Document:

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                                                                    EXHIBIT 10.7

                                                                  Execution Copy

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                                OMNIBUS AGREEMENT

                                      among

                                HOLLY CORPORATION

                            NAVAJO PIPELINE CO., L.P.

                         HOLLY LOGISTIC SERVICES, L.L.C.

                          HEP LOGISTICS HOLDINGS, L.P.

                           HOLLY ENERGY PARTNERS, L.P.

                            HEP LOGISTICS GP, L.L.C.

                                       and

                           HEP OPERATING COMPANY, L.P.

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                                OMNIBUS AGREEMENT

         THIS OMNIBUS AGREEMENT ("Agreement") is entered into on, and effective
as of, the Closing Date (as defined herein), and is by and among Holly
Corporation, a Delaware corporation ("Holly"), Navajo Pipeline Co., L.P., a
Delaware limited partnership ("Navajo Pipeline"), 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
HEP Operating Company, L.P., a Delaware limited partnership (the "Operating
Partnership"). 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.       The Parties desire by their execution of this Agreement to
evidence their agreement, as more fully set forth in Article II, with respect to
those business opportunities that the Holly Entities (as defined herein) and
Holly GP will not engage in during the term of this Agreement unless the
Partnership has declined to engage in any such business opportunity for its own
account.

         2.       The Parties desire by their execution of this Agreement to
evidence their agreement, as more fully set forth in Article III, with respect
to certain indemnification obligations of the Parties to each other.

         3.       The Parties desire by their execution of this Agreement to
evidence their agreement, as more fully set forth in Article IV, with respect to
the amount to be paid by the Partnership for the general and administrative
services to be performed by Holly and its Affiliates (as defined herein) for and
on behalf of the Partnership Group (as defined herein).

         4.       The Parties desire by their execution of this Agreement to
evidence their agreement, as more fully set forth in Article V, with respect to
the Partnership Group's option to purchase the Intermediate Pipelines (as
defined herein).

         5.       The Parties desire by their execution of this Agreement to
evidence their agreement, as more fully set forth in Article VI, with respect to
Holly's right of first refusal relating to the Assets (as defined herein).

         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:

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                                    ARTICLE I
                                   DEFINITIONS

                  1.1      DEFINITIONS.

                           As used in this Agreement, the following terms shall
         have the respective meanings set forth below:

                  "Acquisition Proposal" is defined in Section 6.2(a).

                  "Administrative Fee" is defined in Section 4.1(a).

                  "Affiliate" is defined in the Partnership Agreement.

                  "Assets" means all assets conveyed, contributed, or otherwise
         transferred by the Holly Entities to the Partnership Group prior to or
         on the Closing Date and any assets acquired by the Partnership Group
         pursuant to the exercise of the purchase option granted under Article
         V, including any such assets held by a Person whose ownership interests
         are transferred by the Holly Entities to the Partnership Group prior to
         or on the Closing Date by means of operation of law or otherwise.

                  "Change of Control" means, with respect to any Person (the
         "Applicable Person"), any of the following events: (a) any sale, lease,
         exchange, or other transfer (in one transaction or a series of related
         transactions) of all or substantially all of the Applicable Person's
         assets to any other Person unless immediately following such sale,
         lease, exchange, or other transfer such assets are owned, directly or
         indirectly, by the Applicable Person; (b) the consolidation or merger
         of the Applicable Person with or into another Person pursuant to a
         transaction in which the outstanding Voting Securities of the
         Applicable Person are changed into or exchanged for cash, securities,
         or other property, other than any such transaction where (i) the
         outstanding Voting Securities of the Applicable Person are changed into
         or exchanged for Voting Securities of the surviving Person or its
         parent and (ii) the holders of the Voting Securities of the Applicable
         Person immediately prior to such transaction own, directly or
         indirectly, not less than a majority of the Voting Securities of the
         surviving Person or its parent immediately after such transaction; and
         (c) a "person" or "group" (within the meaning of Sections 13(d) or
         14(d)(2) of the Exchange Act) (in the case of Holly, other than a group
         consisting of some of all of the current control persons of Holly),
         being or becoming the "beneficial owner" (as defined in Rules 13d-3 and
         13d-5 under the Exchange Act) of more than 50% of all of the then
         outstanding Voting Securities of the Applicable Person, except in a
         merger or consolidation that would not constitute a Change of Control
         under clause (b) above.

                  "Closing Date" means the date of the closing of the
         Partnership's initial public offering of Common Units. For purposes of
         Article III, Closing Date shall mean, with respect to the Intermediate
         Pipelines, the closing date of the purchase of the Intermediate
         Pipelines by a Partnership Group Member pursuant to the option granted
         pursuant to Section 5.1.

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                  "Common Units" is defined in the Partnership Agreement.

                  "Conflicts Committee" is defined in the Partnership Agreement.

                  "Contribution Agreement" means that certain Contribution,
         Conveyance and Assumption Agreement, dated as of the Closing Date,
         among Holly, Navajo Pipeline, Holly GP, the General Partner, the
         Partnership, the OLP GP, the Operating Partnership and certain other
         parties, together with the additional conveyance documents and
         instruments contemplated or referenced thereunder.

                  "control" means the possession, directly or indirectly, of the
         power to direct or cause the direction of the management and policies
         of a Person, whether through ownership of voting securities, by
         contract, or otherwise.

                  "Covered Environmental Losses" is defined in Section 3.1.

                  "Disposition Notice" is defined in Section 6.2(a).

                  "Environmental Laws" means all federal, state, and local laws,
         statutes, rules, regulations, orders, and ordinances, now or hereafter
         in effect, relating to protection of the environment including, without
         limitation, the federal Comprehensive Environmental Response,
         Compensation, and Liability Act, the Superfund Amendments
         Reauthorization Act, the Resource Conservation and Recovery Act, the
         Clean Air Act, the Federal Water Pollution Control Act, the Toxic
         Substances Control Act, the Oil Pollution Act, the Safe Drinking Water
         Act, the Hazardous Materials Transportation Act, and other
         environmental conservation and protection laws, each as amended from
         time to time.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
         amended.

                  "First ROFR Acceptance Deadline" is defined in Section 6.2(a).

                  "General Partner" is defined in the introduction to this
         Agreement.

                  "Hazardous Substance" means (a) any substance that is
         designated, defined, or classified as a hazardous waste, hazardous
         material, pollutant, contaminant, or toxic or hazardous substance, or
         that is otherwise regulated under any Environmental Law, including,
         without limitation, any hazardous substance as defined under the
         Comprehensive Environmental Response, Compensation, and Liability Act,
         and (b) petroleum, crude oil, gasoline, natural gas, fuel oil, motor
         oil, waste oil, diesel fuel, jet fuel, and other refined petroleum
         hydrocarbons.

                  "Holly Entities" means Holly and any Person controlled,
         directly or indirectly, by Holly other than the Partnership Entities;
         and "Holly Entity" means any of the Holly Entities.

                  "Indemnified Party" means the Partnership Group or Holly, as
         the case may be, in their capacity as the parties entitled to
         indemnification in accordance with Article III.

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                  "Indemnifying Party" means either the Partnership Group or
         Holly, as the case may be, in their capacity as the parties from whom
         indemnification may be required in accordance with Article III.

                  "Intermediate Pipelines" means the 8-inch pipeline running
         from Lovington, New Mexico to Artesia, New Mexico and the 10-inch
         pipeline running from Lovington, New Mexico to Artesia, New Mexico,
         each owned by Navajo Pipeline.

                  "Limited Partner" is defined in the Partnership Agreement.

                  "Offer" is defined in Section 2.3(a).

                  "Offer Price" is defined in Section 6.2(a).

                  "Partnership Agreement" means the First Amended and Restated
         Agreement of Limited Partnership of Holly Energy Partners, L.P., dated
         as of the Closing Date, as such agreement is in effect on the Closing
         Date, to which reference is hereby made for all purposes of this
         Agreement. No amendment or modification to the Partnership Agreement
         subsequent to the Closing Date shall be given effect for the purposes
         of this Agreement unless consented to by each of the Parties to this
         Agreement.

                  "Partnership Entities" means Holly GP, the General Partner and
         each member of the Partnership Group.

                  "Partnership Entity" means any of the Partnership Entities.

                  "Partnership Group" means the Partnership, the OLP GP, the
         Operating Partnership and any Subsidiary of any such Person, treated as
         a single consolidated entity.

                  "Partnership Group Member" means any member of the Partnership
         Group.

                  "Party" and "Parties" are defined in the introduction to this
         Agreement.

                  "Person" means an individual or a corporation, limited
         liability company, partnership, joint venture, trust, unincorporated
         organization, association, government agency or political subdivision
         thereof or other entity.

                  "Proposed Transferee" is defined in Section 6.2(a).

                  "Prudent Industry Practice" means such practices, methods,
         acts, techniques, and standards as are in effect at the time in
         question that are consistent with (a) the standards generally followed
         by the United States pipeline and terminalling industries or (b) such
         higher standards as may be applied or followed by the Holly Entities in
         the performance of similar tasks or projects, or by the Partnership
         Entities in the performance of similar tasks or projects.

                  "Restricted Businesses" is defined in Section 2.1.

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                  "Retained Assets" means the pipelines, terminals and other
         assets and investments owned by any of the Holly Entities that were not
         conveyed, contributed or otherwise transferred to the Partnership Group
         pursuant to the Contribution Agreement, including, without limitation,
         the Intermediate Pipelines.

                  "ROFR Acceptance Deadline" means the First ROFR Acceptance
         Deadline or the Second ROFR Acceptance Deadline, as applicable.

                  "Sale Assets" is defined in Section 6.2(a).

                  "Second ROFR Acceptance Deadline" is defined in Section
         6.2(a).

                  "Subject Assets" is defined in Section 2.2(d).

                  "Subsidiary" means, with respect to any Person, (a) a
         corporation of which more than 50% of the voting power of shares
         entitled (without regard to the occurrence of any contingency) to vote
         in the election of directors or other governing body of such
         corporation is owned, directly or indirectly, at the date of
         determination, by such Person, by one or more Subsidiaries of such
         Person or a combination thereof, (b) a partnership (whether general or
         limited) in which such Person or a Subsidiary of such Person is, at the
         date of determination, a general or limited partner of such
         partnership, but only if more than 50% of the partnership interests of
         such partnership (considering all of the partnership interests of the
         partnership as a single class) is owned, directly or indirectly, at the
         date of determination, by such Person, by one or more Subsidiaries of
         such Person, or a combination thereof, or (c) any other Person (other
         than a corporation or a partnership) in which such Person, one or more
         Subsidiaries of such Person, or a combination thereof, directly or
         indirectly, at the date of determination, has (i) at least a majority
         ownership interest or (ii) the power to elect or direct the election of
         a majority of the directors or other governing body of such Person.

                  "Toxic Tort" means a claim or cause of action arising from
         personal injury or property damage incurred by the plaintiff that is
         alleged to have been caused by exposure to, or contamination by,
         Hazardous Substances that have been released into the environment by or
         as a result of the actions or omissions of the defendant.

                  "Transfer" including the correlative terms "Transferring" or
         "Transferred" means any direct or indirect transfer, assignment, sale,
         gift, pledge, hypothecation or other encumbrance, or any other
         disposition (whether voluntary, involuntary or by operation of law) of
         the Assets.

                  "Units" is defined in the Partnership Agreement.

                  "Voting Securities" means securities of any class of a Person
         entitling the holders thereof to vote on a regular basis in the
         election of members of the board of directors or other governing body
         of such Person.

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                                   ARTICLE II
                             BUSINESS OPPORTUNITIES

                  2.1      RESTRICTED BUSINESSES. For so long as a Holly Entity
controls the Partnership, and except as permitted by Section 2.2, Holly GP and
each of the Holly Entities shall be prohibited from engaging in or acquiring or
investing in any business having assets engaged in the following businesses (the
"Restricted Businesses"): the ownership and/or operation of crude oil pipelines
or terminals, intermediate product pipelines or terminals, refined products
pipelines or terminals, truck racks or crude oil gathering systems in the
continental United States.

                  2.2      PERMITTED EXCEPTIONS. Notwithstanding any provision
of Section 2.1 to the contrary, Holly GP and the Holly Entities may engage in
the following activities under the following circumstances:

                           (a)      the ownership and/or operation of any of the
         Retained Assets (including replacements of the Retained Assets);

                           (b)      the ownership and/or operation of any crude
         oil pipeline or gathering system, acquired or constructed by a Holly
         Entity or Holly GP after the Closing Date that is physically
         inter-connected to a refinery of a Holly Entity or Holly GP;

                           (c)      any Restricted Business conducted by a Holly
         Entity or Holly GP with the approval of the Conflicts Committee;

                           (d)      the ownership and/or operation of any asset
         or group of related assets used in the activities described in Section
         2.1 that are acquired or constructed by a Holly Entity or Holly GP
         after the Closing Date (the "Subject Assets") if, in the case of an
         acquisition, the fair market value of the Subject Assets (as determined
         in good faith by the Board of Directors of Holly), or, in the case of
         construction, the estimated construction cost of the Subject Assets (as
         determined in good faith by the Board of Directors of Holly), is less
         than $5 million at the time of such acquisition or completion of
         construction, as the case may be;

                           (e)      the ownership and/or operation of any
         Subject Assets acquired by a Holly Entity or Holly GP after the Closing
         Date with a fair market value (as determined in good faith by the Board
         of Directors of Holly) equal to or greater than $5 million at the time
         of the acquisition; provided, the Partnership has been offered the
         opportunity to purchase the Subject Assets in accordance with Section
         2.3 and the Partnership (with the concurrence of the Conflicts
         Committee) has elected not to purchase the Subject Assets; and

                           (f)      the ownership and/or operation of any
         Subject Assets constructed by a Holly Entity or Holly GP after the
         Closing Date with a construction cost (as determined in good faith by
         the Board of Directors of Holly) equal to or greater than $5 million at
         the time of completion of construction that the Partnership has been
         offered the opportunity to purchase in accordance with Section 2.3 and
         the Partnership (with the concurrence of the Conflicts Committee) has
         elected not to purchase.

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                  2.3      PROCEDURES.

                           (a)      In the event that Holly GP or a Holly Entity
         becomes aware of an opportunity to acquire Subject Assets with a fair
         market value (as determined in good faith by the Board of Directors of
         Holly) equal to or greater than $5 million, then subject to Section
         2.3(b), then as soon as practicable, Holly GP or such Holly Entity
         shall notify the General Partner of such opportunity and deliver to the
         General Partner all information prepared by or on behalf of Holly GP or
         such Holly Entity relating to such potential transaction. As soon as
         practicable but in any event within 30 days after receipt of such
         notification and information, the General Partner, on behalf of the
         Partnership, shall notify Holly GP or the Holly Entity that either (i)
         the General Partner, on behalf of the Partnership, has elected, with
         the concurrence of the Conflicts Committee, not to cause a member of
         the Partnership Group to pursue the opportunity to purchase the Subject
         Assets, or (ii) the General Partner, on behalf of the Partnership, has
         elected (with the concurrence of the Conflicts Committee) to cause a
         member of the Partnership Group to pursue the opportunity to purchase
         the Subject Assets. If, at any time, the General Partner abandons such
         opportunity with the approval of the Conflicts Committee (as evidenced
         in writing by the General Partner following the request of Holly GP or
         the Holly Entity), Holly GP or the Holly Entity may pursue such
         opportunity. Any Subject Assets which are permitted to be acquired by
         Holly GP or a Holly Entity must be so acquired (i) within 12 months of
         the later to occur of (A) the date that Holly GP or the Holly Entity
         becomes able to pursue such acquisition in accordance with the
         provisions of this Section 2.3(a), and (B) the date upon which all
         required governmental approvals to consummate such acquisition have
         been obtained, and (ii) on terms not materially more favorable to Holly
         GP or the Holly Entity than were offered to the Partnership. If either
         of these conditions are not satisfied, the opportunity must be
         reoffered to the Partnership in accordance with this Section 2.3(a).

                           (b)      Notwithstanding Section 2.3(a), in the event
         that (i) Holly GP or a Holly Entity becomes aware of an opportunity to
         make an acquisition that includes both Subject Assets and assets that
         are not Subject Assets and the Subject Assets have a fair market value
         (as determined in good faith by the Board of Directors of Holly) equal
         to or greater than $5 million but comprise less than half of the fair
         market value (as determined in good faith by the Board of Directors of
         Holly) of the total assets being considered for acquisition or (ii)
         Holly GP or a Holly Entity desires to construct Subject Assets with an
         estimated construction cost (as determined in good faith by the Board
         of Directors of Holly) equal to or greater than $5 million, then Holly
         GP or the Holly Entity may make such acquisition without first offering
         the opportunity to the Partnership or may construct such Subject Assets
         as long as it complies with the following procedures:

                                    (i)      Within 90 days after the
                  consummation of the acquisition or the completion of
                  construction by Holly GP or a Holly Entity of the Subject
                  Assets, as the case may be, Holly GP or the Holly Entity shall
                  notify the General Partner in writing of such acquisition or
                  construction and offer the Partnership Group the opportunity
                  to purchase such Subject Assets in accordance with this
                  Section 2.3(b) (the "Offer"). The Offer shall set forth the
                  terms relating to the purchase of the Subject Assets and, if
                  Holly GP or any Holly Entity desires to

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                  utilize the Subject Assets, the Offer will also include the
                  commercially reasonable terms on which the Partnership Group
                  will provide services to Holly GP or the Holly Entity to
                  enable Holly GP or the Holly Entity to utilize the Subject
                  Assets. As soon as practicable, but in any event within 30
                  days after receipt of such written notification, the General
                  Partner shall notify Holly GP or the Holly Entity in writing
                  that either (x) the General Partner has elected, with the
                  concurrence of the Conflicts Committee, not to cause a
                  Partnership Group Member to purchase the Subject Assets, in
                  which event Holly GP or the Holly Entity shall be forever free
                  to continue to own or operate such Subject Assets, or (y) the
                  General Partner has elected (with the concurrence of the
                  Conflicts Committee) to cause a Partnership Group Member to
                  purchase the Subject Assets, in which event the following
                  procedures shall apply.

                                    (ii)     If Holly GP or the Holly Entity and
                  the General Partner (with the concurrence of the Conflicts
                  Committee) within 60 days after receipt by the General Partner
                  of the Offer are able to agree on the fair market value of the
                  Subject Assets that are subject to the Offer and the other
                  terms of the Offer including, without limitation, the terms,
                  if any, on which the Partnership Group will provide services
                  to Holly GP or the Holly Entity to enable it to utilize the
                  Subject Assets, a Partnership Group Member shall purchase the
                  Subject Assets for the agreed upon fair market value as soon
                  as commercially practicable after such agreement has been
                  reached and, if applicable, enter into an agreement with Holly
                  GP or the Holly Entity to provide services in a manner
                  consistent with the Offer.

                                    (iii)    If Holly GP or the Holly Entity and
                  the General Partner are unable to agree within 60 days after
                  receipt by the General Partner of the Offer on the fair market
                  value of the Subject Assets that are subject to the Offer or
                  the other terms of the Offer including, if applicable, the
                  terms on which the Partnership Group will provide services to
                  Holly GP or the Holly Entity to enable it to utilize the
                  Subject Assets, Holly GP or the Holly Entity and the General
                  Partner will engage a mutually agreed upon investment banking
                  firm to determine the fair market value of the Subject Assets
                  and/or the other terms on which the Partnership Group and
                  Holly GP or the Holly Entity are unable to agree. Such
                  investment banking firm will determine the fair market value
                  of the Subject Assets and/or the other terms on which the
                  Partnership Group and Holly GP or the Holly Entity are unable
                  to agree within 30 days of its engagement and furnish Holly GP
                  or the Holly Entity and the General Partner its determination.
                  The fees of the investment banking firm will be split equally
                  between Holly GP or the Holly Entity and the Partnership
                  Group. Once the investment banking firm has submitted its
                  determination of the fair market value of the Subject Assets
                  and/or the other terms on which the Partnership Group and
                  Holly GP or the Holly Entity are unable to agree, the General
                  Partner will have the right, but not the obligation, subject
                  to the approval of the Conflicts Committee, to cause a
                  Partnership Group Member to purchase the Subject Assets
                  pursuant to the Offer as modified by the determination of the
                  investment banking firm. The Partnership Group will provide
                  written notice of its decision to Holly GP or the Holly Entity
                  within 30 days after the investment banking firm has submitted
                  its determination.

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                  Failure to provide such notice within such 30-day period shall
                  be deemed to constitute a decision not to purchase the Subject
                  Assets. If the General Partner elects to cause a Partnership
                  Group Member to purchase the Subject Assets, then the
                  Partnership Group Member shall purchase the Subject Assets
                  pursuant to the Offer as modified by the determination of the
                  investment banking firm as soon as commercially practicable
                  after such determination and, if applicable, enter into an
                  agreement with Holly GP or the Holly Entity to provide
                  services in a manner consistent with the Offer, as modified by
                  the determination of the investment banking firm, if
                  applicable.

                  2.4      SCOPE OF PROHIBITION. Except as provided in this
Article II and the Partnership Agreement, Holly GP and each Holly Entity shall
be free to engage in any business activity, including those that may be in
direct competition with any Partnership Group Member.

                  2.5      ENFORCEMENT. Holly GP and the Holly Entities agree
and acknowledge that the Partnership Group does not have an adequate remedy at
law for the breach by Holly GP and the Holly Entities of the covenants and
agreements set forth in this Article II, and that any breach by Holly GP or the
Holly Entities of the covenants and agreements set forth in this Article II
would result in irreparable injury to the Partnership Group. Holly GP and the
Holly Entities further agree and acknowledge that any Partnership Group Member
may, in addition to the other remedies which may be available to the Partnership
Group, file a suit in equity to enjoin Holly GP and the Holly Entities from such
breach, and consent to the issuance of injunctive relief under this Agreement.

                                   ARTICLE III
                                 INDEMNIFICATION

                  3.1      ENVIRONMENTAL INDEMNIFICATION.

                           (a)      Subject to Section 3.2, Holly shall
         indemnify, defend and hold harmless the Partnership Group for a period
         of 10 years after the Closing Date from and against environmental and
         Toxic Tort losses (including, without limitation, economic losses,
         diminution in value suffered by third parties, and lost profits),
         damages, injuries (including, without limitation, personal injury and
         death), liabilities, claims, demands, causes of action, judgments,
         settlements, fines, penalties, costs, and expenses (including, without
         limitation, court costs and reasonable attorney's and expert's fees) of
         any and every kind or character, known or unknown, fixed or contingent,
         suffered or incurred by the Partnership Group or any third party by
         reason of or arising out of:

                                    (i)      any violation or correction of
                  violation of Environmental Laws associated with the ownership
                  or operation of the Assets, or

                                    (ii)     any event or condition associated
                  with ownership or operation of the Assets (including, without
                  limitation, the presence of Hazardous Substances on, under,
                  about or migrating to or from the Assets or the disposal or
                  release of Hazardous Substances generated by operation of the
                  Assets at non-Asset locations) including, without limitation,
                  (A) the cost and expense of any

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                  investigation, assessment, evaluation, monitoring,
                  containment, cleanup, repair, restoration, remediation, or
                  other corrective action required or necessary under
                  Environmental Laws, (B) the cost or expense of the preparation
                  and implementation of any closure, remedial, corrective
                  action, or other plans required or necessary under
                  Environmental Laws, and (C) the cost and expense for any
                  environmental or Toxic Tort pre-trial, trial, or appellate
                  legal or litigation support work;

         but only to the extent that such violation complained of under Section
         3.1(a)(i) or such events or conditions included under Section
         3.1(a)(ii) occurred before the Closing Date (collectively, "Covered
         Environmental Losses").

                           (b)      The Partnership Group shall indemnify,
         defend and hold harmless Holly from and against environmental and Toxic
         Tort losses (including, without limitation, economic losses, diminution
         in value suffered by third parties, and lost profits), damages,
         injuries (including, without limitation, personal injury and death),
         liabilities, claims, demands, causes of action, judgments, settlements,
         fines, penalties, costs, and expenses (including, without limitation,
         court costs and reasonable attorney's and expert's fees) of any and
         every kind or character, known or unknown, fixed or contingent,
         suffered or incurred by Holly or any third party by reason of or
         arising out of:

                                    (i)      any violation or correction of
                  violation of Environmental Laws associated with the ownership
                  or operation of the Assets, or

                                    (ii)     any event or condition associated
                  with ownership or operation of the Assets (including, but not
                  limited to, the presence of Hazardous Substances on, under,
                  about or migrating to or from the Assets or the disposal or
                  release of Hazardous Substances generated by operation of the
                  Assets at non-Asset locations) including, without limitation,
                  (A) the cost and expense of any investigation, assessment,
                  evaluation, monitoring, containment, cleanup, repair,
                  restoration, remediation, or other corrective action required
                  or necessary under Environmental Laws, (B) the cost or expense
                  of the preparation and implementation of any closure,
                  remedial, corrective action, or other plans required or
                  necessary under Environmental Laws, and (C) the cost and
                  expense for any environmental or Toxic Tort pre-trial, trial,
                  or appellate legal or litigation support work;

         and regardless of whether such violation complained of under Section
         3.1(b)(i) or such events or conditions included under Section
         3.1(b)(ii) occurred before or after the Closing Date, except to the
         extent that any of the foregoing are Covered Environmental Losses for
         which the Partnership Group is entitled to indemnification from Holly
         under this Article III.

                  3.2      LIMITATIONS REGARDING ENVIRONMENTAL INDEMNIFICATION.
The aggregate liability of Holly in respect of all Covered Environmental Losses
under Section 3.1(a) shall not exceed $15.0 million and Holly will not have any
obligation under Section 3.1(a) until the Covered Environmental Losses of the
Partnership Group exceed $200,000.

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                  3.3      RIGHT OF WAY INDEMNIFICATION. Holly shall indemnify,
defend and hold harmless the Partnership Group from and against any losses,
damages, liabilities, claims, demands, causes of action, judgments, settlements,
fines, penalties, costs, and expenses (including, without limitation, court
costs and reasonable attorney's and expert's fees) of any and every kind or
character, known or unknown, fixed or contingent, suffered or incurred by the
Partnership Group by reason of or arising out of (a) the failure of the
applicable Partnership Group Member to be the owner of such valid and
indefeasible easement rights or fee ownership interests in and to the lands on
which any pipeline or related pump station, tank farm or equipment conveyed or
contributed or otherwise Transferred (including by way of a Transfer of the
ownership interest of a Person or by operation of law) to the applicable
Partnership Group Member on the Closing Date is located as of the Closing Date;
(b) the failure of the applicable Partnership Group Member to have the consents,
licenses and permits necessary to allow any such pipeline referred to in clause
(a) of this Section 3.3 to cross the roads, waterways, railroads and other areas
upon which any such pipeline is located as of the Closing Date; and (c) the cost
of curing any condition set forth in clause (a) or (b) above that does not allow
any Asset to be operated in accordance with Prudent Industry Practice, to the
extent that Holly is notified in writing of any of the foregoing within 10 years
after the Closing Date.

                  3.4      ADDITIONAL INDEMNIFICATION.

                           (a)      In addition to and not in limitation of the
         indemnification provided under Sections 3.1(a) and 3.3, Holly shall
         indemnify, defend, and hold harmless the Partnership Group from and
         against any losses, damages, liabilities, claims, demands, causes of
         action, judgments, settlements, fines, penalties, costs, and expenses
         (including, without limitation, court costs and reasonable attorney's
         and expert's fees) of any and every kind or character, known or
         unknown, fixed or contingent, suffered or incurred by the Partnership
         Group by reason of or arising out of (i) events and conditions
         associated with the operation of the Assets and occurring before the
         Closing Date (other than Covered Environmental Losses which are
         provided for under Sections 3.1 and 3.2) to the extent that Holly is
         notified in writing of any of the foregoing within five years after the
         Closing Date, (ii) all currently pending legal actions against the
         Holly Entities, (iii) the completion of currently ongoing or scheduled
         remediation projects at the Partnership's El Paso, Albuquerque and
         Mountain Home terminals, (iv) events and conditions associated with the
         Retained Assets and whether occurring before or after the Closing Date,
         and (iv) all federal, state and local income tax liabilities
         attributable to the operation of the Assets prior to the Closing Date,
         including any such income tax liabilities of the Holly Entities that
         may result from the consummation of the formation transactions for the
         Partnership Group and the General Partner.

                           (b)      In addition to and not in limitation of the
         indemnification provided under Section 3.1(b) or the Partnership
         Agreement, the Partnership Group shall indemnify, defend, and hold
         harmless Holly from and against any losses, damages, liabilities,
         claims, demands, causes of action, judgments, settlements, fines,
         penalties, costs, and expenses (including, without limitation, court
         costs and reasonable attorney's and expert's fees) of any and every
         kind or character, known or unknown, fixed or contingent, suffered or
         incurred by Holly by reason of or arising out of events and conditions
         associated with the operation of the Assets and occurring on or after
         the

                                     - 11 -
<PAGE>

         Closing Date (other than Covered Environmental Losses which are
         provided for under Section 3.1), unless such indemnification would not
         be permitted under the Partnership Agreement by reason of one of the
         provisos contained in Section 7.7(a) of the Partnership Agreement.

                  3.5      INDEMNIFICATION PROCEDURES.

                           (a)      The Indemnified Party agrees that promptly
         after it becomes aware of facts giving rise to a claim for
         indemnification under this Article III, it will provide notice thereof
         in writing to the Indemnifying Party, specifying the nature of and
         specific basis for such claim.

                           (b)      The Indemnifying Party shall have the right
         to control all aspects of the defense of (and any counterclaims with
         respect to) any claims brought against the Indemnified Party that are
         covered by the indemnification under this Article III, including,
         without limitation, the selection of counsel, determination of whether
         to appeal any decision of any court and the settling of any such matter
         or any issues relating thereto; provided, however, that no such
         settlement shall be entered into without the consent of the Indemnified
         Party (with the concurrence of the Conflicts Committee in the case of
         the Partnership Group) unless it includes a full release of the
         Indemnified Party from such matter or issues, as the case may be.

                           (c)      The Indemnified Party agrees to cooperate
         fully with the Indemnifying Party, with respect to all aspects of the
         defense of any claims covered by the indemnification under this Article
         III, including, without limitation, the prompt furnishing to the
         Indemnifying Party of any correspondence or other notice relating
         thereto that the Indemnified Party may receive, permitting the name of
         the Indemnified Party to be utilized in connection with such defense,
         the making available to the Indemnifying Party of any files, records or
         other information of the Indemnified Party that the Indemnifying Party
         considers relevant to such defense and the making available to the
         Indemnifying Party of any employees of the Indemnified Party; provided,
         however, that in connection therewith the Indemnifying Party agrees to
         use reasonable efforts to minimize the impact thereof on the operations
         of the Indemnified Party and further agrees to maintain the
         confidentiality of all files, records, and other information furnished
         by the Indemnified Party pursuant to this Section 3.5. In no event
         shall the obligation of the Indemnified Party to cooperate with the
         Indemnifying Party as set forth in the immediately preceding sentence
         be construed as imposing upon the Indemnified Party an obligation to
         hire and pay for counsel in connection with the defense of any claims
         covered by the indemnification set forth in this Article III; provided,
         however, that the Indemnified Party may, at its own option, cost and
         expense, hire and pay for counsel in connection with any such defense.
         The Indemnifying Party agrees to keep any such counsel hired by the
         Indemnified Party informed as to the status of any such defense, but
         the Indemnifying Party shall have the right to retain sole control over
         such defense.

                           (d)      In determining the amount of any loss, cost,
         damage or expense for which the Indemnified Party is entitled to
         indemnification under this Agreement, the gross amount of the
         indemnification will be reduced by (i) any insurance proceeds

                                     - 12 -
<PAGE>

         realized by the Indemnified Party, and such correlative insurance
         benefit shall be net of any incremental insurance premiums that become
         due and payable by the Indemnified Party as a result of such claim and
         (ii) all amounts recovered by the Indemnified Party under contractual
         indemnities from third Persons.

                           (e)      The date on which notification of a claim
         for indemnification is received by the Indemnifying Party shall
         determine whether such claim is timely made.

                                   ARTICLE IV
                       GENERAL AND ADMINISTRATIVE EXPENSES

                  4.1      GENERAL.

                           (a)      The Partnership will pay Holly and its
         Affiliates an administrative fee (the "Administrative Fee") of $2.0
         million per year, payable in equal quarterly installments, for the
         provision by Holly and its Affiliates for the Partnership Group's
         benefit of all the general and administrative services that Holly and
         its Affiliates have traditionally provided in connection with the
         Assets including, without limitation, the general and administrative
         services listed on Schedule I to this Agreement. Holly may increase the
         Administrative Fee on the second and third anniversary date of this
         Agreement by an amount up to the greater of (i) 5.0% or (ii) the then
         current Administrative Fee times the percentage increase from the
         immediately preceding year in the Consumer Price Index -- All Urban
         Consumers, U.S. City Average, Not Seasonally Adjusted. The General
         Partner, with the approval and consent of the Conflicts Committee, may
         agree on behalf of the Partnership to further increases in the
         Administrative Fee in connection with expansions of the operations of
         the Partnership Group through the acquisition or construction of new
         assets or businesses. After this three-year period, the General Partner
         will determine the amount of general and administrative expenses that
         will be properly allocated to the Partnership in accordance with the
         terms of the Partnership Agreement.

                           (b)      At the end of each year, the Partnership
         will have the right to submit to Holly a proposal to reduce the amount
         of the Administrative Fee for that year if the Partnership believes, in
         good faith, that the general and administrative services performed by
         Holly and its Affiliates for the benefit of the Partnership Group for
         the year in question do not justify payment of the full Administrative
         Fee for that year. If the Partnership submits such a proposal to Holly,
         Holly agrees that it will negotiate in good faith with the Partnership
         to determine if the Administrative Fee for that year should be reduced
         and, if so, by how much.

                           (c)      The Administrative Fee shall not include and
         the Partnership Group shall reimburse Holly and its Affiliates for:

                                    (i)      salaries of employees of Holly GP,
                  to the extent, but only to the extent, such employees perform
                  services for the Partnership Group;

                                    (ii)     the cost of employee benefits
                  relating to employees of Holly GP, such as 401(k), pension,
                  and health insurance benefits, to the extent,

                                     - 13 -
<PAGE>

                  but only to the extent, such employees perform services for
                  the Partnership Group; and

                                    (iii)    all sales, use, excise, value added
                  or similar taxes, if any, that may be applicable from time to
                  time in respect of the services provided by the Holly and its
                  Affiliates to the Partnership pursuant to Section 4.1(a).

                                    ARTICLE V
                                PURCHASE OPTIONS

                  5.1      OPTION TO PURCHASE CERTAIN ASSETS RETAINED BY THE
HOLLY ENTITIES.

                           (a)      Navajo Pipeline hereby grants to the
         Partnership Group the unconditional right and option for a period of 3
         years from the Closing Date to purchase for fair market value at the
         time of purchase (in accordance with Section 5.2) all of Navajo
         Pipeline's right title and interest in, to and under the Intermediate
         Pipelines.

                           (b)      Holly will take all action required to cause
         Navajo Pipeline to comply with the terms of this Article V.

                           (c)      The Parties acknowledge that any potential
         transfer of the Intermediate Pipelines pursuant to this Article V is
         subject to obtaining any and all required written consents of
         governmental authorities.

                           (d)      Holly hereby represents and warrants that
         (i) there are no rights of first refusal to purchase the Intermediate
         Pipelines; and (ii) subject to Section 5.2(c), Holly will not Transfer
         the Intermediate Pipelines, other than to a Partnership Group Member,
         during a period of 3 years from the Closing Date.

                  5.2      PROCEDURES.

                           (a)      If a Partnership Group Member decides to
         exercise the option to purchase the Intermediate Pipelines, it will
         provide written notice to Navajo Pipeline of such exercise, the fair
         market value it proposes to pay for the Intermediate Pipelines, and the
         other terms of the purchase including, if requested by a Holly Entity,
         the terms on which the Partnership Group Member will provide services
         to the Holly Entity to enable the Holly Entity to utilize the
         Intermediate Pipelines. The decision to purchase the Intermediate
         Pipelines, the fair market value to be paid for the Intermediate
         Pipelines, and the other terms of the purchase including, if
         applicable, the terms on which the Partnership Group Member will
         provide services to the Holly Entity to enable the Holly Entity to
         utilize the Intermediate Pipelines shall be approved by the Conflicts
         Committee. If the Partnership Group Member and Navajo Pipeline are
         unable to agree on the fair market value of the Intermediate Pipelines
         or the other terms of the purchase including, if applicable, the terms
         on which the Partnership Group Member will provide services to the
         Holly Entity to enable the Holly Entity to utilize the Intermediate
         Pipelines, the Partnership Group Member and Navajo Pipeline will engage
         a mutually-agreed-upon investment banking firm to determine the fair
         market value of the Intermediate Pipelines and/or the other terms on
         which the Partnership Group Member and the Holly Entity are

                                     - 14 -
<PAGE>

         unable to agree. The fees of the investment banking firm will be split
         equally between Navajo Pipeline and the Partnership Group. Once the
         investment banking firm submits its determination of the fair market
         value of the Intermediate Pipelines and/or the other terms on which
         Navajo Pipeline and the Partnership Group Member are unable to agree,
         the Partnership Group Member will have the right, but not the
         obligation, to purchase the Intermediate Pipelines on the terms as
         modified by the determination of the investment banking firm. The
         Partnership Group Member will provide written notice of its decision to
         Navajo Pipeline within 30 days after the investment banking firm has
         submitted its determination. Failure to provide such notice within such
         30-day period shall be deemed to constitute a decision not to purchase
         the Intermediate Pipelines.

                           (b)      If a Partnership Group Member chooses to
         exercise its option to purchase the Intermediate Pipelines under
         Section 5.2(a), this Agreement shall become a contract of sale and
         purchase for the Intermediate Pipelines pursuant to which Navajo
         Pipeline shall be obligated to sell the Intermediate Pipelines to the
         Partnership Group Member and the Partnership Group Member shall be
         obligated to purchase the Intermediate Pipelines from the Navajo
         Pipeline and, if applicable, the Partnership Group Member will enter
         into an agreement with the Holly Entity setting forth the terms on
         which the Partnership Group Member will provide services to the Holly
         Entity to enable the Holly Entity to utilize the Intermediate
         Pipelines. The terms of the purchase and sale agreement, unless
         otherwise agreed to by the Partnership Group Member (with the consent
         of the Conflicts Committee) and Navajo Pipeline, will include the
         following:

                                    (i)      the Partnership Group Member will
                  deliver a cash purchase price (unless the Partnership Group
                  Member and Navajo Pipeline agree that the consideration will
                  be paid by means of Units or an interest-bearing promissory
                  note);

                                    (ii)     the Partnership Group will be
                  entitled to the benefit of the indemnification contained in
                  Article III of this Agreement with respect to events or
                  conditions associated with the operation of the Intermediate
                  Pipelines and occurring before the date of acquisition of the
                  Intermediate Pipelines by the Partnership Group Member;

                                    (iii)    Navajo Pipeline will represent that
                  it has good and indefeasible title to the Intermediate
                  Pipelines, subject to all recorded and unrecorded matters and
                  all physical conditions and other matters in existence on the
                  closing date for the purchase of the Intermediate Pipelines,
                  plus any other such matters as the Partnership Group Member
                  may approve, which approval will not be unreasonably withheld.
                  If the Partnership Group Member desires to obtain any title
                  insurance with respect to the Intermediate Pipelines, the full
                  cost and expense of obtaining the same (including but not
                  limited to the cost of title examination, document duplication
                  and policy premium) shall be borne by the Partnership Group
                  Member;

                                    (iv)     Navajo Pipeline will grant to the
                  Partnership Group Member the right, exercisable at the
                  Partnership Group Member's risk and

                                     - 15 -
<PAGE>

                  expense, to make such surveys, tests and inspections of the
                  Intermediate Pipelines as the Partnership Group Member may
                  deem desirable, so long as such surveys, tests or inspections
                  do not damage the Intermediate Pipelines or interfere with the
                  activities of Navajo Pipeline thereon and so long as the
                  Partnership Group Member has furnished Navajo Pipeline with
                  evidence that adequate liability insurance is in full force
                  and effect;

                                    (v)      the Partnership Group Member will
                  have the right to terminate its obligation to purchase the
                  Intermediate Pipelines under this Article V if the results of
                  any searches, surveys, tests or inspections conducted pursuant
                  to Section 5.2(b)(iii) or (iv) above are, in the reasonable
                  opinion of the Partnership Group, unsatisfactory;

                                    (vi)     the closing date for the purchase
                  of the Intermediate Pipelines shall occur no later than 90
                  days following receipt by Holly of written notice by the
                  Partnership Group Member of its intention to exercise its
                  option to purchase the Intermediate Pipelines pursuant to
                  Section 5.2(a);

                                    (vii)    Navajo Pipeline shall execute, have
                  acknowledged and deliver to the Partnership Group Member a
                  special warranty deed, assignment of easement, or comparable
                  document, as appropriate, in the applicable jurisdiction, on
                  the closing date for the purchase of the Intermediate
                  Pipelines constituting a real property interest conveying the
                  Intermediate Pipelines unto the Partnership Group Member free
                  and clear of all encumbrances created by Navajo Pipeline other
                  than those set forth in Section 5.2(b)(iii) above;

                                    (viii)   the sale of the Intermediate
                  Pipelines shall be made on an "as is," "where is" and "with
                  all faults" basis, and the instruments conveying the
                  Intermediate Pipelines shall contain appropriate disclaimers;

                                    (ix)     neither Navajo Pipeline nor the
                  applicable Partnership Group Member shall have any obligation
                  to sell or buy the Intermediate Pipelines if any of the
                  material consents referred to in Section 5.1(c) have not been
                  obtained; and

                                    (x)      Navajo Pipeline and the Partnership
                  Group shall cooperate in good faith in obtaining all necessary
                  governmental and other third Person approvals, waivers and
                  consents required for the closing. Any such closing shall be
                  delayed, to the extent required, until the third Business Day
                  following the expiration of any required waiting periods under
                  the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
                  amended; provided, however, that such delay shall not exceed
                  60 days and, if governmental approvals and waiting periods
                  shall not have been obtained or expired, as the case may be,
                  by such 60th day, then the Partnership Group shall be deemed
                  to have waived its option to purchase the Intermediate
                  Pipelines and thereafter neither Navajo Pipeline nor the
                  Partnership shall have any further obligation under this
                  Article V with respect to the Intermediate Pipelines.

                                     - 16 -
<PAGE>

                           (c)      If a Partnership Group Member chooses or is
         deemed to have chosen not to exercise its option to purchase the
         Intermediate Pipelines at the price determined by the investment
         banking firm under Section 5.2(a), all future rights to purchase the
         Intermediate Pipelines by the Partnership Group will be extinguished.

                                   ARTICLE VI
                             RIGHT OF FIRST REFUSAL

                  6.1      HOLLY RIGHT OF FIRST REFUSAL.

                           (a)      The Partnership Group hereby grants to Holly
         a right of first refusal on any proposed Transfer (other than a grant
         of a security interest to a bona fide third-party lender or a Transfer
         to another Partnership Group Member) of the Assets that serve the Holly
         Entities' refineries.

                           (b)      The Parties acknowledge that all potential
         Transfers of Sale Assets pursuant to this Article VI are subject to
         obtaining any and all required written consents of governmental
         authorities and other third parties and to the terms of all existing
         agreements in respect of the Sale Assets.

                  6.2      PROCEDURES.

                           (a)      If a Partnership Group Member proposes to
         Transfer any of the Assets that serve the Holly Entities' refineries to
         any Person pursuant to a bona fide third-party offer (an "Acquisition
         Proposal"), then the Partnership shall promptly give written notice (a
         "Disposition Notice") thereof to Holly. The Disposition Notice shall
         set forth the following information in respect of the proposed
         Transfer: the name and address of the prospective acquiror (the
         "Proposed Transferee"), the Assets subject to the Acquisition Proposal
         (the "Sale Assets"), the purchase price offered by such Proposed
         Transferee (the "Offer Price"), reasonable detail concerning any
         non-cash portion of the proposed consideration, if any, to allow Holly
         to reasonably determine the fair market value of such non-cash
         consideration, the Partnership Group's estimate of the fair market
         value of any non-cash consideration and all other material terms and
         conditions of the Acquisition Proposal that are then known to the
         Partnership Group. To the extent the Proposed Transferee's offer
         consists of consideration other than cash (or in addition to cash) the
         Offer Price shall be deemed equal to the amount of any such cash plus
         the fair market value of such non-cash consideration. In the event
         Holly and the Partnership Group agree as to the fair market value of
         any non-cash consideration, Holly will provide written notice of its
         decision regarding the exercise of its right of first refusal to
         purchase the Sale Assets within 30 days of its receipt of the
         Disposition Notice (the "First ROFR Acceptance Deadline"). Failure to
         provide such notice within such 30-day period shall be deemed to
         constitute a decision not to purchase the Sale Assets. In the event (i)
         Holly's determination of the fair market value of any non-cash
         consideration described in the Disposition Notice (to be determined by
         Holly within 30 days of receipt of such Disposition Notice) is less
         than the fair market value of such consideration as determined by the
         Partnership Group in the Disposition Notice and (ii) Holly and the
         Partnership Group are unable to mutually agree upon the fair market
         value of such non-cash

                                     - 17 -
<PAGE>

         consideration within 30 days after Holly notifies the Partnership Group
         of its determination thereof, the Partnership Group and Holly shall
         engage a mutually-agreed-upon investment banking firm to determine the
         fair market value of the non-cash consideration. Such investment
         banking firm shall be instructed to return its decision within 30 days
         after all material information is submitted thereto, which decision
         shall be final. The fees of the investment banking firm will be split
         equally between Holly and the Partnership Group. Holly will provide
         written notice of its decision regarding the exercise of its right of
         first refusal to purchase the Sale Assets to the Partnership Group
         within 30 days after the investment banking firm has submitted its
         determination (the "Second ROFR Acceptance Deadline"). Failure to
         provide such notice within such 30-day period shall be deemed to
         constitute a decision by Holly not to purchase the Sale Assets. If
         Holly fails to exercise a right during any applicable period set forth
         in this Section 6.2(a), Holly shall be deemed to have waived its rights
         with respect to such proposed disposition of the Sale Assets, but not
         with respect to any future offer of Assets.

                           (b)      If Holly chooses to exercise its right of
         first refusal to purchase the Sale Assets under Section 6.2(a), Holly
         and the Partnership Group shall enter into a purchase and sale
         agreement for the Sale Assets which shall include the following terms:

                                    (i)      Holly will agree to deliver cash
                  for the Offer Price (unless Holly and the Partnership Group
                  agree that consideration will be paid by means of an
                  interest-bearing promissory note or equity securities of
                  Holly);

                                    (ii)     the Partnership Group will
                  represent that it has good and indefeasible title to the Sale
                  Assets, subject to all recorded and unrecorded matters and all
                  physical conditions and other matters in existence on the
                  closing date for the purchase of the Sale Assets, plus any
                  other such matters as Holly may approve, which approval will
                  not be unreasonably withheld. If Holly desires to obtain any
                  title insurance with respect to the Sale Assets, the full cost
                  and expense of obtaining the same (including but not limited
                  to the cost of title examination, document duplication and
                  policy premium) shall be borne by Holly;

                                    (iii)    the Partnership Group will grant to
                  Holly the right, exercisable at Holly's risk and expense, to
                  make such surveys, tests and inspections of the Sale Assets as
                  Holly may deem desirable, so long as such surveys, tests or
                  inspections do not damage the Sale Assets or interfere with
                  the activities of the Partnership Group thereon and so long as
                  Holly has furnished the Partnership Group with evidence that
                  adequate liability insurance is in full force and effect;

                                    (iv)     Holly will have the right to
                  terminate its obligation to purchase the Sale Assets under
                  this Article VI if the results of any searches, surveys, tests
                  or inspections conducted pursuant to Section 6.2(b)(ii) or
                  (iii) above are, in the reasonable opinion of Holly,
                  unsatisfactory;

                                    (v)      the closing date for the purchase
                  of the Sale Assets shall occur no later than 90 days following
                  receipt by the Partnership Group of written

                                     - 18 -
<PAGE>

                  notice by Holly of its intention to exercise its option to
                  purchase the Sale Assets pursuant to Section 6.2(a);

                                    (vi)     the Partnership Group shall
                  execute, have acknowledged and deliver to Holly a special
                  warranty deed, assignment of easement, or comparable document,
                  as appropriate, in the applicable jurisdiction, on the closing
                  date for the purchase of the Sale Assets constituting real
                  property interests conveying the Sale Assets unto Holly free
                  and clear of all encumbrances created by the Partnership Group
                  other than those set forth in Section 6.2(b)(ii) above;

                                    (vii)    the sale of any Sale Assets shall
                  be made on an "as is," "where is" and "with all faults" basis,
                  and the instruments conveying such Sale Assets shall contain
                  appropriate disclaimers; and

                                    (viii)   neither the Partnership Group nor
                  Holly shall have any obligation to sell or buy the Sale Assets
                  if any of the material consents referred to in Section 6.1(b)
                  have not been obtained.

                           (c)      Holly and the Partnership Group shall
         cooperate in good faith in obtaining all necessary governmental and
         other third Person approvals, waivers and consents required for the
         closing. Any such closing shall be delayed, to the extent required,
         until the third Business Day following the expiration of any required
         waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act
         of 1976, as amended; provided, however, that such delay shall not
         exceed 60 days and, if governmental approvals and waiting periods shall
         not have been obtained or expired, as the case may be, by such 60th
         day, then Holly shall be deemed to have waived its right of first
         refusal with respect to the Sale Assets described in the Disposition
         Notice and thereafter neither Holly nor the Partnership shall have any
         further obligation under this Article VI with respect to such Sale
         Assets unless such Sale Assets again become subject to this Article VI
         pursuant to Section 6.2(d).

                           (d)      If the Transfer to the Proposed Transferee
         is not consummated in accordance with the terms of the Acquisition
         Proposal within the later of (A) 180 days after the later of the
         applicable ROFR Acceptance Deadline, and (B) 10 days after the
         satisfaction of all governmental approval or filing requirements, if
         any, the Acquisition Proposal shall be deemed to lapse, and the
         Partnership or member of the Partnership Group may not Transfer any of
         the Sale Assets described in the Disposition Notice without complying
         again with the provisions of this Article VI if and to the extent then
         applicable.

                                   ARTICLE VII

                                  MISCELLANEOUS

                  7.1      CHOICE OF LAW; SUBMISSION TO JURISDICTION. This
Agreement shall be subject to and governed by the laws of the State of Texas,
excluding any conflicts-of-law rule or principle that might refer the
construction or interpretation of this Agreement to the laws of

                                     - 19 -
<PAGE>

another state. Each Party hereby submits to the jurisdiction of the state and
federal courts in the State of Texas and to venue in Dallas, Texas.

                  7.2      NOTICE. All notices or requests or consents provided
for by, or permitted to be given pursuant to, this Agreement must be in writing
and must be given by depositing same in the United States mail, addressed to the
Person to be notified, postpaid, and registered or certified with return receipt
requested or by delivering such notice in person or by telecopier or telegram to
such Party. Notice given by personal delivery or mail shall be effective upon
actual receipt. Notice given by telegram or telecopier shall be effective upon
actual receipt if received during the recipient's normal business hours or at
the beginning of the recipient's next business day after receipt if not received
during the recipient's normal business hours. All notices to be sent to a Party
pursuant to this Agreement shall be sent to or made at the address set forth
below such Party's signature to this Agreement or at such other address as such
Party may stipulate to the other Parties in the manner provided in this Section
7.2.

                  if to the Holly Entities:

                     Holly Corporation
                     100 Crescent Court
                     Suite 1600
                     Dallas, Texas 75201
                     Attention: President
                     Fax: 214-615-9372

                     with a copy to:

                          John Glancy
                          General Counsel
                          Holly Corporation
                          100 Crescent Court
                          Suite 1600
                          Dallas, Texas 75201
                          Fax: 214-615-9374

                  if to the Partnership Entities

                     Holly Energy Partners, L.P.
                     c/o Holly Logistic Services, L.L.C.
                     100 Crescent Court
                     Suite 1600
                     Dallas, Texas 75201
                     Attention: Vice President and Chief Financial Officer
                     Fax: (214) 615-9380

                  7.3      ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement of the Parties relating to the matters contained herein,
superseding all prior contracts or agreements, whether oral or written, relating
to the matters contained herein.

                                     - 20 -
<PAGE>

                  7.4      TERMINATION OF ARTICLE II. The provisions of Article
II of this Agreement may be terminated by Holly upon a Change of Control of
Holly.

                  7.5      AMENDMENT OR MODIFICATION. This Agreement may be
amended or modified from time to time only by the written agreement of all the
Parties hereto; provided, however, that the Partnership may not, without the
prior approval of the Conflicts Committee, agree to any amendment or
modification of this Agreement that, in the reasonable discretion of the General
Partner, will adversely affect the holders of Common Units. Each such instrument
shall be reduced to writing and shall be designated on its face an "Amendment"
or an "Addendum" to this Agreement.

                  7.6      ASSIGNMENT. No Party shall have the right to assign
any of its rights or obligations under this Agreement without the consent of the
other Parties hereto.

                  7.7      COUNTERPARTS. This Agreement may be executed in any
number of counterparts with the same effect as if all signatory parties had
signed the same document. All counterparts shall be construed together and shall
constitute one and the same instrument.

                  7.8      SEVERABILITY. If any provision of this Agreement
shall be held invalid or unenforceable by a court or regulatory body of
competent jurisdiction, the remainder of this Agreement shall remain in full
force and effect.

                  7.9      FURTHER ASSURANCES. In connection with this Agreement
and all transactions contemplated by this Agreement, each signatory party hereto
agrees to execute and deliver such additional documents and instruments and to
perform such additional acts as may be necessary or appropriate to effectuate,
carry out and perform all of the terms, provisions and conditions of this
Agreement and all such transactions.

                  7.10     RIGHTS OF LIMITED PARTNERS. The provisions of this
Agreement are enforceable solely by the Parties to this Agreement, and no
Limited Partner of the Partnership shall have the right, separate and apart from
the Partnership, to enforce any provision of this Agreement or to compel any
Party to this Agreement to comply with the terms of this Agreement.

                                     - 21 -
<PAGE>

         IN WITNESS WHEREOF, the Parties have executed this Agreement on, and
effective as of, the Closing Date.

                                  HOLLY CORPORATION

                                  By: /s/ Stephen J. McDonnell
                                      -----------------------------------------
                                      Stephen J. McDonnell
                                      Vice President and Chief Financial Officer

                                  NAVAJO PIPELINE CO., L.P.

                                  BY NAVAJO PIPELINE GP, L.L.C.,
                                  ITS GENERAL PARTNER

                                  By: /s/ Stephen J. McDonnell
                                      -----------------------------------------
                                      Stephen J. McDonnell
                                      Vice President and Chief Financial Officer

                                  HOLLY LOGISTIC SERVICES, L.L.C.

                                  By: /s/ Stephen J. McDonnell
                                      -----------------------------------------
                                      Stephen J. McDonnell
                                      Vice President and Chief Financial Officer

                                  HEP LOGISTIC HOLDINGS, L.P.

                                  BY HOLLY LOGISTIC SERVICES, L.L.C.,
                                  ITS GENERAL PARTNER

                                  By: /s/ Stephen J. McDonnell
                                      -----------------------------------------
                                      Stephen J. McDonnell
                                      Vice President and Chief Financial Officer

                       Signature Page to Omnibus Agreement

<PAGE>

                                  HOLLY ENERGY PARTNERS, L.P.

                                  BY HEP LOGISTICS HOLDINGS, L.P.
                                  ITS GENERAL PARTNER

                                  BY HOLLY LOGISTIC SERVICES, L.L.C.
                                  ITS GENERAL PARTNER

                                  By: /s/ Stephen J. McDonnell
                                      -----------------------------------------
                                      Stephen J. McDonnell
                                      Vice President and Chief Financial Officer

                                  HEP LOGISTICS GP, L.L.C.

                                  By: /s/ Stephen J. McDonnell
                                      -----------------------------------------
                                      Stephen J. McDonnell
                                      Vice President and Chief Financial Officer

                                  HEP OPERATING COMPANY, L.P.

                                  BY HEP LOGISTICS GP, L.L.C.
                                  ITS GENERAL PARTNER

                                  By: /s/ Stephen J. McDonnell
                                      -----------------------------------------
                                      Stephen J. McDonnell
                                      Vice President and Chief Financial Officer

                       Signature Page to Omnibus Agreement

<PAGE>

                                   SCHEDULE I

GENERAL AND ADMINISTRATIVE SERVICES

         (1)      executive services

         (2)      finance, including treasury, and administration services

         (3)      information technology services

         (4)      legal services

         (5)      health, safety and environmental services

         (6)      human resources services

                                 SCHEDULE I - 1<PAGE>

                                                                    EXHIBIT 10.8

                                                                  EXECUTION COPY

                        PIPELINES AND TERMINALS AGREEMENT

      This Pipelines and Terminals Agreement (this "Agreement") is dated as of
July 13, 2004, by and among Holly Corporation, a Delaware corporation ("Holly"),
Navajo Refining Company, L.P., a Delaware limited partnership ("Navajo
Refining"), Holly Refining and Marketing Company, a Delaware corporation,
("Holly Refining" and, together with Holly and Navajo Refining, the "Holly
Entities"), Holly Energy Partners, L.P., a Delaware limited partnership (the
"Partnership"), HEP Operating Company, L.P., a Delaware limited partnership (the
"Operating Partnership"), HEP Logistics Holdings, L.P., a Delaware limited
partnership (the "General Partner"), Holly Logistic Services, L.L.C., a Delaware
limited liability company ("Holly GP"), and HEP Logistics GP, L.L.C., a Delaware
limited liability company ("OLP GP" and, together with the Partnership, the
Operating Partnership, the General Partner and Holly GP, the "Partnership
Entities").

                                    RECITALS:

      WHEREAS, as of the date hereof, by virtue of its indirect ownership
interests in the Partnership, the Holly Entities have an economic interest in
the financial and commercial success of the Partnership;

      WHEREAS, the Partnership Group (as defined below) is substantially
dependent upon the Holly Entities for the volumes of Refined Products (as
defined below) transported through the Partnership Group's pipelines and handled
at the Partnership Group's terminals such that a significant reduction in the
Holly Entities' use of the Partnership Group's services to transport and handle
the Refined Products would result in a correspondingly significant reduction in
the financial and commercial success of the Partnership Group; and

      WHEREAS, the Holly Entities and the Partnership Entities desire to enter
into this Agreement.

      NOW, THEREFORE, in consideration of the covenants and obligations
contained herein, the parties to this Agreement hereby agree as follows:

      SECTION 1. DEFINITIONS

      Capitalized terms used throughout this Agreement and not otherwise defined
herein shall have the meanings set forth below.

      "Affiliate" means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with, the Person in question,
excluding, in the case of Holly, the Partnership Group Members.

      "Applicable Law" means any applicable statute, law, regulation, ordinance,
rule, judgment, rule of law, order, decree, permit, approval, concession, grant,
franchise, license, agreement, requirement, or other governmental restriction or
any similar form of decision of, or any provision or condition of any permit,
license or other operating authorization issued under any of the foregoing by,
or any determination by any Governmental Authority having or asserting
jurisdiction over the matter or matters in question, whether now or hereafter in
effect

<PAGE>

and in each case as amended (including, without limitation, all of the terms and
provisions of the common law of such Governmental Authority), as interpreted and
enforced at the time in question.

      "Arbitrable Dispute" means any and all disputes, Claims, controversies and
other matters in question between any of the Partnership Entities, on the one
hand, and any of the Holly Entities, on the other hand, arising out of or
relating to this Agreement or the alleged breach hereof, or in any way relating
to the subject matter of this Agreement regardless of whether (a) allegedly
extra-contractual in nature, (b) sounding in contract, tort or otherwise, (c)
provided for by Applicable Law or otherwise or (d) seeking damages or any other
relief, whether at law, in equity or otherwise.

      "bpd" means barrels per day.

      "Claim" means any existing or threatened future claim, demand, suit,
action, investigation, proceeding, governmental action or cause of action of any
kind or character (in each case, whether civil, criminal, investigative or
administrative), known or unknown, under any theory, including those based on
theories of contract, tort, statutory liability, strict liability, employer
liability, premises liability, products liability, breach of warranty or
malpractice.

      "Claimant" has the meaning set forth in Section 10(f).

      "Closing Date" means the date of the closing of the Partnership's initial
public offering of Common Units.

      "Common Units" has the meaning set forth in the Partnership Agreement.

      "Contract Quarter" means a three-month period that commences on July 1,
October 1, January 1, or April 1, and ends on September 30, December 31, March
31 or June 30, respectively.

      "Contract Year" means a year that commences on July 1 and ends on the last
day of June, except that the initial Contract Year shall commence on July 13,
2004.

      "Control" (including with correlative meaning, the term "controlled by")
means, as used with respect to any Person, the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise.

      "Controlled Affiliates" means with respect to any Person, any other Person
that directly or indirectly through one or more intermediaries is controlled by
such Person, excluding, in the case of Holly, the Partnership Group Members.

      "Deficiency Notice" has the meaning set forth in Section 9(a).

      "Deficiency Payment" has the meaning set forth in Section 9(a).

      "EBITDA" means earnings before interest, taxes, depreciation and
amortization.

                                       2

<PAGE>

      "FERC" means the United States Federal Energy Regulatory Commission.

      "Force Majeure" means acts of God, strikes, lockouts or other industrial
disturbances, acts of the public enemy, wars, blockades, insurrections, riots,
storms, floods, washouts, arrests, the order of any court or Governmental
Authority having jurisdiction while the same is in force and effect, civil
disturbances, explosions, breakage, accident to machinery, storage tanks or
lines of pipe, inability to obtain or unavoidable delay in obtaining material or
equipment, and any other causes whether of the kind herein enumerated or
otherwise not reasonably within the control of the party claiming suspension and
which by the exercise of due diligence such party is unable to prevent or
overcome.

      "Governmental Authority" means any federal, state, local or foreign
government or any provincial, departmental or other political subdivision
thereof, or any entity, body or authority exercising executive, legislative,
judicial, regulatory, administrative or other governmental functions or any
court, department, commission, board, bureau, agency, instrumentality or
administrative body of any of the foregoing.

      "Holly Group" means Holly, Navajo Refining and Holly Refining and any
Subsidiary of Navajo Refining or Holly Refining, treated as a single
consolidated entity.

      "Holly Group Member" means any member of the Holly Group.

      "Limited Partner" has the meaning set forth in the Partnership Agreement.

      "Minimum Revenue Commitment" has the meaning set forth in Section 2(a).

      "Navajo Refinery" means the refining facilities owned by the Holly Group
in Artesia and Lovington, New Mexico.

      "Omnibus Agreement" means the Omnibus Agreement, dated as of the Closing
Date, among Holly, the Partnership, the Operating Partnership, the General
Partner, Holly GP, OLP GP and Navajo Pipeline Co., L.P.

      "PPI" has the meaning set forth in Section 2(a).

      "Partnership Agreement" means the First Amended and Restated Agreement of
Limited Partnership of Holly Energy Partners, L.P., dated as of the Closing
Date, as such agreement is in effect on the Closing Date, to which reference is
hereby made for all purposes of this Agreement. No amendment or modification to
the Partnership Agreement subsequent to the Closing Date shall be given effect
for the purposes of this Agreement unless consented to by each of the parties to
this Agreement.

      "Partnership Group" means the Partnership, the Operating Partnership and
any Subsidiary of any such Person, treated as a single consolidated entity.

      "Partnership Group Member" means any member of the Partnership Group.

                                       3

<PAGE>

      "Person" means an individual or a corporation, limited liability company,
partnership, joint venture, trust, unincorporated organization, association,
government agency or political subdivision thereof or other entity.

      "Prime Rate" means the prime rate per annum announced by Union Bank of
California, N.A., or if Union Bank of California, N.A. no longer announces a
prime rate for any reason, the prime rate per annum announced by the largest
U.S. bank measured by deposits from time to time as its base rate on corporate
loans, automatically fluctuating upward or downward with each announcement of
such prime rate.

      "Refined Products" means gasolines, diesel fuel, jet fuel, kerosene,
heating oil, distillates, transmix, liquefied petroleum gas, natural gas liquids
and blend stocks.

      "Refined Product Pipelines" means the pipelines described on Exhibit A
attached hereto.

      "Refined Product Terminals" means the terminals described on Exhibit B
attached hereto.

      "Refineries" means, collectively, the Navajo Refinery and the Woods Cross
Refinery.

      "Refund" has the meaning set forth in Section 9(c).

      "Respondent" has the meaning set forth in Section 10(f).

      "Subsidiary" means with respect to any Person, (a) a corporation of which
more than 50% of the voting power of shares entitled (without regard to the
occurrence of any contingency) to vote in the election of directors or other
governing body of such corporation is owned, directly or indirectly, at the date
of determination, by such Person, by one or more Subsidiaries of such Person or
a combination thereof, (b) a partnership (whether general or limited) in which
such Person or a Subsidiary of such Person is, at the date of determination, a
general or limited partner of such partnership, but only if more than 50% of the
partnership interests of such partnership (considering all of the partnership
interests of the partnership as a single class) is owned, directly or
indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such Person, or a combination thereof, or (c) any other Person
(other than a corporation or a partnership) in which such Person, one or more
Subsidiaries of such Person, or a combination thereof, directly or indirectly,
at the date of determination, has (i) at least a majority ownership interest or
(ii) the power to elect or direct the election of a majority of the directors or
other governing body of such Person.

      "Woods Cross Refinery" means the refinery owned by the Holly Group in
Woods Cross, Utah.

      SECTION 2. AGREEMENT TO USE SERVICES RELATING TO PIPELINES AND TERMINALS.

      This Agreement sets forth a commercial arrangement consistent with
historical operational practices between the Holly Group and the predecessor to
the Partnership as well as the objectives of the parties. The parties intend to
be strictly bound by the commercial terms set forth in this Agreement, which set
forth the Minimum Revenue Commitment on the part of the Holly Group and require
the Partnership Group to provide certain transportation and terminalling

                                       4

<PAGE>

services to the Holly Group. The principal objective of the Partnership Group is
for the Holly Group to meet or exceed the Minimum Revenue Commitment. The
principal objective of the Holly Group is for the Partnership Group to provide
services to the Holly Group in a manner that enables the Holly Group to operate
its assets in a manner at least as favorably as the historical course of dealing
between the parties when the Holly Group was the principal user of the Refined
Product Pipelines and the Refined Product Terminals.

      (a) Minimum Revenue Commitment. During the term of this Agreement and
subject to the terms and conditions of this Agreement, the Holly Group agrees as
follows:

            (i) Subject to Section 3, for a term of 15 Contract Years commencing
      on July 13, 2004, the Holly Group will transport on the Refined Product
      Pipelines and terminal in the Refined Product Terminals an amount of
      Refined Products in the aggregate that will produce revenue to the
      Partnership Group in an amount at least equal to $8.85 million per
      Contract Quarter (the "Minimum Revenue Commitment").

            (ii) The Minimum Revenue Commitment shall be adjusted on July 1 of
      each Contract Year by an amount equal to the percentage increase, if any,
      between the two preceding calendar years, in the Producer Price Index for
      Finished Goods, seasonally adjusted, as published by the Department of
      Labor ("PPI"); provided, however, that the Minimum Revenue Commitment will
      not decrease as a result of any decrease in the PPI. If that index is no
      longer published, the Holly Group and the Partnership Group shall
      negotiate in good faith to agree on a new index that gives comparable
      protection against inflation and the same method of adjustment for
      increases in the new index shall be used to calculate increases in the
      Minimum Revenue Commitment. If the Holly Group and the Partnership Group
      are unable to agree, a new index will be determined by binding arbitration
      in accordance with Section 10(f) of this Agreement and the same method of
      adjustment for increases in the new index shall be used to calculate
      increases in the Minimum Revenue Commitment.

            (iii) If the Holly Group is unable for a period of time to transport
      on the Refined Product Pipelines or terminal in the Refined Product
      Terminals the volumes of Refined Products required to meet the Minimum
      Revenue Commitment as a result of the Partnership Group's operational
      difficulties, prorationing or difficulties with pipeline connections, then
      upon written notice by Holly to the Partnership Group, the Minimum Revenue
      Commitment will be reduced for such period of time by an amount equal to:
      (1) the volume of Refined Products that the Holly Group is unable to
      transport on the Refined Product Pipelines or terminal in the Refined
      Product Terminals as a result of the Partnership Group's operational
      difficulties, prorationing or difficulties with pipeline connections
      multiplied by (2) the applicable tariffs and terminal service fees.

      (b) Tariffs and Terminal Service Fees. The initial service fees for
terminalling the Refined Products in the Refined Product Terminals under this
Section 2 are set forth on the fee schedule attached hereto as Exhibit C. The
rules and regulations applicable to interstate and intrastate service on the
Refined Product Pipelines shall be as set forth in the pro forma rules and
regulations tariffs attached hereto as Exhibit D and Exhibit E respectively. The
initial tariff rates for interstate and intrastate service on the Refined
Product Pipelines shall be as set forth in the

                                       5

<PAGE>

pro forma tariffs attached hereto as Exhibit F and Exhibit G respectively. The
initial tariff rates shall be adjusted on July 1 of each Contract Year by an
amount equal to the percentage change, if any, between the two immediately
preceding calendar years, in the PPI. If that index is no longer published, the
Holly Group and the Partnership Group shall negotiate in good faith to agree on
a new index that gives comparable protection against inflation or deflation and
the same method of adjustment for increases or decreases in the new index shall
be used to calculate increases or decreases in the tariff rates. If the Holly
Group and the Partnership Group are unable to agree, a new index will be
determined by binding arbitration in accordance with Section 10(f) of this
Agreement and the same method of adjustment for increases or decreases in the
new index shall be used to calculate increases or decreases in the tariff rates.
Notwithstanding that the Minimum Revenue Commitment will be determined on a
Contract Year basis, the applicable fees, tariff rates and other charges
provided for in this Agreement will become effective as of the date of this
Agreement, or in the case of the Refined Product Pipeline pipeline tariff rates,
as soon thereafter as those rates become effective. The Partnership Group will
use commercially reasonable efforts to obtain the necessary regulatory approvals
for the Refined Product Pipeline tariff rates set forth in Exhibit F and Exhibit
G to become effective on the date of this Agreement or as soon as possible
thereafter.

      (c) Obligations of the Partnership Group. During the term of this
Agreement and subject to the terms and conditions of this Agreement, including
Section 10(c), the Partnership Group agrees to own or lease, operate and
maintain the assets necessary to accept the deliveries from the Holly Group and
to provide the services required under this Agreement. Notwithstanding the
preceding sentence, subject to Section 10(c) of this Agreement and Article VI of
the Omnibus Agreement, the Partnership Group is free to sell any of its assets,
including assets that provide services under this Agreement, and the Partnership
or any Partnership Group Member is free to merge with another entity (whether or
not the Partnership or the Partnership Group Member is the surviving entity in
such merger) and is free to sell all of its assets or all of its equity to
another entity at any time. At the request of the Holly Group, and subject in
each case to any applicable common carrier proration duties, the Partnership
Group agrees to use commercially reasonable efforts to transport by pipeline for
the Holly Group each month during the term of this Agreement (i) up to 40,000
bpd of Refined Products from Artesia to El Paso on the Partnership's Artesia to
Orla to El Paso Refined Product Pipeline or its Artesia to El Paso Refined
Product Pipeline and (ii) up to 40,000 bpd of Refined Products from Artesia to
Moriarty or Artesia to Bloomfield on the Partnership's Artesia to Moriarty and
Artesia to Bloomfield Refined Product Pipeline. The Partnership Group agrees to
provide terminalling services for all Holly Group volumes of Refined Products
transported to the Refined Product Terminals. To the extent that the Holly Group
is entitled to an exception under Section 3 of this Agreement to its obligations
under Section 2(a) of this Agreement, the corresponding obligations of the
Partnership Group under this Section 2(c) will be proportionately reduced.

      (d) Ancillary Services. The Partnership Group will provide ancillary
services as have been provided historically, such as truck rack blending, tank
sampling and tank-to-tank transfers, to the Holly Group. The fees for such
ancillary services are included in the fees established under this Agreement for
services provided under Section 2(b). All fuel additives, dyes, de-icers and
other additives requested to be added to the Holly Group's Refined Products will
be provided by the Holly Group at no cost to the Partnership Group. If any
ancillary services are requested by the Holly Group that are different in kind,
scope or frequency from the ancillary

                                       6

<PAGE>

services that have been historically provided, then the parties shall negotiate
in good faith to determine the appropriate rates to be charged for such
services. The Holly Group shall be responsible for maintaining the integrity of
its operations and the quality of its products so as to not cause additional
operating costs related to ancillary services to be incurred by the Partnership
Group.

      (e) Pipeline Direction. Without Holly's prior written consent, which shall
not be unreasonably withheld, the Partnership Group will not reverse the
direction of any Refined Product Pipeline or connect any other pipeline to the
Refined Product Pipelines or Refined Product Terminals; provided, however, that
the Partnership Group may take any necessary emergency action to prevent or
remedy a release of Refined Products from a Refined Products Pipeline or Refined
Products Terminal without obtaining the consent required by this Section 2(e).

      (f) Product Losses. With respect to the Refined Product Terminals, the
Partnership Group will be responsible for all product losses, as determined on a
quarterly basis on a terminal by terminal basis, that are greater than 0.25% of
the product terminalled in accordance with this Section 2. All product losses
with respect to the Refined Product Terminals will be offset by product gains
with respect to the Refined Product Terminals, if any, as determined on a
quarterly basis on a terminal by terminal basis. Product gains at the Refined
Product Terminals, after any offsetting losses, will be the property of the
Partnership Group.

      (g) Taxes. The Holly Group will pay all taxes, import duties, license fees
and other charges by any Governmental Authority levied on the Refined Products
delivered by the Holly Group for transportation or storage by the Partnership
Group in the Refined Product Pipelines and Refined Product Terminals, including,
but not limited to, any New Mexico gross receipts taxes.

      (h) Timing of Payments. The Holly Group will make payments to the
Partnership Group on a monthly basis during the term of this Agreement with
respect to services rendered by the Partnership Group under this Agreement in
the prior month. Payments not received by the Partnership Group on or prior to
the applicable payment date will accrue interest at the Prime Rate from the
applicable payment date until paid.

      (i) Notification of Utilization. When requested by the Partnership Group,
Holly will provide to the Partnership Group written notification of the Holly
Group's reasonable good faith estimate of its anticipated future utilization of
the assets of the Partnership Group.

      (j) Scheduling of Product Movements. The Partnership Group will use its
reasonable commercial efforts to schedule Refined Product movements and accept
deliveries of Refined Products hereunder in a manner that is consistent with the
historical dealings between the parties, as such dealings may change from time
to time.

      (k) Monthly Surcharge. If new laws or regulations are enacted that require
the Partnership Group to make substantial and unanticipated capital expenditures
with respect to the Refined Products Terminals, the Partnership Group may impose
a monthly surcharge to cover the Holly Group's pro rata share of the Partnership
Group's cost of complying with these laws or

                                       7

<PAGE>

regulations. The Holly Group and the Partnership Group shall use their
reasonable commercial efforts to comply with these laws and regulations, and
shall negotiate in good faith to mitigate the impact of these laws and
regulations and to determine the level of the monthly surcharge. If the Holly
Group and the Partnership Group are unable to agree on the level of the monthly
surcharge, such surcharge will be determined by binding arbitration in
accordance with Section 10(f) of this Agreement.

      (l) Increases in Pipeline Tariff Rates. If new laws or regulations are
enacted that require the Partnership Group to make substantial and unanticipated
capital expenditures with respect to the Refined Product Pipelines, the
Partnership Group may file new tariff rates in order to recover the Partnership
Group's cost of complying with these laws or regulations (including a reasonable
return). The Holly Group and the Partnership Group shall use their reasonable
commercial efforts to comply with these laws and regulations, and shall
negotiate in good faith to mitigate the impact of these laws and regulations and
to determine the amount of the new tariff rates. If the Holly Group and the
Partnership Group are unable to agree on the amount of the new tariff rates that
the Partnership Group will file, such tariff rates will be determined by binding
arbitration in accordance with Section 10(f) of this Agreement.

      SECTION 3. EXCEPTIONS TO THE HOLLY GROUP'S OBLIGATIONS

      (a) Shut Down or Reconfiguration of Refineries. The Holly Group must
deliver to the Partnership Group at least twelve months advance written notice
of any planned shut down or reconfiguration (excluding planned maintenance
turnarounds) of any Refinery or any portion of a Refinery that would reduce such
Refinery's output. The Holly Group will use its commercially reasonable efforts
to mitigate any reduction in the Minimum Revenue Commitment that would result
from such a shut down or reconfiguration. If the Holly Group shuts down or
reconfigures any Refinery or any portion of a Refinery (excluding planned
maintenance turnarounds) and reasonably believes in good faith that such shut
down or reconfiguration will jeopardize its ability to satisfy the Minimum
Revenue Commitment, then the Holly Group will utilize the Refined Product
Pipelines for 100% of the available production from the Refineries to the extent
necessary and available to satisfy the Minimum Revenue Commitment. In the event
that such production is insufficient to satisfy the Minimum Revenue Commitment,
then within 90 days of the delivery of the written notice of the planned shut
down or reconfiguration, the Holly Group shall (i) propose a new Minimum Revenue
Commitment, such that the ratio of the new Minimum Revenue Commitment under this
Agreement over the anticipated production level following the shut down or
reconfiguration will be approximately equal to the ratio of the original Minimum
Revenue Commitment under this Agreement over the original production level and
(ii) propose the date on which the new Minimum Revenue Commitment shall take
effect. Unless objected to by the Partnership Entities within 60 days of receipt
by the Partnership Group of such proposal, such new Minimum Revenue Commitment
shall become effective as of the date proposed by the Holly Group. To the extent
that the Partnership Entities do not agree with the Holly Group's proposal, any
changes in the Holly Group's obligations under this Agreement, or the date on
which such changes will take effect, will be determined by binding arbitration
in accordance with Section 10(f) of this Agreement.

      (b) Force Majeure. In the event that any party is rendered unable, wholly
or in part, by a Force Majeure event from performing its obligations under this
Agreement for a period of

                                       8

<PAGE>

more than 30 days, then upon the delivery of notice and full particulars of the
Force Majeure event in writing within a reasonable time after the occurrence of
the Force Majeure event relied on, the obligations of the parties, so far as
they are affected by the Force Majeure event, shall be suspended for the
duration of any inability so caused. Any suspension of the obligations of the
parties as a result of this Section 3(b) shall extend the term of this
Agreement. The Holly Group will be required to pay any amounts accrued and due
under this Agreement at the time of the Force Majeure event. The cause of the
Force Majeure event shall so far as possible be remedied with all reasonable
dispatch, except that no party shall be compelled to resolve any strikes,
lockouts or other industrial disputes other than as it shall determine to be in
its best interests. In the event a Force Majeure event prevents the Partnership
Group or the Holly Group from performing its obligations under this Agreement
for a period of more than one year, this Agreement may be terminated by the
Partnership Group or the Holly Group. Nothing in this Section 3(b) shall alter
the liability of the Partnership Group as set forth in the rules and regulations
tariffs for the Refined Product Pipelines attached hereto as Exhibit D and
Exhibit E.

      SECTION 4. AGREEMENT TO REMAIN SHIPPER

      With respect to any Refined Products that are produced at a Refinery and
transported in any Refined Product Pipeline or handled at any Refined Product
Terminal, the Holly Group agrees that it will continue its historical commercial
practice of owning such Refined Products from such point as such Refined
Products leave the Refinery until at least such point as they will not be
further transported in a Refined Product Pipeline or handled at a Refined
Product Terminal and to continue acting in the capacity of the shipper of any
such Refined Products for their own account at all times that such Refined
Products are in a Refined Product Pipeline or being handled at the Refined
Product Terminals.

      SECTION 5. AGREEMENT NOT TO CHALLENGE TARIFFS OR TERMINAL CHARGES

      The Holly Entities agree to any tariff rate changes for the Refined
Product Pipelines determined in accordance with this Agreement. The Holly
Entities agree (a) not to challenge, nor to cause their Controlled Affiliates to
challenge, nor to encourage or recommend to any other Person that it challenge,
or voluntarily assist in any way any other Person in challenging, in any forum,
interstate or intrastate tariffs (including joint tariffs) of the Partnership
Group that the Partnership Group has filed or may file containing rates, rules
or regulations that are in effect at any time during the term of this Agreement
and regulate the transportation of Refined Products, (b) not to protest or file
a complaint, nor cause their Controlled Affiliates to protest or file a
complaint, nor encourage or recommend to any other Person that it protest or
file a complaint, or voluntarily assist in any way any other Person in
protesting or filing a complaint, with respect to regulatory filings that the
Partnership Group has made or may make at any time during the term of this
Agreement to change interstate or intrastate tariffs (including joint tariffs)
for transportation of Refined Products and (c) not to seek, nor cause their
Controlled Affiliates to seek, nor encourage or recommend to any other Person
that it seek, or voluntarily assist in any way any other Person in seeking,
regulatory review of, or regulatory jurisdiction over, the contractual rates
charged at any time during the term of this Agreement by the Partnership Group
for terminalling services or to challenge, in any forum, such rates or changes
to such rates, in each case so long as such tariffs, regulatory filings or rates
changed do not conflict with the terms of this Agreement.

                                       9

<PAGE>

      SECTION 6. EFFECTIVENESS AND TERM

      This Agreement shall be effective as of July 13, 2004 and shall terminate
at 12:01 a.m. Dallas, Texas, time on July 1, 2019, unless extended by written
mutual agreement of the parties hereto or as set forth in Section 7; provided,
however, that Section 5 shall survive the termination of this Agreement.

      SECTION 7. RIGHT TO ENTER INTO A NEW AGREEMENT

      For a period of one year following termination without renewal of this
Agreement, the Holly Entities will have the right to enter into a new pipelines
and terminals agreement with the Partnership Entities on commercial terms that
substantially match the terms which the Partnership Group proposes to enter into
an agreement with a third party for similar services. The Partnership Group
shall give the Holly Group 45 days prior written notice of any proposed new
pipelines and terminals agreement with a third party, and shall inform the Holly
Group of the fee schedules, tariffs, duration and any other terms of the
proposed third party agreement.

      SECTION 8. NOTICES

      All notices or requests or consents provided for by, or permitted to be
given pursuant to, this Agreement must be in writing and must be given by
depositing same in the United States mail, addressed to the Person to be
notified, postpaid, and registered or certified with return receipt requested or
by delivering such notice in person or by telecopier or telegram to such party.
Notice given by personal delivery or mail shall be effective upon actual
receipt. Notice given by telegram or telecopier shall be effective upon actual
receipt if received during the recipient's normal business hours or at the
beginning of the recipient's next business day after receipt if not received
during the recipient's normal business hours. All notices to be sent to a party
pursuant to this Agreement shall be sent to or made at the address set forth
below or at such other address as such party may stipulate to the other parties
in the manner provided in this Section 8:

                           if to the Holly Entities:

                           Holly Corporation
                           100 Crescent Court
                           Suite 1600
                           Dallas, Texas 75201
                           Attn: Matthew P. Clifton
                           Telecopy: 1-214-615-9372

                                       10

<PAGE>

                           if to the Partnership Entities:

                           Holly Energy Partners, L.P.
                           c/o Holly Logistic Services, L.L.C.
                           100 Crescent Court
                           Suite 1600
                           Dallas, Texas 75201
                           Attn: James G. Townsend
                           Telecopy: 1-505-748-6827

      SECTION 9. DEFICIENCY PAYMENTS

      (a) As soon as practicable following the end of each Contract Quarter
under this Agreement, the Partnership Group shall deliver to the Holly Group a
written notice (the "Deficiency Notice") detailing any failure of the Holly
Group to meet any of its obligations under Section 2(a) of this Agreement. The
Deficiency Notice shall (i) specify in reasonable detail the nature of any
deficiency and (ii) specify the approximate dollar amount that the Partnership
Group believes would have been paid by the Holly Group to the Partnership Group
if the Holly Group had complied with Section 2(a) of this Agreement (the
"Deficiency Payment"). The Holly Group shall pay the Deficiency Payment to the
Partnership Group upon the later of: (1) 10 days after its receipt of the
Deficiency Notice and (2) 30 days following the end of the related Contract
Quarter.

      (b) If the Holly Group disagrees with the Deficiency Notice, then
following the payment of the Deficiency Payment to the Partnership Group, the
chief financial officers of Holly (on behalf of the Holly Group) and Holly GP
(on behalf of the Partnership Group) shall meet or communicate by telephone at a
mutually acceptable time and place, and thereafter as often as they reasonably
deem necessary and shall negotiate in good faith to attempt to resolve any
differences that they may have with respect to matters specified in the
Deficiency Notice. During the 30-day period following the payment of the
Deficiency Payment, the Holly Group shall have access to the working papers of
the Partnership Group relating to the Deficiency Notice. If such differences are
not resolved within 30 days following the payment of the Deficiency Payment, the
Holly Group and the Partnership Group shall, within 45 days following the
payment of the Deficiency Payment, submit any and all matters which remain in
dispute and which were properly included in the Deficiency Notice to arbitration
in accordance with Section 10(f).

      (c) If it is finally determined pursuant to this Section 9 that the Holly
Group is not required to make any or all of the Deficiency Payment (the
"Refund"), the Partnership Group shall promptly pay to the Holly Group the
Refund, together with interest thereon at the Prime Rate, in immediately
available funds.

      (d) Deficiency Payments will be credited against any payments owed by the
Holly Group in the following four Contract Quarters in excess of the Minimum
Revenue Commitments established by this Agreement for such Calendar Quarters;
provided, however, that the Holly

                                       11

<PAGE>

Group will not receive credit for any Deficiency Payment in any of the following
four Contract Quarters until it has met the Minimum Revenue Commitment in the
succeeding Contract Quarter.

      SECTION 10. MISCELLANEOUS

      (a) Intention as to Refineries. The Holly Entities represent to the
Partnership Entities that, as of the date of this Agreement, they are not
considering a shut down of any of the Refineries or any changes to any of the
Refineries that would have a material adverse effect on the operation of any of
the Refineries.

      (b) Amendments and Waivers. No amendment or modification of this Agreement
shall be valid unless it is in writing and signed by the parties hereto and, in
the case of any amendment or modification adverse to the Partnership Group,
approved by the Conflicts Committee of Holly GP. No waiver of any provision of
this Agreement shall be valid unless it is in writing and signed by the party
against whom the waiver is sought to be enforced, and, in the case of any waiver
by the Partnership Entities, approved by the Conflicts Committee of Holly GP. No
failure or delay in exercising any right hereunder, and no course of conduct,
shall operate as a waiver of any provision of this Agreement. No single or
partial exercise of a right hereunder shall preclude further or complete
exercise of that right or any other right hereunder.

      (c) Successors and Assigns. This Agreement shall inure to the benefit of,
and shall be binding upon, the Holly Entities, the Partnership Entities and
their respective successors and permitted assigns. Neither this Agreement nor
any of the rights or obligations hereunder shall be assigned without the prior
written consent of Holly (in the case of any assignment by the Partnership
Entities) or the Conflicts Committee of Holly GP (in the case of any assignment
by the Holly Entities); provided, however, that (i) the Partnership Entities may
make such an assignment (including a partial pro rata assignment) to an
Affiliate of the Partnership Entities and (ii) any Holly Group Member may make
such an assignment to any Person to which such Holly Group Member has sold any
of its assets which assets rely on the services provided by the Partnership
Group under this Agreement if such Person (A) is reasonably capable of
performing the Holly Group's obligations (or its pro rata portion of such
obligations) under this Agreement assigned to such Person, which determination
shall be made by the Holly Group in its reasonable judgment and (B) has agreed
in writing with the Partnership Group to assume the obligations of the Holly
Group assigned to such Person and (iii) the Partnership Group may make such an
assignment to any Person to which the Partnership Group has sold any of its
transportation, storage or terminalling assets which assets provide services to
the Holly Group under this Agreement if such Person (A) is reasonably capable of
performing the Partnership Group's obligations (or its pro rata portion of such
obligations) under this Agreement assigned to such Person, which determination
shall be made by the Partnership Group in its reasonable judgment and (B) has
agreed in writing with the Holly Group to assume the obligations of the
Partnership Group assigned to such Person. Any attempt to make an assignment
otherwise than as permitted by the foregoing shall be null and void. The parties
hereto agree to require their respective successors, if any, to expressly
assume, in a form of agreement acceptable to the other parties, their
obligations under this Agreement.

                                       12

<PAGE>

      (d) Severability. If any provision of this Agreement shall be held invalid
or unenforceable by a court or regulatory body of competent jurisdiction, the
remainder of this Agreement shall remain in full force and effect.

      (e) Choice of Law. This Agreement shall be subject to and governed by the
laws of the State of Texas, excluding any conflicts-of-law rule or principle
that might refer the construction or interpretation of this Agreement to the
laws of another state.

      (f) Arbitration Provision. Any and all Arbitrable Disputes must be
resolved through the use of binding arbitration using three arbitrators, in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, as supplemented to the extent necessary to determine any procedural
appeal questions by the Federal Arbitration Act (Title 9 of the United States
Code). If there is any inconsistency between this Section and the Commercial
Arbitration Rules or the Federal Arbitration Act, the terms of this Section will
control the rights and obligations of the parties. Arbitration must be initiated
within the time limits set forth in this Agreement, or if no such limits apply,
then within a reasonable time or the time period allowed by the applicable
statute of limitations. Arbitration may be initiated by a party ("Claimant")
serving written notice on the other party ("Respondent") that the Claimant
elects to refer the Arbitrable Dispute to binding arbitration. Claimant's notice
initiating binding arbitration must identify the arbitrator Claimant has
appointed. The Respondent shall respond to Claimant within 30 days after receipt
of Claimant's notice, identifying the arbitrator Respondent has appointed. If
the Respondent fails for any reason to name an arbitrator within the 30-day
period, Claimant shall petition the American Arbitration Association for
appointment of an arbitrator for Respondent's account. The two arbitrators so
chosen shall select a third arbitrator within 30 days after the second
arbitrator has been appointed. The Claimant will pay the compensation and
expenses of the arbitrator named by or for it, and the Respondent will pay the
compensation and expenses of the arbitrator named by or for it. The costs of
petitioning for the appointment of an arbitrator, if any, shall be paid by
Respondent. The Claimant and Respondent will each pay one-half of the
compensation and expenses of the third arbitrator. All arbitrators must (a) be
neutral parties who have never been officers, directors or employees of any of
the Holly Entities, the Partnership Entities or any of their affiliates and (b)
have not less than seven years experience in the energy industry. The hearing
will be conducted in Dallas, Texas and commence within 30 days after the
selection of the third arbitrator. The Holly Entities, the Partnership Entities
and the arbitrators shall proceed diligently and in good faith in order that the
award may be made as promptly as possible. Except as provided in the Federal
Arbitration Act, the decision of the arbitrators will be binding on and
non-appealable by the parties hereto. The arbitrators shall have no right to
grant or award indirect, consequential, punitive or exemplary damages of any
kind.

      (g) Rights of Limited Partners. The provisions of this Agreement are
enforceable solely by the parties to this Agreement, and no Limited Partner of
the Partnership shall have the right, separate and apart from the Partnership,
to enforce any provision of this Agreement or to compel any party to this
Agreement to comply with the terms of this Agreement.

      (h) Further Assurances. In connection with this Agreement and all
transactions contemplated by this Agreement, each signatory party hereto agrees
to execute and deliver such additional documents and instruments and to perform
such additional acts as may be necessary or

                                       13

<PAGE>

appropriate to effectuate, carry out and perform all of the terms, provisions
and conditions of this Agreement and all such transactions.

                                       14

<PAGE>

      IN WITNESS WHEREOF, the undersigned parties have executed this Agreement
as of the date first written above.

                          HOLLY CORPORATION

                          By: /s/ Stephen J. McDonnell
                              ----------------------------------------------
                              Stephen J. McDonnell
                              Vice President and Chief Financial Officer

                          NAVAJO REFINING COMPANY, L.P.

                          By:  NAVAJO REFINING GP, L.L.C.,
                               its general partner

                               By: /s/ Stephen J. McDonnell
                                   --------------------------------------------
                                   Stephen J. McDonnell
                                   Vice President and Chief Financial Officer

                          HOLLY REFINING AND MARKETING COMPANY

                          By: /s/ Stephen J. McDonnell
                              ----------------------------------------------
                              Stephen J. McDonnell
                              Vice President and Chief Financial Officer

                          HOLLY ENERGY PARTNERS, L.P.

                          By:  HEP LOGISTICS HOLDINGS, L.P.,
                               its general partner

                          By:  HOLLY LOGISTIC SERVICES, L.L.C.,
                               its general partner

                               By: /s/ Stephen J. McDonnell
                                   -------------------------------------------
                                   Stephen J. McDonnell
                                   Vice President and Chief Financial Officer

         Signature Page 1 of 2 to the Pipelines and Terminals Agreement

<PAGE>

                          HEP OPERATING COMPANY, L.P.

                          By:  HEP LOGISTICS GP, L.L.C.,
                               its general partner

                               By: /s/ Stephen J. McDonnell
                                   -------------------------------------------
                                   Stephen J. McDonnell
                                   Vice President and Chief Financial Officer

                          HEP LOGISTICS HOLDINGS, L.P.

                          By:  HOLLY LOGISTIC SERVICES, L.L.C.,
                               its general partner

                               By: /s/ Stephen J. McDonnell
                                   ------------------------------------------
                                   Stephen J. McDonnell
                                   Vice President and Chief Financial Officer

                          HOLLY LOGISTIC SERVICES, L.L.C.

                          By: /s/ Stephen J. McDonnell
                              -----------------------------------------------
                              Stephen J. McDonnell
                              Vice President and Chief Financial Officer

                          HEP LOGISTICS GP, L.L.C.

                          By: /s/ Stephen J. McDonnell
                              -----------------------------------------------
                              Stephen J. McDonnell
                              Vice President and Chief Financial Officer

         Signature Page 2 of 2 to the Pipelines and Terminals Agreement

<PAGE>

                                                                       EXHIBIT A

                            REFINED PRODUCT PIPELINES

<TABLE>
<CAPTION>
                                                       MILES OF
ORIGIN AND DESTINATION                                 PIPELINE             DIAMETER                CAPACITY
--------------------------------------------           --------             --------                ---------
                                                                            (inches)                 (bpd)
<S>                                                    <C>                  <C>                     <C>
Artesia, NM to El Paso, TX..................               156                    6                 24,000
Artesia, NM to Orla, TX to El Paso, TX......               215               8/12/8                 60,000(1)
Artesia, NM to Moriarty, NM(2)..............               215                 12/8                 45,000
Artesia, NM to Bloomfield, NM(2)............               406                 12/8                     (3)
</TABLE>

------------------
(1)  Includes 20,000 bpd of capacity on the Orla to El Paso segment of this
     pipeline that is leased to Alon.

(2)  The White Lakes Junction to Moriarty segment of the Artesia to Moriarty
     pipeline and the Moriarty to Bloomfield pipeline is leased from Enterprise
     Products Partners, L.P. under a long-term lease agreement.

(3)  Capacity for this pipeline is reflected in the information for the Artesia
     to Moriarty pipeline.

                                      A-1

<PAGE>

                                                                       EXHIBIT B

                           REFINED PRODUCTS TERMINALS

<TABLE>
<CAPTION>
                                                                                 STORAGE
                                                                                 CAPACITY          NUMBER OF
LOCATION                                                                         (BARRELS)           TANKS
------------------------------------------------------------------               ---------         ---------
<S>                                                                              <C>               <C>
El Paso, TX.......................................................                507,000              16
Moriarty, NM......................................................                189,000               9
Bloomfield, NM....................................................                193,000               7
Albuquerque, NM(1)................................................                 64,000               9
Tucson, AZ(2).....................................................                176,000               9
Mountain Home, ID(3)..............................................                120,000               3
Boise, ID(1)......................................................                111,000               9
Burley, ID(1).....................................................                 70,000               7
Spokane, WA.......................................................                333,000              32
Artesia facility truck rack.......................................                    N/A             N/A
Woods Cross facility truck rack...................................                    N/A             N/A
</TABLE>

------------------

(1)  The Partnership Group has a 50% ownership interest in these terminals. The
     capacity information represents the proportionate share of capacity
     attributable to this ownership interest.

(2)  The Tucson terminal consists of two parcels. On one parcel, the Partnership
     leases the underlying ground as a 50% co-tenant with a division of Kaneb
     Pipeline Co. pursuant to which the Partnership owns 50% of the improvements
     on that parcel. On the other parcel, the Partnership's joint venture with
     Kaneb leases the underlying ground and owns the improvements. The joint
     venture gives the Partnership rights to 100% of the terminal (for both
     parcels), which is operated by Kaneb for a fee.

(3)  Handles only jet fuel.

                                      B-1

<PAGE>

                                                                       EXHIBIT C

                                  FEE SCHEDULE

1.    The Holly Group will pay a terminal service fee of $0.30 per barrel for
      truck rack deliveries and $0.10 per barrel for pipeline deliveries at each
      of the Refined Product Terminals.

2.    The Holly Group will pay a service fee of $0.25 per barrel for truck rack
      deliveries for facilities located within Refineries.

3.    Each of the service fees listed on this Exhibit C will adjust at the
      beginning of each Contract Year by an amount equal to the percentage
      change between the two preceding Contract Years in the index comprised of
      comparable fees posted by Kinder Morgan at its Phoenix, Tucson and Las
      Vegas terminals.

                                       C-1

<PAGE>

                                                                       EXHIBIT D

                                       D-1

<PAGE>

                                                                       EXHIBIT E

                                       E-1

<PAGE>

                                                                       EXHIBIT F

                                       F-1

<PAGE>

                                                                       EXHIBIT G

                                       G-1

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