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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] Quarterly report pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
For the quarterly period ended March 31, 2001 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: 0-27754
HUB GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 36-4007085
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
377 EAST BUTTERFIELD ROAD, SUITE 700
LOMBARD, ILLINOIS 60148
(Address, including zip code, of principal executive offices)
(630) 271-3600
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No __
On April 19, 2001, the registrant had 7,046,050 outstanding shares of
Class A common stock, par value $.01 per share, and 662,296 outstanding shares
of Class B common stock, par value $.01 per share.
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HUB GROUP, INC.
INDEX
PAGE
PART I. FINANCIAL INFORMATION:
HUB GROUP, INC. - REGISTRANT
Unaudited Condensed Consolidated Balance Sheets - March 31, 2001 and
December 31, 2000 3
Unaudited Condensed Consolidated Statements of Operations - Three Months
Ended March 31, 2001 and 2000 4
Unaudited Condensed Consolidated Statement of Stockholders' Equity - Three
Months Ended March 31, 2001 5
Unaudited Condensed Consolidated Statements of Cash Flows - Three
Months Ended March 31, 2001 and 2000 6
Notes to Unaudited Condensed Consolidated Financial Statements 7
Management's Discussion and Analysis of Financial Condition and
Results of Operations 9
PART II. OTHER INFORMATION 13
2
HUB GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
MARCH 31, DECEMBER 31,
-------------- -------------
2001 2000
-------------- -------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ - $ -
Accounts receivable, net 174,740 195,765
Deferred taxes 9,296 7,933
Prepaid expenses and other current assets 5,482 3,609
-------------- -------------
TOTAL CURRENT ASSETS 189,518 207,307
PROPERTY AND EQUIPMENT, net 39,263 43,854
GOODWILL, net 212,472 213,907
OTHER ASSETS 2,106 2,177
-------------- -------------
TOTAL ASSETS $ 443,359 $ 467,245
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable
Trade $ 157,332 $ 166,743
Other 8,012 8,529
Accrued expenses
Payroll 9,740 9,559
Other 7,635 9,658
Current portion of long-term debt 7,588 12,341
-------------- -------------
TOTAL CURRENT LIABILITIES 190,307 206,830
LONG-TERM DEBT, EXCLUDING CURRENT PORTION 102,086 109,089
DEFERRED TAXES 16,095 15,202
CONTINGENCIES AND COMMITMENTS
MINORITY INTEREST - 352
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 2,000,000 shares authorized; no shares
issued or outstanding in 2001 and 2000 - -
Common stock,
Class A: $.01 par value; 12,337,700 shares authorized; 7,046,050
shares issued and outstanding in 2001, 7,046,050 shares issued and
outstanding in 2000 70 70
Class B: $.01 par value; 662,300 shares authorized; 662,296 shares
issued and outstanding in 2001 and 2000 7 7
Additional paid-in capital 110,817 110,817
Purchase price in excess of predecessor basis, net of tax benefit
of $10,306 (15,458) (15,458)
Retained earnings 39,660 40,336
Accumulated other comprehensive loss (225) -
-------------- -------------
TOTAL STOCKHOLDERS' EQUITY 134,871 135,772
-------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 443,359 $ 467,245
============== =============
See notes to unaudited condensed consolidated financial statements.
3
HUB GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
THREE MONTHS
ENDED MARCH 31,
-------------------------
2001 2000
------------ ------------
Revenue $ 345,935 $ 328,568
Transportation costs 299,899 289,103
------------ ------------
Gross margin 46,036 39,465
Costs and expenses:
Salaries and benefits 24,705 23,176
Selling, general and administrative 12,212 11,367
Depreciation and amortization of property and equipment 3,135 1,153
Amortization of goodwill 1,435 1,435
Impairment of property and equipment 3,401 -
------------ ------------
Total costs and expenses 44,888 37,131
Operating income 1,148 2,334
------------ ------------
Other income (expense):
Interest expense (2,944) (3,184)
Interest income 253 172
Other, net (314) 103
------------ ------------
Total other expense (3,005) (2,909)
Loss before minority interest and benefit from income taxes (1,857) (575)
------------ ------------
Minority interest (711) (38)
------------ ------------
Loss before benefit from income taxes (1,146) (537)
Income tax benefit (470) (220)
------------ ------------
Net loss $ (676) $ (317)
============ ============
Basic loss per common share $ (0.09) $ (0.04)
============ ============
Diluted loss per common share $ (0.09) $ (0.04)
============ ============
See notes to unaudited condensed consolidated financial statements.
4
HUB GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the three months ended March 31, 2001
(in thousands, except shares)
PURCHASE
PRICE IN
CLASS A & B EXCESS OF ACCUMULATED
COMMON STOCK ADDITIONAL PREDECESSOR OTHER TOTAL
---------------------- PAID-IN BASIS, NET RETAINED COMPREHENSIVE STOCKHOLDERS'
SHARES AMOUNT CAPITAL OF TAX EARNINGS LOSS EQUITY
----------- ---------- ------------ -------------- ------------ -------------- ----------------
Balance at December 31, 2000 7,708,346 $ 77 $ 110,817 $ (15,458) $ 40,336 $ - $ 135,772
Comprehensive loss
Net loss - - - - (676) - (676)
Other comprehensive
income (loss):
Cumulative effect of
adopting Statement 133,
net of tax of $55 - - - - - 79 79
Derivative instrument loss,
net of tax of ($212) - - - - - (304) (304)
---------------
Comprehensive loss (901)
----------- ---------- ------------ -------------- ------------ --------------- ---------------
Balance at March 31, 2001 7,708,346 $ 77 $ 110,817 $ (15,458) $ 39,660 $ (225) $ 134,871
=========== ========== ============ ============== ============ =============== ===============
See notes to unaudited condensed consolidated financial statements.
5
HUB GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
THREE MONTHS ENDED MARCH 31,
----------------------------
2001 2000
-------------- -------------
Cash flows from operating activities:
Net loss $ (676) $ (317)
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization of property and equipment 3,309 1,369
Amortization of goodwill 1,435 1,435
Impairment of property and equipment 3,401 -
Deferred taxes (470) (220)
Minority interest (711) (38)
Loss/(Gain) on sale of assets 425 (28)
Changes in working capital:
Accounts receivable, net 21,025 7,111
Prepaid expenses and other current assets (1,514) (1,786)
Accounts payable (9,928) 6,209
Accrued expenses (2,067) (2,622)
Other assets 71 97
-------------- -------------
Net cash provided by operating activities 14,300 11,210
-------------- -------------
Cash flows from investing activities:
Purchases of property and equipment, net (2,544) (6,624)
-------------- -------------
Net cash used in investing activities (2,544) (6,624)
-------------- -------------
Cash flows from financing activities:
Proceeds from sale of common stock - 31
Payments on long-term debt (11,756) (6,472)
-------------- -------------
Net cash used in financing activities (11,756) (6,441)
-------------- -------------
Net decrease in cash and cash equivalents - (1,855)
Cash and cash equivalents, beginning of period - 1,865
-------------- -------------
Cash and cash equivalents, end of period $ - $ 10
============== =============
Supplemental disclosures of cash flow information
Cash paid for:
Interest $ 3,115 $ 3,351
Income taxes 15 1,415
Non-cash activity:
Unrealized loss on derivative instrument $ 225 $ -
See notes to unaudited condensed consolidated financial statements.
6
HUB GROUP, INC.
NOTES TO UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. INTERIM FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated financial statements
of Hub Group, Inc. (the "Company") have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in annual financial statements have been
condensed or omitted pursuant to those rules and regulations. However, the
Company believes that the disclosures contained herein are adequate to make the
information presented not misleading.
The financial statements reflect, in the opinion of management, all
material adjustments (which include only normal recurring adjustments) necessary
to present fairly the Company's financial position and results of operations.
NOTE 2. LOSS PER SHARE
The following is a reconciliation of the Company's Loss per Share:
THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, 2001 MARCH 31, 2000
---------------------------- ----------------------------
(000'S) (000'S)
----------------- -----------------
Per-Share Per-Share
LOSS SHARES AMOUNT LOSS SHARES AMOUNT
-------- -------- ---------- -------- -------- ----------
BASIC LOSS PER SHARE
Loss available to
common stockholders $ (676) 7,708 $ (0.09) $ (317) 7,706 $ (0.04)
-------- -------- ---------- -------- -------- ----------
EFFECT OF DILUTIVE SECURITIES
Stock options - 3 - - 34 -
-------- -------- ---------- -------- -------- ----------
DILUTED LOSS PER SHARE
Loss available to
common stockholders
plus assumed exercises $ (676) 7,711 $ (0.09) $ (317) 7,740 $ (0.04)
-------- -------- ---------- -------- -------- ----------
NOTE 3. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
MARCH 31, DECEMBER 31,
------------ ------------
2001 2000
------------ ------------
(000'S)
Building and improvements $ 57 $ 57
Leasehold improvements 2,150 2,111
Computer equipment and software 42,476 46,396
Furniture and equipment 7,650 7,635
Transportation equipment and automobiles 3,630 3,678
------------ ------------
55,963 59,877
Less: Accumulated depreciation and amortization (16,700) (16,023)
------------ ------------
PROPERTY AND EQUIPMENT, net $ 39,263 $ 43,854
============ ============
7
Depreciation expense for the quarter ending March 31, 2001, includes
approximately $926,000 in additional depreciation due primarily to the change in
estimated useful lives in December 2000 for various assets that will no longer
be used once the new operating system is completed. In addition, on March 30,
2001, the Company made the decision to accelerate depreciation for a piece of
communications software due to a change in estimated useful life of that
software. This software is expected to be replaced with a more stable and cost
effective software application during the second quarter of 2001. The impact of
this change in estimate is expected to result in additional depreciation of $0.6
million in the second quarter of 2001.
NOTE 4. IMPAIRMENT OF PROPERTY AND EQUIPMENT
On March 30, 2001, a $3.4 million pretax charge was recorded due to the
impairment of Hub Group Distribution Services' ("Hub Distribution") e-Logistics
software ("e-software"). This e-software was used to process orders relating to
the home delivery of large box items purchased over the internet. Management
made the decision to exit the internet home delivery business and in conjunction
with this decision, all customer contracts associated with the internet home
delivery business were terminated as of March 30, 2001. Consequently, the
e-software's fair value was reduced to zero based on the lack of any future cash
flows attributable to Hub Distribution's e-Logistics initiative. The Company
does not intend to use the software in the future.
NOTE 5. RESTRUCTURING CHARGE
In the fourth quarter of 2000, management approved a plan to
restructure the Company's accounting functions and centralize them at its
corporate headquarters in Lombard, Illinois. This centralization plan will
result in the reduction of 56 accounting-related employees from the operating
companies. All affected employees were informed in mid-November 2000. In
connection with this plan, the Company recorded a pre-tax charge of $250,000
included in salaries and benefits in the fourth quarter of 2000. As of March 31,
2001, no costs had been paid related to the accounting restructuring and no
employees have been terminated. The entire amount accrued is expected to be paid
during the second quarter of 2001 and has been recorded in accrued payroll
expenses.
NOTE 6. DERIVATIVE FINANCIAL INSTRUMENT
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133 ("Statement 133"), "Accounting for
Derivative Instruments and Hedging Activities". On January 1, 2001, the Company
adopted Statement 133 and recorded the fair value of its interest rate swap of
$79,000, net of related income taxes of $55,000, as an asset. The transition
adjustment to record the asset was included in other comprehensive income. At
March 31, 2001, the Company adjusted the fair value of its derivative financial
instrument which resulted in an unrealized loss of $304,000, net of related
income taxes of $212,000. This adjustment is included in other comprehensive
loss. In addition, the related net asset decreased by $79,000 and the related
net liability increased by $225,000. The Company has concluded that the hedge
ineffectiveness of its only derivative instrument is nonexistent.
8
HUB GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THE THREE MONTHS ENDED
MARCH 31, 2000
REVENUE
Revenue for Hub Group, Inc. (the "Company") increased 5.3% to $345.9
million in 2001 from $328.6 million in 2000. Intermodal revenue increased 2.4%
over 2000. Management believes that this slower than historical growth in
intermodal is due primarily to weakness in the domestic market attributed to a
softening economy. Truckload brokerage revenue increased 2.9% over 2000. Again,
management believes this lack of significant growth is attributed to a soft
economy. Logistics revenue, which includes revenue from the Company's supply
chain solutions services and all revenue from Hub Group Distribution Services
("Hub Distribution"), increased 24.6% compared to 2000. This increase was
primarily due to significant growth from the Company's supply chain solutions
business, which continued to grow rapidly as more of the Company's operating
units gained additional logistics expertise and customers.
GROSS MARGIN
Gross margin increased 16.7% to $46.0 million in 2001 from $39.5
million in 2000. As a percent of revenue, gross margin increased to 13.3% from
12.0% in 2000. The increase in margin as a percent of revenue is primarily due
to two significant factors. Gross margin for intermodal was negatively impacted
in the first quarter of 2000 due to the lag between when the Company received
fuel surcharges from its vendors and when the Company reached agreement to pass
these charges on to its customers. During the first quarter of 2001, this same
lag worked to Hub's benefit as fuel surcharges began to decrease. In effect, the
Company has recouped the margin it lost in the prior year related to fuel
surcharges. In addition, Hub Distribution's niche logistics services experienced
an unusually strong gross margin percentage due to replacing lost business from
a slow-down with its largest point-of-purchase display installations with highly
profitable one-time installation projects for two national retailers.
SALARIES AND BENEFITS
Salaries and benefits increased 6.6% to $24.7 million in 2001 from
$23.2 million in 2000. As a percentage of revenue, salaries and benefits
remained constant at 7.1%.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses increased 7.4% to $12.2
million in 2001 from $11.4 million in 2000. As a percentage of revenue, these
expenses remained constant at 3.5%.
DEPRECIATION AND AMORTIZATION OF PROPERTY AND EQUIPMENT
Depreciation and amortization increased 171.9% to $3.1 million in 2001
from $1.2 million in 2000. This expense as a percentage of revenue increased to
0.9% from 0.4% in 2000. During the quarter, the Company recognized $0.9 million
in additional depreciation due primarily to a change in estimated useful lives
in December 2000 for various assets that will no longer be used once the
Company's new operating system is completed. Additionally, the increase in
depreciation and amortization is due to the amortization of internally developed
software applications placed into service throughout 2000 related to the
Company's e-business initiatives.
9
AMORTIZATION OF GOODWILL
Amortization of goodwill remained constant at $1.4 million in both 2001
and 2000.
IMPAIRMENT OF PROPERTY AND EQUIPMENT
The $3.4 million impairment charge in 2001 was due to Hub
Distribution's exit from its initiative surrounding the home delivery of large
box items purchased over the internet.
OTHER INCOME (EXPENSE)
Interest expense decreased 7.5% to $2.9 million in 2001 from $3.2
million in 2000. The decrease in interest expense is due primarily to carrying a
lower average debt balance this year as compared to the prior year.
Interest income increased to $0.3 million in 2001 from $0.2 million in
2000.
Other income/(expense) decreased to $(0.3) million in 2001 from $0.1
million in 2000. The change is due primarily to a $0.4 million loss on the
disposal of a piece of software in 2001.
MINORITY INTEREST
Minority interest decreased to $(0.7) million in 2001 from $0.0 million
in 2000. The decrease is attributed to the loss for Hub Distribution which was
due primarily to the impairment charge taken during the quarter. Without this
charge, Hub Distribution earned $1.4 million in pre-minority interest, pre-tax
income and this minority interest would have been an expense of $0.5 million.
INCOME TAX BENEFIT
The income tax benefit increased to $(0.5) million in 2001 compared to
$(0.2) million in 2000. The Company recorded income tax benefit using an
effective rate of 41.0% in both years.
NET LOSS
Net loss increased to $(0.7) million in 2001 from $(0.3) million in
2000.
LOSS PER SHARE
Basic and diluted loss per common share increased to $(0.09) in 2001
from $(0.04) in 2000.
LIQUIDITY AND CAPITAL RESOURCES
The Company has funded its operations and capital expenditures through
cash flows from operations and bank borrowings.
Cash provided by operating activities for the three months ended March
31, 2001, was approximately $14.3 million, which resulted primarily from a
decrease in accounts receivable of $21.0 million and non-cash charges of $7.4
million, offset by a net loss of $0.7 million, a $12.0 million decrease in
accounts payables and accrued expenses and a $1.4 million increase in prepaid
expenses, other current assets and other assets, all of which were primarily
related to the overall growth of the Company.
10
Net cash used in investing activities for the three months ended March
31, 2001, was $2.5 million related to capital expenditures. The capital
expenditures were principally made to enhance the Company's information system
capabilities. The most significant project relates to a customized operating
system.
The net cash used in financing activities for the three months ended
March 31, 2001, was $11.8 million. This was comprised of $5.0 million of
voluntary payments on the Company's line of credit and $6.8 million of scheduled
payments on the Company's term debt, installment notes and capital leases.
The Company maintains a multi-bank credit facility. The facility is
comprised of $50.0 million in term debt and a $50.0 million revolving line of
credit. At March 31, 2001, there was $40.5 million of outstanding term debt and
$19.0 million outstanding and $31.0 million unused and available under the line
of credit. Borrowings under the line of credit are unsecured and have a
five-year term that began on April 30, 1999, with a floating interest rate based
upon the LIBOR (London Interbank Offered Rate) or Prime Rate. The term debt has
quarterly payments ranging from $1,250,000 to $2,000,000 with a balloon payment
of $19.0 million due on March 31, 2004.
On March 30, 2001, the Company executed an amendment of its unsecured
$50.0 million term debt and the $50.0 million five-year revolving line of credit
agreement. The amendment modifies the definition of EBITDAM slightly, extending
the date for adding back certain non-cash charges. All other provisions of the
existing credit facility remained unchanged. The Company was in compliance with
the financial covenants that were effective as of March 31, 2001.
The Company maintains $50.0 million of private placement debt (the
"Notes"). These Notes are unsecured and have an eight-year average life.
Interest is paid quarterly. These Notes mature on June 25, 2009, with annual
payments of $10.0 million commencing on June 25, 2005.
On March 30, 2001, the Company executed an amendment to the Notes. This
amendment modifies the definition of EBITDAM slightly, extending the date for
adding back certain non-cash charges. All other provisions of the Notes
agreement remained unchanged. The Company was in compliance with the financial
covenants that were effective as of March 31, 2001.
OUTLOOK, RISKS AND UNCERTAINTIES
Except for historical data, the information contained in this Quarterly
Report constitutes forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements are
inherently uncertain and subject to risks. Such statements should be viewed with
caution. Actual results or experience could differ materially from the
forward-looking statements as a result of many factors. Forward-looking
statements in this report include, but are not limited to, those contained in
this "Outlook, Risks and Uncertainties" section regarding expectations, hopes,
beliefs, estimates, intentions or strategies regarding the future. The Company
assumes no liability to update any such forward-looking statements. In addition
to those mentioned elsewhere in this section, such risks and uncertainties
include the impact of competitive pressures in the marketplace, including the
entry of new, web-based competitors and direct marketing efforts by the
railroads, the degree and rate of market growth in the intermodal, brokerage and
logistics markets served by the Company, changes in rail and truck capacity,
further consolidation of rail carriers, deterioration in relationships with
existing rail carriers, rail service conditions, changes in governmental
regulation, adverse weather conditions, fuel shortages, changes in the cost of
services from rail, drayage and other vendors and fluctuations in interest
rates.
GROSS MARGIN
As described above, the increase in the Company's gross margin
percentage is principally attributed to intermodal and niche logistics services.
Management believes that the favorable impact from fuel surcharges in
11
the first quarter of 2001 would be unlikely to continue if fuel prices stabilize
or increase. Additionally, management expects that if fuel surcharges increased
significantly, the time lag to pass these increases on to customers could
negatively impact our historical gross margin percentage. Furthermore,
management estimates it will not sustain the high margins in its niche logistic
services business performed by Hub Distribution, as these high margin projects
are one-time in nature and comparable projects may very well not occur during
the remainder of the year. Therefore, the Company estimates gross margin as a
percentage of revenue will most likely decline in future quarters from the 13.3%
level which existed in the first quarter of 2001.
DEPRECIATION AND AMORTIZATION OF PROPERTY AND EQUIPMENT
Management estimates that as a percentage of revenue depreciation and
amortization of property and equipment will increase significantly in the
future. The most significant factor that will cause an increase in the
percentage is increased software amortization related to the Company's
information systems. During the second quarter of 2001, the Company expects to
place in service its new proprietary operating system. Additionally, on March
30, 2001, the Company made the decision to accelerate depreciation for a piece
of communications software due to a change in estimated useful life of that
software. This software is expected to be replaced with a more stable and cost
effective software application during the second quarter of 2001. The impact of
this change in estimate is expected to result in additional depreciation of $0.6
million in the second quarter of 2001. Additional factors that could cause an
increase in the percentage are increased depreciation expense if the Company
decided to purchase rather than lease a greater proportion of assets or
accelerating depreciation due to changes in useful lives of other existing
assets. The impairment charge taken by Hub Distribution is expected to offset
only a portion of the expected increase in depreciation and amortization as a
percentage of revenue.
LIQUIDITY AND CAPITAL RESOURCES
The Company believes that cash to be provided by operations, cash
available under its line of credit and the Company's ability to obtain
additional credit will be sufficient to meet the Company's short-term working
capital and capital expenditure needs. The Company believes that the
aforementioned items are sufficient to meet its anticipated long-term working
capital, capital expenditure and debt repayment needs.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk related to changes in interest
rates which may adversely affect its results of operations and financial
condition. The Company seeks to minimize the risk from interest rate volatility
through its regular operating and financing activities and, when deemed
appropriate, through the use of derivative financial instruments. The Company
does not use financial instruments for trading purposes.
The Company has both fixed and variable rate debt as described in Note
8 of the Company's Form 10-K filed for the year ended December 31, 2000. The
Company has entered into an interest rate swap agreement designated as a hedge
on a portion of the Company's variable rate debt. The purpose of the swap is to
fix the interest rate on a portion of the variable rate debt and reduce certain
exposures to interest rate fluctuations. At March 31, 2001, the Company had an
interest rate swap with a notional amount of $25.0 million, a weighted average
pay rate of 8.37%, a weighted average receive rate of 7.65% and a maturity date
of September 30, 2002. This swap agreement involves the exchange of amounts
based on the variable interest rate for amounts based on the fixed interest rate
over the life of the agreement, without an exchange of the notional amount upon
which the payments are based. The differential to be paid or received as
interest rates change is accrued and recognized as an adjustment of interest
expense related to the debt.
The main objective of interest rate risk management is to reduce the
total funding cost to the Company and to alter the interest rate exposure to the
desired risk profile.
12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
A list of exhibits included as part of this Report is
set forth in the Exhibit Index appearing elsewhere
herein by this reference.
13
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly authorized this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HUB GROUP, INC.
DATE: April 19, 2001 /S/ JAY E. PARKER
-----------------
Jay E. Parker
Vice President-Finance and
Chief Financial Officer
(Principal Financial Officer)
EXHIBIT INDEX
Exhibit No.
10.16 Amendment to $100 million Credit Agreement among the Registrant, Hub
City Terminals, Inc. and Harris Trust and Savings Bank dated as of
March 30, 2001.
10.17 Amendment to $50 million Note Purchase Agreement among the Registrant,
Hub City Terminals, Inc. and various purchasers March 30, 2001.
HUB GROUP, INC.
HUB CITY TERMINALS, INC.
AMENDMENT TO CREDIT AGREEMENT
Harris Trust and Savings Bank LaSalle Bank National Association
Chicago, Illinois Chicago, Illinois
U.S. Bank National Association National City Bank
Des Plaines, Illinois Cleveland, Ohio
Firstar Bank, N.A.
Milwaukee, Wisconsin
Ladies and Gentlemen:
Reference is hereby made to that certain Credit Agreement dated as of
April 30, 1999 (the "CREDIT AGREEMENT"), as amended and currently in effect, by
and among Hub Group, Inc. (the "PUBLIC HUB COMPANY"), Hub City Terminals, Inc.
for itself and as successor by merger to Hub Holdings, Inc. ("HUB CHICAGO";
together with the Public Hub Company, the "BORROWERS") and you (the "LENDERS").
All capitalized terms used herein without definition shall have the same
meanings herein as such terms have in the Credit Agreement.
The Borrowers have requested that the Lenders make certain amendments
to the Credit Agreement, and the Lenders are willing to do so under the terms
and conditions set forth in this amendment (herein, the "AMENDMENT").
1. AMENDMENT.
Subject to the satisfaction of the conditions precedent set forth in
Section 2 below, the definition of "EDITDAM" appearing in Section 4.1 of the
Credit Agreement shall be amended and as so amended shall be restated in its
entirety to read as follows:
""EBITDAM" means, with reference to any period, Net
Income for such period plus all amounts deducted in arriving
at such Net Income amount in respect of (i) Interest Expense
for such period, PLUS (ii) taxes (including federal, state and
local income taxes) for such period, PLUS (iii) all amounts
properly charged for depreciation and amortization during such
period on the books of the Hub Group, PLUS (iv) any deduction
for Minority Interest during such period, PLUS (v) if such
period includes the fiscal quarters of the Public Hub Company
ending on December 31, 2000 or March 31, 2001, non-cash
charges during such quarters on the books of the Hub Group in
accordance with GAAP aggregating up to $5,100,000 (for both
such quarters taken together), PLUS (vi) all other non-cash
charges during such period on the books of the Hub Group in
accordance with GAAP to the extent the aggregate amount of
such other non-cash charges do not exceed $2,500,000 during
any period of four consecutive fiscal quarters of the Public
Hub Company (prorated appropriately downward (or upward) for
any shorter (or longer) period); PLUS (vii) if such period
includes the fiscal quarters of the Public Hub Company ending
on December 31, 2000, March 31, 2001 or June 30, 2001,
severance payments made during such quarters aggregating up to
$1,200,000 (for all such quarters taken together); PLUS (viii)
if such period includes the fiscal quarters of the Public Hub
Company ending on March 31, 2001, June 30, 2001, September 30,
2001 or December 31, 2001, severance payments (in addition to
those accounted for in clause (vii) above) made during such
quarters aggregating up to $600,000 (for all four such
quarters taken together)."
2. CONDITIONS PRECEDENT.
The effectiveness of the amendment made in Section 1 of this Amendment
is subject to the satisfaction of all of the following conditions precedent:
2.01. The Borrowers, the Guarantors and the Required Lenders shall
have executed and delivered this Amendment.
2.02. The Senior Note Offering shall have been modified by written
instrument (the "SENIOR NOTE AMENDMENT") in form and substance reasonably
satisfactory to the Agent and Required Lenders to effect a modification of the
terms and conditions thereof such that the same are no more burdensome on the
Borrowers than the corresponding provisions of the Credit Agreement after giving
effect to the modifications contemplated by this Amendment.
2.03. After giving effect to this Amendment, no Default or Event of
Default (other than amended hereby) shall have occurred and be continuing as of
the date this Amendment would otherwise take effect.
2.04. Legal matters incident to the execution and delivery of this
Amendment and the Senior Note Amendment shall be reasonably satisfactory to the
Agent and its counsel.
3. REPRESENTATIONS.
In order to induce the Lenders to execute and deliver this Amendment,
the Borrowers hereby represent to the Lenders that as of the date hereof, the
representations and warranties set forth in Section 5 of the Credit Agreement
are and remain true and correct in all material respects (except to the extent
the same expressly relate to an earlier date and except that for purposes of
2
this paragraph the representations contained in Section 5.5 shall be deemed to
refer to the most recent financial statements of the Public Hub Company
delivered to the Lenders) and the Borrowers are in full compliance with all of
the terms and conditions of the Credit Agreement after giving effect to this
Amendment and no Default or Event of Default (other than amended hereby) has
occurred and is continuing under the Credit Agreement or shall result after
giving effect to this Amendment.
4. MISCELLANEOUS.
4.01. Each Borrower and each Guarantor acknowledges and agrees that,
except as modified by this Amendment, all of the Loan Documents to which it is a
party remain in full force and effect for the benefit and security of, among
other things, the Obligations as modified hereby. Each Borrower and each
Guarantor further acknowledges and agrees that all references in such Loan
Documents to the Obligations shall be deemed a reference to the Obligations as
so modified. Each Borrower and each Guarantor further agrees to execute and
deliver any and all instruments or documents as may be reasonably required by
the Agent or the Required Lenders to confirm any of the foregoing.
4.02. Except as specifically amended hereby, the Credit Agreement shall
continue in full force and effect in accordance with its original terms.
Reference to this specific Amendment need not be made in the Credit Agreement,
the Notes, or any other instrument or document executed in connection therewith,
or in any certificate, letter or communication issued or made pursuant to or
with respect to the Credit Agreement, any reference in any of such items to the
Credit Agreement being sufficient to refer to the Credit Agreement as
specifically amended hereby.
4.03. This Amendment may be executed in any number of counterparts, and
by the different parties on different counterpart signature pages, all of which
taken together shall constitute one and the same agreement. Any of the parties
hereto may execute this Amendment by signing any such counterpart and each of
such counterparts shall for all purposes be deemed to be an original. This
Amendment shall be governed by the internal laws of the State of Illinois.
4.04. The Borrowers agree to pay, jointly and severally, all reasonable
out-of-pocket costs and expenses incurred by the Agent in connection with the
preparation, execution and delivery of this Amendment and the documents and
transactions contemplated hereby, including the reasonable fees and expenses of
counsel for the Agent with respect to the foregoing.
3
Dated as of March ___, 2001.
HUB GROUP, INC., a Borrower
HUB CITY TERMINALS, INC., a Borrower
By
David P. Yeager
Chief Executive Officer for each of the
above Companies
4
GUARANTORS' CONSENT
The undersigned heretofore executed and delivered to the Lenders the
Guaranty Agreement. The undersigned hereby consent to the Amendment to the
Credit Agreement as set forth above and confirm that the Guaranty Agreement and
all of the obligations of the undersigned thereunder remain in full force and
effect. The undersigned further agree that their consent to any further
amendments to the Credit Agreement shall not be required as a result of this
consent having been obtained, except to the extent, if any, required by the
Guaranty Agreement. Without limiting the generality of the foregoing, each of
the undersigned limited liability companies (other than HLX Company, L.L.C.,
Quality Services, L.L.C., Quality Services of Kansas, L.L.C., Quality Services
of New Jersey, L.L.C, Q.S. of Illinois, L.L.C. and Q.S. of Georgia, L.L.C.)
acknowledge and agree that it (i) was previously organized as and is the same
entity as the limited partnership listed in the parenthesis next to its name
below and that executed the Guaranty Agreement and (ii) is liable on the
Guaranty Agreement to the same extent, and with the same force and effect, as if
it had originally executed the Guaranty Agreement in the place and stead of its
respective converting limited partnership.
QUALITY INTERMODAL CORPORATION, a
Guarantor
HUB CHICAGO HOLDINGS, INC., a Guarantor
By
David P. Yeager
Chief Executive Officer for each of the
above Companies
HLX COMPANY, L.L.C., a Guarantor
By
David P. Yeager
Vice Chairman and Chief Executive
Officer
QSSC, INC.
QUALITY SERVICES, L.L.C.,
QUALITY SERVICES OF KANSAS, L.L.C.
QUALITY SERVICES OF NEW JERSEY, L.L.C.
Q.S. OF ILLINOIS, L.L.C.
Q.S. OF GEORGIA, L.L.C.
By
David P. Yeager
Chief Executive Officer for each of the
above Guarantors
2
HUB GROUP ALABAMA, LLC (formerly known as
Hub City Alabama, L.P.)
HUB GROUP ATLANTA, LLC (formerly known as
Hub City Atlanta, L.P.)
HUB GROUP BOSTON, LLC (formerly known as
Hub City Boston, L.P.)
HUB GROUP CANADA, LLC (formerly known as
Hub City Canada, L.P.)
HUB GROUP CLEVELAND, LLC (formerly known
as Hub City Cleveland, L.P.)
HUB GROUP DETROIT, LLC (formerly known as
Hub City Detroit, L.P.)
HUB GROUP FLORIDA, LLC (formerly known as
Hub City Florida, L.P.)
HUB GROUP GOLDEN GATE, LLC (formerly
known as Hub City Golden Gate, L.P.)
HUB GROUP INDIANAPOLIS, LLC (formerly
known as Hub City Indianapolis, L.P.)
HUB GROUP KANSAS CITY, LLC (formerly
known as Hub City Kansas City, L.P.)
HUB GROUP LOS ANGELES, LLC (formerly
known as Hub City Los Angeles, L.P.)
HUB GROUP MID ATLANTIC, LLC (formerly
known as Hub City Mid Atlantic, L.P.)
HUB GROUP NEW ORLEANS, LLC (formerly
known as Hub City New Orleans, L.P.)
HUB GROUP NEW YORK STATE, LLC (formerly
known as Hub City New York State, L.P.)
HUB GROUP NEW YORK-NEW JERSEY, LLC
(formerly known as Hub City New
York-New Jersey, L.P.)
HUB GROUP NORTH CENTRAL, LLC (formerly
known as Hub City North Central, L.P.)
HUB GROUP OHIO, LLC (formerly known as
Hub City Ohio, L.P.)
HUB GROUP PHILADELPHIA, LLC (formerly
known as Hub City Philadelphia, L.P.)
HUB GROUP PITTSBURGH, LLC (formerly known
as Hub City Pittsburgh, L.P.)
HUB GROUP PORTLAND, LLC (formerly known
as Hub City Portland, L.P.)
HUB GROUP ST. LOUIS, LLC (formerly known
as Hub City St. Louis, L.P.)
3
HUB GROUP TENNESSEE, LLC (formerly known
as Hub City Tennessee, L.P.)
HUB CITY TEXAS, L.P.
By
David P. Yeager
Chief Executive Officer for each of the
above Guarantors
4
Accepted and agreed to as of the date and year last above written.
HARRIS TRUST AND SAVINGS BANK
By
Name:_________________________________
Title:________________________________
U.S. BANK NATIONAL ASSOCIATION
By
Name:_________________________________
Title:________________________________
FIRSTAR BANK, N.A.
By
Name:_________________________________
Title:________________________________
LASALLE BANK NATIONAL ASSOCIATION
By
Name:_________________________________
Title:________________________________
NATIONAL CITY BANK
By
Name:_________________________________
Title:________________________________
5
================================================================================
HUB GROUP, INC.
and
HUB CITY TERMINALS, INC.
-----------------------------------
SECOND AMENDMENT
Dated as of March 30, 2001
to
NOTE PURCHASE AGREEMENTS
Dated as of June 15, 1999
-----------------------------------
Re: $50,000,000 8.64% Senior Notes
Due June 25, 2009
================================================================================
SECOND AMENDMENT TO NOTE PURCHASE AGREEMENTS
THIS SECOND AMENDMENT dated as of March 30, 2001 (the or this "SECOND
AMENDMENT") to the Note Purchase Agreements each dated as of June 15, 1999, as
amended by the First Amendment to Note Purchase Agreements dated as of February
26, 2001, is between HUB GROUP, INC., a Delaware corporation ("PUBLIC HUB
COMPANY"), HUB CITY TERMINALS, INC., a Delaware corporation, for itself and as
successor by merger to Hub Holdings, Inc. ("HUB CHICAGO"; Public Hub Company and
Hub Chicago being individually referred to herein as an "OBLIGOR" and
collectively as the "OBLIGORS"), and each of the institutions which is a
signatory to this Second Amendment (collectively, the "NOTEHOLDERS").
RECITALS:
A. The Obligors and each of the Noteholders have heretofore entered
into separate and several Note Purchase Agreements each dated as of June 15,
1999 (as amended by the First Amendment to Note Purchase Agreements dated as of
February 26, 2001, collectively, the "NOTE PURCHASE AGREEMENTS"). The Obligors
have heretofore issued the $50,000,000 8.64% Senior Notes Due June 25, 2009 (the
"NOTES") dated June 25, 2000 pursuant to the Note Purchase Agreements.
B. The Obligors and the Noteholders now desire to amend the Note
Purchase Agreements in the respects, but only in the respects, hereinafter
set forth.
C. Capitalized terms used herein shall have the respective meanings
ascribed thereto in the Note Purchase Agreements unless herein defined or the
context shall otherwise require.
D. All requirements of law have been fully complied with and all other
acts and things necessary to make this Second Amendment a valid, legal and
binding instrument according to its terms for the purposes herein expressed have
been done or performed.
NOW, THEREFORE, upon the full and complete satisfaction of the
conditions precedent to the effectiveness of this Second Amendment set forth in
Section 3.1 hereof, and in consideration of good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged, the Obligors and the
Noteholders do hereby agree as follows:
SECTION 1. AMENDMENTS.
SECTION 1.1. The definition of "CONSOLIDATED EBITDA" appearing in
Schedule B to the Note Purchase Agreements shall be amended and restated in its
entirety to read as follows:
"CONSOLIDATED EBITDA" for any period means the sum of (a)
Consolidated Net Income during such period PLUS (to the extent deducted
in determining Consolidated Net Income), (b) all provisions for any
Federal, state or local income taxes made by the Public Hub Company and
the Restricted Subsidiaries during such period, (c) all provisions for
depreciation and amortization (other than amortization of debt
discount) made by the Public Hub Company and the Restricted
Subsidiaries during such period, (d) Consolidated Interest Expense
2
during such period, (e) Minority Interest Expense, (f) if such period
includes the fiscal quarters of the Public Hub Company ending on
December 31, 2000 or March 31, 2001, non-cash charges during such
quarters on the books of the Public Hub Company and its Restricted
Subsidiaries in accordance with GAAP aggregating up to $5,100,000 (for
both such quarters taken together), (g) all other non-cash charges
during such period on the books of the Public Hub Company and its
Restricted Subsidiaries in accordance with GAAP to the extent the
aggregate amount of such other non-cash charges do not exceed
$2,500,000 during any period of four consecutive fiscal quarters of the
Public Hub Company (prorated appropriately downward (or upward) for any
shorter (or longer) period), (h) if such period includes the fiscal
quarters of the Public Hub Company ending on December 31, 2000 March
31, 2001 or June 30, 2001, severance payments made during such quarters
aggregating up to $1,200,000 (for all such quarters taken together) and
(i) if such period includes the fiscal quarters of the Public Hub
Company ending on March 31, 2001, June 30, 2001, September 30, 2001 or
December 31, 2001, severance payments (in addition to those accounted
for in clause (h) above) made during such quarters aggregating up to
$600,000 (for all four such quarters taken together). For purposes of
calculations under SECTION 10.3, Consolidated EBITDA shall be adjusted
for the period in respect of which any such calculation is being made
to give effect to (i) the audited "EBITDA" (determined in a manner
consistent with the definition of "Consolidated EBITDA" contained in
this Agreement) of any business entity acquired by the Public Hub
Company or any Restricted Subsidiary (the "ACQUIRED BUSINESS") and (ii)
all Debt incurred by the Public Hub Company or any Restricted
Subsidiary in connection with such acquisition, and shall be computed
as if the Acquired Business had been a Restricted Subsidiary throughout
the period and all Debt incurred in connection with such acquisition
had been incurred at the beginning of such period in respect of which
such calculation is being made. Without limiting the foregoing,
Consolidated EBITDA shall also be adjusted for the period in respect of
which any such calculation is being made to eliminate (1) the audited
"EBITDA" of any Subsidiary or other property or assets disposed of by
the Public Hub Company or any Restricted Subsidiary (the "TRANSFERRED
BUSINESS") and (2) Debt relating to such Subsidiary, property or
assets, as the case may be, and shall be computed as if the Transferred
Business had been transferred at the beginning of such period in
respect of which such calculation is being made. In the case of any
business entity acquired during the twelve calendar month period
immediately preceding the date of any determination hereunder whose
financial records are not, and are not required to be in accordance
with applicable laws, rules and regulations, audited by the Public Hub
Company's independent public accountants at the time of the acquisition
thereof, the Public Hub Company shall base such determination upon the
Public Hub Company's internally audited net earnings of such business
entity for the immediately preceding fiscal year or the net earnings of
3
such business entity as audited by such business entity's independent
auditors for the immediately preceding fiscal year.
SECTION 1.2. The definition of "CONSOLIDATED EBITDAR" appearing in
Schedule B to the Note Purchase Agreements shall be amended and restated in its
entirety to read as follows:
"CONSOLIDATED EBITDAR" for any period means the sum of (a)
Consolidated Net Income during such period, PLUS (to the extent
deducted in determining Consolidated Net Income) (b) all provisions for
any Federal, state or local income taxes made by the Public Hub Company
and the Restricted Subsidiaries during such period, (c) all provisions
for depreciation and amortization (other than amortization of debt
discount) made by the Public Hub Company and the Restricted
Subsidiaries during such period, (d) Consolidated Interest Expense
during such period, (e) all Rentals (other than Rentals on Capital
Leases) payable during such period by the Public Hub Company and the
Restricted Subsidiaries, (f) Minority Interest Expense, (g) if such
period includes the fiscal quarters of the Public Hub Company ending on
December 31, 2000 or March 31, 2001, non-cash charges during such
quarters on the books of the Public Hub Company and its Restricted
Subsidiaries in accordance with GAAP aggregating up to $5,100,000 (for
both such quarters taken together), (h) all other non-cash charges
during such period on the books of the Public Hub Company and its
Restricted Subsidiaries in accordance with GAAP to the extent the
aggregate amount of such other non-cash charges do not exceed
$2,500,000 during any period of four consecutive fiscal quarters of the
Public Hub Company (prorated appropriately downward (or upward) for any
shorter (or longer) period), (i) if such period includes the fiscal
quarters of the Public Hub Company ending on December 31, 2000 or March
31, 2001 or June 30, 2001, severance payments made during such quarters
aggregating up to $1,200,000 (for all such quarters taken together) and
(j) if such period includes the fiscal quarters of the Public Hub
Company ending on March 31, 2001, June 30, 2001, September 30, 2001 or
December 31, 2001, severance payments (in addition to those accounted
for in clause (i) above) made during such quarters aggregating up to
$600,000 (for all four such quarters taken together). Consolidated
EBITDAR shall not be adjusted to take into account earnings or interest
of an Acquired Business that were earned or accrued prior to its
becoming an Acquired Business.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE OBLIGORS.
SECTION 2.1. To induce the Noteholders to execute and deliver this
Second Amendment (which representations shall survive the execution and delivery
of this Second Amendment), the Obligors, jointly and severally, represent and
warrant to the Noteholders that:
(a) this Second Amendment has been duly authorized, executed
and delivered by each Obligor and this Second Amendment constitutes the
legal, valid and binding obligation, contract and agreement of each
Obligor enforceable against it in accordance with its terms, except as
4
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws or equitable principles relating to or
limiting creditors' rights generally;
(b) the Note Purchase Agreements, as amended by this Second
Amendment, constitute the legal, valid and binding obligations,
contracts and agreements of the Obligors enforceable against them in
accordance with their respective terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws or equitable principles relating to or limiting creditors'
rights generally;
(c) the execution, delivery and performance by the Obligors
of this Second Amendment (i) has been duly authorized by all requisite
corporate action and, if required, shareholder action, (ii) does not
require the consent or approval of any governmental or regulatory body
or agency, and (iii) will not (A) violate (1) any provision of law,
statute, rule or regulation or its certificate of incorporation or
bylaws, (2) any order of any court or any rule, regulation or order of
any other agency or government binding upon it, or (3) any provision of
any material indenture, agreement or other instrument to which any
Obligor is a party or by which any Obligor's properties or assets are
or may be bound, including, without limitation, the Credit Agreement
dated as of April 30, 1999, among the Obligors, the Lenders party
thereto and Harris Trust and Savings Bank, individually and as Agent,
and all amendments, supplements and modifications thereto, or (B)
result in a breach or constitute (alone or with due notice or lapse of
time or both) a default under any indenture, agreement or other
instrument referred to in clause (iii)(A)(3) of this Section 2.1(c);
(d) as of the date hereof and after giving effect to this
Second Amendment, no Default or Event of Default has occurred which is
continuing;
(e) all the representations and warranties contained in
Section 5 of the Note Purchase Agreements (other than those contained
in Sections 5.3, 5.4(a), 5.4(b) and 5.9) are true and correct in all
material respects with the same force and effect as if made by the
Obligors on and as of the date hereof (other than any representation
and warranty that expressly relates to a specified earlier date, which
was true and correct in all material respects as of such date);
PROVIDED, THAT, notwithstanding any reference in Sections 5.4(c) and
5.4(d) of the Note Purchase Agreements to the Restricted Subsidiaries
listed on Schedule 5.4 to the Note Purchase Agreements, the
representations and warranties hereby made by the Obligors with
reference to Sections 5.4(c) and 5.4(d) of the Note Purchase Agreements
shall relate to the Restricted Subsidiaries existing on the date
hereof;
(f) The statements and information furnished to the
Noteholders in connection with the negotiation of this Amendment do
not, taken as a whole, and other than financial projections or
forecasts, contain any untrue statements of a material fact or omit a
material fact necessary to make the material statements contained
herein or therein not misleading, the Noteholders acknowledging that as
to any projections furnished to the Noteholders, the Obligors and the
Constituent Company Guarantors only represent that the same were
prepared on the basis of information and estimates the Obligors
believed to be reasonable; and
5
(g) All tax returns with respect to any income tax or other
material tax required to be filed by the Obligors and the Restricted
Subsidiaries in any jurisdiction have, in fact, been filed, and all
taxes, assessments, fees and other governmental charges upon the
Obligors or the Restricted Subsidiaries or upon any of their respective
properties, income or franchises, which are shown to be due and payable
in such returns, have been paid. The Obligors do not know of any
proposed additional tax assessment against the Obligors or any
Restricted Subsidiary for which adequate provision in accordance with
GAAP has not been made. Adequate provisions in accordance with GAAP for
taxes on the books of the Obligors and each Restricted Subsidiary have
been made for all open years, and for its current fiscal period.
SECTION 3. CONDITIONS TO EFFECTIVENESS OF THIS SECOND AMENDMENT.
SECTION 3.1. This Second Amendment shall not become effective until,
and shall become effective when, each and every one of the following conditions
shall have been satisfied:
(a) executed counterparts of this Second Amendment, duly
executed by the Obligors and the holders of at least 51% of the
outstanding principal of the Notes, shall have been delivered to the
Noteholders;
(b) the Noteholders shall have received a copy of the
resolutions of the Board of Directors of each Obligor authorizing the
execution, delivery and performance by such Obligor of this Second
Amendment, certified by such Obligor's Secretary or an Assistant
Secretary;
(c) the representations and warranties of the Obligors set
forth in Section 2 hereof are true and correct on and with respect to
the date hereof;
(d) the Noteholders shall have received the favorable opinion
of counsel to the Obligors as to the matters set forth in Sections
2.1(a), 2.1(b) and 2.1(c) hereof, which opinion shall be in form and
substance satisfactory to the Noteholders; and
(e) the Noteholders shall have received a true, correct and
complete copy of the Amendment to the Bank Credit Agreement dated the
date hereof.
Upon receipt of all of the foregoing, this Second Amendment shall become
effective as of March 30, 2001.
SECTION 4. PAYMENT OF NOTEHOLDERS' COUNSEL FEES AND EXPENSES.
SECTION 4.1. The Obligors agrees to pay upon demand, the reasonable
fees and expenses of Chapman and Cutler, counsel to the Noteholders, in
connection with the negotiation, preparation, approval, execution and delivery
of this Second Amendment.
6
SECTION 5. MISCELLANEOUS.
SECTION 5.1. This Second Amendment shall be construed in connection
with and as part of each of the Note Purchase Agreements, and except as modified
and expressly amended by this Second Amendment, all terms, conditions and
covenants contained in the Note Purchase Agreements and the Notes are hereby
ratified and shall be and remain in full force and effect.
SECTION 5.2. Any and all notices, requests, certificates and other
instruments executed and delivered after the execution and delivery of this
Second Amendment may refer to the Note Purchase Agreements without making
specific reference to this Second Amendment but nevertheless all such references
shall include this Second Amendment unless the context otherwise requires.
SECTION 5.3. The descriptive headings of the various Sections or parts
of this Second Amendment are for convenience only and shall not affect the
meaning or construction of any of the provisions hereof.
SECTION 5.4. This Second Amendment shall be governed by and construed
in accordance with Illinois law.
SECTION 5.5. The execution hereof by you shall constitute a contract
between us for the uses and purposes hereinabove set forth, and this Second
Amendment may be executed in any number of counterparts, each executed
counterpart constituting an original, but all together only one agreement.
[Signature Pages Begin on Next Page]
7
IN WITNESS WHEREOF, the Obligors and the Noteholders have caused this
instrument to be executed this March 30, 2001.
HUB GROUP, INC.
HUB CITY TERMINALS, INC.
By
David P. Yeager
Chief Executive Officer for each of the
above Companies
Consented, Accepted and Agreed
this March 30, 2001
HUB CHICAGO HOLDINGS, INC., a Constituent
Company Guarantor
By
David P. Yeager
Chief Executive Officer for each of the
above Companies
HLX COMPANY, L.L.C., a Constituent
Company Guarantor
By
David P. Yeager
Vice Chairman and Chief Executive
Officer
QSSC, INC.
QUALITY SERVICES, L.L.C.,
QUALITY SERVICES OF KANSAS, L.L.C.
QUALITY SERVICES OF NEW JERSEY, L.L.C.
Q.S. OF ILLINOIS, L.L.C.
Q.S. OF GEORGIA, L.L.C.
By
David P. Yeager
Chief Executive Officer for each of the
above Constituent Company Guarantors
HUB GROUP ALABAMA, LLC (formerly known as
Hub City Alabama, L.P.)
HUB GROUP ATLANTA, LLC (formerly known as
Hub City Atlanta, L.P.)
HUB GROUP BOSTON, LLC (formerly known as
Hub City Boston, L.P.)
HUB GROUP CANADA, L.P.
HUB GROUP CLEVELAND, LLC (formerly known
as Hub City Cleveland, L.P.)
HUB GROUP DETROIT, LLC (formerly known as
Hub City Detroit, L.P.)
HUB GROUP FLORIDA, LLC (formerly known as
Hub City Florida, L.P.)
HUB GROUP GOLDEN GATE, LLC (formerly
known as Hub City Golden Gate, L.P.)
HUB GROUP INDIANAPOLIS, LLC (formerly
known as Hub City Indianapolis, L.P.)
HUB GROUP KANSAS CITY, LLC (formerly
known as Hub City Kansas City, L.P.)
HUB GROUP LOS ANGELES, LLC (formerly
known as Hub City Los Angeles, L.P.)
HUB GROUP MID ATLANTIC, LLC (formerly
known as Hub City Mid Atlantic, L.P.)
HUB GROUP NEW ORLEANS, LLC (formerly
known as Hub City New Orleans, L.P.)
HUB GROUP NEW YORK STATE, LLC (formerly
known as Hub City New York State, L.P.)
HUB GROUP NEW YORK-NEW JERSEY, LLC
(formerly known as Hub City New
York-New Jersey, L.P.)
HUB GROUP NORTH CENTRAL, LLC (formerly
known as Hub City North Central, L.P.)
HUB GROUP OHIO, LLC (formerly known as
Hub City Ohio, L.P.)
HUB GROUP PHILADELPHIA, LLC (formerly
known as Hub City Philadelphia, L.P.)
HUB GROUP PITTSBURGH, LLC (formerly known
as Hub City Pittsburgh, L.P.)
HUB GROUP PORTLAND, LLC (formerly known
as Hub City Portland, L.P.)
HUB GROUP ST. LOUIS, LLC (formerly known
as Hub City St. Louis, L.P.)
HUB GROUP TENNESSEE, LLC (formerly known
as Hub City Tennessee, L.P.)
HUB CITY TEXAS, L.P.
By
David P. Yeager
Chief Executive Officer for each of the
above Constituent Company Guarantors
Consented, Accepted and Agreed
this March 30, 2001:
BAYSTATE HEALTH SYSTEM, INC.
By: David L. Babson & Company Inc. as
Investment Adviser
By_________________________________
Name:
Title:
Consented, Accepted and Agreed
this March 30, 2001:
C.M. LIFE INSURANCE COMPANY
By: David L. Babson & Company Inc. as
Investment Sub-Adviser
By_________________________________
Name:
Title:
Consented, Accepted and Agreed
this March 30, 2001:
MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY
By: David L. Babson & Company Inc., as
Investment Adviser
By________________________________
Name:
Title:
Consented, Accepted and Agreed
this March 30, 2001:
INVESTORS PARTNER LIFE INSURANCE COMPANY
By____________________________________
Name:
Title:
Consented, Accepted and Agreed
this March 30, 2001:
JOHN HANCOCK LIFE INSURANCE COMPANY
By____________________________________
Name:
Title:
Consented, Accepted and Agreed
this March 30, 2001:
JOHN HANCOCK VARIABLE LIFE INSURANCE
COMPANY
By____________________________________
Name:
Title:
Consented, Accepted and Agreed
this March 30, 2001:
MELLON BANK, N.A., solely in its capacity
as Trustee for the Bell Atlantic
Master Trust (as directed by John
Hancock Life Insurance Company), and
not in its individual capacity
By____________________________________
Name:
Title:
Consented, Accepted and Agreed
this March 30, 2001:
ING INVESTMENT MANAGEMENT LLC, as agent
on behalf of ReliaStar Life Insurance
Company
By____________________________________
Name:
Title:
Consented, Accepted and Agreed
this March 30, 2001:
ING INVESTMENT MANAGEMENT LLC, as agent
on behalf of ReliaStar Life Insurance
Company of New York
By____________________________________
Name:
Title:
Consented, Accepted and Agreed
this March 30, 2001:
UNITED OF OMAHA LIFE INSURANCE COMPANY
By____________________________________
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