SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For fiscal year ended July 31, 1995 Commission File No. 0-5767
LINCOLN INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
Kentucky 61-057092
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Suite No. 6, 120 Village Square
Louisville, Kentucky 40243
Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (502)245-8814
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each
exchange on which
registered
none none
Securities registered pursuant to Section 12(g) of the Act:
Common Stock (no-par) voting
Title of class
Common Stock (no-par) non-voting
Title of class
Indicate by check mark whether the Registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
State the aggregate market value of the voting stock held
by non-affiliates of the Registrant. The aggregate market value
shall be computed by reference to the price at which the stock was
sold, or the average bid and asked prices of such stock, as of a
specified date within 60 days prior to the date of filing.
No regular market exists for either class of stock.
Indicate the number of shares outstanding of each of the
Registrant's classes of common stock, as of the July 31, 1995.
Common (voting) 100,000 Common (non-voting) 1,532,320
DOCUMENTS INCORPORATED BY REFERENCE
(1) Annual Report-- 1994-1995
(2) Information Statement--1995
Portions of the above Annual Report and Information
Statement to be issued are hereby incorporated by reference into
Parts II and III.
PART I
ITEM 1: Business
LINCOLN INTERNATIONAL CORPORATION (LINCOLN), incorporated
in 1960, is engaged in the management of agricultural properties
(Bourbon Stock Yard).
AGRI-BUSINESS:
BOURBON STOCK YARD COMPANY (BOURBON)
BOURBON has been in continuous operation for 160 years
and was merged into LINCOLN in 1978.
LINCOLN INTERNATIONAL entered into a lease agreement with
Kentucky Livestock Exchange, a division of Michigan Livestock
Exchange, a Michigan corporation, wherein, LINCOLN leased its
stockyards operations consisting of approximately seven acres with
the term of the lease being for a period of 10 years beginning on
July 15th, 1995, and ending on July 14th, 2005, with provisions for
payment of rent based on monthly pre-tax profits with a minimum
rent provision of $18,000.00 for the first two years. The lease
agreement is based primarily on the number of head of farm animals
similar to that type of revenue received prior to the execution of
the lease. (See Part IV, Item 14(6) as to the attachment of the
lease provisions herein.)
Prior to the lease agreement of July 15th, 1995,
Lincoln's business consists of that of normal stock yard operations
of handling, receiving, shipping and reshipping, transferring and
yarding of all common types of livestock including cows, feeder
cattle, hogs, feeder pigs, slaughter cattle and sheep and other
related stock yard activities at Louisville, Kentucky (among the
largest in Kentucky). The following schedule sets forth the amount
of receipt of farm animals during the last three (3) fiscal years.
Since sheep are of such a small number, they are not included
within the receipts comparison.
1993 1994 1995
Feeder cattle 143,964 137,676 132,184
Slaughter cattle 52,927 52,252 50,745
Hogs 51,101 47,664 45,875
Feeder pigs 14,440 11,532 11,390
Most of the animals received come from the Kentucky-
Indiana area. There are numerous other smaller yards which provide
little or no competition to BOURBON.
Income is determined by the number of animals handled and
poor market prices, weather conditions or disease over an extended
period of time could materially affect the number of animals
handled and thus affect its income. The animals are supplied by
many farmers, none of which account for any material portion of the
supply. See Item 7 of Part II herein.
BOURBON is subject to the rules and regulations of and
must file (publicly available) reports with, the Interstate
Commerce Commission (ICC) and the United States Department of
Agriculture (USDA). BOURBON'S disposal of its waste materials is
in compliance with federal, state and local environmental laws.
FINANCE BUSINESS:
LINCOLN FINANCE COMPANY, INC. (LINCOLN FINANCE)
LINCOLN INTERNATIONAL sold its last remaining finance
office on December 1st, 1994, and therefore, as of the end of its
fiscal year, July 31st, 1995, was a participant in no finance
company operations.
Prior to the sale of that finance office, the following
represents the business of the Registrant in reference to its
LINCOLN FINANCE business.
LINCOLN FINANCE was organized and incorporated in 1960
and finances consumer and other related small loan company
activities throughout the Commonwealth of Kentucky and as of
July 31, 1994, had one (1) office. Lincoln Finance did finance all
of its loans from its own capital.
There were approximately five hundred eighty-one (581)
loans. The average loan is approximately one thousand one hundred
seventy ($1,170.00) Dollars with a normal maturity of twenty-four
(24) months. LINCOLN had experienced a loan loss of approximately
three (3%) percent of its loans and a delinquent rate of
approximately six (6%) percent which compares favorably with those
in the industry. See Item 7 of Part II herein.
LINCOLN FINANCE was in direct competition with numerous
other small loan companies, some of which may have more experience
and possess greater financial resources. LINCOLN FINANCE was
licensed and regulated by the Kentucky Department of Banking in its
rates of interest, size of loans, and other aspects of its
operations as of December 1, 1994.
EMPLOYEES:
As of July 31, 1995, LINCOLN employed four (4)
administrative personnel.
MAJOR BUSINESS SEGMENTS - FINANCIAL DATA
The following is a report of the major business segments
and the corresponding financial data.
Prior to July 31, 1995, the Company considered its
activities to comprise two segments: (1) financial lending and
(2) agribusiness. After July 31, 1995, the company operated only
an agribusiness. Summary data for 1995, 1994 and 1993 is as
follows:
1995 % 1994 % 1993 %
Revenues:
Finance $58,625 4 $180,462 12 $182,089 12
Agribusiness 1,296,663 95 1,316,632 87 1,303,996 87
Other 6,884 1 10,164 1 11,420 1
Consolidated $1,362,172 $1,507,258 $1,497,505
Operating profit (loss):
Finance $-15,243 $31,848 $23,204
Agribusiness 161,081 132,454 95,117
Total segments 145,838 164,302 118,321
Corporate and other
expenses -246,312 -135,238 -133,261
Income (loss) from
operations -100,474 29,064 -14,940
Nonoperating income 123,082 2,452 326
Interest expense -104,336 -100,519 -90,722
Loss before income
taxes $-81,728 $-69,003 $-105,336
Total assets:
Finance $491 0 $545,209 28 $554,569 27
Agribusiness 1,283,533 79 1,333,934 68 1,389,036 69
Total segments 1,284,024 1,879,143 1,943,605
Corporate and other 339,342 21 80,426 4 94,191 4
Consolidated $1,623,366 $1,959,569 $2,037,796
Capital expenditures:
Finance $0 $0 $0
Agribusiness 5,215 8,639 63,169
Total segments 5,215 8,639 63,169
Corporate and other 695 2,565 3,196
Consolidated $5,910 $11,204 $66,365
Depreciation and
amortization:
Finance $286 $832 $879
Agribusiness 57,118 55,726 54,652
Total segments 57,404 56,558 55,531
Corporate and other 10,423 15,974 19,352
Consolidated $67,827 $72,532 $74,883
ITEM 2: Properties
The following are the various properties owned or
leased by LINCOLN as of July 31, 1995.
APPROXIMATE LEASE EXPI-
TYPE OF SQUARE FEET RATION DATE
LOCATION PROPERTY FLOOR SPACE (RENEWAL
OPTIONS)
LINCOLN ADMINISTRATIVE OFFICES
Louisville, KY Offices 2,600.0 ft. 04/01/96
* * * * * * * * *
BOURBON STOCK YARD
Louisville, KY Stock yard 32,576.0 ft. Owned
real estate 20.2 acres
& buildings
Louisville, KY Right-of-way NA 1995 (1)
for stock yard
Louisville, KY Warehouse 4,000.0 ft. Owned
Louisville, KY Warehouse 9,000.0 ft. Owned
* * * * * * * * *
(1) The right-of-way is not essential to Bourbon's operations
but does provide an easier access and egress from the facility.
* * * * * * * * *
The properties listed above are suitable and adequate
for the various needs they supply.
The total fixed annual rental for all of the above
leased facilities (exclusive of taxes and other charges) was
$14,450.
ITEM 3: Legal Proceedings
Neither LINCOLN nor any of its subsidiaries is engaged
in any material legal proceedings.
ITEM 4: Submission of Matters to a Vote of Security Holders
The only item to be voted on at the annual meeting
which will be held on the 8th day of December, 1995, is the
election of directors. See Part III, Item 10.
PART II
ITEM 5: Market for Registrant's Common Stock and Related
Stockholder Matters
(1) There does not exist at the present time any
regular market for any common stock of the Registrant, either the
voting or non-voting.
(2) There are approximately 1,800 shareholders of
record of the common non-voting stock of LINCOLN. There are
approximately 61 shareholders of record of the voting stock of
LINCOLN.
(3) The Registrant has never paid or declared any
dividends.
(4) The Registrant has filed a Schedule 13E-3 with the
Securities and Exchange Commission as a "Tender Offer" wherein it
will propose to purchase a maximum of 1,000,000 shares of the
(no-par) (non-voting) common stock for a tender price of thirty-
five ($.35) cents per share. Reference is made to that filing
for specific information and is incorporated by reference herein.
ITEM 6: Selected Financial Data
Years ending July 31
1995 1994 1993 1992 1991
Revenues 1362172 1507258 1497505 1517356 1892870
Income (loss) before
extraordinary items -87968 -73394 -105336 70167 -224105
Net income (loss) -87968 -73394 -105336 70167 -224105
Earnings (loss) per
common share:
Income (loss) before
extraordinary items -.05 -.04 -.07 .04 -.14
Net income (loss) -.05 -.04 -.07 .04 -.14
Cash dividends 0 0 0 0 0
Total assets 1623366 1959569 2037796 2095261 3386107
Long-term obligations 733640 819788 871068 888814 871697
ITEM 7: Management's Discussion and Analysis of Financial
Condition and Results of Operations
Agri-Business:
Bourbon Stock Yard
The revenues of Bourbon Stock Yard are based primarily
on the number of livestock handled during the year. The number
of livestock handled fluctuates by the cash price being paid for
livestock, and various factors which influence farming
conditions. Operating costs generally are influenced directly by
the number of livestock received since additional labor is
required to handle additional cattle.
Over the past six (6) years Bourbon has averaged
approximately 196,000 head of cattle per year. No year during
the period has been over 7,000 head more or less than the
average. The on farm inventory of cattle and calves in Kentucky
at January 1, 1995 was the largest in 10 years, however, it was
only up slightly over 1994 inventories. Hog inventories continue
to decline in Kentucky as evidenced by a 7% decline as of January
1, 1995 as compared to 1994. During fiscal 1995 Bourbon handled
approximately 48,000 hogs, which was approximately the same as in
1994.
Net revenue from Stock Yard operations decreased by
approximately $12,000 or 1% from the fiscal year ended July 31,
1994. This decrease in revenue was the result of decreased
receipts of feeder and slaughter cattle during the year. During
the year there was a decrease in the number of cattle received of
approximately 2,000 head.
Net revenue from Stock Yard operations increased by
approximately $13,000 or 1% from the fiscal year ended July 31,
1993. This increase in revenue was the result of increased
receipts from feed and truck wash services. During the year
there was a decrease in the number of cattle received of 7,000
head and 4,000 hogs, however, a tariff increase in the third
quarter of the previous year made up the monetary difference.
Operating costs for the year ended July 31, 1995, were
down approximately $40,000 or 4% as compared to 1994. The
primary decrease in cost was the result of decreased cost of
utilities and lost or stolen cattle.
Operating costs for the year ended July 31, 1994, were
down approximately $25,000 or 2% as compared to 1993. The
primary decrease in cost was the result of decreased cost of
labor. Utility and repairs cost increased during the period by
approximately $32,000 during the period.
Inflation is expected to account for an increase of
approximately 3% - 4% in operating costs for goods and services
purchased during the next fiscal year.
During the last month of the fiscal year Lincoln
entered into an agreement with Michigan Livestock Exchange
whereby Michigan Livestock Exchange leased the Bourbon
operations. Under the provisions of the lease Bourbon should be
profitable during 1996.
The Stock Yard has approximately $61,000 in accounts
payable and accrued liabilities, which is within its cash flow
ability to handle these obligations as they become due. Bourbon
does not have any capital commitments at July 31, 1995. All
funds in excess of expenses are available to the parent.
FINANCE
LINCOLN FINANCE CO.
During the second quarter of the fiscal year Lincoln
sold its remaining small loan office and reported a gain on the
sale of approximately $117,000. This part of Lincoln is now
inactive.
CONSOLIDATED OPERATIONS
Revenues from consolidated operations in 1995 decreased
approximately $145,000 or 10% as compared to 1994. This decrease
is primarily in the reduced revenue in the finance division.
Revenues from consolidated operations in 1994 increased
approximately $10,000 or 1% as compared to 1993. This increase
is primarily in additional sales of feed and incidental items at
Bourbon in fiscal 1994.
Operating costs for the year ended July 31, 1994 were
down approximately $15,000 or 1% as compared to 1994. The
primary area of savings was in utilities.
Operating costs for the year ended July 31, 1994 were
down approximately $27,000 or 1% as compared to 1993. The
primary area of savings was in salaries and wages.
Operating costs, which include amortization and
depreciation account for 114%, 105%, and 107% of net sales and
operating revenues for the years 1995 to 1993 respectively.
The company did not have any capital commitments at
July 31, 1995.
Working Capital at July 31, 1995 was approximately a
negative $117,000 as compared to a working capital position of
approximately a negative $59,000 at July 31, 1994. There were no
defaults on loans payable during the year. The liquidity of the
Company will depend on the lease arrangement with Michigan
Livestock Exchange and the development of the remaining property
owned by the Company.
ITEM 8: Consolidated Financial Statements and Supplementary Data
The response to this item is contained within a
separate section of this report.
ITEM 9: Changes in and Disagreements with Accountants
None.
ITEM 10:
NAME, PRINCIPAL OCCUPATION
AND OTHER POSITIONS WITH DIRECTORS SHARES OWNED AS OF 07/31/95
LINCOLN FOR LAST 5 YEARS SINCE VOTING % NON-VOTING %
Thurman L. Sisney,
President and CEO
Director, Age 49 1994 91,463(1) 91.46% 287,428 18.00%
Charles L. Hamilton
Chairman of Board and
Director, Age 69 1994 91,463(1) 91.46% 287,428 18.00%
Ronald Osborn, 100 .10% 66 .001%
Secretary/Treasurer of
Lincoln International
Corp, Age 56 _______________________________
Officers & Directors as a group 91,563 91.56% 287,494 18.00%
(1) Includes shares held in names of Drivers and
Drovers Diversified, Inc., a Kentucky corporation owned by
Thurman L. Sisney and Charles L. Hamilton.
Management has no reason to believe that any of the
persons so named above will be unable or unavailable to accept
nominations but should this occur, votes will be given for such
other person or persons, if any, as the Board of Directors may
recommend.
BUSINESS HISTORY OF DIRECTORS
Thurman L. Sisney - Mr. Sisney is President, and Chief
Executive Officer of Lincoln International Corporation. Mr.
Sisney has a masters degree in business administration and law
degree from the University of Louisville and has been in private
practice since 1980. He has served as general counsel to the
Kentucky Finance and Administration Cabinet as well as counsel
and legislative liaison to the governor of Kentucky. Mr. Sisney
has also served as General Counsel and Deputy Commissioner of
Agriculture and the Kentucky Department of Agriculture. Mr.
Sisney is very active in civic and charitable organizations in
the community including but not limited to the board of trustees
of the Louisville Conference of the United Methodist Church,
Founder and President of the International Association of
Convention and Hospitality and Industry Attorney's Association.
Charles L. Hamilton - Mr. Hamilton is Chairman of the
Board of Directors of Lincoln International Corporation. Mr.
Hamilton has a bachelor of science degree in agriculture from the
University of Kentucky. He currently serves as president of
Continental Industries, Inc. and is Vice-President of the Bullitt
County Bank. He is serving on the board of supervision of the
Bullitt County Soil Conservation District and has been a leader
in agriculture for the Commonwealth of Kentucky. In 1994, he was
inducted into the University of Kentucky Animal Science Hall of
Fame and was chosen as man of the year by "Progressive Farmer"
for distinguished service to the Kentucky Association of
Conservation District. He has been recognized for outstanding
service to Kentucky Pork Producers and the Louisville Agriculture
Club as well as being recognized as distinguished alumni from
University of Kentucky College of Agriculture. Mr. Hamilton has
also served in 1991 to 1992 as Commissioner of Agriculture for
the Kentucky Department of Agriculture and has served as chairman
of the Kentucky Agriculture Resource Development Authority and
State Advisory Board Task Force on Agriculture. Mr. Hamilton has
also served in various civic activities including being president
of the Bullitt County Chamber of Commerce.
ITEM 11:
The directors received no compensation for 1994-1995.
ITEM 12 and ITEM 13:
LINCOLN intends to file an Information Statement
pursuant to Regulation 14(c) which contains all of the
information required by Part III which information is
incorporated herein by reference.
PART IV
ITEM 14: Exhibits, Financial Statement Schedules and Reports on
Form 8-K
Part IV which relates to Item 14 concerning exhibits,
financial statement schedules and reports is hereby amended to
include the following items by reference.
(3) Articles of Incorporation and By-Laws: The
articles and by-laws of Lincoln International Corporation were
filed as a part of its Form 10 filing in September of 1971.
(10) Material Contracts: A copy of a contract for the
sale of corporate assets between Farmers Friend Mineral Company,
Inc., a Kentucky corporation, and wholly owned subsidiary of the
Registrant, et al., to Music City Supplement Company, Inc., dated
the 16th day of September, 1986, effective September 15, 1986.
(3) A copy of a contract dated February 25, 1987,
between Lincoln International Corporation (Registrant) and
Continental Industries for the sale of inventory relating to
LINCO Shell Products and retention of certain trade names or
trademarks, a part of the agribusiness of Lincoln International
Corporation.
(4) Form 8-K filed September, 1991, reporting sale and
disposition of assets of Lincoln Finance Company, Inc. to
Kentucky Finance Co., Inc. of three (3) of the four (4) finance
companies operated by Registrant.
(5) Articles of Merger of majority held subsidiary,
Professional Services, Inc., into Registrant as filed on Form 10K
for fiscal year 1991-1992.
Form 10-K - 1995 (1) A copy of the lease agreement
dated July 15, 1995, between LINCOLN INTERNATIONAL CORPORATION
and Kentucky Livestock Exchange (BOURBON STOCK YARD OPERATIONS) a
division of Michigan Livestock Exchange, et al.
Financial data and schedules are submitted separately
as a separate schedule and are attached hereto.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, Lincoln International
Corporation has duly caused this report to be signed on its
behalf, by the undersigned, President and Chief Executive
Officer, Thurman L. Sisney, and by its principal Financial
Officer and principal Accounting Officer, Secretary and
Treasurer, Ronald Osborn, as thereunto duly authorized in the
City of Louisville, Commonwealth of Kentucky, on the 30th day of
October, 1995.
LINCOLN INTERNATIONAL CORPORATION
____________________________
By: Thurman L. Sisney, President
Date: ___________________________
___________________________
By: Ronald Osborn, Sec./Treas.
Date: ___________________________
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of LINCOLN INTERNATIONAL CORPORATION in the
capacities and on the date indicated.
SIGNATURE TITLE
(1) Principal Executive Officers
_________________________________
Thurman L. Sisney President & Chairman of the
Board
_________________________________
Ronald Osborn Secretary/Treasurer
(2) Directors
_________________________________
Thurman L. Sisney Director
_________________________________
Charles Hamilton Director
LINCOLN INTERNATIONAL CORPORATION
ANNUAL REPORT FORM 10-K
INDEPENDENT AUDITOR'S REPORT
The Board of Directors and Stockholders
Lincoln International Corporation
Louisville, Kentucky
We have audited the consolidated balance sheets of Lincoln
International Corporation listed in the accompanying index to
Financial Statements (Item 14(a)) as of July 31, 1995 and 1994, and
the related consolidated statements of operations, stockholders'
equity, and cash flows for each of the three years in the period
ended July 31, 1995. 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 financial statements listed in the accompanying
Index to Financial Statements (Item 14(a)) present fairly, in all
material respects, the consolidated financial position of Lincoln
International Corporation as of July 31, 1995 and 1994, and the
consolidated results of its operations and its cash flows for each
of the three years in the period ended July 31, 1995, in conformity
with generally accepted accounting principles.
POTTER & COMPANY, LLP
Louisville, Kentucky
October 11, 1995
LINCOLN INTERNATIONAL CORPORATION
Index to Financial Statements
Item 14(a)
The following consolidated financial statements of Lincoln
International Corporation and subsidiaries are incorporated by
reference in Item 8:
Consolidated balance sheets - July 31, 1995 and 1994
Consolidated statements of operations - years ended
July 31, 1995, 1994, and 1993
Consolidated statements of stockholders' equity - years
ended July 31, 1995, 1994, and 1993
Consolidated statements of cash flows - years ended
July 31, 1995, 1994, and 1993
Notes to consolidated financial statements
Supporting schedules for the three years ended July 31, 1995, 1994,
and 1993:
I - Condensed financial information (parent company
only)
II - Valuation and qualifying accounts and reserves
All other schedules are omitted since the required information is
not present or is not present in amounts sufficient to require
submission of the schedule, or because the information required is
included in the consolidated financial statements and notes
thereto.
ADDITIONAL INFORMATION FURNISHED
PURSUANT TO THE REQUIREMENTS OF FORM 10-K
SCHEDULE I
LINCOLN INTERNATIONAL CORPORATION (PARENT COMPANY ONLY)
CONDENSED BALANCE SHEETS
July 31, 1995 and 1994
1995 1994
A S S E T S
Current assets:
Cash and cash equivalents $331,447 $11,290
Accounts receivable, net 21,251 13,240
Inventories 0 681
Prepaid expenses and other
current assets 7,091 11,054
Total current assets 359,789 36,265
Investments in subsidiaries 1,147,982 1,022,646
Net property, plant and equipment
(Note 1) 1,260,885 1,325,105
Net franchise license 0 50,350
Total assets $2,768,656 $2,434,366
L I A B I L I T I E S A N D
S T O C K H O L D E R S' E Q U I T Y
Current liabilities:
Notes payable $0 $90,379
Current maturities of long-term debt
(Note 1) 167,558 226,084
Accounts payable 60,370 93,676
Accrued expenses 83,832 84,576
Total current liabilities 311,760 494,715
Long-term debt, less current maturities
(Note 1) 733,640 777,688
Advances from subsidiaries 1,312,557 663,298
Stockholders' equity (Note 2):
Common stock, $.50 stated value 816,160 816,160
Additional paid-in capital 471,300 471,300
Retained earnings (deficit) -865,890 -777,924
421,570 509,536
Less treasury stock, at cost 10,871 10,871
Total stockholders' equity 410,699 498,665
Total liabilities and
stockholders' equity $2,768,656 $2,434,366
See accompanying notes.
SCHEDULE I
LINCOLN INTERNATIONAL CORPORATION (PARENT COMPANY ONLY)
CONDENSED STATEMENTS OF OPERATIONS
Years ended July 31, 1995, 1994, and 1993
1995 1994 1993
Revenues:
Net service and operating revenues $1,194,763$1,254,838$1,268,683
Net product sales 119,689 111,803 96,213
Loss on sale of assets -28,501 0 -1,974
Miscellaneous income 26,223 0 0
1,312,174 1,366,641 1,362,922
Costs and expenses:
Cost of service and operating
revenues 914,457 863,045 926,419
Cost of products sold 104,169 97,982 87,866
Operating, general and
administrative expenses 383,117 407,748 373,366
Interest expense - subsidiaries 19,399 51,493 44,380
Interest expense - other 104,336 100,519 90,722
1,525,478 1,520,787 1,522,753
Loss before income tax benefit -213,304 -154,146 -159,831
Income tax benefit 0 0 0
Loss before equity in net earnings
of subsidiaries -213,304 -154,146 -159,831
Equity in net earnings of subsidiaries 125,336 80,745 51,511
Net loss $-87,968 $-73,401 $-108,320
See accompanying notes.
SCHEDULE I
LINCOLN INTERNATIONAL CORPORATION (PARENT COMPANY ONLY)
CONDENSED STATEMENTS OF CASH FLOWS
Years ended July 31, 1995, 1994, and 1993
1995 1994 1993
Cash flows from operating activities:
Net loss $-87,968 $-73,401 $-108,320
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 67,541 71,700 74,004
Equity in net earnings of
consolidated subsidiaries -125,336 -80,745 -51,511
Loss on sale of property,
equipment, and operating assets 28,501 0 1,974
Provision for losses on other
receivables 0 3,081 8,000
Reduction of cash value of life insurance
as additional officers' compensation 0 0 9,793
Change in assets and liabilities:
(Increase) decrease in accounts
receivables -8,011 -2,124 7,700
(Increase) decrease in inventories 681 -73 1,204
(Increase) decrease in other
current assets 3,963 1,522 -718
Increase (decrease) in accounts payable -33,306 -2,589 44,770
Increase (decrease) in accrued expenses -744 7,334 -10,082
Net cash used in operating activities-154,679 -75,295 -23,186
Cash flows from investing activities:
Proceeds from disposal of property,
equipment, and operating assets 24,440 0 0
Purchases of property and equipment -5,910 -11,204 -66,365
Net cash provided by (used in)
investing activities 18,530 -11,204 -66,365
Cash flows from financing activities:
Net borrowings (repayments) under
short-term notes payable -90,379 -1,973 2,596
Increase in advances from subsidiaries 649,259 86,187 65,088
Proceeds from long-term debt 1,389 25,489 58,068
Principal payments on long-term debt -103,963 -30,983 -34,075
Net cash provided by financing
activities 456,306 78,720 91,677
Net increase (decrease) in cash
and cash equivalents 320,157 -7,779 2,126
Cash and cash equivalents
at beginning of year 11,290 19,069 16,943
Cash and cash equivalents
at end of year $331,447 $11,290 $19,069
See accompanying notes.
SCHEDULE I
LINCOLN INTERNATIONAL CORPORATION (PARENT COMPANY ONLY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
July 31, 1995 and 1994
1. Long-term debt
Long-term debt consists of the following:
1995 1994
12% subordinated capital notes, various
maturity dates, unsecured. $170,852 $252,999
Mortgage note payable, interest at 1.5%
over prime (prime was 8.75% as of
July 31, 1995), monthly payments of
$7,566, including principal and
interest, final payment due
June 2011, secured by real
property. 730,346 747,700
Note payable, interest at 10% monthly
payments of $356, including principal
and interest, final payment February
1995, collateralized by equipment,
interest payments due annually. 0 3,073
901,198 1,003,772
Less current maturities 167,558 226,084
Totals $733,640 $777,688
Scheduled maturities of long-term debt during the five years subsequent
to July 31, 1995 are as follows:
1996 $ 167,558
1997 38,501
1998 20,489
1999 22,691
2000 25,129
Later years 626,830
Total $ 901,198
2. Dividends
The Company has received no other cash dividends from subsidiaries or
50 percent or less owned entities for any of the three fiscal years
in the period ended July 31, 1995.
SCHEDULE II
LINCOLN INTERNATIONAL CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Years ended July 31, 1995, 1994, and 1993
Column Column Column Column Column
A B C D E
Additions
Balance Charged Charged Balance
at to to Other at
Beginning Costs & Accounts Deductions End
Description of Year Expenses Describe Describe of Year
Year ended July 31, 1995
Reserves deducted from assets:
Allowance for losses:
Accounts receivable 4,081 0 0 3,331 A 750
Loans receivable - finance 16,515 7,435 0 23,950A,C 0
20,596 7,435 0 27,281 750
Accumulated amortization -
Franchise license 75,529 6,294 0 81,823 D 0
96,125 13,729 0 109,104 750
Year ended July 31, 1994
Reserves deducted from assets:
Allowance for losses:
Accounts receivable 12,100 3,031 0 11,050 A 4,081
Loans receivable - finance 16,929 11,195 0 11,609 A 16,515
29,029 14,226 0 22,659 20,596
Accumulated amortization -
Franchise license 67,137 8,392 0 0 75,529
96,166 22,618 0 22,659 96,125
Year ended July 31, 1993
Reserves deducted from assets:
Allowance for losses:
Accounts receivable 4,100 8,000 0 0 12,100
Loans receivable - finance 17,108 14,143 3,205 B17,527 A 16,929
21,208 22,143 3,205 17,527 29,029
Accumulated amortization -
Franchise license 58,745 8,392 0 0 67,137
79,953 30,535 3,205 17,527 96,166
(A) Write-off of doubtful accounts.
(B) Recoveries of accounts previously written off.
(C) Includes reduction in allowance in the amount of $16,807 due to sale of
finance receivables.
(D) Sold Franchise license May 1, 1995.
LINCOLN INTERNATIONAL CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
AND INDEPENDENT AUDITOR'S REPORT
July 31, 1995, 1994, and 1993
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
Lincoln International Corporation
Louisville, Kentucky
We have audited the accompanying consolidated balance sheets of Lincoln
International Corporation as of July 31, 1995 and 1994, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended July 31, 1995. 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 financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Lincoln
International Corporation as of July 31, 1995 and 1994, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended July 31, 1995, in conformity with generally accepted accounting
principles.
POTTER & COMPANY, LLP
October 11, 1995
LINCOLN INTERNATIONAL CORPORATION
CONSOLIDATED BALANCE SHEETS
July 31, 1995 and 1994
A S S E T S
1995 1994
Current assets:
Cash and cash equivalents $332,682 $21,238
Finance receivables (Note 2) 0 533,995
Other receivables (Note 3) 22,708 14,732
Inventories 0 681
Prepaid expenses 7,091 11,173
Total current assets 362,481 581,819
Net property, plant and equipment
(Notes 4, 6 and 12) 1,260,885 1,327,400
Other asset:
Franchise license, net of
accumulated amortization
of $75,529 in 1994 0 50,350
Total assets $1,623,366 $1,959,569
See accompanying notes.
2
LINCOLN INTERNATIONAL CORPORATION
CONSOLIDATED BALANCE SHEETS
July 31, 1995 and 1994
L I A B I L I T I E S
1995 1994
Current liabilities:
Notes payable (Note 5) $0 $90,379
Current maturities of long-term
debt (Note 6) 318,809 352,064
Accounts payable 60,370 93,710
Income taxes payable 6,240 4,398
Accrued expenses 93,609 98,129
Deferred insurance commissions 0 2,435
Total current liabilities 479,028 641,115
Long-term debt, less current maturities
(Note 6) 733,640 819,788
Total liabilities 1,212,668 1,460,903
Commitments (Note 10)
S T O C K H O L D E R S' E Q U I T Y
Stockholders' equity:
Common stock, voting, $.50 stated
value, 100,000 shares authorized
and issued 50,000 50,000
Common stock, nonvoting, $.50 stated
value, 2,900,000 shares authorized,
1,532,320 shares issued 766,160 766,160
Additional paid-in capital 471,300 471,300
Retained earnings (deficit) -865,891 -777,923
421,569 509,537
Less treasury stock, nonvoting, at
cost, 9,246 shares 10,871 10,871
Total stockholders' equity 410,698 498,666
Total liabilities and
stockholders' equity $1,623,366 $1,959,569
3
LINCOLN INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended July 31, 1995, 1994, and 1993
1995 1994 1993
Revenues:
Net service and operating revenues $1,183,858$1,214,993$1,219,203
Net product sales 119,689 111,803 96,213
Finance charges and other income
earned on finance receivables 58,625 180,462 182,089
Total revenues 1,362,172 1,507,258 1,497,505
Costs and expenses:
Cost of service and operating revenues 931,305 916,635 976,966
Cost of products sold 104,169 97,982 87,866
Operating, general and administrative
expenses 401,660 437,917 416,548
Provision for credit losses on finance
receivables 6,409 5,665 10,938
Interest expense related to finance
subsidiary 19,103 19,995 20,127
Total costs and expenses 1,462,646 1,478,194 1,512,445
Income (loss) from operations -100,474 29,064 -14,940
Other income (expense):
Gain (loss) on sale of property,
equipment, and operating assets
(Note 9) 88,640 0 -1,974
Interest expense -104,336 -100,519 -90,722
Miscellaneous 34,442 2,452 2,300
Total other income (expense) 18,746 -98,067 -90,396
Loss before income taxes -81,728 -69,003 -105,336
Provision for income taxes (Note 7) 6,240 4,398 2,984
Net loss $-87,968 $-73,401 $-108,320
Net loss per common share $-.05 $-.04 $-.07
See accompanying notes.
4
LINCOLN INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years ended July 31, 1995, 1994, and 1993
Total
Common Common Additional Retained Stock-
Stock Stock Paid-in Earnings Treasury holders'
Voting Nonvoting Capital (Deficit) Stock Equity
Balance at
July 31,
1992 $50,000 $766,160 $471,300 $-596,202 $-10,871 $680,387
Net loss 0 0 0 -108,320 0 -108,320
Balance at
July 31,
1993 50,000 766,160 471,300 -704,522 -10,871 572,067
Net loss 0 0 0 -73,401 0 -73,401
Balance at
July 31,
1994 50,000 766,160 471,300 -777,923 -10,871 498,666
Net loss 0 0 0 -87,968 0 -87,968
Balance at
July 31,
1995 $50,000 $766,160 $471,300 $-865,891 $-10,871 $410,698
See accompanying notes.
5
LINCOLN INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended July 31, 1995, 1994, and 1993
1995 1994 1993
Cash flows from operating activities:
Net loss $-87,968 $-73,401 $-108,320
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:
Depreciation and amortization 67,827 72,532 74,883
Provision for credit losses on finance
receivables 7,435 11,188 14,143
Provision for losses on other
receivables 0 3,038 8,000
Reduction in allowance for credit
losses due to sale of operating
assets -16,807 0 0
(Gain) loss on sale of property,
equipment, and operating assets -88,640 0 1,974
Reduction of cash value of life
insurance as additional officers'
compensation 0 0 9,793
Change in assets and liabilities:
(Increase) decrease in other
receivables -7,976 -2,783 7,917
(Increase) decrease in inventories 681 -73 1,204
(Increase) decrease in prepaid
expenses 4,082 1,522 -617
Increase (decrease) in accounts
payable -33,340 -2,555 44,770
Increase (decrease) in income taxes
payable 1,842 1,414 -2,973
Increase (decrease) in accrued
expenses -4,520 2,890 -15,338
Decrease in deferred insurance
commissions -2,435 -535 -110
Net cash provided by (used in)
operating activities -159,819 13,237 35,326
Cash flows from investing activities:
Loans originated -146,251 -407,876 -423,460
Loans repaid 146,565 412,560 415,091
Proceeds from sale of loans 661,951 0 0
Proceeds from disposal of property,
equipment and operating assets 24,690 0 0
Purchases of property and equipment -5,910 -11,204 -66,365
Principal payments received on mortgage
loan 0 0 7,935
Net cash provided by (used in)
investing activities 681,045 -6,520 -66,799
See accompanying notes.
6
LINCOLN INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
Years ended July 31, 1995, 1994, and 1993
1995 1994 1993
Cash flows from financing activities:
Net borrowings (repayments) under
short-term notes payable $-90,379 $-4,473 $2,596
Proceeds from long-term debt 1,389 30,704 62,384
Principal payments on long-term debt -120,792 -34,771 -40,474
Net cash provided by (used in)
financing activities -209,782 -8,540 24,506
Net increase (decrease) in cash
and cash equivalents 311,444 -1,823 -6,967
Cash and cash equivalents
at beginning of year 21,238 23,061 30,028
Cash and cash equivalents
at end of year $332,682 $21,238 $23,061
Supplemental disclosures of cash flow
information:
Cash paid during the year for interest $124,588 $152,724 $134,933
Cash paid during the year for income
taxes $4,398 $2,984 $5,942
See accompanying notes.
7
LINCOLN INTERNATIONAL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
July 31, 1995, 1994, and 1993
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of Lincoln
International Corporation (the Company) is presented to assist in
understanding the Company's financial statements. The financial
statements and notes are representations of the Company's
management who is responsible for their integrity and
objectivity. These accounting policies conform to generally
accepted accounting principles and have been consistently applied
in the preparation of the financial statements.
Company's Activities:
Lincoln International Corporation is engaged in the operation of
a stock yard and small consumer loan company in the state of
Kentucky. The Company also is engaged in the operation of ice
cream franchises in the mid-western United States.
On December 1, 1994, the company sold all finance receivables and
ceased operations at its one remaining small consumer loan
company. On May 1, 1995, the company sold its remaining
territories and equipment of the ice cream operation. On July
15, 1995, the company leased the property associated with the
operation of the stock yard to another stock yard operator.
Principles of Consolidation:
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All significant
intercompany transactions are eliminated in consolidation.
Cash and Cash Equivalents:
For purposes of reporting cash flows, the Company considers all
money market funds with a maturity of three months or less to be
cash equivalents.
Finance Receivables:
All new direct cash loans of the Company have been recorded on
the discount-basis. Income from discount-basis direct cash loans
and retail contracts is calculated using a method which
approximates the interest method. Accrual of interest income is
suspended when a loan is contractually delinquent for ninety days
or more at which time the loan is converted to interest-bearing.
Income from interest-bearing loans is credited to income as and
when collections are made. Extension fees and late charges on
discount-basis direct cash loans and retail contracts are
credited to income when collected. Insurance commissions are
recognized over the terms of the related loans based on the
straight-line method which approximates the interest method.
8
LINCOLN INTERNATIONAL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
July 31, 1995, 1994, and 1993
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Allowance for Losses:
Provisions for credit losses are charged to income in amounts
sufficient to maintain the allowance at a level considered
adequate to cover the losses of principal in the existing
portfolio. The Company's charge-off policy is based on a loan-
by-loan review for all receivables, which are charged-off when
they have had no collections during the preceding twelve-month
period.
Other Receivables:
Royalties are recorded as income on the accrual basis. Expenses
associated with franchise fees and royalties are charged as
expense as incurred. Individual unit franchise fees are recorded
as income when substantially all Company obligations have been
completed.
Property, Plant and Equipment:
Property, plant and equipment are recorded at cost.
Depreciation is provided over the following estimated useful
lives:
Buildings and improvements 20-40 years
Yard and administration building 10-55 years
Leasehold improvements 3- 5 years
Machinery and equipment 3-12 years
The Company uses the straight-line method of computing
depreciation for financial statement purposes and accelerated
methods for income tax purposes. Leasehold improvements are
amortized using the straight-line method over the lease term.
Franchise License:
The Company amortizes the license using the straight-line method
over 15 years which is the term of the franchise license
agreement.
Income Taxes:
The Company files a consolidated federal income tax return.
Investment tax credits are treated as a reduction of the tax
provision in the year in which the benefit is earned (flow-
through method). Separate state income tax returns are filed for
the Company and each subsidiary.
9
LINCOLN INTERNATIONAL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
July 31, 1995, 1994, and 1993
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Earnings Per Share:
Earnings per share are based on the weighted average number of
shares outstanding during each year.
NOTE 2 - FINANCE RECEIVABLES
Finance receivables consist of the following:
1994
Direct cash loans:
Interest-bearing $ 29,942
Discount-basis 635,456
Retail contracts 12,783
678,181
Less:
Unearned finance charges 127,671
Allowance for credit losses 16,515
144,186
Totals $533,995
Changes in the allowance for credit losses were as follows:
Balance as of July 31, 1993 $ 16,929
Provision for credit losses 11,188
Loans charged off (17,132)
Recoveries 5,530
Balance as of July 31, 1994 16,515
Provision for credit losses 7,435
Loans charged off and sold (24,977)
Recoveries 1,027
Balance as of July 31, 1995 $ 0
On December 1, 1994, the finance receivables were sold.
10
LINCOLN INTERNATIONAL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
July 31, 1995, 1994, and 1993
NOTE 3 - OTHER RECEIVABLES
Other receivables consist of the following:
1995 1994
Accounts receivable $22,001 $16,576
Less allowance for doubtful accounts 750 4,081
21,251 12,495
Royalty receivables 1,457 2,237
Totals $22,708 $14,732
NOTE 4 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
1995 1994
Land $ 713,022 $ 718,022
Building and improvements 68,250 85,850
Yard and administration building 2,374,658 2,374,658
Machinery and equipment 446,600 526,774
Leasehold improvements 2,800 5,703
3,605,330 3,711,007
Less accumulated depreciation 2,344,445 2,383,607
Net property, plant and equipment $1,260,885 $1,327,400
NOTE 5 - NOTES PAYABLE
Notes payable consist of the following:
1995 1994
Notes payable - officer $ 0 $15,379
Notes payable - other 0 75,000
Total $ 0 $90,379
11
LINCOLN INTERNATIONAL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
July 31, 1995, 1994, and 1993
NOTE 6 - LONG-TERM DEBT
Long-term debt consists of the following:
1995 1994
12% subordinated capital notes,
various maturity dates,
unsecured. $ 322,103 $ 421,079
Mortgage note payable, interest
at 1.5% over prime (prime was
8.75% as of July 31, 1995),
monthly payments of $7,566,
including principal and
interest, final payment due
June 2011, secured by real
property. 730,346 747,700
Note payable, interest at 10%
monthly payments of $356,
including principal and
interest, final payment
February 1995, collateralized
by equipment. 0 3,073
1,052,449 1,171,852
Less current maturities 318,809 352,064
Totals $ 733,640 $ 819,788
Aggregate maturities required on long-term debt at July 31, 1995
are as follows:
1996 $ 318,809
1997 38,501
1998 20,489
1999 22,691
2000 25,129
Later years 626,830
Total $1,052,449
12
LINCOLN INTERNATIONAL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
July 31, 1995, 1994, and 1993
NOTE 7 - INCOME TAXES
The provision for income taxes consists of the following:
1995 1994 1993
Federal income taxes $ 0 $ 0 $ 0
State and local income taxes 6,240 4,398 2,984
Provision for income taxes $6,240 $4,398 $2,984
The Company has available at July 31, 1995 unused tax credits and
operating loss carryforwards, which may provide future tax
benefits. If not used, the carryforwards will expire as follows:
Year of Tax Operating Loss
Expiration Credits Carryforwards
2001 $61,247 $ 0
2002 0 170,356
2003 0 208,651
2004 0 129,419
2005 0 81,096
2006 0 216,677
2007 0 0
2008 0 89,623
2009 0 76,331
2010 0 59,836
$61,247 $1,031,989
13
LINCOLN INTERNATIONAL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
July 31, 1995, 1994, and 1993
NOTE 7 - INCOME TAXES (CONTINUED)
The difference between the statutory income tax rate and the Company's
effective tax rate is reconciled as follows:
1995 1994 1993
Amount Percent Amount Percent Amount Percent
Federal taxes
(benefit) at
statutory rate $-27,800 -34.0% $-23,500 -34.0% $-35,800 -34.0%
Surtax exemption 0 .0% 0 .0% 0 .0%
Tax effect of
current
operating
loss available
for carryover 27,800 34.0% 23,500 34.0% 35,800 34.0%
Temporary
differences -851 -1.0% 804 1.2% 0 .0%
State and local
income taxes,
net of federal
benefit 7,091 8.6% 3,594 5.2% 2,984 2.8%
$6,240 7.6% $4,398 6.4% $2,984 2.8%
A deferred tax asset due to the operating loss and tax credit
carryforwards has not been recognized because it is more likely than not
that it will not be realized based on current circumstances.
NOTE 8 - MAJOR BUSINESS SEGMENTS
The Company considers its activities to comprise two reportable segments:
financial lending and agribusiness. Summary data is as follows:
1995 1994 1993
Revenues:
Finance $58,625 $180,462 $182,089
Agribusiness 1,296,663 1,316,632 1,303,996
Other 6,884 10,164 11,420
Consolidated $1,362,172 $1,507,258 $1,497,505
14
LINCOLN INTERNATIONAL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
July 31, 1995, 1994, and 1993
NOTE 8 - MAJOR BUSINESS SEGMENTS (CONTINUED)
1995 1994 1993
Operating profit (loss):
Finance $-15,243 $31,848 $23,204
Agribusiness 161,081 132,454 95,117
Total segments 145,838 164,302 118,321
Corporate and other
expenses -246,312 -135,238 -133,261
Income (loss) from
operations -100,474 29,064 -14,940
Nonoperating income 123,082 2,452 326
Interest expense -104,336 -100,519 -90,722
Loss before income
taxes $-81,728 $-69,003 $-105,336
Total assets:
Finance $491 $545,209 $554,569
Agribusiness 1,283,533 1,333,934 1,389,036
Total segments 1,284,024 1,879,143 1,943,605
Corporate and other 339,342 80,426 94,191
Consolidated $1,623,366 $1,959,569 $2,037,796
Capital expenditures:
Finance $0 $0 $0
Agribusiness 5,215 8,639 63,169
Total segments 5,215 8,639 63,169
Corporate and other 695 2,565 3,196
Consolidated $5,910 $11,204 $66,365
Depreciation and
amortization:
Finance $286 $832 $879
Agribusiness 57,118 55,726 54,652
Total segments 57,404 56,558 55,531
Corporate and other 10,423 15,974 19,352
Consolidated $67,827 $72,532 $74,883
15
LINCOLN INTERNATIONAL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
July 31, 1995, 1994, and 1993
NOTE 9 - SALE OF OPERATING ASSETS
On December 1, 1994, the Company sold all finance receivables and ceased
operations at its one remaining branch of Lincoln Finance Company, Inc.,
in Greensburg, Kentucky. Net finance receivables of $559,858 were sold
along with office equipment with a net book value of $1,839 at a gain of
$117,060. The building in Greensburg, Kentucky was sold on July 6, 1995,
at a gain of $8,756 in a separate transaction.
On May 1, 1995, a division of the Company, Linco Marketing sold the
remaining territories and equipment of the Ice Cream Churn Franchises for
$5,000, at a loss of $36,285.
NOTE 10 - LEASE COMMITMENTS
The Company and its subsidiaries lease facilities, sales offices and
equipment under operating leases, the majority of which do not extend
beyond one year.
Total rental expense amounted to $35,711 in 1995, $33,855 in 1994, and
$29,114 in 1993. Future minimum rentals are as follows:
Year ending July 31:
1996 $21,457
1997 11,180
1998 11,180
1999 5,306
2000 1,193
Totals $50,316
NOTE 11 - LEASE OF OPERATIONS
On July 15, 1995, the Company leased the property associated with the
operation of its stock yard to another stock yard operator. Under the
agreement, the Company will receive rent at a minimum of $18,000 a month
for the first two years, plus a percentage of the pre-tax profits. After
the initial two years, the company will receive a percentage of the pre-
tax profits with no minimum payment required. The agreement expires July
31, 2005, but may be terminated by the company upon six months notice to
the lessee. The lessee is responsible at its expense, for most repairs,
insurance, utilities and property taxes associated with the property.
16
LINCOLN INTERNATIONAL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
July 31, 1995, 1994, and 1993
NOTE 12 - LEASE OF PROPERTY, PLANT AND EQUIPMENT
The Company is the lessor of property under operating leases. Following
is a summary of the Company's investment in property, plant and equipment
on operating leases as of July 31, 1995:
Land $ 713,022
Buildings and Improvements 68,250
Yard and administration building 2,374,658
3,155,930
Less accumulated depreciation 1,964,985
$1,190,945
Under the operating method of accounting for leases, the cost of the
property, plant and equipment is recorded as an asset and is depreciated
over its estimated useful life and the rental income is recognized as the
lease rental payments are earned.
All, but one, of the leases are month-to-month. The minimum future
rentals to be received on the leases at July 31, 1995 are as follows:
1996 $ 216,000
1997 216,000
Later years 0
Total $ 432,000
17
LEASE
THIS LEASE is made and entered into as of July 15, 1995,
by and among Lincoln International Corporation, a Kentucky
corporation ("Lessor"), and Kentucky Livestock Exchange (Bourbon
Stock Yards Operations), a division of Michigan Livestock Exchange
("Lessee") and Michigan Livestock Exchange ("MLE").
WHEREAS, Lessor is the owner of the real estate
described on Exhibit A attached hereto and made a part hereof (the
real estate, together with all buildings, livestock pens,
easements and appurtenances, all railroad spur tracks located on
the real estate, and all plumbing, heating, lighting, electrical,
ventilation and air conditioning systems and fixtures now or
hereafter affixed to the buildings and which are necessary to the
general operation and maintenance thereof, is hereinafter referred
to as the ("Property"), which is currently operated as the Bourbon
Stock Yards (the"Business");
WHEREAS, there is located on the Property machinery,
equipment and fixtures currently used or usable in connection with
the Business (the "Equipment"); and
WHEREAS, Lessee desires to rent the Property and
purchase the Equipment from Lessor and Lessor is willing to rent
the Property and sell the Equipment to Lessee.
NOW, THEREFORE, for and in consideration of the mutual
covenants contained in this Lease, Lessor and Lessee agree as
follows:
1. Lease of Property and Equipment; Employees. (a)
Lessor hereby leases to Lessee, and Lessee hereby leases from
Lessor, the Property on the terms and conditions set forth in the
Lease. Lessor hereby represents and warrants to Lessee that other
than Lessee and Lessor's mortgagee, no third party has any
interest in, right to or claim against the Property. At Lessee's
request from time to time, Lessor shall, at its expense, remove
from the Property any items designated by Lessee. Lessor shall
remove such items within a reasonable period of time (not to
exceed thirty (30) days) following Lessee's notice. All of
Lessee's leasehold interest and obligations as to such items shall
terminate with such removal without further act of the parties.
The parties hereto have determined that certain of the Equipment
shall be purchased by Lessee or MLE and the purchase price and
payment terms shall be negotiated in good faith between the
parties.
(b) The Property to be leased hereunder shall include
the property and facilities used by Lessor in connection with the
operation of the truckwash and Lessor shall have no obligation or
liability with respect to such property or facilities.
(c) Lessor hereby agrees to permit Lessee to hire any
of its employees currently employed to perform services on the
Property, but Lessee shall have no obligation to hire any
employees, including, without limitation, those employees who
are members of the Amalgamated Meat Cutters and Butchers Union of
North America, AFL-CIO, Local #227. Lessor shall indemnify and
hold harmless Lessee from and against any and all expenses, costs,
claims, judgments, settlements, obligations and other liabilities
relating to any employees of Lessor not hired by Lessee or
relating to the period prior to the date hereof with respect to
employees of Lessor hired by Lessee.
2. Term. The term of this Lease (the "Term") shall be
ten (10) years, commencing on July 15, 1995 (the "Commencement
Date") and ending on July 31, 2005, unless earlier terminated as
provided herein.
Lessor may earlier terminate the Lease upon six (6)
month's prior written notice to Lessee.
3. Rent. Lessee shall pay to Lessor monthly rent (the
"Rent") as follows:
(a) 75% of the Monthly Pre-tax Profits from the
Commencement Date through July 31, 1997;
(b) 25% of the Monthly Pre-tax Profits from August 1,
1997 through July 31, 1999; and
(c) 50% of the Monthly Pre-tax Profits from August 1,
1999 through July 31, 2005.
Provided, however, that notwithstanding any contrary
provisions of this numerical paragraph 3, rent payable by Lessee
to Lessor on the first day of each calendar month during the first
two (2) years of the Lease shall be Eighteen Thousand Dollars
($18,000.00). The aggregate of such monthly minimum rental
payments shall be deducted from other rental payments due for
Lessee to Lessor above.
"Monthly Pre-tax Profits" shall be the monthly pre-tax
operating income of Lessee or any pro rata portion thereof,
prepared on an accrual basis in accordance with generally accepted
accounting principles. Except as herein otherwise provided with
respect to minimum rental. To the extent there are negative
Monthly Pre-tax Profits in a particular month(s) (a "Deficit"):
(i) Rent shall not be due and payable for that month and (ii) Rent
shall not be due and payable until the aggregate amount of Monthly
Pre-tax Profits following the month in which there is a Deficit
exceeds the aggregate amount of the Deficit. The amount by which
the aggregate Monthly Pre-tax Profits exceeds the Deficit shall be
paid as Rent. Once the Deficit has been reduced to zero, Rent
shall be determined based on the Monthly Pre-tax Profits
subsequent to the month in which the Deficit is reduced to zero.
MLE agrees to charge lessee $3,000 per month for services provided
by MLE to Lessee during the Term. Except with respect to the
foregoing sentence, MLE will not charge Lessee for any services
provided by MLE during the Term without the prior written consent
of Lessor. Percentage Rent shall be paid to Lessor within forty-
five (45) days following the last day of the preceding month.
Lessor has the right to inspect the books and records of Lessee
with respect to the calculation of the Rent due hereunder during
the Business' normal business hours.
4. Use of Property; License. (a) The Property shall
be used by Lessee and its agents in connection with the Business.
Lessor shall obtain all necessary permits and licenses for the use
and occupancy of the Property and warrants that the Property and
the use permitted by this Lease complies with all applicable
governmental laws, rules and regulations. Lessor represents and
warrants that, to Lessor's knowledge, the current use of the
Property does not violate any covenants, conditions, agreements or
restrictions affecting all or any part of the Property.
(b) Lessor hereby grants to Lessee an exclusive license
to use the name "Bourbon Stock Yards" during the Term.
5. Condition; Repairs. (a) Lessee shall take
possession of the Property and Equipment in the condition in which
it then exists.
(b) Lessee will, at its own expense, maintain the
Property and Equipment in good order and repair, consistent with
the condition of the Property and Equipment on the date hereof;
provided, that Lessor shall make all repairs for which the cost
exceeds $10,000 in any one instance and all replacements of
structural elements of the Property and of the Equipment, unless
the need therefore is the result of the acts or gross negligence
of Lessee. Further, Lessee shall not have any responsibility or
liability for structural alterations to the Property or the
Equipment required by changes in governmental rules or regulations
which become effective after the date of this Lease, or for any
capital improvement expenditures with respect to the Property or
Equipment, which expenses shall be paid by Lessor.
6. Insurance. (a) During the Term, Lessee shall
maintain:
(i) Comprehensive general liability insurance with
respect to the Property and operations thereon, including but not
limited to personal injury, blanket contractual, broad form
property damage liability coverages, and workers' compensation
coverage as required by law. Such liability policy or policies
shall be in an amount at least equal to the amount currently
maintained by Lessor or such other amount as may be mutually
agreed to by the parties.
(ii) Casualty coverage for all buildings and
improvements on the Property and against loss or damage as
provided in the standard fire and extended coverage policy with
"all risk" peril coverage for not less than the full replacement
cost thereof and with deductible limits approved by Lessor.
(b) All insurance shall be issued by companies and be
in form and substance reasonably acceptable to Lessor. Lessee,
Lessor and its mortgagee shall be named insureds in such insurance
policy or policies and the same shall contain waivers of
subrogation claims against Lessee, its employees, agents, and
mortgagees. Each policy shall provide that it shall not be
canceled or altered without thirty (30) days prior notice to
Lessee and Lessor. Lessee shall deliver to Lessor certificates
evidencing all required insurance coverage, together with proof of
payment of the premiums, on the date hereof and prior to the
expiration date of the initial or any renewal policies. Failure
of Lessor to object to the form or substance, including coverages,
of any insurance policy within fifteen (15) days following
Lessor's receipt of a copy of such policy shall constitute
Lessor's express consent to the scope of coverage provided
thereby. Such actual coverage shall thereupon be deemed to
constitute compliance with this Paragraph 6.
(c) All policies of insurance, where appropriate, shall
provide that proceeds shall be payable to Lessor and Lessor's
mortgagee pursuant to a standard mortgage clause; provided,
however, that any proceeds of a casualty loss shall be held in an
interest bearing escrow account with a bank, title company or
other party mutually acceptable to Lessor and Lessee to be applied
as provided in Paragraph 7.
(d) Lessor and Lessee waive all rights, each against
the other, for damages caused by fire or other perils covered by
insurance or required to be covered by insurance hereunder, unless
such waiver operates to invalidate any such policy. The insurance
policies herein referred to, wherever they do not name both Lessor
and Lessee as named insureds, shall be endorsed to provide for
such waiver. Provided, however, that this subparagraph shall not
apply in the event a loss is not covered by insurance due to
either party's failure to obtain such insurance for reasons beyond
the direct control of such party or due to the act or omission of
any insurance agent or broker.
7. Restoration of Damage. If the Property or the
Equipment is materially damaged by fire or other casualty which is
not covered by insurance, other than through the gross negligence
or intentional misconduct of Lessee, either party shall have the
right to terminate this Lease as of the date of the fire or
casualty by notice to the other within thirty (30) days after the
date of such casualty, in which event Rent shall be apportioned on
a per diem basis and be paid to the date of such fire or casualty.
For purposes of this Paragraph 7, any damage to the Property
and/or Equipment (collectively, the "Project") shall be considered
material if the Project shall have been damaged or destroyed to
such an extent that, in the reasonable judgment of the Lessee, (i)
it cannot be reasonably restored within a period of three (3)
consecutive months to the condition thereof immediately preceding
such damage or destruction, or (ii) the Lessee is thereby
prevented from carrying on its normal operations at the Project
for a period of three (3) consecutive months. If neither party
elects to terminate this Lease or if the damage is not material,
this Lease shall not be terminated and Lessor shall promptly
repair such damage and restore the Property and the Equipment to
the condition that existed prior to the loss. Rent shall abate
until the Property and Equipment is restored and put in proper
condition for use and occupancy by Lessee for the purposes set
forth in Paragraph 4.
8. Condemnation. (a) If the whole or a material part
of the Property and the Equipment shall be condemned by any public
authority having the power of eminent domain or conveyed to such
public authority in lieu of the exercise of the power of eminent
domain, then the Term shall cease on the date when possession of
the Property and the Equipment or such portion thereof so taken
shall be required by the condemning authority and all Rent shall
be paid up to that day. For the purposes of this Paragraph 8, any
taking shall be considered material if title in and to, or the
temporary use of, all or substantially all of the Property shall
have been taken under the exercise of the power of eminent domain
by any governmental authority, or person acting under
governmental authority (including such a taking as in the
judgement of the Lessee, results in the Lessee's being prevented
thereby from carrying on its normal operations at the Property.
Lessee shall have no right to share in such award except to the
extent provided in Paragraph 8.(c).
(b) If the condemnation is not material, this Lease
shall remain in full force and effect except that Lessor shall, at
its own cost and expense, promptly make all necessary repairs or
alterations to the Property.
(c) All damages awarded or paid for the Property shall
belong to Lessor; provided, however, that Lessor shall not be
entitled to any separate award made to Lessee for loss of
business, depreciation to and cost of removal of trade equipment
or fixtures, relocation expenses or other damages incurred by
Lessee provided that such separate award is not made as a result
of Lessee's contest of Lessor's right to receive the entire award
for diminution in value of the leasehold or of the fee.
9. Utilities. Lessee shall pay as and when due, all
water, gas and electric light and power bills taxed or charged on
the Property or attributable thereto as well as all charges for
security services during the Term. Lessee shall furnish all
heating, ventilation, air-conditioning and heated water to the
Property. Except when caused by the acts or neglect of Lessor or
Lessor's default under this Lease, Lessor shall not be liable for
damages, by abatement of Rent or otherwise, for interruption or
failure of, or delay in, furnishing any service or utility serving
the Property. Lessor represents and warrants that all water,
sewer, gas, electric, telephone, drainage and other utility
equipment, facilities and services required by law or necessary
for the use permitted pursuant to Paragraph 4 are installed and
connected pursuant to valid permits, and are separately metered to
the Property, are in good operating condition and that no
condition exists which would result in the termination or
impairment of such utility services.
10. Taxes. Lessee shall pay, prior to delinquency, all
ad valorem state, county, municipal and school real estate taxes,
installments of special assessments, and personal property taxes
which shall be payable during the Term with respect to the
Property. Lessee shall pay before delinquency all taxes,
assessments, license fees and other public charges levied,
assessed or imposed upon its business operations and its leasehold
improvements, merchandise and other personal property in or about
the Property. Each party shall deliver to the other copies of
receipts showing payment of said obligations within thirty (30)
days after the respective payments evidenced thereby; provided,
however, that nothing contained in this Paragraph 10 shall prevent
Lessee from contesting the amount or validity of any tax, provided
Lessee's use of the Property is not impaired thereby.
11. Alterations. (a) Lessee shall not make any
alterations that would materially impair the fair market value or
the structural integrity of the Property without the prior written
consent of Lessor. The making of any alterations or installation
of any equipment or trade fixtures shall be accomplished (1) in a
good and workmanlike manner, and (2) in compliance with all
applicable laws and regulations. The making of any alterations by
Lessee and the installation of equipment and trade fixtures shall
be paid by Lessee, so that the Property shall be free from any
lien, mortgage, conditional sales agreement, security interest or
title retention agreement. Upon request, Lessee shall deliver to
Lessor evidence of payment, contractors affidavits, and full and
final waivers of all liens for labor, services and materials.
(b) Except as otherwise provided in this paragraph,
title to all alterations (other than equipment and trade fixtures)
shall immediately vest in Lessor and shall be deemed part of the
Property and subject to all the terms of this Lease. Any
equipment and trade fixtures of whatever nature placed or
installed in or upon the Property by Lessee shall remain its
property and may be removed by Lessee upon the expiration or
termination of this Lease.
12. Inspection. Lessor may, at reasonable times during
normal business hours and upon reasonable notice to Lessee, enter
to perform any necessary repairs or capital improvements that
Lessor is required or permitted to do pursuant to the terms of
this Lease. If any emergency presents an immediate, serious
threat to persons or property in or about the Property, Lessor
shall have the absolute right at any time to enter upon the
Property to abate such emergency, using such force as may be
reasonably necessary to effect such entrance without liability to
Lessee therefor. In the exercise of its rights hereunder, Lessor
shall use reasonable efforts to refrain from interfering with
Lessee's business operations and to minimize any inconvenience,
disturbance, loss of business, nuisance or other damage arising
out of such entries.
13. Default; Remedies. (a) The occurrence of any one
or more of the following events (and "Event of Default") shall
constitute a breach of this Lease by Lessee:
(i) Failure to pay Rent as it becomes due and payable,
and such failure continues for more than ten business (10) days
after Lessee's receipt of written notice from Lessor.
(ii) Failure to perform or observe any other material
term or provision of this Lease, and such failure continues for a
period of thirty (30) days after Lessee's receipt of Lessor's
written notice; provided, however, that if the nature of Lessee's
default is such that more than twenty (20) days are reasonably
required for its cure, then Lessee shall not be deemed to be in
default if Lessee commences such cure within said twenty (20) day
period and thereafter diligently prosecutes such cure to
completion.
(b) After the occurrence and during the continuation of
an Event of Default, Lessor shall have the right to:
(i) Terminate this Lease by giving to Lessee not less
than ninety (90) days' advance written notice of Lessor's election
to do so, in which event the Term shall end and all right, title
and interest of Lessee hereunder shall expire on the date stated
in such notice; or
(ii) Terminate Lessee's right of possession without
terminating this Lease by giving not less than ninety (90) days'
advance written notice to Lessee that Lessee's right of possession
shall end on the date stated in such notice, in which event
Lessee's right of possession shall cease on the date stated in
such notice.
(c) If Lessor exercises either of the remedies provided
in the foregoing Paragraphs 13.(b)(i) or 13.(b)(ii), Lessee shall
vacate the Property and surrender possession thereof to Lessor and
Lessor may re-enter and take possession of the Property with
process of law if Lessee has not so surrendered possession or
without process of law if Lessee has done so.
(d) If (i) Lessor defaults in the observance or
performance of any obligation on Lessor's part to be observed or
performed under the terms of this Lease or Lessor defaults in the
payment or performance of any obligation arising in connection
with any mortgage or other encumbrance on the Property, (ii)
Lessee notifies Lessor of the existence of said default, and (iii)
said default shall continue for a period of sixty (60) days after
said notice, then Lessee may either (a) terminate this Lease upon
written notice to Lessor after the expiration of said sixty (60)
day period, or (b) perform the obligation of Lessor hereunder and
thereafter set-off the amount of any expenditure or obligation
paid or incurred by Lessee (including, but not limited to,
reasonable attorney's fees), together with interest thereon at an
interest rate of 10% per annum (the "Default Rate") from the date
incurred, in curing Lessor's default against the Rent next due
under this Lease. At the time that any set-off against the Rent
is taken, Lessee shall provide Lessor with copies of all invoices
substantiating the amount claimed by Lessee to have been paid or
incurred in curing Lessor's default. Lessee shall not be liable
for any Rent payable with respect to any period after termination
hereunder.
14. Covenant Not to Compete. During the Term, neither
Lessor nor MLE shall, directly or indirectly, by or for themselves
or as the agent of another or through others as their agent, own,
manage, operate, control, be compensated by, participate in,
render advice to, have any right to or interest in any other
business directly or indirectly engaged in the sale of services
competitive with Lessee anywhere within a 50 mile radius of the
Property.
The necessity of protection against the competition of
MLE and Lessor and the nature and scope of such protection has
been carefully considered by the parties hereto. The parties
agree and acknowledge that the duration, scope and geographic
areas applicable to the covenant not to compete described in this
Paragraph are reasonable and that adequate compensation has been
received by MLE and Lessor for such obligations. If, however, any
court determines that any of the restrictions are not reasonable,
the parties hereby give the court the right and power to
interpret, alter, amend or modify any or all of the terms
contained herein to include as much of the scope, time period and
geographic area as will render such restrictions enforceable. MLE
and Lessor each agree that in the event of its breach or violation
or attempted breach or violation of this Paragraph, said
provisions, or any of them, may be enforced by an injunction in a
suit in equity, and that a temporary or preliminary injunction or
restraining order may be granted immediately upon the commencement
of any such suit and without notice.
(a) Lessor and Lessee shall mutually agree upon any
capital improvement projects to be undertaken with respect to the
Property and Equipment.
15. Surrender; Holding Over. (a) On the expiration
date of this Lease or on the termination of Lessee's right of
possession, Lessee shall remove its personal property, equipment
and trade fixtures and peacefully yield up the Property and
Equipment to Lessor in substantially the same condition as on the
date hereof, ordinary wear and tear, casualty loss, condemnation
and acts of Lessor excepted.
(b) A holding over by Lessee beyond the expiration of
the Term shall give rise to a month-to-month tenancy only. If
Lessee continues to occupy the Property and Equipment on a month-
to-month tenancy, all of the provisions of this Lease shall
continue to be effective except that either party may, upon prior
written notice, terminate such month-to-month tenancy.
16. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be,
personally delivered or sent by facsimile transmission with
confirming copy sent by overnight courier (such as Express Mail,
Federal Express, etc.) and a delivery receipt obtained and
addressed to the intended recipient as follows:
If to Lessor: Lincoln International Corporation
120 Village Square
Suite 6
Louisville, Kentucky 40243
Telephone No.: 502-245-8814
Facsimile No.: 502-245-8817
ATTN: Lee Sisney
If to Lessee or MLE: Michigan Livestock Exchange
Telephone No.:
Facsimile No.:
ATTN:
or at such other address as either party may provide to the other
in writing for the stated purpose of receiving notices.
17. Quiet Possession. Lessor covenants that Lessee
shall peaceably and quietly have, hold and enjoy the Property and
Equipment during the Term, subject to the terms hereof.
18. Hazardous Substances. (a) Lessee shall, and
Lessee shall cause all of its employees, agents, contractors and
subcontractors and any other persons from time to time present on
or occupying the Property (other than the employees, agents,
contractors and subcontractors or Lessor), to operate its Business
in substantial compliance with all Federal, state or local laws,
ordinances or regulations relating to industrial hygiene or to the
environmental conditions on, under or about the Property
(collectively, "Environmental Laws"), including those relating to
flammable materials, explosives, petroleum (including crude oil),
radioactive materials, hazardous wastes, toxic substances or
related materials, including, without limitation, any asbestos,
asbestos containing materials, PCB's or any substances defined as
or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," or "toxic substances"
(collectively referred to hereinafter as "Hazardous Substances").
(b) Notwithstanding the provisions of Paragraph 18.(a),
Lessor shall remain liable for all loss, damage, cost, expense and
liabilities pertaining to the presence of Hazardous Substances on
the Property or any other premises of Lessor or violations of any
Environmental Laws related to the Property or any other premises
of Lessor prior to the date hereof, whether known or unknown or
whether resulting from the acts of Lessor or its predecessors in
title, and to any present or future claims relating thereto.
Lessee shall have the right to join and participate in, as a party
if it so elects, any legal proceedings or actions initiated by any
person or entity in connection with any claims relating to the
Property. Lessor shall be solely responsible for, and shall
indemnify, defend, and hold harmless Lessee and its directors,
officers, employees, agents, successors and assigns from and
against, any loss, damage, cost, expense or liability directly or
indirectly arising out of or attributable to the use, generation,
storage, release, threatened release, discharge, disposal, or
presence of Hazardous Substances on, under or about the Property
or any other premises of Lessor or any violation of any
Environmental Laws related to the Property or any other premises
of Lessor by parties other than Lessee, including, without
limitation: (1) all foreseeable consequential damages; (2) the
costs of any required or necessary repair, cleanup or
detoxification of the Property, and the preparation and
implementation of any closure, remedial or other required plans;
and (3) all costs and expenses incurred by Lessee in connection
with clauses (1) and (2), including, but not limited to,
attorneys' and consultants' fees and expenses. The foregoing
indemnity, defense, and hold harmless agreement shall survive the
expiration, cancellation or termination of this Lease and exercise
of the option hereunder. Any loss, damage, cost, expense or
liability incurred by Lessee for which Lessor is responsible or
for which Lessor has indemnified Lessee shall be paid to Lessee on
demand, together with interest thereon at the Default Rate from
the date incurred.
19. Waiver; Indemnity. (a) To the extent covered by
policies of insurance maintained or required to be maintained
hereunder, Lessee releases Lessor and its officers, directors,
agents and employees from and waives all claims for damages to
person or property sustained by Lessee resulting, directly or
indirectly, from any occurrence, condition, or defect in or about
the Property or any part thereof, from any equipment or
appurtenance thereon, or from any accident in or about the
Property.
(b) To the extent covered by policies of insurance
maintained or required to be maintained hereunder, Lessor releases
Lessee and its officers, directors, agents and employees from and
waives all claims for damages to person or property sustained by
Lessor resulting, directly or indirectly, from any occurrence,
condition, or defect in or about the Property or any part thereof,
from any equipment or appurtenance thereon, form any accident on
or about the Property.
(c) To the extent not expressly prohibited by law,
Lessee agrees to hold Lessor and its officers, directors, agents
and employees harmless and to indemnify each of them against
claims, expenses or liabilities, including reasonable attorneys'
fees and expenses, arising from any breach on the part of Lessee
in the performance of its covenants or agreements under this Lease
or from Lessee's acts or neglect or that of its officers,
directors, agents or employees, but only to the extent that such
claims, expenses or liabilities are not covered by proceeds of
insurance.
(d) To the extent not expressly prohibited by law,
Lessor agrees to hold Lessee and its officers, directors, agents
and employees harmless and to indemnify each of them against
claims, expenses or liabilities, including reasonable attorneys'
fees and expenses, arising from any breach on the part of Lessor
in the performance of its covenants or agreements under this Lease
or from the breach of any representation or warranty of Lessor set
forth in this Lease or from Lessor's acts or neglect or that of
its officers, directors, agents or employees, but only to the
extent that such claims, expenses or liabilities are not covered
by proceeds of insurance.
20. Force Majeure. Anything in this Lease to the
contrary notwithstanding, Lessee and/or Lessor shall not be deemed
in default with respect to the performance of any obligation on
its part to be performed under this Lease if such default shall be
directly due to any strike, lockout, civil commotion, war-like
operation, invasion, rebellion, hostilities, military or usurped
power, sabotage, governmental regulation or controls, inability to
obtain any material or service, or through acts of God or other
cause or causes whether similar or dissimilar to those enumerated
beyond the control of Lessee and/or Lessor, as the case may be,
and the period for Lessee and/or Lessor to perform such obligation
shall be extended by a period equal to the period of delay caused
by such reason.
21. Miscellaneous. (a) This Lease including the
Exhibits and documents referred to herein contains the entire
agreement between the parties and may be modified only in a
writing signed by the parties.
(b) The terms of this Lease are binding upon an inure to
the benefit of the parties and their respective heirs, legal
representatives, successors and assigns. Nothing in this Lease
shall be deemed to or be construed as creating the relationship of
principal and agent or of partnership or of joint venture between
the parties hereto or any other relationship, other than that of
landlord and tenant.
(c) The paragraph headings are for convenience only.
All grammatical changes required to make the provisions of this
Lease apply to the past, present and future, and in the plural
sense where appropriate, and to corporations, associations,
partnerships or individuals, male or female, shall be assumed as
though in each case fully expressed.
(d) This Lease shall be governed by the laws of the
State of Kentucky. If any term of this Lease is held invalid,
illegal or unenforceable, in whole or in part, the validity of the
remaining part of such term or of any other term of this Lease
shall not be affected thereby. This Lease shall be construed to
have been mutually prepared by the parties.
(e) Time is of the essence of this lease.
(f) If any provision of this Lease requires Lessor's
approval, that approval shall at all times be based on a
reasonable standard.
(g) If either Lessor or Lessee shall bring any action or
proceeding for damages for an alleged breach of any provision of
this Lease, to recover Rent, or to enforce, protect or establish
any right or remedy hereunder, the prevailing party shall be
entitled to recover as a part of such action or proceeding
reasonable attorneys' fees and court costs.
IN WITNESS WHEREOF, the undersigned have executed this
Lease as of the date and year first above written.
LINCOLN INTERNATIONAL CORPORATION
By:
-----------------------------------------
Its:
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KENTUCKY LIVESTOCK EXCHANGE
(BOURBON STOCK YARDS OPERATION)
a division of Michigan Livestock Exchange
By:
-----------------------------------------
Its:
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MICHIGAN LIVESTOCK EXCHANGE
By:
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Its:
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