-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, txtncGQk1ANIV6x/wsDBfZThK7UHdvADF3SRLlEp7mM0JkdvK/OyrANIrEsgpVDZ 4CfLDVdfeohrGV9evMAuTA== 0000890566-94-000423.txt : 19941108 0000890566-94-000423.hdr.sgml : 19941108 ACCESSION NUMBER: 0000890566-94-000423 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 14 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941107 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: IMPERIAL HOLLY CORP CENTRAL INDEX KEY: 0000831327 STANDARD INDUSTRIAL CLASSIFICATION: 2060 IRS NUMBER: 740704500 STATE OF INCORPORATION: TX FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10307 FILM NUMBER: 94557811 BUSINESS ADDRESS: STREET 1: ONE IMPERIAL SQ STE 200 STREET 2: P O BOX 9 CITY: SUGAR LAND STATE: TX ZIP: 77487 BUSINESS PHONE: 7134919181 FORMER COMPANY: FORMER CONFORMED NAME: IMPERIAL SUGAR CO /TX/ DATE OF NAME CHANGE: 19880606 10-Q 1 QUARTERLY REPORT FOR THE PERIOD ENDED 9/30/94 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------- FORM 10-Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1994 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ........ to ........ Commission file number 1-10307 IMPERIAL HOLLY CORPORATION (Exact name of registrant as specified in its charter) Texas 74-0704500 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Imperial Square, Suite 200, P.O. Box 9, Sugar Land, Texas 77487 (Address of principal executive offices, including Zip Code) (713) 491-9181 (Registrant's telephone number, including area code) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /X/ No / / Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of November 3, 1994. 10,267,931 shares. Exhibit Index Appears on Page 14 IMPERIAL HOLLY CORPORATION Index Page PART I - FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets ................. 3 Consolidated Statements of Income ........... 4 Consolidated Statements of Cash Flows ....... 5 Consolidated Statement of Changes in Shareholders' Equity ........................ 6 Notes to Consolidated Financial Statements .. 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K ............. 12 - 2 - IMPERIAL HOLLY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS September 30, 1994 March 31, 1994 (UNAUDITED) --------------- -------------- ASSETS (In Thousands of Dollars) CURRENT ASSETS: Cash and temporary investments ........ $ 1,973 $ 555 Marketable securities ................. 30,137 28,334 Accounts receivable ................... 51,075 43,856 Inventories: Finished products ................... 49,929 110,671 Raw and in-process materials ........ 21,409 22,370 Supplies ............................ 13,253 11,688 Manufacturing costs prior to production 23,275 13,573 Prepaid expenses ...................... 4,593 4,604 ---------- ---------- Total current assets .............. 195,644 235,651 OTHER INVESTMENTS ....................... 6,365 6,553 PROPERTY, PLANT AND EQUIPMENT, NET ...... 138,300 141,234 OTHER ASSETS ............................ 10,064 10,222 ---------- ---------- TOTAL .......................... $ 350,373 $ 393,660 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable -- trade ............. $ 54,169 $ 43,767 Short-term borrowings ................. 24,090 77,438 Current maturities of long-term debt .. 84 84 Other current liabilities ............. 32,282 30,318 ---------- ---------- Total current liabilities ......... 110,625 151,607 LONG-TERM DEBT .......................... 100,019 100,044 DEFERRED TAXES AND OTHER CREDITS ........ 25,888 27,272 SHAREHOLDERS' EQUITY Preferred stock ....................... -- -- Common stock .......................... 31,884 31,780 Retained earnings ..................... 78,897 79,862 Unrealized securities gains -- net .... 3,769 3,804 Pension liability adjustment .......... (709) (709) ---------- ---------- Total shareholders' equity .......... 113,841 114,737 ---------- ---------- TOTAL .......................... $ 350,373 $ 393,660 ========== ========== See notes to consolidated financial statements. - 3 - IMPERIAL HOLLY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended Six Months Ended September 30, September 30, ---------------------------------- ---------------------------------- 1994 1993 1994 1993 ------------- ------------- ------------- ------------- (In Thousands of Dollars) NET SALES ...................................... $ 162,072 $ 164,808 $ 311,396 $ 332,887 ------------- ------------- ------------- ------------- COSTS AND EXPENSES: Cost of sales ................................ 148,116 152,484 282,567 302,887 Selling, general and administrative .......... 14,027 16,199 27,648 32,318 Cost of work force reduction ................. -- 925 -- 925 ------------- ------------- ------------- ------------- Total ...................................... 162,143 169,608 310,215 336,130 ------------- ------------- ------------- ------------- OPERATING INCOME (LOSS) ........................ (71) (4,800) 1,181 (3,243) INTEREST EXPENSE ............................... (2,554) (2,841) (5,187) (5,600) REALIZED SECURITIES GAINS -- NET ............... 116 8 1,738 462 OTHER INCOME -- NET ............................ 685 719 2,022 814 ------------- ------------- ------------- ------------- INCOME (LOSS) BEFORE INCOME TAXES .............. (1,824) (6,914) (246) (7,567) PROVISION (CREDIT) FOR INCOME TAXES ............ (684) (1,644) (102) (1,932) ------------- ------------- ------------- ------------- NET INCOME (LOSS) .............................. $ (1,140) $ (5,270) $ (144) $ (5,635) ============= ============= ============= ============= EARNINGS (LOSS) PER SHARE OF COMMON STOCK ...... $ (0.11) $ (0.52) $ (0.01) $ (0.55) ============= ============= ============= ============= WEIGHTED AVERAGE SHARES OUTSTANDING ............ 10,262,336 10,203,839 10,259,350 10,203,784 ============= ============= ============= =============
See notes to consolidated financial statements. - 4 - IMPERIAL HOLLY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Six Months Ended September 30 ------------------------ 1994 1993 ----------- ----------- (In Thousands of Dollars) OPERATING ACTIVITIES: Net income (loss) .................................. $ (144) $ (5,635) Adjustments for non-cash and non-operating items: Depreciation ..................................... 6,863 8,314 Gain on sales of securities ...................... (1,738) (462) Gain on sales of fixed assets .................... (1,418) 1 Other ............................................ 281 1,475 Working capital changes: Receivables ...................................... (7,219) 2,374 Advances on raw sugar purchase contract .......... -- (7,001) Inventory ........................................ 59,486 14,654 Deferred and prepaid costs ....................... (9,691) (5,572) Accounts payable ................................. 10,402 2,325 Other liabilities ................................ 595 (2,853) --------- --------- Operating cash flow ................................ 57,417 7,620 --------- --------- INVESTMENT ACTIVITIES: Capital expenditures ............................... (5,311) (5,951) Investment in marketable securities ................ (3,901) (2,899) Proceeds from sale of marketable securities ........ 3,766 4,417 Proceeds from sale of fixed assets ................. 2,800 12 Other .............................................. 101 (118) --------- --------- Investing cash flow .................................. (2,545) (4,539) --------- --------- FINANCING ACTIVITIES: Short-term debt: Bank borrowings - net ............................ (1,582) 42,157 CCC borrowings - advances ........................ 16,928 -- CCC borrowings - repayments ...................... (68,042) (50,077) Repayment of long-term debt ........................ (25) (24) Dividends paid ..................................... (821) (2,449) Other .............................................. 88 7 --------- --------- Financing cash flow .................................. (53,454) (10,386) --------- --------- INCREASE (DECREASE) IN CASH AND TEMPORARY INVESTMENTS 1,418 (7,305) CASH AND TEMPORARY INVESTMENTS, BEGINNING OF PERIOD .. 555 9,405 --------- --------- CASH AND TEMPORARY INVESTMENTS, END OF PERIOD ........ $ 1,973 $ 2,100 ========= ========= See notes to consolidated financial statements. - 5 - IMPERIAL HOLLY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY For the Six Months Ended September 30, 1994 (UNAUDITED)
Common Stock Unrealized Pension --------------------- Retained Securities Liability Shares Amount Earnings Gains Adjustment Total ---------- -------- --------- -------- ---------- --------- (In Thousands of Dollars) BALANCE, MARCH 31, 1994 .............................. 10,252,959 $ 31,780 $79,862 $3,804 $(709) $114,737 Net income (loss) .................................... (144) (144) Cash dividend ........................................ (821) (821) Employee stock purchase plan ......................... 11,960 104 104 Change in unrealized securities gains - net .......... (35) (35) ---------- -------- ------- ------- ------ --------- BALANCE, SEPTEMBER 30, 1994 .......................... 10,264,919 $ 31,884 $78,897 $3,769 $(709) $113,841 ========== ======== ======= ======= ====== =========
See notes to consolidated financial statements. - 6 - IMPERIAL HOLLY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SIX MONTHS ENDED SEPTEMBER 30, 1994 AND 1993 Basis of Presentation -- The unaudited condensed consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission and reflect, in the opinion of management, all adjustments, consisting only of normal recurring accruals, that are necessary for a fair presentation of financial position and results of operations for the interim periods presented. These financial statements include the accounts of Imperial Holly Corporation and its majority owned subsidiaries (the "Company"). All significant intercompany balances and transactions have been eliminated in consolidation. Certain information and footnote disclosures required by generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The financial statements included herein should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended March 31, 1994. Cost of Sales -- Payments to growers for sugarbeets are based in part upon the Company's average net return for sugar sold (as defined in the participating contracts with growers) during the grower contract years, some of which extend beyond September 30. The contracts provide for the sharing of the net selling price (gross sales price less certain marketing costs, including packaging costs, brokerage, freight expense and amortization of costs for certain facilities used in connection with marketing) with growers. Cost of sales includes an accrual for estimated additional amounts to be paid to growers based on the average net return realized for sugar sold during each of the contract years through September 30. The final cost of sugarbeets cannot be determined until the end of the contract year for each growing area. Manufacturing costs prior to production are deferred and allocated to production costs based on estimated total units of production for each sugar manufacturing campaign. Additionally, the Company's sugar inventories, which are accounted for on a LIFO basis, are periodically reduced at interim dates to levels below that of the beginning of the fiscal year. When such interim LIFO liquidations are expected to be restored prior to fiscal year-end, the estimated replacement cost of the liquidated layers is utilized as the basis of the cost of sugar sold from beginning of the year inventory. Accordingly, the cost of sugar utilized in the determination of cost of sales for interim periods includes estimates which may require adjustment in future fiscal periods. Contingencies -- In 1992, the U.S. Customs Service ("Customs") notified the Company that Customs had audited customs drawback claims filed by the Company in 1985 and that Customs would require the Company to repay to Customs certain duties and fees previously refunded to the Company. In April 1992, the Company refunded $2.5 million to Customs under protest, a condition precedent to the commencement of an appeal of the audit decision and recorded such amount in other assets. The Company has reached a tentative settlement - 7 - with Customs, subject to final approval by the U.S. Department of the Treasury, which would result in the Company collecting the amount previously recorded. The Company was notified by the Environmental Protection Agency ("EPA") in July 1994 that it had been reclassified as a "de minimis" potentially responsible party with respect to the Operating Industries, Inc. Superfund site in Monterey, California. The EPA has indicated that fuel oil removed from a former Holly Sugar Corporation factory was disposed of at the site by a third party waste disposal contractor when the factory was closed in 1977, prior to the acquisition of Holly Sugar by the Company. According to the EPA, approximately 300 potentially responsible parties have previously agreed to perform portions of the cleanup work at the site and to pay the costs for the oversight of this work. By law, as long as a party remains a "de minimis" potentially responsible party, liability for clean up costs is limited to no more than $500,000. Holly Sugar had third party insurance coverage in force in 1977 which management believes may provide coverage against losses which may be incurred. The Company has not been able to determine its ultimate liability, if any, with respect to this matter. - 8 - ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION The Company finances its working capital and capital expenditure requirements from a combination of funds generated by operations and short-term borrowing arrangements, including short- term, secured, non-recourse borrowings from the Commodity Credit Corporation ("CCC"). Net selling prices of sugar have recently been below collateral rates on some CCC loans. The Company chose to forfeit sugar in full satisfaction of a CCC loan which matured August 31, 1994 in the amount of $652,000. No CCC loans were outstanding at September 30, 1994. The decrease in finished product inventory during the six months ended September 30, 1994 was due in part to the seasonal production schedule of the Company's beet sugar operations. Additionally, the Company's Betteravia, California factory ceased sugarbeet processing in July 1993, reducing fiscal 1995 production and contributing to the reduction in refined sugar inventories. The increases in accounts payable result from the timing of the purchase of and payments for raw sugar. Operating cash flow of $57.4 million for the six months ended September 30, 1994 was used to reduce short-term debt. Long-term debt consists almost entirely of $100 million principal amount of 8-3/8% senior notes due 1999, which requires semi-annual interest- only payments prior to maturity. Management believes that existing internal and external sources are adequate to meet its financing requirements, including fiscal 1995 capital expenditures, estimated at $8.5 million. The Company's marketable securities portfolio is reported at its market value of $30.1 million at September 30, 1994, $5.8 million in excess of its cost basis. RESULTS OF OPERATIONS Net sales declined $21.5 million or 6.5% for the six months ended September 30, 1994 as compared to the same period of the prior year, principally due to a 4.6% decrease in the volume of sugar sold as well as reductions in beet pulp volumes. A reduction in favorable sales opportunities in the cane sugar segment, as well as lower first quarter beet sugar production owing to the Betteravia factory closure, were the primary factors in the volume reductions. Average sales price of sugar declined 1.2% from the already depressed levels of the year earlier period. For the quarter ending September 30, 1994, net sales decreased $2.7 million or 1.7% from the prior year mostly due to lower average sales price, primarily resulting from a change in product mix. On September 29, 1994, the USDA announced that marketing allotments provided for in the current Farm Bill were being imposed on refined beet sugar and raw cane sugar for the USDA fiscal year which commenced October 1, 1994. The Company is unable to predict whether the imposition of marketing allotments will significantly impact future refined sugar prices realized, raw - 9 - sugar prices or the Company's selling margins. Based on the announced allotments and the Company's current production estimates, Management does not believe that marketing allotments will materially restrict the Company's beet sugar sales volumes or materially affect inventory levels. Subsequent to the USDA's announcement, the Company and most of its competitors announced price increases. Cost of sales decreased $20.3 million or 6.7% during the six months ended September 30, 1994 compared to the same period of the prior year primarily due to the decreases in sales volumes. As a percent of sales, cost of sales decreased from 91.0% to 90.7% for the six month periods. For the second quarter, cost of sales decreased $4.4 million or 2.9% and represented 91.4% of sales, down from 92.5% in the prior year's quarter. Unit manufacturing costs of beet sugar declined 10.1% for the six months and 15.1% for the second quarter of the fiscal year as a result of an exceptional production campaign in the Company's Brawley factory and the elimination of high cost production from the Betteravia factory, which was closed in July 1993. Although absent adverse weather conditions, the Company's beet sugar manufacturing costs historically have declined in the second half of the fiscal year, reduced acreage in the Texas Panhandle for the upcoming campaign will affect throughput and cost at the Company's Hereford, Texas factory. The cost of raw cane sugar purchased in both the three and six month periods increased approximately 3% from the prior year and as a result, the Company experienced a decrease in its unit margins on cane sugar sales. The Company purchases sugarbeets under participatory contracts which provide for a percentage sharing of the net selling price realized on refined beet sugar sales between the Company and the grower. Use of this type of contract reduces the Company's exposure to inventory price risks on sugarbeet purchases so long as the contract net selling price does not fall below the regional minimum support prices established by the USDA. Depressed refined sugar selling prices have resulted in net selling prices falling below such minimum support levels in many contract areas. Consequently, the decline in the unit selling price of refined beet sugar was only partially offset by a decline in the unit cost of sugar beets purchased. Total selling, general and administrative expenses decreased by $4.7 million or 14.4% for the six months and $2.2 million or 13.4% for the three months ended September 30, 1994 compared to the same periods of the prior year, as decreases in warehousing and advertising cost were coupled with reductions in general and administrative costs. The Company undertook a cost reduction program, which included a work force reduction in the third quarter of the prior fiscal year, with the majority of the cost reductions reflected in selling, general and administrative expenses. Interest expense for the six and three month periods ended September 30, 1994 was lower than the comparable period of the prior year as a result of the repayment out of lower cost short- term borrowings of the remaining $18.8 million principal amount of 10.93% senior notes in October 1993. Higher average short- term interest rates and somewhat higher than average balances partially offset these lower long-term interest costs. Other income -- net includes a $1.4 million gain on the sale of a corporate aircraft in May 1994. - 10 - The provision for income taxes for the quarter ended September 30, 1993, includes a charge of $872,000 to adjust the Company's deferred tax liabilities for the increase in corporate income tax rates enacted in August 1993. - 11 - PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) The exhibits required to be filed with this report are listed in the Exhibit Index which immediately follows the signatures page of this report. Registrant is a party to several long-term debt instruments under which in each case the total amount of securities authorized does not exceed 10% of the total assets of Registrant and its subsidiaries on a consolidated basis. Pursuant to paragraph 4(iii) (A) of Item 601(b) of Regulation S-K, Registrant agrees to furnish a copy of such instruments to the Securities and Exchange Commission upon request. (b) No reports on Form 8-K were filed during the quarter ended June 30, 1994. - 12 - SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. IMPERIAL HOLLY CORPORATION (Registrant) Dated: November 4, 1994 By: /s/ James C. Kempner James C. Kempner President, Chief Executive Officer and Chief Financial Officer (Principal Financial Officer) - 13 - IMPERIAL HOLLY CORPORATION FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1994 Exhibit Index Exhibit 10(a) Schedule of Employment Agreements 10(b)(1) Imperial Holly Corporation Salary Continuation Plan (As Amended and Restated Effective August 1, 1994) 10(b)(2) Specimen of the Company's Salary Continuation Agreement (Fully Vested) 10(b)(3) Specimen of the Company's Salary Continuation Agreement (Graduated Vesting) 10(b)(4) Schedule of Salary Continuation Agreements 10(c)(1) Imperial Holly Corporation Benefit Restoration Plan (As Amended and Restated Effective August 1, 1994) 10(c)(2) Specimen of the Company's Benefit Restoration Agreement (Fully Vested) 10(c)(3) Specimen of the Company's Benefit Restoration Agreement (Graduated Vesting) 10(c)(4) Schedule of Benefit Restoration Agreements 10(d)(1) Specimen of the Company's Change of Control Agreement 10(d)(2) Schedule of Change of Control Agreements 11 Computation of Income Per Common Share 27 Financial Data Schedule - 14 - EX-10.A 2 SCHEDULE OF EMPLOYMENT AGREEMENTS Exhibit 10(a) IMPERIAL HOLLY CORPORATION SCHEDULE OF EMPLOYMENT AGREEMENTS Name Title Expiration Date ________________ _____________________________ _________________ I. H. Kempner, III Chairman of the Board September 1,1997 J. C. Kempner President, Chief Executive Officer July 26, 1998 and Chief Financial Officer R. W. Hill Executive Vice President July 26, 1998 H. J. Smith Executive Vice President, October 29, 1997 Sales and Marketing W. F. Schwer Senior Vice President, Secretary July 26, 1998 and General Counsel EX-10.B.1 3 CORPORATION SALARY CONTINUATION PLAN IMPERIAL HOLLY CORPORATION SALARY CONTINUATION PLAN (As Amended and Restated Effective August 1, 1994) Imperial Holly Corporation, a Texas corporation (hereinafter called the "Company"), hereby amends, restates and continues the Imperial Holly Corporation Salary Continuation Plan, as amended and restated August 1, 1990, in the form of the amended and restated Imperial Holly Corporation Salary Continuation Plan, effective August 1, 1994, as follows: I. PURPOSE AND DEFINITIONS 1.01 PURPOSE. The purpose of this Plan is to provide retirement, death and disability benefits for selected salaried officers and other key management employees of the Company. 1.02 DEFINITIONS. (a) "Plan" means the Imperial Holly Corporation Salary Continuation Plan, as amended and restated herein effective August 1, 1994, as the same may hereafter be amended from time to time. (b) "Company" means Imperial Holly Corporation (formerly known as Imperial Sugar Company), a Texas corporation, or any successor and its Affiliates. (c) "Affiliate" means any corporation in which the shares owned or controlled, directly or indirectly, by the Company represent eighty (80%), or more, of the voting power of the issued and outstanding capital stock of such corporation, and a corporation which owns or controls, directly or indirectly, eighty percent (80%), or more, of the voting power of the issued and outstanding capital stock of the Company, and any corporation in which eighty percent -1- (80%), or more, of the voting power of the issued and outstanding capital stock is owned or controlled, directly or indirectly, by any corporation which owns or controls, directly or indirectly, eighty percent (80%), or more, of the voting power of the issued and outstanding capital stock of the Company. (d) "Participant" means an Employee of the Company who is selected by the Committee to participate in the Plan and who enters into a Salary Continuation Agreement with the Company. (e) "Board of Directors" means the Board of Directors of the Company. (f) "Employee" means any officer or other key management employee of the Company (whether or not he is also a director thereof), who is compensated for employment with the Company by a regular salary. II. ADMINISTRATION 2.01 APPOINTMENT OF COMMITTEE. This Plan shall be administered by the Executive Compensation Committee of the Board of Directors or such other persons who shall be appointed by the Board of Directors (hereinafter referred to as the "Committee"). The Committee shall represent the Company in all matters concerning the administration of this Plan. The Board of Directors by resolution adopted by the Board of Directors may remove a Committee member for any reason, and the Board of Directors shall fill any vacancies thus created. 2.02 NAMED FIDUCIARY. The Committee shall be the Named Fiduciary of the Plan. -2- 2.03 POWERS AND DUTIES. The Committee shall have the primary responsibility for the administration and operation of the Plan and shall have all powers necessary to carry out the provisions of the Plan, including but not limited to the following: (a) To determine all questions arising in the administration, interpretation and application of the Plan. (b) To determine the eligibility of each Employee for participation in the Plan. (c) To set down uniform and nondiscriminatory rules of interpretation and administration which may be modified from time to time in light of the Committee's experience. (d) To publish and file or cause to be published and filed or disclosed all reports and disclosures required by federal or state law. 2.04 RECORDS AND REPORTS. The Committee shall keep a record of all its proceedings and acts, and shall keep all such books of account, records and other data as may be necessary for the proper administration of the Plan. 2.05 PAYMENT OF EXPENSES. The Committee shall serve without compensation for its services but all expenses of the Committee shall be paid by the Company. 2.06 INDEMNITY OF COMMITTEE. The Company shall indemnify each member of the Committee against any and all claims, loss, damage, expense or liability arising from any action or failure to act, except when the same is determined to be due to the gross negligence or willful misconduct of such Committee member. 2.07 AGENT FOR SERVICE OF PROCESS. The Committee shall be the agent for service of legal process for the Plan. The business address and telephone number of the Committee, as the Named Fiduciary and Plan Administrator, is: c/o Imperial Holly Corporation, P.O. Box 9, Sugar Land, Texas 77487-0009; telephone (713) 491-9181. The -3- Company shall have the right to change the Named Fiduciary of the Plan and shall also have the right to change the address and telephone number of the Named Fiduciary. The Company shall give each Participant under the Plan written notice of any change of the Named Fiduciary or any change in the address and telephone number of the Named Fiduciary. III. PARTICIPATION IN THE PLAN 3.01 ELIGIBILITY. The Committee may from time to time establish such eligibility requirements for participation in the Plan as it may deem appropriate; provided, however, that only salaried officers and other key management employees of the Company shall be eligible to participate in the Plan. 3.02 SALARY CONTINUATION AGREEMENT. Each eligible Employee chosen by the Committee to participate in the Plan shall be offered a Salary Continuation Agreement setting forth the specific provisions which the Committee has determined to be appropriate for such Employee. No Employee shall have any rights whatsoever under the Plan other than the rights and benefits granted to him under his Salary Continuation Agreement with the Company. Any Employee may decline to participate in the Plan upon executing a waiver in form as deemed sufficient by the Committee. IV. SALARY CONTINUATION BENEFITS 4.01 SUPPLEMENTAL RETIREMENT BENEFITS. Each Salary Continuation Agreement entered into under this Plan shall provide for a supplemental retirement benefit for the Participant in such amount and subject to such service requirements and other conditions as the Committee (in its sole discretion) shall determine to be appropriate and shall set forth therein; PROVIDED, HOWEVER, that such supplemental retirement benefit shall not commence to be paid to -4- a Participant prior to the later of (i) the date the Participant attains age 55 or (ii) the date such Participant terminates employment with the Company and all Affiliates, except as otherwise provided in Sections 4.04 and 4.05. 4.02 SUPPLEMENTAL DEATH BENEFITS. Each Salary Continuation Agreement may provide for a supplemental death benefit payable to the surviving spouse or other beneficiary of the Participant in such amounts and subject to such conditions as the Committee shall determine to be appropriate and shall set forth therein. 4.03 SUPPLEMENTAL DISABILITY BENEFITS. Each Salary Continuation Agreement may provide a supplemental disability benefit payable to the Participant in the event of such Participant's Disability (as defined in such Participant's Salary Continuation Agreement) in such amounts and subject to such conditions as the Committee shall determine to be appropriate and shall set forth therein. 4.04 CHANGE IN CONTROL BENEFITS. Each Salary Continuation Agreement may provide for full vesting in and the immediate payment of the full unreduced value of the supplemental retirement benefit under this Plan in the event of a change in control of the Company and, subject to the specific provisions of each Participant's Salary Continuation Agreement, the termination of employment of the Participant with the Company and all Affiliates. Each Salary Continuation Agreement may also provide for an accelerated lump-sum payment of any supplemental disability payment in the event of a change in control. For purposes of this Plan, a "change in control" of the Company shall be deemed to have occurred if any of the following shall have taken place: (a) a change in control is reported by the Company in response to either Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934 (the "Exchange Act") or Item 1 of Form 8-K promulgated -5- under the Exchange Act; (b) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act), is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing forty percent (40%) or more of the combined voting power of the Company's then outstanding securities; or (c) following the election or removal of directors, a majority of the Board of Directors consists of individuals who were not members of the Board of Directors two (2) years before such election or removal, unless the election of each director who was not a director at the beginning of such two-year period has been approved in advance by directors representing at least a majority of the directors then in office who were directors at the beginning of the two-year period. Notwithstanding other provisions of this Section 4.04, the aggregate present value of all parachute payments payable to or for the benefit of a participant in the Plan, whether payable pursuant to this Plan or otherwise, shall be limited to three (3) times the participant's base amount less one dollar and, to the extent necessary, the acceleration of vesting and payment of benefits under this Plan shall be reduced by the Company in order that this limitation not be exceeded. For purposes of this Section 4.04, the terms "parachute payment," "base amount" and "present value" shall have the meanings assigned thereto under Section 280G of the Internal Revenue Code of 1986 (the "Code"). It is the intention of this Section 4.04 to avoid excise taxes on the participant under Section 4999 of the Code or the disallowance of a deduction to the Company pursuant to Section 280G of the Code. 4.05 EARLY COMMENCEMENT OF BENEFITS. Each Salary Continuation Agreement may provide, at the discretion of the Committee, that a Participant receive such Participant's supplemental retirement benefit under this Plan prior to the date such Participant terminates -6- employment with the Company and all Affiliates; PROVIDED, HOWEVER, that the Participant may not receive such supplemental retirement benefit under this Plan prior to the later of (i) the date the Participant attains the age of 55 or (ii) the date such Participant becomes 100% vested in the supplemental retirement benefit under this Plan. 4.06 WITHHOLDING OF TAXES. The Company shall deduct from the amount of any benefits payable under a Salary Continuation Agreement entered into under this Plan any taxes required to be withheld by the federal or any state or local government. V. RIGHTS OF PARTICIPANTS 5.01 LIMITATION OF RIGHTS. Nothing in this Plan shall be construed to: (a) Give any Employee of the Company or an Affiliate any right to participate in the Plan; (b) Limit in any way the rights of the Company or any Affiliate to terminate a Participant's employment with the Company or any Affiliate at any time; (c) Give a Participant or any spouse or other beneficiary of a deceased Participant any interest in any fund or in any specific asset or assets of the Company or any Affiliate; or (d) Be evidence of any agreement or understanding, express or implied, that the Company or any Affiliate will employ a Participant in any particular position or at any particular rate of remuneration. 5.02 NONALIENATION OF BENEFITS. No right or benefit under this Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber or charge the same will be void. -7- No right or benefit hereunder shall be in any manner payable for or subject to any debts, contracts, liabilities or torts of the person entitled to such benefits. 5.03 PREREQUISITES TO BENEFITS. No Participant, or any person claiming through a Participant, shall have any right or interest in the Plan, his Salary Continuation Agreement, or any benefits thereunder unless and until all the terms, conditions and provisions of the Plan and the Salary Continuation Agreement which affect such Participant or such other person shall have been complied with. VI. CLAIMS PROCEDURE 6.01 CLAIM. A Participant shall receive all of the benefits under this Plan to which such Participant is entitled without making specific application therefor. If, however, an Employee is not selected for participation or a Participant or such Participant's beneficiary (hereinafter referred to as a "Claimant") is denied all or any portion of an expected Plan benefit for any reason, such Claimant may file a claim with the Committee. The Committee shall notify the Claimant within sixty (60) days of allowance or denial of the claim. The notice shall be in writing, sent by mail to Claimant's last known address, and must contain the following information: (a) The specific reasons for the denial; (b) Specific reference to pertinent Plan, Salary Continuation Agreement or insurance contract provision on which the denial is based; (c) If applicable, a description of any additional information or material necessary to perfect the claim, and an explanation of why such information or material is necessary; and an explanation of the claims review procedure. -8- 6.02 REVIEW PROCEDURE. (a) A Claimant is entitled to request a review of any denial of his claim by the Committee which is the Plan Administrator. The request for review must be submitted in writing within sixty (60) days of mailing of notice of the denial. Absent a request for review within the sixty-day period, the claim will be deemed to be conclusively denied. The Claimant or his representatives shall be entitled to review all pertinent documents, and to submit issues and comments in writing. (b) The Board of Directors shall review the claim and render the final decision. 6.03 FINAL DECISION. Within sixty (60) days of mailing of a request for review, the Board of Directors shall allow or deny the claim. The decision shall be made in writing to the Claimant. The decision shall recite the facts and reasons for denial, with specific reference to the pertinent Plan provisions. VII. MISCELLANEOUS 7.01 AMENDMENT AND TERMINATION OF THE PLAN. The Board of Directors may amend or terminate this Plan at any time. Any such amendment or termination shall not, however, affect the rights of any Participant to the benefits provided under an executed Salary Continuation Agreement. 7.02 APPLICABLE LAWS. This Plan shall be construed, administered and governed in all respects under the laws of the State of Texas. 7.03 NON-FUNDING OF BENEFITS. The benefits payable under this Plan are unfunded and unsecured promises to pay of the Company. A life insurance or annuity contract -9- (hereinafter referred to as a "Contract") on the life of each Participant may be applied for by the Company or by the Trustee of an Executive Benefits Trust established by the Company. Such Contract, if purchased, shall be the sole, unrestricted property of the Company or such Trust. The amounts of compensation deferred pursuant to this Plan and any Contract purchased hereunder shall at all times be subject to the claims of the Company's creditors. IN WITNESS WHEREOF, the Company has caused this Plan to be executed by its duly authorized officers this 29th day of September, 1994, but effective August 1, 1994. IMPERIAL HOLLY CORPORATION By JAMES C. KEMPNER James C. Kempner President & Chief Executive Officer ATTEST: W. F. SCHWER W. F. Schwer Secretary [SEAL] -10- EX-10.B.2 4 COMPANY'S SALARY CONTINUATION PLAN (FULLY VESTED) Exhibit 10(b)(2) SALARY CONTINUATION AGREEMENT THIS AGREEMENT (this "Agreement"), made as of the _____ day of , 199_, by and between IMPERIAL HOLLY CORPORATION, a Texas corporation (the "Company"), _________________________ and ("Employee"); W I T N E S S E T H: WHEREAS, the Company has established a Salary Continuation Plan, effective April 1, 1981, as amended and restated effective August 1, 1990, and as amended thereafter (the "Plan"), to provide supplemental retirement, death and disability benefits for certain of its officers and key managerial employees who are selected by the Executive Compensation Committee of the Company's Board of Directors (the "Committee") to participate in the Plan, pursuant to which individual salary continuation agreements have been entered into with the officers and other key managerial employees to whom coverage under the Plan has been extended; and WHEREAS, the Committee has selected Employee to participate in the Plan as set forth in this Agreement; NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the parties hereto agree as follows: 1. REFERENCE TO PLAN. This Agreement is being entered into in accordance with and subject to all of the terms, conditions and provisions of the Plan and administrative interpretations thereunder, if any, which have been adopted by the Committee and are still in effect on the date hereof. Employee has received a copy of, and is familiar with the terms of, the Plan and any such administrative interpretations, which are hereby incorporated herein by reference. 2. SALARY CONTINUATION AFTER NORMAL RETIREMENT. If Employee terminates employment with the Company on or after the date Employee attains the age of sixty-five (65) ("Normal Retirement"), the Company shall pay a supplemental retirement benefit as a lump sum cash payment to Employee in the amount of $ (the "Retirement Benefit") on Employee's Normal Retirement Date (as hereinafter defined). For purposes of this Agreement, the term "Normal Retirement Date" shall mean the later of the first day of the month coincident with or next following the date Employee attains the age of sixty-five (65) or the first day of the month next following the date Employee terminates employment with the Company. 3. EARLY RETIREMENT. If Employee terminates employment with the Company prior to Employee's Normal Retirement but after the date Employee attains the age of sixty-two (62), the Company shall pay a supplemental early retirement benefit as a lump-sum cash payment to Employee in the amount of $ (the "Early Retirement Benefit"). Such Early Retirement Benefit shall be payable on the first day of the month next following the date Employee terminates employment with the Company. If Employee terminates employment with the Company after the date Employee attains the age of fifty-five (55) but before the date Employee attains the age of sixty-two (62) ("Early Retirement"), the Company shall pay to Employee, on the first day of the month next following the date of Employee's Early Retirement, an amount equal to Employee's Early Retirement Benefit, discounted by three percent (3%) for each year (including fractional years thereof) by which the date of such payment precedes the first day of the month coincident with or next following the date Employee would attain the age of sixty-two (62). 4. TERMINATION OF EMPLOYMENT DUE TO DISABILITY. If Employee terminates employment with the Company because of Disability (as hereinafter defined) prior to Employee's Normal Retirement, Employee shall be entitled to a monthly supplemental disability benefit in the amount of $ (the "Disability Benefit"), reduced by any disability income payable to Employee under any individual disability policy for which premiums are paid by the Company. Payments of the Disability Benefit, if any, shall commence on the first day of the month next following the date of Employee's termination of employment due to Disability and shall continue monthly thereafter until the earliest of (i) the cessation of Employee's Disability, (ii) Employee's death or (iii) Employee's Normal Retirement Date. If Employee's Disability continues uninterrupted until Employee's Normal Retirement Date, Employee shall receive the Retirement Benefit on Employee's Normal Retirement Date. Subject to Paragraph 16 hereof, if Employee's Disability ceases before Employee's Normal Retirement Date and Employee is immediately reemployed by the Company, Employee's Disability Benefit provided under this Paragraph shall immediately cease, and the Retirement Benefit, Early Retirement Benefit, Termination Benefit (as defined in Paragraph 6B hereof), Unreduced Termination Benefit (as defined in Paragraph 6B hereof) or Death Benefit (as defined in Paragraph 5 hereof), whichever is applicable, payable upon Employee's subsequent retirement or other termination of employment shall be determined in accordance with the provisions of this Agreement. If Employee's Disability ceases before Employee's Normal Retirement Date and Employee is not immediately reemployed by the Company, then Employee, for purposes of this Agreement, shall be deemed to have terminated employment on the date Employee's Disability ceases for purposes of determining Employee's eligibility to receive any other benefits under this Agreement. For purposes of this Agreement, the term "Disability" means a physical or mental disability which is determined by the Committee, upon the advice of competent physicians of the Committee's selection, to prevent Employee from engaging in any substantial gainful activity and which can be expected to result in death or to be of long, continued and indefinite duration. The total and irrecoverable loss of the sight of both eyes or the use of both hands, or of both feet, or of one hand and one foot will be considered to constitute Disability in all events. For purposes of this Agreement, the Committee shall determine, upon the advice of competent physicians of the Committee's selection, the date upon which Employee's Disability ceases. 5. DEATH OF EMPLOYEE WHILE IN EMPLOYMENT OR DURING DISABILITY. If Employee dies while in employment with the Company or during Disability, Employee's Beneficiary (as defined in Paragraph 15) shall be entitled to a supplemental death benefit as a lump-sum cash payment in the amount of $ (the "Death Benefit"), payable on the first day of the month next following the date of Employee's death. The Death Benefit shall be paid to Employee's Beneficiary in lieu of any other benefits due Employee or Employee's Beneficiary under this Agreement. The Death Benefit shall be reduced by the amount of any prior payments by the Company to Employee, if any, for benefits, other than Disability Benefits, under this Agreement. 6. TERMINATION OF EMPLOYMENT PRIOR TO RETIREMENT FOR REASONS OTHER THAN DEATH OR DISABILITY. A. TERMINATION FOR CAUSE. If Employee's employment with the Company is terminated by the Company for Cause, as hereinafter defined, Employee shall be entitled to receive no benefits under this Agreement. For purposes of this Agreement, termination by the Company for "Cause" shall arise only if the termination by the Company is based on (a) an act or acts of dishonesty on the part of Employee constituting a felony which adversely affects the Company, (b) a breach by Employee of Employee's agreement not to compete with the Company described in Paragraph 14 below, and such breach results in a demonstrable material injury to the Company, or (c) a gross and deliberate disregard by Employee of Employee's duties and responsibilities as an officer or employee of the Company. In the event of a termination of Employee's employment by the Company for Cause, the Board of Directors of the Company shall provide Employee with written notice of the conduct on which the termination for Cause is based. B. TERMINATION WITHOUT CAUSE. If Employee's employment with the Company terminates prior to Employee's Early Retirement for any reason other than death, Disability, or termination for Cause (whether said termination of employment is by act of Employee or the Company), Employee shall be entitled to a supplemental termination benefit as a lump-sum cash payment (the "Termination Benefit") in an amount equal to the actuarial equivalent (as hereinafter defined) of $ (the "Unreduced Termination Benefit"), discounted from the date Employee would attain the age of sixty-five (65) to the date of Employee's termination of employment. The Termination Benefit shall be paid to Employee on the first day of the month next following the later of (i) the date Employee attains the age of fifty-five (55) or (ii) the date Employee terminates employment with the Company. For purposes of this Paragraph, the term "actuarial equivalent" shall have the same meaning as the term "Actuarially Equivalent", as defined in the Imperial Holly Corporation Retirement Plan at the time such Termination Benefit is paid to Employee. If Employee dies before the payment of the Termination Benefit but after Employee's termination of employment, Employee's Beneficiary shall be entitled to receive Employee's Termination Benefit (i) on the first day of the month next following the month in which Employee would have attained the age of fifty-five (55), had Employee survived until such time and (ii) in the same amount as Employee would have received on such date. 7. EARLY COMMENCEMENT OF EARLY RETIREMENT BENEFIT. Notwithstanding anything in this Agreement to the contrary, in the sole discretion of the Committee, Employee can receive Employee's Early Retirement Benefit prior to Employee's termination of employment with the Company; PROVIDED, HOWEVER, that such Early Retirement Benefit shall be paid no earlier than the first day of the month next following the month in which Employee attains the age of fifty-five (55). The Early Retirement Benefit payable under this Paragraph shall be calculated in accordance with Paragraph 3, as though Employee had terminated employment as of the last day of the month prior to the payment date determined by the Committee. If Employee receives an Early Retirement Benefit under this Paragraph, Employee shall be entitled to no further benefits under this Agreement other than Disability Benefits to which Employee may become entitled. 8. ADJUSTMENTS TO BENEFITS. Except as provided in Paragraph 9, to the extent that any lump-sum payment under this Agreement would not be fully deductible by the Company at the time of its payment by virtue of the limitation contained in Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), such lump-sum payment shall instead be made in annual installments. The amount of each annual installment shall be equal to the lesser of (a) the full amount of the lump-sum payment, less the amount of any annual installments previously made under this Paragraph, or (b) the portion of such lump-sum payment which would be deductible by the Company at the time it is paid. Each such annual installment shall be paid on the last day of the calendar year or such other date as the Committee shall determine. 9. CHANGE IN CONTROL. A "Change in Control" of the Company shall be deemed to have occurred if any of the following shall have taken place: (a) a change in control is reported by the Company in response to either Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934 (the "Exchange Act") or Item 1 of Form 8-K promulgated under the Exchange Act; (b) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing forty percent (40%) or more of the combined voting power of the Company's then-outstanding securities; or (c) following the election or removal of directors, a majority of the Board of Directors consists of individuals who were not members of the Board of Directors two (2) years before such election or removal, unless the election of each director who is not a director at the beginning of such two-year period has been approved in advance by directors representing at least a majority of the directors then in office who were directors at the beginning of the two-year period. Any payments due under Subparagraph A or C shall be made as soon as practicable following a Change in Control, but in no event later than thirty (30) days after the date of such Change in Control. Any payments due under Subparagraph B or D shall be made as soon as practicable following the date Employee terminates employment with the Company, but in no event later than thirty (30) days after the date Employee terminates employment with the Company. A. DISABILITY AT CHANGE IN CONTROL. In the event of a Change in Control, if Employee is then receiving a Disability Benefit, Employee shall receive, in lieu of further Disability Benefits, a lump-sum cash payment equal to the greater of (1) zero and (2) the present value, discounted at 5.5% without mortality assumptions, of the stream of Disability Benefit payments that would otherwise have been due Employee until Employee's Normal Retirement Date (assuming, for purposes of this calculation, Employee's Disability would continue until Employee's Normal Retirement Date), less the present value, discounted at 5.5% without mortality assumptions, of the stream of payments, if any, Employee would receive until Employee's Normal Retirement Date from any individual disability policy for which premiums are paid by the Company (assuming, for purposes of this calculation, that such payments would continue until Employee's Normal Retirement Date). In the event of a Change in Control, if Employee is suffering a Disability, Employee shall also receive the full unreduced value of the Retirement Benefit, in lieu of all benefits, other than the aforementioned lump-sum Disability Benefit, otherwise payable under this Agreement. B. DISABILITY AFTER CHANGE IN CONTROL. If Employee suffers a Disability after a Change in Control, Employee shall receive, in lieu of Employee's Disability Benefit, a lump-sum cash payment, equal to the greater of (1) zero and (2) the present value, discounted at 5.5% without mortality assumptions, of the stream of Disability Benefit payments that would otherwise have been due Employee until Employee's Normal Retirement Date (assuming, for purposes of this, Employee's Disability or Death Benefit until Employee's Normal Retirement Date), less the present value, discounted at 5.5% without mortality assumptions, of the stream of payments, if any, Employee would receive until Employee's Normal Retirement Date from any individual disability policy for which premiums are paid by the Company (assuming, for purposes of this calculation, that such payments would continue until Employee's Normal Retirement Date). In the event of Employee's Disability after a Change in Control, Employee shall also receive the full unreduced value of the Retirement Benefit, in lieu of all benefits, other than the aforementioned lump-sum Disability Benefit, otherwise payable under this Agreement. C. TERMINATED VESTED EMPLOYEE. If Employee (i) has terminated employment with the Company prior to a Change in Control, (ii) at the time of such Change in Control, is not receiving a Disability Benefit, and (iii) Employee or Employee's Beneficiary, as the case may be, has not received any benefits, other than Disability Benefits, to which Employee is entitled under this Agreement, then Employee or Employee's Beneficiary, as the case may be, shall receive, in lieu of all such benefits, including Disability Benefits, the present value of the Retirement Benefit, Early Retirement Benefit, Unreduced Termination Benefit or Death Benefit to which Employee or Employee's Beneficiary, as the case may be, is entitled, discounted to the date of payment at 5.5% without mortality assumptions (1) from the date Employee would have attained the age of sixty-two (62) if Employee has terminated employment and (2) from the date Employee would have attained the age of fifty-five (55) if Employee is deceased. D. TERMINATION AFTER CHANGE IN CONTROL. If Employee's termination of employment with the Company occurs after a Change in Control for reasons other than Employee's Disability, Employee shall be paid the full unreduced value of the Retirement Benefit, in lieu of all benefits, including Disability Benefits, otherwise payable under this Agreement. Such payment will be made regardless of (1) the length of time that has elapsed between the date of the Change in Control and the date of Employee's termination of employment and (2) whether Employee's termination of employment was voluntary or involuntary. E. PARACHUTE PAYMENT. Notwithstanding any provision hereof, to the contrary, the aggregate present value of all parachute payments payable to or for the benefit of Employee under this Agreement and under other plans or agreements shall be one dollar ($1.00) less than three (3) times Employee's base amount, and, to the extent necessary, payments under this Agreement shall be reduced in order that this limitation not be exceeded. The terms "parachute payment," "base amount" and "present value" shall have the meanings assigned thereto under Section 280G of the Code. It is the intention of this provision to avoid excise taxes on Employee under Section 4999 of the Code or the disallowance of a deduction to the Company pursuant to Section 280G of the Code. 10. STATUS OF AGREEMENT. The benefits payable under this Agreement shall be independent of, and in addition to, any other agreement relating to Employee's employment that may exist from time to time between the parties hereto, or any other compensation payable by the Company to Employee, whether salary, bonus or otherwise. This Agreement shall not be deemed to constitute a contract of employment between the parties hereto, nor shall any provision hereof, except as expressly stated, restrict the right of the Company to discharge Employee or restrict the right of Employee to terminate Employee's employment. 11. LIFE INSURANCE AND FUNDING. All amounts paid under this Agreement shall be paid in cash from the general assets of the Company or from an Executive Benefits Trust established by the Company to assume some or all of the obligations of the Company hereunder. Benefits payable by the Company may be reflected on the accounting records of the Company but Employee shall not have any right, title, or interest whatsoever in or to any investment reserves or accounts that the Company may establish or accumulate to aid in providing the benefits described in this Agreement. The Company in its sole discretion may apply for and procure as owner and for its own benefit insurance on the life of Employee, in such amounts and in such forms as the Company may choose. The trustee on behalf of the Executive Benefits Trust may also hold as owner insurance on the life of Employee. Employee shall have no interest whatsoever in any such policy or policies, but at the request of the Company, Employee shall submit to medical examinations and supply such information and execute such documents as may be required by the insurance company or companies to whom the Company or the trustee of the Executive Benefits Trust has applied for insurance. The rights of Employee or Employee's Beneficiary, or estate, to benefits under this Agreement shall be solely those of an unsecured creditor of the Company. 12. SALE OF THE COMPANY. The sale of all or substantially all of the property and assets of the Company other than in the usual and regular course of its business, or a merger of the Company wherein the Company is not the "surviving corporation," or any other transaction which in effect amounts to the sale of the Company, shall not serve to terminate this Agreement. 13. COMPANY DEFINED. For purposes of this Agreement, the term "Company" shall also include any corporation which is an "Affiliate" as defined in Section 1.02(c) of the Plan. Neither the transfer of Employee from employment by the Company to employment by an Affiliate nor the transfer of Employee from employment by an Affiliate to employment by the Company shall be deemed a termination of employment of Employee by the Company or by an Affiliate. Further, the employment of Employee shall not be deemed to have been terminated or interrupted because of Employee's absence from active employment on account of temporary illness or during authorized vacation or during temporary leaves of absence granted by the Company for reasons of professional advancement, education, health or government service, or during military leave for any period if Employee returns to active employment within ninety (90) days after the termination of Employee's military leave, or during any period required to be treated as a leave of absence by virtue of any valid law or agreement. 14. FORFEITURE OF SALARY CONTINUATION PAYMENTS BY COMPETITION. Employee agrees that, in consideration of the benefits provided herein, Employee will not without the consent of the Company enter into competition with the Company. For purposes of this Paragraph, Employee shall be deemed to be in competition if Employee directly or indirectly, whether as consultant, agent, officer, director, employee or otherwise, enters into an association with another business enterprise which then is one of the competitors of the Company respecting one or more of the Company's business activities. The parties agree that one of the essential considerations for the benefits provided Employee hereunder is to protect and preserve the goodwill of the Company and its respective enterprises, and that said goodwill will be substantially diminished in value if Employee were to enter into competition with the Company before or within one year after receiving any benefits under this Agreement. In the event Employee is deemed to be in competition contrary to the provisions of this Paragraph, thereupon Employee shall forfeit all rights to any further payments of benefits under this Agreement and shall be obligated to repay the Company all benefit payments, except Disability Benefits, previously received under this Agreement. In the event of a Change in Control, Employee's obligations under this Paragraph shall expire and be canceled, and Employee shall be entitled to the benefits provided under this Agreement in accordance with the terms of this Agreement, notwithstanding whether Employee thereafter engages in competition described in this Paragraph. 15. BENEFICIARY AND ALTERNATIVE BENEFICIARY. If Employee dies prior to the receipt of benefits to which Employee is due pursuant to this Agreement, such benefits shall be paid in accordance with Paragraph 2, 3, 5 or 6 above at the time therein specified to such person or persons, or the survivor thereof, including corporations, unincorporated associations or trusts, as Employee may have designated by written document delivered to the Committee and referring to this Agreement (the "Beneficiary"). Employee may from time to time revoke or change any such designation by written document delivered to the Committee. If any designation of a Beneficiary or revocation or change of a designation of a Beneficiary would have the effect of disposing of the community property interest in payments hereunder of Employee's spouse, the Company has no obligation to honor any such designation of a Beneficiary or revocation or change in designation of a Beneficiary absent the written consent of Employee's spouse. If there is no valid designation of a Beneficiary on file with the Committee at the time of Employee's death, or if the Beneficiary shall have predeceased Employee or otherwise cease to exist, such distribution shall be made to Employee's spouse, if living, otherwise to Employee's estate. If the Beneficiary shall survive Employee but die before receiving the payment of the benefit hereunder, such benefit shall be paid to such Beneficiary's estate. 16. BENEFITS AFTER REEMPLOYMENT. If Employee terminates employment with the Company and is subsequently re-employed by the Company, then upon Employee's subsequent termination of employment Employee shall receive a benefit determined under Paragraph 2, 3, 4, 5, 6 or 7 (whichever is applicable) but reduced by the amount of any payment (except payments of Disability Benefits), if any, which Employee received prior to Employee's subsequent termination. 17. WITHHOLDING OF TAXES. The Company may deduct from the amount of any payment hereunder any taxes required to be withheld by the federal or any state or local government. 18. PROHIBITION AGAINST ASSIGNMENT. The Employee's right to benefits under this Agreement shall not be assigned, transferred, pledged or encumbered in any way, and any attempted assignment, transfer, pledge, encumbrance or other disposition of such benefits shall be null and void and without effect; PROVIDED, HOWEVER, that the Company may assign this entire Agreement to any successor to all or substantially all of the Company's capital stock or business and assets and this Agreement shall be binding on any such successor. 19. BINDING EFFECT. This Agreement shall be binding on and after a benefit of the Company, its successors and assigns, and Employee, Employee's heirs, executors, administrators and legal representatives. As used in this Agreement, the term "successor" shall include any person, firm, corporation or other business entity which at any time, whether by merger, purchase or otherwise, acquires all or substantially all of the assets or business of the Company. 20. ENTIRE AGREEMENT. This Agreement constitutes the entire understanding between the parties hereto with respect to the subject matter hereof, and may be modified only by a written instrument executed by both parties hereto. 21. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas. 22. FACILITY OF PAYMENT. When Employee or Employee's Beneficiary (either of which shall be referred to as the "Recipient") is incapacitated in the judgment of the Committee by reason of physical or mental illness or infirmity, the Company may make any payments required by this Agreement: (a) to the Recipient directly; (b) to the guardian of the Recipient's personal estate; (c) to the custodian of a minor Recipient serving under the Uniform Gifts to Minors Act of Texas or any other state; or (d) in the event an inter vivos or testamentary trust is then in existence for the benefit of any such Recipient, the Company may make any such payments to the trustee or trustees of any such trust. The Company may make the payment specified by this Agreement without liability to anyone other than the specified payee. Employee hereby agrees, on behalf of Employee, Employee's heirs and assigns, to hold the Company harmless from any liability for making payments as specified by this Agreement; PROVIDED, HOWEVER, that the Company shall not be held harmless for payments by the Company which are made subsequent to the Company's receipt of a citation or other process issuing out of a court of competent jurisdiction in connection with a suit instituted by someone for the purpose of recovering or establishing an interest in such payments. 23. SEVERABILITY. If, for any reason, any provision of this Agreement is held invalid, in whole or in part, such invalidity shall not affect any other provision of this Agreement not so held invalid, and each such other provision shall to the full extent consistent with law continue in full force and effect. If this Agreement or any portion thereof conflicts with law or regulation governing the activities of the Company, the Agreement or appropriate portion thereof shall be deemed invalid and of no force or effect. 24. CONSENT OF SPOUSE. Employee's spouse is fully aware, understands, and fully consents and agrees to the provisions of this Agreement and the Agreement's binding effect upon any community property interest in payments hereunder, and such awareness, understanding, consent and agreement is evidenced by such spouse's signing of this Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement (in multiple copies) on the day and year first above written. IMPERIAL HOLLY CORPORATION By __________________________________ James C. Kempner President and Chief Executive Officer ATTEST: - -------------------------------- Secretary [SEAL] -------------------------------- Employee -------------------------------- Employee's Spouse EX-10.B.3 5 COMPANY'S SALARY CONTINUATION PLAN (GRAD. VESTING) Exhibit 10(b)(3 SALARY CONTINUATION AGREEMENT THIS AGREEMENT (this "Agreement"), made as of the ___ day of ____________, 1994, by and between IMPERIAL HOLLY CORPORATION, a Texas corporation (the "Company"), and ____________________________________________ ("Employee"); W I T N E S S E T H: WHEREAS, the Company has established a Salary Continuation Plan, effective April 1, 1981, as amended and restated effective August 1, 1990, and as amended thereafter (the "Plan"), to provide supplemental retirement, death and disability benefits for certain of its officers and key managerial employees who are selected by the Executive Compensation Committee of the Company's Board of Directors (the "Committee") to participate in the Plan pursuant to which individual salary continuation agreements have been entered into with the officers and other key managerial employees to whom coverage under the Plan has been extended; and WHEREAS, the Committee has selected Employee to participate in the Plan as set forth in this Agreement; NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the parties hereto agree as follows: 1. REFERENCE TO PLAN. This Agreement is being entered into in accordance with and subject to all of the terms, conditions and provisions of the Plan and administrative interpretations hereunder, if any, which have been adopted by the Committee and are still in effect on the date hereof. Employee has received a copy of, and is familiar with the terms of, the Plan and any such administrative interpretations, which are hereby incorporated herein by reference. 2. SALARY CONTINUATION AFTER NORMAL RETIREMENT. If Employee terminates employment with the Company on or after the date Employee attains the age of sixty-five (65) ("Normal Retirement"), the Company shall pay a supplemental retirement benefit as a lump sum cash payment to Employee in the amount of $ (the "Retirement Benefit") on Employee's Normal Retirement Date (as hereinafter defined). For purposes of this Agreement, the term "Normal Retirement Date" shall mean the later of the first day of the month coincident with or next following the date Employee attains the age of sixty-five (65) or the first day of the month next following the date Employee terminates employment with the Company. 3. EARLY RETIREMENT. If Employee terminates employment with the Company prior to Employee's Normal Retirement but after the date Employee attains the age of sixty-two (62) and completes ten (10) Years of Service (as defined in Paragraph 6B hereof), the Company shall pay a supplemental early retirement benefit as a lump-sum cash payment to Employee in the amount of $ (the "Early Retirement Benefit"). Such Early Retirement Benefit shall be payable on the first day of the month next following the date Employee terminates employment with the Company. If Employee terminates employment with the Company after the date Employee attains the age of fifty-five (55) but before the date Employee attains the age of sixty-two (62) and after Employee completes ten (10) Years of Service ("Early Retirement"), the Company shall pay to Employee, on the first day of the month next following the date of Employee's Early Retirement, an amount equal to Employee's Early Retirement Benefit, discounted by three percent (3%) for each year (including fractional years thereof) by which the date of such payment precedes the first day of the month coincident with or next following the date Employee would attain the age of sixty-two (62). 4. TERMINATION OF EMPLOYMENT DUE TO DISABILITY. If Employee terminates employment with the Company because of Disability (as hereinafter defined) prior to Employee's Normal Retirement, Employee shall be entitled to receive salary continuation payments in the monthly sum of that amount of disability income that would be payable under any disability income payable to Employee under any individual disability policy for which premiums are paid by the Company. Payments of the Disability Benefit, if any, shall commence on the first day of the month next following the date of Employee's termination of employment due to Disability and shall continue monthly thereafter until the earliest of (i) the cessation of Employee's Disability, (ii) Employee's death or (iii) Employee's Normal Retirement Date. If Employee's Disability continues uninterrupted until Employee's Normal Retirement Date, Employee shall receive the Retirement Benefit on Employee's Normal Retirement Date. Subject to Paragraph 16 hereof, if Employee's Disability ceases before Employee's Normal Retirement Date and Employee is immediately reemployed by the Company, Employee's Disability Benefit provided under this Paragraph shall immediately cease, and the Retirement Benefit, Early Retirement Benefit, Termination Benefit (as defined in Paragraph 6B hereof), Unreduced Termination Benefit (as defined in Paragraph 6B hereof) or Death Benefit (as defined in Paragraph 5 hereof), whichever is applicable, payable upon Employee's subsequent retirement or other termination of employment shall be determined in accordance with the provisions of this Agreement. If Employee's Disability ceases before Employee's Normal Retirement Date and Employee is not immediately reemployed by the Company, then Employee, for purposes of this Agreement, shall be deemed to have terminated employment on the date Employee's Disability ceases for purposes of determining Employee's eligibility to receive any other benefits under this Agreement. For purposes of this Agreement, the term "Disability" means a physical or mental disability which is determined by the Committee, upon the advice of competent physicians of the Committee's selection, to prevent Employee from engaging in any substantial gainful activity and which can be expected to result in death or to be of long, continued and indefinite duration. The total and irrecoverable loss of the sight of both eyes or the use of both hands, or of both feet, or of one hand and one foot will be considered to constitute Disability in all events. For purposes of this Agreement, the Committee shall determine, upon the advice of competent physicians of the Company's selection, the date upon which Employee's Disability ceases. 5. DEATH OF EMPLOYEE WHILE IN EMPLOYMENT OR DURING DISABILITY. If Employee dies while in employment with the Company or during Disability, Employee's Beneficiary (as defined in Paragraph 15) shall be entitled to a supplemental death benefit as a lump-sum cash payment in the amount of $ (the "Death Benefit"), payable on the first day of the month next following the date of Employee's death. The Death Benefit shall be paid to Employee's Beneficiary in lieu of any other benefits due Employee or Employee's Beneficiary under this Agreement. The Death Benefit shall be reduced by the amount of any prior payments by the Company to Employee, if any, for benefits, other than Disability Benefits, under this Agreement. 6. TERMINATION OF EMPLOYMENT PRIOR TO RETIREMENT FOR REASONS OTHER THAN DEATH OR DISABILITY. A. TERMINATION FOR CAUSE. If Employee's employment with the Company is terminated by the Company for Cause, as hereinafter defined, Employee shall be entitled to receive no benefits under this Agreement. For purposes of this Agreement, termination by the Company for "Cause" shall arise only if the termination by the Company is based on (a) an act or acts of dishonesty on the part of Employee constituting a felony which adversely affects the Company, (b) breach by Employee of Employee's agreement not to compete with the Company described in Paragraph 14 below, and such breach results in a demonstrable material injury to the Company, or (a) a gross and deliberate disregard by Employee of Employee's duties and responsibilities as an officer or employee of the Company. In the event of a termination of Employee's employment by the Company for Cause, the Board of Directors of the Company shall provide Employee with written notice of the conduct on which the termination for Cause is based. B. TERMINATION WITHOUT CAUSE. If Employee's employment with the Company terminates prior to Employee's Early Retirement for any reason other than death, Disability, or termination for Cause (whether said termination of employment is by act of Employee or the Company), Employee shall be entitled to a supplemental termination benefit as a lump-sum cash payment (the "Termination Benefit") in an amount equal to the actuarial equivalent (as hereinafter defined) of the product of (a) multiplied by (b) (the "Unreduced Termination Benefit"), where (a) is $ , discounted from the date Employee would attain the age of sixty-five (65) to the date of Employee's termination of employment, and where (b) is the applicable percentage determined from the vesting schedule set forth below as follows: YEARS OF SERVICE AT APPLICABLE TERMINATION OF EMPLOYMENT PERCENTAGE Less than 4 years 0% 4 years but less than 5 15% 5 years but less than 6 30% 6 years but less than 7 45% 7 years but less than 8 60% 8 years but less than 9 75% 9 years but less than 10 90% 10 years or more 100% For purposes of the above vesting schedule, a "Year of Service" shall mean each twelve consecutive completed calendar months of continuous employment (including periods of Disability and authorized leaves of absence as described in this Agreement) of Employee with the Company from and after date. The Termination Benefit shall be paid to Employee on the first day of the month next following the later of (i) the date Employee attains the age of fifty-five (55) or (ii) the date Employee terminates employment with the Company. For purposes of this Paragraph, the term "actuarial equivalent" shall have the same meaning as the term "Actuarially Equivalent", as defined in the Imperial Holly Corporation Retirement Plan at the time such Termination Benefit is paid to Employee. If Employee dies before the payment of the Termination Benefit but after Employee's termination of employment with a vested benefit hereunder, Employee's Beneficiary shall be entitled to receive Employee's Termination Benefit (i) on the first day of the month next following the month in which Employee would have attained the age of fifty-five (55), had Employee survived until such time and (ii) in the same amount as Employee would have received on such date. 7. EARLY COMMENCEMENT OF BENEFIT. Notwithstanding anything in this Agreement to the contrary, in the sole discretion of the Committee, Employee can receive Employee's Early Retirement Benefit prior to Employee's termination of employment with the Company; PROVIDED, HOWEVER, that such Early Retirement Benefit shall be paid no earlier than the first day of the month next following the later of (i) the month in which Employee attains the age of fifty-five (55) or (ii) the month in which Employee completes ten (10) Years of Service. The Early Retirement Benefit payable under this Paragraph shall be calculated in accordance with Paragraph 3, as though Employee had terminated employment as of the last day of the month prior to the payment date determined by the Committee. If Employee receives an Early Retirement Benefit under this Paragraph, Employee shall be entitled to no further benefits under this Agreement other than Disability Benefits to which Employee may become entitled. 8. ADJUSTMENTS TO BENEFITS. Except as provided in Paragraph 9, to the extent that any lump-sum payment under this Agreement would not be fully deductible by the Company at the time of its payment by virtue of the limitation contained in Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), such lump-sum payment shall instead be made in annual installments. The amount of each annual installment shall be equal to the lesser of (a) the full amount of the lump-sum payment, less the amount of any annual installments previously made under this Paragraph, or (b) the portion of such lump-sum payment which would be deductible by the Company at the time it is paid. Each such annual installment shall be paid on the last day of the calendar year or such other date as the Committee shall determine. 9. CHANGE IN CONTROL. Notwithstanding the foregoing provisions of Paragraph 6 hereof, Employee shall be treated as having completed ten (10) Years of Service on and after a Change in Control of the Company. provided Employee is then an employee of the Company or is receiving a Disability Benefit at the time of such Change in Control. Such a "Change in Control" of the Company shall be deemed to have occurred if any of the following shall have taken place: (a) a change in control is reported by the Company in response to either Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934 (the "Exchange Act") or Item 1 of Form 8-K promulgated under the Exchange Act; (b) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing forty percent (40%) or more of the combined voting power of the Company's then-outstanding securities; or (c) following the election or removal of directors, a majority of the Board of Directors consists of individuals who were not members of the Board of Directors two (2) years before such election or removal, unless the election of each director who is not a director at the beginning of such two-year period has been approved in advance by directors representing at least a majority of the directors then in office who were directors at the beginning of the two-year period. Any payments due under Subparagraph A or C shall be made as soon as practicable following a Change in Control, but in no event later than thirty (30) days after the date of such Change in Control. Any payments due under Subparagraph B or D shall be made as soon as practicable following the date Employee terminates employment with the Company, but in no event later than thirty (30) days after the date Employee terminates employment with the Company. A. DISABILITY AT CHANGE IN CONTROL. In the event of a Change in Control, if Employee is then receiving a Disability Benefit, Employee shall receive, in lieu of further Disability Benefits, a lump-sum cash payment equal to the greater of (1) zero and (2) the present value, discounted at 5.5% without mortality assumptions, of the stream of Disability Benefit payments that would otherwise have been due Employee until Employee's Normal Retirement Date (assuming, for purposes of this calculation, Employee's Disability would continue until Employee's Normal Retirement Date), less the present value, discounted at 5.5% without mortality assumptions, of the stream of payments, if any, Employee would receive until Employee's Normal Retirement Date from any individual disability policy for which premiums are paid by the Company (assuming, for purposes of this calculation, that such payments would continue until Employee's Normal Retirement Date). In the event of a Change in Control, if Employee is suffering a Disability, Employee shall also receive the full unreduced value of the Retirement Benefit, in lieu of all benefits, other than the aforementioned lump-sum Disability Benefit, otherwise payable under this Agreement. B. DISABILITY AFTER CHANGE IN CONTROL. If Employee suffers a Disability after a Change in Control, Employee shall receive, in lieu of Employee's Disability Benefit, a lump-sum cash payment, equal to the greater of (1) zero and (2) the present value, discounted at 5.5% without mortality assumptions, of the stream of Disability Benefit payments that would otherwise have been due Employee until Employee's Normal Retirement Date (assuming, for purposes of this calculation, Employee's Disability would continue until Employee's Normal Retirement Date), less the present value, discounted at 5.5% without mortality assumptions, of the stream of payments, if any, Employee would receive until Employee's Normal Retirement Date from any individual disability policy for which premiums are paid by the Company (assuming, for purposes of this calculation, that such payments would continue until Employee's Normal Retirement Date). In the event of Employee's Disability after a Change in Control, Employee shall also receive the full unreduced value of the Retirement Benefit, in lieu of all benefits, other than the aforementioned lump-sum Disability Benefit, otherwise payable under this Agreement. C. TERMINATED VESTED EMPLOYEE. If Employee (i) has terminated employment with the Company prior to a Change in Control, (ii) is vested under this Agreement, (iii) at the time of such Change in Control, is not receiving a Disability Benefit, and (iv) Employee or Employee's Beneficiary, as the case may be, has not received any benefits, other than Disability Benefits, to which Employee is entitled under this Agreement, then Employee or Employee's Beneficiary, as the case may be, shall receive, in lieu of all such benefits, including Disability Benefits, the present value of the Retirement Benefit, Early Retirement Benefit, Unreduced Termination Benefit or Death Benefit to which Employee or Employee's Beneficiary, as the case may be, is entitled, discounted to the date of payment at 5.5% without mortality assumptions (1) from the date Employee would have attained the age of sixty-two (62) if Employee has terminated employment and (2) from the date Employee would have attained the age of fifty-five (55) if Employee is deceased. D. TERMINATION AFTER CHANGE IN CONTROL. If Employee's termination of employment with the Company occurs after a Change in Control for reasons other than Employee's Disability, Employee shall be paid the full unreduced value of the Retirement Benefit in lieu of all benefits, including Disability Benefits otherwise payable under this Agreement. Such payment will be made regardless of (1) the length of time that has elapsed between the date of the Change in Control and the date of Employee's termination of employment and (2) whether the termination of employment was voluntary or involuntary. E. PARACHUTE PAYMENT. Notwithstanding any provision of this Agreement to the contrary, the aggregate present value of all parachute payments payable to or for the benefit of Employee under this Agreement and under other plans or agreements shall be one dollar ($1.00) less than three (3) times Employee's base amount, and, to the extent necessary, payments under this Agreement shall be reduced in order that this limitation not be exceeded. The terms "parachute payment," "base amount" and "present value" shall have the meanings assigned thereto under Section 280G of the Code. It is the intention of this provision to avoid excise taxes on Employee under Section 4999 of the Code or the disallowance of a deduction to the Company pursuant to Section 280G of the Code. 10. STATUS OF AGREEMENT. The benefits payable under this Agreement shall be independent of, and in addition to, any other agreement relating to Employee's employment that may exist from time to time between the parties hereto, or any other compensation payable by the Company to Employee, whether salary, bonus or otherwise. This Agreement shall not be deemed to constitute a contract of employment between the parties hereto, nor shall any provision hereof, except as expressly stated, restrict the right of the Company to discharge Employee or restrict the right of Employee to terminate Employee's employment. 11. LIFE INSURANCE AND FUNDING. All amounts paid under this Agreement shall be paid in cash from the general assets of the Company or from an Executive Benefits Trust established by the Company to assume some or all of the obligations of the Company hereunder. Benefits payable by the Company may be reflected on the accounting records of the Company but Employee shall not have any right, title, or interest whatsoever in or to any investment reserves or accounts that the Company may establish or accumulate to aid in providing the benefits described in this Agreement. The Company in its sole discretion may apply for and procure as owner and for its own benefit insurance on the life of Employee, in such amounts and in such forms as the Company may choose. The trustee on behalf of the Executive Benefits Trust may also hold as owner insurance on the life of Employee. Employee shall have no interest whatsoever in any such policy or policies, but at the request of the Company, Employee shall submit to medical examinations and supply such information and execute such documents as may be required by the insurance company or companies to whom the Company or the trustee of the Executive Benefits Trust has applied for insurance. The rights of Employee or Employee's Beneficiary, or estate, to benefits under this Agreement shall be solely those of an unsecured creditor of the Company. 12. SALE OF THE COMPANY. The sale of all or substantially all of the property and assets of the Company other than in the usual and regular course of its business, or a merger of the Company wherein the Company is not the "surviving corporation," or any other transaction which in effect amounts to the sale of the Company, shall not serve to terminate this Agreement. 13. COMPANY DEFINED. For purposes of this Agreement, the term "Company" shall also include any corporation which is an "Affiliate" as defined in Section 1.02(c) of the Plan. Neither the transfer of Employee from employment by the Company to employment by an Affiliate nor the transfer of Employee from employment by an Affiliate to employment by the Company shall be deemed a termination of employment of Employee by the Company or by an Affiliate. Further, the employment of Employee shall not be deemed to have been terminated or interrupted because of Employee's absence from active employment on account of temporary illness or during authorized vacation or during temporary leaves of absence granted by the Company for reasons of professional advancement, education, health or government service, or during military leave for any period if Employee returns to active employment within ninety (90) days after the termination of Employee's military leave, or during any period required to be treated as a leave of absence by virtue of any valid law or agreement. 14. FORFEITURE OF PAYMENTS BY COMPETITION. Employee agrees that, in consideration of the benefits provided herein, Employee will not without the consent of the Company enter into competition with the Company. For purposes of this Paragraph, Employee shall be deemed to be in competition if Employee directly or indirectly, whether as consultant, agent, officer, director, employee or otherwise, enters into an association with another business enterprise which then is one of the competitors of the Company respecting one or more of the Company's business activities. The parties agree that one of the essential considerations for the benefits provided Employee hereunder is to protect and preserve the goodwill of the Company and its respective enterprises, and that said goodwill will be substantially diminished in value if Employee were to enter into competition with the Company before or within one year after receiving any benefits under this Agreement. In the event Employee is deemed to be in competition contrary to the provisions of this Paragraph, thereupon Employee shall forfeit all rights to any further payments of benefits under this Agreement and shall be obligated to repay the Company all benefit payments, except Disability Benefits, previously received under this Agreement. In the event of a Change in Control, Employee's obligations under this Paragraph shall expire and be cancelled, and Employee shall be entitled to the benefits provided under this Agreement in accordance with the terms of this Agreement, notwithstanding whether Employee thereafter engages in competition described in this Paragraph. 15. BENEFICIARY AND ALTERNATIVE BENEFICIARY. If Employee dies prior to the receipt of benefits to which Employee is due pursuant to this Agreement, such benefits shall be paid in accordance with Paragraph 2, 3, 5 or 6 above at the time therein specified to such person or persons, or the survivor thereof, including corporations, unincorporated associations or trusts, as Employee may have designated by written document delivered to the Committee and referring to this Agreement (the "Beneficiary"). Employee may from time to time revoke or change any such designation by written document delivered to the Committee. If any designation of a Beneficiary or revocation or change of a designation of a Beneficiary has the effect of disposing of the community property interest in payments hereunder of Employee's spouse, the Company has no obligation to honor any such designation of a Beneficiary or revocation or change in designation of a Beneficiary absent the written consent of Employee's spouse. If there is no valid designation of a Beneficiary on file with the Committee at the time of Employee's death, or if the Beneficiary shall have predeceased Employee or otherwise cease to exist, such distribution shall be made to Employee's spouse, if living, otherwise to Employee's estate. If the Beneficiary shall survive Employee but die before receiving the payment of the benefit hereunder, such benefit shall be paid to such Beneficiary's estate. 16. BENEFITS AFTER REEMPLOYMENT. If Employee terminates employment with the Company and is subsequently reemployed by the Company, then upon Employee's subsequent termination of employment Employee shall receive a benefit determined under Paragraph 2, 3, 4, 5, 6 or 7 (whichever is applicable) but reduced by the amount of any payment (except payments of Disability Benefits), if any, which Employee received prior to Employee's subsequent termination. 17. WITHHOLDING OF TAXES. The Company may deduct from the amount of any payment hereunder any taxes required to be withheld by the federal or any state or local government 18. PROHIBITION AGAINST ASSIGNMENT. The Employee's right to benefits under this Agreement shall not be assigned, transferred, pledged or encumbered in any way, and any attempted assignment, transfer, pledge, encumbrance or other disposition of such benefits shall be null and void and without effect; PROVIDED, HOWEVER, that the Company may assign this entire Agreement to any successor to all or substantially all of the Company's capital stock or business and assets and this Agreement shall be binding on any such successor. 19. BINDING EFFECT. This Agreement shall be binding upon and inure to the benefit of the Company, its successors and assigns, and Employee, Employee's heirs, executors, administrators and legal representatives. As used in this Agreement, the term "successor" shall include any person, firm, corporation or other business entity which at any time, whether by merger, purchase or otherwise, acquires all or substantially all of the assets or business of the Company. 20. ENTIRE AGREEMENT. This Agreement constitutes the entire understanding between the parties hereto with respect to the subject matter hereof, and may be modified only by a written instrument executed by both parties hereto. 21. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas. 22. FACILITY OF PAYMENT. When Employee or Employee's Beneficiary (either of which shall be referred to as the "Recipient") is incapacitated in the judgment of the Committee by reason of physical or mental illness or infirmity, the Company may make any payments required by this Agreement: (a) to the Recipient directly; (b) to the guardian of the Recipient's personal estate; (c) to the custodian of a minor Recipient serving under the Uniform Gifts to Minors Act of Texas or any other state; or (d) in the event an inter vivos or testamentary trust is then in existence for the benefit of any such Recipient, the Company may make any such payments to the trustee or trustees of any such trust. The Company may make the payment specified by this Agreement without liability to anyone other than the specified payee. Employee hereby agrees, on behalf of Employee, Employee's heirs and assigns, to hold the Company harmless from any liability for making payments as specified by this Agreement; PROVIDED, HOWEVER, that the Company shall not be held harmless for payments by the Company which are made subsequent to the Company's receipt of a citation or other process issuing out of a court of competent jurisdiction in connection with a suit instituted by someone for the purpose of recovering or establishing an interest in such payments. 23. SEVERABILITY. If, for any reason, any provision of this Agreement is held invalid, in whole or in part, such invalidity shall not affect any other provision of this Agreement not so held invalid, and each such other provision shall to the full extent consistent with law continue in full force and effect. If this Agreement or any portion thereof conflicts with law or regulation governing the activities of the Company, the Agreement or appropriate portion thereof shall be deemed invalid and of no force or effect. 24. CONSENT OF SPOUSE. Employee's spouse is fully aware, understands, and fully consents and agrees to the provisions of this Agreement and the Agreement's binding effect upon any community property interest in payments hereunder, and such awareness, understanding, consent and agreement is evidenced by such spouse's signing of this Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement (in multiple copies) on the day and year first above written. IMPERIAL HOLLY CORPORATION By James C. Kempner President and Chief Executive Officer ATTEST: Secretary [SEAL] Employee Employee's Spouse EX-10.B.4 6 SALARY CONTINUATION AGREEMENT SCHEDULE Exhibit 10(b)(4) IMPERIAL HOLLY CORPORATION SCHEDULE OF SALARY CONTINUATION AGREEMENTS Name Title - ----------------------------- ----------------------- Agreements with Full Vesting: I. H. Kempner, III Chairman of the Board J. C. Kempner President, Chief Executive Officer and Chief Financial Officer R. E. Henderson Vice President and Treasurer J. R. Skiles Vice President, Distribution Agreements with Graduated Vesting: R. W. Hill Executive Vice President H. J. Smith Executive Vice President, Sales and Marketing W. F. Schwer Senior Vice President, Secretary and General Counsel W. A. Coker Vice President, Transportation P. C. Carrothers Senior Vice President, Logistics EX-10.C.1 7 BENEFIT RESTORATION PLAN IMPERIAL HOLLY CORPORATION BENEFIT RESTORATION PLAN (As Amended and Restated Effective August 1, 1994) Imperial Holly Corporation, a Texas corporation (the "Company"), hereby amends, restates and continues the Imperial Holly Corporation Benefit Restoration Plan, as amended and restated August 1, 1990, in the form of the amended and restated Imperial Holly Corporation Benefit Restoration Plan, effective August 1, 1994, as follows: ARTICLE I NAME AND PURPOSE 1.1 NAME. The name of the Plan is the Imperial Holly Corporation Benefit Restoration Plan (the "Plan"). This Plan will be maintained as an unfunded pension plan for the benefit of a select group of management employees within the meaning of Department of Labor Regulations, Section 2520.104-23, promulgated under the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). 1.2 PURPOSE. Section 415 of the Internal Revenue Code of 1986, as amended ("Section 415"), imposes limitations on the amount of retirement benefits which may be paid to certain Employees of the Company and its participating subsidiaries under the Imperial Holly Corporation Retirement Plan, as amended and restated effective February 29, 1988, and as thereafter amended from time to time (the "Retirement Plan"). Effective January 1, 1989, Section 401(a)(17) of the Internal Revenue Code of 1986, as amended, limits the annual compensation of each participating Employee which may be taken into account in computing benefits under the Retirement Plan for any Plan Year. The purpose of this Plan is to provide additional benefits to Participants whose retirement benefits under the Retirement Plan are -1- reduced, curtailed or otherwise limited as a result of the limitations imposed by Section 415 and/or Section 401(a)(17). ARTICLE II DEFINITIONS AND CONSTRUCTION 2.1 DEFINITIONS. For purposes of this Plan the following definitions shall be applicable: (a) "Employee" shall mean any person who is regularly employed on a salaried basis by the Company or by a Subsidiary, including, but not limited to, any employee who is also an officer or director of the Company or of a Subsidiary. (b) "Participant" shall mean an Employee who is designated as a Participant under the provisions of Article III and who is entitled to a benefit under the provisions of Article IV of the Plan. (c) "Company" shall mean Imperial Holly Corporation. (d) "Subsidiary" shall mean a corporation, eighty percent (80%) or more of whose stock is owned (directly or through another Subsidiary) by Imperial Holly Corporation. (e) "Board of Directors" shall mean the Board of Directors of Imperial Holly Corporation. (f) "Change in Control" shall mean a change in control of the Company which shall be deemed to have occurred if any of the following shall have taken place: (a) a change in control is reported by the Company in response to either Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934 (the "Exchange Act") or Item 1 of Form 8-K promulgated under the Exchange Act; (b) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act), is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing forty percent (40%) or more of the combined voting power of the Company's then outstanding securities; or (c) following the election or removal of directors, a majority of the Board of Directors consists of individuals who were not members of the Board of Directors two years before such election or removal, unless the election of each director who was not a director at the beginning of such two-year period has been -2- approved in advance by directors representing at least a majority of the directors then in office who were directors at the beginning of the two-year period. (g) "Committee" shall mean the Executive Compensation Committee designated as such from time to time by the Board of Directors. (h) "Participating Employer" shall mean the Company and each Subsidiary which shall be designated by the Board of Directors of the Company as a Participating Employer pursuant to Article VII. (i) "Prior Benefit Restoration Agreements" shall mean the Benefit Restoration Agreements amending and restating the three letter agreements, dated June 29, 1983, which provided supplemental retirement and death benefits to Roy E. Henderson, I. H. Kempner, III and James R. Skiles, respectively, and the Benefit Restoration Agreements in favor of Roger W. Hill and James C. Kempner. (j) "Compensation" shall mean the amount of a Participant's base salary which was authorized by the Compensation Committee and any bonuses and commissions which are actually paid to him by the Company, but shall exclude any other items of compensation that are paid to such Participant. 2.2 GENDER AND NUMBER. Except when otherwise indicated by the context, any masculine terminology used in this Plan shall also include the feminine gender, and the definition of any term in the singular shall also include the plural. 2.3 SEVERABILITY. In the event any provision of this Plan shall be held invalid or illegal for any reason, any illegality or invalidity shall not affect the remaining provisions of this Plan, but this Plan shall be construed and enforced as if the illegal or invalid provision had never been inserted, and the Company shall have the privilege and opportunity to correct and remedy such questions of illegality or invalidity by amendment as provided in this Plan. 2.4 PLAN NOT AN EMPLOYMENT CONTRACT. This Plan is not an employment contract. It does not give any person the right to be continued in employment, and all employees remain subject to change of salary, transfer, change of job, discipline, layoff, discharge, or any other change of employment status. -3- ARTICLE III PARTICIPATION 3.1 PRIOR PARTICIPANTS. Each of the Employees of the Company identified in Section 2.1(i), with whom the Company has entered into a Prior Benefit Restoration Agreement, shall become a Participant in this Plan, as amended from and after August 1, 1994, and the Company's obligations under the Prior Benefit Restoration Agreements are amended, restated and continued by this Plan. 3.2 NEW PARTICIPANTS. Any officer or management Employee of the Company or of another Participating Employer shall become a Participant in this Plan, as of a date designated by the Committee, when selected as a Participant by the Committee and approved by the Board of Directors. ARTICLE IV BENEFITS 4.1 RETIREMENT PLAN RESTORATION BENEFIT. When a Participant's retirement benefit commences (or would have commenced except for the lack of vesting, if applicable) or a death benefit payable with respect to a Participant commences under the Retirement Plan, the Company will calculate the single-sum value of his Retirement Plan Restoration Benefit, which shall equal the excess of the amount of the retirement benefit or death benefit, as the case may be, which would have been payable under the Retirement Plan but for the limitations imposed by Section 415 or Section 401(a)(17) and the lack of vesting, if applicable, over the amount of the retirement benefit or death benefit payable under the Retirement Plan. The retirement benefit or death benefit to be considered in computing the Retirement Plan Restoration Benefit shall exclude that portion of the retirement benefit or the -4- death benefit (available if the limitations of Section 415 and/or Section 401(a)(17) were not applicable to the Participant) which is attributable to any compensation (as such term is defined under the Retirement Plan) which would not be considered Compensation under this Plan. The term "retirement benefit" includes benefits payable from the Retirement Plan because of a Participant's disability or vested termination of employment. 4.2 FORM OF PAYMENT AND COMMENCEMENT DATE. (a) FORM OF PAYMENT. The form of Retirement Plan Restoration Benefit provided under this Plan shall be the paid in the form of a lump sum cash payment. Such single sum value of the Retirement Plan Restoration Benefit shall be determined by applying a 5.5% interest assumption and such other actuarial assumptions as are then being utilized under the Retirement Plan to determine actuarially equivalent benefits to the form of payment chosen by the Participant under the Retirement Plan. (b) PAYMENT DATE. The lump sum payment of the Retirement Plan Restoration Benefit payable under this Plan shall be made within thirty days after the Participant's retirement, death or other termination of employment with the Company or another Participating Employer. 4.3 VESTING. A Participant shall become vested in the Retirement Plan Restoration Benefits payable under Section 4.1 at the same time as any such retirement benefits would have become vested under the Retirement Plan or upon a Change in Control of the Company. Notwithstanding the provisions of this paragraph 4.3, the Committee may authorize the Company to enter into a Benefit Restoration Agreement with any specific Participant which provides for full vesting of benefits under this Plan regardless of vesting under the Retirement Plan. 4.4 DEATH BENEFITS. No death benefit shall be paid under this Plan except as provided in this Section 4.4. A death benefit shall be payable to a surviving spouse or other designated beneficiary of the Participant if a death benefit is payable to such person under the -5- death benefit provisions of the Retirement Plan. The amount of such death benefit shall be determined under Section 4.1, and such death benefit shall be payable in a lump sum at the time provided in Section 4.2(b). The designated beneficiary of a Participant under the Retirement Plan shall be the designated beneficiary of the Participant under this Plan. 4.5 CHANGE IN CONTROL BENEFITS. Upon a "Change in Control" of the Company, the Retirement Plan Restoration Benefits of each active Employee shall become fully vested and shall be payable in a lump sum upon the subsequent termination of employment of the Employee in an amount equal to the present value of such unpaid benefits payable to the Employee discounted at 5.5% per annum. Notwithstanding other provisions of this Section 4.5, the aggregate present value of all parachute payments payable to or for the benefit of a Participant in the Plan, whether payable pursuant to the Plan or otherwise, shall be limited to three times the Participant's base amount less one dollar and, to the extent necessary, the acceleration of vesting and payment of benefits under this Plan shall be reduced by the Company in order that this limitation not be exceeded. For purposes of this Section 4.5, the terms "parachute payment," "base amount" and "present value" shall have the meanings assigned thereto under Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"). It is the intention of this Section 4.5 to avoid excise taxes on the Participant under Section 4999 of the Code or the disallowance of a deduction to the Company pursuant to Section 280G of the Code. 4.6 FUNDING. All amounts paid under this Plan shall be paid in cash from the general assets of the Company or from an Executive Benefits Trust established by the Company. Benefits payable by the Company may be reflected on the accounting records of the Company but no Employee shall have any right, title, or interest whatsoever in or to any investment -6- reserves or accounts that the Company may establish or accumulate to aid in providing the benefits described in this Plan. The rights of an Employee, or his Beneficiary or estate, to benefits under the Executive Benefits Trust shall be solely those of an unsecured creditor. 4.7 TAX WITHHOLDING. The Company may withhold from payments under this Plan any federal, state, or local taxes required by law to be withheld with respect to such payments. 4.8 EFFECT ON OTHER PLANS. Amounts accrued or paid under this Plan shall not be considered compensation for the purpose of the Company's Retirement Plan, or any other pension plan or life insurance plans of the Company or a Participating Employer. 4.9 NONALIENATION OF BENEFITS. No right or benefit under this Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber or charge the same will be void. No right or benefit hereunder shall be in any manner payable for or subject to any debts, contracts, liabilities or torts of the person entitled to such benefits. ARTICLE V ADMINISTRATION 5.1 ADMINISTRATION. The Plan shall be administered, construed and interpreted by the Executive Compensation Committee of the Board of Directors (the "Committee"). The determinations by the Committee of the Employees who are eligible to be Participants in the Plan, the selection of Participants from eligible Employees, the computation of the amounts of their benefits under the Plan, and the construction and interpretation by the Committee of any provision of the Plan, shall be final, conclusive and binding upon all parties, including the Company, its stockholders and its employees. -7- 5.2 EXPENSES. The expenses of administering this Plan shall be borne by the Company. 5.3 INDEMNIFICATION AND EXCULPATION. The members of the Committee, its agents, officers, directors and employees of the Company and other Participating Employers and their affiliates, shall be indemnified and held harmless by the Company against and from any and all loss, cost, liability or expense that may be imposed upon or reasonably incurred by them in connection with or resulting from any claim, action, suit, or proceeding to which they may be a party or in which they may be involved by reason of any action taken or failure to act under this Plan and against and from any and all amounts paid by them in settlement (with the Company's written approval) or paid by them in satisfaction of a judgment in any such action, suit or proceeding. The foregoing provision shall not be applicable to any person if the loss, cost, liability or expense is due to such person's gross negligence or willful misconduct. ARTICLE VI MERGER, AMENDMENT AND TERMINATION 6.1 MERGER, CONSOLIDATION OR ACQUISITION. In the event of a merger, consolidation, or acquisition where the Company is not the surviving corporation, the successor or acquiring corporation shall assume, continue and carry on the Plan in the same manner and subject to the same rights and obligations as the Company would have had if the merger, consolidation or acquisition had not taken place. 6.2 AMENDMENT AND TERMINATION. The Directors of the Company may amend, modify, or terminate this Plan at any time. In the event of a termination of the Plan pursuant to this Section 6.2, unpaid benefits shall continue to be an obligation of the Company and shall be paid as scheduled. -8- ARTICLE VII PARTICIPATING EMPLOYERS 7.1 DESIGNATION PROCEDURE. The Board of Directors of the Company may designate any Subsidiary as a Participating Employer in order that its Employees may be selected as Participants under the Plan. Each such Participating Employer shall assume no liability as a result of such appointment and the Company shall have the obligation to pay all benefits provided by this Plan, including benefits payable to Participants who are Employees of other Participating Employers. 7.2 TERMINATION OF PARTICIPATING EMPLOYER. The Board of Directors of the Company may terminate the designation of any Subsidiary as a Participating Employer by giving ninety (90) days' notice in writing of such termination to the Subsidiary, but such termination shall not reduce the benefits payable hereunder to any Employee of the Subsidiary. ARTICLE VIII MISCELLANEOUS PROVISIONS 8.1 BINDING EFFECT. The benefits and obligations under this Plan shall be binding upon and inure to the benefit of the Company, its successors and assigns, and each Participant, his spouse, heirs, executors, administrators and legal representatives. 8.2 APPLICABLE LAW. This Plan shall be construed in accordance with and governed by the law of the State of Texas. -9- IN WITNESS WHEREOF, the Company has caused this Plan to be executed by its duly authorized officers this 29th day of September, 1994, but effective August 1, 1994. IMPERIAL HOLLY CORPORATION By James C. Kempner President & Chief Executive Officer ATTEST: W. F. SCHWER W. F. Schwer Secretary [SEAL] EX-10.C.2 8 BENEFIT RESTORATION AGREEMENT (FULLY VESTED) Exhibit 10(c)(2) BENEFIT RESTORATION AGREEMENT (As Amended and Restated August , 1994) THIS AGREEMENT (this "Agreement"), made this _____ day of ________ , 199_, by and between IMPERIAL HOLLY CORPORATION, a Texas corporation (the "Company"), and _____________________________ ("Employee"); W I T N E S S E T H: WHEREAS, the Company has established a Benefit Restoration Plan, as amended and restated effective August 1, 1990, and as thereafter amended from time to time (the "Plan"), to restore retirement and death benefits lost under the Retirement Plan due to limitations under certain provisions of the Internal Revenue Code of 1986, as amended; and WHEREAS, the Executive Compensation Committee (the "Committee") of the Board of Directors of the Company has selected Employee to participate in the Plan; NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the Company and Employee agree as follows: 1. TERMS. Terms not otherwise defined herein shall have the same meaning as ascribed thereto in the Plan. 2. REFERENCE TO PLAN. This Agreement is being entered into in accordance with and subject to all of the terms, conditions and provisions of the Plan and administrative interpretations thereunder, if any, which have been adopted by the Committee and are still in effect on the date hereof. Employee has received a copy of, and is familiar with the terms of, the Plan and any such administrative interpretations, which are hereby incorporated herein by reference. 3. VESTING. Upon execution of this Agreement by the Company, Employee shall be fully vested in the Retirement Plan Restoration Benefits provided Employee under the Plan regardless of the vesting schedule provided under the Retirement Plan. 4. LIFE INSURANCE AND FUNDING. All amounts paid under this Agreement shall be paid in cash from the general assets of the Company or from an Executive Benefits Trust established by the Company to assume some or all of the obligations of the Company hereunder. Benefits payable by the Company may be reflected on the accounting records of the Company but Employee shall not have any right, title, or interest whatsoever in or to any investment reserves or accounts that the Company may establish or accumulate to aid in providing the benefits described in this Agreement. The Company in its sole discretion may apply for and procure as owner and for its own benefit insurance on the life of Employee, in such amounts and in such forms as the Company may choose. The trustee on behalf of the Executive Benefits Trust may also hold as owner insurance on the life of Employee. Employee shall have no interest whatsoever in any such policy or policies, but at the request of the Company, Employee shall submit to medical examinations and supply such information and execute such documents as may be required by the insurance company or companies to whom the Company or the trustee of the Executive Benefits Trust has applied for insurance. The rights of Employee or Employee's beneficiary, or estate, to benefits under this Agreement shall be solely those of an unsecured creditor of the Company. 5. STATUS OF AGREEMENT. The benefits payable under this Agreement shall be independent of, and in addition to, any other agreement relating to Employee's employment that may exist from time to time between the parties hereto, or any other compensation payable by the Company to Employee, whether salary, bonus or otherwise. This Agreement shall not be deemed to constitute a contract of employment between the parties hereto, nor shall any provision hereof, except as expressly stated, restrict the right of the Company to discharge Employee or restrict the right of Employee to terminate Employee's employment. 6. ENTIRE AGREEMENT. This Agreement constitutes the entire understanding between the parties hereto with respect to the subject matter hereof, and, subject to Section 9 hereof, may be modified only by a written instrument executed by both parties hereto. 7. SEVERABILITY. If, for any reason, any provision of this Agreement is held invalid, in whole or in part, such invalidity shall not affect any other provision of this Agreement not so held invalid, and each such other provision shall to the full extent consistent with law continue in full force and effect. If this Agreement or any portion thereof conflicts with law or regulation governing the activities of the Company, this Agreement or appropriate portion thereof shall be deemed invalid and of no force or effect. 8. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas. 9. AMENDMENT. The Company may at any time and from time to time, modify or amend, in whole or in part, any or all of the provisions of the Plan, provided, that, unless the Company receives Employee's prior written consent, any such modification or amendment shall only prospectively affect the obligations and benefits under this Agreement and the Plan. In addition, the Company may at any time terminate the Plan. In the event of a termination of the Plan, unpaid benefits shall continue to be an obligation of the Company and shall be paid as scheduled.. IN WITNESS WHEREOF, the parties have executed this Agreement (in multiple copies) on the day and year first above written. IMPERIAL HOLLY CORPORATION By James C. Kempner President and Chief Executive Officer ATTEST: Secretary [SEAL] Employee EX-10.C.3 9 BENEFIT RESTORATION AGREEMENT (GRADUATED VESTING) Exhibit 10(c)(3) BENEFIT RESTORATION AGREEMENT (As Amended and Restated August 1, 1994) THIS AGREEMENT (this "Agreement"), made this 1st day of August 1994, by and between IMPERIAL HOLLY CORPORATION, a Texas corporation (the "Company"), and _________________________________________ ("Employee"); W I T N E S S E T H: WHEREAS, the Company has established a Benefit Restoration Plan, as amended and restated effective August 1, 1990, and as thereafter amended from time to time (the "Plan"), to restore retirement and death benefits lost under the Retirement Plan due to limitations under certain provisions of the Internal Revenue Code of 1986, as amended; and WHEREAS, the Executive Compensation Committee (the "Committee") of the Board of Directors of the Company has selected Employee to participate in the Plan; NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the Company and Employee agree as follows: 1. TERMS. Terms not otherwise defined herein shall have the same meaning as ascribed thereto in the Plan. 2. REFERENCE TO PLAN. This Agreement is being entered into in accordance with and subject to all of the terms, conditions and provisions of the Plan and administrative interpretations thereunder, if any, which have been adopted by the Committee and are still in effect on the date hereof. Employee has received a copy of, and is familiar with the terms of, the Plan and any such administrative interpretations, which are hereby incorporated herein by reference. 3. VESTING. Employee shall become vested in the Retirement Plan Restoration Benefits provided Employee under the Plan (i) at the same time as Employee becomes vested under the Retirement Plan and (ii) upon a Change of Control. 4. LIFE INSURANCE AND FUNDING. All amounts paid under this Agreement shall be paid in cash from the general assets of the Company or from an Executive Benefits Trust established by the Company to assume some or all of the obligations of the Company hereunder. Benefits payable by the Company may be reflected on the accounting records of the Company but Employee shall not have any right, title, or interest whatsoever in or to any investment reserves or accounts that the Company may establish or accumulate to aid in providing the benefits described in this Agreement. The Company in its sole discretion may apply for and procure as owner and for its own benefit insurance on the life of Employee, in such amounts and in such forms as the Company may choose. The trustee on behalf of the Executive Benefits Trust may also hold as owner insurance on the life of Employee. Employee shall have no interest whatsoever in any such policy or policies, but at the request of the Company, Employee shall submit to medical examinations and supply such information and execute such documents as may be required by the insurance company or companies to whom the Company or the trustee of the Executive Benefits Trust has applied for insurance. The rights of Employee or Employee's beneficiary, or estate, to benefits under this Agreement shall be solely those of an unsecured creditor of the Company. 5. STATUS OF AGREEMENT. The benefits payable under this Agreement shall be independent of, and in addition to, any other agreement relating to Employee's employment that may exist from time to time between the parties hereto, or any other compensation payable by the Company to Employee, whether salary, bonus or otherwise. This Agreement shall not be deemed to constitute a contract of employment between the parties hereto, nor shall any provision hereof, except as expressly stated, restrict the right of the Company to discharge Employee or restrict the right of Employee to terminate Employee's employment. 6. ENTIRE AGREEMENT. This Agreement constitutes the entire understanding between the parties hereto with respect to the subject matter hereof, and, subject to Section 9 hereof, may be modified only by a written instrument executed by both parties hereto. 7. SEVERABILITY. If, for any reason, any provision of this Agreement is held invalid, in whole or in part, such invalidity shall not affect any other provision of this Agreement not so held invalid, and each such other provision shall to the full extent consistent with law continue in full force and effect. If this Agreement or any portion thereof conflicts with law or regulation governing the activities of the Company, this Agreement or appropriate portion thereof shall be deemed invalid and of no force or effect. 8. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas. 9. AMENDMENT. The Company may at any time and from time to time, modify or amend, in whole or in part, any or all of the provisions of the Plan, provided, that, unless the Company receives Employee's prior written consent, any such modification or amendment shall only prospectively affect the obligations and benefits under this Agreement and the Plan. In addition, the Company may at any time terminate the Plan. In the event of a termination of the Plan, unpaid benefits shall continue to be an obligation of the Company and shall be paid as scheduled.. IN WITNESS WHEREOF, the parties have executed this Agreement (in multiple copies) on the day and year first above written. IMPERIAL HOLLY CORPORATION By James C. Kempner President and Chief Executive Officer ATTEST: Secretary [SEAL] Employee EX-10.C.4 10 BENEFIT RESTORATION AGREEMENT SCHEDULE Exhibit 10(c)(4) IMPERIAL HOLLY CORPORATION SCHEDULE OF BENEFIT RESTORATION AGREEMENTS Name Title ____________________ _________________________________ Agreements with Full Vesting: I. H. Kempner, III Chairman of the Board J. C. Kempner President, Chief Executive Officer and Chief Financial Officer R. W. Hill Executive Vice President W. F. Schwer Senior Vice President, Secretary and General Counsel R. E. Henderson Vice President and Treasurer J. R. Skiles Vice President, Distribution Agreements with Graduated Vesting: H. J. Smith Executive Vice President, Sales and Marketing P. C. Carrothers Senior Vice President, Logistics EX-10.D.1 11 CHANGE OF CONTROL AGREEMENT SPECIMEN Exhibit 10(d)(1) CHANGE OF CONTROL AGREEMENT THIS AGREEMENT (this "Agreement"), made and entered into as of the 1st day of August, 1994, by and between IMPERIAL HOLLY CORPORATION, a Texas corporation, and ______________________________________ ("Employee"), an individual residing in _________________ County, ___________________________; W I T N E S S E T H: WHEREAS, the Company wishes to secure the continued services of Employee and, subject to the provisions of this Agreement, desires to provide a benefit to Employee in the event of Employee's involuntary termination or Termination for Good Reason after a Change in Control of the Company, as such terms are hereinafter defined; NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the parties hereto agree as follows: 1. DEFINITIONS. For purposes of this Agreement, the following terms shall have the following meanings: (a) "Affiliate" means (i) any corporation in which the shares owned or controlled, directly or indirectly, by the Company represent eighty percent (80%) or more of the voting power of the issued and outstanding capital stock of such corporation, (ii) any corporation which owns or controls, directly or indirectly, eighty percent (80%) or more of the voting power of the issued and outstanding capital stock of the Company, and (iii) any corporation in which eighty percent (80%) or more of the voting power of the issued and outstanding capital stock is owned or controlled, directly or indirectly, by any corporation which owns or controls, directly or indirectly, eighty percent (80%) or more of the voting power of the issued and outstanding capital stock of the Company. (b) The Company shall have "Cause" to terminate Employee's employment with the Company (i) if Employee grossly and deliberately disregards Employee's duties and responsibilities as an officer of the Company, (ii) if Employee engages in an act or acts of dishonesty constituting a felony which adversely affects the Company or (iii) for any reason which constitutes cause under any written employment agreement between Employee and the Company that was entered into prior to the Effective Date of the Change of Control. Notwithstanding the foregoing, Employee shall not be deemed to have been terminated for Cause unless and until Employee shall have received a copy of a resolution duly adopted by the affirmative vote of two-thirds of the entire membership of the Board of Directors finding that in the good faith opinion of the Board of Directors the Company has Cause to terminate Employee's employment with the Company. For the purposes of this subsection (b), Employee shall not be considered to have disregarded Employee's duties and responsibilities as an officer of the Company if (i) there is a Termination For Good Reason or by reason of (ii) Employee's reasonable participation in volunteer services for a church or other charitable, educational or civic organization, (iii) Employee's reasonable participation as a director of any corporation, or (iv) any absence from employment because of Employee's illness, incapacity, Disability or reasonable vacation periods. (c) "Company" means Imperial Holly Corporation, a Texas corporation, or any successor and its Affiliates. (d) A "Change in Control" shall be deemed to have occurred if any of the following shall have taken place: (i) change in control is reported by the Company in response to either Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or Item 1 of Form 8-K promulgated under the Exchange Act; (ii) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing forty percent (40%) or more of the combined voting power of the Company's then outstanding securities; or (iii) following the election or removal of directors, a majority of the Board of Directors consists of individuals who were not members of the Board of Directors two (2) years before such election or removal, unless the election of each director who was not a director at the beginning of such two-year period has been approved in advance by directors representing at least a majority of the directors then in office who were directors at the beginning of the two-year period. (e) "Disability" means Employee's inability to fulfill Employee's duties and responsibilities as an officer of the Company due to physical or mental disability which continues for 180 consecutive days or more, or for an aggregate of 180 days in any period of twelve months. Evidence of such disability shall be certified by a physician acceptable to both the Company and Employee. (f) The "Effective Date" of a Change in Control shall mean the date of occurrence of the specified event constituting such Change in Control. (g) "Involuntary Termination of Employment" means an involuntary termination of employment of Employee by the Company and shall include Employee's Termination for Good Reason. Notwithstanding the foregoing, Involuntary Termination of Employment shall not include termination of Employee's employment by reason of death, Disability or Cause. (h) "Termination for Good Reason" means Employee's termination of employment with the Company following the occurrence of any of the following events that occurs on or after the Effective Date of a Change in Control without Employee's prior written consent: (i) a diminution of Employee's duties and responsibilities from those assigned to Employee immediately prior to the Effective Date of the Change in Control. (ii) a reduction in Employee's salary from the rate in effect immediately prior to the Effective Date of the Change in Control or, except for any reduction applied as part of any Company-wide policy, a reduction in Employee's other compensation or benefits (other than salary) from those available to Employee immediately prior to the Effective Date of the Change in Control; (iii) a relocation of Employee's primary office from the metropolitan area of its location on the Effective Date of the Change in Control; (iv) an excessive increase in Employee's travel on behalf of the Company, which increase shall be deemed to occur if the discharge of Employee's assigned duties and responsibilities requires Employee to travel and/or work outside the city in which Employee's principal office is located otherwise than as Employee was required to travel and/or work in the ordinary course of the performance of the duties and responsibilities assigned to Employee immediately prior to the Effective Date of the Change in Control; or (v) the failure of the Company to obtain the unconditional assumption in writing or by operation of law of the Company's obligations to Employee under this Agreement by any successor prior to or at the time of a reorganization, merger, consolidation, or disposition of all or substantially all of the assets of the Company or similar transaction. 2. CHANGE IN CONTROL BENEFIT. In the event Employee experiences an Involuntary Termination of Employment during the period commencing on the Effective Date of a Change in Control and ending one year after that date, Employee shall be entitled to receive, within 30 days after Employee's Involuntary Termination of Employment a lump sum payment equal to three times Employee's base amount, minus $1.00. The term "base amount", as used herein, shall have the meaning assigned thereto under Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"). 3. REDUCTION OF PAYMENTS. The Company and Employee understand that the benefits under this Agreement may constitute parachute payments. The Company and Employee agree that the aggregate present value of all parachute payments payable to or for the benefit of Employee under this Agreement and under all other plans or agreements shall not exceed the limit described in paragraph 2 above and, to the extent necessary, payments under this Agreement shall be reduced in order that this limitation not be exceeded. The terms "parachute payment" and "present value", as used herein, shall have the meanings assigned thereto under Section 280G of the Code. It is the intention of this paragraph to avoid excise taxes on Employee under Section 4999 of the Code and the disallowance of a deduction to the Company pursuant to Section 280G of the Code. 4. EVENTS TERMINATING THIS AGREEMENT. (a) If Employee's employment with the Company is terminated for any reason before the Effective Date of a Change in Control, this Agreement shall terminate upon the date of termination of Employee's employment and Employee shall not be entitled to any benefits or payments under this Agreement. (b) If Employee's employment with the Company terminates on or after the Effective Date of a Change in Control due to Employee's (i) Disability, (ii) termination by the Company for Cause, (iii) death, or (iv) voluntary termination for reasons other than Termination for Good Reason, Employee shall not be entitled to receive any payments or benefits under this Agreement. 5. STATUS OF AGREEMENT. The benefits payable under this Agreement shall be independent of, and in addition to, any other agreement relating to Employee's employment that may exist from time to time between the parties hereto, or any other compensation payable by the Company to Employee, whether salary, bonus or otherwise. This Agreement shall not be deemed to constitute a contract of employment between the parties hereto, nor shall any provision hereof, except as expressly stated, restrict the right of the Company to discharge Employee or restrict the right of Employee to terminate his employment. 6. TERM OF AGREEMENT. Subject to Employee's earlier termination of employment with the Company, as provided herein, this Agreement shall remain in effect until August 1, 1998, and shall be automatically renewed and extended for successive one- year terms commencing on August 1 until the Company, acting upon the directions of the Board of Directors, gives Employee written notice of its decision not to renew this Agreement for the following term PROVIDED that such notice is delivered to Employee at least 90 days before the then current term expires. Notwithstanding the foregoing, if this Agreement is in effect as of the Effective Date of a Change in Control, this Agreement shall automatically be renewed for an additional one-year term as of the Effective Date of a Change in Control and may not be terminated by the Company until the completion of such one-year term. 7. SOURCE OF PAYMENTS. All payments provided in this Agreement shall be paid in cash from the general funds of the Company. Employee shall have no right, title, or interest whatsoever in or to any investments which the Company may make to aid the Company in meeting its obligations hereunder. Employee shall cooperate and provide to the Company any documentation as may be required to aid the Company in meeting its obligations hereunder. Nothing contained in this Agreement, and no action taken pursuant to this paragraph, shall create or be construed to create a trust of any kind, or a fiduciary relationship, between the Company and Employee or any other person. The rights of Employee or Employee's estate to benefits under this Agreement shall be solely those of an unsecured creditor of the Company. 8. SALE OF THE COMPANY. The sale of all or substantially all of the property and assets of the Company otherwise than in the usual and regular course of its business, or a merger of the Company wherein the Company is not the "surviving corporation" or any other transaction which in effect amounts to the sale of the Company, shall not serve to terminate this Agreement. 9. TERMINATION FOR CAUSE. The Company may terminate Employee's employment at any time for Cause, in which event Employee shall not be entitled to receive any payments or other benefits under this Agreement. 10. DEATH OF EMPLOYEE. In the event Employee dies subsequent to Employee's entitlement to benefits under this Agreement but prior to the payment of such benefits, such benefits payable to Employee shall be paid to Employee's estate. 11. WITHHOLDING OF TAXES. The Company may deduct from the amount of any benefits payable hereunder any taxes required to be withheld by the federal or any state or local government. 12. PROHIBITION AGAINST ASSIGNMENT. The right of Employee to benefits under this Agreement shall not be assigned, transferred, pledged or encumbered in any way, and any attempted assignment, transfer, pledge, encumbrance or other disposition of such benefits shall be null and void and without effect; provided, however, that the Company may assign this entire Agreement to any successor to all or substantially all of the Company's capital stock or business and assets and this Agreement shall be binding on any such successor. 13. BINDING EFFECT. This Agreement shall be binding upon and inure to the benefit of the Company, its successors and assigns, and Employee, his heirs, executors, administrators and legal representatives. As used in this Agreement, the term "successor" shall include any person, firm, corporation or other business entity which at any time, whether by merger, purchase or otherwise, acquires all or substantially all of the assets or business of the Company. 14. ENTIRE AGREEMENT. This Agreement constitutes the entire understanding between parties hereto with respect to the subject matter hereof, and may be modified only by a written instrument executed by both parties hereto. 15. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas. 16. SEVERABILITY. If, for any reason, any provision of this Agreement is held invalid, in whole or in part, such invalidity shall not affect any other provision of this Agreement not so held invalid, and each such other provision shall to the full extent consistent with law continue in full force and effect. If this Agreement or any portion thereof conflicts with law or regulation governing the activities of the Company, the Agreement or appropriate portion thereof shall be deemed invalid and of no force or effect. 17. CONFIDENTIALITY. Employee shall retain in confidence any and all confidential information known to him concerning the Company and its business so long as such information is not otherwise publicly disclosed. IN WITNESS THEREOF, the Company has caused this Agreement to be executed and its seal to be affixed hereunto by its officers thereunto duly authorized, and Employee has signed this Agreement, all as of the day and year first above written. IMPERIAL HOLLY CORPORATION By James C. Kempner President, and Chief Executive Officer ATTEST: Secretary [SEAL] Employee EX-10.D.2 12 CHANGE OF CONTROL AGREEMENTS SCHEDULE Exhibit 10(d)(2) IMPERIAL HOLLY CORPORATION SCHEDULE OF CHANGE OF CONTROL AGREEMENTS Name Title ____________________ _________________________________ R. E. Henderson Vice President and Treasurer W. M Krocak Vice President, Human Resources B. T. Harrison Vice President, Refinery Operations H. P. Mechler Controller O. W. Meyers, III Vice President, Corporate Finance R. F. Silva Vice President, Product Development P. C. Carrothers Senior Vice President, Logistics W. J. Anderson Vice President, Engineering Services EX-11 13 COMPUTATION OF RATIOS Exhibit 11 IMPERIAL HOLLY CORPORATION AND SUBSIDIARIES COMPUTATION OF INCOME PER COMMON SHARE (UNAUDITED) Three Months Six Months Ended Ended September 30 September 30 1994 1994 -------------- -------------- (In Thousands of Dollars) NET INCOME (LOSS) FOR PRIMARY AND FULLY DILUTED COMPUTATION: As reported .............................. $ (1,140) $ (144) Adjustments - none ....................... -- -- ------------ ------------ As adjusted .............................. $ (1,140) $ (144) ============ ============ PRIMARY EARNINGS (LOSS) PER SHARE: Weighted average shares of common stock outstanding ...................... 10,262,336 10,259,350 Incremental shares issuable from assumed exercise of stock options under the treasury stock method ........ 32,074 31,942 ------------ ------------ Weighted average shares of common stock outstanding, as adjusted ......... 10,294,410 10,291,292 ============ ============ Primary earnings (loss) per share ........ $ (0.11) $ (0.01) ============ ============ FULLY DILUTED EARNINGS (LOSS) PER SHARE: Weighted average shares of common stock outstanding ...................... 10,262,336 10,259,350 Incremental shares issuable from assumed exercise of stock options under the treasury stock method ........ 46,522 46,522 ------------ ------------ Weighted average shares of common stock outstanding, as adjusted ......... 10,308,858 10,305,872 ============ ============ Fully diluted earnings (loss) per share .............................. $ (0.11) $ (0.01) ============ ============ This calculation is submitted in accordance with Item 601(b)(11) of Regulation S-K; the amount of dilution illustrated in this calculation is not required to be disclosed pursuant to paragraph 14 of Accounting Principles Board Opinion No. 15. EX-27 14 FINANCIAL DATA SCHEDULE
5 The Schedule contains summary financial information extracted from the Company's unaudited condensed consolidated financial statements for the six months ended September 30, 1994 and is qualified in its entirety by reference to such financial statements. 1000 6-MOS MAR-31-1995 APR-01-1994 SEP-30-1994 1,973 30,137 51,075 0 84,591 195,644 270,204 131,904 350,373 110,625 100,019 31,884 0 0 81,957 350,373 311,396 311,396 282,567 282,567 0 0 5,187 (246) (102) (144) 0 0 0 (144) (0.01) (0.01)
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