<PAGE>   1
 
                                  SCHEDULE 14A
                                 (RULE 14A-101)
                    INFORMATION REQUIRED IN PROXY STATEMENT
 
                            SCHEDULE 14A INFORMATION
 
          PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
               EXCHANGE ACT OF 1934 (AMENDMENT NO.             )
 
     Filed by the registrant /X/
     Filed by a party other than the registrant / /
     Check the appropriate box:
     / / Preliminary proxy statement
     /X/ Definitive proxy statement
     / / Definitive additional materials
     / / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

                              HOLLY CORPORATION
- - --------------------------------------------------------------------------------
                (Name of Registrant as Specified in Its Charter)


- - --------------------------------------------------------------------------------
                   (Name of Person(s) Filing Proxy Statement)

Payment of filing fee (Check the appropriate box):
     /X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
     / / $500 per each party to the controversy pursuant to Exchange Act Rule
         14a-6(i)(3).
     / / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
         0-11.
 
     (1) Title of each class of securities to which transaction applies:
 
- - --------------------------------------------------------------------------------
     (2) Aggregate number of securities to which transactions applies:
 
- - --------------------------------------------------------------------------------
     (3) Per unit price or other underlying value of transaction computed
         pursuant to Exchange Act Rule 0-11:(1)
 
- - --------------------------------------------------------------------------------
     (4) Proposed maximum aggregate value of transaction:
 
- - --------------------------------------------------------------------------------
     / / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
 
     (1) Amount previously paid:
 
- - --------------------------------------------------------------------------------
     (2) Form, schedule or registration statement no.:
 
- - --------------------------------------------------------------------------------
     (3) Filing party:
 
- - --------------------------------------------------------------------------------
     (4) Date filed:
 
- - --------------------------------------------------------------------------------


- - ---------------
    (1) Set forth the amount on which the filing fee is calculated and state how
it was determined.

<PAGE>   2
 
                               HOLLY CORPORATION
                               100 CRESCENT COURT
                                   SUITE 1600
                            DALLAS, TEXAS 75201-6927

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

                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

                             ---------------------
 
                                DECEMBER 8, 1994
 
PLEASE TAKE NOTICE that the Annual Meeting of Stockholders of Holly Corporation
will be held in Suite 200, First National Bank Building, 303 West Main, Artesia,
New Mexico, on Thursday, December 8, 1994, at 9:30 o'clock A.M. local time, to
 
          1. Elect a board of eight directors for the ensuing year; and
 
          2. Transact such other business as may properly come before the
             meeting, or any adjournment thereof.
 
     Only stockholders of record on October 19, 1994 are entitled to notice of
and to vote at the meeting.
 
     STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING IN PERSON ARE URGED TO
FILL OUT, SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE
ON WHICH NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. PROXIES
FORWARDED BY OR FOR BROKERS, BANKS, OR FIDUCIARIES SHOULD BE RETURNED AS
REQUESTED BY THEM. THE PROMPT RETURN OF PROXIES WILL SAVE THE EXPENSE INVOLVED
IN FURTHER COMMUNICATION.
 
                                         By Order of the Board of Directors:
 
                                                 HENRY A. TEICHHOLZ
                                       Vice President, Treasurer and Controller
 
N
ovember 3, 1994

<PAGE>   3
 
                                PROXY STATEMENT
                                       OF
                               HOLLY CORPORATION
                               100 CRESCENT COURT
                                   SUITE 1600
                            DALLAS, TEXAS 75201-6927
 
     The enclosed proxy for the Annual Meeting of Stockholders is being
solicited on behalf of the Board of Directors of Holly Corporation and is
revocable at any time prior to the exercise of the powers conferred thereby by
written notice to the Controller of the Company or in open meeting. The proxy
statement and proxy are expected to be sent to stockholders commencing on
November 3, 1994. The cost of soliciting proxies will be borne by the Company.
Regular employees of the Company may solicit proxies by mail, telephone,
telecopier or in person, without special compensation. Upon request, the Company
will reimburse brokers, dealers, banks and trustees, or their nominees, for
reasonable expenses incurred by them in forwarding proxy material to beneficial
owners of Common Stock.
 
     The Company's Annual Report for its 1994 fiscal year, which ended on July
31, 1994, is being distributed concurrently herewith. The Board of Directors has
fixed October 19, 1994, as the record date for the determination of stockholders
entitled to vote at the Annual Meeting. At the close of business on that record
date, there were outstanding 8,253,514 shares of the common stock, par value
$.01 per share (the "Common Stock"), the holders of which are entitled to one
vote per share.

<PAGE>   4
 

                             PRINCIPAL STOCKHOLDERS
 
     The table below lists the only persons known to the management to own
beneficially, as beneficial ownership is defined by Rule 13d-3 adopted by the
Securities and Exchange Commission ("SEC"), 5% or more of the Company's Common
Stock as of October 7, 1994:
 

<TABLE>
<CAPTION>
 
                                                                                       PERCENT OF
                   NAME AND ADDRESS                         AMOUNT AND NATURE OF       COMMON STOCK
                  OF BENEFICIAL OWNER                      BENEFICIAL OWNERSHIP(A)     OUTSTANDING
- - -------------------------------------------------------    -----------------------     ------------
<S>                                                        <C>                         <C>
Texas Commerce Bank, N.A.                                     1,210,676 shares(1)           14.7%
Trustee for Holly Corporation Employee
  Stock Ownership Plan
P.O. Box 2558
Houston, Texas 77252

Brown Brothers Harriman Trust Company of Texas, as            2,021,136 shares              24.5%
  trustee of trusts in the names of Betty Regard,
  Margaret Simmons and Suzanne Bartolucci(2)
2001 Ross Avenue
Dallas, Texas 75201-2996

Brown Brothers Harriman Trust Company of Texas, as              281,562 shares               3.4%
  trustee
  of three trusts for the benefit of David and
  Lamar Norsworthy and Nona Barrett, respectively.
2001 Ross Avenue
Dallas, Texas 75201-2996

David Norsworthy                                                250,752 shares(3)            3.0%
114 Hudson Street
Del Rio, Texas 78840

Lamar Norsworthy                                                428,581 shares(3)            5.2%
100 Crescent Court
Dallas, Texas 75201-6927
                                                                                             
Nona Barrett                                                    430,278 shares               5.2%
P.O. Box 668
Lake City, Colorado 81235

David Norsworthy, Lamar Norsworthy and Brown Brothers           285,858 shares(5)            3.5%
  Harriman Trust Company of Texas, as co-trustees of
  three trusts for the benefit of David and Lamar
  Norsworthy and Nona Barrett, respectively(4)
2001 Ross Avenue
Dallas, Texas 75201-2996

J. P. Morgan & Co. Incorporated, its subsidiaries and           685,800 shares(6)            8.3%
  affiliates, acting in various fiduciary capacities
23 Wall Street
New York, New York 10015

The Guardian Life Insurance Company of America, its             628,968 shares(7)            7.6%
  subsidiaries and affiliates, acting in various
  fiduciary capacities
201 Park Avenue South
New York, New York 10003
</TABLE>

 
                                            (All notes appear on following page)
 
                                        2

<PAGE>   5
 
- - ---------------
 
(a)  Sole voting and investment power except as shown otherwise.
 
(1)  Plan participants share voting power.
 
(2)  The named individuals are life beneficiaries and their "children and
     descendants," of whom there are now five, are residuary beneficiaries of
     these trusts.
 
(3)  Does not include 285,858 shares which are beneficially owned by three 
     trusts of which this owner is a co-trustee and which are listed separately.
 
(4)  The named individuals are the life beneficiaries and members of their
     families are the residuary beneficiaries of these trusts. Substantially all
     of the 285,858 shares are held in a limited partnership of which the
     general partner is a limited liability company owned and controlled by
     these trusts; the 98.5% limited partner in such partnership is a trust of
     which David Norsworthy, Lamar Norsworthy and Brown Brothers Harriman Trust
     Company of Texas are co-trustees and under which, unless the life
     beneficiary of the trust exercises a power of appointment directing
     otherwise, residuary beneficiaries are the trusts for the benefit of David
     and Lamar Norsworthy and Nona Barrett of which Brown Brothers Harriman
     Trust Company of Texas is the trustee.
 
(5)  The three co-trustees share indirect voting and investment powers. David
     Norsworthy and Lamar Norsworthy each disclaims that he is the beneficial
     owner except as to 1,430 of these shares.
 
(6)  Beneficial owner does not have voting power with respect to 188,600 shares.
 
(7)  Beneficial owner has shared voting and investment power with respect to
     453,468 shares and sole voting and investment power with respect to 175,500
     shares.
 
     The Company is advised that as of October 7, 1994 the present executive
officers and directors of the Company as a group owned beneficially 904,898
shares (including 284,428 shares as to which Lamar Norsworthy, Chairman of the
Board, President and Chief Executive Officer of the Company, disclaims
beneficial ownership) or approximately 11.0% of the Common Stock. Other than
Lamar Norsworthy, no executive officer owns more than 1% of the Company's Common
Stock.
 
                                        3

<PAGE>   6
 
                             ELECTION OF DIRECTORS
 
     At the Annual Meeting it is proposed to elect the eight management nominees
shown below to hold office as directors until the next annual meeting of
stockholders or until their respective successors shall have been elected and
qualify.
 
     The Company notes with sadness the absence of long-time director Henry L.
Stern. Mr. Stern, who retired as Senior Vice President and General Counsel of
the Company in 1989, served as director of the Company from 1967 to 1977 and
from 1980 until his death on October 30, 1994. The Company is grateful for Mr.
Stern's many years of service and will miss his guidance in the future.
 
     Each of the nominees listed below was elected as director by the
shareholders at the annual meeting in 1993. If any nominee should unexpectedly
become unavailable for election, votes will be cast, pursuant to the
accompanying proxy, for the election of a substitute who may be selected by the
present Board of Directors. Management has no reason to believe that any of the
nominees named below will be unable to serve.
 
     All properly executed proxies delivered pursuant to this solicitation and
not revoked will be voted at the Annual Meeting in accordance with the
directions given. With respect to the election of directors, in voting by proxy,
stockholders may vote in favor of all nominees or withhold their votes as to all
nominees or withhold their votes as to specific nominees. The election of
directors will be decided by a plurality vote. Thus, abstentions and broker
non-votes will be treated as votes neither "for" nor "against" the election of
directors, although abstentions and broker non-votes will be counted in
determining if a quorum is present.
 
     Set forth below is certain information about each nominee, including
principal occupations for at least five years and beneficial ownership of shares
of Common Stock ("Common Shares"). Offices with the Company have been held for
at least five years. Membership on certain Board committees is indicated by (A)
for audit committee, compensation committee and public policy committee; (E) for
executive committee:
 
          W. John Glancy, 52, a director since 1975, has practiced law in the
     Law Offices of W. John Glancy since January 1991. From 1988 to 1990 he was
     a partner in the law firm of Hughes & Luce. (A)
                                          Common Shares owned............... 200
 
          Marcus R. Hickerson, 68, a director since 1960, has been a consultant
     to Centex Development Company since 1987. (A)
                                          Common Shares owned............. 1,556
 
                                        4

<PAGE>   7
 
          A. J. Losee, 69, a director since 1978, is a shareholder in the
     Artesia, New Mexico law firm of Losee, Carson, Haas & Carroll, P.A., and
     has practiced law for more than 40 years. (A) (E)
                                          Common Shares owned............. 1,000
 
          Thomas K. Matthews, II, 68, a director since 1978, is a financial
     consultant. (A)
                                          Common Shares owned............... 400
 
          Robert G. McKenzie, 56, a director since 1992, has been Executive Vice
     President and Chief Operating Officer of Brown Brothers Harriman Trust
     Company of Texas since January 1990 . Theretofore, he was Executive Vice
     President of NCNB Texas National Bank and of First Republic Bank Dallas
     N.A. and Senior Vice President of RepublicBank Dallas, N.A. (A)
                                          Common Shares owned............. 1,000
 
          Lamar Norsworthy, 48, a director since 1967, is Chairman of the Board,
     Chief Executive Officer and President of the Company. (E)
                                          Common Shares owned........ 428,581(1)
 
          E. I. Parsons, 66, a director since 1976, until his retirement in
     January 1992 was Vice Chairman of the Board of the Company. (A)
                                          Common Shares owned............. 3,526
 
          Jack P. Reid, 58, a director since 1977, is Executive Vice President,
     Refining, of the Company. (E)
                                          Common Shares owned............ 59,591
- - ---------------
 
(1)  Mr. Norsworthy shares with two co-trustees voting and investment power for
     an additional 285,858 Common Shares as to which he disclaims beneficial
     ownership except as to 1,430 shares; see "Principal Stockholders".
 
     Certain information set forth above for each director nominee is based on
information furnished by such nominee; stockholdings are as of October 7, 1994.
No nominee other than Mr. Norsworthy owns beneficially as much as 1% of the
Common Stock.
 

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
 
     Based upon the Company's review of the reports and amendments on Forms 3, 4
and 5 furnished to the Company pursuant to Section 16(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), all such reports were
filed in a timely manner by reporting persons, except as set forth below. Lamar
N
orsworthy filed in June 1994 a Form 5 for the fiscal
 
                                        5

<PAGE>   8
 
year ended July 31, 1992 reporting ownership of 281,568 shares of Common Stock
owned by a trust of which Mr. Norsworthy is one of three co-trustees and The
Nona B. Norsworthy Trust filed in June 1994 a Form 3 for the month of May 1991
reporting ownership of 281,568 shares of Common Stock; no additional
transactions were reported in these filings, which were required by changes in
applicable SEC rules. Henry L. Stern filed in September 1994 a Form 5 for the
fiscal year ended July 31, 1993 reporting one retirement plan transaction as a
result of which his beneficial ownership of 667 shares of Common Stock changed
from indirect to direct.
 
BOARD COMMITTEES AND MEETINGS
 
     The Audit Committee of the Board of Directors, which met six times during
the 1994 fiscal year, is responsible for monitoring the Company's internal
accounting controls, recommending to the Board the selection of independent
auditors, and reviewing certain activities of the independent auditors and their
reports and conclusions.
 
     The Compensation Committee of the Board of Directors, which met eight times
during the 1994 fiscal year, is responsible for recommending to the Board
changes in the compensation of executive personnel and salaries and bonuses for
employee directors and for reviewing and making recommendations relative to the
Company's employee benefit plans. In addition, an Executive Stock Option
Committee composed of nonemployee directors is responsible for considering
grants of stock options to officers and directors of the Company; this committee
did not meet during the 1994 fiscal year.
 
     The Public Policy Committee of the Board of Directors, which met seven
times during the 1994 fiscal year, is responsible for (1) reviewing the
Company's policies and procedures on matters of public and governmental concern
that significantly affect the Company, including but not limited to
environmental, occupational health and safety, and equal employment opportunity
matters, and (2) recommending to management and the Board of Directors the
formulation or modification of policies and procedures concerning such matters.
 
     The Executive Committee of the Board of Directors has the authority of the
Board, to the extent permitted by law and subject to any limitations that may be
specified from time to time by the Board, for the management of the business and
affairs of the Company between meetings of the Board.
 
     The Board of Directors does not have a standing nominating committee.
 
     During the 1994 fiscal year, the Board of Directors held four meetings.
Each director attended at least 75% of the aggregate of the total number of
meetings of the Board and of all committees of the Board on which that director
served.
 
                                        6

<PAGE>   9
 

                  EXECUTIVE COMPENSATION AND OTHER INFORMATION
 
     The following table and notes present the compensation provided by the
Company to its chief executive officer and the other four most highly
compensated executive officers for all services rendered in all capacities to
the Company and its subsidiaries for the fiscal years ended July 31, 1994, 1993
and 1992.
 
                           SUMMARY COMPENSATION TABLE
 

<TABLE>
<CAPTION>
                                                                 ANNUAL COMPENSATION                   ALL
               NAME AND                               -----------------------------------------       OTHER
               PRINCIPAL                   FISCAL                                OTHER ANNUAL        COMPEN-
               POSITION                     YEAR       SALARY       BONUS       COMPENSATION(1)     SATION(2)
- - ---------------------------------------    ------     --------     --------     ---------------     ---------
<S>                                        <C>        <C>          <C>          <C>                 <C>
Lamar Norsworthy                            1994      $336,828     $125,000               --        $ 19,080 (3)
Chairman of the Board,                      1993       263,853      100,000               --         611,268 (4)
  President and Chief Executive             1992       251,500       37,000               --              --
  Officer

Jack P. Reid                                1994       309,907      117,000               --          19,886 (3)
Executive Vice President,                   1993       282,916      100,000               --         632,973 (4)
  Refining                                  1992       269,640       40,000               --              --

William J. Gray                             1994       166,530       58,000               --          13,700 (3)
Senior Vice President, Marketing            1993       158,580       55,000               --          14,191 (4)
  and Supply                                1992       150,990       31,000               --              --

Matthew P. Clifton                          1994       146,928       53,000               --          12,164 (3)
Senior Vice President                       1993       139,908       50,000               --          71,857 (4)
                                            1992       133,200       25,000               --              --
Christopher L. Cella                        1994       150,340       45,000               --          12,045 (3)
Vice President and General                  1993       142,872       42,000               --          12,521 (4)
  Counsel                                   1992       135,360       25,000               --              --
</TABLE>

 
- - ---------------
 
(1) Any perquisites or other personal benefits received from the Company by any
    of the named executives were substantially less than the reporting
    thresholds established by the SEC (the lesser of $50,000 or 10% of the
    individuals' total annual salary and bonus).
 
(2) In accordance with the transition provisions of the SEC rules, information
    with respect to fiscal year 1992 is omitted.
 
                                        7

<PAGE>   10
 
(3) All Other Compensation -- details for fiscal 1994:
 

<TABLE>
<CAPTION>
                                                                                          DIVIDENDS
                                                                                         DISTRIBUTED
                                       DIVIDENDS       COMPANY                               ON
                                          ON           MATCHING         COMPANY          UNALLOCATED
                                        PHANTOM         THRIFT        CONTRIBUTION          ESOP
                 NAME                   SHARES           PLAN           TO ESOP            SHARES           TOTAL
- - ------------------------------------   ---------       --------       ------------       -----------       -------
<S>                                    <C>             <C>            <C>                <C>               <C>
Lamar Norsworthy                        $ 4,943         $6,382           $5,603            $ 2,152         $19,080
Jack P. Reid                              5,121          7,010            5,603              2,152          19,886
William J. Gray                              --          6,416            5,263              2,021          13,700
Matthew P. Clifton                           --          5,688            4,679              1,797          12,164
Christopher L. Cella                         --          5,720            4,570              1,755          12,045
</TABLE>

 
(4) All Other Compensation -- details for fiscal 1993:
 

<TABLE>
<CAPTION>
                                                                                       DIVIDENDS
                                                                                      DISTRIBUTED
                          AWARDS    DIVIDENDS               COMPANY                       ON
                            OF         ON       PAYMENTS    MATCHING     COMPANY      UNALLOCATED      MOVING
                         PHANTOM    PHANTOM    IN LIEU OF    THRIFT    CONTRIBUTION      ESOP          EXPENSE
          NAME            SHARES     SHARES    DIVIDENDS      PLAN       TO ESOP        SHARES      REIMBURSEMENT     TOTAL
- - ----------------------   -------    ---------  ----------   --------   ------------   -----------   -------------   ---------
<S>                      <C>        <C>        <C>          <C>        <C>            <C>           <C>             <C>
Lamar Norsworthy         $377,817*  $  1,059    $ 215,253**  $7,427       $6,750        $ 2,962        $    --      $ 611,268
Jack P. Reid              391,353*     1,097      222,964**   7,847        6,750          2,962             --        632,973
William J. Gray                --         --           --     6,120        5,609          2,462             --         14,191
Matthew P. Clifton             --         --           --     4,846        4,877          2,140         59,994         71,857
Christopher L.Cella            --         --           --     5,384        4,960          2,177             --         12,521
</TABLE>

 
- - ---------------
 
 * Amounts shown are the market value on the date of award of a number of shares
   of Common Stock equal to the number of Phantom Shares awarded to the named
   officer. Phantom Shares were granted to the named officers for past services
   and to compensate for the exclusion of the officers from the Employee Stock
   Ownership Plan ("ESOP") in the 1986-88 fiscal years. Phantom Shares are
   unsecured rights to cash payments based on dividends paid on shares of Common
   Stock and the market value of such shares at future dates. Payments based on
   market value of Common Stock are generally due 40 days after termination of
   employment or the date of final distribution to the officer under the ESOP
   unless the officer elects to defer payments to future dates that may not be
   later than 60 days after the officer's death or permanent disability.
 
** Total of special cash payments to compensate officer for dividends paid on
   shares of Common Stock held in the ESOP that would have been allocated to the
   officer for the fiscal years 1986 through 1988 if the officer had not been
   excluded from participation in the ESOP for those years.
 
                                        8

<PAGE>   11
 
     The following table sets forth information with respect to the exercisable
value of unexercised Phantom Shares at July 31, 1994.
 

<TABLE>
<CAPTION>
          AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
- - --------------------------------------------------------------------------------------------------------------
                                                                       NUMBER OF          VALUE OF UNEXERCISED 
                                                                      UNEXERCISED             IN-THE-MONEY     
                                                                    OPTIONS/SARS AT         OPTIONS/SARS AT    
                                         SHARES                     FISCAL YEAR-END         FISCAL YEAR-END    
                                        ACQUIRED                          (#)                     ($)          
                                           ON         VALUE         ---------------       -------------------- 
                                        EXERCISE     REALIZED        EXERCISABLE/             EXERCISABLE/     
                 NAME                     (#)          ($)           UNEXERCISABLE           UNEXERCISABLE     
- - --------------------------------------  --------     --------       ---------------       -------------------- 
<S>                                     <C>          <C>            <C>                   <C>
Lamar Norsworthy......................      0            0              14,124/0              $ 402,534/$0
Jack P. Reid..........................      0            0              14,630/0              $ 416,955/$0
</TABLE>

 
BONUS ARRANGEMENTS
 
     The Company and its principal subsidiaries provide incentive bonuses for
certain key personnel. Bonuses are based in part on the performance of the
Company and in part on assessment of individual performance. See "Compensation
Committee Report on Executive Compensation."
 
RETIREMENT PLAN
 
     The Company has a noncontributory Retirement Plan for all permanent
employees. The following table sets forth the estimated annual retirement
benefits (subject to reduction for Social Security offsets) that would be
payable in 1994 for certain salary ranges under the Retirement Plan and the
retirement restoration plan described below:
 
                               PENSION PLAN TABLE
 

<TABLE>
<CAPTION>
                                                      YEARS OF CREDITED SERVICE AT NORMAL RETIREMENT
HIGHEST THREE-YEAR                       ------------------------------------------------------------------------
  AVERAGE SALARY                           10           15           20           25           30           35
- - ------------------                       -------     --------     --------     --------     --------     --------
<S>                                      <C>         <C>          <C>          <C>          <C>          <C>
    $150,000...........................  $24,000     $ 36,000     $ 48,000     $ 60,000     $ 72,000     $ 84,000
     200,000...........................   32,000       48,000       64,000       80,000       96,000      112,000
     250,000...........................   40,000       60,000       80,000      100,000      120,000      140,000
     300,000...........................   48,000       72,000       96,000      120,000      144,000      168,000
     350,000...........................   56,000       84,000      112,000      140,000      168,000      196,000
     400,000...........................   64,000       96,000      128,000      160,000      192,000      224,000
     450,000...........................   72,000      108,000      144,000      180,000      216,000      252,000
     500,000...........................   80,000      120,000      160,000      200,000      240,000      280,000
</TABLE>

 
     The compensation covered by the Company's retirement plans is the salary
paid to each employee, the amount of which is shown in the Summary Compensation
Table on page 7 under
 
                                        9

<PAGE>   12
 
the heading "Salary" for each executive listed therein. At July 31, 1994,
Messrs. Norsworthy, Reid, Gray, Clifton, and Cella were credited with 21, 35,
25, 14, and 4 years of service, respectively. Under the Plan, subject to certain
age and length-of-service requirements, employees upon normal retirement are
entitled to a life annuity with yearly pension payments equal to 1.6% of average
annual salary compensation during their highest compensated consecutive 36-month
period of employment with the Company multiplied by total credited years of
service, less 1.5% of primary Social Security benefits multiplied by such
service years but not to exceed 45% of such benefits.
 
     Benefits up to limits set by the Internal Revenue Code are funded by
Company contributions to the Retirement Plan, with the amounts determined on an
actuarial basis. The Internal Revenue Code currently limits benefits that may be
covered by the Retirement Plan's assets to $118,800 per year (subject to
increases for future years based on price level changes) and limits the
compensation that may be taken into account in computing such benefits to
$235,840 for the 1994 fiscal year and to $150,000 for additional benefits
accrued in years after fiscal 1994 (subject to certain upward adjustments for
future years). The Company has recently adopted a retirement restoration plan
that provides for additional payments from the Company so that total retirement
plan benefits for executives will be maintained at the levels provided in the
Retirement Plan before the application of the Internal Revenue Code limitations.
 
THRIFT AND STOCK OWNERSHIP PLANS
 
     The Company has a Thrift Plan and an ESOP, which are qualified under the
Internal Revenue Code, for eligible employees of the Company and its
subsidiaries.
 
     Employees with at least one year of service may elect to participate in the
Thrift Plan by making contributions to the Plan of from 2% to 14% of their
compensation. The Company matches employee contributions up to 4% of their
compensation. In 1994, employee contributions which are made on a tax-deferred
basis are limited to $9,240 per year. Employees may direct Company contributions
to be invested in Common Stock. Company contributions vest upon the earlier of
five years of credited service or termination of employment due to retirement,
disability or death. Matching Company contributions for executive officers under
the Thrift Plan have been included in the Summary Compensation Table under the
column captioned "All Other Compensation."
 
     All employees of the Company and eligible affiliates with at least one year
of service, other than employees covered by collective bargaining agreements,
participate in the ESOP established in 1985. Initially, the ESOP owned 1,500,000
shares of Common Stock. Commencing with the 1987 fiscal year, shares of Common
Stock held by the ESOP have been allocated to the accounts of participants for
each fiscal year on the basis of payments of principal on the ESOP's ten-year
installment note issued to the Company in connection with the ESOP's purchase of
Common
 
                                       10

<PAGE>   13
 
Stock from the Company. Shares are allocated to participants based on their
compensation. Participants' shares vest upon the earlier of five years' credited
service or termination of employment due to retirement, disability or death. For
the 1994 fiscal year, shares of Common Stock held by the ESOP were allocated to
executive officers as follows: 2,049 shares were allocated to Mr. Norsworthy and
to Mr. Reid, 1,925 to Mr. Gray, 1,711 to Mr. Clifton and 1,671 to Mr. Cella. The
cost of these allocated shares and dividends received on unallocated shares of
Common Stock held by the ESOP are included in the Summary Compensation Table
under the column captioned "All Other Compensation."
 
ESOP RESTORATION PLAN
 
     The Company has recently adopted an ESOP restoration plan to provide
additional benefits to executives whose allocations of Company shares from the
ESOP for the 1995 and 1996 fiscal years will be reduced because of the
application of Internal Revenue Code limitations. The new plan does not apply
with respect to the 1994 fiscal year and hence amounts with respect to the plan
are not included in the Summary Compensation Table on page 7. The plan provides
for the grant to participants after the end of the 1995 and 1996 fiscal years of
"phantom shares" equal in number to the number of shares not allocated to
participants because of the Internal Revenue Code limitations. The phantom
shares under the plan will be unsecured rights to cash payments based on
dividends paid on shares of Common Stock and on the market value of such shares
at future dates. Payments based on market value of Common Stock will generally
be made at the time of a participant's termination of employment or at the time
of a final distribution to the participant under the ESOP unless the participant
elects to defer payments over a 10-year period. It is expected that a total of
approximately 7,500 phantom shares will be granted to participants for each of
the 1995 and 1996 fiscal years.
 
COMPENSATION OF DIRECTORS
 
     Directors who are not employees of the Company or its subsidiaries are paid
$12,000 per annum, plus $1,000 per day per attended meeting, other than
conference telephone meetings, of the Board and per attended meeting of a
committee of the Board that does not immediately precede or follow a Board
meeting. Officers of the Company do not receive compensation for serving on the
Board of Directors.
 
                                       11

<PAGE>   14
 
C
OMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
     The members of the Compensation Committee of the Board of Directors during
the 1994 fiscal year are listed below. None of the members of the Committee was
an officer or employee of the Company or any of its subsidiaries during the 1994
fiscal year. Members of the Committee who in prior years were officers of the
Company or of a subsidiary are indicated below by (O).
 

<TABLE>
<S>                                         <C>
W. John Glancy(O)(1)                        E.I. Parsons(O)
Marcus R. Hickerson(O)                      Robert G. McKenzie
A.J. Losee(2)                               Henry L. Stern(O)
Thomas K. Matthews, II
</TABLE>

 
- - ---------------
 
(1)  Mr. Glancy was, and is expected to continue to be, retained to render legal
     services to the Company. For such services rendered in the 1994 fiscal
     year, Mr. Glancy's law office was paid approximately $87,000.
 
(2)  Mr. Losee is a shareholder in the Artesia, New Mexico law firm of Losee,
     Carson, Haas & Carroll, P.A., which was, and is expected to continue to be,
     retained to render legal services to the Company. For such services
     rendered in the 1994 fiscal year, Losee, Carson, Haas & Carroll, P.A. was
     paid approximately $178,000.
 
No executive officer of the Company served as a director or member of the
compensation committee of another entity which had an executive officer serving
as a member of the Company's Board of Directors or the Board's Compensation
Committee.
 
                                       12

<PAGE>   15
 
            COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
 
     The Compensation Committee of the Board is responsible for all compensation
programs for the executive officers of the Company. The Committee determines the
compensation of officers who are also directors (other than any grants of stock
options, which are subject to the jurisdiction of the Executive Stock Option
Committee) and reviews overall compensation levels for the Company's other
executive officers. There were eight meetings of the Compensation Committee
during the 1994 fiscal year.
 
     The basic objective of the Company's compensation program for executives is
to provide levels of compensation that allow the Company to attract and retain
productive executives who are motivated to protect and enhance the long-term
value of the Company for its shareholders. The Company seeks to establish and
maintain levels of compensation that will be competitive with levels for
comparable companies. Competitive compensation levels are estimated on the basis
of available information on compensation paid by companies in the Company's
industry that are most similar to the Company, taking into account the Company's
size and place in the refining industry. Executive compensation programs are
intended to reward each executive based on Company performance and individual
performance and to balance appropriately short-term and long-term
considerations.
 
     The Company's major current compensation programs for executives are
salaries, annual bonuses, allocations of shares under the ESOP, benefits under
retirement and thrift plans, and benefits under the recently adopted retirement
restoration plan and ESOP restoration plan.
 
     Salaries of executives are set at levels intended to be competitive with
levels for comparable businesses. Salaries are reviewed and adjusted annually.
 
     Bonuses are based in part on an evaluation of the performance of the
Company and in part on assessments of individual performance. Because of the
relative size of the Company in the refining industry and the susceptibility of
the Company and the industry to unexpected changes in circumstances that can
have major impacts -- positive or negative -- on performance, the Company's
performance, as measured principally by net income, is evaluated by the
Committee after the end of the fiscal year in light of the circumstances of the
Company and the industry for the year completed. In this evaluation, particular
consideration is given to the Company's handling during the year of the
controllable elements affecting current and future results of operations and to
the Company's performance for the year as compared to historical levels; the
Committee also takes into account as appropriate any major differences between
Company performance and the performance levels of other companies in the
refining industry. In the case of Mr. Norsworthy and Mr. Reid, Company
performance is the predominant element in the determination of bonuses. In the
case of bonuses for other executives, the relative importance of individual
performance and
 
                                       13

<PAGE>   16
 
Company performance varies among executives depending on their responsibilities
within the Company. Amounts of bonuses for different performance levels are
intended to be competitive with bonus levels of comparable companies.
 
     Compensation of Lamar Norsworthy, the Company's Chairman of the Board,
President and Chief Executive Officer, is determined by the Committee under the
principles described above. After a review of salary levels of chief executive
officers of comparable companies, the Compensation Committee increased Mr.
Norsworthy's salary from an annual level of $273,700 to an annual level of
$380,000 effective January 1, 1994. Effective June 1, 1994, Mr. Norsworthy's
salary was further increased to an annual level of $386,750. The Committee
believes that Mr. Norsworthy's salary is currently at a competitive level based
on comparisons with similar refining companies. Since Mr. Norsworthy has overall
responsibility for the Company, Mr. Norsworthy's bonus is based primarily on
evaluation of the performance of the Company for the last completed fiscal year.
For the 1994 fiscal year, Mr. Norsworthy's bonus of $125,000 was approximately
37% of his salary for the year. This bonus level was based on the Committee's
view that the Company's performance for the 1994 fiscal year was generally at
expected levels in terms of net earnings and the Company's response to
opportunities and challenges that arose during the year.
 
     In September 1994, the Committee recommended and the Board approved
creation of supplemental plans intended to provide to executives payments to
replace benefits under the retirement plan and the ESOP that cannot be provided
from these plans because of Internal Revenue Code limitations.
 
     The retirement restoration plan will provide to participants additional
benefits to take the place of benefits that would have been provided under the
qualified retirement plan except for the application of limitation provisions of
the Internal Revenue Code. The three initial participants under the plan are
Lamar Norsworthy, Jack P. Reid, and William J. Gray, who are the only executives
whose salary and benefit levels currently exceed Internal Revenue Code
limitations. Because of the operation of the Internal Revenue Code limitations
that have caused the adoption of the retirement restoration plan, initially most
of the value of benefits under the plan will be allocable to Mr. Reid and Mr.
Norsworthy. Although benefits under this plan will be unfunded general
obligations of the Company, in certain circumstances in which there is a change
in control of the Company the Company would be required to purchase annuities
and make cash payments with a total cost equal to the value of accrued benefits
under the plan. The expense accrued for the 1995 fiscal year with respect to
this plan is expected to be approximately $237,000.
 
     In the case of the ESOP restoration plan, participants will receive phantom
shares to the extent that ESOP shares would have been allocated to them except
for Internal Revenue Code limitations. The phantom shares under the plan will be
unsecured rights to cash payments from the Company based on dividends paid on
shares of Common Stock and based on the market value of
 
                                       14

<PAGE>   17
 
such shares at future dates. Payments based on market value of Common Stock will
generally be made when a participant terminates employment with the Company or
when a final distribution is made to the participant under the ESOP unless the
participant elects to defer payments over a 10-year period. The plan will be
effective for the fiscal years ending July 31, 1995 and July 31, 1996 and it is
anticipated that a total of approximately 7,500 phantom shares will be allocated
for each year to participants under the plan. Expense to the Company will be
determined by future market prices of shares of Common Stock and by the level of
future dividends paid on shares of Common Stock. Eleven executives, including
the five individuals listed in the Summary Compensation Table on page 7, are
participants under the plan.
 
                Compensation Committee of the Board of Directors
 
Thomas K. Matthews, II, Chairman                                      A.J. Losee
W. John Glancy                                                      E.I. Parsons
Marcus R. Hickerson                                           Robert G. McKenzie
 
     The Compensation Committee Report on Executive Compensation will not be
deemed incorporated by reference in any filing by the Company under the
Securities Act of 1933, as amended (the "Securities Act") or the Exchange Act,
except to the extent that the Company specifically incorporates such report by
reference.
 
                                       15

<PAGE>   18
 
STOCK PERFORMANCE GRAPH
 
     Set forth below is a line graph comparing, for the period of five fiscal
years commencing July 31, 1989 and ending July 31, 1994, the yearly percentage
change in the cumulative total shareholder return on the Company's Common Shares
to the cumulative total return of the S&P Composite 500 Stock Index and of an
industry peer group chosen by the Company.
 
           COMPARISON OF FIVE-YEAR CUMULATIVE SHAREHOLDER RETURNS(1)
 
(GRAPH)


<TABLE>
<CAPTION>
      MEASUREMENT PERIOD         HOLLY CORPO-                    INDUSTRY PEER
    (FISCAL YEAR COVERED)           RATION          S&P 500        GROUP(2)
    ---------------------        -----------        -------      -------------
<S>                              <C>             <C>             <C>
1989                                   100             100             100
1990                                    99             107              99
1991                                   117             120              93
1992                                    94             135              83
1993                                   104             147              96
1994                                   112             155             109
</TABLE>

 
(1)  The amounts shown assume that the value of the investment in the Company 
     and each index was $100 on July 31, 1989 and that all dividends were
     reinvested.
 
(2)  The peer group, as chosen by the Company, includes companies that are
     similar to the Company in regards to refining operations. This group is
     made up of Ashland Oil, Inc., Crown Central Petroleum Corporation, Diamond
     Shamrock, Inc., Getty Petroleum Corporation, Giant Industries Inc., Tesoro
     Petroleum Corp., Tosco Corporation, Total Petroleum (North America) Ltd.,
     Sun Company, Inc., Ultramar Corporation and Valero Energy Corporation. It
     should be noted that almost all of the peer group companies are also
     engaged in retail gasoline marketing in addition to their refining
     activities and are engaged in oil and gas exploration and production to a
     greater extent than is the Company; in addition, most of the peer companies
     are substantially larger than the Company in terms of assets and sales.
 
                                       16

<PAGE>   19
 
     The stock price performance depicted in the foregoing graph is not
necessarily indicative of future price performance. The graph will not be deemed
to be incorporated by reference in any filing by the Company under the
Securities Act or the Exchange Act, except to the extent that the Company
specifically incorporates such graph by reference.
 
                RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
 
     The Board of Directors of the Company has selected Ernst & Young LLP,
independent certified public accountants, to audit the books, records and
accounts of the Company and its consolidated subsidiaries for the 1995 fiscal
year. Ernst & Young LLP has conducted such audits since 1977. It is expected
that a representative of such firm will be present in person or by conference
telephone at the stockholders' meeting, will have an opportunity to make a
statement if the representative so desires, and will be available to respond to
appropriate questions.
 
                             STOCKHOLDER PROPOSALS
 
     Proposals of stockholders to be considered for presentation at the
Company's 1995 Annual Meeting should be received by the Company by July 6, 1995,
in order to be considered for inclusion in the proxy statement for that meeting.
 
                         FINANCIAL STATEMENTS AVAILABLE
 
     A copy of the Company's 1994 Annual Report containing the audited
consolidated balance sheets at July 31, 1994 and 1993, and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the three fiscal years ended July 31, 1994, is being mailed with this Proxy
Statement to shareholders entitled to notice of the Annual Meeting. The Annual
Report does not constitute a part of the proxy solicitation material.
 
                                                  HENRY A. TEICHHOLZ
                                       Vice President, Treasurer and Controller
 
November 3, 1994
 
                                       17

<PAGE>   20
                              HOLLY CORPORATION
P
R        PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - DECEMBER 8, 1994
O
X                SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Y

     Lamar Norsworthy, Gerard L. Regard and Jack P. Reid, or any of them or
their substitutes, are hereby appointed proxies to represent and to vote the
stock of Holly Corporation standing in the name(s) of the undersigned at the
Annual Meeting of Stockholders to be held in Artesia, New Mexico on December 8,
1994, and at all adjournments thereof.

     TO VOTE IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS
YOU DO NOT NEED TO MARK ANY OF THE BOXES. JUST DATE AND SIGN ON THE REVERSE
SIDE.

                                                            SEE REVERSE
          CONTINUED AND TO BE SIGNED ON REVERSE SIDE           SIDE



(X)   PLEASE MARK 
      VOTES AS IN
      THIS EXAMPLE.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS
GIVEN, IT WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES AS DIRECTORS AND IN
THE DISCRETION OF THOSE AUTHORIZED TO VOTE THIS PROXY ON ANY OTHER BUSINESS.

1. Election of Directors

NOMINEES: W.J. Glancy, M.R. Hickerson, A.J. Losee, T.K. Matthews, R.G.
McKenzie, L. Norsworthy, E.I. Parsons, J.P. Reid

                           FOR                  WITHHELD

                           ( )                    ( )

( )________________________________
For all nominees except as noted above

2. Other Business - Voting upon any other business properly before the meeting
   or any adjournment thereof.

Receipt of the Company's Annual Report for its 1994 fiscal year, Notice of the
Annual Meeting and related Proxy Statement is hereby acknowledge, and all
former proxies are hereby revoked.

                               MARK HERE
                              FOR ADDRESS    (  )
                               CHANGE AND
                              NOTE AT LEFT

Please sign below exactly as name(s) appear(s) hereon. Joint tenants should
both sign. Executors, administrators, trustees or guardians should show their
capacity as such. Corporations should sign by President or other authorized
officer.

Signature:__________________________ Date ____________
Signature:__________________________ Date ____________