IN THE UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
In re
SIMPLY WHEELZ LLC, D/B/A ADVANTAGE RENT-A-CAR,
Debtor.
MOTION OF DEBTOR FOR PRELIMINARY AND FINAL ORDERS
(A) AUTHORIZING POST-PETITION LEASE AND CREDIT FACILITY ON A
SECURED AND SUPER-PRIORITY BASIS PURSUANT TO 11 U.S.C. §§ 105,363,
364(C)(1), 364(C)(2), 364(D)(1) AND 507(B) WITH MERCHANTS AUTOMOTIVE
GROUP, INC.; (B) ASSUMING AN EXISTING OPEN-END MASTER LEASE
AGREEMENT; (C) GRANTING OTHER RELATED RELIEF; AND (D) SCHEDULING
A FINAL HEARING PURSUANT TO RULE 4001(BV2) AND (C)(2)
Simply Wheelz LLC, as debtor and debtor-in-possession (the "Debtor"), through its
counsel, files this Motion of Debtor for Preliminary and Final Orders (A) Authorizing Post-
Petition Lease and Credit Facility on a Secured and Super Priority Basis Pursuant to 11 U.S.C.
§§ 105, 363, 364(c)(1), 364(c)(2), 364(d)(1) and 507(b) with Merchants Automotive Group, Inc.;
(B) Assuming An Existing Open-End Master Lease Agreement; (C) Granting Other Related
Relief; and (D) Scheduling a Final Hearing Pursuant to Rule 4001(b)(2) and (c)(2) (the
"Motion") in which the Debtor requests immediate relief authorizing a post-petition lease and
credit facility up to an amount of $17,500,000 (the "Interim Amount") through the entry of an
interim order in substantially similar form to that filed herewith (the "Interim Order") (a copy of
which is attached hereto as Exhibit A), and then, after notice and a final hearing, a final order
authorizing a post-petition lease and credit facility up to an amount of $17.5 million (the
"Authorized Credit Transaction"), and assuming an existing Open End Master Lease Agreement.
In support of this Motion, the Debtor respectfully states as follows:
Case No. 13-03332-ee Chapter 11
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I. JIIRTSDICTION AND VENUE
1. The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and
1334. Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409. This is a core proceeding
pursuant to 28 U.S.C. § 157(b)(2)(A) and (M).
2. The statutory bases for the relief requested herein are Sections 361, 363, 364 and
507 of the Bankruptcy Code and Rules 4001 and 9014 of the Federal Rules of Bankruptcy
Procedure (the "Bankruptcy Rules").
II. BACKGROUND
3. On November 5, 2013 (the "Petition Date"), the Debtor filed a voluntary petition
for relief, and thereby commenced a case under chapter 11, title 11, of the United States Code
(the "Bankruptcy Code"), in the United States Bankruptcy Court for the Southern District of
Mississippi (the "Court"). Pursuant to sections 1107(a) and 1108 of the Bankruptcy Code, the
Debtor is operating its business and managing its property as debtor-in-possession.
4. No official committee of unsecured creditors has yet been appointed in this Case
(any subsequently appointed official committee of unsecured creditors, the "Committee").
5. The Debtor is a Delaware limited liability company doing business under the
brand name Advantage Rent-A-Car ("Advantage"). The Debtor provides retail rental car services
for leisure, lifestyle, business and insurance replacement customers and, as of the Petition Date,
maintained a fleet of approximately 23,000 vehicles in 73 locations throughout the United States.
The Debtor is the fourth largest retail rental car provider in North America and employs
approximately 1,800 employees and outside contractors. The Debtor's principal place of
business is located at 1052 Highland Colony Parkway, Suite 204, Ridgeland, Mississippi.
6. Additional information about the Debtor's business and the events leading up to
the Petition Date can be found in the Declaration of Thomas P. McDonnell, III in support of the
Chapter 11 Petition and the first day motions [Docket No. 12] (the "First Day Declaration"),
which is incorporated herein by reference.
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7. This Court has previously entered a Final Order (I) Authorizing Debtor to Obtain
Post-Petition Secured Financing Pursuant to 11 U.S.C. §§ 105, 361, 362 and 364; and (II)
Granting Liens and Super-Priority Claims [Docket No. 133] (the "Catalyst DIP Order") pursuant
to which The Catalyst Capital Group, Inc., on behalf of one or more funds managed by it and/or
through certain affiliates (the "Catalyst DIP Lender") is providing debtor-in-possession financing
to the Debtor for general working capital purposes.
8. In this Motion, the Debtor seeks interim and final approval to enter into a post-
petition lease and credit facility (the "DIP Transaction") provided by Merchants Automotive
Group, Inc., d/b/a Merchants Fleet Management (the "DIP Lessor"), pursuant to the terms
described in the term sheet attached as Exhibit B hereto (the "DIP Transaction Term Sheet").
The Debtor intends to enter into such definitive documentation evidencing the DIP Transaction
acceptable in form and substance to the Debtor and the DIP Lessor according to the terms set
forth in the DIP Transaction Term Sheet and the Interim Order comprising the DIP Transaction
Documents.1 Additional terms of the DIP Transaction are set forth in the Interim Order.
9. The Debtor also seeks the following relief:
A. Authorization for the Debtor to enter into and perform under: (a) the DIP
Transaction Documents; and (b) all other security agreements, pledge agreements, notes,
guarantees, mortgages, certificates, Uniform Commercial Code financing statements and
all other related agreements, instruments and other documents executed and/or delivered
in connection with, or otherwise related to, the DIP Transaction (as defined below), each
of which being in form and substance acceptable to the DIP Lessor (all such documents
referred to in this clause (b), together with the DIP Agreements and the Interim Order,
collectively, the "DIP Transaction Documents"), pursuant to sections 363, 364 and 365 of
the Bankruptcy Code;
1 Capitalized terms used but not otherwise defined in the Interim Order shall have the respective meanings ascribed
to such terms in the DIP Transaction Term Sheet.
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B. Authorization for the Debtor to grant to the DIP Lessor the DIP Liens (as
defined below) on (i) all motor vehicles acquired by a DIP Credit Extension under the
DIP Transaction Documents, and all accessions and additions thereto, all proceeds from
the sale or other disposition thereof (including insurance proceeds but excluding any
rents, income, profit or other proceeds arising from the use or operation of the Merchants
Vehicles in the ordinary course of business), and all documents, books and records, and
general intangibles relating thereto, and related Cash Collateral (the "Merchants Vehicle
Collateral") and (ii) one or more letters of credit issued in favor of the DIP Lessor as
beneficiary or cash or cash equivalents held by the DIP Lessor as security deposit pursuant to
the DIP Transaction Documents and all such deposit accounts relating to such cash and
Cash Collateral (the "Security Deposit." and collectively with the Merchants Vehicle
Collateral, the "Merchants Collaterar'") pursuant to sections 364(c)(2) and 364(d)(1) of the
Bankruptcy Code, which Liens2 on the Merchants Vehicle Collateral (the "DIP Liens")
shall be first and senior in priority in and to all other liens, encumbrances, interests,
claims, charges and other Liens solely with respect to the Merchants Vehicle Collateral;
C. Authorization for the Debtor to grant to the DIP Lessor super-priority
administrative claims pursuant to section 364(c)(1) of the Bankruptcy Code having
recourse to all pre-petition and post-petition property of the Debtor's estate, now owned
or hereafter acquired, and any of the Debtor's rights under section 506(c) of the
Bankruptcy Code, (i) subject only to the "Carve Out" as such term is defined in and on
the terms as provided in the Catalyst DIP Order and super-priority administrative claims
pursuant to section 364(c)(1) of the Bankruptcy Code in favor of the Catalyst DIP Lender
pursuant to the Catalyst DIP Order and (ii) pari passu in priority (and not junior or
subordinate) to any super-priority administrative expense claim granted to any other provider
2 As used in this Motion and the Interim Order, a "Lien" means a mortgage, deed of trust, pledge, hypothecation,
assignment, encumbrance, lien, security interest or other security arrangement.
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of fleet financing to the Debtor, including, but not limited to HFC Acceptance, LLC (the
"DIP Super-Priority Claims");
D. To vacate the automatic stay imposed by section 362 of the Bankruptcy
Code solely to the extent necessary to implement and effectuate the terms and provisions
of the DIP Transaction Documents and subject in all respects to the Debtor's rights under
paragraph 10 of the Interim Order;
E. Authorization for the Debtor to incur indebtedness up to an amount of
$17,500,000 (the "Interim Amount'") during the Interim Period (as defined below) under
the DIP Transaction Documents for the purposes of leasing motor vehicles as part of the
rental car fleet used in the operations of the Debtor's businesses, and paying certain
transaction fees and expenses in accordance with, the DIP Transaction Documents;
F. The scheduling of a final hearing (the "Final Hearing"') to be held before
this Court to consider entry of a final order, the form and substance of which shall be
acceptable to the DIP Lessor, approving the DIP Transaction in an aggregate principal
amount up to an amount of $17,500,000 (the "Commitment"') on a final basis (the "Final
Order"), to be used by the Debtor for the purpose of leasing motor vehicles as part of the
rental car fleet used in the operations of the Debtor's businesses, and paying other costs
and expenses in accordance with the DIP Transaction Documents and the Final Order;
G. The assumption of that certain Open-End Master Lease Agreement, by
and between Merchants Automotive Group, Inc. and the Debtor, dated as of May 21,
2013, a copy of which is attached hereto as Exhibit C; and
H. Waiver of any applicable stay (including under Bankruptcy Rule 6004)
and provision for immediate effectiveness of the Interim Order.
10. Under Bankruptcy Rule 4001(b)(2) and (c)(2), the Court may commence a final
hearing on a motion for authority to obtain credit no earlier than fourteen (14) days after service
of the motion and notice of hearing on the motion. Bankruptcy Rule 4001(b)(2) and (c)(2) further
provides, however, that the Court may conduct a preliminary hearing before the expiration of the
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14-day notice period as necessary to avoid immediate and irreparable harm to a debtor's estate
pending a final hearing. The Debtor respectfully requests the Court to conduct a preliminary
hearing at the Court's earliest convenience to authorize the secured post-petition financing as
necessary to avoid immediate and irreparable harm to Debtor's bankruptcy estate pending a final
hearing.
11. Debtor's Need for Financing. The Debtor has an immediate need for credit under
the DIP Transaction pursuant to the terms of the DIP Transaction Documents. The DIP
Transaction will allow the Debtor, among other things, to maintain the orderly continuation of
the operation of its businesses. The Debtor's access to sufficient credit to maintain its fleet of
rental cars under the DIP Transaction is vital to maximizing the value of the Debtor's assets and
businesses for the benefit of the Debtor's creditors and other parties in interest.
12. No Credit Available on More Favorable Terms. As set forth in the Motion and in
the First Day Declaration, the Debtor has been, and continues to be, unable to obtain credit on
more favorable terms from sources other than the DIP Transaction from the DIP Lessor pursuant
to the DIP Transaction Documents. The Debtor is unable to obtain adequate unsecured credit
allowable under section 503(b)(1) of the Bankruptcy Code as an administrative expense. The
Debtor is also unable to obtain secured credit allowable under sections 364(c)(1), 364(c)(2),
364(c)(3) and 364(d)(1) of the Bankruptcy Code, other than on an interim basis as provided in
the Interim Order and subject to the granting to the DIP Lessor of the rights, remedies,
privileges, benefits and protections provided herein and in the DIP Transaction Documents
(collectively, the "DIP Protections"'), including, without limitation, the DIP Liens and the DIP
Super-Priority Claims.
13. Business Judgment and Good Faith Pursuant to Section 364(6).
A. The DIP Lessor has indicated a willingness to enter into the DIP
Transaction and provide the Debtor post-petition secured credit pursuant to the DIP
Transaction in accordance with the DIP Transaction Documents.
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B. The terms and conditions of the DIP Transaction pursuant to the DIP
Transaction Documents, and the fees and expenses paid and to be paid thereunder, are
fair, reasonable and the best available under the circumstances, reflect the Debtor's
exercise of prudent business judgment consistent with its fiduciary duties, and are
supported by reasonably equivalent value and fair consideration.
C. The DIP Transaction and DIP Transaction Documents were negotiated in
good faith and at arm's length among the Debtor and the DIP Lessor with the assistance
and counsel of their respective advisors, and all of the DIP Obligations (as defined
below) shall be deemed to have been incurred to and extended by the DIP Lessor and its
affiliates for valid business purposes and uses and in good faith, as that term is used in
section 364(e) of the Bankruptcy Code, and in express reliance upon the protections
offered by section 364(e) of the Bankruptcy Code, and the DIP Liens, the DIP Super-
Priority Claims and the other DIP Protections shall be entitled to the fall protection of
section 364(e) of the Bankruptcy Code in the event the Interim Order or any other order
or any provision hereof or thereof is vacated, reversed, amended or modified, on appeal
or otherwise.
D. Relief Essential; Best Interest. For the reasons stated above, the Debtor
requests immediate entry of the Interim Order pursuant to Bankruptcy Rules 4001(b)(2),
4001(c)(2) and the Local Rules because in the absence of the Court's granting the relief
requested herein, the Debtor's businesses, assets and estate will be immediately and
irreparably harmed. Consummation of the DIP Transaction in accordance with the
Interim Order and the other DIP Transaction Documents is therefore in the best interests
of the Debtor's estate and consistent with its fiduciary duties.
E. DIP Loan Documents and DIP Protections. The Debtor seeks:
(1) Authorization to Enter into the DIP Transaction Documents and to
Obtain Credit and Incur the DIP Obligations. The Debtor requests that it be expressly and
immediately authorized to enter into the DIP Transaction, execute, deliver and perform under the
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DIP Transaction Documents and to incur the DIP Obligations (as defined below) in accordance
with, and subject to, the terms of the DIP Transaction Term Sheet, the Interim Order and the
other DIP Transaction Documents, and to execute, deliver and perform under all other
instruments, certificates, agreements and documents which may be required or necessary for the
performance by the Debtor under the DIP Transaction Documents and the creation and
perfection of the DIP Liens described in, and provided for by, the Interim Order and the other
DIP Transaction Documents.
(2) DIP Obligations. For purposes of this Motion, the term "DIP
Obligations" means all amounts and other obligations and liabilities owing or arising under the
DIP Transaction Documents (including, without limitation, all "Obligations," as may be defined
or provided in the DIP Transaction Documents) and includes, without limitation, the principal of,
interest on and fees, costs, expenses and other charges owing in respect of, such amounts
(including any reasonable attorneys', accountants', financial advisors' and other fees, costs and
expenses), and any obligations in respect of indemnity and reimbursement claims, whether
contingent or otherwise.
(3) Authorization to Incur DIP Obligations. To enable the Debtor to
continue to operate its businesses, during the period from the granting of an Interim Order
through and including the Final Order (such period, the "Interim Period""), to authorize the
Debtor to incur indebtedness under the DIP Transaction during such Interim Period in an
aggregate outstanding principal amount not to exceed $17.5 million, in each case subject to the
terms and conditions of the Interim Order and the other DIP Transaction Documents.
(4) Use of Cash Collateral. Following the expiration of the Interim
Period, to require that the Debtor's authority to request and/or obtain further credit, leasing or
other financial accommodations under the DIP Transaction and to use "cash collateral," as
defined in section 363(a) of the Bankruptcy Code and consisting of proceeds of the Merchants
Vehicle Collateral (""Cash Collateral"') will be governed by the terms of the Final Order (if
entered) and the DIP Transaction Documents.
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WHEREFORE, PREMISES CONSIDERED, the Debtor respectfully requests that the
Court enter an order granting it the following relief:
1. Authorizing the Debtor to enter into and perform under the DIP Transaction
Documents;
2. Authorizing for the Debtor to grant to the DIP Lessor (a) the DIP Liens on all of
the Merchants Vehicle Collateral pursuant to sections 364(c)(2), 364(c)(3) and 364(d)(1) of the
Bankruptcy Code, which DIP Liens shall be first and senior in priority to all other Liens in the
Merchants Vehicle Collateral; and (b) the DIP Super-Priority Claims;
3. To vacate the automatic stay imposed by section 362 of the Bankruptcy Code
solely to the extent necessary to implement and effectuate the terms and provisions of the DIP
Transaction Documents;
4. Authorizing the Debtor to incur indebtedness up to $17,500,000 as the Interim
Amount during the Interim Period under the DIP Transaction for the purposes of leasing motor
vehicles comprising part of the rental fleet used in connection with the operations of the Debtor's
businesses, and paying certain costs, fees and expenses in accordance with the DIP Transaction
Documents;
5. Scheduling a Final Hearing to be held before this Court to consider entry of a
final order, the form and substance of which shall be acceptable to the DIP Lessor, approving the
DIP Transaction in an aggregate principal amount up to an amount of $17,500,000, on a final
basis in a Final Order, to be used by the Debtor for the purpose of leasing motor vehicles as part
of the rental car fleet used in connection with the operations of the Debtor's businesses and
paying other costs, fees and expenses in accordance with the DIP Transaction Documents and
the Final Order;
6. The assumption of that certain Open-End Master Lease Agreement, by and
between Merchants Automotive Group, Inc. and the Debtor, dated as of May 21, 2013;
7. Finding the Debtor and the DIP Lessor have acted in good faith and are protected
by the provisions of Section 364(e) of the Bankruptcy Code;
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8. Waiving any applicable stay (including under Bankruptcy Rule 6004) and
provision for immediate effectiveness of the Interim Order and the Final Order; and
9. Granting such other, further and different relief as may be just and proper.
THIS, the 20th day of December, 2013.
Respectfully submitted,
SIMPLY WHEELZ LLC
By: s/ Stevhen W. Rosenblatt
Stephen W. Rosenblatt (MB # 5676)
Christopher R. Maddux (MB # 100501)
J. Mitchell Carrington (MB # 104228)
Thomas M. Hewitt (MB # 104589)
BUTLER SNOW LLP
1020 Highland Colony Parkway, Suite 1400
Ridgeland, MS 39157
Telephone: (601) 985-4504
Fax:(601) 985-4500
Steve.Rosenblatt@,butlersnow.com
Chris. Maddux@butlersno w. com
Mitch. Carrington@butlersno w. com
ATTORNEYS FOR DEBTOR
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CERTIFICATE OF SERVICE
I certify that the foregoing pleading was filed electronically through the Court's ECF
system and served electronically on all parties enlisted to receive service electronically and was
separately served by e-mail on the following:
Ronald H. McAlpin, Esq.
Assistant United States Trustee
501 East Court Street
Suite 6-430
Jackson, MS 39201
Office of the United States Trustee
501 East Court Street
Suite 6-430
Jackson, MS 39201
U STPRegionOS. AB.ECF @usdoj .gov
David N. Usry, Esq.
Assistant United States Attorney
United States Attorney's Office
501 East Court Street, Suite 4.430
Jackson, MS 39201
David.Usry@,usdoi .gov
SO CERTIFIED, this the 20th day of December, 2013.
/s/ Stephen W. Rosenblatt
STEPHEN W. ROSENBLATT
ButlerSnow 18796906v2
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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
In re
SIMPLY WHEELZ LLC, D/B/A ADVANTAGE RENT-A-CAR,
Debtor.
INTERIM ORDER (I) AUTHORIZING DEBTOR TO ENTER INTO POST-PETITION
LEASE AND CREDIT FACILITY PURSUANT TO 11 U.S.C. 105,361,362,363 AND 364
WITH MERCHANTS FLEET MANAGEMENT; (II) GRANTING LIENS AND SUPER-
PRIORITY CLAIMS; AND (III) SCHEDULING A FINAL HEARING
PURSUANT TO BANKRUPTCY RULE 4001
[Dkt. # ]
THIS CAUSE came before the Court on the Motion of Debtor for Preliminary and Final
Orders (A) Authorizing Post-Petition Lease and Credit Facility on a Secured and Super-Priority
Basis Pursuant to 11 U.S.C. §§ 105, 363, 364(c)(1), 364(c)(2), 364(d)(1) and 507(b) with
Merchants Automotive Group, Inc.; (B) Assuming an Existing Open-End Master Lease
Agreement; (C) Granting Other Related Relief; and (D) Scheduling a Final Hearing Pursuant to
Rule 4001(b)(2) and (c)(2) [Dkt. # ] (the "Motion") filed by Simply Wheelz LLC (the
"Borrower"), as a Debtor and debtor-in-possession (the "Debtor") in the above captioned
chapter 11 case (the "Case," and upon conversion to a case under chapter 7 of the Bankruptcy
Code and any other proceedings related to the Case, a "Successor Case"), requesting entry of an
interim order (together with all exhibits attached hereto, this "Interim Order") pursuant to
sections 105, 361, 362, 363, 364, and 507 of chapter 11 of title 11 of the United States Code (as
amended, the "Bankruptcy Code"), Rules 2002, 4001, 6004 and 9014 of the Federal Rules of
Bankruptcy Procedure (the "Bankruptcy Rules"), and the Local Bankruptcy Rules for the
Southern District of Mississippi (the "Local Rules") seeking, among other things:
(i) authorization for the Borrower to enter into the post-petition lease and
credit facility (the "DIP Transaction") provided by Merchants Automotive Group, Inc. (the
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"DIP Lessor"), pursuant to and in accordance with certain documents collectively attached as
Exhibit A hereto (as may be hereafter amended in accordance with the Interim Order, the "D/P
Transaction Agreements");1
(ii) authorization for the Debtor to enter into and perform under: (a) the DIP
Transaction Agreements; (b) this Interim Order; and (c) all other security agreements, pledge
agreements, notes, guarantees, mortgages, certificates, Uniform Commercial Code financing
statements and all other related agreements, instruments and other documents executed and/or
delivered in connection with, or otherwise related to, the DIP Transaction (as defined below),
each of which being in form and substance acceptable to the DIP Lessor (all such documents
referred to in this clause (c), together with the DIP Transaction Agreements and this Interim
Order, collectively, the "DIP Transaction Documents");
(iii) the granting to the DIP Lessor: (a) the DIP Liens on all of the Merchants
Collateral (as defined below) pursuant to sections 364(c)(2), 364(c)(3) and 364(d)(1) of the
Bankruptcy Code, which DIP Liens (as defined below) shall be first and senior in priority to any
and all other Liens (as defined below) with respect to the Merchants Collateral (as defined
below), and (b) super-priority administrative claims pursuant to section 364(c)(1) of the
Bankruptcy Code having recourse to all pre-petition and post-petition property of the Debtor's
estate, now owned or hereafter acquired, and any of the Debtor's rights under section 506(c) of
the Bankruptcy Code and the proceeds thereof, subject and junior only to the "Carve Out" (the
"Catalyst DIP Carve Out") as defined and provided in the Final Order (I) Authorizing Debtor to
Obtain Post-Petition Secured Financing Pursuant to 11 U.S.C. §§ 105, 361, 362 and 364; and
(II) Granting Liens and Super-Priority Claims, entered on December 3, 2013 [Docket No. 133]
(the "Catalyst DIP Order"), and the super-priority administrative claims pursuant to section
364(c)(1) of the Bankruptcy Code in favor of the Catalyst DIP Lender (defined herein) pursuant
1 Capitalized terms used but not otherwise defined in this Interim Order shall have the respective meanings ascribed to such terms in the
DIP Transaction Agreements.
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to the Catalyst DIP Order and pari passu in priority (and not junior or subordinate) to any Other
Fleet Financing DIP Super-Priority Claim (as defined below);
(iv) to vacate the automatic stay imposed by section 362 of the Bankruptcy
Code solely to the extent necessary to implement and effectuate the terms and provisions of the
DIP Transaction Documents and subject in all respects to the Debtor's rights under paragraph 11
hereof;
(v) authorization for the Debtor to borrow up to an amount of $50,000,000
(collectively, the "Interim Amount") during the Interim Period (as defined below) under the DIP
Transaction for the purposes of leasing motor vehicles as part of the rental car fleet used in the
operations of the Debtor's businesses, and paying certain costs, fees and expenses in accordance
with the DIP Transaction Documents;
(vi) the scheduling of a final hearing (the "Final Hearing") to be held before
this Court to consider entry of a final order, the form and substance of which shall be acceptable
to the DIP Lessor, approving the DIP Transaction in an aggregate principal amount up to an
amount of $100,000,000 (the "Commitment") on a final basis (the "Final Order"), to be used by
the Debtor for the purpose of leasing motor vehicles as part of the rental car fleet used in the
operations of the Debtor's businesses, and paying other costs, fees and expenses in accordance
with the DIP Transaction Documents and the Final Order; and
(vii) waiver of any applicable stay (including under Bankruptcy Rule 6004) and
provision for immediate effectiveness of this Interim Order.
Having considered the Motion, the DIP Term Sheet, the Declaration of Thomas P.
McDonnell, III in support of the Chapter 11 Petition and the first day motions [Docket No. 12]
(the "First Day Declaration") and the evidence submitted or proffered at the hearing held and
concluded before this Court on December 23, 2013 (the "Interim Hearing")-, and in accordance
with Bankruptcy Rules 2002, 4001(b), (c) and (d) and 9014 and all applicable Local Rules,
notice of the Motion and the Interim Hearing having been provided in a sufficient manner; and it
appearing that approval of the interim relief requested in the Motion is necessary to avoid
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immediate and irreparable harm to the Debtor pending the Final Hearing and otherwise is fair
and reasonable and in the best interests of the Debtor, its creditors, its estate and all parties in
interest, and is essential for maximizing the value of the Debtor's businesses and assets for the
benefit of the Debtor's creditors and all parties in interests; and after due deliberation and
consideration, and for good and sufficient cause appearing therefor:
IT IS FOUND, ORDERED AND ADJUDGED2, that:
A. Commencement Date. On November 5, 2013 (the "Commencement Date"), the
Debtor filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code with the
United States Bankruptcy Court for the Southern District of Mississippi (this "Court"). The
Debtor has continued in the management and operation of its business and properties as a debtor-
in-possession pursuant to sections 1107 and 1108 of the Bankruptcy Code. No official
committee of unsecured creditors has yet been appointed in this Case (any subsequently
appointed official committee of unsecured creditors, theCommittee").
B. Jurisdiction and Venue. This Court has core jurisdiction over the Case, the
Motion and the parties and property affected hereby pursuant to28U.S.C. §§ 157(b) and 1334.
Venue for the Case and proceedings on the Motion is proper before this Court pursuant to 28
U.S.C. §§ 1408. The statutory predicates for the relief sought herein are sections 105, 361, 362,
363, 364 and 507 of the Bankruptcy Code and Bankruptcy Rules 2002,4001, 6004 and 9014 and
Local Rule 4001-5.
C. Notice. The Interim Hearing is being held pursuant to the authorization of
Bankruptcy Rule 4001. Notice of the Interim Hearing and the emergency relief requested in the
Motion has been provided by the Debtor, whether by facsimile, electronic mail, overnight courier
or hand delivery, on December 17, 2013, to certain parties in interest, including: (a) the United
States Trustee for Region V; (b) Bank of America; (c) The Catalyst Capital Group, Inc., (d) the
DIP Lessor; (e) the office of the United States Attorney for the Southern District of Mississippi;
2 Findings of fact shall be construed as conclusions of law, and conclusions of law shall be construed as findings of fact, pursuant to
Bankruptcy Rule 7052.
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(f)the attorney for the Internal Revenue Service; and (g) the holders of the twenty largest
unsecured claims. Under the circumstances, such notice of the Motion, the relief requested
therein and the Interim Hearing complies with Bankruptcy Rule 4001(b), (c) and (d) and the
Local Rules.
D. Findings Regarding the DIP Transaction.
(i) Need for Post-Petition Credit. The Debtor has an immediate need to enter
into the DIP Transaction Documents and to obtain credit under the DIP Transaction to, among
other things, permit the orderly continuation of the operation of its businesses and operational
needs. The Debtor's entry into the DIP Transaction and access to the credit provided under the
DIP Transaction is vital to maximizing the value of the Debtor's assets and businesses for the
benefit of the Debtor's creditors and parties in interest.
(ii) No Credit Available on More Favorable Terms. As set forth in the
Motion, the Debtor has been, and continues to be, unable to obtain credit on more favorable
terms from sources other than the DIP Transaction from the DIP Lessor pursuant to the DIP
Transaction Documents. The Debtor is unable to obtain adequate unsecured credit allowable
under section 503(b)(1) of the Bankruptcy Code as an administrative expense. The Debtor is
also unable to obtain secured credit allowable under sections 364(c)(1), 364(c)(2), 364(c)(3) or
364(d)(1) of the Bankruptcy Code, other than on an interim basis as provided in this Interim
Order and subject to the granting to the DIP Lessor of the rights, remedies, privileges, benefits
and protections provided herein and in the DIP Transaction Documents (collectively, the "Z)/P
Protections"), including, without limitation, the DIP Liens and the DIP Super-Priority Claims
(each as defined below).
E. Business Judgment and Good Faith Pursuant to Section 364(e).
(i) The DIP Lessor has indicated a willingness to enter into the DIP
Transaction and provide the Debtor post-petition secured credit pursuant to the DIP Transaction
in accordance with the DIP Transaction Documents.
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(ii) The terms and conditions of the DIP Transaction pursuant to the DIP
Transaction Documents, and the fees and expenses paid and to be paid thereunder, are fair,
reasonable and the best available under the circumstances, reflect the Debtor's exercise of
prudent business judgment consistent with its fiduciary duties, and are supported by reasonably
equivalent value and fair consideration.
(iii) The DIP Transaction and DIP Transaction Documents were negotiated in
good faith and at arm's length among the Debtor and the DIP Lessor with the assistance and
counsel of their respective advisors, and all of the DIP Obligations (as defined below) shall be
deemed to have been extended by the DIP Lessor and its affiliates for valid business purposes
and uses and in good faith, as that term is used in section 364(e) of the Bankruptcy Code, and in
express reliance upon the protections offered by section 364(e) of the Bankruptcy Code, and the
DIP Liens, the DIP Super-Priority Claims and the other DIP Protections shall be entitled to the
full protection of section 364(e) of the Bankruptcy Code in the event this Interim Order or any
other order or any provision hereof or thereof is vacated, reversed, amended or modified, on
appeal or otherwise.
F. Relief Essential; Best Interest. For the reasons stated above, the Debtor has
requested immediate entry of this Interim Order pursuant to Bankruptcy Rules 4001(b)(2),
4001(c)(2) and the Local Rules. Absent granting the relief set forth in this Interim Order, the
Debtor's businesses, assets and estate will be immediately and irreparably harmed.
Consummation of the DIP Transaction in accordance with this Interim Order and the other DIP
Transaction Documents is therefore in the best interests of the Debtor's estate and consistent
with its fiduciary duties.
NOW, THEREFORE, on the Motion and the record before this Court with respect to
the Motion, and good and sufficient cause appearing therefor,
IT IS ORDERED that:
1. Motion Granted. The Motion is granted in accordance with the terms and
conditions set forth in this Interim Order and the other DIP Transaction Documents. This
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Interim Order shall become effective immediately upon its entry. Any objections to the Motion
with respect to the entry of this Interim Order that have not been withdrawn, waived or settled,
are denied and overruled with prejudice.
2. DIP Transaction Documents and DIP Protections.
(1) Approval of DIP Transaction Documents. The Debtor is expressly and
immediately authorized to execute, deliver and perform under the DIP Transaction Documents
and to incur the DIP Obligations (as defined below) in accordance with, and subject to, the terms
of this Interim Order and the other DIP Transaction Documents, and to execute, deliver and
perform under all other instruments, certificates, agreements and documents which may be
required or necessary for the performance by the Debtor under the DIP Transaction Documents
and the creation and perfection of the DIP Liens described in, and provided for by, this Interim
Order and the other DIP Transaction Documents. The Debtor is hereby authorized to do and
perform all acts and pay the principal, interest, fees, expenses and other amounts described in the
DIP Transaction Documents as such become due pursuant to the DIP Transaction Documents,
including all closing fees, administrative fees, commitment fees and reasonable attorneys',
financial advisors' and accountants' fees, costs and expenses, and disbursements arising under
the DIP Transaction Documents, which amounts shall not be subject to further approval of this
Court and shall be non-refundable; provided, however, that the payment of the fees and expenses
of the DIP Lessor Professionals (as defined below) incurred on or after the Commencement Date
shall be subject to the provisions of paragraph 14(a). Upon their execution and delivery, the DIP
Transaction Documents shall represent valid and binding obligations of the Debtor enforceable
against the Debtor and its bankruptcy estate in accordance with their terms. Each responsible
officer of the Debtor acting singly is hereby authorized to execute and deliver each of the DIP
Transaction Documents, such execution and delivery to be conclusive of their respective
authority to act in the name of and on behalf of the Debtor.
(2) DIP Obligations. For purposes of this Interim Order, the term "Z>/P
Obligations" shall mean all amounts and other obligations and liabilities owing or arising under
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the DIP Transaction Documents (including, without limitation, all "Obligations," as defined in
the DIP Transaction Documents) and shall include, without limitation, the principal of, interest
on and fees, costs, expenses and other charges owing in respect of, such amounts (including any
reasonable attorneys', accountants', financial advisors' and other fees, costs and expenses), and
any obligations in respect of indemnity and reimbursement claims, whether contingent or
otherwise,
(3) Authorization to Incur DIP Obligations. To enable the Debtor to continue
to operate its businesses, during the period from the entry of this Interim Order through and
including the entry of the Final Order (such period, the "Interim Period"), the Debtor is hereby
authorized to borrow under the DIP Transaction during such Interim Period in an aggregate
outstanding principal amount up to an aggregate amount of $50,000,000, in each case subject to
the terms and conditions of this Interim Order and the other DIP Transaction Documents.
Following the expiration of the Interim Period, the Debtor's authority to request and/or obtain
further borrowings or other financial accommodations under the DIP Transaction and to use
"cash collateral," as defined in section 363(a) of the Bankruptcy Code consisting of proceeds of
the Merchants Collateral {"Cash Collateral") will be governed by the terms of the Final Order
(if entered) and the DIP Transaction Documents.
(4) Interest. Fees, Costs and Expenses. The DIP Obligations shall bear
interest at the rates, and be due and payable (and paid), as set forth in, and in accordance with the
terms and conditions of, the DIP Transaction Documents, in each case without further notice,
motion or application to, order of, or hearing before, this Court. Subject to the provisions of
paragraph 14(a) of this Interim Order, as applicable, the Debtor shall pay all post-petition fees,
costs, expenses (including reasonable legal and other professional fees and expenses of the DIP
Lessor and its affiliates) and other charges payable under the terms of the DIP Transaction
Documents without regard to the amounts set forth with respect thereto in the Approved Budget
(as defined in the Catalyst DIP Order). All such fees, costs, expenses and disbursements,
whether incurred, paid or required to be paid, are hereby affirmed, ratified, authorized and
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payable (and any funds held by the DIP Lessor and/or its professionals as of the Commencement
Date for payment of such fees, costs, expenses and disbursements may be, but are not required to
be, applied for payment) as contemplated in the DIP Transaction Documents, and shall be non
refundable.
(5) Use of DIP Transaction Credit. During the Interim Period, the Debtor is
authorized to lease and use credit under the DIP Transaction and Cash Collateral only for the
specific purposes set forth in the DIP Transaction Documents.
(6) Conditions Precedent. The DIP Lessor shall have no obligation to make
any lease, extension of credit or any other financial accommodation under the DIP Transaction
Documents (each a "DIP Credit Extension") during the Interim Period unless and until all of the
following conditions precedent to the making of any such DIP Credit Extension under the DIP
Transaction Documents have been satisfied in full or waived by the DIP Lessor:
(i) During the Interim Period, this Interim Order shall be in full force and effect and shall not have been stayed, vacated, reversed, amended or otherwise modified without the prior written consent of the DIP Lessor in its sole discretion.
(ii) The DIP Lessor shall have received payment in full of all fees and expense reimbursement then owing pursuant to the terms of the DIP Transaction Documents.
(iii) The Debtor shall have submitted to the DIP Lessor all documentation relating to the DIP Credit Extension being requested, in each instance in accordance with the terms thereof.
(iv) No Event of Default has occurred and is continuing or would reasonably be expected to result after giving effect to any requested DIP Credit Extension.
(7) DIP Liens. The DIP Lessor is hereby granted, as security for the DIP
Obligations, Liens (as defined below) on the property of the Debtor (as further described below,
the "DIP Liens"), now existing or hereinafter acquired, consisting of the following: (i) all motor
vehicles acquired by a DIP Credit Extension under the DIP Transaction Documents, and all
accessions and additions thereto, all proceeds from the sale, loss or other disposition thereof
(including insurance proceeds but excluding any rents, income, profit or other proceeds arising
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from the use or operation of the Merchants Vehicles in the ordinary course of business), and all
documents, books and records, and general intangibles relating thereto, and related Cash
Collateral (the "Merchants Vehicle CollateraF) and (ii) one or more letters of credit issued in
favor of the DIP Lessor as beneficiary (in form and substance, and from a financial institution,
acceptable to the DIP Lessor) or cash or cash equivalents held by the DIP Lessor as security deposit
pursuant to the DIP Transaction Documents and all such deposit accounts relating to such cash and
Cash Collateral (the "Security Deposit," and collectively with the Merchants Vehicle Collateral, the
"Merchants CollateraF), as follows:
(i) First Lien on Merchants Collateral. Pursuant to section 364(c)(2) of the Bankruptcy Code, a first and senior priority security interest in and Lien upon all Merchants Collateral; and
(ii) Priming Liens. Pursuant to section 364(d)(1) of the Bankruptcy Code, a first and senior priority priming security interest and Lien upon only the Merchants Collateral.
(8) DIP Lien Priority. The Merchants Collateral shall be free and clear of all
Liens at all times, other than (i) the DIP Liens in favor of the DIP Lessor and (ii) a junior in
priority and subordinate Lien securing the DIP Obligations under, and as defined in, the Catalyst
DIP Order in favor of the Catalyst DIP Lender; provided, however, the Catalyst DIP Lender
cannot exercise or enforce rights and remedies with respect to the Merchants Collateral in any
manner that interferes with the exercise or enforcement of any rights and remedies by the DIP
Lessor with respect any Merchants Collateral (and to the extent the Catalyst DIP Lender receives
any payments or proceeds in respect of the Merchants Collateral, the Catalyst DIP Lender shall
immediately turn over same to the DIP Lessor for application to the DIP Obligations). The DIP
Liens granted to the DIP Lessor shall in each and every case be first priority senior Liens that are
otherwise senior to all pre-petition and post-petition Liens of any other person or entity. The
DIP Liens and the DIP Super-Priority Claims (as defined below) (A) shall not be subject to
sections 510, 549, 550 or 551 of the Bankruptcy Code, (B) shall not be subordinate to, or pari
passu with, any intercompany or affiliate security interest or Lien, and (C) shall be valid and
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enforceable against any trustee or any other estate representative appointed in the Case or in any
Successor Case, and/or upon the dismissal of the Case. Except as provided herein, no claim or
Lien in respect of any Merchants Collateral having a priority superior to or pari passu with those
granted by this Interim Order with respect to the DIP Obligations shall be granted or allowed
until (x) all DIP Obligations have been indefeasibly paid in full in cash and (y) all commitments
under the DIP Transaction Documents have been terminated. As used herein, a "Lien" means a
mortgage, deed of trust, pledge, hypothecation, assignment, encumbrance, lien, security interest
or other security arrangement.
(9) Enforceable Obligations. The DIP Transaction Documents shall constitute
and evidence valid and binding DIP Obligations of the Debtor, which DIP Obligations shall be
enforceable against the Debtor, its estate and any successors thereto (including any trustee or
other estate representative in any Successor Case), and its creditors, in accordance with their
terms. No obligation, payment, transfer or grant of security under the DIP Transaction
Documents shall be stayed, restrained, voidable, avoidable or recoverable under the Bankruptcy
Code or under any applicable law (including Under sections 502(d), 544, 547, 548 or 549 of the
Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform
Fraudulent Conveyance Act or similar statute or common law), or subject to any avoidance,
reduction, setoff, recoupment, offset, recharacterization, subordination (whether equitable,
contractual or otherwise), counterclaim, cross-claim, defense or any other challenge under the
Bankruptcy Code or any applicable law or regulation by any person or entity.
(10) Super-Priority Administrative Claim Status. In addition to the DIP Liens
granted herein, effective immediately upon entry of this Interim Order, all of the DIP Obligations
shall constitute allowed super-priority administrative claims pursuant to section 364(c)(1) of the
Bankruptcy Code, which shall have priority over all other administrative expense claims,
adequate protection and other diminution claims, unsecured claims and all other claims against
the Debtor, now existing or hereafter arising, of any kind or nature whatsoever, including
administrative expenses or other claims of the kinds specified in, or ordered pursuant to, sections
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105, 326, 328, 330, 331, 503, 506, 507, 546, 726, 1113 and 1114 or any other provision of the
Bankruptcy Code or otherwise, whether or not such expenses or claims may become secured by
a judgment Lien or other non-consensual Lien, levy or attachment (the "DIP Super-Priority
Claim"), subject and junior only to the Catalyst DIP Carve-Out and the allowed superpriority
administrative expense claim pursuant to section 364(c)(1) of the Bankruptcy Code in favor of
The Catalyst Capital Group, Inc., on behalf of one or more funds managed by it and/or through
certain affiliates (the "Catalyst DIP Lender''') pursuant to the Catalyst DIP Order (the "Catalyst
DIP Super-Priority Claim")-, provided, however, the DIP Super-Priority Claim (i) shall be
extinguished upon the assumption and assignment of the DIP Transaction to The Catalyst Capital
Group, Inc., on behalf of one or more funds managed by it and/or through certain affiliates
pursuant to the terms of its purchase agreement, as approved by the Bankruptcy Court, or
otherwise on terms and conditions acceptable to Merchants, (ii) shall be pari passu in priority (and
not junior or subordinate) to any super-priority administrative expense claim granted to any other
provider of fleet financing to the Debtor including but not limited to that of HFC Acceptance, LLC
(any such other super priority administrative claim, an "Other Fleet Financing DIP Super-Priority
Claim"), and (iii) shall not be exercised or enforced in any manner that interferes with the exercise or
enforcement of any rights and remedies of the Catalyst DIP Lender in respect of the Catalyst DIP
Super-Priority Claim or in respect of its lien on any Collateral (as defined in the Catalyst DIP Order)
other than the Merchants Collateral (and to the extent the DIP Lessor receives any payments or
proceeds in respect of the DIP Super-Priority Claim not constituting proceeds of the Merchants
Collateral, the DIP Lessor shall immediately turn over same to the Catalyst DIP Lender for
application to the DIP Obligations (as defined in the Catalyst DIP Order)). The DIP Super-Priority
Claims shall for purposes of section 1129(a)(9)(A) of the Bankruptcy Code be considered
administrative expenses allowed under section 503(b) of the Bankruptcy Code, shall be against
the Debtor, and shall be payable from and have recourse to all pre-petition and post-petition
property of the Debtor and all proceeds thereof, including Avoidance Actions. No costs or
expenses of administration, including professional fees allowed and payable under sections 328,
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330, 331 and 503 of the Bankruptcy Code, or otherwise, that have been or may be incurred in
this Case or in any Successor Case, and except as otherwise provided herein, no administrative
priority claims or other priority claims are, or will be, senior to, prior to or pari passu with, the
DIP Liens or the DIP Super-Priority Claims, or with any other claims of the DIP Lessor and its
affiliates arising under the DIP Transaction Documents.
3. Automatic Post-Petition Lien Perfection. The DIP Liens shall, immediately and
without any further action, be valid, binding, fully perfected, continuing, enforceable and non-
avoidable upon the entry of this Interim Order by the Court. This Interim Order shall be
sufficient and conclusive evidence of the validity, enforceability, perfection and priority of the
DIP Liens without the necessity of (a) filing or recording any financing statement, deed of trust,
mortgage, or other instrument or document which may otherwise be required under the law of
any jurisdiction or (b) taking any other action to validate or perfect the DIP Liens or to entitle the
DIP Liens to the priorities granted herein, including without limitation taking acts to include or
reference the DIP Lessor's interest in the Merchants Vehicle Collateral with respect to the
certificates of title. Notwithstanding the foregoing, the DIP Lessor may, in its sole discretion,
file financing statements, mortgages, security agreements, notices of Liens and other similar
documents, and take such other actions or require the Debtor to take such actions to reflect the
DIP Lessor's interest on a certificate of title, and is hereby granted relief from the automatic stay
of section 362 of the Bankruptcy Code in order to do so, and all such financing statements,
mortgages, security agreements, notices and other agreements or documents shall be deemed to
have been filed or recorded at the time and on the Commencement Date and shall constitute DIP
Transaction Documents. The Debtor shall execute and deliver to the DIP Lessor all such
financing statements, mortgages, notices and other documents and take such other actions,
including actions with respect to certificates of title, as the DIP Lessor may reasonably request to
evidence and confirm the contemplated priority of the DIP Liens granted pursuant hereto.
Without limiting the foregoing, the DIP Lessor, in its discretion, may file a photocopy of this
Interim Order as a financing statement with any recording officer designated to file financing
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statements or with any registry of deeds or similar office in any jurisdiction in which the Debtor
has real or personal property, and in such event, the subject filing or recording officer shall be
authorized to file or record such copy of this Interim Order. Subject to the entry of the Final
Order, any provision of any lease, loan document, easement, use agreement, proffer, covenant,
license, contract, organizational document, or other instrument or agreement that requires the
payment of any fees or obligations to any governmental entity or non-governmental entity in
order for the Debtor to pledge, grant, mortgage, sell, assign or otherwise transfer any fee or
leasehold interest or the proceeds thereof or other Merchants Collateral, is and shall be deemed
to be inconsistent with the provisions of the Bankruptcy Code, and shall have no force or effect
with respect to the Liens on such leasehold interests or other applicable Merchants Collateral or
the proceeds of any assignment and/or sale thereof by the Debtor, in favor of the DIP Lessor in
accordance with the terms of the DIP Transaction Documents.
4. Credit Bid. The DIP Lessor shall have the unqualified right to credit bid all or
any portion of the DIP Obligations with respect to any of the Merchants Collateral under or
pursuant to (i) section 363 of the Bankruptcy Code, (ii) a plan of reorganization or plan of
liquidation under section 1129 of the Bankruptcy Code (including as part of any reorganization
plan subject to confirmation under section I129(b)(2)(A)(i)-(iii) of the Bankruptcy Code), or
(iii) a sale or other disposition by a chapter 7 trustee for the Debtor under section 725 of the
Bankruptcy Code.
5. Discharge Waiver. The Debtor expressly stipulates, and the Court finds and
adjudicates that, the DIP Obligations shall not be discharged or otherwise impaired by the entry
of an order confirming any plan of reorganization, notwithstanding the provisions of sections 524
and/or 1141(d) of the Bankruptcy Code, unless the DIP Obligations have been indefeasibly paid
in full in cash on or before the effective date of a confirmed plan of reorganization and all
commitments under the DIP Transaction have been terminated.
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6. Protection of DIP Lessor's Rights.
(1) Unless the DIP Lessor shall have provided its prior written consent or all
DIP Obligations have been indefeasibly paid in full in cash and the DIP Transaction has
terminated, there shall not be entered in this Case or in any Successor Case any order which
authorizes (i) the obtaining of credit or the incurring of indebtedness that is secured by a security,
mortgage, or collateral interest or other Lien on all or any portion of the Merchants Collateral or
that is entitled to administrative priority status, in each case which is superior to or pari passu
with the DIP Liens or DIP Super-Priority Claims granted pursuant to this Interim Order except as
set forth in this Interim Order and except as may otherwise be agreed to by the DIP Lessor
pursuant to the DIP Transaction Documents; or (ii) the use of Merchants Collateral or DIP
Transaction advances proceeds for any purpose other than in accordance with the DIP
Transaction Documents. To the extent any term or provision of the Catalyst DIP Financing
Order is inconsistent with the terms of the DIP Protections granted to Merchants is this Interim
Order, the terms of this Interim Order shall control.
(2) The Debtor will (i) maintain complete and accurate books, records and
accounts with respect to matters involving the Merchants Collateral and business of the Debtor,
(ii) cooperate, consult with, and provide to representatives of and professionals for the DIP
Lessor all such information as required or allowed under the DIP Transaction Documents
(including this paragraph), (iii) permit representatives of the DIP Lessor and its agents and
professionals to (y) have access to, and to visit and inspect, any of the facilities owned or used in
connection with the Merchants Collateral, any of the computer, accounting or operational
systems owned or used in connection with the Merchants Collateral, and any of the books and
records relating to the Merchants Collateral, and (z) discuss any matter relating to the Debtor's
business affairs, operations and the sale process with the Debtor, its officers, directors,
employees and advisors and other professionals, as often as may be reasonably requested. To the
extent any affiliate of the Debtor has any facilities or assets or any computer, accounting or
operational systems used in connection with the Merchants Collateral and the Debtor's business
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or any books and records relating to the Merchants Collateral and the Debtor's business, the DIP
Lessor shall (i) have full and complete access to, and shall be entitled to visit and inspect, any
such facilities or assets of such affiliate and any such computer, accounting or operational
systems of such affiliate and any such books and records of such affiliate and (ii) shall be entitled
to discuss any matter relating to the Merchants Collateral and the Debtor's business affairs,
operations and the sale process with such affiliate, its officers, directors, employees and advisors
and other professionals, as often as may be reasonably requested. In addition, the DIP Lessor
and its agents and other professionals and representatives shall be entitled to communicate
directly with any and all vendors, customers, creditors or other parties in interest with respect to
any matter involving the Debtor, relating to the Merchants Collateral and the Debtor's business
affairs, operations or the sale process. The Debtor and its Board of Directors shall cooperate,
and shall cause the Debtor's officers, employees, advisors and other professionals to cooperate,
with the DIP Lessor in connection with the exercise of their access and informational rights as
set forth herein.
7. Proceeds of Subsequent Financing. Without limiting the provisions and
protections of paragraph 6 above, if at any time prior to the indefeasible payment in full in cash
of all DIP Obligations and the termination of the DIP Transaction, the Debtor's estate, any
trustee, any examiner with enlarged powers or any responsible officer subsequently appointed
shall obtain credit or incur debt pursuant to sections 364(b), 364(c), 364(d) or any other
provision of the Bankruptcy Code or other applicable law in violation of the DIP Transaction
Documents (including this Interim Order) secured by a lien on any of the Merchants Collateral,
then all of the cash proceeds derived from such credit or debt and all Cash Collateral shall
immediately be turned over to the DIP Lessor until indefeasible payment in full in cash of the
DIP Obligations.
8. Disposition of Merchants Collateral: Additional Negative Covenants.
(1) The Debtor shall not sell, transfer, lease, encumber or otherwise dispose of
any portion of the Merchants Collateral without the prior consent of the DIP Lessor (and no such
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consent shall be implied from any other action, inaction or acquiescence by the DIP Lessor or
any order of this Court), except (i) as expressly permitted in the DIP Transaction Documents,
and (ii) as approved by the Court to the extent required under applicable bankruptcy law after
notice and a hearing. Notwithstanding anything to the contrary in this Interim Order, any sale or
other disposition of all or substantially all of the Debtor's assets or stock that does not provide
for the indefeasible payment of the DIP Obligations in foil in cash at closing or assumption of
the DIP Transaction by the purchaser shall be subject to the prior written consent of the DIP
Lessor, which consent may be withheld in the DIP Lessor's sole discretion.
(2) If the Debtor shall at any time (i) sell any Merchants Collateral outside of
the ordinary course of business (as determined by the DIP Lessor), or (ii) suffer any loss,
destruction or damage of property, including any actual, pending or threatened institution of any
proceedings for the condemnation or seizure, or for the exercise of any right of eminent domain,
of the Merchants Collateral (the events in clause (ii), collectively, an "Event of Loss"), then the
Debtor shall promptly notify the DIP Lessor of such proposed disposition or Event of Loss
(including the amount of the estimated insurance or other proceeds to be received) and within
one business day of receipt of such proceeds, the Debtor shall deliver, or cause to be delivered,
100% of the proceeds (net of reasonable transaction-related expenses determined acceptable by
the DIP Lessor) to the DIP Lessor as a prepayment of the DIP Obligations; provided, however,
that the DIP Lessor may, at its election and sole discretion, require mandatory prepayment in
respect of any insurance payment received in respect of any loss of or damage to any Merchants
Vehicle Collateral in the course of its usage by any rental customer.
9. Events of Default. The following shall constitute an event of default under this
Interim Order, unless waived in writing by the DIP Lessor (the "Events of Default")-.
(1) The occurrence of an "Event of Default" under, and as defined in, the DIP
Transaction Documents.
(2) The Debtor proposes or supports, directly or indirectly, any plan of
reorganization or sale of all or substantially all of the Debtor's assets which includes the
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Merchants Collateral or entry of any confirmation order or sale order that is not conditioned
upon the indefeasible payment in full in cash, upon the consummation of such plan of
reorganization or such sale, of all DIP Obligations or the assumption by the purchaser of the DIP
Transaction.
(3) Any other breach or violation by the Debtor of the terms and provisions
of this Interim Order.
10. Rights and Remedies Upon Event of Default.
(1) Immediately upon the occurrence and during the continuation of an Event
of Default, the DIP Lessor may, at its election and sole discretion, (i)(l) declare all or any
portion of the DIP Obligations to be immediately due and payable, (2) declare the termination,
reduction or restriction of any further commitment to lease or extend credit to the Debtor, to the
extent any such commitment remains, and (3) terminate the DIP Transaction and the DIP
Transaction Documents as to any future liability or obligation of the DIP Lessor, but without
affecting any of the DIP Obligations, the DIP Liens, DIP Super-Priority Claims or the other DIP
Protections; and (ii) declare a termination, reduction or restriction on the ability of the Debtor to
use any Cash Collateral (any such declaration shall be made in writing to the Debtor, the
Committee, the Catalyst DIP Lender and the U.S. Trustee, and shall be referred to herein as a
"Termination Declaration" and the date of such Termination Declaration being herein referred
to as the "Termination Declaration Date").
(2) In addition to the remedies described above and other customary remedies,
five (5) days following the Termination Declaration Date, the DIP Lessor shall have relief from
the automatic stay without further notice or order of this Court and may repossess, recover
possession, and/or foreclose on all or any portion of the Merchants Collateral, collect proceeds of
the Merchants Collateral, and apply the proceeds thereof to the DIP Obligations, occupy the
Debtor's premises to sell or otherwise dispose of the Merchants Collateral or otherwise exercise
remedies against the Merchants Collateral permitted by applicable non-bankruptcy law. During
such five (5) day period, the Debtor and the Committee shall be entitled to an emergency hearing
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before the Court for the sole purpose of contesting whether an Event of Default has occurred.
Unless the Court at such hearing determines that an Event of Default has not occurred and is not
continuing, the automatic stay, as to the DIP Lessor (and, if applicable, its designee), shall
automatically terminate at the end of such five (5) day period, without further notice or order.
Neither section 105 nor any other provision of the Bankruptcy Code shall be utilized to preclude
or restrict the DIP Lessor (or its designee) from exercising its default-related rights and remedies
under the DIP Transaction Documents and applicable law. Notwithstanding the foregoing,
nothing herein shall preclude the DIP Lessor from seeking an order from the Court authorizing
the DIP Lessor to exercise any enforcement rights or remedies with respect to the Merchants
Collateral on less than five (5) days' notice.
(3) Without limiting the foregoing, upon the request of the DIP Lessor
following the expiration of such five (5) day period, upon the request by and pursuant to the
instructions of the DIP Lessor, the Debtor shall assemble and deliver to the DIP Lessor or its
agent, or use commercially reasonable efforts to market and sell all or such portion of the
Merchants Collateral as the DIP Lessor shall specify and on such terms and conditions and
pursuant to such procedures and processes as is acceptable to the DIP Lessor, and remit the
proceeds therefrom to the DIP Lessor for application to the DIP Obligations, and in connection
with the foregoing, the Debtor shall file and use commercially reasonable efforts to pursue one or
more motions under section 363 of the Bankruptcy Code, in form and substance satisfactory to
the DIP Lessor, for the entry of order(s) of the Court (in form and substance satisfactory to the
DIP Lessor) approving procedures (acceptable to the DIP Lessor) governing each such sale of
the Merchants Collateral and approving each such sale of the Merchants Collateral that has been
approved by the DIP Lessor.
(4) All proceeds realized in connection with the exercise of the rights and
remedies of the DIP Lessor shall be for application to the DIP Obligations under, and in
accordance with the provisions of, the DIP Transaction Documents until indefeasible payment in
full in cash of the DIP Obligations.
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(5) Notwithstanding anything contained herein to the contrary, and without
limiting any other rights or remedies of the DIP Lessor contained in the DIP Transaction
Documents, or otherwise available at law or in equity, upon reasonable prior written notice to the
Debtor and any landlord, lienholder, licensor or other third party owner of any leased or licensed
premises or intellectual property that an Event of Default has occurred and is continuing, the DIP
Lessor (i)may, unless otherwise provided in any separate agreement by and between the
applicable landlord or licensor and the DIP Lessor, enter upon any leased or licensed premises of
the Debtor for the purpose of exercising any remedy with respect to the Merchants Collateral
located thereon and (ii) shall be entitled to all of the Debtor's rights and privileges as lessee or
licensee under the applicable lease or license and to use any and all trademarks, trade names,
copyrights, licenses, patents or any other similar assets of the Debtor, which are owned by or
subject to a Lien of any third party and which are used by Debtor in its businesses, in all cases
without interference from lienholders, lessors, licensors thereunder, provided, however, that in
the event the DIP Lessor has taken possession of any Merchants Vehicle Collateral and stores
such Merchants Vehicle Collateral at a location or uses such location to show, liquidate or
otherwise dispose of such Merchants Vehicle Collateral, the DIP Lessor shall pay only that
portion of the reasonable amount of rent and additional rent, fees, royalties or other obligations
of the Debtor relating to that portion of the physical location actually used that first arise after
delivery of the written notice referenced above from the DIP Lessor and that are payable during
the period of such occupancy or use by such DIP Lessor calculated on a per diem basis. Nothing
herein shall require the Debtor or the DIP Lessor to assume any lease or license under section
365(a) of the Bankruptcy Code as a precondition to the rights afforded to the DIP Lessor in this
paragraph 10.
(6) The automatic stay imposed under section 362(a) of the Bankruptcy Code
is hereby modified pursuant to the terms of the DIP Transaction Documents as necessary to
(i) permit the Debtor to grant the DIP Liens and to incur all liabilities and obligations to the DIP
Lessor under the DIP Transaction Documents, (ii) authorize the DIP Lessor to retain and apply
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payments hereunder, and (iii) as otherwise necessary to implement and effectuate the provisions
of this Interim Order.
11. Preservation of Rights Granted Under the Interim Order.
(1) No Non-Consensual Modification or Extension of Interim Order. Unless
all DIP Obligations shall have been indefeasibly paid in full in cash and the DIP Transaction
shall have been terminated, the Debtor shall not seek, and it shall constitute an Event of Default,
if there is entered (i) an order amending, supplementing, extending or otherwise modifying this
Interim Order or (ii) an order converting or dismissing the Case, in each case, without the prior
written consent of the DIP Lessor, which consent shall not be implied by any other action,
inaction or acquiescence.
(2) Dismissal. If any order dismissing the Case under section 1112 of the
Bankruptcy Code or otherwise is at any time entered, such order shall provide (in accordance
with sections 105 and 349 of the Bankruptcy Code) to the fullest extent permitted by law that
(i) the DIP Protections shall continue in full force and effect and shall maintain their priorities as
provided in this Interim Order until all DIP Obligations have been indefeasibly paid in full in
cash and the DIP Transaction is terminated (and that all DIP Protections shall, notwithstanding
such dismissal, remain binding on all parties in interest), and (ii) this Court shall retain
jurisdiction, notwithstanding such dismissal, for the purposes of enforcing such DIP Protections
and DIP Obligations.
(3) Modification of Interim Order. Based on the findings set forth in this
Interim Order and in accordance with section 364(e) of the Bankruptcy Code, which is
applicable to the DIP Transaction contemplated by this Interim Order, in the event any or all of
the provisions of this Interim Order are hereafter reversed, modified, vacated or stayed by a
subsequent order of this Court or any other court, the DIP Lessor shall be entitled to the
protections provided in section 364(e) of the Bankruptcy Code, and no such reversal,
modification, vacatur or stay shall affect (i) the validity, priority or enforceability of any DIP
Protections granted or incurred prior to the actual receipt of written notice by the DIP Lessor of
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the effective date of such reversal, modification, vacatur or stay or (ii)the validity or
enforceability of any Lien, claim or priority authorized or created hereby or pursuant to the DIP
Transaction Documents with respect to any DIP Obligations. Notwithstanding any such reversal,
modification, vacatur or stay, any DIP Obligations incurred by the Debtor prior to the actual
receipt of written notice by the DIP Lessor of the effective date of such reversal, modification,
vacatur or stay shall be governed in all respects by the original provisions of this Interim Order,
and the DIP Lessor shall be entitled to all of the DIP Protections, and all other rights, remedies,
Liens, priorities, privileges, protections and benefits granted in section 364(e) of the Bankruptcy
Code, this Interim Order and pursuant to the other DIP Transaction Documents with respect to
all DIP Obligations.
(4) Survival of Interim Order. The provisions of this Interim Order, the other
DIP Transaction Documents, any actions taken pursuant hereto or thereto, and all of the DIP
Protections, and all other rights, remedies, Liens, priorities, privileges, protections and benefits
granted to any or all of the DIP Lessor and its affiliates shall survive, and shall not be modified,
impaired or discharged by, the entry of any order confirming any plan of reorganization in the
Case, converting the Case to a case under chapter 7, dismissing the Case, withdrawal of the
reference as to the Case or any Successor Case or providing for abstention from handling or
retaining of jurisdiction of the Case in this Court, or terminating the joint administration of this
Case or by any other act or omission. The terms and provisions of this Interim Order, including
all of the DIP Protections and all other rights, remedies, Liens, priorities, privileges, protections
and benefits granted to the DIP Lessor, shall continue in full force and effect notwithstanding the
entry of any such order, and such DIP Protections shall continue in these proceedings and in any
Successor Case, and shall maintain their respective priorities as provided by this Interim Order.
12. Waiver of Section 506(c) Claims. As a further inducement, and condition of, to
the DIP Lessor providing the DIP Transaction, the Debtor and any successors thereto or any
representatives thereof, including any trustees appointed in the Case or any Successor Case, shall
be deemed to have waived any rights, benefits, or causes of action under section 506(c) of the
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Bankruptcy Code as they may relate to or be asserted against the DIP Lessor and/or any
Merchants Collateral. Nothing contained in this Interim Order or in any Final Order shall be
deemed a consent by the DIP Lessor to any charge, Lien, assessment or claim against the
Merchants Collateral under section 506(c) of the Bankruptcy Code or otherwise.
13. Other Rights and Obligations.
(1) Expenses. All post-petition fees, costs and expenses of the DIP Lessor
(including, without limitation, the fees, costs and expenses of any legal counsel, consultants,
accounting firms, auditors, financial advisors or other advisors and professionals retained by the
DIP Lessor from time to time) incurred in connection with this Case, the diligence, negotiation,
documentation, consummation, administration or any other aspect of the DIP Transaction and the
DIP Transaction Documents, the diligence, negotiation, documentation, consummation or any
other aspect of any credit bid or other bid by the DIP Lessor or the sale process in this Case, or
incurred in connection with the enforcement of rights and remedies under the DIP Transaction
Documents or applicable law are to be reimbursed on a current basis by the Debtor and shall in
any event constitute part of the DIP Obligations. For avoidance of doubt, all such fees and
expenses described in the immediately preceding sentence shall be reimbursed without regard to
the amounts set forth in the Approved Budget with respect thereto. All such obligations shall
constitute DIP Obligations. Professionals for the DIP Lessor and its affiliates (collectively, the
"DIP Lessor Professionals") shall not be required to comply with the U.S. Trustee fee rules and
guidelines. If the Debtor objects to the reasonableness of the fees and expenses of any DIP
Lessor Professional and cannot resolve such objection within ten (10) days of receipt of
summary invoices, the Debtor shall file with the Court and serve on such DIP Lessor
Professional an objection (the "Fee Objection") limited to the issue of reasonableness of such
disputed fees and expenses. The Debtor shall timely pay in accordance with the terms and
conditions of this Interim Order the undisputed fees, costs and expenses reflected on any invoice
to which a Fee Objection has been timely filed.
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(2) Binding Effect. The provisions of this Interim Order, including all
findings herein, and the other DIP Transaction Documents shall be binding upon all parties in
interest in this Case, including the DIP Lessor, all pre-petition and post-petition creditors,
whether or not secured, the Committee and the Debtor and their respective successors and
assigns (including any chapter 7 or chapter 11 trustee hereinafter appointed or elected for the
estate of the Debtor, any examiner appointed pursuant to section 1104 of the Bankruptcy Code or
any other fiduciary or responsible person appointed as a legal representative of the Debtor or
with respect to the property of the estate of the Debtor), whether in the Case, in any Successor
Case, or upon dismissal of any such Case or Successor Case; provided, however, except as
expressly provided herein, that the DIP Lessor shall have no obligation to permit the use of Cash
Collateral or to extend any credit to any chapter 7 or chapter 11 trustee or other responsible
person appointed for the estate of the Debtor in the Case or Successor Case.
(3) No Waiver. The failure of the DIP Lessor to seek relief or otherwise
exercise its rights and remedies under the DIP Transaction Documents or otherwise (or any delay
in seeking or exercising same), shall not constitute a waiver of any of such parties' rights
hereunder, thereunder, or otherwise. Except as expressly provided herein, nothing contained in
this Interim Order shall impair or modify any rights, claims or defenses available in law or equity
to the DIP Lessor, including rights of setoff (or the right of a Debtor to contest such assertion).
The entry of this Interim Order is without prejudice to, and does not constitute a waiver of,
expressly or implicitly, or otherwise impair, the ability of the DIP Lessor under the Bankruptcy
Code or under non-bankruptcy law to (i) request conversion of the Case to a case under
Chapter 7, dismissal of the Case, or the appointment of a trustee in the Case, (ii) propose, subject
to the provisions of section 1121 of the Bankruptcy Code, any chapter 11 plan or plans with
respect to the Debtor, or (iii) exercise any of the rights, claims or privileges (whether legal,
equitable or otherwise) of the DIP Lessor.
(4) No Third Party Rights. Except as explicitly provided for herein, this
Interim Order does not create any rights for the benefit of any third party, creditor, equity holder
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or any direct, indirect or incidental beneficiary. In determining to provide credit (whether under
the DIP Transaction Documents or otherwise) or in exercising any rights or remedies as and
when permitted pursuant to the DIP Transaction Documents, the DIP Lessor shall not (i) be
deemed to be in control of the operations of the Debtor, or (ii) owe any fiduciary duty to the
Debtor, its creditors, shareholders or estate,
(5) No Marshaling. The DIP Lessor shall not be subjected to, and the Debtor
shall not attempt to subject the DIP Lessor to, the equitable doctrine of "marshaling" or any other
similar doctrine with respect to any of the Merchants Collateral, as applicable.
(6) Amendments. The Debtor is authorized and empowered, without further
notice and hearing or approval of this Court, to amend, modify, supplement or waive any
provision of the DIP Transaction Documents in accordance with the provisions thereof, unless
such amendment, modification, supplement or waiver (i) increases the interest rate (other than as
a result of the imposition of the default rate), (ii) increases the aggregate leasing and credit
commitments of the DIP Lessor in respect of the DIP Transaction (except for such increase
expressly permitted under the DIP Transaction Documents), (iii) changes the maturity date, or
(iv) adds or amends (in any respect unfavorable to the Debtor) any Event of Default. No waiver,
modification, or amendment of any of the provisions hereof shall be effective unless set forth in
writing, signed by on behalf of all the Debtor and the DIP Lessor, and consented to by Catalyst
DIP Lender to the extent that The Catalyst Capital Group, Inc., on behalf of one or more funds
managed by it and/or through certain affiliates is a "Prevailing Purchaser" as defined in the
Order Pursuant to Bankruptcy Code Sections 105(A), 363 and 365, Bankruptcy Rules 2002,
3007, 6004, 6006, 9007 and 9014, (A) Approving Bidding Procedures in Connection with Sale of
Assets of Debtor, (B) Approving Form and Manner of Notice, (C) Scheduling Auction and Sale
Hearing, (D) Authorizing Procedures Governing Assumption and Assignment of Certain
Executory Contracts and Unexpired Leases, and (E) Granting Related Relief [Docket No. 109]
and, except as permitted herein without further order, approved by this Court.
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(7) Inconsistency. In the event of any inconsistency between the terms and
conditions of the other DIP Transaction Documents and of this Interim Order, the provisions of
this Interim Order shall govern and control.
(8) Enforceability. This Interim Order shall constitute findings of fact and
conclusions of law pursuant to the Bankruptcy Rule 7052 and shall take effect and be fully
enforceable nunc pro tunc to the Commencement Date immediately upon execution hereof.
Notwithstanding Bankruptcy Rules 4001(a)(3), 6004(h), 6006(d), 7062 or 9024 or any other
Bankruptcy Rule or Local Rule or Rule 62(a) of the Federal Rules of Civil Procedure, this
Interim Order shall be immediately effective and enforceable upon its entry, and there shall be no
stay of execution or effectiveness of this Interim Order.
(9) Headings. Paragraph headings used herein are for convenience only and
are not to affect the construction of or to be taken into consideration in interpreting this Interim
Order.
14. Final Hearing.
(1) The Final Hearing to consider entry of the Final Order and final approval
of the DIP Transaction is scheduled for , 2013, at [ ] p.m. (prevailing Central time)
at the United States Bankruptcy Court for the Southern District of Mississippi. The proposed
Final Order shall be substantially the same as the Interim Order except that (1) those provisions
in the Interim Order that are subject to the entry of the Final Order shall be included in the Final
Order without such qualification, and (ii) modifications to settle objections duly raised prior to
the Final Hearing. If no objections to the relief sought in the Final Hearing are filed and served
in accordance with this Interim Order, no Final Hearing may be held, and a separate Final Order
may be presented by the Debtor and entered by this Court.
(2) Final Hearing Notice. On or before December , 2013 the Debtor shall
serve, by United States mail, first-class postage prepaid (such service constituting adequate
notice of the Final Hearing), (1) notice of the entry of this Interim Order and of the Final Hearing
(the "Final Hearing Notice") and (ii) a copy of this Interim Order, on the parties having been
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given notice of the Interim Hearing and to any other party that has filed a request for notices with
this Court and to the Committee after the same has been appointed, or Committee counsel, if the
same shall have been appointed. The Final Hearing Notice shall state that any party in interest
objecting to the entry of the proposed Final Order shall file written objections with the Clerk of
the Court no later than [ ], 2013, which objections shall be served so that the same are received
on or before such date by: (a) the Debtor, [ ], Attn.: [ ]; (b) proposed
counsel for the Debtor, [ ], Attn.: [ ]; (c) counsel to The Catalyst Capital
Group, Inc., ; (d) counsel to the DIP Lessor, Buchalter
Nemer, 1000 Wilshire Boulevard, Suite 1500, Los Angeles, CA 90017, Attn: William Brody;
and (e) the United States Trustee [ ].
15. Retention of Jurisdiction. The Court has and will retain jurisdiction to enforce
this Interim Order according to its terms.
SO ORDERED this the day of December, 2013.
HONORABLE EDWARD ELLINGTON
UNITED STATES BANKRUPTCY JUDGE
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Exhibit A
(A) Master Lease Agreement (Open Ended), dated as of December [ ], 2013, by and
between the Debtor and the DIP Lessor,
(B) TBD.
ButlerSnow 18797057vl
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FOR DISCUSSION PURPOSES ONLY
Summary of Terms and Conditions
Restructure of Lease Agreement-Simply Wheelz LLC dba Advantage Rent A Car
December 18, 2013
On November 5, 2013 (the "Petition Date"), Simply Wheelz LLC dba Advantage Rent A Car
("Debtor") filed a petition for relief under Chapter 11 of Title 11 of the United States Code in the
Bankruptcy Court for the Southern District of Mississippi (Case No. 13-03332-ee). Prior to the
Petition Date, Debtor and Merchants Automotive Group, Inc. ("Lessor") were parties to a
contract to provide certain financiais accommodations to or for the benefit of the Debtor, which
the Debtor may not assume pursuant to 11 U.S.C. § 365(c)(2) and which does not bind Lessor
post-petition. Debtor has requested that Lessor provide certain post-petition financing to Debtor
on terms similar to original transaction.
The proposed terms and conditions outlined in this Summary of Terms and Conditions are
provided for discussion purposes only and do not constitute an offer or an agreement. This
Summary of Terms and Conditions is being provided as minutes to certain proposals and ideas
discussed between the parties during the conference held on November 14, 2013. This summary
is intended as an outline only and does not purport to summarize all the terms, conditions,
covenants, representations, warranties or other provisions which would be contained in definitive
legal documentation of the transaction contemplated herein. The actual terms and conditions of
the transactions contemplated herein are subject to further due diligence, formal credit approval,
and satisfactory review of documentation. Moreover, the Debtor must obtain approval from the
bankruptcy court to enter into any agreement with Lessor before Lessor becomes obligated to
provide any post-petition financial accommodations to the Debtor.
Debtor: Simply Wheelz LLC dba Advantage Rent A Car ("Debtor")
Lessor: Merchants Automotive Group, Inc. ("Lessor")
Original Transaction: Open-End Master Lease Agreement and Addendum to Open End Master
Lease Agreement executed by and between Debtor and Lessor dated April
17, 2013 (together with any other further amendments, addendums and
collateral documents thereto, the "Agreement"). Any capitalized terms
not defined herein shall have the same meaning as used in the Agreement.
Lessor reserves all rights against Debtor under the Agreement and
applicable law.
Proposed
Transaction:
Continued
Performance:
Under the terms and conditions stated herein, in addition to the terms set
forth in the Agreement, Lessor will fund the balance of the Debtor's order
for vehicles per the original transaction for use in the Debtor's business.
As a prerequisite to Lessor's obligation to provide any post-petition
financing to Debtor, Debtor must be current and remain current in all pre-
FOR DISCUSSION PURPOSES ONLY EXHIBIT
8
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FOR DISCUSSION PURPOSES ONLY
petition obligations under all Lease Schedules entered into between Lessor
and Debtor.
Additional
Compensation: Upon any post-petition funding provided by Lessor to Debtor, Debtor
agrees to pay Lessor a restructuring fee of 1% of all such subsequent
funding.
Additional
Conditions:
Costs and fees:
To secure Debtor's obligations (i) for payment under the Agreement and
any Lease Schedule funded by Lessor hereunder, and (ii) under sections 9
through 11 of the Agreement relating to the return and surrender of any
Vehicle leased to Debtor hereunder, Debtor shall deliver a Sight Draft
Letter of Credit in the amount of $3,000,000 prior to Lessor funding any
order for Vehicles pursuant to the terms and conditions proposed herein.
The Debtor will also assume or lease 250 vehicles known as the Lewis
Transportation units at terms mutually agreeable to both parties.
Debtor shall bear all costs associated with the transaction and restructure
of obligations described herein, including without limitation Lessor's
attorneys' fees.
ButlerSnow 18801741 vl
FOR DISCUSSION PURPOSES ONLY
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MERCHANTS L. E A S I IM Q
This Open-End Master Lease Agreement (the "Agreement") is entered determination of the proper lease term period for purposes of its FASB 13
into by and between Merchants Automotive Group, Inc., a New or similar analysis.
Hampshire corporation ("Lessor"), and the undersigned (the "Customer"). . A ^ t ,. .
If more than one party executes this Agreement as Customer, each shall 5- fIi T ^ Cu/01
m'r shal1 t0per^ the. ye.hlCleS
be jointly and severally liable hereunder. ™ ^he UnitedI States only and shaU operate and maintain the Vehicles m strict conformity with all federal, state, county and
1. LEASE; DISCLAIMER Lessor hereby agiees to lease to Customer and municipal statutes, ordinances and regulations and shall not permit
Customer hereby agrees to lease from Lessor one or more vehicles (each a the Vehicles to be used for the transportation of hazardous
"Vehicle" and together, the "Vehicles") for use in its business. Customer substances or the unlawful transportation of any persons or
shall order a Vehicle or Vehicles for lease by placing a noncancelable property including, without limitation, alcoholic beverages or
Vehicle order with Lessor which shall be conffrmed by the issuance of narcotics. When applicable, should the Customer be a "Motor
an Order Between by Lessor delivered to the Customer and which shall Carrier," the Customer shall ensure compliance with the Vehicle
be executed by the Customer and returned to Lessor (a 'Vehicle Identification and placarding requirements of said laws, using its
Order"). Customer's Vehicle Order shall authorize Lessor to purchase own US DOT identification number on the Vehicle. The
such Vehicle subject to the then current warranty of the manufacturer. Customer shall comply and cause all persons operating the
Lessor hereby assigns the manufacturer's warranty to Customer for the Vehicles to comply with all statutes, ordinances and regulations
Lease Term (defined below). CUSTOMER AGREES THAT LESSOR IS which may be applicable to the registration, leasing, insurance, use
NOT THE MANUFACUTURER, DESIGNER OR DISTRIBIITOR OF THE and operation of the Vehicles, including operators' licensing VEHICLES AND THAT EACH VEHICLE (INCLUDING ANY SPECIFIED AND WITH MI condjtions 0f the nolicies of insurance MODIFICATION) IS OF A DESIGN SPECIFIED BY CUSTOMER AND lequ"e™eIits> ana witu all conditions oi me policies ot insuiance SUITABLE FOR ITS PURPOSES. 011 Vehicles, and shall prepare and furnish to the Lessor all
documents, returns or forms legally required thereunder. The LESSO R M A K E S N O R E P R E S E N T A T I O N O R W A R R A N T Y O F A N Y 0 , . 0 „ , . 0 0 0 T W Q , ° , . ^ „ 1 . . . KIND, EXPRESS OR IMPLIED, WITH RESPECT TO a) ANY VEHICLE Customer agrees that whenever any statute, oidmance or
INCLUDING, BUT NOT LIMITED TO THE MERCHANTABILITY OR FITNESS regulation requires installation of any accessories or equipment, FORA PARTICULAR PURPOSE OF A VEHICLE; THE DESIGN, QUALITY the Customer will comply with all such requirements and will
OR CAPACITY OF A VEHICLE; OR COMPLIANCE OF A VEHICLE WITH accept such equipment for all new Vehicles at the time such APPLICABLE LAW OR b) THE ACCOUNTING TREATMENT OF THIS ,, , „„ K , . .. , R. „ . „ „ , „ AGREEMENT OR THE TIMING OF THE ACCRUALS OF THE RENTALS ^e'l c es aie acquired by the Lessor foi the Customei . Customer HEREUNDER FOR FINANCIAL STATEMENT OR TAX PURPOSES, agrees to repair the Vehicles and to maintain them in safe and CLSTOMER AQFINOWLEDGES AND AGREES THAT LESSOR E AN FSDEPENDENT good mechanical condition all according to the standards and CONIRACROR AND DOES NOT ACT IN THE CAPACUY OF A FIDUCIARY OF requirements of the manufacturer's warranty. All additions to a
SSSSS11'^VILL0DnrAINTAXANDAG001™^^ ̂ Vehicle become the property of Lessor and shall, unless otherwise
directed by the Lessor, be surrendered with the Vehicle. 2. DELIVERY. Customer shall take deliveiy within five (5) business , days of notice that the Vehicle is available. If Customer fails to do so, Lessor TITLING; REGISTRATION; NET LEASE. Unless otherwise
may, for purposes of beginningrental charges, treat such fifth (5fl,) business day as 'WiM by law, all Vehicles shall be registered m the name of the Lessor (faring
the date of acceptance. Customer shall inspect a V ehicle at the location of eri^l1s ^J-ase Term, and any certificates of title required shall likewise be in the
deliveiy for conformity to the Vehicle Older. Customei's removal of the Vehicle 1131116 ^le Lessor- Customer shall provide Lessor prior written notice of any
from such location shall constitute acceptance of the Vehicle, If Customer chanSe of ad<kess 01'location of Vehicles or Customer's place of business.
requests1hatLessor,priortodeUveiytoCustomer,deliveroneormore Vehiclesto Customer covenants that it will pay all costs, expenses, fees, charges, fines,
an upfitter, body company, installer or other third patty and/or obtain certain violations and taxes ™ed in connection with the Vehicle's titling,
equipment orparts from a specific vendor (each a "Vendor "), then Customer registration, deliveiy, purchase, sale, rental and modification, and arising
assumes all risks of doing business with the Vendor, including without ^ om t'le operation or use of the Vehicle during its Lease Term. If Lessor
limitation, the Vendor's creditworthiness. ^ of 4(3 forgoing amounts, Customer shall promptly reimburse Lessor and pay the then current administrative charge noted in the Rate
3. TERM OF AGREEMENT. This Agreement shall commence Schedule attached hereto,
on the Effective Date noted below, and continue until canceled or terminated by either party upon thirty (30) days' written notice to the other. 7- RENTAL CHARGES. Customer will pay monthly rental for each
Notwithstanding tennination, this Agreement shall remain in effect with Vehicte in accordance with the terms of the Lease Schedule for such
respect to each Vehicle then leased and each Vehicle Order processed by Vehicle>as weI1 as a11 other Provided for in ^ Agreement and the
Lessor until all terms and conditions of this Agreement and the related 11e'ated Lease Schedule, Rate Schedule and Vehicle Order. Monthly rental
Schedule A for each Vehicle attached hereto from time to time (each a sba11 begin on the first (1 ) day of the calendar month foUowing
"Lease Schedule" and together, the "Lease Schedules") are satisfied. Customer's acceptance of fee Vehicle. Customer agrees that, fiom the time of acceptance of the Vehicle by Customer to the time when the first full
4. LEASE TERM. The noncancelable minimum lease term for each monthly rental charges are payable, Customer will pay interim rental in
Vehicle (a "Lease Term") shall not be less than three hundred sixty an amount equal to the monthly rental charge pro-rated on a daily basis
seven (367) days beginning upon Customer's acceptance. Thereafter, based on the actual number of days in the month. Monthly rental charges
the Lease Term may be renewed monthly for the lesser of the mutually end on the last day of the month prior to sale. Customer agrees to pay
agreeable Maximum Lease Term noted on the Rate Schedule or the interim rental on each Vehicle for the month of sale until the date of
amortization term set in the respective Vehicle Order and the related Lease suirender of the Vehicle in accordance with paragraph 9 in an amount equal
Schedule. Customer acknowledges that it is responsible for its own to the monthly rental chaige pro-rated on a daily basis based on the actual
number of days in the month. Interim rental payments do not reduce Book
Case 13-03332-ee Doc 300 Filed 12/20/13 Entered 12/20/13 16:39:22 Desc Main Document Page 42 of 58
Value. If a Vehicle Order specifies a Vehicle requiring party, Customer agrees that the sale of such vehicle shall be subject to the
modifications, such that it is necessary or desirable for Lessor to pay for indemnity herein and to pay the then current sale fee.
an incomplete Vehicle or its components, Lessor shall charge Customer, „T A T D U M T A T A R M R O T A ^ V R R A • ri, * as additional rental, interim financing as provided in the Rate Schedule. !1^ ̂ TERMNM, RENTAL ADJUSTMENT. As an mcentwe to
Customer agrees that Customer's obligation to pay monthly rental and other Customer to mamtam the value of each Vehicle by good maintenance,
amounts shall be unconditional and that Customer shall not be entitled to ^ and careful use dumg its Lease'Term, the parties agree that the
any reduction of, or setoff against, such amounts. enhancement or reduction m value shall be compensated as Mows:
8. PAYMENT TERMS. Time is of the essence. Monthly rental v , , a,' RfUn* °f f ft^eeds exceed flie Book
payments will be due and payable, in advance, on the fist (1*) day of each Value (as ^ ̂ Schedule) of the Vehicle, lessor shall retain
calendar month. Lessor issues monthly invoices to all its customer; ™ arnount ^ ̂ ̂ B°ok Value and renut or credlt tlie excess to
however, Customer is responsible for timely making monthly rental Customer as a refund of rental.
payments regardless of whether Lessor sends an invoice to Customer. b. Rental Charge. If the Net Proceeds are less than the Book
Payments shall be made in U.S. dollars by Lessor initiated ACH direct Value, Customer shall pay Lessor the amount of the difference. However,
debit, electronic transfer from a Customer bank account to an account if the Net Proceeds are less than the Guaranteed Residual (defined below), this
specified by Lessor or other means expressly petmitted by Lessor. Payment rental charge is limited to the amount of the difference between the
credit is subjectto final paymentbyflie institution on which the item ofpayment Guaranteed Residual and the Book Value. The Guaranteed Residual is
was drawn. No restrictive endorsements shall be valid or binding. Late twenty (20%) percent of the Capitalized Cost at the end of the minimum
payments will be charged in tie amount of the lesser of one and one-half (V/2%) Lease Term and thereafter, twenty (20%) percent of the Book Value as of
percent or the highest legal interest rate per month or fraction thereof It is the the end ofthe prior month.
intent of Lessor that it not receive directly or indirectly any amount in excess , „ ,^TTT, ^ , ,, . . , „ „ . of that amount which may be legally paid. Any excess charges will be credited ,2- INSURANCE. Customer shall mamtam the following
to Customer or, upon request of Customer, refimded. Customer agees to coveK,ges durm|,416 T
Uase Te™ f ea* Veh,cle ^ carefully review each invoice or other statement provided by Lessor. ^ company acceptable to Lessor and deliver to Lessor a certificate thereof:
Customei-identifiesabillingerror,CustomerwilladviseLessorpromptly,andm a Automobile liability insurance with an Additional
such event Lessors sole liability and Customer's exclusive remedy shall be Insured endorsement as specified by Lessor and with minimum limits of
appropriate adjustments in Customer's account. All charges are based upon coverage as Lessor may require, but in no event less than $1 million
Lessor's standard operating routines, existing business policy and computer combined single limit per occurrence or less than $5 million for Vehicles
systems capabilities. capable of transporting more than eigjit (8) passengeis. No self-insured retention
9. SURRENDER OF VEHICLES. At the end ofthe minimum or deductible is pennissible.
Lease Tenn, or at any time thereafter, Customer may, upon ten (10) days' b. Comprehensive and collision insurance with a Loss
written notice to Lessor, deliver the Vehicle identified in the notice to Payee endorsement as specified by Lessor and with coverage for the actual
Lessor at a mutually agreed location Prior to sunender of Vehicles, cash value of each Vehicle and subject to a mutually agreeable
Customer may solicit offers payable in certified funds from deductible. Customer shall bear all risk of loss, damage or destruction to the
prospective purchasers on an "as is, where is" basis, without warranty Vehicle (which may exceed actual cash value), however caused, from
by or recourse to Lessor; provided, that Customer will not continue to use any the time of acceptance until surrender to Lessor,
such Vehicle after its sale; and provided further, that the sale, ifit takes place „ . , „ . „ . , „ ., . before the expiration ofthe Maximum Lease Terni, is not to another / _ ,c-. Conditions. All insurance pohcies shall provide for thirty
automobile leasing company. Surrender ofthe Vehicle shaUnot be (30) days P"or nfce t0 ^ssor ofany cancellation or reduction m
effective until Lessor or its agent has actual physical possession of coveraSe- P'f mfr a!ltho1
r,zf,s tLe,ssor t0 endorse Customers name to
the Vehicle and has received all license plates, registration certificates, msi,rauce checks 1'elated to 1,16 Vehicles-
documents oftitle, odometer and damage disclosures and other 1 3 , INDEMNITY. CUSTOMER MILL INDEMNIFY AND
documentation necessary for the sale of the Vehicle. If, upon Customer DEFEND LESSOR (INCLUDING ANY OF ITS AFFILIATES AND AGENTS)
request, Lessor accepts an offer to purchase a Vehicle from a Customer or AGAINST ANY LOSS, LIABILITY, OR CLAIM DIRECTLY OR „ T OO,™ INDIRECTLY RELATING TO THE LEASE, MAINTENANCE, USE, a purchaser identified by Customei and Lessor does not take actual CONDITION, (INCLUDING BUT NOT LIMITED TO PATENT OR LATENT
physical possession of the Vehicle, neither siurender nor sale shall be DEFECTS WHETHER OR NOT DISCOVERABLE, PRODUCT LIABILITY
deemed to occur until Lessor delivers the certificate oftitle and receives CLAIMS OR CONDITION OF THE VEHICLE AT SURRENDER), OR
payment. Any personal property in a Vehicle upon simender shall be deemed SURRENDER OF ANY VEHICLE BETWEEN THE TIME OF DELIVERY I J J J 1 , C, T , . TO CUSTOMER AND THE TIME OF SURRENDER. IF LESSOR SELLS
abandoned and may be disposed of by Lessor without liability to Lessor. ANY VEHICLE TO CUSTOMER, ANY OF rrs EMPLOYEES OR A
Once a Vehicle is fully depreciated, a fee in the amount noted in the Rate PURCHASER FROM WHOM CUSTOMER OBTAINS AN OFFER,
Schedule will be assessed and payable by the Customer as an extended CUSTOMER'S COVENANT OF INDEMNITY WITH REPECT TO SUCH
lease charge and will continue until the Customer terminates the lease. VEHICLE SHALL CONTINUE. THIS INDEMNITY IS ABSOLUTE AND & UNCONDITONAL AND INCLUDES CLAIMS OF NEGLIGENCE, STRICT
10. SALE OF VEHICLES. Lessor or its servicing agent shall solicit LIABILITY, AND BREACH OF WARRANTY, BUT DOES NOT EXTEND
from prospective purchasei* wholesale cash bids for the Vehicle, Such 5 ™ J,™™
Vehicles shall be sold m a commercially reasonable manner. From the SURVIVE THE TERMINATION OF THIS AGREEMENT,
sales proceeds of any Vehicle sold under this Agreement (and any _ third party owned vehicles), Lessor shall deduct all direct sales expenses NATURE OF AGREEMENT. The parties intend the lease of
paid or incun'ed by Lessor as well as Lessor's then cuirent sale fee and its Vehicles hereunder to be a true lease. Without prejudice to the intention of
servicing agenfs then current sale fee, the balance remaining to ^ parties that this Agreement be a lease, Customer hereby grants Lessor a
constitute the "Net Proceeds" which, subject to the provisions of security interest in the Vehicles and all proceeds, accessions,
paragraph 11, shall be payable to Lessor. If Lessor or its servicing documents, instruments, accounts, chattel paper, equipment, subleases,
agent manages the sale of any vehicle owned by Customer or a third security deposits and general intangibles related thereto to secure all
Case 13-03332-ee Doc 300 Filed 12/20/13 Entered 12/20/13 16:39:22 Desc Main Document Page 43 of 58
obligations of Customer to Lessor under this Agreement (and the related due forthe remainder ofthe Lease ̂ Teim or any renewal term fiom Customer;
Lease Schedules, Rate Schedule and Vehicle Orders) or any other (iii) collectlheftill rental due for the period priorto any sale of Vehicles; (iv)
agreement. Customer further grants Lessor its power of attorney to act as recover all expenses incurred to repossess said Vehicles together with
agent and attomey-in-iact of Customer in respect to titling and registration reasonable attorneys' fees for enforcement of Lessor's rights; (v) collect
of a Vehicle or otherwise noting Lessors interest, A photocopy or other any charges relating to the pick-up and transportation of the Vehicles; (vi)
reproduction of this Agreement shall be sufficient as a financing statement, collect any charges relating to the disposition ofthe Vehicles; (vii) sell the
The Customer shall promptly execute and deliver to the Lessor such further Vehicles to another party and recover amounts due under paragraph 11; and
documents and take such further action as the Lessor may require in order (viii) offiet any amounts due to Customer against amounts due to Lessor,
to more effectively cany out the intention and purposes of this Agreement. In addition, Lessor shall have the right to cancel this Agreement and shall
15. MISCELLANEOUS. If Customer executes a business ^in anrightsandremediesavailable at laworin equity; all such rights .. ... . , ,. . , , , . and remedies to be cumulative and not exclusive,
use certification with respect to the Vehicles leased under this
Agreement, both Lessor and Customer agree to report all Vehicle leases as 18. LIMITATION OF DAMAGESw EXCEPT WITH RESPECT TO
leases for U.S. income tax purposes. Customer has no right, title or CUSTOMER'S OBLIGATIONS OF INDEMNITY, EACH PARTY AGREES
interest in and to any Vehicle leased hereunder except as lessee. Lessor SOLE AND EXCLUSIVE REMEDY FOR ANY MATTER OR , , . . V -RT, , ! ^ ' CAUSE 0F ACRLON RELATED DIRECTLY OR INDIRECTLY TO ANY has the right to mark the Vehicle at any time stating its interest as owner CLAIM RELATED TO THE SUBJECT MATTER HEREOF BY THE OTHER
and to receive and retain rebates, discounts and other compensation PARTY TO THIS AGREEMENT SHALL BE A CONTRACT ACTION;
directly or indirectly from manufacturers, suppliers and vendors with DAMAGES SHALL BE LIMITED TO ACTUAL AND DIRECT DAMAGES
respect to the Vehicles leased hereunder. Lessor may engage ted ^STORT OT parties to refer business to Lessor If this Agreement or any other Notwithstandin ^ foregoi Lessor shall not be liable for any agreement between^Customer and Lessor resulte from such a referral, d 01. costs incun.ed b the Customer due the Less01,s Mm.e to
Lessor may pay, and shall be solely liable for, payment of any pelfolm aily provisions hereof resulting from fire or other casualty, riot, broker fee, commission or other compensation related thereto. or other labor difficul eiTlinental lation or restriction or
Customer agrees that it is not now and will not mthe fiiturebe listed on any 0ther cause beyond tlie Lessor's control, watch list maintained by the U.S. Treasuiy Department and shall comply
with the Patriot Act and international trade control and money laundering 19. ASSIGNMENTS. Customer shall not assign, sublet,
laws, as applicable. lien, encumber, or transfer any interest in any of the Vehicles
^ r^.A-vT^Ax ^rr™leased hereunder or any interest in this Agreement (or the
, ? ; ™ ORDER ^3^ Lease Scheduies Rate Schedule and Vehicle Orders) to ACCEPTANCE. Tte aedtwatoess of Customer amd any; guarantor is a without ^ consent of Lessor such
materia condition to this Agreement Customer shall provide lessor with consent b Lessor shaU unless otherwise eed in writing,
financial information reasonably requested by and satisfectoiy to Lessor each re[ie ve Customer of its obligations and liabilities under this
year of this Agreement. Nothing herem shaH be construed to require A eement and related Lease Schedule, Rate Schedule and Lessor to accept any order for a vehicle from Customer. Vehicle 0rder Lessor may assigp all or my pait of its ^ ̂ ̂
17. DEFAULT; REMEDIES interest in this Agreement (including the Lease Schedules, Rate
, „ , „ , , Schedule and Vehicle Orders) or the Vehicles, including all receivables. a. Default. If Customer shall mil to make monthly rental or
overpayments within fifteen (15) days ofthe due date or maintain insurance 20. RELATED ENTITIES. In the event that Customer permits any
coverage as herein required or after ten (10) days' written notice shall fail to Vehicles subject to this Agreement to be used or operated by any present or
perform or observe any of its other covenants, conditions or obligations future subsidiary, parent or affiliate of Customer (each a "Related Entity"),
under this Agreement, or Customer or any guarantor shall (i) make an Customer agrees that notwithstanding: (a) use or operation by a Related
assignment for the benefit of creditors, or suffer a receiver or trustee to Entity; (b) any direction by Customer to Lessor to invoice a Related
be appointed, or file or suffer to be filed any petition under any Entity; and (c) any payment made by a Related Entity with respect to any
bankruptcy or insolvency law of any jurisdiction; or (ii) discontinue business; Vehicle, all such Vehicles shall at all times remain subject to the terms
or (iii) cease its corporate, partnership or legal existence or die; or (iv) be in and conditions of this Agreement and Customer shall at all times
default under any other agreement it may have with Lessor or any parent, remain liable for all of the duties and obligations (for payment or
subsidiary or affiliate of Lessor; or (v) undergo a change in controlling otherwise) under this Agreement. Any use or operation by a Related Entity
ownership; or (vi) suffer a material adverse change in operating or financial of any Vehicle shall not, in any way, constitute a sale, assignment or
condition which impairs Customer's ability to perfonn its obligations transfer, sublease or other disposition of such Vehicle, or any interest
hereunder or Lessor's title to or rights in the Vehicles; or (vii) make any therein, or of any rights granted to or obligations of Customer under this
representation or warranty herein, or in any document delivered to Agreement.
Lessor in connection herewith (including, without limitation, financial 2 j REPRESENTATIONS, WARRANTIES AND COVENANTS.
information) or filed with any governmental entity and obtained by xhe Customer represents and warrants to and covenants with the Lessor that: Lessor m connection herewith, which shall prove to be ffe or (a) ^ Customei. has ^ foim of business otEani2ation (b)
misleading in any material respect; ten m such event. Customer shall be ^ Customei,s chief executive o{fice md addrcss for p^g of notices
in default under this Agreement A default under the temis of this Agreement hereunderis ^ Med ^ (c) ^ Cllstomer ^ duly 011anized and existing
shaU constitute a default under any other a^ement Customer has with fa good siding unfe the laws ofthe state listed below and is qualified to do Lessor orany parent, subsidiaiy or affiliate oftesor. business yjbama necessaiy to cany on its present business and to ovra ils
b. Remedies. In the event of default by Customer, Lessor property; (d) the Customer shall not change its form or state of organization
shall have the right to: (i) repossess any or all Vehicles leased hereunder without the Lessor's prior written consent, which consent will not be
wherever they may be found (and for that purpose Lessor or its agents unreasonably withheld, and shall immediately notify the Lessor of any change
mayenterupon any premises of or imderthe control of Customer) without ofthe Customer's organizational identification number issued by its state of
canceling this Agreement; (ii) collect the present value ofthe monthly rental organization or its chief executive office or notice address; (e) tin's Agreement
Case 13-03332-ee Doc 300 Filed 12/20/13 Entered 12/20/13 16:39:22 Desc Main Document Page 44 of 58
has been duly authorized by all necessaiy action on the part of the Customer 26. WAIVER OF JURY TRIAL. DOTH PARTIES TO THIS
and does not contravene any law binding on the Customer, any provision of AGREEMENT HEREBY WAIVE ANY AND ALL RIGHT TO ANY TRIAL
its certificate or articles of incorporation or by-laws, or certificate or articles of OR PR0CEEI)INGS A:RISING DIRECTLY OR . . . ^ R ^ | , , , I N D I R E C T L Y H E R E U N D E R
organization or operating agreement, or partnership certificate or agreement or
any other agreement among the shareholders, members or partners of the 27. GOVERNING LAW. THIS AGREEMENT SHALL NOT BE
Customer, or any agreement, indenture, or other instrument to which the EFFECTIVE UNTIL SIGNED BY LESSOR IN NEW HAMPSHIRE, AND rw™™- IC O «A,+,7™. ,,,1^1, if /A rt-MP u SHALL, UPON SUCH EXECUTION, BE DEEMED EFFECTIVE AS OF THE Customer is a party oi by which it may be bound, (f) this Agreement has EFFECTIVE DAXET THE LAWS OF THE STATE OF NEW HAMPSHIRE
been duly executed and delivered by authorized ofBcers, members, managers SHALL GOVERN ALL QUESTIONS OR DISPUTES RELATING TO THE
or partners of the Customer and constitutes a legal, valid and binding VALIDITY, INTERPRETATION, PERFORMANCE, ENFORCEMENT,
obligation of the Customer enforceable in accordance with its terms; (s) fee ^ EFFECT OF THIS AGREEMENT, WITHOUT REGARD TO CHOICE OF W I ... „ . •„ „„ F LAW PRINCIPLES.THE CUSTOMER HEREBY CONSENTS AND SUBMITS TO
Customer has not and will not create, incur or permit to exist any lien, THE JURISDICTION OF THE COURTS OF THE STATE OF NEW HAMPSHIRE
encumbrance or security interest on or with respect to die Vehicles (except AND THE FEDERAL DISTRICT COURT FOR THE DISTRICT OF NEW
those of persons claiming by, through or under the Lessor); (h) the Vehicles HAMPSHIRE FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER
will be used primarily in the conduct of the Customer's business and will PROCEEDING ARISING OUT OF ITS OBLIGATIONS HEREUNDER, AND
remain registered at L location shown on the applicable Lease Schedule ST^So^ucSSJf ^ ̂ CUSTOMER ^
unless otherwise agreed in writing by Lessor; (i) there are no pending or '
threatened actions or proceedings before any court or administrative agency, 28, ODOMETER DISCLOSURE STATEMENT. Federal law
and no circumstances exist which may lead to such an action, which could (and State law, if applicable) requires that Customer as lessee disclose,
materially adversely affect the Customer's financial condition or operations; and Customer shall disclose, the mileage of each Vehicle to Lessor in
and (j) all financial and other infonnation provided by Ihe Customer or at the connection with the transfer of ownership of the Vehicle. Failure to
Customers direction is, and such information hereafter furnished will be, true, complete an odometer disclosure statement or making a false statement
comect and complete in all material respects. may result in fines and/or imprisonment
22. INFORMATION SHARING. Customer (including any Related 29. MODIFICATIONS. This Agreement, its exhibits, Lease
Entity) authorizes Lessor to disclose infonnation about Customer or any Schedules, Rate Schedules, Vehicle Orders, addenda and amendments
Related Entity that Lessor may at any time possess to any affiliate or third contain the entire understanding of the parties and merge all oral
party vendor fi'om whom the Customer received, directly or indirectly, understandings. Customer may issue purchase orders for administrative
goods or services, whether such information was supplied by Customer to convenience, but such purchase orders are subject to the terms and
Lessor or otherwise obtained by Lessor. conditions of this Agreement and shall not amend or supplement
. . , it. Any modifications, changes, or amendments may be made only in a 23. LEGAL NOTICES. Customer shall give full cooperation in the ^-j^g sjgned by Customer and Lessor. Failure of either party to
prosecution and defense of any action brought by or against Lessor or its enforce any right shall not be deemed a waiver of such right insurance carrier. If any action is commenced for damages resulting from
the use in any way of a Vehicle, Customer shall notify Lessor of the action r^Tr^nN n ^ T.(^! , « J . . /-I/YX J JX • T. J? THE MOTOR VEHICLES OR EQUIPMENT IDENTIFIED IN
and forward within ten (10) days after receipt of a copy any summons or TJJJS LEASE AGREEMENT, AND ALL RIGHTS OF
other process received in connection with the action. The Customer shall MERCHANTS AUTOMOTIVE GROUP, INC. UNDER THIS
notify the Lessor of eveiy lien, encumbrance, or levy placed against a LEASE AGREEMENT AND EACH SCHEDULE HERETO, Vehicle within twenty four (24) hours after it is placed. CONSTITUTE COLLATERAL GRANTED TO RBS CITIZENS,
N.A., AS COLLATERAL AGENT (THE "COLLATERAL
24. EARLY TERMINATION. Upon thirty (30) days' prior written AGENT") UNDER THE AMENDED AND RESTATED PLEDGE
notice thereof to the Lessor, Ihe Customer shall have fire right, but not the AND COLLATERAL ASSIGNMENT OF MOTOR VEHICLE AND
obligation, to terminate the lease of a Vehicle hereunder which has been in EQUIPMENT LEASES DATED AS OF JULY 28, 2010, AS
tipn^pirndprthi"! I caqpfftrnnt Ipwfhan threehundrpH sixlv seven HFIT^RLAW AMENDED, BETWEEN MERCHANTS AUTOMOTIVE GROUP, service under mis Lease tor not less man tnreenundrea sixty seven (JO/) days INC AND RBS CITIZENS, N.A. (OR, IF APPLICABLE, A as evidenced by the date ofdeliveiy shown on the related Lease Schedule, SUCCESSOR COLLATERAL AGENT), AS COLLATERAL
Such written notice shall specify the Vehicle which the Customer intends to AGENT FOR CERTAIN LENDERS, THIS LEASE HAS BEEN
surrender. In addition to all other costs, expenses and charges due and payable ASSIGNED TO THE COLLATERAL AGENT AS SECURITY '|*XTTj1 T IT'Tl¥7fj C
to the Lessor upon the termination of each Vehicle, upon the Customer's '
election to temiinate the Lease of a Vehicle under tin's paragraph 24, the
Customer shall also be obligated to pay to the Lessor:
a. the monthly rental for a minimum term of three hundred sixty
seven (367) days less the amounts previously paid by the Customer prior to
the early termination;
b. a yield maintenance fee equal to one (1) month's rental for the
Vehicle; and
c. an interest equalization adjustment as defined in the Rate
Schedule.
25. LEASE INTEGRATION. This Agreement, together with each
Rate Schedule, Lease Schedule, addendum and Vehicle Order, constitutes a
single unitary, non-severable lease agreement between Lessor and Customer
for all Vehicles leased by the Customer fiom Lessor and governed by this
Agreement and each Rate Schedule, Lease Schedule and Vehicle Order.
(signature on next page)
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by duly authorized
representatives.
Notice Address: f^Y ^ & 1 (TQ-
Chief Executive Office Address:
Merchants Automotive Group, Inc.
By:
Title: Authorized Signatoiy
Address: 1278 Hooksett Road, Hooksett, New Hampshiiie 03106
EFFECTIVE DATE: Mav8.2013
1. Customer certifies under penally of perjury that it intends the Vehicles leased pursuant to this Agreement to be used more
than 50% in the trade or business of Customer, and
2. Customer has been advised that Lessor and not Customer will be treated as the owner of the Vehicles for
Federal Income Taxpuiposes.
Title:
(President, Vice President, Treaswer, orpimide certificate of authorit))
Title:
(President, Vice President, Treasurer, or provide certificate of authority)
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In an effort to better service your account, please complete and sign the attached ACH forms included in this
package. ACH offers a variety of benefits to you by simplifying the invoice payment processing, saving you money on postage and processing, and payment is reliable, accurate, on time and confidential.
1. Kindly return the executed ORIGINAL ACH FORMS - enclosed herein along with an ORIGINAL VOIDED
BLANK CHECK from the checking account you select for regular payments.
2. Mailing address for return of documents: Merchants Leasing
PO Box 16415,1278 Hooksett Road
Hooksett, NH 03106
Attention: Michelle Dillman
Please be advised of the following arrangements associated with the ACH process:
> Your lease payment invoices, due on the first day of the month, will be withdrawn on the first business day of the month.
> All other invoices that come due during the month, through the 15th of the month, will be paid via ACH on the first working day of the following month, at the same time as the next lease payment is due.
For example: any invoices that are issued prior to June 15lh will be withdrawn via ACH on the first business
day of July, along with the July lease payment that is due on July I5'. Any invoices issued after June 16,h,
will be drawn ACH on the first working day of August.
> Please do not send a physical check to pay for the invoices you receive from Merchants Automotive Group.
All invoices will be stamped "Do not Pay - Paid via ACH". If you are uncertain what the disposition on an invoice is, please contact me and I will be happy to assist you with more details.
AUTHORIZATION AGREEMENT FOR DIRECT PAYMENTS (ACH DEBITS)
p/neia rnZS, <K'-PSV75-) IT
I (we) hereby authorize 'jt-' 1 ^hereinafter called COMPANY, to
initiate debit entries to my (our) it Checking Account/ • Savings Account (select one) indicated below at the
depository financial institution named below, hereafter called DEPOSITORY, and to debit the same to such account.
I (we) acknowledge that the origination of ACH transactions to my (our) account must comply with the provisions of U.S. law.
Depository Rranrh^O M
City State zip
Routing Account Number Number
This authorization is to remain in full force and effect until COMPANY has received written notification from me (or either of us) of its termination in such time and in such manner as to afford COMPANY and DEPOSITORY a
reasonable opportunity to act on it.
ttanrtd Qgyw Soc.Ss
To m lflr\c.b OK^aifi^friOtko
Date Siqnature(s)
C/<n/te
Along with this signed document, please attach an ORIGINAL VOIDED BLANK CHECK and return to the
attention of your Client Service Representative. Thank you.
Please attach voided check here.
- 6 -
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RATE SCHEDULE TO
OPEN-END MASTER LEASE AGREEMENT
This Rate Schedule to Master Lease Agreement dated April 17,2013 ("Agreement") is made and entered into as of April 17,
2013 (the "Effective Date") by and between the undersigned (the "Rate Schedule") and amends and supplements the
Agreement.
PRICING TERMS. Nothing in the Agreement or the Rate Schedule shall be construed to require the Lessor to accept
any Vehicle Order.
CAPITALIZED COST: For the purposes of the Agreement, "Capitalized Cost" means: (i) Manufacturer's invoice
price of the Vehicle plus dealer charges, if any; (ii) invoice price of any additions pursuant to the Customer's request;
(iii) other relevant costs as mutually agreed upon; and (iv) a markup or markdown as set forth below. Adjustments
which occur after Lessor's payment for the Vehicle may be credited or billed to Customer.
Type of Vehicle
At Risk Factoiy Invoice less negotiated manufacturers
discount (holdback and finance money retained by
Lessor)
Guaranteed Depreciation Program (GDP) Not Applicable - refer to GM Program rules
BOOK VALUE: For purposes of the Agreement, "Book Value" means, as of any month, the Capitalized Cost
reduced by the Applicable Amortization (equal to the sum total of all base lease payments paid up to such month plus the
amount of cash Customer provides Lessor as collateral enhancement) commencing with the first month following Vehicle
acceptance and continuing through the month prior to the date of surrender and/or disposition ofthe Vehicle.
MONTHLY RENTAL: For the puiposes of the Agreement and any related Lease Schedule, monthly rental is a
single inseverable payment charged to the Customer for the use of the Vehicle computed by aggregating the
monthly base payment, interest (calculated by adding the Index Rate and Adder noted below) and the
Management Fee noted below. For each Vehicle, the Monthly Rental shall begin, (i) in the case of a Vehicle
delivered on the lsl day through the IS1'1 day of a month, on the first day of that month and (ii) in the case of a
Vehicle delivered on the 16th day through the 31st day of a month, on the first day of the immediately following
month.
LEASE TERM: Maximum Number of Months in the Depreciation Term the "Maximum Lease Term" (as selected by the
Customer in the Vehicle Order from the table below)
Type of Vehicle Maximum Lease Term(s) inMonths
Cars 18 months
Lt. Trucks 18 months
Prime Rate: When used as the Index Rate, Prime Rate means the rate of interest published by The Wall Street
Journal as the "Prime Rate" in its section entitled "Money Rates" as of the first business day of the month.
Vehicle Type Fixed or Float Lease Term Index Rate Adder Management Fee
Cars & Lt. Trucks Fixed 18 months Prime Refer to
addendum
Tranche 1 & 2 $20 per vehicle per month
and Tranche 3 & 4 $10 per vehicle per
month
INTERIM FINANCING PAYABLE TO LESSOR: Interim financing will be charged for the period(s) beginning with
each advance of funds for any uncompleted and any other ordered but undelivered Vehicle and ending on the date of acceptance.
For interim financing, the interest rate shall be the interest rate that applies to the lease for the particular uncompleted or ordered
Vehicle, divided by 360 and multiplied by 365.
- 1 -
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INTEREST EQUALIZATION: Upon early termination of a vehicle, an interest equalization adjustment will be
assessed in an amount equal to the difference between the actual imputed interest owed and the imputed interest paid
through the date of tennination, for any Vehicle which does not remain in service for the entire Lease Term,
DEDUCTIBLE PERMITTED ON COMPREHENSIVE AND COLLISION INSURANCE: $1,000.00
REGISTRATION, TITLES, AND VIOLATIONS: During the term of the Agreement Lessor may provide any of
the following services at the Customer's request or as may be necessary as a result of violations issued to the
Customer's driver in the operation and use of the Vehicles leased under the Agreement. The fees shown below shall
apply on a per occurrence basis each time a listed service is provided by Lessor.
REGISTRATION:
Per Occurrence Merchants Automotive Administrative Fee
Annual Renewals $35.00 Per occurrence, plus the cost of registration
State to State Change $75.00 Per occurrence, plus the cost of registration
Duplicate Title Fee $50.00 Per occurrence, plus applicable state fees
Duplicate Registration Fee $25.00 Per occurrence, applicable state fees
Or Amendments
Change of Plate Type $50.00 Per occurrence, plus the cost of plate fees & mailing
VIOLATIONS PROCESS
Parking & Moving Violations
Lessor will pay the fine and invoice the amount of the fine for the violation to the Customer with an added $25.00 administrative
fee.
Toll & Snapshot/Camera Violations
Some violation issuing agencies or municipalities allow the fine to be assigned directly to the Customer and others require that
they be paid by the owner. For those that do not allow the charge to be assigned to the Customer, Lessor will pay the fine along
with any applicable penalties or late fees and invoice that amount to the Customer. For those that allow the fine to be assigned,
Lessor will assign these over to the Customer by returning the violation to the issuing agency or municipality. That agency or
municipality will then forward the violation directly to the Customer for payment. A $25.00 research fee will be invoiced per
violation to the Customer in both cases.
Third Party Vendor Fees
Occasionally, Lessor employs a third party vendor to facilitate the above services and violations processing. The costs of using
these vendors will be passed through to the Customer. Other fees may include: Federal Express, mailing fees, Department of
Motor Vehicle Administrative fees, etc.
LEASE EXTENSION: Lease Extension Charge - $35.00 per Vehicle per month for the duration of the extension
period commencing the month after each unit is fully depreciated until the Customer terminates each unit.
UPFITTING: Lessor will assess a 2% markup on the actual cost paid by the Lessor for all upfitting requirements.
COURTESY DELIVERY FEE: Charged to Customer
EXCESS MILEAGE CHARGE: RefertoGDPProgramniles
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Simply Wheelz LLC dba Advantage Rent A Car (Customer)
TMe: -Q , An Authorized Signatoiy
(President, Vice President, Treasurer, or provide certificate of authority)
BY:
Title: CSzO , An Authorized Signatoiy
(President, Vice President, Treasurer, or provide ceitificate of authority)
Merchants Automotive Group, Inc. (Lessor)
By:
Title: , An Authorized Signatory
Address: 1278 Hooksett Road, Hooksett, New Hampshire 03106
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ADDENDUM TO OPEN END MASTER LEASE AGREEMENT
This ADDENDUM ("Addendum"") to the Open-End Master Lease Agreement dated April 17, 2013 (the "Agreement"-) between Merchants Automotive Group, Inc. ("Lessor") and Simply Wheelz LLC dba Advantage Rent A Car ("Customer") and Franchise Services of America, Inc.
("FSNA" or "Guarantor"') as the Corporate Guarantor under the Continuing Guaranty attached to the Agreement.
WHEREAS, the parties have entered into the Agreement on the same date as the date of this Addendum; and
WHEREAS, the parties desire to modify or supplement certain, specific terms of the
Agreement or add additional provisions to the Agreement as expressly set forth in this Addendum.
NOW, THEREFORE, for the consideration described in the Agreement and this
Addendum and other good and valuable consideration the receipt and sufficiency of which the parties acknowledge, intending to be legally bound, the parties agree as follows:
1. Initial and Renewal Terms: Minimum Fleet per Term. Section 4, LEASE TERM, is deleted in its entirety and replaced with the following:
4. LEASE TERMS; MINIMUM FLEET, (a) The noncancelable minimum lease term for each Vehicle shall not be less than five hundred forty-five (545) days (each a "Lease Term") beginning upon Customer's acceptance of each Vehicle. Thereafter, the Lease Term may be renewed monthly for the lesser of the mutually agreeable Maximum Lease Term noted on the Rate Schedule or the amortization term set in the respective Vehicle Order and the related Lease
Schedule or as mutually agreed in writing between the parties. Customer acknowledges that it is responsible for its own determination of the proper lease
term period for purposes of its FASB 13 or similar analysis.
(b) There shall be 4 noncancelable, immediately successive minimum fleet
commitment periods pursuant to this Agreement of 18 months each (each of the 4
18-month periods, a "Commitment Period"). Customer shall lease a minimum
fleet of three thousand (3,000) Vehicles per each Commitment Period, or an aggregate minimum of twelve thousand (12,000) Vehicles over the four
noncancelable minimum Commitment Periods; provided, however, that during the
initial Commitment Period (beginning on the date of this Agreement) Customer may take up to 12 months (but no longer) to reach 3,000 vehicles during only that
Commitment Period. Vehicles leased in Commitment Periods 2 through 4 shall
replace Vehicles leased in the prior terms. When the Lease Term for each of the
Vehicles ends for Vehicles leased in Commitment Periods 1,2, and 3 Customer shall place an order for a replacement Vehicle within 60 days of the end of such Lease Term which ordered Vehicle shall count toward the total Vehicle commitment for the next Commitment Period (2, 3, or 4, as the case may be).
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This process shall continue through the end of Commitment Period 4 and until
Customer leases a total of 12,000 Vehicles through the 4 Commitment Periods.
Customer may dispose of up to the lesser of 600 Vehicles or 20% of only the
Vehicle units leased in such Commitment Period after 6 months and up 100% of only the Vehicle units leased in such Commitment Period after 12 months without
penalty. The maximum Guarantied Deprecation Program Vehicles (such as, for
example, the GM Program described below) during the Lease Terms shall be as follows: Term 1,1,384 Vehicles (or 46% if at any time less than 3,000 Vehicles
are leased in Term 1; Term 2, 900 Vehicles (or 30% if at any time less than 3,000 Vehicles are leased in Term 2; Terms 3 and 4, no Guarantied Deprecation Program Vehicles shall be leased.
2. Guarantied Depreciation Program Vehicles: GM Fleet & Commercial Daily Rental
Acquisition Program. Lessor may acquire some of the Vehicles leased to Customer under the various Vehicle manufacturers' Guarantied Depreciation Programs (each such program, a "GDP") such as the General Motors Daily Rental Acquisition Program (the "GM Program").
Lessor has provided Customer the following documents applicable to the GM Program for model year 2013 including the following: (i) memorandum dated December 21, 2012 from John Prusem
Manager—GM Remarketing Rental and Inspection Support, (ii) the GM Daily Rental
Acquisition Program Turn-in Standards and Procedures for model year 2013; (iii) the GM
2013MY Daily Rental Acquisition Program Guidelines, (iv) the GM Tire Usage Chart dated November 5, 2012, and (v) YT8 Flat Rate Program for the 2013 MY, Guidelines, Rates, and
Parameters (items (i) through (v) as may be amended from time-to-time and the GM Program
documents for future model years, as they are produced and may be amended, are collectively,
the "GM Program Documents"). The GM Program Documents are expressly incorporated into this Agreement and constitute an integral part of this Agreement. Customer shall comply with the GM Program Documents for any Vehicles leased under the GM Program and shall be responsible for, and hold Lessor harmless against, any failure to comply with the GM Program Documents. Customer's request to lease Vehicles under any GDP constitutes Customer's irrevocable agreement with and representation and warranty to Lessor as follows: (vi) Customer
has read the applicable GDP documents (which may be similar in content to the GM Program Documents), (vii) such GDP documents are expressly incorporated into this Agreement and constitute an integral part of this Agreement, and (viii) Customer shall comply with such GDP documents for any Vehicles leased under the applicable GDP and shall be responsible for, and
hold Lessor harmless against, any failure to comply with such GDP documents. Lessor will collect depreciation payments from Customer on a monthly basis under Lessor's usual terms. At the end of a Lease Term, if the depreciation payments collected are more than depreciation that is due under the GM Program Documents or other GDP documents, then Lessor shall credit
Customer's account with the amount of the overpayment. If at the end of a Term, the
depreciation payments Lessor collected are less than the depreciation that is due under the GM
Program Documents or other GDP documents, then Customer shall promptly pay Lessor the
amount of the underpayment.
At Lessor's request, Customer shall assign all of its right, title, and interest in and to (but not the
obligations or burdens of) any GDP (the "GDP Program Rights") pursuant to which Customer
leases Vehicles using such forms of assignment documents as Lessor may require with
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Customer's reasonable approval which shall not be unreasonably withheld, conditioned, or
delayed with the intent being to give Merchants the full benefit of the GDP Program Rights.
3. Additional Security. To secure Customer's and any Guarantor's obligations to Lessor
under the this Agreement, at all times Customer shall provide a combination of cash collateral
(representing two-thirds of the total) and Letters of Credit (representing one-third of the total) in
an aggregate amount that is no less than ten percent (10%) of all Vehicles that are not Vehicles
leased under a GDP (described below) as more particularly described as follows. Customer shall
provide the following additional security to Lessor: (i) two Standby Letters of Credit from
financial institutions reasonably acceptable to Lessor in the aggregate amount of $2,000,000. A
Letter of Credit in the amount of $1,000,000 will be delivered to Lessor no later than May [24],
2013, and a second Letter of Credit in the amount of $1,000,000 will be delivered to Lessor prior to Lessor funding any orders for Vehicles for the first Commitment Period.; and (ii) cash
collateral, initially, in the amount of $1,500,000, provided that so long as Customer is not in material breach of this Agreement, $500,000 shall be refunded upon Customer's delivery of the first Letter of Credit and the balance of $1,000,000 will be refunded upon Lessor's receipt of the second letter of credit. Upon Customer's return of all Vehicles leased under Commitment Periods 1 and 2, Customer may reduce its aggregate letter of credit commitment from $2,000,000
to $1,000,000. Lessor shall have no obligation to keep the cash collateral in an interest bearing account or account to Customer for interest earned. For non-GDP program Vehicles, the value of the Cash Collateral held by the Lessor will be applied against the Capitalized Cost of the
Vehicle along with the Applicable Amortization for such vehicle for purposes of calculating Book Value and Interest Adjustments pursuant to the Rate Schedule.
4. No Interim Rent. Section 7 is hereby deleted such that Customer is not obligated to pay interim rent under this Agreement.
5. Permitted Self-Insurance. Section 12, INSURANCE, is hereby revised as follows: The
last sentence of Section 12.a is deleted and replaced with the following: "Customer may self-insure its automobile liability insurance deductible up to a maximum per-occurrence deductible
amount of One Hundred Thousand Dollars ($100,000)." Section 12.b is hereby amended by
added the following at the end of the section: "Customer may self-insure for physical (property) damage to the Vehicles."
6. Successor Liability. Section 19, ASSIGNMENTS, is hereby amended to add the
following immediately before the last sentence in that section:
"Customer's noncancelable commitment and firm obligation to lease a minimum 12,000 Vehicles over the 4 Commitment Periods is a material inducement to
Lessor entering into this Agreement and played an integral role in Lessor's
pricing and concessions on other important terms. Customer's obligations under this Agreement, including the obligation to lease the minimum fleet of Vehicles
over each of the 4 Commitment Periods as described above, shall be binding on any and all of Lessor's successors and assigns (to the extent Lessor permits
assignment), and shall survive any sale of Customer's business or other change in control of the Customer."
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7. Limited Early Termination Penalty Waiver. Section 24, EARLY TERMINATION, is hereby amended as follows: If Customer exercises its right to dispose of Vehicles prior to the end
of such Vehicles' respective Lease Terms only as described in and limited by the terms of Section 4(b), and provided further that Customer is not in breach of this Agreement, then the penalties for early tennination described in Sections 24 a and c shall not apply. The penalties for
early termination described in Sections 24 a and c shall also not apply to Vehicles Lessor determines in its reasonable discretion are salvage vehicles.
8. No Yield Maintenance. Sub-Section 24.b (yield maintenance fee) is hereby deleted in its
entirety. Further, so long as Customer (and any Guarantor) is not in breach of its obligations
under the Lease, including without limitation, its obligation to lease the minimum fleet of
Vehicles state herein, Lessor shall not charge Customer its usual commitment fee or unused available credit fee.
9. EBITDA-Based Depreciation Rate Adjustment. A new Section 30, DEPRECIATION
RATE ADJUSTMENT, of the Agreement is hereby added immediately following Section 29, MODIFICATIONS, and slates as follows:
30. DEPRECIATION AND INTEREST RATE ADJUSTMENTS. In consideration for Customer making firm commitments to lease Vehicles during
Commitment Periods 2, 3, and 4 as more fully described above in this Agreement among the other consideration exchanged between the parties, as an incentive to Customer based on its continued financial health and credit worthiness the assurance of which is an integral component of this rate adjustment incentive, (i) the depreciation rate per month per each Vehicle may be adjusted for lease terms 2, 3, and 4 from 2.5% to 2.125% and (ii) the interest rate Lessor charges Customer for extensions of credit of any kind under the Agreement, as more fully described in the Customer's rate schedule that Merchants provided may be
adjusted for Commitment Periods 2, 3, and 4 from the Wall Street Journal Prime Rate plus 2% (or 1.75% if the letter of credit described above is provided) to the
Wall Street Journal Prime Rate plus 1.25% (or 1.00% if the letter of credit
described above is provided), in each case conditioned upon and in accordance
with the following terms.
Customer must provide timely (no later than 12 months prior to the start of a
Commitment Period) EBITDA forecasts to Lessor for Commitment Periods 2, 3, and 4 along with such other financial and other information as Lessor may reasonably request to assess whether the Customer's EBITDA forecast is a valid measure of the Customer's operational revenue in the spirit of this incentive (for
example, low earnings from items such as agreements to defer revenue and one time charges such as signing bonuses and capital expenditures may be taken into
account) (the preceding is for each Commitment Period is, collectively, an "EBITDA Forecast"'). After Customer provides an EBITDA Forecast to Lessor,
Lessor will promptly review the EBITDA Forecast with Customer to determine
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whether the EBITDA Forecast reflects the spirit of the parties' intentions for this incentive.
Within a reasonable time prior to Lessor placing Vehicle orders requested by
Customer for each of Commitment Periods 2, 3, and 4, Lessor will measure Customer's actual EBITDA as reported in Customer's monthly financial
statements it delivers to Lessor (determined in accordance with GAAP and consistent with industry standards) against the EBITDA Forecast. Once Customer and Lessor agree as to the EBITDA Forecast, then for the reduced
depreciation rate and reduced interest rate to apply and for it to continue as to any orders for Vehicles in Commitment Period 2, 3, or 4, actual EBITDA measured
against the EBITDA Forecast must comply with the following EBITDA-based covenants.
a. Customer's actual EBITDA for the for the twelve (12) month
period immediately preceding the Vehicle order cannot be less than 90%
of the trailing average of the Customer's EBITDA Forecast for the same period. (By way of example only for purposes of demonstrating how to
calculate this covenant, if Customer's average EBITDA Forecast for the trailing 12 months immediately preceding the a Vehicle order for
Commitment Period 2 is $15,662 million, then this covenant is satisfied if the actual average monthly EBITDA for the same period is $15,662 x .90, or $14.1 million.); AND
b. Customer's actual EBITDA Margin for the for the twelve (12) month period immediately preceding the Vehicle order cannot be less than 90% of the trailing average of the EBITDA Margin forecasted for the same period.
The depreciation and interest rate adjustments provided for in this section do not apply retroactive to Vehicles leased before Customer was entitled to the
reductions (if at all), but will only apply to future Vehicle leases ordered after the reductions take effect. Nothing in this section changes or diminishes Customer's other obligations to Lessor under this Agreement, such as, for example, the
requirement to provide a monthly financial statements and the contents of those statements.
10. Special Provisions for Closed End Leased Vehicles. Certain Vehicles (limited in number as described at the end of section 4(b)) shall be ordered on a "closed end" structure distinguished
by depreciation rates and residual values that are guaranteed by a third party ("Closed End
Vehicles""). These Vehicles leased under a GDP such as the GM Program (described in Section
3 of this Addendum) will be Closed End Vehicles. Only for leases of Closed End Vehicles, the following provisions shall apply and will supersede any conflicting provision of the Agreement:
Sections 9, SURRENDER OF VEHICLES, 10, SALE OF VEHICLES, 11,
TERMINAL RENTAL ADJUSTMENT, and 24, EARLY TERMINATION, shall
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each be deleted in its entirety only for Closed End Vehicles, and, instead, the
rules, requirements, and charges of the applicable GDP (such as the GM Program)
will apply. In addition, Customer shall continue to pay the full lease payment
until Merchants receives the funds from the disposition of the Vehicle from the
GDP lessor. Merchants may settle amounts owed to third party GDP program
lessors (such as GM in the case of the GM Program) directly for items such as end
of Lease Term charges including wear and tear, damage, auction fees, and other charges and expenses owed under the GDP program documents (the "GDP Program Expenses"'). Customer must unconditionally reimburse Lessor for all
GDP Program Expenses Lessor pays upon receipt of Lessor's invoice for same
without, and Customer waives and releases, any right of set off, counterclaim, or other reductions from those amounts. If Customer disputes any GDP Program
Expenses, then Customer's only recourse is to dispute those amounts with the third party GDP program lessor directly, and Merchants will provide its reasonable cooperation to resolve such dispute with Customer bearing any expense of such cooperation.
11. Effect of Addendum. This Addendum constitutes an integral part of the Agreement and modifies the Agreement only to the limited extent of the express provisions of this Addendum. Except as expressly modified by this Addendum, the Agreement in all other respects remains unchanged and binding on the parties. To the extent of any inconsistency between the
Agreement and this Addendum, the terms of this Addendum will control. To the extent of any
inconsistency between the Rate Schedule to Master Lease Agreement and this Addendum or the Agreement, the terms of the Rate Schedule to Master Lease Agreement will control.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be signed by duly authorized representatives.
LESSOR
MERCHANTS AUTOMOTIVE GROUP, INC.
By:
Name: Name:-3^^<iD Mr7c-\)&')s^ \
Title: Title: (LtO
Date: Date: 5/<3 [/f&
CUSTOMER
SIMPLY WHEELZ LLC DBA ADVANTAGE
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MERCHANTS LE/VBIISIG
CONTINUING GUARANTY
THIS IS A GUARANTY, made by the Undersigned (who, whether one or more, are herein called the "Guarantors") in favor/consideration of Merchants Automotive Group, Inc. 1278 Hooksett
Road, Hooksett. NH 03106. its subsidiary or associated companies (herein called "Creditor"). Each reference herein to Guarantor(s) shall be deemed to include the successors and assigns of Guarantor(s), all of whom shall be bound by the provisions of this Guaranty.
In order to induce Creditor to extend from time to time credit to Simply Wheelz LLC dba
Advantage Rent A Car (herein called "Customer") and in consideration of such extension of credit, the undersigned intending to be legally bound hereby agrees as follows:
1. The Guarantors jointly and severally hereby unconditionally and absolutely guarantee the
due and punctual payment of all indebtedness, obligations and liabilities of Customer to
Creditor now or hereafter incurred (herein called "Obligations"). Such guaranty is an
absolute, present and continuing guaranty of payment and not of collectibility and is in no
way conditioned or contingent upon an attempt to collect from Customer or upon any other action, occurrence or circumstance whatsoever.
2. The liability of the Guarantors hereunder shall not be affected or impaired by (and Creditor is hereby expressly authorized to make at any time or from time to time, without notice to or further consent of the Guarantors) any compromise, settlement, release, renewal, extension, indulgence, waiver, alteration, substitution, exchange, change in, modification or other disposition, either express or implied, of all or any part of the obligations.
3. Presentment, demand for payment, protest, notice of protest, notice of dishonor and of nonpayment of the obligations are hereby expressly waived by Guarantors.
4. No act of commission or omission of any land or at any time upon Creditor's part in respect
to any matter whatsoever shall in any way affect or impair the liability of Guarantors hereunder. No waiver by Creditor of any of the provisions of this Guaranty shall be valid unless in writing signed by an officer of the Creditor.
5. Guarantors will pay all expenses (including, without limitation, reasonable attorney's fees
the court costs) paid or incurred by Creditor in enforcing this Guaranty.
6. The execution, delivery and perfonnance by the Guarantor of this Guaranty are within the
power of the undersigned Guarantor and have been duly authorized by all necessary
actions on the part of the Guarantor. This Guaranty has been duly executed and delivered
by the undersigned Guarantor and constitutes the legal, valid and binding obligation of
the Guarantor. No consent, approval, order or authorization of any other party is required in connection with the execution and delivery of this Guaranty by the Guarantor.
7. Provided the Guarantor is a business entity, the Guarantor will provide financial
statements to Lessor within one-hundred and twenty (120) days after the close of each of Guarantor's fiscal years, and, upon the Lessor's request, within sixty (60) days of the
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MERCHANTS L.BA8IIMC3
end of each month of the Lessee's fiscal year, a copy of its financial statements prepared
in accordance with generally accepted accounting principals and in the case of annual
financial statements, prepared by an independent certified public accountant; in the case
of quarterly financial statements, certified by Guarantor's chief financial officer or
manager. If an individual Guarantor, the undersigned agrees to provide Lessor with a
personal financial statement consisting of a balance sheet, upon Lessor's request and
authorizes Lessor to obtain any credit report relating to the undersigned and agrees that
Lessor may hereafter obtain such credit reports as Lessor in its sole discretion may determine.
8. THIS GUARANTY AND THE LEGAL RELATIONS OF THE PARTIES HERETO SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW HAMPSHIRE, WITHOUT REGARD TO PRINCIPLES REGARDING THE CHOICE
OF LAW. THE GUARANTOR HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW HAMPSHIRE AND/OR
THE FEDERAL DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING
ARISING OUT OF ITS OBLIGATIONS HEREUNDER, AND EXPRESSLY WAIVES
ANY OBJECTIONS THAT THE GUARANTOR MAY HAVE TO THE VENUE OF SUCH COURTS. THE GUARANTOR HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS GUARANTY.
IN WITNESS WHEREOF, this Guaranty has been duly executed by the undersigned the
date set forth below:
Franchise Services of North America. Inc.
Authorized Signature: t
Printed Name: lorvi cX^iO£.£.£-
Corporate Title: a f o deo
Date: sbi/ii
Corporate Guarantor Address: )VS^
Corporate Guarantor Phone #: ȣ>! 7/3> ^333
Corporate Guarantor Federal I.D. #:
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