NOTE 9.

Subsequent Events

On July 1, 2017 (the “Closing Date”), Hub Group Trucking (HGT), a wholly owned subsidiary of Hub Group, Inc., acquired the membership interest of Estenson Logistics, LLC (“Estenson”). As a result of the Estenson Acquisition, HGT acquired substantially all of the assets of Estenson, which include tractors and trailers.

The purchase price for Estenson was approximately $286 million, including contingent consideration related to an earn-out provision included in the Purchase Agreement, which will not exceed $6 million and is based on Estenson’s EBITDA results in 2017 and 2018. We assumed $114 million of Estenson debt, paid $111 million in cash, and borrowed $55 million under our new line of credit to facilitate the acquisition.

Due to limitations on access to Estenson information prior to the Closing Date and the limited time since the Closing Date, the initial accounting for the business combination is incomplete at this time. As a result, we are unable to provide the amounts recognized as of the Closing Date for the major classes of assets acquired, liabilities assumed, pre-acquisition contingencies and goodwill.

We incurred approximately $1.5 million of acquisition costs associated with this transaction prior to the Closing Date that are reflected in general and administrative in the Unaudited Consolidated Statements of Income for the six months ended June 30, 2017.

On July 1, 2017, we entered into a new $350 million Credit Agreement. The Credit Agreement replaces the Restated Credit Agreement dated December 12, 2013.

Borrowings under the Credit Agreement generally bear interest at a variable rate equal to (i) LIBOR plus a specified margin based upon the Borrowers' total net leverage ratio (as defined in the Credit Agreement) (the "Total Net Leverage Ratio"), or (ii) the base rate (which is the highest of (a) the administrative agent's prime rate, (b) the federal funds rate plus 0.50% or (c) the sum of 1% plus one-month LIBOR) plus a specified margin based upon the Total Net Leverage Ratio. The specified margin for Eurodollar loans varies from 100.0 to 200.0 basis points per annum. The specified margin for base rate loans varies from 0.0 to 100.0 basis points per annum. The Borrowers must also pay (1) a commitment fee ranging from 10.0 to 25.0 basis points per annum (based upon the Total Net Leverage Ratio) on the aggregate unused commitments and (2) a letter of credit fee ranging from 100.0 to 200.0 basis points per annum (based upon the Total Net Leverage Ratio) on the undrawn amount of letters of credit.

The Credit Agreement contains various restrictions and covenants, including negative covenants that limit or restrict dividends, indebtedness of subsidiaries, mergers and fundamental changes, asset sales, acquisitions, liens and encumbrances, transactions with affiliates, changes in fiscal year and other matters customarily restricted in such agreements. The Company must maintain a Total Net Leverage Ratio of (a) total funded debt as of such date, minus up to $50,000,000 in unrestricted cash and cash equivalents (each as defined in the Credit Agreement) to (b) consolidated EBITDA (as defined in the credit agreement) of not more than 3.00 to 1.00; provided that as of the close of each of the four fiscal quarters occurring after the consummation of a permitted acquisition (as defined in the Credit Agreement) with an aggregate consideration of $150,000,000 or more, such ratio shall not be more than 3.25 to 1.00. The Company must maintain an interest coverage ratio of consolidated EBITDA to consolidated cash interest expense of not less than 3.00 to 1.00.

We incurred $1.3 million of financing costs related to the Credit Agreement during the third quarter of 2017, which will be capitalized and amortized to interest expense over the term of the agreement.