Document:

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                                                                    EXHIBIT 10.2

                              ALLIED HOLDINGS, INC.
                  AMENDED AND RESTATED LONG-TERM INCENTIVE PLAN

                                    EFFECTIVE
                                 JANUARY 1, 2001

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                              ALLIED HOLDINGS, INC.
                  AMENDED AND RESTATED LONG-TERM INCENTIVE PLAN

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
<S>                                                                               <C>
ARTICLE I PURPOSE........................................................         1
ARTICLE II DEFINITIONS...................................................         1
   2.1 "Adjusted Fair Market Value"......................................         1
   2.2 "Agreement".......................................................         1
   2.3 "Award"...........................................................         1
   2.4 "Bank Balance"....................................................         2
   2.5 "Board"...........................................................         2
   2.6 "Cash Awards".....................................................         2
   2.7 "Cause"...........................................................         2
   2.8 "Change in Capitalization"........................................         2
   2.9 "Change in Control"...............................................         2
   2.10 "Code"...........................................................         3
   2.11 "Committee"......................................................         3
   2.12 "Company"........................................................         3
   2.13 "Deferral Plan"..................................................         3
   2.14 "Disability".....................................................         3
   2.15 "Division".......................................................         4
   2.16 "Eligible Employee"..............................................         4
   2.17 "Eligible Director"..............................................         4
   2.18 "Employee".......................................................         4
   2.19 "Exchange Act"...................................................         4
   2.20 "Fair Market Value"..............................................         4
   2.21 "Grantee"........................................................         4
   2.22 "Incentive Stock-Option".........................................         4
   2.23 "Maximum Goal"...................................................         5
   2.24 "Minimum Goal"...................................................         5
   2.25 "Nonqualified Stock Option"......................................         5
   2.26 "Option".........................................................         5
   2.27 "Optionee".......................................................         5
   2.28 "Performance Awards".............................................         5
   2.29 "Performance Goal"...............................................         5
   2.30 "Performance Period".............................................         5
   2.31 "Performance Shares".............................................         5
   2.32 "Performance Sharing Bank".......................................         5
   2.33 "Performance Unit"...............................................         5
   2.34 "Primary Goal"...................................................         5
   2.35 "Restricted Stock"...............................................         5
   2.36 "Retirement".....................................................         6
   2.37 "Shares".........................................................         6
   2.38 "Stock Appreciation Right".......................................         6
</TABLE>

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<TABLE>
<S>                                                                              <C>
   2.39 "Subsidiary".....................................................         6
   2.40 "Successor Corporation"..........................................         6
   2.41 "Ten-Percent Stockholder"........................................         6
ARTICLE III ADMINISTRATION...............................................         6
   3.1 Powers of the Committee...........................................         6
   3.2 The Committee.....................................................         7
   3.3 Awards Issuable by the Board......................................         8
ARTICLE IV STOCK SUBJECT TO PLAN.........................................         8
   4.1 Number of Shares..................................................         8
   4.2 Shares Eligible After Expiration..................................         8
ARTICLE V ELIGIBILITY....................................................         8
ARTICLE VI OPTIONS.......................................................         9
   6.1 Purchase Price....................................................         9
   6.2 Duration..........................................................         9
   6.3 Non-transferability...............................................         9
   6.4 Vesting...........................................................         9
   6.5 Method of Exercise................................................         9
   6.6 Rights of Optionees...............................................        10
   6.7 Termination of Employment.........................................        10
   6.8 Modification or Substitution......................................        10
   6.9 Effect of Change in Control.......................................        10
ARTICLE VII STOCK APPRECIATION RIGHTS....................................        11
   7.1 Time of Grant.....................................................        11
   7.2 Stock Appreciation Right Related to an Option.....................        11
   7.3 Stock Appreciation Right Unrelated to an Option...................        12
   7.4 Method of Exercise................................................        12
   7.5 Form of Payment...................................................        13
   7.6 Restrictions......................................................        13
   7.7 Termination of Employment.........................................        13
   7.8 Modification or Substitution......................................        13
   7.9 Effect of Change in Control.......................................        13
ARTICLE VIII RESTRICTED STOCK............................................        14
   8.1 Rights of Grantee.................................................        14
   8.2 Non-transferability...............................................        14
   8.3 Lapse of Restrictions.............................................        14
   8.4 Termination of Employment.........................................        15
   8.5 Modification or Substitution......................................        15
   8.6 Treatment of Dividends............................................        15
   8.7 Delivery of Shares................................................        15
   8.8 Vesting...........................................................        15
ARTICLE IX PERFORMANCE AWARDS............................................        15
   9.1 Performance Goals.................................................        15
   9.2  Performance Shares...............................................        16
   9.3 Cash Awards.......................................................        16
   9.4 Effect of Change in Control.......................................        17
   9.5 Non-transferability...............................................        18
   9.6 Modification or Substitution......................................        18
ARTICLE X LOANS..........................................................        18
   10.1 Loans............................................................        18
   10.2 Maximum Amount of Loan...........................................        18
</TABLE>

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<TABLE>
<S>                                                                              <C>
   10.3 Term.............................................................        18
   10.4 Repayment........................................................        18
   10.5 Security.........................................................        18
ARTICLE XI ADJUSTMENT UPON CHANGES IN CAPITALIZATION.....................        19
   11.1 Adjustments......................................................        19
   11.2 Limitations Regarding Incentive Stock Options....................        19
   11.3 Continuation of Conditions, Restrictions, Etc....................        19
ARTICLE XII EFFECT OF CERTAIN TRANSACTIONS................................       19
ARTICLE XIII RELEASE OF FINANCIAL INFORMATION............................        20
ARTICLE XIV TERMINATION AND AMENDMENT OF THIS PLAN.......................        20
   14.1 Termination......................................................        20
   14.2 Amendment........................................................        20
ARTICLE XV NON-EXCLUSIVITY OF THIS PLAN..................................        20
ARTICLE XVI LIMITATION OF LIABILITY......................................        21
ARTICLE XVII REGULATIONS AND OTHER APPROVALS, GOVERNING LAW..............        21
   17.1 Governing Law....................................................        21
   17.2 Conditions.......................................................        21
   17.3 Rule 16b-3.......................................................        21
   17.4 Authority of the Board...........................................        21
   17.5 Effect of Securities Laws........................................        22
   17.6 Registration.....................................................        22
ARTICLE XVIII MISCELLANEOUS..............................................        22
   18.1 Multiple Agreements..............................................        22
   18.2 Withholding of Taxes.............................................        23
   18.3 Designation of Beneficiary.......................................        23
   18.4 Notices..........................................................        24
ARTICLE XIX EFFECTIVE DATE...............................................        24
</TABLE>

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                              ALLIED HOLDINGS, INC.
                  AMENDED AND RESTATED LONG-TERM INCENTIVE PLAN

                                    ARTICLE I

                                     PURPOSE

         The Allied Holdings, Inc. Long-Term Incentive Plan (the "Plan") is
restated as of January 1, 2001 to provide additional incentives to the officers,
directors and certain other Employees of Allied Holdings, Inc. (the "Company")
and its Subsidiaries (as hereinafter defined) whose contributions are
substantial and essential to the continued growth and success of the Company's
business; to strengthen their commitment to the Company and its Subsidiaries; to
motivate such officers and Employees to perform their responsibilities
faithfully, diligently, to the best of their ability and in the best interests
of the Company; and, to attract and retain competent, qualified and dedicated
individuals whose efforts will result in the long-term growth and profitability
of the Company. To accomplish these purposes, this Plan authorizes the Company
to grant Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation
Rights, Restricted Stock, Performance Units, Performance Shares, and Cash Awards
to Eligible Employees (as each term is hereinafter defined) on the terms and
conditions hereinafter set forth.

                                   ARTICLE II

                                   DEFINITIONS

         As used in this Plan, the following terms shall have the meaning set
forth:

         2.1      "ADJUSTED FAIR MARKET VALUE" means, in the event of a Change
in Control, the greater of (a) the highest price per Share paid to holders of
the Shares in any transaction (or series of transactions) constituting or
resulting in such Change in Control, or (b) the highest Fair Market Value of a
Share during the ninety (90) day period ending on the date of such Change in
Control.

         2.2      "AGREEMENT" means the written agreement between the Company
and an Optionee or Grantee which evidences the grant of an Option or Award and
sets forth the terms and conditions thereof.

         2.3      "AWARD" means a grant of Restricted Stock, Stock Appreciation
Rights, Performance Shares, Performance Awards or any combination thereof.

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         2.4      "BANK BALANCE" means the total of undistributed Cash Awards
held in the Performance Sharing Bank.

         2.5      "BOARD" means the Board of Directors of the Company.

         2.6      "CASH AWARDS" means cash to be paid pursuant to the Award and
Performance Sharing Bank System described in Section 9.3.

         2.7      "CAUSE" with respect to termination of the Participant's
employment with the Company or any Subsidiary, means (i) the commission by
Employee of an act constituting a felony and Employee's conviction thereof; (ii)
Employee's prolonged absence, without the consent of Employer, other than as a
result of Employee's Disability or permitted absence or vacation; (iii) conduct
of Employee which amounts to fraud, dishonesty, gross or willful neglect of
duties; or (iv) Employee's engaging in any activity which would constitute
grounds for termination for cause by Employer or an of its subsidiaries or
affiliates.

         2.8      "CHANGE IN CAPITALIZATION" means any increase or reduction in
the number of Shares, or any change (including, but not limited to, a change in
value) or exchange of Shares for a different number or kind of shares or other
securities of the Company, by reason of a reclassification, recapitalization,
merger, consolidation, reorganization, spin-off, split-up, issuance of warrants
or rights or debentures, stock dividend, stock split or reverse stock split,
cash dividend, property dividend, combination or exchange of shares, repurchase
of shares, public offering, private placement, change in corporate structure or
otherwise which, in the judgment and sole discretion of the Board, is material
or significant.

         2.9      "CHANGE IN CONTROL" means any of the following events:

         (a)      The acquisition (other than from the Company) by any "Person"
                  (as used for purposes of Section 13(d) or 14(d) of the
                  Exchange Act) of beneficial ownership (within the meaning of
                  Rule 13d-3 promulgated under the Exchange Act) of twenty
                  percent (20%) or more of the combined voting power of the
                  Company's then outstanding voting securities; or

         (b)      The individuals who, as of the date of adoption of this Plan
                  by the Board, are members of the Board (the "Incumbent
                  Board"), cease for any reason to constitute at least
                  two-thirds ([OBJECT OMITTED]) of the Board; provided, however,
                  that if the election, or nomination for election by the
                  Company's stockholders, of any new director was approved by a
                  vote of at least two-thirds ([OBJECT OMITTED]) of the
                  Incumbent Board, such new director shall, for purposes of this
                  Agreement, be considered as a member of the Incumbent Board;
                  or

         (c)      Approval by stockholders of the Company of (i) a merger or
                  consolidation involving the Company if the stockholders of the
                  Company, immediately before such merger or consolidation do
                  not, as a result of such merger or consolidation,

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                  own, directly or indirectly, more than seventy percent (70%)
                  of the combined voting power of the then outstanding voting
                  securities of the corporation resulting from such merger or
                  consolidation in substantially the same proportion as their
                  ownership of the combined voting power of the voting
                  securities of the Company outstanding immediately before such
                  merger or consolidation, or (ii) a complete liquidation or
                  dissolution of the Company or an agreement for the sale or
                  other disposition of all or substantially all of the assets of
                  the Company.

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
pursuant to subsection (a) above, solely because twenty percent (20%) or more of
the combined voting power of the Company's then outstanding securities is
acquired by (i) a trustee or other fiduciary holding securities under one or
more Employee benefit plans maintained by the Company or any of its
subsidiaries, or (ii) any corporation which, immediately prior to such
acquisition, is owned directly or indirectly by the stockholders of the Company
in the same proportion as their ownership of stock in the Company immediately
prior to such acquisition.

         2.10     "CODE" means the Internal Revenue Code of 1986, as from time
to time amended.

         2.11     "COMMITTEE" means the compensation committee (a) as may be
appointed by the Board at any time who qualify as "outside directors" within the
meaning of Treasury Regulation Section 1.162-27(e)(3) and (b) to which the Board
may delegate any or all of its duties under this Plan, and which may be
disbanded at any time by the Board, all in accordance with Section 3.2 hereof.

         2.12     "COMPANY" means Allied Holdings, Inc., a Georgia corporation.

         2.13     "DEFERRAL PLAN" means the Allied Holdings, Inc. Deferred
Compensation Plan.

         2.14     "DISABILITY" with respect to an Optionee or Grantee, shall
conclusively be deemed to have occurred (a) if such Optionee or Grantee shall be
receiving payments pursuant to a policy of long-term disability income
insurance; or (b) if such Optionee or Grantee shall have no disability income
insurance then in force, then if any insurance company insuring such Optionee's
or Grantee's life shall agree to waive the premiums due on such policy pursuant
to a disability waiver of premium provision in the contract of life insurance;
or (c) if such Optionee or Grantee shall have no disability waiver of premium
provision in any contract of life insurance, then if such Optionee or Grantee
shall be receiving disability benefits from or through the Social Security
Administration; provided, however, that in the event such Optionee's or
Grantee's disability shall, otherwise and in good faith, come into question
(and, for purposes of this proviso, "disability" shall mean the permanent and
continuous inability of such Optionee or Grantee to perform substantially all of
the duties being performed immediately prior to his disability coming into
question), and a dispute shall arise with respect thereto, then such Optionee or
Grantee (or his personal representatives) shall appoint a medical doctor, the
Company shall appoint a medical doctor, and said two doctors shall, in turn,
appoint a third party medical doctor who shall examine such Optionee or Grantee
to determine the question of disability and whose determination shall be binding
upon such Optionee or Grantee, the Company, and their respective successors and
assigns.

                                       3
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         2.15     "DIVISION" means such operating units or divisions of the
Company designated as a Division by the Board, if any.

         2.16     "ELIGIBLE EMPLOYEE" means any officer or certain other
Employee of the Company or a Subsidiary designated by the Committee as eligible
to receive Options or Awards subject to the terms and conditions of this Plan.
Only Employees in grade category 9 or above shall be eligible to participate in
awards issued under Section 9.3, and only Employees in grade category 6 or above
shall be eligible to participate in awards issuable under Section 9.2.

         2.17     "ELIGIBLE DIRECTOR" means any non-Employee member of the Board
or any non-Employee member of the board of directors (or similar governing body,
if any) of a Subsidiary.

         2.18     "EMPLOYEE" means any Employee of the Company or a Subsidiary.

         2.19     "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
from time to time amended.

         2.20     "FAIR MARKET VALUE" means the value determined as follows:

         (a)      If the Shares are admitted to trading on a national securities
                  exchange, Fair Market Value on any date shall be the last sale
                  price reported for the Shares on such exchange on such date
                  or, if no sale was reported on such date, on the last date
                  preceding such date on which a sale was reported; or

         (b)      If the Shares are admitted to quotation on the National
                  Association of Securities Dealers Automated Quotation System
                  ("NASDAQ") or other comparable quotation system and have been
                  designated as a National Market System ("NMS") security, Fair
                  Market Value on any date shall be the last sale price reported
                  for the Shares on such system on such date or on the last day
                  preceding such date on which a sale was reported; or

         (c)      If the Shares are admitted to quotation on NASDAQ and have not
                  been designated a NMS security, Fair Market Value on any date
                  shall be the average of the highest bid and lowest asked
                  prices of the Shares on such system on such date;

provided, however, that if none of the foregoing shall be applicable, Fair
Market Value shall mean the fair market value of the Shares as determined in
good faith by the Board.

         2.21     "GRANTEE" means an Eligible Employee to whom an Award has been
granted under this Plan.

         2.22     "INCENTIVE STOCK OPTION" means an Option within the meaning of
Section 422(b) of the Code.

                                       4
<PAGE>   9

         2.23     "MAXIMUM GOAL" means an outstanding level of performance of
the Company, a Subsidiary or a Division during a Performance Period for which a
Performance Award is granted, as determined by the Committee at the time such
Performance Award is granted.

         2.24     "MINIMUM GOAL" means a minimum level of performance of the
Company, a Subsidiary or a Division during a Performance Period for which a
Performance Award is granted, as determined by the Committee at the time such
Performance Award is granted.

         2.25     "NONQUALIFIED STOCK OPTION" means an Option which is not an
Incentive Stock Option.

         2.26     "OPTION" means an Incentive Stock Option, a Nonqualified Stock
Option, or either or both of them.

         2.27     "OPTIONEE" means an Eligible Employee to whom an Option has
been granted under this Plan.

         2.28     "PERFORMANCE AWARDS" means Performance Units, Performance
Shares, Cash Awards, or any combination of them.

         2.29     "PERFORMANCE GOAL" means a goal set by the Committee which, if
achieved, shall result in the payment of an Award. If so provided pursuant to an
Agreement, an Award may be partially paid if a Performance Goal is not fully
attained.

         2.30     "PERFORMANCE PERIOD" means the time period specified by the
Committee at the time a Performance Award is granted during which the
performance of the Company, a Subsidiary or a Division shall be measured, which
period shall be not less than one fiscal year.

         2.31     "PERFORMANCE SHARES" means potential rights to receive
Restricted Stock which are granted under Article IX of this Plan.

         2.32     "PERFORMANCE SHARING BANK" means the record of account
maintained by the Company to which Cash Awards shall be credited. No actual fund
or trust shall exist.

         2.33     "PERFORMANCE UNIT" means an Award granted under Article IX of
this Plan.

         2.34     "PRIMARY GOAL" means a challenging and above average level of
performance of the Company, a Subsidiary or a Division during a Performance
Period for which a Performance Award is granted, as determined by the Committee
at the time such Performance Award is granted.

         2.35     "RESTRICTED STOCK" means Shares issued or transferred to an
Eligible Employee which are subject to restrictions established by the Committee
at the time the Restrictive Stock is awarded to such Eligible Employee.
Restricted Stock may be subject to restrictions which lapse over time without
regard to the performance of the Company, a Subsidiary or a Division pursuant to
Article VIII hereof or may be awarded as Performance Shares pursuant to Article
IX hereof.

                                       5
<PAGE>   10

         2.36     "RETIREMENT" means the voluntary termination of employment by
a Grantee or Optionee at any time after such Grantee or Optionee attains age
sixty-five (65).

         2.37     "SHARES" means the no par value common stock of the Company
(including any new, additional or different stock or securities resulting from a
Change in Capitalization).

         2.38     "STOCK APPRECIATION RIGHT" means a right to receive all or
some portion of the increase in the value of the Shares pursuant to Article VII
hereof.

         2.39     "SUBSIDIARY" means (a) Allied Systems, Ltd., a Georgia limited
partnership, and (b) any corporation in an unbroken chain of corporations,
beginning with the Company, if each of the corporations other than the last
corporation in the unbroken chain owns stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.

         2.40     "SUCCESSOR CORPORATION" means a corporation, or a parent or
subsidiary thereof within the meaning of Section 425(a) of the Code, which
issues or assumes a stock option in a transaction to which Section 425(a) of the
Code applies.

         2.41     "TEN-PERCENT STOCKHOLDER" means an Eligible Employee who, at
the time an Incentive Stock Option is to be granted to him, owns (within the
meaning of Section 422(b)(6) of the Code) stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company,
or of a parent or a subsidiary of the Company.

                                   ARTICLE III

                                 ADMINISTRATION

         3.1      POWERS OF THE COMMITTEE. This Plan shall be administered by
the Committee and, subject to the express terms and conditions set forth herein,
the Committee shall have the power, from time to time:

         (a)      To determine those Eligible Employees to whom Options shall be
                  granted under this Plan and the number of Incentive Stock
                  Options, Nonqualified Stock Options, or both, to be granted to
                  each Eligible Employee; to prescribe the terms and conditions
                  (which need not be identical) of each Option, including
                  without limitation the purchase price per Share subject to
                  each Option; and, to make any amendment or modification to any
                  Agreement consistent with the terms of this Plan;

         (b)      To determine those Eligible Directors to whom Nonqualified
                  Stock Options shall be granted under this Plan and the number
                  of Nonqualified Stock Options to be granted to each Eligible
                  Director; to prescribe the terms and conditions (which need
                  not be identical) of each Option, including without limitation
                  the purchase

                                       6
<PAGE>   11

                  price per Share subject to each Option; and, to make any
                  amendment or modification to any Agreement consistent with the
                  terms of this Plan;

         (c)      To select those Eligible Employees to whom Awards shall be
                  granted under this Plan and to determine the number of
                  Performance Units, Performance Shares, Shares of Restricted
                  Stock, Stock Appreciation Rights, or all or any of them, to be
                  granted pursuant to each Award; to prescribe the terms and
                  conditions of each Award, including without limitation the
                  restrictions or performance criteria relating to such Units,
                  Shares or Rights, the maximum value of each Performance Unit
                  and Performance Share and whether Stock Appreciation Rights
                  will be granted along with, in conjunction with, or related
                  to, an Option; and, to make any amendment or modification to
                  any Agreement consistent with the terms of this Plan;

         (d)      To select those Eligible Directors to whom Awards shall be
                  granted under this Plan and to determine the number of
                  Performance Units, Performance Shares, Shares of Restricted
                  Stock, Stock Appreciation Rights, or all or any of them, to be
                  granted pursuant to each Award; to set annual incentives and
                  performance based measures; to prescribe the terms and
                  conditions of each Award, including without limitation the
                  restrictions or performance criteria relating to such Units,
                  Shares or Rights, the maximum value of each Performance Unit
                  and Performance Share and whether Stock Appreciation Rights
                  will be granted along with, in conjunction with, or related
                  to, Nonqualified Stock Options; and, to make any amendment or
                  modification to any Agreement consistent with the terms of
                  this Plan;

         (e)      To construe and interpret this Plan and the Options and Awards
                  granted hereunder and to establish, amend and revoke rules and
                  regulations for the administration of this Plan, including
                  without limitation correcting any defect or supplying any
                  omission in, or reconciling any inconsistency in, this Plan or
                  in any Agreement, in such manner and to such extent it shall
                  deem necessary or advisable to make this Plan fully effective,
                  and all decisions and determinations by the Committee in the
                  exercise of this power shall be final, binding and conclusive
                  upon the Company, each Subsidiary, Optionees and Grantees, as
                  the case may be;

         (f)      To determine the duration and purposes for leaves of absence
                  which may be granted to an Optionee or Grantee on an
                  individual basis without constituting a termination of
                  employment or service for purposes of this Plan;

         (g)      To exercise its discretion with respect to the powers and
                  rights granted to it as set forth in this Plan; and

         (h)      To exercise, generally, such powers and to perform such acts
                  as it shall deem necessary or advisable to promote the best
                  interests of the Company with respect to this Plan.

                                       7
<PAGE>   12

         3.2      THE COMMITTEE. In addition to the powers described in Section
3.1, the Committee shall have such powers and duties as shall be expressly
delegated in writing by the Board. The Board may, at the time of delegating such
duties, specify the minimum number of meetings to be held each calendar year;
the number of members of the Committee that shall constitute a quorum; and the
requisite vote of the Committee needed to adopt or defeat any proposal. In the
event of a failure of the Board to specify the matters described in the
preceding sentence, the Committee may establish its own rules of governance.
Anything in this Plan to the contrary notwithstanding, the Board may, at any
time after the appointing of a Committee and for any reason, disband the
Committee, at which time any and all powers and duties previously delegated to
the Committee shall revert to the Board. No member of the Committee shall be
personally liable for any action, determination or interpretation made in good
faith with respect to this Plan, Agreements, Options or Awards, and all members
of the Committee shall be fully indemnified by the Company with respect to any
such action, determination or interpretation.

         3.3      AWARDS ISSUABLE BY THE BOARD. The Board may grant any awards
available under the Plan except Incentive Stock Options and awards described in
Article IX to Eligible Directors. When the Board does so, it shall have all
those powers described in Sections 3.1 and 3.2 which are vested in the Committee
with respect to such awards.

                                   ARTICLE IV

                              STOCK SUBJECT TO PLAN

         4.1      NUMBER OF SHARES. The maximum number of Shares that may be
issued or transferred pursuant to Options and Awards under this Plan shall be
One Million Five Hundred Thousand (1,500,000) Shares (or such number and kind of
shares of stock or other securities to which such Shares are adjusted upon a
Change in Capitalization pursuant to Article XI hereof provided that the number
of shares available under the Plan may be increased pursuant to action by the
shareholders of the Company) and the Company shall reserve for the purposes of
this Plan, out of its authorized but unissued Shares or out of Shares held in
the Company's treasury, or partly out of each, such number of Shares as shall be
determined, from time to time, by the Board so long as the aggregate number of
shares so reserved shall not exceed the maximum set forth above.

         4.2      SHARES ELIGIBLE AFTER EXPIRATION. Whenever any outstanding
Option or Award or portion thereof expires, is canceled, is forfeited or is
otherwise terminated for any reason (other than by exercise of the Option or any
Stock Appreciation Right), the Shares allocable to the expired, canceled,
forfeited or otherwise terminated portion of such Option or Award may again be
the subject of Options and Awards hereunder.

                                       8
<PAGE>   13

                                    ARTICLE V

                                   ELIGIBILITY

         Subject to the terms and conditions of this Plan, the Committee shall
have full and final authority to select those Eligible Employees and Eligible
Directors who shall receive Options, Awards, or both; provided, however, that no
Eligible Employee shall receive any Incentive Stock Options unless such Eligible
Employee shall be an Employee of the Company, a parent or a subsidiary (within
the meaning of Section 422 of the Code) at the time the Incentive Stock Option
is granted. No Eligible Director shall receive any Incentive Stock Options.

                                   ARTICLE VI

                                     OPTIONS

         The Committee may, at any time and from time to time during the term of
this Plan, grant Options in accordance with this Plan and the terms and
conditions of the Option shall be set forth in an Agreement; each Option and
Related Agreement shall be subject to the following terms and conditions:

         6.1      PURCHASE PRICE. The purchase price or the manner in which the
purchase price is to be determined for Shares under each Option shall be set
forth in the Agreement; provided, however, that the purchase price per Share
under each Option shall not be less than one hundred percent (100%) of the Fair
Market Value of a Share at the time the Option is granted (one hundred ten
percent (110%) in the case of an Incentive Stock Option granted to a Ten-Percent
Stockholder).

         6.2      DURATION. Options granted hereunder shall be for such term as
the Committee shall determine; provided, however, that no Option shall be
exercisable after the expiration of ten (10) Years from the date it shall be
granted (five (5) years in the case of an Incentive Stock Option granted to a
Ten-Percent Stockholder). The Committee may, after the granting of any Option,
extend the term thereof, but in no event shall the term as so extended exceed
the maximum term provided for in the preceding sentence.

         6.3      NON-TRANSFERABILITY. No Option shall be transferable by the
Optionee to whom granted otherwise than by will or the laws of descent and
distribution, and an Option may be exercised during the lifetime of such
Optionee only by such Optionee or such Optionee's guardian or legal
representative. The terms of such Option shall be final, binding and conclusive
upon the beneficiaries, executors, administrators, heirs and successors of the
Optionee.

         6.4      VESTING. Subject to Section 6.9 hereof, each Option shall be
exercisable in such installments (which need not be equal) and at such times as
may be designated by the Committee

                                       9
<PAGE>   14

and set forth in the Agreement. To the extent not exercised, installments shall
accumulate and be exercisable, in whole or in part, at any time after becoming
exercisable, but not later than the date the Option expires. The Committee may
accelerate the exercisability of any Option or portion thereof, at any time and
from time to time.

         6.5      METHOD OF EXERCISE. The exercise of an Option shall be made
only by a written notice (a) delivered in accordance with Section 18.4 hereof to
the Secretary or an officer of the Company at the Company's principal executive
office, (b) specifying the number of Shares to be purchased and accompanied by
payment therefor and (c) otherwise in accordance with the Agreement pursuant to
which the Option was granted. The purchase price for any Shares purchased
pursuant to the exercise of an Option shall be paid in full upon such exercise
and, in the sole discretion of the Committee, either in cash, by check, or by
transferring Shares to the Company upon such terms and conditions as determined
by the Committee. The written notice pursuant to this Section 6.5 may also
provide instructions from the Optionee to the Company that upon receipt of the
purchase price in cash from the Optionee's broker or dealer, designated as such
in the written notice, in payment for any Shares purchased pursuant to the
exercise of an Option, the Company shall issue such Shares directly to the
designated broker or dealer. Any Shares transferred to the Company as payment of
the purchase price under an Option shall be valued at their Fair Market Value on
the day preceding the date of exercise of such Option. If requested by the
Committee, the Optionee shall deliver the Agreement evidencing the Option and
the Agreement evidencing any related Stock Appreciation Right to the Secretary
or an officer of the Company who shall endorse thereon a notation of such
exercise and return such Agreement to the Optionee. No fractional Shares shall
be issued upon exercise of an Option and the number of Shares that may be
purchased upon exercise shall be rounded to the nearest number of whole Shares.

         6.6      RIGHTS OF OPTIONEES. No Optionee shall be deemed for any
purpose to be the owner of any Shares subject to any Option unless and until (a)
the Option shall have been exercised pursuant to the terms thereof, (b) the
Company shall have issued and delivered the Shares to the Optionee, and (c) the
Optionee's name shall have been entered as a stockholder of record on the books
of the Company. Thereupon, the Optionee shall have full voting, dividend and
other ownership rights with respect to such Shares.

        6.7       TERMINATION OF EMPLOYMENT. An Agreement shall set forth the
terms and conditions of the Option upon the termination of the Optionee's
employment with the Company, Subsidiary or Division, as applicable (including a
Grantee's ceasing to be employed by a Subsidiary or Division as a result of the
sale of such Subsidiary or Division or an interest in such Subsidiary or
Division), as the Committee may, in its discretion, determine at the time the
Option is granted or thereafter; provided, however, that no Option shall be
exercisable beyond its maximum term as set forth in Section 6.2 hereof.

         6.8      MODIFICATION OR SUBSTITUTION. Subject to the terms of this
Plan, the Committee may, in its discretion, modify outstanding Options or accept
the surrender of outstanding Options (to the extent not exercised) and grant new
Options in substitution therefor. Notwithstanding the

                                       10
<PAGE>   15

foregoing, no modification of an Option shall adversely alter or impair any
rights or obligations under the Agreement without the Optionee's prior written
consent.

         6.9      EFFECT OF CHANGE IN CONTROL. Notwithstanding anything
contained in this Plan or an Agreement to the contrary, in the event of a Change
in Control, (a) all Options outstanding on the date of such Change in Control
shall become immediately and fully exercisable; (b) each Optionee shall be
permitted to surrender for cancellation, within sixty (60) days after such
Change in Control, any Option or portion of an Option to the extent not yet
exercised; and (c) upon cancellation, each Optionee shall be entitled to receive
a cash payment in an amount equal to:

                  (i)      in the case of a Non-Qualified Stock Option, the
                           excess of the greater of the Fair Market Value, on
                           the date preceding the date of surrender, of the
                           Shares subject to such Option or portion thereof
                           surrendered or the Adjusted Fair Market Value of the
                           Shares subject to such Option or portion thereof
                           surrendered over the aggregate purchase price for
                           such Shares under such Option; or

                  (ii)     in the case of an Incentive Stock Option, the excess
                           of the Fair Market Value, at the time of surrender,
                           of the Shares subject to such Option or portion
                           thereof surrendered over the aggregate purchase price
                           for such Shares under such Option;

provided, however, that in the case of an Option granted within six (6) months
prior to the Change in Control to any Optionee who may be subject to liability
under Section 16(b) of the Exchange Act, such Optionee shall be entitled to
surrender for cancellation his or her Option during the sixty (60) day period
commencing upon the expiration of six (6) months after the date of grant of any
such Option.

                                   ARTICLE VII

                            STOCK APPRECIATION RIGHTS

         The Committee may, in its discretion, either alone or in connection
with the grant of an Option grant Stock Appreciation Rights in accordance with
this Plan and such terms and conditions as shall be set forth in an Agreement.
If granted in connection with an Option, a Stock Appreciation Right shall cover
the same Shares covered by the Option (or such lesser number of Shares as the
Committee may determine) and shall, except as provided in this Article VII, be
subject to the same terms and conditions as the related Option.

         7.1      TIME OF GRANT. A Stock Appreciation Right may be granted (a)
at any time if unrelated to an Option, or (b) if related to an Option, either at
the time of grant, or at any time thereafter during the term of the Option.

                                       11
<PAGE>   16

         7.2        STOCK APPRECIATION RIGHT RELATED TO AN OPTION.

         (a)      Payment. A Stock Appreciation Right granted in connection with
                  an Option shall entitle the holder thereof to receive payment
                  of an amount computed pursuant to Section 7.2(c) below upon
                  exercise of the Stock Appreciation Right or any portion
                  thereof.

         (b)      Exercise. Subject to Section 7.6 hereof, a Stock Appreciation
                  Right granted in accordance with an Option shall be
                  exercisable at such time or times and only to the extent that
                  the related Option is exercisable, and shall not be
                  transferable except to the extent the related Option may be
                  transferable. A Stock Appreciation Right granted in connection
                  with an Incentive Stock Option shall be exercisable only if
                  the Fair Market Value of a Share on the date of exercise
                  exceeds the purchase price specified in the related Incentive
                  Stock Option Agreement.

         (c)      Amount of Payment. Except as otherwise provided in Section 7.9
                  below, upon the exercise of a Stock Appreciation Right related
                  to an Option, the Grantee shall be entitled to receive an
                  amount determined by multiplying

                  (i)      the excess of the Fair Market Value of a Share on the
                           date of exercise of such Stock Appreciation Right
                           over the per Share purchase price under the related
                           Option, by

                  (ii)     the number of Shares as to which such Stock
                           Appreciation Right is being exercised.

                  Notwithstanding the foregoing, the Committee may limit, in any
                  manner, the amount payable with respect to any Stock
                  Appreciation Right by including such limit in the Agreement
                  evidencing the Stock Appreciation Right at the time it is
                  granted.

         (d)      Treatment of Related Options and Stock Appreciation Rights
                  Upon Exercise. Upon the exercise of a Stock Appreciation Right
                  granted in connection with an Option, the Option related
                  thereto shall be deemed to be exercised and shall be canceled
                  to the extent of the number of Shares as to which the Stock
                  Appreciation Right is exercised, and upon the exercise of an
                  Option granted in connection with a Stock Appreciation Right
                  or the surrender of such Option pursuant to Section 6.9
                  hereof, the Stock Appreciation Right related thereto shall be
                  deemed to be exercised and shall be canceled to the extent of
                  the number of Shares as to which the Option is exercised or
                  surrendered.

         7.3      STOCK APPRECIATION RIGHT UNRELATED TO AN OPTION. The Committee
may grant to Eligible Employees Stock Appreciation Rights unrelated to Options.
Stock Appreciation Rights unrelated to Options shall contain such terms and
conditions as to exercisability (subject to Section 7.6 below), vesting and
duration as the Committee shall determine, but in no event shall they have a
term of greater than ten (10) years. The amount payable upon exercise of a

                                       12
<PAGE>   17

Stock Appreciation Right shall be determined in accordance with Section 7.2(c)
or Section 7.9 hereof, as the case may be, except that "Fair Market Value of a
Share on the date of the grant of the Stock Appreciation Right" shall be
substituted in clause (i) of Section 7.2(c) for "per share purchase price under
the related Option."

         7.4      METHOD OF EXERCISE. Stock Appreciation Rights shall be
exercised by a Grantee only by a written notice delivered in accordance with
Section 18.4 hereof to the Secretary or an officer of the Company at the
Company's principal executive office, specifying the number of Shares with
respect to which the Stock Appreciation Right is being exercised. If requested
by the Committee, the Grantee shall deliver the Agreement evidencing the Stock
Appreciation Right being exercised and the Agreement evidencing any related
Option to the Secretary or an officer of the Company who shall endorse thereon a
notation of such exercise and return such Agreement to the Grantee.

         7.5      FORM OF PAYMENT. Payment of the amount determined under
Sections 7.2(c) or Section 7.3 may be made, in the discretion of the Committee,
solely in whole Shares in a number determined at their Fair Market Value on the
date preceding the date of exercise of the Stock Appreciation Right, or solely
in cash, or in a combination of cash and Shares. If the Committee decides to
make full payment in Shares and the amount payable results in a fractional
Share, payment for the fractional Share shall be made in cash.

         7.6      RESTRICTIONS. No Stock Appreciation Right may be exercised
before the date six (6) months after the date it is granted, unless the death or
Disability of the Grantee occurs before the expiration of the six (6) month
period.

         7.7      TERMINATION OF EMPLOYMENT. The Agreement shall set forth the
terms and conditions of the Award upon the termination of the Grantee's
employment with the Company, Subsidiary or a Division (including a Grantee's
ceasing to be employed by a Subsidiary or Division as a result of the sale of
such Subsidiary or Division or an interest in such Subsidiary or Division) as
the Committee may, in its discretion, determine at the time the Stock
Appreciation Right is granted or thereafter.

         7.8      MODIFICATION OR SUBSTITUTION. Subject to the terms of this
Plan, the Committee may modify outstanding Awards of Stock Appreciation Rights
or accept the surrender of outstanding Awards of Stock Appreciation Rights (to
the extent not exercised) and grant new Awards in substitution therefor.
Notwithstanding the foregoing, no modification of an Award shall adversely alter
or impair any rights or obligations under the Agreement without the Grantee's
consent.

         7.9      EFFECT OF CHANGE IN CONTROL. Notwithstanding anything
contained in this Plan to the contrary, in the event of a Change in Control,
subject to Section 7.6 hereof, all Stock Appreciation Rights shall become
immediately and fully exercisable. Notwithstanding Section 7.2(c), Section 7.3
and Section 7.5 hereof, upon the exercise of a Stock Appreciation Right or any
portion thereof during the sixty (60) day period following a Change in Control,
the amount payable shall be in cash and shall be determined by reference to

                                       13
<PAGE>   18

         (a)      in the case of a Stock Appreciation right related to a
                  Non-Qualified Stock Option or a Stock Appreciation Right not
                  related to an Option, the greater of (i) the Fair Market Value
                  of the Shares on the date preceding the date of such exercise
                  and (ii) the Adjusted Fair Market Value of the Shares on the
                  date of such exercise; or

         (b)      in the case of a Stock Appreciation Right related to an
                  Incentive Stock Option, the Fair Market Value of the Shares on
                  the date of such exercise;

provided, however, that in the case of a Stock Appreciation Right granted within
six (6) months prior to the Change in Control to any Grantee who may be subject
to liability under Section 16(b) of the Exchange Act, such Grantee shall be
entitled to exercise such Grantee's Stock Appreciation Right during the sixty
(60) day period commencing upon the expiration of six (6) months from the date
of grant of any such Stock Appreciation Right.

                                  ARTICLE VIII

                                RESTRICTED STOCK

         The Committee may grant Awards of Restricted Stock, and may issue
Shares of Restricted Stock, which shall be evidenced by an Agreement between the
Company and the Grantee. Each Agreement shall contain such restrictions, terms
and conditions as the Committee may, in its discretion, determine. Without
limiting the generality of the foregoing, such Agreements may require that an
appropriate legend be placed on Share certificates. Awards of Restricted Stock
shall be subject to the following terms and conditions:

         8.1      RIGHTS OF GRANTEE. Shares of Restricted Stock granted pursuant
to an Award hereunder shall be issued in the name of the Grantee as soon as
reasonably practicable after the Award is granted provided that the Grantee
shall have executed an Agreement evidencing the Award, the appropriate blank
stock powers and, in the discretion of the Committee, an escrow agreement and
any other documents which the Committee may require as a condition to the
issuance of such Shares. If a Grantee shall fail to execute the Agreement
evidencing a Restricted Stock Award, the appropriate blank stock powers and, in
the discretion of the Committee, an escrow agreement or any other documents
which the Committee may require within the time period prescribed by the
Committee at the time the Award is granted, the Award shall be null and void. At
the discretion of the Committee, Shares issued in connection with a Restricted
Stock Award shall be deposited together with the stock powers with an escrow
agent designated by the Committee. Unless the Committee determines otherwise and
as set forth in the Agreement, upon delivery of the Shares to the escrow agent,
the Grantee shall have all of the rights of a stockholder with respect to such
Shares, including the right to vote the Shares and to receive all dividends or
other distributions paid or made with respect to the Shares.

         8.2      NON-TRANSFERABILITY. Until any restrictions upon the Shares of
Restricted Stock awarded to a Grantee shall have lapsed in the manner set forth
in Section 8.3 below, such Shares

                                       14
<PAGE>   19

shall not be sold, transferred or otherwise disposed of and shall not be pledged
or otherwise hypothecated, nor shall they be delivered to the Grantee.

         8.3      LAPSE OF RESTRICTIONS.

         (a)      Generally. Restrictions upon Shares of Restricted Stock
                  awarded hereunder shall lapse at such time or times and on
                  such terms and conditions as the Committee may determine.

         (b)      Effect of Change in Control. Notwithstanding anything
                  contained in this Plan to the contrary, in the event of a
                  Change in Control, all restrictions upon any Shares of
                  Restricted Stock (other than Performance Shares) shall lapse
                  immediately and all such Shares shall become fully vested in
                  the Grantee.

         8.4      TERMINATION OF EMPLOYMENT. The Agreement shall set forth the
terms and conditions of an Award of Restricted Stock upon the termination of the
Grantee's employment with the Company, a Subsidiary, or a Division (including a
Grantee's ceasing to be employed by a Subsidiary or Division as a result of the
sale of such Subsidiary or Division or an interest in such Subsidiary or
Division) as the Committee may, in its discretion, determine at the time the
Award is granted or thereafter.

         8.5      MODIFICATION OR SUBSTITUTION. Subject to the terms of this
Plan, the Committee may modify outstanding Awards of Restricted Stock or accept
the surrender of outstanding Awards of Restricted Stock (to the extent not
exercised) and grant new Awards in substitution therefor. Notwithstanding the
foregoing, no modification of an Award shall adversely alter or impair any
rights or obligations under the Agreement without the Grantee's consent.

         8.6      TREATMENT OF DIVIDENDS. At the time an Award of Shares of
Restricted Stock is granted, the Committee may, in its discretion, determine
that the payment to the Grantee of dividends, or a specified portion thereof,
declared or paid on such Shares by the Company shall be (a) deferred until the
lapsing of the restrictions imposed upon such Shares and (b) held by the Company
for the account of the Grantee until such time. In the event of such deferral,
there shall be credited at the end of each year (or portion thereof) interest on
the amount of the account at the beginning of the year at an annual rate as the
Committee, in its discretion, may determine. Payment of deferred dividends,
together with interest accrued thereon, shall be made upon the lapsing of
restrictions imposed on such Shares, and any dividends deferred (together with
any interest accrued thereon) in respect of any Shares of Restricted Stock shall
be forfeited upon the forfeiture of such Shares pursuant to Section 8.4 hereof
or otherwise.

         8.7      DELIVERY OF SHARES. Upon the lapse of the restrictions on
Shares of Restricted Stock, the Committee shall cause a stock certificate to be
delivered to the Grantee with respect to such Shares, free of all restrictions
hereunder.

         8.8      VESTING. Subject to Section 8.3 hereof, each Award of
Restricted Stock shall vest at such times as may be designated by the Committee
and set forth in the Agreement.

                                       15
<PAGE>   20

                                   ARTICLE IX

                               PERFORMANCE AWARDS

         9.1      PERFORMANCE GOALS. Performance Goals for Performance Awards
may be expressed in terms of (a) earnings per Share, (b) pre-tax profits, (c)
net earnings or net worth, (d) return on equity or assets, (e) any combination
of the foregoing, or (f) any other standard or standards deemed appropriate by
the Committee at the time the Award is granted subject to ratification by the
shareholders. Performance Goals may be based on the performance of the Company
and its Subsidiaries (which may be on a consolidated basis), a Subsidiary or a
Division. Prior to the end of a Performance Period, the Committee, in its
discretion, may adjust the Performance Goals to reflect a Change in the
Capitalization, a change in the tax rate or book tax rate of the Company or any
Subsidiary, or any other event which may materially affect the performance of
the Company, a Subsidiary or a Division, including, but not limited to, market
conditions or a significant acquisition or disposition of assets or other
property by the Company, a Subsidiary or a Division.

         9.2      PERFORMANCE SHARES. The Committee may, in its discretion,
grant Awards of Performance Shares, which shall be payable as Restricted Stock
if Performance Goals set by the Committee for the Performance Period to which
such Performance Shares relate are met. Performance Shares shall be evidenced by
an Agreement between the Company and the Grantee. Each Agreement may provide for
partial payment of Performance Shares if Performance Goals are not met. Each
Agreement may contain restrictions and terms and conditions as the Committee
may, in its discretion, require. Performance Shares which become Restricted
Stock upon attainment (or partial attainment, if so specified in an Agreement)
of a Performance Goal shall, upon issuance of the Restricted Stock, be subject
to the rules applicable to Restricted Stock as set forth under Article VIII.
Unless the Agreement provides otherwise, if the Grantee's employment with the
Company and its Subsidiaries terminates due to the Grantee's Retirement,
Disability or death, all of the Grantee's unvested shares of Restricted Stock
shall vest immediately. However, unless the Agreement provides otherwise, if the
Grantee's employment with the Company or its Subsidiary terminates for any
reason other than the Grantee's Retirement, Disability or death, the Grantee's
unvested shares of Restricted Stock shall be forfeited on the date of such
termination of employment.

         9.3      CASH AWARDS. The Committee may, in its discretion, grant Cash
Awards to Eligible Employees. Such Awards shall be payable solely in cash from
the Performance Sharing Bank provided Performance Goals set by the Committee for
the Performance Period to which such Cash Awards relate are met. Cash Awards
shall be evidenced by an Agreement between the Company and the Grantee. Each
Agreement may provide for partial payment of Cash Awards if Performance Goals
are not met. Each Agreement may contain restrictions, and terms and conditions
as the Committee may, in its discretion, require.

                                       16
<PAGE>   21

         (a)      Payment of Awards. After the end of each Performance Period,
                  provided the specified Performance Goal in the applicable
                  Agreement is met so as to justify a Cash Award, a Grantee's
                  Cash Award shall be added to his account in the Performance
                  Sharing Bank. After such addition, thirty-three percent (33%)
                  of the Grantee's Bank Balance shall be paid to him, in cash,
                  as soon as administratively practicable after the last day of
                  the Performance Period to which such Award relates. A
                  Participant may elect to defer receipt of a Cash Award which
                  would otherwise be payable to him during a calendar year if he
                  elects to so defer pursuant to the terms of the Company's
                  Deferred Compensation Plan.

         (b)      Termination of Employment. The Agreement shall set forth the
                  terms and conditions of the grant of Cash Awards upon the
                  termination of the Grantee's employment with the Company, a
                  Subsidiary, or a Division (including a Grantee's ceasing to be
                  employed by a Subsidiary or Division as a result of the sale
                  of such Subsidiary or Division or an interest in such
                  Subsidiary or Division) as the Committee may, in its
                  discretion, determine at the time the Award is granted or
                  thereafter. Unless the Agreement provides otherwise, if the
                  Grantee's employment with the Company and its Subsidiaries
                  terminates during the Performance Period due to the Grantee's
                  Retirement, Disability, death, or involuntary termination
                  without Cause (whether due to corporate reorganization, job
                  elimination, Change in Control or otherwise), the Grantee
                  shall be entitled to a cash payment of his undistributed Bank
                  Balance as soon as administratively practicable after such
                  termination of employment. Unless the Agreement provides
                  otherwise, subject to Section 9.4, if the Grantee's employment
                  with the Company or a Subsidiary terminates during the
                  Performance Period for any reason other than the Grantee's
                  Retirement, Disability, death, or involuntary termination
                  without Cause (whether due to corporate reorganization, job
                  elimination, Change in Control or otherwise), the Grantee's
                  Bank Balance will be forfeited on the date of such termination
                  of employment. If a Grantee's employment is terminated during
                  a Performance Period involuntarily without Cause (whether due
                  to corporate reorganization, job elimination, Change in
                  Control or otherwise), or due to death or Disability, and a
                  Cash Award would have been paid to the Participant's
                  Performance Sharing Bank if the Grantee had remained employed
                  throughout the entire Performance Period, then a credit shall
                  be made to such Grantee's Performance Sharing Bank equal to
                  the credit which would have been made had the Grantee been
                  employed for the entire Performance Period, pro rated for the
                  number of days the Grantee actually was employed during the
                  Performance Period.

         (c)      Maximum Awards under Sections 9.2 and 9.3. In no event shall a
                  Grantee's combined vested Restricted Stock resulting from
                  Performance Share Awards (i.e. which vest during the calendar
                  year and become Shares) and Cash Awards payable to the Grantee
                  from the Performance Sharing Bank for a calendar year exceed
                  $1,000,000, and any excess amounts shall be carried forward to
                  the next

                                       17
<PAGE>   22

                  calendar year for payment, subject to the same $1,000,000
                  limitation in such succeeding year.

         9.4      EFFECT OF CHANGE IN CONTROL. Notwithstanding anything
contained in this Plan to the contrary, in the event of a Change in Control:

                  (a)      With respect to Cash Awards, the Grantee shall be
                           entitled to receive a pro rata share of the Cash
                           Award which would have been payable for the entire
                           Performance Period in which such Change in Control
                           occurs, provided that the Cash Award shall be
                           calculated as if the Performance Goal was exactly
                           achieved. The pro rata share shall be based on the
                           number of days during the Performance Period which
                           precede the date of the Change in Control. Subject to
                           any conditions the Committee may specify, the Grantee
                           shall also be entitled to receive a cash payment
                           equal to the amount of the Grantee's Bank Balance, if
                           any, immediately prior to, upon or as soon as
                           administratively practicable after such Change in
                           Control.

                  (b)      With respect to Performance Shares, all Performance
                           Goals for the Performance Period in which the Change
                           of Control occurs shall be deemed met and all
                           restrictions on such Performance Shares shall lapse
                           immediately. All Performance Shares shall be
                           converted to Restricted Stock. All Restricted Stock
                           shall be fully vested, so as to convert such
                           Restricted Stock to Shares.

         9.5      NON-TRANSFERABILITY. No Performance Awards shall be
transferable by the Grantee otherwise than by will or the laws of descent and
distribution.

         9.6      MODIFICATION OR SUBSTITUTION. Subject to the terms of this
Plan, the Committee may modify outstanding Performance Awards or accept the
surrender of outstanding Performance Awards and grant new Performance Awards in
substitution therefor. Notwithstanding the foregoing, no modification of a
Performance Award shall adversely alter or impair any rights or obligations
under the Agreement without the Grantee's written consent.

                                    ARTICLE X

                                      LOANS

         10.1     LOANS. The Company or any Subsidiary may make loans to a
Grantee or Optionee in connection with the exercise of an Option, subject to the
following terms and conditions and such other terms and conditions not
inconsistent with this Plan including the rate of interest (if any) imposed by
the Committee from time to time.

         10.2     MAXIMUM AMOUNT OF LOAN. No loan made under this Plan shall
exceed the sum of (a) the aggregate purchase price payable pursuant to the
Option with respect to which the loan is made, plus (b) the amount of the
reasonably estimated income taxes payable by the Optionee

                                       18
<PAGE>   23

or Grantee with respect to the Option or Award. In no event may any such loan
exceed the Fair Market Value, at the date of exercise, of any such Shares.

         10.3     TERM. No loan shall have an initial term exceeding ten (10)
years; provided, however, that loans under this Plan shall be renewable at the
discretion of the Committee.

         10.4     REPAYMENT. Loans under this Plan may be satisfied by an
Optionee or Grantee either in cash or, with the consent of the Committee, in
whole or in part by the transfer to the Company of Shares whose Fair Market
Value on the date of such payment is equal to the cash amount for which such
Shares are transferred.

         10.5     SECURITY. Each loan shall be secured by a pledge of Shares
with a Fair Market Value of not less than the principal amount of the loan.
After partial repayment of a loan, pledged Shares no longer required as security
may be released into escrow or pursuant to the terms of the Option, Award or
escrow agreement to the Optionee or Grantee (as the case may be).

                                   ARTICLE XI

                    ADJUSTMENT UPON CHANGES IN CAPITALIZATION

         11.1     ADJUSTMENTS. In the event of a Change in Capitalization, the
Committee shall conclusively determine the appropriate adjustments, if any, to
(a) the maximum number and class of Shares or other stock or securities with
respect to which Options or Awards may be granted under this Plan, (b) the
number and class of Shares or other stock or securities which are subject to
outstanding Options or Awards granted under this Plan, and (c) the purchase
price therefor, if applicable.

         11.2     LIMITATIONS REGARDING INCENTIVE STOCK OPTIONS. Any such
adjustment in the Shares or other stock or securities subject to outstanding
Incentive Stock Options (including any adjustments in the purchase price) shall
be made in such manner as not to constitute a modification as defined by Section
425(h)(3) of the Code and only to the extent otherwise permitted by Sections 422
and 425 of the Code.

         11.3     CONTINUATION OF CONDITIONS, RESTRICTIONS, ETC. If, by reason
of a Change in Capitalization, a Grantee of an Award shall be entitled to, or an
Optionee shall be entitled to exercise an Option with respect to, new,
additional or different shares of stock, securities, Performance Units or
Performance Shares (other than rights or warrants to purchase securities), such
new additional or different shares shall thereupon be subject to all of the
conditions, restrictions and performance criteria which were applicable to the
Performance Units or Performance Shares pursuant to the Award or Shares subject
to the Option, as the case may be, prior to such Change in Capitalization.

                                       19
<PAGE>   24

                                   ARTICLE XII

                         EFFECT OF CERTAIN TRANSACTIONS

         Subject to Sections 6.9, 7.9, 8.3(b) and 9.5 hereof, in the event of
(a) the liquidation or dissolution of the Company or (b) a merger or
consolidation of the Company (a "Transaction"), this Plan and the Options and
Awards issued hereunder shall continue in effect in accordance with their
respective terms and each Optionee and Grantee shall be entitled to receive in
respect of each Share subject to any outstanding Options or Awards, as the case
may be, upon exercise of any option or Award or payment or transfer in respect
of any Award, the same number and kind of stock, securities, cash, property, or
other consideration that each holder of a Share was entitled to receive in the
Transaction in respect of a Share.

                                  ARTICLE XIII

                        RELEASE OF FINANCIAL INFORMATION

         A copy of the Company's annual report to stockholders shall be
delivered to each Optionee and Grantee at the time such report is distributed to
the Company's stockholders. Upon reasonable request the Company shall furnish,
as soon as reasonably practicable, to each Optionee and Grantee a copy of its
most recent annual report and each quarterly report and current report filed
under the Exchange Act since the end of the Company's prior fiscal year.

                                   ARTICLE XIV

                     TERMINATION AND AMENDMENT OF THIS PLAN

         14.1     TERMINATION. This Plan shall terminate on the day immediately
preceding the tenth (10th) anniversary of its effective date and no Option or
Award may be granted thereafter. The Board may sooner terminate or amend this
Plan (other than to reduce the rights of Optionees and Grantees, as the case may
be, under Sections 6.9, 7.9, 8.3(b) and 9.5 hereof), at any time and from time
to time; provided, however, that to the extent necessary under Section 16(b) of
the Exchange Act and the rules and regulations promulgated thereunder, no
amendment shall be effective unless approved by the stockholders of the Company
in accordance with applicable law and regulations at an annual or special
meeting held within twelve (12) months before or after the date of adoption of
such amendment.

         14.2     AMENDMENT. Except as provided in Articles XI and XII hereof,
rights and obligations under any Option or Award granted before any amendment of
this Plan shall not be

                                       20
<PAGE>   25

adversely altered or impaired by such amendment, except with the written consent
of the Optionee or Grantee, as the case may be.

                                   ARTICLE XV

                          NON-EXCLUSIVITY OF THIS PLAN

         The adoption of this Plan by the Board and approval by the Company's
shareholders shall not be construed as amending, modifying or rescinding any
previously approved incentive arrangement or as creating any limitations on the
power of the Board to adopt such other incentive arrangements as it may deem
desirable.

                                   ARTICLE XVI

                             LIMITATION OF LIABILITY

         As illustrative of the limitations of liability of the Company, but not
intended to be exhaustive thereof, nothing in this Plan shall be construed to:

                  (a)      give any person any right to be granted an Option or
                           Award other than at the sole discretion of the
                           Committee;

                  (b)      give any person any rights whatsoever with respect to
                           Shares except as specifically provided in this Plan;

                  (c)      limit in any way the right of the Company to
                           terminate the employment of any person at any time;
                           or

                  (d)      be evidence of any agreement or understanding,
                           expressed or implied, that the Company will employ
                           any person in any particular position at any
                           particular rate of compensation or for any particular
                           period of time.

                                  ARTICLE XVII

                 REGULATIONS AND OTHER APPROVALS, GOVERNING LAW

         17.1     GOVERNING LAW. This Program and the rights of all persons
claiming hereunder shall be construed and determined in accordance with the laws
of the State of Georgia without giving effect to the conflicts of laws
principles thereof, except to the extent that such law is preempted by federal
law.

                                       21
<PAGE>   26

         17.2     CONDITIONS. The obligation of the Company to sell or deliver
Shares with respect to Options and Awards granted under this Plan shall be
subject to all applicable laws, rules and regulations, including all applicable
federal and state securities laws, and the obtaining of all such approvals by
governmental agencies as may be deemed necessary or appropriate by the Board.

         17.3     RULE 16B-3. This Plan is intended to comply with Rule 16b-3
promulgated under the Exchange Act and the Committee shall interpret and
administer the provisions of this Plan or any Agreement in a manner consistent
therewith. Any provisions inconsistent with such Rule shall be inoperative and
shall not affect the validity of this Plan.

         17.4     AUTHORITY OF THE BOARD. The Board may make such changes as may
be necessary or appropriate to comply with the rules and regulations of any
government authority, or to obtain for Eligible Employees granted Incentive
Stock Options the tax benefits under the applicable provisions of the Code and
regulations promulgated thereunder. The Board, in its sole discretion, may also
make Awards to Eligible Directors except in no case shall the Board award such
Eligible Directors Incentive Stock Options.

         17.5     EFFECT OF SECURITIES LAWS. Each Option and Award is subject to
the requirement that, if at any time the Committee determines, in its
discretion, that the listing, registration or qualification of Shares issuable
pursuant to this Plan is required by any securities exchange or under any state
or federal law, or the consent or approval of any governmental regulatory body
is necessary or desirable as a condition of, or in connection with, the grant of
an Option or the issuance of Shares, no Options shall be granted or payment made
or Shares issued, in whole or in part, unless listing, registration,
qualification, consent or approval has been effected or obtained free of any
conditions as acceptable to the Committee.

         17.6     REGISTRATION. The Company shall have no obligation to
register, under any federal or state securities laws, any Shares acquired
pursuant to this Plan. Notwithstanding anything contained in this Plan to the
contrary, in the event that the disposition of Shares acquired pursuant to this
Plan is not covered by a then current registration statement under the
Securities Act of 1933, as amended, and is not otherwise exempt from such
registration, such Shares shall be restricted against transfer to the extent
required by the Securities Act of 1933, as amended, and Rule 144 or other
regulations thereunder. The Committee may require any individual receiving
Shares pursuant to this Plan, as a condition precedent to receipt of such Shares
(including upon exercise of an Option), to represent and warrant to the Company
in writing that the Shares acquired by such individual are acquired without a
view to any distribution thereof and will not be sold or transferred other than
pursuant to an effective registration thereof under said Act or pursuant to an
exemption applicable under the Securities Act of 1933, as amended, or the rules
and regulations promulgated thereunder. The certificates evidencing any of such
Shares shall bear an appropriate legend to reflect their status as restricted
securities as aforesaid.

                                       22
<PAGE>   27

                                  ARTICLE XVIII

                                  MISCELLANEOUS

         18.1     MULTIPLE AGREEMENTS. The terms of each Option or Award may
differ from other Options or Awards granted under this Plan at the same time, or
at some other time. The Committee may also grant more than one Option or Award
to a given Eligible Employee during the term of this Plan, either in addition
to, or in substitution for, one or more Options or Awards previously granted to
that Eligible Employee. The grant of multiple Options, Awards, or both may be
evidenced by a single Agreement or multiple Agreements, as determined by the
Committee.

         18.2     WITHHOLDING OF TAXES.

         (a)      The Company shall have the right to deduct from any
                  distribution of cash to any Optionee or Grantee an amount
                  equal to the federal, state and local income taxes and other
                  amounts as may be required by law to be withheld (the
                  "Withholding Taxes") with respect to any Option or Award. If
                  an Optionee or Grantee is entitled to receive Shares upon
                  exercise of an Option or pursuant to an Award, the Optionee or
                  Grantee shall pay the Withholding Taxes to the Company prior
                  to the issuance, or release from escrow, of such Shares. In
                  satisfaction of the Withholding Taxes to the Company, the
                  Optionee or Grantee may make a written election (the "Tax
                  Election") which may be accepted or rejected in the discretion
                  of the Committee, to have withheld a portion of the Shares
                  issuable to him or her upon exercise of the Option or pursuant
                  to an Award having an aggregate Fair Market Value equal to the
                  Withholding Taxes, provided that (i) in respect of an Optionee
                  or Grantee who may be subject to liability under Section 16(b)
                  of the Exchange Act (unless his or her employment was
                  terminated due to Disability or death), (A) the Optionee or
                  Grantee makes the Tax Election at least six (6) months after
                  the date the Option or Award was granted and (B) the Tax
                  Election is made either at least six (6) months prior to the
                  date that the amount of the Withholding Taxes are determined
                  (the "Tax Date") or during the ten (10) day period beginning
                  on the third business day and ending on the twelfth business
                  day following the release for publication of the Company's
                  quarterly or annual statements of earnings, (ii) the Tax
                  Election is made prior to the Tax Date, and (iii) the Tax
                  Election is irrevocable; provided, however, in the event that
                  the Tax Date occurs subsequent to the exercise of the Option
                  or issuance of Shares, the Optionee or Grantee shall tender
                  back to the Company on the Tax Date that

                                       23
<PAGE>   28

                  number of Shares having a Fair Market Value on the date
                  preceding the Tax Date at least equal to the Withholding
                  Taxes.

         (b)      If an Optionee makes a disposition, within the meaning of
                  Section 425(c) of the Code and Regulations promulgated
                  thereunder, of any Share or Shares issued to him pursuant to
                  his exercise of the Option within the two (2) year period
                  commencing on the day after the date of the grant or within
                  the one year period commencing on the day after the date of
                  transfer of such Share or Shares to the Optionee pursuant to
                  such exercise, the Optionee shall, within ten (10) days such
                  disposition, notify the Company thereof, by delivery of
                  written notice to the Company at its principal executive
                  office, and immediately deliver to the Company the amount of
                  Withholding Taxes.

         18.3     DESIGNATION OF BENEFICIARY. Each Optionee and Grantee may
designate a person or persons to receive, in the event of his or her death, any
Option or Award or any amount payable pursuant thereto, to which he or she would
then be entitled. Such designation will be made upon forms supplied by and
delivered to the Company and may be revoked in writing. If an Optionee or
Grantee fails effectively to designate a beneficiary, then his or her estate
shall be deemed to be the beneficiary.

         18.4     NOTICES. All notices, requests, demands and other
communications required of or from any Grantee or Optionee under, or in
connection with, this Plan (other than pursuant to Article XIII hereof) shall be
in writing, and shall be deemed to have been duly given if delivered or mailed
by registered or certified mail and return receipt requested, postage prepaid,
or by overnight courier service, charges prepaid, to the Company at its then
current main business office address; all such notices shall be deemed duly
given on the day delivered or, if mailed, on the fifth day following the
postmark date.

                                   ARTICLE XIX

                                 EFFECTIVE DATE

         The effective date of this Plan shall be January 1, 2001 provided that
any Awards issued after 2000 shall be subject to the approval of this Restated
Plan by the affirmative vote of the holders of a majority of the securities of
the Company present, or represented, and entitled to vote at a meeting of
stockholders duly held in accordance with the applicable laws of the State of
Georgia within twelve (12) months of such adoption.

                                       24
<PAGE>   29

         IN WITNESS WHEREOF, the Company has caused this Plan to be executed and
delivered by its officer, all as of the _____ day of __________, 200_.

ATTEST:                                      ALLIED HOLDINGS, INC.

                                             By:
-------------------------------------           --------------------------------
Its Secretary

[CORPORATE SEAL]                             Title:
                                                   -----------------------------

                                       25
<PAGE>   30

                              ALLIED HOLDINGS, INC.
                           PERFORMANCE SHARE AGREEMENT

         THIS PERFORMANCE SHARE AGREEMENT is made as of the _____ day of
___________, _____ (the "Grant Date"), between Allied Holdings, Inc., a Georgia
corporation (the "Company"), and ___________________________ (the "Grantee").

         WHEREAS, the Company has adopted the Allied Holdings, Inc. Long-Term
Incentive Plan, as restated as of January 1, 2001, to provide additional
incentive to certain officers and employees of the Company and its Subsidiaries
(the "Plan"); and

         WHEREAS, the Grantee has been selected to receive a Performance Share
Award on the terms and conditions hereinafter set forth;

         NOW, THEREFORE, for and in consideration of the mutual covenants and
conditions hereinafter set forth, and other good and valuable consideration, the
receipt, adequacy and sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:

         1.       INCORPORATION OF PLAN. This Agreement shall be construed in
accordance and consistent with, and subject to, the provisions of the Plan, the
provisions of which are incorporated herein by reference, and, except as
otherwise expressly set forth herein, the capitalized terms used in this
Agreement shall have the same definitions as set forth in the Plan. The Grantee
hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all
of the terms and provisions thereof.

         2.       SPECIAL DEFINITIONS. As used in this Agreement, the following
terms shall have the meaning set forth:

         (a)      "Actual Net Income" means the Net Income of the Company, or if
the Performance Goal is limited to a Subsidiary or Division, the Net Income of
such Subsidiary or Division, for the Performance Period.

         (b)      "Maximum Stock Award" means the maximum number of Shares
available to be awarded as Restricted Stock as set forth on Exhibit A.

         (c)      "Net Income" means the income, net of expenses of the Company
(or a Subsidiary or Division, if applicable) calculated for Performance Period
according to generally accepted accounting principles (GAAP).

         (d)      "Net Income Threshold" means the dollar amount equal to the
percentage specified in Exhibit A under "Net Income Threshold" multiplied by the
Performance Goal for Net Income for the Performance Period.

                                     1 of 6
<PAGE>   31

         (e)      "Performance Goal for Net Income" shall mean a Net Income
amount which, if it is exactly realized by the Company (or Division or
Subsidiary if applicable) for a Performance Period, shall result in full
crediting of a Maximum Stock Award.

         3.       GRANT OF STOCK

         (a)      The Company hereby grants to Grantee such whole Shares (the
"Restricted Stock") as set forth in Exhibit A, the provisions of which are
incorporated herein by reference, subject to, and in accordance with, the terms
and conditions set forth in this Agreement, and subject to the restrictions of
Section 3(b) of this Agreement.

         (b)      Grantee shall be awarded such percentage of the Maximum Stock
Award as Restricted Stock as follows:

                  (i)      If the Performance Goal for Net Income is achieved or
         exceeded during the Performance Period, Grantee shall be awarded 100%
         of the Maximum Stock Award.

                  (ii)     If the Net Income Threshold is not achieved during
         the Performance Period, Grantee shall be awarded 50% of the Maximum
         Stock Award.

                  (iii)    If the Net Income Threshold is achieved but the
         Performance Goal for Net Income is not achieved, Performance Shares
         shall be awarded in a number which shall equal the ratio of the Actual
         Net Income divided by the Performance Goal for the Net Income
         multiplied by the Maximum Stock Award.

         4.       VESTING. Each Award of Restricted Stock shall be one-third
(1/3) vested as of the first day following the Performance Period to which such
Award relates. (This is so even though the exact Award is not determined until
after such day.) Thereafter, provided the Grantee remains employed by the
Company or its Subsidiary, an additional one-third (1/3) of the Restricted Stock
shall vest on the first anniversary of the first day following the Performance
Period to which the award of such Shares relate. Provided the Grantee remains
employed by the Company or its Subsidiary, all shares of an Award of Restricted
Stock shall be one hundred percent (100%) vested on the second anniversary of
the first day following the Performance Period to which the Award of such Shares
relates. If the Grantee's employment with the Company or its Subsidiary
terminates due to the Grantee's Retirement, Disability or death, all of the
Grantee's unvested shares of Restricted Stock shall immediately become one
hundred percent (100%) vested. If the Grantee's employment with the Company or
its Subsidiary is terminated for any other reason, the Grantee shall be entitled
to all shares of Restricted Stock already vested and all unvested shares of such
Restricted Stock shall be forfeited. If any shares are forfeitable upon such
termination, Grantee shall surrender his Certificate to the Company for
cancellation, and the Company shall issue a new stock certificate to the Grantee
for the Restricted Stock which was nonforfeitable on the date of such
termination.

         5.       WITHHOLDING OF TAXES. The Company may deduct and withhold from
the wages, salary, bonus and other income paid by the Company or such Subsidiary
to the Grantee the

                                     2 of 6
<PAGE>   32

requisite tax upon the amount of taxable income, if any, recognized by the
Grantee in connection with the issuance of any Restricted Stock, or the effect
of any Restricted Stock becoming nonforfeitable, as may be required from time to
time under any federal or state tax laws and regulations. This withholding of
tax shall be made from the Company's concurrent or next payment of wages,
salary, bonus or other income to the Grantee or by payment to the Company by the
Grantee of the required withholding tax, as shall be determined by the Company.

         6.       DIVIDENDS AND VOTING RIGHTS. The Participant shall be entitled
to receive any dividends paid with respect to shares of Restricted Stock that
become payable during the Restricted Period; provided, however, that no
dividends shall be payable to or for the benefit of the Participant with respect
to record dates occurring prior to the Grant Date, or with respect to record
dates occurring on or after the date, if any, on which the Participant has
forfeited the Restricted Stock. The Participant shall be entitled to vote the
shares of Restricted Stock during the Restricted Period to the same extent as
would have been applicable to the Participant if the Participant was then vested
in the shares; provided, however, that the Participant shall not be entitled to
vote the shares with respect to record dates for such voting rights arising
prior to the Grant Date, or with respect to record dates occurring on or after
the date, if any, on which the Participant has forfeited the Restricted Stock.

         7.       EFFECT OF CHANGE IN CONTROL. Notwithstanding anything
contained in this Agreement to the contrary, in the event of a Change in
Control, all Restricted Stock shall become immediately nonforfeitable as of the
effective date of such Change of Control.

         8.       NONTRANSFERABILITY. The rights herein granted to Grantee shall
not be transferable other than by will or by the laws of descent and
distribution.

         9.       LEGEND ON STOCK CERTIFICATE. Any Restricted Stock issued
pursuant to this Agreement shall have endorsed thereon legends substantially as
follows:

                  "THE VOTING AND OWNERSHIP RIGHTS IN THE SHARES
                  EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO THAT
                  CERTAIN PERFORMANCE SHARE AGREEMENT (THE
                  "AGREEMENT") DATED AS OF ______________, _____, BY
                  AND BETWEEN ALLIED HOLDINGS, INC. (THE "COMPANY")
                  AND THE HOLDER HEREOF, A COPY OF WHICH AGREEMENT IS
                  ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
                  COMPANY. PURSUANT TO THE AGREEMENT (A) ONE-THIRD
                  (1/3) OF THE SHARES EVIDENCED BY THIS CERTIFICATE
                  BECOME NONFORFEITABLE ON THE FIRST ANNIVERSARY OF
                  THE LAST DAY OF THE PERFORMANCE PERIOD TO WHICH SUCH
                  AWARD RELATES AND AN ADDITIONAL ONE-THIRD (1/3)
                  BECOME NONFORFEITABLE ON EACH OF THE SECOND AND
                  THIRD ANNIVERSARIES OF SAID LAST DAY OF THE
                  PERFORMANCE PERIOD TO WHICH SUCH AWARD RELATES; AND
                  (B) ALL SHARES EVIDENCED BY THIS CERTIFICATE NOT
                  PREVIOUSLY

                                     3 of 6
<PAGE>   33

                  NONFORFEITABLE BECOME NONFORFEITABLE UPON THE
                  OCCURRENCE OF A "CHANGE OF CONTROL," AS DEFINED IN
                  THE PLAN PURSUANT TO WHICH THE AGREEMENT WAS
                  CREATED.

                  THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT
                  BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
                  AMENDED (THE "ACT") OR APPLICABLE STATE SECURITIES
                  LAWS. THE SHARES MAY NOT BE SOLD, TRANSFERRED OR
                  ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
                  STATEMENT FOR THESE SHARES UNDER THE ACT AND
                  APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
                  COUNSEL SATISFACTORY TO THE COMPANY THAT
                  REGISTRATION IS NOT REQUIRED UNDER THE ACT OR SUCH
                  STATE SECURITIES LAW.

In addition, the Certificate or any other certificates evidencing Restricted
Stock shall bear such legends and shall be subject to such restrictions on
transfer as may be necessary to comply with all applicable federal and state
securities laws and regulations.

         10.      NO RIGHT TO CONTINUED EMPLOYMENT. Nothing in this Agreement or
the Plan shall be interpreted or construed to confer upon the Grantee any right
with respect to continuance of employment by the Company nor shall this
Agreement or the Plan interfere in any way with the right of the Company to
terminate the Grantee's employment at any time.

         11.      ADJUSTMENTS. In the event of a Change in Capitalization, the
Board or the Committee, as applicable, shall make appropriate adjustments to the
number and class of Restricted Stock or other stock or securities subject to the
Plan. Such adjustment shall be made in accordance with the provisions of Article
XI of the Plan and shall be effective and final, binding, and conclusive for all
purposes of the Plan and this Agreement.

         12.      TERMINATING EVENTS. Subject to Section 4 hereof, upon the
effective date of a merger or consolidation of the Company (hereinafter referred
to as a "Transaction"), all rights with respect to the Restricted Stock shall
continue in effect and the Grantee shall be entitled to receive in respect of
all Restricted Stock, the same number and kind of stock, securities, cash,
property, or other consideration that each holder of nonforfeitable the Company
stock was entitled to receive in the Transaction.

         13.      MODIFICATION OF AGREEMENT. This Agreement can be modified,
amended, suspended or terminated, and any terms or conditions can be waived, but
only by a written instrument executed by the parties hereto.

         14.      SEVERABILITY. If any provision of this Agreement shall be held
by a court of competent jurisdiction to be unenforceable or invalid for any
reason, the remaining provisions of this Agreement shall not be affected by such
holding and shall continue in full force in accordance with their terms.

                                     4 of 6
<PAGE>   34

         15.      GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Georgia without giving effect to the conflicts-of-laws principles thereof.

         16.      SUCCESSORS IN INTEREST. This Agreement shall inure to the
benefit of, and be binding upon, each successor to the Company. This Agreement
shall inure to the benefit of the Grantee's legal representatives. All
obligations imposed upon the Grantee and all rights granted to the Company under
this Agreement shall be final, binding and conclusive upon the Grantee and
Grantee's heirs, executors, administrators and successors.

         17.      RESOLUTION OF DISPUTES. Any dispute or disagreement which may
arise under, or as a result of, or in any way relate to, the interpretation,
construction or application of this Agreement shall be determined by the
Company's Board of Directors or Committee. Any determination made hereunder
shall be final, binding, and conclusive on the Grantee and the Company for all
purposes.

         18.      MISCELLANEOUS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, but all of which
together shall constitute but a single document. As used herein, the masculine,
feminine and neuter shall each include the others and the singular and plural
shall each include the other, and this Agreement shall be read accordingly when
required by the facts. As used herein, "the Company" includes not only Allied
Holdings, Inc., but also each subsidiary thereof, and this Agreement shall be
read accordingly when required by the facts.

         IN WITNESS WHEREOF, the Grantee has executed this Agreement and the
Company has caused this Agreement to be executed by its duly authorized
Officers, all the day and year first set forth above.

GRANTEE:                                     ALLIED HOLDINGS, INC.

                                             By:
-----------------------------------             --------------------------------
[NAME]

                                             Its:
                                                 -------------------------------

                                     5 of 6
<PAGE>   35

                                    EXHIBIT A

                  PERFORMANCE MEASURES AND MAXIMUM STOCK AWARD

         Following are the performance measures and Maximum Stock Award pursuant
to the attached Agreement:

         Grantee:
                 ---------------------------------------------------------------

         Grant Date:
                    ------------------------------------------------------------

         Performance Period--Fiscal Year of the Company Ended:
                                                              ------------------

         Maximum Stock Award:
                             ------------------------------------------

         Net Income Threshold (%):
                                  -------------------------------------

         Performance Goal for Net Income:
                                         ------------------------------

Dated:
      ---------------------------------

GRANTEE:                                     ALLIED HOLDINGS, INC.

                                             By:
---------------------------------------         --------------------------------
[NAME]
                                             As Its:
                                                    ----------------------------

                                     6 of 6
<PAGE>   36

                             ALLIED HOLDINGS, INC.
                              CASH AWARD AGREEMENT

         THIS CASH AWARD AGREEMENT is made as of the _____ day of ___________,
_____ (the "Grant Date"), between Allied Holdings, Inc., a Georgia corporation
(the "Company"), and ___________________________ (the "Grantee").

         WHEREAS, the Company has adopted the Allied Holdings, Inc. Long-Term
Incentive Plan, as restated as of January 1, 2001, to provide additional
incentive to certain officers and employees of the Company and its Subsidiaries
(the "Plan"); and

         WHEREAS, the Grantee has been selected to receive a Cash Award on the
terms and conditions hereinafter set forth;

         NOW, THEREFORE, for and in consideration of the mutual covenants and
conditions hereinafter set forth, and other good and valuable consideration, the
receipt, adequacy and sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:

         1.       INCORPORATION OF PLAN. This Agreement shall be construed in
accordance and consistent with, and subject to, the provisions of the Plan, the
provisions of which are incorporated herein by reference, and, except as
otherwise expressly set forth herein, the capitalized terms used in this
Agreement shall have the same definitions as set forth in the Plan. The Grantee
hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all
of the terms and provisions thereof.

         2.       SPECIAL DEFINITIONS. As used in this Agreement, the following
terms shall have the meaning set forth:

         (a)      "Actual Net Income" means the Net Income of the Company, or if
the Performance Goal is limited to a Subsidiary or Division, the Net Income of
such Subsidiary or Division, for the Performance Period.

         (b)      "Award Percentage" means the Grantee's percentage share of the
total Award Pool.

         (c)      "Award Pool" means the total amount awarded to all Grantees
under the Cash Award portion of the Plan for the Performance Period.

         (d)      "Maximum Award Pool" means Award Pool which shall be granted
if the Actual Net Income equals or exceeds the Maximum Awardable Net Income.

         (e)      "Maximum Awardable Net Income" means the Net Income amount
necessary to produce the Maximum Award Pool.

                                     1 of 6
<PAGE>   37

         (f)      "Net Income" means the income, net of expenses, of the Company
(or a Subsidiary or Division, as applicable) calculated for the Performance
Period according to generally accepted accounting principles (GAAP).

         (g)      "Net Income Threshold" means the percentage (not more than
100%) of the Performance Goal for Net Income for the Performance Period as
specified in Exhibit A.

         (h)      "Performance Goal for Net Income" shall mean a Net Income
amount which, if it is exactly realized by the Company (or Division or
Subsidiary if applicable) for a Performance Period, shall result in full
crediting of a Cash Award equal to the Grantee's Award Percentage of the Full
Award to the Grantee's Performance Sharing Bank.

         (i)      "Full Award" shall mean the amount which shall be credited to
all Grantees' Performance Sharing Banks if the Performance Goal for Net Income
is attained but not exceeded.

         3.       GRANT OF AWARD.

         (a)      The Company hereby grants to Grantee such Cash Award as set
forth in Exhibit A, the provisions of which are incorporated herein by
reference, subject to, and in accordance with, the terms and conditions set
forth in this Agreement, subject to the provisions of Section 3(b).

         (b)      Grantee shall be awarded a Cash Award equal to the following:

                  (i)      If the Actual Net Income for the Performance Period
         does not equal at least the Net Income Threshold, Grantee shall not
         receive a Cash Award for the Performance Period.

                  (ii)     If the Actual Net Income for the Performance Period
         equals or exceeds the Net Income Threshold, Grantee shall be awarded a
         Cash Award equal to the product of the Award Percentage multiplied by
         the Award Pool. The Award Pool shall equal one-hundred percent (100%)
         of the Full Award, but no more, if the Performance Goal for Net Income
         is exactly attained. If the Actual Net Income exceeds the Net Income
         Threshold but does not exceed the Performance Goal for Net Income, then
         the Award Pool shall equal the Full Amount multiplied by the ratio of
         the Actual Net Income divided by the Performance Goal for Net Income.
         If the Actual Net Income equals or exceeds the Maximum Awardable Net
         Income, then the Award Pool shall equal the Maximum Award Pool. If the
         Actual Net Income exceeds the Performance Goal for Net Income, but is
         less than the Maximum Awardable Net Income, then the Award Pool shall
         be increased proportionately from the Full Award to the Maximum Award
         Pool to the degree the excess of the Actual Net Income over the
         Performance Goal for Net Income compares to the excess of Maximum
         Awardable Net Income over the Performance Goal for Net Income.

                                     2 of 6
<PAGE>   38

         4.       PERFORMANCE SHARING BANK. The Cash Award shall be added to the
Grantee's Performance Sharing Bank account. After taking into account any
addition to the Grantee's Performance Sharing Bank for the immediately preceding
Performance Period (if any), thirty-three percent (33%) of the Grantee's Bank
Balance shall be distributed to the Grantee in one lump-sum cash payment.

         5.       WITHHOLDING.

         The Company may deduct and withhold from the wages, salary, bonus and
other income paid by the Company or such Subsidiary to the Grantee the requisite
tax upon the amount of taxable income, if any, recognized by the Grantee in
connection with the payment of such portion of the Bank Balance as is set forth
in Section 4 of this Agreement, as may be required from time to time under any
federal or state tax laws and regulations. This withholding of tax shall be made
from the Company's concurrent or next payment of wages, salary, bonus or other
income to the Grantee or by payment to the Company by the Grantee of the
required withholding tax, as shall be determined by the Company.

         6.       EFFECT OF CHANGE IN CONTROL, RETIREMENT, DEATH, DISABILITY AND
OTHER TERMINATION. Notwithstanding anything contained in this Agreement to the
contrary, in the event of a Change in Control, Retirement, death of the Grantee,
Disability of Grantee, or involuntary termination of Grantee without Cause
(whether due to corporate reorganization, job elimination or otherwise), the
Grantee's entire Bank Balance shall become immediately distributable as of the
effective date of such Change of Control, Retirement, death, Disability, or
involuntary termination without Cause. If the Grantee's employment with the
Company is terminated either voluntarily on the Grantee's part or for Cause by
the Company, the Grantee's entire Bank Balance shall be forfeited.

         7.       NONTRANSFERABILITY. The rights herein granted to Grantee shall
not be transferable other than by will or by the laws of descent and
distribution.

         8.       NO RIGHT TO CONTINUED EMPLOYMENT. Nothing in this Agreement or
the Plan shall be interpreted or construed to confer upon the Grantee any right
with respect to continuance of employment by the Company nor shall this
Agreement or the Plan interfere in any way with the right of the Company to
terminate the Grantee's employment at any time.

         9.       TERMINATING EVENTS. Subject to Section 4 hereof, upon the
effective date of a merger or consolidation of the Company (hereinafter referred
to as a "Transaction"), all rights with respect to the Cash Awards shall
continue in effect.

         10.      MODIFICATION OF AGREEMENT. This Agreement can be modified,
amended, suspended or terminated, and any terms or conditions can be waived, but
only by a written instrument executed by the parties hereto.

         11.      SEVERABILITY. If any provision of this Agreement shall be held
by a court of competent jurisdiction to be unenforceable or invalid for any
reason, the remaining provisions of

                                     3 of 6
<PAGE>   39

this Agreement shall not be affected by such holding and shall continue in full
force in accordance with their terms.

         12.      GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Georgia without giving effect to the conflicts-of-laws principles thereof.

         13.      SUCCESSORS IN INTEREST. This Agreement shall inure to the
benefit of, and be binding upon, each successor to the Company. This Agreement
shall inure to the benefit of the Grantee's legal representatives. All
obligations imposed upon the Grantee and all rights granted to the Company under
this Agreement shall be final, binding and conclusive upon the Grantee and
Grantee's heirs, executors, administrators and successors.

         14.      RESOLUTION OF DISPUTES. Any dispute or disagreement which may
arise under, or as a result of, or in any way relate to, the interpretation,
construction or application of this Agreement shall be determined by the
Company's Board of Directors or Committee. Any determination made hereunder
shall be final, binding, and conclusive on the Grantee and the Company for all
purposes.

         15.      MISCELLANEOUS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, but all of which
together shall constitute but a single document. As used herein, the masculine,
feminine and neuter shall each include the others and the singular and plural
shall each include the other, and this Agreement shall be read accordingly when
required by the facts. As used herein, "the Company" includes not only Allied
Holdings, Inc., but also each subsidiary thereof, and this Agreement shall be
read accordingly when required by the facts.

                                     4 of 6
<PAGE>   40

         IN WITNESS WHEREOF, the Grantee has executed this Agreement and the
Company has caused this Agreement to be executed by its duly authorized
Officers, all the day and year first set forth above.

GRANTEE:                                     ALLIED HOLDINGS, INC.

                                             By:
------------------------------------            --------------------------------
[NAME]
                                             Its:
                                                 -------------------------------

                                     5 of 6
<PAGE>   41

                                    EXHIBIT A

                       PERFORMANCE MEASURES AND CASH AWARD

         Grantee:
                 ---------------------------------------------------------------

         Grant Date:
                    ------------------------------------------------------------

         Performance Period--Fiscal Year of the Company Ended:
                                                              ------------------

         Performance Goal for Net Income:
                                         ---------------------------------------

         Full Award:
                    ------------------------------------------------------------

         Net Income Threshold:
                              --------------------------------------------------

         Award Percentage:
                          ------------------------------------------------------

         Maximum Award Pool:
                            ----------------------------------------------------

         Maximum Awardable Net Income:
                                      ------------------------------------------

Dated:
      ---------------------------------

GRANTEE:                                     ALLIED HOLDINGS, INC.

                                             By:
---------------------------------------         --------------------------------
[NAME]
                                             As Its:
                                                    ----------------------------

                                     6 of 6<PAGE>   1
                                                                    EXHIBIT 10.4

                        THIRD AMENDMENT TO NOTE AGREEMENT

         THIS THIRD AMENDMENT, dated as of April 13, 2001 (this "Third
Amendment") to the Note Agreement dated as of January 15, 1996 (as amended by
the First Amendment to Note Agreement dated as of April 16, 1997 (the "First
Amendment"), and as further amended by the Second Amendment to Note Agreement
dated as of September 30, 1997 (the "Second Amendment") is made between ALLIED
HOLDINGS, INC., a Georgia corporation (the "Company"), and each of the
institutions which is a signatory to this Third Amendment (collectively, the
"Noteholders") and is effective as of December 31, 2000.

                                    RECITALS:

         A.       The Company and each of the Noteholders have heretofore
entered into the Note Agreement dated as of January 15, 1996, as amended by the
First Amendment and as further amended by the Second Amendment (as so amended,
the "Note Agreement"). The Company heretofore issued the $40,000,000 12% Senior
Subordinated Notes due February 1, 2003 (the "Notes") pursuant to the Note
Agreement.

         B.       The Company and the Noteholders now desire to amend the Note
Agreement in the respects, but only in the respects, hereinafter set forth.

         C.       Capitalized terms used herein shall have the respective
meanings ascribed thereto in the Note Agreement unless herein defined or the
context shall otherwise require.

         D.       All requirements of law have been fully complied with and all
other acts and things necessary to make this Third Amendment a valid, legal and
binding instrument according to the terms for the purposes herein expressed have
been done or performed.

         NOW, THEREFORE, upon the full and complete satisfaction of the
conditions precedent to the effectiveness of this Third Amendment set forth in
ss.3.1 hereof, and in consideration of other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the Company and the
Noteholders do hereby agree as follows:

SECTION 1.        AMENDMENTS.

         1.1      Compliance with Section 5.6 of the Note Agreement shall be and
hereby is waived for the period commencing the date hereof through March 30,
2002. Commencing March 31, 2002, Section 5.6 of the Note Agreement shall be
deleted in its entirety and replaced with the following text:

<PAGE>   2

                  "Section 5.6. Consolidated Net Worth. The Company will at all
         times during the period commencing March 31, 2002 and ending June 29,
         2002 keep and maintain Consolidated Net Worth at an amount not less
         than the greater of (i) negative Four Million Dollars (-$4,000,000) or
         (ii) the sum of Seventeen Million Dollars ($17,000,000) plus the
         aggregate Consolidated Net Income for the immediately preceding four
         fiscal quarter period ending March 31, 2002 (such greater amount, the
         "Minimum Amount"), and for each period set forth in the table below
         shall keep and maintain Consolidated Net Worth at an amount equal to
         the sum of the Minimum Amount plus the amount set forth opposite the
         applicable period:

<TABLE>
<CAPTION>
                         Period                                        Amount
                         ------                                        ------
          <S>                                    <C>
          June 30, 2002 to September 29, 2002    50% of Consolidated Net Income for the Company's
                                                 fiscal quarter ending June 30, 2002 (but without
                                                 deduction in the event of a loss)

          September 30, 2002 to December 30,     50% of Consolidated Net Income for the Company's
          2002                                   two fiscal quarters ending September 30, 2002
                                                 (but without deduction in the event of a loss)

          December 31, 2002 and thereafter       50% of Consolidated Net Income for the Company's
                                                 three fiscal quarters ending December 31, 2002
                                                 (but without deduction in the event of a loss)
</TABLE>

         1.2      Section 5.7(a) of the Note Agreement shall be and hereby is
amended by inserting "for the incurrence of Indebtedness under the Credit
Agreement in excess of $200,000,000" after "2 to 1" where it appears in the
eleventh line of clause (5) (as added by the First Amendment).

         1.3      Compliance with Section 5.8 of the Note Agreement shall be and
hereby is waived for the period commencing the date hereof through March 30,
2002.

         1.4      Section 5.11 of the Note Agreement shall be and hereby is
amended by adding a new paragraph to the end thereof, to read as follows:

                  "Notwithstanding the foregoing provisions of this Section
         5.11, the Company shall not make or declare any Restricted Payments
         (for purposes of this sentence, the term Restricted Payment shall not
         include Restricted Investments)."

         1.5      Section 9.1 of the Note Agreement shall be and hereby is
amended as follows:

                                       2
<PAGE>   3

                  (a)      the definition of "Consolidated Cash Flow" is hereby
         amended by adding the following sentence to the end thereof:

                           "Notwithstanding anything to the contrary in this
                  definition, for the purpose of calculating the Fixed Charge
                  Coverage Ratio, the PIK Amount (as defined in the Notes) shall
                  not be included in the foregoing calculations.";

                  (b)      the definition of "Default Rate" is hereby amended
         and restated as follows:

                           "Default Rate" shall mean a rate of interest per
                  annum equal to the higher at the time of (i) the applicable
                  Accrual Rate (as defined in the Notes) plus 2% and (ii) the
                  rate announced by Fleet National Bank (or a successor thereto)
                  as its "Base Rate";

                  (c)      the definition of "Fixed Charges" is hereby amended
         by adding the following sentence to the end thereof:

                           "Notwithstanding anything to the contrary in this
                  definition, for the purpose of calculating the Fixed Charge
                  Coverage Ratio, the PIK Amount (as defined in the Notes) shall
                  not be included in the foregoing calculations.";

                  (d)      the definition of "Restricted Investments" is hereby
         amended by adding the following new subparagraph (j) immediately
         following subparagraph (i) thereof (as added by the First Amendment):

                           "(j) Investments in any Person, not otherwise
                  permitted by the provisions of subparagraphs (a) through (i)
                  above, inclusive, provided that (x) the aggregate amount of
                  such Investments shall not exceed Two Hundred Fifty Thousand
                  Dollars ($250,000) in the aggregate at any time outstanding,
                  in addition to the Investments permitted above; (y) at the
                  time of making each such Investment and after giving effect
                  thereto no Default or Event of Default shall have occurred and
                  be declared; and (z) the Noteholders agree that Investments
                  made under this subparagraph (j) shall not be deemed to be
                  Indebtedness under the Note Agreement."; and

                  (e)      the definition of "Revolving Credit Commitment
         Amount" is hereby amended by deleting "$130,000,000" and inserting
         "$230,000,000" in lieu thereof.

         1.6      Sections 11.4, 12.8, 12.9 and 12.10 of the Credit Agreement,
as in effect as of the date hereof after giving effect to Amendment No. 1 to the
Credit Agreement, dated as of April 13, 2001, by and among Allied Holdings,
Inc., Allied Systems (Canada) Company and the financial institutions and agents
named therein, but without giving effect to any subsequent amendments,
modifications, restatements or supplements thereto that have not been consented
to by each of the

                                       3
<PAGE>   4
Noteholders, are incorporated by reference as if fully set forth herein; except
that such incorporation by reference shall be subject to the following
modifications:

                  (a)      with respect to Section 11.4 of the Credit Agreement,
         as incorporated herein, references to the Banks shall be deemed to be
         references to the Noteholders;

                  (b)      with respect to Section 12.8 of the Credit Agreement,
         the table relating to Minimum Consolidated EBITDA as incorporated
         herein shall be modified to read as follows:

<TABLE>
<CAPTION>
              Month Ending                  Minimum Consolidated EBITDA
              ------------                  ---------------------------
           <S>                              <C>

             March 31, 2001                       $(13,700,000)
             April 30, 2001                       $ (5,000,000)
              May 31, 2001                        $  1,200,000
             June 30, 2001                        $  6,500,000
             July 31, 2001                        $          0
            August 31, 2001                       $  4,000,000
           September 30, 2001                     $  6,400,000
            October 31, 2001                      $ 17,600,000
           November 30, 2001                      $ 17,100,000
           December 31, 2001                      $ 18,300,000;
</TABLE>

                  (c)      with respect to Section 12.9 of the Credit Agreement,
         the ratio of (a) Consolidated Net Tangible Assets to (b) Consolidated
         Senior Secured Debt as incorporated herein shall be modified by
         deleting the words "not less than 1.90:1.00" and inserting the words
         "not less than 1.70:1.00" in lieu thereof; and

                  (d)      with respect to Section 12.10 of the Credit
         Agreement, the limits on Capital Expenditures as incorporated herein
         shall be modified by deleting the words:

                            "(a) during the fiscal quarter ending March 31,
                  2001, $8,300,000, (b) during the period of two fiscal quarters
                  ending June 30, 2001, $18,000,000, (c) during the period of
                  three fiscal quarters ending September 30, 2001, $21,500,000,
                  and (d) during the period of four fiscal quarters ending
                  December 31, 2001, $24,500,000",

                           and inserting in lieu thereof the words:

                           "(a) during the fiscal quarter ending March 31, 2001,
                  $9,300,000, (b) during the period of two fiscal quarters
                  ending June 30, 2001, $20,000,000, (c) during the period of
                  three fiscal quarters ending September 30, 2001, $24,500,000,

                                       4
<PAGE>   5

                  and (d) during the period of four fiscal quarters ending
                  December 31, 2001, $28,500,000".

SECTION 2.        REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         2.1      To induce the Noteholders to execute and deliver this Third
Amendment, the Company represents and warrants to each Noteholder (which
representations shall survive the execution and delivery of this Third
Amendment) that:

                  (a)      This Third Amendment has been duly authorized,
         executed and delivered by the Company and this Third Amendment
         constitutes the legal, valid and binding obligation, contract and
         agreement of the Company, enforceable against it in accordance with its
         terms, except as enforcement may be limited by bankruptcy, insolvency,
         reorganization, moratorium or similar laws or equitable principles
         relating to or limiting creditor's rights generally;

                  (b)      The Note Agreement, as amended by this Third
         Amendment, constitutes the legal, valid and binding obligations,
         contracts and agreements of the Company enforceable against it in
         accordance with their respective terms, except as enforcement may be
         limited by bankruptcy, insolvency, reorganization, moratorium or
         similar laws or equitable principles relating to or limiting creditors'
         rights generally; and

                  (c)      The execution, delivery and performance by the
         Company of this Third Amendment (i) has been duly authorized by all
         requisite corporate action and if required, shareholder action, (ii)
         does not require the consent or approval of any governmental or
         regulatory body or agency, and (iii) will not violate (x) any provision
         of law, statute, rule or regulation or its certificate of incorporation
         or bylaws, (y) any order of any court or any rule, regulation or order
         of any other agency or government binding upon it, or (z) any provision
         of any material indenture, agreement or other instrument to which it is
         a party or by which its properties or assets are or may be bound or
         result in a breach or constitute (alone or with due notice or lapse of
         time or both) a default thereunder; and (d) as of the date hereof and
         after giving effect to this Third Amendment, no Default or Event of
         Default has occurred which is continuing.

SECTION 3.        CONDITIONS TO EFFECTIVENESS OF THIS THIRD AMENDMENT.

         3.1      This Third Amendment shall not be effective until, and shall
become effective when, each and every one of the following conditions shall have
been satisfied:

                  (a)      Executed counterparts of this Third Amendment, duly
         executed by the Company and the holders of one hundred percent (100%)
         of the outstanding principal of the Notes, shall have been delivered to
         the Noteholders;

                                       5
<PAGE>   6

                  (b)      The Company shall have executed an Allonge to each of
         the outstanding Notes (each, an "Allonge"), substantially in the form
         attached hereto as Exhibit A, and each of the Notes, as modified by its
         respective Allonge, shall be in full force and effect;

                  (c)      The Company shall have entered into Amendment No. 1
         to the Credit Agreement, and all conditions to effectiveness of such
         Amendment No. 1 shall have been satisfied (other than any condition to
         effectiveness thereof which is conditioned on the effectiveness of this
         Third Amendment);

                  (d)      The Company shall have paid a fee (the "Restructuring
         Fee") to the Noteholders, in cash in the aggregate amount of $200,000,
         to be paid pro rata according to their respective principal amounts as
         set forth on Schedule I to the Note Agreement; and

                  (e)      The representations and warranties of the Company set
         forth in Section 2 hereof shall be true and correct on and with respect
         to the date hereof.

         Upon satisfaction of the foregoing conditions, this Third Amendment
shall become effective as of December 31, 2000.

SECTION 4.        REFERENCE TO AND EFFECT ON THE NOTE AGREEMENT.

         4.1      This Third Amendment shall be construed in connection with and
is a part of the Note Agreement, shall be effective as of December 31, 2000, and
except as modified and expressly amended by this Third Amendment and the
Allonges, all terms, conditions and covenants contained in the Note Agreement
and the Notes are hereby ratified and confirmed and shall be and remain in full
force and effect.

         4.2      Except as expressly provided herein, the execution, delivery
and effectiveness of this Third Amendment shall not operate as a waiver of: (i)
any right, power or remedy of the Noteholders under the Note Agreement or any of
the documents or agreements executed and delivered in connection therewith, or
(ii) any Event of Default under the Note Agreement.

         4.3      Upon the effectiveness of this Third Amendment, each reference
in the Note Agreement to:

                  (a)      "this Agreement," "hereunder," "hereof," "herein" or
         words of like import shall mean and be a reference to the Note
         Agreement as amended hereby;

                  (b)      "Notes" shall be to the Notes as amended hereby and
         by the Allonges.

SECTION 5.        MISCELLANEOUS.

         5.1      Any and all notices, requests, certificates and other
instruments executed and delivered after the execution and delivery of this
Third Amendment may refer to the Note

                                       6
<PAGE>   7

Agreement without making specific reference to this Third Amendment but
nevertheless all such references shall include this Third Amendment unless the
context otherwise requires.

         5.2      The provisions of this Third Amendment shall inure to the
benefit of, and be binding upon, each of the parties hereto and their respective
successors and assigns, including, without limitation, the holders from time to
time of the Notes and any interest therein.

         5.3      The descriptive headings of the various Sections or parts of
this Third Amendment are for convenience only and shall not affect the meaning
or construction of any of the provisions hereof.

         5.4      This Third Amendment shall be governed by and construed in
accordance with Illinois law.

         5.5      This Third Amendment may be executed in any number of
counterparts, each executed counterpart constituting an original, but all of
which together shall constitute only one agreement. Delivery of an executed
counterpart to this Third Amendment by telecopier shall be effective as delivery
of a manually executed counterpart to this Third Amendment.

                                       7
<PAGE>   8

         IN WITNESS WHEREOF, the Company and the Noteholders have caused this
Third Amendment to be duly executed and delivered all as of the day and year
first above written.

                                          ALLIED HOLDINGS, INC.

                                          By
                                            ----------------------------
                                              Name:
                                              Title:

                                          JOHN HANCOCK LIFE INSURANCE
                                            COMPANY (formerly John Hancock
                                            Mutual Life Insurance Company)

                                          By
                                            ----------------------------
                                              Name:
                                              Title:

                                          BARNETT & CO.

                                          By
                                            ----------------------------
                                              Name:
                                              Title:

                                          THE NORTHWESTERN MUTUAL LIFE
                                            INSURANCE COMPANY

                                          By
                                            ----------------------------
                                              Name:
                                              Title:

                                       8
<PAGE>   9

                                    EXHIBIT A

                                     ALLONGE
                                       TO
                12% SENIOR SUBORDINATED NOTE DUE FEBRUARY 1, 2003
                                       OF
                              ALLIED HOLDINGS, INC.

                                                                  April 13, 2001

         The 12% Senior Subordinated Note due February 1, 2003 of Allied
Holdings, Inc., Note number _______, issued in the original principal amount of
$[___________], to which this Allonge is attached, is hereby modified by the
terms hereof.

         Such Note is one of a series of Senior Subordinated Notes (herein
called the "Notes", the holders of such Notes, the "Noteholders") issued
pursuant to the Note Agreement, dated as of January 15, 1996, between Allied
Holdings, Inc. (the "Company") and the purchasers named therein, as amended by
(i) First Amendment to Note Agreement, dated as of April 16, 1997, by and among
the Company and the Noteholders, (ii) Second Amendment to Note Agreement, dated
as of September 30, 1997, by and among the Company and the Noteholders and (iii)
Third Amendment to Note Agreement, dated as of April 13, 2001, by and among the
Company and the Noteholders (as from time to time amended, the "Note
Agreement").

         All references in the Note to the Note Agreement shall be deemed and
construed to be references to the Note Agreement as defined in this Allonge.
Capitalized terms used herein without definition shall have the respective
meanings ascribed thereto in the Note Agreement.

         Interest shall be payable on this Note as follows:

         From and after April 13, 2001, interest (computed on the basis of a
360-day year of twelve 30-day months) shall accrue on the outstanding principal
amount of the Note not then overdue at the Accrual Rate (as defined below).

         On any interest payment date, so long as no Default or Event of Default
has occurred and is continuing, the Company may, upon at least three Business
Days and no more than ten Business Days prior written notice to the holder of
the Note, at its option defer to the maturity date of the Note an amount of
interest (such amount being referred to as the "PIK Amount") equal to (i) the
amount of the interest due on such interest payment date on the Note at the
applicable Accrual Rate, less (ii) the amount of interest that would accrue on
the Note at the Initial Rate to such interest payment date, provided that if the
Company exercises its option to defer interest on the Note, it shall

<PAGE>   10

contemporaneously exercise its interest deferral option with respect to all the
Notes. Each such PIK Amount shall be added to the outstanding principal amount
of the Note and interest on such amount shall accrue and be payable as
aforesaid. The holder hereof may enter the amount of such PIK Amount opposite
the applicable interest payment date on the schedule attached hereto as Annex I,
but the failure to enter such amount of PIK interest shall not affect the
outstanding principal amount of the Note or the obligation of the Company to pay
such amount, together with interest thereon as modified by this Allonge, and if
applicable the Make-Whole Amount.

         As used herein, the following terms shall have the following
definitions:

         "Accrual Rate" means a rate per annum equal to the Initial Rate plus
the Applicable Margin.

         "Applicable Margin" means:

<TABLE>
<CAPTION>
                    PERIOD                                 AMOUNT
                    ------                                 ------
    <S>                                                    <C>
     April 13, 2001 through June 30, 2001                   2.00%
    July 1, 2001 through September 30, 2001                 2.25%
   October 1, 2001 through December 31, 2001                2.50%
    January 1, 2002 through March 31, 2002                  2.75%
         April 1, 2002 and thereafter                       3.00%
</TABLE>

         "Initial Rate" means 12% per annum.

         "Default Rate" means a rate of interest per annum equal to the higher
at the time of (i) the applicable Accrual Rate (as defined in the Notes) plus 2%
and (ii) the rate announced by Fleet National Bank (or a successor thereto) as
its "Base Rate".

                                       10
<PAGE>   11

         Except as expressly provided herein, this Note is not modified or
amended in any respect and remains in full force and effect.

                                             ALLIED HOLDINGS, INC.

                                             By
                                               -------------------------
                                                 Name:
                                                 Title:

                                       11
<PAGE>   12

                                     ANNEX I

<TABLE>
<CAPTION>
                INTEREST PAYMENT DATE                  PIK AMOUNT
                ---------------------                  ----------
                <S>                                    <C>
                    August 1, 2001
                   February 1, 2002
                    August 1, 2002
                   February 1, 2003
</TABLE>

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