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Exhibit
10.27
AMENDMENT NO. 3 AND LIMITED WAIVER TO AMENDED AND RESTATED CREDIT
AGREEMENT
This
Amendment No. 3 and Limited Waiver to Amended and Restated
Credit Agreement (this “
Agreement ”)
dated as of August 11, 2006 is made by and among COVENANT ASSET
MANAGEMENT, INC., a Nevada corporation (the “
Borrower ”),
COVENANT TRANSPORT, INC., a Nevada corporation and the owner of
100% of the issued and outstanding common stock of the Borrower
(the “
Parent ”),
BANK OF AMERICA, N.A., a national banking association organized and
existing under the laws of the United States (“
Bank of America ”),
in its capacity as administrative agent for the Lenders (as defined
in the Credit Agreement (as defined below)) (in such capacity, the
“
Agent ”),
each of the Lenders signatory hereto and each of the Guarantors (as
defined in the Credit Agreement) signatory hereto.
W I T N E S S E T H
:
WHEREAS ,
the Borrower, the Parent, the Agent and the Lenders have entered
into that certain Amended and Restated Credit Agreement dated as of
December 16, 2004, as amended by Amendment No. 1 to Amended and
Restated Credit Agreement dated as of July 18, 2005 and Amendment
No. 2 to Amended and Restated Credit Agreement dated as of March 3,
2006 (as hereby amended and as from time to time hereafter further
amended, modified, supplemented, restated, or amended and restated,
the “
Credit Agreement ”;
the capitalized terms used in this Agreement not otherwise defined
herein shall have the respective meanings given thereto in the
Credit Agreement), pursuant to which the Lenders have made
available to the Borrower various revolving credit facilities,
including a letter of credit facility and a swing line facility;
and
WHEREAS ,
each of the Parent and the Guarantors has entered into a Facility
Guaranty pursuant to which it has guaranteed certain or all of the
obligations of the Borrower under the Credit Agreement and the
other Loan Documents, and the Parent, the Borrower and the
Guarantors have entered into various of the Security Instruments to
secure their respective obligations and liabilities with respect to
the Loans and the Loan Documents; and
WHEREAS ,
the Parent and the Borrower have advised the Agent and the Lenders
that they desire to enter into certain agreements relating to the
purchase by the Parent (either directly or indirectly through its
wholly-owned Subsidiary) of 100% of the issued and outstanding
shares of that certain truckload carrier identified by the Parent
and previously disclosed to the Lenders (“Target”) in
accordance with the terms and conditions set forth in that certain
letter dated as of July 31, 2006 among the Parent, Star and the
shareholders of Star (the “
Proposed Transaction ”);
WHEREAS ,
in connection with the consummation of the Proposed Transaction,
the Parent and the Borrower require waivers to and amendments of
certain terms of the Credit Agreement;
WHEREAS ,
if the Proposed Transaction is consummated, the Agent and the
Lenders signatory hereto are willing so to effect such amendments
to certain provisions of the Credit Agreement and waivers of
certain covenants under the Credit Agreement, in each case as set
forth below pursuant to the terms and conditions contained in this
Agreement;
WHEREAS ,
if the Proposed Transaction is not consummated upon the terms and
conditions set forth herein, this Agreement shall be of no force or
effect;
NOW, THEREFORE ,
in consideration of the premises and further valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1.
Amendments to Credit Agreement .
Subject to the terms and conditions set forth herein, the Credit
Agreement is hereby amended as follows:
(a)
The
following definition of “
Proposed Transaction ”
is hereby added to
Section 1.2 :
“
Proposed Transaction ”
means the purchase by the Parent (either directly or indirectly
through its wholly-owned Subsidiary) of 100% of the issued and
outstanding shares of that certain truckload carrier identified by
the Parent and previously disclosed to the Lenders
(“Target”) in accordance with the terms and conditions
set forth in that certain letter dated as of July 31, 2006 among
the Parent, Target and the shareholders of Target.
(b)
The following definition of “
Third Amendment ”
is hereby added to
Section 1.2 :
“
Third Amendment ”
means that certain Amendment No. 3 and Limited Waiver to Amended
and Restated Credit Agreement dated as of August 11, 2006 among the
Borrower, the Parent, the Agent, the Lenders party thereto and each
of the Guarantors.
(c)
The
following definition of “
Third Amendment Effectiveness Date ”
is hereby added to
Section 1.2 :
“
Third Amendment Effectiveness Date ”
means the date upon which the conditions set forth in Sections 3, 4
and 5 of the Third Amendment are satisfied.
(d)
Section 10.1(a) is
hereby deleted in its entirety and the following is inserted in
lieu thereof:
Consolidated Tangible Net Worth .
Permit Consolidated Tangible Net Worth to be less than (i) the
minimum required amount of Consolidated Tangible Net Worth set
forth in Line 1.a(d) of the certificate of an Authorized
Representative in the form of Exhibit H to the Credit Agreement
most recently delivered prior to the Third Amendment Effectiveness
Date (the “
Third Amendment Effectiveness Date Prior Quarter
”)
less the amount of intangible assets acquired in connection with
the Proposed Transaction during the period from and including the
Third Amendment Effectiveness Date until but excluding the last day
of the fiscal quarter of the Parent ending after the Third
Amendment Effectiveness Date Prior Quarter, and (ii) as at the last
day of each fiscal quarter of the Parent ending after the Third
Amendment Effectiveness Date Prior Quarter and until (but
excluding) the last day of the next following fiscal quarter of the
Parent, the sum of (A) the amount of Consolidated Tangible Net
Worth required to be maintained
pursuant
to this
Section 10.1(a) as
at the end of the immediately preceding fiscal quarter (or, in the
case of the first fiscal quarter of the Parent ending after the
Third Amendment Effectiveness Date, required to be maintained as of
the Third Amendment Effectiveness Date), plus (B) 50% of
Consolidated Net Income (with no reduction for net losses during
any period) for the fiscal quarter of the Parent ending on such day
(including within “Consolidated Net Income” certain
items otherwise excluded, as provided for in the definition of
“Consolidated Net Income”), plus (C) 100% of the
aggregate amount of all increases in the stated capital and
additional paid-in capital accounts of the Parent resulting from
the issuance, sale or exchange of equity securities or other
capital investments.
2.
Waivers to Credit Agreement .
Subject to the terms and conditions set forth herein, the
Administrative Agent and the Lenders hereby:
(a)
waive
any Default or Event of Default arising from the failure to
comply with “the making of Acquisitions permitted
hereunder” as set forth in
Section 2.2(i) of
the Credit Agreement solely as a result of the Proposed
Transaction;
(b)
waive any Default or Event of Default arising from the
failure to comply with
Section 10.2 of
the Credit Agreement solely as a result of entering into any
agreement, contract, or binding commitment for the Proposed
Transaction, provided that such waiver shall only apply to the
excess of the amount by which the Costs of Acquisition of the
Proposed Transaction, together with all other Costs of Acquisition
incurred on or prior to the date of this Agreement during the
current Fiscal Year exceeds 20% of Consolidated Total Assets as of
the end of the immediately preceding Fiscal Year;
(c)
waive any Default or Event of Default arising from the
failure to comply with
Section 10.6(a) of
the Credit Agreement solely as a result of the Proposed
Transaction; and
(d)
waive any Default or Event of Default arising from the
failure to comply with
Section 10.7(b)(iv) of
the Credit Agreement solely as a result of the Proposed
Transaction.
The
waivers set forth in this
Section 2 are
limited to the extent specifically set forth above and no other
terms, covenants or provisions of the Credit Agreement or any other
Loan Document are intended to be effected hereby.
3.
Condition Precedent to Section 2(b) Waiver .
The effectiveness of the limited waiver to the Credit Agreement
provided in Paragraph 2(b) and of this Agreement other than with
respect to Paragraphs 1(b), 1(c), 1(d), 2(a), 2(c) and 2(d) hereof
shall be effective upon the Agent’s receipt of (i) originally
executed counterparts of this Agreement, duly executed by the
Agent, the Required Lenders, and on or before December 31, 2006,
the Parent, the Borrower and each Guarantor and (ii) originally
executed counterparts of the letter agreement, dated as of August
11, 2006, duly executed by the Parent, the Borrower and the Agent
(the “
Amendment Fee Letter ”)
and all fees and expenses payable to the Agent and the Lenders as
of the date of execution hereof by the Required Lenders as set
forth in the Amendment Fee Letter.
4.
Conditions Subsequent to Section 2(b) Waiver
.
The continued effectiveness of the limited waiver to the
Credit Agreement provided in Paragraph 2(b) and of this
Agreement other than with respect to Paragraphs 1(b), 1(c),
1(d), 2(a), 2(c) and 2(d) hereof shall be conditioned
up
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