10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2006

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                                       to

Commission File Number: 0-24960

                                                       

COVENANT TRANSPORT, INC.

(Exact name of registrant as specified in its charter)

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)

423-821-1212

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer" and "large accelerated filer" in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer o Accelerated filer x Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date (November 3, 2006).

Class A Common Stock, $.01 par value: 11,650,690shares

Class B Common Stock, $.01 par value: 2,350,000 shares

Page 1

TABLE OF CONTENTS

PART I FINANCIAL INFORMATION
		Page Number
Item 1.	Financial Statements
	Consolidated Condensed Balance Sheets as of September 30, 2006 (Unaudited) and December 31, 2005	3
	Consolidated Condensed Statements of Operations for the three and nine months ended September 30, 2006 and 2005 (Unaudited)	4
	Consolidated Condensed Statements of Stockholders' Equity and Comprehensive Loss for the nine months ended September 30, 2006 (Unaudited)	5
	Consolidated Condensed Statements of Cash Flows for the nine months ended September 30, 2006 and 2005 (Unaudited)	6
	Notes to Consolidated Condensed Financial Statements (Unaudited)	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	33
Item 4.	Controls and Procedures	34
PART II OTHER INFORMATION
		Page Number
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 6.	Exhibits	37

Page 2

PART 1

FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

COVENANT TRANSPORT, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands, except share data)
	September 30, 2006			December 31, 2005
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	8,328		$	3,618
Accounts receivable, net of allowance of $1,943 in 2006 and $2,200 in 2005		81,091			77,969
Drivers advances and other receivables		8,173			3,932
Inventory and supplies		4,572			4,661
Prepaid expenses		11,415			16,199
Assets held for sale		36,416			3,204
Deferred income taxes		15,904			16,158
Income taxes receivable		6,452			7,559
Total current assets		172,351			133,300
Property and equipment, at cost		326,000			295,433
Less accumulated depreciation and amortization		(66,654	)		(84,275	)
Net property and equipment		259,346			211,158
Other assets		47,293			26,803
Total assets	$	478,990		$	371,261
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Securitization facility	$	57,281		$	47,281
Accounts payable and accrued expenses		38,107			25,545
Current maturities of long-term debt		5,882			-
Current portion of insurance and claims accrual		20,624			18,529
Total current liabilities		121,894			91,355
Long-term debt		105,833			33,000
Insurance and claims accrual, net of current portion		19,343			23,272
Deferred income taxes		42,249			33,910
Total liabilities		289,319			181,537
Commitments and contingent liabilities		-			-
Stockholders' equity:
Class A common stock, $.01 par value; 20,000,000 shares authorized; 13,469,090 and 13,447,608 shares issued; 11,650,690 and 11,629,208 outstanding as of September 30, 2006 and December 31, 2005, respectively		135			134
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		91,986			91,553
Treasury stock at cost; 1,818,400 shares		(21,582	)		(21,582	)
Retained earnings		119,108			119,595
Total stockholders' equity		189,671			189,724
Total liabilities and stockholders' equity	$	478,990		$	371,261

The accompanying notes are an integral part of these consolidated condensed financial statements.

Page 3

COVENANT TRANSPORT, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005

(In thousands, except per share data)

	Three months ended September 30, (unaudited)						Nine months ended September 30, (unaudited)
	2006			2005			2006			2005
Revenue:
Freight revenue	$	144,148		$	144,681		$	412,926		$	406,988
Fuel surcharges		32,513			25,214			84,621			57,647
Total revenue	$	176,661		$	169,895		$	497,547		$	464,635
Operating expenses:
Salaries, wages, and related expenses		66,892			63,264			189,955			178,177
Fuel expense		52,858			48,109			145,075			121,504
Operations and maintenance		9,062			9,174			26,334			24,846
Revenue equipment rentals and purchased transportation		16,462			15,263			46,598			45,672
Operating taxes and licenses		3,423			3,117			10,190			10,060
Insurance and claims		8,360			10,090			24,773			28,527
Communications and utilities		1,785			1,726			4,902			4,967
General supplies and expenses		5,675			4,759			15,719			13,223
Depreciation and amortization, including net gains on disposition of equipment		8,624			10,543			27,179			30,491
Total operating expenses		173,141			166,045			490,725			457,467
Operating income		3,520			3,850			6,822			7,168
Other (income) expenses:
Interest expense		1,752			1,290			3,951			2,942
Interest income		(169	)		(90	)		(491	)		(191	)
Other		-			(113	)		(13	)		(443	)
Other expenses, net		1,583			1,087			3,447			2,308
Income before income taxes		1,937			2,763			3,375			4,860
Income tax expense		1,142			1,546			3,862			3,640
Net income (loss)	$	795		$	1,217		$	(487	)	$	1,220
Net income (loss) per share:
Basic earnings (loss) per share:	$	0.06		$	0.09		$	(0.03	)	$	0.09
Diluted earnings (loss) per share:	$	0.06		$	0.09		$	(0.03	)	$	0.08
Basic weighted average shares outstanding		14,000			13,979			14,074			14,241
Diluted weighted average shares outstanding		14,059			14,044			14,074			14,355

The accompanying notes are an integral part of these consolidated condensed financial statements.

Page 4

COVENANT TRANSPORT, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY

AND COMPREHENSIVE LOSS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006

(Unaudited and in thousands)

	Common Stock				Additional Paid-In		Treasury			Retained			Total Stockholders'			Comprehensive
	Class A		Class B		Capital		Stock			Earnings			Equity			Loss
Balances at December 31, 2005	$	134	$	24	$	91,553	$	(21,582	)	$	119,595		$	189,724
Exercise of employee stock options		1		-		245		-			-			246
Income tax benefit arising from    the exercise of stock options		-		-		17		-			-			17
SFAS No. 123R stock-based    employee compensation cost		-		-		171		-			-			171
Net loss		-		-		-		-			(487	)		(487	)		(487	)
Comprehensive loss for nine    months ended September 30, 2006																$	(487	)
Balances at September 30, 2006	$	135	$	24	$	91,986	$	(21,582	)	$	119,108		$	189,671

The accompanying notes are an integral part of these consolidated condensed financial statements.

Page 5

COVENANT TRANSPORT, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005

(In thousands)

	Nine months ended September 30, (unaudited)
	2006			2005
Cash flows from operating activities:
Net income (loss)	$	(487	)	$	1,220
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Provision for losses on accounts receivable		441			1,440
Depreciation and amortization		29,946			31,007
Deferred income tax benefit		(1,380	)		(9,229	)
Net gain on disposition of property and equipment		(2,884	)		(516	)
Non-cash stock compensation		171			-
Changes in operating assets and liabilities, net of effects from purchase of Star Transportation, Inc.:
Receivables and advances		4,618			(3,093	)
Prepaid expenses and other assets		6,044			(6,320	)
Inventory and supplies		130			(951	)
Insurance and claims accrual		(4,387	)		(2,064	)
Accounts payable and accrued expenses		9,085			2,301
Net cash flows provided by operating activities		41,297			13,795
Cash flows from investing activities:
Acquisition of property and equipment		(118,958	)		(89,089	)
Purchase of Star Transportation, Inc., net of cash acquired		(39,004	)		-
Proceeds from building sale leaseback		29,630			-
Proceeds from disposition of property and equipment		44,947			57,063
Net cash flows used in investing activities		(83,385	)		(32,026	)
Cash flows from financing activities:
Changes in checks outstanding in excess of bank balances		-			3,890
Exercise of stock options		246			418
Income tax benefit arising from exercise of stock options		17			50
Proceeds from issuance of debt		104,807			107,000
Repayments of debt		(58,272	)		(82,888	)
Deferred costs		-			8
Net cash provided by financing activities		46,798			16,821
Net change in cash and cash equivalents		4,710			(1,410	)
Cash and cash equivalents at beginning of period		3,618			5,066
Cash and cash equivalents at end of period	$	8,328		$	3,656

The accompanying notes are an integral part of these consolidated condensed financial statements.

Page 6

COVENANT TRANSPORT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Note 1.   Basis of Presentation

The consolidated condensed financial statements include the accounts of Covenant Transport, Inc., a Nevada holding company, and its wholly owned subsidiaries. References in this report to "we," "us," "our," the "Company," and similar expressions refer to Covenant Transport, Inc. and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the accompanying financial statements include all adjustments which are necessary for a fair presentation of the results for the interim periods presented, such adjustments being of a normal recurring nature. Certain information and footnote disclosures have been condensed or omitted pursuant to such rules and regulations. The December 31, 2005 consolidated condensed balance sheet was derived from our audited balance sheet as of that date. These consolidated condensed financial statements and notes thereto be read in conjunction with the consolidated condensed financial statements and notes thereto included in our Form 10-K for the year ended December 31, 2005. Results of operations in interim periods are not necessarily indicative of results to be expected for a full year.

Certain prior period financial statement balances have been reclassified to conform to the current period's classification.

Note 2.   Comprehensive Earnings (Loss)

Comprehensive earnings (loss) generally include all changes in equity during a period except those resulting from investments by owners and distributions to owners. Comprehensive earnings (loss) for the nine month periods ended September 30, 2006 and 2005 equaled net income (loss).

Note 3.   Segment Information

We have one reportable segment under the provisions of Statement of Financial Accounting Standards (“SFAS”) No.131, Disclosures about Segments of an Enterprise and Related Information. Each of our four transportation service offerings that meet the quantitative threshold requirements of SFAS No. 131 provides truckload transportation services that have been aggregated since they have similar economic characteristics and meet the other aggregation criteria of SFAS No. 131. Accordingly, we have not presented separate financial information for each of our service offerings as our consolidated condensed financial statements present our one reportable segment. Our four major transportation service offerings are: (a) expedited long haul service, (b) refrigerated service, (c) dedicated service, and (d) regional solo-driver service. We generate other revenue through a subsidiary that provides freight brokerage services. This operation does not meet the quantitative threshold reporting requirements of SFAS No. 131.

Note 4.   Basic and Diluted Earnings (Loss) per Share

We apply the provisions of SFAS No. 128, Earnings per Share, which requires us to present basic EPS and diluted EPS. Basic EPS excludes dilution and is computed by dividing earnings available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. The calculation of diluted earnings per share for the three months ended September 30, 2006 and September 30, 2005, excludes approximately 1.0 million shares and 1.3 million shares respectively, and approximately 0.4 million shares for the nine months ended September 30, 2005 since the option price was greater than the average market price of the common shares. The calculation of diluted loss per share for the nine months ended September 30, 2006, excludes all unexercised shares, since the effect of any assumed exercise of the related options would be anti-dilutive.

Page 7

The following table sets forth, for the periods indicated, the calculation of net earnings (loss) per share included in our consolidated condensed statements of operations:

(in thousands except per share data)	Three months ended September 30,				Nine months ended September 30,
	2006		2005		2006			2005
Numerator:
Net earnings (loss)	$	795	$	1,217	$	(487	)	$	1,220
Denominator:
Denominator for basic earnings per share    - weighted-average shares		14,000		13,979		14,074			14,241
Effect of dilutive securities:
Employee stock options		59		65		0			114
Denominator for diluted earnings per share - adjusted weighted-average shares and assumed conversions		14,059		14,044		14,074			14,355
Net income (loss) per share:
Basic earnings (loss) per share:	$	0.06	$	0.09	$	(0.03	)	$	0.09
Diluted earnings (loss) per share:	$	0.06	$	0.09	$	(0.03	)	$	0.08

Note 5.   Share-Based Compensation

Prior to May 23, 2006, we had four stock-based compensation plans. On May 23, 2006, upon the recommendation of our Board of Directors, our stockholders approved the Covenant Transport, Inc. 2006 Omnibus Incentive Plan. The Covenant Transport, Inc. 2006 Omnibus Incentive Plan replaced the Covenant Transport, Inc. 2003 Incentive Stock Plan, Amended and Restated Incentive Stock Plan, Outside Director Stock Option Plan, and 1998 Non-Officer Incentive Stock Plan.

Effective January 1, 2006, we adopted SFAS No. 123R, Share-Based Payment ("SFAS No. 123R") using the modified prospective method. Under this method, compensation cost is recognized on or after the required effective date for the portion of outstanding awards for which the requisite service has not yet been rendered, based on the grant-date fair value of those awards calculated under SFAS No. 123R for either recognition or pro forma disclosures. Stock-based employee compensation expense for the three months and nine months ended September 30, 2006 was $109,017 and $171,307, respectively, and is included in salaries, wages, and related expenses within the consolidated condensed statements of operations. There was no cumulative effect of initially adopting SFAS No. 123R.

In periods prior to January 1, 2006, we accounted for our stock-based compensation plans under APB Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations, under which no compensation expense has been recognized because all employee and outside director stock options have been granted with the exercise price equal to the fair value of the our Class A common stock on the date of grant. The fair value of options granted was estimated as of the date of grant using the Black-Scholes option pricing model. The fair value of the employee and outside director stock options which would have been expensed in the three months and nine months ended September 30, 2005 would have been $0.8 million and $2.2 million, respectively.

Page 8

Our pro forma net income (loss) and earnings (loss) per share would have been as indicated below had the estimated fair value of all option grants on their grant date been charged to salaries, wages and related expense in accordance with SFAS No. 123R.

(in thousands, except per share data)	Three months ended September 30, 2005			Nine months ended September 30, 2005
Net income, as reported:	$	1,217		$	1,220
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		(790	)		(2,235	)
Pro forma net income (loss)	$	427		$	(1,015	)
Basic earnings (loss) per share:
As reported	$	0.09		$	0.09
Pro forma	$	0.03		$	(0.07	)
Diluted earnings (loss) per share:
As reported	$	0.09		$	0.08
Pro forma	$	0.03		$	(0.07	)

On August 31, 2005, the Compensation Committee of our Board of Directors approved the acceleration of the vesting of all outstanding unvested stock options. As a result, the vesting of approximately 170,000 previously unvested stock options granted under our Amended and Restated Incentive Stock Plan and our 2003 Incentive Stock Plan was accelerated and all such options became fully exercisable as of August 31, 2005. The primary purpose of the accelerated vesting was to avoid recognizing compensation expense associated with these options upon adoption of SFAS No. 123R. This acceleration of vesting did not result in any compensation expense for us during 2005; however, without the acceleration of vesting we would have been required to recognize compensation expense beginning in 2006 in accordance with SFAS No. 123R. Under the fair value method of SFAS No. 123R, we would have recorded $2.2 million, net of tax, for the 12 month period ended December 31, 2005, which represents the pro forma compensation expense as well as the effect of the acceleration of the stock options that would be recorded as compensation expense.

The following tables summarize our stock option activity for the nine months ended September 30, 2006:

	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		1,454		$	14.33
Options granted		5		$	13.80
Options exercised		(19	)	$	12.64
Options forfeited		(25	)	$	15.75
Options expired		(178	)	$	15.50
Outstanding at end of period		1,237		$	14.16		5.5 years	$	871
Exercisable at end of period		1,222		$	14.21		5.5 years	$	861

Page 9

The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model, which uses a number of assumptions to determine the fair value of the options on the date of grant. The following weighted-average assumptions were used to determine the fair value of the stock options granted during the three and nine months ended September 30, 2006 and 2005:

	Three months ended September 30,		Nine months ended September 30,
	2006	2005	2006	2005
Expected volatility	37.4% - 39.5%	42.3%	37.4% - 39.5%	42.3% - 51.9%
Risk-free interest rate	4.9% - 5.0%	2.8% - 4.2%	4.9% - 5.0%	2.8% - 4.2%
Expected lives (in years)	5.0	5.0	5.0	5.0

The expected lives of the options are based on the historical and expected future employee exercise behavior. Expected volatility is based upon the historical volatility of our common stock. The risk-free interest rate is based upon the U.S. Treasury yield curve at the date of grant with maturity dates approximately equal to the expected life at the grant date.

The following tables summarize our restricted stock award activity for the nine months ended September 30, 2006:

	Number of stock awards			Weighted average grant date fair value
Unvested at January 1, 2006	-			-
Granted		484,984		$	12.65
Vested		-			-
Forfeited		(28,000	)		-
Unvested at September 30, 2006		456,984		$	12.65

Included in the above table is 396,664 restricted stock awards that vest only if we achieve an earnings-per-share target of $2.00 by 2010. The underlying performance targets of earnings per share for these restricted stock awards do not begin until the 2007 fiscal year, therefore no compensation expense for these restricted stock awards will be recorded until January 1, 2007.

As of September 30, 2006, we had $0.3 million and $0.9 million in unrecognized compensation expense related to stock options and restricted stock awards, respectively, which is expected to be recognized over a weighted average period of approximately 3 years for stock options and 4 years for restricted stock awards.

Note 6.   Income Taxes

Income tax expense varies from the amount computed by applying the federal corporate income tax rate of 35% to income before income taxes primarily due to state income taxes, net of federal income tax effect, adjusted for permanent differences, the most significant of which is the effect of the per diem pay structure for drivers.

On April 20, 2006, we completed the appeals process with the IRS related to their 2001 and 2002 audits. Related to this settlement with the IRS, we recorded additional income tax expense of approximately $0.5 million for the nine months ended September 30, 2006. We received a favorable resolution in the Closing Agreement received from the IRS which stated that our wholly-owned captive insurance subsidiary made a valid election under section 953(d) of the Internal Revenue Code and is to be respected as an insurance company.

On September 8, 2006, the IRS completed their audit fieldwork of our 2003 and 2004 tax returns and has proposed the disallowance, with which we have agreed, of approximately $350,000 of costs related to the November 2003 stock offering. During the three months ended June 30, 2006, we recorded all of the $0.1 million of income tax expense related to this proposed disallowance of tax benefits. Additionally, the IRS has proposed to disallow the tax benefits associated with insurance premium payments made to our wholly-owned captive insurance subsidiary for the 2003 and 2004 years. Due to the favorable resolution of the 2001 and 2002 IRS audit on this issue, we are vigorously defending our position related to this proposed disallowance of tax benefits using all administrative and legal processes available. On October 5, 2006, we

Page 10

filed an official Statement of Appeal with the IRS Appeals Office requesting a conference with an IRS Appeals Officer protesting this proposed adjustment related to the disallowance of our deductions for the insurance premiums paid. For the three and nine months ended September 30, 2006, income tax expense of $0.1 million and $0.3 million, respectively, was recorded in our consolidated condensed statements of operations related to this uncertain tax position. If we are unsuccessful in defending our position on this deduction, we could ultimately owe taxes totaling $1.7 million related to this issue, for which we have currently accrued approximately $0.8 million of income taxes in our consolidated condensed balance sheets at September 30, 2006.

Note 7.   Derivative Instruments and Other Comprehensive Income

We account for derivative instruments in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities- (as amended, "SFAS No. 133"). SFAS No. 133 requires that all derivative instruments be recorded on the balance sheet at their fair value. Changes in the fair value of derivatives are recorded each period in current earnings or in other comprehensive income, depending on whether a derivative is designated as part of a hedging relationship and, if it is, depending on the type of hedging relationship.

With our acquisition of Star (see Note 10) on September 14, 2006, we assumed an interest rate swap agreement which became effective September 2005 and terminates in September 2010. Under this swap contract, we pay interest expense at a fixed rate of 5.36% and receive interest income at a variable rate of LIBOR plus 1.25% (6.49% as of September 30, 2006). The fair value of the swap at September 30, 2006 was approximately $251,852.

In 2001, we entered into two $10.0 million notional amount cancelable interest rate swap agreements to manage the risk of variability in cash flows associated with floating-rate debt. Due to the counter-parties' imbedded options to cancel, these derivatives did not qualify, and are not designated as hedging instruments under SFAS No. 133. Consequently, these derivatives are marked to fair value through earnings, in other expense in the accompanying statements of operations. At September 30, 2006, the swap agreements had expired and there was no liability thereunder; however, at September 30, 2005 the fair value of these interest-rate swap agreements was a liability of $0.1 million, which is included in accrued expenses on the consolidated condensed balance sheets. The derivative activity, as reported in the consolidated condensed financial statements for the nine months ended September 30, 2006 and 2005 is summarized in the following table:

(in thousands)	Nine months ended September 30,
	2006			2005
Net liability for derivatives at January 1	$	(13	)	$	(439	)
Gain in value of derivative instruments that do not qualify as hedging      instruments		13			372
Net liability for derivatives at September 30	$	-		$	(67	)

From time to time, we enter into fuel purchase commitments for a notional amount of diesel fuel at prices which are determined when fuel purchases occur.

Page 11

Note 8.   Property and Equipment

Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Revenue equipment is generally depreciated over five to ten years with salvage values ranging from 4% to 39%. The salvage value, useful life, and annual depreciation of tractors and trailers are evaluated annually based on the current market environment and on the Company's recent experience with disposition values. Any change could result in greater or lesser annual expense in the future. Included in depreciation in the consolidated condensed statements of operations are net gains on disposal of revenue equipment of $1.2 million and $0.4 million for the three months ended September 30, 2006 and 2005, respectively, and of $2.9 million and $0.5 million for the nine months ended September 30, 2006 and 2005, respectively. We also evaluate the carrying value of long-lived assets for impairment by analyzing the operating performance and future cash flows for those assets, whenever events or changes in circumstances indicate that the carrying amounts of such assets may not be recoverable. We evaluate the need to adjust the carrying value of the underlying assets if the sum of the expected cash flows is less than the carrying value. Impairment can be impacted by our projection of the actual level of future cash flows, the level of actual cash flows and salvage values, the methods of estimation used for determining fair values, and the impact of guaranteed residuals. Any changes in management's judgments could result in greater or lesser annual depreciation expense or additional impairment charges in the future. Additionally, when we discontinue the utilization of revenue equipment or terminals in our operations, we reclassify such assets to assets held for sale in our consolidated condensed balance sheets. These assets are recorded at the lower of depreciated cost plus the related costs to sell or fair value less related costs to sell. We anticipate selling the assets held for sale within the next twelve months and do not expect any material loss on their disposal.

In April 2006, we entered into a sale leaseback transaction involving our corporate headquarters, a maintenance facility, a body shop, and approximately forty-six acres of surrounding property in Chattanooga, Tennessee. We received proceeds of approximately $29.6 million from the sale of the property, which we used to pay down borrowings under our Credit Agreement and to purchase revenue equipment. In the transaction, we entered into a twenty-year lease agreement, whereby we will lease back the property at an annual rental rate of approximately $2.5 million, subject to annual rent increases of 1.0%, resulting in annual straight-line rental expense of approximately $2.7 million. The transaction resulted in a gain of approximately $2.1 million, which is being amortized ratably over the life of the lease and recorded as depreciation expense on our consolidated condensed statements of operations.

Note 9.   Securitization Facility and Long-Term Debt

Our securitization facility and long-term debt consisted of the following at September 30, 2006 and December 31, 2005:

(in thousands)	September 30, 2006			December 31, 2005
Securitization Facility	$	57,281		$	47,281
Borrowings under Credit Agreement	$	69,000		$	33,000
Installment notes payable with banks, weighted average     interest rate of 5.99% at September 30, 2006, due in     monthly installments with final maturities at various dates     through September 2010, secured by related revenue     equipment		42,715			-
		111,715			33,000
Less current maturities		(5,882	)		-
Long-term debt, less current maturities	$	105,833		$	33,000

Page 12

In December 2004, we entered into a Credit Agreement with a group of banks (the “Credit Agreement”). The facility matures in December 2009. Borrowings under the Credit Agreement are based on the banks' base rate, which floats daily, or LIBOR, which accrues interest based on one, two, three, or six month LIBOR rates plus an applicable margin that is adjusted quarterly between 0.75% and 1.25% based on cash flow coverage (the applicable margin was 1.0% at September 30, 2006). At September 30, 2006, we had $69.0 million of borrowings outstanding under the Credit Agreement.

The Credit Agreement has a maximum borrowing limit of $150.0 million with an accordion feature which permits an increase up to a maximum borrowing limit of $200.0 million. Borrowings related to revenue equipment are limited to the lesser of 90% of net book value of revenue equipment or the maximum borrowing limit. Letters of credit are limited to an aggregate commitment of $85.0 million. The Credit Agreement is secured by a pledge of the stock of most of the Company's subsidiaries. A commitment fee, that is adjusted quarterly between 0.15% and 0.25% per annum based on cash flow coverage, is due on the daily unused portion of the Credit Agreement. As of September 30, 2006, we had approximately $10.5 million of available borrowing capacity. At September 30, 2006 and December 31, 2005, we had undrawn letters of credit outstanding of approximately $70.5million and $73.9million, respectively.

In December 2000, we entered into an accounts receivable securitization facility (the "Securitization Facility"). On a revolving basis, we sell our interests in our accounts receivable to CVTI Receivables Corp. (“CRC”), a wholly-owned bankruptcy-remote special purpose subsidiary incorporated in Nevada. CRC sells a percentage ownership in such receivables to an unrelated financial entity. We can receive up to $62.0 million of proceeds, subject to eligible receivables, and pay a service fee recorded as interest expense, based on commercial paper interest rates plus an applicable margin of 0.44% per annum and a commitment fee of 0.10% per annum on the daily unused portion of the Securitization Facility. The net proceeds under the Securitization Facility are required to be shown as a current liability because the term, subject to annual renewals, is 364 days. As of September 30, 2006 and December 31, 2005, we had $57.3 million and $47.3 million outstanding, respectively, with weighted average interest rates of 5.3% and 4.4%, respectively. CRC does not meet the requirements for off-balance sheet accounting; therefore, it is reflected in our consolidated condensed financial statements.

The provisions of the installment notes payable with banks place certain restrictions and limitations related to the activities of Star. These include limits on capital expenditures, advances to related parties, investments sales or rental of properties and additional borrowings.

The Credit Agreement and Securitization Facility contain certain restrictions and covenants relating to, among other things, dividends, tangible net worth, cash flow coverage, acquisitions and dispositions, and total indebtedness. These agreements are cross-defaulted. We were in compliance with the covenants as of September 30, 2006.

Note 10.  Acquisition

On September 14, 2006, we acquired 100% of the outstanding stock of Star Transportation, Inc. (“Star”), a short-to-medium haul dry van regional truckload carrier based in Nashville, Tennessee. The acquisition included 614 tractors and 1,719 trailers. The total purchase price of approximately $39 million has been allocated to tangible and intangible assets acquired and liabilities assumed based on their fair market values as of the acquisition date in accordance with Financial Accounting Standards Board statement number 141 (SFAS No. 141), “Business Combinations”. Star’s operating results have been accounted for in the Company's results of operations since the acquisition date.

Page 13

Although we continue to complete our valuation of the identifiable intangibles and goodwill, the following table summarizes our preliminary estimated fair value of the assets acquired and liabilities assumed at the date of acquisition:

(In thousands)
Current assets	$	10,970
Property and equipment		64,089
Deferred tax assets		297
Other assets - Interest rate swap (See Note 7)		252
Identifiable intangible assets:
Tradename (5-year estimated useful life)		1,950
Customer relationships (7-year estimated useful life)		1,200
Goodwill		19,995
Total assets	$	98,753
Current liabilities	$	13,181
Long-term debt, net of current maturities		36,298
Deferred tax liabilities		10,270
Total liabilities	$	59,749
Total preliminary purchase price	$	39,004

The total preliminary purchase price of $39.0 million includes purchase price consideration paid to the selling shareholders of Star, or their respective escrow agents, totaling $38.7 million and $0.3 million of acquisition-related costs.

The following pro forma financial information reflects our consolidated summarized results of operations as if the acquisition of Star had taken place on January 1, 2006. The pro forma financial information is not necessarily indicative of the results as it would have been if the acquisition had been effected on the assumed date and is not necessarily indicative of future results:

(in thousands, except per share data)	Three months ended September 30, 2006		Nine months ended September 30, 2006
Pro forma revenues	$	198,131	$	572,557
Pro forma net income	$	655	$	1,989
Pro forma basic and diluted earnings per share	$	0.05	$	0.14

Note 11.  Recent Accounting Pronouncements

In September 2006, the Securities and Exchange Commission published Staff Accounting Bulletin ("SAB") No. 108 (Topic 1N), Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements. SAB No. 108 requires registrants to quantify misstatements using both the balance-sheet and income-statement approaches, with adjustment required if either method results in a material error. The provisions of SAB No. 108 are effective for annual financial statements for the first fiscal year ending after November 15, 2006. We are continuing to evaluate the impact of the adoption of SAB No. 108, but management does not currently believe SAB No. 108 will have a material effect upon initial adoption on our consolidated financial statements.

In September 2006, the FASB issued SFAS No. 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans-an amendment of FASB Statements No. 87, 88, 106, and 132(R). This Statement requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its balance sheet and to recognize changes in that funded status in the year in which the changes occur through comprehensive income of a business entity. This Statement also requires an employer to measure the funded status of a plan as of the date of its year-end balance sheet, with limited exceptions. The provisions of SFAS No. 158 are effective as of the end of the fiscal year ending after December 15, 2006. The adoption of SFAS No. 158 will not have a material impact on our consolidated financial statements.

Page 14

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. The provisions of SFAS No. 157 are effective as of the beginning of the first fiscal year that begins after November 15, 2007. We do not believe the adoption of SFAS No. 157 will have a material impact on our consolidated financial statements.

In June 2006, the FASB published Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109 (“FIN 48”). FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The effective date of this interpretation is January 1, 2007, the first fiscal year beginning after December 15, 2006. We are continuing to evaluate the impact of the adoption of FIN 48 on our consolidated financial statements.

Effective December 31, 2005, we adopted FASB Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations (“FIN 47”), which clarifies that the term conditional asset retirement obligation as used in SFAS No. 143, Accounting for Asset Retirement Obligations, refers to a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditioned on a future event that may or may not be within the control of the entity. The obligation to perform the asset retirement activity is unconditional even though uncertainty exists about the timing and/or method of settlement. Accordingly, an entity is required to recognize a liability for the fair value of a conditional asset retirement obligation if the fair value of the liability can be reasonably estimated. Uncertainty about the timing and/or method of settlement of a conditional asset retirement obligation should be factored into the measurement of the liability when sufficient information exists. FIN 47 also clarifies when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. The adoption of FIN 47 impacted our accounting for the conditional obligation to remove Company decals and other identifying markings from certain tractors and trailers under operating leases at the end of the lease terms. In the three and six months ended June 30, 2006, the impact of the adoption of FIN 47 was approximately $0.1 million and $0.2 million, respectively, of additional expense in our revenue equipment rentals and purchased transportation expenses.

In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections.  SFAS No. 154 replaces APB Opinion No. 20, Accounting Changes, and SFAS Statement No. 3, Reporting Changes in Interim Financial Statements.  SFAS No. 154 changes the accounting for, and reporting of, a change in accounting principle.  SFAS No. 154 requires retrospective application to prior periods’ financial statements of voluntary changes in accounting principle and changes required by new accounting standards when the standard does not include specific transition provisions, unless it is impracticable to do so.   SFAS No. 154 is effective for accounting changes and corrections of errors in fiscal years beginning after December 15, 2005.  Weadopted this statement effective January 2006.

In December 2004, the FASB issued SFAS No. 123R, Share-Based Payments, revising SFAS No. 123, Accounting for Stock Based Compensation; superseding APB Opinion No. 25, Accounting for Stock Issued to Employees and its related implementation guidance; and amending SFAS No. 95, Statement of Cash Flows. SFAS No. 123R requires companies to recognize the grant date fair value of stock options and other equity-based compensation issued to employees in its income statement, generally over the remaining vesting period. In 2005, we accelerated the vesting of substantially all of our outstanding stock options. This allowed us to recognize an expense in 2005 which was significantly less than the compensation expense that would have been recognized beginning in 2006 in accordance with SFAS No. 123R. SFAS No. 123R was effective January 1, 2006. Our adoption of SFAS No. 123R had minimal impact for the three and six month periods ended June 30, 2006 (See Note 5).

Page 15

Note 12.  Commitments and Contingencies

In the normal course of business, we are party to ordinary, routine litigation, most of which involves claims for personal injury and property damage incurred in connection with the transportation of freight. We maintain insurance to cover liabilities arising from the transportation of freight for amounts in excess of certain self-insured retentions. In the opinion of management, our potential exposure under pending legal proceedings is adequately provided for in the accompanying consolidated condensed financial statements. Currently, we are involved in the significant personal injury claim described below.

On March 7, 2003, an accident occurred in Wisconsin involving a vehicle and one of our tractors. Two adult occupants of the vehicle were killed in the accident. The only other occupant of the vehicle was a child, who survived with little apparent injury. Suit was filed in the United States District Court in Minnesota by heirs of one of the decedents against us and our driver under the style: Bill Kayachitch and Susan Kayachitch as co-trustees for the heirs and next of kin of Souvorachak Kayachitch, deceased, vs. Julie Robinson and Covenant Transport, Inc. The case was settled on October 10, 2005 at a level below the aggregate coverage limits of our insurance policies and was formally dismissed in February 2006. Representatives of the child may file an additional suit against the Company.

Financial risks which potentially subject us to concentrations of credit risk consist of deposits in banks in excess of the Federal Deposit Insurance Corporation limits. Our sales are generally made on account without collateral. Repayment terms vary based on certain conditions. We maintain reserves that management believes are adequate to provide for potential credit losses. The majority of our customer base spans the United States. We monitor these risks and believe the risk of incurring material losses is remote.

We use purchase commitments through suppliers to reduce a portion of our cash flow exposure to fuel price fluctuations.

Note 13.  Subsequent Event

On October 20, 2006, we amended our Securitization Facility to include Covenant Transport Solutions, Inc., a Nevada corporation ("Solutions"), and Star Transportation, Inc., a Tennessee corporation ("Star"), as additional originators, permitting CRC to purchase accounts receivable from these subsidiaries of the Company as well as from Covenant and Southern Refrigerated. The Securitization Facility Amendments also increased the amount that the Company, through CRC, can borrow under the Securitization Facility, from $62.0 million to $70.0 million, subject to eligible receivables.

Page 16

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The consolidated condensed financial statements include the accounts of Covenant Transport, Inc., a Nevada holding company, and its wholly-owned subsidiaries. References in this report to "we," "us," "our," the "Company," and similar expressions refer to Covenant Transport, Inc. and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

This quarterly report contains certain statements that may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such statements may be identified by their use of terms or phrases such as "expects," "estimates," "projects," "believes," "anticipates," "plans," "intends," and similar terms and phrases. Forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, which could cause future events and actual results to differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. Actual results may differ from those set forth in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed in the section entitled Item 1A. Risk Factors, set forth below. All such forward-looking statements speak only as of the date of this Form 10-Q. You are cautioned not to place undue reliance on such forward-looking statements. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with regard thereto or any change in the events, conditions, or circumstances on which any such statement is based.

Executive Overview

We are one of the ten largest truckload carriers in the United States measured by revenue according to Transport Topics, a publication of the American Trucking Associations. We focus on targeted markets where we believe our service standards can provide a competitive advantage. Currently, we categorize our business with four major transportation service offerings: Expedited long haul service, Refrigerated service, Dedicated service, and Regional solo-driver service. We are a major carrier for transportation companies such as freight forwarders, less-than-truckload carriers, and third-party logistics providers that require a high level of service to support their businesses, as well as for traditional truckload customers such as manufacturers and retailers. We also generate revenue through a subsidiary that provides freight brokerage services.

On September 14, 2006, we acquired 100% of the outstanding stock of Star Transportation, Inc. (“Star”), a short-to-medium haul dry van regional truckload carrier based in Nashville, Tennessee. Star operates primarily in the southeastern United States, with shipments concentrated from Texas across the Southeast to Virginia, and an average length of haul of approximately 470 miles. We are operating Star as a separate subsidiary, continuing with substantially the same personnel, customers, lanes and terminal locations as it had prior to our acquisition. The acquisition included 614 tractors and 1,719 trailers. Star’s operating results have been accounted for in the Company's results of operations since the acquisition date. Star’s total revenue for the sixteen days ended September 30, 2006 totaled approximately $4.5 million, which is included in our consolidated condensed statements of operations for the three and nine months ended September 30, 2006.

For the nine months ended September 30, 2006, total revenue increased $32.9 million, or 7.1%, to $497.5 million from $464.6 million in the 2005 period. Freight revenue, which excludes revenue from fuel surcharges, increased $5.9 million, or 1.5%, to $412.9 million in the 2006 period from $407.0 million in the 2005 period. We experienced a net loss of $0.5 million, or $0.03 per share, for the first nine months of 2006, compared with a profit of $1.2 million, or $0.09 per share, for the first nine months of 2005.

For the nine months ended September 30, 2006, our average freight revenue per tractor per week, our main measure of asset productivity, increased 4.2%, to $3,058 in the first nine months of 2006 compared to $2,934 in the same period of 2005. The increase was primarily generated by a 0.3% increase in average freight revenue per total mile, and a 3.0% increase in average miles per tractor equipment utilization. Weighted average tractors decreased 3.1% to 3,448 in the 2006 period from 3,557 in the 2005 period.

Page 17

Our after-tax costs on a per-mile basis increased 2.0%, or $.03 per mile, compared with the first nine months of 2005. The main factors were a $.033 per mile increase in compensation expense, driven primarily by increases in driver pay and office salaries related to the business realignment, and a $.009 per mile increase in our health insurance claim costs, partially offset by a $.012 per mile decrease in our insurance and claims expense.

During 2005, we began the formal realignment of our business into four distinct service offerings: Expedited long haul, Refrigerated, Dedicated, and Regional solo-driver. We manage and operate each service offering separately, each under the authority of a general manager. We have now hired the general managers for each of the service offerings. In addition, within the Regional solo-driver service offering, we have divided the business into several service centers, each under separate management as well. Our freight brokerage operation is also managed and operated as a separate subsidiary.

The realignment has involved significant changes, including selecting and installing new leadership over each service offering, reassigning personnel, allocating tractors and trailers to each service offering, migrating operations to preferred traffic lanes for each service offering, acquainting drivers and customers to new lanes, contacts, and procedures, developing and approving business plans, developing systems to support, measure, and hold accountable each service offering, including budgets, incentive targets, and individual income statements. We also have been addressing driver retention by focusing on driver development and satisfaction as key components of every aspect of our business. Although we have continued to make significant progress, this process will continue at least into 2007.

For the three months ended September 30, 2006, results of the business realignment on each service offering include the following, as compared to the results we had achieved for the three months ended September 30, 2005:

• Expedited long haul service. Increased the fleet by approximately 4% and expanded the length of haul to reflect a renewed focus on transcontinental loads. The team operation is also the main training ground for new drivers, and improvements in our training have allowed us to lower turnover in a difficult driver market. Average freight revenue per total mile has remained basically flat with last year, although the length of haul has expanded about 11%.

• Refrigerated service. Increased our combined Southern Refrigerated Transport (“SRT”) and Covenant Refrigerated fleet by approximately 19% and expanded the length of haul slightly by just over 1%. Average freight revenue per total mile remained basically flat. Within this service offering, SRT continues to generate the best performance of any part of our company, and Covenant Refrigerated has been less proactive than desired because of taking on more trucks than its business plan called for to cover additional trucks coming out of the Covenant regional service offering.

• Dedicated service. Increased the fleet by approximately 23% and expanded the average length of haul by 22%, while miles per truck decreased about 6%. Average freight revenue per total mile increased 3.9% even with the much longer average length of haul. While we believe the reallocation of trucks from the regional business to new dedicated business was prudent, the margins on the new dedicated business have not reached our long-term targets due to the quick expansion of this service offering, but have continued to improve.

• Regional solo-driver service. Within our Covenant regional operation, we decreased the fleet by approximately 37%, decreased the length of haul by approximately 15% to 542 miles, and increased miles per truck by 7%. Average freight revenue per total mile remained flat. The freight mix within our regional service offering changed substantially, as we have worked to reposition several hundred tractors around freight centers and driver domiciles. The average truck count for the quarter decreased by just over 500 trucks versus the third quarter of last year, and we expect the truck count to continue to decrease over the remainder of the year, as additional trucks are allocated elsewhere and the overall size of the company’s fleet is reduced.  Our Star regional service is not involved in the business realignment and was only included in our results of operations since September 14, 2006, the date of acquisition.

Page 18

We also initiated a freight brokerage operation in the first quarter of 2006 and hired a Vice President and General Manager of brokerage operations. Freight brokerage is operated as a separate subsidiary, Covenant Transport Solutions, Inc. The brokerage operation has helped us continue to serve customers when we lacked capacity in a given area or the load has not met our operating profile. This service has been helpful as we continue to realign trucks between service offerings and manage our freight mix toward preferred lanes.

Our business realignment presents numerous challenges and may result in volatile financial performance or periods of unprofitable results. We believe our results were most volatile during the first half of 2006. However, fluctuations in results may be ongoing as major activities within the realignment will continue at least into 2007.

At September 30, 2006, we had $189.7 million in stockholders' equity and $169.0 million in balance sheet debt for a total debt-to-capitalization ratio of 47.1% and a book value of $13.49 per share.

Revenue

We generate substantially all of our revenue by transporting freight for our customers. Generally, we are paid by the mile or by the load for our services. The main factors that affect our revenue are the revenue per mile we receive from our customers, the percentage of miles for which we are compensated, the number of tractors operating, and the number of miles we generate with our equipment. These factors relate to, among other things, the U.S. economy, inventory levels, the level of truck capacity in our markets, specific customer demand, the percentage of team-driven tractors in our fleet, driver availability, and our average length of haul.

We also derive revenue from fuel surcharges, loading and unloading activities, equipment detention, and other accessorial services. We measure revenue before fuel surcharges, or “freight revenue,” because we believe that fuel surcharges tend to be a volatile source of revenue. We believe the exclusion of fuel surcharges affords a more consistent basis for comparing the results of operations from period to period.

We operate tractors driven by a single driver and also tractors assigned to two-person driver teams. Over time the percentage of our revenue generated by driver teams has trended down, although the mix depends on a variety of factors over time. Our single driver tractors generally operate in shorter lengths of haul, generate fewer miles per tractor, and experience more non-revenue miles, but the lower productive miles are expected to be offset by generally higher revenue per loaded mile and the reduced employee expense of compensating only one driver. We expect operating statistics and expenses to shift with the mix of single and team operations.

Expenses and Profitability

The main factors that impact our profitability on the expense side are the variable costs of transporting freight for our customers. The variable costs include fuel expense, driver-related expenses, such as wages, benefits, training, and recruitment, and independent contractor costs, which we record as purchased transportation. Expenses that have both fixed and variable components include maintenance and tire expense and our total cost of insurance and claims. These expenses generally vary with the miles we travel, but also have a controllable component based on safety, fleet age, efficiency, and other factors. Our main fixed cost is the acquisition and financing of long-term assets, primarily revenue equipment and operating terminals. In addition, we have other mostly fixed costs, such as our non-driver personnel.

Revenue Equipment

We operate approximately 3,854 tractors and 10,106 trailers, including the 614 tractors and 1,719 trailers for which we assumed ownership in connection with our acquisition of Star on September 14, 2006. Of our tractors, at September 30, 2006, approximately 2,704 were owned, 1,008 were financed under operating leases, and 142 were provided by independent contractors, who own and drive their own tractors. Of our trailers, at September 30, 2006, approximately 2,459 were owned and approximately 7,647 were financed under operating leases. We finance a portion of our tractor fleet and most of our trailer fleet with off-balance sheet operating leases. These leases generally run for a period of three years for tractors and five to seven years for trailers.

Page 19

In September 2005, we entered into an agreement with a finance company to lease approximately 1,800 model-year 2006 and 2007 dry van trailers under seven-year walk away leases. These trailers will replace approximately 1,200 model-year 1998 and 1999 dry van trailers and approximately 600 model-year 2000 dry van trailers. At September 30, 2006, we had taken delivery and replaced substantially all of these trailers.

For 2006, in line with our overall fleet reduction initiative, we plan to replace approximately 2,000 tractors, or approximately 55% of our Company-owned tractor fleet. This is a substantially greater percentage than the number of tractors we would normally replace and will result in a substantial increase over normal replacement capital expenditures. We are increasing our purchases in 2006 to afford us flexibility to evaluate the cost and performance of tractors equipped with engines that meet 2007 emissions requirements.

Independent contractors (owner-operators) provide a tractor and a driver and are responsible for all operating expenses in exchange for a fixed payment per mile. We do not have the capital outlay of purchasing the tractor. The payments to independent contractors and the financing of equipment under operating leases are recorded in revenue equipment rentals and purchased transportation. Expenses associated with owned equipment, such as interest and depreciation, are not incurred, and for independent contractor-tractors, driver compensation, fuel, and other expenses are not incurred. Because obtaining equipment from independent contractors and under operating leases effectively shifts financing expenses from interest to "above the line" operating expenses, we evaluate our efficiency using net margin as well as operating ratio.

RESULTS OF OPERATIONS

The following tables set forth the percentage relationship of certain items to total revenue and freight revenue:

	Three Months Ended September 30,			Three Months Ended September 30,
	2006	2005		2006	2005
Total revenue	100.0%	100.0%	Freight revenue (1)	100.0%	100.0%
Operating expenses:			Operating expenses:
Salaries, wages, and related expenses	37.9	37.2	Salaries, wages, and related expenses	46.4	43.7
Fuel expense	29.9	28.3	Fuel expense (1)	14.1	15.8
Operations and maintenance	5.2	5.4	Operations and maintenance	6.3	6.3
Revenue equipment rentals and purchased transportation	9.3	9.0	Revenue equipment rentals and purchased transportation	11.4	10.5
Operating taxes and licenses	1.9	1.8	Operating taxes and licenses	2.4	2.2
Insurance and claims	4.7	5.9	Insurance and claims	5.8	7.0
Communications and utilities	1.0	1.0	Communications and utilities	1.2	1.2
General supplies and expenses	3.2	2.8	General supplies and expenses	3.9	3.3
Depreciation and amortization	4.9	6.2	Depreciation and amortization	6.0	7.3
Total operating expenses	98.0	97.7	Total operating expenses	97.5	97.3
Operating income	2.0	2.3	Operating income	2.5	2.7
Other expense, net	0.9	0.6	Other expense, net	1.1	0.8
Income before income taxes	1.1	1.6	Income before income taxes	1.4	1.9
Income tax expense	0.6	0.9	Income tax expense	0.8	1.1
Net income	0.5%	0.7%	Net income	0.6%	0.8%

⁽¹⁾ Freight revenue is total revenue less fuel surcharge revenue. Fuel surcharge revenue is shown netted against the fuel expense category ($32.5 million and $25.2 million in the three months ended September 30, 2006 and 2005, respectively).

Page 20

	Nine Months Ended September 30,			Nine Months Ended September 30,
	2006	2005		2006	2005
Total revenue	100.0%	100.0%	Freight revenue (2)	100.0%	100.0%
Operating expenses:			Operating expenses:
Salaries, wages, and related expenses	38.2	38.3	Salaries, wages, and related expenses	46.0	43.8
Fuel expense	29.1	26.2	Fuel expense (2)	14.6	15.7
Operations and maintenance	5.2	5.3	Operations and maintenance	6.4	6.1
Revenue equipment rentals and purchased transportation	9.4	9.8	Revenue equipment rentals and purchased transportation	11.3	11.2
Operating taxes and licenses	2.0	2.2	Operating taxes and licenses	2.5	2.5
Insurance and claims	5.0	6.1	Insurance and claims	6.0	7.0
Communications and utilities	1.0	1.1	Communications and utilities	1.2	1.2
General supplies and expenses	3.2	2.8	General supplies and expenses	3.8	3.2
Depreciation and amortization	5.5	6.6	Depreciation and amortization	6.6	7.5
Total operating expenses	98.6	98.5	Total operating expenses	98.4	98.2
Operating income	1.4	1.5	Operating income	1.6	1.8
Other expense, net	0.7	0.5	Other expense, net	0.8	0.6
Income before income taxes	0.7	1.0	Income before income taxes	0.8	1.2
Income tax expense	0.8	0.7	Income tax expense	0.9	0.9
Net income (loss)	(0.1%)	0.3%	Net income (loss)	(0.1%)	0.3%

⁽²⁾ Freight revenue is total revenue less fuel surcharge revenue. Fuel surcharge revenue is shown netted against the fuel expense category ($84.6 million and $57.6 million in the nine months ended September 30, 2006 and 2005, respectively).

COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 2006 TO THREE MONTHS ENDED SEPTEMBER 30, 2005

For the quarter ended September 30, 2006, total revenue increased $6.8 million, or 4.0%, to $176.7 million from $169.9 million in the 2005 period. Total revenue includes $32.5 million and $25.2 million of fuel surcharge revenue in the 2006 and 2005 periods, respectively. For comparison purposes in the discussion below, we use freight revenue (total revenue less fuel surcharge revenue) when discussing changes as a percentage of revenue. We believe removing this sometimes volatile source of revenue affords a more consistent basis for comparing the results of operations from period to period. Star’s revenue and expense have only been included in our results of operations since September 14, 2006, the date of acquisition. Star’s impact on the percentage of expenses to freight revenue was not significant and will not be included in our discussion of specific expense categories below.

Freight revenue remained relatively constant at $144.1 million in the three months ended September 30, 2006, and $144.7 million in the same period of 2005. Average freight revenue per tractor per week, our primary measure of productivity, increased 1.8% to $3,123 in the 2006 period from $3,067 in the 2005 period. The increase was primarily generated by a 1.6% increase in average miles per tractor, a reduction in non-revenue miles percentage and a 0.3% increase in our average freight revenue per total mile. Excluding the acquisition of Star, we continued to constrain the size of our tractor fleet to achieve greater fleet utilization and improved profitability. In general, the changes in freight mix as a result of the realignment expanded the portions of our business with longer lengths of haul, more miles per tractor, and generally lower rate structures, while shrinking the regional service offering, which had the highest rate structure but significantly lower miles per tractor.

Page 21

Salaries, wages, and related expenses increased $3.6 million, or 5.7%, to $66.9 million in the 2006 period, from $63.3 million in the 2005 period. As a percentage of freight revenue, salaries, wages, and related expenses increased to 46.4% in the 2006 period from 43.7% in the 2005 period. The increase was largely attributable to driver pay per mile increases and driver retention bonus programs instituted in the second half of 2005, an increase in the percentage of our fleet comprised of company drivers versus owner-operators, higher health claim costs and additional office salaries related to our business realignment. Driver pay increased $2.9 million to $45.9 million in the 2006 period from $43.0 million in the 2005 period. Our payroll expense for employees, other than over-the-road drivers, as well as our employee benefits, increased $0.8 million to $18.8 million in the 2006 period from $18.0 million in the 2005 period, including wages paid in the 2006 period for our new brokerage operation’s management and support employees of $0.1 million in the 2006 period.We maintain a workers' compensation plan and group medical plan for our employees with a deductible amount of $1.0 million for each workers' compensation claim and a stop loss amount of $275,000 for each medical claim.

Fuel expense, net of fuel surcharge revenue of $32.5 million in the 2006 period and $25.2 million in the 2005 period, decreased $2.6 million, or 11.4%, to $20.3 million in the 2006 period, from $22.9 million in the 2005 period. As a percentage of freight revenue, net fuel expense decreased to 14.1% in the 2006 period from 15.8% in the 2005 period primarily due to a $0.30 per gallon decrease in diesel fuel prices over the last few weeks of the 2006 period. Although fuel prices increased sharply for most of 2006 from already high levels during 2005, the fuel price decrease at the end of the 2006 period, our improved fuel surcharge program, better fuel economy due to lower idle times and a lower percentage of non-revenue miles allowed us to improve our net fuel expense. Fuel surcharges amounted to $0.31 per total mile in the 2006 period and $0.24 per total mile in the 2005 period. Fuel costs may be affected in the future by price fluctuations, volume purchase commitments, the terms and collectibility of fuel surcharges, the percentage of miles driven by independent contractors, and lower fuel mileage due to government mandated emissions standards that have resulted in less fuel efficient engines. Even though fuel in the fourth quarter of 2006 is expected to average at or below 2005 prices, fuel prices decreased dramatically in the fourth quarter of 2005, which included the delayed positive impact of fuel surcharge collection. Absent a significant decrease in fourth quarter 2006 fuel prices, we would expect an increase in this expense category in the fourth quarter of 2006, as compared to the fourth quarter of 2005.

Operations and maintenance, consisting primarily of vehicle maintenance, repairs, and driver recruitment expenses, slightly decreased by $0.1 million to $9.1 million in the 2006 period from $9.2 million in the 2005 period. As a percentage of freight revenue, operations and maintenance remained at 6.3% in the 2006 and 2005 periods.

Revenue equipment rentals and purchased transportation increased $1.2 million, or 7.8%, to $16.5 million in the 2006 period, from $15.3 million in the 2005 period. As a percentage of freight revenue, revenue equipment rentals and purchased transportation expense increased to 11.4% in the 2006 period from 10.5% in the 2005 period. Payments to third-party transportation providers to our brokerage operation were $1.2 million in the 2006 period, compared to zero in the 2005 period, before we began our brokerage operation. Tractor and trailer equipment rental and other related expenses increased $1.0 million, to $10.6 million compared with $9.6 million in the same period of 2005. We had financed approximately 1,008 tractors and 7,647 trailers under operating leases at September 30, 2006, compared with 1,140 tractors and 7,384 trailers under operating leases at September 30, 2005. Payments to independent contractors decreased $0.9 million, or 16.1%, to $4.7 million in the 2006 period from $5.6 million in the 2005 period, mainly due to a decrease in the independent contractor fleet to an average of 147 during the 2006 period versus an average of 190 in the 2005 period.

Operating taxes and licenses increased $0.3 million, or 9.7%, to $3.4 million in the 2006 period from $3.1 million in the 2005 period. As a percentage of freight revenue, operating taxes and licenses remained essentially constant at 2.4% in the 2006 period versus 2.2% in the 2005 period.

Insurance and claims, consisting primarily of premiums and deductible amounts for liability, physical damage, and cargo damage insurance and claims, decreased $1.7 million, or 17.1%, to approximately $8.4 million in the 2006 period from approximately $10.1 million in the 2005 period. As a percentage of freight revenue, insurance and claims decreased to 5.8% in the 2006 period from 7.0% in the 2005 period. During the quarter, we reduced our accrual for casualty claims to 8.0 cents per mile from 9.5 cents per mile for the same quarter in 2005 as a result of several quarters of improved safety results that have changed our actuarial estimate.

Page 22

Our current casualty program expires in February 2007. In general, for casualty claims, we have insurance coverage up to $50.0 million per claim. We are self-insured for personal injury and property damage claims for amounts up to $2.0 million per occurrence, subject to an additional $2.0 million self-insured aggregate amount, which results in total self-insured retention of up to $4.0 million until the $2.0 million aggregate threshold is reached. We are self-insured for cargo loss and damage claims for amounts up to $1.0 million per occurrence. Insurance and claims expense varies based on the frequency and severity of claims, the premium expense, and the level of self-insured retention, the development of claims over time, and other factors. With our significant self-insured retention, insurance and claims expense may fluctuate significantly from period to period.

Communications and utilities expense remained essentially constant at $1.8 million and $1.7 million in the 2006 and 2005 periods, respectively. As a percentage of freight revenue, communications and utilities also remained essentially constant at 1.2% in the 2006 and 2005 periods.

General supplies and expenses, consisting primarily of headquarters and other terminal facilities expenses, increased $0.9 million to $5.7 million in the 2006 period from $4.8 million in the 2005 period. As a percentage of freight revenue, general supplies and expenses increased to 3.9% in the 2006 period from 3.3% in the 2005 period. Of this increase, $0.7 million was for additional building rent paid on our headquarters building and surrounding property in Chattanooga, Tennessee for which we completed a sale leaseback transaction effective April 2006 as described more fully in the following paragraph.

In April 2006, we entered into a sale leaseback transaction involving our corporate headquarters, a maintenance facility, a body shop, and approximately forty-six acres of surrounding property in Chattanooga, Tennessee. We received proceeds of approximately $29.6 million from the sale of the property, which we used to pay down borrowings under our Credit Agreement and to purchase revenue equipment. In the transaction, we entered into a twenty-year lease agreement, whereby we will lease back the property at an annual rental rate of approximately $2.5 million, subject to annual rent increases of 1.0%, resulting in annual straight-line rental expense of approximately $2.7 million. The transaction resulted in a gain of approximately $2.1 million, which is being amortized ratably over the life of the lease and recorded as an offset to depreciation expense on our consolidated condensed statements of operations.

Depreciation and amortization, consisting primarily of depreciation of revenue equipment, decreased $1.9 million, or 18.1% to $8.6 million in the 2006 period from $10.5 million in the 2005 period. As a percentage of freight revenue, depreciation and amortization decreased to 6.0% in the 2006 period from 7.3% in the 2005 period. The decrease primarily related to a net gain on the disposal of tractors and trailers of approximately $1.2 million in the 2006 period compared to a net gain of $0.4 million in the 2005 period. Additionally, a decrease of $0.2 million in depreciation expense for the 2006 period resulted from the April 2006 sale leaseback transaction involving our Chattanooga facility as compared to the 2005 period. Depreciation and amortization expense is net of any gain or loss on the disposal of tractors and trailers.

Amortization expense relates to deferred debt costs incurred and covenants not to compete from five acquisitions. Goodwill amortization ceased beginning January 1, 2002, in accordance with SFAS No. 142, Goodwill and Other Intangible Assets. We evaluate goodwill and certain intangibles for impairment, annually. During the second quarter of 2006, we tested our goodwill totaling $11.5 million for impairment and found no impairment.

The other expense category includes interest expense, interest income, and pre-tax non-cash gains or losses related to the accounting for interest rate derivatives under SFAS No. 133. Other expense, net, increased $0.5 million to $1.6 million in the 2006 period from $1.1 million in the 2005 period. The increase relates primarily to increased net interest expense of $0.5 million resulting from the additional borrowings of debt related to the Star acquisition and higher variable interest rates.

Our income tax expense was $1.1 million and $1.5 million in the 2006 and 2005 periods, respectively. The effective tax rate is different from the expected combined tax rate due to permanent differences related primarily to a per diem pay structure implemented in 2001. Due to the nondeductible effect of per diem, our tax rate will fluctuate in future periods as income fluctuates.

Page 23

On September 8, 2006, the IRS completed their audit fieldwork of our 2003 and 2004 tax returns and has proposed the disallowance, with which we have agreed, of approximately $350,000 of costs related to the November 2003 stock offering. During the three months ended June 30, 2006, we recorded all of the $0.1 million of income tax expense related to this proposed disallowance of tax benefits. Additionally, the IRS has proposed to disallow the tax benefits associated with insurance premium payments made to our wholly-owned captive insurance subsidiary for the 2003 and 2004 years. Due to the favorable resolution of the 2001 and 2002 IRS audit on this issue, we are vigorously defending our position related to this proposed disallowance of tax benefits using all administrative and legal processes available. On October 5, 2006, we filed an official Statement of Appeal with the IRS Appeals Office requesting a conference with an IRS Appeals Officer protesting this proposed adjustment related to the disallowance of our deductions for the insurance premiums paid. For the three months ended September 30, 2006, income tax expense of $0.1 million was recorded in our consolidated condensed statements of operations related to this uncertain tax position.

Primarily as a result of the factors described above, net income decreased approximately $0.4 million to $0.8 million in the 2006 period from net income of $1.2 million in the 2005 period. As a result of the foregoing, our net margin decreased to 0.6% in the 2006 period from 0.8% in the 2005 period.

COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 2006 TO NINE MONTHS ENDED SEPTEMBER 30, 2005

For the nine months ended September 30, 2006, total revenue increased $32.9 million, or 7.1%, to $497.5 million from $464.6 million in the 2005 period. Total revenue includes $84.6 million and $57.6 million of fuel surcharge revenue in the 2006 and 2005 periods, respectively. For comparison purposes in the discussion below, we use freight revenue (total revenue less fuel surcharge revenue) when discussing changes as a percentage of revenue. We believe removing this sometimes volatile source of revenue affords a more consistent basis for comparing the results of operations from period to period. Star’s revenue and expense have only been included in our results of operations since September 14, 2006, the date of acquisition.  Star’s impact on the percentage of expenses to freight revenue was not significant and will not be included in our discussion of specific expense categories below.

Freight revenue increased $5.9 million or 1.5% to $412.9 million in the nine months ended September 30, 2006 from $407.0 million in the same period of 2005. Average freight revenue per tractor per week, our primary measure of asset productivity, increased 4.2% to $3,058 in the 2006 period from $2,934 in the 2005 period. The increase was primarily generated by a 3.0% increase in average miles per tractor, an improvement in non-revenue miles percentage and a 0.4% increase in our average freight revenue per loaded mile. Excluding the acquisition of Star, we continued to constrain the size of our tractor fleet to achieve greater fleet utilization and improved profitability. In general, the changes in freight mix as a result of the realignment expanded the portions of our business with longer lengths of haul, more miles per tractor, and generally lower rate structures, while shrinking the regional service offering, which had the highest rate structure but significantly lower miles per tractor.

Salaries, wages, and related expenses increased $11.8 million, or 6.6%, to $190.0 million in the 2006 period, from $178.2 million in the 2005 period. As a percentage of freight revenue, salaries, wages, and related expenses increased to 46.0% in the 2006 period, from 43.8% in the 2005 period. The increase was largely attributable to driver pay per mile increases and driver retention bonus programs instituted in the second half of 2005, an increase in the percentage of our fleet comprised of company drivers versus owner-operators, higher health claim costs and additional office salaries related to our business realignment. Driver pay increased $6.1 million to $130.3 million in the 2006 period from $124.2 million in the 2005 period. This resulted in increased driver pay on a cost per mile basis of 3.7% in the 2006 period over the 2005 period. Our payroll expense for employees, other than over-the-road drivers, as well as our employee benefits, increased $7.6 million to $54.3 million in the 2006 period from $47.6 million in the 2005 period, including a $2.6 million increase in our health insurance costs.We maintain a workers' compensation plan and group medical plan for our employees with a deductible amount of $1.0 million for each workers' compensation claim and a stop loss amount of $275,000 for each medical claim.

Page 24

Fuel expense, net of fuel surcharge revenue of $84.6 million in the 2006 period and $57.6 million in the 2005 period, decreased $3.4 million to $60.5 million in the 2006 period from $63.9 million in the 2005 period. As a percentage of freight revenue, net fuel expense decreased to 14.6% in the 2006 period from 15.7% in the 2005 period. Although fuel prices increased sharply for most of 2006 from already high levels during 2005, our improved fuel surcharge program, better fuel economy due to lower idle times and a lower percentage of non-revenue miles allowed us to improve our net fuel expense. Our fuel surcharge program was able to offset all of the higher fuel prices and allowed us better overall recovery of excess fuel costs. Fuel surcharges amounted to $0.28 per total mile in the 2006 period and $0.19 per total mile in the 2005 period. Fuel costs may be affected in the future by price fluctuations, volume purchase commitments, the terms and collectibility of fuel surcharges, the percentage of miles driven by independent contractors, and lower fuel mileage due to government mandated emissions standards that have resulted in less fuel efficient engines. Even though fuel in the fourth quarter of 2006 is expected to average at or below 2005 prices, fuel prices decreased dramatically in the fourth quarter of 2005, which included the delayed impact of fuel surcharge collection. Absent a significant decrease in fourth quarter 2006 fuel prices, we would expect an increase in this expense category in the fourth quarter of 2006, as compared to the fourth quarter of 2005.

Operations and maintenance, consisting primarily of vehicle maintenance, repairs, and driver recruitment expenses, increased $1.5 million to $26.3 million in the 2006 period from $24.8 million in the 2005 period. As a percentage of freight revenue, operations and maintenance increased to 6.4% in the 2006 period from 6.1% in the 2005 period. The increase resulted in part from higher unloading costs, tractor maintenance costs and increased driver recruiting expense due to a tighter supply of drivers in the early part of 2006.

Revenue equipment rentals and purchased transportation increased $0.9 million, or 2.0%, to $46.6 million in the 2006 period, from $45.7 million in the 2005 period. As a percentage of freight revenue, revenue equipment rentals and purchased transportation expense slightly increased to 11.3% in the 2006 period from 11.2% in the 2005 period. The increase is due principally to purchased transportation related to our brokerage business totaling $1.5 million in the 2006 period, compared to only $0.1 million in the 2005 period, before we began our brokerage operation, and an increase in revenue equipment rentals, offset partially by a decrease in the percentage of our total miles that were driven by independent contractors. Payments to independent contractors decreased $2.1 million to $14.3 million in the 2006 period from $16.4 million in the 2005 period, mainly due to a decrease in the independent contractor fleet to an average of 153 during the 2006 period versus an average of 196 in the 2005 period. Tractor and trailer equipment rental and other related expenses increased $1.6 million, to $30.7 million in the 2006 period compared with $29.1 million in the same period of 2005. We had financed approximately 1,008 tractors and 7,647 trailers under operating leases at September 30, 2006, compared with 1,140 tractors and 7,384 trailers under operating leases at September 30, 2005. During the third quarter of 2006, we purchased approximately 198 tractors that were previously leased.

Operating taxes and licenses remained essentially constant at $10.2 million and $10.1 million in the 2006 and 2005 periods, respectively. As a percentage of freight revenue, operating taxes and licenses also remained essentially constant at 2.5% for both the 2006 and 2005 periods.

Insurance and claims, consisting primarily of premiums and deductible amounts for liability, physical damage, and cargo damage insurance and claims, decreased $3.7 million, or 13.0%, to approximately $24.8 million in the 2006 period from approximately $28.5 million in the 2005 period. As a percentage of freight revenue, insurance and claims decreased to 6.0% in the 2006 period from 7.0% in the 2005 period. During our second and third quarters, we reduced our accrual for casualty claims to 8.0 cents per mile in the 2006 period from 9.5 cents per mile in the 2005 period as a result of several quarters of improved safety results that have changed our actuarial estimate. We also recorded and received an insurance rebate of approximately $1.0 million during the first nine months of 2006 resulting from achieving monetary claim targets for our casualty policy in the policy year ending February 28, 2006.

Page 25

Our current casualty program expires in February 2007. In general, for casualty claims, we have insurance coverage up to $50.0 million per claim. We are self-insured for personal injury and property damage claims for amounts up to $2.0 million per occurrence, subject to an additional $2.0 million self-insured aggregate amount, which results in total self-insured retention of up to $4.0 million until the $2.0 million aggregate threshold is reached. We are self-insured for cargo loss and damage claims for amounts up to $1.0 million per occurrence. Insurance and claims expense varies based on the frequency and severity of claims, the premium expense, and the level of self-insured retention, the development of claims over time, and other factors. With our significant self-insured retention, insurance and claims expense may fluctuate significantly from period to period.

Communications and utilities expense remained essentially constant at $4.9 million and $5.0 million in the 2006 and 2005 periods, respectively. As a percentage of freight revenue, communications and utilities also remained essentially constant at 1.2% in the 2006 and 2005 periods.

General supplies and expenses, consisting primarily of headquarters and other terminal facilities expenses, increased $2.5 million to $15.7 million in the 2006 period from $13.2 million in the 2005 period. As a percentage of freight revenue, general supplies and expenses increased to 3.8% in the 2006 period from 3.2% in the 2005 period. Of this increase, $1.5 million was for additional building rent paid on our headquarters building and surrounding property in Chattanooga, Tennessee for which we completed a sale leaseback transaction effective April 2006 as described more fully in the following paragraph. The additional increase is partially due to our paying for contract labor related to the business realignment, an increase in our travel expenses related to customer visits and increased outside professional fees, offset by reduced bad debt expense.

In April 2006, we entered into a sale leaseback transaction involving our corporate headquarters, a maintenance facility, a body shop, and approximately forty-six acres of surrounding property in Chattanooga, Tennessee. We received proceeds of approximately $29.6 million from the sale of the property, which we used to pay down borrowings under our Credit Agreement and to purchase revenue equipment. In the transaction, we entered into a twenty-year lease agreement, whereby we will lease back the property at an annual rental rate of approximately $2.5 million, subject to annual rent increases of 1.0%, resulting in annual straight-line rental expense of approximately $2.7 million. The transaction resulted in a gain of approximately $2.1 million, which is being amortized ratably over the life of the lease and recorded as an offset to depreciation expense on our consolidated condensed statements of operations.

Depreciation and amortization, consisting primarily of depreciation of revenue equipment, decreased $3.3 million, or 10.8%, to $27.2 million in the 2006 period from $30.5 million in the 2005 period. As a percentage of freight revenue, depreciation and amortization decreased to 6.6% in the 2006 period from 7.5% in the 2005 period. The decrease primarily related to a net gain on the disposal of tractors and trailers of $2.9 million in the 2006 period compared to a net gain of $0.5 million in the 2005 period. Additionally, a decrease of $0.4 million in depreciation expense for the 2006 period resulted from the April 2006 sale leaseback transaction involving our Chattanooga facility as compared to the 2005 period. Depreciation and amortization expense is net of any gain or loss on the disposal of tractors and trailers.

The other expense category includes interest expense, interest income, and pre-tax non-cash gains or losses related to the accounting for interest rate derivatives under SFAS No. 133. Other expense, net, increased $1.1 million, to $3.4 million in the 2006 period from $2.3 million in the 2005 period. The increase relates primarily to increased net interest expense of $0.8 million resulting from the additional borrowings of debt related to the Star acquisition and higher variable interest rates. In the 2006 period, we recognized no pre-tax, non-cash gain compared to a $0.4 million gain in the 2005 period related to the accounting for interest rate derivatives under SFAS No. 133.

Our income tax expense was $3.9 million and $3.6 million in the 2006 and 2005 periods, respectively. The effective tax rate is different from the expected combined tax rate due to permanent differences related to a per diem pay structure implemented in 2001. Due to the nondeductible effect of per diem, our tax rate will fluctuate in future periods as income fluctuates. On April 20, 2006, we completed the appeals process with the IRS related to their 2001 and 2002 audits. Related to this settlement with the IRS, we recorded additional income tax expense of approximately $0.5 million for the three months ended June 30, 2006. We received a favorable resolution in the Closing Agreement received from the IRS which stated that our wholly-owned captive insurance subsidiary made a valid election under section 953(d) of the Internal Revenue Code and is to be respected as an insurance company.

Page 26

On September 8, 2006, the IRS completed their audit fieldwork of our 2003 and 2004 tax returns and has proposed the disallowance, with which we have agreed, of approximately $350,000 of costs related to the November 2003 stock offering. During the three months ended June 30, 2006, we recorded all of the $0.1 million of income tax expense related to this proposed disallowance of tax benefits. Additionally, the IRS has proposed to disallow the tax benefits associated with insurance premium payments made to our wholly-owned captive insurance subsidiary for the 2003 and 2004 years. Due to the favorable resolution of the 2001 and 2002 IRS audit on this issue, we are vigorously defending our position related to this proposed disallowance of tax benefits using all administrative and legal processes available. On October 5, 2006, we filed an official Statement of Appeal with the IRS Appeals Office requesting a conference with an IRS Appeals Officer protesting this proposed adjustment related to the disallowance of our deductions for the insurance premiums paid. For the nine months ended September 30, 2006, income tax expense of $0.3 million was recorded in our consolidated condensed statements of operations related to this uncertain tax position.

Primarily as a result of the factors described above, net income decreased approximately $1.7 million to a net loss of $0.5 million in the 2006 period from net income of $1.2 million in the 2005 period. As a result of the foregoing, our net margin (loss) decreased to (0.1%) in the 2006 period from 0.3% in the 2005 period.

LIQUIDITY AND CAPITAL RESOURCES

Our business requires significant capital investments. In recent years, we have financed our capital requirements with borrowings under our Securitization Facility and a line of credit, cash flows from operations, and long-term operating leases. Our primary sources of liquidity at September 30, 2006, were funds provided by operations, proceeds under the Securitization Facility, borrowings under our Credit Agreement, and operating leases of revenue equipment.

Over the past several years, we have financed a large and increasing percentage of our revenue equipment through operating leases. This has reduced the net value of revenue equipment reflected on our balance sheet, reduced our borrowings and increased our net cash flows compared to purchasing all of our revenue equipment. Certain items could fluctuate depending on whether we finance our revenue equipment through borrowings or through operating leases. We expect capital expenditures, primarily for revenue equipment (net of proceeds from revenue equipment disposals and the April 2006 sale leaseback transaction), to be approximately $55.0 to $60.0 million in 2006, exclusive of acquisitions of companies, assuming all revenue equipment is purchased. We believe our sources of liquidity are adequate to meet our current and projected needs for at least the next twelve months. On a longer term basis, based on anticipated future cash flows, current availability under our Credit Agreement and Securitization Facility, and sources of financing that we expect will be available to us, we do not expect to experience significant liquidity constraints in the foreseeable future.

Cash Flows

Net cash provided by operating activities was $41.3 million in the 2006 period and $13.8 million in the 2005 period. We have continued to focus on improved collections of accounts receivable resulting in improved cash flows of $7.7 million in the 2006 period as compared to the 2005 period. Our cash from operating activities was lower in the 2005 period due primarily to $10.0 million in tax payments, a $10.0 million payment for two years of prepaid insurance premiums, and our lower performance in the collection of receivables.

Net cash used in investing activities was $83.4 million in the 2006 period and $32.0 million in the 2005 period. All 2005 period cash outflows were related to net purchases of property and equipment. In the 2006 period, $39.0 million was used for the acquisition of Star and $74.0 million was used for net purchases of property and equipment, which was offset by the $29.6 million of proceeds from the April 2006 sale leaseback transaction of our Chattanooga facility. The sale leaseback transaction was used for purchasing additional revenue equipment and paying down our outstanding debt on the Credit Facility.

Page 27

Net cash provided by financing activities was $46.8 million in the 2006 period, as we borrowed additional funds primarily to fund our acquisition of Star. Net cash provided by financing activities was $16.8 million in the 2005 period. At September 30, 2006, the Company had outstanding debt of $169.0 million, primarily consisting of approximately $69.0 million drawn under the Credit Agreement, $57.3 million from the Securitization Facility and $42.7 million of installment notes payable assumed in our acquisition of Star. Interest rates on this debt range from 5.3% to 6.7%.

In May 2006, the Board of Directors approved an extension of our previously approved stock repurchase plan for up to 1.3 million Company shares to be purchased in the open market or through negotiated transactions subject to criteria established by the Board. No shares have been purchased under this plan during 2006. At September 30, 2006, there were 1,154,100 shares still available to purchase under the guidance of this plan.

Material Debt Agreements

In December 2004, we entered into a Credit Agreement with a group of banks. The facility matures in December 2009. Borrowings under the Credit Agreement are based on the banks' base rate, which floats daily, or LIBOR, which accrues interest based on one, two, three, or six month LIBOR rates plus an applicable margin that is adjusted quarterly between 0.75% and 1.25% based on cash flow coverage (the applicable margin was 1.0% at September 30, 2006). At September 30, 2006, we had $69.0 million outstanding under the Credit Agreement.

The Credit Agreement has a maximum borrowing limit of $150.0 million with an accordion feature, which permits an increase up to a maximum borrowing limit of $200.0 million. Borrowings related to revenue equipment are limited to the lesser of 90% of net book value of revenue equipment or the maximum borrowing limit. Letters of credit are limited to an aggregate commitment of $85.0 million. The Credit Agreement is secured by a pledge of the stock of most of our subsidiaries. A commitment fee that is adjusted quarterly between 0.15% and 0.25% per annum based on cash flow coverage, is due on the daily unused portion of the Credit Agreement. As of September 30, 2006, we had approximately $10.5 million of available borrowing capacity under the Credit Agreement. At September 30, 2006 and December 31, 2005, we had undrawn letters of credit outstanding of approximately $70.5million and $73.9million, respectively.

In December 2000, we entered into the Securitization Facility. On a revolving basis, we sell our interests in our accounts receivable to CVTI Receivables Corp. (“CRC”), a wholly-owned bankruptcy-remote special purpose subsidiary incorporated in Nevada. CRC sells a percentage ownership in such receivables to an unrelated financial entity. After giving effect to the October 26, 2006 amendment to the Securitization Facility, we can receive up to $70.0 million of proceeds, subject to eligible receivables, and pay a service fee recorded as interest expense, based on commercial paper interest rates plus an applicable margin of 0.44% per annum and a commitment fee of 0.10% per annum on the daily unused portion of the Securitization Facility. The net proceeds under the Securitization Facility are required to be shown as a current liability because the term, subject to annual renewals, is 364 days. As of September 30, 2006 and December 31, 2005, we had $57.3 million and $47.3 million, respectively outstanding, with weighted average interest rates of 5.3% and 3.8%, respectively. CRC does not meet the requirements for off-balance sheet accounting; therefore, it is reflected in our consolidated condensed financial statements.

Our credit agreement and securitization facilities and other financing arrangements contain certain restrictions and covenants relating to, among other things, dividends, tangible net worth, cash flow coverage, acquisitions and dispositions, and total indebtedness. These agreements are cross-defaulted. We were in compliance with these agreements as of September 30, 2006.

Page 28

OFF-BALANCE SHEET ARRANGEMENTS

Operating leases have been an important source of financing for our revenue equipment, computer equipment, the Company airplane and certain real estate. At September 30, 2006, we had financed approximately 1,008 tractors and 7,647 trailers under operating leases. Vehicles held under operating leases are not carried on our balance sheet, and lease payments in respect of such vehicles are reflected in our income statements in the line item “Revenue equipment rentals and purchased transportation.” Our revenue equipment rental expense was $30.7 million in the 2006 period, compared to $29.1 million in the 2005 period. The total amount of remaining payments under operating leases as of September 30, 2006, was approximately $181.5 million. In connection with various operating leases, we issued residual value guarantees, which provide that if we do not purchase the leased equipment from the lessor at the end of the lease term, we are liable to the lessor for an amount equal to the shortage (if any) between the proceeds from the sale of the equipment and an agreed value. As of September 30, 2006, the maximum amount of the residual value guarantees was approximately $45.5 million. To the extent the expected value at the lease termination date is lower than the residual value guarantee, we would accrue for the difference over the remaining lease term. We believe that proceeds from the sale of equipment under operating leases would exceed the payment obligation on all operating leases.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make decisions based upon estimates, assumptions, and factors we consider relevant to the circumstances. Such decisions include the selection of applicable accounting principles and the use of judgment in their application, the results of which impact reported amounts and disclosures. Changes in future economic conditions or other business circumstances may affect the outcomes of our estimates and assumptions. Accordingly, actual results could differ from those anticipated. A summary of the significant accounting policies followed in preparation of the financial statements is contained in Note 1 of the financial statements contained in our annual report on Form 10-K for the fiscal year ended December 31, 2005. The following discussion addresses our most critical accounting policies, which are those that are both important to the portrayal of our financial condition and results of operations and that require significant judgment or use of complex estimates.

Our critical accounting policies include the following:

Depreciation of Revenue Equipment - Depreciation is calculated using the straight-line method over the estimated useful lives of the assets and was approximately $27.6 million on tractors and trailers in the first nine months of 2006. Depreciation of revenue equipment is our largest item of depreciation. We generally depreciate new tractors (excluding day cabs) over five years to salvage values of 4% to 33% and new trailers over seven years to salvage values of 17% to 39%. Gains and losses on the disposal of revenue equipment are included in depreciation expense in our statements of operations.

We annually review the reasonableness of our estimates regarding useful lives and salvage values of our revenue equipment and other long-lived assets based upon, among other things, our experience with similar assets, conditions in the used revenue equipment market, and prevailing industry practice. Changes in our useful life or salvage value estimates, or fluctuations in market values that are not reflected in our estimates, could have a material effect on our results of operations.

Revenue equipment and other long-lived assets are tested for impairment whenever an event occurs that indicates an impairment may exist. Expected future cash flows are used to analyze whether an impairment has occurred. If the sum of expected undiscounted cash flows is less than the carrying value of the long-lived asset, then an impairment loss is recognized. We measure the impairment loss by comparing the fair value of the asset to its carrying value. Fair value is determined based on a discounted cash flow analysis or the appraised value of the assets, as appropriate. We have not recognized any impairments of long-lived assets to date.

Page 29

Accounting for Investments - Effective July 1, 2000, we combined our logistics business with the logistics businesses of five other transportation companies into a company called Transplace, Inc (“Transplace”). Transplace operates a global transportation logistics service. In the transaction, we contributed our logistics customer list, logistics business software and software licenses, certain intellectual property, intangible assets totaling approximately $5.1 million, and $5.0 million in cash for the initial funding of the venture, in exchange for 12.4% ownership. We account for our investment using the cost method of accounting, with the investment included in other assets. We continue to evaluate our cost method investment in Transplace for impairment due to declines considered to be other than temporary. This impairment evaluation includes general economic and company-specific evaluations. If we determine that a decline in the cost value of this investment is other than temporary, then a charge to earnings will be recorded to other (income) expenses in our consolidated condensed statements of operations for all or a portion of the unrealized loss, and a new cost basis in the investment will be established. As of September 30, 2006, no such charge had been recorded. However, we are closely evaluating this investment for impairment as our evaluation of the value of this investment had been steadily declining over the last few fiscal quarters until recent cash flow improvements steadied this decline in recent months. As such we do not currently believe that an impairment charge will be warranted in the near term. We will continue to evaluate this investment for impairment on a quarterly basis. Also, during the first quarter of 2005, the Company loaned Transplace approximately $2.7 million. The 6% interest-bearing note receivable matures January 2007. Based on the borrowing availability of Transplace, we do not believe there is any impairment of this note receivable.

Accounting for Business Combinations - In accordance with business combination accounting, we allocate the purchase price of acquired companies to the tangible and intangible assets acquired, and liabilities assumed based on their estimated fair values. We engage third-party appraisal firms to assist management in determining the fair values of certain assets acquired. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Management makes estimates of fair value based upon historical experience, as well as information obtained from the management of the acquired companies and are inherently uncertain. Unanticipated events and circumstances may occur which may affect the accuracy or validity of such assumptions, estimates or actual results. In certain business combinations that are treated as a stock purchase for income tax purposes, we must record deferred taxes relating to the book versus tax basis of acquired assets and liabilities. Generally, such business combinations result in deferred tax liabilities as the book values are reflected at fair values whereas the tax basis is carried over from the acquired company. Such deferred taxes are initially estimated based on preliminary information and are subject to change as valuations and tax returns are finalized.

Insurance and Other Claims - The primary claims arising against us consist of cargo liability, personal injury, property damage, workers' compensation, and employee medical expenses. Our insurance program involves self-insurance with high-risk retention levels. Because of our significant self-insured retention amounts, we have significant exposure to fluctuations in the number and severity of claims and to variations between our estimated and actual ultimate payouts. We accrue the estimated cost of the uninsured portion of pending claims. Our estimates require judgments concerning the nature and severity of the claim, historical trends, advice from third-party administrators and insurers, the size of any potential damage award based on factors such as the specific facts of individual cases, the jurisdictions involved, the prospect of punitive damages, future medical costs, and inflation estimates of future claims development, and the legal and other costs to settle or defend the claims. We have significant exposure to fluctuations in the number and severity of claims. If there is an increase in the frequency and severity of claims, or we are required to accrue or pay additional amounts if the claims prove to be more severe than originally assessed, or any of the claims would exceed the limits of our insurance coverage, our profitability would be adversely affected.

In addition to estimates within our self-insured retention layers, we also must make judgments concerning our aggregate coverage limits. If any claim occurrence were to exceed our aggregate coverage limits, we would have to accrue for the excess amount. Our critical estimates include evaluating whether a claim may exceed such limits and, if so, by how much. Currently, we are not aware of any such claims. If one or more claims were to exceed our then effective coverage limits, our financial condition and results of operations could be materially and adversely affected.

Lease Accounting and Off-Balance Sheet Transactions - Operating leases have been an important source of financing for our revenue equipment, computer equipment, and Company airplane. In connection with the leases of a majority of the value of the equipment we finance with operating leases, we issued residual value guarantees, which provide that if we do not purchase the leased equipment from the lessor at the end of the lease term, then we are liable to the lessor for an amount equal to the shortage (if any) between the proceeds from the sale of the equipment and an agreed value. As of September 30, 2006, the maximum amount of the residual value guarantees was approximately $45.5 million. To the extent the expected value at the lease termination date is lower than the residual value guarantee, we would accrue for the difference over the remaining lease term. We believe that proceeds from the sale of equipment under operating leases would exceed the payment obligation on all operating leases. The estimated values at lease termination involve management judgments. As leases are entered into, determination as to the classification as an operating or capital lease involves management judgments on residual values and useful lives.

Page 30

Accounting for Income Taxes - We make important judgments concerning a variety of factors, including the appropriateness of tax strategies, expected future tax consequences based on future Company performance, and to the extent tax strategies are challenged by taxing authorities, our likelihood of success. We utilize certain income tax planning strategies to reduce our overall cost of income taxes. It is possible that certain strategies might be disallowed, resulting in an increased liability for income taxes. Significant management judgments are involved in assessing the likelihood of sustaining the strategies and in determining the likely range of defense and settlement costs, and an ultimate result worse than our expectations could adversely affect our results of operations.

On April 20, 2006, we completed the appeals process with the IRS related to their 2001 and 2002 audits. Related to this settlement with the IRS, we recorded additional income tax expense of approximately $0.5 million for the three months ended June 30, 2006. We received a favorable resolution in the Closing Agreement received from the IRS which stated that our wholly-owned captive insurance subsidiary made a valid election under section 953(d) of the Internal Revenue Code and is to be respected as an insurance company.

On September 8, 2006, the IRS completed their audit fieldwork of our 2003 and 2004 tax returns and has proposed the disallowance, with which we have agreed, of approximately $350,000 of costs related to the November 2003 stock offering. During the three months ended June 30, 2006, we recorded all of the $0.1 million of income tax expense related to this proposed disallowance of tax benefits. Additionally, the IRS has proposed to disallow the tax benefits associated with insurance premium payments made to our wholly-owned captive insurance subsidiary for the 2003 and 2004 years. Due to the favorable resolution of the 2001 and 2002 IRS audit on this issue, we are vigorously defending our position related to this proposed disallowance of tax benefits using all administrative and legal processes available. On October 5, 2006, we filed an official Statement of Appeal with the IRS Appeals Office requesting a conference with an IRS Appeals Officer protesting this proposed adjustment related to the disallowance of our deductions for the insurance premiums paid. For the three and nine months ended September 30, 2006, income tax expense of $0.1 million and $0.3 million, respectively, was recorded in our consolidated condensed statements of operations related to this uncertain tax position. If we are unsuccessful in defending our position on this deduction, we could ultimately owe taxes totaling $1.7 million related to this issue, for which we have currently accrued approximately $0.8 million of income taxes in our consolidated condensed balance sheets at September 30, 2006.

Deferred income taxes represent a substantial liability on our consolidated condensed balance sheet and are determined in accordance with SFAS No. 109. Deferred tax assets and liabilities (tax benefits and liabilities expected to be realized in the future) are recognized for the expected future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carry forwards.

The carrying value of our deferred tax assets assumes that we will be able to generate, based on certain estimates and assumptions, sufficient future taxable income in certain tax jurisdictions to utilize these deferred tax benefits. If these estimates and related assumptions change in the future, we may be required to establish a valuation allowance against the carrying value of the deferred tax assets, which would result in additional income tax expense. On a periodic basis we assess the need for adjustment of the valuation allowance. No valuation reserve has been established at September 30, 2006, because, based on forecasted income, we believe that it is more likely than not that the future benefit of the deferred tax assets will be realized. However, there can be no assurance that we will meet our forecasts of future income.

We believe that we have adequately provided for our future tax consequences based upon current facts and circumstances and current tax law. During the first nine months of 2006, we made no material changes in our assumptions regarding the determination of income tax liabilities. However, should our tax positions be challenged, different outcomes could result and have a significant impact on the amounts reported through our consolidated condensed statement of operations.

Page 31

INFLATION, NEW EMISSIONS CONTROL REGULATIONS, AND FUEL COSTS

Most of our operating expenses are inflation-sensitive, with inflation generally producing increased costs of operations. During the past three years, the most significant effects of inflation have been on revenue equipment prices and the compensation paid to the drivers. New emissions control regulations and increases in commodity prices, wages of manufacturing workers, and other items have resulted in higher tractor prices, and there has been an industry-wide increase in wages paid to attract and retain qualified drivers. The cost of fuel also has risen substantially over the past three years. We believe this increase primarily reflects world events rather than underlying inflationary pressure. We attempt to limit the effects of inflation through increases in freight rates, certain cost control efforts, and to limit the effects of fuel prices through fuel surcharges.

The engines used in our tractors are subject to emissions control regulations, which have substantially increased our operating expenses. As of September 30, 2006, our entire tractor fleet has such emissions compliant engines and is experiencing approximately 2% to 4% reduced fuel economy compared with pre-2002 equipment. In 2007, stricter regulations will become effective. Compliance with such regulations is expected to increase the cost of new tractors and could impair equipment productivity, lower fuel mileage, and increase our operating expenses. These adverse effects combined with the uncertainty as to the reliability of the vehicles equipped with the newly designed diesel engines and the residual values that will be realized from the disposition of these vehicles could increase our costs or otherwise adversely affect our business or operations once the regulations become effective.

Fluctuations in the price or availability of fuel, as well as hedging activities, surcharge collection, and the volume and terms of diesel fuel purchase commitments may increase our costs of operation, which could materially and adversely affect our profitability. We impose fuel surcharges on substantially all accounts. These arrangements may not fully protect us from fuel price increases and also may result in us not receiving the full benefit of any fuel price decreases. We currently do not have any fuel hedging contracts in place. If we do hedge, we may be forced to make cash payments under the hedging arrangements. A small portion of our fuel requirements for 2006 are covered by volume purchase commitments. Based on current market conditions, we have decided to limit our hedging and purchase commitments, but we continue to evaluate such measures. The absence of meaningful fuel price protection through these measures could adversely affect our profitability.

SEASONALITY

In the trucking industry, revenue generally decreases as customers reduce shipments during the winter holiday season and as inclement weather impedes operations. At the same time, operating expenses generally increase, with fuel efficiency declining because of engine idling and weather, creating more equipment repairs. For the reasons stated, first quarter net income historically has been lower than net income in each of the other three quarters of the year. Our equipment utilization typically improves substantially between May and October of each year because of the trucking industry's seasonal shortage of equipment on traffic originating in California and because of general increases in shipping demand during those months. The seasonal shortage typically occurs between May and August because California produce carriers' equipment is fully utilized for produce during those months and does not compete for shipments hauled by our dry van operation. During September and October, business increases as a result of increased retail merchandise shipped in anticipation of the holidays.

Page 32

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We experience various market risks, including changes in interest rates and fuel prices. We do not enter into derivatives or other financial instruments for trading or speculative purposes, or when there are no underlying related exposures.

COMMODITY PRICE RISK

From time-to-time we may enter into derivative financial instruments to reduce our exposure to fuel price fluctuations. In accordance with SFAS 133, we adjust any derivative instruments to fair value through earnings on a monthly basis. As of September 30, 2006, we had no derivative financial instruments to reduce our exposure to fuel price fluctuations.

INTEREST RATE RISK

Our market risk is also affected by changes in interest rates. Historically, we have used a combination of fixed-rate and variable-rate obligations to manage our interest rate exposure. Fixed-rate obligations expose us to the risk that interest rates might fall. Variable-rate obligations expose us to the risk that interest rates might rise. Currently, all of our borrowing is under variable-rate agreements.

Our variable-rate obligations consist of our Credit Agreement, Securitization Facility and various revenue equipment installment notes payable. At September 30, 2006, we had variable, base rate borrowings of $69.0 million outstanding under the Credit Agreement, $57.3 million under the Securitization Facility and $42.7 million outstanding under the various revenue equipment installment notes payable. Assuming variable-rate borrowings under the Credit Agreement and Securitization Facility at September 30, 2006 levels, a one percentage point increase in interest rates could increase our annual interest expense by approximately $1.7 million.

Page 33

ITEM 4.  CONTROLS AND PROCEDURES

As required by Rule 13a-15 under the Exchange Act, we have carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our controls and procedures were effective as of the end of the period covered by this report. There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected or that are reasonably likely to materially affect our internal control over financial reporting.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer, as appropriate, to allow timely decisions regarding disclosures.

We have confidence in our internal controls and procedures. Nevertheless, our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure procedures and controls or our internal controls will prevent all errors or intentional fraud. An internal control system, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of such internal controls are met. Further, the design of an internal control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all internal control systems, no evaluation of controls can provide absolute assurance that all our control issues and instances of fraud, if any, have been detected.

Page 34

PART II OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS From time to time we are a party to ordinary, routine litigation arising in the ordinary course of business, most of which involves claims for personal injury and property damage incurred in connection with the transportation of freight. We maintain insurance to cover liabilities arising from the transportation of freight for amounts in excess of certain self-insured retentions. Reference is made in our Form 10-Q for the quarterly period ended March 31, 2006 regarding a lawsuit against us relating to a 2003 vehicular accident.
ITEM 1A.	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, 2005, 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 on our Form 10-K, we believe that the following issues, uncertainties, and risks, should be considered in evaluating our business and growth outlook. We may not be successful in executing our business realignment and improving or maintaining our profitability. During 2005 we adopted, and we continue to implement, a strategic plan designed to improve our profitability. The plan generally involves organizing our operations around four distinct service offerings. However, we may not be successful in executing this plan. As we continue to implement this plan, including realigning our business, we expect changes to items such as the customer base, rate structure, routes served, driver domiciles, management, reporting structure, and operating procedures. These changes, and others that we did not expect, will present significant challenges, including, but not limited to, the following:
		•	Developing management depth to oversee the service offerings and also manage regional terminals within the service offerings;
		•	Adapting our personnel to new strategies, policies, and procedures, including more distributed decision making;
		•	Maintaining customer relationships and freight volumes while changing routes, pricing, and other aspects of our operations;
		•	Maintaining a sufficient number of qualified drivers while changing routes, policies, procedures, and management structures;
		•	Controlling headcount and expenses generally during a transition that may entail a period of duplication of some functions; and
		•	Improving or eliminating processes, functions, services, or other items that are identified as substandard.
	As part of the realignment and our focus on improving the profitability of our regional operations, we acquired Star's regional operations and decided to downsize our historical/Chattanooga-based regional operations. As part of the downsizing, we plan to replace approximately 2,000 tractors in 2006, or approximately 55% of our Company-owned tractor fleet. This is a substantially greater percentage than we would normally replace and will result in a substantial increase in capital expenditures. We are also replacing a significant number of trailers, which will be primarily financed with operating leases. If we are unable to dispose of this equipment at acceptable prices, our results of operations may be adversely affected. Additionally, selling our equipment may adversely affect our customer service and driver turn-over.

Page 35

There can be no assurance that the integration of Star's regional operations into our operations will be successful and that we will be able to continue and improve upon Star's profitability. As we integrate Star's regional operations, we may lose key components of Star's operation, including customers, drivers, other employees, and owner-operators, none of whom are bound to remain with Star. Further, integrating Star's regional operations may distract our management from other operations, including our business realignment. There can be no assurance that the expected synergies from the acquisition, including without limitation, the impact on our regional service offering, will come to fruition. In addition, there can be no assurance that we will be able to manage our debt levels and cash requirements and maintain adequate liquidity following the acquisition of Star and through the downsizing and fleet replacement process.

Our credit and securitization facilities and other financing arrangements contain restrictive and financial covenants, and we may be unable to comply with these covenants. A default could result in the acceleration of all 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.

Our credit and securitization facilities and other financing arrangements contain covenants that impose certain restrictions and require us to maintain specified financial ratios. Following the Star acquisition, we were very close to the upper limit on our leverage ratio at September 30, 2006. If we fail to comply with any of these covenants, we will be in default, which could cause cross-defaults under other loans or agreements. A default, if not waived by our lenders, could cause our debt and other obligations to become immediately due and payable. To obtain waivers of defaults, we may incur significant fees and transaction costs. If waivers of defaults are not obtained and acceleration occurs, we may be unable to borrow sufficient additional funds to refinance the accelerated debt. Even if new financing is made available to us, it may not be available on commercially acceptable terms.

Page 36

ITEM 6.	EXHIBITS
Exhibit Number	Reference	Description
3.1	(1)	Restated Articles of Incorporation
3.2	(1)	Amended Bylaws dated September 27, 1994
4.1	(1)	Restated Articles of Incorporation
4.2	(1)	Amended Bylaws dated September 27, 1994
10.26	#	Stock Purchase Agreement dated September 14, 2006, among Covenant Transport, Inc., Star Transportation, Inc., Beth D. Franklin, David D. Dortch, Rose D. Shipp, David W. Dortch, and James F. Brower, Jr.
10.27	#	Amendment No. 3 and Limited Waiver to Amended and Restated Credit Agreement dated August 11, 2006, among Covenant Asset Management, Inc., Covenant Transport, Inc., and Bank of America, N.A.
10.28	#	Amendment No. 10 to Loan Agreement dated July 2006 among Three Pillars Funding LLC (f/k/a Three Pillars Funding Corporation), SunTrust Capital Markets, Inc. (f/k/a SunTrust Equitable Securities Corporation), CVTI Receivables Corp., and Covenant Transport, Inc.
31.1	#	Certification pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, by David R. Parker, the Company's Chief Executive Officer
31.2	#	Certification pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, by Joey B. Hogan, the Company's Chief Financial Officer
32.1	#	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by David R. Parker, the Company's Chief Executive Officer
32.2	#	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Joey B. Hogan, the Company's Chief Financial Officer
References:
(1)	Incorporated by reference to Form S-1, Registration No. 33-82978, effective October 28, 1994.
#	Filed herewith.

Page 37

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	COVENANT TRANSPORT, INC.
Date: November 9, 2006	By:	/s/ Joey B. Hogan
		Joey B. Hogan
		Executive Vice President and Chief Financial Officer,
		in his capacity as such and on behalf of the issuer.

Page 38

EX-10.26

Exhibit 10.26

STOCK PURCHASE AGREEMENT

By and Among

COVENANT TRANSPORT, INC.

STAR TRANSPORTATION, INC.

BETH D. FRANKLIN

DAVID D. DORTCH

ROSE D. SHIPP

DAVID W. DORTCH

and

JAMES F. BROWER, JR.

Dated as of September 14, 2006

TABLE OF CONTENTS

			Page
ARTICLE 1	SALE AND TRANSFER OF SHARES, CLOSING		2
	Section 1.1	Sale and Transfer of Shares	2
	Section 1.2	Purchase Price	2
	Section 1.3	Closing	3
	Section 1.4	Closing Deliveries	3
	Section 1.5	Adjustments and Procedures	4
	Section 1.5	Adjustments and Procedures	4
	Section 1.6	Transfer Taxes	6
	Section 1.7	Lease Purchase Conversion Adjustment	6
ARTICLE II	REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS		7
	Section 2.1	Organization and Good Standing	7
	Section 2.2	Authorization and Validity	8
	Section 2.3	Capitalization	8
	Section 2.4	Subsidiaries	8
	Section 2.5	No Violation	8
	Section 2.6	Finder's Fee	9
	Section 2.7	Consents	9
	Section 2.8	Financial Statements	9
	Section 2.9	Books and Records; Internal Controls	9
	Section 2.10	Properties; Encumbrances	10
	Section 2.11	Condition and Sufficiency of Assets	11
	Section 2.12	Accounts Receivable	11
	Section 2.13	No Undisclosed Liabilities	11
	Section 2.14	Taxes	11
	Section 2.15	No Materially Adverse Change	13
	Section 2.16	Employee Benefits	13
	Section 2.17	Compliance with Legal Requirements; Governmental Authorizations	15
	Section 2.18	Legal Proceedings; Orders	16
	Section 2.19	Absence of Certain Changes and Events	17
	Section 2.20	Contracts; No Defaults	18
	Section 2.21	Insurance	20
	Section 2.22	Environmental Matters	22
	Section 2.22	Employees; Independent Contractors	22
	Section 2.24	Labor Relations; Compliance	23
	Section 2.25	Trade Rights; Intellectual Property	24
	Section 2.26	Tractors and Trailers; Compliance	24
	Section 2.27	Relationships with Related Persons	25
	Section 2.28	Prepayment of Indebtedness	25
	Section 2.29	Bank Accounts	25
	Section 2.30	Officers and Directors; Powers of Attorney	25
	Section 2.31	Stock Options and Warrants	25
	Section 2.32	Interest Rate Swap	25
	Section 2.33	Stockholder Liabilities	25
ARTICLE III	REPRESENTATIONS AND WARRANTIES OF COVENANT		26
	Section 3.1	Organization and Good Standing	26
	Section 3.2	Authorization and Validity	26
	Section 3.3	No Violation	26

i

	Section 3.4	Finder's Fee	26
	Section 3.5	Consents	26
ARTICLE IV	OTHER AGREEMENTS		26
	Section 4.1	Guaranties	26
	Section 4.2	Certain Tax Matters	27
	Section 4.3	Use of Office Space and Assistant	29
ARTICLE V	INDEMNIFICATION; REMEDIES		30
	Section 5.1	Survival; Right to Indemnification not Affected by Knowledge	30
	Section 5.2	Indemnification and Payment of Damages by the Stockholders	31
	Section 5.3	Indemnification and Payment of Damages by Covenant	31
	Section 5.4	Procedure for Indemnification - Third Party Claims	31
	Section 5.5	Procedure for Indemnification - Other Claims	32
	Section 5.6	Limitations on Claims	32
	Section 5.7	Exclusive Remedy	34
ARTICLE XI	MISCELLANEOUS		34
	Section 6.1	Amendment and Waiver	34
	Section 6.2	Assignment; Third-Party Rights	34
	Section 6.3	Notice	34
	Section 6.4	Public Announcements	35
	Section 6.5	Confidentiality	35
	Section 6.6	Entire Agreement	36
	Section 6.7	Transaction Expenses	36
	Section 6.8	Further Assurances	36
	Section 6.9	Severability	36
	Section 6.10	Governing Law	36
	Section 6.11	Captions	36
	Section 6.12	Counterparts	36
	Section 6.13	Number and Gender	37
	Section 6.14	Time of Essence	37
	Section 6.15	Waiver; Remedies Cumulative	37
	Section 6.16	Stockholder Representative	37

Exhibits

Exhibit A	Definitions
Exhibit B	Form of Escrow Agreement
Exhibit C	Form of Transition Services Agreement
Exhibit D	Form of Noncompetition Agreements
Exhibit E	Form of Stockholder Releases
Exhibit F	Form of Spousal Consent
Exhibit G	Form of Opinion of Waller Lansden Dortch & Davis, LLP
Exhibit H	Form of Opinion of Scudder Law Firm, P.C., L.L.O.

ii

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of September 14, 2006, is made and entered into by and among Covenant Transport, Inc., a Nevada corporation ("Covenant"), Star Transportation, Inc., a Tennessee corporation (the "Company"), and Beth D. Franklin, David D. Dortch, Rose D. Shipp, David W. Dortch, and James F. Brower, Jr. (collectively the "Stockholders," and each, a "Stockholder"). Covenant, the Company, and the Stockholders are sometimes individually referred to herein as a "Party" and together as the "Parties." Capitalized terms used herein shall have the meanings ascribed to such terms in Exhibit A attached hereto or as elsewhere defined in this Agreement.

RECITALS

WHEREAS, the Stockholders own all of the issued and outstanding shares of capital stock of the Company (the "Shares"); and

WHEREAS, Covenant desires to purchase from the Stockholders, and the Stockholders desire to sell and transfer to Covenant, the Shares, subject to the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual representations, warranties, and covenants herein contained, and on the terms and subject to the conditions herein set forth, the Parties hereto, intending to be legally bound, hereby covenant and agree as follows:

ARTICLE I

SALE AND TRANSFER OF SHARES; CLOSING

Section 1.1Sale and Transfer of Shares. Subject to and upon the terms and conditions of this Agreement, at the Closing, the Stockholders will sell and transfer the Shares to Covenant, and Covenant will purchase the Shares from the Stockholders.

Section 1.2Purchase Price.

(a)The purchase price (the "Purchase Price") for the Shares will be an amount equal to (i) Forty Million Three Hundred Thousand Dollars ($40,300,000) (the "Closing Amount") plus (ii) the Debt Adjustment Amount (as defined in Section 1.5(a) below), if any, minus (iii) the Working Capital Adjustment Amount (as defined in Section 1.5(a) below), if any.

(b)The Closing Amount shall be payable by Covenant at the Closing as follows:

(i)         Four Million Dollars ($4,000,000) (the "Indemnity Escrow Amount") shall be delivered at the Closing to an escrow agent mutually acceptable to Covenant and the Company (the "Escrow Agent"), to be held in escrow to secure the Stockholders' indemnification obligations under this Agreement, pursuant to an escrow agreement substantially in the form attached hereto as Exhibit B (the "Escrow Agreement").

(ii)Two Million Dollars ($2,000,000) (the "Waller Escrow") shall be delivered to Waller Lansden Dortch & Davis, LLP ("Waller") to be held and disbursed as directed by such agreement as may exist between Waller and the Stockholders.

(ii)The balance of the Closing Amount shall be paid by Covenant at the Closing to or on behalf of the Stockholders by wire transfer in accordance with the Proceeds Schedule.

(c)The Debt Adjustment Amount and the Working Capital Adjustment Amount, if any, shall be payable as set forth in Section 1.5(e) below.

(d)In connection with Covenant's purchase of the Shares pursuant to this Agreement, at or prior to Closing and subject to Section 1.5, the Company shall pay an amount of cash as determined by the Company to the Stockholders in redemption of a portion of their capital stock of the Company; provided, that the amount of cash paid by the Company hereunder shall not cause the Company to incur additional Debt.

Section 1.3Closing. Subject to and upon the terms and conditions of this Agreement, the closing of the purchase and sale of the Shares (the "Closing") is taking place at the offices of Waller Lansden Dortch & Davis, LLP, 511 Union Street, Suite 2700, Nashville, Tennessee 37219, at 12:00 p.m. Central Daylight Time on the date hereof, concurrently with the execution and delivery of this Agreement by the Parties. The Closing shall be effective as of 11:59pm on the date hereof.

Section 1.4Closing Deliveries.

(a)Documents to be Delivered by the Company and the Stockholders. The Company and the Stockholders, as the case may be, shall deliver the following documents to Covenant at the Closing, each in form and substance reasonably satisfactory to Covenant:

(i)           A certificate of the secretary or assistant secretary of the Company, certifying as to (i) a copy of the charter of the Company, certified by an appropriate authority of the jurisdiction of its incorporation and dated not earlier than ten (10) days prior to the Closing, (ii) a copy of the bylaws of the Company, (iii) a copy of the resolutions of the board of directors and stockholders of the Company, approving and authorizing the execution, delivery and performance of this Agreement and all other Transaction Documents and the consummation of the Contemplated Transactions, (iv) incumbency and signatures of each of the Company's officers who is authorized to execute and deliver this Agreement and any of the other Transaction Documents, (v) certificates of good standing and legal existence of the Company in each jurisdiction set forth on Schedule 2.1(a) of the Stockholder Disclosure Schedule, dated not earlier than ten (10) days prior to the Closing, and (vi) the accuracy of the list of Stockholders set forth on Schedule 2.3 of the Stockholder Disclosure Schedule;

(ii)         Copies of all third party Consents that are required under Material Contracts and Governmental Authorizations that the Company is required to obtain in order to effect the Contemplated Transactions;

(iii)The Escrow Agreement, executed by each of the Stockholders;

(iv)A transition services agreement, in the form attached hereto as Exhibit C (the "Transition Services Agreement"), executed by Beth D. Franklin;

(v)Noncompetition agreements, in the form attached hereto as Exhibit D (the "Noncompetition Agreements"), executed by each of the Stockholders;

(vi)General releases of claims arising prior to the Closing against the Company and Covenant, in the form attached hereto as Exhibit E (the "Stockholder Releases"), executed by each of the Stockholders of the Company;

(vii)     Spousal consents, in the form attached hereto as Exhibit F (the "Spousal Consents"), executed by the spouse, if any, of each of the Stockholders;

3

(viii)An opinion of Waller Lansden Dortch & Davis, LLP, counsel to the Company and the Stockholders, in the form attached hereto as Exhibit G (the "Waller Opinion"); and

(ix)     Such other documents as Covenant may reasonably request in connection with the Contemplated Transactions.

(b)Documents to be Delivered by Covenant. Covenant shall deliver the following documents to the Stockholders at Closing, each in form and substance satisfactory to the Stockholders:

(i)A certificate of the secretary or assistant secretary of Covenant, certifying as to (i) a copy of the resolutions of the board of directors of Covenant, approving and authorizing the execution, delivery and performance of this Agreement and the other Transaction Documents to which it is a party and the consummation of the Contemplated Transactions, and (ii) incumbency and signatures of each of the Company's officers who is authorized to execute and deliver this Agreement and such other Transaction Documents;

(ii)Copies of all material third party Consents and Governmental Authorizations that Covenant is required to obtain in order to effect the Contemplated Transactions;

(iii)The Escrow Agreement, executed by and on behalf of Covenant;

(iv)     The Transition Services Agreement, executed by and on behalf of Covenant;

(v)      The Noncompetition Agreements, executed by and on behalf of Covenant;

(vi)     An opinion of the Scudder Law Firm, P.C., L.L.O., counsel to Covenant, in the form attached hereto as Exhibit H (the "Scudder Opinion"); and

(vii)    Such other documents as the Stockholders may reasonably request in connection with the Contemplated Transactions.

Section 1.5Adjustments and Procedures.

(a)Definitions. The following terms shall have the meanings set forth below:

(i)"Adjusted Working Capital" means, as of a given date, an amount equal to the difference of (A) the current assets of the Company, excluding cash, set forth on the applicable balance sheet of the Company as of such date, minus (B) the current liabilities of the Company, excluding debt, set forth on the applicable balance sheet of the Company as of such date, in each case prepared in accordance with GAAP consistently applied.

(ii)      "Benchmark Adjusted Working Capital" means $4,404,886.00.

(iii)     "Closing Debt" means the aggregate amount of Debt reflected on the Closing Balance Sheet prepared pursuant to Section 1.5(b) below.

(iv)    "Closing Adjusted Working Capital" means an amount equal to (A) the Adjusted Working Capital reflected on the Closing Balance Sheet prepared pursuant to Section

4

1.5(b) below, plus (B) the amount of cash, net of any checks written by the Company but not yet recorded, reflected on such Closing Balance Sheet.

(v)     "Debt Adjustment Amount" (which may be a positive or negative number) means an amount equal to the difference of (A) Forty Two Million Dollars ($42,000,000), minus (B) the Closing Debt, plus (C) the Actual Additional Debt (determined pursuant to Section 1.7 below) if any, minus (D) the Actual Debt Paydown (determined pursuant to Section 1.7 below), if any.

(vi)   "Working Capital Adjustment Amount" (which may be zero or a positive number) means an amount equal to the greater of (A) zero and (B) an amount equal to the difference of (1) the Benchmark Adjusted Working Capital, minus (2) the Closing Adjusted Working Capital.

(b)Closing Date Balance Sheet. Within thirty (30) days after Closing, Covenant and the Company shall prepare, or cause to be prepared, a balance sheet for the Company as of the Closing Date in accordance with GAAP consistent with the methodology used by the Company in the preparation of the Interim Balance Sheet (the "Closing Balance Sheet"). Covenant shall then determine the Debt Adjustment Amount and Working Capital Adjustment Amount based upon the Closing Balance Sheet and shall deliver the Closing Balance Sheet and its determination of the Debt Adjustment Amount and Working Capital Adjustment Amount (together with sufficient documentation and working papers to explain how such calculations were performed) to the Stockholder Representative within thirty (30) days after the Closing Date.

(c)Notice of Objections. If, within twenty (20) days following delivery of the Closing Balance Sheet and Covenant's determinations of the Debt Adjustment Amount and the Working Capital Adjustment Amount, the Stockholder Representative has not given Covenant written notice of its objection ("Objection Notice") as to such calculations and determinations, then the Debt Adjustment Amount and the Working Capital Adjustment Amount calculated by Covenant shall be binding and conclusive on the Parties and shall be deemed finally determined for purposes of Section 1.5(e) below.

(d)Resolution of Objections. If the Stockholder Representative duly gives Covenant such Objection Notice, and if the Stockholder Representative and Covenant fail to resolve the issues set forth in such Objection Notice within thirty (30) days of Covenant's receipt of the Objection Notice, the Stockholder Representative and Covenant shall submit the issues remaining in dispute to the Nashville office of Crowe, Chizek and Company, LLC, or such other independent accountants as the Stockholder Representative and Covenant may mutually identify (the "Independent Accountants") for resolution. If issues are submitted to the Independent Accountants for resolution:

(i)the Stockholders and Covenant shall furnish, or cause to be furnished, to the Independent Accountants such work papers and other documents and information relating to the disputed issues as the Independent Accountants may request and are available to that Party or its agents;

(ii)      the Stockholder Representative and Covenant shall each be afforded the opportunity to present to the Independent Accountants any material relating to the disputed issues and to discuss the issues with the Independent Accountants;

(iii)    the determination by the Independent Accountants, as set forth in a written notice to be delivered to both the Stockholder Representative and Covenant within sixty (60) days of the submission to the Independent Accountants of the issues remaining in dispute,

5

shall be final, binding, and conclusive on the Parties and shall be used in the calculation of the Debt Adjustment Amount and the Working Capital Adjustment Amount; and

(iv)   the Stockholders, on one hand, and Covenant, on the other hand, will each bear fifty percent (50%) of the fees and costs of the Independent Accountants for such determination.

(e)Payment Procedures. As promptly as practicable and in any event within five (5) business days following final determination of the Debt Adjustment Amount and the Working Capital Adjustment Amount pursuant to Section 1.5(c) or 1.5(d) above:

(i)if the Purchase Price (as calculated pursuant to Section 1.2(a)) is greater than the Closing Amount paid to the Stockholders at the Closing (such excess, the "Stockholder Adjustment Amount"), then the Stockholder Adjustment Amount shall be paid to the Stockholders, in accordance with the Proceeds Schedule, through payment by Covenant to the Stockholders by wire transfer; and

(ii)     if the Purchase Price (as calculated pursuant to Section 1.2(a)) is less than the Closing Amount paid to the Stockholders at the Closing (such difference, the "Covenant Adjustment Amount"), then the Covenant Adjustment Amount shall be paid to Covenant through payments by cash, check, or wire transfer to Covenant from each of the Stockholders of their respective pro rata share of the Covenant Adjustment Amount (calculated based upon their respective pro rata share of the Closing Payment set forth in the Proceeds Schedule).

Section 1.6Transfer Taxes. All transfer Taxes incurred in connection with the sale and transfer of the Shares under this Agreement will be borne and paid by the Stockholders, and the Stockholders shall promptly reimburse Covenant and the Company for any such transfer Tax which Covenant or the Company is required to pay under applicable Legal Requirements.

Section 1.7Lease Purchase Conversion Adjustment. The parties desire to provide for an additional adjustment to the Debt Adjustment Amount if the Lease Purchase Conversion has not been completed prior to the Closing Date.

(a)Not less than three (3) days prior to the anticipated Closing Date, the Stockholders shall have provided to Covenant a certificate in the form of Schedule 1.7 to the Stockholder Disclosure Schedule (the "Lease Purchase Conversion Certificate") setting forth either (i) a statement to the effect that the Lease Purchase Conversion has been completed prior to the Closing Date; or (ii) the following: (A) the number and purchase price (including FET, delivery charges, and all other amounts capable of being capitalized under GAAP) of the tractors and trailers included in the Lease Purchase Conversion that are not expected to have been accepted for delivery and paid for by the Company, and the related financing recorded on the Company's balance sheet prior to the Closing Date (such information, the "Projected Undelivered Equipment" and the "Projected Undelivered Equipment Debt"); (B) the unit or VIN numbers of all tractors and trailers included in the Lease Purchase Conversion and identified for sale therein that are not expected to have been sold, the proceeds recorded, and the receipt of such proceeds applied against the related debt prior to the Closing Date (the "Projected Unsold Equipment"); (C) the expected net proceeds (after all sale preparation costs, sales commissions, and all turn-in, reconditioning, mileage penalty, and other costs associated with lease expiration or termination and return of leased equipment, and all other related costs) of the Projected Unsold Equipment (the "Projected Unsold Equipment Proceeds"); (D) the anticipated timeframe for disposal of the Projected Unsold Equipment and receipt of the net proceeds of disposal in the Ordinary Course of Business; and (E) a calculation showing the Projected Unsold Equipment Proceeds minus the Projected Undelivered

6

Equipment Debt, with the difference being referred to as the "Projected Debt Paydown" if a positive number or the "Projected Additional Debt" if a negative number.

(b)Within two (2) days after receipt of the Projected Lease Purchase Conversion Schedule, Covenant shall have given written notice of (i) its acceptance of the Projected Debt Paydown or Projected Additional Debt, as applicable, or (ii) any adjustments reasonably necessary, in Covenant's good faith judgment, to properly estimate the Projected Debt Paydown or Projected Additional Debt as applicable, such written notice to have been delivered to the Stockholder Representative and to be binding for purposes of the Closing, subject, however, to post-Closing adjustment as described below.

(c)In connection with the preparation of the Closing Balance Sheet, the parties shall also determine (i) the actual number and purchase price (including FET, delivery charges, and all other amounts capable of being capitalized under GAAP) of the tractors and trailers included in the Lease Purchase Conversion that, in fact, had not been accepted for delivery and paid for by the Company and the related financing recorded on the Company's balance sheet prior to the Closing Date (the "Actual Undelivered Equipment" and "Actual Undelivered Equipment Debt"); (ii) the actual tractors and trailers included in the Lease Purchase Conversion and identified for sale therein that, in fact, had not been sold, the proceeds recorded, and the receipt of such proceeds applied against the related debt prior to the Closing Date (the "Actual Unsold Equipment"); (iii) the actual net proceeds (after all sale preparation costs, sales commissions, and all other related costs) of the Actual Unsold Equipment (the "Actual Unsold Equipment Proceeds") and (iv) a calculation showing the Actual Unsold Equipment Proceeds minus the Actual Unsold Equipment Debt, with the difference being referred to as the "Actual Debt Paydown" if a positive number or the "Actual Additional Debt" if a negative number. These calculations shall be subject to the same procedures as the Closing Balance Sheet.

(d)For purposes of determining the Debt Adjustment Amount, the Closing Debt shall be increased by the Actual Additional Debt or decreased by the Actual Debt Paydown, as the case may be.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS

As of the Closing Date, each of the Stockholders jointly and severally represents and warrants Covenant as follows:

Section 2.1Organization and Good Standing.

(a)The Company is duly organized, validly existing, and in good standing under the laws of the State of Tennessee, with all requisite power and authority to carry on the business in which it is engaged, own the properties it owns, and execute, deliver and perform this Agreement and the other Transaction Documents to which it is a party. The Company is duly qualified or registered to do business and is in good standing as a foreign corporation in each jurisdiction in which the character of the properties owned, operated, or leased by the Company, or the nature of its activities, is such that qualification or registration by the Company as a foreign corporation in such jurisdiction is required by applicable Legal Requirements, except where failure to be so registered would not have a Materially Adverse Effect. Schedule 2.1(a) of the Stockholder Disclosure Schedule contains a list of all jurisdictions in which the Company is so qualified or registered or required to be so qualified or registered.

(b)The Stockholders have delivered to Covenant copies of the Organizational Documents of the Company as currently in effect.

7

Section 2.2Authorization and Validity. The execution, delivery, and performance of this Agreement and the other Transaction Documents by the Company and the Stockholders, and the consummation of the Contemplated Transactions, have been duly authorized, and no other proceedings or approvals are necessary to authorize the execution, delivery, and performance of this Agreement or consummation of the Contemplated Transactions by the Company or the Stockholders. This Agreement and each of the other Transaction Documents has been duly and validly executed and delivered by the Company and the Stockholders (as appropriate) and constitutes, as of the Closing, legal, valid, and binding obligations of the Company and the Stockholders, enforceable against each of them in accordance with their respective terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors' rights generally, and as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.

Section 2.3Capitalization.

(a)Schedule 2.3 of the Stockholder Disclosure Schedule contains (a) a true and complete description of the number of authorized, issued, and outstanding shares of capital stock and other securities or equity interests of the Company, and (b) a true and complete list of all holders of capital stock and other securities or equity interests of the Company. The Shares constitute all of the issued and outstanding shares of capital stock of the Company, have been duly authorized and validly issued, and are fully paid and nonassessable. Except for this Agreement and the other Transaction Documents, there are no outstanding warrants, options, Contracts, subscriptions, convertible or exchangeable securities, or other commitments pursuant to which the Company is or may become obligated to issue any shares of capital stock of the Company or any other securities convertible, exchangeable, or exercisable for any such shares of capital stock, and no equity securities of the Company are reserved for issuance for any purpose. None of the Shares was issued in violation of the Securities Act or any other Legal Requirement.

(b)Each Stockholder owns all of the Shares to be transferred by him or her hereunder (as set forth on Schedule 2.3 of the Stockholder Disclosure Schedule), free and clear of all Liens or other restrictions. No Stockholder is a party to,or has Knowledge of, any Contracts or commitments relating to the voting, purchase, or sale of the Shares, other than this Agreement and the other Transaction Documents. Upon delivery to Covenant at the Closing of certificates representing the Shares duly endorsed for transfer to Covenant, and receipt by the Stockholders of the consideration therefor, Covenant will acquire the Shares free and clear of any Liens and restrictions.

Section 2.4Subsidiaries. The Company does not have any subsidiaries and does not, directly or indirectly, beneficially own, and is not a party to or bound by any Contract to acquire, any capital stock of, or any other security, equity, ownership interest, debt investment or similar interest in, any other Person.

Section 2.5No Violation. Except as set forth in Schedule 2.5 of the Stockholder Disclosure Schedule, neither the execution and performance of this Agreement and the other Transaction Documents, nor the consummation or performance of all of the transactions contemplated hereby or thereby (collectively, the "Contemplated Transactions") will, directly or indirectly (with or without notice or lapse of time or both): (a) contravene, conflict with, or result in a violation of (i) any provision of the Organizational Documentsof the Company, or (ii) any resolution adopted by the board of directors or stockholders of the Company; (b) contravene, conflict with, or result in a violation of, or give any Governmental Body or other Person the right to challenge any of the Contemplated Transactions or to exercise any remedy or obtain any relief under, any Legal Requirement or any Order to which the Company or any Stockholder may be subject; (c) contravene, conflict with, or result in a violation of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend,

8

cancel, terminate, or modify, any Governmental Authorization that is held by the Company or that otherwise relates to the business and operations of the Company; (d) contravene, conflict with, or result in a violation or breach of any provision of, or give any Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate, or modify, any Material Contract other than for which a Consent permanently and irrevocably waiving such violation, breach, default or other right or remedy that is identified on Schedule 2.7 has been obtained prior to Closing; (e) result in the imposition or creation of any material Lien upon or with respect to any of the assets owned by the Company or used in the business and operations of the Company. The Company is not in violation of any term or provision of any Organizational Document, Material Contract, Legal Requirement, Governmental Authorization, or Order.

Section 2.6Finder's Fee. Except for the agreements between the Stockholders and the Persons listed on Schedule 2.6 of the Stockholder Disclosure Schedule, a complete and accurate copy of each of which is set forth in such Schedule 2.6 of the Stockholder Disclosure Schedule, neither the Company nor any Stockholder has incurred any obligation, contingent or otherwise, for any finder's, broker's or agent's fee in connection with the Contemplated Transactions.

Section 2.7Consents. Except as set forth in Schedule 2.7 of the Stockholder Disclosure Schedule, no Consent of, or filing with, any Person, including, without limitation, under any Material Contract or Governmental Authorization or from any Governmental Body, is required to authorize, or is required in connection with, the execution, delivery, and performance of this Agreement or the other Transaction Documents or the consummation of any of the Contemplated Transactions.

Section 2.8Financial Statements. The Stockholders have delivered to Covenant audited balance sheets of the Company as at December 31 for each of the years 2003 and 2004, and the related audited statements of income, changes in equity, and cash flows for each of the fiscal years then ended (the "Historical Financial Statements"). Schedule 2.8 of the Stockholder Disclosure Schedule sets forth (together with the related notes) (a) the audited balance sheet of the Company as at December 31, 2005 (the "Year-End Balance Sheet" and December 31, 2005 being the "Balance Sheet Date"), (b) the related audited statements of income, changes in equity, and cash flows for the fiscal year then ended (together with the Year-End Balance Sheet, the "Year-End Financial Statements"), (c) the unaudited balance sheet of the Company as at August 31, 2006(the "Interim Balance Sheet"), and (d) the related unaudited statements of income, changes in equity, and cash flows for the year-to-date period then ended (together with the Interim Balance Sheet, the "Interim Financial Statements"). The Historical Financial Statements, the Year-End Financial Statements, and the Interim Financial Statements (collectively, the "Financial Statements") fairly present in all material respects the financial condition and the results of operations, changes in stockholders' equity, and cash flows of the Company as at the respective dates of and for the periods referred to in such Financial Statements, all in accordance with GAAP, subject, in the case of the Interim Financial Statements, to normal recurring year-end adjustments (the effect of which will not, individually or in the aggregate, be materially adverse) and the absence of notes (which, if presented, would not differ materially from those included in the Year-End Financial Statements). The Financial Statements reflect the consistent application of GAAP throughout the periods involved, except as disclosed in the notes to such Financial Statements. The Financial Statements have been prepared from and are in accordance with the books and records of the Company, and represent bona fide transactions. No financial statements of any Person are required by GAAP to be consolidated with the Financial Statements.

Section 2.9Books and Records; Internal Controls.

(a)The books of account, minute books, corporate record books, and other records of the Company have been made available to Covenant. The minute books of the Company contain records of all meetings held of, and action taken by, the board of directors, all committees of the board of

9

directors, and stockholders of the Company that are accurate in all material respects, and no meeting or action of the board of directors and committee of the board of directors or stockholders has been held or taken that is not reflected in such minute books.

(b)To the Company's Knowledge, the Company maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

Section 2.10Properties; Encumbrances.

(a)Schedule 2.10 of the Stockholder Disclosure Schedule contains a complete and accurate list of all real property owned by the Company (the "Owned Real Property"), all leases ("Real Property Leases") of real property by the Company (the "Leased Real Property" and, together with the Owned Real Property, the "Real Property"), or other interests therein owned by the Company or used in the business and operations of the Company.

(b)Except as set forth on Schedule 2.10(b) of the Stockholder Disclosure Schedule, the Company owns, with good and marketable title, or has valid and binding leaseholds in, all of the Real Property and all other properties and assets (whether real, personal, or mixed and whether tangible or intangible) that it purports to own or lease, including but not limited to all of the properties and assets reflected in the Interim Financial Statements (except for properties and assets sold since the date of the Interim Balance Sheet in the Ordinary Course of Business and consistent with past practice). All of the owned properties and assets are free and clear of all Liens other than Permitted Liens and are not, in the case of Real Property, subject to any rights of way, building use restrictions, exceptions, variances, reservations, or limitations of any nature, except, with respect to all such properties and assets, (i) mortgages or security interests shown in the Interim Financial Statements as securing specified liabilities or obligations, with respect to which no default (or event that, with notice or lapse of time or both, would constitute a default) exists, (ii) mortgages or security interests incurred in connection with the purchase of property or assets after the date of the Interim Balance Sheet (such mortgages and security interests being limited to the property or assets so acquired), with respect to which no default (or event that, with notice or lapse of time or both, would constitute a default) exists, and (iii) with respect to Real Property, (A) minor imperfections of title, if any, none of which is substantial in amount, materially detracts from the value or impairs the present use of the property subject thereto, or impairs the business or operations of the Company, and (B) other land use restrictions that do not impair the present use of the property subject thereto.

(c)All buildings and structures on the Owned Real Property lie wholly within the boundaries of such Owned Real Property and do not encroach upon the property of, or otherwise conflict with the property rights of, any other Person.

(d)The Company enjoys peaceful and undisturbed possession of the Real Property sufficient for the current operations and use of such Real Property by the Company.

(e)Regarding all Contracts, Real Property Leases, deeds and other instruments that evidence, secure, or otherwise relate to the Real Property (collectively, the "Real Property Documents"), (i) to the Company’s Knowledge, there is no material default thereunder by any of the other parties thereto, nor has any event occurred which, with the passage of time or notice, or both, would constitute a material default thereunder or a violation of the terms (or permit the termination) thereof; and (ii) none

10

of the Contemplated Transactions will constitute or create a default, event of default, or right of termination thereunder.

(f)The Company has not leased or sublet, and no other Person is in possession of, or has the right of use or occupancy of any portion of, any of the Real Property, and no part of any of the Real Property has been condemned, requisitioned, or otherwise taken by any Governmental Body and, to the Company’s Knowledge, no such condemnation, requisition, or taking is threatened or contemplated.

(g)Since January 1, 2006, no written notice of any increase in the assessed valuation of the Real Property, and no written notice of any contemplated special assessment, has been received by the Company or the Stockholders, and, to the Company’s Knowledge, there is no threatened special assessment pertaining to any of the Real Property.

Section 2.11Condition and Sufficiency of Assets.Except as set forth on Schedule 2.11 or as covered by Section 2.26 hereof, the buildings, structures, equipment, and other material tangible assets owned or leased by the Company are in reasonable operating condition and repair, ordinary wear and tear excepted, and are adequate for the uses to which they are being put. The Company owns, leases, or otherwise possesses a vested right to use all of such buildings, structures, equipment, and other material assets, and all Material Contracts related to such buildings, structures, material equipment, and other material assets are listed in Schedule 2.20(a) of the Stockholder Disclosure Schedule. The buildings, structures, equipment, and other assets owned or leased by the Company include all of the fixed assets used in the business and operations of the Company and are sufficient for the continued conduct of the business and operations of the Company after the Closing in substantially the same manner as conducted prior to the Closing.

Section 2.12Accounts Receivable. All accounts receivable of the Company that are reflected in the Interim Financial Statements or on the accounting records of the Company as of the Closing Date (collectively, the "Accounts Receivable") arose from sales actually made or services actually performed by the Company in the Ordinary Course of Business. To the Company’s Knowledge, there is no contest, claim, or right of set-off, other than returns in the Ordinary Course of Business, relating to the amount or validity of such Account Receivable except as reflected by the reserves shown on the Interim Balance Sheet.

Section 2.13No Undisclosed Liabilities. Except as set forth in Schedule 2.13 of the Stockholder Disclosure Schedule, the Company has no Liabilities which are required by GAAP to be reflected in the Interim Financial Statements (or would be required by GAAP to be reflected on, or disclosed in the notes of, audited financial statements if the Interim Financial Statements were audited) except for (a) Liabilities reflected or reserved against in the Interim Financial Statements, (b) Liabilities incurred after the date of the Interim Financial Statements in the Ordinary Course of Business which do not have, individually or in the aggregate, a Materially Adverse Effect, and (c) Liabilities incurred pursuant to this Agreement and the Contemplated Transactions.

Section 2.14Taxes.

(a)Tax Returns Filed and Taxes Paid. Except as set forth in Schedule 2.14(a) of the Stockholder Disclosure Schedule, the Company has filed or caused to be filed on a timely basis all tax returns and all reports with respect to Taxes (the "Tax Returns") that are or were required to be filed by the Company. All Tax Returns filed by the Company are true, correct and complete in all material respects. The Companyhas paid, or made provision for the payment of, all Taxes that have or may have become due for all periods covered by the Tax Returns or otherwise, or pursuant to any assessment received by the Company, except such Taxes, if any, identified in Schedule 2.14(a) of the Stockholder Disclosure Schedule as being contested in good faith and as to which adequate reserves (determined in

11

accordance with GAAP) have been provided in the Interim Financial Statements. Except as provided in Schedule 2.14(a) of the Stockholder Disclosure Schedule, the Company currently is not the beneficiary of any extension of time within which to file any Tax Return. No claim has ever been made, or, to the Company’s Knowledge, is expected to be made, nor, to the Company’s Knowledge, is there a reasonable basis upon which such a claim might be made, by any Governmental Body in a jurisdiction where the Company does not file Tax Returns that the Company is or may be subject to taxation by that jurisdiction. There are no Liens on any of the assets owned by the Company or used in the business and operations of the Company that arose in connection with any failure (or alleged failure) to pay any Tax (other than Taxes not yet due and payable), and to the Company’s Knowledge, there is no basis for the assertion of any claims attributable to Taxes which, if adversely determined, would result in any such Lien.

(b)Delivery of Tax Returns and Information Regarding Audits and Potential Audits. The Company and the Stockholders have delivered to Covenant copies of, and Schedule 2.14(b) of the Stockholder Disclosure Schedule contains a complete and accurate list of, all federal and state income Tax Returns filed since January 1, 2001. Schedule 2.14(b) of the Stockholder Disclosure Schedule contains a complete and accurate list of all Tax Returns of the Company that have been audited or are currently under audit and accurately describes any deficiencies or other amounts that were paid or are currently being contested. To the Company’s Knowledge, no undisclosed deficiencies are expected to be asserted with respect to any such audit. All deficiencies proposed as a result of such audits have been paid, reserved against, settled or are being contested in good faith by appropriate proceedings as described in Schedule 2.14(b) of the Stockholder Disclosure Schedule. The Stockholders have delivered to Covenant copies of any examination reports, statements or deficiencies, or similar items with respect to such audits. Except as provided in Schedule 2.14(b) of the Stockholder Disclosure Schedule, neither the Company nor the Stockholders has received written notice from any Governmental Body alleging any amount of Taxes due or otherwise contesting or investigating any Taxes or Tax Returns that may be due from the Company, and the Stockholders have no Knowledge that any Governmental Body is likely to assess any additional Taxes for any period for which Tax Returns have been filed. Except as described in Schedule 2.14(b) of the Stockholder Disclosure Schedule, the Company has not given or been requested to give waivers or extensions (or is or would be subject to a waiver or extension given by any other Person) of any statute of limitations relating to the payment of Taxes of the Company or for which the Company may be liable.

(c)Specific Potential Tax Liabilities and Tax Situations. Except as set forth in Schedule 2.14(c) of the Stockholder Disclosure Schedule:

(i)All material Taxes that the Company is or was required by Legal Requirements to withhold, deduct, or collect have been duly withheld, deducted, and collected and, to the extent required, have been paid to the proper Governmental Body or other Person;

(ii)     There is no tax sharing agreement, tax allocation agreement, tax indemnity obligation, or similar written agreement, arrangement, understanding, or practice with respect to Taxes (including any advance pricing agreement, closing agreement, or other arrangement relating to Taxes) that will require any payment by the Company;

(iii)   The Company (A) has not been a member of an affiliated group within the meaning of Code § 1504(a) (or any similar group defined under a similar provision of any state, local, or foreign Legal Requirement) and (B) has no Liability for Taxes of any Person under Treasury Regulation Section 1.1502-6 (or any similar provision of any state, local, or foreign Legal Requirement), as a transferee or successor by Contract or otherwise; and

12

(iv)  To the Company’s Knowledge, the Company has disclosed on its federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income tax within the meaning of Code § 6662.

(d)S Corporation. The Company is a domestic corporation that has elected since January 1, 1989 and continues to elect and properly maintains its status as an "S" corporation within the meaning of Code § 1361. The Company does not have any "built-in gain" under Section 1374 of the Code.

Section 2.15No Materially Adverse Change. Since June 30, 2006, there has not been any Materially Adverse Change and no event has occurred or circumstance exists that reasonably would be expected to result in a Materially Adverse Change.

Section 2.16Employee Benefits.

(a)Schedule 2.16(a) of the Stockholder Disclosure Schedule sets forth a list of all Plans, Pension Plans, deferred compensation, stock or stock option plans or arrangements, severance, change-in-control, and other Benefit Arrangements (i) of which the Company or an ERISA Affiliate of the Company is or was a Plan Sponsor at any time during the six (6) years prior to the Closing Date, (ii) under which any employee or former employee of the Company has any present or future right to benefits, (iii) under which the Company or an ERISA Affiliate of the Company has or may have any Liability for present or future payment of benefits, (iv) in which the Company or an ERISA Affiliate of the Company contributes or has contributed at any time during the six (6) years prior to the Closing Date, or (v) in which the Company or an ERISA Affiliate of the Company otherwise participates or has participated at any time during the six (6) years prior to the Closing Date (collectively, the "Benefit Plans").

(b)Schedule 2.16(b) of the Stockholder Disclosure Schedule (i) sets forth a list of all ERISA Affiliates of the Company, and (ii) identifies each of the Benefit Plans (A) of which any such ERISA Affiliate is or was a Plan Sponsor at any time during the six (6) years prior to the Closing Date, (B) under which any such ERISA Affiliate has or may have any Liability for present or future payment of benefits, (C) in which any such ERISA Affiliate contributes or has contributed at any time during the six (6) years prior to the Closing Date, or (D) in which any such ERISA Affiliate otherwise participates or has participated at any time during the six (6) years prior to the Closing Date.

(c)As applicable with respect to each Benefit Plan, the Company has delivered to Covenant copies of (i) each current Benefit Plan document, including any amendments, (ii) any summary plan description provided under a Benefit Plan, (iii) the most recent IRS determination letter, if any, and (iv) all other documents that set forth the material terms of any of the Benefit Plans.

(d)Except as set forth in Schedule 2.16(d) of the Stockholder Disclosure Schedule:

(i)          Each Benefit Plan has been maintained, operated, and administered in material compliance with its terms and the applicable provisions of ERISA, the Code, and other Legal Requirements.

(ii)        With respect to any Benefit Plan, no Proceedings or claims (other than routine claims for benefits in the Ordinary Course of Business or investigations by any Governmental Body are pending or, to the Company’s Knowledge, threatened.

(iii)       The execution, delivery, and performance by the Company of this Agreement and the Contemplated Transactions will not constitute an event under any Benefit

13

Plan that will result in any payment (whether as severance pay or otherwise), acceleration, vesting, or increase in benefits with respect to any employee of the Company.

(iv)      Since the Balance Sheet Date, there has been no establishment or amendment of any Benefit Plan other than as required by applicable Legal Requirements or in the Ordinary Course of Business.

(v)       The Company has received no notice of any future material increase in premium costs of Benefit Plans that are insured or of any future material increase in benefit costs of such Benefit Plans.

(vi)       No Benefit Plan is a Title IV Plan.

(vii)     Neither the Company nor any ERISA Affiliate of the Company has filed a notice of intent to terminate any Benefit Plan or has adopted any amendment or taken any other action to terminate a Benefit Plan or to treat a Benefit Plan as terminated.

(viii)    To the Company’s Knowledge, there are no facts or circumstances that may give rise to any liability of any Stockholder, the Company, or Covenant to the PBGC under Title IV of ERISA.

(ix)      Neither the Company nor any ERISA Affiliate of the Company has ever established, maintained, or contributed to or otherwise participated in, or had any obligation to maintain, contribute to, or otherwise participate in, any Multi-Employer Plan.

(x)       Except to the extent required under ERISA § 601 et. seq. and Code § 4980B or as otherwise required in this Agreement, the Company does not provide health or welfare benefits to any retired or former employee and is not obligated to provide health or welfare benefits to any active employee following such employee's retirement or other termination of service.

(xi)     No payment that is owed or may become due to any director, officer, employee, or agent of the Company will be non-deductible to the Company or subject to Tax under Code § 280G or § 4999, nor will the Company be required to "gross up" or otherwise compensate any such Person because of the imposition of any excise Tax on a payment to such Person.

(xii)  With respect to any Benefit Plan, neither the Company nor any ERISA Affiliate has within the past six years incurred or reasonably expects to incur (A) any withdrawal liabilities as defined in ERISA § 4201 or any actual or contingent liability under ERISA § 4204 (collectively, "Withdrawal Liability") and no event has occurred which could result in Withdrawal Liabilities. Neither Covenant nor its Affiliates (including the Company) will have any Withdrawal Liability, with respect to any Benefit Plan, as a result of the execution, delivery, and performance by Covenant, the Company, and the Stockholders of this Agreement and the Contemplated Transactions.

(e)With respect to Humboldt Express, Inc. ("Humboldt") and any Plan, Pension Plan or other Benefit Arrangement sponsored or contributed to by Humboldt (each a, "Humboldt Plan"), neither the Company nor any ERISA Affiliate has incurred or reasonably expects to incur Withdrawal Liability or other Liabilities with respect to any Humboldt Plan or any collective bargaining agreement to which Humboldt was a party, and no event has occurred which could result in such Liabilities. Neither Covenant nor its Affiliates (including the Company) will have any Withdrawal Liabilities or

14

other Liabilities with respect to any Humboldt Plan or any collective bargaining agreement to which Humboldt was a party, as a result of the execution, delivery, and performance by Covenant, the Company, and the Stockholders of this Agreement and the Contemplated Transactions. Humboldt ceased to be an ERISA Affiliate on or before May 6, 1994. Since such date, no other Person has been an ERISA Affiliate of the Company.

Section 2.17Compliance with Legal Requirements; Governmental Authorizations.

(a)Since January 1, 2001, except as set forth in Schedule 2.17(a) of the Stockholder Disclosure Schedule, and except for matters relating to Environmental Laws, Benefit Plans, ERISA and Taxes:

(i) To the Company’s Knowledge, the Company is, and at all times has been, in compliance in all material respects with each Legal Requirement that is or was applicable to it or to the conduct or operation of its business or the ownership or use of any of its assets;

(ii)To the Company’s Knowledge, no event has occurred or circumstance exists that (with or without notice or lapse of time) (A) may constitute or result in a material violation by the Company of, or a material failure on the part of the Company to comply with, any Legal Requirement, or (B) may give rise to any obligation on the part of the Company to undertake, or to bear all or any portion of the cost of, any remedial action of any nature; and

(iii)     The Company has not received any notice or other communication (whether oral or written) from any Governmental Body regarding (A) any actual, alleged, possible, or potential material violation of, or material failure to comply with, any Legal Requirement, or (B) any actual, alleged, possible, or potential obligation on the part of the Company to undertake, or to bear all or any portion of the material cost of, any remedial action of any nature.

(b)Schedule 2.17(b) of the Stockholder Disclosure Schedule contains a complete and accurate list of each Governmental Authorization that is held by the Company or that otherwise relates to the business and operations of the Company or to any of the assets owned or used by the Company. Each Governmental Authorization listed on Schedule 2.17(b) of the Stockholder Disclosure Schedule is valid and in full force and effect. Except as set forth in Schedule 2.17(b) of the Stockholder Disclosure Schedule:

(i) The Company is, and at all times has been, in compliance in all material respects with all of the terms and requirements of each Governmental Authorization identified on Schedule 2.17(b) of the Stockholder Disclosure Schedule;

(ii)To the Company’s Knowledge, no event has occurred or circumstance exists that may (with or without notice or lapse of time, or both) (A) constitute or result directly or indirectly in a material violation of, or a failure to comply in all material respects with, any term or requirement of any Governmental Authorization identified on Schedule 2.17(b) of the Stockholder Disclosure Schedule, or (B) result directly or indirectly in the revocation, withdrawal, suspension, cancellation, or termination of, or any modification to, any Governmental Authorization identified on Schedule 2.17(b) of the Stockholder Disclosure Schedule;

(iii)    The Company has not received any notice or other communication (whether oral or written) from any Governmental Body or any other Person regarding (A) any actual, alleged, possible, or potential violation of or failure to comply with any term or

15

requirement of any Governmental Authorization, or (B) any actual, proposed, possible, or potential revocation, withdrawal, suspension, cancellation, termination of, or modification to any Governmental Authorization; and

(iv)   All applications required to have been filed for the renewal of the Governmental Authorizations listed on Schedule 2.17(b) of the Stockholder Disclosure Schedule have been duly filed on a timely basis with the appropriate Governmental Bodies, and all other filings required to have been made with respect to such Governmental Authorizations have been duly made on a timely basis with the appropriate Governmental Bodies.

(c)The Governmental Authorizations listed in Schedule 2.17(b) of the Stockholder Disclosure Schedule collectively constitute all of the Governmental Authorizations necessary to permit the Company to lawfully conduct and operate its business and operations in the manner currently conducted and operated, and to permit the Company to own and use its assets in the manner in which it currently owns and uses such assets.

Section 2.18Legal Proceedings; Orders.

(a)Except as set forth in Schedule 2.18(a) of the Stockholder Disclosure Schedule, there is no pending Proceeding:

(i)that has been commenced by or against the Company or that otherwise relates to or may affect the business and operations of the Company or any of the assets owned or used by the Company; or

(ii)      that challenges, or that may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the Contemplated Transactions.

(b)The Proceedings listed or required to be listed in Schedule 2.18(a) of the Stockholder Disclosure Schedule will not, individually or in the aggregate, have a Materially Adverse Effect. To the Company’s Knowledge, no Proceeding such as is described in Section 2.18(a) has been threatened, and no event has occurred or circumstance exists that may give rise to or serve as a basis for the commencement of any such Proceeding.

(c)Except as set forth in Schedule 2.18(c) of the Stockholder Disclosure Schedule, there is no Order to which the Company, or any of the assets owned or used in the business and operations of the Company, is subject.

(d)Except as set forth in Schedule 2.18(d) of the Stockholder Disclosure Schedule:

(i)      the Company is, and at all times has been, in full compliance with all of the terms and requirements of each Order to which it, or any of the assets owned or used by it, is or has been subject;

(ii)     no event has occurred or circumstance exists that may constitute or result in (with or without notice or lapse of time) a violation of or failure to comply with any term or requirement of any Order to which the Company, or any of the assets owned or used in the business and operations of the Company, is subject; and

(iii)    the Company has not received any notice or other communication (whether oral or written) from any Governmental Body or any other Person regarding any actual, alleged, possible, or potential violation of, or failure to comply with, any term or requirement of

16

any Order to which the Company, or any of the assets owned or used in the business and operations of the Company, is subject.

Section 2.19Absence of Certain Changes and Events. Except as contemplated hereby or as set forth in Schedule 2.19 of the Stockholder Disclosure Schedule, since June 30, 2006, there have not been any of the following occurrences:

(a)purchase, redemption, retirement, or other acquisition by the Company of any equity securities, or declaration or payment of any dividend or other distribution or payment in respect of its equity securities, other than the Pre-Closing Cash Redemption and actions in the Ordinary Course of Business;

(b)amendment to the Organizational Documents of the Company;

(c)merger, consolidation with, or acquisition of the business of any other corporation or business organization, or acquisition of any material property or assets of any other Person;

(d)increase by the Company of any bonuses, salaries, or other compensation to any officer, director, or employee that constitutes a material increase in such Person's bonus, salary or compensation, or entry into any employment, severance, or similar Contract with any officer, director, or employee other than in the Ordinary Course of Business;

(e)adoption of, or increase in the payments to or benefits under, any Benefit Plan for or with any employees of the Company other than as required by applicable Legal Requirements or in the Ordinary Course of Business;

(f)incurrence of any additional indebtedness for borrowed money other than in the Ordinary Course of Business or, issuance of any debt securities, or assumption, guarantee, or endorsement of the obligations of any Person;

(g)discharge or satisfaction of any Liens or payment of any material Liabilities (whether individually or in the aggregate) other than in the Ordinary Course of Business;

(h)failure to pay or discharge any material Liability when due;

(i) reduction or cancellation of any amounts owed to the Company, or settlement of any claims or Proceedings against the Company, other than in the Ordinary Course of Business;

(j)damage to or destruction or loss of any asset or property of the Company, whether or not covered by insurance, which, individually or in the aggregate reasonably would be expected to exceed $100,000 or may otherwise have a Materially Adverse Effect;

(k)entry into, termination of, or receipt of notice of termination of (i) any license, distributorship, dealer, sales representative, joint venture, credit, or similar agreement, or (ii) any Contract or transaction involving a total remaining commitment by or to the Company of at least $100,000, other than in the Ordinary Course of Business;

(l)sale, lease, or other disposition of any asset or property of the Company or mortgage, pledge, or imposition of any other Lien on any asset or property of the Company, except in the Ordinary Course of Business;

(m)    labor unrest or union organizing activity;

17

(n) Contract, transaction, or arrangement with any Stockholder, officer, director, or Affiliate of the Company, or any Affiliate or Related Person of any of the foregoing;

(o)    material change in the accounting methods used by the Company; or

(p)    agreement, whether oral or written, by the Company to do any of the foregoing.

Section 2.20Contracts; No Defaults.

(a)Schedule 2.20(a) of the Stockholder Disclosure Schedule contains a complete list of all Material Contracts. For purposes of this Agreement, "Material Contract" means all Contracts that are material to the business and operations of the Company, including but not limited to all of the following types of Contracts to which the Company is a party or by which the Company or any of its properties is bound:

(i)          Contracts, other than transportation or carrier agreements, that involve performance of services or delivery of goods or materials by the Company of an amount or value in excess of $100,000 within a six-month period and are not terminable on less than sixty (60) days notice;

(ii)        Contracts that involve performance of services or delivery of goods or materials to the Company of an amount or value in excess of $100,000 within a six-month period and are not terminable on less than sixty (60) days notice;

(iii)        Contracts that were not entered into in the Ordinary Course of Business;

(iv)       Real Property Leases or other Real Property Documents;

(v)       mortgages, indentures, loan or credit agreements, security agreements, and other agreements and instruments relating to the borrowing of money or extension of credit;

(vi)      leases for machinery, equipment, motor vehicles, furniture, office equipment, or other personal property, having aggregate remaining lease payments in excess of $100,000;

(vii)    Contracts with any of the Company's 15 largest customers, based on the Company's 2006 revenues year-to-date, as well as any Contracts for "dedicated" or similar services;

(viii)   licensing agreements or other Contracts with respect to patents, trademarks, copyrights, or other intellectual property, including agreements with current or former employees, consultants, or contractors regarding the appropriation or the non-disclosure of any intellectual property assets;

(ix)      collective bargaining agreements or other Contracts to or with any labor union or other employee representative of a group of employees;

(x)      joint venture, partnership, or other Contracts (however named) involving a sharing of profits, losses, costs, or liabilities by the Company with any other Person;

(xi)    Contracts containing covenants that in any way purport to restrict the business activity of the Company or any of its key employees or limit the freedom of the

18

Company or any of its key employees to engage in any line of business or to compete with any Person;

(xii)      Contracts providing for payments to or by any Person based on sales, purchases, or profits, other than direct payments for goods or services;

(xiii)     powers of attorney;

(xiv)    guaranties, performance, bid or completion bonds, surety or appeal bonds, return of money bonds, and surety or indemnification agreements involving at least $100,000;

(xv)     custom bonds and standby letters of credit involving at least $100,000;

(xvi)   Contracts where the consequences of a breach or default thereunder, or the termination, expiration, or cancellation thereof, would reasonably be expected to have a Materially Adverse Effect;

(xvii)   employment, independent contractor, and consulting Contracts listed on Schedule 2.16(a);

(xviii)  Contracts entered into other than in the Ordinary Course of Business that contains or provides for an express undertaking by the Company to be responsible for consequential damages;

(xix)     Contracts for capital expenditures in excess of $100,000;

(xx)     any written warranty or other similar undertaking with respect to contractual performance extended by the Company other than in the Ordinary Course of Business;

(xxi)    any Contract between the Company and one or more Related Person(s);

(xxii)   Applicable Equipment Documents; and

(xxiii)  any amendment, supplement, and modification (whether oral or written) in respect of any of the foregoing.

(b)Except as set forth in Schedule 2.20(b) of the Stockholder Disclosure Schedule, each Material Contract identified or required to be identified in Schedule 2.20(a) of the Stockholder Disclosure Schedule is in full force and effect and is valid and enforceable in accordance with its terms.

(c)Except as set forth in Schedule 2.20(c) of the Stockholder Disclosure Schedule:

(i) The Company is and at all times has been in compliance in all material respects with all applicable terms and requirements of each Material Contract under which the Company has or had any obligation or liability or by which the Company or any of the assets owned or used by the Company is or was bound;

(ii)        to the Company's Knowledge, no event has occurred or circumstance exists that (with or without notice or lapse of time, or both) may contravene, conflict with, or result in a violation or breach of, or give the Company or any other Person the right to declare a

19

default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate, or modify, any Material Contract. The Company has not given to or received from any other Person any written notice or other written communication regarding any actual, alleged, possible, or potential violation or breach of, or default under, any Material Contract; and

(iii)     neither the execution and delivery of this Agreement, nor the consummation of the Contemplated Transactions, will result in a violation or breach of, or give the Company or any other Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate, or modify, any Material Contract.

(d)There are no renegotiations of, attempts to renegotiate, or outstanding rights to renegotiate any material amounts paid or payable to the Company under current or completed Material Contracts with any Person and no such Person has made written demand for such renegotiation.

(e)The Material Contracts to which the Company is a party have been entered into in the Ordinary Course of Business and have been entered into without the commission of any act, alone or in concert with any other Person, or any consideration having been paid or promised, that is or would be in violation of any Legal Requirement.

Section 2.21Insurance.

(a)Schedule 2.21(a) of the Stockholder Disclosure Schedule describes each policy of insurance to which the Company is a party or that provides coverage to the Company. The Company and the Stockholders have delivered to Covenant:

(i) true and complete copies of all policies of insurance to which the Company is a party or under which the Company is or has been covered at any time within the five years preceding the date of this Agreement;

(ii)       true and complete copies of all pending applications for policies of insurance; and

(iii)      any review by any actuary, and any statement by any auditor of the Financial Statements, with regard to the adequacy of coverage or of the reserves for claims.

(b)Schedule 2.21(b) of the Stockholder Disclosure Schedule describes:

(i)any self-insurance arrangement by or affecting the Company, including any reserves established thereunder;

(ii)      any contract or arrangement, other than a policy of insurance or general risk allocation provision in transportation or carrier agreements, for the transfer or sharing of any risk by the Company; and

(iii)     all obligations of the Company to third parties with respect to insurance (including such obligations under leases and service agreements but excluding general insurance provisions in transportation or carrier agreements) and identifies the policy under which such coverage is provided.

(c)The Stockholders have delivered to Covenant a summary report of the loss experience under each policy for the five preceding policy years, and a copy of the last page of each such

20

loss experience summary report for each of the five preceding policy years is set forth in Schedule 2.21(c) of the Stockholder Disclosure Schedule. Schedule 2.21(c) of the Stockholder Disclosure Schedule also sets forth, by year, for the current policy year and each of the five preceding policy years:

(i) a summary of all open claims under each insurance policy;

(ii)        a statement describing each claim under an insurance policy for an amount in excess of $100,000, which sets forth:

(A) the name of the claimant;

(B) a description of the policy by insurer, type of insurance, and period of coverage; and

(C) the amount and a brief description of the claim; and

(iii)          a statement describing the loss experience for all claims that were self-insured, including the number and aggregate cost of such claims.

(d)Except as set forth on Schedule 2.21(d) of the Stockholder Disclosure Schedule:

(i) All policies to which the Company is a party or that provide coverage to the Company:

(A) are valid, outstanding, and enforceable;

(B) are issued by an insurer that is financially sound and reputable;

(C) taken together, provide adequate insurance coverage for the assets and the operations of the Company for all risks to which the Company are normally exposed;

(D) are sufficient for compliance with all material Legal Requirements involving the retention of insurance coverage and Material Contracts to which the Company are parties or by which any of them is bound;

(E) will continue in full force and effect following the consummation of the Contemplated Transactions; and

(F) do not provide for any retrospective premium adjustment or other experienced-based liability on the part of the Company.

(ii)     The Company has not received (A) any refusal of coverage or any notice that a defense will be afforded with reservation of rights, or (B) any notice of cancellation or any other indication that any insurance policy is no longer in full force or effect or will not be renewed or that the issuer of any policy is not willing or able to perform its obligations thereunder.

(iii)    The Company has paid all premiums due, and has otherwise performed all of its obligations, under each policy to which it is a party or that provides coverage to the Company.

21

(iv)    The Company has given notice to the insurer of all claims that may be insured thereby.

Section 2.22Environmental Matters. Except as set forth in Schedule 2.22 of the Stockholder Disclosure Schedule:

(a)The Company (including the Real Property) is and at all times has been operated in material compliance with applicable Environmental Laws, which compliance includes but is not limited to the possession by the Company of all permits and governmental authorizations required under applicable Environmental Laws for the operations and activities of the Company as such operations and activities are conducted on the date of this Agreement, and compliance with the terms and conditions thereof.

(b)The Company has not treated, stored, managed, disposed of, transported, handled, released, or used any Materials of Environmental Concern except in the Ordinary Course of Business and in compliance with all applicable Environmental Laws, and to the Company’s Knowledge, no third party has treated, stored, managed, disposed of, transported, handled, released or used any Materials of Environmental Concern on any premises used in the conduct of the Company’s business except in the Ordinary Course of Business and in compliance with all applicable Environmental Laws;

(c)There are no Environmental Claims pending or, to the Company’s Knowledge, threatened against the Company, and to the Company’s Knowledge, no circumstances exist which could reasonably be expected to lead to the assertion of an Environmental Claim against the Company.

(d)(i) There are no underground storage tanks located on any Owned Real Property, Leased Real Property, or any Facilities operated by the Company, or, to the Company's Knowledge, on any property adjacent thereto; (ii) to the Company's Knowledge, there is no asbestos-containing material (as defined under Environmental Laws) contained in or forming part of any building, building component, structure, office space or other Facility owned, leased or operated by the Company; and (iii) to the Company's Knowledge, there are no PCBs or PCB-containing items contained in or forming part of any building, building component, structure, office space or other Facility owned, leased or operated by the Company.

(e)The Company and the Stockholders have delivered to Covenant true and complete copies and results of any reports, studies, analyses, tests, or monitoring possessed or initiated by or on behalf of the Company pertaining to Materials of Environmental Concern or the treatment, storage, management, disposal, transportation, handling, release or use of Materials of Environmental Concern, or concerning compliance by the Company, or any other Person for whose conduct the Company is or may be held responsible, with Environmental Laws.

Section 2.23Employees; Independent Contractors.

(a)Schedule 2.23(a) of the Stockholder Disclosure Schedule contains a complete and accurate list of the following information for each non-driver employee, officer, or director of the Company, including each employee on leave of absence or layoff status: name; job title; current compensation paid or payable and any change in compensation since January 1, 2005; vacation accrued; and service credited for purposes of vesting and eligibility to participate under any Benefit Plan.

(b)Unless otherwise disclosed on Schedule 2.23(b) of the Stockholder Disclosure Schedule, to the Company's Knowledge, no employee, officer, or director of the Company is a party to, or is otherwise bound by, any agreement or arrangement, including any confidentiality, noncompetition, or proprietary rights agreement, between such employee, officer, or director and any other Person that in

22

any way adversely affects or will affect (i) the performance of his or her duties as an employee, officer, or director of the Company, or (ii) the ability of the Company to conduct its business and operations.

(c) Schedule 2.23(c) of the Stockholder Disclosure Schedule contains a complete and accurate list of the following information for each retired employee, officer, or director of the Company, or their dependents, receiving benefits or scheduled to receive benefits in the future under any Benefit Plan: name, description of benefits, start and end date for benefits, and recipient contribution toward benefits.

(d) Except as set forth in Schedule 2.23(d) of the Stockholder Disclosure Schedule, there are no Contracts, Benefit Plans, or other arrangements which would give rise to any severance, termination, change-in-control, or other similar payment to any employee, officer, director, or independent contractor of the Company as a result of the execution and delivery of this Agreement and the consummation of the Contemplated Transactions, and the Company is not a party to any employment agreement, whether written or oral, with any employee.

(e)The Company maintains accurate and up-to-date files and records for all employee and independent contractor drivers, and all such driver files contain all information and materials required under applicable Legal Requirements. Each employee and independent contractor driver of the Company meets all DOT requirements.

(f)Each independent contractor providing equipment and/or services to the Company have been retained under a valid Contract, and a copy of each standard form of Contract used by the Company for independent contractors has been delivered to Covenant.

(g)The Company has not taken any action in respect of its employees that would require notice or create any Liability under the Worker Adjustment and Retraining Notification Act, and the Company does not have any present plans to take such action.

Section 2.24Labor Relations; Compliance. The Company has not ever been a party to any collective bargaining or other labor Contract, and has never been part of a consolidated or controlled group of companies that was a party to any collective bargaining or other labor Contract. Since January 1, 2001, there has not been, there is not presently pending or existing, and, to the Company’s Knowledge, there is not threatened, (a) any strike, slowdown, picketing, work stoppage, or employee grievance process, (b) any Proceeding against or affecting the Company relating to the alleged violation of any Legal Requirement pertaining to labor relations or employment matters, including any charge or complaint filed by an employee or union with the National Labor Relations Board, the Equal Employment Opportunity Commission, or any comparable Governmental Body, organizational activity, or other labor or employment dispute against or affecting the Company or any of its premises, or (c) any application for certification of a collective bargaining agent. No event has occurred or circumstance exists that reasonably could provide the basis for any work stoppage or other labor dispute. There is no lockout of any employees by the Company, and no such action is contemplated by the Company. The Companyhas complied in all material respects with all Legal Requirements relating to employment, equal employment opportunity, nondiscrimination, immigration, wages, hours, benefits, collective bargaining, the payment of social security and similar taxes, occupational safety and health, and plant closing. The Company is not liable for the payment of any compensation, damages, taxes, fines, penalties, or other amounts, however designated, for failure to comply with any of the foregoing Legal Requirements.

23

Section 2.25Trade Rights; Intellectual Property.

(a)For purposes of this Agreement, "Trade Rights" means the trade name "Star Transportation" and any other trademarks, trade names or service marks used in the business and operations of the Company. "Intellectual Property" means all mailing lists, all customer lists, all prospect lists, all advertising materials used in the business and operations of the Company, all logos used in the business and operations of the Company, all telephone and facsimile numbers used in the business and operations of the Company, and all intellectual property used or useful in connection with or relating to the business and operations of the Company or under development, including without limitation all copyrights, patents, trade secrets, proprietary and technical information, research and development, processes, formulas, and know-how, together with all rights to, and all applications, registrations, and licenses for, any of the foregoing, in any form or media, and any other intangible assets of the Company used in the business and operations of the Company.

(b)The Trade Rights and Intellectual Property used in the business and operations of the Company are, individually and in the aggregate, in all material respects valid, subsisting, and in full force and effect and are owned by the Company free and clear of any material Liens or adverse claims of any Person. The Company has not and does not infringe upon or unlawfully or wrongfully use any U.S. patent, trademark, trade name, service mark, copyright, trade secret or other intellectual property owned or claimed by any other Person. To the Company’s Knowledge,no other Person is making unauthorized use of any of the Trade Rights or Intellectual Property. The Company has not granted any licenses or other rights to any Person to use any of the Trade Rights or Intellectual Property. To the Company’s Knowledge, it is not in default under any notice of any claim of infringement or any other claim or proceeding relating to, any patent, trademark, trade name, service mark, copyright, trade secret, domain name, web site or other intellectual property. As of the Closing, Covenant will have the right to use all Trade Rights and Intellectual Property.

Section 2.26Tractors and Trailers; Compliance.

(a)Except as set forth in Schedule 2.26(a) of the Stockholder Disclosure Schedule, each of the tractors and trailers owned, operated, or leased by the Company (i) is in reasonable operating condition and repair, ordinary wear and tear excepted, and adequate for use in the Ordinary Course of Business of the Company as conducted as of the Closing Date, (ii) has been adequately maintained in accordance with the internal maintenance schedules of the Company; (iii) is in material compliance with all applicable manufacturer's specifications and warranty requirements; and (iv) meets all applicable operating condition requirements of the DOT.Schedule 2.26(a) identifies each tractor and trailer owned, operated, or leased by the Company that is not currently in operable condition as of the Closing Date.

(b)Schedule 2.26(b) of the Stockholder Disclosure Schedule sets forth a list of all tractors and trailers that are owned, leased, or operated by the Company. All tractors and trailers have been operated at all times in material compliance with applicable leases, other financing documents, tradeback, buyback and other Contracts or arrangements with manufacturers, distributors, dealers, or their Affiliates, and all other applicable Contracts (collectively, "Applicable Equipment Documents"). Each leased tractor and leased trailer has been operated within the mileage allowance (subject in each case to mileage aggregation agreements with third parties), if any, of the Applicable Equipment Document, prorated for the portion of the period that has expired. There are no late fees, penalties, or other amounts owing under any Applicable Equipment Document, other than any current month payment that is not yet due. The Company possesses good and marketable title to its owned tractors and trailers, and a valid leasehold interest in its leased tractors and trailers, subject to Permitted Liens.

(c)Each of the tractors and trailers owned, operated, or leased by the Company is properly licensed and registered with applicable authorities in accordance with permissible practices.

24

Such licenses and registrations are current, all current license plates and stickers are properly affixed to such equipment, and all fees have been paid. The Company has never received an unsatisfactory or conditional safety and fitness rating from the Federal Motor Carrier Safety Administration ("FMCSA"), or its predecessor the Federal Highway Administration ("FHWA"), as a result of a compliance review for any of the factors that are considered by the FMCSA or FHWA, and there is no Proceeding pending that could result in an unsatisfactory or conditional safety and fitness rating. The Company is and at all times has been in compliance in all material respects with all FMCSA regulations.

Section 2.27Relationships with Related Persons. Except as set forth on Schedule 2.27 of the Stockholder Disclosure Schedule, none of the Company's Stockholders, former stockholders, directors, officers, and employees of the Company, and none of their respective Related Persons and Affiliates, have any interest in any of the properties or assets of or used by the Company and do not own, of record or as a beneficial owner, an equity interest or any other financial or profit interest in any Person that (i) has had business dealings or a material financial interest in any transaction with the Company, or (ii) has engaged or is engaged in competition with the business and operations of the Company. Except as set forth in Schedule 2.27 of the Stockholder Disclosure Schedule, neither the Stockholders, nor any director or officer of the Company, and none of their Related Persons or Affiliates, is a party to any Contract with, or has any claim or right against, the Company.

Section 2.28Prepayment of Indebtedness. Except as set forth in Schedule 2.28 of the Stockholder Disclosure Schedule, all indebtedness of the Company may be prepaid at any time without penalty.

Section 2.29Bank Accounts. Schedule 2.29 of the Stockholder Disclosure Schedule sets forth a list of all banks or other financial institutions with which the Company has an account, lock box, safe deposit box, or borrowing authority, specifying with respect to each, the name and address of the bank or other financial institution, the account number, and the names of the Persons authorized as signatories thereon or to act or deal in connection therewith.

Section 2.30Officers and Directors; Powers of Attorney. Schedule 2.30 of the Stockholder Disclosure Schedule sets forth a list of all officers and directors of the Company, and all Persons having power of attorney, authority as agent, or other authority to act on behalf of the Company or on behalf of any officer or director of the Company (in their capacity as an officer or director).

Section 2.31Certain Actions and Payments Prior to Closing. Prior to the Closing, the Company and the Stockholders have, (a) taken all actions necessary to cause the cancellation and termination of all options, warrants, other rights to acquire capital stock or other equity securities of the Company, and any other derivative or equity-linked rights held by any employee, officer, director, Stockholder, any of their Affiliates, or any other Person; (b) paid in full any severance, termination, change-in-control, or other similar payment to any employee, officer, director, Stockholder, any of their Affiliates, or any other Person, which results from the execution and delivery of this Agreement or the consummation of the Contemplated Transactions (other than the payments of the Purchase Price to the Stockholders contemplated herein), all of which are set forth in Schedule 2.23(d) of the Stockholder Disclosure Schedule; and (c) paid in full all Transaction Expenses of the Company and the Stockholders.

Section 2.32Interest Rate Swap. The interest rate swaps or similar Contracts to which the Company is a party, copies of each of which are attached hereto as Schedule 2.32 of the Stockholder Disclosure Schedule (the "Interest Rate Swaps"), are in full force and effect as of the Closing.

Section 2.33Stockholder Liabilities. Prior to the Closing, the Stockholders have paid in full all obligations (including interest) owed by them to the Company. As of the Closing Date, no Stockholder has any Liability or Debt owed by such Stockholder to the Company.

25

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF COVENANT

As of the Closing Date, Covenant represents and warrants to the Stockholders as follows:

Section 3.1Organization and Good Standing. Covenant is a corporation duly organized, validly existing, and in good standing under the laws of the State of Nevada with all requisite corporate power and authority to carry on the business in which it is engaged, own the properties it owns, and execute, deliver, and perform this Agreement and the other Transaction Documents to which it is a Party.

Section 3.2Authorization and Validity. The execution, delivery, and performance of this Agreement and the other Transaction Documents by Covenant, and the consummation of the Contemplated Transactions, have been duly authorized, and no other proceedings or approval are necessary to authorize the execution, delivery, and performance of this Agreement by Covenant. This Agreement has been, and each of the other Transaction Documents at or prior to the Closing will be, duly and validly executed and delivered by Covenant and constitute or will constitute, as of the Closing, the legal, valid and binding obligations of Covenant, enforceable against Covenant in accordance with their respective terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors' rights generally, and as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.

Section 3.3No Violation. Neither the execution and performance by Covenant of this Agreement or the Transaction Documents nor the consummation or performance by Covenant of the Contemplated Transactions will, directly or indirectly (with or without notice or lapse of time): (a) contravene, conflict with, or result in a violation of (i) any provision of the Organizational Documents of Covenant, (ii) any resolution adopted by the board of directors of Covenant, (iii) any Order applicable to Covenant, or (iv) any Legal Requirement applicable to Covenant; or (b) contravene, conflict with, or result in a violation of, or give any Governmental Body or other Person the right to challenge any of the Contemplated Transactions.

Section 3.4Finder's Fee. Covenant has not incurred any obligation, contingent or otherwise, for any finder's, broker's or agent's fee in connection with the Contemplated Transactions, other than Covenant's agreement to pay a portion of the fees under that certain finder's fee arrangement identified on Schedule 2.6 of the Stockholder Disclosure Schedule, as specifically set forth in Section 6.7 hereof.

Section 3.5Consents. Except as set forth in Schedule 3.5 of the Covenant Disclosure Schedule, no Consent of, or filing with, any Governmental Body or any other Person is required to authorize, or is required in connection with, the execution, delivery, and performance by Covenant of this Agreement or consummation by Covenant of the Contemplated Transactions.

ARTICLE IV

OTHER AGREEMENTS

Section 4.1Guaranties. Covenant shall use commercially reasonable efforts to obtain the full release of the Stockholders from any liability with respect to the personal guaranties by the Stockholders of the obligations of the Company, including those identified on Schedule 4.1 of the Stockholder Disclosure Schedule (the "Stockholder Guaranties"). From and after the Closing, Covenant shall indemnify and hold the Stockholders harmless from and against any liability under the Stockholder Guaranties to the extent expressly set forth herein.

26

Section 4.2Certain Tax Matters.

(a)Tax Returns. The Stockholders shall prepare or cause to be prepared, and file or cause to be filed all Tax Returns or claims for refund of the Company for all taxable periods of the Company ending on or prior to the Closing Date (the "Pre-Closing Tax Returns"). For clarification, if no Section 338(h)(10) Election is made, the Company’s final federal Form 1120S for the taxable period ended the day prior to the Closing Date will be considered a Pre-Closing Tax Return to be filed by the Stockholders and, if a Section 338(h)(10) Election is made, the Company's final Form 1120S for the taxable period ended on the Closing Date will be considered a Pre-Closing Tax Return to be filed by the Stockholders. To the extent permitted by applicable Legal Requirements, the Stockholders shall include any income, gain, loss, deduction or other tax items for such periods on their Tax Returns in a manner consistent with the Schedule K-1s furnished by the Company to the Stockholders for such period. Covenant shall timely prepare and file (or cause to be prepared and filed) all Tax Returns of the Company for taxable periods ending after the Closing Date (the "Post-Closing Tax Returns"). For clarification, pursuant to Treasury Regulations Section 1.1502-76(b)(1)(ii)(A)(2), if no Section 338(h)(10) Election is made, the Company will become a member of Covenant’s consolidated group at the beginning of the Closing Date, with any Closing Date income of the Company included in the applicable federal Form 1120 of the Covenant consolidated group. Covenant shall timely pay or cause to be paid all Taxes relating to any Post-Closing Tax Returns.

(b)Cooperation and Information. The Stockholders, the Company and Covenant shall provide each other with such cooperation and information as either of them reasonably may request of the other in filing any Tax Return, determining a liability for Taxes or a right to a refund of Taxes or participating in or conducting any audit or other proceeding in respect of Taxes. Such cooperation and information shall include providing copies of relevant Tax Returns or portions thereof, together with related work papers and documents relating to rulings or other determinations by taxing authorities. Notwithstanding anything to the contrary in this Agreement, each party shall retain all Tax Returns, work papers and all material records or other documents relating to Tax matters of the Company for the taxable period that includes the Closing Date and for all prior taxable periods until the date that is six (6) months after the expiration of the statute of limitations applicable to such Tax.

(c)Contests. After the Closing, Covenant shall promptly notify the Stockholders in writing of the proposed assessment or the commencement of any Tax audit or administrative or judicial proceeding or of any demand or claim on Covenant or the Company which, if determined adversely to the taxpayer or after the lapse of time, could be grounds for payment of Taxes or indemnification by the Stockholders under this Agreement. Such notice shall contain factual information (to the extent known to Covenant or the Company) describing the asserted Tax liability in reasonable detail and shall include copies of any notice or other document received from any taxing authority in respect of any such asserted Tax liability. If Covenant fails to give the Stockholders prompt notice of an asserted Tax liability as required by this section, then the Stockholders shall not have any obligation to indemnify for any loss arising out of such asserted Tax liability under this Agreement; provided, however, that failure to give such notification shall not affect the indemnification provided hereunder except to the extent that the Indemnifying Party shall have been prejudiced as a result of such failure (except that the Indemnifying Party shall not be liable for any expenses incurred during the period in which the Indemnified Person failed to give such notice). In the case of a Tax audit or administrative or judicial proceeding (a "Contest") that relates to periods ending on or before the Closing Date, the Stockholders shall have the sole right to direct and control the conduct of such Contest. With respect to any Contest for any period beginning before the Closing Date and ending after the Closing Date, the Party which would bear the burden of the greater portion of the sum of the adjustments that may reasonably be anticipated for such period may elect to direct and control, through counsel of its own choosing, such Contest. If the Stockholders elect to direct any Contest or portion of a Contest, the Stockholders shall promptly notify Covenant of its intent to do so, and Covenant shall cooperate and shall cause the Company to fully

27

cooperate in each phase of such Contest. If the Stockholders elect not to direct the Contest, Covenant shall assume control of such Contest and such Contest shall be subject to indemnification in accordance with Article V hereof. Covenant shall keep the Stockholder Representative reasonably informed of the status of such Contest. In any case, neither Covenant and the Company on the one hand, or the Stockholders, on the other hand, may settle or compromise any asserted liability without prior written consent of the other affected party, which consent may not be unreasonably withheld, conditioned, or delayed. In any event, any party may participate, at their own expense, in the Contest.

(d)Section 338(h)(10) Election.

(i)As soon after the Closing Date as practicable and in any event not later than December 31, 2006, Covenant shall give the Stockholder Representative written notice as to whether Covenant will make an election under Code § 338(h)(10) (and any corresponding elections under state, local or foreign tax law) (a "Section 338(h)(10) Election") with respect to the purchase and sale of the Shares of the Company hereunder.

(ii)      In the event of a Section 338(h)(10) Election by Covenant, the Stockholders agree that the Purchase Price and the liabilities of the Company (and other relevant items) will be allocated to the Company's assets for all purposes (including Tax and financial accounting purposes) in accordance with Code § 338(h)(10) and pursuant to an allocation schedule determined and prepared by Covenant in its discretion and consistent with applicable Legal Requirements (the "Allocation Schedule"). Such Allocation Schedule shall be provided by Covenant to the Stockholder Representative at the same time it provides written notice of the Section 338(h)(10) Election. In the event of a Section 338(h)(10) Election by Covenant, the Parties agree that Covenant, the Company, and the Stockholders will file all Tax Returns (including amended Tax Returns and claims for refund as appropriate) and information returns in a manner consistent with the Section 338(h)(10) Election and the Allocation Schedule. In such event, Covenant shall prepare, and the Stockholders agree to sign and to promptly take all actions necessary to join Covenant in filing, Internal Revenue Service Form 8023, all required attachments thereto, and all comparable state forms and schedules, consistent with the Allocation Schedule and within the time limits required by applicable Legal Requirements. Each Stockholder agrees to provide Covenant with any information required to complete Form 8023. If any changes, supplements, or amendments are required to be made to any such forms, attachments and schedules, the Stockholders shall promptly take all actions necessary to enable Covenant to effect such changes, supplements, or amendments.

(iii)     In the event of a Section 338(h)(10) Election by Covenant, any income, gain, loss, deduction, or other Tax item resulting from the Section 338(h)(10) Election shall be included by the Stockholders in the Stockholders' Tax Returns in a manner consistent with the Schedule K-1s furnished by the Company to the Stockholders to the extent required by applicable Legal Requirements. In such event, Covenant shall pay to each Stockholder, in cash, the amount of additional consideration necessary, including any incremental amount further grossing up such additional consideration for any Taxes arising from such payment, to cause such Stockholder's aggregate after-Tax net proceeds from the sale of such Stockholder's Shares with the Section 338(h)(10) Election to be equal to the aggregate after-Tax net proceeds that such Stockholder would have received had the Section 338(h)(10) Election not been made, taking into account all appropriate state, federal, local, and foreign Tax implications (the "Tax Adjustment"). Each Stockholder shall provide Covenant with a schedule computing the amount of the Tax Adjustment (the "Tax Adjustment Schedule") within ten (10) days after Covenant provides notice to such Stockholder of the Section 338(h)(10) Election. If Covenant shall dispute any Tax Adjustment Schedule, the Parties shall negotiate in good faith to determine the proper adjustment for a period of thirty (30) days. If the parties do not reach agreement within such period, then the

28

disputed portion of the adjustment shall be referred to the Independent Accountants for determination. The Party whose proposed adjustment was most different from the Independent Accountant's shall bear the cost of the Independent Accountants. The amount of the Tax Adjustment as finally determined shall be paid by Covenant to each Stockholder at or prior to the later of (i) the time such Stockholder signs Form 8023 to make the federal Section 338(h)(10) Election and (ii) five (5) days after final determination of such Stockholder's Tax Adjustment Schedule; but in any event no later than January 15, 2007.

(iv)     In the event of a Section 338(h)(10) Election by Covenant, the Parties agree to be bound by the Allocation Schedule and shall take no action inconsistent with the Section 338(h)(10) Election or the Allocation Schedule for the purpose of all Tax Returns filed by them, and shall not voluntarily take any action inconsistent therewith unless required by applicable Legal Requirements. In the event of any Contest which impacts the Section 338(h)(10) Election and the Tax Adjustments, the Party receiving notice of such Contest shall promptly notify the other Parties thereof, and such Contest shall be subject to the procedures set forth in Section 4.2(c) above. If any such Contest, upon final determination, results in a change in the Tax Adjustment previously agreed or determined as to any Stockholder, then (A) any increase in such Tax Adjustment resulting from such Contest shall be paid by Covenant to such Stockholder and (B) any decrease in such Tax Adjustment resulting from such Contest shall be paid by such Stockholder to Covenant.

Section 4.3Use of Office Space and Assistant. The Company will provide Beth D. Franklin and her father with continuing use of their offices at the Company's headquarters in Nashville, Tennessee, and exclusive access to their current assistant, Mandee Johnson, for a period of one (1) year following the Closing. During such period, the Company shall continue to pay Ms. Johnson's current salary as of the Closing, and shall continue to provide Ms. Johnson with her existing benefits as of the Closing Date.

Section 4.4Group Health Coverage. Each of the Stockholders shall be entitled to continuing group health coverage under the Company's group health insurance plan in effect as of the date hereof (the "Company Group Health Plan") for a period of up to three years following the Closing Date pursuant to the continuing coverage requirements of ERISA § 601 e. seq. and Code § 4980B ("COBRA"), solely to the extent such COBRA coverage is permissible under the Group Health Plan and applicable Legal Requirements. Except as may be otherwise provided in a separate written agreement with any Stockholder, any such COBRA coverage shall be provided solely at the expense of the participating Stockholders. Nothing in this Section 4.4 shall be deemed to provide to any Stockholder any rights beyond such Stockholder's rights pursuant to the Company Group Health Plan and COBRA, provided, however, that nothing in this Section 4.4 shall be deemed to affect or alter any contrary agreement for the Company to provide continuing coverage under COBRA or otherwise to a Stockholder as may be provided in a separate written agreement with such Stockholder, copies of each of which are attached hereto as Schedule 4.4 of the Stockholder Disclosure Schedule.

Section 4.5Lenoir City Property.

(a)The Parties acknowledge that (i) Star Development, Inc., a Tennessee corporation ("Star Development"), a corporation controlled by one or more of the Stockholders, is the owner of that certain real property located at 14700 El Camino Lane, Lenoir City, Tennessee, as more specifically described on Schedule 2.10 of the Stockholder Disclosure Schedule (the "Lenoir City Property"), and (ii) prior to the Closing, the Company has used and operated on the Lenoir City Property pursuant to an oral understanding, as more fully described on Schedule 2.10 of the Stockholder Disclosure Schedule.

29

(b)The Stockholders shall cause Star Development to, and Covenant, the Company, and the Stockholders shall, use good faith reasonable efforts to promptly negotiate and enter into a written lease of the Lenoir City Property on substantially the following terms: (i) an initial term of two (2) years, with automatic annual renewals thereafter; (ii) monthly rent in the amount of $2,000 during the initial term and any renewal term; (iii) the Company shall be responsible for all Taxes and insurance related to the Lenoir City Property; and (iv) Star Development shall not sell or transfer the Lenoir City Property prior to the end of the initial term, and shall provide Covenant and the Company with a right of first refusal for any proposed sale or transfer of the Lenoir City Property after the initial term.

ARTICLE V

INDEMNIFICATION; REMEDIES

Section 5.1Survival. The representations and warranties of the Company and the Stockholders contained in this Agreement (including the Schedules attached hereto), except for Sections 2.2 [Authorization and Validity], 2.3 [Capitalization], 2.14 [Taxes], 2.16 [Employee Benefits], and 2.22 [Environmental Matters], and in the certificate delivered pursuant to Section 1.4(a)(i), shall terminate on the first anniversary of the Closing Date (the "Basic Representation Survival Period"). The representations and warranties of the Company and the Stockholders set forth in Sections 2.14 [Taxes], 2.16 [Employee Benefits], and 2.22 [Environmental Matters] shall survive for a period of three (3) years following the Closing Date, and the representations and warranties of the Company and the Stockholders set forth in Sections 2.2 [Authorization and Validity] and 2.3 [Capitalization] shall survive until the expiration of the relevant statute of limitation (the "Extended Representation Survival Periods" and, together with the Basic Representation Survival Period, the "Survival Periods"). The obligations to indemnify and hold harmless any Covenant Indemnified Person or Stockholder Indemnified Person under this Article V shall terminate when the applicable Survival Period set forth in this Section 5.1 terminates; provided, however, that (a) such indemnification rights shall not terminate with respect to any item as to which a Covenant Indemnified Person or Stockholder, as applicable, shall have, before the expiration of the applicable Survival Period, previously made a claim pursuant to Sections 5.4 or 5.5 of this Agreement, and (b) the Survival Periods shall not apply to any Breach of any representation or warranty which constitutes actual fraud (as distinguished from an unknowing Breach) or which involves Sections 2.2 [Authorization and Validity], or 2.3 [Capitalization], in which event such representation and warranty shall survive the Closing. The payment of Damages or other remedy based on the representations, warranties, covenants, and obligations of the Parties contained in this Agreement (including the Schedules attached hereto) will not be affected by any investigation conducted with respect to, or any Knowledge acquired (or capable of being acquired) at any time, whether before or after the execution and delivery of this Agreement or the Closing Date, with respect to the accuracy or inaccuracy of or compliance with, any such representation, warranty, covenant, or obligation, except for, and to the extent of, Covenant's Actual Knowledge of Undisclosed Breach (as defined below) by the Stockholders as of the Closing Date. Covenant shall be deemed to have "Actual Knowledge of Undisclosed Breach" by the Stockholders as of the Closing Date only to the extent that, at the Closing: (x) Covenant Executives have Knowledge, based on a written due diligence report prepared by Covenant personnel or a third-party advisor engaged by Covenant to perform due diligence in connection with the Contemplated Transactions (a "Diligence Report"), of facts or circumstances that, taken together, represent a Breach by the Stockholders as of the Closing Date, (y) Covenant Executives have Knowledge, based on such Diligence Report, that such facts or circumstances in fact constitute such a Breach by the Stockholders as of the Closing Date, and (z) the Stockholders did not have Knowledge, and there was no Company Knowledge, of any such Breach. In the event of such Actual Knowledge of Undisclosed Breach by the Stockholders as of the Closing Date, Covenant shall be deemed to waive its right to indemnification pursuant to this Article V for Damages resulting from such Breach only to the extent of, and up to any specific dollar amount identified in, the applicable Diligence Report. Covenant represents and warrants to the

30

Stockholders that the Diligence Reports set forth all facts and circumstances of which Covenant Executives have Knowledge that, taken together, represent a Breach by the Stockholders as of the Closing Date and that, to the Knowledge of the Covenant Executives, in fact constitute such a Breach by the Stockholders as of the Closing Date. Notwithstanding any provision to the contrary set forth herein, the Stockholders shall bear the burden of proof that Covenant had Actual Knowledge of Undisclosed Breach as of the Closing Date. Except as specifically set forth above, the waiver of any condition based on the accuracy of any representation or warranty, or on the performance of or compliance with any covenant or obligation, will not affect the right to indemnification, payment of Damages, or other remedy based on such representations, warranties, covenants and obligations.

Section 5.2Indemnification and Payment of Damages by the Stockholders. The Stockholders, severally, will indemnify, defend, and hold harmless Covenant, the Company, and their respective Representatives (collectively, the "Covenant Indemnified Persons") for, and will pay to the Indemnified Persons the amount of, any and all costs, losses, liabilities, obligations, claims, damages (including incidental and consequential damages), deficiencies, expenses, diminution of value, whether or not involving a third-party claim, and all interest, penalties, reasonable attorneys' fees, and all reasonable amounts paid in investigation, defense, or settlement of any of the foregoing (collectively, "Damages"), arising, directly or indirectly, from or in connection with:

(a)any Breach of any representation or warranty made by the Company or the Stockholders in this Agreement, the Stockholder Disclosure Schedule, or any other certificate or document delivered by the Company or the Stockholders pursuant to this Agreement;

(b)any Breach by the Company or any of the Stockholders of any of its covenants or obligations in this Agreement; and

(c)any failure by the Company, prior to the Closing, to file any state Tax Return that is or was required to be filed by the Company, and any failure to pay any state Taxes that have or may have become due for any period prior to the Closing Date.

Section 5.3Indemnification and Payment of Damages by Covenant. Covenant will indemnify, defend, and hold harmless the Stockholders and their heirs, executors, and personal representatives (collectively, the "Stockholder Indemnified Persons") for, and will pay to the Stockholders the amount of, any Damages arising, directly or indirectly, from or in connection with:

(a)any Breach of any representation or warranty made by Covenant in this Agreement or any other certificate or document delivered by Covenant pursuant to this Agreement;

(b)any Breach by Covenant of any of its covenants or obligations in this Agreement;

Section 5.4Procedure for Indemnification - Third Party Claims.

(a)In order for a Covenant Indemnified Person or a Stockholder Indemnified Person (the "Indemnified Person") to be entitled to any indemnification provided for under Section 5.2 or Section 5.3 of this Agreement in respect of, or arising out of, a Third Party Claim, such Indemnified Person must notify the Party from whom indemnification is sought (the "Indemnifying Party") in writing of the Third Party Claim within ten (10) business days after receipt by the Indemnified Person of written notice of the Third Party Claim; provided, however, that failure to give such notification shall not affect the indemnification provided hereunder except to the extent that the Indemnifying Party shall have been prejudiced as a result of such failure (except that the Indemnifying Party shall not be liable for any expenses incurred during the period in which the Indemnified Person failed to give such notice).

31

Thereafter, the Indemnified Person shall deliver to the Indemnifying Party, within five (5) business days after receipt thereof, copies of all notices and documents (including court papers) received by the Indemnified Person relating to the Third Party Claim.

(b)If a Third Party Claim is made against an Indemnified Person, the Indemnifying Party will be entitled to participate in the related Proceeding and, if it so chooses, assume and control the defense of such Third Party Claim with counsel satisfactory to the Indemnified Person; provided, however, that the Indemnifying Party shall not be entitled to assume and control the defense of such Proceeding if (i) the Indemnifying Party is also a party to such Proceeding and the Indemnified Person determines in good faith that joint representation would be inappropriate, or (ii) the Indemnifying Party fails to provide reasonable assurance to the Indemnified Person of its financial capacity and willingness to actively and appropriately defend such Proceedings and provide indemnification with respect to such Third Party Claim. If the Indemnifying Party assumes the defense of such Third Party Claim, (i) it will be conclusively established for purposes of this Agreement that the Third Party Claim is within the scope of and subject to indemnification; (ii) no compromise or settlement of the Third Party Claim may be effected by the Indemnifying Party without the Indemnified Person's consent; and (iii) the Indemnified Person will have no liability with respect to any compromise or settlement of such Third Party Claim effected without its consent. If notice is given to an Indemnifying Party of the commencement of a Third Party Claim and the Indemnifying Party does not, within twenty (20) days after such notice is given, give notice to the Indemnified Person of its election to assume the defense of such Third Party Claim (to the extent permitted pursuant to Section 5.4(a)), the Indemnifying Party will be bound by any determination made in any related Proceeding or any compromise or settlement effected by the Indemnified Person.

(c)Notwithstanding the foregoing, if an Indemnified Person determines in good faith that there is a reasonable probability that a Third Party Claim may adversely affect it or its Affiliates other than as a result of monetary damages for which it would be entitled to indemnification under this Agreement, the Indemnified Person may, by notice to the Indemnifying Party, assume the exclusive right to defend, compromise, or settle such Third Party Claim at the sole cost and expense of the Indemnifying Party.

(d)The Stockholders hereby consent to the non-exclusive jurisdiction of any court in which a Third Party Claim is brought against any Indemnified Person for purposes of any claim that an Indemnified Person may have under this Agreement with respect to such Third Party Claim or the matters alleged therein, and agree that process may be served on the Stockholders with respect to such Third Party Claim anywhere in the world.

Section 5.5Procedure for Indemnification - Other Claims. A claim for indemnification for any matter not involving a Third Party Claim may be asserted by notice to the Party from whom indemnification is sought.

Section 5.6Limitations on Claims.

(a)The maximum aggregate liability of the Stockholders to the Covenant Indemnified Persons under Section 5.2(a) shall not exceed Four Million Dollars ($4,000,000) (the "General Cap"), and Covenant, on behalf of itself and the other Covenant Indemnified Persons, agrees not to seek, and shall not be entitled to recover, any Damages under Section 5.2(a) in excess of the General Cap. Notwithstanding the foregoing, the General Cap shall not limit any recovery by the Covenant Indemnified Persons (i) in the case of fraud, (ii) in any action involving a Breach of Section 2.2 [Authorization and Validity], or 2.3 [Capitalization], or (iii) in any claim for Damages under Sections 5.2(b) or 5.2(c). The Stockholders’ liability for Damages under Section 5.2(a) in excess of the General Cap shall be several, and not joint.

32

(b)No Covenant Indemnified Persons shall be entitled to recover any Damages pursuant to Section 5.2(a) unless the aggregate amount of all Damages for which Covenant Indemnified Persons would, but for this sentence, be entitled to receive indemnification pursuant to Section 5.2(a) exceeds Two Hundred Fifty Thousand Dollars ($250,000) (the "Damage Threshold"), and then only for such Damages in excess of the Damage Threshold. Notwithstanding the foregoing, the limitation in this Section 5.5(b) shall not apply (i) in the case of fraud, (ii) in any claim for Breach of Section 2.2 [Authorization and Validity] or 2.3 [Capitalization] or (iii) in any claim for Damages under Sections 5.2(b) or 5.2(c).

(c)The maximum aggregate liability of the Stockholders to the Covenant Indemnified Persons under Sections 5.2(c) shall not exceed One Hundred Thirty Thousand Dollars ($130,000) (the "Special Cap"), and Covenant, on behalf of itself and the other Covenant Indemnified Persons, agrees not to seek, and shall not be entitled to recover, any Damages under Sections 5.2(c) in excess of the Special Cap. Notwithstanding the foregoing, the Special Cap shall not limit recovery by the Covenant Indemnified Persons in any case based on fraud.

(d)During the term of the Escrow Agreement, all claims for indemnification of the Covenant Indemnified Persons pursuant to Sections 5.2(a) and 5.2(c) shall be paid first out of the Indemnity Escrow Funds in accordance with the terms of the Escrow Agreement and subject to the other limitations set forth in this Article V.

(e)Calculation of Damages.

(i)To the extent that any claim for indemnification for Damages under this Article V is covered by insurance held by the Indemnified Person, such Indemnified Person shall use its commercially reasonable efforts to seek recovery from the applicable insurer, provided that the Indemnifying Party agrees to reimburse the Indemnified Person for any reasonable out-of-pocket costs incurred by the Indemnified Person in connection with such recovery. Further, to the extent that any claim for indemnification for Damages under this Article V is covered by insurance held by the Indemnified Person, such Indemnified Person shall be entitled to indemnification pursuant to this Article V only with respect to the amount of the Damages that are in excess of (x) the cash proceeds received by such Indemnified Person pursuant to such insurance, minus (y) any costs of collecting such proceeds and any increased insurance costs related thereto (such increased insurance costs to include but not be limited to self-insured retention amounts, retrospective premium adjustments, increases in future premiums, indemnification obligations, and all other costs or detriments experienced by the Indemnified Person as a direct result of the claim or Damages). If such Indemnified Person receives such net cash insurance proceeds prior to the time such claim is paid, then the amount payable by the Indemnifying Party pursuant to such claim shall be reduced by the amount of such proceeds. If such Indemnified Person receives such net cash insurance proceeds after such claim has been paid, then upon the receipt by the Indemnified Person of any net cash proceeds pursuant to such insurance up to the amount of Damages incurred by such Indemnified Person with respect to such claim, such Indemnified Person shall promptly repay any portion of such amount which was previously paid by the Indemnifying Party to such Indemnified Person in satisfaction of such claim.

(ii)Any calculation of Damages for purposes of this Article V shall be reduced to take account of any Tax benefit (including, but not limited to, any Tax refund or credit but net of the Tax cost or detriment, if any, including but not limited to a reduction in basis of assets, reduction in net book value, loss of depreciation or amortization or similar deductions, or increase in gain upon a sale as a result of a reduction in or reallocation of the purchase price) actually realized by the Indemnified Person as a result of any such Damages. Any payment

33

hereunder shall initially be made without regard to this Section 5.6(e)(ii) and shall be reduced to reflect any such net Tax benefit only after the Indemnified Person has actually realized such benefit. If such Indemnified Person actually realizes such net Tax benefit after such claim has been paid, then upon the actual realization by the Indemnified Person of such net Tax benefit up to the amount of Damages incurred by such Indemnified Person with respect to such claim, such Indemnified Person shall promptly repay any portion of such amount which was previously paid by the Indemnifying Party to such Indemnified Person in satisfaction of such claim. For purposes of this Section 5.6(e)(ii), the Indemnified Person shall be deemed to have "actually realized" a net Tax benefit to the extent that, and at such time as, the amount of Taxes required to be paid by the Indemnified Person is reduced below the amount of Taxes that it would have been required to pay but for deductibility of such Damages. The amount of any reduction hereunder shall be adjusted to reflect any final determination with respect to the Indemnified Person's liability for Taxes.

(iii)Any calculation of Damages for purposes of this Article V shall be reduced to take account of any amounts actually recovered by the Indemnified Person pursuant to any indemnification by or under any indemnification agreements with any third party (net of any costs incurred to obtain such recovered amounts). If such Indemnified Person receives such net recovery prior to the time such claim is paid, then the amount payable by the Indemnifying Party pursuant to such claim shall be reduced by the amount of such net recovery. If such Indemnified Person receives such net recovery after such claim has been paid, then upon the receipt by the Indemnified Person of any net recovery up to the amount of Damages incurred by such Indemnified Person with respect to such claim, such Indemnified Person shall promptly repay any portion of such amount which was previously paid by the Indemnifying Party to such Indemnified Person in satisfaction of such claim.

(f)Tax Treatment. Any indemnification payments under this Article V shall be treated, for Tax purposes, as adjustment to the Purchase Price.

Section 5.7Exclusive Remedy. The exclusive remedy of each Party in connection with this Agreement and the transactions contemplated hereby shall be as provided in this Article V.

ARTICLE VI

MISCELLANEOUS

Section 6.1Amendment and Waiver. No provision of this Agreement may be amended, modified, supplemented or waived except by an instrument in writing executed by all of the Parties hereto or, in the case of an asserted waiver, executed by the Party against which enforcement of the waiver is sought. The rights and remedies of the Parties to this Agreement are cumulative and not alternative.

Section 6.2Assignment; Third-Party Rights. Neither this Agreement nor any right created hereby shall be assignable by any Party hereto, except by Covenant to any Person that is an Affiliate of Covenant. Nothing expressed or referred to in this Agreement will be construed to give any Person other than the parties to this Agreement any legal or equitable right, remedy or claim under or with respect to this Agreement or any provision of this Agreement, except such rights as shall inure to a successor or permitted assignee pursuant to this Section 6.2.

Section 6.3Notice. Any notice or communication must be in writing and given by depositing the same in the United States mail, addressed to the Party to be notified, postage prepaid and registered or certified with return receipt requested, or by delivering the same by hand delivery (including by a nationally recognized overnight carrier) or by fax. Such notice shall be deemed received on the date

34

on which it is delivered or faxed (with confirmation received). For purposes of notice, the addresses of the Parties shall be:

If to the Stockholders or the Stockholder Representative:	At the respective addresses set forth on the signature pages hereto.
With a copy to:	Waller Lansden Dortch & Davis, LLP 511 Union Street Suite 2700 Nashville, Tennessee 37219 Fax: (615) 244-6804 Attention: Chase Cole
If to Covenant or the Company:	Covenant Transport, Inc. 400 Birmingham Highway Chattanooga, Tennessee 37419 Fax: (423) 821-5442 Attention: Chief Financial Officer
With a copy to:	Scudder Law Firm, P.C., L.L.O. 411 South 13th Street Suite 200 Lincoln, Nebraska 68508 Fax: (402) 435-4239 Attention: Mark Scudder

Any Party may change its address for notice by written notice given to the other Parties in accordance with this Section 6.3. Notwithstanding the foregoing, any notice required to be delivered to any of the Stockholders may be delivered to the Stockholder Representative in accordance with Section 6.16 in the manner set forth in this Section 6.3, and any such notice shall be deemed received by all Stockholders on the date on which it is delivered or faxed (with confirmation received) to the Stockholder Representative.

Section 6.4Public Announcements. Covenant will consult with the Stockholder Representative regarding the contents of the public announcement of the Contemplated Transactions and will take into consideration the reasonable requests of the Stockholder Representative with respect to such public announcement, subject, however, to all Legal Requirements, stock exchange requirements, and prudent disclosure requirements applicable to Covenant. Unless consented to by Covenant in advance or required by applicable Legal Requirements, prior to the Closing, the Stockholders and the Company shall keep this Agreement strictly confidential and may not make any disclosure of this Agreement to any Person. The Stockholder Representative, the Company and Covenant will consult with each other concerning the means by which the Company's employees, customers, and suppliers and others having dealings with the Company will be informed of the Contemplated Transactions.

Section 6.5Confidentiality. Prior to the Closing Date, the Parties will maintain in confidence, and will cause their respective Representatives to maintain in confidence, all written, oral, or other information obtained from another Party in connection with this Agreement or the Contemplated Transactions ("Confidential Information"), including, without limitation, customer and employment information, unless and only to the extent that such Confidential Information (a) becomes generally available to the public other than as a result of a breach of any confidentiality obligation, (b) was available to the Party receiving the information on a non-confidential basis prior to disclosure, (c) is

35

independently developed by a Party, (d) becomes lawfully available to a Party on a non-confidential basis from a source other than the Party disclosing the Confidential Information, provided that such source is not known by the Party receiving the Confidential Information to be subject to a confidentiality obligation in favor of the Party disclosing the information, or (e) the Party disclosing the Confidential Information expressly approves in writing such other Party's disclosure. The Parties will not disclose Confidential Information to others except for Representatives who have a need to know such Confidential Information for the purpose of effecting the Contemplated Transactions or as may be required by applicable Legal Requirements.

Section 6.6Entire Agreement. This Agreement supersedes all prior agreements between the Parties with respect to its subject matter (including the Letter of Intent between Covenant and the Stockholders dated July 31, 2006), and constitutes (together with the Schedules and Exhibits hereto and the other Transaction Documents) a complete and exclusive statement of the terms of the agreement between the Parties with respect to its subject matter.

Section 6.7Transaction Expenses. Except as otherwise expressly provided in this Agreement, each Party to this Agreement will bear its respective Transaction Expenses. Notwithstanding the foregoing or any other provision of this Agreement to the contrary, the Parties agree that Covenant will pay Fifty Thousand Dollars ($50,000) of any fee due under that certain finder's fee arrangement identified on Schedule 2.6 of the Stockholder Disclosure Schedule (and only that certain arrangement) as a result of the consummation of the Contemplated Transactions, and the Stockholders individually (and not the Company) shall be solely responsible for any other fees due thereunder. In the event of any termination of this Agreement, the obligation of each Party to pay its own expenses will be subject to any rights of such Party arising from a Breach of this Agreement by another Party.

Section 6.8Further Assurances. The Stockholders, the Company, and Covenant, from time to time after the Closing at the request of any other Party hereto, and without further consideration, shall execute and deliver further instruments of transfer and assignment and take such other action as a Party may reasonably require to more effectively transfer and assign to, and vest in, Covenant, the Shares and all rights thereto, and to fully implement the provisions of this Agreement and the other Transaction Documents.

Section 6.9Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term hereof, such provision shall be fully severable and this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision never comprised a part hereof; and the remaining provisions hereof shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as part of this Agreement a provision as similar in its terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

Section 6.10Governing Law. This Agreement shall be governed by, and construed in accordance with, the substantive laws of the State of Tennessee without reference or regard to the conflicts of law rules thereof.

Section 6.11Captions. The captions in this Agreement are for convenience of reference only and shall not limit or otherwise affect any of the terms or provisions hereof.

Section 6.12Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. The exchange of copies of this Agreement and of signature pages by facsimile transmission shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original

36

Agreement for all purposes. Signatures of the parties transmitted by facsimile shall be deemed to be their original signatures for all purposes.

Section 6.13Number and Gender. Whenever the context requires, references in this Agreement to the singular number shall include the plural, the plural number shall include the singular and words denoting gender shall include the masculine, feminine and neuter.

Section 6.14Time of Essence. With regard to all dates and time periods set forth or referred to in this Agreement, time is of the essence.

Section 6.15Waiver; Remedies Cumulative. The rights and remedies of the parties to this Agreement are cumulative and not alternative. Neither any failure nor any delay by any party in exercising any right, power or privilege under this Agreement or any of the documents referred to in this Agreement will operate as a waiver of such right, power or privilege, and no single or partial exercise of any such right, power or privilege will preclude any other or further exercise of such right, power or privilege or the exercise of any other right, power or privilege. To the maximum extent permitted by applicable law, (a) no claim or right arising out of this Agreement or any of the documents referred to in this Agreement can be discharged by one party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other party; (b) no waiver that may be given by a party will be applicable except in the specific instance for which it is given; and (c) no notice to or demand on one party will be deemed to be a waiver of any obligation of that party or of the right of the party giving such notice or demand to take further action without notice or demand as provided in this Agreement or the documents referred to in this Agreement.

Section 6.16Stockholder Representative. Each of the Stockholders hereby irrevocably authorizes and appoints Beth D. Franklin (the "Stockholder Representative") as his or her representative and true and lawful attorney-in-fact and agent to act in his or her name, place, and stead and to execute any agreement, certificate, instrument, or document to be delivered by the Stockholders in connection with this Agreement and the Contemplated Transactions. The Stockholder Representative shall serve as the agent of the Stockholders for all purposes related to this Agreement, including without limitation any notice required to be delivered to the Stockholders under this Agreement or any of the other Transaction Documents. The Stockholder Representative shall have the full power, authority, and right to perform, do, and take any and all actions they deem necessary or advisable to carry out the purposes of this Agreement and the other Transaction Documents, including, without limitation, the power to amend or modify this Agreement and the other Transaction Documents and to waive any provision herein or therein. All decisions of the Stockholder Representative shall be binding upon the Stockholders. Covenant and each other Party shall be entitled to rely upon such authorization and designation and shall be fully protected in dealing with the Stockholder Representative with respect to any and all matters concerning the Stockholders; provided, however, that nothing set forth herein shall require Covenant to accept the signature or action of the Stockholder Representative in lieu of the signature or action of any Stockholder.

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

37

IN WITNESS WHEREOF, the Parties hereto, intending to be legally bound, have caused this Agreement to be executed by their duly authorized representatives as of the date first above written.

COVENANT TRANSPORT, INC.
By:	/s/ David R. Parker
	David R. Parker
	Chairman, President and CEO
STAR TRANSPORTATION, INC.
By:	/s/ Beth D. Franklin
	Beth D. Franklin
	Chief Executive Officer
STOCKHOLDERS:
	/s/ Beth D. Franklin
	Beth D. Franklin
	515 Jackson Boulevard
	Nashville, Tennessee 37205
	/s/ David D. Dortch
	David D. Dortch
	The Rokeby
	3901 West End Avenue
	Nashville, Tennessee 37205
	/s/ Rose D. Shipp
	Rose D. Shipp
	4303 Lillywood Road
	Nashville, Tennessee 37205
	/s/ David W. Dortch
	David W. Dortch
	601 North Mobile Street
	Fairhope, Alabama 36532
	/s/ James F. Brower, Jr.
	Jim Brower
	222 31st Avenue North
	Nashville, Tennessee 37203

STOCK PURCHASE AGREEMENT SIGNATURE PAGE

EXHIBIT A

Definitions

"Accounts Receivable" shall have the meaning set forth in Section 2.12 hereof.

"Actual Additional Debt" shall have the meaning set forth in Section 1.7(c) hereof.

"Actual Debt Paydown" shall have the meaning set forth in Section 1.7(c) hereof.

"Actual Knowledge of Undisclosed Breach" shall have the meaning set forth in Section 5.1 hereof.

"Actual Undelivered Equipment" shall have the meaning set forth in Section 1.7(c) hereof.

"Actual Undelivered Equipment Debt" shall have the meaning set forth in Section 1.7(c) hereof.

"Actual Unsold Equipment" shall have the meaning set forth in Section 1.7(c) hereof.

"Actual Unsold Equipment Debt" shall have the meaning set forth in Section 1.7(c) hereof.

"Adjusted Working Capital" shall have the meaning set forth in Section 1.5(a)(i) hereof.

"Agreement" shall have the meaning set forth in the preamble of this Agreement.

"Affiliate" means, with respect to any Person, any other Person or group of affiliated Persons directly or indirectly controlling (including without limitation all directors and executive officers of such Person), controlled by or under direct or indirect common control with such Person. For purposes of this definition, (i) a Person shall be deemed to control another Person if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of such other Person, and (ii) a Related Person shall be deemed to be an Affiliate of that Person.

"Allocation Schedule" shall have the meaning set forth in Section 4.2(d)(ii).

"Applicable Equipment Documents" shall have the meaning set forth in Section 2.26(b) hereof.

"Balance Sheet Date" shall have the meaning set forth in Section 2.8 hereof.

"Basic Representation Survival Period" shall have the meaning set forth in Section 5.1 hereof.

"Benchmark Adjusted Working Capital" shall have the meaning set forth in Section 1.5(a)(ii) hereof.

"Benefit Arrangements" include each "employee benefit plan", as defined in Section 3(3) of ERISA, and all other material fringe benefit, cafeteria, welfare, and retirement plans and arrangements established, maintained, contributed to, or obligated to be contributed to by the Company or any ERISA Affiliate thereof, whether or not any such plan or arrangement is otherwise exempt from some or all of the provisions of ERISA.

"Benefit Plan" shall have the meaning set forth in Section 2.16(a) hereof.

"Best Efforts" shall mean the commercially reasonable efforts that a prudent Person desirous of achieving a result would use in similar circumstances to ensure that such result is achieved as expeditiously as possible; provided, however, that an obligation to use Best Efforts under this Agreement does not require the Person subject to that obligation to take actions that would result in a materially adverse change in the benefits to such Person of this Agreement and the Contemplated Transactions.

"Breach" shall mean any inaccuracy in or breach of, or any failure to perform or comply with, any representation, warranty, covenant, obligation, or other provision of this Agreement or any instrument delivered pursuant to this Agreement.

"Closing" shall have the meaning set forth in Section 1.3 hereof.

"Closing Adjusted Working Capital" shall have the meaning set forth in Section 1.5(a)(iv) hereof.

"Closing Amount" shall have the meaning set forth in Section 1.2(a) hereof.

"Closing Balance Sheet" shall have the meaning set forth in Section 1.5(b) hereof.

"Closing Date" means the date on which the Closing occurs.

"Closing Debt" shall have the meaning set forth in Section 1.5(a)(iii) hereof.

"Code" means the Internal Revenue Code of 1986, as amended.

"Company" shall have the meaning set forth in the preamble of this Agreement.

"Company’s Knowledge" means (i) the actual knowledge of the Stockholders other than Beth Franklin, and (ii) the actual knowledge, after reasonable inquiry, of Beth Franklin and the other executive officers of the Company.

"Confidential Information" shall have the meaning set forth in Section 6.5 hereof.

"Consent" means any approval, consent, ratification, waiver, or other authorization (including any Governmental Authorization).

"Contest" shall have the meaning set forth in Section 4.2(c) of this Agreement.

"Contract" shall mean any agreement, contract, obligation, promise, or undertaking (whether written or oral and whether express or implied) that is legally binding.

"Contemplated Transactions" shall have the meaning set forth in Section 2.5 hereof.

"Contingent Obligation" means, as to any Person, any direct or indirect liability of such Person with respect to any indebtedness, lease, dividend, guaranty, letter of credit or other obligation (each a "primary obligation") of another Person (the "primary obligor"), whether or not contingent, (i) to purchase, repurchase or otherwise acquire any such primary obligation or any property constituting direct or indirect security therefor, or (ii) to advance or provide funds (A) for the payment or discharge of any such primary obligation, or (B) to maintain working capital or equity capital of the primary obligor in respect of any such primary obligation or otherwise to maintain the net worth or solvency or any balance sheet item, level of income or financial condition of such primary obligor, or (iii) to purchase property,

2

securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor thereof to make payment of such primary obligation, or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss or failure or inability to perform in respect thereof

"Covenant" shall have the meaning set forth in the preamble of this Agreement.

"Covenant Adjustment Amount" shall have the meaning set forth in Section 1.5(e)(ii) hereof.

"Covenant Executives" means David Parker and Joey Hogan, Covenant's Chief Executive Officer and Chief Financial Officer, respectively.

"Covenant Indemnified Person" shall have the meaning set forth in Section 5.2 hereof.

"Covenant Survival Period" shall have the meaning set forth in Section 5.1 hereof.

"Damage Threshold" shall have the meaning set forth in Section 5.6(b) hereof.

"Damages" shall have the meaning set forth in Section 5.2 hereof.

"Debt" means, as to any Person, without duplication (including all such items incurred by any partnership or joint venture as to which such Person is liable as a general partner or joint venturer):

(a)all indebtedness in respect of money borrowed, including, without limitation, all obligations under capitalized leases, all amounts outstanding under accounts receivable securitizations (including all obligations of special purpose entities utilized to effect such securitizations), all obligations under synthetic leases, all subordinated indebtedness, the deferred purchase price of any property or services, the aggregate face amount of all surety bonds, letters of credit, and bankers’ acceptances, and (without duplication) all payment and reimbursement obligations in respect thereof whether or not matured, evidenced by a promissory note, bond, debenture or similar written obligation for the payment of money (including reimbursement agreements and conditional sales or similar title retention agreements), any past due interest amounts or penalties related to any of the foregoing, other than trade payables and accrued expenses incurred in the ordinary course of business;

(b)any and all obligations of such Person, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (i) any and all agreements, devices or arrangements designed to protect at least one of the parties thereto from the fluctuations of interest rates, exchange rates or forward rates, including fuel prices, applicable to such party’s assets, liabilities or exchange transactions, including, but not limited to, Dollar-denominated or cross-currency interest rate exchange agreements, forward currency exchange agreements, interest rate cap or collar protection agreements, forward rate currency or interest rate options, puts, warrants and those commonly known as interest rate "swap" agreements and forward fuel purchase contracts, commitments, or options; (ii) all other "derivative instruments" as defined in FASB 133 and which are subject to the reporting requirements of FASB 133; and (iii) any and all cancellations, buybacks, reversals, terminations or assignments of any of the foregoing;

(c)all indebtedness secured by any Lien on any property or asset owned or held by such Person regardless or whether the indebtedness secured thereby shall have been assumed by such Person or is non-recourse to the credit of such Person; and

3

(d)any and all Contingent Obligations of such Person.

"Debt Adjustment Amount" shall have the meaning set forth in Section 1.5(a)(v) hereof.

"Diligence Report" shall have the meaning set forth in Section 5.1 hereof.

"DOT" means the U.S. Department of Transportation, including the FHWA and FMCSA.

"Environmental Claim" means any investigation or written claim, action, cause of action, or notice by any Person alleging potential liability (including potential liability for investigatory costs, cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries, or penalties), or any Lien or other restriction of any nature, arising out of, based on or resulting from: (a) the presence, or release or threat of release into the environment, of any Materials of Environmental Concern at any location owned or operated by the Company; or (b) circumstances forming the basis of any violation or alleged violation of any Environmental Law applicable to the Company or the Company’s business.

"Environmental Laws" means, as they exist on the date hereof and as of the Closing Date, all applicable Legal Requirements relating to pollution or protection of human health (as relating to the environment or the workplace) and the environment (including ambient air, surface water, ground water, land surface or sub-surface strata), including Legal Requirements relating to emissions, discharges, releases or threatened releases of Materials of Environmental Concern, or otherwise relating to the use, treatment, storage, disposal, transport or handling of Materials of Environmental Concern, including, but not limited to Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq., Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq., Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., Occupational Safety and Health Act, 29 U.S.C. § 651 et seq., the Clean Air Act, 42 U.S.C. § 7401 et seq., the Clean Water Act, 33 U.S.C. § 1251 et seq., each as may have been amended or supplemented, and any applicable environmental transfer statutes or Legal Requirements.

"ERISA" shall mean the Employee Retirement Income Security Act of 1974 or any successor law, and regulations and rules issued pursuant to that Act or any successor law.

"ERISA Affiliate" shall mean, with respect to a Party, any other person that, together with that Party, would be treated as a single employer under Code § 414.

"Escrow Agent" shall have the meaning set forth in Section 2.4(d) hereof.

"Escrow Agreement" shall have the meaning set forth in Section 2.4(d) hereof.

"Extended Representation Survival Period" shall have the meaning set forth in Section 5.1 hereof.

"Facilities" means any real property, leaseholds, or other interests currently or formerly owned or operated by the Company and any buildings, plants, structures, or equipment (including motor vehicles, trucks, tractors, trailers, tank cars, and other rolling stock) currently or formerly owned or operated by the Company.

"FASB 133" means Statement of Financial Accounting Standards No. 133.

"Financial Statements" shall have the meaning set forth in Section 2.8 hereof.

4

"FHWA" shall have the meaning set forth in Section 2.26(b) hereof.

"FMCSA" shall have the meaning set forth in Section 2.26(b) hereof.

"GAAP" means generally accepted accounting principles in the United States, consistently applied throughout all relevant periods.

"General Cap" shall have the meaning set forth in Section 5.6(a) hereof.

"Governmental Authorizations" shall mean all permits, authorizations, certificates, approvals, registrations, variances, exemptions, rights of way, franchises, privileges, immunities, grants, ordinances, licenses and other rights of every kind and character relating to the business and operations of the Company or all or any of the assets of the Company, including but not limited to permits and authorizations granted by the DOT and FHWA.

"Governmental Body" means any (i) nation, state, county, city, town, village, district, or other jurisdiction of any nature; (ii) federal, state, local, municipal, foreign, or other government; (iii) governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal); (iv) multi-national organization or body; or (v) body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature.

"Historical Financial Statements" shall have the meaning set forth in Section 2.8 hereof.

"Humboldt" shall have the meaning set forth in Section 2.16(e).

"Humboldt Plan" shall have the meaning set forth in Section 2.16(e).

"Independent Accountants" shall have the meaning set forth in Section 1.5(d) hereof.

"Indemnified Person" shall have the meaning set forth in Section 5.4(a) hereof.

"Indemnifying Party" shall have the meaning set forth in Section 5.4(a) hereof.

"Indemnity Escrow Amount" shall have the meaning set forth in Section 1.2(b)(i) hereof.

"Intellectual Property" shall have the meaning set forth in Section 2.25(a) hereof.

"Interest Rate Swaps" shall have the meaning set forth in Section 2.32 hereof.

"Interim Balance Sheet" shall have the meaning set forth in Section 2.8 hereof.

"Interim Financial Statements" shall have the meaning set forth in Section 2.8 hereof.

"IRS" means the Internal Revenue Service or any successor agency.

"Knowledge" means actual knowledge.

"Lease-Purchase Conversion" means the Company's process since January 1, 2006 of purchasing 225 new trailers and 135 new tractors and disposing of 135 tractors formerly financed under operating leases.

5

"Lease-Purchase Conversion Certificate" shall have the meaning set forth in Section 1.7(a) hereof.

"Leased Real Property" shall have the meaning set forth in Section 2.10(a) hereof.

"Lenoir City Property" shall have the meaning set forth in Section 4.5(a) hereof.

"Legal Requirement" shall mean for any Person any law, treaty, regulation, rule, order, judgment, or decree, or any other determination or requirement of an governmental authority or arbitrator applicable to or binding on such Person or any of its property or to which such Person or any of its property is subject.

"Liability" means any and all Debts, liabilities, obligations, and commitments, whether known or unknown, asserted or unasserted, fixed, absolute, or contingent, matured or unmatured, accrued or unaccrued, liquidated or unliquidated, due or to become due, whenever or however arising (including, without limitation, whether arising out of any contract or tort based on negligence, strict liability, or otherwise).

"Lien" shall mean any mortgage, lien, pledge, claim, charge, security interest or encumbrance of any kind, including without limitation the interest of a vendor or lessor under any conditional sale agreement, capital lease obligation or other title retention agreement, or any agreement to create or grant any of the foregoing or prohibiting the Company from granting Liens on their respective assets.

"Material Contract" shall have the meaning set forth in Section 2.20(a) hereof.

"Materially Adverse Effect" or "Materially Adverse Change" means any change, circumstance, or effect that does have, or is reasonably likely to have, a materially adverse effect on the business, operations, financialcondition of the Company taken as a whole, or the ability of the Company or the Stockholders to consummate the Contemplated Transactions; provided, however, that Materially Adverse Effect and Materially Adverse Change shall not include any adverse changes or conditions as and to the extent such changes or conditions result from or relate to (i) general business or economic conditions, including such conditions related to the business of the Company, (ii) national or international political or social conditions, including the engagement by the United States in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon the United States, or any of its territories, possessions, or diplomatic or consular offices, or upon any military installation, equipment, or personnel of the United States, (iii) financial, banking, or securities markets (including any disruption thereof any decline in prevailing interest rates or any market index), (iv) changes in GAAP, (v) changes in Legal Requirements issued by any Governmental Body, or (vi) the taking of any action contemplated by this Agreement and the other Transaction Documents.

"Materials of Environmental Concern" means chemicals, pollutants, contaminants, hazardous materials, hazardous substances and hazardous wastes, medical waste, toxic substances, petroleum and petroleum products and by-products, asbestos-containing materials, PCBs, and any other chemicals, pollutants, substances or wastes, in each case so defined, identified, or regulated under any Environmental Law.

"Multi-Employer Plan" shall have the meaning set forth in ERISA § 3(37)(A).

"Noncompetition Agreements" shall have the meaning set forth in Section 1.4(a)(v) hereof.

6

"Objection Notice" shall have the meaning set forth in Section 1.5(c) hereof.

"Order" means any award, decision, injunction, judgment, order, ruling, subpoena, or verdict entered, issued, made, or rendered by any court, administrative agency, Governmental Body, or by any arbitrator.

"Ordinary Course of Business" shall mean an action taken by a Person only if: (a) such action is consistent with the past practices of such Person and is taken in the ordinary course of the normal day-to-day operations of such Person; (b) such action is not required to be authorized by the board of directors of such Person (or by any Person or group of Persons exercising similar authority); and (c) such action is similar in nature and magnitude to actions customarily taken, without any authorization by the board of directors (or by any Person or group of Persons exercising similar authority), in the ordinary course of the normal day-to-day operations of other Persons that are in the same line of business as such Person.

"Organizational Documents" shall mean (a) the articles or certificate of incorporation and the bylaws of a corporation; (b) the partnership agreement and any statement of partnership of a general partnership; (c) the limited partnership agreement and the certificate of limited partnership of a limited partnership; (d) any charter or similar document adopted or filed in connection with the creation, formation, or organization of a Person; and (e) any amendment to any of the foregoing.

"Owned Real Property" shall have the meaning set forth in Section 2.10(a) hereof.

"Party" and "Parties" shall have the meanings set forth in the preamble of this Agreement.

"PBGC" means the Pension Benefit Guaranty Corporation, or any successor thereto.

"Pension Plan" shall have the meaning given in ERISA § 3(2)(A).

"Permitted Lien" means (a) any Lien approved in writing by Covenant, (b) any Lien for Taxes or other governmental charges or assessments which are not delinquent or which are being contested in good faith through appropriate proceedings and adequate reserves to pay the same have been established in the Financial Statements to the extent required by GAAP, (c) any Lien of any landlord, carrier, warehouseman, mechanic or materialman and any like Lien arising in the Ordinary Course of Business for sums that are not delinquent or which are being contested in good faith through appropriate proceedings and adequate reserves to pay the same have been established in the Financial Statements to the extent required by GAAP, (d) any Lien of the lender, lessor or other financing source (i) securing indebtedness for borrowed money, or (ii) on assets leased under a capitalized lease obligation, each to the extent (in either case) that such indebtedness for borrowed money or capital lease is reflected in the Financial Statements to the extent required by GAAP and is included in the calculation of the Debt Adjustment Amount, (e) recorded easements and recorded rights of way; (f) Legal Requirements regulating the use or enjoyment of the applicable property, or (g) with respect to Leased Real Property, Liens which encumber the fee interest in such property.

"Person" means any individual, corporation, partnership, limited liability company, trust, joint venture, unincorporated association or other enterprise or any governmental authority.

"Plan" shall have the meaning given in ERISA § 3(3).

"Plan Sponsor" shall have the meaning given in ERISA § 3(16)(B).

"Post-Closing Tax Returns" shall have the meaning set forth in Section 4.2(a) hereof.

7

"Pre-Closing Cash Redemption" means the payment of cash by the Company to the Stockholders at or prior to the Closing, in redemption of capital stock.

"Pre-Closing Tax Returns" shall have the meaning set forth in Section 4.2(a) hereof.

"Proceeding" means any action, arbitration, mediation, audit, hearing, investigation, litigation or suit (whether civil, criminal, administrative, judicial or investigative, whether formal or informal, whether public or private) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Body, arbitrator, or mediator.

"Projected Additional Debt" shall have the meaning set forth in Section 1.7(a) hereof.

"Projected Debt Paydown" shall have the meaning set forth in Section 1.7(a) hereof.

"Projected Undelivered Equipment" shall have the meaning set forth in Section 1.7(a) hereof.

"Projected Undelivered Equipment Debt" shall have the meaning set forth in Section 1.7(a) hereof.

"Projected Unsold Equipment" shall have the meaning set forth in Section 1.7(a) hereof.

"Projected Unsold Equipment Proceeds" shall have the meaning set forth in Section 1.7(a) hereof.

"Property Transfer Election" shall have the meaning set forth in Section 4.5(c)(i) hereof.

"Purchase Price" shall have the meaning set forth in Section 1.2(a) hereof.

"Real Property" shall have the meaning set forth in Section 2.10(a) hereof.

"Real Property Documents" shall have the meaning set forth in Section 2.10(e) hereof.

"Real Property Leases" shall have the meaning set forth in Section 2.10(a) hereof.

"Regulatory Change" means, with respect to any Person, any change after the date of this Agreement in United States federal or state Legal Requirements, or in any other Legal Requirement promulgated by any Governmental Body, or the entry, adoption or making after such date of any Order, interpretation, directive or request of or under any United States federal or state Legal Requirements (whether or not having the force of law) by any court or Governmental Body charged with the interpretation or administration thereof, applying to a class of Persons including such Person.

"Related Person" shall have the following meaning:

(a)With respect to a particular individual: (i) each other member of such individual's Family; (ii) any Person that is directly or indirectly controlled by such individual or one or more members of such individual's Family; (iii) any Person in which such individual or members of such individual's Family hold (individually or in the aggregate) a Material Interest; and (iv) any Person with respect to which such individual or one or more members of such individual's Family serves as a director, officer, partner, executor, or trustee (or in a similar capacity).

8

(b)With respect to a specified Person other than an individual: (i) any Person that directly or indirectly controls, is directly or indirectly controlled by, or is directly or indirectly under common control with such specified Person; (ii) any Person that holds a Material Interest in such specified Person; (iii) each Person that serves as a director, officer, partner, executor, or trustee of such specified Person (or in a similar capacity); (iv) any Person in which such specified Person holds a Material Interest; (v) any Person with respect to which such specified Person serves as a general partner or a trustee (or in a similar capacity); and (vi) any Related Person of any individual described in clause (b) or (c).

For purposes of this definition, (a) the "Family" of an individual includes (i) the individual, (ii) the individual's spouse, (iii)any other natural person who is related to the individual or the individual's spouse within the second degree, and (iv) any other natural person who resides with such individual, and (b) "Material Interest" means direct or indirect beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934) of voting securities or other voting interests representing at least 5% of the outstanding voting power of a Person or equity securities or other equity interests representing at least 5% of the outstanding equity securities or equity interests in a Person.

"Representatives" means, with respect to a particular Person, any director, officer, manager, employee, agent, consultant, advisor, accountant, financial advisor, legal counsel or other representative of that Person.

"Scudder Opinion" shall have the meaning set forth in Section 1.4(b)(vi) hereof.

"Section 338(h)(10) Election" shall have the meaning set forth in Section 4.2(d)(i).

"Securities Act" means the Securities Act of 1933, as amended.

"Shares" shall have the meaning set forth in the recitals of this Agreement.

"Special Cap" shall have the meaning set forth in Section 5.6(c) hereof.

"Spousal Consent" shall have the meaning set forth in Section 1.4(a)(viii) hereof.

"Star Development" shall have the meaning set forth in Section 4.5(a) hereof.

"Stockholder Adjustment Amount" shall have the meaning set forth in Section 1.5(e)(i) hereof.

"Stockholder Disclosure Schedule" shall mean the disclosure document delivered by the Stockholders pursuant to the terms of this Agreement and attached hereto as Exhibit H.

"Stockholder" shall have the meaning set forth in the preamble of this Agreement.

"Stockholder Guaranties" shall have the meaning set forth in Section 4.1 hereof.

"Stockholder Indemnified Persons" shall have the meaning set forth in Section 5.3 hereof.

"Stockholder Releases" shall have the meaning set forth in Section 1.4(a)(vi) hereof.

"Stockholder Representative" shall have the meaning set forth in Section 6.16 hereof.

9

"Survival Period" shall have the meaning set forth in Section 5.1 hereof.

"Surviving Corporation" shall have the meaning set forth in Section 2.1 hereof.

"Tax Adjustment" shall have the meaning set forth in Section 4.2(d)(iii) hereof.

"Tax Adjustment Notice" shall have the meaning set forth in Section 4.2(d)(iii) hereof.

"Tax Returns" shall have the meaning set forth in Section 2.14(a) hereof.

"Taxes" shall mean any federal, state, local or foreign taxes, assessments, interest, penalties, deficiencies, fees and other governmental charges or impositions, including without limitation all income tax, unemployment compensation, social security, payroll, sales and use, highway use, fuel, excise, privilege, property, ad valorem, franchise, license, school and any other tax or similar governmental charge or imposition under any Legal Requirement.

"Third Party Claims" means any claim against any Indemnified Person by a Third Party, whether or not involving a Proceeding.

"Title IV Plan" means a Pension Plan that is subject to Title IV of ERISA, other than Multi-Employer Plans.

"Trade Rights" shall have the meaning set forth in Section 2.25(a) hereof.

"Transaction Documents" means, collectively, this Agreement, the Escrow Agreement, the Transition Services Agreement, the Noncompetition Agreements, the Stockholder Releases, the Spousal Consents, and all other documents and instruments executed in connection herewith, as any or all of the foregoing may be renewed, amended, extended, modified, supplemented, replaced or rearranged from time to time.

"Transaction Expenses" means all out-of-pocket costs and expenses that are incurred by the designated Party or Parties in connection with the negotiation and execution of this Agreement and the consummation of the Contemplated Transactions, including, without limitation, fees for the services of brokers, attorneys, accountants, consultants, and other like professionals.

"Transition Services Agreement" shall have the meaning set forth in Section 1.4(a)(vi) hereof.

"Waller" shall have the meaning set forth in Section 1.2(b)(ii) hereof.

"Waller Escrow" shall have the meaning set forth in Section 1.2(b)(ii) hereof.

"Waller Opinion" shall have the meaning set forth in Section 1.4(a)(viii) hereof.

"Withdrawal Liability" shall have the meaning set forth in Section 2.16(d)(xii) hereof.

"Working Capital Adjustment Amount" shall have the meaning set forth in Section 1.5(a)(vi) hereof.

"Year-End Balance Sheet" shall have the meaning set forth in Section 2.8 hereof.

"Year-End Financial Statements" shall have the meaning set forth in Section 2.8 hereof.

10

Back to Form 10-Q

EX-10.27

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:

(i) 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;

(ii) 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”);

4

(iii) 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

(iv) such other documents, instruments, opinions, certifications, undertakings, further assurances and other matters as the Agent shall reasonably request.

(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.

BORROWER:
COVENANT ASSET MANAGEMENT, INC., a Nevada corporation
By:	/s/ David Parker
Name:	David Parker
Title:	President
PARENT:
COVENANT TRANSPORT, INC.,a Nevada corporation
By:	/s/ David Parker
Name:	David Parker
Title:	President and Chief Executive Officer

Signature Page

GUARANTORS:
COVENANT TRANSPORT, INC., a Tennessee corporation
By:	/s/ David Parker
Name:	David Parker
Title:	President and Chief Executive Officer
HAROLD IVES TRUCKING CO., an Arkansas corporation
By:	/s/ David Parker
Name:	David Parker
Title:	President
SOUTHERN REFRIGERATED TRANSPORT, INC., an Arkansas corporation
By:	/s/ David Parker
Name:	David Parker
Title:	Chief Executive Officer
COVENANT.COM, INC., a Nevada corporation
By:	/s/ David Parker
Name:	David Parker
Title:	President and Chief Executive Officer
CIP, INC., a Nevada corporation
By:	/s/ David Parker
Name:	David Parker
Title:	President

Signature Page

AGENT:
BANK OF AMERICA, N.A., as Agent
By:	/s/ Michael Brashler
Name:	Michael Brashler
Title:	Vice President

Signature Page

LENDERS:
BANK OF AMERICA, N.A.
By:	/s/ Andrew Buunton
Name:	Andrew Buunton
Title:	Vice President

Signature Page

NATIONAL CITY BANK OF KENTUCKY
By:	/s/ Kevin L. Anderson
Name:	Kevin L. Anderson
Title:	SVP

Signature Page

BRANCH BANKING AND TRUST COMPANY
By:	/s/ R. Andrew Beam
Name:	R. Andrew Beam
Title:	Senior Vice President

Signature Page

FIRST TENNESSEE BANK NATIONAL ASSOCIATION
By:	/s/ Mark A. Stewart
Name:	Mark A. Stewart
Title:	Senior Vice President

Signature Page

AMSOUTH BANK
By:	/s/ W. Walter Robinson III
Name:	W. Walter Robinson III
Title:	Vice President

Signature Page

BNP PARIBAS
By:	/s/ Brad Ellis
Name:	Brad Ellis
Title:	Vice President
By:	/s/ Becky Ortega
Name:	Becky Ortega
Title:	Vice President

Signature Page

SUNTRUST BANK
By:	/s/ J. H. Miles
Name:	J. H. Miles
Title:	Managing Director

Signature Page

Back to Form 10-Q

EX-10.28

 

Exhibit 10.28

AMENDMENT NO. 10 TO

LOAN AGREEMENT

(CVTI/Covenant Transport)

THIS AMENDMENT NO. 10 TO LOAN AGREEMENT, dated as of July 7, 2006 (the “Amendment”), is entered into by and among THREE PILLARS FUNDING LLC (formerly known as THREE PILLARS FUNDING CORPORATION), (“Three Pillars”), SUNTRUST CAPITAL MARKETS, INC. (formerly SunTrust Equitable Securities Corporation), as administrator (the “Administrator”), CVTI RECEIVABLES CORP. (“CVTI”), and COVENANT TRANSPORT, INC. (“Covenant”). Capitalized terms used and not otherwise defined herein are used as defined in the Loan Agreement, dated as of December 12, 2000 among Three Pillars, the Administrator, CVTI and Covenant (as amended to date, the “Loan Agreement”).

WHEREAS, the parties hereto desire to further amend the Loan Agreement in certain respects as provided herein;

NOW THEREFORE, in consideration of the premises and the other mutual covenants contained herein, the parties hereto agree as follows:

SECTION 1. Amendments to the Loan Agreement.

(a) The definition of “Concentration Limit” is hereby amended in its entirety to read as follows:

“Concentration Limit: For any Obligor (a) whose (i) short term unsecured debt rating is (A) equal to both A1+ by S&P and P1 by Moody’s, 12.0%, (B) equal to both A1 by S&P and P1 by Moody’s, 10.0%, (C) equal to both A2 by S&P and P2 by Moody’s, 8.0%, (D) equal to both A3 by S&P and P3 by Moody’s, 7.0%; provided, however, if such Obligor is rated by both Moody’s and S&P and has a split rating, the applicable rating will be the lower of the two ratings, or (ii) in the absence of short term unsecured debt ratings by both Rating Agencies, whose long term unsecured debt rating is (A) equal to both AAA by S&P and Aaa by Moody’s, 12.0%, (B) equal to both AA-, AA or AA+ by S&P and Aa3, Aa2 or Aa1 by Moody’s, 10.0%, (C) equal to both A-, A or A+ by S&P and A3, A2 or A1 by Moody’s, 8.0%, (D) equal to both BBB-, BBB or BBB+ by S&P and Baa3, Baa2 or Baa1 by Moody’s, 7.0%; provided, however, if such Obligor is rated by both Moody’s and S&P and has a split rating, the applicable rating will be the lower of the two ratings or (b) that has no short term unsecured debt rating or long term unsecured debt rating or is rated below any of the foregoing rating categories, 3.0%, in each case, of the Aggregate Unpaid Balance. The Concentration Limit for a Special Obligor shall be 6%.”

(b) The definition of “Reserve Floor” is hereby amended in its entirety to read as follows:

“Reserve Floor: For any Due Period, the sum of (a) 15.0% and (b) the product of (i) the Expected Dilution Ratio for such Due Period and (ii) the Dilution Horizon Ratio for such Due Period.”

(c) The definition of “Special Obligor” is hereby amended in its entirety to read as follows:

“Special Obligor: Shaw Industries, Inc.”

SECTION 2. Effect of Amendment.

Except as modified and expressly amended by this Amendment, the Loan Agreement is in all respects ratified and confirmed, and all the terms, provisions and conditions thereof shall be and remain in full force and effect. This Amendment shall be effective as of the date (the “Effective Date”) on which each of the parties hereto delivers to the Administrator a fully executed original of this Amendment. On and after the Effective Date, all references in the Loan Agreement to “this Agreement,” “hereto,” “hereof,” “hereunder” or words of like import refer to the Loan Agreement as amended by this Amendment.

SECTION 3. Binding Effect.

This Amendment shall be binding upon and inure to the benefit of the parties to the Loan Agreement and their successors and permitted assigns.

SECTION 4. Governing Law.

This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York.

SECTION 5. Execution in Counterparts; Severability.

This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original, and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page by facsimile shall be effective as delivery of a manually executed counterpart of this Amendment. In case any provision in or obligation under this Amendment shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their respective officers thereunto duty authorized, as of the date first above written.

THREE PILLARS:	THREE PILLARS FUNDING LLC
	By:	/s/ Doris J. Hearn
	Title:	Vice President
THE BORROWER:	CVTI RECEIVABLES CORP.
	By:	/s/ Richard B. Cribbs
	Title:	Assistant Treasurer
THE ADMINISTRATOR:	SUNTRUST CAPITAL MARKETS, INC.
	By:	/s/ James R. Bennison
	Name:	James R. Bennison
	Title:	Managing Director
THE MASTER SERVICER:	COVENANT TRANSPORT, INC.,
	a Nevada holding corporation
	By:	/s/ Richard B. Cribbs
	Title:	Controller, Assistant Secretary, and Assistant Treasurer

(Signature Page to Amendment No. 10 to Loan Agreement (CVTI/Covenant Transport))

Back to Form 10-Q

EX-31.1

Exhibit 31.1

CERTIFICATION

I, David R. Parker, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Covenant Transport, 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:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

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):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 9, 2006	By:	/s/ David R. Parker
		David R. Parker
		Chief Executive Officer

Back to Form 10-Q

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Joey B. Hogan, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Covenant Transport, 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:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 9, 2006	By:	/s/ Joey B. Hogan
		Joey B. Hogan
		Chief Financial Officer

Back to Form 10-Q

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Covenant Transport, Inc. (the "Company") on Form 10-Q for the period ended September 30, 2006, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, David R. Parker, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(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 results of operations of the Company.

Date: November 9, 2006	By:	/s/ David R. Parker
		David R. Parker
		Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to Covenant Transport, Inc. and will be retained by Covenant Transport, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

Back to Form 10-Q

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Covenant Transport, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2006, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joey B. Hogan, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(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 results of operations of the Company.

Date: November 9, 2006	By:	/s/ Joey B. Hogan
		Joey B. Hogan
		Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to Covenant Transport, Inc. and will be retained by Covenant Transport, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

Back to Form 10-Q