SC 14D9

 
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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
 
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                                 SCHEDULE 14D-9
 
                     SOLICITATION/RECOMMENDATION STATEMENT
                      PURSUANT TO SECTION 14(D) (4) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
 
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                       SAVANNAH FOODS & INDUSTRIES, INC.
                           (NAME OF SUBJECT COMPANY)
 
                       SAVANNAH FOODS & INDUSTRIES, INC.
                      (NAME OF PERSON(S) FILING STATEMENT)
 
                     COMMON STOCK, PAR VALUE $.25 PER SHARE
                         (TITLE OF CLASS OF SECURITIES)
 
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                                   804795102
                     (CUSIP NUMBER OF CLASS OF SECURITIES)
 
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                             WILLIAM W. SPRAGUE III
                     PRESIDENT AND CHIEF EXECUTIVE OFFICER
                       SAVANNAH FOODS & INDUSTRIES, INC.
                                  P.O. BOX 339
                            SAVANNAH, GEORGIA 31402
                                 (912) 234-1261
      (NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE
     NOTICE AND COMMUNICATION ON BEHALF OF THE PERSON(S) FILING STATEMENT)
 
                                    COPY TO:
 
                             STEPHEN M BANKER, ESQ.
                    SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
                                919 THIRD AVENUE
                            NEW YORK, NEW YORK 10022
                                 (212) 735-3000
 
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ITEM 1. SECURITY AND SUBJECT COMPANY
 
  The name of the subject company is Savannah Foods & Industries, Inc., a
Delaware corporation (the "Company"). The address of the principal executive
offices of the Company is P. O. Box 339, Savannah, Georgia, 31402. The title
of the class of equity securities to which this statement relates is the
Common Stock, par value $.25 per share, of the Company (the "Shares").
 
ITEM 2. TENDER OFFER OF THE BIDDER
 
  This statement relates to a tender offer by IHK Merger Sub Corporation, a
Delaware corporation (the "Purchaser") and a wholly owned subsidiary of
Imperial Holly Corporation, a Texas corporation ("Imperial Holly"), disclosed
in a Tender Offer Statement on Schedule 14D-1, dated September 18, 1997 (the
"Schedule 14D-1"), whereby the Purchaser has offered to purchase 14,397,836
Shares at a price of $20.25 per Share (such price, or any such higher price as
may be paid in the Offer (as defined below), being referred to herein as the
"Offer Price"), net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
September 18, 1997 (the "Offer to Purchase") and in the related Letter of
Transmittal (which together constitute the "Offer"), copies of which are filed
as Exhibits (a)(1) and (a)(2) hereto, respectively, and are incorporated by
reference herein.
 
  The Offer is conditioned upon, among other things, (i) there being validly
tendered and not withdrawn by the Expiration Date at least 14,397,836 Shares
or such other number of Shares representing 50.1% of the Company's outstanding
Common Stock on a fully diluted basis on the date of purchase (the "Target
Share Condition" and such number of Shares being referred to herein as the
"Target Number of Shares"), (ii) the expiration of any applicable waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act") and the regulations thereunder (the "HSR Condition")
and (iii) Imperial Holly having obtained financing sufficient to enable it (or
to cause the Purchaser) to purchase the Shares tendered pursuant to the Offer
and to consummate the Merger (the "Financing Condition"). The Offer also is
subject to certain other conditions which are set forth in the Offer to
Purchase.
 
  The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of September 12, 1997 (the "Merger Agreement"), among Imperial Holly, the
Purchaser and the Company, pursuant to which, as promptly as practicable
following the later of the Expiration Date and the satisfaction or waiver of
certain conditions, the Purchaser will be merged with and into the Company
(the "Merger"), with the Company surviving as a wholly owned subsidiary of
Imperial Holly (the "Surviving Corporation"). The Merger Agreement, a copy of
which is filed as Exhibit (c)(1) hereto and is incorporated by reference
herein, is summarized in Item 3.
 
  According to the Schedule 14D-1, the address of the principal executive
offices of Imperial Holly and the Purchaser is One Imperial Square, Suite 200,
P.O. Box 9, Sugar Land, Texas 77487.
 
ITEM 3. IDENTITY AND BACKGROUND
 
  (a) The name and address of the Company, which is the person filing this
statement, is set forth in Item 1 above. All information contained in this
Statement or incorporated herein by reference concerning Imperial Holly, the
Purchaser or their respective officers, directors, representatives or
affiliates, or actions or events with respect to any of them, was provided by
Imperial Holly or the Purchaser, respectively, and the Company takes no
responsibility for such information.
 
  (b) Certain contracts, agreements, arrangements or understandings between
the Company or its affiliates and its executive officers, directors or
affiliates are described in the Company's Information Statement (the
"Information Statement") pursuant to Section 14(f) of the Securities Exchange
Act of 1934, as amended, which is attached as Annex A hereto and incorporated
by reference, under the captions "Executive Compensation", "Stock Ownership of
Certain Beneficial Owners and Management", and "Certain Relationships and
Related Transactions" and "Board of Directors and Committees of the Board".
 
                                       2

 
  Descriptions of (i) the Merger Agreement, (ii) the stockholders agreements,
each dated as of September 12, 1997 (the "Company Stockholders Agreements"),
among Imperial Holly, the Purchaser and each of the Directors and executive
officers of the Company, and (iii) the Agreement and Irrevocable Proxy, dated
as of September 12, 1997 (the "Imperial Holly Proxy Agreements"), among the
Company and certain stockholders of Imperial Holly, are set forth below.
Except as described herein, there are no material contracts, agreements,
arrangements or understandings, or any potential or actual conflicts of
interest between the Company or its affiliates and the Company, Imperial
Holly, the Purchaser or any of their respective executive officers, directors
or affiliates.
 
MERGER AGREEMENT
 
  The Merger Agreement. The following summary of the Merger Agreement is
qualified by reference to the Merger Agreement.
 
  The Offer. The Merger Agreement provides for the making of the Offer. The
obligation of the Purchaser to accept for payment or pay for Shares tendered
pursuant to the Offer is subject to the satisfaction of the Target Share
Condition, the HSR Condition and the Financing Condition and certain other
conditions that are set forth in Section 14 of the Offer to Purchase. If any
condition to the Purchaser's obligation to purchase Shares under the Offer is
not satisfied prior to the Expiration Date, the Purchaser reserves the right
(subject to the terms of the Merger Agreement and the applicable rules and
regulations of the Commission) to (i) decline to purchase any of the Shares
tendered and terminate the Offer, (ii) waive such unsatisfied condition, and
purchase the Target Number of Shares validly tendered and not withdrawn, (iii)
extend the Offer and, subject to the right of stockholders to withdraw Shares
as provided in Section 4 of the Offer to Purchase, retain the Shares which
have been tendered during the period or periods for which the Offer is
extended, or (iv) amend the Offer. The Merger Agreement provides that the
Purchaser reserves the right to increase the price per Share payable in the
Offer or to otherwise amend the Offer; provided, however, the Purchaser will
not, without the prior written consent of the Company, (i) decrease or change
the form of consideration payable in the Offer, (ii) decrease the number of
Shares sought pursuant to the Offer, (iii) impose conditions to the Offer in
addition to those set forth in the Merger Agreement, (iv) change the
conditions of the Offer (except that the Purchaser may waive any of the
conditions of the Offer other than the condition that not less than 50.1% of
the Shares outstanding on a fully diluted basis shall have been validly
tendered and not withdrawn) or (v) make any other change in the terms or
conditions of the Offer which is adverse to holders of Shares.
 
  Board Representation. The Merger Agreement provides that, upon the
Purchaser's acquisition of a majority of the outstanding Shares pursuant to
the Offer, the Purchaser shall be entitled to designate such number of
directors, rounded up to the next whole number, on the Board of Directors as
shall give the Purchaser representation on the Board of Directors equal to the
product of the total number of directors on the Board of Directors multiplied
by the percentage that the aggregate number of Shares beneficially owned by
the Purchaser at such time bears to the total number of Shares then
outstanding, and the Company shall, at such time, promptly take all actions
necessary to cause the Purchaser's designees to be elected as directors of the
Company, including increasing the size of the Board of Directors or securing
the resignations of incumbent directors or both. At the request and expense of
the Purchaser, the Company shall take all action necessary to effect any such
election, including mailing to its stockholders the Information Statement.
 
  Notwithstanding the foregoing, at all times prior to the Effective Time, the
Board of Directors of the Company shall include at least two directors who
held office as of the date of the Merger Agreement (any such director
remaining in office being a "Continuing Director"). Following the election or
appointment of Purchaser's designees and, prior to the effective time of the
Merger (the "Effective Time") such designees shall abstain from acting upon,
and the approval of a majority of the Continuing Directors shall be required
to authorize and shall be sufficient to authorize, any resolution with respect
to any termination of the Merger Agreement by the Company, any amendment of
the Merger Agreement requiring action by the Board of Directors of the
Company, any extension of time for the performance of any of the obligations
or other acts of
 
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Imperial Holly or the Purchaser under the Merger Agreement, any waiver of
compliance with any of the agreements or conditions under the Merger Agreement
for the benefit of the Company and any action to seek to enforce any
obligation of Imperial Holly or the Purchaser under this Agreement.
 
  The Merger. The Merger Agreement provides that, at the Effective Time, the
Purchaser will be merged with and into the Company, whereupon the separate
corporate existence of the Purchaser will cease and the Company will be the
surviving corporation in the Merger. The Merger Agreement further provides
that (i) subject to certain requirements in the Merger Agreement, the
Certificate of Incorporation and the By-Laws of the Purchaser as in effect at
the Effective Time shall be the Certificate of Incorporation and the By-Laws
of the surviving corporation, (ii) the directors of the Purchaser immediately
prior to the Effective Time shall be the initial directors of the surviving
corporation, and (iii) the officers of the Company immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation.
 
  Consideration to be Paid in the Merger. The Merger Agreement provides that
each Share issued and outstanding immediately prior to the Effective Time
(other than Shares held by Imperial Holly, the Purchaser or any of their
subsidiaries, or held in the treasury of the Company, all of which will be
canceled and cease to exist without consideration being payable therefor (the
"Excluded Shares"), and Shares held by stockholders who perfect their
appraisal rights under Delaware law (the "Dissenting Shares")) will be
converted into the right to receive (i) cash in the amount equal to the Offer
Price, without interest thereon (the "Cash Consideration"), or (ii) Stock
Consideration (as defined below, and together with the Cash Consideration, the
"Merger Consideration").
 
  The number of Shares to be converted into the right to receive the Cash
Consideration in the Merger shall be equal to (x) 70% of the number of Shares
issued and outstanding immediately prior to the Effective Time less (y) the
sum of the Excluded Shares (which include Shares purchased in the Offer) and
the Dissenting Shares (the "Cash Election Number"). Subsequent to the
consummation of the Offer, each stockholder of the Company holding Shares not
tendered in the Offer (other than Excluded Shares) or not accepted for payment
in the Offer because of proration will be entitled to make an election to
receive the Cash Consideration. In the event that the number of Shares
electing to receive the Cash Consideration exceeds the Cash Election Number,
such Shares will be converted into the right to receive the Cash Consideration
on a pro rata basis, with the remainder converted into the right to receive
the Stock Consideration. In the event that the number of Shares electing to
receive the Cash Consideration is less than the Cash Election Number, such
Shares will be converted into the right to receive the Cash Consideration
while those Shares not so electing will be converted into the right to receive
the Stock Consideration on a pro rata basis, with the remainder receiving the
Cash Consideration. "Stock Consideration" with respect to each Share converted
into the right to receive such Stock Consideration shall mean (x) if the
Closing Price (as defined below) of the shares of common stock, without par
value, of Imperial Holly ("Imperial Shares") is $13.25 or lower, a number of
Imperial Shares equal to the quotient of the Offer Price divided by $13.25,
(y) if the Closing Price of the Imperial Shares is $17.25 or greater, a number
of Imperial Shares equal to the quotient of the Offer Price divided by $17.25,
or (z) if the Closing Price of the Shares is greater than $13.25 but less than
$17.25, a number of Imperial Shares equal to the quotient of the Offer Price
divided by the Closing Price. The Stock Consideration also includes with each
Imperial Share the right to purchase one one-hundredth of a share of Series A
Junior Participating Preferred Stock, without par value, of Imperial Holly
pursuant to a rights agreement, dated as of September 14, 1989, as amended,
between Imperial Holly and the Bank of New York, as rights agent. "Closing
Price" means the volume weighted average of the trading prices of the Imperial
Shares, rounded to three decimal places, as reported by Bloomberg Financial
Markets, for each of the first 15 consecutive days upon which both the New
York Stock Exchange and the American Stock Exchange are open for trading in
the period commencing 20 of such trading days prior to the date of the closing
of the Merger.
 
  Company Options. Each unexpired and unexercised option to purchase Shares
issued pursuant to the Company's 1996 Equity Incentive Plan, or otherwise
granted by the Company (in each case, an "Option"), shall, at the Effective
Time and at the election of the holder of such Option either (i) be assumed by
Imperial Holly
 
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and shall constitute an option to acquire, on the same terms and conditions as
were applicable under such assumed Option, a number of Imperial Shares equal
to the product of (A) the Stock Consideration and (B) the number of Shares
subject to such Option, at a price per share equal to the amount obtained by
dividing the exercise price of such Option by the Stock Consideration or (ii)
be canceled by the Company, and each holder of an Option so canceled shall be
entitled to receive an amount in cash equal to the difference between the
Offer Price and the exercise price of such Option. Each holder of an Option
shall make such election by notifying the Company and Imperial Holly by 5:00
p.m. New York City time on the Election Date (as defined below). At the
Effective Time, Imperial Holly shall deliver to holders of Options, who make
the election set forth in clause (i) of the preceding sentence, appropriate
option agreements representing the right to acquire Imperial Shares on the
same terms and conditions as contained in the outstanding Options. Imperial
Holly shall adopt and comply with the terms of the 1996 Equity Incentive Plan
as it applies to Options assumed as set forth above including, without
limitation, provisions regarding the accelerated vesting of Options which
shall occur by virtue of consummation of the Merger, to the extent required by
the terms of such Options or such Plan. The date of grant of each option to
acquire Imperial Shares shall be deemed to be the date on which the
corresponding Option was granted.
 
  Stockholders' Meetings. In the Merger Agreement, each of the Company and
Imperial Holly agreed to take all action necessary in accordance with
applicable law to duly call, give notice of, convene and hold a special
meeting of its stockholders as soon as practicable following the consummation
of the Offer for the purpose of (in the case of the Company) the approving and
adopting of the Merger Agreement and the Merger or (in the case of Imperial
Holly) the issuance of the Stock Consideration to stockholders of the Company
in the Merger (the "Company Stockholders Meeting" and the "Imperial
Stockholders Meeting," respectively). Subject to their fiduciary duties under
applicable law, the respective Board of Directors of the Company and Imperial
Holly will recommend that their respective stockholders approve such actions.
 
  Exchange of Certificates. The Merger Agreement provides that as of or
promptly after the Effective Time, Imperial Holly shall deposit the aggregate
Merger Consideration with a bank (the "Exchange Agent") for the benefit of the
holders of Shares. As soon as practicable after the Effective Time, each
holder of an outstanding certificate or certificates which prior thereto
represented Shares shall, upon surrender to the Exchange Agent of such
certificate or certificates and acceptances thereof by the Exchange Agent, be
entitled to a certificate or certificates representing the number of full
Imperial Shares received as Stock Consideration and the Cash Consideration, if
any, into which the number of Shares previously represented by such
certificate or certificates surrendered shall have been converted pursuant to
the Merger Agreement. The Exchange Agent shall accept such certificates upon
compliance with such reasonable terms and conditions as the Exchange Agent may
impose to effect an orderly exchange thereof in accordance with normal
exchange practices. If any certificate for such Imperial Shares is to be
issued in, or if cash is to be remitted to, a name other than that in which
the certificate representing Shares surrendered for exchange is registered,
the certificate so surrendered shall be properly endorsed, with signature
guaranteed or otherwise in proper form for transfer. The person requesting
such exchange shall pay any transfer or other taxes required by reason of the
issuance of certificates for such Imperial Shares in a name other than that of
the registered holder of the certificate surrendered or establish that such
tax has been paid or is not applicable. Until surrendered, each certificate
representing Shares shall be deemed at any time after the Effective Time to
represent only the right to receive the Merger Consideration upon surrender.
 
  Each holder of Shares after the Effective Time who would otherwise have been
entitled to receive as Stock Consideration a fraction of an Imperial Share
(after taking into account all Shares delivered by such holder) shall receive,
in lieu thereof, a cash payment (without interest) equal to such fraction
multiplied by the Cash Consideration.
 
  No dividends or other distributions with respect to Imperial Shares with a
record date after the Effective Time shall be paid to the holder of any
unsurrendered certificate representing Shares and no cash payment in lieu of
fractional Imperial Shares shall be paid to any such holder until the
surrender of such certificate representing Shares. However, following
surrender of any such certificates, but subject to applicable laws, the holder
of a certificate representing whole Imperial Shares shall be paid, without
interest, at the time of such
 
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surrender (i) cash in lieu of fractional Imperial Shares to which such holder
is entitled and (ii) the proportionate amount of dividends or other
distributions with a record date after the Effective Time theretofore paid
with respect to such fractional or whole Imperial Shares.
 
  Any portion of the Merger Consideration deposited with the Exchange Agent
which remains undistributed to the holders of the certificates representing
Shares for six months after the Effective Time shall be delivered to Imperial
Holly, and any holders of Shares prior to the Effective Time who have not
theretofore complied with the exchange provisions of the Merger Agreement
shall thereafter look only to Imperial Holly and only as general creditors
thereof for payment of their claim for cash or Imperial Shares. None of the
Purchaser, the Company, Imperial Holly or the Exchange Agent shall be liable
to any person in respect of any cash or any Imperial Shares delivered to a
public office pursuant to any applicable abandoned property, escheat or
similar law. If any certificates representing Shares shall not have been
surrendered immediately prior to the date on which any Merger Consideration in
respect of such certificate would otherwise escheat to or become the property
of any government authority, any such Merger Consideration in respect of such
certificate shall, as such time and to the extent permitted by applicable law,
become the property of the Surviving Corporation, free and clear of all claims
or interest of any person previously entitled thereto. The Company shall pay
all charges and expenses of the Exchange Agent.
 
  Elections. The Merger Agreement provides that each person who, on or prior
to the Election Date, is a record holder of Shares (other than Excluded
Shares) will be entitled, with respect to all or any portion of his Shares, to
make an unconditional election (a "Cash Election") on or prior to such
Election Date to receive the Cash Consideration. The Company shall prepare and
mail a form of election, which form shall be subject to the reasonable
approval of Imperial Holly and the Purchaser (the "Form of Election"), with
the joint proxy statement/prospectus prepared in connection with the Merger
(the "Proxy Statement") to the record holders of Shares as of the record date
for the Company Stockholders Meeting to be used by each such record holder who
wishes to make a Cash Election with respect to any or all Shares held by such
holder. The Company will use commercially reasonable efforts to make the Form
of Election and the Proxy Statement available to all persons who become
holders of Shares during the period between such record date and the Election
Date. Any such holder's Cash Election shall have been properly made only if
the Exchange Agent shall have received at its designated office, by 5:00 p.m.,
New York City time on the business day (the "Election Date") next preceding
the day on which the vote is taken at the Company Stockholders' Meeting (or
any adjournment thereof) a Form of Election properly completed and signed and
accompanied by certificates for the Shares to which such Form of Election
relates (or by an appropriate guarantee of delivery of such certificates as
set forth in such Form of Election from a firm which is a member of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc. or a commercial bank or trust company having an
office or correspondent in the United States, provided such certificates are
in fact delivered to the Exchange Agent within three New York Stock Exchange,
Inc. trading days after the date of execution of such guarantee of delivery).
Failure to deliver Shares covered by such a guarantee of delivery within the
time set forth therein shall invalidate an otherwise properly made Cash
Election.
 
  Any Form of Election may be revoked by the stockholder submitting it to the
Exchange Agent only by written notice received by the Exchange Agent (i) prior
to 5:00 p.m., New York City time, on the Election Date or (ii) after the date
of the Company Stockholders Meeting, if (and to the extent that) the Paying
Agent is legally required to permit revocations and the Effective Time shall
not yet have occurred. In addition, all Forms of Election shall automatically
be revoked if the Exchange Agent is notified in writing by Imperial Holly,
Purchaser and the Company that the Merger has been abandoned. If a Form of
Election is revoked, the certificate or certificates (or guarantees of
delivery, as appropriate) for Shares to which such Form of Election relates
shall be promptly returned to the stockholder submitting the same to the
Exchange Agent.
 
  The determination of the Exchange Agent shall be binding as to whether or
not Cash Elections, have been properly made or revoked with respect to Shares
and when Cash Elections were received. If the Exchange Agent determines that
any Cash Election was not properly made with respect to Shares, such Shares
shall be exchanged in the Merger for Stock Consideration. The Exchange Agent
shall also make all computations as to the allocation
 
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and the proration contemplated in connection with any exchange, and any such
computation shall be conclusive and binding on the holders of Shares.
 
  Dissenters' Rights. If the Merger is consummated, persons who hold Shares at
that time would have the right to appraisal of their Shares in accordance with
Section 262 of the Delaware General Corporation Law (the "DGCL"). Such
appraisal rights, if the statutory procedures are complied with, would result
in a judicial determination of the "fair value" of such Dissenting Shares
(excluding any element of value arising from the accomplishment or expectation
of the Merger) owned by such holders. In addition, such dissenting
stockholders may be entitled to receive payment of a fair rate of interest
from the date of consummation of the Merger on the amount determined to be the
fair value of their Dissenting Shares. Any such judicial determination of the
fair value of the Dissenting Shares could be based upon considerations other
than or in addition to the Offer Price, the Cash Consideration or the
Stockholder Consideration and the market value of the Shares, including asset
values, the investment value of the Shares and any other valuation
considerations generally accepted in the investment community. The value so
determined for the Dissenting Shares could be more or less than the Offer
Price, the Cash Consideration or the Stock Consideration and payment of such
consideration would take place subsequent to payment pursuant to the Offer.
The Company shall not, without the prior written consent of Purchaser and
Imperial Holly, make any payment with respect to, or settle or offer to settle
with, any such dissenters.
 
  Representations and Warranties. The Merger Agreement contains customary
representations and warranties by the Company, on the one hand, and the
Purchaser and Imperial Holly, on the other hand, relating to, among other
things, (i) due organization and qualification, including subsidiaries, (ii)
charter documents, (iii) capitalization, (iv) due authorization, execution and
delivery of the Merger Agreement and consummation of the transactions
contemplated thereby, (v) conflict with charter documents and required
consents, (vi) possession of all necessary permits; (vii) accuracy of
information contained in documents filed with the Commission and financial
statements prepared in accordance with U.S. generally accepted accounting
principles ("U.S. GAAP"), (viii) no material adverse effect since the end of
the Company's and Imperial Holly's last respective fiscal year, (ix) the
absence of material litigation, (x) matters relating to the Employee
Retirement Income Security Act, (xi) intellectual property, (xii) taxes,
(xiii) environmental matters, (xiv) products, (xv) real property and other
assets, (xvi) insurance, (xvii) opinions of the Company's and Imperial Holly's
respective financial advisors, (xviii) vote necessary for stockholder
approval, (xix) no brokers other than financial advisers of the Company and
Imperial Holly and (xx) no material misstatements or omissions in documents
filed with Commission in connection with Offer and Merger. The Company also
represented and warranted that it (a) amended the Company Rights Agreement,
(b) amended certain provisions of the Company's Employee Benefit Trust and (c)
terminated the agreement and plan of merger, dated July 14, 1997, entered into
among the Company, Flo-Sun Incorporated ("FSI") and certain affiliates of FSI.
In addition, the Purchaser and Imperial Holly represented that Imperial Holly
received a commitment letter from Lehman Commercial Paper Inc. ("LCPI"), an
affiliate of Lehman Brothers Inc., which is acting as Dealer Manager for the
Offer, to provide financing to complete the Offer and the Merger.
 
  Employee Benefit Matters. For a one year period immediately following the
Closing Date, Imperial Holly has agreed to provide or cause the Surviving
Corporation to provide all employees of the Company who continue to be
employed by Imperial Holly or the Surviving Corporation or any of their
respective affiliates as of the Effective Time ("Continuing Employees") with
compensation and benefits on terms which are, in the aggregate, not
substantially less favorable than those provided to Continuing Employees
immediately prior to the date of the Merger Agreement.
 
  In addition, the Merger Agreement provides that the Surviving Corporation
shall, for the purposes of all employee benefit plans of Imperial Holly or the
Surviving Corporation or any of their respective affiliates in which
Continuing Employees participate after the Effective Time and under which an
employee's benefit depends, in whole or in part, on length of service, give
credit to Continuing Employees for service previously credited with the
Company or its subsidiaries prior to the Effective Time to the extent that
such crediting of service does not result in duplication of benefits. Imperial
Holly further agreed to guarantee all obligations of the Company under any
employee benefit plan of the Company.
 
 
                                       7

 
  Prior to the execution of the Merger Agreement, the Company amended each of
(i) the Company's Supplemental Executive Retirement Plan and (ii) the Deferred
Compensation Plan for Key Employees of the Company, as amended and restated as
of August 1, 1990 (collectively, the "Company Executive Deferred Compensation
Plans"), to provide that neither the execution of the Merger Agreement, nor
the consummation of the transactions contemplated by the Merger Agreement,
shall constitute a "change in control" for purposes of such Company Executive
Deferred Compensation Plans or otherwise will result in the acceleration of
vesting or payment of any benefit, or the triggering of any ancillary or
supplemental benefit or subsidy, under such plan.
 
  Prior to the execution of the Merger Agreement and in accordance with the
terms thereof, the Company amended its Benefit Trust Agreement (the "Benefit
Trust") in order to, among other things,; (i) provide for the prepayment of
the existing note of the Benefit Trust (the "Note"), with the cash proceeds
received in the Offer and the Merger; (ii) provide for the remaining corpus of
the Benefit Trust to be reinvested in Imperial Shares to be acquired from
Imperial Holly; (iii) provide that the corpus of the Benefit Trust will not be
immediately distributed to participants, but rather will be held in the
Benefit Trust to pay benefits when due; (iv) provide that, from and after
consummation of the Offer, the Company will no longer be entitled to be
reimbursed from the Benefit Trust for payments or contributions made prior to
such time under the covered benefit plans; (v) provide that no actions taken
in connection with the Offer and the Merger will constitute a Potential Change
in Control under the Benefit Trust; (vi) provide that, from and after
consummation of the Offer, the Trustee can sell Imperial Shares only after
giving Imperial Holly a right of first refusal; (vii) provide that, from and
after consummation of the Offer, Imperial Shares held by the Benefit Trust
will be voted in proportion to all other outstanding Imperial Shares; and
(viii) provide that, from and after consummation of the Offer, the Trustee
will tender or exchange Imperial Shares held by the Benefit Trust as directed
by the Company's Board of Directors. The Merger Agreement stipulates that the
cash received by the Benefit Trust in the Offer and the Merger will be used to
repay the Note to the Company and to purchase additional Imperial Shares.
Consummation of the Offer will constitute a Change in Control under the
Benefit Trust.
 
  Employment Agreements. In connection with the Merger, Imperial Holly intends
to enter into a new employment agreement with Mr. Sprague providing for a 5-
year term beginning on the Effective Time. Pursuant to the employment
agreement, Mr. Sprague will continue as the President of the Company and will
be nominated to serve on Imperial Holly's Board. In addition to his base
salary which will continue at no less than $430,000 per year, Mr. Sprague will
be entitled to participate in an annual bonus program, which provides him with
a maximum bonus opportunity equal to 75% of his base salary, to continue to
receive benefits under the Company's Supplemental Executive Retirement Plan
and retiree health benefits, to receive a stock option grant with respect to
135,000 shares of Imperial Holly common stock, and various other benefits and
perquisites. In addition, upon termination of his employment for "Good Reason"
or if he is involuntarily terminated by Imperial Holly other than for "Cause"
(as those terms are defined in the employment agreement), Mr. Sprague will be
entitled to receive a lump sum payment equal to three times the sum of his
base salary and his highest bonus amount (as defined in the employment
agreement), his stock options shall vest, and certain employee benefits will
be continued for a period of up to five years. Also, in the event these
payments would exceed the "golden" parachute payment limit of the Internal
Revenue Code, Mr. Sprague will be made "whole" on a net after-tax basis for
any parachute excise tax he incurs. Imperial Holly acknowledged, in connection
with the execution of the Merger Agreement, its intention to enter into
employment agreements, to become effective upon consummation of the Merger,
with certain other senior executives of the Company on terms to be determined.
 
  Agreements with Respect to the Conduct of Business Pending the Merger. The
Merger Agreement provides that, between the date of the Merger Agreement and
the Effective Time, the Company and Imperial Holly shall not, unless agreed to
in writing by the other party, fail to carry on their business and the
business of their subsidiaries in the usual, regular and ordinary course in
substantially the same manner as conducted beforehand, or fail to use
commercially reasonable efforts to preserve substantially intact their present
lines of business, maintain their rights and franchises and preserve their
relationships with employees, customers and suppliers.
 
                                       8

 
  The Merger Agreement contains covenants of both the Company and Imperial
Holly with respect to the period between the date of the Merger Agreement and
the Effective Time, including covenants that: (i) prevent amendment to
corporate governance documents, (ii) prevent issuance of securities, (iii)
prevent declaration and payment of dividends (other than regular quarterly
dividends), (iv) limit reclassification or alteration of any of its capital
stock, (v) limit acquisition or disposition of any entity or assets not in the
ordinary course of business, (vi) limit incurrence of any indebtedness, (vii)
limit entrance into, amendment or termination of any material contract, (viii)
limit authorization of any material capital expenditure, (ix) limit increases
of the compensation to its officers or employees, (x) limit entrance into or
amendment of any employment or severance agreement, (xi) prevent the
establishment or amendment of any benefit or option plans, (xii) limit changes
in accounting methods, (xiii) prevent the making of any tax election with
respect to any material tax liability and (xiv) limit payment, discharge or
satisfaction of any obligation.
 
  In addition, the Merger Agreement contains covenants of both the Company and
Imperial Holly with respect to the period between the date of the Merger
Agreement and Effective Time, that neither party will (i) take any action that
would prevent or impede the Merger from obtaining any material consent or
approval, (ii) enter into any agreement that would limit such company's
ability to compete or (iii) take any action that would result in breach of any
representations or warranties or prevent the conditions to the Merger from
being satisfied.
 
  Neither the Company, Imperial Holly nor any subsidiary thereof may authorize
or enter into an agreement to do anything listed above.
 
  No Solicitation. The Merger Agreement provides that neither the Company nor
any subsidiary shall, directly or indirectly, initiate, solicit, encourage, or
otherwise facilitate any inquiries or the making of any proposal or offer
relating to a merger, reorganization, share exchange, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
(other than the transactions contemplated by the Merger Agreement) (any of
such transactions being an "Acquisition Proposal") involving, or any purchase
or sale of all or any significant portion of the assets or 20% or more of the
equity securities of, the Company or any subsidiary that could reasonably be
expected to interfere with the completion of the Merger or the other
transactions contemplated by the Merger Agreement. Neither the Company or any
subsidiary of the Company will have any discussion with or provide any
confidential information or data to any person or entity relating to an
Acquisition Proposal or engage in any negotiations concerning an Acquisition
Proposal, or otherwise facilitate any effort or attempt to make or implement
an Acquisition Proposal or accept an Acquisition Proposal; provided, however,
that nothing contained in the Merger Agreement shall prevent the Company or
the Company's Board of Directors from (i) complying with Rule 14e-2 under the
Exchange Act with regard to an Acquisition Proposal; (ii) engaging in any
discussions or negotiations with, or providing any information to, any person
or entity in response to an unsolicited bona fide written Acquisition Proposal
by any such person or entity; or (iii) recommending such an unsolicited bona
fide written Acquisition Proposal to the holders of Shares if and only to the
extent that, in any such case as is referred to in clauses (ii) and (iii), (A)
the Company's Board of Directors concludes in good faith (after consultation
with its legal counsel and financial advisors) that such Acquisition Proposal
is reasonably capable of being completed, and would, if consummated, result in
a transaction more favorable to holders of Shares than the transactions
contemplated by the Merger Agreement (any such more favorable Acquisition
Proposal being hereinafter referred to as a "Superior Proposal"), (B) the
Company's Board of Directors determines in good faith after consultation with
legal counsel that such action is necessary for it to act in a manner
consistent with its fiduciary duties, (C) prior to providing any information
or data to any person or entity in connection with a Superior Proposal, the
Company's Board of Directors receives from such person or entity an executed
confidentiality agreement on terms substantially similar to those contained in
the confidentiality agreement, dated August 26, 1997, between the Company and
Imperial Holly and (D) prior to providing any information or data to or
entering into discussions or negotiations with any person or entity, the Board
of Directors notifies Imperial Holly promptly of the inquiries, proposals or
offers received by, the information requested from, or the discussions or
negotiations sought to be initiated or continued with, the Company or any
subsidiary indicating the name of such person or entity and the terms and
conditions of any proposals or offers. The Company also will cease and cause
to be terminated any existing activities, discussions or negotiations with any
parties previously conducted regarding any Acquisition Proposal.
 
                                       9

 
  Indemnification of Directors. As provided in the Merger Agreement, Imperial
Holly will, and will cause the Surviving Corporation to, maintain all rights
of indemnification existing in favor of, and indemnify, each present and
former director, officer, employee and fiduciary of the Company or any
subsidiary and each person who served at the request of the Company or any
subsidiary (collectively, the "Indemnified Parties") to the fullest extent
permitted under applicable law against all losses and claims arising out of or
pertaining to any action or omission in their capacity as an officer,
director, employee or fiduciary of the Company. Imperial Holly and the
Purchaser agree that all rights to indemnification existing in favor of the
Indemnified Parties as provided in the Company's By-Laws with respect to
matters occurring through the Effective Time, shall survive the Merger and
shall continue in full force and effect for a period of not less than six
years from the Effective Time. In the event any claim, action, suit,
proceeding or investigation (a "Claim") is brought against any Indemnified
Party (whether arising before or after the Effective Time) after the Effective
Time, the Indemnified Parties have certain rights with respect to retention of
counsel, payment of fees and expenses and assistance in the vigorous defense
of any Claim (provided that neither Imperial Holly nor the Surviving
Corporation shall be liable for any settlement of any Claim effected without
its written consent).
 
  For a period of six years after the Effective Time, Imperial Holly shall
cause to be maintained in effect the current directors' and officers'
liability insurance policies maintained by the Company with respect to claims
arising from facts or events that occurred prior to the Effective Time;
provided, however, that in no event shall Imperial Holly be required to expend
more than an amount per year equal to 200% of current annual premiums paid by
the Company for such insurance.
 
  Company Rights Plan. The Company's Board of Directors shall take all further
action necessary in order to render the preferred stock purchase rights under
the Company Rights Agreement, dated as of March 31, 1989 between the Company
and Citizens and Southern Trust Company (the "Company Rights Plan")
inapplicable to the Offer, the Merger and the other transactions contemplated
by the Merger Agreement, to terminate the Company Rights Agreement as of the
Effective Time and to ensure that Imperial Holly and Purchaser will not have
any obligations in connection with the Company Rights Agreement or such
related purchase rights.
 
  Conditions to Each Party's Obligation to Effect the Merger. In addition to
the approval and adoption of the Merger Agreement and the transactions
contemplated thereby by the affirmative vote of the stockholders of the
Company in accordance with the DGCL and the Company's Certificate of
Incorporation and the approval of the issuance of the Imperial Shares pursuant
to the Merger by the affirmative vote of the shareholders of Imperial Holly in
accordance with the applicable rules and regulations of the American Stock
Exchange, the obligations of the Company, Imperial Holly and the Purchaser to
consummate the Merger are subject to the following conditions: (i) any waiting
period (and any extension thereof) applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated; (ii) the
absence of any law, rule, regulation or other order by any governmental entity
which would have the effect of restraining or making the Merger illegal or
otherwise prohibiting consummation of the Merger; (iii) the Registration
Statement on Form S-4 to be filed by Imperial Holly with the Commission after
the consummation of the Offer (the "Registration Statement") shall have been
declared effective, and the absence of a stop order suspending such
effectiveness; (iv) the Imperial Shares to be issued in the Merger and
pursuant to options assumed by Imperial Holly shall have been authorized for
listing on the American Stock Exchange, subject to official notice of
issuance; and (v) the Purchaser shall have purchased Shares pursuant to the
Offer.
 
  Termination. The Merger Agreement may be terminated and the Merger and the
other transactions contemplated thereby may be abandoned at any time prior to
the Effective Time, notwithstanding any requisite approval and adoption of the
Merger Agreement and the transactions contemplated thereby:
 
    (a) by mutual written consent of Imperial Holly and the Company; or
 
    (b) by Imperial Holly or the Company if the Effective Time shall not have
  occurred on or before May 31, 1998; provided, however, that the right to
  terminate the Merger Agreement will not be available to
 
                                      10

 
  any party whose failure to fulfill any obligation under the Merger
  Agreement has been the cause of, or resulted in, the failure of the
  Effective Time to occur on or before such date; or
 
    (c) by either Imperial Holly or the Company, if any court of competent
  jurisdiction in the United States or other governmental entity, based
  otherwise than on any antitrust law, (i) shall have issued an order,
  decree, judgment, injunction, ruling or taken any other action permanently
  restraining, enjoining or otherwise prohibiting the transactions
  contemplated by the Merger Agreement and such order, decree, judgment,
  injunction, ruling or other action shall have become final and
  nonappealable or (ii) shall have failed to issue an order, decree,
  judgment, injunction, ruling or other action or to take any other action
  necessary to fulfill the conditions to the closing of the Merger and such
  denial of a request to issue such order, decree, judgment, injunction,
  ruling or other action or take such other action shall have become final
  and nonappealable; or
 
    (d) (x) by either Imperial Holly or the Company, if the Merger Agreement
  and the transactions contemplated thereby shall fail to receive the
  requisite vote for approval and adoption at the Company Stockholders'
  Meeting or (y) by the Company, if the issuance of the Imperial Shares as
  part of the Merger shall fail to receive the requisite vote for approval at
  the Imperial Shareholders Meeting; or
 
    (e) by Imperial Holly, if prior to the payment for Shares pursuant to the
  Offer (i) the Company's Board of Directors withdraws, modifies or changes
  its approval or recommendation (including by amendment of the Schedule 14D-
  9) of the Merger Agreement, the Offer or the Merger in a manner adverse to
  Imperial Holly or the Purchaser, (ii) the Company's Board of Directors
  shall, at a time when there is an Acquisition Proposal with respect to the
  Company, fail to reaffirm such approval or recommendation of the Merger
  Agreement, the Offer or the Merger upon the reasonable request of Imperial
  Holly and Purchaser, (iii) the Company's Board of Directors shall approve
  or recommend any acquisition of the Company or a material portion of its
  assets or any tender offer for shares of its capital stock, in each case,
  other than by the other parties to the Merger Agreement or affiliates
  thereof; (iv) a tender offer or exchange offer for 20% or more of the
  outstanding Shares is commenced, and the Company's Board of Directors fails
  to recommend against acceptance of such tender offer or exchange offer by
  its stockholders (including by taking no position with respect to the
  acceptance of such tender offer or exchange offer by its stockholders); or
  (v) the Company's Board of Directors has resolved to take any of the
  actions specified in clauses (i) through (iv) above;
 
    (f) by the Company, prior to the payment for Shares pursuant to the
  Offer, upon five business days' prior notice to Imperial Holly and
  Purchaser (which notice shall be revocable by the Company), if, as a result
  of a Superior Proposal received by the Company from a person or entity
  other than a party to this Agreement or any of its affiliates, the
  Company's Board of Directors determines in good faith that their fiduciary
  obligations require that such Superior Proposal be accepted; provided,
  however, that (i) the Company's Board of Directors shall have concluded in
  good faith, on the basis of advice of counsel, that such action is
  necessary for the Company's Board of Directors to act in a manner
  consistent with its fiduciary duties and (ii) prior to the effective date
  of any such termination, the Company shall provide Imperial Holly and
  Purchaser with an opportunity to make such adjustments in the terms and
  conditions of this Agreement, the Offer or the Merger as would enable the
  Company to proceed with the transactions contemplated hereby; provided,
  however, that it shall be a condition to the effectiveness of termination
  by the Company that the Company shall have made the payment of the
  Termination Fee (as defined below) to Imperial Holly;
 
    (g) by Imperial Holly, prior to the payment for Shares pursuant to the
  Offer, upon a breach of any representation, warranty, covenant or agreement
  on the part of the Company set forth in this Agreement, or if any
  representation or warranty of the Company shall have become untrue;
  provided, however, that, if such breach is curable by the Company and for
  so long as the Company continues to exercise all reasonable efforts to cure
  such breach, Imperial Holly may not terminate the Merger Agreement;
 
    (h) by the Company, prior to the payment for Shares pursuant to the
  Offer, upon breach of any representation, warranty, covenant or agreement
  on the part of Imperial Holly or the Purchaser set forth in
 
                                      11

 
  this Agreement, or if any representation or warranty of Imperial Holly and
  the Purchaser shall have become untrue, in either case except for such
  breaches or failures (i) which, individually or in the aggregate, would not
  have a material adverse effect upon Imperial Holly and (ii) which,
  individually or in the aggregate, would not materially impair or delay the
  ability of the Purchaser to consummate the Offer or the ability of Imperial
  Holly, the Purchaser and the Company to effect the Merger; provided,
  however, that, if such breach is curable by Imperial Holly and the
  Purchaser and for so long as Imperial Holly and the Purchaser continue to
  exercise all reasonable efforts to cure such breach, the Company may not
  terminate the Merger Agreement; or
 
    (i) by Imperial Holly, if the Offer is terminated or expires without the
  purchase of any Shares thereunder, unless such termination or expiration
  has been caused by or resulted from the failure in any material respect of
  Imperial Holly or the Purchaser to perform any of its covenants and
  agreements contained in the Merger Agreement or in the Offer;
 
    (j) by the Company, if all of the conditions to the Offer have been
  satisfied except for the Financing Condition and Imperial Holly fails to
  accept and pay for the Shares in the Offer solely because of the failure of
  LCPI to provide the funding necessary for such purchase; and
 
    (k) by the Company, if on May 29, 1998, the Effective Time shall not have
  occurred because Imperial Holly and the Purchaser have not been permitted
  to consummate the Offer and the Merger by reason of any antitrust law.
 
  Fees and Expenses. The Merger Agreement provides that except as set forth
therein, all expenses incurred in connection with the Merger Agreement shall
be paid by the party incurring such expenses, whether or not the Merger is
consummated, except that the Company and Imperial Holly each shall pay one-
half of all expenses relating to printing, filing and mailing the Registration
Statement and the Proxy Statement and all Commission and other regulatory
filing fees incurred in connection with the Registration Statement and the
Proxy Statement.
 
  Termination Fees. The Merger Agreement provides that (i) if Imperial Holly
terminates the Merger Agreement pursuant to paragraph (e) above or (ii) if the
Company shall terminate the Merger Agreement pursuant to paragraph (f) above
or (iii) if (A) Imperial Holly or the Company terminates the Merger Agreement
pursuant to paragraph (d) due to the failure of the Company's stockholders to
approve and adopt the Merger Agreement and (B) at the time of such failure to
so approve and adopt the Merger Agreement there exists an Acquisition Proposal
with respect to the Company and, within 12 months of the termination of the
Merger Agreement, the Company enters into a definitive agreement with any
third party with respect to an Acquisition Proposal with respect to the
Company, then the Company will pay to Imperial Holly an amount equal to
$8,000,000 (the "Company Termination Fee").
 
  The Merger Agreement provides that if the Company terminates the Merger
Agreement pursuant to paragraph (j) or (k) above, then Imperial Holly will pay
to the Company an amount equal to $8,000,000 (the "Imperial Termination Fee").
 
  The Company Termination Fee required to be paid pursuant to clause (ii)
above will be paid prior to, and will be a pre-condition to effectiveness of
termination of the Merger Agreement and the Company Termination Fee required
to be paid pursuant to clause (iii) will be paid to Imperial Holly on the next
business day after a definitive agreement is entered into with a third party
with respect to an Acquisition Proposal with respect to the Company. Any
payment of a Company Termination Fee or an Imperial Termination Fee shall be
made not later than two business days after termination of the Merger
Agreement.
 
  Amendment. The Merger Agreement provides that it may be amended (by an
instrument in writing signed by the parties thereto) by the parties thereto by
action by or on behalf of their respective Boards of Directors at any time
prior to the Effective Time; provided, however, after approval and adoption of
the Merger Agreement
 
                                      12

 
and the transactions contemplated thereby by the stockholders of the Company,
no amendment may be made which would reduce the amount or change the type of
consideration payable in the Merger.
 
COMPANY STOCKHOLDERS AGREEMENTS
 
  As a condition and inducement to entering the Merger Agreement, Imperial
Holly and the Purchaser required that substantially all of the directors and
executive officers of the Company enter into a stockholders agreement, dated
September 12, 1997 whereby they would agree to tender all Shares owned by them
into the Offer prior to the expiration of the Offer and not withdraw any of
such Shares so tendered so long as the per Share price is not less than $20.25
in cash net to the seller. Each of the directors and executive officers of the
Company have executed such agreements, a form of which is filed as Exhibit
(c)(2) hereto and is incorporated by reference herein.
 
IMPERIAL HOLLY PROXY AGREEMENTS
 
  As a condition and inducement to entering the Merger Agreement, the Company
required that certain stockholders of Imperial Holly, affiliated with Imperial
Holly and representing approximately 66.34% of the issued and outstanding
Imperial Shares, enter into the Imperial Holly Proxy Agreements, pursuant to
which they would agree to vote all of their Imperial Shares in favor of the
Merger, a form of which is filed as Exhibit (c)(3) hereto and is incorporated
by reference herein.
 
ITEM 4. THE SOLICITATION OR RECOMMENDATION
 
  (a) Recommendation of the Board of Directors.
 
  On September 11, 1997, the Board of Directors of the Company (the "Board of
Directors"), based in part upon the opinion of DLJ that the proposed
consideration to be received by holders of Shares pursuant to the Merger
Agreement is fair from a financial point of view to the holders of Shares,
unanimously determined that the Offer and the Merger are fair to and in the
best interests of the stockholders of the Company, approved the Offer and the
Merger and recommended acceptance of the Offer and approval and adoption of
the Merger Agreement by the stockholders of the Company and approved the
amendment to the Company Rights Plan so as to provide that no purchase rights
under such agreement will become exercisable as a result of the approval,
execution or delivery of the Merger Agreement or the consummation of the
transactions contemplated thereby (including the Offer and the Merger).
 
  A copy of a letter to all stockholders of the Company communicating the
recommendations of the Board of Directors is filed as Exhibit (a)(3) hereto
and is incorporated herein by reference.
 
  (b) Background; Reasons for the Board of Directors' Recommendation.
 
  Background. The terms of the Merger Agreement are the result of arm's-length
negotiations between representatives, legal advisors and financial advisors of
the Company and Imperial Holly. The following is a brief discussion of the
background of events and the actions of the parties to the Merger Agreement
culminating in their execution and delivery of such agreement.
 
  In the winter of 1996, the Board of Directors requested that its senior
management present a strategic plan to improve long-term stockholder value. At
a special meeting of the Board of Directors of the Company on March 27, 1996,
the Company's senior management presented a plan which outlined two strategies
to improve long-term stockholder value: (i) the maximization of the value of
the Company's existing sugar business and (ii) the acquisition of food-related
product companies in order to expand the Company's size, diversify its product
lines and reduce its dependence on the refined sugar business. The Company
considered this second strategy to be parallel but supplemental to its primary
goal to maximize the value of its existing business.
 
                                      13

 
 Efforts to Implement the Diversification Strategy.
 
  Senior representatives of the Company met with several investment banks from
May 6 to May 8, 1996. At such meetings, the investment banks were asked to
present acquisition candidates to the Company. Following these meetings,
several potential candidates were presented to the Company. However, in each
case, the discussions with such candidates did not result in any acquisition
proposals.
 
  In November 1996, a candidate outside the sugar industry (the
"Diversification Candidate") expressed a high level of interest in engaging in
a strategic business combination with the Company, and preliminary
conversations between senior representatives of the Company and senior
representatives of the Diversification Candidate ensued. On December 10, 1996,
the Company engaged Donaldson, Lufkin & Jenrette Securities Corporation
("DLJ") as its financial advisor on a short-term basis in order to determine
the feasibility of entering into a strategic business combination with the
Diversification Candidate.
 
  At a special meeting of the Board of Directors on December 16, 1996 to
discuss the opportunity with the Diversification Candidate, DLJ advised the
Board of Directors that the proposed transaction, which would have resulted in
a change in control of the Company, involved a discount to the Company's share
price, did not have any meaningful synergies of combination, and was not
compelling enough to pursue without first investigating potential interest by
certain strategic partners. After discussing the proposal of the
Diversification Candidate, considering the comments of DLJ and considering
such other factors as it deemed appropriate, the Board of Directors, by a
unanimous vote of all directors present, decided to reject the proposal of the
Diversification Candidate and to continue to investigate and evaluate
strategic options for the Company, with the advice and assistance of DLJ.
 
 Efforts to Implement Strategy to Maximize Value; Agreement with Flo-Sun
Incorporated.
 
  In an effort to maximize the value of the Company's existing sugar business,
management reduced costs, reduced debt, sold or closed non-strategic assets,
and developed higher value new products.
 
  In addition, senior management and the Board of Directors believed that
vertical integration was likely to benefit the Company on a long-term basis.
The Company also decided that it should concurrently discuss transactions with
other sugar industry participants that would not result in vertical
integration. As a result, the Company initiated discussions with various
participants in the sugar business, both domestically and abroad. The
objective in this process was to maximize stockholder value.
 
  In March 1996, certain senior officers of the Company met with
representatives of a major raw sugar producer ("Candidate 1") to explore the
possibility of the two companies entering into a strategic business
combination. Over the next several months, senior officers from the Company
and Candidate 1 continued their conversations concerning a possible business
combination or other alliance. In March 1997, Candidate 1 indicated that it
was not interested in further discussions.
 
  Another alternative to strengthen the Company's sugar business was to form
alliances with, merge, or acquire beet sugar companies.
 
  In July 1996, a Company representative met with a representative of a beet
sugar company ("Candidate 2") and discussed a proposal to form a joint venture
or other strategic combination. The discussions which ensued failed to produce
a mutually satisfactory proposal. A Company representative met with a senior
executive of another beet processor ("Candidate 3") several times in 1996 and
1997 to discuss various strategic combinations, including the possibility of
merging. Proposals discussed between the Company and Candidate 3, again, were
never agreed upon.
 
  In August 1996, Flo-Sun Incorporated, a privately held Florida based sugar
cane grower ("FSI"), expressed a high level of interest in engaging in a
strategic business combination with the Company, and preliminary conversations
between senior representatives of the Company and FSI commenced.
 
                                      14

 
  On December 20, 1996, the Company entered into a letter agreement with DLJ
pursuant to which the Company retained DLJ as its exclusive financial advisor
with respect to a possible acquisition by a third party, or a sale, merger,
consolidation or any other business combination. From late December 1996 until
May 1997, certain senior officers of the Company and DLJ proceeded to contact
a number of potential candidates, both domestic and foreign, in addition to
those already referred to who might be expected to have an interest in
engaging in a strategic business combination with the Company.
 
  On February 26, 1997, as part of the process of gaining further information
about the Company, FSI entered into a confidentiality agreement with the
Company. On March 7, 1997, another party ("Candidate 4") similarly entered
into a confidentiality agreement with the Company. In May 1997, Candidate 4,
after reviewing certain information about the Company, informed the Company
that it did not desire to pursue a strategic business combination.
 
  From mid-December 1996 until April 1997, certain senior officers of the
Company also continued to periodically engage in informal discussions and
meetings with certain senior officers from the Diversification Candidate.
 
  On April 15, 1997, the Diversification Candidate made another proposal to
engage in a strategic business combination with the Company.
 
  At the regular meeting of the Board of Directors on April 17, 1997, Mr.
Eugene Cartledge, Chairman of the Board of Directors, reported that the
Executive Committee of the Board of Directors had voted the day earlier to
recommend that he and the Company's President and Chief Executive Officer, Mr.
William W. Sprague III, continue to investigate all available options with
respect to a strategic transaction, which recommendation the Board of
Directors then approved.
 
  On April 30, 1997, another party ("Candidate 5") approached the Company
about a strategic merger, and entered into a confidentiality agreement with
the Company. Subsequently, the Company concluded that a merger with Candidate
5 would not meet its strategic objectives. Accordingly, the Company notified
Candidate 5 in May 1997 that it did not desire to pursue a strategic business
combination with Candidate 5 at that time.
 
  On May 12, 1997, FSI indicated that it was in the planning stages with
respect to a restructuring transaction involving certain subsidiaries of FSI.
FSI stated that such restructuring would combine all of the U.S. operations of
FSI under one corporate umbrella, XSF Holdings, Inc. ("XSF"), and that such
restructuring could be consummated in connection with a possible business
combination transaction with the Company. On that date, FSI proposed to the
Company a business combination with XSF, pursuant to which the resulting
combined company (the "Combined Company") would be a public company, the
Company stockholders would receive 40% of the outstanding common stock of the
Combined Company and FSI and certain stockholders of FSI would receive 60% of
the outstanding common stock of Combined Company. Also on May 12, 1997, as
part of the process of gaining further information about XSF and FSI, the
Company entered into a confidentiality agreement with FSI.
 
  On May 22, 1997, at a special meeting, the Board of Directors met to
consider the two most recent proposals made by each of FSI and the
Diversification Candidate. During this meeting, DLJ advised the Board of
Directors that the likelihood of concluding the proposed transaction with the
Diversification Candidate on a basis that would be fair to the Company's
stockholders was favorable, but that the proposed transaction with FSI could
possibly be more favorable depending on further negotiations and additional
information. The Board of Directors, based on DLJ's advice and on such other
factors as it deemed appropriate, then decided that Mr. Cartledge and DLJ
should continue to aggressively negotiate both alternatives until a choice
could be made.
 
  On May 23, 1997, Mr. Cartledge, Mr. Sprague, Mr. Alfonso Fanjul, Chairman
and Chief Executive Officer of FSI, Mr. Jose Pepe Fanjul, Vice-Chairman and
Chief Operating Officer of FSI, and other representatives of
 
                                      15

 
FSI and the Company, along with representatives of DLJ, Goldman, Sachs,
Skadden, Arps, Meagher, Slate & Flom, LLP, legal advisors to the Company, and
Shearman and Sterling and Steel Hector & Davis LLP, legal advisors to FSI, met
to discuss a possible strategic business combination.
 
  On May 24, 1997, the Board of Directors convened telephonically for the
purpose of Mr. Cartledge updating the Board of Directors on the status of the
Company's discussions and to discuss the relative merits of the two
alternatives.
 
  Late on May 25, 1997, the Diversification Candidate and the Company
terminated their discussions. At a special meeting of the Board of Directors
on May 26, 1997, the Board of Directors then directed the Company's
management, Mr. Cartledge and DLJ to negotiate an agreement with FSI to be
presented to the Board of Directors for acceptance or rejection.
 
  After the Board of Directors meeting on May 26, 1997, Mr. Cartledge
contacted Mr. Alfonso Fanjul to indicate that the Company was interested in
pursuing an alliance with FSI. They then commenced a detailed mutual due
diligence process.
 
  During the following weeks, representatives of the Company and FSI and their
respective advisors continued to discuss matters relating to the structuring
of the proposed transaction and the terms to be included in the documentation
of the transaction and to exchange information regarding their respective
businesses.
 
  On June 30, 1997, FSI delivered a draft merger agreement to the Company and
its outside advisors. At a special meeting on July 1, 1997, the Board of
Directors convened and received reports from Mr. Cartledge and Mr. Sprague
with respect to the ongoing merger negotiations with FSI.
 
  From June 30 through July 10, 1997, the Company, FSI and their respective
legal counsel and investment bankers held several meetings in person and by
telephone in which various terms of a proposed Agreement and Plan of Merger,
among the Company, XSF, DXE Merger Corp., a Delaware corporation and a wholly
owned subsidiary of XSF, and FSI (the "FSI Merger Agreement"), were discussed
and negotiated. Pursuant to the terms of the FSI Merger Agreement, DXE would
be merged with and into the Company (the "FSI Merger"), resulting in the
Company becoming a wholly owned subsidiary of XSF.
 
  On July 10, 1997, Mr. Cartledge, Mr. Sprague, Mr. Alfonso Fanjul and Mr.
Jose Pepe Fanjul met to discuss the exchange ratio of the proposed
transaction. While the Company's representatives negotiated for an increased
percentage of the final company on behalf of the Company's stockholders, there
were discussions by the Fanjuls about the relative book values of the Florida
Crystals Companies which supported the exchange ratio of 40% that they had
proposed. After vigorous debate, the Fanjuls agreed to accept an exchange
ratio whereby the Company stockholders would receive 41.5% of the Combined
Company (the "FSI Exchange Ratio"). Messrs. Cartledge and Sprague agreed to
recommend the transaction to the Board of Directors.
 
  On July 14, 1997, the Board of Directors held a special meeting to review
the proposed FSI Merger Agreement and the terms of the FSI Merger and the
transactions contemplated thereby. At such meeting, DLJ rendered to the Board
of Directors its oral opinion (confirmed in writing later that day) to the
effect that, as of such date, and based upon and subject to the assumptions,
limitations and qualifications set forth therein, the aggregate number of
shares of the common stock of the Combined Company to be received in the FSI
Merger by the Company stockholders is fair to the Company's stockholders from
a financial point of view. The Board of Directors, by a unanimous vote of all
directors present, then approved the FSI Merger, the FSI Merger Agreement and
the transactions contemplated thereby.
 
  Following the conclusion of the Board of Directors' special meeting on the
evening of July 14, 1997, the FSI Merger Agreement was executed and delivered
by all the parties thereto. On July 15, 1997, the Company and FSI issued a
joint press release announcing the execution of the FSI Merger Agreement.
 
                                      16

 
 Actions Leading to the Merger Agreement with Imperial Holly.
 
  On August 25, 1997, Imperial Holly submitted a proposal to acquire the
Company in a transaction pursuant to which stockholders of the Company would
receive $18.75 in value per share of Common Stock, comprised of 70% cash and
30% Imperial Shares.
 
  On August 26, 1997, the Board of Directors telephonically convened a special
meeting by telephone to evaluate the transaction proposal submitted by
Imperial Holly. At such meeting, DLJ advised the Board of Directors that
Imperial Holly's proposal was superior to the FSI Merger. The Board of
Directors instructed the Company's management to begin discussions with
Imperial Holly in order to improve the terms and conditions of its proposal.
On August 26, 1997, the Company entered into a confidentiality agreement with
Imperial Holly.
 
  From August 25, 1997 through September 4, 1997, the Company, Imperial Holly
and their respective legal counsel and investment bankers held several
meetings in person and by telephone in which various terms of the Merger were
discussed and negotiated. On August 27, 1997, Imperial Holly delivered a draft
merger agreement to the Company and its outside advisors, and Imperial Holly
and the Company both commenced a detailed mutual due diligence process.
 
  On September 4, 1997, the Board of Directors of Imperial Holly held a
special meeting at which it approved the terms of the proposed merger
agreement and the transactions contemplated thereby. Imperial Holly then
delivered to the Company an executed merger agreement, together with a
commitment to leave its offer open through noon on September 12, 1997.
 
  Also on September 4, 1997, the Board of Directors held a special meeting to
review the proposed Offer, the Merger, the Merger Agreement and the
transactions contemplated thereby. Prior to the commencement of such special
meeting, the Company received from FSI a letter proposing certain changes to
the FSI Merger Agreement, including increasing the FSI Exchange Ratio to 45%
of the Combined Company and providing $4.00 in cash per share of Company
Common Stock (the "Revised FSI Proposal"). DLJ advised the Board that it was
prepared to render an opinion to the effect that the consideration of $18.75
per Share to be received by the stockholders of the Company pursuant to the
proposed merger agreement with Imperial Holly was fair to the Company's
stockholders from a financial point of view. The Board determined that, based
in part on the advice of DLJ, the Imperial Holly proposal was superior to the
FSI Merger. Accordingly, the Board of Directors determined to terminate the
FSI Merger Agreement and to pursue a strategy to obtain the highest bid from
both FSI and Imperial Holly.
 
  Pursuant to the terms of the FSI Merger Agreement, prior to termination FSI
must be given five business days to make adjustments in the terms and
conditions of such agreement. Accordingly, immediately following the September
4, 1997 meeting, the Company sent FSI a letter terminating the FSI Merger
Agreement effective on September 11, 1997, subject to FSI's right to adjust
the terms of the FSI Merger Agreement as would enable the Company to proceed
with a transaction with FSI.
 
  On September 5, 1997, the Company received a draft of a proposed amendment
to the FSI Merger Agreement incorporating the terms of the Revised FSI
Proposal (the "FSI Amendment"). Representatives of the Company and FSI
subsequently negotiated the terms of the FSI Amendment.
 
  On September 8, 1997, the Company notified both FSI and Imperial Holly that
its Board would meet on September 11, 1997 to consider the FSI Amendment, and
that both parties should submit their best and final proposals by September
10, 1997. In addition, on September 8, 1997, the Company engaged a second
financial adviser, The Robinson-Humphrey Company ("Robinson Humphrey"), in
connection with reviewing the various offers to acquire the Company.
 
  On September 10, 1997, the Board of Directors of Imperial Holly met to
approve a revised offer to acquire the Company, increasing the proposed
purchase price to $20.25 per share of Common Stock. Following such
 
                                      17

 
meeting, Imperial Holly sent the Company a revised Merger Agreement
incorporating such change and certain other changes requested by the Company.
Upon receipt of the revised Merger Agreement, Mr. Sprague contacted Mr.
Alphonso Fanjul and informed him of the revised proposal from Imperial Holly.
Mr. Fanjul stated that the FSI Amendment was FSI's final offer. On September
10, 1997, FSI sent the Company a definitive copy of the FSI Amendment and
informed the Company that its revised offer would remain open until 4:00 p.m.
on September 11, 1997.
 
  At a special meeting held on September 11, 1997, the Board of Directors
unanimously approved the Offer, the Merger, the Merger Agreement and the other
transactions contemplated thereby, and resolved to recommend that the Company
stockholders tender their Shares pursuant to the Offer and vote for adoption
of the Merger Agreement and approval of the transactions contemplated thereby.
 
  On the morning of September 12, 1997, the Company executed and delivered the
Merger Agreement, as previously executed and delivered by Imperial Holly, and
issued a joint press release announcing the execution of the Merger Agreement.
A copy of such press release is filed as Exhibit (a)(9) hereto and is
incorporated herein by reference.
 
  Reasons for the Board of Directors' Recommendation. In approving the Offer,
the Merger, the Merger Agreement and the other transactions contemplated
thereby, and recommending that stockholders accept the Offer and vote for
adoption of the Merger Agreement and approval of the transactions contemplated
thereby, the Board of Directors considered a number of factors, including the
following:
 
  . The fact that the $20.25 per Share price represents a premium of
    approximately 36% over the closing sale price of $14.9375 per Share as
    reported on the New York Stock Exchange on August 25, 1997, the last
    trading date prior to the date the Company first publicly announced it
    had received an acquisition proposal from Imperial Holly;
 
  . The recent historical market prices and trading information for the
    Shares;
 
  . The presentation by DLJ to the Board of Directors on September 11, 1997
    of its financial analysis and its written opinion (the "DLJ Opinion") to
    the effect that, as of such date and based upon and subject to the
    assumptions, limitations and qualifications set forth therein, the
    consideration of $20.25 per Share to be received by the stockholders of
    the Company pursuant to the Merger Agreement is fair to the Company's
    stockholders from a financial point of view; the full text of the DLJ
    Opinion is attached as Annex B hereto and should be read in its entirety;
 
  . The fact that DLJ had informed the Board of Directors that the DLJ
    Opinion had superceded the written opinion, dated July 14, 1997, of DLJ
    relating to the fairness from a financial point of view to the
    stockholders of the Company of the consideration to be received pursuant
    to the FSI Merger Agreement, and that DLJ had withdrawn such opinion;
 
  . The presentation by Robinson-Humphrey of its financial analysis of the
    relative values of the FSI Merger and the Merger;
 
  . The business, operations, properties, assets, financial condition and
    operating results of the Company and Imperial Holly;
 
  . The estimated impact of the potential operating efficiencies and other
    synergies resulting from Merger, including economies of scale; the Board
    of Directors also considered the degree of risk that such synergies and
    cost savings will not be achieved, that the operations of the two
    companies will not be successfully integrated and that key Company
    management personnel might not remain with the Company after announcement
    of the Merger;
 
  . The benefit of geographic and production diversification achieved as a
    result of the Merger, including (i) a balance of beet (approximately 35%
    of production) and sugar cane (approximately 65% of production)
 
                                      18

 
   refining which would enhance the combined company's ability to withstand
   near term pressure in connection with the supply of sugar cane, (ii)
   broadened market participation and (iii) geographically dispersed
   production facilities allowing for efficient sourcing for customers;
 
  . The increased refining capacity resulting from the Merger, enhancing the
    combined company's ability to secure sufficient supplies of sugar cane
    through, among other means, a partnering arrangement with raw sugar
    suppliers;
 
  . The opportunity for the Company stockholders to maintain an ownership
    stake in the combined entity and realize the potential long-term benefits
    of the Merger described above;
 
  . The Company's uncertain future as an independent sugar refiner in light
    of, among other things, (i) the historical and anticipated future slow
    rate of growth of sugar consumption in the United States, (ii) the
    anticipated growth of production capacity for the refined sugar market in
    the United States caused by the shift toward vertical integration of the
    refined sugar industry by raw sugar producers ("Vertical Integration"),
    including the construction of a refinery in Florida by U.S. Sugar, a
    significant raw sugar producer, expected to be completed in 1998, and
    (iii) the anticipated impact of Vertical Integration on the availability
    to the Company of raw sugar to be refined (including the determination by
    U.S. Sugar to terminate its supply contract with the Company effective
    October 31, 2001), and the prices at which raw sugar might be available;
 
  . The results of the inquiries made by the Company's management and DLJ,
    financial advisor to the Company, to major companies in the sugar
    industry, both domestic and foreign, regarding a possible strategic
    alliance, partnership, business combination, acquisition or similar
    transaction with the Company and that, in light of such inquiries, the
    Company's management did not receive nor did it believe it likely that
    any other party would propose a strategic alliance, partnership, business
    combination, acquisition or similar transaction that, taken as a whole,
    would be more favorable to the Company and its stockholders than the
    Offer, the Merger and the transactions contemplated thereby;
 
  . The strategic alternatives available to the Company (including continuing
    the Company business in its present configuration without significant
    changes), none of which the Board of Directors believed to be as
    favorable to the Company stockholders as a merger with Imperial Holly;
 
  . The regulatory approvals required to consummate the Merger and the
    transactions contemplated thereby, and the prospects for receiving all
    such approvals;
 
  . The Offer provides for a prompt cash tender offer for a significant
    number of Shares, thereby enabling stockholders of the Company who want
    to receive cash in exchange for their Shares to obtain certain of the
    benefits of the Merger at the earliest possible time;
 
  . The likelihood that the Offer and the Merger will be consummated, and the
    effects on the Company's business, operations and financial condition
    should it not be possible to consummate the Merger following public
    announcement that the Merger Agreement had been entered into;
 
  . The terms and conditions of the Merger, the Merger Agreement and the
    transactions contemplated thereby, which were the product of arm's-length
    negotiations, including the parties' representations, warranties and
    covenants, the conditions to their respective obligations, and the
    limited ability of Imperial Holly and the Purchaser to terminate the
    Offer or the Merger Agreement;
 
  . The provisions of the Merger Agreement that permit the Company to
    consider additional bona fide third party offers to acquire the Company
    and permit the Company to provide information to and negotiate with such
    parties and to terminate the Merger Agreement prior to the consummation
    of the Merger, subject to the payment of agreed upon fees and expenses to
    Imperial Holly, if the Board of Directors determines that its fiduciary
    duties require that a superior third party proposal be accepted; and
 
  . The interests that the Board of Directors and the Company's management
    may be deemed to have in the Offer, the Merger, the Merger Agreement and
    the transactions contemplated thereby.
 
                                      19

 
  The foregoing discussion of the information and factors considered by the
Board of Directors is not intended to be exhaustive, and such information and
factors were considered collectively by the Board of Directors in connection
with its review of the Offer, the Merger, the Merger Agreement and the
transactions contemplated thereby. In view of the variety of factors
considered in connection with such evaluation, the Board of Directors did not
find it practicable to, and did not, quantify or otherwise assign relative
weights to the specific factors considered in reaching its determination. In
addition, individual members of the Board of Directors may have given
different weights to different factors.
 
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
 
  Pursuant to a letter agreement dated December 20, 1996, as revised July 11,
1997 (the "DLJ Engagement Letter"), the Company engaged Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJ") to act as its financial advisor in
connection with various financial and strategic alternatives, including but
not limited to the possible sale of all or a portion of the Company. Pursuant
to the terms of the DLJ Engagement Letter, the Company has agreed to pay DLJ
for its services (i) a retainer advisory fee of $100,000, payable on January
20, 1997, (ii) a fee of $500,000, payable at the time DLJ notifies the Board
of Directors that it is prepared to deliver an opinion in connection with a
Sale Transaction (as defined in the DLJ Engagement Letter) and (iii) a
transaction fee, payable upon the consummation of a Transaction (as defined in
the DLJ Engagement Letter) within 12 months after the date of the DLJ
Engagement Letter, in an amount equal to 0.7% of the Consideration (as defined
in the DLJ Engagement Letter) paid in a Transaction, less the fees paid in (i)
and (ii) above. The Company has agreed to reimburse DLJ for reasonable out-of-
pocket expenses, including attorneys' fees, and to indemnify DLJ against
certain liabilities, including certain liabilities under the federal
securities laws.
 
  In addition, Pursuant to a letter agreement dated September 8, 1997, the
Company engaged Robinson-Humphrey to act as its financial advisor in
connection with reviewing various offers to acquire the Company. Pursuant to
the terms of the letter agreement, the Company has paid Robinson-Humphrey a
fee equal to $250,000. The Company has agreed to reimburse Robinson-Humphrey
for reasonable out-of-pocket expenses, including attorneys' fees, and to
indemnify Robinson-Humphrey against certain liabilities, including certain
liabilities under the federal securities laws.
 
  Except as described herein, neither the Company nor any person acting on its
behalf currently intends to employ, retain or compensate any other person to
make solicitations or recommendations to stockholders on its behalf concerning
the Offer.
 
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
 
  (a) Except as described in Item 3(b), during the past 60 days, no
transactions in the Shares have been effected by the Company or, to the best
of the Company's knowledge, by any executive officer, director, affiliate or
subsidiary of the Company.
 
  (b) To the best of the Company's knowledge, to the extent permitted by
applicable securities laws, rules or regulations, all of the Company's
executive officers, directors and affiliates who own Shares presently intend
to tender such Shares to Imperial Holly pursuant to the Offer. See Item 3 for
information concerning agreements pursuant to which certain officers and
directors have made certain commitments to tender their Shares pursuant to the
Offer.
 
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
 
  (a) Except as described in this Schedule 14D-9, or as set forth in the Offer
to Purchase, to the best of the Company's knowledge, no negotiation is being
undertaken or is under way by the Company in response to the Offer which
relates to or would result in: (i) an extraordinary transaction such as a
merger or reorganization, involving the Company or any subsidiary of the
Company, (ii) a purchase, sale or transfer of a material amount
 
                                      20

 
of assets by the Company or any subsidiary of the Company, (iii) a tender
offer for or other acquisition of securities by or of the Company or (iv) any
material change in the present capitalization or dividend policy of the
Company.
 
  (b) Except as set forth herein, there are no transactions, board
resolutions, agreements in principle, or a signed contracts in response to the
Offer, other than the one described pursuant to Item 3(b) of this statement,
which relates or would result in one or more of the matters referred to in
Item 7(a).
 
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
 
  The information contained in all of the Exhibits referred to in Item 9 below
is incorporated herein by reference.
 
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
 


 EXHIBIT
   NO.
 -------
      
  (a)(l) Offer to Purchase (incorporated by reference to Exhibit (a)(1) to the
         Tender Offer Statement on Schedule 14D-1, filed with the Securities
         and Exchange Commission (the "Commission") by Imperial Holly and the
         Purchaser on September 18, 1997).*+
 (a)(2)  Letter of Transmittal (incorporated by reference to Exhibit (a)(2) to
         the Tender Offer Statement on Schedule 14D-1, filed with the
         Commission by Imperial Holly and the Purchaser on September 18,
         1997).*+
 (a)(3)  Letter to Company stockholders, dated September 18, 1997.*+
 (a)(4)  Notice of Guaranteed Delivery (incorporated by reference to Exhibit
         (a)(3) to the Tender Offer Statement on Schedule 14D-1, filed with the
         Commission by Imperial Holly and the Purchaser on September 18,
         1997).*+
 (a)(5)  Letter from Lehman Brothers, Inc. to Brokers, Dealers, Commercial
         Banks, Trust Companies and Other Nominees (incorporated by reference
         to Exhibit (a)(4) to the Tender Offer Statement on Schedule 14D-1,
         filed with the Commission by Imperial Holly and the Purchaser on
         September 18, 1997).
 (a)(6)  Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
         Companies and Other Nominees (incorporated by reference to Exhibit
         (a)(5) to the Tender Offer Statement on Schedule 14D-1, filed with the
         Commission by Imperial Holly and the Purchaser on September 18,
         1997).*+
 (a)(7)  IRS Guidelines for Certification of Taxpayer Identification Number on
         Substitute Form W-9 (incorporated by reference to Exhibit (a)(6) to
         the Tender Offer Statement on Schedule 14D-1, filed with the
         Commission by Imperial Holly and the Purchaser on September 18,
         1997).*+
 (a)(8)  Summary Advertisement as published in The Wall Street Journal on
         September 18, 1997 (incorporated by reference to Exhibit (a)(7) to the
         Tender Offer Statement on Schedule 14D-1, filed with the Commission by
         Imperial Holly and the Purchaser on September 18, 1997).
 (a)(9)  Press Release issued by the Company and Imperial Holly on September
         12, 1997.+
 (c)(1)  Agreement and Plan of Merger dated as of September 12, 1997, among
         Imperial Holly, the Purchaser and the Company (incorporated by
         reference to Exhibit (c)(1) to the Tender Offer Statement on Schedule
         14D-1, filed with the Commission by Imperial Holly and the Purchaser
         on September 18, 1997).
 (c)(2)  Stockholders Agreement, dated as of September 12, 1997, among Imperial
         Holly, the Purchaser and the Executive Officers and Directors of the
         Company (incorporated by reference to Exhibit (c)(2) to the Tender
         Offer Statement on Schedule 14D-1, filed with the Commission by
         Imperial Holly and the Purchaser on September 18, 1997).
 (c)(3)  Form of Agreement and Irrevocable Proxy, dated as of September 12,
         1997, among the Company and certain stockholders of Imperial Holly
         (incorporated by reference to Exhibit (c)(3) to the Tender Offer
         Statement on Schedule 14D-1, filed with the Commission by Imperial
         Holly and the Purchaser on September 18, 1997).

 
 
                                      21

 


 EXHIBIT
   NO.
 -------
      
 (c)(4)  Opinion of Donaldson, Lufkin, & Jenrette dated September 11, 1997.*+
 (c)(5)  Amendment No. 3 to the Supplemental Executive Retirement Plan.+
 (c)(6)  Amendment No. 4 to the Supplemental Executive Retirement Plan.+
 (c)(7)  Amendment No. 3 to the Deferred Compensation Plan for Key Employees.+
 (c)(8)  Amendment No. 4 to the Deferred Compensation Plan for Key Employees.+
 (c)(9)  Amendment No. 5 to the Deferred Compensation Plan for Key Employees.+

- --------
* Included in documents mailed to stockholders.
+ Filed herewith.
 
                                       22

 
                                   SIGNATURE
 
  After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
 
                                      SAVANNAH FOODS & INDUSTRIES, INC.
 
                                      [SIGNATURE OF WILLIAM W. SPRAGUE APPEARS
                                      HERE]
                                      BY: _____________________________________
                                         Name: WILLIAM W. SPRAGUE III
                                         Title: President and Chief Executive
                                          Officer
 
Dated: September 18, 1997
 
                                       23

 
                                                                        ANNEX A
 
                       SAVANNAH FOODS & INDUSTRIES, INC.
                                 P.O. BOX 339
                            SAVANNAH, GEORGIA 31402
 
                       INFORMATION STATEMENT PURSUANT TO
                        SECTION 14(F) OF THE SECURITIES
                EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
 
                               ----------------
 
  This Information Statement ("Information Statement") is being mailed on or
about September 18, 1997, as a part of the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
to the holders of record of shares of common stock, par value $.25 per share,
of the Company (the "Shares") at the close of business on or about September
18, 1997. You are receiving this Information Statement in connection with the
possible election of persons designated by the Purchaser to a majority of the
seats on the Board of Directors.
 
  Pursuant to the Merger Agreement, the Purchaser commenced the Offer on
September 18, 1997. The Offer is scheduled to expire at 12:00 midnight, New
York City Time, on Thursday, October 16, 1997, unless the Offer is extended.
 
  You are urged to read this Information Statement carefully. You are not,
however, required to take any action. Capitalized terms used herein and not
otherwise defined herein shall have the meaning set forth in the Schedule 14D-
9.
 
  The following information is based on the Company's Proxy Statement dated as
of February 20, 1997, and, except as indicated, such information is given as
of such date.
 
  The information contained in this Information Statement or incorporated by
reference herein concerning Imperial Holly, the Purchaser, or their respective
officers, directors, representatives or affiliates or actions or events with
respect to any of them, was provided by Imperial Holly or the Purchaser, and
the Company takes no responsibility for such information.
 
                    INFORMATION WITH RESPECT TO THE COMPANY
 
OUTSTANDING VOTING STOCK
 
  As of August 31, 1997, there were (i) 28,738,196 Shares issued and
outstanding, all of which were validly issued, fully paid and nonassessable,
(ii) 2,568,604 Shares were held in the Treasury of the Company, and (iii)
1,250,000 Shares reserved for future issuance pursuant to the Company's 1996
Equity Incentive Plan, of which 179,844 Shares were reserved for issuance upon
exercise of existing options.
 
  As of August 31, 1997, no Executive Officer or Director owned 1% or more of
the Shares. All Directors and current Executive Officers as a group (16
persons) owned beneficially 877,217 Shares constituting approximately 3.05% of
outstanding voting securities.
 
PURCHASER'S RIGHT TO DESIGNATE DIRECTORS; PURCHASER'S DESIGNEES
 
  The Merger Agreement provides that, upon the Purchaser's acquisition of a
majority of the outstanding Shares pursuant to the Offer, the Purchaser shall
be entitled to designate such number of Directors, rounded up to the next
whole number, on the Board of Directors as shall give the Purchaser
representation on the Board of Directors equal to the product of the total
number of Directors on the Board of Directors multiplied by the percentage
that the aggregate number of Shares beneficially owned by the Purchaser at
such time bears to the total number of Shares then outstanding (the "Purchaser
Designees"), and the Company shall, at such time, promptly take all actions
necessary to cause the Purchaser's Designees to be elected as Directors of the
Company, including increasing the size of the Board of Directors or securing
the resignations of incumbent directors or both. Notwithstanding the
foregoing, at all times prior to the Effective Time, the Board of Directors
 
                                      A-1

 
shall include at least two Directors who held office as of the date of the
Merger Agreement (any such director remaining in office being a "Continuing
Director"). Following the election or appointment of the Purchaser's Designees
and, prior to the Effective Time, such designees shall abstain from acting
upon, and the approval of a majority of the Continuing Directors shall be
required to authorize and shall be sufficient to authorize, any resolution
with respect to any termination of the Merger Agreement by the Company, any
amendment of the Merger Agreement requiring action by the Board of Directors,
any extension of time for the performance of any of the obligations or other
acts of Imperial Holly or the Purchaser under the Merger Agreement, any waiver
of compliance with any of the agreements or conditions under the Merger
Agreement for the benefit of the Company and any action to seek to enforce any
obligation of Imperial Holly or the Purchaser under the Merger Agreement.
 
  The Purchaser Designees will be selected by the Purchaser from among the
individuals listed below. Each of the following individuals has consented to
serve as a Director of the Company if appointed or elected. None of the
following individuals owns any Shares, other than James C. Kempner who owns
3,000 Shares and Roger W. Hill who owns 100 Shares. In addition, none of the
following individuals is a Director of, or holds any position with, the
Company. The name, age, present principal occupation or employment and five-
year employment history of each of the following individuals are set forth
below. Each person is a citizen of the United States and the business address
of each such person is c/o One Imperial Square, Suite 200, 8016 Highway 90-A,
Sugar Land, Texas 77478.
 


                                 PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
           NAME              MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- --------------------------- ----------------------------------------------------
                         
Roger W. Hill.............. Director of Imperial Holly since 1988. President and
                             CEO Holly Sugar Corp. from 1988 to present and
                             Managing Director of Imperial Holly from 1996 to
                             present.
James C. Kempner........... Director of Imperial Holly since 1988. President,
                             Chief Executive Officer and Chief Financial Officer
                             of Imperial Holly from 1993 to present. Executive
                             Vice President and Chief Financial Officer from
                             1988-1993.
Peter C. Carrothers........ Officer of Imperial Holly since 1994. Senior Vice
                             President--Operations from 1994 to present. Pepsico
                             Foods International, Vice President--Logistics from
                             1990 to 1994.
Douglas W. Ehrenkranz...... Officer of Imperial Holly since 1995. Vice
                             President--Sales and Marketing 1995 to present and
                             Managing Director from April 1997 to present.
                             Procter & Gamble Corp., Category Sales Manager from
                             1979 to 1993.
John A. Richmond........... Officer of Imperial Holly since 1991. Vice
                             President--Operations from 1995 to present and
                             Managing Director from April 1997 to present. Holly
                             Sugar Corp., Senior Vice President and General
                             Manager--Beet Sugar Operations from 1993 to 1995.
                             Holly Sugar Corp., Senior Vice President and
                             General Manager--Eastern Division from 1992 to
                             1993.
William F. Schwer.......... Officer of Imperial Holly since 1989. Managing
                             Director from 1995 to present. Senior Vice
                             President and General Counsel from 1993 to 1995.
                             Vice President and General Counsel 1992 to 1993.
Karen L. Mercer............ Officer of Imperial Holly since 1993. Vice President
                             and Treasurer from April 1997 to present. Treasurer
                             from 1994 to April 1997. Texas Commerce Bank, Vice
                             President--General Lending in 1993. First City
                             Bank, various positions 1988 to 1993.

 
                                      A-2

 
BOARD OF DIRECTORS
 
  The Board of Directors currently consists of 12 members, and there are
currently no vacancies on the Board of Directors. Each Director holds office
until such Director's successor is elected and qualified or until such
Director's earlier resignation, death or removal.
 
  Set forth on the following pages is information with respect to standing
members of the Board of Directors as of August 31, 1997.
 
                   DIRECTORS WHOSE TERMS CONTINUE UNTIL 1998
 
DALE C. CRITZ                          Mr. Dale C. Critz is owner and
Presidient,                            President of Critz. Inc., a retail
Critz, Inc.                            automobile dealership. He has served
Age: 64                                on the Board of Directors of SunTrust
Director since: 1993                   Bank, Savannah, N.A. since 1963 and
Present Term expires: 1998             was appointed Chairman of the Board in
Member: Compensation Committee         1992. He is a Trustee of the Georgia
                                       Automobile Dealers Association Workers
                                       Compensation Fund.
 
ARTHUR M. GIGNILLIAT, JR.              Mr. Arthur M. Gignilliat, Jr. is
President and Chief Executive Officer, President and Chief Executive Officer
Savannah Electric and Power            of Savannah Electric and Power
Company                                Company. He serves on the Board of
Age: 64                                Directors of Savannah Electric and
Director since: 1988                   Power Company and on the NationsBank,
Present term expires: 1998             N.A. (South) Savannah Advisory Board.
Member: Compensation Committee         He is a member of the Governor's
(Chairman)                             Development Council, and is Chairman
                                       of the Georgia International and
                                       Maritime Trade Center Authority.
 
ARNOLD TENENBAUM                       Mr. Arnold Tenenbaum is President of
President,                             Chatham Steel Corporation. Chatham
Chatham Steel Corporation              Steel is a wholesale distributor of
Age: 61                                metal products. It has branches in
Director since: 1989                   five states. Mr. Tenenbaum is on the
Present term expires: 1998             Board of Directors of First Union Bank
Member: Audit Committee                of Savannah, First Union Bank of
                                       Georgia. Savannah Electric and Power
                                       Company, and the Georgia Lottery
                                       Corporation.
 
                                      A-3

 
                   DIRECTORS WHOSE TERMS CONTINUE UNTIL 1999
 
W. WALDO BRADLEY                       Mr. W. Waldo Bradley is Chairman of
Chairman,                              the Board of Bradley Plywood
Bradley Plywood Corporation            Corporation, Savannah, Georgia, a
Age: 63                                wholesale distributor of building
Director since: 1979                   materials. He also serves as a
Present term expires: 1999             Director of First Union Corporation,
Member: Compensation, Executive, and   Charlotte, North Carolina, and Atlanta
Nominating Committees                  Gas Light Company.
 
JOHN D. CARSWELL                       Mr. John D. Carswell has been in the
Associated with Sedgwick James, Inc.   general insurance business all of his
Age: 66                                business life. He was associated with
Director since: 1985                   Palmer & Cay/Carswell, Inc. until
Present term expires: 1999             December 1, 1993 and joined Sedgwick
Member: Audit Committee and Nominating James, Inc. on April 1, 1994.
Committee (Chairman)
 
F. SPRAGUE EXLEY                       Mr. F. Sprague Exley, who first joined
Senior Vice President--Human           the Company in 1965, is Senior Vice
Resources and Administration           President--Human Resources and
and Assistant Secretary,               Administration and Assistant
Savannah Foods & Industries, Inc.      Secretary. He was elected to his
Age: 58                                current position in 1995. Prior to
Director since: 1976                   that he served as Vice President--
Present term expires: 1999             Distribution of the Company. He is on
                                       the NationsBank, N.A. (South) Savannah
                                       Advisory Board and is a member of the
                                       Board of the Georgia Freight Bureau,
                                       Inc., Atlanta, Georgia.
 
WILLIAM W. SPRAGUE III                 Mr. William W. Sprague III has been
President and Chief Executive Officer, President and Chief Executive Officer
Savannah Foods & Industries, Inc.      of Savannah Foods & Industries, Inc.
Age: 41                                since 1995. He served as President and
Director since: 1990                   Chief Operating Officer from 1993 to
Present term expires: 1999             1995. He began his career with the
Member: Executive Committee            Company in 1983, and his previous
                                       position was Vice President--Sales.
 
HUGH M. TARBUTTON                      Mr. Hugh M. Tarbutton is President of
President,                             Sandersville Railroad Company,
Sandersville Railroad Company          Sandersville, Georgia. He is also a
Age: 64                                Director of NationsBank, N.A. (South).
Director since: 1971
Present term expires: 1999
Member: Executive and Nominating
Committees, and Audit Committee
(Chairman)
 
                                      A-4

 
                   DIRECTORS WHOSE TERMS CONTINUE UNTIL 2000
 
R. EUGENE CARTLEDGE                    Mr. Eugene Cartledge retired as
Director                               Chairman and Chief Executive Officer
Union Camp Corporation                 of Union Camp Corporation in June
Age: 68                                1994, a position he had held since
Director since: 1995                   1986. He has been a member of the
Present term expires: 2000             Union Camp Board of Directors since
Member: Compensation Committee         1983 and continues to serve in that
                                       capacity. He is also a Director of The
                                       Sun Company, Delta Air Lines, Inc.,
                                       Blount, Inc., Chase Brass Industries,
                                       and UCAR International Inc.
 
LEE B. DURHAM, JR.                     Mr. Lee B. Burham, Jr. retired as
Retired                                counsel to Clark Hill P.L.C., Detroit,
1021 Dawson Ct.                        Michigan. He had been a practicing
Greensboro, GA 30642                   attorney for more than 30 years. Clark
Age: 67                                Hill P.L.C. is general counsel to
Director since: 1985                   Michigan Sugar Company, a wholly-owned
Present term expires: 2000             subsidiary of the Company.
 
ROBERT L. HARRISON                     Mr. Robert L. Harrison is President of
President,                             Stevens Shipping & Terminal Co.,
Stevens Shipping & Terminal Co.        Savannah, Georgia. Stevens conducts
Age: 57                                steamship agency and stevedoring
Director since: 1990                   services in South Atlantic port areas.
Present term expires: 2000             He is also on the NationsBank, N.A.
Member: Audit and Compensation         (South) Savannah Advisory Board and is
Committees                             Vice President and a Director of
                                       Fairway Terminal Corporation of Texas.
 
JAMES M. REED                          Mr. James M. Reed is Vice Chairman and
Vice Chairman and Chief Financial      Chief Financial Officer of Union Camp
Officer,                               Corporation. He also serves on the
Union Camp Corporation                 Board of Directors of Bush Boake
Age: 64                                Allen, Inc., Martin Marietta
Director since: 1996                   Materials, Inc. and the Bulgarian-
Present term expires: 2000             American Enterprise Fund, Inc. and is
                                       a trustee of Simpson College in Iowa.
 
                                      A-5

 
                BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
 
  During the fiscal year ended September 29, 1996, the Board of Directors met
eight times. No Director attended fewer than 75% of the Board of Directors and
Committee meetings.
 
  Effective April 23, 1996, the Company entered into a one-year agreement with
R. Eugene Cartledge to serve as the Chairman of the Board of Directors. In
addition to the compensation paid to all non-employee Directors as described
below, the agreement stipulates that Mr. Cartledge receive $182,700 payable in
16,610 Shares, plus cash in an amount sufficient to pay the taxes due on such
compensation.
 
  Directors who are also employees of the Company are not compensated for
service as Directors or as members of any Committee of the Board of Directors.
In order to directly link Directors' fees with the interest of stockholders,
the Company will pay a retainer to its non-employee Directors in stock units.
Non-employee Directors were paid a retainer of $4,687.50 from October 1995
through June 30, 1996, a fee of $600 for each Board of Directors meeting
attended, and $200 for each Committee meeting attended, except that no fees
were paid for meetings of the Committee of Outside Directors, Committee
meetings held on the same day as a Board of Directors meeting, or meetings
conducted by telephone. At the August 1996 Board of Directors meeting, the
Directors adopted a new Non-Employee Directors' Compensation Plan (the "Plan")
as of July 1, 1996 in lieu of the retainer which had been paid prior to that
time and in consideration of participating Directors' voluntarily
relinquishing certain benefits under a deferred compensation plan. Under the
Plan, the annual compensation paid to the Directors as a retainer was set at
$20,000 per year for the 5 1/2 year Plan term and is payable in Share Units (a
"Share Unit" is the equivalent of one Share). The number of Share Units given
to each Director was determined by dividing an annual retainer of $20,000 by
$11.00 per Share and multiplying the resultant amount by the 5 1/2 year term
of the Plan. Accordingly, the Plan grants each Director 10,010 Share Units
over the Plan term. Each Director will be vested with 455 Share Units on the
last day of each calendar quarter until December 31, 2001, as long as the
Director remains on the Board of Directors. In the event a Director dies
before December 31, 2001, all of such Director's Share Units will vest, and,
in the case of Directors serving on June 1, 1996, all Share Units will vest in
the event of a change in control of the Company as defined in the Plan.
Unvested Share Units are forfeited to the Company. Upon the vesting of Share
Units, the Director is paid. in cash, the value of such Share Units, based
upon the fair market value of the Shares at the time of vesting. The fair
market value is defined as the closing price of a share of the Shares. The
Plan permits a Director to defer all or a portion of his or her vested Share
Units until after termination of the Director's service on the Board of
Directors, in which case the Share Units are valued at the highest closing
price of a Share during the twelve months preceding the Director's termination
of service. Amounts deferred under the Plan are restricted in terms of the
earliest and latest dates that payments may begin. Directors are also credited
with dividend equivalents on all Share Units held under the Plan at such time
and in such amount as all holders of Shares receive dividends. Dividend
equivalents are reinvested in additional Share Units. Beginning, July 1, 1996,
non-employee Directors are paid $1,000 for each Board of Directors meeting
attended and $750 for each Committee meeting attended except for meetings of
the Committee of Outside Directors. Directors may elect to defer meeting fees
pursuant to an amended and restated deferred compensation plan.
 
  Effective June 30, 1996 the deferred compensation agreements with all active
non-employee Directors were modified to reduce the guaranteed interest rate to
8%, and then to the prime rate in effect on each January 1. The effect of this
modification is estimated to have reduced the present value of the payments
which ultimately will be paid to the Directors under the related deferred
compensation agreements by $2,600,000. As consideration for the reduction in
the interest rate credited on the Directors' deferred compensation, a
Supplemental Share Unit Plan (the "Plan") was established for non-employee
Directors. The Plan granted 111,619 Share Units (a "Share Unit" is the
equivalent of one Share) to the nonemployee Directors. The number of Share
Units was equal to one-half of the Directors' deferred compensation account
balances as of June 30, 1996 divided by a price of $11.00 per Share Unit, and
at the $11.00 per Share Unit price had a value of $1,228,000. These Share
Units fully vested on June 30, 1996 and the value of each Share Unit is
adjusted upward or downward based on the highest daily closing price of the
Shares during the preceding twelve month period. At retirement from the
 
                                      A-6

 
Board of Directors, each non-employee Director will receive, in cash, the
value of the Share Units in his deferral account. During fiscal 1996, the
Company expensed $1,563,000 related to this Plan. Future expenses or income
related to this Plan will only be incurred as the price of the Shares
increases or decreases, respectively.
 
  The Board of Directors has an Executive Committee and four standing
committees: an Audit Committee, a Compensation Committee, a Nominating
Committee, and a Committee of Outside Directors.
 
  The Executive Committee has the authority of the Board of Directors between
meetings of the Board of Directors. The Committee is composed of Messrs.
Bradley, Cartledge (Chairman), Sprague III, and Tarbutton. It met three times
during fiscal 1996.
 
  The Audit Committee serves as the communication link between the Board of
Directors, as the representative of stockholders, and the independent
accountants. The Company's internal auditor reports to this Committee. The
Committee is composed of Messrs. Carswell, Harrison, Tarbutton (Chairman), and
Tenenbaum. It met three times during fiscal 1996.
 
  The Compensation Committee has the responsibility for recommending to the
full Board of Directors the compensation arrangements for senior management of
the Company, and also recommends to the Board of Directors adoption of and/or
modification to any compensation plans in which Executive Officers and
Directors are eligible to participate, as well as the benefits under such
plans. During fiscal 1996, the Committee was composed of Messrs. Bradley,
Cartledge, Critz, Gignilliat (Chairman), and Harrison. It met six times during
fiscal 1996.
 
  The Nominating Committee has the responsibility of nominating a new Board of
Directors members and will consider qualified nominees for Director
recommended by stockholders. Recommendations should be sent to the Chairman of
the Nominating Committee, in care of the Secretary of the Company. The
Committee is composed of Messrs. Bradley, Carswell (Chairman), and Tarbutton.
It met twice during fiscal 1996.
 
  The Committee of Outside Directors generally meets the evening before
regular meetings of the Board of Directors. The Committee is composed of all
non-employee Directors and its agenda is set by the Committee's Chairman. The
Committee reports matters at its discretion to the Board of Directors. The
officers of the Committee are Mr. Tarbutton (Chairman), Mr. Bradley (Vice-
Chairman), and Mr. Durham (Secretary).
 
  The Audit, Compensation, Nominating, and Outside Directors committees are
composed of non-employee Directors.
 
            COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
 
  The Compensation Committee has the responsibility for recommending to the
full Board of Directors the compensation arrangements for senior management of
the Company, and also recommends to the Board of Directors adoption of and/or
modification to any compensation plans in which Executive Officers and
Directors are eligible to participate, as well as the benefits under such
plans. This responsibility includes reviewing and considering new, or
amendments to, compensation plans, retirement plans and other benefit plans,
and monitoring the performance and compensation of Executive Officers.
 
  The Company maintains compensation and benefit programs designed to attract,
motivate, and retain management and employees. Wherever practical, the Company
attempts to link employee reward to financial performance and stockholder
reward. The Company maintains several benefit and incentive plans. In
addition, employment contracts are currently in place with all Executive
Officers. Except for the Supplemental Executive Retirement Plan and a deferred
compensation plan, substantially all non-bargaining unit employees in the
Company participate in all other plans. The Supplemental Executive Retirement
Plan was designed to eliminate an inequity to managers and officers that
exists in companies with a qualified defined benefit pension plan.
 
                                      A-7

 
  The Company's executive compensation program consists of three main
components: (1) base salary, (2) potential for an annual bonus under a profit-
sharing bonus plan, and (3) potential for a contribution to the Employee Stock
Ownership Plan (ESOP). The second and third components are "at risk" and are
determined by the profitability of the Company for the year. The "at risk"
component of compensation fluctuates significantly with earnings, and as a
result it represented 0% of total compensation of the named Executive Officers
in fiscal 1996, 1995, and 1994. The only manner in which Executive Officers
participate in the profit sharing bonus plan on a basis other than non-officer
employees is that the target award increases as a percent of pay, based on job
grade, from 5% for most employees to a maximum of 50% for the Chief Executive
Officer ("CEO"). The target award is achieved when return on equity ("ROE"),
as defined (consolidated net income plus the after-tax charge to income for
the year for the contribution, if any, to the ESOP divided by consolidated
stockholders' equity at the beginning of the year), reaches 16%. If ROE is
less than 13%, there is no profit sharing payment, and if it exceeds 20%, a
maximum of 150% of the target award is paid. ESOP contributions are
recommended by management and approved by the Board of Directors based
primarily upon earnings of the Company. Contributions to the ESOP are made
after considering the Company's earnings for the year and its cash position
and other cash requirements at year-end and in the following year. The
Committee has no discretion with respect to the amount of the contribution
allocated to the CEO under the ESOP. Rather, these contributions are allocated
to each participant, including the CEO, based upon his or her earnings for the
year as required by Internal Revenue Service regulations.
 
  At the February 20, 1997 Annual Meeting of the Company, the 1996 Equity
Incentive Plan with a stock option/restricted stock plan was adopted.
 
  Annually, the Company evaluates the performance of the Executive Officers
and other key employees and establishes an appropriate compensation level for
each person. Job grades and minimum, normal and maximum compensation levels
have been assigned to every position based upon market compensation data. The
base salary level of each Executive Officer is annually compared to market
data supplied to the Company by an independent compensation consultant. The
independent consultant accumulates data for comparable positions in companies
with similar revenue levels from a wide variety of industries, with emphasis
placed upon companies in the food and kindred products standard industrial
classification code. The Company's philosophy is to pay Executive Officers
competitive compensation which approximates the median of market data. The
independent consultant also provides the Company with compensation information
for the Executive Officers of the companies in its peer group. However, no
particular weight is given to these specific companies in evaluating
compensation, because the Company does not believe it competes with these
companies for executive talent.
 
  Changes to base salary of all Executive Officers are normally recommended by
the CEO to this Committee in November or December of each year. At this time,
he discusses with the Committee the performance of each Executive Officer and
his or her potential for advancement, and relates proposed pay adjustments to
the salary survey information and the Company's performance. The Committee
then decides whether or not to recommend approval to the Board of Directors of
the management recommendations. If an Executive Officer promotion is requested
by management at any other time, a similar process is followed. The Committee
also normally evaluates the performance of the CEO before recommending
approval of a base salary adjustment for him in November or December of each
year. Compensation survey data and other information, including Company
performance, is used by the Committee in determining his salary adjustment.
 
  However, in recognition of the decreased earnings of the Company in prior
years, effective October 1, 1995, Mr. Sprague III recommended. and the
Compensation Committee accepted, a 10% decrease in base salary for himself and
a 5% decrease in base salary for the other four most highly compensated
Executive Officers at that time. The Committee agreed with Mr. Sprague that by
decreasing these salaries, the Company would reinforce the linkage between
senior management reward and stockholder reward and would emphasize to Company
personnel the need for significant cost reduction programs at the Company.
Additionally, the Executive Officers of the Company have not received any pay
under the "at risk" components of their compensation as discussed above.
 
 
                                      A-8

 
  The Committee believes that the Company's compensation program is
appropriate, considering those in place at comparable companies and
considering the Company's goal to link employee and management compensation to
stockholder reward. It believes that the total remuneration generated by this
compensation package is reasonable and competitive by the same standard.
 
                            COMPENSATION COMMITTEE:
 
  Arthur M. Gignilliat, Jr. (Chairman)
 
                                              Dale C. Critz
 
  W. Waldo Bradley
 
                                              Robert L. Harrison
  R. Eugene Cartledge
 
  Mr. Cartledge resigned as a member of the Committee in December, 1996 and
was replaced by Mr. James M. Reed.
 
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
  During fiscal 1996, the five persons listed above, Messrs. Gignilliat,
Bradley, Cartledge, Critz and Harrison, served as members of the Compensation
Committee. No member of this committee is a former or current Executive
Officer or employee of the Company or any of its subsidiaries. Robert L.
Harrison is President of Stevens Shipping & Terminal Company in Savannah,
Georgia. The Company conducts business with this firm related to port
activities associated with the importation of raw sugar. In fiscal 1996, the
Company purchased services from this firm in the amount of approximately
$1,475,000. R. Eugene Cartledge is Chairman of the Board of Directors. He has
a one-year agreement which stipulates that he receive $182,700 payable in
16,610 Shares, cash in an amount sufficient to pay the taxes due on such
compensation, and an option to purchase 100,000 Shares at the price of $11.00
per Share.
 
                                      A-9

 
                            EXECUTIVE COMPENSATION
 
SUMMARY COMPENSATION TABLE
 
  The following table sets forth the compensation awarded to, earned by, or
paid to each person who served as the Company's Chief Executive Officer during
its most recent fiscal year and of its five other most highly compensated
Executive Officers during such year.


                                     ANNUAL COMPENSATION      LONG-TERM COMPENSATION
                                  ------------------------- ---------------------------
                                                                  AWARDS        PAYOUTS
                                                            ------------------- -------
                                                   OTHER
                                                ANNUAL COM- RESTRICTED OPTIONS/  LTIP    ALL OTHER
        NAME AND          FISCAL  SALARY  BONUS  PENSATION    STOCK      SARS   PAYOUTS COMPENSATION
   PRINCIPAL POSITION     YEAR(1)   ($)    ($)    ($)(2)      AWARDS     ($)      ($)      ($)(3)
   ------------------     ------- ------- ----- ----------- ---------- -------- ------- ------------
                                                                
William W. Sprague III..   1996   365,400    0        0          0         0        0       5,704
 President & Chief         1995   362,460    0        0          0         0        0      13,131
 Executive Officer         1994   228,750    0        0          0         0        0      14,128
C. Richard Donnelly (4).   1996   237,500    0        0          0         0        0      22,404
 Senior Vice President     1995   238,062    0        0          0         0        0      16,409
 President--Savannah
  Foods Industrial,        1994   202,562    0        0          0         0        0      14,081
  Inc.
James M. Kelley.........   1996   211,768    0        0          0         0        0       7,095
 Senior Vice President     1995   209,396    0        0          0         0        0       6,809
 President--Dixie
  Crystals(R) Brands,
  Inc.                     1994   172,499    0        0          0         0        0       9,454
David H. Roche..........   1996   194,230    0        0          0         0        0       3,801
 Senior Vice President     1995   195,896    0        0          0         0        0       4,073
 President and Chief Op-
  erating Officer--        1994   158,700    0        0          0         0        0       5,334
 Michigan Sugar Company
F. Sprague Exley........   1996   185,000    0        0          0         0        0       9,911
 Senior Vice President--   1995   147,898    0        0          0         0        0      15,570
 Human Resources & Ad-
  ministration             1994   143,899    0        0          0         0        0      18,846
Gregory H. Smith........   1996   185,000    0        0          0         0        0         280
 Senior Vice President     1995   160,834    0        0          0         0        0         352
 Chief Financial Officer
  and Treasurer

- -------
(1) Information is only presented for the years in which the individual served
    as an Executive Officer of the Company. The Company's fiscal year ends on
    the Sunday closest to September 30.
(2) "Perquisites" do not exceed $50,000 or 10% of total salary and bonus.
(3) "All Other Compensation" for fiscal 1996 includes: (i) above market
    earnings accrued on deferred compensation (Mr. Sprague III--$2,124; Mr.
    Donnelly--$18,801; Mr. Kelley--$6,606; Mr. Roche--$1,005; Mr. Exley--
    $6,236; Mr. Smith--$0), (ii) Directors fees (Mr. Sprague III--$600; Mr.
    Exley--$600), (iii) amounts contributed to defined contribution retirement
    plans (Mr. Sprague III--$2,507; Mr. Donnelly--$3,382; Mr. Kelley--$378;
    Mr. Roche--$2,339; Mr. Exley--$3,070; Mr. Smith--$257), and (iv) amounts
    accrued as contributions to non-qualified retirement plans (Mr. Sprague
    III--$473; Mr. Donnelly--$221; Mr. Kelley--$111; Mr. Roche--$457; Mr.
    Exley--$5; Mr. Smith--$23).
(4) C. Richard Donnelly retired from the Company effective December 1, 1996.
 
                                     A-10

 
                                 PENSION PLANS
 
  The Company has in effect a non-contributory pension plan which applies to
substantially all non-bargaining unit employees, including Executive Officers.
The normal retirement age under the plan is 65. When an employee retires,
several forms of benefit payments are available, including an actuarially
reduced benefit to provide a surviving spouse's annuity of 50%, 75%, or 100%
of the employee's reduced pension. The basic payment formula is 1.75% of the
final three-year average of earnings, times credited years of service (up to
30) minus a Social Security allowance. A reduced benefit can be received at
age 55 with 10 or more years of credited service or at age 62 with five or
more years of credited service. The following table shows the estimated annual
pension benefits payable to participants upon normal retirement from the
Company's pension plan in specified remuneration classes and years of credited
service:
 
                              PENSION PLAN TABLE
 


                                                   YEARS OF SERVICE
                                      ------------------------------------------
            REMUNERATION                10      15      20      25    30 & ABOVE
            ------------              ------- ------- ------- ------- ----------
                                                       
$125,000............................. $19,800 $29,700 $39,600 $49,500  $59,400
$150,000 & above.....................  24,200  36,300  48,400  60,500   72,500

 
  Covered compensation is defined as base salary, as presented under the
Salary column in the Summary Compensation Table, however, it is subject to
Internal Revenue Code limits. The amounts set forth in the table are
calculated on a straight-life annuity basis payable at age 65 and are offset
by an allowance for Social Security. The estimated credited years of service
for each of the named Executive Officers are: William W. Sprague III: 13; C.
Richard Donnelly: 30; James M. Kelley: 23; David H. Roche: 20; F. Sprague
Exley: 31 and Gregory H. Smith: 18.
 
  In addition to benefits paid under the Company's pension plan for
substantially all employees, all Executive Officers of the Company receive
coordinated benefits from the Supplemental Executive Retirement Plan (the
"SERP"). The SERP includes each of the Executive Officers listed in the
foregoing Summary Compensation Table, and provides a benefit based upon the
following formula: 65% of base salary, less the amount payable from the
pension plan, less a social security allowance, all multiplied by a fraction
the numerator of which is the Executive Officer's years of service as of June
30, 1996 and the denominator of which is the years of potential service at
normal retirement.
 
  The estimated annual benefits payable upon retirement at normal retirement
age, using current earnings, for each of the named Executive Officers from the
Company's non-contributory pension plan and the SERP are as follows: William
W. Sprague III: $130,441; C. Richard Donnelly: $128,593; James M. Kelley:
$122,694; David H. Roche: $117,205; F. Sprague Exley: $107,195 and Gregory H.
Smith: $106,755.
 
                                     A-11

 
          STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
  The following table sets forth, as of August 31, 1997, certain information
with respect to the beneficial ownership of Shares by Directors, each Non-
Director Executive Officer named in the summary Compensation Table below, all
Directors and Executive Officers of the Company as a group, and each holder
known by the Company to be the beneficial owner of more than 5% of the
Company's issued and outstanding Shares. Except as disclosed in the notes to
the table, each person has sole voting and investment powers with respect to
the whole number of Shares shown as beneficially owned by him.
 


                                               AMOUNT AND NATURE      PERCENT
                   NAME                     OF BENEFICIAL OWNERSHIP OF CLASS (1)
                   ----                     ----------------------- -----------
                                                              
Wachovia Bank of North Carolina, N.A. (2).         2,570,637(3)        8.95%
Archer-Daniels-Midland Company (4)........         1,661,900(5)        5.78%
W. Waldo Bradley..........................           151,924(6)           *
John D. Carswell..........................            66,000(7)           *
R. Eugene Cartledge.......................            30,000              *
Dale C. Critz.............................            13,100(8)           *
Lee B. Durham, Jr.........................             3,928              *
F. Sprague Exley..........................           114,428(9)           *
Arthur M. Gignilliat, Jr..................             1,376              *
Robert L. Harrison........................            31,430(10)          *
James M. Reed.............................             1,000              *
William W. Sprague III....................           179,486(11)          *
Hugh M. Tarbutton.........................           229,888(12)          *
Arnold Tenenbaum..........................             1,700(17)          *
Benjamin A. Oxnard, Jr....................            37,290
James M. Kelley...........................            23,492              *
David H. Roche............................             3,024              *
Gregory H. Smith..........................            13,151              *
All Directors and Executive Officers as a
 group (16 individuals)...................           877,217(14)       3.05%

- --------
*Indicates Less than 1.00%
 
(1) Amounts are calculated based upon 28,739,196 Shares outstanding, which
    includes the 2,500,000 Shares held in the Company's Benefit Trust.
 
(2) The business address of Wachovia Bank of North Carolina, N.A. is:
    100 N. Main Street
    Winston-Salem, North Carolina 27150
 
(3) Based upon information received from Wachovia Bank of North Carolina, N.A.
    ("Wachovia"). Such Shares include 2,500,000 Shares held by Wachovia as
    trustee of the Company's Benefit Trust. These Shares are voted based upon
    the voting results of the Shares held in the Company's Employee Stock
    Ownership Plan. Subject to certain limitations under the Trust Agreement,
    Wachovia may dispose of any Shares held by the Trust during its term. The
    70,637 Share balance constitutes shares held for various fiduciary,
    investment and custodial accounts in which Wachovia has no beneficial
    interest. Other than the Shares held as trustee of the Benefit Trust, the
    number of Shares held by Wachovia with voting or investment power is as
    follows: sole voting power--22,116; shared voting power--0; sole
    investment power--22,116: and shared investment power--0.
 
(4) The business address of Archer-Daniels-Midland Company is:
    4666 Faries Parkway
    P. 0. Box 1470
    Decatur, Illinois 62525
 
 
                                     A-12

 
(5)  Information is based on a Schedule 13D filed by Archer-Daniels-Midland
     Company. dated May 17, 1995 and amended on September 1, 1995, disclosing
     voting and investment power held by such person with respect to Shares.
 
(6)  Includes 64,160 Shares owned by Bradley Foundation, Inc. of which Mr.
     Bradley is President. It also includes the following Shares in which Mr.
     Bradley disclaims any beneficial ownership: 8,000 Shares in a trust for
     his children, 50,880 Shares owned by a partnership of which his daughters
     and trusts for his children are among the partners, and 10,804 Shares
     owned by his wife.
 
(7)  Includes the following 26,000 Shares in which Mr. Carswell has no
     investment or voting power and in which he disclaims any beneficial
     ownership: 13,000 Shares in an irrevocable trust for his wife and
     grandchildren, and 13,000 Shares in an irrevocable trust with his children
     as beneficiaries.
 
(8)  Includes 8,000 Shares owned by a family partnership of which Mr. Critz is
     managing general partner. He disclaims any beneficial ownership in the
     Shares beneficially owned by other partners.
 
(9)  Includes 33,481 Shares in Mr. Exley's mother's estate of which he is a co-
     executor and in which he is a residual beneficiary. Includes 2,810 Shares
     held in a trust of which Mr. Exley is a trustee and a beneficiary. It also
     includes 863 Shares held in a custodial account for his granddaughter,
     2,686 Shares owned by his wife, and 1,342 Shares owned by his son in which
     Mr. Exley disclaims any beneficial ownership.
 
(10) Includes 1,780 Shares owned by Mr. Harrison's wife and 510 Shares held as
     custodian for his daughter in which Mr. Harrison disclaims any beneficial
     ownership. Also includes the 26,000 Shares disclosed under Mr. Carswell
     above. Mr. Harrison is a trustee with investment and voting power for the
     irrevocable trusts, but disclaims any beneficial ownership in those
     Shares.
 
(11) Includes 157,000 Shares held in a trust, of which Mr. Sprague is a
     trustee and a beneficiary. Also includes 3,052 Shares owned by his wife
     and 8,949 Shares owned by his children, in which Mr. Sprague disclaims
     any beneficial ownership.
 
(12) Includes 27,392 Shares held by Mr. Tarbutton's wife as custodian for
     their children, in which he disclaims any beneficial ownership.
 
(13) Includes 1,100 Shares held by Mr. Tenenbaum's wife as custodian for their
     children, in which he disclaims any beneficial ownership.
 
(14) Amount is adjusted for the 26,000 Shares held in trust and included under
     both Mr. Carswell and Mr. Harrison above.
 
                                     A-13

 
     COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
 
  Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and persons who own more than ten-
percent of a registered class of the Company's equity securities to file with
the Securities and Exchange Commission (the "SEC") initial reports of
ownership and reports of changes in ownership of the Shares and other equity
securities of the Company. Executive officers, directors and greater than ten-
percent beneficial owners are required by SEC regulation to furnish the
Company with copies of all Section 16(a) reports they file.
 
  Based solely upon review of the copies of such reports furnished to the
Company and written representations that no other reports were required, the
Company believes that there was compliance for the fiscal year ended September
29, 1996 with all Section 16(a) filing requirements applicable to the
Company's executive officers, directors and greater than ten-percent
beneficial owners.
 
                CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
  Archer-Daniels-Midland Company reports ownership of 5.78% of the outstanding
Shares. The Company purchases corn syrup and fructose from this firm. In
fiscal 1996, the Company purchased goods from this firm in the amount of
approximately $202,000.
 
  R. Eugene Cartledge is Chairman of the Board of Directors. He has a one-year
agreement which stipulates that he receive $182,700 payable in 16,610 Shares,
cash in an amount sufficient to pay the taxes due on such compensation, and an
option to purchase 100,000 Shares at the price of $11.00 per Share.
 
  James M. Reed, a Director of the Company, is Vice Chairman and Chief
Financial Officer of Union Camp Corporation. The Company purchases packaging
supplies from this firm. During fiscal 1996, the Company purchased goods from
this firm in the amount of approximately $7,703,000.
 
  As listed in the Stock Ownership of Certain Beneficial Owners and Management
table, Wachovia Bank of North Carolina, N.A. ("Wachovia") is the trustee of
the Company's Benefit Trust. An affiliate of Wachovia serves as agent for a
syndicate of banks for the Company's $120,000,000 credit facility dated April
1, 1996, of which Wachovia has committed $37,500,000. The Company also has
several standby letters of credit with Wachovia supporting various commercial
and debt transactions totaling $16,313,000 at September 29, 1996, including
$8,203,000 outstanding under the credit facility dated April 1, 1996. For
fiscal 1996, the Company paid Wachovia $622,000 in interest and $239,000 in
fees related these credit instruments. In the opinion of management, the terms
of such arrangements are fair and reasonable and as favorable to the Company
as could have been obtained from a wholly unrelated party.
 
  William W. Sprague, Jr., the former Chairman of the Board and Chief
Executive Officer of the Company, retired from the Company as of December 31,
1994, at which time he became a consultant for the Company, In fiscal 1996,
Mr. Sprague, Jr. was paid $100,000 for his consulting services. Mr. Sprague,
Jr. is the father of William W. Sprague III, a Director, and the President and
Chief Executive Officer of the Company.
 
EMPLOYMENT AGREEMENTS
 
  In connection with the Merger, Imperial Holly intends to enter into a new
employment agreement with Mr. Sprague providing for a 5-year term beginning on
the Effective Time. Pursuant to the employment agreement, Mr. Sprague will
continue as the President of the Company and will be nominated to serve on
Imperial Holly's Board. In addition to his base salary which will continue at
no less than $430,000 per year, Mr. Sprague will be entitled to participate in
an annual bonus program, which provides him with a maximum bonus opportunity
equal to 75% of his base salary, to continue to receive benefits under the
Company's Supplemental Executive
 
                                     A-14

 
Retirement Plan and retiree health benefits, to receive a stock option grant
with respect to 135,000 shares of Imperial Holly common stock, and various
other benefits and perquisites. In addition, upon termination of his
employment for "Good Reason" or if he is involuntarily terminated by Imperial
Holly other than for "Cause" (as those terms are defined in the employment
agreement), Mr. Sprague will be entitled to receive a lump sum payment equal
to three times the sum of his base salary and his highest bonus amount (as
defined in the employment agreement), his stock options shall vest, and
certain employee benefits will be continued for a period of up to five years.
Also, in the event these payments would exceed the "golden" parachute payment
limit of the Internal Revenue Code, Mr. Sprague will be made "whole" on a net
after-tax basis for any parachute excise tax he incurs. Imperial Holly
acknowledged, in connection with the execution of the Merger Agreement, its
intention to enter into employment agreements, to become effective upon
consummation of the Merger, with certain other senior executives of the
Company on terms to be determined.
 
                                     A-15

 
                                                                        ANNEX B
 
                         DONALDSON, LUFKIN & JENRETTE
 
              Donaldson, Lufkin & Jenrette Securities Corporation
         277 Park Avenue, New York, New York 10172  .  (212) 892-3000
 
                                                             September 11, 1997
 
Board of Directors
Savannah Foods & Industries, Inc.
Two East Bryan Street
Savannah, GA 31401-0339
 
Dear Sirs:
 
  You have requested our opinion as to the fairness from a financial point of
view to the stockholders of Savannah Foods & Industries, Inc. (the "Company")
of the consideration to be received by such stockholders pursuant to the terms
of the Agreement and Plan of Merger, to be dated as of September 12, 1997 (the
"Agreement"), by and among Imperial Holly Corporation ("IHK"), the Company and
IHK Merger Sub Corporation, a wholly owned subsidiary of IHK.
 
  Pursuant to the Agreement, IHK Merger Sub Corporation will commence an offer
to purchase at least 50.1% of the outstanding shares (on a fully-diluted
basis) of the Company's common stock, par value, $0.25 per share (the "Common
Stock") at a price of $20.25 (the "Offer Price") per share (the "Tender
Offer"). Following consummation of the Tender Offer, each share of Common
Stock not previously tendered and accepted for payment in the Tender Offer
will, by virtue of a Merger of IHK Merger Sub Corporation with and into the
Company (the "Merger" and together with the Tender Offer, the "Transaction"),
be converted into the right to receive, subject to proration, either (i) the
Stock Consideration (as defined below) or (ii) cash in an amount equal to the
Offer Price (the "Cash Consideration" and together with the Stock
Consideration, the "Consideration"). The Agreement provides that the Stock
Consideration is (i) if the Closing Price (as defined in the Agreement) of
common stock, no par value, of IHK (the "IHK Common Stock") is $13.25 or
lower, a number of shares of IHK Common Stock equal to the quotient of the
Offer Price divided by $13.25; (ii) if the Closing Price of IHK Common Stock
is $17.25 or greater, a number of shares of IHK Common Stock equal to the
quotient of the Offer Price divided by $17.25; and (iii) if the Closing Price
of the IHK Common Stock is greater than $13.25 but less than $17.25, a number
of shares of IHK Common Stock equal to the quotient of the Offer Price divided
by the Closing Price of the IHK Common Stock. The Agreement provides that the
number of shares of Common Stock to be converted into the right to receive the
Cash Consideration in the Merger shall be equal to 70% of the shares of Common
Stock issued and outstanding immediately prior to the effective time of the
Merger, less the sum of (i) the number of dissenting shares of Common Stock
and (ii) shares of Common Stock to be canceled.
 
  In arriving at our opinion, we have reviewed the Agreement and the exhibits
thereto. We also have reviewed financial and other information that was
publicly available or furnished to us by the Company and IHK, including
information provided during discussions with their respective managements.
Included in the information provided during discussions with the respective
managements were certain financial projections of the Company for the fiscal
years ending September 30, 1997 through September 30, 2002 prepared by the
management of the Company and certain financial projections of IHK for the
fiscal years ending March 31, 1997 through March 31, 2003 prepared by the
management of IHK. In addition, we have compared certain financial and
securities data of the Company and IHK with various other companies whose
securities are traded in public markets, reviewed the historical stock prices
and trading volumes of the Common Stock and the IHK Common Stock, reviewed
prices and premiums paid in certain other business combinations and conducted
such other financial studies, analyses and investigations as we deemed
appropriate for purposes of this opinion.
 
                                      B-1

 
Board of Directors                                            September 11, 1997
Savannah Foods & Industries, Inc.
 
  In rendering our opinion, we have relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available
to us from public sources, that was provided to us by the Company and IHK or
their respective representatives, or that was otherwise reviewed by us. In
addition, we have relied upon the estimates of the managements of the Company
and IHK as to the operating synergies projected as a result of the
Transaction. With respect to the financial projections supplied to us, we have
assumed that they have been reasonably prepared on the basis reflecting the
best currently available estimates and judgments of the managements of the
Company and IHK as to the future operating and financial performance of the
Company and IHK, respectively. We have not assumed any responsibility for
making an independent evaluation of any assets or liabilities or for making
any independent verification of any of the information reviewed by us. We have
relied as to certain legal matters on advice of counsel to the Company.
 
  Our opinion is necessarily based on economic, market, financial and other
conditions as they exist on, and on the information made available to us as
of, the date of this letter. It should be understood that, although subsequent
developments may affect this opinion, we do not have any obligation to update,
revise or reaffirm this opinion. We are expressing no opinion herein as to the
price at which IHK Common Stock will trade at any time. Our opinion does not
address the merits of the Transaction nor does it address the Board's decision
to proceed with the Transaction. Our opinion does not constitute a
recommendation to whether such stockholder should tender shares in the Tender
Offer or how such stockholder should vote on the proposed Merger.
 
  Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), as part of its
investment banking services, is regularly engaged in the valuation of
businesses and securities in connection with mergers, acquisitions,
underwritings, sales and distributions of listed and unlisted securities,
private placements and valuations for corporate and other purposes.
 
  Based upon the foregoing and such other factors as we deem relevant, we are
of the opinion that the Consideration to be received by the stockholders of
the Company pursuant to the Agreement is fair to such stockholders from a
financial point of view.
 
                                          Very truly yours,
 
                                          DONALDSON, LUFKIN & JENRETTE
                                          SECURITIES CORPORATION
 
                                                 /s/ Lawrence N. Lavine
                                          By:
                                             ----------------------------------
                                              Lawrence N. Lavine
                                              Managing Director
 
                                      B-2

 
                               INDEX TO EXHIBITS
 


 EXHIBIT
   NO.
 -------
      
  (a)(l) Offer to Purchase (incorporated by reference to Exhibit (a)(1) to the
         Tender Offer Statement on Schedule 14D-1, filed with the Securities
         and Exchange Commission (the "Commission") by Imperial Holly and the
         Purchaser on September 18, 1997).*+
 (a)(2)  Letter of Transmittal (incorporated by reference to Exhibit (a)(2) to
         the Tender Offer Statement on Schedule 14D-1, filed with the
         Commission by Imperial Holly and the Purchaser on September 18,
         1997).*+
 (a)(3)  Letter to Company stockholders, dated September 18, 1997.*+
 (a)(4)  Notice of Guaranteed Delivery (incorporated by reference to Exhibit
         (a)(3) to the Tender Offer Statement on Schedule 14D-1, filed with the
         Commission by Imperial Holly and the Purchaser on September 18,
         1997).*+
 (a)(5)  Letter from Lehman Brothers, Inc. to Brokers, Dealers, Commercial
         Banks, Trust Companies and Other Nominees (incorporated by reference
         to Exhibit (a)(4) to the Tender Offer Statement on Schedule 14D-1,
         filed with the Commission by Imperial Holly and the Purchaser on
         September 18, 1997).
 (a)(6)  Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
         Companies and Other Nominees (incorporated by reference to Exhibit
         (a)(5) to the Tender Offer Statement on Schedule 14D-1, filed with the
         Commission by Imperial Holly and the Purchaser on September 18,
         1997).*+
 (a)(7)  IRS Guidelines for Certification of Taxpayer Identification Number on
         Substitute Form W-9 (incorporated by reference to Exhibit (a)(6) to
         the Tender Offer Statement on Schedule 14D-1, filed with the
         Commission by Imperial Holly and the Purchaser on September 18,
         1997).*+
 (a)(8)  Summary Advertisement as published in The Wall Street Journal on
         September 18, 1997 (incorporated by reference to Exhibit (a)(7) to the
         Tender Offer Statement on Schedule 14D-1, filed with the Commission by
         Imperial Holly and the Purchaser on September 18, 1997).
 (a)(9)  Press Release issued by the Company and Imperial Holly on September
         12, 1997.+
 (c)(1)  Agreement and Plan of Merger dated as of September 12, 1997, among
         Imperial Holly, the Purchaser and the Company (incorporated by
         reference to Exhibit (c)(1) to the Tender Offer Statement on Schedule
         14D-1, filed with the Commission by Imperial Holly and the Purchaser
         on September 18, 1997).
 (c)(2)  Stockholders Agreement, dated as of September 12, 1997, among Imperial
         Holly, the Purchaser and the Executive Officers and Directors of the
         Company (incorporated by reference to Exhibit (c)(2) to the Tender
         Offer Statement on Schedule 14D-1, filed with the Commission by
         Imperial Holly and the Purchaser on September 18, 1997).
 (c)(3)  Form of Agreement and Irrevocable Proxy, dated as of September 12,
         1997, among the Company and certain stockholders of Imperial Holly
         (incorporated by reference to Exhibit (c)(3) to the Tender Offer
         Statement on Schedule 14D-1, filed with the Commission by Imperial
         Holly and the Purchaser on September 18, 1997).
 (c)(4)  Opinion of Donaldson, Lufkin, & Jenrette dated September 11, 1997.*+
 (c)(5)  Amendment No. 3 to the Supplemental Executive Retirement Plan.+
 (c)(6)  Amendment No. 4 to the Supplemental Executive Retirement Plan.+
 (c)(7)  Amendment No. 3 to the Deferred Compensation Plan for Key Employees.+
 (c)(8)  Amendment No. 4 to the Deferred Compensation Plan for Key Employees.+
 (c)(9)  Amendment No. 5 to the Deferred Compensation Plan for Key Employees.+

- --------
* Included in documents mailed to stockholders.
+ Filed herewith.

EX-99.(A)(3)

                                                                  EXHIBIT (a)(3)

 
                  [LETTERHEAD OF SAVANNAH FOODS APPEARS HERE]
 
                                                              September 18, 1997
 
Dear Stockholder:
 
  On behalf of the Board of Directors of Savannah Foods & Industries, Inc. (the
"Company"), I am pleased to inform you that the Company entered into an
Agreement and Plan of Merger, dated as of September 12, 1997 (the "Merger
Agreement"), with Imperial Holly Corporation ("Imperial Holly") and IHK Merger
Sub Corporation, its wholly owned subsidiary (the "Purchaser"), pursuant to
which the Purchaser has today commenced a cash tender offer (the "Offer") to
purchase 50.1% of the outstanding Common Stock of the Company (the "Shares") at
a price of $20.25 per Share, net to the seller in cash. The Offer is
conditioned upon, among other things, the tender of at least 50.1% of the
Shares.
 
  Following the successful completion of the Offer, upon the terms and subject
to the conditions contained in the Merger Agreement, the Purchaser will be
merged with and into the Company (the "Merger"), with the Company as the
surviving corporation. At the effective time of the Merger, each remaining
issued and outstanding Share shall be converted into the right to receive
either (i) $20.25 of Imperial Holly Common Stock (the "Stock Consideration"),
subject to a collar of $13.25 to $17.25 per share of Imperial Holly Common
Stock, or (ii) $20.25 in cash (the "Cash Consideration"), subject to proration
and dissenters rights. The aggregate number of Shares to be converted into the
right to receive the Stock Consideration will be equal to 30% of all
outstanding Shares at the time of the Merger; and the number of Shares to be
converted into the right to receive the Cash Consideration pursuant to the
Merger will be equal to 19.9% of all outstanding Shares at the time of the
Merger.
 
  YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE
MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE STOCKHOLDERS OF THE
COMPANY. THE BOARD HAS ALSO UNANIMOUSLY APPROVED THE OFFER, THE MERGER AND THE
MERGER AGREEMENT AND RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY ACCEPT THE
OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
 
  In arriving at its recommendation, the Board of Directors gave careful
consideration to the factors described in the enclosed
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
which is being filed today with the Securities and Exchange Commission,
including, among other things, the written opinion of Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJ"), the Company's financial advisor, that
the consideration to be received by the stockholders of the Company pursuant to
the Offer and the Merger is fair to such stockholders from a financial point of
view.
 
  Additional information with respect to the Board's decision is contained in
the enclosed Schedule 14D-9 and we urge you to consider this information
carefully.
 
  In addition to the attached Schedule 14D-9, enclosed also is the Purchaser's
Offer to Purchase, dated September 18, 1997, together with related materials,
including a Letter of Transmittal to be used for tendering your Shares in the
Offer. These documents set forth the terms and conditions of the Offer and
provide instructions as to how to tender your Shares. I urge you to read the
enclosed materials carefully and consider all factors set forth therein before
making your decision with respect to tendering your Shares pursuant to the
Offer.
 
  On behalf of the Board of Directors, management and employees of the Company,
I thank you for the support you have given the Company.
 
                                        Very truly yours,
 
                                        [SIGNATURE OF WILLIAM W. SPRAGUE
                                        APPEARS HERE]
                                        William W. Sprague III
                                        President and Chief Executive Officer
 
                   P.O. Box 339, Savannah, Georgia 31402-0339

EX-99.(A)(9)

 
                                                                  EXHIBIT (a)(9)


FOR IMMEDIATE RELEASE

Contacts:
Imperial Holly:     William F. Schwer-(281) 490-9795
Savannah Foods:     F. Sprague Exley-(912) 651-4961


    Savannah Foods Accepts Revised $20.25 Per Share Bid From Imperial Holly
    -----------------------------------------------------------------------

     Savannah, GA, September 12, 1997 - Savannah Foods & Industries, Inc. (NYSE:
SFI), a sugar refiner and distributor based in Savannah, Georgia, and Imperial
Holly Corporation (ASE: IHK), a producer and marketer of refined sugar,
announced they have entered into a merger agreement pursuant to which Imperial
Holly will acquire Savannah Foods at a price of $20.25 per share of Savannah
Foods common stock, comprised of 70% cash and 30% Imperial Holly common stock.

     The merger agreement provides that Imperial Holly will commence a cash
tender offer for 50.1% of the Savannah Foods shares at $20.25 per share in cash,
to be followed by a merger in which 30% of the Savannah Foods shares will be
converted into $20.25 of Imperial Holly stock, subject to a collar of $13.25 to
$17.25 per share of Imperial Holly stock, and the remaining shares will be
exchanged for $20.25 in cash.  Stockholders will be permitted to elect between
the cash or stock consideration in the merger with an ultimate split of 70% cash
and 30% stock in the acquisition.

     The transaction is subject to the expiration of the waiting period under
the Hart-Scott-Rodino Act, the tender of 50.1% of the Savannah Foods shares
pursuant to the tender offer, the receipt of financing, and other customary
conditions.  Imperial Holly has received a commitment letter from Lehman
Brothers Commercial Paper Inc. for the funds necessary to complete the
transaction.

     Savannah Foods has terminated its previously announced merger agreement
with Flo-Sun Incorporated and has paid the termination fee due under that
agreement.

     William W. Sprague III, President and Chief Executive Officer of Savannah
Foods, will be President and CEO of Savannah Foods, which will become a wholly
owned subsidiary of Imperial Holly.  He also will serve on the Board of
Directors of Imperial Holly with R. Eugene Cartledge, the Chairman of Savannah
Foods.  Savannah Foods headquarters will remain in Savannah.

 
     Mr. Cartledge said, "We are thrilled to be able to provide our stockholders
with an opportunity to realize a significant cash price for their shares.  At
the same time, they will be able to benefit from the strengths to be achieved by
combining Savannah Foods and Imperial Holly."

     William Sprague, President and Chief Executive Officer of Savannah Foods,
said, "The combination of Savannah Foods and Imperial Holly is good for our
stockholders, good for our employees, and good for business.  Our complementary
geographic presence will enable us to provide even better service to our
customers.  I am pleased to participate in this exciting opportunity."

     James C. Kempner, President and Chief Executive Officer of Imperial Holly,
said, "We have always had great respect for Savannah Foods and its people.  Both
of our companies share the common values of family leadership, and both have
prospered by offering customers value and by dealing with our suppliers in a
fair and equitable manner.  With our industry undergoing rapid change, this
shared heritage will be particularly important in the years to come.  I look
forward to working with Bill Sprague in combining the two companies."

     Savannah Foods operates three cane sugar refineries located in Georgia,
Louisiana and Florida, and four sugar beet factories located in Michigan.
Imperial Holly Corporation, which is headquartered in Sugar Land, Texas, near
Houston, operates a cane refinery and eight sugar beet factories located in
Montana, Wyoming, Texas and California.

                                       2

EX-99.(C)(4)

 
                                                                        ANNEX B
 
                         DONALDSON, LUFKIN & JENRETTE
 
              Donaldson, Lufkin & Jenrette Securities Corporation
         277 Park Avenue, New York, New York 10172  .  (212) 892-3000
 
                                                             September 11, 1997
 
Board of Directors
Savannah Foods & Industries, Inc.
Two East Bryan Street
Savannah, GA 31401-0339
 
Dear Sirs:
 
  You have requested our opinion as to the fairness from a financial point of
view to the stockholders of Savannah Foods & Industries, Inc. (the "Company")
of the consideration to be received by such stockholders pursuant to the terms
of the Agreement and Plan of Merger, to be dated as of September 12, 1997 (the
"Agreement"), by and among Imperial Holly Corporation ("IHK"), the Company and
IHK Merger Sub Corporation, a wholly owned subsidiary of IHK.
 
  Pursuant to the Agreement, IHK Merger Sub Corporation will commence an offer
to purchase at least 50.1% of the outstanding shares (on a fully-diluted
basis) of the Company's common stock, par value, $0.25 per share (the "Common
Stock") at a price of $20.25 (the "Offer Price") per share (the "Tender
Offer"). Following consummation of the Tender Offer, each share of Common
Stock not previously tendered and accepted for payment in the Tender Offer
will, by virtue of a Merger of IHK Merger Sub Corporation with and into the
Company (the "Merger" and together with the Tender Offer, the "Transaction"),
be converted into the right to receive, subject to proration, either (i) the
Stock Consideration (as defined below) or (ii) cash in an amount equal to the
Offer Price (the "Cash Consideration" and together with the Stock
Consideration, the "Consideration"). The Agreement provides that the Stock
Consideration is (i) if the Closing Price (as defined in the Agreement) of
common stock, no par value, of IHK (the "IHK Common Stock") is $13.25 or
lower, a number of shares of IHK Common Stock equal to the quotient of the
Offer Price divided by $13.25; (ii) if the Closing Price of IHK Common Stock
is $17.25 or greater, a number of shares of IHK Common Stock equal to the
quotient of the Offer Price divided by $17.25; and (iii) if the Closing Price
of the IHK Common Stock is greater than $13.25 but less than $17.25, a number
of shares of IHK Common Stock equal to the quotient of the Offer Price divided
by the Closing Price of the IHK Common Stock. The Agreement provides that the
number of shares of Common Stock to be converted into the right to receive the
Cash Consideration in the Merger shall be equal to 70% of the shares of Common
Stock issued and outstanding immediately prior to the effective time of the
Merger, less the sum of (i) the number of dissenting shares of Common Stock
and (ii) shares of Common Stock to be canceled.
 
  In arriving at our opinion, we have reviewed the Agreement and the exhibits
thereto. We also have reviewed financial and other information that was
publicly available or furnished to us by the Company and IHK, including
information provided during discussions with their respective managements.
Included in the information provided during discussions with the respective
managements were certain financial projections of the Company for the fiscal
years ending September 30, 1997 through September 30, 2002 prepared by the
management of the Company and certain financial projections of IHK for the
fiscal years ending March 31, 1997 through March 31, 2003 prepared by the
management of IHK. In addition, we have compared certain financial and
securities data of the Company and IHK with various other companies whose
securities are traded in public markets, reviewed the historical stock prices
and trading volumes of the Common Stock and the IHK Common Stock, reviewed
prices and premiums paid in certain other business combinations and conducted
such other financial studies, analyses and investigations as we deemed
appropriate for purposes of this opinion.
 
                                      B-1

 
Board of Directors                                            September 11, 1997
Savannah Foods & Industries, Inc.
 
  In rendering our opinion, we have relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available
to us from public sources, that was provided to us by the Company and IHK or
their respective representatives, or that was otherwise reviewed by us. In
addition, we have relied upon the estimates of the managements of the Company
and IHK as to the operating synergies projected as a result of the
Transaction. With respect to the financial projections supplied to us, we have
assumed that they have been reasonably prepared on the basis reflecting the
best currently available estimates and judgments of the managements of the
Company and IHK as to the future operating and financial performance of the
Company and IHK, respectively. We have not assumed any responsibility for
making an independent evaluation of any assets or liabilities or for making
any independent verification of any of the information reviewed by us. We have
relied as to certain legal matters on advice of counsel to the Company.
 
  Our opinion is necessarily based on economic, market, financial and other
conditions as they exist on, and on the information made available to us as
of, the date of this letter. It should be understood that, although subsequent
developments may affect this opinion, we do not have any obligation to update,
revise or reaffirm this opinion. We are expressing no opinion herein as to the
price at which IHK Common Stock will trade at any time. Our opinion does not
address the merits of the Transaction nor does it address the Board's decision
to proceed with the Transaction. Our opinion does not constitute a
recommendation to whether such stockholder should tender shares in the Tender
Offer or how such stockholder should vote on the proposed Merger.
 
  Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), as part of its
investment banking services, is regularly engaged in the valuation of
businesses and securities in connection with mergers, acquisitions,
underwritings, sales and distributions of listed and unlisted securities,
private placements and valuations for corporate and other purposes.
 
  Based upon the foregoing and such other factors as we deem relevant, we are
of the opinion that the Consideration to be received by the stockholders of
the Company pursuant to the Agreement is fair to such stockholders from a
financial point of view.
 
                                          Very truly yours,
 
                                          DONALDSON, LUFKIN & JENRETTE
                                          SECURITIES CORPORATION
 
                                                 /s/ Lawrence N. Lavine
                                          By:
                                             ----------------------------------
                                              Lawrence N. Lavine
                                              Managing Director
 
                                      B-2

EX-99.(C)(5)

                                                                  EXHIBIT (C)(5)
 
                                AMENDMENT NO. 3
             TO THE SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (SERP)
                                      OF
               SAVANNAH FOODS & INDUSTRIES INC. AND SUBSIDIARIES


          THIS AMENDMENT NO. 3 is made as of the 14th day of July, 1997, by
Savannah Foods & Industries, Inc. (the "Company").


                              W I T N E S S E T H:

          WHEREAS, the Board of Directors of the Company adopted the Second
Amendment and Restatement of the Supplemental Executive Retirement Plan (SERP)
of Savannah Foods & Industries, Inc. and Subsidiaries, effective January 1,
1989, together with subsequent amendments thereto (such plan, as amended to
date, being hereinafter referred to as the "Plan");  and

          WHEREAS, pursuant to its authority under Article 11 of the Plan, the
Board desires to amend the Plan in certain respects.

          NOW, THEREFORE, effective as of July 14, 1997, the Plan is hereby
amended as set forth below:

                                    ITEM ONE

          Section 1.7 of the Plan is hereby amended by adding the following
sentence at the end thereof:

     Notwithstanding the foregoing, any transaction pursuant to an agreement to
     which the Company is a party, which agreement is entered into on or before
     July 18, 1997, shall not constitute a Change in Control.

 
 IN WITNESS WHEREOF, the Company has caused this Amendment to be executed as of
                     the day and year first above written.

  
                        SAVANNAH FOODS & INDUSTRIES, INC.


                        By: 
                           -------------------------------------     
                                         President
                                        

                                       2

EX-99.(C)(6)

 
                                                                 EXHIBIT (C)(6)

                                AMENDMENT NO. 4
             TO THE SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (SERP)
                                      OF
              SAVANNAH FOODS & INDUSTRIES, INC. AND SUBSIDIARIES


          THIS AMENDMENT NO. 4 is made as of the 4th day of September, 1997, by
Savannah Foods & Industries, Inc. (the "Company").


                              W I T N E S S E T H:

          WHEREAS, the Board of Directors of the Company adopted the Second
Amendment and Restatement of the Supplemental Executive Retirement Plan (SERP)
of Savannah Foods & Industries, Inc. and Subsidiaries, effective January 1,
1989, together with subsequent amendments thereto (such plan, as amended to
date, being hereinafter referred to as the "Plan"); and

          WHEREAS, pursuant to its authority under Article 11 of the Plan, the
Board desires to amend the Plan in certain respects.

          NOW, THEREFORE, effective as of September 4, 1997, the Plan is hereby
amended as set forth below:

                                    ITEM ONE

          Section 1.7 of the Plan is hereby amended by adding the following
sentence at the end thereof:

     Notwithstanding the foregoing, any transaction pursuant to an agreement to
     which the Company and Imperial Holly Corporation are parties shall not 
     constitute a Change in Control.


 
 IN WITNESS WHEREOF, the Company has caused this Amendment to be executed as of
          the day and year first above written.


                       SAVANNAH FOODS & INDUSTRIES, INC.


                
                       By: 
                          ----------------------------------      
                                      President

                                       2

EX-99.(C)(7)

 
                                                                 EXHIBIT (C)(7)

                                AMENDMENT NO. 3
              TO THE DEFERRED COMPENSATION PLAN FOR KEY EMPLOYEES
                                      OF
              SAVANNAH FOODS & INDUSTRIES, INC. AND SUBSIDIARIES


     THIS AMENDMENT NO. 3 is made as of the 1st day of January, 1996, by
Savannah Foods & Industries, Inc. (the "Company").

                                  WITNESSETH:

     WHEREAS, the Board of Directors of the Company adopted the Amend ment &
Restatement of the Deferred Compensation Plan for Key Employees of Savannah
Foods & Industries, Inc. and Subsidiaries, effective August 1, 1990 and as
subsequently amended in that Amendment No. 1 dated October 16, 1992 and in that
Amendment No. 2 dated December 13, 1993 (the "Plan"); and

     WHEREAS, the Board deems it to be in the best interests of the Company to
modify the Plan so as to eliminate certain Deemed Deferrals for any calendar
year beginning after December 31, 1995.

     NOW, THEREFORE, effective as of January 1, 1996, the Plan is amended as
set forth below.

                                    ITEM ONE

     Section 2.5 of the Plan is amended by adding the following as a new 
paragraph (d) thereof:

          (d)  Limitation on Deemed Deferrals.  Notwithstanding any provision
     herein to the contrary, no Participant shall receive credit for any Deemed
     Deferrals under this Section 2.5 or any other provision of this Plan for
     any calendar year beginning after December 31, 1995.

 
     IN WITNESS WHEREOF, the Company has caused this Amendment to be executed as
of January 1, 1996.



                                    SAVANNAH FOODS & INDUSTRIES, INC.


                                    By:
                                       --------------------------------------- 
                                    Senior Vice President, Human Resources
                                    and Administration and Assistant Secretary


ATTEST:

- --------------------------
Secretary

                                       2

EX-99.(C)(8)

 
                                                                 EXHIBIT (C)(8)

                                AMENDMENT NO. 4
             TO THE DEFERRED COMPENSATION PLAN FOR KEY EMPLOYEES
                                      OF
               SAVANNAH FOODS & INDUSTRIES INC. AND SUBSIDIARIES


          THIS AMENDMENT NO. 4 is made as of the 14th day of July, 1997,
by Savannah Foods & Industries, Inc. (the "Company").


                              W I T N E S S E T H:

          WHEREAS, the Board of Directors of the Company adopted the Deferred
Compensation Plan for key Employees of Savannah Foods & Industries, Inc. and
Subsidiaries, Amended and Restated effective August 1, 1990, together with
subsequent amendments thereto (such plan, as amended to date, being hereinafter
referred to as the "Plan"); and

          WHEREAS, pursuant to its authority under Article 11 of the Plan, the
Board desires to amend the Plan in certain respects.

          NOW, THEREFORE, effective as of July 14, 1997, the Plan is hereby
amended as set forth below:

                                    ITEM ONE

          Section 1.5 of the Plan is hereby amended by adding the following
sentence at the end thereof:

     Notwithstanding the foregoing, any transaction pursuant to an agreement to
     which the Company is a party, which agreement is entered into on or before 
     July 18, 1997, shall not constitute a Change in Control.


IN WITNESS WHEREOF, the Company has caused this Amendment to be executed as of
           the day and year first above written.


                       SAVANNAH FOODS & INDUSTRIES, INC.


                          By: 
                             ------------------------------------   
                                            President
                                        

EX-99.(C)(9)

 
                                                                 EXHIBIT (C)(9)

                                AMENDMENT NO. 5
              TO THE DEFERRED COMPENSATION PLAN FOR KEY EMPLOYEES
                                      OF
              SAVANNAH FOODS & INDUSTRIES, INC. AND SUBSIDIARIES


          THIS AMENDMENT NO. 5 is made as of the 4th day of September, 1997, by
Savannah Foods & Industries, Inc. (the "Company").


                              W I T N E S S E T H:

          WHEREAS, the Board of Directors of the Company adopted the Deferred
Compensation Plan for Key Employees of Savannah Foods & Industries, Inc. and
Subsidiaries, Amended and Restated effective August 1, 1990, together with
subsequent amendments thereto (such plan, as amended to date, being hereinafter
referred to as the "Plan"); and

          WHEREAS, pursuant to its authority under Article 11 of the Plan, the
Board desires to amend the Plan in certain respects.

          NOW, THEREFORE, effective as of September 4th, 1997, the Plan is
hereby amended as set forth below:

                                    ITEM ONE

          Section 1.5 of the Plan is hereby amended by adding the following
sentence at the end thereof:

     Notwithstanding the foregoing, any transaction pursuant to an agreement to
     which the Company and Imperial Holly Corporation are parties shall not
     constitute a Change in Control.


 IN WITNESS WHEREOF, the Company has caused this Amendment to be executed as of
                     the day and year first above written.


                       SAVANNAH FOODS & INDUSTRIES, INC.


                            By:
                               ------------------------------------- 
                                              President