SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
/X/ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 (fee required)
/X/For the fiscal year ended: April 30, 1995
OR
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 (no fee required) For the transition period from __________ to _________
Commission File Number: 0-1653
GENESEE CORPORATION
(Exact name of registrant as specified in its charter)
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<S> <C>
NEW YORK 16-0445920
(state or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
445 St. Paul Street, Rochester, New York 14605
(Address of principal executive office) (zip code)
Registrant's Telephone Number, including area code: (716) 546-1030
Securities Registered Pursuant to Section 12(b) of the Act: NONE
Securities Registered Pursuant to Section 12(g) of the Act: Class B Common Stock,
par value $.50 per share
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days. Yes x No _____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. x
The aggregate market value of voting common stock (Class A) held by non-
affiliates, based on the price for Class B Common Stock at the close of trading
on July 14, 1995 was approximately $2,039,700.
The number of shares outstanding of each of the registrant's classes of common
stock as of July 14, 1995 was:
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Number of Shares
Class Outstanding
<S> <C>
Class A Common Stock (voting) 209,885
par value $.50 per share
Class B Common Stock (non-voting) 1,393,012
par value $.50 per share
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1
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PART I
Item 1. Description of Business
General. Genesee Corporation (the "Corporation") was incorporated in
1932 under the laws of the State of New York. The Corporation functions as a
holding company, with wholly-owned subsidiaries that conduct business in the
areas of malt beverage production, dehydrated food processing and packaging,
equipment leasing and real estate investment.
Malt Beverage Business. The Corporation's malt beverage business is
conducted by its wholly-owned subsidiary, The Genesee Brewing Company, Inc.
("Genesee Brewing Company"). Genesee Brewing Company commenced brewing at the
end of Prohibition in 1932 and is the Corporation's dominant business.
Malt beverage products produced by Genesee Brewing Company are
marketed under the following trademarks: Genesee Beer, Genesee Light Beer,
Genesee Cream Ale, Genesee 12-Horse Ale, Genesee Bock Beer, Genesee NA, Genny
Ice Beer, Genny Red Lager, Michael Shea's Irish Amber Beer, Michael Shea's
Black & Tan, Michael Shea's Blonde Lager, JW Dundee's Honey Brown Lager, Koch's
Golden Anniversary Beer, Koch's Golden Anniversary Light Beer and Koch's Golden
Anniversary Ice Beer.
Genesee Brewing Company owns no patents, licenses, franchises or
concessions, except for the trademarks identified above. These trademarks are a
valuable source of product identity for Genesee Brewing Company brands.
During the fiscal year ended April 30, 1995, Genesee Brewing Company
sold approximately 1.8 million barrels of malt beverage products. Sales
generally are greater in the summer than in the winter months.
Except in Monroe County, New York, where Genesee Brewing Company sells
its products directly to retailers, beer and ale are sold to approximately 250
independent wholesale distributors. Through this distribution system, malt
beverages produced by Genesee Brewing Company are resold to retailers in twenty-
six states and the Canadian provinces of Ontario and Quebec. Sales to
distributors located in New York, Pennsylvania and Ohio account for
approximately 85% of Genesee Brewing Company's sales. Export sales accounted for
approximately two-percent of sales in fiscal 1995, and Genesee Brewing Company
is pursuing opportunities to expand export sales.
Genesee Brewing Company's marketing organization consists of staff
advertising, sales promotion, graphics, merchandising, sales administration and
field sales personnel. These sales personnel work with the independent
distributors to stimulate sales in each distributor's territory.
The brewing industry in the United States is highly competitive.
Genesee Brewing Company's products compete with a growing number of national,
regional, microbrewed and imported brands. Genesee Brewing Company competes on
the basis of advertising and/or pricing, depending on the competitive brand
strategy and the particular market involved. The domestic brewing industry is
dominated by five brewers whose brands accounted for approximately 90% of the
beer and ale sold in the United States in 1994. Genesee Brewing Company's
relative position in the industry in terms of annual barrel sales is believed to
be seventh, as it has been for several years.
The Genesee and Koch's brands generate in excess of 90% of Genesee
Brewing Company's sales volume. As part of its strategy to support its
established brands, Genesee Brewing Company introduced Koch's Golden Anniversary
Ice Beer in November 1994 to extend the Koch's family of value priced brands
into the ice beer category. In March 1995, Genesee Brewing Company introduced
Genny Red Lager to compete in the emerging red beer category. These two new
brands demonstrate Genesee Brewing Company's commitment to maintain the vitality
of its established brands with brand extensions and new products to meet
changing consumer preferences.
2
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Overall consumption of malt beverage products in the United States has
increased only slightly during the past ten years. Much of this growth has come
from imported products and the popularity of microbrewed products which have
spawned the small but rapidly growing specialty beer segment. Specialty beers
are high quality, craft brewed products that utilize special ingredients and
different brewing styles to create unique and distinctive malt beverage
products. These specialty products may not have the broad appeal of the
traditional American lager-style beers, but they have acquired a meaningful
share of the market from consumers seeking variety in their malt beverage
consumption habits.
Genesee was an early entrant in the specialty beer segment when it
introduced Michael Shea's Irish Amber in 1992. Genesee Brewing Company's
specialty beer line now includes Michael Shea's Irish Amber, Michael Shea's
Black & Tan, JW Dundee's Honey Brown Lager and Michael Shea's Blonde Lager,
which was introduced in March 1995. These specialty brands account for a small
but growing percentage of Genesee Brewing Company's overall sales and they
represent a significant opportunity for Genesee Brewing Company in a growing
segment of the malt beverage market. In recognition of the unique product
development and marketing challenges posed by the specialty beer category,
Genesee Brewing Company created a specialty brewing division to consolidate all
of its specialty brands under a single identity. As part of its strategy to
expand its sales in the specialty segment, Genesee Brewing Company will continue
to develop new brands to expand its line of specialty products.
Beer and ale products are produced from barley malt, hops, corn grits
and corn syrups. Genesee Brewing Company uses the Krausen process in the brewing
of beer. This process produces natural carbonation by the addition of a small
amount of beer in the early stages of fermentation to fermented beer at the
beginning of the lager or aging process. Variations in the flavor, appearance
and aroma of beer and ale products are achieved by changing the proportions of
the basic ingredients, modifying the malting and finishing processes, using
different strains of yeast in the process of fermentation and altering the aging
period.
Genesee Brewing Company has several sources of supply available to it
for most of the ingredients, packaging materials and equipment utilized in the
brewing and bottling operations. Glass bottles in which beer and ale are
packaged are purchased from three sources. Genesee Brewing Company is not under
any contractual obligation to limit purchases of bottles to these suppliers and
alternative sources are available.
Genesee Brewing Company purchases all of its requirements for aluminum
cans from a single supplier under an agreement which runs through December 31,
1998. This supplier has multiple plants which are qualified to produce for
Genesee Brewing Company. If the current supplier was unable to supply Genesee
Brewing Company's requirements, alternative sources for aluminum cans might not
be readily available.
Fiber board and chipboard used for secondary packaging of glass
bottles and aluminum cans (e.g., 6-pack baskets, 12-pack wraps, etc.) are
purchased from single sources to maintain compatibility with packaging equipment
used by Genesee Brewing Company. Alternate sources for these secondary packaging
materials might not be readily available.
Corrugated packaging used for 24-can trays and 24-pack cartons is
purchased from two suppliers. Genesee Brewing Company is not under any
contractual obligation to limit purchases of corrugated packaging to these two
suppliers and additional sources for these packaging materials are readily
available.
Genesee Brewing Company has an agreement to purchase virtually all of
its requirements for barley malt from a single supplier. This agreement runs
through December 1995 and can be renewed by Genesee Brewing Company for two
additional one-year terms. Alternative sources for barley malt are readily
available, subject to the possibility of shortages which may affect the entire
commercial malting industry.
3
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The price, quality and availability of agricultural ingredients used
in the brewing process are affected by weather and other climatic conditions in
the regions where these ingredients are grown. Cool and wet conditions in
certain growing regions during the summer of 1994 adversely affected crop yields
and the quality of barley used to produce the barley malt used in the production
of malt beverages. The supplier of barley malt to Genesee Brewing Company
carefully monitored the barley it purchased to maintain the quality of barley
malt supplied to Genesee Brewing Company. Although Genesee Brewing Company did
not experience any difficulty in obtaining sufficient supplies of barley malt,
the cost of barley malt was slightly higher than anticipated.
Favorable weather conditions during the 1994 growing season produced
record yields in many corn-growing regions which resulted in stable pricing,
adequate supplies and high quality of the corn products used in malt beverage
production.
The price, quality and availability of agricultural ingredients for
the remainder of fiscal 1996 will be determined by climatic conditions during
the current growing season. To date, climatic conditions during the 1995 growing
season have been generally favorable in most regions where agricultural
ingredients used by Genesee Brewing Company are grown.
A substantial portion of Genesee Brewing Company's requirements for
hops is purchased on a contract basis two to three years in advance of harvest.
These contracts are firm with respect to quality, price and variety. The balance
of hops requirements is purchased as needed on the open market.
In addition to the governmental regulation common to most businesses,
Genesee Brewing Company is regulated by the U.S. Treasury Department's Bureau of
Alcohol, Tobacco and Firearms, the U. S. Food and Drug Administration, the New
York State Liquor Authority, the New York Department of Agriculture and Markets
and the state liquor control agencies in each state in which its products are
sold. These regulations cover, among other matters, collection of federal and
state taxes, physical changes in plant and other operating facilities, types of
credit allowed, reporting and changing prices, sales promotion, advertising and
public relations, labeling and packaging, changes in officers and directors,
investigations of employees, and distribution methods and relationships.
As of April 30, 1995, seven states where Genesee Brewing Company
products are sold (New York, Vermont, Maine, Connecticut, Massachusetts,
Michigan and Delaware) require consumers to pay a deposit on containers. The
United States Congress and several other states in which Genesee Brewing Company
products are sold have, from time to time, considered legislation that would
require a deposit on containers, impose special taxes on non-refillable
containers or non-biodegradable packaging materials, or require hazard warnings
to be included in advertising or posted at retail outlets.
Although Genesee Brewing Company has facilities for removing certain
solid waste materials from effluent discharged by its Rochester, New York
brewing plant, the effluent is discharged into the Rochester Pure Waters
District sewage system for further treatment. An agreement with the Rochester
Pure Waters District provides that Genesee Brewing Company will make annual
surcharge payments to the District which will fluctuate with production levels
and may vary according to effluent content. In fiscal 1995, a surcharge of
approximately $303,000 was paid in addition to the normal sanitary and combined
sewage charge for the year of approximately $480,000.
Food Business. The Corporation's food business is conducted by its
wholly-owned subsidiary, Ontario Foods, Incorporated ("Ontario Foods"). Ontario
Foods produces a variety of dry and dehydrated food and beverage products,
including soup mixes, side dishes, infant cereals, iced tea mixes, instant
beverage mixes and hot cocoa. The products are produced by mixing and blending
various dry ingredients and packaging these products in a variety of packaging
configurations, including flexible pouches, fiber and metal cans and bulk
packaging in fiber drums and polyethylene lined cartons.
Food and beverage products produced by Ontario Foods are sold to food
store chains throughout the United States under Ontario Foods' proprietary
labels or as private label products under the label of the food store chain.
Chain store private label products are a growing product category and represent
the largest part of Ontario Foods' revenues.
4
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Ontario Foods' proprietary food and beverage products are marketed
under the Thirst Quench'r, Taste of the Alps, Sadano's, Golden Kettle and Van
Dutch trademarks. Except for these trademarks, Ontario Foods does not own any
trademarks, patents, franchises or concessions which are material to its
business.
In fiscal 1995, Ontario Foods continued the strategy it implemented in
fiscal 1994 to focus resources on its private label business. As part of this
strategy, Ontario Foods acquired the private label product lines of a New Jersey
- - -based food processing company in August 1994 which contributed to the growth of
revenues and earnings from Ontario Foods' private label business in fiscal 1995.
Although contract manufacturing was reduced as part of the plan to
focus on private label business, Ontario Foods has continued some contract
processing/packaging arrangements with major food companies. Contract processing
/packaging agreements are typically short term in nature, terminating with the
end of the particular production run. The blending and packaging of infant
breakfast cereal for a single customer accounts for a significant amount of
Ontario Foods' contract processing/packaging business.
The food and beverage products produced by Ontario Foods utilize a
variety of natural and artificial ingredients. Some of these ingredients are
processed by Ontario Foods from a raw state while others have been pre-processed
and are further processed by Ontario Foods to produce the finished product.
Numerous sources of supply are available for the ingredients used in Ontario
Foods' products. Products produced under contract processing/packaging
agreements typically utilize ingredients and packaging supplied by the customer.
Food and beverage products produced by Ontario Foods are packaged in a
variety of packaging configurations, including cartons, flexible pouches and
fiber and metal cans. Packaging materials used by Ontario Foods are purchased
from a variety of sources.
Ontario Foods' business is non-seasonal, although the product mix
varies on a seasonal basis. For example, iced tea and beverage mixes are
consumed in greater quantity in the summer months whereas consumption of dry
soup mixes, side dishes and hot cocoa are typically greater in the fall and
winter months.
The dehydrated food industry consists of thousands of producers
ranging from large multi-national companies with vast product offerings and
operations, to small specialty producers which serve specific geographic areas
or market niches. Ontario Foods competes primarily on the basis of quality,
price and service.
In addition to the governmental regulations common to most businesses,
food processing is regulated by the U.S. Food and Drug Administration, the U.S.
Department of Agriculture, the New York Department of Agriculture and Markets
and a variety of other state and local agencies. These regulations cover
ingredients and packaging materials, product labeling, plant sanitation and
processing methods, and disposal of adulterated or contaminated ingredients or
products.
Other Businesses. The Corporation's equipment leasing business is
conducted by a joint venture known as Cheyenne Leasing Company ("Cheyenne"),
which is 85% owned by the Corporation's Genesee Ventures, Inc. ("Genesee
Ventures") subsidiary. In the fiscal year ended April 30, 1995, Cheyenne
financed leases involving equipment having an initial cost of $22 million.
Cheyenne's total lease portfolio as of April 30, 1995 included more than 290
leases representing an initial equipment cost of approximately $109 million.
The Corporation's real estate investment activities are conducted by
two subsidiaries of Genesee Ventures. One real estate investment is a minority
interest in an office building in Rochester, New York. The second is a fifty-
percent interest in a multi-unit residential property located in a suburb of
Syracuse, New York.
5
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During fiscal 1995, the Corporation sold its interest in a third
property - a multi-unit residential property located in Columbus, Ohio. During
fiscal 1994, the Corporation held a ninety-five percent interest in a $5.8
million mortgage from the 1990 sale of another investment property. This
mortgage was paid in full in June 1995.
Employees. As of April 30, 1995, the Corporation and its subsidiaries
employed 693 people. Genesee Brewing Company employed 597 people, 380 of whom
are represented by six separate unions whose collective bargaining agreements
generally conform to those of the brewing industry. During fiscal 1995, three-
year contracts were successfully negotiated with these unions. Employee
relations with Genesee Brewing Company's union and non-union employees have been
good.
As of April 30, 1995, Ontario Foods employed 96 people, none of whom
are represented by a union. Employee relations for Ontario Foods have been good.
Item 2. Properties
Brewing Operations. Genesee Brewing Company's brewing, bottling,
racking, storage, shipping, branch distribution, garage, office and maintenance
facilities are situated in Rochester, New York on approximately 26 acres of
land.
The original brewing building in Rochester is approximately 100 years
old and is of stone construction. A second brewhouse was built in 1980. Genesee
Brewing Company's other buildings in Rochester are of concrete block, steel or
metal construction and have been constructed since 1932 except for certain
warehouse and distribution facilities which are about 80 years old.
Based on current product and package mix, these facilities give
Genesee Brewing Company capacity for producing approximately 3,500,000 barrels
of beer and ale per year. If demand were to warrant, Genesee Brewing Company
could implement further phases of a planned brewhouse expansion which, based on
current product and package mix, would achieve a total annual capacity of
approximately 6,000,000 barrels.
Production equipment is upgraded or added as needed and is comparable
to that used in the industry.
All of the properties described above are owned free and clear of any
mortgages or other encumbrances. The Corporation considers the above properties
and equipment to be in generally good condition and adequate and suitable for
the conduct of its business.
In January 1995, Genesee Brewing Company sold a former malting
facility in Sodus Point, New York that had been out of service since it was
closed in 1986.
In June 1995, Genesee Brewing Company was notified that Consolidated
Rail Corporation intends to abandon the track serving Genesee Brewing Company's
facility within three years. Rail service is used to deliver grains used in
brewing malt beverages. Other methods of delivery of brewing grains are
available but would be more expensive.
Genesee Brewing Company owns and operates a fleet of 20 delivery
trucks and 11 tractors and 15 trailers used to transport beer to customers.
Genesee Brewing Company also owns 75 automobiles used by salesmen and executives
and 10 pick-up trucks and vans.
Food Processing Operations. Ontario Foods leases approximately 220,000
square feet of office, production, laboratory and storage space in Albion, New
York. The term of the lease expires in the year 2000. Ontario Foods also
maintains a sales office in Ocean Township, New Jersey.
The production facility, which is comprised of several buildings with
attendant leasehold improvements, was designed and constructed for food
processing operations. The buildings and related equipment are considered to be
in generally good condition and are adequate and suitable for the current and
projected future needs of Ontario Foods.
6
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Ontario Foods has production equipment for freeze drying, drum drying,
mixing and packaging of food products. Equipment is regularly maintained and
upgraded and is comparable to that used in the industry.
Other. The Corporation's Genesee Ventures subsidiary has interests in
three real estate investments. Each real estate investment is owned by a
separate subsidiary of Genesee Ventures in partnership with a real estate
investment and management company.
Clinton Square is a 14-story office building in Rochester, New York,
construction of which was completed in September 1990. A subsidiary of Genesee
Ventures has a ten percent interest in the limited partnership that owns Clinton
Square. A second Genesee Ventures subsidiary owns a fifty percent interest in
the limited partnership that owns a 408-unit apartment complex located in a
suburb of Syracuse, New York. A third Genesee Ventures subsidiary owns a ninety
five percent interest in the limited partnership that formerly owned Brook
Gardens, a 425-site manufactured home community in Hamburg, New York. The Brook
Gardens property was sold in November 1990. The limited partnership held a note
and mortgage from the buyer for a portion of the purchase price of the property.
This note was paid in full and the mortgage was discharged in June 1995.
Item 3. Legal Proceedings
In September 1992, Myrtha Herandez, doing business as Upstate Returns,
commenced a lawsuit in U.S. District Court for the Western District of New York
against Genesee Brewing Company and beer distributors and soft drink bottlers in
Rochester, New York. The lawsuit alleged that Genesee Brewing Company conspired
with the other defendants in violation of federal and state antitrust statutes
to prohibit and restrain the plaintiff from entering the beverage container
recycling business. The complaint sought compensatory damages of $1,000,000,
trebling thereof under applicable antitrust statutes, punitive damages of
$15,000,000, attorneys fees, costs and disbursements. Genesee Brewing Company
filed an answer asserting certain affirmative defenses and counterclaims. In
response to motions by Genesee Brewing Company and the other defendants, the
Court dismissed all causes of action against Genesee Brewing Company and all
other defendants by order entered on May 2, 1995. Acting pro se, the plaintiff
on June 22, 1995, filed a motion seeking reconsideration of the U.S. District
Court ruling dismissing all causes of action and an extension to retain council
(sic).
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during
the fourth quarter ended April 30, 1995.
7
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PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
The Corporation's Class B Common Stock is traded over-the-counter on the NASDAQ
National Market System under the symbol GENBB. As of June 26, 1995, the
approximate number of holders of record of Class A and Class B Common Stock were
170 and 1,250 respectively. There is no established public trading market for
the Corporation's Class A (voting) Common Stock which has generally traded
within the same range as Class B (non-voting) stock. The price for the Class B
stock as reported by NASDAQ and the dividends paid per share on Class A and B
stock for each quarter for the past two years are shown below:
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UNAUDITED FISCAL YEAR ENDED APRIL 30, 1995 FISCAL YEAR ENDED APRIL 30, 1994
MARKET PRICE DIVIDENDS MARKET PRICE DIVIDENDS
HIGH LOW HIGH LOW
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First Quarter $ 40 36 1/2 0.30 38 32 0.30
Second Quarter 42 37 0.30 38 32 0.30
Third Quarter 39 34 1/2 0.30 44 34 1/4 0.30
Fourth Quarter 39 1/4 35 1/2 0.90 42 1/2 37 1/4 0.70
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The Corporation expects to continue its policy of paying dividends. The
dividends paid in any year, however, depend on earnings, capital requirements
and the overall financial condition of the Corporation.
8
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Item 6. Selected Financial Data
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UNAUDITED
YEARS ENDED 4/30/95 4/30/94 4/30/93 4/30/92 4/30/91
<S> <C> <C> <C> <C> <C>
Net Revenues $131,367 137,142 138,745 145,148 134,785
Earnings before Cumulative Effect of
Changes in Accounting Principles $ 5,608 4,080 342 7,427 5,938
Net Earnings / (Loss) $ 6,368 4,080 (6,505) 7,427 5,938
Total Assets $148,699 150,712 149,012 142,780 122,616
Total Long Term Debt $ 4,038 9,869 10,154 10,410 -
Earnings Per Share Before Cumulative Effect
of Changes in Accounting Principles $ 3.50 2.55 0.21 4.64 3.71
Net Earnings / (Loss) Per Share $ 3.98 2.55 (4.06) 4.64 3.71
Cash Dividends Per Share $ 1.80 1.60 1.60 1.68 1.60
</TABLE>
(Dollars in thousands, except per share data)
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Summary. Gross revenues for the fiscal year ended April 30, 1995 were
$173.1 million compared to fiscal 1994 gross revenues of $181.8 million, and
fiscal 1993 gross revenues of $184.4 million. The Corporation reported net
earnings of $6.4 million in fiscal 1995 compared to net earnings of $4.1 million
in fiscal 1994 and a net loss of $6.5 million in fiscal 1993.
Fiscal 1995 net earnings include a $1.7 million gain from the sale of
the Corporation's interest in a residential real estate project in Columbus,
Ohio. In addition, fiscal 1995 net earnings include $760,000 (net of income
taxes) relating to the cumulative effect to May 1, 1994 of a change in the
accounting treatment for investments in debt and equity securities. Effective at
the beginning of fiscal 1995, the Corporation was required to adopt Statement of
Financial Accounting Standards No. 115, Accounting for Certain Investments in
Debt and Equity Securities (SFAS 115). The Corporation has classified all of its
marketable debt and equity securities as available for sale. This classification
means that such securities are shown on the Corporation's balance sheet at
market value and that any change in the market value of these securities is
reflected as a separate component of shareholders' equity on the balance sheet
until such time that a security is sold. At that time, the Corporation will
record a realized gain or loss on its statement of earnings. The cumulative
effect to May 1, 1994 of this accounting change relates to the fact that prior
to and through April 30, 1994, the Corporation had recorded $1.3 million in
unrealized pre-tax losses on its investment portfolio.
The loss in fiscal 1993 included a one-time net, after-tax charge of
$6.8 million resulting from the Corporation's early adoption of two required
accounting changes which affected the accounting for income taxes and
post-retirement benefits other than pensions.
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Results of Operations. Fiscal 1995 consolidated net revenues of
$131.4 million were down $5.7 million compared to net revenues of $137.1 million
in fiscal 1994. Net sales for Genesee Brewing Company, the Corporation's largest
subsidiary, were $110.3 million, a decrease of $1.6 million or 1.4% from the
$111.9 million in fiscal 1994. Genesee Brewing Company's barrel volume for
fiscal 1995 decreased 5.4% to 1.8 million barrels compared to 1.9 million
barrels in 1994. The decrease in malt beverage sales was primarily the result of
lower sales of Genesee Brewing Company's established brands. In recent years,
Genesee Brewing Company and most other brewers have experienced volume declines
in their established brands due to changing consumer preferences that favor new
brands and "niche" products targeted at specific consumer markets. Genesee
Brewing Company has addressed this trend with the introduction of new products
as described above in Item 1. Growth in the sales of these new brands has helped
to offset the decline in sales of Genesee Brewing Company's established brands.
Sales of Genesee Brewing Company's specialty brands nearly doubled in fiscal
1995 to a total of 150,000 barrels.
Despite lower overall revenues, Genesee Brewing Company's net sales
per barrel increased by almost $2.50 in fiscal 1995. The increase in sales per
barrel is due to a general industry price increase that went into effect late in
fiscal 1994, a $660,000 excise tax credit, and a favorable change in brand mix.
Genesee Brewing Company's specialty brands are priced higher than its other
brands and are generally more profitable.
Net sales for Ontario Foods decreased $3.1 million in fiscal 1995 due
to the restructuring program initiated in fiscal 1994. The restructuring program
eliminated certain marginally profitable food ingredients and contract
manufacturing business. In order to effect a smooth transition to other
suppliers, the customers for this business temporarily increased their
inventories which resulted in a one time surge in Ontario Foods' fiscal 1994
sales. Despite the overall sales decline, Ontario Foods' on-going private label
business showed a $2 million increase in sales. Side dish sales in particular
showed continued growth, increasing by $1.4 million over fiscal 1994 sales.
Fiscal 1995 sales also benefited from Ontario Foods' acquisition of several
private label product lines from a New Jersey food processing company. These
products contributed approximately $1 million to sales in fiscal 1995.
Genesee Corporation's consolidated net revenues for fiscal 1994 were
down $1.6 million compared to fiscal 1993. Genesee Brewing Company's net sales
were $111.9 million in fiscal 1994 compared to $114.3 million in fiscal 1993.
Genesee Brewing Company's lower sales were the result of lower barrel sales in
fiscal 1994. Barrel volume decreased 4.2% to 1.9 million barrels compared to 2
million barrels in fiscal 1993. The decrease in volume was primarily due to the
continued decline in established brands resulting from competitive pressure and
the current consumer trend towards newer brands.
In fiscal 1994, Ontario Foods' net sales increased 4.5% or $900,000
despite the suspension of certain marginally profitable food ingredients and
contract manufacturing business pursuant to the restructuring plan previously
mentioned. Ontario Foods' line of private label side dishes continued to show
strong sales growth in fiscal 1994. Sales of these products were up $3.2 million
versus fiscal 1993.
Genesee Corporation's consolidated gross profit was down by $810,000
in fiscal 1995 as compared to fiscal 1994 due to lower sales volume. However, as
a percentage of net revenues, consolidated gross profit increased from 27% in
fiscal 1994 to 27.6% in fiscal 1995. The higher percentage gross profit margins
are attributable to the higher margins reported by Genesee Brewing Company.
Genesee Brewing Company's gross profit margins, as a percent of net sales,
increased by 1.5 percentage points despite lower sales volume and a sharp
increase in the cost of aluminum cans that went into effect on January 1, 1995.
The improvement in Genesee Brewing Company's percentage gross profit margins was
primarily the result of increased specialty brand sales (i.e., improved brand
mix), the price increase previously mentioned, and improved production
efficiencies resulting from ongoing cost containment efforts.
Ontario Foods' gross profit was down substantially in fiscal 1995 due
to lower sales volume. However, Ontario Foods' private label business showed
higher gross profits due to a more favorable sales mix. The more profitable side
dish lines represented a greater percentage of total sales in fiscal 1995
compared to fiscal 1994. Ontario Foods had a higher percentage of low margin
iced tea and drink mix sales in fiscal 1994 than in fiscal 1995.
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In fiscal 1994, Genesee Corporation's consolidated gross profit was up
$3.2 million over the consolidated gross profit reported in fiscal 1993. This
increase was primarily due to improved margins at Ontario Foods. Ontario Foods'
gross profit increased by $2 million in fiscal 1994 due to the higher sales
volume and longer, more efficient production runs during implementation of the
restructuring plan in fiscal 1994.
Genesee Brewing Company's gross profit also was higher in fiscal 1994
than in the prior year. The improved margin was due to generally lower materials
costs in fiscal 1994, particularly on barley malt and aluminum cans. In
addition, Genesee Brewing Company continued its efforts to control costs and
improve production efficiencies in order to offset the adverse effects of lower
volume and intense price competition.
Consolidated selling, general, and administrative expenses were down
over $2 million in fiscal 1995, primarily as a result of Ontario Foods'
restructuring program. Elimination of the food ingredients division and most of
the contract manufacturing business greatly simplified the remaining business
thereby allowing substantial reductions in selling costs and administrative
overhead.
Genesee Brewing Company's selling, general, and administrative
expenses were also lower in fiscal 1995 compared to fiscal 1994 due to lower
marketing expenditures. Genesee Ventures' consolidated selling, general, and
administrative expenses were also lower due to the sale of Genesee Venture's 89%
interest in the Columbus, Ohio residential real estate project.
On a consolidated basis, Genesee Corporation reported operating income
of $4.7 million in fiscal 1995 compared to operating income of $3.5 million in
fiscal 1994 and an operating loss of $1.4 million in fiscal 1993. All three of
the Corporation's subsidiaries showed higher operating profits in fiscal 1995
than in the previous year.
Genesee Brewing Company's operating income increased $1.5 million in
fiscal 1995 primarily due to improved brand mix and cost controls.
Ontario Foods' operating income of $470,000 in fiscal 1995 represents
a $337,000 increase over fiscal 1994's operating income of $133,000 and a $2.2
million increase over fiscal 1993's operating loss of $1.7 million. The increase
in operating income was due to successful completion of the restructuring
program previously mentioned and to continued growth in the company's private
label side dish business.
Genesee Ventures' fiscal 1995 operating income increased slightly over
the previous year primarily due to favorable lease residual experience. Although
the sale of the Ohio real estate investment generated a $1.7 million non-
operating gain, it depressed fiscal 1995 operating income because the project
was sold in August 1994 and therefore generated only four months of operating
income for fiscal 1995. Genesee Ventures has reported approximately $2.3 million
of operating income in each of the last three fiscal years.
Consolidated investment income -- representing interest income,
realized gains and losses on marketable securities, dividend income from
marketable equity securities, and, prior to fiscal 1995, unrealized losses on
marketable securities -- was $3.5 million in fiscal 1995 compared to $3.9
million in fiscal 1994 and $3.2 million in fiscal 1993. Fiscal 1995 investment
income benefited from generally higher interest rates and investable balances.
However, the decline in investment income is due to the fact that fiscal 1994's
investment income was especially high. During the second and third quarters of
fiscal 1994, the Corporation adjusted the asset allocation for its cash
investment portfolio. Consequently the Corporation realized a $1.7 million gain
on the sale of marketable securities as a result of this change. Investment
income in fiscal 1994 would have been even higher had the Corporation not
incurred a $1.2 million of unrealized losses in the fourth quarter of fiscal
1994 when interest rates rose dramatically and bond prices fell.
11
<PAGE>
Earnings before income taxes and cumulative effects of changes in
accounting principles were $8.6 million in fiscal 1995 compared to $6.3 million
in fiscal 1994 and $900,000 in fiscal 1993. More favorable sales mix, higher
production efficiencies, non-recurring income from the sale of the Ohio real
estate investment, and overhead cost containment efforts all contributed to the
$7.7 million improvement in profitability between fiscal 1993 and fiscal 1995.
These factors also contributed to the $2.3 million increase in consolidated net
earnings in fiscal 1995 versus fiscal 1994. In addition, the Corporation
recognized $760,000 (net of income taxes) in fiscal 1995 due to the adoption
of SFAS 115, which is more fully explained above.
In fiscal 1993, the Corporation reported a net loss of $6.5 million
partially as a result of a $1.8 million one-time charge relating to the
discontinuance of its Buffalo, New York malting operation. In addition, the
Corporation also recorded a one-time net, after tax charge of $6.8 million
representing the cumulative effect of changes in accounting principles. The
Corporation elected early adoption of Statement of Financial Accounting
Standards No. 106 (SFAS 106), Employers' Accounting for Postretirement Benefits
Other than Pensions and Statement of Financial Accounting Standards No. 109
(SFAS 109), Accounting for Income Taxes. Both accounting changes were adopted as
of the beginning of the fiscal year through a one-time charge or benefit on the
income statement to reflect the cumulative effect of the change in accounting
method on prior years. Therefore, effective May 1, 1992, the Corporation
recorded a one-time benefit of $1.4 million resulting from adoption of SFAS 109
and a one-time, after-tax charge of $8.3 million resulting from adoption of SFAS
106.
Liquidity and Capital Resources. Cash, cash equivalents and short term
investments in total were $44.7 million at April 30, 1995, a $6.7 million
increase over the $38 million reported at April 30, 1994. The higher balances
reflect improved corporate profitability as well as the cash received from the
sale of the Corporation's investment in the Columbus, Ohio real estate project.
The net accounts receivable balance at April 30, 1995 of $11.1 million
is slightly lower than the balance at April 30, 1994 due to the Corporation's
lower overall sales revenue. Accounts payable were also somewhat lower at April
30, 1995 compared to the prior year reflecting the lower sales revenue.
Total inventories were $13.6 million at April 30, 1995 compared to
$10.7 million at April 30, 1994. The higher inventory balances are partially due
to the proliferation of new customers and new products at Genesee Brewing
Company and Ontario Foods. Each new customer or product requires the Corporation
to increase its safety stock of materials and finished goods in order to
maintain customer service levels. The Corporation is addressing this issue by
focusing attention on warehousing operations and purchasing practices.
In addition, a substantial amount of the increase in total inventories
is attributable to an increase in sugar purchases at Ontario Foods in
anticipation of higher sugar costs in fiscal 1996.
Capital expenditures in fiscal 1995 totaled $4.4 million compared to
$4.7 million in fiscal 1994. Fiscal 1995 capital expenditures include
approximately $800,000 from the completion of a new duostack can packaging
system, $500,000 in brewing equipment upgrades, $400,000 for a hot cocoa mix
cartoning machine and $600,000 in progress payments on a $3.2 million packaging
line reconfiguration and upgrade project. Fiscal 1994 capital expenditures
included approximately $1.3 million for a malt storage and handling system that
was required as a result of Genesee Brewing Company's decision in fiscal 1993 to
shut down its own malting operations and purchase malt from a commercial malt
supplier.
The Corporation expects to fund all capital needs internally as it has
in the past. With respect to real estate and equipment leasing, such investments
may also include a debt component, which is usually obtained on a non-recourse
basis.
12
<PAGE>
As previously discussed, the Corporation adopted SFAS 115 in fiscal
1995. The cumulative effect of this change resulted in net after-tax income of
$760,000 which had no cash impact. As of May 1, 1994 -- the effective date of
the change -- the Corporation had approximately $1.3 million of unrealized
losses on its investment portfolio that had been charged to the Corporation's
consolidated statement of earnings. During fiscal 1995, the Corporation's
investment portfolio showed unrealized net capital gains of approximately
$200,000 which served to reduce the $1.3 million offset to shareholders' equity.
As of April 30, 1995, the offset to retained earnings was $652,000 net of
$435,000 in deferred income taxes payable. Had the Corporation liquidated its
portfolio on that day, it would have recorded a net after-tax charge of $652,000
to fiscal 1995 earnings on its consolidated statement of earnings.
On June 12, 1995, the Corporation received payment in full on the
$5.8 million mortgage receivable shown on the Corporation's consolidated balance
sheet at April 30, 1995. Simultaneously, the corporation paid off underlying
mortgages and term notes payable having a combined principal balance of $4
million at April 30, 1995. The receivable and notes payable relate to the
November 1990 sale of the Hamburg, New York manufactured home park that was
owned by a partnership in which the Corporation had a 50% (and later a 95%)
interest. As part of the sale, the partnership took back financing in the form
of a mortgage receivable that wrapped around the existing financing.
As mentioned above, the Corporation sold its interest in an 89% owned
residential real estate project in August 1994. The sale affected the
Corporation's consolidated balance sheet primarily by reducing net property,
plant and equipment by $9.8 million and mortgage notes payable by $5.7 million.
The Corporation has a strategy to search for and develop opportunities
which will contribute to the Corporation's future growth. The Corporation plans
to continue to use its strong financial position to further diversify its
business in order to broaden its profit base and contribute to the continued
long-term success of the Corporation.
13
<PAGE>
Item 8. Financial Statements and Supplementary Data Selected
<TABLE>
(a) Selected Quarterly
Financial Data (Unaudited)
FISCAL YEAR ENDED 4/30/95 FIRST SECOND THIRD FOURTH TOTAL
QUARTER QUARTER QUARTER QUARTER YEAR
<S> <C> <C> <C> <C> <C>
Net Revenues $36,071 31,678 31,784 31,834 131,367
Gross Profit 9,859 9,377 8,837 8,196 36,269
Net Earnings 2,336 2,198 1,444 390 6,368
Net Earnings Per Share 1.46 1.37 0.90 0.25 3.98
FISCAL YEAR ENDED 4/30/94 FIRST SECOND THIRD FOURTH TOTAL
QUARTER QUARTER QUARTER QUARTER YEAR
Net Revenues $39,337 34,160 31,793 31,852 137,142
Gross Profit 10,927 8,715 8,458 8,979 37,079
Net Earnings 1,524 466 1,178 912 4,080
Net Earnings Per Share 0.95 0.29 0.74 0.57 2.55
</TABLE>
(Dollars in thousands, except per share data)
14
<PAGE>
(b) Consolidated Financial
Statements
Independent Auditors' Report
The Board of Directors and Shareholders
Genesee Corporation:
We have audited the accompanying consolidated balance sheets of Genesee
Corporation and subsidiaries as of April 30, 1995 and 1994, and the related
consolidated statements of earnings and retained earnings, and cash flows for
each of the years in the three-year period ended April 30, 1995. These
consolidated financial statements are the responsibility of the Corporation's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Genesee Corporation
and subsidiaries at April 30, 1995 and 1994, and the results of their operations
and their cash flows for each of the years in the three-year period ended April
30, 1995 in conformity with generally accepted accounting principles.
As discussed in notes 1, 2, 3 and 14, the Corporation changed its method of
accounting for debt and equity securities in fiscal 1995 and its method of
accounting for income taxes and postretirement benefits other than pensions in
fiscal 1993.
/s/KPMG Peat Marwick LLP
Rochester, N.Y.
June 2, 1995, except note 17
which is as of June 12, 1995
15
<PAGE>
GENESEE CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheets
April 30, 1995 and 1994
(Dollars in thousands)
<TABLE>
Assets 1995 1994
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 10,422 7,159
Marketable securities available for sale, at market 34,300 30,800
Trade accounts receivable, less allowance for doubtful
receivables of $565 in 1995 and $677 in 1994 11,067 11,479
Inventories, at lower of cost (first-in, first-out)
or market 13,616 10,713
Deferred income tax assets 1,680 2,073
Real estate mortgage receivable 5,807 -
Other current assets 1,460 809
Total current assets 78,352 63,033
Property, plant and equipment, at cost 119,444 127,502
Less accumulated depreciation 91,053 88,410
Net property, plant and equipment 28,391 39,092
Investment in and notes receivable from
unconsolidated real estate partnerships 4,305 4,514
Real estate mortgage receivable - 6,000
Investment in:
Direct financing leases 3,511 2,967
Leveraged leases 19,646 19,350
Total investment in leases 23,157 22,317
Deferred income tax assets 12,539 13,679
Other assets 1,955 2,077
Total Assets $148,699 150,712
</TABLE>
16
<PAGE>
GENESEE CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheets
April 30, 1995 and 1994
(Dollars in thousands)
<TABLE>
Liabilities and Shareholders' Equity 1995 1994
<S> <C> <C>
Current liabilities:
Current installments of long-term debt of
consolidated real estate partnerships $ 4,038 258
Accounts payable 9,278 9,618
Accrued expenses and other liabilities 5,986 5,568
Income taxes payable 742 414
Federal and state beer taxes payable 2,226 2,147
Deferred income tax liabilities 828 912
Accrued postretirement benefits 582 566
Total current liabilities 23,680 19,483
Deferred income tax liabilities 18,635 18,718
Accrued postretirement benefits 15,698 15,273
Long-term debt of consolidated real estate
partnerships, excluding current installments - 9,611
Other liabilities 308 70
Total liabilities 58,321 63,155
Minority interests in consolidated subsidiaries 1,428 1,454
Shareholders' equity:
Common Stock:
Class A, voting, $.50 par value. Authorized 450,000
shares; 209,885 shares issued and outstanding 105 105
Class B, non-voting, $.50 par value. Authorized
3,850,000 shares; 1,506,876 shares issued and
outstanding 753 753
Additional paid-in capital 5,882 5,882
Retained earnings 86,870 83,385
Less unrealized loss on marketable securities, net
of income taxes 652 -
Less Class B treasury stock, at cost; 114,740 shares
in 1995 and 115,439 shares in 1994 4,008 4,022
Total shareholders' equity 88,950 86,103
Total liabilities and shareholders' equity $148,699 150,712
</TABLE>
See accompanying notes to consolidated financial statements.
17
<PAGE>
GENESEE CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Earnings and Retained Earnings
Years ended April 30, 1995, 1994 and 1993
(Dollars in thousands, except per share data)
<TABLE>
1995 1994 1993
<S> <C> <C> <C>
Revenues $173,112 181,768 184,417
Less:
Federal and state beer taxes 38,387 41,614 43,372
Sales returns and allowances 3,358 3,012 2,300
Total deductions 41,745 44,626 45,672
Net revenues 131,367 137,142 138,745
Cost of goods sold 95,098 100,063 104,868
Gross profit 36,269 37,079 33,877
Selling, general and administrative expenses 31,577 33,624 33,481
Provision for discontinuance of malting operations - - 1,760
Operating income / (loss) 4,692 3,455 (1,364)
Investment income 3,465 3,881 3,160
Other income / (expense), net (461) (548) (423)
Gain on sale of interest in real estate partnership 1,670 - -
Minority interests in earnings of subsidiaries (721) (444) (473)
Earnings before income taxes and cumulative
effects of changes in accounting principles 8,645 6,344 900
Income taxes 3,037 2,264 558
Earnings before cumulative effects of changes in
accounting principles $ 5,608 4,080 342
</TABLE>
18
<PAGE>
GENESEE CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Earnings and Retained Earnings
<TABLE>
1995 1994 1993
<S> <C> <C> <C>
Cumulative effect of accounting changes:
Income taxes $ - - 1,437
Postretirement benefits other than pensions,
net of income tax benefit of $5,523 - - (8,284)
Investments in debt and equity securities,
net of income tax expense of $507 760 - -
Net earnings / (loss) 6,368 4,080 (6,505)
Retained earnings at beginning of year 83,385 81,867 90,934
Dividends - $1.80 per share in 1995 and
$1.60 per share in 1994 and 1993 2,883 2,562 2,562
Retained earnings at end of year $ 86,870 83,385 81,867
Earnings / (loss) per common share:
Earnings before cumulative effects of changes
in accounting principles 3.50 2.55 0.21
Cumulative effect of accounting changes:
Income taxes - - 0.90
Postretirement benefits other than pensions,
net of income tax benefit - - (5.17)
Investments in debt and equity securities 0.48 - -
Net earnings / (loss) per common share $ 3.98 2.55 (4.06)
</TABLE>
See accompanying notes to consolidated financial statements.
19
<PAGE>
GENESEE CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended April 30, 1995, 1994 and 1993
(Dollars in thousands)
<TABLE>
1995 1994 1993
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings / (loss) $ 6,368 4,080 (6,505)
Adjustments to reconcile net earnings / (loss) to
net cash provided by operating activities:
Cumulative effect of changes in accounting principles (760) - 6,847
Provision for discontinuance of malting operations - - 1,760
Gain on disposition of assets (1,877) (51) (43)
Provision for losses on disposition of property, plant
and equipment 457 - 503
Depreciation 4,595 5,420 6,353
Provision for unrealized losses on marketable securities - 1,181 86
Other 609 479 477
Changes in noncash assets and liabilities:
Trade accounts receivable 524 (967) 3,021
Inventories (2,903) 1,698 649
Deferred income tax assets 1,461 (829) (4,235)
Other assets (529) 34 (198)
Accounts payable (340) (3,384) (723)
Accrued expense and other liabilities 418 165 1,235
Income taxes payable 328 70 (305)
Federal and state beer taxes 79 1,164 (2,313)
Deferred income tax liabilities (167) 1,830 3,858
Accrued postretirement benefits 441 997 1,035
Other liabilities 238 (628) (301)
Net cash provided by operating activities $ 8,942 11,259 11,201
</TABLE>
20
<PAGE>
GENESEE CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
<TABLE>
1995 1994 1993
<S> <C> <C> <C>
Cash flows from investing activities:
Capital expenditures $ (4,379) (4,706) (5,226)
Proceeds from sale of property, plant, and equipment 11,905 317 74
Sales of marketable securities 10,608 31,261 8,332
Purchases of marketable securities (13,928) (26,983) (11,371)
Investments in and advances to unconsolidated real
estate partnerships, net of distributions 209 (1,827) 86
Net investment in direct financing and leveraged leases (840) (2,351) (3,369)
Withdrawals by minority interest (747) (191) (276)
Other 193 - -
Net cash (used in) provided by investing activities 3,021 (4,480) (11,750)
Cash flows from financing activities:
Proceeds from refinancing of long-term debt of
consolidated real estate partnerships - 5,727 -
Principal payments on long-term debt of consolidated
real estate partnerships (5,831) (6,012) (256)
Payment of dividends (2,883) (2,562) (2,562)
Proceeds from exercise of stock options 48 - 210
Purchase of treasury stock (34) - (210)
Net cash (used in) provided by financing activities (8,700) (2,847) (2,818)
Net increase / (decrease) in cash and cash equivalents 3,263 3,932 (3,367)
Cash and cash equivalents at beginning of year 7,159 3,227 6,594
Cash and cash equivalents at end of year $ 10,422 7,159 3,227
</TABLE>
See accompanying notes to consolidated financial statements.
21
<PAGE>
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
April 30, 1995, 1994 and 1993
(1) Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements of Genesee Corporation and
subsidiaries (the Corporation) include the consolidated accounts of Genesee
Corporation, The Genesee Brewing Company, Inc., Ontario Foods, Incorporated
and the consolidated accounts of Genesee Ventures, Inc., which is the
Corporation's wholly owned equipment leasing and real estate subsidiary.
The Corporation's investments in real estate limited partnerships, in which
it has less than a majority interest, are accounted for by the equity
method. The Corporation's proportionate shares of the results of operations
of the unconsolidated limited partnerships are recorded as other income or
expense in the consolidated statements of earnings.
All significant intercompany balances and transactions have been eliminated
in consolidation.
Cash Equivalents and Marketable Securities
Cash and cash equivalents include all cash balances and highly liquid
investments with a maturity of three months or less. Marketable securities
include mutual funds; corporate, government and government agency
obligations; and common stock and equivalents.
During fiscal 1995, the Corporation adopted Statement of Financial
Accounting Standards No. 115, Accounting for Certain Investments in Debt
and Equity Securities, (SFAS 115) effective May 1, 1994. See note 2 for
details.
Returnable Containers
Returnable containers (kegs, bottles and related cases), specifically
identifiable as owned by The Genesee Brewing Company, Inc., are capitalized
at cost and are reflected in the consolidated financial statements in
property, plant and equipment. All generic returnable containers are
expensed when shipped.
A liability for deposits charged to customers for returnable containers is
included in the consolidated financial statements.
22
<PAGE>
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) Summary of Significant Accounting Policies (continued)
Revenue Recognition
Revenue from the sale of beer, ale and food products is recognized upon
shipment. Revenue from the Corporation's lease portfolio is recognized on a
level yield method. Revenue from real estate investments is recognized when
rent is earned.
Depreciation
The Corporation provides for depreciation at rates which are estimated to
write off the cost of depreciable assets over their useful lives. The
straight-line method of depreciation is generally used on all assets. The
following estimated useful lives, in years, are used:
Buildings 25 - 50
Machinery and equipment 3 - 20
Furniture and fixtures 5 - 10
Returnable containers Estimated trip life or 8 years
Income Taxes
The Corporation files a consolidated federal income tax return with its
wholly owned consolidated subsidiaries. Separate or combined tax returns
are filed at the state level, depending on the state. Statement of
Financial Accounting Standards No. 109 (SFAS 109), Accounting for Income
Taxes, required a change from the deferred method of accounting for income
taxes of APB Opinion No. 11 (APB 11) to the asset and liability method of
accounting for income taxes. Under the asset and liability method of SFAS
109, deferred tax assets and liabilities are derived from the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. Under SFAS
109, the effect on deferred tax assets and liabilities of a change in tax
rates is recognized as income or expense in the period that includes the
enactment date.
During fiscal 1993, the Corporation elected to adopt SFAS 109 effective May
1, 1992, and has reported the cumulative effect of the change in method of
accounting for income taxes to May 1, 1992 in the fiscal 1993 consolidated
statement of earnings.
23
<PAGE>
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) Summary of Significant Accounting Policies (continued)
Postretirement Benefit Plans
The Corporation provides certain health care and life insurance benefits to
retired employees and spouses under defined benefit plans covering
substantially all retirees and employees.
During fiscal 1993, the Corporation elected to adopt Statement of Financial
Accounting Standards No. 106 (SFAS 106), Employers' Accounting for
Postretirement Benefits Other than Pensions, effective May 1, 1992. Under
this pronouncement, postretirement health and other benefits are accounted
for as a form of deferred compensation to be recognized over the service
life of employees, rather than the Corporation's previous practice of
recording costs as cash payments were made. The Corporation has recorded
the cumulative effect of this change as of May 1, 1992 in the fiscal 1993
consolidated statement of earnings.
Net Earnings Per Share
Net earnings per share amounts are based on the weighted average number of
shares of Class A and Class B common stock outstanding. Weighted averages
were 1,601,842 in fiscal 1995, 1,601,322 in fiscal 1994 and 1,601,128 in
fiscal 1993.
Reclassifications
It is the Corporation's policy to reclassify certain amounts in the prior
year consolidated financial statements to conform with the current year
presentation.
(2) Marketable Securities - Available for Sale
Effective May 1, 1994, the Corporation adopted Statement of Financial
Accounting Standards No. 115, Accounting for Certain Investments in Debt
and Equity Securities, (SFAS 115). SFAS 115 expands the use of fair value
accounting for securities to be classified as "held to maturity",
"available for sale" or "trading" based on the corporation's intentions
with respect to the ultimate disposition of the security. The
classification determines the appropriate accounting carrying value
(cost basis or fair value) and, in the case of fair value, whether any
fluctuation impacts stockholders' equity directly or is reflected in the
consolidated statement of earnings.
The Corporation has classified its entire investment portfolio as
"available for sale". Securities available for sale consist of debt and
equity securities that are not intended to be held to maturity and are not
actively traded. Securities available for sale are reported at fair value,
with unrealized gains and losses credited or charged, net of tax effect,
directly to stockholders' equity. Realized gains and losses on securities
available for sale are determined on a weighted average basis and are
reported in the consolidated statement of earnings as investment income.
24
<PAGE>
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(2) Marketable Securities - Available for Sale (continued)
As a result of the adoption of SFAS 115, the Corporation recorded in its
fiscal 1995 consolidated statement of earnings a net of tax benefit of
$760,000 reflecting the cumulative effect of this new accounting standard
on retained earnings to May 1, 1994. Concurrently, the Corporation recorded
a $760,000 net of tax charge directly against stockholders' equity.
The components of the Corporation's portfolio of marketable securities at
April 30, 1995:
<TABLE>
Gross Gross
Amortized Unrealized Unrealized Fair
(Dollars in thousands) Cost Gains Losses Value
<S> <C> <C> <C> <C>
Equity securities $ 1,809 189 77 1,921
Fixed income securities:
Debt securities issued by U.S. Government 1,716 14 71 1,659
Corporate debt securities 3,831 64 121 3,774
Mortgage-backed securities 946 12 5 953
Sub total 6,493 90 197 6,386
Mutual funds:
Equity funds 3,000 278 - 3,278
Fixed income funds 13,437 - 908 12,529
Foreign funds 3,134 151 1 3,284
Mortgage-backed funds 6,587 - 611 5,976
Sub total 26,158 429 1,520 25,067
Other 927 - 1 926
Marketable securities available for sale $35,387 708 1,795 34,300
</TABLE>
25
<PAGE>
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(2) Marketable Securities - Available for Sale (continued)
The components of the Corporation's portfolio of marketable securities at
April 30, 1994:
<TABLE>
Gross Gross
Amortized Unrealized Unrealized Fair
(Dollars in thousands) Cost Gains Losses Value
<S> <C> <C> <C> <C>
Equity securities $ 842 23 57 808
Fixed income securities:
Debt securities issued by U.S. Government 1,156 - 83 1,073
Corporate debt securities 4,976 38 125 4,889
Mortgage-backed securities 500 7 - 507
Sub total 6,632 45 208 6,469
Mutual Funds:
Equity funds 2,250 24 - 2,274
Fixed income funds 12,635 - 859 11,776
Foreign funds 3,000 262 - 3,262
Mortgage-backed funds 6,120 - 497 5,623
Sub total 24,005 286 1,356 22,935
Other 588 - - 588
Marketable securities available for sale $32,067 354 1,621 30,800
</TABLE>
The amortized cost and fair value of fixed income securities at April 30,
1995, by contractual maturity, are as follows:
<TABLE>
Amoritized Fair
Cost Value
<S> <C> <C>
Contractual maturity
Within one year $ 573 549
After one year, but within five years 2,848 2,826
After five years, but within ten years 1,432 1,408
After ten years 694 650
Sub total 5,547 5,433
Mortgage-backed securities 946 953
Total fixed income securities $ 6,493 6,386
</TABLE>
26
<PAGE>
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(2) Marketable Securities - Available for Sale (continued)
The following represents the total proceeds from sales of marketable
securities for fiscal years 1995, 1994 and 1993 and the components of net gains
realized on those sales:
<TABLE>
Year Ended April 30, 1995 1994 1993
<S> <C> <C> <C>
Proceeds from sales $10,570 33,008 8,569
Gains from sales 178 2,218 400
Losses from sales (216) (471) (163)
Net gains / (losses) from sales $ (38) 1,747 237
</TABLE>
( Dollars in thousands)
(3) Income Taxes
As discussed in note 1, the Corporation adopted SFAS 109 effective May 1,
1992. The cumulative effect of this change in accounting for income taxes
of approximately $1.4 million or $.90 per share was determined as of May 1,
1992 and is reported separately in the consolidated statement of earnings
for the year ended April 30, 1993.
Components of income tax expense (benefit) are as follows:
<TABLE>
1995 1994 1993
<S> <C> <C> <C>
Current:
Federal $1,259 1,003 702
State 484 260 233
Total current income tax expense 1,743 1,263 935
Deferred:
Federal 1,588 829 (441)
State (294) 172 64
Total deferred income tax expense/(benefit) 1,294 1,001 (377)
Total income tax expense $3,037 2,264 558
</TABLE>
(Dollars in thousands)
The actual tax expense for the three years differs from the "expected" tax
expense, computed by applying the U.S. Federal corporate tax rate of 34% to
earnings before income taxes and cumulative effect of changes in accounting
principles. A reconciliation of the expected tax expense to actual tax
expense, including the impact of state income tax, is presented below:
27
<PAGE>
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(3) Income Taxes (continued)
<TABLE>
1995 1994 1993
<S> <C> <C> <C>
Computed "expected" tax expense at 34% $ 2,939 2,157 306
State income taxes (net of federal income tax benefit) 125 285 196
Other (none individually in excess of 5% of computed
"expected" tax expense) (27) (178) 56
Total income tax expense $ 3,037 2,264 558
Effective tax rate 35.1% 35.7% 62.0%
(Dollars in thousands)
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred income tax assets and liabilities at April 30,
1995 and 1994 are presented below:
<TABLE>
1995 1994
<S> <C> <C>
Deferred income tax assets:
Deposit liabilities $ 329 555
Compensated absences, principally due to accrual
for financial reporting purposes 503 490
Allowance for doubtful accounts 226 271
Reserve for workmen's compensation 420 320
Deferred compensation 100 -
Postretirement benefits other that pensions 6,512 6,360
Alternative minimum tax credit carryforwards 3,993 5,960
Building and equipment valuation reserves 144 395
Charitable contribution carryforwards 144 355
Unrealized losses on investments 435 507
Other (none individually in excess of 5% of total) 1,413 539
Total deferred income tax assets 14,219 15,752
Deferred income tax liabilities:
Basis differential on leasing portfolio 14,971 14,102
Basis differential on real estate partnerships 389 1,313
Accelerated depreciation on plant and equipment 3,108 3,148
Returnable containers 780 869
Other 215 198
Total deferred income tax liabilities 19,463 19,630
Net deferred income tax liabilities $ 5,244 3,878
(Dollars in thousands)
</TABLE>
28
<PAGE>
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(3) Income Taxes (continued)
As detailed above, the Corporation has $14,219,000 of deferred income tax
assets at April 30, 1995, including $3,993,000 of alternative minimum tax
(AMT) credit carry forwards which carry forward indefinitely. Management
believes that it is more likely than not that the deferred income tax
assets will be realized in the normal course of operations. The Corporation
does not expect to be an AMT taxpayer indefinitely. Accordingly, no
valuation allowance has been recognized for deferred income tax assets.
(4) Inventories
Inventories at April 30, 1995 and 1994 are summarized as follows:
<TABLE>
1995 1994
<S> <C> <C>
Finished goods $ 3,933 3,479
Goods in process 1,190 1,056
Raw materials, containers and packaging supplies 8,493 6,178
Total inventories $ 13,616 10,713
</TABLE>
(Dollars in thousands)
(5) Property, Plant and Equipment
Property, plant and equipment at April 30, 1995 and 1994 are summarized as
follows:
<TABLE>
1995 1994
<S> <C> <C>
Land and land improvements $ 1,175 1,189
Buildings 20,764 20,588
Real estate held for investment purposes - 9,828
Machinery, equipment, furniture and fixtures 68,411 67,451
Returnable containers 27,692 26,842
Construction in process 1,402 1,604
Total property, plant and equipment 119,444 127,502
Less accumulated depreciation 91,053 88,410
Net property, plant and equipment $ 28,391 39,092
(Dollars in thousands)
</TABLE>
29
<PAGE>
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(6) Leasing Activities
The Corporation's leasing activity is conducted by Cheyenne Leasing
Company, a joint venture which is 85% owned by Genesee Ventures, Inc.
Information pertaining to the Corporation's net investment in direct
financing leases and leveraged leases at April 30, 1995 and 1994 is
presented below:
<TABLE>
Direct Financing Leveraged
Leases Leases
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Minimum rentals receivable $ 3,284 2,471 1,736 1,690
Estimated unguaranteed residual
value of leased assets 826 897 23,931 23,416
Unearned and deferred income (599) (401) (6,021) (5,756)
Investment in leases $ 3,511 2,967 19,646 19,350
Deferred taxes arising from leveraged leases (14,733) (13,606)
Net investment in leveraged leases $ 4,913 5,744
(Dollars in thousands)
</TABLE>
The following is a schedule of minimum rentals receivable by year for
direct financing and leveraged leases at April 30, 1995:
Year ending April :
1996 $ 1,793
1997 1,092
1998 967
1999 584
2000 338
Thereafter 246
Total minimum rentals receivable $ 5,020
(Dollars in thousands)
30
<PAGE>
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(7) Industry Segments
The Corporation's principal business segments are: beer and ale products,
dehydrated food products, equipment leasing, and real estate investments.
Financial information for these segments is as follows:
<TABLE>
As of and for Operating
the fiscal year Net Income / Capital Identifiable
ending April 30, Revenues (loss) Depreciation Additions Assets
<S> <C> <C> <C> <C> <C>
1995
Brewing $110,323 2,936 4,190 3,559 54,018
Food processing 17,993 470 405 820 13,474
Leasing 2,095 2,029 - - 23,408
Real estate 956 295 - - 11,503
Corporate and other - (1,038) - - 46,296
Total $131,367 4,692 4,595 4,379 148,699
1994
Brewing $111,850 1,467 4,601 4,352 55,137
Food processing 21,108 133 522 232 10,553
Leasing 1,547 1,495 - - 21,883
Real estate 2,637 781 297 122 21,938
Corporate and other - (421) - - 41,201
Total $137,142 3,455 5,420 4,706 150,712
(Dollars in thousands)
</TABLE>
31
<PAGE>
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(7) Industry Segments (continued)
<TABLE>
As of and for Operating
the fiscal year Net Income / Capital Identifiable
ending April 30, Revenues (loss) Depreciation Additions Assets
<S> <C> <C> <C> <C> <C>
1993
Brewing $114,289 (1,494) 5,521 3,884 56,805
Food processing 20,196 (1,695) 551 1,297 11,050
Leasing 1,678 1,617 - - 20,367
Real Estate 2,582 716 281 45 18,856
Corporate and other - (508) - - 41,934
Total $138,745 (1,364) 6,353 5,226 149,012
(Dollars in thousands)
</TABLE>
(8) Mortgage Note Receivable
The Corporation holds a mortgage receivable in the amount of $5,807,000
requiring monthly payments of interest only at 10.37 %. Principal is due in
full on June 1, 1995. See note 17.
(9) Discontinuance of Malting Operations
During fiscal 1993, the Corporation elected to purchase its malt from a
third-party supplier. Previously, the Corporation produced its own malt at
a malthouse in Buffalo, New York. As a result of this decision, the
Corporation recorded a fourth quarter charge of approximately $1.8 million
before taxes in fiscal 1993 to reflect the total anticipated cost of
discontinuing malting operations, including a loss on the sale of the
Buffalo malthouse.
(10) Gain on Sale of Interest in Real Estate
Partnership In August 1994, the Corporation sold it's 89% interest in a
real estate limited partnership for cash and recognized a pre-tax gain of
$1,670,000 recorded on the consolidated statement of earnings.
32
<PAGE>
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(11) Long-Term Debt
Long-term debt at April 30, 1995 represents obligations of the
Corporation's consolidated real estate limited partnerships. At April 30,
1995 and 1994, long-term debt consisted of the following:
<TABLE>
1995 1994
<S> <C> <C>
Mortgage note payable requiring monthly payments of $56,
including interest at stepped rates ranging from 8.75% to
10.25% (8.75% at April 30, 1994). This debt related to the
interest in the real estate partnership which was sold in
August 1994 as discussed in note 10. $ - 5,720
Mortgage note payable requiring monthly payments of $16
principal and interest at prime plus 1% (10% at April 30,
1995), maturing in July 1995, secured by the underlying real 1,207 1,266
estate.
Term note payable requiring monthly payments of $28 principal
and interest at 10%, maturing in July 1995. 2,831 2,883
Total long-term debt 4,038 9,869
Less current installments 4,038 258
Total long-term debt, excluding current installments $ - 9,611
(Dollars in thousands)
</TABLE>
33
<PAGE>
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(12) Shareholders' Equity
A summary of changes in and balances of additional paid-in capital,
treasury stock and unrealized loss on marketable securities as of and for
the three years ended April 30, 1995 follows:
<TABLE>
Unrealized
Loss on
Per Additional Treasury Stock Marketable
Share Price Paid in-Capital Shares Amount Securities
<S> <C> <C> <C> <C> <C>
Balances at April 30, 1992 $ 5,843 115,755 $(3,983) -
Stock options exercised $34.84 39 (4,904) 171 -
Acquisition of stock 44.75-46.00 - 4,588 (210) -
Balances at April 30, 1993 $ 5,882 115,439 $(4,022) -
Stock options exercised - - - -
Acquisition of stock - - - -
Balances at April 30, 1994 $ 5,882 115,439 $(4,022) -
Net change in unrealized loss
on marketable securities - - - (652)
Stock options exercised $34.84 - (1,500) (48) -
Acquisitions of stock 41.00 - 1,178 48 -
Stock bonus issued 37.46 - (377) 14 -
Balances at April 30, 1995 $ 5,882 114,740 $(4,008) (652)
(Dollars in thousands, except per share data)
</TABLE>
34
<PAGE>
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(13) Stock Option and Bonus Plans
Under the 1992 Stock Plan (1992 Plan), the Corporation made available an
aggregate of 100,000 shares of Class A or Class B common stock for the
purpose of incentive stock options and bonuses to certain key employees. In
October 1994, the 1992 Plan was amended, subject to shareholder approval at
the 1995 Annual Meeting, to authorize an additional 100,000 shares of Class
A or Class B common stock for issuance under the 1992 Plan and to provide
options to outside directors of the Corporation. Such shares may be issued
from authorized and unissued shares or from treasury shares. Options
granted under the 1992 Plan may be exercised any time from the option award
date to a specified expiration date not more than ten years from the award
date or five years in the case of ten percent or more shareholders. At
April 30, 1995, options for 70,000 shares were exercisable under the 1992
Plan at prices ranging from $34.62 to $49.78 per share. Option prices were
not less than the fair market value of the stock on the date the options
were granted. Under the 1992 Plan, stock bonuses may be granted at the
discretion of the Corporation at a price less than the fair market value of
the stock on the date the bonus is granted.
The Corporation has adopted a Stock Bonus Incentive Program under the 1992
Plan (Bonus Program). No stock bonuses were awarded under the Bonus Program
in fiscal 1993. In fiscal 1994, the Corporation awarded from treasury a
total of 1,885 shares of Class B common stock under the Bonus Program; 377
shares were issued to plan participants in June 1994 and the balance will
be issued in four equal annual installments of 377 shares commencing June
1995. Compensation expense in the amount of $71,000 was recorded in fiscal
1994 as a result of the June 1994 grant based on the fair market value of
1,885 shares awarded. In fiscal 1995, the Corporation awarded from treasury
a total of 2,495 shares of Class B common stock under the Bonus Program;
499 shares were issued to plan participants in June 1995 and the balance
will be issued in four equal annual installments of 499 shares commencing
June 1996. Compensation expense in the amount of $140,000 was recorded in
fiscal 1995 as a result of the June 1995 grant based on the fair market
value of 2,495 shares awarded.
Under the 1982 Incentive Stock Option Plan (1982 Plan), the Corporation
made available an aggregate of 240,000 shares of common stock for the
purpose of incentive stock options and bonuses to certain key employees.
Such shares may be issued from authorized and unissued shares or from
treasury shares. The purchase date may be any time from the option award
date to a specified expiration date not more than ten years from the award
date or five years in the case of ten percent or more shareholders. At
April 30, 1995, options for 15,250 shares were exercisable under the 1982
Plan at option price`s ranging from $31.00 to $34.10 per share. No further
shares are available for future grants under the 1982 Plan. Option prices
are not less than the fair market value of the stock on the date the
options were granted.
35
<PAGE>
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(14) Retirement Plans
Substantially all union employees are covered under a multi-employer
pension plan which requires the Corporation to contribute specified amounts
per employee. The Corporation has no current intentions to withdraw from
this plan. All costs under the plan are paid currently and charged directly
to earnings ($793,000 in fiscal 1995, $823,000 in fiscal 1994 and $919,000
in fiscal 1993).
All salaried and office employees who have been employed by the Corporation
for two years are eligible for coverage in fully-trusteed, contributory
(optional) profit sharing retirement plans. The plans generally provide for
annual contributions by the Corporation at the discretion of the Board of
Directors. Contributions under the plans are paid currently and charged
directly to earnings ($1,208,000 in fiscal 1995, $1,036,000 in fiscal 1994
and $1,106,000 in fiscal 1993).
The Corporation provides certain health care and life insurance benefits to
retired employees and spouses under a defined benefit plan covering
substantially all retirees and employees. The Corporation's share of
nonbargaining health care costs is limited to twice it's fiscal 1993 cost,
with the Corporation sharing future health care cost increases equally with
nonbargaining retirees until such limit is reached. The Corporation
implemented a cap on the future medical cost for bargaining retirees equal
to 150% of it's fiscal 1994 cost. The Corporation pays for all future
health care cost increases until the cap is reached.
The life insurance benefits are noncontributory and provide an earnings
related benefit to salaried exempt employees and executives and a fixed
benefit to other covered employees.
As discussed in note 1, the Corporation elected the adoption of SFAS 106
effective May 1, 1992. The Corporation elected to immediately recognize the
cumulative effect of the change in accounting principle of $8,284,000 or
$5.17 per share (net of income tax benefit of $5,523,000) which represents
the accumulated postretirement benefit obligation existing at May 1, 1992.
Postretirement health care and life insurance costs for fiscal 1995 and
fiscal 1994 were approximately $1,023,000 and $1,622,000 respectively. In
addition to the cumulative effect, the Corporation's fiscal 1993
postretirement health care and life insurance costs were approximately
$1,583,000. The Corporation continues to fund such benefit costs
principally on a pay-as-you-go basis.
36
<PAGE>
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(14) Retirement Plans (continued)
The following table presents the plan's funded status reconciled with
amounts recognized in the Corporation's consolidated balance sheet at
April 30, 1995 and 1994:
<TABLE>
1995 1994
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $ 5,689 6,857
Fully eligible active plan participants 1,032 1,409
Other active plan participants 3,110 6,373
9,831 14,639
Unrecognized net gain from past experience
different from that assumed 2,708 770
Prior service benefit not yet recognized in net
periodic postretirement benefit cost 3,741 430
Accrued postretirement benefit cost included
in the balance sheets $ 16,280 15,839
(Dollars in thousands)
</TABLE>
Net periodic postretirement benefit cost for fiscal 1995, fiscal 1994 and
fiscal 1993 includes the following components:
<TABLE>
1995 1994 1993
<S> <C> <C> <C>
Service cost $ 291 437 432
Interest cost 989 1,215 1,151
Net amortization and deferral (257) (30) -
Net periodic postretirement benefit cost $ 1,023 1,622 1,583
(Dollars in thousands)
</TABLE>
The implementation of a cap on the medical cost for bargaining retirees
required an interim measurement as of November 1, 1994. The cap on
bargaining health care cost increases resulted in a $496,000 decrease in
the fiscal 1995 net periodic postretirement benefit cost and $3.5 million
decrease in the accumulated postretirement benefit obligation.
For measurement purposes, a 11.5 % annual rate of increase in the per
capita cost of covered benefits (i.e., health care cost trend rate) was
assumed for fiscal 1995 (13% in fiscal 1994 and 14% in fiscal 1993); the
rate was assumed to decrease gradually to 5.5 % by the year 2001 and remain
at that level thereafter.
37
<PAGE>
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(14) Retirement Plans (continued)
In determining the accumulated postretirement benefit obligation as of
April 30, 1995, the annual rate of increase in the per capita cost of
covered health care benefits was assumed to be lower in each future year
than for prior measurements, i.e., 10.5 % for fiscal 1996 decreasing
gradually to 5.5 % for fiscal 2001 and later fiscal years.
Increasing the assumed health care cost trend rates by 1 percentage point
in each year would not have a significant impact on the accumulated
postretirement benefit obligation as of April 30, 1995 nor on the net
periodic postretirement benefit expense for fiscal 1995.
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 8.0% at May 1, 1994, 9.0% at November
1, 1994 and 8.5% at April 30, 1995.
(15) Disclosures about Fair Value of Financial Instruments
Cash and Cash Equivalents
The carrying amount of cash and cash equivalents approximates fair market
value because of the short maturity of these instruments.
Marketable Securities
As discussed in notes 1 and 2, the carrying value of marketable securities
is market value.
Real Estate Mortgage Receivable
The fair value of notes receivable is estimated by discounting future cash
flows using a rate of 10.37 % and is estimated to be $5,807,000 at
April 30, 1995.
(16) Cash Flow Information
The following is supplemental cash flow information for the years ended
April 30:
<TABLE>
1995 1994 1993
<S> <C> <C> <C>
Cash paid during the year for:
Income taxes $ 1,609 1,476 1,440
Interest on debt of consolidated real
estate partnerships 598 737 756
(Dollars in thousands)
</TABLE>
38
<PAGE>
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(17) Subsequent Event
On June 12, 1995, the Corporation received a payment of $5,965,000 in
complete satisfaction of all principal and interest owed to it on the
mortgage receivable described in note 8. The Corporation thereupon paid off
the mortgage and term notes payable described in note 11 which had a
combined principal balance of $4,038,000 at April 30, 1995.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Inapplicable
PART III
Item 10. Directors and Executive Officers of the Registrant
(a) Directors: The table below lists the directors of the Corporation
and sets forth their ages, their other positions with the Corporation and its
subsidiaries, the principal occupations of those directors who do not hold other
positions with the Corporation or its subsidiaries, and the expiration of their
terms in office. The term in office of each director expires at the annual
meeting of shareholders of the Class A Common Stock held in the year specified.
39
<PAGE>
<TABLE>
Name and Age Director Position and Principal Occupation Expiration
Since for the Last Five Years of Term
in Office
<S> <C> <C> <C>
Stephen B. Ashley (55) 1987 President and Chief Executive Officer of 1996
Sibley Corporation (1)
William A. Buckingham (52) 1992 Executive Vice President of First Empire 1996
State Corporation and Manufacturers and
Traders Trust Company (2)
Thomas E. Clement (62) 1970 Partner - Nixon, Hargrave, Devans & Doyle, 1996
Attorneys
Gary C. Geminn (52) 1986 Vice President - Production of Genesee 1997
Brewing Company
William J. Hoot (78) 1960 Retired; formerly President of the 1997
Corporation
Samuel T. Hubbard, Jr. (45) 1992 President and Chief Executive Officer of 1995
The Alling and Cory Company (3)
Robert N. Latella (52) 1986 Executive Vice President and Chief 1995
Operating Officer of the Corporation
Richard P. Miller, Jr. (52) 1987 Vice President - External Affairs and 1997
Senior Counsel to the President,
University of Rochester (4)
John D. Reifenrath (67) 1982 Retired; formerly Senior Vice President - 1995
Marketing of Genesee Brewing Company (5)
Charles S. Wehle (47) 1976 Senior Vice President of the Corporation (6) 1997
John L. Wehle, Jr. (49) 1976 Chairman of the Board, President and Chief 1996
Executive Officer of the Corporation (7)
</TABLE>
(1) Sibley Corporation is a privately held mortgage banking company. Mr.
Ashley is also a Director of Hahn Automotive Warehouse, Inc. and the
Federal National Mortgage Association.
(2) First Empire State Corporation is a publicly-held bank holding company
and Manufacturers and Trust Company is a New York State chartered
bank. Prior to assuming his present position in 1990, Mr. Buckingham
was Executive Vice President of Manufacturers Hanover Trust Company.
(3) The Alling and Cory Company is a distributor of paper and packaging
products headquartered in Rochester, New York. Mr. Hubbard is also a
director of First Empire State Corporation.
(4) Mr. Miller is also a Director of Rochester Telephone Corporation.
(5) Mr. Reifenrath retired in 1993 as Senior Vice President - Marketing of
Genesee Brewing Company.
(6) See Note (3) to Item 10(b).
(7) Mr. Wehle is also a Director of First Empire State Corporation.
40
<PAGE>
(b) Executive Officers and Significant Employees: The table below
lists the executive officers and significant employees of the Corporation and
its subsidiaries and sets forth their ages, the dates they became officers and
the offices held. Officers of the Corporation and its subsidiaries serve for a
term of one year beginning with the first meeting of the Board of Directors
occurring after the annual meeting of the holders of Class A Common Stock of the
Corporation.
<TABLE>
Officer of
the Company
Name Age Since Office
<S> <C> <C> <C>
John L. Wehle, Jr. 49 1970 Chairman of the board, President and Chief
Executive Officer (1)
Robert N. Latella 52 1986 Executive Vice President and Chief Operating
Officer (2)
Charles S. Wehle 47 1988 Senior Vice President (3)
Gary C. Geminn 52 1985 Vice President - Production of Genesee
Brewing Company (4)
Karl D. Simonson 52 1994 Vice President - Planning & Development (5)
William A. Neilson 44 1986 Vice President - Human Resources (6)
Mark W. Leunig 40 1988 Vice President, Secretary and
General Counsel (7)
Edward J. Rompala 35 1989 Vice President and Treasurer (8)
Michael C. Atseff 39 1992 Controller (9)
</TABLE>
(1) Mr. J. L. Wehle, Jr. was elected Chairman of the Board of Directors
in November 1993. He has been President and Chief Executive Officer of
the Corporation for more than five years. He is also a Director and
President and Chief Executive Officer of Genesee Brewing Company.
(2) Mr. Latella has been Executive Vice President and Chief Operating
Officer of the Corporation for more than five years. He is also a
Director and Executive Vice President and Chief Operating Officer of
Genesee Brewing Company.
(3) Mr. Wehle was elected Senior Vice President of the Corporation in
January 1995. He is also Executive Vice President - Sales and
Marketing of Genesee Brewing Company, a position he has held for more
than five years.
(4) Mr. Geminn has been Vice President - Production of Genesee Brewing
Company for more than five years.
(5) Mr. Simonson was elected Vice President - Planning and Development of
the Corporation in October 1994. He is also President of Ontario
Foods, a position he has held since June 1993. He joined the
Corporation in September 1992 as Manager of Planning and Development.
Prior to that he held a variety of senior management positions in the
food industry.
(6) Mr. Neilson has been Vice President - Human Resources of the
Corporation for more than five years. He is also Vice President -
Human Resources of Genesee Brewing Company.
(7) Mr. Leunig was elected Vice President of the Corporation in October
1994. He also serves as Secretary and General Counsel of the
Corporation and Genesee Brewing Company, positions he has held for
more than five years.
41
<PAGE>
(8) Mr. Rompala was elected Vice President of the Corporation in October
1994. He also serves as Treasurer of the Corporation and Genesee
Brewing Company, positions to which he was elected in October 1990.
Prior to that he served as Manager of Planning and Development and
Assistant Treasurer of the Corporation.
(9) Mr. Atseff was appointed Controller of the Corporation in January
1992. Prior to that he held a variety of positions in the
Corporation's Finance Department.
John L. Wehle, Jr. and Charles S. Wehle are brothers.
(c) Compliance with Section 16(a) of Securities Exchange Act of 1934:
To the Corporation's knowledge, based solely on review of copies of reports of
initial ownership and changes of ownership furnished to the Corporation by its
directors, executive officers and persons who own more than ten percent of the
Corporation's Class B Common Stock, and written representations to the
Corporation by such persons that no other reports were required, there were no
failures by such persons to comply with the reporting requirements under Section
16(a) of the Act during the Corporation's fiscal year ended April 30, 1995.
Item 11. Executive Compensation
(a) The table below sets forth a summary of compensation paid during
the past three fiscal years for all services rendered to the Corporation and its
subsidiaries by the Chief Executive Officer and the four other executive
officers of the Corporation whose total annual salary and bonus for the fiscal
year ended April 30, 1995 exceeded $100,000.
<TABLE>
Annual Compensation Long Term Compansation
Name and Fiscal Other Annual Restricted Stock All Other
Principal Position Year Salary ($) Bonus ($) Compensation Stock Awards ($)(3) Options (#) Compensation
<S> <C> <C> <C> <C> <C> <C> <C>
John L. Wehle, Jr., 1995 320,000 151,382 (1) 1,500 6,930 5,000 54,547 (4)
Chariman of the 1994 280,085 52,407 (2) 656 5,244 3,000 31,538
Board, President, 1993 243,304 0 0 0 4,000 46,046
Chief Executive
Officer
Robert N. Latella, 1995 214,065 104,616 (1) 1,500 6,930 4,000 38,261 (5)
Executive Vice 1994 200,717 38,197 (2) 656 5,244 2,500 26,718
President, Chief 1993 192,773 0 0 0 4,000 36,671
Operating Officer
Charles S. Wehle, 1995 142,625 35,668 (1) 1,125 5,390 3,000 22,105 (6)
Senior Vice 1994 124,364 13,857 (2) 468 3,746 2,000 15,999
President 1993 113,713 0 0 0 3,000 19,808
Gary C. Geminn, 1995 106,122 23,663 (1) 1,031 4,620 2,000 22,105 (7)
Vice President - 1994 99,505 12,944 (2) 468 3,746 1,000 12,844
Production of 1993 95,566 0 0 0 1,500 15,685
Genesee Brewing Co.
Mark W. Leunig, 1995 93,902 22,509 (1) 1,031 4,620 1,500 15,113 (8)
Vice President, 1994 89,736 11,612 (2) 468 3,746 1,000 10,935
General Counsel, 1993 -- -- -- -- -- --
Secretary
</TABLE>
42
<PAGE>
(1) Amounts reflect cash and stock bonuses earned during fiscal year 1995
under the Corporation's 1986 Incentive Bonus Plan and 1992 Stock Plan,
which were paid to the named executive officer in June 1995.
(2) Amounts reflect bonuses earned under the Corporation's 1986 Incentive
Bonus Plan and 1992 Stock Plan during fiscal 1994 which were paid to
the named executive officer in June 1994.
(3) The restricted stock awards reported in this column vest annually in
one-quarter increments over a four-year period. No dividends are paid
on the restricted stock. As of June 22, 1995, the aggregate number of
shares and corresponding value of restricted stock held by each of the
named individuals was as follows: 285 shares valued at $10,863 held by
each of Mr. J. L. Wehle, Jr. and Mr. Latella; 215 shares valued at
$8,200 held by Mr. C. S. Wehle and 195 shares valued at $7,430 held by
each of Mr. Geminn and Mr. Leunig.
(4) Amount reflects $21,000 contribution under the Corporation's Profit
Sharing Retirement Plan, $31,939 contribution under the Corporation's
Benefit Restoration Plan and $1,608 in premiums paid by the
Corporation on life insurance policies for the benefit of Mr. Wehle.
(5) Amount reflects $21,000 contribution under the Corporation's Profit
Sharing Retirement Plan, $15,216 contribution under the Corporation's
Benefit Restoration Plan and $2,045 in premiums paid by the
Corporation on life insurance policies for the benefit of Mr. Latella.
(6) Amount reflects $21,000 contribution under the Corporation's Profit
Sharing Retirement Plan, $305 contribution under the Corporation's
Benefit Restoration Plan and $800 in premiums paid by the Corporation
on life insurance policies for the benefit of Mr. Wehle.
(7) Amount reflects $16,856 contribution under the Corporation's Profit
Sharing Retirement Plan and $870 in premiums paid by the Corporation
on life insurance policies for the benefit of Mr. Geminn.
(8) Amount reflects $14,846 contribution under the Corporation's Profit
Sharing Retirement Plan and $267 in premiums paid by the Corporation
on life insurance policies for the benefit of Mr. Leunig.
(b) The table below sets forth information about options granted to
the named executive officers during the Corporation's fiscal year ended
April 30, 1995.
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants Potential Realizable
% of Total Value at Assumed
Options Annual Rates of Stock
Options Granted to Price Appreciation for
Granted Employees in Exercise Expiration Option Term (2)
Name (#) (1) Fiscal Year Price ($/SH) Date 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
John L. Wehle, Jr. 5,000 20.8% $41.80 8/28/99 $33,493 $96,997
Robert N. Latella 4,000 16.7% $38.00 8/28/99 41,995 92,798
Charles S. Wehle 3,000 12.5% $41.80 8/28/99 20,096 58,198
Gary C. Geminn 2,000 8.7% $38.00 8/28/99 20,997 46,399
Mark W. Leunig 1,500 6.3% $38.00 8/28/99 15,748 34,799
</TABLE>
(1) Options to acquire shares of Class B Common Stock pursuant to the
Corporation's 1992 Stock Plan. Options are exercisable in their
entirety from and after the date of grant.
43
<PAGE>
(2) The potential realizable value illustrates value that might be
realized upon exercise of the options immediately prior to the
expiration of their term, assuming the specified annual compound rates
of appreciation on the Corporation's Class B Common Stock over the
term of the options.
(c) The table below sets forth information about the aggregate number
of shares received and the value realized by the named executive officer
upon exercise of options exercised during the Corporation's fiscal year
ended April 30, 1995; and the aggregate number and value of options held by
the named executive officer at the end of the fiscal year:
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FIACAL YEAR AND FISCAL YEAR-END OPTION VALUES
Shares Number of Unexercised Options Value of Unexercised In-the-
at
Acquired on Value $ FY-End (#) Money Options at FY-End ($)
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
John L. Wehle, Jr. 0 - 15,750 0 $ 11,813 0
Robert N. Latella 0 - 13,000 0 25,325 0
Charles S. Wehle 0 - 10,000 0 6,300 0
Gary C. Geminn 0 - 6,000 0 12,005 0
Mark W. Leunig 0 - 5,500 0 12,005 0
</TABLE>
(d) Directors who are employees of the Corporation do not receive
directors' fees. Directors who are not employees receive an annual fee of
$7,000 plus $500 for each Board and Committee meeting they attend.
(e) The Corporation has agreements with John L. Wehle, Jr., Charles
S. Wehle and Robert N. Latella (the "Agreements") which provide that, after
a "Change in Control" (as that term is defined in the Agreements), if
employment is terminated by the Corporation without "Cause" (as that term
is defined in the Agreements) or by Messrs. Wehle or Mr. Latella for
"Good Reason" (as that term is defined in the Agreements), the Corporation
must pay a lump sum payment equal to a maximum of three times the annual
base salary of Messrs. Wehle or Mr. Latella in effect at the date of
termination of employment, plus three times the largest bonus paid to them
at any time during the preceding five fiscal years.
(f) Under an agreement with the Corporation, John L. Wehle, Jr. is
employed by the Corporation for so long as may be mutually agreed upon. Mr.
Wehle is also entitled to receive for so long as he lives a monthly payment
of $7,500 in the event he ceases to be employed by the Corporation, whether
by reason of death, disability or otherwise. If Mr. Wehle should die prior
to having received 120 such monthly installments, the Corporation is
obligated to pay the remainder of such installments to his designated
beneficiaries or to his estate. Installment payments while Mr. Wehle is
alive are contingent upon his not engaging in a competing business without
the Corporation's consent.
(g) Compensation Committee Interlocks and Insider Participation.
Stephen B. Ashley, Thomas E. Clement and William J. Hoot served during the
fiscal year ended April 30, 1995 as members of the Management Continuity
Committee of the Corporation's Board of Directors. Mr. Hoot was an officer
of the Corporation prior to his retirement in 1982. See description of
relationship with Mr. Clement at Item 13.
44
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) The Corporation's only class of voting securities is its Class A
Common Stock. As of July 14, 1995, persons who owned of record or were known by
the Corporation to own beneficially more than 5% of the outstanding Class A
Common Stock were:
<TABLE>
Percent of
Name and Address Amount Owned Class A Stock
<S> <C> <C>
John L. Wehle, Jr., as Trustee 73,845 (1) 35.2%
under th Will of Louis A. Wehle
P.O. Box 762
Rochester, NY 14603
John L. Wehle, Jr., Charles S. Wehle 41,957 (2) 20.0%
and Henry S. Wehle
P.O. Box 762
Rochester, NY 14603
John L. Wehle, Jr., as Trustee under 12,145 (3) 5.8%
Elizabeth R. Wehle Trust
P.O. Box 762
Rochester, NY 14603
Mutual Series Fund, Inc. 27,546 (4) 13.1%
51 John F. Kennedy Parkway
Short Hills, New Jersey 07078
</TABLE>
(1) The power to vote and otherwise act with respect to these shares is vested
in John L. Wehle, Jr. while a trustee. In the event of his death,
resignation or incapacity, such power would pass to Charles S. Wehle.
(2) Excludes shares owned by trusts described elsewhere in this table and
notes. Includes 31,443 shares held by Trust under Will of John L. Wehle,
8,595 shares owned individually by John L. Wehle, Jr., 1,890 shares owned
individually by Charles S. Wehle and 29 shares owned individually Henry S.
Wehle. Pursuant to a Shareholder Agreement and Irrevocable Proxy dated June
22, 1988 (the "Shareholder Agreement") among John L. Wehle, John L. Wehle,
Jr., Charles S. Wehle and Henry S. Wehle (the "Shareholders"), John L.
Wehle, Jr. is appointed proxy to vote all voting securities of the
Corporation then owned or thereafter acquired by the Shareholders. Under
the Shareholder Agreement, Charles S. Wehle would succeed John L. Wehle,
Jr. as proxy in the event of the death, incapacity or resignation of John
L. Wehle, Jr. The Shareholder Agreement will continue in effect until
terminated in writing signed by all of the surviving Shareholders.
As of July 14, 1995, 41,957 Class A shares, constituting 20% of the Class
A shares outstanding, are subject to the Shareholder Agreement.
(3) The power to vote and otherwise act with respect to these shares is vested
in John L. Wehle, Jr. while a trustee.
(4) Power to vote and otherwise act with respect to these shares is vested in
Heine Securities Corporation under investment advisory agreements.
Information with respect to these shares is based on Schedule 13G filings
with the Securities and Exchange Commission.
Except as otherwise described above, to the Corporation's knowledge the persons
listed above have sole voting and sole investment power with respect to all
Class A shares listed.
(b) The number of and percentage of outstanding shares of Class A and
Class B Common Stock of the Corporation beneficially owned (as determined in
accordance with Rule 13d-3 under the Securities Exchange Act of 1934) as of July
14, 1995 by each director and by all directors and officers as a group are set
forth in the following table:
45
<PAGE>
<TABLE>
Shares of Percentage of Shares of Percentage of
Name of Director or Class A Class A Class B Class B
Executive Officer Common Stock Common Stock Common Stock Common Stock
<S> <C> <C> <C> <C>
John L. Wehle, Jr. 127,947 (1) 61% 94,100 (3)(4) 6.7%
(5)(6)
William J. Hoot 119 (17) 2,343 (7) (17)
Robert N. Latella 604 (17) 13,115 (8) (17)
Gary C. Geminn None -- 7,448 (9) (17)
John D. Reifenrath None -- 3,879 (10) (17)
Charles S. Wehle (2) (2) 11,347 (4)(11) (17)
Thomas E. Clement None -- 1,104 (4)(12) (17)
Stephen B. Ashley None -- 1.200 (13) (17)
Richard P. Miller, Jr. None -- 1,100 (14) (17)
Mark W. Leunig None -- 5,580 (15) (17)
William A. Buckingham 240 (17) 1,000 (16) (17)
Samuel T. Hubbard, Jr. None -- 1,000 (16) (17)
All Directors and
Executive Officers as
a group (16 persons) 128,910 61.4% 157,495 10.7%
</TABLE>
(1) See Table under Item 12(a) and Notes (1), (2) and (3) thereto.
(2) See Table under Item 12(a) and Notes (1) and (2) thereto.
(3) Includes 40,633 shares held as trustee under the will of Louis A.
Wehle. See Note (1) to table set forth in Item 12(a) above.
(4) These directors serve as trustees of Genesee Country Museum, which
holds 37,638 Class B shares, none of which are included in the table
above. J. L. Wehle, Jr. is also an officer of the Museum.
(5) Includes 37,090 shares held as trustee under Elizabeth R. Wehle
irrevocable trust dated January 12,1950. The power to act with respect
to those shares is vested in John L. Wehle, Jr. while a trustee.
(6) Includes 115 shares owned individually, 512 shares held as custodian
for minor child under the New York Uniform Gifts to Minors Act and
15,750 shares which may be acquired pursuant to presently exercisable
stock options.
(7) Includes 1,343 shares owned individually and 1,000 shares which may be
acquired pursuant to presently exercisable stock options.
(8) Includes 115 shares owned individually and 13,000 shares which may be
acquired pursuant to presently exercisable stock options.
(9) Includes 1,448 shares owned individually and 6,000 shares which may be
acquired pursuant to presently exercisable stock options.
46
<PAGE>
(10) Includes 2,879 shares owned individually and 1,000 shares which may be
acquired pursuant to presently exercisable stock options.
(11) Includes 1,085 shares owned individually, 10,000 shares which may be
acquired pursuant to presently exercisable stock options and 262
shares held as custodian under the New York Uniform Gifts to Minors
Act.
(12) Includes 104 shares owned individually and 1,000 shares which may be
acquired pursuant to presently exercisable stock options.
(13) Includes 200 shares owned individually and 1,000 shares which may be
acquired pursuant to presently exercisable stock options.
(14) Includes 100 shares owned by Mr. Miller's wife, the beneficial
ownership of which is disclaimed by Mr. Miller, and 1,000 shares which
may be acquired pursuant to presently exercisable stock options.
(15) Includes 80 shares owned individually and 5,500 shares which may be
acquired pursuant to presently exercisable stock options.
(16) Shares which may be acquired pursuant to presently exercisable stock
options.
(17) Amount of shares owned does not exceed one-percent of shares
outstanding.
A Shareholder Agreement and Irrevocable Proxy among John L. Wehle,
John L. Wehle, Jr., Charles S. Wehle and Henry S. Wehle dated June 22,
1988 may at a subsequent date result in a change in control of the
Corporation, which agreement is more fully described in Note (2) to
Item 12(a).
Item 13. Certain Relationships and Related Transactions
The professional corporation of Thomas E. Clement, a director of the
Corporation, is a partner of the law firm of Nixon, Hargrave, Devans & Doyle,
which during fiscal year 1995 performed legal services for the Corporation and
which the Corporation intends to retain to provide such services in fiscal year
1996.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) The following documents are filed as part of this report:
1. Financial Statement Schedules:
Independent Auditors' Report on Schedules.
Schedule VIII - Consolidated Valuation and Qualifying
Accounts for the years ended April 30, 1995, 1994 and 1993.
Other schedules have been omitted because they are either not applicable or not
required, or the required information is given in the consolidated financial
statements or the notes thereto.
2. Exhibits:
See Exhibit Index at Page 52 of this report.
47
<PAGE>
(b) Reports on Form 8-K.
No reports on Form 8-K have been filed during the last quarter of
the period covered by this report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereto duly authorized.
<TABLE>
<S> <C>
7/13/95 By: /s/John L. Wehle, Jr
(Date) John L. Wehle, Jr., Chairman, President
and Chief Executive Officer
7/13/95 By: /s/Edward J. Rompala
(Date) Edward J. Rompala, Vice President and Treasurer
(Principal Financial Officer)
7/13/95 By: /s/Michael C. Atseff
(Date) Michael C. Atseff, Controller
</TABLE>
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
/s/Stephen B. Ashley 7/11/95 Director
Stephen B. Ashley (Date)
/s/William A. Buckingham 7/14/95 Director
William A. Buckingham (Date)
/s/Thomas E. Clement 7/12/95 Director
Thomas E. Clement (Date)
/s/Gary C. Geminn 7/12/95 Director
Gary C. Geminn (Date)
/s/William J. Hoot 7/12/95 Director
William J. Hoot (Date)
48
<PAGE>
/s/Samuel T. Hubbard, Jr. 7/11/95 Director
Samuel T. Hubbard, Jr. (Date)
/s/Robert N. Latella 7/12/95 Director
Robert N. Latella (Date)
/s/Richard P. Miller, Jr. 7/13/95 Director
Richard P. Miller, Jr. (Date)
/s/John D. Reifenrath 7/17/95 Director
John D. Reifenrath (Date)
/s/Charles S. Wehle 7/17/95 Director
Charles S. Wehle (Date)
/s/John L. Wehle, Jr. 7/13/95 Director
John L. Wehle, Jr. (Date)
</TABLE>
49
<PAGE>
Independent Auditors' Report
The Board of Directors and Shareholders
Genesee Corporation:
Under date of June 2, 1995, except for note 17 which is as of June 12, 1995, we
reported on the consolidated balance sheets of Genesee Corporation and
subsidiaries as of April 30, 1995 and 1994, and the related consolidated
statements of earnings and retained earnings, and cash flows for each of the
years in the three-year period ended April 30, 1995, as contained in the 1995
annual report to shareholders. These consolidated financial statements and our
report thereon are incorporated by reference in the annual report on Form 10-K
for the year 1995. In connection with our audits of the aforementioned
consolidated financial statements, we also have audited the related consolidated
financial statement schedules as listed in the accompanying index. These
consolidated financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statement schedules based on our audits.
In our opinion, such consolidated financial statement schedules, when considered
in relation to the basic consolidated financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.
As discussed, notes 1, 2, 3 and 14 to the financial statement, the Company
changed its method of accounting for debt and equity securities in fiscal 1995
and income taxes and postretirement benefits other than pensions in 1993.
/s/KPMG Peat Marwick
Rochester, New York
June 2, 1995, except note 17
which is as of June 12, 1995
50
<PAGE>
GENESEE CORPORATION SCHEDULE VIII
AND SUBSIDIARIES
Consolidated Valuation and Qualifying Accounts
Years ended April 30, 1995, 1994 and 1993
<TABLE>
Balance at Additions Net Balance
beginning charged to cost amounts at end
Description of period and expenses written off of period
(Dollars in thousands)
<S> <C> <C> <C> <C>
1995
Allowance for
doubtful receivables $ 677 (10) 102 565
Allowance for loss on
idle plant and equipment 486 457 486 457
Allowance for obsolete
inventory 280 86 298 68
$ 1,443 533 886 1,090
1994
Allowance for
doubtful receivables $ 712 (3) 32 677
Allowance for loss on
idle plant and equipment 486 - - 486
Allowance for obsolete
inventory - 280 - 280
Allowance for malthouse
shut down costs $ 353 - 353 -
1,551 277 385 1,443
1993
Allowance for
doubtful receivables $ 708 57 53 712
Allowance for loss on
idle plant and equipment 350 136 - 486
Allowance for obsolete
inventory 10 - 10 -
Allowance for malthouse
shut down costs - 353 - 353
$ 1,068 546 63 1,551
</TABLE>
51
<PAGE>
EXHIBIT INDEX
<TABLE>
Number Document Page
<S> <C> <C>
3-1 Certificate of Incorporation (incorporated by --
reference to Exhibit 3-1 to the Corporation's report
on Form 10-K for the fiscal year ended April 30, 1994).
3-2 By-Laws. 53
10-1 1986 Genesee Incentive Bonus Plan, as amended June 12, --
1990 (incorporated by reference to Exhibit 10-2 to the
Corporation's report on Form 10-K for the fiscal year
ended April 30, 1991).
10-2 1982 Incentive Stock Option Plan (incorporated by --
reference to Exhibit 10-2 to the Corporation's report on
Form 10-K for the fiscal year ended April 30, 1994).
10-3 1992 Stock Plan amended in 1994. 59
10-4 Stock Bonus Incentive Program under 1992 Stock Plan --
(incorporated by reference to Exhibit 10-6 to the
Corporation's report on Form 10-K for the fiscal year
ended April 30, 1992).
10-5 Agreement with John L. Wehle, Jr. dated August 29, 1994. 65
10-6 Executive Agreement with J.L. Wehle, Jr. dated February 68
27, 1995. Substantially identical agreements were
executed with C.S. Wehle and R.N. Latella.
10-7 Indemnification Agreement with J.L. Wehle, Jr. dated June 73
8, 1989. Substantially identical agreements were
executed with all other directors and officers of the
Corporation.
22 Subsidiaries of the Registrant. 82
</TABLE>
52
<PAGE>
EXHIBIT 3-2
GENESEE CORPORATION
BY-LAWS
ARTICLE I
SHAREHOLDERS
Section 1. Annual Meeting: An annual meeting of shareholders for the
election of directors and the transaction of other business shall be held on
such day in the month of October in each year and at such time on such day as
shall be fixed by the Board of Directors of the Corporation not later than 10
days before the meeting.
Section 2. Meetings: Special meetings of the shareholders may be called
by the Board of Directors. Such meetings shall be held at such time as may be
fixed in the call and stated in the notice of meeting.
Section 3. Place of Meetings: Meetings of shareholders shall be held at
such place, within or without the State of New York, as may be fixed in the
notice of meeting. Unless otherwise provided by action of the Board of
Directors, all meetings of shareholders shall be held at the office of the
Corporation in Rochester, New York.
Section 4. Notice of Meetings: Notice of each meeting of shareholders
shall be in writing and shall state the place, date, and hour of the meeting and
the purpose or purposes for which the meeting is called.
A copy of the notice of any meeting shall be given, personally, or by mail,
not less than ten or more than fifty days before the date of the meeting, to
each shareholder entitled to vote at such meeting. If mailed, such notice is
given when deposited in the United States mail, with postage thereon prepaid,
directed to the shareholder at his address as it appears on the record of
shareholders, or, if he shall have filed with the Secretary of the Corporation a
written request that notices to him be mailed to some other address, then
directed to him at such other address.
Section 5. Inspectors of Election: The Board of Directors, in advance
of any shareholders' meeting, may appoint one or more inspectors to act at the
meeting or any adjournment thereof. If inspectors are not so appointed, the
person presiding at a shareholders' meeting may, and on the request of any
shareholder entitled to vote thereat shall, appoint two inspectors. Each
inspector, before entering upon the discharge of his duties, shall take and sign
an oath faithfully to execute the duties of inspector at such meeting with
strict impartiality and according to the best of his ability.
The inspectors shall determine the number of shares outstanding and the
voting power of each, the shares represented at the meeting, the existence of a
quorum, and the validity and effect of proxies, and shall receive votes, ballots
or consents, hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes, ballots or
consents, determine the result, and do such acts as are proper to conduct the
election or vote with fairness to all shareholders. On request of the person
presiding at the meeting or any shareholder entitled to vote thereat, the
inspectors shall make a report in writing of any challenge, question or matter
determined by them and execute a certificate of any fact found by them. Any
report or certificate made by them shall be prima facie evidence of the facts
stated and of the vote as certified by them.
53
<PAGE>
Section 6. List of Shareholders at Meetings: A list of shareholders as
of the record date, certified by the Secretary or any Assistant Secretary or by
the transfer agent, if any, shall be produced at any meeting of shareholders
upon the request thereat or prior thereto of any shareholder. If the right to
vote at any meeting is challenged, the inspectors of election, or person
presiding thereat, shall require such list of shareholders to be produced as
evidence of the right of the persons challenged to vote at such meeting, and all
persons who appear from such list to be shareholders entitled to vote thereat
may vote at such meeting.
Section 7. Qualification of Voters: Every shareholder of record of
Common Stock of the Corporation shall be entitled at every meeting of
shareholders to one vote for every share of Class A Stock standing in his name
on the record of shareholders.
Section 8. Quorum of Shareholders: The holders of a majority of the
shares entitled to vote thereat shall constitute a quorum at a meeting of
shareholders for the transaction of any business.
The shareholders present, in person or by proxy, and entitled to vote may,
by a majority of votes cast, adjourn the meeting despite the absence of a
quorum.
Section 9. Vote of Shareholders: Directors shall, except as otherwise
required by law, be elected by a plurality of the votes cast at a meeting of
shareholders by the holders of shares entitled to vote in the election.
Whenever any corporate action, other than the election of directors, is to
be taken by vote of the shareholders, it shall, except as otherwise required by
law, be authorized by a majority of the votes cast at a meeting of shareholders
by the holders of shares entitled to vote thereon.
Section 10. Proxies: Every shareholder entitled to vote at a meeting of
shareholders or to express consent or dissent without a meeting may authorize
another person or persons to act for him by proxy.
Section 11. Fixing Record Date: For the purpose of determining the
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or to express consent to or dissent from any proposal
without a meeting, or for the purpose of determining shareholders entitled to
receive payment of any dividend or the allotment of any rights, or for the
purpose of any other action, the Board of Directors may fix, in advance, a date
as the record date for any such determination of shareholders. Such date shall
not be more than fifty nor less than ten days before the date of such meeting,
nor more than fifty days prior to any other action.
ARTICLE II
BOARD OF DIRECTORS
Section 1. Power of Board and Qualification of Directors: The business
of the Corporation shall be managed by the Board of Directors, each of whom
shall be at least twenty-one years of age. Except as to any person who has at
any time served as the chief executive officer or the chief operating officer of
the Corporation, neither a director who has reached the age of 70 nor a director
who is an employee of the Corporation and whose employment terminates for any
reason, shall be eligible for re-election to the Board of Directors.
(Amended by Board of Directors, 3/6/86)
54
<PAGE>
Section 2. Number of Directors: The number of directors constituting
the entire Board of Directors shall be such number as may be fixed from time to
time by vote of a majority of the entire Board of Directors, and until otherwise
fixed by the Board shall be twelve. No decrease in the number of directors shall
shorten the term of any incumbent director.
(Amended by approval of Shareholders, 10/21/76)
Section 3. Election and Term of Directors: The Board of Directors shall
be classified, with respect to the time for which each class shall hold office,
into three classes, as nearly equal in number as possible as determined by the
Board of Directors. The first class of directors shall be initially elected to
hold office until the annual meeting of shareholders held in the first year
following the year of their election, the second class shall be initially
elected to hold office until the annual meeting of shareholders held in the
second year following the year of their election, and the third class shall be
elected to hold office until the annual meeting of shareholders held in the
third year following the year of their election, with the members of each class
to hold office until their successors are elected and qualified. Thereafter, the
successors of the class of directors whose term expires at each annual meeting
of shareholders shall be elected to hold office until the annual meeting of
shareholders held in the third year following the year of their election and
until their successors are elected and qualified.
(Amended by approval of Board of Directors, 9/11/87)
Section 4. Quorum of the Board; Action by the Board: A one-third of the
entire Board of Directors shall constitute a quorum for the transaction of
business, and the vote of the majority of the directors present at the time of
such vote, if a quorum is then present, shall be the act of the Board.
Section 5. Meeting of the Board: An annual meeting of the Board of
Directors shall be held in each year directly after the adjournment of the
annual shareholders' meeting. Regular meetings of the Board shall be held at
such times as may from time to time be fixed by resolution of the Board.
Special meetings of the Board may be held at any time upon the call of the
President or any two directors.
Meetings of the Board of Directors shall be held at such place, within or
without the State of New York, as from time to time may be fixed by resolution
of the Board for annual and regular meetings and in the notice of meeting for
special meetings. If no place is so fixed, meetings of the Board shall be held
at the office of the Corporation in Rochester, New York.
No notice need be given of annual or regular meetings of the Board of
Directors. Notice of each special meeting of the Board shall be given by oral,
telegraphic, or written notice, duly given or sent or mailed to each director
not less than one day before such meeting.
Section 6. Newly Created Directorships and Vacancies: Newly created
directorships resulting from an increase in the number of directors and
vacancies occurring in the Board of Directors for any reason except the removal
of directors by shareholders without cause may be filled by vote of a majority
of the directors then in office, although less than a quorum exists. A director
elected to fill a vacancy shall be elected to hold office for the unexpired term
of his predecessor.
Section 7. Executive and Other Committees of Directors: The Board of
Directors, by resolution adopted by a majority of the entire Board, may
designate from among its members an Executive Committee consisting of three or
more directors and may designate from among its numbers other committees each
consisting of three or more directors, and each of which, to the extent provided
in the resolution, shall have all the authority of the Board, except that no
such committee shall have authority as to matters vested solely in the Board by
law.
Section 8. Compensation of Directors: The Board of Directors shall have
authority to fix the compensation of directors for services in any capacity.
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Section 9. Indemnification of Directors and Officers:
(a) Right to Indemnification. Except as prohibited by law or as provided
in Paragraph (b) below, the Corporation shall indemnify any person against all
reasonable expenses, including attorneys fees, and all judgments, excise taxes,
fines, penalties, amounts paid in settlement and any other liability paid or
incurred by such person in connection with any actual or threatened claim,
action, suit or proceeding, whether civil, criminal, administrative,
investigative, or other, or whether brought by or in the right of the
Corporation or otherwise, in which such person may be involved as a party or
otherwise, by reason of the fact that such person or such person's testator or
intestate is or was a director or officer of the Corporation, or serves or
served in any capacity at the request of the Corporation any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise. To
the maximum extent permitted by law, the Corporation shall make advances of
expenses incurred by such person in connection with any such actual or
threatened claim, action, suit or proceeding prior to final disposition thereof,
provided that the Corporation receives an undertaking by or on behalf of such
person to repay such advances to the extent such person is ultimately found not
to be entitled to indemnification.
(b) Exclusions. No indemnification shall be made to or on behalf of any
person if a judgment or other final adjudication adverse to such person
establishes that either (i) such person's acts were committed in bad faith, or
were the result of active and deliberate dishonesty, and were material to the
action, or (ii) such person gained in fact a financial benefit or other economic
advantage to which such person was not legally entitled.
(c) Indemnification Not Exclusive. The right of indemnification under this
Section 9 shall not be deemed exclusive of any other rights to which persons
seeking indemnification hereunder may be entitled under applicable law, by
agreement or otherwise, and the provisions hereof shall inure to the benefit of
the heirs, beneficiaries and legal representatives of persons entitled to
indemnification hereunder and shall be applicable to actions arising from acts
or omissions occurring before or after the adoption hereof. Persons who are not
directors or officers of the Corporation may be similarly indemnified and
entitled to advancement or reimbursement of expenses to the extent authorized at
any time by the Board of Directors. The Corporation is authorized to enter into
agreements with any of its directors or officers extending rights to
indemnification and advancement of expenses to such person to the fullest extent
permitted by applicable law, but the failure to enter into any such agreement
shall not affect or limit the rights of such person pursuant to this By-Law.
(d) Contract Rights. The right of indemnification under this Section 9
shall be deemed to constitute a contract between the Corporation and the persons
entitled to indemnification and may not, without the consent of such person, be
amended or repealed with respect to any event, act or emission occurring or
allegedly occurring prior to the end of the term of office such person is
serving when such amendment or repeal is adopted.
(Amended by approval of Board of Directors, 6/4/87)
Section 10. Action Without a Meeting: Any action required or permitted
to be taken by the Board of Directors or any committee thereof may be taken
without a meeting if all members of the or the committee consent in writing to
the adoption of a resolution authorizing the action. The resolution and the
written consents thereto shall be filed with the minutes of the proceedings of
the Board or committee.
(Amended by approval of Board of Directors, 3/10/75)
Section 11. Participation in Board Meeting by Conference Telephone: Any
one or more members of the Board of Directors or any committee thereof may
participate in a meeting of such Board or committee by means of a conference
telephone or similar communications equipment allowing all persons participating
in the meeting to hear each other at the same time. Participation by such means
shall constitute presence in person at a meeting.
(Amended by approval of Board of Directors, 9/4/75)
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ARTICLE III
OFFICERS
Section 1. Officers: The Board of Directors, as soon as may be
practicable after the annual election of directors, shall elect a Chairman of
the Board of Directors, a President, one or more Vice Presidents (one of whom
may be designated Executive Vice President), a Secretary and a Treasurer, and
from time to time may elect or appoint such other officers as it may determine.
Any two or more offices may be held by the same person, except the offices of
President and Secretary.
(Amended 10/20/69)
Section 2. Term of Office and Removal: Each officer shall hold office
for the term for which he is elected or appointed, and until his successor has
been elected or appointed and qualified.
Section 3. Powers and Duties: The officers of the Corporation shall
each have such powers and authority and perform such duties in the management of
the property and affairs of the Corporation, as from time to time may be
prescribed by the Board of Directors and, to the extent not so prescribed, they
shall each have such powers and authority and perform such duties in the
management of the property and affairs of the Corporation, subject to the
control of the Board, as generally pertain to their respective offices.
Without limitation of the foregoing:
(a) Chairman of the Board of Directors: The Chairman shall be a
senior officer of the Corporation, shall preside at all meetings of the
Corporation's stockholders and at all meetings of the Board of Directors and
shall be a Director of the Corporation.
(b) President: The President shall be the Chief Executive Officer of
the Corporation. In the absence of the Chairman of the Board, he shall preside
at meetings of shareholders and of the Board of Directors.
(c) Executive Vice President: The Executive Vice President shall be
the Chief Operating and Administrative Officer and, in the event of the death,
resignation, removal, disability, or absence of the President, shall possess the
powers and perform the duties of the President.
(d) Vice Presidents: The Board of Directors shall determine the
powers and duties of the respective Vice Presidents and may, in its discretion,
fix such order of seniority among the respective Vice Presidents as it may deem
advisable.
(e) Secretary: The Secretary shall issue notices of all meetings of
shareholders and directors where notices of such meetings are required by law or
these By-Laws, and shall keep the minutes of such meetings. He shall sign such
instruments and attest such documents as require his signature or attestation
and affix the corporate seal thereto where appropriate.
(f) Treasurer: The Treasurer shall have general charge of, and be
responsible for, the fiscal affairs of the Corporation and shall sign all
instruments and documents as require his signature.
(Amended 10/23/86)
Section 4. Records: The Corporation shall keep (a) correct and complete
books and records of account; (b) minutes of the proceedings of the
shareholders, Board of Directors, and any committees of the Board; and (c) a
current list of the directors and officers and their residence addresses.
The Corporation shall also keep at its office in the State of New York or
at the office of its transfer agent or registrar in the State of New York, if
any, a record containing the names and addresses of all shareholders, the number
and class of shares held by each and the dates when they respectively became the
owners of record thereof.
Section 5. Checks and Similar Instruments: All checks and drafts on the
Corporation's bank accounts and all bills of exchange and promissory notes and
all acceptances, obligations, and other instruments, for the payment of money,
shall be signed by facsimile or otherwise on behalf of the Corporation by such
officer or officers or agent or agents as shall be thereunto authorized from
time to time by the Board of Directors.
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Section 6. Voting Shares Held by the Corporation: Either the President
or the Secretary may vote shares of stock held by the Corporation in other
corporations and may execute for and on behalf of the Corporation proxies for
such purpose.
ARTICLE IV
SHARE CERTIFICATES AND LOSS THEREOF - TRANSFER OF SHARES
Section 1. Form of Share Certificates: The shares of the Corporation
shall be represented by certificates, in such forms as the Board of Directors
may from time to time prescribe, signed by the Chairman of the Board if such
there be, or the President or a Vice President and the Secretary or an Assistant
Secretary or the Treasurer or an Assistant Treasurer, and may be sealed with the
seal of the corporation or a facsimile thereof. The signatures of the officers
upon a certificate may be facsimiles if the certificate is counter-signed by a
transfer agent or registered by a registrar other than the Corporation or its
employee. In case any officer who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer at the date of issue.
Section 2. Lost, Stolen, or Destroyed Share Certificates: No
certificate or certificates for shares of the Corporation shall be issued in
place of any certificate alleged to have been lost, stolen, or destroyed, except
upon production of such evidence of the loss, theft, or destruction, and upon
such indemnification and payment of costs of the Corporation and its agents to
such extent and in such manner as the Board of Directors may from time to time
prescribe.
Section 3. Transfer of Shares: Share of the Corporation shall be
transferable on the books of the Corporation by the registered holder thereof in
person or by his duly authorized attorney, by delivery for cancellation of a
certificate or certificates for the same number of shares, with proper
endorsement consisting of either a written assignment of the certificate or a
power of attorney to sell, assign, or transfer the same or the shares
represented thereby, signed by the person appearing by the certificate to be the
owner of the shares represented thereby, either written thereon or attached
thereto, with such proof of the authenticity of the signature as the Corporation
or its agents may reasonably require. Such endorsement may be either in blank or
to a specified person, and shall have affixed thereto all stock transfer stamps
required by law.
ARTICLE V
Other Matters
Section 1. Corporate Seal: The corporate seal shall have inscribed
thereon the name of the Corporation and such other appropriate legend as the
Board of Directors may from time to time determine. In lieu of the corporate
seal, when so authorized by the Board, a facsimile thereof may be affixed or
impressed or reproduced in any other manner.
Section 2. Amendments: By-Laws of the Corporation may be amended,
repealed or adopted by vote of the holders of the shares at the time entitled to
vote in the election of any directors. By-Laws may also be amended, repealed, or
adopted by the Board of Directors, but any By-Law adopted by the Board may be
amended or repealed by the shareholders entitled to vote thereon as hereinabove
provided.
If any By-Law regulating an impending election of directors is adopted,
amended, or repealed by the Board of Directors, there shall be set forth in the
notice of the next meeting of shareholders for the election of directors the By-
Law so adopted, amended, or repealed, together with a concise statement of the
changes made.
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EXHIBIT 10-3
Genesee Corporation
1992 Stock Plan
Amended in 1994
1. Purpose
The purpose of the Plan is to enable eligible key employees of the
Corporation and its subsidiaries to purchase shares of Common Stock of the
Corporation by means of stock options, including incentive stock options under
Section 422 of the Internal Revenue Code of 1986, and to provide for the award
of stock bonuses as additional compensation to eligible key employees of the
Corporation and its subsidiaries. An additional purpose of the plan is to
increase the stake in the Corporation of members of the Board of Directors of
the Corporation who are not otherwise officers or employees of the Corporation
or its subsidiaries by the award of stock options. Through the use of such
options and awards, the Corporation expects to be able to attract and retain the
best available talent and to encourage the highest level of performance from key
personnel to the Corporation and its subsidiaries.
2. Administration
The Plan shall be administered by the Management Continuity Committee (the
"Committee") consisting of not less than three directors appointed by the Board
of Directors of the Corporation. Each member of the Committee shall be a member
of the Board who is "disinterested" as defined in Rule 16b-3 under the
Securities Exchange Act of 1934 ("Rule 16b-3"). The Board shall fill any
vacancy.
Subject to the provisions of the Plan, the Committee shall possess the
authority, in its discretion (a) to determine the employees of the Corporation
or its subsidiaries to whom, and the time or times at which, options and awards
shall be granted, and the number and class of shares to be subject to each
option or award, and to provide a limitation on the number of shares included
within the option or award that may be purchased by the optionee or granted to
an awardee during any annual (or other stated) period; (b) to interpret the
Plan; (c) to make and amend rules and regulations relating thereto; (d) to
prescribe the form and conditions of option and award agreements; and (e) to
make all other determinations necessary or advisable for the administration of
the Plan. The Committee's determinations shall be conclusive and binding.
The Committee shall have no discretion as to Outside Director's Options as set
forth in Section 5A hereof.
The Plan and all grants and awards under it are intended to comply with
Rule 16b-3 and any provision of the Plan or any grant or award, insofar as it
does not so comply, shall be deemed ineffective and shall be construed as to so
comply, except as otherwise determined by the Committee.
3. Eligible Employees
Options or awards may be granted under the Plan only to key employees of
the Corporation or one of its subsidiaries, as determined by the Committee.
Neither the members of the Committee, nor any director who is not an officer or
employee of the Corporation or one of its subsidiaries, shall be eligible to
receive an option or award under the Plan, except pursuant to Section 5A.
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4. Shares Available
An aggregate of 200,000 shares of the Class A Common Stock (par value fifty
cents) or the Class B Common Stock (par value fifty cents) shall be available
for grants of options or awards of stock bonuses under the Plan. Such shares may
be authorized and unissued shares or may be treasury shares. If an option or
stock bonus expires, terminates, is canceled without being exercised or is
forfeited or becomes not payable, new options or stock bonuses may be thereafter
granted or awarded covering such shares. No person shall receive grants of
options totaling more than 100,000 shares in the aggregate under the Plan.
5. Terms and Conditions of Options
Each option granted under the Plan shall be evidenced by a stock option
agreement in such form as the Committee shall approve from time to time, which
agreements shall conform with this Plan. Incentive stock option agreements shall
reflect the terms and conditions set forth in Sections 5(a) through 5(j) hereof.
(a) Purchase Price. The purchase price under each option shall be not
less than the fair market value of the stock at the time such option is granted.
The Committee shall determine the purchase price. If an option is granted to an
employee who at the time of grant owns stock possessing more than ten percent of
the total combined voting power of all classes of stock of the Corporation (a
"10-percent Shareholder"), the purchase price shall be at least 110% of the fair
market value of the stock subject to the option.
(b) Duration of Option. Each option by its terms shall not be
exercisable after the expiration of ten years from the date such option is
granted. In the case of an option granted to a 10-percent Shareholder, the
option by its terms shall not be exercisable after the expiration of five years
from the date such option is granted.
(c) Options Nontransferable. Each option by its terms shall not be
transferable by the optionee otherwise than by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order, and shall be
exercisable, during his lifetime, only by the optionee.
(d) Exercise Period. The exercise of each option shall be subject to
such conditions as may be imposed by the Committee and specified in the option
agreement. The Committee may, among other things, specify a minimum length of
employment and may stagger the period of exercise by providing that only a
certain percentage of options may be exercised each year.
(e) Payment of Option Price. An option shall be exercised upon written
notice to the Corporation accompanied by payment in full for the shares being
acquired. The payment shall be made in cash or by check; by delivery of whole
shares of Common Stock of the Corporation registered in the name of the
optionee, having an aggregate fair market value on the date of exercise equal to
the aggregate exercise price of the option being exercised; (for options granted
after the adoption of the 1994 amendments) by delivery of instructions to the
Corporation to withhold from the shares of Common Stock which would otherwise
be issued on the exercise that number of whole shares having a fair market value
equal to the exercise price; or by a combination of the foregoing.
(f) Maximum Value of Shares. All options granted to an employee under
this Plan and any other incentive stock option plan maintained by the
Corporation or its subsidiaries shall restrict to $100,000 in each calendar year
the aggregate fair market value (determined on the date of grant) of the Common
Stock with respect to which the incentive stock options are exercisable for the
first time by an employee.
(g) Rights as a Shareholder. The optionee shall have no rights as a
shareholder with respect to any option shares until the date of issuance to the
optionee of a stock certificate for such shares and no adjustment shall be made
for any dividends or other rights the record date for which is prior to the date
such stock certificate is issued.
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(h) General Restriction. Each option shall be subject to the
requirement that, if at any time the Board of Directors shall determine, in its
discretion, that the listing, registration or qualification of the shares
subject to such option upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the granting of
such option or the issue or purchase of shares thereunder, such option may not
be exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Board of Directors.
(i) Limit on Grants. Each option must be granted within ten years
from the date of the Plan's adoption or the date the Plan is approved by
shareholders, whichever is earlier.
(j) Termination of Employment. If the employment of an optionee
terminates for any reason other than death or disability, the option may be
exercised by him at any time prior to the earlier of the expiration date of the
option or the expiration of three months after the date of termination, but only
if, and to the extent that, he was entitled to exercise the option at the date
of such termination. Notwithstanding the foregoing, an option may not be
exercised after termination of employment if the Committee determines that the
termination of employment of such optionee resulted from willful acts, or
failure to act, by the optionee detrimental to the Corporation or any of its
subsidiaries. The Committee shall determine whether an authorized leave of
absence shall constitute a termination of employment for purposes of this Plan.
If an optionee's employment terminates by reason of disability (within the
meaning of Section 22(e)(3) of the Internal Revenue Code of 1986) or death, his
option may be exercised at any time prior to the earlier of the expiration of
the option or the expiration of one year following the date employment
terminated due to disability or death. If after termination of employment but
before the expiration of the earlier of the option period or the three months
period, the optionee dies, the option shall continue to be exercisable only for
the remainder of either such period (whichever is shorter) and the one year
period shall not be applicable.
Options other than incentive stock options may be granted under the Plan at
exercise prices as the Committee shall determine. Such non-incentive stock
options shall be evidenced by stock option agreements which shall contain such
provisions as the Committee shall deem appropriate and which shall identify the
options as not being incentive stock options. To the extent that an incentive
stock option does not meet the requirements applicable thereto, it shall be
deemed a non-incentive stock option and shall otherwise remain in full force and
effect.
5A. Outside Director's Options
(a) Outside Director's Options. Subject to the limitation in Section
5A(j), an option to purchase 1,000 shares of Class B Common Stock ("Outside
Director's Options") (as may be adjusted pursuant to Section 7) shall be granted
automatically to each member of the Board of Directors of the Corporation who is
not otherwise an officer or employee of the Corporation or its subsidiaries
("Outside Director"). The first Outside Director's Options shall be granted to
each Outside Director immediately following the meeting of the Board at which
this Section 5A is added to the Plan subject to the approval of shareholders at
the next following annual meeting of the Corporation's shareholders. The grant
of Outside Director's Options shall continue each year immediately following the
annual meeting of the Corporation's shareholders until and including the annual
meeting of the Corporation's shareholders in the year 2002. Any Outside Director
who is elected to the Board after the above grants commence shall also
automatically receive an option to purchase 1,000 shares of Class B Common Stock
each year for the number of years remaining until and including the annual
meeting of the Corporation's shareholders in the year 2002, beginning with the
annual meeting of the Corporation's shareholders at which the director is
elected or the meeting of the Corporation's shareholders next following the
election if the election is by the Board.
(b) General. Each Outside Director's Option granted under the Plan
shall be evidenced by an agreement (an "Agreement") duly executed on behalf of
the Corporation and by the director to whom such Outside Director's Option is
granted and dated as of the applicable date of grant. Each Agreement shall be
signed on behalf of the Corporation by an officer or officers delegated such
authority by the Committee using manual signature. Each Agreement shall comply
with and be subject to the terms and conditions of the Plan. Any Agreement may
contain such other terms, provisions and conditions not inconsistent with the
Plan or this Section 5A as may be determined by the Committee, so long as the
"disinterestedness" requirement of Section 2 is not compromised. All Outside
Director's Options granted under the Plan shall be non-qualified stock options.
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(c) Outside Director's Option Exercise Price. The exercise price per
share for an Outside Director's Option shall be the fair market value determined
as of the date of grant by taking the mean between the highest and lowest quoted
selling prices on that date. If there were no sales on the date of grant, fair
market value shall be determined by taking the weighted average of the means
between the highest and lowest sales on the nearest date before and the nearest
date after the valuation date, in accordance with the Estate Tax Regulations,
26 CFR S 20.2031-2.
(d) Exercise. Outside Director's Options shall be exercisable
immediately upon grant and are exercisable in whole or in part, at any time from
time to time, until the expiration or termination of their term in accordance
with Section 5A(f) by giving written notice of exercise, signed by the person
exercising the Outside Director's Option, to the Secretary of the Corporation at
the principal office of the Corporation specifying the number of shares of
Common Stock as to which the Outside Director's Option is then being exercised
together with payment of the full exercise price for the number of shares of
Common Stock to be purchased. The date both such notice and payment are received
by the office of the Corporate Secretary of the Corporation shall be the date of
exercise of the Outside Director's Option as to such number of shares.
Notwithstanding any provision to the contrary, no Outside Director's Option may
at any time be exercised with respect to a fractional share.
(e) Payment of Exercise Price. The exercise price may be paid:
(i) in cash, or by check, bank draft or money order payable
in United States dollars to the order of the Corporation; or
(ii) by delivery by the Outside Director to the Corporation
of whole shares of Common Stock registered in the name of the Outside Director
having an aggregate fair market value on the date of exercise equal to the
aggregate exercise price of the Common Stock as to which the Stock Option is
then being exercised; or
(iii) by delivery of instructions to the Corporation to
withhold from the shares of Common Stock which would otherwise be issued on the
exercise that number of whole shares having a fair market value equal to the
exercise price; or
(iv) by any combination of (i), (ii) or (iii) above.
(f) Term of Outside Director's Options. Each Outside Director's
Option shall expire five (5) years from its date of grant, but shall be subject
to earlier termination as follows:
(i) In the event of the termination of an Outside
Director's Option holder's service as a Director, by re(ason of the removal of
the Director (by the shareholders, the Board of Directors or otherwise), the
then-outstanding Outside Director's Options of such holder (whether or not then
exercisable) shall automatically expire on (and may not be exercised on) the
effective date of such termination.
(ii) In the event of the termination of an Outside
Director's Option holder's service as a Director by reason of retirement or
total and permanent disability, the then-outstanding Outside Director's Options
of such holder shall become exercisable, to the full extent of the number of
shares of Common Stock remaining covered by such Outside Director's Options, and
each such Outside Director's Option shall expire one year after the date of such
termination or on the stated expiration date, whichever is earlier. For purposes
of this Section, the phrase "by reason of retirement" means (a) mandatory
retirement pursuant to Board policy or (b) termination of service by deciding
not to stand for re-election.
(iii) In the event of the death of an Outside Director's
Option holder while such holder is a Director, the then-outstanding Outside
Director's Options of such holder shall become exercisable, to the full extent
of the number of shares of Common Stock remaining covered by such Outside
Director's Options, and each such Outside Director's Option shall expire one
year after the date of death of such optionee or on the stated grant expiration
date, whichever is earlier. Exercise of a deceased holder's Outside Director's
Options that are still exercisable shall be by the estate of such holder or by
the person or persons to whom the holder's rights have passed by will or the
laws of descent and distribution.
(iv) In the event of the termination of an Outside
Director's Option holder's service as a Director for any reason other than as
described in Sections 5A(f)(i)-(iii), including without limitation, resignation,
the then outstanding Outside Director's Options of such holder shall become
exercisable, to the full extent of the number of shares of Common Stock
remaining covered by such Outside Director's Options, and each such Outside
Director's Option shall expire three (3) months after the effective date of such
termination or on the stated grant expiration date, whichever is earlier.
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(g) Limitation of Rights. Neither the recipient of an Outside
Director's Option under the Plan nor the recipient's successor or successors in
interest shall have any rights as a shareholder of the Corporation with respect
to any shares of Common Stock subject to an Outside Director's Option granted to
such person until the date of issuance of a stock certificate for such shares of
Common Stock.
(h) Limitation as to Directorship. Neither the Plan, nor the granting
of an Outside Director's Option, nor any other action taken pursuant to the Plan
shall constitute or be evidence of any agreement or understanding, express or
implied, that an Outside Director has a right to continue as a Director for any
period of time or at any particular rate of compensation.
(i) Limitation on Awards to Outside Directors. Notwithstanding any
provision to the contrary, an Outside Director shall not be entitled to receive
or participate in any grant or award under the Plan other than Outside
Director's Options which are granted to such Outside Director pursuant to
Section 5A(a) and meet all of the requirements of Section 5A applicable thereto.
(j) Curtailment of Outside Director's Options. Notwithstanding any
provision to the contrary, no Outside Director's Option shall be granted
pursuant to Section 5A(a) on a date when the number of shares of Common Stock
authorized and then available for issuance pursuant to the Plan is less than the
aggregate number of such shares which would be issuable pursuant to Outside
Director's Options otherwise required to be granted on such date.
(k) Conflicting Provisions. In the event of any conflict between a
provision of this Section 5A and a provision in any other section of the Plan
with respect to Outside Director's Options, such provision of this Section 5A
shall be deemed to control. Except in the case of conflict, however, provisions
in other sections are applicable.
6. Stock Bonus Awards
The Committee shall have authority to award stock bonuses to eligible
employees as additional compensation for service to the Corporation. Stock
bonuses shall be awarded for past services and, unless otherwise determined by
the Committee, for no cash consideration. All shares awarded as a stock bonus
shall be subject to such restrictions, if any, as the Committee may determine.
In order to enforce any restrictions imposed by the Committee on a stock bonus,
the employee awarded the stock bonus shall enter into an agreement with the
Corporation setting forth the restrictions or conditions of the award.
7. Adjustment of Shares
In the event of any change in the Common Stock of the Corporation by reason
of any stock dividend, recapitalization, reorganization, merger, consolidation,
split-up, combination, or exchange of shares, or rights offering to purchase
Common Stock at a price substantially below fair market value, or of any
similar change affecting the Common Stock, the number and kind of shares which
thereafter may be optioned and sold or awarded under the Plan and the number and
kind of shares subject to option in outstanding option agreements and the
purchase price per share thereof shall be appropriately adjusted consistent with
such change in such manner as the Committee may deem equitable to prevent
substantial dilution or enlargement of the rights granted to, or available for,
participants in the Plan.
8. No Employment Rights
The Plan and any options or awards granted under the Plan shall not confer
upon any optionee or awardee any right with respect to continuance of employment
by the Corporation or any subsidiary, nor shall they interfere in any way with
the right of the Corporation or any subsidiary by which an optionee or awardee
is employed to terminate his employment at any time.
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9. Amendment and Discontinuance
This Plan may be amended, modified or terminated by the shareholders of the
Corporation or by the Board of Directors, except that the Board may not (i)
amend the Plan more than once every six months to change the amount, price or
timing of Director's Options or (ii) without approval of the shareholders,
materially increase the benefits accruing to participants under the Plan,
increase the maximum number of shares as to which options or awards may be
granted under the Plan, change the minimum option price, change the class of
eligible employees, extend the period for which options or awards may be granted
or exercised, or cause the Plan or options or awards granted under the Plan to
fail to meet the requirements of Rule 16b-3. No amendment, modification, or
termination of the Plan may, without the written consent of an employee to whom
any option or restricted award shall theretofore have been granted, adversely
affect the rights of such employee under such option or restricted award.
10. Effective Date
The effective date of the Plan shall be the earlier of the date the Plan is
adopted by the Board of Directors or the date the Plan is approved by
shareholders, so long as the latter date is within twelve months of the former
date.
11. Name of Plan
The name of the Plan shall be Genesee Corporation 1992 Stock Plan, as
amended in 1994.
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EXHIBIT 10-5
DEFERRED COMPENSATION AGREEMENT as of the 29th day of August, 1994, by and
between GENESEE CORPORATION, a New York corporation of Rochester, New York
("Company"), and JOHN L. WEHLE, JR. residing at 2171 Scottsville Road,
Scottsville, New York 14546 ("Wehle").
Wehle has made substantial contributions to Company over a period of more
than 25 years, including as its Chief Executive Officer. In recognition of that
service, to assure his continuing commitment to the Company, and to provide him
with benefits commensurate with his responsibilities as the Company's Chairman,
President and Chief Executive Officer, Wehle and the Company have agreed to the
terms hereof.
NOW, THEREFORE, in pursuance of the foregoing and the promises and
conditions hereinafter set forth, the parties hereto do mutually covenant and
agree with each other as follows:
1. The Company agrees to employ Wehle as its Chief Executive Officer from
the date as of which this Agreement is made for so long as it is mutually agreed
upon between Wehle and the Company, and Wehle agrees that so long as he
continues in the employ of the Company in that capacity he shall devote his best
efforts and such of his business time and attention to the affairs of the
Company as is necessary to properly fulfill his responsibilities as such Chief
Executive Officer. Wehle's base salary shall be mutually agreed upon from time
to time between himself and the Management Continuity Committee of the Board of
Directors of the Company.
2. Wehle agrees that from and after the date he ceases to be employed as
the Chief Executive Officer of the Company he will serve the Company as a
consultant and the Company hereby agrees to retain the services of Wehle as such
a consultant. Wehle's duties as a consultant shall be to advise and consult with
the management of the Company with respect to the operations of its several
businesses and customer relations, and to assist the management of the Company
in contacts with presently existing customers of the Company to the extent
reasonably requested so to do by the Company and to develop further contacts and
business for the Company to the extent reasonably requested so to do by the
Company. It is agreed that the foregoing consulting services shall in no way
restrict Wehle's movements and that the Company will reimburse him for out-of-
pocket expenses reasonably incurred by him in the performance of such services
for the Company. It is further understood that from and after the date he ceases
to be employed as the Chief Executive Officer of the Company Wehle will not be
considered an employee, representative or agent of the Company for any purposes
and that he shall have no authority to bind or obligate the Company to third
persons. The Company shall have no control over the manner or means of Wehle's
performance.
3. From and after the date Wehle ceases to be employed by the Company,
whether by reason of death, disability, retirement or otherwise, the Company
shall pay to Wehle Seven Thousand Five Hundred Dollars ($7,500.00) per month for
so long as he shall live, provided, however, that if Wehle shall die prior to
having received one hundred twenty (120) such monthly installments the Company
shall pay the remainder of such installments to the beneficiary or beneficiaries
and in the proportions designated by Wehle under paragraph 8 hereof. If no such
beneficiary is designated, or if Wehle so directs in his designation, the
Company shall pay the "commuted value" of such remaining installments (as
defined in Exhibit A annexed hereto) in one lump sum to Wehle's estate or such
designated beneficiary or beneficiaries.
4. Payment of each monthly installment hereunder while Wehle is alive
shall be subject to the condition that Wehle shall not, without first having
procured the written consent of the Company, directly or indirectly as a
principal, officer, director, stockholder (except as the owner of less than 5%
of the stock of a company whose stock is publicly traded), partner, employee or
in any other capacity whatsoever, engage in or become associated with, or advise
or assist, any business or enterprise which is engaged in providing any goods or
services that are competitive with any goods or services that are or may at any
time be offered by the Company.
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5. Neither Wehle nor his estate shall under any circumstances have any
option or right to require payments hereunder, otherwise than in accordance with
the terms and subject to full compliance with the conditions herein specified.
6. The Company agrees that if at any time prior to the making of any
payments to be paid to Wehle hereunder it shall liquidate or dissolve, it shall,
to the extent that it may be legally capable of doing so, before any such
liquidation or dissolution, make proper provision for the continuation of the
payments to Wehle or his beneficiary or beneficiaries as hereinabove set forth.
The Company further agrees that it shall not merge, consolidate with or transfer
its assets to any other corporation unless such corporation shall assume the
Company's obligations under this Agreement.
7. Nothing contained in this Agreement shall in any way affect or
interfere with the right of Wehle to participate in any retirement plan or in
any bonus or other incentive compensation or benefit plan to which he may now or
hereafter be entitled as an officer or employee of the Company.
8. Wehle shall have the right, by an instrument in writing delivered to
the Company, to name one or more beneficiaries to receive any monies payable
hereunder after his death, the amount payable to each of such beneficiaries and
whether such payment or payments shall be in continuing installments or in a
single lump sum equal to the "commuted value" of all remaining installments, and
to change such beneficiary or beneficiaries at any time and from time to time.
The Company shall be bound by the designation last filed with it by Wehle.
9. This Agreement shall be binding upon the parties hereto, their heirs,
executors, administrators, successors and assigns.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed
by the Chairman of the Management Continuity Committee of its Board of Directors
and by its duly authorized officer, and Wehle has hereunto set his hand, as of
the day and year first above appearing.
GENESEE CORPORATION
For The Management Continuity
Committee of the Board of Directors:
/s/Stephen B. Ashley
Stephen B. Ashley
Chairman
For the Corporation:
/s/Robert N.Latella
Robert N. Latella
Executive Vice President
and Chief Operating Officer
/s/John L. Wehle, Jr.
John L. Wehle, Jr.
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EHIBIT A
Definition of Commuted Value
The commuted value of the remaining payments shall equal the present value, as
of the date of payment, of the remaining payments that would have been made had
Wehle not died. In determining the present value, a discount rate equal to the
Treasury Rate plus 100 basis points on the date of payment shall be used, with
semi-annual compounding. The Treasury Rate shall equal the yield-to-maturity of
United States Treasury obligations having a maturity substantially equal to the
remaining payment period.
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EXHIBIT 10-6
EXECUTIVE AGREEMENT
This AGREEMENT is dated as of February 27, 1995 by and between GENESEE
CORPORATION (the "Corporation") and JOHN L. WEHLE, JR. (the "Executive") and
supersedes the Employment Agreement between the parties dated May 7, 1991
("Employment Agreement").
Employee has contributed substantially to the success of the Corporation
over a period of years. The Corporation desires to encourage his continuing
service by continuing to provide certain benefits provided to Executive pursuant
to the Employment Agreement, and Executive is willing to enter into this
Agreement.
Now, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the parties
agree as follows:
1. Term of Agreement. The term of this Agreement commenced on the date
hereof and shall continue in effect until terminated by written agreement of
both parties.
2. Termination of Employment.
(a) Cause. As used in this Agreement, "Cause" shall mean (i)
Executive is convicted of a felony, or (ii) Executive, in carrying out the
duties of his employment, has been guilty of unreasonable (and persistent)
neglect or refusal to perform his duties hereunder, or (iii) any material
misappropriation of funds or property by Executive.
(b) Termination Following a Change in Control.
(1) For purposes of this Agreement, a "Change in Control" shall
be deemed to have occurred if any of the following occur unless the Board of
Directors prior to such occurrence resolves that the occurrence shall not
constitute a "Change in Control" for purposes of this Agreement:
(i) any "person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(other than (a) the Corporation or (b) any corporation owned, directly or
indirectly, by the Corporation or the shareholders of the Corporation in
substantially the same proportions as their ownership of stock of the
Corporation), is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Corporation representing 20% of more of the combined voting power of the
Corporation's then outstanding securities (provided, however, that no direct
descendant of John L. Wehle, Sr., the trust established under the will of Louis
A. Wehle and any trustee thereunder shall be a "person" for purposes of this
Agreement); or
(ii) during any period of two consecutive years, there
is elected 20% or more of the members of the Board of Directors of the
Corporation without the approval of the nomination of such members by a majority
of that portion of the Board consisting of members who were serving at the
beginning of the two-year period; or
(iii) the shareholders of the Corporation approve a
merger or consolidation of the Corporation with any other corporation, other
than (a) a merger or consolidation which would result in the voting securities
of the Corporation outstanding immediately prior thereto continuing to
represent more than 80% of the combined voting power of the voting securities of
the Corporation, or such surviving entity, outstanding immediately after such
merger or consolidation; or (b) a merger or consolidation effected to implement
a recapitalization of the Corporation (or similar transaction) in which no
"person" (as defined above) acquires more than 20% of the combined voting power
of the Corporation's then-outstanding securities; or
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(iv) the shareholders of the Corporation approve an
agreement for the sale or disposition by the Corporation of all or substantially
all of the Corporation's assets.
(2) If Executive's employment is terminated by the Corporation
following a Change in Control for no reason or for a reason other than Cause,
then within 5 business days following such termination, Executive shall be paid
by the Corporation, subject to Section 2(c) below, a lump sum payment in cash
equal to the sum of the following:
(A) (i) The amount left to be paid with respect to his
base salary earned through the termination date but not yet paid; (ii) an amount
equal to the amount expended on his behalf by the Corporation during the 12
months preceding the date of termination for all life insurance, medical
insurance and disability insurance premiums and benefits, automobile use,
perquisites, club dues and all other such employee benefits and reimbursements;
(iii) any deferred salary, bonuses and compensation, but subject to the terms of
the applicable plans or deferral agreements; (iv) amounts and rights to which
Executive is entitled in respect of any outstanding equity grants, stock options
and supplemental retirement benefit arrangements, as determined in accordance
with the applicable plans, agreements or arrangements; (v) the prorated portion
(based on the portion of the fiscal year served prior to termination) of the
bonus that Executive would have earned pursuant to any award that is made to him
for that fiscal year under the 1986 Incentive Bonus Plan, as amended, as if all
the primary targets in respect of that year had been achieved and, based
thereon, the maximum discretionary bonuses had been paid; and (vi) a prorated
amount (based on the portion of the fiscal year served prior to termination) in
respect of the Profit Sharing Retirement Plan of Employer assuming a
contribution by the Corporation at the rate of 15% of Executive's annual
compensation (assumed for purposes of this calculation to have continued
throughout the fiscal year at the rate in effect at termination). The amounts
and rights to which Executive may be entitled in respect of any outstanding
stock grants, stock options and supplemental retirement benefit arrangements
shall be determined in accordance with the applicable plans and/or any
applicable agreements; provided, however, that any vesting period provided for
under any such plan, agreement, or arrangement shall be accelerated and deemed
to have passed.
(B) A single lump sum payment equal to the product of 3
times Executive's annual base salary in effect at the date of his termination of
employment, plus an amount equal to the product of 3 times the amount of the
highest cash bonus paid to Executive at any time during the five fiscal years of
the Corporation preceding termination of his employment.
(3) If Executive's employment is terminated by Executive
following a Change in Control for Good Reason (as herein defined), then
Executive shall be entitled to receive the payment described in subparagraphs
(2)(A) and (B) of this Section 2 (b). "Good Reason" shall mean the occurrence of
any of the following circumstances:
(i) the assignment to Executive of any duties inconsistent
with the position that Executive held immediately prior to the Change in Control
of the Corporation, or a significant adverse alteration in the nature or status
of Executive's responsibilities or the conditions of his employment from those
in effect immediately prior to such Change in Control; or
(ii) the relocation of the Corporation's offices at which
Executive is employed immediately prior to the date of the Change in Control of
the Corporation to a location more than 50 miles from Rochester, New York, or
the Corporation's requiring Executive to be based anywhere other than the
Corporation's offices at such location except for required travel on the
Corporation's business to an extent substantially consistent with Executive's
business travel obligations at the time of the Change in Control; or
(iii) the failure by the Corporation to continue in effect
any material compensation or retirement or other benefit plan or arrangement in
which Executive participates immediately prior to the Change in Control of the
Corporation unless an equitable and substantially comparable arrangement
(embodied in a substitute or alternative plan) has been made with respect to
such plan or arrangement, or the failure by the Corporation to continue
Executive's participation therein (or in such substitute or alternative plan or
arrangement) on a basis not less favorable, both in terms of the amount of
benefits provided and the level of participation relative to other participants,
as existed at the time of the Change in Control of the Corporation; or
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(iv) the failure by the Corporation to continue to provide
Executive with benefits substantially similar to those enjoyed by him under any
of the life insurance, medical, health and accident, or disability plans in
which Executive was participating at the time of the Change in Control of the
Corporation, the taking of any action by the Corporation which would directly
or indirectly materially reduce any of such benefits, or the failure by the
Corporation to provide Executive with the number of paid vacation days to which
he is entitled in accordance with the Corporation's normal vacation policy in
effect at the time of the Change in Control of the Corporation; or
(v) any breach of this Agreement by the Corporation.
(c) Possible Cutback. It is anticipated that the payments to be
made to Executive under this Agreement and other agreements may become subject
to the tax (the "Excise Tax") imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended (the "Code") (or any similar tax that may hereafter be
imposed) on account of "excess parachute payments" as defined in Section 280G of
the Code. Executive and the Corporation agree that the total amount payable
under this Agreement shall be the amount such that the Executive's net after tax
benefit of all such payments is the greater of either (i) the largest amount
which will avoid the imposition of the Excise Tax or (ii) the amount payable
without regard to any such limitation (and which will be subject to the
imposition of the Excise Tax). The term "net after tax benefit" means the amount
that would be left to the Executive after the Excise Tax and federal and state
income taxes. The determination of the amount to be paid hereunder shall be made
by an independent certified public accounting firm selected by the Executive and
whose fee will be paid by the Corporation.
3. Funding. The Corporation may in its discretion establish a trust or other
fund to finance any of the payments which are or may become payable to Executive
under this Agreement.
4. Legal Expense. If, with respect to any alleged failure by the Corporation
to comply subsequent to a Change in Control with any of the terms of this
Agreement and regardless of whether Executive is successful, Executive hires
legal counsel with respect to this Agreement or institutes any negotiations or
institutes or responds to legal action to assert or defend the validity of,
enforce his rights under, or recover damages for breach of this Agreement, the
Corporation shall pay, as they are incurred, his actual expenses for attorneys'
fees and disbursements, together with such additional payments, if any, as may
be necessary so that the net after tax payments to the Executive equal such fees
and disbursements.
5. Restrictive Covenant; Trade Secrets. (a) Executive agrees that for two
years after the termination of his employment, he will not, without the prior
written consent of the Corporation, directly or indirectly, as a principal,
officer, director, stockholder (except as the owner of less than 5% of the stock
of a company whose stock is publicly traded), partner, employee or in any other
capacity whatsoever engage in or become associated with, or advise or assist,
any business or enterprise that is engaged in providing any goods or services
that are competitive with any goods or services that are or may at any time be
offered by the Corporation. For the purposes of this Section 5 a business or
enterprise shall be deemed to be engaged in providing goods or services that are
competitive with any goods or services offered by the Corporation if the Board
of Directors of the Corporation so determines. It is agreed that the
Corporation's sole remedy in the event of Executive's breach of this Section
5(a) shall be the termination of all compensation otherwise payable to Executive
under Section 2 with respect to the period of time after such breach.
Notwithstanding any of the foregoing, this Section 5 shall not be applicable
with respect to (i) commercial real estate investment or management or (ii) any
discrete business of the Corporation which accounts, in the fiscal year
immediately preceding the year in which Executive's employment terminates, for
less than 5% of the Corporation's consolidated net sales and net earnings.
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(b) Executive agrees that during the period of his employment by the
Corporation and thereafter he shall hold in confidence and not disclose to any
unauthorized person any knowledge or information of a confidential nature or any
trade secret with respect to the businesses of the Corporation and any of its
subsidiaries, and not to disclose, publish or make use of the same without the
prior express written consent of the Corporation. Executive shall be free to
disclose such information, knowledge or trade secret in the ordinary course of
his carrying out his duties as an officer of the Corporation, and shall be free
to disclose such information, knowledge or trade secret if such matters become
public through no fault of Executive or if compelled by legal process.
6. Miscellaneous.
(a) Amendments. This Agreement may not be altered, modified or amended
except by a written instrument signed by each of the parties hereto.
(b) Successors. As used in this Agreement, the term "Corporation" shall
include any successors to all or part of the business and/or assets of the
Corporation. This Agreement shall inure to the benefit of and be binding upon
the Corporation and its successors and assigns. The Corporation shall require
any successor (whether direct or indirect, by purchase merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Corporation to assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Corporation would be required to perform
it if no such succession had taken place. This Agreement shall inure to the
benefit of and be enforceable by the Executive and his personal or legal
representatives, executors, administrators, heirs, distributees, devisees and
legatees.
(c) Assignment. Except as provided under Paragraph (b) of this Section 6,
neither this Agreement nor any of the rights or obligations hereunder shall be
assigned or delegated by any party hereto without the prior written consent of
the other party.
(d) Waiver. Waiver by any party hereto of any breach or default by the
other party of any of the terms of this Agreement shall not operate as a waiver
of any other breach or default, whether similar to or different from the breach
or default waived.
(e) Severability. In the event that any one or more of the provisions of
this Agreement shall be or become invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not be affected thereby.
(f) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.
(g) Notices. Notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by United States registered mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive to: John L. Wehle, Jr.
2171 Scottsville Road
Scottsville, New York 14546
If to the Corporation to: The Genesee Corporation
P.O. Box 762
445 St. Paul Street
Rochester, New York 14603
Attention: General Counsel
or to such other address or such other person as Executive or the Corporation
shall designate in writing in accordance herewith except that notices regarding
changes in notices shall be effective only upon receipt.
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(i) Headings. Headings to sections and paragraphs in this Agreement are
for the convenience of the parties only and are not intended to be a part of, or
to affect the meaning or interpretation of, this Agreement.
(j) Governing Law. The Agreement shall be governed by the laws of the
State of New York without reference to the principles of conflict of laws.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed and Executive has hereunto set his hand as of the day and year first
above written.
GENESEE CORPORATION
By: /s/Mark W. Leunig
Its: Vice President & Secretary
/s/ John L. Wehle, Jr.
John L. Wehle, Jr.
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EXHIBIT 10-7
INDEMNIFICATION AGREEMENT
Agreement, dated June 8, 1989 between Genesee Corporation, a New York
corporation (the "Company"), and John L. Wehle, Jr. (the "Indemnitee").
WHEREAS, highly competent persons are becoming more reluctant to serve as
directors and officers of the Company unless they are provided with adequate
protection through insurance or adequate indemnification against inordinate
risks of claims and actions against them arising out of their service to and
activities on behalf of the Company;
WHEREAS, the current impracticability of obtaining adequate insurance and
the uncertainties relating to indemnification have increased the difficulty of
attracting and retaining such persons;
WHEREAS, the Board of Directors of the Company has determined that the
inability to attract and retain such persons is detrimental to the best
interests of the Company's stockholders and that the Company should act to
assure such persons that there will be increased certainty of such protection in
the future;
WHEREAS, it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify such persons to the fullest extent
permitted by applicable law so that they will serve or continue to serve the
Company free from undue concern that they will not be so indemnified; and
WHEREAS, the Indemnitee is willing to serve, continue to serve and to take
an additional service for or on behalf of the Company on the condition that the
Indemnitee be so indemnified;
NOW, THEREFORE, the Company and the Indemnitee hereby agree as follows:
ARTICLE I - DEFINITIONS
For purposes of this Agreement, the following terms shall have the meanings
given:
1.1 "Board" shall mean the Board of Directors of the Company.
1.2 A "Change in Control" shall be deemed to have occurred if:
(i) any "Person," as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than
(a) the Company or (b) any corporation owned, directly or indirectly, by the
Company or the stockholders of the Company in substantially the same proportions
as their ownership of stock of the Company), is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 20% or more of the
combined voting power of the Company's then outstanding securities (provided,
however, that none of John L. Wehle, any direct descendant of John L. Wehle, the
trust established under the will of Louis A. Wehle and any trustee thereunder
shall be a "person" for purposes of this Agreement);
(ii) during any period of two consecutive years, there is elected 20%
or more of the members of the Board of Directors of Company without the approval
of the nomination of such members by a majority of that portion of the Board
consisting of members who were serving at the beginning of the two-year period;
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(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (a) a merger
or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent more than 80% of
the combined voting power of the voting securities of the Company, or such
surviving entity, outstanding immediately after such merger or consolidation; or
(b) a merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no "person" (as defined above)
acquires more than 20% of the combined voting power of the Company's then-
outstanding securities; or
(iv) the stockholders of the Company approve an agreement for the sale
or disposition by the Company of all or substantially all of the Company's
assets, including a sale or disposition of Genesee Brewing Co., Inc. or its
assets.
1.3 "Disinterested Director" means a director of the Company who is not
and was not a party to the Proceeding in respect of which indemnification is
sought by the Indemnitee.
1.4 "Expenses" shall include all reasonable attorneys' fees, retainers,
court costs, transcript costs, fees of experts, witness fees, travel expenses,
duplicating costs, printing and binding costs, telephone charges, postage,
delivery service fees, and all other disbursements or expenses of the types
customarily incurred in connection with prosecuting, defending, preparing to
prosecute or defend, investigating, or being or preparing to be a witness in a
Proceeding.
1.5 "Independent Counsel" means a law firm, or a member of a law firm,
that is experienced in matters of corporation law and neither presently is, nor
in the past three years has been, retained to represent (i) the Company or the
Indemnitee in any matter material to either such party or (ii) any other party
to the Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term "Independent Counsel" shall not include
any person who, under the applicable standards of professional conduct then
prevailing, would have any conflict of interest in representing either the
Company or the Indemnitee in an action to determine the Indemnitee's rights
under this Agreement.
1.6 "Proceeding" includes any action, suit, arbitration, alternate dispute
resolution mechanism, investigation, administrative hearing or any other actual,
threatened or completed proceeding, whether civil, criminal, administrative or
investigative, other than one initiated by the Indemnitee. For purposes of the
foregoing sentence, a "Proceeding" shall not be deemed to have been initiated by
the Indemnitee where the Indemnitee seeks pursuant to Article VII of this
Agreement to enforce the Indemnitee's rights under this Agreement.
ARTICLE II - SERVICES BY THE INDEMNITEE,
NOTICE OF PROCEEDINGS
2.1 Services. The Indemnitee agrees to continue to serve as a director
and/or officer of the Company. The Indemnitee may at any time and for any reason
resign from such position(s) (subject to any other contractual obligation or any
obligation imposed by operation of law).
2.2 Notice of Proceeding. The Indemnitee agrees promptly to notify the
Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document or communication relating
to any Proceeding or matter which may be subject to indemnification or
advancement of Expenses covered hereunder; provided, however, that the failure
by the Indemnitee to give such notice, or any delay in giving such notice, shall
not relieve the Company of its obligations under this Agreement except to the
extent that the Company is actually prejudiced by any such failure or delay.
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ARTICLE III - INDEMNIFICATION
3.1 In General. In connection with any Proceeding, whether relating to
events occurring before or after the date hereof, the Company shall indemnify,
and advance Expenses, to the Indemnitee as provided in this Agreement and to the
fullest extent permitted by applicable law in effect on the date hereof and to
such greater extent as applicable law may thereafter from time to time permit.
3.2 Proceeding Other Than Proceedings by or in the Right of the Company.
The Indemnitee shall be entitled to the rights of indemnification provided in
this Section if, because the Indemnitee is or was a director of the Company, the
Indemnitee is, or is threatened to be made, a party to any Proceeding, other
than a Proceeding by or in the right of the Company. Subject to Section 3.1, the
Indemnitee shall be indemnified against Expenses, judgments, penalties, fines
and amounts paid in settlement, actually and reasonably incurred by the
Indemnitee or on the Indemnitee's behalf in connection with such Proceeding.
3.3 Proceedings by or in the Right of the Company. The Indemnitee shall be
entitled to the rights of indemnification provided in this Section if, because
the Indemnitee is or was a director of the Company, the Indemnitee is, or is
threatened to be made, a party to any Proceeding brought by or in the right of
the Company to procure a judgment in its favor. Subject to Section 3.1, the
Indemnitee shall be indemnified against Expenses, judgments, penalties, fines
and amounts paid in settlement, actually and reasonably incurred by the
Indemnitee or on the Indemnitee's behalf in connection with such Proceeding.
Notwithstanding the foregoing, no such indemnification shall be made in respect
of any claim, issue or matter in such Proceeding as to which the Indemnitee
shall have been adjudged to be liable to the Company if applicable law prohibits
such indemnification or if such claim, issue or matter involves an accounting of
profits by the Indemnitee to the Company pursuant to the provisions of Section
16(b) of the Securities Exchange Act of 1934, as amended ("Section 16").
3.4 Indemnification of a Party Who is Wholly or Partly Successful.
Notwithstanding any other provision of this Agreement, to the extent that the
Indemnitee is, because the Indemnitee is or was a director of the Company, a
party to and is successful, on the merits or otherwise, in any Proceeding, the
Indemnitee shall be indemnified to the fullest extent permitted by law, against
all Expenses, judgments, penalties, fines, and amounts paid in settlement,
actually and reasonably incurred by the Indemnitee or on the Indemnitee's behalf
in connection therewith. If the Indemnitee is not wholly successful in such
Proceeding but is successful, on the merits or otherwise, as to one or more but
less than all claims, issues or matters in such Proceeding, the Company shall
indemnify the Indemnitee to the fullest extent permitted by law, against all
Expenses, judgments, penalties, fines, and amounts paid in settlement, actually
and reasonably incurred by the Indemnitee or on the Indemnitee's behalf in
connection with each successfully resolved claim, issue or matter. For purposes
of this Section and without limitation, the termination of any claim, issue or
matter in such a Proceeding by dismissal, with or without prejudice, shall be
deemed to be a successful result as to such claim, issue or matter.
3.5 Indemnification for Expenses of a Witness. Notwithstanding any other
provision of this Agreement, to the extent that the Indemnitee is, because the
Indemnitee is or was a director of the Company, a witness in any Proceeding, the
Indemnitee shall be indemnified against all Expenses actually and reasonably
incurred by the Indemnitee or on the Indemnitee's behalf in connection
therewith.
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ARTICLE IV - ADVANCEMENT OF EXPENSES
Notwithstanding any provision to the contrary in Article V, the Company
shall advance all reasonable Expenses which, because the Indemnitee is or was a
director of the Company, were incurred by or on behalf of the Indemnitee in
connection with any Proceeding, within 10 days after the receipt by the Company
of a statement or statements from the Indemnitee requesting such advance or
advances, whether prior to or after final disposition of such Proceeding. Such
statement or statements shall reasonably evidence the Expenses and shall include
or be preceded or accompanied by an undertaking by or on behalf of the
Indemnitee to repay any Expenses if it shall ultimately be determined that the
Indemnitee is not entitled to be indemnified against such Expenses. Any advance
and undertakings to repay pursuant to this Article IV shall be unsecured and
interest free.
ARTICLE V - PROCEDURES FOR DETERMINATION OF ENTITLEMENT
5.1 Initial Request. To obtain indemnification under this Agreement, the
Indemnitee shall submit to the Company a written request, including such
documentation and information as is reasonably available to the Indemnitee and
is reasonably necessary to determine whether and to what extent the Indemnitee
is entitled to indemnification. The Secretary of the Company shall promptly
advise the Board in writing that the Indemnitee has requested indemnification.
5.2 Method of Determination. A determination (if required by applicable
law) with respect to the Indemnitee's entitlement to indemnification shall be
made as follows:
(a) if a Change of Control has occurred, unless the Indemnitee shall
request in writing that such determination be made in accordance with clause (b)
of this Section, the determination shall be made by Independent Counsel in a
written opinion to the Board, a copy of which shall be delivered to the
Indemnitee.
(b) if a Change of Control has not occurred, the determination shall
be made by the Board by a majority vote of a quorum consisting of Disinterested
Directors. In the event that a quorum of the Board consisting of Disinterested
Directors is not obtainable or, even if obtainable, such quorum of Disinterested
Directors so directs, the determination shall be made by Independent Counsel in
a written opinion to the Board, a copy of which shall be delivered to the
Indemnitee.
5.3 Selection, Payment and Discharge of Independent Counsel. In the event
the determination of entitlement to indemnification is to be made by Independent
Counsel pursuant to the preceding Section, the Independent Counsel shall be
selected, paid, and discharged in the following manner:
(a) If a Change of Control has not occurred, the Independent Counsel
shall be selected by the Board, and the Company shall give written notice to the
Indemnitee advising the Indemnitee of the identity of the Independent Counsel so
selected.
(b) If a Change of Control has occurred, the Independent Counsel
shall be selected by the Indemnitee (unless the Indemnitee shall request that
such selection be made by the Board, in which event clause (a) of this Section
shall apply), and the Indemnitee shall give written notice to the Company
advising it of the identity of the Independent Counsel so selected.
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(c) Following the initial selection described in clauses (a) and (b)
of this Section, the Indemnitee or the Company, as the case may be, may, within
seven days after such written notice of selection has been given, deliver to the
other party a written objection to such selection. Such objection may be
asserted only on the ground that the Independent Counsel so selected does not
meet the requirements of "Independent Counsel" as defined in Section 1.5 of this
Agreement, and the objection shall set forth with particularity the factual
basis of such assertion. Absent a proper and timely objection, the person or
firm so selected shall act as Independent Counsel. If such written objection is
made, the Independent Counsel so selected may not serve as Independent Counsel
unless and until a court has determined that such objection is without merit.
(d) Either the Company or the Indemnitee may petition the Supreme
Court of the State of New York or other court of competent jurisdiction if the
parties have been unable to agree on the selection of Independent Counsel within
20 days after submission by the Indemnitee of a written request for
indemnification pursuant to Section 5.1 of this Agreement. Such petition may
request a determination whether an objection to the party's selection is without
merit and/or seek the appointment as Independent Counsel of a person or firm
selected by the court or by such other person as the court shall designate. A
person or firm so appointed shall act as Independent Counsel under Section 5.2
of this Agreement.
(e) The Company shall pay any and all reasonable fees and expenses of
Independent Counsel incurred by such Independent Counsel in connection with its
actions pursuant to this Agreement, and the Company shall pay all reasonable
fees and expenses incident to the procedures of this Section, regardless of the
manner in which such Independent Counsel was selected or appointed.
(f) Upon the due commencement of any judicial proceeding or
arbitration pursuant to Section 7.2 of this Agreement, Independent Counsel shall
be discharged and relieved of any further responsibility in such capacity
(subject to the applicable standards of professional conduct then prevailing).
5.4 Cooperation. The Indemnitee shall cooperate with the person, persons
or entity making the determination with respect to the Indemnitee's entitlement
to indemnification under this Agreement, including providing to such person,
persons or entity upon reasonable advance request any documentation or
information which is not privileged or otherwise protected from disclosure and
which is reasonably available to the Indemnitee and reasonably necessary to such
determination. Any reasonable costs or expenses (including attorneys' fees and
disbursements) incurred by the Indemnitee in so cooperating with the person,
persons or entity making such determination shall be borne by the Company
(irrespective of the determination as to the Indemnitee's entitlement to
indemnification) and the Company hereby indemnifies and agrees to hold the
Indemnitee harmless therefrom.
5.5 Payment. If it is determined that the Indemnitee is entitled to
indemnification, payment to the Indemnitee shall be made within ten days after
such determination.
ARTICLE VI - PRESUMPTIONS AND EFFECT OF
CERTAIN PROCEEDINGS
6.1 Burden of Proof. In making a determination with respect to entitlement
to indemnification hereunder, the person or persons or entity making such
determination shall presume that the Indemnitee is entitled to indemnification
under this Agreement if the Indemnitee has submitted a request for
indemnification in accordance with Section 5.1 of this Agreement, and the
Company shall have the burden of proof to overcome that presumption in
connection with the making by any person, persons or entity of any determination
contrary to that presumption.
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6.2 Effect of Other Proceedings. The termination of any Proceeding or of
any claim, issue or matter therein, by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent shall not
(except as otherwise expressly provided in this Agreement) of itself adversely
affect the right of the Indemnitee to indemnification or create a presumption
that the Indemnitee did not meet any applicable standard of conduct.
6.3 Actions of Others. The knowledge and/or actions, or failure to act, of
any director, officer, agent or employee of the Company shall not be imputed to
the Indemnitee for purposes of determining the right to indemnification under
this Agreement.
ARTICLE VII - REMEDIES OF THE INDEMNITEE
7.1 Application. This Article VII shall apply in the event of a Dispute.
For purposes of this Article, "Dispute", shall mean any of the following events:
(a) a determination is made pursuant to Article V of this Agreement
that the Indemnitee is not entitled to indemnification under this Agreement;
(b) advance of Expenses is not timely made pursuant to Article IV of
this Agreement;
(c) the determination of entitlement to be made pursuant to Section
5.2 of this Agreement has not been made within 30 days after receipt by the
Company of the request for indemnification;
(d) payment of indemnification is not made pursuant to Section 3.5 of
this Agreement within 20 days after receipt by the Company of a written request
therefor; or
(e) payment of indemnification is not made within 20 days after a
determination has been made that the Indemnitee is entitled to indemnification
pursuant to Article V of this Agreement.
7.2 Adjudication. In the event of a Dispute, the Indemnitee shall be
entitled to an adjudication in an appropriate court of the State of New York, or
in any other court of competent jurisdiction, of the Indemnitee's entitlement to
such indemnification or advancement of Expenses. Alternatively, the Indemnitee,
at the Indemnitee's option, may seek an award in arbitration to be conducted by
a single arbitrator pursuant to the rules of the American Arbitration
Association. The Indemnitee shall commence such proceeding seeking an
adjudication or an award in arbitration within 180 days following the date on
which the Indemnitee first has the right to commence such proceeding pursuant to
this Section. The Company shall not oppose the Indemnitee's right to seek any
such adjudication or award in arbitration.
7.3 De Novo Review. In the event that a determination shall have been made
pursuant to Article V of this Agreement that the Indemnitee is not entitled to
indemnification, any judicial proceeding or arbitration commenced pursuant to
this Article VII shall be conducted in all respects as a de novo trial, or
arbitration, on the merits and the Indemnitee shall not be prejudiced by reason
of that adverse determination or by reason of the absence of a determination
pursuant to Article V. In any such proceeding or arbitration, the Company shall
have the burden of proving that the Indemnitee is not entitled to
indemnification or advancement of Expenses, as the case may be.
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7.4 Company Bound. If a determination shall have been made or deemed to
have been made pursuant to Article V of this Agreement that the Indemnitee is
entitled to indemnification, the Company shall be bound by such determination in
any judicial proceeding or arbitration absent (i) a misstatement by the
Indemnitee of a material fact, or an omission of a material fact necessary to
make the Indemnitee's statement not materially misleading, in connection with
the request for indemnification or (ii) a prohibition of such indemnification
under applicable law.
7.5 Procedures Valid. The Company shall be precluded from asserting in any
judicial proceeding or arbitration commenced pursuant to this Article VII that
the procedures and presumptions of this Agreement are not valid, binding and
enforceable and shall stipulate in any such court or before any such arbitrator
that the Company is bound by all the provisions of this Agreement.
7.6 Expenses of Adjudication. In the event that the Indemnitee, pursuant
to this Article VII, seeks a judicial adjudication of, or an award in
arbitration to enforce the Indemnitee's rights under, or to recover damages for
breach of, this Agreement, the Indemnitee shall be entitled to recover from the
Company, and shall be indemnified by the Company against, any and all expenses
(of the types described in the definition of Expenses in Section 1.4 of this
Agreement) actually and reasonably incurred by the Indemnitee in such
adjudication or arbitration, but only if the Indemnitee prevails therein. If it
shall be determined in such adjudication or arbitration that the Indemnitee is
entitled to receive part, but not all of the indemnification or advancement of
expenses sought, the expenses incurred by the Indemnitee in connection with such
adjudication or arbitration shall be appropriately prorated.
ARTICLE VIII - NON-EXCLUSIVITY, INSURANCE, SUBROGATION
8.1 Non-Exclusivity. The rights of indemnification and to receive
advancement of Expenses as provided by this Agreement shall not be deemed
exclusive of any other rights to which the Indemnitee may at any time be
entitled under applicable law, the Certificate of Incorporation or By-Laws of
the Company, any agreement, a vote of shareholders or a resolution of directors,
or otherwise. No amendment, alteration, rescission or replacement of this
Agreement or any provision hereof shall be effective as to the Indemnitee with
respect to any action taken or omitted by the Indemnitee as a director of the
Company prior to such amendment, alteration, rescission or replacement.
8.2 Insurance. The Company may maintain an insurance policy or policies
against liability arising out of this Agreement or otherwise.
8.3 Subrogation. In the event of any payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of the Indemnitee who shall execute all papers required and take all
action necessary to secure such rights, including execution of such documents as
are necessary to enable the Company to bring suit to enforce such rights.
8.4 No Duplicative Payment. The Company shall not be liable under this
Agreement to make any payment of amounts otherwise indemnifiable hereunder if
and to the extent that the Indemnitee has otherwise actually unconditionally
received such payment under any insurance policy, contract, agreement or
otherwise.
ARTICLE IX - GENERAL PROVISIONS
9.1 Binding Effect. This Agreement shall be binding upon the Company and
its successors and assigns, shall inure to the benefit of the Indemnitee and the
Indemnitee's heirs, executors and administrators and shall continue in effect
regardless of whether the Indemnitee continues to serve as a Director of the
Company.
79
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9.2 Severability. If any provision or provisions of this Agreement shall
be held to be invalid, illegal or unenforceable for any reason whatsoever:
a) the validity, legality and enforceability of the remaining
provisions of this Agreement (including, without limitation, each portion of any
Section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that is not itself invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby; and
(b) to the fullest extent possible, the provisions of this Agreement
(including, without limitation, each portion of any Section of this Agreement
containing any such provision held to be invalid, illegal or unenforceable, that
is not itself invalid, illegal or unenforceable) shall be construed so as to
give effect to the intent manifested by the provision held invalid, illegal or
unenforceable.
9.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
but all of which together shall constitute one and the same Agreement.
9.4 Headings. The headings of the paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.
9.5 Modification and Waiver. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both of the
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
9.6 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if (i)
delivered by hand, or (ii) mailed by certified or registered mail with postage
prepaid, on the third business day after the day on which it is so mailed:
If to the Indemnitee:
John L. Wehle, Jr.
2171 Scottsville Road
Scottsville, New York 14546
If to the Company:
Attn: The President
445 St. Paul Street
Rochester, New York 14605
or to such other address as may have been furnished to the Indemnitee by the
Company or to the Company by the Indemnitee, as the case may be.
9.7 Governing Law. The parties agree that this Agreement shall be governed
by, and construed and enforced in accordance with, the laws of the State of New
York without application of the conflict of laws principles thereof.
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9.8 Entire Agreement. This Agreement constitutes the entire agreement and
understanding between the parties hereto in reference to all the matters herein
agreed upon. This Agreement replaces all prior indemnification agreements or
understandings of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
Company:
Genesee Corporation
By: /s/Robert N. Latella
Name: Robert N. Latella
Title: Executive Vice President and
Chief Operating Officer
Indemnitee
/s/John L. Wehle, Jr.
John L. Wehle, Jr.
81
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EXHIBIT 22
Subsidiaries
Names State of Incorporation
The Genesee Brewing Company, Inc. New York
Genesee Ventures, Inc. New York
Ontario Foods, Incorporated New York
82
<PAGE>
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