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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1999 COMMISSION FILE NUMBER 1-13453
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TODHUNTER INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 59-1284057
(State of Incorporation) (IRS Employer
Identification Number)
222 LAKEVIEW AVENUE, SUITE 1500, WEST PALM BEACH, FL 33401
(Address of principal executive office) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (561) 655-8977
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
COMMON STOCK, $.01 PAR VALUE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
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, as amended, during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes /X/ No/ /
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (Section 229.405 of Title 17, Code of Federal
Regulations) is not contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/
The aggregate market value of the voting stock held by non-affiliates
of the registrant as of December 10, 1999 (computed by reference to the last
reported sale price of registrant's common stock on AMEX on such date):
$28,330,841.
The number of shares outstanding of registrant's Common Stock, $.01
par value per share, as of December 10, 1999, was 5,513,734.
There were no shares of Preferred Stock outstanding as of December 10,
1999.
Documents Incorporated by Reference: Part III - Portions of the
registrant's definitive proxy statement to be filed within 120 days of the end
of the registrant's fiscal year in conjunction with the registrant's 2000 annual
stockholders' meeting.
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PART I
THIS ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER
30, 1999 (THE "FORM 10-K") CONTAINS "FORWARD-LOOKING STATEMENTS," AS DEFINED
UNDER SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
(THE "EXCHANGE ACT"). FORWARD-LOOKING STATEMENTS ARE STATEMENTS OTHER THAN
HISTORICAL INFORMATION OR STATEMENTS OF CURRENT CONDITION AND RELATE TO
FUTURE EVENTS OR THE FUTURE FINANCIAL PERFORMANCE OF THE COMPANY. SOME
FORWARD-LOOKING STATEMENTS MAY BE IDENTIFIED BY USE OF SUCH TERMS AS
"BELIEVES," "ANTICIPATES," "INTENDS" OR "EXPECTS." SUCH FORWARD-LOOKING
STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS
THAT MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY
TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR
ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE
COMPANY'S ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THE RESULTS DISCUSSED
IN THE FORWARD-LOOKING STATEMENTS. THE FOLLOWING IS A LIST OF FACTORS, AMONG
OTHERS, THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE
FORWARD-LOOKING STATEMENTS: BUSINESS CONDITIONS AND GROWTH IN CERTAIN MARKET
SEGMENTS AND INDUSTRIES AND THE GENERAL ECONOMY; COMPETITIVE FACTORS
INCLUDING INCREASED COMPETITION AND PRICE PRESSURES; AVAILABILITY OF THIRD
PARTY COMPONENT PRODUCTS AT REASONABLE PRICES; INCREASED EXCISE TAXES;
FOREIGN CURRENCY EXPOSURE; CHANGES IN PRODUCT MIX BETWEEN AND AMONG PRODUCT
LINES; LOWER THAN EXPECTED CUSTOMER ORDERS AND QUARTERLY SEASONAL FLUCTUATION
OF THOSE ORDERS; AND PRODUCT SHIPMENT INTERRUPTIONS. ALSO, SEE "RISK FACTORS"
IN PREVIOUS FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. THE COMPANY
UNDERTAKES NO OBLIGATION TO PUBLICLY UPDATE OR REVISE ANY FORWARD-LOOKING
STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR
OTHERWISE.
ITEM 1. BUSINESS
GENERAL OVERVIEW
Todhunter International, Inc. (the "Company") is a leading producer
and supplier of brandy, rum, wine and spirits to other beverage alcohol
manufacturers; produces, imports and markets premium branded spirits; bottles
beverage alcohol and other beverages on a contract basis and under its own
labels; and produces vinegar and cooking wine. The Company operates four
production facilities in the United States and purchases products for resale
from other producers. The Company is a Delaware corporation organized in 1970 as
a successor to a business founded in the Bahamas in 1964. All references in this
report to "Fiscal 1999", "Fiscal 1998" and "Fiscal 1997" shall refer to the
Company's fiscal year ended September 30 of such year unless the context
otherwise requires.
RELATIONSHIP WITH ANGOSTURA LIMITED
On July 21, 1999, Angostura Limited ("Angostura"), a Trinidad-based
distiller, acquired 1,000,000 shares of the Company's common stock from A.
Kenneth Pincourt, Jr., Chairman, Chief Executive Officer and founder of the
Company. On August 10, 1999, Angostura purchased from the Company an additional
650,220 shares of the Company's common stock, and the Company agreed to add two
nominees of Angostura to its board of directors. Angostura has continued to
purchase shares on the open market and currently holds 32.9% of the Company's
common stock. The Company is discussing with Angostura entering into a strategic
relationship, whereby the Company would market Angostura products in the United
States and Europe through its existing distribution network. In return, the
Company will receive marketing support and investments from Angostura in order
to continue to expand its distribution network. The Company and Angostura have
not yet entered into a formal marketing agreement and the Company has not begun
marketing Angostura's products.
RECENT ACQUISITION
On November 17, 1999, the Company acquired substantially all of the
assets of Adams Wine Company d/b/a Monarch Wine Company of Georgia ("Monarch"),
Atlanta, Georgia (the acquisition of the assets of Monarch is hereafter referred
to as the "Monarch Acquisition"). Monarch specializes in the manufacture of
wines, including custom blended wines and cooking wines for the food industry
and base wines for producers of vinegar and beverage alcohol. For the year ended
December 31, 1998, Monarch's sales were $16 million.
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The purchase price was approximately $23.5 million in cash, subject to
a post-closing purchase price adjustment. The Monarch Acquisition strengthens
the Company's position in the beverage alcohol and food industry by expanding
the Company's customer base and product offerings, and improves the Company's
plant capacity utilization since the Company plans to discontinue wine
production at the Monarch facility in Atlanta, Georgia in Fiscal 2000 and
integrate its wine production into the Company's existing facilities. There are
also synergies in the areas of sales, distribution and administrative overhead.
BUSINESS SEGMENTS
The Company operates primarily in the beverage alcohol industry in the
United States. The Company reports its operating results in five segments:
- Bulk Alcohol Products (citrus brandy, citrus spirits, rum, cane
spirits, fortified citrus wine, purchased distilled products and
byproducts)
- Premium Branded Spirits (primarily rum, flavored rum and tequila)
- Bottling Operations (contract bottling services and proprietary
and private label products)
- Vinegar and Cooking Wine (bulk vinegar, bulk cooking wine,
vinegar stock and proprietary and private label case goods)
- Corporate Operations and Other (primarily corporate related
items).
Information regarding net sales, operating income and total assets of
each of the Company's business segments and information regarding geographic
areas is set forth in Note 11 to the Company's consolidated financial statements
located in Item 8 of this Annual Report on Form 10-K.
BULK ALCOHOL PRODUCTS. The Company produces and sells citrus brandy,
citrus spirits, rum, cane spirits and fortified citrus wine in the United
States. The Company also purchases other distilled products from several
suppliers for resale, including grain alcohol, which is denatured and packaged
and sold as industrial alcohol to hospitals, universities, fragrance producers
and other manufacturers. The Company is the largest supplier of citrus brandy,
bulk rum and fortified citrus wine in the United States. The Company sells its
bulk alcohol products to over 40 producers of beverage alcohol in the United
States and exports products to approximately 10 countries from the United
States. The Company's distilling operations produce a byproduct, which is sold
as animal feed.
Citrus brandy and spirits are distilled from citrus juice
byproducts purchased from manufacturers of citrus juice concentrate. The
Company's citrus brandy is used primarily as an ingredient in flavored
brandies. Citrus spirits are used primarily as a fortifying ingredient to
increase the alcohol content of the Company's citrus wine and the wine of
other manufacturers. The Company's citrus wine is fermented from citrus juice
and fortified with citrus spirits to increase its alcohol content to
approximately 20% by volume. Known as fortified citrus wine, this product is
used primarily as an ingredient in cordials, whiskies and other beverage
alcohol. Rum and cane spirits are distilled from sugar cane molasses and are
sold to other bottlers of rum, producers of beverage alcohol, food companies
and flavor manufacturers. Rum is also used in the Company's premium branded
spirits and bottling operations.
Management believes that its proximity to raw materials and its use of
citrus byproducts in the production of bulk alcohol provide it with cost
advantages over competing products. Because end products are taxed on a blended
rate based upon the ingredients used rather than on the resulting alcohol
content of the end product, beverage alcohol producers can lower excise taxes on
their products by substituting fortified citrus wine for distilled spirits
alternatives. This cost savings arises because fortified citrus wine is
currently subject to federal excise taxes of $1.57 per gallon, whereas distilled
spirits are taxed at $13.50 per proof gallon (one proof gallon is approximately
equivalent in alcohol content to two and one-half gallons of fortified citrus
wine). The ability of beverage alcohol producers to substitute fortified citrus
wine for distilled spirits varies by end product according to government
regulations. For example, fortified citrus wine may contribute up to 49% of the
alcohol content of cordials and liqueurs, and up to approximately 10% of the
alcohol content of Canadian whiskey. In addition, small quantities of fortified
citrus wine may be used in blended whiskey, rum, brandy and other types of
beverage alcohol.
PREMIUM BRANDED SPIRITS. The Company produces, bottles, imports,
develops and markets a line of premium branded spirits in the United States and
exports distilled spirits to about 10 countries in Europe. Since 1996, the
Company has established and strengthened relationships with wholesalers,
expanded its distribution network, developed new products, obtained agency
agreements and acquired management and marketing expertise.
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Management's strategy has been to focus on marketing and building premium
brands with an initial emphasis on the rum and tequila categories. The
Company's principal premium brands include:
- Cruzan Estate Rums
- Cruzan Flavored Rums
- Porfidio Tequila
- Plymouth Gin
BOTTLING OPERATIONS . The Company's bottling operations include
contract bottling services and the production, bottling and marketing of a
complete line of distilled spirits under its own proprietary labels and under
the private labels of major retailers. The Company's primary bottling operations
are located in Florida and serve customers in the Southeastern United States.
The Company also produces and sells proprietary label products in the United
States Virgin Islands.
Contract bottling products include distilled spirits, coolers,
prepared cocktails, fruit juices, carbonated and non-carbonated fruit flavored
beverages and flavored sparkling water. The Company's proprietary and private
label products include rum, gin, vodka, tequila, cordials and various whiskies.
The Company's proprietary label products are marketed in the popular-price
category of the distilled spirits market.
VINEGAR AND COOKING WINE. To complement its distilling, winery and
bottling operations, the Company produces vinegar, vinegar stock, and cooking
wine for sale to condiment manufacturers, food service distributors and major
retailers. The Company's sales to retailers are sold under its proprietary
labels and under the private labels of major retailers in the Southeastern
United States.
CORPORATE OPERATIONS AND OTHER. Corporate Operations and Other
includes traditional corporate items and the results of certain nonmaterial
operations.
DEPENDENCE ON MAJOR CUSTOMERS
The Company sells its bulk alcohol products to over 40 producers of
beverage alcohol in the United States and foreign countries. The Company's
contract bottling services and proprietary and private label products are sold
to a limited number of customers. The Company's vinegar and cooking wine are
sold to over 100 condiment manufacturers, food service distributors and
retailers. The Company has major customers in its bulk alcohol products and
bottling operations businesses. The loss of one or more of the Company's major
customers could have a material adverse effect on the Company's liquidity and
results of operations.
PRODUCTION
The Company's principal domestic production facilities are located in
Lake Alfred and Auburndale, Florida, both near Orlando and central to Florida's
citrus growing region. The two plants have similar distilling, bottling and
winery operations, allowing the Company to shift production from one plant to
the other. The Lake Alfred plant also has a vinegar production facility. Both
plants are near major highways and are serviced by a railroad, providing good
transportation access. The Company has a cold storage, warehousing and P.E.T.
bottle manufacturing facility in Winter Haven, Florida. The Company also
operates a winery and vinegar production facility in Louisville, Kentucky. The
Company's offshore rum production facilities are located in St. Croix, United
States Virgin Islands.
DISTILLING. The Company begins its distilling process with citrus or
cane molasses, which is fermented for approximately two to seven days. Once
fermented, the product has an average alcohol content of 4% by volume, which is
increased to approximately 95% through distillation. The alcohol is then
processed through rectifying columns and further refined. The finished product
is stored in stainless steel tanks, except rum, which is generally stored in
wooden barrels for aging purposes. The Lake Alfred, Auburndale and Virgin
Islands facilities can produce, on a combined basis, up to 23 million gallons of
distilled products per year.
WINERY. Wine is produced by the fermentation of citrus or grape juice.
After fermentation, the wine is fortified by the addition of distilled citrus
spirits to raise its alcohol content to approximately 20% by volume. Fortified
citrus wine is sold to producers of beverage alcohol. The wineries are
physically segregated from the distilling
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operations and have their own set of fermenting and storage tanks. The Lake
Alfred, Auburndale and Louisville facilities can produce, on a combined
basis, up to 20 million gallons of wine per year.
BOTTLING. The Lake Alfred and Auburndale plants both have automated,
high-speed bottling lines capable of filling up to 600 12-ounce containers per
minute. Lake Alfred has two lines that are used primarily to bottle vinegar and
juices, two lines that are used to bottle the proprietary and private label
products and one line to bottle premium branded spirits. Auburndale has two
lines that are dedicated to bottling coolers and prepared cocktails and three
lines that bottle proprietary and private label products, premium branded
spirits and cooking wine. The Company's warehouse storage areas can accommodate
up to 800,000 cases. The Company's plant in the Virgin Islands has one line
capable of bottling up to 250,000 cases per year. The Company distills and ages
its own rum, but generally produces its other proprietary and private label
products from alcohol purchased from third parties. Depending on the particular
formula for a product, the Company adds flavoring and/or sugar, reduces the
product's proof and then filters and bottles the finished product. The Company's
bottling capacity is approximately 10 million cases per year.
VINEGAR AND COOKING WINE. Vinegar is produced by converting alcohol
into acetic acid. Several varieties of vinegar, including white distilled, red
wine, white wine, corn, rice wine, balsamic, tarragon and apple cider, are
produced at the Lake Alfred and Louisville facilities which have a combined
capacity of 7.5 million grain gallons per year. Cooking wine is produced by the
controlled fermentation of red or white grape juice into wine. Several varieties
of cooking wine, including red, white, sherry, golden, marsala and chablis, are
produced at the Auburndale and the Louisville facilities.
QUALITY CONTROL. Each of the Company's facilities is equipped with a
quality control laboratory. The Company employs several chemists who continually
test to ensure the quality of its raw materials and end products.
RAW MATERIALS. The principal raw materials used in the Company's
distilling operations are citrus molasses, a byproduct of citrus juice
production, and cane molasses, a byproduct of sugar production. Citrus molasses,
which is used in the production of citrus brandy and citrus spirits, accounted
for approximately 50% of the raw materials used in the Company's distilling
operations in 1999. Cane molasses, which is used in the production of rum and
cane spirits, accounts for the remaining 50%. Citrus juice concentrate is the
primary raw material used in the Company's winery operations. The Company
purchases such raw materials from a variety of suppliers. The Company purchases
distilled products, used in its bulk alcohol products and bottling operations
businesses from several suppliers. Glass bottles and other materials, such as
caps, labels and cardboard cartons, are used in bottling and packaging and are
available from numerous suppliers. Alcohol and grape juice concentrate are the
primary raw materials used in the Company's vinegar and cooking wine operations.
During Fiscal 1999, one supplier accounted for more than 10% of the Company's
raw material purchases. The cost of raw materials fluctuates depending upon a
number of factors, including crop conditions, weather, governmental programs and
purchases by foreign governments.
FLUCTUATIONS IN OPERATING RESULTS; SEASONALITY
The Company has a limited number of customers, and these customers
often purchase bulk alcohol products in significant quantities or place
significant orders for contract bottling services, distilled spirits, vinegar
and cooking wine. Accordingly, the size and timing of purchase orders and
product shipments can cause operating results to fluctuate significantly from
quarter to quarter. Additionally, some Company products generate higher
profit margins than others, and changes in the Company's product mix will
cause gross margins to fluctuate. Certain aspects of the Company's business
are also seasonal, with increased demand for the Company's contract bottling
services from April to October and increased production of the Company's bulk
alcohol products during the months from November to June, corresponding to
the Florida citrus-harvest. As a result of these factors, the Company's
operating results may vary significantly from quarter to quarter.
MARKETING AND DISTRIBUTION
Bulk alcohol products are sold primarily in large quantities through
the Company's salespeople. The Company's marketing strategy emphasizes the cost
advantages of these products over other ingredients available to end producers.
Bulk alcohol products are sold primarily to other bottlers, distillers and end
producers located throughout the United States and Canada.
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The Company sells proprietary and private label spirits to wholesalers
for distribution primarily in the Southeastern United States. The Company's
marketing strategy for these products places primary emphasis upon promotional
programs emphasizing the Company's cost advantages, directed at wholesalers and
retailers, rather than consumers. Wholesalers and retailers market these
products to retailers and directly to consumers, respectively. Although
competition for retail shelf space in the beverage alcohol industry is
significant, wholesalers of such products, and not the Company, generally must
address such competition, although the Company's promotional programs may have a
beneficial effect upon the allocation of retail shelf space for its products.
The Company produces, imports, markets and sells premium branded spirits to
wholesalers in the United States. The Company's marketing and promotional
programs for its premium brands are directed at wholesalers, retailers and
consumers. Sales of the Company's proprietary and private label and premium
branded spirits are generally made FOB (free on board) at the Company's
facilities and, accordingly, the purchasers of such products are responsible for
the risk of loss and transportation costs. In addition to its salesforce, the
Company works through various brokers to develop and service its sales to
wholesalers and retailers.
The Company's marketing strategy with respect to its contract bottling
services emphasizes the cost advantages and quality of the Company's services.
Arrangements with bottling customers are typically negotiated by the Company's
executive officers.
Vinegar and cooking wine are sold primarily in large quantities to
manufacturers, distributors and retailers through the Company's salesforce.
These products are also sold through wholesalers and directly to retailers under
the Company's proprietary labels and under the private labels of retailers.
COMPETITION
The areas of the beverage alcohol industry in which the Company
does business are highly competitive with respect to price, service and
product quality, and there are several companies with substantially greater
financial and other resources than the Company. The Company's citrus-based
bulk alcohol products compete primarily with producers of grape-based
products. While the Company is aware of only two other domestic producers of
citrus brandy and spirits, there exist several producers of grape-based
distilled products. The Company's proprietary and private label products and
premium branded spirits compete on a regional and national basis against
other distilled spirits products, including premium labels, mid-price and
popular-price products. The proprietary label and premium branded spirits
produced by the Company compete with those of companies for whom the Company
performs contract bottling services and to whom the Company sells its bulk
alcohol products. The Company believes that its relationships with such
customers are good and has not experienced any adverse effects, such as
termination or non-renewal of ongoing contracts as a result of such
competition. Based upon its historical experience and customer relationships,
the Company does not expect to experience any adverse effects from such
competition in the foreseeable future. Contract bottling operations compete
against other bottlers located throughout the Southeastern United States. The
Company experiences similar competition in its vinegar and cooking wine
operations. While Management believes that it has achieved a strong
competitive position in the markets it serves, there can be no assurance that
the Company will be able to maintain its competitive position in the future.
REGULATION AND TAXATION
The production, importing and sale of wine and spirits is subject to
extensive regulation by certain federal and state agencies, and the Company is
required to obtain various permits, bonds and licenses to comply with
regulations. Pursuant to federal and state environmental requirements, the
Company is required to obtain permits and licenses to operate certain
facilities, and to treat and remove effluents discharged from its distilling,
winery and bottling operations. Management believes it is presently in material
compliance with all applicable federal and state regulations.
Beverage alcohol produced and bottled by the Company is subject to
substantial federal excise taxes. Excise taxes are imposed at flat rates of
$13.50 per proof gallon for distilled spirits and $1.57 per gallon for fortified
citrus wine. Tax rates on spirits were increased from $12.50 to $13.50 per proof
gallon effective January 1, 1991. Effective at the same time, tax rates on
fortified wines were increased by $.90 per gallon. Where necessary and
competitively feasible, the Company has increased its prices to offset tax
increases. Management believes that such tax increases have adversely affected
the total unit volume of beverage alcohol sold industry-wide.
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The Company's fortified wine products, as an ingredient of beverage
alcohol, have a cost advantage under the component method of taxation, which
taxes wine at a lower rate than distilled spirits. Changes in, or the
elimination of, the component method of taxation, as it relates to wine, would
have a material adverse effect on the Company's results of operations.
EMPLOYEES
As of September 30, 1999, the Company had approximately 330 full-time
employees. Additional workers are generally employed at the Company's bottling
facilities during the summer months when the bulk of contract bottling takes
place. None of the Company's employees are members of any labor union nor are
there any collective bargaining agreements between the Company and its
employees, with the exception of the Company's Virgin Islands employees. The
Virgin Islands operation, consisting of approximately 60 employees, is fully
unionized. Management believes that its relations with its employees are good.
INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES
The Company has facilities in Florida and Kentucky for the production
of its bulk alcohol products, premium branded spirits, contract bottling
services, vinegar and cooking wine. The Company sells its products and services
primarily to customers in the United States but also exports certain products to
foreign countries, primarily in Eastern Europe, Canada and the Caribbean. The
Company's rum production facilities are located in St. Croix, United States
Virgin Islands. Rum produced in the Virgin Islands is sold primarily to other
bottlers of rum, producers of beverage alcohol, food companies and flavor
manufacturers located in the United States but is also sold to foreign countries
in the Caribbean, South America and Europe. See Note 11 to the Company's
consolidated financial statements for additional information about the Company's
foreign and domestic operations and export sales.
ITEM 2. PROPERTIES
The Company owns all of its principal production facilities, including
all related land, buildings, and equipment. The Lake Alfred facility consists of
four principal buildings with approximately 250,000 square feet on 32 acres. The
Auburndale facility consists of three principal buildings with approximately
250,000 square feet on 16 acres. The Louisville facility consists of three
principal buildings with approximately 60,000 square feet on 27.5 acres. The
Winter Haven facility consists of three principal buildings with approximately
140,000 square feet on 30 acres. The Virgin Islands facility consists of seven
principal buildings with approximately 200,000 square feet on 30 acres. As a
result of the Monarch Acquisition in November 1999, the Company leases, in
Atlanta, Georgia, two buildings with approximately 50,000 square feet on 6
acres. The Company's facilities in the Bahamas consist of five principal
buildings with approximately 50,000 square feet on 6 acres. The Company leases
approximately 10,000 square feet of office space in West Palm Beach, Florida for
its executive offices. Management believes that all of its facilities, both
owned and leased, are adequate and suitable for operations in the foreseeable
future.
ITEM 3. LEGAL PROCEEDINGS
The Company and its subsidiaries are subject to litigation from time
to time in the ordinary course of business. Legal proceedings which are pending
as of September 30, 1999, consist only of matters in the ordinary course of
business and taken together are not material.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to security holders during the fourth quarter
of Fiscal 1999.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock trades on the American Stock Exchange under
the symbol "THT." The following table sets forth the high and low closing
quotations of the Company's common stock for each quarter during the past two
fiscal years.
<TABLE>
<CAPTION>
PERIOD HIGH LOW
- ------ ---- ---
<S> <C> <C>
Fiscal 1998
First quarter 10 9/16 9 9/16
Second quarter 10 1/2 8 1/4
Third quarter 9 3/16 8 3/16
Fourth quarter 9 3/4 6 7/8
Fiscal 1999
First quarter 8 1/4 6 3/4
Second quarter 8 1/4 7 3/8
Third quarter 8 1/2 6 3/4
Fourth quarter 10 3/8 8 1/2
</TABLE>
The number of stockholders of record as of December 3, 1999 was 57. In
addition, the number of beneficial owners as of January 20, 1999, the last date
upon which the Company received a list of beneficial owners, was approximately
991.
No dividend was paid to stockholders during the fiscal years ended
September 30, 1998 and 1999. The Company intends to continue to retain earnings
for use in the business of the Company and therefore does not anticipate
declaring or paying cash dividends in the immediate future. In addition, the
payment of cash dividends requires the consent of the Company's lender.
RECENT SALES OF UNREGISTERED SECURITIES
On August 10, 1999, the Company issued 650,220 shares of the Company's
common stock to Angostura in a privately negotiated, all cash transaction at $10
per share. No commissions were paid. The issuance was exempt from registration
under Section 4(2) of the Securities Act as a transaction not involving a public
offering.
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ITEM 6. SELECTED FINANCIAL DATA
The following selected financial data are derived from the Company's
audited consolidated financial statements. The following data are qualified by
reference to, and should be read in conjunction with, the consolidated financial
statements and related notes and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere herein.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENTS OF INCOME DATA:
Net sales $ 76,733 $ 75,096 $ 77,938 $ 78,197 $ 70,191
Cost of goods sold 53,000 53,006 56,493 58,428 54,564
--------- --------- --------- --------- ---------
Gross profit 23,733 22,090 21,445 19,769 15,627
Selling, general and administrative expenses 15,023 13,937 13,126 11,483 11,599
--------- --------- --------- --------- ---------
Operating income 8,710 8,153 8,319 8,286 4,028
Other income (expense):
Interest income 715 655 840 1,036 740
Interest expense (3,608) (3,946) (4,146) (4,351) (4,015)
Other, net 181 660 931 766 252
--------- --------- --------- --------- ---------
Income from continuing operations before income taxes 5,998 5,522 5,944 5,737 1,005
Income tax expense 1,458 808 1,259 1,192 1,060
--------- --------- --------- --------- ---------
Income (loss) from continuing operations 4,540 4,714 4,685 4,545 (55)
Discontinued operations, net of income tax benefit - - - - (10,740)
--------- --------- --------- --------- ---------
Income (loss) before extraordinary item 4,540 4,714 4,685 4,545 (10,795)
Extraordinary item, net of income tax benefit - - - - (468)
--------- --------- --------- --------- ---------
Net income (loss) $ 4,540 $ 4,714 $ 4,685 $ 4,545 $(11,263)
--------- --------- -------- ---------- ---------
--------- --------- -------- ---------- ---------
Net income per share
Basic
Income (loss) from continuing operations $ 0.91 $ 0.95 $ 0.95 $ 0.92 $ (0.01)
(Loss) from discontinued operations - - - - (2.19)
Extraordinary item - - - - (0.10)
--------- --------- --------- --------- ---------
Net income (loss) $ 0.91 $ 0.95 $ 0.95 $ 0.92 $ (2.30)
--------- --------- -------- ---------- ---------
--------- --------- -------- ---------- ---------
Diluted
Income (loss) from continuing operations $ 0.91 $ 0.95 $ 0.94 $ 0.92 $ (0.01)
(Loss) from discontinued operations - - - - (2.19)
Extraordinary item - - - - (0.10)
--------- --------- -------- ---------- ---------
Net income (loss) $ 0.91 $ 0.95 $ 0.94 $ 0.92 $ (2.30)
--------- --------- -------- ---------- ---------
--------- --------- -------- ---------- ---------
Weighted average shares outstanding
Basic 4,964 4,950 4,943 4,919 4,906
Diluted 4,982 4,985 4,966 4,955 4,906
BALANCE SHEET DATA (AT PERIOD END):
Working capital $ 36,246 $ 37,807 $31,640 $ 33,517 $ 35,435
Total assets 97,167 96,997 95,618 98,859 103,787
Short-term debt 6,000 1,888 2,938 2,152 2,264
Long-term debt 28,000 42,581 43,135 51,293 57,759
Stockholders' equity 51,193 41,004 36,290 31,448 26,865
</TABLE>
8
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION
The following discussion and analysis summarizes the significant
factors affecting (i) consolidated results of operations of the Company for
Fiscal 1999 compared to Fiscal 1998, and Fiscal 1998 compared to Fiscal 1997,
and (ii) financial liquidity and capital resources for Fiscal 1999. This
discussion and analysis should be read in conjunction with the Company's
consolidated financial statements and notes thereto included herein. Certain
amounts presented in this Item 7 have generally been rounded to the nearest
thousand and hundred thousand, as applicable, but the percentages calculated are
based on actual amounts without rounding.
The Company operates primarily in the beverage alcohol industry in the
United States. The Company reports its operating results in five segments: Bulk
Alcohol Products (citrus brandy, citrus spirits, rum, cane spirits, fortified
citrus wine, purchased distilled products and byproducts); Premium Branded
Spirits (primarily rum, flavored rum and tequila); Bottling Operations (contract
bottling services and proprietary and private label products); Vinegar and
Cooking Wine (bulk vinegar, bulk cooking wine, vinegar stock and proprietary and
private label case goods); and Corporate Operations and Other (primarily
corporate related items).
Information regarding net sales, operating income and total assets of
each of the Company's business segments and information regarding geographic
areas is set forth in Note 11 to the Company's consolidated financial statements
located in Item 8 of this Annual Report on Form 10-K.
During the fourth quarter of Fiscal 1999, the Company adopted
Statement of Financial Accounting Standards (SFAS) No. 131, "Disclosure about
Segments of an Enterprise and Related Information", which changes the way public
companies report information about operating segments. SFAS No. 131, which is
based on the management approach to segment reporting, establishes requirements
to report selected segment information about products and services, major
customers, and the countries in which the Company has material operations.
Accordingly, all previously reported results have been restated to reflect the
retroactive application of this accounting change as required by generally
accepted accounting principles.
RECENT ACQUISITION
On November 17, 1999, the Company acquired substantially all of the
assets of Adams Wine Company d/b/a Monarch Wine Company of Georgia ("Monarch"),
Atlanta, Georgia (the acquisition of the assets of Monarch is hereafter referred
to as the "Monarch Acquisition"). Monarch specializes in the manufacture of
wines, including custom blended wines and cooking wines for the food industry
and base wines for producers of vinegar and beverage alcohol. For the year ended
December 31, 1998, Monarch's sales were $16 million.
The purchase price was approximately $23.5 million in cash, subject to
a post-closing purchase price adjustment. The Monarch Acquisition strengthens
the Company's position in the beverage alcohol and food industry by expanding
the Company's customer base and product offerings, and improves the Company's
plant capacity utilization since the Company plans to discontinue wine
production at the Monarch facility in Atlanta, Georgia in Fiscal 2000 and will
integrate its wine production into the Company's existing facilities. There are
also synergies in the areas of sales, distribution and administrative overhead.
9
<PAGE>
The following tables set forth statement of income items as a
percentage of net sales and information on net sales of certain Company
products.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Net sales 100.0 % 100.0 % 100.0 %
Cost of goods sold 69.1 70.6 72.5
------ ------ ------
Gross margin 30.9 29.4 27.5
Selling, general and administrative expenses 19.5 18.6 16.8
------ ------ ------
Operating income 11.4 10.8 10.7
Other income (expense), net (3.6) (3.4) (3.1)
------ ------ ------
Income before income taxes 7.8 7.4 7.6
Income tax expense 1.9 1.1 1.6
------ ------ ------
Net income 5.9 % 6.3 % 6.0 %
------ ------ ------
------ ------ ------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, % CHANGE
------------------------ ----------------
1999 1998 1997 99/98 98/97
---- ---- ---- ----- -----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Bulk alcohol products $ 33,522 $ 32,510 $ 34,718 3.1 (6.4)
Premium branded spirits 12,126 10,485 8,435 15.6 24.3
Bottling operations 17,778 19,171 22,940 (7.3) (16.4)
Vinegar and cooking wine 11,029 10,544 9,403 4.6 12.1
Corporate operations and other 2,278 2,386 2,442 (4.5) (2.3)
-------- -------- --------
$ 76,733 $ 75,096 $ 77,938 2.2 (3.6)
-------- -------- --------
-------- -------- --------
</TABLE>
The following table provides unit sales volume data for certain Company
products.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, % CHANGE
------------------------ -----------------
1999 1998 1997 99/98 98/97
---- ---- ---- ----- -----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Bulk alcohol products:
Distilled products, in proof gallons
Citrus brandy 1,459 1,479 1,805 (1.4) (18.1)
Citrus spirits 1,347 1,012 1,062 33.0 (4.7)
Rum 4,542 4,412 4,380 3.0 0.7
Cane spirits 551 617 542 (10.6) 13.7
Fortified citrus wine, in gallons 6,912 6,846 6,439 1.0 6.3
Premium branded spirits, in cases 243 215 194 13.1 11.0
Bottling operations, in cases 4,423 4,639 5,394 (4.6) (14.0)
Vinegar
Bulk, in 100 grain gallons 4,757 5,251 4,510 (9.4) 16.4
Cases 514 503 562 2.2 (10.6)
Drums, in 100 grain gallons 964 746 476 29.2 56.6
Cooking Wine
Bulk, in gallons 85 71 44 20.1 59.3
Cases 221 243 207 (8.7) 16.9
</TABLE>
The Company is a leading producer and supplier of brandy, rum, wine
and spirits to other beverage alcohol manufacturers; produces, imports and
markets premium branded spirits; bottles beverage alcohol and other beverages on
a contract basis and under its own labels; and produces vinegar and cooking
wine.
The Company's net sales and gross margins (gross profit as a
percentage of net sales) vary depending on the mix of business among the
Company's products. Historically, gross margins have been highest in bulk
alcohol products and premium branded spirits and lower in bottling operations
and vinegar and cooking wine operations. Within its bottling operations, sales
and gross margins have varied substantially based upon the mix of business from
the Company's "Type A" and "Type B" bottling customers. Type A bottling
customers pay the Company to purchase their raw materials and these costs are
passed through to the customer. Type B bottling customers supply
10
<PAGE>
their own raw materials and are only charged for bottling charges. Although
gross profit per case for the Company's Type A and Type B bottling customers
is approximately equal, given the same case volume, net sales and cost of
goods sold with respect to products bottled for Type A bottling customers are
higher, and gross margins are lower, than for Type B bottling customers. As a
result, significant fluctuations in volume of Type A bottling customers can
distort the Company's gross margin.
The Company has a limited number of customers, and these customers
often purchase bulk alcohol products in significant quantities or place
significant orders for contract bottling services, distilled spirits, vinegar
and cooking wine. Accordingly, the size and timing of purchase orders and
product shipments can cause operating results to fluctuate significantly from
quarter to quarter. Additionally, some Company products generate higher
profit margins than others, and changes in the Company's product mix will
cause gross margins to fluctuate. Certain aspects of the Company's business
are also seasonal, with increased demand for the Company's contract bottling
services from April to October and increased production of the Company's bulk
alcohol products during the months from November to June, corresponding to
the Florida citrus-harvest. As a result of these factors, the Company's
operating results may vary significantly from quarter to quarter.
Net sales represent the Company's gross sales less excise taxes.
Excise taxes are generally payable on products bottled by the Company. In
addition, excise taxes are payable on sales of industrial alcohol to certain
customers. Accordingly, excise taxes vary from period to period depending upon
the Company's product and customer mix.
RESULTS OF OPERATIONS
FISCAL 1999 COMPARED TO FISCAL 1998
NET SALES. Net sales were $76.7 million in 1999, an increase of 2.2%
from net sales of $75.1 million in 1998.
Net sales of bulk alcohol products were $33.5 million in 1999, an
increase of 3.1% from net sales of $32.5 million in 1998. The increase resulted
primarily from (i) an increase in sales of citrus spirits and rum, and (ii) an
improved product mix of sales of purchased distilled products. These increases
were partially offset by decreases in citrus brandy, cane spirits and
byproducts.
Net sales of premium branded spirits were $12.1 million in 1999, an
increase of 15.6% from net sales of $10.5 million in 1998. Sales increases
reflect the continued expansion of the Company's distribution network into new
markets and the success of its Cruzan Flavored Rums and Porfidio Tequila.
Net sales in the Company's bottling operations were $17.8 million in
1999, a decrease of 7.3% from net sales of $19.2 million in 1998. The Company's
overall bottling volume decreased 4.6% in 1999. The decrease in volume was
primarily attributable to a decrease in business with the Company's largest Type
A bottling customer. The Customer believes that the business with this Type A
bottling customer will not return to historic levels. Sales of the Company's
proprietary and private label products decreased 1.5% in 1999.
Net sales of vinegar and cooking wine were $11.0 million in 1999, an
increase of 4.6% from net sales of $10.5 million in 1998. The Company's two
vinegar plants are operating at maximum capacity. The Company intends to expand
its vinegar production capacity by building or acquiring additional facilities.
GROSS PROFIT. Gross profit was $23.7 million in 1999, an increase of
7.4% from gross profit of $22.1 million in 1998. Gross margin increased to 30.9%
in 1999 from 29.4% in 1998. The improvement in gross margin is primarily
attributable to a favorable change in product mix in the Company's bulk alcohol
products and a decrease in contract bottling volume with a Type A bottling
customer.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $15.0 million in 1999, an increase of 7.8% from
$13.9 million in 1998. Selling, general and administrative expenses were 19.5%
of net sales in 1999 and 18.6% in 1998. The increase in selling, general and
administrative expenses in 1999, is primarily attributable to increased
marketing and new employees related to the Company's efforts to increase its
distribution network. The increase was partially offset by a reduction in
administrative overhead.
11
<PAGE>
OPERATING INCOME. The following table sets forth the operating income
(loss) by operating segment of the Company for Fiscal 1999 and Fiscal 1998.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, % CHANGE
------------------------ --------
1999 1998 99/98
---- ---- -----
(IN THOUSANDS)
<S> <C> <C> <C>
Bulk alcohol products $11,880 $ 11,020 7.8
Premium branded spirits (523) 250 (309.0)
Bottling operations 591 963 (38.7)
Vinegar and cooking wine 1,922 1,708 12.5
Corporate operations and other (5,160) (5,788) (10.9)
-------- --------
$ 8,710 $ 8,153 6.8
-------- --------
-------- --------
</TABLE>
As a result of the above factors, operating income was $8.7 million in
1999, an increase of 6.8% from operating income of $8.2 million in 1998.
INTEREST INCOME. The Company earns interest income on its cash,
short-term investments and notes receivable. The increase in interest income in
1999 is attributable to higher average amounts of cash, short-term investments
and notes receivable outstanding compared to 1998.
INTEREST EXPENSE. Interest expense was $3.6 million in 1999 and $3.9
million in 1998. The decrease in interest expense was due to lower levels of
debt outstanding and lower rates during 1999 compared to 1998.
OTHER, NET. Included in other income is a nonrecurring gain of $.1
million in 1999 and $.4 million in 1998.
INCOME TAX EXPENSE. The Company's effective income tax rate was 24.3%
in 1999 and 14.6% in 1998. The low tax rate is attributable to the Virgin
Islands subsidiary which has a 90% exemption from United States federal income
taxes. Also, in 1998 the Company amended its 1993, 1994 and 1995 income tax
returns, which resulted in loss carryforwards available in 1998 and a refund of
income taxes previously paid. No such loss carryforwards or refunds were
available in 1999.
FISCAL 1998 COMPARED TO FISCAL 1997
NET SALES. Net sales were $75.1 million in 1998, a decrease of 3.6%
from net sales of $77.9 million in 1997.
Net sales of bulk alcohol products were $32.5 million in 1998, a
decrease of 6.4% from net sales of $34.7 million in 1997. The decrease resulted
primarily from a decrease in sales of citrus brandy, purchased distilled
products and byproducts. These decreases were partially offset by increases in
sales of rum, cane spirits and fortified citrus wine.
Net sales of premium branded spirits were $10.5 million in 1998, an
increase of 24.3% from net sales of $8.4 million in 1997. Sales increases
reflect the expansion of the Company's distribution network into new markets and
the introduction of new brands.
Net sales in the Company's bottling operations were $19.2 million in
1998, a decrease of 16.4% from net sales of $22.9 million in 1997. The Company's
overall bottling volume decreased 14.0% in 1998. The decrease in volume is
primarily attributable to a decrease in business with the Company's largest Type
A bottling customer. The Company believes that the business with this Type A
bottling customer will not return to historical levels. Sales of the Company's
proprietary and private label products decreased 5.5% in 1998 due to competition
from other low cost bottlers.
Net sales of vinegar and cooking wine were $10.5 million in 1998, an
increase of 12.1% from net sales of $9.4 million in 1997. The increase in net
sales of vinegar and cooking wine was due to increased manufacturing capacity,
which allowed the Company to increase sales to existing and new customers, and
an improved product mix.
12
<PAGE>
The Company's two vinegar plants are now operating at maximum capacity. The
Company intends to expand its vinegar production capacity.
GROSS PROFIT. Gross profit was $22.1 million in 1998, an increase of
3.0% from gross profit of $21.4 million in 1997. Gross margin increased to 29.4%
in 1998 from 27.5% in 1997. The improvement in gross margin is primarily
attributable to reduced raw material costs in the Company's domestic distilling
operations, a decrease in contract bottling volume with a large Type A bottling
customer and a favorable change in product mix.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $13.9 million in 1998, an increase of 6.2% from
$13.1 million in 1997. Selling, general and administrative expenses were 18.6%
of net sales in 1998 and 16.8% in 1997. The increase in selling, general and
administrative expenses in 1998, is primarily attributable to (1) increased
marketing and new employees related to the Company's efforts to increase its
distribution network for its premium branded spirits, and (2) legal fees
relating to the Company's efforts to prosecute and settle various lawsuits. The
increase was partially offset by a reduction in administrative overhead.
OPERATING INCOME. The following table sets forth the operating income
(loss) by operating segment of the Company for Fiscal 1998 and Fiscal 1997.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, % CHANGE
------------------------ --------
1998 1997 98/97
---- ---- -----
(IN THOUSANDS)
<S> <C> <C> <C>
Bulk alcohol products $ 11,020 $ 11,135 (1.0)
Premium branded spirits 250 901 (72.2)
Bottling operations 963 657 46.8
Vinegar and cooking wine 1,708 1,197 42.7
Corporate operations and other (5,788) (5,571) 3.9
--------- ---------
$ 8,153 $ 8,319 (2.0)
--------- ---------
--------- ---------
</TABLE>
As a result of the above factors, operating income was $8.2 million in
1998, a decrease of 2.0% from operating income of $8.3 million in 1997.
INTEREST INCOME. The Company earns interest income on its cash
investments and notes receivable. The decrease in interest income in 1998 is due
to decreased cash investments and amounts of notes receivable.
INTEREST EXPENSE. Interest expense was $3.9 million in 1998 and $4.1
million in 1997. The decrease in interest expense was due to lower levels of
debt outstanding and lower interest rates during 1998 as compared to 1997.
OTHER, NET. Included in other income is rental income from the
Bahamian subsidiary and non-recurrring gains of $.4 million in 1998 and $.3
million in 1997 relating to insured hurricane damage.
INCOME TAX EXPENSE. The Company's effective income tax rate was 14.6%
in 1998 and 21.2% in 1997. The low tax rate is attributable to the Virgin
Islands subsidiary which has a 90% exemption from U.S. federal income taxes.
Also, the Company recently amended its 1993, 1994 and 1995 federal income tax
returns which has resulted in loss carryforwards available in the current year
and a request for refund of income tax previously paid.
FINANCIAL LIQUIDITY AND CAPITAL RESOURCES
GENERAL
The Company's principal use of cash in its operating activities is for
purchasing raw materials to be used in its manufacturing operations, purchasing
imported products for its premium branded spirits business and carrying
inventories and the subsequent receivables. The Company's source of liquidity
has historically been cash flow from operations and its line of credit. Some of
the Company's manufacturing operations are seasonal and the Company's borrowings
on its line of credit vary during the year. For example, the Company uses citrus
molasses as its primary raw material in the production of citrus brandy and
spirits at its two Florida distilleries. The Company buys citrus
13
<PAGE>
molasses, a byproduct of citrus juice production, from local manufacturers of
citrus juice and concentrate during the citrus harvest, which generally runs
from November to June. The Company generally begins purchasing citrus
molasses in November and builds inventory of citrus brandy and spirits. The
Company must manufacture and build inventory while raw materials are
available due to the short life of the citrus molasses it purchases. Another
seasonal business of the Company is its contract bottling services. Demand
for contract bottling services is highest during the months from April
through October. Management believes that cash provided by operating
activities and its financing activities will provide adequate resources to
satisfy its working capital, liquidity and anticipated capital expenditure
requirements for both its short-term and long-term capital needs.
OPERATING ACTIVITIES
Net cash provided by operating activities in 1999 was $8.6 million,
which resulted from $8.9 million in net income adjusted for noncash items, less
$.3 million representing the net change in operating assets and liabilities.
INVESTING AND FINANCING ACTIVITIES
Net cash used in investing activities in 1999 was $4.2 million, which
resulted primarily from $2.6 million of capital expenditures and $2.5 million of
purchases of short-term investments. Payments received on notes receivable of
$2.0 million were offset by new notes issued of $1.1 million.
Net cash used in financing activities in 1999 was $4.8 million, which
resulted primarily from principal payments on long-term debt of $4.1 million and
purchases of treasury stock of $.7 million. On September 22, 1998, the Company's
board of directors authorized the repurchase of up to 100,000 shares of the
Company's common stock, either in open market or private transactions. The
Company completed its repurchase plan during Fiscal 1999 after purchasing 99,200
shares. On August 12, 1999, the Company issued 650,220 new shares to Angostura
for $6.4 million, net of expenses. The proceeds from the sale of the shares were
used to pay down the Company's line of credit.
At September 30, 1999, the Company had an unsecured bank line of
credit of $15 million, which was to expire November 1, 2001. There were no
outstanding borrowings under this line of credit at September 30, 1999. In
November 1999, the Company's existing long-term debt and line of credit were
replaced with a new $71 million credit agreement between the Company and a
syndicate of lenders. The new credit agreement consists of a $15 million line of
credit and $56 million term loan. The Company used $23.5 million of the term
loan in November 1999 to fund the Monarch Acquisition. See Note 7 to the
Company's consolidated financial statements for additional information related
to the Company's long-term debt.
The Company's total debt was $34.0 million as of September 30, 1999,
and its ratio of debt to equity was .66 to 1.
With respect to the Bahamian and Virgin Islands subsidiaries, no
provision has been made for taxes which would result from the remittance of such
undistributed earnings as the Company intends to reinvest these earnings
indefinitely. The Company's share of the undistributed earnings of the Bahamian
and Virgin Islands subsidiaries was approximately $8.2 million and $15.8
million, respectively, as of September 30, 1999. See Note 8 to the Company's
consolidated financial statements for additional information on income taxes
related to these subsidiaries.
Based on current plans and business conditions, management expects
that its cash and cash equivalents, together with any amounts generated from
operations and available borrowings, will be sufficient to meet the Company's
cash requirements for at least the next 12 months.
FORWARD-LOOKING STATEMENTS
Management's Discussion and Analysis of Financial Condition and
Results of Operations may contain, among other things, information regarding
revenue growth, expenditure levels and plans for development. These statements
could be considered forward-looking statements that involve a number of risks
and uncertainties. The following is a list of factors, among others, that could
cause actual results to differ materially from the forward-looking statements:
business conditions and growth in certain market segments and industries and the
general economy; competitive factors including increased competition and price
pressures; availability of third party component
14
<PAGE>
products at reasonable prices; excise taxes; foreign currency exposure;
changes in product mix; lower than expected customer orders and quarterly
seasonal fluctuation of those orders; and product shipment interruptions. See
"Risk Factors" in previous filings with the Securities and Exchange
Commission.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes accounting and reporting
standards for derivative instruments and hedging activities. It requires that an
entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value. The
Company will adopt SFAS No. 133 as required during Fiscal 2001.
YEAR 2000 COMPLIANCE
Until recently, computer programs generally were written using two
digits rather than four to define the applicable year. Accordingly, programs may
recognize a date using "00" as the year 1900 instead of as the year 2000. This
problem may affect the Company's information technology systems, such as
financial, order entry, inventory control and forecasting systems, and
non-information technology systems that contain computer chips, such as
production equipment and security systems. It may also affect the technology
systems of third party vendors and customers, and of governmental entities upon
which the Company's business ordinarily relies.
The Company has completed a comprehensive program to identify,
evaluate and address issues associated with the ability of its information
technology and core non-information technology systems to properly recognize the
Year 2000 in order to avoid interruption of the operation of these systems and a
material adverse effect on the Company's operations as a result of the century
change. Each of the information technology software programs that the Company
currently uses has either been certified by its respective vendor as Year 2000
compliant or will be replaced with software that is so certified prior to
January 1, 2000. The Company has conducted comprehensive tests of all of its
software programs for Year 2000 compliance as part of its Year 2000 readiness
program. The Company believes that its core non-information technology systems,
such as its bottling and production equipment, air conditioning/refrigeration
units, telephones and faxes will not be adversely affected by the Year 2000, due
to the completion of its tests and evaluation of such equipment. As part of its
Year 2000 compliance program, the Company is contacting its significant vendors,
suppliers and customers to ascertain whether the systems used by such third
parties are Year 2000 compliant. The Company has completed virtually all Year
2000 compliance software testing.
To date the Company has spent approximately $531,000 to reprogram,
replace and test its information technology software for Year 2000 compliance.
Costs and expenses arising in connection with the Company's Year 2000 compliance
efforts have been capitalized.
The Company currently anticipates that both its core information
technology and non-information technology systems will be Year 2000 compliant in
sufficient time to avoid business interruptions, though no assurances can be
given that the Company's compliance testing will not detect unanticipated Year
2000 compliance problems. Furthermore, the Company does not yet know the Year
2000 compliance status of all third parties that are integral to the Company's
business and is therefore currently unable to assess the likelihood or the risk
to the Company of third party system failures. A system failure by any of the
Company's significant customers, suppliers or vendors could result in a material
adverse effect on the Company's business and operations.
The Company has developed contingency plans to handle a Year 2000
system failure experienced by its information technology systems. These backup
procedures, including manual record keeping and processing, have been tested and
utilized by the Company in the past during times of unplanned system failure.
EFFECTS OF INFLATION AND CHANGING PRICES
The Company's results of operations and financial condition have not
been significantly affected by inflation and changing prices. The Company has
been able, subject to normal competitive conditions, to pass along rising costs
through increased selling prices.
15
<PAGE>
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
<TABLE>
<CAPTION>
Market Risk Analysis
September 30, 1999
Expected Maturity Date
----------------------------------------------------------------------------------------------------------
2000 2001 2002 2003 2004 Thereafter Total Fair Value
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Notes receivable:
Fixed rate $ 1,439,796 $ 1,378,680 $ 496,196 $ 532,916 $ 572,365 $ 2,545,623 $ 6,965,576 $ 6,786,928
Average interest rate 7.13% 7.33% 7.64% 7.71% 7.80% 7.95% 7.48% --
Liabilities
Long-term debt:
Variable rate $ 6,000,000 $ 8,000,000 $ 8,000,000 $ 8,000,000 $ 4,000,000 $ -- $ 34,000,000 $34,000,000
Average interest rate 8.91% 8.91% 8.91% 8.91% 8.91% -- 8.91% --
Interest Rate Derivatives
Interest rate swaps:
Fixed to variable $ 800,000 $ 933,333 $ 933,333 $ 533,334 $ 800,000 $ -- $ 4,000,000 $ 89,150
Interest rate paid 6.19% 6.19% 6.19% 6.19% 6.19% -- 6.19% --
Interest rate 8.91% 8.91% 8.91% 8.91% 8.91% -- 8.91% --
received
</TABLE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and financial statement
schedules of the Company and its subsidiaries, and the report of independent
auditors are listed at Item 14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information regarding directors and executive officers required by
Item 10 is incorporated by reference from the Company's definitive proxy
statement for its 2000 annual stockholders' meeting.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is incorporated by reference from
the Company's definitive proxy statement for its 2000 annual stockholders'
meeting.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 is incorporated by reference from
the Company's definitive proxy statement for its 2000 annual stockholders'
meeting.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 is incorporated by reference from
the Company's definitive proxy statement for its 2000 annual stockholders'
meeting.
16
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Financial Statements and Schedules
See "Index to Financial Statements and Financial Statement
Schedules".
(b) Exhibits
See "Index to Exhibits".
(c) Reports on Form 8-K
During the fourth quarter of Fiscal 1999, the Company filed the
following current reports on Form 8-K:
(i) Form 8-K dated July 21, 1999. This Form 8-K reported
information under Item 1 (Changes in Control of Registrant)
and Item 7 (Financial Statements and Exhibits).
(ii) Form 8-K dated August 10, 1999. This Form 8-K reported
information under Item 1 (Changes in Control of Registrant)
and Item 7 (Financial Statements and Exhibits).
(iii) Form 8-K dated September 28, 1999. This Form 8-K reported
information under Item 5 (Other Events) and Item 7 (Financial
Statements and Exhibits).
17
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of West
Palm Beach, State of Florida, on the 15th day of December, 1999.
TODHUNTER INTERNATIONAL, INC.
By: /s/ A. Kenneth Pincourt, Jr.
--------------------------------------------
A. Kenneth Pincourt, Jr., Chairman of the Board
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
/s/ A. Kenneth Pincourt, Jr. Chairman of the Board
- ------------------------------- and Chief Executive Officer December 15, 1999
A. Kenneth Pincourt, Jr. (Principal Executive Officer)
/s/ Troy Edwards Treasurer and Chief Financial Officer December 15, 1999
- -------------------------------
Troy Edwards (Principal Financial
and Accounting Officer)
/s/ Thomas A. Valdes Director December 15, 1999
- -------------------------------
Thomas A. Valdes
/s/ Jay S. Maltby Director December 15, 1999
- -------------------------------
Jay S. Maltby
/s/ D. Chris Mitchell Director December 15, 1999
- -------------------------------
D. Chris Mitchell
/s/ Leonard G. Rogers Director December 15, 1999
- -------------------------------
Leonard G. Rogers
/s/ W. Gregory Robertson Director December 15, 1999
- -------------------------------
W. Gregory Robertson
/s/ Edward F. McDonnell Director December 15, 1999
- -------------------------------
Edward F. McDonnell
/s/ K. Ian McLachlan Director December 15, 1999
- -------------------------------
K. Ian McLachlan
/s/ Godfrey D. Bain Director December 15, 1999
- -------------------------------
Godfrey D. Bain
</TABLE>
18
<PAGE>
TODHUNTER INTERNATIONAL, INC.
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
a) Financial Statements
Independent Auditor's Report 20
Consolidated balance sheets as of September 30, 1999 and 1998 21
Consolidated statements of income for the years ended
September 30, 1999, 1998 and 1997 23
Consolidated statements of stockholders' equity for the
years ended September 30, 1999, 1998 and 1997 24
Consolidated statements of cash flows for the years ended
September 30, 1999, 1998 and 1997 25
Notes to consolidated financial statements 27
b) Financial Statement Schedules
</TABLE>
All schedules have been omitted as not required, not applicable, not deemed
material or because the information is included in the notes to the
registrant's consolidated financial statements.
19
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
Todhunter International, Inc. and Subsidiaries
West Palm Beach, Florida
We have audited the accompanying consolidated balance sheets of Todhunter
International, Inc. and subsidiaries as of September 30, 1999 and 1998, and the
related consolidated statements of income, stockholders' equity and cash flows
for each of the three years in the period ended September 30, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Todhunter
International, Inc. and subsidiaries as of September 30, 1999 and 1998, and the
results of their operations and their cash flows for each of the three years in
the period ended September 30, 1999 in conformity with generally accepted
accounting principles.
/s/ McGladrey & Pullen, LLP
West Palm Beach, Florida
November 24, 1999
20
<PAGE>
TODHUNTER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1999 AND 1998
<TABLE>
<CAPTION>
ASSETS 1999 1998
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 5,265,318 $ 5,629,016
Short-term investments 2,547,365 -
Trade receivables 12,161,401 11,623,197
Other receivables 2,316,398 2,237,397
Inventories 23,011,883 23,423,573
Notes receivable, current maturities 1,439,796 1,503,675
Deferred income taxes 929,000 1,011,000
Other current assets 1,899,672 1,000,192
-------------------------
TOTAL CURRENT ASSETS 49,570,833 46,428,050
Long-Term Notes Receivable, less current 5,525,780 5,738,287
maturities
Property and Equipment, less accumulated
depreciation
1999 $36,098,763; 1998 $32,017,543 39,774,028 41,527,402
Goodwill, less accumulated amortization
1999 $735,841; 1998 $703,096 356,678 389,423
Other Assets 1,939,927 2,913,868
-------------------------
$97,167,246 $96,997,030
-------------------------
-------------------------
</TABLE>
See Notes to Consolidated Financial Statements.
21
<PAGE>
TODHUNTER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1999 AND 1998
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY 1999 1998
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current Liabilities
Current maturities of long-term debt $6,000,000 $1,888,133
Accounts payable 4,417,313 3,417,615
Accrued interest expense 1,261,542 1,261,542
Other accrued expenses 1,646,462 2,054,188
-------------------------
TOTAL CURRENT LIABILITIES 13,325,317 8,621,478
Long-Term Debt, less current maturities 28,000,000 42,580,944
Deferred Income Taxes 4,345,000 4,685,000
Other Liabilities 303,835 105,539
-------------------------
45,974,152 55,992,961
-------------------------
Commitments
Stockholders' Equity
Preferred stock, par value $.01 per share; authorized 2,500,000 shares,
no shares issued - -
Common stock, par value $.01 per share; authorized 10,000,000 shares;
issued 1999 5,612,934; 1998 4,949,714 56,129 49,497
Additional paid-in capital 18,326,014 11,945,777
Retained earnings 33,548,731 29,008,795
-------------------------
51,930,874 41,004,069
Less cost of 99,200 shares of treasury stock (737,780) -
-------------------------
51,193,094 41,004,069
-------------------------
$97,167,246 $96,997,030
-------------------------
-------------------------
</TABLE>
22
<PAGE>
TODHUNTER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales $ 114,196,882 $ 110,846,810 $ 116,605,935
Less excise taxes 37,463,735 35,750,916 38,667,686
----------------------------------------------------------
NET SALES 76,733,147 75,095,894 77,938,249
Cost of goods sold 53,000,012 53,005,786 56,493,174
----------------------------------------------------------
GROSS PROFIT 23,733,135 22,090,108 21,445,075
Selling, general and administrative expenses 15,022,979 13,937,082 13,126,309
----------------------------------------------------------
OPERATING INCOME 8,710,156 8,153,026 8,318,766
----------------------------------------------------------
Other income (expense):
Interest income 715,055 655,230 840,016
Interest expense (3,607,706) (3,946,528) (4,146,322)
Equity in losses of equity investee (357,145) (364,740) -
Other, net 537,248 1,025,020 931,394
----------------------------------------------------------
(2,712,548) (2,631,018) (2,374,912)
----------------------------------------------------------
INCOME BEFORE INCOME TAXES 5,997,608 5,522,008 5,943,854
----------------------------------------------------------
Income tax expense (benefit):
Current 1,715,672 824,312 197,292
Deferred (258,000) (16,000) 1,062,000
----------------------------------------------------------
1,457,672 808,312 1,259,292
----------------------------------------------------------
NET INCOME $ 4,539,936 $ 4,713,696 $ 4,684,562
----------------------------------------------------------
----------------------------------------------------------
Net income per common share:
Basic $ 0.91 $ 0.95 $ 0.95
----------------------------------------------------------
----------------------------------------------------------
Diluted $ 0.91 $ 0.95 $ 0.94
----------------------------------------------------------
----------------------------------------------------------
Common shares and equivalents outstanding:
Basic 4,963,760 4,949,714 4,943,169
----------------------------------------------------------
----------------------------------------------------------
Diluted 4,981,579 4,984,868 4,966,165
----------------------------------------------------------
----------------------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements.
23
<PAGE>
TODHUNTER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
Common Stock Treasury Stock
----------------------- Additional ---------------------- Total
Shares Paid-in Retained Shares Stockholders'
Issued Amount Capital Earnings Acquired Amount Equity
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, September 30, 1996 4,923,464 $ 49,235 $ 11,788,539 $ 19,610,537 - $ - $ 31,448,311
Issuance of common stock 26,250 263 157,237 - - - 157,500
Net income - - - 4,684,562 - - 4,684,562
---------------------------------------------------------------------------------------------
Balance, September 30, 1997 4,949,714 49,498 11,945,776 24,295,099 - - 36,290,373
Net income - - - 4,713,696 - - 4,713,696
---------------------------------------------------------------------------------------------
Balance, September 30, 1998 4,949,714 49,498 11,945,776 29,008,795 - - 41,004,069
Issuance of common stock 663,220 6,631 6,380,238 - - 6,386,869
Shares acquired for
treasury stock - - - 99,200 (737,780) (737,780)
Net income - - - 4,539,936 - - 4,539,936
---------------------------------------------------------------------------------------------
Balance, September 30, 1999 5,612,934 $ 56,129 $ 18,326,014 $ 33,548,731 99,200 $ (737,780) $ 51,193,094
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements.
24
<PAGE>
TODHUNTER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
1999 1998 1997
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows From Operating Activities
Net income $ 4,539,936 $ 4,713,696 $ 4,684,562
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation 4,352,708 4,151,350 3,930,933
Amortization 99,146 94,108 229,190
Equity in losses of equity investees 357,145 364,740 -
Deferred income taxes (258,000) (16,000) 1,062,000
Other (168,259) (10,225) 120,537
Changes in assets and liabilities:
(Increase) decrease in:
Receivables (617,205) (693,399) (360,722)
Inventories 411,690 (3,336,672) (1,472,597)
Other assets (899,480) 579,842 (221,600)
Increase (decrease) in:
Accounts payable 999,698 (1,621,637) (14,409)
Accrued interest expense - (142,902) 142,902
Other accrued expenses (407,726) 738,588 (358,939)
Other liabilities 198,296 (120,174) (128,617)
-------------------------------------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 8,607,949 4,701,315 7,613,240
-------------------------------------------
Cash Flows From Investing Activities
Proceeds from sale of property and equipment 359,228 38,692 63,565
Principal payments received on
notes receivable 1,968,168 1,477,775 1,525,539
Purchase of property and equipment (2,577,396) (2,721,995) (3,775,112)
Disbursements for notes receivable (1,113,666) (913,883) (52,500)
Purchase of short-term investments (2,547,365) - -
Redemption of certificates of deposit - - 4,494,375
Purchase of minority interest in subsidiary - (418,249) -
(Increase) decrease in other assets (240,628) 164,304 (344,177)
-------------------------------------------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES $ (4,151,659) $ (2,373,356) $ 1,911,690
-------------------------------------------
(Continued)
25
<PAGE>
TODHUNTER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997
<CAPTION>
1999 1998 1997
- ----------------------------------------------------------------------------------------------------
Cash Flows From Financing Activities
Net borrowings (payments) under line of
credit arrangements $ (6,330,944) $ 2,083,997 $ (5,438,538)
Proceeds from issuance of common stock 6,386,869 - 157,500
Purchase of common stock for treasury (737,780) - -
Principal payments on long-term borrowings (4,138,133) (3,687,744) (1,933,334)
----------------------------------------------
NET CASH (USED IN)
FINANCING ACTIVITIES (4,819,988) (1,603,747) (7,214,372)
----------------------------------------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (363,698) 724,212 2,310,558
Cash and cash equivalents:
Beginning 5,629,016 4,904,804 2,594,246
----------------------------------------------
Ending $ 5,265,318 $ 5,629,016 $ 4,904,804
----------------------------------------------
----------------------------------------------
Supplemental Disclosures of Cash Flow
Information
Cash payments for:
Interest $ 3,607,706 $ 4,089,430 $ 4,003,420
----------------------------------------------
----------------------------------------------
Income taxes $ 1,842,737 $ 406,937 $ 344,347
----------------------------------------------
----------------------------------------------
Supplemental schedule of noncash investing
and financing activities
Notes receivable received in exchange for
sale of other assets. $ 850,000 $ - $ -
----------------------------------------------
----------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements.
26
<PAGE>
TODHUNTER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
Note 1. Nature of Business and Significant Accounting Policies
NATURE OF BUSINESS: Todhunter International, Inc. (the "Company") is a
leading producer and supplier of brandy, rum, wine and spirits to other
beverage alcohol manufacturers; produces, imports and markets premium branded
spirits; bottles beverage alcohol and other beverages on a contract basis and
under its own labels; and produces vinegar and cooking wine. The Company
operates four production facilities in the United States and purchases
products for resale from other producers.
A summary of the Company's significant accounting policies follows:
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include
the accounts of Todhunter International, Inc. and all of its majority-owned
subsidiaries. All significant intercompany balances and transactions have
been eliminated in consolidation. Investments in business entities in which
the Company does not have control, but has the ability to exercise
significant influence over operating and financial policies (generally
20-50% ownership), are accounted for by the equity method.
ACCOUNTING ESTIMATES: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
REVENUE RECOGNITION: The Company recognizes revenue when its product is
shipped, at which time title passes to the customer. Revenues from contract
bottling services are recognized at the time the bottling process is
completed. Excise taxes on products sold are billed directly to customers
and are included in sales at the same time the product sold is recognized
as revenue.
CASH EQUIVALENTS: The Company considers certificates of deposit with an
original maturity of three months or less to be cash equivalents. The
Company maintains depository accounts in excess of FDIC insured limits. The
Company has not experienced any credit losses in such accounts and does not
anticipate any losses.
SHORT-TERM INVESTMENTS: The Company has investments in U.S. government
securities which mature within six months of purchase. All of the Company's
short-term investments are classified as held-to-maturity and are carried
at amortized cost.
INVENTORIES: Inventories are stated at the lower of cost or market. Cost is
determined using the first-in, first-out method.
27
<PAGE>
TODHUNTER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY AND EQUIPMENT: Property and equipment is stated at cost.
Depreciation is calculated on the straight-line method over the estimated
useful lives of the various classes of depreciable assets. Estimated lives
are as follows:
<TABLE>
<CAPTION>
Years
---------------
<S> <C>
Land improvements 3 to 20
Buildings and improvements 3 to 40
Machinery and equipment 3 to 33
</TABLE>
FINANCIAL INSTRUMENTS: The Company utilizes derivative financial
instruments to change the fixed/variable interest rate mix of the debt
portfolio to reduce the Company's aggregate risk to movements in interest
rates. The derivative instruments consist of interest rate swap agreements
with banks. Gains and losses relating to qualified hedges are deferred and
included in the measurement of the related transaction, when the hedged
transaction occurs. Realized and unrealized changes in the fair value of
the remaining derivative financial instruments are recognized in income in
the period in which the change occurs. The Company's policy is not to hold
or issue derivative financial instruments for trading purposes.
AMORTIZATION: Amortization is computed on the straight-line basis over the
estimated lives of the capitalized assets. Estimated lives are as follows:
<TABLE>
<CAPTION>
Years
---------------
<S> <C>
Goodwill 20 - 40
Trademarks 20 - 40
Other 3 - 12
</TABLE>
IMPAIRMENT OF LONG-LIVED ASSETS: In accordance with FASB Statement No. 121,
ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED
ASSETS TO BE DISPOSED OF, the Company records impairment losses on
long-lived assets used in operations when events and circumstances indicate
that the assets might be impaired and the undiscounted cash flows estimated
to be generated by those assets are less than the carrying amounts of those
assets.
INCOME TAXES: Deferred income tax assets and liabilities are computed for
differences between the financial statement and tax bases of assets and
liabilities that will result in taxable or deductible amounts in the future
based on enacted tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount
expected to be realized.
28
<PAGE>
TODHUNTER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PREFERRED STOCK: The Company has authorized 2,500,000 shares of $.01 par
value preferred stock. No terms are stated as to dividend, liquidation or
other rights applicable to these shares.
RECLASSIFICATIONS: Certain amounts in the 1998 consolidated financial
statements have been reclassified to conform with the 1999 presentation.
NOTE 2. INVENTORIES
The major components of inventories as of September 30, 1999 and 1998 are:
<TABLE>
<CAPTION>
1999 1998
---------------------------------
<S> <C> <C>
Finished goods $ 15,076,552 $ 15,794,672
Work in process 583,884 355,659
Raw materials and supplies 7,351,447 7,273,242
---------------------------------
$ 23,011,883 $ 23,423,573
---------------------------------
---------------------------------
</TABLE>
NOTE 3. NOTES RECEIVABLE
Notes receivable consist of the following as of September 30, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
-------------- --------------
<S> <C> <C>
6% note, collateralized by general intangibles, mortgage and
security agreement, monthly payments of $83,333 plus interest
through September 2001 $ 1,916,667 $ 2,916,667
7% note, collateralized by property and equipment, monthly
principal and interest payments of $47,202 through May 2006 3,000,000 3,343,267
8.5% unsecured notes, principal payable on demand. Interest
payments are due monthly or on demand in accordance with
the terms of the agreement. (See Note 13) 1,073,115 770,000
8% note, collateralized by real property, monthly
principal and interest payments of $10,313 through April 2009 826,457 -
Other 149,337 212,028
-------------------------------
6,965,576 7,241,962
Less current maturities 1,439,796 1,503,675
-------------------------------
$ 5,525,780 $ 5,738,287
-------------------------------
-------------------------------
</TABLE>
29
<PAGE>
TODHUNTER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
NOTE 4. PROPERTY AND EQUIPMENT
The major classifications of property and equipment as of September 30, 1999 and
1998 are:
<TABLE>
<CAPTION>
1999 1998
---------------------------
<S> <C> <C>
Land $ 4,757,587 $ 4,757,587
Land improvements 1,187,292 1,156,115
Buildings and improvements 16,184,107 15,804,392
Machinery and equipment 53,743,805 51,826,851
---------------------------
75,872,791 73,544,945
Less accumulated depreciation 36,098,763 32,017,543
---------------------------
$ 39,774,028 $ 41,527,402
---------------------------
---------------------------
</TABLE>
NOTE 5. OTHER ASSETS
Other assets, net of accumulated amortization, consist of the following as of
September 30, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
-----------------------------
<S> <C> <C>
Trademarks $ 995,648 $ 1,035,848
Other 944,279 1,878,020
-----------------------------
$1,939,927 $ 2,913,868
-----------------------------
-----------------------------
</TABLE>
NOTE 6. OTHER ACCRUED EXPENSES
Other accrued expenses consist of the following as of September 30, 1999 and
1998:
<TABLE>
<CAPTION>
1999 1998
----------------------------
<S> <C> <C>
Accrued property taxes $ 466,888 $ 456,833
Accrued payroll and related expenses 752,479 483,572
Other 427,095 1,113,783
----------------------------
$1,646,462 $2,054,188
----------------------------
----------------------------
</TABLE>
30
<PAGE>
TODHUNTER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANICAL STATEMENTS
- ------------------------------------------------------------------------------
NOTE 7. FINANCING ARRANGEMENTS
Long-term debt consists of the following as of September 30, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
-------------------------------
<S> <C> <C>
Senior notes, interest at 8.905%, unsecured
(replaced with new credit agreement subsequent to
September 30, 1999)(1) $ 34,000,000 $ 34,000,000
Revolving credit note of $15,000,000, unsecured
(replaced with new credit agreement subsequent
to September 30, 1999) - 6,330,944
Bank note payable, interest was calculated based
upon a floating rate of 2.50% above the one month
LIBOR rate (2) - 3,250,000
Note payable, interest at 7.5% - 888,133
-------------------------------
34,000,000 44,469,077
Less current maturities 6,000,000 1,888,133
-------------------------------
$ 28,000,000 $ 42,580,944
-------------------------------
-------------------------------
</TABLE>
In November 1999, the Company entered into a new credit agreement, which
consisted of $15 million of revolving lines of credit and $56 million of term
loans. The revolving lines of credit terminate in November 2002. Interest
payments on the revolving lines of credit are payable monthly. Borrowings under
the credit agreement will bear interest based upon either the Eurodollar or
prime rate, at the Company's option, plus an applicable margin as defined in the
agreement. For the term loans, the Company will make quarterly principal
installments of $2,000,000 starting March 31, 2000 through September 30, 2004
with any remaining balance due December 31, 2004. The credit agreement is
collateralized by 65% of the issued and outstanding stock of the Company's
majority-owned subsidiaries. The proceeds of these notes were used to retire the
previous finance agreements and to finance a business acquisition (see Note 17).
The Company is required to maintain minimum fixed charge and interest coverage
ratios in addition to other financial covenants. Maturities of long-term debt
presented in the financial statements as of September 30, 1999 have been based
on the terms of the new credit agreement.
Maturities of long-term debt as of September 30, 1999 are as follows:
<TABLE>
<CAPTION>
Year Ending
September 30, Amount
- --------------------------------------------------------------------
<S> <C>
2000 $ 6,000,000
2001 8,000,000
2002 8,000,000
2003 8,000,000
2004 4,000,000
---------------
$ 34,000,000
---------------
---------------
</TABLE>
31
<PAGE>
TODHUNTER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
NOTE 7. FINANCING ARRANGEMENTS (CONTINUED)
The Company uses interest rate swap agreements to change the fixed/variable
interest rate mix of the debt portfolio to reduce the Company's aggregate risk
to movements in interest rates. Amounts paid or received under interest rate
swap agreements are accrued as interest rates change and are recognized over the
life of the swap agreements as an adjustment to interest expense. The related
amounts payable to, or receivable from, the counterparties are included in
accrued interest expense. A summary of the interest rate swaps is as follows:
(1) The Company has entered into an interest rate swap agreement with a bank
calling for the Company to exchange, as of May 1 and November 1 through
2004, interest payment streams calculated on a principal balance starting
at $4,000,000 and reducing starting in November 1999. The Company's
interest is calculated based upon a floating rate of 1.06% above the
six-month LIBOR rate. The bank's rate is 8.905%. During 1999, 1998 and
1997, the Company received net payments of $95,245, $87,054 and $88,898
respectively, related to this agreement, and reduced interest expense
accordingly. This agreement was terminated in November 1999 in conjunction
with the refinancing of the Company's debt.
(2) The Company had entered into an interest rate swap agreement accounted for
as a hedge with a bank. This agreement was terminated in fiscal year 1999.
During 1999, 1998 and 1997, the Company made net payments of $16,459,
$29,208 and $27,327, respectively, related to this agreement, and increased
interest expense accordingly.
NOTE 8. INCOME TAXES
Income tax expense consists of the following for the years ended September 30,
1999, 1998 and 1997:
<TABLE>
<CAPTION>
1999 1998 1997
--------------------------------------------------
<S> <C> <C> <C>
Current income tax expense (benefit):
Federal $ 1,589,051 $ 860,191 $ 224,764
State 126,621 (35,879) (27,472)
--------------------------------------------------
1,715,672 824,312 197,292
--------------------------------------------------
Deferred income tax expense (benefit):
Federal (218,000) 13,000 926,000
State (40,000) (29,000) 136,000
--------------------------------------------------
(258,000) (16,000) 1,062,000
--------------------------------------------------
Total income tax expense $ 1,457,672 $ 808,312 $ 1,259,292
--------------------------------------------------
--------------------------------------------------
</TABLE>
32
<PAGE>
TODHUNTER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
NOTE 8. INCOME TAXES (CONTINUED)
Temporary differences between the financial statement carrying amounts and tax
bases of assets and liabilities that give rise to significant portions of the
deferred tax assets and liabilities relate to the following as of September 30,
1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
--------------------------------
<S> <C> <C>
Deferred tax liabilities:
Property and equipment, principally due
to differences in depreciation $ 3,775,000 $ 3,704,000
Installment sale 570,000 862,000
Other - 119,000
--------------------------------
4,345,000 4,685,000
--------------------------------
Deferred tax assets:
Inventories, principally due to additional costs inventoried
for tax purposes pursuant to the Tax Reform Act of 1986 701,000 771,000
Difference related to anticipated future expenses and
allowances 133,000 227,000
Deferred compensation 84,000 -
Other 11,000 13,000
--------------------------------
929,000 1,011,000
--------------------------------
Net deferred income tax liability $ 3,416,000 $ 3,674,000
--------------------------------
--------------------------------
</TABLE>
No valuation allowance has been recorded as of September 30, 1999 or 1998.
Income tax expense differed from the amounts computed by applying the statutory
United States federal income tax rate to income before income taxes as a result
of the following for the years ended September 30, 1999, 1998 and 1997:
<TABLE>
<CAPTION>
1999 1998 1997
-----------------------------------------------
<S> <C> <C> <C>
Computed "expected" tax expense $ 2,039,186 $ 1,877,483 $ 2,020,910
Taxable income and dividends from
Bahamian subsidiary 158,632 97,950 80,881
Effect of income tax subsidy on earnings of
Virgin Islands subsidiary (1,070,253) (1,169,187) (1,025,698)
Non-deductible losses of equity investee 121,429 124,012 -
Effect of state taxes 83,570 12,199 9,340
Other 125,108 (134,145) 173,859
-----------------------------------------------
Total income tax expense $ 1,457,672 $ 808,312 $ 1,259,292
-----------------------------------------------
-----------------------------------------------
</TABLE>
33
<PAGE>
TODHUNTER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
NOTE 8. INCOME TAXES (CONTINUED)
Generally, the Bahamian subsidiary is not subject to United States federal
income taxes and there are no income taxes in the Commonwealth of the Bahamas.
Certain passive income of the Bahamian subsidiary is subject to United States
federal income taxes. The tax effect of income from the Bahamian subsidiary
reflected above and the undistributed earnings of the Bahamian subsidiary have
been reduced by the taxable amount.
The Virgin Islands subsidiary, through the Industrial Development Commission of
the Government of the Virgin Islands of the United States, has received a 90%
exemption from income taxes. This exemption is effective through January 31,
2002. The per share effect of this exemption on earnings on a basic and diluted
basis for the years ended September 30, 1999, 1998 and 1997, respectively, is as
follows:
<TABLE>
<CAPTION>
1999 1998 1997
-----------------------------------
<S> <C> <C> <C>
Basic $ 0.22 $ 0.24 $ 0.21
Diluted 0.21 0.23 0.21
</TABLE>
With respect to the Bahamian and Virgin Islands subsidiaries, no provision has
been made for taxes which would result from the remittance of such undistributed
earnings as the Company intends to reinvest these earnings indefinitely. The
Company's share of the undistributed earnings of the Bahamian and Virgin Islands
subsidiaries was approximately $8,200,000 and $15,800,000, respectively, as of
September 30, 1999.
NOTE 9. LEASES
The Company occupies office space under noncancelable operating leases which
expire in 2006. Initial base rent is $31,069 through 2000 and increases to
$31,956, thereafter, payable monthly. The leases contain two renewal options
of five years each.
Future minimum lease payments under noncancelable operating leases as of
September 30, 1999 are as follows:
<TABLE>
<CAPTION>
Year Ending
September 30, Amount
- --------------------------------------------------------------
<S> <C>
2000 $ 386,393
2001 389,651
2002 389,651
2003 389,651
2004 389,651
Thereafter 779,303
--------------
$ 2,724,300
--------------
--------------
</TABLE>
Rent expense for office space (including the Company's share of common area
expenses, real estate and sales taxes) amounted to $303,770, $359,484, and
$324,005, for the years ended September 30, 1999, 1998 and 1997, respectively.
34
<PAGE>
TODHUNTER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
NOTE 10. STOCK OPTIONS
On August 11, 1992, the Company adopted a stock option plan for the grant of
options to key employees. Option prices may not be less than 85% for the
nonqualified options or 100% for the qualified stock options of the fair market
value at the date of the grant. As of September 30, 1999, 1,400,000 shares are
authorized for issuance under the option plan. Options granted have vesting
periods ranging from 3 to 5 years. During the years ended September 30, 1999 and
1997, the Company received a total of $78,000 and $157,500 upon the exercise of
stock options for 13,000 and 26,250 shares, respectively. There were no stock
options exercised during the year ended September 30, 1998.
The Company applies Accounting Principles Board Opinion Number 25, ACCOUNTING
FOR STOCK ISSUED TO EMPLOYEES ("APB 25") and related interpretations in
accounting for options granted which requires compensation expense for the
Company's options to be recognized only if the market price of the underlying
stock exceeds the exercise price on the date of grant. Accordingly, the Company
has not recognized compensation expense for its options granted after 1994. SFAS
123, ACCOUNTING FOR STOCK-BASED COMPENSATION, issued in October 1995, requires
pro forma disclosures for option grants made after December 31, 1994, when
accounting for stock-based compensation plans in accordance with APB 25.
If the Company had elected, to recognize compensation cost based on the fair
value of the options granted at grant date as prescribed by SFAS No. 123, net
income and earnings per common share would have been reduced to the pro forma
amounts shown below:
<TABLE>
<CAPTION>
1999 1998 1997
--------------------------------------------------
<S> <C> <C> <C>
Net income - as reported $ 4,539,936 $ 4,713,696 $ 4,684,562
Net income - pro forma 4,364,707 4,538,467 4,602,805
Earnings per common share - as reported (Basic) 0.91 0.95 0.95
Earnings per common share - as reported (Diluted) 0.91 0.95 0.94
Earnings per common share - pro forma (Basic) 0.88 0.91 0.93
Earnings per common share - pro forma (Diluted) 0.88 0.91 0.92
</TABLE>
The pro forma effects are determined as if compensation costs were recognized
using the fair value based accounting method. The fair values of options granted
during 1999, 1998 and 1996 were estimated on the date of grant using the
Black-Scholes option pricing model with the following assumptions: risk free
interest rate of 4.75%, 4.75% and 6.30% expected lives of 10 years; expected
volatility of 29%, 30%, and 31%, respectively; and a zero percent dividend
yield.
35
<PAGE>
TODHUNTER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
NOTE 10. STOCK OPTIONS (CONTINUED)
A reconciliation of the Company's stock option activity, and related
information, for the years ended September 30 follows:
<TABLE>
<CAPTION>
1999 1998 1997
---------------------------------------------------------------------------------
Weighted Weighted Weighted
Number Average Number Average Number Average
of Exercise of Exercise of Exercise
Options Price Options Price Options Price
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding, beginning of year 352,000 $ 9.45 292,000 $ 9.53 402,750 $ 9.57
Granted 335,000 8.13 60,000 9.06 - -
Exercised (13,000) 6.00 - - (26,250) 6.00
Forfeited (75,000) 12.25 - - (84,500) 10.81
---------------------------------------------------------------------------------
Outstanding, end of year 599,000 $ 8.43 352,000 $ 9.45 292,000 $ 9.53
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Exercisable, end of year 226,500 $ 8.83 257,000 $ 9.72 239,500 $ 9.83
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
</TABLE>
The following table summarizes information about the stock options at September
30, 1999:
<TABLE>
<CAPTION>
Number Number
Outstanding at Exercisable at
September 30, September 30, Expiration
Exercise Price 1999 1999 Date
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 6.0000 56,500 56,500 November 2002
12.2500 60,000 60,000 April 2004
8.1250 87,500 70,000 February 2006
8.1250 335,000 - December 2008
9.0625 60,000 40,000 May 2008
------------------------------------------------
599,000 226,500
------------------------------------------------
------------------------------------------------
</TABLE>
The exercise price of options granted has been equal to or greater than their
grant date fair value.
36
<PAGE>
TODHUNTER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
NOTE 11. SEGMENT AND GEOGRAPHIC INFORMATION
The Company operates primarily in the beverage alcohol industry in the United
States. The Company reports its operating results in five segments:
- Bulk Alcohol Products (citrus brandy, citrus spirits, rum, cane
spirits, fortified citrus wine, purchased distilled products and
by products)
- Premium Branded Spirits (primarily rum, flavored rum and tequila)
- Bottling Operations (contract bottling services and proprietary and
private label products)
- Vinegar and Cooking Wine (bulk vinegar, bulk cooking wine, vinegar
stock and proprietary and private label case goods)
- Corporate Operations and Other (primarily corporate related items).
The accounting policies of the reportable segments are the same as those
described in Note 1 to the Consolidated Financial Statements. The Company
evaluates the performance of its operating segments based on income before
income taxes, equity in losses of equity investee, interest income and expense.
Intersegment sales and transfers are not significant.
Summarized financial information concerning the Company's reportable segments is
shown in the following table. "Corporate Operations and Other" includes
corporate related items and the results of certain non material operations.
37
<PAGE>
TODHUNTER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
NOTE 11. SEGMENT AND GEOGRAPHIC INFORMATION (CONTINUED)
Net sales, operating income (loss), identifiable assets, depreciation and
amortization and capital expenditures for the Company's operating segments
for the years ended September 30, 1999, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
(in thousands) 1999 1998 1997
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES
Bulk Alcohol Products $ 33,522 $ 32,510 $ 34,718
Premium Branded Spirits 12,126 10,485 8,435
Bottling Operations 17,778 19,171 22,940
Vinegar and Cooking Wine 11,029 10,544 9,403
Corporate Operations and Other 2,278 2,386 2,442
-------------------------------------------
$ 76,733 $ 75,096 $ 77,938
-------------------------------------------
-------------------------------------------
OPERATING INCOME (LOSS)
Bulk Alcohol Products $ 11,880 $ 11,020 $ 11,135
Premium Branded Spirits (523) 250 901
Bottling Operations 591 963 657
Vinegar and Cooking Wine 1,922 1,708 1,197
Corporate Operations and Other (5,160) (5,788) (5,571)
-------------------------------------------
$ 8,710 $ 8,153 $ 8,319
-------------------------------------------
-------------------------------------------
IDENTIFIABLE ASSETS
Bulk Alcohol Products $ 44,355 $ 44,583 $ 44,011
Premium Branded Spirits 4,920 4,841 2,852
Bottling Operations 24,070 24,707 22,940
Vinegar and Cooking Wine 6,620 6,550 6,864
Corporate Operations and Other 17,202 16,316 18,951
-------------------------------------------
$ 97,167 $ 96,997 $ 95,618
-------------------------------------------
-------------------------------------------
DEPRECIATION AND AMORTIZATION
Bulk Alcohol Products $ 2,205 $ 2,068 $ 2,000
Premium Branded Spirits 101 58 58
Bottling Operations 1,502 1,397 1,312
Vinegar and Cooking Wine 328 327 253
Corporate Operations and Other 316 395 537
-------------------------------------------
$ 4,452 $ 4,245 $ 4,160
-------------------------------------------
-------------------------------------------
CAPITAL EXPENDITURES
Bulk Alcohol Products $ 1,497 $ 1,299 $ 1,668
Premium Branded Spirits 180 35 -
Bottling Operations 601 923 846
Vinegar and Cooking Wine 212 235 993
Corporate Operations and Other 87 230 268
-------------------------------------------
$ 2,577 $ 2,722 $ 3,775
-------------------------------------------
-------------------------------------------
</TABLE>
38
<PAGE>
TODHUNTER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
NOTE 11. SEGMENT AND GEOGRAPHIC INFORMATION (CONTINUED)
Sales and operating income for the years ended September 30, 1999, 1998, and
1997 and identifiable assets as of the end of each period classified by
geographic area, were as follows:
<TABLE>
<CAPTION>
U. S. VIRGIN
ISLANDS AND
UNITED STATES THE BAHAMAS CONSOLIDATED
------------------------------------------------
<S> <C> <C> <C>
September 30, 1999:
Net sales $ 63,746,499 $ 12,986,648 $ 76,733,147
Operating income 5,638,014 3,072,142 8,710,156
Identifiable assets 65,276,033 31,891,213 97,167,246
September 30, 1998:
Net sales 62,144,796 12,951,098 75,095,894
Operating income 5,160,075 2,992,950 8,153,025
Identifiable assets 64,659,348 32,337,682 96,997,030
September 30, 1997:
Net sales 64,865,688 13,072,561 77,938,249
Operating income 5,350,994 2,967,772 8,318,766
Identifiable assets 63,300,335 32,318,120 95,618,455
</TABLE>
Included in net sales for the United States are export sales, primarily to
Eastern Europe, Canada and the Caribbean, totaling approximately $4,400,000,
$7,200,000 and $8,900,000 for the years ended September 30, 1999, 1998 and 1997.
NOTE 12. PENSION PLAN
The Company has a defined contribution retirement plan which covers
substantially all United States employees. Contributions to the plan were
approximately $644,022, $669,866, and $632,484 for the years ended September
30, 1999, 1998 and 1997, respectively. The Company contributes 6.0% of an
employee's total compensation, plus 5.5% of compensation in excess of the
social security tax wage base. An employee's compensation in excess of
$160,000 is disregarded in determining the Company's contribution. Generally,
contributions to the plan begin to vest to the benefit of the participant
after three years of service. Participants are entitled, upon retirement, to
their vested portion of the retirement fund assets, which are held by a
corporate trustee.
NOTE 13. INVESTMENT IN PREMIER WINES & SPIRITS, LTD.
In 1997, the Company acquired a 45% interest in Premier Wines & Spirits,
Ltd., ("Premier"), a wholesale liquor distributor in the United States Virgin
Islands, for $450,000. This investment is being accounted for using the
equity method. The Company had sales to Premier of approximately $1,808,000
and $1,490,000 for the year ended September 30, 1999 and 1998, respectively.
Included in trade receivables is approximately $518,000 and $1,490,000 as of
September 30, 1999 and 1998, respectively, related to these sales. The
Company has made advances to Premier which are included in notes receivable
(see Note 3).
39
<PAGE>
TODHUNTER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
NOTE 14. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate that
value:
The carrying amounts approximate fair values as of September 30, 1999 and
1998 for cash and cash equivalents, short-term investments, trade
receivables, other receivables and accounts payable because of the
short-term maturities of those instruments.
NOTES RECEIVABLE: The fair value of the Company's notes receivable has been
determined based on available market information and management's estimate of
current market conditions of similar instruments.
LONG-TERM DEBT: The fair value of the Company's long-term debt is estimated
based on the current rates offered to the Company for debt of the same
remaining maturities with similar collateral requirements.
<TABLE>
<CAPTION>
Carrying Amount Fair Value
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Financial assets:
Notes receivable $ 6,965,576 $ 7,241,962 $ 6,786,928 $ 7,165,016
Financial liabilities:
Long-term debt, including
interest rate swaps 34,000,000 44,469,077 33,910,850 46,739,257
</TABLE>
NOTE 15. NET INCOME PER COMMON SHARE
Basic net income per common share is computed using the weighted average number
of common shares outstanding during the period. Diluted net income per share is
computed using the weighted average number of common and dilutive common
equivalent shares outstanding during the period.
<TABLE>
<CAPTION>
1999 1998 1997
-----------------------------------------
<S> <C> <C> <C>
Net income $4,539,936 $4,713,696 $4,684,562
-----------------------------------------
-----------------------------------------
Determination of shares:
Weighted average number of common shares outstanding 4,963,760 4,949,714 4,943,169
Shares issuable on exercise of stock options, net of
shares assumed to be repurchased 17,819 35,154 22,996
-----------------------------------------
Average common shares outstanding for diluted
computation 4,981,579 4,984,868 4,966,165
-----------------------------------------
-----------------------------------------
Net income per common share:
Basic $ 0.91 $ 0.95 $ 0.95
Diluted 0.91 0.95 0.94
</TABLE>
40
<PAGE>
TODHUNTER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
NOTE 16. QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
Quarter First Second Third Fourth
- ------------------------------------------------------------------------------------------------
(In thousands, except per share and gross margin data)
<S> <C> <C> <C> <C>
1999
Net sales $ 16,541 $19,031 $ 21,856 $ 19,305
Gross profit 5,357 6,106 6,343 5,927
Gross margin 32.40% 32.10% 29.0% 30.70%
Net income 952 1,265 1,155 1,168
Net income per share:
Basic 0.19 0.26 0.24 0.22
Diluted 0.19 0.26 0.24 0.22
1998
Net sales $ 17,741 $17,679 $ 19,792 $ 19,884
Gross profit 5,123 5,220 6,263 5,484
Gross margin 28.90% 29.50% 31.60% 27.60%
Net income 1,121 982 1,327 1,284
Net income per share:
Basic 0.23 0.20 0.27 0.26
Diluted 0.22 0.20 0.27 0.26
1997
Net sales $ 18,915 $17,437 $ 22,123 $ 19,463
Gross profit 4,954 5,116 6,085 5,290
Gross margin 26.20% 29.30% 27.50% 27.20%
Net income 1,261 923 1,487 1,014
Net income per share:
Basic 0.26 0.19 0.30 0.20
Diluted 0.25 0.19 0.30 0.20
</TABLE>
41
<PAGE>
TODHUNTER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
NOTE 17. SUBSEQUENT EVENT (UNAUDITED)
During November 1999, the Company completed the purchase of the assets of
Monarch Wine Company of Atlanta, Georgia, a privately held company. Monarch
specialized in the manufacturing of wines, including custom blended wines and
cooking wines for the food industry and base wines for producers of vinegar and
beverage alcohol. The activities of Monarch will be included in the Company's
bulk alcohol products and vinegar and cooking wine segments. The purchase price
was $23.5 million and was funded from a $71 million credit agreement, between
the Company and a syndicate of lenders (see Note 7). The credit agreement also
funded the refinancing of existing debt.
The purchase price of $23.5 million includes approximately $22.8 million of
goodwill. The goodwill will be amortized over 20 years. The purchase price
allocation has not been completed as of November 24, 1999.
The Company also incurred approximately $900,000, net of taxes, in additional
expenses related to the prepayment of the previous debt. These expenses will be
reflected as an extraordinary item in the Company's statement of income for the
year ended September 30, 2000.
The following unaudited pro forma summary presents the consolidated results of
operations as if the acquisition had been made as of October 1, 1997. These
results do not purport to be indicative of what would have occurred had the
acquisition actually been made as of such date or of results which may occur in
the future.
<TABLE>
<CAPTION>
Years Ended September 30 (in thousands, except per share data) 1999 1998
- -------------------------------------------------------------------------------------------------
(UNAUDITED) (Unaudited)
<S> <C> <C>
Net Sales $ 93,395 $ 89,574
Net Income 7,226 6,518
Net income per common share:
Basic 1.46 1.32
Diluted 1.45 1.31
</TABLE>
42
<PAGE>
TODHUNTER INTERNATIONAL, INC.
INDEX TO EXHIBITS
<TABLE>
<S> <C>
3.1 Amended and Restated Certificate of Incorporation of Todhunter
International, Inc. (1)
3.2 Amended and Restated By-Laws of Todhunter International, Inc. (13)
4.1 Form of Todhunter International, Inc. Common Stock Certificate (1)
10.2 Bulk Malt Purchase Agreement, dated as of September 25, 1991, between
Todhunter International, Inc. and Joseph E. Seagram & Sons, Inc. (1)
10.3 Cooler Production Agreement dated as of October 15, 1987, between
Todhunter International, Inc. and Joseph E. Seagram & Sons, Inc., as
amended May 1, 1990 and August 27, 1991 (1)
10.6 Todhunter International, Inc. 1992 Stock Option Plan, as amended (9)
10.7 Todhunter International, Inc. Defined Contribution Pension Plan (1)
10.8 Lease, dated March 24, 1988, as amended, between Todhunter
International, Inc. and Especially West Palm Beach, Inc. (1)
10.8(a) Amendment to Lease, dated January 1, 1997, between Todhunter
International, Inc. and Florida Acquisition Fund Esperante, Ltd. (10)
10.10 Loan Agreement dated as of January 31, 1994, between Virgin Islands
Rum Industries, Ltd. and First Union National Bank of Florida (3)
10.10(a) Modification of Loan Agreement dated as of January 5, 1996, amending
Loan Agreement dated January 31, 1994 (5)
10.12 Guaranteed Subordinated Note Agreement dated as of August 4, 1994,
among Todhunter International, Inc., Blair Importers, Ltd., Charmer
Industries, Inc. and certain shareholders thereof (2)
10.13 Note Purchase Agreement dated as of October 30, 1994, among Todhunter
International, Inc., Blair Importers, Ltd. and certain purchasers (3)
10.13(a) First Amendment Agreement and Waiver dated as of February 1, 1996,
amending Note Purchase Agreement dated as of October 30, 1994 (6)
10.14 Loan Agreement dated as of November 22, 1994, among Todhunter
International, Inc., Blair Importers, Ltd. and First Union National
Bank of Florida (3)
10.14(a) Modification of Loan Agreement dated as of February 26, 1996, amending
Loan Agreement dated as of November 22, 1994 (6)
10.14(b) Modification of Loan Agreement dated as of August 19, 1996, amending
Loan Agreement dated as of November 22, 1994, as amended (7)
10.14(c) Third Modification of Loan Agreement dated as of December 18, 1996,
amending Loan Agreement dated as of November 22, 1994, as amended (8)
10.14(d) Fourth modification of Loan Agreement dated as of September 17, 1998,
amending Loan Agreement dated as of November 22, 1994 (10)
10.15 Renewal Revolving Credit Note dated as of September 17, 1998 (10)
10.16 Asset Purchase Agreement dated as of September 27, 1999, among
Todhunter International, Inc. and Adams Wine Company d/b/a Monarch
Wine Company of Georgia, and Howard J. Weinstein, David Paszamant,
Jay Paszamant and Matthew Paszamant (11)
10.17 Credit Agreement dated as of November 17, 1999, by and among
Todhunter International, Inc., and each of the Financial Institutions
Initially a Signatory thereto, and SOUTHTRUST BANK, National
Association (11)
10.18 Executive Employment Agreement dated as of July 15, 1999, between
Thomas A. Valdes and Todhunter International, Inc. (13)
10.19 Executive Employment Agreement dated as of July 15, 1999, between Jay
S. Maltby and Todhunter International, Inc. (13)
10.20 Executive Employment Agreement dated as of July 15, 1999, between A.
Kenneth Pincourt, Jr. and Todhunter International, Inc. (13)
10.21 Executive Employment Agreement dated as of July 15, 1999, between D.
Chris Mitchell and Todhunter International, Inc. (13)
11.1 Statement of Computation of Per Share Earnings (12)
21.1 Subsidiaries of Todhunter International, Inc. (4)
23.1 Consent of McGladrey & Pullen, LLP (13)
27.1 Financial Data Schedule (13)
</TABLE>
43
<PAGE>
(1) Incorporated herein by reference to the Company's Registration
Statement on Form S-1 (File No. 33-50848).
(2) Incorporated herein by reference to the Company's Current Report on
Form 8-K for August 5, 1994, as amended.
(3) Incorporated herein by reference to the Company's Annual Report on
Form 10-K for the year ended September 30, 1994.
(4) Incorporated herein by reference to the Company's Annual Report on
Form 10-K for the year ended September 30, 1995.
(5) Incorporated herein by reference to the Company's Quarterly Report
on Form 10-Q for the quarter ended December 31, 1995.
(6) Incorporated herein by reference to the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1996.
(7) Incorporated herein by reference to the Company's Annual Report on
Form 10-K for the year ended September 30, 1996.
(8) Incorporated herein by reference to the Company's Quarterly Report
on Form 10-Q for the quarter ended December 31, 1996.
(9) Incorporated herein by reference to the Company's Annual Report on
Form 10-K for the year ended September 30, 1997.
(10) Incorporated herein by reference to the Company's Annual Report on
Form 10-K for the year ended September 30, 1998.
(11) Incorporated herein by reference to the Company's Current Report on
Form 8-K for November 17, 1999.
(12) Filed herewith and incorporated herein by reference to Note 15 of
notes to consolidated financial statements, included in Item 8 of
the Company's Annual Report on Form 10-K for the year ended September
30, 1999.
(13) Filed herewith.
44
<PAGE>
AMENDED AND RESTATED BYLAWS
OF
TODHUNTER INTERNATIONAL, INC.
Adopted by the Board of Directors on August 11, 1992, and as amended by the
Board of Directors through September 22, 1999.
ARTICLE I
MEETINGS OF STOCKHOLDERS
1.1 ANNUAL MEETING. The annual meeting of the stockholders of this
corporation shall be held at the time and place designated by the Board of
Directors of the corporation. The annual meeting of stockholders for any
year shall be held no later than thirteen (13) months after the last
preceding annual meeting of stockholders. Business transacted at the annual
meeting shall include the election of directors of the corporation.
1.2 SPECIAL MEETINGS. Special meetings of the stockholders shall be
held when directed by the President or the Board of Directors, or when
requested in writing by the holders of not less than twenty-five percent
(25%) of all the shares entitled to vote at the meeting. The call for the
meeting shall be issued by the Secretary, unless the President, Board of
Directors or stockholders requesting the meeting shall designate another
person to do so.
1.3 PLACE. Meetings of stockholders may be held within or outside of
the State of Delaware. If no place is designated in the notice for a meeting
of stockholders, the place of meeting shall be the principal office of the
corporation.
1.4 NOTICE. Except as otherwise provided in the Delaware General
Corporation Law (the "Law"), written notice stating the place, day and hour
of the meeting and, in the case of a special meeting or as otherwise provided
by law, the purpose or purposes for
<PAGE>
which the meeting is called, shall be delivered to each stockholder of record
entitled to vote at such meeting not less than ten (10) nor more than sixty
(60) days before the date of the meeting, either personally or by first class
mail, by or at the direction of the President, the Secretary, or the officer
or other persons calling the meeting. If mailed, such notice shall be deemed
to be delivered when deposited in the United States mail addressed to the
stockholder at the stockholder's address as it appears in the current records
of stockholders of the corporation, with postage thereon prepaid.
1.5 NOTICE OF ADJOURNED MEETINGS. When a meeting is adjourned to
another time or place, it shall not be necessary to give any notice of the
adjourned meeting if the time and place to which the meeting is adjourned are
announced at the meeting at which the adjournment is taken, and at the
adjourned meeting any business may be transacted that might have been
transacted on the original date of the meeting. If, however, after the
adjournment the Board of Directors fixes a new record date for the adjourned
meeting, a notice of the adjourned meeting shall be given as provided in
Section 1.4 to each stockholder of record on the new record date entitled to
vote at such meeting.
1.6 WAIVER OF NOTICE OF STOCKHOLDERS MEETINGS. Whenever any notice
is required to be given to any stockholder, a waiver thereof in writing
signed by the stockholder or stockholders entitled to such notice, whether
before, during or after the time of the meeting stated therein and delivered
to the corporation for inclusion in the minutes or filing with the corporate
records, shall be equivalent to the giving of such notice. Attendance by a
stockholder at a meeting shall constitute a waiver of: (a) lack of notice or
defective notice of such meeting, unless the stockholder at the beginning of
the meeting objects to holding the meeting; or (b) lack of defective notice
of a particular matter at a meeting that is not within the purpose or
purposes described in the meeting notice, unless the person objects to
considering that particular matter when it is presented. Unless otherwise
required by the articles of incorporation, neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
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stockholders need be specified in any written waiver of notice.
1.7 FIXING RECORD DATE. In order that the corporation may determine
the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the Board of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which record date shall not be more than sixty (60) nor less than ten (10)
days before the date of such meeting. If no record is fixed by the Board of
Directors, the record date for determining stockholders entitled to notice of
or to vote at a meeting of stockholders shall be at the close of business on
the day next preceding the day on which notice is given, or, if notice
waived, at the close of business on the day next preceding the day on which
the meeting is held. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors
may fix a new record date for the adjourned meeting.
In order that the corporation may determine the stockholders entitled
to consent to corporate action in writing without a meeting, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which date shall not be more than ten (10) days after the date
upon which the resolution fixing the record date is adopted by the Board of
Directors. If no record date has been fixed by the Board of Directors, the
record date for determining stockholders entitled to consent to corporate
action in writing without a meeting, when no prior action by the Board of
Directors is required by this chapter, shall be the first date on which a
signed written consent setting forth the action taken or proposed to be taken
is delivered to the corporation by delivery to its registered office in this
State, its principal place of business, or an officer or agent of the
corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to a corporation's registered
office shall be
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by hand or by certified or registered mail, return receipt requested. If no
record date has been fixed by the Board of Directors and prior action by the
Board of Directors is required by this chapter, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the day on which the
Board of Directors adopts the resolution taking such prior action.
In order that the corporation may determine the stockholders entitled
to receive payment of any dividend or other distribution or allotment of any
rights or the stockholders entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record
date is adopted, and which record date shall be not more than sixty (60) days
prior to such action. If no record date is fixed, the record date for
determining stockholders for any such purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto.
1.8 VOTING RECORD. After fixing a record date for a meeting of
stockholders, the corporation shall prepare an alphabetical list of the names
of all stockholders who are entitled to notice of such meeting, arranged by
voting group, with the address of, and the number and class and series, if
any, of the shares held by, each stockholder. The stockholders' list must be
available for inspection by any stockholder for a period of ten (10) days
prior to the meeting or such shorter time as exists between the record date
and the meeting and continuing through the meeting at the corporation's
principal office, at a place identified in the meeting notice in the city
where the meeting will be held, or at the office of the corporation's
transfer agent or registrar. Any stockholder of the corporation or his agent
or attorney is entitled on written demand to inspect the stockholders' list
(subject to the requirements of the Law), during regular business hours and
at his expense, during the period it is available for inspection. The
corporation shall make the stockholders' list available at the meeting of
stockholders, and any
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stockholder or his agent or attorney is entitled to inspect the list at any
time during the meeting or any adjournment.
If the requirements of this Section have not been substantially
complied with, the meeting shall be adjourned until such time as the
corporation complies with such requirements on demand of any stockholder in
person or by proxy who failed to get such access. If no such demand is made,
failure to comply with the requirements of this Section shall not affect the
validity of any action taken at such meeting.
1.9 STOCKHOLDER PROPOSALS.
(a) At an annual meeting of the stockholders, only such business
shall be conducted as shall have been properly brought before the meeting.
To be properly brought before an annual meeting, business must be (i)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board of Directors, (ii) otherwise properly brought
before the meeting by or at the direction of the Board of Directors, or (iii)
otherwise properly brought before the meeting by a stockholder in accordance
with this section.
(b) For business to be properly brought before an annual meeting by
a stockholder, the corporation must have received timely notice thereof in
writing from such stockholder. To be timely, a stockholder's notice must be
received by the Secretary of the corporation as of the date set forth in the
corporation's proxy statement relating to the annual meeting for the
preceding year; PROVIDED, HOWEVER, that if no such date is stated, then such
date shall be one hundred and twenty (120) calendar days in advance of the
date (with respect to the forthcoming annual meeting) that the corporation's
proxy statement was released to its stockholders in connection with the
previous year's annual meeting of security holders; and PROVIDED FURTHER that
if no annual meeting was held in the previous year or the date of the annual
meeting has been changed by more than thirty (30) calendar days from the date
contemplated at the time of the previous year's proxy statement, a proposal
shall be received by the
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corporation no later than the close of business on the tenth (10th) day
following the date on which notice of the date of the annual meeting is given
to stockholders or made public, whichever first occurs.
(c) Such notification shall contain the following information as to
each matter the stockholder proposes to bring before the annual meeting: (i)
a brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting;
(ii) the name and address, as they appear on the corporation's books, of the
stockholder proposing such business; (iii) the class and number of shares of
the corporation which are beneficially owned, as such term is defined in Rule
13d-3 ("Rule 13d-3") promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), by the stockholder; (iv) any substantial
interest of the stockholder in such business; and (v) any other information
required pursuant to the rules and regulations promulgated under the Exchange
Act relating to shareholder proposals. For purposes of clause (iv) above, a
"substantial interest of the stockholder in such business" shall be deemed to
occur if such interest were reportable (assuming that the stockholder's
business was in fact brought before the annual meeting) pursuant to Item 5 of
Schedule 14A (Rule 14a-101) promulgated under the Exchange Act.
(d) Notwithstanding anything in the Bylaws to the contrary, no
business shall be conducted at any annual meeting except in accordance with
the procedures set forth in this section.
1.10 NOMINATION PROCEDURES.
(a) Only persons who are nominated in accordance with the
procedures set forth in this Section shall be eligible for election as
directors. Nominations of persons for election to the Board of Directors of
the corporation may be made at a meeting of stockholders by or at the
direction of the Board of Directors or by any stockholder of the corporation
entitled to vote for the election of directors at the meeting; PROVIDED,
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HOWEVER, that any nomination made by a stockholder must comply with all of
the notice procedures set forth in this Section 1.10.
(b) Nominations for election to the Board of Directors, other than
those made by or at the direction of the Board of Directors, shall be made
pursuant to timely notice in writing to the Secretary of the corporation. To
be timely, a stockholder's notice shall be received at the principal
executive offices of the corporation not less than one hundred twenty (120)
days and not more than one hundred eighty (180) days prior to any meeting of
stockholders called for the election of directors; provided, however, that if
no annual meeting was held in the previous year or the date of the annual
meeting has been changed to be more than thirty (30) calendar days earlier
than the date contemplated by the previous year's statement, such notice by
the stockholder to be timely must be received no later than the close of
business on the tenth (10th) day following the date on which notice of the
date of the annual meeting is given to stockholders or made public, whichever
first occurs. In the event of an adjournment, the date of the annual meeting
shall be deemed to be the date upon which the original annual meeting was
convened.
(c) Such notification shall contain the following information to
the extent known to the notifying stockholder: (i) as to each person whom
the stockholder proposes to nominate for election or re-election as a
director at the annual meeting; (w) the name, age, business address and
residence address of the proposed nominee, (x) the principal occupation or
employment of the proposed nominee, (y) the class and number of shares of
capital stock of the corporation which are beneficially owned by the proposed
nominee, and (z) any other information relating to the proposed nominee that
is required to be disclosed in solicitations for proxies for election of
directors pursuant to Regulation 14A under the Exchange Act; and (ii) as to
the stockholder giving the notice of nominees for election at the annual
meeting, (x) the name and record address of the stockholder, and (y) the
class and number of shares of capital stock of the corporation
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which are beneficially owned (as defined in Rule 13d-3) by the stockholder.
(d) The corporation may require any proposed nominee for election
at an annual or special meeting of stockholders to furnish such other
information as may reasonably be required by the corporation to determine the
eligibility of such proposed nominee to serve as a director of the
corporation. No person shall be eligible for election as a director of the
corporation unless nominated in accordance with the procedures set forth
herein.
1.11 STOCKHOLDER QUORUM AND VOTING. Shares entitled to vote as a
separate voting group may take action on a matter at a meeting only if a
quorum of those shares exists with respect to that matter. Except as
otherwise provided in the articles of incorporation or by the Law, a majority
of the shares entitled to vote on the matter by each voting group,
represented in person or by proxy, shall constitute a quorum at any meeting
of stockholders, but in no event shall a quorum consist of less than one
third of the shares of each voting group entitled to vote. If less than a
majority of outstanding shares entitled to vote are represented at a meeting,
a majority of the shares so represented may adjourn the meeting from time to
time without further notice. After a quorum has been established at any
stockholders' meeting, the subsequent withdrawal of stockholders, so as to
reduce the number of shares entitled to vote at the meeting below the number
required for a quorum, shall not affect the validity of any action taken at
the meeting or any adjournment thereof.
Once a share is represented for any purpose at a meeting, it is deemed
present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is or must be set for
that adjourned meeting. When a specified item of business is required to be
voted on by a class or series of stock, a majority of the shares of such
class or series shall constitute a quorum for the transaction of such item of
business by that class or series.
1.12 VOTES PER SHARE. Except as otherwise provided in the articles of
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incorporation or by the Law, each outstanding share, regardless of class,
shall be entitled to one vote on each matter submitted to a vote at a meeting
of stockholders.
1.13 MANNER OF ACTION. If a quorum is present, action on a matter
(other than the election of directors) by a voting group is approved if the
votes cast within the voting group favoring the action exceed the votes cast
opposing the action, unless a greater or lesser number of affirmative votes
is required by the articles of incorporation or by law.
1.14 VOTING FOR DIRECTORS. At each election for directors, every
stockholder entitled to vote at such election shall have the right to vote,
in person or by proxy, the number of shares owned by him for as many persons
as there are directors to be elected at that time and for whose election he
has a right to vote. Unless otherwise provided in the articles of
incorporation, cumulative voting is not authorized and the directors shall be
elected by a plurality of the votes cast by the shares entitled to vote in
the election at a meeting at which a quorum is present.
1.15 VOTING OF SHARES. A stockholder may vote at any meeting of
stockholders of the corporation, either in person or by proxy.
Shares standing in the name of another corporation, domestic or
foreign, may be voted by the officer, agent or proxy designated by the bylaws
of the corporate stockholder or, in the absence of any applicable bylaw, by
such person as the board of directors of the corporate stockholder may
designate. Proof of such designation may be made by presentation of a
certified copy of the bylaws or other instrument of the corporate
stockholder. In the absence of any such designation or, in the case of
conflicting designation by the corporate stockholder, the chairman of the
board, the president, any vice president, the secretary and the treasurer of
the corporate stockholder shall be presumed to possess, in that order,
authority to vote such shares.
Shares held by an administrator, executor, guardian, personal
representative or conservator may be voted by him or her, either in person or
by proxy, without a transfer of such shares into his or her name. Shares
standing in the name of a trustee may be
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voted by him or her, either in person or by proxy, but no trustee shall be
entitled to vote shares held by him or her without a transfer of such shares
into his or her name or the name of his or her nominee.
Shares held by or under the control of a receiver, a trustee in a
bankruptcy proceeding or an assignee for the benefit of creditors may be
voted by such person without the transfer thereof into his or her name.
If shares stand of record in the names of two or more persons, whether
fiduciaries, members of a partnership, joint tenants, tenants in common,
tenants by the entirety or otherwise, or if two or more persons have the same
fiduciary relationship with respect to the same shares, unless the Secretary
of the corporation is given notice to the contrary and is furnished with a
copy of the instrument or order appointing them or creating the relationship
wherein it is so provided, then acts with respect to voting shall have the
following effect: (a) if only one votes, in person or by proxy, that act
binds all; (b) if more than one votes, in person or by proxy, the act of the
majority so voting binds all; (c) if more than one votes, in person or by
proxy, but the vote is evenly split on any particular matter, each faction is
entitled to vote the share or shares in question proportionally; or (d) if
the instrument or order so filed shows that any such tenancy is held in
unequal interest, a majority or a vote evenly split for purposes hereof shall
be a majority or a vote evenly split in interest. The principles of this
paragraph shall apply, insofar as possible, to execution of proxies, waivers,
consents, or objections and for the purpose of ascertaining the presence of a
quorum.
1.16 PROXIES. Any stockholder of the corporation, other person
entitled to vote on behalf of a stockholder pursuant to the Law, or
attorney-in-fact for such persons, may vote the stockholder's shares in
person or by proxy. Any stockholder of the corporation may appoint a proxy
to vote or otherwise act for him or her by signing an appointment form,
either personally or by an attorney-in-fact. An executed telegram or
cablegram appearing to have been transmitted by such person, or a
photographic,
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photostatic, or equivalent reproduction of an appointment form, shall be
deemed a sufficient appointment form.
An appointment of a proxy is effective when received by the Secretary
of the corporation or such other officer or agent which is authorized to
tabulate votes, and shall be valid for up to three (3) years, unless a longer
period is expressly provided in the appointment form.
The death or incapacity of the stockholder appointing a proxy does not
affect the right of the corporation to accept the proxy's authority unless
notice of the death or incapacity is received by the Secretary or other
officer or agent authorized to tabulate votes before the proxy exercises his
authority under the appointment.
An appointment of a proxy is revocable by the stockholder unless the
appointment form conspicuously states that it is irrevocable and the
appointment is coupled with an interest.
1.17 VOTING TRUSTS. One or more stockholders may create a voting
trust, conferring on a trustee the right to vote or otherwise act for them,
by signing an agreement setting out the provisions of the trust and
transferring their shares to the trustee. When a voting trust agreement is
signed, the trustee shall prepare a list of the names and addresses of all
owners of beneficial interest in the trust, together with the number and
class of shares each transferred to the trust, and deliver copies of the list
and agreement to the corporation's principal office. After filing a copy of
the list and agreement in the corporation's principal office, such copies
shall be open to inspection by any stockholder of the corporation, subject to
the requirements of the Law, or to any beneficiary of the trust under the
agreement during business hours. The trustee must also deliver a copy of each
extension of the voting trust agreement, and a list of beneficial owners
under such extended agreement, to the corporation's principal office.
1.18 STOCKHOLDERS' AGREEMENTS. Two or more stockholders may provide
for the manner in which they will vote their shares, and providing for such
other matters as are
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permitted by the Law, by signing an agreement for that purpose. When a
stockholders' agreement is signed, the stockholders who are parties thereto
shall deliver copies of the agreement to the corporation's principal office.
After filing a copy of the agreement in the corporation's principal office,
such copies shall be open to inspection by any stockholder of the
corporation, subject to the requirements of the Law, or any party to the
agreement during business hours.
1.19 ACTION BY STOCKHOLDERS WITHOUT A MEETING. Unless otherwise
provided in the certificate of incorporation, action required or permitted to
be taken at any meeting of the stockholders may be taken without a meeting,
without prior notice and without a vote if the action is taken by the holders
of outstanding shares of each voting group entitled to vote thereon having
not less than the minimum number of votes with respect to each voting group
that would be necessary to authorize or take such action at a meeting at
which all voting groups and shares entitled to vote thereon were present and
voted. In order to be effective, the action must be evidenced by one or more
written consents describing the action taken, dated and signed by approving
stockholders having the requisite number of votes of each voting group
entitled to vote thereon, and delivered to the corporation by delivery to its
principal office in Delaware, its principal place of business, the Secretary
of the corporation, or another office or agent of the corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. No written consent shall be effective to take such corporate
action unless, within sixty (60) days of the date of the earliest dated
consent delivered in the manner required by this Section, written consents
signed by the number of holders required to take such action are delivered to
the corporation as set forth in this Section.
Any written consent may be revoked prior to the date that the
corporation receives the required number of consents to authorize the
proposed action. No revocation is effective unless in writing and until
received by the corporation at its
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principal office or its principal place of business, or received by the
Secretary or other officer or agent of the corporation having custody of the
book in which proceedings of meetings of stockholders are recorded.
Prompt notice of the taking of corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
A consent signed as required by in this Section has the effect of a
meeting vote and may be described as such in any document.
Whenever action is taken as set forth in this Section, the written
consent of the stockholders consenting thereto or the written reports of
inspectors appointed to tabulate such consents shall be filed with the
minutes of proceedings of stockholders.
1.20 INSPECTORS OF ELECTION.
(a) The corporation shall, in advance of any meeting of stockholders,
appoint one or more inspectors to act at the meeting and make a written
report thereof. The corporation may designate one or more persons as
alternate inspectors to replace any inspector who fails to act. If no
inspector or alternate is able to act at a meeting of stockholders, the
person presiding at the meeting shall appoint one or more inspectors to act
at the meeting. Each inspector, before entering upon the discharge of his
duties, shall take and sign an oath faithfully to execute the duties of
inspector with strict impartiality and according to the best of his ability.
(b) The inspectors shall (i) ascertain the number of shares
outstanding and the voting power of each, (ii) determine the shares
represented at a meeting and the validity of proxies and ballots, (iii) count
all votes and ballots, (iv) determine and retain for a reasonable period a
record of the disposition of any challenges made to any determination by the
inspectors, and (v) certify their determination of the number of shares
represented at the meeting, and their count of all votes and ballots. The
inspectors may appoint or retain other persons or entities to assist the
inspectors in the
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performance of the duties of the inspectors.
(c) The date and time of the opening and the closing of the polls for
each matter upon which the stockholders will vote at a meeting shall be
announced at the meeting. No ballot, proxies or votes, nor any revocations
thereof or changes thereto, shall be accepted by the inspectors after the
closing of the polls unless the Court of Chancery upon application by a
stockholder shall determine otherwise.
(d) In determining the validity and counting of proxies and ballots,
the inspectors shall be limited to an examination of the proxies, any
envelopes submitted with those proxies, any information provided in
accordance with Section 212(c)(2), ballots and the regular books and records
of the corporation, except that the inspectors may consider other reliable
information for the limited purpose of reconciling proxies and ballots
submitted by or on behalf of banks, brokers, their nominees or similar
persons which represent more votes than the holder of a proxy is authorized
by the record owner to cast or more votes than the stockholder holds of
record. If the inspectors consider other reliable information for the
limited purpose permitted herein, the inspectors at the time they make their
certification pursuant to subsection (b)(v) of this section shall specify the
precise information considered by them including the person or persons from
whom they obtained the information, when the information was obtained, the
means by which the information was obtained and the basis for the inspectors'
belief that such information is accurate and reliable.
(e) This section shall not apply to the corporation unless and until
it has a class of voting stock that is (i) listed on a national securities
exchange, (ii) authorized for quotation on an interdealer quotation system of
a registered national securities association, or (iii) held of record by more
than 2,000 stockholders.
ARTICLE II
DIRECTORS
2.1 FUNCTIONS. Except as provided in the articles of incorporation
or by law, all
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corporate powers shall be exercised by or under the authority of, and the
business and affairs of this corporation shall be managed under the
direction of, the Board of Directors.
2.2 NUMBER. The Board of Directors of the corporation shall consist
of nine (9) persons. The number of directors may at any time and from time
to time be increased or decreased by action of either the stockholders or the
Board of Directors, but no decrease in the number of directors shall have the
effect of shortening the term of any incumbent director.
2.3 QUALIFICATIONS. A director must be a natural person who is 18
years of age or older but need not be a citizen of the United States, a
resident of the State of Delaware or a stockholder of this corporation.
2.4 TERM. Each director shall hold office until a successor has been
elected and qualified or until an earlier resignation, removal from office or
death.
2.5 REMOVAL OF DIRECTORS. Any director, or the entire Board of
Directors, may be removed, with or without cause, upon the affirmative vote
of (i) at least two-thirds percent (66-2/3%) of the voting power of all of
the then-outstanding voting stock, voting as a single class, or (ii) the
holders of at least fifty-one percent (51%) of the voting power of all of the
then-outstanding voting stock, voting as a single class, AND a majority of
disinterested directors (as defined in the Corporation's Amended and Restated
Certificate of Incorporation). The notice of the meeting at which a vote is
taken to remove a director must state that the purpose or one of the purposes
of the meeting is the removal of the director or directors.
2.6 RESIGNATION. Any director may resign at any time by delivering
written notice to the corporation, the Board of Directors or its Chairman.
Such resignation is effective when the notice is delivered unless the notice
specifies a later effective date, in which event the Board of Directors may
fill the pending vacancy before the effective date if the Board of Directors
provides that the successor does not take office until the effective
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date.
2.7 VACANCIES. Any vacancy occurring in the Board of Directors,
including any vacancy created by reason of an increase in the number of
directors, may be filled by the affirmative vote of a majority of the
remaining directors though less than a quorum of the Board of Directors. A
director elected to fill a vacancy shall hold office only until the next
stockholders meeting at which directors are elected.
2.8 REGULAR MEETINGS. An annual regular meeting of the Board of
Directors shall be held without notice immediately after, and at the same
place as, the annual meeting of stockholders for the purpose of the election
of officers and the transaction of such other business as may come before the
meeting, and at such other time and place as may be determined by the Board
of Directors. The Board of Directors may, at any time and from time to time,
provide by resolution, the time and place, either within or outside of the
State of Delaware, for the holding of the annual regular meeting or
additional regular meetings of the Board of Directors without other notice
than such resolution.
2.9 SPECIAL MEETINGS. Special meetings of the Board of Directors may
be called by the Chairman of the Board, the President or any two (2)
directors.
The person or persons authorized to call special meetings of the Board
of Directors may designate any place, either within or outside of the State
of Delaware, as the place for holding any special meeting of the Board of
Directors called by them. If no designation is made, the place of meeting
shall be the principal office of the corporation in the State of Delaware.
Notice of any special meeting of the Board of Directors may be given
by any reasonable means, whether oral or written, at least two (2) days prior
to such special meeting, either orally (by telephone or in person), or by
written notice delivered personally or mailed to each director at his or her
business or residence address. If mailed, such notice of any special meeting
shall be deemed to be delivered on the second day after it is deposited in
the United States mail, so addressed, with postage
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thereon prepaid. If notice is given by telegram, such notice shall be deemed
to be delivered when the telegram is delivered to the telegraph company.
Neither the business to be transacted at, nor the purpose or purposes of, any
special meetings of the Board of Directors need be specified in the notice or
in any written waiver of notice of such meeting.
2.10 WAIVER OF NOTICE OF MEETING. Notice of a meeting of the Board
of Directors need not be given to any director who signs a written waiver of
notice either before, during or after the meeting. Attendance of a director
at a meeting shall constitute a waiver of notice of such meeting and waiver
of any and all objections to the place of the meeting, the time of the
meeting and the manner in which it has been called or convened, except when a
director states, at the beginning of the meeting or promptly upon arrival at
the meeting, any objection to the transaction of business because the meeting
is not lawfully called or convened.
2.11 QUORUM AND VOTING. A majority of the number of directors fixed
in the manner provided by these bylaws shall constitute a quorum for the
transaction of business; provided however, that whenever, for any reason, a
vacancy occurs in the Board of Directors, a quorum shall consist of a
majority of the remaining directors until the vacancy has been filled. The
Law of the majority of the directors present at a meeting at which a quorum
is present when the vote is taken shall be the Law of the Board of Directors.
A majority of the directors present, whether or not a quorum exists,
may adjourn any meeting of the Board of Directors to another time and place.
Notice of any such adjourned meeting shall be given to the directors who were
not present at the time of the adjournment and, unless the time and place of
the adjourned meeting are announced at the time of the adjournment, to the
other directors.
2.12 PRESUMPTION OF ASSENT. A director of this corporation who is
present at a meeting of its Board of Directors, or a committee of the Board
of Directors, at which
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action on any corporate matter is taken shall be presumed to have assented to
the action taken, unless he or she (i) objects at the beginning of the
meeting (or promptly upon his arrival) to holding the meeting or transacting
specified business at the meeting, or (ii) votes against such action or
abstains from the action taken.
2.13 MEETINGS OF THE BOARD OF DIRECTORS BY MEANS OF A CONFERENCE
TELEPHONE OR SIMILAR COMMUNICATIONS. Members of the Board of Directors may
participate in a meeting of such Board by means of a conference telephone or
similar communications equipment if all persons participating in the meeting
can hear each other at the same time. Participation by such means shall
constitute presence in person at a meeting.
2.14 ACTION WITHOUT A MEETING. Any action required or permitted to
be taken at a meeting of the Board of Directors or a committee thereof may be
taken without a meeting if a consent in writing, setting forth the action so
taken, is signed by all of the directors of this corporation, or all the
members of the committee, as the case may be, and the writing or writings are
filed with the minutes or proceedings of the Board or committee. Action
taken under this Section is effective when the last director or member of the
committee signs the consent, unless the consent specifies a different
effective date. Such consent shall have the effect as a meeting vote and may
be described as such in any document.
2.15 COMPENSATION. Each director may be paid his expenses, if any,
of attendance at each meeting of the Board of Directors and a committee
thereof, and may be paid a stated salary as a director or a fixed sum for
attendance at each meeting of the Board of Directors (or a committee thereof)
or both, as may from time to time be determined by action of the Board of
Directors. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
2.16 DIRECTOR CONFLICTS OF INTERESTS. No contract or other
transaction between this corporation and one or more of its directors or any
other corporation, firm,
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association or entity in which one or more of the directors of this
corporation are directors or officers or are financially interested shall be
either void or voidable because of such relationship or interest, or because
such director or directors of this corporation are present at the meeting of
the Board of Directors or a committee thereof which authorizes, approves or
ratifies such contract or transaction, or because his or their vote(s) are
counted for such purpose, if:
(a) The fact of such relationship or interest is disclosed or known
to the Board of Directors or committee which in good faith authorizes,
approves or ratifies the contract or transaction by a vote or consent
sufficient for the purpose without counting the vote(s) or written consent(s)
of such interested director(s); or
(b) The fact of such relationship or interest is disclosed or known
to the stockholders entitled to vote and they in good faith authorize,
approve or ratify such contract or transaction by vote or written consent; or
(c) The contract or transaction is fair and reasonable as to the
corporation at the time it is authorized by the Board of Directors, a
committee thereof or the stockholders.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or a committee
thereof which authorizes, approves or ratifies such contract or transaction.
ARTICLE III
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors, by resolution adopted by a majority of the
full Board of Directors, may designate from among its members an executive
committee and one or more other committees each of which, to the extent
provided in such resolution, shall have and may exercise all the authority of
the Board of Directors, except as prohibited by the Law.
Each committee must have two (2) or more members who serve at the
pleasure
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of the Board of Directors. The Board of Directors, by resolution adopted in
accordance with this Article III, may designate one (1) or more directors as
alternate members of any such committee who may act in the place and stead of
any absent member or members at any meeting of such committee.
ARTICLE IV
OFFICERS
4.1 OFFICERS. If so appointed by the Board of Directors, the
officers of this corporation shall consist of a President, a Secretary and
such other officers as appointed by the Board of Directors. Any two (2) or
more offices may be held by the same person.
4.2 APPOINTMENT AND TERM OF OFFICE. The officers of the corporation
shall be appointed annually by the Board of Directors at the first meeting of
the Board held after the stockholders' annual meeting. If the appointment of
officers does not occur at this meeting, the appointment shall occur as soon
thereafter as practicable. Each officer shall hold office until a successor
has been duly appointed and qualified, or until an earlier resignation,
removal from office, or death.
4.3 REMOVAL OF OFFICERS. Any officer of the corporation may be
removed from his or her office or position at any time, with or without
cause, by the Board of Directors. Any officer or assistant officer, if
appointed by another officer pursuant to authority, if any, received from the
Board of Directors, may likewise be removed by such officer.
4.4 RESIGNATION. Any officer of the corporation may resign at any
time from his or her office or position by delivering notice to the
corporation, the Board of Directors or its Chairman. Such resignation is
effective when the notice is delivered unless the notice specifies a later
effective date. If a resignation is made effective at a later date and the
corporation accepts the future effective date, the Board of Directors may
fill the pending vacancy before the effective date if the Board provides that
the successor does not take office until the effective date.
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4.5 DUTIES. If so appointed by the Board of Directors, the officers
of this corporation shall have the following duties:
The President shall be the chief executive officer of the corporation
and shall, subject to the control of the Board of Directors, in general,
supervise and control all of the business and affairs of the corporation, and
shall preside at all meetings of the stockholders, the Board of Directors and
all committees of the Board of Directors on which he or she may serve. In
addition, the President shall possess, and may exercise, such power and
authority, and shall perform such duties, as may from time to time be
assigned to him or her by the Board of Directors, and as are incident to the
office of President.
Each Vice President shall possess, and may exercise, such power and
authority, and shall perform such duties, as may from time to time be
assigned to him or her by the Board of Directors or the President.
The Secretary shall have custody of, and maintain, all of the
corporate records except the financial records, shall record the minutes of
all meetings of the stockholders and Board of Directors, see that all notices
of meetings are duly given, keep a register of the mailing address of each
stockholder of the corporation, be responsible for authenticating records of
the corporation and perform such other duties as may be prescribed by the
Board of Directors or the President.
The Treasurer shall have custody of all corporate funds and financial
records, shall keep full and accurate accounts of receipts and disbursements
and shall perform such other duties as may be prescribed by the Board of
Directors or the President.
4.6 OTHER OFFICERS, EMPLOYEES, AND AGENTS. Each and every other
officer, employee, and agent of the corporation shall possess, and may
exercise, such power and authority, and shall perform such duties, as may
from time to time be assigned to him or her by the Board of Directors, the
officer appointing him or her, and such officer or officers who may from time
to time be designated by the Board to exercise
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supervisory authority.
ARTICLE V
STOCK CERTIFICATES
5.1 CERTIFICATES FOR SHARES. Unless the Board of Directors provides
otherwise by resolution, every holder of stock shall be entitled to have a
certificate signed by or in the name of the corporation (either manually or
by facsimile) by the Chairman or Vice Chairman of the Board of Directors,
President or Vice President and the Secretary or an Assistant Secretary and
may be sealed with the seal of the corporation or a facsimile thereof. A
certificate which has been signed by an officer or officers who later shall
have ceased to be such officer when the certificate is issued shall
nevertheless be valid. No certificate shall be issued for any share until
such share is fully paid. Upon receipt of the consideration for which the
Board of Directors has authorized for the issuance of the shares, such shares
so issued shall be fully paid and nonassessable.
5.2 TRANSFER OF SHARES; OWNERSHIP OF SHARES. Transfers of shares of
stock of the corporation shall be made only on the stock transfer books of
the corporation, and only after the surrender to the corporation of the
certificates representing such shares, if any. Except as provided by the
Law, the person in whose name the shares stand on the books of the
corporation shall be deemed by the corporation to be the owner thereof for
all purposes and the corporation shall not be bound to recognize any
equitable or other claim to, or interest in, such shares on the part of any
other person, whether or not it shall have express or other notice thereof.
5.3 LOST, STOLEN OR DESTROYED CERTIFICATES. The corporation shall
issue a new stock certificate in the place of any certificate previously
issued if the holder of record of the certificate: (a) makes proof in
affidavit form that it has been lost, destroyed or wrongfully taken; (b)
requests the issuance of a new certificate before the corporation has notice
that the certificate has been acquired by a purchaser for value in good faith
and without notice of any adverse claim; (c) at the discretion of the Board
of Directors,
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gives bond in such form and amount as the corporation may require, to
indemnify the corporation, the transfer agent and registrar against any claim
that may be made on account of the alleged loss, destruction or theft of such
certificate; and (d) satisfies any other reasonable requirements imposed by
the corporation.
ARTICLE VI
ACTIONS WITH RESPECT TO SECURITIES OF OTHER CORPORATIONS
Unless otherwise directed by the Board of Directors, the President or
a designee of the President shall have the power to vote and to otherwise act
on behalf of the corporation, in person or by proxy, at any meeting of
stockholders on, or with respect to, any action of stockholders of any other
corporation in which this corporation may hold securities and to otherwise
exercise any and all rights and powers which this corporation may possess by
reason of its ownership of securities in other corporations.
ARTICLE VII
BOOKS AND RECORDS
This corporation shall maintain accurate accounting records and shall
keep records of minutes of all meetings of its stockholders and Board of
Directors, a record of all actions taken by the stockholders or Board of
Directors without a meeting, and a record of all actions taken by a committee
of the Board of Directors in place of the Board of Directors on behalf of the
corporation.
This corporation or its agent shall also maintain a record of its
stockholders in a form that permits preparation of a list of names and
addresses of all stockholders in alphabetical order by classes of shares
showing the number and series of shares held by each.
Any books, records and minutes may be in written form or in any other
form capable of being converted into written form within a reasonable time.
The corporation shall so convert any records so kept upon the request of any
person entitled to inspect the same.
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ARTICLE VIII
CORPORATE SEAL
The Board of Directors shall provide for a corporate seal which may be
facsimile, engraved, printed or an impression seal which shall be circular in
form and shall have inscribed thereon the name of the corporation, the words
"seal" and "Delaware" and the year of incorporation.
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ARTICLE IX
AMENDMENTS
These bylaws may be altered, amended or repealed and new bylaws may be
adopted, by either the Board of Directors or the stockholders, but the Board
of Directors may not alter, amend or repeal any bylaw adopted by stockholders
if the stockholders specifically provide that such bylaw is not subject to
amendment or repeal by the directors.
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EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT (this "Agreement") is made this 15th day of July, 1999,
between Todhunter International, Inc., a Delaware corporation ("Employer"),
and Thomas A. Valdes ("Executive").
The parties hereto, in consideration of the mutual covenants contained
herein, agree upon the following terms of employment of Executive by
Employer:
1. EMPLOYMENT AND TERM. Subject to the terms and conditions herein,
Employer hereby employs Executive and Executive hereby accepts employment for
a five-year term commencing on the date hereof and ending at the close of
business on July 14th, 2004 (the "Employment Period"), unless sooner
terminated as hereinafter provided. The Employment Period shall continue
automatically for additional periods of one (1) year each under the same
terms and conditions unless either party shall have given written notice of
termination at least ninety (90) days before the end of the then current
term. All references herein to the Employment Period shall refer to both the
initial Employment Period and any such successive Employment Periods.
2. DUTIES. Executive shall serve as Executive Vice President of the
Employer. Executive shall perform the duties generally of an Executive Vice
President for Employer and shall have such specific responsibilities, duties
and authorities as shall from time to time be assigned by the Chief Executive
Officer or the Board of Directors of Employer ("Board of Directors").
Executive shall devote substantially all of his working time and efforts to
the business and affairs of Employer and its subsidiaries. Executive shall
not be required to relocate his office or residence outside of Palm Beach
County, Florida.
3. COMPENSATION.
(A) SALARY. For all duties to be performed by Executive in any capacity
hereunder, Executive shall be paid an annual salary at a rate determined by
the Board of Directors of not less than $215,185 per year (the "Base Salary")
payable monthly or in such more frequent installments as Employer customarily
pays its other executives. The Board of Directors may authorize upward
compensation adjustments by way of salary, bonus or otherwise, as it deems
appropriate during the Employment Period or any extension hereof.
(B) BONUS. In addition to the Base Salary, Employer shall pay Executive
within sixty (60) days after the end of each fiscal year of Employer which
occurs during the Employment Period a cash bonus in an amount determined by
the Board of Directors but in no event less than $68,000 per year. The
amount of the bonus may exceed such amount to the extent earned in accordance
with performance targets, measurements and such other criteria as shall be
established for such fiscal year by the Board of Directors.
(C) VACATION. Executive shall be entitled each year to a reasonable
period of paid vacation.
(D) FRINGE BENEFITS. Executive shall be entitled to participate in or
receive benefits under any employee benefit plan or arrangement made
available by Employer or its subsidiaries in the future to its executives and
key management employees, subject to and on a basis consistent with the
terms, conditions and overall administration of such plans and arrangements.
(E) EXPENSES. It is understood that Executive will from time to time
incur reasonable expenses in conjunction with his employment. Employer will
promptly reimburse him for any such expenses of which he shall present a
signed itemized written account setting forth the amount and nature of each
such expenditure, and in addition, with respect to travel or entertainment,
the business purpose, the nature of discussions and other person or persons
involved and such other information as Employer may reasonably require;
provided that such
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expenses are incurred and accounted for in accordance with such other
policies and procedures then established by Employer.
4. TERMINATION. Unless otherwise agreed to in writing by Employer and
Executive, Executive's employment hereunder may be terminated under the
following circumstances, in addition to terminations pursuant to Section 5
hereof:
(A) DEATH. Executive's death.
(B) DISABILITY. If, as a result of Executive's incapacity due to physical
or mental illness (such incapacity being determined by the Board of Directors
in its sole reasonable discretion), Executive shall have been absent from his
full-time duties as described hereunder for the entire period of six (6)
consecutive months, Employer may terminate Executive's employment hereunder.
(C) CAUSE.
(1) Employer may terminate Executive's employment hereunder for Cause.
For purposes of this Agreement, "Cause" shall mean that (a) Executive is
convicted of a felony which, in the sole determination of the Board of
Directors, would have a material adverse effect on Executive's ability to
perform his duties hereunder or on the business or reputation of Employer;
(b) Executive has exhibited gross misconduct resulting in material harm to
Employer, its business or reputation; (c) Executive has willfully
misappropriated Employer assets or has otherwise willfully defrauded
Employer, including without limitation by fraud, theft, embezzlement, or
breach of a fiduciary duty involving personal profit; (d) Executive has
intentionally failed to perform his duties hereunder; or (e) Executive has
breached any provision of this Agreement. For the purposes of this Section
4(C)(1), no act or failure to act on Executive's part shall be considered
"willful" unless done, or omitted to be done, by him not in good faith and
without reasonable belief that his action or omission was in the best
interests of Employer.
(2) Notwithstanding the foregoing, any termination of Executive shall not
be considered a termination for Cause pursuant to this Section 4, and shall
be considered a termination Without Cause pursuant to Section 4(D) hereof, if
such termination is effected without: (a) reasonable notice to Executive
setting forth the reasons for Employer's intention to terminate for Cause;
(b) an opportunity for Executive, together with his counsel, to be heard
before the Board of Directors; and (c) delivery to Executive of a Notice of
Termination as provided for in Section 4(I) hereof from the Board of
Directors finding that in the good faith opinion of the Board of Directors,
Executive was guilty of conduct set forth above in the preceding sentence,
and specifying the particulars thereof in detail.
(D) WITHOUT CAUSE. Any termination of Executive by Employer (including
any action which is deemed a termination of Executive pursuant to Section
4(F) hereof), other than a termination pursuant to Sections 4(A)-4(C) hereof,
shall be deemed a termination Without Cause.
(E) TERMINATION BY EXECUTIVE. Executive may terminate this Agreement (1)
due to the Executive's retirement; provided that Executive provides Employer
with thirty (30) days written notice, pursuant to Section 4(I), prior to the
effective date of such retirement, as shall be stated in such notice, and (2)
for any reason other than Executive's retirement; provided that the Executive
provides Employer with sixty (60) days written notice prior to the effective
date of such termination, as shall be stated in such notice.
(F) OTHER EVENTS OF TERMINATION. The following circumstances shall
specifically be deemed a termination Without Cause of Executive's employment
by Employer:
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(1) a vote by the Board of Directors to terminate Executive Without Cause,
as defined in Section 4(D) hereof;
(2) any termination of Executive's employment which is not effected
pursuant to a Notice of Termination satisfying the requirements of Section
4(I) hereof;
(3) a breach by Employer of this Agreement, and a subsequent election by
Executive to terminate this Agreement pursuant to Section 4(E) above; or
(4) The performance of any other act by Employer which is designed to
prevent and does prevent Executive from properly performing the authorities,
duties and responsibilities of his employment hereunder, including without
limitation a material change in the duties or position of Executive within
Employer.
(G) PAYMENTS IF WITHOUT CAUSE. If Executive's employment is terminated
for any reason pursuant to Section 4(D) hereof, Employer shall continue to
pay Executive his Base Salary and bonus in accordance with and at such times
specified in Sections 3(A) and 3(B) and provide the benefits pursuant to
Section 3(E) for the greater of: (1) one (1) year from the Date of
Termination, or (2) the balance of the Employment Period. In addition, the
vesting schedules, if any, under all stock options held by Executive shall
continue to run to the maximum extent permitted by applicable law.
(H) PAYMENTS UNDER OTHER TERMINATIONS. If Executive's employment is
terminated pursuant to Sections 4(A), 4(B), 4(C) or 4(E) hereof, on and after
the Date of Termination Employer shall no longer be obligated to pay
Executive any amounts payable hereunder for such period, whether in the form
of Base Salary, bonus or otherwise, and Executive shall have no right to
compensation or other benefits hereunder for any such period.
Notwithstanding the foregoing, Employer shall be obligated to pay to
Executive all amounts payable hereunder and otherwise, through and including
the Date of Termination, whether such amounts were payable prior to the date
of termination or thereafter, and Executive shall be entitled to receive any
extension of benefits beyond the Date of Termination, provided that (1) such
benefits were received by Executive prior to the Date of Termination and (2)
such extension is customarily offered by Employer to its employees or is
otherwise required by applicable law.
(I) NOTICE OF TERMINATION. Any termination of Executive's employment by
Employer or by Executive (other than termination pursuant to Section 4(A)
hereof) shall be communicated by written Notice of Termination to the other
party hereto. For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall (1) indicate the specific termination
provision in this Agreement relied upon; (2) set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of
Executive's employment under the provision so indicated; and (3) contain any
other information required by this Agreement.
(J) EFFECTIVE DATE OF TERMINATION. For purposes of this Section 4, "Date
of Termination" shall mean: (1) if Executive's employment is terminated by
his death, the date of his death; (2) if Executive's employment is terminated
pursuant to Section 4(B) hereof, the termination date stated in the written
notice sent by Employer after the expiration of six (6) consecutive months of
Executive's incapacity due to physical or mental illness, as set forth in
Section 4(B) hereof (provided that Executive shall not have returned to the
performance of his duties on a full-time basis during such six (6) month
period); (3) if Executive's employment is terminated pursuant to Sections
4(C) or 4(D) hereof, the date that the Notice of Termination is communicated
to Executive pursuant to Section 4(I) hereof; (4) if Executive's employment
is terminated pursuant to Section 4(E) hereof, the termination date stated in
the written notice received by Employer; or (5) if deemed terminated pursuant
to Section 4(F) hereof, the date of such action which is deemed a termination
of Executive by Employer.
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5. TERMINATION OF EMPLOYMENT UPON CHANGE OF CONTROL.
(A) CERTAIN DEFINITIONS.
(1) "Change of Control" shall mean:
(a) The acquisition by any person, entity or "group" required to file a
Schedule 13D or Schedule 14D-1 promulgated under the Securities Exchange Act
of 1934 (the "Exchange Act") (excluding, for this purpose, A. Kenneth
Pincourt, Jr., Employer, its subsidiaries, or any employee benefit plan of
Employer, or its subsidiaries which acquires beneficial ownership of voting
securities of Employer, including shares acquired pursuant to the exercise of
options or warrants, or conversion of preferred stock outstanding as of the
date hereof) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of over 25% (in one or more transactions,
in the aggregate) of either the then outstanding shares of common stock or
the combined voting power of Employer's then outstanding voting securities
entitled to vote generally in the election of directors; or
(b) An election or appointment to the Board of Directors by virtue of
which the individuals who immediately prior thereto constituted the Board of
Directors (the "Incumbent Board") no longer constitute at least a majority of
the Board of Directors, provided that any person who becomes a director
subsequent to the date hereof whose election, or nomination for election by
Employer's stockholders, was approved by a vote of at least a majority of the
Incumbent Board (other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the Directors of Employer, as
such terms are used in Rule 14a-1 promulgated under the Exchange Act) shall
be, for purposes of this Agreement, considered as though such person were a
member of the Incumbent Board; or
(c) Approval by the stockholders of Employer of: (i) a reorganization,
merger or consolidation by reason of which persons who were the stockholders
of Employer immediately prior to such reorganization, merger or consolidation
do not, immediately thereafter, own more than fifty percent (50%) of the
combined voting power entitled to vote generally in the election of directors
of the reorganized, merged or consolidated company's then outstanding voting
securities, or (ii) a liquidation or dissolution of Employer or the sale of
all or substantially all of the assets of Employer (whether such assets are
held directly or indirectly).
(2) "Date of Termination", for the purposes of this Section 5, means the
date of receipt by Executive of a notice of termination of employment from
Employer or any later date specified therein, or the date Executive delivers
a letter of resignation to Employer.
(3) The "Effective Date" shall be the date on which a Change of Control
occurs. Anything in this Agreement to the contrary notwithstanding, if
Executive's employment with Employer is terminated prior to the date on which
a Change of Control occurs, and it is reasonably demonstrated that such
termination (a) was at the request of a third party who has taken steps
reasonably calculated to effect a Change of Control or (b) otherwise arose in
connection with or anticipation of a Change of Control, then for all purposes
of this Agreement the "Effective Date" shall mean the date immediately prior
to the date of such termination.
(B) OBLIGATIONS OF EMPLOYER UPON TERMINATION. If within one (1) year
following the Effective Date of a Change of Control, Executive's employment
is deemed terminated Without Cause, Employer shall pay to Executive in a lump
sum in cash within thirty (30) days after the Date of Termination to the
extent not theretofore paid, Executive's compensation (including bonuses) and
fringe benefits, at the rate in effect on the Date of Termination, through
the remaining Employment Period, BUT NOT less than two (2) times the annual
compensation (including bonuses) and fringe benefits (except that Executive,
at his option, may choose to continue to
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have he and his family covered, to the extent they are then covered, by
Employer's health plan in lieu of receiving a lump sum payment for that
benefit, and Employer shall use reasonable efforts to cooperate in such
event); provided that the payment under this subsection (B) shall be reduced
to the extent required so that such payment, either alone or together with
other payments which Executive has the right to receive from Employer, shall
not be an excess parachute payment within the meaning of Section 280G(b) of
the Internal Revenue Code of 1986, as amended (the "Code"), and the
regulations promulgated thereunder, or successor provisions of similar
import. The determination of any reduction shall be made by the independent
certified public accountants of Employer.
(C) NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or
limit Executive's continuing or future participation in any benefit, bonus,
incentive or other plans, programs, policies or practices provided by
Employer or its subsidiaries and for which Executive may qualify, nor shall
anything herein limit or otherwise affect such rights as Executive may have
under any stock option or other agreements with Employer or any of its
subsidiaries. Amounts which are vested benefits or which Executive is
otherwise entitled to receive under any plan, policy, practice or program of
Employer or any of its subsidiaries at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy, practice
or program; provided that the vesting schedules, if any, under all stock
options held by Executive shall continue to run to the maximum extent
permitted by applicable law.
6. CONFIDENTIALITY.
(A) In the course of his employment, Employer or any of its subsidiaries
may disclose or make known to Executive, and Executive may be given access to
or may become acquainted with, certain information, trade secrets or both,
including but not limited to confidential information and trade secrets
regarding tapes, computer programs, designs, skills, procedures,
formulations, methods, documentation, drawings, facilities, customers,
policies, marketing, pricing, customer lists and leads, and other information
and know-how, all relating to or useful in Employer's business or the
business of its subsidiaries and/or affiliates (collectively, the
"Information"), and which Employer considers proprietary, desires to maintain
confidential and is not in the public domain. During the Employment Period
and at all times thereafter, Executive shall not in any manner, either
directly or indirectly, divulge, disclose or communicate to any person or
firm, except to or for Employer's benefit as directed by Employer or except
as required by applicable law or court process (but only after giving
Employer written notice so that Employer may attempt to obtain a protective
order), any of the Information which he may have acquired in the course of or
as an incident to his employment by Employer, the parties agreeing that such
information affects the successful and effective conduct of Employer's
business and its goodwill, and that any breach of the terms of this Section 6
is a material breach of this Agreement.
(B) All equipment, documents, memoranda, reports, records, files,
materials, samples, books, correspondence, lists, other written and graphic
records, and the like (collectively, the "Materials") affecting or relating
to the business of Employer or of its subsidiaries and/or affiliates, which
Executive shall prepare, use, construct, observe, possess or control shall be
and remain Employer's sole property or in Employer's exclusive custody, and
must not be removed from the premises of Employer except as directed by
Employer's Board of Directors in writing. Promptly upon termination of the
Agreement or Executive's employment hereunder for any reason, or otherwise
upon request of the Chief Executive Officer of Employer, the Information, the
Materials and all copies thereof in the custody or control of Executive shall
be delivered to Employer.
7. RESTRICTIVE COVENANT. During the Employment Period, Executive will
not, directly or indirectly:
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(A) engage in any trade or business directly competitive with that of any
of Employer or any of its subsidiaries, anywhere in the United States or such
other country or countries in which Employer actively engages in its trade or
business as of the Date of Termination ("Territory");
(B) become associated as a manager, supervisor, employee, consultant,
advisor, control shareholder (either individually or as part of an affiliated
group), or otherwise of any person, corporation or entity engaging in any
trade or business directly competitive with those of Employer or any of its
subsidiaries anywhere in the Territory;
(C) call upon any client or clients of Employer or any of its subsidiaries
for the purpose of selling or soliciting for any person, corporation or
entity, other than any of Employer or its subsidiaries, sales of any
products, processes, or services directly competitive with those of Employer
or any of its subsidiaries within the Territory;
(D) divert, solicit or take away any such client or clients of Employer or
any of its subsidiaries for the purpose of selling any products or services
directly competitive with those of Employer or any of its subsidiaries; and
service any contracts or accounts relating to any products or services
directly competitive with those of Employer or any of its subsidiaries for
any person, corporation or entity other than Employer or any of its
subsidiaries; or
(E) induce, influence, combine or conspire with, or attempt to induce,
influence, combine or conspire with, any of the officers or employees of
Employer or any of its subsidiaries to terminate his or her employment with
or to directly compete against Employer or any of its subsidiaries;
provided, however, that nothing herein shall be deemed to preclude Executive
from owning less than five percent (5%) of the outstanding capital stock of
any company whose stock is traded on an established stock exchange or quoted
on Nasdaq. Should any of the time periods or the geographic area set forth
in this Section 7 be held to be unreasonable by any court of competent
subject matter jurisdiction, the parties hereto agree to petition such court
to reduce the time period or geographic area to the maximum permitted by
governing law.
8. ASSIGNMENTS. No party shall assign his or its rights or obligations
under this Agreement without the prior written consent of the other party to
this Agreement.
9. AMENDMENTS. The provisions of this Agreement may not be amended,
supplemented, waived or changed orally, but only by a writing signed by the
party as to whom enforcement of any such amendment, supplement, waiver or
modification is sought and making specific reference to this Agreement.
10. REMEDIES. If a party commits a material breach, or is about to commit
a material breach, of any of the provisions of this Agreement, the other
party shall have the right to have the provisions of this Agreement
specifically enforced by any court having equity jurisdiction without being
required to post bond or other security and without having to prove the
inadequacy of the available remedies at law, it being acknowledged and agreed
that any such breach or threatened breach will cause irreparable injury to
the non-breaching party and that the money damages will not provide an
adequate remedy to the non-breaching party. In addition, the non-breaching
party may take all such other actions and remedies available to it under law
or in equity and shall be entitled to such damages as it can show it has
sustained, by reason of such breach.
11. SURRENDER OF BOOKS AND RECORDS. Executive acknowledges that all
lists, books, records, literature, products and any other materials owned by
Employer or its subsidiaries or used by them in connection with the conduct
of their business, shall at all times remain the property of Employer and its
subsidiaries and that upon termination of employment hereunder, irrespective
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of the time, manner or cause of said termination, Executive will surrender to
Employer and its subsidiaries all such lists, books, records, literature,
products and other materials.
12. SEVERABILITY. If any provision of this Agreement or any other
agreement entered into pursuant to this Agreement is contrary to, prohibited
by or deemed invalid under applicable law or regulation, such provision shall
be inapplicable and deemed omitted to the extent so contrary, prohibited or
invalid, but the remainder of this Agreement shall not be invalidated thereby
and shall be given full force and effect so far as possible. If any
provision of this Agreement may be construed in two or more ways, one of
which would render the provision invalid or otherwise voidable or
unenforceable and another of which would render the provision valid and
enforceable, such provision shall have the meaning which renders it valid and
enforceable.
13. NOTICES. All notices, requests, consents and other communications
required or permitted under this Agreement shall be in writing (including
electronic transmission) and shall be (as elected by the person giving such
notice) hand delivered by messenger or courier service, electronically
transmitted, or mailed (airmail if international) by registered or certified
mail (postage prepaid), return receipt requested, addressed to:
If to Employer: With a copy to:
Todhunter International, Inc. Gunster, Yoakley, Valdes-Fauli & Stewart, P.A.
222 Lakeview Avenue 777 South Flagler Drive
Suite 1500 Suite 500, East Tower
West Palm Beach, Florida 33401 West Palm Beach, Florida 33401
(561) 655-8977 (561) 650-0553
Fax: (561) 655-9718 Fax: (561) 655-5677
Attn: A. Kenneth Pincourt, Jr. Attn: Michael V. Mitrione, Esq.
If to Employee:
Thomas A. Valdes
13440 Oakmeade
Palm Beach Gardens, FL 33418
Telephone (561) 694-8534
Fax:(561) 624-8946
or to such other address as any party may designate by notice complying with
the terms of this Section. Each such notice shall be deemed delivered (a) on
the date delivered if by personal delivery; (b) on the date of transmission
with confirmed answer back if by electronic transmission; and (c) on the date
upon which the return receipt is signed or delivery is refused or the notice
is designated by the postal authorities as not deliverable, as the case may
be, if mailed.
14. BINDING EFFECT. All of the terms and provisions of this Agreement
shall be binding upon, inure to the benefit of, and be enforceable by the
parties and their respective administrators, executors, legal
representatives, heirs, successors and permitted assigns, whether so
expressed or not.
15. WAIVER. The failure or delay of any party at any time to require
performance by another party of any provision of this Agreement, even if
known, shall not affect the right of such party to require performance of
that provision or to exercise any right, power or remedy under this
Agreement. Any waiver by any party of any breach of any provision of this
Agreement should not be construed as a waiver of any continuing or succeeding
breach of such provision, a waiver of the provision itself, or a waiver of
any right, power or remedy under this Agreement. No
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notice to or demand on any party in any circumstance shall, of itself,
entitle such party to any other or further notice or demand in similar or
other circumstances.
16. GOVERNING LAW. This Agreement and all transactions contemplated by
this Agreement shall be governed by, and construed and enforced in accordance
with, the laws of the State of Florida.
17. JURISDICTION AND VENUE. The parties acknowledge that a substantial
portion of the negotiations, anticipated performance and execution of this
Agreement occurred or shall occur in Palm Beach County, Florida. Any civil
action or legal proceeding arising out of or relating to this Agreement shall
be brought in the courts of record of the State of Florida in Palm Beach
County or the United States District Court, Southern District of Florida,
West Palm Beach Division. Each party consents to the jurisdiction of such
court in any such civil action or legal proceeding and waives any objection
to the laying of venue of any such civil action or legal proceeding in such
court. Service of any court paper may be effected on such party by mail, as
provided in this Agreement, or in such other manner as may be provided under
applicable laws, rules of procedure or local rules.
18. ENFORCEMENT COSTS. If any civil action, arbitration or other legal
proceeding is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default or misrepresentation in connection with any
provision of this Agreement, the successful or prevailing party or parties
shall be entitled to recover reasonable attorneys' fees, sales and use taxes,
court costs and all expenses even if not taxable as court costs (including,
without limitation, all such fees, taxes, costs and expenses incident to
arbitration, appellate, bankruptcy and post-judgment proceedings), incurred
in that civil action, arbitration or legal proceeding, in addition to any
other relief to which such party or parties may be entitled. Attorneys' fees
shall include, without limitation, paralegal fees, investigative fees,
administrative costs, sales and use taxes and all other charges billed by the
attorney to the prevailing party.
19. ENTIRE AGREEMENT. This Agreement represents the entire understanding
and agreement between the parties with respect to the subject matter of this
Agreement, and supersedes all other negotiations, understandings and
representations (if any) made by and between such parties (including, without
limitation, any and all prior employment agreements and all amendments
thereto between Executive and Employer).
20. SURVIVAL. The provisions of Sections 4, 5, 6 and 8 through 20 shall
survive any termination or expiration of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date and year first above written.
/s/ Thomas A. Valdes
--------------------------------
Thomas A. Valdes, Executive
TODHUNTER INTERNATIONAL, INC.
By: /s/ A. Kenneth Pincourt, Jr.
----------------------------
A. Kenneth Pincourt, Jr.
Chief Executive Officer
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EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT (this "Agreement") is made this 15th day of July, 1999,
between Todhunter International, Inc., a Delaware corporation ("Employer"),
and Jay S. Maltby ("Executive").
The parties hereto, in consideration of the mutual covenants contained
herein, agree upon the following terms of employment of Executive by
Employer:
1. EMPLOYMENT AND TERM. Subject to the terms and conditions herein,
Employer hereby employs Executive and Executive hereby accepts employment for
a five-year term commencing on the date hereof and ending at the close of
business on July 14th, 2004 (the "Employment Period"), unless sooner
terminated as hereinafter provided. The Employment Period shall continue
automatically for additional periods of one (1) year each under the same
terms and conditions unless either party shall have given written notice of
termination at least ninety (90) days before the end of the then current
term. All references herein to the Employment Period shall refer to both the
initial Employment Period and any such successive Employment Periods.
2. DUTIES. Executive shall serve as President and Chief Operating
Officer of the Employer. Executive shall perform the duties generally of a
President and Chief Operating Officer for Employer and shall have such
specific responsibilities, duties and authorities as shall from time to time
be assigned by the Chief Executive Officer or the Board of Directors of
Employer ("Board of Directors"). Executive shall devote substantially all
of his working time and efforts to the business and affairs of Employer and
its subsidiaries. Executive shall not be required to relocate his office or
residence outside of Palm Beach County, Florida.
3. COMPENSATION.
(A) SALARY. For all duties to be performed by Executive in any capacity
hereunder, Executive shall be paid an annual salary at a rate determined by
the Board of Directors of not less than $293,580 per year (the "Base Salary")
payable monthly or in such more frequent installments as Employer customarily
pays its other executives. The Board of Directors may authorize upward
compensation adjustments by way of salary, bonus or otherwise, as it deems
appropriate during the Employment Period or any extension hereof.
(B) BONUS. In addition to the Base Salary, Employer shall pay Executive
within sixty (60) days after the end of each fiscal year of Employer which
occurs during the Employment Period a cash bonus in an amount determined by
the Board of Directors but in no event less than $85,000 per year. The
amount of the bonus may exceed such amount to the extent earned in accordance
with performance targets, measurements and such other criteria as shall be
established for such fiscal year by the Board of Directors.
(C) VACATION. Executive shall be entitled each year to a reasonable
period of paid vacation.
(D) FRINGE BENEFITS. Executive shall be entitled to participate in or
receive benefits under any employee benefit plan or arrangement made
available by Employer or its subsidiaries in the future to its executives and
key management employees, subject to and on a basis consistent with the
terms, conditions and overall administration of such plans and arrangements.
(E) EXPENSES. It is understood that Executive will from time to time
incur reasonable expenses in conjunction with his employment. Employer will
promptly reimburse him for any such expenses of which he shall present a
signed itemized written account setting forth the amount and nature of each
such expenditure, and in addition, with respect to travel or entertainment,
the business purpose, the nature of discussions and other person or persons
involved and such other information as Employer may reasonably require;
provided that such
<PAGE>
expenses are incurred and accounted for in accordance with such other
policies and procedures then established by Employer.
4. TERMINATION. Unless otherwise agreed to in writing by Employer and
Executive, Executive's employment hereunder may be terminated under the
following circumstances, in addition to terminations pursuant to Section 5
hereof:
(A) DEATH. Executive's death.
(B) DISABILITY. If, as a result of Executive's incapacity due to physical
or mental illness (such incapacity being determined by the Board of Directors
in its sole reasonable discretion), Executive shall have been absent from his
full-time duties as described hereunder for the entire period of six (6)
consecutive months, Employer may terminate Executive's employment hereunder.
(C) CAUSE.
(1) Employer may terminate Executive's employment hereunder for Cause.
For purposes of this Agreement, "Cause" shall mean that (a) Executive is
convicted of a felony which, in the sole determination of the Board of
Directors, would have a material adverse effect on Executive's ability to
perform his duties hereunder or on the business or reputation of Employer;
(b) Executive has exhibited gross misconduct resulting in material harm to
Employer, its business or reputation; (c) Executive has willfully
misappropriated Employer assets or has otherwise willfully defrauded
Employer, including without limitation by fraud, theft, embezzlement, or
breach of a fiduciary duty involving personal profit; (d) Executive has
intentionally failed to perform his duties hereunder; or (e) Executive has
breached any provision of this Agreement. For the purposes of this Section
4(C)(1), no act or failure to act on Executive's part shall be considered
"willful" unless done, or omitted to be done, by him not in good faith and
without reasonable belief that his action or omission was in the best
interests of Employer.
(2) Notwithstanding the foregoing, any termination of Executive shall not
be considered a termination for Cause pursuant to this Section 4, and shall
be considered a termination Without Cause pursuant to Section 4(D) hereof, if
such termination is effected without: (a) reasonable notice to Executive
setting forth the reasons for Employer's intention to terminate for Cause;
(b) an opportunity for Executive, together with his counsel, to be heard
before the Board of Directors; and (c) delivery to Executive of a Notice of
Termination as provided for in Section 4(I) hereof from the Board of
Directors finding that in the good faith opinion of the Board of Directors,
Executive was guilty of conduct set forth above in the preceding sentence,
and specifying the particulars thereof in detail.
(D) WITHOUT CAUSE. Any termination of Executive by Employer (including
any action which is deemed a termination of Executive pursuant to Section
4(F) hereof), other than a termination pursuant to Sections 4(A)-4(C) hereof,
shall be deemed a termination Without Cause.
(E) TERMINATION BY EXECUTIVE. Executive may terminate this Agreement (1)
due to the Executive's retirement; provided that Executive provides Employer
with thirty (30) days written notice, pursuant to Section 4(I), prior to the
effective date of such retirement, as shall be stated in such notice, and (2)
for any reason other than Executive's retirement; provided that the Executive
provides Employer with sixty (60) days written notice prior to the effective
date of such termination, as shall be stated in such notice.
(F) OTHER EVENTS OF TERMINATION. The following circumstances shall
specifically be deemed a termination Without Cause of Executive's employment
by Employer:
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(1) a vote by the Board of Directors to terminate Executive Without Cause,
as defined in Section 4(D) hereof;
(2) any termination of Executive's employment which is not effected
pursuant to a Notice of Termination satisfying the requirements of Section
4(I) hereof;
(3) a breach by Employer of this Agreement, and a subsequent election by
Executive to terminate this Agreement pursuant to Section 4(E) above; or
(4) the performance of any other act by Employer which is designed to
prevent and does prevent Executive from properly performing the authorities,
duties and responsibilities of his employment hereunder, including without
limitation a material change in the duties or position of Executive within
Employer.
(G) PAYMENTS IF WITHOUT CAUSE. If Executive's employment is terminated
for any reason pursuant to Section 4(D) hereof, Employer shall continue to
pay Executive his Base Salary and bonus in accordance with and at such times
specified in Sections 3(A) and 3(B) and provide the benefits pursuant to
Section 3(E) for the greater of: (1) one (1) year from the Date of
Termination, or (2) the balance of the Employment Period. In addition, the
vesting schedules, if any, under all stock options held by Executive shall
continue to run to the maximum extent permitted by applicable law.
(H) PAYMENTS UNDER OTHER TERMINATIONS. If Executive's employment is
terminated pursuant to Sections 4(A), 4(B), 4(C) or 4(E) hereof, on and after
the Date of Termination Employer shall no longer be obligated to pay
Executive any amounts payable hereunder for such period, whether in the form
of Base Salary, bonus or otherwise, and Executive shall have no right to
compensation or other benefits hereunder for any such period.
Notwithstanding the foregoing, Employer shall be obligated to pay to
Executive all amounts payable hereunder and otherwise, through and including
the Date of Termination, whether such amounts were payable prior to the date
of termination or thereafter, and Executive shall be entitled to receive any
extension of benefits beyond the Date of Termination, provided that (1) such
benefits were received by Executive prior to the Date of Termination and (2)
such extension is customarily offered by Employer to its employees or is
otherwise required by applicable law.
(I) NOTICE OF TERMINATION. Any termination of Executive's employment by
Employer or by Executive (other than termination pursuant to Section 4(A)
hereof) shall be communicated by written Notice of Termination to the other
party hereto. For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall (1) indicate the specific termination
provision in this Agreement relied upon; (2) set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of
Executive's employment under the provision so indicated; and (3) contain any
other information required by this Agreement.
(J) EFFECTIVE DATE OF TERMINATION. For purposes of this Section 4, "Date
of Termination" shall mean: (1) if Executive's employment is terminated by
his death, the date of his death; (2) if Executive's employment is terminated
pursuant to Section 4(B) hereof, the termination date stated in the written
notice sent by Employer after the expiration of six (6) consecutive months of
Executive's incapacity due to physical or mental illness, as set forth in
Section 4(B) hereof (provided that Executive shall not have returned to the
performance of his duties on a full-time basis during such six (6) month
period); (3) if Executive's employment is terminated pursuant to Sections
4(C) or 4(D) hereof, the date that the Notice of Termination is communicated
to Executive pursuant to Section 4(I) hereof; (4) if Executive's employment
is terminated pursuant to Section 4(E) hereof, the termination date stated in
the written notice received by Employer; or (5) if deemed terminated pursuant
to Section 4(F) hereof, the date of such action which is deemed a termination
of Executive by Employer.
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5. TERMINATION OF EMPLOYMENT UPON CHANGE OF CONTROL.
(A) CERTAIN DEFINITIONS.
(1) "Change of Control" shall mean:
(a) The acquisition by any person, entity or "group" required to file a
Schedule 13D or Schedule 14D-1 promulgated under the Securities Exchange Act
of 1934 (the "Exchange Act") (excluding, for this purpose, A. Kenneth
Pincourt, Jr., Employer, its subsidiaries, or any employee benefit plan of
Employer, or its subsidiaries which acquires beneficial ownership of voting
securities of Employer, including shares acquired pursuant to the exercise of
options or warrants, or conversion of preferred stock outstanding as of the
date hereof) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of over 25% (in one or more transactions,
in the aggregate) of either the then outstanding shares of common stock or
the combined voting power of Employer's then outstanding voting securities
entitled to vote generally in the election of directors; or
(b) An election or appointment to the Board of Directors by virtue of
which the individuals who immediately prior thereto constituted the Board of
Directors (the "Incumbent Board") no longer constitute at least a majority of
the Board of Directors, provided that any person who becomes a director
subsequent to the date hereof whose election, or nomination for election by
Employer's stockholders, was approved by a vote of at least a majority of the
Incumbent Board (other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the Directors of Employer, as
such terms are used in Rule 14a-1 promulgated under the Exchange Act) shall
be, for purposes of this Agreement, considered as though such person were a
member of the Incumbent Board; or
(c) Approval by the stockholders of Employer of: (i) a reorganization,
merger or consolidation by reason of which persons who were the stockholders
of Employer immediately prior to such reorganization, merger or consolidation
do not, immediately thereafter, own more than fifty percent (50%) of the
combined voting power entitled to vote generally in the election of directors
of the reorganized, merged or consolidated company's then outstanding voting
securities, or (ii) a liquidation or dissolution of Employer or the sale of
all or substantially all of the assets of Employer (whether such assets are
held directly or indirectly).
(2) "Date of Termination", for the purposes of this Section 5, means the
date of receipt by Executive of a notice of termination of employment from
Employer or any later date specified therein, or the date Executive delivers
a letter of resignation to Employer.
(3) The "Effective Date" shall be the date on which a Change of Control
occurs. Anything in this Agreement to the contrary notwithstanding, if
Executive's employment with Employer is terminated prior to the date on which
a Change of Control occurs, and it is reasonably demonstrated that such
termination (a) was at the request of a third party who has taken steps
reasonably calculated to effect a Change of Control or (b) otherwise arose in
connection with or anticipation of a Change of Control, then for all purposes
of this Agreement the "Effective Date" shall mean the date immediately prior
to the date of such termination.
(B) OBLIGATIONS OF EMPLOYER UPON TERMINATION. If within one (1) year
following the Effective Date of a Change of Control, Executive's employment
is deemed terminated Without Cause, Employer shall pay to Executive in a lump
sum in cash within thirty (30) days after the Date of Termination to the
extent not theretofore paid, Executive's compensation (including bonuses) and
fringe benefits, at the rate in effect on the Date of Termination, through
the remaining Employment Period, BUT NOT less than two (2) times the annual
compensation (including bonuses) and fringe benefits (except that Executive,
at his option, may choose to continue to
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have he and his family covered, to the extent they are then covered, by
Employer's health plan in lieu of receiving a lump sum payment for that
benefit, and Employer shall use reasonable efforts to cooperate in such
event); provided that the payment under this subsection (B) shall be reduced
to the extent required so that such payment, either alone or together with
other payments which Executive has the right to receive from Employer, shall
not be an excess parachute payment within the meaning of Section 280G(b) of
the Internal Revenue Code of 1986, as amended (the "Code"), and the
regulations promulgated thereunder, or successor provisions of similar
import. The determination of any reduction shall be made by the independent
certified public accountants of Employer.
(C) NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or
limit Executive's continuing or future participation in any benefit, bonus,
incentive or other plans, programs, policies or practices provided by
Employer or its subsidiaries and for which Executive may qualify, nor shall
anything herein limit or otherwise affect such rights as Executive may have
under any stock option or other agreements with Employer or any of its
subsidiaries. Amounts which are vested benefits or which Executive is
otherwise entitled to receive under any plan, policy, practice or program of
Employer or any of its subsidiaries at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy, practice
or program; provided that the vesting schedules, if any, under all stock
options held by Executive shall continue to run to the maximum extent
permitted by applicable law.
6. CONFIDENTIALITY.
(A) In the course of his employment, Employer or any of its subsidiaries
may disclose or make known to Executive, and Executive may be given access to
or may become acquainted with, certain information, trade secrets or both,
including but not limited to confidential information and trade secrets
regarding tapes, computer programs, designs, skills, procedures,
formulations, methods, documentation, drawings, facilities, customers,
policies, marketing, pricing, customer lists and leads, and other information
and know-how, all relating to or useful in Employer's business or the
business of its subsidiaries and/or affiliates (collectively, the
"Information"), and which Employer considers proprietary, desires to maintain
confidential and is not in the public domain. During the Employment Period
and at all times thereafter, Executive shall not in any manner, either
directly or indirectly, divulge, disclose or communicate to any person or
firm, except to or for Employer's benefit as directed by Employer or except
as required by applicable law or court process (but only after giving
Employer written notice so that Employer may attempt to obtain a protective
order), any of the Information which he may have acquired in the course of or
as an incident to his employment by Employer, the parties agreeing that such
information affects the successful and effective conduct of Employer's
business and its goodwill, and that any breach of the terms of this Section 6
is a material breach of this Agreement.
(B) All equipment, documents, memoranda, reports, records, files,
materials, samples, books, correspondence, lists, other written and graphic
records, and the like (collectively, the "Materials") affecting or relating
to the business of Employer or of its subsidiaries and/or affiliates, which
Executive shall prepare, use, construct, observe, possess or control shall be
and remain Employer's sole property or in Employer's exclusive custody, and
must not be removed from the premises of Employer except as directed by
Employer's Board of Directors in writing. Promptly upon termination of the
Agreement or Executive's employment hereunder for any reason, or otherwise
upon request of the Chief Executive Officer of Employer, the Information, the
Materials and all copies thereof in the custody or control of Executive shall
be delivered to Employer.
7. RESTRICTIVE COVENANT. During the Employment Period, Executive will
not, directly or indirectly:
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(A) engage in any trade or business directly competitive with that of any
of Employer or any of its subsidiaries, anywhere in the United States or such
other country or countries in which Employer actively engages in its trade or
business as of the Date of Termination ("Territory");
(B) become associated as a manager, supervisor, employee, consultant,
advisor, control shareholder (either individually or as part of an affiliated
group), or otherwise of any person, corporation or entity engaging in any
trade or business directly competitive with those of Employer or any of its
subsidiaries anywhere in the Territory;
(C) call upon any client or clients of Employer or any of its subsidiaries
for the purpose of selling or soliciting for any person, corporation or
entity, other than any of Employer or its subsidiaries, sales of any
products, processes, or services directly competitive with those of Employer
or any of its subsidiaries within the Territory;
(D) divert, solicit or take away any such client or clients of Employer or
any of its subsidiaries for the purpose of selling any products or services
directly competitive with those of Employer or any of its subsidiaries; and
service any contracts or accounts relating to any products or services
directly competitive with those of Employer or any of its subsidiaries for
any person, corporation or entity other than Employer or any of its
subsidiaries; or
(E) induce, influence, combine or conspire with, or attempt to induce,
influence, combine or conspire with, any of the officers or employees of
Employer or any of its subsidiaries to terminate his or her employment with
or to directly compete against Employer or any of its subsidiaries;
provided, however, that nothing herein shall be deemed to preclude Executive
from owning less than five percent (5%) of the outstanding capital stock of
any company whose stock is traded on an established stock exchange or quoted
on Nasdaq. Should any of the time periods or the geographic area set forth
in this Section 7 be held to be unreasonable by any court of competent
subject matter jurisdiction, the parties hereto agree to petition such court
to reduce the time period or geographic area to the maximum permitted by
governing law.
8. ASSIGNMENTS. No party shall assign his or its rights or obligations
under this Agreement without the prior written consent of the other party to
this Agreement.
9. AMENDMENTS. The provisions of this Agreement may not be amended,
supplemented, waived or changed orally, but only by a writing signed by the
party as to whom enforcement of any such amendment, supplement, waiver or
modification is sought and making specific reference to this Agreement.
10. REMEDIES. If a party commits a material breach, or is about to commit
a material breach, of any of the provisions of this Agreement, the other
party shall have the right to have the provisions of this Agreement
specifically enforced by any court having equity jurisdiction without being
required to post bond or other security and without having to prove the
inadequacy of the available remedies at law, it being acknowledged and agreed
that any such breach or threatened breach will cause irreparable injury to
the non-breaching party and that the money damages will not provide an
adequate remedy to the non-breaching party. In addition, the non-breaching
party may take all such other actions and remedies available to it under law
or in equity and shall be entitled to such damages as it can show it has
sustained, by reason of such breach.
11. SURRENDER OF BOOKS AND RECORDS. Executive acknowledges that all
lists, books, records, literature, products and any other materials owned by
Employer or its subsidiaries or used by them in connection with the conduct
of their business, shall at all times remain the property of Employer and its
subsidiaries and that upon termination of employment hereunder, irrespective
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of the time, manner or cause of said termination, Executive will surrender to
Employer and its subsidiaries all such lists, books, records, literature,
products and other materials.
12. SEVERABILITY. If any provision of this Agreement or any other
agreement entered into pursuant to this Agreement is contrary to, prohibited
by or deemed invalid under applicable law or regulation, such provision shall
be inapplicable and deemed omitted to the extent so contrary, prohibited or
invalid, but the remainder of this Agreement shall not be invalidated thereby
and shall be given full force and effect so far as possible. If any
provision of this Agreement may be construed in two or more ways, one of
which would render the provision invalid or otherwise voidable or
unenforceable and another of which would render the provision valid and
enforceable, such provision shall have the meaning which renders it valid and
enforceable.
13. NOTICES. All notices, requests, consents and other communications
required or permitted under this Agreement shall be in writing (including
electronic transmission) and shall be (as elected by the person giving such
notice) hand delivered by messenger or courier service, electronically
transmitted, or mailed (airmail if international) by registered or certified
mail (postage prepaid), return receipt requested, addressed to:
If to Employer: With a copy to:
Todhunter International, Inc. Gunster, Yoakley, Valdes-Fauli & Stewart, P.A.
222 Lakeview Avenue 777 South Flagler Drive
Suite 1500 Suite 500, East Tower
West Palm Beach, Florida 33401 West Palm Beach, Florida 33401
(561) 655-8977 (561) 650-0553
Fax: (561) 655-9718 Fax: (561) 655-5677
Attn: A. Kenneth Pincourt, Jr. Attn: Michael V. Mitrione, Esq.
If to Employee:
Jay S. Maltby
7910 Old Marsh Rd.
Palm Beach Gardens, FL 33418
Telephone:(561) 625-5490
Fax:(561) 626-2774
or to such other address as any party may designate by notice complying with
the terms of this Section. Each such notice shall be deemed delivered (a) on
the date delivered if by personal delivery; (b) on the date of transmission
with confirmed answer back if by electronic transmission; and (c) on the date
upon which the return receipt is signed or delivery is refused or the notice
is designated by the postal authorities as not deliverable, as the case may
be, if mailed.
14. BINDING EFFECT. All of the terms and provisions of this Agreement
shall be binding upon, inure to the benefit of, and be enforceable by the
parties and their respective administrators, executors, legal
representatives, heirs, successors and permitted assigns, whether so
expressed or not.
15. WAIVER. The failure or delay of any party at any time to require
performance by another party of any provision of this Agreement, even if
known, shall not affect the right of such party to require performance of
that provision or to exercise any right, power or remedy under this
Agreement. Any waiver by any party of any breach of any provision of this
Agreement should not be construed as a waiver of any continuing or succeeding
breach of such provision, a waiver of the provision itself, or a waiver of
any right, power or remedy under this Agreement. No
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notice to or demand on any party in any circumstance shall, of itself,
entitle such party to any other or further notice or demand in similar or
other circumstances.
16. GOVERNING LAW. This Agreement and all transactions contemplated by
this Agreement shall be governed by, and construed and enforced in accordance
with, the laws of the State of Florida.
17. JURISDICTION AND VENUE. The parties acknowledge that a substantial
portion of the negotiations, anticipated performance and execution of this
Agreement occurred or shall occur in Palm Beach County, Florida. Any civil
action or legal proceeding arising out of or relating to this Agreement shall
be brought in the courts of record of the State of Florida in Palm Beach
County or the United States District Court, Southern District of Florida,
West Palm Beach Division. Each party consents to the jurisdiction of such
court in any such civil action or legal proceeding and waives any objection
to the laying of venue of any such civil action or legal proceeding in such
court. Service of any court paper may be effected on such party by mail, as
provided in this Agreement, or in such other manner as may be provided under
applicable laws, rules of procedure or local rules.
18. ENFORCEMENT COSTS. If any civil action, arbitration or other legal
proceeding is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default or misrepresentation in connection with any
provision of this Agreement, the successful or prevailing party or parties
shall be entitled to recover reasonable attorneys' fees, sales and use taxes,
court costs and all expenses even if not taxable as court costs (including,
without limitation, all such fees, taxes, costs and expenses incident to
arbitration, appellate, bankruptcy and post-judgment proceedings), incurred
in that civil action, arbitration or legal proceeding, in addition to any
other relief to which such party or parties may be entitled. Attorneys' fees
shall include, without limitation, paralegal fees, investigative fees,
administrative costs, sales and use taxes and all other charges billed by the
attorney to the prevailing party.
19. ENTIRE AGREEMENT. This Agreement represents the entire understanding
and agreement between the parties with respect to the subject matter of this
Agreement, and supersedes all other negotiations, understandings and
representations (if any) made by and between such parties (including, without
limitation, any and all prior employment agreements and all amendments
thereto between Executive and Employer).
20. SURVIVAL. The provisions of Sections 4, 5, 6 and 8 through 20 shall
survive any termination or expiration of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date and year first above written.
/s/ Jay S. Maltby
---------------------------------
Jay S. Maltby, Executive
TODHUNTER INTERNATIONAL, INC.
By: /s/ A. Kenneth Pincourt, Jr.
-----------------------------
A. Kenneth Pincourt, Jr.
Chief Executive Officer
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EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT (this "Agreement") is made this 15th day of July, 1999,
between Todhunter International, Inc., a Delaware corporation ("Employer"),
and A. Kenneth Pincourt, Jr. ("Executive").
The parties hereto, in consideration of the mutual covenants contained
herein, agree upon the following terms of employment of Executive by
Employer:
1. EMPLOYMENT AND TERM. Subject to the terms and conditions herein,
Employer hereby employs Executive and Executive hereby accepts employment for
a five-year term commencing on the date hereof and ending at the close of
business on July 14th, 2004 (the "Employment Period"), unless sooner
terminated as hereinafter provided. The Employment Period shall continue
automatically for additional periods of one (1) year each under the same
terms and conditions unless either party shall have given written notice of
termination at least ninety (90) days before the end of the then current
term. All references herein to the Employment Period shall refer to both the
initial Employment Period and any such successive Employment Periods.
2. DUTIES. Executive shall serve as Chief Executive Officer of the
Employer. Executive shall perform the duties generally of a Chief Executive
Officer for Employer and shall have such specific responsibilities, duties
and authorities as shall from time to time be assigned by the Chief Executive
Officer or the Board of Directors of Employer ("Board of Directors").
Executive shall devote substantially all of his working time and efforts to
the business and affairs of Employer and its subsidiaries. Executive shall
not be required to relocate his office or residence outside of Palm Beach
County, Florida.
3. COMPENSATION.
(A) SALARY. For all duties to be performed by Executive in any capacity
hereunder, Executive shall be paid an annual salary at a rate determined by
the Board of Directors of not less than $363,100 per year (the "Base Salary")
payable monthly or in such more frequent installments as Employer customarily
pays its other executives. The Board of Directors may authorize upward
compensation adjustments by way of salary, bonus or otherwise, as it deems
appropriate during the Employment Period or any extension hereof.
(B) BONUS. In addition to the Base Salary, Employer shall pay Executive
within sixty (60) days after the end of each fiscal year of Employer which
occurs during the Employment Period a cash bonus in an amount determined by
the Board of Directors but in no event less than $119,000 per year. The
amount of the bonus may exceed such amount to the extent earned in accordance
with performance targets, measurements and such other criteria as shall be
established for such fiscal year by the Board of Directors.
(C) VACATION. Executive shall be entitled each year to a reasonable
period of paid vacation.
(D) FRINGE BENEFITS. Executive shall be entitled to participate in or
receive benefits under any employee benefit plan or arrangement made
available by Employer or its subsidiaries in the future to its executives and
key management employees, subject to and on a basis consistent with the
terms, conditions and overall administration of such plans and arrangements.
(E) EXPENSES. It is understood that Executive will from time to time
incur reasonable expenses in conjunction with his employment. Employer will
promptly reimburse him for any such expenses of which he shall present a
signed itemized written account setting forth the amount and nature of each
such expenditure, and in addition, with respect to travel or entertainment,
the business purpose, the nature of discussions and other person or persons
involved and such other information as Employer may reasonably require;
provided that such
<PAGE>
expenses are incurred and accounted for in accordance with such other
policies and procedures then established by Employer.
4. TERMINATION. Unless otherwise agreed to in writing by Employer and
Executive, Executive's employment hereunder may be terminated under the
following circumstances, in addition to terminations pursuant to Section 5
hereof:
(A) DEATH. Executive's death.
(B) DISABILITY. If, as a result of Executive's incapacity due to physical
or mental illness (such incapacity being determined by the Board of Directors
in its sole reasonable discretion), Executive shall have been absent from his
full-time duties as described hereunder for the entire period of six (6)
consecutive months, Employer may terminate Executive's employment hereunder.
(C) CAUSE.
(1) Employer may terminate Executive's employment hereunder for Cause.
For purposes of this Agreement, "Cause" shall mean that (a) Executive is
convicted of a felony which, in the sole determination of the Board of
Directors, would have a material adverse effect on Executive's ability to
perform his duties hereunder or on the business or reputation of Employer;
(b) Executive has exhibited gross misconduct resulting in material harm to
Employer, its business or reputation; (c) Executive has willfully
misappropriated Employer assets or has otherwise willfully defrauded
Employer, including without limitation by fraud, theft, embezzlement, or
breach of a fiduciary duty involving personal profit; (d) Executive has
intentionally failed to perform his duties hereunder; or (e) Executive has
breached any provision of this Agreement. For the purposes of this Section
4(C)(1), no act or failure to act on Executive's part shall be considered
"willful" unless done, or omitted to be done, by him not in good faith and
without reasonable belief that his action or omission was in the best
interests of Employer.
(2) Notwithstanding the foregoing, any termination of Executive shall not
be considered a termination for Cause pursuant to this Section 4, and shall
be considered a termination Without Cause pursuant to Section 4(D) hereof, if
such termination is effected without: (a) reasonable notice to Executive
setting forth the reasons for Employer's intention to terminate for Cause;
(b) an opportunity for Executive, together with his counsel, to be heard
before the Board of Directors; and (c) delivery to Executive of a Notice of
Termination as provided for in Section 4(I) hereof from the Board of
Directors finding that in the good faith opinion of the Board of Directors,
Executive was guilty of conduct set forth above in the preceding sentence,
and specifying the particulars thereof in detail.
(D) WITHOUT CAUSE. Any termination of Executive by Employer (including
any action which is deemed a termination of Executive pursuant to Section
4(F) hereof), other than a termination pursuant to Sections 4(A)-4(C) hereof,
shall be deemed a termination Without Cause.
(E) TERMINATION BY EXECUTIVE. Executive may terminate this Agreement (1)
due to the Executive's retirement; provided that Executive provides Employer
with thirty (30) days written notice, pursuant to Section 4(I), prior to the
effective date of such retirement, as shall be stated in such notice, and (2)
for any reason other than Executive's retirement; provided that the Executive
provides Employer with sixty (60) days written notice prior to the effective
date of such termination, as shall be stated in such notice.
(F) OTHER EVENTS OF TERMINATION. The following circumstances shall
specifically be deemed a termination Without Cause of Executive's employment
by Employer:
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(1) a vote by the Board of Directors to terminate Executive Without Cause,
as defined in Section 4(D) hereof;
(2) any termination of Executive's employment which is not effected
pursuant to a Notice of Termination satisfying the requirements of Section
4(I) hereof;
(3) a breach by Employer of this Agreement, and a subsequent election by
Executive to terminate this Agreement pursuant to Section 4(E) above; or
(4) The performance of any other act by Employer which is designed to
prevent and does prevent Executive from properly performing the authorities,
duties and responsibilities of his employment hereunder, including without
limitation a material change in the duties or position of Executive within
Employer.
(G) PAYMENTS IF WITHOUT CAUSE. If Executive's employment is terminated
for any reason pursuant to Section 4(D) hereof, Employer shall continue to
pay Executive his Base Salary and bonus in accordance with and at such times
specified in Sections 3(A) and 3(B) and provide the benefits pursuant to
Section 3(E) for the greater of: (1) one (1) year from the Date of
Termination, or (2) the balance of the Employment Period. In addition, the
vesting schedules, if any, under all stock options held by Executive shall
continue to run to the maximum extent permitted by applicable law.
(H) PAYMENTS UNDER OTHER TERMINATIONS. If Executive's employment is
terminated pursuant to Sections 4(A), 4(B), 4(C) or 4(E) hereof, on and after
the Date of Termination Employer shall no longer be obligated to pay
Executive any amounts payable hereunder for such period, whether in the form
of Base Salary, bonus or otherwise, and Executive shall have no right to
compensation or other benefits hereunder for any such period.
Notwithstanding the foregoing, Employer shall be obligated to pay to
Executive all amounts payable hereunder and otherwise, through and including
the Date of Termination, whether such amounts were payable prior to the date
of termination or thereafter, and Executive shall be entitled to receive any
extension of benefits beyond the Date of Termination, provided that (1) such
benefits were received by Executive prior to the Date of Termination and (2)
such extension is customarily offered by Employer to its employees or is
otherwise required by applicable law.
(I) NOTICE OF TERMINATION. Any termination of Executive's employment by
Employer or by Executive (other than termination pursuant to Section 4(A)
hereof) shall be communicated by written Notice of Termination to the other
party hereto. For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall (1) indicate the specific termination
provision in this Agreement relied upon; (2) set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of
Executive's employment under the provision so indicated; and (3) contain any
other information required by this Agreement.
(J) EFFECTIVE DATE OF TERMINATION. For purposes of this Section 4, "Date
of Termination" shall mean: (1) if Executive's employment is terminated by
his death, the date of his death; (2) if Executive's employment is terminated
pursuant to Section 4(B) hereof, the termination date stated in the written
notice sent by Employer after the expiration of six (6) consecutive months of
Executive's incapacity due to physical or mental illness, as set forth in
Section 4(B) hereof (provided that Executive shall not have returned to the
performance of his duties on a full-time basis during such six (6) month
period); (3) if Executive's employment is terminated pursuant to Sections
4(C) or 4(D) hereof, the date that the Notice of Termination is communicated
to Executive pursuant to Section 4(I) hereof; (4) if Executive's employment
is terminated pursuant to Section 4(E) hereof, the termination date stated in
the written notice received by Employer; or (5) if deemed terminated pursuant
to Section 4(F) hereof, the date of such action which is deemed a termination
of Executive by Employer.
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5. TERMINATION OF EMPLOYMENT UPON CHANGE OF CONTROL.
(A) CERTAIN DEFINITIONS.
(1) "Change of Control" shall mean:
(a) The acquisition by any person, entity or "group" required to file a
Schedule 13D or Schedule 14D-1 promulgated under the Securities Exchange Act
of 1934 (the "Exchange Act") (excluding, for this purpose, A. Kenneth
Pincourt, Jr., Employer, its subsidiaries, or any employee benefit plan of
Employer, or its subsidiaries which acquires beneficial ownership of voting
securities of Employer, including shares acquired pursuant to the exercise of
options or warrants, or conversion of preferred stock outstanding as of the
date hereof) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of over 25% (in one or more transactions,
in the aggregate) of either the then outstanding shares of common stock or
the combined voting power of Employer's then outstanding voting securities
entitled to vote generally in the election of directors; or
(b) An election or appointment to the Board of Directors by virtue of
which the individuals who immediately prior thereto constituted the Board of
Directors (the "Incumbent Board") no longer constitute at least a majority of
the Board of Directors, provided that any person who becomes a director
subsequent to the date hereof whose election, or nomination for election by
Employer's stockholders, was approved by a vote of at least a majority of the
Incumbent Board (other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the Directors of Employer, as
such terms are used in Rule 14a-1 promulgated under the Exchange Act) shall
be, for purposes of this Agreement, considered as though such person were a
member of the Incumbent Board; or
(c) Approval by the stockholders of Employer of: (i) a reorganization,
merger or consolidation by reason of which persons who were the stockholders
of Employer immediately prior to such reorganization, merger or consolidation
do not, immediately thereafter, own more than fifty percent (50%) of the
combined voting power entitled to vote generally in the election of directors
of the reorganized, merged or consolidated company's then outstanding voting
securities, or (ii) a liquidation or dissolution of Employer or the sale of
all or substantially all of the assets of Employer (whether such assets are
held directly or indirectly).
(2) "Date of Termination", for the purposes of this Section 5, means the
date of receipt by Executive of a notice of termination of employment from
Employer or any later date specified therein, or the date Executive delivers
a letter of resignation to Employer.
(3) The "Effective Date" shall be the date on which a Change of Control
occurs. Anything in this Agreement to the contrary notwithstanding, if
Executive's employment with Employer is terminated prior to the date on which
a Change of Control occurs, and it is reasonably demonstrated that such
termination (a) was at the request of a third party who has taken steps
reasonably calculated to effect a Change of Control or (b) otherwise arose in
connection with or anticipation of a Change of Control, then for all purposes
of this Agreement the "Effective Date" shall mean the date immediately prior
to the date of such termination.
(B) OBLIGATIONS OF EMPLOYER UPON TERMINATION. If within one (1) year
following the Effective Date of a Change of Control, Executive's employment
is deemed terminated Without Cause, Employer shall pay to Executive in a lump
sum in cash within thirty (30) days after the Date of Termination to the
extent not theretofore paid, Executive's compensation (including bonuses) and
fringe benefits, at the rate in effect on the Date of Termination, through
the remaining Employment Period, BUT NOT less than two (2) times the annual
compensation (including bonuses) and fringe benefits (except that Executive,
at his option, may choose to continue to
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have he and his family covered, to the extent they are then covered, by
Employer's health plan in lieu of receiving a lump sum payment for that
benefit, and Employer shall use reasonable efforts to cooperate in such
event); provided that the payment under this subsection (B) shall be reduced
to the extent required so that such payment, either alone or together with
other payments which Executive has the right to receive from Employer, shall
not be an excess parachute payment within the meaning of Section 280G(b) of
the Internal Revenue Code of 1986, as amended (the "Code"), and the
regulations promulgated thereunder, or successor provisions of similar
import. The determination of any reduction shall be made by the independent
certified public accountants of Employer.
(C) NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or
limit Executive's continuing or future participation in any benefit, bonus,
incentive or other plans, programs, policies or practices provided by
Employer or its subsidiaries and for which Executive may qualify, nor shall
anything herein limit or otherwise affect such rights as Executive may have
under any stock option or other agreements with Employer or any of its
subsidiaries. Amounts which are vested benefits or which Executive is
otherwise entitled to receive under any plan, policy, practice or program of
Employer or any of its subsidiaries at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy, practice
or program; provided that the vesting schedules, if any, under all stock
options held by Executive shall continue to run to the maximum extent
permitted by applicable law.
6. CONFIDENTIALITY.
(A) In the course of his employment, Employer or any of its subsidiaries
may disclose or make known to Executive, and Executive may be given access to
or may become acquainted with, certain information, trade secrets or both,
including but not limited to confidential information and trade secrets
regarding tapes, computer programs, designs, skills, procedures,
formulations, methods, documentation, drawings, facilities, customers,
policies, marketing, pricing, customer lists and leads, and other information
and know-how, all relating to or useful in Employer's business or the
business of its subsidiaries and/or affiliates (collectively, the
"Information"), and which Employer considers proprietary, desires to maintain
confidential and is not in the public domain. During the Employment Period
and at all times thereafter, Executive shall not in any manner, either
directly or indirectly, divulge, disclose or communicate to any person or
firm, except to or for Employer's benefit as directed by Employer or except
as required by applicable law or court process (but only after giving
Employer written notice so that Employer may attempt to obtain a protective
order), any of the Information which he may have acquired in the course of or
as an incident to his employment by Employer, the parties agreeing that such
information affects the successful and effective conduct of Employer's
business and its goodwill, and that any breach of the terms of this Section 6
is a material breach of this Agreement.
(B) All equipment, documents, memoranda, reports, records, files,
materials, samples, books, correspondence, lists, other written and graphic
records, and the like (collectively, the "Materials") affecting or relating
to the business of Employer or of its subsidiaries and/or affiliates, which
Executive shall prepare, use, construct, observe, possess or control shall be
and remain Employer's sole property or in Employer's exclusive custody, and
must not be removed from the premises of Employer except as directed by
Employer's Board of Directors in writing. Promptly upon termination of the
Agreement or Executive's employment hereunder for any reason, or otherwise
upon request of the Chief Executive Officer of Employer, the Information, the
Materials and all copies thereof in the custody or control of Executive shall
be delivered to Employer.
7. RESTRICTIVE COVENANT. During the Employment Period, Executive will
not, directly or indirectly:
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(A) engage in any trade or business directly competitive with that of any
of Employer or any of its subsidiaries, anywhere in the United States or such
other country or countries in which Employer actively engages in its trade or
business as of the Date of Termination ("Territory");
(B) become associated as a manager, supervisor, employee, consultant,
advisor, control shareholder (either individually or as part of an affiliated
group), or otherwise of any person, corporation or entity engaging in any
trade or business directly competitive with those of Employer or any of its
subsidiaries anywhere in the Territory;
(C) call upon any client or clients of Employer or any of its subsidiaries
for the purpose of selling or soliciting for any person, corporation or
entity, other than any of Employer or its subsidiaries, sales of any
products, processes, or services directly competitive with those of Employer
or any of its subsidiaries within the Territory;
(D) divert, solicit or take away any such client or clients of Employer or
any of its subsidiaries for the purpose of selling any products or services
directly competitive with those of Employer or any of its subsidiaries; and
service any contracts or accounts relating to any products or services
directly competitive with those of Employer or any of its subsidiaries for
any person, corporation or entity other than Employer or any of its
subsidiaries; or
(E) induce, influence, combine or conspire with, or attempt to induce,
influence, combine or conspire with, any of the officers or employees of
Employer or any of its subsidiaries to terminate his or her employment with
or to directly compete against Employer or any of its subsidiaries;
provided, however, that nothing herein shall be deemed to preclude Executive
from owning less than five percent (5%) of the outstanding capital stock of
any company whose stock is traded on an established stock exchange or quoted
on Nasdaq. Should any of the time periods or the geographic area set forth
in this Section 7 be held to be unreasonable by any court of competent
subject matter jurisdiction, the parties hereto agree to petition such court
to reduce the time period or geographic area to the maximum permitted by
governing law.
8. ASSIGNMENTS. No party shall assign his or its rights or obligations
under this Agreement without the prior written consent of the other party to
this Agreement.
9. AMENDMENTS. The provisions of this Agreement may not be amended,
supplemented, waived or changed orally, but only by a writing signed by the
party as to whom enforcement of any such amendment, supplement, waiver or
modification is sought and making specific reference to this Agreement.
10. REMEDIES. If a party commits a material breach, or is about to commit
a material breach, of any of the provisions of this Agreement, the other
party shall have the right to have the provisions of this Agreement
specifically enforced by any court having equity jurisdiction without being
required to post bond or other security and without having to prove the
inadequacy of the available remedies at law, it being acknowledged and agreed
that any such breach or threatened breach will cause irreparable injury to
the non-breaching party and that the money damages will not provide an
adequate remedy to the non-breaching party. In addition, the non-breaching
party may take all such other actions and remedies available to it under law
or in equity and shall be entitled to such damages as it can show it has
sustained, by reason of such breach.
11. SURRENDER OF BOOKS AND RECORDS. Executive acknowledges that all
lists, books, records, literature, products and any other materials owned by
Employer or its subsidiaries or used by them in connection with the conduct
of their business, shall at all times remain the property of Employer and its
subsidiaries and that upon termination of employment hereunder, irrespective
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of the time, manner or cause of said termination, Executive will surrender to
Employer and its subsidiaries all such lists, books, records, literature,
products and other materials.
12. SEVERABILITY. If any provision of this Agreement or any other
agreement entered into pursuant to this Agreement is contrary to, prohibited
by or deemed invalid under applicable law or regulation, such provision shall
be inapplicable and deemed omitted to the extent so contrary, prohibited or
invalid, but the remainder of this Agreement shall not be invalidated thereby
and shall be given full force and effect so far as possible. If any
provision of this Agreement may be construed in two or more ways, one of
which would render the provision invalid or otherwise voidable or
unenforceable and another of which would render the provision valid and
enforceable, such provision shall have the meaning which renders it valid and
enforceable.
13. NOTICES. All notices, requests, consents and other communications
required or permitted under this Agreement shall be in writing (including
electronic transmission) and shall be (as elected by the person giving such
notice) hand delivered by messenger or courier service, electronically
transmitted, or mailed (airmail if international) by registered or certified
mail (postage prepaid), return receipt requested, addressed to:
If to Employer: With a copy to:
Todhunter International, Inc. Gunster, Yoakley, Valdes-Fauli & Stewart, P.A.
222 Lakeview Avenue 777 South Flagler Drive
Suite 1500 Suite 500, East Tower
West Palm Beach, Florida 33401 West Palm Beach, Florida 33401
(561) 655-8977 (561) 650-0553
Fax: (561) 655-9718 Fax: (561) 655-5677
Attn: Jay S. Maltby Attn: Michael V. Mitrione, Esq.
If to Employee:
A. Kenneth Pincourt, Jr.
222 Lakeview Ave
West Palm Beach, FL 33401
Telephone: 655-8977
Fax: 655-9718
or to such other address as any party may designate by notice complying with
the terms of this Section. Each such notice shall be deemed delivered (a) on
the date delivered if by personal delivery; (b) on the date of transmission
with confirmed answer back if by electronic transmission; and (c) on the date
upon which the return receipt is signed or delivery is refused or the notice
is designated by the postal authorities as not deliverable, as the case may
be, if mailed.
14. BINDING EFFECT. All of the terms and provisions of this Agreement
shall be binding upon, inure to the benefit of, and be enforceable by the
parties and their respective administrators, executors, legal
representatives, heirs, successors and permitted assigns, whether so
expressed or not.
15. WAIVER. The failure or delay of any party at any time to require
performance by another party of any provision of this Agreement, even if
known, shall not affect the right of such party to require performance of
that provision or to exercise any right, power or remedy under this
Agreement. Any waiver by any party of any breach of any provision of this
Agreement should not be construed as a waiver of any continuing or succeeding
breach of such provision, a waiver of the provision itself, or a waiver of
any right, power or remedy under this Agreement. No
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notice to or demand on any party in any circumstance shall, of itself,
entitle such party to any other or further notice or demand in similar or
other circumstances.
16. GOVERNING LAW. This Agreement and all transactions contemplated by
this Agreement shall be governed by, and construed and enforced in accordance
with, the laws of the State of Florida.
17. JURISDICTION AND VENUE. The parties acknowledge that a substantial
portion of the negotiations, anticipated performance and execution of this
Agreement occurred or shall occur in Palm Beach County, Florida. Any civil
action or legal proceeding arising out of or relating to this Agreement shall
be brought in the courts of record of the State of Florida in Palm Beach
County or the United States District Court, Southern District of Florida,
West Palm Beach Division. Each party consents to the jurisdiction of such
court in any such civil action or legal proceeding and waives any objection
to the laying of venue of any such civil action or legal proceeding in such
court. Service of any court paper may be effected on such party by mail, as
provided in this Agreement, or in such other manner as may be provided under
applicable laws, rules of procedure or local rules.
18. ENFORCEMENT COSTS. If any civil action, arbitration or other legal
proceeding is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default or misrepresentation in connection with any
provision of this Agreement, the successful or prevailing party or parties
shall be entitled to recover reasonable attorneys' fees, sales and use taxes,
court costs and all expenses even if not taxable as court costs (including,
without limitation, all such fees, taxes, costs and expenses incident to
arbitration, appellate, bankruptcy and post-judgment proceedings), incurred
in that civil action, arbitration or legal proceeding, in addition to any
other relief to which such party or parties may be entitled. Attorneys' fees
shall include, without limitation, paralegal fees, investigative fees,
administrative costs, sales and use taxes and all other charges billed by the
attorney to the prevailing party.
19. ENTIRE AGREEMENT. This Agreement represents the entire understanding
and agreement between the parties with respect to the subject matter of this
Agreement, and supersedes all other negotiations, understandings and
representations (if any) made by and between such parties (including, without
limitation, any and all prior employment agreements and all amendments
thereto between Executive and Employer).
20. SURVIVAL. The provisions of Sections 4, 5, 6 and 8 through 20 shall
survive any termination or expiration of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date and year first above written.
/s/ A. Kenneth Pincourt, Jr.
--------------------------------------
A. Kenneth Pincourt, Jr., Executive
TODHUNTER INTERNATIONAL, INC.
By: /s/ Jay S. Maltby
----------------------------------
Jay S. Maltby, President
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EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT (this "Agreement") is made this 15th day of July, 1999,
between Todhunter International, Inc., a Delaware corporation ("Employer"),
and D. Chris Mitchell ("Executive").
The parties hereto, in consideration of the mutual covenants contained
herein, agree upon the following terms of employment of Executive by
Employer:
1. EMPLOYMENT AND TERM. Subject to the terms and conditions herein,
Employer hereby employs Executive and Executive hereby accepts employment for
a five-year term commencing on the date hereof and ending at the close of
business on July 14th, 2004 (the "Employment Period"), unless sooner
terminated as hereinafter provided. The Employment Period shall continue
automatically for additional periods of one (1) year each under the same
terms and conditions unless either party shall have given written notice of
termination at least ninety (90) days before the end of the then current
term. All references herein to the Employment Period shall refer to both the
initial Employment Period and any such successive Employment Periods.
2. DUTIES. Executive shall serve as Senior Vice President - Sales of the
Employer. Executive shall perform the duties generally of a Senior Vice
President - Sales for Employer and shall have such specific responsibilities,
duties and authorities as shall from time to time be assigned by the Chief
Executive Officer or the Board of Directors of Employer ("Board of
Directors"). Executive shall devote substantially all of his working time
and efforts to the business and affairs of Employer and its subsidiaries.
Executive shall not be required to relocate his office or residence outside
of Palm Beach County, Florida.
3. COMPENSATION.
(A) SALARY. For all duties to be performed by Executive in any capacity
hereunder, Executive shall be paid an annual salary at a rate determined by
the Board of Directors of not less than $182,185 per year (the "Base Salary")
payable monthly or in such more frequent installments as Employer customarily
pays its other executives. The Board of Directors may authorize upward
compensation adjustments by way of salary, bonus or otherwise, as it deems
appropriate during the Employment Period or any extension hereof.
(B) BONUS. In addition to the Base Salary, Employer shall pay Executive
within sixty (60) days after the end of each fiscal year of Employer which
occurs during the Employment Period a cash bonus in an amount determined by
the Board of Directors but in no event less than $19,550 per year. The
amount of the bonus may exceed such amount to the extent earned in accordance
with performance targets, measurements and such other criteria as shall be
established for such fiscal year by the Board of Directors.
(C) VACATION. Executive shall be entitled each year to a reasonable
period of paid vacation.
(D) FRINGE BENEFITS. Executive shall be entitled to participate in or
receive benefits under any employee benefit plan or arrangement made
available by Employer or its subsidiaries in the future to its executives and
key management employees, subject to and on a basis consistent with the
terms, conditions and overall administration of such plans and arrangements.
(E) EXPENSES. It is understood that Executive will from time to time
incur reasonable expenses in conjunction with his employment. Employer will
promptly reimburse him for any such expenses of which he shall present a
signed itemized written account setting forth the amount and nature of each
such expenditure, and in addition, with respect to travel or entertainment,
the business purpose, the nature of discussions and other person or persons
involved and such other information as Employer may reasonably require;
provided that such
<PAGE>
expenses are incurred and accounted for in accordance with such other
policies and procedures then established by Employer.
4. TERMINATION. Unless otherwise agreed to in writing by Employer and
Executive, Executive's employment hereunder may be terminated under the
following circumstances, in addition to terminations pursuant to Section 5
hereof:
(A) DEATH. Executive's death.
(B) DISABILITY. If, as a result of Executive's incapacity due to physical
or mental illness (such incapacity being determined by the Board of Directors
in its sole reasonable discretion), Executive shall have been absent from his
full-time duties as described hereunder for the entire period of six (6)
consecutive months, Employer may terminate Executive's employment hereunder.
(C) CAUSE.
(1) Employer may terminate Executive's employment hereunder for Cause.
For purposes of this Agreement, "Cause" shall mean that (a) Executive is
convicted of a felony which, in the sole determination of the Board of
Directors, would have a material adverse effect on Executive's ability to
perform his duties hereunder or on the business or reputation of Employer;
(b) Executive has exhibited gross misconduct resulting in material harm to
Employer, its business or reputation; (c) Executive has willfully
misappropriated Employer assets or has otherwise willfully defrauded
Employer, including without limitation by fraud, theft, embezzlement, or
breach of a fiduciary duty involving personal profit; (d) Executive has
intentionally failed to perform his duties hereunder; or (e) Executive has
breached any provision of this Agreement. For the purposes of this Section
4(C)(1), no act or failure to act on Executive's part shall be considered
"willful" unless done, or omitted to be done, by him not in good faith and
without reasonable belief that his action or omission was in the best
interests of Employer.
(2) Notwithstanding the foregoing, any termination of Executive shall not
be considered a termination for Cause pursuant to this Section 4, and shall
be considered a termination Without Cause pursuant to Section 4(D) hereof, if
such termination is effected without: (a) reasonable notice to Executive
setting forth the reasons for Employer's intention to terminate for Cause;
(b) an opportunity for Executive, together with his counsel, to be heard
before the Board of Directors; and (c) delivery to Executive of a Notice of
Termination as provided for in Section 4(I) hereof from the Board of
Directors finding that in the good faith opinion of the Board of Directors,
Executive was guilty of conduct set forth above in the preceding sentence,
and specifying the particulars thereof in detail.
(D) WITHOUT CAUSE. Any termination of Executive by Employer (including
any action which is deemed a termination of Executive pursuant to Section
4(F) hereof), other than a termination pursuant to Sections 4(A)-4(C) hereof,
shall be deemed a termination Without Cause.
(E) TERMINATION BY EXECUTIVE. Executive may terminate this Agreement (1)
due to the Executive's retirement; provided that Executive provides Employer
with thirty (30) days written notice, pursuant to Section 4(I), prior to the
effective date of such retirement, as shall be stated in such notice, and (2)
for any reason other than Executive's retirement; provided that the Executive
provides Employer with sixty (60) days written notice prior to the effective
date of such termination, as shall be stated in such notice.
(F) OTHER EVENTS OF TERMINATION. The following circumstances shall
specifically be deemed a termination Without Cause of Executive's employment
by Employer:
2
<PAGE>
(1) a vote by the Board of Directors to terminate Executive Without Cause,
as defined in Section 4(D) hereof;
(2) any termination of Executive's employment which is not effected
pursuant to a Notice of Termination satisfying the requirements of Section
4(I) hereof;
(3) a breach by Employer of this Agreement, and a subsequent election by
Executive to terminate this Agreement pursuant to Section 4(E) above; or
(4) the performance of any other act by Employer which is designed to
prevent and does prevent Executive from properly performing the authorities,
duties and responsibilities of his employment hereunder, including without
limitation a material change in the duties or position of Executive within
Employer.
(G) PAYMENTS IF WITHOUT CAUSE. If Executive's employment is terminated
for any reason pursuant to Section 4(D) hereof, Employer shall continue to
pay Executive his Base Salary and bonus in accordance with and at such times
specified in Sections 3(A) and 3(B) and provide the benefits pursuant to
Section 3(E) for the greater of: (1) one (1) year from the Date of
Termination, or (2) the balance of the Employment Period. In addition, the
vesting schedules, if any, under all stock options held by Executive shall
continue to run to the maximum extent permitted by applicable law.
(H) PAYMENTS UNDER OTHER TERMINATIONS. If Executive's employment is
terminated pursuant to Sections 4(A), 4(B), 4(C) or 4(E) hereof, on and after
the Date of Termination Employer shall no longer be obligated to pay
Executive any amounts payable hereunder for such period, whether in the form
of Base Salary, bonus or otherwise, and Executive shall have no right to
compensation or other benefits hereunder for any such period.
Notwithstanding the foregoing, Employer shall be obligated to pay to
Executive all amounts payable hereunder and otherwise, through and including
the Date of Termination, whether such amounts were payable prior to the date
of termination or thereafter, and Executive shall be entitled to receive any
extension of benefits beyond the Date of Termination, provided that (1) such
benefits were received by Executive prior to the Date of Termination and (2)
such extension is customarily offered by Employer to its employees or is
otherwise required by applicable law.
(I) NOTICE OF TERMINATION. Any termination of Executive's employment by
Employer or by Executive (other than termination pursuant to Section 4(A)
hereof) shall be communicated by written Notice of Termination to the other
party hereto. For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall (1) indicate the specific termination
provision in this Agreement relied upon; (2) set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of
Executive's employment under the provision so indicated; and (3) contain any
other information required by this Agreement.
(J) EFFECTIVE DATE OF TERMINATION. For purposes of this Section 4, "Date
of Termination" shall mean: (1) if Executive's employment is terminated by
his death, the date of his death; (2) if Executive's employment is terminated
pursuant to Section 4(B) hereof, the termination date stated in the written
notice sent by Employer after the expiration of six (6) consecutive months of
Executive's incapacity due to physical or mental illness, as set forth in
Section 4(B) hereof (provided that Executive shall not have returned to the
performance of his duties on a full-time basis during such six (6) month
period); (3) if Executive's employment is terminated pursuant to Sections
4(C) or 4(D) hereof, the date that the Notice of Termination is communicated
to Executive pursuant to Section 4(I) hereof; (4) if Executive's employment
is terminated pursuant to Section 4(E) hereof, the termination date stated in
the written notice received by Employer; or (5) if deemed terminated pursuant
to Section 4(F) hereof, the date of such action which is deemed a termination
of Executive by Employer.
3
<PAGE>
5. TERMINATION OF EMPLOYMENT UPON CHANGE OF CONTROL.
(A) CERTAIN DEFINITIONS.
(1) "Change of Control" shall mean:
(a) The acquisition by any person, entity or "group" required to file a
Schedule 13D or Schedule 14D-1 promulgated under the Securities Exchange Act
of 1934 (the "Exchange Act") (excluding, for this purpose, A. Kenneth
Pincourt, Jr., Employer, its subsidiaries, or any employee benefit plan of
Employer, or its subsidiaries which acquires beneficial ownership of voting
securities of Employer, including shares acquired pursuant to the exercise of
options or warrants, or conversion of preferred stock outstanding as of the
date hereof) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of over 25% (in one or more transactions,
in the aggregate) of either the then outstanding shares of common stock or
the combined voting power of Employer's then outstanding voting securities
entitled to vote generally in the election of directors; or
(b) An election or appointment to the Board of Directors by virtue of
which the individuals who immediately prior thereto constituted the Board of
Directors (the "Incumbent Board") no longer constitute at least a majority of
the Board of Directors, provided that any person who becomes a director
subsequent to the date hereof whose election, or nomination for election by
Employer's stockholders, was approved by a vote of at least a majority of the
Incumbent Board (other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the Directors of Employer, as
such terms are used in Rule 14a-1 promulgated under the Exchange Act) shall
be, for purposes of this Agreement, considered as though such person were a
member of the Incumbent Board; or
(c) Approval by the stockholders of Employer of: (i) a reorganization,
merger or consolidation by reason of which persons who were the stockholders
of Employer immediately prior to such reorganization, merger or consolidation
do not, immediately thereafter, own more than fifty percent (50%) of the
combined voting power entitled to vote generally in the election of directors
of the reorganized, merged or consolidated company's then outstanding voting
securities, or (ii) a liquidation or dissolution of Employer or the sale of
all or substantially all of the assets of Employer (whether such assets are
held directly or indirectly).
(2) "Date of Termination", for the purposes of this Section 5, means the
date of receipt by Executive of a notice of termination of employment from
Employer or any later date specified therein, or the date Executive delivers
a letter of resignation to Employer.
(3) The "Effective Date" shall be the date on which a Change of Control
occurs. Anything in this Agreement to the contrary notwithstanding, if
Executive's employment with Employer is terminated prior to the date on which
a Change of Control occurs, and it is reasonably demonstrated that such
termination (a) was at the request of a third party who has taken steps
reasonably calculated to effect a Change of Control or (b) otherwise arose in
connection with or anticipation of a Change of Control, then for all purposes
of this Agreement the "Effective Date" shall mean the date immediately prior
to the date of such termination.
(B) OBLIGATIONS OF EMPLOYER UPON TERMINATION. If within one (1) year
following the Effective Date of a Change of Control, Executive's employment
is deemed terminated Without Cause, Employer shall pay to Executive in a lump
sum in cash within thirty (30) days after the Date of Termination to the
extent not theretofore paid, Executive's compensation (including bonuses) and
fringe benefits, at the rate in effect on the Date of Termination, through
the remaining Employment Period, BUT NOT less than two (2) times the annual
compensation (including bonuses) and fringe benefits (except that Executive,
at his option, may choose to continue to
4
<PAGE>
have he and his family covered, to the extent they are then covered, by
Employer's health plan in lieu of receiving a lump sum payment for that
benefit, and Employer shall use reasonable efforts to cooperate in such
event); provided that the payment under this subsection (B) shall be reduced
to the extent required so that such payment, either alone or together with
other payments which Executive has the right to receive from Employer, shall
not be an excess parachute payment within the meaning of Section 280G(b) of
the Internal Revenue Code of 1986, as amended (the "Code"), and the
regulations promulgated thereunder, or successor provisions of similar
import. The determination of any reduction shall be made by the independent
certified public accountants of Employer.
(C) NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or
limit Executive's continuing or future participation in any benefit, bonus,
incentive or other plans, programs, policies or practices provided by
Employer or its subsidiaries and for which Executive may qualify, nor shall
anything herein limit or otherwise affect such rights as Executive may have
under any stock option or other agreements with Employer or any of its
subsidiaries. Amounts which are vested benefits or which Executive is
otherwise entitled to receive under any plan, policy, practice or program of
Employer or any of its subsidiaries at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy, practice
or program; provided that the vesting schedules, if any, under all stock
options held by Executive shall continue to run to the maximum extent
permitted by applicable law.
6. CONFIDENTIALITY.
(A) In the course of his employment, Employer or any of its subsidiaries
may disclose or make known to Executive, and Executive may be given access to
or may become acquainted with, certain information, trade secrets or both,
including but not limited to confidential information and trade secrets
regarding tapes, computer programs, designs, skills, procedures,
formulations, methods, documentation, drawings, facilities, customers,
policies, marketing, pricing, customer lists and leads, and other information
and know-how, all relating to or useful in Employer's business or the
business of its subsidiaries and/or affiliates (collectively, the
"Information"), and which Employer considers proprietary, desires to maintain
confidential and is not in the public domain. During the Employment Period
and at all times thereafter, Executive shall not in any manner, either
directly or indirectly, divulge, disclose or communicate to any person or
firm, except to or for Employer's benefit as directed by Employer or except
as required by applicable law or court process (but only after giving
Employer written notice so that Employer may attempt to obtain a protective
order), any of the Information which he may have acquired in the course of or
as an incident to his employment by Employer, the parties agreeing that such
information affects the successful and effective conduct of Employer's
business and its goodwill, and that any breach of the terms of this Section 6
is a material breach of this Agreement.
(B) All equipment, documents, memoranda, reports, records, files,
materials, samples, books, correspondence, lists, other written and graphic
records, and the like (collectively, the "Materials") affecting or relating
to the business of Employer or of its subsidiaries and/or affiliates, which
Executive shall prepare, use, construct, observe, possess or control shall be
and remain Employer's sole property or in Employer's exclusive custody, and
must not be removed from the premises of Employer except as directed by
Employer's Board of Directors in writing. Promptly upon termination of the
Agreement or Executive's employment hereunder for any reason, or otherwise
upon request of the Chief Executive Officer of Employer, the Information, the
Materials and all copies thereof in the custody or control of Executive shall
be delivered to Employer.
7. RESTRICTIVE COVENANT. During the Employment Period, Executive will
not, directly or indirectly:
5
<PAGE>
(A) engage in any trade or business directly competitive with that of any
of Employer or any of its subsidiaries, anywhere in the United States or such
other country or countries in which Employer actively engages in its trade or
business as of the Date of Termination ("Territory");
(B) become associated as a manager, supervisor, employee, consultant,
advisor, control shareholder (either individually or as part of an affiliated
group), or otherwise of any person, corporation or entity engaging in any
trade or business directly competitive with those of Employer or any of its
subsidiaries anywhere in the Territory;
(C) call upon any client or clients of Employer or any of its subsidiaries
for the purpose of selling or soliciting for any person, corporation or
entity, other than any of Employer or its subsidiaries, sales of any
products, processes, or services directly competitive with those of Employer
or any of its subsidiaries within the Territory;
(D) divert, solicit or take away any such client or clients of Employer or
any of its subsidiaries for the purpose of selling any products or services
directly competitive with those of Employer or any of its subsidiaries; and
service any contracts or accounts relating to any products or services
directly competitive with those of Employer or any of its subsidiaries for
any person, corporation or entity other than Employer or any of its
subsidiaries; or
(E) induce, influence, combine or conspire with, or attempt to induce,
influence, combine or conspire with, any of the officers or employees of
Employer or any of its subsidiaries to terminate his or her employment with
or to directly compete against Employer or any of its subsidiaries;
provided, however, that nothing herein shall be deemed to preclude Executive
from owning less than five percent (5%) of the outstanding capital stock of
any company whose stock is traded on an established stock exchange or quoted
on Nasdaq. Should any of the time periods or the geographic area set forth
in this Section 7 be held to be unreasonable by any court of competent
subject matter jurisdiction, the parties hereto agree to petition such court
to reduce the time period or geographic area to the maximum permitted by
governing law.
8. ASSIGNMENTS. No party shall assign his or its rights or obligations
under this Agreement without the prior written consent of the other party to
this Agreement.
9. AMENDMENTS. The provisions of this Agreement may not be amended,
supplemented, waived or changed orally, but only by a writing signed by the
party as to whom enforcement of any such amendment, supplement, waiver or
modification is sought and making specific reference to this Agreement.
10. REMEDIES. If a party commits a material breach, or is about to commit
a material breach, of any of the provisions of this Agreement, the other
party shall have the right to have the provisions of this Agreement
specifically enforced by any court having equity jurisdiction without being
required to post bond or other security and without having to prove the
inadequacy of the available remedies at law, it being acknowledged and agreed
that any such breach or threatened breach will cause irreparable injury to
the non-breaching party and that the money damages will not provide an
adequate remedy to the non-breaching party. In addition, the non-breaching
party may take all such other actions and remedies available to it under law
or in equity and shall be entitled to such damages as it can show it has
sustained, by reason of such breach.
11. SURRENDER OF BOOKS AND RECORDS. Executive acknowledges that all
lists, books, records, literature, products and any other materials owned by
Employer or its subsidiaries or used by them in connection with the conduct
of their business, shall at all times remain the property of Employer and its
subsidiaries and that upon termination of employment hereunder, irrespective
6
<PAGE>
of the time, manner or cause of said termination, Executive will surrender to
Employer and its subsidiaries all such lists, books, records, literature,
products and other materials.
12. SEVERABILITY. If any provision of this Agreement or any other
agreement entered into pursuant to this Agreement is contrary to, prohibited
by or deemed invalid under applicable law or regulation, such provision shall
be inapplicable and deemed omitted to the extent so contrary, prohibited or
invalid, but the remainder of this Agreement shall not be invalidated thereby
and shall be given full force and effect so far as possible. If any
provision of this Agreement may be construed in two or more ways, one of
which would render the provision invalid or otherwise voidable or
unenforceable and another of which would render the provision valid and
enforceable, such provision shall have the meaning which renders it valid and
enforceable.
13. NOTICES. All notices, requests, consents and other communications
required or permitted under this Agreement shall be in writing (including
electronic transmission) and shall be (as elected by the person giving such
notice) hand delivered by messenger or courier service, electronically
transmitted, or mailed (airmail if international) by registered or certified
mail (postage prepaid), return receipt requested, addressed to:
If to Employer: With a copy to:
Todhunter International, Inc. Gunster, Yoakley, Valdes-Fauli & Stewart, P.A.
222 Lakeview Avenue 777 South Flagler Drive
Suite 1500 Suite 500, East Tower
West Palm Beach, Florida 33401 West Palm Beach, Florida 33401
(561) 655-8977 (561) 650-0553
Fax: (561) 655-9718 Fax: (561) 655-5677
Attn: A. Kenneth Pincourt, Jr. Attn: Michael V. Mitrione, Esq.
If to Employee:
D. Chris Mitchell
18894 Loblolly Bay Ct.
Jupiter, FL 33458
Telephone:(561) 743-7861
Fax:____________________
or to such other address as any party may designate by notice complying with
the terms of this Section. Each such notice shall be deemed delivered (a) on
the date delivered if by personal delivery; (b) on the date of transmission
with confirmed answer back if by electronic transmission; and (c) on the date
upon which the return receipt is signed or delivery is refused or the notice
is designated by the postal authorities as not deliverable, as the case may
be, if mailed.
14. BINDING EFFECT. All of the terms and provisions of this Agreement
shall be binding upon, inure to the benefit of, and be enforceable by the
parties and their respective administrators, executors, legal
representatives, heirs, successors and permitted assigns, whether so
expressed or not.
15. WAIVER. The failure or delay of any party at any time to require
performance by another party of any provision of this Agreement, even if
known, shall not affect the right of such party to require performance of
that provision or to exercise any right, power or remedy under this
Agreement. Any waiver by any party of any breach of any provision of this
Agreement should not be construed as a waiver of any continuing or succeeding
breach of such provision, a waiver of the provision itself, or a waiver of
any right, power or remedy under this Agreement. No
7
<PAGE>
notice to or demand on any party in any circumstance shall, of itself,
entitle such party to any other or further notice or demand in similar or
other circumstances.
16. GOVERNING LAW. This Agreement and all transactions contemplated by
this Agreement shall be governed by, and construed and enforced in accordance
with, the laws of the State of Florida.
17. JURISDICTION AND VENUE. The parties acknowledge that a substantial
portion of the negotiations, anticipated performance and execution of this
Agreement occurred or shall occur in Palm Beach County, Florida. Any civil
action or legal proceeding arising out of or relating to this Agreement shall
be brought in the courts of record of the State of Florida in Palm Beach
County or the United States District Court, Southern District of Florida,
West Palm Beach Division. Each party consents to the jurisdiction of such
court in any such civil action or legal proceeding and waives any objection
to the laying of venue of any such civil action or legal proceeding in such
court. Service of any court paper may be effected on such party by mail, as
provided in this Agreement, or in such other manner as may be provided under
applicable laws, rules of procedure or local rules.
18. ENFORCEMENT COSTS. If any civil action, arbitration or other legal
proceeding is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default or misrepresentation in connection with any
provision of this Agreement, the successful or prevailing party or parties
shall be entitled to recover reasonable attorneys' fees, sales and use taxes,
court costs and all expenses even if not taxable as court costs (including,
without limitation, all such fees, taxes, costs and expenses incident to
arbitration, appellate, bankruptcy and post-judgment proceedings), incurred
in that civil action, arbitration or legal proceeding, in addition to any
other relief to which such party or parties may be entitled. Attorneys' fees
shall include, without limitation, paralegal fees, investigative fees,
administrative costs, sales and use taxes and all other charges billed by the
attorney to the prevailing party.
19. ENTIRE AGREEMENT. This Agreement represents the entire understanding
and agreement between the parties with respect to the subject matter of this
Agreement, and supersedes all other negotiations, understandings and
representations (if any) made by and between such parties (including, without
limitation, any and all prior employment agreements and all amendments
thereto between Executive and Employer).
20. SURVIVAL. The provisions of Sections 4, 5, 6 and 8 through 20 shall
survive any termination or expiration of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date and year first above written.
/s/ D. Chris Mitchell
--------------------------------------
D. Chris Mitchell, Executive
TODHUNTER INTERNATIONAL, INC.
By: /s/ A. Kenneth Pincourt, Jr.
----------------------------------
A. Kenneth Pincourt, Jr.
Chief Executive Officer
8
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the December 16, 1993
Registration Statement on Form S-8 (Registration No. 33-73018) and in the July
9, 1996 Registration Statement on Form S-8 (Registration No. 333-07827) of our
report, dated November 24, 1999, which appears in the annual report on Form 10-K
of Todhunter International, Inc. for the year ended September 30, 1999.
/s/ McGladrey & Pullen, LLP
West Palm Beach, Florida
December 15, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TODHUNTER
INTERNATIONAL INC'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED
SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> SEP-30-1999
<CASH> 5,265,318
<SECURITIES> 2,547,365
<RECEIVABLES> 14,477,799
<ALLOWANCES> 0
<INVENTORY> 23,011,883
<CURRENT-ASSETS> 49,570,833
<PP&E> 75,872,791
<DEPRECIATION> 36,098,763
<TOTAL-ASSETS> 97,167,246
<CURRENT-LIABILITIES> 13,325,317
<BONDS> 28,000,000
0
0
<COMMON> 56,129
<OTHER-SE> 51,136,965
<TOTAL-LIABILITY-AND-EQUITY> 97,167,246
<SALES> 76,733,147
<TOTAL-REVENUES> 76,733,147
<CGS> 53,000,012
<TOTAL-COSTS> 53,000,012
<OTHER-EXPENSES> 14,127,821
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,607,706
<INCOME-PRETAX> 5,997,608
<INCOME-TAX> 1,457,672
<INCOME-CONTINUING> 4,539,936
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,539,936
<EPS-BASIC> 0.91
<EPS-DILUTED> 0.91
</TABLE>
