EX-4.4 LOAN AND SECURITY AGREEMENT AND GUARANTEE



 





Exhibit 4.4




EXECUTION VERSION




LOAN AND SECURITY AGREEMENT AND GUARANTY




dated as of April 5, 2007




among




ALLIED SYSTEMS, Ltd. (L.P.),

a Georgia limited partnership and a debtor and debtor in possession under

Chapter 11 of the Bankruptcy Code.




as “Borrower”




ALLIED HOLDINGS, INC.,

a Georgia corporation and a debtor and debtor in possession under

Chapter 11 of the Bankruptcy Code




and




THE OTHER SUBSIDIARIES PARTY HERETO




as “Guarantors”




and




YUCAIPA TRANSPORTATION, LLC,

a Delaware limited liability company




as “Lender”




 









 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	PAGE	 
	SECTION 1. DEFINITIONS
	 	 	2	 
	1.1 General Definitions
	 	 	2	 
	1.2 Definitions; Interpretation
	 	 	11	 
	 
	 	 	 	 
	SECTION 2. LOAN PROVISIONS
	 	 	11	 
	2.1 Loan Mechanics
	 	 	11	 
	2.2 Use of Proceeds
	 	 	12	 
	2.3 Conversion to Equity
	 	 	12	 
	 
	 	 	 	 
	SECTION 3. CONDITIONS TO FUNDING
	 	 	12	 
	3.1 Conditions to Initial Funding
	 	 	12	 
	3.2 Conditions to Each Funding
	 	 	14	 
	 
	 	 	 	 
	SECTION 4. GRANT OF SECURITY
	 	 	15	 
	4.1 Grant of Security
	 	 	15	 
	 
	 	 	 	 
	SECTION 5. SECURITY FOR OBLIGATIONS; BORROWER REMAINS LIABLE
	 	 	15	 
	5.1 Security for Obligations
	 	 	15	 
	5.2 Continuing Liability Under Collateral
	 	 	15	 
	 
	 	 	 	 
	SECTION 6. REPRESENTATIONS AND WARRANTIES AND COVENANTS
	 	 	16	 
	6.1 Representations and Warranties
	 	 	16	 
	6.2 Covenants and Agreements
	 	 	20	 
	 
	 	 	 	 
	SECTION 7. ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES
	 	 	24	 
	7.1 Access; Right of Inspection
	 	 	24	 
	7.2 Further Assurances
	 	 	24	 
	 
	 	 	 	 
	SECTION 8. LENDER APPOINTED ATTORNEY-IN-FACT
	 	 	24	 
	8.1 Power of Attorney
	 	 	24	 
	8.2 No Duty on the Part of Lender
	 	 	25	 
	 
	 	 	 	 
	SECTION 9. REMEDIES
	 	 	26	 
	9.1 Events of Default
	 	 	26	 
	9.2 Application of Proceeds
	 	 	33	 
	9.3 Sales on Credit
	 	 	33	 
	9.4 Cash Proceeds
	 	 	33	 
	 
	 	 	 	 
	SECTION 10. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS
	 	 	33	 
	 
	 	 	 	 
	SECTION 11. STANDARD OF CARE; LENDER MAY PERFORM
	 	 	34	 









i









 








	 	 	 	 	 
	SECTION 12. MISCELLANEOUS
	 	 	34	 
	12.1 Reimbursement of Expenses
	 	 	34	 
	12.2 Notices
	 	 	35	 
	12.3 No Waiver
	 	 	35	 
	12.4 Severability
	 	 	35	 
	12.5 Independence
	 	 	36	 
	12.6 Successors and Assigns
	 	 	36	 
	12.7 Entire Agreement
	 	 	36	 
	12.8 Counterparts
	 	 	36	 
	12.9 Governing Law
	 	 	36	 
	 
	 	 	 	 
	SECTION 13. GUARANTY
	 	 	36	 
	13.1 Guaranty of the Obligations
	 	 	36	 
	13.2 Payment by Guarantors
	 	 	36	 
	13.3 Liability of Guarantors Absolute
	 	 	37	 
	13.4 Waivers by Guarantors
	 	 	39	 
	13.5 Guarantors’ Rights of Subrogation, Contribution, etc
	 	 	39	 
	13.6 Subordination of Other Obligations
	 	 	40	 
	13.7 Continuing Guaranty
	 	 	40	 
	13.8 Authority of Guarantors or Borrower
	 	 	40	 
	13.9 Financial Condition of Borrower
	 	 	40	 
	13.10 Bankruptcy, etc
	 	 	40	 
	13.11 Discharge of Guaranty Upon Sale of Guarantors
	 	 	41	 
	13.12 Contribution by Guarantors
	 	 	42	 






ii




 









 








          This LOAN AND SECURITY AGREEMENT AND GUARANTY is entered into as of April 5, 2007 (this
“Agreement”), by and among ALLIED SYSTEMS, LTD. (L.P.), a Georgia limited partnership and a debtor
and debtor in possession under Chapter 11 of the Bankruptcy Code
(“Borrower”), ALLIED HOLDINGS,
INC., a Georgia corporation and a debtor and debtor in possession under Chapter 11 of the
Bankruptcy Code (“Holdings”), THE OTHER SUBSIDIARIES (AS DEFINED BELOW) OF HOLDINGS PARTY HERETO
(such Subsidiaries, together with any future Subsidiaries of
Holdings, the “Subsidiary Guarantors”,
and together with Borrower and Holdings, collectively, the
“Loan Parties”, and individually, a
“Loan Party”), and YUCAIPA TRANSPORTATION, LLC, a
Delaware limited liability company (“Lender”).




RECITALS:




          WHEREAS,
on July 31, 2005 (the “Petition Date”), Holdings, Borrower, and certain Subsidiaries
(as defined below) of Borrower and Holdings (such Subsidiaries, together with Borrower and
Holdings, collectively the “Debtors”, and
individually a “Debtor”) filed a voluntary petition for
relief (collectively, the “Cases”) under Chapter 11 of the Bankruptcy Code (as defined below) with
the United States Bankruptcy Court for the Northern District of Georgia (such court or any other
court having competent jurisdiction over the Cases, the
“Bankruptcy Court”);




          WHEREAS, from and after the Petition Date, the Debtors are continuing to operate their
respective businesses and manage their respective properties as debtors in possession under
Sections 1107 and 1108 of the Bankruptcy Code;




          WHEREAS, pursuant to that certain Equipment Purchase Agreement, entered into as of April 5,
2007 (as amended, modified and supplemented from time to time, the
“Purchase Agreement”) by and
among Borrower, Holdings and Lender, Borrower and Holdings have agreed to purchase and in the
future may agree to purchase certain tractors and trailers and related equipment from Lender (any
such purchase, individually, an “Equipment Purchase”, and all such purchases collectively, the
“Equipment Purchases”);




          WHEREAS, Lender has agreed to accept as payment of the purchase price for the initial
Equipment Purchase that certain Secured Convertible Promissory Note, dated April 5, 2007 (as
amended, modified and supplemented from time to time, the
“Initial Promissory Note”), in the
original principal amount of Five Hundred Sixty-Four Thousand ($564,000), payable to Lender;




          WHEREAS, Lender may advance additional funds to Borrower for (i) Equipment Purchases and
Transfer Taxes (as defined in the Purchase Agreement), registration fees and any other
out-of-pocket fees, costs or expenses incurred, by Lender or its Affiliates in connection with the
Equipment Purchases and (ii) funding of repair and maintenance for the rigs and other equipment
purchased pursuant to the Equipment Purchases, with any such advance to be made pursuant to
additional secured convertible promissory notes in substantially the form of the Initial Promissory
Note (such additional notes, the “Additional Promissory
Notes”, and together with the Initial
Promissory Note, collectively, the “Promissory
Notes”, and individually a “Promissory Note”); and




1









 








          WHEREAS, as a condition precedent to advancing funds under the Promissory Notes, Lender
has required the Loan Parties to execute and deliver this Agreement.




          NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants
herein contained, the Loan Parties and Lender agree as follows:




SECTION 1. DEFINITIONS.




          1.1 General Definitions. In this Agreement, the following terms shall have the
following meanings:




          “Additional Promissory Notes” shall have the meaning set forth in the recitals.




          “Advance Date” shall mean the Closing Date and the date of each future advance pursuant to
any Promissory Note.




          “Agreement” shall have the meaning set forth in the preamble.




          “Approval Order” shall mean the Interim Approval Order or the Final Approval Order, as
applicable.




          “Approved Plan” shall mean a plan of reorganization that is (i) proposed by the Debtors, (ii)
supported by Lender or any affiliate of Lender and (iii) approved and confirmed in the Cases
pursuant to a confirmation order of the Bankruptcy Court in form and substance acceptable to
Lender.




          “Available Funding Period” shall mean the period commencing on the Closing Date and ending on
the Maturity Date.




          “Bankruptcy Code” shall mean Title 11 of the United States Code entitled “Bankruptcy”, as now
and hereafter in effect, or any successor statute.




          “BIA” shall mean the Bankruptcy and Insolvency Act (Canada), as now or hereafter in effect or
any successor statute.




          “Borrower” shall have the meaning set forth in the preamble.




          “Business Day” shall mean any day excluding Saturday, Sunday and any day which is a legal
holiday under the laws of the State of Georgia or the State of California or is a day on which
banking institutions located in such state are authorized or required by law or other governmental
action to close.




          “Canadian Approval Order” shall mean the Canadian Interim Approval Order or the Canadian Final
Approval Order, as applicable.




          “Canadian Court” shall mean the Ontario Superior Court of Justice (Commercial List).




2









 








          “Canadian Final Approval Order” shall mean an order of the Canadian Court under Section
18.6 of the CCAA, together with all extensions, modifications and amendments thereto, in each case
in form and substance satisfactory to Lender, giving full effect to the Final Approval Order, which
order shall specifically but not exclusively provide that each of the Canadian Loan Parties is
authorized to enter into the Loan Documents to which it is a party, and provide, execute and
deliver all such guarantees, documents, security interests and liens as are contemplated in such
Loan Documents and granting to Lender a fixed charge, mortgage, hypothec, security interest and
lien in all of the Collateral in which any of the Canadian Loan Parties now or hereafter has an
interest ranking in priority to all other encumbrances.




          “Canadian Insolvency Law” shall mean any of the BIA and the CCAA, and any other applicable
insolvency or other similar law.




          “Canadian Interim Approval Order” shall mean an order of the Canadian Court under Section 18.6
of the CCAA, together with all extensions, modifications and amendments thereto, in each case in
form and substance satisfactory to Lender, giving full effect to the Interim Approval Order, which
order shall specifically but not exclusively provide that each of the Canadian Loan Parties is
authorized to enter into the Loan Documents to which it is a party, and provide, execute and
deliver all such guarantees, documents, security interests and liens as are contemplated in such
Loan Documents and granting to Lender a fixed charge, mortgage, hypothec, security interest and
lien in all of the Collateral in which any of the Canadian Loan Parties now or hereafter has an
interest ranking in priority to all other encumbrances.




          “Canadian Loan Party” shall mean any Loan Party incorporated, organized or otherwise
established under the laws of Canada or any political subdivision of Canada.




          “Canadian PPSA” shall mean the Personal Property Security Act (Ontario) and the Regulations
thereunder, as from time to time in effect, provided, however, if the validity, perfection (or
opposability), effect of perfection or of non-perfection or priority of Lender’s security interest
in any Collateral are governed by the personal property security laws or laws relating to movable
property of any jurisdiction other than Ontario, Canadian PPSA shall mean those personal property
security laws or laws relating to movable property in such other jurisdiction for the purpose of
the provisions hereof relating to such validity, perfection (or opposability), effect of perfection
or of non-perfection or priority and for the definitions related to such provisions.




          “Canadian Subsidiary” shall mean any Subsidiary that is incorporated, organized or otherwise
established under the laws of Canada or any political subdivision of Canada.




          “Capital Lease” shall mean, as applied to any Person, any lease of any property (whether real,
personal or mixed) by such Person as lessee that, in conformity with GAAP, is or should be
accounted for as a capital lease on the balance sheet of such Person.




          “Cases” shall have the meaning set forth in the recitals.




          “Cash Proceeds” shall have the meaning assigned in Section 9.4.




3









 








          “CCAA” shall mean Companies’ Creditors Arrangement Act (Canada), as now and hereafter
in effect, or any successor statute.




          “Change of Control” shall mean (i) any Person or “group” (within the meaning of Rules 13d-3
and 13d-5 under the Exchange Act) other than Lender and its Affiliates (a) shall have acquired
beneficial ownership of 35% or more on a fully diluted basis of the voting and/or economic interest
in the Equity Interests of Holdings or (b) shall have obtained the power (whether or not exercised)
to elect a majority of the members of the board of directors (or similar governing body) of
Holdings; or (ii) Holdings shall cease to beneficially own and control, directly or indirectly,
100% on a fully diluted basis of the economic and voting interest in the Equity Interests of
Systems; or (ill) a plan of reorganization other than the Approved Plan is consummated.




          “Closing Date” shall mean the date on which the Initial Promissory Note is issued.




          “Collateral” shall have the meaning assigned in Section 4.1.




          “Collateral Account” shall mean any account established by Lender.




          “Collateral Records” shall mean books, records, ledger cards, files, correspondence, customer
lists, blueprints, technical specifications, manuals, computer software, computer printouts, tapes,
disks and related data processing software and similar items that at any time evidence or contain
information relating to any of the Collateral or are otherwise necessary or helpful in the
collection thereof or realization thereupon.




          “Committee” shall mean the Official Committee of Unsecured Creditors appointed in the Cases
pursuant to Section 1102 of the Bankruptcy Code, on August 5, 2005, as reconstituted from time to
time.




          “Contractual Obligation” shall mean, as applied to any Person, any provision of any Security
issued by that Person or of any indenture, mortgage, deed of trust, contract, undertaking,
agreement or other instrument to which that Person is a party or by which it or any of its
properties is bound or to which it or any of its properties is subject.




          “Debtors” shall have the meaning set forth in the recitals.




          “Default” shall mean a condition or event that, after notice or lapse of time or both, would
constitute an Event of Default.




          “Disclosure Statement” shall mean the written disclosure statement that relates to the Plan,
as approved by the Bankruptcy Court pursuant to Section 1125 of the Bankruptcy Code and Rule 3017
of the Federal Rules of Bankruptcy Procedure, as such disclosure statement may be amended, modified
or supplemented from time to time in accordance with applicable law.




          “Disqualified Equity Interests” shall mean any Equity Interest which, by its terms (or by the
terms of any security or other Equity Interests into which it is convertible or for







4









 







which it is exchangeable), or upon the happening of any event or condition (i) matures or is
mandatorily redeemable (other than solely for Equity Interests which are not otherwise Disqualified
Equity Interests), pursuant to a sinking fund obligation or otherwise, (ii) is redeemable at the
option of the holder thereof (other than solely for Equity Interests which are not otherwise
Disqualified Equity Interests), in whole or in part, (iii) provides for the scheduled payments or
dividends in cash, or (iv) is or becomes convertible into or exchangeable for Indebtedness or any
other Equity Interests that would constitute Disqualified Equity Interests, in each case, prior to
the date that is 91 days after the Maturity Date.




          “Domestic Subsidiary” shall mean any Subsidiary organized under the laws of the United States
of America, any State thereof or the District of Columbia.




          “Employee
Benefit Plan” shall mean, in respect of any Loan Party other than a Canadian Loan
Party, any “employee benefit plan” as defined in
Section 3(3) of ERISA which is or was sponsored,
maintained or contributed to by, or required to be contributed by, Holdings, any of its
Subsidiaries or any of their respective ERISA Affiliates, and in respect of any Canadian Loan
Party, any employee benefit plan of any nature or kind that is not a Pension Plan and is maintained
by or contributed to, or required to be maintained by or contributed to, by such Canadian Loan
Party.




          “Equipment Purchase” and “Equipment Purchases” shall have the meanings set forth in the
recitals.




          “Equipment Schedule” shall have the meaning set forth in the Purchase Agreement.




          “Equity Interests” shall mean any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all equivalent
ownership interests in a Person (other than a corporation), including partnership interests and
membership interests, and any and all warrants, rights or options to purchase or other arrangements
or rights to acquire any of the foregoing.




          “ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as amended from time
to time, and any successor thereto.




          “ERISA Affiliate” shall mean, as applied to any Person, (i) any corporation which is a member
of a controlled group of corporations within the meaning of Section 414(b) of the Internal Revenue
Code of which that Person is a member; (ii) any trade or business (whether or not incorporated)
which is a member of a group of trades or businesses under common control within the meaning of
Section 414(c) of the Internal Revenue Code of which that Person is a member; and (iii) any member
of an affiliated service group within the meaning of Section 414(m) or (o) of the Internal Revenue
Code of which that Person, any corporation described in clause (i) above or any trade or business
described in clause (ii) above is a member. Any former ERISA Affiliate of Holdings or any of its
Subsidiaries shall continue to be considered an ERISA Affiliate of Holdings or any such Subsidiary
within the meaning of this definition with respect to the period such entity was an ERISA Affiliate
of Holdings or such Subsidiary and with respect to
 

5









 








liabilities arising after such period for which Holdings or such Subsidiary could be liable
under the Internal Revenue Code or ERISA.




          “Event of Default” shall mean each of the conditions or events set forth in Section 9.1 (a).




          “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time,
and any successor statute.




          “Executive Officer” shall mean, as applied to any Person, any individual holding the position
of chairman of the board (if an officer), chief executive officer, president (or the equivalent
thereof), such Person’s chief financial officer or treasurer and such Person’s vice president of
human resources and risk management.




          “Existing Credit Agreement” shall mean that Secured Super-Priority Debtor in Possession and
Exit Credit and Guaranty Agreement, dated as of March 30. 2007, entered into by and among Holdings,
Borrower, and certain subsidiaries of Holdings, as Subsidiary Guarantors, the Lenders party thereto
from time to time, Goldman Sachs Credit Partners L.P., as Syndication Agent, and The CIT
Group/Business Credit, Inc., as Administrative Agent and as Collateral Agent , as it may be
amended, supplemented or otherwise modified from time to time in accordance with the terms hereof.




          “Fair Market Value” shall mean, with respect to any Purchased Title Vehicle, the purchase
price paid for such Purchased Title Vehicle pursuant to the Purchase Agreement.




          “Final Approval Order” shall mean an order (in form and substance substantially similar to the
Interim Approval Order and otherwise in form and substance satisfactory to Lender) of the
Bankruptcy Court pursuant to Section 364 of the Bankruptcy Code entered after the final hearing
approving this Agreement and the other Loan Documents, as to which no stay has been entered and
which has not been reversed, vacated or overturned, and from which no appeal or motion to
reconsider has been timely filed, or if timely filed, such appeal or motion to reconsider has been
dismissed or denied unless Lender waives such requirement, and which has not been amended,
supplemented or otherwise modified in any respect adverse to Lender without the prior written
consent of Lender.




          “Funding Notice” shall mean a notice substantially in the form of Exhibit A.




          “GAAP” shall mean United States generally accepted accounting principles in effect as of the
date of determination thereof.




          “Governmental Authority” shall mean any federal, state, provincial, municipal, national or
other government, governmental department, commission, board, bureau, court, tribunal, agency or
instrumentality or political subdivision thereof or any entity, officer or examiner exercising
executive, legislative, judicial, regulatory or administrative functions of or pertaining to any
government or any court, in each case whether associated with a state of the United States, the
United States, or a foreign entity or government.

6









 








          “Governmental Authorization” shall mean any permit, license, authorization, plan,
directive, consent order or consent decree of or from any Governmental Authority.




          “Guarantors” shall mean Holdings and each Domestic Subsidiary and Canadian Subsidiary of
Holdings, excluding in each case. Borrower and any Inactive Subsidiary.




          “Guaranty” shall mean the guaranty of Guarantors set forth in Section 13.




          “Holdings” shall have the meaning set forth in the preamble.




          “Inactive Subsidiary” shall mean any Subsidiary of Holdings that has (i) no assets other than
de minimus assets not exceeding $250,000, (ii) no revenues and (iii) no income.




          “Indebtedness”, as applied to any Person, shall mean, without duplication, (i) all
indebtedness of such Person for borrowed money; (ii) that portion of obligations of such Person
with respect to Capital Leases that is properly classified as a liability on a balance sheet in
conformity with GAAP; (iii) notes payable and bankers acceptances of such Person; (iv) any
obligation of such Person owed for all or any part of the deferred purchase price of property or
services (excluding any such obligations incurred under ERISA), which purchase price is (a) due
more than six months from the date of incurrence of the obligation in respect thereof or (b)
evidenced by a note or similar written instrument; (v) all indebtedness secured by any Lien on any
property or asset owned or held by such Person (other than a Lien on leased property (real or
personal) granted by the landlord or lessor thereof) regardless of whether the indebtedness secured
thereby shall have been assumed by such Person or is nonrecourse to the credit of such Person; (vi)
the face amount of any letter of credit issued for the account of such Person or as to which such
Person is otherwise liable for reimbursement of drawings; (vii) Disqualified Equity Interests,
(viii) the direct or indirect guaranty, endorsement (otherwise than for collection or deposit in
the ordinary course of business), co-making, discounting with recourse or sale with recourse by
such Person of the obligation which would be Indebtedness of another; (ix) any obligation which
would be Indebtedness of such Person the primary purpose or intent of which is to provide assurance
to an obligee that the obligation of the obligor thereof will be paid or discharged, or any
agreement relating thereto will be complied with, or the holders thereof will be protected (in
whole or in part) against loss in respect thereof; and (x) any liability of such Person for an
obligation which would be Indebtedness of another through any agreement (contingent or otherwise)
(a) to purchase, repurchase or otherwise acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such obligation (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise) or (b) to maintain the solvency or
any balance sheet item, level of income or financial condition of another if, in the case of any
agreement described under subclauses (a) or (b) of this clause (x), the primary purpose or intent
thereof is as described in clause (ix) above.




          
“Initial Promissory Note” shall have the meaning set forth in the recitals.




          “Initial Repair Costs” shall have the meaning provided in the Purchase Agreement.





7









 








          “Insurance” shall mean (i) all insurance policies covering any or all of the Collateral
(regardless of whether Lender is the loss payee thereof) and (ii) any key man life insurance
policies.




          “Interim Approval Order” shall mean an order (in substantially the form of Exhibit C and
otherwise in form and substance satisfactory to Lender) of the Bankruptcy Court pursuant to Section
364 of the Bankruptcy Code entered after an interim hearing approving this Agreement and the other
Loan Documents, as to which no stay has been entered and which has not been reversed, vacated or
overturned, and from which no appeal or motion to reconsider has been timely filed, or if timely
filed, such appeal or motion to reconsider has been dismissed or denied unless Lender waives such
requirement, and which has not been amended, supplemented or otherwise modified in any respect
adverse to Lender without the prior written consent of Lender.




          “Internal Revenue Code” shall mean the Internal Revenue Code of 1986, as amended to the date
hereof and from time to time hereafter, and any successor statute.




          “Lender” shall have the meaning set forth in the preamble.




          “Lien” shall mean any lien, mortgage, pledge, assignment, security interest, charge or
encumbrance of any kind (including any agreement to give any of the foregoing, any conditional sale
or other title retention agreement, and any lease in the nature thereof) and any option, trust or
other preferential arrangement having the practical effect of any of the foregoing.




          “Loan Documents” shall mean this Agreement, the Promissory Notes, the Purchase Agreement and
all other documents, instruments or agreements executed and delivered by a Loan Party for the
benefit of Lender in connection herewith and therewith.




          “Loan Party” shall have the meaning set forth in the preamble.




          “Material Adverse Effect” shall mean (i) a material adverse effect on and/or material adverse
developments with respect to the business, operations, properties, assets or condition (financial
or otherwise) of Holdings and its Subsidiaries taken as a whole; (ii) a material impairment of the
ability of the Loan Parties to fully and timely perform their Obligations; (iii) a material adverse
effect on and/or material adverse developments with respect to the legality, validity, binding
effect or enforceability against a Loan Party of a Loan Document to which it is a party; or (iv) a
material impairment of the rights, remedies and benefits available to, or conferred upon. Lender
under any Loan Document.




          “Maturity Date” shall mean the earlier of (i) April 4, 2008; and (ii) the date that all
Obligations shall become due and payable in full hereunder and under the Promissory Notes, whether
by acceleration or otherwise.




          “Maximum Loan Amount” shall mean fifteen million dollars ($15,000,000).




          “Multiemployer Plan” shall mean any Employee Benefit Plan which is a “multiemployer plan” as
defined in Section 3(37) of ERISA.




8









 








          “Obligations” shall mean all obligations of every nature of the Loan Parties under any
Loan Document, whether for principal, interest (including interest which, but for the filing of a
petition in bankruptcy with respect to any Loan Party, would have accrued on any Obligation,
whether or not a claim is allowed against such Loan Party for such interest in the related
bankruptcy proceeding), fees, expenses, indemnification or otherwise.




          “PBGC” shall mean the Pension Benefit Guaranty Corporation or any successor thereto.




          “Pension Plan” shall mean, in respect of any Loan Party other than any Canadian Loan Party,
any Employee Benefit Plan, other than a Multiemployer Plan, which is subject to Section 412 of the
Internal Revenue Code or Section 302 of ERISA and in respect of any Canadian Loan Party, each
pension, supplementary pension, retirement savings or other retirement income plan or arrangement
of any kind, registered or non-registered, established, maintained or contributed to by such
Canadian Loan Party for its employees or former employees, but does not include the Canada Pension
Plan or the Quebec Pension Plan that is maintained by the Government of Canada or the Province of
Quebec, respectively.




          “Permitted Encumbrances” shall mean each of the following Liens: (i) Liens in favor of Lender
granted pursuant to any Loan Document; (ii) Liens for Taxes not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly instituted and diligently conducted, so
long as (a) adequate reserve or other appropriate provision as shall be required in conformity with
GAAP shall have been made therefor, and (b) such contest proceedings conclusively operate to stay
the sale of any portion of the Collateral to satisfy such Tax or claim; (iii) Liens of landlords,
banks (and rights of set-off), of carriers, warehousemen, mechanics, repairmen, workmen and
materialmen, and other Liens imposed by law (other than any such Lien imposed pursuant to Section
401 (a)(29) or 412(n) of the Internal Revenue Code or by ERISA), in each case incurred in the
ordinary course of business (a) for amounts not yet overdue or (b) for amounts that are overdue and
that (in the case of any such amounts overdue for a period in excess of thirty days) are being
contested in good faith by appropriate proceedings, so long as such reserves or other appropriate
provisions, if any. as shall be required by GAAP shall have been made for any such contested
amounts; (iv) Liens incurred in the ordinary course of business in connection with workers’
compensation, unemployment insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government
contracts, trade contracts, performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money or other Indebtedness), so long as no
foreclosure, sale or similar proceedings have been commenced with respect to any portion of the
Collateral on account thereof; (v) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the importation of goods; (vi)
bankers’ Liens, rights of setoff and other similar Liens existing solely with respect to cash and
cash equivalents on deposit in one or more accounts maintained by any Loan Party, in each case
granted in the ordinary course of business in favor of the bank or banks with which such accounts
are maintained, securing amounts owing to such bank with respect to cash management and operating
account arrangements, including those involving pooled accounts and netting arrangements;
provided that, unless such Liens are non-consensual and arise by operation of law, in no
case shall any such Liens secure (either directly or indirectly) the repayment of any Indebtedness;
and
 

9









 








(vii) Liens arising out of judgments or awards in connection with court proceedings which do
not constitute an Event of Default.




          “Person” shall mean and include natural persons, corporations, limited partnerships, general
partnerships, limited liability companies, unlimited liability companies, limited liability
partnerships, joint stock companies, Joint Ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not legal entities, and
Governmental Authorities.




          “Petition Date” shall have the meaning set forth in the recitals.




          “Plan” shall mean the Chapter 11 plan of reorganization with respect to the Debtors confirmed
by the Bankruptcy Court.




          “Plan Effective Date” shall mean the Effective Date as defined in the Plan.




          “Pledge Supplement” shall mean any supplement to this agreement in substantially the form of
Exhibit B.




          “Proceeds” shall mean (i) all “proceeds” as defined in Article 9 of the UCC, and (ii) whatever
is receivable or received when Collateral or proceeds are sold, exchanged, collected or otherwise
disposed of, whether such disposition is voluntary or involuntary.




          “Promissory
Note” and “Promissory Notes” shall have the meanings set forth in the recitals.




          “Purchase Agreement” shall have the meaning set forth in the recitals.




          “Record” shall have the meaning specified in Article 9 of the UCC.




          “Secured Obligations” shall have the meaning assigned in Section 5.1.




          “Stipulation Regarding Continued Exclusivity” shall mean that certain Stipulation Regarding
Continued Exclusivity and Plan of Reorganization between the Debtors and Yucaipa American Alliance
Fund I, LP and Yucaipa American Alliance (Parallel) Fund I, LP, which was filed with the Bankruptcy
Court in February 2007, as amended, modified and supplemented from time to time in accordance with
the terms thereof.




          “Subsidiary” shall mean, with respect to any Person, any other Person of which more than 50%
of the total voting power of shares of stock or other ownership interests entitled (without regard
to the occurrence of any contingency) to vote in the election of such Person or Persons (whether
directors, managers, trustees or other Persons performing similar functions) having the power to
direct or cause the direction of the management and policies thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof; provided, in determining the percentage of ownership
interests of any Person controlled by another Person, no ownership interest in the nature of a
“qualifying share” of the former Person shall be deemed to be outstanding.

10









 









          “Subsidiary Guarantors” shall have the meaning set forth in the preamble.




          “Tax”
shall mean any present or future tax, levy, impost, duty, assessment, charge, fee,
deduction or withholding of any nature and whatever called, by whomsoever, on whomsoever and
wherever imposed, levied, collected, withheld or assessed; provided, “Tax on the overall
net income” of a Person shall be construed as a reference to a tax imposed by the jurisdiction in
which such Person is organized or in which such Person’s applicable principal office is located or
in which such Person is deemed to be doing business on all or part of the net income, profits or
gains (whether worldwide, or only insofar as such income, profits or gains are considered to arise
in or to relate to a particular jurisdiction, or otherwise) of such Person.




          “Title Vehicles” shall mean motor vehicles, tractors, trailers and other like property of
which title thereto is governed by a certificate of title or similar instrument.




          “Transfer
 Taxes” shall have the meaning provided in the Purchase Agreement.




          “UCC” shall mean the Uniform Commercial Code as in effect from time to time in the State of
New York or, when the context implies, the Uniform Commercial Code as in effect from time to time
in any other applicable jurisdiction.




          “United States” shall mean the United States of America.




     1.2 Definitions; Interpretation. All capitalized terms used herein (including the preamble and
recitals hereto) and not otherwise defined herein shall have the meanings ascribed thereto in the
UCC. References to “Sections,” “Exhibits” and “Schedules” shall be to Sections, Exhibits and
Schedules, as the case may be, of this Agreement unless otherwise specifically provided. Section
headings in this Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any substantive effect. Any
of the terms defined herein may, unless the context otherwise requires, be used in the singular or
the plural, depending on the reference. The use herein of the word “include” or “including”, when
following any general statement, term or matter, shall not be construed to limit such statement,
term or matter to the specific items or matters set forth immediately following such word or to
similar items or matters, whether or not nonlimiting language (such as “without limitation” or “but
not limited to” or words of similar import) is used with reference thereto, but rather shall be
deemed to refer to all other items or matters that fall within the broadest possible scope of such
general statement, term or matter. All references herein to
provisions of the UCC shall include all
successor provisions under any subsequent version or amendment to any Article of the UCC.



SECTION 2. LOAN PROVISIONS.




     2.1 Loan Mechanics.



          (a) Loan Commitments. Subject to the terms and conditions hereof, during the Available
Funding Period, Lender agrees to make loans to Borrower in an aggregate amount up to but not
exceeding the Maximum Loan Amount. Any amount borrowed under this Section 2.1 (a) and subsequently
repaid or prepaid may not be reborrowed. All amounts owed hereunder

11









 







with respect to the loans made pursuant to the Promissory Notes shall be paid in full no
later than the Maturity Date.




          (b)  Borrowing Mechanics for Loans.





                    (i) Whenever Borrower desires that Lender make a Loan, Borrower shall deliver to Lender a
fully executed and delivered Funding Notice no later than 11:00 a.m. (New York City time) at least
three Business Day in advance of the proposed Advance Date.




                    (ii) Upon satisfaction or waiver of the conditions precedent specified herein, Lender shall
make the proceeds of the requested loans available to Borrower on the applicable Advance Date by
either (x) crediting such amount against the purchase price to be paid under and pursuant to the
Purchase Agreement (for loans made in connection with purchases of Purchased Title Vehicles or (y)
causing an amount of same day funds in Dollars equal to the proceeds of such loan to be credited to
the account of Borrower at to the account as may be designated in writing to Lender by Borrower.



     2.2
Use of Proceeds. Promissory Notes shall only be issued
(i) in payment of the purchase
price for Equipment Purchases and related Transfer Taxes,
registration fees and any other
out-of-pocket fees, costs or expenses incurred, by Lender or its
Affiliates in connection with the
Equipment Purchases and the Loan Documents and (ii) for proceeds
which are applied to finance
expenses incurred by Borrower and Holdings for Initial Repair Costs.



     2.3
Conversion to Equity. Upon the effective date of and pursuant to an Approved Plan, the
principal and interest due and owing under the Notes (including,
without limitation, any interest
which has been added to principal pursuant to the Notes) and all
other Obligations owing under the
Loan Documents shall, at the option of the either Holdings or Lender,
in each case in its sole and
absolute discretion, be converted into voting Equity Interests of
Holdings, which option must be
exercised by giving Holdings or Lender, as applicable, written notice within ten(10) days after the
entry by the Bankruptcy Court of an order confirming such Approved Plan. If the conversion right is
exercised, then the Obligations shall be exchanged into a percentage
of the total outstanding voting
Equity Interests of Holdings after giving effect to consummation of the Approved Plan, with the
percentage of shares to be issued to Lender to be calculated as follows: 100 percent multiplied by a
fraction, (i) the numerator of which equals the total amount of the Obligations as of the Plan
Effective Date and (ii) the denominator of which equals
(a) Two Hundred Eighty-Five Million Dollars
($285,000,000) minus (b) the principal amount of Indebtedness (other than the Obligations) of
Holdings and its Subsidiaries net of cash on hand outstanding on the Plan Effective Date after
giving effect to consummation of the Approved Plan.



SECTION 3. CONDITIONS TO FUNDING.




     3.1 Conditions to Initial Funding. The obligation of Lender to make fund the Initial
Promissory Note on the Closing Date is subject to the satisfaction or waiver of the following
conditions on or before the Closing Date:



          (a) Credit Documents. Lender shall have received a copy of each Loan Document
originally executed and delivered by each applicable Loan Party.





12









 





          (b) Court Order. The Bankruptcy Court shall have entered the Interim Approval
Order, which shall be certified by the Clerk of the Bankruptcy Court as having been duly entered,
and the Interim Approval Order shall be in full force and effect, shall not be subject to a motion
for reconsideration and shall not have been vacated, reversed, modified, amended or stayed without
the written consent of Lenders and, if the Interim Approval Order is the subject of a pending
appeal or motion for reconsideration in any respect, neither the making of the loans pursuant to
the Promissory Notes nor the performance by the Loan Parties of their respective obligations under
the Loan Documents shall be the subject of a presently effective stay pending appeal. The Loan
Parties shall have complied in full with the notice and all other requirements as provided for
under the Interim Approval Order. The Canadian Court shall have entered the Canadian Interim
Approval Order, which shall be certified by the Clerk of the Canadian Court as having been duly
entered, and the Canadian Interim Approval Order shall be in full force and effect, shall not be
subject to a motion for reconsideration and shall not have been vacated, reversed, modified,
amended or stayed without the written consent of Lender and, if the Canadian Interim Approval
Order is the subject of a pending appeal or motion for reconsideration in any respect,
neither the making of the loans pursuant to the Promissory Notes nor the performance by the Loan
Parties of their respective obligations under the Loan Documents shall be the subject of a
presently effective stay pending appeal.




          (c) Organizational Documents; Incumbency. Lender shall have received (i) copies of
each Organizational Document executed and delivered by each Loan Party, as applicable, and, to the
extent applicable, certified as of a recent date by the appropriate governmental official, each
dated the Closing Date or a recent date prior thereto; (ii) signature and incumbency certificates
of the officers of such Person executing the Loan Documents to which it is a party; (iii)
resolutions of the Board of Directors or similar governing body of each Loan Party approving and
authorizing the execution, delivery and performance of this Agreement and the other Loan
Documents to which it is a party or by which it or its assets may be bound as of the Closing Date,
certified as of the Closing Date by its secretary or an assistant secretary as being in full force
and effect without modification or amendment; provided that the resolutions for each Loan Party
other than Borrower, Holdings, and Allied Systems (Canada) Company shall be delivered within 30
days following the Closing Date; (iv) a good standing certificate or equivalent from the applicable
Governmental Authority of each Loan Party’s jurisdiction of incorporation, organization or
formation, each dated a recent date prior to the Closing Date; and (v) such other documents as
Lender may reasonably request.




          (d) Governmental Authorizations and Consents. Each Loan Party shall have obtained all
Governmental Authorizations and all consents of other Persons, in each case that are necessary or
advisable in connection with the transactions contemplated by the Loan Documents to occur on or
before the Closing Date and each of the foregoing shall be in full force and effect and in form and
substance reasonably satisfactory to Lender.




          (e) Personal Property Collateral. In order to create in favor of Lender a valid,
perfected security interest in the Collateral, the Loan Parties shall have delivered to Lender:





          (i) evidence reasonably satisfactory to Lender that Lender will have a first priority
perfected security interest in the Collateral and of the filing or publishing of




13









 








UCC and Canadian PPSA financing statements and other evidence of registration or publication; and




          (ii) a list setting forth the vehicle identification numbers for each Purchased Title
Vehicle as of the Closing Date.



          (f) Evidence of Insurance. Lender shall have received a certificate from Borrower’s
insurance broker or other evidence reasonably satisfactory to it that all insurance required to be
maintained pursuant to Section 6.2(c) is in full force and effect, together with endorsements
naming Lender, as additional insured and loss payee thereunder to the extent required under Section
6.2(c).




          (g) Closing Date Certificate. Borrower shall have delivered to Lender an originally
executed closing certificate certifying that the conditions set forth in this Section 3.1 have been
satisfied.




          (h) No Litigation. There shall not exist any action, suit, investigation, litigation,
proceeding, hearing (other than the Cases) or other legal or regulatory developments, pending or
threatened in any court or before any arbitrator or Governmental Authority that, in the reasonable
opinion of Lender, singly or in the aggregate, materially impairs the transactions contemplated by
the Loan Documents, or that could reasonably be expected to have a Material Adverse Effect.




     3.2 Conditions to Each Funding. The obligation of Lender to make any loan on any Advance Date
pursuant to a Promissory Note, including the Initial Promissory Note, is subject to the
satisfaction or waiver of the following conditions precedent:



          (a) Funding Notice. Lender shall have received a fully executed and delivered Funding
Notice.




          (b) Amount. After making the loan requested on such Advance Date, the
aggregate principal amount of all outstanding Promissory Notes shall not exceed the Maximum Loan
Amount.




          (c) Representations and Warranties. As of such Advance Date, the
representations and warranties contained herein and in the other Loan Documents shall be true and
correct in all material respects on and as of such Advance Date to the same extent as though made
on and as of that date, except to the extent such representations and warranties specifically
relate to an earlier date, in which case such representations and warranties shall have been true
and correct in all material respects on and as of such earlier date.




          (d) No Default. As of such Advance Date, no event shall have occurred and be
continuing or would result from the consummation of the loan to be made that would constitute an
Event of Default or a Default.




          (e) Executed Promissory Note. Lender shall have received an original of a fully
executed Promissory Note in the principal amount of the loan being requested.




14









 





          (f) Event Specific Conditions.





          (i) For each funding of a loan as the payment price for a purchase of additional Purchased
Title Vehicles, Lender shall have received an Equipment Schedule with respect to such purchase,
such Equipment Schedule to be delivered pursuant to the provisions of the Purchase Agreement.




          (ii) For each funding of a loan for the purpose of financing Initial Repair Costs, Transfer
Taxes, registration fees and any other out-of-pocket fees, costs or expenses incurred, by Lender or
its Affiliates in connection with the Equipment Purchases and the Loan Documents, such Promissory
Notes shall be issued in accordance with the provisions of Section 7.5 of the Purchase Agreement.



SECTION 4. GRANT OF SECURITY.




     4.1 Grant of Security. Each Loan Party hereby grants to Lender a security interest in and
continuing lien on all of such Loan Party’s right, title and interest in, to and under the
following property of such Loan Party, whether now owned or existing or hereafter acquired or
arising and wherever located (all of which being hereinafter collectively referred to as the
“Collateral”):




          (i) all Title Vehicles purchased pursuant to the Purchase and Sale Agreements, including those
Title Vehicles set forth on Schedule 4.1 (collectively, the “Purchased Title Vehicles”);




          (ii) all Collateral Records (including certificates of title) relating exclusively to the
Purchased Title Vehicles; and




          (iii) to the extent not otherwise included above, all Proceeds and accessions of or in
respect of any Collateral.



SECTION 5. SECURITY FOR OBLIGATIONS; BORROWER REMAINS LIABLE.




     5.1 Security for Obligations. This Agreement secures, and the Collateral is collateral
security for, the prompt and complete payment or performance in full when due, whether at stated
maturity, by required prepayment, declaration, acceleration, demand or otherwise (including the
payment of amounts that would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. §362(a) (and any successor provision thereof)), of all
Obligations of the Loan Parties (the “Secured Obligations”).



     5.2 Continuing Liability Under Collateral. Notwithstanding anything herein to the contrary,
(i) each Loan Party shall remain liable for all obligations under the Collateral and nothing
contained herein is intended or shall be a delegation of duties to Lender, (ii) each Loan Party
shall remain liable under each of the agreements included in the Collateral to perform all of the
obligations undertaken by it thereunder all in accordance with and pursuant to the terms and
provisions thereof, and Lender shall not have any obligation or liability under any of such
agreements by reason of or arising out of this Agreement or any other document related thereto, nor
shall Lender have any obligation to make any inquiry as to the nature or sufficiency of any



15









 





payment received by it or have any obligation to take any action to collect or enforce any rights
under any agreement included in the Collateral, and (iii) the exercise by Lender of any of its
rights hereunder shall not release any Loan Party from any of its duties or obligations under the
contracts and agreements included in the Collateral.



SECTION 6. REPRESENTATIONS AND WARRANTIES AND COVENANTS.




     6.1  Representations and Warranties. Each Loan Party hereby represents and warrants, on
each Advance Date, that:



          (a) Corporate Existence. Such Loan Party and each of its Subsidiaries (other than
Inactive Subsidiaries) (i) is duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization as identified in Schedule 6.1(a), (ii) subject to the entry of
the Approval Order by the Bankruptcy Court and the Canadian Approval Order the Canadian Court has
all requisite power and authority to own and operate its properties, to carry on its business as
now conducted and as proposed to be conducted, to enter into this Agreement and the other Loan
Documents to which such Loan Party is a party and to carry out the transactions contemplated
thereby, and (ii) is qualified to do business and in good standing in every jurisdiction where its
assets are located and wherever necessary to carry out its business and operations, except in
jurisdictions where the failure to be so qualified or in good standing has not had, and could not
be reasonably expected to have, a Material Adverse Effect.




          (b) Due Authorization. Upon the entry of the Approval Order by the Bankruptcy Court
and the Canadian Approval Order by the Canadian Court, the execution, delivery and performance of
this Agreement and the other Loan Documents have been duly authorized by all necessary action on
the part of such Loan Party.




          (c) No Conflict. Subject to entry of the Approval Order by the Bankruptcy Court and
the Canadian Approval Order by the Canadian Court, the execution, delivery and performance by such
Loan Party of this Agreement and the other Loan Documents to which such Loan Party is a party, the
consummation of the Plan, and the consummation of the transactions contemplated by this Agreement
do not and will not (i) violate (x) any provision of any law or any governmental rule or regulation
applicable to such Loan Party or any of its Subsidiaries, (y) any of the Organizational Documents
of such Loan Party, or (z) any order, judgment or decree of any court or other agency of government
binding on such Loan Party or any of its Subsidiaries; (ii) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any Contractual Obligation of
such Loan Party or any of its Subsidiaries except to the extent such conflict, breach or default
could not reasonably be expected to have a Material Adverse Effect; (iii) result in or require the
creation or imposition of any Lien upon any of the properties or assets of such Loan Party or any
of its Subsidiaries (other than any Liens created under this Agreement in favor of Lender); or (iv)
require any approval of stockholders, members or partners or any approval or consent of any Person
under any Contractual Obligation of such Loan Party or any of its Subsidiaries, except for (x) such
approvals or consents which will be obtained on or before the Closing Date, and (y) any such
approvals or consents the failure of which to obtain could not reasonably be expected to have a
Material Adverse Effect.




16









 





          (d) No Government Action. Upon the entry of the Approval Order by the
Bankruptcy Court and the Canadian Approval Order by the Canadian Court, the execution, delivery and
performance by such Loan Party of this Agreement and the other Loan Documents to which such Loan
Party is a party, the consummation of the Plan, and the consummation of the transactions
contemplated by this Agreement do not and will not require any registration with, consent or
approval of, or notice to, or other action to, with or by, any Governmental Authority except (i) as
required by the Approval Order or the Canadian Approval Order or as otherwise set forth in the
Plan, (ii) in the case of consummation of the Plan, as required by the Bankruptcy Code, (iii) for
filings and recordings with respect to the Collateral to be made, or otherwise delivered to Lender
for filing and/or recordation and (iv) any registration, consent, approval, notice or action to the
extent that the failure to undertake or obtain such registration, consent, approval, notice or
action could not reasonably be expected to have a Material Adverse Effect.




          (e) Valid and Binding. This Agreement and the other Loan Documents to which such
Loan Party is a party have been duly executed and delivered by such Loan Party and, subject to the
entry of the Approval Order by the Bankruptcy Court and the Canadian Approval Order by the Canadian
Court, are the legally valid and binding obligations of such Loan Party, enforceable against such
Loan Party in accordance with their respective terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights
generally or by equitable principles relating to enforceability.




          (f) No Material Adverse Effect. Since December 31, 2005, no event, circumstance
or change has occurred that has caused or evidences, either in any case or in the aggregate, a
Material Adverse Effect, other than (i) as described in the Disclosure Statement, (ii) the
commencement of the Cases and the events typically resulting from the commencement of the Cases,
and (iii) such events, circumstances or changes that have been publicly disclosed by such Loan
Party or its Subsidiaries.




          (g) Taxes. Except as otherwise permitted under Section 6.2(b), all federal income
and all other material Tax returns and reports of such Loan Party and its Subsidiaries required to
be filed by any of them have been timely filed, and all Taxes shown on such Tax returns to be due
and payable and all other material assessments, fees and other governmental charges upon such Loan
Party and its Subsidiaries and upon their respective properties, assets, income, businesses and
franchises which are due and payable have been paid when due and payable. Such Loan Party knows of
no proposed Tax assessment against such Loan Party or any of its Subsidiaries which is not being
actively contested by such Loan Party or such Subsidiary in good faith and by appropriate
proceedings; provided, such reserves or other appropriate provisions, as shall be required in
conformity with GAAP shall have been made or provided therefor.




          (h) Contractual Obligations. Neither such Loan Party nor any of its Subsidiaries is in
default in the performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any of its Contractual Obligations other than as a result of the filing of
the Cases (and any payment default directly related to such filing), and no condition exists which,
with the giving of notice or the lapse of time or both, could constitute such a default, except
where the consequences, direct or indirect, of such default or defaults, if any, could not
reasonably be expected to have a Material Adverse Effect.




17









 





          (i) Compliance with Law. Each of such Loan Party and its Subsidiaries is in
compliance with all applicable statutes, regulations and orders of, and all applicable restrictions
imposed by, all Governmental Authorities, in respect of the conduct of its business and the
ownership of its property, except such non-compliance that, individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse Effect.




          (j) Purchased Title Vehicles. Such Loan Party owns the Purchased Title Vehicles
purported to be owned by it or otherwise has the rights it purports to have in the Purchased Title
Vehicles and, as to all Purchased Title Vehicles whether now existing or hereafter acquired, will
continue to own or have such rights in each Purchased Title Vehicle, in each case free and clear of
any and all Liens, rights or claims of all other Persons, other than Permitted Encumbrances.




          (k) Location of Collateral. All of the Purchased Title Vehicles (excluding Purchased
Title Vehicles being repaired in a third-party location in the ordinary course of business) are
garaged at and/or operated out of the locations specified in Schedule 6.1(k) (as such schedule may
be amended or supplemented from time to time).




          (1) Corporate Information. Such Loan Party has indicated on Schedule 6.1 (a) (as such
schedule may be amended or supplemented from time to time): (i) the type of organization of such
Loan Party, (ii) the jurisdiction of organization of such Loan Party, (iii) such Loan Party’s
organizational identification number and (iv) the jurisdiction where the chief executive office of
such Loan Party is located.




          (m) Legal Names. The full legal name of such Loan Party is as set forth on Schedule
6.1 (a) and since July 31, 2005 such Loan Party has not done, and does not do, business under any
other name (including any trade name or fictitious business name) except for those names set forth
on Schedule 6.1(b) (as such schedule may be amended or supplemented from time to time).




          (n) Corporate Structure. Except as provided on Schedule 6.1(c), such Loan Party has
not changed its name, jurisdiction of organization or its corporate structure in any way (e.g., by
merger, consolidation, change in corporate form or otherwise) since July 31, 2005.




          (o) Perfection of Lien. Upon (i) the filing of all UCC financing statements naming
such Loan Party as “debtor” and Lender as “secured party” and describing the Collateral in the
filing offices set forth opposite such Loan Party’s name on Schedule 6.1 (d) hereof (as such
schedule may be amended or supplemented from time to time) and other filings delivered by Borrower,
and (ii) notation of Lender’s first priority lien on motor vehicle certificates of title with
respect to any Purchased Title Vehicle, the security interests granted to Lender hereunder
constitute valid and perfected first priority Liens on all of the Collateral.




          (p) Filings. All actions and consents, including all filings, notices, registrations
and recordings necessary or desirable for the exercise by Lender of remedies in respect of the
Collateral have been made or obtained, except to the extent that the period of time to have
Lender’s Lien noted on the motor vehicle certificates of title with respect to any Purchased Title
Vehicle pursuant to Section 6.2(q) has not yet passed.




18









 





          (q) Financing Statements. Other than the financing statements filed in favor of
Lender, no effective UCC financing statement, fixture filing or other instrument similar in effect
under any applicable law covering all or any part of the Collateral is on file in any filing or
recording office except for financing statements for which proper termination statements have been
filed or authorized for filing.




          (r) Authorization. Other than the Approval Order and the Canadian Approval Order, no
authorization, approval or other action by, and no notice to or filing with, any Governmental
Authority or regulatory body is required for either (i) the pledge or grant by such Loan Party of
the Liens purported to be created in favor of Lender hereunder or (ii) the exercise by Lender of
any rights or remedies in respect of any Collateral (whether specifically granted or created
hereunder or created or provided for by applicable law), except for the filings and registrations
contemplated by clause (o) above.




          (s) Information. All information supplied by such Loan Party with respect to any of
the Collateral (in each case taken as a whole with respect to any particular Collateral) is
accurate and complete in all material respects.




          (t) Secured, Super-Priority Obligations. On and after the Closing Date and until the
Plan Effective Date:





          (i) The provisions of the Loan Documents, the Approval Order and the Canadian Approval Order
are effective to create in favor of Lender, legal, valid and perfected Liens on and security
interests in all right, title and interest in the Collateral, having the priority provided for
herein and in the Approval Order and the Canadian Approval Order and enforceable against the Loan
Parties.




          (ii) Pursuant to subclauses (2) and (3) of clause (c) of Section 364 of the Bankruptcy Code,
the Interim Approval Order, the Final Approval Order, the Canadian Interim Approval Order and the
Canadian Final Approval Order, all Obligations are secured by a first priority perfected Lien on
the Collateral, subject only to (x) valid, perfected, nonavoidable and enforceable Liens existing
as of the Petition Date as set forth on Schedule 6.1(t) hereto, and (y) the extent such
post-petition perfection is expressly permitted by Bankruptcy Code, valid, nonavoidable and
enforeceable Liens existing as of the Petition Date, but perfected after the Petition Date as set
forth on Schedule 6.l(t).




          (iii) Pursuant to clause (c)(l) of Section 364 of the Bankruptcy Code, the Interim Approval
Order, the Final Approval Order, the Canadian Interim Approval Order and the Canadian Final
Approval Order, all Obligations and all other obligations of the Loan Parties under the Loan
Documents at all times shall constitute allowed super-priority administrative expense claims in the
Cases having priority over all administrative expenses of the kind specified in clause (b) of
Section 503 or clause (b) of Section 507 of the Bankruptcy Code. Such super-priority administrative
expense claims shall be subject and subordinate to the super-priority administrative expense claims
of the Agent and the Lenders (each as defined in the Existing Credit Agreement) under and pursuant
to the




19









 








Existing Credit Agreement and the other Credit Documents (as defined in the Existing Credit
Agreement).




          (iv) the Interim Approval Order, the Final Approval Order, the Canadian Interim Approval
Order, the Canadian Final Approval Order and the transactions contemplated hereby and thereby, are
in full force and effect and have not been vacated, reversed, modified, amended or stayed without
the prior written consent of Lender.



6.2 Covenants and Agreements. Each Loan Party hereby covenants and agrees that:




          (a) Corporate Existence. Except as otherwise permitted under Section 6.8 of the
Existing Credit Agreement, each Loan Party will, and will cause each of its Subsidiaries (other
than Inactive Subsidiaries) to, at all times preserve and keep in full force and effect its
existence and all rights and franchises, licenses and permits material to its business; provided,
neither any such Loan Party (other than Borrower with respect to existence) or any of its
Subsidiaries shall be required to preserve any such existence, right or franchise, licenses and
permits if an Executive Officer of such Loan Party shall determine that the preservation thereof is
no longer desirable in the conduct of the business of such Person, and that the loss thereof is not
disadvantageous in any material respect to such Person or to Lender.




          (b) Taxes. Such Loan Party will, and will cause each of its Subsidiaries to, pay
promptly when due all federal and state and provincial income Taxes and property and other Taxes,
assessments and governmental charges or levies imposed upon it, and all claims (including claims
for labor, materials and supplies) against, the Collateral; provided, no such Tax or claim need be
paid if it is subject to the automatic stay in connection with the Cases or is otherwise being
contested in good faith by appropriate proceedings promptly instituted and diligently conducted, so
long as (i) adequate reserve or other appropriate provision as shall be required in conformity with
GAAP shall have been made therefor, and (ii) in the case of a Tax or claim which has or may become
a Lien against any of the Collateral, such contest proceedings conclusively operate to stay the
sale of any portion of the Collateral to satisfy such Tax or claim.




          (c) Insurance. Borrower shall maintain at all times on the Purchased Title Vehicles,
at its expense, all-risk physical damage insurance and comprehensive general and/or automobile (as
appropriate) liability insurance (covering bodily injury and property damage exposures) in such
amounts, against such risks, in such form and with such insurers as shall be satisfactory to
Lender; provided, that the amount of all-risk physical damage insurance shall not be less than the
Fair Market Value of such Purchased Title Vehicle. Each physical damage insurance policy will
name Lender as loss payee with respect to each Purchased Title Vehicle. Each liability insurance
policy will name Lender as additional insured. In no event shall Lender be responsible for
premiums, warranties or representations to any insurer or any agent thereof. Borrower shall furnish
to Lender a certificate or other evidence reasonably satisfactory to Lender that such insurance
coverage is in effect, but Lender shall be under no duty to ascertain the existence or adequacy of
such insurance. Borrower shall be liable for all deductible portions of all required insurance.
Lender may, at its own expense, for its own benefit, purchase insurance in excess of that required
under this Agreement. Physical damage insurance proceeds shall be applied as set forth in Section
6.2(d).




20









 





          (d) Risk of Loss. Borrower agrees to assume and bear the entire risk of any partial
or complete loss with respect to the Purchased Title Vehicles from any and every cause whatsoever
including theft, loss, damage, destruction or governmental taking, whether or not such loss is
covered by insurance or caused by any default or neglect of Borrower. Borrower agrees to give
Lender prompt notice of any damage to or loss of any Purchased Title Vehicle. All physical damage
insurance proceeds shall be payable directly to Lender. If any Purchased Title Vehicle is lost,
destroyed, damaged beyond repair, or taken by governmental action, Borrower shall pay to Lender
within thirty (30) days following such loss or taking the Market Value for such Purchased Title
Vehicle and any other amounts then due and owing hereunder with respect to such Purchased Title
Vehicle. Following payment of the Market Value for any Purchased Title Vehicle, and if no Event of
Default has occurred and remains continuing, Lender will then:





          (i) transfer to Borrower Lender’s rights to such Purchased Title Vehicle “as-is, where-is and
with all defects,” without recourse and without representation or warranty, express or implied,
other than a warranty that the Title Vehicle is free and clear of any liens created by Lender; and




          (ii) remit to Borrower any physical damage insurance proceeds arising out of such loss up to
the amount of the Fair Market Value of the Purchased Title Vehicle on the date of loss.



Lender shall determine in the exercise of its reasonable judgment whether the Purchased Title
Vehicle is damaged beyond repair. In the event of damage or loss, which does not result in damage
beyond repair or a total loss of the Purchased Title Vehicle or any item thereof, Borrower shall
cause the affected Purchased Title Vehicle to be restored to the condition required by the terms of
this Agreement. Upon completion of such repair and after supplying Lender with satisfactory
evidence thereof (and provided no Event of Default has occurred and remains continuing), Borrower
shall be entitled to receive any insurance proceeds or other recovery to which Lender would
otherwise be entitled in connection with such loss up to the amount expended by Borrower in making
the repair.



Lender shall not be obligated to undertake by litigation or otherwise the collection of any claim
against any person for loss of, damage to, or governmental taking of the Purchased Title Vehicles,
but Lender will cooperate with Borrower at Borrower’s sole cost and expense to pursue such claims.



          (e) Compliance with Law. Such Loan Party will comply, and shall cause each of its
Subsidiaries and all other Persons, if any, on or occupying any Facilities to comply, with the
requirements of all applicable laws, rules, regulations and orders of any Governmental Authority
(including all Environmental Laws), noncompliance with which could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.




          (f) Final Approval Order. Holdings and Borrower shall use their
commercially reasonable efforts to ensure that the Final Approval Order with respect to the Interim
Approval Order is entered by the Bankruptcy Court no later than April 25, 2007.




21









 





          (g) Canadian Final Approval Order. Holdings and Borrower shall use their commercially
reasonable efforts to ensure that the Canadian Final Approval Order is entered by the Canadian
Court no later than April 27, 2007.




          (h) 
Liens on Collateral. Except for the security interest created by this Agreement, such Loan
Party shall not create or suffer to exist any Lien upon or with respect to any of the Collateral,
except Permitted Encumbrances, and such Loan Party shall defend the Collateral against all Persons
at any time claiming any other interest therein.




          (i) Use of Collateral. Such Loan Party shall not produce, use or permit any Collateral
to be used unlawfully or in violation of any provision of this Agreement or any applicable statute,
regulation or ordinance, except to the extent that any such violation could either individually or
in the aggregate reasonably be expected to have a Material Adverse Effect, or any policy of
insurance covering the Collateral.




          (j) Change in Corporate Structure. Such Loan Party shall not change such Loan Party’s
name, identity, corporate structure (e.g., by merger, consolidation, change in corporate form or
otherwise), chief executive office, type of organization or jurisdiction of organization or
establish any trade names unless such Loan Party shall have (a) notified Lender in writing, by
executing and delivering to Lender a completed Pledge Supplement, substantially in the form of
Exhibit B attached hereto, together with all Supplements to Schedules thereto, at least thirty (30)
days prior to any such change or establishment, identifying such new proposed name, identity,
corporate structure, chief executive office, jurisdiction of organization or trade name and
providing such other information in connection therewith as Lender may reasonably request and (b)
taken all actions necessary or advisable to maintain the continuous validity, perfection and the
same or better priority of Lender’s security interest in the Collateral intended to be granted and
agreed to hereby.




          (k) Rights in Collateral. Such Loan Party shall not take or permit any action which
could materially impair Lender’s rights in the Collateral except as otherwise permitted under this
Agreement.




          (1) Transfer of Collateral. Such Loan Party shall not sell, transfer or assign (by
operation of law or otherwise) any Collateral except the Collateral or any portion thereof may be
transferred (i) to the Borrower or any Guarantor and (ii) as otherwise permitted pursuant to this
Agreement.




          (m)
Registration, Licensing and Titling. Such Loan Party shall in the ordinary course
of business be responsible for proper registration, licensing, and titling of the Purchased Title
Vehicles. Such Loan Party shall pay or cause to be paid all registration fees, title fees,
licensing fees, traffic summonses, penalties, judgments and fines incurred with respect to any
Purchased Title Vehicle.




          (n) Repairs. Such Loan Party shall perform or cause to be performed, and shall pay for
any costs for all maintenance and repairs of the Purchased Title Vehicles, and shall keep all of
the Purchased Title Vehicles in good working order and condition.




22









 





          (o) Location. Such Loan Party shall garage the Purchased Title Vehicles at or
operate the Purchased Title Vehicles out of the location specified on Schedule 6.1(k) (as such
schedule may be amended or supplemented from time to time) unless it shall have (i) notified Lender
in writing, by executing and delivering to Lender a completed Pledge Supplement, substantially in
the form of Exhibit B attached hereto, together with all Supplements to Schedules thereto promptly
after any change in locations, identifying such new locations and providing such other information
in connection therewith as Lender may reasonably request and (ii) taken all actions necessary or
advisable to maintain the continuous validity, perfection and the same or better priority of
Lender’s security interest in the Collateral intended to be granted and agreed to hereby, or to
enable Lender to exercise and enforce its rights and remedies hereunder, with respect to such
Purchased Title Vehicles.




          (p) Records. Such Loan Party shall keep correct and accurate records of the Purchased
Title Vehicles, as is customarily maintained under similar circumstances by Persons of established
reputation engaged in similar business, and in any event in conformity with GAAP.




          (q) Record Title. With respect the Purchased Title Vehicles, if any such Purchased
Title Vehicle is covered by a certificate of title under a statute of any jurisdiction under the
law of which indication of a security interest on such certificate is required as a condition of
perfection thereof, such Loan Party shall (i) promptly, and in any event within fifteen calendar
days after the acquisition of any such Purchased Title Vehicle, execute and file with the registrar
of motor vehicles or other appropriate authority in such jurisdiction an application or other
document requesting the notation or other indication of the security interest created hereunder on
such certificate of title, and (ii) within five Business Days after such filing, deliver to Lender
copies of all such applications or other documents filed.




          (r) Exclusivity. The Debtors covenant that, subject to their rights under Section
12(c) of the Stipulation Regarding Continued Exclusivity, they will use best efforts to preserve
their exclusivity under Section 1121 of the Bankruptcy Code, including taking all actions that are
commercially reasonable to object to any motion, application or other effort to terminate such
exclusivity.




          (s) Delivery of Information to Participants. From and after the date that Borrower
receives notice (which notice shall include a mailing address for the applicable Participant) that
any Person has become a participant with respect to the Promissory Notes or any of the other
Obligations (any such person, a “Participant” and all such
Persons, the “Participants”) and until
Borrower has received notice that such Person is no longer a Participant, such Loan Party shall
provide to such Participant a copy of each certificate, notice, request, report and financial
statement that such Loan Party is required to deliver to Lender hereunder.




          (t) Other Information. Such Loan Party shall provide any information reasonably
requested by Lender with respect to the Collateral.





23









 









SECTION 7. ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES




     7.1 Access; Right of Inspection. Lender shall at all times upon reasonable notice and at
reasonable times during normal business hours (except after the occurrence and during the
continuation of an Event of Default) have full and free access during normal business hours to all
the books, correspondence and records of the Loan Parties, and Lender and its representatives may
examine the same, take extracts therefrom and make photocopies thereof, and the Loan Parties agree
to render to Agent, at the Loan Parties’ cost and expense, such clerical and other assistance as
may be reasonably requested with regard thereto. Upon reasonable notice and at reasonable times
during normal business hours (except after the occurrence and during the continuation of an Event
of Default) Lender and its representatives shall at all times also have the right to enter any
premises of the Loan Parties and inspect any property of the Loan Parties where any of the
Collateral of the Loan Parties granted pursuant to this Agreement is located for the purpose of
inspecting the same, observing its use or otherwise protecting its interests therein.



     7.2 Further Assurances.




          (a) The Loan Parties agree that from time to time, at the expense of the Loan Parties, that
the Loan Parties shall promptly execute and deliver all further instruments and documents, and take
all further action, that may be reasonably necessary or desirable, or that Lender may reasonably
request, in order to create and/or maintain the validity, perfection or priority of and protect any
security interest granted hereby or to enable Lender to exercise and enforce its rights and
remedies hereunder with respect to any Collateral. Without limiting the generality of the
foregoing, the Loan Parties shall:





          (i) file such financing or continuation statements, or amendments thereto, and execute and
deliver such other agreements, instruments, endorsements, powers of attorney or notices, as may be
necessary or desirable, or as Lender may reasonably request, in order to perfect and preserve the
security interests granted or purported to be granted hereby; and




          (ii) at Lender’s request, appear in and defend any action or proceeding that may affect the
Loan Parties’ title to or Lender’s security interest in all or any part of the Collateral.



          (b) Each Loan Party hereby authorizes Lender to file a Record or Records, including, without
limitation, financing or continuation statements, and amendments thereto, in any jurisdictions and
with any filing offices as Lender may determine, in its sole discretion, are necessary or advisable
to perfect the security interest granted to Lender herein. Such financing statements may describe
the Collateral in the same manner as described herein or may contain an indication or description
of collateral that describes such property in any other manner as Lender may determine, in its sole
discretion, is necessary, advisable or prudent to ensure the perfection of the security interest in
the Collateral granted to Lender herein.




SECTION 8. LENDER APPOINTED ATTORNEY-IN-FACT.




     8.1 Power of Attorney. Each Loan Party hereby irrevocably appoints Lender (such
appointment being coupled with an interest) as such Loan Party’s attorney-in-fact, with full




24









 








authority in the place and stead of such Loan Party and in the name of such Loan Party, Lender or
otherwise, from time to time in Lender’s discretion to take any action and to execute any
instrument that Lender may deem reasonably necessary or advisable to accomplish the purposes of
this Agreement, including, without limitation, the following:



          (a) upon the occurrence and during the continuance of any Event of Default, to obtain and
adjust insurance required to be maintained by such Loan Party or paid to Lender pursuant to this
Agreement;




          (b) upon the occurrence and during the continuance of any Event of Default, to ask for,
demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys
due and to become due under or in respect of any of the Collateral;




          (c) upon the occurrence and during the continuance of any Event of Default, to receive,
endorse and collect any drafts or other instruments, documents and chattel paper in connection with
clause (b) above;




          (d) upon the occurrence and during the continuance of any Event of Default, to file any claims
or take any action or institute any proceedings that Lender may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of Lender with respect to
any of the Collateral;




          (e) to prepare and file any UCC financing statements against such Loan Party as debtor;




          (f) upon the occurrence and during the continuance of any Event of Default, to execute any
form required by any Secretary of State to permit Lender to act on behalf of such Loan Party in
transferring title and registration of the Purchased Title Vehicles; and




          (g) upon the occurrence and during the continuance of any Default, such Loan Party to take or
cause to be taken all actions necessary to perform or comply or cause performance or compliance
with the terms of this Agreement, including, without limitation, access to pay or discharge Taxes
or Liens (other than Permitted Encumbrances) levied or placed upon or threatened against the
Collateral, the legality or validity thereof and the amounts necessary to discharge the same to be
determined by Lender in its sole discretion, any such payments made by Lender to become obligations
of such Loan Party to Lender, due and payable immediately without demand.




     8.2 No Duty on the Part of Lender. The powers conferred on Lender hereunder are solely to
protect the interests of Lender in the Collateral, and shall not impose any duty upon Lender to
exercise any such powers. Lender shall be accountable only for amounts that it actually receives as
a result of the exercise of such powers, and neither it nor any of its officers, directors,
employees or agents shall be responsible to the Loan Parties for any act or failure to act
hereunder, except for its own gross negligence or willful misconduct.




25









 








SECTION 9. REMEDIES.




     9.1 Events of Default.




          (a) Events of Default. If any one or more of the following conditions or events
(each an “Event of Default”) shall occur:





          (i) Failure by the Loan Parties to pay (i) when due any installment of principal of or
interest on any Promissory Note, whether at stated maturity, by acceleration, by notice of
voluntary prepayment, by mandatory prepayment or otherwise; or (ii) any fee or any other amount due
hereunder within thirty days after the date due; or




          (ii) (i) Failure of any Loan Party or any of their respective Subsidiaries to pay when due any
principal of or interest on or any other amount payable in respect of one or more items of
Indebtedness (other than (x) Indebtedness referred to in Section 9.1(a)(i) and (y) during the
pendency of the Cases, Indebtedness incurred prior to the commencement of the Cases) with an
aggregate principal amount of $7,500,000 or more, in each case beyond the grace period, if any,
provided therefor; or (ii) breach or default by any Loan Party with respect to any other material
term of (1) one or more items of Indebtedness in the aggregate principal amount referred to in
clause (i) above or (2) any loan agreement, mortgage, indenture or other agreement relating to such
item(s) of Indebtedness, in each case beyond the grace period, if any, provided therefor, if the
effect of such breach or default is to cause that Indebtedness to become or be declared due and
payable (or redeemable) prior to its stated maturity or the stated maturity of any underlying
obligation, as the case may be; or




          (iii) Failure of any Loan Party to perform or comply with any term or condition contained in
Section 6.2(c), (d), (1), or (q); or




          (iv) Any representation, warranty, certification or other statement made or deemed made by any
Loan Party in any Loan Document or in any statement or certificate at any time given by any Loan
Party or any of its Subsidiaries in writing pursuant hereto or thereto or in connection herewith or
therewith shall be false in any material respect as of the date made or deemed made; or




          (v) Any Loan Party shall default in the performance of or compliance with any term contained
herein or any of the other Loan Documents, other than any such term referred to in any other
Section of this Section 9.1 (a), and such default shall not have been remedied or waived within
thirty days after the earlier of (i) an Authorized Officer of such Loan Party becoming aware of
such default or (ii) receipt by any Loan Party of notice from Lender of such default; or




          (vi) Other than the Cases, (i) a court of competent jurisdiction shall enter a decree or order
for relief in respect of Holdings or any of its Subsidiaries (other than any Inactive Subsidiary)
in an involuntary case or application under the Bankruptcy Code, Canadian Insolvency Law or under
any other applicable bankruptcy, insolvency or similar law now or hereafter in effect, which decree
or order is not stayed; or any other similar relief shall be granted under any applicable federal,
state, or provincial law; or




26









 








(ii) an involuntary case or application shall be commenced against Holdings or any of its
Subsidiaries (other than any Inactive Subsidiary) under the Bankruptcy Code, Canadian Insolvency
Law or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect;
or a decree or order of a court having jurisdiction in the premises for the appointment of a
receiver, receiver-manager, interim receiver, monitor, administrator, liquidator, sequestrator,
trustee, custodian or other officer having similar powers over Holdings or any of its Subsidiaries,
or over all or a substantial part of its property, shall have been entered; or there shall have
occurred the involuntary appointment of a receiver, receiver-manager, interim receiver, monitor,
administrator, liquidator, sequestrator, trustee, or other custodian of Holdings or any of its
Subsidiaries (other than any Inactive Subsidiary) for all or a substantial part of its property; or
a warrant of attachment, execution or similar process shall have been issued against any
substantial part of the property of Holdings or any of its Subsidiaries (other than any Inactive
Subsidiary), and any such event described in this clause (ii) shall continue for sixty days without
having been dismissed, bonded or discharged; or




          (vii) Other than the Cases, (i) Holdings or any of its Subsidiaries (other than any Inactive
Subsidiary) shall have an order for relief entered with respect to it or shall commence a voluntary
case or application under the Bankruptcy Code, Canadian Insolvency Law or under any other
applicable bankruptcy, insolvency or similar law now or hereafter in effect, including, without
limitation, filing a notice of intention to make a proposal pursuant to the BIA or shall consent to
the entry of an order for relief in an involuntary case or application, or to the conversion of an
involuntary case or application to a voluntary case or application, under any such law, or shall
consent to the appointment of or taking possession by a receiver, receiver-manager, interim
receiver, monitor, administrator, liquidator, sequestrator, trustee or other custodian for all or a
substantial part of its property; or Holdings or any of its Subsidiaries (other than any Inactive
Subsidiary) shall make any assignment for the benefit of creditors; or (ii) Holdings or any of its
Subsidiaries (other than any Inactive Subsidiary) shall be unable, or shall fail generally, or
shall admit in writing its inability, to pay its debts as such debts become due; or the board of
directors (or similar governing body) of Holdings or any of its Subsidiaries (other than any
Inactive Subsidiary) (or any committee thereof) shall adopt any resolution or otherwise authorize
any action to approve any of the actions referred to herein or in Section 8.1(f); or




          (viii) Any money judgment, writ or warrant of attachment or similar process involving in the
aggregate at any time an amount in excess of $7,500,000 (in either case to the extent not
adequately covered by insurance as to which a solvent and unaffiliated insurance company has
acknowledged coverage) shall be entered or filed against Holdings or any of its Subsidiaries or any
of their respective assets (other than the allowance of claims in the Cases) and shall remain
undischarged, unvacated, unbonded or unstayed for a period of sixty days (or in any event later
than five days prior to the date of any proposed sale thereunder); or




          (ix) Any order, judgment or decree shall be entered against any Loan Party decreeing the
winding up, dissolution or split up of such Loan Party and such order shall remain undischarged or
unstayed for a period in excess of thirty days; or




27









 






          (x) A Change of Control shall occur; or




          (xi) At any time after the execution and delivery thereof, (i) the Guaranty for any reason,
other than the satisfaction in full of all Obligations, shall cease to be in full force and effect
(other than in accordance with its terms) or shall be declared to be null and void or any Guarantor
shall repudiate its obligations thereunder, (ii) this Agreement or any Loan Document ceases to be
in full force and effect (other than by reason of a release of Collateral in accordance with the
terms hereof or thereof or the satisfaction in full of the Obligations in accordance with the terms
hereof) or shall be declared null and void, or Lender shall not have or shall cease to have a valid
and perfected Lien in any Collateral purported to be covered by this Agreement with the priority
required by this Agreement, in each case for any reason other than the failure of Lender to take
any action within its control, or (iii) any Loan Party shall contest the validity or enforceability
of any Loan Document in writing or deny in writing that it has any further liability, including
with respect to future advances by Lender, under any Loan Document to which it is a party or shall
contest the validity or perfection of any Lien in any Collateral purported to be covered by the
Loan Documents; or




          (xii) any Case shall be dismissed or converted to a case under Chapter 7 of the Bankruptcy
Code, or any Loan Party shall file any pleading requesting dismissal or there shall be filed a
motion or other pleading seeking the termination of any of the proceedings pursuant to section
18.6 of the CCAA in respect of any of the Canadian Loan Parties; or a motion, any plan of
reorganization or disclosure statement shall be filed by any Loan Party or any other action shall
be taken by any Loan Party in any of the Cases, for the approval of (i) additional financing under
Section 364(c) or (d) of the Bankruptcy Code not otherwise permitted pursuant to this Agreement or
(ii) the granting of any Lien (other than Permitted Encumbrances or Liens expressly permitted in
the Interim Approval Order, the Final Approval Order, the Canadian Interim Approval Order or the
Canadian Final Approval Order) upon or affecting any Collateral which are pari passu or senior to
the Liens on the Collateral in favor of Lender, or (iii) any other action or actions adverse to
Lender’s interests under any Loan Document or its rights and remedies hereunder or its interest in
the Collateral; or




          (xiii) the Bankruptcy Court shall enter an order in any of the Cases granting (i) any other
claim having priority senior to or pari passu with the claims of Lender under the Loan Documents
or any other claim having priority over any or all administrative expenses of the kind specified
in clause (b) of Section 503 or clause (b) of Section 507 of the Bankruptcy Code or (ii) any Lien
on the Collateral having a priority senior to or pari passu with the Liens and security interests
granted herein, except (x) as expressly provided herein, in the Interim Approval Order, the Final
Approval Order, the Canadian Interim Approval Order or the Canadian Final Approval Order and (y)
any such order required under the Existing Credit Agreement as in effect on the date hereof; or




          (xiv) any Loan Party shall pay any prepetition Claim without the consent of Lender unless
otherwise permitted pursuant to Section 6.17 of the Existing Credit Agreement; or



28









 






          (xv) the Bankruptcy Court or Canadian Court shall enter an order granting relief from the
automatic stay applicable under Section 362 of the Bankruptcy Code or the Canadian Stay Order to
any holder of any security interest to permit foreclosure on any assets having a book value in
excess of $1,000,000 in the aggregate; or




          (xvi) (i) any Loan Party shall fail to comply with the terms of the Interim Approval Order,
the Final Approval Order, the Canadian Interim Approval Order or the Canadian Final Approval Order
in any material respect, (ii) the Interim Approval Order, the Final Approval Order, the Canadian
Interim Approval Order or the Canadian Final Approval Order shall be amended, supplemented,
stayed, reversed, vacated or otherwise modified in any respect adverse to Lender without the
written consent of Lender, or (iii) any Loan Party shall file a motion for reconsideration with
respect to the Interim Approval Order, the Final Approval Order, the Canadian Interim Approval
Order or the Canadian Final Approval Order; or




          (xvii) the Bankruptcy Court shall enter an order appointing a trustee under Chapter 7 or
Chapter 11 of the Bankruptcy Code, or a responsible officer or an examiner with enlarged powers
relating to the operation of the business (powers beyond those set forth in subclauses (3) and (4)
of clause (a) of Section 1106 of the Bankruptcy Code) under clause (b) of Section 1106 of the
Bankruptcy Code in the Cases; or, in Canada, the appointment of a receiver, receiver-manager,
interim receiver or trustee in bankruptcy in respect of any Loan Party; or




          (xviii) either (x) a plan of reorganization (other than the Approved Plan and a plan of
reorganization filed in connection with the exercise by the Debtor of its rights under Section
12(c) of the Stipulation Regarding Continued Exclusivity) is filed by any Debtor or (y) a plan of
reorganization (other than the Approved Plan) is confirmed and, with respect to any plan of
reorganization described in subclause (x) or (y), both (i) the treatment of the Lender and all
Affiliates of the Lender in such plan of reorganization is not approved by Lender and all
Affiliates of the Lender in their sole and absolute discretion and (ii) such plan of
reorganization does not provide for the payment in full in cash of the Obligations on or prior to
the date of consummation thereof; or




          (xix) the Loan Parties or any of their Subsidiaries shall seek to, or shall support (in any
such case by way of any motion or other pleading filed with the Bankruptcy Court or the Canadian
Court or any other writing to another party-in-interest executed by or on behalf of the Loan
Parties or any of their Subsidiaries) any other Person’s motion to, disallow in whole or in part
the Lenders’ claim in respect of the Obligations or to challenge the validity and enforceability
of the Liens in favor of Lender; or




          (xx) for any reason, the Debtors shall withdraw their support for the plan of reorganization
filed with the Bankruptcy Court on March 2, 2007 (as such plan or reorganization shall be modified
in a manner acceptable to Lender and its Affiliates) except as permitted pursuant to paragraph
12(c) of the Stipulation Regarding Continued Exclusivity;



29









 






          (xxi) the Final Approval Order is not entered by the Bankruptcy Court on or before the
expiration of the Interim Approval Order;




          (xxii) the Canadian Interim Approval Order is not entered by the Canadian Court on or
before April 10, 2007;




          (xxiii) the Canadian Final Approval Order is not entered by the Canadian Court on or
before the expiration of the Canadian Interim Approval Order.



          (b) Repurchase Option





          (i) Lender shall have the option (the “Repurchase Option”), exercisable by Lender at any time
if (x) an Event of Default has occurred and is continuing; or (y) a plan or reorganization (other
than the Approved Plan) has been filed and the treatment of the Lender and all Affiliates of
Lender in such plan of reorganization is not approved by Lender and all of its Affiliates in their
sole and absolute discretion; or (z) the Debtors have exercised their right under and pursuant to
paragraph 12(c) of the Stipulations Regarding Continued Exclusivity to withdraw their support of
the “Plan” (as such term is defined in the Stipulation Regarding Continued Exclusivity), to
repurchase all or any portion of the Purchased Title Vehicles in accordance with the payment
provisions set forth in Section 9.1(b)(ii) below. The Repurchase Option shall be exercisable by
Lender, without any further court approval of any kind (including no need for any relief from
stay), by five Business Days written notice (a “Repurchase Notice”) to Borrower (A) identifying
the Purchased Title Vehicles with respect to which Lender has elected to exercise the Repurchase
Option (the “Repurchased Vehicles”) and (B) specifying the time(s) and date(s) (a “Delivery Date”)
and location(s) (a “Delivery Location”) for the delivery to Lender or its designee of the
Repurchased Vehicles; provided,  however, that no Delivery Date shall be less than ten (10)
days, nor more than ninety (90) days, following the date on which Lender has delivered the
applicable Repurchase Notice to Borrower.




          (ii) The purchase price to be paid by Lender with respect to any Repurchased Vehicle shall be
an amount equal to the “Purchase Price” for such Repurchased Title Vehicle, as set forth, in the
appropriate Equipment Schedule together with a pro rata portion of
the 
out-of-pocket expenses of
Lender set forth on such Equipment Schedule plus the amount of the Initial Repair Costs for such
Repurchased Vehicle (such amounts, collectively, the “Repurchase Price”). Lender shall pay the
purchase price by surrendering to Borrower for cancellation one or more Promissory Notes in a
principal amount equal to the Repurchase Price, and if the principal amount of the Promissory Notes
so surrendered for any purchase of Repurchased Vehicles is greater than the aggregate Repurchase
Price for such Repurchased Vehicles, Borrower shall deliver to Lender an originally executed
Promissory Note, in substantially the form of the Initial Promissory Note, issued by Borrower in
favor of Lender, for a principal amount equal to the principal amount of the Promissory Notes
surrendered minus the Repurchase Price for the Repurchased Vehicles.



30









 






          (iii) Borrower shall, at Borrower’s sole cost and expense, deliver all Repurchased Vehicles,
or cause all Repurchased Vehicles to be delivered, at each Delivery Location, and on each Delivery
Date, specified in the Repurchase Notice delivered by Lender in accordance with Section 9.1(b)(i)
above. Upon delivery thereof, each Repurchased Vehicle shall (A) be in sound mechanical shape and,
if mobile, shall be in good working order under full payload; (B) have no missing parts,
components, or glass; (C) have no damage to parts, components, or glass (other than damage for
which the aggregate cost of repair does not exceed $500, per Repurchased Vehicle or $25,000 (or pro
rata portion thereof if there is a partial exercise of the Repurchase Option) in the aggregate for
all Repurchased Vehicles repurchased by Lender pursuant to the exercise of the Repurchase Option);
and (D) have no structural damage. The condition of each item of Repurchased Vehicle shall be
determined by an inspection report (the “Inspection Report”), prepared by Borrower and delivered to
Lender no later than five days prior to the applicable Delivery Date. In the event that such
Inspection Report indicates that the damage to the Repurchased Vehicles exceeds $25,000 (or the
appropriate pro rata portion thereof), Borrower shall, if requested by Lender, promptly provide
Lender and/or its designees and their respective employees, agents and representatives access to
the Repurchased Vehicles at the Delivery Location, or at such other location as may be specified by
Lender in writing, no less than three days prior to the Delivery Date, and Lender shall thereafter
have the option, at Lender’s election and in lieu of accepting such Repurchased Vehicle in such
condition, to require Borrower to repair such Repurchased Equipment prior to accepting delivery
thereof or making any payment to Borrower with respect thereto.




          (iv) Borrower shall deliver title to all Repurchased Vehicles to Lender or Lender’s
designee(s) free and clear of all claims, Liens and legal processes of creditors of Borrower. In
connection with any exercise of the Repurchase Option, Borrower shall, at Borrower’s sole cost and
expense, (A) prepare and execute one or more certificates of title or other instruments necessary
to convey title to the Repurchased Vehicles to Lender or
Lender’s designee(s), as well as such
other instruments as Lender may reasonably request to vest all right, title and interest in and to
the Repurchased Vehicles to Lender or Lender’s designee(s) and (B) ensure, as and to the extent
requested by Lender, that all registrations or other filings with respect to such Repurchased
Vehicles be made or filed in any applicable jurisdiction within five days of Lender’s request
therefore.




          (v) Upon receipt of any Repurchase Notice delivered by Lender in accordance with Section
9.1(b)(i) above, Borrower shall promptly cease to use or operate the Repurchased Vehicles
specified in such Repurchase Notice, except to the extent necessary to deliver such Repurchased
Vehicles to the Delivery Location in accordance with Section 9.1(b)(iii) above. Notwithstanding
any exercise by Lender of the Repurchase Option hereunder and until such time as delivery of any
Repurchased Vehicles has been made to Lender or Lender’s designee(s) in accordance with Section
9.1(b)(iii) above, all covenants and obligations of Borrower set forth in this Agreement and the
other Loan Documents (including, without limitation, those relating to insurance, maintenance and
registrations) shall remain in full force and effect with respect to such Repurchased Vehicles,
and any risk of loss with respect thereto shall remain the exclusive liability and obligation of
Borrower.



31









 







          (vi) Any exercise by Lender of any Repurchase Option pursuant to this Section 9.1(b)
shall not affect in any way the super priority status of any administrative claim that may
remain under this Agreement and the other Loan Documents, if and to the extent that any
Obligations remain outstanding after the exercise by Lender of the Repurchase Option.



          (c) Sale of Collateral. If an Event of Default has occurred and is continuing, Lender
may be the purchaser of any or all of the Collateral at any public or private (to the extent to the
portion of the Collateral being privately sold is of a kind that is customarily sold on a
recognized market or the subject of widely distributed standard price quotations) sale in
accordance with the UCC and Lender shall be entitled, for the purpose of bidding and making
settlement or payment of the purchase price for all or any portion of the Collateral sold at any
such sale made in accordance with the UCC, to use and apply any of the Secured Obligations as a
credit on account of the purchase price for any Collateral payable by Lender at such sale. Each
purchaser at any such sale shall hold the property sold absolutely free from any claim or right on
the part of any Loan Party, and each Loan Party hereby waives (to the extent permitted by
applicable law) all rights of redemption, stay and/or appraisal which it now has or may at any time
in the future have under any rule of law or statute now existing or hereafter enacted. Each Loan
Party agrees that, to the extent notice of sale shall be required by law, at least ten (10) days
notice to such Loan Party of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. Lender shall not be obligated
to make any sale of Collateral regardless of notice of sale having been given. Lender may adjourn
any public or private sale from time to time by announcement at the time and place fixed therefor,
and such sale may, without further notice, be made at the time and place to which it was so
adjourned. Each Loan Party agrees that it would not be commercially unreasonable for Lender to
dispose of the Collateral or any portion thereof by using Internet sites that provide for the
auction of assets of the types included in the Collateral or that have the reasonable capability of
doing so, or that match buyers and sellers of assets. Each Loan Party hereby waives any claims
against Lender arising by reason of the fact that the price at which any Collateral may have been
sold at such a private sale was less than the price which might have been obtained at a public
sale, even if Lender accepts the first offer received and does not offer such Collateral to more
than one offeree. If the proceeds of any sale or other disposition of the Collateral are
insufficient to pay all the Secured Obligations, each Loan Party shall be liable for the deficiency
and the fees of any attorneys employed by Lender to collect such deficiency. Each Loan Party
further agrees that a breach of any of the covenants contained in this Section will cause
irreparable injury to Lender, that Lender has no adequate remedy at law in respect of such breach
and, as a consequence, that each and every covenant contained in this Section shall be
specifically enforceable against such Loan Party, and each Loan Party hereby waives and agrees not
to assert any defenses against an action for specific performance of such covenants except for a
defense that no default has occurred giving rise to the Secured Obligations becoming due and
payable prior to their stated maturities. Nothing in this Section shall in any way alter the rights
of Lender hereunder.




          (d) Warranties. Lender may sell the Collateral without giving any warranties as to
the Collateral. Lender may specifically disclaim or modify any warranties of title or the like.
This procedure will not be considered to adversely affect the commercial reasonableness of any sale
of the Collateral.




32









 





          (e) No Marshalling. Lender shall have no obligation to marshal any of the
Collateral.




          (f) No Surcharge. Debtor hereby waive any right to surcharge against the Collateral
under Section 506 of the Bankruptcy Code.




     9.2 Application of Proceeds. Except as expressly provided elsewhere in this Agreement, all
proceeds received by Lender in respect of any sale, any collection from, or other realization upon
all or any part of the Collateral shall be applied in full or in part by Lender against, the
Secured Obligations in the order selected by Lender, and to the extent that there is any excess of
such proceeds, to the payment to or upon the order of the applicable Loan Party or to whosoever may
be lawfully entitled to receive the same or as a court of competent jurisdiction may direct.



     9.3 Sales on Credit. If Lender sells any of the Collateral upon credit, the Loan Parties
will be credited only with payments actually made by purchaser and received by Lender and applied
to indebtedness of the purchaser. In the event the purchaser fails to pay for the Collateral,
Lender may resell the Collateral and the Loan Parties shall be credited with proceeds of the sale.



     9.4 Cash Proceeds. Upon the occurrence and during the continuation of an Event of
Default, all proceeds of any Collateral received by any Loan Party consisting of cash, checks and
other non-cash items (collectively, “Cash Proceeds”) shall be held by such Loan Party in trust for
Lender, segregated from other funds of such Loan Party, and shall, forthwith upon receipt by such
Loan Party be turned over to Lender in the exact form received by such Loan Party (duly indorsed by
such Loan Party to Lender, if required) and held by Lender in the Collateral Account. Any Cash
Proceeds received by Lender (whether from any Loan Party or otherwise): (i) if no Event of Default
shall have occurred and be continuing, shall be held by Lender, as collateral security for the
Secured Obligations (whether matured or unmatured) and (ii) if an Event of Default shall have
occurred and be continuing, may, in the sole discretion of Lender, (A) be held by Lender, as
collateral security for the Secured Obligations (whether matured or unmatured) and/or (B) then or
at any time thereafter may be applied by Lender against the Secured Obligations.



SECTION 10. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS.




          This Agreement shall create a continuing security interest in the Collateral and shall remain
in full force and effect until the payment in full of all Secured Obligations, be binding upon each
Loan Party, its successors and assigns, and inure, together with the rights and remedies of Lender
hereunder, to the benefit of Lender and its successors, transferees and assigns. Without limiting
the generality of the foregoing, Lender may assign or otherwise transfer any Promissory Notes held
by it to any Affiliate of Lender or, if an Event of Default then exists, to any other Person, and
such Affiliate or other Person shall thereupon become vested with all the benefits in respect
thereof granted to Lender herein or otherwise. Notwithstanding the foregoing, Lender shall have the
right at any time to sell one or more participations to any Person in all or any part of the
Promissory Notes or in any other Obligation. Upon the payment in full of all Secured Obligations
(including a conversion pursuant to Section 2.3), the security interest




33









 




granted hereby shall automatically terminate hereunder and of record and all rights to the
Collateral shall revert to the Loan Parties. Upon any such termination Lender shall, at the Loan
Parties’ expense, execute and deliver to the Loan Parties or otherwise authorize the filing of
such documents as any Loan Party shall reasonably request, including financing statement
amendments to evidence such termination.




SECTION 11. STANDARD OF CARE; LENDER MAY PERFORM.




          The powers conferred on Lender hereunder are solely to protect its interest in the
Collateral and shall not impose any duty upon it to exercise any such powers. Except for the
exercise of reasonable care in the custody of any Collateral in its possession and the accounting
for moneys actually received by it hereunder, Lender shall have no duty as to any Collateral or as
to the taking of any necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral. Lender shall be deemed to have exercised reasonable care in the
custody and preservation of Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which Lender accords its own property. Neither Lender nor any of its
directors, officers, employees or agents shall be liable for failure to demand, collect or realize
upon all or any part of the Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Collateral upon the request of any Loan Party or
otherwise. If any Loan Party fails to perform any agreement contained herein, Lender may itself
perform, or cause performance of, such agreement, and the expenses of Lender incurred in connection
therewith shall be payable by Borrower under Section 12.1.




SECTION 12. MISCELLANEOUS.




     12.1 Reimbursement of Expenses. Each Loan Party agrees to pay promptly (a) all the actual,
reasonable, and documented costs and expenses of Lender for the preparation of the Loan Documents
and any consents, amendments, waivers or other modifications thereto; (b) the actual, reasonable,
and documented fees, expenses and disbursements of counsel to Lender (in each case including
reasonable allocated costs of internal counsel) in connection with the negotiation, preparation,
execution and administration of the Loan Documents and any consents, amendments, waivers or other
modifications thereto and any other documents or matters requested by the Loan Parties; (c) all
the actual costs and reasonable expenses of creating, perfecting and recording Liens in favor of
Lender, including filing and recording fees, expenses and Transfer Taxes, stamp or documentary
taxes, search fees, title insurance premiums and reasonable fees, expenses and disbursements of
counsel to Lender and of counsel providing any opinions that Lender may reasonably request in
respect of the Collateral or the Liens created pursuant to the Loan Documents; (d) all the actual
costs and reasonable expenses (including the reasonable fees, expenses and disbursements of any
appraisers, consultants, advisors and agents employed or retained by Lender and its counsel) in
connection with the custody or preservation of any of the Collateral; and (e) after the occurrence
of a Default or an Event of Default, all reasonable costs and expenses, including reasonable
attorneys’ fees (including reasonable allocated costs of internal counsel) and reasonable costs of
settlement, incurred by Lender in enforcing any Obligations of or in collecting any payments due
from any Loan Party hereunder or under the other Loan Documents by reason of such Default or Event
of Default (including in connection with the sale, lease or license of, collection from, or other
realization upon any of the Collateral or the enforcement of the Guaranty) or in connection with
any refinancing or



34









 




restructuring of the credit arrangements provided hereunder in the nature of a “work-out”
or pursuant to any insolvency or bankruptcy cases or proceedings.




     12.2 Notices.



          (a) Any notice or other communication herein required or permitted to be given to a
Loan Party or Lender, shall be sent to such Person’s address as set forth on Schedule 12.2, or
otherwise indicated to Borrower or Lender, as applicable, in writing. Except as otherwise set
forth in paragraph (b) below, each notice hereunder shall be in writing and may be personally
served, telexed or sent by telefacsimile or United States mail (certified, return receipt) or
courier service and shall be deemed to have been given when delivered in person or by courier
service and signed for against receipt thereof, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid and properly
addressed.




          (b) Lender or Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to procedures approved by it,
provided that approval of such procedures may be limited to particular notices or communications.
Unless Borrower and Lenders otherwise agree, (i) notices and other communications
sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement
from the intended recipient (such as by the “return receipt requested” function, as available,
return e-mail or other written acknowledgement), provided that if such notice or other
communication is not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on the next Business Day
for the recipient, and (ii) notices or communications posted to an Internet or intranet website
shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as
described in the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.




          (c) Each of the Loan Parties understands that the distribution of material through an
electronic medium is not necessarily secure and that there are confidentiality and other risks
associated with such distribution and agrees and assumes the risks associated with such electronic
distribution, except to the extent caused by the willful misconduct or gross negligence of
Administrative Agent.




     12.3 No Waiver. No failure or delay on the part of Lender in the exercise of any power,
right or privilege hereunder or under any other Loan Document shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude other or further exercise
thereof or of any other power, right or privilege. All rights and remedies existing under this
Agreement and the other Loan Documents are cumulative to, and not exclusive of, any rights or
remedies otherwise available.



     12.4 Severability. In case any provision in or obligation under this Agreement 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.



35









 





     12.5 Independence. All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or would otherwise be within the limitations of, another covenant
shall not avoid the occurrence of a Default or an Event of Default if such action is taken or
condition exists.



     12.6 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of
Lender and the Loan Parties and their respective successors and assigns. The Loan Parties shall
not, without the prior written consent of Lender assign any right, duty or obligation hereunder.



     12.7 Entire Agreement. This Agreement and the other Loan Documents embody the entire
agreement and understanding between the Loan Parties and Lender and supersede all prior agreements
and understandings between such parties relating to the subject matter hereof and thereof.
Accordingly, the Loan Documents may not be contradicted by evidence of prior, contemporaneous or
subsequent oral agreements of the parties. There are no unwritten oral agreements between the
parties.



     12.8 Counterparts. This Agreement may be executed in one or more counterparts and by different
parties hereto in separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one and the same
instrument; signature pages may be detached from multiple separate counterparts and attached to a
single counterpart so that all signature pages are physically attached to the same document.



     12.9 Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS CONFLICTS OF LAW PROVISIONS (OTHER THAN
SECTION 5-1401 AND SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATION LAWS).



SECTION 13. GUARANTY




     13.1 Guaranty of the Obligations. Subject to Section 13.12, Guarantors jointly and severally
hereby irrevocably and unconditionally guarantees to Lender the due and punctual payment in full of
all Obligations when the same shall become due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a) or
under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect)
(collectively, the “Guaranteed Obligations”).



     13.2 Payment by Guarantors. Subject to Section 13.12, Guarantors hereby jointly and
severally agree, in furtherance of the foregoing and not in limitation of any other right which
Lender may have at law or in equity against any Guarantor by virtue hereof, that upon the failure
of Borrower to pay any of the Guaranteed Obligations when and as the same shall become due, whether
at stated maturity, by required prepayment, declaration, acceleration, demand or



36









 




otherwise (including amounts that would become due but for the operation of the automatic stay
under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a) or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect), Guarantors will upon demand
pay, or cause to be paid, in Cash, to Lender, an amount equal to the sum of the unpaid principal
amount of all Guaranteed Obligations then due as aforesaid, accrued and unpaid interest on such
Guaranteed Obligations (including interest which, but for Borrower’s becoming the subject of a
case under the Bankruptcy Code, would have accrued on such Guaranteed Obligations, whether or not
a claim is allowed against Borrower for such interest in the related bankruptcy case) and all
other Guaranteed Obligations then owed to Lender as aforesaid.




     13.3 Liability of Guarantors Absolute. Each Guarantor agrees that its obligations hereunder
are irrevocable, absolute, independent and unconditional and shall not be affected by any
circumstance which constitutes a legal or equitable discharge of a guarantor or surety other than
payment in full of the Guaranteed Obligations. In furtherance of the foregoing and without
limiting the generality thereof, Guarantor agrees as follows:



          (a) this Guaranty is a guaranty of payment when due and not of collectability. This Guaranty
is a primary obligation of each Guarantor and not merely a contract of surety;




          (b) Lender may enforce this Guaranty upon the occurrence of an Event of Default
notwithstanding the existence of any dispute between Borrower and Lender with respect to the
existence of such Event of Default;




          (c) the obligations of each Guarantor hereunder are independent of the obligations of Borrower
and the obligations of any other guarantor (including any other Guarantor) of the obligations of
Borrower, and a separate action or actions may be brought and prosecuted against Guarantor whether
any or not any action is brought against Borrower or any of such other guarantors and whether or
not Borrower is joined in any such action or actions;




          (d) payment by any Guarantor of a portion, but not all, of the Guaranteed Obligations shall in
no way limit, affect, modify or abridge any Guarantor’s liability for any portion of the Guaranteed
Obligations which has not been paid. Without limiting the generality of the foregoing, if Lender is
awarded a judgment in any suit brought to enforce any Guarantor’s covenant to pay a portion of the
Guaranteed Obligations, such judgment shall not be deemed to release such Guarantor from its
covenant to pay the portion of the Guaranteed Obligations that is not the subject of such suit and
such judgment shall not, except to the extent satisfied by such Guarantor, limit, affect, modify or
abridge any other Guarantor’s liability hereunder in respect of the Guaranteed Obligations;




          (e) Lender, upon such terms as it deems appropriate, without notice or
demand and without affecting the validity or enforceability hereof or giving rise to any reduction,
limitation, impairment, discharge or termination of any Guarantor’s liability hereunder, from time
to time may (i) renew, extend, accelerate, increase the rate of interest on, or otherwise change
the time, place, manner or terms of payment of the Guaranteed Obligations; (ii) settle, compromise,
release or discharge, or accept or refuse any offer of performance with respect to,
or substitutions for, the Guaranteed Obligations or any agreement relating thereto and/or
subordinate the payment of the same to the payment of any other obligations; (iii) request and




37









 




accept other guaranties of the Guaranteed Obligations and take and hold security for the payment
hereof or the Guaranteed Obligations; (iv) release, surrender, exchange, substitute, compromise,
settle, rescind, waive, alter, subordinate or modify, with or without consideration, any security
for payment of the Guaranteed Obligations, any other guaranties of the Guaranteed Obligations, or
any other obligation of any Person (including any other Guarantor) with respect to the Guaranteed
Obligations; (v) enforce and apply any security now or hereafter held by or for the benefit of
Lender in respect hereof or the Guaranteed Obligations and direct the order or manner of sale
thereof, or exercise any other right or remedy that Lender may have against any such security, in
each case as Lender in its discretion may determine consistent herewith and any applicable security
agreement, including foreclosure on any such security pursuant to one or more judicial or
nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable, and
even though such action operates to impair or extinguish any right of reimbursement or subrogation
or other right or remedy of any Guarantor against Borrower or any security for the Guaranteed
Obligations; and (vi) exercise any other rights available to it under the Loan Documents; and




          (f) this Guaranty and the obligations of Guarantors hereunder shall be valid and
enforceable and shall not be subject to any reduction, limitation, impairment, discharge or
termination for any reason (other than payment in full of the Guaranteed Obligations), including
the occurrence of any of the following, whether or not any Guarantor shall have had notice or
knowledge of any of them: (i) any failure or omission to assert or enforce or agreement or election
not to assert or enforce, or the stay or enjoining, by order of court, by operation of law or
otherwise, of the exercise or enforcement of, any claim or demand or any right, power or remedy
(whether arising under the Loan Documents, at law, in equity or otherwise) with respect to the
Guaranteed Obligations or any agreement relating thereto, or with respect to any other guaranty of
or security for the payment of the Guaranteed Obligations; (ii) any rescission, waiver, amendment
or modification of, or any consent to departure from, any of the terms or provisions (including
provisions relating to events of default) hereof, any of the other Loan Documents or any agreement
or instrument executed pursuant thereto, or of any other guaranty or security for the Guaranteed
Obligations, in each case whether or not in accordance with the terms hereof or such Loan Document,
or any agreement relating to such other guaranty or security; (iii) the Guaranteed Obligations, or
any agreement relating thereto, at any time being found to be illegal, invalid or unenforceable in
any respect; (iv) the application of payments received from any source (other than payments
received pursuant to the other Loan Documents or from the proceeds of any security for the
Guaranteed Obligations, except to the extent such security also serves as collateral for
indebtedness other than the Guaranteed Obligations) to the payment of indebtedness other than the
Guaranteed Obligations, even though Lender might have elected to apply such payment to any part or
all of the Guaranteed Obligations; (v) Lender’s consent to the change, reorganization or
termination of the corporate structure or existence of Holdings or any of its Subsidiaries and to
any corresponding restructuring of the Guaranteed Obligations; (vi) any failure to perfect or
continue perfection of a security interest in any collateral which secures any of the Guaranteed
Obligations; (vii) any defenses, set-offs or counterclaims which Borrower may allege or assert
against Lender in respect of the Guaranteed Obligations, including failure of consideration, breach
of warranty, payment, statute of frauds, statute of limitations, accord and satisfaction and usury;
and (viii) any other act or thing or omission, or delay to do any other act or thing, which may or
might in any manner or to any extent vary the risk of any Guarantor as an obligor in respect of the
Guaranteed Obligations.




38









 





     13.4 Waivers by Guarantors. Each Guarantor hereby waives, for the benefit of Lender: (a)
any right to require Lender, as a condition of payment or performance by Guarantor, to (i) proceed
against Borrower, any other guarantor (including any other Guarantor) of the Guaranteed Obligations
or any other Person, (ii) proceed against or exhaust any security held from Borrower, any such
other guarantor or any other Person, (iii) proceed against or have resort to any balance of any
Deposit Account or credit on the books of Lender in favor of Borrower or any other Guarantor or any
other Person, or (iv) pursue any other remedy in the power of Lender whatsoever; (b) any defense
arising by reason of the incapacity, lack of authority or any disability or other defense of
Borrower or any other Guarantor including any defense based on or arising out of the lack of
validity or the unenforceability of the Guaranteed Obligations or any agreement or instrument
relating thereto or by reason of the cessation of the liability of Borrower or any other Guarantor
from any cause other than payment in full of the Guaranteed Obligations; (c) any defense based upon
any statute or rule of law which provides that the obligation of a surety must be neither larger in
amount nor in other respects more burdensome than that of the principal; (d) any defense based upon
Lender’s errors or omissions in the administration of the Guaranteed Obligations, except behavior
which amounts to willful misconduct, gross negligence or bad faith; (e) (i) any principles or
provisions of law, statutory or otherwise, which are or might be in conflict with the terms hereof
and any legal or equitable discharge of such Guarantor’s obligations hereunder, (ii) the benefit of
any statute of limitations affecting such Guarantor’s liability hereunder or the enforcement
hereof, (iii) any rights to set-offs, recoupments and counterclaims, and (iv) promptness, diligence
and any requirement that Lender protect, secure, perfect or insure any security interest or lien or
any property subject thereto; (f) notices, demands, presentments, protests, notices of protest,
notices of dishonor and notices of any action or inaction, including acceptance hereof, notices of
default hereunder, or any agreement or instrument related thereto, notices of any renewal,
extension or modification of the Guaranteed Obligations or any agreement related thereto, notices
of any extension of credit to Borrower, and notices of any of the matters referred to in Section
13.3 and any right to consent to any thereof; and (g) any defenses or benefits that may be derived
from or afforded by law which limit the liability of or exonerate guarantors or sureties, or which
may conflict with the terms hereof.



     13.5 Guarantors’ Rights of Subrogation, Contribution, etc. Until the Guaranteed Obligations
(other than contingent indemnification obligations for which no claim has been made) shall have
been indefeasibly paid in full, each Guarantor hereby waives any claim, right or remedy, direct or
indirect, that such Guarantor now has or may hereafter have against Borrower or any other Guarantor
or any of its assets in connection with this Guaranty or the performance by such Guarantor of its
obligations hereunder, in each case whether such claim, right or remedy arises in equity, under
contract, by statute, under common law or otherwise and including (a) any right of subrogation,
reimbursement or indemnification that such Guarantor now has or may hereafter have against Borrower
with respect to the Guaranteed Obligations, (b) any right to enforce, or to participate in, any
claim, right or remedy that Lender now has or may hereafter have against Borrower, and (c) any
benefit of, and any right to participate in, any collateral or security now or hereafter held by
Lender. In addition, until the Guaranteed Obligations (other than contingent indemnification
obligations for which no claim has been made) shall have been indefeasibly paid in full, each
Guarantor shall withhold exercise of any right of contribution such Guarantor may have against any
other guarantor (including any other Guarantor) of the Guaranteed Obligations, including any such
right of contribution as contemplated by Section 13.12. Each Guarantor further agrees that, to the
extent the waiver or agreement to withhold the



39









 




exercise of its rights of subrogation, reimbursement, indemnification and contribution as set forth
herein is found by a court of competent jurisdiction to be void or voidable for any reason, any
rights of subrogation, reimbursement or indemnification such Guarantor may have against Borrower or
against any collateral or security, and any rights of contribution Guarantor may have against any
such other guarantor, shall be junior and subordinate to any rights Lender may have against
Borrower, to all right, title and interest Lender may have in any such collateral or security, and
to any right Lender may have against such other guarantor. If any amount shall be paid to any
Guarantor on account of any such subrogation, reimbursement, indemnification or contribution rights
at any time when all Guaranteed Obligations (other than contingent indemnification obligations for
which no claim has been made) shall not have been finally and indefeasibly paid in full, such
amount shall be held in trust for Lender and shall forthwith be paid over to Lender to be credited
and applied against the Guaranteed Obligations, whether matured or unmatured, in accordance with
the terms hereof.




     13.6 Subordination of Other Obligations. Any Indebtedness of Borrower or any Guarantor now
or hereafter held by any Guarantor (the “Obligee Guarantor”) is hereby subordinated in right of
payment to the Guaranteed Obligations, and any such Indebtedness collected or received by the
Obligee Guarantor after an Event of Default has occurred and is continuing shall be held in trust
for Lender and shall forthwith be paid over to Lender to be credited and applied against the
Guaranteed Obligations but without affecting, impairing or limiting in any manner the liability of
the Obligee Guarantor under any other provision hereof.



     13.7 Continuing Guaranty. This Guaranty is a continuing guaranty and shall remain in effect
until all of the Guaranteed Obligations shall have been paid in full. Each Guarantor hereby
irrevocably waives any right to revoke this Guaranty as to future transactions giving rise to any
Guaranteed Obligations.



     13.8 Authority of Guarantors or Borrower. It is not necessary for Lender to inquire into the
capacity or powers of Guarantor or Borrower or the officers, directors or any agents acting or
purporting to act on behalf of any of them.



     13.9 Financial Condition of Borrower. Any loan under any Promissory Note may be made to
Borrower or continued from time to time without notice to or authorization from any Guarantor
regardless of the financial or other condition of Borrower at the time of any such grant or
continuation. Lender shall not have any obligation to disclose or discuss with any Guarantor its
assessment, or any Guarantor’s assessment, of the financial condition of Borrower. Each Guarantor
has adequate means to obtain information from Borrower on a continuing basis concerning the
financial condition of Borrower and their ability to perform its obligations under the Loan
Documents, and each Guarantor assumes the responsibility for being and keeping informed of the
financial condition of Borrower and of all circumstances bearing upon the risk of nonpayment of
the Guaranteed Obligations. Each Guarantor hereby waives and relinquishes any duty on the part of
Lender to disclose any matter, fact or thing relating to the business, operations or conditions of
Borrower now known or hereafter known by Lender.



40









 





     13.10 Bankruptcy, etc.



          (a) So long as any Guaranteed Obligations (other than contingent
indemnification obligations for which no claim has been made) remain outstanding, no Guarantor
shall, without the prior written consent of Lender, commence or join with any other Person in
commencing any bankruptcy, reorganization or insolvency case or proceeding of or against Borrower
or any other Guarantor. The obligations of Guarantors hereunder shall not be reduced, limited,
impaired, discharged, deferred, suspended or terminated by any case or proceeding, voluntary or
involuntary, involving the bankruptcy, insolvency, receivership, reorganization, liquidation or
arrangement of Borrower or any other Guarantor or by any defense which Borrower or any other
Guarantor may have by reason of the order, decree or decision of any court or administrative body
resulting from any such proceeding.




          (b) Each Guarantor acknowledges and agrees that any interest on any portion of the Guaranteed
Obligations which accrues after the commencement of any case or proceeding referred to in clause
(a) above (or, if interest on any portion of the Guaranteed Obligations ceases to accrue by
operation of law by reason of the commencement of such case or proceeding, such interest as would
have accrued on such portion of the Guaranteed Obligations if such case or proceeding had not been
commenced) shall be included in the Guaranteed Obligations because it is the intention of
Guarantors and Lender that the Guaranteed Obligations which are guaranteed by Guarantors pursuant
hereto should be determined without regard to any rule of law or order which may relieve Borrower
of any portion of such Guaranteed Obligations. Guarantors will permit any trustee in bankruptcy,
receiver, debtor in possession, assignee for the benefit of creditors or similar Person to pay
Lender, or allow the claim of Lender in respect of, any such interest accruing after the date on
which such case or proceeding is commenced.




          (c) In the event that all or any portion of the Guaranteed Obligations are paid by Borrower,
the obligations of Guarantors hereunder shall continue and remain in full force and effect or be
reinstated, as the case may be, in the event that all or any part of such payment(s) are rescinded
or recovered directly or indirectly from Lender as a preference, fraudulent transfer or otherwise,
and any such payments which are so rescinded or recovered shall constitute Guaranteed Obligations
for all purposes hereunder.




     13.11 Discharge of Guaranty Upon Sale of Guarantors.




          (a) If all of the Equity Interests of any Guarantor or any of its successors in interest
hereunder shall be sold or otherwise disposed of (including by merger or consolidation) in
accordance with the terms and conditions or the Existing Credit Agreement, the Guaranty of such
Guarantor or such successor in interest, as the case may be, hereunder shall automatically be
discharged and released without any further action by Lender or any other Person effective as of
the time of sale of Equity Interests.




          (b) Notwithstanding anything to the contrary in this Agreement or the other Loan Documents, if
at any time after the Closing Date, the Guaranty of any Canadian Subsidiary that is a Controlled
Foreign Subsidiary causes, or is reasonably expected to cause, material adverse tax consequences to
Holdings and its Domestic Subsidiaries, taken as a whole, then the Guaranty of such Canadian
Subsidiary shall be discharged and released by Lender without any further action by Lender or any
other Person; provided that in the event (whether as a result of an amendment of the Internal
Revenue Code or otherwise) a Guaranty by such Canadian Subsidiary




41









 




thereafter would not result in material adverse tax consequences to Holdings and its Domestic
Subsidiaries, upon the request of Lender, such Canadian Subsidiary shall again become a Guarantor
hereunder by executing a Counterpart Agreement.




     13.12 Contribution by Guarantors. All Guarantors desire to allocate among themselves
(collectively, the “Contributing Guarantors”), in a fair and equitable manner, their obligations
arising under this Guaranty. Accordingly, in the event any payment or distribution is made on any
date by a Guarantor (a “Funding Guarantor”) under this Guaranty such that its Aggregate Payments
exceeds its Fair Share as of such date, such Funding Guarantor shall be entitled to a contribution
from each of the other Contributing Guarantors in an amount sufficient to cause each Contributing
Guarantor’s Aggregate Payments to equal its Fair Share as of such date. “Fair Share” means, with
respect to a Contributing Guarantor as of any date of determination, an amount equal to (a) the
ratio of (i) the Fair Share Contribution Amount with respect to such Contributing Guarantor to (ii)
the aggregate of the Fair Share Contribution Amounts with respect to all Contributing Guarantors
multiplied by (b) the aggregate amount paid or distributed on or before such date by all Funding
Guarantors under this Guaranty in respect of the obligations Guaranteed. “Fair Share Contribution
Amount” means, with respect to a Contributing Guarantor as of any date of determination, the
maximum aggregate amount of the obligations of such Contributing Guarantor under this Guaranty that
would not render its obligations hereunder or thereunder subject to avoidance as a fraudulent
transfer or conveyance under Section 548 of Title 11 of the United States Code or under any other
applicable bankruptcy, insolvency or similar law now or hereafter in effect; provided,
solely for purposes of calculating the “Fair Share Contribution Amount” with respect to any
Contributing Guarantor for purposes of this Section 7.2, any assets or liabilities of such
Contributing Guarantor arising by virtue of any rights to subrogation, reimbursement or
indemnification or any rights to or obligations of contribution hereunder shall not be considered
as assets or liabilities of such Contributing Guarantor. “Aggregate Payments” means, with respect
to a Contributing Guarantor as of any date of determination, an amount equal to (1) the aggregate
amount of all payments and distributions made on or before such date by such Contributing Guarantor
in respect of this Guaranty (including in respect of this Section 13.2), minus (2) the aggregate
amount of all payments received on or before such date by such Contributing Guarantor from the
other Contributing Guarantors as contributions under this Section 13.2. The amounts payable as
contributions hereunder shall be determined as of the date on which the related payment or
distribution is made by the applicable Funding Guarantor. The allocation among Contributing
Guarantors of their obligations as set forth in this Section 13.2 shall not be construed in any way
to limit the liability of any Contributing Guarantor hereunder. Each Guarantor is a third party
beneficiary to the contribution agreement set forth in this Section 13.2.



[The remainder of this page intentionally left blank]




42









 





          IN WITNESS WHEREOF, the Loan Parties and Lender have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as of the date
first written above.




	 	 	 	 	 
	 	ALLIED SYSTEMS, LTD. (L.P.), 

as Borrower 

 	 
	 	By:  	/s/ Thomas H. King
 	 
	 	 	Thomas H. King       	 
	 	 	Executive Vice President and Assistant Treasurer 	 
	 
	 	ALLIED HOLDINGS, INC. 

as Guarantor 

 	 
	 	By:  	/s/ Thomas H. King
 	 
	 	 	Thomas H. King           	 
	 	 	Executive Vice President and Chief

Financial Officer 	 
	 



	 	 	 	 	 
	 	AH INDUSTRIES INC. 

ALLIED AUTOMOTIVE GROUP, INC.

ALLIED FREIGHT BROKER LLC

ALLIED SYSTEMS (CANADA)

COMPANY

AXIS CANADA COMPANY

AXIS GROUP, INC.

COMMERCIAL CARRIERS, Inc.

CORDIN TRANSPORT LLC

C T SERVICES, INC.

F.J. BOUTELL DRIVEAWAY LLC

GACS INCORPORATED

QAT, INC.

RMX LLC

TERMINAL SERVICES LLC

TRANSPORT SUPPORT LLC

 	 
	 	By:  	/s/ Thomas H. King	 
	 	Thomas H. King           	 
	 	Executive Vice President and Assistant Treasurer 	 
	 




S-1









 





	 	 	 	 	 
	 	ACE OPERATIONS, LLC

AXIS NETHERLANDS, LLC

 	 
	 	By:  	/s/ Thomas H. King
 	 
	 	 	Thomas H. King      	 
	 	 	Executive Vice President and Assistant
Treasurer 	 
	 
	 	AXIS ARETA, LLC 

LOGISTIC SYSTEMS, LLC

LOGISTIC TECHNOLOGY, LLC



By: AX International Limited, 

Its Sole Member and Manager 

 	 
	 	By:  	/s/ Thomas H. King
 	 
	 	 	Thomas H. King      	 
	 	 	Executive Vice President and Assistant
Treasurer 	 
	 




S-2









 





	 	 	 	 	 	 	 
	 	 	YUCAIPA TRANSPORTATION, LLC,	 	 
	 	 	as Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	Name:	 	 
	 	 	Title:	 	 






S-3









 





EXECUTION VERSION




SECURED CONVERTIBLE PROMISSORY NOTE




	 	 	 
	$564,000

	 	Los Angeles, California
	 

	 	April 5, 2007






          FOR VALUE RECEIVED, the undersigned, Allied Systems Ltd. (L.P.), a Georgia limited partnership
(“Borrower”), promises to pay to Yucaipa Transportation, LLC, a Delaware limited liability company
(“Lender”), or order, the principal amount of Five Hundred Sixty-Four Thousand Dollars ($564,000),
with interest from the date hereof on the unpaid principal balance under this Note at the rate each
month equal to the sum of (i) the three month LIBOR rate as determined by Lender on such day (or if
such day was not a Business Day, the first Business Day immediately preceding such day) based on
rates for deposits in dollars (as set forth by Bloomberg L.P.-page BTMM or any other comparable
publicly available service as may be selected by Lender plus (ii) four percent (4.00%) per annum
(on the basis of a 360-day year and the actual number of days elapsed). The principal amount of
this Note shall be due and payable on the Maturity Date (as defined in that certain Loan and
Security Agreement and Guaranty entered into as of April 5, 2007 (as amended, modified and
supplemented from time to time, the “Loan Agreement”), by and between Borrower, Allied Holdings,
Inc., a Georgia corporation and a debtor and debtor in possession under Chapter 11 of the
Bankruptcy Code (“Holdings” and the other Subsidiaries (as defined below) of Holdings party hereto
(such Subsidiaries and together with Borrower and Holdings, collectively, the “Loan Parties”, and
individually, a “Loan Party”) and Lender). Capitalized terms used in this Note without definition
shall have the meanings provided in the Loan Agreement. On the first day of each calendar quarter,
commencing with July 1, 2007, the interest rate payable hereunder shall be adjusted based on the
then applicable LIBOR rate (as described above) and all accrued interest under this Note shall be
added to principal, and shall thereafter bear interest at the same rate as the principal of this
Note. On the Maturity Date the entire remaining unpaid principal balance of this Note, together
with any and all accrued and unpaid interest (including, without limitation, all interest that has
been added to principal hereunder) and any and all costs and expenses provided for under this Note
and the other Loan Documents, shall be due and payable. This Note may not be prepaid at any time.




          All payments under this Note shall be made to Lender or its order, in lawful money of the
United States of America and in immediately available funds delivered to Lender by wire transfer of
immediately available funds to such account within the United States as Lender or any holder hereof
shall designate in writing for such purpose from time to time. If a payment under this Note
otherwise would become due and payable on a day that is not a Business Day, the due date thereof
shall be extended to the next Business Day and interest shall be payable thereon during such
extension. All amounts due under this Note and the other Loan Documents shall be payable without
defense, set off or counterclaim.




          Each payment under this Note shall be applied in the following order: (i) to the payment of
costs and expenses which Borrower is required to pay pursuant to the provisions of this Note or any
of the other Loan Documents; (ii) to the payment of accrued and unpaid interest; and (iii) to the
payment of outstanding principal. Lender and each holder hereof shall have the




1









 





continuing and exclusive right to apply or reverse and reapply any and all payments under this
Note.




          Upon the occurrence of any Event of Default, the obligations under this Note shall become due
and payable in accordance with the provisions of the Loan Agreement, and Lender shall have all
other remedies available under the Loan Agreement. In addition, upon the occurrence of an Event of
Default, interest shall thereafter accrue on the entire unpaid principal balance under this Note,
including without limitation (x) any accrued interest which has been added to the principal balance
and (y) any delinquent interest which has been added to the principal amount due under this Note
pursuant to the terms hereof, at the rate set forth herein plus two percent (2.00%) per annum (on
the basis of a 360-day year and the actual number of days elapsed). On the first day of each
calendar quarter, all interest which has become payable and is then delinquent shall, without
curing the default under this Note by reason of such delinquency, be added to the principal amount
due under this Note, and shall thereafter bear interest at the same rate as is applicable to
principal, with interest on overdue interest to bear interest, in each case to the fullest extent
permitted by applicable law, both before and after default, maturity, foreclosure, judgment and the
filing of any petition in a bankruptcy proceeding. In no event shall interest be charged under this
Note which would violate any applicable law. If the rate of interest provided for herein would
otherwise exceed the maximum rate permitted by applicable law, then the interest rate shall be
reduced to the maximum rate permitted by applicable law.




          This Note is secured under the Loan Agreement. Reference is hereby made to the Loan Agreement
for a description of the nature and extent of the security for this Note and the rights and
remedies available to the holder of this Note. Nothing herein shall be deemed to limit the rights
of Lender under this Note or the Loan Agreement, all of which rights and remedies are cumulative.




          No waiver or modification of any of the terms of this Note shall be valid or binding unless
set forth in a writing specifically referring to this Note and signed by a duly authorized officer
of Lender or any holder of this Note, and then only to the extent specifically set forth therein.




          If any default occurs in any payment due under this Note, Borrower and all guarantors and
endorsers hereof, and their successors and assigns, promise to pay all costs and expenses,
including attorneys’ fees, incurred by each holder hereof in collecting or attempting to collect
the indebtedness under this Note, whether or not any action or proceeding is commenced. None of the
provisions hereof and none of the holder’s rights or remedies under this Note on account of any
past or future defaults shall be deemed to have been waived by the holder’s acceptance of any past
due installments or by any indulgence granted by the holder to Borrower.




          Borrower and all guarantors and endorsers hereof, and their successors and assigns, hereby
waive presentment, demand, diligence, protest and notice of every kind (except such notices as may
be required under the Loan Agreement), and agree that they shall remain liable for all amounts due
under this Note notwithstanding any extension of time or change in the terms of payment of this
Note granted by any holder hereof, any change, alteration or release of any property now or
hereafter securing the payment hereof or any delay or failure by the holder




2









 




hereof to exercise any rights under this Note or the Loan Agreement. Borrower and all guarantors
and endorsers hereof, and their successors and assigns, hereby waive the right to plead any and all
statutes of limitation as a defense to a demand under this Note to the full extent permitted by
law.




          This Note shall inure to the benefit of Lender, its successors and assigns and shall bind the
heirs, executors, administrators, successors and assigns of Borrower. Each reference herein to
powers or rights of Lender shall also be deemed a reference to the same power or right of such
assignees, to the extent of the interest assigned to them.




          In the event that any one or more provisions of this Note shall be held to be illegal, invalid
or otherwise unenforceable, the same shall not affect any other provision of this Note and the
remaining provisions of this Note shall remain in full force and effect.




          Upon the effective date of and pursuant to an Approved Plan, the principal and interest due
and owing under this Note (including, without limitation, any interest which has been added to
principal pursuant to this Note) may be converted in accordance with Section 2.3 of the Loan
Agreement.




          This Note shall be governed by and construed in accordance with the laws of the State of New
York, without giving effect to the principles thereof relating to conflicts of law; provided, that
Lender and each holder hereof reserves any and all rights it may have under federal law, including
without limitation those relating to the charging of interest.




[The remainder of this page intentionally left blank]




3









 





     IN WITNESS WHEREOF, Borrower has caused this Secured Promissory Note to be duly executed the
day and year first above written.



	 	 	 	 	 	 	 
	 	 	ALLIED SYSTEMS LTD. (L.P.), a Georgia limited partnership	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Thomas H. King
 

	 	 
	 

	 	Name:
	 	Thomas H. King	 	 
	 

	 	Title:
	 	EVP
	 	 







S-1