HUB GROUP, INC.
HUB CITY TERMINALS, INC.
AMENDMENT TO CREDIT AGREEMENT
Xxxxxx 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 waive the Hub
Group's non-compliance with certain financial covenants for the fiscal
quarter ending June 30, 2002 and the Lenders are willing to do so under the
terms and conditions set forth in this amendment (herein, the "Amendment").
1. WAIVERS.
The Borrowers have informed the Lenders that the Hub Group was in
default of their obligations under Section 7.8 of the Credit Agreement
(Fixed Charge Coverage Ratio) for the fiscal quarter ending June 30, 2002,
Section 7.9 of the Credit Agreement (Minimum EBITDAM) for the fiscal
quarter ending June 30, 2002 and Section 7.10 of the Credit Agreement (Cash
Flow Leverage Ratio) for the fiscal quarter ending June 30, 2002
(collectively, the "Existing Defaults"). In accordance with the request of
the Borrowers and subject to the satisfaction of the conditions precedent
set forth in Section 3 below, the Lenders hereby waive the Existing
Defaults. The foregoing waiver is expressly limited to the matters stated
herein.
2. AMENDMENTS.
Subject to the satisfaction of the conditions precedent set forth
in Section 3 below, the Credit Agreement shall be and hereby is amended as
follows:
2.01. Section 1 of the Credit Agreement shall be and hereby is
amended by adding the following new Sections 1.9 immediately at the end
thereof:
"Section 1.9. Security. No later than October 15, 2002
(the "Collateral Deadline") and subject to the other
terms of this Section 1.9, the Obligations shall be
secured by valid, perfected, and enforceable Liens on all
right, title, and interest of the Borrowers and each
other Guarantor in all personal property (including,
without limitation, accounts, instruments, documents,
chattel paper, general intangibles, patents, trademarks,
tradenames, copyrights, investment property, inventory,
equipment, fixtures, deposit accounts, and commercial
tort claims), whether now owned or hereafter acquired or
arising, and all proceeds thereof. The Borrowers and the
other Guarantors acknowledge and agree that such Liens on
the Collateral shall be valid and perfected first
priority Liens, subject only to the Liens permitted by
Section 7.12 hereof, securing on a ratable basis
(pursuant to the Intercreditor Agreement) the
Obligations, the Senior Notes and the Hedging Liability,
in each case pursuant to one or more Collateral Documents
in form and substance satisfactory to the Agent and the
Required Lenders. Notwithstanding anything in this
Agreement to the contrary: (i) Liens shall not be granted
on Property of any Foreign Subsidiary (or on any equity
interest in any Foreign Subsidiary in excess of 65% of
the equity thereof); (ii) Liens shall not be granted on
real property; (iii) Liens shall not be perfected on
vehicles subject to certificate of title laws; (iv) and
notwithstanding anything contained in any other Loan
Document or in the Senior Note Agreements or the Senior
Notes and except to the extent otherwise permitted by
Sections 9-406, 9-407 or 9-408 of the UCC, in no event
shall the Collateral include, and the Borrowers and the
Guarantors shall not be deemed to have granted a security
interest in, any asset to the extent that such a grant
would, under the provisions of any existing contract or
agreement enforceable under applicable law and pertaining
to such asset or otherwise, result in a mandatory
prepayment under, breach or termination of the provisions
of, or constitute a default under or termination of, any
such contract or agreement, provided, that if and when
such provisions are removed, terminated or otherwise
become unenforceable as a matter of law, the Collateral
shall be deemed to include such assets and the Borrowers
and the Guarantors shall be deemed to have granted a
security interest therein; and (v) if, by no later than
5:00 p.m. on the Collateral Deadline, the Borrowers shall
have provided to the Lenders a signed commitment of a
lender to provide financing in an amount sufficient to
repay in full the Obligations on or before October 31,
2002 and containing such other terms and conditions as
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shall be reasonably acceptable to the Agent and the
Required Lenders, then the Liens of the Collateral
Documents shall not be perfected until November 1, 2002."
2.02. Section 4.1 of the Credit Agreement shall be amended by
inserting the following new definitions in the appropriate alphabetical
order:
""Collateral" means all properties, rights, interests,
and privileges from time to time subject to the Liens
granted to the collateral agent (as defined in the
Intercreditor Agreement), or any security trustee
therefor, by the Collateral Documents.
"Collateral Documents" means all mortgages, deeds of
trust, security agreements, pledge agreements,
assignments, financing statements and other documents as
shall from time to time secure the Obligations, the
Senior Notes, the Hedging Liability, or any part thereof.
"Intercreditor Agreement" shall mean an intercreditor and
collateral agency agreement (in form and substance
satisfactory to the Agent and the Required Lenders) to be
entered into by the Lenders and the Senior Noteholders
providing for the Liens described in Section 1.9 hereof
on the Collateral to secure the Obligations, the Senior
Notes and the Hedging Liability on a pari passu basis and
appointing Xxxxxx Trust and Savings Bank as a collateral
agent to hold such Liens.
"Senior Notes" shall mean the indebtedness of the Public
Hub Company and Hub Chicago to BayState Health System,
Inc., C.M. Life Insurance Company, Massachusetts Mutual
Life Insurance Company, Investors Partner Life Insurance
Company, Xxxx Xxxxxxx Life Insurance Company, Xxxx
Xxxxxxx Variable Life Insurance Company, Mellon Bank,
N.A. (solely in its capacity as Trustee for the Xxxx
Atlantic Master Trust (as directed by Xxxx Xxxxxxx Life
Insurance Company), and not in its individual capacity),
ReliaStar Life Insurance Company, ReliaStar Life
Insurance Company of New York and United of Omaha Life
Insurance Company (collectively, together with their
successors and assigns, the "Senior Noteholders") in the
aggregate original principal amount of $50,000,000 as
evidenced by the 8.64% Senior Notes Due June 25, 2009,
issued and sold by the Public Hub Company and Hub Chicago
to the Senior Noteholders pursuant to separate and
several Note Purchase Agreements each dated as of June
15, 1999, as the same may be amended, supplemented or
otherwise modified from time to time (the "Senior Note
Agreements").
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"UCC" shall mean the Uniform Commercial Code of the State
of Illinois as in effect from time to time."
2.03. Sections 7.8, 7.9 and 7.10 of the Credit Agreement shall be
amended and as so amended shall be restated in their entirety to read,
respectively, as follows:
"Section 7.8. Fixed Charge Coverage Ratio. The
Hub Group shall not, as of the close of each fiscal quarter
of the Public Hub Company specified below, permit the Fixed
Charge Coverage Ratio as of such date to be less than:
FIXED CHARGE
AS OF THE FISCAL COVERAGE RATIO SHALL
QUARTER ENDING ON: NOT BE LESS THAN:
9/30/02 0.90 to 1
12/31/02 0.875 to 1
3/31/03 1.20 to 1
6/30/03 and at all times 1.25 to 1
thereafter
Notwithstanding anything contained in this Agreement to
the contrary, for purposes of computing the Hub Group's
compliance with this Section, the Hub Group's adjustment
of earnings for the 2001 fiscal year (which was an
aggregate EBITDAM adjustment of $1,800,000 for such year)
shall be treated as if such adjustment had occurred
evenly in each fiscal quarter of such year (i.e. $450,000
per fiscal quarter).
Section 7.9. Minimum EBITDAM. The Hub Group
shall, as of the close of each fiscal quarter of the
Public Hub Company specified below, maintain EBITDAM for
the four fiscal quarters of the Public Hub Company then
ended of not less than:
AS OF THE FISCAL EBITDAM SHALL NOT BE
QUARTER ENDING ON: LESS THAN:
9/30/02 $24,000,000
12/31/02 $21,500,000
3/31/03 $38,000,000
6/30/03 and at all times $40,000,000
thereafter
Notwithstanding anything contained in this Agreement to
the contrary, for purposes of computing the Hub Group's
compliance with this Section, the Hub Group's adjustment
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of earnings for the 2001 fiscal year (which was an
aggregate EBITDAM adjustment of $1,800,000 for such year)
shall be treated as if such adjustment had occurred
evenly in each fiscal quarter of such year (i.e. $450,000
per fiscal quarter).
Section 7.10. Cash Flow Leverage Ratio. The Hub
Group shall not, as of the close of each fiscal quarter of
the Public Hub Company specified below, permit the Cash
Flow Leverage Ratio as of such date to be more than:
CASH FLOW LEVERAGE
AS OF THE FISCAL RATIO SHALL NOT BE
QUARTER ENDING ON: MORE THA
9/30/02 4.75 to 1
12/31/02 5.25 to 1
3/31/03 2.75 to 1
6/30/03 and at all times 2.50 to 1
thereafter
Notwithstanding anything contained in this Agreement to
the contrary, for purposes of computing the Hub Group's
compliance with this Section, the Hub Group's adjustment
of earnings for the 2001 fiscal year (which was an
aggregate EBITDAM adjustment of $1,800,000 for such year)
shall be treated as if such adjustment had occurred
evenly in each fiscal quarter of such year (i.e.
$450,000 per fiscal quarter)."
2.04. Section 7.12 of the Credit Agreement shall be amended by
inserting the following new sentence immediately at the end thereof:
"Notwithstanding anything in this Section to the
contrary, this Section shall neither apply to nor operate
to prevent Liens in favor of the collateral agent (as
defined in the Intercreditor Agreement) granted under the
Collateral Documents to secure the Obligations, the
Senior Notes and the Hedging Liability on a pari passu
basis pursuant to the Intercreditor Agreement."
3. CONDITIONS PRECEDENT.
The effectiveness of this Amendment is subject to the satisfaction
of all of the following conditions precedent:
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3.01. The Borrowers, the Guarantors and the Required Lenders shall
have executed and delivered this Amendment.
3.02. The Senior Note Offering shall have been modified by written
instrument (the "Senior Note Amendment") in form and substance reasonably
satisfactory to the Agent to effect a waiver and 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.
3.03. The Borrowers shall have paid to the Agent, for the ratable
benefit of the Lenders which have executed and delivered to counsel for the
Agent a counterpart of this Amendment no later than 5:00 p.m. (Chicago
time) on August 13, 2002, an amendment fee in an amount equal to 0.10% of
such executing Lenders' Revolving Credit Commitments and outstanding Term
Loans (the "Amendment Fee"), such Amendment Fee to be fully earned and due
and payable to such executing Lenders upon such Lenders' execution of this
Amendment.
3.04. 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.
Upon the satisfaction of the foregoing conditions precedent, the
Lenders also consent to the acquisition by Hub City Terminals, Inc. of the
equity interests in Hub Group Distribution Services, an Illinois limited
partnership, which are not currently owned by Hub City Terminals, Inc. for
cash consideration of approximately $4,000,000.
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4. CONDITIONS SUBSEQUENT.
The Borrowers shall cooperate with the Agent and the Lenders to
the extent reasonably necessary to enable such parties to revise the
financial covenants of the Credit Agreement with respect to the fiscal
periods after January 1, 2003 by no later than the Collateral Deadline, and
shall deliver to the Agent and the Lenders, as soon as possible, but in any
event no later than the Collateral Deadline: (i) quarterly financial
projections for the Borrowers' 2003 fiscal year, (ii) details with respect
to cost reduction initiatives being undertaken by the Borrowers along with
a timeline for the implementation of such initiatives and (iii) details
with respect to revenue generation initiatives which support the Borrowers'
2003 financial projections. No later than November 1, 2002, the Borrowers
and the Lenders shall have closed an amendment to the Credit Agreement
which provides for such revisions to the financial covenants and contains
such other provisions as the Lenders may require, including, without
limitation, changes to the Applicable Margins and an amendment fee in an
amount equal to 0.15% of the Lenders' Revolving Credit Commitments and
outstanding Term Loans. Failure to close such an amendment to the Credit
Agreement by November 1, 2002 shall constitute an Event of Default unless
such deadline is otherwise extended by the Required Lenders.
5. 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 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 the Existing Defaults) has
occurred and is continuing under the Credit Agreement or shall result after
giving effect to this Amendment.
6. MISCELLANEOUS.
6.01. 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.
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6.02. 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.
6.03. 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.
6.04. 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,
the Collateral Documents, the Intercreditor Agreement and the documents and
transactions contemplated hereby, including the reasonable fees and
expenses of counsel for the Agent with respect to the foregoing.
[Remainder of Page Intentionally Left Blank.]
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Dated as of August 13, 2002.
HUB GROUP, INC., a Borrower
HUB CITY TERMINALS, INC., a Borrower
By /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Chief Executive Officer for each of
the above Companies
Accepted and agreed to as of the date and year last above written.
XXXXXX TRUST AND SAVINGS BANK
By /s/ Xxxxx X. Xxxxxx
Name: /s/ Xxxxx X. Xxxxxx
Title: Managing Director
U.S. BANK NATIONAL ASSOCIATION
By
Name:____________________________
Title:___________________________
FIRSTAR BANK, N.A.
By
Name:___________________________
Title:__________________________
LASALLE BANK NATIONAL ASSOCIATION
By /s/ Xxxx Xxxxx
Name: Xxxx Xxxxx
Title: Vice President
NATIONAL CITY BANK
By /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
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.
HUB CHICAGO HOLDINGS, INC., a
Guarantor
By /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Chief Executive Officer
HLX COMPANY, L.L.C., a Guarantor
By /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
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 /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Chief Executive Officer for each
of the above Guarantors
HUB GROUP ALABAMA, LLC
HUB GROUP ATLANTA, LLC
HUB GROUP BOSTON, LLC
HUB GROUP CANADA, L.P.
HUB GROUP CLEVELAND, LLC
HUB GROUP DETROIT, LLC
HUB GROUP FLORIDA, LLC
HUB GROUP GOLDEN GATE, LLC
HUB GROUP INDIANAPOLIS, LLC
HUB GROUP KANSAS CITY, LLC
HUB GROUP LOS ANGELES, LLC
HUB GROUP MID ATLANTIC, LLC
HUB GROUP NEW ORLEANS, LLC
HUB GROUP NEW YORK STATE, LLC
HUB GROUP NEW YORK-NEW JERSEY, LLC
HUB GROUP NORTH CENTRAL, LLC
HUB GROUP OHIO, LLC
HUB GROUP PHILADELPHIA, LLC
HUB GROUP PITTSBURGH, LLC
HUB GROUP PORTLAND, LLC
HUB GROUP ST. LOUIS, LLC
HUB GROUP TENNESSEE, LLC
HUB CITY TEXAS, L.P.
HUB GROUP TRANSPORT, LLC
HUB GROUP ASSOCIATES, INC.
HUB FREIGHT SERVICES, INC.
By /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Chief Executive Officer for each
of the above Guarantors
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