<PAGE> 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
<PAGE> 2
BESTWAY RENTAL, INC.
QUARTERLY REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
FOR THE QUARTER ENDED
April 30, 1995
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION PAGE NO.
--------
<S> <C>
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
</TABLE>
2
<PAGE> 3
BESTWAY RENTAL, INC.
Consolidated Balance Sheets
April 30, 1995 and July 31, 1994
(Unaudited)
<TABLE>
<CAPTION>
April 30, July 31,
ASSETS 1995 1994
--------------- ------------
<S> <C> <C>
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
============== =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 4
BESTWAY RENTAL, INC.
Consolidated Statements of Income
For the three and nine months ended April 30, 1995 and April 30, 1994
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------------- ---------------------------
April 30, April 30, April 30, April 30,
----------- ----------- ----------- -----------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
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
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 5
BESTWAY RENTAL, INC.
Consolidated Statements of Cash Flows
For the nine months ended April 30, 1995 and April 30, 1994
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
-----------------------------
April 30, April 30,
1995 1994
----------- -----------
<S> <C> <C>
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
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 6
BESTWAY RENTAL, INC.
Consolidated Statements of Stockholders' Equity
for the nine months ended April 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Paid-In Retained
Shares Amount Capital Earnings
------ ------ ------- --------
<S> <C> <C> <C> <C>
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)
=========== ========= =========== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE> 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:
<TABLE>
<S> <C>
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
=========
</TABLE>
7
<PAGE> 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.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
April 30, April 30,
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
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%
======== ========= ====== ======
</TABLE>
8
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 14
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
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
</TABLE>
<PAGE> 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
<PAGE> 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
<PAGE> 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.
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
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