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Forth Amended and Restated Charter of the Audit - Covenant

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Forth Amended and Restated Charter of the Audit - Covenant

    FOURTH AMENDED AND RESTATED CHARTER

    OF THE AUDIT COMMITTEE

    OF

    THE BOARD OF DIRECTORS

    OF

    COVENANT TRANSPORT, INC.

    February 28, 2007

    Recitals.

     This Charter (this “Charter”) describes the duties and responsibilities of the audit committee (the "Audit

    Committee") of Covenant Transport, Inc. (the “Company”) and grants the Audit Committee the authority necessary to perform its oversight responsibility.

    Charter.

     1. Purposes of the Audit Committee. The purposes of the Audit Committee are to (a) oversee the accounting and financial reporting processes of the Company and the audits of the Company's financial statements,

    (b) monitor the independence of any registered public accounting firm engaged for the purpose of preparing or

    issuing an audit report or performing other audit, review or attest services for the Company (including resolution of

    disagreements between management and the auditor regarding financial reporting) (the “outside auditors”) through

    (i) ensuring the Company’s receipt from the outside auditors of a formal written statement delineating all

    relationships between the auditor and the company and (ii) actively engaging in a dialogue with the outside auditors

    with respect to any disclosed relationships or services that may impact the objectivity and independence of the

    auditor, and (c) assist the Company’s Board of Directors (the “Board”) in its oversight of the independence of the

    outside auditors. The Audit Committee is also responsible for carrying out the duties set forth below.

    2. Qualifications of Audit Committee. The Audit Committee shall consist of not less than three members of the Board, each of whom shall, as determined by the Board, (a) be independent and meet the criteria for

    independence as required under the rules and regulations of the U.S. Securities and Exchange Commission (the

    “SEC”) implementing Section 301 of the Sarbanes-Oxley Act of 2002, the rules and regulations of the Nasdaq Stock Market (“Nasdaq”), and any other applicable laws, rules, and regulations governing independence promulgated by

    any regulatory authority with proper jurisdiction (a Regulatory Authority,” and collectively, with the SEC and

    Nasdaq, the “Regulatory Authorities”), unless an exemption from the requirement to meet such rule or regulation

    applies; (b) not have participated in the preparation of financial statements of the Company or any current subsidiary

    of the Company at any time during the past three years; (c) be able to read and understand fundamental financial

    statements, including the Company's balance sheet, income statement, and cash flow statement; (d) have all other

    qualifications required by law or the Regulatory Authorities, and (e) be free of any relationship that, in the Board's

    discretion, would interfere with the members independent judgment. At least one member of the Audit Committee shall have (i) past employment experience in finance or accounting; (ii) requisite professional certification in

    accounting; or (iii) any other comparable experience or background which, in the judgment of the Board, results in

    the individual being considered a "financial expert" in accordance with the rules and regulations of the Regulatory

    Authorities.

    3. Duties and Authority of the Audit Committee. The following functions shall be the common recurring activities of the Audit Committee in carrying out its responsibilities outlined in Paragraph 1 of this

    Charter. These functions should serve as a guide with the understanding that the Audit Committee may carry out

    additional functions and adopt additional policies and procedures as may be appropriate in light of changing

    business, legislative, regulatory, legal, or other conditions. The Audit Committee shall also carry out any other

    responsibilities and duties delegated to it by the Board from time to time related to the purposes of the Audit

    Committee outlined in Paragraph 1 of this Charter. Subject to the foregoing, the Audit Committee shall:

    (a) Meet to review and discuss the Companys annual audited financial statements and

    quarterly financial statements with management and the Companys outside auditors;

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    (b) Assure that the Companys interim financial statements are reviewed by the Company's outside auditors, as required by SEC rules, prior to the filing of such interim financial statements with the SEC as

    part of the Companys report on Form 10-Q;

    (c) Review and discuss the Companys audited financial statements with management, and recommend to the Board whether the audited financial statements should be included in the Companys report on

    Form 10-K;

    (d) Review and discuss the Companys audited financial statements with the Companys

    outside auditors and review those matters required to be discussed by Statement of Auditing Standards No. 61, as

    modified or supplemented from time to time;

     (e) Receive the formal written disclosures from the Companys outside auditors delineating

    all relationships between the auditor and the Company, consistent with the requirements of the Independence

    Standards Board Standard 1, as modified or supplemented from time to time;

     (f) Actively engage in a dialogue with the outside auditors with respect to any disclosed

    relationships or services that may impact the objectivity and independence of the outside auditors; and, as required

    by SEC rules, pre-approve all audit services and permitted non-audit services to be performed by the outside

    auditors;

     (g) Establish policies and procedures to take, or recommend that the full Board take,

    appropriate action to oversee the independence of the outside auditors.

     (h) Establish policies and procedures for the engagement of the outside auditors to provide

    permitted non-audit services;

    (i) Review annually the scope of the outside auditors work, including any non-auditing or consulting services;

    (j) Review with the Companys outside auditors all adjustments made to the Companys

    audited financial statements, including a reconciliation of any adjustments made in the audited financial statements

    from the Company's quarterly interim financial statements;

    (k) Review with management and the Companys outside auditors any significant financial reporting issues or judgments called for in connection with the preparation of the Company's financial statements,

    including the adequacy and appropriateness of any reserves, policies relating to the recognition of revenue, the

    quality and appropriateness of the Company's accounting principles, and any other matters which, in the Audit

    Committee’s judgment, or the judgment of the Companys outside auditors, could have a material impact on the Company's financial statements;

    (l) Meet with the Companys outside auditors and with management to review and assess any material financial risk exposure to the Company and the steps management has or plans to take to monitor and

    control financial risk;

    (m) Review with the Companys outside auditors and management the adequacy of the Companys internal financial controls and reporting systems;

    (n) Confer with the Companys outside auditors about any audit requirements as specified in the Securities and Exchange Act of 1934 that may have come to the attention of the outside auditors;

    (o) Review any major changes to the Companys auditing and accounting policies and practices suggested by the Companys outside auditors or by management (in undertaking the duties specified

    herein, in communications with the Companys outside auditors, the Audit Committee shall, in accordance with

    Statement of Auditing Standards No. 61, communicate with the external auditors with respect to (i) the methods

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used to account for significant or unusual transactions; (ii) the effect of significant accounting policies in

    controversial or emerging areas for which there is a lack of authoritative guidance or consensus; (iii) the process

    used by management in formulating particularly sensitive accounting estimates, and the basis for the outside

    auditors conclusions regarding the reasonableness of those estimates; and (iv) disagreements with management, if

    any, over the application of accounting principles, the basis for management's accounting estimates, and the

    disclosures in the Companys financial statements);

    (p) Take responsibility for the appointment, compensation, retention, and oversight of the work of the Company's outside auditors (including resolution of disagreements between management and the

    outside auditors regarding financial reporting), and recommend their selection and engagement;

    (q) Ensure that the outside auditors report directly to the Audit Committee;

    (r) Review the proposed scope and plan of the annual audit;

    (s) Review the outside auditors management letter and consider any comments made by the

    outside auditors with respect to improvements in the internal accounting controls of the Company, consider any

    corrective action recommended by the outside auditors, and review any corrective action taken by management;

    (t) Review and devote attention to any areas in which management and the Company's outside auditors disagree and determine the reasons for such disagreement;

    (u) Review the performance of the outside auditors and take direct responsibility for hiring and, if appropriate, replacing any outside auditor failing to perform satisfactorily;

    (v) Review any difficulties any outside auditor may have encountered with respect to performance of an audit, including, without limitation, any restrictions placed upon the scope of the audit on access

    to information, or any changes in the proposed scope of the audit;

    (w) Provide, as part of the Companys proxy filed pursuant to SEC regulations, the report

    required by SEC regulations relating to proxies and cause a copy of that report to be included annually in the

    Companys proxy solicitation materials;

    (x) Establish procedures for the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters;

    (y) Establish in accordance with law and the rules and regulations of the Regulatory Authorities procedures for the confidential, anonymous submission by employees of the Company of concerns

    regarding questionable accounting or auditing matters;

    (z) Obtain the advice and assistance, as appropriate, of independent counsel and other advisors as necessary to fulfill the responsibilities of the Audit Committee;

    (aa) Establish policies for the hiring of employees or former employees of outside auditors;

    (bb) Review and approve in advance all transactions between the Company and its executive officers and directors;

    (cc) Review and approve all director-related conflicts of interest between a director’s

    obligations to the Company and his or her personal interests;

    (dd) Establish policies and procedures for review, approval, or ratification of any transaction required to be reported under Item 404(a) of Regulation S-K;

    (ee) Review any requests for waivers of compliance with the Company’s Code of Conduct

    and Ethics;

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    (ff) Review and approve in advance all non-audit related work performed on behalf of the

    Company by the outside auditors; and

    (gg) Annually review and reassess the adequacy of this Charter and make recommendations

    to the Board with respect to any changes in this Charter.

    4. Access to Information. In order to perform its obligations, the Audit Committee shall have unrestricted access to all relevant internal and external Company information and to any officer, director, or

    employee of the Company.

    5. Employee Access to Audit Committee. Any person employed by the Company and any of the Companys independent contractors shall have access to the Audit Committee, pursuant to procedures adopted by

    the Audit Committee, to report any matter such person believes would be of interest to the Audit Committee or of

    general concern to the Audit Committee or the Board. Contacting a member of the Audit Committee to report any

    irregularity, questionable activity, or other matter shall not subject the person making the report to discipline.

    6. Frequency of Meetings.

    (a) The Audit Committee shall meet at such times as may be necessary and shall meet each

    quarter prior to the release of the Companys earnings statements to review the earnings release. The Audit Committee meetings may be held in conjunction with selected Board meetings. Special meetings of the Audit

    Committee may be called by any member of the Audit Committee, any member of the Board, the Chief Financial

    Officer, or the Chief Executive Officer.

    (b) The Audit Committee, at least once a year, shall meet privately with the Companys

    outside and, if applicable, internal auditors, and no representative of the Companys management shall attend such

    meetings.

    7. Access to Legal Counsel, Outside Advisors, and Funding. The Audit Committee shall have full

    and free access to the Companys outside legal counsel, and in its discretion, to engage its own independent legal

    counsel and other advisors. The Company shall pay for the cost of any such legal counsel and advisors. The

    Company also shall pay for the ordinary administrative expenses of the Audit Committee that are necessary or

    appropriate in carrying out the Audit Committee’s duties.

    8. Meeting Procedures.

    (a) Members of the Audit Committee shall endeavor to attend all meetings of the Audit

    Committee. The Audit Committee is governed by the same rules regarding meetings (including meetings by

    telephone conference), action without meetings, notice, waiver of notice, and quorum and voting requirements as are

    applicable to the Board and is authorized to adopt its own rules of procedure not inconsistent with any provision of

    this Charter, any provision of the Companys Bylaws, or the laws of the state of Nevada.

    (b) Written minutes shall be maintained for each meeting of the Audit Committee.

    9. Other Duties. The Audit Committee shall perform such other duties as the Board may assign to it

    or as may be imposed by law or by rule or regulation of the Regulatory Authorities.

    10. Limitation of Audit Committee Duties. The Audit Committee is not an investigative committee of the Board and shall have no investigative duties unless expressly assigned to the Audit Committee by the Board or

    pursuant to the Companys Code of Conduct and Ethics. The Audit Committee shall exercise its business judgment

    in performing its duties under this Charter, including the duties outlined in Paragraph 3, and may emphasize and

    prioritize those duties and responsibilities set forth above that the Committee, in its discretion and judgment,

    believes are the most important, given the particular circumstances. It is not the duty of the Audit Committee to

    undertake the audit of the Company itself, to plan the audit, or to undertake any of the responsibilities of the

    Companys internal or outside auditors. The Audit Committee is not required to follow the procedures required of

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auditors in performing reviews of interim financial statements or audited financial statements. In performing its

    functions, the Audit Committee may rely upon information provided to it by management, by the Company’s

    internal and outside auditors, or by legal counsel. This Charter imposes no duties on the Audit Committee or its

    members that are greater than those duties imposed by law upon a director of a Nevada corporation under Title 7 of

    the Nevada Revised Statutes. If any claim is asserted against the Audit Committee, any of its members, or the

    Company by a stockholder or any other person, nothing in this Charter shall be construed to limit or restrict any

    defense or indemnification available to the Audit Committee, any of its members, or the Company.

    * * * * * * *

    Adopted by the Board of Directors of Covenant Transport, Inc. on February 28, 2007.

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