AMENDMENT NO. 3 AND LIMITED WAIVER TO AMENDED AND RESTATED CREDIT AGREEMENT
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
2
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.
3
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 upon
satisfaction of the following conditions:
(a) The
purchase agreement and all other documentation for the Proposed Transaction
(the
“Proposed
Transaction Documents”)
which
would violate Section 10.2 of the Credit Agreement but for the waiver set forth
in Paragraph
2(b)
above
shall, in the form executed, be consistent with the letter agreement dated
as of
July 31, 2006 among the Parent, Target, and the shareholders of Target (the
“Letter
of Intent”);
and
(b) The
Agent
shall have received a certificate executed by an Authorized Representative
of
the Parent as to the matters set forth in Paragraph 4(a) above and attaching
true, correct and complete copies of each of the Proposed Transaction Documents
as soon as is reasonably practicable on or after the date of execution of the
Proposed Transaction Documents (but in no event later than the next Business
Day
after such date of execution of the Proposed Transaction
Documents).
5. Conditions
Precedent to Amendments and additional Waivers.
The
amendments to the Credit Agreement provided in Paragraph
1(b), 1(c), and 1(d),
and the
limited waivers to the Credit Agreement provided in Paragraphs
2(a), 2(c) and 2(d)
shall be
effective upon the satisfaction of the following conditions
precedent:
(a) The
Proposed Transaction (i) is consummated and effective on or before December
31,
2006, (ii) is consummated in accordance with all applicable laws following
receipt of all consents and approvals required to be obtained from any
Governmental Authority or other Person in connection with the Proposed
Transaction, and (iii) is consummated pursuant to documentation consistent
with
the Letter of Intent.
(b) Immediately
upon giving effect to the Proposed Transaction, Target shall be a wholly-owned
direct or indirect Subsidiary of the Parent.
(c) The
Agent
shall have received each of the following documents or instruments in form
and
substance reasonably acceptable to the Agent:
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(i)
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a
certificate dated as of the Third Amendment Effectiveness Date executed
by
an Authorized Representative of each the Borrower and the Parent
as to the
matters set forth in Paragraphs
5(a), 5(b), 8(a), 8(b), 8(c) and 8(e)
of
this Agreement;
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(ii)
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true
and complete copies of consents to the Proposed Transaction by (x)
Bank of
America, N.A., as lender under that certain Loan Agreement dated
as of
March 1, 2000 between Target and Bank of America, N.A., as amended
through
the date hereof (the “Target/Bank
of America Loan Agreement”)
and (y) AmSouth Bank, as lender under that certain Amended and Restated
Loan Agreement dated as of March 1, 2006 between AmSouth Bank and
Target,
as amended through the date hereof (the “Target/AmSouth
Loan Agreement”);
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4
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(iii)
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a
duly completed and executed certificate of an Authorized Representative
dated as of the Third Amendment Effectiveness Date in the form of
Exhibit
H to the Credit Agreement, with respect to the fiscal quarter ending
June 30, 2006, demonstrating compliance with the financial covenants
contained in Article
X
of
the Credit Agreement, as amended hereby, after giving pro forma effect
to
the Proposed Transaction; and
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(iv)
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such
other documents, instruments, opinions, certifications, undertakings,
further assurances and other matters as the Agent shall reasonably
request.
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(d) The
Parent and the Borrower shall have paid the fees in the amounts and at the
times
specified in the Amendment Fee Letter.
(e) all
fees and
expenses payable to the Agent and the Lenders (including the fees and expenses
of counsel to the Agent) accrued to date shall have been paid in full to the
extent invoiced prior to or on the effective date of this Agreement, but without
prejudice to the later payment of accrued fees and expenses not so
invoiced.
6. Conditions
Subsequent to Amendments and additional Waivers.
The
continued effectiveness of the amendments to the Credit Agreement provided
in
Paragraph
1(b), 1(c), and 1(d),
and the
limited waivers to the Credit Agreement provided in Paragraphs
2(a), 2(c) and 2(d)
shall be
conditioned upon satisfaction of the following conditions:
(a) Substantially
simultaneously with the consummation of the Proposed Transaction or immediately
thereafter, each of the Parent and the Borrower shall have complied with the
requirements set forth in Section
9.19
of the
Credit Agreement with respect to Target and the Agent shall have received the
documents required thereunder.
(b) Substantially
simultaneously with the consummation of the Proposed Transaction or immediately
thereafter, the Agent shall have received true and complete copies of amendments
to (x) the Target/Bank of America Loan Agreement and (y) the Target/AmSouth
Loan
Agreement, in each case as necessary not to violate or conflict with the Credit
Agreement.
7. Consent
of the Parent and the Guarantors.
Each of
the Parent and the Guarantors has joined in the execution of this Agreement
for
the purposes of consenting hereto and for the further purpose of confirming
its
guaranty of the Obligations of the Borrower pursuant to the Facility Guaranty
to
which the Parent or such Guarantor is party and its obligations under each
other
Loan Document to which it is a party. The Parent and each Guarantor hereby
consents, acknowledges and agrees to the amendments of the Credit Agreement
set
forth herein and hereby confirms and ratifies in all respects the Facility
Guaranty and each other Loan Document to which the Parent or such Guarantor
is a
party and the enforceability of such Facility Guaranty and each such other
Loan
Document against the Parent and such Guarantor in accordance with its
terms
8. Representations
and Warranties.
In
order to induce the Agent and the Lenders party hereto to enter into this
Agreement, each of the Parent and the Borrower represent and warrant to the
Agent and such Lenders as follows:
5
(a) The
representations and warranties made by the Parent and the Borrower in
Article
VIII
of the
Credit Agreement (after giving effect to this Agreement) and by each Loan Party
in each of the other Loan Documents to which it is a party are true and correct
in all material respects on and as of the date hereof, except to the extent
that
such representations and warranties expressly relate to an earlier
date;
(b) Since
the
date of the most recent financial reports of the Parent delivered pursuant
to
Section
9.1
of the
Credit Agreement, no act, event, condition or circumstance has occurred or
arisen which, singly or in the aggregate with one or more other acts, events,
occurrences or conditions (whenever occurring or arising), has had or could
reasonably be expected to have a Material Adverse Effect;
(c) The
Persons appearing as Guarantors on the signature pages to this Agreement
constitute all Persons who are required (as of the date hereof) to be Guarantors
pursuant to the terms of the Credit Agreement and the other Loan Documents,
including without limitation all Persons who became Subsidiaries or were
otherwise required to become Guarantors after the Closing Date as a result
of
any merger, acquisition or other reorganization, and each such Person has
executed and delivered a Facility Guaranty;
(d) This
Agreement has been duly authorized, executed and delivered by the Parent, the
Borrower and the Guarantors party hereto and constitutes a legal, valid and
binding obligation of such parties, except as may be limited by general
principles of equity or by the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors’ rights generally;
and
(e) No
Default or
Event of Default has occurred and is continuing either immediately prior to
or
immediately after the effectiveness of this Agreement.
9. Entire
Agreement.
This
Agreement, together with the Amendment Fee Letter and all the Loan Documents
(collectively, the “Relevant
Documents”),
sets
forth the entire understanding and agreement of the parties hereto in relation
to the subject matter hereof and supersedes any prior negotiations and
agreements among the parties relative to such subject matter. No promise,
condition, representation or warranty, express or implied, not herein set forth
shall bind any party hereto, and not one of them has relied on any such promise,
condition, representation or warranty. Each of the parties hereto acknowledges
that, except as otherwise expressly stated in the Relevant Documents, no
representations, warranties or commitments, express or implied, have been made
by any party to the other. None of the terms or conditions of this Agreement
may
be changed, modified, waived or canceled orally or otherwise, except as
permitted pursuant to Section
13.6
of the
Credit Agreement.
10. Full
Force and Effect of Agreement.
Except
as hereby specifically amended, modified or supplemented, the Credit Agreement
and all other Loan Documents are hereby confirmed and ratified in all respects
by each party hereto and shall be and remain in full force and effect according
to their respective terms.
6
11. Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed an original as against any party whose signature appears thereon, and
all
of which shall together constitute one and the same instrument.
12. Governing
Law.
This
Agreement shall in all respects be governed by, and construed in accordance
with, the laws of the state of Tennessee.
13. Enforceability.
Should
any one or more of the provisions of this Agreement be determined to be illegal
or unenforceable as to one or more of the parties hereto, all other provisions
nevertheless shall remain effective and binding on the parties
hereto.
14. References.
All
references in any of the Loan Documents to the “Credit Agreement” shall mean the
Credit Agreement, as amended hereby.
15. Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the Parent, the
Borrower, the Agent and each of the Guarantors and Lenders, and their respective
successors, assigns and legal representatives; provided,
however, that neither the Parent, the Borrower nor any Guarantor, without the
prior consent of the Required Lenders, may assign any rights, powers, duties
or
obligations hereunder.
16. Expenses.
The
Parent and the Borrower agree to pay to the Agent all reasonable out-of-pocket
expenses of the Agent (including the fees and expenses of counsel to the Agent)
incurred or arising in connection with the negotiation and preparation of this
Agreement.
[Signature
pages follow.]
7
IN
WITNESS WHEREOF,
the
parties hereto have caused this instrument to be made, executed and delivered
by
their duly authorized officers as of the day and year first above
written.
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BORROWER:
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COVENANT
ASSET MANAGEMENT, INC.,
a
Nevada
corporation
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By:
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/s/
▇▇▇▇▇ ▇▇▇▇▇▇
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Name:
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▇▇▇▇▇
▇▇▇▇▇▇
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Title:
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President
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PARENT:
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COVENANT
TRANSPORT, INC., a
Nevada
corporation
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By:
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/s/
▇▇▇▇▇ ▇▇▇▇▇▇
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Name:
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▇▇▇▇▇
▇▇▇▇▇▇
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Title:
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President
and Chief Executive Officer
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Signature
Page
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GUARANTORS:
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COVENANT
TRANSPORT, INC.,
a
Tennessee corporation
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By:
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/s/
▇▇▇▇▇ ▇▇▇▇▇▇
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Name:
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▇▇▇▇▇
▇▇▇▇▇▇
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Title:
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President
and Chief Executive Officer
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▇▇▇▇▇▇
▇▇▇▇ TRUCKING CO.,
an
Arkansas corporation
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By:
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/s/
▇▇▇▇▇ ▇▇▇▇▇▇
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Name:
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▇▇▇▇▇
▇▇▇▇▇▇
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Title:
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President
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SOUTHERN
REFRIGERATED TRANSPORT,
INC.,
an
Arkansas corporation
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By:
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/s/
▇▇▇▇▇ ▇▇▇▇▇▇
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Name:
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▇▇▇▇▇
▇▇▇▇▇▇
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Title:
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Chief
Executive Officer
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▇▇▇▇▇▇▇▇.▇▇▇,
INC.,
a
Nevada corporation
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By:
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/s/
▇▇▇▇▇ ▇▇▇▇▇▇
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Name:
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▇▇▇▇▇
▇▇▇▇▇▇
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Title:
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President
and Chief Executive Officer
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CIP,
INC.,
a
Nevada corporation
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By:
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/s/
▇▇▇▇▇ ▇▇▇▇▇▇
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Name:
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▇▇▇▇▇
▇▇▇▇▇▇
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Title:
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President
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Signature
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AGENT:
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BANK
OF AMERICA, N.A.,
as Agent
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By:
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/s/
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name:
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▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
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Title:
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Vice
President
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Signature
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LENDERS:
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BANK
OF AMERICA, N.A.
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By:
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/s/
▇▇▇▇▇▇ Buunton
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Name:
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▇▇▇▇▇▇
Buunton
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Title:
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Vice
President
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Signature
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NATIONAL
CITY BANK OF KENTUCKY
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By:
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/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name:
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▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇
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Title:
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SVP
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Signature
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BRANCH
BANKING AND TRUST COMPANY
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By:
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/s/
R. ▇▇▇▇▇▇ ▇▇▇▇
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Name:
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R.
▇▇▇▇▇▇ ▇▇▇▇
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Title:
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Senior
Vice President
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Signature
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FIRST
TENNESSEE BANK NATIONAL ASSOCIATION
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By:
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/s/
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name:
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▇▇▇▇
▇. ▇▇▇▇▇▇▇
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Title:
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Senior
Vice President
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Signature
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AMSOUTH
BANK
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By:
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/s/
W. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ III
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Name:
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W.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ III
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Title:
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Vice
President
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Signature
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BNP
PARIBAS
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By:
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/s/
▇▇▇▇ ▇▇▇▇▇
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Name:
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▇▇▇▇
▇▇▇▇▇
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Title:
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Vice
President
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By:
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/s/
▇▇▇▇▇ ▇▇▇▇▇▇
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Name:
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▇▇▇▇▇
▇▇▇▇▇▇
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Title:
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Vice
President
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Signature
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SUNTRUST
BANK
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By:
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/s/
▇. ▇. ▇▇▇▇▇
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Name:
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▇.
▇. ▇▇▇▇▇
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Title:
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Managing
Director
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Signature Page