10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2012

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number: 000-24180

Quality Distribution, Inc.

(Exact name of registrant as specified in its charter)

Florida	59-3239073
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
4041 Park Oaks Boulevard, Suite 200, Tampa, FL	33610
(Address of Principal Executive Offices)	(Zip Code)

813-630-5826

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2).    Yes  ¨    No  x

As of August 3, 2012, the registrant had 27,782,315 shares of Common Stock, no par value, outstanding.

QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES

CONTENTS

PART I—FINANCIAL INFORMATION	1
ITEM 1—FINANCIAL STATEMENTS (Unaudited)	1
Consolidated Statements of Operations for the Three and Six Months Ended June  30, 2012 and 2011	1
Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June  30, 2012 and 2011	2
Consolidated Balance Sheets as of June 30, 2012 and December 31, 2011	3
Consolidated Statements of Shareholders’ Deficit for the Six Months Ended June  30, 2012 and 2011	4
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2012 and 2011	5
Notes to Consolidated Financial Statements	6
ITEM  2—Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
ITEM 3—Quantitative and Qualitative Disclosures About Market Risk	60
ITEM 4—Controls and Procedures	61
PART II—OTHER INFORMATION	61
ITEM 1—Legal Proceedings	61
ITEM 1A—Risk Factors	61
ITEM 2—Unregistered Sales of Equity Securities and Use of Proceeds	63
ITEM 3—Defaults Upon Senior Securities	63
ITEM 4—Mine Safety Disclosures	63
ITEM 5—Other Information	63
ITEM 6—Exhibits	64
Signatures	65

QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES

PART I—FINANCIAL INFORMATION

ITEM 1—FINANCIAL STATEMENTS

Consolidated Statements of Operations

Unaudited (In 000’s, Except Per Share Amounts)

	Three months ended June 30,						Six months ended June 30,
	2012			2011			2012			2011
OPERATING REVENUES:
Transportation	$	150,519		$	129,397		$	283,725		$	254,078
Service revenue		30,034			27,642			58,019			54,380
Fuel surcharge		32,180			32,954			62,904			59,445
Total operating revenues		212,733			189,993			404,648			367,903
OPERATING EXPENSES:
Purchased transportation		142,309			133,692			274,186			258,414
Compensation		18,516			15,515			35,147			30,398
Fuel, supplies and maintenance		18,445			11,665			32,911			23,442
Depreciation and amortization		4,622			3,378			8,413			6,870
Selling and administrative		10,089			4,886			16,599			10,035
Insurance costs		4,139			3,540			7,358			8,225
Taxes and licenses		624			652			1,372			1,099
Communication and utilities		907			657			1,744			1,459
Gain on disposal of property and equipment		(362	)		(410	)		(364	)		(650	)
Restructuring credit		—			(521	)		—			(521	)
Total operating expenses		199,289			173,054			377,366			338,771
Operating income		13,444			16,939			27,282			29,132
Interest expense		7,180			7,311			14,369			15,122
Interest income		(229	)		(178	)		(408	)		(317	)
Write-off of debt issuance costs		—			—			—			1,786
Other expense (income)		72			29			(164	)		(7	)
Income before income taxes		6,421			9,777			13,485			12,548
(Benefit from) provision for income taxes		(22,383	)		731			(22,019	)		780
Net income	$	28,804		$	9,046		$	35,504		$	11,768
PER SHARE DATA:
Net income per common share
Basic	$	1.07		$	0.39		$	1.38		$	0.52
Diluted	$	1.04		$	0.37		$	1.34		$	0.49
Weighted-average number of shares
Basic		26,804			23,253			25,675			22,723
Diluted		27,600			24,581			26,516			24,024

The accompanying notes are an integral part of these consolidated financial statements.

1

QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Unaudited (In 000’s)

	Three months ended June 30,				Six months ended June 30,
	2012		2011		2012		2011
Net income	$	28,804	$	9,046	$	35,504	$	11,768
Other comprehensive income, net of tax:
Amortization of prior service costs and losses		388		318		776		636
Foreign currency translation adjustment		45		7		6		(43	)
Total other comprehensive income, net of tax		433		325		782		593
Comprehensive income	$	29,237	$	9,371	$	36,286	$	12,361

The accompanying notes are an integral part of these consolidated financial statements.

2

QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

Unaudited (In 000’s)

	June 30, 2012			December 31, 2011
ASSETS
Current assets:
Cash and cash equivalents	$	4,129		$	4,053
Accounts receivable, net		116,481			90,567
Prepaid expenses		10,962			7,849
Deferred tax asset		7,491			4,048
Other current assets		7,323			3,858
Total current assets		146,386			110,375
Property and equipment, net		163,264			125,892
Goodwill		82,047			31,344
Intangibles, net		35,031			18,471
Non-current deferred tax asset		15,286			—
Other assets		12,483			16,313
Total assets	$	454,497		$	302,395
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities:
Current maturities of indebtedness	$	2,537		$	4,139
Current maturities of capital lease obligations		5,250			5,261
Accounts payable		12,327			7,571
Independent affiliates and independent owner-operators payable		17,358			9,795
Accrued expenses		36,141			25,327
Environmental liabilities		4,201			3,878
Accrued loss and damage claims		7,888			8,614
Total current liabilities		85,702			64,585
Long-term indebtedness, less current maturities		356,194			293,823
Capital lease obligations, less current maturities		2,327			3,840
Environmental liabilities		5,156			6,222
Accrued loss and damage claims		8,931			9,768
Other non-current liabilities		25,937			30,342
Total liabilities		484, 247			408,580
Commitments and contingencies—Note 13
SHAREHOLDERS’ DEFICIT
Common stock, no par value; 49,000 shares authorized; 28,048 issued and 27,776 outstanding at June 30, 2012 and 24,207 issued and 23,940 outstanding at December 31, 2011		435,396			393,859
Treasury stock, 272 shares at June 30, 2012 and 267 shares at December 31, 2011		(1,944	)		(1,878	)
Accumulated deficit		(243,039	)		(278,543	)
Stock recapitalization		(189,589	)		(189,589	)
Accumulated other comprehensive loss		(30,599	)		(31,381	)
Stock purchase warrants		25			1,347
Total shareholders’ deficit		(29,750	)		(106,185	)
Total liabilities and shareholders’ deficit	$	454,497		$	302,395

The accompanying notes are an integral part of these consolidated financial statements.

3

QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES

Consolidated Statements of Shareholders’ Deficit

For the Six Months Ended June 30, 2012 and 2011

Unaudited (In 000’s)

	Shares of Common Stock		Shares of Treasury Stock			Common Stock		Treasury Stock			Accumulated Deficit			Stock Recapitalization			Accumulated Other Comprehensive Loss			Stock Purchase Warrants			Total Shareholders’ Deficit
Balance, December 31, 2010		21,678		(220	)	$	371,288	$	(1,593	)	$	(301,974	)	$	(189,589	)	$	(26,194	)	$	1,683		$	(146,379	)
Net income		—		—			—		—			11,768			—			—			—			11,768
Issuance of restricted stock		83		—			—		—			—			—			—			—			—
Forfeiture of restricted stock		—		(18	)		—		—			—			—			—			—			—
Amortization of restricted stock		—		—			562		—			—			—			—			—			562
Amortization of stock options		—		—			896		—			—			—			—			—			896
Stock option exercises		307		(1	)		1,618		(13	)		—			—			—			—			1,605
Proceeds from equity offering, net of transaction costs		2,000		—			17,599		—			—			—			—			—			17,599
Satisfaction of stock subscription receivable		—		(4	)		—		—			—			—			—			—			—
Amortization of prior service costs and losses (pension plans), net of tax		—		—			—		—			—			—			636			—			636
Foreign currency translation adjustment, net of tax		—		—			—		—			—			—			(43	)		—			(43	)
Balance, June 30, 2011		24,068		(243	)	$	391,963	$	(1,606	)	$	(290,206	)	$	(189,589	)	$	(25,601	)	$	1,683		$	(113,356	)
Balance, December 31, 2011		24,207		(267	)	$	393,859	$	(1,878	)	$	(278,543	)	$	(189,589	)	$	(31,381	)	$	1,347		$	(106,185	)
Net income		—		—			—		—			35,504			—			—			—			35,504
Issuance of restricted stock		163		—			—		—			—			—			—			—			—
Forfeiture of restricted stock		—		(5	)		—		(66	)		—			—			—			—			(66	)
Amortization of restricted stock		—		—			658		—			—			—			—			—			658
Amortization of stock options		—		—			860		—			—			—			—			—			860
Stock warrant exercises		346		—			1,322		—			—			—			—			(1,322	)		—
Stock option exercises		47		—			254		—			—			—			—			—			254
Proceeds from equity offering, net of transaction costs		2,500		—			30,523		—			—			—			—			—			30,523
Issuance of stock for acquisitions		785		—			7,920		—			—			—			—			—			7,920
Amortization of prior service costs and losses (pension plans), net of tax		—		—			—		—			—			—			776			—			776
Foreign currency translation adjustment, net of tax		—		—			—		—			—			—			6			—			6
Balance, June 30, 2012		28,048		(272	)	$	435,396	$	(1,944	)	$	(243,039	)	$	(189,589	)	$	(30,599	)	$	25		$	(29,750	)

The accompanying notes are an integral part of these consolidated financial statements.

4

QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Unaudited (In 000’s)

	Six Months Ended June 30,
	2012			2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	35,504		$	11,768
Adjustments to reconcile to net cash and cash equivalents provided by (used in) operating activities:
Depreciation and amortization		8,413			6,870
Bad debt recoveries		(24	)		(118	)
Gain on disposal of property and equipment		(364	)		(650	)
PIK interest on Senior Subordinated Notes		—			187
Write-off of deferred financing costs		—			328
Write-off of original bond issuance costs		—			1,458
Stock-based compensation		1,518			1,458
Amortization of deferred financing costs		1,055			1,095
Amortization of bond discount		108			220
Noncontrolling interest dividends		—			38
Release of deferred tax asset valuation allowance		(22,777	)		—
Changes in assets and liabilities:
Accounts and other receivables		(25,884	)		(14,540	)
Prepaid expenses		610			1,408
Other assets		(3,103	)		1,527
Accounts payable		3,316			406
Accrued expenses		263			(3,301	)
Environmental liabilities		(743	)		(1,398	)
Accrued loss and damage claims		(1,562	)		2,195
Independent affiliates and independent owner-operators payable		7,563			3,390
Other liabilities		373			(126	)
Current income taxes		(872	)		187
Net cash provided by operating activities		3,394			12,402
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(17,913	)		(9,336	)
Greensville purchase price adjustment		(66	)		—
Acquisition of Trojan		(8,657	)		—
Acquisition of Bice and RM		(52,176	)		—
Proceeds from sales of property and equipment		6,959			6,279
Net cash used in investing activities		(71,853	)		(3,057	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt		(2,472	)		(30,379	)
Principal payments on capital lease obligations		(2,005	)		(2,545	)
Proceeds from revolver		126,800			60,000
Payments on revolver		(85,300	)		(53,000	)
Payments on acquisition notes		(428	)		(405	)
Deferred financing costs		(277	)		(607	)
Change in book overdraft		1,440			149
Noncontrolling interest dividends		—			(38	)
Redemption of noncontrolling interest		—			(1,833	)
Proceeds from equity offering, net of transaction costs		30,523			17,599
Proceeds from exercise of stock options		254			1,605
Net cash provided by (used in) financing activities		68,535			(9,454	)
Effect of exchange rate changes on cash and cash equivalents		—			(1	)
Net increase (decrease) in cash and cash equivalents		76			(110	)
Cash and cash equivalents, beginning of period		4,053			1,753
Cash and cash equivalents, end of period	$	4,129		$	1,643
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for:
Interest	$	13,066		$	13,657
Income Taxes		1,212			631

The accompanying notes are an integral part of these consolidated financial statements.

5

QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES

Quality Distribution, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

1. Summary of Significant Accounting Policies

Basis of Presentation

In this quarterly report, unless the context otherwise requires or indicates, (i) the terms the “Company,” “our Company,” “Quality Distribution,” “QDI,” “we,” “us” and “our” refer to Quality Distribution, Inc. and its consolidated subsidiaries and their predecessors, (ii) the terms “Quality Distribution, LLC” and “QD LLC” refer to our 100% owned subsidiary, Quality Distribution, LLC, a Delaware limited liability company, and its consolidated subsidiaries and their predecessors, (iii) the term “QD Capital” refers to our 100% owned subsidiary, QD Capital Corporation, a Delaware corporation, (iv) the term “QCI” refers to our 100% owned subsidiary, Quality Carriers, Inc., an Illinois corporation, (v) the term “Boasso” refers collectively to our 100% owned subsidiary, Boasso America Corporation, a Louisiana corporation, and Boasso’s 100% owned subsidiary, Greensville Transport Company (“Greensville”), a Virginia corporation, (vi) the term “QCER” refers collectively to our 100% owned subsidiaries, QC Energy Resources, Inc., a Delaware corporation, QC Energy Resources, LLC, a Delaware limited liability company and QC Environmental Services, Inc. a North Dakota corporation, and (vii) the term “CLC” refers to our 100% owned subsidiary, Chemical Leaman Corporation, a Pennsylvania corporation.

We are engaged primarily in transportation of bulk chemicals in North America. We are the largest provider of intermodal ISO tank container and depot services in North America through Boasso. In 2011, we entered the unconventional oil and gas frac shale energy markets, providing logistics services to these markets through QCER. We conduct a significant portion of our business through a network of independent affiliates and independent owner-operators. Independent affiliates are companies which enter into various term contracts with the Company. Independent affiliates are responsible for paying for their own power equipment (including debt service), fuel and other operating costs. Most of the independent affiliates lease trailers from us. Independent owner-operators are independent contractors who, through a contract with us, supply one or more tractors and drivers for our and our affiliates’ use. Contracts with independent owner-operators may be terminated by either party on short notice. We charge independent affiliates and third parties for the use of tractors and trailers as necessary in the form of rent. In exchange for the services rendered, independent affiliates and independent owner-operators are normally paid a percentage of the revenues collected on each load hauled.

Our accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X and do not include all of the information and notes required by accounting principles generally accepted in the United States (“GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments and accruals) considered necessary for a fair statement of consolidated financial position, results of operations and cash flows have been included. The year ended December 31, 2011 consolidated balance sheet data was derived from our audited financial statements, but does not include all the disclosures required by GAAP. For further information, refer to our Annual Report on Form 10-K for the year ended December 31, 2011, including the consolidated financial statements and accompanying notes.

Operating results for the three and six months ended June 30, 2012 are not necessarily indicative of the results that may be expected for any future period.

Reclassification

Certain prior period amounts have been reclassified amongst business segments to conform to the current year presentation.

6

New Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued amended guidance on fair value measurement. This guidance clarifies how to measure fair value and is largely consistent with existing fair value measurement principles. It also expands existing disclosure requirements for fair value measurements. This amendment is effective for fiscal years beginning after January 1, 2012. The adoption of this standard to expand our footnote disclosures in the consolidated financial statements did not have a material impact on our consolidated financial statements.

In June 2011, FASB updated its guidance on comprehensive income. This accounting update eliminates the option to present the components of other comprehensive income as part of the statement of shareholders’ equity. Instead, the Company must report comprehensive income in either a single continuous statement of comprehensive income which contains two sections, net income and other comprehensive income, or in two separate but consecutive statements. This amendment will be effective for public companies during the interim and annual periods beginning after December 15, 2011 with early adoption permitted. The adoption of this amended guidance did not have a material impact on the Company’s consolidated financial statements.

In September 2011, the FASB issued additional amendments to the guidance on goodwill testing for impairment by permitting an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. This amendment is effective for fiscal years beginning after December 15, 2011, with early adoption permitted in limited circumstances. The adoption of this amendment did not have a material impact on the Company’s financial position, results of operations or cash flows.

In September 2011, the FASB issued amended guidance that requires employers to provide additional separate disclosures for multiemployer pension plans and multiemployer other postretirement benefit plans. The additional quantitative and qualitative disclosures will provide users with more detailed information about an employer’s involvement in multiemployer pension plans. The new disclosure requirements are required for fiscal years ending after December 15, 2011. The adoption of this standard to expand our footnote disclosures in the consolidated financial statements did not have a material impact on our consolidated financial statements.

In December 2011, the FASB issued additional guidance on comprehensive income. This accounting update defers changes that relate to the presentation of reclassification adjustments out of accumulated other comprehensive income. The adoption of this guidance did not have a material effect on the Company’s consolidated financial statements.

Acquisitions and Dispositions

Wylie Bice Trucking, LLC and RM Resources, LLC

On June 1, 2012, we acquired certain operating assets of Wylie Bice Trucking, LLC (“Bice”) and the operating assets and rights of RM Resources, LLC (“RM”) for $81.4 million aggregate consideration. Headquartered in Killdeer, ND, Bice is a leading provider of transportation services to the unconventional oil and gas frac shale industry within the Bakken shale region, primarily hauling fresh water, flowback and production water, and oil for numerous energy customers. The flowback and production water Bice hauls is primarily disposed of utilizing five salt water injection wells we purchased from RM. In accordance with the asset purchase agreement, RM must deliver a sixth disposal well within six months after the closing date of the acquisition. On a combined basis, for its most recent fiscal year ended December 31, 2011, Bice and RM had revenues of approximately $106.0 million. The results of Bice and RM have been included in our results since the date of acquisition, and are included in our energy logistics segment.

These transactions were structured as asset acquisitions with aggregate consideration paid to the sellers as follows: (i) $52.2 million in cash; (ii) $21.3 million in 5-year subordinated seller notes bearing interest at a 5.00% fixed rate; and (iii) $7.9 million in unregistered restricted shares of Quality common stock. Up to an additional $19.0 million may be payable in cash one year after the closing date, contingent upon the collective businesses meeting certain future operating and financial performance criteria. Our preliminary estimate of this contingent consideration is $6.8 million. We have performed a preliminary allocation of the purchase price. Estimates of useful lives and estimated fair values of tangible and amortizable intangible assets will be finalized after we review all available data including, but not limited to, appraisals and internal assessments. The purchase price of the combined acquisitions has initially been allocated to the assets acquired according to their estimated fair values at the time of the acquisitions as follows:

(In thousands)	Bice & RM Combined
Equipment	$	25,251
Non-compete agreements		400
Tradename		700
Customer-related intangibles		12,320
Contingent consideration		(6,800	)
Goodwill		49,524
	$	81,395

7

The non-compete agreements will be amortized over an estimated six year useful life on a straight-line basis. The customer-related intangible assets relate to acquired customer relationships, and will be amortized over an estimated ten year useful life on a straight-line basis. The tradename will be amortized over an estimated two year useful life on a straight-line basis. Goodwill has been recorded because the consideration paid exceeds the fair value of the assets acquired. The goodwill acquired in these acquisitions is tax deductible.

Unaudited Pro forma Results. Businesses acquired are included in our consolidated results from the date of each acquisition. Unaudited pro forma results displayed below only represent the Bice and RM acquisitions, as our other acquisitions in 2012 and 2011 did not meet the threshold for pro forma reporting. The following unaudited pro forma consolidated results are presented to show our results, on a pro forma basis, as if the 2012 acquisition of Bice and RM had been completed as of January 1, 2011:

Unaudited pro forma consolidated results

	Three months ended June 30,				Six months ended June 30,
	2012		2011		2012		2011
Operating revenues	$	229,255	$	211,709	$	452,685	$	397,643
Net income		29,054		9,774		37,932		12,970
Income per common share–basic	$	1.08	$	0.42	$	1.48	$	0.57
Income per common share–diluted	$	1.05	$	0.40	$	1.43	$	0.54

Trojan Vacuum Services

On April 1, 2012, we acquired certain operating assets of Trojan Vacuum Services (“Trojan”). The purchase price was $8.7 million, paid in cash, with potential additional consideration of $1.0 million, to be paid in cash, subject to Trojan achieving certain future operating and financial performance criteria. Trojan is headquartered in Pleasanton, TX and provides transportation service to the unconventional oil and gas frac shale industry within the Eagle Ford shale region, primarily hauling flowback and production water for various energy customers. For its fiscal year ended December 31, 2011, Trojan had revenues of approximately $13.5 million. The results of the Trojan acquisition are included in our energy logistics segment.

Greensville Transport Services, Inc.

On November 1, 2011, Boasso acquired all of the outstanding stock of Greensville. The purchase price was $8.6 million, paid in cash, with an additional $0.5 million to be paid in cash, subject to Greensville meeting certain future operating performance criteria. An additional $0.5 million was paid in cash for a 338(h)(10) tax election and a working capital adjustment. Greensville is headquartered in Chesapeake, Virginia and is a leading provider of ISO tank container and depot services with access to ports in Virginia, Maryland and South Carolina. The results of the Greensville acquisition are included in our intermodal segment.

2. Variable Interest Entities

At June 30, 2012, we have a variable interest in two variable interest entities (“VIEs”), for which we are not the primary beneficiary. We have concluded, based on our qualitative consideration of our contracts with the VIEs, the operating structure of the VIEs and our role with the VIEs, that we do not have the power to direct the activities that most significantly impact their economic performance. Therefore, we are not required to consolidate the operations of these VIEs.

One VIE is an independent affiliate that is directly engaged in the dry bulk business through the management of three trucking terminals in the North East region of the U.S. As such, this business is highly seasonal. We are involved with the VIE as a non-controlling interest. Our maximum exposure to loss as a result of our involvement with this unconsolidated VIE is limited to our recorded loans receivable which aggregated approximately $2.2 million at June 30, 2012. These loans are secured by a second-priority lien on certain assets of the VIE.

8

Due to severe winter weather in the fourth quarter of 2010, we recorded a $0.5 million reserve against our $2.8 million of loans receivable from this VIE during the first quarter of 2011. This reserve was reversed during the fourth quarter of 2011 based on an assessment of the VIE’s improved business performance and the Company’s improved collateral position.

The other VIE was an independent affiliate that was directly engaged in both the chemical and energy logistics businesses through the management of nine trucking terminals located throughout the U.S. and one energy terminal in the Northeast region of the U.S. This VIE has exited the transportation industry except for ownership of certain assets. We were involved with the VIE as a non-controlling interest. Our maximum exposure to loss as a result of our involvement with this unconsolidated VIE is limited to our recorded loans receivable which aggregated approximately $3.2 million at June 30, 2012. These loans are secured by a pledge of equity interests in a related party of the independent affiliate.

In light of financial and operational difficulties of this independent affiliate and the potential negative impact those difficulties could have had on us and our customers, we recently entered into contractual arrangements with this independent affiliate to terminate our affiliate relationship in a manner allowing a smooth transition of the servicing of those customers back to us and to certain other independent affiliates. As part of those contractual arrangements, we provided certain loans to a related party of the independent affiliate to permit an orderly transition of the business and acquired the right to purchase the operating assets of the independent affiliate. Outstanding loans associated with this prior independent affiliate were approximately $6.4 million at August 3, 2012, of which $6.0 million is secured by a combination of (1) a pledge of equity interests in a related party of the independent affiliate and (2) interests in certain real estate owned by a related party of the independent affiliate.

9

3. Fair Value of Financial Instruments

The three-level valuation hierarchy for fair value measurements is based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions. These two types of inputs create the following fair value hierarchy:

• Level 1—Quoted prices for identical instruments in active markets;

• Level 2—Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations whose significant inputs are observable; and

• Level 3—Instruments whose significant inputs are unobservable.

Following is a description of the valuation methodologies we used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy.

Fair Value Measurements on a Nonrecurring Basis

The fair value of our long-term indebtedness is based on level 2 quoted market prices. As of June 30, 2012, the carrying value and fair value are as follows (in thousands):

	Carrying Value		Fair Value
9.875% Second-Priority Senior Secured Notes due 2018 (“2018 Notes”)	$	225,000	$	248,063

Our asset-based loan facility (the “ABL Facility”) is variable rate debt and approximates fair value.

The carrying amounts reported in the accompanying consolidated balance sheets for cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the immediate or short-term maturities of these financial instruments.

4. Goodwill and Intangible Assets

Goodwill

Under the FASB guidance, goodwill and intangible assets are subject to an annual impairment test as well as impairment assessments of certain triggering events. We evaluate goodwill for impairment by determining the fair value based on criteria in the FASB guidance for each reporting unit, our energy logistics segment and our intermodal segment. These reporting units contain goodwill and other identifiable intangible assets as a result of previous business acquisitions. Our annual impairment test is performed during the second quarter with a measurement date of June 30^th. The methodology applied in the analysis performed at June 30, 2012 was consistent with the methodology applied in prior years, but was based on updated assumptions, as appropriate. As a result of our analysis, we concluded no impairment had occurred as of June 30, 2012.

Under the FASB guidance, the process of evaluating the potential impairment of goodwill involves a two-step process and requires significant judgment at many points during the analysis. In the first step, we determine whether there is an indication of impairment by comparing the fair value of a reporting unit to its carrying amount, including goodwill. If, based on the first step, we determine that there is an indication of goodwill impairment, we assess the impairment in step two in accordance with the FASB guidance.

In the first step, we determine the fair value for each reporting unit using a combination of two valuation approaches: the market approach and the income approach. The market approach uses a guideline company methodology which is based upon a comparison of us to similar publicly-traded companies within our industry. We derive a market value of invested capital or business enterprise value for each comparable company by multiplying the price per share of common stock of the publicly traded companies by their total common shares outstanding and adding each company’s current level of debt. We calculate a business enterprise multiple based on revenue and earnings from each company, then apply those multiples to each reporting unit’s revenue and earnings to conclude a reporting unit business enterprise value. Assumptions regarding the selection of comparable companies are made based on, among other factors, capital structure, operating environment and industry. As the comparable companies were typically larger and more diversified than our reporting units, multiples were adjusted prior to application to our reporting units’ revenues and earnings to reflect differences in margins, long-term growth prospects and market capitalization.

The income approach uses a discounted debt-free cash flow analysis to measure fair value by estimating the present value of future economic benefits. To perform the discounted debt-free cash flow analysis, we develop a pro forma analysis of each reporting unit to estimate future available debt-free cash flow and discount estimated debt-free cash flow by an estimated industry weighted average cost of capital based on the same comparable companies used in the market approach. Per the FASB guidance, the

10

weighted average cost of capital is based on inputs (e.g., capital structure, risk, etc.) from a market participant’s perspective and not necessarily from the reporting unit’s or QDI’s perspective. Future cash flow is projected based on assumptions for our economic growth, industry expansion, future operations and the discount rate, all of which require significant judgments by management.

Goodwill within our intermodal and energy logistics segments and the related changes were as follows (in thousands):

	December 31, 2011		Additions		June 30, 2012
Intermodal (1)	$	31,344	$	66	$	31,410
Energy Logistics (2)		—		50,637		50,637
Total	$	31,344	$	50,703	$	82,047

(1) Additions represent a purchase price adjustment for the Greensville acquisition.

(2) Of the total additions of $50.6 million, $1.1 million relate to the Trojan acquisition and $49.5 million related to the Bice and RM acquisitions.

Intangible Assets

Intangible assets at June 30, 2012 are as follows (in thousands):

	Gross value		Additions		Accumulated amortization			Net book value		Average lives (in years)
Tradename—Intermodal	$	7,400	$	—	$	—		$	7,400		Indefinite
Tradename—Energy Logistics		—		800		(42	)		758		2
Customer relationships		14,260		15,330		(4,772	)		24,818		10-12
Non-compete agreements		3,221		440		(2,701	)		960		3-6
Service agreement		—		1,120		(25	)		1,095		11
	$	24,881	$	17,690	$	(7,540	)	$	35,031

Of the total intangibles of approximately $35.0 million at June 30, 2012, approximately $17.4 million was allocated to our energy logistics segment, $17.2 million was allocated to our intermodal segment and approximately $0.4 million was allocated to our chemical logistics segment.

Amortization expense for the three months ended June 30, 2012 and 2011 was $0.7 million and $0.3 million, respectively. Amortization expense for the six months ended June 30, 2012 and 2011 was $1.1 million and $0.7 million, respectively. Estimated future amortization expense for intangible assets is as follows (in thousands):

2012 remaining	$	1,871
2013		3,524
2014		3,081
2015		2,922
2016		2,918
2017 and after		13,315
Total	$	27,631

5. Income Per Share

A reconciliation of the numerators and denominators of the basic and diluted income per share computations is as follows (in thousands, except per share amounts):

11

	Three months ended
	June 30, 2012						June 30, 2011
	Net income (numerator)		Shares (denominator)		Per-share amount		Net income (numerator)		Shares (denominator)		Per-share amount
Basic income available to common shareholders:	$	28,804		26,804	$	1.07	$	9,046		23,253	$	0.39
Effect of dilutive securities:
Stock options		—		629		—		—		666		—
Unvested restricted stock		—		158		—		—		220		—
Stock warrants		—		9		—		—		442		—
Diluted income available to common shareholders:	$	28,804		27,600	$	1.04	$	9,046		24,581	$	0.37
	Six months ended
	June 30, 2012						June 30, 2011
	Net income (numerator)		Shares (denominator)		Per-share amount		Net income (numerator)		Shares (denominator)		Per-share amount
Basic income available to common shareholders:	$	35,504		25,675	$	1.38	$	11,768		22,723	$	0.52
Effect of dilutive securities:
Stock options		—		655		—		—		636		—
Unvested restricted stock		—		169		—		—		223		—
Stock warrants		—		17		—		—		442		—
Diluted income available to common shareholders:	$	35,504		26,516	$	1.34	$	11,768		24,024	$	0.49

12

The following securities were not included in the calculation of diluted earnings per share because such inclusion would be anti-dilutive (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2012		2011		2012		2011
Stock options		1,690		1,580		1,665		1,610
Unvested restricted shares and stock units		252		248		241		246

6. Stock-Based Compensation

As of June 30, 2012, we maintain one active stock-based incentive plan, the Quality Distribution, Inc. 2012 Equity Incentive Plan (the “2012 Equity Incentive Plan”), under which stock options, restricted shares, stock units and other types of equity and cash incentive awards may be granted to employees, non-employee directors and service providers. The 2012 Equity Incentive Plan became effective May 30, 2012 upon receipt of shareholder approval and expires May 30, 2022. There are 2,000,000 shares of common stock reserved for issuance under this plan. We maintain two other stock-based incentive plans under which stock options, restricted shares, and stock units have been granted to employees, non-employee directors, consultants and advisors but under which no additional awards may be made after May 30, 2012.

We recognize expense for stock-based compensation based upon estimated grant date fair value. We apply the Black-Scholes valuation model in determining the fair value of share-based payments to employees. The resulting compensation expense is recognized over the requisite service period, which is generally the awards’ vesting term. Compensation expense is recognized only for those awards expected to vest, with forfeitures estimated based on our historical experience and future expectations. All stock-based compensation expense is classified within “Compensation” in the Consolidated Statements of Operations. None of the stock-based compensation was capitalized during the first six months of 2012.

The fair value of options granted during the first six months of 2012 was based upon the Black-Scholes option-pricing model. The expected term of the options represents the estimated period of time until exercise, giving consideration to the contractual terms, vesting schedules and expectations of future employee behavior. For 2012, expected stock price volatility is based on the historical volatility of our common stock. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant with an equivalent remaining term. The Company has not paid dividends in the past and does not currently plan to pay any dividends in the foreseeable future. The Black-Scholes model was used with the following weighted average assumptions:

	Six months ended June 30,
	2012			2011
Risk free rate		0.9	%		2.0	%
Expected life		5 years			5 years
Volatility		77.5	%		78.0	%
Expected dividend		nil			nil

The following table summarizes stock options, restricted shares and stock units granted (in thousands) during the six months ended June 30:

	2012				2011
	Options Issued		Restricted Shares and Stock Units Issued		Options Issued		Restricted Shares Issued
March 31st		163		153		223		83
June 30th		3		13		—		—

The following table summarizes stock-based compensation expense (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2012		2011		2012		2011
Stock options	$	469	$	458	$	860	$	896
Restricted shares and stock units		376		276		658		562
	$	845	$	734	$	1,518	$	1,458

13

The following table summarizes unrecognized stock-based compensation and the weighted average period over which such stock-based compensation is expected to be recognized as of June 30, 2012 (in thousands):

			Remaining years
Stock options	$	2,736		2.6
Restricted shares and stock units		2,353		2.3
	$	5,089

These amounts do not include the cost of any additional awards that may be granted in future periods nor any changes in our forfeiture rate. Stock options for 46,954 shares were exercised during the six months ended June 30, 2012.

7. Employee Benefit Plans

We maintain two noncontributory defined benefit plans resulting from a prior acquisition that cover vested salaried participants and retirees (“CLC Plan”) and certain other vested participants and retirees under a collective bargaining agreement (“TTWU Plan”). Retirement benefits for employees covered by the CLC Plan are based on years of service and compensation levels. The monthly benefit for employees under the TTWU Plan is based on years of service multiplied by a monthly benefit factor. Pension costs are funded in accordance with the provisions of the applicable law. Both pension plans have been frozen since prior to January 1, 1998. There have been no new participants and no future accruals of benefits from the time the plans were frozen.

We use a December 31^st measurement date for both of our plans.

The components of estimated net periodic pension cost are as follows (in thousands):

	Three months ended June 30,						Six months ended June 30,
	2012			2011			2012			2011
Service cost	$	44		$	44		$	88		$	88
Interest cost		542			605			1,084			1,210
Amortization of prior service cost		23			23			47			47
Amortization of loss		365			294			729			588
Expected return on plan assets		(565	)		(574	)		(1,131	)		(1,149	)
Net periodic pension cost	$	409		$	392		$	817		$	784

We contributed $1.4 million to our pension plans during the six months ended June 30, 2012. We expect to contribute an additional $2.7 million during the remainder of 2012.

Multi-employer pension plans

At June 30, 2012, we contributed to three separate multi-employer pension plans for employees under collective bargaining agreements. These agreements cover approximately 2.5% of our total workforce, including our independent affiliates’ employees and independent owner-operators providing service to us. These multi-employer pension plans provide defined benefits to retired participants. We do not directly or indirectly manage any of these multi-employer pension plans. Trustees, half of whom are appointed by the International Brotherhood of Teamsters (the “Teamsters”) and half of whom various contributing employers appoint, manage the trusts covering these plans. Our collective bargaining agreements with the Teamsters determine the amounts of our ongoing contributions to these plans.

14

In conjunction with our prior restructuring efforts, during the quarter ended September 30, 2010, we notified the trustees of three other pension plans of our intention to withdraw from those plans. Our withdrawal notifications were originally estimated to result in an aggregate withdrawal liability of approximately $2.0 million and we recorded a restructuring charge for this full amount in the third quarter of 2010. During the first nine months of 2011, we made aggregate payments of approximately $1.5 million to fully discharge the liabilities under those three pension plans and recorded a restructuring credit of $0.5 million in the second quarter of 2011.

We do not currently intend to withdraw from the remaining three multi-employer pension plans or take any actions that would subject us to payment of contingent obligations upon withdrawal from such plans. Based on information provided to us from the trustees of these plans, we estimate our portion of the contingent liability in the case of a full withdrawal or termination from these plans to be approximately $62.2 million, of which $57.9 million relates to the Central States Southeast and Southwest Areas Pension Plan.

These defined benefit plans cover substantially all of our union employees not covered under the TTWU Plan. The actuarial present value of accumulated plan benefits and net assets available for benefits to employees under these multi-employer plans is not readily available.

8. Restructuring

We account for restructuring costs associated with one-time termination benefits, costs associated with lease and contract terminations and other related exit activities in accordance with FASB’s guidance. We previously made estimates of the costs to be incurred as part of a restructuring plan developed during 2008 and concluded at the end of 2010, which resulted in charges during 2008, 2009 and 2010 primarily related to our chemical logistics segment. At June 30, 2012, $2.4 million was accrued related to the restructuring charges which are expected to be paid through 2017.

In the six months ended June 30, 2012, we had the following activity in our restructuring accruals (in thousands):

	Balance at December 31, 2011		Additions		Payments			Reductions		Balance at June 30, 2012
Restructuring costs	$	2,782	$	—	$	(361	)	$	—	$	2,421

9. Segment Reporting

Reportable Segments

In connection with our entry into the unconventional oil and gas frac shale energy market in 2011, a new segment for financial reporting purposes was identified during the fourth quarter of 2011 in order to better distinguish logistics services to the energy markets from logistics services to the chemical markets based upon how these businesses are managed. Our previous logistics segment was renamed Chemical Logistics.

We have three reportable business segments for financial reporting purposes that are distinguished primarily on the basis of services offered:

• Chemical Logistics, which consists of the transportation of bulk chemicals primarily through our network of 28 independent affiliates, and equipment rental income;

• Energy Logistics, which consists primarily of the transportation of fresh water, disposal water, proppant sand and crude oil for the unconventional oil and gas frac shale energy markets, primarily through company-operated terminals; and

• Intermodal, which consists solely of Boasso’s intermodal ISO tank container transportation and depot services business supporting the international movement of bulk liquids.

Segment operating income reported in our segment tables excludes amounts such as depreciation and amortization, gains and losses on disposal of property and equipment and restructuring costs. Although these amounts are excluded from the business segment results, they are included in our reported consolidated statements of operations. Most corporate and shared services overhead costs, including acquisitions costs, are included in our chemical logistics segment. We have not provided specific asset information by segment, as it is not regularly provided to our chief operating decision maker for review.

15

Summarized segment data and a reconciliation to income before income taxes follow (in thousands):

	Three Months Ended June 30, 2012
	Chemical Logistics			Energy Logistics		Intermodal			Total
Operating Revenues:
Transportation	$	107,935		$	24,929	$	17,655		$	150,519
Service revenue		16,977			1,247		11,810			30,034
Fuel surcharge		27,378			325		4,477			32,180
Total operating revenues		152,290			26,501		33,942			212,733
Segment operating income		8,544			3,914		5,246			17,704
Depreciation and amortization		2,746			1,017		859			4,622
Other income		(362	)		—		—			(362	)
Operating income		6,160			2,897		4,387			13,444
Interest expense		5,562			105		1,513			7,180
Interest income		(229	)		—		—			(229	)
Other (income) expense		(184	)		—		256			72
Income before income taxes	$	1,011		$	2,792	$	2,618		$	6,421
	Three Months Ended June 30, 2011
	Chemical Logistics			Energy Logistics		Intermodal			Total
Operating Revenues:
Transportation	$	112,318		$	1,992	$	15,087		$	129,397
Service revenue		17,078			77		10,487			27,642
Fuel surcharge		29,013			—		3,941			32,954
Total operating revenues		158,409			2,069		29,515			189,993
Segment operating income		14,333			318		4,735			19,386
Depreciation and amortization		2,537			41		800			3,378
Other (income) expense		(954	)		—		23			(931	)
Operating income		12,750			277		3,912			16,939
Interest expense		5,796			—		1,515			7,311
Interest income		(178	)		—		—			(178	)
Other (income) expense		(240	)		—		269			29
Income before income taxes	$	7,372		$	277	$	2,128		$	9,777
	Six Months Ended June 30, 2012
	Chemical Logistics			Energy Logistics		Intermodal			Total
Operating Revenues:
Transportation	$	213,582		$	34,978	$	35,165		$	283,725
Service revenue		32,893			2,131		22,995			58,019
Fuel surcharge		53,692			326		8,886			62,904
Total operating revenues		300,167			37,435		67,046			404,648
Segment operating income		19,976			4,996		10,359			35,331
Depreciation and amortization		5,434			1,264		1,715			8,413
Other (income) expense		(344	)		22		(42	)		(364	)
Operating income		14,886			3,710		8,686			27,282
Interest expense		11,235			114		3,020			14,369
Interest income		(408	)		—		—			(408	)
Other (income) expense		(680	)		—		516			(164	)
Income before income taxes	$	4,739		$	3,596	$	5,150		$	13,485

16

	Six Months Ended June 30, 2011
	Chemical Logistics			Energy Logistics		Intermodal		Total
Operating Revenues:
Transportation	$	222,930		$	1,992	$	29,156	$	254,078
Service revenue		33,586			77		20,717		54,380
Fuel surcharge		52,652					6,793		59,445
Total operating revenues		309,168			2,069		56,666		367,903
Segment operating income		25,115			318		9,398		34,831
Depreciation and amortization		5,232			41		1,597		6,870
Other (income) expense		(1,201	)		—		30		(1,171	)
Operating income		21,084			277		7,771		29,132
Interest expense		12,091			—		3,031		15,122
Interest income		(317	)		—		—		(317	)
Other expense		1,263			—		516		1,779
Income before income taxes	$	8,047		$	277	$	4,224	$	12,548

17

Geographic Segments

Our operations are located primarily in the United States, Canada and Mexico. Inter-area sales are not significant to the total revenue of any geographic area. Information about our operations in different geographic areas for the three and six months ended June 30, 2012 and 2011 is as follows (in thousands):

	Three months ended June 30, 2012
	U. S.		International		Consolidated
Total operating revenues	$	202,474	$	10,259	$	212,733
Operating income		11,716		1,728		13,444
	Three months ended June 30, 2011
	U. S.		International		Consolidated
Total operating revenues	$	177,472	$	12,521	$	189,993
Operating income		14,860		2,079		16,939
	Six months ended June 30, 2012
	U. S.		International		Consolidated
Total operating revenues	$	384,048	$	20,600	$	404,648
Operating income		23,786		3,496		27,282
	Six months ended June 30, 2011
	U. S.		International		Consolidated
Total operating revenues	$	344,104	$	23,799	$	367,903
Operating income		25,203		3,929		29,132
	As of June 30, 2012
	U. S.		International		Consolidated
Long-term identifiable assets (1)	$	157,121	$	6,143	$	163,264
	As of June 30, 2011
	U. S.		International		Consolidated
Long-term identifiable assets (1)	$	104,220	$	7,009	$	111,229
	As of December 31, 2011
	U. S.		International		Consolidated
Long-term identifiable assets (1)	$	119,879	$	6,013	$	125,892

(1) Includes property and equipment.

10. Income Taxes

At December 31, 2011, we had approximately $1.6 million of total gross unrecognized tax benefits. Of this total, $1.2 million (net of federal benefit on state tax issues) represents the amount of unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in any future periods.

Included in the balance of total gross unrecognized tax benefits at December 31, 2011 was $0.6 million related to tax positions for which it is reasonably possible that the total amounts could significantly change during the next twelve months due to expiration of the applicable statute of limitations.

For the three months ended June 30, 2012, the net change to our total gross unrecognized tax benefit was $0.2 million. The net change consisted of a cash payment related to an audit settlement and an increase related to an uncertain tax position for one of our foreign jurisdictions. Our total gross unrecognized tax benefit at June 30, 2012 was $1.8 million. This represents the total of our unrecognized tax benefits (not including interest and penalties).

18

Our continuing practice is to recognize interest and/or penalties related to income tax matters in income tax expense. We had $0.5 million (net of federal tax benefit) accrued for interest and $0.2 million accrued for penalties at December 31, 2011. The total amount accrued for interest and penalties at June 30, 2012 was $0.7 million.

We are subject to the income tax jurisdictions of the U.S., Canada and Mexico, as well as income tax of multiple state jurisdictions. We believe we are no longer subject to U.S. federal income tax examinations for years before 2007, to international examinations for years before 2007 and, with few exceptions, to state examinations before 2007.

The effective tax rates for the three months ended June 30, 2012 and 2011 were a tax benefit of greater than 100% and a tax provision of 7.5%, respectively. The effective tax rates for the six months ended June 30, 2012 and 2011 were a tax benefit of greater than 100% and a tax provision of 6.2%, respectively. These effective tax rates were impacted by a $22.8 million tax benefit resulting from a valuation allowance release and the previously recorded 100% valuation allowance, respectively.

During the second quarter of 2012, we recorded tax benefit of $22.8 million related to a valuation allowance release as a result of our consistent cumulative income position, improved operating results, and recent expansion of our energy business through acquisition. Our assessment of the recoverability of the deferred tax assets primarily relied on the positive evidence related to our cumulative income position as of June 30, 2012. We have determined that it is more likely than not that expected future taxable income will be sufficient to utilize substantially all of our U.S. federal and state net deferred tax assets. We will continue to maintain a valuation allowance against our net deferred tax asset related to foreign tax credits. Changes in deferred tax assets and valuation allowance are reflected in the provision for income taxes line in our consolidated statements of operations.

11. Redeemable Noncontrolling Interest

On March 3, 2011, we redeemed 100% of the 302 outstanding shares of Series C preferred stock of CLC which were held by two shareholders who were not affiliated with us. These shareholders received the maximum aggregate redemption value (which was equivalent to par value) of $1.8 million, plus accrued and unpaid preferred dividends through the redemption date.

12. Common Stock Offering

On March 13, 2012, we sold 2.5 million shares of our common stock in an underwritten public offering, at a gross price of $13.00 per share, and received net proceeds, after underwriting fees and expenses, of approximately $30.5 million. Certain affiliates of Apollo Management, L.P. also sold 3.2 million shares in the offering.

On February 9, 2011, we sold 2.0 million shares of our common stock in an underwritten public offering, at a gross price of $9.50 per share, and received net proceeds, after underwriting fees and expenses, of approximately $17.6 million. Certain affiliates of Apollo Management, L.P. also sold 2.6 million shares in the offering.

13. Commitments and Contingencies

Environmental Matters

It is our policy to comply with all applicable environmental, safety and health laws. We also are committed to the principles of Responsible Care^®, an international chemical industry initiative to enhance the industry’s responsible management of chemicals. We have obtained independent certification that our management system is in place and functions according to professional standards and we continue to evaluate and continuously improve our Responsible Care^® Management System performance. Our current activities involve the handling, transportation and storage of bulk chemicals, both liquid and dry, many of which are classified as hazardous materials or hazardous substances. In addition, our former tank wash business (which was sold in 2009) involved the generation, storage, discharge and disposal of wastes that may have contained hazardous substances. As such, we and others who operate in our industry are subject to environmental, health and safety laws and regulation by U.S. federal, state and local agencies as well as foreign governmental authorities. Environmental laws and regulations are complex, and address emissions to the air, discharge onto land or water, and the generation, handling, storage, transportation, treatment and disposal of waste materials. These laws change frequently and generally require us to obtain and maintain various licenses and permits. Environmental laws have tended to become more stringent over time, and most provide for substantial fines and potential criminal sanctions for violations. Some of these laws and regulations are subject to varying and conflicting interpretations. Under certain of these laws, we could also be subject to allegations of liability for the activities of our independent affiliates or independent owner-operators.

19

We are potentially subject to strict, joint and several liability for investigating and rectifying the consequences of spills and other releases of such substances. From time to time, we have incurred remedial costs and regulatory penalties with respect to chemical or wastewater spills and releases at our facilities and on the road, and, notwithstanding the existence of our environmental management program, we cannot: (1) assure that such obligations will not be incurred in the future, (2) predict with certainty the extent of future liabilities and costs under environmental, health, and safety laws, or (3) assure that such liabilities will not result in a material adverse effect on our business, financial condition, operating results or cash flow. We have established reserves for remediation expenses at known contamination sites when it is probable that such efforts will be required of us and the related expenses can be reasonably estimated. We have also incurred in the past, and expect to incur in the future, expenditures related to environmental compliance; however, we do not anticipate that compliance with existing environmental laws will have a material adverse effect on our earnings or competitive position.

Environmental Reserves

Our policy is to accrue remediation expenses when it is probable that such efforts will be required and the related expenses can be reasonably estimated. Estimates of costs for future environmental compliance and remediation may be impacted by such factors as changes in environmental laws and regulatory requirements, the availability and application of technology, the identification of currently unknown potential remediation sites and the allocation of costs among the potentially responsible parties under the applicable statutes. Our reserves for environmental compliance and remediation are adjusted periodically as remediation efforts progress or as additional technical or legal information becomes available. As of June 30, 2012 and December 31, 2011, we had reserves in the amount of $9.4 million and $10.1 million, respectively, for all environmental matters, of which the most significant are discussed below.

The balances presented include both current and long-term environmental reserves. We expect the estimated environmental reserves to be paid over the next five years. Additions to the environmental reserves are classified in our Consolidated Statements of Operations within the “Selling and administrative” category.

Property Contamination Liabilities

We have been named as (or are alleged to be) a potentially responsible party under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (“CERCLA”) and similar state laws at approximately 25 sites. At 17 of the 25 sites, we are one of many parties with alleged liability and are negotiating with Federal, State or private parties on the scope of our obligations, if any. At 1 of the 17 sites, we will be participating in the initial study to determine site remediation objectives. Since our overall liability cannot be estimated at this time, we have set reserves for only the initial remedial investigation phase. At 2 of the 17 sites, we have explicitly denied any liability and since there has been no subsequent demand for payment we have not established a reserve for these matters. We have estimated all future expenditures for these 17 multi-party environmental matters to be paid over the next five years to be in the range of $2.1 million to $3.8 million. As of June 30, 2012, we have reserved $2.1 million.

At 8 of the 25 sites, we are the only responsible party and are in the process of conducting investigations and/or remediation projects. Five of these projects relate to operations conducted by CLC and its subsidiaries prior to our acquisition of CLC in 1998. These five sites are: (1) Bridgeport, New Jersey; (2) William Dick, Pennsylvania; (3) Tonawanda, New York; (4) Scary Creek, West Virginia; and (5) Charleston, West Virginia. The remaining three sites relate to investigations and potential remediation that were triggered by the New Jersey Industrial Site Recovery Act (“ISRA”), which requires such investigations and remediation following the sale of industrial facilities. Each of these sites is discussed in more detail below. We have estimated future expenditures over the next five years for these eight properties to be in the range of $7.3 million to $16.7 million. As of June 30, 2012, we have reserved $7.3 million.

20

Bridgeport, New Jersey

QDI is required under the terms of three federal consent decrees to perform remediation work at this operating truck terminal and tank wash site. CLC entered into consent orders with the U.S. Environmental Protection Agency (“USEPA”) in 1991 to treat groundwater, in 1998 to remove contamination in the wetlands, and in 2010 to assess and remediate contaminated soils at the site.

The groundwater treatment remedy negotiated with USEPA required us to construct a treatment facility for in-place treatment of groundwater contamination and a local discharge which was completed in early 2007. After various start-up issues, the treatment facility began initial operations in June 2010. The plant experienced issues with the treatment of vapor phase emissions and operation was suspended in July 2010. After a re-design process, the plant resumed operations in July 2011 and is now in the operations and maintenance phase. The plant appears to be performing in accordance with its design criteria and meeting permit requirements. Wetlands contamination has been remediated with localized restoration completed. Monitoring of the restored wetlands is required by USEPA to continue in 2012. In regard to contaminated soils, USEPA finalized the feasibility study and issued a record of decision in 2009 for the limited areas that show contamination and warrant additional investigation or work. We entered into a consent order with USEPA in 2010 to perform the remediation work, which will consist of in-place thermal treatment. Additional site investigation work had been required by USEPA prior to the start of the engineering design effort. We have estimated aggregate expenditures for the Bridgeport location over the next five years to be in the range of $4.6 million to $8.5 million. As of June 30, 2012, we have reserved $4.6 million.

William Dick, Pennsylvania

CLC entered into a consent order with the Pennsylvania Department of Environmental Protection and USEPA in 1995 to provide a replacement water supply to area residents, treat contaminated groundwater, and perform remediation of contaminated soils at this former wastewater disposal site. The replacement water supply is complete. We completed construction of a groundwater treatment facility with local discharge in 2007 and the treatment facility began operations in 2010. Although initial soil treatment was completed in 2007, test results indicated that soil clean-up objectives were not fully achieved. Accordingly, negotiations are on-going with USEPA over further soil remediation that may be needed at the site. We have estimated aggregate expenditures for the William Dick location over the next five years to be in the range of $0.9 million to $3.4 million. As of June 30, 2012, we have reserved $0.9 million.

Other Properties

Tonawanda, New York: CLC entered into a consent order with the New York Department of Environmental Conservation (“NYSDEC”) in 1999 obligating it to perform soil and groundwater remediation at this former truck terminal and tank wash site. We have completed a remedial investigation and a feasibility study. The state issued a record of decision in 2006. The remedial design work plan was completed and submitted to the agency in the fourth quarter of 2011. The remedial action phase is expected to begin later in 2012, pending approval from the NYSDEC.

Scary Creek, West Virginia: CLC received a cleanup notice from the state environmental authority in 1994. The state and we have agreed that remediation can be conducted under the state’s voluntary clean-up program (instead of the state superfund enforcement program). We are currently completing the originally planned remedial investigation and the additional site investigation work.

Charleston, West Virginia: CLC completed its remediation plan for a former drum disposal area in 1995 at this truck terminal and tank wash site under the terms of a state hazardous waste permit. Supplemental groundwater monitoring was also required and completed. In 2012, we entered into the state’s voluntary clean-up program which will require us to perform additional sampling to close the site. We have estimated aggregate future expenditures over the next five years for Tonawanda, Scary Creek, ISRA New Jersey and Charleston to be in the range of $1.8 million to $4.8 million. As of June 30, 2012, we have reserved $1.8 million.

21

ISRA New Jersey Facilities: We are obliged to conduct investigations and remediation at three current or former New Jersey tank wash and terminal sites pursuant to the state’s ISRA, which requires such remediation following the sale of facilities after 1983. Two of the sites are in the process of remedial investigation with projections set in contemplation of limited soil remediation expense for contaminated areas.

One site has completed the investigation phase and a final report was submitted to New Jersey Department of Environmental Protection. In accordance with the report findings and with the concurrence of the NJDEP, remedial efforts included limited soil excavation at the site, deed recordation, placement of clean fill and the designation of a Classification Exception Area (“CEA”) for the groundwater. No further field remediation work is expected and this site has entered a long term monitoring phase.

Other Legal Matters

We are from time to time involved in routine litigation incidental to the conduct of our business. We believe that no such routine litigation currently pending against us, if adversely determined, would have a material adverse effect on our consolidated financial position, results of operations or cash flows.

14. Guarantor Subsidiaries

At and during the six months ended June 30, 2012, there were outstanding 2018 Notes that were issued by our subsidiaries, QD LLC and QD Capital. The payment obligations of QD LLC and QD Capital under the 2018 Notes are guaranteed by QDI and by all of its domestic subsidiaries other than immaterial subsidiaries as further described below.

The 2018 Notes are the senior obligations of our subsidiaries, QD LLC and QD Capital, and are secured by a subordinated, second-priority lien on assets that secure our ABL Facility through a collateral agreement that is separate from the indenture under which these notes were issued. Pursuant to an intercreditor agreement, the liens on the collateral securing the 2018 Notes rank junior in right of payment to the ABL Facility and obligations under certain hedging agreements and cash management obligations and certain other first-lien obligations. Decisions regarding the maintenance and release of the collateral secured by the collateral agreement are made by the lenders under our ABL Facility and neither the indenture trustee nor the holders of the 2018 Notes have control of decisions regarding the release of the collateral.

The 2018 Notes are also on a second-priority senior secured basis, jointly and severally, by QDI, subsidiary guarantors, and certain of our future U.S. restricted subsidiaries. The guarantees of the subsidiary guarantors are full and unconditional subject to customary release provisions for sales of a subsidiary in compliance with other provisions of the indenture for the 2018 Notes (the “Notes Indenture”) or foreclosures of a pledge of the equity interests of the subsidiary, the right to designate a subsidiary as unrestricted under the terms of the Notes Indenture, the discharge of the 2018 Notes or the defeasance of the Notes Indenture. The guarantee of QDI is full and unconditional.

The subsidiary guarantors of all of the 2018 Notes are all of our direct and indirect domestic subsidiaries other than immaterial subsidiaries. No non-domestic subsidiaries are guarantor subsidiaries. QD Capital has no material assets or operations. QD LLC, all of the subsidiary guarantors and QD Capital are 100% owned by QDI. The subsidiary guarantors are 100% owned subsidiaries of QD LLC. QD LLC conducts substantially all of its business through and derives virtually all of its income from its subsidiaries. Therefore, its ability to make required principal and interest payments with respect to its indebtedness depends on the earnings of subsidiaries and its ability to receive funds from its subsidiaries through dividend and other payments.

22

QDI has no significant restrictions on its ability to receive funds from its subsidiaries. The ABL Facility and the indenture governing our 2018 Notes contain certain limitations on QD LLC’s ability to make distributions to QDI. We do not consider these restrictions to be significant, because QDI is a holding company with no significant operations or assets, other than ownership of 100% of QD LLC’s membership units. QD LLC’s direct and indirect wholly owned subsidiaries are generally permitted to make distributions to QD LLC, which is the principal obligor under the ABL Facility and the 2018 Notes. We do not believe that additional financial or narrative information about QDI, QD LLC, QD Capital or the subsidiary guarantors would be material to evaluating the guarantees.

The following condensed consolidating financial information for QDI, QD LLC, and QD Capital, which has no assets or operations, non-guarantor subsidiaries and combined guarantor subsidiaries presents:

• Condensed consolidating balance sheets at June 30, 2012 and December 31, 2011 and condensed consolidating statements of operations for the three and six month periods ended June 30, 2012 and 2011, and the condensed consolidating statements of cash flows for each of the six-month periods ended June 30, 2012 and 2011.

• Elimination entries necessary to consolidate the parent company and all its subsidiaries.

23

QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES

Condensed Consolidating Statements of Operations

Three Months Ended June 30, 2012

Unaudited—(In 000’s)

	QDI		QD LLC & QD Capital			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Operating revenues:
Transportation	$	—	$	—		$	150,519		$	—		$	—		$	150,519
Service revenue		—		—			29,936			98			—			30,034
Fuel surcharge		—		—			32,180			—			—			32,180
Total operating revenues		—		—			212,635			98			—			212,733
Operating expenses:
Purchased transportation		—		—			142,309			—			—			142,309
Compensation		—		—			18,516			—			—			18,516
Fuel, supplies and maintenance		—		—			18,445			—			—			18,445
Depreciation and amortization		—		—			4,622			—			—			4,622
Selling and administrative		—		11			10,066			12			—			10,089
Insurance costs		—		—			4,139			—			—			4,139
Taxes and licenses		—		—			624			—			—			624
Communication and utilities		—		—			907			—			—			907
Gain on disposal of property and equipment		—		—			(362	)		—			—			(362	)
Operating (loss) income		—		(11	)		13,369			86			—			13,444
Interest expense (income), non-related party, net		—		6,876			78			(3	)		—			6,951
Interest (income) expense, related party, net		—		(6,876	)		6,980			(104	)		—			—
Other expense		—		—			56			16			—			72
(Loss) income before income taxes		—		(11	)		6,255			177			—			6,421
(Benefit from) provision for income taxes		—		—			(22,420	)		37			—			(22,383	)
Equity in earnings of subsidiaries		28,804		28,815			—			—			(57,619	)		—
Net income		28,804		28,804			28,675			140			(57,619	)		28,804
Total other comprehensive income (loss), net of tax		433		433			388			45			(866	)		433
Comprehensive income	$	29,237	$	29,237		$	29,063		$	185		$	(58,485	)	$	29,237

24

QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES

Condensed Consolidating Statements of Operations

Three Months Ended June 30, 2011

Unaudited—(In 000’s)

	QDI			QD LLC & QD Capital			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Operating revenues:
Transportation	$	—		$	—		$	129,397		$	—		$	—		$	129,397
Service revenue		—			—			27,510			132			—			27,642
Fuel surcharge		—			—			32,954			—			—			32,954
Total operating revenues		—			—			189,861			132			—			189,993
Operating expenses:
Purchased transportation		—			—			133,692			—			—			133,692
Compensation		—			—			15,515			—			—			15,515
Fuel, supplies and maintenance		—			—			11,665			—			—			11,665
Depreciation and amortization		—			—			3,378			—			—			3,378
Selling and administrative		—			41			4,827			18			—			4,886
Insurance costs		—			—			3,534			6			—			3,540
Taxes and licenses		—			—			652			—			—			652
Communication and utilities		—			—			657			—			—			657
Gain on disposal of property and equipment		—			—			(410	)		—			—			(410	)
Restructuring credit		—			—			(521	)		—			—			(521	)
Operating (loss) income		—			(41	)		16,872			108			—			16,939
Interest (income) expense, non-related party, net		(1	)		6,915			221			(2	)		—			7,133
Interest (income) expense, related party, net		—			(6,915	)		7,017			(102	)		—			—
Other expense		—			—			20			9			—			29
Income (loss) before income taxes		1			(41	)		9,614			203			—			9,777
Provision for income taxes		—			—			700			31			—			731
Equity in earnings of subsidiaries		9,045			9,086			—			—			(18,131	)		—
Net income		9,046			9,045			8,914			172			(18,131	)		9,046
Total other comprehensive income , net of tax		325			325			318			7			(650	)		325
Comprehensive income	$	9,371		$	9,370		$	9,232		$	179		$	(18,781	)	$	9,371

25

QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES

Condensed Consolidating Statements of Operations

Six Months Ended June 30, 2012

Unaudited—(In 000’s)

	QDI		QD LLC & QD Capital			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Operating revenues:
Transportation	$	—	$	—		$	283,725		$	—		$	—		$	283,725
Service revenue		—		—			57,817			202			—			58,019
Fuel surcharge		—		—			62,904			—			—			62,904
Total operating revenues		—		—			404,446			202			—			404,648
Operating expenses:
Purchased transportation		—		—			274,186			—			—			274,186
Compensation		—		—			35,147			—			—			35,147
Fuel, supplies and maintenance		—		—			32,911			—			—			32,911
Depreciation and amortization		—		—			8,413			—			—			8,413
Selling and administrative		—		17			16,554			28			—			16,599
Insurance costs		—		—			7,358			—			—			7,358
Taxes and licenses		—		—			1,372			—			—			1,372
Communication and utilities		—		—			1,744			—			—			1,744
Gain on disposal of property and equipment		—		—			(364	)		—			—			(364	)
Operating (loss) income		—		(17	)		27,125			174			—			27,282
Interest expense (income), non-related party, net		—		13,727			240			(6	)		—			13,961
Interest (income) expense, related party, net		—		(13,727	)		13,935			(208	)		—			—
Other (income) expense		—		—			(173	)		9			—			(164	)
(Loss) income before income taxes		—		(17	)		13,123			379			—			13,485
(Benefit from) provision for income taxes		—		—			(22,090	)		71			—			(22,019	)
Equity in earnings of subsidiaries		35,504		35,521			—			—			(71,025	)		—
Net income		35,504		35,504			35,213			308			(71,025	)		35,504
Total other comprehensive income (loss), net of tax		782		782			776			6			(1,564	)		782
Comprehensive income	$	36,286	$	36,286		$	35,989		$	314		$	(72,589	)	$	36,286

26

QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES

Condensed Consolidating Statements of Operations

Six Months Ended June 30, 2011

Unaudited—(In 000’s)

	QDI			QD LLC & QD Capital			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Operating revenues:
Transportation	$	—		$	—		$	254,078		$	—		$	—		$	254,078
Service revenue		—			—			54,114			266			—			54,380
Fuel surcharge		—			—			59,445			—			—			59,445
Total operating revenues		—			—			367,637			266			—			367,903
Operating expenses:
Purchased transportation		—			—			258,414			—			—			258,414
Compensation		—			—			30,398			—			—			30,398
Fuel, supplies and maintenance		—			—			23,442			—			—			23,442
Depreciation and amortization		—			—			6,870			—			—			6,870
Selling and administrative		—			53			9,944			38						10,035
Insurance costs		—			—			8,214			11			—			8,225
Taxes and licenses		—			—			1,099			—			—			1,099
Communication and utilities		—			—			1,459			—			—			1,459
Gain on disposal of property and equipment		—			—			(650	)		—			—			(650	)
Restructuring credit		—			—			(521	)		—			—			(521	)
Operating (loss) income		—			(53	)		28,968			217			—			29,132
Interest (income) expense, non-related party, net		(15	)		14,277			546			(3	)		—			14,805
Interest (income) expense, related party, net		—			(14,277	)		14,481			(204	)		—			—
Write-off of debt issuance costs		—			1,786			—			—			—			1,786
Other expense (income)		—			2			32			(41	)		—			(7	)
Income (loss) before income taxes		15			(1,841	)		13,909			465			—			12,548
Provision for (benefit from) income taxes		—			—			929			(149	)		—			780
Equity in earnings of subsidiaries		11,753			13,594			—			—			(25,347	)		—
Net income	$	11,768		$	11,753		$	12,980		$	614		$	(25,347	)	$	11,768
Total other comprehensive income (loss), net of tax		593			593			636			(43	)		(1,186	)		593
Comprehensive income	$	12,361		$	12,346		$	13,616		$	571		$	(26,533	)	$	12,361

27

QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES

Condensed Consolidating Balance Sheet

June 30, 2012

Unaudited—(In 000’s)

	QDI			QD LLC and QD Capital			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—		$	—		$	3,566		$	563		$	—		$	4,129
Accounts receivable, net		—			—			116,435			46			—			116,481
Prepaid expenses		—			6			10,956			—			—			10,962
Deferred tax asset		—			—			7,491			—			—			7,491
Other		(33	)		—			7,365			(9	)		—			7,323
Total current assets		(33	)		6			145,813			600			—			146,386
Property and equipment, net		—			—			163,264			—			—			163,264
Goodwill		—			—			82,047			—			—			82,047
Intangibles, net		—			—			35,031			—			—			35,031
Non-current deferred tax asset, net		—			—			15,286			—			—			15,286
Investment in subsidiaries		(103,064	)		418,060			27,531			—			(342,527	)		—
Other assets		—			9,877			2,606			—			—			12,483
Total assets	$	(103,097	)	$	427,943		$	471,578		$	600		$	(342,527	)	$	454,497
LIABILITIES AND SHAREHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Current maturities of indebtedness	$	—		$	—		$	2,537		$	—		$	—		$	2,537
Current maturities of capital lease obligations		—			—			5,250			—			—			5,250
Accounts payable		—			—			12,336			(9	)		—			12,327
Intercompany		(72,340	)		196,176			(89,177	)		(7,128	)		(27,531	)		—
Independent affiliates and independent owner-operators payable		—			—			17,358			—			—			17,358
Accrued expenses		—			4,204			31,927			10			—			36,141
Environmental liabilities		—			—			4,201			—			—			4,201
Accrued loss and damage claims		—			—			7,888			—			—			7,888
Total current liabilities		(72,340	)		200,380			(7,680	)		(7,127	)		(27,531	)		85,702
Long-term indebtedness, less current maturities		—			330,627			25,567			—			—			356,194
Capital lease obligations, less current maturities		—			—			2,327			—			—			2,327
Environmental liabilities		—			—			5,156			—			—			5,156
Accrued loss and damage claims		—			—			8,931			—			—			8,931
Other non-current liabilities		(1,007	)		—			26,902			42			—			25,937
Total liabilities		(73,347	)		531,007			61,203			(7,085	)		(27,531	)		484,247
Shareholders’ (deficit) equity:
Common stock		435,396			354,963			399,323			4,833			(759,119	)		435,396
Treasury stock		(1,944	)		—			—			—			—			(1,944	)
Accumulated (deficit) retained earnings		(243,039	)		(238,336	)		40,151			3,935			194,250			(243,039	)
Stock recapitalization		(189,589	)		(189,589	)		—			(55	)		189,644			(189,589	)
Accumulated other comprehensive loss		(30,599	)		(30,127	)		(29,099	)		(1,028	)		60,254			(30,599	)
Stock purchase warrants		25			25			—			—			(25	)		25
Total shareholders’ (deficit) equity		(29,750	)		(103,064	)		410,375			7,685			(314,996	)		(29,750	)
Total liabilities and shareholders’ (deficit) equity	$	(103,097	)	$	427,943		$	471,578		$	600		$	(342,527	)	$	454,497

28

QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES

Condensed Consolidating Balance Sheet

December 31, 2011

Unaudited—(In 000’s)

	QDI			QD LLC and QD Capital			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—		$	—		$	3,540		$	513		$	—		$	4,053
Accounts receivable, net		—			—			90,509			58			—			90,567
Prepaid expenses		—			31			7,818			—			—			7,849
Deferred tax asset		—			—			4,048			—			—			4,048
Other		307			—			3,551			—			—			3,858
Total current assets		307			31			109,466			571			—			110,375
Property and equipment, net		—			—			125,892			—			—			125,892
Goodwill		—			—			31,344			—			—			31,344
Intangibles, net		—			—			18,471			—			—			18,471
Investment in subsidiaries		(138,028	)		382,191			27,964			—			(272,127	)		—
Other assets		—			10,655			5,658			—			—			16,313
Total assets	$	(137,721	)	$	392,877		$	318,795		$	571		$	(272,127	)	$	302,395
LIABILITIES AND SHAREHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Current maturities of indebtedness	$	—		$	—		$	4,139		$	—		$	—		$	4,139
Current maturities of capital lease obligations		—			—			5,261			—			—			5,261
Accounts payable		—			—			7,579			(8	)		—			7,571
Intercompany		(30,870	)		237,702			(171,982	)		(6,886	)		(27,964	)		—
Independent affiliates and independent owner-operators payable		—			—			9,795			—			—			9,795
Accrued expenses		341			4,184			20,751			51			—			25,327
Environmental liabilities		—			—			3,878			—			—			3,878
Accrued loss and damage claims		—			—			8,614			—			—			8,614
Total current liabilities		(30,529	)		241,886			(111,965	)		(6,843	)		(27,964	)		64,585
Long-term indebtedness, less current maturities		—			289,019			4,804			—			—			293,823
Capital lease obligations, less current maturities		—			—			3,840			—			—			3,840
Environmental liabilities		—			—			6,222			—			—			6,222
Accrued loss and damage claims		—			—			9,768			—			—			9,768
Other non-current liabilities		(1,007	)		—			31,306			43			—			30,342
Total liabilities		(31,536	)		530,905			(56,025	)		(6,800	)		(27,964	)		408,580
Shareholders’ (deficit) equity:
Common stock		393,859			354,963			399,757			4,833			(759,553	)		393,859
Treasury stock		(1,878	)		—			—			—			—			(1,878	)
Accumulated (deficit) retained earnings		(278,543	)		(273,840	)		4,938			3,627			265,275			(278,543	)
Stock recapitalization		(189,589	)		(189,589	)		—			(55	)		189,644			(189,589	)
Accumulated other comprehensive loss		(31,381	)		(30,909	)		(29,875	)		(1,034	)		61,818			(31,381	)
Stock purchase warrants		1,347			1,347			—			—			(1,347	)		1,347
Total shareholders’ (deficit) equity		(106,185	)		(138,028	)		374,820			7,371			(244,163	)		(106,185	)
Total liabilities and shareholders’ (deficit) equity	$	(137,721	)	$	392,877		$	318,795		$	571		$	(272,127	)	$	302,395

29

QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES

Condensed Consolidating Statements of Cash Flows

Six Months Ended June 30, 2012

Unaudited—(In 000’s)

	QDI			QD LLC and QD Capital			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net income	$	35,504		$	35,504		$	35,213		$	308		$	(71,025	)	$	35,504
Adjustments for non-cash charges		(33,986	)		(48,085	)		(817	)		(208	)		71,025			(12,071	)
Net changes in assets and liabilities		—			823			(21,168	)		306			—			(20,039	)
Intercompany activity		(1,518	)		11,758			(9,884	)		(356	)		—			—
Net cash provided by operating activities		—			—			3,344			50			—			3,394
Cash flows from investing activities:
Capital expenditures		—			—			(17,913	)		—			—			(17,913	)
Greensville purchase price adjustment		—			—			(66	)		—			—			(66	)
Acquisition of Trojan		—			—			(8,657	)		—			—			(8,657	)
Acquisition of Bice & RM		—			—			(52,176	)		—			—			(52,176	)
Proceeds from sales of property and equipment		—			—			6,959			—			—			6,959
Net cash used in investing activities		—			—			(71,853	)		—			—			(71,853	)
Cash flows from financing activities:
Principal payments on long-term debt and capital lease obligations		—			—			(4,477	)		—			—			(4,477	)
Proceeds from revolver		—			126,800			—			—			—			126,800
Payments on revolver		—			(85,300	)		—			—			—			(85,300	)
Deferred financing costs		—			(277	)		—			—			—			(277	)
Proceeds from equity offering, net of transaction costs		30,523			—			—			—			—			30,523
Proceeds from exercise of stock options		254			—			—			—			—			254
Other		—			—			1,012			—			—			1,012
Intercompany activity		(30,777	)		(41,223	)		72,000			—			—			—
Net cash provided by financing activities		—			—			68,535			—			—			68,535
Effect of exchange rate changes on cash and cash equivalents		—			—			—			—			—			—
Net increase in cash and cash equivalents		—			—			26			50			—			76
Cash and cash equivalents, beginning of period		—			—			3,540			513			—			4,053
Cash and cash equivalents, end of period	$	—		$	—		$	3,566		$	563		$	—		$	4,129

30

QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES

Condensed Consolidating Statements of Cash Flows

Six Months Ended June 30, 2011

Unaudited—(In 000’s)

	QDI			QD LLC and QD Capital			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net income	$	11,768		$	11,753		$	12,980		$	614		$	(25,347	)	$	11,768
Adjustments for non-cash charges		(10,295	)		(24,583	)		20,621			(204	)		25,347			10,886
Net changes in assets and liabilities		(84	)		633			(11,670	)		869			—			(10,252	)
Intercompany activity		(1,389	)		12,197			(9,279	)		(1,529	)		—			—
Net cash provided by (used in) operating activities		—			—			12,652			(250	)		—			12,402
Cash flows from investing activities:
Capital expenditures		—			—			(9,336	)		—			—			(9,336	)
Proceeds from sales of property and equipment		—			—			6,279			—			—			6,279
Net cash used in investing activities		—			—			(3,057	)		—			—			(3,057	)
Cash flows from financing activities:
Principal payments on long-term debt and capital lease obligations		—			(27,578	)		(5,346	)		—			—			(32,924	)
Proceeds from revolver		—			60,000			—			—			—			60,000
Payments on revolver		—			(53,000	)		—			—			—			(53,000	)
Deferred financing costs		—			(607	)		—			—			—			(607	)
Redemption of noncontrolling interest		—			—			(1,833	)		—			—			(1,833	)
Proceeds from equity offering, net of transaction costs		17,599			—			—			—			—			17,599
Proceeds from exercise of stock options		1,605			—			—			—			—			1,605
Other		—			—			(294	)		—			—			(294	)
Intercompany activity		(19,204	)		21,185			(1,981	)		—			—			—
Net cash used in financing activities		—			—			(9,454	)		—			—			(9,454	)
Effect of exchange rate changes on cash and cash equivalents		—			—			(1	)		—			—			(1	)
Net increase (decrease) in cash and cash equivalents		—			—			140			(250	)		—			(110	)
Cash and cash equivalents, beginning of period		—			—			1,174			579			—			1,753
Cash and cash equivalents, end of period	$	—		$	—		$	1,314		$	329		$	—		$	1,643

31

15. SUBSEQUENT EVENTS

August 2012 Asset Acquisition – Dunn’s Tank Service

On August 1, 2012, we acquired the operating assets of Dunn’s Tank Service, Inc. and the operating assets and rights of Nassau Disposal, Inc., collectively (“Dunn’s”), for an aggregate purchase price of $34.3 million paid in cash. An additional $3.6 million in cash consideration may be payable if certain future operating and financial performance criteria are satisfied. Dunn’s is headquartered in Velma, Oklahoma and provides transportation services to the unconventional oil and gas industry within the Woodford and Utica shale regions, primarily hauling flowback and production water for various energy customers. For its fiscal year ended December 31, 2011, Dunn’s had revenues of approximately $17.5 million.

Termination of Independent Affiliate Relationship

In light of financial and operational difficulties of an independent affiliate and the potential negative impact those difficulties could have had on us and our customers, we recently entered into contractual arrangements with this independent affiliate to terminate our affiliate relationship in a manner allowing a smooth transition of the servicing of those customers back to us and to certain other independent affiliates. As part of those contractual arrangements, we provided certain loans to a related party of the independent affiliate to permit an orderly transition of the business and acquired the right to purchase the operating assets of the independent affiliate. Outstanding loans associated with this prior independent affiliate were approximately $6.4 million at August 3, 2012, of which $6.0 million is secured by a combination of (1) a pledge of equity interests in a related party of the independent affiliate and (2) interests in certain real estate owned by a related party of the independent affiliate.

32

ITEM 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our results of operations and financial condition should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this report. The following discussion includes forward-looking statements. For a discussion of important factors that could cause actual results to differ from results discussed in the forward-looking statements, see “Forward-Looking Statements and Certain Considerations” contained elsewhere in this report.

OVERVIEW

We operate the largest chemical bulk tank truck network in North America through our 100% owned subsidiary, QCI, and are also the largest provider of intermodal ISO tank container and depot services in North America through our 100% owned subsidiary, Boasso. In 2011, we entered the unconventional oil and gas frac shale energy markets, providing logistics services to these markets through QCER. We operate an asset-light business model and service customers across North America through our network of 28 independent affiliates, 95 terminals servicing the chemical markets (89 of which are operated by independent affiliates and 6 which are company-operated), 9 company-operated tank depot services terminals (intermodal) and 5 terminals servicing the energy markets (3 of which are company-operated and 2 which are operated by independent affiliates).

Financial Reporting Segments

In connection with our entry into the unconventional oil and gas frac shale energy market in 2011, a new segment for financial reporting purposes was identified during the fourth quarter of 2011 in order to better distinguish logistics services to the energy markets from logistics services to the chemical markets based upon how these businesses are managed. Our previous logistics segment was renamed Chemical Logistics.

We have three reportable business segments for financial reporting purposes that are distinguished primarily on the basis of services offered:

• Chemical Logistics, which consists of the transportation of bulk chemicals primarily through our network of 28 independent affiliates, and equipment rental income;

• Energy Logistics, which consists primarily of the transportation of fresh water, disposal water, proppant sand and crude oil for the unconventional oil and gas frac shale energy markets, primarily through company-operated terminals; and

• Intermodal, which consists solely of Boasso’s intermodal ISO tank container transportation and depot services business supporting the international movement of bulk liquids.

Chemical Logistics

The bulk tank truck market in North America includes all products shipped by bulk tank truck carriers and consists mainly of liquid and dry bulk chemicals and bulk dry and liquid food-grade products. We coordinate the transport of a broad range of chemical products, primarily through our independent affiliate network, and provide our customers with logistics and other value-added services. We are a core carrier for many of the major companies engaged in chemical processing including Arclin, Arkema, Ashland, BASF, Dow, DuPont, ExxonMobil, Georgia-Pacific, Honeywell, PPG Industries, Procter & Gamble and Unilever, and we provide services to most of the top 100 chemical producers with North American operations. We believe the diversity of our customer base, geography and end-markets provides a competitive advantage.

We believe the specialized nature of the bulk tank truck industry, including specifically-licensed drivers, specialized equipment and more stringent safety requirements, create barriers to entry which limit the more drastic swings in supply experienced by the broader trucking industry. Additionally, it is common practice in the bulk tank truck industry for customers to pay fuel surcharges, which helps enable recovery of fuel price increases from customers.

33

Our transportation revenue is principally a function of the volume of shipments by the bulk chemical industry, prices, the average number of miles driven per load, our market share and the allocation of shipments between tank truck transportation and other modes of transportation such as rail. The volume of shipments of chemical products is, in turn, affected by many diverse industries and end-use markets, including consumer and industrial products, paints and coatings, paper and packaging, agriculture and food products, and tends to vary with changing economic conditions. Due to the nature of our customers’ business, our revenues are seasonal. Revenues generally decline during winter months, namely our first and fourth fiscal quarters and over holidays, and rise during our second and third fiscal quarters. Highway transportation can be adversely affected depending upon the severity of the weather in various sections of the country during the winter months. During periods of heavy snow, ice or rain, we may not be able to move our trucks and equipment between locations, thereby reducing our ability to provide services and generate revenues.

Energy Logistics

Beginning in the second quarter of fiscal 2011, transportation revenue includes revenue earned from hauling fresh and disposal water for the energy market and in the fourth quarter of 2011 we began hauling proppant sand and oil. In the second quarter of 2012, we expanded our energy logistics business through the acquisitions of Trojan, Bice and RM and in August 2012 we acquired Dunn’s. This revenue is principally a function of the volume of shipments, price per hour of service, and the allocation of shipments between us and other carriers under logistics contracts we manage. Volume of shipments can be influenced significantly by fluctuations in the price of natural gas and oil, which in turn influences frac shale drilling activity levels. Similar to the shipment of bulk chemicals, we expect revenues to generally be lower during the winter months, as drilling within certain shales that we service may be adversely affected by the severity of weather in various sections of the country.

Intermodal

Our 100% owned subsidiary, Boasso, which also includes Greensville since November     , 2011, is the largest North American provider of intermodal ISO tank container transportation and depot services, with nine terminals located in the eastern half of the United States. In addition to intermodal tank transportation services, Boasso provides tank cleaning, heating, testing, maintenance and storage services to customers. Boasso provides local and over-the-road trucking primarily within the proximity of the port cities where its depots are located. Boasso also sells equipment that its customers use for portable alternative storage or office space.

Demand for intermodal ISO tank containers is impacted by the aggregate volume of imports and exports of chemicals through United States ports, and Boasso’s revenues are accordingly impacted by this import/export volume, in particular the number and volume of shipments through ports at which Boasso has terminals, as well as their market share. Economic conditions and differences among the laws and currencies of foreign nations may also impact the volume of shipments.

Our Industry

Chemical Logistics

The bulk tank truck market in North America includes all products shipped by bulk tank truck carriers and consists mainly of liquid and dry bulk chemicals (including plastics) and bulk dry and liquid food-grade products. We estimate, based on industry sources, that the highly fragmented North American for-hire segment of the bulk transport market generated revenues of approximately $6.4 billion in 2011. We specifically operate in the for-hire chemical and food grade bulk transport market (which we estimated at $4.4 billion in 2011). We believe we have the leading market share (estimated at 15% in 2011) in this sector based on revenues. Through our independent affiliate network, we operate the largest for-hire chemical bulk tank truck network in North

34

America comprising terminals, tractors and trailers. We believe managing a larger carrier network facilitates customer service and lane density, and provides a more favorable cost structure for us and our independent affiliates. As such, we believe we are well-positioned to expand our business by increasing our market share.

The chemical bulk tank truck industry growth is generally dependent on volume growth in the industrial chemical industry, the rate at which chemical companies outsource their transportation needs, the overall capacity of the rail system, and, in particular the extent to which chemical companies make use of the rail system for their bulk chemical transportation needs. We believe the most significant factors relevant to our future business growth in our core business are the ability to obtain additional business from existing customers, add new customers, increase the utilization of our trailer fleet and add and retain qualified drivers.

Our industry is characterized by high barriers to entry such as the time and cost required to develop the operational infrastructure necessary to handle sensitive chemical cargo, the financial and managerial resources required to recruit and train drivers, substantial and increasingly more stringent industry regulatory requirements, strong customer relationships and the significant capital investments required to build a fleet of equipment and establish a network of terminals and independent affiliates.

Energy Logistics

In 2010, we initiated a growth strategy targeting the unconventional oil and gas frac shale energy market, through our 100% owned subsidiaries, QCER. We currently serve numerous customers and operate approximately 1,000 units (tractors, trailers and combo equipment) of energy equipment in this market. In the third quarter of 2011, QCER won a multi-year contract with a major energy company to provide full logistics of their fresh and disposal water hauling needs in the Marcellus shale region of Pennsylvania. The logistics revenues associated with this contract began in the third quarter of 2011. In the fourth quarter of 2011, we began hauling oil in the Eagle Ford shale region of Texas and in April 2012, we acquired certain operating assets of Trojan, a provider of transportation services within the Eagle Ford Shale region. In June 2012, we acquired certain operating assets and rights of Bice and RM, providers of transportation and disposal well services within the Bakken shale region of North Dakota. In August 2012, we acquired certain operating assets and rights of Dunn’s, a provider of transportation and disposal well services within the Woodford and Utica shale regions. We expect the Marcellus, Eagle Ford, Bakken, Woodford and Utica shale regions to provide revenue and growth prospects for the future as well. We believe the energy logistics market has significant revenue potential and we may realize higher margins and better equipment utilization than we experience in our chemical logistics business. In connection with our entry into this business, we will operate a portion of the energy logistics business through company-operated terminals, rather than through independent affiliates, which will affect the overall mix of our asset-light business.

We are now operating (including the Dunn’s acquisition) in 5 different shale regions in North America, four of which drill for both oil and natural gas. Our strategy to target oil rich shales helps to diversify our customer offerings and lessen the impact of swings in any one commodity. We are also diversified geographically which can help us optimize equipment utilization.

Intermodal

We estimate that the North American intermodal ISO tank container transportation and depot services market generated revenues of approximately $243.0 million in 2011, and we believe Boasso and Greensville collectively have the leading market share. The intermodal ISO tank container business generally provides services that facilitate the global movement of liquid and dry bulk chemicals, pharmaceuticals and food grade products.

The proliferation of global import/export of bulk liquid chemicals has driven the movement of basic manufacturing out of the United States and has resulted in an increase in chemical plant infrastructure to service these off-shore industries. Driven by this globalization, the intermodal ISO tank container market is a growing sector of the overall liquid bulk chemical transportation sector. Furthermore, chemical manufacturers have sought to efficiently transport their products by utilizing ISO tank containers. The resulting demand for distributors that can offer a broad range of services within the supply chain will drive future growth in this sector. We believe that our intermodal business will benefit from these trends because of its market leadership, experience and track record.

35

Our Network

Our chemical logistics business has a network that consists primarily of independently owned third-party affiliate terminals, independent owner-operator drivers and, to a lesser extent, company-operated terminals. Independent affiliates are independent companies we contract with to operate trucking terminals exclusively on our behalf in defined markets. The independent affiliates generally provide the capital necessary to service their contracted business and are also responsible for most of the operating costs associated with servicing the contracted business. Independent owner-operators are generally individual drivers who own or lease their tractors and agree to provide transportation services to us under contract. We believe the use of independent affiliates and independent owner-operators provides the following key competitive advantages to us in the marketplace:

• Locally owned and operated independent affiliate terminals can provide superior, tailored customer service.

• Independent affiliates and independent owner-operators generally are paid a fixed, contractual percentage of revenue collected on each load they transport creating a variable cost structure that mitigates against cyclical downturns.

• Reliance on independent affiliates and independent owner-operators creates an asset-light business model that generally reduces our capital investment.

Due to several factors, including our ownership of the customer contracts and relationships, the presence of non-compete agreements with the independent affiliates, and our ownership of the trailers, our relationships with the independent affiliates tend to be long-term in nature, with minimal voluntary turnover. Given the specialty nature of the services we provide and the size of our existing network, we believe there are significant barriers to entry to our industry.

We believe the most significant factors relevant to our future business growth are the ability to (i) expand into new markets, specifically the energy markets, (ii) add new customers, (iii) obtain additional business from existing customers, (iv) add and retain qualified drivers and (v) improve the utilization of our tractor and trailer fleets. While many of our customers source some of their logistics needs with rail, we expect our customers to continue to outsource a greater proportion of their logistics needs to full service tank truck carriers. As a result of our leading market position, strong customer relationships and flexible business model, we believe we are well-positioned to benefit from customers seeking consolidation of their shipping relationships and those opting to outsource a greater portion of their logistics needs to third-party tank truck carriers.

Recent Significant Transactions

August 2012 Asset Acquisition – Dunn’s Tank Service

On August 1, 2012, we acquired the operating assets of Dunn’s Tank Service, Inc. and the operating assets and rights of Nassau Disposal, Inc., collectively (“Dunn’s”), for an aggregate purchase price of $34.3 million paid in cash. An additional $3.6 million in cash consideration may be payable if certain future operating and financial performance criteria are satisfied. Dunn’s is headquartered in Velma, Oklahoma and provides transportation services to the unconventional oil and gas industry within the Woodford and Utica shale regions, primarily hauling flowback and production water for various energy customers. For its fiscal year ended December 31, 2011, Dunn’s had revenues of approximately $17.5 million.

36

June 2012 Asset acquisitions – Wylie Bice Trucking, LLC and RM Resources, LLC

On June 1, 2012, we acquired certain operating assets of Bice and the operating assets and rights of RM for an aggregate purchase price of $81.4 million, plus potential additional consideration of $19.0 million, to be paid in cash, subject to Bice and RM achieving certain future operating and financial performance criteria. Headquartered in Killdeer, ND, Bice is a leading provider of transportation services to the unconventional oil and gas industry within the Bakken shale region, primarily hauling fresh water, flowback and production water, and oil for numerous energy customers. The flowback and production water Bice hauls is primarily disposed of utilizing five existing salt water injection wells we purchased from RM. In accordance with the asset purchase agreement, RM must deliver a sixth well within six months after the closing date of the acquisition. On a combined basis for its most recent fiscal year ended December 31, 2011, Bice and RM had revenues of approximately $106.0 million. Unaudited pro forma consolidated results for these acquisitions are presented in Note 1of Notes to Consolidated Financial Statements included in Item 1 of this report. The results of the Bice and RM acquisitions are included in our energy logistics segment.

April 2012 Asset Acquisition – Trojan Vacuum Services

On April 1, 2012, we acquired certain operating assets of Trojan Vacuum Services (“Trojan”). The purchase price was $8.7 million, paid in cash, with potential additional consideration of $1.0 million, to be paid in cash, subject to Trojan achieving certain future operating and financial performance criteria. Trojan is headquartered in Pleasanton, TX and provides transportation service to the unconventional oil and gas industry within the Eagle Ford shale region, primarily hauling flowback and production water for various energy customers. For the fiscal year ended December 31, 2011, Trojan had revenues of approximately $13.5 million. Pro forma information for the acquisition has not been presented as the acquisition did not meet the threshold for pro forma reporting. The results of the Trojan acquisition are including in our energy logistics segment.

March 2012 Common Stock Offering

On March 13, 2012, we sold 2.5 million shares of our common stock in an underwritten public offering, at a gross price of $13.00 per share, and received net proceeds, after underwriting fees and expenses, of approximately $30.5 million. Certain affiliates of Apollo Management, L.P. also sold 3.2 million shares in the offering. We used our net cash proceeds to repay outstanding borrowings under our ABL Facility.

November 2011 Intermodal Acquisition – Greensville Transport Services

On November 1, 2011, Boasso acquired all of the outstanding stock of Greensville Transport Company (“Greensville”). The purchase price was $8.6 million, paid in cash, with an additional $0.5 million to be paid in cash, subject to Greensville meeting certain future operating performance criteria. An additional $0.5 million was paid in cash for a 338(h)(10) tax election and a working capital adjustment. Greensville is headquartered in Chesapeake, Virginia and is a leading provider of ISO tank container and depot services with access to ports in Virginia, Maryland and South Carolina. Pro forma information for the acquisition has not been presented as the acquisition did not meet the threshold for pro forma reporting. The results of the Greensville acquisition are included in our intermodal segment.

37

August 2011 ABL Facility Refinancing

On August 19, 2011, we entered into a credit agreement for a new senior secured asset-based revolving credit facility (the “ABL Facility”). The ABL Facility provides for a revolving credit facility with a maturity of five years and a maximum borrowing capacity of $250.0 million. The ABL Facility includes a sublimit of up to $150.0 million for letters of credit and up to $30.0 million for swingline borrowings on same-day notice. The ABL Facility replaced our previous asset-based revolving credit facility entered into on December 18, 2007 and its related collateral arrangements and guarantees.

February 2011 Common Stock Offering

On February 9, 2011, we sold 2.0 million shares of our common stock in an underwritten public offering, at a gross price of $9.50 per share, and received net proceeds, after underwriting fees and expenses, of approximately $17.6 million. Certain affiliates of Apollo Management, L.P. also sold 2.6 million shares in the offering. Pursuant to the offering, we used our net cash proceeds to redeem $17.5 million of our 2013 PIK Notes at par, plus accrued and unpaid interest on March 11, 2011.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. We believe the following are the more critical accounting policies that impact the financial statements, some of which are based on management’s best estimates available at the time of preparation. Actual future experience may differ from these estimates.

Property and equipment—Property and equipment expenditures, including tractor and trailer rebuilds that extend the useful lives of such equipment, are capitalized and recorded at cost. For financial statement purposes, these assets are depreciated using the straight-line method over the estimated useful lives of the assets to an estimated salvage value.

The asset lives used are presented in the following table:

	Average Lives (in years)
Buildings and improvements	10 - 25
Tractors and terminal equipment	5 - 7
Trailers	15 - 20
Energy market equipment	4 - 15
Disposal wells	15
Furniture and fixtures	3 - 5
Other equipment	3 - 10

Tractor and trailer rebuilds, which are recurring in nature and extend the lives of the related assets, are capitalized and depreciated over the period of extension, generally 3 to 10 years, based on the type and extent of these rebuilds. Maintenance and repairs are charged directly to expense as incurred. Management estimates the useful lives of these assets based on historical trends and the age of the assets when placed in service. Any changes in the actual lives could result in material changes in the net book value of these assets. Additionally, we estimate the salvage values of these assets based on historical sales or disposals, and any changes in the actual salvage values could also affect the net book value of these assets.

Furthermore, we evaluate the recoverability of our long-lived assets whenever adverse events or changes in the business climate indicate that the expected undiscounted future cash flows from the related asset may be less than previously anticipated. If the net book value of the related asset exceeds the undiscounted future cash flows of the asset, the carrying amount would be reduced to the present value of its expected future cash flows and an impairment loss would be recognized. This analysis requires us to make significant estimates and assumptions in projecting future cash flows, and changes in facts and circumstances could result in material changes in the amount of any write-offs for impairment.

Asset Retirement Obligation—We account for asset retirement obligations in accordance with FASB guidance which addresses accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. FASB guidance requires that the fair value of a liability for a retirement obligation be recorded in the period in which it is incurred and the corresponding cost capitalized by increasing the carrying amount of the related long-lived asset. The liability is accreted to its then present value each period, and the capitalized cost is depreciated over the estimated useful life of the related asset. We have included estimated future costs of abandonment and dismantlement in our amortization base and amortize these costs as a component of our depreciation and interest expense.

38

Goodwill

Under the FASB guidance, the process of evaluating the potential impairment of goodwill involves a two-step process and requires significant judgment at many points during the analysis. In the first step, we determine whether there is an indication of impairment by comparing the fair value of a reporting unit to its carrying amount, including goodwill. If, based on the first step, we determine that there is an indication of goodwill impairment, we assess the impairment in step two in accordance with the FASB guidance.

In the first step, we determine the fair value for each reporting unit using a combination of two valuation approaches: the market approach and the income approach. The market approach uses a guideline company methodology which is based upon a comparison of us to similar publicly-traded companies within our industry. We derive a market value of invested capital or business enterprise value for each comparable company by multiplying the price per share of common stock of the publicly traded companies by their total common shares outstanding and adding each company’s current level of debt. We calculate a business enterprise multiple based on revenue and earnings from each company, then apply those multiples to each reporting unit’s revenue and earnings to conclude a reporting unit business enterprise value. Assumptions regarding the selection of comparable companies are made based on, among other factors, capital structure, operating environment and industry. As the comparable companies were typically larger and more diversified than our reporting units, multiples were adjusted prior to application to our reporting units’ revenues and earnings to reflect differences in margins, long-term growth prospects and market capitalization.

The income approach uses a discounted debt-free cash flow analysis to measure fair value by estimating the present value of future economic benefits. To perform the discounted debt-free cash flow analysis, we develop a pro forma analysis of each reporting unit to estimate future available debt-free cash flow and discounting estimated debt-free cash flow by an estimated industry weighted average cost of capital based on the same comparable companies used in the market approach. Per the FASB guidance, the weighted average cost of capital is based on inputs (e.g., capital structure, risk, etc.) from a market participant’s perspective and not necessarily from the reporting unit or QDI’s perspective. Future cash flow is projected based on assumptions for our economic growth, industry expansion, future operations and the discount rate, all of which require significant judgments by management.

After computing a separate business enterprise value under the income approach and market approach, we apply a weighting to them to derive the business enterprise value of the reporting unit. The income approach and market approach were both weighted 50% in the analysis performed at June 30, 2012. The weightings are evaluated each time a goodwill impairment assessment is performed and give consideration to the relative reliability of each approach at that time. Given that the business enterprise value derived from the market approach supported what was calculated in the income approach, we believed that both approaches should be equally weighted. Based on these weightings, we calculated a business enterprise value for the reporting unit. We then add debt-free liabilities of the reporting unit to the calculated business enterprise value to derive an implied fair value of the reporting unit. The implied fair value is then compared to the reporting unit’s carrying value. Upon completion of the analysis in step one, we determined that the fair value of both our energy logistics and intermodal reporting units exceeded its respective carrying value. As such, a step two analysis was not required.

Intangible assets

To determine the implied fair value of our indefinite-lived intangible assets, we utilize the relief from royalty method, pursuant to which those assets are valued by reference to the amount of royalty income they would generate if licensed in an arm’s length transaction. Under the relief from royalty method, similar to the discounted cash flow method, estimated net revenues expected to be generated by the asset during its life are multiplied by a benchmark royalty rate and then discounted by the estimated weighted average cost of capital associated with the asset. The resulting capitalized royalty stream is an indication of the value of owning the asset. Based upon management’s review of the value of the indefinite-lived intangible assets in our intermodal segment, we determined that the implied fair value exceeded its carrying value.

If there are changes to the methods used to allocate carrying values, if management’s estimates of future operating results change, if there are changes in the identified reporting units or if there are changes to other significant assumptions, the estimated carrying values for each reporting unit and the estimated fair value of our goodwill could change significantly, and could result in future impairment charges, which could materially impact our results of operations and financial condition.

Deferred Tax Asset—In accordance with FASB guidance, we use the liability method of accounting for income taxes. Significant management judgment is required in determining the provision for income taxes and, in particular, any valuation allowance that is recorded or released against our deferred tax assets.

We continue to evaluate quarterly the positive and negative evidence regarding the realization of net deferred tax assets. The carrying value of our net deferred tax assets is based on our belief that it is more likely than not that we will generate sufficient future taxable income to realize these deferred tax assets. We review a rolling thirty-six month calculation of U.S. earnings, and consider other criteria at each reporting date, to determine if we have incurred cumulative income or losses in recent years. In addition, we review future reversal of existing taxable temporary differences, the ability to carry back tax attributes to prior years, feasibility of tax planning strategies and estimated future taxable income.

39

During the second quarter of 2012, we recorded tax benefit of $22.8 million related to a valuation allowance release as a result of our consistent cumulative income position, improved operating results, and recent expansion of our energy business through acquisition. Our assessment of the recoverability of the deferred tax assets primarily relied on the positive evidence related to our cumulative income position as of June 30, 2012. We have determined that it is more likely than not that expected future taxable income will be sufficient to utilize substantially all of our U.S. federal and state net deferred tax assets. We will continue to maintain a valuation allowance against our net deferred tax asset related to foreign tax credits. Changes in deferred tax assets and valuation allowance are reflected in the provision for income taxes line in our consolidated statements of operations.

At December 31, 2011, we had an estimated $77.0 million in federal net operating loss carryforwards, $3.0 million of unrecognized federal operating loss carryforwards related to excess stock compensation deductions and uncertain tax position deductions, $2.4 million in alternative minimum tax credit carryforwards and $4.8 million in foreign tax credit carryforwards. The net operating loss carryforwards will expire in the years 2018 through 2030, while the alternative minimum tax credits may be carried forward indefinitely and the foreign tax credits may be carried forward for 10 years.

Uncertain Income Tax Positions—In accordance with FASB guidance, we account for uncertainty in income taxes, using a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained upon audit, including resolution of related appeals or litigation processes, if any. The second step requires us to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as we have to determine the probability of various possible outcomes. We re-evaluate these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, and new audit activity. Such a change in recognition and measurement would result in recognition of a tax benefit and/or an additional charge to the tax provision.

Environmental liabilities—We have reserved for potential environmental liabilities based on the best estimates of potential clean-up and remediation for known environmental sites. We employ a staff of environmental professionals to administer all phases of our environmental programs and use outside experts where needed. These professionals develop estimates of potential liabilities at

40

these sites based on projected and known remediation costs. These cost projections are determined through previous experiences with other sites and through bids from third-party contractors. Management believes current reserves are reasonable based on current information, but estimates of environmental reserves and exposures may be affected by information subsequently received.

Accrued loss and damage claims—We currently maintain liability insurance for bodily injury and property damage claims, covering all employees, independent owner-operators and independent affiliates, and workers’ compensation insurance coverage on our employees and company drivers. This insurance includes deductibles of $2.0 million per incident for bodily injury and property damage and $1.0 million for workers’ compensation. As such, we are subject to liability as a self-insurer to the extent of these deductibles under the policy. We are self-insured for damage to the equipment we own or lease and for cargo losses. As of June 30, 2012, we had $22.9 million in an outstanding letter of credit to our insurance administrator to guarantee the self-insurance portion of our liability. If we fail to meet certain terms of our agreement, the insurance administrator may draw down the letter of credit. In developing liability reserves, we rely on professional third party claims administrators, insurance company estimates and the judgment of our own personnel, and independent professional actuaries and attorneys. The most significant assumptions used in the estimation process include determining the trends in loss costs, the expected consistency in the frequency and severity of claims incurred but not yet reported to prior-year claims, and expected costs to settle unpaid claims. Management believes reserves are reasonable given known information, but as each case develops, estimates may change to reflect the effect of new information.

Revenue recognition—Transportation revenue, including fuel surcharges and related costs, is recognized on the date freight is delivered. Service revenue consists primarily of rental revenues (primarily tractor and trailer rental), intermodal and depot revenues, tank wash revenues and insurance related administrative services. Rental revenues from independent affiliates, independent owner-operators and third parties are recognized ratably over the lease period. Intermodal and depot revenues, consisting primarily of repair and storage services, are recognized when the services are rendered. Insurance related administrative service revenues are recorded ratably over the service period. We recognize all revenues on a gross basis as the principal and primary obligor with risk of loss in relation to our responsibility for completion of services as contracted with our customers.

41

Allowance for uncollectible receivables—The allowance for all potentially uncollectible receivables is based on a combination of historical data, cash payment trends, specific customer issues, write-off trends, general economic conditions and other factors. These factors are continuously monitored by our management to arrive at the estimate for the amount of accounts receivable that may be ultimately uncollectible. The receivables analyzed include trade receivables, as well as loans and advances made to independent owner-operators and independent affiliates. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, an additional allowance could be required.

Stock compensation plans—Stock compensation is determined by the assumptions required under the FASB guidance. The fair values of stock option grants are based upon the Black-Scholes option-pricing model and amortized as compensation expense on a straight-line basis over the vesting period of the grants. Restricted stock awards are issued and measured at market value on the date of grant and related compensation expense is recognized over time on a straight-line basis over the vesting period of the grants. Stock unit awards are measured at market value on the date of grant and related compensation expense is recognized over time on a straight-line basis over the vesting period of the grants. Stock-based compensation expense related to stock options and restricted stock was $0.8 million for the three months ended June 30, 2012 and 2011. Stock-based compensation expense related to stock options and restricted stock was $1.5 million for the six months ended June 30, 2012 and 2011. As of June 30, 2012, there was approximately $5.1 million of total unrecognized compensation cost related to the unvested portion of our stock-based awards. The recognition period for the remaining unrecognized stock-based compensation cost generally varies from two to four years. For further discussion on stock-based compensation, see Note 6 of Notes to Consolidated Financial Statements.

Pension plans—We maintain two noncontributory defined benefit plans resulting from a prior acquisition that cover certain vested salaried participants and retirees and certain other vested participants and retirees under an expired collective bargaining agreement. Both plans are frozen and, as such, no future benefits accrue. We record annual amounts relating to these plans based on calculations specified by GAAP, which include various actuarial assumptions such as discount rates (4.90% to 5.25%) and assumed rates of return (7.00% to 8.00%) depending on the pension plan. Material changes in pension costs may occur in the future due to changes in these assumptions. Future annual amounts could be impacted by changes in the discount rate, changes in the expected long-term rate of return, changes in the level of contributions to the plans and other factors. We had an accumulated net pension equity charge (after-tax) of $5.2 million at December 31, 2011.

The discount rate is based on a model portfolio of AA-rated bonds with a maturity matched to the estimated payouts of future pension benefits. The expected return on plan assets is based on our expectation of the long-term rates of return on each asset class based on the current asset mix of the funds, considering the historical returns earned on the type of assets in the funds, plus an assumption of future inflation. The current inflation assumption is 3.0%. We review our actuarial assumptions on an annual basis and make modifications to the assumptions based on current rates and trends when appropriate. The effects of the modifications are amortized over future periods.

Assumed discount rates and expected return on plan assets have a significant effect on the amounts reported for the pension plan. At December 31, 2011, our projected benefit obligation (“PBO”) was $51.6 million. Our projected 2012 net periodic pension expense is $1.6 million. A 1.0% decrease in our assumed discount rate would increase our PBO to $57.3 million and decrease our 2012 net periodic pension expense less than $0.1 million. A 1.0% increase in our assumed discount rate would decrease our PBO to $46.7 million and increase our 2012 net periodic pension expense less than $0.1 million. A 1.0% decrease in our assumed rate of return would not change our PBO but would increase our 2012 net periodic pension expense to $1.9 million. A 1.0% increase in our assumed rate of return would not change our PBO but would decrease our 2012 net periodic pension expense to $1.3 million.

Restructuring —We account for restructuring costs associated with one-time termination benefits, costs associated with lease and contract terminations and other related exit activities in accordance with the FASB’s guidance. We previously made estimates of the costs to be incurred as part of a restructuring plan developed during 2008 and concluded at the end of 2010 which resulted in charges during 2008, 2009 and 2010, primarily related to our chemical logistics segment. As of June 30, 2012, approximately $2.4 million was accrued related to the restructuring charges, which are expected to be paid through 2017.

42

NEW ACCOUNTING PRONOUNCEMENTS

Refer to Note 1, “Summary of Significant Accounting Policies—New Accounting Pronouncements” for discussion of recent accounting pronouncements and for additional discussion surrounding the adoption of accounting standards.

Results of Operations

The following table presents certain condensed consolidated financial information, as a percentage of revenue, for the three and six months ended June 30, 2012 and 2011:

	Three months ended June 30,						Six months ended June 30,
	2012			2011			2012			2011
OPERATING REVENUES:
Transportation		70.8	%		68.1	%		70.1	%		69.1	%
Service revenue		14.1			14.6			14.4			14.7
Fuel surcharge		15.1			17.3			15.5			16.2
Total operating revenues		100.0			100.0			100.0			100.0
OPERATING EXPENSES:
Purchased transportation		66.9			70.4			67.8			70.2
Compensation		8.7			8.2			8.7			8.3
Fuel, supplies and maintenance		8.7			6.1			8.1			6.4
Depreciation and amortization		2.2			1.8			2.1			2.0
Selling and administrative		4.7			2.6			4.1			2.7
Insurance costs		1.9			1.9			1.8			2.2
Taxes and licenses		0.3			0.3			0.3			0.3
Communication and utilities		0.4			0.3			0.4			0.4
Gain on disposal of property and equipment		-0.2			-0.2			-0.1			-0.2
Restructuring credit		0.0			-0.3			0.0			-0.1
Total operating expenses		93.6			91.1			93.2			92.2
Operating income		6.4			8.9			6.8			7.8
Interest expense		3.4			3.8			3.6			4.1
Interest income		-0.1			-0.1			-0.1			-0.1
Write-off of debt issuance costs		0.0			0.0			0.0			0.5
Other expense		0.0			0.0			0.0			0.0
Income before income taxes		3.1			5.2			3.3			3.3
(Benefit from) provision for income taxes		-10.5			0.4			-5.4			0.2
Net income		13.6	%		4.8	%		8.7	%		3.1	%

The following table shows the approximate number of terminals, drivers, tractors, trailers and energy market equipment that we managed (including affiliates and independent owner-operators) as of June 30:

	2012		2011
Terminals		109		104
Drivers (1)		3,177		2,687
Tractors		2,762		2,868
Trailers		5,268		5,469
Energy market equipment (2)		1,035		22

(1) Includes approximately 500 drivers added as a result of our entrance into the energy logistics business

(2) Includes tractors and trailers

43

As of June 30, our network terminals and facilities consisted of the following:

	2012 Terminals		2011 Terminals
Chemical logistics independent affiliate trucking terminals		89		93
Chemical logistics company-operated trucking terminals		6		3
Energy logistics independent affiliate energy terminals		2		—
Energy logistics company-operated energy terminals		3		—
Intermodal container services terminals/depots		9		8
Total		109		104

Three Months Ended June 30, 2012 Compared to Three Months Ended June 30, 2011

Comparability for the three months ended June 30, 2012 to the three months ended June 30, 2011 is affected by recent acquisitions consummated in 2011 and 2012. In November 2011, we acquired all the outstanding stock of Greensville which is included in our intermodal segment. In April 2012, we acquired certain operating assets of Trojan and in June 2012, we acquired certain operating assets and rights of Bice and RM. Trojan, Bice and RM are collectively referred to as the “2012 Energy Acquisitions” and are included in our energy logistics segment.

For the quarter ended June 30, 2012, total revenues were $212.7 million, an increase of $22.7 million, or 12.0%, from revenues of $190.0 million for the same period in 2011. Transportation revenue increased by $21.1 million, or 16.3%, primarily due to an increase in energy logistics revenue of $22.9 million of which $12.0 related to the 2012 Energy Acquisitions and an increase of $2.6 million related to our intermodal business. These increases were partially offset by a decrease in chemical logistics revenue of $4.4 million due to driver capacity constraints resulting from the lingering effects of our EOBR installation, partially offset by price increases.

Service revenue increased $2.4 million, or 8.7%, due to higher intermodal depot services revenue of $1.3 million and a $1.1 million increase in our energy logistics business, of which $0.7 million was due to the 2012 Energy Acquisitions. Service revenue in our chemical logistics business remained consistent with the prior period.

Fuel surcharge revenue decreased $0.8 million, or 2.3%, due to a decrease in fuel prices and a decrease in chemical logistics transportation revenue. We have fuel surcharge programs in place with the majority of our chemical logistics and intermodal customers. These programs typically involve a specified computation based on the changes in fuel prices. As a result, most of these programs have a short time lag between when fuel prices change and when this change is reflected in revenues. It is not meaningful to compare the amount of fuel surcharge revenue or the change in fuel surcharge revenue between reporting periods to fuel expense, or the change of fuel expense between periods, as a significant portion of fuel costs are included in purchased transportation.

Purchased transportation increased $8.6 million, or 6.4%, due to an increase of $15.0 million in costs related to servicing the energy logistics market of which $4.8 million was due to the 2012 Energy Acquisitions. Purchased transportation also increased $1.7 million in costs related to our intermodal business offset by a decrease of $8.1 million in costs related to servicing the chemical logistics market. Total purchased transportation as a percentage of transportation revenue and fuel surcharge revenue decreased to 77.9% for the current quarter versus 82.3% for the same period in 2011. Our independent affiliates generated 92.3% of our chemical logistics revenue and fuel surcharge revenue for the three months ended June 30, 2012 compared to 94.2% for the comparable prior-year period. This decrease resulted from the conversion of two independent affiliate trucking terminals to company-operated terminals and the addition of one new company-operated terminal. During the 2012 and 2011 periods, we paid our independent affiliates approximately 85% of chemical logistics transportation revenue and paid independent owner-operators approximately 65% of chemical logistics transportation revenue.

During the quarter ended June 30, 2012, hauling for the energy market was performed by company-operated terminals, independent affiliates and independent third-party carriers. For the quarter ended June 30, 2012, company-operated terminals generated approximately 50% of the energy revenue and independent affiliates and third-party carriers generated approximately 50%. We typically pay these independent contractors between 72% and 95% depending on their type of association with the company.

Compensation expense increased by $3.0 million, or 19.3%, due to an increase of $2.3 million in our energy logistics business of which $1.9 million was due to the 2012 Energy Acquisitions and an increase in our intermodal business of $0.7 million, which $0.6 million related to the acquisition of Greensville. Compensation expense in our chemical logistics business remained consistent with the prior year period.

44

Fuel, supplies and maintenance increased $6.8 million, or 58.1%, due to an increase of $3.4 million related to our energy logistics business of which $2.5 million was due to the 2012 Energy Acquisitions. We had an increase of $2.2 million related to our chemical logistics business, resulting primarily from an increase in equipment rent expense of $0.6 million, higher repairs and maintenance expense and other terminal costs $1.2 million and an increase in fuel costs of $0.4 million, primarily at our company-owned terminals. In addition, we had an increase of $1.2 million related to our intermodal business due to an increase in repairs and maintenance expense of $0.6 million, an increase in fuel costs of $0.3 million and an increase in equipment rent of $0.3 million.

Depreciation and amortization expense increased $1.2 million, or 36.8%, primarily due to an increase in depreciation for new energy equipment and an increase in amortization expense for intangible assets.

Selling and administrative expenses increased $5.2 million, or more than 100.0%, primarily due to an increase in our chemical logistics business of $4.7 million which includes the incurrence of $2.6 million of acquisition-related costs, a lease termination cost of $0.5 million, an increase in terminal costs of $0.4 million and an increase of $0.9 million in other professional fees, which included $0.3 million for various legal settlements and $0.6 million for other legal fees. In addition, our intermodal business had increased costs of $0.3 million and our energy logistics business had increased costs of $0.2 million.

Insurance costs increased $0.6 million, or 16.9%, due to an increase in volume in our energy logistics business and premiums due to the 2012 Energy Acquisitions, as well as a settlement of a large claim. As a percentage of revenue, insurance expense remained at the low end of the Company’s target of 2 to 3% of total revenue.

We recognized a gain on disposal of revenue equipment of $0.4 million in both periods.

For the quarter ended June 30, 2012, operating income was $13.4 million, a decrease of $3.5 million, or 20.6%, compared to operating income of $16.9 million for the same period in 2011. The operating margin for the quarter ended June 30, 2012 was 6.4% compared to 8.9% for the same period in 2011 as a result of the above-mentioned items.

Interest expense decreased $0.1 million, or 1.8% in the quarter ended June 30, 2012, primarily due to redemptions of our high cost 2013 PIK Notes during 2011 offset by an increase in our weighted average ABL Facility borrowings. We expect our interest expense for the remainder of 2012 to be higher than the last six months of 2011 due to higher average debt balances.

45

The benefit for income taxes was $22.4 million for the quarter ended June 30, 2012, compared to the provision for income taxes of $0.7 million for the same period in 2011. The effective tax rates for the quarter ended June 30, 2012 and 2011 were more than 100% and 7.5%, respectively. The effective tax rate in the current quarter was impacted by a release of $22.8 million of our deferred tax valuation allowance, See Note 10 of Notes to Consolidated Financial Statements. The effective tax rate in the same period in 2011 was impacted by a 100% valuation allowance recorded against our net deferred tax assets.

For the quarter ended June 30, 2012, net income was $28.8 million compared to net income of $9.0 million for the same period in 2011 as a result of the above-mentioned items.

Six Months Ended June 30, 2012 Compared to Six Months Ended June 30, 2011

Comparability for the six months ended June 30, 2012 to the six months ended June 30, 2011 is affected by recent acquisitions consummated in 2011 and 2012. In November 2011, we acquired all the outstanding stock of Greensville which is included in our intermodal segment. In April 2012, we acquired certain operating assets of Trojan and in June 2012, we acquired certain operating assets and rights of Bice and RM. Trojan, Bice and RM are collectively referred to as the “2012 Energy Acquisitions” and are included in our energy logistics segment.

For the six months ended June 30, 2012, total revenues were $404.6 million, an increase of $36.7 million, or 10.0%, from revenues of $367.9 million for the same period in 2011. Transportation revenue increased $29.6 million, or 11.7%, primarily due to an increase in new energy logistics revenue of $33.0 million of which $12.0 related to the 2012 Energy Acquisitions and an increase of $6.0 million in our intermodal business due to an increase in demand and acquisition of Greensville. These increases were partially offset by a decrease in chemical logistics revenue of $9.4 million due to driver capacity constraints resulting from the lingering effects of our installation of electronic on-board recorders, partially offset by price increases.

Service revenue increased $3.6 million, or 6.7%. This increase was primarily due to higher intermodal depot services revenue of $2.3 million and an increase in our energy logistics business of $2.0 million of which $0.7 million was due to the 2012 Energy Acquisitions, partially offset by a decrease in our chemical logistics business of $0.7 million due to a reduction in rental income.

Fuel surcharge revenue increased $3.5 million, or 5.8%, primarily due to an increase in our intermodal business. We have fuel surcharge programs in place with the majority of our chemical logistics and intermodal customers. As a result, most of these programs typically involve a specified computation based on the changes in fuel prices. As a result, some of these programs have a short time lag between when fuel prices change and when this change is reflected in revenues. It is not meaningful to compare the amount of fuel surcharge revenue or the change in fuel surcharge revenue between reporting periods to fuel expense, or the change of fuel expense between periods, as a significant portion of fuel costs are included in purchased transportation.

Purchased transportation increased $15.8 million, or 6.1%, due to an increase of $23.3 million in costs related to servicing the energy logistics market, of which $4.8 million was due to the 2012 Energy Acquisitions. Purchased transportation also increased $4.1 million related to our intermodal business, offset by a decrease of $11.6 million in costs related to servicing the chemical logistics market. Total purchased transportation as a percentage of transportation revenue and fuel surcharge revenue decreased to 79.1% for the six months ended June 30, 2012 versus 82.4% for the same period in 2011. Our independent affiliates generated 92.0% of our chemical logistics revenue and fuel surcharge revenue for the six months ended June 30, 2012 compared to 94.2% for the comparable prior-year period. This decrease resulted from the conversion of 2 independent affiliate trucking terminals to company-operated terminals and the addition of one new company-operated terminal. During the 2012 and 2011 periods, we paid our independent affiliates approximately 85% of chemical logistics transportation revenue and paid independent owner-operators approximately 65% of chemical logistics transportation revenue.

During the first six months of 2012, hauling for the energy market was performed by company-operated terminals, independent affiliates and independent third-party carriers. In the first six months of 2012, company-operated terminals generated approximately 35% of the energy revenue and independent affiliates and third-party carriers generated approximately 65%. We typically pay these independent contractors between 72% and 95% depending on their type of association with the company.

Compensation expense increased $4.7 million, or 15.6%, due to an increase of $2.6 million in our energy logistics business of which $1.9 million was due to the 2012 Energy Acquisitions and an increase in our intermodal business of $2.1 million, which $1.1 million related to the acquisition of Greensville. Compensation expense in our chemical logistics business remained consistent with the prior year period.

46

Fuel, supplies and maintenance increased $9.5 million, or 40.4%, due to an increase of $3.1 million related to our chemical logistics business resulting primarily from an increase in equipment rent expense of $0.6 million, an increase in repairs and maintenance expense and other terminal costs of $1.7 million and an increase in fuel costs of $0.8 million, primarily at our company-owned terminals. We had an increase of $3.9 million related to our energy logistics business of which $2.5 million was due to the 2012 Energy Acquisitions. In addition, we had an increase of $2.5 million related to our intermodal business primarily due to an increase in repairs and maintenance expense of $0.9 million, an increase in fuel costs of $0.9 million, and an increase in equipment rent of $0.7 million.

Depreciation and amortization expense increased $1.5 million, or 22.5%, primarily due to an increase in depreciation for new energy equipment and an increase in amortization expense for intangible assets.

Selling and administrative expenses increased $6.6 million, or 65.4%, primarily due to an increase in our chemical logistics business of $5.6 million which includes the incurrence of $3.0 million of acquisition-related costs, an increase of $1.0 million in professional fees, of which includes $0.3 million for various legal settlements, a lease termination cost of $0.5 million and other terminal costs of $1.1 million. In addition, our intermodal business had increased costs of $0.5 million and our energy logistics business had increased costs of $0.5 million.

Insurance costs decreased $0.9 million, or 10.5%, due to a reduction in the number and severity of claims partially offset by settlement of a large claim. As a percentage of revenue, insurance expense remained at the low end of the Company’s target of 2 to 3% of total revenue.

We recognized a gain on disposal of revenue equipment of $0.4 million for the six months ended June 30, 2012 and a gain on disposal of revenue equipment of $0.7 million for the six months ended June 30, 2011.

In 2012, we had no restructuring credit. In the second quarter of 2011, we recognized a restructuring credit of $0.5 million resulting from the reduction of a liability for the withdrawal from a multi-employer pension plan which was fully paid in the second quarter of 2011.

For the six months ended June 30, 2012, operating income was $27.3 million, a decrease of $1.8 million, or 6.4%, compared to operating income of $29.1 million for the same period in 2011. The operating margin for the six months ended June 30, 2012 was 6.8% compared to 7.8% for the same period in 2011 as a result of the above-mentioned items.

Interest expense decreased $0.8 million, or 5.0%, in the six months ended June 30, 2012, primarily due to redemptions of our high cost 2013 PIK Notes during 2011 partially offset by an increase in our weighted average ABL Facility borrowings. We expect our interest expense for the remainder of 2012 to be higher than the last six months of 2011 due to higher average debt balances.

We had no write-offs of debt issuance costs during the six months ended June 30, 2012. In the first six months of 2011, we wrote off debt issuance costs of $1.8 million resulting from redemptions of our 2013 PIK Notes in January 2011 and March 2011 in the amounts of $10.0 million and $17.5 million, respectively.

47

The benefit for income taxes was $22.0 million for the six months ended June 30, 2012, compared to the provision for income taxes of $0.8 million for the same period in 2011. The effective tax rates for the six months ended June 30, 2012 and 2011 were more than 100% and 6.2%, respectively. The effective tax rate for the six months ended June 30, 2012 was impacted by a release of $22.8 million of our deferred tax valuation allowance. The effective tax rate in the same period in 2011 was impacted by a 100% valuation allowance recorded against our net deferred tax assets.

For the six months ended June 30, 2012, net income was $35.5 million compared to net income of $11.8 million for the same period in 2011 as a result of the above-mentioned items.

Segment Operating Results

In connection with our entry into the unconventional oil and gas frac shale energy market in 2011, a new segment for financial reporting purposes was identified during the fourth quarter of 2011 in order to better distinguish logistics services to the energy markets from logistics services to the chemical markets based upon how these businesses are managed. Our previous logistics segment was renamed Chemical Logistics.

48

We have three reportable business segments for financial reporting purposes that are distinguished primarily on the basis of services offered:

• Chemical Logistics, which consists of the transportation of bulk chemicals primarily through our network of 28 independent affiliates, and equipment rental income;

• Energy Logistics, which consists primarily of the transportation of fresh water, disposal water, proppant sand and crude oil for the unconventional oil and gas frac shale energy markets, primarily through company-operated terminals; and

• Intermodal, which consists solely of Boasso’s intermodal ISO tank container transportation and depot services business supporting the international movement of bulk liquids.

Segment operating income reported in our segment tables excludes amounts such as depreciation and amortization, gains and losses on disposal of property and equipment, restructuring costs, corporate and other unallocated amounts. Although these amounts are excluded from the business segment results, they are included in our reported consolidated statement of operations. Most corporate and shared services overhead costs, including acquisition costs, are included in our chemical logistics segment. We have not provided specific asset information by segment, as it is not regularly provided to our chief operating decision maker for review.

Summarized segment operating results are as follows (in thousands):

	Three Months Ended June 30, 2012
	Chemical Logistics			Energy Logistics			Intermodal			Total
Operating Revenues:
Transportation	$	107,935		$	24,929		$	17,655			150,519
Service revenue		16,977			1,247			11,810			30,034
Fuel surcharge		27,378			325			4,477			32,180
Total operating revenue		152,290			26,501			33,942			212,733
Segment revenue % of total revenue		71.6	%		12.4	%		16.0	%		100.0	%
Segment operating income		8,544			3,914			5,246			17,704
Depreciation and amortization		2,746			1,017			859			4,622
Other income		(362	)		—			—			(362	)
Operating income	$	6,160		$	2,897		$	4,387		$	13,444

	Three Months Ended June 30, 2011
	Chemical Logistics			Energy Logistics			Intermodal			Total
Operating Revenues:
Transportation	$	112,318		$	1,992		$	15,087		$	129,397
Service revenue		17,078			77			10,487			27,642
Fuel surcharge		29,013			—			3,941			32,954
Total operating revenue	$	158,409			2,069		$	29,515		$	189,993
Segment revenue % of total revenue		83.4	%		1.1	%		15.5	%		100.0	%
Segment operating income	$	14,333			318		$	4,735		$	19,386
Depreciation and amortization		2,537			41			800			3,378
Other (income) expense		(954	)		—			23			(931	)
Operating income	$	12,750		$	277		$	3,912		$	16,939

49

	2012 vs 2011	Chemical Logistics			Energy Logistics			Intermodal			Total
Segment revenues	$        change	$	(6,119	)	$	24,432		$	4,427		$	22,740
	%      change		(3.9	)%		1,180.9	%		15.0	%		12.0	%
Segment revenues (excluding fuel surcharge)	$        change	$	(4,484	)	$	24,107		$	3,891		$	23,514
	%      change		(3.5	)%		1,165.2	%		15.2	%		15.0	%
Segment operating income	$        change	$	(5,789	)	$	3,596		$	511		($	1,682	)
	%      change		(40.4	)%		1,130.8	%		10.8	%		(8.7	)%

	Six Months Ended June 30, 2012
	Chemical Logistics			Energy Logistics			Intermodal			Total
Operating Revenues:
Transportation	$	213,582		$	34,978		$	35,165		$	283,725
Service revenue		32,893			2,131			22,995			58,019
Fuel surcharge		53,692			326			8,886			62,904
Total operating revenue		300,167			37,435			67,046			404,648
Segment revenue % of total revenue		74.2	%		9.2	%		16.6	%		100	%
Segment operating income		19,976			4,996			10,359			35,331
Depreciation and amortization		5,434			1,264			1,715			8,413
Other (income) expense		(344	)		22			(42	)		(364	)
Operating income	$	14,886		$	3,710		$	8,686		$	27,282

	Six Months Ended June 30, 2011
	Chemical Logistics			Energy Logistics			Intermodal			Total
Operating Revenues:
Transportation	$	222,930		$	1,992		$	29,156		$	254,078
Service revenue		33,586			77			20,717			54,380
Fuel surcharge		52,652			—			6,793			59,445
Total operating revenue		309,168			2,069			56,666			367,903
Segment revenue % of total revenue		84.0	%		0.6	%		15.4	%		100.0	%
Segment operating income		25,115			318			9,398			34,831
Depreciation and amortization		5,232			41			1,597			6,870
Other (income) expense		(1,201	)		—			30			(1,171	)
Operating income	$	21,084		$	277		$	7,771		$	29,132

	2012 vs 2011	Chemical Logistics			Energy Logistics			Intermodal			Total
Segment revenues	$            change	$	(9,001	)	$	35,366		$	10,380		$	36,745
	%          change		(2.9	)%		1,709.3	%		18.3	%		10.0	%

	2012 vs 2011	Chemical Logistics			Energy Logistics			Intermodal			Total
Segment revenues (excluding fuel surcharge)	$            change	$	(10,041	)	$	35,040		$	8,287		$	33,286
	%          change		(3.9	)%		1,693.6	%		16.6	%		10.8	%
Segment operating income	$            change	$	(5,139	)	$	4,678		$	961		$	500
	%          change		(20.5	)%		1,471.1	%		10.2	%		1.4	%

50

Three Months Ended June 30, 2012 Compared to Three Months Ended June 30, 2011

Comparability for the three months ended June 30, 2012 to the three months ended June 30, 2011 is affected by recent acquisitions consummated in 2011 and 2012. In November 2011, we acquired all the outstanding stock of Greensville which is included in our intermodal segment. In April 2012, we acquired certain operating assets of Trojan and in June 2012, we acquired certain operating assets and rights of Bice and RM. Trojan, Bice and RM are collectively referred to as the “2012 Energy Acquisitions” and are included in our energy logistics segment.

Operating revenue:

Chemical Logistics—revenues decreased $6.1 million, or 3.9%, for the quarter ended June 30, 2012 compared to the same period for 2011 primarily due to a decrease in transportation revenue of $4.4 million. The decline was driven by reduced linehaul revenue resulting primarily from a decrease in loads of 7.6 %, a decrease in miles of 6.4% and the lingering effects of the implementation of electronic on-board recorders on driver counts. Although driver counts are rising slightly, we expect industry-wide tightness in driver capacity to impact our chemical logistics business for the remainder of 2012. In addition, fuel surcharge decreased by $1.6 million due to decreased fuel prices. Service revenue remained consistent with the prior period.

Energy Logistics—revenues increased $24.4 million, or more than 100.0%, for the quarter ended June 30, 2012 due to our entry into the unconventional oil and gas frac shale energy market during the second quarter of 2011 and the 2012 Energy Acquisitions. We continue to generate a high percentage of segment operating revenues from our Marcellus Shale operation, which includes a significant amount of lower margin business brokered to third-party carriers.

Intermodal—revenues increased $4.4 million, or 15.0%, for the quarter ended June 30, 2012 compared to the same period in 2011, partially due to the Greensville acquisition and partially due to higher volumes and depot revenue.

Operating income:

Chemical Logistics—operating income decreased $5.8 million, or 40.4%, for the quarter ended June 30, 2012 compared to the same period in 2011 primarily due to acquisition costs, severance and lease termination costs, legal and claims settlement costs, increased terminal costs, and higher repairs and maintenance.

Energy Logistics—operating income increased $3.6 million, or more than 100.0%, for the quarter ended June 30, 2012 due to our entry into the unconventional oil and gas frac shale energy market in the second quarter of 2011 and the 2012 Energy Acquisitions.

Intermodal—operating income increased $0.5 million, or 10.8%, for the quarter ended June 30, 2012 compared to the same period in 2011 due to increased customer demand and to the acquisition of Greensville.

Six Months Ended June 30, 2012 Compared to Six Months Ended June 30, 2011

Comparability for the six months ended June 30, 2012 to the six months ended June 30, 2011 is affected by recent acquisitions consummated in 2011 and 2012. In November 2011, we acquired all the outstanding stock of Greensville which is included in our intermodal segment. In April 2012, we acquired certain operating assets of Trojan and in June 2012, we acquired certain operating assets and rights of Bice and RM. Trojan, Bice and RM are collectively referred to as the “2012 Energy Acquisitions” and are included in our energy logistics segment.

Operating revenue:

Chemical Logistics—revenues decreased $9.0 million, or 2.9%, for the six months ended June 30, 2012 compared to the same period for 2011 primarily due to a decrease in transportation revenue of $9.3 million. The decline was driven by reduced linehaul revenue resulting primarily from a decrease in loads of 7.2%, a decrease in miles of 7.3% and the lingering effects of the implementation of electronic on-board recorders on driver counts. Although driver counts are rising slightly, we expect industry-wide tightness in driver capacity to impact our chemical logistics business for the remainder of 2012. This decline was partially offset by an increase of $1.0 million of fuel surcharge revenue due to increased fuel prices. In addition, service revenue decreased by $0.7 million due primarily to decreased trailer rental revenue.

Energy Logistics—revenues increased $35.4 million, or more than 100.0%, for the six months ended June 30, 2012 due to our entry into the unconventional oil and gas frac shale energy market during the second quarter of 2011 and the 2012 Energy Acquisitions. We continue to generate a high percentage of segment operating revenues from our Marcellus Shale operation, which includes a significant amount of lower margin business brokered to third-party carriers.

51

Intermodal—revenues increased $10.4 million, or 18.3%, for the six months ended June 30, 2012 compared to the same period in 2011, partially due to the Greensville acquisition and partially due to higher volumes and depot revenue.

Operating income:

Chemical Logistics—operating income decreased $5.1 million, or 20.5%, for the six months ended June 30, 2012 compared to the same period in 2011 primarily due to acquisition costs, severance and lease termination costs, legal and claims settlement costs, increased terminal costs, and higher repairs and maintenance.

Energy Logistics—operating income increased $4.7 million, or more than 100.0%, for the six months ended June 30, 2012 due to our entry into the unconventional oil and gas frac shale energy market in the second quarter of 2011 and the 2012 Energy Acquisitions.

Intermodal—operating income increased $1.0 million, or 10.2%, for the six months ended June 30, 2012 compared to the same period in 2011 due to increased customer demand and to the acquisition of Greensville.

Liquidity and Capital Resources

Our primary cash needs consist of working capital, capital expenditures, acquisitions and debt service. Our working capital needs depend upon the timing of our collections from customers and payments to others as well as our capital and operating lease payment obligations. Our capital expenditures primarily relate to acquiring trailers to maintain the chemical logistics fleet and supporting our energy logistics business with growth capital. We reduced our capital expenditure requirements for our chemical logistics business by utilizing independent affiliates and independent owner-operators.

Independent affiliates and independent owner-operators typically supply their own tractors, which reduces our capital investment requirements. For the six months ending June 30, 2012, capital expenditures were $17.9 million and proceeds from sales of property and equipment were $7.0 million. Capital expenditures for 2012 included $10.1 million for equipment purchased to support our energy logistics business and proceeds from sales of property and equipment for 2012 included $1.4 million of energy equipment sales to independent affiliates. We generally expect our sustaining capital expenditures for our chemical logistics and intermodal businesses, net of proceeds from property and equipment sales, to be approximately 1% of operating segment revenues annually. We currently expect net capital expenditures to decline from first half of 2012. We expect net capital expenditures to be approximately $20.0 to $25.0 million for the 2012 year, of which approximately $13.4 million is for equipment required to grow our energy logistics business. Some of our independent affiliates who are engaged with us in the energy market may at times purchase some portion of this equipment from us. Actual amounts could differ materially because of operating needs, growth needs, regulatory changes, covenants in our debt arrangements, other expenses or other factors.

Debt service currently consists of required interest payments on the outstanding balance of our ABL Facility and our outstanding 2018 Notes as well as acquisition related indebtedness. We have no major debt maturities prior to August 2016, when our ABL Facility matures. During 2011, note indebtedness was comprised primarily of our 2018 Notes and our 2013 PIK Notes, though the aggregate principal balance of notes changed during 2011. We redeemed $10.0 million of our 2013 PIK Notes in January 2011, redeemed $17.5 million of our 2013 PIK Notes with the proceeds from our common stock offering in March 2011, and redeemed the remaining $5.8 million of our 2013 PIK Notes in July 2011.

We may from time to time repurchase or redeem additional amounts of our outstanding debt or other securities. Any repurchases or redemptions would depend upon prevailing market conditions, our liquidity requirements, contractual restrictions and other factors we consider important. Future repurchases or redemptions may materially impact our liquidity, future tax liability and results of operations.

Our primary sources of liquidity for operations during the 2012 and 2011 periods have been cash flow from operations and borrowing availability under the ABL Facility and our previous ABL Facility. At June 30, 2012, we had $86.1 million of borrowing availability under the ABL Facility. We used a portion of this availability during the third quarter to complete the Dunn’s acquisition. We periodically make business acquisitions with cash as part or all of the consideration. Some acquisitions provide us with new assets to pledge under our ABL Facility and increase our borrowing capacity. If availability under the ABL Facility is insufficient to fund acquisitions, we would either need to raise additional capital or use other sources of liquidity to consummate the desired transactions. We believe that, based on current operations and anticipated growth, our cash flow from operations, together with other available sources of liquidity, will be sufficient to fund anticipated capital expenditures, operating expenses and our other anticipated liquidity needs for the next 12 months. Anticipated debt maturities in 2016, the acquisition of other businesses or other events that we do not foresee may require us to seek alternative financing, such as restructuring or refinancing our long-term debt, selling assets or operations or selling additional debt or equity securities. If these alternatives were not available in a timely manner or on satisfactory terms or were not permitted under any of our debt agreements and we default on our obligations, our debt could be accelerated and our assets might not be sufficient to repay in full all of our obligations.

52

Cash Flows

The following summarizes our cash flows for the six months ended June 30, 2012 and 2011 as reported in our consolidated statements of cash flows in the accompanying consolidated financial statements (in thousands):

	Six months ended June 30,
	2012			2011
Net cash provided by operating activities	$	3,394		$	12,402
Net cash used in investing activities		(71,853	)		(3,057	)
Net cash provided by (used in) financing activities		68,535			(9,454	)
Effect of exchange rate changes on cash		—			(1	)
Net increase (decrease) in cash and cash equivalents		76			(110	)
Cash and cash equivalents at beginning of period		4,053			1,753
Cash and cash equivalents at end of period	$	4,129		$	1,643

Net cash provided by operating activities was $3.4 million for the six-month period ended June 30, 2012, compared to $12.4 million provided by operating activities in the comparable 2011 period. The $9.0 million decrease in cash provided by operating activities was primarily due to an increase in accounts receivable of $11.3 million primarily due to increased energy logistics revenue and an increase in other assets of $4.6 million primarily due to the issuance of a $2.8 million note to an independent affiliate in the current period versus a write-off of debt issuance costs and a reduction in deposits in prior year. These uses of cash were partially offset by sources of cash from an increase in affiliates and independent owner-operators payable of $4.2 million and higher accounts payable of $2.9 million primarily due to growth in our energy logistics business.

Net cash used in investing activities totaled $71.9 million for the six-month period ended June 30, 2012, compared to $3.1 million used in the comparable 2011 period. The $68.8 million increase in cash used in investing activities was due primarily to the 2012 Energy Acquisitions of $60.9 and $8.6 million of net capital expenditures primarily to support our energy logistics business growth initiatives.

Net cash provided by financing activities was $68.5 million during the six-month period ended June 30, 2012, compared to $9.5 million used in financing activities in the comparable 2011 period. In the 2012 period, increased borrowings of $41.5 million under our ABL Facility, and net cash received from our equity offering of approximately $30.5 million was utilized to fund recent asset acquisitions and to pay down $4.5 million of other debt and capital lease obligations. In the 2011 period, net cash received from our equity offering of approximately $17.6 million and increased borrowings of $7.0 million under our Previous ABL Facility were utilized to redeem $27.5 million in principal amount of our 2013 PIK Notes, to pay down other debt and capital lease obligations and to redeem for $1.8 million the preferred shares of our subsidiary, CLC, which we previously reflected on our balance sheet as redeemable noncontrolling interest.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements as defined under Item 303(a)(4) of Regulation S-K.

Contractual Obligations

The following is a schedule of our long-term contractual commitments, including the current portion of our long-term indebtedness at June 30, 2012 over the periods we expect them to be paid (in thousands):

	Total		Remainder of 2012		Years 2013 & 2014		Years 2015 & 2016		The Five Years after 2016
Operating leases (1)	$	81,125	$	10,860	$	32,085	$	28,378	$	9,802
Total indebtedness (2)		360,104		1,557		3,870		108,377		246,300
Capital leases		7,577		2,668		4,637		272		—
Interest on indebtedness (3)		162,574		13,957		54,692		52,747		41,178
Total contractual cash obligations (4)(5)(6)(7)	$	611,380	$	29,042	$	95,284	$	189,774	$	297,280

(1) These obligations represent the minimum rental commitments under all non-cancelable operating leases including the guaranteed residual values at the end of the leases. Commitments also include the operating lease for our corporate headquarters. We expect that some of our operating lease obligations for tractors and trailers will be partially offset by rental revenue from subleasing the tractors to independent affiliates and independent owner-operators and subleasing trailers to independent affiliates.

53

(2) Includes aggregate unamortized discount of $1.4 million.

(3) Amounts presented for interest payments assume that all long-term debt obligations outstanding as of June 30, 2012 will remain outstanding until maturity and interest rates on variable-rate debt in effect as of June 30, 2012 will remain in effect until maturity.

(4) Excludes long-term pension obligations as we are unable to reasonably estimate the ultimate amount or timing of settlement of such obligations. As of June 30, 2012, obligations of $21.3 million were reflected in the consolidated balance sheet. This amount represented our unfunded status of such plans, which is the difference between our projected benefit obligation and the fair value of plan assets, as of such date. See Note 7 of the notes to consolidated financial statements.

(5) Excludes liabilities associated with environmental matters as we are unable to reasonably estimate the ultimate amount or timing of settlement of such liabilities. Liabilities of $9.4 million, which represents our reserves for environmental compliance and remediation were reflected in the consolidated balance sheet as of June 30, 2012. See Note 13 of the notes to consolidated financial statements.

(6) Excludes accrued loss and damage claims as we are unable to reasonably estimate the ultimate amount or timing of settlement of such claims. As of June 30, 2012, accrued loss and damage claims of $16.8 million, which represented the balance of our reserves for such liabilities, were reflected in the consolidated balance sheet.

(7) Excludes liabilities associated with uncertain tax positions as we are unable to reasonably estimate the ultimate amount or timing of settlement of such positions. See Note 10 of the notes to consolidated financial statements.

54

Long-term Debt

Long-term debt consisted of the following (in thousands):

	June 30, 2012			December 31, 2011
Capital lease obligations	$	7,577		$	9,101
ABL Facility		107,000			65,500
9.875% Second-Priority Senior Secured Notes, due 2018		225,000			225,000
5% Subordinated Acquisition Notes		21,300			—
Other Notes		6,804			8,943
Long-term debt, including current maturities		367,681			308,544
Discount on Notes		(1,373	)		(1,481	)
		366,308			307,063
Less current maturities of long-term debt (including capital lease obligations)		(7,787	)		(9,400	)
Long-term debt, less current maturities (including capital lease obligations)	$	358,521		$	297,663

Debt Retirement

The following is a schedule of our indebtedness at June 30, 2012 over the periods we are required to pay such indebtedness (in thousands):

	Remainder of 2012		2013		2014		2015		2016 and after		Total
Capital lease obligations	$	2,668	$	3,400	$	1,237	$	256	$	16	$	7,577
ABL Facility		—		—		—		—		107,000		107,000
9.875% Second-Priority Senior Secured Notes, due 2018 (1)		—		—		—		—		225,000		225,000
5% Subordinated Acquisition Notes		—		—		—		—		21,300		21,300
Other Notes		1,557		2,539		1,331		1,112		265		6,804
Total	$	4,225	$	5,939	$	2,568	$	1,368	$	353,581	$	367,681

(1) Amounts do not include the remaining aggregated unamortized original issue discount of $1.4 million.

The following is a schedule of our debt issuance costs (in thousands):

	December 31, 2011		Additional Debt Issuance Costs		2012 amortization expense			June 30, 2012
ABL Facility	$	5,094	$	277	$	(607	)	$	4,764
9.875% Second-Priority Senior Secured Notes, due 2018		5,560		—		(448	)		5,112
Total	$	10,654	$	277	$	(1,055	)	$	9,876

Amortization expense of deferred issuance costs was $0.6 million for each of the three months ending June 30, 2012 and 2011, and is included in interest expense. Amortization expense of deferred issuance costs was $1.1 million for each of the six months ending June 30, 2012 and 2011, and is included in interest expense. We are amortizing these costs over the term of the debt instruments.

The ABL Facility

On August 19, 2011, we entered into the ABL Facility. The ABL Facility provides for a revolving credit facility with a maturity of five years and a maximum borrowing capacity of $250.0 million. The ABL Facility includes borrowing capacity of up to $150.0 million for letters of credit and up to $30.0 million for swingline borrowings on same-day notice. This ABL Facility replaced the previous ABL Facility. The proceeds of the ABL Facility were used to repay all outstanding indebtedness under our previous ABL Facility, and to pay related fees and expenses. The ABL Facility is available for working capital needs and general corporate purposes, including permitted acquisitions. At June 30, 2012, we had $86.1 million of borrowing availability under the ABL Facility.

55

Borrowings under the ABL Facility bear interest at a rate equal to an applicable margin plus, at our option, either a base rate or LIBOR. The applicable margin at June 30, 2012 was 1.00% for base rate borrowings and 2.00% for LIBOR borrowings. The applicable margin for borrowings will be reduced or increased based on aggregate borrowing base availability under the ABL Facility and may be further reduced in the event that our fixed charge coverage ratio as calculated under the ABL Facility exceeds a target level. The base rate is equal to the highest of the prime rate, the federal funds overnight rate plus 0.50% and 30-day LIBOR plus 1.00%. In addition to paying interest on outstanding principal under the ABL Facility, we are required to pay an unutilized commitment fee to the lenders quarterly at a rate ranging from 0.25% to 0.50%, depending on the average utilization of the ABL Facility. We also pay customary letter of credit fees quarterly. We may voluntarily repay outstanding loans under the ABL Facility at any time without premium or penalty, other than customary “breakage” costs with respect to LIBOR loans. The interest rate on the ABL Facility at June 30, 2012 was 2.3%.

The borrowing base for the ABL Facility consists of eligible accounts receivable, inventory, tractor and trailer equipment, real property and certain other equipment.

We recorded $5.8 million in new debt issuance costs relating to the ABL Facility, of which $4.5 million related to the new issuance and $1.3 million related to unamortized debt issuance costs of the previous ABL Facility. We are amortizing the debt issuance costs over the remaining term of the ABL Facility.

The Previous ABL Facility

Our previous ABL Facility consisted of a current asset tranche in the amount of $205.0 million and a fixed asset tranche in the amount of $20.0 million. The previous ABL Facility included a sublimit of up to $150.0 million to issue letters of credit and was available for working capital needs and general corporate purposes, including permitted acquisitions. The interest rate under the current asset tranche was based, at our option, on either the administrative agent’s base rate plus 1.00% or on the Eurodollar LIBOR rate plus an applicable margin. The administrative agent’s base rate was equal to the greater of the federal funds overnight rate plus 0.50% or the prime rate. The interest rate under the fixed asset tranche was based, at our option, on either the administrative agent’s base rate plus 1.25% or on LIBOR plus an applicable margin. The applicable margin under either tranche was subject to increases or reductions based upon the amounts available for borrowing. The interest rate on the previous ABL Facility at June 30, 2011 was 2.1%. We incurred $6.9 million in debt issuance costs relating to the previous ABL Facility.

Accounting Treatment for the Exchange of New ABL Facility for Previous ABL Facility

The exchange of the Previous ABL Facility for the New ABL Facility was treated partially as a debt modification and partially as a debt extinguishment in accordance with FASB guidance. Under applicable FASB guidance, we compared the product of the remaining term multiplied by the maximum borrowing capacity of the Previous ABL Facility to the maximum borrowing capacity of the new arrangement on a creditor-by-creditor basis to determine the accounting treatment. For each creditor, if the borrowing capacity of the new arrangement is greater than or equal to the maximum borrowing capacity of the old arrangement, then the exchange is classified as a modification, and, if not, the exchange is classified as an extinguishment in proportion to the percentage of the decrease. If the exchange is classified as a modification, then any unamortized debt issuance costs relating to the Previous ABL Facility are allocated to the New ABL Facility and amortized over the term of the New ABL Facility using the effective interest method. Furthermore, if the exchange is classified as an extinguishment, then any unamortized debt issuance costs relating to the Previous ABL Facility are written off in proportion to the decrease in maximum borrowing capacity of the New ABL Facility. Upon the exchange of the Previous ABL Facility with the New ABL Facility, we wrote off $0.9 million of unamortized debt issuance costs, reflecting the proportion of such costs determined to be for indebtedness treated as extinguished, and the remaining unamortized debt issuance costs of $1.3 million, relating to indebtedness deemed a modification, were allocated to the New ABL Facility.

9.875% Second-Priority Senior Secured Notes Due 2018

On November 3, 2010, we issued $225.0 million aggregate principal amount of the 2018 Notes. With the proceeds of the issuance of the 2018 Notes, we repaid and redeemed our certain of our outstanding notes, redeemed $47.5 million of our 2013 PIK Notes, and paid down a portion of our outstanding borrowings under the previous ABL Facility.

Interest on the 2018 Notes is payable at a rate of 9.875% per annum, semiannually on May 1 and November 1 of each year. The payment obligations of QD LLC and QD Capital under the 2018 Notes are guaranteed by QDI and by all of its 100% owned domestic subsidiaries other than immaterial subsidiaries. The 2018 Notes are senior obligations of QD LLC and QD Capital and are secured by a second-priority lien on certain assets. Pursuant to an intercreditor agreement, the liens on the collateral securing the 2018 Notes rank junior in right of payment to the ABL Facility and obligations under certain hedging agreements and cash management obligations and certain other first-lien obligations.

The 2018 Notes mature on November 1, 2018. Prior to November 1, 2014, we may redeem the 2018 Notes, in whole or in part, at a price equal to 100% of the principal amount of the 2018 Notes redeemed, plus accrued and unpaid interest to the redemption date, plus an additional “make-whole premium” intended to capture the value of holding 2018 Notes through November 1, 2014, but not less than 1%. During any twelve-month period prior to

56

November 1, 2014, we may also redeem up to 10% of the original aggregate principal amount of the 2018 Notes at a redemption price of 103%, plus accrued and unpaid interest to the redemption date. Additionally, at any time prior to November 1, 2013, we may redeem up to 35% of the principal amount of the 2018 Notes at a redemption price of 109.875%, plus accrued and unpaid interest to the redemption date, with the net proceeds of one or more equity offerings so long as at least 50% of the aggregate original principal amount of the 2018 Notes remains outstanding afterwards. On or after November 1, 2014, we may redeem the 2018 Notes, in whole or in part, at the following prices (expressed as a percentage of principal amount), plus accrued and unpaid interest to the redemption date, if redeemed during the 12-month period commencing on November 1 of the years set forth below:

Period	Redemption Price
2014		104.938	%
2015		102.469	%
2016 and thereafter		100.000	%

We recorded $6.6 million in debt issuance costs relating to the 2018 Notes, of which $6.4 million was related to the new issuance and $0.2 million of unamortized debt issuance costs related to our 10% Senior Notes due 2013 which are no longer outstanding. We are amortizing these costs over the term of the 2018 Notes.

5% Subordinated Acquisition Notes

We issued promissory notes in an aggregate principal amount of $21.3 million as part of the consideration for Bice and RM acquisitions. The promissory notes bear interest at a fixed rate of 5.0% per annum and mature June 1, 2017. Payments of interest only are scheduled for the end of each calendar quarter with principal payable in full at maturity. The promissory notes are unsecured and subordinated. The notes are non-negotiable and non-transferable and may be prepaid at any time without premium or penalty.

11.75% Senior Subordinated PIK Notes Due 2013

On October 15, 2009, we issued $80.7 million aggregate principal amount of the 2013 PIK Notes. The payment obligations of QD LLC and QD Capital under the 2013 PIK Notes were guaranteed by QDI and by all of its domestic subsidiaries other than immaterial subsidiaries. The 2013 PIK Notes were unsecured senior subordinated obligations of QD LLC and QD Capital. Interest was payable on the 2013 PIK Notes at 11.75% per annum, payable 9% in cash and 2.75% in the form of additional 2013 PIK Notes.

At January 1, 2011, the outstanding principal balance of these notes was $33.3 million. On January 20, 2011, we redeemed $10.0 million of these notes plus accrued and unpaid interest. On March 11, 2011, we redeemed $17.5 million of these notes plus accrued and unpaid interest. We redeemed the remaining $5.8 million of principal amount of our 2013 PIK Notes in July 2011.

We recorded $1.5 million in debt issuance costs related to the 2013 PIK Notes and we recorded $6.7 million in note issuance discount due to warrants issued concurrently with the issuance of the 2013 PIK Notes. At January 1, 2011, $2.1 million of unamortized debt issuance costs and original issue discount remained. In conjunction with the January 20, 2011 and March 11, 2011 redemptions, we wrote off $1.8 million of unamortized debt issuance costs and unamortized original issue costs in the first quarter of 2011. In conjunction with the July 20, 2011 final redemption, we wrote off the remaining $0.3 million of unamortized debt issuance costs and unamortized original issue costs in the third quarter of 2011.

Collateral, Guarantees and Covenants

The ABL Facility contains a fixed charge coverage ratio which only needs to be met if borrowing availability is less than $20.0 million or $25.0 million, depending upon the size of our borrowing base. The ABL Facility contains a number of covenants that, among other things, restrict, subject to certain exceptions, our ability to sell assets; incur additional indebtedness; prepay other indebtedness, including the 2018 Notes; pay dividends and distributions or repurchase QDI’s capital stock; create liens on assets; make investments; make certain acquisitions; engage in mergers or consolidations; engage in certain transactions with affiliates; amend certain charter documents and material agreements governing subordinated indebtedness, including the 2018 Notes; change our business; and enter into agreements that restrict dividends from QD LLC’s subsidiaries. The ABL Facility also contains certain customary affirmative covenants and events of default.

The indenture governing the 2018 Notes contains covenants that restrict, subject to certain exceptions, our ability to, among other things: (i) incur additional debt or issue certain preferred shares; (ii) pay dividends on or make other distributions in respect of QDI’s common stock or make other restricted payments; (iii) make certain investments; (iv) sell certain assets; (v) create or permit to exist dividend and/or payment restrictions affecting their restricted subsidiaries; (vi) create liens on certain assets to secure debt; (vii) consolidate, merge, sell or otherwise dispose of all or substantially all of their assets; (viii) enter into certain transactions with their affiliates; and (ix) designate their subsidiaries as unrestricted subsidiaries. The indenture also provides certain customary events of default, which, if any of them occurs, may result in the principal, interest and any other monetary obligations on the then outstanding 2018 Notes becoming payable immediately.

57

The payment obligations under the ABL Facility are senior secured obligations of QD LLC and QD Capital and are secured by a first-priority lien on certain assets and guaranteed by QDI and by all of its domestic restricted subsidiaries other than immaterial subsidiaries. The payment obligations of QD LLC and QD Capital under the 2018 Notes are guaranteed by QDI and by all of its domestic subsidiaries other than immaterial subsidiaries. The 2018 Notes, and the guarantees thereof, are senior obligations of QD LLC and QD Capital and are secured by a second-priority lien on certain assets. Pursuant to an intercreditor agreement, the liens on the collateral securing the 2018 Notes rank junior in right of payment to the ABL Facility and obligations under certain hedging agreements and cash management obligations and certain other first lien obligations. We were in compliance with the covenants under the ABL Facility and the 2018 Notes at June 30, 2012.

Other Liabilities and Obligations

As of June 30, 2012, we had $9.4 million of environmental liabilities, $21.3 million of pension plan obligations and $16.8 million of insurance claim obligations. The timing of the cash payments for environmental liabilities and insurance claims fluctuates from quarter to quarter. We expect to incur additional environmental costs in the future for environmental studies and remediation efforts that we will be required to undertake related to legacy CLC sites.

As of June 30, 2012, we had $29.3 million in outstanding letters of credit that may be drawn by third parties to satisfy some of the obligations described above and certain other obligations. We are required to provide letters of credit to our insurance administrator to ensure that we pay required claims. The letter of credit issued to our insurance administrator had a maximum draw amount of $22.9 million as of June 30, 2012. If we fail to meet certain terms of our agreement, the insurance administrator may draw down the entire letter of credit. The remaining $6.4 million of outstanding letters of credit as of June 30, 2012 relate to various other obligations.

Other Issues

While uncertainties relating to environmental, labor and other regulatory matters exist within the trucking industry, management is not aware of any trends or events likely to have a material adverse effect on liquidity or the accompanying financial statements. Our credit ratings are affected by many factors, including our financial results, operating cash flows and total indebtedness.

The ABL Facility and the indentures governing the 2018 Notes contain certain limitations on QD LLC’s ability to make distributions to QDI. We do not consider these restrictions to be significant, because QDI is a holding company with no significant operations or assets, other than ownership of 100% of QD LLC’s membership units. QD LLC’s direct and indirect 100% owned subsidiaries are generally permitted to make distributions to QD LLC, which is the principal obligor under the New ABL Facility and the 2018 Notes.

FORWARD-LOOKING STATEMENTS AND CERTAIN CONSIDERATIONS

This report, along with other documents that are publicly disseminated by us, contain or might contain forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended. All statements included in this report and in any subsequent filings made by us with the SEC, other than statements of historical fact, that address activities, events or developments that we or our management expect, believe or anticipate will or may occur in the future are forward-looking statements. These statements represent our reasonable judgment on the future based on various factors and using numerous assumptions and are subject to known and unknown risks, uncertainties and other factors that could cause our actual results and financial position to differ materially. We claim the protection of the safe harbor for forward-looking statements provided in the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act and Section 21E of the Exchange Act. Examples of forward-looking statements include: (i) projections of revenue, earnings, capital structure and other financial items, (ii) statements of our plans and objectives, (iii) statements of expected future economic performance, and (iv) assumptions underlying statements regarding us or our business. Forward-looking statements can be identified by, among other things, the use of forward-looking language, such as “targets,” “bodes,” “believes,” “expects,” “estimates,” “may,” “will,” “should,” “could,” “seeks,” “plans,” “intends,” “anticipates” or “scheduled to” or the negatives of those terms, or other variations of those terms or comparable language, or by discussions of strategy or other intentions.

Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause our actual results to differ materially from those contemplated by the statements. The forward-looking information is based on various factors and was derived using numerous assumptions. Important factors that could cause our actual results to be materially different from the forward-looking statements include the following risks and other factors discussed under the Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2011 and in our Quarterly Reports on Form 10-Q. These factors include:

58

• the effect of local, national and international economic, credit and capital market conditions on the economy in general, and on the particular industries in which we operate, including excess capacity in the industry, the availability of qualified drivers, changes in fuel and insurance prices, interest rate fluctuations, and downturns in customers’ business cycles and shipping requirements;

• our substantial leverage and our ability to make required payments and restrictions contained in our debt arrangements;

• competition and rate fluctuations;

• our reliance on independent affiliates and independent owner-operators;

• the loss of or material reduction in the services to one or more of our major customers;

• our liability as a self-insurer to the extent of our deductibles as well as changing conditions and pricing in the insurance marketplace;

• increased unionization, which could increase our operating costs or constrain operating flexibility;

• changes in the future, or our inability to comply with, governmental regulations and legislative changes affecting the transportation industry generally or in the particular segments in which we operate;

• increased costs or operating restrictions on us or our customers in the energy logistics market;

• our ability to comply with current and future environmental regulations and the increasing costs relating to environmental compliance;

• potential disruption at U.S. ports of entry;

• diesel fuel prices and our ability to recover costs through fuel surcharges;

• our ability to attract and retain qualified drivers;

• terrorist attacks and the cost of complying with existing and future anti-terrorism security measures;

• our dependence on senior management;

• the potential loss of our ability to use net operating losses to offset future income;

• potential future impairment charges;

• the interests of our largest shareholder, which may conflict with your or our interests;

• our ability to successfully identify acquisition opportunities, consummate such acquisitions and integrate acquired businesses and converted independent affiliates;

• our ability to execute plans to profitably operate in the transportation business and disposal well business within the energy logistics market;

• our success in entering new markets;

• adverse weather conditions;

• changes in health insurance benefit regulations;

• our liability for our proportionate share of unfunded vested benefit liabilities in the event of our withdrawal from any of our multi-employer pension plans; and

• changes in planned or actual capital expenditures due to operating needs, changes in regulation, covenants in our debt arrangements and other expenses, including interest expenses.

In addition, there may be other factors that could cause our actual results or financial condition to be materially different from the results referenced in the forward-looking statements. All forward-looking statements contained in this Quarterly Report on Form 10-Q are qualified in their entirety by this cautionary statement. Forward-looking statements speak only as of the date they are made, and we do not intend to update or otherwise revise the forward-looking statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect the occurrence of unanticipated events.

ADDITIONAL INFORMATION AVAILABLE ON COMPANY WEBSITE

Our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports may be viewed or downloaded electronically or as paper copies from our website: www.qualitydistribution.com as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Our recent press releases are also available to be viewed or downloaded electronically at www.qualitydistribution.com. We will also

59

provide electronic or paper copies of our SEC filings free of charge on request. We regularly post or otherwise make available information on the Investor Relations section of our website that may be important to investors. Any information on or linked from our website is not incorporated by reference into this Quarterly Report on Form 10-Q.

ITEM 3—Quantitative and Qualitative Disclosures about Market Risk

We are subject to market risks from (i) interest rates due to our variable interest rate indebtedness, (ii) foreign currency fluctuations due to our international operations and (iii) increased commodity prices due to the diesel consumption necessary for our operations. During the six months ended June 30, 2012, we have not held derivative instruments or engaged in other hedging transactions to reduce our exposure to such risks.

Interest Rate Risk

We are exposed to the impact of interest rate changes through our variable-rate borrowings under the ABL Facility. With regard to the ABL Facility, at QD LLC’s option, the applicable margin for borrowings at June 30, 2012 was 1.00% with respect to base rate borrowings and 2.00% with respect to LIBOR borrowings. The applicable margin for such borrowings will be reduced or increased based on aggregate borrowing base availability under the ABL Facility and may be further reduced in the event that our fixed charge coverage ratio as calculated under the ABL Facility exceeds a target level. The base rate under the ABL Facility is equal to the highest of the prime rate, the federal funds overnight rate plus 0.50% and 30 day LIBOR plus 1.00%.

	Balance at June 30, 2012 ($ in 000s)		Interest Rate at June 30, 2012			Effect of 1% Increase ($ in 000s)
ABL Facility	$	107,000		2.28	%	$	1,070

At June 30, 2012, a 1% point increase in the current per annum interest rate would result in $1.1 million of additional interest expense during the next 12 months. The foregoing calculation assumes an instantaneous 1% point increase in the rates under the ABL Facility and that the principal amount is the amount outstanding as of June 30, 2012. The calculation therefore does not account for the differences in the market rates upon which the interest rates of our indebtedness are based, our option to elect the lowest of three different interest rates under our borrowings or other possible actions, such as prepayment, that we might take in response to any rate increase.

Foreign Currency Exchange Rate Risk

Operating in international markets involves exposure to the possibility of volatile movements in foreign exchange rates. The currencies in each of the countries in which we operate affect:

• the results of our international operations reported in United States dollars; and

• the value of the net assets of our international operations reported in United States dollars.

These exposures may impact future earnings or cash flows. Revenue from foreign locations (Canada and Mexico) represented approximately 5.1% of our consolidated revenue for the six months ended June 30, 2012 and 6.5% of our consolidated revenue for the six months ended June 30, 2011. The economic impact of foreign exchange rate movements is complex because such changes are often linked to variability in real growth, inflation, interest rates, governmental actions and other factors. These changes, if material, could cause us to adjust our financing and operating strategies. Therefore, to isolate the effect of changes in currency does not accurately portray the effect of these other important economic factors. As foreign exchange rates change, translation of the income statements of our international subsidiaries into U.S. dollars affects year-over-year comparability of operating results. While we may hedge specific transaction risks, we generally do not hedge translation risks because we believe there is no long-term economic benefit in doing so.

Assets and liabilities for our Canadian operations are matched in the local currency, which reduces the need for dollar conversion. Our Mexican operations use the United States dollar as their functional currency. Any foreign currency impact on translating assets and liabilities into dollars is included as a component of shareholders’ deficit. Our revenue results for the six months ended June 30, 2012 were negatively impacted by a $0.6 million foreign currency movement, primarily due to the weakening of the Canadian dollar against the United States dollar.

Changes in foreign exchange rates that had the largest impact on translating our international operating profits for the first six months of 2012 related to the Canadian dollar versus the United States dollar. We estimate that a 1% adverse change in the Canadian dollar foreign exchange rate would have decreased our revenues by approximately $0.2 million for the six months ended June 30, 2012, assuming no changes other than the exchange rate itself. Our intercompany loans are subject to fluctuations in exchange rates primarily between the United States dollar and the Canadian dollar. Based on the outstanding balance of our intercompany loans at June 30, 2012, a change of 1% in the exchange rate for the Canadian dollar would cause a change in our foreign exchange result of less than $0.1 million.

60

Commodity Price Risk

The price and availability of diesel fuel are subject to fluctuations due to changes in the level of global oil production, seasonality, weather, global politics and other market factors. Historically, we have been able to recover a majority of fuel price increases from our customers in the form of fuel surcharges. The price and availability of diesel fuel can be unpredictable as well as the extent to which fuel surcharges can be collected to offset such increases. In the six months ended June 30, 2012 and 2011, a majority of fuel costs were covered through fuel surcharges.

ITEM 4—Controls and Procedures

Evaluation of disclosure controls and procedures

As required by Exchange Act Rules 13a-15(b) and 15d-15(b), management has evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on their evaluation, management concluded our disclosure controls and procedures (as defined in Securities Exchange Act Rules 13a-15(e) and 15d-15(e)) were effective as of June 30, 2012 to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and were effective as of June 30, 2012 to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the quarter ended June 30, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 1—Legal Proceedings

Other than reported in “Item 3—Legal Proceedings” of our Annual Report on Form 10-K for the year ended December 31, 2011, “Note 20. Commitments and Contingencies” to our audited consolidated financial statements contained in such Form 10-K and “Note 13. Commitments and Contingencies” to our unaudited consolidated financial statements included in this report, we are not currently a party to any material pending legal proceedings other than routine matters incidental to our business and no material developments have occurred in any proceedings described in such Form 10-K.

ITEM 1A—Risk Factors

You should carefully consider the factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2011 included under Item 1A “Risk Factors” in addition to the other information set forth in this report. The risks described in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q are not the only risks facing our Company. Our business is also subject to the following risks:

Our operations involve hazardous materials, which could create environmental liabilities.

Our activities, particularly those relating to our handling, transportation, storage and disposal of bulk chemicals, flowback and produced water and oil, are subject to environmental, health and safety laws and regulation by governmental authorities in the United States as well as foreign governmental authorities. Among other things, these environmental laws and regulations address emissions to the air, discharges onto land and into water, the generation, handling, storage, transportation, treatment and disposal of waste materials, and the health and safety of our employees. These laws generally require us to obtain and maintain various licenses and permits. Most environmental laws provide for substantial fines, penalties and potential criminal sanctions for violations. Additionally, we have been, and may in the future be required to obtain financial guarantees, such as letters of credit, for environmental obligations. Environmental, health and safety laws and regulations are complex, change frequently and have tended to become stricter over time. Some of these laws and regulations are subject to varying and conflicting interpretations. There can be no assurance that violations of such laws, regulations, permits or licenses will not be identified or occur in the future, or that such laws and regulations will not change in a manner that could impose material costs on us.

61

As a handler of hazardous substances, we are potentially subject to strict, joint and several liability for investigating and rectifying the consequences of spills, leakage from injection wells and other environmental releases of these substances to surface or subsurface soils, surface water or groundwater. We have incurred remedial costs and regulatory penalties for chemical or wastewater spills and releases at our facilities or over the road. As a result of environmental studies conducted at our facilities or at third party sites, we have identified environmental contamination at certain sites that will require remediation and we are currently conducting investigation and remediation projects at eight of our facilities. In addition, we may be liable for environmental damages caused by previous owners of property purchased by us. Future liabilities and costs under environmental, health, and safety laws are not easily predicted, and such liabilities could result in a material adverse effect on our financial condition, results of operations or business reputation.

In addition, we have been named a potentially responsible party at various sites under the CERCLA and other environmental regulatory programs. Our current reserves provided for these sites may prove insufficient, which would result in future charges against earnings. Furthermore, we could be named a potentially responsible party at other sites in the future and the costs associated with such future sites could be material.

Federal and state legislative and regulatory initiatives could result in increased costs and additional operating restrictions upon us or our oil and gas frac shale energy customers in the energy logistics market.

Frac shale drilling is under significant legislative, regulatory and public scrutiny. Legislation to modify the treatment of hydraulic fracturing under the Safe Drinking Water Act has been proposed in Congress, the EPA is studying the potential environmental impacts of frac shale drilling activities, and the U.S. Department of the Interior has proposed to require companies to publicly disclose the chemicals used in hydraulic fracturing operations on public lands. In addition, some states and localities have adopted, and others are reportedly considering adopting, regulations or ordinances that could restrict frac shale drilling and injection wells in certain circumstances, or that would impose higher taxes, fees or royalties on us or on our energy logistics market customers. For example, North Dakota has adopted regulations requiring the permitting and bonding of injection wells and disclosure of fluids utilized in the hydraulic fracturing process. Similarly, Texas has adopted fluids disclosure requirements. Moreover, public debate over frac shale drilling has been increasing and has reportedly resulted in delays of well permits in some areas.

Future U.S. federal, state or local laws or regulations could significantly restrict, or increase costs associated with, hydraulic fracturing and make it more difficult or costly for producers to conduct hydraulic fracturing operations, which could result in a decline in exploration and production. New laws and regulations, and new enforcement policies by regulatory agencies, could also expressly restrict the quantities, sources and methods of water use and disposal, including in injection wells, and otherwise increase our and our customers’ costs of compliance, which could minimize water use and disposal needs even if other limits on drilling and completing new wells were not imposed. Any decline in exploration and production or any restrictions on water use and disposal could negatively impact our operation of disposal wells, result in a decline in demand for our energy logistics business and have a material adverse effect on our business, financial condition, results of operations and cash flows.

Although we expect the Greensville, Trojan, Bice, RM and Dunn’s acquisitions to be beneficial, their expected benefits may not be realized, in the time frame anticipated or at all, because of integration or other challenges and we may become liable for liabilities of which we are currently unaware.

Achieving the expected benefits of the Greensville, Trojan, Bice, RM and Dunn’s acquisitions will depend on the timely and efficient integration of their operations, business culture, technology and personnel with our Company. The integration may not be completed as quickly as expected, and if we fail to effectively integrate the companies or the integration takes longer than expected, we may not achieve the expected benefits of the acquisition. The challenges involved in this integration include, among others:

• potential disruption on our ongoing business and distraction of management,

• unexpected loss of key employees or customers of Greensville, Trojan, Bice, RM and Dunn’s ,

• conforming Greensville, Trojan, Bice, RM and Dunn’s standards, processes, procedures and controls with our operations,

• hiring additional management and other critical personnel, and

• increasing the scope, geographic diversity and complexity of our operations.

We conducted due diligence investigations of Greensville, Trojan, Bice, RM and Dunn’s operations prior to consummating these acquisitions. However, we cannot assure you that our efforts were sufficient to uncover all material information concerning such operations. As a result of such acquisitions, we may be held liable for risks and liabilities (including environmental-related costs or liabilities at disposal wells previously operated by RM or Dunn’s or otherwise) of which we are not aware at the present time, some of which may not have been discoverable from our due diligence efforts.

62

ITEM 2—Unregistered Sales of Equity Securities and Use of Proceeds

During quarter ended June 30, 2012, we completed two related acquisitions in which a portion of the purchase price consideration consisted of unregistered shares of our common stock. On June 1, 2012, we issued a total of 470,944 shares of our common stock, which was valued in aggregate at $5.4 million, to Wylie C. Bice, the sole member of Bice in partial consideration for the acquisition of the operating assets of Bice. On June 11, 2012, we issued a total of 313,963 shares of our common stock, which was valued in aggregate at $3.6 million , to Wylie C. Bice, Monte Gawryluk and Dean A. Rodne, collectively the holders of all outstanding limited liability company membership interests in RM Resources, in partial consideration for the acquisition of the operating assets of RM Resources. All shares of common stock were issued in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act, as the shares were issued to the owners of businesses acquired in privately negotiated transactions not involving any public offering or solicitation.

ITEM 3—Defaults Upon Senior Securities

None.

ITEM 4—Mine Safety Disclosures

Not applicable.

ITEM 5—Other Information

None.

63

ITEM 6—Exhibits

Exhibit No.	Description
2.1	Asset Purchase Agreement, dated May 7, 2012 by and among Quality Carriers, Inc., Wylie Bice Trucking, LLC and Wylie C. Bice. Incorporated herein by reference to Exhibit 2.1 to Current Report on Form 8-K, filed June 6, 2012.
2.2	Asset Purchase Agreement, dated May 7, 2012 by and among QC Environmental Services, Inc., RM Resources, LLC, Wylie C. Bice, Monte Gawryluk and Dean A. Rodne. Incorporated herein by reference to Exhibit 2.1 to Current Report on Form 8-K, filed June 15, 2012.
4.1	Second Supplemental Indenture to Indenture with respect to the 9.875% Second-Priority Senior Secured Notes due 2018, dated as of August 1, 2012, among Quality Distribution, LLC, QD Capital Corporation, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee and The Bank of New York Mellon Trust Company, N.A., as Collateral Agent.
10.1	Quality Distribution, Inc. 2012 Equity Incentive Plan. Incorporated herein by reference to Exhibit 10.1 to Quality Distribution, Inc.’s Current Report on Form 8-K, filed May 31, 2012.
10.2	Form of Quality Distribution, Inc. 2012 Equity Incentive Plan Nonqualified Stock Option Award Agreement. Incorporated herein by reference to Exhibit 10.2 to Quality Distribution, Inc.’s Current Report on Form 8-K, filed May 31, 2012.
10.3	Form of Quality Distribution, Inc. 2012 Equity Incentive Plan Restricted Stock Award Agreement. Incorporated herein by reference to Exhibit 10.3 to Quality Distribution, Inc.’s Current Report on Form 8-K, filed May 31, 2012.
10.4	Form of Quality Distribution, Inc. 2012 Equity Incentive Plan Restricted Stock Award Agreement. Incorporated herein by reference to Exhibit 10.3 to Quality Distribution, Inc.’s Current Report on Form 8-K, filed May 31, 2012.
10.5	Agreement of Separation and General Release dated July 12, 2012, between Quality Distribution, Inc. and Jonathan C. Gold
10.6	Employment Agreement, effective July 9, 2012, between Quality Distribution, Inc. and John T. Wilson
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant To 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	Interactive Data File

64

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	QUALITY DISTRIBUTION, INC.
August 9, 2012	/s/    GARY R. ENZOR
	GARY R. ENZOR,
	CHIEF EXECUTIVE OFFICER
	(PRINCIPAL EXECUTIVE OFFICER)
August 9, 2012	/s/    JOSEPH J. TROY
	JOSEPH J. TROY,
	EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER (PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)

65

EX-4.1

Exhibit 4.1

SECOND SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”) dated as of August 1, 2012 among QC ENVIRONMENTAL SERVICES, INC., a North Dakota corporation, QC ENERGY RESOURCES NORTHWEST, LLC, a Delaware limited liability company, QC ENERGY RESOURCES TEXAS, LLC, a Delaware limited liability company, QC ENERGY LOGISTICS, LLC, a Delaware limited liability company, and QUALITY BULK LOGISTICS, LLC, a Delaware limited liability company (each, a “New Guarantor” and, collectively, the “New Guarantors”), the other Guarantors named in the signature pages hereto, QUALITY DISTRIBUTION, LLC, a Delaware limited liability company, and QD CAPITAL CORPORATION, a Delaware corporation (together, the “Issuers”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association, as trustee under the indenture referred to below (the “Trustee”).

W I T N E S S E T H:

WHEREAS, the Issuers and certain Guarantors named therein have heretofore executed and delivered to the Trustee an indenture (as amended, supplemented or otherwise modified, the “Indenture”) dated as of November 3, 2010, providing for the issuance of the Issuers’ Second-Priority Senior Secured Notes due 2018 ( the “Notes”), initially in the aggregate principal amount of $225,000,000;

WHEREAS, Section 4.11 of the Indenture provides that under certain circumstances the Issuers are required to cause each New Guarantors to execute and deliver to the Trustee a supplemental indenture pursuant to which such New Guarantors shall unconditionally guarantee all the Issuers’ Obligations under the Notes and the Indenture pursuant to a Guarantee on the terms and conditions set forth herein;

WHEREAS, Sections 9.01(a)(iv), (x) and (xii) of the Indenture provide, respectively, that the Issuers, the Guarantors and the Trustee may amend the Indenture without the consent of the holders to (i) add a Guarantor with respect to the Notes pursuant to Section 4.11, (ii) surrender any right or power in the Indenture conferred upon the Issuers and (iii) make any change that does not adversely affect the rights of any holder;

WHEREAS, the Issuers, the Guarantors, the New Guarantors and the Trustee are authorized to execute and deliver this Supplemental Indenture;

WHEREAS, the Issuers have complied with all conditions precedent provided for in the Indenture relating to this Supplemental Indenture; and

WHEREAS, the Issuers have requested that the Trustee execute and deliver this Supplemental Indenture.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Issuers, the Guarantors, the New Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the holders of the Notes as follows:

1. Defined Terms. As used in this Supplemental Indenture, terms defined in the Indenture or in the preamble or recital hereto are used herein as therein defined, except that the term “holders” in

1

this Supplemental Indenture shall refer to the term “holders” as defined in the Indenture and the Trustee acting on behalf of and for the benefit of such holders. The words “herein,” “hereof” and “hereby” and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular section hereof.

2. Effectiveness. This Supplemental Indenture shall become effective immediately upon its execution and delivery by the Issuers and the Trustee.

3. Agreement to Guarantee. Each New Guarantor hereby agrees, jointly and severally with all existing Guarantors and all other New Guarantors, to unconditionally guarantee the Issuers’ Obligations under the Notes and the Indenture on the terms and subject to the conditions set forth in Article XII of the Indenture and to be bound by all other applicable provisions of the Indenture and the Notes and to perform all of the obligations and agreements of a Guarantor under the Indenture.

4. Amendments. Section 11.04 of the Indenture is hereby amended by:

(i) in subsection (a) thereof, replacing the phrase “subject to subsections (b) and (c) of this Section 11.04” with the phrase “subject to subsections (b), (c) and (d) of this Section 11.04”; and

(ii) adding the following new subsection (d) at the end thereof:

“ (d) Notwithstanding anything herein to the contrary, to the extent necessary in order that under Rule 3-10 or Rule 3-16 of Regulation S-X under the Securities Act of 1933 (or any other law, rule or regulation), any direct or indirect parent of QD LLC not be required to file separate financial statements of QD, LLC and/or its Subsidiaries with the SEC (or any other governmental agency), none of (i) the provisions of Section 11.04(a) or (ii) the provisions of Article XII of this Indenture shall operate to release the Guarantee of any direct or indirect parent of QD LLC.”

5. Ratification of Indenture; Supplemental Indentures Part of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby.

6. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

7. Trustee Makes No Representation. The Trustee makes no representation as to the validity or sufficiency of this Supplemental Indenture. The recitals contained herein shall be taken as the statement of the Issuers, the Guarantors and the New Guarantors and the Trustee assumes no responsibility for their correctness.

8. Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.

2

9. Effect of Headings. The Section headings herein are for convenience only and shall not effect the construction thereof.

10. Notices. All notices or other communications to the New Guarantors shall be given as provided in Section 13.02 of the Indenture.

3

IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first written above.

QUALITY DISTRIBUTION, LLC, as an Issuer
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

QD CAPITAL CORPORATION, as an Issuer
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

BOASSO AMERICA CORPORATION, as a Guarantor
By:	/s/ Gary R. Enzor
Name: Title:	Gary R. Enzor CEO

CHEMICAL LEAMAN CORPORATION, as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

ENVIROPOWER INC., as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

4

QUALA SYSTEMS, INC., as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

POWER PURCHASING, INC., as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

AMERICAN TRANSINSURANCE GROUP, INC., as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

MEXICO INVESTMENTS, INC., as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

MTL OF NEVADA, as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

5

QD RISK SERVICES, INC., as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

QUALITY CARRIERS, INC., as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

QC DRY BULK, LLC, as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

QC ENERGY RESOURCES, LLC, as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

QC ENVIRONMENTAL SERVICES, INC. as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

6

QC ENERGY RESOURCES NORTHWEST, LLC, as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

QC ENERGY RESOURCES TEXAS, LLC, as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

QC ENERGY LOGISTICS, LLC, as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

QUALITY BULK LOGISTICS, LLC, as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

7

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., not in its individual capacity, but solely as Trustee
By:	/s/ Melonee Young
Name:	Melonee Young
Title:	Vice President

8

OFFICER’S CERTIFICATE

August 1, 2012

This Officer’s Certificate is delivered pursuant to the Indenture, dated as of November 3, 2010 (as amended, restated, supplemented or otherwise modified from time to time, the “Indenture”), among Quality Distribution, LLC, a Delaware limited liability company (the “Company”), QD Capital Corporation, a Delaware corporation (together with the Company, the “Issuers”), the guarantors party thereto (the “Guarantors”) and The Bank of New York Mellon Trust Company, N.A., as Trustee (the “Trustee”), relating to the 9.875% Second-Priority Senior Secured Notes due 2018 of the Issuers. Reference is hereby made to (i) the Second Supplemental Indenture, of even date herewith (the “Supplemental Indenture”), among the Issuers, QC Environmental Services, Inc., a North Dakota corporation, QC Energy Resources Northwest, LLC, a Delaware limited liability company, QC Energy Resources Texas, LLC, a Delaware limited liability company, QC Energy Logistics, LLC, a Delaware limited liability company and Quality Bulk Logistics, LLC, a Delaware limited liability company (each, an “Additional Guarantor” and, collectively, the “Additional Guarantors”), the other Guarantors and the Trustee, in the form attached here to as Exhibit A, (ii) Supplement No. 2 to the Collateral Agreement dated as of the date hereof (“Supplement No.2”), between the Additional Guarantors and The Bank of New York Mellon Trust Company, N.A., as Collateral Agent and (iii) the Acknowledgement to the Intercreditor Agreement dated as of the date hereof by the Additional Guarantors, Bank of America, N.A., as Intercreditor Agent, and the Trustee, as Second Priority Agent (the “Acknowledgement” and, together with the Supplemental Indenture and Supplement No.2, the “Transaction Documents”). Capitalized terms used herein and not otherwise defined shall have the respective meanings given to such terms in the Indenture

The Issuers hereby request the Trustee to execute and deliver the Transaction Documents on the date hereof.

The undersigned officer of the Issuers, in his or her capacity as such and not in his or her individual capacity, hereby certifies on behalf of the Issuers as follows:

1. He or she has read all of the covenants and conditions of the Indenture and the related definitions (including, but not limited to, Sections 4.11, 9.01, 9.06, 13.04 and 13.05 of the Indenture) with respect to the execution and delivery of the Transaction Documents by the Trustee.

2. The statements made in this Officer’s Certificate are based upon an examination and investigation of the provisions of the Indenture and each of the other documents, certificates and corporate or other records that he or she considered appropriate.

3. He or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether the covenants and conditions precedent, if any, under the Indenture with respect to the execution and delivery of the Transaction Documents by the Trustee have been complied with, whether the

amendments to the Indenture set forth in the Supplemental Indenture are authorized or permitted by the Indenture and whether the Transaction Documents are the legal, valid and binding obligation of the Issuers and the Guarantors enforceable against them in accordance with their terms and comply with the provisions of the Indenture (including Section 9.03).

5. In the opinion of the undersigned, such covenants and conditions precedent under the Indenture with respect to the execution and delivery of the Supplemental Indenture Documents by the Trustee have been complied with, the amendments to the Indenture set forth in the Supplemental Indenture are authorized or permitted by the Indenture and the Transaction Documents are the legal, valid and binding obligation of the Issuers and the Guarantors enforceable against them in accordance with their terms and comply with the provisions of the Indenture (including Section 9.03).

As to various questions of law relevant to the certification listed above in paragraph 5, each of the undersigned has relied upon the opinion of O’Melveny & Meyers LLP, special counsel to the Issuers, delivered concurrently herewith.

IN WITNESS WHEREOF, the undersigned have duly executed this Officer’s Certificate as of the date first written above.

QUALITY DISTRIBUTION, LLC, as an Issuer
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

QD CAPITAL CORPORATION, as an Issuer
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

Exhibit A

Second Supplemental Indenture

(attached)

SECOND SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”) dated as of August 1, 2012 among QC ENVIRONMENTAL SERVICES, INC., a North Dakota corporation, QC ENERGY RESOURCES NORTHWEST, LLC, a Delaware limited liability company, QC ENERGY RESOURCES TEXAS, LLC, a Delaware limited liability company, QC ENERGY LOGISTICS, LLC, a Delaware limited liability company, and QUALITY BULK LOGISTICS, LLC, a Delaware limited liability company (each, a “New Guarantor” and, collectively, the “New Guarantors”), the other Guarantors named in the signature pages hereto, QUALITY DISTRIBUTION, LLC, a Delaware limited liability company, and QD CAPITAL CORPORATION, a Delaware corporation (together, the “Issuers”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association, as trustee under the indenture referred to below (the “Trustee”).

W I T N E S S E T H:

WHEREAS, the Issuers and certain Guarantors named therein have heretofore executed and delivered to the Trustee an indenture (as amended, supplemented or otherwise modified, the “Indenture”) dated as of November 3, 2010, providing for the issuance of the Issuers’ Second-Priority Senior Secured Notes due 2018 ( the “Notes”), initially in the aggregate principal amount of $225,000,000;

WHEREAS, Section 4.11 of the Indenture provides that under certain circumstances the Issuers are required to cause each New Guarantors to execute and deliver to the Trustee a supplemental indenture pursuant to which such New Guarantors shall unconditionally guarantee all the Issuers’ Obligations under the Notes and the Indenture pursuant to a Guarantee on the terms and conditions set forth herein;

WHEREAS, Sections 9.01(a)(iv), (x) and (xii) of the Indenture provide, respectively, that the Issuers, the Guarantors and the Trustee may amend the Indenture without the consent of the holders to (i) add a Guarantor with respect to the Notes pursuant to Section 4.11, (ii) surrender any right or power in the Indenture conferred upon the Issuers and (iii) make any change that does not adversely affect the rights of any holder;

WHEREAS, the Issuers, the Guarantors, the New Guarantors and the Trustee are authorized to execute and deliver this Supplemental Indenture;

WHEREAS, the Issuers have complied with all conditions precedent provided for in the Indenture relating to this Supplemental Indenture; and

WHEREAS, the Issuers have requested that the Trustee execute and deliver this Supplemental Indenture.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Issuers, the Guarantors, the New Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the holders of the Notes as follows:

1. Defined Terms. As used in this Supplemental Indenture, terms defined in the Indenture or in the preamble or recital hereto are used herein as therein defined, except that the term “holders” in

1

this Supplemental Indenture shall refer to the term “holders” as defined in the Indenture and the Trustee acting on behalf of and for the benefit of such holders. The words “herein,” “hereof” and “hereby” and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular section hereof.

2. Effectiveness. This Supplemental Indenture shall become effective immediately upon its execution and delivery by the Issuers and the Trustee.

3. Agreement to Guarantee. Each New Guarantor hereby agrees, jointly and severally with all existing Guarantors and all other New Guarantors, to unconditionally guarantee the Issuers’ Obligations under the Notes and the Indenture on the terms and subject to the conditions set forth in Article XII of the Indenture and to be bound by all other applicable provisions of the Indenture and the Notes and to perform all of the obligations and agreements of a Guarantor under the Indenture.

4. Amendments. Section 11.04 of the Indenture is hereby amended by:

(i) in subsection (a) thereof, replacing the phrase “subject to subsections (b) and (c) of this Section 11.04” with the phrase “subject to subsections (b), (c) and (d) of this Section 11.04”; and

(ii) adding the following new subsection (d) at the end thereof:

“ (d) Notwithstanding anything herein to the contrary, to the extent necessary in order that under Rule 3-10 or Rule 3-16 of Regulation S-X under the Securities Act of 1933 (or any other law, rule or regulation), any direct or indirect parent of QD LLC not be required to file separate financial statements of QD, LLC and/or its Subsidiaries with the SEC (or any other governmental agency), none of (i) the provisions of Section 11.04(a) or (ii) the provisions of Article XII of this Indenture shall operate to release the Guarantee of any direct or indirect parent of QD LLC.”

5. Ratification of Indenture; Supplemental Indentures Part of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby.

6. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

7. Trustee Makes No Representation. The Trustee makes no representation as to the validity or sufficiency of this Supplemental Indenture. The recitals contained herein shall be taken as the statement of the Issuers, the Guarantors and the New Guarantors and the Trustee assumes no responsibility for their correctness.

8. Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.

2

9. Effect of Headings. The Section headings herein are for convenience only and shall not effect the construction thereof.

10. Notices. All notices or other communications to the New Guarantors shall be given as provided in Section 13.02 of the Indenture.

3

IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first written above.

QUALITY DISTRIBUTION, LLC, as an Issuer
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

QD CAPITAL CORPORATION, as an Issuer
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

BOASSO AMERICA CORPORATION, as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

CHEMICAL LEAMAN CORPORATION, as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

ENVIROPOWER INC., as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

4

QUALA SYSTEMS, INC., as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

POWER PURCHASING, INC., as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

AMERICAN TRANSINSURANCE GROUP, INC., as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

MEXICO INVESTMENTS, INC., as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

MTL OF NEVADA, as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

5

QD RISK SERVICES, INC., as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

QUALITY CARRIERS, INC., as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

QC DRY BULK, LLC, as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

QC ENERGY RESOURCES, LLC, as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

QC ENVIRONMENTAL SERVICES, INC. as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

6

QC ENERGY RESOURCES NORTHWEST, LLC, as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

QC ENERGY RESOURCES TEXAS, LLC, as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

QC ENERGY LOGISTICS, LLC, as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

QUALITY BULK LOGISTICS, LLC, as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

7

THE BANK OF NEW YORK MELLON     TRUST COMPANY, N.A., not in its individual capacity, but solely as Trustee
By:	/s/ Melonee Young
Name:	Melonee Young
Title:	Vice President

8

BEIJING BRUSSELS CENTURY CITY HONG KONG JAKARTA† LONDON LOS ANGELES	Times Square Tower 7 Times Square New York, New York 10036 TELEPHONE (212) 326-2000 FACSIMILE (212) 326-2061 www.omm.com	NEWPORT BEACH SAN FRANCISCO SHANGHAI SILICON VALLEY SINGAPORE TOKYO WASHINGTON, D.C.

August 1, 2012

The Bank of New York Mellon Trust Company, N.A.

10161 Centurion Parkway

Jacksonville, FL 32256

Attention: Corporate Trust Administration

Re: Quality Distribution, LLC/QD Capital Corporation

Ladies and Gentlemen:

We have acted as special counsel to Quality Distribution, LLC, a Delaware limited liability company (“Quality Distribution”), QD Capital Corporation, a Delaware corporation (“QD Capital,” and together with Quality Distribution, the “Issuers”). We are providing this opinion to you at the request of the Issuers pursuant to the Indenture, dated as of November 3, 2010 (as amended, restated, supplemented or otherwise modified from time to time, the “Indenture”), among the Issuers, the guarantors party thereto (the “Guarantors”) and The Bank of New York Mellon Trust Company, N.A., as Trustee (the “Trustee”), relating to the 9.875% Second-Priority Senior Secured Notes due 2018 of the Issuers. Reference is hereby made to (i) the Second Supplemental Indenture, of even date herewith (the “Supplemental Indenture”), among the Issuers, QC Environmental Services, Inc., a North Dakota corporation, QC Energy Resources Northwest, LLC, a Delaware limited liability company, QC Energy Resources Texas, LLC, a Delaware limited liability company, QC Energy Logistics, LLC, a Delaware limited liability company, and Quality Bulk Logistics, LLC, a Delaware limited liability company (each, an “Additional Guarantor” and, collectively, the “Additional Guarantors”), the other Guarantors and the Trustee, in the form attached here to as Exhibit A, (ii) Supplement No. 2 to the Collateral Agreement dated as of the date hereof (“Supplement No. 2”), between the Additional Guarantors and The Bank of New York Mellon Trust Company, N.A., as Collateral Agent and (iii) the Acknowledgement to the Intercreditor Agreement dated as of the date hereof by the Additional Guarantor, Bank of America, N.A., as Intercreditor Agent, and the Trustee, as Second Priority Agent (the “Acknowledgment” and, together with the Supplemental Indenture and Supplement No. 2, the “Transaction Documents”). Capitalized terms used herein and not otherwise defined shall have the respective meanings given to such terms in the Indenture.

In our capacity as such counsel, we have examined originals, or copies identified to our satisfaction, of those corporate and other records and documents we considered appropriate.

As to relevant factual matters, we have relied upon, among other things, the factual representations in the Officer’s Certificate delivered to you today by the Issuers (the “Officer’s Certificate”) in the form attached hereto as Exhibit B. In addition, we have assumed, without independent investigation, the accuracy of the factual statements made in the Officer’s Certificate.

† In association with Tumbuan & Partners

O’MELVENY & MYERS LLP

The Bank of New York Mellon Trust Company

August 1, 2012

Page 2

We have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity with originals of all documents submitted to us as copies. In addition, we assume that you have received the Officer’s Certificate and the Officer’s Certificate is reasonably satisfactory to you.

In connection with our opinion, (i) we have read (a) the conditions precedent and the related definitions in the Indenture, including, but not limited to, those set forth in Sections 4.11, 9.01, 9.03, 9.06, 13.04 and 13.05, (b) the Collateral Agreement dated as of November 3, 2010, among the Issuers, the other pledgors party thereto, and The Bank of New York Mellon Trust Company, N.A., as Collateral Agent and (c) the Officer’s Certificate delivered to you pursuant to Sections 9.06, 13.04 and 13.05 of the Indenture (the “Officer’s Certificate”), a copy of which is attached to this opinion letter as Exhibit B, (ii) the nature and scope of the examination and investigation upon which such opinion is based included an examination of the Indenture, including the sections of the Indenture referred to above, and (iii) we believe that we have made such investigation and examination as is reasonably necessary to enable us to express the informed opinion set forth below.

As to relevant factual matters, we have, with your consent, relied upon, oral or written statements and representations of officers of the Issuers and Guarantors. We have not independently verified such factual matters.

We have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity with originals of all documents submitted to us as copies. To the extent the obligations of the Issuers and the Guarantors depend on the enforceability of the Transaction Documents against the other parties thereto, we have assumed that the Transaction Documents are enforceable against such other parties.

On the basis of such examination, our reliance upon the assumptions stated in this opinion and our consideration of those questions of law we considered relevant, and subject to the limitations and qualifications in this opinion, we are of the opinion that:

1. All covenants and conditions precedent under the Indenture with respect to the execution and delivery of the Transaction Documents by the Issuers, the Guarantors and the Trustee have been complied with (including Section 9.03 of the Indenture), the execution and delivery of the Transaction Documents by the Issuers, the Guarantors and the Trustee are permitted by the Indenture and the amendments to the Indenture set forth in the Supplemental Indenture are authorized or permitted by the Indenture.

2. The Transaction Documents (i) are the legal, valid and binding obligation of the Issuers and the Guarantors, enforceable against them in accordance with their terms, except as

O’MELVENY & MYERS LLP

The Bank of New York Mellon Trust Company

August 1, 2012

Page 3

may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting creditors’ rights generally (including, without limitation, fraudulent conveyance laws) and by general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing and the possible unavailability of specific performance or injunctive relief, regardless of whether considered in a proceeding in equity or at law and possible judicial action giving effect to governmental actions or foreign laws affecting creditors’ rights and (ii) comply with the provisions of the Indenture (including Section 9.03).

The opinions as expressed herein are subject to the following qualifications:

(a) Our opinion in paragraph 2(i) above as to the enforceability of the Transaction Documents is subject to: (i) public policy considerations, statutes or court decisions that may limit the rights of a party to obtain indemnification against its own gross negligence, willful misconduct or unlawful conduct; (ii) the unenforceability under certain circumstances of broadly or vaguely stated waivers or waivers of rights granted by law where the waivers are against public policy or prohibited by law; (iii) the unenforceability under certain circumstances of provisions imposing penalties, liquidated damages or other economic remedies; and (iv) the unenforceability under certain circumstances of provisions appointing one party as trustee for an adverse party or provisions for the appointment of a receiver.

(b) We express no opinion as to any provision of the Transaction Documents insofar as it purports to grant a right of setoff in respect of any Issuer’s or Guarantor’s assets to any person other than a creditor of such Issuer or Guarantor.

(c) We advise you that any provision of the Transaction Documents that provides for exclusive or non-exclusive jurisdiction of the courts of a particular state and federal courts sitting in that state may not be binding on the courts in the forum(s) selected or excluded.

The law covered by this opinion is limited to the present law of the State of New York and the present Trust Indenture Act of 1939. We express no opinion as to the laws of any other jurisdiction and no opinion regarding the statutes, administrative decisions, rules, regulations or requirements of any county, municipality, subdivision or local authority of any jurisdiction.

This opinion is furnished by us as counsel for the Issuers and may be relied upon by you, as Trustee, only in connection with the execution and delivery of the Transaction Documents and related matters. It may not be used or relied upon by you for any other purpose or by any other person, nor may copies be delivered to any other person without in each instance our prior written consent. This opinion is expressly limited to the matters set forth above, and we render no opinion, whether by implication or otherwise, as to any other matters. We assume no obligation to update or supplement this opinion to reflect any facts or circumstances that arise after the date of this opinion and come to our attention, or any future changes in laws.

Very truly yours,

O’Melveny & Myers LLP

Exhibit A

Second Supplemental Indenture

SECOND SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”) dated as of August 1, 2012 among QC ENVIRONMENTAL SERVICES, INC., a North Dakota corporation, QC ENERGY RESOURCES NORTHWEST, LLC, a Delaware limited liability company, QC ENERGY RESOURCES TEXAS, LLC, a Delaware limited liability company, QC ENERGY LOGISTICS, LLC, a Delaware limited liability company, and QUALITY BULK LOGISTICS, LLC, a Delaware limited liability company (each, a “New Guarantor” and, collectively, the “New Guarantors”), the other Guarantors named in the signature pages hereto, QUALITY DISTRIBUTION, LLC, a Delaware limited liability company, and QD CAPITAL CORPORATION, a Delaware corporation (together, the “Issuers”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association, as trustee under the indenture referred to below (the “Trustee”).

W I T N E S S E T H :

WHEREAS, the Issuers and certain Guarantors named therein have heretofore executed and delivered to the Trustee an indenture (as amended, supplemented or otherwise modified, the “Indenture”) dated as of November 3, 2010, providing for the issuance of the Issuers’ Second-Priority Senior Secured Notes due 2018 (the “Notes”), initially in the aggregate principal amount of $225,000,000;

WHEREAS, Section 4.11 of the Indenture provides that under certain circumstances the Issuers are required to cause each New Guarantors to execute and deliver to the Trustee a supplemental indenture pursuant to which such New Guarantors shall unconditionally guarantee all the Issuers’ Obligations under the Notes and the Indenture pursuant to a Guarantee on the terms and conditions set forth herein;

WHEREAS, Sections 9.01(a)(iv), (x) and (xii) of the Indenture provide, respectively, that the Issuers, the Guarantors and the Trustee may amend the Indenture without the consent of the holders to (i) add a Guarantor with respect to the Notes pursuant to Section 4.11, (ii) surrender any right or power in the Indenture conferred upon the Issuers and (iii) make any change that does not adversely affect the rights of any holder;

WHEREAS, the Issuers, the Guarantors, the New Guarantors and the Trustee are authorized to execute and deliver this Supplemental Indenture;

WHEREAS, the Issuers have complied with all conditions precedent provided for in the Indenture relating to this Supplemental Indenture; and

WHEREAS, the Issuers have requested that the Trustee execute and deliver this Supplemental Indenture.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Issuers, the Guarantors, the New Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the holders of the Notes as follows:

1. Defined Terms. As used in this Supplemental Indenture, terms defined in the Indenture or in the preamble or recital hereto are used herein as therein defined, except that the term “holders” in

1

this Supplemental Indenture shall refer to the term “holders” as defined in the Indenture and the Trustee acting on behalf of and for the benefit of such holders. The words “herein,” “hereof” and “hereby” and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular section hereof.

2. Effectiveness. This Supplemental Indenture shall become effective immediately upon its execution and delivery by the Issuers and the Trustee.

3. Agreement to Guarantee. Each New Guarantor hereby agrees, jointly and severally with all existing Guarantors and all other New Guarantors, to unconditionally guarantee the Issuers’ Obligations under the Notes and the Indenture on the terms and subject to the conditions set forth in Article XII of the Indenture and to be bound by all other applicable provisions of the Indenture and the Notes and to perform all of the obligations and agreements of a Guarantor under the Indenture.

4. Amendments. Section 11.04 of the Indenture is hereby amended by:

(i) in subsection (a) thereof, replacing the phrase “subject to subsections (b) and (c) of this Section 11.04” with the phrase “subject to subsections (b), (c) and (d) of this Section 11.04”; and

(ii) adding the following new subsection (d) at the end thereof:

“ (d) Notwithstanding anything herein to the contrary, to the extent necessary in order that under Rule 3-10 or Rule 3-16 of Regulation S-X under the Securities Act of 1933 (or any other law, rule or regulation), any direct or indirect parent of QD LLC not be required to file separate financial statements of QD, LLC and/or its Subsidiaries with the SEC (or any other governmental agency), none of (i) the provisions of Section 11.04(a) or (ii) the provisions of Article XII of this Indenture shall operate to release the Guarantee of any direct or indirect parent of QD LLC.”

5. Ratification of Indenture; Supplemental Indentures Part of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby.

6. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

7. Trustee Makes No Representation. The Trustee makes no representation as to the validity or sufficiency of this Supplemental Indenture. The recitals contained herein shall be taken as the statement of the Issuers, the Guarantors and the New Guarantors and the Trustee assumes no responsibility for their correctness.

8. Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.

2

9. Effect of Headings. The Section headings herein are for convenience only and shall not effect the construction thereof.

10. Notices. All notices or other communications to the New Guarantors shall be given as provided in Section 13.02 of the Indenture.

3

IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first written above.

QUALITY DISTRIBUTION, LLC, as an Issuer
By:	/s/ Gary R. Enzor
Name: Gary R. Enzor
Title: CEO

QD CAPITAL CORPORATION, as an Issuer
By:	/s/ Gary R. Enzor
Name: Gary R. Enzor
Title: CEO

BOASSO AMERICA CORPORATION, as a Guarantor
By:	/s/ Gary R. Enzor
Name: Gary R. Enzor
Title: CEO

CHEMICAL LEAMAN CORPORATION, as a Guarantor
By:	/s/ Gary R. Enzor
Name: Gary R. Enzor
Title: CEO

ENVIROPOWER INC., as a Guarantor
By:	/s/ Gary R. Enzor
Name: Gary R. Enzor
Title: CEO

4

QUALA SYSTEMS, INC., as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

POWER PURCHASING, INC., as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

AMERICAN TRANSINSURANCE GROUP, INC., as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

MEXICO INVESTMENTS, INC., as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

MTL OF NEVADA, as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

5

QD RISK SERVICES, INC., as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

QUALITY CARRIERS, INC., as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

QC DRY BULK, LLC, as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

QC ENERGY RESOURCES, LLC, as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

QC ENVIRONMENTAL SERVICES, INC. as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

6

QC ENERGY RESOURCES NORTHWEST, LLC, as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title	CEO

QC ENERGY RESOURCES TEXAS, LLC, as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title	CEO

QC ENERGY LOGISTICS, LLC, as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title	CEO

QUALITY BULK LOGISTICS, LLC, as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title	CEO

7

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., not in its individual capacity, but solely as Trustee
By:	/s/ Melonee Young
Name:	Melonee Young
Title:	Vice President

8

Exhibit B

Officer’s Certificate

OFFICER’S CERTIFICATE

August 1, 2012

This Officer’s Certificate is delivered pursuant to the Indenture, dated as of November 3, 2010 (as amended, restated, supplemented or otherwise modified from time to time, the “Indenture”), among Quality Distribution, LLC, a Delaware limited liability company (the “Company”), QD Capital Corporation, a Delaware corporation (together with the Company, the “Issuers”), the guarantors party thereto (the “Guarantors”) and The Bank of New York Mellon Trust Company, N.A., as Trustee (the “Trustee”), relating to the 9.875% Second-Priority Senior Secured Notes due 2018 of the Issuers. Reference is hereby made to (i) the Second Supplemental Indenture, of even date herewith (the “Supplemental Indenture”), among the Issuers, QC Environmental Services, Inc., a North Dakota corporation, QC Energy Resources Northwest, LLC, a Delaware limited liability company, QC Energy Resources Texas, LLC, a Delaware limited liability company, QC Energy Logistics, LLC, a Delaware limited liability company and Quality Bulk Logistics, LLC, a Delaware limited liability company (each, an “Additional Guarantor” and, collectively, the “Additional Guarantors”), the other Guarantors and the Trustee, in the form attached here to as Exhibit A, (ii) Supplement No. 2 to the Collateral Agreement dated as of the date hereof (“Supplement No.2”), between the Additional Guarantors and The Bank of New York Mellon Trust Company, N.A., as Collateral Agent and (iii) the Acknowledgement to the Intercreditor Agreement dated as of the date hereof by the Additional Guarantors, Bank of America, N.A., as Intercreditor Agent, and the Trustee, as Second Priority Agent (the “Acknowledgement” and, together with the Supplemental Indenture and Supplement No.2, the “Transaction Documents”). Capitalized terms used herein and not otherwise defined shall have the respective meanings given to such terms in the Indenture

The Issuers hereby request the Trustee to execute and deliver the Transaction Documents on the date hereof.

The undersigned officer of the Issuers, in his or her capacity as such and not in his or her individual capacity, hereby certifies on behalf of the Issuers as follows:

1. He or she has read all of the covenants and conditions of the Indenture and the related definitions (including, but not limited to, Sections 4.11, 9.01, 9.06, 13.04 and 13.05 of the Indenture) with respect to the execution and delivery of the Transaction Documents by the Trustee.

2. The statements made in this Officer’s Certificate are based upon an examination and investigation of the provisions of the Indenture and each of the other documents, certificates and corporate or other records that he or she considered appropriate.

3. He or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether the covenants and conditions precedent, if any, under the Indenture with respect to the execution and delivery of the Transaction Documents by the Trustee have been complied with, whether the

amendments to the Indenture set forth in the Supplemental Indenture are authorized or permitted by the Indenture and whether the Transaction Documents are the legal, valid and binding obligation of the Issuers and the Guarantors enforceable against them in accordance with their terms and comply with the provisions of the Indenture (including Section 9.03).

5. In the opinion of the undersigned, such covenants and conditions precedent under the Indenture with respect to the execution and delivery of the Supplemental Indenture Documents by the Trustee have been complied with, the amendments to the Indenture set forth in the Supplemental Indenture are authorized or permitted by the Indenture and the Transaction Documents are the legal, valid and binding obligation of the Issuers and the Guarantors enforceable against them in accordance with their terms and comply with the provisions of the Indenture (including Section 9.03).

As to various questions of law relevant to the certification listed above in paragraph 5, each of the undersigned has relied upon the opinion of O’Melveny & Meyers LLP, special counsel to the Issuers, delivered concurrently herewith.

IN WITNESS WHEREOF, the undersigned have duly executed this Officer’s Certificate as of the date first written above.

QUALITY DISTRIBUTION, LLC, as an Issuer
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title	CEO

QD CAPITAL CORPORATION, as an Issuer
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title	CEO

Exhibit A

Second Supplemental Indenture

(attached)

SECOND SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”) dated as of August 1, 2012 among QC ENVIRONMENTAL SERVICES, INC., a North Dakota corporation, QC ENERGY RESOURCES NORTHWEST, LLC, a Delaware limited liability company, QC ENERGY RESOURCES TEXAS, LLC, a Delaware limited liability company, QC ENERGY LOGISTICS, LLC, a Delaware limited liability company, and QUALITY BULK LOGISTICS, LLC, a Delaware limited liability company (each, a “New Guarantor” and, collectively, the “New Guarantors”), the other Guarantors named in the signature pages hereto, QUALITY DISTRIBUTION, LLC, a Delaware limited liability company, and QD CAPITAL CORPORATION, a Delaware corporation (together, the “Issuers”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association, as trustee under the indenture referred to below (the “Trustee”).

W I T N E S S E T H:

WHEREAS, the Issuers and certain Guarantors named therein have heretofore executed and delivered to the Trustee an indenture (as amended, supplemented or otherwise modified, the “Indenture”) dated as of November 3, 2010, providing for the issuance of the Issuers’ Second-Priority Senior Secured Notes due 2018 (the “Notes”), initially in the aggregate principal amount of $225,000,000;

WHEREAS, Section 4.11 of the Indenture provides that under certain circumstances the Issuers are required to cause each New Guarantors to execute and deliver to the Trustee a supplemental indenture pursuant to which such New Guarantors shall unconditionally guarantee all the Issuers’ Obligations under the Notes and the Indenture pursuant to a Guarantee on the terms and conditions set forth herein;

WHEREAS, Sections 9.01(a)(iv), (x) and (xii) of the Indenture provide, respectively, that the Issuers, the Guarantors and the Trustee may amend the Indenture without the consent of the holders to (i) add a Guarantor with respect to the Notes pursuant to Section 4.11, (ii) surrender any right or power in the Indenture conferred upon the Issuers and (iii) make any change that does not adversely affect the rights of any holder;

WHEREAS, the Issuers, the Guarantors, the New Guarantors and the Trustee are authorized to execute and deliver this Supplemental Indenture;

WHEREAS, the Issuers have complied with all conditions precedent provided for in the Indenture relating to this Supplemental Indenture; and

WHEREAS, the Issuers have requested that the Trustee execute and deliver this Supplemental Indenture.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Issuers, the Guarantors, the New Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the holders of the Notes as follows:

1. Defined Terms. As used in this Supplemental Indenture, terms defined in the Indenture or in the preamble or recital hereto are used herein as therein defined, except that the term “holders” in

1

this Supplemental Indenture shall refer to the term “holders” as defined in the Indenture and the Trustee acting on behalf of and for the benefit of such holders. The words “herein,” “hereof and “hereby” and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular section hereof.

2. Effectiveness. This Supplemental Indenture shall become effective immediately upon its execution and delivery by the Issuers and the Trustee.

3. Agreement to Guarantee. Each New Guarantor hereby agrees, jointly and severally with all existing Guarantors and all other New Guarantors, to unconditionally guarantee the Issuers’ Obligations under the Notes and the Indenture on the terms and subject to the conditions set forth in Article XII of the Indenture and to be bound by all other applicable provisions of the Indenture and the Notes and to perform all of the obligations and agreements of a Guarantor under the Indenture.

4. Amendments. Section 11.04 of the Indenture is hereby amended by:

(i) in subsection (a) thereof, replacing the phrase “subject to subsections (b) and (c) of this Section 11.04” with the phrase “subject to subsections (b), (c) and (d) of this Section 11.04”; and

(ii) adding the following new subsection (d) at the end thereof:

“ (d) Notwithstanding anything herein to the contrary, to the extent necessary in order that under Rule 3-10 or Rule 3-16 of Regulation S-X under the Securities Act of 1933 (or any other law, rule or regulation), any direct or indirect parent of QD LLC not be required to file separate financial statements of QD, LLC and/or its Subsidiaries with the SEC (or any other governmental agency), none of (i) the provisions of Section 11.04(a) or (ii) the provisions of Article XII of this Indenture shall operate to release the Guarantee of any direct or indirect parent of QD LLC.”

5. Ratification of Indenture; Supplemental Indentures Part of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby.

6. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

7. Trustee Makes No Representation. The Trustee makes no representation as to the validity or sufficiency of this Supplemental Indenture. The recitals contained herein shall be taken as the statement of the Issuers, the Guarantors and the New Guarantors and the Trustee assumes no responsibility for their correctness.

8. Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.

2

9. Effect of Headings. The Section headings herein are for convenience only and shall not effect the construction thereof.

10. Notices. All notices or other communications to the New Guarantors shall be given as provided in Section 13.02 of the Indenture.

3

IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first written above.

QUALITY DISTRIBUTION, LLC, as an Issuer
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

QD CAPITAL CORPORATION, as an Issuer
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

BOASSO AMERICA CORPORATION, as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

CHEMICAL LEAMAN CORPORATION, as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

ENVIROPOWER INC., as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

4

QUALA SYSTEMS, INC., as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

POWER PURCHASING, INC., as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

AMERICAN TRANSINSURANCE GROUP, INC., as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

MEXICO INVESTMENTS, INC., as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

MTL OF NEVADA, as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

5

QD RISK SERVICES, INC., as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

QUALITY CARRIERS, INC., as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

QC DRY BULK, LLC, as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

QC ENERGY RESOURCES, LLC, as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

QC ENVIRONMENTAL SERVICES, INC. as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

6

QC ENERGY RESOURCES NORTHWEST, LLC, as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

QC ENERGY RESOURCES TEXAS, LLC, as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

QC ENERGY LOGISTICS, LLC, as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

QUALITY BULK LOGISTICS, LLC, as a Guarantor
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

7

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., not in its individual capacity, but solely as Trustee
By:	/s/ Melonee Young
Name:	Melonee Young
Title:	Vice President

8

SUPPLEMENT NO. 2 dated as of August 1, 2012 (this “Supplement”), to the Collateral Agreement dated as of November 3, 2010 (the “Collateral Agreement”), among QUALITY DISTRIBUTION, LLC, a Delaware limited liability company (“QD LLC”), QD CAPITAL CORPORATION, a Delaware Corporation (together with QD LLC, the “Issuers”), QUALITY DISTRIBUTION, INC., each Subsidiary of QD LLC identified on Schedule I thereto or otherwise identified herein as a party (each, a “Subsidiary Pledgor” and collectively, the “Subsidiary Pledgors”) and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. as collateral agent for the Secured Parties (in such capacity, the “Collateral Agent”).

A. Reference is made to the Indenture dated as of November 3, 2010 (as amended, restated, supplemented, waived or otherwise modified from time to time, the “Indenture”), among the Issuers, Holdings, and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee (the “Trustee”).

B. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Indenture and the Collateral Agreement.

C. The Pledgors have entered into the Collateral Agreement in order to induce to induce the Trustee to enter into the Indenture, and to induce the Holders of the Notes to purchase the Notes. Section 9.16 of the Collateral Agreement provides that additional Subsidiaries may become Subsidiary Pledgors under the Collateral Agreement by execution and delivery of an instrument in the form of this Supplement. Each undersigned Subsidiary (each, a “New Subsidiary” and, collectively, the “New Subsidiaries”) is executing this Supplement in accordance with the requirements of the Indenture to become a Subsidiary Pledgor under the Collateral Agreement as consideration for the entry by the Trustee into the Indenture and the purchase of the Notes by the Holders.

Accordingly, the Collateral Agent and each New Subsidiary agree as follows:

SECTION 1. In accordance with Section 9.16 of the Collateral Agreement, each New Subsidiary by its signature below becomes a Subsidiary Pledgor under the Collateral Agreement with the same force and effect as if originally named therein as a Subsidiary Pledgor, and each New Subsidiary hereby (a) agrees to all the terms and provisions of the Collateral Agreement applicable to it as a Subsidiary Pledgor thereunder and (b) represents and warrants that the representations and warranties made by it as a Pledgor thereunder are true and correct, in all material respects, on and as of the date hereof. In furtherance of the foregoing, each New Subsidiary, as security for the payment and performance in full of the Obligations (as defined in the Collateral Agreement), does hereby create and grant to the Collateral Agent, for the ratable benefit of the Secured Parties, a security interest in and Lien on all such New Subsidiary’s right, title and interest in and to the Collateral (as defined in the Collateral Agreement) of such New Subsidiary. Each reference to a “Subsidiary Pledgor” or “Pledgor” in the Collateral Agreement shall be deemed to include the New Subsidiary. The Collateral Agreement is hereby incorporated herein by reference.

SECTION 2. Each New Subsidiary represents and warrants to the Collateral Agent and the other Secured Parties that this Supplement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance

with its terms, subject to (i) the effects of bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or other similar laws affecting creditors’ rights generally, (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and (iii) implied covenants of good faith and fair dealing.

SECTION 3. This Agreement may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one contract. This Supplement shall become effective when (a) the Collateral Agent shall have received a counterpart of this Supplement that bears the signature of each New Subsidiary and (b) the Collateral Agent has executed a counterpart hereof.

SECTION 4. Schedules I, II, III, IV, V and VI and to the Collateral Agreement are hereby amended by supplementing such Schedules with the information for the New Subsidiaries contained in Annexes A, B, C, D, E and F attached hereto.

SECTION 5. Except as expressly supplemented hereby, the Collateral Agreement shall remain in full force and effect.

SECTION 6. THIS SUPPLEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS SUPPLEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

SECTION 7. In the event any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and in the Collateral Agreement shall not in any way be affected or impaired thereby. The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 8. All communications and notices hereunder shall be in writing and given as provided in Section 9.01 of the Collateral Agreement.

SECTION 9. Each New Subsidiary agrees to reimburse the Collateral Agent for reasonable out-of-pocket expenses in connection with this Supplement, including the reasonable fees, disbursements and other charges of counsel for the Collateral Agent.

SECTION 10. The recitals contained herein shall be taken as the statements of the New Subsidiaries, and the Collateral Agent assumes no responsibility for their correctness. The Collateral Agent makes no representations as to the validity or sufficiency of this Supplement.

Page 2

IN WITNESS WHEREOF, the New Subsidiaries and the Collateral Agent have duly executed this Supplement to the Collateral Agreement as of the day and year first above written.

QC ENVIRONMENTAL SERVICES, INC.
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

QC ENERGY RESOURCES NORTHWEST, LLC
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

QC ENERGY RESOURCES TEXAS, LLC
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

QC ENERGY LOGISTICS, LLC
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

QUALITY BULK LOGISTICS, LLC
By:	/s/ Gary R. Enzor
Name:	Gary R. Enzor
Title:	CEO

Page 3

ANNEX A

to Supplement No. 2 to the

Collateral Agreement

JL NAME; JURISDICTION OF FORMATION; CHIEF EXECUTIVE OFFICE; TYPE OF ORGANIZATION; WHETHER A REGISTERED ORGANIZATION; ORGANIZATIONAL IDENTIFICATION NUMBER, IF ANY;

FEDERAL TAXPAYER IDENTIFICATION NUMBER

[ILLEGIBLE]	Location of Chief Executive Office	Type of Organization	Registered Organization?	Organization Identification Number (or, if none, so indicate)	Federal Taxpayer Identification Number
[ILLEGIBLE]	4041 Park Oaks Blvd.,Ste 200 Tampa, Florida 33610	Corporation	Yes	31,519,000	45-5321615
[ILLEGIBLE]	4041 Park Oaks Blvd.,Ste 200 Tampa, Florida 33610	Limited Liability Compary	Yes	5068899	45-3853313
[ILLEGIBLE]	4041 Park Oaks BIvd.,Ste 200 Tampa, Florida 33610	Limited Liability Company	Yes	5091658	35-2433295
[ILLEGIBLE]	4041 Park Oaks Blvd.,Ste 200 Tampa, Florida 33610	Limited Liability Company	Yes	5189738	Not yet applied for.
[ILLEGIBLE]	4041 Park Oaks BlvD.,Ste 200 Tampa, Florida 33610	Limited Liability Company	Yes	5189735	Not yet applied for.

ANNEX B

to Supplement No. 2 to the

Collateral Agreement

PLEDGED SECURITIES OF THE NEW SUBSIDIARIES

Equity Interests

None.

Debt Securities

None.

ANNEX C

to Supplement No. 2 to the

Collateral Agreement

PATENTS, TRADEMARKS AND COPYRIGHTS

None.

ANNEX D

to Supplement No. 2 to the

Collateral Agreement

FILING JURISDICTIONS

QC Environmental Services, Inc.	North Dakota
QC Energy Resources Northwest, LLC	Delaware
QC Energy Resources Texas, LLC	Delaware
QC Energy Logistics, LLC	Delaware
Quality Bulk Logistics, LLC	Delaware

ANNEX E

to Supplement No. 2 to the

Collateral Agreement

COMMERCIAL TORT CLAIMS

None.

ANNEX F

to Supplement No. 2 to the

Collateral Agreement

MATTERS RELATING TO ACCOUNTS AND INVENTORY

None.

ANNEX G

to Supplement No. 2 to the

Collateral Agreement

TRANSPORTATION EQUIPMENT

None.

ACKNOWLEDGEMENT OF INTERCREDITOR AGREEMENT

This Acknowledgement of Intercreditor Agreement (this “Acknowledgement”) dated as of August 1, 2012 by the undersigned is made in reference to the Intercreditor Agreement, dated as of November 3, 2010 (as amended, restated, supplemented or otherwise modified from time to time, the “Intercreditor Agreement”), among Bank of America, N.A., as Intercreditor Agent, and The Bank of New York Mellon Trust Company, N.A., as Second Priority Agent.

Reference is also made to (i) the Credit Agreement dated as of August 19, 2011 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Quality Distribution, LLC, (the “Company”), Quality Distribution, Inc. (“Holdings”), Bank of America, N.A., as administrative and collateral agent, and the lenders and other agents party thereto and (ii) the Indenture, dated as of November 3, 2010 (as amended, restated, supplemented or otherwise modified from time to time, the “Indenture”), among the Company, QD Capital Corporation, a Delaware corporation, (together with the Company, the “Issuers”), the guarantors party thereto, and The Bank of New York Mellon Trust Company, N.A., as trustee, relating to the 9.875% Second-Priority Senior Secured Notes due 2018 of the Issuers.

Capitalized terms used in this Acknowledgement and not otherwise defined herein shall have the meanings set forth in the Intercreditor Agreement.

Each of the undersigned Loan Parties (each, a “Grantor”) consents to the terms of the Intercreditor Agreement. Each Grantor agrees not to take any action that would be contrary to the provisions of the Intercreditor Agreement and agrees that, except as otherwise provided therein, including with respect to those provisions of which the Company is an intended third party beneficiary, no Second Priority Agent, First Lien Agent, Senior Lender or Second Priority Secured Party shall have any liability to the Grantor for acting in accordance with the provisions of the Intercreditor Agreement, the Credit Agreement, the Indenture and other collateral, security and credit documents referred to therein. Each Grantor understands that it is not an intended beneficiary or third party beneficiary of the Intercreditor Agreement except that it is an intended beneficiary and third party beneficiary thereof with the right and power to enforce with respect to Sections 5.1, 5.3, 5.7, 8.3 (solely with respect to the final sentence thereof), 8.16 and 8.22 thereof and as otherwise provided therein. Each Grantor agrees to be bound by Section 8.22 of the Intercreditor Agreement.

Notwithstanding anything to the contrary in the Intercreditor Agreement or provided herein, each of the undersigned and each party to the Intercreditor Agreement agree, on behalf of itself and in its capacity as agent under the Intercreditor Agreement, that (i) Holdings, the Company and the other Grantors shall not have any right to consent to or approve any amendment, modification or waiver of any provision of the Intercreditor Agreement except to the extent their rights are adversely affected (in which case the Company shall have the right to consent to or approve any such amendment, modification or waiver) and (ii) upon the Company’s request in connection with a designation of additional obligations as Other First Priority Lien Obligations or Future Second Lien Indebtedness, any First Lien Agent and/or any Second Priority Agent shall enter into such supplemental agreements (which may each take the form of a joinder to the Intercreditor Agreement) to facilitate the designation of such additional obligations as contemplated by Section 8.22 of the Intercreditor Agreement as the Company may request.

Without limitation of the Intercreditor Agreement, the undersigned agree, at the Company’s expense, to take such further action and to execute and deliver such additional documents and instruments (in recordable form, if requested) as any of the Company, the Intercreditor Agents, the Trustee or any other First Lien Agent or Second Priority Agent may reasonably request to effectuate the terms of the Intercreditor Agreement.

THIS ACKNOWLEDGEMENT SHALL BE INTERPRETED, AND THE RIGHTS AND LIABILITIES OF THE BOUND HEREBY DETERMINED, IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

This Acknowledgement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. Delivery of an executed counterpart of this Acknowledgement by telefacsimile or electronic mail shall be equally as effective as delivery of an original executed counterpart of this Acknowledgement. Any party delivering an executed counterpart of this Acknowledgement by telefacsimile or electronic mail also shall deliver an original executed counterpart of this Acknowledgement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Acknowledgement.

*  *  *  *  *  *  *

IN WITNESS WHEREOF, the undersigned have caused this Acknowledgment to be executed as of the date first set forth above.

QC ENVIRONMENTAL SERVICES, INC., as a Grantor
By:	/s/ Gary R. Enzor
	Name: Gary R. Enzor Title: CEO

QC ENERGY RESOURCES NORTHWEST, LLC as a Grantor
By:	/s/ Gary R. Enzor
	Name: Gary R. Enzor Title: CEO

QC ENERGY RESOURCES TEXAS, LLC, as a Grantor
By:	/s/ Gary R. Enzor
	Name: Gary R. Enzor Title: CEO

QC ENERGY LOGISTICS, LLC, as a Grantor
By:	/s/ Gary R. Enzor
	Name: Gary R. Enzor Title: CEO

QUALITY BULK LOGISTICS, LLC., as a Grantor
By:	/s/ Gary R. Enzor
	Name: Gary R. Enzor Title: CEO

Acknowledged:

The Bank of New York Mellon Trust Company, N.A., in its capacity as Trustee, as Second Priority Agent
By:	/s/ Melonee Young
	Name: Melonee Young
	Title:   Vice President

Bank of America, N.A.,

in its capacity as Administrative Agent, as Collateral Agent, as Intercreditor Agent

By:
	Name: Title:

Acknowledged:

The Bank of New York Mellon Trust Company, N.A., in its capacity as Trustee, as Second Priority Agent
By:
	Name:
	Title:

Bank of America, N.A.,

in its capacity as Administrative Agent, as Collateral Agent, as Intercreditor Agent

By:	/s/ William [ILLEGIBLE]
	Name: William [ILLEGIBLE] Title: Vice President

EX-10.5

Exhibit 10.5

AGREEMENT OF SEPARATION AND GENERAL RELEASE

This Agreement of Separation and General Release (“Agreement”) is made effective July 12, 2012 (the “Effective Date”) by and between Jonathan C. Gold (“Gold”) and Quality Distribution, Inc. (“Quality Distribution”), a Florida corporation.

WHEREAS, Gold is employed by Quality Distribution pursuant to the Employment Agreement dated April 1, 2007, subsequently amended on January 29, 2010 (“Employment Agreement”); and

WHEREAS, Gold and Quality Distribution have mutually agreed to end Gold’s employment with Quality Distribution effective August 3, 2012; and

WHEREAS, Gold and Quality Distribution have mutually agreed that it is desirable to end Gold’s employment with Quality Distribution on the terms and conditions set forth in this Agreement.

NOW, THEREFORE, Gold and Quality Distribution, intending to be legally bound hereby and in consideration of the mutual promises contained herein, do hereby agree as follows:

1. Termination. Gold and Quality Distribution mutually agree that Gold’s employment with Quality Distribution shall terminate effective as of 11:59 p.m. Eastern time on August 3, 2012 (“Separation Date”). Gold shall continue to provide services to, and serve as an officer of, Quality Distribution pursuant to the terms of his Employment Agreement until the Separation Date; provided, however, that Gold’s position during the period July 9, 2012 through August 3, 2012 shall be that of Senior Advisor to the CEO, reporting to, and with duties assigned by, the Chief Executive Officer.

2. Severance Payments. Gold shall receive the severance and benefits provided in Section 4.2.3 of his Employment Agreement and the additional stock option rights granted to him in Paragraph 3 below. For the sake of clarity, the bonus amounts to which Gold shall be entitled are: $38,950.82 for the period January 1, 2012 through August 3, 2012 (payable in or around March 2013); $27,049.18 for the period August 4, 2012 through December 31, 2012 (also payable in or around March 2013); and $38,950.82 for the period January 1, 2013 through August 3, 2013 (payable in or around March 2014). Gold acknowledges that as of the Separation Date, except as expressly provided in this Agreement and the Employment Agreement, Gold is not entitled to any other compensation, payments, distributions, bonuses, PTO, severance, stock options or benefits from Quality Distribution.

3. Stock Options.

(a) Notwithstanding anything to the contrary, including without limitation anything to the contrary contained in the Employment Agreement or any of Gold’s stock option or restricted stock agreements with Quality Distribution, all grants of restricted stock and options to purchase common stock of Quality Distribution previously granted to Gold that have not vested as of the Separation Date shall immediately terminate, become null and void and be of no further force or effect, except for the following grants (the “Surviving Grants”):

Plan Name	Grant Date	Type of Grant	Exercise Price		Vesting Date	Vest Quantity
2003 Stock Option Plan	04-Nov-2009	Option	$	3.82	04-Nov-2012		6,250
2003 Restricted Stock Incentive Plan	04-Nov-2009	Restricted Stock		N/A	04-Nov-2012		2,500

            JG

Page 1 of 7

(b) All of Gold’s stock options granted by Quality Distribution that vested on or prior to the Separation Date and all of the options included in the Surviving Grants are hereinafter collectively referred to as the “Surviving Options.” Gold shall remain subject to Quality Distribution’s Statement of Policy Concerning Securities Trading and Related Matters (the “Insider Trading Policy”) until the close of business on September 30, 2012, including the requirement that he obtain prior clearance for all trades (including the maximum number of shares that may be traded) from Quality Distribution’s Chief Financial Officer or Chief Executive Officer; provided, however, that notwithstanding anything to the contrary: (i) commencing at the start of the second business day following the release of Quality Distribution’s earnings release regarding its second quarter financial results (which is expected to be released on or about August 1, 2012), Gold shall no longer be restricted to trading only in Window Periods (as defined in the Insider Trading Policy); and (ii) Gold may exercise any of the Surviving Options at any time after they vest until the Expiration Date (as defined below). The Surviving Grants are subject to applicable withholding obligations of Quality Distribution, if any.

(c) Notwithstanding anything in this Agreement to the contrary (including without limitation that Gold may provide certain consulting services to the Company after the Separation Date pursuant to Section 5, below), all Surviving Options that have not been exercised prior to 5:00 p.m., Tampa, FL time, on December 31, 2012 (the “Expiration Date”) shall, at such time, automatically terminate, become null and void, and be of no further force or effect; provided, however, that the Expiration Date shall be extended to June 30, 2013 if: (i) Gold comes into possession of material non-public information concerning Quality Distribution in the course of providing consulting services pursuant to Section 5 below, before December 31, 2012, as determined in the reasonable discretion of Quality Distribution’s Chief Financial Officer or Chief Executive Officer; or (ii) Gold dies or becomes disabled on or after the Effective Date but before December 31, 2012.

4. General Releases.

(a) Gold, individually, and on behalf of, as applicable, Gold’s current, former, and successor agents, representatives, guardians, heirs, assigns, successors, executors, administrators and insurers does hereby irrevocably release, acquit, and discharge Quality Distribution and the Other Released Parties (as defined in 4(b) below), from any and all Claims and Controversies (as defined in 4(c) below); provided, however, that nothing in this Agreement will be considered a release of: Gold’s claims, if any, for Gold’s right to enforce his

            JG

Page 2 of 7

Employment Agreement or this Agreement; Gold’s vested benefits and benefit continuation/conversion rights under Quality Distribution’s employee benefit plans; and Gold’s right to indemnification pursuant to Section 6 of the Employment Agreement.

(b) For the purposes of this Agreement, the term “Other Released Parties” means, as applicable, Quality Distribution’s Affiliates, and with respect to Quality Distribution and its Affiliates, each of their respective predecessors and successors, and each of their past, present and future employees, officers, directors, stockholders, trustees, owners, partners, members, representatives, administrators, assigns, attorneys, agents, servants, assigns, insurers, employee benefit programs (and the trustees, administrators, fiduciaries, and insurers of such programs). For the purposes of this Agreement, “Affiliates” means any individual, corporation, partnership, association, joint-stock company, trust, unincorporated association or other entity (other than Quality Distribution) that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with Quality Distribution.

(c) For the purposes of this Agreement, the term “Claims and Controversies” means any and all claims, debts, damages, demands, liabilities, benefits, suits in equity, complaints, grievances, obligations, promises, agreements, rights, controversies, costs, losses, remedies, attorneys’ fees and expenses, back pay, front pay, severance pay, percentage recovery, injunctive relief, lost profits, emotional distress, mental anguish, personal injuries, liquidated damages, punitive damages, disability benefits, interest, expert fees and expenses, reinstatement, other compensation, suits, appeals, actions, and causes of action, of whatever kind or character, including without limitation, any dispute, claim, charge, or cause of action arising under the Civil Rights Act of 1964, Title VII, 42 U.S.C. §§ 2000e et seq., as amended (including the Civil Rights Act of 1991), the Civil Rights Act of 1866, 42 U.S.C. §§ 1981 et seq., as amended, the Equal Pay Act of 1963 (EPA), 29 U.S.C. §§ 201 et seq., as amended, the Age Discrimination in Employment Act of 1967, 29 U.S.C. §§ 621 et seq., as amended, the Americans with Disabilities Act of 1990 (ADA), 42 U.S.C. §§ 12101 et seq., as amended, the Rehabilitation Act of 1973, 29 U.S.C. §§ 794 et seq., as amended, the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001 et seq., as amended, the Consolidated Budget and Reconciliation Act of 1985 (COBRA), §§ 1161 et seq., as amended, the Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 201 et seq., as amended, the Family and Medical Leave Act (FMLA), 29 U.S.C. §§ 2601 et seq., as amended, the Labor Management Relations Act (LMRA), 29 U.S.C. §§ 141 et seq., as amended, the Employee Polygraph Protection Act, 29 U.S.C. §§ 2001 et seq., as amended, the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961 et seq., as amended, the Occupational Safety and Health Act (OSHA), 29 U.S.C. §§ 651 et seq., as amended, the Electronic Communications Privacy Act, 18 U.S.C. 2510 et seq., and 2701 et seq., as amended, the Uniform Services Employment and Re-Employment Rights Act, 38 U.S.C. §§ 4301 et seq., as amended, the Sarbanes-Oxley Act, 18 U.S.C. § 1514A, as amended, the Florida Civil Rights Act (“FCRA”), Chapter 760, Florida Statutes, the Genetic Information Non-Discrimination Act (“GINA”), 42 U.S.C. 2000ff, et seq.; Florida’s Minimum wage Act, §§448.109 and 448.110, all other applicable state and federal fair employment laws, state and federal equal employment opportunity laws, and state and federal labor statutes and regulations, and all other constitutional, federal, state, local, and municipal law claims, whether statutory, regulatory, common law (including without limitation, breach of the Employment Agreement, other breach of express or implied contract, wrongful discharge in violation of public policy, breach of covenant of good faith and fair dealing, promissory estoppel, quantum meruit, fraud, fraud in the inducement,

            JG

Page 3 of 7

fraud in the factum, statutory fraud, negligent misrepresentation, defamation, libel, slander, slander per se, retaliation, tortious interference with prospective contract, tortious interference with business relationship, tortious interference with contract, invasion of privacy, intentional infliction of emotional distress, and any other common law theory of recovery, whether legal or equitable, negligent or intentional), or otherwise, whether known or unknown to the Parties, foreseen or unforeseen, fixed or contingent, liquidated or unliquidated, directly or indirectly arising out of or relating to any and all disputes now existing between Gold on the one hand, and Quality Distribution or Other Released Parties on the other hand, whether related to or in any way growing out of, resulting from or to result from Gold’s employment with and/or termination from Quality Distribution, for or because of any matter or thing done, omitted, or allowed to be done by Quality Distribution or the Other Released Parties, as applicable, for any incidents, including those past and present, which existed or may have existed at any time prior to and/or contemporaneously with the execution of this Agreement, including all past, present, and future damages, injuries, costs, expenses, attorney’s fees, other fees, effects and results in any way related to or connected with such incidents.

(d) Gold understands that Gold is releasing Claims of which Gold may not be aware. This is Gold’s knowing and voluntary intent, even though Gold recognizes that someday Gold might learn that some or all of the facts that Gold currently believes to be true are untrue and even though Gold might then regret having signed this Agreement. Nevertheless, Gold is assuming that risk and Gold agrees that this Agreement shall remain effective in all respects in any such case. It is further understood and agreed that Gold is waiving all rights under any statute or common law principle which otherwise limits application of a general release to claims which the releasing party does not know or suspect to exist in his favor at the time of signing the release which, if known by him, would have materially affected his settlement with the party being released and Gold understands the significance of doing so.

(e) Neither Gold nor his heirs, agents, representatives or attorneys have filed or caused to be filed any lawsuit, with respect to any Claim that Gold is releasing in this Agreement.

(f) Quality Distribution, on its own behalf and on behalf of the Other Released Parties, does hereby irrevocably release, acquit, and discharge Gold from any and all Claims and Controversies; provided, however, that nothing in this Agreement will be considered a release of Quality Distribution’s claims, if any, for Quality Distribution’s right to enforce this Agreement or the Employment Agreement (including, without limitation, Quality Distribution’s rights under the restrictive covenants detailed in Section 5.1 and Annexes B and C thereto). Quality Distribution understands that it is releasing Claims of which it may not be aware. This is Quality Distribution’s knowing and voluntary intent, even though it recognizes that someday it might learn that some or all of the facts that it currently believes to be true are untrue and even though Quality Distribution might then regret having signed this Agreement. Nevertheless, Quality Distribution is assuming that risk and agrees that this Agreement shall remain effective in all respects in any such case. It is further understood and agreed that Quality Distribution is waiving all rights under any statute or common law principle which otherwise limits application of a general release to claims which the releasing party does not know or suspect to exist in his favor at the time of signing the release which, if known by it, would have materially affected its settlement with the party being released and Quality Distribution understands the significance of doing so. Neither Quality Distribution, the Other Released Parties, nor their respective agents, representatives or attorneys, have filed or caused to be filed any lawsuit with respect to any Claim that Quality Distribution is releasing in this Agreement.

            JG

Page 4 of 7

5. Post Employment Consulting Services; Indemnity. In consideration of the stock options rights granted to Gold pursuant to Paragraph 3 of this Agreement, Gold agrees to provide post termination consulting services to Quality Distribution, reporting to, and acting at the direction of, the Chief Executive Officer, between August 4, 2012 and August 3, 2013; provided, however, that Gold shall only be required to provide such services to the extent that Gold, in his reasonable judgment, determines that he is able to do so without violating any legal or ethical obligations. Gold shall be required to provide, at most, seven (7) business days of such consulting services. The dates of such consulting services shall be selected by Quality Distribution who shall provide Gold with at least seven (7) days prior notice. Quality Distribution shall pay Gold $2,000.00 for each day of consulting services, plus his reasonable travel expenses. Quality Distribution shall indemnify, defend and hold Gold harmless from any Claims and Controversies arising from or related to Gold’s performance of consulting services, except to the extent caused by Gold’s intentional misconduct.

6. Non-Admission. It is specifically understood and agreed that this Agreement shall not in any way be construed as an admission that Quality Distribution has violated any federal, state or local law or common law duty, or that any action taken by Quality Distribution with respect to Gold has been unwarranted, unjustified, discriminatory or otherwise unlawful.

7. Headings. The headings in this Agreement are for convenience and reference only and shall not be construed as part of this Agreement or to limit or otherwise affect the meaning hereof.

8. Amendments. No change, alteration or modification hereof may be made except in writing signed by each of the parties hereto.

9. Governing Law. This Agreement shall be governed by, construed and enforced pursuant to the laws of the State of Florida applicable to contracts made and entirely to be performed therein without regard to rules relating to conflicts of law.

10. Dispute Resolution. Any controversy, claim or dispute arising out of or relating to this Agreement or the breach thereof shall be settled by arbitration before one (1) arbitrator. In the event that the parties are not able to agree on an arbitrator, then the matter shall be decided by a panel of three (3) arbitrators, with each party selecting one (1) arbitrator and these two arbitrators selecting the third arbitrator. The Arbitration will be administered by the American Arbitration Association in accordance with its National Rules for Resolution of Employment Disputes. The arbitration proceeding shall be confidential, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction. Any such arbitration shall take place in Tampa, Florida, or in any other mutually agreeable location. In the event any judicial action is necessary to enforce the arbitration provisions of this Agreement, sole jurisdiction shall be in the federal and states courts for Hillsborough County, Florida. The arbitrator(s) shall have the authority to provide any award or relief, including injunctive relief, allowed by law or this Agreement. The arbitrator(s) shall have the discretion to award reasonable attorneys’ fees, costs and expenses to the prevailing party.

            JG

Page 5 of 7

11. Separability. If any provision of this Agreement shall be declared to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not affect the remaining provisions hereof which shall remain in full force and effect.

12. Entire Agreement; Construction; Definitions. This Agreement contains the entire understanding between Gold and Quality Distribution relating to the termination of Gold’s employment with Quality Distribution. The Parties agree that all terms of the Employment Agreement shall remain in full force and effect until the Separation Date. After the Separation Date, it is the parties’ intent that their respective post-termination rights and obligations under the Employment Agreement continue in full force and effect, except to the extent expressly modified by this Agreement. Accordingly, this Agreement and the Employment Agreement shall be construed to be consistent with one another to the maximum extent possible. Unless otherwise defined in this Agreement, any term used herein shall have the meaning set forth in the Employment Agreement.

13. Voluntary Agreement. Each party to this Agreement acknowledges and represents that he or it (a) has fully and carefully read this Agreement prior to signing it, (b) has been, or has had the opportunity to be, advised by independent legal counsel of his or its own choice as to the legal effect and meaning of each of the terms and conditions of this Agreement, and (c) is signing and entering into this Agreement as a free and voluntary act without duress or undue pressure or influence of any kind or nature whatsoever and has not relied on any promises, representations or warranties regarding the subject matter hereof other than as set forth in this Agreement.

14. Counterparts and Facsimile. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute but one and the same instrument. Facsimile transmission of any signed original document or retransmission of any signed facsimile transmission will be deemed the same as delivery of an original. At the request of any party, the parties will confirm facsimile transmission by signing a duplicate original document.

15. Older Workers’ Benefit Protection Act Provisions. In accordance with the requirements of the Older Workers’ Benefits Protection Act, Gold expressly acknowledges the following:

(a) Consideration. The consideration provided pursuant to this Agreement is in addition to any consideration that he would otherwise be entitled.

(b) Independent Legal Counsel. Gold has been advised and encouraged to consult with an attorney before signing this Agreement. Gold acknowledges that if he desired to, Gold had an adequate opportunity to do so.

            JG

Page 6 of 7

(c) Consideration Period. Gold has twenty-one (21) calendar days from the date the original Agreement was given to him, July 12, 2012, to consider this Agreement before signing it. The twenty-one (21) day period expires on August 1, 2012. Gold may use as much or as little of this twenty-one (21) day period as Gold wishes before signing. If Gold does not sign and return this Agreement within this twenty-one (21) day period, it will not become effective or enforceable and Gold will not receive the severance, benefits and stock option rights described herein.

(d) Revocation Period and Effective Date. Gold has seven (7) calendar days after signing this Agreement to revoke it. To revoke this Agreement after signing it, Gold must deliver a written notice of revocation to Quality Distribution’s Vice President – Human Resources before the seven (7) day period expires. This Agreement shall not become effective until the eighth (8^th) calendar day after Gold signs it (“Revocation Expiration Date”). If Gold revokes this Agreement: (i) except for this Section 15(d), the provisions of this Agreement will not become effective or enforceable; (ii) Gold’s employment will be deemed to have been terminated by Quality Distribution at 11:59 p.m. Eastern time on August 3, 2012 without Cause; and (iii)the parties will have only the respective post-termination rights and obligations set forth in the Employment Agreement.

16. Assignability; Succession. This Agreement shall inure to the benefit of and shall be binding upon Quality Distribution and its successors and assigns. Gold may not assign, transfer, pledge, encumber, hypothecate or otherwise dispose of this Agreement or any of his rights or obligations hereunder without the prior written consent of Quality Distribution, and any such attempted assignment, transfer, pledge, encumbrance, hypothecation or other disposition without such consent shall be null and void and without effect. Notwithstanding the foregoing, it is expressly understood and agreed that Gold’s estate shall be entitled to all monies, stock, and stock options due to Gold hereunder in the event Gold dies at, or subsequent to, the Effective Date, but prior to the receipt by Gold of such monies, stock, and stock options due him pursuant to the terms hereof.

IN WITNESS WHEREOF, the parties have set their hands and seals to this Agreement as of the date set forth below.

Date:
	JONATHAN C. GOLD
Date:	QUALITY DISTRIBUTION, INC.
	By:
	Its:

            JG

Page 7 of 7

EX-10.6

Exhibit 10.6

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT (this “Agreement”) dated as of the 25th day of June, 2012 between QUALITY DISTRIBUTION, INC., a Florida corporation (the “Company”), and John T. Wilson (the “Executive”).

The Executive and the Company wish to enter into an employment relationship on the terms and conditions set forth in this Agreement.

Accordingly, the Company and the Executive hereby agree as follows:

1. Employment, Duties and Acceptance.

1.1 Employment. The Company hereby agrees to employ the Executive for the Term (as defined in Section 2.1), to render exclusive and full-time services to the Company, in the capacity of Senior Vice President, General Counsel and Corporate Secretary of the Company and to perform such other duties consistent with such position (including service as a director or officer of any affiliate of the Company if elected) as may be assigned by the Company. It is agreed and understood that, if applicable, the Executive shall resign as an officer of the Company or any subsidiary immediately upon termination of his or her employment hereunder for any reason.

1.1.1 Duties and Authority. During the Term, the Executive shall serve as the Senior Vice President, General Counsel and Corporate Secretary and shall have the normal duties, responsibilities, functions and authority of the position but subject to the power and authority of the Chief Executive Officer and/or the Company’s Board of Directors (the “Board”) to expand or limit such duties, responsibilities, functions and authority, consistent with the foregoing, and to overrule the actions of employees and officers of the Company. During the Term, the Executive shall report to the Company’s Chief Executive Officer.

1.2 Acceptance. The Executive hereby accepts such employment and agrees to render the services described above. During the Term, and consistent with the above, the Executive agrees to serve the Company faithfully and to the best of the Executive’s ability, to devote the Executive’s entire business time, energy and skill to such employment, and to use the Executive’s best efforts, skill and ability to promote the Company’s interests. It is understood that, during the Term, subject to any conflict-of-interest policies of the Company and Section 5.1, the Executive may (w) serve as executor or a similar role with respect to the will of any family member, (x) serve in any capacity with any civic, charitable, educational or professional organization provided that such service does not interfere with his duties hereunder, (y) make and manage investments of his choice, and (z) with the prior written consent of the Chief Executive Officer, serve on the board of directors of one or more non-competing for-profit organization provided that such board service does not interfere with his duties hereunder.

1.3 Location. The duties to be performed by the Executive hereunder shall be performed primarily at the location specified by the Company, subject to reasonable travel requirements consistent with the nature of the Executive’s duties from time to time on behalf of the Company.

               Initial              QDI

1.4 Fiduciary Relationship. The Executive acknowledges and fully understands that, by entering into this Agreement, he undertakes a fiduciary relationship with the Company, and, as a fiduciary, has the obligation to use due care and act in the best interests of the Company at all times. Executive shall be candid in all reports and responses to inquiries and shall include in any report or response all information known or then available to the Executive, even if not specifically requested, which Executive reasonably believes is material, relevant and reasonably required for the understanding of the matter in question sufficient to inform the person to whom such report or response is provided. Failure of the Executive to fulfill all fiduciary obligations ordinarily imposed by law on similarly situated employees in a fiduciary relationship will be deemed a material breach of this Agreement by the Executive.

2. Term of Employment.

2.1 Term. The term of the Executive’s employment under this Agreement (the “Term”) shall commence on July 9, 2012 (the “Effective Date”), and shall end on the date on which the Term is terminated pursuant to Section 4.

3. Compensation; Benefits.

3.1 Salary. As compensation for all services to be rendered pursuant to this Agreement, the Company agrees to pay to the Executive during the Term a base salary, payable bi-weekly, at the initial annual rate of $250,000 (the “Base Salary”). On each anniversary of the Effective Date, or such other appropriate date during each year of the Term when the salaries of the Company’s employees are normally reviewed, the Company and/or the Board shall review the recommendation of the Company regarding the Executive’s Base Salary and determine if, and by how much, the Base Salary should be increased.

3.2 Bonus. The Executive shall be eligible to participate in the Quality Distribution, Inc. Management Incentive Plan or its equivalent, as approved by the Company’s Compensation Committee, annually. Effective for the 2012 plan year, at target, the bonus opportunity shall be 50% of Base Salary, prorated for the first fiscal year. The Executive’s annual bonus, if any, shall be paid at the same time as annual bonuses are normally paid to similarly situated employees of the Company, as set forth in the plan.

3.3 Stock Options. The Company agrees to grant Executive options to acquire 40,000 shares of the Company’s common stock pursuant to the Quality Distribution, Inc. 2012 Equity Incentive Plan (“Equity Plan”), such grant to be effective as of the Effective Date. These options will vest in equal annual installments over four years. Future grants will be at the discretion of the Compensation Committee. The foregoing grant is subject to the limitations provided in the Equity Plan and the Nonqualified Stock Option Award Agreement to be executed by Executive.

3.4 Restricted Stock Units. The Company agrees to grant Executive 10,000 restricted shares of the Company’s common stock pursuant to the Quality Distribution, Inc.

2               Initial              QDI

2012 Equity Incentive Plan (“Equity Plan”), such grant to be effective as of the Effective Date. These restricted shares will vest in equal annual installments over four years. Future grants will be at the discretion of the Compensation Committee. The foregoing grant is subject to the limitations provided in the Equity Plan and Restricted Stock Unit Award Agreement to be executed by Executive

3.5 Annual Equity Award. The Executive shall be eligible at the discretion of the Compensation Committee, to receive an annual equity award, at target, equal to 50% of Executive’s base salary compensation. The Executive’s annual equity award, if any, shall be made at the same time as annual equity awards are normally made to similarly situated employees of the Company, pursuant to the Quality Distribution, Inc. 2012 Equity Incentive Plan (“Equity Plan”).

3.6 Relocation. The Executive shall be eligible for relocation assistance under the Company’s relocation policy and shall remain so eligible during the Term.

3.7 Business Expenses. The Company shall pay or reimburse the Executive for all reasonable expenses actually incurred or paid by the Executive during the Term in the performance of the Executive’s services under this Agreement, subject to and in accordance with applicable expense-reimbursement and related policies and procedures as in effect from time to time.

3.8 Paid Time Off. During the Term, the Executive shall be entitled to twenty (20) days of paid time off per fiscal year, with a carryover of up to ten (10) days each fiscal year, but at no time an aggregate of more than ten (10) days’ carryover. Days carried over may only be used for the purpose of Family Medical Leave or Short Term Disability. Paid time off shall be prorated for the fiscal year in accordance with the published Paid Time Off policy.

3.9 Benefits and Perquisites. During the Term, the Executive shall be eligible to participate in those defined contribution, salary deferral, group insurance, medical, dental, disability and other benefit plans and such perquisites of the Company as from time to time in effect and on a basis no less favorable than any other similarly situated Executive of the Company.

4. Termination.

4.1 Termination Events.

4.1.1 Executive’s employment and the Term shall terminate immediately upon the occurrence of any of the following:

(i) the death of the Executive;

(ii) the physical or mental disability of the Executive, whether totally or partially, such that, with or without reasonable accommodation, the Executive is unable to perform the Executive’s material duties, for a period equal to the greater of three months or the eligibility waiting period under the Company’s long-term disability insurance policy; or

3               Initial              QDI

(iii) notice of termination for “Cause.” As used herein, “Cause” means (a) a good faith finding by the Company of the Executive’s failure to satisfactorily perform Executive’s assigned duties for the Company as a result of Executive’s material dishonesty, gross negligence or intentional misconduct (including intentionally violating any law, rule or regulation or any policy or guideline of the Company); (b) Executive’s conviction of, or the entry of a pleading of guilty or nolo contendere by Executive to, any crime involving moral turpitude or any felony; or (c) a material breach of this Agreement not cured to the reasonable satisfaction of the Chief Executive Officer within thirty days after written notice to the Executive by the Chief Executive Officer.

4.1.2 The Executive may immediately resign the Executive’s position for Good Reason, and, in such event, the Term shall terminate. As used herein, “Good Reason” means without the Executive’s consent (i) a material breach of this Agreement by the Company not cured to the Executive’s reasonable satisfaction within thirty days after written notice to the Chief Executive Officer by the Executive; (ii) a material diminution of Employee’s duties or authority caused by the Company; (iii) a change in Employee’s reporting assignment so that Employee does not report directly to the Company’s Chief Executive Officer; or (iv) an involuntary relocation of more than 50 miles of Employee’s principal place of business as it exists as of the Effective Date.

4.1.3 The Company may terminate the Executive’s employment following notice of termination without Cause given by the Company and, in such event, the Term shall terminate.

4.1.4 The Executive may voluntarily resign the Executive’s position following notice to the Company of the Executive’s intent to voluntarily resign without Good Reason and, in such event, the Term shall terminate.

4.1.5 The date upon which Executive’s employment and the Term terminate pursuant to this Section 4.1 shall be the Executive’s “Termination Date” for all purposes of this Agreement.

4.2 Payments Upon a Termination Event.

4.2.1 Following any termination of the Executive’s employment, the Company shall pay or provide to the Executive, or the Executive’s estate or beneficiary, as the case may be: (i) Base Salary earned through the Termination Date; (ii) the balance of any awarded but as yet unpaid, annual cash bonus or other incentive awards for any fiscal year prior to the fiscal year during which the Executive’s Termination Date occurs; (iii) any vested, but not forfeited benefits on the Termination Date, under the Company’s employee benefit plans in accordance with the terms of such plans; and (iv) benefit continuation and conversion rights to which the Executive is entitled under the Company’s employee benefit plans.

4               Initial              QDI

4.2.2 Following a termination by the Company without Cause or by the Executive for Good Reason, the Company shall pay or provide to the Executive in addition to the payments in Section 4.2.1 above, (i) Base Salary payable in accordance with the normal payroll cycles of the Company for fifty two weeks following the Termination Date; (ii) an annual cash bonus at target prorated from the first day of such fiscal year through the Termination Date which shall be paid in a lump sum at the same time as annual cash bonuses are normally paid to similarly situated Employees of the Company and (iii) if participating in the Company’s medical benefits at the time of termination, Company provided medical benefits for the Executive (and his or her eligible dependents) at active employee contribution rates for fifty two weeks following the Termination Date. COBRA coverage eligibility will be reduced during the period of severance coverage. If, and only if, required by law, the Company shall not commence payment of the amount described in Section 4.2.3(i) and (ii) above until six months after the Termination Date.

4.3 General Release.

4.3.1 The receipt of any payment as set forth in Section 4.2.2 shall be contingent upon the Executive’s execution of a general release agreement reasonably acceptable to the Company that (i) waives any rights the Executive may otherwise have against the Company and its Affiliates, and its and their directors, officers, employees and agents, and (ii) releases the Company and its Affiliates from actions, suits, claims, proceedings and demands related to the period of Executive’s employment and/or the termination of Executive’s employment. For purposes of this Agreement, “Affiliates” means any individual, corporation, partnership, association, joint-stock company, trust, unincorporated association or other entity (other than the Company) that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Notwithstanding the foregoing, said general release agreement shall exclude Executive’s right to enforce this Agreement, and Executive’s vested benefits and benefit continuation/conversion rights under the Company’s employee benefit plans, and Executive’s right to indemnification under Section 6 of this Agreement.

5. Restrictive Covenant.

5.1 Restrictive Covenant. Executive agrees to be bound by the Restrictive Covenant agreement set forth on Appendix A which is attached hereto and herein incorporated by reference.

6. Indemnification.

The Company shall indemnify, defend, and hold harmless Executive in accordance with the provisions of Article VI of the Company’s By-Laws.

7. No Duty to Mitigate.

The Executive shall have no duty to mitigate any amounts payable to him hereunder, and such amounts shall not be subject to reduction for any compensation received by Executive from employment in any capacity or other source following the termination of Executive’s employment with the Company and its subsidiaries.

5               Initial              QDI

8. Prior Agreements; Amendments; No Waiver.

This Agreement contains the entire understanding between the parties hereto with respect to the subject matter hereof. This Agreement may not be changed orally, but only by an instrument in writing signed by each party hereto. No failure on the part of either party to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof, nor shall any partial exercise of any right hereunder preclude any further exercise thereof. Without limiting the generality of the first sentence of this Section 8 any and all prior agreements or purported agreements between the Company and Executive are hereby terminated on and as of the Effective Date. In the event of any difference between this Agreement and any other document referred to in this Agreement, this Agreement shall control.

9. Withholding.

The Company shall be entitled to withhold from any and all amounts payable to Executive hereunder such amounts as may, from time to time, be required to be withheld pursuant to applicable tax laws and regulations.

10. Succession; Assignability; Binding Effect.

10.1 The Company may assign all of its rights and obligations hereunder to any successor or successors (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company; provided, however, that the Company will require each such successor or successors expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place, and further provided that nothing contained herein shall act as a release of the Company of its obligations hereunder.

10.2 This Agreement shall inure to the benefit of and shall be binding upon the Company and its successors and assigns. Executive may not assign, transfer, pledge, encumber, hypothecate or otherwise dispose of this Agreement or any of his rights or obligations hereunder without the prior written consent of the Company, and any such attempted assignment, transfer, pledge, encumbrance, hypothecation or other disposition without such consent shall be null and void and without effect. Notwithstanding the foregoing, it is expressly understood and agreed that the Executive’s estate shall be entitled to all monies due to Executive hereunder in the event Executive dies at, or subsequent to, the termination of his employment, but prior to the receipt by Executive of monies due him pursuant to the terms hereof.

11. Headings.

The Section and subsection headings contained herein are included solely for convenience of reference and shall not control or affect the meaning or interpretation of any of the provisions of this Agreement.

6               Initial              QDI

12. Notices.

Notice hereunder will be addressed to a party at Executive’s home address in accordance with the Corporation’s personnel records or its corporate headquarters address. Either party may change its address for notice purposes by written notice to the other party in accordance with this Section 12.

13. Governing Law.

This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Florida applicable to contracts made and to be performed wholly in that state, without giving effect to the principles thereof relating to conflicts or choice of laws.

14. Execution in Counterparts.

This Agreement may be executed by the parties hereto in counterparts, each of which shall be deemed to be an original, but all such counterparts shall constitute one and the same instrument, and all signatures need not appear on any one counterpart.

15. Construction.

The parties acknowledge that this Agreement is the result of arm’s-length negotiations between sophisticated parties each afforded the opportunity to utilize representation by legal counsel. Each and every provision of this Agreement shall be construed as though both parties participated equally in the drafting of same, and any rule of construction that a document shall be construed against the drafting party shall not be applicable to this Agreement.

16. Dispute Resolution.

Subject to the rights of the Company pursuant to Appendix A herein, any controversy, claim or dispute arising out of or relating to this Agreement, the breach thereof, or the Executive’s employment by the Company shall be settled by arbitration before one arbitrator. The arbitration will be administered by the American Arbitration Association in accordance with its National Rules for Resolution of Employment Disputes. The arbitration proceeding shall be confidential, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction. Any such arbitration shall take place in the Tampa, Florida area, or in any other mutually agreeable location. In the event any judicial action is necessary to enforce the arbitration provisions of this Agreement, sole jurisdiction shall be in the federal and state courts, as applicable, located in Florida. Any request for interim injunctive relief or other provisional remedies or opposition thereto shall not be deemed to be a waiver of the right or obligation to arbitrate hereunder. The arbitrator shall have the discretion to award reasonable attorneys’ fees, costs and expenses to the prevailing party. To the extent a party prevails in any dispute arising out of this Agreement or any of its terms and provisions, all reasonable costs, fees and expenses relating to such dispute, including the parties’ reasonable legal fees, shall be borne by the party not prevailing in the resolution of such dispute, but only to the extent that the arbitrator or court, as the case may be, deems reasonable and appropriate given the merits of the claims and defenses asserted.

7               Initial              QDI

17. Corporate Opportunity.

During the Term, Executive shall submit to the Board all business, commercial and investment opportunities or offers presented to Executive or of which Executive becomes aware, which relate to the business of the Company at any time during the Term (“Corporate Opportunities”). Unless approved by the Board in writing after full disclosure, Executive shall not accept or pursue, directly or indirectly, any Corporate Opportunities on Executive’s own behalf.

18. Insurance.

The Company may, at its discretion, apply for and procure in its own name and for its own benefit life and/or disability insurance on Executive in any amount or amounts considered advisable. Executive agrees to cooperate in any medical or other examination, supply any information and execute and deliver any applications or other instruments in writing as may be reasonably necessary to obtain and constitute such insurance. Executive hereby represents that he has no reason to believe that his life is not insurable at rates now prevailing for healthy men of his age.

19. Executive’s Representations.

Executive hereby represents and warrants to the Company that: (i) the execution, delivery and performance of this Agreement by Executive do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Executive is a party or by which he is bound; (ii) Executive is not a party to or bound by any employment agreement, non-compete agreement or confidentiality agreement with any other person or entity except as disclosed to the Company prior to the date hereof; and (iii) upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of Executive, enforceable in accordance with its terms. Executive hereby acknowledges and represents that he understands his or her rights and obligations under this Agreement and that he fully understands the terms and conditions contained herein.

8               Initial              QDI

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

QUALITY DISTRIBUTION, INC.

By:

Gary R. Enzor

Chief Executive Officer

EXECUTIVE:

John T. Wilson

9               Initial              QDI

Appendix A

RESTRICTIVE COVENANTS

In consideration of Executive’s employment with the Company, the provision by the Company of trade secrets and confidential information to Executive, the Company’s introduction to Executive of its clients and customers, and other good and valuable consideration, the receipt and sufficiency of which Executive acknowledges, Executive agrees to be bound as follows:

1. NON-COMPETE

During the Term and for a period of twelve (12) months after the Term ends, Executive will not, either on his or her own behalf or on behalf of any other person, firm or entity, individually or collectively, directly or indirectly: (i) engage in the Company Business, which is defined as: (a) any business involving trucking, transloading, tank cleaning, container services, logistics, freight brokerage, or freight forwarding involving bulk commodities; (b) any business providing support for energy exploration and development activities; and (c) any other business in which Company or any of its parent, subsidiary or affiliated companies are engaged during the last twelve (12) months of the term in any location in North America; (ii) compete with Company or any of its parent, subsidiary or affiliated companies, or participate as an agent, employee, officer, consultant, advisor, representative, stockholder, partner, member, joint venture, or in any other capacity, or have any direct or indirect financial interest, in any enterprise that has any material operations engaged in the Company Business in any location in North America; (iii) engage in any business relationship with any independent contractor or employee of the Company or any of its parent, subsidiary or affiliated companies; (iv) engage in any manner with any company with which the Company has dealt in any manner as an acquisition or potential acquisition candidate; provided, however, that nothing contained herein shall prohibit Executive from owning no more than five percent (5%) of the equity of any publicly traded entity with respect to which Executive does not serve as an officer, director, employee, consultant or in any other capacity other than as an investor; or being employed by an enterprise that engages in the Company Business, but whose principal business is not the Company Business, if (i) Executive’s involvement is limited to those operations that are not the Company Business or (ii) no more than 5% of the revenues of the enterprise for the year prior to the end of the Term or the 12 month period following the Term are generated by the Company Business.

2. CONFIDENTIALITY

Executive will not use or disclose any Confidential Information belonging to the Company (including its parents, subsidiaries and affiliated companies), except as necessary in a legal proceeding. “Confidential Information” means information or data in written, electronic, or any other form, tangible or intangible, which is not generally known outside the Company. Confidential Information includes, but is not limited to:

(i) business, financial and strategic information, such as sales and earnings information and trends, material, overhead and other costs, profit margins, accounting information, banking and financing information, pricing policies, capital expenditure/investment plans and budgets, forecasts, strategies, plans and prospects.

1               Initial              QDI

(ii) organizational and operational information, such as personnel and salary data, information concerning the utilization or capabilities of personnel, facilities or equipment, logistics management techniques, methodologies and systems, methods of operation data and facilities plans, and including specifically the same information with respect to owner/operators and affiliate or Company terminals;

(iii) advertising, marketing and sales information, such as marketing and advertising data, plans, programs, techniques, strategies, results and budgets, pricing and volume strategies, catalog, licensing or other agreements or arrangements, and market research and forecasts and marketing and sales training and development courses, aids, techniques, instruction and materials.

(iv) product and merchandising information, such as information concerning offered or proposed products or services and the sourcing of the same, product or services specifications, data, drawings, designs, performance characteristics, features, capabilities and plans and development and delivery schedules.

(v) information about existing or prospective customers, suppliers, such as customer and supplier lists and contact information, customer preference data, purchasing habits, authority levels and business methodologies, sales history, pricing and rebate levels, credit information and contracts.

(vi) technical information, such as information regarding plant and equipment organization, performance and design, information technology and logistics systems and related designs, integration, capabilities, performance and plans, computer hardware and software, research and development objectives, budgets and results, intellectual property applications, and other design and performance data.

At the end of the Term, Executive will return to the Company all property belonging to the Company, including all Confidential Information in a tangible form. Notwithstanding anything to the contrary contained in this Appendix A, the restrictions on using or disclosing Confidential Information set forth in this Section 2 shall extend beyond the Term for so long as the Confidential Information is not generally known outside of the Company.

3. NON-SOLICITATION / NON - HIRE

During the Term and for a period of twelve (12) months after the Term ends (the “Non-Solicitation Period”), Executive will not solicit or make any other contact with, directly or indirectly, any customer of the Company, who or which was a customer at any time during the last twelve (12) months of the Term, with respect to the provision of any service to any such customer that is the same or substantially similar to any offered or provided to such customer by the Company or any of its parent, subsidiary or affiliated companies.

Executive will not, during the Non-Solicitation Period, solicit or make any other contact regarding the Company or any of its parent, subsidiary or affiliated companies with any union or

2               Initial              QDI

similar organization which has a collective bargaining agreement, union contract or similar agreement with the Company or any of its parent, subsidiary or affiliated companies, or which is seeking to organize employees of the Company or any of its parent, subsidiary or affiliated companies, with respect to any employee of the Company or such union’s or similar organization’s relationship or arrangements with the Company or any of its parent, subsidiary or affiliated companies.

Executive will not, during the Non-Solicitation Period, solicit, hire, or make any other contact with, directly or indirectly, any person who is an employee or independent contractor (including, without limitation, any truck drivers, owner/operators, or terminal operators, or the employees or fleet owners associated with any terminal operator) of the Company or any of its parent, subsidiary or affiliated companies during the last twelve (12) months of the Term, with respect to any employment services or other business relationship.

4. NON-DISPARAGEMENT

Executive will not make or publish, or cause to be made or published, any statement or information that disparages or defames the Company or any of its parent, subsidiary or affiliated companies, or any of their respective officers, directors, shareholders, employees or representatives.

5. REMEDIES

Executive acknowledges that irreparable damage would occur in the event of Executive’s breach of any of the provisions of this Appendix A. Therefore, in addition to any other remedy to which Company may be entitled at law or in equity, Company shall be entitled to an injunction to prevent any such breach by Executive and to enforce specifically the terms and provisions of this Appendix A.

6. SCOPE

If the scope of any restriction or requirement contained in this Appendix A is found by any court of competent jurisdiction to be too broad or restrictive to permit enforcement of such restriction or requirement to its full extent, then such restriction or requirement shall be enforced to the maximum extent permitted by law, and the Executive consents and agrees that the court may modify the scope of such restriction or requirement so as to permit its enforcement.

	AGREED:
DATE:

3               Initial              QDI

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Gary R. Enzor, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Quality Distribution, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2012

/s/ Gary R. Enzor

GARY R. ENZOR

CHIEF EXECUTIVE OFFICER

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Joseph J. Troy, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Quality Distribution, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2012

/s/ Joseph J. Troy

JOSEPH J. TROY

EXECUTIVE VICE PRESIDENT AND CHIEF

FINANCIAL OFFICER

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Each of the undersigned in connection with this Quarterly Report of Quality Distribution, Inc. (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the undersigned’s knowledge:

(1) the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 9, 2012

/s/ Gary R. Enzor

GARY R. ENZOR

CHIEF EXECUTIVE OFFICER

Date: August 9, 2012

/s/ Joseph J. Troy

JOSEPH J. TROY

EXECUTIVE VICE PRESIDENT AND CHIEF

FINANCIAL OFFICER

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 has been provided to Quality Distribution, Inc. and will be retained by Quality Distribution, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.