<PAGE>
1
Index to Exhibits at page 22
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 10-Q/A
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended January 29, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0 -1653
GENESEE CORPORATION
(Exact name of registrant as specified in its charter)
STATE OF 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 offices) (Zip Code)
Registrant's telephone number, including area code (716) 546-1030
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
As of the date of this report, the Registrant had the following shares of common
stock outstanding:
Number of
Class Shares Outstanding
Class A Common Stock
(voting), par value 209,885
$.50 per share
Class B Common Stock
(non-voting), par 1,410,312
value $.50 per share
<PAGE>
2
<TABLE>
GENESEE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
January 29, 2000 and May 1, 1999
UNAUDITED AUDITED
(Dollars in Thousands) January 29, 2000 May 1, 1999
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 5,850 $ 5,836
Marketable securities available for sale 7,834 7,964
Trade accounts receivable, less allowance for doubtful receivables
of $235 at January 29, 2000 and $478 at May 1, 1999 4,077 10,222
Inventories, at lower of cost (first-in, first-out) or market 9,645 16,414
Deferred income tax assets, current portion 0 397
Other current assets 230 751
-------- --------
Total current assets 27,636 41,584
Net property, plant and equipment 12,197 37,040
Investment in and notes receivable from unconsolidated real estate partnerships 5,252 5,343
Investments in direct financing and leveraged leases 25,190 28,285
Goodwill and other intangibles net of accumulated amortization of $2,766 at
January 29, 2000 and $1,747 at May 1, 1999 27,071 28,280
Other assets 2,898 3,421
Net assets held for disposal - noncurrent 11,900 0
-------- --------
Total assets $ 112,144 $ 143,953
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Line of credit $ 0 $ 3,000
Notes payable, current portion 82 82
Accounts payable 1,534 8,421
Income taxes payable 0 1,215
Federal and state beer taxes payable 0 1,354
Accrued compensation 390 3,505
Accrued postretirement benefits, current portion 0 731
Accrued expenses and other 1,337 5,374
Deferred income tax liabilities, current portion 1,051 0
Net liabilities held for disposal - current 1,854 0
-------- --------
Total current liabilities 6,248 23,682
Notes payable, noncurrent portion 6,265 4,679
Deferred income tax liabilities, noncurrent portion 10,090 8,251
Accrued postretirement benefits, noncurrent portion 0 15,332
Other liabilities 471 493
-------- --------
Total liabilities 23,074 52,437
Minority interests in consolidated subsidiaries 2,588 2,479
Shareholders' equity:
Class A common stock 105 105
Class B common stock 753 753
Additional paid-in capital 5,847 5,856
Retained earnings 83,347 85,692
Accumulated other comprehensive (loss)/income (169) 77
Less: Class B treasury stock, at cost (3,401) (3,446)
-------- --------
-------- --------
Total shareholders' equity 86,482 89,037
-------- --------
Total liabilities and shareholders' equity $ 112,144 $ 143,953
======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
3
<TABLE>
GENESEE CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS
OF EARNINGS AND COMPREHENSIVE INCOME Thirteen Weeks Ended
January 29, 2000 and January 30, 1999
(Dollars in Thousands,
Except Per Share Data) UNAUDITED
<S> <C> <C>
2000 1999
As Restated
Revenues $ 11,927 $ 11,972
Cost of goods sold 9,223 8,627
---------- ----------
Gross profit 2,704 3,345
Selling, general and administrative expenses 1,685 2,029
---------- ----------
Operating income 1,019 1,316
Investment income 245 250
Other income 461 3,533
Interest expense (146) (235)
Interest of minority partners in earnings of
subsidiaries (231) (216)
---------- ----------
Earnings from continuing operations before income taxes 1,348 4,648
Income tax expense 620 1,958
---------- ----------
Earnings from continuing operations 728 2,690
Discontinued operations:
Loss from operations of the discontinued brewing segment
(less applicable income tax benefit of $ 363 and $ 799, respectively) (426) (939)
---------- ----------
Net earnings 302 1,751
Other comprehensive income, net of income taxes:
Unrealized holding losses arising during the period (85) (20)
---------- ----------
Comprehensive income $ 217 $ 1,731
========== ==========
Basic and diluted earnings per share from continuing operations $ 0.45 $ 1.66
Basic and diluted loss per share from discontinued operations (0.26) (0.58)
---------- ----------
---------- ----------
$ 0.19 $ 1.08
========== ==========
Weighted average common shares outstanding 1,620,197 1,618,909
Weighted average and common equivalent shares 1,620,483 1,618,909
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
4
<TABLE>
GENESEE CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS
OF EARNINGS AND COMPREHENSIVE INCOME Thirty Nine Weeks
Ended January 29, 2000 and January 30, 1999
(Dollars in Thousands,
Except Per Share Data) UNAUDITED
<S> <C> <C>
2000 1999
As Restated
Revenues $ 35,539 $ 33,127
Cost of goods sold 28,464 24,318
--------- ---------
Gross profit 7,075 8,809
Selling, general and administrative expenses 5,091 5,502
--------- ---------
Operating income 1,984 3,307
Investment income 680 1,659
Other income 718 3,615
Interest expense (438) (395)
Interest of minority partners in earnings of
subsidiaries (821) (710)
--------- ---------
Earnings from continuing operations before income taxes 2,123 7,476
Income tax expense 977 3,287
--------- ---------
Earnings from continuing operations 1,146 4,189
Discontinued operations:
Loss from operations of the discontinued brewing segment
(less applicable income tax benefit of $ 1,525 and $ 1,612, respectively) (1,790) (1,892)
--------- ---------
Net (loss)/earnings (644) 2,297
Other comprehensive income, net of income taxes:
Unrealized holding losses arising during the period (246) (508)
--------- ---------
Comprehensive (loss)/income $ (890) $ 1,789
========= =========
Basic and diluted earnings per share from continuing operations $ 0.71 $ 2.59
Basic and diluted loss per share from discontinued operations (1.10) (1.17)
--------- ---------
--------- ---------
$ (0.39) $ 1.42
========= =========
Weighted average common shares outstanding 1,619,952 1,618,754
Weighted average and common equivalent shares 1,619,952 1,618,952
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
5
<TABLE>
GENESEE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Thirty Nine Weeks Ended January 29, 2000 and January 30, 1999
<S> <C> <C>
UNAUDITED
(Dollars in thousands) 2000 1999
As Restated
Cash flows from operating activities:
Net earnings from continuing operations $ 1,146 $ 4,189
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 2,031 1,319
Gain on disposition of assets 0 0
Deferred tax provision 0 0
Other 1,607 1,884
Changes in non-cash assets and liabilities:
Trade accounts receivable (497) (1,048)
Inventories 1,420 (1,877)
Other assets 15 (115)
Accounts payable (791) (128)
Accrued expenses and other (1,344) 931
Income taxes payable (1,215) 904
Other liabilities (2) (1,372)
--------- ---------
Net cash provided by continuing operating activities 2,370 4,687
Net cash provided by discontinued operations 1,666 1,855
--------- ---------
-------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 4,036 6,542
-------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Acquisitions, net of cash acquired 0 (18,826)
Capital expenditures (3,417) (2,690)
Proceeds from sale of marketable securities 2,418 10,319
Purchases of marketable securities and other investments (2,262) 82
Investments in and advances to unconsolidated
real estate investments, net of distributions 91 200
Net investment in direct financing and leveraged leases 3,095 4,814
Withdrawals by minority interest (712) (513)
--------- ---------
Net cash used in continuing investing activities (787) (6,614)
Net cash used in discontinued operations (120) (1,776)
-------------------------------------------------------------------------------------------------------
Net cash used in investing activities (907) (8,390)
-------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from acquisition of debt 1,700 7,780
Principal payments on debt (3,114) 0
Payment of dividends (1,701) (2,266)
-------------------------------------------------------------------------------------------------------
Net cash (used in) provided by financing activities (3,115) 5,514
-------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 14 3,666
Cash and cash equivalents at beginning of the period 5,836 2,692
-------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of the period $ 5,850 $ 6,358
=============================================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
6
GENESEE CORPORATION
Notes to Consolidated Financial Statements
NOTE (A) Planned Divestiture of the Corporation's Brewing Business
On December 16, 1999 the Corporation's brewing business entered into
an agreement with the owners of City Brewing Company to sell
substantially all of its assets. In accordance with generally
accepted accounting principles ("GAAP"), the results of operations of
the brewing business have been segregated from the Corporation's
continuing operations and accounted for as discontinued operations in
the accompanying consolidated statements of earnings and
comprehensive income and in the consolidated statements of cash
flows. The results of operations for the brewing business were as
follows:
<TABLE>
<S> <C> <C> <C> <C>
- ---------------------------------------- ----------------------------------------------- -------------------------------------------
Thirteen weeks ended Thirty nine weeks ended
- ---------------------------------------- ----------------------------------------------- -------------------------------------------
- ---------------------------------------- ------------------------ ---------------------- --------------------- ---------------------
(Dollars in thousands) January 29, 2000 January 30, 1999 January 29, 2000 January 30, 1999
- ---------------------------------------- ------------------------ ---------------------- --------------------- ---------------------
- ---------------------------------------- ------------------------ ---------------------- --------------------- ---------------------
- ---------------------------------------- ------------------------ ---------------------- --------------------- ---------------------
- ---------------------------------------- ------------------------ ---------------------- --------------------- ---------------------
Revenue $ 25,973 $ 29,760 $ 91,158 $ 103,164
- ---------------------------------------- ------------------------ ---------------------- --------------------- ---------------------
- ---------------------------------------- ------------------------ ---------------------- --------------------- ---------------------
Less Beer Taxes (5,371) (6,303) (19,024) (22,290)
- ---------------------------------------- ------------------------ ---------------------- --------------------- ---------------------
- ---------------------------------------- ------------------------ ---------------------- --------------------- ---------------------
- ---------------------------------------- ------------------------ ---------------------- --------------------- ---------------------
- ---------------------------------------- ------------------------ ---------------------- --------------------- ---------------------
Net Revenue 20,602 23,457 72,134 80,874
- ---------------------------------------- ------------------------ ---------------------- --------------------- ---------------------
- ---------------------------------------- ------------------------ ---------------------- --------------------- ---------------------
- ---------------------------------------- ------------------------ ---------------------- --------------------- ---------------------
- ---------------------------------------- ------------------------ ---------------------- --------------------- ---------------------
Loss from discontinued
operations, net of tax benefit
before non-recurring
restructuring charge (426) (939) (834) (1,892)
- ---------------------------------------- ------------------------ ---------------------- --------------------- ---------------------
- ---------------------------------------- ------------------------ ---------------------- --------------------- ---------------------
Non-recurring restructuring
charge, net of tax benefit 0 0 (956) 0
- ---------------------------------------- ------------------------ ---------------------- --------------------- ---------------------
- ---------------------------------------- ------------------------ ---------------------- --------------------- ---------------------
- ---------------------------------------- ------------------------ ---------------------- --------------------- ---------------------
- ---------------------------------------- ------------------------ ---------------------- --------------------- ---------------------
Loss from discontinued
operations, net of taxes (426) (939) (1,790) (1,892)
- ---------------------------------------- ------------------------ ---------------------- --------------------- ---------------------
</TABLE>
<PAGE>
7
GENESEE CORPORATION
Notes to Consolidated Financial Statements
NOTE (A) Planned Divestiture of the Corporation's Brewing Business (continued)
The net assets of the brewing business have been excluded from their
respective captions and reported as net assets (liabilities) held for
disposal in the accompanying consolidated balance sheet at January 29,
2000. The net assets of the brewing business at January 29, 2000 were
as follows:
<TABLE>
<S> <C> <C>
---------------------------------------------------------------------
(Dollars in thousands)
------------------------------------------------------ --------------
------------------------------------------------------ --------------
Accounts receivable, net $ 3,848
------------------------------------------------------ --------------
------------------------------------------------------ --------------
Inventory 5,252
------------------------------------------------------ --------------
------------------------------------------------------ --------------
Net deferred income tax asset, current portion 1,448
------------------------------------------------------ --------------
------------------------------------------------------ --------------
Other current assets 447
------------------------------------------------------ --------------
------------------------------------------------------ --------------
Accounts payable (4,392)
------------------------------------------------------ --------------
------------------------------------------------------ --------------
Federal and state beer taxes payable (453)
------------------------------------------------------ --------------
------------------------------------------------------ --------------
Accrued compensation (2,998)
------------------------------------------------------ --------------
------------------------------------------------------ --------------
Accrued postretirement benefits, current portion (731)
------------------------------------------------------ --------------
------------------------------------------------------ --------------
Accrued expenses and other (3,350)
------------------------------------------------------ --------------
------------------------------------------------------ --------------
Accrued restructuring (925)
------------------------------------------------------ --------------
------------------------------------------------------ --------------
Net liabilities held for disposal - current (1,854)
------------------------------------------------------ --------------
------------------------------------------------------ --------------
Net property, plant and equipment 24,109
------------------------------------------------------ --------------
------------------------------------------------------ --------------
Net deferred income tax asset, noncurrent portion 2,861
------------------------------------------------------ --------------
------------------------------------------------------ --------------
Other assets 381
------------------------------------------------------ --------------
------------------------------------------------------ --------------
Accrued postretirement benefits, noncurrent portion (15,332)
------------------------------------------------------ --------------
------------------------------------------------------ --------------
Other liabilities (119)
------------------------------------------------------ --------------
------------------------------------------------------ --------------
Net assets held for disposal - noncurrent 11,900
------------------------------------------------------ --------------
</TABLE>
NOTE (B) The Corporation's consolidated financial statements enclosed herein are
unaudited with the exception of the Consolidated Balance Sheet at May 1,
1999 and, because of the seasonal nature of the business and the varying
schedule of its special sales efforts, these results are not necessarily
indicative of the results to be expected for the entire year. In the
opinion of management, the interim financial statements reflect all
adjustments, consisting of only normal recurring items, which are necessary
for a fair presentation of the results for the periods presented. The
accompanying financial statements have been prepared in accordance with
GAAP and SEC guidelines applicable to interim financial information. These
statements should be reviewed in conjunction with the annual report to
shareholders for the year ended May 1, 1999. It is the Corporation's policy
to reclassify certain amounts in the prior year consolidated financial
statements to conform with the current year presentation.
Certain reclassifications of the January 30, 1999 financial statements have
been made to reflect the Company's fiscal 2000 discontinued operations
which are planned to be divested by the end of fiscal 2000 (as discussed in
Note A above.)
<PAGE>
8
GENESEE CORPORATION
Notes to Consolidated Financial Statements
NOTE (C) Inventories of continuing operations are summarized as follows:
Dollars in thousands
January 29, 2000 May 1,1999
Finished goods $ 4,415 $ 6,292
Goods in process 0 1,445
Raw materials,
containers and 5,230 8,677
packaging supplies
Total inventories $ 9,645 $ 16,414
NOTE (D) The Corporation's consolidated balance sheet includes a mortgage
payable with a remaining principal amount due of $4.7 million,
collateralized by certain land, buildings and equipment. The mortgage
payable bears interest at a fixed rate of 6.49% per annum and requires
payments of principal and interest through 2008. The principal payable for
each fiscal year through the year ending May 1, 2004 is, respectively,
$82,000, $88,000, $93,000, $100,000 and $106,000.
In addition, the Corporation has a $10 million line of credit, which bears
interest at LIBOR plus 70 basis points. This line of credit expires in
April 2000. At January 29, 2000, $10 million was available for use under
this instrument.
In addition, the Corporation has a $1.7 million term note payable, which
bears interest at LIBOR plus 100 basis points for an effective rate of
6.25%. Maturity of this note is eight years from draw down of funds, which
is November 2007. At January 29, 2000, $1.6 million was outstanding and $0
was available for use under this instrument.
<PAGE>
9
GENESEE CORPORATION
Notes to Consolidated Financial Statements
NOTE (E) Restructuring Charge
In the second quarter of fiscal 2000, the Corporation's brewing
business (see Note A) recorded a restructuring charge of $1,771,000.
This restructuring charge is related to costs associated with a work
force reduction whereby approximately 50 positions were eliminated as
of January 29, 2000. Also included in this restructuring charge are
costs associated with a discontinued package configuration. The
remainder of the employee severance and termination benefits and other
employee related costs will be paid prior to the end of fiscal 2000.
The restructuring charge and its utilization are summarized as
follows:
<TABLE>
<S> <C> <C> <C>
------------------------------------------------------------------------------------------------------------
Fiscal 2000
Description Charge Utilized through 3rd Qtr. To be utilized in future
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Employee severance and
termination benefits $ 1,357,000 $ 491,000 $ 866,000
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Other employee related costs 77,000 18,000 59,000
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Discontinued package costs 337,000 337,000 0
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Total $ 1,771,000 $ 846,000 $ 925,000
------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE (F) Segment Reporting
With the planned divestiture of its brewing business (see Note A), the
Corporation has three operating reportable segments: food processing,
leasing and real estate, and corporate. The food processing segment
produces dry side dish, bouillon, soup, drink mix and instant iced tea
products under private label for many of the country's largest
supermarket chains. The leasing and real estate segment leases
construction, transportation, and other high-value equipment and
machinery, and partners with experienced real estate developers to
invest in certain properties. The corporate segment retains the
Corporation's investments in marketable securities generating
investment income as well as supporting corporate costs.
The Corporation evaluates performance based on operating income or
loss and earnings before income taxes.
Intersegment sales and transfers are not material and are eliminated
in consolidation. No single customer accounted for more than 10% of
revenues and the Corporation's international revenues are not
significant.
The Corporation's reportable segments, other than corporate, are
strategic business units that offer different products and services.
They are managed separately because each business requires different
technology and marketing strategies.
<PAGE>
10
GENESEE CORPORATION
Notes to Consolidated Financial Statements
NOTE (F) Segment Reporting (continued)
<TABLE>
Financial information for the Corporation's operating reportabl segments is as
follows:
<S> <C> <C> <C> <C> <C> <C>
Leasing
Food And Discontinued
For the thirteen Processing Real Estate Corporate Operations Eliminations Consolidated
week period Ended
January 29, 2000
- ---------------------------------------------------------------------------------------------------------------------------
Net revenues from external
customers $ 11,218 $ 709 $ - $ - $ 11,927
Depreciation and amortization 703 - - - 703
Operating income/(loss) 542 625 (148) - 1,019
Investment income - 92 533 (380) 245
Earnings/(loss)before income
taxes 277 882 526 (337) 1,348
Identifiable assets 54,140 34,349 11,755 11,900 - 112,144
Capital expenditures 810 - - - 810
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
For the thirteen
week period Ended
January 30, 1999
- ----------------------------------------------------------------------------------------------------------------------------
Net revenues from external
customers $ 11,134 $ 838 $ - $ - $ 11,972
Depreciation and amortization 538 - - - 538
Operating income/(loss) 693 787 (164) - 1,316
Investment income 21 78 702 (551) 250
Earnings/(loss)before income
taxes 473 3,985 2,878 (2,688) 4,648
Identifiable assets 55,453 37,777 3,382 50,512 147,124
Capital expenditures 6 - - - 6
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
11
GENESEE CORPORATION
Notes to Consolidated Financial Statements
NOTE (F) Segment Reporting (continued)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Leasing
Food And Discontinued
For the thirty nine week period Processing Real Estate Corporate Operations Eliminations Consolidated
Ended January 29, 2000
------------------------------------------------------------------------------------------------------------------------
Net revenues from external
customers $ 33,060 $ 2,479 $ - $ - $ 35,539
Depreciation and amortization 2,031 - - - 2,031
Operating income/(loss) 254 2,262 (532) 1,984
Investment income - 250 1,631 (1,201) 680
Earnings/(loss) before income
taxes (595) 2,253 (1,292) 1,757 2,123
Identifiable assets 54,140 34,349 11,755 11,900 - 112,144
Capital expenditures 3,417 - - - 3,417
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
For the thirty nine week period
Ended January 30, 1999
------------------------------------------------------------------------------------------------------------------------
Net revenues from external
customers $ 30,520 $ 2,607 $ - $ - $ 33,127
Depreciation and amortization 1,319 - - - 1,319
Operating income/(loss) 1,608 2,463 (764) - 3,307
Investment income 21 243 3,045 (1,650) 1,659
Earnings/(loss) before income
taxes 1,131 4,990 3,873 (2,518) 7,476
Identifiable assets 55,453 37,777 3,382 50,512 - 147,124
Capital expenditures 2,690 - - - 2,690
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)
------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
12
GENESEE CORPORATION
Notes to Consolidated Financial Statements
NOTE (G) Supplemental Cash Flow Information
Cash paid for taxes was $44,000 and $67,000 for the thirteen week
period ended January 29, 2000 and January 30, 1999, respectively; cash
paid for interest was $146,000 and $235,000 for the thirteen week
period ended January 29, 2000 and January 30, 1999, respectively.
Cash paid for taxes was $1,529,000 and $771,000 for the thirty nine
week period ended January 29, 2000 and January 30, 1999, respectively;
cash paid for interest was $438,000 and $395,000 for the thirty nine
week period ended January 29, 2000 and January 30, 1999, respectively.
NOTE (H) Subsequent Event - Chief Executive Officer's Retirement Agreement
On March 2, 2000 the Corporation entered into a retirement agreement
with its Chief Executive Officer. Under this agreement, the
Corporation will pay retirement benefits that will result in a
one-time pre-tax charge against fourth quarter 2000 earnings from
continuing operations of approximately $1.2 million.
<PAGE>
13
GENESEE CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This financial review should be read in conjunction with the
accompanying consolidated financial statements and contains management's
discussion and analysis of the Corporation's results of operations and
liquidity. The discussion of operating results and liquidity and capital
resources for fiscal 2000 and fiscal 1999 excludes the discontinued brewing
business discussed in Note (A) to the accompanying consolidated financial
statements.
CONTINUING OPERATIONS
Comparison of 13 weeks ended January 29, 2000 to 13 weeks ended January 30, 1999
Consolidated net revenues from continuing operations for the thirteen
weeks ended January 29, 2000 were $11.9 million, a decrease of $45,000 from
consolidated net revenues reported for the same period last year, primarily
due to lower lease revenue at Genesee Ventures, Inc.
On a consolidated basis, the Corporation reported operating income
from continuing operations of $1.0 million, which was an decrease of
$297,000 as compared to the same period last year, also due primarily to
the lower lease revenue at Genesee Ventures, Inc. and a result of expenses
incurred by the Foods Division related to the transitioning of production
to the Medina, New York facility.
On a consolidated basis, the Corporation reported earnings from
continuing operations of $728,000, or $.45 basic and diluted earnings per
share, in the third quarter this year, compared to earnings from continuing
operations of $2.7 million, or $1.66 basic and diluted earnings per share,
for the same period last year. This decrease in earnings from continuing
operations is primarily related to a $3.4 million pre-tax gain realized by
Genesee Ventures, Inc. in 1999 from the sale of its investment in Lloyd's
Food Products, Inc. during the third quarter of fiscal 1999, partially
offset by significant expenses incurred by the Foods Division related to
the transitioning of production to the Medina, New York facility.
The Corporation reported a net loss from discontinued operations of
$426,000, net of a tax benefit of $363,000, or ($.26) basic and diluted
loss per share for the third quarter of fiscal 2000, compared to a net loss
from discontinued operations of $939,000, net of a tax benefit of $799,000,
or ($.58) basic and diluted loss per share for the same period last year.
<PAGE>
14
GENESEE CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Foods Division
Net sales for the Foods Division were $11.2 million in the third
quarter of fiscal 2000, compared to $11.1 million for the third quarter
last year.
Gross profit for the Foods Division decreased $512,000 to $2.0 million
in the third quarter of fiscal 2000, compared to $2.5 million for the third
quarter last year. The decrease in gross profit was primarily attributable
to $477,000 of expenses incurred by the Foods Division in the third quarter
of fiscal 2000 in transitioning production to the Medina, New York facility
that the Foods Division acquired in October 1998. The consolidation of all
operations at a single location, which is substantially complete, is
expected to generate efficiencies and cost savings for the Foods Division
going forward.
The Foods Division's selling, general and administrative expenses
decreased $296,000 to $1.4 million in the third quarter of fiscal 2000
compared to the same period last year. This decrease is primarily a result
of the elimination of duplicate administrative expenses of TKI Foods, Inc.
The Foods Division recorded operating income of $542,000 in the third
quarter of fiscal 2000, which was $151,000 less than the operating income
reported in the third quarter last year primarily as a result of expenses
incurred by the Foods Division related to the transitioning of production
to the Medina, New York facility.
Other expense increased $47,000 to $266,000 in the third quarter of
fiscal 2000 as compared to the same period last year.
Genesee Ventures
Genesee Ventures, Inc., the Corporation's equipment leasing and real
estate investment subsidiary, reported operating income of $625,000 for the
third quarter of fiscal 2000, which was $162,000 less than the third
quarter of fiscal 1999. This decrease was primarily a result of reduced
lease revenue associated with the maturation of certain leases that were
not renewed or replaced.
During the third quarter of fiscal 2000, Genesee Ventures recorded
$407,000 that was associated with the sale of Genesee Venture's investment
in Lloyd's Food Products, Inc. during fiscal 1999. The initial gain of $3.4
million on the sale was recorded during the third quarter of fiscal 1999.
In August 1999, the Corporation approved a plan to wind down its
equipment leasing business in light of changes in many of the factors that
influenced the Corporation's decision to invest in equipment leasing. These
factors include changes in the Corporation's capital requirements, changes
in the competitive conditions in the equipment leasing business, a
reduction in the tax advantages generated by Cheyenne Leasing Company as a
result of lower operating income from the Corporation's brewing business,
and a decision by the Corporation's co-venturer in Cheyenne Leasing Company
to phase out its involvement in the equipment leasing business.
Under the wind down plan, Cheyenne Leasing Company will not fund any
new leases after December 31, 1999 and will manage its existing lease
portfolio to maximize lease revenues and residual income. Based on current
projections, Cheyenne Leasing Company's operating income is expected
decline as the remaining leases in Cheyenne's portfolio mature. The final
leases are expected to mature during 2007.
<PAGE>
15
GENESEE CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Comparison of 39 weeks ended January 29, 2000 to 39 weeks ended January 30, 1999
Consolidated year-to-date net revenues from continuing operations were
$35.5 million, an increase of $2.4 million from consolidated net revenues
reported for the same period last year, due to increased sales by the
Corporation's Foods Division.
On a consolidated basis, the Corporation reported operating income
from continuing operations of $2.0 million, which was a decrease of $1.3
million as compared to the same period last year, due primarily to costs
associated with transitioning of production to the Medina, New York
facility that the Foods Division acquired in October 1998.
On a consolidated basis, the Corporation reported year-to-date
earnings from continuing operations of $1.1 million, or $.71 basic and
diluted earnings per share, compared to earnings from continuing operations
of $4.2 million, or $2.59 basic and diluted earnings per share, for the
same period last year. This decrease in earnings is primarily a result of
the $3.4 million gain realized in the third quarter of fiscal 1999 from the
sale of Genesee Ventures, Inc.'s investment in Lloyd's Food Products, Inc.
The Corporation reported a year-to-date net loss from discontinued
operations of $1.8 million, net of a tax benefit of $1.5 million, or
($1.10) basic and diluted loss per share for the third quarter of fiscal
2000, compared to a year-to-date net loss from discontinued operations of
$1.9 million, net of a tax benefit of $1.6 million, or ($1.17) basic and
diluted loss per share for the same period last year.
<PAGE>
16
GENESEE CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Foods Division
Net sales for the Foods Division were $33.1 million in the first three
quarters of fiscal 2000, compared to $30.5 million for the same time period
last year. The increase in net sales was primarily attributable to $4.0
million in year-to-date sales of artificial sweeteners and other private
label food products of TKI Foods, Inc. and Spectrum Foods, Inc., which were
acquired by the Corporation during the second quarter of fiscal 1999.
Partially offsetting the increase in net sales was lower than expected
sales of iced tea mix and side dishes due to competitive pressure from
branded label competitors.
Side dish sales continued to be adversely affected by heavy
promotional activity by the major branded side dish producer. This
promotional pricing has reduced the price spread between the branded side
dish line and the Foods Division's private label side dishes, making the
private label product less attractive to consumers. In addition, another
major branded food producer recently introduced a new line of side dish
products that will compete with both the existing brand leader and the
Foods Division's private label side dish line. This new side dish brand is
being introduced with heavy promotional support and is expected to increase
the competitive pressure on the Foods Division's private label business.
Revenues and profit margins from iced tea mix sales declined, largely
as a result of previously reported efforts by a large Canadian sugar
refiner to displace the Foods Division's private label iced tea mix in key
chain accounts. Although the Foods Division has not lost any key accounts,
it had to reduce iced tea pricing to retain them. In addition, the overall
decline of this mature category resulted in lower unit sales in the first
three quarters. The challenges facing the Foods Division's iced tea and
side dish business are normal competitive pressures that affect products in
the mature stage of their life cycle. These expected product maturity
factors underscore the Foods Division's strategy to expand its product
offerings either through acquisition or internally developed new products.
The addition of bouillon and artificial sweeteners to the Foods
Division's product line has helped to offset lower iced tea mix and side
dish sales. However, the Foods Division's sweetener business faces a
potential competitive threat from the decision by the major producer of
branded artificial sweeteners to introduce a line of private label
artificial sweeteners, targeting many of the Foods Division's key chain
accounts. The Foods Division reduced its sweetener prices to counter this
potential threat, which is expected to reduce revenues and profit margins
from the sweetener business. It is not clear what long term impact this new
private label sweetener line will have on the Foods Division's sweetener
business because the producer announced on February 4, 2000 that it had
reached an agreement to sell its packaged sweetener business which could
impact the efforts to displace the Foods Division from key accounts.
<PAGE>
17
GENESEE CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Gross profit for the Foods Division decreased $555,000 to $5.6 million
in the first three quarters of fiscal 2000, compared to $6.2 million for
the same time period last year. The decrease in gross profit was
attributable to lower sales of iced tea mix, side dishes, bouillon and
artificial sweeteners. Also contributing to the decrease in gross profit
was $1.5 million of expenses incurred by the Foods Division in the first
three quarters of fiscal 2000 in transitioning production to the Medina,
New York facility that the Foods Division acquired in October 1998. The
consolidation of all operations at a single location, which is
substantially complete, is expected to generate efficiencies and cost
savings for the Foods Division going forward.
The Foods Division's selling, general and administrative expenses
decreased $54,000 in the first three quarters of fiscal 2000 compared to
the same period last year.
The Foods Division recorded operating income of $254,000 in the first
three quarters of fiscal 2000, which was $1.3 million less than the
operating income reported in the first three quarters of last year which
was a result of the transitioning expenses mentioned above.
Other expense increased $374,000 to $850,000 in the first three
quarters of fiscal 2000 as compared to the same period last year. This
increase is primarily the result of $221,000 of interest expense on the
mortgage and term loan pertaining to the Medina facility.
Genesee Ventures
Genesee Ventures, Inc., the Corporation's equipment leasing and real
estate investment subsidiary, reported operating income of $2.3 million for
the first three quarters of fiscal 2000, which was $201,000 less than the
first three quarters of fiscal 1999. The lower income for Genesee Ventures,
Inc. was primarily the result of reduced lease revenue as certain leases
mature and are not renewed or replaced during the wind down of Cheyenne
Leasing Company.
In August 1999, the Corporation approved a plan to wind down its
equipment leasing business in light of changes in many of the factors that
influenced the Corporation's decision to invest in equipment leasing,
including changes in the Corporation's capital requirements, changes in the
competitive conditions in the equipment leasing business, a reduction in
the tax advantages generated by Cheyenne Leasing Company as a result of
lower operating income from the Corporation's brewing business, and a
decision by the Corporation's co-venturer in Cheyenne Leasing Company to
phase out its involvement in the equipment leasing business.
Under the wind down plan, Cheyenne Leasing Company will not fund any
new leases after December 31, 1999 and will manage its existing lease
portfolio to maximize lease revenues and residual income. Based on current
projections, Cheyenne Leasing Company's operating income is expected to
decline as the remaining leases in Cheyenne's portfolio mature.
Genesee Ventures, Inc. earnings before taxes decreased $2.7 million to
$2.3 million as compared to $5.0 million for the same period last year. The
decrease in earnings was primarily due to the $3.4 million gain recognized
in the third quarter of fiscal 1999 associated with the sale of Genesee
Ventures' investment in Lloyd's Food Products, Inc. offset by a $602,000
gain recognized during the first three quarters of fiscal 2000 which was
also associated with the sale of the Lloyd's Food Products, Inc.
investment.
<PAGE>
18
GENESEE CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
LIQUIDITY AND CAPITAL RESOURCES (from continuing operations)
Cash and cash equivalents and marketable securities showed very little
change from May 1, 1999 to January 29, 2000. Cash and cash equivalents
totaled $5.8 million at January 29, 2000 and at May 1, 1999. Marketable
securities totaled $7.8 million at January 29, 2000 and $8.0 million at May
1, 1999.
Net trade accounts receivable decreased by $6.1 million of which $6.6
million relates to the discontinued brewing business which is included in
the balance at May 1, 1999. The increase of $440,000 from the May 1, 1999
balance is primarily attributable to increased sales volume at the Foods
Division.
Inventories decreased by $6.8 million, of which $5.4 million relates
to the discontinued brewing business and is included in the balance at May
1, 1999. Inventories were further decreased by $1.4 million, which is the
result of a concerted effort by the Foods Division's management to reduce
inventory levels of that subsidiary.
Net property, plant and equipment decreased by $24.8 million, of which
$26.9 million relates to the discontinued brewing business which is
included in the balance at May 1, 1999. The remaining increase by $2.1
million from May 1, 1999 to January 29, 2000 is primarily a result of
capital additions to the Foods Division facility in Medina, New York as
well as other Foods Division acquisitions of property, plant and equipment
being offset by normal depreciation and amortization of such assets.
Investments in direct financing and leveraged leases decreased $3.1
million from May 1, 1999 as a result of a large number of leases maturing
and not being replaced with new leases as Cheyenne Leasing Company is not
actively seeking new leasing opportunities and is in a wind down phase.
Current liabilities decreased $17.4 million, of which $14.0 million
relates to the discontinued brewing business which is included in the
balance at May 1, 1999. The remaining $3.4 million decrease in current
liabilities is the result of the satisfaction of the $3.0 million line of
credit that was paid down in the third quarter of fiscal 2000, $792,000
less in accounts payable due to timing of payments, $1.2 million less in
income taxes payable due to significant estimated tax payments being made
during the second quarter of fiscal 2000, $1.4 million less in accrued
compensation and other accrued expenses due to certain accrued amounts
related to the acquisition of TKI Foods, Inc. having been paid off during
the first three quarters of fiscal 2000, offset by approximately $3.0
million of discontinued operation balance sheet reclassifications related
to deferred income tax liabilities and net liabilities held for disposal.
Notes payable increased $1.6 million net of repayments due to the draw
down of funds on a multiple disbursement term note, which is being used for
renovation of the Foods Division's new production facility in Medina, New
York.
The Corporation is re-evaluating its capital resources in light of its
decision to sell the assets of its brewing business and the decision to
wind down its equipment leasing business. Until this evaluation is
completed, the Corporation is not actively searching for new acquisition
opportunities for its Foods Division, instead devoting resources to
completing the transition of the Foods Division to its Medina, New York
production facility and internal development of new private label products
and extensions of existing product lines.
<PAGE>
19
GENESEE CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
In connection with the decision to sell the assets of its brewing
business and the wind down of its equipment leasing business, the
Corporation is evaluating its projected cash flows, capital resources and
liquidity requirements. As part of this assessment, the Corporation's Board
of Directors is reviewing the Corporation's dividend policy to determine
whether shareholder value would be enhanced by a change in the
Corporation's current policy of regular and special dividend payments.
Year 2000
The year 2000 issue was the result of computer hardware and software
systems and other equipment with embedded chips or processors that used
only two digits rather than four to represent the year. Time-sensitive
software could have recognized a date using "00" as the year 1900 rather
than 2000. These systems could have failed to operate or could have been
unable to process data accurately as a result of this flaw. The year 2000
issue could have arisen at any point in the supply chain, manufacturing
process, distribution channels or information systems of the Corporation,
its subsidiaries and third parties with which it does business.
The Corporation assembled a task force and developed a formal plan to
ensure that all of its significant date-sensitive computer software and
hardware systems and other equipment utilized in its various manufacturing,
distribution and administration activities would be Year 2000 compliant and
operational on a timely basis. The plan also included an assessment process
to determine that the Corporation's significant customers and suppliers
would also be Year 2000 compliant.
The Corporation utilized both internal and external resources to
achieve Year 2000 preparedness. The total cost to the Corporation and its
subsidiaries for Year 2000 preparedness was approximately $1.7 million. The
Corporation and its subsidiaries encountered no difficulties associated
with the Year 2000 issue and did not have to activate any of their Year
2000 contingency plans. The Corporation does not anticipate any substantive
problems related to this issue going forward.
<PAGE>
20
GENESEE CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Forward-Looking Statements
This report contains forward-looking statements within the meaning of
the federal securities laws. These forward-looking statements may include
statements about the operations and prospects for the Corporation and its
subsidiary businesses, and statements about industry trends and conditions
that may affect the performance or financial condition of the Corporation
and its subsidiary businesses. These forward-looking statements involve
significant risks and uncertainties that could cause actual results to
differ materially from those expressed in or implied by the statements. The
most important factors that could cause actual results to differ from the
expectations stated in these forward-looking statements include, among
others, the inability to complete or the delay in the sale of the brewing
business on satisfactory terms; a shift in consumer preferences away from
store-brand, private label food products; increased competition from
branded food product producers that might adversely affect sales of private
label products; continued price promotion by the major side dish brand
which is adversely impacting sales of the Foods Division's private label
side dish products; continued price competition from low cost imported iced
tea producers and the possibility that the Foods Division may not be able
to source sufficient supply of low price sugar to produce a price
competitive private label iced tea product; the possibility that the Foods
Division might not achieve the expected synergies from the integration of
TKI Foods and Spectrum Foods and relocation of all operations into a single
facility in Medina New York; and the possibility that Cheyenne Leasing
Company may not achieve the residual value projected for equipment coming
off leases as Cheyenne's lease portfolio matures.
<PAGE>
21
GENESEE CORPORATION
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. The following exhibit is attached to this report:
Exhibit 10-1 - Severance Agreement and General Release with C.S. Wehle.
Exhibit 10-2 - Employment Agreement with S.T. Hubbard, Jr.
(b) Reports on Form 8-K. The Corporation filed a report on Form
8-K on December 17, 1999 to report the announcement of an
agreement by Genesee Brewing Company to sell substantially all of
its assets to the owners of City Brewing Company.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GENESEE CORPORATION
Date: 03/09/00 /s /Samuel T. Hubbard, Jr.
Samuel T. Hubbard, Jr.
President and Chief Executive Officer
Date: 03/09/00 /s / John B. Henderson
John B. Henderson
Senior Vice President and Chief Financial Officer
<PAGE>
22
GENESEE CORPORATION
EXHIBIT INDEX
Exhibit Number Exhibit Page
10-1 Severance Agreement and General Release 23
dated December 15, 1999 between the
Corporation and Charles S. Wehle
10-2 Employment Agreement dated December 15, 1999 26
between the Corporation and Samuel T. Hubbard, Jr.
<PAGE>
23
EXHIBIT 10-1
Severance Agreement and General Release
In recognition of the many years of dedicated service Charles S. Wehle
has rendered to Genesee Corporation and its wholly owned subsidiary The
Genesee Brewing Company, Inc. (hereinafter referred to collectively as
"Genesee"), and in recognition of his substantial contributions to the
growth and success of Genesee, the parties wish to enter into the following
Severance Agreement and General Release.
Charles S. Wehle (the "Executive") will resign as President of The
Genesee Brewing Company, Inc. on January 15, 2000 but will continue to be
employed by Genesee on an interim basis, rendering services as needed from
time to time. On May 15, 2000, Executive will terminate active employment
with Genesee.
I. Compensation and Benefits. The following payments and benefits shall be
provided to Executive:
A. Base Salary. Executive's current base salary of $206,000 will be paid
through May 15, 2000.
B. Retirement Incentive Payments. In exchange for Executive's general
release, as described in section III of this Agreement, Genesee will
make the following retirement incentive payments to Executive:
1. $250,000, less the amount of normal salary paid from January 15,
2000 through May 15, 2000, to be paid on May 15, 2000;
2. $250,000 to be paid on January 1, 2001.
C. Perquisites. Executive shall be entitled to all existing perquisites
through May 15, 2000.
D. Taxation. Executive acknowledges and agrees that all payments made to
Executive pursuant to this Agreement are gross amounts, subject to
applicable federal and state tax withholding and reporting, as
required.
II. Employee Benefit Plans. This Agreement shall not affect the amount of
Executive's vested benefits under the employee benefit plans in which he
participates. In accordance with the plan terms, Executive shall be treated
as an active employee under the benefit plans in which he participates
until May 15, 2000. After Executive terminates active employment on May 15,
2000, he shall be treated as a retired participant under the benefit plans,
including the Genesee Corporation 1992 Stock Plan ("Stock Option Plan"),
and he shall be entitled to all the rights of a retired participant under
the terms of those plans.
A. Profit Sharing Plan. Executive will participate in the Genesee
Corporation Profit Sharing Retirement Plan through the plan year
ending April 30, 2000.
<PAGE>
24
B. Executive Benefit Plans. Executive will continue to participate as an
active employee in the following executive benefit plans, according to
the terms of those plans, until May 15, 2000:
1. Genesee Corporation 1986 Incentive Bonus Plan ("Incentive Bonus
Plan");
2. Genesee Corporation Stock Bonus Incentive Program ("Stock Bonus
Plan");
3. Genesee Corporation Benefit Restoration Plan ("Benefit
Restoration Plan"); and
4. Stock Option Plan.
C. Welfare Benefit Plans.
1. Life Insurance. Executive may participate in the Group Life
Insurance Plan until May 15, 2000. Thereafter, Executive may
convert his group policy at his own expense.
2. Medical, Dental, and Disability Plans. Executive may participate
in Genesee's medical, dental, and disability plans as an active
employee until May 15, 2000.
III. General Release.
A. Release. In exchange for Genesee entering into this Agreement and
making the payments referred to above, Executive waives and releases
any and all rights or claims that he has against Genesee, its
affiliated companies, or any of their respective officers, directors,
agents, employees, successors or assigns. The rights and claims so
waived and released shall include, but are not limited to, those
arising under local, state and federal statutory or common law
(including claims of breach of contract and wrongful discharge), and
any law relating to sex, age, race, religious, handicap, or national
origin discrimination (including, but not limited to, any claims under
the Age Discrimination in Employment Act (ADEA), Title VII of the
Civil Rights Act of 1964, the New York Human Rights Law, and the
Employee Retirement Income Security Act (ERISA)).
B. Knowing and Voluntary Waiver. Executive is advised to consult with an
attorney prior to executing this Agreement. By signing this
Agreement, Executive acknowledges that he was afforded a period of at
least twenty-one (21) days within which to consider this Agreement,
that he has had sufficient opportunity to consult with the advisors
of his choice, and that he has freely, knowingly, and voluntarily
entered into this Agreement.
IV. Other Terms of the Agreement.
A. Indemnification. Genesee shall indemnify Executive for services
rendered to Genesee to the full extent provided by law. Genesee shall
reimburse all costs and attorney's fees incurred by Executive in
connection with such indemnification matters.
<PAGE>
25
B. Disparaging Remarks. Executive agrees not to make disparaging remarks
about Genesee, its products, or employees, provided that he shall not
be prevented from speaking truthfully about Genesee. Genesee agrees to
not make disparaging remarks about Executive, but it reserves the
right to speak truthfully concerning Executive.
C. Entire Agreement. There are no understandings between the parties
regarding this Agreement, or its subject matter, other than as
specifically set forth in this Agreement. Any prior offers,
understandings, and agreements regarding the subject matter of this
Agreement are superseded by this Agreement. This Agreement shall not
be amended except in a writing signed by Executive and a duly
authorized representative of Genesee.
D. Revocation. Executive may revoke this Agreement during the seven (7)
days following the execution of this Agreement. Unless revoked, this
Agreement shall become effective and enforceable on the eighth day
after it is executed by Executive.
/s/ Charles S. Wehle December 15, 1999
Charles S. Wehle (Date)
Genesee Corporation
By:
/s/ Samuel T. Hubbard, Jr. December 15, 1999
Samuel T. Hubbard, Jr. (Date)
President and Chief Operating Officer
<PAGE>
26
EXHIBIT 10-2
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") effective as of June 18, 1999
(the "Effective Date"), between GENESEE CORPORATION, a New York corporation (the
"Genesee"), THE GENESEE BREWING COMPANY, INC., a New York corporation (the
"Brewery" and together with Genesee, the "Company"), and SAMUEL T. HUBBARD, JR.
(the "Executive").
PRELIMINARY STATEMENTS:
A. The Genesee Board of Directors (the "Board") and its Management
Continuity Committee (the "MCC") have approved the engagement of the Executive
as Genesee's President and Chief Operating Officer and as the Brewery's Chief
Executive Officer, subject to the execution and delivery of this Agreement by
the parties hereto.
B. The Executive is willing to serve in these capacities on the terms and
conditions hereinafter set forth.
PROVISIONS:
NOW, THEREFORE, in consideration of the premises and mutual covenants set
forth herein, the parties agree as follows:
1. Employment. The Company hereby agrees to employ the Executive and the
Executive hereby agrees to serve the Company, on the terms and conditions set
forth in this Agreement.
2. Term of Agreement. Subject to the terms and conditions hereof, the term
of the Executive's employment pursuant to this Agreement (the "Term") shall
commence on the Effective Date and shall continue in effect through June 18,
2001; provided, however, that on June 18, 2001 and on the 18th day of each June
thereafter, the Term shall be automatically extended for an additional one-year
period unless, at least ninety (90) days or more prior to such date, the Company
or the Executive shall have given written notice to the other party stating that
the Term shall not be so extended.
3. Position and Duties.
(a) During the Term, the Executive shall serve as the President and
Chief Operating Officer of Genesee and shall have powers and authority with
respect to Genesee's business and affairs superior to any other officer or
employee of Genesee other than Genesee's Chief Executive Officer. During
the Term, the Executive shall also serve as the Chief Executive Officer of
the Brewery and shall have powers and authority with respect to the
Brewery's business and affairs superior to any other officers or employees.
The Executive shall also have such other powers and duties as may from time
to time be delegated to him by the Board, provided that such duties are not
inconsistent with his present duties and with the Executive's position.
Notwithstanding the foregoing, the Executive shall report directly to the
Board. The Executive shall devote substantially his whole working time,
efforts and attention to the business and affairs of the Company (except
for vacation time, absence for sickness or similar disability and
engagement in the activities permitted under Section 7(a) to the extent
permitted thereunder) and shall carry out his duties honestly, diligently,
in good faith and in the best interests of the Company.
(b) To the extent permitted by law and the Company's organizational
documents, during the Term, the Board shall either vote, or recommend to
the shareholders of the Company that they vote, as appropriate, at each
shareholders' meeting at which the Executive's position as a director of
Genesee is voted on to continue the Executive as a director. In addition,
the Executive shall be elected to the Board of Directors of each subsidiary
of Genesee and to the position of Vice Chairman of the Brewery's Board.
4. Place of Performance. In connection with his employment by the Company,
the Executive shall be based at the Company's principal executive offices. The
Company shall not, without the written consent of the Executive, relocate or
transfer its principal executive offices outside Monroe County, New York.
5. Compensation and Related Matters. Subject to the terms and conditions
herein, during the Term, the Executive shall be entitled to the following
compensation and benefits:
<PAGE>
27
(a) Base Salary. From the Effective Date until June 18, 2001 the
Executive shall receive a base salary at the annual rate no less than the
Executive's current annual salary (the "Base Salary") which shall be
payable in accordance with the Company's payroll practices. Following June
18, 2001, the Base Salary may be increased on an annual basis during the
remainder of the Term to such greater amount as shall be determined by the
MCC, in its sole and absolute discretion. The Base Salary payable hereunder
shall be reduced to the extent that the Employee elects to defer such Base
Salary under the terms of any deferred compensation or savings plan
maintained or established by the Company, provided that any such reduction
of the Base Salary shall not be taken into account for purposes of
calculating the Annual Bonus (defined below).
(b) Annual Bonus. In addition to the Base Salary, the Executive shall
be eligible to receive an annual bonus (the "Annual Bonus") for each fiscal
year of Genesee up to a maximum of fifty percent (50%) of his Base Salary
for such fiscal year. The MCC shall have sole and absolute discretion to
determine whether an Annual Bonus will be awarded for any fiscal year and
the amount of the Annual Bonus to be paid. Any Annual Bonus approved by the
MCC shall be due and payable within sixty (60) days after the end of the
Company's fiscal year for which such bonus is awarded.
(c) Stock Option. Simultaneously with the execution hereof, the
Company and Executive will enter into a stock option agreement (the "Option
Agreement") providing for the grant to Executive of a non-qualified stock
option (the "Option") to purchase up to the number of shares of Genesee
Class B common stock as approved by the MCC on their 9/2/1999 meeting (the
"Option Shares"). The Option will be issued pursuant to the Company's 1992
Stock Option Plan (the "1992 Plan") and will be subject to the terms
thereof and shall have the following additional terms.
(i) The Option shall have an exercise price of $25.31 per share.
(ii) The Option shall have a ten (10) year term, but shall terminate
no later than one (1) year after the date of Executive's death or
termination of employment or service; provided, however, that if
Executive's employment is terminated for Cause, as defined in Section 9(c)
hereof, the Option shall terminate if not exercised within thirty (30) days
following the Date of Termination, as defined in Section 9(g).
(iii)The Option shall be fully vested as of the execution of the
Option Agreement by the Company with respect to the purchase of up to 25%
of the Option Shares. The Option shall vest and be or become exercisable
with respect to the remaining Option Shares as follows so long as the
Executive remains employed hereunder on the applicable vesting date:
(A) The Option shall vest and become exercisable with
respect to an additional 25% of the Option Shares if at any time
during the term of the Option, the Closing Price for the Common
Stock for any thirty (30) consecutive trading days (a "Trading
Period" ) shall be not less than $30 for each trading day during
the Trading Period;
(B) The Option shall vest and become exercisable with
respect to an additional 25% of the shares if at any time during
the term of the Option, the Closing Price for the Common Stock
for any Trading Period is not less than $35 for each trading day
during the Trading Period;
(C) The Option shall vest and become exercisable with
respect to an additional 25% of the shares if at any time during
the term of the Option, the Closing Price for the Common Stock
for any Trading Period is not less than $40 for each trading day
during the Trading Period; and
(D) all other vesting shall be in accordance with Sections
9(c), (d) and (e).
In the event of any stock split, reverse stock split or similar
recapitalization, the Closing Prices set forth in Sections 5(c)(iii)(A), (B) and
(C) shall be equitably adjusted by the MCC so that the Executive's vesting
rights under these subsections is no worse than it was immediately prior to such
transaction. The MCC shall give the Executive written notice of any such
adjustment.
Notwithstanding the foregoing, vesting with respect to any Closing Price
shall occur only once for any Closing Price (i.e., $30, $35 and $40). (For
example, after the Option has vested with respect to 5(c)(iii)(A) the Option
shall not vest with respect to any additional Option Shares if during any
subsequent Trading Period the Closing Price exceeds $30 for each trading day
during the Trading Period unless Section 5(c)(iii)(B) or (C) applies).
Similarly, once Option Shares are vested pursuant to Section 5(iii)(A), (B) or
(C), they shall not become unvested solely as a result of a subsequent decline
in the Closing Price. Except as otherwise provide in Section 9, any portion of
the Option which is unvested as of the Date of Termination or the expiration of
the Term will be forfeited immediately upon such termination or expiration.
<PAGE>
28
(iv) The Option shall have such other terms and conditions as the MCC deems
appropriate and which are consistent with the 1992 Plan. The Option Agreement
shall be in a form approved by the MCC.
(d) Expenses. Upon the submission of supporting documentation by the
Executive, the Company shall reimburse the Executive for all reasonable
expenses actually paid or incurred by the Executive in the course of, and
pursuant to the business of, the Company, including expenses for travel and
entertainment.
(e) Other Benefits. The Executive shall be entitled to participate in
all non-stock or non-equity based employee benefit plans or arrangements
made available to all of the Company's senior management or key employees
from time to time, subject to and on a basis consistent with the terms,
conditions and overall administration of such plan or arrangement. Such
plans and arrangements shall include, without limitation, all pension and
retirement plans, supplemental pension and retirement plans, savings and
profit sharing plans, life insurance policies, officers' and directors'
liability insurance policies, life insurance plans, medical and health
insurance plans, disability plans, dental plans, health-and-accident plans
or similar plans or arrangements. Nothing paid to the Executive under any
plan or arrangement presently in effect or made available in the future
shall be deemed to be in lieu of the Base Salary or any other obligation
payable to the Executive pursuant to this Agreement. The Executive
expressly acknowledges that except for the Option described in Section
5(c), he shall not be entitled to, and he shall not participate in
Genesee's 1986 Incentive Bonus Plan, as amended, Genesee's Stock Bonus
Program or the 1992 Plan or any other stock or equity based program adopted
by Genesee or the Brewery as of and after the Effective Date.
(f) Vacation. The Executive shall be entitled to not less than four
(4) weeks vacation in any calendar year (prorated in any calendar year
during which the Executive is employed under this Agreement for less than
the entire year in accordance with the number of days in such calendar year
during which he is so employed). The Executive shall also be entitled to
all paid holidays given by the Company to its senior executive officers.
(g) Automobile Expense. In recognition of the necessity of the use of
an automobile to the efficient and expeditious performance of the
Executive's services, duties and obligations to and on behalf of the
Company, the Company shall pay to the Executive an automobile allowance of
$700 per month, payable in advance of each month.
(h) Profit Sharing Plan Restoration. During the first twenty-four (24)
months of the Term, the Company shall pay to Executive an amount which
shall equal the amount that would have been credited to him under the
Company's profit sharing plan had he qualified for such plan together with
an amount which shall equal the combined Federal and state taxes associated
with such payment using the highest combined federal and state tax rates.
Such payments shall be made at or about the time that contributions are
made to the Company's profit sharing plan.
(i) Club Memberships. During the Term, the Company shall pay all of
the Executive's fees, dues and membership assessments of those clubs which
Executive belongs to on the date hereo. The Company shall also reimburse
the Executive for all reasonable expenses incurred at such club(s) on
behalf of the Company.
(k) Legal Fees. Promptly following the execution of this Agreement,
the Company shall reimburse the Executive for the reasonable legal fees he
incurred in connection with the review, negotiation and execution of this
Agreement.
7. Restrictive Covenants.
(a) Certain Activities During Employment. Except with the prior
written consent of the MCC, the Executive will not during the Term
undertake or engage in any other employment, occupation or business
enterprise other than one in which he is an inactive investor as
described below. This provision shall not be deemed to preclude (i)
the Executive from serving on the board of directors of a reasonable
number of other corporations, or (ii) membership in professional
societies or trade associations or lecturing or the acceptance of
honorary positions, in all cases, that are incidental to his
employment by the Company and which are not adverse or antagonistic to
the Company, its business or prospects, financial or otherwise. The
Executive will also not acquire, assume or participate in, directly or
indirectly, any position, investment or interest adverse or
antagonistic to the Company, its business or prospects, financial or
otherwise, or take any action towards any of the foregoing. Further,
during the Term, except on behalf of the Company or its subsidiaries,
the Executive will not, directly or indirectly, whether as an officer,
director, employee, stockholder, partner, proprietor, associate,
representative or otherwise, become or be interested in any other
person, corporation, firm, partnership or other entity whatsoever
which directly competes with the Company or any of its direct or
<PAGE>
29
indirect subsidiaries, in any part of the world, in any line of
business engaged in by any such entities (or in which any such
entities have made plans to be engaged in); provided, however, that
anything above to the contrary notwithstanding, Executive may own, as
an inactive investor, securities of any competitor corporation, so
long as his holdings in any one such corporation shall not in the
aggregate constitute more than one percent (l%) of the voting stock of
such corporation.
(b) Unauthorized Disclosure. During the Term and for a two (2)
year period thereafter, the Executive shall not, without the written
consent of the Board or a person authorized thereby, disclose to any
person, other than an employee of the Company (or its subsidiaries) or
a person to whom disclosure is reasonably necessary or appropriate in
connection with the performance by the Executive of his duties as an
executive of the Company, any confidential information obtained by him
while in the employ of the Company with respect to any of the
Company's customers, suppliers, creditors, lenders or investment
bankers or methods of brewing, distribution or marketing; provided,
however, that confidential information shall not include any
information known generally to the public (other than as a result of
unauthorized disclosure by the Executive) or any information of a type
not otherwise considered confidential by persons engaged in the same
business or a business similar to that conducted by the Company.
(c) Non-Solicitation of Employees. While employed by the Company
and for a period of two (2) years thereafter, the Executive shall not,
directly or indirectly, for himself or for any other person, firm,
corporation, partnership, association or other entity, attempt to
employ or enter into any contractual arrangement with any employee or
former employee of the Company or any of its direct or indirect
subsidiaries, unless such employee or former employee has not been
employed by any such entity for a period in excess of six (6) months.
(d) Books And Records. All books, records, accounts and similar
repositories of confidential information of the Company, whether
prepared by the Executive or otherwise coming into the Executive's
possession, shall be the exclusive property of the Company and shall
be returned immediately to the Company on termination of this
Agreement or on the Company's request at any time.
(e) Injunction. It is recognized and hereby acknowledged by the
Company and the Executive that a breach by the Executive of any of the
agreements contained in this Section 7 may cause irreparable harm or
damage to the Company, or its subsidiaries, the monetary amount of
which may be virtually impossible to ascertain. As a result, the
Executive and the Company agree that the Company and any of its
subsidiaries shall be entitled to an injunction issued by any court of
competent jurisdiction enjoining and restraining any and all
violations of such agreements by the Executive or his associates,
affiliates, partners or agents, and that such right to an injunction
shall be cumulative and in addition to whatever other remedies the
Company may possess.
8. Termination.
(a) Termination Events. The Executive's employment under this
Agreement shall be terminable as follows:
(i) Death. By the Company upon the Executive's death.
(ii) Disability. By the Company, if, as a result of the
Executive's incapacity due to physical or mental illness ("Permanent
Disability"), the Executive shall be unable to substantially perform
his duties under this Agreement for three (3) consecutive months as
determined by a medical doctor retained by Genesee, and within thirty
(30) days after written Notice of Termination (defined below) is given
(which notice may only be given after the end of such three (3) month
period), the Executive shall not have returned to the performance of
his duties under this Agreement.
(iii)For Cause. By the Company, for Cause. For purposes of this
Agreement, "Cause" shall mean (A) repeated and persistent neglect or
refusal by the Executive to substantially perform his duties under
this Agreement (other than any such failure resulting from the
Executive's incapacity due to Permanent Disability), after a demand
for substantial performance is delivered to the Executive by the Board
stating the manner in which the Company believes the Executive has not
substantially performed his duties, and the Executive shall have
failed to resume substantial performance of such duties within thirty
(30) days of receiving such demand, (B) the engaging by the Executive
in criminal conduct (including embezzlement and criminal fraud), (C)
the commission by the Executive of a felony, or a misdemeanor which
impairs the Executive's ability substantially to perform his duties
with the Company, (D) any material misappropriation of funds or
intentional material damage to the property or businesses of the
Company by the Executive or (E) the material breach of this Agreement
by the Executive other as set forth in Section 8(a)(iii)(A)).
<PAGE>
30
(iv) Without Cause. By the Company without Cause upon at least
thirty (30) days written notice to the Executive of its election to do
so.
(v) Voluntary Termination. By the Executive other than due to the
Employee's death or Permanent Disability ("Voluntary Termination")
upon at least forty-five (45) days written notice to the Company of
his election to do so.
(vi) Sale of the Company. By the Company upon the Sale of the
Company.
(b) Notice of Termination. Any termination of the
Executive's employment by the Company or by the Executive shall
be communicated by written Notice of Termination to the other
party hereto given in accordance with Section 11. For purposes of
this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate the provision in this Agreement
relied upon to terminate the Term.
(c) Date of Termination. "Date of Termination" shall mean
(i) if the Executive's employment is terminated by his death, the
date of his death, (ii) if the Executive's employment is
terminated for Permanent Disability, thirty (30) days after
Notice of Termination is given (provided that the Executive shall
not have returned to the performance of his duties during such
thirty (30) day period), (iii) if the Executive's employment is
terminated by the Company for Cause, without Cause or upon Sale
of the Company, the date specified in the Notice of Termination
after the expiration of any cure periods, if applicable, (iv) if
the Executive's employment is terminated as a result of his
Voluntary Termination, the date set forth in the Executive's
Notice of Termination (but not beyond forty-five (45) days after
delivery of the Executive's Notice of Termination), and (v) if
the Executive's employment is terminated for any other reason,
the date on which a Notice of Termination is given after the
expiration of any cure periods.
9. Compensation Upon Termination Or During Disability.
(a) Death. If the Executive's employment shall be terminated
by reason of his death, the Company shall pay to such person as
the Executive shall have designated in a notice filed with the
Company, or, if no such person shall have been designated, to his
estate, (i) any unpaid amounts of his Base Salary or Annual Bonus
and accrued vacation prior to the Date of Termination and (ii)
any payments the Executive's spouse, beneficiaries or estate may
be entitled to receive pursuant to any pension or employee
benefit plan, life insurance policy or other plan, program or
policy then maintained or provided by the Company, or any other
agreement between the Executive and the Company (excluding the
Option and the 1992 Plan) (collectively, the "Termination
Benefits").
(b) Disability. During any period that the Executive fails
to perform his duties hereunder as a result of incapacity due to
physical or mental illness, the Executive shall continue to
receive his full Base Salary until the Executive's employment is
terminated pursuant to Section 8(a)(ii) hereof. The Executive
shall continue to be paid in bi-monthly installments an amount
equal to his Base Salary at the rate in effect at the time Notice
of Termination is given until the earlier of twenty-seven (27)
weeks after the Date of Termination or the date on which the Term
would have expired had a Notice of Termination been delivered
(assuming that no notice would be given to extend the Term), plus
any disability payments otherwise payable by or pursuant to plans
provided by the Company. In addition, the Company shall pay to
the Executive the Termination Benefits.
(c) For Cause. If the Executive's employment shall be
terminated by the Company for Cause, the Company shall pay the
Executive the Termination Benefits.
(d) Termination by the Company Without Cause, Etc. If the
Company terminates the Executive's employment for any reason
other than (i) due to death, (ii) for Cause (iii) Permanent
Disability or (iv) upon a Sale of the Company, then all unvested
Options shall immediately vest and the Company shall pay the
Executive the Termination Benefits and a lump sum payment equal
to one hundred fifty percent (150%) of the annual Base Salary
amount in effect on the date that the Notice of Termination was
given by the Company, provided that as a condition to such
payment the Executive first executes a general release of the
Company and all of its officers, directors and representatives of
any and all claims and which is otherwise in form satisfactory to
the Company (a "General Release").
<PAGE>
31
(e) Termination by the Company Upon Sale of the Company. If
the Company terminates the Executive's employment upon or after a
Sale of the Company, then all unvested Options shall immediately
vest upon the effectiveness of such termination and the Company
shall pay the Executive the Termination Benefits and a lump sum
payment equal to one-hundred fifty percent (150%) of the annual
Base Salary amount in effect on the date that the Sale of the
Company has been completed, except that no such lump sum payment
shall be due if the Closing Price of the Company's common stock
as of any date after the first public announcement of the Sale of
the Company equals or exceeds $55, provided that as a condition
to such payment the Executive first executes a General Release.
(f) Voluntary Termination by the Executive. If the
Executive's employment with the Company is terminated by his
Voluntary Termination prior to the one hundred eighty (180th) day
following the Effective Date, then the Company shall pay the
Executive the Termination Benefits. If the Executive's employment
with the Company is terminated as a result of Voluntary
Termination by the Executive after the one hundred eightieth
(180th) day following the Effective Date but before the three
hundred sixty-fifth (365th) day following the Effective Date,
then the Company shall pay the Executive the Termination Benefits
plus a lump sum payment in the amount of $150,000, provided that
as a condition to such payment the Executive first executes a
General Release.
(g) Payment of Termination Benefits and Other Amounts.
Except as otherwise provided herein, all Termination Benefits and
lump sum payments shall be due and payable within forty-five (45)
days after the Date of Termination or if a General Release is
required, within forty-five (45) days after delivery of the
General Release to the Company. Upon making such payments, the
Company shall have no further liability hereunder.
10. Successors. This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable by the Executive
other than by will or the laws of descent and distribution. This Agreement and
all rights of the Executive hereunder shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devises and legatees. If the
Executive should die while any amounts would still be payable to him hereunder,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the Executive's personal or legal
representatives or, if there be no such persons, the Executive's estate. This
Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns. The Company will 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 Company, by agreement in
form and substance satisfactory to the Executive, to assume expressly and agree
to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
11. Notice. All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
Samuel T. Hubbard
296 Sandringham Road
Rochester, New York 14610
If to the Company:
The Genesee Corporation
445 St. Paul Street
Rochester, New York 14605
with a copy to:
Management Continuity Committee
16 W. Main Street
Rochester, New York 14614 Attn: Stephen B. Ashley, Chairman
<PAGE>
32
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications shall be effective
when actually received by the addressee.
12. Certain Definitions. As used herein, the following definitions shall
apply:
"Closing Price" shall mean with respect to the Company's Class B
common stock on any trading day (A) if such stock is listed or admitted for
trading on any United States national securities exchange, or if actual
transactions are otherwise reported on a consolidated transaction reporting
system, the last reported sale price of such stock on such exchange or
reporting system, as reported in any newspaper of general circulation, (B)
if such stock is quoted on the National Association of Securities Dealers
Automated Quotation System or any similar system of automated dissemination
of quotations of securities prices in common use, the mean between the
closing high bid and low asked quotations for such day as reported on such
system, (C) if neither clause (A) or (B) is applicable, the mean between
the high bid and low asked quotations for the common stock as reported by
the National Quotation Bureau, Incorporated or (D) if none of clauses (A),
(B) or (C) apply, the price determined by the Genesee Board in good faith
to be the fair market value of such stock.
"Sale of the Company" shall mean that any of the following
circumstances have occurred:
(A) Any "person" (as such term is used in Sections 3(a)(9) and
13(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) (a "Significant Stockholder") is or becomes the
"beneficial owner" (as defined in Rule 13(d)-3 under the Exchange
Act), directly or indirectly, of twenty percent (20%) or more of the
combined voting power of Genesee's then outstanding securities
entitled to vote in the election of directors (provided, however, that
none of the direct descendants of John L. Wehle, the trusts
established by Elizabeth R. Wehle and under the Wills of Lewis A.
Wehle and John L. Wehle and any trustee thereunder (collectively, the
"Wehles") shall be a "person" for purposes of this Agreement and no
person who would be a Significant Stockholder as a result of acquiring
shares held by or over which any of the Wehles have investment or
voting control (the "Wehle Shares") shall be considered a Significant
Stockholder for purposes of this Agreement;
(B) Stockholders of Genesee approve and there is closed a (1)
merger or consolidation of Genesee with any other corporation other
than a merger or consolidation (1) which would result in Genesee
securities entitled to vote in the election of directors outstanding
immediately prior to the transaction continuing to represent more than
eighty percent (80%) of the combined outstanding voting power of the
then outstanding securities entitled to vote in the election of
directors of Genesee, or the surviving entity of such transaction; or
(2) a merger or consolidation effected to implement a recapitalization
of Genesee (or a similar transaction) in which no "person" (as defined
above) becomes a Significant Stockholder; or
(C) A sale or disposition by Genesee and its subsidiaries of more
than eighty-five percent (85%) of the fair market value of their
assets to one or more parties in a coordinated sale, disposition or
pursuant to a plan of dissolution and liquidation adopted by the Board
of Directors and approved by the Company's shareholders, provided that
the sale of the Brewery assets alone shall not under any circumstances
be a "Sale of the Company."
13. Miscellaneous.
(a) No provisions of this Agreement may be modified, waived or
discharged unless such modification, waiver or discharge is agreed to
in a writing signed by the Executive and such officer as may be
specifically designated by the Board to execute such instrument (which
may be done by way of ratification through a formal committee vote).
(b) The failure by either party hereto to insist upon compliance
with any condition or provision of this Agreement shall not be deemed
a waiver of such condition or provision or any other provision hereof.
(c) No agreements or representations, oral or otherwise, express
or implied, with respect to the subject matter hereof have been made
by either party which are not set forth expressly in this Agreement
and this Agreement supersedes any other employment agreement between
the Company and the Executive, including, without limitation, the
document entitled "Outline of Employment Agreement for Samuel T.
Hubbard, Jr., June 14, 1999."
(d) The Company may withhold from any amounts or payments due
under this Agreement all federal, state or other taxes as legally
shall be required.
<PAGE>
33
(e) The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of New York,
without reference to principles of conflicts of laws.
(f) The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall
remain in full force and effect.
(g) Genesee may, in its discretion, establish a trust to fund any
of the payments which are or may become payable to the Executive under
this Agreement.
(h) Executive represents and warrants that his employment by the
Company will not conflict with and will not be constrained by any
prior employment or consulting agreement or relationship.
(i) This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original, but all of which together
shall constitute one and the same instrument.
(j) The Company agrees that in the event that the Executive
becomes entitled to compensation under this Agreement, the Executive
shall have no obligation to mitigate damages and the Company shall not
assert any right of setoff as a result of subsequent employment
against sums owing to the Executive under this Agreement.
IN WITNESS WHEREOF, the parties have executed this Employment Agreement as
of this 15th day of December, 1999.
GENESEE CORPORATION THE GENESEE BREWING COMPANY, INC.
By: /s/ Stephen B. Ashley By: /s/ Charles S. Wehle
Name: Name:
Title: Title:
/s/ Samuel T. Hubbard, Jr. .
Samuel T. Hubbard, Jr.
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<INVENTORY> 9,645
<CURRENT-ASSETS> 27,636
<PP&E> 17,585
<DEPRECIATION> 5,388
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<OTHER-SE> 85,624
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