OPTION AGREEMENT

     THIS OPTION AGREEMENT (?Agreement?) is entered into as of January 31, 2008, and is by and among Holly Corporation, a Delaware corporation (?Holly?), Holly UNEV Pipeline Company, a Delaware corporation (?Holly UNEV?), Navajo Pipeline Co., L.P., a Delaware limited partnership, Holly Logistic Services, L.L.C., a Delaware limited liability company (?Holly GP?), HEP Logistics Holdings, L.P., a Delaware limited partnership (the ?General Partner?), Holly Energy Partners, L.P., a Delaware limited partnership (the ?Partnership?), HEP Logistics GP, L.L.C., a Delaware limited liability company (the ?OLP GP?), and Holly Energy Partners?Operating, L.P., a Delaware limited partnership (?HEP-Operating?). The above-named entities are sometimes referred to in this Agreement each as a ?Party? and collectively as the ?Parties.?

R E C I T A L S:

     1. Certain of the Parties are also parties to the Omnibus Agreement entered into as of July 13, 2004, as amended as of the date hereof (the ?Omnibus Agreement?).

     2. The Omnibus Agreement restricts the Holly Entities from engaging in any Restricted Business (as such term is defined in the Omnibus Agreement) to the extent provided in Article II thereof.

     3. Holly has entered into a Memorandum of Understanding dated June 26, 2007 with Sinclair Transportation Company (?Sinclair?) relating to the facilities and services required to initially transport 62,000 barrels per day of refined petroleum products from Salt Lake City, Utah to Las Vegas, Nevada, including a 12-inch diameter or greater pipeline with an ANSI 600# pressure rating and a length of approximately 400 miles, along with terminals in or near the Cedar City area of Southern Utah and Las Vegas, Nevada (the ?UNEV Project?).

     4. The Parties desire by their execution of this Agreement to evidence their agreement that the provisions of Article II of the Omnibus Agreement shall not apply to the UNEV Project and are hereby waived to such extent and in lieu thereof HEP-Operating shall have an option to purchase the Holly UNEV Interests on the terms and conditions set forth herein.

     5. The Parties desire that the exercise price for the option shall be determined based on the principle that HEP-Operating shall acquire the Holly UNEV Interests in exchange for a cash payment equal to the Option Purchase Price.

     In consideration of the premises and the covenants, conditions, and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto hereby agree as follows:

ARTICLE I
The Option

     1.1 Grant of Option. Subject to the terms and conditions hereof, Holly UNEV hereby grants to HEP-Operating an irrevocable option (the ?Option?) to purchase all of the Holly UNEV Interests in the manner set forth below at a purchase price equal to the Option Purchase Price plus or minus the Closing Adjustment Amount payable in immediately available funds; provided, however, that at the election of Holly UNEV made at any time prior to 5:00 p.m. Central time on the third business day prior to the Closing (as defined below), up to five percent of the Option Purchase Price shall be payable in Common Units valued based on the average closing price for the five trading days ending on the date immediately prior to the Closing (as defined below).

     1.2 Exercise of Option. The Option may be exercised by HEP-Operating, in whole but not in part, at any time after the Project Completion Date and on or before 5:00 p.m., Central time, on the Expiration Date. In order to exercise the Option, HEP-Operating must send a written notice (an ?Exercise Notice?) to Holly UNEV. Unless otherwise mutually agreed in writing by HEP-Operating and Holly UNEV, the closing (the ?Closing?) of the exercise of the Option will take place on the first day of the month following the month in which the Exercise Notice is delivered (the ?Closing Date?); provided, however, that if there are less than five business days from the date the Exercise Notice is delivered until the first day of the month following the month in which the Exercise Notice is delivered, the Closing Date shall be the first day of the month that is the second month following the month in which the Exercise Notice is delivered. Upon receipt of an Exercise Notice, Holly UNEV will be obligated to deliver the Holly UNEV Interests in accordance with Section 1.3 of this Agreement, HEP-Operating will be obligated to deliver the Option Purchase Price on the Closing Date (or if the Closing Date falls on a day that is not a business day, the business day immediately prior to the Closing Date) and HEP-Operating or Holly UNEV will be obligated to deliver the Closing Adjustment Amount in accordance with Section 1.6 if such amount is positive or negative, respectively. The Closing shall occur at the offices of Vinson & Elkins L.L.P., 3700 Trammell Crow Center, 2001 Ross Avenue, Dallas, Texas, unless another place is mutually agreed to in writing by HEP-Operating and Holly UNEV.

     1.3 Actions on the Closing Date. On the Closing Date, Holly UNEV shall cause the Holly UNEV Interests to be transferred to HEP-Operating free and clear of all liens, claims, encumbrances and security interests of any nature whatsoever against delivery of the Option Purchase Price in immediately available funds.

     1.4 Operations Amount Estimates. Holly UNEV shall (1) no later than five business days after the delivery of the Exercise Notice or the Termination Option Exercise Notice, deliver to HEP-Operating an estimated income statement and balance sheet of UNEV Pipeline for the period commencing on the Project Completion Date through 11:59 p.m. on the date immediately prior to the Closing Date or Termination Option Closing (either such time, the ?Effective Time?) and as of the Effective Time, respectively, together with a certificate containing a good faith estimate of the Operations Amount calculated from such estimated income statement and balance sheet, and (2) no earlier than two days prior to the Closing or the Termination Option Closing, deliver to HEP-Operating an estimated income statement and balance sheet of UNEV