| | Daimler Truck Financial $200 Million Secured Equipment Facility On June 30, 2008, Covenant Transportation Group, Inc., a Nevada corporation (formerly known as Covenant Transport, Inc. and herein referred to as, the "Company"), and Covenant Asset Management, Inc., a Nevada corporation and one of the Company's subsidiaries (the "Borrower") (together with certain other subsidiaries of the Company), secured a $200,000,000 line of credit from Daimler Truck Financial (the "Daimler Financing"). The Daimler Financing is secured by both new and used tractors and is structured as a combination of retail installment contracts and TRAC leases. Pricing for the Daimler Financing is at (i) the 60 month Treasury Rate plus 1.97% annually on new equipment financed through retail installment contracts, and (ii) a rate of 6% annually on all used equipment financed. Approximately $122,000,000 was funded under the Daimler Financing at June 30, 2008. Amendment No. 2, Consent and Limited Waiver to Second Amended and Restated Credit Agreement Contemporaneously with the funding of the Daimler Financing, the Company and the Borrower (together with certain other subsidiaries of the Company), entered into that certain Amendment No. 2, Consent and Limited Waiver to Second Amended and Restated Credit Agreement ("Amendment No. 2") with Bank of America, N.A., as administrative agent (the "Agent") and SunTrust Bank, National City Bank, Branch Banking and Trust Company, First Tennessee Bank National Association, LaSalle Bank National Association, Regions Bank, FSG Bank, N.A., and Sovereign Bank (collectively, with the Agent, the "Lenders"), which amends that certain Second Amended and Restated Credit Agreement, dated December 21, 2006, by and among the Company, the Borrower, and the Lenders, as amended (the "Credit Agreement"). Amendment No. 2, among other things, (i) amends certain defined terms used in the Credit Agreement, (ii) authorizes the Daimler Financing and releases Agent's liens on any collateral securing the Daimler Financing, (iii) reduces the maximum borrowing limit from $190,000,000 to $81,000,000, (iv) limits the aggregate outstanding amount of revolving loans under the Credit Agreement to $30,000,000, (v) fixes the letter of credit sublimit under the Credit Agreement at the present level of $51,000,000 and grants the Agent a security interest in a cash collateral account of $50,500,000 to secure outstanding standby letters of credit, and (vi) waives, for the period commencing June 30, 2008 and ending August 29, 2008, any default or event of default that may have otherwise occurred as a result of any failure by the Company's consolidated group of companies to comply with a leverage ratio contained in the Credit Agreement. After giving effect to Amendment No. 2, borrowings under the Credit Agreement are subject to a borrowing base limit of (i) 85% of the net orderly liquidation value of any eligible revenue equipment as determined under an appraisal prepared by Taylor & Martin, Inc. (the "Taylor & Martin Appraisal"), plus (ii) 70% of the net book value of any eligible revenue equipment that is not valued in the Taylor & Martin Appraisal, plus (iii) the balance in the cash collateral account, less specified types of unsecured indebtedness, and letters of credit. The obligations of the Borrower under the Credit Agreement continue to be guaranteed by the Company and all of the Company's wholly-owned domestic subsidiaries, except CVTI Receivables Corp., a Nevada corporation (collectively, the "Guarantors"), and is secured by a pledge of certain of the Guarantors' assets, excluding certain revenue equipment of the Guarantors serving as collateral under the Daimler Financing. The foregoing summary of the terms and conditions of Amendment No. 2 does not purport to be complete and is qualified in its entirety by reference to the full text of Amendment No. 2, which will be filed with the Company's Form 10-Q for the quarter ending June 30, 2008. |
