UNITED STATES BANKRUPTCY COURT                                              FOR THE DISTRICT OF DELAWARE·-----------------...
LP and Yucaipa American Alliance (Parallel) Fund I, LP (collectively, "Yucaipa")? Just over ayear after emerging from Chap...
The Alleged Debtors have admitted that these Events of Default have occurred and arecontinuing under each of the Credit Ag...
each case since August 2009? The Alleged Debtors failure to make these interest and principalpayments for more than two an...
Obligations and Second Lien Obligations when they mature in May and September, 2012,respectively), and in need of a financ...
to control Allied, including the right to appoint and direct the actions of senior management ofAllied.The Credit Agreemen...
accelerate the Obligations under each of the Credit Agreements, and to exercise remedies.       Yucaipa realized that the ...
conditions. 5        That is, in the Third Amendment, to prevent Yucaipa, as the majority and controllingowner of Allied, ...
Credit Agreement, including the Petitioning Creditors, which includes the right to direct theexercise of (or forbearance f...
Lien Credit Agreement that would have eliminated all of the restrictions and conditions imposedupon Yucaipas ownership of ...
amendment to First Lien Credit Agreement with ComVest, dated as of August 21, 2009 (the"Purported Fourth Amendment"). 7 Th...
affecting the rights of all First Lien Lenders, including the Petitioning Creditors. Those rightsinclude:                 ...
Prepetition Litigation           The Administrative Agent, initially refused to acknowledge the validity of the PurportedF...
including the exercise of remedies." (Exhibit F) 13 • As consideration for CITs acquiescence tothe settlement, Yucaipa, am...
15   REDACTED
The Petitioning Creditors Efforts to Engagethe Alleged Debtors in Restructuring Negotiations       Despite ongoing Default...
CONCLUSION       In light of the undeniable occurrence and continuing Events of Default and faced with theinability to pre...
EXHIBIT A
EXECUTION VERSION     AMENDED AND RESTATED FIRST LIENSECURED SUPER-PRIORITY DEBTOR IN POSSESSION AND EXIT CREDIT AND GUARA...
TABLE OF CONTENTSSECTION 1. DEFINITIONS AND INTERPRETATION ............................................................ 2 ...
3.4        Conditions to Exit Facilities Option ...................................................................... 91 ...
5.16          Canadian Supplemental Final Order .................................................................... 118  ...
SECTION9.           AGENTS ..................................................................................................
APPENDICES:   A-1      Term Loan Commitments              A-2      LC Commitments              A-3      Revolving Commitme...
AMENDED AND RESTATED FIRST LIEN                SECURED SUPER-PRIORITY DEBTOR IN POSSESSION                 AND EXIT CREDIT...
WHEREAS, Borrowers will refinance a portion of the Existing Term Loans withthe proceeds of a new second lien term loan in ...
(London, England time) on such Interest Rate Determination Date, or (b) in the event the ratereferenced in the preceding c...
"Affirmation Agreement" shall mean the Affirmation Agreement substantially inthe form ofExhibit 0 hereto.              "Ag...
"Asset Sale" means a sale, lease or sub-lease (as lessor or sublessor), sale andleaseback, assignment, conveyance, exclusi...
"Base Rate Loan" means a Loan bearing interest at a rate detennined byreference to the Base Rate.              "Benchmark ...
Documents and containing a release in favor of Administrative Agent and Syndication Agent andthe Lenders and their respect...
satisfactory to the Agent, which, among other matters but not by way of limitation, recognizesthe Cases and imposes a stay...
investigation, initiation or prosecution of any claims, defenses or causes of action (as describedin the Interim DIP Order...
"CCAA" means Companies Creditors Arrangement Act (Canada), as now andhereafter in effect, or any successor statute.       ...
"Closing Date Certificate" means a Closing Date Certificate substantially in theform of Exhibit G-1.              "Collate...
"Compliance Certificate" means a Compliance Certificate substantially in theform ofExhibit C.               "Confirmation ...
and its Subsidiaries, but excluding, however, any such expenditures made in connection with aPermitted Acquisition permitt...
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  1. 1. UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE·------------------------------------------------------------------------------------------xIn re: Chapter 11ALLIED SYSTEMS HOLDINGS, INC., Case No. 12--[_ _,] (LJ) Alleged Debtor.--------------·---------------------------------------------------------------------------XIn re: Chapter 11ALLIED SYSTEMS, LTD. (L.P.), Case No. 12-._[_ __,] (LJ) Alleged Debtor.·------------------------------------------------------------------------------------------x STATEMENT OF PETITIONING CREDITORS IN SUPPORT OF THE INVOLUNTARY CHAPTER 11 PETITIONS FILED AGAINST ALLIED SYSTEMS HOLDINGS, INC. AND ALLIED SYSTEMS, LTD. (L.P.) The Petitioning Creditors 1 are lenders (in such capacity, the "Lenders") under the CreditAgreements (as defined below), and respectfully submit this statement (i) in support of theinvoluntary chapter 11 petitions filed against Allied Systems Holdings, Inc. ("Allied") andAllied Systems, Ltd., (L.P.) ("Allied Systems", collectively, the "Alleged Debtors"), and (ii) toassist the Court and other parties-in-interest in understanding the circumstances that led to thefiling of these involuntary petitions. INTRODUCTION The Petitioning Creditors are Lenders under the Credit Agreements (defined below),pursuant to which the Alleged Debtors obtained approximately $315 million in financing whenthey emerged from Chapter 11 in 2007 under the control of Yucaipa American Alliance Fund I,1 The Petitioning Creditors are BDCM Opportunity Fund II, LP, Black Diamond CLO 2005-1 Ltd., and SpectrumInvestment Partners, L.P.
  2. 2. LP and Yucaipa American Alliance (Parallel) Fund I, LP (collectively, "Yucaipa")? Just over ayear after emerging from Chapter 11, however, Events of Default occurred under each of theCredit Agreements as the financial condition of the Alleged Debtors and their businessoperations deteriorated.2 In re Allied Holdings, Inc. et al. Case No. 05-12515 (CRM) (Bankr. N.D. GA).More particularly, the Alleged Debtors are party to each of the following:(a) that certain Amended and Restated First Lien Secured Super-Priority Debtor in Possession and Exit Credit andGuaranty Agreement dated as of March 30,2007 and amended and restated as of May 15,2007, and as furtheramended, modified or supplemented through April 17, 2008 (including, without limitation, as set forth inAmendment No.3 to Credit Agreement and Consent dated as of April 17, 2008), by and among Allied Holdings,Inc. and Allied Systems, Ltd. (L.P.), as Borrowers, certain Subsidiaries of Borrowers, as Subsidiary Guarantors,various Lenders, Goldman Sachs Credit Partners L.P., as Lead Arranger and Syndication Agent, and The CITGroup/Business Credit, Inc. ("CIT), as Administrative Agent and Collateral Agent, in the original principal amountof$265,000,000 (the "First Lien Credit Agreement", a true and correct copy of which is annexed hereto as ExhibitA), and(b) that certain Second Lien Secured Super-Priority Debtor in Possession and Exit Credit and Guaranty Agreementdated as of May 15,2007 (as amended, modified or supplemented from time to time), by and among AlliedHoldings, Inc. and Allied Systems, Ltd. (L.P.), as Borrowers, certain Subsidiaries of Borrowers, as SubsidiaryGuarantors, various Lenders, and Goldman Sachs Credit Partners L.P ., as Lead Arranger and Syndication Agent,Administrative Agent and Collateral Agent, in the original principal amount of $50,000,000 (the "Second LienCredit Agreement", a true and correct copy of which is annexed hereto as Exhibit B) .The First Lien CreditAgreement and the Second Lien Credit Agreement are collectively referred to herein as the "Credit Agreements."Capitalized terms used but not specifically defined herein shall have the meanings ascribed to them in the First LienCredit Agreement or the Second Lien Credit Agreement, as applicable. 2 REDACTED
  3. 3. The Alleged Debtors have admitted that these Events of Default have occurred and arecontinuing under each of the Credit Agreements. The occurrence and continuance of theseEvents of Default entitle the First Lien Lenders to accelerate the Obligations under each of theCredit Agreements, and to exercise remedies. As you would expect based upon the foregoing, the Alleged Debtors and theirsubsidiaries, on a consolidated basis, theAlleged Debtors have been unable to pay, and thus have failed to pay, (a) interest and principalpayments to all First Lien Lenders in the aggregate amount of at least $57.4 million and (b)interest payments to all Second Lien Lenders in the aggregate amount of at least $9.6 million in 3 REDACTED
  4. 4. each case since August 2009? The Alleged Debtors failure to make these interest and principalpayments for more than two and one half years is dispositive evidence that Alleged Debtors arenot paying their debts as they become due. 4 In any other circumstance, given the substantial and continuing payment defaults andother Events of Default that have been ongoing for several years, the First Lien Lenders wouldlong ago have instructed the Administrative Agent to accelerate the Obligations and commencethe exercise of remedies. In the present case, however, the Alleged Debtors, under Yucaipascontrol, engaged in a course of conduct with Yucaipa -- in direct violation of the terms of theFirst Lien Credit Agreement -- designed to thwart the legitimate exercise of the rights of the FirstLien Lenders for the sole and exclusive benefit of Yucaipa. Through this course of conduct,Yucaipa (with the Alleged Debtors assistance) has hijacked control of the First Lien CreditAgreement by purporting to acquire a majority of the First Lien Obligations and with it theability to control the Administrative Agent as "Requisite Lender." Yucaipas efforts in thisregard, and the related litigation that they and the Alleged Debtors commenced against theAdministrative Agent, have effectively neutralized the Administrative Agent and stopped theLenders dead in their tracks from taking any actions to enforce the Obligations, notwithstandingthe substantial and admitted Events of Default (including payment defaults). As the Petitioning Creditors will demonstrate, the Alleged Debtors are hopelesslyinsolvent, unable to pay their debts as they become due (as evidenced by their failure to payinterest for more than two and one-half years and their obvious inability to pay the First Lien 4 REDACTED
  5. 5. Obligations and Second Lien Obligations when they mature in May and September, 2012,respectively), and in need of a financial restructuring that can only be accomplished throughbankruptcy. Despite the obvious financial distress of the Alleged Debtors, Allieds board ofdirectors (the "Allied Board"), in breach of its fiduciary duties, has refused to engage innegotiations regarding a financial restructuring, and has instead chosen to engage (and continuesto engage) in conduct designed solely to benefit the controlling shareholder Yucaipa at theexpense of the Alleged Debtors creditors, including the Petitioning Creditors. With financialperformance continuing to deteriorate, maturity dates for the First Lien Obligations and SecondLien Obligations on the near term horizon, and no present ability to accelerate the Obligations ordirect the enforcement of remedies despite the numerous and material Events of Default thatoccurred and are continuing, the Petitioning Creditors had no choice but to proceed with thefiling of the involuntary petitions. STATEMENT IN SUPPORT Allied is a provider of distribution and transportation services to the automotive industry,specializing in the delivery of new vehicles from auto manufacturing plants to auto dealerships.Allied and several related entities filed for Chapter II bankruptcy protection in July 2005.Yucaipas Control of Allieds Business In May 2007, Allied emerged from bankruptcy pursuant to a plan of reorganization thatresulted in Yucaipa becoming the majority and controlling shareholder of Allied. Uponinformation and belief, Yucaipa owns more than 70% of the common equity of Allied. As aresult of their controlling ownership interest, Yucaipa controls the Allied Board. Pursuant toAllieds 2007 plan of reorganization, Yucaipa appointed four out of the five members of theAllied Board. Yucaipas ability to appoint the members of the Allied Board has enabled Yucaipa 5 REDACTED
  6. 6. to control Allied, including the right to appoint and direct the actions of senior management ofAllied.The Credit Agreements In connection with its emergence from bankruptcy in May 2007, Allied obtained anaggregate of $315 million of financing through the First Lien Credit Agreement and the SecondLien Credit Agreement. The Petitioning Creditors are Lenders under both the First Lien CreditAgreement and the Second Lien Credit Agreement, and own or control, with power to vote, (a)approximately $47.9 million (20%) in aggregate principal amount of First Lien Obligations, and(b) approximately $5 million (17%) in aggregate principal amount of Second Lien Obligations. As is typical for credit agreements of this type, the First Lien Credit Agreement, prior toany amendments, contained an absolute prohibition against Yucaipa, as the majority andcontrolling shareholder of Allied, from becoming a First Lien Lender. The purpose of thisprohibition was to assure that, as the owner of the Borrowers (Allied and Allied Systems),Yucaipa could not interfere with the rights of, and decisions being made by, the First LienLenders vis-a-vis the Borrower including (without limitation) declaring or waiving defaults, anddeciding when (or if) to exercise remedies. This prohibition was designed to prevent Yucaipa,the controlling owner of the Borrower, from buying enough debt to be able to prevent theLenders from collecting on that debt or otherwise exercising their rights vis-a-vis the Borrower.The Alleged Debtors Events of Default Just over a year after emerging from Chapter 11, the Events of Default described abovebegan to occur under each of the Credit Agreements. The Alleged Debtors have admitted thatthese Events of Default have occurred and are continuing under each of the Credit Agreements.The occurrence and continuance of these Events of Default entitle the First Lien Lenders to 6 REDACTED
  7. 7. accelerate the Obligations under each of the Credit Agreements, and to exercise remedies. Yucaipa realized that the Alleged Debtors were in financial distress, and that the FirstLien Lenders could accelerate the Obligations and begin to enforce remedies. Such actionswould likely force the Alleged Debtors back into bankruptcy and result in a loss of Yucaipassubstantial equity investment.Yucaipa Obtains the Right to Become a Lenderunder the Credit Agreement, withSignificant Restrictions on their Rights as Lender Pursuant to this strategy, in addition to its status as majority shareholder of Allied and itscontrol over the Allied Board and day-to-day operations, Yucaipa sought to become a Lenderunder the First Lien Credit Agreement. Section 10.6 of each Credit Agreement permittedLenders to sell, assign or transfer all or a portion of their rights and obligations under theapplicable Credit Agreement, but only to a party that satisfied the definition of "EligibleAssignee." Under each of the Credit Agreements as originally drafted, the definition of EligibleAssignee expressly excluded the Sponsor and affiliates of Allied. Yucaipa is specificallydesignated as the "Sponsor" in each of the Credit Agreements. In addition, as majorityshareholder, Yucaipa is an affiliate of Allied. Thus, unless the parties to the Credit Agreements consented to an amendment to thedefinition of "Eligible Assignee," no Lender could sell, assig~ or transfer any of its rights orobligations to Yucaipa and, consequently, Yucaipa could not become a Lender under eitherCredit Agreement. Yucaipa and Allied requested and obtained Lender consent to that certainAmendment No. 3 to Credit Agreement and Consent, dated as of April 17, 2008 (the ThirdAmendment"), which amended the First Lien Credit Agreement to allow Yucaipa to become aFirst Lien Lender and a Second Lien Lender, but only under strictly limited circumstances and 7 REDACTED
  8. 8. conditions. 5 That is, in the Third Amendment, to prevent Yucaipa, as the majority and controllingowner of Allied, from harming the interests of the Lenders and undermining and interfering withtheir rights and remedies against Allied, the Third Amendment placed significant restrictions andconditions on any sale or assignment of Term Loans to Yucaipa (sales or assignments of the LCDeposits and Revolving Loan were not permitted at all). Specifically, Yucaipas potential statusas a First Lien Lender was subject to the following restrictions and conditions, among others, (i)after giving effect to any such sale or assignment, Yucaipa could not hold or beneficially ownmore than 25% of the aggregate outstanding principal amount of the Term Loans, or acquiremore than $50 million in the aggregate of the principal amount of the Term Loans; (ii) Yucaipahad to make capital contributions to Allied of at least 50% of the aggregate principal amount ofTerm Loans it acquired; and (iii) Yucaipa would not have any voting rights with respect to anyTerm Loans it might acquire (which other First Lien Lenders holding Term Loans would have),including rights to consent to any amendment, modification, termination or waiver of anyprovision of the First Lien Credit Agreement. These restrictions and conditions served to ensure that Yucaipa, already a majority andcontrolling shareholder of Allied, did not obtain unfettered control over Allied and injure ordestroy the Lenders rights and interests by, among other things, becoming the Requisite Lenderunder the First Lien Credit Agreement. Under the First Lien Credit Agreement, RequisiteLender is defined to mean one or more Lenders that have or hold more than 50% of the sum ofthe aggregate Term Loans, Revolving Loans and LC Facility. The Requisite Lender has theauthority to make certain key decisions affecting the rights of all Lenders under the First Lien5 Pursuant to Amendment No.3, dated as of April 17, 2008, to the Second Lien Credit Agreement, Yucaipa was alsopermitted to purchase Second Lien Obligations. 8 REDACTED
  9. 9. Credit Agreement, including the Petitioning Creditors, which includes the right to direct theexercise of (or forbearance from exercise of) remedies such as demanding payment by Allied ofany and all amounts due, or commencing foreclosure on the collateral pledged to secure theObligations. Pursuant to the Third Amendment, the effect of the prohibitions imposed on Yucaipasability to acquire and vote Term Loans and other Obligations was to preclude Yucaipa from everbecoming the Requisite Lender. Consequently, because Yucaipa had no ability to become theRequisite Lender under the Credit Agreements, it could not as majority and controlling owner ofAllied, harm the interests of the Petitioning Creditors and other Lenders, or otherwise interferewith the Lenders rights. In the Third Amendment, Yucaipa acknowledged that as "RestrictedSponsor Affiliate" its breach of the Third Amendment "will cause the other Lenders and Agentsto sustain damages for which they would not have an adequate remedy at law for moneydamages" and further agreed that "specific performance of such covenants and agreements"contained in the Third Amendment would be the appropriate remedy.The Forbearance Agreement and The Failed Tender Offer Given the occurrence and continuance of Events of Default, on or about September 24,2008, Allied entered into a forbearance agreement with the First Lien Agent and First LienLenders pursuant to which the First Lien Lenders agreed to refrain from taking action to enforcetheir rights under the First Lien Credit Agreement so that the parties could engage in discussionsregarding a restructuring of Allieds debt. Those discussions ultimately proved unsuccessful. In February 2009, Yucaipa launched a tender offer to purchase Obligations from the FirstLien Lenders at a substantial discount to par. The tender offer was conditioned upon acceptanceand consent by First Lien Lenders constituting Requisite Lenders to an amendment to the First 9 REDACTED
  10. 10. Lien Credit Agreement that would have eliminated all of the restrictions and conditions imposedupon Yucaipas ownership of Obligations as set forth in the Third Amendment. Yucaipastender offer failed, as Yucaipa did not receive a sufficient number of acceptances to amend theFirst Lien Credit Agreement in the manner needed.Yucaipa, with the Assistance of AllegedDebtors, Violates the First Lien Credit Agreement;The Purported Fourth Amendment With the lapse of the forbearance period, the failure of the tender offer, the continuingDefaults and Events of Default by Allied (including, but not limited to, the failure to pay interestand principal), and the continued deterioration in Allieds business, Yucaipa was determined toprotect its investment at any cost. In order to do so, Yucaipa sought to ensure that the First LienLenders could not accelerate the Obligations or exercise remedies. The only way to do that wasto gain control of the First Lien Obligations, which the First Lien Credit Agreement (as amendedthrough the Third Amendment) specifically prohibited. To that end, Yucaipa, with Alliedsassistance, intentionally violated the negotiated restrictions of the Third Amendment in order toprevent the First Lien Lenders from declaring the Obligations to be immediately due andpayable, exercising their rights and remedies against the Alleged Debtors, and otherwise seekingto collect on the Obligations. After the First Lien Lenders refused to accept Yucaipas tender offer, Yucaipa enteredinto direct discussions with ComVest Investment Partners III ("ComVest") to purchase the TermLoans and LC Facility Obligations then held by ComVest, which at the time comprised amajority of the Term Loans, Revolving Loans and aggregate LC Exposure Obligations thenoutstanding. 6 In connection therewith, Yucaipa caused Allied to enter into a purported6 At the time, given the magnitude of its holdings, Com Vest was the Requisite Lender under the First Lien CreditAgreement. 10 REDACTED
  11. 11. amendment to First Lien Credit Agreement with ComVest, dated as of August 21, 2009 (the"Purported Fourth Amendment"). 7 The Purported Fourth Amendment committed Allied tovarious unfair, wasteful provisions, notwithstanding that, at the time of the documentation of theabove-described arrangements, Allied was unable to attest either to its solvency or to the absenceof any material adverse change in its business. Allied received no consideration for itsagreement to the Purported Fourth Amendment. More importantly, the Purported Fourth Amendment, which was executed without theconsent of the Lenders, or the Administrative Agent, deletes every restriction and condition inthe Third Amendment relating to Yucaipa acquiring and voting Obligations, and that preventedYucaipa from interfering with the exercise of Lender rights. The Purported Fourth Amendment further allowed Yucaipa to enter into an Assignmentand Assumption Agreement with ComVest, dated August 21, 2009 (the "ComVestAssignment"), pursuant to which ComVest assigned its interest in $114.7 million of Term Loans(constituting more than 65% of the aggregate Term Loan Exposure), and $30.4 million of LCExposure (constituting more than 60% of the aggregate LC Exposure) to Yucaipa, well in excessof the express limitations imposed by the Third Amendment. 8 By virtue of the Purported Fourth Amendment, Yucaipa not only claims to have norestrictions on its ability to acquire Obligations under the First Lien Credit Agreement and tovote those Obligations, Yucaipa also asserts that it constitutes a "Requisite Lender." Under theFirst Lien Credit Agreement, a Requisite Lender has broad authority to make certain decisions7 The Petitioning Creditors dispute the validity, enforceability and effectiveness of the Purported FourthAmendment, as well as any transaction or event taken in reliance thereon.8 Upon information and belief, Yucaipa negotiated the purchase of the Obligations held by ComVest and, inconnection therewith, choreographed the execution ofthe Purported Fourth Amendment by ComVest and Yucaipascontrolled affiliate Allied. 11 REDACTED
  12. 12. affecting the rights of all First Lien Lenders, including the Petitioning Creditors. Those rightsinclude: • The ability to direct the Administrative Agent to act (or not act) upon the occurrence and during the continuance of an Event of Default. • To direct the Administrative Agent to accelerate (or not accelerate) the Obligations when Allied fails to pay interest or principal when due and to exercise (or not exercise) remedies to obtain payment of the Obligations. Acting under its alleged status as the Requisite Lender, Yucaipa has prevented theAdministrative Agent from taking any actions on behalf of the First Lien Lenders to acceleratethe Obligations or exercise remedies despite the fact that Allied has admitted to the occurrenceand continuance of Defaults and Events of Default for more than three years, including thefailure to pay more than $67 millions of dollars of interest and principal on the First Lien Loanand Second Lien Loan. Upon consummation of the ComVest Assigmnent, Yucaipa, which by then alreadycontrolled Allied through (a) ownership of the majority of Allieds common and preferred equity,(b) its appointment of a majority of the Allied Board, including Derex Walker, its chairman, and(c) its control of Allieds management, announced that it had acquired a majority of theObligations under the First Lien Credit Agreement by virtue of the acquisition from ComVestand the Purported Fourth Amendment, despite the clear and unequivocal restrictions on suchownership contained in the Third Amendment. Allieds actions in executing the PurportedFourth Amendment -- at Yucaipas direction -- were undertaken solely to protect Yucaipasinvestment in Allied at the expense of the First Lien Lenders and to interfere with or destroy therights of the First Lien Lenders. 99 On September 18, 2009, the Petitioning Creditors sent the letter annexed hereto as Exhibit C to counsel for theAdministrative Agent raising doubts about the validity ofYucaipas entitlement to act as Requisite Lender and 12 REDACTED
  13. 13. Prepetition Litigation The Administrative Agent, initially refused to acknowledge the validity of the PurportedFourth Amendment or Yucaipas alleged status as the Requisite Lender. Because of theAdministrative Agents refusal, on November 13, 2009, Yucaipa and Allied (Yucaipascontrolled affiliate) commenced an action against CIT Group/Business Credit, Inc. in theSuperior Court of Fulton County, Georgia, inter alia, (a) alleging breach of the First Lien CreditAgreement, (b) seeking a declaration that the Purported Fourth Amendment was effective andbinding on the parties to the First Lien Credit Agreement, and (c) seeking a declaration thatYucaipa was the Requisite Lender under the First Lien Credit Agreement (the "GeorgiaAction"). 10 On December 21, 2009, CIT filed a verified answer and counterclaims againstYucaipa and Allied seeking a declaration that the Purported Fourth Amendment was ineffectiveand not binding, that Yucaipa was not the Requisite Lender, and other relief ("CITCounterclaim"). 11 Notwithstanding the positions set forth in the CIT Counterclaim, CIT ultimatelyacquiesced in Yucaipas flagrant breach of the First Lien Credit Agreement. On December 5,2011, without notice to or consultation with the Petitioning Creditors, the parties to the GeorgiaAction entered into a settlement agreement (the "Settlement Agreement") 12 pursuant to whichCIT agreed not to "object to, challenge or contest, either directly or indirectly, the validity of theFourth Amendment," and acknowledged "that Yucaipa is the Requisite Lender for all purposesrecommending that the Administrative Agent disregard directions from Yucaipa in its purported capacity asRequisite Lender.10 A true and correct copy ofthe Complaint is annexed hereto as Exhibit D.11 A true and correct copy ofthe CIT Counterclaim is annexed hereto as Exhibit E.12 A true and correct copy of the Settlement Agreement is annexed hereto as Exhibit F. See Exhibit F, 1[10. 13 REDACTED
  14. 14. including the exercise of remedies." (Exhibit F) 13 • As consideration for CITs acquiescence tothe settlement, Yucaipa, among other things, agreed to fully indemnify CIT from claims broughtagainst CIT by third parties, such as the Lenders, arising from CITs agreement to enter thesettlement agreement. 14 As a result of the foregoing, Yucaipa not only has control over the Alleged Debtors (theBorrower) through its majority and controlling ownership interest in the Alleged Debtors andcontrol of the Allied Board, but it also purports to have control over all decisions affecting allLenders (as the purported Requisite Lender), including the ability to prevent the Lenders fromexercising their rights and remedies against the Alleged Debtors (including, without limitation,upon the Maturity Date of the Obligations). The Petitioning Creditors have attempted to protect their interests by commencing anaction against Yucaipa on January 17,2012 in the Supreme Court of New York County, NewYork, seeking a declaration that the Purported Fourth Amendment is invalid, ineffective and notbinding, and that Yucaipa is not the Requisite Lender under the First Lien Credit Agreement (the"New York Action"). On March 23,2012, Yucaipa filed a motion to dismiss on the grounds thatthe Settlement Agreement by CIT bars the New York Action under the doctrine of res judicata.13 The Settlement Agreement was signed by CIT solely in its capacity as a Lender and not in its capacity asAdministrative Agent. (See id., at 1!12.).14 Yucaipa also agreed to acknowledge the seniority of the Revolving Loans owed to CIT by Allied to theObligations represented to the Term Loans (which are the Obligations held by the Petitioning Creditors), dismiss theGeorgia Action and released CIT, as well as other consideration. (See id. ). 14 REDACTED
  15. 15. 15 REDACTED
  16. 16. The Petitioning Creditors Efforts to Engagethe Alleged Debtors in Restructuring Negotiations Despite ongoing Defaults and Events of Default -- including the failure to make interestand principal payments for more than two and one-half years -- and the commencement of theNew York Action, the Petitioning Creditors attempted to engage the Alleged Debtors inrestructuring negotiations. These attempts were met with a perfunctory response declining toaddress the substantive issues raised by the Petitioning Creditors or to engage them inrestructuring discussions. 16 REDACTED
  17. 17. CONCLUSION In light of the undeniable occurrence and continuing Events of Default and faced with theinability to preserve and protect their rights under the terms of the Credit Agreement, thePetitioning Creditors reluctantly concluded that they had no choice but to commence theseinvoluntary Chapter 11 cases. The Petitioning Creditors believe that the Chapter 11 process willpreserve the Alleged Debtors value, and assure an orderly restructuring and hopefully a speedyemergence from bankruptcy. In light of all that has transpired, the Petitioning Creditors arrivedat the rational conclusion that involuntary Chapter 11 cases were the only means to break theapparent impasse caused by Yucaipa and the directors and officers of the Alleged Debtors whohave disregarded their fiduciary duties.Dated: May 17, 2012 LANDIS RATH & COBB LLP Wilmington, Delaware By: [0;; !;/~{ AdainG. Landis (No. 3407) Kerri K. Mumford (No. 4186) 919 Market Street, Suite 1800 Wilmington, Delaware 19899 Telephone: (302) 467-4400 Facsimile: (302) 467-4500 -and- Adam C. Harris Robert J. Ward Victoria A. Lepore SCHULTE ROTH & ZABEL LLP 919 Third Avenue New York, New York 10022 Telephone: (212) 756-2000 Facsimile: (212) 593-5955 Attorneys for BDCM Opportunity Fund II, LP, Black Diamond CLO 2005-1 Ltd, and Spectrum Investment Partners, L.P. 17
  18. 18. EXHIBIT A
  19. 19. EXECUTION VERSION AMENDED AND RESTATED FIRST LIENSECURED SUPER-PRIORITY DEBTOR IN POSSESSION AND EXIT CREDIT AND GUARANTY AGREEMENT dated as of March 30, 2007 and amended and restated as of May 15, 2007 among ALLIED HOLDINGS, INC. and ALLIED SYSTEMS, LTD. (L.P.), as Borrowers CERTAIN SUBSIDIARIES OF ALLIED HOLDINGS, INC. and ALLIED SYSTEMS, LTD. (L.P.), as Guarantors, VARIOUS LENDERS, GOLDMAN SACHS CREDIT PARTNERS L.P., as Lead Arranger and Syndication Agent, and THE CIT GROUP/BUSINESS CREDIT, INC., as Administrative Agent and Collateral Agent$265,000,000 Senior Secured First Priority Credit Facilities
  20. 20. TABLE OF CONTENTSSECTION 1. DEFINITIONS AND INTERPRETATION ............................................................ 2 1.1 Definitions ................................................................................................................ 2 1.2 Accounting Terms .................................................................................................. 46 1.3 Interpretation, etc ................................................................................................... 4 7SECTION 2. LOANS AND LETTERS OF CREDIT ................................................................ .47 2.1 Term Loans ............................................................................................................ 47 2.2 Revolving Loans .................................................................................................... 49 2.3 Swing Line Loans .................................................................................................. 50 2.4 Issuance ofLetters of Credit and Purchase ofParticipations Therein ................... 52 2.5 Pro Rata Shares; Availability of Funds .................................................................. 60 2.6 Use of Proceeds ...................................................................................................... 61 2.7 Evidence ofDebt; Register; Lenders Books and Records; Notes ......................... 61 2.8 Interest on Loans .................................................................................................... 62 2.9 Conversion/Continuation ....................................................................................... 65 2.10 Default Interest. ...................................................................................................... 65 2.11 Fees ........................................................................................................................ 66 2.12 Scheduled Payments .............................................................................................. 67 2.13 Voluntary Prepayments/Commitment Reductions; Call Protection ...................... 67 2.14 Mandatory Prepayments ........................................................................................ 69 2.15 Application ofPrepayments ................................................................................... 71 2.16 General Provisions Regarding Payments ............................................................... 72 2.17 Ratable Sharing ...................................................................................................... 73 2.18 Making or Maintaining Eurodollar Rate Loans ..................................................... 74 2.19 Increased Costs; Capital Adequacy ....................................................................... 76 2.20 Taxes; Withholding, etc ......................................................................................... 77 2.21 Obligation to Mitigate ............................................................................................ 79 2.22 Defaulting Lenders ................................................................................................. 80 2.23 Removal or Replacement of a Lender ................................................................... 81 2.24 Super-Priority Nature of Obligations and Lenders Liens ..................................... 82 2.25 Payment of Obligations .......................................................................................... 83 2.26 No Discharge; Survival of Claims ......................................................................... 83 2.27 Waiver of any Priming Rights ............................................................................... 83 2.28 Co-Borrowers ......................................................................................................... 83 2.29 Judgment Currency ................................................................................................ 85SECTION 3. CONDITIONS PRECEDENT AND CONVERSION TO EXIT FACILITIES .......................................................................................................... 86 3.1 Closing Date ........................................................................................................... 86 3.2 Conditions to Each Credit Extension ..................................................................... 90 3.3 Exit Facilities Option ............................................................................................. 91
  21. 21. 3.4 Conditions to Exit Facilities Option ...................................................................... 91 3.5 Conversion to Exit Facilities .................................................................................. 98SECTION 4. REPRESENTATIONS AND WARRANTIES ...................................................... 99 4.1 Organization; Requisite Power and Authority; Qualification ................................ 99 4.2 Equity Interests and Ownership ............................................................................. 99 4.3 Due Authorization .................................................................................................. 99 4.4 No Conflict. ............................................................................................................ 99 4.5 Governmental Consents ....................................................................................... 100 4.6 Binding Obligation ............................................................................................... 100 4.7 Historical Financial Statements ........................................................................... 100 4.8 Projections ............................................................................................................ ! 01 4.9 No Material Adverse Change ............................................................................... 101 4.10 No Restricted Junior Payments ............................................................................ 101 4.11 Adverse Proceedings, etc ..................................................................................... 10 1 4.12 Payment ofTaxes ................................................................................................. l01 4.13 Properties ............................................................................................................. 102 4.14 Environmental Matters ......................................................................................... 102 4.15 No Defaults .......................................................................................................... 103 4.16 Material Contracts ................................................................................................ I 03 4.17 Governmental Regulation .................................................................................... 103 4.18 Margin Stock ........................................................................................................ 103 4.19 Employee Matters ................................................................................................ ! 03 4.20 Employee Benefit Plans ....................................................................................... l04 4.21 Certain Fees ......................................................................................................... 105 4.22 Solvency ............................................................................................................... ! 05 4.23 Compliance with Statutes, etc .............................................................................. 105 4.24 Disclosure ............................................................................................................ 106 4.25 Secured, Super-Priority Obligations .................................................................... 106 4.26 Patriot Act ............................................................................................................ 107SECTION 5. AFFIRMATIVE COVENANTS ......................................................................... 107 5.1 Financial Statements and Other Reports ............................................................. .l07 5.2 Existence .............................................................................................................. 112 5.3 Payment ofTaxes and Claims .............................................................................. 113 5.4 Maintenance ofProperties ................................................................................... 113 5.5 Insurance .............................................................................................................. 113 5.6 Books and Records; Inspections .......................................................................... 114 5.7 Lenders Meetings ................................................................................................. 114 5.8 Compliance with Laws ........................................................................................ 114 5.9 Environmenta1 ...................................................................................................... 114 5.10 Subsidiaries .......................................................................................................... 116 5.11 Additional Real Estate Assets .............................................................................. 117 5.12 Interest Rate Protection ....................................................................................... .117 5.13 Further Assurances ............................................................................................... 117 5.14 Maintenance ofRatings ....................................................................................... 118 5.15 Final Supplemental DIP Order. ............................................................................ 118 11
  22. 22. 5.16 Canadian Supplemental Final Order .................................................................... 118 5.17 Restructuring Advisers ........................................................................................ 118 5.18 Intentionally Omitted ........................................................................................... 118SECTION 6. NEGATIVE COVENANTS ........................................................................ .,., .. 118 6.1 Indebtedness ......................................................................................................... 119 6.2 Liens ..................................................................................................................... 123 6.3 No Further Negative Pledges ............................................................................... 126 6.4 Restricted Junior Payments .................................................................................. 126 6.5 Restrictions on Subsidiary Distributions ............................................................. 127 6.6 Investments .......................................................................................................... 127 6.7 Financial Covenants ............................................................................................. 129 6.8 Fundamental Changes; Disposition of Assets; Acquisitions ............................... 132 6.9 Disposal of Subsidiary Interests ........................................................................... 134 6.10 Sales and Lease-Backs ......................................................................................... 135 6.11 Transactions with Shareholders and Affiliates .................................................... 135 6.12 Conduct ofBusiness ............................................................................................ 135 6.13 Amendments or Waivers of Organizational Documents and Certain Agreements .......................................................................................................... 136 6.14 Haul Insurance ..................................................................................................... 13 6 6.15 Chapter 11 Claims; Adequate Protection ............................................................ .l36 6.16 DIP Orders and Canadian Orders ........................................................................ 136 6.17 Limitation on Prepayments ofPre-Petition Obligations ...................................... 136 6.18 Fiscal Year ........................................................................................................... 137 6.19 Repayment of Indebtedness ................................................................................. 137 6.20 Reclamation Claims ............................................................................................. 13 7 6.21 Chapter 11 Claims ................................................................................................ 137 6.22 Limitation on Voluntary Payments and Amendments or Waivers of the Second Lien Credit Agreement. ........................................................................... 137SECTION?. GUARANTY ....................................................................................................... 138 7.1 Guaranty of the Obligations ................................................................................. 138 7.2 Contribution by Guarantors ................................................................................. 138 7.3 Payment by Guarantors ........................................................................................ 139 7.4 Liability of Guarantors Absolute ......................................................................... 139 7.5 Waivers by Guarantors ........................................................................................ 141 7.6 Guarantors Rights of Subrogation, Contribution, etc .......................................... 142 7.7 Subordination of Other Obligations ..................................................................... 142 7.8 Continuing Guaranty ............................................................................................ 143 7.9 Authority of Guarantors or Borrowers ................................................................. 143 7.10 Financial Condition ofBorrowers ....................................................................... 143 7.11 Bankruptcy, etc .................................................................................................... 143 7.12 Discharge of Guaranty Upon Sale of Guarantor. ................................................. 144SECTION 8. EVENTS OF DEFAULT; CARVE-OUT EVENT .............................................. 144 8.1 Events of Default ................................................................................................. 144 8.2 Carve-Out Events ................................................................................................. 150 Ill
  23. 23. SECTION9. AGENTS .............................................................................................................. 150 9.1 Appointment of Agents ........................................................................................ 150 9.2 Powers and Duties ................................................................................................ I 51 9.3 General Immunity ................................................................................................ 151 9.4 Agents Entitled to Act as Lender ......................................................................... 153 9.5 Lenders Representations, Warranties and Acknowledgment.. ............................ 153 9.6 Right to Indemnity ............................................................................................... 153 9.7 Successor Administrative Agent, Collateral Agent and Swing Line Lender. ...... 154 9.8 Collateral Documents and Guaranty.................................................................... 155SECTION 10. MISCELLANEOUS ............................................................................................ 156 10.1 Notices ................................................................................................................. 156 10.2 Expenses .............................................................................................................. 158 10.3 Indemnity ............................................................................................................. 158 10.4 Set-Off. ................................................................................................................. 159 10.5 Amendments and Waivers ................................................................................... 159 10.6 Successors and Assigns; Participations ............................................................... 163 10.7 Independence of Covenants ................................................................................. 167 10.8 Survival ofRepresentations, Warranties and Agreements ................................. .167 10.9 No Waiver; Remedies Cumulative ...................................................................... 167 10.10 Marshalling; Payments Set Aside ........................................................................ 167 10.11 Severability .......................................................................................................... 168 10.12 Obligations Several; Independent Nature of Lenders Rights ............................. .168 10.I3 Headings .............................................................................................................. 168 IO.I4 APPLICABLE LAW ........................................................................................... I68 10.I5 CONSENT TO JURISDICTION ......................................................................... l68 10.16 WANER OF JURY TRIAL. ............................................................................... 169 I O.I7 Confidentiality ..................................................................................................... 169 1O.I8 Usury Savings Clause .......................................................................................... 170 10.19 Counterparts ......................................................................................................... 171 10.20 Effectiveness ........................................................................................................ 17I I 0.21 Patriot Act ............................................................................................................ 171 10.22 Electronic Execution of Assignments ................................................................. .17I 10.23 Post-Closing Actions ........................................................................................... 172 10.24 Joint and Several Liability ................................................................................... 172 10.25 Limitations Act, 2002 .......................................................................................... 172 10.26 Effect ofRestatement ........................................................................................... 172 IV
  24. 24. APPENDICES: A-1 Term Loan Commitments A-2 LC Commitments A-3 Revolving Commitments 8 Notice AddressesSCHEDULES: 4.1 Jurisdictions of Organization and Qualification 4.2 Equity Interests and Ownership 4.7 Contingent Liabilities 4.13 Real Estate Assets 4.16 Material Contracts 4.19 Employee Matters 4.20 Employee Benefit Plans 4.25 Post-petition Liens 6.1 Certain Indebtedness 6.2 Certain Liens 6.5 Certain Restrictions on Subsidiary Distributions 6.6 Certain Investments 6.8(a) Planned Asset Sales 6.8(b) Restructuring Asset Sales 6.11 Certain Affiliate Transactions 10.23 Post-Closing ActionsEXHIBITS: A-1 Funding Notice A-2 Conversion/Continuation Notice A-3 Issuance Notice B-1 Term Loan Note B-2 Revolving Loan Note B-3 Swing Line Note c Compliance Certificate D [Intentionally Omitted] E Assignment Agreement F Certificate Re Non-bank Status G-1 Closing Date Certificate G-2 Solvency Certificate H Counterpart Agreement I Pledge and Security Agreement J Mortgage K Landlord Waiver and Consent Agreement L Intercompany Note M Interim Supplemental DIP Order N Canadian Pledge and Security Agreement 0 Affirmation Agreement v
  25. 25. AMENDED AND RESTATED FIRST LIEN SECURED SUPER-PRIORITY DEBTOR IN POSSESSION AND EXIT CREDIT AND GUARANTY AGREEMENT This AMENDED AND RESTATED FIRST LIEN SECURED SUPER-PRIORITY DEBTOR IN POSSESSION AND EXIT CREDIT AND GUARANTYAGREEMENT, dated as of March 30, 2007, and amended and restated as of May 15, 2007, isentered into by and among ALLIED HOLDINGS, INC., a Georgia corporation and a debtor anddebtor in possession under Chapter 11 of the Bankruptcy Code (as defined below) ("Holdings"),ALLIED SYSTEMS, LTD. (L.P.), a Georgia limited partnership and a debtor and debtor inpossession under Chapter 11 of the Bankruptcy Code ("Systems" and, together with Holdings,the "Borrowers"), CERTAIN SUBSIDIARIES OF BORROWERS, as Subsidiary Guarantors,the Lenders party hereto from time to time, GOLDMAN SACHS CREDIT PARTNERS L.P.("GSCP"), as Syndication Agent (in such capacity, "Syndication Agent"), and THE CITGROUP/BUSINESS CREDIT, INC. ("CIT"), as Administrative Agent (together with itspermitted successors in such capacity, "Administrative Agent") and as Collateral Agent(together with its permitted successor in such capacity, "Collateral Agent"). RECITALS: WHEREAS, capitalized terms used in these Recitals shall have the respectivemeanings set forth for such terms in Section 1.1 hereof; WHEREAS, on July 31, 2005 (the "Petition Date"), Borrowers and each of theother Debtors filed voluntary petitions for relief (collectively, the "Cases") under Chapter 11 ofthe Bankruptcy Code with the Bankruptcy Court, which Cases have been recognized in Canadapursuant to the Canadian Stay Order; WHEREAS, from and after the Petition Date, Debtors are continuing to operatetheir respective businesses and manage their respective properties as debtors in possession underSections 1107 and 11 08 of the Bankruptcy Code; WHEREAS, Borrowers and the Agents and the Lenders party thereto previouslyentered into the Secured Super-Priority Debtor in Possession and Exit Credit and GuarantyAgreement, dated as of March 30, 2007 (the "Existing Credit Agreement"), as amended, underwhich the Lenders extended to Borrowers certain credit facilities (the "Existing CreditFacilities") consisting of $230,000,000 aggregate principal amount of Term Loans (the"Existing Term Loans"), $35,000,000 aggregate principal amount of Revolving Commitmentsand $50,000,000 aggregate principal amount of LC Commitments;
  26. 26. WHEREAS, Borrowers will refinance a portion of the Existing Term Loans withthe proceeds of a new second lien term loan in an aggregate principal amount equal to$50,000,000 under a new Second Lien Secured Super-Priority Debtor in Possession and ExitCredit and Guaranty Agreement dated as of May 15, 2007; WHEREAS, Borrowers have agreed to secure all of their Obligations by grantingto Collateral Agent, for the benefit of Secured Parties, a First Priority Lien on substantially all oftheir assets, including a pledge of all of the Equity Interests of each of their respective DomesticSubsidiaries, 100% of all the Equity Interests of each of their Canadian Subsidiaries and 65% ofall the Equity Interests of each of their other respective first-tier Foreign Subsidiaries; WHEREAS, Guarantors have agreed to guarantee the obligations of Borrowershereunder and to secure their respective Obligations by granting to Collateral Agent, for thebenefit of Secured Parties, a First Priority Lien on substantially all of their respective assets,including a pledge of all of the Equity Interests of each of their respective Domestic Subsidiaries(including Systems), 100% of all the Equity Interests of each of their respective CanadianSubsidiaries and 65% of all the Equity Interests of each of their other respective directly ownedForeign Subsidiaries; and WHEREAS, the Lenders have agreed to grant an option to Borrowers to causethe Credit Facilities to be converted to the Exit Facilities subject to certain terms and conditionsset forth herein. NOW, THEREFORE, in consideration of the premises and the agreements,provisions and covenants herein contained, the parties hereto agree as follows:SECTION 1. DEFINITIONS AND INTERPRETATION 1.1 Definitions. The following terms used herein, including in the preamble, recitals,exhibits and schedules hereto, shall have the following meanings: "Act" as defined in Section 3.1(r). "Adjusted Eurodollar Rate" means, for any Interest Rate Determination Datewith respect to an Interest Period for a Eurodollar Rate Loan, the rate per annum obtained bydividing (and rounding upward to the next whole multiple of 1/16 of 1%) (i) (a) the rate perannum (rounded to the nearest 1/100 of 1%) equal to the rate determined by AdministrativeAgent to be the offered rate which appears on the page of the Telerate Screen which displays anaverage British Bankers Association Interest Settlement Rate (such page currently being pagenumber 3740 or 3750, as applicable) for deposits (for delivery on the first day of such period)with a term equivalent to such period in Dollars, determined as of approximately 11 :00 a.m. 2
  27. 27. (London, England time) on such Interest Rate Determination Date, or (b) in the event the ratereferenced in the preceding clause (a) does not appear on such page or service or if such page orservice shall cease to be available, the rate per annum (rounded to the nearest 1/100 of I%) equalto the rate determined by Administrative Agent to be the offered rate on such other page or otherservice which displays an average British Bankers Association Interest Settlement Rate fordeposits (for delivery on the first day of such period) with a term equivalent to such period inDollars, determined as of approximately 11:00 a.m. (London, England time) on such InterestRate Determination Date, or (c) in the event the rates referenced in the preceding clauses (a) and(b) are not available, the rate per annum (rounded to the nearest 11100 of 1%) equal to theoffered quotation rate to first class banks in the London interbank market by Deutsche Bank fordeposits (for delivery on the first day of the relevant period) in Dollars of amounts in same dayfunds comparable to the principal amount of the applicable Loan of Administrative Agent, in itscapacity as a Lender, for which the Adjusted Eurodollar Rate is then being determined withmaturities comparable to such period as of approximately 11:00 a.m. (London, England time) onsuch Interest Rate Determination Date, by (ii) an amount equal to (a) one minus (b) theApplicable Reserve Requirement. "Administrative Agent" as defined in the preamble hereto. "Adverse Proceeding" means any action, suit, proceeding, hearing (whetheradministrative, judicial or otherwise), governmental investigation or arbitration (whether or notpurportedly on behalf of Holdings or any of its Subsidiaries) at law or in equity, or before or byany Governmental Authority, domestic or foreign (including any Environmental Claims),whether pending or, to the knowledge of Holdings or any of its Subsidiaries, threatened againstor affecting Holdings or any of its Subsidiaries or any property of Holdings or any of itsSubsidiaries. "Affected Lender" as defined in Section 2.18(b). "Affected Loans" as defined in Section 2.18(b ). "Affiliate" means, as applied to any Person, any other Person directly orindirectly controlling, controlled by, or under common control with, that Person. For thepurposes of this definition, "control" (including, with correlative meanings, the terms"controlling", "controlled by" and "under common control with"), as applied to any Person,means the possession, directly or indirectly, of the power (i) to vote 5% or more (or, for purposesof the definition of "Controlled Investment Affiliate", 50% or more) of the Securities havingordinary voting power for the election of directors of such Person or (ii) to direct or cause thedirection of the management and policies of that Person, whether through the ownership ofvoting securities or by contract or otherwise. 3
  28. 28. "Affirmation Agreement" shall mean the Affirmation Agreement substantially inthe form ofExhibit 0 hereto. "Agent" means each of Administrative Agent, Syndication Agent and CollateralAgent. "Agent Affiliates" as defined in Section 10.1 (b )(iii). "Aggregate Amounts Due" as defined in Section 2.17. "Aggregate Payments" as defined in Section 7.2. "Agreement" means this Amended and Restated First Lien Secured Super-Priority Debtor in Possession and Exit Credit and Guaranty Agreement, dated as of March 30,2007, and amended and restated as of May 15, 2007, as it may be amended, supplemented orotherwise modified from time to time. "AH Industries" means AH Industries Inc., an Alberta corporation. "Applicable Reserve Requirement" means, at any time, for any Eurodollar RateLoan, the maximum rate, expressed as a decimal, at which reserves (including any basicmarginal, special, supplemental, emergency or other reserves) are required to be maintained withrespect thereto against "Eurocurrency liabilities" (as such tem1 is defined in Regulation D) underregulations issued from time to time by the Board of Governors or other applicable bankingregulator. Without limiting the effect of the foregoing, the Applicable Reserve Requirementshall reflect any other reserves required to be maintained by such member banks with respect to(i) any category of liabilities which includes deposits by reference to which the applicableAdjusted Eurodollar Rate or any other interest rate of a Loan is to be determined, or (ii) anycategory of extensions of credit or other assets which include Eurodollar Rate Loans. AEurodollar Rate Loan shall be deemed to constitute Eurocurrency liabilities and as such shall bedeemed subject to reserve requirements without benefits of credit for proration, exceptions oroffsets that may be available from time to time to the applicable Lender. The rate of interest onEurodollar Rate Loans shall be adjusted automatically on and as of the effective date of anychange in the Applicable Reserve Requirement. "Approved Electronic Communications" means any notice, demand,communication, infunnalion, document or other material that any Credit Party provides toAdministrative Agent pursuant to any Credit Document or the transactions contemplated thereinwhich is distributed to the Agents or to the lenders by means of electronic communicationspursuant to Section 10.1 (b). 4
  29. 29. "Asset Sale" means a sale, lease or sub-lease (as lessor or sublessor), sale andleaseback, assignment, conveyance, exclusive license (as licensor or sublicensor), transfer orother disposition to, or any exchange of property with, any Person (other than Borrower or anyGuarantor Subsidiary), in one transaction or a series of transactions, of all or any part ofHoldings or any of its Subsidiaries businesses, assets or properties of any kind, whether real,personal, or mixed and whether tangible or intangible, whether now owned or hereafter acquired,leased or licensed, including the Equity Interests of any of Holdings Subsidiaries, other than (i)inventory (or other assets) sold, leased or licensed out in the ordinary course of business(excluding any such sales, leases or licenses out by operations or divisions discontinued or to bediscontinued), (ii) sales or other dispositions of obsolete or worn out rigs and (iii) sales, leases orlicenses out of other assets for aggregate consideration of less than $500,000 with respect to anytransaction or series of related transactions and less than $1,000,000 in the aggregate during anyFiscal Year. "Assignment Agreement" means an Assignment and Assumption Agreementsubstantially in the form of Exhibit E, with such amendments or modifications as may beapproved by Administrative Agent. "Assignment Effective Date" as defined in Section 10.6(b). "Authorized Officer" means, as applied to any Person, any individual holdingthe position of chairman of the board (if an officer), chief executive officer, president or one ofits vice presidents (or the equivalent thereof), and such Persons chief financial officer, controller,assistant controller, treasurer or assistant treasurer. "Bankruptcy Code" means Title 11 of the United States Code entitled "Bank-ruptcy," as now and hereafter in effect, or any successor statute; provided, however, that, withrespect to the Cases, "Bankruptcy Code" means Title 11 of the United States Code, as in effecton the Petition Date and as thereafter amended, if such amendments are made applicable to theCases. "Bankruptcy Court" means the United States Bankruptcy Court for the NorthernDistrict of Georgia or any other court having competent jurisdiction over the Cases. "Base Fiscal Year" as defined in Section 6.7(c). "Base Rate" means, for any day, a rate per annum equal to the greater of (i) thePrime Rate in effect on such day and (ii) the Federal Funds Effective Rate in effect on such dayplus Y:! of 1%. Any change in the Base Rate due to a change in the Prime Rate or the FederalFunds Effective Rate shall be effective on the effective day of such change in the Prime Rate orthe Federal Funds Effective Rate, respectively. 5
  30. 30. "Base Rate Loan" means a Loan bearing interest at a rate detennined byreference to the Base Rate. "Benchmark LIBOR Rate" as defined in Section 2.4(m). "Beneficiary" means each Agent, Issuing Bank, Lender and Lender Counterparty. "BIA means the Bankruptcy and Insolvency Act (Canada), as now or hereafter ineffect or any successor statute. "Blue Thunder" means Blue Thunder Auto Transport, Inc. or any of itsSubsidiaries or Affiliates. "Blue Thunder Equipment" means rigs (including tractors, trailers and relatedequipment) purchased from Blue Thunder or any auctioneer acting on behalf of Blue Thunderand any replacement parts or improvements made thereto. "Board of Governors" means the Board of Governors of the United StatesFederal Reserve System, or any successor thereto. "Borrowers" as defined in the preamble hereto. "Business Day" means (i) any day excluding Saturday, Sunday and any daywhich is a legal holiday under the laws of the State of New York or is a day on which bankinginstitutions located in such state are authorized or required by law or other governmental actionto close and (ii) with respect to all notices, determinations, fundings and payments in connectionwith the Adjusted Eurodollar Rate or any Eurodollar Rate Loans, the term "Business Day" shallmean any day which is a Business Day described in clause (i) and which is also a day for tradingby and between banks in Dollar deposits in the London interbank market. "Canadian Court" means the Ontario Superior Court of Justice (CommercialList). "Canadian Confirmation Order" means an order of the Canadian Court underSection 18.6 of the CCAA, together with all extensions, modifications and amendments thereto,in each case in form and substance satisfactory to Agents, giving full effect to the ConfirmationOrder, which order shall specifically but not exclusively confirm the Plan and approve andauthorize the transactions contemplated thereby and the granting of liens under the Credit 6
  31. 31. Documents and containing a release in favor of Administrative Agent and Syndication Agent andthe Lenders and their respective affiliates. "Canadian Credit Party" means any Credit Party incorporated, organized orotherwise established under the laws of Canada or any political subdivision of Canada. "Canadian DIP Order" means the Canadian Interim Order or the Canadian FinalOrder, as applicable. "Canadian Final Order" means the order entitled "In the Matter of Section 18.6of the Companies Creditors Arrangement Act, R.S.C. 1985, c. C-36 and in the matter of AlliedHoldings and those subsidiaries listed on Schedule A hereto" entered by the Canadian Court onApril 16, 2007, as amended, supplemented or otherwise modified by the Canadian SupplementalInterim Order and Canadian Supplemental Final Order. "Canadian Insolvency Law" shall mean any of the BIA and the CCAA, and anyother applicable insolvency or other similar law. "Canadian Interim Order" means the order entitled "In the Matter of Section18.6 of the Companies Creditors Arrangement Act, R.S.C. 1985, c. C-36 and in the matter ofAllied Holdings and those subsidiaries listed on Schedule A hereto" entered by the CanadianCourt on March 29, 2007, as amended, supplemented or otherwise modified by the CanadianSupplemental Interim Order and Canadian Supplemental Final Order. "Canadian Pledge and Security Agreement" means the Pledge and SecurityAgreement, dated as of March 30, 2007, executed by each Canadian Credit Party, as it may beamended, supplemented or otherwise modified from time to time. "Canadian PPSA" means the Personal Property Security Act (Ontario) and theRegulations 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 CollateralAgents security interest in any Collateral are governed by the personal property security laws orlaws relating to movable property of any jurisdiction other than Ontario, Canadian PPSA shallmean those personal property security laws or laws relating to movable property in such otherjurisdiction for the purpose of the provisions hereof relating to such validity, perfection (oropposability), effect of perfection or of non-perfection or priority and for the definitions relatedto such provisions. "Canadian Stay Order" means, collectively, the order of the Canadian Courtentered on August 5, 2005 under Section 18.6 of the CCAA, together with all extensions,modifications and amendments thereto, in. each case in form and substance reasonably 7
  32. 32. satisfactory to the Agent, which, among other matters but not by way of limitation, recognizesthe Cases and imposes a stay of proceedings against creditors and others in Canada. "Canadian Subsidiary" means any Subsidiary that is incorporated, organized orotherwise established under the laws of Canada or any political subdivision of Canada. "Canadian Supplemental Final Order" means an order of the Canadian Courtunder Section 18.6 of the CCAA, together with all extensions, modifications and amendmentsthereto, in each case in form and substance satisfactory to Agents, giving full effect to the FinalSupplemental DIP Order, which order shall specifically but not exclusively provide that each ofthe Canadian Credit Parties is authorized to enter into the Credit Documents (as amended andrestated) to which it is a party, and provide, execute and deliver all such guarantees, documents,security interests and liens as are contemplated in such Credit Documents and granting to theCollateral Agent a fixed charge, mortgage, hypothec, security interest and lien in all of theCollateral in which any of the Canadian Credit Parties now or hereafter has an interest ranking inpriority to all other encumbrances. "Canadian Supplemental Interim Order" means an order of the CanadianCourt under Section 18.6 of the CCAA, together with all extensions, modifications andamendments thereto, in each case in form and substance satisfactory to Agents, giving full effectto the Interim Supplemental DIP Order, which order shall specifically but not exclusivelyprovide that each of the Canadian Credit Parties is authorized to enter into the Credit Documents(as amended and restated) to which it is a party, and provide, execute and deliver all suchguarantees, documents, security interests and liens as are contemplated in such CreditDocuments and granting to the Collateral Agent a fixed charge, mortgage, hypothec, securityinterest and lien in all of the Collateral in which any of the Canadian Credit Parties now orhereafter has an interest ranking in priority to all other encumbrances. "Capital Lease" means, as applied to any Person, any lease of any property(whether real, personal or mixed) by that Person as lessee that, in conformity with GAAP, is orshould be accounted for as a capital lease on the balance sheet ofthat Person. "Carve-Out" means the following claims: (a) quarterly fees pursuant to 28 U.S.C.§ 1930(a)(6), (b) fees payable to the clerk ofthe Bankruptcy Court and any agent thereof and (c)fees and disbursements incurred by the Credit Parties professionals (other than the Credit Partiesordinary course professionals) and the professionals of the Committee retained prior to the ExitFacilities Conversion Date (collectively, the "Professionals") and allowed by order of theBankruptcy Court in the aggregate amount not to exceed $1,500,000, in each case incurred priorto a Carve-Out Event but not yet paid to the extent such fees and expenses are approved by theBankruptcy Court, subject to the right of Administrative Agent, the Lenders and any other partyin interest to object to the award of such fees and expenses; provided, however, that the Carve-Out shall not include, apply to, or be available for any fees or expenses incurred by any party,including the Credit Parties, any Committee or any Professional in connection with the 8
  33. 33. investigation, initiation or prosecution of any claims, defenses or causes of action (as describedin the Interim DIP Order) against the Agents or the Lenders and as otherwise provided in theInterim DIP Order or Final DIP Order, as applicable; provided, further, prior to a Carve-OutEvent the Credit Parties shall be permitted to pay compensation and reimbursement of expensesallowed and payable under Sections 328, 330 and 331 of the Bankruptcy Code or otherwisepursuant to an order of the Bankruptcy Court, as the same may be due and payable, and the sameshall not reduce the Carve-Out, subject to the right of Administrative Agent, the Lenders and anyother party in interest to object to such payments; provided, further, that in the event of anyinconsistency in the definition of "Carve-Out" between the provisions of this Agreement and theInterim DIP Order or Final DIP Order, the provisions of the Interim DIP Order or Final DIPOrder shall govern. "Carve-Out Event" as defined in Section 8.2. "Carve-Out Event Notice" as defmed in Section 8.2. "Cases" as defined in the recitals hereto. "Cash" means money, currency or a credit balance in any demand or DepositAccount. "Cash Equivalents" means, as at any date of determination, (i) marketablesecurities (a) issued or directly and unconditionally guaranteed as to interest and principal by theUnited States Government or the Government of Canada or (b) issued by any agency of theUnited States, in each case maturing within one year after the date of acquisition; (ii) marketabledirect obligations issued by any state ofthe United States of America or any political subdivisionof any such state or any public instrumentality thereof, in each case maturing within one yearafter the date of acquisition and having, at the time of the acquisition thereof, a rating of at leastA-1 from S&P or at least P-1 from Moodys; (iii) commercial paper maturing no more than oneyear from the date of acquisition thereof and having, at the time of the acquisition thereof, arating of at least A-1 from S&P or at least P-1 from Moodys; (iv) certificates of deposit orbankers acceptances maturing within one year after the date of acquisition and issued oraccepted by any Lender or by any commercial bank organized under the laws of the UnitedStates of America or any state thereof or the District of Columbia that (a) is at least "adequatelycapitalized" (as defined in the regulations of its primary Federal banking regulator) and (b) hasTier 1 capital (as defined in such regulations) of not less than $1 00,000,000; (v) fullycollateralized repurchase agreements with a term of not more than 90 days for securitiesdescribed in clause (i) above and entered into with a financial institution satisfying the criteria ofclause (iv) above; and (vi) shares of any money market mutual fund that (a) has substantially allofits assets invested continuously in the types of investments referred to in clauses (i) through (v)above, (b) has net assets of not less than $500,000,000, and (c) has the highest rating obtainablefrom either S&P or Moodys. 9
  34. 34. "CCAA" means Companies Creditors Arrangement Act (Canada), as now andhereafter in effect, or any successor statute. "Certificate re Non-Bank Status" means a certificate substantially in the forn1 ofExhibit F. "Change of Control" means, at any time on or after the Exit FacilitiesConversion Date (i) prior to a Qualified Public Offering, (a) Sponsor and its ControlledInvestment Affiliates shall not beneficially own and control at least 40% on a fully diluted basisof the economic and voting interests in the Equity Interests of Holdings, (b) Sponsor and itsControlled Investment Affiliates fail to elect a majority of the members of the board of directors(or similar governing body) of Holdings or (c) any Person or "group" (within the meaning ofRules 13d-3 and 13d-5 under the Exchange Act) shall at any time have acquired beneficialownership on a fully diluted basis of the voting and/or economic interests in the Equity Interestsof Holdings greater than the beneficial ownership on a fully diluted basis of the voting and/oreconomic interests in the Equity Interests of Holdings owned by the Sponsor and its ControlledInvestment Affiliates at such time; (ii) after a Qualified Public Offering, any Person or "group"(within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) other than Sponsor andits Controlled Investment Affiliates (a) shall have acquired beneficial ownership of 35% or moreon a fully diluted basis ofthe voting and/or economic interest in the Equity Interests of Holdingsor (b) shall have obtained the power (whether or not exercised) to elect a majority of themembers of the board of directors (or similar governing body) of Holdings; (iii) Holdings shallcease to beneficially own and control, directly or indirectly, 100% on a fully diluted basis of theeconomic and voting interest in the Equity Interests of Systems; (iv) the majority of the seats(other than vacant seats) on the board of directors (or similar governing body) of Holdings ceaseto be occupied by Persons who either (a) were members of the board of directors of Holdings onthe Exit Facilities Conversion Date or (b) were nominated for election by the board of directorsof Holdings, a majority of whom were directors on the Exit Facilities Conversion Date or whoseelection or nomination for election was previously approved by a majority of such directors. "CIT" as defined in the preamble. "Claim" has the meaning specified in Section 101(5) ofthe Bankruptcy Code. "Class" means with respect to Lenders, each of the following classes of Lenders:(i) Lenders having Term Loan Exposure, (ii) Lenders having Revolving Loan Exposure and (iii)Lenders having LC Deposits. "Closing Date" means March 30, 2007. 10
  35. 35. "Closing Date Certificate" means a Closing Date Certificate substantially in theform of Exhibit G-1. "Collateral" means, collectively, all of the real, personal and mixed property(including Equity Interests) in which Liens are purported to be granted pursuant to the CollateralDocuments as security for the Obligations. "Collateral Agent" as defined in the preamble hereto. "Collateral Documents" means the Pledge and Security Agreement, CanadianPledge and Security Agreement, the Quebec Security the Collateral Servicing Agreement, theMortgages, the Intellectual Property Security Agreements, the Landlord Personal PropertyCollateral Access Agreements, if any, and all other instruments, documents and agreementsdelivered by any Credit Party pursuant to this Agreement or any of the other Credit Documentsin order to.grant to Collateral Agent, for the benefit of Secured Parties, or perfect a Lien on anyreal, personal or mixed property of that Credit Party as security for the Obligations. "Collateral Questionnaire" means a certificate in form satisfactory to CollateralAgent that provides information with respect to the personal or mixed property of each CreditParty. "Collateral Servicing Agreement" means a Collateral Servicing Agreement, inform and substance reasonably satisfactory to the Collateral Agent, by and among CorporationService Company, each Credit Party (other than any Foreign Subsidiary), the Collateral Agentand the Second Lien Collateral Agent. "Committed Capital Expenditures" as defined in Section 6.7(d). "Committee" means the Official Committee ofUnsecured Creditors appointed inthe Cases pursuant to Section 1102 ofthe Bankruptcy Code, on August 5, 2005, as reconstitutedfrom time to time. "Commitment" means any Revolving Commitment, LC Commitment or TermLoan Commitment. "Commodity Agreement" means any commodity exchange contract, commodityswap agreement, futures contract, option contract, synthetic cap or other similar agreement orarrangement, each of which is for the purpose of hedging the commodity risk associated withHoldings and its Subsidiaries operations and not for speculative purposes. 11
  36. 36. "Compliance Certificate" means a Compliance Certificate substantially in theform ofExhibit C. "Confirmation Order" as defined in Section 3.4(e)(iv). "Consolidated Adjusted EBITDA" means, for any period, an amountdetermined for Holdings and its Subsidiaries on a consolidated basis equal to (i) ConsolidatedNet Income for such period, plus, to the extent deducted in determining such Consolidated NetIncome, the sum, without duplication, of amounts for (a) Consolidated Interest Expense for suchperiod; (b) consolidated income, single business, franchise, unitary or gross receipt tax expensefor such period; (c) total depreciation expense for such period; (d) total amortization expense forsuch period; (e) the cumulative effect (whether positive or negative) of any change in accountingprinciples; (f) management fees and expenses paid during such period pursuant to theManagement Agreement to the extent permitted hereunder; (g) Transaction Costs for such period;(h) with respect to any period (including any Fiscal Quarter) during Fiscal Year 2006 or 2007,costs and expenses resulting from administrative expenses paid with respect to the Cases forprofessional fees and expenses in an amount up to, but not exceeding in the aggregate for FiscalYear 2006 and 2007, $30,000,000; (i) with respect to any period (including any Fiscal Quarter)during Fiscal Year 2006 or 2007, amounts paid as cure payments or similar costs in connectionwith assumptions of executory contracts assumed during the Cases or as part of the Plan in anamount up to, but not exceeding in the aggregate for Fiscal Year 2006 and 2007, $5,000,000; (j)fees and charges related to any events or transactions that are unusual in nature and infrequent inoccurrence, in that it is unrelated to, or only incidentally related to, the current ordinary andtypical activities of Borrowers and would not reasonably be expected to recur in a normaloperating cycle in an amount up to, but not exceeding, $1,000,000 in the aggregate for anyperiods occurring during any Fiscal Year and, $3,000,000 in the aggregate from the Closing Dateto the date of determination; (k) with respect to any period (including any Fiscal Quarter) duringFiscal Year 2007, non-recurring costs and expenses arising from or recognized in connectionwith the consummation and effectiveness of the Plan in an amount up to, but not exceeding in theaggregate for Fiscal Year 2007, $5,000,000; and (1) other non-Cash charges for such period (excluding any such non- Cash charge to the extent that it represents an accrual or reserve forpotential Cash payment in any future period or amortization of a prepaid Cash payment that wasmade in a prior period); and (m) with respect to any period (including any Fiscal Quarter) during Fiscal Year 2007, amounts paid to Sponsor in connection with a claim by Sponsor for substantial contribution in accordance with the Plan in an amount up to, but not exceeding, $5,000,000, minus (ii) to the extent included in determining such Consolidated Net Income, non-Cash gains for such period (excluding any such non -Cash gain to the extent it represents the reversal of an accrual or reserve for potential Cash gain in any prior period). "Consolidated Capital Expenditures" means, for any period, the aggregate of allexpenditures of Holdings and its Subsidiaries during such period determined on a consolidatedbasis that, in accordance with GAAP, are or should be included in "purchase of property andequipment" or similar items reflected in the consolidated statement of cash flows of Holdings 12
  37. 37. and its Subsidiaries, but excluding, however, any such expenditures made in connection with aPermitted Acquisition permitted hereunder. "Consolidated Cash Interest Expense" means, for any period, total interestexpense (including that portion attributable to Capital Leases in accordance with GAAP andcapitalized interest) of Holdings and its Subsidiaries on a consolidated basis with respect to alloutstanding Indebtedness of Holdings and its Subsidiaries, including all commissions, discountsand other fees and charges owed with respect to letters of credit and net costs under Interest RateAgreements, but excluding, however, any amount not payable in Cash and any amounts referredto in Section 2.ll(f) payable on or before the Closing Date. "Consolidated Current Assets" means, as at any date of determination, the totalassets of Holdings and its Subsidiaries on a consolidated basis that may properly be classified ascurrent assets in conformity with GAAP, excluding Cash and Cash Equivalents. "Consolidated Current Liabilities" means, as at any date of determination, thetotal liabilities of Holdings and its Subsidiaries on a consolidated basis that may properly beclassified as current liabilities in conformity with GAAP, excluding the current portion of longterm debt. "Consolidated Excess Cash Flow" means, for any Fiscal Year, an amount (ifpositive) equal to: (i) the sum, without duplication, of (a) Consolidated Adjusted EBITDA forsuch Fiscal Year; plus (b) the Consolidated Working Capital Adjustment for such Fiscal Year;minus (ii) the sum, without duplication, of (a) scheduled repayments of Indebtedness forborrowed money (including the implied principal component of scheduled payments made onCapital Leases, but excluding repayments of Revolving Loans or Swing Line Loans except to theextent the Revolving Commitments are permanently reduced in connection with suchrepayments) paid in Cash during such Fiscal Year; (b) Consolidated Capital Expenditures forsuch Fiscal Year (net of any proceeds of (x) any related financings with respect to suchexpenditures, (y) any sales of assets used to finance such expenditures and (z) any SpentCommitted Capital Expenditures deducted in the calculation of Consolidated Excess Cash Flowfor the preceding Fiscal Year); (c) Consolidated Cash Interest Expense for such Fiscal Year;(d) with respect to Fiscal Year 2007, any amounts referred to in Section 2.11 (f) paid on or beforethe Closing Date; (e) consolidated income, single business, franchise, unitary or gross receipt taxexpense payable in cash with respect to such Fiscal Year; (f) management fees and expenses paidduring such Fiscal Year pursuant to the Management Agreement to the extent permittedhereunder; (g) with respect to Fiscal Year 2007, Transaction Costs paid in Cash during suchFiscal Year; (h) with respect to Fiscal Year 2007, costs and expenses resulting fromadministrative expenses with respect to the Cases which are for professional fees and expensesand are paid in Cash during such Fiscal Year; (i) amounts paid in cash during such Fiscal Year ascure payments or similar costs in connection with assumptions of executory contracts assumedduring the Cases or as part of the Plan; U) fees, charges and expenses related to any events ortransactions that are paid in Cash during such Fiscal Year and are unusual in nature andinfrequent in occurrence, in that it is unrelated to, or only incidentally related to, the current 13

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