Document:

Exhibit 10.1 Wells Fargo Second Modification Agreement

    
      

    

     

    Exhibit
      10.1

     

    SECOND
      

    MODIFICATION
      AGREEMENT

     

    BY
      THIS
      SECOND MODIFICATION AGREEMENT (the "Agreement"), made and entered into as of
      the
      30th day of March, 2007, WELLS FARGO BANK, NATIONAL ASSOCIATION (the "Lender"),
      and KNIGHT TRANSPORTATION, INC., an Arizona corporation (the "Borrower"), in
      consideration of the mutual covenants herein contained and other good and
      valuable consideration, the receipt and sufficiency of which is hereby
      acknowledged, hereby confirm and agree as follows:

     

    SECTION
      1. RECITALS;
      ACKNOWLEDGEMENTS.

     

    1.1     The
      Borrower and the Lender entered into that Credit Agreement dated
      September 15, 2005 (as amended from time to time, the "Credit Agreement")
      to provide financial accommodations to the Borrower as provided
      therein.

     

    1.2     Borrower
      and the Lender desire to modify the Credit Agreement as set forth
      herein.

     

    1.3     All
      undefined capitalized terms used herein shall have the meaning given them in
      the
      Credit Agreement as modified by that Modification Agreement dated October 6,
      2006.

     

    SECTION
      2. CREDIT
      AGREEMENT.

     

    2.1     The
      following definition in Section 1.1 of the Credit Agreement is hereby amended
      to
      read as follows:

     

        "RLC
      Maturity
      Date" shall mean September 30, 2009.

     

    2.2     The
      following definition in Section 1.1 of the Credit Agreement is hereby
      deleted:

     

        "Quick
      Ratio".

     

    2.3     Section
      5.11(a) of the Credit Agreement is hereby amended to read as
      follows:

     

    (a) [Intentionally
      left blank].

     

    2.4     Exhibit
      "E" to the Credit Agreement is hereby amended to read as attached
      hereto.

     

    SECTION
      3. OTHER
      MODIFICATIONS, RATIFICATIONS AND AGREEMENTS.

     

    3.1     All
      references to the Credit Agreement in the other Loan Documents are hereby
      amended to refer to the Credit Agreement as hereby amended.

     

    3.2     Borrower
      hereby reaffirms to the Lender each of the representations, warranties,
      covenants and agreements of Borrower set forth in the Credit Agreement, with
      the
      same force and effect as if each were separately stated herein and made as
      of
      the date hereof.

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    3.3     Borrower
      hereby ratifies, reaffirms, acknowledges, and agrees that the Note and the
      Credit Agreement represent valid, enforceable and collectible obligations of
      Borrower, and that there are no existing claims, defenses, personal or
      otherwise, or rights of setoff whatsoever with respect to any of these documents
      or instruments. Borrower further acknowledges and represents that no event
      has
      occurred and no condition exists that, after notice or lapse of time, or both,
      would constitute a default under this Agreement, the Note or the Credit
      Agreement.

     

    3.4     All
      terms, conditions and provisions of the Credit Agreement are continued in full
      force and effect and shall remain unaffected and unchanged except as
      specifically amended hereby. The Credit Agreement, as amended hereby, is hereby
      ratified and reaffirmed by Borrower, and Borrower specifically acknowledges
      the
      validity and enforceability thereof.

     

    SECTION
      4. GENERAL.

     

    4.1     This
      Agreement in no way acts as a release or relinquishment of those rights securing
      payment of the Loans. Such rights are hereby ratified, confirmed, renewed and
      extended by Borrower in all respects.

     

    4.2     The
      modifications contained herein shall not be binding upon the Lender until the
      Lender shall have received all of the following:

     

    (a) An
      original of this Agreement fully executed by the Borrower.

     

    (b) A
      Consent
      and Agreement of Guarantors, fully executed by the Guarantors.

     

    (c) Such
      resolutions or authorizations and such other documents as the Lender may require
      relating to the existence and good standing of the Borrower and the Guarantors
      and the authority of any person executing this Agreement or other documents
      on
      behalf of the Borrower and the Guarantors.

     

    4.3     Borrower
      shall execute and deliver such additional documents and do such other acts
      as
      the Banks may reasonably require to fully implement the intent of this
      Agreement.

     

    4.4     Borrower
      shall pay all costs and expenses, including, but not limited to, reasonable
      attorneys' fees incurred by the Lender in connection herewith, whether or not
      all of the conditions described in Paragraph 4.2 above are satisfied. The
      Lender, at its option, but without any obligation to do so, may advance funds
      to
      pay any such costs and expenses that are the obligation of the Borrower, and
      all
      such funds advanced shall bear interest at the highest rate provided in the
      Note
      and shall be due and payable upon demand.

     

    4.5     Notwithstanding
      anything to the contrary contained herein or in any other instrument executed
      by
      Borrower or the Lender, or in any other action or conduct undertaken by Borrower
      or the Lender on or before the date hereof, the agreements, covenants and
      provisions contained herein shall constitute the only evidence of the Lender's
      consent to modify the terms and provisions of the Credit Agreement. Accordingly,
      no express or implied consent to any further modifications involving any of
      the
      matters set forth in this Agreement or otherwise shall be inferred or implied
      by
      the Lender's consent to this Agreement. Further, the Lender's consent to this
      Agreement shall not constitute a waiver (either express or implied) of the
      requirement that any further modification of the Credit Agreement shall require
      the express written consent of the Lender; no such consent (either express
      or
      implied) has been given as of the date hereof.

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    4.6     Time
      is
      hereby declared to be of the essence hereof of the Credit Agreement, and the
      Lender requires, and Borrower agrees to, strict performance of each and every
      covenant, condition, provision and agreement hereof, of the Credit
      Agreement.

     

    4.7     This
      Agreement shall be binding upon, and shall inure to the benefit of, the parties
      hereto and their heirs, personal representatives, successors and
      assigns.

     

    4.8     This
      Agreement is made for the sole protection and benefit of the parties hereto,
      and
      no other person or entity shall have any right of action hereon.

     

    4.9     This
      Agreement shall be governed by and construed according to the laws of the State
      of Arizona.

     

    IN
      WITNESS WHEREOF, these presents are executed as of the date indicated
      above.

    

      
        	
                WELLS
                  FARGO BANK, NATIONAL 

                ASSOCIATION

              
	 
	 
	
                By:
                  /s/ Keri Tignini

              
	
                Name:
                  Keri Tignini

              
	
                Its:
                  Vice President

              
	
                LENDER

              
	 
	 
	
                KNIGHT
                  TRANSPORTATION, INC.

              
	 
	 
	
                By:
                  /s/ David Jackson

              
	
                Name:
                  David Jackson

              
	
                Its:
                  Chief Financial Officer

              
	
                BORROWER

              

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Exhibit
      to Second Modification Agreement available upon
      request.Exhibit 10.1 (Executive Officer Bonus Program)

    
      

    

    Exhibit
      10.1

    Covenant
      Transport, Inc.

    2007
      Named Executive Officer Bonus Program

    

    Pursuant
      to the Covenant Transport, Inc. 2006 Omnibus Incentive Plan (the "Plan"), on
      February 28, 2007, the Compensation Committee of the Board of Directors (the
      "Committee") of Covenant Transport, Inc., a Nevada corporation (the "Company")
      approved the key terms of the Company's 2007 Bonus Program (the "Program").
      The
      disclosures in this Exhibit were previously filed on Form 8-K on February 28,
      2007.

    

    As
      set
      forth in the Plan, which was approved by the Company's stockholders at the
      2006
      annual meeting of stockholders, the Committee may choose from a range of defined
      performance measures. The Committee approved operating income and operating
      ratio targets (the "Performance Targets") as the basis for bonuses to be paid
      pursuant to the Program for each of the following service offerings (or
      combination of service offerings) and subsidiaries (each, a "Business Unit")
      and
      on a consolidated basis: Expedited, Dedicated, Covenant Regional/Over the Road,
      the total Covenant division (prior three service offerings), Southern
      Refrigerated Transport, Inc., Star Transportation, Inc., and Covenant Transport
      Solutions, Inc. The Performance Targets are generally consistent with the
      Company's goal to improve its consolidated operating ratio by 100 to 200 basis
      points in 2007 versus 2006, although the Performance Targets for some Business
      Units require significantly greater improvement and the Performance Targets
      for
      some Business Units allow for a decrease in performance versus
      2006.

    

    Under
      the
      Program, and consistent with the objectives of the Plan, certain employees,
      including the Company's named executive officers, may receive bonuses upon
      satisfaction of the Performance Targets established for 2007. Bonuses awarded
      pursuant to the Program will be determined by a formula established by the
      Committee that is tied to achievement of one or both of the Performance Targets.
      The formula established by the Committee utilizes incremental levels of
      achievement of the Performance Targets, subject to upward or downward adjustment
      in defined circumstances. The applicable percentage of the Performance Target
      that is achieved is then multiplied by the employee's target bonus to determine
      the employee's bonus. 

    

    The
      following chart highlights the method by which the bonus payments to the
      Company's named executive officers would be calculated should the Company meet
      100% of the Performance Targets for 2007: 

    

    
      	
              Named
                executive officer

            	
              Target
                bonus as a

              percentage
                (%) of

              base
                salary(1) 

            	
              Basis
                of

              Performance
                Targets(2) 

            
	 	 	 
	
              David
                R. Parker, 

              Chairman,
                President, and Chief Executive Officer

            	
              50%

            	
              Consolidated

            
	 	 	 
	
              Michael
                W. Miller,

              Executive
                Vice President—Procurement and Corporate Operations
                Manager

            	
              50%

            	
              Consolidated

            
	 	 	 
	
              Joey
                B. Hogan,

              Executive
                Vice President and 

              Chief
                Financial Officer

            	
              50%

            	
              Consolidated

            
	 	 	 
	
              L.D.
                "Micky" Miller, III,

              Executive
                Vice President—Sales and Marketing

            	
              50%

            	
              Consolidated

            
	 	 	 
	
              Tony
                Smith, 

              President
                of Southern Refrigerated Transport, Inc. 

            	
              50%

            	
              Southern
                Refrigerated 

              Transport,
                Inc.

            

    

    

    
      	
              (1)

            	
              Bonuses
                payable for 2007 (if any) will vary depending on the extent to which
                actual performance meets, exceeds, or falls short of the Performance
                Targets. Bonuses payable for the named executive officers can range
                from
                15% to 130% of the employee's target bonus. 

            
	 	 
	
              (2)

            	
              Performance
                Targets are tied to the achievement of operating income and operating
                ratio goals. Performance Targets for senior executive officers and
                most
                other participants with corporate-wide responsibility are tied to
                operating income and operating ratio goals calculated on a consolidated
                basis. Performance Targets for Business Unit managers and other
                participants dedicated primarily to a single Business Unit are tied
                to
                operating income and operating ratio goals for the Business Unit.
                

            

    

     

    Back
      to Form 10-Q

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