-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, i7h+nC6oB52/4Ms1oUekHE5Kyss2D3Np6gVnOIfDASZQNnjMuDnf7IFod+pt//E4 7gYhUX6SvWBlnkR0OQb9qA== 0000950134-95-001374.txt : 19950614 0000950134-95-001374.hdr.sgml : 19950614 ACCESSION NUMBER: 0000950134-95-001374 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19950430 FILED AS OF DATE: 19950613 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BESTWAY RENTAL INC CENTRAL INDEX KEY: 0000004344 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 810332743 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-08568 FILM NUMBER: 95546639 BUSINESS ADDRESS: STREET 1: 7800 STEMMONS STE 320 CITY: DALLAS STATE: TX ZIP: 75247 BUSINESS PHONE: 2146306655 MAIL ADDRESS: STREET 1: 7800 STEMMONS FRWY SUITE 320 CITY: DALLAS STATE: TX ZIP: 75217 FORMER COMPANY: FORMER CONFORMED NAME: AMARCO RESOURCES CORP DATE OF NAME CHANGE: 19880403 10-Q 1 FORM 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 30, 1995 / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to __________ Commission file number 0-8568 BESTWAY RENTAL, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 81-0332743 - ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 7800 Stemmons, Suite 320, Dallas, Texas 75247 - ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) (214) 630-6655 ---------------------------------------------------- (Registrant's telephone number, including area code) 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 --- --- APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Number of shares: 75,003,620 As of April 30, 1995 2 BESTWAY RENTAL, INC. QUARTERLY REPORT TO THE SECURITIES AND EXCHANGE COMMISSION FOR THE QUARTER ENDED April 30, 1995
PART I - FINANCIAL INFORMATION PAGE NO. -------- ITEM 1. Consolidated Unaudited Financial Statements 3 - 8 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 - 10 PART II - OTHER INFORMATION ITEM 4. Submission of Matters to a Vote of Security Holders 11 ITEM 6. Exhibits and Reports on Form 8-K, Signatures 12 - 13
2 3 BESTWAY RENTAL, INC. Consolidated Balance Sheets April 30, 1995 and July 31, 1994 (Unaudited)
April 30, July 31, ASSETS 1995 1994 --------------- ------------ Cash $ 247,116 $ 273,183 Restricted cash 119,342 119,342 Prepaid expenses 205,601 150,282 Other assets 79,332 30,080 Rental merchandise, at cost 10,673,982 9,100,959 Less accumulated depreciation 4,022,460 3,380,582 -------------- ------------- 6,651,522 5,720,377 -------------- ------------- Property and equipment, at cost 3,398,158 2,955,411 Less accumulated depreciation 1,553,336 1,140,357 -------------- ------------- 1,844,822 1,815,054 -------------- ------------- Non-compete, net of amortization 627,923 765,759 Goodwill, net of amortization 2,080,925 2,209,202 -------------- ------------- Total Assets $ 11,856,583 $ 11,083,279 ============== ============= LIABILITIES AND EQUITY Accounts payable $ 785,508 $ 702,439 Accrued interest - related parties 11,621 12,013 Accrued interest - other 21,865 17,715 Income taxes payable 39,112 35,319 Accrued other liabilities 728,504 769,980 Notes payable - related parties 3,600,000 3,600,000 Notes payable - other 2,982,555 2,885,659 Commitments and contingencies Stockholders Equity: Preferred stock, $10.00 par value; 1,000,000 authorized, none issued -- -- Common stock, $.01 par value; 90,000,000 authorized; 75,003,620 shares issued and outstanding at April 30, 1995 and July 31, 1994, respectively 750,037 752,638 Paid-in capital 14,107,875 14,108,984 Accumulated deficit (11,170,494) (11,801,468) -------------- ------------- Total equity 3,687,418 3,060,154 -------------- ------------- Total liabilities and equity $ 11,856,583 $ 11,083,279 ============== =============
The accompanying notes are an integral part of the financial statements. 3 4 BESTWAY RENTAL, INC. Consolidated Statements of Income For the three and nine months ended April 30, 1995 and April 30, 1994 (Unaudited)
Three Months Ended Nine Months Ended ---------------------------- --------------------------- April 30, April 30, April 30, April 30, ----------- ----------- ----------- ----------- 1995 1994 1995 1994 ---- ---- ---- ---- Revenues Rental income $ 4,164,939 $ 4,284,020 $12,003,807 $12,121,498 Sales of merchandise 62,244 74,674 123,500 162,438 ----------- ----------- ----------- ----------- 4,229,183 4,358,694 12,127,307 12,283,936 ----------- ----------- ----------- ----------- Cost and operating expenses Depreciation and amortization- 1,002,933 1,084,891 2,933,569 3,166,755 Rental merchandise 240,035 193,221 695,642 543,633 Other 59,540 86,702 110,873 180,943 Cost of merchandise sold 992,111 992,278 2,935,233 2,988,155 Salaries and wages 186,953 209,082 533,261 612,639 Advertising 1,358,809 1,399,546 3,856,694 4,024,588 Other operating expenses (5,563) --- (6,123) --- Gain on sale of assets 131,665 100,714 386,453 287,740 ----------- ----------- ----------- ----------- Interest expense 3,966,483 4,066,434 11,445,602 11,804,453 ----------- ----------- ----------- ----------- Income before income tax provision $ 262,700 $ 292,260 $ 681,705 $ 479,483 ----------- ----------- ----------- ----------- Provision for income tax 17,706 --- 50,730 --- ----------- ----------- ----------- ----------- Net income $ 244,994 $ 292,260 $ 630,975 $ 479,483 ----------- ----------- ----------- ----------- Net income per share $ .00 $ .00 $ .01 $ .00 =========== =========== =========== =========== Weighted average common shares outstanding 75,003,620 75,263,799 75,148,164 75,263,799 =========== =========== =========== ===========
The accompanying notes are an integral part of the financial statements. 4 5 BESTWAY RENTAL, INC. Consolidated Statements of Cash Flows For the nine months ended April 30, 1995 and April 30, 1994 (Unaudited)
Nine Months Ended ----------------------------- April 30, April 30, 1995 1994 ----------- ----------- Cash flows from operating activities: Net income $ 630,975 $ 479,483 Depreciation and amortization 3,629,210 3,710,393 Net book value of rental units retired 617,195 773,031 (Gain) loss on sale of fixed assets (6,123) 750 Stock cancellation (13,424) -- Stock issued 9,714 -- Changes in asset and liability accounts other than cash: Prepaid expenses (55,319) (119,330) Other assets (49,252) (10,167) Accounts payable 43,773 321,354 Income taxes payable 3,793 -- Accrued liabilities 1,394 (153,360) ----------- ----------- Total adjustments (55,611) 38,497 ----------- ----------- Net cash flows from operating activities: 4,811,936 5,002,154 ----------- ----------- Cash flows from investing activities: Purchase of rental units and equipment (4,481,908) (4,118,323) Additions to property and equipment (477,712) (706,760) Proceeds from sale of property and equipment 24,720 2,500 Mississippi Asset Purchase -- (1,969,619) ----------- ----------- Net cash flows used in investing activities: (4,934,900) (6,792,202) ----------- ---------- Cash flows from financing activities: Proceeds of notes payable 896,800 2,380,006 Repayment of notes payable (799,904) (601,877) ------------ ----------- Net cash flows provided by financing activities: 96,896 1,778,129 ----------- ----------- Net increase/(decrease) in cash (26,068) (11,919) Cash at the beginning of the year 273,183 350,797 ----------- ----------- Cash at the end of the quarter $ 247,116 $ 338,878 =========== ===========
The accompanying notes are an integral part of the financial statements. 5 6 BESTWAY RENTAL, INC. Consolidated Statements of Stockholders' Equity for the nine months ended April 30, 1995 (Unaudited)
Common Stock Paid-In Retained Shares Amount Capital Earnings ------ ------ ------- -------- Balance at July 31, 1994 75,263,799 $ 752,638 $14,108,984 $(11,801,469) Stock cancellation (447,507) (4,474) (8,950) Stock issued 187,328 1,873 7,841 Net income for the nine months ended April 30, 1995 630,975 ----------- --------- ----------- ------------ Balance at April 30, 1995 75,003,620 $ 750,037 $14,107,875 $(11,170,494) =========== ========= =========== ============
The accompanying notes are an integral part of the financial statements. 6 7 BESTWAY RENTAL, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 1. Reference to Previous Disclosures The consolidated financial statements included herein have been prepared by the Company without audit. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted or are incorporated herein by reference to the financial statements included in the Company's 1994 Form 10-K. Management believes that the disclosures are adequate to make the information presented not misleading and that all adjustments deemed necessary for a fair statement of the results for the interim period have been reflected. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's 1994 Form 10-K, particularly with regard to disclosure relating to significant accounting policies. 2. Notes Payable On August 26, 1994 the $500,000 note payable dated March 4, 1992 maturing August 31, 1994 was extended until August 31, 1995. On March 15, 1995, the Company amended its August 19, 1993 First Amended and Restated Revolving Credit Loan Agreement with its senior collateralized lender. In the amendment, the Company increased the maximum amount available under the line of credit from $3,000,000 to 4,000,000, extended the maturity date from August 18, 1995 to August 18, 1996 and reduced the interest rate from prime plus 2% to prime plus 1.5%. The Amendment to the First Amended and Restate Revolving Credit Loan Agreement is incorporated as Exhibit 10.1 to this Form 10Q. 3. Reclassifications Certain reclassifications were made to the prior year financial statements to conform with the current year presentation. 4. Income Taxes The following is the reconciliation of the U.S. statutory tax rate to the Company's effective tax rate on income for the nine months ended April 30, 1995: Federal income tax at statutory rate of 34% $ 231,780 Goodwill amortization 43,614 Alternative minimum tax 17,016 State income tax 33,714 Utilization of net operating loss carryforward (275,394) --------- Provision for income tax $ 50,730 =========
7 8 5. Earnings Per Share Earnings per common share have been computed based upon the weighted average common shares outstanding during each period. Fully diluted earnings per share is not shown because the relevant convertible securities are either immaterial, antidilutive or both. 6. Restricted Cash Amount represents escrow money deposited in connection with the sale of certain stores as required by the asset purchase agreement. Disbursements will be made from this account to satisfy any taxes owed by the Company, any claims of third parties against the assets which are the Company's responsibility, or to satisfy any indemnification rights as specified in the asset purchase agreement. Upon termination, any amount not payable to third parties will be returned to the Company. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations The following table sets forth, for the periods indicated, certain items from the Company's Consolidated Statements of Income, expressed as a percentage of revenues.
Three Months Ended Nine Months Ended April 30, April 30, 1995 1994 1995 1994 ---- ---- ---- ---- Revenues Rental income 98.5% 98.3% 99.0% 98.7% Sales of merchandise 1.5 1.7% 1.0 1.3 --------- --------- ------ ------ Total revenues 100.0 100.0 100.0 100.0 Cost and operating expenses Depreciation and amortization - Rental merchandise 23.7 24.9 24.2 25.8 Other 5.7 4.4 5.7 4.4 Cost of merchandise sold 1.4 2.0 .9 1.5 Salaries and wages 23.4 22.8 24.2 24.3 Advertising 4.4 4.8 4.4 5.0 Other operating expenses 32.1 32.1 31.8 32.8 Interest expense 3.1 2.3 3.2 2.3 --------- --------- ------ ------ Total cost and operating expenses 93.8 93.3 94.4 96.1 --------- --------- ------ ------ Net income before income tax provision 6.2 6.7 5.6 3.9 --------- --------- ------ ------ Provision for income tax .4 -- .4 -- --------- --------- ------ ------ Net income 5.8% 6.7% 5.2% 3.9% ======== ========= ====== ======
8 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, con't. Third Quarter of Fiscal 1995 Compared with Third Quarter of Fiscal 1994 Total revenue decreased by $129,511 or 3.0% for the three months ended April 30, 1995, as compared to the three months ended April 30, 1994 due to a decrease in the number of stores in operation to 35 from 41. Same store revenues increased by $220,019 or 8.1%. Revenues from the Company's Mississippi stores acquired September 10, 1993 increased $194,908 or 24.2%. Revenues from three new stores opened in the first quarter of 1994 increased $98,454 or 52.8%. Revenues decreased $642,892 due to the six Midwest stores closed as a result of the June 16, 1994 asset purchase agreement. The Company experienced significant improvement in store operating margins during the quarter ended April 30, 1995 compared to the quarter ended April 30, 1994. The three new stores opened in 1994 experienced profits of approximately $58,000 compared to losses of approximately $16,000 for the three month period ended April 30, 1995 and 1994, respectively. Total store operating margins including the three new stores, Mississippi stores acquired September 10, 1993, same stores and the six Midwest stores closed June 16, 1994 increased 25.9% as a result of better merchandising strategies and upgrading the Company's sales and support resources. Interest expense increased to 3.1% from 2.3% of total revenues due to increased borrowings for the purchase of new delivery vans and a 2.25% increase in the interest rate at April 30, 1995 compared to April 30, 1994. The Company's improved performance is primarily due to the implementation of a marketing program based on increasing the Company's share of the customer's business and the implementation of a broad-based training program designed to improve customer satisfaction skills of the Company's employees and to reduce employee turnover. Nine Months Ended April 30, 1995 Compared with Nine Months Ended April 30, 1994 Total revenues decreased by $156,629 or 1.3% for the nine months ended April 30, 1995, as compared to the nine months ended April 30, 1994. Same store revenues increased $506,332 or 6.2%. Revenues from the Company's Mississippi stores acquired September 6, 1993 increased $874,140 or 46.5%. Revenues from the three new stores opened in the first quarter of 1994 increased $422,353 or 122.6%. Revenues decreased $1,959,454 due to the six Midwest stores closed as a result of the June 16, 1994 asset purchase agreement. The Company experienced significant improvement in store operating margins during the nine months ended April 30, 1995 compared to the nine months ended April 30, 1994. The three new stores opened in 1994 experienced profits of approximately $127,000 compared to losses of approximately $144,000 for the nine months ended April 30, 1995 and 1994, respectively. Total store operating margins including the three new stores, Mississippi stores acquired September 10, 1993, same stores and the six Midwest stores closed June 16, 1994 increased 32.0% as a result of better merchandising strategies and upgrading the Company's sales and support resources. Interest expense increased to 3.2% from 2.3% of total revenues due to increased borrowings for the purchase of new delivery vans and a 2.25% increase in the interest rate at April 30, 1995 compared to April 30, 1994. 9 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, con't. The Company's improved performance is primarily due to the implementation of a marketing program based on increasing the Company's share of the customer's business and the implementation of a broad-based training program designed to improve customer satisfaction skills of the Company's employees and to reduce employee turnover. Financial Condition, Liquidity and Capital Resources The Company's primary source of funds to finance its business has been its cash flows provided by operating activities and its bank borrowings. The funds have been used primarily to purchase and carry additional rental merchandise for existing stores. On March 15, 1995, the Company amended its August 19, 1993 First Amended and Restated Revolving Credit Loan Agreement with its senior collateralized lender. In the amendment, the Company increased the maximum amount available under the line of credit from $3,000,000 to $4,000,000, extended the maturity date from August 18, 1995 to August 18, 1996 and reduced the interest rate from prime plus 2% to prime plus 1.5%. The Company's net cash flows provided by operating activities and used in investing activities was $4,811,936 and $4,934,900, respectively. The $190,218 decrease in cash flows from operating activities as compared to the same period last year is primarily due to a decrease in asset and liability accounts other than cash as a result of closing six stores on June 16, 1994. The Company's investing activities primarily reflect its continuing replacement of rental merchandise that was purchased by customers' either by full pay our under the rental agreement or by exercise of the customers' early purchase option and provide increased inventory levels to meet the Company's increase in the number of units on rent. Additions to property and equipment include the purchase and retrofit of vehicles and leasehold improvements for five of the Company's older stores. In addition, the Company implemented a jewelry program having related costs of approximately $118,000 for the design and installation of jewelry centers in each store. With the Company having available credit of $1,579,473 under the $4,000,000 amended line of credit at April 30, 1995 and reporting operating profits, management believes the Company has adequate cash resources to meet its cash obligation. Inflation Although the Company cannot precisely determine the effects of inflation on its business, it is management's belief that the effects on revenues and from continuing operating results have not been significant. 10 11 PART II - OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 1. Name Change On April 13, 1995 a majority of the stockholders of the Company authorized an amendment of the Certificate of Incorporation in order to effect the change of the Company's name to Bestway, Inc. effective June 6, 1995. The Amendment to the Certificate is incorporated as Exhibit 3.1 to this Form 10Q. 2. Reverse Split of Common Stock On April 13, 1995 a majority of the stockholders of the Company authorized an amendment of the Certificate of Incorporation in order to effect the reverse stock split of each share of common stock, par value $.01 per share, into one-five hundredth of a fully paid and nonassessable share of common stock, par value $5.00 per share effective June 6, 1995. In addition, a majority of the stockholders authorized a Fractional Share Program to permit holders of fewer than 500 shares of common stock to maintain their equity interest in the Company and to provide funds to the Company for the purpose of paying holders of fractional interests in reverse split common stock the fair value of their fractional interests. The Amendment to the Certificate is incorporated as Exhibit 3.1 to this Form 10Q. 3. Reclassification of Common Stock On April 13, 1995 a majority of the stockholders of the Company authorized an amendment of the Certificate of Incorporation in order to effect a subsequent reclassification pursuant to which each one share of common stock, par value $5.00 per share, was converted into ten shares of common stock, par value $.01 per share effective June 7, 1995. The Amendment to the Certificate is incorporated as Exhibit 3.1 to this Form 10Q. 4. Authorized Shares Decrease On April 13, 1995 a majority of the stockholders of the Company authorized an amendment of the Certificate of Incorporation in order to effect a decrease in the Company's authorized number of shares of common stock from 90,000,000 shares to 20,000,000 shares effective June 7, 1995. The Amendment to the Certificate is incorporated as Exhibit 3.1 to this Form 10Q. 11 12 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K, SIGNATURES (a) Exhibits required by Item 601 of Regulation S-K 3.1 Amended and Restated Certificate of Incorporation 10.1 First Amendment to First Amended and Restated Revolving Credit Loan Agreement dated March 15, 1995 27 Financial Data Schedule (b) Reports on Form 8-K None 12 13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BESTWAY RENTAL, INC. June 13, 1995 /s/ Beth A. Durrett ------------------------------------- Beth A. Durrett Vice President - Controller (Principal Financial Officer and duly authorized to sign on behalf of the Registrant) 13 14 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 3.1 Amended and Restated Certificate of Incorporation 10.1 First Amendment to First Amended and Restated Revolving Credit Loan Agreement dated March 15, 1995 27 Financial Data Schedule
EX-3.1 2 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION 1 EXHIBIT 3.1 CERTIFICATE OF AMENDMENT TO THE THIRD RESTATED CERTIFICATE OF INCORPORATION OF BESTWAY RENTAL, INC. (REVERSE STOCK SPLIT) We, R. Brooks Reed, President, and Beth A. Durrett, Secretary, of Bestway Rental, Inc., a corporation existing under the laws of the State of Delaware (the "Corporation"), do hereby certify as follows: FIRST: That the first sentence of Article FIRST of the Third Restated Certificate of Incorporation, as amended (the "Certificate of Incorporation") of this Corporation be amended and restated in its entirety, effective as of the effective time ("Effective Time") of this Certificate of Amendment, as specified in paragraph SEVENTH hereof, to read as follows: "The name of the Corporation is Bestway, Inc." SECOND: That the first paragraph of Article FOURTH of the Certificate of Incorporation be amended and restated in its entirety, effective as of the Effective Time of this Certificate of Amendment as specified in paragraph SEVENTH hereof, to read as follows: "The total number of shares of stock of all classes which the Corporation shall have authority to issue is One Million, One Hundred and Fifty Thousand and One Hundred (1,150,100). One Million (1,000,000) of such shares, having the par value of Ten Dollars ($10.00) per share, shall be designated Preferred Stock, and One Hundred and Fifty Thousand and One Hundred (150,100) of such shares, having the par value of Five Dollars ($5.00) per share, shall be designated Common Stock. Effective as of 6:00 p.m. Eastern Daylight Time on June 6, 1995 (the "Effective Time"), without any further action on the part of the Corporation or its stockholders, each share of Common Stock, par value $.01 per share, then issued and outstanding shall be changed into one-five hundredth (1/500) of a fully paid and nonassessable share of Common Stock, par value $5.00 per share (the "Reverse Stock Split"). No functional shares will be issued as a result of the Reverse Stock Split and, in lieu of fractional shares, stockholders will receive cash in the amount of the fair value of fractions of a share as of the Effective Time as determined by the Board of Directors of the Corporation; provided, however, that stockholders who, at a specified date prior to the Effective Time, return to the Corporation (or its exchange agent for this purpose) a letter of transmittal and other documentation, properly completed in accordance with instructions in the letter of transmittal, may elect to purchase (i) additional fractional shares in an amount sufficient for such stockholder to hold a full share of Common Stock for any fractional share held by such stockholder as a result of the Reverse Stock Split, and (ii) to the extent of the number of whole shares, if any, remaining in the fractional share pool created by the Reverse Stock Split after satisfying the purchase of fractional shares pursuant to the preceding clause (i), additional whole shares of Common Stock in order to provide funds to the Corporation for the payment of cash to the holders of fractional shares." THIRD: That the foregoing amendments to the Certificate of Incorporation were duly adopted by the unanimous written consent of the Board of Directors of the Corporation of 2 resolutions declaring said amendments to be advisable, and directing appropriate officers of the Corporation to procure the adoption, approval and written consent of stockholders holding at least a majority of the outstanding stock of the Corporation. FOURTH: That the foregoing amendments were authorized by a resolution in the form of a written consent signed by holders of a majority of the outstanding stock of the Corporation entitled to vote thereon, and notice thereof was duly given to those stockholders who did not consent in writing. FIFTH: That the foregoing amendments were duly adopted in accordance with the applicable provisions of Section 242, and Section 228 of the General Corporation Law of the State of Delaware. SIXTH: That except as provided above, the Certificate of Incorporation shall remain unchanged. SEVENTH: That pursuant to Section 103(d) of the General Corporation Law of the State of Delaware, this Certificate of Amendment shall be effective at 6:00 p.m. Eastern Daylight Time on June 6, 1995. IN WITNESS WHEREOF, we have executed this Certificate of Amendment as of the 2nd day of June, 1995. /s/ R. BROOKS REED R. Brooks Reed, President ATTEST: /s/ BETH A. DURRETT Beth A. Durrett, Secretary 3 CERTIFICATE OF AMENDMENT TO THE THIRD RESTATED CERTIFICATE OF INCORPORATION OF BESTWAY, INC. (Reclassification of Common Stock) We, R. Brooks Reed, President, and Beth A. Durrett, Secretary, of Bestway Inc., a corporation existing under the laws of the State of Delaware (the "Corporation"), do hereby certify as follows: FIRST: That the first paragraph of Article FOURTH of the Third Restated Certificate of Incorporation, as amended (the "Certificate of Incorporation") of this Corporation be amended and restated in its entirety, effective as of the effective time ("Effective Time") of this Certificate of Amendment as specified in paragraph SEVENTH hereof, to read as follows: "The total number of shares of stock of all classes which the Corporation shall have authority to issue is Twenty-one Million (21,000,000). One Million (1,000,000) of such shares, having the par value of Ten Dollars ($10.00) per share, shall be designated Preferred Stock, and Twenty Million (20,000,000) of the shares, having the par value of One Cent ($0.01) per share, shall be designated Common Stock. Effective as of 6:00 a.m. Eastern Daylight Time on June 7, 1995 (the "Effective Time"), each share of Common Stock, par value Five Dollars ($5.00) per share, then issued and outstanding shall be changed into and reclassified as Ten (10) fully paid and nonassessable shares of Common Stock, par value One Cent ($0.01) per share." SECOND: That the foregoing amendment to the Certificate of Incorporation was duly adopted by the unanimous written consent of the Board of Directors of the Corporation of resolutions declaring said amendment to be advisable, and directing appropriate officers of the Corporation to procure the adoption, approval and written consent of stockholders holding at least a majority of the outstanding stock of the Corporation. THIRD: That the foregoing amendment was authorized by a resolution in the form of a written consent signed by holders of a majority of the outstanding stock of the Corporation entitled to vote thereon, and notice thereof was duly given to those stockholders who did not consent in writing. FOURTH: That the foregoing amendment was duly adopted in accordance with the applicable provisions of Section 242 and Section 228 of the General Corporation Law of the State of Delaware. FIFTH: That pursuant to Section 244 of the General Corporation Law of the State of Delaware, the Board of Directors of the Corporation approved by resolution the reduction of the Corporation's capital resulting from the reclassification of such stock pursuant to the foregoing amendment. SIXTH: That except as provided above, the Certificate of Incorporation shall remain unchanged. 4 SEVENTH: That pursuant to Section 103(d) of the General Corporation Law of the State of Delaware, this Certificate of Amendment shall be effective at 6:00 a.m. Eastern Daylight Time on June 7, 1995. IN WITNESS WHEREOF, we have executed this Certificate of Amendment as of the 28th day of April, 1995. /s/ R. BROOKS REED R. Brooks Reed, President ATTEST: /s/ BETH A. DURRETT Beth A. Durrett, Secretary EX-10.1 3 1ST AMENDMENT TO REVOLVING CREDIT AND LOAN AGRMNT 1 EXHIBIT 10.1 FIRST AMENDMENT TO FIRST AMENDED AND RESTATED REVOLVING CREDIT LOAN AGREEMENT THIS FIRST AMENDMENT TO FIRST AMENDED AND RESTATED REVOLVING CREDIT LOAN AGREEMENT (the "AMENDMENT"), dated as of March 15, 1995, is among the Borrower (as defined below) and COMERICA BANK-TEXAS, a Texas banking association ("LENDER"). RECITALS: Borrower and Lender have entered into that certain First Amended and Restated Revolving Credit Loan Agreement dated as of August 19, 1993 (such agreement as previously amended and/or extended and as may be hereafter amended or otherwise modified from time to time, the "AGREEMENT"). Borrower and Lender desire to amend the Agreement as herein provided. NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I Definitions Section 1.1 Definitions. Capitalized terms used in this Amendment, to the extent not otherwise defined herein, shall have the same meanings as in the Agreement, as amended hereby. As used herein the term "BORROWER" shall mean, collectively, Bestway Rental, Inc., a Delaware corporation, EZY Rental, Inc., a Tennessee corporation, K.C. Resource Service Corporation, a Missouri corporation, and U.S. Credit-Service Corporation, a Missouri corporation, each of which are jointly and severally liable under all documents executed by them for the benefit of Lender. ARTICLE II Amendments Section 2.1. Amendment to Section 1.1. Effective as of the date hereof, certain definitions contained in Section 1.1 of the Agreement are hereby amended as follows: (a) The following definitions are hereby substituted for existing definitions of the same identity, and such existing definitions are deleted in their entirety: FIRST AMENDMENT TO FIRST AMENDED AND RESTATED REVOLVING CREDIT LOAN AGREEMENT - Page 1 2 "MAXIMUM REVOLVING CREDIT LOAN" shall mean $4,000,000.00. "REVOLVING CREDIT NOTE" shall mean the First Modification Revolving Credit Note dated March 15, 1995, in the original principal amount of $4,000,000, executed by the Borrower and payable to the order of the Bank, as renewed, extended, increased and/or modified from time to time. "TERMINATION DATE" shall mean August 18, 1996. Section 2.2 Amendment to Section 2 Generally. Effective as of the date hereof, the reference in Section 2.1. of the Agreement to "$3,000,000" is deleted and replaced with "$4,000,000". Additionally, any other reference in Section 2, generally, to a $3,000,000 limit for the face amount of the Revolving Credit Note shall be deleted and $4,000,000 shall be substituted therefor. Section 2.3 Amendment to Section 2.2.4. Effective as of the date hereof, all references in Section 2.2.4 of the Agreement to "two percent (2%)" shall be deleted and substituted therefor shall be "one and one-half percent (1.50%)." ARTICLE III Conditions Precedent The effectiveness of this Amendment is subject to the condition that Lender shall have received as of the date hereof, in form and substance satisfactory to Lender, (a) the Revolving Credit Note, (b) resolutions of the Board of Directors of the Borrower certified by its Secretary or an Assistant Secretary which authorize the execution, delivery, and performance by the Borrower of this Amendment, and (c) written ratification of all existing subordination agreements from O'Donnell & Masur, L.P., Jack E. Meyer and Euless Aero Components, Inc. ARTICLE IV Ratifications and Other Agreements Section 4.1 Ratifications. The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Agreement and except as expressly modified and superseded by this Amendment, the terms and provisions of the Agreement, the Note, and all other loan and collateral documents executed in connection with the Agreement are hereby ratified and confirmed and shall continue in full force and effect. Borrower and Lender agree that the Agreement as amended hereby and all other documents executed in connection with the Agreement or this Amendment to which Borrower is a party shall continue to be legal, valid, binding and enforceable in accordance with their respective terms. FIRST AMENDMENT TO FIRST AMENDED AND RESTATED REVOLVING CREDIT LOAN AGREEMENT - Page 2 3 Section 4.2 Representations and Warrantes. Borrower hereby represents and warrants to Lender that (a) the execution, delivery and performance of this Amendment and any and all other documents executed and/or delivered in connection herewith have been authorized by all requisite corporate action on the part of Borrower and will not violate the articles of incorporation or bylaws of Borrower or any agreement to which Borrower or any of its properties is bound, (b) the representations and warranties contained in the Agreement, as amended hereby, and any other documents executed in connection therewith or herewith are true and correct on and as of the date hereof as though made on and as of the date hereof, (c) no Event of Default has occurred and is continuing and no event or condition has occurred that with the giving of notice or lapse of time or both would be an Event of Default, and (d) Borrower is in full compliance with all covenants and agreements contained in the Agreement as amended hereby. Since the date of the Agreement, there have been no amendments to any of the respective articles of incorporation or bylaws of the entities which collectively comprise the Borrower. ARTICLE V Miscellaneous Section 5.1 Survival of Representations and Warranties. All representations and warranties made in this Amendment or any other document executed in connection herewith shall survive the execution and delivery of this Amendment, and no investigation by Lender or any closing shall affect the representations and warranties or the right of Lender to rely upon them. Section 5.2 Reference to Agreement. The Agreement, and any and all other agreements, documents, or instruments now or hereafter executed and delivered pursuant to the terms hereof or pursuant to the terms of the Agreement as amended hereby, are hereby amended so that any reference in such documents to the Agreement shall mean a reference to the Agreement as amended hereby. Section 5.3 Expenses of Lender. As provided in the Agreement, Borrower agrees to pay on demand all reasonable costs and expenses incurred by Lender in connection with the preparation, negotiation, and execution of this Amendment and any other documents executed pursuant hereto and any and all amendments, modifications, and supplements thereto, including without limitation the costs and reasonable fees of Lender's legal counsel, and all costs and expenses incurred by Lender in connection with the enforcement or preservation of any rights under the Agreement, as amended hereby, or any other document executed in connection therewith, including without limitation the costs and reasonable fees of Lender's legal counsel. Section 5.4 Severability. Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable. FIRST AMENDMENT TO FIRST AMENDED AND RESTATED REVOLVING CREDIT LOAN AGREEMENT - Page 3 4 Section 5.5 Applicable Law. This Amendment and all other documents executed pursuant hereto shall be deemed to have been made and to be performable in Dallas, Dallas County, Texas and shall be governed by and construed in accordance with the laws of the State of Texas. Section 5.6 Successors and Assigns. This Amendment is binding upon and shall inure to the benefit of Lender, Borrower, and their respective successors and assigns, except Borrower may not assign or transfer any of its rights or obligations hereunder without the prior written consent of Lender. Section 5.7 Counterparts. This Amendment may be executed in one or more counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same instrument. Section 5.8 Effect of Waiver. No consent or waiver, express or implied, by Lender to or for any breach of or deviation from any covenant, condition or duty by Borrower or any obligated party shall be deemed a consent or waiver to or of any other breach of the same or any other covenant, condition or duty. Section 5.9 Headings. The headings, captions, and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment. Section 5.10 Non-Application of Chapter 15 of Texas Credit Code. The provisions of Chapter 15 of the Texas Credit Code (Vernon's Annotated Texas Statutes, Article 5069-15) are specifically declared by the parties not to be applicable to this Amendment or any of the Loan Documents or the transactions contemplated hereby. Section 5.11 ENTIRE AGREEMENT. THE AGREEMENT, THIS AND ALL OTHER INSTRUMENTS, DOCUMENTS AND AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION WITH THE AGREEMENT OR THIS AMENDMENT EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THIS AMENDMENT, AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO. FIRST AMENDMENT TO FIRST AMENDED AND RESTATED REVOLVING CREDIT LOAN AGREEMENT - Page 4 5 Executed as of the date first written above. BORROWER: BESTWAY RENTAL, INC., By: /s/ BETH A. DURRETT ----------------------- Beth A. Durrett Vice President EZY RENTAL, INC. By: /s/ BETH A. DURRETT ----------------------- Beth A. Durrett Vice President K. C. RESOURCE SERVICE CORPORATION By: /s/ BETH A. DURRETT ----------------------- Beth A. Durrett Vice President U.S. CREDIT-SERVICE CORPORATION By: /s/ BETH A. DURRETT ----------------------- Beth A. Durrett Vice President LENDER: COMERICA BANK-TEXAS By: ----------------------- G. Christopher Jones Vice President FIRST AMENDMENT TO FIRST AMENDED AND RESTATED REVOLVING CREDIT LOAN AGREEMENT - Page 5 6 Each of the undersigned hereby severally, but not jointly, (i) consents and agrees to this Amendment and (ii) confirms and agrees that any subordination agreement previously executed respectively by the undersigned for the benefit of Lender is in full force and effect and is the legal, valid and binding obligation of the undersigned and is, enforceable in accordance with its terms. SUBORDINATING PARTIES: O'DONNELL & MASUR, L.P. By: O'Donnell & Masur, a general partnership By: /s/ JAMES A. O'DONNELL ---------------------------------------- Its: General Partner --------------------------------------- /s/ JACK E. MEYER ------------------------------------------- Jack E. Meyer EULESS AERO COMPONENTS, INC. By: /s/ DAVID S. TEMIN ---------------------------------------- Its: Vice President --------------------------------------- FIRST AMENDMENT TO FIRST AMENDED AND RESTATED REVOLVING CREDIT LOAN AGREEMENT - Page 6 7 SECOND AMENDED AND RESTATED REVOLVING CREDIT NOTE Dallas, Texas $4,000,000.00 March 15, 1995 FOR VALUE RECEIVED, BESTWAY RENTAL, INC., a Delaware corporation which is successor-by-merger to EZY Acquisition, Inc., EZY RENTAL, INC., a Tennessee corporation, K. C. RESOURCE SERVICE CORPORATION, a Missouri corporation, and U.S. CREDIT - SERVICE CORPORATION, a Missouri corporation, (collectively, the "MAKER"), jointly and severally promise to pay to the order of COMERICA BANK-TEXAS (the "BANK") at 1909 Woodall Rodgers Freeway, Dallas, Texas 75201, on August 18, 1996, (unless sooner due under the terms of the Loan Agreement, as that term is defined below) the principal sum of Four Million and No/100 Dollars ($4,000,000.00) or, if less, the aggregate unpaid principal sum shown on the schedule(s) which, at the sole option of the Bank, may be attached hereto and made a part hereof. The unpaid principal amount of this Note shall bear interest and be payable as provided in that certain First Amended and Restated Revolving Credit Agreement, dated August 19, 1993, between the Maker and the Bank (as amended from time to time, including without limitation of even date herewith, the "LOAN AGREEMENT") and this Note is the Revolving Credit Note referred to in the Loan Agreement. Interest shall be payable to the extent accrued on the first day of each calendar month, beginning April 1, 1995, until maturity (whether by acceleration or otherwise) and, from and after such maturity, on demand. This Note is secured by the Collateral described in the Loan Agreement, which Loan Agreement, as it may be amended from time to time, is by this reference incorporated herein and made a part hereof. Reference is hereby made to the Loan Agreement for a statement of its terms and conditions, including those conditions under which this Note may be paid prior to its due date or its due date accelerated. Unless otherwise defined herein, capitalized terms herein shall have the meanings given such terms in the Loan Agreement. If an Event of Default (as defined in the Loan Agreement) occurs and is not cured within the time, if any, provided for by the Loan Agreement and is continuing, the Bank may exercise any one or more of the rights (including the right to accelerate this Note and any other Indebtedness, as defined in the Loan Agreement) and remedies granted by the Loan Agreement, or given to a secured party under applicable law. The Bank is hereby granted a security interest in all property of the Maker at any time in the possession of the Bank and in all balances of deposit accounts of the Maker from time to time with the Bank. If an Event of Default occurs and is not cured within the time, if any, SECOND AMENDED AND RESTATED REVOLVING CREDIT NOTE - Page 1 8 provided for by the Loan Agreement, then the Bank, upon the occurrence and continuance of any such Event of Default, or after the expiration of any time provided for cure, may at its option and without prior notice to the Maker declare the principal of and interest on this Note to be immediately due and payable and may set off against the principal of and interest on this Note (i) any amount owing by the Bank to the Maker (ii) any property of the Maker in the possession of the Bank and (iii) any amount in any deposit account of the Maker with the Bank. No agreements, conditions, provisions or stipulations contained in this Note or in any other agreement between the Maker and the Bank, or the occurrence of an Event of Default, or the exercise by the Bank of the right to accelerate the payment of the maturity of principal and interest, or to exercise any option whatsoever contained in this Note or any other agreement between the Maker and the Bank, or the arising of any contingency whatsoever, shall entitle the Bank to collect, in any event, interest exceeding the maximum rate of nonusurious interest allowed from time to time by applicable state or federal laws as now or as may hereinafter be in effect (the "MAXIMUM LEGAL RATE") and in no event shall the Maker be obligated to pay interest exceeding such Maximum Legal Rate, and all agreements, conditions or stipulations, if any, which may in any event or contingency whatsoever operate to bind, obligate or compel the Maker to pay a rate of interest exceeding the Maximum Legal Rate shall be without binding force or effect, at law or in equity, to the extent only of the excess of interest over such Maximum Legal Rate. In the event any interest is charged in excess of the Maximum Legal Rate (the "Excess"), the Maker acknowledges and stipulates that any such charge shall be the result of an accidental and bona fide error, and such Excess shall be, first applied to reduce the principal of any obligations due, and, second, returned to the Maker, it being the intention of the parties hereto not to enter at any time into an usurious or otherwise illegal relationship. The parties hereto recognize that with fluctuations in the prime commercial interest rate from time to time announced by the Bank such an unintentional result could inadvertently occur. By the execution of this Note, the Maker covenants that (a) the credit or return of any Excess shall constitute the acceptance by the Maker of such Excess, and (b) the Maker shall not seek or pursue any other remedy, legal or equitable, against the Bank based, in whole or in part, upon the charging or receiving of any interest in excess of the Maximum Legal Rate. For the purpose of determining whether or not any Excess has been contracted for, charged or received by the Bank, all interest at any time contracted for, charged or received by the Bank in connection with the Maker's obligations shall be amortized, prorated, allocated and spread in equal parts during the entire term of this Note. If at any time the rate of interest payable hereunder shall be computed on the basis of the Maximum Legal Rate, any subsequent reduction in the Contract Rate shall not reduce such interest thereafter payable hereunder below the amount computed on the basis of the Maximum Legal Rate until the aggregate amount of such interest accrued and payable under this Note equals the total amount of interest which would have accrued if such interest had been at all times computed solely on the basis of the Contract Rate. Unless preempted by federal law, the rate of interest from time to time in effect hereunder shall not exceed the "INDICATED RATE CEILING" from time to time in effect under Chapter SECOND AMENDED AND RESTATED REVOLVING CREDIT NOTE - Page 2 9 1 of the Texas Credit Code (Vernon's Texas Civil Statutes), Section (a)(1), Article 5069-1.04, as amended. The provisions of this Note governing interest shall be deemed to be incorporated into every document or communication relating to the obligations which sets forth or prescribes any account, right or claims or alleged account, right or claim of the Bank with respect to the Maker (or any other obligor in respect of the obligations), whether or not any provisions of this Note is referred to therein. All such documents and communications and all figures set forth therein shall, for the sole purpose of computing the extent of the obligations asserted by the Bank thereunder, be automatically recomputed by the Maker or any other obligor, and by any court considering the same, to give effect to the adjustments or credits required by this Note. If the applicable state or federal law is amended in the future to allow a greater rate of interest to be charged under this Note than is presently allowed by applicable state or federal law, then the limitation of interest hereunder shall be increased to the maximum rate of interest allowed by applicable state or federal law, as amended, which increase shall be effective hereunder on the effective date of such amendment, and all interest charges owing to the Bank by reason thereof shall be payable upon demand. The provisions of Chapter 15 of the Texas Credit Code (Vernon's Texas Civil Statutes), Article 5069-15, as amended, are specifically declared by the parties hereto not to be applicable to this Note or any of the other agreements executed in connection herewith or therewith or to the transactions contemplated hereby or thereby. The Maker and all guarantors and endorsers (i) waive presentment, demand, protest and notice of dishonor, (ii) agree that no extension or indulgence to the Maker or release or nonenforcement of any security, whether with or without notice, shall affect the obligations of any guarantor or endorser, and (iii) agree to reimburse the holder of this Note for any and all costs and expenses (including, but not limited to, reasonable attorney fees) incurred in collecting or attempting to collect any and all principal of and interest on this Note. Should this Note be signed by more than one party, all of the obligations herein contained shall be the joint and several obligations of each signatory hereto. This Note is given in renewal and extension (but not as a novation) of that certain First Amended and Restated Revolving Credit Note dated August 19, 1993, in the original principal amount of $3,000,000.00 executed by Maker and payable to the order of the Bank. SECOND AMENDED AND RESTATED REVOLVING CREDIT NOTE - Page 3 10 IN WITNESS WHEREOF, the Maker has executed this Note as of the 15th day of March, 1995. BESTWAY RENTAL, INC. By: /s/ BETH A. DURRETT --------------------------- Beth A. Durrett Vice President EZY RENTAL, INC. By: /s/ BETH A. DURRETT --------------------------- Beth A. Durrett Vice President K.C. RESOURCE SERVICE CORPORATION By: /s/ BETH A. DURRETT --------------------------- Beth A. Durrett Vice President U.S. CREDIT - SERVICE CORPORATION By: /s/ BETH A. DURRETT --------------------------- Beth A. Durrett Vice President SECOND AMENDED AND RESTATED REVOLVING CREDIT NOTE - Page 4 EX-27 4 FINANCIAL DATA SCHEDULE
5 9-MOS JUL-31-1995 APR-30-1995 366,458 0 0 0 10,673,982 2,993,781 3,398,158 5,575,796 11,856,583 8,169,165 0 750,037 0 0 2,937,381 11,856,583 0 12,127,307 0 3,044,442 8,014,707 0 386,453 681,705 50,730 630,975 0 0 0 630,975 .01 0
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