[X]
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
[
]
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Nevada
|
88-0320154
|
|
(State
or other jurisdiction of incorporation
|
(I.R.S.
Employer Identification No.)
|
|
or
organization)
|
||
400
Birmingham Hwy.
|
||
Chattanooga,
TN
|
37419
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Yes
[X]
|
No
[ ]
|
Large
accelerated filer [ ]
|
Accelerated
filer [X]
|
|
Non-accelerated filer [ ] (Do not
check if a smaller reporting company)
|
Smaller reporting company
[ ]
|
Yes
[ ]
|
No
[ X ]
|
PART
I
FINANCIAL
INFORMATION
|
||
Page
Number
|
||
Item
1.
|
Financial
Statements
|
|
Consolidated
Condensed Balance Sheets as of June 30, 2008 (Unaudited) and December 31,
2007
|
||
Consolidated
Condensed Statements of Operations for the three and six months ended June
30, 2008 and 2007 (Unaudited)
|
||
Consolidated
Condensed Statements of Equity and Comprehensive Loss for the six months
ended June 30, 2008 (Unaudited)
|
||
Consolidated
Condensed Statements of Cash Flows for the six months ended June 30, 2008
and 2007 (Unaudited)
|
||
Notes
to Consolidated Condensed Financial Statements (Unaudited)
|
||
Item
2.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
|
Item
4.
|
Controls
and Procedures
|
|
PART
II
OTHER
INFORMATION
|
||
Page
Number
|
||
Item
1.
|
Legal
Proceedings
|
|
Item
1A.
|
Risk
Factors
|
|
Item
4.
|
Submission
of Matters to Vote of Security Holders
|
|
Item
6.
|
Exhibits
|
|
CONSOLIDATED
CONDENSED BALANCE
SHEETS
(In
thousands, except share data)
|
||||||||
ASSETS
|
June
30, 2008
(unaudited)
|
December
31, 2007
|
||||||
Current
assets:
|
||||||||
Cash and cash
equivalents
|
$ | 8,844 | $ | 4,500 | ||||
Accounts receivable, net of
allowance of $1,391 in 2008 and $1,537 in 2007
|
92,098 | 79,207 | ||||||
Drivers' advances and other
receivables, net of allowance of $2,749 in
2008 and $2,706 in
2007
|
8,238 | 5,479 | ||||||
Inventory and
supplies
|
4,491 | 4,102 | ||||||
Prepaid
expenses
|
9,951 | 7,030 | ||||||
Assets held for
sale
|
12,519 | 10,448 | ||||||
Deferred income
taxes
|
24,273 | 18,484 | ||||||
Income taxes
receivable
|
4,972 | 7,500 | ||||||
Total
current assets
|
165,386 | 136,750 | ||||||
Property
and equipment, at cost
|
336,054 | 350,158 | ||||||
Less
accumulated depreciation and amortization
|
(116,851 | ) | (102,628 | ) | ||||
Net
property and equipment
|
219,203 | 247,530 | ||||||
Restricted
cash and cash equivalents
|
50,502 | - | ||||||
Goodwill
|
36,210 | 36,210 | ||||||
Other
assets, net
|
18,655 | 19,304 | ||||||
Total
assets
|
$ | 489,956 | $ | 439,794 | ||||
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Securitization
facility
|
$ | 59,964 | $ | 47,964 | ||||
Checks outstanding in excess of
bank balances
|
- | 4,572 | ||||||
Current maturities of
acquisition obligation
|
333 | 333 | ||||||
Current maturities of long-term
debt
|
56,175 | 2,335 | ||||||
Accounts payable and accrued
expenses
|
43,246 | 35,029 | ||||||
Current portion of insurance
and claims accrual
|
15,808 | 19,827 | ||||||
Total
current liabilities
|
175,526 | 110,060 | ||||||
Long-term debt
|
78,137 | 86,467 | ||||||
Insurance and claims accrual,
net of current portion
|
12,587 | 10,810 | ||||||
Deferred income
taxes
|
59,672 | 57,902 | ||||||
Other long-term
liabilities
|
2,062 | 2,289 | ||||||
Total
liabilities
|
327,984 | 267,528 | ||||||
Commitments
and contingent liabilities
|
- | - | ||||||
Stockholders'
equity:
|
||||||||
Class A common stock, $.01 par
value; 20,000,000 shares authorized;
13,469,090 shares issued; and
11,699,182 and 11,676,298 shares
outstanding
as of June 30, 2008, and December 31, 2007, respectively
|
135 | 135 | ||||||
Class B common stock, $.01 par
value; 5,000,000 shares authorized;
2,350,000 shares issued and
outstanding
|
24 | 24 | ||||||
Additional
paid-in-capital
|
91,842 | 92,238 | ||||||
Treasury stock at cost;
1,769,908 and 1,792,792 shares as of June 30, 2008,
and
December 31, 2007, respectively
|
(21,006 | ) | (21,278 | ) | ||||
Retained
earnings
|
90,977 | 101,147 | ||||||
Total
stockholders' equity
|
161,972 | 172,266 | ||||||
Total
liabilities and stockholders' equity
|
$ | 489,956 | $ | 439,794 |
Three
months ended
June
30,
(unaudited)
|
Six
months ended
June
30,
(unaudited)
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Revenue:
|
||||||||||||||||
Freight revenue
|
$ | 160,451 | $ | 151,033 | $ | 309,046 | $ | 294,575 | ||||||||
Fuel surcharge
revenue
|
48,275 | 26,412 | 81,353 | 49,262 | ||||||||||||
Total
revenue
|
$ | 208,726 | $ | 177,445 | $ | 390,399 | $ | 343,837 | ||||||||
Operating
expenses:
|
||||||||||||||||
Salaries, wages, and related
expenses
|
66,939 | 69,149 | 133,616 | 136,571 | ||||||||||||
Fuel expense
|
78,732 | 52,136 | 142,190 | 98,126 | ||||||||||||
Operations and
maintenance
|
10,639 | 10,402 | 21,454 | 20,000 | ||||||||||||
Revenue equipment rentals and
purchased transportation
|
23,273 | 15,850 | 43,619 | 31,312 | ||||||||||||
Operating taxes and
licenses
|
3,391 | 3,532 | 6,751 | 7,411 | ||||||||||||
Insurance and
claims
|
5,981 | 14,507 | 13,951 | 20,762 | ||||||||||||
Communications and
utilities
|
1,660 | 1,852 | 3,417 | 3,967 | ||||||||||||
General supplies and
expenses
|
6,475 | 5,838 | 12,443 | 11,520 | ||||||||||||
Depreciation and amortization,
including gains and losses on
disposition of
equipment
|
11,892 | 13,586 | 22,808 | 26,320 | ||||||||||||
Asset
impairment charge
|
- | 1,665 | - | 1,665 | ||||||||||||
Total
operating expenses
|
208,982 | 188,517 | 400,249 | 357,654 | ||||||||||||
Operating
loss
|
(256 | ) | (11,072 | ) | (9,850 | ) | (13,817 | ) | ||||||||
Other
(income) expenses:
|
||||||||||||||||
Interest
expense
|
2,198 | 2,975 | 4,480 | 6,006 | ||||||||||||
Interest income
|
(67 | ) | (110 | ) | (155 | ) | (225 | ) | ||||||||
Other
|
(31 | ) | (34 | ) | (63 | ) | (116 | ) | ||||||||
Other
expenses, net
|
2,100 | 2,831 | 4,262 | 5,665 | ||||||||||||
Loss
before income taxes
|
(2,356 | ) | (13,903 | ) | (14,112 | ) | (19,482 | ) | ||||||||
Income
tax benefit
|
(7 | ) | (2,646 | ) | (3,942 | ) | (6,155 | ) | ||||||||
Net
loss
|
$ | (2,349 | ) | $ | (11,257 | ) | $ | (10,170 | ) | $ | (13,327 | ) | ||||
Loss
per share:
|
||||||||||||||||
Basic
and diluted loss per share:
|
$ | (0.17 | ) | $ | (0.80 | ) | $ | (0.73 | ) | $ | (0.95 | ) | ||||
Basic
and diluted weighted average common shares outstanding
|
14,028 | 14,019 | 14,027 | 14,011 | ||||||||||||
Common
Stock
|
Additional
Paid-In
Capital
|
Treasury
Stock
|
Retained
Earnings
|
Total
Stockholders'
Equity
|
Comprehensive
Loss
|
|||||||||||||||||||||||
Class
A
|
Class
B
|
|||||||||||||||||||||||||||
Balances
at December 31, 2007
|
$ | 135 | $ | 24 | $ | 92,238 | $ | (21,278 | ) | $ | 101,147 | $ | 172,266 | |||||||||||||||
Reversal
of previously recognized SFAS No. 123R stock-based employee
compensation cost
|
- | - | (224 | ) | - | - | (224 | ) | ||||||||||||||||||||
Issuance
of restricted stock to
non-employee directors from
treasury stock
|
- | - | (172 | ) | 272 | - | 100 | |||||||||||||||||||||
Net
loss
|
- | - | - | - | (10,170 | ) | (10,170 | ) | (10,170 | ) | ||||||||||||||||||
Comprehensive
loss for six months ended June 30, 2008
|
$ | (10,170 | ) | |||||||||||||||||||||||||
Balances
at June 30, 2008
|
$ | 135 | $ | 24 | $ | 91,842 | $ | (21,006 | ) | $ | 90,977 | $ | 161,972 | |||||||||||||||
Six
months ended
June
30,
(unaudited)
|
||||||||
2008
|
2007
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
loss
|
$ | (10,170 | ) | $ | (13,327 | ) | ||
Adjustments
to reconcile net loss to net cash provided by operating
activities:
|
||||||||
Provision for losses on
accounts receivable
|
538 | 377 | ||||||
Depreciation and amortization,
including impairment charge
|
22,712 | 27,084 | ||||||
Amortization of deferred
financing fees
|
165 | 130 | ||||||
Deferred income taxes
(benefit)
|
403 | (5,828 | ) | |||||
Stock based compensation
expense reversal
|
(224 | ) | - | |||||
Non
cash stock compensation
|
100 | 378 | ||||||
Loss on disposition of property
and equipment
|
96 | 901 | ||||||
Changes in operating assets and
liabilities:
|
||||||||
Receivables and
advances
|
(18,005 | ) | (2,221 | ) | ||||
Prepaid expenses and other
assets
|
(2,835 | ) | 249 | |||||
Inventory and
supplies
|
(362 | ) | 384 | |||||
Insurance and claims
accrual
|
(2,242 | ) | (955 | ) | ||||
Accounts payable and accrued
expenses
|
8,019 | 2,165 | ||||||
Net
cash flows provided by/(used in) operating activities
|
(1,805 | ) | 9,337 | |||||
Cash
flows from investing activities:
|
||||||||
Acquisition of property and
equipment
|
(8,391 | ) | (39,422 | ) | ||||
Proceeds from disposition of
property and equipment
|
12,232 | 28,015 | ||||||
Net
change in restricted cash and cash equivalents
|
(50,502 | ) | - | |||||
Payment of acquisition obligation
|
(167 | ) | (167 | ) | ||||
Net
cash flows used in investing activities
|
(46,828 | ) | (11,574 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Change in checks outstanding in
excess of bank balances
|
(4,572 | ) | (204 | ) | ||||
Proceeds from issuance of
debt
|
151,918 | 40,500 | ||||||
Repayments of
debt
|
(94,179 | ) | (38,400 | ) | ||||
Debt refinancing
costs
|
(190 | ) | (262 | ) | ||||
Net
cash provided by financing activities
|
52,977 | 1,634 | ||||||
Net
change in cash and cash equivalents
|
4,344 | (603 | ) | |||||
Cash
and cash equivalents at beginning of period
|
4,500 | 5,407 | ||||||
Cash
and cash equivalents at end of period
|
$ | 8,844 | $ | 4,804 | ||||
Note
4.
|
Segment
Information
|
Note
5.
|
Basic
and Diluted Loss per Share
|
(in
thousands except per share data)
|
Three
Months ended
June
30,
|
Six
Months ended
June
30,
|
||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Numerator:
|
||||||||||||||||
Net loss
|
$ | (2,349 | ) | $ | (11,257 | ) | $ | (10,170 | ) | $ | (13,327 | ) | ||||
Denominator:
|
||||||||||||||||
Denominator for basic earnings per
share – weighted-
average shares
|
14,028 | 14,019 | 14,027 | 14,011 | ||||||||||||
Effect
of dilutive securities:
|
||||||||||||||||
Employee stock
options
|
- | - | - | - | ||||||||||||
Denominator
for diluted earnings per share –
adjusted weighted-average shares
and assumed
conversions
|
14,028 | 14,019 | 14,027 | 14,011 | ||||||||||||
Net
loss per share:
|
||||||||||||||||
Basic and diluted loss per share:
|
$ | (0.17 | ) | $ | (0.80 | ) | $ | (0.73 | ) | $ | (0.95 | ) |
Note
6.
|
Share-Based
Compensation
|
Number
of options
(in
thousands)
|
Weighted
average exercise price
|
Weighted
average
remaining
contractual
term
|
Aggregate
intrinsic value
(in
thousands)
|
||||||||||
Outstanding
at beginning of the
period
|
1,205 | $ | 13.33 |
64
months
|
$ | - | |||||||
Options
granted
|
- | - | |||||||||||
Options
exercised
|
- | - | |||||||||||
Options
forfeited
|
(10 | ) | $ | 8.31 | |||||||||
Options
expired
|
(23 | ) | $ | 14.97 | |||||||||
Outstanding
at end of period
|
1,172 | $ | 13.34 |
58 months
|
$ | - | |||||||
Exercisable
at end of period
|
1,009 | $ | 14.00 |
50 months
|
$ | - |
Number
of
stock
awards
|
Weighted
average
grant
date
fair value
|
|||||||
Unvested
at January 1, 2008
|
500,584 | $ | 12.21 | |||||
Granted
|
- | - | ||||||
Vested
|
- | - | ||||||
Forfeited
|
(920 | ) | $ | 11.50 | ||||
Unvested
at June 30, 2008
|
499,664 | $ | 12.21 |
(in
thousands)
|
June
30, 2008
|
December
31,
2007
|
||||||||||||||
Current
|
Long-Term
|
Current
|
Long-Term
|
|||||||||||||
Securitization
Facility
|
$ | 59,964 | $ | - | $ | 47,964 | $ | - | ||||||||
Borrowings
under Credit Facility
|
- | - | - | 75,000 | ||||||||||||
Revenue
equipment installment notes with finance company weighted average interest
rate
of
5.95% and 5.65% at June 30, 2008, and December 31, 2007, respectively, due
in
monthly installments with final maturities at various dates
ranging from December 2008
to December 2011, secured by related revenue
equipment
|
56,175 | 78,137 | 2,335 | 11,467 | ||||||||||||
Total
debt
|
$ | 116,139 | $ | 78,137 | $ | 50,299 | $ | 86,467 | ||||||||
Less:
cash collateral for letters of credit
|
- | $ | (50,502 | ) | - | - | ||||||||||
Total
debt, net of cash collateral for letters of credit
|
$ | 116,139 | $ | 27,635 | $ | 50,299 | $ | 86,467 |
●
|
Covenant
expedited long haul, dedicated and regional solo-driver service. We
decreased the average fleet size by 5.1%. We increased the number of team
drivers within this fleet from the 2007 period, averaging 944 teams during
the 2008 period compared to averaging only 777 teams during the 2007
period. Average freight revenue per truck per week increased by
8.9%, with average freight revenue per total mile up approximately 1.7%
and miles per truck up approximately 6.9%.
|
●
|
SRT
Refrigerated service. We decreased the average fleet size by
5.4%. Average freight revenue per truck per week was flat, with
average freight revenue per total mile up 2.9% and miles per truck down
approximately 2.8%.
|
●
|
Star
regional solo-driver service. We decreased the average fleet size by
8.5%. Average freight revenue per truck per week decreased by 0.9%, with
average freight revenue per total mile decreasing 4.6% and miles per truck
increasing 3.9% . Especially soft freight demand in the
southeastern United States, where Star's lanes are concentrated,
has resulted in rate pressure, a larger percentage of unloaded miles,
and reduced fuel surcharge collection, related in part, to greater
reliance on brokered freight.
|
●
|
Covenant
Transport Solutions' brokerage freight service. Covenant Transport
Solutions has continued to grow through the addition of agents, who are
paid a commission for each load of freight they provide; and the addition
of employee-led "company stores." The number of loads increased
to 7,194 in the second quarter of 2008 from 2,157 loads in the second
quarter of 2007. Average revenue per load also increased 12.7%
to $1,875 in the second quarter of 2008 from $1,663 per load in the second
quarter of 2007. The brokerage operation has helped us continue
to serve customers when we lacked capacity in a given area or when the
load has not met the operating profile of one of our service
offerings.
|
Three
months ended
June
30,
|
Three
months ended
June
30,
|
||||||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||||||
Total
revenue
|
100.0 | % | 100.0 | % |
Freight revenue
(1)
|
100.0 | % | 100.0 | % | ||||||||
Operating
expenses:
|
Operating
expenses:
|
||||||||||||||||
Salaries, wages, and
related
expenses
|
32.1 | 39.0 |
Salaries, wages, and
related
expenses
|
41.7 | 45.8 | ||||||||||||
Fuel expense
|
37.7 | 29.4 |
Fuel expense (1)
|
19.0 | 17.0 | ||||||||||||
Operations and
maintenance
|
5.0 | 5.9 |
Operations and
maintenance
|
6.6 | 6.9 | ||||||||||||
Revenue equipment rentals
and
purchased
transportation
|
11.2 | 8.9 |
Revenue equipment rentals
and
purchased
transportation
|
14.5 | 10.5 | ||||||||||||
Operating taxes and
licenses
|
1.6 | 2.0 |
Operating taxes and
licenses
|
2.1 | 2.3 | ||||||||||||
Insurance and
claims
|
2.9 | 8.2 |
Insurance and
claims
|
3.7 | 9.6 | ||||||||||||
Communications and
utilities
|
0.8 | 1.0 |
Communications and
utilities
|
1.2 | 1.2 | ||||||||||||
General supplies and
expenses
|
3.1 | 3.3 |
General supplies and
expenses
|
4.0 | 3.9 | ||||||||||||
Depreciation and
amortization
|
5.7 | 7.6 |
Depreciation and
amortization
|
7.4 | 9.0 | ||||||||||||
Asset
impairment charge
|
0.0 | 0.9 |
Asset
impairment charge
|
0.0 | 1.1 | ||||||||||||
Total operating
expenses
|
100.1 | 106.2 |
Total operating
expenses
|
100.2 | 107.3 | ||||||||||||
Operating
loss
|
(0.1 | ) | (6.2 | ) |
Operating
loss
|
(0.2 | ) | (7.3 | ) | ||||||||
Other expense,
net
|
1.0 | 1.6 |
Other expense,
net
|
1.3 | 1.9 | ||||||||||||
Loss
before income taxes
|
(1.1 | ) | (7.8 | ) |
Loss
before income taxes
|
(1.5 | ) | (9.2 | ) | ||||||||
Income tax
benefit
|
0.0 | (1.5 | ) |
Income tax
benefit
|
0.0 | (1.8 | ) | ||||||||||
Net
loss
|
(1.1 | )% | (6.3 | )% |
Net
loss
|
(1.5 | )% | (7.5 | )% |
(1)
|
Freight
revenue is total revenue less fuel surcharge revenue. Fuel
surcharge revenue is shown netted against the fuel expense category ($48.3
million and $26.4 million in the three months ended June 30, 2008 and
2007, respectively).
|
Six
months ended
June
30,
|
Six
months ended
June
30,
|
||||||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||||||
Total
revenue
|
100.0 | % | 100.0 | % |
Freight revenue
(1)
|
100.0 | % | 100.0 | % | ||||||||
Operating
expenses:
|
Operating
expenses:
|
||||||||||||||||
Salaries, wages, and
related
expenses
|
34.2 | 39.7 |
Salaries, wages, and
related
expenses
|
43.2 | 46.5 | ||||||||||||
Fuel expense
|
36.4 | 28.5 |
Fuel expense (1)
|
19.7 | 16.6 | ||||||||||||
Operations and
maintenance
|
5.5 | 5.8 |
Operations and
maintenance
|
6.9 | 6.8 | ||||||||||||
Revenue equipment rentals
and
purchased
transportation
|
11.2 | 9.1 |
Revenue equipment rentals
and
purchased
transportation
|
14.1 | 10.6 | ||||||||||||
Operating taxes and
licenses
|
1.7 | 2.2 |
Operating taxes and
licenses
|
2.2 | 2.5 | ||||||||||||
Insurance and
claims
|
3.6 | 6.0 |
Insurance and
claims
|
4.5 | 7.0 | ||||||||||||
Communications and
utilities
|
0.9 | 1.2 |
Communications and
utilities
|
1.2 | 1.3 | ||||||||||||
General supplies and
expenses
|
3.2 | 3.4 |
General supplies and
expenses
|
4.0 | 3.9 | ||||||||||||
Depreciation and
amortization
|
5.8 | 7.6 |
Depreciation and
amortization
|
7.4 | 8.9 | ||||||||||||
Asset
impairment charge
|
0.0 | 0.5 |
Asset
impairment charge
|
0.0 | 0.6 | ||||||||||||
Total operating
expenses
|
102.5 | 104.0 |
Total operating
expenses
|
103.2 | 104.7 | ||||||||||||
Operating
loss
|
(2.5 | ) | (4.0 | ) |
Operating
loss
|
(3.2 | ) | (4.7 | ) | ||||||||
Other expense,
net
|
1.1 | 1.7 |
Other expense,
net
|
1.4 | 1.9 | ||||||||||||
Loss
before income taxes
|
(3.6 | ) | (5.7 | ) |
Loss
before income taxes
|
(4.6 | ) | (6.6 | ) | ||||||||
Income tax
benefit
|
(1.0 | ) | (1.8 | ) |
Income tax
benefit
|
(1.3 | ) | (2.1 | ) | ||||||||
Net
loss
|
(2.6 | )% | (3.9 | )% |
Net
loss
|
(3.3 | )% | (4.5 | )% |
(1)
|
Freight
revenue is total revenue less fuel surcharge revenue. Fuel
surcharge revenue is shown netted against the fuel expense category ($81.4
million and $49.3 million in the six months ended June 30, 2008 and 2007,
respectively).
|
RISK
FACTORS
While
we attempt to identify, manage, and mitigate risks and uncertainties
associated with our business, some level of risk and uncertainty will
always be present. Our Form 10-K for the year ended December
31, 2007, in the section entitled Item 1A. Risk Factors, describes some of
the risks and uncertainties associated with our business. These
risks and uncertainties have the potential to materially affect our
business, financial condition, results of operations, cash flows,
projected results, and future prospects. In addition to the
risk factors set forth in our Form 10-K, we believe that the following
additional issues, uncertainties, and risks, should be considered in
evaluating our business and growth outlook:
Our
revolving credit and securitization facilities and other financing
arrangements contain certain covenants, restrictions, and requirements,
and we may be unable to comply with these covenants, restrictions, and
requirements. We are presently in default under our revolving
credit and securitization facilities, subject to a waiver through August
29, 2008, and failure to obtain an extension of the waiver, and amendment,
or a replacement facility could result in the acceleration of a
substantial portion of our outstanding indebtedness, which could have an
adverse effect on our financial condition, liquidity, results of
operations, and the price of our common
stock.
|
We
have a credit facility with a group of banks. This Credit
Facility is cross-defaulted to our accounts receivable securitization
facility. On June 30, 2008, we signed Amendment No. 2 to our
Credit Facility, which among other things, (i) authorized the Daimler
facility (as defined in Note 10 to our consolidated condensed financial
statements contained herein), (ii) reduced the maximum borrowing limit,
(iii) limited the aggregate outstanding amount of revolving loans under
the Credit
Facility,
(iv) fixed the letter of credit sublimit under the Credit Facility at the
present level of $51 million and grants a security interest in a cash
collateral account to secure outstanding letters of credit, and (v)
waived, 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.
In
addition to Amendment No. 2 to the Credit Facility, we also entered into
an amendment to our Securitization Facility for the purpose of waiving any
defaults that would have occurred because of a certain cross-default
provision contained in the Securitization Facility. The
cross-default provision is triggered by the Company's default on any debt
obligation in excess of $5 million, regardless of whether such default is
waived. Accordingly, a default under the Credit Facility,
although waived as described above, necessitated a waiver under the
Company's Securitization Facility. The waiver is effective for
the period commencing June 30, 2008, and ending August 29,
2008.
We
are in the process of seeking alternatives for replacing or amending our
Credit Facility and our Securitization Facility, as well as for obtaining
separate financing of certain of our terminal
locations. Although we believe we have sufficient assets to
collateralize financing that is adequate to meet our current and projected
needs, both for the next twelve months and on a longer term basis, the
current credit market and our financial results for the past several
quarters, are making the process of obtaining such financing
time-consuming and difficult. Moreover, we note that the
defaults under our Credit Facility and Securitization Facility have been
waived only through August 29, 2008, as we attempt to replace, or
renegotiate the terms of, those facilities. Our view concerning
our liquidity is premised on the timely replacement or amendment of such
facilities on acceptable terms, as well as improvements in our results of
operations in the second half of 2008, compared with the same period of
2007. If we fail to obtain replacement financing, amendments of
our Credit Facility and Securitization Facility, or extensions of the
current waivers under such facilities, our bank group could cease making
further advances, declare our debt to be immediately due and payable,
impose significant restrictions and requirements on our operations,
institute foreclosure procedures against their security, or impose
significant fees and transaction costs. If acceleration occurs,
we may have difficulty in borrowing sufficient additional funds to
refinance the accelerated debt or we may have to issue equity securities,
which would dilute stock ownership. Even if new financing is
made available to us, it may not be available on acceptable
terms. As a result, failure to achieve a replacement facility,
an amendment, or further waivers could cause a materially adverse effect
on our liquidity, financial condition, and results of
operations.
|
SUBMISSION
OF MATTERS TO VOTE OF SECURITY HOLDERS
|
|||||
The
Annual Meeting of Stockholders of Covenant Transportation Group, Inc., was
held on May 14, 2008, for the purpose of electing five directors for
one-year terms. Proxies for the meeting were solicited pursuant
to Section 14(a) of the Exchange Act, and there was no solicitation in
opposition to the Board's proposal. Each of the nominees for
director as listed in the Definitive Proxy Statement filed with the SEC on
April 15, 2008 (File No. 000-24960) was elected.
The
voting tabulation on the election of directors was as
follows:
|
Votes
"FOR"
|
Votes
"AGAINST"
|
ABSTENTIONS
|
BROKER
NON-VOTES
|
|
David
R. Parker
|
15,193,859
|
—
|
560,470
|
—
|
William
T. Alt
|
14,854,189
|
—
|
900,140
|
—
|
Robert
E. Bosworth
|
14,824,535
|
—
|
929,794
|
—
|
Bradley
A. Moline
|
15,018,635
|
—
|
735,694
|
—
|
Niel
B. Nielson
|
15,204,903
|
—
|
549,426
|
—
|
References:
|
|
(1)
|
Incorporated
by reference to Form 10-K, filed March 17, 2008 (SEC Commission File
No. 000-24960).
|
#
|
Filed
herewith.
|
COVENANT
TRANSPORTATION GROUP, INC.
|
||
Date: August
11, 2008
|
By:
|
/s/
Richard B. Cribbs
|
Richard
B. Cribbs
|
||
Senior
Vice President and Chief Financial Officer
|
||
in
his capacity as such and on behalf of the
issuer.
|
BORROWER
:
|
|
COVENANT ASSET MANAGEMENT,
INC.
, a Nevada corporation
|
|
By:
|
/s/
M. David Hughes
|
Name:
|
M.
David Hughes
|
Title:
|
Treasurer
|
PARENT
:
|
|
COVENANT TRANSPORTATION GROUP,
INC.
, a Nevada corporation
|
|
By:
|
/s/
M. David Hughes
|
Name:
|
M.
David Hughes
|
Title:
|
Senior
Vice President
|
SUBSIDIARY
GUARANTORS
:
|
|
COVENANT
TRANSPORT, INC.
|
|
By:
|
/s/
M. David Hughes
|
Name:
|
M.
David Hughes
|
Title:
|
Senior
Vice President and Treasurer
|
SOUTHERN
REFRIGERATED TRANSPORT, INC.
|
|
By:
|
/s/
M. David Hughes
|
Name:
|
M.
David Hughes
|
Title:
|
Vice
President
|
COVENANT
TRANSPORT SOLUTIONS, INC.
|
|
By:
|
/s/
M. David Hughes
|
Name:
|
M.
David Hughes
|
Title:
|
Treasurer
|
STAR
TRANSPORTATION, INC.
|
|
By:
|
/s/
M. David Hughes
|
Name:
|
M.
David Hughes
|
Title:
|
Vice
President
|
CTG
LEASING COMPANY
|
|
By:
|
/s/
M. David Hughes
|
Name:
|
M.
David Hughes
|
Title:
|
Vice
President
|
ADMINISTRATIVE
AGENT
:
|
|
BANK OF AMERICA, N.A
.,
as Administrative Agent
|
|
By:
|
/s/
Maurice Washington
|
Name:
|
Maurice
Washington
|
Title:
|
Vice
President
|
BANK OF AMERICA, N.A.,
as a Lender, L/C Issuer and Swing Line Lender
|
|
By:
|
/s/
Kevin M. Behan
|
Name:
|
Kevin
M. Behan
|
Title:
|
SVP
|
SUNTRUST
BANK
|
|
By:
|
/s/
Kap Yarbrough
|
Name:
|
Kap
Yarbrough
|
Title:
|
Vice
President
|
NATIONAL
CITY BANK
|
|
By:
|
/s/
Kevin L. Anderson
|
Name:
|
Kevin
L. Anderson
|
Title:
|
Senior
Vice President
|
BRANCH
BANKING AND TRUST COMPANY
|
|
By:
|
/s/
R. Andrew Beam
|
Name:
|
R.
Andrew Beam
|
Title:
|
Senior
Vice President
|
FIRST
TENNESSEE BANK NATIONAL ASSOCIATION
|
|
By:
|
/s/
Robert T. Lusk
|
Name:
|
Robert
T. Lusk
|
Title:
|
Senior
Vice President
|
LASALLE
BANK NATIONAL ASSOCIATION
|
|
By:
|
/s/
Kevin M. Behan
|
Name:
|
Kevin
M. Behan
|
Title:
|
SVP
|
REGIONS
BANK, SUCCESSOR BY MERGER TO AMSOUTH BANK
|
|
By:
|
/s/
Jay W. Dale
|
Name:
|
Jay
W. Dale
|
Title:
|
Vice
President
|
FSGBANK.
N.A.
|
|
By:
|
/s/
Lawrence M. Riedey
|
Name:
|
Lawrence
M. Riedey
|
Title:
|
Sr.
Vice President
|
SOVEREIGN
BANK
|
|
By:
|
/s/
William Latham
|
Name:
|
William
Latham
|
Title:
|
Senior
Vice President
|
Lender
|
Revolving
Credit Commitment
|
Applicable
Commitment Percentage
|
||||||
Bank
of America, N.A.
|
$ | 14,175,000.00 | 17.500000000 | % | ||||
Regions
Bank
|
$ | 13,162,500.00 | 16.250000000 | % | ||||
SunTrust
Bank
|
$ | 7,886,842.11 | 9.73684211 | % | ||||
LaSalle
Bank National Association
|
$ | 10,125,000.00 | 12.500000000 | % | ||||
Branch
Banking and Trust Company
|
$ | 9,112,500.00 | 11.250000000 | % | ||||
National
City Bank
|
$ | 8,100,000.00 | 10.000000000 | % | ||||
Sovereign
Bank
|
$ | 8,100,000.00 | 10.000000000 | % | ||||
FSG
Bank, N.A.
|
$ | 4,263,157.89 | 5.26315790 | % | ||||
First
Tennessee Bank National Association
|
$ | 6,075,000.00 | 7.500000000 | % | ||||
Total
|
$ | 81,000,000.00 | 100.000000000 | % |
THREE
PILLARS
|
THREE
PILLARS FUNDING LLC
|
||
By:
|
/s/
Davis J. Hean
|
||
Title: Vice
President
|
|||
THE
BORROWER:
|
CVTI
RECEIVABLES CORP.
|
||
By:
|
/s/
M. David Hughes
|
||
M.
David Hughes
|
|||
Treasurer
|
|||
THE
ADMINISTRATOR:
|
SUNTRUST
ROBINSON HUMPHREY, INC.
|
||
By:
|
/s/
Joseph R. Franke
|
||
Title: Director
|
|||
THE
MASTER SERVICER:
|
COVENANT
TRANSPORTATION GROUP, INC.,
a
Nevada holding corporation
|
||
By:
|
/s/
M. David Hughes
|
||
M.
David Hughes
|
|||
Senior
Vice President, Treasurer
|
|||
FORM
OF
|
||||
DaimlerChrysler
|
LEASE
AGREEMENT
|
|||
Truck
Financial
|
(Open-End)
|
Guarantor
Name:
|
Guarantor
Name:
|
||||
Guarantor Signature X:
|
Guarantor Signature X:
|
||||
DaimlerChrysler
|
LEASE
AGREEMENT
|
|||
Truck
Financial
|
TERMS & CONDITIONS
(Continued)
|
|
1.
|
Agreement: Defined
Terms. All capitalized terms used herein and not otherwise
defined herein shall have the meanings set forth in the
Agreement. Except as expressly modified hereby, all of the
terms of the Agreement shall remain in full force and
effect.
|
|
2.
|
Paragraph
5 shall be modified as follows:
|
|
a.
|
Clause
(a) of the second sentence after "consent," shall be modified to
add: "provided, however, Lessee may sublease Equipment in the
ordinary course of its leasing business without Lessor's consent, provided
Lessee gives Lessor prior written notice of such sublease;"
and
|
|
b.
|
The
following sentence shall be added after the last
sentence: "Tri-Pak units and Qualcomm units are deemed readily
removable."
|
|
3.
|
Paragraph
7 shall be modified as follows:
|
|
a.
|
Clause
(3) shall be deleted in its entirety and replaced with the following
language: "the Stipulated Loss Amount established by Lessor and specified
in the Stipulated Loss Schedule".
|
|
4.
|
In
Paragraph 8, the following sentence shall be added after the last
sentence: "Lessee agrees to give Lessor prior written notice in
the event Lessee changes its business name or form, or merges into any
other entity.
|
|
5.
|
Paragraph
11 shall be modified as follows:
|
|
a.
|
Clause
(e) shall be deleted in its
entirety;
|
|
b.
|
Clause
(h), after "guarantor of Lessee," shall be modified to add "in favor of
Lessor;" and
|
|
c.
|
The
following language shall be added at the end of the
sentence: ", provided Lessor first gives written notice to
Lessee, and Lessee fails to cure within thirty (30) days of receipt of
notice."
|
|
6.
|
Paragraph
12 shall be modified as follows:
|
|
a.
|
Clause
(3) shall be deleted in its entirety and replaced with the following
language: "the Stipulated Loss Amount established by Lessor and
specified in the Stipulated Loss
Schedule".
|
|
7.
|
Paragraph
14 shall be modified as follows:
|
|
a.
|
Clause
(3) shall be deleted in its entirety and replaced with the following
language: "the Stipulated Loss Amount established by Lessor and
specified in the Stipulated Loss
Schedule".
|
|
b.
|
In
the third sentence, all language after "Lease Term" shall be replaced with
"will be equal to the stated residual
value."
|
|
8.
|
In
Paragraph 18, the following language shall be deleted from clause (c);
"including insurance proceeds and refunds of insurance
premiums"
|
|
9.
|
Except
as modified herein, the terms of the Agreement shall remain in full force
and effect.
|
Covenant Transport,
Inc.
, a Tennessee
corporation
|
CTG Leasing Company
, a
Nevada corporation
|
||
By:
|
/s/
M. David Hughes
|
By:
|
/s/
M. David Hughes
|
Its:
|
Senior
Vice President
|
Its:
|
Senior
Vice President
|
Southern Refrigerated
Transport, Inc.
, an
Arkansas
corporation
|
Star Transportation,
Inc.
, a Tennessee
corporation
|
||
By:
|
/s/
M. David Hughes
|
By:
|
/s/
M. David Hughes
|
Its:
|
Senior
Vice President
|
Its:
|
Senior
Vice President
|
Daimler Trust
, a
Delaware statutory trust
|
|||
By:
|
/s/ Michael D. Fate | ||
Its:
|
Regional Credit Manager | ||
FORM
OF
|
Date:
|
|||
DaimlerChrysler
|
Quote
#:
|
|||
Truck
Financial
|
Direct
Purchase Money Loan and Security Agreement
|
TFFF1757SI
A
|
BORROWER:
|
CO-BORROWER
|
DEALER:
|
||
Name
|
Name
|
Name
|
||
Address
|
Address
|
Address
|
||
City
St Zip Code
|
City
St Zip Code
|
City
St Zip Code
|
CREDITOR
|
,
and its successors,
transferees and assigns.
|
|
I
(meaning individually, collectively, and interchangeably, all, Borrowers
named above, jointly and severally) have entered into a direct loan
("Agreement") with Creditor to finance the purchase of the following
described equipment ("Equipment"). I acknowledge that I have accepted
delivery of the Equipment in good order without reservation of rights and
without implied warranty as to condition, merchantability, and suitability
for any purpose. I further acknowledge and certify that I have
entered into this Agreement with Creditor, and I intend to use the
purchased Equipment, primarily for business or commercial purposes, and
not for personal, family, household or agricultural purposes. As part of
the like-kind exchange program, the owner of the equipment has engaged MBF
Account Services LLC as a qualified intermediary. You are hereby notified
that the owner of the equipment has assigned to MBF Account Services LLC
its rights (but not obligations) for the sale of this
equipment.
|
||
DESCRIPTION
OF EQUIPMENT:
|
List
Payoff to:
|
New/Used
|
Make
|
Model
|
Serial
Number
|
Body
Type
|
Model
Year
|
Cash
Sale Price
|
TRADE-IN
& DOWNPAYMENT:
|
|||||
Make
|
Model
|
Serial
Number
|
Body-Type
|
Model-Year
|
Allowance
|
Guarantor
Name:
|
Guarantor
Name:
|
||||
Signature:
X
|
Signature:
X
|
||||
Date:
|
||||
DaimlerChrysler
|
Direct
Purchase Money Loan and Security Agreement
|
Quote
No.:
|
||
Truck
Financial
|
TFFF1757SI
A
|
1.
Interest/Late Payment
: I promise to pay
to the order of Creditor the Amount Financed together with daily simple
interest thereon at the rate of 6.00% per annum, from the date of this
Agreement until all of my obligations under this Agreement are fully paid
and satisfied. Interest will be computed on the basis of the actual number
of days elapsed in a 365 day year, or a 366 day year if a leap year. If I
fail to make any payment within ten (10) days of the due date, I agree to
pay Creditor a late payment fee in an amount equal to 5% of the delinquent
payment, or such lesser amount as may be limited by law.
2.
Additional Charges
: I agree to pay a
charge of $25, or such lesser amount as may be limited by law, for each
check, draft or similar instrument presented to Creditor that is returned
or dishonored for any reason.
3.
Prepayment
: I may prepay the then unpaid
principal balance, plus accrued interest and other amounts then owing
under this Agreement, in full at any time without penalty.
4.
Grant of Security Interest
: In order to
secure the prompt and punctual payment and satisfaction of my Indebtedness
(as defined herein), I am granting Creditor a security interest in the
Equipment, and in all accessions, replacements and additions to the
Equipment, and in all leases and chattel paper of the Equipment, and in
all lease payments, rentals, and rights thereto, and in all proceeds
derived from the Equipment, including insurance proceeds and refunds of
insurance premiums. If Creditor permits me to allow others to use or lease
the Equipment, I agree to stamp any agreement between me and my lessee
with language approved by Creditor and to provide and update Creditor with
all current contact information of user or lessee. I also agree that
collateral securing other loans, credit sales and leases that I may have
with Creditor or any affiliate of Creditor, whether now or in the future,
additionally will secure my Indebtedness under this Agreement. The
Equipment, all leases and chattel paper of the Equipment, all lease
payments, rentals, and rights thereto, proceeds, and my additional
collateral securing other loans, credit sales, and leases with Creditor or
any affiliate of Creditor, are individually, collectively and
interchangeably referred to under this Agreement as my "Collateral." For
purposes of this Agreement, the term "Indebtedness" means: (1) my
indebtedness under my loan and under this Agreement for payment of
principal, interest, late charges, returned check fees, liquidated damages
and any other amounts due hereunder; (2) my indebtedness under any other
loans, leases or other obligations that I may now and in the future owe to
Creditor or any affiliate of Creditor; (3) all additional funds that
Creditor or any affiliate of Creditor may advance on my behalf as provided
in this Agreement; and (4) Creditor's costs and expenses incurred in
enforcing Creditor's rights under this Agreement, and in protecting and
preserving the Collateral, including reimbursement of Creditor's
reasonable attorney's fees, court costs, and collection expenses. I
authorize Creditor to perfect its security interest in the Collateral. I
agree to reimburse Creditor for all filing costs and perfection expenses,
as well as for all costs of amending, continuing and terminating such
filings.
5.
Covenants
: I agree: (1) not to sell,
lease, transfer or assign the Collateral without Creditor's prior written
consent; (2) not to allow any other security interest or lien to be placed
on or to attach to the Collateral; (3) not to make any material changes or
alterations to the Equipment without Creditor's prior written consent
(including replacements, additions, accessories or substitutions); (4) not
to remove the Equipment from the state in which I reside or have my
principal offices, other than in the ordinary course of business, for a
period in excess of sixty (60) consecutive days, without first obtaining
Creditor's prior written consent; (5) not to re-title the Equipment in
another state without first notifying Creditor; and (6) if I am a business
entity, not to change my name or form or state of organization without
first notifying Creditor at least thirty (30) days in advance of such
change. I further agree: (a) that anything that may be attached to the
Equipment will become an accession to the Equipment, and will become part
of the Collateral; (b) to make all necessary repairs to, and not to
abandon the Equipment; (c) to abide by all laws and rules and regulations
with respect to the use and operation of the Equipment, and to obtain all
necessary permits and licenses in those jurisdictions where required; (d)
to pay all taxes and assessments levied against the Equipment and to
furnish Creditor with proof of such payments; and (e) to permit Creditor
to inspect the Equipment at reasonable times.
6.
Insurance
: I agree to keep the Equipment
continuously insured, by an insurance company and with deductible approved
by Creditor, against comprehensive and collision damage, and any other
hazards Creditor may specify from time to time. Such insurance coverage
shall be for the greater of either the full value of the Equipment or the
sum of the obligations arising under this Agreement. I agree to provide
Creditor with written proof of a paid insurance policy, and subsequent
renewals, showing Creditor as a loss payee and additional insured under my
insurance policy, which will require at least thirty (30) days advance
written notice to Creditor before such insurance may lapse, be reduced,
canceled or terminated for any reason. I assign to Creditor all proceeds
from insurance policies covering the Equipment, including, but not limited
to, refunds of unearned premiums of any credit life, credit disability,
property or other insurance financed by Creditor under this Agreement, and
direct said insurance companies to pay such amounts directly to Creditor.
Creditor may apply any insurance proceeds and returned premiums received
to the unpaid balance of my then Indebtedness. Should I fail to purchase
and maintain adequate insurance on the Equipment, as determined by
Creditor (at Creditor's sole discretion), then Creditor may (at Creditor's
sole option, and without any responsibility or liability to do so)
purchase such insurance as Creditor deems necessary to protect its
interest. I agree to immediately reimburse Creditor for the expense of
said insurance, together with interest thereon at the rate of 18% per
annum, or such lesser rate as may be limited by law, from the date of each
advance until Creditor is repaid. I authorize Creditor to release to third
parties any information necessary to facilitate insurance and tax
monitoring and insurance placement. If there is a total loss on any item
of Equipment, I agree to immediately pay to Creditor the unpaid principal
balance plus accrued interest and any other amounts then due and owing on
such item of Equipment. All insurance policies financed under this
Agreement, unless a shorter period is specified in the policy, end upon
the original due date of the last payment due under this Agreement. If I
am due any insurance refund, I will seek same from insurance company.
Creditor does not require me to have credit life insurance.
UNLESS
OTHERWISE SPECIFIED HEREIN, THE INSURANCE AFFORDED UNDER THIS AGREEMENT
DOES NOT COVER LIABILITY FOR INJURY TO PERSON OR DAMAGES TO PROPERTY OR
OTHERS. NO PUBLIC LIABILITY INSURANCE IS ISSUED WITH THIS
TRANSACTION.
7.
Default and Acceleration
: Creditor
has the right at its sole option to insist on immediate payment in full of
all Indebtedness that I may owe to Creditor upon the occurrence of any one
or more of the following events: (1) if I fail to make any payment under
this Agreement when due; or (2) if I am in default under any other
provision of this Agreement; or (3) if I am in default under any other
loan, lease, extension of credit, or obligation that I may then owe to
Creditor or any affiliate of Creditor; or (4) If I, without Creditor's
consent, (a) make a significant change in the management, ownership or
control; or (b) merge, transfer, acquire or consolidate with any other
entity; or (5) if I should become insolvent, or the subject of a
bankruptcy or other relief from creditors; or (6) if any of the Equipment
is
seized
under process of law; or (7) if any guaranty of my obligations under this
Agreement is withdrawn or becomes unenforceable for any reason; or (8) if
Creditor reasonably believes itself to be Insecure in the repayment of
this Agreement. After default and acceleration, I agree to continue to pay
Creditor interest on the then unpaid balance of my Indebtedness at the
rate of eighteen (18%) percent per annum, or such lesser rate as may be
limited by law.
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8.
Default Remedies
: Should I default under
this Agreement, and Creditor elects to accelerate payment of my
Indebtedness, Creditor may exercise all of the rights and remedies
available to secured creditors generally under the Uniform Commercial Code
in effect in the state where the Collateral is then located. I agree to
turn over and deliver the Collateral to Creditor at my expense, at the
time and at the location Creditor may demand of me. Alternatively,
Creditor may enter any premises or other place where the Collateral may be
located, and take possession of the Collateral, and all other property
then located on or in the Collateral, provided that Creditor is able to do
so without breach of the peace. Creditor may then sell the Collateral
without warranty at public or private sale, and apply the sale proceeds to
the satisfaction of my Indebtedness. Creditor has no obligation to
clean-up, repair, or prepare the Collateral for sale. I hereby agree that
Creditor may advertise and sell repossessed Collateral through
www.usedtruckinventory.com
or other
internet websites through which equipment or motor vehicles similar to the
Collateral is sold and that such disposition shall be deemed in conformity
with reasonable commercial practice among dealers of the type of property
that was the subject of the disposition. Any requirement that Creditor
notify me of the sale or other disposition of the Collateral will be
satisfied if Creditor sends me a written communication at least ten (10)
days in advance of the date on which a public sale is scheduled, or within
ten (10) days in advance of the time after which a private sale or other
disposition may take place. Furthermore, upon default Creditor may cancel
any insurance financed under this Agreement and apply the refunded premium
to my outstanding balance. I authorize Creditor to notify anyone using
equipment to pay Creditor directly for my Indebtedness.
9.
Waivers
: I and all Guarantors each waive
presentment, notice, and demand for payment, and agree that our liability
under this Agreement shall be joint and several with each other. We
further agree that discharge or release of any party, or Collateral, or
any extension of time for payment, or any delay in enforcing Creditor's
rights, will not cause Creditor to lose any of its rights. I expressly
waive any right to a jury trial in any dispute regarding or arising out of
this Agreement, the sale of the Equipment, or my relationship with
Creditor or Dealer.
10.
Collection/Attorney's Fees and Expenses
:
If Creditor sues me, or if Creditor refers my loan to an attorney for
collection, I agree to pay Creditor reasonable attorney's fees. I further
agree to reimburse Creditor for its court costs and collection expenses
incurred in enforcing Creditor's rights under this Agreement.
11.
Savings Clause
: It is Creditor's
intent to fully comply with all laws and regulations limiting imposition
and collection of interest and other fees and charges in connection with
my loan. Should I be called upon, or should I ever pay interest or other
fees and charges to Creditor in excess of the amount(s) and rate(s)
permitted, I agree that Creditor may cure such violation by crediting any
excess amount that I have paid against my then outstanding Indebtedness
under this Agreement.
12.
No Agency Relationship; No Right to Assert
Claims and Defenses
: I fully understand and unconditionally agree
that neither Dealer, the Equipment manufacturer and distributor, nor their
employees, are Creditor's partners, agents, or representatives, and have
no right to commit, bind or obligate Creditor in any way. My obligations
to Creditor under this Agreement are absolute, unconditional and
non-cancelable with no right of offset, counterclaim or defense against
Creditor or any assignee, the Dealer, the Equipment manufacturer,
distributor, or their employees.
13.
Representations and Warranties
: I
represent and warrant to Creditor that: (1) my correct legal name and
state of residence or organization are listed on page 1 of this Agreement,
and I am property authorized, licensed and in good standing to conduct
business in each applicable jurisdiction; (2) none of the preprinted
provisions of this Agreement have been altered, modified, or stricken by
me or by anyone else; (3) I or my authorized representative properly
executed this Agreement in my name and my signature on this Agreement, or
that of my authorized representative, is genuine; (4) the amount of the
cash downpayment reflected in this Agreement was paid by me to the Dealer
in cash prior to the time this Agreement was signed; (5) any trade-in
allowance, rebate or incentive payment reflected in this Agreement is bona
fide and was applied to the Cash Sale Price of the Equipment; and (6) I
have and intend to license, title, and register the Equipment in the
proper state or jurisdiction.
14.
Power of Attorney
: To the extent
permitted by law, I hereby appoint Creditor as my attorney-in-fact. My
grant of this power of attorney is coupled with an interest and is
irrevocable until all obligations I owe under this Agreement are paid in
full. As my attorney-in-fact, Creditor can: (a) sign on my behalf all
Certificates of Ownership, Registration cards, applications, affidavits or
any other documents required to register and properly perfect Creditor's
security interest in the Equipment; (b) transfer my entire interest in the
Equipment as part of a repossession and sale; (c) act on my behalf in
insurance matters relating to the Equipment, including, but not limited
to, the power to endorse insurance proceeds checks or drafts on my behalf
and cancel any credit life, credit disability, guaranteed automotive
protection coverage, extended warranty or other optional insurance
financed under this Agreement and apply the refunded premium or cost to my
outstanding balance if I am in default.
15.
Governing Law
: This Agreement shall be
deemed received and accepted by Creditor in Lisle, Illinois on the date of
funding. Furthermore this Agreement and my credit financing of the
Equipment shall be governed and construed under the laws of the State of
Illinois irrespective of the conflict of laws principles of that
state.
16.
Miscellaneous
: In this Agreement, the
words "I", "me", "my", "we", "us" and "our" individually, collectively and
interchangeably mean each person or entity signing this Agreement as a
Borrower, Co-Borrower or Guarantor, their successors and assigns, and all
other persons that may be or become obligated under this Agreement. All
schedules executed in connection with this Agreement are part of this
Agreement. This Agreement and any such schedules constitute the entire
agreement between the parties. No modification or amendment of this
Agreement shall be effective unless in writing signed by all parties. All
provisions of this Agreement that are prohibited by applicable law shall
be ineffective solely to the extent of such prohibition without
invalidating the other provisions of this Agreement. Any waiver of
Creditor's rights and remedies under this Agreement shall be effective
only if specifically agreed by Creditor in writing.
17.
Authorization to Share Information
:
Creditor may collect non-public information from Borrower and any
guarantor which may consist of information on credit applications or other
forms, information regarding transactions with Creditor, affiliates or
others and information that Creditor receives from consumer or credit
reporting agencies and other outside sources during the time period that a
line of credit is in effect or that any balance is due to Creditor under
any lease or loan agreement ("Information"). Borrower and guarantors agree
that Creditor may disclose any of the Information to any affiliate,
assigns or agents of Creditor.
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|
1.
|
Agreement: Defined
Terms. All capitalized terms used herein and not otherwise
defined herein shall have the meanings set forth in the
Agreement. Except as expressly modified hereby, all of the
terms of the Agreement shall remain in full force and
effect.
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2.
|
The
"Disclosures Required under Illinois Law" paragraph of page 1 of the
Agreement shall be superseded by that certain Self Insurance Letter
Agreement – Retail (Physical Damage) of even date herewith executed by
Borrower.
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3.
|
Paragraph
5 shall be modified as follows:
|
|
a.
|
Clause
(3) of the first sentence after "Equipment," shall be modified to
add: "(other than those related to Tri-Pak units and Satellite
Equipment)"
|
|
b.
|
Clause
(a) of the second sentence, after "attached to the Equipment," shall be
modified to add "(except Tri-Pak units and Satellite Equipment)"
and
|
|
c.
|
The
following sentence shall be added after the last sentence: "I
will give Creditor prior written notice in the event I change my business
name or form, or merge into any other
entity."
|
|
4.
|
Paragraph
7 shall be modified as follows:
|
|
a.
|
Clause
(1) of the first sentence, after "when due," shall be modified to
add" ", provided Creditor provides notice to me and I fail to
make payment within five (5) business days from the date of receipt of
said notice"
|
|
b.
|
Clause
(4)(b) of the first sentence shall be deleted in its entirety;
and
|
|
c.
|
Clause
(8) of the first sentence shall be deleted in its
entirety.
|
|
5.
|
Except
as modified herein, the terms of the Agreement shall remain in full force
and effect.
|
Covenant Transport,
Inc.
, a Tennessee
corporation
|
CTG Leasing Company
, a
Nevada corporation
|
||
By:
|
/s/
M. David Hughes
|
By:
|
/s/
M. David Hughes
|
Its:
|
Senior
Vice President
|
Its:
|
Senior
Vice President
|
Southern Refrigerated
Transport, Inc.
, an
Arkansas
corporation
|
Star Transportation,
Inc.
, a Tennessee
corporation
|
||
By:
|
/s/
M. David Hughes
|
By:
|
/s/
M. David Hughes
|
Its:
|
Senior
Vice President
|
Its:
|
Senior
Vice President
|
DCFS USA LLC,
a Delaware
limited liability
company
|
|||
By:
|
/s/ Michael D. Fate | ||
Its:
|
Regional Credit Manager | ||
1.
|
I
have reviewed this Form 10-Q of Covenant Transportation Group,
Inc.;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
5.
|
The
registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's
board of directors (or persons performing the equivalent
functions):
|
Date:
August 11, 2008
|
/s/
David R. Parker
|
David
R. Parker
|
|
Chief
Executive Officer
|
1.
|
I
have reviewed this Form 10-Q of Covenant Transportation Group,
Inc.;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
5.
|
The
registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's
board of directors (or persons performing the equivalent
functions):
|
Date:
August 11, 2008
|
/s/
Richard B. Cribbs
|
Richard
B. Cribbs
|
|
Senior
Vice President and Chief Financial
Officer
|
1.
|
The
Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934;
and
|
2.
|
The
information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the
Company.
|
Date:
August 11, 2008
|
/s/
David R. Parker
|
David
R. Parker
|
|
Chief
Executive Officer
|
1.
|
The
Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934;
and
|
2.
|
The
information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the
Company.
|
Date:
August 11, 2008
|
/s/ Richard
B. Cribbs
|
Richard
B. Cribbs
|
|
Senior
Vice President and Chief Financial
Officer
|