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                                                                    Exhibit 10.1

                                     [FORM]
                                HOLLY CORPORATION
                        PERFORMANCE SHARE UNIT AGREEMENT


         This Performance Share Unit Agreement (the "Agreement") is made and
entered into by and between HOLLY CORPORATION, a Delaware corporation (the
"Company"), and ______________________ (the "Employee"). If the Employee
presently is or subsequently becomes employed by a subsidiary of the Company,
the term "Company" shall be deemed to refer collectively to the Company and the
subsidiary or subsidiaries which employ the Employee. This Agreement is entered
into as of the ____ day of ____, ____ (the "Date of Grant").


                              W I T N E S S E T H:


         WHEREAS, the Company has adopted the HOLLY CORPORATION LONG-TERM
INCENTIVE COMPENSATION PLAN (the "Plan") to attract, retain and motivate
employees, directors and consultants; and

         WHEREAS, the Long-Term Incentive Compensation Plan Committee (the
"Committee") believes that entering into this Agreement with the Employee is
consistent with the stated purposes for which the Plan was adopted.

         NOW, THEREFORE, in consideration of the services rendered by the
Employee, it is agreed by and between the Company and the Employee, as follows:

         1. Grant. The Company hereby grants as of the Date of Grant a
     Performance Award (as defined in the Plan) of ________ performance share
     units (the "Units"), subject to the terms and conditions set forth in this
     Agreement. Depending upon the Company's performance, the Employee may earn
     from ____percent (____%) to ____ (____%) of the Units, based on the total
     shareholder return ("TSR") of the Company's common stock, par value $.01
     per share (the "Shares"), as compared to the TSR of a peer group of
     companies as provided in Section 2.

         2. Nature of Award. The Units represent an award for the "Performance
     Period" described in this Section 2. The Performance Period begins on
     ____and ends on ____. At the end of the Performance Period, the Employee
     shall be entitled to a cash payment equal to the value of the Units as
     determined under this Section 2 and payable at the time indicated in
     Section 4 or Section 3(b), as applicable. At the end of the Performance
     Period, the amount paid with respect to the Units will be based upon the
     TSR of the Company compared to the TSR of a select group of peer companies
     designated by the Committee for performance measurement purposes (the "Peer
     Group"), which for this Performance Period shall be
     _________________________________________________. TSR includes both
     appreciation in share price during the Performance Period and the assumed
     reinvestment of any dividends declared into additional Shares at the time
     dividends are paid. The Share price for the TSR calculation of the Company
     shall be the average Share price for the final thirty- (30-) day trading
     period of the Performance Period (the "Share Price"). The amount payable to
     the Employee pursuant to the



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     Agreement shall be an amount equal to the number of Units (as specified in
     Section 1 and after any applicable adjustment under Section 3) multiplied
     by a "Performance Percentage" (which will be based upon the Company's TSR
     ranking as compared to the ranking of the Peer Group, from which the peer
     companies having the highest and lowest TSR shall be removed) multiplied by
     the Share Price. The Performance Percentage will be determined in
     accordance with the following "Performance Schedule."


                              PERFORMANCE SCHEDULE

                           PERFORMANCE PERCENTAGE (%)
                            TO BE MULTIPLIED BY UNITS
           BASED UPON THE COMPANY'S TSR AS COMPARED TO THE PEER GROUP

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

<Table>
<Caption>
             THE COMPANY'S TSR AS COMPARED TO                            PERFORMANCE PERCENTAGE (%) TO BE
          THE PEER GROUP TSR - PERCENTILE RANKING                              MULTIPLIED BY UNITS
<S>                                                                      <C>
          ____ Percentile or Less                                                      ____%
          ____ - ____ Percentile                                                       ____%
          ____ - ____ Percentile                                                       ____%
          ____ - ____ Percentile                                                       ____%
          ____ - ____ Percentile                                                       ____%
          ____ Percentile and Higher                                                   ____%
</Table>


          3. Early Termination. In the event of separation from employment of
     the Employee prior to the end of the Performance Period on account of an
     event described in this Section 3, the number of Units with respect to
     which payment at the end of the Performance Period is based shall be
     determined as follows:

               (a) (i) In the event that the Employee separates from employment
          for any reason other than voluntary separation or Cause, as defined in
          Section 3(c)(vii), or (ii) in the event of the Employee's death or
          (iii) in the event of the Employee's total and permanent disability as
          determined by the Committee in its sole discretion, or (iv) in the
          event that the Employee shall retire after attaining normal retirement
          age of 62 or after attaining an earlier retirement age approved by the
          Committee in its sole discretion, the number of Units that shall be
          earned by and paid to the Employee or his beneficiary, in accordance
          with and at the time specified in Section 4, shall be determined as
          follows: the Employee shall forfeit a percentage of the Units equal to
          the percentage that the number of full months following the date of
          separation, death, disability or retirement to the end of the
          Performance Period bears to ____. The Committee shall determine the
          number of Units earned and the amount to be paid to the Employee or
          his beneficiary as soon as administratively practicable after the end
          of the Performance Period based upon the TSR calculation determined
          pursuant to Section 2 for the entire Performance Period. In its sole
          discretion, the Committee may make a payment to the Employee assuming
          a Performance Percentage of up to ____ percent (____%) of the Units
          instead of the pro-rata number of Units as determined pursuant to this
          Section 3(a). Unless the Committee determines




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          otherwise, the Employee will have no right to any other Units and
          those other Units granted under this Agreement will be forfeited. If
          the Employee separates from employment prior to the end of the
          Performance Period due to voluntary separation or on account of Cause,
          all Units hereunder will be forfeited.

               (b) In the event of a Special Involuntary Termination, as defined
          in Section 3(c)(vi), before the end of the Performance Period, no
          Units shall be forfeited, and payment with respect to ____ percent
          (____%) of the Units shall be made as soon as administratively
          practicable following the Special Involuntary Termination. In the
          event of a Special Involuntary Termination, the amount payable with
          respect to this Agreement will equal the number of Units granted
          pursuant to Section 1, multiplied by the Share Price, and multiplied
          by a Performance Percentage of ____ percent (____%); provided,
          however, the Share Price shall be calculated using the average Share
          price for the thirty- (30-) day trading period preceding the date of
          the Special Involuntary Termination. Payment pursuant to this Section
          3(b) is in-lieu of payment pursuant to Section 3(a) and if the
          Employee receives payment pursuant to this Section 3(b) the Employee
          will not be entitled to any payment pursuant to Section 3(a).

               (c) Definitions. For purposes of this Section 3,

                    (i) "Change in Control" shall mean:

                         A. Any "Person" (as defined in Section 3(c)(ii) below),
                    other than (1) the Company or any of its subsidiaries, (2) a
                    trustee or other fiduciary holding securities under an
                    employee benefit plan of the Company or any of its
                    "Affiliates" (as defined in Section 3(c)(v) below), (3) an
                    underwriter temporarily holding securities pursuant to an
                    offering of such securities, or (4) a corporation owned,
                    directly or indirectly, by the shareholders of the Company
                    in substantially the same proportions as their ownership of
                    stock of the Company, is or becomes the "Beneficial Owner"
                    (as defined in Section 3(c)(iii) below), directly or
                    indirectly, of securities of the Company (not including in
                    the securities beneficially owned by such person any
                    securities acquired directly from the Company or its
                    Affiliates) representing more than forty percent (40%) of
                    the combined voting power of the Company's then outstanding
                    securities, or more than forty percent (40%) of the then
                    outstanding common stock of the Company, excluding any
                    Person who becomes such a Beneficial Owner in connection
                    with a transaction described in Section 3(c)(i)(C)(I) below.

                         B. The individuals who as of the Date of Grant
                    constitute the Board of Directors of the Company and any
                    "New Director" (as defined in Section 3(c)(iv) below) cease
                    for any reason to constitute a majority of the Board of
                    Directors.



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                         C. There is consummated a merger or consolidation of
                    the Company or any direct or indirect subsidiary of the
                    Company with any other corporation, except if:

                                   (I) the merger or consolidation results in
                         the voting securities of the Company outstanding
                         immediately prior thereto continuing to represent
                         (either by remaining outstanding or by being converted
                         into voting securities of the surviving entity or any
                         parent thereof) at least sixty percent (60%) of the
                         combined voting power of the voting securities of the
                         Company or such surviving entity or any parent thereof
                         outstanding immediately after such merger or
                         consolidation; or

                                   (II) the merger or consolidation is effected
                         to implement a recapitalization of the Company (or
                         similar transaction) in which no Person is or becomes
                         the Beneficial Owner, directly, or indirectly, of
                         securities of the Company (not including in the
                         securities beneficially owned by such Person any
                         securities acquired directly from the Company or its
                         Affiliates other than in connection with the
                         acquisition by the Company or its Affiliates of a
                         business) representing more than forty percent (40%) of
                         the combined voting power of the Company's then
                         outstanding securities.

                         D. The shareholders of the Company approve a plan of
                    complete liquidation or dissolution of the Company or an
                    agreement for the sale or disposition by the Company of all
                    or substantially all of the Company's assets, other than a
                    sale or disposition by the Company of all or substantially
                    all of the Company's assets to an entity at least sixty
                    percent (60%) of the combined voting power of the voting
                    securities of which is owned by the stockholders of the
                    Company in substantially the same proportions as their
                    ownership of the Company immediately prior to such sale.

                                   (ii) "Person" shall have the meaning given in
                         section 3(a)(9) of the Securities Exchange Act of 1934
                         (the "1934 Act") as modified and used in sections 13(d)
                         and 14(d) of the 1934 Act.

                                   (iii) "Beneficial Owner" shall have the
                         meaning provided in Rule 13d-3 under the 1934 Act.

                                   (iv) "New Director" shall mean an individual
                         whose election by the Company's Board of Directors or
                         nomination for election by the Company's shareholders
                         was approved by a vote of at least two-thirds



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                         (2/3) of the directors then still in office who either
                         were directors at the Date of Grant or whose election
                         or nomination for election was previously so approved
                         or recommended. However, "New Director" shall not
                         include a director whose initial assumption of office
                         is in connection with an actual or threatened election
                         contest, including but not limited to a consent
                         solicitation relating to the election of directors of
                         the Company.

                                   (v) "Affiliate" shall have the meaning set
                         forth in Rule 12b-2 promulgated under section 12 of the
                         1934 Act.

                                   (vi) "Special Involuntary Termination" shall
                         mean the occurrence of (1) or (2) within sixty (60)
                         days prior to, or at any time after, a "Change in
                         Control" (as defined in Section 3(c)(i)), where (1) is
                         termination of the Employee's employment with the
                         Company (including subsidiaries of the Company) by the
                         Company for any reason other than "Cause" (as defined
                         in Section 3(c)(vii)) and (2) is a resignation by the
                         Employee from employment with the Company (including
                         subsidiaries of the Company) within ninety (90) days
                         after an "Adverse Change" (as defined in Section
                         3(c)(viii)) by the Company (including subsidiaries of
                         the Company) in the terms of the Employee's employment.

                                   (vii) "Cause" shall mean:

                                             A. An act or acts of dishonesty on
                                   the part of the Employee constituting a
                                   felony or serious misdemeanor and resulting
                                   or intended to result directly in gain or
                                   personal enrichment at the expense of the
                                   Company;

                                             B. Gross or willful and wanton
                                   negligence in the performance of the
                                   Employee's material and substantial duties of
                                   employment with the Company; or

                                             C. Conviction of a felony involving
                                   moral turpitude.

                         The existence of Cause shall be determined by the
                         Committee, in its sole and absolute discretion.

                                   (viii) "Adverse Change" shall mean (A) a
                         change in the city in which the Employee is required to
                         work regularly, (B) a substantial increase in travel
                         requirements of employment, (C) a substantial reduction
                         in duties of the type previously performed by the
                         Employee, or (D) a significant reduction in
                         compensation or benefits (other than bonuses and other
                         discretionary items of compensation) that does not
                         apply generally to executives of the Company or its
                         successor.

                    4. Payment of Units. The value of the Units earned shall be
          converted to a fully equivalent cash value at the end of the
          Performance Period (or such earlier time as specified under Section
          3(b)) and shall be payable in cash as soon as reasonably


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          practicable following the close of the Performance Period (or such
          earlier time as specified under Section 3(b)) in the amount determined
          in accordance with Section 2, as adjusted by Section 3, if applicable.
          Such cash payment will be subject to withholding for taxes and other
          applicable payroll adjustments. The Committee's determination of the
          amount payable shall be binding upon the Employee and his beneficiary
          or estate.



                    5. Adjustment in Number of Units. Except as provided below,
          in the event that the outstanding Shares of the Company are increased,
          decreased or exchanged for a different number of kind of shares or
          other securities, or if additional, new or different shares or
          securities are distributed with respect to the Shares through merger,
          consolidation, sale of all or substantially all of the assets of the
          Company, reorganization, recapitalization, stock dividend, stock
          split, reverse stock split or other distribution with respect to such
          Shares, the number of Units subject to this Agreement shall be
          adjusted, in the sole discretion of the Committee, to reflect the
          change in outstanding Shares, and, to the extent Shares are replaced
          or exchanged for different securities, the Committee shall, in its
          sole discretion, cause the Units to be valued in accordance with
          Sections 2 and 3 of this Agreement, but with respect to such new
          securities.

                    6. Definitions; Copy of Plan. To the extent not specifically
          provided herein, all terms used in this Agreement shall have the same
          meanings ascribed to them in the Plan. By the execution of this
          Agreement, the Employee acknowledges receipt of a copy of the Plan. If
          any provision of this Agreement is held to be illegal, invalid or
          unenforceable under any applicable law, then such provision will be
          deemed to be modified to the minimum extent necessary to render it
          legal, valid and enforceable; and if such provision cannot be so
          modified, then this Agreement will be construed as if not containing
          the provision held to be invalid, and the rights and obligations of
          the parties will be construed and enforced accordingly.

                    7. Administration. This Agreement shall at all times be
          subject to the terms and conditions of the Plan. The Committee shall
          have sole and complete discretion with respect to all matters reserved
          to it by the Plan and decisions of the majority of the Committee with
          respect thereto and this Agreement shall be final and binding upon the
          Employee and the Company. In the event of any conflict between the
          terms and conditions of this Agreement and the Plan, the provisions of
          the Plan shall control.

                    8. No Right to Continued Employment. This Agreement shall
          not be construed to confer upon the Employee any right to continue as
          an Employee of the Company and shall not limit the right of the
          Company, in its sole discretion, to terminate the service of the
          Employee at any time.

                    9. Governing Law. This Agreement shall be interpreted and
          administered under the laws of the State of Texas, without giving
          effect to any conflict of laws provisions.

                    10. Amendments. This Agreement may be amended only by a
          written agreement executed by the Company and the Employee. Any such
          amendment shall be



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          made only upon the mutual consent of the parties, which consent (of
          either party) may be withheld for any reason.

                    11. No Liability for Good Faith Determinations. The Company
          and the members of the Committee and the Board shall not be liable for
          any act, omission or determination taken or made in good faith with
          respect to this Agreement or the Units granted hereunder.

                    12. No Guarantee of Interests. The Board and the Company do
          not guarantee the Shares (as defined in the Plan) from loss or
          depreciation.

                    13. Nontransferability. This Agreement and all rights under
          this Agreement shall not be transferable by the Employee during his
          life other than by will or pursuant to applicable laws of descent and
          distribution. Any rights and privileges of the Employee in connection
          herewith shall not be transferred, assigned, pledged or hypothecated
          by the Employee or by any other person or persons, in any way, whether
          by operation of law, or otherwise, and shall not be subject to
          execution, attachment, garnishment or similar process. In the event of
          any such occurrence, this Agreement shall automatically be terminated
          and shall thereafter be null and void. Notwithstanding the foregoing,
          all or some of the Units or rights under this Agreement may be
          transferred to a spouse pursuant to a domestic relations order issued
          by a court of competent jurisdiction.

          IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its officers thereunto duly authorized, and the Employee has set his
hand effective as of the date and year first above written.


                                           HOLLY CORPORATION



                                           By:
                                              ----------------------------------


                                           -------------------------------------
                                           Employee



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