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2005 Incentive Compensation Plan

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Sectors: Utilities
Governing Law: Delaware, View Delaware State Laws
Effective Date: July 06, 2005
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Exhibit 10.2 ALON USA ENERGY, INC.
2005 INCENTIVE COMPENSATION PLAN


ALON USA ENERGY, INC.
2005 INCENTIVE COMPENSATION PLAN SECTION PAGE 1. Purpose 1 2. Term 1 3. Definitions 1 4. Shares Available Under Plan 5 5. Limitations on Awards 5 6. Stock Options 6 7. Appreciation Rights 7 8. Restricted Shares 9 9. Restricted Stock Units 10 10. Performance Shares and Performance Units 10 11. Senior Executive Plan Bonuses 11 12. Awards to Eligible Directors 12 13. Transferability 13 14. Adjustments 13 15. Fractional Shares 14 16. Withholding Taxes 14 17. Administration of the Plan 14 18. Amendments and Other Matters 15 19. Governing Law 16


ALON USA ENERGY, INC.
2005 INCENTIVE COMPENSATION PLAN Alon USA Energy, Inc., a Delaware corporation (the " Company" ), establishes the Alon USA Energy, Inc. 2005 Incentive Compensation Plan (the " Plan" ), effective as of July 6, 2005, subject to stockholder approval. 1. Purpose . The purpose of the Plan is to attract and retain the best available talent and encourage the highest level of performance by directors, executive officers and selected employees, and to provide them incentives to put forth maximum efforts for the success of the Company' s business, in order to serve the best interests of the Company and its stockholders. 2. Term . The Plan will expire on the tenth anniversary of the date on which it is approved by the stockholders of the Company. No further Awards will be made under the Plan on or after such tenth anniversary. Awards that are outstanding on the date the Plan terminates will remain in effect according to their terms and the provisions of the Plan. 3. Definitions . The following terms, when used in the Plan with initial capital letters, will have the following meanings: (a) Appreciation Right means a right granted pursuant to Section 7. (b) Award means the award of a Senior Executive Plan Bonus; the grant of Appreciation Rights, Stock Options, Performance Shares, Performance Units or Restricted Stock Units; or the grant or sale of Restricted Shares. (c) Board means the Board of Directors of the Company. (d) Code means the Internal Revenue Code of 1986, as in effect from time to time. (e) Committee means: (i) with respect to any matter arising under the Plan that relates to a Participant who is subject to Section 16 of the Exchange Act, the Incentive Compensation Plan Committee appointed by the Board, which committee at all times will consist of two or more members of the Board, all of whom are intended (A) to meet all applicable independence requirements of the New York Stock Exchange or the principal national securities exchange or principal market on or in which the Common Stock is traded and (B) to qualify as " non-employee directors" as defined in Rule 16b-3 and as " outside directors" as defined in regulations adopted under Section 162(m) of the Code, as such terms may be amended from time to time, provided, however, that the failure of a member of the Committee to so qualify will not invalidate any Award granted to such Participant under the Plan;


(ii) with respect to any matter arising under the Plan that relates to any other Participant, the Compensation Committee of the Board; and (iii) to the extent the administration of the Plan has been assumed by the Board pursuant to Section 17, the Board. (f) Common Stock means the common stock, par value $.01 per share, of the Company or any security into which such Common Stock may be changed by reason of any transaction or event of the type described in Section 14. (g) Date of Grant means the date specified by the Committee on which an Award will become effective. (h) Deferral Period means the period of time during which Restricted Stock Units are subject to deferral limitations under Section 9. (i) Eligible Director means a member of the Board who is not (i) an employee of the Company or any Subsidiary or (ii) an officer, director or employee of (A) Alon Israel Oil Company or any of its affiliates other than the Company or any Subsidiary; (B) Africa Israel Investments Ltd. or any of its affiliates; (C) Bielsol Investments (1987) Ltd. or any of its affiliates; or (D) Kibbutz Movement or any of its affiliates. (j) Evidence of Award means an agreement, certificate, resolution or other type or form of writing or other evidence approved by the Committee which sets forth the terms and conditions of an Award. An Evidence of Award may be in any electronic medium, may be limited to a notation on the books and records of the Company and need not be signed by a representative of the Company or a Participant. (k) Exchange Act means the Securities Exchange Act of 1934, as amended. (l) Grant Price means the price per share of Common Stock at which an Appreciation Right is granted. (m) Management Objectives means the measurable performance objectives, if any, established by the Committee for a Performance Period that are to be achieved with respect to an Award. Management Objectives may be described in terms of company-wide objectives ( i.e., the performance of the Company and all of its Subsidiaries) or in terms of objectives that are related to the performance of the individual Participant or of the division, Subsidiary, department, region or function within the Company or a Subsidiary in which the Participant receiving the Award is employed or on which the Participant' s efforts have the most influence. The achievement of the Management Objectives established by the Committee for any Performance Period will be determined without regard to any change in accounting standards by the Financial Accounting Standards Board or any successor entity.

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The Management Objectives applicable to any Award to a Participant who is, or is determined by the Committee to be likely to become, a " covered employee" within the meaning of Section 162(m) of the Code (or any successor provision) will be limited to specified levels of, growth in, or performance relative to peer company performance in, one or more of the following performance measures (excluding the effect of extraordinary or nonrecurring items unless the Committee specifically includes any such extraordinary or nonrecurring item at the time such Award is granted): (i) profitability measures; (ii) revenue, sales and same store sales measures; (iii) business unit performance; (iv) leverage measures; (v) stockholder return; (vi) expense management; (vii) asset and liability measures; (viii) individual performance; (ix) supply chain efficiency; (x) customer satisfaction; (xi) productivity measures; (xii) cash flow measures; (xiii) return measures; and (xiv) product development and/or performance If the Committee determines that, as a result of a change in the business, operations, corporate structure or capital structure of the Company, or the manner in which the Company conducts its business, or any other events or circumstances, the Management Objectives are no longer suitable, the Committee may in its discretion modify such Management Objectives or the related minimum acceptable level of achievement, in whole or in part, with respect to a Performance Period as the Committee deems appropriate and equitable. (n) Market Value per Share means, at any date, the closing sale price of the Common Stock on that date (or, if there are no sales on that date, the last preceding date on which there was a sale) on the principal national securities exchange or in the principal market on or in which the Common Stock is traded.

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(o) Option Price means the purchase price per share payable on exercise of a Stock Option. (p) Participant means a person who is selected by the Committee to receive an Award under the Plan and who at that time is an executive officer or other key employee of the Company or any Subsidiary, or who at that time is an Eligible Director, provided that an Eligible Director shall be a Participant only for purposes of Awards of Restricted Shares. (q) Performance Share means a bookkeeping entry that records the equivalent of one share of Common Stock awarded pursuant to Section 10. (r) Performance Period means, with respect to an Award, a period of time within which the Management Objectives relating to such Award are to be measured. The Performance Period for a Senior Executive Plan Bonus will be the fiscal year of the Company, and, unless otherwise expressly provided in the Plan, the Performance Period for all other Awards will be established by the Committee at the time of the Award. (s) Performance Unit means a unit equivalent to $1.00 (or such other value as the Committee determines) granted pursuant to Section 10. (t) Restricted Shares means shares of Common Stock granted or sold pursuant to Section 8 as to which neither the ownership restrictions nor the restrictions on transfer have expired. (u) Restricted Stock Units means an Award pursuant to Section 9 of the right to receive shares of Common Stock at the end of a specified Deferral Period. (v) Rule 16b-3 means Rule 16b-3 under Section 16 of the Exchange Act as amended (or any successor rule to the same effect), as in effect from time to time. (w) Senior Executive Plan Bonus means an Award of annual incentive compensation made pursuant to and subject to the conditions set forth in Section 11. (x) Spread means the excess of the Market Value per Share on the date an Appreciation Right is exercised over (i) the Option Price provided for in the Stock Option granted in tandem with the Appreciation Right or (ii) if there is no tandem Stock Option, the Grant Price provided for in the Appreciation Right, in either case multiplied by the number of shares of Common Stock in respect of which the Appreciation Right is exercised. (y) Stock Option means the right to purchase shares of Common Stock upon exercise of an option granted pursuant to Section 6. (z) Subsidiary means (i) any corporation of which at least 50% of the combined voting power of the then outstanding shares of Voting Stock is owned

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directly or indirectly by the Company, (ii) any partnership of which at least 50% of the profits interest or capital interest is owned directly or indirectly by the Company and (iii) any other entity of which at least 50% of the total equity interest is owned directly or indirectly by the Company. (aa) Voting Stock means the securities entitled to vote generally in the election of directors or persons who serve similar functions. 4. Shares Available Under Plan . The aggregate number of shares of Common Stock that may be (i) subject to an Award of Appreciation Rights or Stock Options or (ii) issued or transferred as Restricted Shares and released from all restrictions or in payment of Performance Shares, Performance Units, Restricted Stock Units or Senior Executive Plan Bonuses will not exceed in the aggregate 2,200,000 shares. Such shares may be shares of original issuance or treasury shares or a combination of the foregoing. The number of shares of Common Stock available under this Section 4 will be subject to adjustment as provided in Section 14 and will be further adjusted to include shares that relate to Awards that expire or are forfeited. The number of shares of Common Stock available under this Section 4 will not be adjusted to include (i) any shares withheld by, or tendered to, the Company in payment of the Option Price with respect to a Stock Option or in satisfaction of the taxes required to be withheld in connection with any Award granted under the Plan or (ii) any shares subject to an Appreciation Right that are not transferred to a Participant upon exercise of the Appreciation Right. 5. Limitations on Awards . Awards under the Plan will be subject to the following limitations: (a) No more than 2,200,000 shares of Common Stock, subject to adjustment as provided in Section 4, may be subject to an Award of Stock Options that are intended to qualify as incentive stock options under Section 422 of the Code. (b) The maximum number of shares of Common Stock that: (i) may be subject to Stock Options or Appreciation Rights granted to a Participant during any calendar year will not exceed 100,000 shares plus an additional 100,000 shares with respect to Stock Options or Appreciation Rights granted a Participant who has not previously been employed by the Company or any Subsidiary and (ii) may be granted to a Participant during any calendar year as Performance Shares, Restricted Shares or Restricted Stock Units may not exceed 50,000 shares plus an additional 50,000 shares with respect to Performance Shares, Restricted Shares or Restricted Stock Units granted a Participant who has not previously been employed by the Company or any Subsidiary. The limitations set forth in this Section 5(b) will apply without regard to whether the applicable Award is settled in cash or in shares of Common Stock.

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(c) The maximum aggregate cash value of payments to any Participant for any Performance Period pursuant to an award of Performance Units will not exceed $1 million. (d) The payment of a Senior Executive Plan Bonus to any Participant will not exceed $1 million. 6. Stock Options . The Committee may from time to time authorize grants of options to any Participant to purchase shares of Common Stock upon such terms and conditions as it may determine in accordance with this Section 6. Each Participant who is a key employee of the Company or any Subsidiary will be eligible to receive a grant of Stock Options that are intended to qualify as incentive stock options within the meaning of Section 422 of the Code. Each grant of Stock Options may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions: (a) Each grant will specify the numb
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