LOAN AND SECURITY AGREEMENT AND GUARANTY

Exhibit 4.4

EXECUTION VERSION

LOAN AND SECURITY AGREEMENT AND GUARANTY

dated as of April 5, 2007

among

ALLIED SYSTEMS, Ltd. (L.P.),
a Georgia limited partnership and a debtor and debtor in possession under
Chapter 11 of the Bankruptcy Code.

ALLIED HOLDINGS, INC.,
a Georgia corporation and a debtor and debtor in possession under
Chapter 11 of the Bankruptcy Code

and

and

YUCAIPA TRANSPORTATION, LLC,
a Delaware limited liability company

TABLE OF CONTENTS

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

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

ii

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

RECITALS:

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

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

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

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

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

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

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

SECTION 1. DEFINITIONS.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

          (b) Borrowing Mechanics for Loans.

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

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

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

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

SECTION 3. CONDITIONS TO FUNDING.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

          (f) Event Specific Conditions.

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

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

SECTION 4. GRANT OF SECURITY.

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

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

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

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

SECTION 5. SECURITY FOR OBLIGATIONS; BORROWER REMAINS LIABLE.

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

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

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

SECTION 6. REPRESENTATIONS AND WARRANTIES AND COVENANTS.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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