Exhibit 10.26
EXECUTION COPY
ASSIGNMENT AND ASSUMPTION
AGREEMENT dated as of May 30, 2002 (this
"Agreement"), between QUALITY
DISTRIBUTION, INC., a Florida
corporation (the "Assignor"), and
QUALITY DISTRIBUTION, LLC, a Delaware
limited liability company and a
wholly-owned subsidiary of the company
(the "Assignee").
WHEREAS, the Assignor has issued $100,000,000 aggregate principal
amount of its 10% Series B Senior Subordinated Notes due 2006 (the "Fixed Rate
Notes") and $40,000,000 aggregate principal amount of its Series B Floating
Interest Rate Subordinated Term Securities due 2006 (FIRSTS(SM)) (together with
the Fixed Rate Notes, the "Old Notes").
WHEREAS, pursuant to the terms of an Offering Memorandum and Consent
Solicitation Statement dated as of April 10, 2002, as amended by Supplement No.
1 thereto dated May 10, 2002 (the "Offering Memorandum"), the Assignor is
offering certain holders of the Old Notes the opportunity to exchange pursuant
to the terms set forth in the Offering Memorandum (the "Debt/Equity Exchange"),
Old Notes for debt and equity securities consisting of (a) 12.5% Senior
Subordinated Secured Notes due 2008 which will be issued by the Assignee; (b)
12% Junior Subordinated PIK Notes due 2009 (the "PIK Notes") which will be
issued by the Assignor; and (c) Warrants to purchase one share of the Assignor's
Common Stock, $0.01 par value per share.
WHEREAS, the Assignor, Levy Transport Ltd./Levy Transport Ltee, various
Banks, Lasalle Bank National Association (f/k/a ABN AMRO Bank N.V.), The Bank of
Nova Scotia, PB Capital Corp. (f/k/a BHF-Bank Aktiengesellschaft), Bank Austria
Creditanstalt Corporate Finance, Inc. (f/k/a Creditanstalt Corporate Finance,
Inc.) and Royal Bank of Canada, as Co-Agents, Salomon Brothers Holding Company
Inc., as Documentation Agent, Deutsche Bank Trust Company Americas (f/k/a
Bankers Trust Company), as Syndication Agent, and the Administrative Agent are
parties to a Credit Agreement, dated as of June 9, 1998 and amended and restated
as of August 28, 1998 (as so amended and restated and as the same has been
further amended, modified and/or supplemented to, but not including, the date
hereof, (the "Credit Agreement"), providing for the making of loans and the
issuance of letters of credit, all as contemplated thereby.
WHEREAS, in connection with the consummation of the Debt/Equity
Exchange, the Assignor desires to contribute to the Assignee all of the
Assignor's assets, liabilities and obligations (except as set forth herein) and
the Assignee desires to accept such contribution and to assume all such
liabilities and obligations of the Assignor (except as set forth herein), upon
the terms and subject to the conditions hereinafter set forth.
WHEREAS, the execution and delivery of this Agreement is a condition to
the satisfaction of the transactions contemplated by the Debt/Equity Exchange.
NOW, THEREFORE, in consideration of the mutual benefits to be derived
and the covenants contained herein, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as set forth below.
Section 1. Contribution of Assets; Assumption of Liabilities.
(a) Contributed Assets. On and subject to the terms and conditions of
this Agreement, the Assignor hereby sells, contributes, transfers, assigns,
conveys and delivers to the Assignee, as a contribution to capital and in
consideration for all of the equity of the Assignee to be issued to the Assignor
and the assumption of the Assumed Liabilities by the Assignee, all right, title
and interest in and to all of the assets, business, goodwill and rights of the
Assignor (other than the Excluded Assets), as the same shall exist immediately
prior to the consummation of the Debt/Equity Exchange, subject to all
encumbrances and liens attaching thereto (all such assets, business, goodwill
and rights being collectively referred to as, the "Contributed Assets"),
including, without limitation, the following:
(i) all cash and cash equivalents of the Assignor;
(ii) all accounts, notes and other receivables;
(iii) all raw materials and supplies, work-in-process,
finished goods and other items of inventory and all shipping containers
and other parts;
(iv) all real property, machinery, equipment, furniture,
fixtures, leasehold improvements, vehicles and other tangible personal
property, including, without limitation, all such assets currently
located at any of the real property owned, leased or used by the
Assignor;
(v) all intellectual property rights, goodwill associated
therewith, licenses and sublicenses granted or obtained with respect
thereto, and rights thereunder, remedies against infringements thereof,
and rights to protection of interests therein under any laws;
(vi) all of the Assignor's interest and rights in all
contracts to which the Assignor is a party or by which its assets are
bound; including without limitation, the Credit Agreement and the other
Credit Documents (as defined in the Credit Agreement as in effect
immediately prior to the consummation of the Debt/Equity Exchange) to
which the Assignor is a party;
(vii) all stationery, forms, labels, shipping material,
catalogs, brochures, art work, photographs, advertising material and
promotional material;
(viii) all payments, deposits (excluding prepaid tax deposits)
and prepaid expenses of the Assignor;
(ix) all claims, causes of action, judgments, warranties,
refunds, rights of recovery, rights of set-off and rights of recoupment
of any kind;
(x) all permits;
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(xi) all rights (including experience ratings, to the extent
transferable to the Assignee) with respect to unemployment, workers'
compensation and other similar insurance and related funded reserves,
in each case relating to employees of the Assignor who become employees
of the Assignee;
(xii) all assets relating to or owned by, and all rights in
and to, any employee benefit plans, including the books, records and
other documents relating thereto;
(xiii) all rights to receive mail and other communications
addressed to the Assignor (including mail and communications from
customers, suppliers, distributors, agents and others and payments with
respect to the Contributed Assets), other than such rights that relate
solely to the Excluded Assets;
(xiv) all books, records, ledgers, files, documents and
correspondence, lists, drawings, specifications, studies, reports and
other printed or written materials relating to the Assignor (other than
any of the foregoing that relate solely to the Excluded Assets);
(xv) all securities issued to and held by the Assignor (other
than the membership interests of the Assignee issued to the Assignor);
and
(xvi) all other assets of the Assignor other than the Excluded
Assets.
(b) Excluded Assets. Notwithstanding anything to the contrary contained
herein, the Contributed Assets shall not include the following assets and rights
of the Assignor (collectively, the "Excluded Assets"):
(i) the corporate charter, qualifications to conduct business
as a foreign corporation, arrangements with registered agents relating
to foreign qualifications, taxpayer and other identification numbers,
seals, minute books, stock transfer books, blank stock certificates and
other documents relating to the organization, maintenance and existence
of the Assignor as a corporation;
(ii) the name "Quality Distribution Inc." and all intellectual
property rights and goodwill associated therewith, and rights to
protection of interests thereof under any laws or contracts; and
(iii) any of the assets and rights of the Assignor under any
insurance policy issued to or on behalf of the Assignor;
(iv) any of the assets or rights of the Assignor under any
employee benefit plan established for the benefit of the employees,
officers and directors of the Assignor and its subsidiaries; and
(v) any of the rights of the Assignor under this Agreement and
the other agreements listed on Schedule I hereto.
(c) Assumed Liabilities. On and subject to the terms of Section 1(d)
hereof, the Assignor hereby transfers and assigns to the Assignee, and the
Assignee hereby assumes and
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agrees to discharge or perform when due in accordance with the terms thereof,
all of the liabilities and obligations of the Assignor in existence, or
contingent (other than the Excluded Liabilities), as the same shall exist
immediately prior to the consummation of the Debt/Equity Exchange, including
without limitation, (x) all Loans, reimbursement obligations with respect to
Letters of Credit and all other Obligations (as each such term is defined in the
Credit Agreement) of the Assignor under the Credit Agreement and (y) all other
obligations and liabilities of the Assignor under the Credit Agreement and the
other Credit Documents (as defined in the Credit Agreement as in effect
immediately prior to the consummation of the Debt/Equity Exchange) to which the
Assignor is a party (all such liabilities and obligations collectively referred
to as the "Assumed Liabilities"); provided, however, that said assumption shall
not (i) increase the obligation of the Assignee to any third party with respect
to the Assumed Liabilities beyond the obligation that the Assignor would have to
any third party if not for said assumption; (ii) waive any valid defense that
was available to the Assignor with respect to the Assumed Liabilities; or (iii)
enlarge any rights or remedies of any third party under any of the Assumed
Liabilities.
(d) Excluded Liabilities. Notwithstanding anything to the contrary
contained herein, the Assumed Liabilities shall not include the following
liabilities of the Assignor (collectively, the "Excluded Liabilities"):
(i) any liability of the Assignor arising from or related to
the Excluded Assets; and
(ii) any liability of the Assignor arising from or related to
any Old Notes not tendered in connection with the Debt/Equity Exchange.
(e) Acknowledgment of Obligations.
(i) The Assignor hereby acknowledges that it is retaining the
Excluded Liabilities and the Assignor shall pay, discharge and perform
all such Excluded Liabilities promptly when due.
(ii) The Assignor hereby acknowledges that concurrently with
the consummation of the Debt/Equity Exchange, (i) the Assignor shall be
a party to the Credit Agreement as a Guarantor and shall have all the
rights, obligations and liabilities of "Holdings" thereunder, (ii) the
Assignor shall be a party to the U.S. Pledge Agreement and the U.S.
Security Agreement by virtue of its execution of such agreements on the
date of the consummation of the Debt/Equity Exchange and shall have all
of the rights, obligations and liabilities of an "Assignor" or
"Pledgor" thereunder, as the case may be, and (iii) that rights,
obligations and liabilities of the Assignor referred to in the
preceding clauses (i) and (ii) are not being contributed, assigned, or
otherwise transferred to the Assignee pursuant to this Agreement.
(f) Deliveries.
(i) The Assignor hereby agrees to deliver to the Assignee,
duly executed instruments of sale, transfer, conveyance and assignment
as the Assignee or its counsel reasonably may request, including,
without limitation, any real property or intellectual
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property right transfer instruments, in form reasonably satisfactory to
the Assignor, to effectuate the transfer of the Contributed Assets to
the Assignee.
(ii) The Assignee shall deliver to the Assignor such
instruments of assumption as the Assignor reasonably may request, in
form reasonably satisfactory to the Assignee, to effectuate the
assumption of the Assumed Liabilities by the Assignee.
(g) Certain Commitments, Permits and Intellectual Property.
Notwithstanding anything to the contrary contained herein, to the extent that
the assignment by the Assignor of any contract (excluding, however any Credit
Document), permit or intellectual property right to be assigned hereunder shall
require the consent, waiver or approval of another party thereto or of any
governmental entity or shall violate any law, this Agreement shall not
constitute an assignment or attempted assignment thereof or an assumption by the
Assignee of any of the Assignor's liabilities or obligations thereunder. The
Assignor shall use commercially reasonable efforts to obtain any consent, waiver
or approval to the assignment to the Assignee of each such contract, permit or
intellectual property right with respect to which any consent, waiver or
approval is required for such assignment. Until such consent, waiver or approval
is obtained, each party hereto agrees to cooperate with the other party hereto
in any reasonable arrangement necessary or desirable to provide to the Assignee
the benefits of the contract, permit or intellectual property right (subject to
the assumption by the Assignee of the Assignor's obligations thereunder).
(h) Power of Attorney; Right of Endorsement, Etc. The Assignor hereby
constitutes and appoints the Assignee, and its successors and assigns, the true
and lawful attorney of the Assignor with full power of substitution, in the name
of the Assignee or the name of the Assignor, on behalf of and for the benefit of
the Assignee,
(i) to collect all Contributed Assets;
(ii) to endorse, without recourse, checks, notes and other
instruments attributable to the Contributed Assets;
(iii) to institute and prosecute all proceedings which the
Assignee may deem proper in order to collect, assert or enforce any
claim, right or title in or to the Contributed Assets;
(iv) to defend and compromise all actions, suits or
proceedings with respect to any of the Contributed Assets or the
Assumed Liabilities; and
(v) to do all such reasonable acts and things with respect to
the Contributed Assets and the Assumed Liabilities as the Assignee may
deem advisable.
The Assignor agrees that the foregoing powers are coupled with an interest and
shall be irrevocable by the Assignor directly or indirectly by the dissolution
of the Assignor or in any other manner. The Assignee shall retain for its own
account any amounts collected pursuant to the foregoing powers and the Assignor
shall promptly pay to the Assignee any amounts received by the Assignor after
the consummation of the Debt/Equity Exchange with respect to the Contributed
Assets.
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Section 2. Further Assurances.
Each of the parties hereto agrees that it shall from time to time on or
after the date hereof do, execute, acknowledge and deliver, and will cause to be
done, executed, acknowledged and delivered, all such further acts, deeds,
certificates, bills of sale, assignments, transfers, conveyances, powers of
attorney, assurances and other documents as may be reasonably requested by
either party hereto for better assigning, transferring, granting, conveying,
assuring and conferring right, title and interest to the Assignee of the
Contributed Assets and for the better assumption by the Assignee of the Assumed
Liabilities.
Section 3. Effectiveness of Contributions and Assumptions.
The contributions and assumptions effected pursuant to this Agreement
shall be deemed to occur immediately and concurrently upon the consummation of
the Debt/Equity Exchange (the "Effective Date").
Section 4. Miscellaneous.
(a) Amendment; Waiver and Release. Except as otherwise provided herein,
no modification, amendment or waiver of any provision of this Agreement shall be
effective unless such modification, amendment or waiver is approved in writing
by each of the parties hereto. The failure of any party to enforce any of the
provisions of this Agreement shall in no way be construed as a waiver of such
provisions and shall not affect the right of such party thereafter to enforce
each and every provision of this Agreement in accordance with its terms.
(b) Severability. It is the desire and intent of the parties hereto
that the provisions of this Agreement be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated by a court of competent jurisdiction to be
invalid, prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction. Notwithstanding the foregoing, if such
provision could be more narrowly drawn so as not to be invalid, prohibited or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
(c) Successors and Assigns. This Agreement shall bind and inure to the
benefit of and be enforceable by the Company and parties hereto and their
respective successors and assigns. Except as otherwise expressly provided
herein, this Agreement shall not confer any rights or remedies upon any Person
other than the parties hereto and their respective successors and permitted
assigns.
(d) Counterparts and Facsimile Execution. This Agreement may be
executed in two or more counterparts, all of which shall be considered one and
the same agreement and shall become effective when one or more counterparts have
been signed by each of the parties and delivered (by facsimile or otherwise) to
the other party, it being understood that all parties need not sign the same
counterpart. Any counterpart or other signature hereupon delivered by
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facsimile shall be deemed for all purposes as constituting good and valid
execution and delivery of this Agreement by such party.
(e) Remedies. The parties shall each have and retain all other rights
and remedies existing in their favor at law or equity, including, without
limitation, any actions for specific performance and/or injunctive or other
equitable relief (including, without limitation, the remedy of rescission) to
enforce or prevent any violations of the provisions of this Agreement.
(f) GOVERNING LAW. THE PROVISIONS OF THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO CONTRACTS ENTERED INTO AND FULLY PERFORMED WITHIN THE STATE OF NEW YORK BY
RESIDENTS OF THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICTS OF LAW
PRINCIPLES).
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IN WITNESS WHEREOF, the parties hereto have executed this Assignment
and Assumption Agreement as of the day and year first above written.
QUALITY DISTRIBUTION, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
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Name: Xxxxxx X. Xxxxxxxxx
Title: President and Chief Executive Officer
QUALITY DISTRIBUTION, LLC
By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President and Chief Executive Officer
Schedule I
Excluded Agreements
1. Second Amended and Restated Shareholders Agreement dated as of May
28, 2002, among the Assignor and the shareholders of the Assignor signatory
thereto.
2. Second Amended and Restated Registration Rights Agreement dated as
of May 28, 2002, among the Assignor and the shareholders of the Assignor
signatory thereto.
3. Indenture dated as of June 9, 0000 xxxxxxx xxx Xxxxxxxx xxx Xxxxxx
Xxxxxx Trust Company of New York, as trustee.
4. Indenture dated as of May 28, 2002, among the Assignor and
Wilmington Trust Company, as Trustee, and the Old Notes issued thereunder.
5. Warrant Agreement dated as of May 28, 2002, among the Assignor and
Bank of New York, as Warrant Agent.
