Exhibit 10.29
LOCK-UP AGREEMENT
This LOCK-UP AGREEMENT (this "Agreement") is entered into as of April
10, 2002, by and among Quality Distribution, Inc., a Florida corporation (the
"Company"), and those members of management of the Company identified on the
signature page hereto (individually, a "Management Person," and collectively the
"Management Persons" or the "Management Group").
WHEREAS, the Company 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)) (the "FIRSTS",
and together with the Fixed Rate Notes, the "Old Notes"); and
WHEREAS, the Management Persons own an aggregate of $1,000,000
principal amount of the Old Notes (the "Management Group Old Notes"), and such
principal amount remains outstanding as of the date hereof; and
WHEREAS, pursuant to the terms of an Offering Memorandum and Consent
Solicitation Statement, dated as of the date hereof, and incorporated herein by
reference (as such document may be amended and/or supplemented from time to
time, the "Offering Memorandum"; references herein to the Offering Memorandum or
to information included therein include all material incorporated therein by
reference), the Company is offering all holders of Old Notes (other than the
Management Group, Apollo Investment Fund III, L.P., Apollo Overseas Partners
III, L.P. and Apollo (U.K.) Partners III, L.P. (collectively, the "Apollo
Entities") and ARES Leveraged Investment Fund, L.P. and ARES Leveraged
Investment Fund II, L.P. (collectively, the "Ares Entities")) 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 (the
"Debt/Equity Securities") consisting of (a) 12.5% Senior Subordinated Secured
Notes due 2008 (the "New Notes"), which will be issued by Quality Distribution,
LLC, a wholly owned subsidiary of the Company ("QDI LLC") to be formed on or
prior to the Closing Date, (b) 12% Junior Subordinated PIK Notes due 2009 (the
"Junior PIK Notes"), which will be issued by the Company and (c) Warrants (the
"Warrants"), each to purchase one share of the Company's Common Stock, $0.01 par
value per share (the "Common Stock"); and
WHEREAS, upon the satisfaction of certain conditions set forth herein,
the Company has agreed to issue to the Management Persons, and the Management
Persons have agreed to acquire from the Company, (i) Debt/Equity Securities,
(ii) shares of the Company's 13.75% Preferred Stock, par value $0.01 per share
(the "13.75% Preferred Stock") or (iii) the Company's 10% Senior Secured Notes
due 2008 (the "10% Senior Secured Notes"), in each case in exchange for all of
the Management Group Old Notes and simultaneous with the consummation of the
Apollo Debt/Equity Exchange, Apollo Junior Exchange or Apollo Senior Note
Exchange (each as defined below), respectively, all as more fully set forth
herein; and
WHEREAS, simultaneous with the consummation of the Debt/Equity
Exchange and upon the satisfaction of certain conditions set forth in that
certain Lock-Up and Purchase Agreement, dated as of the date hereof, among the
Company and the Apollo Entities (the
"Apollo Lock-Up Agreement"), the Company has agreed to issue to the Apollo
Entities, and the Apollo Entities have agreed to acquire from the Company,
Debt/Equity Securities in exchange (the "Apollo Debt/Equity Exchange") for all
of the Old Notes owned by the Apollo Entities (the "Apollo Old Notes"), all as
more fully set forth therein; and
WHEREAS, simultaneous with the consummation of the Debt/Equity
Exchange and upon the satisfaction of certain conditions set forth in that
certain Lock-Up Agreement, dated as of the date hereof, among the Company and
the Ares Entities (the "Ares Lock-Up Agreement"), the Company has agreed to
issue to the Ares Entities, and the Ares Entities have agreed to acquire from
the Company, Debt/Equity Securities in exchange (the "Ares Debt/Equity
Exchange") for all of the Old Notes owned by the Ares Entities, all as more
fully set forth therein; and
WHEREAS, pursuant to the terms of the Apollo Lock-Up Agreement, in
lieu of consummating the Apollo Debt/Equity Exchange and simultaneous with the
consummation of the Debt/Equity Exchange, the Apollo Entities have agreed to
acquire from the Company, and the Company has agreed to issue to the Apollo
Entities, shares of the 13.75% Preferred Stock, in exchange (the "Apollo Junior
Exchange") for all of the Apollo Old Notes, all as more fully set forth therein;
and
WHEREAS, if the Apollo Junior Exchange is to be consummated and
certain conditions set forth in the Apollo Lock-Up Agreement are satisfied, the
Apollo Entities have agreed to purchase from the Company, and the Company has
agreed to sell to the Apollo Entities, additional shares of 13.75% Preferred
Stock, all as more fully set forth therein; and
WHEREAS, pursuant to the terms of the Apollo Lock-Up Agreement, if the
Debt/Equity Exchange is not consummated because certain conditions thereto are
not satisfied, in lieu of the Apollo Debt/Equity Exchange or the Apollo Junior
Exchange, as the case may be, the Company has agreed to issue to the Apollo
Entities, and the Apollo Entities have agreed to acquire from the Company, 10%
Senior Secured Notes in exchange (the "Apollo Senior Note Exchange") for all of
the Apollo Old Notes, all as more fully set forth therein; and
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. The Transactions.
(a) The Management Group Debt/Equity Exchange.
(i) Consideration. Subject to the terms and conditions
contained herein, if the Apollo Debt/Equity Exchange is consummated, then
the Company shall issue to each Management Person that number of
Debt/Equity Securities (the "Management Group Debt/Equity Securities") set
forth opposite such Management Person's name in column 2 of Schedule I
attached hereto and each Management Person shall deliver to the Company in
exchange therefor the principal amount of Management Group Old Notes set
forth opposite such Management Person's name in column 3 of Schedule I
attached hereto (the "Management Group Debt/Equity Exchange"). Any unpaid
interest on the Management Group Old Notes accrued through the Closing Date
(as defined herein) will become
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immediately due and payable on the first interest payment date provided for
in the New Notes.
(ii) Terms of the Management Group Debt/Equity Securities.
The Management Group Debt/Equity Securities will be governed by (A) in the
case of the New Notes (the "Management Group New Notes"), an Indenture in
the form attached to the Offering Memorandum (the "New Note Indenture"),
(B) in the case of the Junior PIK Notes (the "Management Group Junior PIK
Notes"), an Indenture in the form attached to the Offering Memorandum (the
"Junior PIK Note Indenture") and (C) in the case of the Warrants (the
"Management Group Warrants"), a Warrant Agreement in the form attached to
the Offering Memorandum (the "Warrant Agreement"); in each case as such
document may be amended and/or supplemented from time to time.
(b) The Management Group Junior Exchange.
(i) Consideration. Subject to the terms and conditions
contained herein, if the Apollo Junior Exchange is consummated, then in
lieu of consummating the Management Group Debt/Equity Exchange, the Company
shall issue to each Management Person that number of shares of 13.75%
Preferred Stock set forth opposite such Management Person's name in column
2 of Schedule II attached hereto and each Management Person shall deliver
to the Company in exchange therefor the principal amount of Management
Group Old Notes set forth opposite such Management Person's name in column
3 of Schedule II attached hereto (the "Management Group Junior Exchange").
Any unpaid interest on the Management Group Old Notes accrued through the
Closing Date will become immediately due and payable on the same date that
holders of Debt/Equity Securities receive such interest on their Old Notes
pursuant to the terms of the Offering Memorandum.
(ii) Terms of the 13.75% Preferred Stock. The terms and
conditions of the 13.75% Preferred Stock shall be as set forth in the
Articles of Amendment filed in connection therewith in the form attached to
the Offering Memorandum.
(c) The Management Group 10% Senior Note Exchange.
(i) Consideration. Subject to the terms and conditions
contained herein, if the Apollo Senior Note Exchange has been consummated,
then the Company shall issue to each Management Person the principal amount
of 10% Senior Secured Notes (the "Management Group 10% Senior Secured
Notes") set forth opposite such Management Person's name in column 2 of
Schedule III attached hereto and each Management Person shall deliver to
the Company in exchange therefor the principal amount of Management Group
Old Notes set forth opposite such Management Person's name in column 3 of
Schedule III attached hereto (the "Management Group Senior Note Exchange").
Any unpaid interest on the Management Group Old Notes accrued through the
Closing Date will become immediately due and payable on the first interest
payment date provided for in the Management Group 10% Senior Secured Notes.
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(ii) Terms of the Management Group 10% Senior Secured
Notes. The Management Group 10% Senior Secured Notes will be governed by an
Indenture to be dated the Closing Date (as defined below) (the "10% Senior
Secured Note Indenture"). The Company hereby agrees that in the event the
Management Group Senior Note Exchange is to be consummated, the Company
shall take all action necessary to have the 10% Senior Secured Note
Indenture and any security agreement related thereto (reasonably acceptable
to the Management Persons) executed and delivered on or prior to the
Closing Date.
2. Closing.
(a) Closing Date. The consummation of the transactions contemplated
hereby (each, a "Closing"), shall occur at the offices of X'Xxxxxxxx LLP, 00
Xxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 on the following dates: (i) in the
case of the Management Group Debt/Equity Exchange, simultaneously with the
Apollo Debt/Equity Exchange, (ii) in the case of the Management Group Junior
Exchange, simultaneously with the Apollo Junior Exchange or (iii) in the case of
the Management Group Senior Note Exchange, simultaneously with the closing of
the Senior Note Exchange (as defined in the Offering Memorandum). For purposes
of this Agreement, the date of the Closing provided for in the immediate
preceding sentence is hereinafter referred to as the "Closing Date".
(b) Company Obligations. At the Closing, the Company will cause to be
delivered to the Management Persons (i) the Management Group Debt/Equity
Securities through the facilities of The Depository Trust Company ("DTC"), (ii)
the Management Group 10% Senior Secured Notes, or (iii) the 13.75% Preferred
Stock, as the case may be. In addition, at the Closing (other than in the case
of a closing of the Management Group Junior Exchange) the Company will cause to
be delivered to the Management Persons an executed copy of the Registration
Rights Agreement, dated as of the Closing Date, by and among QDI LLC (in the
event of consummation of the Management Group Debt/Equity Exchange) or
alternatively, the Company (in the event of consummation of the Management Group
Senior Note Exchange), the Management Persons and the other parties thereto,
substantially in the form described in the Offering Memorandum (the
"Registration Rights Agreement") and reliance letters addressed to the
Management Group with respect to those portions of the legal opinions and
certificates delivered to Deutsche Bank Securities Inc. (as Dealer Manager for
the Debt/Equity Exchange) as the Management Group shall reasonably request.
(c) Management Persons' Obligations. At the Closing, the Management
Persons will cause to be delivered to the Company (i) the Management Group Old
Notes through the facilities of DTC and (ii) if applicable, an executed copy of
the Registration Rights Agreement.
3. Representations of the Management Persons.
Each Management Person hereby severally and not jointly represents and
warrants to the Company as follows:
(a) Authorization. Such Management Person has the requisite power and
authority to execute, deliver and perform his obligations under this Agreement.
This Agreement
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constitutes a legal, valid and binding obligation of such Management Person,
enforceable in accordance with its terms, except that the enforcement thereof
may be subject to (i) bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws now or hereafter in effect relating
to creditors' rights generally, (ii) general principles of equity and the
discretion of the court before which any proceeding therefor may be brought
(regardless of whether such enforcement is considered in a proceeding in equity
or at law) and (iii) public policy considerations.
(b) No Violations. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby by such
Management Person shall (i) violate any law, the result of which would prevent
such Management Person from consummating the transactions contemplated hereby or
(ii) result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under, any contract to which such Management
Person is a party or by which such Management Person is bound or to which any of
such Management Person's assets is subject, the result of which would prevent
the consummation of the transactions contemplated hereby.
(c) No Consents. No material permit, authorization, order, consent or
approval of or by, or any material notification of or filing with, any person
(governmental or private) is required in connection with the execution, delivery
and performance by such Management Person of this Agreement or the consummation
by such Management Person of the transactions contemplated hereby.
(d) Access to Information. The Company has made available to such
Management Person all reports, schedules, forms, statements and other documents
filed by the Company with the Securities and Exchange Commission pursuant to the
reporting requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and such Management Person has received physical delivery of
all such documents, records and information which such Management Person has
requested, and has had adequate opportunity to ask questions of, and receive
answers from, the Company's officers, employees, agents, accountants, and
representatives concerning the Company's business, operations, financial
condition, assets, liabilities, and all other matters relevant in consummating
the transactions contemplated herein.
(e) Title to Old Notes. Immediately prior to the Closing, such
Management Person will have title to the Management Group Old Notes being
exchanged by such Management Person, as applicable, free and clear of all
claims, liens, title defects and objections or equities of any kind and nature
whatsoever.
(f) Investment Representations.
(i) Such Management Person is the person who exercises
full investment discretion with respect to the Management Group Old Notes
owned by such Management Person and such Management Person has neither
purchased nor sold for his account any Management Group Old Notes, as
applicable, since the original issuance thereof.
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(ii) Such Management Person is acquiring the Management
Group 10% Senior Secured Notes, the Management Group Debt/Equity Securities
or the 13.75% Preferred Stock, as applicable, for his own account, and not
as a nominee or agent for any other person, firm or corporation, and not
with a view to the sale or distribution of all or any part thereof in any
transaction that would be in violation of the securities laws of the United
States, and it has no present intention of selling or otherwise
distributing any of such securities in violation of the Securities Act of
1933, as amended (the "Securities Act"). Such Management Person does not
have any contract, undertaking, agreement or arrangement with any person,
firm or corporation to sell, transfer or grant participations to such
person, firm or corporation with respect to any such securities.
(iii) Such Management Person understands that none of the
Management Group 10% Senior Secured Notes, the Management Group Debt/Equity
Securities (including the Management Group Warrants and the Common Stock
issuable upon exercise of the Management Group Warrants comprising the
Management Group Debt/Equity Securities) or the 13.75% Preferred Stock, as
applicable, acquired hereunder will be registered under the Securities Act
on the Closing Date, in part based upon an exemption from registration
predicated on the accuracy and completeness of his representations and
warranties appearing herein. Such Management Person understands and
acknowledges that, as a result, he will not be permitted to sell, transfer
or assign any of such securities acquired hereunder until such securities
are registered, or an exemption from the registration and prospectus
delivery requirements of the Securities Act is available.
(iv) Such Management Person agrees that in no event will he
make a disposition of any of the Management Group 10% Senior Secured Notes,
the Management Group Debt/Equity Securities (including the Management Group
Warrants and the Common Stock issuable upon exercise of the Management
Group Warrants comprising the Management Group Debt/Equity Securities) or
the 13.75% Preferred Stock, as applicable, or any interest therein, unless
such securities are registered under the Securities Act or unless and until
(A) he shall have notified the Company of the proposed disposition and
shall have furnished the Company with a statement of the circumstances
surrounding the proposed disposition and (B) he shall have furnished the
Company with an opinion of counsel, satisfactory in form and content to the
Company, to the effect that (x) such disposition will not require
registration of such security under the Securities Act or compliance with
applicable state securities laws or (y) an exemption from the registration
requirements of the Securities Act is available and that all appropriate
action necessary for compliance thereunder and under the applicable state
securities laws has been taken.
(v) Such Management Person is an "Accredited Investor" as
such term is defined in Rule 501 of Regulation D promulgated under the
Securities Act; does not require the assistance of an investment advisor or
other purchaser representative to participate in the transactions
contemplated by this Agreement; has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits
and risks of his investment in the Management Group 10% Senior Secured
Notes, the Management Group Debt/Equity Securities or the 13.75% Preferred
Stock, as applicable;
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has the ability to bear the economic risks of his investment for an
indefinite period of time; and has had adequate opportunity to ask
questions of, and receive answers from, the Company concerning all matters
relevant to the transactions contemplated herein.
(g) Section 4(2) Exemption. Such Management Person acknowledges that
the transactions contemplated hereby are intended to be exempt from registration
by virtue of Section 4(2) of the Securities Act. Such Management Person knows of
no reason why such exemption would not be available for the transactions
contemplated hereby.
(h) Brokers. There is no broker, investment banker, financial
advisor, finder or other person which has been retained by or is authorized to
act on behalf of such Management Person who might be entitled to any fee or
commission for which the Company will be liable in connection with the execution
of this Agreement or the transactions contemplated hereby.
4. The Company's Representations.
The Company hereby represents and warrants to each Management Person
(i) with respect to itself and each Guarantor (as defined below) on the date
hereof and (ii) in the event of the Management Group Debt/Equity Exchange, with
respect to QDI LLC on the Closing Date, as follows:
(a) Organization, Authority, etc. The Company and each of its
subsidiaries which are guarantors of the Old Notes and will become guarantors of
the Management Group New Notes or the Management Group 10% Senior Secured Notes,
as applicable (the "Guarantors"), has been duly incorporated or organized, as
the case may be, is validly existing and is in good standing under the laws of
its jurisdiction of incorporation or organization, with all requisite corporate
or other power and authority to own or lease its properties and conduct its
businesses as now conducted as described in the Offering Memorandum, and is duly
qualified to do business as a foreign corporation and is in good standing in all
other jurisdictions where the ownership or leasing of its properties or the
conduct of its businesses requires such qualification, except where the failure
to be so qualified would not, individually or in the aggregate, have a material
adverse effect on the business, condition (financial or other) or results of
operations of the Company and its subsidiaries, taken as a whole (a "Material
Adverse Effect").
(b) Corporate Acts and Proceedings. The execution and delivery of
this Agreement and the transactions contemplated hereby have been duly and
validly authorized, and all necessary corporate action has been taken to make
this Agreement a legal, valid and binding obligation of the Company, enforceable
in accordance with its terms, except that the enforcement thereof may be subject
to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium
or other similar laws now or hereafter in effect relating to creditors' rights
generally, (ii) general principles of equity and the discretion of the court
before which any proceeding therefor may be brought (regardless of whether such
enforcement is considered in a proceeding in equity or at law) and (iii) public
policy considerations.
(c) Valid Issuance.
The Management Group New Notes or the Management Group 10% Senior
Secured Notes, as applicable, will be in the form contemplated by the New Note
Indenture or the
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10% Senior Secured Note Indenture, as applicable, and will conform in all
material respects to the description thereof in the Offering Memorandum; the
Management Group New Notes or the Management Group 10% Senior Secured Notes have
been duly authorized by QDI LLC or the Company, as applicable, and, when
executed by QDI LLC or the Company and authenticated by the trustee in
accordance with the provisions of the New Note Indenture or the 10% Senior
Secured Note Indenture, as applicable, and when delivered against receipt of the
Management Group Old Notes in connection with the consummation of the Management
Group Debt/Equity Exchange or the Management Group Senior Note Exchange, as
applicable, in accordance with the terms of the Offering Memorandum, will be
duly executed, issued and delivered and will constitute valid and binding
obligations of the Company, enforceable against QDI LLC or the Company, as
applicable, in accordance with their terms, and will be entitled to the benefits
of the New Note Indenture or the 10% Senior Secured Note Indenture, as
applicable, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally, (ii) general principles of equity and the discretion of the court
before which any proceeding therefor may be brought (regardless of whether such
enforcement is considered in a proceeding in equity or at law) and (iii) public
policy considerations.
The Management Group Junior PIK Notes, when and if issued, will be in
the form contemplated by the Junior PIK Note Indenture and will conform in all
material respects to the description thereof in the Offering Memorandum; the
Management Group Junior PIK Notes have been duly authorized by the Company and,
when executed by the Company and authenticated by the trustee thereunder in
accordance with the provisions of the Junior PIK Note Indenture and, when
delivered against receipt of the Management Group Old Notes in connection with
the consummation of the Management Group Debt/Equity Exchange in accordance with
the terms of the Offering Memorandum, will be duly executed, issued and
delivered and will constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, and will be
entitled to the benefits of the Junior PIK Note Indenture, except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, (ii) general
principles of equity and the discretion of the court before which any proceeding
therefor may be brought (regardless of whether such enforcement is considered in
a proceeding in equity or at law) and (iii) public policy considerations.
The 10% Senior Secured Note Indenture has been duly authorized by the
Company and each of the Guarantors and, when executed and delivered by the
Company and each of the Guarantors (assuming the due authorization, execution
and delivery by the trustee thereunder), will have been duly executed and
delivered, and upon consummation of the Management Group Senior Note Exchange
will constitute a valid and binding obligation of the Company and each of the
Guarantors, enforceable against the Company and each of the Guarantors in
accordance with its terms, except that the enforcement thereof may be subject to
(i) bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally, (ii) general principles of equity and the discretion of the court
before which any proceeding therefor may be brought (regardless of whether such
enforcement is considered in a proceeding in equity or at law) and (iii) public
policy considerations.
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The New Note Indenture has been duly authorized by QDI LLC and each of
the Guarantors and, when executed and delivered by QDI LLC and each of the
Guarantors (assuming the due authorization, execution and delivery by the
trustee thereunder), will have been duly executed and delivered, and upon
consummation of the Management Group Debt/Equity Exchange will constitute a
valid and binding obligation of QDI LLC and each of the Guarantors, enforceable
against QDI LLC and each of the Guarantors in accordance with its terms, except
that the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, (ii) general
principles of equity and the discretion of the court before which any proceeding
therefor may be brought (regardless of whether such enforcement is considered in
a proceeding in equity or at law) and (iii) public policy considerations.
The Junior PIK Note Indenture has been duly authorized by the Company
and, when executed and delivered by the Company (assuming the due authorization,
execution and delivery by the trustee under the Junior PIK Note Indenture), will
have been duly executed and delivered, and upon consummation of the Management
Group Debt/Equity Exchange will constitute a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except
that the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, (ii) general
principles of equity and the discretion of the court before which any proceeding
therefor may be brought (regardless of whether such enforcement is considered in
a proceeding in equity or at law) and (iii) public policy considerations.
The Management Group Warrants to be issued pursuant to the Management
Group Debt/Equity Exchange have been duly authorized by the Company and, when
issued and executed by the Company, authenticated by the Warrant Agent under the
Warrant Agreement and delivered against receipt of the Management Group Old
Notes in connection with the consummation of the Management Group Debt/Equity
Exchange in accordance with the terms of the Offering Memorandum, will be
validly issued and will constitute valid and binding obligations of the Company,
entitled to the benefits of the Warrant Agreement and enforceable against the
Company in accordance with their terms, except that the enforcement thereof may
be subject to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally, (ii) general principles of equity and the
discretion of the court before which any proceeding therefor may be brought
(regardless of whether such enforcement is considered in a proceeding in equity
or at law) and (iii) public policy considerations.
The Warrant Agreement has been duly authorized by the Company and,
when executed and delivered by the Company (assuming the due authorization,
execution and delivery by the Warrant Agent under the Warrant Agreement), will
have been duly executed and delivered, and upon consummation of the Management
Group Debt/Equity Exchange will constitute a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except
that the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, (ii) general
principles of equity and the
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discretion of the court before which any proceeding therefor may be brought
(regardless of whether such enforcement is considered in a proceeding in equity
or at law) and (iii) public policy considerations.
The guarantees of the Management Group New Notes or the Management
Group 10% Senior Secured Notes, as applicable, to be issued by each of the
Guarantors have been duly authorized by each Guarantor and, upon the execution,
authentication and delivery of the Management Group New Notes or the Management
Group 10% Senior Secured Notes, as applicable, and delivery against receipt of
the Management Group Old Notes in connection with the consummation of the
Management Group Debt/Equity Exchange or the Management Group Senior Note
Exchange, as applicable, in accordance with the terms of the Offering
Memorandum, will be duly executed and delivered, will be entitled to the
benefits of the New Note Indenture or the 10% Senior Secured Note Indenture, as
applicable, and will constitute valid and binding obligations of the Guarantors,
enforceable against each of the Guarantors in accordance with their terms,
except that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally, (ii)
general principles of equity and the discretion of the court before which any
proceeding therefor may be brought (regardless of whether such enforcement is
considered in a proceeding in equity or at law) and (iii) public policy
considerations.
Each of the Security Documents (as defined in the Offering Memorandum)
has been duly authorized by the Company and/or each of the Guarantors party
thereto and, when executed and delivered by the Company and/or each of such
Guarantors (assuming the due authorization, execution and delivery thereof by
Credit Suisse First Boston, as collateral agent (the "Collateral Agent")), will
have been duly executed and delivered on the Closing Date and will constitute a
valid and binding obligation of the Company and/or each of such Guarantors,
enforceable against the Company and/or each of such Guarantors in accordance
with its terms and, upon filing of financing statements (containing adequate
descriptions of the Collateral (as defined in the Offering Memorandum)) or
recording of Mortgages (as defined in the Offering Memorandum), or an amendment
to existing Mortgages, as appropriate, with the appropriate governmental
authorities (including payment of the appropriate filing or recording fees and
any applicable taxes) and delivery of the applicable documents to the Collateral
Agent in accordance with the provisions of the Security Documents, a valid and
perfected Lien (as defined in the Offering Memorandum) on the Collateral
consisting of real property and a perfected security interest in the Collateral
consisting of personal property on the Closing Date securing obligations of the
Company and the Guarantors under the New Note Indenture or the 10% Senior
Secured Note Indenture, as applicable, which lien and security interest will be
superior to and prior to the Liens of all third persons other than the holders
of Liens permitted by the applicable Security Document or Permitted Liens under
the Credit Agreement, dated as of June 9, 1998 and amended and restated as of
August 28, 1998, as further amended to the date hereof (including without
limitation pursuant to Amendment No. 5 to the Credit Agreement) (the "Credit
Agreement"), among the Company and the other parties thereto, except that the
enforcement thereof may be subject to (1) bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally, (2) general principles of equity
and the discretion of the court before which any proceeding
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therefor may be brought (regardless of whether such enforcement is considered in
a proceeding in equity or at law) and (3) public policy considerations.
The Registration Rights Agreement has been duly authorized
by the Company or QDI LLC, as applicable, and each of the Guarantors and, when
executed and delivered by the Company or QDI LLC, as applicable, and each of the
Guarantors, will have been duly executed and delivered and will constitute a
valid and binding obligation of the Company or QDI LLC, as applicable, and each
of the Guarantors, enforceable against the Company or QDI LLC, as applicable,
and each of the Guarantors in accordance with its terms, except that (i) the
enforcement thereof may be subject to (1) bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally, (2) general principles of equity
and the discretion of the court before which any proceeding therefor may be
brought (regardless of whether such enforcement is considered in a proceeding in
equity or at law) and (3) public policy considerations and (ii) any rights to
indemnity or contribution thereunder may be limited by federal and state
securities laws and public policy considerations.
(d) No Integration, General Solicitation or Advertising.
Subject to the accuracy of the Management Persons' representations and
warranties contained in Section 3 hereof, none of the Company or any of the
Guarantors or any of their respective Affiliates (as defined in Rule 501(b) of
Regulation D under the Securities Act) has directly, or through any agent (other
than the Dealer Manager for the Debt/Equity Exchange), (i) sold, offered for
sale, solicited offers to buy or otherwise negotiated in respect of any
"security" (as defined in the Securities Act) that is or could be integrated
with the sale of the Management Group Debt/Equity Securities or the Management
Group 10% Senior Secured Notes, as applicable, in a manner that would require
the registration under the Securities Act of the Management Group Debt/Equity
Securities or the Management Group 10% Senior Secured Notes, as applicable, or
(ii) engaged in any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Securities Act) in connection
with the offering of the Management Group Debt/Equity Securities or the
Management Group 10% Senior Secured Notes, as applicable, or in any manner
involving a public offering within the meaning of Section 4(2) of the Securities
Act.
(e) Exempt Offering. Assuming the accuracy of the
Management Persons' representations and warranties contained in Section 3
hereof, it is not necessary in connection with the offer, exchange and delivery
of the Management Group Debt/Equity Securities or Management Group 10% Senior
Secured Notes, as applicable, in the manner contemplated by this Agreement and
the Offering Memorandum to register any of the Management Group Debt/Equity
Securities or Management Group 10% Senior Secured Notes, as applicable, under
the Securities Act or to qualify the New Note Indenture or 10% Senior Secured
Note Indenture under the Trust Indenture Act of 1939, as amended.
(f) Brokers. Except as contemplated by the Dealer Manager
Agreement to be entered into between the Company and Deutsche Bank Securities
Inc., the Company has not paid or agreed to pay to any person any compensation
for (i) soliciting another to purchase any of the Company's securities or (ii)
the solicitation of tenders or Consents (as defined in the Offering Memorandum)
by holders of the Old Notes pursuant to the Debt/Equity Exchange or the
Management Group Senior Note Exchange.
11
(g) Compliance with Other Instruments. The consummation of
the transactions contemplated in this Agreement will not conflict with or
constitute or result in a breach or violation of, or result in the creation or
imposition of a lien, charge or encumbrance on any property or assets of the
Company or any Guarantor (other than as created pursuant to the New Note
Indenture or the 10% Senior Secured Note Indenture, as applicable, the Credit
Agreement or the Security Documents) under the terms or provisions of, or
constitute a default by the Company or any of the Guarantors under (i) any
indenture, mortgage, deed of trust, loan agreement, note, lease, license,
franchise agreement, permit, certificate, contract or other agreement or
instrument to which the Company or any of the Guarantors is a party or to which
the Company or any of the Guarantors is subject, which conflict, breach,
violation or default would have a Material Adverse Effect, (ii) the certificate
of incorporation or bylaws (or similar organizational documents) of the Company
or any of the Guarantors or (iii) any statute, judgment, decree, order, rule or
regulation of any court or governmental agency or other body applicable to the
Company or any of the Guarantors or any of their respective properties, which
conflict, breach, violation or default, individually or in the aggregate, would
have a Material Adverse Effect.
(h) No Consents. No material permit, authorization, order,
consent or approval of or by, or any material notification of or filing with,
any person (governmental or private) is required in connection with the
execution, delivery and performance by the Company of this Agreement or the
consummation by the Company and the Guarantors of the transactions contemplated
hereby, except (i) such as have been obtained on or prior to the Closing Date,
(ii) such as may be required under the Securities Act, the Exchange Act, state
securities or "Blue Sky" laws in connection with the exchange of the Management
Group Debt/Equity Securities or the Management Group 10% Senior Secured Notes,
as applicable, (iii) such as may be required under the Registration Rights
Agreement and (iv) such filings and recordings with governmental authorities as
may be required to perfect liens under the Security Documents.
(i) None of the Company or any of the Guarantors is now or,
after giving effect to the offering and issuance of the Management Group
Debt/Equity Securities or the Management Group 10% Senior Secured Notes, as
applicable, and the cancellation of the Management Group Old Notes accepted in
the Management Group Debt/Equity Exchange or the Management Group Senior Note
Exchange and the consummation of the other transactions contemplated by the
Offering Memorandum, will be an "investment company" or a company "controlled
by" an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
(j) As of the date hereof and as of the Closing Date, the
Offering Memorandum does not and will not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they are
made, not misleading, except that the Company makes no representation or
warranty with respect to any statement contained in, or any matter omitted from,
the Offering Memorandum relating to the Management Persons in reliance upon
information furnished by the Management Persons.
12
(k) The Company's authorized equity capitalization is as
set forth in the Offering Memorandum, and the capital stock of the Company
conforms in all material respects to the description thereof contained in the
Offering Memorandum.
(l) The audited consolidated financial statements and
related notes of the Company and its consolidated subsidiaries incorporated by
reference in the Offering Memorandum present fairly, in all material respects,
the consolidated financial position, results of operations and cash flows of the
Company and its consolidated subsidiaries at the dates and for the periods to
which they relate and have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis; and PricewaterhouseCoopers
LLP, which has audited the consolidated financial statements as set forth in its
reports incorporated by reference in the Offering Memorandum, is an independent
public accountant with respect to the Company under Rule 101 of the Code of
Professional Conduct of the American Institute of Certified Public Accountants,
and its rulings and interpretations.
5. Conditions of the Company's Obligations. The obligation of the
Company to consummate the transactions contemplated herein at the Closing is
subject to the fulfillment of each of the following conditions before or
simultaneously with the Closing, any of which may be waived in whole or in part
by the Company:
(a) Continued Accuracy of the Management Persons'
Representations and Warranties. The representations and warranties of the
Management Persons contained in Section 3 hereof shall be true and correct on
and as of the Closing Date with the same effect as though such representations
and warranties had been made on and as of the Closing Date (except to the extent
expressly made as of an earlier date, in which case as of such earlier date).
(b) Performance of Covenants. The covenants of the
Management Group contained herein shall have been performed.
6. Registration Rights.
The Management Persons will have such registration rights
(a) with respect to the Management Group 10% Senior Secured Notes, as set forth
in the Registration Rights Agreement or (b) with respect to the Management Group
New Notes, as set forth in the Registration Rights Agreement.
7. Legends.
(a) Until a registration statement covering the Management
Group 10% Senior Secured Notes, the Management Group Debt/Equity Securities
(including the Common Stock issuable upon exercise of the Management Group
Warrants comprising such Management Group Debt/Equity Securities), or the 13.75%
Preferred Stock, if any, is declared effective, all certificates representing
such securities which were issued in exchange for the Management Group Old Notes
hereunder shall bear substantially the following legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR OFFERED FOR
SALE UNLESS REGISTERED UNDER SAID ACT AND ANY
13
APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION
FROM SUCH REGISTRATION IS AVAILABLE OR UPON DELIVERY OF AN
OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY
SATISFACTORY TO QUALITY DISTRIBUTION, INC. THAT SUCH
REGISTRATION IS NOT REQUIRED.
(b) In addition to the legend set forth in Section 7(a)
hereof, the Management Group 10% Senior Secured Notes, the Management Group New
Notes and the Management Group Warrants (including the Common Stock issuable
upon exercise of the Management Group Warrants comprising such Management Group
Debt/Equity Securities), if any, shall also bear substantially the following
legend:
THIS SECURITY IS ALSO SUBJECT TO, AND HAS THE BENEFIT OF, A
REGISTRATION RIGHTS AGREEMENT DATED AS OF [______] [__],
2002 BETWEEN THE HOLDER AND QUALITY DISTRIBUTION,
[INC.][LLC], COPIES OF WHICH ARE ON FILE WITH QUALITY
DISTRIBUTION, [INC.][LLC].
(c) In addition to the legend set forth in Section 7(a) and
Section 7(b) hereof, the Management Group 10% Senior Secured Notes, the
Management Group New Notes, the Management Group Junior PIK Notes, the 13.75%
Preferred Stock and the Management Group Warrants (including the Common Stock
issuable upon exercise of the Management Group Warrants comprising such
Management Group Debt/Equity Securities), if any, shall also bear any legend
required to be placed thereon by DTC or any applicable state corporation,
commercial or securities law.
8. Survival of Representations, Warranties and Agreements. None of
the representations, warranties and covenants contained in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Closing.
9. Termination; Effect of Termination.
(a) Termination. Notwithstanding anything in this Agreement
to the contrary:
(i) this Agreement and the transactions
contemplated herein shall automatically terminate upon termination of the
Apollo Lock-Up Agreement; or
(ii) this Agreement and the transactions
contemplated herein may, by written notice given at any time prior to the
Closing, be terminated by any Management Person, if the Company has
amended the terms of the Offering Memorandum as in effect as of the date
hereof in a manner that materially adversely affects the value of the
Management Group Debt/Equity Securities, the Management Group 10% Senior
Secured Notes or the 13.75% Preferred Stock to be received by the
Management Group pursuant to the terms of this Agreement.
(b) Effect of Termination. In the event of the termination
and abandonment of this Agreement pursuant to Section 9(a) of this Agreement,
this Agreement (other than Section 10(b) (Expenses), Section 10(c) (Notices),
Section 10(d) (Confidentiality), Section 10(h) (Choice of
14
Law), Section 10(k) (Jurisdiction) and Section 10(m) (Waiver of Jury Trial)
which shall remain in full force and effect) shall forthwith become null and
void and no party hereto (or any of their respective representatives) shall have
any liability or further obligation to any other party hereto, except as
provided in this Section 9(b); provided, however, that if this Agreement is
terminated by a party because of the breach of this Agreement by the other party
or because one or more of the conditions to the terminating party's obligations
under this Agreement is not satisfied as a result of the other party's failure
to fully comply with its obligations under this Agreement, the terminating
party's rights to pursue all legal remedies will survive such termination
unimpaired.
10. Miscellaneous.
(a) Amendment. This Agreement and any provision hereof may
only be changed, waived, discharged or terminated upon the written consent of
each of the parties hereto; provided, however, that if the number, composition
or terms of the Debt/Equity Securities offered on the date hereof in the
Debt/Equity Exchange are revised, then the number of Management Group
Debt/Equity Securities to be delivered to the Management Persons pursuant to
Schedule I attached hereto shall be deemed to be automatically amended to
reflect such change(s), without any action by the parties hereto.
(b) Expenses. Whether or not the transactions contemplated
hereby are consummated, each of the Company and the Management Group shall pay
their own expenses incurred in connection with the transactions contemplated
hereby.
(c) Notices. All notices and other communications provided
for or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier, telex, facsimile, telecopier, or similar
writing:
(i) if to a Management Person, to the attention of
such Management Person at the Company's address set forth in (ii) below.
(ii) if to the Company, to:
Quality Distribution, Inc.
0000 Xxxxxxxx Xxxx Xxxxx
Xxxxx, Xxxxxxx 00000
Attention:Chief Executive Officer and President
Telephone:(000) 000-0000
Facsimile:(000) 000-0000
with a copy to:
X'Xxxxxxxx LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx
Telephone: (000) 000-0000
15
Facsimile: (000) 000-0000
(iii)All such notices and communications shall be
deemed to have been duly given: (A) when delivered by hand, if personally
delivered; (B) five (5) business days after being deposited in the mail,
postage prepaid, if mailed; (C) one (1) business day after being timely
dispatched postage prepaid, if by same-day or next-day courier; (D) when
answered back, if telexed; (E) when receipt acknowledged, if sent by
facsimile transmission and (F) if given by any other means, when
delivered at the addresses referred to in this Section 10(c). Any of the
above addresses may be changed by notice made in accordance with this
Section 10(c).
(d) Confidentiality. Notwithstanding anything herein to the
contrary, each Management Person shall, and shall cause his respective
representatives to, maintain in confidence and not use to the detriment of the
Company any written, oral or other information relating to the Company or to the
business of the Company obtained from the Company or any of its representatives,
except to the extent (i) any such information is or becomes generally available
to the public other than as a result of disclosure by any of the Management
Persons or any of their respective representatives, (ii) any such information is
required to be disclosed by a court or governmental entity of competent
jurisdiction or (iii) that use of such information is necessary or appropriate
in making any filing or obtaining any consent or approval required for the
consummation of the transactions contemplated herein, and each Management Person
shall instruct his representatives having access to such information of such
obligation of confidentiality.
(e) Best Efforts. Notwithstanding anything herein to the
contrary, each Management Person shall use his best efforts to perform his
obligations under this Agreement, including without limitation his best efforts
to prevent the consummation of the transactions contemplated hereby from
conflicting with the terms and conditions of the Promissory Note issued by such
Management Investor to LaSalle Bank National Association (and corresponding
Consumer Pledge and Security Agreement), if any.
(f) Parties in Interest. All the terms and provisions of
this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective successors and assigns of the parties hereto,
whether so expressed or not.
(g) Headings. The headings of the sections and paragraphs
of this Agreement have been inserted for convenience of reference only and do
not constitute a part of this Agreement.
(h) Choice of Law. The internal laws of the State of New
York shall govern the enforceability and validity of this Agreement, the
construction of its terms and the interpretation of the rights and duties of the
parties hereto without giving effect to conflicts of laws, rules or principles.
(i) Entire Agreement. This Agreement, the Apollo Lock-Up
Agreement, the Ares Lock-Up Agreement, and the Offering Memorandum (including
the exhibits and schedules attached to each such document) contain the entire
agreement among the parties hereto with respect to the subject matter hereof and
supersede and replace all other prior agreements, written
16
or oral, among the parties hereto with respect to the subject matter hereof,
including, without limitation, that certain Commitment Letter, dated as of
January 29, 2002 between the Ares Entities and the Company.
(j) Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
with the same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument. This Agreement shall become effective
when each party hereto shall have received a counterpart hereof signed by the
other party hereto.
(k) Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby may be brought in
any federal or state court located in the State of New York, and each of the
parties hereby consents to the jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 10(c) hereof shall be
deemed effective service of process on such party.
(l) No Implied Waiver. No failure or delay by any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law.
(m) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
(n) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon such
a determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent possible.
* * * * *
17
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the date first above written.
QUALITY DISTRIBUTION, INC.
By:/s/ Xxxxxx X. Xxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxx
Title: President and Chief Executive Officer
MANAGEMENT PERSONS
/s/ Xxxxxx X. Xxxxxxxxx
----------------------------------------------
Xxxxxx X. Xxxxxxxxx
/s/ Xxxxxxx X. Xxxxx
----------------------------------------------
Xxxxxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxxxxxxx
----------------------------------------------
Xxxxxx X. Xxxxxxxxxx
/s/ Xxxxx X. Xxxxxxxxxxx
----------------------------------------------
Xxxxx X. Xxxxxxxxxxx
/s/ Xxxxx X. Xxxxxxxx
----------------------------------------------
Xxxxx X. Xxxxxxxx
/s/ Xxxxxxx X. Xxxxx
----------------------------------------------
Xxxxxxx X. Xxxxx
SCHEDULE I
MANAGEMENT GROUP DEBT/EQUITY EXCHANGE
Management Debt/Equity Securities to be Received (2) Aggregate Principal Amount of
Management Group Old Notes
To Be Surrendered (3)
---------------------------------------------------------------- --------------------------------
Management Person (1) Aggregate Principal Aggregate Principal Number of Fixed FIRSTS
---------------------- Amount of New Notes Amount of Warrants Rate Notes
Junior PIK Notes
------------------------ ---------------------- -------------- --------------- --------------
Xxxxxx X. Xxxxxxxxx $325,000 $ 75,000 795 $ 500,000
Xxxxxxx X. Xxxxx $ 65,000 $ 15,000 159 $ 100,000
Xxxxxx X. Xxxxxxxxxx $ 65,000 $ 15,000 159 $ 100,000
Xxxxx X. Xxxxxxxxxxx $ 65,000 $ 15,000 159 $ 100,000
Xxxxx X. Xxxxxxxx $ 65,000 $ 15,000 159 $ 100,000
Xxxxxxx X. Xxxxx $ 65,000 $ 15,000 159 $ 100,000
------------------------ ---------------------- -------------- --------------- ---------------
Total $650,000 $150,000 1,590 $ 1,000,000
========================= -===================== ============== =============== ===============
SCHEDULE II
MANAGEMENT GROUP JUNIOR EXCHANGE
Aggregate Principal Amount of
Management Group Old Notes
To Be Surrendered (3)
-----------------------------------
Management Person (1) Number of Shares Fixed FIRSTS
---------------------- of 13.75% Rate Notes
Preferred Stock (2)
---------------------- ---------------- ------------------
Xxxxxx X. Xxxxxxxxx 5,000 $ 500,000
Xxxxxxx X. Xxxxx 1,000 $ 100,000
Xxxxxx X. Xxxxxxxxxx 1,000 $ 100,000
Xxxxx X. Xxxxxxxxxxx 1,000 $ 100,000
Xxxxx X. Xxxxxxxx 1,000 $ 100,000
Xxxxxxx X. Xxxxx 1,000 $ 100,000
---------------------- ---------------- ------------------
Total 10,000 $1,000,000
====================== ================ ==================
SCHEDULE III
MANAGEMENT GROUP SENIOR NOTE EXCHANGE
Aggregate Principal Amount of
Management Group Old Notes
To Be Surrendered (3)
-----------------------------------
Management Person (1) Fixed FIRSTS
----------------------- Aggregate Principal Rate Notes
Amount of 10% Senior
Secured Notes (2)
------------------------- --------------- -------------------
Xxxxxx X. Xxxxxxxxx $ 500,000 $ 500,000
Xxxxxxx X. Xxxxx $ 100,000 $ 100,000
Xxxxxx X. Xxxxxxxxxx $ 100,000 $ 100,000
Xxxxx X. Xxxxxxxxxxx $ 100,000 $ 100,000
Xxxxx X. Xxxxxxxx $ 100,000 $ 100,000
Xxxxxxx X. Xxxxx $ 100,000 $ 100,000
------------------------- --------------- -------------------
Total $1,000,000 $1,000,000
========================= =============== ===================
