative one (-1) times that Supplemental Quantity.

“Eastbound Shipment” means, with respect to any quantity of Supplemental Material, the shipment and transporting of such Supplemental Material commencing with the withdrawal of Crude Oil from the BSR Crude Storage Tanks through the Alternate Delivery Point and the movement of such Crude Oil through the Supplemental Injection Point (after which it shall constitute Supplemental Material) and then via the Supplemental Pipeline to the Nederland Terminal.

“Effective Date” has the meaning specified in the introductory paragraph of this Agreement.

“Electronic Signature” means any electronic symbol or process attached to, or associated with, a contract or other record and adopted by a Person with the intent to sign, authenticate or accept such contract or record.

“Environmental Law” means any existing or past Applicable Law, policy, judicial or administrative interpretation thereof or any legally binding requirement that governs or purports to govern the protection of persons, natural resources or the environment (including the protection of ambient air, surface water, groundwater, land surface or subsurface strata, endangered species or wetlands), occupational health and safety and the manufacture, processing, distribution, use, generation, handling, treatment, storage, disposal, transportation, release or management of solid waste, industrial waste or hazardous substances or materials.

“Equity Interests” means, with respect to any person, any and all shares, interests, participations or other equivalents, including membership interests (however designated, whether voting or nonvoting), of equity of such person, including, if such person is a partnership, partnership interests (whether general or limited) and any other interest or participation that confers on a person the right to receive a share of the profits and losses of, or distributions of property of, such partnership, but excluding debt securities convertible or exchangeable into such equity.

“Estimated Commencement Date Value” has the meaning specified in the Inventory Sales Agreement.

“Estimated Termination Amount” has the meaning specified in Section 19.2(b).

“Estimated Yield” has the meaning specified in Section 8.3(a).

“Event of Default” means an occurrence of the events or circumstances described in Section 18.1.

“Excess Quantity” means any portion of any Supplemental Quantity that, due to the application of the proration policy under the Supplemental Pipeline Tariff, may not be transported by Aron under its status as designated shipper on the Supplemental Pipeline and instead is subject to a buy/sell transaction consisting of a sale from Aron to Alon USA and a subsequent sale from Alon USA to Aron.

“Excluded Materials” means any materials other than Crude Oil or Products.

“Excluded Transactions” has the meaning specified in the Marketing and Sales Agreement.

“Existing Financing Agreements” mean the Financing Agreements listed on Schedule X.

“Existing Sales Commitments” has the meaning specified in Section 8.8(a).

“Existing Procurement Contract” means such crude oil purchase agreement, dated as of the Commencement Date, between Chevron and Aron having such terms and conditions as Aron shall deem acceptable.

“Expiration Date” has the meaning specified in Section 3.1.

“Exposure Default Interest” has the meaning specified in Section 10.6(b).

“Fed Funds Rate” means the rate set forth in H.15(519) or in H.15 Daily Update for the most recently preceding Business Day under the caption “Federal funds (effective)”; provided that if no such rate is so published for any of the immediately three (3) preceding Business Days, then such rate shall be the arithmetic mean of the rates for the last transaction in overnight Federal funds arranged by each of three leading brokers of U.S. dollar Federal funds transactions prior to 9:00 a.m., CPT, on that day, which brokers shall be selected by Aron in a commercially reasonable manner. For purposes hereof, “H.15(519)” means the weekly statistical release designated as such, or any successor publication, published by the Board of Governors of the Federal Reserve System, available through the worldwide website of the Board of Governors of the Federal Reserve System at http://www.federalreserve.gov/releases/h15/, or any successor site or publication and “H.15 Daily Update” means the daily update of H.15(519), available through the worldwide website of the Board of Governors of the Federal Reserve System at http://www.federalreserve.gov/releases/h15/update/, or any successor site or publication.

“Fee Letter” means that certain amended and restated letter from Aron to the Company, executed on or after the date hereof and as from time to time thereafter amended and/or restated, which identifies itself as the “Fee Letter” for purposes hereof, and pursuant to which the Parties have set forth the amounts for and other terms relating to certain fees payable hereunder.

“FERC” means the Federal Energy Regulatory Commission.

“Financing Agreement” means any credit agreement, indenture or other financing agreement under which the Guarantor or any of its subsidiaries (including the Company) may incur or become liable for indebtedness for borrowed money (including capitalized lease obligations and reimbursement obligations with respect to letters of credit) but only if the covenants thereunder limit or otherwise apply to any of the business, assets or operations of the Company.

“First Restated Agreement” has the meaning specified in the recitals above.

“First Restated Agreement Effective Date” means the “Effective Date” as defined in the First Restated Agreement.

“Force Majeure” means any cause or event reasonably beyond the control of a Party, including fires, earthquakes, lightning, floods, explosions, storms, adverse weather, landslides and other acts of natural calamity or acts of God; navigational accidents or maritime peril; vessel damage or loss; strikes, grievances, actions by or among workers or lock-outs (whether or not such labor difficulty could be settled by acceding to any demands of any such labor group of individuals and whether or not involving employees of the Company or Aron); accidents at, closing of, or restrictions upon the use of mooring facilities, docks, ports, pipelines, harbors, railroads or other navigational or transportation mechanisms; disruption or breakdown of, or explosions or accidents to, wells, storage plants, refineries, terminals, machinery or other facilities; acts of war, hostilities (whether declared or undeclared), civil commotion, embargoes, blockades, terrorism, sabotage or acts of the public enemy; any act or omission of any Governmental Authority; good faith compliance with any order, request or directive of any Governmental Authority; curtailment, interference, failure or cessation of supplies reasonably beyond the control of a Party; or any other cause reasonably beyond the control of a Party, whether similar or dissimilar to those above and whether foreseeable or unforeseeable, which, by the exercise of due diligence, such Party could not have been able to avoid or overcome. Solely for purposes of this definition, the failure of any Third Party Supplier to deliver Crude Oil pursuant to any Procurement Contract, whether as a result of Force Majeure as defined above, “force majeure” as defined in such Procurement Contract, breach of contract by such Third Party Supplier or any other reason, shall constitute an event of Force Majeure for Aron under this Agreement with respect to the quantity of Crude Oil subject to that Procurement Contract.

“GAAP” means generally accepted accounting principles in the United States.

“Governmental Authority” means any federal, state, regional, local, or municipal governmental body, agency, instrumentality, authority or entity established or controlled by a government or subdivision thereof, including any legislative, administrative or judicial body, or any person purporting to act therefor.

“Guarantee” means the Guaranty, dated as of July 20, 2017, from the Guarantor provided to Aron in connection with this Agreement and the transactions contemplated hereby.

“Guarantor” means Delek US Holdings, Inc.

“Hazardous Substances” means any explosive or radioactive substances or wastes and any toxic or hazardous substances, materials, wastes, contaminants or pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances defined or listed as “hazardous substances,” “hazardous materials,” “hazardous wastes” or “toxic substances” (or similarly identified), regulated under or forming the basis for liability under any applicable Environmental Law.

“HLS” means heavy Louisiana sweet.

“Hydrocarbons” has the meaning specified in Section 17.2(i).

“Identified Facilities” has the meaning specified in Section 13.4(a).

“Included Locations” means, collectively, the Included Supplemental Facilities, any Other Included Crude Locations and any other third party owned and operated storage facility or pipeline which the Parties agree shall be an “Included Location” for purposes hereof.

“Included Supplemental Facilities” means, collectively, the Supplemental Pipeline and the Nederland Terminal.

“Included Transaction” means a transaction identified as such pursuant to Section 5.11(b) or such other transaction to the extent the Parties deem such transaction to be an Included Transaction for purposes hereof (which deemed transaction may include an agreement of Aron to purchase Product from the Company as well as an agreement of the Company to purchase Product from Aron).

“Independent Inspection Company” has the meaning specified in Section 11.3.

“Index Amount” has the meaning specified on Schedule B.

“Index Value” has the meaning specified in Section 7.5(d)(ii).

“Initial Estimated Yield” has the meaning specified in Section 8.3(a).

“Inventory Sales Agreement” means the purchase and sale agreement, in a form and substance mutually agreeable to the Parties, dated as of the Commencement Date, pursuant to which the Company is selling and transferring to Aron the Commencement Date Volumes for the Commencement Date Purchase Value, free and clear of all liens, claims and encumbrances of any kind.

“KSR Monthly Deferral Amount” has the meaning specified in Schedule HH.

“LC Default” means, with respect to a Letter of Credit, the occurrence of any of the following events at any time: (a) the issuer of such Letter of Credit ceases to be an Acceptable Financial Institution; (b) the issuer of the Letter of Credit shall fail to comply with or perform its obligations under such Letter of Credit; (c) the issuer of such Letter of Credit shall disaffirm, disclaim, repudiate or reject, in whole or in part, or challenge the validity of, such Letter of Credit; (d) such Letter of Credit is to expire within twenty (20) Business Days or (e) the issuer of such Letter of Credit becomes Bankrupt.

“Letter of Credit” means an irrevocable, transferable standby letter of credit issued by an Acceptable Financial Institution in favor of Aron and provided by the Company to Aron pursuant to and otherwise satisfying the requirements of Section 12.4(c) below, in a form and in substance satisfactory to Aron.

“Level One Fee” means the amount set forth as the “Level One Fee” in the Fee Letter.

“Level Two Fee” means the amount set forth as the “Level Two Fee” in the Fee Letter.

“Liabilities” means any losses, liabilities, charges, damages, deficiencies, assessments, interests, fines, penalties, costs and expenses (collectively, “Costs”) of any kind (including reasonable attorneys’ fees and other fees, court costs and other disbursements), including any Costs directly or indirectly arising out of or related to any suit, proceeding, judgment, settlement or judicial or administrative order and any Costs arising from compliance or non-compliance with Environmental Law.

“Liens” has the meaning specified in Section 17.2(h).

“Lien Documents” means the Pledge and Security Agreement and any other instruments, documents and agreements delivered by or on behalf of the Company in order to grant to, or perfect in favor of, Aron, a lien on any real, personal or mixed property of the Company as security for the obligations of the Company pursuant to this Agreement and the Transaction Documents.

“Liquidated Amount” has the meaning specified in Section 18.2(f).

“LLS” means light Louisiana sweet.

“Long Crude FIFO Value” has the meaning specified on Schedule B.

“Long Product FIFO Value” means the price so listed on Schedule B.

“Marketing and Sales Agreement” means the products marketing and sales agreement, dated as of the Commencement Date, between the Company and Aron pursuant to which the Product purchased by Aron hereunder shall from time to time be marketed and sold by the Company for Aron’s account, as amended, supplemented, restated or otherwise modified from time to time.

“Material Adverse Change” means a material adverse effect on and/or material adverse change with respect to (i) the business, operations, properties, assets or financial condition of the Company and its subsidiaries taken as a whole; (ii) the ability of the Company to fully and timely perform its obligations; (iii) the legality, validity, binding effect or enforceability against the Company of any of the Transaction Documents; or (iv) the rights and remedies available to, or conferred upon, Aron hereunder; provided that none of the following changes or effects shall constitute a “Material Adverse Change”: (1) changes, or effects arising from or relating to changes, of laws, that are not specific to the business or markets in which the Company operates; (2) changes arising from or relating to, or effects of, the transactions contemplated by this Agreement or the taking of any action in accordance with this Agreement; (3) changes, or effects arising from or relating to changes, in economic, political or regulatory conditions generally affecting the U.S. economy as a whole, except to the extent such change or effect has a disproportionate effect on the Company relative to other industry participants; (4) changes, or effects arising from or relating to changes, in financial, banking, or securities markets generally affecting the U.S. economy as a whole, (including (a) any disruption of any of the foregoing markets, (b) any change in currency exchange rates, (c) any decline in the price of any security or any market index and (d) any increased cost of capital or pricing related to any financing), except to the extent such change or effect has a disproportionate effect on the Company relative to other industry participants; and (5) changes arising from or relating to, or effects of, any seasonal fluctuations in the business, except to the

extent such change or effect has a disproportionate effect on the Company relative to other industry participants.

“Maximum Holdback Amount” has the meaning specified in Section 19.2(b).

“Maximum Volume” has the meaning specified in Section 7.1.

“Measured Crude Quantity” means, for any Delivery Date, the total quantity of Crude Oil that, during such Delivery Date, was withdrawn and lifted by and delivered to the Company at the Crude Delivery Point, as evidenced by either meter readings and meter tickets for that Delivery Date or tank gaugings conducted at the beginning and end of such Delivery Date.

“Measured Product Quantity” means, for any Delivery Date, the total quantity of a particular Product that, during such Delivery Date, was delivered by the Company to Aron at the Products Delivery Point, as evidenced by either meter readings and meter tickets for that Delivery Date or tank gaugings conducted at the beginning and end of such Delivery Date.

“Monthly Cover Costs” has the meaning specified in Section 7.6.

“Monthly Crude Forecast” has the meaning specified in Section 5.2(b).

“Monthly Crude Oil True-up Amount” has the meaning specified on Schedule C.

“Monthly Crude Payment” has the meaning specified in Section 6.2(a)(ii).

“Monthly Crude Price” means, with respect to the Net Crude Sales Volume for any month, the volume weighted average price per Barrel specified in the related Procurement Contracts under which Aron acquired such Barrels in such month.

“Monthly Crude Receipts” means, for any month, the aggregate quantity of Barrels of Crude Oil for which Aron is invoiced by sellers (whether Third Party Suppliers, the Company or Affiliates of the Company) under Procurement Contracts with respect to Crude Oil quantities delivered during such month.

“Monthly Excluded Transaction Fee” has the meaning specified in Section 7.8.

“Monthly Product Estimate” has the meaning specified in Section 8.3(b).

“Monthly Product Sale Adjustment” has the meaning specified in Section 7.5.

“Monthly Product True-up Amount” has the meaning specified on Schedule C.

“Monthly Supplemental Quantity” means, for any calendar month, the sum of the Eastbound Quantities and Westbound Quantities injected into the Supplemental Pipeline via the Supplemental Injection Point or ejected from the Supplemental Pipeline via the Supplemental Injection Point during such month (which may be a positive or negative amount) as evidenced by the SPLP monthly statement.

“Monthly True-up Amount” has the meaning specified in Section 10.3(a).

“Monthly Working Capital Adjustment” is an amount to be determined pursuant to Schedule L hereto.

“Moody’s” means Moody’s Investors Service, Inc., including any official successor to Moody’s.

“Nederland-Krotz Buy/Sell Confirmation” means a term buy/sell confirmation executed by and between the Company and Aron in substantially the form of Schedule W hereto subject to which the Parties may enter into, from time to time, buy/sell transactions each of which consist of two transactions, with the first being a sale by Aron to the Company of a quantity of Supplemental Material at the time such quantity passes the delivery point specified therein for which the Company shall arrange to transport to the Refinery and with the second being a sale by the Company to Aron, from such quantity of Supplemental Material, of the portion thereof that is actually delivered to Crude Storage Tanks at the Refinery as such quantity passes the Crude Intake Point.

“Nederland-Krotz Buy/Sell Transaction” has the meaning specified in Section 5.11(d)(i) below.

“Nederland Shipment Procedures” has the meaning specified in Section 5.11(d)(ii).

“Nederland Terminal” means the SPMT Nederland Terminal located on the Sabine-Neches Waterway between Beaumont and Port Arthur, Texas.

“Net Crude Sales Volume” means, for any month, (A) the sum of (1) the Actual Month End Crude Volume for the prior month plus (2) the Monthly Crude Receipts for such month, minus (B) the Actual Month End Crude Volume for such month.

“Net Payment” (i) for any Production Week has the meaning specified in Section 10.1(e) and (ii) for any day, has the meaning specified in Section 10.2(d).

“Nomination Month” means the month that occurs two (2) months prior to the Delivery Month.

“Non-Affected Party” has the meaning specified in Section 16.1.

“Non-Defaulting Party” has the meaning specified in Section 18.2(a).

“Non-Holdback Portion” has the meaning specified in Section 19.2(b).

“Obligations” means all obligations of the Company arising hereunder or under the other Transaction Documents and under all transactions contemplated thereby.

Reuters Screen LIBOR01 Page (or otherwise on such screen or its successor), One Month LIBOR shall be determined by reference to such other comparable publicly available service for displaying Eurodollar rates as the Parties, acting reasonably, select. One Month LIBOR shall be established on the last Business Day of a calendar month and shall be in effect for the next calendar month; provided that if One LIBOR can no longer be determined by Aron (in its sole discretion) or any Governmental Authority having jurisdiction over the quotation or determination of London Interbank Offered Rates declares that it will no longer supervise or sanction such rates for purposes of interest rates on loans, then Aron and the Company shall endeavor, in good faith, to establish an alternate rate of interest to One Month LIBOR that gives due consideration to the then prevailing market convention for determining a rate of interest for middle-market loans in the United States at such time, and shall enter into an amendment to this Agreement to reflect such alternate rate of interest and such other related changes to this Agreement as may be applicable; provided further that, until such alternate rate of interest is agreed upon by Aron and the Company, One Month LIBOR for purposes hereof and each other Transaction Document shall be the “Wall Street Journal Prime Rate” as published and defined in The Wall Street Journal. Notwithstanding the foregoing, the One Month LIBOR shall at no time be less than 0.00% per annum.

“Operational Volume Range” means the range of operational volumes for any given set of associated Crude Storage Tanks and Other Included Crude Locations for each type of Crude Oil and for any given set of associated Product Storage Tanks for each group of Products, between the minimum volume and the maximum volume, as set forth on Schedule D hereto.

“Other Barrels” has the meaning specified in Section 5.3(f).

“Other Included Crude Location” means any storage tank or pipeline not owned or leased by the Company or any Affiliate of the Company at which Aron stores, holds or transports Crude Oil in connection with this Agreement and which is listed on Schedule V hereto; provided that in determining the volume of Crude Oil at an Other Included Crude Location for purposes of this Agreement, only volumes stored, held or transported in connection with this Agreement shall be counted.

“Other Inventory Sales” means the Company’s obligation to sell inventory to Aron, pursuant to the Other Inventory Sales Agreement.

“Other Inventory Sales Agreement” means the “Inventory Sales Agreement” between the as referred to and defined in the Alon USA Supply and Offtake Agreement.

“Party” or “Parties” has the meaning specified in the preamble to this Agreement.

“Periodic Adjustment Date” means each October 1^st and May 1^st occurring after the Third Restatement Adjustment Date.

and for which adequate reserves have been set aside; (b) liens of mechanics, laborers, suppliers, workers and materialmen incurred in the ordinary course of business for sums not yet due or being diligently contested in good faith, if such reserve or appropriate provision, if any, as shall be required by GAAP shall have been made therefore; (c) liens incurred in the ordinary course of business in connection with worker’s compensation and unemployment insurance or other types of social security benefits; and (d) liens securing rental, storage, throughput, handling or other fees or charges owing from time to time to eligible carriers, solely to the extent of such fees or charge.

“Person” means an individual, corporation, partnership, limited liability company, joint venture, trust or unincorporated organization, joint stock company or any other private entity or organization, Governmental Authority, court or any other legal entity, whether acting in an individual, fiduciary or other capacity.

“Pipeline Cutoff Date” means, with respect to any Pipeline System, the date and time by which a shipper on such Pipeline System is required to provide its nominations to the entity that schedules and tracks Crude Oil and Products in a Pipeline System for the next shipment period for which nominations are then due.

“Pipeline System” means the ExxonMobil Pipeline System, Colonial Pipeline System or any other pipeline that may be used to transport Crude Oil or Products to the Crude Storage Tanks or out of the Product Storage Tanks at the Refinery.

“Pledge and Security Agreement” means the Pledge and Security Agreement dated as of October 31, 2014 between the Company, the subsidiaries of the Company from time to time party thereto, and Aron, as amended, supplemented, restated or otherwise modified from time to time.

“Pre-Adjustment Level One Fee” means the amount set forth as the “Pre-Adjustment Level One Fee” in the Fee Letter.

“Pre-Adjustment Level Two Fee” means the amount set forth as the “Pre-Adjustment Level Two Fee” in the Fee Letter.

“Price” means, for any month and with respect to a particular Product Group, the amount added to or subtracted from the applicable Index Amount to determine the Pricing Value for such month and Product Group. The Prices applicable during the Term shall be as set forth on Schedule B.

“Price Adjustment Settlement Amount” has the meaning specified on Schedule GG hereto.

“Pricing Group” means any of Product Groups listed as a pricing group on Schedule P.

“Pricing Value” means, with respect to a particular grade of Crude Oil or type of Product, the applicable Index Amount plus or minus the applicable Price indicated on Schedule B.

“Procurement Contract” means any procurement contract (either an Existing Procurement Contract or any Additional Procurement Contract) entered into by Aron for the purchase or sale of Crude Oil to be processed or sold at the Refinery, which may be either a contract with any seller or purchaser of Crude Oil (other than the Company) or a contract with the Company, or such other

contract to the extent the Parties deem such contract to be a Procurement Contract for purposes hereof.

“Procurement Contract Assignment” means an instrument, in form and substance reasonably satisfactory to Aron, by which the Company assigns to Aron all rights and obligations under a Procurement Contract and Aron assumes such rights and obligations thereunder, subject to terms satisfactory to Aron providing for the automatic reassignment thereof to the Company in connection with the termination of this Agreement.

“Product” means any of the refined petroleum products listed on Schedule A hereto, as from time to time amended by mutual agreement of the Parties.

“Product Cost” has the meaning specified in Section 8.7.

“Product Group” means Crude Oil or a group of Products as specified on Schedule P.

“Product Price” means the Price applicable to the Index Amount for the relevant Product as specified on Schedule B.

“Product Purchase Agreements” has the meaning specified in the Marketing and Sales Agreement.

“Product Storage Tanks” means any of the tanks adjacent to the Refinery listed on Schedule E hereto that store Products.

“Production Week” means each consecutive day period (based on CPT) designated as a “Production Week” on Schedule G hereto (which the Parties acknowledge will not in every case be a seven (7) day period).

“Products Delivery Point” means the inlet flange of the Product Storage Tanks.

“Products Offtake Point” means the outlet flange of the Product Storage Tanks.

“Pro Forma Expiration Date” has the meaning specified in Section 18.2(b).

“Projected Monthly Run Volume” has the meaning specified in Section 7.2(a).

“Projected Net Crude Consumption” means, for any Delivery Month, the Projected Monthly Run Volume for such Delivery Month minus the number of Other Barrels that the Company indicated it expected to deliver into the Crude Storage Tanks during such Delivery Month.

“Refinery” means the petroleum refinery located in Krotz Springs, Louisiana owned and operated by the Company.

facilities, pipelines, tanks and associated facilities owned and operated by the Company which constitute the Storage Facilities.

“Required Storage and Transportation Arrangements” mean such designations and other binding contractual arrangements, in form and substance satisfactory to Aron, pursuant to which the Company shall have provided Aron with the Company’s (or its Affiliates’) full and unimpaired right to use the Available Storage or Transportation Arrangements, including the Included Supplemental Facilities and the Other Included Crude Locations.

“Related Hedges” means any transactions from time to time entered into by Aron with third parties unrelated to Aron or its Affiliates to hedge Aron’s exposure resulting from this Agreement or any other Transaction Document and Aron’s rights and obligations hereunder or thereunder.

“Remedies Exercise Date” has the meaning specified in Section 18.2(b).

“Revised Estimated Yield” has the meaning specified in Section 8.3(a).

“Run-out Report” has the meaning specified in Section 7.3(a).

“S&O Party” means each of the Company, Alon USA, LP, Lion Oil Company, and Lion Oil Trading & Transportation, LLC.

“S&O Party Guarantee” means the Guaranty, dated as of the Third Restatement Effective Date, from the S&O Parties provided to Aron in connection with this Agreement and the transactions contemplated hereby, in a form and in substance satisfactory to Aron.

“S&P” means Standard & Poor’s Rating Services Group, a division of The McGraw-Hill Companies, Inc., including any official successor to S&P.

“Second Restated Agreement” has the meaning specified in the recitals above.

“Second Restated Agreement Effective Date” means the “Effective Date” as defined in the First Restated Agreement.

“Settlement Amount” has the meaning specified in Section 18.2(b).

“Shipped Quantity” has the meaning specified in Section 5.11(d)(i).

“Short Crude FIFO Value” has the meaning specified on Schedule B.

“Short Product FIFO Value” has the meaning specified on Schedule B.

“Specified Indebtedness” means any obligation (whether present or future, contingent or otherwise, as principal or surety or otherwise) of the Company in respect of borrowed money.

“Specified Transaction” means (a) any transaction (including an agreement with respect thereto) now existing or hereafter entered into between Aron (or any of its Designated Affiliates)

and the Company (or any of its Designated Affiliates) (i) which is a rate swap transaction, swap option, basis swap, forward rate transaction, commodity swap, commodity option, commodity spot transaction, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option, weather swap, weather derivative, weather option, credit protection transaction, credit swap, credit default swap, credit default option, total return swap, credit spread transaction, repurchase transaction, reverse repurchase transaction, buy/sell-back transaction, securities lending transaction, or forward purchase or sale of a security, commodity or other financial instrument or interest (including any option with respect to any of these transactions), including any supply and/or offtake transaction relating to any refining operations of any Designated Affiliate of the Company or (ii) which is a type of transaction that is similar to any transaction referred to in clause (i) that is currently, or in the future becomes, recurrently entered into the financial markets (including terms and conditions incorporated by reference in such agreement) and that is a forward, swap, future, option or other derivative on one or more rates, currencies, commodities, equity securities or other equity instruments, debt securities or other debt instruments, or economic indices or measures of economic risk or value, (b) any combination of these transactions and (c) any other transaction identified as a Specified Transaction in this Agreement or the relevant confirmation.

“SPLP” means Sunoco Pipeline L.P.

“SPMT” means Sunoco Partners Marketing & Terminals L.P., a Texas limited partnership and an Affiliate of Sunoco.

“Step-Out Inventory Sales Agreement” means the purchase and sale agreement, substantially in the form of Schedule R hereto, to be dated as of the Termination Date, pursuant to which the Company shall buy Crude Oil and Products from Aron subject to the provisions of this Agreement and any other terms agreed by the parties thereto.

“Storage Facilities” mean the storage, loading and offloading facilities owned or operated by the Company located at Krotz Springs, Louisiana, including the Crude Storage Tanks, the Product Storage Tanks and the land, piping, marine facilities, truck facilities and other facilities related thereto, together with existing or future modifications or additions, which are excluded from the definition of Refinery or Refinery Facilities. In addition, the term “Storage Facilities” includes any location where a storage facility is used by the Company to store or throughput Crude Oil or Products except those storage, loading and offloading facilities owned or operated by the Company which are used to store Excluded Materials.

“Storage Facilities Agreement” means the storage facilities agreement, dated as of the Commencement Date, between the Company and Aron, pursuant to which the Company has granted to Aron an exclusive right to use the Storage Facilities in connection with this Agreement.

“Storage Tanks” has the meaning specified in the Storage Facilities Agreement.

“Supplemental Agreement” means that certain Supplemental Agreement to Supply and Offtake Agreement dated as of October 31, 2011 between Aron and the Company relating to the First Restated Agreement.

“Supplemental Deferred Portion” means an amount equal to [***] of the product of the Supplemental Step-in Price and the Supplemental Step-in Inventory.

“Supplemental Injection Point” means the first permanent flange at the inlet to the SPLP custody transfer meter on the Supplemental Pipeline at Big Spring, Texas, which is located at the connection between the White Oil Pipeline and the White Oil Connection.

“Supplemental Inventory Sales Agreement” means the purchase and sale agreement dated as of October 31, 2011, pursuant to which the Company sold and transferred to Aron the inventory of Crude Oil owned by the Company and held in the Included Supplemental Facilities as of 11:59:59 p.m., CPT on October 31, 2011, free and clear of all liens, claims and encumbrances of any kind.

“Supplemental LC” has the meaning specified in the Fee Letter.

“Supplemental Material” means, at any time, all Crude Oil held by Aron in any of the Included Supplemental Facilities.

“Supplemental Monthly Fee” has the meaning specified in the Fee Letter.

“Supplemental Pipeline” means the portion of the common carrier Crude Oil pipeline more fully described on Schedule V hereto.

“Supplemental Pipeline Tariff” means SPLP’s tariffs on file with FERC containing the rates, rules and regulations governing the provision of Crude Oil transportation and related services on the Supplemental Pipeline (1) westbound from the Nederland Terminal to the Big Spring Refinery and (2) eastbound from the Big Spring Refinery to the Nederland Terminal, in substantially the forms attached to the Supplemental T&D Agreement.

“Supplemental Price” means, for any calendar month, Average Monthly NYMEX Price for such month.

“Supplemental Quantity” has the meaning specified in Section 5.11(a).

“Supplemental Step-in Inventory” means the Definitive Transfer Date Volume as determined under the Supplemental Inventory Sales Agreement.

“Supplemental Step-in Price” means the price per Barrel of Crude Oil specified in the Supplemental Inventory Sales Agreement.

“Supplemental T&D Agreement” means that certain Pipeline Throughput and Deficiency Agreement between Alon USA and Sunoco Pipeline L.P., a Texas limited partnership, dated October 7, 2011, pursuant to which Alon USA has the right to transport Crude Oil on the Supplemental Pipeline.

“Supplier’s Inspector” means any Person selected by Aron in a commercially reasonable manner that is acting as an agent for Aron or that (1) is a licensed Person who performs sampling, quality analysis and quantity determination of the Crude Oil and Products purchased and sold hereunder, (2) is not an Affiliate of any Party and (3) in the reasonable judgment of Aron, is qualified and reputed to perform its services in accordance with Applicable Law and industry practice, to perform any and all inspections required by Aron.

“Supply Cost” has the meaning specified in Section 6.2(a)(i).

“Tank Balance Volume Report” means a report in the form of Schedule H.

“Target Month End Crude Volume” has the meaning specified in Section 7.2(b).

“Target Month End Product Volume” has the meaning specified in Section 7.3(b).

“Tax” or “Taxes” has the meaning specified in Section 14.1.

“Term” has the meaning specified in Section 3.1.

“Termination Amount” means, without duplication, the total net amount owed by one Party to the other Party upon termination of this Agreement under Section 19.2.

“Termination Date” has the meaning specified in Section 19.1.

“Termination Date Purchase Value” means, with respect to the Termination Date Volumes, initially the Estimated Termination Date Value until the Definitive Termination Date Value has been determined and thereafter the Definitive Termination Date Value (as such terms are defined in the form of the Step-out Inventory Sales Agreement attached hereto as Schedule R).

“Termination Date Volumes” has the meaning specified in Section 19.1(d).

“Termination Holdback Amount” has the meaning specified in Section 19.2(b).

“Termination Reconciliation Statement” has the meaning specified in Section 19.2(c).

“Third A&R BSR S&O Agreement” means the Third Amended and Restated Supply and Offtake Agreement dated as of the Third Restatement Effective Date between Aron and Alon Supply, LP.

“Third A&R Delek S&O Agreement” means the Third Amended and Restated Supply and Offtake Agreement dated as of the Third Restatement Effective Date between Aron, Lion Oil Company, and Lion Oil Trading & Transportation, LLC.

“Third Party Supplier” means any seller of Crude Oil under a Procurement Contract (other than the Company).

“Third Restatement Adjustment Date” means June 1, 2020.

“Three Month LIBOR” means, as of the date of any determination, the London Interbank Offered Rate for three-month U.S. dollar deposits appearing on Reuters Screen LIBOR01 Page (or any successor page) at approximately 11:00 a.m. (London time). If such rate does not appear on Reuters Screen LIBOR01 Page (or otherwise on such screen or its successor), Three Month LIBOR shall be determined by reference to such other comparable publicly available service for displaying Eurodollar rates as the Parties, acting reasonably, select. Three Month LIBOR shall be established on the last Business Day of a calendar quarter and shall be in effect for the three (3) months comprising the next calendar quarter; provided that if Three Month LIBOR can no longer be determined by Aron (in its sole discretion) or any Governmental Authority having jurisdiction over the quotation or determination of London Interbank Offered Rates declares that it will no longer supervise or sanction such rates for purposes of interest rates on loans, then Aron and the Company shall endeavor, in good faith, to establish an alternate rate of interest to Three Month LIBOR that gives due consideration to the then prevailing market convention for determining a rate of interest for middle-market loans in the United States at such time, and shall enter into an amendment to this Agreement to reflect such alternate rate of interest and such other related changes to this Agreement as may be applicable; provided further that, until such alternate rate of interest is agreed upon by Aron and the Company, Three Month LIBOR for purposes hereof and each other Transaction Document shall be the “Wall Street Journal Prime Rate” as published and defined in The Wall Street Journal. Notwithstanding the foregoing, the Three Month LIBOR shall at no time be less than 0.00% per annum.

“Title Documents” has the meaning specified in Section 5.11(d)(iii).

“Transaction Document” means any of this Agreement, the Fee Letter, the Marketing and Sales Agreement, the Inventory Sales Agreement, the Storage Facilities Agreement, the Step-Out Inventory Sales Agreement, the Other Inventory Sales Agreement, the Required Storage and Transportation Arrangements, the Nederland-Krotz Buy/Sell Confirmation, the Supplemental Inventory Sales Agreement, the Guarantee, the S&O Party Guarantee, the Pledge and Security Agreement, the Company Acknowledgment, and any other agreements or instruments contemplated hereby or executed in connection herewith, in each case as amended, supplemented, restated or otherwise modified from time to time.

“Transition Adjustment Period” means the period of calendar months with respect to which any of the calculations in accordance with Schedule HH are to be made by Aron.

“UCC” means the Uniform Commercial Code as the same may from time to time be in effect in the State of New York or the Uniform Commercial code (or similar code or statute) of another jurisdiction, to the extent it may be required to apply to any item or items of collateral.

“Volume Determination Procedures” mean the Company’s ordinary month-end procedures for determining the volumes of Crude Oil or Product held in any Storage Tank, which include manually gauging each Storage Tank on the last day of the month to ensure that the automated tank level readings are accurate to within a tolerance of two (2) inches (it being understood that if the automated reading cannot be calibrated to be within such tolerance, the Company uses the manual gauge reading in its calculation of month-end inventory); provided that (i) with respect to the Included Supplemental Facilities, volume determinations shall be based on the monthly statements

provided by SPLP and SPMT and (ii) unless otherwise agreed by the Parties, the volume determinations for any Other Included Crude Location shall be determined based on reports received by Aron from the operator of such Other Included Crude Location and provided by Aron to the Company.

“Weekly Projection” has the meaning specified in Section 5.2(c).

“Weekly Product Value” has the meaning specified in Section 10.1(d).

“Weekly Supply Value” has the meaning specified in Section 10.1(c).

“Westbound Quantity” means, for any Supplemental Quantity that is a Westbound Shipment, a quantity of Crude Oil equal to that Supplemental Quantity.

“Westbound Shipment” means, with respect to any quantity of Supplemental Material, the shipment and transporting of such Supplemental Material westbound from the Nederland Terminal (or other points) via the Supplemental Pipeline to the Supplemental Injection Point (after which it shall be accounted for as Crude Oil under the Alon USA Supply and Offtake Agreement rather than Supplemental Material) and then the movement of such Crude Oil via the White Oil Connection to the Alternate Delivery Point at the Crude Storage Tanks located at the Big Spring Refinery.

“White Oil Connection” means the segment of pipeline owned by Alon USA that runs between the Alternate Delivery Point at the BSR Crude Storage Tanks and the Supplemental Injection Point.

“White Oil Pipeline” means the approximately 25-mile common carrier Crude Oil pipeline owned by SPLP and running between the main line of the Supplemental Pipeline and the White Oil Connection.

1.2 Construction of Agreement.

(a) Unless otherwise specified, all references herein are to the Articles, Sections and Schedules to this Agreement, as may be from time to time amended or modified.

(b) All headings herein are intended solely for convenience of reference and shall not affect the meaning or interpretation of the provisions of this Agreement.

(c) Unless expressly provided otherwise, the word “including” as used herein does not limit the preceding words or terms and shall be read to be followed by the words “without limitation” or words having similar import.

(d) Unless expressly provided otherwise, all references to days, weeks, months and quarters mean calendar days, weeks, months and quarters, respectively.

(e) Unless expressly provided otherwise, references herein to “consent” mean the prior written consent of the Party at issue, which shall not be unreasonably withheld, delayed or conditioned.

(f) A reference to any Party to this Agreement or another agreement or document includes the Party’s permitted successors and assigns.

(g) Unless the contrary clearly appears from the context, for purposes of this Agreement, the singular number includes the plural number and vice versa; and each gender includes the other gender.

(h) Except where specifically stated otherwise, any reference to any Applicable Law or agreement shall be a reference to the same as amended, supplemented or re-enacted from time to time.

(i) Unless otherwise expressly stated herein, any reference to “volume” shall be deemed to refer to the net volume.

(j) The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.

1.3 No Interpretive Advantage to Drafter. The Parties acknowledge that they and their counsel have reviewed and revised this Agreement and that no presumption of contract interpretation or construction shall apply to the advantage or disadvantage of the drafter of this Agreement.

ARTICLE 2
CONDITIONS PRECEDENT

2.1 Conditions to Effectiveness. This Agreement shall not be effective, and the Third Restatement Effective Date shall not occur, until the prior or concurrent satisfaction of each of the following conditions precedent:

(a) Each of the Third A&R BSR S&O Agreement and the Third A&R Delek S&O Agreement has been executed and is in full force and effect;

(b) The S&O Party Guarantee shall have been duly executed and delivered to Aron in a form and in substance satisfactory to Aron;

(c) The Parties shall have executed an amendment to the Marketing and Sales Agreement in a form and in substance satisfactory to Aron;

(d) The Parties shall have agreed to the form and substance of the Step-Out Inventory Sales Agreement (which form is attached hereto as Schedule R);

(e) The Parties shall have entered into an amendment to Pledge and Security Agreement in a form and in substance satisfactory to Aron.

(f) The Company and Aron shall have duly executed the Fee Letter;

(g) The Parties have prepared and appended hereto a full amended and restated set of Schedules and Exhibits;

(h) The Company shall have delivered to Aron a certificate signed by the principal executive officer of the Company certifying as to incumbency, board approval and resolutions, other matters;

(i) The Company shall have delivered to Aron an opinion of counsel, in form and substance satisfactory to Aron, covering such matters as Aron shall reasonably request, including: good standing; existence and due qualification; power and authority; due authorization and execution; enforceability of the Transaction Documents; and no conflicts including with respect to the Existing Financing Agreements;

(j) The Company has delivered to Aron amendments and restatements of the Company Acknowledgement Agreement, the BSR Acknowledgment Agreement and the Delek Acknowledgment Agreement, each duly executed by all parties thereto, reflecting such updated references and further amendments and modifications as Aron shall have reasonably requested;

(k) Aron shall have confirmed to its satisfaction that, as of the Third Restatement Effective Date, each of the Existing Financing Agreements contains provisions that (i) recognize the respective rights and obligations of the Parties under this Agreement and the other Transaction Documents, (ii) confirm that this Agreement, the other Transaction Documents and the transactions contemplated hereby and thereby do not and will not conflict with or violate any terms and conditions of such Existing Financing Agreement and (iii) recognize that Aron is the owner of Crude Oil and Products to the extent contemplated hereby and by the other Transaction Documents, free and clear of any liens of any lender or other creditor that is party to such Existing Financing Agreement, other than Permitted Liens;

(l) Aron shall have received final approvals from relevant internal committees;

(m) To the extent deemed necessary or appropriate by Aron, acknowledgements and/or releases (including without limitation, amendments or termination of UCC financing statements), in form and substance satisfactory to Aron, shall have been duly executed by lenders or other creditors that are party to Existing Financing Agreements, confirming the release of any lien in favor of such lender or other creditor that might apply to or be deemed to apply to any Crude Oil and/or Products of which Aron is the owner as contemplated by this Agreement and the other Transaction Documents and agreeing to provide Aron with such further documentation as it may reasonably request in order to confirm the foregoing;

(n) The Company shall have delivered to Aron such other certificates, documents and instruments as may be reasonably necessary to consummate the transactions contemplated herein, including UCC-1 financing statements reflecting Aron as owner of all Crude Oil in the Crude Storage Tanks and all Products in the Product Storage Tanks on and as of the Third Restatement Effective Date;

(o) No action or proceeding shall have been instituted nor shall any action by a Governmental Authority be threatened, nor shall any order, judgment or decree have been issued or proposed to be issued by any Governmental Authority as of the Third Restatement Effective Date to set aside, restrain, enjoin or prevent the transactions and performance of the obligations contemplated by this Agreement;

(p) The Company shall have delivered to Aron insurance certificates evidencing the effectiveness of the insurance policies required by Article 15 below;

(q) The Company shall have provided to Aron confirmation, in form and substance satisfactory to Aron, that all other Transaction Documents remain in full force and effect;

(r) All representations and warranties of the Company and its Affiliates contained in the Transaction Documents shall be true and correct on and as of the Third Restatement Effective Date; and

(s) All representations and warranties of Aron contained in the Transaction Documents shall be true and correct in all material respects on and as of the Third Restatement Effective Date.

2.2 Amendment and Restatement. This Agreement amends and restates in its entirety (but without novation) the Second Restated Agreement. In addition, from and after the Third Restatement Effective Date, all references to the “Agreement,” the “S&O Agreement,” or the “Supply and Offtake Agreement” contained in the other Transaction Documents shall be deemed to refer to this Agreement.

2.3 Post-Third Restatement Effective Date Undertakings. From and after the Third Restatement Effective Date, the Company may endeavor to negotiate and implement designations and other binding contractual arrangements, in form and substance satisfactory to Aron, pursuant to which the Company may transfer and assign to Aron the Company’s (or its Affiliates’) right to use any Available Storage or Transportation Arrangement that has not previously been included as an Included Location or such other storage or transportation facility as may hereafter be identified by the Company; provided that (i) upon and concurrently with implementing any such assignment, designation or arrangement, any such Available Storage or Transportation Arrangement shall be added to the appropriate Schedule hereto as an additional Included Location, as applicable, and such assignment, designation or arrangement shall constitute a Required Storage and Transportation Arrangement hereunder, and the Company represents and confirms that, in connection with the execution of the Supplemental Agreement, the Company provided to Aron the Required Storage and Transportation Arrangements relating to the Included Supplemental Facilities; (ii) to the extent requested by Aron, the Company shall amend the Inventory Sales Agreement and any other applicable Transaction Document to include any inventory transferred to Aron as a result of such assignment, designation or arrangement; and (iii) without limiting the generality of the foregoing, the addition of an Included Location shall be subject to satisfaction of Aron’s Policies and Procedures (as defined in Section 13.4(a) below), which shall be applied in a nondiscriminatory manner as provided in Section 13.4(b) (i) below. In addition, if the relevant storage or transportation facility

fails to satisfy Aron’s Policies and Procedures as a result of Aron’s Policies and Procedures exceeding the standards or requirements imposed under Applicable Law or good and prudent industry practice, then, upon the Company’s request, Aron shall consult with the Company in good faith to determine whether based on further information provided by the Company such storage or transportation facility complies with Aron’s Policies and Procedures and/or whether additional actions or procedures can be taken or implemented so that, as a result, such storage or transportation facility would comply with Aron’s Policies and Procedures and, based on such further information and/or the implementation of such additional actions or procedures, Aron will from time to time reconsider whether such storage or transportation facility satisfies clause (iii) above.

2.4 UCC Filings.

(a) From and after the Third Restatement Effective Date, the Company will from time to time cooperate with Aron to cause to be prepared, executed and filed, in such jurisdictions as Aron shall deem necessary or appropriate, UCC-1 financing statements reflecting (i) Aron as owner of all Crude Oil and Products in the Storage Facilities and the Included Locations and (ii) Aron as a secured party with respect to any Collateral to perfect Aron’s security interest under the Lien Documents. The Company shall execute and deliver to Aron, and the Company hereby authorizes Aron to file (with or without the Company’s signature), at any time and from time to time, all such financing statements, amendments to financing statements, continuation financing statements, termination statements, relating to such Crude Oil, Products, and Collateral and other documents and instruments, all in form satisfactory to Aron, as Aron may request, to confirm Aron’s ownership of such Crude Oil and Products, or perfected lien on such Collateral and to otherwise accomplish the purposes of this Agreement.

(b) Without limiting the generality of the foregoing, the Company ratifies and authorizes the filing by Aron of any financing statements filed prior to the Third Restatement Effective Date.

ARTICLE 3
TERM OF AGREEMENT

3.1 Term. The Second Restated Agreement became effective on the Second Restated Agreement Effective Date with the Commencement Date occurring as provided above. This Agreement constitutes a continuation of the term of the Second Restated Agreement under the amended and restated terms hereof and, subject to Section 3.2, shall continue for a period ending at 11:59:59 p.m., CPT on December 30, 2022 (the “Term”; the last day of such Term being herein referred to as the “Expiration Date”, except as provided in Section 3.2 below).

3.2 Changing the Term. Aron may, in its sole discretion elect to extend this Agreement until May 30, 2025; provided that such election shall not be effective unless Aron (i) gives the Company at least six (6) months’ notice prior to the Expiration Date of any such election pursuant to Article 27, (ii) if the Third A&R BSR S&O Agreement is still in effect, concurrently exercises its right to extend the Third A&R BSR S&O Agreement, and (iii) if the Third A&R Delek S&O

Agreement is still in effect, concurrently exercises its right to extend the Third A&R Delek S&O Agreement.

3.3 Applicability of Certain Schedules With Respect to Third Restatement Adjustment Date. For all purposes of this Agreement and any other Transaction Document, with respect to the period from and including the Third Restatement Effective Date to but excluding the Third Restatement Adjustment Date, Schedule B shall mean Schedule B-1, Schedule C shall mean Schedule C-1, Schedule G shall mean Schedule G-1, and Schedule L shall mean Schedule L-1; and with respect to the period from and including the Third Restatement Adjustment Date, Schedule B shall mean Schedule B-2, Schedule C shall mean Schedule C-2, Schedule G shall mean Schedule G-2, and Schedule L shall mean Schedule L-2.

3.4 Obligations upon Termination. In connection with the termination of the Agreement on the Expiration Date the Parties shall perform their obligations relating to termination pursuant to Article 19.

ARTICLE 4
COMMENCEMENT DATE TRANSFER

4.1 Transfer and Payment on the Commencement Date. The Commencement Date Volumes were sold and transferred and payment of the Estimated Commencement Date Value was made as provided in the Inventory Sales Agreement.

4.2 Post-Commencement Date Reconciliation and True-up. Determination and payment of the Definitive Commencement Date Value has been made as provided in the Inventory Sales Agreement.

4.3 Deferred Portion of Purchase Price. Aron has deferred paying to the Company the sum of (i) [***] of the Definitive Commencement Date Value and (ii) the Supplemental Deferred Portion (the “Deferred Portion”). During the term of this Agreement, the Deferred Portion shall constitute an account receivable owing from Aron to the Company, in accordance with this Agreement. The Deferred Portion shall be due and payable from Aron to the Company on the Termination Date, in accordance with this Agreement. As of the Third Restatement Effective Date, the Deferred Portion is equal to such amount as listed on Schedule U.

ARTICLE 5
SUPPLY OF CRUDE OIL

5.1 Sale of Crude Oil. On and after the Third Restatement Effective Date through the end of the Term, and subject to (a) Aron’s ability to procure Crude Oil in accordance with the terms hereof, (b) its receipt of Crude Oil under Procurement Contracts and (c) the Company’s maintenance of the Base Agreements and Required Storage and Transportation Arrangements and compliance with the terms and conditions hereof, Aron agrees to sell and deliver to the Company, and the Company agrees to purchase and receive from Aron, Crude Oil as set forth herein. Aron shall, in accordance with the terms and conditions hereof, have the right to be the exclusive supplier of Crude

Oil to the Refinery and all Crude Oil supplied under this Agreement shall be solely for use at the Refinery.

5.2 Monthly and Weekly Forecasts and Projections.

(a) No later than the tenth (10^th) Business Day prior to the Contract Cutoff Date of the Nomination Month, Aron shall provide the Company with a preliminary written forecast of Aron’s Target Month End Crude Volume and Target Month End Product Volume for the Delivery Month. During the first month of deliveries of Crude Oil made pursuant to this Agreement, Aron’s Target Month End Crude Volume and Target Month End Product Volume shall not exceed the midpoint of the ranges for the Crude Oil and Product Groups on Schedule D.

(b) No later than four (4) Business Days prior to the earliest Contract Cutoff Date in any Nomination Month, the Company shall provide Aron with a written forecast of the Refinery’s anticipated Crude Oil requirements for the related Delivery Month (each, a “Monthly Crude Forecast”).

(c) No later than 5:00 p.m., CPT, each Monday, the Company shall provide Aron with a written summary of the Refinery’s projected Crude Oil runs for the upcoming Production Week (each, a “Weekly Projection”).

(d) The Company shall promptly notify Aron in writing upon learning of any material change in any Monthly Crude Forecast or Weekly Projection or if it is necessary to delay any previously scheduled pipeline nominations or barge loadings.

(e) The Parties acknowledge that the Company is solely responsible for providing the Monthly Crude Forecast and the Weekly Projection and for making any adjustments thereto, and the Company agrees that all such forecasts and projections shall be prepared in good faith, with due regard to all available and reliable historical information and the Company’s then-current business prospects, and in accordance with such standards of care as are generally applicable in the U.S. oil refining industry. The Company acknowledges and agrees that (1) Aron shall be entitled to rely and act, and shall be fully protected in relying and acting, upon all such forecasts and projections, and (2) Aron shall not have any responsibility to make any investigation into the facts or matters stated in such forecasts or projections.

5.3 Procurement of Crude Oil.

(a) As of the Commencement Date, Aron shall have become the purchaser under the Existing Procurement Contract through executing a new Procurement Contract with the Third Party Supplier thereunder.

(b) From time to time during the Term of this Agreement, the Company or Aron may propose that an Additional Procurement Contract be entered into, including any such Additional Procurement Contract as may be entered into in connection with the expiration

of an outstanding Procurement Contract. If the Parties mutually agree to seek Additional Procurement Contracts, then the Company shall endeavor to identify quantities of Crude Oil that may be acquired on a spot or term basis from one or more Third Party Suppliers. The Company may negotiate with any such Third Party Supplier regarding the price and other terms of such potential Additional Procurement Contract. The Company shall have no authority to bind Aron to, or enter into on Aron’s behalf, any Additional Procurement Contract or Procurement Contract Assignment, and the Company shall not represent to any third party that it has such authority. If the Company has negotiated an offer from a Third Party Supplier for an Additional Procurement Contract (and if relevant, Procurement Contract Assignment) that the Company wishes to be executed, the Company shall apprise Aron in writing of the terms of such offer and Aron shall promptly determine and advise the Company as to whether Aron desires to accept such offer. If Aron indicates its desire to accept such offer, then Aron shall promptly endeavor to formally communicate its acceptance of such offer to the Company and such Third Party Supplier so that the Third Party Supplier and Aron may enter into a binding Additional Procurement Contract (and if relevant, Procurement Contract Assignment) provided that any Additional Procurement Contract (and, if relevant, related Procurement Contract Assignment) shall require Aron’s express agreement and Aron shall not have any liability under or in connection with this Agreement if for any reason it, acting in good faith, does not agree to any proposed Additional Procurement Contract or related Procurement Contract Assignment.

(d) Title for each quantity of Crude Oil delivered into a Crude Storage Tank shall pass, if delivered under a Procurement Contract, from the relevant Third Party Supplier as provided in the relevant Procurement Contract or, if not delivered under a Procurement Contract, from the Company to Aron, as the Crude Oil passes the Crude Intake Point. The Parties acknowledge that the consideration due from Aron to the Company for any Crude Oil that is not delivered under a Procurement Contract will be reflected in the Monthly True-up Amounts determined following such delivery.

(e) The Company agrees that, except as permitted under Section 5.3(b), (c) or (d), it will not purchase or acquire Crude Oil from any party other than Aron during the Term of this Agreement, unless otherwise consented to by Aron.

(f) No later than four (4) Business Days prior to the earliest Contract Cutoff Date in any Nomination Month, the Company shall inform Aron whether the Company has purchased or intends to purchase any Crude Oil that is not being procured under a Procurement Contract for delivery during the related Delivery Month (“Other Barrels”), in which case the Company shall provide to Aron the quantity, grade and delivery terms of

such Other Barrels expected to be delivered to the Crude Storage Tanks during such Delivery Month.

5.4 Nominations under Procurement Contracts and for Pipelines.

(a) On the Business Day following receipt of the Monthly Crude Forecast and prior to the delivery of the Projected Monthly Run Volume, Aron shall provide to the Company Aron’s preliminary Target Month End Crude Volume and Target Month End Product Volume for the related Delivery Month if different from the Target Month End Crude Volume and Target Month End Product Volume for the related Delivery Month previously provided in Section 5.2(a). By no later than two (2) Business Days prior to the earliest Contract Cutoff Date occurring in such Nomination Month, the Company shall provide to Aron the Projected Monthly Run Volume for the Delivery Month for which deliveries must be nominated prior to such Contract Cutoff Dates. As part of such Projected Monthly Run Volume, the Company may specify the grade of such Projected Monthly Run Volume, provided that such grades and their respective quantities specified by the Company shall fall within the grades and quantities then available to be nominated by Aron under the outstanding Procurement Contracts.

(b) Provided that the Company provides Aron with the Projected Monthly Run Volume as required under Section 5.4(a), Aron shall make all scheduling and other selections and nominations (collectively, “Contract Nominations”) that are to be made under the Procurement Contracts on or before the Contract Cutoff Dates for the Procurement Contracts and such Contract Nominations shall reflect the quantity of each grade specified by the Company in such Projected Monthly Run Volume. Should any Contract Nomination not be accepted by any Third Party Supplier under a Procurement Contract, Aron shall promptly advise the Company and use commercially reasonable efforts with the Company and such Third Party Supplier to revise the Contract Nomination subject to the terms of any such Procurement Contract. Aron shall provide the Company with confirmation that such Contract Nominations have been made.

(c) Insofar as any pipeline nominations are required to be made by Aron for any Crude Oil prior to any applicable Pipeline Cutoff Date for any month, Aron shall be responsible for making such pipeline and terminal nominations for that month; provided that, Aron’s obligation to make such nominations shall be conditioned on its receiving from the Company scheduling instructions for that month a sufficient number of days prior to such Pipeline Cutoff Date so that Aron can make such nominations within the lead times required by such pipelines and terminals. Aron shall not be responsible if a Pipeline System is unable to accept Aron’s nomination or if the Pipeline System must allocate capacity among its shippers.

(d) For operational and other reasons relating to the conduct of its business, the Company may, from time to time, request that Aron make adjustments or modifications to Contract Nominations it has previously made under the Procurement Contracts. Promptly following receipt of any such request, Aron will use its commercially reasonable efforts to make such adjustment or modification, subject to any limitations or restrictions under the

relevant Procurement Contracts. Any additional cost or expenses incurred as a result of such an adjustment or modification shall constitute an Ancillary Cost hereunder.

(f) In addition to the nomination process, Aron and the Company shall follow the mutually agreed communications protocol as set forth on Schedule J hereto, with respect to ongoing daily coordination with feedstock suppliers, including purchases or sales of Crude Oil outside of the normal nomination procedures.

(g) Each of the Company and Aron agrees to use commercially reasonable efforts in preparing the forecasts, projections and nominations required by this Agreement in a manner intended to maintain Crude Oil and Product operational volumes within the Operational Volume Range.

(h) Prior to entering into any Ancillary Contract (as defined in Article 19 below) that is intended for the exclusive benefit of the Company in connection with this Agreement and does not by its terms expire or terminate on or as of the Termination Date, Aron will endeavor, in good faith and subject to any confidentiality restrictions, to afford the Company an opportunity to review and comment on such Ancillary Contract or the terms thereof and to confer with the Company regarding such Ancillary Contract and terms and if Aron enters into any such Ancillary Contract without the Company’s consent, the Company shall not be obligated to assume such Ancillary Contract pursuant to Section 19.1(c) below.

5.5 Storage and Delivery of Crude Oil.

(a) Aron shall have the exclusive right to store Crude Oil in the Crude Storage Tanks as provided in the Storage Facilities Agreement.

(c) Provided no Default or Event of Default has occurred and is continuing, the Company shall be permitted to withdraw from the Crude Storage Tanks and take delivery of Crude Oil on any day and at any time. The withdrawal and receipt of any Crude Oil by the Company at the Crude Delivery Point shall be on an “ex works” basis. Aron shall be responsible only for arranging transportation and delivery of Crude Oil into the Crude Storage Tanks and the Company shall bear sole responsibility for arranging the withdrawal of Crude Oil from the Crude Storage Tanks. The Company shall take all actions necessary to maintain a connection with the Crude Storage Tanks to enable withdrawal and delivery of Crude Oil to be made as contemplated hereby.

5.6 Title, Risk of Loss and Custody.

(a) Title to and risk of loss of the Crude Oil shall pass from Aron to the Company at the Crude Delivery Point. The Company shall assume custody of the Crude Oil as it passes the Crude Delivery Point.

(b) During the time any Crude Oil is held in the Crude Storage Tanks, the Company, in its capacity as operator of the Crude Storage Tanks and pursuant to the Storage Facilities Agreement, shall be solely responsible for compliance with all Applicable Laws, including all Environmental Laws, pertaining to the possession, handling, use and processing of such Crude Oil and shall indemnify and hold harmless Aron, its Affiliates and their agents, representatives, contractors, employees, directors and officers, for all Liabilities directly or indirectly arising therefrom except to the extent such Liabilities are caused by or attributable to any of the matters for which Aron is indemnifying the Company pursuant to Article 20.

(c) At and after transfer of any Crude Oil at the Crude Delivery Point, the Company shall be solely responsible for compliance with all Applicable Laws, including all Environmental Laws pertaining to the possession, handling, use and processing of such Crude Oil and shall indemnify and hold harmless Aron, its Affiliates and their agents, representatives, contractors, employees, directors and officers, for all Liabilities directly or indirectly arising therefrom.

(d) Notwithstanding anything to the contrary herein, Aron and the Company agree that the Company shall have an insurable interest in Crude Oil that is subject to a Procurement Contract and that the Company may, at its election and with prior notice to Aron, endeavor to insure the Crude Oil. If pursuant to the terms of this Agreement, the Company bears the loss of any Crude Oil, then (subject to any other setoff or netting rights Aron may have hereunder) any insurance payment to Aron made to cover same shall be promptly paid over by Aron to the Company.

5.7 Contract Documentation, Confirmations and Conditions.

(a) Aron’s obligations to deliver Crude Oil under this Agreement shall be subject to (i) the Company identifying and negotiating potential Procurement Contracts, in accordance with Section 5.3, that are acceptable to both the Company and Aron relating to a sufficient quantity of Crude Oil to meet the Refinery’s requirements, (ii) the Company performing its obligations hereunder with respect to providing Aron with timely nominations, forecasts and projections (including Projected Monthly Run Volumes, as contemplated in Section 5.4(a)) so that Aron may make timely nominations under the Procurement Contracts, (iii) all of the terms and conditions of the Procurement Contracts, and (iv) no Event of Default having occurred and continuing with respect to the Company.

(b) In documenting each Procurement Contract, including any Additional Procurement Contract that may be entered into pursuant to Section 5.3(b), Aron will endeavor and cooperate with the Company, in good faith and in a commercially reasonable manner, to obtain the Third Party Supplier’s agreement that a copy of such Procurement

Contract may be provided to the Company; provided that this Section 5.7(b) in no way limits the Company’s rights to consent to all Procurement Contracts as contemplated by Section 5.3(b). In addition, to the extent it is permitted to do so, Aron will endeavor to keep the Company apprised of, and consult with the Company regarding, the terms and conditions being incorporated into any Procurement Contract under negotiation with a Third Party Supplier.

(c) The Company acknowledges and agrees that, subject to the terms and conditions of this Agreement, it is obligated to purchase and take delivery of all Crude Oil acquired by Aron under Procurement Contracts executed in connection herewith and subject to the terms and conditions specified in Section 5.4 above. In the event of a dispute, Aron will provide to the Company, to the extent legally and contractually permissible, a copy of the Procurement Contract in question.

5.8 DISCLAIMER OF WARRANTIES. EXCEPT FOR THE WARRANTY OF TITLE WITH RESPECT TO CRUDE OIL DELIVERED HEREUNDER, ARON MAKES NO WARRANTY, CONDITION OR OTHER REPRESENTATION, WRITTEN OR ORAL, EXPRESS OR IMPLIED, OF MERCHANTABILITY, FITNESS OR SUITABILITY OF THE CRUDE OIL FOR ANY PARTICULAR PURPOSE OR OTHERWISE. FURTHER, ARON MAKES NO WARRANTY OR REPRESENTATION THAT THE CRUDE OIL CONFORMS TO THE SPECIFICATIONS IDENTIFIED IN ARON’S CONTRACT WITH ANY THIRD PARTY SUPPLIER.

5.9 Quality Claims and Claims Handling.

(a) The failure of any Crude Oil that Aron hereunder sells to the Company to meet the specifications or other quality requirements applicable thereto as stated in Aron’s Procurement Contract for that Crude Oil shall be for the sole account of the Company and shall not entitle the Company to any reduction in the amounts due by it to Aron hereunder; provided, however, that any claims made by Aron with respect to such non-conforming Crude Oil shall be for the Company’s account and resolved in accordance with this Section 5.9.

(b) The Parties shall consult with each other and coordinate how to handle and resolve any claims arising in the ordinary course of business (including claims related to Crude Oil, pipeline or ocean transportation, and any dispute, claim, or controversy arising hereunder between Aron and any of its vendors who supply goods or services in conjunction with Aron’s performance of its obligations under this Agreement) made by or against Aron. In all instances wherein claims are made by a third party against Aron which will be for the account of the Company, the Company shall have the right, subject to Section 5.9(d), to either direct Aron to take commercially reasonable actions in the handling of such claims or assume the handling of such claims in the name of Aron, all at the Company’s cost and expense; provided that Aron may require that the Company assume the handling of any such claim. To the extent that the Company believes that any claim should be made by Aron for the account of the Company against any third party (whether a Third Party Supplier, terminal facility, pipeline, storage facility or otherwise), and subject to Section 5.9(d), Aron will take

any commercially reasonable actions as requested by the Company either directly, or by allowing the Company to do so, to prosecute such claim all at the Company’s cost and expense and all recoveries resulting from the prosecution of such claim shall be for the account of the Company.

(c) Aron shall, in a commercially reasonable manner, cooperate with the Company in prosecuting any such claim and shall be entitled to assist in the prosecution of such claim at the Company’s expense.

(d) Notwithstanding anything in Section 5.9(b) or Section 5.9(c) to the contrary, Aron may notify the Company that Aron is retaining control over or limiting its participation in the resolution of any claim referred to in Section 5.9(b) or Section 5.9(c) if Aron, in its reasonable judgment, has determined that it has commercially reasonable business considerations for doing so based on any relationships that Aron or any of its Affiliates had, has or may have with the third party involved in such claim; provided that, subject to such considerations, Aron shall use commercially reasonable efforts to resolve such claim, at the Company’s expense and for the Company’s account or, at its option, Aron may assign to the Company all of Aron’s rights under and to pursue such claim after which Aron shall have no further obligation with respect thereto. In addition, any claim that is or becomes subject to Article 20 shall be handled and resolved in accordance with the provisions of Article 20.

(e) If any claim contemplated in this Section 5.9 involves a counterparty that is an Affiliate of Aron and the management and operation of such counterparty is under the actual and effective control of Aron, then the Company shall control the dispute and resolution of such claim.

5.10 Communications.

(a) Each Party shall promptly provide to the other copies of any and all written communications and documents between it and any third party which in any way relate to Ancillary Costs, including but not limited to written communications and documents with Pipeline Systems, provided that Aron has received such communications and documents in respect of the Pipeline System and/or any communications and documents related to the nominating, scheduling and/or chartering of vessels; provided that neither Party shall be obligated to provide to the other any such materials that contain proprietary or confidential information and, in providing any such materials, such Party may redact or delete any such proprietary or confidential information.

(b) With respect to any proprietary or confidential information referred to in Section 5.10(a), Aron shall promptly notify the Company of the nature or type of such information and use its commercially reasonable efforts to obtain such consents or releases as necessary to permit such information to be made available to the Company.

(c) The Parties shall coordinate all nominations and deliveries according to the communications protocol set forth on Schedule J hereto.

5.11 Supplemental Material.

(a) Supplemental Quantities. From time to time, unless otherwise directed by Aron under the Alon USA Supply and Offtake Agreement, and provided no Default or Event of Default has occurred and is continuing under this Agreement, Alon USA may withdraw quantities of Crude Oil from the BSR Crude Storage Tanks through the Alternate Delivery Point for Eastbound Shipment or receive quantities of Crude Oil into the BSR Crude Storage Tanks through the Alternate Delivery Point from Westbound Shipment. In each case, the quantity of Crude Oil withdrawn or received shall be deemed to equal the quantity reported by SPLP as having been injected or delivered at the Supplemental Injection Point based on readings of SPLP’s custody transfer meter (each such quantity, a “Supplemental Quantity”). Once any Crude Oil is injected into the Supplemental Pipeline, such Crude Oil shall constitute Supplemental Material for purposes hereof. Each Supplemental Quantity shall be the amount reported by SPLP, which amounts shall be reported as positive numbers and shall indicate for each Supplemental Quantity whether it is an Eastbound Shipment or a Westbound Shipment.

(b) Certain Adjustments.

(i) For purposes of all monthly calculations:

(A) the Monthly Supplemental Quantity shall be deemed to be subject to an Included Transaction; provided that, if such Monthly Supplemental Quantity is a positive amount, such Included Transaction shall constitute an agreement by the Company to purchase Supplemental Material from Aron which shall represent a positive volume for purposes of this Agreement and if such Monthly Supplemental Quantity is negative, such Included Transaction shall constitute an agreement of Aron to purchase Supplemental Material from the Company which shall represent a negative volume for purposes of this Agreement, and in each case having a per Barrel price equal to the Supplemental Price for that relevant month. The Parties acknowledge that, for purposes of calculating the Aggregate Monthly Product True-up Amount in accordance with Schedule C to this Agreement, as a result of the foregoing, the Monthly Supplemental Quantity shall be added to Aggregate Product Sales for the relevant month and the Supplemental Material Product Group, so that if the Monthly Supplemental Quantity is a positive number (representing a purchase of Supplemental Material by the Company from Aron) it shall increase Aggregate Product Sales and if the Monthly Supplemental Quantity is a negative number (representing a purchase of Supplemental Material by Aron from the Company) it shall decrease Aggregate Product Sales; and

(B) each Nederland-Krotz Buy/Sell Transaction shall be deemed to result in:

(1) the aggregate Shipped Quantity for such month being subject to an Included Transaction under which Aron has sold such quantity to the Company at the applicable price specified pursuant to the Nederland-Krotz Buy/Sell Confirmation and, for purposes of the month in which such aggregate Shipped Quantity is delivered, it shall be an increase to the Aggregate Product Sales for such month for the Supplemental Material Product Group; and

(2) the aggregate Delivered Quantity for such month being subject to a Procurement Contract under which Aron has purchased such quantity from the Company at the applicable price specified pursuant to the Nederland-Krotz Buy/Sell Confirmation and, for purposes of the month in which such Delivered Quantity is delivered, it shall be an increase to Aggregate Crude Receipts for such month.

(ii) For purposes of calculating Net Payments, the following provisions shall apply:

(A) “Adjusted Net Payment Condition” means the following: Aron shall have determined, in its reasonable judgment based on such inventory reports and other reasonable forms of evidence as may be available, that the sum of the Supplemental Step-in Inventory and the aggregate quantity of Supplemental Material injected into the Included Supplemental Facilities following the Inventory Transfer Time under the Supplemental Inventory Sales Agreement exceeds [***] Barrels.

(B) Once the Adjusted Net Payment Condition has been satisfied, and for so long as the Supplemental LC is maintained and continues to satisfy the maintenance requirements specified in the Fee Letter, the determination, as applicable, of the Weekly Supply Value under Section 10.1(c) or the Daily Supply Value under Section 10.2(c) of this Agreement shall be adjusted by including in such determination the deemed Procurement Contract referred to in Section 5.11(b)(i)(B)(2) above on the same basis as all other Procurement Contracts for purposes of such determination; provided that if Aron in its reasonable judgment determines, with respect to such deemed Procurement Contracts, that Contract Nominations are deviating from actual Shipped Quantities in excess of immaterial and customary variances, then for purposes of determining the Weekly Supply Value, Aron may from time to time adjust the amount of such Contract Nominations as it deems appropriate.

(C) The Parties acknowledge and agree that neither the Supplemental Material nor the Included Supplemental Facilities shall at any time be reflected in the calculation of the Net Payment.

(D) The Parties acknowledge and agree that the deemed Procurement Contract referred to in Section 5.11(b)(i)(B)(2) above shall be included in the determination of the Weekly Supply Value or Daily Supply Value only under the terms and conditions specified above. Accordingly, at all times prior to the satisfaction of the Adjusted Net Payment Condition and thereafter at any time at which the Supplemental LC has ceased to comply with the maintenance conditions specified in the Fee Letter, the determination of the Weekly Supply Value or Daily Supply Value shall be made as set forth in Section 10.1(c) or 10.2(c) of this Agreement (as applicable), without including such deemed Procurement Contract as contemplated by Section 5.11(b)(i)(B)(2) above.

(c) Measurements. For purposes of determining the Monthly Supplemental Quantity, Aron shall rely on the pipeline statements provided by SPLP with respect to the volumes on the Supplemental Pipeline.

(d) Shipments from Nederland Terminal to the Refinery.

(i) From time to time, the Parties may enter into buy/sell transactions pursuant to the Nederland-Krotz Buy/Sell Confirmation (each, a “Nederland-Krotz Buy/Sell Transaction”), under which, in the case of each Nederland-Krotz Buy/Sell Transaction, Aron shall sell to the Company a quantity of Supplemental Material at the time it passes the delivery point specified in the Nederland-Krotz Buy/Sell Confirmation (the “Shipped Quantity”), which the Company shall thereafter arrange to transport to the Refinery, and the Company shall sell to Aron the portion of the Shipped Quantity that is delivered into the Crude Storage Tanks at the Refinery as such quantity passes the Crude Intake Point (the “Delivered Quantity”), in each case as further specified pursuant to the Nederland-Krotz Buy/Sell Confirmation. Each Shipped Quantity shall be determined based on the reports of Supplier’s Inspector or SPMT as mutually agreed between the Parties. The Parties acknowledge that the net payment terms specified in the Nederland-Krotz Buy/Sell Confirmation are conditioned on the requirement that Shipped Quantities be transported by the Company only to the Refinery.

(ii) In connection with each Nederland-Krotz Buy/Sell Transaction, the Parties shall comply with both the nomination and scheduling procedures set forth in the Nederland Terminaling Agreement (“Nederland Shipment Procedures”) and the Scheduling Protocol set forth on Schedule J hereto.

(iii) The Company covenants and agrees that it will take such further actions, and execute, deliver and/or file such additional agreements, instruments and documents as Aron and its Affiliates may deem necessary or appropriate to confirm and maintain the lien and security interest of Aron under the Lien Documents in all Shipped Quantities and all documents of title (“Title Documents”) related thereto. If, in Aron’s reasonable judgment, Aron does not or would not hold a perfected first priority security interest in any quantities that are intended to be Shipped Quantities

and/or Title Documents that would be related thereto, then such quantities shall not be released from the storage tanks at the Nederland Terminal unless the Company has provided to Aron additional credit support in form and substance satisfactory to Aron with respect to such quantities that the Company desires to ship.

(iv) Without limiting the generality of Section 5.11(d)(iii) above, the Company covenants and agrees, with respect to each Shipped Quantity, that any bill of lading issued with respect to the further transportation by the Company of such Shipped Quantity from the docks of the Nederland Terminal (as provided in the Nederland Shipment Procedures) shall be a non-negotiable bill of lading and the Company shall be the only consignee named thereon.

(e) Title.

(i) Aron shall retain title to all Supplemental Material quantities at all times while such quantities are held in the Supplemental Pipeline or in the Nederland Terminal in connection with this Agreement or the Alon USA Supply and Offtake Agreement (including without limitation any linefill transferred to Aron in connection therewith), except to the extent otherwise provided under a buy/sell transaction between Aron and Alon USA with respect to an Excess Quantity.

(ii) As provided in the Nederland-Krotz Buy/Sell Confirmation, title to any Shipped Quantity shall transfer from Aron to the Company as such quantity passes the relevant delivery point provided therein and title to any Delivered Quantity shall transfer from the Company to Aron as such Supplemental Quantity or portion thereof passes the relevant delivery point as provided therein.

(f) Certain Acknowledgements and Further Agreements.

(i) To the extent that, as of the Termination Date, Aron holds any Supplemental Material in the Supplemental Pipeline or the Nederland Terminal that it owns in connection with this Agreement or as a result of any Included Transactions or Procurement Contracts thereunder, such Supplemental Material volumes (as determined in accordance with the Volume Determination Procedures) shall be included as part of the Termination Date Volumes and purchased by the Company in accordance with the terms of this Agreement and the Step-out Inventory Sales Agreement.

(ii) The Company agrees that whether any Procurement Contract constitutes a Procurement Contract under this Agreement or the Alon USA Supply and Offtake Agreement will, unless otherwise deemed appropriate based on Aron’s reasonable judgment, be determined by Aron based on whether the Crude Oil subject thereto is first delivered to an Included Supplemental Facility under this Agreement or an Included Location under the Alon USA Supply and Offtake Agreement.

(iii) The Company agrees that any removal of Supplemental Material from the Included Supplemental Facilities shall occur (i) under a Nederland Buy/Sell Transaction, (ii) via Westbound Shipment through the Supplemental Injection Point or (iii) otherwise under a separate documents arrangement expressly agreed to by Aron.

(g) Supplemental Material Product Group.

(i) From and after the date hereof, and notwithstanding anything in this Agreement or any other Transaction Document to the contrary, Supplemental Material shall be treated as a separate Product and Product Group for purposes of this Agreement and such other Transaction Documents.

(ii) The range applicable to Target Month End Product Volumes specified by Aron, as contemplated by Section 7.3(c) of this Agreement, shall have a Baseline Volume and Volume in Excess of Baseline as specified on Schedule D.

5.12 Deemed Acceptance. With respect to any trade confirmation issued by Aron to the Company in connection with any transaction relating to this Agreement, if Aron does not receive from the Company either acceptance or notification of a bona fide error within two (2) Business Days after receipt of such confirmation, then the Company shall be deemed to have accepted such confirmation, and such confirmation shall be effective and binding upon the Parties.

ARTICLE 6
PURCHASE VALUE FOR CRUDE OIL

6.1 Daily Volumes. For each Delivery Date, the Company shall provide to Aron, by no later than 1:00 pm CPT on the next Business Day (except (i) in the case of Friday and Saturday, then by the following Monday and (ii) in the case of Sunday and Monday, then by the following Tuesday), meter tickets or tank gauge readings confirming the Measured Crude Quantity for each Crude Storage Tank for that Delivery Date.

6.2 Purchase Value.

(a) Prior to the Third Restatement Adjustment Date:

(i) The per Barrel value of the Crude Oil sold to the Company hereunder shall equal the sum of the per Barrel purchase value specified in the related Procurement Contract under which such Crude Oil was acquired (the “Base Price”) plus the Pre-Adjustment Level One Fee (such sum being the “Supply Cost”), subject to application of the relevant Prices and Index Amounts as provided on Schedule B hereto and calculation of the Monthly Crude Oil True-up Amount as provided on Schedule C hereto.

(ii) For all Other Barrels procured by the Company outside of a Procurement Contract and sold to Aron, the Company will pay Aron the Pre-

Adjustment Level Two Fee per Barrel. Any such amount will be included in the applicable Monthly Crude Oil True-Up Amount. Upon Aron’s request, the Company will provide documentation evidencing such Crude Oil purchases.

(b) Following the Third Restatement Adjustment Date:

(i) As the purchase value for the Net Crude Sales Volume for any month, the Company shall owe to Aron when due the Monthly Crude Payment determined with respect to that Net Crude Sales Volume, subject to application of the relevant Prices and Index Amounts as provided on Schedule B hereto and calculation of the Monthly Crude Oil True-up Amount as provided on Schedule C hereto, and payable as provided in Section 10.2.

(ii) For any month, the “Monthly Crude Payment” shall equal, with respect to the Net Crude Sales Volume for such month, the sum of (A) the product of (1) the Monthly Crude Price for that month and (2) the Net Crude Sales Volume for such month (the amount determined in this clause (A) may be a positive or negative number), (B) the Crude Purchase Fee for that month and (C) the Ancillary Costs for that month. If the Monthly Crude Payment is a negative number, then the absolute value thereof shall represent an amount owed from Aron to the Company and payable as provided in Section 10.2.

(iii) For any month, the “Crude Purchase Fee” shall equal the sum of:

(A) the product of (1) the Level One Fee per barrel and (2) the Level One Barrels for such month, plus

(B) the product of (1) Level Two Fee per barrel and (2) the Level Two Barrels for such month.

(iv) “Third Party Barrels” means, for any month, the number of barrels purchased by Aron from any Third Party Supplier (other than any Affiliate of the Company).

(v) “Level One Barrels” means, for any month, the number of Third Party Barrels not in excess of [***] barrels.

(vi) “Level Two Barrels” means, for any month, the number of Third Party Barrels (if any) in excess of the Level One Barrels for such month.

(vii) For any month, the “Counterparty Crude Sales Fee” shall equal the product of (A) “Monthly Crude Procurement Sale Volume” (as defined on Schedule C) and (B) the counterparty level fee as determined on a monthly basis by Aron for each respective party.

(viii) The Crude Purchase Fee calculated under this Section 6.2 shall be incorporated under Schedule C as an amount due to Aron and to the extent

necessary, Aron may convert such amount to a negative number for purposes of achieving that result in making its calculations under Schedule C.

6.3 Material Crude Grade Changes. If either the Company or Aron concludes in its reasonable judgment that the specifications (including specific gravity and sulfur content of Crude Oil) of the Crude Oil procured, or projected to be procured, differ materially from the HLS and LLS Crude Oil, the grades that have generally been run by the Refinery, then the Company and Aron will endeavor in good faith to mutually agree on (i) acceptable indices for such Crude Oil, and (ii) a settlement payment from one Party to the other sufficient to compensate the relevant Party for the relative costs and benefits to each of the differences in value between the prior indices and the amended indices.

ARTICLE 7
TARGET INVENTORY LEVELS AND
WORKING CAPITAL ADJUSTMENT

7.1 Target Inventory Levels. Aron will set monthly inventory targets for Crude Oil and Products. Such monthly inventory targets for Crude Oil and Products shall be subject to (i) the Baseline Volumes and (ii) the sum of Baseline Volumes plus Volumes in Excess of Baseline on Schedule D for each Pricing Group (each sum, a “Maximum Volume”).

7.2 Target Month End Crude Volume.

(a) By no later than two (2) Business Days prior to the earliest Contract Cutoff Date occurring in each Nomination Month, the Company shall notify Aron of the aggregate quantity of Crude Oil that the Company expects to run at the Refinery during the subject Delivery Month (the “Projected Monthly Run Volume”).

(b) For each month of the Term, the “Target Month End Crude Volume” shall equal (i) the Target Month End Crude Volume for the immediately preceding month, subject to any adjustment thereto made pursuant to Section 7.2, plus (ii) the aggregate volume of Crude Oil that Aron has nominated under the Procurement Contracts for delivery during that month pursuant to Section 5.4(b), plus (iii) the aggregate volume of the expected Other Barrels, minus (iv) the Projected Monthly Run Volume for that month (except that the Target Month End Crude Volume as of the Commencement Date and as of the end of the first month of the Term shall be the respective volumes specified as such on Schedule I hereto). Notwithstanding the foregoing, Target Month End Crude Volume shall in no event exceed a Maximum Volume or be less than the Baseline Volume for Crude Oil indicated on Schedule D unless Aron establishes such a Month End Crude Volume as otherwise permitted under this Section 7.2.

(c) In establishing a Target Month End Crude Volume, Aron acknowledges that its ability to increase any such Target Month End Crude Volume is constrained to the extent that the Crude Oil available for delivery under the Procurement Contracts plus Other Barrels available for delivery during such month are not greater than the Company’s Crude Oil requirements for the Refinery for the month related to such Target Month End Crude Volume.

(d) After Aron has established a Target Month End Crude Volume for any month, it may change such Target Month End Crude Volume as follows:

(i) If the sum of (A) the Actual Month End Crude Volume and (B) the Baseline Volume for Crude Oil (the “Adjusted Month End Crude Volume”) is above the Target Month End Crude Volume by more than [***] Barrels and the Projected Net Crude Consumption is greater than the Actual Net Crude Consumption, then Aron may increase the Target Month End Crude Volume for such Delivery Month by the lesser of (i) the Adjusted Month End Crude Volume minus the sum of (A) the Target Month End Crude Volume and (B) [***] Barrels and (ii) the Projected Net Crude Consumption minus the Actual Net Crude Consumption. If the Target Month End Crude Volume is above the Adjusted Month End Crude Volume by more than [***] Barrels and the Actual Net Crude Consumption is greater than the Projected Net Crude Consumption, then Aron may reduce the Target Month End Crude Volume for such Delivery Month by the lesser of (i) the Target Month End Crude Volume minus the sum of (A) the Adjusted Month End Crude Volume plus (B) [***] Barrels and (ii) the Actual Net Crude Consumption minus the Projected Net Crude Consumption. Aron must notify the Company of its intent to make this change within four (4) Business Days after the end of such Delivery Month. The Company may dispute this change within one (1) Business Day after receiving such notification from Aron.

(ii) In addition, Aron may adjust the Target Month End Crude Volume with the consent of the Company.

In all cases described above, the changed Target Month End Crude Volume affects only the subject month and does not impact the calculation of the Target Month End Crude Volume in subsequent months pursuant to Section 7.2(b).

7.3 Target Month End Product Volume.

(a) No later than five (5) Business Days prior to each calendar month, the Company shall provide to Aron its standard run-out report (the “Run-out Report”) showing the estimated quantities of each Product that it expects to produce and deliver to Aron during such month and the quantities of each Product it expects to sell under the Marketing and Sales Agreement during such month (for each Product, the “Projected Monthly Production Volume”), which may, from time to time, be adjusted by the Company.

(b) For each month and each type of Product, Aron shall from time to time (but subject to any applicable notification deadlines specified on Schedule D hereto) specify an aggregate quantity and grade that shall be the “Target Month End Product Volume” for that month, which shall represent that volume (which may be zero or a positive number) for that Product targeted to be in excess of the Baseline Volume for that Product (except that the Target Month End Product Volume for each type of Product as of the Commencement Date and as of the end of the first month of the Term shall be the respective volumes specified as such on Schedule I hereto). Notwithstanding the foregoing, Target Month End Product

Volume shall in no event exceed a Maximum Volume or be less than the Baseline Volume for such Product unless Aron establishes such a Month End Product Volume as otherwise permitted under this Section 7.3.

(c) Provided that the Company has complied with its obligations under the Marketing and Sales Agreement, and subject to events of Force Majeure, facility turnarounds, the performance of any third parties (including purchasers of Products under the Marketing and Sales Agreement), Aron will, in establishing each Target Month End Product Volume, endeavor in a commercially reasonable manner to cause such Target Month End Product Volume to be within the applicable range specified for such Product on Schedule D hereto.

(d) At any time prior to the beginning of the month to which a Target Month End Product Volume relates (but subject to any applicable notification deadlines specified on Schedule D hereto), Aron may change such Target Month End Product Volume.

(e) After Aron has established a Target Month End Product Volume, it may change such Target Month End Product Volume if one of the following occurs: (i) the sum of (A) the Actual Month End Product Volume and (B) the Baseline Volume for such Product (the “Adjusted Month End Product Volume”) is below the minimum of the Operational Volume Range for the volume in excess of the Baseline Volume for such Product or (ii) the Adjusted Month End Product Volume is above the maximum of the Operational Volume Range for the volume in excess of the Baseline Volume for such Product, in which case Aron may change its Target Month End Product Volume for such month to equal the Adjusted Month End Product Volume. Aron must notify the Company of its intent to make this change within four (4) Business Days after the end of such Delivery Month. The Company may dispute this change within one (1) Business Day after receiving such notification from Aron. In all cases described above, the changed Target Month End Product Volume affects only the subject month and does not impact the calculation of the Target Month End Product Volume in subsequent months.

(f) The Target Month End Product Volume will be adjusted in accordance with the procedure for Excluded Transactions as described in the Marketing and Sales Agreement.

In addition, Aron may adjust the Target Month End Product Volume with the consent of the Company.

7.4 Monthly Working Capital Adjustment. Promptly after the end of each month, Aron shall determine the Monthly Working Capital Adjustment.

7.5 Monthly Product Sale Adjustments. For each calendar month (or portion thereof) during the term of the Marketing and Sales Agreement and for each Product Group, Aron shall determine whether an amount is due by one Party to the other (for each Product Group, a “Monthly Product Sale Adjustment”) in accordance with the following terms and conditions:

(a) For each Product Group and relevant period, Aron shall determine (i) the aggregate quantity of Barrels of such Product Group sold during such period under Product

Purchase Agreements and Company Purchase Agreements, (ii) the aggregate quantity of Barrels of such Product Group sold under any Excluded Transaction executed pursuant to Section 2.2(c) of the Marketing and Sales Agreement and (iii) the Aggregate Receipts (as defined below);

(b) If, for any Product Group and relevant period, (i) the Aggregate Receipts exceeds the Index Value (as defined below), then the Monthly Product Sale Adjustment for that Product Group shall equal such excess and shall be due to the Company and (ii) the Index Value exceeds the Aggregate Receipts, then the Monthly Product Sale Adjustment for that Product Group shall equal such excess and shall be due to Aron;

(c) If Aron determines that any Monthly Product Sale Adjustment is due, it will include its calculation of such amount in the documentation provided to the Company for the relevant period pursuant to Section 10.3 hereof and such Monthly Product Sale Adjustment shall be incorporated as a component of the Monthly True-up Amount due for such period which, if due to the Company, shall be expressed as a positive number and, if due to Aron, shall be expressed as a negative number; and

(d) As used herein:

(i) “Aggregate Receipts” means, for any Product Group and relevant period, the sum of (x) the actual aggregate purchase value invoiced by Aron for all quantities of such Product Group that Aron delivered during such period (without giving effect to any offsetting Excluded Transactions) under Product Purchase Agreements with Customers and under Company Purchase Agreements with Company Purchasers (as defined in the Marketing and Sales Agreement) and (y) for any Excluded Transaction executed pursuant to Section 2.2(c) of the Marketing and Sales Agreement, the aggregate purchase value that would have been payable under the proposed Product Purchase Agreement in connection with which such Excluded Transaction was executed;

(ii) “Index Value” means, for any Product Group and relevant period, the product of (A) the sum of the aggregate quantity of Barrels of such Product Group sold during such period (without giving effect to any offsetting Excluded Transactions) under Product Purchase Agreements and Company Purchase Agreements and the quantity of sales for such period covered by clause (y) of the definition of Aggregate Receipts, multiplied by (B) the Long Product FIFO Value for that Product Group and period.

obligations or the shortfall in the quantity held for its account (collectively, “Monthly Cover Costs”), then the Company shall be obliged to reimburse Aron for such Monthly Cover Costs. If Aron determines that any Monthly Cover Costs are due to it, Aron shall promptly communicate such determination to the Company and, subject to any mitigation of such costs actually achieved by the Company, include the calculation of such amount in the documentation provided to the Company for the relevant period pursuant to Section 10.3 hereof and such Monthly Cover Costs shall be incorporated as a component of the Monthly True-up Amount due for such period hereunder.

7.7 Costs Related to Shortfall. To the extent that Aron is required to cover any shortfall in any Product delivery, whether under a Product Purchase Agreement or Company Purchase Agreement or otherwise, by any inventory it owns and acquires separately from the inventory owned and maintained in connection with this Agreement, any cost or loss incurred by Aron in connection therewith that is not otherwise included as a Monthly Cover Cost shall constitute an Ancillary Cost that is to be reimbursed to Aron.

7.8 Monthly Excluded Transaction Fee. For any Barrel of gasoline or jet fuel delivered by Aron under an Excluded Transaction (net of any purchases under Excluded Transactions), Aron shall be obligated to pay to the Company an amount equal to the applicable Per Barrel Adjustment (as set forth on Schedule K to this Agreement). For each calendar month, Aron shall determine the net quantities of gasoline and jet fuel delivered during such month under Excluded Transactions and the aggregate amount due under this Section 7.8 as a result of such deliveries (the “Monthly Excluded Transaction Fee”). In addition, in computing the Monthly Excluded Transaction Fee, no fee shall be due with respect to any Barrels subject to an Excluded Transaction Pair (as defined in the Marketing and Sales Agreement). If any Monthly Excluded Transaction Fee is due to the Company for any period, Aron will include its calculation of such amount in the documentation provided to the Company for the relevant period pursuant to Section 10.3 hereunder and such Monthly Excluded Transaction Fee shall be incorporated as a component of the Monthly True-up Amount due for such period

7.9 Periodic Price Adjustments.

(a) Prior to each Periodic Adjustment Date, the Parties shall undertake the procedures set forth in Schedule GG and calculate whether, based on such data and procedures set forth in Schedule GG, an adjustment to any of the Prices is appropriate. Promptly after Aron has completed such calculation, it shall advise the Company in writing as to whether any Price adjustments are appropriate and if so the amounts of such Price adjustments. Any such adjusted Prices shall become applicable commencing with the relevant Periodic Adjustment Date.

(b) If any Prices are adjusted as of a Periodic Adjustment Date, Aron shall determine the Price Adjustment Settlement Amount in accordance with Schedule GG hereto and such amount shall be included in the applicable Monthly True-Up Amount as set forth on Schedule GG.

7.10 Transition Adjustment Period. The Parties agree that, with respect to the months occurring in the Transition Adjustment Period, the Monthly True-up Amounts for each such month shall be further adjusted as provided in Schedule HH hereto.

ARTICLE 8
PURCHASE AND DELIVERY OF PRODUCTS

8.1 Purchase and Sale of Products. Aron agrees to purchase and receive from the Company, and the Company agrees to sell and deliver to Aron, the entire Products output of the Refinery from and including the Commencement Date through the end of the Term of this Agreement, at the values determined pursuant to this Agreement and otherwise in accordance with the terms and conditions of this Agreement.

8.2 Transportation, Delivery and Storage of Products.

(a) Unless otherwise agreed by Aron, all Products shall be delivered by the Company to Aron at the Products Delivery Point into the Product Storage Tanks, on an FOB basis. Title and risk of loss to the Products so delivered to Aron shall pass from the Company to Aron as such Products pass the Products Delivery Point.

(b) Aron shall have exclusive right to store Products in the Product Storage Tanks as provided in the Storage Facilities Agreement.

(c) Pursuant to the Required Storage and Transportation Arrangements, Aron shall have the exclusive right to inject (except for such injections by the Company otherwise contemplated hereby), store, transport and withdraw Products in and on the Included Locations to the same extent as the Company’s rights to do so prior to the implementation of the Required Storage and Transportation Arrangements.

8.3 Expected Yield and Estimated Output.

(a) On or before the Commencement Date, the Company provided to Aron an expected Product yield for the Refinery based on its then current operating forecast for the Refinery (the “Initial Estimated Yield”). From time to time, based on its then current operating forecast for the Refinery, the Company may provide to Aron a revised expected Product yield for the Refinery (each, a “Revised Estimated Yield” and, together with the Initial Estimated Yield, an “Estimated Yield”).

(b) At least five (5) Business Days prior to each month, the Company shall, based on the then current Estimated Yield and such other operating factors as it deems relevant, prepare and provide to Aron an estimate of the Product quantities it expects to deliver to Aron during such month (each, a “Monthly Product Estimate”).

8.4 Delivered Quantities. For each Delivery Date, the Company shall provide to Aron, by no later than 1:00 p.m. CPT on the next Business Day (except (i) in the case of Friday and Saturday, then by the following Monday and (ii) in the case of Sunday and Monday, then by the

following Tuesday), meter tickets or tank gauge readings confirming the Measured Product Quantity in each Product Storage Tank for each Product delivered during that Delivery Date.

8.5 Title and Risk of Loss. Title and risk of loss to Products shall pass from the Company to Aron as Products pass the Products Delivery Point.

8.6 Product Specifications. The Company agrees that all Products sold to Aron hereunder shall conform to the respective specifications set forth on Schedule A hereto or to such other specifications as are from time to time agreed upon by the Parties.

8.7 Purchase Value of Products. The per unit value for each type of Product sold to Aron hereunder shall equal the Long Product FIFO Value specified for such Product (the “Product Cost”), subject to application of the relevant values as provided on Schedule B hereto and calculation of the Monthly Product True-up Amount as provided on Schedule C hereto.

8.8 Resale of Products.

(a) The Parties will endeavor, in good faith, to cause each of the Company’s existing commitments to sell Product to a third party (collectively, “Existing Sales Commitments”) to be assigned by the Company to Aron pursuant to an assignment agreement in form and substance satisfactory to Aron. Any Existing Sales Commitment that is so assigned shall constitute an “Assigned Sales Commitment” for purposes hereof. The Parties acknowledge that an assignment of an Existing Sales Commitment may not occur for various reasons, including, but not limited to, the refusal of the purchaser thereunder to consent to such assignment or Aron’s determination that it does not wish to have a direct contractual relationship with such purchaser.

(b) The Company agrees that, except for the Existing Sales Commitments, the Company will not enter into any other commitments to sell Products unless permitted in accordance with the Marketing and Sales Agreement or otherwise consented to by Aron in writing.

8.9 Material Product Grade Changes. If either the Company or Aron concludes in its reasonable judgment that the specifications or the mix of the constituents of a Pricing Group produced, or projected to be produced, differ materially from those that have generally been produced by the Refinery, then the Company and Aron will endeavor in good faith to mutually agree on (i) acceptable indices for such Product, and (ii) a settlement payment from one Party to the other sufficient to compensate the relevant Party for the relative costs and benefits to each of the differences in value between the prior indices and the amended indices.

ARTICLE 9
ANCILLARY COSTS; MONTH END INVENTORY;
CERTAIN DISPOSITIONS

9.1 Ancillary Costs.

(a) The Company agrees to reimburse Aron for all Ancillary Costs incurred by Aron (regardless of whether the Crude Oil and/or Products to which any such Ancillary Costs related have been received by or delivered to any Party). Such reimbursement shall occur on a monthly basis as part of the monthly true-up in Section 10.3 below, except that Aron may require that any such Ancillary Costs be reimbursed on demand in the event that (i) a Default or Event of Default has occurred and is continuing, (ii) upon the Expiration Date of the Agreement or (iii) the aggregate amount of unreimbursed Ancillary Costs at any time exceeds $[***], but only in respect of such excess. Aron shall promptly provide the Company with copies of all invoices for Ancillary Costs incurred by Aron. All refunds or adjustments of any type received by Aron related to any Ancillary Costs shall be reflected in the Monthly True-up Amount as provided in Section 10.3 below.

(b) Without limiting the foregoing, if Aron has reasonably determined (based on its experience in any one or more of the three (3) preceding months) that it expects the amount of Ancillary Costs for an upcoming month to exceed $[***] Aron may require that its estimate of such Ancillary Costs (to the extent of such excess) be paid in equal installments as part of each Net Payment made during such month, with the actual amount of such Ancillary Costs (net of such estimated payment) to be incorporated as a component of the Monthly True-up Amount payable in the next month.

9.2 Month End Inventory.

(a) As of 11:59:59 p.m., CPT, on the last day of each month, the Company shall apply the Volume Determination Procedures to the Crude Storage Tanks, the Included Supplemental Facilities, the Product Storage Tanks and the Other Included Crude Locations, and based thereon shall determine for such month (i) the aggregate volume of Crude Oil held in the Crude Storage Tanks and Other Included Crude Locations at that time minus the Baseline Volume for Crude Oil (the “Actual Month End Crude Volume”), which may be positive, negative or zero and (ii) for each Product, the aggregate volume of such Product held in the Product Storage Tanks and the Included Supplemental Facilities at that time minus the Baseline Volume for such Product (each, an “Actual Month End Product Volume”), which may be positive, negative or zero. The Company shall notify Aron of the Actual Month End Crude Volume and each Actual Month End Product Volume by no later than 5:00 p.m., CPT on the tenth day thereafter, except that with respect to volume information provided by third parties, the Company shall endeavor to cause third parties to provide such information to Aron by the fifteenth (15th) day after the end of such month

then the Company will cooperate with Aron, or Supplier’s Inspector, to ensure the correct application of the Volume Determination Procedures, including making such revisions to the Actual Month End Crude Volume and any Actual Month End Product Volume as may be necessary to correct any such errors.

9.3 Disposition Following Force Majeure.

(a) Notwithstanding anything to the contrary, if Aron decides or is required, due to an event of Force Majeure affecting either Party or otherwise, to sell to any unrelated third parties, in arm’s length transactions, any quantities of Crude Oil that, based on the then current Monthly Crude Forecast or Weekly Projection, Aron would reasonably have expected to have sold to the Company (any quantity of Crude Oil so disposed of by Aron being referred to as a “Disposed Quantity”), then the Company shall be obligated to pay to Aron an amount equal to the difference between the value at which such Disposed Quantity would have been sold to the Company, minus the amount realized in the sale to a third party (the “Disposition Amount”). In no event shall the Disposed Quantity exceed the aggregate amount of Crude Oil that the Company would have been expected to purchase based on their current Monthly Crude Forecast or Weekly Projection for the period during which the Company is unable to take delivery of Crude Oil as the result of the Force Majeure event or otherwise.

(b) In connection with its selling any Disposed Quantity, Aron shall promptly determine the Disposition Amount and issue to the Company an invoice for such amount. The Company shall pay to Aron the invoiced amount no later than the second Business Day after the date of such invoice. If, in connection with the sale of any Disposed Quantity, the Disposition Amount is a negative number, then Aron shall pay the amount of such excess to the Company no later than the second Business Day after the date of such invoice.

9.4 Tank Maintenance.

(a) Promptly after the Company completes its annual business plan with respect to any year, it shall notify Aron of any tank maintenance contemplated with respect to such year that would result in any Crude Storage Tank or Product Storage Tank being unavailable for use by Aron. The Company immediately shall notify Aron orally (followed by prompt written notice) of any previously unscheduled downtime or maintenance of any Crude Storage Tank or Product Storage Tank and its expected duration.

(b) The Company shall give Aron at least two (2) months’ prior written notice of any maintenance that the Company intends to conduct on any of the Crude Storage Tanks or Product Storage Tanks that would result in such storage tank being taken out of service (“Tank Maintenance”). The Parties agree to cooperate with each other in establishing the start date for any such maintenance so as to not unnecessarily interfere with any of Aron’s purchase or sale commitments or to otherwise accommodate, to the extent reasonably practicable, other commercial or market considerations that Aron deems relevant.

(c) In connection with any Tank Maintenance, the Parties shall promptly consult and endeavor to agree on adjusted inventory minimum and maximum levels and other

appropriate adjustments hereunder that are to apply during the period of such Tank Maintenance.

(d) The Company agrees that it will use its best efforts, consistent with good industry standards and practices, to complete (and to cause any third parties to complete) any Tank Maintenance as promptly as practicable. The Company shall provide Aron with an initial estimate of the period of any Tank Maintenance and shall regularly update Aron as to the progress of such Tank Maintenance. If, the Company determines that the expected completion date for Tank Maintenance has or is likely to change by thirty (30) days or more, it shall promptly notify Aron of such determination.

ARTICLE 10
PAYMENT PROVISIONS

10.1 Weekly Net Payments prior to the Third Restatement Adjustment Date. Prior to the Third Restatement Date:

(a) For each Production Week, Aron shall provide the Company with a net settlement statement in connection with each Production Week setting forth (i) the Weekly Supply Value (as defined below) and (ii) the Weekly Product Value (as defined below) as per the scheduled dates to be agreed on or before the Commencement Date. Provided no Default or Event of Default has occurred and is continuing, the Net Payment for any week shall be calculated as set forth in Section 10.1(e) below. Aron shall notify the Company of the Net Payment for a Production Week by the close of business on the first Business Day following such Production Week. The Net Payment for any Production Week shall be due from the Party owing such amount on the applicable Payment Date specified on Schedule G hereto; provided that in no event shall payment be due earlier than two (2) Business Days after Aron has provided notification of the Net Payment for a Production Week.

(b) If a Default or an Event of Default has occurred and is continuing, then the Non-Defaulting Party may, at its option and without limiting any other rights or remedies it may have hereunder or otherwise, suspend the requirement under Section 10.1(a) that payments be made weekly on a net basis and in lieu thereof the Defaulting Party shall be required to pay all amounts upon demand.

(i) Using the Tank Balance Volume Report and Alon Other Barrel Report provided by the Company, Aron will calculate the “Crude Consumption Volume” for each Crude Storage Tank as follows: Beginning Inventory plus Receipts minus Ending Inventory minus Other Barrels, each as reflected on the Tank Balance Volume Report and Alon Other Barrel Report (as shown on Schedule H). To obtain the “Daily Crude Consumption Volume” Aron will sum the Crude Consumption Volumes for the Crude Oil Group. The “Weekly Consumption Volume” shall be equal to the sum of the Daily Crude Consumption Volumes for each day in the Production Week.

(ii) Aron will use the Contract Nominations for the respective Delivery Month to allocate the Weekly Consumption Volume among those crude grades included in the Contract Nominations. For each crude grade so nominated, Aron will determine a “Grade Percentage” which shall be equal to the nominated volume of such crude grade divided by the total volume of crude nominated.

(iii) The “Weekly Grade Value” shall be an amount equal to (1) the Weekly Consumption Volume, multiplied by (2) the applicable Grade Percentage, multiplied by (3) the applicable Weekly Price, as set forth on Schedule B, plus $[***] per Barrel, multiplied by (4) negative one “-1”. If for such month Aron does not enter any Crude Oil Procurement Contracts, the Weekly Price will equal the sum of the closing settlement price on the New York Mercantile Exchange for the first nearby Light Crude Futures contract for the trading days in the relevant invoice period, as outlined on Schedule G.

(iv) The “Weekly Supply Value” shall be an amount equal to sum of all applicable Weekly Grade Values for the Production Week.

(d) As used herein, the “Weekly Product Value” shall be calculated as follows:

(i) Using the Tank Balance Volume Report provided by the Company, Aron will calculate the “Production Volume” for each Product Storage Tank as follows: Ending Inventory plus Sales (determined on a net volume basis) minus Beginning Inventory, each as reflected on the Tank Balance Volume Report. To obtain the “Daily Production Volume” for each Product Group, Aron will sum the Production Volumes for each of the applicable Product Storage Tanks. The “Weekly Production Volume” shall be equal to the sum of the Daily Production Volumes by Product Group for each day in the Production Week.

(ii) For each Product Group, the “Weekly Product Value” shall be an amount equal to (1) the Weekly Production Volumes, multiplied by (2) the applicable Weekly Price, as set forth on Schedule B.

(iii) The “Total Weekly Product Value” shall be an amount equal to the sum of all applicable Weekly Product Values for all Product Groups for the Production Week.

(e) The “Net Payment” for any Production Week shall be an amount equal to the sum of (1) the Total Weekly Product Value and (2) the Weekly Supply Value. If this is a negative amount, the absolute value will represent an amount payable to Aron and if this is a positive amount, it will represent an amount payable to the Company.

10.2 Daily Net Payments on and after the Third Restatement Adjustment Date. On and after the Third Restatement Date:

(a) For each day, Aron shall provide the Company with a net settlement statement in connection with such day setting forth (i) the Daily Supply Value (as defined below) and (ii) the Daily Product Value (as defined below) as per the dates specified on Schedule G hereto. Provided no Default or Event of Default has occurred and is continuing, the Net Payment for any day shall be calculated as set forth in Section 10.2(d) below.

(b) As used herein, the “Daily Supply Value” shall be calculated as follows:

(ii) Aron will use the Contract Nominations for the respective Delivery Month to allocate the Daily Crude Consumption Volume among those crude grades included in the Contract Nominations. For each crude grade so nominated, Aron will determine a “Grade Percentage” which shall be equal to the nominated volume of such crude grade divided by the total volume of crude nominated.

(iii) The “Daily Grade Value” shall be an amount equal to (1) the Daily Crude Consumption Volume, multiplied by (2) the applicable Grade Percentage, multiplied by (3) the applicable Daily Value, as set forth on Schedule B, multiplied by (4) negative one “-1”. If for such month Aron does not enter any Crude Oil Procurement Contracts, the Daily Value will equal the sum of the closing settlement price on the New York Mercantile Exchange for the first nearby Light Crude Futures contract for the trading days in the relevant invoice period, as outlined on Schedule G.

(iv) The “Daily Supply Value” for any day shall be an amount equal to applicable Daily Grade Values for such day.

(ii) For each Product Group, the “Daily Product Value” shall be an amount equal to (1) the Daily Production Volumes, multiplied by (2) the applicable Daily Value, as set forth on Schedule B.

(iii) The “Total Daily Product Value” for any day shall be an amount equal to the sum of all applicable Daily Product Values for all Product Groups for such day.

(d) The “Net Payment” for any day shall be an amount equal to the sum of (1) the Total Daily Product Value and (2) the Daily Supply Value. If this is a negative amount, the absolute value will represent an amount payable to Aron and if this is a positive amount, it will represent an amount payable to the Company.

(e) For each day, Aron shall determine the Total Daily Product Value and the Daily Supply Value, in a commercially reasonable manner based on the inventory data and otherwise in the manner contemplated by this Section 10.2 and Schedule G, and to the extent it deems appropriate taking into account such other data as may be relevant to the determination of such estimates.

(f) If Aron advises the Company of a Net Payment on any Business Day, then the Company shall be obligated to pay such Net Payment to Aron on the following Business Day.

(g) For any Business Day, the Net Payment to be determined and advised by Aron shall be the Net Payment for that day, provided that if such Business Day is followed by one or more non-Business Days (whether weekends or Bank Holidays), then Aron shall reasonably determine and advise to the Company the Net Payment for that Business Day as well as the Net Payment each of such following non-Business Days in the manner contemplated by this Section 10.2 and Schedule G, and all such Net Payments shall be due on that Business Day.

10.3 Monthly True-Up Amount.

(a) Aron will use commercially reasonable efforts to provide to the Company, within fifteen (15) Business Days after the end of any calendar month, a calculation and appropriate documentation to support such calculation for such month for a monthly true-up payment (the “Monthly True-up Amount”). The Monthly True-up Amount for any month shall be equal to:

(i) the Monthly Crude Oil True-up Amount (as defined on Schedule C hereto); plus

(ii) the Aggregate Monthly Product True-up Amount (as defined on Schedule C hereto), minus

(iii) the Ancillary Costs for such month, plus

(iv) the Monthly Excluded Transaction Fee, plus

(v) the Monthly Product Sale Adjustment, minus

(vi) the Monthly Cover Costs, plus

(vii) the Monthly Working Capital Adjustment, plus

(viii) any other amount then due from Aron to the Company under this Agreement or any other Transaction Document (including, without limitation, any Additional Monthly Fee or Supplemental Monthly Fee due to the Company inclusive of the KSR Monthly Deferral Amount calculated in accordance with Schedule HH, if applicable), minus

(ix) any other amount then due from the Company to Aron under this Agreement or any other Transaction Document (including without limitation any Additional Monthly Fee or Supplemental Monthly Fee due to Aron), plus

(x) The Price Adjustment Settlement Amount calculated in accordance with Schedule GG, if applicable, which, if positive, shall be due from Aron to the Company and, if negative, shall be due from the Company to Aron.

If the Monthly True-up Amount is a positive number, such amount shall be due from Aron to the Company, and if the Monthly True-up Amount is a negative number, then the absolute value thereof shall be due from the Company to Aron. The Company shall pay any Monthly True-up Amount due to Aron within two (2) Business Days after the Company’s receipt of the monthly invoice and all related documentation supporting the invoiced amount. Aron shall pay any Monthly True-up Amount due to the Company within two (2) Business Days after making its definitive determination of such amount.

(b) For purposes of determining the amounts due under clauses (i) and (ii) of Section 10.3(a), the definitions and formulas set forth on Schedule C hereto shall apply and for purposes of determining the amount due under clause (vii) of Section 10.3(a), the definitions and formula set forth on Schedule L hereto shall apply.

(c) For the purposes of determining the Monthly True-Up Amount for May 2020 and June 2020, and notwithstanding anything to the contrary on Schedule C, the Parties agree that additional sums shall be owing from one Party to the other to reflect the net amounts that would have been due between the Parties had the Second Restated Agreement expired on the Expiration Date thereof (including the purchase by the Company of Crude Oil and Products pursuant to the Step-Out Inventory Sales Agreement contemplated thereby) and this Agreement had been entered into and became effective on the Third Restatement Adjustment Date (with the purchase by Aron on the Third Restatement Adjustment Date of Crude Oil and Products pursuant to a document comparable to the Inventory Sales Agreement). The amounts determined and payable under this Section10.3(c) shall be

included as part of the Monthly True-Up Amounts for May 2020 and June 2020, which shall be payable in June 2020 and July 2020, respectively.

(d) Prior to the Third Restatement Adjustment Date, if Aron determines that there has been a significant level of sales or of exchange volumes such that calculations of the Base Price and Procurement Price (as defined on Schedule B) produce a skewed price, Aron shall notify the Company thereof. If Aron and the Company are unable to agree on a Base Price by the last business day of an applicable calendar month, the Base Price and Procurement Price for such month will be equal to the Alternate Price (as defined below).

(i) The “Alternate Price” for each calendar month equals: [***]

Where:

a: The arithmetic average of the closing settlement price(s) on the New York Mercantile Exchange for the first nearby Light Sweet Crude Oil Futures Contract, as determined on each Trading Day during the Delivery Month

b: The arithmetic average of the daily quotations as published by “Argus Americas Crude”, in the section “Gulf coast and midcontinent domestic” for “HLS” under the column “Weighted average” for the prompt month, for the pricing dates from and including the 26th of the month, two (2) months prior to the Delivery Month, to and including the 25th of the month, one (1) month prior to the Delivery Month. Saturdays, Sundays and holidays are excluded.

LESS

The arithmetic average of the daily quotation as published by “Argus Americas Crude”, in the section “Americas, US Gulf coast and midcontinent pipeline” in the subsection “WTI Formula Basis”, for the prompt month, for the pricing dates from and including the 26th of the month, two (2) months prior to the Delivery Month, to and including the 25th of the month, one (1) month prior to the Delivery Month. Saturdays, Sundays and holidays are excluded.

c: The arithmetic average of the daily quotations as published by “Argus Americas Crude”, in the section “Gulf coast and midcontinent domestic” for “LLS” under the column “Weighted average” for the prompt month, for the pricing dates from and including the 26th of the month, two (2) months prior to the Delivery Month, to and including the 25th of the month, one (1) month prior to the Delivery Month. Saturdays, Sundays and holidays are excluded.

LESS

d: The arithmetic average of the daily quotations as published by "Argus Americas Crude", in the section “WTI Markers” for “Diff CMA Nym” under the column “Wtd Avg” for the prompt month, for the pricing dates from and including the 26th of the month, two (2) months prior to the Delivery Month, to and including the 25th of the month, one (1) month prior to the Delivery Month. Saturdays, Sundays and holidays are excluded.

(e) On and after the Third Restatement Adjustment Date, for purposes of determining the Daily Value, the Short Crude FIFO Value and the Long Crude FIFO Value Price, in each case, for the Crude Product Group for Volume in Excess of Baseline Volume, the definitions and formulas for the “Crude Index Calculation” set forth on Schedule B-2 shall apply.

10.4 Invoices.

(a) Invoices shall be prepared and submitted in accordance with Schedule G hereto.

(b) If the Company in good faith disputes the amount of any invoice issued by Aron relating to any amount payable hereunder (including Net Payments, Monthly True-up Amounts or Ancillary Costs), it nonetheless shall pay Aron the full amount of such invoice by the due date and inform Aron in writing of the portion of the invoice with which it disagrees and why; provided that to the extent that the Company promptly informs Aron of a calculation error that is obvious on its face, the Company shall pay Aron the undisputed amounts and may retain such disputed amount pending resolution of such dispute. The Parties shall cooperate in resolving the dispute expeditiously. If the Parties agree that the Company does not owe some or all of the disputed amount or as may be determined by a court pursuant to Article 23, Aron shall return such amount to the Company, together with interest at the Fed Funds Rate from the date such amount was paid, within two (2) Business Days from, as appropriate, the date of their agreement or the date of the final, non-appealable decision of such court. Following resolution of any such disputed amount, Aron will issue a corrected invoice and any residual payment that would be required thereby will be made by the appropriate Party within two (2) Business Days. To the extent that the Existing Procurement Contract permits disputed amounts to be retained pending resolution of

disputes, the Parties agree to permit disputed amounts to be retained hereunder on the same terms, notwithstanding anything hereunder to the contrary.

10.5 Other Feedstocks. If Aron procures any catfeed or other non-Crude Oil feedstocks for the Company to run at the Refinery, the Parties shall agree in connection with such procurement upon the terms for incorporating the purchase of such feedstocks into the daily, weekly and monthly settlements contemplated by Sections 10.1, 10.2 and 10.3 above.

10.6 Interest.

(a) If any amount payable by the Company, the Guarantor, or any S&O Party under this Agreement or any other Transaction Document is not paid when due, whether at its scheduled payment date, by acceleration or otherwise, such amount shall thereafter bear interest at a rate per annum equal to the Default Interest Rate (calculated on the basis of actual days elapsed over a 360 day year).

(b) For so long as any Event of Default with respect to the Company has occurred and is continuing, interest shall accrue on a daily basis for such period (“Exposure Default Interest”) at the Default Interest Rate on Aron’s daily aggregate exposure to the S&O Parties under this Agreement and the other Transaction Documents, as determined by Aron in a commercially reasonable manner provided that such Exposure Default Interest shall be determined without duplication of any other interest accruing hereunder, including interest accruing at the Default Interest Rate under Section 10.6(a) above.

(c) Any Default Interest Rate interest accruing under Section 10.6(a) or Exposure Default Interest accruing under Section 10.6(b) shall be due to Aron on demand or, absent such demand, monthly and shall continue to accrue after occurrence of any Event of Default under Section 18.1(d) hereof, whether or not allowed or allowable in any insolvency or bankruptcy proceeding.

10.7 Payment in Full in Same Day Funds. All payments to be made under this Agreement shall be made by wire transfer of same day funds in U.S. Dollars to such bank account at such bank as the payee shall designate in writing to the payor from time to time. Except as expressly provided in this Agreement, all payments shall be made in full without discount, offset, withholding, counterclaim or deduction whatsoever for any claims which a Party may now have or hereafter acquire against the other Party, whether pursuant to the terms of this Agreement or otherwise.

10.8 Annual and Other Fees. As additional consideration for the arrangements contemplated hereby, the Company agrees to pay to Aron, as and when due, all fees provided for in the Fee Letter; provided that with respect to the Annual Fee referred to therein, such Annual Fee for each twelve (12) month period during the Term is to be paid in arrears, in equal quarterly installments, on June 1, September 1, December 1 and March 1 of each year, and the Termination Date. The Annual Fee shall be prorated for any periods of less than a full three (3) months.

ARTICLE 11
INDEPENDENT INSPECTORS; STANDARDS OF MEASUREMENT

11.1 Aron shall be entitled to have Supplier’s Inspector present at any time the Volume Determination Procedures are to be applied in accordance with the terms of this Agreement and to observe the conduct of Volume Determination Procedures.

11.2 In addition to its rights under Section 11.1, Aron may, from time to time during the Term of this Agreement, upon reasonable prior notice to the Company, at Aron’s own cost and expense, have Supplier’s Inspector conduct surveys and inspections of any of the Storage Facilities or observe any Crude Oil or Product transmission, handling, metering or other activities being conducted at such Storage Facilities or the Delivery Points; provided that such surveys, inspections and observations shall not materially interfere with the ordinary course of business being conducted at such Storage Facilities or the Refinery.

11.3 In the event that recalibration of meters, gauges or other measurement equipment is requested by Aron such as “strapping,” the Parties shall select a mutually agreeable certified and licensed independent petroleum inspection company (the “Independent Inspection Company”) to conduct such recalibration. The cost of the Independent Inspection Company is to be shared equally by the Company and Aron.

11.4 Standards of Measurement. All quantity determinations herein will be corrected to sixty (60) degrees Fahrenheit based on a U.S. gallon of two hundred thirty-one (231) cubic inches and forty-two (42) gallons to the Barrel, in accordance with the latest supplement or amendment to ASTM-IP petroleum measurement tables (Table 6A of ASTM-IP for Feedstocks and Table 6B of ASTM-IP for Products).

ARTICLE 12
FINANCIAL INFORMATION; CREDIT SUPPORT;
AND ADEQUATE ASSURANCES

12.1 Provision of Financial Information. The Company shall provide to Aron (i) within ninety (90) days following the end of each of its fiscal years, a copy of the annual report, containing audited consolidated financial statements of Delek US Holdings, Inc. and its consolidated subsidiaries for such fiscal year certified by independent certified public accountants, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit, and (ii) within forty-five (45) days after the end of its first three (3) fiscal quarters of each fiscal year, a copy of the quarterly report, containing unaudited consolidated financial statements of Delek US Holdings, Inc. and its consolidated subsidiaries for such fiscal quarter; provided that so long as Delek US Holdings, Inc. is required to make public filings of its quarterly and annual financial results pursuant to the Exchange Act, such filings are available on the SEC’s EDGAR database and such filings are made in a timely manner, then the Company will not be required to provide such annual or quarterly financial reports of Delek US Holdings, Inc. to Aron.

12.2 Additional Information. Upon reasonable notice, the Company shall provide to Aron such additional information as Aron may reasonably request to enable it to ascertain the current financial condition of the Company, including product reports in the form of Schedule S hereto.

12.3 Notification of Certain Events. The Company shall notify Aron within one (1) Business Day after learning of any of the following events:

(a) The Company’s or any of its Affiliates’ binding agreement to sell, lease, sublease, transfer or otherwise dispose of, or grant any Person (including an Affiliate) an option to acquire, in one transaction or a series of related transactions, all or a material portion of the Refinery assets;

(b) The Company’s or any of its Affiliates’ binding agreement to consolidate or amalgamate with, merge with or into, or transfer all or substantially all of its assets to, another entity (including an Affiliate);

(d) An early termination of or any notice of “event of default” under either the Guarantee or the S&O Party Guarantee;

(e) A material amendment to any Existing Financing Agreement or any other Financing Agreement; or

(f) The execution of any agreement or other instrument or the announcement of any transaction or proposed transaction by the Guarantor or any of its Affiliates relating to a change of control of the Guarantor;

provided that, with respect to clauses (a), (b), (e) and (f), no such notice shall be required if such event have been reported by the Guarantor on a Form 8‑K that has been filed by the Guarantor with the SEC in a timely manner.

12.4 Credit Support.

(a) As further security for the prompt and complete payment of all amounts due or that may become due hereunder, the Company shall grant the Lien contemplated by, comply with the terms of and maintain in full force and effect the Lien Documents and assist Aron in maintaining any UCC financing statements or other filings necessary to preserve Aron’s liens pursuant to the Lien Documents.

(b) As a condition to Aron’s entering into this Agreement, the Company has agreed to provide the Guarantee to Aron, as credit support for the prompt and complete performance and payment of all of the Company’s obligations hereunder, and all costs and expenses (including but not limited to the reasonable costs, expenses, and external attorneys’ fees of Aron) of amending and maintaining the Guarantee shall be borne by the Company.

(i) The Company may, from time to time, provide to Aron one or more Letters of Credit as additional credit support and margin for or to secure prompt and complete payment and performance of all of the Company’s obligations hereunder and under the other Transaction Documents; provided that (A) all costs and expenses (including but not limited to the reasonable costs, expenses, and external attorneys’ fees of Aron) of establishing, renewing, substituting, canceling, increasing, and reducing the amount of (as the case may be) the Letters of Credit shall be borne by the Company, (B) no LC Default shall have occurred and be continuing with respect to any such Letter of Credit and (C) as a condition to accepting any such Letter of Credit, the Parties shall agree to such additional terms and conditions with respect thereto as Aron may require, including without limitation the Company’s agreement to cause such Letter of Credit to have a minimum available amount and to remain outstanding for a specified period. Upon the occurrence of an LC Default with respect to any Letter of Credit provided to Aron hereunder, the Company agrees to deliver a substitute Letter of Credit to Aron having an available amount at least equal to that of the Letter of Credit to be replaced on or before the first (1st) Business Day after written demand by Aron (or the third (3rd) Business Day if only clause (a) under the definition of LC Default applies). Any Letter of Credit provided to Aron under this Section 12.4(c) shall be in addition to, and not in replacement of, the Supplemental LC provided pursuant to the Fee Letter, it being acknowledged that the Supplemental LC shall be subject to the further terms and conditions specified in the Fee Letter.

(ii) A Letter of Credit shall provide that Aron may draw upon the Letter of Credit in an amount (up to the face amount for which the Letter of Credit has been issued) that is equal to all amounts that are due and owing from the Company but have not been paid to Aron within the time allowed for such payments under this Agreement or any other Transaction Document (including any related notice or grace period or both). A Letter of Credit shall provide that a drawing shall be made on the Letter of Credit upon submission to the bank issuing the Letter of Credit of one or more certificates specifying the amounts due and owing to Aron in accordance with the specific requirements of the Letter of Credit.

the Company’s obligations hereunder and under the other Transaction Documents; provided that any such cash collateral and margin shall be subject to the terms and conditions of Section 12.4(c)(v) below. The Company shall remain liable for any amounts due and owing to Aron and remaining unpaid after the application of the amounts so drawn by Aron.

(iv) Provided no Default (of which Aron has provided notice to the Company) or Event of Default by the Company has occurred and is continuing, upon the Company’s request, Aron shall cooperate with the Company in a commercially reasonable manner to implement a reduction of the available amount under any outstanding Letters of Credit that have been provided to Aron hereunder by the Company; provided that if any minimum available amount requirement is applicable hereunder with respect to such Letters of Credit, no such reduction shall be made that results in the aggregate available amount thereunder being less than such minimum available amount requirement.

(v) To the extent that Aron makes a drawing under any Letter of Credit and retains any portion of such drawn amount as cash collateral and margin to secure the prompt and complete the payment and performance of all of the Company’s obligations hereunder and under the other Transaction Documents, the Company further agrees that Aron shall have, and hereby grants to Aron, a present and continuing security interest in and to, and a general first lien upon and right of set off against, such cash amount and all interest and other proceeds from time to time received, receivable or otherwise distributed in respect thereof, or in exchange therefor. Notwithstanding any provisions of Applicable Law, Aron shall have the right to sell, pledge, rehypothecate, assign, invest, use, commingle or otherwise use in its business all or any portion of such retained cash amount, free from any claim or right of any nature whatsoever of the Company, including any equity or right of redemption by the Company. Nothing in this Section 12.4(c) shall limit any rights of Aron under any other provision of this Agreement or any other Transaction Documents, including without limitation, under Article 18 below.

12.5 Adequate Assurances. If, during the Term of this Agreement, a Material Adverse Change has occurred with respect to the Company and is continuing, then Aron may notify the Company thereof and demand in writing that the Company provide to Aron adequate assurance of the Company’s ability to perform its obligations hereunder. Such adequate assurance (the “Adequate Assurance”) may take the form of a prepayment from the Company to Aron in such amount as Aron reasonably deems sufficient, a provision of additional credit support in the form of letters of credit, third party guaranties and/or collateral security in such forms and amount and provided by such parties as Aron reasonably deems sufficient or such other form of assurance as Aron reasonably deems sufficient, in each case taking into account such Material Adverse Change. If such adequate assurance is not received within 10 Business Days after such demand by Aron, then such failure shall constitute an Event of Default by the Company under clause (k) of Section 18.1.

ARTICLE 13
REFINERY TURNAROUND, MAINTENANCE AND CLOSURE

13.1 The Company shall promptly notify Aron in writing of the date for which any inspection, maintenance. restart or turnaround at the Refinery has been scheduled, or any revision to previously scheduled inspection, maintenance, restart or turnaround, which may affect receipts of Crude Oil at the Refinery or the Storage Facilities, the processing of Crude Oil in the Refinery or the delivery of Products to Aron or by Aron to any third parties; provided that, in any event, such notice shall have been given at least twenty (20) Business Days prior to the commencement of such inspection, maintenance, restart or turnaround. The Parties shall cooperate with each other in establishing inspection, maintenance and turnaround schedules that do not unnecessarily interfere with the receipt of Crude Oil that Aron has committed to purchase or the delivery of Products that Aron has committed to sell.

13.2 The Company shall immediately notify Aron orally (followed by prompt written notice) of any previously unscheduled downtime, inspection, maintenance or turnaround and its expected duration.

13.3 In the event of a scheduled shutdown of the Refinery, the Company shall, to the extent feasible, complete processing of all Crude Oil being charged to, processed at or consumed in the Refinery at that time.

13.4 (a) Subject to Section 13.4(b) below, if at any time Aron determines that all or any portion of the facilities constituting an Included Location (in each case, “Identified Facilities”) fail to satisfy Aron’s then applicable policies and procedures relating to the prudent maintenance and operation of storage tanks and pipeline facilities (“Aron’s Policies and Procedures”), and without limiting any other rights and remedies available to Aron hereunder or under any other Transaction Document, Aron may provide the Company notice of such failure so long as such failure is continuing and, if Aron provides such notice, the following provisions shall be applicable: (i) in the case of any Identified Facilities that are subject to the Storage Facility Agreement, upon such date as Aron shall specify, such Identified Facilities shall cease to constitute an Included Location (or part of an Included Location) for purposes hereof and any payment to Aron in respect of any Crude Oil or Products held in such Identified Facilities shall become due in accordance with the provisions of Article 10 hereof; and (ii) in the case of any Identified Facilities that are subject to a Required Storage and Transportation Arrangement, the Parties shall endeavor as promptly as reasonably practicable to execute such rights, provide such notices, negotiate such reassignments or terminations and/or take such further actions as Aron deems necessary or appropriate to terminate Aron’s status as the party entitled to use and/or hold Crude Oil or Products at such Identified Facilities and, concurrently with effecting the termination of such status, such Identified Facilities shall cease to constitute an Included Location (or part of an Included Location) for purposes hereof and any payment to Aron in respect of any Crude Oil or Products held in such Identified Facilities shall become due in accordance with the provisions of Article 10 hereof.

(a) Aron’s rights under Section 13.4(a) above are subject to the following additional terms and conditions:

(i) Aron shall apply Aron’s Policies and Procedures with respect to the Included Locations in a non-discriminatory manner as compared with other similar storage tanks and pipeline facilities utilized by Aron in a similar manner;

(ii) If the failure of any Identified Facilities to satisfy Aron’s Policies and Procedures is a result of Aron’s Policies and Procedures exceeding the standards or requirements imposed under Applicable Law or good and prudent industry practice, then (1) Aron shall not require the removal of such Identified Facilities as Included Locations until the 120^th day after giving the Company notice of such failure, (2) during such 120 day period, Aron shall consult with the Company in good faith to determine whether based on further information provided by the Company such Identified Facilities comply with Aron’s Policies and Procedures and/or whether additional actions or procedures can be taken or implemented so that, as a result, such Identified Facilities would comply with Aron’s Policies and Procedures, and (3) if it is determined that such Identified Facilities do comply with Aron’s Policies and Procedures or, as a result of such additional actions or procedures, such Identified Facilities become so compliant within such 120 day period, then such Identified Facilities shall not cease to be Included Locations based on the noncompliance stated in Aron’s notice to the Company;

(iii) If within the 120 day period referred to in clause (ii)(2) above, the Company has identified and diligently commenced the implementation of additional actions or procedures that are intended to result in such Identified Facilities becoming compliant with Aron’s Policies and Procedures, but such implementation cannot through commercially reasonable efforts be completed within such 120 day period, then so long as the Company continues to diligently and in a commercially reasonable manner pursue the implementation of such additional actions and procedures, Aron will extend such 120 day period up for up to an additional 60 days to allow for such implementation to be completed and if such implementation is completed within such additional 60 day period, then such Identified Facilities shall not cease to be Included Locations based on the noncompliance stated in Aron’s notice to the Company; and

(iv) If any Identified Facilities cease to be Included Locations pursuant to Section 13.4(a) above and thereafter Aron determines, in its reasonable good faith judgment, that such Identified Facilities have become compliant with Aron’s Policies and Procedures, then Aron shall promptly cooperate with the Company to reestablish such Identified Facilities as Included Locations hereunder.

ARTICLE 14
TAXES

14.1 The Company shall pay and indemnify and hold Aron harmless against, the amount of all sales, use, gross receipts, value added, severance, ad valorem, excise, property, spill, environmental, transaction-based, or similar taxes, duties and fees, howsoever designated (each, a “Tax” and collectively, “Taxes”) regardless of the taxing authority, and all penalties and interest thereon, paid, owing, asserted against, or incurred by Aron directly or indirectly with respect to the Crude Oil procured and sold, and the Products purchased and resold, and other transactions contemplated hereunder to the greatest extent permitted by Applicable Law; in the event that the Company is not permitted to pay such Taxes, the amount due hereunder shall be adjusted such that the Company shall bear the economic burden of the Taxes. The Company shall pay when due such Taxes unless there is an applicable exemption from such Tax, with written confirmation of such Tax exemption to be contemporaneously provided to Aron. To the extent Aron is required by law to collect such Taxes, one hundred percent (100%) of such Taxes shall be added to invoices as separately stated charges and paid in full by the Company in accordance with this Agreement, unless the Company is exempt from such Taxes and furnishes Aron with a certificate of exemption; provided, however, that (i) the failure of Aron to separately state or collect Taxes from the Company shall not alter the liability of the Company for Taxes and (ii) Aron shall only be liable for Taxes if and to the extent that Taxes have been separately stated and collected from the Company. Aron shall be responsible for all taxes imposed on Aron’s net income.

14.2 If the Company disagrees with Aron’s determination that any Tax is due with respect to transactions under this Agreement, the Company shall have the right to seek a binding administrative determination from the applicable taxing authority, or, alternatively, the Company shall have the right to contest any asserted claim for such Taxes in its own name, subject to its agreeing to indemnify Aron for the entire amount of such contested Tax (including any associated interest and/or late penalties) should such Tax be deemed applicable. Aron agrees to reasonably cooperate with the Company, at the Company’s cost and expense, in the event the Company determines to contest any such Taxes. Notwithstanding anything to the contrary in Section 14.1, the Company shall not be obligated to indemnify Aron with respect to any penalties or interest resulting from (and only to the extent of and attributable to) Aron’s negligence in preparing and filing any property tax returns that are to be prepared and filed by Aron with respect hereto; provided any information that the Company has provided to Aron for purposes of such returns is accurate and complete, and made available by the Company to Aron in a timely manner. If the Company apprises Aron in a timely manner of any verifiable discounts available for early filing of any such property tax returns that Aron is to file, Aron shall use its commercially reasonable efforts to avail itself of such discounts and if any such discount is obtained, the amount to be indemnified by the Company under Section 14.1 shall be the discounted amount.

but Aron shall be consulted. In any event, the Company and Aron shall fully cooperate with each other as to the asserted liability. Each Party shall bear all the reasonable costs of any action undertaken by the other at the Party’s request.

14.4 Any other provision of this Agreement to the contrary notwithstanding, this Article 14 shall survive until ninety (90) days after the expiration of the statute of limitations for the assessment, collection, and levy of any Tax.

ARTICLE 15
INSURANCE

15.1 Insurance Coverages. The Company shall procure and maintain in full force and effect throughout the Term of this Agreement insurance coverages of the following types and amounts and with insurance or reinsurance companies rated not less than A- by A.M. Best, or an equivalent rating agency of comparable financial strength:

(a) Property damage coverage on an “all risk” basis in an amount sufficient to cover the market value or potential full replacement cost of all Crude Oil to be delivered to the Company at the Crude Delivery Point and all Products to be delivered to Aron at the Products Delivery Point. In the event that the market value or potential full replacement cost of all Crude Oil and Products exceeds the insurance limits available or the insurance limits available at commercially reasonable rates in the insurance marketplace, the Company will maintain the highest insurance limit available at commercially reasonable rates; provided, however, that the Company will promptly notify Aron of the Company’s inability to fully insure any Crude Oil and Products and provide full details of such inability. Such policies shall name Aron as a loss payee with respect to any of Aron’s Crude Oil or Product in the care, custody or control of the Company. Notwithstanding anything to the contrary herein, Aron, may, at its option and expense, endeavor to procure and provide such property damage coverage for the Crude Oil and Products; provided that to the extent any such insurance is duplicative with insurance procured by the Company, the insurance procured by the Company shall in all cases represent, and be written to be, the primary coverage.

(b) Commercial general liability coverage which includes bodily injury, broad form property damage and contractual liability, cross suit liability, and products and completed operations liability coverage in a minimum amount of $[***] per occurrence and $[***] in the aggregate, which coverage may be self-insured by the Company.

(c) (i) Workers compensation in the amount required by Applicable Law, and (i) employer’s liability with a minimum amount of $[***] per accident, $[***] per disease, and $[***] aggregate.

(d) Commercial automobile liability insurance in a minimum amount of $[***] per accident.

(e) Umbrella/excess liability coverage providing coverage on a follow-form or equivalent basis with respect to the coverage required under Sections 15.1(b), 15.1(c)(ii) and 15.1(d) in a minimum amount of $[***] per occurrence and in the aggregate.

(f) [Reserved]

(g) Wharfinger’s / charterer’s liability insurance (if applicable) in a minimum amount of $[***] per occurrence and in the aggregate.

(h) Non-owned aviation liability insurance (if applicable) in a minimum amount of $[***] per occurrence and in the aggregate.

(i) Sudden and Accidental pollution liability of $[***] provided as part of the Commercial General Liability and Umbrella/Excess Liability program or as part of a standalone placement providing equivalent coverage.

15.2 Additional Insurance Requirements.

(a) The foregoing policies shall include or provide that the underwriters waive all rights of subrogation against Aron and the insurance is primary without contribution from Aron’s insurance. The foregoing policies with the exception of those listed in Sections 15.1(a), 15.1(c) and 15.1(g) shall include Aron, its subsidiaries, and affiliates and their respective directors, officers, employees and agents as additional insured.

(b) The Company shall cause its insurance carriers to furnish Aron with insurance certificates, in Acord form or equivalent, evidencing the existence of the coverages and the endorsements required above. The Company shall provide thirty (30) days’ written notice prior to cancellation or material modification of insurance becoming effective. The Company also shall provide renewal certificates prior to expiration of the policy.

(c) The mere purchase and existence of insurance does not reduce or release either Party from any liability incurred or assumed under this Agreement.

(d) The Company shall comply with all notice and reporting requirements in the foregoing policies and timely pay all premiums.

(e) The Company shall be responsible for any deductibles or retentions that are applicable to the insurance required pursuant to Section 15.1.

15.3 The Company shall have the right to satisfy its insurance obligations outlined in Sections 15.1 and 15.2 by means of a captive insurance program provided that (a) such captive insurance program is permitted under and in compliance with applicable law, (b) such insurance policy or policies issued by the captive insurer contains a “cut-though” endorsement providing that in the event of the captive insurer’s insolvency any reinsurer of the captive insurer will pay any loss covered by a reinsurance contract directly to the Company, and (c) such captive insurance program is able to pay claims in accordance with the laws of the State of New York.

ARTICLE 16
FORCE MAJEURE

16.1 If a Party is rendered unable by an event of Force Majeure to perform in whole or in part any obligation or condition of this Agreement (the “Affected Party”), it shall not be liable to the other Party to perform such obligation or condition (except for payment and indemnification obligations) for so long as the event of Force Majeure exists and to the extent that performance is hindered by such event of Force Majeure; provided, however, that the Affected Party shall use any commercially reasonable efforts to avoid or remove the event of Force Majeure. During the period that performance by the Affected Party of a part or whole of its obligations has been suspended by reason of an event of Force Majeure, the other Party (the “Non-Affected Party”) likewise may suspend the performance of all or a part of its obligations to the extent that such suspension is commercially reasonable, except for any payment and indemnification obligations. The Parties acknowledge that if, as a result of a Force Majeure, the Company were to suspend its receipt and/or processing of Crude Oil, then Aron would be entitled to suspend, to a comparable extent, its purchasing of Products.

16.2 The Affected Party shall give prompt oral notice to the Non-Affected Party of its declaration of an event of Force Majeure, to be followed by written notice within twenty-four (24) hours after receiving notice of the occurrence of a Force Majeure event, including, to the extent feasible, the details and the expected duration of the Force Majeure event and the volume of Crude Oil or Products affected. The Affected Party also shall promptly notify the Non-Affected Party when the event of Force Majeure is terminated. However, the failure or inability of the Affected Party to provide such notice within the time periods specified above shall not preclude it from declaring an event of Force Majeure.

16.3 In the event the Affected Party’s performance is suspended due to an event of Force Majeure in excess of thirty (30) consecutive days after the date that notice of such event is given, and so long as such event is continuing, the Non-Affected Party, in its sole discretion, may terminate or curtail its obligations under this Agreement affected by such event of Force Majeure (the “Affected Obligations”) by giving notice of such termination or curtailment to the Affected Party, and neither Party shall have any further liability to the other in respect of such Affected Obligations to the extent terminated or curtailed, except for the rights and remedies previously accrued under this Agreement, any payment and indemnification obligations by either Party under this Agreement and the obligations set forth in Article 19.

16.4 If any Affected Obligation is not terminated pursuant to this Article 16 or any other provision of this Agreement, performance shall resume to the extent made possible by the end or amelioration of the event of Force Majeure in accordance with the terms of this Agreement; provided, however, that the Term of this Agreement shall not be extended.

claims that Aron may have as a result of such Third Party Supplier’s failure shall be subject to Section 5.9 hereof and any other applicable provisions of this Agreement relating to claims against third parties.

16.6 If at any time during the Term any of the Required Storage and Transportation Arrangements cease to be in effect (in whole or in part) or any of the applicable Included Locations cease, in whole or in part, to be available to Aron pursuant to the Required Storage and Transportation Arrangements, and the foregoing is a result of or attributable to any owner or operator of such Included Location becoming Bankrupt or breaching or defaulting in any of its obligations relating to the Required Storage and Transportation Arrangements, then:

(a) The Company shall promptly use commercially reasonable efforts to establish for Aron’s benefit alternative and/or replacement storage and transportation arrangements no less favorable to Aron (in Aron’s reasonable judgment) than those that have ceased to be available;

(b) Until such alternative and/or replacement arrangements complying with clause (a) above have been established, each Party shall be deemed to have been affected by an event of Force Majeure and its obligations under this Agreement shall be curtailed to the extent such performance is hindered by such lack of effectiveness of any Required Storage and Transportation Arrangements or the availability of any pipeline or storage facility related thereto; and

(c) Without limiting the generality of the foregoing, in no event shall Aron have any obligation under or in connection with this Agreement to store Crude Oil or Product in any pipeline or store Crude Oil or Product in any storage facility at any time from and after the owner or operator thereof becoming Bankrupt. If any such storage facility is an Included Location then Aron may, in its discretion, elect upon written notice to the Company that such storage facility shall cease to be an Included Location as of a date specified in such written notice in which case any Crude Oil or Product held by Aron therein shall be purchased by the Company in accordance with the applicable provisions of Sections 10.1, 10.2 and 10.3 hereof.

ARTICLE 17
REPRESENTATIONS, WARRANTIES AND COVENANTS

17.1 Mutual Representations. Each Party represents and warrants to the other Party as of the Third Restatement Effective Date and each sale of Crude Oil hereunder, that:

(a) It is an “Eligible Contract Participant” as defined in Section 1a(18) of the Commodity Exchange Act, as amended.

Products hereunder constitutes a commodity forward agreement as such term is used in the definition of “swap agreement,” as each such term is defined in the Bankruptcy Code and used in section 560 of the Bankruptcy Code and (iii) a “master netting agreement participant” and this Agreement constitutes a “master netting agreement,” as each such term is defined in the Bankruptcy Code and used in section 561 of the Bankruptcy Code.

(c) It is duly organized and validly existing under the laws of the jurisdiction of its organization or incorporation and in good standing under such laws.

(d) It has the corporate, governmental or other legal capacity, authority and power to execute and deliver the Transaction Documents and to perform its obligations under this Agreement, and has taken all necessary action to authorize the foregoing.

(e) The execution, delivery and performance of the Transaction Documents and the performance of its obligations thereunder and the consummation of the transactions contemplated thereby do not violate or conflict with any Applicable Law, any provision of its constitutional documents, any order or judgment of any court or Governmental Authority applicable to it or any of its assets or any contractual restriction binding on or affecting it or any of its assets.

(f) All governmental and other authorizations, approvals, consents, notices and filings that are required to have been obtained or submitted by it with respect to the Transaction Documents have been obtained or submitted and are in full force and effect, and all conditions of any such authorizations, approvals, consents, notices and filings have been complied with.

(g) Its obligations under the Transaction Documents constitute its legal, valid and binding obligations, enforceable in accordance with its terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to equitable principles of general application regardless of whether enforcement is sought in a proceeding in equity or at law).

(h) No Event of Default or Default has occurred and is continuing, and no such event or circumstance would occur as a result of its entering into or performing its obligations under the Transaction Documents.

(i) There is not pending or, to its knowledge, threatened against it or any of its Affiliates any action, suit or proceeding at law or in equity or before any court, tribunal, Governmental Authority, official or any arbitrator that is likely to affect the legality, validity or enforceability against it of this Agreement or its ability to perform its obligations under the Transaction Documents.

(j) It is not relying upon any representations of the other Party other than those expressly set forth in this Agreement.

(k) It has entered into this Agreement as principal (and not as advisor, agent, broker or in any other capacity, fiduciary or otherwise), with a full understanding of the material terms and risks of the same, and is capable of assuming those risks.

(l) It has made its trading and investment decisions (including their suitability) based upon its own judgment and any advice from its advisors as it has deemed necessary and not in reliance upon any view expressed by the other Party.

(m) The other Party (i) is acting solely in the capacity of an arm’s-length contractual counterparty with respect to this Agreement, (ii) is not acting as a financial advisor or fiduciary or in any similar capacity with respect to this Agreement and (iii) has not given to it any assurance or guarantee as to the expected performance or result of this Agreement.

(n) It is not bound by any agreement that would preclude or hinder its execution, delivery, or performance of this Agreement.

(o) Neither it nor any of its Affiliates has been contacted by or negotiated with any finder, broker or other intermediary in connection with the sale of Crude Oil or Products hereunder who is entitled to any compensation with respect thereto.

(p) None of its directors, officers, employees or agents or those of its Affiliates has received or will receive any commission, fee, rebate, gift or entertainment of significant value in connection with this Agreement.

17.2 Company’s Representations and Covenants.

(a) The Company has delivered true and complete copies of the Base Agreements and Required Storage and Transportation Arrangements and all amendments thereto to Aron.

(b) The Company shall in all material respects continue to perform its obligations under and comply with the terms of the Base Agreements and Required Storage and Transportation Arrangements.

(c) The Company shall maintain and pursue diligently all its material rights under the Base Agreements and Required Storage and Transportation Arrangements and take all reasonable steps to enforce its rights and any rights granted to the Company thereunder.

(d) The Company shall not modify, amend or waive rights arising under any of the Base Agreements or the Required Storage and Transportation Arrangements without the prior written consent of Aron; provided, however, that if the Company provides Aron with notice, the Company may make such modifications or amendments, including extensions or elections under any of the foregoing, that do not adversely affect Aron’s rights thereunder, degrade, reduce or limit the standards applicable to the operator thereunder or otherwise

interfere with Aron’s rights to use the Pipeline System and Included Locations subject thereto without the prior written consent of Aron.

(e) The Company shall not cause or permit any of the Crude Oil or Products held at the Included Locations to become subject to any Liens.

(f) The Company represents and warrants that the Storage Facilities have been maintained, repaired, inspected and serviced in accordance with good and prudent industry standards and Applicable Law and are in good working order and repair in all respects.

(g) In the event the Company becomes Bankrupt, and to the extent permitted by Applicable Law, the Company intends that (i) Aron’s right to liquidate, collect, net and set off rights and obligations under this Agreement and liquidate and terminate this Agreement shall not be stayed, avoided, or otherwise limited by the Bankruptcy Code, including section 362(a), 547, 548 or 553 thereof; (ii) Aron shall be entitled to the rights, remedies and protections afforded by and under, among other sections, sections 362(b)(6), 362(b)(17), 362((b)(27), 546(e), 546 (g), 546 (j), 548(d), 553, 556, 560, 561 and 562 of the Bankruptcy Code; and (iii) any cash, securities or other property provided as performance assurance, credit, support or collateral with respect to the transactions contemplated hereby shall constitute “margin payments” as defined in section 101(38) of the Bankruptcy Code and all payments for, under or in connection with the transactions contemplated hereby, shall constitute “settlement payments” as defined in section 101(51A) of the Bankruptcy Code.

(h) The Company agrees that it shall have no interest in or the right to dispose of, and shall not permit the creation of, or suffer to exist, any security interest, lien, encumbrance, charge or other claim of any nature (collectively, “Liens”) with respect to, any quantities of Crude Oil prior to the delivery thereof by Aron to the Company at the Crude Delivery Point or any quantities of Products after delivery thereof to Aron at the Products Delivery Point (collectively, “Aron’s Property”). The Company authorizes Aron to file at any time and from time to time any UCC financing statements describing the quantities of Aron’s Property subject to this Agreement and Aron’s ownership thereof and title thereto, and the Company shall execute and deliver to Aron, and the Company hereby authorizes Aron to file (with or without the Company’s signature), at any time and from time to time, all amendments to financing statements, assignments, continuation financing statements, termination statements, and other documents and instruments, in form reasonably satisfactory to Aron, as Aron may reasonably request, to provide public notice of Aron’s ownership of and title to the quantities of Aron’s Property subject to this Agreement and to otherwise protect Aron’s interest therein.

(i) As provided in the Pledge and Security Agreement, the Company has granted to Aron additional security for the prompt and complete payment and performance of all obligations which remains in full force and effect.

(j) With respect to all Required Storage and Transportation Arrangements in which the party providing the storage or transportation services is an Affiliate of the

Company, the Company shall cause such Affiliate to perform its obligations under such Required Storage and Transportation Arrangement.

(k) [Reserved]

(l) The Company has delivered true and complete copies of the Existing Financing Agreements and all material amendments thereto to Aron.

(m) The Company shall not modify or amend (including any extensions of or elections under), or waive any rights arising under, any Existing Financing Agreement without the prior written consent of Aron, if doing so would (i) adversely affect in any respect any of Aron’s rights or remedies under this Agreement or the other Transaction Documents or (ii) cause such Existing Financing Agreement to no longer satisfy the conditions set forth in Section 2.1(k) and Section 2.1(m) above, including, without limitation, the recognition that Aron is the owner of Crude Oil and Products to the extent contemplated hereby and by the other Transaction Documents, free and clear of any liens of any lender or other creditor that is party to such Financing Agreement, other than Permitted Liens.

(n) The Company represents and warrants that to its knowledge, none of its Affiliates are party to any credit agreement, indenture or other financing agreement under which the Company or any of its subsidiaries may incur or become liable for indebtedness for borrowed money (including capitalized lease obligations and reimbursement obligations with respect to letters of credit) which covenants that limit or otherwise apply to any of the business, assets or operations of the Company, other than the Existing Financing Agreements.

(o) The Company shall not enter into any Financing Agreement (an “Additional Financing Agreement”) unless such Additional Financing Agreement, at the time it is entered into, (i) contains provisions that recognize the respective rights and obligations of the Parties under this Agreement and the other Transaction Documents, (ii) does not adversely affect in any respect any of Aron’s rights or remedies under this Agreement or the other Transaction Documents and (iii) satisfies the conditions in Section 2.1(k) and Section 2.1(m) to the same extent as if such Additional Financing Agreement were an Existing Financing Agreement, including, without limitation, the recognition that Aron is the owner of Crude Oil and Products to the extent contemplated hereby and by the other Transaction Documents, free and clear of any liens of any lender or other creditor that is party to such Financing Agreement, other than Permitted Liens. The Company shall not modify or amend (including any extensions of or elections under), or waive any rights arising under, any Additional Financing Agreement without the prior written consent of Aron, if doing so would (i) adversely affect in any respect any of Aron’s rights or remedies under this Agreement or the other Transaction Documents or (ii) cause such Additional Financing Agreement to no longer satisfy the conditions set forth in Section 2.1(k) and Section 2.1(m) above to the same extent as if such Additional Financing Agreement were an Existing Financing Agreement, including, without limitation, the recognition that Aron is the owner of Crude Oil and Products to the extent contemplated hereby and by the other Transaction Documents, free and clear of any liens of any lender or other creditor that is party to such Financing Agreement, other than Permitted Liens.

(p) To the extent deemed necessary or appropriate by Aron, the Company shall cause acknowledgements and/or releases (including without limitation, amendments or termination of UCC financing statements), in form and substance satisfactory to Aron, to be duly executed by lenders or other creditors that are party to Existing Financing Agreements, confirming the release of any lien in favor of such lender or other creditor that might apply to or be deemed to apply to any Crude Oil and/or Products of which Aron is the owner as contemplated by this Agreement and the other Transaction Documents and agreeing to provide Aron with such further documentation as it may reasonably request in order to confirm the foregoing.

(q) With respect to the Company Acknowledgment Agreement, the Company covenants that it shall promptly cause the Acknowledgement Agreement to be further amended or amended and restated, to the extent deemed necessary or appropriate by Aron, to acknowledge any locations hereafter added as Included Locations hereunder (together with Crude Oil and Products held therein by Aron).

17.3 Acknowledgment. The Company acknowledges and agrees that (1) Aron is a merchant of Crude Oil and Products and may, from time to time, be dealing with prospective counterparties, or pursuing trading or hedging strategies, in connection with aspects of Aron’s business which are unrelated hereto and that such dealings and such trading or hedging strategies may be different from or opposite to those being pursued by or for the Company, (2) Aron may, in its sole discretion, determine whether to advise the Company of any potential transaction with a Third Party Supplier and prior to advising the Company of any such potential transaction Aron may, in its discretion, determine not to pursue such transaction or to pursue such transaction in connection with another aspect of Aron’s business and Aron shall have no liability of any nature to the Company as a result of any such determination, (3) Aron has no fiduciary or trust obligations of any nature with respect to the Refinery or the Company or any of its Affiliates, (4) Aron may enter into transactions and purchase Crude Oil or Products for its own account or the account of others at values more favorable than those being paid by the Company hereunder and (5) nothing herein shall be construed to prevent Aron, or any of its partners, officers, employees or Affiliates, in any way from purchasing, selling or otherwise trading in Crude Oil, Products or any other commodity for its or their own account or for the account of others, whether prior to, simultaneously with or subsequent to any transaction under this Agreement.

ARTICLE 18
DEFAULT AND TERMINATION

18.1 Events of Default. Notwithstanding any other provision of this Agreement, the occurrence of any of the following shall constitute an “Event of Default”:

(a) Either Party fails to make payment when due (i) under Section 10.1 or 10.2 hereof, Article 19 hereof or any Company Purchase Agreement within one (1) Business Day after a written demand therefor or (ii) under any other provision hereof or any other Transaction Document within five (5) Business Days; or

(b) Other than a default described in Sections 18.1(a) and 18.1(c), either Party fails to perform any material obligation or covenant to the other under this Agreement or any other Transaction Document, which is not cured to the reasonable satisfaction of the other Party (in its sole discretion) within ten (10) Business Days after the date that such Party receives written notice that such obligation or covenant has not been performed; or

(c) Either Party (or, if applicable, any Affiliate of such Party that is party to a Transaction Document) breaches any material representation or material warranty made or repeated or deemed to have been made or repeated by the Party, or any warranty or representation proves to have been incorrect or misleading in any material respect when made or repeated or deemed to have been made or repeated under the Transaction Documents; provided, however, that if such breach is curable, such breach is not cured to the reasonable satisfaction of the other Party within ten (10) Business Days after the date that such Party receives notice that corrective action is needed; or

(d) Either Party becomes Bankrupt; or

(e) Either Party or any of its Designated Affiliates (1) defaults under a Specified Transaction and, after giving effect to any applicable notice requirement or grace period, there occurs a liquidation of, an acceleration of obligations under, or any early termination of, that Specified Transaction, (2) defaults, after giving effect to any applicable notice requirement or grace period, in making any payment or delivery due on the last payment, delivery or exchange date of, or any payment on early termination of, a Specified Transaction (or such default continues for at least three (3) Business Days if there is no applicable notice requirement or grace period) or (3) disaffirms, disclaims, repudiates or rejects, in whole or in part, a Specified Transaction (or such action is taken by any person or entity appointed or empowered to operate it or act on its behalf); or

(f) The Company fails to satisfy its obligations with respect to Other Inventory Sales; or

(g) (i) The Company fails in a material respect to perform its obligations under, comply with, or maintain a Base Agreement or the Required Storage and Transportation Arrangements; or (ii) the Company breaches in a material respect its obligations under Section 17.2(f);

(h) The Company or any of its Affiliates sells, leases, subleases, transfers or otherwise disposes of, in one transaction or a series of related transactions, all or a material portion of the assets of the Refinery; or

the Company’s obligations hereunder and under the other Transaction Documents, or (B) in the reasonable judgment of Aron, the creditworthiness of the resulting, surviving or transferee entity, taking into account any guaranties, is materially weaker than the Company immediately prior to the consolidation, amalgamation, merger or transfer; or

(j) The Company fails to provide Adequate Assurance in accordance with Section 12.5;

(k) There shall occur either (A) a default, event of default or other similar condition or event (however described) in respect of the Company or any of its Affiliates under one or more agreements or instruments relating to Specified Indebtedness in an aggregate amount of not less than fifty million dollars ($50,000,000) which has resulted in such Specified Indebtedness becoming due and payable under such agreements and instruments before it would have otherwise been due and payable or (B) a default by the Company or any of its Affiliates (individually or collectively) in making one or more payments on the due date thereof in an aggregate amount of not less than fifty million dollars ($50,000,000) under such agreements or instruments (after giving effect to any applicable notice requirement or grace period); or

(l) Any of the parties under any of the Existing Financing Agreements or any other Financing Agreements shall disaffirm, disclaim, repudiate or reject, in whole or in part, or challenge the validity of this Agreement; or

(m) An “Event of Default” (howsoever defined) has occurred under any of the Existing Financing Agreements or any other Financing Agreements to which the Company is a party or for which the Company has provided a guaranty or under any guaranty of such Financing Agreements provided by the Guarantor; or

(n) Any of the following: (i) the Guarantor or any S&O Party fails to perform or otherwise defaults in any obligation under the Guarantee or the S&O Party Guarantee, as applicable, (ii) the Guarantor or any S&O Party becomes Bankrupt, (iii) either of the Guarantee or the S&O Party Guarantee expires or terminates or ceases to be in full force and effect prior to the satisfaction of all obligations of the Company or any other Affiliate of the Company to Aron under this Agreement and the other Transaction Documents, (iv) the Guarantor or any S&O Party disaffirms, disclaims, repudiates or rejects, in whole or in part, or challenges the validity of, the Guarantee or the S&O Party Guarantee, as applicable, or (v) a Change of Control occurs.

The Company shall be the Defaulting Party upon the occurrence of any of the events described in clauses (f) through (n) (inclusive) above.

18.2 Remedies Upon Event of Default.

Company is the Defaulting Party) or the Company (where Aron is the Defaulting Party) (such non-defaulting Party or Parties, the “Non-Defaulting Party”) may, without notice, (i) declare all of the Defaulting Party’s obligations under this Agreement to be forthwith due and payable, all without presentment, demand, protest or further notice of any kind, all of which are expressly waived by the Defaulting Party (except that in the case of any Event of Default under Section 18.1(d), all such obligations shall automatically and without any such declaration become forthwith due and payable) and/or (ii) subject to Section 18.2(c), exercise any rights and remedies provided or available to the Non-Defaulting Party under this Agreement or at law or equity, including all remedies provided under the UCC and as provided under this Section 18.2. It is expressly agreed that all such obligations shall be due and payable as a result of any acceleration pursuant to this Section 18.2, including (without limitation) in the case of any automatic acceleration resulting from an Event of Default under Section 18.1(d) and all such obligations shall survive and continue to be due and payable following an Event of Default under Section 18.1(d).

(b) Notwithstanding any other provision of this Agreement, if an Event of Default has occurred and is continuing with respect to the Defaulting Party, the Non-Defaulting Party shall have the right, immediately and at any time(s) thereafter, to terminate this Agreement (and any other contract or agreement that may then be outstanding among the Parties that relates specifically to this Agreement, including any Transaction Document) and, subject to Section 18.2(c), to liquidate and terminate any or all rights and obligations under this Agreement (except that in the case of any Event of Default under Section 18.1(d), this Agreement shall automatically and without any notice be terminated); provided that, in the event Aron is the Non-Defaulting Party, this Agreement shall not be deemed to have terminated in full until Aron shall have disposed of all Crude Oil and Products owned or maintained by Aron in connection herewith. The Settlement Amount (as defined below) shall be calculated in a commercially reasonable manner based on such liquidated and terminated rights and obligations and shall be payable by one Party to the other. The “Settlement Amount” means the amount, expressed in U.S. Dollars, of losses and costs that are or would be incurred by the Non-Defaulting Party (expressed as a positive number) or gains that are or would be realized by the Non-Defaulting Party (expressed as a negative number) as a result of the liquidation and termination of all rights and obligations under this Agreement. The determination of the Settlement Amount shall include (without duplication): (x) the losses and costs (or gains) incurred or realized (and determined in a commercially reasonable manner) by the Non-Defaulting Party in terminating, transferring, redeploying or otherwise modifying any outstanding Procurement Contracts and (y) the losses and costs (or gains) incurred or realized (and determined in a commercially reasonable manner) by the Non-Defaulting Party with respect to Crude Oil and Product inventories maintained for purposes of this Agreement which shall be determined by the Non-Defaulting Party as follows: (1) Aron will, subject to Sections 7.3 and 7.4, project Target Month End Crude Volumes and Target Month End Product Volumes for all months occurring from the date on which the Non-Defaulting Party terminates this Agreement or commences exercising its remedies following such Event of Default (the “Remedies Exercise Date”) to the earlier of the Expiration Date set forth in Section 3.1 or, if elected by either Party, any other date as of which either Party would have been entitled to terminate this Agreement under

Section 3.2 but only if such Party notifies the other Party of such election within 3 Business Days after the Remedies Exercise Date (the earliest of such Expiration Date and any such date elected by a Party being the “Pro Forma Expiration Date”) and (2) in accordance with clause (c) below, the Non-Defaulting Party shall value, and determine the net amount that would have been owing from one Party to the other based on, all purchases and sales of Crude Oil and Products that would have resulted from such projected Target Month End Crude Volumes and Target Month End Product Volumes through the Pro Forma Expiration Date (including a final sale of all remaining inventories), which net amount shall be discounted to present value on a commercially reasonable basis and constitute the amount due under this clause (y). If the Settlement Amount is a positive number it shall be due to the Non-Defaulting Party and if it is a negative number, the absolute value thereof shall be due to the Defaulting Party.

(c) The Settlement Amount shall be determined by the Non-Defaulting Party, acting in good faith, in a commercially reasonable manner. The Non-Defaulting Party shall determine the Settlement Amount commencing as of the date on which such termination occurs by reference to such futures, forward, swap and options markets as it shall select in its commercially reasonable judgment; provided that the Non-Defaulting Party is not required to effect such terminations and/or determine the Settlement Amount on a single day, but rather may effect such terminations and determine the Settlement Amount over a commercially reasonable period of time. In calculating the Settlement Amount, the Non-Defaulting Party shall discount to present value (in any commercially reasonable manner based on London interbank rates for the applicable period and currency) any amount which would be due at a later date and shall add interest (at a rate determined in the same manner) to any amount due prior to the date of the calculation. Without limiting the generality of the foregoing, it is agreed that for purposes of determining the Settlement Amount: (1) any fixed fee amounts (including those provided for under Section 10.4) shall be the amount of such fee that would have accrued through the Pro Forma Expiration Date; (2) for the period following the Remedies Exercise Date, no Crude Oil per Barrel fees as provided in Section 6.2 shall be included in the Settlement Amount except with respect to Barrels of Crude Oil actually processed at the Refinery following such date; (3) to the extent the Fee Letter provides for the calculation of any amount to be included in the Settlement Amount, the provisions of the Fee Letter shall be controlling for such purpose; and (4) to the extent the Non-Defaulting Party deems it commercially reasonable to do so, it may in referencing prices in the futures, forward, swap and options markets for purposes of calculating various elements of the Settlement Amount endeavor to align the dates as of which such reference prices are determined.

and/or the modification, settlement or termination of such outstanding Procurement Contracts in such manner as it elects and (iv) liquidate in a commercially reasonable manner any credit support or other margin or collateral, to the extent not already in the form of cash (including making a demand under the Guarantee, the S&O Party Guarantee or any credit support, margin or collateral arrangements) and apply and set off such credit support, margin or collateral or the proceeds thereof or payment under the Guarantee against any obligation owing by the Company to Aron. Aron shall be under no obligation to prioritize the order with respect to which it exercises any one or more rights and remedies available hereunder. The Company shall in all events remain liable to Aron for any amount payable by the Company in respect of any of its obligations remaining unpaid after any such liquidation, application and set off.

(e) Without limiting any other rights or remedies hereunder, if an Event of Default has occurred and is continuing and the Company is the Non-Defaulting Party, the Company may, in its discretion, (i) withhold or suspend its obligations, including any of its delivery or payment obligations, under this Agreement and/or (ii) otherwise arrange for the settlement or termination of the Parties’ outstanding commitments hereunder, the sale in a commercially reasonable manner of Crude Oil and/or Product for Aron’s account, and the replacement of the supply and offtake arrangement contemplated hereby with such alternative arrangements as it may procure.

(f) The Non-Defaulting Party shall set off (i) the Settlement Amount (if due to the Defaulting Party), plus any performance security (including the Guarantee, the S&O Party Guarantee or any credit support, margin or collateral) then held by the Non-Defaulting Party pursuant to the Transaction Documents, plus (at the Non-Defaulting Party’s election) any or all other amounts due to the Defaulting Party hereunder (including under Article 10), against (ii) the Settlement Amount (if due to the Non-Defaulting Party), plus any performance security (including the Guarantee or any credit support, margin or collateral) then held by the Defaulting Party, plus (at the Non-Defaulting Party’s election) any or all other amounts due to the Non-Defaulting Party hereunder (including under Article 10), so that all such amounts shall be netted to a single liquidated amount payable by one Party to the other (the “Liquidated Amount”). The Party with the payment obligation shall pay the Liquidated Amount to the applicable other Parties within one Business Day after such amount has been determined.

(g) No delay or failure on the part of the Non-Defaulting Party in exercising any right or remedy to which it may be entitled on account of any Event of Default shall constitute an abandonment of any such right, and the Non-Defaulting Party shall be entitled to exercise such right or remedy at any time during the continuance of an Event of Default.

(h) The Non-Defaulting Party’s rights under this Section shall be in addition to, and not in limitation or exclusion of, any other rights which the Non-Defaulting Party may have (whether by agreement, operation of law or otherwise), including any rights of recoupment, setoff, combination of accounts or other rights under any credit support that may from time to time be provided in connection with this Agreement. The Defaulting Party

shall indemnify and hold the Non-Defaulting Party harmless from all reasonable costs and expenses, including reasonable attorney fees, incurred in the exercise of any remedies hereunder.

(i) If an Event of Default has occurred and is continuing, the Non-Defaulting Party may, without limitation on its rights under this Section, set off amounts which the Defaulting Party owes to it against any amounts which it owes to the Defaulting Party (whether hereunder, under any other contract or agreement or otherwise and whether or not then due).

(j) The Parties acknowledge and agree that this Agreement is intended to be a “master netting agreement” as such term is defined in section 101(38A) of the Bankruptcy Code. As used in this Section 18.2, unless otherwise expressly provided, each reference to “this Agreement” shall, and shall be deemed to be, a reference to “this Agreement and the other Transaction Documents.”

(k) Without limiting the generality of the foregoing, in the event the obligation under this Agreement and the other Transaction Documents are accelerated or otherwise become due prior to their maturity date, in each case, in respect of any Event of Default with respect to the Company (including, but not limited to, upon the occurrence of an Event of Default arising under Section 18.1(d)), (including the acceleration of claims by operation of law)), any amounts that would have become due hereunder or thereunder on the date of such acceleration or otherwise with respect to any early termination hereof (whether or not as a result of an Event of Default) also be due and payable as though such early termination had occurred and shall be part of the Obligations. Any such amount payable shall be presumed to be the liquidated damages sustained by Aron as the result of the early termination and the Company agrees that it is reasonable under the circumstances currently existing. THE COMPANY EXPRESSLY WAIVES (TO THE FULLEST EXTENT IT MAY LAWFULLY DO SO) THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE OR LAW THAT PROHIBITS OR MAY PROHIBIT THE COLLECTION OF THE FOREGOING AMOUNTS IN CONNECTION WITH ANY SUCH ACCELERATION. The Company expressly agrees (to the fullest extent it may lawfully do so) that: (A) all such amounts are reasonable and the product of an arm’s length transaction between sophisticated business people, ably represented by counsel; (B) such amounts shall be payable notwithstanding the then prevailing market rates at the time payment is made; (C) there has been a course of conduct between the Parties hereto giving specific consideration in this transaction for such agreement to pay such amounts; and (D) the Company shall be estopped hereafter from claiming differently than as agreed to in this paragraph. The Company expressly acknowledges that its agreement to pay such amounts to Aron as herein described is a material inducement to Aron to enter into this Agreement.

18.3 U.S. Resolution Stay Provisions.

(a) Recognition of U.S. Special Resolution Regimes.

(i) In the event that Aron becomes subject to a proceeding under (i) the Federal Deposit Insurance Act and the regulations promulgated thereunder or Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder (a “U.S. Special Resolution Regime”) the transfer from Aron of this Agreement, the Inventory Sales Agreements and any obligation in or under, and any property securing, this Agreement or any other Transaction Document, will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if this Agreement, Inventory Sales Agreement and, if in effect, the Step-out Inventory Sales Agreement (collectively, the “Safe Harbor Agreements”), and any interest and obligation in or under, and any property securing, the Safe Harbor Agreements were governed by the laws of the United States or a state of the United States.

(ii) In the event that Aron or an Affiliate becomes subject to a proceeding under a U.S. Special Resolution Regime, any Default Rights (as defined in 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable (“Default Rights”)) under any Safe Harbor Agreement that may be exercised against Aron are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if a Safe Harbor Agreement were governed by the laws of the United States or a state of the United States.

(b) Limitation on Exercise of Certain Default Rights Related to an Affiliate’s Entry into Insolvency Proceedings. Notwithstanding anything herein to the contrary, the Parties expressly acknowledge and agree that:

(i) In the event that Aron or an Affiliate becomes subject to a proceeding under a U.S. Special Resolution Regime, the Company shall not be permitted to exercise any Default Right with respect to a Safe Harbor Agreement or any Credit Enhancement, in each case, that is related, directly or indirectly, to an Affiliate of Aron becoming subject to any insolvency or liquidation proceeding, except to the extent that the exercise of such Default Right would be permitted under the provisions of 12 C.F.R. 252.84, 12 C.F.R. 47.5 or 12 C.F.R. 382.4, as applicable; and

(ii) In the event that Aron or an Affiliate becomes subject to a proceeding under a U.S. Special Resolution Regime, nothing in any Safe Harbor Agreement shall prohibit the transfer of any Credit Enhancement, any interest or obligation in or under such Credit Enhancement, or any property securing such Credit Enhancement, to a transferee upon or following an Affiliate of Aron becoming subject to an insolvency or liquidation proceeding, unless the transfer would result in the Company being the beneficiary of such Credit Enhancement in violation of any law applicable to the Company.

(c) U.S. Protocol. If the Company adheres to the ISDA 2018 U.S. Resolution Stay Protocol, as published by the International Swaps and Derivatives Association, Inc. as of July 31, 2018 (the “ISDA U.S. Protocol”), the terms of the ISDA U.S. Protocol will supersede and replace the terms of this Section 18.3.

(d) For purposes of this Section 18.3, the term “Affiliate” means “Affiliate” as defined in, and interpreted in accordance with 12 U.S.C. § 1841 (k) .

ARTICLE 19
SETTLEMENT AT TERMINATION

19.1 Upon expiration or termination of this Agreement for any reason other than as a result of an Event of Default (in which case the Expiration Date or any other date that may be agreed by the Parties shall be the “Termination Date”; provided that if such date is not a Business Day, the Termination Date shall occur on the immediately preceding Business Day), the Parties covenant and agree to proceed as provided in this Article 19; provided that (x) this Agreement shall continue in effect following any Termination Date until all obligations are finally settled as contemplated by this Article 19 and (y) the provisions of this Article 19 shall in no way limit the rights and remedies which the Non-Defaulting Party may have as a result of an Event of Default, whether pursuant to Article 18 above or otherwise:

(a) If any Procurement Contract does not either (i) by its terms (or the terms under which it was originally assigned to Aron) automatically become assigned (or reassigned) to the Company on and as of the Termination Date in a manner which releases Aron from all obligations thereunder for all periods following the Termination Date or (ii) by its terms, expire or terminate on and as of the Termination Date, then the Parties shall promptly negotiate and enter into, with each of the then existing Third Party Suppliers, assignments, assumptions and/or such other documentation, in form and substance reasonably satisfactory to the Parties, pursuant to which, as of the Termination Date, (i) such Procurement Contract shall be assigned (or reassigned) to the Company or shall be terminated, (ii) all rights and obligations of Aron under each of the then outstanding Procurement Contracts shall be assigned to the Company, (iii) the Company shall assume all of such obligations to be paid or performed following such termination, and (iv) Aron shall be released by such Third Party Suppliers and the Company from any further obligations thereunder. In connection with the assignment or reassignment of any Procurement Contract, the Parties shall endeavor, in a commercially reasonable manner, to facilitate the transitioning of the supply and payment arrangements, including any change in payment terms, under the relevant Procurement Contracts so as to prevent any material disruption in the supply of Crude Oil thereunder.

obligations of Aron with respect to each then outstanding sales commitment shall be assigned to the Company, (iii) the Company shall assume all of such obligations to be paid or performed following such termination, and (iv) Aron shall be released by the purchasers thereunder and the Company from any further obligations with respect to such sales commitments. In connection with the assignment or reassignment of any Procurement Contract, the Parties shall endeavor, in a commercially reasonable manner, to facilitate the transitioning of the Product marketing and sales arrangements so as to prevent any material disruption in the distribution of Products from the Refinery.

(c) In the event that Aron has become a party to any other third party service contract in connection with this Agreement and the transactions contemplated hereby, including any pipeline, terminalling, storage and shipping arrangement, including but not limited to the Required Storage and Transportation Arrangements (an “Ancillary Contract”) and such Ancillary Contract does not by its terms expire or terminate on and as of the Termination Date, then the Parties shall promptly negotiate and enter into with each service provider thereunder such instruments or other documentation, in form and substance reasonably satisfactory to the Parties, pursuant to which as of the Termination Date (i) such Ancillary Contract shall be assigned to the Company or shall be terminated, (ii) all rights and obligations of Aron with respect to each then outstanding Ancillary Contract shall be assigned to the Company, (iii) the Company shall assume all of such obligations to be paid or performed following such termination, and (iv) Aron shall be released by the third party service providers thereunder and the Company from any further obligations with respect to such Ancillary Contract. For each case in which the Company has transferred to Aron for purposes of this Agreement the historical pipeline capacity of the Company on any Included Location or where Aron has been a shipper of record on a pipeline for volumes of Crude Oil or Products shipped by Aron for purposes of this Agreement and as a result of has generated a capacity history based on such shipments, Aron shall, in connection with the occurrence of a Termination Date, endeavor in good faith and in a commercially reasonable manner to cause such historical pipeline capacity, including any adjustments to such history based on and attributable to quantities of Crude Oil and/or Products transported by Aron for purposes of this Agreement (“Related Pipeline Capacity”), to be transferred the Company, as directed, in each case subject to any applicable rules, regulations and tariffs; provided that the Company shall reimburse Aron for any out-of-pocket costs and expenses incurred by Aron in connection with its endeavoring to effect such transfer. Without limiting the foregoing, Aron agrees, upon request of the Company at any time prior to and after a Termination Date, to cooperate in good faith with the Company to endeavor to cause each Pipeline System at any Included Location to agree and acknowledge that the Related Pipeline Capacity shall be for the benefit of the Company; provided that the Company shall reimburse Aron for any out-of-pocket costs and expenses incurred by Aron in connection with its endeavoring to effect such agreement and acknowledgement. Any historical capacity held by Aron that does not constitute Related Pipeline Capacity shall be retained by Aron. In addition, if despite Aron’s commercially reasonable efforts, a Pipeline System will not effect or permit such transfer or the portion of Aron’s historical pipeline capacity constitute Related Pipeline Capacity cannot be identified or allocated, no transfer shall be required with respect to such Pipeline System.

(d) The Parties shall enter into the Step-Out Inventory Sales Agreement, pursuant to which the volume of Crude Oil and Products in the Storage Tanks, Included Supplemental Facilities, Other Included Crude Locations and any other Included Locations shall be purchased and transferred as contemplated therein. The Crude Oil volumes measured by Supplier’s Inspector at the Termination Date and recorded in Supplier’s Inspector’s final inventory report shall be the “Termination Date Crude Oil Volumes” for the purposes of this Agreement and the Product volumes measured by Supplier’s Inspector at the Termination Date and recorded in Supplier’s Inspector’s final inventory report shall be the “Termination Date Product Volumes” for purposes of this Agreement, and such Termination Date Crude Oil Volumes and Termination Date Product Volumes shall collectively be referred to as the “Termination Date Volumes”.

(e) Aron shall promptly reconcile and determine the Termination Amount pursuant to Section 19.2. The Parties shall promptly exchange all information necessary to determine the estimates and final calculations contemplated by Section 19.2.

(f) Aron shall have no further obligation to purchase and shall not purchase or pay for Crude Oil or Products, or incur any such purchase obligations on and after the Termination Date. Except as may be required for Aron to fulfill its obligations hereunder until the Termination Date or during any obligatory notice period pursuant to any Procurement Contract, Aron shall not be obligated to purchase, take title to or pay for any Crude Oil or Products following the Termination Date or such earlier date as the Parties may determine in connection with the transitioning of such supply arrangements to the Company. Notwithstanding anything to the contrary herein, no Delivery Date shall occur later than the calendar day immediately preceding the Termination Date.

19.2 Termination Amount.

(a) The “Termination Amount” shall equal:

(i) the Termination Date Purchase Value, which is the aggregate amount payable to Aron under the Step-Out Inventory Sales Agreement, plus

(ii) all unpaid amounts payable hereunder by the Company to Aron in respect of Crude Oil delivered on or prior to the Termination Date, plus

(iii) all Ancillary Costs incurred through the Termination Date that have not yet been paid or reimbursed by the Company, plus

(iv) in the case of an early termination, the amount reasonably determined by Aron as the breakage costs it incurred in connection with the termination, unwinding or redeploying of all Related Hedges as a result of such early termination, plus

(v) the aggregate amount due under Section 10.2(a), calculated as of the Termination Date with such date being the final day of the last monthly period for

which such calculations are to be made under this Agreement; provided that, if such amount under Section 10.2(a) is due to Aron, then such amount will be included in this Termination Amount as a positive number and if such amount under Section 10.2(a) is due to the Company, then such amount will be included in this Termination Amount as a negative number, plus

(vi) any unpaid portion of the Annual Fee or other fees owed to Aron pursuant to Section 10.8, plus

(vii) any FIFO Balance Final Settlement that is determined to be due pursuant to Schedule N; provided that, if such FIFO Balance Final Settlement is due to Aron, then such amount will be included in this Termination Amount as a positive number and if such amount under Section 10.2(a) would be due to the Company, then such amount will be included in this Termination Amount as a negative number, minus

(viii) all unpaid amounts payable hereunder by Aron to the Company in respect of Product delivered on or prior to the Termination Date, and

(ix) all amounts due from Aron to the Company under the Marketing and Sales Agreement by Aron to the Company for services provided up to the Termination Date.

Without duplication of the foregoing, the Termination Amount shall include all amounts due from one party to the other specified on Schedule U hereto; provided that the Estimated Termination Amount shall include (A) all such amounts due from the Company to Aron and (B) the Non-Holdback Portion, if any, as determined in Section 19.2(b) below and due from Aron to the Company. For the avoidance of doubt, the Estimated Termination Amount shall not include the Termination Holdback Amount. All of the foregoing amounts shall be aggregated or netted to a single liquidated amount owing from one Party to the other. If the Termination Amount is a positive number, it shall be due to Aron and if it is a negative number, the absolute value thereof shall be due to the Company.

Commencement Date Value, but applying the Step-Out Values as indicated on Schedule B hereto and other price terms provided for herein with respect to the purchase of the Termination Date Volumes. Aron shall use its commercially reasonable efforts to prepare, and provide the Company with, an initial Estimated Termination Amount, together with appropriate supporting documentation, at least five (5) Business Days prior to the Termination Date. To the extent reasonably practicable, Aron shall endeavor to update its calculation of the Estimated Termination Amount by no later than 12:00 noon CPT on the Business Day prior to the Termination Date. If Aron is able to provide such updated amount, that amount shall constitute the Estimated Termination Amount and shall be due and payable by no later than 5:00 p.m. CPT on the Business Day preceding the Termination Date. Otherwise, the initial Estimated Termination Amount shall be the amount payable on the Termination Date. If the Estimated Termination Amount is a positive number, it shall be due to Aron and if it is a negative number, the absolute value thereof shall be due to the Company.

(c) Aron shall prepare, and provide the Company with, (i) a statement showing the calculation, as of the Termination Date, of the Termination Amount, (ii) a statement (the “Termination Reconciliation Statement”) reconciling the Termination Amount with the sum of the Estimated Termination Amount pursuant to Section 19.2(b) and the Termination Holdback Amount and indicating any amount remaining to be paid by one Party to the other as a result of such reconciliation. Within one (1) Business Day after receiving the Termination Reconciliation Statement and the related supporting documentation, the Parties will make any and all payments required pursuant thereto. Promptly after receiving such payment, Aron shall cause any filing or recording of any Uniform Commercial Code financing forms to be terminated.

(d) Notwithstanding anything herein to the contrary, Aron shall not have any obligation to make any payment contemplated by this Section 19.2, transfer of title to Crude Oil or Products or to otherwise cooperate in the transition matters described in Section 19.1 unless the Company shall have performed its obligations under the Step-Out Inventory Sales Agreement and performed its obligations thereunder as and when required pursuant to the terms thereof.

19.3 Transition Services. To the extent necessary to facilitate the transition to the Purchasers of the storage and transportation rights and status contemplated hereby, each Party shall take such additional actions, execute such further instruments and provide such additional assistance as the other Party may from time to time reasonably request for such purposes.

ARTICLE 20
INDEMNIFICATION

or warranty of Aron made herein or in connection herewith proving to be false or misleading, (ii) any failure by Aron to comply with or observe any Applicable Law, (iii) Aron’s negligence or willful misconduct, or (iv) injury, disease, or death of any person or damage to or loss of any property, fine or penalty, any of which is caused by Aron or its employees, representatives, agents or contractors in exercising any rights or performing any obligations hereunder or in connection herewith, except to the extent that any Liability arising under clause (iv) has resulted from the negligence or willful misconduct on the part of the Company, its Affiliates or any of their respective employees, representatives, agents or contractors.

20.2 To the fullest extent permitted by Applicable Law and except as specified otherwise elsewhere in this Agreement, the Company shall defend, indemnify and hold harmless Aron, its Affiliates, and their directors, officers, employees, representatives, agents and contractors for and against any Liabilities directly or indirectly arising out of (i) any breach by the Company of any covenant or agreement contained herein or made in connection herewith or any representation or warranty of the Company made herein or in connection herewith proving to be false or misleading, including, without limitation the Company’s obligation for payment of taxes pursuant to Section 14.1, (ii) the Company’s transportation, handling, storage, refining or disposal of any Crude Oil or the products thereof, including any conduct by the Company on behalf of or as the agent of Aron under the Required Storage and Transportation Arrangements, (iii) the Company’s failure to comply with its obligations under the terminalling, pipeline and lease agreements underlying the Required Storage and Transportation Arrangements, (iv) the Company’s negligence or willful misconduct, (v) any failure by the Company to comply with or observe any Applicable Law, (vi) injury, disease, or death of any person or damage to or loss of any property, fine or penalty, any of which is caused by the Company or its employees, representatives, agents or contractors in exercising any rights or performing any obligations hereunder or in connection herewith, (vii) actual or alleged presence or release of Hazardous Substances in connection with the Transaction Documents or the transactions contemplated thereby, or any liability under any Environmental Law related in any way to or asserted in connection with the Transaction Documents or the transactions contemplated thereby or (viii) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Company, and regardless of whether J. Aron is a party thereto, except to the extent that any Liability arising under clause (vi), (vii) or (viii) above has resulted from the negligence or willful misconduct on the part of Aron, its Affiliates or any of their respective employees, representatives, agents or contractors.

20.3 The Parties’ obligations to defend, indemnify, and hold each other harmless under the terms of the Transaction Documents shall not vest any rights in any third party (whether a Governmental Authority or private entity), nor shall they be considered an admission of liability or responsibility for any purposes other than those enumerated in the Transaction Documents.

adversely affected by such failure. Each Party shall have the right but not the duty to participate, at its own expense, with counsel of its own selection, in the defense and settlement thereof without relieving the other of any obligations hereunder. Notwithstanding the foregoing, an indemnifying Party shall not be entitled to assume responsibility for and control of any judicial or administrative proceeding if such proceeding involves an Event of Default by the indemnifying Party under this Agreement which shall have occurred and be continuing.

ARTICLE 21
LIMITATION ON DAMAGES

Unless otherwise expressly provided in this Agreement, the Parties’ liability for damages is limited to direct, actual damages only (which include any amounts determined under Article 18) and neither Party shall be liable for specific performance, lost profits or other business interruption damages, or special, consequential, incidental, punitive, exemplary or indirect damages, in tort, contract or otherwise, of any kind, arising out of or in any way connected with the performance, the suspension of performance, the failure to perform, or the termination of this Agreement; provided, however, that, such limitation shall not apply with respect to (i) any third party claim for which indemnification is available under this Agreement or (ii) any breach of Article 23. Each Party acknowledges the duty to mitigate damages hereunder.

ARTICLE 22
AUDIT AND INSPECTION

22.1 During the Term of this Agreement each Party and its duly authorized representatives, upon reasonable notice and during normal working hours, shall have access to the accounting records and other documents maintained by the other Party, or any of the other Party’s contractors and agents, which relate to this Agreement; provided, that, neither this Section nor any other provision hereof shall entitle the Company to have access to any records concerning any hedges or offsetting transactions or other trading positions or pricing information that may have been entered into with other parties or utilized in connection with any transactions contemplated hereby or by any other Transaction Document. The right to inspect or audit such records shall survive termination of this Agreement for a period of two (2) years following the Termination Date. Each Party shall preserve, and shall cause all contractors or agents to preserve, all of the aforesaid documents for a period of at least two (2) years from the Termination Date.

ARTICLE 23
CONFIDENTIALITY

23.1 In addition to the Company’s confidentiality obligations under the Transaction Documents, the Parties agree that the specific terms and conditions of this Agreement including any list of counterparties, the Transaction Documents and the drafts of this Agreement exchanged by the Parties and any information exchanged between the Parties, including calculations of any fees or other amounts paid by the Company to Aron under this Agreement and all information received by Aron from the Company relating to the costs of operation, operating conditions, and other commercial information of the Company not made available to the public, are confidential

and shall not be disclosed to any third party, except (i) as may be required by court order or Applicable Laws or as requested by a Governmental Authority, (ii) to such Party’s or its Affiliates’ employees, directors, shareholders, auditors, consultants, banks, lenders, financial advisors and legal advisors, or (iii) to such Party’ insurance providers, solely for the purpose of procuring insurance coverage or confirming the extent of existing insurance coverage; provided, that, prior to any disclosure permitted by this clause (iii), such insurance providers shall have agreed in writing to keep confidential any information or document subject to this Section. The confidentiality obligations under this Agreement shall survive termination of this Agreement for a period of two (2) years following the Termination Date. The Parties shall be entitled to all remedies available at law, or in equity, to enforce or seek relief in connection with the confidentiality obligations contained herein.

23.2 In the case of disclosure covered by clause (i) of Section 23.1, to the extent practicable and in conformance with the relevant court order, Applicable Law or request, the disclosing Party shall notify the other Party in writing of any proceeding of which it is aware which may result in disclosure.

23.3 Tax Disclosure. Notwithstanding anything herein to the contrary, the Parties (and their respective employees, representatives or other agents) are authorized to disclose to any person the U.S. federal and state income tax treatment and tax structure of the transaction and all materials of any kind (including tax opinions and other tax analyses) that are provided to the Parties relating to that treatment and structure, without the Parties imposing any limitation of any kind. However, any information relating to the tax treatment and tax structure shall remain confidential (and the foregoing sentence shall not apply) to the extent necessary to enable any person to comply with securities laws. For this purpose, “tax structure” is limited to any facts that may be relevant to that treatment.

ARTICLE 24
GOVERNING LAW

24.1 This Agreement shall be governed by, construed and enforced under the laws of the State of New York without giving effect to its conflicts of laws principles that would require the application of the laws of another state.

24.2 Each of the Parties hereby irrevocably submits to the exclusive jurisdiction of any federal or state court of competent jurisdiction situated in the City of New York (without recourse to arbitration unless both Parties agree in writing), and to service of process by certified mail, delivered to the Party at the address indicated in Article 26. Each Party hereby irrevocably waives, to the fullest extent permitted by Applicable Law, any objection to personal jurisdiction, whether on grounds of venue, residence or domicile.

24.3 Each Party waives, to the fullest extent permitted by Applicable Law, any right it may have to a trial by jury in respect of any proceedings relating to this agreement.

ARTICLE 25
ASSIGNMENT

25.1 This Agreement shall inure to the benefit of and be binding upon the Parties hereto, their respective successors and permitted assigns.

25.2 The Company shall not assign this Agreement or its rights or interests hereunder in whole or in part, or delegate its obligations hereunder in whole or in part, without the express written consent of Aron. Aron may, without the Company’s consent, assign and delegate all of Aron’s rights and obligations hereunder to (i) any Affiliate of Aron, provided that the obligations of such Affiliate hereunder are guaranteed by The Goldman Sachs Group, Inc. or (ii) any non-Affiliate Person that succeeds to all or substantially all of its assets and business and assumes Aron’s obligations hereunder, whether by contract, operation of law or otherwise, provided that the creditworthiness of such successor entity is equal or superior to the creditworthiness of Aron immediately prior to such assignment. Any other assignment by Aron shall require the Company’s consent.

25.3 Any attempted assignment in violation of this Article 25 shall be null and void ab initio and the non-assigning Party shall have the right, without prejudice to any other rights or remedies it may have hereunder or otherwise, to terminate this Agreement effective immediately upon notice to the Party attempting such assignment.

ARTICLE 26
NOTICES

26.1 All invoices, notices, requests and other communications given pursuant to this Agreement shall be in writing and sent by email or nationally recognized overnight courier. A notice shall be deemed to have been received when transmitted by email to the other Party’s email set forth on Schedule M, or on the following Business Day if sent by nationally recognized overnight courier to the other Party’s address set forth on Schedule M and to the attention of the person or department indicated. A Party may change its address or email address by giving written notice in accordance with this Section, which is effective upon receipt.

ARTICLE 27
NO WAIVER, CUMULATIVE REMEDIES

27.1 The failure of a Party hereunder to assert a right or enforce an obligation of the other Party shall not be deemed a waiver of such right or obligation. The waiver by any Party of a breach of any provision of, or Event of Default or Default under, this Agreement shall not operate or be construed as a waiver of any other breach of that provision or as a waiver of any breach of another provision of, Event of Default or Default under, this Agreement, whether of a like kind or different nature.

27.2 Each and every right granted to the Parties under this Agreement or allowed it by law or equity shall be cumulative and may be exercised from time to time in accordance with the terms thereof and Applicable Law.

ARTICLE 28
NATURE OF THE TRANSACTION AND
RELATIONSHIP OF PARTIES

28.1 This Agreement shall not be construed as creating a partnership, association or joint venture between the Parties. It is understood that each Party is an independent contractor with complete charge of its employees and agents in the performance of its duties hereunder, and nothing herein shall be construed to make such Party, or any employee or agent of the Company, an agent or employee of the other Party.

28.2 Neither Party shall have the right or authority to negotiate, conclude or execute any contract or legal document with any third person; to assume, create, or incur any liability of any kind, express or implied, against or in the name of the other; or to otherwise act as the representative of the other, unless expressly authorized in writing by the other.

ARTICLE 29
MISCELLANEOUS

29.1 If any Article, Section or provision of this Agreement shall be determined to be null and void, voidable or invalid by a court of competent jurisdiction, then for such period that the same is void or invalid, it shall be deemed to be deleted from this Agreement and the remaining portions of this Agreement shall remain in full force and effect.

29.2 The terms of this Agreement and the other Transaction Documents constitute the entire agreement between the Parties with respect to the matters set forth in this Agreement, and no representations or warranties shall be implied or provisions added in the absence of a written agreement to such effect between the Parties. Except as set forth in Section 29.3 below, this Agreement shall not be amended or otherwise modified or changed except by written instrument executed by the Parties’ duly authorized representatives.

29.3 Notwithstanding anything herein to the contrary, each Schedule hereto may be amended by email exchange between the Parties confirming such amendment and such email exchange shall constitute a written agreement between the Parties with respect to such amendment. In addition, to better effectuate the foregoing amendment mechanism, the Parties may implement a standard form of email exchange for such purposes.

29.4 No promise, representation or inducement has been made by any Party that is not embodied in this Agreement or the other Transaction Documents, and neither Party shall be bound by or liable for any alleged representation, promise or inducement not so set forth.

29.5 Time is of the essence with respect to all aspects of each Party’s performance of any obligations under this Agreement.

29.6 Nothing expressed or implied in this Agreement is intended to create any rights, obligations or benefits under this Agreement in any Person other than the Parties and their successors and permitted assigns.

29.7 All audit rights, payment, confidentiality and indemnification obligations and obligations under this Agreement shall survive the expiration or termination of this Agreement.

29.8 This Agreement may be executed by the Parties in separate counterparts and initially delivered by facsimile transmission or otherwise, with original signature pages to follow, and all such counterparts shall together constitute one and the same instrument.

29.9 The words “executed”, “execution”, “signed”, “signature”, “delivery” and words of like import in or relating to this Agreement and the other Transaction Documents and the transactions contemplated hereby and thereby shall be deemed to include Electronic Signatures, deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

29.10 All transactions hereunder are entered into in reliance on the fact that this Agreement and all such transactions constitute a single, integrated agreement between the Parties, and the Parties would not have otherwise entered into any other transactions hereunder.

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, each Party hereto has caused this Agreement to be executed by its duly authorized representative as of the date first above written.

J. ARON & COMPANY LLC

By: /s/ Simon Collier

Name: Simon Collier

Title: Attorney-in-fact

ALON REFINING KROTZ SPRINGS, INC.

By: /s/ Frederec Green

Name: Frederec Green

Title: Executive Vice President

By: /s/ Regina Jones

Name: Regina Jones

Title: Executive Vice President

Schedule C-1

Exhibit 10.9

THIRD AMENDED AND RESTATED
MASTER SUPPLY AND OFFTAKE AGREEMENT

dated as of April 7, 2020

among

J. ARON & COMPANY LLC,

LION OIL COMPANY

and

LION OIL TRADING & TRANSPORTATION, LLC

TABLE OF CONTENTS

Page

ARTICLE 1 DEFINITIONS AND CONSTRUCTION 2

ARTICLE 2 CONDITIONS PRECEDENT 27

ARTICLE 3 TERM OF AGREEMENT 30

ARTICLE 4 COMMENCEMENT DATE TRANSFER 31

ARTICLE 5 PURCHASE AND SALE OF CRUDE OIL 31

ARTICLE 6 PURCHASE VALUE FOR CRUDE OIL 40

ARTICLE 7 TARGET INVENTORY LEVELS AND WORKING CAPITAL ADJUSTMENT 43

ARTICLE 8 PURCHASE AND DELIVERY OF PRODUCTS 47

ARTICLE 9 ANCILLARY COSTS; MONTH END INVENTORY; CERTAIN DISPOSITIONS; TANK MAINTENANCE; CERTAIN OTHER MATTERS 49

ARTICLE 10 PAYMENT PROVISIONS 55

ARTICLE 11 LIEN AMOUNTS 61

ARTICLE 12 INDEPENDENT INSPECTORS; STANDARDS OF MEASUREMENT 64

ARTICLE 13 FINANCIAL INFORMATION; CREDIT SUPPORT; AND ADEQUATE ASSURANCES 65

ARTICLE 14 REFINERY TURNAROUND, MAINTENANCE AND CLOSURE 69

ARTICLE 15 TAXES 72

ARTICLE 16 INSURANCE 73

ARTICLE 17 FORCE MAJEURE 74

ARTICLE 18 REPRESENTATIONS, WARRANTIES AND COVENANTS 76

ARTICLE 19 DEFAULT AND TERMINATION 84

ARTICLE 20 SETTLEMENT AT TERMINATION 90

ARTICLE 21 INDEMNIFICATION 95

ARTICLE 22 LIMITATION ON DAMAGES 96

ARTICLE 23 RECORDS AND INSPECTION 97

ARTICLE 24 CONFIDENTIALITY 97

ARTICLE 25 GOVERNING LAW 98

ARTICLE 26 ASSIGNMENT 99

ARTICLE 27 NOTICES 99

ARTICLE 28 NO WAIVER, CUMULATIVE REMEDIES 99

ARTICLE 29 NATURE OF THE TRANSACTION AND RELATIONSHIP OF PARTIES 100

ARTICLE 30 MISCELLANEOUS 100

-i-

Schedules



Schedule	Description
Schedule A	Products and Product Specifications
Schedule B	Pricing Values
Schedule C	Monthly True-Up Amounts
Schedule D	Operational Volume Range
Schedule E	Tank List
Schedule F	[Reserved]
Schedule G	Invoice Schedule
Schedule H	Form of Inventory Reports
Schedule I	Initial Inventory Targets
Schedule J	Scheduling and Communications Protocol
Schedule K	Monthly Excluded Transaction Fee Determination
Schedule L	Monthly Working Capital Adjustment
Schedule M	Notices
Schedule N	FIFO Balance Final Settlements
Schedule O	MTD Performance Report
Schedule P	Included Products
Schedule Q	Form of Trade Sheet
Schedule R	Form of Step-Out Inventory Sales Agreement
Schedule S	Shipping Dock Report
Schedule T	Form of Excluded Transaction Trade Sheet
Schedule U	Available Storage and Transportation Arrangements
Schedule V	Aron Crude Receipts Pipelines
Schedule W	Product Pipeline Systems/Included Terminals

-ii-



Schedule	Description
Schedule X	Marketing and Sales Agreement
Schedule Y	LOTT Inventory Sales Agreement
Schedule Z	Lion Oil Inventory Sales Agreement
Schedule AA	Storage Facilities Agreement
Schedule BB	Holdback Schedule
Schedule CC	Excess LC Amount and Excess LC Rate
Schedule DD	Existing Financing Agreements
Schedule EE	Form of Letter of Credit
Schedule FF Schedule GG Schedule HH	Illustration of Calculation of Interim Payments Periodic Price Adjustments Transition Adjustment Period Provisions
Schedule II	[Reserved]
Schedule JJ	Form of Bailee’s Letter
Schedule KK	Red Zone Confirmation

-iii-

THIRD AMENDED AND RESTATED
MASTER SUPPLY AND OFFTAKE AGREEMENT

This Third Amended and Restated Master Supply and Offtake Agreement (this “Agreement”) is made as of April 7, 2020 (the “Third Restatement Effective Date”), among J. Aron & Company LLC (“Aron”), a limited liability company organized under the laws of New York (formerly known as J. Aron & Company, a general partnership organized under the laws of New York) and located at 200 West Street, New York, New York 10282-2198, Lion Oil Company (the “Company”), a corporation organized under the laws of Arkansas located at 7102 Commerce Way, Brentwood, Tennessee 37027, and Lion Oil Trading & Transportation, LLC (“LOTT”), a limited liability company organized under the laws of Texas (formerly known as Lion Oil Trading & Transportation, Inc., a corporation organized under the laws of Arkansas) and located at 7102 Commerce Way, Brentwood, Tennessee 37027 (each referred to individually as a “Party” or collectively as the “Parties”).

WHEREAS, the Company owns and operates a crude oil refinery located in El Dorado, Arkansas (the “Refinery”) for the processing and refining of crude oil and other feedstocks and the recovery therefrom of refined products;

WHEREAS, LOTT is in the business of buying, selling and transporting of crude oil and other petroleum feedstocks in connection with the processing and refining operations of the Company;

WHEREAS, the Company, LOTT and Aron entered into a Master Supply and Offtake Agreement, dated as of April 29, 2011, providing for a supply and offtake transaction under which Aron delivers crude oil and other petroleum feedstocks to the Company for use at the Refinery and purchases all refined products produced by the Refinery (other than certain excluded products) and the Company purchases such crude oil and other petroleum feedstocks from Aron for use at the Refinery and sells and delivers to Aron such refined products (such agreement, as from time to time amended prior to the date hereof, the “Original Agreement”);

WHEREAS, the Company and LOTT sold certain pipeline and storage assets on November 7, 2012 to Delek Logistics Partners, LP and its subsidiaries (individually and collectively, “Delek MLP”), and entered into agreements for the use of these assets with the Company and LOTT and, from time to time thereafter, has transferred and may transfer additional assets to Delek MLP while retaining certain right to use such assets, and in connection with the foregoing the Parties have executed and will execute, as appropriate, Required Storage and Transportation Arrangements (as defined below) that also constitute Required MLP Arrangements (as defined below);

WHEREAS, the Parties amended and restated in its entirety the Original Agreement by entering into an Amended and Restated Master Supply and Offtake Agreement, dated as of December 23, 2013 (the “First Restated Agreement”);

WHEREAS, the Parties amended and restated in its entirety the First Restated Agreement by entering into a Second Amended and Restated Master Supply and Offtake Agreement, dated as of February 27, 2017 (the “Second Restated Agreement”);

WHEREAS, the Company and Aron wish to amend and restate in its entirety the Second Restated Agreement as hereinafter provided;

WHEREAS, the Parties have agreed that, for the Term of this Agreement, the Company will provide professional consulting, liaison, and other related services to assist Aron in the marketing and sale of the refined products acquired by Aron hereunder in accordance with the terms and conditions of the Marketing and Sales Agreement (as defined below); and

WHEREAS, it is contemplated that upon the scheduled termination of this Agreement, Aron will sell and the Company will purchase all of Aron’s crude oil, feedstocks and products inventory held at the Included Locations as set forth and in accordance with the terms and conditions of the Step-Out Inventory Sales Agreement (as defined below);

Article 1

DEFINITIONS AND CONSTRUCTION

1.1 Definitions.

For purposes of this Agreement, including the foregoing recitals, the following terms shall have the meanings indicated below:

“Actual Month End Crude Volume” has the meaning specified in Section 9.2(b).

“Actual Month End Included Crude Volume” has the meaning specified in Section 9.2(a).

“Actual Month End Included Product Volume” has the meaning specified in Section 9.2(a).

“Actual Month End Product Volume” has the meaning specified in Section 9.2(b).

“Actual Monthly Crude Run” has the meaning specified in Section 6.4(a)(iii).

“Additional Financing Agreement” has the meaning specified in Section 18.2(j).

“Additional Waived Fee Barrels” means, for any month, the greater of (i) zero and (ii) the lesser of (A) Actual Monthly Crude Run for such month minus the product of [***] Barrels and the number of days in such month and (B) Designated Company-Sourced Barrels for such month minus the product of [***] Barrels and the number of days in such month.

“Adequate Assurance” has the meaning specified in Section 13.5.

“Affected Obligations” has the meaning specified in Section 17.3.

“Affected Party” has the meaning specified in Section 17.1.

“Affiliate” means, in relation to any Person, any entity controlled, directly or indirectly, by such Person, any entity that controls, directly or indirectly, such Person, or any entity directly or indirectly under common control with such Person; provided that, without limiting the foregoing, it is acknowledged that each MLP Party constitutes an Affiliate of the Company Parties for purposes hereof. For this purpose, “control” of any entity or Person means ownership of a majority of the issued shares or voting power or control in fact of the entity or Person.

“Ancillary Contract” has the meaning specified in Section 20.1(c).

“Ancillary Costs” means all freight, pipeline, transportation, storage, tariffs and other costs and expenses incurred by Aron as a result of the purchase, movement and storage of Crude Oil or

Products undertaken in connection with or required for purposes of this Agreement (whether or not arising under Procurement Contracts), including, ocean-going freight and other costs associated with waterborne movements, inspection costs and fees, wharfage, port and dock fees, vessel demurrage, lightering costs, ship’s agent fees, import charges, waterborne insurance premiums, fees and expenses, broker’s and agent’s fees, load port charges and fees, pipeline transportation costs, pipeline transfer and pumpover fees, pipeline throughput and scheduling charges (including any fees and charges resulting from changes in nominations undertaken to satisfy delivery requirements under this Agreement), pipeline and other common carrier tariffs, blending, tankage, linefill and throughput charges, pipeline demurrage, superfund and other comparable fees, processing fees (including fees for water or sediment removal or feedstock decontamination), merchandise processing costs and fees, importation costs, any charges imposed by any Governmental Authority (including transfer taxes (but not taxes on the net income of Aron) and U.S. Customs and other duties), user fees, fees and costs for any credit support provided to any pipelines with respect to any transactions contemplated by this Agreement and any pipeline compensation or reimbursement payments that are not timely paid by the pipeline to Aron. Notwithstanding the foregoing, (i) Aron’s hedging costs in connection with this Agreement or the transactions contemplated hereby shall not be considered Ancillary Costs (but such exclusion shall not change or be deemed to change the manner in which losses, costs and damages in connection with hedges and related trading positions are addressed under Articles 19 and 20 below), (ii) any Product shipping costs of Aron, to the extent incurred after Aron has removed such Product from the Product Storage Facilities for its own account, shall not be considered Ancillary Costs and (iii) any costs and expenses of Supplier’s Inspector shall not be considered Ancillary Costs.

“Annual Fee” means the amount set forth as the “Annual Fee” in the Fee Letter.

“ARKS Acknowledgment Agreement” means the Acknowledgment Agreement, dated as of March 30, 2018, among Aron, Alon Refining Krotz Springs, Inc. and Wells Fargo Bank, National Association (in its capacity as collateral agent for certain lenders).

“Aron Procurement Contract” has the same meaning as Procurement Contract.

“Asphalt Product Group” has the meaning specified on Schedule P hereto.

“Bank Holiday” means any day (other than a Saturday or Sunday) on which banks are authorized or required to close in the State of New York.

arrangement or composition with or for the benefit of its creditors, (iv) institutes a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation, (v) has a resolution passed for its winding-up, official management or liquidation, other than pursuant to a consolidation, amalgamation or merger, (vi) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for all or substantially all of its assets, (vii) has a secured party take possession of all or substantially all of its assets, or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all of its assets, (viii) files an answer or other pleading admitting or failing to contest the allegations of a petition filed against it in any proceeding of the foregoing nature, (ix) causes or is subject to any event with respect to it which, under Applicable Law, has an analogous effect to any of the foregoing events, (x) has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy under any bankruptcy or insolvency law or other similar law affecting creditors’ rights and such proceeding is not dismissed within fifteen (15) days or (xi) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing events.

“Bankruptcy Code” means chapter 11 of Title 11, U.S. Code.

“Barrel” means forty-two (42) net U.S. gallons, measured at 60° F.

“Base Agreement” means any agreement between the Company or LOTT and a third party pursuant to which the Company or LOTT has acquired rights to use any of the Included Third Party Storage Tanks, the Included Crude Pipelines or the Included Product Pipelines.

“Baseline Volume” means for Crude Oil or each Product Group the respective minimum volume specified therefor under the “Baseline Volume” column on Schedule D.

“BSR Acknowledgment Agreement” means the Acknowledgment Agreement, dated as of March 30, 2018, among Aron, Alon USA, LP and Wells Fargo Bank, National Association (in its capacity as collateral agent for certain lenders).

“Business Day” means any day that is not a Saturday, Sunday, or Bank Holiday.

“Change of Control” means (a) the failure of Guarantor to (i) hold and own, directly or indirectly, Equity Interests representing 100%, on a fully diluted basis, of the aggregate ordinary voting power of the Company and LOTT or (ii) control the Company and LOTT, or (b) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, but excluding any employee benefit plan of such person or its Subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a “person” or “group” shall be deemed to have “beneficial ownership” of all Equity Interests that such “person” or “group” has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “option right”)), directly or indirectly, of more than forty percent (40%) of the Equity Interests of Guarantor entitled to vote in the election of members of the board of directors of Guarantor. For the purpose of this definition, “control” means the

possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling”, “Controlled” and “under common Control with” have meanings correlative thereto.

“Collateral” means the “Collateral” as defined in the Lien Documents.

“Commencement Date” means April 29, 2011.

“Commencement Date Crude Oil Volumes” means the total quantity of Crude Oil in the Crude Storage Tanks, Included Third Party Crude Storage Tanks and the Included Crude Pipelines purchased by Aron on the Commencement Date, pursuant to the Inventory Sales Agreements.

“Commencement Date Products Volumes” means the total quantities of the Products in the Product Storage Facilities purchased by Aron on the Commencement Date, pursuant to the Inventory Sales Agreements.

“Commencement Date Volumes” means, collectively, the Commencement Date Crude Oil Volumes and the Commencement Date Products Volumes.

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. Section 1 et seq.).

“Company Acknowledgment Agreement” has the meaning specified in Section 18.2(k)(ii).

“Company Party” has the meaning specified in Section 18.2(a).

“Company Purchase Agreement” has the meaning specified in the Marketing and Sales Agreement.

“Company Purchasers” has the meaning specified in the Marketing and Sales Agreement.

“Consignment Letter Agreement” means that certain letter agreement between the Company and Aron, dated January 25, 2017, relating to the consignment by Aron to the Company of certain Product from time to time held at the Cape Girardeau, Missouri refined products terminal operated by Enterprise Refined Products Company LLC (“ERPC”), which letter agreement has been acknowledged by ERPC for certain purposes.

“Contract Nominations” has the meaning specified in Section 5.4(b).

“CPT” means the prevailing time in the Central time zone.

“Credit Enhancement” means any credit enhancement or credit support arrangement in support of the obligations of Aron under or with respect to this Agreement, the Inventory Sales Agreements and the Step-out Inventory Sales Agreement, including any guarantee, collateral arrangement (including any pledge, charge, mortgage or other security interest in collateral or title transfer arrangement), trust or similar arrangement, letter of credit, transfer of margin or any similar arrangement.

“Crude Delivery Point” means the outlet flange of the last Onsite Crude Storage Tank upstream of a processing unit at the Refinery.

“Crude Intake Point” means the inlet flange of the Crude Storage Tanks and the Included Crude Pipelines owned or used (as such rights may be assigned to Aron by the Company) by the Company or LOTT.

“Crude Oil” means all crude oil that (i) Aron purchases and sells to the Company (including all crude oil injected at a Crude Intake Point) or (ii) for which Aron assumes the payment obligation pursuant to any Procurement Contract.

“Crude Oil Linefill” means, at any time, the aggregate volume of Crude Oil linefill on the Included Crude Pipelines for which Aron is treated as the exclusive owner by the Included Crude Pipelines; provided that such volume shall be determined by using the volumes reported on the most recently available statements from the Included Crude Pipelines.

“Crude Price” means the Price applicable to the Index Amount for Crude Oil as specified on Schedule B.

“Crude Purchase Fee” (a) prior to the Third Restatement Adjustment Date, has the meaning specified in Section 6.4(a)(i), and (b) from and after the Third Restatement Adjustment Date, has the meaning specified in Section 6.4(b)(i).

“Crude Storage Facilities” means, collectively, the Crude Storage Tanks and the Included Crude Pipelines.

“Crude Storage Tanks” means any of the Onsite Crude Storage Tanks or Offsite Crude Storage Tanks.

“Cumulative Estimated Daily Net Settlement Amount” means, as of any day, the sum of the Daily Settlement Amounts for such date and all prior dates during the then current month and any prior month for which the Monthly True-Up Payment has not been satisfied.

“Cumulative Interim Paid Amount” means, as of any day, the sum of (i) the most recent Interim Reset Amount and (ii) the sum of the Interim Payments actually received by Aron for all days from (and including) the most recent prior Monthly True-Up Date (or, if no Monthly True-Up Date has yet occurred, the Initial Delivery Date) to (but excluding) such day.

“Customers” has the meaning specified in the Marketing and Sales Agreement.

“DDP” has the meaning specified in Section 8.2(a).

“Default” means any event that, with notice or the passage of time, would constitute an Event of Default.

“Defaulting Party” has the meaning specified in Section 19.2.

“Deferred Interim Payment Amount” means, as of any time, $[***].

“Deferred Portion” has the meaning specified in the Inventory Sales Agreement.

“Definitive Commencement Date Value” means the sum of the Lion Oil Definitive Commencement Date Value and the LOTT Definitive Commencement Date Value.

“Delivery Date” means any applicable 24-hour period.

“Delivery Month” means the month in which Crude Oil is to be delivered to the Refinery.

“Delivery Point” means a Crude Delivery Point or a Products Delivery Point, as applicable.

“Designated Affiliate” means, in the case of Aron, Goldman, Sachs & Co and, in the case of the Company Parties, Alon Refining Krotz Springs, Inc., Alon USA, LP, Delek Refining, Ltd., and Delek Marketing & Supply, LLC (collectively, the “Delek Entities”), provided that a Delek Entity shall be a Designated Affiliate of the Company Parties only if and for so long as it is an Affiliate of the Company Parties.

“Designated Company-Sourced Barrels” means, for any month, the aggregate number of Barrels of Crude Oil delivered by the Company to Aron with transfer of title occurring at the relevant Offsite Crude Storage Tanks, Included Third Party Crude Storage Tanks or other upstream point, regardless of whether such delivery is via a pipeline that is not an Included Crude Pipeline or is

pursuant to a Procurement Contract with delivery via an Included Crude Pipeline, reduced by the Monthly Crude Procurement Sales Volume for such month (as set forth on Schedule C).

“Disposed Quantity” has the meaning specified in Section 9.4.

“Disposition Amount” has the meaning specified in Section 9.4.

“Eligible Hydrocarbon Inventory” means, as of any day, the Hydrocarbons owned by either Company Party that are subject to a valid, first priority perfected Lien and security interest in favor of Aron, including, without limitation, at any time and with respect to any such Hydrocarbons, the aggregate volume of such Hydrocarbons constituting linefill; provided that, unless Aron shall otherwise elect in its reasonable discretion, Eligible Hydrocarbon Inventory shall not include any Hydrocarbon:

(a) that is held on consignment or not otherwise owned by either Company Party;

(b) that is unmerchantable or constitutes product that is permanently off-spec;

(d) that consists solely of chemicals (other than commodity chemicals maintained in bulk), samples, prototypes, supplies, or packing and shipping materials;

(e) that is not located at a Specified Lien Location;

(f) that is not currently either usable or salable, at market price, in the normal course of the Company’s business; or

(g) that is not identified on Schedule P, unless otherwise mutually agreed by the Parties.

“Enterprise” means TE Products Pipeline Company LLC.

“Enterprise Teppco Product Pipeline” means Enterprise’s refined products pipeline system that has a connection point at El Dorado, Arkansas.

“Equity Interests” means, with respect to any Person, any and all shares, interests, participations or other equivalents, including membership interests (however designated, whether voting or nonvoting), of equity of such Person, including, if such Person is a partnership, partnership interests (whether general or limited) and any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of property of, such partnership, but excluding debt securities convertible or exchangeable into such equity.

“Estimated Commencement Date Value” means the sum of the Lion Oil Estimated Commencement Date Value and the LOTT Estimated Commencement Date Value.

“Estimated Daily Net Crude Sales” has the meaning specified in Section 10.1(d).

“Estimated Daily Net Product Sales” has the meaning specified in Section 10.1(d).

“Estimated Gathering Crude Value” has the meaning specified in Section 10.1(d).

“Estimated Gathering Tank Injections” mean, for any day, the aggregate daily crude flow through meters R1, R2, and R3, plus the total change in daily inventory for all Gathering Tanks denoted as Lien on Schedule E (other than Tank 66), plus the total change in daily inventory for all Gathering Tanks denoted as Title on Schedule E (other than Tank 66) minus the sum of aggregate daily crude flow through meters C‑1, C‑2, C‑3, M‑4, M‑7, FINNEY #1, FINNEY #2 and FINNEY #3, (and any additional meters as mutually agreed upon by the Company and Aron), minus Total Rail Receipts.

“Estimated Initial Lien Amount” has the meaning specified in Section 11.2.

“Estimated Termination Amount” has the meaning specified in Section 20.2(b).

“Estimated Yield” has the meaning specified in Section 8.3(a).

“Event of Default” means an occurrence of the events or circumstances described in Section 19.1.

“Excess Cumulative Amount” means, for any period starting on a Monthly True-Up Date (or, if no Monthly True-Up Date has occurred, on the Initial Delivery Date) to (but excluding) the next Monthly True-Up Date, the excess, if any of Cumulative Interim Paid Amount as of the day prior to the start of such period minus the Gross Monthly Payment Amount for the month to which such first Monthly True-Up Date relates or, if there is no such excess, then zero.

“Excess LC Amount” means the amount described on Schedule CC.

“Excess LC Fee” means, for any month, the product of (i) Excess LC Amount for such month, (ii) the Excess LC Rate and (iii) a fraction with a numerator equal to the number of days in such month and a denominator equal to 365.

“Excess LC Rate” means, for any month, the rate described on Schedule CC.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Excluded Materials” means any refined petroleum products other than those that are Products.

“Excluded Transactions” has the meaning specified in the Marketing and Sales Agreement.

“Existing Financing Agreements” mean the Financing Agreements listed on Schedule DD.

“Expiration Date” has the meaning specified in Section 3.1.

“Exposure Default Interest” has the meaning specified in Section 10.6(b).

“Fed Funds Rate” means, for any date, the rate set forth in H.15(519) or in H.15 Daily Update for the most recently preceding Business Day under the caption “Federal funds (effective)”; provided that if no such rate is so published for any of the immediately three (3) preceding Business Days, then such rate shall be the arithmetic mean of the rates for the last transaction in overnight Federal funds arranged by each of three leading brokers of U.S. dollar Federal funds transactions prior to 9:00 a.m., CPT, on that day, which brokers shall be selected by Aron in a commercially reasonable manner. For purposes hereof, “H.15(519)” means the weekly statistical release designated as such, or any successor publication, published by the Board of Governors of the Federal Reserve System, available through the worldwide website of the Board of Governors of the Federal Reserve System at http://www.federalreserve.gov/releases/h15/, or any successor site or publication and “H.15 Daily Update” means the daily update of H.15(519), available through the worldwide website of the Board of Governors of the Federal Reserve System at http://www.federalreserve.gov/releases/h15/update/, or any successor site or publication.

“Fee Letter” means that certain amended and restated letter by and among the Guarantor, the Company, LOTT and Aron, executed on or after the date hereof and as from time to time thereafter amended and/or restated, which identifies itself as the “Fee Letter” for purposes hereof, and pursuant to which the Parties have set forth the amounts for and other terms relating to certain fees payable hereunder.

“FIFO Balance Final Settlement” means the amount determined to be due pursuant to Schedule N.

“Financing Agreement” means any credit agreement, indenture or other financing agreement under which the Guarantor or any of its subsidiaries (including the Company and LOTT) may incur or become liable for indebtedness for borrowed money (including capitalized lease obligations and reimbursement obligations with respect to letters of credit) but only if the covenants thereunder limit or otherwise apply to any of the business, assets or operations of the Company or LOTT.

difficulty could be settled by acceding to any demands of any such labor group of individuals and whether or not involving employees of the Company or Aron); accidents at, closing of, or restrictions upon the use of mooring facilities, docks, ports, pipelines, harbors, railroads or other navigational or transportation mechanisms; disruption or breakdown of, explosions or accidents to wells, storage plants, refineries, terminals, machinery or other facilities; acts of war, hostilities (whether declared or undeclared), civil commotion, embargoes, blockades, terrorism, sabotage or acts of the public enemy; any act or omission of any Governmental Authority; good faith compliance with any order, request or directive of any Governmental Authority; curtailment, interference, failure or cessation of supplies reasonably beyond the control of a Party; or any other cause reasonably beyond the control of a Party, whether similar or dissimilar to those above and whether foreseeable or unforeseeable, which, by the exercise of due diligence, such Party could not have been able to avoid or overcome. Solely for purposes of this definition, the failure of any Third Party Supplier to deliver Crude Oil pursuant to any Procurement Contract, whether as a result of Force Majeure as defined above, “force majeure” as defined in such Procurement Contract, breach of contract by such Third Party Supplier or any other reason, shall constitute an event of Force Majeure for Aron under this Agreement with respect to the quantity of Crude Oil subject to that Procurement Contract.

“GAAP” means generally accepted accounting principles in the United States.

“Gathering Tanks” means any of the gathering tanks identified and described on Schedule E.

“Gross Monthly Payment Amount” means, for any month, an amount equal to the Monthly True-Up Amount for that month minus the amount under clause (a)(i) of Section 10.2 included in such Monthly True-Up Amount.

“Guarantee” means the Guaranty, dated as of July 20, 2017, from the Guarantor provided to Aron in connection with this Agreement and the transactions contemplated hereby.

“Guarantor” means Delek US Holdings, Inc.

“Hydrocarbons” has the meaning specified in Section 18.2(o).

“Identified Facilities” has the meaning specified in Section 14.4(a).

“Included Crude Lien Inventory” means, as of any day, Eligible Hydrocarbon Inventory consisting of Crude Oil that is then held at a Specified Lien Location.

“Included Crude Pipelines” means, the pipelines or sections thereof as further described on Schedule V, as such schedule may, from time to time, be amended by the Parties.

“Included Locations” means, collectively, the Crude Storage Tanks, Included Crude Pipelines, Product Storage Tanks, Included Product Pipelines and Included Third Party Storage Tanks.

“Included Product Lien Inventory” means, for each Product and as of any day, Eligible Hydrocarbon Inventory consisting of such Product that is then held at a Specified Lien Location.

“Included Product Pipelines” means the pipelines or sections thereof as further described on Schedule W, as such schedule may, from time to time, be amended by the Parties.

“Included Third Party Crude Storage Tanks” means any of the storage tanks identified and described on Schedule E.

“Included Third Party Product Storage Tanks” means any of the tanks, salt wells or pipelines identified and described on Schedule E.

“Included Third Party Storage Tanks” means the Included Third Party Crude Storage Tanks and Included Third Party Product Storage Tanks.

“Included Transactions” has the meaning specified in the Marketing and Sales Agreement.

“Independent Inspection Company” has the meaning specified in Section 12.3.

“Index Amount” has the meaning specified on Schedule B.

“Initial Crude Lien Inventory Value” has the meaning specified in the Fee Letter.

“Initial Delivery Date” means the Delivery Date occurring on May 1, 2011.

“Initial Estimated Yield” has the meaning specified in Section 8.3(a).

“Initial Lien Amount” has the meaning specified in Section 11.2.

“Initial Product Lien Inventory Value” has the meaning specified in the Fee Letter.

“Interim Payment” has the meaning specified in Section 10.1.

“Interim Reset Amount” means (i) zero, for the period from the Initial Delivery Date to and including the initial Monthly True-Up Date and (ii) the applicable Excess Cumulative Amount for the period from the first day following a Monthly True-Up Date to (but excluding) the next Monthly True-Up Date.

“Inventory Collateral” has the meaning specified in Section 18.2(o).

“Inventory Measurement Time” has the meaning ascribed to such term in the LOTT Inventory Sales Agreement.

“Inventory Report” has the meaning specified in Section 11.8(a).

“Inventory Sales Agreements” means the Lion Oil Inventory Sales Agreement and the LOTT Inventory Sales Agreement.

“Inventory Transfer Locations” has the meaning ascribed to such term in the LOTT Inventory Sales Agreement.

“Inventory Transfer Time” has the meaning ascribed to such term in the LOTT Inventory Sales Agreement.

“Laws” means, collectively, all international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreement with, any Governmental Authority.

“LC Available Amount” means, as of any time, the sum of the then current aggregate available amount under all Qualified LCs then held by Aron pursuant to Section 13.4(b) below and the amount drawn by Aron under such Qualified LCs and then held by Aron as additional cash collateral as contemplated under Section 13.4(b)(iii); provided that if and for so long as a Letter of Credit ceases to be a Qualified LC, the available amount thereof shall not be included in the LC Available Amount.

“LC Fee” means, for any month, the product of (i) Monthly LC Amount for such month, (ii) the LC Rate and (iii) a fraction with a numerator equal to the number of days in such month and a denominator equal to 365.

“LC Rate” means the Three Month LIBOR.

“LC Threshold Amount” means, as of any time, the lesser of (i) the then current LC Available Amount and (ii) the sum of LC Threshold Cap and the amount drawn by Aron under such Qualified LCs and then held by Aron as additional cash collateral as contemplated under Section 13.4(b)(iii).

“LC Threshold Cap” means $[***] or such greater amount as Aron, in its discretion, may agree to in writing, provided that if any fees are agreed to by the Parties in connection with such greater amount such fees shall be calculated as provided on Schedule CC.

“Letter of Credit” means an irrevocable, transferable standby letter of credit issued by an Acceptable Financial Institution in favor of Aron and provided by the Company to Aron pursuant to and otherwise satisfying the requirements of Section 13.4(b) below, in a form and in substance satisfactory to Aron.

“Level One Fee” means the amount set forth as the “Level One Fee” in the Fee Letter.

“Level Two Fee” means the amount set forth as the “Level Two Fee” in the Fee Letter.

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement and any capital lease having substantially the same economic effect as any of the foregoing).

“Lien Amount” has the meaning specified in Section 11.1.

“Lien Documents” means the Pledge and Security Agreement and any other instruments, documents and agreements delivered by or on behalf of the Company Parties in order to grant to, or perfect in favor of, Aron, a lien on any real, personal or mixed property of the Company Parties as security for the obligations of the Company pursuant to this Agreement and the Transaction Documents.

“Lion Monthly Deferral Amount” has the meaning specified in Schedule HH.

“Lion Oil Definitive Commencement Date Value” has the meaning specified in the Lion Oil Inventory Sales Agreement.

“Lion Oil Estimated Commencement Date Value” has the meaning specified in the Lion Oil Inventory Sales Agreement.

“Lion Oil Inventory Sales Agreement” means the inventory sales agreement, dated as of the Commencement Date, between the Company and Aron, pursuant to which the Company is selling and transferring to Aron a specified portion of the Commencement Date Volumes for a specified percentage of the Commencement Date Purchase Value, free and clear of all liens, claims and encumbrances of any kind other than Permitted Liens.

“Lion-Owned Rail Receipts” mean, for any day, the difference between Total Rail Receipts and the aggregate number of barrels not identified as “LION/LOTT” deliveries on the inventory reports from time to time provided by the Company generally in the form set forth on Schedule H.

“Liquidated Amount” has the meaning specified in Section 19.2(f).

“Location Conversion Date” means March 1, 2017.

“Long Crude FIFO Value” has the meaning specified on Schedule B.

“Long Product FIFO Value” means the price so listed on Schedule B.

“LOTT Definitive Commencement Date Value” has the meaning specified in the LOTT Inventory Sales Agreement.

“LOTT Estimated Commencement Date Value” has the meaning specified in the LOTT Inventory Sales Agreement.

“LOTT Inventory Sales Agreement” means the inventory sales agreement, dated as of the Commencement Date, between LOTT and Aron, pursuant to which LOTT is selling and transferring to Aron a specified portion of the Commencement Date Volumes for a specified percentage of the Commencement Date Purchase Value, free and clear of all liens, claims and encumbrances of any kind other than Permitted Liens.

“Marketing and Sales Agreement” means the products marketing and sales agreement, dated as of the Commencement Date, between the Company and Aron, pursuant to which the Product purchased by Aron hereunder shall from time to time be marketed and sold by the Company for Aron’s account, as amended, supplemented, restated or otherwise modified from time to time.

“Material Adverse Change” means a material adverse effect on and/or material adverse change with respect to (i) the business, operations, properties, assets or financial condition of the Guarantor, the Company and its Subsidiaries taken as a whole; (ii) the ability of the Company to fully and timely perform its obligations; (iii) the legality, validity, binding effect or enforceability against the Company of any of the Transaction Documents; or (iv) the rights and remedies available to, or conferred upon, Aron hereunder; provided that none of the following changes or effects shall constitute a “Material Adverse Effect”: (1) changes, or effects arising from or relating to changes, of laws, that are not specific to the business or markets in which the Company operates; (2) changes arising from or relating to, or effects of, the transactions contemplated by this Agreement or the taking of any action in accordance with this Agreement; (3) changes, or effects arising from or relating to changes, in economic, political or regulatory conditions generally affecting the U.S. economy as a whole, except to the extent such change or effect has a disproportionate effect on the Company relative to other industry participants; (4) changes, or effects arising from or relating to changes, in financial, banking, or securities markets generally affecting the U.S. economy as a whole, (including (a) any disruption of any of the foregoing markets, (b) any change in currency exchange rates, (c) any decline in the price of any security or any market index and (d) any increased cost of capital or pricing related to any financing), except to the extent such change or effect has a

disproportionate effect on the Company relative to other industry participants; and (5) changes arising from or relating to, or effects of, any seasonal fluctuations in the business, except to the extent such change or effect has a disproportionate effect on the Company relative to other industry participants.

“Maximum Holdback Amount” has the meaning specified in Section 20.2(b).

“Maximum Volume” has the meaning specified in Section 7.1.

“Measured Crude Quantity” means, for any Delivery Date, the total quantity of Crude Oil that, during such Delivery Date, was withdrawn and lifted by and delivered to the Company at the Crude Delivery Point, as evidenced by meter readings and/or meter tickets for that Delivery Date and tank gaugings conducted at the beginning and end of such Delivery Date.

“Measured Product Quantity” means, for any Delivery Date, the total quantity of a particular Product that, during such Delivery Date, was delivered by the Company to Aron at the Products Delivery Point, as evidenced by meter readings and/or meter tickets for that Delivery Date and tank gaugings conducted at the beginning and end of such Delivery Date.

“MLP Acknowledgment Agreement” has the meaning specified in Section 18.2(k)(ii).

“MLP Party” means Delek MLP or any Subsidiary of Delek MLP that is a party to a Required MLP Arrangement.

“Monthly Cover Costs” has the meaning specified in Section 7.6.

“Monthly Crude Forecast” has the meaning specified in Section ‎5.2(a).

“Monthly Crude Oil True-Up Amount” has the meaning specified on Schedule C.

“Monthly Crude Payment” has the meaning specified in Section 6.3.

“Monthly Crude Price” means, with respect to the Net Crude Sales Volume for any month, the volume weighted average price per barrel specified in the related Procurement Contracts under which Aron acquired or sold such barrels in such month.

“Monthly Crude Procurement Sales Volume” has the meaning specified on Schedule C.

“Monthly Crude Receipts” has the meaning specified on Schedule C.

“Monthly Excluded Transaction Fee” has the meaning specified on Section 7.8.

“Monthly LC Amount” means the amount described on Schedule CC.

“Monthly Product Sale Adjustment” has the meaning specified on Section 7.5.

“Monthly Product Sales” means, for any month and Product Group, the aggregate sales volume of such Product sold during such month, pursuant to (a) Included Transactions and Excluded

Transactions (each as defined in the Marketing and Sales Agreement) or (b) any Company Purchase Agreements.

“Monthly Product True-Up Amount” has the meaning specified on Schedule C.

“Monthly True-Up Amount” has the meaning specified in Section 10.2(a).

“Monthly True-Up Date” means, for any month, the Business Day on which the Monthly True-Up Amount for the immediately preceding month is due.

“Monthly Working Capital Adjustment” is an amount to be determined pursuant to Schedule L.

“Moody’s” means Moody’s Investors Service, Inc., including any official successor to Moody’s.

“MTD Performance Report” has the meaning specified in Section 7.3(a).

“Net Crude Sales Volume” has the meaning specified in Section 9.3(a).

“Nomination Month” means the month that occurs two (2) months prior to the Delivery Month.

“Non-Affected Party” has the meaning specified in Section 17.1.

“Non-Defaulting Party” has the meaning specified in Section 19.2(a).

“Non-Holdback Portion” has the meaning specified in Section 20.2(b).

“NSV” means, with respect to any measurement of volume, the total liquid volume, excluding basic sediment and water and free water, corrected for the observed temperature to 60° F.

“Obligations” has the meaning specified in Section 18.2(o).

“Offsite Crude Storage Tanks” means the tanks owned or used (as such rights may be assigned to Aron by the Company) by the Company or LOTT located outside the Refinery that store Crude Oil, as further described on Schedule E.

“Offsite Product Storage Tanks” means any of the tanks, salt wells or pipelines owned or used (as such rights may be assigned to Aron by the Company) by the Company or LOTT located outside the Refinery, that store or transport Products, as further described on Schedule E.

Eurodollar rates as the Parties, acting reasonably, select. One Month LIBOR shall be established on the last Business Day of a calendar month and shall be in effect for the next calendar month; provided that if One LIBOR can no longer be determined by Aron (in its sole discretion) or any Governmental Authority having jurisdiction over the quotation or determination of London Interbank Offered Rates declares that it will no longer supervise or sanction such rates for purposes of interest rates on loans, then Aron and the Company shall endeavor, in good faith, to establish an alternate rate of interest to One Month LIBOR that gives due consideration to the then prevailing market convention for determining a rate of interest for middle-market loans in the United States at such time, and shall enter into an amendment to this Agreement to reflect such alternate rate of interest and such other related changes to this Agreement as may be applicable; provided further that, until such alternate rate of interest is agreed upon by Aron and the Company, One Month LIBOR for purposes hereof and each other Transaction Document shall be the “Wall Street Journal Prime Rate” as published and defined in The Wall Street Journal. Notwithstanding the foregoing, the One Month LIBOR shall at no time be less than 0.00% per annum.

“Onsite Crude Storage Tanks” means any of the tanks at or adjacent to the Refinery that store Crude Oil, listed on Schedule E.

“Onsite Product Storage Tanks” means the tanks, salt wells or pipelines located at the Refinery that store or transport Products, listed on Schedule E.

“Operational Volume Range” means the range of operational volumes for any given set of associated Crude Storage Tanks for each type of Crude Oil and for any given set of associated Product Storage Facilities for each group of Products, between the minimum volume and the maximum volume, as set forth on Schedule D.

“Original Agreement” has the meaning specified in the recitals above.

“Original Effective Date” means the “Effective Date” as defined in the Original Agreement.

“Other Barrels” means, with respect to any Delivery Month, any Crude Oil purchased by the Company or LOTT that is not being sold to Aron under a Procurement Contract, but is expected to be delivered and transferred to Aron at a Crude Intake Point during such Delivery Month.

“Owned Lien Location” means a Specified Lien Location that is owned and operated by the Company and/or LOTT.

“Party” or “Parties” has the meaning specified in the preamble to this Agreement.

“Per Barrel Adjustment” means the amounts described in Section 7.8 and set forth on Schedule K.

“Permitted Lien(s)” means (a) (i) liens on real estate for real estate taxes, assessments, sewer and water charges and/or other governmental charges and levies not yet delinquent and (ii) liens for taxes, assessments, judgments, governmental charges or levies, or claims not yet delinquent or the non-payment of which is being diligently contested in good faith by appropriate proceedings

and for which adequate reserves have been set aside; (b) liens of mechanics, laborers, suppliers, workers and materialmen incurred in the ordinary course of business for sums not yet due or being diligently contested in good faith, if such reserve or appropriate provision, if any, as shall be required by GAAP shall have been made therefore; (c) liens incurred in the ordinary course of business in connection with worker's compensation and unemployment insurance or other types of social security benefits; and (d) liens securing rental, storage, throughput, handling or other fees or charges owing from time to time to eligible carriers, solely to the extent of such fees or charges.

“Periodic Adjustment Date” means each October 1^st and May 1^st occurring after the Third Restatement Adjustment Date.

“Pipeline Cutoff Date” means, with respect to any Included Crude Pipeline or Included Product Pipeline, the date and time by which a shipper on such Included Crude Pipeline or Included Product Pipeline, as applicable, is required to provide its nominations to the entity that schedules and tracks Crude Oil and Products in such Included Crude Pipeline or Included Product Pipeline, as applicable for the next shipment period for which nominations are then due.

“Pipeline System” means the Included Crude Pipelines and Included Product Pipelines.

“Pledge and Security Agreement” means the Pledge and Security Agreement, dated as of the date hereof, by and among the Company Parties, their subsidiaries from time to time party thereto, and Aron, as amended, supplemented, restated or otherwise modified from time to time.

“Pre-Adjustment Level One Fee” means the amount set forth as the “Pre-Adjustment Level One Fee” in the Fee Letter.

“Pre-Adjustment Level Two Fee” means the amount set forth as the “Pre-Adjustment Level Two Fee” in the Fee Letter.

“Price Adjustment Settlement Amount” has the meaning specified on Schedule GG hereto.

“Pricing Group” means any of the refined petroleum product groups listed as a pricing group on Schedule P.

“Pricing Value” means, with respect to a particular grade of Crude Oil or type of Product, the applicable Index Amount plus or minus the applicable Price indicated on Schedule B.

“Procurement Contract” means any procurement contract entered into by Aron for the purchase or sale of Crude Oil to be processed at the Refinery or sold, which may be either a contract with any seller or purchaser of Crude Oil (other than the Company or an Affiliate of the Company) or a contract with the Company (or such other contract as the Parties may deem to be a Procurement Contract for purposes hereof); provided that a Procurement Contract involving an exchange of one grade or location of Crude Oil for another grade and/or location of Crude Oil shall consist of two related contracts, one of which shall provide for the purchase of Crude Oil by Aron from a seller (which may be a third party, the Company or an Affiliate of the Company) and the other of which shall provide for the exchange by Aron with a party (which may or may not be the seller under the first contract) for Crude Oil of a different grade and/or at a different location, and which may or may not be of an equal quantity of Crude Oil (collectively, an “Exchange Procurement Contract”).

“Procurement Contract Assignment” means an instrument, in form and substance reasonably satisfactory to Aron, by which LOTT assigns to Aron all rights and obligations under a contract between a third party seller and LOTT and Aron assumes such rights and obligations thereunder, subject to terms satisfactory to Aron providing for the automatic reassignment thereof to LOTT in connection with the termination of this Agreement, with the result that such contract becomes a Procurement Contract hereunder.

“Product” means any of the refined petroleum products listed on Schedule A, as from time to time amended by mutual agreement of the Parties.

“Product Group” means a group of Products as specified on Schedule P.

“Product Linefill” means, at any time and for any grade of Product, the aggregate volume of linefill of that Product on the Included Product Pipelines for which Aron is treated as the exclusive owner by the Included Product Pipelines; provided that such volume shall be determined by using the volumes reported on the monthly or daily statements, as applicable, from the Included Product Pipelines.

“Product Price” means the Price applicable to the Index Amount for the relevant Product as specified on Schedule B.

“Product Purchase Agreements” has the meaning specified in the Marketing and Sales Agreement.

“Product Storage Facilities” means, collectively, the Product Storage Tanks, the Included Product Pipelines and the Included Third Party Product Storage Tanks.

“Product Storage Tanks” means any of the Onsite Product Storage Tanks or Offsite Product Storage Tanks.

“Products Delivery Point” means the inlet flange of the Onsite Product Storage Tanks.

“Products Offtake Point” means the delivery point at which Aron transfers title to Products in accordance with sales transactions executed pursuant to the Marketing and Sales Agreement.

“Projected Monthly Run Volume” has the meaning specified in Section 7.2(a).

“Qualified LC” means a Letter of Credit that is designated as a Qualified LC in accordance with Section 13.4(b)(vi) and as to which no LC Default has occurred and is continuing.

“Reduced Fee Barrels” has the meaning specified in Section 6.4(b).

“Refinery” means the petroleum refinery located in El Dorado, Arkansas owned and operated by the Company.

“Refinery Facilities” means all the facilities owned and operated by the Company located at the Refinery, and any associated or adjacent facility that is used by the Company to carry out the terms of this Agreement, excluding, however, the Crude Oil receiving and Products delivery facilities, pipelines, tanks and associated facilities owned and operated by the Company which constitute the Storage Facilities.

“Refinery Procurement Contract” means a procurement contract entered into by the Company with any third party seller for the purchase by the Company of Crude Oil, which Crude Oil may be resold by the Company to Aron under an Aron Procurement Contract or delivered as Other Barrels.

“Regulatory Event” has the meaning specified in Section 9.6.

“Regulatory Event Notice” has the meaning specified in Section 9.6.

“Remaining Annual Fee” means an amount equal to the aggregate Annual Fee that would have become due for the period commencing on the date on which this Agreement is terminated under Section 19.2 below and ending on the Expiration Date.

“Required MLP Arrangements” means the Required Storage and Transportation Arrangements entered into with Delek MLP, including, but not limited to, the following agreements: (i) that certain Pipelines and Storage Facilities Agreement, dated as of November 7, 2012, among Delek MLP, SALA Gathering Systems, LLC (“Sala”), El Dorado Pipeline Company, LLC (“El Dorado”) and Magnolia Pipeline Company, LLC (“Magnolia”), the Company and Aron; (ii) that certain Terminalling Services Agreement (Memphis Terminal), dated as of November 7, 2012, among Delek MLP, Delek Logistics Operating, LLC (“Delek Operating”), the Company and Aron; (iii) that certain Products Transportation Agreement, dated as of January 9, 2019, among the Company, El Dorado and Aron; (iv) that certain Terminalling Services Agreement, dated as of October 24, 2013, between the Company, Delek MLP and Aron; and (v) that certain Throughput and Tankage Agreement (El Dorado Terminal and Tankage), dated as of February 10, 2014, between the Company, Delek Operating and Aron, each as from time to time amended or modified.

“Required Storage and Transportation Arrangements” mean such designations and other binding contractual arrangements, in form and substance satisfactory to Aron, pursuant to which the Company or LOTT, as applicable, shall have provided Aron with full and unimpaired right to the Company’s or LOTT’s (or their Affiliates’), as applicable, rights to use the Included Crude

Pipelines, Included Product Pipelines, Crude Storage Tanks, Product Storage Tanks and Included Third Party Storage Tanks.

“S&O Party” means each of the Company, LOTT, Alon Refining Krotz Springs, Inc. and Alon USA, LP.

“S&P” means Standard & Poor’s Rating Services Group, a division of The McGraw-Hill Companies, Inc., including any official successor to S&P.

“Second Restated Agreement” has the meaning specified in the recitals above.

“Second Restatement Effective Date” means February 27, 2017.

“Settlement Amount” has the meaning specified in Section 19.2(b).

“Short Crude FIFO Value” has the meaning specified on Schedule B.

“Short Product FIFO Value” has the meaning specified on Schedule B.

“Specified Indebtedness” means any obligation (whether present or future, contingent or otherwise, as principal or surety or otherwise) in respect of borrowed money.

“Specified Inventory Sales Agreement” means that certain purchase and sale agreement, dated as of the Location Conversion Date, pursuant to which the Company and LOTT purchased from Aron all Crude Oil and Products located at the Specified Lien Locations subject to the terms and conditions thereof.

“Specified Lien Location” means the storage tanks and pipelines identified on Schedules E, V and W hereto as “lien locations” and further identified as: (i) an Owned Lien Location, (ii) a Third Party Lien Location (other than a Third Party Common Carrier Location) for which a bailee’s letter has been delivered and is in effect or (iii) a Third Party Common Carrier Location.

“Specified Transaction” means (a) any transaction (including an agreement with respect thereto) now existing or hereafter entered into between Aron (or any of its Designated Affiliates) and either Company Party (and any of its Designated Affiliates) (i) which is a rate swap transaction, swap option, basis swap, forward rate transaction, commodity swap, commodity option, commodity spot transaction, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option, weather swap, weather derivative, weather option, credit protection transaction, credit swap, credit default swap, credit default option, total return swap, credit spread transaction, repurchase transaction, reverse repurchase transaction, buy/sell-back transaction, securities lending transaction, or forward purchase or sale of a security, commodity or other financial instrument or interest (including any

option with respect to any of these transactions), including any supply and/or offtake transaction relating to any refining operations of any Designated Affiliate of the Company Parties or (ii) which is a type of transaction that is similar to any transaction referred to in clause (i) that is currently, or in the future becomes, recurrently entered into the financial markets (including terms and conditions incorporated by reference in such agreement) and that is a forward, swap, future, option or other derivative on one or more rates, currencies, commodities, equity securities or other equity instruments, debt securities or other debt instruments, or economic indices or measures of economic risk or value, (b) any combination of these transactions and (c) any other transaction identified as a Specified Transaction in this agreement or the relevant confirmation.

“Stock Purchase Agreement” means the stock purchase agreement, among Ergon, Inc., the Company and the Guarantor, dated as of March 17, 2011, as from time to time amended, pursuant to which the Guarantor acquired 4,450,000 shares of the Company’s common stock from Ergon, Inc.

“Storage Facilities” mean the storage, loading and offloading facilities owned, operated, leased or used pursuant to a contractual right of use by the Company, LOTT or any other subsidiary of the Company including the Crude Storage Tanks, the Product Storage Tanks, any pipelines owned or operated by the Company or its subsidiaries, and the land, piping, marine facilities, truck facilities and other facilities related thereto, together with existing or future modifications or additions, which are excluded from the definition of Refinery or Refinery Facilities. In addition, the term “Storage Facilities” includes any location where a storage facility is used by the Company or LOTT to store or throughput Crude Oil or Products except those storage, loading and offloading facilities owned, operated, leased or used pursuant to a contractual right of use by the Company or LOTT which are used exclusively to store Excluded Materials.

“Storage Facilities Agreement” means the storage facilities agreement, dated as of the Commencement Date, among the Company, LOTT, El Dorado, Magnolia and Aron, pursuant to which the Company, LOTT, El Dorado and Magnolia shall grant to Aron an exclusive right to use the Storage Facilities in connection with this Agreement, as amended, supplemented, restated or otherwise modified from time to time.

“Subsidiary” as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of the Company.

“Supplier’s Inspector” means any Person selected by Aron in a commercially reasonable manner at Aron’s own cost and expense that is acting as an agent for Aron or that (1) is a licensed Person who performs sampling, quality analysis and quantity determination of the Crude Oil and Products purchased and sold hereunder, (2) is not an Affiliate of any Party and (3) in the reasonable judgment of Aron, is qualified and reputed to perform its services in accordance with Applicable Law and industry practice, to perform any and all inspections required by Aron.

“Tank Maintenance” has the meaning specified in Section 9.5.

“Target Month End Crude Volume” has the meaning specified in Section 7.2(b).

“Target Month End Product Volume” has the meaning specified in Section 7.3(b).

“Tax” or “Taxes” has the meaning specified in Section 15.1.

“Term” has the meaning specified in Section 3.1.

“Termination Amount” means, without duplication, the total net amount owed by one Party to the other Party upon termination of this Agreement under Section 20.2(a).

“Termination Date” has the meaning specified in Section 20.1.

“Termination Date Purchase Value” means, with respect to the Termination Date Volumes, initially the Estimated Termination Amount until the Definitive Termination Date Value has been determined and thereafter the Definitive Termination Date Value (as such terms are defined in the form of the Step-Out Inventory Sales Agreement attached hereto as Schedule R).

“Termination Date Volumes” has the meaning specified in Section 20.1(d).

“Termination Holdback Amount” has the meaning specified in Section 20.2(b).

“Third A&R ARKS S&O Agreement” means the Third Amended and Restated Supply and Offtake Agreement dated as of the Third Restatement Effective Date between Aron and Alon Refining Krotz Springs, Inc., as amended, supplemented, restated or otherwise modified from time to time.

“Third A&R BSR S&O Agreement” means the Third Amended and Restated Supply and Offtake Agreement dated as of the Third Restatement Effective Date between Aron and Alon USA, LP, as amended, supplemented, restated or otherwise modified from time to time.

“Third Party Common Carrier Location” means a Specified Lien Location that is owned and operated by an entity that is not an Affiliate of the Company Parties and is either a common carrier pipeline or a multi-user storage terminal.

“Third Party Lien Location” means a Specified Lien Location that is not an Owned Lien Location; provided that such location (except for Third Party Common Carrier Locations) shall

only constitute a Third Party Lien Location if a “bailee’s letter” as contemplated by Section 18.2(r) is in effect with respect thereto.

“Third Party Supplier” means any seller of Crude Oil under a Procurement Contract including any counterparty to any exchange agreement that is a component of a Procurement Contract (other than LOTT or the Company).

“Total Rail Receipts” mean, for any day, the aggregate quantity of Crude Oil offloaded during such day at any railcar unloading facility adjacent to the Refinery, as measured by the crude flow through any rail crude meter identified on the inventory report from time to time provided by the Company generally in the form set forth on Schedule H.

“Third Restatement Adjustment Date” means May 1, 2020.

“Third Restatement Effective Date” has the meaning specified in the introductory paragraph hereof.

“Transaction Document” means any of this Agreement, the Fee Letter, the Marketing and Sales Agreement, the Inventory Sales Agreements, the Storage Facilities Agreement, the Step-Out Inventory Sales Agreements, the Required Storage and Transportation Arrangements, the Consignment Letter Agreement, the Specified Inventory Sales Agreement, the Guarantee, the S&O Party Guarantee, the Pledge and Security Agreement, the MLP Acknowledgment Agreement, the Company Acknowledgment Agreement, and any other agreement or instrument contemplated hereby or executed in connection herewith, in each case as amended, supplemented, restated or otherwise modified from time to time.

“Transition Adjustment Period” means the period of calendar months with respect to which any of the calculations in accordance with Schedule HH are to be made by Aron.

“Volume Cap for Reduced Crude Fee” means, for any month, [***] Barrels per day multiplied by the number of calendar days in such month.

“Volume Cap for Waived Crude Fee” means, for any month, [***] Barrels per day multiplied by the number of calendar days in such month.

“Volume Determination Procedures” mean the Company’s ordinary month-end procedures for determining the NSV of Crude Oil in the Crude Storage Tanks or Products in the Product Storage Tanks, which for each quarter-end shall be based on manual gauge readings of each Crude Storage Tank or Product Storage Tank as at the end of such quarter.

“Waived Fee Barrels” has the meaning specified in Section 6.4(a)(iv).

1.2 Construction of Agreement.

(a) Unless otherwise specified, reference to, and the definition of any document (including this Agreement) shall be deemed a reference to such document as may be, amended, supplemented, revised or modified from time to time.

(b) Unless otherwise specified, all references to an “Article,” “Section,” or Schedule” are to an Article or Section hereof or a Schedule attached hereto.

(c) All headings herein are intended solely for convenience of reference and shall not affect the meaning or interpretation of the provisions of this Agreement.

(d) Unless expressly provided otherwise, the word “including” as used herein does not limit the preceding words or terms and shall be read to be followed by the words “without limitation” or words having similar import.

(e) Unless expressly provided otherwise, all references to days, weeks, months and quarters mean calendar days, weeks, months and quarters, respectively.

(f) Unless expressly provided otherwise, references herein to “consent” mean the prior written consent of the Party at issue, which shall not be unreasonably withheld, delayed or conditioned.

(g) A reference to any Party to this Agreement or another agreement or document includes the Party’s permitted successors and assigns.

(h) Unless the contrary clearly appears from the context, for purposes of this Agreement, the singular number includes the plural number and vice versa; and each gender includes the other gender.

(i) Except where specifically stated otherwise, any reference to any Applicable Law or agreement shall be a reference to the same as amended, supplemented or re-enacted from time to time.

(j) Unless otherwise expressly stated herein, any reference to “volume” shall be deemed to refer to actual NSV, unless such volume has not been yet been determined, in which case, volume shall be an estimated net volume determined in accordance with the terms hereof.

(k) The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.

1.3 The Parties acknowledge that they and their counsel have reviewed and revised this Agreement and that no presumption of contract interpretation or construction shall apply to the advantage or disadvantage of the drafter of this Agreement.

ARTICLE 2

CONDITIONS PRECEDENT

2.1 Conditions Precedent to Effectiveness. This Agreement shall not be effective, and the Third Restatement Effective Date shall not occur, until the prior or concurrent satisfaction of each of the following conditions precedent:

(a) Each of the Third A&R ARKS S&O Agreement and the Third A&R BSR S&O Agreement has been executed and is in full force and effect;

(b) The Parties shall have executed an amendment to the Marketing and Sales Agreement in a form and in substance satisfactory to Aron;

(c) The Parties shall have agreed to the form and substance of the Step-Out Inventory Sales Agreement (which form is attached hereto as Schedule R);

(d) The S&O Party Guarantee shall have been duly executed and delivered to Aron in a form and in substance satisfactory to Aron;

(e) The Parties shall have entered into the Pledge and Security Agreement in a form and in substance satisfactory to Aron.

(f) The Company Parties and Aron shall have duly executed the Fee Letter;

(g) The Parties have prepared and appended hereto a full amended and restated set of Schedules and Exhibits;

(h) The Company shall have delivered to Aron a certificate signed by the principal executive officer of the Company certifying as to incumbency, board approval and resolutions, other matters;

(j) Aron shall have received amendments and restatements of the MLP Acknowledgment Agreement, the Company Acknowledgment Agreement, the ARKS Acknowledgment Agreement and the BSR Acknowledgment Agreement, each duly executed by all parties thereto, reflecting such updated references and further amendments and modifications as Aron shall have reasonably requested;

(l) Aron shall have received final approvals from relevant internal committees;

(p) The Company shall have delivered to Aron insurance certificates evidencing the effectiveness of the insurance policies set forth on Schedule F;

(q) The Company and LOTT have provided to Aron confirmation, in form and substance satisfactory to Aron, that all other Transaction Documents remain in full force and effect;

(r) All representations and warranties of the Company and its Affiliates contained in the Transaction Documents shall be true and correct in all material respects on and as of the Third Restatement Effective Date; and

(s) All representations and warranties of Aron contained in the Transaction Documents shall be true and correct in all material respects on and as of the Third Restatement Effective Date.

2.3 Additional Terms and Conditions relating to the Conversion of certain Included Locations to Specified Lien Locations.

(a) For each Specified Lien Location that is a Third Party Lien Location, on and effective as of the Location Conversion Date, the Company and LOTT provided to Aron a duly executed “bailee’s letter” as contemplated by Section 18.2(r), except for Third Party Common Carrier Locations. As provided in clause (ii) of the definition of Specified Lien Location, a Third Party Lien Location (except for a Third Party Common Carrier Location) shall be counted as a Specified Lien Locations for purposes hereof only if a bailee’s letter for such location has been delivered to Aron and is in effect;

(b) The Parties may from time to time, by amending the appropriate schedule hereto, add a new Specified Lien Location, convert an Included Location to a Specified Lien Location or delete a location so that it ceases to be a Specified Lien Location.

2.4 Post-Third Restatement Effective Date Undertakings. From and after the Third Restatement Effective Date, the Company may endeavor to negotiate and implement designations and other binding contractual arrangements, in form and substance satisfactory to Aron, pursuant to which the Company may transfer and assign to Aron the Company’s (or its Affiliates’) right to

use any Available Storage or Transportation Arrangement that has not previously been included as an Included Location or such other storage or transportation facility as may hereafter be identified by the Company; provided that (i) upon and concurrently with implementing any such assignment, designation or arrangement, any such Available Storage or Transportation Arrangement shall be added to the appropriate Schedule hereto as an additional Included Location, as applicable, and such assignment, designation or arrangement shall constitute a Required Storage and Transportation Arrangement hereunder; (ii) to the extent requested by Aron, the Company shall cause ARKS to enter into an amendment to the Inventory Sales Agreement and any other applicable Transaction Document to include any inventory transferred to Aron as a result of such assignment, designation or arrangement; and (iii) without limiting the generality of the foregoing, the addition of an Included Location shall be subject to satisfaction of Aron’s Policies and Procedures (as defined in Section 13.4(a) below), which shall be applied in a nondiscriminatory manner as provided in Section 13.4(b)(i) below. In addition, if the relevant storage or transportation facility fails to satisfy Aron’s Policies and Procedures as a result of Aron’s Policies and Procedures exceeding the standards or requirements imposed under Applicable Law or good and prudent industry practice, then, upon the Company’s request, Aron shall consult with the Company in good faith to determine whether based on further information provided by the Company such storage or transportation facility complies with Aron’s Policies and Procedures and/or whether additional actions or procedures can be taken or implemented so that, as a result, such storage or transportation facility would comply with Aron’s Policies and Procedures and, based on such further information and/or the implementation of such additional actions or procedures, Aron will from time to time reconsider whether such storage or transportation facility satisfies clause (iii) above.

2.5 UCC Filings.

(b) Without limiting the generality of the foregoing, the Company ratifies and authorizes the filing by Aron of any financing statements filed prior to the Third Restatement Effective Date.

ARTICLE 3

TERM OF AGREEMENT

3.1 Term. The Original Agreement became effective on the Original Effective Date with the Commencement Date (as acknowledged above) occurring on April 29, 2011 and each of the First Restated Agreement and Second Restated Agreement constituted a continuation thereof. Subject to Section 2.1 above, this Agreement shall be effective as of the Third Restatement Effective Date. This Agreement constitutes a continuation of the term of the Original Agreement, the First Restated Agreement, and the Second Restated Agreement under the amended and restated terms hereof and, subject to Section 3.2, the term of this Agreement shall continue for a period ending at 11:59:59 p.m., CPT on December 30, 2022 (the “Term”; the last day of such Term being herein referred to as the “Expiration Date”, except as provided in Section 3.2 below).

3.2 Changing the Term. Aron may, in its sole discretion elect to extend this Agreement until May 30, 2025; provided that such election shall not be effective unless Aron (i) gives the Company Parties at least six (6) months’ notice prior to the Expiration Date of any such election pursuant to Article 27, (ii) if the Third A&R ARKS S&O Agreement is still in effect, concurrently exercise its right to extend the Third A&R ARKS S&O Agreement, and (iii) if the Third A&R BSR S&O Agreement is still in effect, concurrently exercise its right to extend the Third A&R BSR S&O Agreement.

3.3 Applicability of Certain Schedules With Respect to Third Restatement Adjustment Date. For all purposes of this Agreement and any other Transaction Document, with respect to the period from the Third Restatement Effective Date to the Third Restatement Adjustment Date, Schedule B shall mean Schedule B‑1, Schedule D shall mean Schedule D‑1, Schedule L shall mean Schedule L-1, and Schedule CC shall mean Schedule CC-1; and with respect to the period from and including the Third Restatement Adjustment Date, Schedule B shall mean Schedule B‑2, Schedule D shall mean Schedule D‑2, Schedule L shall mean Schedule L-2, and Schedule CC shall mean Schedule CC-2.

3.4 Obligations upon Termination. In connection with the termination of the Agreement on the Expiration Date, the Parties shall perform their obligations relating to termination pursuant to Article 20.

ARTICLE 4

COMMENCEMENT DATE TRANSFER

4.1 Transfer and Payment on the Commencement Date. The Parties acknowledge and agree that the Commencement Date Volumes were sold and transferred and payment of the Estimated Commencement Date Value was made as provided in the Inventory Sales Agreements.

4.2 Post-Commencement Date Reconciliation and True-Up. The Parties further acknowledge that the determination and payment of the Definitive Commencement Date Value has been made as provided in the Inventory Sales Agreements.

ARTICLE 5

PURCHASE AND SALE OF CRUDE OIL

5.1 Sale of Crude Oil. On and after the Initial Delivery Date through the end of the Term, and subject to (a) Aron’s ability to procure Crude Oil in accordance with the terms hereof, (b) its receipt of Crude Oil under Procurement Contracts and (c) the Company’s maintenance of the Base Agreements and Required Storage and Transportation Arrangements and compliance with the terms and conditions hereof, Aron will endeavor, in a commercially reasonable manner, to enter into Procurement Contracts that will accommodate, in the aggregate, monthly deliveries of Crude Oil up to [***] Barrels per day and the Company agrees to purchase and receive from Aron all such Crude Oil as provided herein and subject to the terms and conditions hereof. Aron shall, in accordance with the terms and conditions hereof, be the exclusive owner of Crude Oil in the Crude Storage Tanks.

5.2 Monthly Forecasts and Projections.

(a) Before the Contract Cutoff Date in any Nomination Month, the Company shall provide Aron with a written forecast of the Refinery’s anticipated Crude Oil requirements for the related Delivery Month (each, a “Monthly Crude Forecast”).

(b) [Reserved.]

(c) The Company shall promptly notify Aron in writing upon learning of any material change in any Monthly Crude Forecast or if it is necessary to delay any previously scheduled pipeline nominations.

(d) The Parties acknowledge that the Company is solely responsible for providing the Monthly Crude Forecast and for making any adjustments thereto, and the Company agrees that all such forecasts and projections shall be prepared in good faith, with due regard to all available and reliable historical information and the Company’s then-current business prospects, and in accordance with such standards of care as are generally applicable in the U.S. oil refining industry. The Company acknowledges and agrees that (i) Aron shall be entitled to rely and act upon all such forecasts and projections and shall not be deemed in breach hereof to the extent any such breach or alleged breach is attributable to its having acted or relied thereon, and (ii) Aron shall not have any responsibility to make any investigation into the facts or matters stated in such forecasts or projections.

5.3 Procurement of Crude Oil.

(a) As of the Commencement Date, Procurement Contracts consisted of (i) such Procurement Contracts as LOTT and Aron may have entered into and (ii) such Procurement Contracts with certain Third Party Suppliers as shall have been novated from LOTT to Aron, in each case providing for the purchase of Crude Oil to be processed at the Refinery for April or May 2011. In connection with such novated Procurement Contracts, the parties acknowledge that, concurrently with the effectiveness of such novations, Aron and LOTT entered into transactions identical to the novated Procurement Contracts (the “Back-to-Back Contracts”), except with Aron as seller thereunder and certain other modifications as specified in a letter agreement between Aron and LOTT, dated April 27, 2011. The parties further acknowledge and agree that, as a result of such novated Procurement Contracts, the

Back-to-Back Contracts and the terms of the LOTT Inventory Sales Agreement, (i) from and after the effectiveness of such novations to the Inventory Measurement Time under the LOTT Inventory Sales Agreement, all Crude Oil delivered under the novated Procurement Contracts and the Back-to-Back Contracts shall have been or shall be transferred from the relevant Third Party Supplier to Aron and then from Aron to LOTT and (ii) from and after the Inventory Transfer Time under the LOTT Inventory Sales Agreement to the Inventory Measurement Time under the LOTT Inventory Sales Agreement, all such Crude Oil that is held or received at any of the Inventory Transfer Locations shall be transferred by LOTT to Aron under and in accordance with the terms of the LOTT Inventory Sales Agreement.

(b) From time to time during the Term of this Agreement, the Company may propose that an additional Procurement Contract be entered into, including any such additional Procurement Contract as may be entered into in connection with the expiration of an outstanding Procurement Contract. If the Parties mutually agree to seek additional Procurement Contracts, then the Company shall endeavor to identify quantities of Crude Oil that may be acquired on a spot or term basis from one or more Third Party Suppliers. The Company may negotiate with any such Third Party Supplier regarding the price and other terms of such potential additional Procurement Contract. The Company shall have no authority to bind Aron to, or enter into on Aron’s behalf, any additional Procurement Contract or Procurement Contract Assignment, and the Company shall not represent to any third party that it has such authority. If the Company has negotiated an offer from a Third Party Supplier for an additional Procurement Contract (and if relevant, Procurement Contract Assignment) that the Company wishes to be executed, the Company shall apprise Aron in writing using the applicable trade ticket included on Schedule Q (the “Crude Procurement Request”) (which may be via email) of the terms of such offer, Aron shall promptly determine and advise the Company as to whether Aron consent to accept such offer. If Aron indicates its consent to accept such offer, then Aron shall promptly endeavor to formally communicate its acceptance of such offer to the Company and such Third Party Supplier so that the Third Party Supplier and Aron may enter into a binding additional Procurement Contract (and if relevant, Procurement Contract Assignment) provided that any additional Procurement Contract (and, if relevant, related Procurement Contract Assignment) shall require Aron’s express agreement and Aron shall not have any liability under or in connection with this Agreement if for any reason it, acting in good faith, does not agree to any proposed additional Procurement Contract or related Procurement Contract Assignment.

(c) If the Company determines, in its reasonable judgment, that it is commercially beneficial for the Refinery to run a particular grade and/or volume of Crude Oil that is available from a Third Party Supplier that is not a counterparty with which Aron is then prepared to enter into a contract, then the Company may execute a Refinery Procurement Contract to acquire such Crude Oil for the Company’s account and, unless an Aron Procurement Contract is executed with respect thereto pursuant to Section 5.3(g), such Crude Oil if delivered to a Crude Intake Point shall constitute Other Barrels.

(d) Title for each quantity of Crude Oil to be delivered into a Crude Storage Tank shall pass to Aron, (i) if delivered under a Procurement Contract with a Third Party Supplier,

from such Third Party Supplier as provided in the relevant Procurement Contract, (ii) if delivered under a Procurement Contract with the Company or LOTT, from the Company or LOTT as provided in the relevant Procurement Contract and (iii) if not delivered under a Procurement Contract (and whether such delivery is via an Included Crude Pipeline or another crude pipeline), from the Company as the Crude Oil passes the Crude Intake Point.

(e) For each quantity of Crude Oil to be delivered directly into a Specified Lien Location, (i) if delivery occurs under a Procurement Contract with a Third Party Supplier, title shall pass on a simultaneous flash title basis so that, at the relevant delivery point under such Procurement Contract, at the moment in time when title and risk of loss to any quantity is transferred by a Third Party Supplier to Aron under such Procurement Contract, title and risk of loss to that same quantity will be transferred from Aron to the Company, (ii) if delivery occurs under a Procurement Contract with the Company or LOTT, title shall pass on a simultaneous flash title basis so that, at the relevant delivery point under such Procurement Contract, at the moment in time when title and risk of loss to any quantity is transferred by the Company or LOTT to Aron under such Procurement Contract, title and risk of loss to that same quantity will be transferred from Aron to the Company and (iii) if such Crude Oil consists of Other Barrels, then title and risk of loss shall either pass at the relevant point at which delivery is made by LOTT to the Company if LOTT is delivering such Crude Oil or continue to be held by the Company if the Company is delivering such Crude Oil.

(f) The Parties acknowledge that the consideration due from Aron to the Company for any Crude Oil that is not delivered under a Procurement Contract will be reflected in the Monthly True-Up Amounts determined following delivery and in accordance with Schedule C.

(g) No later than the fifth (5^th) Business Day of the month preceding a Delivery Month, the Company shall inform Aron whether the Company has purchased or intends to purchase any Crude Oil that is being procured under a Refinery Procurement Contract for delivery during such Delivery Month (“Refinery Procured Barrels”). In connection with each such quantity of Refinery Procured Barrels, the Company may provide to Aron a trade ticket stating the quantity, grade and delivery terms of such Refinery Procured Barrels expected to be delivered to an Included Location or Specified Lien Location during such Delivery Month and, provided no Default (of which Aron has provided notice to the Company) or Event of Default with respect to the Company has occurred and is then continuing, the Company and Aron shall enter into an Aron Procurement Contract under which Aron shall purchase such quantity from the Company and title shall pass as provided in Section 5.3(d) or (e) above as applicable and Aron shall promptly provide to the Company a written confirmation of such Aron Procurement Contract. If any change occurs in the quantity, grade or delivery terms of the Refinery Procured Barrels that the Company expects to procure for delivery during such Delivery Month, the Company shall promptly advise Aron of such change and the related Aron Procurement Contract shall be modified accordingly. With respect to any confirmation issued by Aron to the Company in connection with an Aron Procurement Contract with the Company, if Aron does not receive from the Company either acceptance or notification of a bona fide error within two (2) Business Days

after receipt of such confirmation, then the Company shall be deemed to have accepted such confirmation, and such confirmation shall be effective and binding upon the Parties.

(h) Unless otherwise agreed by Aron (in its discretion), the Company and LOTT covenant and agree that (i) they will use commercially reasonable efforts to enter into Exchange Procurement Contract during any month so as to eliminate any volume imbalance and (ii) the sole purpose and intent of any such Exchange Procurement Contract shall be to, directly or indirectly, procure Crude Oil to be processed at the Refinery.

(i) With respect to all Crude Oil, LOTT covenants and agrees to be the party responsible for making entry of goods into the U.S., meeting the reporting requirements and payment obligations of U.S. Customs for the importation of goods, compliance with all free trade zone bonding, reporting and duty payments, and serving as importer of record in connection herewith.

5.4 Nominations under Procurement Contracts and for Pipelines.

(a) On the Business Day following receipt of the Monthly Crude Forecast and prior to the delivery of the Projected Monthly Run Volume, Aron shall provide to the Company Aron’s preliminary Target Month End Crude Volume and Target Month End Product Volume for the related Delivery Month if different from the Target Month End Crude Volume and Target Month End Product Volume for the related Delivery Month previously provided in Sections 7.2(b) and 7.3(b). As set forth in Section 7.2(a), by no later than two (2) Business Days prior to the earliest Contract Cutoff Date occurring in such Nomination Month, the Company shall provide to Aron the Projected Monthly Run Volume for the Delivery Month for which deliveries must be nominated prior to such Contract Cutoff Dates. As part of such Projected Monthly Run Volume, the Company may specify the grade of such Projected Monthly Run Volume, provided that such grades and their respective quantities specified by the Company shall fall within the grades and quantities then available to be nominated by Aron under the outstanding Procurement Contracts.

that, Aron’s obligation to make such nominations shall be conditioned on its receiving from the Company scheduling instructions for that month a sufficient number of days prior to such Pipeline Cutoff Date so that Aron can make such nominations within the lead times required by such pipelines and terminals. Aron shall not be responsible if a Pipeline System is unable to accept Aron’s nomination or if the Pipeline System must allocate Crude Oil among its shippers.

(d) The Parties agree that the Company may, from time to time, request that Aron make adjustments or modifications to Contract Nominations it has previously made under the Procurement Contracts. Promptly following receipt of any such request, Aron will use its commercially reasonable efforts to make such adjustment or modification, subject to any limitations or restrictions under the relevant Procurement Contracts. Any additional cost or expenses incurred as a result of such an adjustment or modification shall constitute an Ancillary Cost hereunder.

(e) Aron shall not nominate or to its knowledge otherwise acquire any Crude Oil with characteristics that are not previously approved by the Company for use at the Refinery, such approval to be in the Company’s discretion; provided that any Crude Oil purchased pursuant to a Procurement Contract proposed by the Company shall be deemed to have characteristics approved by the Company for purposes of this clause. The foregoing shall not limit the Company’s rights to pursue any claims against third parties as contemplated by Section 5.9 below.

(h) Prior to entering into any Ancillary Contract that does not by its terms expire or terminate on or before the Expiration Date, Aron will, subject to any confidentiality restrictions, afford the Company an opportunity to review and comment on such Ancillary Contract or the terms thereof and to confer with the Company regarding such Ancillary Contract and terms, and if Aron enters into any such Ancillary Contract without the Company’s consent, the Company shall not be obligated to assume such Ancillary Contract pursuant to Section 20.1(c) below.

5.5 Transportation, Storage and Delivery of Crude Oil.

(a) Aron shall have the exclusive right to inject, store and withdraw (except for such injections or withdrawals by the Company otherwise contemplated hereby) Crude Oil in the Crude Storage Tanks as provided in the Storage Facilities Agreement.

(b) Pursuant to the Required Storage and Transportation Arrangements, Aron shall have the right to inject (except for such injections by the Company otherwise contemplated hereby), store, transport and withdraw Crude Oil in and on the Included Crude Pipeline to the same extent as the Company’s rights to do so prior to the implementation of the Required Storage and Transportation Arrangements. With respect to any activities involving Crude Oil covered by the Storage Facilities Agreement or any Required Storage and Transportation Arrangement, Aron may from time to time appoint the Company or LOTT as Aron’s agent thereunder for such activities as Aron may specify.

(c) Provided no Default (of which Aron has provided notice to the Company) or Event of Default by the Company or LOTT has occurred and is continuing, the Company shall be permitted to withdraw from the Crude Storage Tanks and take delivery of Crude Oil on any day and at any time. The withdrawal and receipt of any Crude Oil by the Company at the Crude Delivery Point shall be on an “ex works” (EXW Incoterms 2010) basis. The Company shall bear sole responsibility for arranging the withdrawal of Crude Oil from the Crude Storage Tanks. The Company shall take commercially reasonable actions necessary to maintain a connection with the Crude Storage Tanks to enable withdrawal and delivery of Crude Oil to be made as contemplated hereby.

(d) Provided no Default (of which Aron has provided notice to the Company) or Event of Default by the Company or LOTT has occurred and is continuing, the Company shall be permitted to withdraw from Specified Lien Locations. The Company shall bear sole responsibility for arranging the withdrawal of Crude Oil from Specified Lien Locations. The Company shall take commercially reasonable actions necessary to maintain a connection with the Specified Lien Locations to enable withdrawal and delivery of Crude Oil to be made as contemplated hereby.

5.6 Title, Risk of Loss and Custody.

(a) Title to and risk of loss of the Crude Oil held in the Crude Storage Tanks shall pass from Aron to the Company at the Crude Delivery Point. The Company shall assume custody of the Crude Oil as it passes the Crude Delivery Point; provided that prior to such delivery the Company shall have custody of such Crude Oil in accordance with Section 5.6(b) below.

(b) During the time any Crude Oil or Products is held in any Storage Facilities, the Company or LOTT, in its capacity as operator of the Storage Facilities and pursuant to the Storage Facilities Agreement, shall be solely responsible for compliance (or causing applicable third parties other than Aron to comply) with all Applicable Laws, including all Environmental Laws, pertaining to the possession, handling, use and processing of such Crude Oil or Products and shall indemnify and hold harmless Aron, its Affiliates and their agents, representatives, contractors, employees, directors and officers, for all Liabilities directly or indirectly arising from failure by the Company or LOTT to so comply (or to cause such compliance), except to the extent such Liabilities are caused by or attributable to any of the matters for which Aron is indemnifying the Company pursuant to Section 21.1.

(c) At and after transfer of any Crude Oil at the Crude Delivery Point from Aron to the Company pursuant to Section 5.6(a) above, the Company shall be solely responsible for compliance (or causing applicable third parties other than Aron to comply) with all Applicable Laws, including all Environmental Laws pertaining to the possession, handling, use and processing of such Crude Oil and shall indemnify and hold harmless Aron, its Affiliates and their agents, representatives, contractors, employees, directors and officers, for all Liabilities directly or indirectly arising from failure by the Company to so comply.

(d) Notwithstanding anything to the contrary herein, Aron and the Company and LOTT agree that the Company and LOTT shall have an insurable interest in Crude Oil that is subject to a Procurement Contract or as otherwise subject to this Agreement, and that the Company or LOTT may, at its election and with prior notice to Aron, endeavor to insure the Crude Oil. If pursuant to the terms of this Agreement, the Company or LOTT has fully compensated Aron therefor as required hereunder, then (subject to any other setoff or netting rights Aron may have hereunder) any insurance payment to Aron made to cover the same shall be promptly paid over by Aron to the Company or LOTT.

(e) Without limiting any of obligations hereunder of the Company or LOTT to cause any actions by third parties, it is acknowledged that in determining how to comply with such obligations, the Company and LOTT may use such contractual or other arrangements as they deem necessary or appropriate.

5.7 Contract Documentation, Confirmations and Conditions.

(a) Aron’s obligations to deliver Crude Oil under this Agreement shall be subject to (i) the Company’s identifying and negotiating potential Procurement Contracts, in accordance with Section 5.3, that are acceptable to both the Company and Aron relating to a sufficient quantity of Crude Oil to meet the Refinery’s requirements, (ii) the Company’s performing its obligations hereunder with respect to providing Aron with timely nominations, forecasts and projections (including Projected Monthly Run Volumes, as contemplated in Section 5.4(a)) so that Aron may make timely nominations under the Procurement Contracts, (iii) all of the terms and conditions of the Procurement Contracts, (iv) any other condition set forth in Section 5.1 above and (v) no Event of Default having occurred and continuing with respect to the Company.

(b) In documenting each Procurement Contract, Aron will endeavor and cooperate with the Company, in good faith and in a commercially reasonable manner, to obtain the Third Party Supplier’s agreement that a copy of such Procurement Contract may be provided to the Company; provided that this Section 5.7(b) in no way limits the Company’s rights to consent to all Procurement Contracts as contemplated by Section 5.3. In addition, to the extent it is permitted to do so, Aron will endeavor to keep the Company apprised of, and consult with the Company regarding, the terms and conditions being incorporated into any Procurement Contract under negotiation with a Third Party Supplier. Notwithstanding the foregoing, Aron and the Company may pre-agree on one or more standard sets of general terms and conditions and modifications thereto upon which Procurement Contracts may be executed without any further obligation of Aron to apprise

the Company of such terms and conditions incorporated into such Procurement Contract and may, from time to time, agree to alterations or further modifications to such pre-agreed terms.

(c) The Company acknowledges and agrees that, subject to the terms and conditions of this Agreement, it is obligated to purchase and take delivery of all Crude Oil acquired by Aron under Procurement Contracts executed in connection herewith and subject to the terms and conditions specified in Section 5.4 above. In the event of a dispute, Aron will provide, to the extent legally and contractually permissible, to the Company, a copy of the Procurement Contract in question.

5.8 [Reserved]

5.9 Quality Claims and Claims Handling.

(b) The Parties shall consult with each other and coordinate how to handle and resolve any claims arising in the ordinary course of business (including claims related to Crude Oil, pipeline or ocean transportation, and any dispute, claim, or controversy arising hereunder between Aron and any of its vendors who supply goods or services in conjunction with Aron’s performance of its obligations under this Agreement) made by or against Aron. In all instances wherein claims are made by a third party against Aron which will be for the account of the Company, the Company shall have the right, subject to Section 5.9(c), to either direct Aron to take commercially reasonable actions in the handling of such claims or assume the handling of such claims in the name of Aron, all at the Company’s cost and expense. To the extent that the Company believes that any claim should be made by Aron for the account of the Company against any third party (whether a Third Party Supplier, terminal facility, pipeline, storage facility or otherwise), and subject to Section 5.9(c), Aron will take any commercially reasonable actions requested by the Company either directly, or by allowing the Company to do so, to prosecute such claim, all at the Company’s cost and expense and all recoveries resulting from the prosecution of such claim shall be for the account of the Company.

(c) Aron shall, in a commercially reasonable manner, cooperate with the Company in prosecuting any such claim. If the Company requests that Aron assist in prosecuting any such claim, Aron shall be entitled to assist in the prosecution of such claim at the Company’s expense. Aron shall also be entitled to assist at its own expense in prosecuting any such claim other than by the request of the Company.

(d) Notwithstanding anything in Section 5.9(b) to the contrary but subject to Section 5.9(e), Aron may notify the Company that Aron is retaining control over the resolution of any claim referred to in Section 5.9(b) if Aron, in its reasonable judgment, has determined that it has commercially reasonable business considerations for doing so based on any relationships that Aron or any of its Affiliates had, has or may have with the third party involved in such claim; provided that, subject to such considerations, Aron shall use commercially reasonable efforts to resolve such claim, at the Company’s expense and for the Company’s account or, at its option, Aron may assign to the Company all of Aron’s rights under and to pursue such claim after which Aron shall have no further obligation with respect thereto. In addition, any claim that is or becomes subject to Article 21 shall be handled and resolved in accordance with the provisions of Article 21.

5.10 Communications.

(c) The Parties shall coordinate all nominations and deliveries according to the scheduling and communications protocol on Schedule J hereto.

5.11 Deemed Acceptance. With respect to any trade confirmation issued by Aron to the Company in connection with any transaction relating to this Agreement, if Aron does not receive from the Company either acceptance or notification of a bona fide error within two (2) Business Days after receipt of such confirmation, then the Company shall be deemed to have accepted such confirmation, and such confirmation shall be effective and binding upon the Parties.

ARTICLE 6

PURCHASE VALUE FOR CRUDE OIL

6.1 Daily Volumes. Each Business Day the Company shall provide to Aron, by no later than 2:00 p.m. CPT, available meter tickets and/or meter readings, and tank gauge readings confirming the Measured Crude Quantity for each Crude Storage Tank for all Delivery Dates since the prior Business Day.

6.2 Purchase Value. As the purchase value for the Net Crude Sales Volume for any month, the Company shall owe to Aron when due the Monthly Crude Payment determined with respect to that Net Crude Sales Volume, subject to application of the relevant Prices and Index Amounts as provided on Schedule B hereto and calculation of the Monthly Crude Oil True-Up Amount as provided for on Schedule C hereto, and payable as provided in Section 10.2.

6.3 Monthly Crude Payment. For any month, the “Monthly Crude Payment” shall equal, with respect to the Net Crude Sales Volume for such month, the sum of (A) the product of (1) the Monthly Crude Price for that month and (2) the Net Crude Sales Volume for such month (the amount determined in this clause (A) may be a positive or negative number), (B) the Crude Purchase Fee for that month and (C) the Ancillary Costs for that month. If the Monthly Crude Payment is a negative number, then the absolute value thereof shall represent an amount owed from Aron to the Company and payable as provided in Section 10.2.

6.4 Crude Purchase Fee.

(a) Prior to Third Restatement Adjustment Date. Prior to the Third Restatement Adjustment Date, as used herein:

(i) For any month, the “Crude Purchase Fee” shall equal the sum of:

(A) the product of (1) the Pre-Adjustment Level One Fee per barrel and (2) the Reduced Fee Barrels for such month, plus

(B) the product of (1) the Pre-Adjustment Level Two Fee per barrel and (2) the greater of (x) zero and (y) the Actual Monthly Crude Run for such month minus the sum of the Reduced Fee Barrels for such month and the Waived Fee Barrels for such month.

(ii) “Reduced Fee Barrels” means, for any month, whichever of the following is the smallest quantity: (i) the Actual Monthly Crude Run for such month minus the Volume Cap for Waived Crude Fee, (ii) the Designated Company-Sourced Barrels for such month minus the Volume Cap for Waived Crude Fee and (iii) the Volume Cap for Reduced Crude Fee for such month; provided that in no event shall the foregoing be less than zero.

(iii) “Actual Monthly Crude Run” means, for any month, the Net Crude Sales Volume for such month plus the aggregate quantity of those Other Barrels that are actually delivered and received at the Crude Storage Tanks during such month.

(iv) “Waived Fee Barrels” means the sum of (i) the lesser of the Designated Company-Sourced Barrels and the Volume Cap for Waived Crude Fee and (ii) the Additional Waived Fee Barrels; provided that, for each 12 consecutive month period commencing on an anniversary of the Adjustment Date or any shorter period commencing on such a date and ending on a Termination Date hereunder (each, a “Waived Fee Barrel Period”), the Waived Fee Barrels due for the final month of such period may be subject to adjustment as provided in Section 6.4(a)(v) below.

(v) For each Waived Fee Barrel Period, Aron shall determine the number of Waived Fee Barrels for that period (“Total Waived Fee Barrels”) by applying such term and the various components thereof to the entire period (rather to a single month) as if each such term and component referred to such period and not a single month. If, for any Waived Fee Barrel Period, the sum of the Waived Fee Barrels for all months during such period (which for the final month of such period shall be calculated without giving effect to any adjustment under this Section 6.4(a)) exceeds the Total Waived Fee Barrels for such period, then the number of Waived Fee Barrels for the final month of such period used in computing the Crude Purchase Fee for such month shall equal the Waived Fee Barrels for such month (calculated without giving effect to any adjustment under this Section 6.4(a)) minus such excess (it being acknowledged that such number may be a positive or negative amount).

(vi) For each Procurement Contract under which Aron is seller, the Parties shall, at or prior the time such Procurement Contract is executed, agree to a per Barrel fee due from the Company to Aron in connection with such Procurement Contract, with the product of such per Barrel fee and the quantity delivered by Aron under such Procurement Contract shall being a “Crude Sales Fee”. For each month, the “Counterparty Crude Sales Fee” shall be the sum of the Crude Sales Fees for all quantities of Crude Oil delivered by Aron under Procurement Contracts in which Aron is seller.

(b) Following Third Restatement Adjustment Date. Following to the Third Restatement Adjustment Date, as used herein:

(i) For any month, the “Crude Purchase Fee” shall equal the sum of:

(A) the product of (1) the Level One Fee per barrel and (2) the Level One Barrels for such month, plus

(B) the product of (1) Level Two Fee per barrel and (2) the Level Two Barrels for such month.

(ii) “Third Party Barrels” means, for any month, the number of barrels purchased by Aron from any Third Party Supplier (other than any Affiliate of the Company).

(iii) “Level One Barrels” means, for any month, the number of Third Party Barrels not in excess of [***] barrels.

(iv) “Level Two Barrels” means, for any month, the number of Third Party Barrels (if any) in excess of the Level One Barrels for such month.

(v) For each Procurement Contract under which Aron is seller, the Parties shall, at or prior the time such Procurement Contract is executed, agree to a per Barrel fee due from the Company to Aron in connection with such Procurement Contract, with the product of such per Barrel fee and the quantity delivered by Aron under such Procurement Contract shall being a “Crude Sales Fee”. For each month, the “Counterparty Crude Sales Fee” shall be the sum of the Crude Sales Fees for all quantities of Crude Oil delivered by Aron under Procurement Contracts in which Aron is seller.

6.5 Material Crude Grade Changes. If either the Company or Aron concludes in its reasonable judgment that the specifications (including specific gravity and sulfur content of the Crude Oil) of the Crude Oil procured, or projected to be procured, differ materially from the grades that have generally been run by the Refinery, then the Company and Aron will endeavor in good faith to mutually agree on (i) acceptable indices for such Crude Oil, and (ii) a settlement payment from one Party to the other sufficient to compensate the relevant Party for the relative costs and benefits to each of the differences in value between the prior indices and the amended indices.

6.6 Upon Aron’s request, the Company will, subject to any confidentiality restrictions, provide documentation evidencing all purchases of Designated Company-Sourced Barrels for any month.

ARTICLE 7

TARGET INVENTORY LEVELS AND WORKING CAPITAL ADJUSTMENT

7.1 Target Inventory Levels. Aron will set monthly inventory targets for Crude Oil and Products. Such monthly inventory targets for Crude Oil and Products shall be subject to (i) the Baseline Volumes and (ii) the sum of Baseline Volumes plus Volumes in Excess of Baseline for each Pricing Group indicated on Schedule D hereto (each sum, a “Maximum Volume”).

7.2 Target Month End Crude Volume.

(b) By no later than the last Business Day of each Nomination Month, Aron shall notify the Company of the quantity of Crude Oil that Aron is designating as the “Target Month End Crude Volume” for the Delivery Month related to that Nomination Month;

provided that such Target Month End Crude Volume shall not exceed the Maximum Volume or be less than the Baseline Volume for Crude Oil indicated on Schedule D, subject to Section 7.2(c) below.

(c) During the first two months of deliveries of Crude Oil made pursuant to the Original Agreement, Aron’s Target Month End Crude Volume and Target Month End Product Volume were the amounts specified on Schedule I to the Original Agreement.

(d) If, for any month, the Actual Month End Crude Volume exceeds the Maximum Volume or the Actual Month End Crude Volume is less than the Baseline Volume, then Aron may change the Target Month End Crude Volume for such month as follows:

(i) If the Actual Month End Crude Volume is above the Target Month End Crude Volume, then Aron may increase the Target Month End Crude Volume for such Delivery Month to equal the Actual Month End Crude Volume or (ii) if the Target Month End Crude Volume is above the Actual Month End Crude Volume, then Aron may reduce the Target Month End Crude Volume for such Delivery Month to equal the Actual Month End Crude Volume. Aron must notify the Company of its intent to make this change within four (4) Business Days after the end of such Delivery Month. The Company may dispute this change within one (1) Business Day after receiving such notification from Aron. In all cases described above, the changed Target Month End Crude Volume affects only the subject month and does not impact the calculation of the Target Month End Crude Volume in subsequent months.

(ii) In addition, Aron may adjust the Target Month End Crude Volume with the consent of the Company.

7.3 Target Month End Product Volume.

(a) The Company shall provide to Aron its standard Products inventory and production report substantially in the form of Schedule O hereto (the “MTD Performance Report”). The MTD Performance Report shall be provided to Aron from time to time in accordance with the Company’s past practices with respect to such report.

shall in no event exceed a Maximum Volume or be less than the Baseline Volume for such Product unless Aron establishes such a Month End Product Volume as otherwise permitted under this Section 7.3.

(c) Provided that the Company has complied in all material respects with its obligations under the Marketing and Sales Agreement, and subject to events of Force Majeure, facility turnarounds, the performance of any third parties (including purchasers of Products under the Marketing and Sales Agreement), Aron will, in establishing each Target Month End Product Volume, cause such Target Month End Product Volume to be within the applicable range specified for such Product on Schedule D hereto.

(e) After Aron has established a Target Month End Product Volume, it may change such Target Month End Product Volume if one of the following occurs: (i) the Actual Month End Product Volume is below the minimum of the Operational Volume Range or (ii) the Actual Month End Product Volume is above the maximum of the Operational Volume Range, in which case Aron may change its Target Month End Product Volume for such month to equal the Actual Month End Product Volume. Aron must notify the Company of its intent to make this change within four (4) Business Days after the end of such Delivery Month. The Company may dispute this change within one (1) Business Day after receiving such notification from Aron. In all cases described above, the changed Target Month End Product Volume affects only the subject month and does not impact the calculation of the Target Month End Product Volume in subsequent months.

(f) The Target Month End Product Volume will be adjusted in accordance with the procedure for Excluded Transactions as described in the Marketing and Sales Agreement.

In addition, Aron may adjust the Target Month End Product Volume with the consent of the Company.

7.4 Monthly Working Capital Adjustment. Promptly after the end of each month, Aron shall reasonably determine the Monthly Working Capital Adjustment.

7.5 Monthly Product Sale Adjustments. For each month (or portion thereof) during the term of the Marketing and Sales Agreement and for each Product Group, Aron shall reasonably determine whether an amount is due by one Party to the other (for each Product Group, a “Monthly Product Sale Adjustment”) in accordance with the following terms and conditions:

(a) For each Product Group and relevant period, Aron shall reasonably determine (i) the aggregate quantity of barrels of such Product Group sold during such period under Product Purchase Agreements and Company Purchase Agreements, (ii) the aggregate quantity of barrels of such Product Group sold under Excluded Transactions executed pursuant to Section 2.2(c) of the Marketing and Sales Agreement and (iii) the Aggregate Receipts (as defined below);

(c) If Aron determines that any Monthly Product Sale Adjustment is due, it will include its calculation of such amount in the documentation provided to the Company for the relevant period pursuant to Section 10.2 and such Monthly Product Sale Adjustment shall be incorporated as a component of the Monthly True-Up Amount due for such period, which, if due to the Company, shall be expressed as a positive number and, if due to Aron, shall be expressed as a negative number; and

(d) As used herein:

(i) “Aggregate Receipts” means, for any Product Group and relevant period, the sum of (x) the actual aggregate purchase value invoiced by Aron for all quantities of such Product Group that Aron delivered during such period (without giving effect to any offsetting Excluded Transactions) under Product Purchase Agreements with Customers and under Company Purchase Agreements with Company Purchasers (each as defined in the Marketing and Sales Agreement) and (y) for any Excluded Transaction executed pursuant to Section 2.2(c) of the Marketing and Sales Agreement, the aggregate purchase value that would have been payable under the proposed Product Purchase Agreement in connection with which such Excluded Transaction was executed;

(ii) “Index Value” means, for any Product Group and relevant period, the product of (A) the sum of the aggregate quantity of barrels of such Product Group sold during such period (without giving effect to any offsetting Excluded Transactions) under Product Purchase Agreements and Company Purchase Agreements and the quantity of sales for such period covered by clause (y) of the definition of Aggregate Receipts, and (B) the Long Product FIFO Value for that Product Group and period.

7.6 Monthly Cover Costs. If, for any month (or portion thereof), Aron reasonably determines that, as a result of the Company’s failure to produce the quantities of Product projected under this Agreement or the Company’s failure to comply with its obligations under the Marketing and Sales Agreement, Aron retains insufficient quantities of Product to comply with its obligations to any third parties or the Company, whether under Product Purchase Agreements, Company Purchase Agreements or Excluded Transactions, and Aron incurs any additional costs and expenses in procuring and transporting Product from other sources for purposes of covering such delivery obligations or the shortfall in the quantity held for its account (collectively, “Monthly Cover Costs”), then the Company shall be obliged to reimburse Aron for such Monthly Cover Costs. If Aron determines that any Monthly Cover Costs are due to it, Aron shall promptly communicate such determination to the Company and, subject to any mitigation of such costs actually achieved by the Company, include the calculation of such amount in the documentation provided to the Company

for the relevant period pursuant to Section 10.2 and such Monthly Cover Costs shall be incorporated as a component of the Monthly True-Up Amount due for such period hereunder.

7.7 Costs Related to Shortfall. To the extent that Aron is required to cover any shortfall in any Product delivery, whether under a Product Purchase Agreement or Company Purchase Agreement or otherwise, by any inventory it owns and acquires separately from the inventory owned and maintained in connection with this Agreement, (i) any cost or loss incurred by Aron in connection therewith that is not otherwise included as a Monthly Cover Cost shall constitute an Ancillary Cost that is to be reimbursed to Aron and (ii) any profit or gain realized by Aron in connection therewith shall be forfeited to the Company.

7.8 Monthly Excluded Transaction Fee. For any barrel of gasoline or diesel delivered by Aron under an Excluded Transaction (net of any purchases under Excluded Transactions), Aron shall be obligated to pay to the Company an amount equal to the applicable Per Barrel Adjustment (as set forth on Schedule K to this Agreement). For each month, Aron shall reasonably determine the net quantities of gasoline and diesel delivered during such month under Excluded Transactions and the aggregate amount due under this Section 7.8 as a result of such deliveries (the “Monthly Excluded Transaction Fee”).

7.9 Certain Month-End Product Transactions. With respect to any bulk purchases and sales of Product between Aron and the Company or any Affiliate of the Company that would occur on or closely preceding the last day of a month and are to be shipped on the Enterprise Teppco Product Pipeline, but would not be reflected in Estimated Daily Net Product Sales until the following month, the parties agree that all such purchases and sales (regardless of the quantity thereof) shall be executed as bulk purchases and sales pursuant to Section 2.4(b) of the Marketing and Sales Agreement and Schedule KK, and shall constitute Company Purchase Agreements.

7.10 Periodic Price Adjustments.

(a) Prior to each Periodic Adjustment Date, the Parties shall undertake the procedures set forth in Schedule GG and calculate whether, based on such data and procedures set forth on Schedule GG, an adjustment to any of the Prices is appropriate. Promptly after Aron has completed such calculation, it shall advise the Company in writing as to whether any Price adjustments are appropriate and if so the amounts of such Price adjustments. Any such adjusted Prices shall become applicable commencing with the relevant Periodic Adjustment Date.

7.11 Transition Adjustment Period. The Parties agree that, with respect to the months occurring in the Transition Adjustment Period, the Monthly True-up Amounts for each such month shall be further adjusted as provided in Schedule HH hereto.

ARTICLE 8

PURCHASE AND DELIVERY OF PRODUCTS

8.1 Purchase and Sale of Products. Aron agrees to purchase and receive from the Company, and the Company agrees to sell and deliver to Aron, the Products output of the Refinery delivered directly into Included Locations from and including the Initial Delivery Date through the end of the Term of this Agreement, at the values determined pursuant to this Agreement and otherwise in accordance with the terms and conditions of this Agreement. Products output of the Refinery that is delivered directly into Specified Lien Locations shall not be purchased by Aron.

8.2 Delivery and Storage of Products.

(a) Unless otherwise agreed by the Parties, all Products that are to be directly delivered into Included Locations shall be delivered by the Company to Aron at the Products Delivery Point into the Product Storage Tanks, on a delivered duty paid (“DDP”) basis. All Products delivered by the Company into Specified Lien Locations shall also be delivered on a DDP basis.

(b) Aron shall have exclusive right to store Products in the Product Storage Tanks in the Included Locations as provided in the Storage Facilities Agreement.

8.3 Expected Yield and Estimated Output.

(a) On or before the Commencement Date, the Company provided to Aron an expected Product yield for the Refinery based on its then current operating forecast for the Refinery (the “Initial Estimated Yield”). From time to time, based on its then current operating forecast for the Refinery, the Company may provide to Aron a revised expected Product yield for the Refinery (each such revised estimate, together with the Initial Estimated Yield, an “Estimated Yield”).

(b) As set forth on Schedules O and S to this Agreement, the Company shall, based on the then current Estimated Yield and such other operating factors as it deems relevant, prepare and provide to Aron, for each month, an estimate of the Product quantities it expects to deliver to Aron or into Specified Lien Locations during such month.

8.4 Delivered Quantities. For each Delivery Date, the Company shall provide to Aron, by no later than 2:00 p.m., CPT on the next Business Day, available meter tickets and/or meter readings and tank gauge readings confirming the Measured Product Quantity in each Product Storage Tank for each Product delivered during that Delivery Date.

8.5 Title and Risk of Loss. Title and risk of loss to Products shall pass from the Company to Aron as Products pass the Products Delivery Point; provided that if Products are delivered from the Refinery into a Specified Lien Location, then title and risk of loss to such Products shall remain with the Company. If Products pass directly from a Specified Lien Location to an Included Location, title and risk of loss to such Products shall pass from the Company to Aron as Products pass the

Products Delivery Point of such Included Location. Aron shall retain title through the Included Product Pipelines and in the Included Third Party Product Storage Tanks. With respect to Products held in Included Locations, title and risk of loss to Products shall pass from Aron to the Company as Products pass at the Products Offtake Point, provided that title and risk of loss shall remain with Aron during Product transfers between Included Locations at which Products are held.

8.6 Product Specifications. The Company agrees that all Products sold to Aron hereunder shall conform to the respective specifications set forth on Schedule A for such Products as to which specifications are set forth on Schedule A or to such other specifications as are from time to time agreed upon by the Parties. For such Products as to which there are no specifications set forth on Schedule A, there are no specifications with respect to such Products.

8.7 Purchase Value of Products. The per unit value for each type of Product sold to Aron hereunder shall equal the Long Product FIFO Value specified for such Product, subject to application of the relevant values as provided on Schedule B and calculation of the Monthly True-Up Amount as provided for on Schedule C.

8.8 [Reserved.]

8.9 Transportation, Storage and Delivery of Products.

(a) Aron shall have the exclusive right to inject, store and withdraw Products in the Product Storage Tanks as provided in the Storage Facilities Agreement.

(b) Pursuant to the Required Storage and Transportation Arrangements, Aron shall have the exclusive right to inject (except for such injections by the Company otherwise contemplated hereby), store, transport and withdraw Products in and on the Included Product Pipelines and the Included Third Party Product Storage Tanks to the same extent as the Company’s rights to do so prior to the implementation of the Required Storage and Transportation Arrangements. With respect to any activities involving Products covered by the Storage Facilities Agreement or any Required Storage and Transportation Arrangement, Aron may from time to time appoint the Company or LOTT as Aron’s agent thereunder for such activities as Aron may specify.

(c) Product transfers using truck or rail between the Product Storage Tanks shall be transported in a manner consistent with the Company’s past practices and in accordance with Applicable Law and good industry practice.

(d) For purposes of determining any Product volumes used in making any Interim Payment or Monthly True-Up Amount, any Product volumes held in any truck or railcars at the end of the relevant period shall be excluded from such Product volume determination.

8.10 Material Product Grade Changes. If either the Company or Aron concludes in its reasonable judgment that the specifications or the mix of the constituents of a Pricing Group produced, or projected to be produced, differ materially from those that have generally been produced by the Refinery, then the Company and Aron will endeavor in good faith to mutually agree on

(i) acceptable indices for such Product, and (ii) a settlement payment from one Party to the other sufficient to compensate the Parties for the relative costs and benefits to each of the differences in value between the prior indices and the amended indices.

ARTICLE 9

ANCILLARY COSTS; MONTH END INVENTORY; CERTAIN DISPOSITIONS; TANK MAINTENANCE; CERTAIN OTHER MATTERS

9.1 Ancillary Costs.

(a) From time to time, Aron shall estimate Ancillary Costs it expects to incur with respect to each day occurring during any month. As provided in Section 10.1, Aron shall include such daily estimate of Ancillary Costs in the determination of the Interim Payments due with respect to each day in such month.

(b) Without limiting the foregoing, the Company agrees to reimburse Aron for all Ancillary Costs incurred by Aron. Such reimbursement shall occur from time to time upon demand of Aron to the Company. When making such demand, Aron shall promptly provide the Company with copies of any relevant invoices for Ancillary Costs incurred by Aron. All refunds or adjustments of any type received by Aron related to any Ancillary Costs shall be reflected in the Monthly True-Up Amount as provided in Section 10.2 below.

9.2 Month End Inventory.

(a) As of 11:59:59 p.m., CPT, on the last day of each month, the Company shall apply the Volume Determination Procedures to the Crude Storage Facilities, the Product Storage Facilities and the Specified Lien Locations, and based thereon shall determine for such month (i) the aggregate volume of Crude Oil held in the Crude Storage Tanks at that time, plus the Crude Oil Linefill at that time (the “Actual Month End Included Crude Volume”), (ii) the aggregate amount of Crude Oil held in Specified Lien Locations (including Crude Oil Linefill) at that time (the “Actual Month End Crude Lien Inventory”), (iii) for each Product, the aggregate volume of such Product held in the Product Storage Tanks at that time, plus the aggregate volume of such Product held in the Included Third Party Product Storage Tanks at that time, plus the Product Linefill for such Product at that time (each, an “Actual Month End Included Product Volume”) and (iv) for each Product, the aggregate volume of such Product held in the Specified Lien Locations (including Product Linefill) at that time (each, an “Actual Month End Product Lien Inventory”). The Company shall notify Aron of the Actual Month End Crude Volume and each Actual Month End Product Volume by no later than 5:00 p.m., CPT on the fifth Business Day thereafter, except that with respect to volume information provided by third parties, the Company shall endeavor to cause third parties to provide such information to Aron by the fifteenth (15^th) day after the end of such month.

(b) As used herein,

“Actual Month End Crude Volume” for any month equals the sum of the Actual Month End Included Crude Volume and Actual Month End Crude Lien Inventory for such month; and

“Actual Month End Product Volume” for any Product and any month equal the sum of the Actual Month End Included Product Volume and Actual Month End Product Lien Inventory for such Product and month.

(c) At the cost and expense of Aron, Aron may, or may have Supplier’s Inspector, witness all or any aspects of the Volume Determination Procedures as Aron shall direct. If, in the judgment of Aron or Supplier’s Inspector, the Volume Determination Procedures have not been applied correctly, then the Company will cooperate with Aron, or Supplier’s Inspector, to ensure the correct application of the Volume Determination Procedures, including making such revisions to the Actual Month End Crude Volume and any Actual Month End Product Volume as may be necessary to correct any such errors.

9.3 Calculation of Sales.

(a) For any month, the “Net Crude Sales Volume” shall equal the greater of (x) (A) the sum of (1) the Actual Month End Crude Volume for the prior month plus (2) the Monthly Crude Receipts for such month, minus (B) the Actual Month End Crude Volume for such month and (y) zero.

(b) For any month, and for each Pricing Group (as defined on Schedule P), the “Net Product Sales Volume” shall equal (A) the sum of (1) the Actual Month End Product Volume for such month plus (2) the Monthly Product Sales for such month, minus (B) the Actual Month End Product Volume for the prior month.

9.4 Disposition Following Force Majeure.

(a) Notwithstanding anything to the contrary, if Aron is required, due to an event of Force Majeure affecting either Party, to sell to any unrelated third parties, in arm’s length transactions, any quantities of Crude Oil that, based on the then current Monthly Crude Forecast, Aron would reasonably have expected to have sold to the Company or ultimately processed by the Company (any quantity of Crude Oil so disposed of by Aron being referred to as a “Disposed Quantity”), then the Company shall be obligated to pay to Aron an amount equal to the difference between the value at which such Disposed Quantity would have been sold to the Company, minus the amount realized in the sale to a third party (the “Disposition Amount”). In no event shall the Disposed Quantity exceed the aggregate amount of Crude Oil that the Company would have been expected to purchase based on their current Monthly Crude Forecast for the period during which the Company is unable to take delivery of Crude Oil as the result of the Force Majeure event or otherwise.

(b) In connection with its selling any Disposed Quantity, Aron shall (i) use commercially reasonable efforts to sell such Disposed Quantity at generally prevailing values and (ii) promptly determine the Disposition Amount and issue to the Company an

invoice for such amount. The Company shall pay to Aron the invoiced amount no later than the second Business Day after the date of such invoice. If, in connection with the sale of any Disposed Quantity, the Disposition Amount is a negative number, then Aron shall pay the amount of such excess to the Company no later than the second Business Day after the date of such invoice.

9.5 Change to Tank Status.

(a) The Company or LOTT shall provide prompt written notice to Aron of any maintenance that the Company or LOTT intends to conduct on any of the Crude Storage Tanks or Product Storage Tanks that would result in such storage tank being taken out of service (“Tank Maintenance”). The Parties agree to cooperate with each other in establishing the effective date for any such Tank Maintenance for the purposes of any amendments to Schedule E.

(b) The Company or LOTT shall also provide prompt written notice to Aron of any binding agreement to sell, lease, sublease, transfer or otherwise dispose of any tank listed on Schedule E.

(c) The Company and LOTT agree that they will use commercially reasonable efforts, consistent with good industry standards and practices, to complete (and to cause any third parties to complete) any Tank Maintenance as promptly as practicable.

9.6 Certain Regulatory Matters.

(a) If Aron shall determine, in its sole judgment, that as a result of (i) the taking effect of any Applicable Law after the date hereof, (ii) any change in Applicable Law or in the administration, interpretation or application thereof by any Governmental Authority, (iii) the making or issuance of any request, guideline or directive (whether or not having the force of law) or any interpretation thereof by any Governmental Authority or the bringing of any action in a court of competent jurisdiction (regardless of whether related to Aron) or (iv) any interpretation of or proposal to implement any of the foregoing by a Governmental Authority, including, without limitation, any of the foregoing events described in clauses (i)-(iv) arising from or relating to either the Federal Reserve Notice of Proposed Rulemaking or the Federal Reserve 620 Report and whether occurring before or after the Second Restatement Effective Date (each, a “Regulatory Event”), Aron or any of its Affiliates is or would (A) not be permitted to hold, store, transport, buy, finance, sell or own any or certain of the commodities subject to the transactions contemplated by the Transaction Documents, (B) be required to hold additional capital, or be assessed any additional capital or other charges, on the basis of holding, storing, transporting, buying, financing, selling, or owing any commodities from time to time, including without limitation, any of the commodities subject to the transactions contemplated by this Agreement and the other Transaction Documents, (C) be unable to perform in any material respect its obligations under this Agreement and the other Transaction Documents, or (D) were it to continue to hold, store, transport, buy, finance, sell or own any of the commodities subject to the transactions contemplated by this Agreement and the Transaction Documents or perform any such

obligations, and taking into account other commodities and the volumes thereof held by Aron or any of its Affiliates from time to time, be or likely to be required to hold additional capital, or be assessed any additional capital or other charges, or be or likely to be subject to additional or increased burdens or costs (such additional capital or other charges, burdens and costs, collectively, “Additional Costs”), then it shall notify the Company in writing of such determination (a “Regulatory Event Notice”). Promptly following the sending of a Regulatory Event Notice, Aron shall propose what actions or steps, if any, either Party or both Parties could implement to alleviate, minimize and/or mitigate the effect of any such Regulatory Event, and the Company shall consider any such actions or steps in good faith. If, in Aron’s sole judgment, Aron is able to identify actions or steps that can be implemented with respect to the transactions contemplated by this Agreement and the other Transaction Documents without adversely impacting the business conducted by Aron and its Affiliates generally, including, without limitation, without resulting in Aron or its Affiliates being required to incur any Additional Costs on the basis of holding, storing, transporting, buying, selling or owing any commodities from time to time, including without limitation, any of the commodities subject to the transactions contemplated by this Agreement and the other Transaction Documents, while preserving the economic terms and conditions of this Agreement and the other Transaction Documents (including economic benefits, risk allocation, costs and Liabilities), then the Parties shall, in good faith and in a commercially reasonable manner, endeavor to implement such actions and steps. If, in Aron’s sole judgment, Aron is unable to identify such actions or steps or the Parties are unable to implement any actions and steps that have been so identified, then Aron may, by written notice to the Company (a “Regulatory Termination Notice”), elect to terminate this Agreement in the manner provided for in Article 20 on such date Aron shall specify in such notice, which date shall constitute a Termination Date for purposes of Article 20; provided that (x) (unless such Regulatory Event has or is expected to become effective at an earlier date) the date specified in such Regulatory Termination Notice shall occur at least ninety (90) days after the date such notice is given and if practicable on the last day of a month, or on such earlier date as may be requested by the Company provided that the Parties in Aron’s reasonable judgment have sufficient time to effect a termination pursuant to Article 20 hereof, (y) if a Regulatory Termination Notice is given, an election under Section 9.6(b) is made and the alternative structure contemplated by Section 9.6(b) is implemented, then no termination shall result from such Regulatory Termination Notice and (z) if the relevant Regulatory Termination Notice relates only to the incurrence of Additional Costs, then if and for so long as the Company exercises its option under Section 9.6(d) below, no termination shall result from such Regulatory Termination Notice. In the case of a Regulatory Termination Notice referred to in clause (z) of the preceding sentence, Aron will also provide to the Company an estimate of such Additional Costs which Aron shall determine in a commercially reasonable manner based on such information relating to the relevant Regulatory Event as is then available to Aron.

(b) Without limiting the generality of the foregoing, (i) in the case of Aron, concurrently with, and (ii) in the case of the Company following, the giving of a Regulatory Termination Notice, either Party may, in its sole discretion, elect to modify this Agreement, the other Transaction Documents and the transactions subject hereto and thereto so that Aron

shall not be the owner of any commodities held at Included Locations and that instead all commodities held at Included Locations shall constitute Inventory Collateral and all Included Locations shall constitute Specified Lien Locations, and if such election is made, then the Company shall (and shall cause its Affiliates and third parties to) execute such amendments and modifications to the Transaction Documents, take such other actions and execute and deliver such ancillary documents (including acknowledgments, consents, waivers, security agreements or acknowledgments, UCC financing statements, delivery of legal opinions, etc.) as are necessary and appropriate in Aron’s judgment to implement and confirm the effectiveness such alternative structure. Aron may only make the election contemplated by this subsection (b) if it does so concurrently with its giving of the Regulatory Termination Notice. The Company may make the election contemplated by this subsection (b) on a temporary basis prior to the effective date of the Regulatory Termination Notice (provided that is shall advise Aron that such election has been made on a temporary basis) and if the Company makes such election on a temporary basis, then during the 90 day period following the date on such election, the Company may (in each case by written notice to Aron) elect to continue the election under this subsection (b), elect to pay Additional Costs as contemplated under subsection (d) below if such election is available, or elect to have termination pursuant to such Regulatory Termination Notice become effective on the last day of such 90 day period; provided that if the Company elects to have the Regulatory Termination Notice become effective, Aron may, in its discretion, reset the date as of which termination is to be effective pursuant to Article 20 hereof to allow sufficient time for such termination to be effected as contemplated thereby and until such termination date occurs, the Company’s temporary election under this clause (b) shall remain in effect.

(c) If Aron gives a Regulatory Termination Notice relating to a Regulatory Event that is based on a rule or regulation that, at the time such notice is given, has not yet become effective (including without limitation any rule or regulation resulting from the Federal Reserve Notice of Proposed Rulemaking), then without limiting the minimum 90 day notice period required under clause (a) above, such Regulatory Termination Notice shall not become effective prior to the date on which such rule or regulation becomes effective.

(d) If Aron gives a Regulatory Termination Notice relating to a Regulatory Event Notice that relates only to the incurrence of Additional Costs, then the Company may elect, by written notice to Aron, to compensate Aron from time to time for such Additional Costs incurred by Aron and so long as the Company compensates Aron for such Additional Costs, this Agreement shall not be terminated on the basis of such Regulatory Event Notice; provided that (i) upon giving such notice to Aron, the Company Parties shall become obligated to pay all Additional Costs thereafter incurred, subject to clause (iv) below, and without limiting such obligation Aron may require that the Company Parties execute such further documents or instruments as Aron may request to confirm such obligation, (ii) the amount of such Additional Costs shall be determined by Aron in accordance with its internal procedures and shall include Additional Costs directly arising from this Agreement, the other Transaction Documents and the transactions contemplated hereby and thereby and the portion of any other Additional Costs allocable, on a pro rata basis, to this Agreement, such Transaction Documents and such transactions, (iii) such Additional Costs shall be

documented and invoiced by Aron to the Company Parties on a monthly basis and be due and payable within two (2) Business Days after invoicing, it being acknowledged that to the extent feasible, Aron will endeavor to include such Additional Costs in the monthly settlement provided for under Section 10.2 hereof and (iv) the Company Parties may elect to cease compensating Aron for such Additional Costs by written notice which shall be effective 120 days after being given, in which case Aron may reinstate its Regulatory Termination Notice with respect to such Additional Costs.

(e) As used herein, “Federal Reserve Notice of Proposed Rulemaking” means the notice of proposed rulemaking issued by the Board of Governors of the Federal Reserve System titled “Risk-based Capital and Other Regulatory Requirements for Activities of Financing Holding Companies Related to Physical Commodities and Risk-based Capital Requirements for Merchant Banking Investments” (Docket No. R‑1547; RIN 7100 AE‑58); and “Federal Reserve 620 Report” means the Report to the Congress and the Financial Stability Oversight Council Pursuant to Section 620 of the Dodd-Frank Act issued in September 2016 by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency.

9.7 DISCLAIMER OF WARRANTIES. EXCEPT FOR THE WARRANTY OF TITLE WITH RESPECT TO CRUDE OIL OR PRODUCTS DELIVERED HEREUNDER, NO PARTY MAKES ANY WARRANTY, CONDITION OR OTHER REPRESENTATION, WRITTEN OR ORAL, EXPRESS OR IMPLIED, OF MERCHANTABILITY, FITNESS OR SUITABILITY OF THE CRUDE OIL OR PRODUCTS FOR ANY PARTICULAR PURPOSE OR OTHERWISE. FURTHER, NO PARTY MAKES ANY WARRANTY OR REPRESENTATION THAT THE CRUDE OIL OR PRODUCTS CONFORMS TO THE SPECIFICATIONS IDENTIFIED IN ANY CONTRACT WITH ANY THIRD PARTY SUPPLIER.

ARTICLE 10
PAYMENT PROVISIONS

10.1 Interim Payments.

(a) For each day, Aron will calculate a provisional payment (each an “Interim Payment”) which:

(i) if such day is not a Monthly True-Up Date, shall equal (i) the greater of (A) zero and (B) the Cumulative Estimated Daily Net Settlement Amount as of such date minus the LC Threshold Amount as of such date, minus (ii) the Cumulative Interim Paid Amount as of such date; and

(ii) if such day is a Monthly True-Up Date, shall be determined as follows:

(1) Upon the payment of any Monthly True-Up Amount due on such day, Aron shall determine the Interim Reset Amount as of such Monthly True-Up Date;

(2) Aron shall calculate the Cumulative Estimated Daily Net Settlement Amount as of such date and the Cumulative Interim Paid Amount as of such date after giving effect to the payment of such Monthly True-Up Amount and such Interim Reset Amount; and

(3) the Interim Payment for such Monthly True-up Date shall equal (i) the greater of (A) zero and (B) the Cumulative Estimated Daily Net Settlement Amount as of such date minus the LC Threshold Amount as of such date, minus (ii) the Cumulative Interim Paid Amount as of such date

(iii) For illustrative purposes only, Schedule FF sets forth an example of the computations contemplated by this Section 10.1(a). Such example is not, and is not intended to be, an indication or prediction of the actual results of the computations under this Section 10.1(a), but merely provides an illustration of the manner in which computations are to be made.

(b) For purposes of calculating Interim Payments, Aron shall determine, for each day, a daily settlement amount (“Daily Settlement Amount”) shall be the Estimated Daily Net Product Sales times the applicable Daily Value per Schedule B minus the Estimated Daily Net Crude Sales minus an estimate of Ancillary Costs, which shall be denoted as a positive number, for such day to the extent not directly invoiced to the Company, in the manner illustrated on Schedule G and subject to the following terms and conditions. If such amount is a positive number, such amount shall be due from Aron to the Company. If such amount is a negative number, then the absolute value thereof shall be due from the Company to Aron. With respect to the foregoing calculations and determinations:

(i) if inventory data needed for the applicable invoice date per Schedule G has not been reported Aron will reasonably use the inventory data for the day occurring during the thirty (30) day period preceding such calendar day that results in the largest Estimated Daily Net Crude Sales or the smallest Estimated Daily Net Product Sales (as the case may be); and

(ii) if Aron determines a Daily Settlement Amount using any inventory data covered by clause (i) above or determines that any inventory data it has used in such determination was inaccurate, then Aron may, at its option, adjust future Daily Settlement Amounts (no more often than once per calendar week) to take account of any corrected inventory data or any inventory data that, if available, would have complied with clause (i) above.

(i) The Company shall, as of the end of each day, provide to Aron inventory reports in the form set forth on Schedule H, showing the quantity of (w) Crude Oil held in Crude Storage Tanks, (x) Crude Oil that is Included Crude Lien

Inventory, (y) Products held in Product Storage Tanks and (z) Products that are Included Product Lien Inventory.

(d) For the purposes hereof,

(i) “Estimated Daily Net Crude Sales” for any day shall be the aggregate daily flow through meters R1, R2, and R3 times the applicable Daily Value per Schedule B minus the Estimated Gathering Crude Value minus Lion-Owned Rail Receipts times the applicable Daily Value per Schedule B;

(ii) “Estimated Daily Net Product Sales” for any day and Product shall be the estimate for that day of the Product volume that equals (x) the aggregate volume of such Product held in the Product Storage Tanks at the end of such day, plus the aggregate volume of such Product held in the Included Third Party Product Storage Tanks at the end of such day, plus the Product Linefill at the end of such day, plus the aggregate volume of Included Product Lien Inventory at the end of such day, plus (y) the Daily Product Sales of such Product for such day, minus (z) the aggregate volume of such Product held in the Product Storage Tanks at the beginning of such day, plus the aggregate volume of such Product held in the Included Third Party Product Storage Tanks at the beginning of such day, plus the Product Linefill at the beginning of such day, plus the aggregate volume of Included Product Lien Inventory at the beginning of such day; and

(iii) “Estimated Gathering Crude Value” for any day shall be the Estimated Gathering Tank Injections times (the closing settlement price on the NYMEX for the first nearby light sweet crude oil futures contracts rounded to 4 decimal points minus $[***]/bbl).

(e) For each day, Aron shall determine the Estimated Daily Net Crude Sales and Estimated Daily Net Product Sales, in a commercially reasonable manner based on the inventory data and otherwise in the manner contemplated by this Section 10.1 and Schedule G, and to the extent it deems appropriate taking into account such other data as may be relevant to the determination of such estimates.

(f) If Aron advises the Company of an Interim Payment on any Business Day, then the Company shall be obligated to pay such Interim Payment to Aron on the following Business Day.

(g) For any Business Day, the Interim Payment to be determined and advised by Aron shall be the Interim Payment for that day, provided that if such Business Day is followed by one or more non-Business Days (whether weekends or Bank Holidays), then Aron shall reasonably determine and advise to the Company the Interim Payment for that Business Day as well as the Interim Payment each of such following non-Business Days and all such Interim Payments shall be due on that Business Day.

(h) [Reserved.]

(i) With respect to the Deferred Interim Payment Amount, the parties agree that:

(i) commencing with the Interim Payment due for the Initial Delivery Date and until such point as the aggregate amount of Interim Payments equals the Deferred Interim Payment Amount, such aggregate amount of Interim Payments were deferred so that the first [***] of such payments so deferred were required to be paid under Section 10.1, and were excluded from the Monthly True-Up Amount calculation under Section 10.2, it being acknowledged that the amount referred to in this clause (i) shall not be due from the Company to Aron until the Termination Date hereunder, at which time such amount shall be due and payable in full (unless payment of such amount is accelerated under Article 19); and

(ii) So long as any portion of the Deferred Interim Payment Amount is being deferred pursuant to clause (i) above, it shall be counted as having been paid for purposes of determining any Interim Payments or Monthly True-Up Amounts calculated hereunder (but without prejudice to such amounts being due as contemplated under clause (i) above).

The provisions of this clause (i) have been retained for good order’s sake and to provide a convenient record of the matters covered thereby.

10.2 Monthly True-Up Amount.

(a) Aron will use commercially reasonable efforts to provide to the Company, within fifteen (15) Business Days after the end of any month, a calculation and appropriate documentation to support such calculation for such month for a monthly true-up payment (the “Monthly True-Up Amount”). The Monthly True-Up Amount for any month shall be equal to:

(i) the Cumulative Interim Paid Amount as of the then current Monthly True-Up Date, minus

(ii) the Gross Monthly Crude Oil Value (as defined on Schedule C); minus

(iii) the sum of the Gross Monthly Product Values (as defined on Schedule C), minus

(iv) the Ancillary Costs for such month, plus

(v) the Monthly Excluded Transaction Fee, plus

(vi) the Monthly Product Sale Adjustment, minus

(vii) the Monthly Cover Costs, plus

(viii) the Monthly Working Capital Adjustment, plus

(ix) any other amount then due from Aron to the Company under this Agreement or any other Transaction Document (including without limitation any Additional Monthly Fee due to the Company, inclusive of the Lion Monthly Deferral Amount calculated in accordance with Schedule HH of this Agreement, if applicable), minus

(x) any Excess LC Fee for such month, minus

(xi) any LC Fee for such month, minus

(xii) any other amount then due from the Company to Aron under this Agreement or any other Transaction Document (including without limitation any Additional Monthly Fee due to Aron), plus

(xiii) the Price Adjustment Settlement Amount calculated in accordance with Schedule GG, if applicable, which, if positive, shall be due from Aron to the Company and, if negative, shall be due from the Company to Aron.

If the Monthly True-Up Amount is a positive number, such amount shall be reflected in the Interim Reset Amount, each as fixed as of the then current Monthly True-Up Date pursuant to Section 10.1(a) above. If the Monthly True-Up Amount is a negative number, then the absolute value thereof shall be due from the Company to Aron. The Company shall pay any Monthly True-Up Amount due to Aron within two (2) Business Days after the Company’s receipt of the monthly invoice and all related documentation supporting the invoiced amount.

(b) For purposes of determining the amounts due under clauses (i) and (ii) of Section 10.2(a), the definitions and formulas set forth on Schedule C shall apply and for purposes of determining the amount due under clause (viii) of Section 10.2(a), the definitions and formula set forth on Schedule L shall apply.

(c) For the purposes of determining the Monthly True-Up Amount for April 2020 and May 2020, and notwithstanding anything to the contrary on Schedule C, the Parties agree that additional sums shall be owing from one Party to the other to reflect the net amounts that would have been due between the Parties had the Second Restated Agreement expired on the Expiration Date thereof (including the purchase by the Company of Crude Oil and Products pursuant to the Step-Out Inventory Sales Agreement contemplated thereby) and this Agreement had been entered into and became effective on the Third Restatement Adjustment Date (with the purchase by Aron on the Third Restatement Adjustment Date of Crude Oil and Products pursuant to a document comparable to the Inventory Sales Agreements). The amounts determined and payable under this Section 10.2(c) shall be included as part of the Monthly True-Up Amounts for April 2020 and May 2020, which shall be payable in May 2020 and June 2020, respectively.

(d) Prior to the Third Restatement Adjustment Date, for purposes of determining the Daily Value, the Short Crude FIFO Value and the Long Crude FIFO Value Price, in each case, for the Crude Product Group for Volume in Excess of Baseline Volume, the definitions

and formulas for the “Base Calculation”, the “Alternate Calculation” and the “Light Sweet Crude Oil Futures Contract”, in each case, set forth on Schedule B-1 shall apply.

10.3 Annual and Other Fees. As additional consideration for the arrangements contemplated hereby, the Company agrees to pay to Aron, as and when due, all fees provided for in the Fee Letter; provided that with respect to the Annual Fee referred to therein, such Annual Fee for each twelve (12) month period during the Term is to be paid in arrears, in equal quarterly installments, (i) prior to the Third Restatement Adjustment Date, on February 1, May 1, August 1 and November 1 of each year, (ii) from and after the Third Restatement Adjustment Date, on June 1, September 1, December 1 and March 1 of each year, and (iii) the Termination Date. The Annual Fee shall be prorated for any periods of less than a full three (3) months.

10.4 Invoices.

(a) Invoices shall be prepared and submitted in accordance to Schedule G.

(b) If the Company in good faith disputes the amount of any invoice issued by Aron relating to any amount payable hereunder (including Interim Payments, Monthly True-Up Amounts or Ancillary Costs), it nonetheless shall pay Aron the full amount of such invoice by the due date and inform Aron in writing of the portion of the invoice with which it disagrees and why; provided that, to the extent that the Company promptly informs Aron of a calculation error that is obvious on its face, the Company shall pay Aron the undisputed amounts and may retain such disputed amount pending resolution of such dispute. The Parties shall cooperate in resolving the dispute expeditiously. If the Parties agree that the Company does not owe some or all of the disputed amount or as may be determined by a court pursuant to Article 25, Aron shall return such amount to the Company, together with interest at the Fed Funds Rate from the date such amount was paid, within two (2) Business Days from, as appropriate, the date of their agreement or the date of the final, non-appealable decision of such court. Following resolution of any such disputed amount, Aron will issue a corrected invoice and any residual payment that would be required thereby will be made by the appropriate Party within two (2) Business Days. To the extent that an existing Procurement Contract permits disputed amounts to be retained pending resolution of disputes, the Parties agree to permit disputed amounts to be retained hereunder on the same terms, notwithstanding anything hereunder to the contrary.

10.5 Other Feedstocks. If Aron procures any catfeed or other non-Crude Oil feedstocks for the Company to run at the Refinery, the parties shall agree in connection with such procurement upon terms for incorporating the purchase of such feedstocks into the daily and monthly settlements contemplated by Sections 10.1 and 10.2 above.

10.6 Interest.

(a) If any amount payable by any Company Party, the Guarantor, or any S&O Party under this Agreement or any other Transaction Document is not paid when due, whether at its scheduled payment date, by acceleration or otherwise, such amount shall thereafter bear interest at a rate per annum equal to the Default Interest Rate (calculated on the basis of actual days elapsed over a 360 day year).

(b) For so long as any Event of Default with respect to the Company Parties has occurred and is continuing, interest shall accrue on a daily basis for such period (“Exposure Default Interest”) at the Default Interest Rate on Aron’s daily aggregate exposure to the S&O Parties under this Agreement and the other Transaction Documents, as determined by Aron in a commercially reasonable manner provided that such Exposure Default Interest shall be determined without duplication of any other interest accruing hereunder, including interest accruing at the Default Interest Rate under Section 10.6(a) above.

(c) Any Default Interest Rate interest accruing under Section 10.6(a) or Exposure Default Interest accruing Section 10.6(b) shall be due to Aron on demand or, absent such demand, monthly and shall continue to accrue after occurrence of any Event of Default under Section 19.1(d) hereof, whether or not allowed or allowable in any insolvency or bankruptcy proceeding.

10.7 Payment in Full in Same Day Funds. All payments to be made under this Agreement shall be made by telegraphic transfer of same day funds in U.S. Dollars to such bank account at such bank as the payee shall designate in writing to the payor from time to time. Except as expressly provided in this Agreement, all payments shall be made in full without discount, offset, withholding, counterclaim or deduction whatsoever for any claims which a Party may now have or hereafter acquire against the other Party, whether pursuant to the terms of this Agreement or otherwise.

ARTICLE 11
LIEN AMOUNTS

11.1 Lien Amounts. Commencing on the Location Conversion Date and from time to time thereafter during the Term, and subject to the terms and conditions of this Agreement, Aron will advance to the Company the amount as from time to time determined hereunder (such amount, the “Lien Amount”), which shall initially equal the Initial Lien Amount and thereafter be adjusted as provided in Section 11.3 below. The Lien Amount will fluctuate from time to time based on the value and volume of the Included Crude Lien Inventory and Included Product Lien Inventory.

11.2 Initial Lien Amount. As of the Location Conversion Date, the “Initial Lien Amount” equaled the sum of Initial Crude Lien Inventory Value and the Initial Product Lien Inventory Value. Aron advanced the Initial Lien Amount to the Company on the Location Conversion Date.

11.3 Interim Payments.

(a) With respect to each day during the Term, Aron shall calculate, as provided in Section 10.1(b), the Estimated Daily Net Crude Sales and Estimated Daily Net Product Sales which shall be due from one Party to the other and settled as provided therein; provided that Aron shall not be obligated to pay any such Interim Payment to the Company at any time that a Default (of which Aron has provided notice to the Company) or Event of Default with respect to the Company or LOTT has occurred and is continuing.

(b) The “Interim Adjustment Amount” means, for any day, the amount determined by Aron as an interim adjustment to the Lien Amount, by applying the applicable Daily Values to the day over day change in the Included Product Lien Inventory and Included Crude Lien Inventory, which may be a positive or negative amount. If positive, the Interim Adjustment Amount shall increase the Lien Amount and if negative, the Interim Adjustment Amount shall decrease the Lien Amount.

11.4 [Reserved]


11.5	Delivery of Inventory Collateral.

(a) If any Crude Oil that is Inventory Collateral in a Specified Lien Location passes directly from such Specified Lien Location to an Included Location, then title and risk of loss thereto shall pass from the Company to Aron as such Crude Oil enters the first permanent flange of the Included Location.

(b) If any Crude Oil owned by Aron in an Included Location passes directly from such Included Location into a Specified Lien Location, then title and risk of loss thereto shall pass from Aron to the Company as such Crude Oil exits the Included Location.

(c) If any Products that are Inventory Collateral in a Specified Lien Location pass directly from such Specified Lien Location to an Included Location, then title and risk of loss thereto shall pass from the Company to Aron as such Products enter the first permanent flange of the Included Location.

(d) If any Products owned by Aron in an Included Location pass directly from such Included Location into a Specified Lien Location, then title and risk of loss thereto shall pass from Aron to the Company as such Products exit the Included Location.

11.6 Remedies upon Event of Default. If an Event of Default with respect to the Company occurs and Aron exercises its remedies under Article 19 hereof, then without limiting any rights and remedies that Aron may have thereunder, under the Transaction Documents or otherwise, it is agreed that:

(a)

(i) Aron may terminate its obligation to make any further payments or advances to the Company with respect to any Lien Amount and declare the then outstanding Lien Amounts to be due and payable, except that in the case of an Event

of Default under Section 19.1(d), Aron’s obligation to make any further payments or advances to the Company with respect to the Lien Amounts shall automatically be terminated and the then outstanding Lien Amounts shall automatically be immediately due and payable without any election, notice or action on the part of Aron; provided that the amount due to Aron as a result of such termination and acceleration shall include all amounts accrued on such Lien Amounts to the date of such termination and all losses and costs which Aron incurs as a result of maintaining, terminating or obtaining any related hedge positions and in doing so Aron may use such pricing and rate references as Aron deems appropriate in its commercially reasonable judgment, including references to such futures, forward, swap and options markets as it shall select in its reasonable judgment; and

(ii) Aron may, in its discretion, include any amount determined under clause (i) above in any net settlement (including under Section 19.2(f) hereof), exercise of setoff rights (including under Section 19.2(i) hereof) or in the exercise of other rights whether by agreement, at law or in equity (including rights of recoupment) that Aron may have.

The foregoing shall in no way limit or be deemed to limit any other rights or remedies of Aron under this Agreement or any other Transaction Document, including its rights to apply the proceeds of any Inventory Collateral to any Obligations.

11.7 Settlement at Termination. In the event this Agreement terminates pursuant to Article 20 hereof, the following provisions shall apply with respect to all Lien Amounts:

(a) The Lien Amounts outstanding as of the Termination Date shall be due and payable by the Company to Aron, together with all amounts accrued thereon through such Termination Date;

(b) All amounts referred to in clause (a) above shall be included in the Termination Amount under Section 20.2(a); and

(c) In determining the Estimated Termination Amount and the Termination Holdback Amount, Aron may, in its commercially reasonable judgment, take account of any amounts due under clause (a) above that will not be definitively determined as of the Termination Date and/or which will be subject to any true-up or adjustment following the Termination Date.

11.8 Eligible Hydrocarbon Inventory.

(a) By no later than 3:00 p.m. CPT on each Business Day, the Company shall provide to Aron, via email, a report in form and substance reasonably satisfactory to Aron as illustrated on Schedule H (the “Inventory Report”) showing the inventory quantities that then constitute Eligible Hydrocarbon Inventory, including the quantity and location of each type of inventory.

(b) Notwithstanding the inventory quantities shown in an Inventory Report, if Aron in its reasonable judgment and in good faith determines that any of such quantities do not constitute Eligible Hydrocarbon Inventory, then Aron may exclude such quantities from the Eligible Hydrocarbon Inventory for purposes hereof.

(c) By delivering an Inventory Report, the Company shall be deemed to represent and warrant to Aron (to the same extent as if set forth in this Agreement) that all Hydrocarbons identified as Eligible Hydrocarbon Inventory in such report meet all the requirements of Eligible Hydrocarbon Inventory set forth in this Agreement.

ARTICLE 12

INDEPENDENT INSPECTORS; STANDARDS OF MEASUREMENT

12.1 Aron shall be entitled at Aron’s own cost and expense to have Supplier’s Inspector present at any time the Volume Determination Procedures are to be applied in accordance with the terms of this Agreement and to observe the conduct of Volume Determination Procedures.

12.2 In addition to its rights under Section 12.1, Aron may, from time to time during the Term of this Agreement, upon reasonable prior notice to the Company (which notice the Company shall forward to any applicable owners or operators) and at Aron’s own cost and expense, have Supplier’s Inspector conduct surveys and inspections of any of the Storage Facilities or observe any Crude Oil or Product transmission, handling, metering or other activities being conducted at such Storage Facilities or the Delivery Points; provided that such surveys, inspections and observations shall not materially interfere with the ordinary course of business being conducted at such Storage Facilities or the Refinery and shall be conducted in accordance with all Applicable Laws and permits; provided further, that (i) Aron’s personnel and its representatives shall follow routes and paths designated by the applicable operator or security personnel employed by such operator, (ii) Aron’s personnel and its representatives shall observe Applicable Laws and all security, fire and safety directives, procedures, regulations and guidelines then in effect at such location while, in, around or about such location, and (iii) Aron shall be liable for any loss, liability, damage, claim or expense caused by the negligence, willful misconduct or other tortious conduct of such Aron personnel and/or its representatives.

12.3 In the event that recalibration of meters, gauges or other measurement equipment is requested by Aron, such as “strapping,” the Parties shall select a mutually agreeable certified and licensed independent petroleum inspection company (the “Independent Inspection Company”) to conduct such recalibration. The cost of the Independent Inspection Company is to be shared equally by the Company and Aron.

12.4 Standards of Measurement. All quantity determinations herein will be corrected to sixty (60) degrees Fahrenheit based on a U.S. gallon of two hundred thirty-one (231) cubic inches and forty-two (42) gallons to the Barrel, in accordance with the latest supplement or amendment to ASTM-IP petroleum measurement tables (Table 6A of ASTM-IP for Feedstocks and Table 6B of ASTM‑IP for Products).

12.5 To the extent that the Company or LOTT receives any inventory reports relating to a survey of the quantity and quality of the physical inventory pursuant to the Stock Purchase Agreement or generated by any third party, Aron shall promptly receive the survey report generated thereunder, which report shall be addressed to Aron.

12.6 Each Party agrees to provide the other Parties with reasonable access to any reports and other information provided to it by third party service providers (including storage facilities and pipelines) with respect to volumes of Crude Oil and Products that are subject to this Agreement and held and/or transported by such third party service providers.

12.7 A Company Party or MLP Party may require any party requesting entry to a Storage Facility or the Refinery on behalf of, at the request of, or for the benefit of Aron, prior to permitting them to enter such location, to enter into an access agreement, provided the terms and conditions of such access agreement are reasonable and typical of such agreements required by other operators in the area local to such location. Notwithstanding anything to the contrary herein, the indemnification provisions of such access agreement shall control over the indemnification provisions herein with respect to any Liabilities directly or indirectly arising out of Aron or its employees, representatives, agents or contractors exercising any inspection or access rights granted herein.

ARTICLE 13

FINANCIAL INFORMATION; CREDIT SUPPORT; AND ADEQUATE ASSURANCES

13.1 Provision of Financial Information. The Company shall provide Aron (i) within ninety (90) days following the end of each of its fiscal years, (a) a copy of the annual report on Form 10-K, containing audited consolidated financial statements of Guarantor and its consolidated subsidiaries for such fiscal year certified by independent certified public accountants and (b) the balance sheet, statement of income and statement of cash flow of the Company for such fiscal year, as reviewed by the Company’s independent certified public accountants, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit, and (ii) within sixty (60) days after the end of its first three (3) fiscal quarters of each fiscal year, a copy of the quarterly report, containing unaudited consolidated financial statements Guarantor and its consolidated subsidiaries for such fiscal quarter; provided that so long as Guarantor is required to make public filings of its quarterly and annual financial results pursuant to the Exchange Act, such filings are available on the SEC’s EDGAR database and such filings are made in a timely manner, then the Company will not be required to provide such annual or quarterly financial reports of Guarantor to Aron. In all cases the statements shall be for the most recent accounting period and prepared in accordance with GAAP or such other principles then in effect.

13.2 Additional Information. Upon reasonable notice, the Company shall provide to Aron such additional information as Aron may reasonably request to enable it to ascertain the current financial condition of the Company, including product reports substantially in the form of Schedule S.

13.3 Notification of Certain Events. The Company shall notify Aron, in the case of clauses (a), (b), (e) and (f) below within four (4) Business Days and, in the case of clauses (c) and (d) below within one (1) Business Day, after learning of any of the following events:

(b) Either Company Party’s, any of its Subsidiaries’, the Guarantor’s or any of their other Affiliates’ binding agreement to consolidate or amalgamate with, merge with or into, or transfer all or substantially all of its assets to, another entity (including an Affiliate), but in the case of any such other Affiliate only if such transaction would limit or otherwise apply to or in any material respect affect any of the business, assets or operations of the Company or LOTT;

(d) An early termination of or any notice of “event of default” under either the Guarantee or the S&O Party Guarantee;

(e) A material amendment to any Existing Financing Agreement or any other Financing Agreement; or

13.4 Credit Support.

(a) Guarantee. As a condition to Aron entering into this Agreement, the Company has agreed to cause the Guarantor to provide the Guarantee to Aron and the S&O Parties to provide the S&O Party Guarantee to Aron, as credit support for the prompt and complete performance and payment of all of the Company’s obligations hereunder, and all costs and expenses (including but not limited to the reasonable costs, expenses, and external attorneys’ fees of Aron) of amending and maintaining the Guarantee and the S&O Party Guarantee shall be borne by the Company.

(b) Letters of Credit.

(i) The Company may, from time to time, provide to Aron one or more Letters of Credit as additional credit support and margin for or to secure prompt and

complete payment and performance of all of the Company’s and LOTT’s obligations hereunder and under the other Transaction Documents; provided that (A) all costs and expenses (including but not limited to the reasonable costs, expenses, and external attorneys’ fees of Aron) of establishing, renewing, substituting, canceling, increasing, and reducing the amount of (as the case may be) the Letters of Credit shall be borne by the Company, (B) no LC Default shall have occurred and be continuing with respect to any such Letter of Credit and (C) as a condition to accepting any such Letter of Credit, the Parties shall agree to such additional terms and conditions with respect thereto as Aron may require, including without limitation the Company’s agreement to cause such Letter of Credit to have a minimum available amount and to remain outstanding for a specified period. Upon the occurrence of an LC Default with respect to any Letter of Credit provided to Aron hereunder, the Company agrees to deliver a substitute Letter of Credit to Aron having an available amount at least equal to that of the Letter of Credit to be replaced on or before the first (1st) Business Day after written demand by Aron (or the third (3rd) Business Day if only clause (a) under the definition of LC Default applies).

(ii) A Letter of Credit shall provide that Aron may draw upon the Letter of Credit in an amount (up to the face amount for which the Letter of Credit has been issued) that is equal to all amounts that are due and owing from the Company or LOTT but have not been paid to Aron within the time allowed for such payments under this Agreement or any other Transaction Document (including any related notice or grace period or both). A Letter of Credit shall provide that a drawing shall be made on the Letter of Credit upon submission to the bank issuing the Letter of Credit of one or more certificates specifying the amounts due and owing to Aron in accordance with the specific requirements of the Letter of Credit.

(iii) If the Company shall fail to renew, extend or replace a Letter of Credit more than twenty (20) Business Days prior to its expiry date, then Aron may draw on the entire, undrawn portion of such outstanding Letter of Credit upon submission to the bank issuing such Letter of Credit of one or more certificates specifying the amounts due and owing to Aron in accordance with the specific requirements of the Letter of Credit. Any proceeds received as a result of such drawing may, in Aron’s discretion, be applied in payment of any amount due to Aron hereunder or under the other Transaction Documents (including any amount being due under Section 10.1 above) or retained as additional cash collateral and margin to secure the prompt and complete the payment and performance of all of the Company’s and LOTT’s obligations hereunder and under the other Transaction Documents; provided that any such cash collateral and margin shall be subject to the terms and conditions of Section 13.4(b)(v) below. The Company shall remain liable for any amounts due and owing to Aron and remaining unpaid after the application of the amounts so drawn by Aron.

(iv) Provided no Default (of which Aron has provided notice to the Company) or Event of Default by the Company or LOTT has occurred and is

continuing, upon the Company’s request, Aron shall cooperate with the Company in a commercially reasonable manner to implement a reduction of the available amount under any outstanding Letters of Credit that have been provided to Aron hereunder by the Company Parties; provided that if any minimum available amount requirement is applicable hereunder with respect to such Letters of Credit, no such reduction shall be made that results in the aggregate available amount thereunder being less than such minimum available amount requirement.

(v) To the extent that Aron makes a drawing under any Letter of Credit and retains any portion of such drawn amount as cash collateral and margin to secure the prompt and complete the payment and performance of all of the Company’s and LOTT’s obligations hereunder and under the other Transaction Documents, the Company further agrees that Aron shall have, and hereby grants to Aron, a present and continuing security interest in and to, and a general first lien upon and right of set off against, such cash amount and all interest and other proceeds from time to time received, receivable or otherwise distributed in respect thereof, or in exchange therefor. Notwithstanding any provisions of Applicable Law, Aron shall have the right to sell, pledge, rehypothecate, assign, invest, use, commingle or otherwise use in its business all or any portion of such retained cash amount, free from any claim or right of any nature whatsoever of the Company, including any equity or right of redemption by the Company. Nothing in this Section 13.4(b) shall limit any rights of Aron under any other provision of this Agreement or any other Transaction Documents, including without limitation, under Article 19 below.

(vi) Any Letter of Credit that is intended to be a Qualified LC for purposes of the LC Available Amount hereunder shall be identified to Aron by the Company in writing as a Qualified LC and any Letter of Credit not so identified shall not constitute a Qualified LC for such purpose.

(c) The Parties agree that the Company Parties may request that Aron release its lien on the portion of the Inventory Collateral that is located in the Plantation Pipeline Systems and any asphalt terminal that are not Included Locations if the Company Parties are able to obtain financing from an unaffiliated third party based on such portion of the Inventory Collateral and Aron will agree to provide such release to the Company Parties provided that Aron and such third party, concurrently with such release, enter into acknowledgment and intercreditor documentation in form and substance reasonably satisfactory to Aron.

(d) Nothing in this Section 13.4 shall limit any rights of Aron under any other provision of this Agreement, including under Article 19 below.

13.5 Adequate Assurances. If, during the Term of this Agreement, a Material Adverse Change has occurred with respect to the Company and is continuing, then Aron may notify the Company thereof and demand in writing that the Company provide to Aron adequate assurance of the Company’s ability to perform its obligations hereunder. Such adequate assurance (the “Adequate Assurance”) may take the form of a prepayment from the Company to Aron in such amount as Aron

reasonably deems sufficient, a provision of additional credit support in the form of letters of credit, third party guaranties and/or collateral security in such forms and amount and provided by such parties as Aron reasonably deems sufficient or such other form of assurance as Aron reasonably deems sufficient, in each case taking into account such Material Adverse Change. If such Adequate Assurance is not received within ten (10) Business Days after such demand by Aron, then such failure shall constitute an Event of Default by the Company under clause (i) of Section 19.1.

ARTICLE 14

REFINERY TURNAROUND, MAINTENANCE AND CLOSURE

14.1 The Company shall promptly notify Aron in writing of the date for which any maintenance or turnaround at the Refinery has been scheduled, or any revision to previously scheduled maintenance or turnaround, which may impair receipts of Crude Oil at the Refinery or the Storage Facilities, the processing of Crude Oil in the Refinery or the delivery of Products to Aron or by Aron to the Company or any third parties; provided that, (i) promptly after the Company completes its annual business plan with respect to any year, it shall notify Aron of any such maintenance or turnaround contemplated with respect to such year and (ii) the Company shall give Aron at least two (2) months’ prior written notice of any such scheduled maintenance or turnaround.

14.2 The Company shall promptly notify Aron orally (followed by prompt written notice) of any previously unscheduled material downtime, maintenance or turnaround and its expected duration.

14.3 In the event of a scheduled shutdown of the Refinery, the Company shall, to the extent feasible, complete processing of all Crude Oil being charged to, processed at or consumed in the Refinery at that time.

14.4 Treatment of Identified Facilities.

(a) Subject to Section 14.4(b) below, if at any time Aron determines that all or any portion of the facilities constituting an Included Location or Specified Lien Location (in each case, “Identified Facilities”) fail to satisfy Aron’s then applicable policies and procedures relating to the prudent maintenance and operation of storage tanks, pipeline facilities, vessels and other infrastructure used to store or transport Crude Oil and/or Products (“Aron’s Policies and Procedures”), and without limiting any other rights and remedies available to Aron hereunder or under any other Transaction Document, Aron may provide the Company notice of such failure so long as such failure is continuing and, if Aron provides such notice, the following provisions shall be applicable: (i) in the case of any Identified Facilities that are subject to the Storage Facilities Agreement, upon such date as Aron shall specify, such Identified Facilities shall cease to constitute an Included Location (or part of an Included Location) for purposes hereof and any payment to Aron in respect of any Crude Oil or Products held in such Identified Facilities shall become due in accordance with the provisions of Article 10 hereof; (ii) in the case of any Identified Facilities that are subject to a Required Storage and Transportation Arrangement, the Parties shall endeavor as promptly as reasonably practicable to execute such rights, provide such notices, negotiate

such reassignments or terminations and/or take such further actions as Aron deems necessary or appropriate to terminate Aron’s status as the party entitled to use and/or hold Crude Oil or Products at such Identified Facilities and, concurrently with effecting the termination of such status, such Identified Facilities shall cease to constitute an Included Location (or part of an Included Location) for purposes hereof and any payment to Aron in respect of any Crude Oil or Products held in such Identified Facilities shall become due in accordance with the provisions of Section 10 hereof and (iii) in the case of any Identified Facilities that are Specified Lien Locations, such Identified Facilities shall cease to constitute a Specified Lien Location (or part of a Specified Lien Location) for purposes hereof and any payment to Aron in respect of any Crude Oil or Products held in such Identified Facilities shall become due in accordance with the provisions of Articles 10 and 11 hereof. Aron’s Policies and Procedures are, as of the Third Restatement Effective Date, in accordance with and not in excess of standards and requirements under Applicable Law and good and prudent industry custom, practices and procedures, provided that Aron may from time to time adjust Aron’s Policies and Procedures. If any tank or pipeline has ceased to be an Included Location or Specified Lien Location pursuant to this Section 14.4(a) and thereafter such tank or pipeline is returned to service or reactivated and Aron determines, in its reasonable good faith judgment, that such tank or Identified Facilities is compliant with the standards or requirements imposed under Applicable Law or good and prudent industry custom, practice and procedures, then Aron shall promptly cooperate with the Company to reestablish such tank or pipeline as an Included Location or Specified Lien Location hereunder (subject to application of Section 14.4(b)(ii) below with respect to reestablishing a tank or pipeline as an Included Location).

(b) Aron’s rights under Section 14.4(a) above are subject to the following additional terms and conditions:

(i) Aron shall apply Aron’s Policies and Procedures with respect to the Included Locations or Specified Lien Locations in a non-discriminatory manner as compared with other similar storage tanks and pipeline facilities utilized in a similar manner; and

(ii) If Aron’s Policies and Procedures exceed the standards or requirements imposed under Applicable Law or good and prudent industry custom, practice and procedures, then such excess standards or requirements shall only be applied with respect to determining whether an Included Location is an Identified Facility. If, as a result of the application of such excess standards or requirements, any Included Location is determined to be an Identified Facility, then (1) Aron shall not require the removal of such Identified Facilities as Included Locations until the 60th day after giving the Company written notice of such failure, unless in Aron’s reasonable judgment such failure presents an imminent risk relating to such Identified Facility in which case Aron may require that such Identified Facility immediately cease to constitute an Included Location and the terms of Section 14.4(a) shall immediately become applicable, (2) during such 60 day period, Aron shall consult with the Company in good faith to determine whether based on further information

provided by the Company such Identified Facilities comply with Aron’s Policies and Procedures and/or whether additional actions or procedures can be taken or implemented so that, as a result, such Identified Facilities would comply with Aron’s Policies and Procedures, and (3) if it is determined that such Identified Facilities do comply with Aron’s Policies and Procedures or, as a result of such additional actions or procedures, such Identified Facilities become so compliant within such 60 day period, then such Identified Facilities shall not cease to be Included Locations based on the noncompliance stated in Aron’s notice to the Company; and

(iii) If pursuant to clause (ii) above any Identified Facility ceases to be an Included Location as a result of the application of such excess standards or requirements referred to therein, but otherwise complies with Aron’s Policies and Procedures that are not in excess of standards and requirements under Applicable Law and good and prudent industry custom, practices and procedures, then such Included Location shall become a Specified Lien Location as of the date it ceases being an Included Location. It is acknowledged that the provisions of clause (ii) above only apply to an Identified Facility that is an Included Location, not a Specified Lien Location.

(c) The Company Parties further agree that the Company will promptly notify Aron in writing of any Included Location or Specified Lien Location that (i) the Company or LOTT removes from service, for any reason and if removal from service is anticipated to be more than 30 days or (ii) has had no bulk movements of Crude Oil or Products during any period of 60 consecutive days or has otherwise been designated or categorized as no longer being active or in use for at least 60 consecutive days and has de minimis inventory and then, in either such case, Aron shall, within 5 Business Days after receipt of such notice, advise the Company whether the tank or pipeline constituting such Included Location or Specified Lien Location shall cease to constitute an Included Location or Specified Lien Location for purposes hereof. If Aron advises the Company Parties that any such tank or pipeline is to cease to be an Included Location or Specified Lien Location, such change in status shall occur on the effective date specified by Aron. If any tank or pipeline has ceased to be an Included Location or Specified Lien Location pursuant to this Section 14.4(c) and thereafter such tank or pipeline is returned to service or reactivated and Aron determines, in its reasonable good faith judgment, that such tank or pipeline is compliant with Aron’s Policies and Procedures, then Aron shall promptly cooperate with the Company to reestablish such tank or pipeline as an Included Location or Specified Lien Location hereunder.

(d) With respect to any Included Location that is subject to a Required Storage and Transportation Arrangement (other than a Required MLP Arrangement), the Company Parties shall use their commercially reasonable efforts to arrange for Aron to be permitted, from time to time, to conduct inspections of such Included Location for purposes of determining whether such Included Location satisfies Aron’s Policies and Procedures. If despite such efforts, the Company Parties are unable to make such arrangements with respect to an Included Location, then upon written notice from Aron to the Company such Included Location shall be converted to a Specified Lien Location.

(e) With respect to any Included Location or Specified Lien Location that is owned or operated by either Company Party or any MLP Party, the Company Parties shall from time to time permit or cause a MLP Party to permit Aron to conduct inspections of such Included Location or Specified Lien Location for purposes of determining whether such Included Location or Specified Lien Location satisfies Aron’s Policies and Procedures. If the Company Parties fail to comply with the foregoing requirement with respect to any Included Location or Specified Lien Location, then upon written notice from Aron to the Company such Included Location or Specified Lien Location shall cease to constitute an Included Location or Specified Lien Location for purposes hereof.

ARTICLE 15

TAXES

15.1 The Company shall pay and indemnify and hold Aron harmless against, the amount of all sales, use, gross receipts, value added, severance, ad valorem, excise, property, spill, environmental, transaction-based, or similar taxes, duties and fees, howsoever designated (each, a “Tax” and collectively, “Taxes”) regardless of the taxing authority, and all penalties and interest thereon, paid, owing, asserted against, or incurred by Aron directly or indirectly with respect to the Crude Oil procured and sold, and the Products purchased and resold, and other transactions contemplated hereunder to the greatest extent permitted by Applicable Law; in the event that the Company is not permitted to pay such Taxes, the amount due hereunder shall be adjusted such that the Company shall bear the economic burden of the Taxes. The Company shall pay when due such Taxes unless there is an applicable exemption from such Tax, with written confirmation of such Tax exemption to be contemporaneously provided to Aron. To the extent Aron is required by law to collect such Taxes, one hundred percent (100%) of such Taxes shall be added to invoices as separately stated charges and paid in full by the Company in accordance with this Agreement, unless the Company is exempt from such Taxes and furnishes Aron with a certificate of exemption; provided, however, that (i) the failure of Aron to separately state or collect Taxes from the Company shall not alter the liability of the Company for Taxes and (ii) Aron shall only be liable for Taxes if and to the extent that Taxes have been separately stated and collected from the Company. Aron shall be responsible for all taxes imposed on Aron’s net income.

15.2 If the Company disagrees with Aron’s determination that any Tax is due with respect to transactions under this Agreement, the Company shall have the right to seek a binding administrative determination from the applicable taxing authority, or, alternatively, the Company shall have the right to contest any asserted claim for such Taxes in its own name, subject to its agreeing to indemnify Aron for the entire amount of such contested Tax (including any associated interest and/or late penalties) should such Tax be deemed applicable. Aron agrees to reasonably cooperate with the Company, at the Company’s cost and expense, in the event the Company determines to contest any such Taxes. Notwithstanding anything to the contrary in Section 15.1, the Company shall not be obligated to indemnify Aron with respect to any penalties or interest resulting from (and only to the extent of and attributable to) Aron’s negligence in preparing and filing any property tax returns that are to be prepared and filed by Aron with respect hereto; provided any information that the Company has provided to Aron for purposes of such returns is accurate

and complete, and made available by the Company to Aron in a timely manner. If the Company apprises Aron in a timely manner of any verifiable discounts available for early filing of any such property tax returns that Aron is to file, Aron shall use its commercially reasonable efforts to avail itself of such discounts and if any such discount is obtained, the amount to be indemnified by the Company under Section 15.1 shall be the discounted amount.

15.3 The Company and Aron shall promptly inform each other in writing of any assertion by a taxing authority of additional liability for Taxes in respect of said transactions. Any legal proceedings or any other action against Aron with respect to such asserted liability shall be under Aron’s direction, but the Company shall be consulted. Any legal proceedings or any other action against the Company with respect to such asserted liability shall be under the Company’s direction, but Aron shall be consulted. In any event, the Company and Aron shall fully cooperate with each other as to the asserted liability. Each Party shall bear all the reasonable costs of any action undertaken by the other at the Party’s request.

15.4 Any other provision of this Agreement to the contrary notwithstanding, this Article 15 shall survive until ninety (90) days after the expiration of the statute of limitations for the assessment, collection, and levy of any Tax.

ARTICLE 16

INSURANCE

16.1 Insurance Coverages. The Company shall procure and maintain in full force and effect throughout the Term of this Agreement insurance coverages of the following types and amounts and with insurance or reinsurance companies rated not less than A- by A.M. Best or an equivalent rating agency of comparable financial strength:

(a) Property damage coverage on an “all risk” basis subject to policy terms, conditions, and exclusions without flood, earthquake, windstorm, tsunami and terrorism exclusions in an amount sufficient to cover the greater of the market value or potential full replacement cost of all Crude Oil and Products owned by Aron or the Company Parties in inventory at any location hereunder. In the event that the market value or potential full replacement cost of all Crude Oil and Products exceeds the insurance limits available or the insurance limits available at commercially reasonable rates in the insurance marketplace, the Company will maintain the highest insurance limit available at commercially reasonable rates; provided, however, that the Company will promptly notify Aron of the Company’s inability to fully insure any Crude Oil and Products and provide full details of such inability. Such policies shall be endorsed to name Aron as a loss payee with respect to any of Aron's Crude Oil or Product in the care, custody or control of the Company. Notwithstanding anything to the contrary herein, Aron, may, at its option and its sole expense, endeavor to procure and provide such property damage coverage for the Crude Oil and Products; provided that, to the extent any such insurance is duplicative with insurance procured by the Company, the insurance procured by the Company shall in all cases represent, and be written to be, the primary coverage;

(b) Commercial General Liability coverage which includes bodily injury, property damage, contractual liability, cross suit liability, and products and completed operations liability coverage in a minimum amount of $[***] per occurrence and $[***] in the aggregate;

(c) Wharfinger's/Charterer's Liability insurance (if applicable) in a minimum amount of $[***] per occurrence and in the aggregate;

(d) (i) Workers’ Compensation in the amount required by Applicable Law, and (i) Employer’s Liability with a minimum amount of $[***] per accident, $[***] per disease, and $[***] aggregate;

(e) Automobile Liability coverage in a minimum amount of $[***] combined single limit for all owned/hired/non-owned vehicles; and

(f) Umbrella/Excess Liability coverage providing coverage on a follow-form or equivalent basis with respect to the coverage required under Sections 16.1(b), (c), (d)(ii) and (e) in a minimum amount of $[***] per occurrence and in the aggregate.

(g) Sudden and Accidental pollution liability of $[***] provided as part of the Commercial General Liability and Umbrella/Excess Liability program or as part of a standalone placement providing equivalent coverage.

16.2 Additional Insurance Requirements.

(a) The foregoing policies in Section 16.1 shall include or provide waiver of subrogation for the benefit of Aron and the insurance shall be primary and non-contributory from Aron’s insurance. The foregoing policies with the exception of those listed in Sections 16.1(a) and 16.1(d)(i) shall include Aron, its subsidiaries, and affiliates and their respective directors, officers, employees and agents as additional insured. The foregoing policy in Section 16.1(a) shall include Aron as loss payee and/or lender loss payee with respect the Crude Oil and Products.

(b) The Company shall cause its insurance carriers to furnish Aron with insurance certificates, in ACORD form or equivalent form reasonably satisfactory to Aron, evidencing the existence of the coverages and the endorsements required above. The Company shall provide thirty (30) days’ written notice prior to cancellation of insurance becoming effective. The Company also shall provide renewal certificates within ten (10) days after expiration of the policy.

(c) The mere purchase and existence of insurance does not reduce or release either Party from any liability incurred or assumed under this Agreement.

(d) The Company shall comply with all notice and reporting requirements in the foregoing policies and timely pay all premiums.

The Company shall be responsible for any deductibles or retentions that are applicable to the insurance required pursuant to Section 16.1.

16.3 The Company shall have the right to satisfy its insurance obligations outlined in Sections 16.1 and 16.2 by means of a captive insurance program provided that (a) such captive insurance program is permitted under and in compliance with applicable law, (b) such insurance policy or policies issued by the captive insurer contains a “cut-though” endorsement providing that in the event of the captive insurer’s insolvency any reinsurer of the captive insurer will pay any loss covered by a reinsurance contract directly to the Company, and (c) such captive insurance program is able to pay claims in accordance with the laws of the State of New York.

ARTICLE 17

FORCE MAJEURE

17.1 If a Party is rendered unable by an event of Force Majeure to perform in whole or in part any obligation or condition of this Agreement (the “Affected Party”), it shall not be liable to the other Party to perform such obligation or condition (except for payment and indemnification obligations) for so long as the event of Force Majeure exists and to the extent that performance is prevented or materially hindered by such event of Force Majeure; provided, however, that the Affected Party shall use any commercially reasonable efforts to mitigate, avoid or remove the event of Force Majeure. During the period that performance by the Affected Party of a part or whole of its obligations has been suspended by reason of an event of Force Majeure, the other Party (the “Non-Affected Party”) likewise may suspend the performance of all or a part of its obligations to the extent that such suspension is commercially reasonable, except for any payment and indemnification obligations. The Parties acknowledge that if, as a result of a Force Majeure, the Company were to suspend its receipt and/or processing of Crude Oil, then Aron would be entitled to suspend, to a comparable extent, its purchasing of Products. To the extent that Aron is unable to perform hereunder as a result of any event of Force Majeure as described in the last sentence of the definition of such term set forth above, such event shall constitute a material hindrance for purposes of this Article 17.

17.2 The Affected Party shall give prompt notice to the Non-Affected Party of its declaration of an event of Force Majeure, to be followed by written notice within twenty-four (24) hours after receiving notice of the occurrence of a Force Majeure event, including, to the extent feasible, the details and the expected duration of the Force Majeure event and the volume of Crude Oil or Products affected. The Affected Party also shall promptly notify the Non-Affected Party when the event of Force Majeure is terminated. However, the failure or inability of the Affected Party to provide such notice within the time periods specified above shall not preclude it from declaring an event of Force Majeure.

17.3 In the event the Affected Party’s performance is suspended due to an event of Force Majeure in excess of ninety (90) consecutive days after the date that notice of such event is given, and so long as such event is continuing, the Non-Affected Party, in its sole discretion, may terminate or curtail its obligations under this Agreement affected by such event of Force Majeure (the “Affected Obligations”) by giving notice of such termination or curtailment to the Affected Party, and neither

Party shall have any further liability to the other in respect of such Affected Obligations to the extent terminated or curtailed, except for the rights and remedies previously accrued under this Agreement, any payment and indemnification obligations by either Party under this Agreement and the obligations set forth in Article 20.

17.4 If any Affected Obligation is not terminated pursuant to this Article 17 or any other provision of this Agreement, performance shall resume to the extent made possible by the end or amelioration of the event of Force Majeure in accordance with the terms of this Agreement; provided, however, that the term of this Agreement shall not be extended.

17.5 The Parties acknowledge and agree that the right of Aron to declare a Force Majeure based upon any failure by a Third Party Supplier to deliver Crude Oil under a Procurement Contract is solely for purposes of determining the respective rights and obligations as between Aron and the Company with respect to any Crude Oil delivery affected thereby, and any such declaration shall not excuse the default of such Third Party Supplier under one or more Procurement Contracts. Any claims that Aron may have as a result of such Third Party Supplier’s failure shall be subject to Section 5.9 and any other applicable provisions of this Agreement relating to claims against third parties.

17.6 If at any time during the Term any of the Required Storage and Transportation Arrangements cease to be in effect (in whole or in part), any of the Included Crude Pipeline, Included Product Pipeline or Included Third Party Storage Tanks cease, in whole or in part, to be available to Aron pursuant to the Required Storage and Transportation Arrangements or any Third Party Lien Location ceases, in whole or in part, to be available to the Company or LOTT, and the foregoing is a result of or attributable to any owner or operator of the Included Crude Pipeline, Included Product Pipeline, Included Third Party Storage Tanks or Third Party Lien Location becoming Bankrupt or breaching or defaulting in any of its obligations relating to the Required Storage and Transportation Arrangements or its contractual obligations to the Company or LOTT, then:

(a) The Company shall promptly use commercially reasonable efforts to establish (i) in the case of a Required Storage and Transportation Arrangement, alternative and/or replacement storage and transportation arrangements subject to a Required Storage and Transportation Arrangement for Aron’s benefit and no less favorable to Aron (in Aron’s reasonable judgment) than those that have ceased to be available and (ii) in the case of a Third Party Lien Location, an alternative and/or replacement storage and transportation arrangement to serve as a replacement for the location that ceased to be a Third Party Lien Location;

(b) Until such alternative and/or replacement arrangements complying with clause (a) above have been established, each Party shall be deemed to have been affected by an event of Force Majeure and its obligations under this Agreement shall be curtailed to the extent such performance is prevented or materially hindered by such lack of effectiveness of any Required Storage and Transportation Arrangements, Third Party Lien Location or the availability of any pipeline or storage facility related thereto; and

(c) Without limiting the generality of the foregoing, in no event shall Aron have any obligation under or in connection with this Agreement to store Crude Oil or Product in any pipeline or store Crude Oil or Product in any storage facility or to treat any location as a Specified Lien Location at any time from and after the owner or operator thereof becomes Bankrupt. If any such storage facility is an Included Location then Aron may, in its discretion, elect upon written notice to the Company that such storage facility shall cease to be an Included Location as of a date specified in such written notice in which case any Crude Oil or Product held by Aron therein shall be purchased by the Company in accordance with the applicable provisions of Sections 10.1 and 10.2 hereof.

ARTICLE 18

REPRESENTATIONS, WARRANTIES AND COVENANTS

18.1 Mutual Representations. Each Party represents and warrants to the other Party as of the Third Restatement Effective Date and each sale of Crude Oil hereunder, that:

(a) It is an “Eligible Contract Participant” as defined in Section 1a(18) of the Commodity Exchange Act, as amended.

(b) It is (i) a “forward contract merchant” in respect of this Agreement and this Agreement and each sale of Crude Oil or Products hereunder constitutes a “forward contract,” as such term is used in Section 556 of the Bankruptcy Code, (ii) a “swap participant” in respect of this Agreement and this Agreement and each sale of Crude Oil or Products hereunder constitutes a commodity forward agreement as such term is used in the definition of “swap agreement,” as each such term is defined in the Bankruptcy Code and used in Section 560 of the Bankruptcy Code and (iii) a “master netting agreement participant” and this Agreement constitutes a “master netting agreement,” as each such term is defined in the Bankruptcy Code and used in Section 561 of the Bankruptcy Code.

(c) It is duly organized and validly existing under the laws of the jurisdiction of its organization or incorporation and in good standing under such laws.

(f) All governmental and other authorizations, approvals, consents, notices and filings that are required to have been obtained or submitted by it with respect to the

Transaction Documents have been obtained or submitted are in full force and effect, and all conditions of any such authorizations, approvals, consents, notices and filings have been complied with.

(h) No Event of Default or, to such Party’s knowledge, Default has occurred and is continuing, and no such event or circumstance would occur as a result of its entering into or performing its obligations under the Transaction Documents.

(j) It is not relying upon any representations of the other Party other than those expressly set forth in this Agreement.

(n) It is not bound by any agreement that would preclude or hinder its execution, delivery, or performance of this Agreement.

None of its directors, officers, employees or agents or those of its Affiliates has received or will receive any commission, fee, rebate, gift or entertainment of significant value in connection with this Agreement.

18.2 Company’s and LOTT’s Representations and Covenants. The Company Parties represent and warrant to and agree with Aron as follows:

(a) The Company and LOTT (each, a “Company Party,” and collectively, the “Company Parties”) have delivered true and complete copies of the Base Agreements and Required Storage and Transportation Arrangements and all amendments thereto to Aron.

(b) Each Company Party shall in all material respects continue to perform its obligations under and comply with the terms of the Base Agreements and Required Storage and Transportation Arrangements.

(c) Each Company Party shall maintain and pursue diligently all its material rights under the Base Agreements and Required Storage and Transportation Arrangements and take all reasonable steps to enforce any rights granted to the applicable Company Party thereunder.

(d) Neither Company Party shall modify, amend or waive rights arising under the Base Agreements or Required Storage and Transportation Arrangements without the prior written consent of Aron; provided, however, that if a Company Party provides Aron with notice, the Company Party may make such modifications or amendments, including extensions or elections under any of the foregoing, that do not adversely affect Aron’s rights thereunder or otherwise interfere with Aron’s rights to use the Pipeline Systems and Included Third Party Storage Tanks subject thereto without the prior written consent of Aron.

(e) Neither Company Party shall cause or permit any of the Crude Oil or Products held at the Included Locations to become subject to any liens or encumbrances, other than Permitted Liens.

(f) The Company has delivered true and complete copies of the Existing Financing Agreements and all material amendments thereto to Aron.

(g) Neither Company Party shall modify or amend (including any extensions of or elections under), or waive any rights arising under, any Existing Financing Agreement without the prior written consent of Aron, if doing so would (i) adversely affect in any respect any of Aron’s rights or remedies under this Agreement or the other Transaction Documents or (ii) cause such Existing Financing Agreement to no longer satisfy the conditions set forth in Section 2.1(k) and Section 2.1(m) above, including, without limitation, the recognition that Aron is the owner of Crude Oil and Products to the extent contemplated hereby and by the other Transaction Documents, free and clear of any liens of any lender or other creditor that is party to such Financing Agreement, other than Permitted Liens.

(h) The Company Parties represent and warrant that to their knowledge, none of its Affiliates are party to any credit agreement, indenture or other financing agreement under which the Company Parties or any of their subsidiaries may incur or become liable for indebtedness for borrowed money (including capitalized lease obligations and reimbursement obligations with respect to letters of credit) which covenants that limit or otherwise apply to any of the business, assets or operations of the Company or LOTT, other than the Existing Financing Agreements.

(i) The Company Parties represent and warrant that, to their knowledge, Schedule U hereto contains a complete list of all storage, loading and offloading facilities owned, operated, leased or used pursuant to a contractual right of use by the Company or LOTT.

(j) Neither Company Party shall, from and after the Original Effective Date, enter into any Financing Agreement (an “Additional Financing Agreement”) unless such Additional Financing Agreement, at the time it is entered into, (i) contains provisions that recognize the respective rights and obligations of the Parties under this Agreement and the other Transaction Documents, (ii) does not adversely affect in any respect any of Aron’s rights or remedies under this Agreement or the other Transaction Documents and (iii) satisfies the conditions in Section 2.1(k) and Section 2.1(m) to the same extent as if such Additional Financing Agreement were an Existing Financing Agreement, including, without limitation, the recognition that Aron is the owner of Crude Oil and Products to the extent contemplated hereby and by the other Transaction Documents, free and clear of any liens of any lender or other creditor that is party to such Financing Agreement, other than Permitted Liens. Neither Company Party shall modify or amend (including any extensions of or elections under), or waive any rights arising under, any Additional Financing Agreement without the prior written consent of Aron, if doing so would (i) adversely affect in any respect any of Aron’s rights or remedies under this Agreement or the other Transaction Documents or (ii) cause such Additional Financing Agreement to no longer satisfy the conditions set forth in Section 2.1(k) and Section 2.1(m) above to the same extent as if such Additional Financing Agreement were an Existing Financing Agreement, including, without limitation, the recognition that Aron is the owner of Crude Oil and Products to the extent contemplated hereby and by the other Transaction Documents, free and clear of any liens of any lender or other creditor that is party to such Financing Agreement, other than Permitted Liens.

(k) (i) To the extent deemed necessary or appropriate by Aron, the Company shall cause acknowledgements and/or releases (including without limitation, amendments or termination of UCC financing statements), in form and substance satisfactory to Aron, to be duly executed by lenders or other creditors that are party to Existing Financing Agreements, confirming the release of any lien in favor of such lender or other creditor that might apply to or be deemed to apply to any Crude Oil and/or Products of which Aron is the owner as contemplated by this Agreement and the other Transaction Documents and agreeing to provide Aron with such further documentation as it may reasonably request in order to confirm the foregoing; and

(i) With respect to the Acknowledgment Agreement, dated as of March 30, 2018, among Aron, the Company Parties and Wells Fargo Bank, National Association (in its capacity as collateral agent for certain lenders) (the “Company Acknowledgment Agreement”) and the Acknowledgment Agreement, dated as of March 15, 2017, among Aron, Delek MLP, Sala, El Dorado, Magnolia, Delek Operating and Fifth Third Bank, as administrative agent under the “Credit Agreement” referenced therein (the “MLP Acknowledgment Agreement”), and without limiting the generality of Section 18.2(k)(i) above, the Company Parties covenant that from and after the date hereof they will promptly cause the Company Acknowledgment Agreement or the MLP Acknowledgment Agreement, as applicable, to be further amended or amended and restated, to the extent deemed necessary or appropriate by Aron, to acknowledge any locations hereafter added as Included Locations hereunder (together with Crude Oil and Products held therein by Aron).

(l) The Company Parties represent and warrant that the Storage Facilities owned and/or operated by the Company Parties have been maintained, repaired, inspected and serviced such that they are in good working order and repair. The Company hereby represents, warrants and covenants that it will take commercially reasonable actions (or cause others to take commercially reasonable actions) to maintain, repair, inspect and service such Storage Facilities in accordance with industry standards.

(m) In the event that any Company Party becomes Bankrupt, and to the extent permitted by Applicable Law, the Company Party intends that (i) Aron’s right to liquidate, collect, net and set off rights and obligations under this Agreement and liquidate and terminate this Agreement shall not be stayed, avoided, or otherwise limited by the Bankruptcy Code, including Sections 362(a), 547, 548 or 553 thereof; (ii) Aron shall be entitled to the rights, remedies and protections afforded by and under, among other sections, Sections 362(b)(6), 362(b)(17), 362(b)(27), 546(e), 546(g), 546(j), 548(d), 553, 556, 560, 561 and 562 of the Bankruptcy Code; and (iii) any cash, securities or other property provided as performance assurance, credit, support or collateral with respect to the transactions contemplated hereby shall constitute “margin payments” as defined in Section 101(38) of the Bankruptcy Code and all payments for, under or in connection with the transactions contemplated hereby, shall constitute “settlement payments” as defined in Section 101(51A) of the Bankruptcy Code.

(n) The Company Parties agree that they shall have no interest in or the right to dispose of, and shall not permit the creation of, or suffer to exist, any security interest, lien, encumbrance, charge or other claim of any nature, other than Permitted Liens, with respect to any quantities of Crude Oil prior to the delivery thereof by Aron to the Company at the Crude Delivery Point or any quantities of Products after delivery thereof to Aron at the Products Delivery Point (collectively, “Aron’s Property”). The Company Parties authorize Aron to file at any time and from time to time any UCC financing statements describing the quantities of Aron’s Property subject to this Agreement and Aron’s ownership thereof and title thereto, and the Company Parties hereby authorizes Aron to file (with or without the

Company’s signature), at any time and from time to time, all amendments to financing statements, assignments, continuation financing statements, termination statements, and other documents and instruments, in form reasonably satisfactory to Aron, as Aron may reasonably request, to provide public notice of Aron’s ownership of and title to the quantities of Aron’s Property subject to this Agreement and to otherwise protect Aron’s interest therein.

(o) As provided in the Pledge and Security Agreement, the Company Parties have granted to Aron, as additional security for the prompt and complete payment and performance of all obligations of the Company Parties arising hereunder or under the other Transaction Documents and under all transactions contemplated thereby (collectively, the “Obligations”), a present and continuing security interest in all of such Company Parties’ right, title and interest in, to and under all crude oil, refined petroleum products and other hydrocarbons (collectively, “Hydrocarbons”) from time to time owned by either Company Party, wherever located (including Hydrocarbons located at the Specified Lien Locations and at any other locations) and whether now existing or owned or hereafter acquired or arising and all documents of title directly related thereto and all general intangibles arising therefrom (collectively, the “Inventory Collateral”), provided that the Inventory Collateral excludes the Colonial Pipeline Inventory (as defined in the Pledge and Security Agreement. The foregoing security interest is a continuation of the security interest granted under Section 17.2(o) of the Original Agreement, which has been maintained in effect at times from the date of the Original Agreement to the Restatement Effective Date and is continuing from and after the Restatement Effective Date pursuant to the Pledge and Security Agreement. Each Company Party hereby authorizes Aron to file at any time and from time to time any financing statements describing the Inventory Collateral, and each Company Party hereby authorizes Aron to file (with or without such Company Party’s signature), at any time and from time to time, all amendments to financing statements, continuation financing statements, termination statements, notices and all other documents and instruments, in form satisfactory to Aron, as Aron may reasonably request, to maintain the priority and perfection or provide notice of Aron’s security interest in the Inventory Collateral and to accomplish the purposes of this Agreement. Without limiting its representations, warranties, covenants and other obligations under the Pledge and Security Agreement, each Company Party (i) represents and warrants that such Pledge and Security Agreement creates an enforceable security interest in the Inventory Collateral in favor of Aron and, upon filing the initial financing statements contemplated above, Aron shall have a perfected, first priority lien on and security interest in the Inventory Collateral and (ii) covenants and agrees that, so long as this Agreement or any Transaction Documents remain in effect or any Obligations remain unsatisfied, it will not create, agree or consent to any Liens on the Inventory Collateral (other than the lien granted to Aron hereunder) other than Permitted Liens. Upon the occurrence and during the continuance of any Event of Default with respect to a Company Party, Aron shall have, in addition to all other rights and remedies granted to it in this Agreement or any other Transaction Document, all the rights and remedies of a secured party under the UCC and other Applicable Laws with respect to the Inventory Collateral.

(p) With respect to all Required Storage and Transportation Arrangements in which the party providing the storage or transportation services is an Affiliate of the

Company, the Company and LOTT shall cause such Affiliate to perform its obligations under such Required Storage and Transportation Arrangement.

(q) With respect to the Required MLP Arrangements,

(i) no later than the date on which such Required MLP Arrangements become effective, the Company and LOTT shall have procured from the secured creditors of Delek MLP and delivered to Aron, access agreements duly executed by such secured creditors and in form and substance reasonably satisfactory to Aron, granting Aron access to the plant, property and equipment upon which such secured creditors have a lien with respect to any Crude Oil and/or Products of Aron’s from time to time located in or at such plant, property and equipment; and

(ii) to the fullest extent permitted by Applicable Law, cause Delek MLP and its subsidiaries that are parties to such Required MLP Arrangements to make the full capacity of the pipelines and storage facilities available pursuant thereto to Aron for purposes of this Agreement and the transactions contemplated hereby and by the other Transaction Documents.

(r) With respect to any Inventory Collateral that is held in a location that is not an Owned Lien Location, the Company Parties covenant and agree that:

(i) Any Person at any time and from time to time holding all or any portion of such Inventory Collateral shall be deemed to, and shall, hold such Inventory Collateral as the agent of, and as pledge holder for, Aron. At any time and from time to time, Aron may give notice to any such Person holding all or any portion of such Inventory Collateral that such Person is holding the Inventory Collateral as the agent and bailee of, and as pledge holder for, Aron, and obtain such Person’s written acknowledgment thereof. Without limiting the generality of the foregoing, the Company Parties will join with Aron in notifying any Person who has possession of any Inventory Collateral of Aron’s security interest therein and obtaining an acknowledgment from such Person that it is holding the Inventory Collateral for the benefit of Aron.

(ii) From and after the Third Restatement Effective Date, the Company Parties will use commercially reasonable efforts to obtain from each Person from whom the Company leases any premises, and from each other Person at whose premises any Inventory Collateral is at any time present (including any bailee, warehouseman or similar Person), any such collateral access, subordination, landlord waiver, bailment, consent and estoppel agreements, as Aron may reasonably require, in form and substance satisfactory to Aron; provided that, with respect to any such Person that is an Affiliate of the Company, the Company Parties will cause such Person to deliver to Aron a “bailee’s letter” in substantially the form attached as Schedule JJ hereto no later than (whether a new location that is being added as a Specified Lien Location or an Included Location that is being converted to a Specified Lien Location), 45 days after the Parties agree to such location becoming a Specified

Lien Location or if later, the effective date on which such location becomes a Specified Lien Location. In the event that any such Person becomes an Affiliate of the Company on and after the Third Restatement Effective Date, the Company will cause such Person to deliver such bailee’s letter no later than 45 days after the date such Person becomes an Affiliate of the Company. For any such Person that is not an Affiliate of the Company, the Company Parties shall continue from time to time to make the commercially reasonable efforts contemplated by this provision.

18.3 Acknowledgment. The Company Parties acknowledge and agree that (1) Aron is a merchant of Crude Oil and Products and may, from time to time, be dealing with prospective counterparties, or pursuing trading or hedging strategies, in connection with aspects of Aron’s business which are unrelated hereto and that such dealings and such trading or hedging strategies may be different from or opposite to those being pursued by or for either Company Party, (2) Aron may, in its sole discretion, determine whether to advise the Company Party of any potential transaction with a Third Party Supplier and prior to advising the Company Party of any such potential transaction Aron may, in its discretion, determine not to pursue such transaction or to pursue such transaction in connection with another aspect of Aron’s business and Aron shall have no liability of any nature to either Company Party as a result of any such determination, (3) Aron has no fiduciary or trust obligations of any nature with respect to the Refinery or either Company Party or any of its Affiliates, (4) Aron may enter into transactions and purchase Crude Oil or Products for its own account or the account of others at values more favorable than those being paid by either Company Party hereunder and (5) nothing herein shall be construed to prevent Aron, or any of its partners, officers, employees or Affiliates, in any way from purchasing, selling or otherwise trading in Crude Oil, Products or any other commodity for its or their own account or for the account of others, whether prior to, simultaneously with or subsequent to any transaction under this Agreement.

ARTICLE 19

DEFAULT AND TERMINATION

19.1 Events of Default. Notwithstanding any other provision of this Agreement, the occurrence of any of the following shall constitute an “Event of Default”:

(a) Any Party fails to make payment when due (i) under Article 10, Article 11 Article 20 or any Company Purchase Agreement within one (1) Business Day after a written demand therefor or (ii) under any other provision hereof or any other Transaction Document within five (5) Business Days; or

(b) Other than a default described in Sections 19.1(a) and 19.1(c), any Party fails to perform any material obligation or covenant to the other under this Agreement or any other Transaction Document, which is not cured to the reasonable satisfaction of any other Party (in its sole discretion) within ten (10) Business Days after the date that such Party receives written notice that such obligation or covenant has not been performed; or

(c) Any Party breaches any material representation or material warranty made or repeated or deemed to have been made or repeated by the Party, or any warranty or

representation proves to have been incorrect or misleading in any material respect when made or repeated or deemed to have been made or repeated under any Transaction Document; provided, however, that if such breach is curable, such breach is not cured to the reasonable satisfaction of the other Party within ten (10) Business Days after the date that such Party receives notice that corrective action is needed; or

(d) Any Party becomes Bankrupt; or

(e) Any Party or any of its Designated Affiliates (1) defaults under a Specified Transaction and, after giving effect to any applicable notice requirement or grace period, there occurs a liquidation of, an acceleration of obligations under, or any early termination of, that Specified Transaction, (2) defaults, after giving effect to any applicable notice requirement or grace period, in making any payment or delivery due on the last payment, delivery or exchange date of, or any payment on early termination of, a Specified Transaction (or such default continues for at least three (3) Business Days if there is no applicable notice requirement or grace period) or (3) disaffirms, disclaims, repudiates or rejects, in whole or in part, a Specified Transaction (or such action is taken by any Person or entity appointed or empowered to operate it or act on its behalf); or

(f) (i) Either Company Party fails in a material respect to perform its obligations under, comply with, or maintain a Base Agreement or the Required Storage and Transportation Arrangements; or (ii) either Company Party breaches in a material respect its obligations under Section 9.5(c) or Section 18.2(e);

(g) A Company Party or any of its Affiliates sells, leases, subleases, transfers or otherwise disposes of, in one transaction or a series of related transactions, all or a material portion of the assets of the Refinery; or

(h) The Company or LOTT (i) consolidates or amalgamates with, merges with or into, or transfers all or substantially all of its assets to, another entity (including an Affiliate) or any such consolidation, amalgamation, merger or transfer is consummated, and (ii)(A) the successor entity resulting from any such consolidation, amalgamation or merger or the Person that otherwise acquires all or substantially all of the assets of the Company or LOTT does not assume, in a manner satisfactory to Aron, all of the Company’s obligations hereunder and under the other Transaction Documents, or (B) in the reasonable judgment of Aron, the creditworthiness of the resulting, surviving or transferee entity, taking into account any guaranties, is materially weaker than the Company immediately prior to the consolidation, amalgamation, merger or transfer; or

(i) The Company fails to provide Adequate Assurance in accordance with Section 13.5; or

(j) There shall occur either (A) a default, event of default or other similar condition or event (however described) in respect of either Company Party, any of its Subsidiaries or the Guarantor under one or more agreements or instruments relating to Specified Indebtedness (including any guarantees of Specified Indebtedness) in an aggregate

amount of not less than fifty million dollars ($50,000,000) which has resulted in such Specified Indebtedness becoming due and payable under such agreements and instruments before it would have otherwise been due and payable or (B) a default by either Company Party, any such Subsidiary or the Guarantor (individually or collectively) in making one or more payments on the due date thereof in an aggregate amount of not less than fifty million dollars ($50,000,000) under such agreements or instruments (after giving effect to any applicable notice requirement or grace period); or

(k) An “Event of Default” (howsoever defined) has occurred under any of the Existing Financing Agreements or any other Financing Agreements to which either Company Party is a party or for which either Company Party has provided a guaranty or under any guaranty of such Financing Agreements provided by the Guarantor; or

(m) Any of the following: (i) the Guarantor or any S&O Party fails to perform or otherwise defaults in any obligation under the Guarantee or the S&O Party Guarantee, as applicable, (ii) the Guarantor or any S&O Party becomes Bankrupt, (iii) either of the Guarantee or the S&O Party Guarantee expires or terminates or ceases to be in full force and effect prior to the satisfaction of all obligations of the Company, LOTT or any other subsidiary of the Company to Aron under this Agreement and the other Transaction Documents, (iv) the Guarantor or any S&O Party disaffirms, disclaims, repudiates or rejects, in whole or in part, or challenges the validity of, the Guarantee or the S&O Party Guarantee, as applicable, or (v) a Change of Control occurs.

The Company shall be the Defaulting Party upon the occurrence of any of the events described in clauses (f)-(m) (inclusive) above. If any of the events described in clauses (a)-(e) occurs with respect to or is caused by LOTT or any other subsidiary of the Company, the Company shall be the Defaulting Party upon the occurrence of such event.

19.2 Remedies Upon Event of Default.

(a) Notwithstanding any other provision of this Agreement, if any Event of Default with respect to a Company, on the one hand, or Aron, on the other hand (such defaulting Party, the “Defaulting Party”) has occurred and is continuing, Aron (where the Company is the Defaulting Party) or the Company (where Aron is the Defaulting Party) (such non-defaulting Party or Parties, the “Non-Defaulting Party”) may, without notice, (i) declare all of the Defaulting Party’s obligations under this Agreement to be forthwith due and payable, all without presentment, demand, protest or further notice of any kind, all of which are expressly waived by the Defaulting Party (except that in the case of any Event of Default under Section 19.1(d), all such obligations shall automatically and without any such declaration become forthwith due and payable) and/or (ii) subject to Section 19.2(c), exercise any rights and remedies provided or available to the Non-Defaulting Party under this Agreement or at law or equity, including all remedies provided under UCC and as

provided under this Section 19.2. It is expressly agreed that all such obligations shall be due and payable as a result of any acceleration pursuant to this Section 19.2, including (without limitation) in the case of any automatic acceleration resulting from an Event of Default under Section 19.1(d) and all such obligations shall survive and continue to be due and payable following an Event of Default under Section 19.1(d).

(d) Without limiting any other rights or remedies hereunder, if an Event of Default has occurred and is continuing and Aron is the Non-Defaulting Party, Aron may, in its discretion, (i) withhold or suspend its obligations, including any of its delivery or payment obligations, under this Agreement, (ii) withdraw from storage any and all of the Crude Oil and/or Products then in the Storage Facilities, (iii) otherwise arrange for the disposition of any Crude Oil and/or Products subject to outstanding Procurement Contracts and/or the modification, settlement or termination of such outstanding Procurement Contracts in such manner as it elects and (iv) liquidate in a commercially reasonable manner any credit support, margin or collateral, to the extent not already in the form of cash (including making a demand under the Guarantee, the S&O Party Guarantee or any credit support, margin or collateral arrangements) and apply and set off such payment under the Guarantee, the S&O Party Guarantee or any credit support, margin or collateral or the proceeds thereof against any obligation owing by the Company to Aron. Aron shall be under no obligation to prioritize the order with respect to which it exercises any one or more rights and remedies available hereunder. The Company shall in all events remain liable to Aron for any amount payable by the Company in respect of any of its obligations remaining unpaid after any such liquidation, application and set off.

(e) Without limiting any other rights or remedies hereunder, if an Event of Default has occurred and is continuing and the Company is the Non-Defaulting Party, the Company may, in its discretion, (i) withhold or suspend its obligations, including any of its delivery or payment obligations, under this Agreement and/or (ii) otherwise arrange for the settlement or termination of the parties’ outstanding commitments hereunder, the sale in a commercially reasonable manner of Crude Oil and/or Product for Aron’s account, and the replacement of the supply and offtake arrangement contemplated hereby with such alternative arrangements as it may procure, including, without limitation, notwithstanding anything herein to the contrary, with respect to such replacement, the purchase of Crude Oil by the Company on its own account and the storage of Product and Crude Oil owned by the Company in the Included Locations.

(f) The Non-Defaulting Party shall set off (i) the Settlement Amount (if due to the Defaulting Party), plus any performance security (including the Guarantee, the S&O Party Guarantee, or any credit support, margin or collateral arrangements) then held by the Non-Defaulting Party pursuant to the Transaction Documents, plus (at the Non-Defaulting Party’s election) any or all other amounts due to the Defaulting Party hereunder (including under Article 10), against (ii) the Settlement Amount (if due to the Non-Defaulting Party), plus any performance security (including the Guarantee, the S&O Party Guarantee, or any credit support, margin or collateral arrangements) then held by the Defaulting Party, plus (at the Non-Defaulting Party’s election) any or all other amounts due to the Non-Defaulting Party hereunder (including under Article 10), so that all such amounts shall be netted to a single liquidated amount payable by one Party to the other (the “Liquidated Amount”). The Party with the payment obligation shall pay the Liquidated Amount to the applicable other Parties within one (1) Business Day after such amount has been determined.

(h) The Non-Defaulting Party’s rights under this Section 19.2 shall be in addition to, and not in limitation or exclusion of, any other rights which the Non‑Defaulting Party may have (whether by agreement, operation of law or otherwise), including any rights of recoupment, setoff, combination of accounts or other rights under any credit support that may from time to time be provided in connection with this Agreement. The Defaulting Party shall indemnify and hold the Non-Defaulting Party harmless from all reasonable costs and expenses, including reasonable attorney fees, incurred in the exercise of any remedies hereunder.

(i) If an Event of Default has occurred and is continuing, the Non-Defaulting Party and any Affiliate thereof may, without limitation on its rights under this Section 19.2, set off amounts which the Defaulting Party owes to it or any such Affiliate against any amounts which it or such Affiliate owes to the Defaulting Party (whether hereunder, under any other contract or agreement or otherwise and whether or not then due).

(j) The Parties acknowledge and agree that this Agreement is intended to be a “master netting agreement” as such term is defined in Section 101(38A) of the Bankruptcy Code. As used in this Section 19.2, unless otherwise expressly provided, each reference to “this Agreement” shall, and shall be deemed to, be a reference to “this Agreement and the other Transaction Documents.”

(k) Without limiting the generality of the foregoing, in the event the obligation under this Agreement and the other Transaction Documents are accelerated or otherwise become due prior to their maturity date, in each case, in respect of any Event of Default with respect to the Company Parties (including, but not limited to, upon the occurrence of an Event of Default arising under Section 19.1(d)) (including the acceleration of claims by operation of law)), any amounts that would have become due hereunder or thereunder on the date of such acceleration or otherwise with respect to any early termination hereof (whether or not as a result of an Event of Default) also be due and payable as though such early termination had occurred and shall be part of the Obligations. Any such amount payable shall be presumed to be the liquidated damages sustained by Aron as the result of the early termination and each of the Company Parties agrees that it is reasonable under the circumstances currently existing. EACH OF THE COMPANY PARTIES EXPRESSLY WAIVES (TO THE FULLEST EXTENT IT MAY LAWFULLY DO SO) THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE OR LAW THAT PROHIBITS OR MAY PROHIBIT THE COLLECTION OF THE FOREGOING AMOUNTS IN CONNECTION WITH ANY SUCH ACCELERATION. Each of the Company Parties expressly agree (to the fullest extent it may lawfully do so) that: (A) all such amounts are reasonable and the product of an arm’s length transaction between sophisticated business people, ably represented by counsel; (B) such amounts shall be payable notwithstanding the

then prevailing market rates at the time payment is made; (C) there has been a course of conduct between the Parties hereto giving specific consideration in this transaction for such agreement to pay such amounts; and (D) the Company Parties shall be estopped hereafter from claiming differently than as agreed to in this paragraph. Each of the Company Parties expressly acknowledges that its agreement to pay such amounts to Aron as herein described is a material inducement to Aron to enter into this Agreement.

19.3 U.S. Resolution Stay Provisions.

(a) Recognition of U.S. Special Resolution Regimes.

(i) In the event that Aron becomes subject to a proceeding under (i) the Federal Deposit Insurance Act and the regulations promulgated thereunder or Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder (a “U.S. Special Resolution Regime”) the transfer from Aron of this Agreement, the Inventory Sales Agreements and any obligation in or under, and any property securing, this Agreement or any other Transaction Document, will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if this Agreement, Inventory Sales Agreements and, if in effect, the Step-out Inventory Sales Agreement (collectively, the “Safe Harbor Agreements”), and any interest and obligation in or under, and any property securing, the Safe Harbor Agreements were governed by the laws of the United States or a state of the United States.

(i) In the event that Aron or an Affiliate becomes subject to a proceeding under a U.S. Special Resolution Regime, the Company Parties shall not be permitted to exercise any Default Right with respect to a Safe Harbor Agreement or any Credit Enhancement, in each case, that is related, directly or indirectly, to an Affiliate of Aron becoming subject to any insolvency or liquidation proceeding, except to the extent that the exercise of such Default Right would be permitted under the provisions of 12 C.F.R. 252.84, 12 C.F.R. 47.5 or 12 C.F.R. 382.4, as applicable; and

(ii) In the event that Aron or an Affiliate becomes subject to a proceeding under a U.S. Special Resolution Regime, nothing in any Safe Harbor Agreement

shall prohibit the transfer of any Credit Enhancement, any interest or obligation in or under such Credit Enhancement, or any property securing such Credit Enhancement, to a transferee upon or following an Affiliate of Aron becoming subject to an insolvency or liquidation proceeding, unless the transfer would result in the Company Parties being the beneficiary of such Credit Enhancement in violation of any law applicable to the Company Parties.

(c) U.S. Protocol. If the Company Parties adhere to the ISDA 2018 U.S. Resolution Stay Protocol, as published by the International Swaps and Derivatives Association, Inc. as of July 31, 2018 (the “ISDA U.S. Protocol”), the terms of the ISDA U.S. Protocol will supersede and replace the terms of this Section 19.3.

(d) For purposes of this Section 19.3, the term “Affiliate” means “Affiliate” as defined in, and interpreted in accordance with 12 U.S.C. § 1841(k).

ARTICLE 20

SETTLEMENT AT TERMINATION

20.1 Upon expiration or termination of this Agreement for any reason other than as a result of an Event of Default (in which case the Expiration Date or any other date that may be agreed by the Parties shall be the “Termination Date”; provided that if such date is not a Business Day, any payments due on such date shall be made on the immediately preceding Business Day), the Parties covenant and agree to proceed as provided in this Article 20; provided that (x) this Agreement shall continue in effect following any Termination Date until all obligations are finally settled as contemplated by this Article 20 and (y) the provisions of this Article 20 shall in no way limit the rights and remedies which the Non-Defaulting Party may have as a result of an Event of Default, whether pursuant to Article 19 above or otherwise:

(a) If any Procurement Contract does not either (i) by its terms automatically become assigned to the Company on and as of the Termination Date in a manner that releases Aron from all obligations thereunder for all periods following the Termination Date or (ii) by its terms, expire or terminate on and as of the Termination Date, then the Parties shall promptly negotiate and enter into, with each of the then existing Third Party Suppliers, assignments, assumptions and/or such other documentation, in form and substance reasonably satisfactory to the Parties, pursuant to which, as of the Termination Date, (i) such Procurement Contract shall be assigned to the Company or shall be terminated, (ii) all rights and obligations of Aron under each of the then outstanding Procurement Contracts shall be assigned to the Company, (iii) the Company shall assume all of such obligations to be paid or performed following such termination, and (iv) Aron shall be released by such Third Party Suppliers and the Company from any further obligations thereunder. In connection with the assignment or reassignment of any Procurement Contract, the Parties shall endeavor, in a commercially reasonable manner, to facilitate the transitioning of the supply and payment arrangements, including any change in payment terms, under the relevant Procurement Contracts so as to prevent any material disruption in the supply of Crude Oil thereunder.

(b) If, pursuant to the Marketing and Sales Agreement, any sales commitments are outstanding that, by their terms, extend beyond the Termination Date, then the Parties shall promptly negotiate and enter into, with each of the purchasers thereunder, assignments, assumptions and/or such other documentation, in form and substance reasonably satisfactory to the Parties, pursuant to which, as of the Termination Date, (i) such sales commitment shall be assigned (or reassigned) to the Company or shall be terminated, (ii) all rights and obligations of Aron with respect to each then outstanding sales commitment shall be assigned to the Company, (iii) the Company shall assume all of such obligations to be paid or performed following such termination, and (iv) Aron shall be released by the purchasers thereunder and the Company from any further obligations with respect to such sales commitments. In connection with the assignment or reassignment of any Procurement Contract, the Parties shall endeavor, in a commercially reasonable manner, to facilitate the transitioning of the Product marketing and sales arrangements so as to prevent any material disruption in the distribution of Products from the Refinery.

(c) In the event that Aron has become a party to any other third party service contract in connection with this Agreement and the transactions contemplated hereby, including any pipeline, terminalling, storage and shipping arrangement including but not limited to the Required Storage and Transportation Arrangements (an “Ancillary Contract”) and such Ancillary Contract does not by its terms expire or terminate on and as of the Termination Date, then the Parties shall promptly negotiate and enter into with each service provider thereunder such instruments or other documentation, in form and substance reasonably satisfactory to the Parties, pursuant to which as of the Termination Date (i) such Ancillary Contract shall be assigned to the Company or shall be terminated, (ii) all rights and obligations of Aron with respect to each then outstanding Ancillary Contract shall be assigned to the Company, (iii) the Company shall assume all of such obligations to be paid or performed following such termination, and (iv) Aron shall be released by the third party service providers thereunder and the Company from any further obligations with respect to such Ancillary Contract. For each case in which the Company and/or LOTT has transferred to Aron for purposes of this Agreement the historical pipeline capacity of the Company or LOTT on any Included Location or where Aron has been a shipper of record on a pipeline for volumes of Crude Oil or Products shipped by Aron for purposes of this Agreement and as a result of has generated a capacity history based on such shipments, Aron shall, in connection with the occurrence of a Termination Date, endeavor in good faith and in a commercially reasonable manner to cause such historical pipeline capacity, including any adjustments to such history based on and attributable to quantities of Crude Oil and/or Products transported by Aron for purposes of this Agreement (“Related Pipeline Capacity”), to be transferred the Company and/or LOTT, as directed, in each case subject to any applicable rules, regulations and tariffs; provided that the Company and LOTT shall reimburse Aron for any out-of-pocket costs and expenses incurred by Aron in connection with its endeavoring to effect such transfer. Without limiting the foregoing, Aron agrees, upon request of the Company at any time prior to and after a Termination Date, to cooperate in good faith with the Company to endeavor to cause each Pipeline System at any Included Location to agree and acknowledge that the Related Pipeline Capacity shall be for the benefit of the Company or LOTT, as applicable; provided that the Company and LOTT shall

reimburse Aron for any out-of-pocket costs and expenses incurred by Aron in connection with its endeavoring to effect such agreement and acknowledgement. Any historical capacity held by Aron that does not constitute Related Pipeline Capacity shall be retained by Aron. In addition, if despite Aron’s commercially reasonable efforts, a Pipeline System will not effect or permit such transfer or the portion of Aron’s historical pipeline capacity constitute Related Pipeline Capacity cannot be identified or allocated, no transfer shall be required with respect to such Pipeline System.

(d) The volume of Crude Oil and Products at the Included Locations shall be purchased and transferred to the Company as contemplated in the Step-Out Inventory Sales Agreement. The Crude Oil volumes measured by the Independent Inspection Company at the Termination Date and recorded in the Independent Inspection Company’s final inventory report shall be the “Termination Date Crude Oil Volumes” for the purposes of this Agreement and the Product volumes measured by the Independent Inspection Company at the Termination Date and recorded in the Independent Inspection Company’s final inventory report shall be the “Termination Date Product Volumes” for purposes of this Agreement, and such Termination Date Crude Oil Volumes and Termination Date Product Volumes shall collectively be referred to as the “Termination Date Volumes”. The volume of Crude Oil and Products at the Specified Lien Location shall be measured, determined and reported on in the same manner and on the same basis at the Termination Date as the volumes in the Included Locations and such volume determination shall be used for determining the final amount due from the Company Parties to Aron with respect to the Lien Amount.

(e) Aron shall promptly reconcile and calculate the Termination Amount pursuant to Section 20.2 and the amount shall be determined pursuant to Section 20.2. The Parties shall promptly exchange all information necessary to determine the estimates and final calculations contemplated by Section 20.2.

(f) Aron shall have no further obligation to purchase and shall not purchase or pay for Crude Oil or Products, make any further Lien Amount advances or incur any such purchase obligations on and after the Termination Date. Except as may be required for Aron to fulfill its obligations hereunder until the Termination Date or during any obligatory notice period pursuant to any Procurement Contract, Aron shall not be obligated to purchase, take title to or pay for, and the Company shall not be obligated to purchase or sell, any Crude Oil or Products following the Termination Date or such earlier date as the Parties may determine in connection with the transitioning of such supply arrangements to the Company. Notwithstanding anything to the contrary herein, no Delivery Date shall occur later than the Business Day immediately preceding the Termination Date.

(g) Promptly after all obligations due to Aron under this Agreement and the other Transaction Documents have been satisfied in full, Aron shall release and return to the Company each of the Guarantee and the S&O Party Guarantee and surrender and confirm the cancellation of any Qualified LCs then held by Aron.

20.2 Termination Amount.

(a) The “Termination Amount” shall equal:

(i) the Termination Date Purchase Value, which is the aggregate amount payable to Aron under the Step-Out Inventory Sales Agreement, plus

(ii) all unpaid amounts payable hereunder by the Company to Aron in respect of Crude Oil delivered on or prior to the Termination Date (including Deferred Interim Payment Amount), plus

(iii) all Ancillary Costs incurred through the Termination Date that have not yet been paid or reimbursed by the Company, plus

(iv) in the case of an early termination (except for an early termination resulting solely from a Regulatory Termination Notice given by Aron where Aron has not make a concurrent election under Section 9.6(b) above), the amount reasonably determined by Aron as the losses, costs and damages (in each case that are commercially reasonable and for which Aron is able to provide to the Company reasonable supporting evidence) it incurred or realized as a result of Aron’s terminating, liquidating, maintaining, obtaining or reestablishing any hedge or related trading positions in connection with such early termination, plus

(v) the aggregate amount due under Section 10.2(a), calculated as of the Termination Date with such date being the final day of the last monthly period for which such calculations are to be made under this Agreement; provided that, if such amount under Section 10.2(a) is due to Aron, then such amount will be included in this Termination Amount as a positive number and if such amount under Section 10.2(a) would be an Interim Reset Amount it shall be due to the Company and included in this Termination Amount as a negative number, plus

(vi) any unpaid portion of the Annual Fee or other fees owed to Aron pursuant to Section 10.3, plus

(viii) the Lien Amounts previously paid or advanced by Aron, including any fees, expenses and other costs associated therewith pursuant to Article 11,

(ix) all unpaid amounts payable hereunder by Aron to the Company in respect of Product delivered on or prior to the Termination Date, and

(x) all amounts due from Aron to the Company under the Marketing and Sales Agreement for services provided up to the Termination Date.

Without duplication of the foregoing, the Termination Amount shall include all amounts due from one party to the other specified on Schedule BB hereto; provided that the Estimated Termination Amount shall include (A) all such amounts due from the Company to Aron and (B) the Non-Holdback Portion, if any, as determined in Section 20.2(b) below and due from Aron to the Company. For the avoidance of doubt, the Estimated Termination Amount shall not include the Termination Holdback Amount. All of the foregoing amounts shall be aggregated or netted to a single liquidated amount owing from one Party to the other. If the Termination Amount is a positive number, it shall be due to Aron and if it is a negative number, the absolute value thereof shall be due to the Company.

(b) The Parties acknowledge that one or more of the components of the Termination Amount will not be able to be definitively determined by the Termination Date and therefore agree that Aron shall, in a commercially reasonable manner, estimate each of such components and use such estimated components to determine an estimate of the Termination Amount (the “Estimated Termination Amount”) plus such additional amount which Aron shall reasonably determine (the “Termination Holdback Amount”); provided that the Termination Holdback Amount shall be such portion of the total of all amounts due from Aron to the Company that are listed on Schedule BB hereto (the “Maximum Holdback Amount”) as Aron deems appropriate in its commercially reasonable judgment based on the estimation process set forth herein; provided further that, if the Maximum Holdback Amount exceeds the Termination Holdback Amount, such excess shall be referred to as the “Non-Holdback Portion” hereunder. Without limiting the generality of the foregoing, the Parties agree that the amount due under Section 20.2(a)(i) above shall be estimated by Aron in the same manner and using the same methodology as it used in preparing the Estimated Commencement Date Value, but applying the “Step-Out Values” as indicated on Schedule B and other price terms provided for herein with respect to the purchase of the Termination Date Volumes. Aron shall use its commercially reasonable efforts to prepare, and provide the Company with, an initial Estimated Termination Amount, together with appropriate supporting documentation, at least five (5) Business Days prior to the Termination Date. To the extent reasonably practicable, Aron shall endeavor to update its calculation of the Estimated Termination Amount by no later than 12:00 noon CPT on the Business Day prior to the Termination Date. If Aron is able to provide such updated amount, that amount shall constitute the Estimated Termination Amount and shall be due and payable by no later than 5:00 p.m., CPT on the Business Day preceding the Termination Date. Otherwise, the initial Estimated Termination Amount shall be the amount payable on the Termination Date. If the Estimated Termination Amount is a positive number, it shall be due to Aron and if it is a negative number, the absolute value thereof shall be due to the Company.

as a result of such reconciliation. Within one (1) Business Day after receiving the Termination Reconciliation Statement and the related supporting documentation, the Parties will make any and all payments required pursuant thereto. Promptly after receiving such payment, Aron shall cause any filing or recording of any UCC financing forms to be terminated.

20.3 Transition Services. To the extent necessary to facilitate the transition to the purchasers of the storage and transportation rights and status contemplated hereby, each Party shall take such additional actions, execute such further instruments and provide such additional assistance as the other Party may from time to time reasonably request for such purposes.

ARTICLE 21

INDEMNIFICATION

21.1 To the fullest extent permitted by Applicable Law and except as specified otherwise elsewhere in the Transaction Documents, Aron shall defend, indemnify and hold harmless the Company, its Affiliates, and their directors, officers, employees, representatives, agents and contractors for and against any Liabilities directly or indirectly arising out of (i) any breach by Aron of any covenant or agreement contained herein or made in connection herewith or any representation or warranty of Aron made herein or in connection herewith proving to be false or misleading, (ii) any failure by Aron to comply with or observe any Applicable Law, (iii) Aron’s negligence or willful misconduct, or (iv) injury, disease, or death of any person or damage to or loss of any property, fine or penalty, any of which is caused by Aron or its employees, representatives, agents or contractors in exercising any rights or performing any obligations hereunder or in connection herewith, except to the extent that such injury, disease, death, or damage to or loss of property was caused by the negligence or willful misconduct on the part of the Company, its Affiliates or any of their respective employees, representatives, agents or contractors.

21.2 To the fullest extent permitted by Applicable Law and except as specified otherwise elsewhere in this Agreement, the Company Parties shall defend, indemnify and hold harmless Aron, its Affiliates, and their directors, officers, employees, representatives, agents and contractors for and against any Liabilities directly or indirectly arising out of (i) any breach by either Company Party of any covenant or agreement contained herein or made in connection herewith or any representation or warranty of the Company made herein or in connection herewith proving to be false or misleading, including, without limitation the Company Parties’ obligation for payment of Taxes pursuant to Section 15.1, (ii) either Company Party’s transportation, handling, storage, refining or disposal of any Crude Oil or the products thereof, including any conduct by either Company Party on behalf of or as the agent of Aron under the Required Storage and Transportation Arrangements, (iii) either Company Party’s failure to comply with its obligations under the terminalling, pipeline and lease agreements underlying the Required Storage and Transportation Arrangements, (iv) either Company Party’s negligence or willful misconduct, (v) any failure by either Company Party to comply with or observe any Applicable Law, (vi) injury, disease, or death of any person or damage to or loss of any property, fine or penalty, any of which is caused by either Company Party or its employees, representatives, agents or contractors in exercising any rights or performing any obligations hereunder or in connection herewith, (vii) actual or alleged presence or release of Hazardous Substances in connection with the Transaction Documents or the transactions

contemplated thereby, or any liability under any Environmental Law related in any way to or asserted in connection with the Transaction Documents or the transactions contemplated thereby, (viii) the Company Parties’ ownership, handling or use of any Inventory Collateral, including without limitation any Included Crude Lien Inventory or Included Product Lien Inventory, or (ix) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by a Company Party, and regardless of whether Aron is a party thereto, except to the extent that, with respect to clause (vi) above, such injury, disease, death, or damage to or loss of property was caused by the negligence or willful misconduct on the part of Aron, its Affiliates or any of their respective employees, representatives, agents or contractors.

21.3 The Parties’ obligations to defend, indemnify, and hold each other harmless under the terms of the Transaction Documents shall not vest any rights in any third party (whether a Governmental Authority or private entity), nor shall they be considered an admission of liability or responsibility for any purposes other than those enumerated in the Transaction Documents.

21.4 Each Party agrees to notify the other as soon as practicable after receiving notice of any claim or suit brought against it within the indemnities of this Agreement, shall furnish to the other the complete details within its knowledge and shall render all reasonable assistance requested by the other in the defense; provided that, the failure to give such notice shall not affect the indemnification provided hereunder, except to the extent that the indemnifying Party is materially adversely affected by such failure. Each Party shall have the right but not the duty to participate, at its own expense, with counsel of its own selection, in the defense and settlement thereof without relieving the other of any obligations hereunder. Notwithstanding the foregoing, an indemnifying Party shall not be entitled to assume responsibility for and control of any judicial or administrative proceeding if such proceeding involves an Event of Default by the indemnifying Party under this Agreement which shall have occurred and be continuing.

ARTICLE 22

LIMITATION ON DAMAGES

UNLESS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, THE PARTIES’ LIABILITY FOR DAMAGES IS LIMITED TO DIRECT, ACTUAL DAMAGES ONLY (WHICH INCLUDE ANY AMOUNTS DETERMINED UNDER ARTICLE 19) AND NO PARTY SHALL BE LIABLE FOR SPECIFIC PERFORMANCE, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, OR SPECIAL, CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, IN TORT, CONTRACT OR OTHERWISE, OF ANY KIND, ARISING OUT OF OR IN ANY WAY CONNECTED WITH THE PERFORMANCE, THE SUSPENSION OF PERFORMANCE, THE FAILURE TO PERFORM, OR THE TERMINATION OF THIS AGREEMENT; PROVIDED, HOWEVER, THAT, SUCH LIMITATION SHALL NOT APPLY WITH RESPECT TO (I) ANY THIRD PARTY CLAIM FOR WHICH INDEMNIFICATION IS AVAILABLE UNDER THIS AGREEMENT OR (II) ANY BREACH OF ARTICLE 24. EACH PARTY ACKNOWLEDGES THE DUTY TO MITIGATE DAMAGES HEREUNDER.

ARTICLE 23

RECORDS AND INSPECTION

During the Term of this Agreement each Party may make reasonable requests of the other Party for copies of documents maintained by the other Party, or any of the other Party’s contractors and agents, which relate to this Agreement; provided that, neither this Section nor any other provision hereof shall entitle the Company to have access to any records concerning any hedges or offsetting transactions or other trading positions or pricing information that may have been entered into with other parties or utilized in connection with any transactions contemplated hereby or by any other Transaction Document. The right to receive copies of such records shall survive termination of this Agreement for a period of two (2) years following the Termination Date. Each Party shall preserve, and shall use commercially reasonable efforts to cause all contractors or agents to preserve, all of the aforesaid documents for a period of at least two (2) years from the Termination Date.

ARTICLE 24

CONFIDENTIALITY

24.1 In addition to the Company’s confidentiality obligations under the Transaction Documents, the Parties agree that the specific terms and conditions of this Agreement, including any list of counterparties, the Transaction Documents and the drafts of this Agreement exchanged by the Parties and any information exchanged between the Parties, including calculations of any fees or other amounts paid by the Company to Aron under this Agreement and all information received by Aron from the Company relating to the costs of operation, operating conditions, and other commercial information of the Company not made available to the public, are confidential and shall not be disclosed to any third party, except (i) as may be required by court order or Applicable Laws, as requested by a Governmental Authority or a required by any stock exchanges on which a Party’s or its Affiliate’s shares are listed, (ii) to such Party’s or its Affiliates’ employees, directors, shareholders, auditors, consultants, banks, lenders, financial advisors and legal advisors, or (iii) to such Party’ insurance providers, solely for the purpose of procuring insurance coverage or confirming the extent of existing insurance coverage; provided that, prior to any disclosure permitted by this clause (iii), such insurance providers shall have agreed in writing to keep confidential any information or document subject to this Section 24.1. The confidentiality obligations under this Agreement shall survive termination of this Agreement for a period of two (2) years following the Termination Date. The Parties shall be entitled to all remedies available at law, or in equity, to enforce or seek relief in connection with the confidentiality obligations contained herein.

24.2 In the case of disclosure covered by clause (i) of Section 24.1, to the extent practicable and in conformance with the relevant court order, Applicable Law or request, the disclosing Party shall notify the other Party in writing of any proceeding of which it is aware which may result in disclosure.

24.3 Tax Disclosure. Notwithstanding anything herein to the contrary, the Parties (and their respective employees, representatives or other agents) are authorized to disclose to any Person the U.S. federal and state income tax treatment and tax structure of the transaction and all materials

of any kind (including tax opinions and other tax analyses) that are provided to the Parties relating to that treatment and structure, without the Parties imposing any limitation of any kind. However, any information relating to the tax treatment and tax structure shall remain confidential (and the foregoing sentence shall not apply) to the extent necessary to enable any Person to comply with securities laws. For this purpose, “tax structure” is limited to any facts that may be relevant to that treatment.

ARTICLE 25

GOVERNING LAW

25.1 THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED UNDER THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ITS CONFLICT OF LAWS PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER STATE.

25.2 EACH OF THE PARTIES HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY FEDERAL OR STATE COURT OF COMPETENT JURISDICTION SITUATED IN THE CITY OF NEW YORK, AND TO SERVICE OF PROCESS BY CERTIFIED MAIL, DELIVERED TO THE PARTY AT THE ADDRESS INDICATED IN ARTICLE 27. EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION TO PERSONAL JURISDICTION, WHETHER ON GROUNDS OF VENUE, RESIDENCE OR DOMICILE.

25.3 Each Party waives, to the fullest extent permitted by Applicable Law, any right it may have to a trial by jury in respect of any proceedings relating to this agreement.

25.4 This Agreement is executed and delivered in connection with a closing of the transactions referenced herein which is occurring in the state of New York, and all parties acknowledge and agree that this Agreement is not valid, binding and enforceable until accepted and approved by Aron in New York.

ARTICLE 26

ASSIGNMENT

26.1 This Agreement shall inure to the benefit of and be binding upon the Parties hereto, their respective successors and permitted assigns.

26.2 The Company shall not assign this Agreement or its rights or interests hereunder in whole or in part, or delegate its obligations hereunder in whole or in part, without the express written consent of Aron. Aron may, without the Company’s consent, assign and delegate all of Aron’s rights and obligations hereunder to (i) any Affiliate of Aron, provided that the obligations of such Affiliate hereunder are guaranteed by The Goldman Sachs Group, Inc. or (ii) any non-Affiliate Person that succeeds to all or substantially all of its assets and business and assumes Aron’s obligations hereunder, whether by contract, operation of law or otherwise, provided that the creditworthiness

100

of such successor entity is equal or superior to the creditworthiness of Aron (taking into account any credit support for Aron) immediately prior to such assignment. Any other assignment by Aron shall require the Company’s consent.

26.3 Any attempted assignment in violation of this Article 26 shall be null and void ab initio and the non-assigning Party shall have the right, without prejudice to any other rights or remedies it may have hereunder or otherwise, to terminate this Agreement effective immediately upon notice to the Party attempting such assignment.

ARTICLE 27

NOTICES

All invoices, notices, requests and other communications given pursuant to this Agreement shall be in writing and sent by email or nationally recognized overnight courier (except that a notice or other communication under Article 19 hereof may not be given by email or any other electronic messaging system). A notice shall be deemed to have been received when transmitted by email to the other Party’s email set forth on Schedule M, or on the following Business Day if sent by nationally recognized overnight courier to the other Party’s address set forth on Schedule M and to the attention of the person or department indicated. A Party may change its address or email address by giving written notice in accordance with this Section, which is effective upon receipt.

ARTICLE 28

NO WAIVER, CUMULATIVE REMEDIES

28.1 The failure of a Party hereunder to assert a right or enforce an obligation of the other Party shall not be deemed a waiver of such right or obligation. The waiver by any Party of a breach of any provision of, or Event of Default under, this Agreement shall not operate or be construed as a waiver of any other breach of that provision or as a waiver of any breach of another provision of, Event of Default under, this Agreement, whether of a like kind or different nature.

28.2 Each and every right granted to the Parties under this Agreement or allowed it by law or equity shall be cumulative and may be exercised from time to time in accordance with the terms thereof and Applicable Law.

ARTICLE 29

NATURE OF THE TRANSACTION AND RELATIONSHIP OF PARTIES

29.1 This Agreement shall not be construed as creating a partnership, association or joint venture between the Parties. It is understood that each Party is an independent contractor with complete charge of its employees and agents in the performance of its duties hereunder, and nothing herein shall be construed to make such Party, or any employee or agent of the Company, an agent or employee of the other Party.

101

29.2 Neither Party shall have the right or authority to negotiate, conclude or execute any contract or legal document with any third person; to assume, create, or incur any liability of any kind, express or implied, against or in the name of the other; or to otherwise act as the representative of the other, unless expressly authorized in writing by the other.

ARTICLE 30

MISCELLANEOUS

30.1 If any Article, Section or provision of this Agreement shall be determined to be null and void, voidable or invalid by a court of competent jurisdiction, then for such period that the same is void or invalid, it shall be deemed to be deleted from this Agreement and the remaining portions of this Agreement shall remain in full force and effect.

30.2 The terms of this Agreement and the other Transaction Documents constitute the entire agreement between the Parties with respect to the matters set forth in this Agreement, and no representations or warranties shall be implied or provisions added in the absence of a written agreement to such effect between the Parties. Except as set forth in Section 30.3 below, this Agreement shall not be amended or otherwise modified or changed except by written instrument executed by the Parties’ duly authorized representatives.

30.3 Notwithstanding anything herein to the contrary, each Schedule hereto may be amended by email exchange between the Parties confirming such amendment and such email exchange shall constitute a written agreement between the Parties with respect to such amendment. In addition, to better effectuate the foregoing amendment mechanism, the Parties may implement a standard form of email exchange for such purposes.

30.4 No promise, representation or inducement has been made by any Party that is not embodied in this Agreement or the other Transaction Documents, and neither Party shall be bound by or liable for any alleged representation, promise or inducement not so set forth.

30.5 Time is of the essence with respect to all aspects of each Party’s performance of any obligations under this Agreement.

30.6 Nothing expressed or implied in this Agreement is intended to create any rights, obligations or benefits under this Agreement in any Person other than the Parties and their successors and permitted assigns.

30.7 All audit rights, payment, confidentiality and indemnification obligations and obligations under this Agreement shall survive for the time periods specified herein.

30.8 This Agreement may be executed by the Parties in separate counterparts and initially delivered by facsimile transmission or otherwise, with original signature pages to follow, and all such counterparts shall together constitute one and the same instrument

30.9 The words “executed”, “execution”, “signed”, “signature”, “delivery” and words of like import in or relating to this Agreement and the other Transaction Documents and the transactions

102

contemplated hereby and thereby shall be deemed to include Electronic Signatures, deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

30.10 All transactions hereunder are entered into in reliance on the fact that this Agreement and all such transactions constitute a single, integrated agreement between the Parties, and the Parties would not have otherwise entered into any other transactions hereunder.

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, each Party hereto has caused this Agreement to be executed by its duly authorized representative as of the date first above written.

J. ARON & COMPANY LLC

By: /s/ Simon Collier

Name: Simon Collier

Title: Attorney-in-fact

LION OIL COMPANY

By: /s/ Frederec Green

Name: Frederec Green

Title: Executive Vice President

By: /s/ Regina Jones

Name: Regina Jones

Title: Executive Vice President

103

LION OIL TRADING & TRANSPORTATION, LLC

By: /s/ Frederec Green

Name: Frederec Green

Title: Executive Vice President

By: /s/ Regina Jones

Name: Regina Jones

Title: Executive Vice President

Exhibit 10.10

THIRD AMENDED AND RESTATED

SUPPLY AND OFFTAKE AGREEMENT

dated as of April 7, 2020

between

J. ARON & COMPANY LLC

and

ALON USA, LP

TABLE OF CONTENTS

Page

ARTICLE 1 DEFINITIONS AND CONSTRUCTION 1

ARTICLE 2 CONDITIONS PRECEDENT 24

ARTICLE 3 TERM OF AGREEMENT 27

ARTICLE 4 COMMENCEMENT DATE TRANSFER 28

ARTICLE 5 PURCHASE AND SALE OF CRUDE OIL 28

ARTICLE 6 PURCHASE VALUE FOR CRUDE OIL 40

ARTICLE 7 TARGET INVENTORY LEVELS AND WORKING CAPITAL ADJUSTMENT 42

ARTICLE 8 PURCHASE AND DELIVERY OF PRODUCTS 47

ARTICLE 9 ANCILLARY COSTS; MONTH END INVENTORY; CERTAIN DISPOSITIONS; TANK MAINTENANCE 50

ARTICLE 10 PAYMENT PROVISIONS 52

ARTICLE 11 INDEPENDENT INSPECTORS; STANDARDS OF MEASUREMENT 58

ARTICLE 12 FINANCIAL INFORMATION; CREDIT SUPPORT; AND ADEQUATE ASSURANCES 59

ARTICLE 13 REFINERY TURNAROUND, MAINTENANCE AND CLOSURE 62

ARTICLE 14 TAXES 64

ARTICLE 15 INSURANCE 65

ARTICLE 16 FORCE MAJEURE 67

ARTICLE 17 REPRESENTATIONS, WARRANTIES AND COVENANTS 69

ARTICLE 18 DEFAULT AND TERMINATION 74

ARTICLE 19 SETTLEMENT AT TERMINATION 82

ARTICLE 20 INDEMNIFICATION 86

ARTICLE 21 LIMITATION ON DAMAGES 88

ARTICLE 22 AUDIT AND INSPECTION 88

ARTICLE 23 CONFIDENTIALITY 88

ARTICLE 24 GOVERNING LAW 89

ARTICLE 25 ASSIGNMENT 90

ARTICLE 26 NOTICES 90

ARTICLE 27 NO WAIVER, CUMULATIVE REMEDIES 90

ARTICLE 28 NATURE OF THE TRANSACTION AND RELATIONSHIP OF PARTIES 91

ARTICLE 29 MISCELLANEOUS 91

-i-

Schedules



Schedule	Description
Schedule A	Products and Product Specifications
Schedule B	Pricing Values
Schedule C	Monthly True-up Amounts
Schedule D	Operational Volume Range
Schedule E	Tank List
Schedule F	Existing Financing Agreements
Schedule G	Invoice Schedule
Schedule H	Form of Inventory Reports
Schedule I	Initial Inventory Targets
Schedule J	Scheduling and Communications Protocol
Schedule K	Monthly Excluded Transaction Fee Determination
Schedule L	Monthly Working Capital Adjustment
Schedule M	Notices
Schedule N	FIFO Balance Final Settlements
Schedule O	Form of Run-out Report
Schedule P	Pricing Group
Schedule Q	Form of Trade Sheet
Schedule R	Step-Out Inventory Sales Agreement
Schedule S	Form of Refinery Production Volume Report
Schedule T	Excluded Transaction Trade Sheet
Schedule U	Holdback Schedule
Schedule V	Available Storage or Transportation Arrangements
Schedule W	[Reserved]

-ii-



Schedule	Description
Schedule X	Pipeline Systems (Included Pipelines)
Schedule Z	Orla to El Paso/ El Paso Inventory Description
Schedule AA	Pledge and Security Agreement
Schedule BB	[Reserved]
Schedule CC	[Reserved]
Schedule DD	[Reserved]
Schedule EE	[Reserved]
Schedule GG	Periodic Price Adjustments
Schedule HH	Transition Adjustment Period Provisions

-iii-

THIRD AMENDED AND RESTATED SUPPLY AND OFFTAKE AGREEMENT

This Third Amended and Restated Supply and Offtake Agreement (this “Agreement”) is made as of April 7, 2020 (the “Third Restatement Effective Date”), between J. Aron & Company LLC (“Aron”), a limited liability company organized under the laws of New York (formerly known as J. Aron & Company, a general partnership organized under the laws of New York) and located at 200 West Street, New York, New York 10282-2198, and Alon USA, LP (the “Company”), a limited partnership organized under the laws of Texas located at 12700 Park Central Dr., Suite 1600, Dallas, Texas 75251 (each referred to individually as a “Party” or collectively as the “Parties”).

WHEREAS, the Company is the exclusive lessee and operator of a crude oil refinery located in Big Spring, Texas, together with other real and personal property related thereto (the “Refinery”) as described in the Master Lease Agreement (as defined below);

WHEREAS, Aron and Alon Refining Krotz Springs, Inc. (“ARKS”) have entered into that Inventory Sales Agreement dated as of the Commencement Date which provides, subject to the conditions therein, for ARKS to sell to Aron and Aron to buy from ARKS all crude oil and petroleum products held by ARKS at the Included Locations (as defined below) on the Closing Date (as defined below);

WHEREAS, the Company and Aron are parties to an Amended and Restated Supply and Offtake Agreement, (the “First Restated Agreement”) dated as of March 1, 2011, pursuant to which Aron agreed to deliver crude oil and other petroleum feedstocks to the Company for use at such Refinery and purchase all refined products produced by the Refinery (other than certain excluded products);