10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[x]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 — For the quarterly period ended March 31, 2002
	or
[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 — For the transition period from _________________ to _________________
	Commission File Number: 0-22276

ALLIED HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

GEORGIA	58-0360550
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

Suite 200, 160 Clairemont Avenue, Decatur, Georgia 30030

(Address of principal executive offices)

(404) 373-4285

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [  ] No

Outstanding common stock, no par value at April 30, 2002                               8,361,526

1

ALLIED HOLDINGS, INC. & SUBSIDIARIES

INDEX

PART I

FINANCIAL INFORMATION

				PAGE
ITEM 1: FINANCIAL STATEMENTS
	Consolidated Balance Sheets as of March 31, 2002 and December 31, 2001				3
	Consolidated Statements of Operations for the Three Month Periods Ended March 31, 2002 and 2001				4
	Consolidated Statements of Cash Flows for the Three Month Periods Ended March 31, 2002 and 2001				5
	Notes to Consolidated Financial Statements				6
ITEM 2
	Management’s Discussion and Analysis of Financial Condition and Results of Operations				17
ITEM 3	Quantitative and Qualitative Disclosures about Market Risk				24
			PART II
		OTHER INFORMATION
ITEM 1
	Legal Proceedings				24
ITEM 6
	Exhibits and Reports on Form 8-K				25
	Signature Pages				26

2

PART 1 — FINANCIAL INFORMATION

ITEM 1 — FINANCIAL STATEMENTS

ALLIED HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands)

					March 31
					2002			December 31
					(Unaudited)			2001
				ASSETS
CURRENT ASSETS:
	Cash and cash equivalents				$	19,615		$	10,543
	Short-term investments					64,658			64,794
	Receivables, net of allowance for doubtful accounts of $10,511 and $11,058 at March 31, 2002 and December 31, 2001, respectively					62,684			72,292
	Inventories					5,241			5,349
	Deferred tax assets					34,334			32,403
	Prepayments and other current assets					17,490			18,921
		Total current assets				204,022			204,302
PROPERTY AND EQUIPMENT, NET						202,436			214,641
OTHER ASSETS:
	Goodwill, net					90,174			90,230
	Other					30,820			24,219
		Total other assets				120,994			114,449
		Total assets			$	527,452		$	533,392
	LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
	Current maturities of long-term debt				$	3,507		$	2,625
	Trade accounts payable					37,713			40,232
	Accrued liabilities					88,978			82,963
			Total current liabilities			130,198			125,820
LONG-TERM DEBT, less current maturities						276,534			286,533
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS						9,535			9,363
DEFERRED INCOME TAXES						21,612			21,383
OTHER LONG-TERM LIABILITIES						72,803			72,296
STOCKHOLDERS’ EQUITY:
	Common stock, no par value; 20,000 shares authorized, 8,252 and 8,274 shares outstanding at March 31, 2002 and December 31, 2001, respectively					—			—
	Additional paid-in capital					46,603			46,520
	Treasury stock, 139 shares at cost at March 31, 2002 and December 31, 2001, respectively					(707	)		(707	)
	Retained deficit					(20,050	)		(18,894	)
	Accumulated other comprehensive loss, net of tax					(9,076	)		(8,922	)
			Total stockholders’ equity			16,770			17,997
			Total liabilities and stockholders’ equity		$	527,452		$	533,392

The accompanying notes are an integral part of these consolidated balance sheets.

3

ALLIED HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
(Unaudited)

			For the Three Months Ended
			March 31
			2002			2001
REVENUES			$	213,259		$	218,179
OPERATING EXPENSES:
		Salaries, wages and fringe benefits		118,536			131,717
		Operating supplies and expenses		30,905			41,442
		Purchased transportation		21,779			23,296
		Insurance and claims		10,571			13,289
		Operating taxes and licenses		8,463			8,626
		Depreciation and amortization		13,663			15,191
		Rents		1,354			2,070
		Communications and utilities		1,992			2,038
		Other operating expenses		3,260			3,856
		Gain on sale of operating assets		(1,029	)		(167	)
		Total operating expenses		209,494			241,358
		Operating income (loss)		3,765			(23,179	)
OTHER INCOME (EXPENSE):
		Equity in earnings of UK and Brazil joint ventures, net of tax		—			1,209
		Interest expense		(8,122	)		(8,466	)
		Interest income		272			964
		Other		(207	)		—
				(8,057	)		(6,293	)
LOSS BEFORE INCOME TAXES & EXTRAORDINARY ITEM				(4,292	)		(29,472	)
INCOME TAX BENEFIT				1,431			10,610
NET LOSS BEFORE EXTRAORDINARY ITEM				(2,861	)		(18,862	)
EXTRAORDINARY GAIN ON EARLY EXTINGUISHMENT OF DEBT, NET OF TAX				1,705			—
NET LOSS			$	(1,156	)	$	(18,862	)
BASIC AND DILUTED NET LOSS PER COMMON SHARE:
	NET LOSS BEFORE EXTRAORDINARY ITEM		$	(0.35	)	$	(2.35	)
	EXTRAORDINARY GAIN ON EARLY EXTINGUISHMENT OF DEBT			0.21			—
	NET LOSS		$	(0.14	)	$	(2.35	)
COMMON SHARES OUTSTANDING — BASIC AND DILUTED				8,252			8,020

The accompanying notes are an integral part of these consolidated statements.

4

ALLIED HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)

			For the Three Months Ended
			March 31
			2002			2001
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss			$	(1,156	)	$	(18,862	)
	Adjustments to reconcile net loss to net cash provided by operating activities:
	Gain on early extinguishment of debt			(2,750	)		—
		Depreciation and amortization		13,663			15,191
		Amortization of deferred financing costs		1,045			436
		Gain on sale of assets and other		(822	)		(167	)
		Deferred income taxes		(722	)		(10,593	)
		Compensation expense related to stock options and grants		59			69
		Equity in earnings of joint ventures		—			(1,209	)
		Amortization of Teamsters Union contract costs		600			600
		Change in operating assets and liabilities excluding effect of businesses acquired:
		Receivables, net of allowance for doubtful accounts		9,473			15,161
		Inventories		99			232
		Prepayments and other current assets		1,405			504
		Trade accounts payable		(2,467	)		(4,348	)
		Accrued liabilities		6,878			15,855
		Total adjustments		26,461			31,731
		Net cash provided by operating activities		25,305			12,869
CASH FLOWS FROM INVESTING ACTIVITIES:
	Purchases of property and equipment			(2,626	)		(7,579	)
	Proceeds from sale of property and equipment			2,185			436
	Investment in UK and Brazil joint ventures			—			(464	)
	Decrease (increase) in short-term investments			136			(8,993	)
	Decrease (increase) in the cash surrender value of life insurance			183			(120	)
		Net cash used in investing activities		(122	)		(16,720	)
CASH FLOWS FROM FINANCING ACTIVITIES:
	(Repayments) borrowing under revolving credit facilities			(49,457	)		13,193
	Additions to long-term debt			82,762			—
	Repayments of long-term debt			(39,672	)		—
	Payment of deferred financing costs			(8,803	)		—
	Proceeds from issuance of common stock			24			85
	Other, net			(920	)		(2,863	)
		Net cash (used in) provided by financing activities		(16,066	)		10,415
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS				(45	)		(1,068	)
NET INCREASE IN CASH AND CASH EQUIVALENTS				9,072			5,496
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD				10,543			2,373
CASH AND CASH EQUIVALENTS AT END OF PERIOD			$	19,615		$	7,869

The accompanying notes are an integral part of these consolidated statements.

5

Allied Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)

1.	Basis of Presentation
	The unaudited consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The statements contained herein reflect all adjustments, all of which are of a normal, recurring nature, which are, in the opinion of management, necessary to present fairly the financial condition, results of operations and cash flows for the periods presented. Operating results for the three-month period ended March 31, 2002 are not necessarily indicative of the results that may be expected for the year ended December 31, 2002. The interim financial statements should be read in conjunction with the financial statements and notes thereto of Allied Holdings, Inc. and Subsidiaries, (the “Company”) included in the Company’s 2001 Annual Report on Form 10-K.
	Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation.
2.	Use of Estimates
	The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
3.	Comprehensive Income
	Statement of Financial Accounting Standards (“SFAS”) No. 130, “Reporting Comprehensive Income,” requires companies to report all changes in equity during a period, except those resulting from investment by owners and distribution to owners. The Company had a comprehensive loss of $1.3 million in the first quarter of 2002 versus a comprehensive loss of $22.6 million in the first quarter of 2001. The difference between comprehensive loss and net loss is the foreign currency translation adjustment and minimum pension liability, net of income taxes.
4.	Accounting for Derivative Instruments and Hedging Activities
	SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended, establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value. SFAS No. 133 requires that changes in the derivative’s fair value be recognized currently in earnings unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivative’s gains and losses to offset related results on the hedged item in the income statement, and requires that a company must formally document, designate, and assess the effectiveness of transactions that receive hedge accounting.

6

	From time to time, the Company enters into future contracts to manage the risk associated with changes in fuel prices. Gains and losses from fuel hedging contracts are recognized as part of fuel expense when the Company uses the underlying fuel being hedged. During 2001, Allied Automotive Group entered into a forward purchase commitment to purchase one million gallons of low sulfur diesel fuel per month until August 2002 at determinable prices defined within the agreement. The Company does not enter into fuel hedging contracts for speculative purposes. At March 31, 2002, the Company did not have any outstanding fuel hedging contracts or other derivative instruments that fall under the provisions of SFAS No. 133 as amended by SFAS No. 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities.”
5.	Recent Accounting Pronouncements
	In June 2001, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 141, “Business Combinations,” and SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 141 prospectively prohibits the pooling-of-interests method of accounting for business combinations initiated after June 30, 2001. SFAS No. 142 requires companies to cease amortizing goodwill that existed at June 30, 2001. The Company adopted SFAS No. 142 effective January 1, 2002 and accordingly incurred no amortization expense of goodwill during the three months ended March 31, 2002. Included in the accompanying consolidated statements of operations is amortization expense related to goodwill of approximately $0.9 million, for the three months ended March 31, 2001.
	SFAS No. 142 also establishes a new method of testing goodwill for impairment on an annual basis or on an interim basis if an event occurs or circumstances change that would reduce the fair value of a reporting unit below its carrying value. In accordance with SFAS No. 142, the Company has six months, subsequent to the adoption of the statement, to complete the first step of the transitional goodwill impairment test. Pursuant to the adoption of SFAS No. 142, the Company has established its reporting units based on its reporting structure in a reasonable and supportable manner. The Company’s reporting units are the Allied Automotive Group subsidiary and the Axis Group subsidiary. The Company expects to complete the transitional test within the six-month period and will report the results of that testing subsequent to its completion. Pursuant to the adoption of SFAS No. 142, the Company will annually test goodwill for impairment.
	In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations,” which addresses accounting and reporting for asset retirement costs of long-lived assets resulting from legal obligations associated with acquisition, construction, or development transactions. The Company plans to adopt SFAS No. 143 in the first quarter of fiscal 2003. Management will evaluate the impact of the adoption of this statement on the consolidated financial statements during fiscal 2002.
	In August 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” which clarifies accounting and reporting for assets held for sale, scheduled for abandonment or other disposal, and recognition of impairment loss related to the carrying value of long-lived assets. The Company adopted this standard on January 1, 2002 and there was no impact on the earnings or financial position of the Company as of the date of the adoption.
	In April 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statements No. 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.” The statement updates, clarifies and simplifies existing accounting pronouncements. The statement requires that in certain circumstances previous items classified as extraordinary that do not meet the criteria in Opinion 30 must be reclassified. The statement is effective for fiscal years beginning after May 15, 2002. Management will evaluate the impact of the adoption of this statement on the consolidated financial statements during fiscal 2002.
6.	Workforce Reduction Expense
	The Company has implemented a program to achieve a significant reduction in corporate overhead expenses as well as upgrade certain personnel as a result of turnaround initiatives. Targeted in the plan are workforce reductions and additional efforts to decrease discretionary spending and eliminate fixed

7

costs. The Company terminated approximately 76 and 65 corporate and field employees during the three months ended March 31, 2002 and three months ended March 31, 2001, respectively. The Company had $2.1 million and $3.7 million of workforce reduction liabilities at March 31, 2002 and December 31, 2001, respectively. The following table summarizes the activity in the accrual for termination benefits for the three months ended March 31, 2002 and the three months ended March 31, 2001, (in thousands):

	Three Months Ended
	March 31			March 31
	2002			2001
Beginning balance	$	3,700		$	1,600
Additions to reserve charged to salaries, wages, fringe benefits		400			5,000
Cash payments		(2,000	)		(1,900	)
Ending balance	$	2,100		$	4,700

7.	Long-Term Debt
	Long-term debt consisted of the following:

	March 31			December 31
	2002			2001
Revolving credit facility	$	130,041		$	98,900
Senior notes		150,000			150,000
Senior subordinated notes		—			40,258
		280,041			289,158
Less current maturities of long-term debt		(3,507	)		(2,625	)
	$	276,534		$	286,533

On September 30, 1997, the Company issued $150 million of 8 5/8% senior notes (the “Notes”) through a private placement. Subsequently, the senior notes were registered with the Securities and Exchange Commission. The net proceeds from the Notes were used to fund the acquisition of Ryder Automotive Carrier Services, Inc. and RC Management Corp., pay related fees and expenses, and reduce outstanding indebtedness.

Borrowings under the Notes are general unsecured obligations of the Company. The Company’s obligations under the Notes are guaranteed by substantially all of the subsidiaries of the Company (the “Guarantor Subsidiaries”). Haul Insurance Ltd., Arrendadora de Equipo Para el Transporte de Automoviles, S. de R.L. de C.V. and Axis Logistica, S. de R.L. de C.V. do not guarantee the Company’s obligations under the Notes (the “Nonguarantor Subsidiaries”). There are no restrictions on the ability of Guarantors to make distributions to the Company.

The Notes set forth a number of negative covenants binding on the Company. The covenants limit the Company’s ability to, among other things, purchase or redeem stock, make dividend or other distributions, make investments, and incur or repay debt (with the exception of payment of interest or principal at stated maturity)

Concurrent with the issuance of the Notes, the Company closed on a revolving credit facility (the “Revolving Credit Facility”). The Company also previously issued $40 million of senior subordinated notes (the “Senior Subordinated Notes”) through a private placement.

8

On February 25, 2002, the Company refinanced the Revolving Credit Facility and Senior Subordinated Notes with a new credit facility including certain term loans (the “Term Loans”) (collectively, the “Credit Facility”). Proceeds from the Term Loans were used to repurchase the $40 million of Senior Subordinated Notes for $37.25 million. In conjunction with the extinguishment of debt, the Company recognized an extraordinary gain of approximately $1.7 million, net of income taxes during the first quarter of 2002. The Credit Facility includes a revolving credit facility (the “Revolver”) that allows the Company to borrow under a revolving line of credit up to the lesser of $120 million or a borrowing base amount as defined in the Credit Facility. The interest rate for the Revolver is based upon the prime rate plus 1.5% or LIBOR plus 4.5% at management’s discretion with a minimum interest rate of 6.5%. Annual commitment fees are due on the undrawn portion of the commitment. At March 31, 2002, $49.4 million was outstanding under the Revolver, and approximately $20.5 million was committed under letters of credit. As of March 31, 2002 the Company had approximately $33.6 million available under the Revolver.

The Term Loans are comprised of four loans: $17.5 million Term Loan A, $25.0 million Term Loan B, $11.0 million Term Loan C, and $29.25 million Term Loan D. The Term Loans (except Term Loan D) mature on February 25, 2005. Term Loan D matures on February 26, 2005.

Term Loan A is repayable in installments over three years, with interest payable monthly based upon the prime rate plus 2.75% with a minimum interest rate of 7.75%. Term Loan B is repayable in installments over three years, with interest payable monthly based upon the prime rate plus 6.5%. The interest rate on Term Loan B includes interest paid in kind of 3.5% that will be payable upon maturity. The minimum interest for Term Loan B is 11.5%. Term Loan C is payable in full at maturity with interest payable monthly based upon the prime rate plus 9%. The interest rate on Term Loan C also includes interest paid in kind of 5% that will be payable upon maturity. The minimum interest for Term Loan C is 14%. Term Loan D is payable in full at maturity with interest payable quarterly based upon the prime rate plus 3.5%

Cash proceeds from certain asset sales and other transactions are required to be used to repay the Term Loans, as specified in the Credit Facility. As of March 31, 2002, the amount outstanding for the Term Loans was $15.3 million for Term Loan A, $25.0 million for Term Loan B, $11.0 million for Term Loan C and $29.25 million for Term Loan D.

Borrowings under the Credit Facility are secured by a first priority security interest on assets of the Company and certain of its subsidiaries, including a pledge of stock of certain subsidiaries. In addition, certain subsidiaries of the Company jointly and severally guarantee the obligations of the Company under the Credit Facility.

The Credit Facility agreement sets forth a number of affirmative, negative, and financial covenants binding on the Company. The negative covenants limit the ability of the Company to, among other things, incur debt, incur liens, make investments, or sell assets. The financial covenants require the Company to maintain a minimum consolidated earnings before interest, taxes, depreciation and amortization amount and include leverage and fixed charge coverage ratios.

The Company does not anticipate any covenant violations during 2002. There can be no assurance, however, that the Company will be able to comply with these or its other debt covenants or that, if it fails to do so, it will be able to obtain amendments to or waivers of such covenants. Failure of the Company to comply with covenants contained in its debt instruments, if not waived, or to adequately service debt obligations, could result in default under the Credit Facility. Any default under the Company’s debt instruments, particularly any default that results in an acceleration of indebtedness or foreclosure on collateral could have a material adverse effect on the Company.

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8.	Employee Benefits
	As part of the Company’s turnaround efforts in the first quarter, the Allied Holdings Inc. Defined Benefit Pension Plan (the “Plan”) was amended in February 2002. The amendment resulted in a curtailment of the plan effective April 30, 2002. The Company’s net pension cost for 2001 was $2.6 million.
9.	Industry Segment and Geographic Information
	In accordance with the requirements of SFAS No.131, “Disclosure About Segments of an Enterprise and Related Information,” the Company has identified two reportable industry segments through which it conducts its operating activities: Allied Automotive Group and Axis Group. These two segments reflect the organization used by management for internal reporting. Allied Automotive Group is engaged in the business of transporting automobiles and light trucks from manufacturing plants, ports, auctions, and railway distribution points to automobile dealerships. Axis Group provides distribution, automobile inspection, auction, and logistics services for the automotive industry.

		Three Months Ended March 31
		2002			2001
Revenues—unaffiliated customers:
Allied Automotive Group		$	206,610		$	212,024
Axis Group			6,649			6,155
	Total	$	213,259		$	218,179
Depreciation and amortization:
Allied Automotive Group		$	12,190		$	13,450
Axis Group			707			894
Corporate/other			766			847
	Total	$	13,663		$	15,191
Operating profit (loss):
Allied Automotive Group		$	5,555		$	(16,129	)
Axis Group			163			(452	)
Corporate/other			(1,953	)		(6,598	)
	Total		3,765			(23,179	)
Reconciling items:
Equity income in UK and Brazil joint ventures			—			1,209
Interest expense			(8,122	)		(8,466	)
Interest income			272			964
Other, net			(207)			—
Loss before income taxes and extraordinary item		$	(4,292	)	$	(29,472	)

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		March 31		December 31
		2002		2001
Total assets:
Allied Automotive Group		$	332,675	$	353,558
Axis Group			40,651		43,881
Corporate/other			154,126		135,953
	Total	$	527,452	$	533,392
Capital expenditures:
Allied Automotive Group		$	2,608	$	6,988
Axis Group			18		524
Corporate/other			—		67
	Total	$	2,626	$	7,579

Geographic financial information for the three months ended March 31, 2002 and 2001 is as follows (in thousands):

		Three Months Ended March 31
		2002		2001
Revenues:
United States		$	178,228	$	181,298
Canada			35,031		36,881
	Total	$	213,259	$	218,179

	Revenues are attributed to the respective countries based on the location of the origination terminal.
10.	Subsequent Events
	On April 15, 2002, the Company sold its interests in its joint venture in Brazil to Coimex Empreendimentos E Participacoes Ltda, and Itaguacu Comercio E Participacoes Ltda for approximately $3 million. $2.7 million of cash was received at closing and the remaining $0.3 million will be paid to the Company by December 31, 2002. The joint venture was established in January 1998 and held by the Company’s Axis Group subsidiary. The proceeds from the sale were used to reduce the Company’s outstanding debt. The Company’s interest in its joint venture in Brazil was approximately $3.0 million at March 31, 2002.
11.	Supplemental Guarantor Information
	The following condensed consolidating balance sheets, statements of operations and statements of cash flows present the financial statements of the parent company, and the combined financial statements of the Guarantor Subsidiaries and Nonguarantor Subsidiaries. The Guarantors are jointly and severally liable for the Company’s obligations under the Notes and there are no restrictions on the ability of the Guarantors to make distributions to the Company.

11

Supplemental Condensed Consolidating Balance Sheet
March 31, 2002
(In thousands)
(Unaudited)

			Allied			Guarantor			Nonguarantor
			Holdings			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Current assets:
	Cash and cash equivalents		$	517		$	693		$	18,405		$	—		$	19,615
	Short-term investments			—			—			64,658			—			64,658
	Receivables, net of allowance for doubtful accounts			11			59,317			3,356			—			62,684
	Inventories			—			5,235			6			—			5,241
	Deferred tax asset—current			33,589			494			251			—			34,334
	Prepayments and other current assets			879			16,494			117			—			17,490
		Total current assets		34,996			82,233			86,793			—			204,022
Property and equipment, net				10,977			188,019			3,440			—			202,436
Other assets:
	Goodwill, net			1,515			88,659			—			—			90,174
	Other			21,925			4,860			4,035			—			30,820
	Deferred tax asset—noncurrent			14,129			—			—			(14,129	)		—
	Intercompany receivables			26,551			—			—			(26,551	)		—
	Investment in subsidiaries			70,350			8,534			—			(78,884	)		—
		Total other assets		134,470			102,053			4,035			(119,564	)		120,994
		Total assets	$	180,443		$	372,305		$	94,268		$	(119,564	)	$	527,452
Current liabilities:
	Current maturities of long-term debt		$	—		$	3,507			—		$	—		$	3,507
	Trade accounts payable			1,762			35,715			236			—			37,713
	Intercompany payables			—			21,710			4,841			(26,551	)		—
	Accrued liabilities			8,366			58,879			21,733			—			88,978
		Total current liabilities		10,128			119,811			26,810			(26,551	)		130,198
Long-term debt, less current maturities				150,000			126,534			—			—			276,534
Postretirement benefits other than pensions				—			9,535			—			—			9,535
Deferred income taxes				—			35,741			—			(14,129	)		21,612
Other long-term liabilities				3,545			33,694			35,564			—			72,803
Stockholders’ equity:
	Common stock, no par value			—			—			—			—			—
	Additional paid-in capital			46,603			182,023			13,849			(195,872	)		46,603
	Treasury stock			(707	)		—			—			—			(707	)
	Retained (deficit) earnings			(20,050	)		(121,573	)		18,519			103,054			(20,050	)
	Cumulative other comprehensive loss, net of tax			(9,076	)		(13,460	)		(474	)		13,934			(9,076	)
		Total stockholders’ equity		16,770			46,990			31,894			(78,884	)		16,770
		Total liabilities and stockholders’ equity	$	180,443		$	372,305		$	94,268		$	(119,564	)	$	527,452

12

Supplemental Condensed Consolidating Balance Sheet
December 31, 2001
(In thousands)
(Unaudited)

			Allied			Guarantor			Nonguarantor
			Holdings			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Current assets:
	Cash and cash equivalents		$	209		$	1,063		$	9,271		$	—		$	10,543
	Short-term investments			—			—			64,794			—			64,794
	Receivables, net of allowance for doubtful accounts			24			69,112			3,156			—			72,292
	Inventories			—			5,344			5			—			5,349
	Deferred tax asset—current			31,658			493			252			—			32,403
	Prepayments and other current assets			1,161			17,645			115			—			18,921
		Total current assets		33,052			93,657			77,593			—			204,302
Property and equipment, net				11,743			199,378			3,520			—			214,641
Other assets:
	Goodwill, net			1,515			88,715			—			—			90,230
	Other			14,404			5,742			4,073			—			24,219
	Deferred tax asset—noncurrent			14,362			—			—			(14,362	)		—
	Intercompany receivables			233,827			—			—			(233,827	)		—
	Investment in subsidiaries			11,697			8,757			—			(20,454	)		—
		Total other assets		275,805			103,214			4,073			(268,643	)		114,449
		Total assets	$	320,600		$	396,249		$	85,186		$	(268,643	)	$	533,392
Current liabilities:
	Current maturities of long-term debt		$	2,625		$	—			—		$	—		$	2,625
	Trade accounts payable			2,753			37,326			153			—			40,232
	Intercompany payables			—			230,040			3,787			(233,827	)		—
	Accrued liabilities			7,157			61,460			14,346			—			82,963
		Total current liabilities		12,535			328,826			18,286			(233,827	)		125,820
Long-term debt, less current maturities				286,523			10			—			—			286,533
Postretirement benefits other than pensions				—			9,363			—			—			9,363
Deferred income taxes				—			35,745			—			(14,362	)		21,383
Other long-term liabilities				3,545			34,906			33,845			—			72,296
Stockholders’ equity:
	Common stock, no par value			—			—			—			—			—
	Additional paid-in capital			46,520			90,061			13,849			(103,910	)		46,520
	Treasury stock			(707	)		—			—			—			(707	)
	Retained (deficit) earnings			(18,894	)		(90,171	)		20,649			69,522			(18,894	)
	Cumulative other comprehensive loss, net of tax			(8,922	)		(12,491	)		(1,443	)		13,934			(8,922	)
		Total stockholders’ equity		17,997			(12,601	)		33,055			(20,454	)		17,997
		Total liabilities and stockholders’ equity	$	320,600		$	396,249		$	85,186		$	(268,643	)	$	533,392

13

Supplemental Condensed Consolidating Statement of Operations
Three Months Ended March 31, 2002
(In thousands)
(Unaudited)

			Allied			Guarantor			Nonguarantor
			Holdings			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Revenues			$	2,535		$	212,767		$	9,622		$	(11,665	)	$	213,259
Operating expenses:
	Salaries, wages, and fringe benefits			1,476			117,060			—			—			118,536
	Operating supplies and expenses			326			30,540			39			—			30,905
	Purchased transportation			—			21,779			—			—			21,779
	Insurance and claims			—			10,571			9,130			(9,130	)		10,571
	Operating taxes and licenses			54			8,409			—			—			8,463
	Depreciation and amortization			766			12,778			119			—			13,663
	Rents			423			929			2			—			1,354
	Communications and utilities			185			1,804			3			—			1,992
	Other operating expenses			1,165			4,544			86			(2,535	)		3,260
	Gain on sale of operating assets, net			—			(1,029	)		—			—			(1,029	)
		Total operating expenses		4,395			207,385			9,379			(11,665	)		209,494
		Operating (loss) income		(1,860	)		5,382			243			—			3,765
Other income (expense):
	Interest expense			(8,415	)		(5,902	)		(89	)		6,284			(8,122	)
	Interest income			6,235			14			307			(6,284	)		272
	Other, net			160			(367	)		—			—			(207	)
	Equity in losses of subsidiaries			(1,166	)		—			—			1,166			—
				(3,186	)		(6,255	)		218			1,166			(8,057	)
(Loss) income before income taxes & extraordinary item				(5,046	)		(873	)		461			1,166			(4,292	)
Income tax benefit (provision)				2,185			(26	)		(728	)		—			1,431
Loss before extraordinary item				(2,861	)		(899	)		(267	)		1,166			(2,861	)
Extraordinary gain on early extinguishment of debt				1,705			—			—			—			1,705
Net loss			$	(1,156	)	$	(899	)	$	(267	)	$	1,166		$	(1,156	)

Supplemental Condensed Consolidating Statement of Operations
Three Months Ended March 31, 2001
(In thousands)
(Unaudited)

			Allied			Guarantor			Nonguarantor
			Holdings			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Revenues			$	2,475		$	217,776		$	9,495		$	(11,567	)	$	218,179
Operating expenses:
	Salaries, wages, and fringe benefits			5,121			126,596			—			—			131,717
	Operating supplies and expenses			903			40,536			3			—			41,442
	Purchased transportation			—			23,296			—			—			23,296
	Insurance and claims			—			13,802			8,579			(9,092	)		13,289
	Operating taxes and licenses			47			8,579			—			—			8,626
	Depreciation and amortization			847			14,177			167			—			15,191
	Rents			532			1,538			—			—			2,070
	Communications and utilities			14			2,024			—			—			2,038
	Other operating expenses			1,760			4,531			40			(2,475	)		3,856
	Gain on sale of operating assets, net			—			(167	)		—			—			(167	)
		Total operating expenses		9,224			234,912			8,789			(11,567	)		241,358
		Operating (loss) income		(6,749	)		(17,136	)		706			—			(23,179	)
Other income (expense):
	Equity in earnings (loss) of UK and Brazil joint ventures, net of tax			—			1,219			(10	)		—			1,209
	Interest expense			(8,023	)		(8,059	)		(40	)		7,656			(8,466	)
	Interest income			7,710			63			847			(7,656	)		964
	Intercompany dividends			251			(251	)		—			—			—
	Equity in net loss of subsidiaries			(22,879	)		—			—			22,879			—
				(22,941	)		(7,028	)		797			22,879			(6,293	)
(Loss) income before income taxes				(29,690	)		(24,164	)		1,503			22,879			(29,472	)
Income tax benefit (provision)				10,828			216			(434	)		—			10,610
Net loss			$	(18,862	)	$	(23,948	)	$	1,069		$	22,879		$	(18,862	)

14

Supplemental Condensed Consolidating Statement of Cash Flows
Three Months Ended March 31, 2002
(In thousands)
(Unaudited)

					Allied			Guarantor			Nonguarantor
					Holdings			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
	Net loss				$	(1,156	)	$	(899	)	$	(267	)	$	1,166		$	(1,156	)
	Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
		Gain on early extinguishment of debt				(2,750	)		—			—			—			(2,750	)
		Depreciation and amortization				766			12,778			119			—			13,663
		Amortization of deferred financing costs				1,045			—			—			—			1,045
		Gain on sale of assets and other				—			(822	)		—			—			(822	)
		Deferred income taxes				(626	)		(97	)		1						(722	)
		Compensation expense related to stock options and grants				59			—			—			—			59
		Amortization of Teamsters Union contract costs				—			600			—			—			600
		Equity in net losses of subsidiaries				1,166			—			—			(1,166	)		—
		Change in operating assets and liabilities:
			Receivables, net of allowance for
			doubtful accounts			13			9,660			(200	)		—			9,473
			Inventories			—			100			(1	)		—			99
			Prepayments and other current assets			282			1,125			(2	)		—			1,405
			Trade accounts payable			(991	)		(1,559	)		83			—			(2,467	)
			Intercompany receivables (payables), net			207,276			(208,330	)		1,054			—			—
			Accrued liabilities			1,209			(3,437	)		9,106						6,878
				Total adjustments		207,449			(189,982	)		10,160			(1,166	)		26,461
				Net cash provided by (used in) operating activities		206,293			(190,881	)		9,893			—			25,305
Cash flows from investing activities:
	Purchases of property and equipment					—			(2,587	)		(39	)		—			(2,626	)
	Proceeds from sale of property and equipment					—			2,185			—			—			2,185
	Investment in UK and Brazil joint ventures					—			464			(464	)		—			—
	Intercompany dividend (paid) received					(60,000	)		60,000			—			—			—
	Decrease in short-term investments					—			—			136			—			136
	Decrease in cash surrender value of life insurance					183			—			—			—			183
				Net cash (used in) provided by investing activities		(59,817	)		60,062			(367	)		—			(122	)
Cash flows from financing activities:
	(Repayments of) borrowing under revolving credit facilities					(98,900	)		49,443			—			—			(49,457	)
	Additions to long-term debt					—			82,762			—			—			82,762
	Repayments of long-term debt					(37,498	)		(2,174	)		—			—			(39,672	)
	Payment of deferred financing costs					(8,803	)		—			—			—			(8,803	)
	Proceeds from issuance of common stock					24			—			—			—			24
	Other, net					(991	)		2,278			(2,207	)		—			(920	)
				Net cash (used in) provided by financing activities		(146,163	)		132,309			(2,207	)		—			(16,066	)
Effect of exchange rate changes on cash and cash equivalents						—			(1,860	)		1,815			—			(45	)
Net increase (decrease) in cash and cash equivalents						308			(370	)		9,134			—			9,072
Cash and cash equivalents at beginning of year						209			1,063			9,271			—			10,543
Cash and cash equivalents at end of year					$	517		$	693		$	18,405		$	—		$	19,615

15

Supplemental Condensed Consolidating Statement of Cash Flows
Three Months Ended March 31, 2001
(In thousands)
(Unaudited)

					Allied			Guarantor			Nonguarantor
					Holdings			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
	Net (loss) income				$	(18,862	)	$	(23,948	)	$	1,069		$	22,879		$	(18,862	)
	Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
		Depreciation and amortization				847			14,177			167			—			15,191
		Gain on sale of property and equipment				—			(167	)		—			—			(167	)
		Amortization of deferred financing costs				436			—			—			—			436
		Deferred income taxes				—			(10,593	)		—			—			(10,593	)
		Compensation expense related to stock options and grants				69			—			—			—			69
		Equity in losses of joint ventures				—			(1,219	)		10			—			(1,209	)
		Amortization of Teamsters Union contract costs				—			600			—			—			600
		Equity in net income of subsidiaries				22,879			—			—			(22,879	)		—
		Change in operating assets and liabilities:
			Receivables, net of allowance for doubtful accounts			772			17,533			(3,144	)		—			15,161
			Inventories			—			232			—			—			232
			Prepayments and other current assets			101			(1,590	)		1,993			—			504
			Intercompany receivables and payables			(13,299	)		11,240			2,059			—			—
			Trade accounts payable			60			(5,431	)		1,023			—			(4,348	)
			Accrued liabilities			(5,096	)		12,357			8,594			—			15,855
				Total adjustments		6,769			37,139			10,702			(22,879	)		31,731
				Net cash (used in) provided by operating activities		(12,093	)		13,191			11,771			—			12,869
Cash flows from investing activities:
	Purchases of property and equipment					(63	)		(6,907	)		(609	)		—			(7,579	)
	Proceeds from sale of property and equipment					—			436			—			—			436
	Investment in UK and Brazil joint ventures					—			—			(464	)		—			(464	)
	Intercompany dividend received (paid)					251			(251	)		—			—			—
	Increase in short-term investments					—			—			(8,993	)		—			(8,993	)
	Increase in cash surrender value of life insurance					(120	)		—			—			—			(120	)
				Net cash provided by (used in) investing activities		68			(6,722	)		(10,066	)		—			(16,720	)
Cash flows from financing activities:
	Proceeds from (repayment of) long-term debt, net					13,675			(482	)		—			—			13,193
	Proceeds from issuance of common stock					85			—			—			—			85
	Other, net					(446	)		(3,666	)		1,249			—			(2,863	)
				Net cash provided by (used in) financing activities		13,314			(4,148	)		1,249			—			10,415
Effect of exchange rate changes on cash and cash equivalents						—			(458	)		(610	)		—			(1,068	)
Net increase in cash and cash equivalents						1,289			1,863			2,344			—			5,496
Cash and cash equivalents at beginning of year						(1,213	)		2,063			1,523			—			2,373
Cash and cash equivalents at end of year					$	76		$	3,926		$	3,867		$	—		$	7,869

16

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

     The following table sets forth the percentage relationship of expense items to revenues for the periods indicated:

			Three Months Ended March 31
			2002			2001
Revenues				100.0	%		100.0	%
Operating expenses:
	Salaries, wages and fringe benefits			55.6			60.4
	Operating supplies and expenses			14.5			19.0
	Purchased transportation			10.2			10.7
	Insurance and claims			5.0			6.1
	Operating taxes and licenses			4.0			4.0
	Depreciation and amortization			6.4			7.0
	Rents			0.6			0.9
	Communications and utilities			0.9			0.9
	Other operating expenses			1.5			1.7
Gain on sale of operating assets				(0.5	)		(0.1	)
		Total operating expenses		98.2			110.6
Operating income (loss)				1.8			(10.6	)
Other income (expense):
	Equity in earnings of joint ventures, net of tax			—			0.6
	Interest expense			(3.8	)		(3.9	)
	Interest income			0.1			0.4
	Other, net			(0.1	)		—
				(3.8	)		(2.9	)
Loss before income taxes & extraordinary item				(2.0	)		(13.5	)
Income tax benefit				0.7			4.9
Loss before extraordinary item				(1.3	)		(8.6	)
Extraordinary gain on early extinguishment of debt, net of tax				0.8			—
Net loss				(0.5	)%		(8.6	)%

Three Months Ended March 31, 2002 Compared to Three Months Ended March 31, 2001

Revenues were $213.3 million in the first quarter of 2002 compared to revenues of $218.2 million in the first quarter of 2001, a decrease of 2.2%. The Company experienced a net loss of $1.2 million in the first quarter of 2002 versus a net loss of $18.9 million in the first quarter of 2001. Basic and diluted loss per share in the first quarter of 2002 were $0.14 versus basic and diluted loss per share of $2.35 in the first quarter of 2001. The first quarter 2002 net loss included a $1.7 million after-tax gain on the early extinguishment of the Company’s subordinated notes ($0.21 per share basic and diluted) and a $550,000 after-tax gain on the sale of assets. The first quarter 2001 net loss included an after-tax charge of $3.2 million for severance and workforce reduction expenses.

The decrease in revenues was due to a 6.9% decline in vehicle deliveries primarily resulting from the closing of unprofitable terminals in the fourth quarter of 2001 together with a decrease in market share. Offsetting the impact on revenues from the volume decline was a 4.7% increase in the Allied Automotive Group revenue per unit, which increased from $89.71 in the first quarter of 2001 to $93.91 in the first quarter of 2002. This increase is primarily the result of the implementation by Allied Automotive Group of a new administrative processing fee in September 2001.

The following is a discussion of the changes in the Company’s major expense categories:

Salaries, wages and fringe benefits decreased from 60.4% of revenues in the first quarter of 2001 to 55.6% of revenues in the first quarter of 2002. The decrease was primarily due to continued

17

productivity and efficiency improvements implemented by the Company’s turnaround initiatives. In addition, the Company incurred $5.0 million of workforce reduction expenses in the first quarter of 2001 compared to $0.4 million of workforce reduction or severance expenses which were related to the upgrade of personnel as part of the turnaround initiatives in the first quarter of 2002.

Operating supplies and expenses decreased from 19.0% of revenues in the first quarter of 2001 to 14.5% of revenues in the first quarter of 2002. The decrease was primarily due to a decrease in fuel costs experienced in the first quarter of 2002 versus the first quarter of 2001 together with a reduction in the maintenance costs of rigs in service. The decreased maintenance costs are a result of the Company operating approximately 10% fewer rigs in the first quarter of 2002 as well as management’s efforts to aggressively reduce overhead costs and unnecessary spending. These efforts are consistent with the Company’s turnaround initiatives.

Purchased transportation decreased from 10.7% of revenues in the first quarter of 2001 to 10.2% of revenues in the first quarter of 2002. The decrease was due primarily to a decrease in the number of owner-operators resulting from the closing of unprofitable terminals in the fourth quarter of 2001. The decrease was offset by an increase in the mix of loads hauled by owner-operators versus company drivers. All costs for owner-operators are included in purchased transportation expense.

Insurance and claims expense decreased from 6.1% of revenues in the first quarter of 2001 to 5.0% of revenues in the first quarter of 2002. The decrease was a result of lower cargo claims experienced on shipped vehicles as well as a reduction in auto self-insurance claims. Allied Automotive Group is aggressively managing its insurance costs as part of its turnaround plan.

Depreciation and amortization decreased from 7.0% of revenues in the first quarter of 2001 to 6.4% of revenues in the first quarter of 2002. Depreciation and amortization expense was $13.7 million in the first quarter of 2002 compared to $15.2 in the first quarter of 2001. The decline is primarily due the reduction of amortization expense resulting from the Company’s adoption of SFAS No. 142 “Goodwill and Other Intangibles” which became effective January 1, 2002. During the first quarter 2001, the Company recorded $0.9 million of amortization expense related to goodwill. The remaining decrease is primarily due to the sale of non-performing assets during 2001.

Rents decreased from 0.9% of revenues in the first quarter of 2001 to 0.6% of revenues in the first quarter of 2002. This decline is primarily due to the closing of unprofitable terminal locations in the fourth quarter of 2001.

Other operating expenses decreased from 1.7% of revenues in the first quarter of 2001 to 1.5% of revenues in the first quarter of 2002. The decrease was primarily due to overall lower professional fees for consultants.

During the first quarter of 2002, Allied Automotive Group disposed of surplus real estate as part of its turnaround initiative plan. The Company recorded a $1.0 million pre-tax gain on the sale of this property.

Equity in earnings of joint ventures, net of tax, decreased to $0 in the first quarter of 2002 from earnings of $1.2 million in the first quarter of 2001. The decrease is attributable primarily to the sale of the Company’s joint ventures in the United Kingdom in the fourth quarter of 2001.

Axis Group completed the sale of its joint venture interest in Brazil during April 2002 for $3.0 million. The joint venture was established in January 1998. Equity in earnings of the Brazil joint venture was $0 during each of the three months ended March 31, 2002 and 2001. The proceeds from the sale were used to reduce the Company’s outstanding debt.

Interest expense decreased from $8.5 million, or 3.9% of revenues, in the first quarter of 2001 to $8.1 million, or 3.8% of revenues, in the first quarter of 2002. The decrease was primarily due to

18

lower debt balances in the first quarter of 2002 compared to the first quarter of 2001 together with lower effective interest rates as a result of the new credit facility.

Interest income decreased from $1.0 million in the first quarter of 2001 to $0.3 million in the first quarter of 2002. The decrease was due to lower investment income as a result of market performance on its short-term investments from the Company’s captive insurance subsidiary Haul Insurance Limited.

In June 2001, the FASB issued SFAS No. 141, “Business Combinations,” and SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 141 prospectively prohibits the pooling-of-interests method of accounting for business combinations initiated after June 30, 2001. SFAS No. 142 requires companies to cease amortizing goodwill that existed at June 30, 2001. The Company adopted SFAS 142 effective January 1, 2002 and accordingly incurred no amortization expense of goodwill during the three months ended March 31, 2002. Included in the accompanying consolidated statements of operations is amortization expense related to goodwill of approximately $0.9 million, for the three months ended March 31, 2001.

SFAS No. 142 also establishes a new method of testing goodwill for impairment on an annual basis or on an interim basis if an event occurs or circumstances change that would reduce the fair value of a reporting unit below its carrying value. In accordance with SFAS No. 142, the Company has six months, subsequent to the adoption of the statement, to complete the first step of the transitional goodwill impairment test. Pursuant to the adoption of SFAS No. 142, the Company has established its reporting units based on its reporting structure in a reasonable and supportable manner. The Company expects to complete the transitional test within the six-month period and will report the results of that testing subsequent to its completion. The Company’s preliminary analysis indicates that a range of impairment between $3.0 and $5.0 million after tax may require a corresponding reduction in the fair value of goodwill related to the Company’s Axis Group subsidiary. Pursuant to the adoption of SFAS No. 142, the Company will annually test goodwill for impairment on the anniversary of the transitional goodwill impairment test.

As part of the Company’s turnaround efforts in the first quarter, the Allied Holdings Inc. Defined Benefit Pension Plan (the “Plan”) was amended in February 2002. The amendment resulted in a curtailment of the Plan effective April 30, 2002. The Company’s net pension cost for 2001 was $2.6 million.

Financial Condition, Liquidity and Capital Resources

The Company’s sources of liquidity are funds provided by operations and borrowings under its revolving credit facility with a syndicate of lenders. The Company’s primary liquidity needs are for the refurbishment and maintenance of rigs and terminal facilities, the payment of operating expenses and the payment of interest and principal associated with long-term debt.

Net cash provided by operating activities totaled $25.3 million in the first three months of 2002 versus $12.9 million for the same period in 2001. The increase was primarily due to a decrease in net loss from $18.9 million in the first quarter of 2001 to $1.2 million in the first quarter of 2002. In addition, the Company generated favorable changes in operating assets and liabilities of $12.8 million during the first quarter of 2002. The improvements in working capital were primarily the result of aggressively implemented measures to improve asset utilization during the last six

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months of 2001 and the first three months of 2002. These measures included a reduction in outstanding accounts receivable at March 31, 2002 versus December 31, 2001.

Net cash used in investing activities totaled $0.1 for the first quarter of 2002 versus $16.7 million for the first quarter of 2001. Cash paid to purchase capital items decreased $5.0 million to $2.6 million in the first quarter of 2002 from $7.6 million in the first quarter of 2001. The decrease in capital spending reflects the Company’s strategy to reduce capital expenditures through its new fleet refurbishment program. Instead of purchasing new rigs, the Company embarked on a significant fleet refurbishment program that is expected to enable the Company to refurbish approximately 15% of its active fleet in 2002. The decrease in cash used in investing activities was further enhanced by the change in the investment portfolio mix of the Company’s captive insurance company, which increased short-term investments by $9.0 million in the first quarter of 2001. These decreases were offset by the receipt of $2.2 million of proceeds from the sale of assets in the first quarter of 2002 compared to $0.4 million in the first quarter of 2001.

Net cash used in financing activities totaled $16.1 million in 2002 versus net cash provided by financing activities of $10.9 million in 2001. During the first quarter of 2002, long-term debt was reduced by $9.1 million, compared to borrowings of long-term debt of $13.2 million in the first quarter of 2001. The reduction of long-term debt in the first quarter of 2002 included the gain on early extinguishment of the Senior Subordinated Notes of approximately $2.8 million. The repayment of debt was primarily due to a reduction in the net loss experienced by the Company together with lower working capital requirements and the cash received from the sale of assets. In addition, the Company paid $8.8 million in deferred financing costs relating to the refinancing.

On February 25, 2002, the Company refinanced its revolving credit facility and $40 million Senior Subordinated Notes with the Credit Facility. Proceeds from the term loans were used to repurchase the $40 million of Senior Subordinated Notes for $37.25 million. In conjunction with the extinguishment of debt, the Company recognized an extraordinary gain of $1.7 million, net of income taxes. The Credit Facility includes the Revolver that allows the Company to borrow under a revolving line of credit up to the lesser of $120 million or a borrowing base amount as defined in the Credit Facility agreement. The interest rate for the Revolver is based upon the prime rate plus 1.5% or LIBOR plus 4.5% with a minimum interest rate of 6.5%. Annual commitment fees are due on the undrawn portion of the commitment. At March 31, 2002, $49.4 million was outstanding under the Revolver, and approximately $20.5 million was committed under letters of credit. As of March 31, 2002, the Company had approximately $33.6 million available under the Revolver.

The Term Loans are comprised of four loans, $17.5 million Term Loan A, $25.0 million Term Loan B, $11.0 million Term Loan C, and $29.25 million Term Loan D. The Term Loans (except Term Loan D) mature on February 25, 2005. Term Loan D matures on February 26, 2005.

Term Loan A is repayable in installments over three years, with interest payable monthly based upon the prime rate plus 2.75% with a minimum interest rate of 7.75%. Term Loan B is repayable in installments over three years, with interest payable monthly based upon the prime rate plus 6.50%. The interest rate on Term Loan B includes interest paid in kind of 3.50% that will be payable upon maturity. The minimum interest for Term Loan B is 11.50%. Term Loan C is payable in full at maturity with interest payable monthly based upon the prime rate plus 9.00%. The interest rate on Term Loan C also includes interest paid in kind of 5.00% that will be payable upon maturity. The minimum interest for Term Loan C is 14.00%. Term Loan D is payable in full at maturity with interest payable quarterly based upon the prime rate plus 3.50%. In addition, the Company currently has outstanding indebtedness of $150 million under a series of 8 5/8% Senior Notes maturing in 2007.

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The Credit Facility agreement and the Senior Notes set forth a number of affirmative, negative and financial covenants binding on the Company. The negative covenants limit the ability of the Company to, among other things, incur or repay debt, incur liens, make investments, purchase or redeem stock, make dividends or other distributions or sell assets. The financial covenants set forth in the Credit Facility require the Company to maintain minimum consolidated earnings before interest, taxes, depreciation and amortization and also includes leverage and fixed charge coverage ratios. The Company anticipates limiting capital expenditures to a range of $20 to $30 million in 2002, which is within covenant limitations.

The Company does not anticipate any covenant violations during 2002. There can be no assurance, however, that the Company will be able to comply with these or its other debt covenants or that, if it fails to do so, it will be able to obtain amendments to or waivers of such covenants. Failure of the Company to comply with covenants contained in its debt instruments, if not waived, or to adequately service debt obligations, could result in a default under the Credit Facility. Any default under the Company’s debt instruments, particularly any default that results in an acceleration of indebtedness or foreclosure on collateral could have a material adverse effect on the Company.

Borrowings under the Credit Facility are secured by a first priority security interest on assets of the Company and certain of its subsidiaries, including a pledge of stock of certain subsidiaries. In addition, certain subsidiaries of the Company jointly and severally guarantee the obligations of the Company under the Credit Facility.

The Company began trading its common stock on the American Stock Exchange (“AMEX”) under the symbol AHI, effective April 8, 2002. The Company’s common stock was previously listed on the New York Stock Exchange (“NYSE”). As previously announced, the Company had been operating under a plan that was approved by the NYSE in August 2001. The plan was to bring the Company’s total market capitalization and shareholders’ equity above NYSE’s continued listing requirement of $50 million by November 29, 2002. The Company believes, however, that the change to AMEX better allows for management of business without the uncertainty and distractions associated with meeting NYSE standards. Management does not expect a significant change in shareholder liquidity as a result of the move to the AMEX.

Disclosures About Market Risks

The market risk inherent in the Company’s market risk sensitive instruments and positions is the potential loss arising from adverse changes in short-term investment prices, interest rates, fuel prices, and foreign currency exchange rates.

Short-term Investments - The Company does not use derivative financial instruments in its investment portfolio. The Company places its investments in instruments that meet high credit quality standards, as specified in the Company’s investment policy guidelines. The policy also limits the amount of credit exposure to any one issue, issuer, and type of instrument. Short-term investments at March 31, 2002, which are recorded at a fair value of $64.7 million, have exposure to price risk. This risk is estimated as the potential loss in fair value resulting from a hypothetical 10% adverse change in quoted prices and amounts to $6.5 million.

Interest Rates - The Company primarily issues long-term debt obligations to support general corporate purposes including capital expenditures and working capital needs. The majority of the Company’s long-term debt obligations bear a fixed rate of interest. A one-percentage point increase in interest rates affecting the Company’s floating rate long-term debt would reduce pre-tax income by $1.3 million over the next fiscal year. A one-percentage point change in interest

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rates would not have a material effect on the fair value of the Company’s fixed rate long-term debt.

Fuel Prices — Allied Automotive Group is dependent on diesel fuel to operate its fleet of Rigs. Diesel fuel prices are subject to fluctuations due to unpredictable factors such as weather, government policies, changes in global demand, and global production. To reduce price risk caused by market fluctuations, Allied Automotive Group periodically purchases fuel in advance of consumption. During 2001 Allied Automotive Group entered into a forward purchase commitment to purchase one million gallons of low sulfur diesel fuel per month until August 2002 at determinable prices defined within the agreement. A 10% increase in diesel fuel prices would reduce pre-tax income by $1.7 million over the next fiscal year assuming 2001 levels of fuel consumption.

Foreign Currency Exchange Rates — Although the majority of the Company’s operations are in the United States, the Company does have foreign subsidiaries (primarily Canada). The net investments in foreign subsidiaries translated into dollars using exchange rates at March 31, 2002, are $72.5 million. The potential loss in fair value impacting other comprehensive income resulting from a hypothetical 10% change in quoted foreign currency exchange rates amounts to $7.3 million. The Company does not use derivative financial instruments to hedge its exposure to changes in foreign currency exchange rates.

Revenue Variability — The Company’s revenues are variable and can be impacted by sudden unexpected changes in Original Equipment Manufacturer production levels. In addition, the Company’s revenues are seasonal, with the second and fourth quarters generally experiencing higher revenues than the first and third quarters. The volume of vehicles shipped during the second and fourth quarters is generally higher due to the introduction of new models which are shipped to dealers during those periods, and the generally higher spring and early summer sales of automobiles and light trucks. During the first and third quarters, vehicle shipments typically decline due to lower sales volume during those periods and scheduled plant shut downs. Except for the impact of rising fuel costs discussed herein, inflation has not significantly affected the Company’s results of operations.

Critical Accounting Policies

The Company has certain critical accounting policies that are important to the portrayal of financial condition and results of operation. These critical accounting policies require subjective or complex judgments. The Company’s critical accounting policies include claims and insurance reserves, accounts receivable valuation reserves and the income tax valuation reserve.

CLAIMS AND INSURANCE RESERVES — Reserves for self-insured workers’ compensation, automobile, and general liability losses are subject to actuarial estimates based on historical claims experience adjusted for current industry trends. The Company receives third-party actuarial valuations to assist in the determination of its claims and insurance reserves. The actuarial estimates are discounted at 6% to their present value. The claims and insurance reserves are adjusted periodically as such claims mature to reflect changes in actuarial estimates based on actual experience.

ACCOUNTS RECEIVABLE VALUATION RESERVES — Substantially all revenue is derived from transporting new automobiles and light trucks from manufacturing plants, ports, auctions, and railway distribution points to automobile dealerships. Revenue is recorded when the vehicles are delivered to the dealerships. The Company makes significant estimates to determine the collectibility of its accounts receivable on the balance sheet. Estimates include periodic

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evaluations of the credit worthiness of customers including the impact of market and economic conditions on their viability to satisfy amounts owed to the Company. In addition, estimates include assessments of the potential for customer billing adjustments based on the timing of delivery, the accuracy of pricing, as well as evaluation of the historical aging of customer accounts.

INCOME TAX VALUATION RESERVE — The Company recognizes deferred tax liabilities and assets, including certain foreign tax credits, for the expected future tax consequences of events that have been included in the financial statements or tax returns. As a result of the Company’s operating loss position, expected insufficient future foreign source income, and limited foreign tax credit expirations, the foreign tax credits are not expected to be realized. The Company provides for a valuation allowance for these and any other net deferred tax assets or credits not expected to be realized in the future. However, utilization of remaining deferred tax assets at March 31, 2002 is based on management’s assessment of the Company’s earnings history, the actions the Company has taken and will continue to take to improve its financial performance, expectations of future taxable income, and other relevant considerations.

Cautionary Notice Regarding Forward-Looking Statements - This Quarterly Report on Form 10-Q contains, and from time to time the Company and its officers, directors or employees may make other forward-looking statements, including statements regarding, among other items, (i) the Company’s plans, intentions or expectations, (ii) general industry trends, competitive conditions and customer preferences, (iii) the Company’s management information systems, (iv) the Company’s efforts to reduce costs, (v) the adequacy of the Company’s sources of cash to finance its current and future operations and (vi) resolution of litigation without material adverse effect on the Company. This notice is intended to take advantage of the “safe harbor” provided by the Private Securities Litigation Reform Act of 1995 with respect to such forward-looking statements. Without limiting the generality of the foregoing, the words “believe,” “anticipate,” “seek,” “expect,” “estimate,” “intend,” “plan,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements involve a number of risks and uncertainties. Among others, factors that could cause actual results to differ materially from historical results or results expressed or implied by such forward-looking statements are the following: economic recessions or downturns in new vehicle production or sales; the highly competitive nature of the automotive distribution industry; dependence on the automotive industry; the impact of recent price increases implemented by the Company on the Company’s market share; loss or reduction of revenues generated by the Company’s major customers or the loss of any such customers; the variability of quarterly results and seasonality of the automotive distribution industry; the Company’s highly leveraged financial position; labor disputes involving the Company or its significant customers; the dependence on key personnel who have been hired or retained by the Company; the availability of strategic acquisitions or joint venture partners; increases in fuel prices; increased frequency and severity of work related accidents and workers’ compensation claims; availability of appropriate insurance coverage; increased expenses due to layoffs of employees; changes in regulatory requirements which are applicable to the Company’s business; changes in vehicle sizes and weights which may adversely impact vehicle deliveries per load; risks associated with doing business in foreign countries; and other risk factors set forth from time to time in the Company’s Securities and Exchange Commission reports, including but not limited to, this Quarterly Report on Form 10-Q and the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001. Many of these factors are beyond the Company’s ability to control or predict, and readers are cautioned not to put undue reliance on such forward-looking statements. The Company disclaims any obligation to update or review any forward-looking statements contained in this Quarterly Report or in any statement referencing the risk factors and other cautionary statements set forth in this Quarterly Report.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

The information required under this item is provided under the caption “Disclosures about Market Risks” under Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

PART 2 — OTHER INFORMATION

ITEM 1 — LEGAL PROCEEDINGS

The Company is involved in various litigation and environmental matters relating to employment practices, damages, and other matters arising from operations in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters, other than those discussed below, will not have a material adverse effect on the Company’s financial position or results of operations.

Gateway Development & Manufacturing, Inc. v. Commercial Carriers, Inc., et al., Index No. 1997/8920 (the “Gateway Case”) and Commercial Carriers, Inc. v. Gateway Development & Manufacturing, Inc., et al. (the “CCI Case”), Index No. 12000/8184. The claims at issue in both the Gateway Case and the CCI case center around the contention that the Company breached legal duties with respect to a failed business transaction involving Gateway Development & Manufacturing, Inc., Ryder Truck Rental, Inc. and Ryder System, Inc. In the Gateway Case, the Company has sought and received summary judgment in its favor on the sole claim (for tortious interference with contract) asserted against it by Gateway Development & Manufacturing, Inc., but that ruling has been appealed. A decision on that appeal is expected later this year. In the interim, the trial court has permitted the filing and service of cross-claims against the Company by the other defendants in that action. In the CCI Case, the Company has accepted service of a separate complaint asserting claims against the Company by the other defendants in the Gateway Case. It is anticipated that the claims asserted in both the Gateway Case and the CCI Case will be resolved in a unified proceeding. With respect to the entirety of this litigation, the Company intends to continue its vigorous defense against the claims asserted against it, as management believes all of those claims are without merit. While the ultimate results of this litigation cannot be predicted, if this litigation is resolved in a manner that is adverse to the Company, it could have a material adverse effect on the Company’s consolidated financial position or results of operations.

Ryder Systems, Inc. v. Allied Holdings, Inc., AH Acquisition Corp. and Allied Automotive Group, Inc., Case No. 01-3553-CIV-HUCK in the United States District Court for the Southern District of Florida, relates to the Company’s August 1997 stock acquisition of certain corporations wholly owned by Ryder. Through that acquisition, the Company agreed to assume financial responsibility for certain third-party injury claims arising on or before the August 1997 closing date. Ryder’s original complaint was filed on August 16, 2001. In response, the Company moved to dismiss, and the court granted that motion with leave for Ryder to amend its complaint. On December 26, 2001, Ryder timely filed its amended complaint. Ryder’s five-count amended complaint alleges, in Count one, that the Company breached its agreement with Ryder by failing to undertake certain actions (including posting letters of credit and bonds) to substitute the Company for Ryder under an insurance policy covering third-party claims and with various states’ agencies that regulate matters such as self-insured workers’ compensation. In Counts two through four, the amended complaint alleges that if these obligations are not required by contract, the legal doctrines of promissory estoppel, good faith, fair dealing and negligent misrepresentation created them. In Count five, the amended complaint seeks a declaration that the Company is required to undertake these actions. The Company intends to continue its vigorous defense against the claims asserted against it, as management believes all

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of those claims are without merit. It has moved to dismiss the first four counts, answered the declaratory judgment count, and raised several counterclaims. The ultimate results of this litigation cannot be predicted. However, if Ryder prevails on its claims and the court orders the Company to substitute itself for Ryder by, among other things, posting substantial letters of credit, it could have a material adverse effect on the Company’s consolidated financial position or results of operations.

Item 6. Exhibits and Reports on Form 8-K.

(a)	Exhibits:
Exhibit	Description
10.1†	First Amendment to Employment Agreement between Allied Holdings, Inc. and Hugh E. Sawyer
10.2†	Employment Agreement between Allied Holdings, Inc. and Daniel H. Popky
10.2(a)†	First Amendment to Employment Agreement between Allied Holdings, Inc. and Daniel H. Popky
10.3†	Employment Agreement between Allied Holdings, Inc. and Thomas M. Duffy
10.3(a)†	First Amendment to Employment Agreement between Allied Holdings, Inc. and Thomas M. Duffy
10.4†	Employment Agreement between Allied Holdings, Inc. and Robert J. Rutland
10.5†	Employment Agreement among Axis Group, Inc., Allied Holdings, Inc. and Jack Gross

† Management contract, compensatory plan or arrangement.

(b)	Reports on Form 8-K:
	On April 2, 2002, the Company filed with the Commission a Current Report on Form 8-K regarding the dismissal of its independent public accountants Arthur Andersen LLP and the engagement of KPMG LLP as its new independent auditors which Current Report was amended on April 19, 2002.
	On February 27, 2002, the Company filed with the Commission a Current Report on form 8-K to announce the successful completion of the refinancing of its revolving credit facility as well as its subordinated debt on February 26, 2002.
	On February 21, 2002, the Company filed an amendment to a Current Report on Form 8-K filed with the Commission December 20, 2001 relative to the sale of the Company’s interest in the United Kingdom joint venture to provide the Company’s unaudited pro forma condensed consolidated balance sheet and statement of operations as of and for the nine month period ending September 30, 2001 and unaudited proforma condensed consolidated statement of operations for the year ended December 31, 2001.
	On February 14, 2002, the Company filed with the Commission a Current Report on Form 8-K announcing that the Company had reached an agreement on February 12, 2002 with the Company’s subordinated debt holders extending the February 15 interest payment date under the Company’s $40 million subordinated debt facility to March 1, 2002.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Allied Holdings, Inc.
May 15, 2002	/s/ HUGH E. SAWYER
(Date)	Hugh E. Sawyer on behalf of Registrant as President and Chief Executive Officer
May 15, 2002	/s/ DANIEL H. POPKY
(Date)	Daniel H. Popky on behalf of Registrant as Senior Vice President, Finance and Chief Financial Officer

26 EX-10.1 3 g75961ex10-1.txt FIRST AMENDMENT TO EMPLOYMENT AGREEMENT- SAWYER EXHIBIT 10.1 FIRST AMENDMENT TO EMPLOYMENT AGREEMENT THIS FIRST AMENDMENT to Employment Agreement (the "Amendment") is made and entered into as of the 22nd day of December, 2001, by and between Hugh E. Sawyer ("Employee") and Allied Holdings, Inc. ("Employer"). WITNESSETH: WHEREAS, Employer and Employee entered into that certain Employment Agreement dated effective as of June 18, 2001 (the "Employment Agreement"); and WHEREAS, the parties desire to amend the Employment Agreement as set forth herein; NOW, THEREFORE, for and in consideration of the covenants and conditions set forth herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Employer and Employee hereby mutually agree as follows: 1. The last sentence of Section 5(a) shall be deleted in its entirety, and the following shall be substituted in its place: "Such annual cash bonuses will be payable on such date or dates as is determined by the Compensation Committee of the Board of Directors, but in no event later than thirty (30) days after completion of the independent certified audit for the applicable year (each, an "Annual Bonus"); and 2. The second to the last sentence of Section 5(b) shall be deleted in its entirety, and the following shall be substituted in its place: "Such Annual Bonus shall be payable on a date or dates to be determined by the Compensation Committee of the Board of Directors." 3. All terms which are capitalized herein, but which are not defined herein, shall have the meanings ascribed to them in the Employment Agreement. 4. All provisions of the Employment Agreement which have not been amended by this Amendment shall remain in full force and effect. Notwithstanding the foregoing, to the extent there is any inconsistency between the provisions of the Employment Agreement and the provisions of this Amendment, the provisions of this Amendment shall control. 5. Each of the parties hereto will, from time to time, and at all times hereafter, upon every reasonable request to do so by any other party, make, do, execute and deliver, or cause to be made done, executed and delivered, all such further acts, deeds, assurances and things as may be reasonably required or necessary in order to further implement and carry out the terms and purpose of this Amendment. 6. This Amendment may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute the same agreement, document, or instrument. Any signature page of any such counterpart, or any electronic facsimile thereof, may be attached or appended to any other counterpart to complete a fully executed counterpart of such agreement, document or instrument, and any telecopy or other facsimile transmission of any signature shall be deemed an original and shall bind such party. IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to be duly executed on its behalf, all as of the day and year first written above. "Employer" ALLIED HOLDINGS, INC. By: /s/ Robert J. Rutland ---------------------------------------- Robert J. Rutland, Chairman "Employee" /s/ Hugh E. Sawyer ------------------------------------------- HUGH E. SAWYER EX-10.2 4 g75961ex10-2.txt EMPLOYMENT AGREEMENT - POPKY EXHIBIT 10.2 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT is made and entered into as of the 23rd day of February, 2000, by and between DANIEL H. POPKY ("Employee") and ALLIED HOLDINGS, INC., a Georgia corporation ("Employer"). WITNESSETH WHEREAS, Employer, through its Affiliates (as hereinafter defined), is engaged in the transportation of automobiles and light trucks from manufacturers to retailers, and other related activities (the "Business"); and WHEREAS, Employee has a number of years of experience in the Business in addition to having management skills of which Employer desires to avail itself; and WHEREAS, Employer and Employee have made and entered into a previous employment agreement; and WHEREAS, Employer and Employee deem it in their respective best interests to clarify the duties and obligations, each to the other, by executing this new Employment Agreement, NOW, THEREFORE, for and in consideration of the covenants and conditions hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Employer and Employee hereby mutually agree that all previous employment agreements are superseded, null, void, and of no further force and effect, and Employer and Employee further mutually agree as follows: 1. DEFINITIONS. (a) "Affiliate" means any corporation, partnership or other entity of which Employer owns at least eighty percent (80%) of the outstanding equity and voting rights directly or indirectly through any other corporation, partnership or other entity. (b) "Base Salary" means the annual salary payable pursuant to Paragraph 4(a) hereof as adjusted, from time to time, by Employer. (c) "Cause" means (i) the commission by Employee of an act constituting a felony and Employee's conviction thereof; (ii) Employee's prolonged absence, without the consent of Employer, other than as a result of Employee's Disability or permitted absence or vacation; (iii) conduct of Employee which amounts to fraud, dishonesty, gross or willful neglect of duties; or (iv) engaging in activities prohibited by Paragraphs 13, 14 or 15 hereof. (d) "Disability" shall conclusively be deemed to have occurred with respect to Employee (i) if Employee shall be receiving payments pursuant to a policy of long-term disability income insurance; (ii) if Employee shall have no long-term disability income coverage then in force and any insurance company insuring Employee's life shall agree to waive the premiums due on such policy pursuant to a long-term disability waiver of premium provision in the contract of life insurance; or (iii) if Employee shall have no long-term disability waiver of premium provision in any contract of life insurance, then if Employee shall be receiving long-term disability benefits from or through the Social Security Administration; provided, however, that in the event Employee's disability shall, otherwise and in good faith, come into question (and, for purposes of this proviso, "disability" shall mean the permanent and continuous inability of Employee to perform substantially all of the duties being performed immediately prior to his disability coming into question), and a dispute shall arise with respect thereto, then Employee (or his personal representatives) shall appoint a medical doctor, Employer shall appoint a medical doctor, and said two (2) doctors shall, in turn, appoint a third party medical doctor who shall examine Employee to determine the question of disability and whose determination shall be binding upon all parties to this Agreement. (e) "Restricted Period" means the period commencing as of the date hereof and ending on that date one (1) year after the termination of Employee's employment with Employer for any reason, whether voluntary or involuntary. (f) "Term" means the Initial Term and any Renewal Term (each as defined in Paragraph 2 hereof); provided, however, that, in the event Employee's employment shall terminate by reason of the applicability of Paragraph 8 hereof then, in such event, the "Term" shall end upon the termination of Employee's employment. 2. TERM. Subject to the provisions hereinafter set forth, the Term of this Agreement shall commence as of the date hereof and shall end on December 31, 2001 (the "Initial Term"). Upon the expiration of the Initial Term, and on the expiration of each successive Renewal Term (as hereinafter defined), Employee's employment shall be automatically renewed for an additional term of one (1) years (the "Renewal Term(s)"), unless written notification of termination is given by either party to the other party not less than three (3) months prior to the expiration of the Initial Term or, as the case may be, the then-current Renewal Term. 3. DUTIES. (a) Employee shall, during the Term, serve as Senior Vice President and Chief Financial Officer of Employer. Employee's principal duties shall be 2 to perform such executive, managerial and administrative duties as the Chairman and Board of Directors of Employer may, from time to time, reasonably request as are consistent with the position of Senior Vice President and Chief Financial Officer. (b) Subject to the preceding subparagraph, during the Term, Employee shall devote substantially all of his time, energy and skill to performing the duties of his employment (vacations as provided hereunder and reasonable absences because of illness excepted), shall faithfully and industriously perform such duties, and shall use his best efforts to follow and implement all management policies and decisions of Employer. Employee shall not become personally involved in the management or operations of any other company, partnership, proprietorship or other entity, other than any Affiliate, without the prior written consent of Employer; provided, however, that so long as it does not interfere with Employee's employment hereunder, Employee may, with Employer's consent, (1) serve as a director, officer or partner in a company that does not compete with the Business of Employer and the Affiliates so long as the aggregate amount of time spent by Employee in all such capacities shall not exceed twenty (20) hours per month, and (2) serve as an officer or director of, or otherwise participate in, educational, welfare, social, religious, civic, trade and industry-related organizations. 4. BASE SALARY. (a) For and in consideration of the services to be rendered by Employee pursuant to this Agreement, Employer shall pay to Employee, for each year during the Term, an annual salary of Two Hundred Twenty-seven Thousand Dollars ($227,000.00), payable in equal semi-monthly installments in accordance with Employer's payroll practices. Employee's salary shall be reviewed by the Board of Directors of Employer annually and, in the sole discretion of the Board of Directors, may be increased, but not decreased. (b) In addition to the Base Salary paid to Employee pursuant to Paragraph 4(a) hereof, Employee shall be eligible to receive monthly compensation of up to (x) 3% of (y) Employee's Base Salary multiplied by one-twelfth (1/12), through Allied's anticipated "Monthly R+" performance incentive plan, as such plan shall be developed, implemented and maintained from time to time by Allied. The pertinent terms of the plan and the specific performance objectives to be developed to measure Employee's performance under such plan shall be provided to Employee at such time as Allied shall have implemented the same. This Paragraph 4(b) shall not create any entitlement for Employee, require Allied to actually implement the Monthly R+ plan or prevent Allied from, in its sole and exclusive 3 discretion, terminating or changing the terms to any such plan Allied does so implement. 5. BONUS COMPENSATION. Employee shall, with respect to each calendar year of Employer ending during the Term, be entitled to participate in the Allied Holdings, Inc. EVA Based Incentive Plan, as the same may be from time to time amended and in effect (the "EVA Plan"). The Employee's Target Bonus for purposes of the EVA Plan shall be such percentage of Employee's Base Salary as shall, from time to time, be determined by Employer. Employee's actual bonus shall be calculated in accordance with the terms of the EVA Plan. Employee shall be provided with a copy of the EVA Plan within thirty (30) days of execution of this Agreement. 6. OTHER BENEFITS. During the Term, Employer shall provide the following benefits to Employee: (a) Employee shall be entitled to participate in all group medical and hospitalization benefit programs, dental care, sick leave, life insurance or other benefit plans for highly compensated employees of Employer or any Affiliate as are now or hereafter provided by Employer or any Affiliate, in each case in accordance with the terms and conditions of each such plan and benefit package. (b) Employee shall be entitled to participate in all long term incentive plans, stock option plans and other similar plans for highly compensated employees of Employer as are now or hereafter provided by Employer or any Affiliate, in each case in accordance with the terms and conditions of each such plan. (c) Employee shall be provided with the use of an automobile, which shall be comparable to other automobiles Employer provides to persons serving in the capacity of Vice-President of Employer, or President of an Affiliate, and which shall be chosen by Employee from a list of automobiles Employer typically makes available to its Vice-Presidents and Presidents of its Affiliates, and Employer shall pay for the cost of all insurance, ad valorem taxes and tag charges for such automobile and all operating and maintenance charges for such automobile. In addition, Employee shall be entitled to an automobile allowance for his spouse comparable to the spousal allowance Employer provides to persons serving in the capacity of Vice-President of Employer or President of an Affiliate, as determined from time to time by the Board of Directors of Employer. (d) Employee shall be provided with the use of a cellular telephone, at no cost to Employee. 4 (e) Employer shall reimburse Employee for dues paid by Employee for membership in such professional organizations and eating clubs as shall, from time to time, be deemed appropriate and necessary by Employer. (f) Employee shall, at all times, have available to him an expense account, including the use of a corporate American Express card, to defray ordinary and necessary business expenses incurred in the performance of his duties hereunder. Employee shall be reimbursed for such expenses upon presentation and approval of expense statements or written vouchers or other supporting documents as may be reasonably requested in advance by Employer, which approval shall not be unreasonably withheld or delayed. The benefits described in subparagraph (a) of this Paragraph shall not be construed to require Employer to establish any such plans or programs or to prevent Employer from modifying or terminating any such plans or programs, and no such action or failure thereof shall affect this Agreement; provided, however, that in the event of any reduction in the group medical and hospitalization benefits in place as of the date hereof, the salary payable to Employee shall be increased, as of the effective date of such reduction, by that amount necessary to enable Employee to supplement the benefits provided by Employer to maintain the level of benefits currently provided to him by it. 7. VACATION. Employee shall receive no fewer than three (3) weeks of paid vacation for each year during the Term. Scheduling of vacation shall be subject to the prior approval of Employer (which approval shall not be unreasonably withheld). Vacation time shall not accrue, and in the event Employee prior to the end of any year shall not use all of his vacation time for such year, such vacation time shall be forfeited. 8. TERMINATION. Anything herein to the contrary notwithstanding, Employee's employment hereunder shall terminate upon the first to occur of any of the following events: (a) Employee's Disability; (b) Employee's death; (c) Employee's materially breaching this Agreement by the non-performance or non-observance of any material term or condition of this Agreement, which breach shall not be corrected within forty-five (45) days after receipt of written notice of same from Employer; (d) Employer's sending Employee written notice terminating his employment hereunder prior to the expiration of the Initial Term or any Renewal Term in accordance with Paragraph 2 hereof; 5 (e) Employee's voluntarily terminating his employment hereunder prior to the expiration of the Initial Term or any Renewal Term; or (f) Employee's being terminated for Cause. 9. TERMINATION PAYMENT. Subject to the provisions of Paragraph 11 hereof, in the event (a) Employee's employment shall terminate pursuant to Paragraph 8(a) (Disability) or Paragraph 8(b) (death) hereof; or (b) Employee shall terminate his employment as a result of (i) any failure to elect or reelect or to appoint or reappoint Employee to the position of Senior Vice President and Chief Financial Officer of Employer unless agreed to by Employee; (ii) any material change by Employer in Employee's function, duties, responsibility, importance, or scope from the position and attributes thereof described in Paragraph 3 hereof unless agreed to by Employee, or any change in location of the principal offices of Employer outside the metropolitan Atlanta, Georgia, area, or any requirement that Employee perform substantially all of his duties outside the metropolitan Atlanta, Georgia, area (and any such material change or relocation of Employer or Employee shall be deemed a continuing breach of this Agreement); (iii) the liquidation, dissolution, consolidation or merger of Employer (other than a merger or other combination of Employer and an Affiliate); provided, however, that if there shall be a termination of employment resulting from events described in this subsection (iii) and in subsection (d) below, then such termination shall be deemed to fall within the terms of subsection (d) below which shall control and be paramount; (iv) any other material breach of this Agreement by Employer which shall not be cured within thirty (30) days after receipt of written notice of same from Employee; (v) Employer filing a petition for protection or relief from creditors under the federal bankruptcy law, or any petition shall be filed against Employer under the federal bankruptcy law, or Employer shall admit in writing its inability to pay its debts or shall make an assignment for the benefit of creditors, or a petition or application for the appointment of a receiver or liquidator or custodian of 6 Employer is filed, or Employer shall seek a composition with creditors; or (c) Employee's employment shall be terminated by Employer for any reason other than for Cause or because Employer elects not to extend this Agreement beyond the Initial or any Renewal Term; or (d) If (i) Employer undergoes any change in control or ownership whereby Employer is reorganized, merged, or consolidated with one or more corporations as a result of which the owners of all of the outstanding shares of common stock immediately prior to such reorganization, merger or consolidation own in the aggregate less than seventy percent (70%) of the outstanding shares of common stock of the Employer or any other entity into which Employer shall be merged or consolidated immediately following the consummation thereof (hereinafter, "Employer's successor-in-interest"), or (ii) the sale, transfer or other disposition of all or substantially all of the assets or more than thirty percent (30%) of the then outstanding shares of common stock of Employer is effectuated, other than as a result of a merger or other combination of Employer and an Affiliate, or (iii) the acquisition by any "person" as used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934 of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent (20%) or more of the combined voting power of Employer's then outstanding voting securities is effectuated; or (iv) the individuals who, as of the date of execution of this Agreement, are members of the Board of Directors (the "incumbent Board") cease for any reason to constitute at least two-thirds (2/3) of the Board; provided, however, that if the election, or nomination for election by the shareholders of any new director was approved by a vote of at least two-thirds (2/3) of the incumbent Board, such new director shall, for purposes of this Agreement, be considered as a member of the incumbent Board, and (a) Employee's employment with Employer or Employer's successor-in-interest is terminated by Employer or Employer's successor-in-interest (as the case may be) or Employee for any reason, or (b) Employee's employment under this Agreement is not extended by Employer or Employer's successor-in-interest for any Renewal Term, and such termination or non-renewal occurs within two (2) years after the closing of the transaction which resulted in the change in control, then Employer shall, depending upon the reason for the termination of Employee's employment, immediately pay in cash to Employee an amount determined as follows: (x) If the termination shall be pursuant to subparagraph (d) above, the amount shall be equal to the sum of 7 (1) three hundred percent (300%) of Employee's then-effective annual Base Salary; and (2) three hundred percent (300%) of Employee's then-effective Bonus, as hereinafter defined. In addition, Employer shall continue to provide to Employee (except in the case of Employee's death), for a period of three (3) years from said termination, the benefits enumerated in Paragraph 6(a) and Paragraph 6(c) hereof. (y) If the termination shall be other than pursuant to subparagraph (d) above, the amount shall be equal to the sum of (1) two hundred percent (200%) of Employee's then-effective annual Base Salary; and (2) two hundred percent (200%) of Employee's then-effective Bonus, as hereinafter defined. In addition, Employer shall continue to provide to Employee (except in the case of Employee's death), for a period of two (2) years from said termination, the benefits enumerated in Paragraph 6(a) and Paragraph 6(c) hereof. 10. OPERATIVE PROVISIONS. (a) As used in this Agreement, the term "Bonus" shall mean: (i) with respect to the most recent grant or award of restricted stock, pursuant to Employer's "Long Term Incentive Plan", made prior to the date of termination of Employee's employment, the Dollar value, as of the date of such grant or award, of the Long Term Incentive Plan restricted stock plan target for Employee as approved by the Compensation Committee of Employer's Board of Directors, which Dollar value is established by the Compensation Committee notwithstanding the number of shares actually received pursuant to such grant or award and notwithstanding the value of such shares actually received; plus (ii) the highest of (1) the average of the EVA bonuses actually paid to Employee for the two (2) years immediately preceding the year in which termination of employment occurs; (2) the average of the EVA bonuses which would have been paid to Employee for the two (2) years immediately preceding the year in which termination of employment occurs, assuming his EVA target bonus had been achieved for each such year; or (3) the amount of the EVA target 8 bonus for Employee for the year in which termination of employment occurs. (b) In the event of a termination of employment pursuant to Paragraph 9 hereof, all restricted stock awards of Employee shall become wholly unrestricted and all unvested stock options of Employee shall become fully vested in Employee, and all such agreements pertaining thereto shall be read accordingly; provided, however, that Employee shall not have any such rights with respect to any stock issued under any employee stock plan of Employer qualifying under Section 402(a) et seq. of the Code if, and to the extent, such rights would jeopardize the qualification of such plan under said Section. As used in the preceding sentence, "Code" means the Internal Revenue Code of 1986 as amended from time to time or any provisions from time to time enacted and corresponding in substance thereto. (c) Paragraph 9 and this Paragraph 10 shall survive the termination of this Agreement, and this Agreement shall be read accordingly. 11. INTENTION OF PARTIES. It is the express understanding and intention of Employer and Employee that the provisions of Paragraph 5 and Paragraph 9 hereof shall be read together and be non-exclusive so that, in the event of a termination of Employee's employment pursuant to Paragraph 9 of this Employment Agreement, Employee shall receive both (i) all of the compensation specified in Paragraph 9 hereof (including, but not limited to, the applicable percentage of Employee's then-effective Base Salary and the applicable percentage of the cash portion of Employee's Bonus) and (ii) one hundred percent (100%) of the pro rata portion of both the cash and equity parts of Employee's Bonus based on the number of days in the fiscal year falling within the Term (which shall include the amount of any EVA bonus paid to Employee during that year, if any), but in no event shall such pro rata portion be less than the pro rata share of the highest of (i) the average of the EVA bonuses actually paid to Employee for the two (2) years immediately preceding the year in which termination of employment occurs; (ii) the average of the EVA bonuses which would have been paid to Employee for the two (2) years immediately preceding the year in which termination of employment occurs, assuming his EVA target bonus had been achieved for each such year; or (iii) the amount of the EVA target bonus for Employee for the year in which termination of employment occurs. The amounts referred to in this Paragraph are in addition to the benefits enumerated in Paragraphs 6(b) and 6(c) hereof. 12. CONDITIONS TO BENEFITS. Anything in this Agreement to the contrary notwithstanding: (a) To receive the benefits enumerated in Paragraph 9 hereof, Employee shall execute and agree to be bound by a release agreement substantially in the form attached to this Agreement as Exhibit A and, to the extent applicable, a resignation letter substantially in the form attached as Exhibit B, prior to, 9 and as a condition to, receiving any payments or benefits provided for in Paragraph 9 hereof or otherwise following termination of his employment hereunder [and, if applicable, the release agreement may contain provisions required by federal, state or local law (e.g., the Older Worker's Benefit Protection Act) to effect a general release of all claims]. (b) Employee's right to receive any of the benefits provided for in Paragraph 9 or otherwise in this Agreement following termination of his employment hereunder shall immediately cease and be of no further force or effect if Employee violates any of the covenants contained in Paragraphs 13, 14, 15 or 16 hereof. 13. COVENANT NOT-TO-DISCLOSE. Employer and Employee recognize that, during the course of Employee's term of employment with Employer pursuant to this Agreement, Employer will disclose to Employee information concerning Employer and the Affiliates, their products, their customers, their services, their trade secrets, their proprietary information and other information concerning their business all of which constitute valuable assets of Employer and the Affiliates. Employer and Employee further acknowledge that Employer has, and will, invest considerable amounts of time, effort and corporate resources in developing such valuable assets and that disclosure by Employee of such assets to the public shall cause irreparable harm, damage and loss to Employer and the Affiliates. (a) To protect these assets, Employee agrees that he shall not, during the Restricted Period, advise or disclose to any person, corporation, firm, partnership or other entity whatsoever (except Employer or an Affiliate), or any officer, director, stockholder, partner or associate of any such corporation, firm, partnership or entity any information received from Employer by Employee during the course of Employee's association with Employer relating to the business affairs of Employer and the Affiliates including information concerning Employer's and the Affiliates' finances, services, customers, customer lists, prospective customers, staff, contemplated acquisitions (whether of business or assets), ideas, proprietary information, methods, marketing investigations, surveys, research and any other information relating to the business and objectives of Employer and the Affiliates, except as permitted by Exhibit C hereof. (b) Employee further agrees that he shall not, during the term of his employment or any time thereafter, advise or disclose to any person or entity any trade secret which Employer or any Affiliate has disclosed to Employee during the course of his employment with Employer. (c) In the event Employee's employment is terminated, Employee agrees that, if requested by Employer, he will acknowledge in writing that he received the disclosures referred to herein and is under the obligations referred to in this Agreement. 10 (d) This Paragraph 13 shall, except as otherwise provided in this Agreement, survive the termination of this Agreement. 14. COVENANT NOT-TO-INDUCE. Employee covenants and agrees that during the Restricted Period, he will not, directly or indirectly, on his own behalf or in the service or on behalf of others, hire, solicit, take away or attempt to hire, solicit or take away any employee or other personnel of Employer and the Affiliates. This Paragraph 14 shall, except as otherwise provided in this Agreement, survive the termination of this Agreement. 15. COVENANT OF NON-DISPARAGEMENT AND COOPERATION. Employee agrees that he shall not at any time during or following the term of this Agreement make any remarks disparaging the conduct or character of Employer or the Affiliates or any of Employer's or the Affiliates' current or former agents, employees, officers, directors, successors or assigns (collectively the "Related Companies"). In addition, Employee agrees to cooperate with the Related Companies, at no extra cost, in any litigation or administrative proceedings (e.g., EEOC charges) involving any matters with which Employee was involved during Employee's employment with Employer. Employer shall reimburse Employee for travel expenses approved by Employer or the Affiliates incurred in providing such assistance. This Paragraph 15 shall survive the termination of this Agreement. 16. COVENANT NOT-TO-COMPETE. Employer and Employee acknowledge that, by virtue of Employee's responsibilities and authority, he shall, during the course of his Employment, be instrumental in developing management services related to the Business, much of which will be unavailable to those in positions of lesser responsibility and authority. Employee further acknowledges that the ability of such information to benefit a competitor or potential competitor of Employer and the Affiliates shall cause irreparable harm, damage and loss to Employer. To protect Employer and the Affiliates from Employee's using or exploiting this information, Employee agrees that, if the employment relationship between Employee and Employer terminates for any reason whatsoever, then, in such event, for a period of one (1) year or, in the case of Employee's termination pursuant to Paragraph 9(d) hereof, two (2) years, from the date of Employee's termination of employment, Employee shall not engage in management services related to the Business or in a similar capacity for any other person or entity who engages in the Business in the United States, Canada, Mexico, Brazil, Argentina, the United Kingdom or South Africa (collectively, the "Restricted Territory"), and Employee shall not directly or indirectly, own, manage, join, control, contract with, be employed by, act in the capacity of an officer, director, trustee, shareholder or partner or consultant, or participate in any manner in the ownership, management, operation, or control of any business or person engaged in the Business in the Restricted Territory; provided, however, Employee shall be permitted to own not more than five percent (5%) of the stock of a corporation required to file reports pursuant to the Securities Exchange Act of 1934. As to the foregoing, Employee acknowledges that he has the ability to earn a comparable income within or without the Restricted Territory as a manager or executive for persons or entities not engaged in the Business and that earning a livelihood by working for persons or entities not engaged in the Business within or without the Restricted Territory would not constitute a hardship or an unreasonable restriction on the 11 Employee or restrict him from earning comparable income. This Paragraph 16 shall survive the termination of this Agreement. 17. SPECIFIC ENFORCEMENT. Employer and Employee expressly agree that a violation of the covenants not-to-disclose, not-to-induce, not-to-disparage and not-to-compete contained in Paragraphs 13, 14, 15 and 16 hereof, or any provision thereof, shall cause irreparable injury to Employer and that, accordingly, Employer shall be entitled, in addition to any other rights and remedies it may have at law or in equity, to an injunction enjoining and restraining Employee from doing or continuing to do any such act and any other violation or threatened violation of said Paragraphs 13, 14, 15 and 16 hereof. 18. SEVERABILITY. In the event any provision of this Agreement shall be found to be void, the remaining provisions of this Agreement shall nevertheless be binding with the same effect as though the void part were deleted; provided, however, if Paragraphs 13, 14, 15 and 16 hereof shall be declared invalid, in whole or in part, Employee shall execute, as soon as possible, a supplemental agreement with Employer, granting Employer, to the extent legally possible, the protection afforded by said Paragraphs. It is expressly understood and agreed by the parties hereto that Employer shall not be barred from enforcing the restrictive covenants contained in each of Paragraphs 13, 14, 15 and 16 as each are separate and distinct, so that the invalidity of any one or more of said covenants shall not affect the enforceability and validity of the other covenants. 19. INCOME TAX WITHHOLDING. Employer or any other payor may withhold from any compensation or benefits payable under this Agreement such Federal, State, City or other taxes as shall be required pursuant to any law or governmental regulation or ruling. 20. OTHER TAX CONSIDERATIONS. Notwithstanding any other provision of this Agreement to the contrary, in the event that any payment or benefit received or to be received by Employee is triggered by an event described in subparagraph (d) of Paragraph 9 of this Agreement, whether such payment or benefit is pursuant to the terms of this Agreement or any other plan, arrangement or agreement with Employer or any Affiliate of Employer (hereinafter, all such payments and benefits being sometimes referred to as "Total Payments"), and would not be deductible, either in whole or in part, by Employer or an Affiliate making such payment or providing such benefit as a result of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), then, to the extent necessary to make such portion of the Total Payments deductible (and after taking into account any reduction in the Total Payments provided by reason of Section 280G of the Code in any such other plan, arrangement or agreement), (A) the cash portion of the Total Payments provided in this Paragraph 20 shall first be reduced (if necessary, to zero (0)), and (B) all other non-cash Total Payments under this Paragraph 20 shall next be reduced (if necessary, to zero (0)); provided, however, that the Employee's payment shall only be reduced by this Paragraph 20 if Employer determines that reducing the Total Payments would result in greater after-tax proceeds to the Employee than if no such reduction in Total Payments had occurred. Any determination required by the preceding sentence shall be made by independent certified public accountants or tax counsel (hereinafter, such party shall sometimes 12 be hereinafter referred to as the "Independent Adviser") selected by Employer, the selection of which shall be reasonably acceptable to Employee. In making Employer's determination as to the application and effect of this Paragraph 20 on any payments or benefits received or to be received by Employee, (i) no portion of the Total Payments shall be taken into account which in the opinion of the Independent Adviser does not constitute a "parachute payment" within the meaning of Section 280G(b)(2) of the Code, including by reason of Section 280G(b)(4)(A) of the Code; (ii) those Total Payments provided under this Paragraph 20 shall be reduced only to the extent necessary so that the Total Payments (other than those referred to in clause (i)) in their entirety constitute reasonable compensation for services actually rendered within the meaning of Section 280G(b)(4)(B) of the Code or are otherwise not subject to disallowance as deductions, in the opinion of the Independent Adviser; and (iii) the value of any non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Company's independent certified public accountants in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. 21. WAIVER. The waiver of a breach of any term of this Agreement by any of the parties hereto shall not operate or be construed as a waiver by such party of the breach of any other term of this Agreement or as a waiver of a subsequent breach of the same term of this Agreement. 22. RIGHTS AND LIABILITIES UPON NOTICE OF TERMINATION. As soon as notice of termination of this Agreement is given, Employee shall immediately cease contact with all customers of Employer and shall forthwith surrender to Employer all customer lists, documents and other property of Employer then in his possession, compliance with which shall not be deemed to be a breach of this Agreement by Employee. Pending the surrender of all such customer lists, documents and other property to Employer, Employer may hold in abeyance any payments due Employee pursuant to this Agreement. 23. ASSIGNMENT. (a) Employee shall not assign, transfer or convey this Agreement, or in any way encumber the compensation or other benefits payable to him hereunder, except with the prior written consent of Employer or upon Employee's death. (b) The covenants, terms and provisions set forth herein shall be binding upon and shall inure to the benefit of, and be enforceable by, Employer and its successors and assigns. 24. NOTICES. All notices required herein shall be in writing and shall be deemed to have been given when delivered personally or when deposited in the U.S. Mail, certified or registered, postage prepaid, return receipt requested, addressed as follows, to wit: 13 If to Employer at: 160 Clairemont Avenue Suite 200 Decatur, Georgia 30030 With a copy to: Cohen Pollock Merlin Axelrod & Tanenbaum, P.C. 2100 RiverEdge Parkway Suite 300 Atlanta, Georgia 30328-4656 Attn: Elliott Cohen, Esquire If to Employee at: -------------------------------------------- -------------------------------------------- or at such other addresses as may, from time to time, be furnished to Employer by Employee, or by Employer to Employee on the terms of this Paragraph. 25. BINDING EFFECT. This Agreement shall be binding on the parties hereto and on their respective heirs, administrators, executors, successors and permitted assigns. 26. ENFORCEABILITY. This Agreement contains the entire understanding of the parties and may be altered, amended or modified only by a writing executed by both of the parties hereto. This Agreement supersedes all prior agreements and understandings by and between Employer and Employee relating to Employee's employment. 27. APPLICABLE LAW. This Agreement and the rights and liabilities of the parties hereto shall be governed by, and construed and interpreted in accordance with, the laws of the State of Georgia. 28. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall constitute an original, but all of which together shall constitute but a single document. [SIGNATURE PAGE TO FOLLOW] 14 IN WITNESS WHEREOF, Employee has hereunder set his hand and seal, and Employer has caused this Agreement to be executed and delivered by its duly authorized officers, all as of the day and year first above written. (SEAL) - ------------------------------- ------------------------------- WITNESS DANIEL H. POPKY ATTEST: ALLIED HOLDINGS, INC. By: By: ---------------------------- ---------------------------------- Its Secretary Its President -------------- --------------- [CORPORATE SEAL] 15 EX-10.2(A) 5 g75961ex10-2a.txt FIRST AMENDMENT TO EMPLOYMENT AGREEMENT- POPKY EXHIBIT 10.2(A) FIRST AMENDMENT TO EMPLOYMENT AGREEMENT THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT ("Amendment") is made as of the 1st day of June, 2001, by and between DANIEL H. POPKY ("Employee") and ALLIED HOLDINGS, INC. ("Employer"). WHEREAS, Employer and Employee have entered into an Employment Agreement dated February 23, 2000; and WHEREAS, Employer and Employee desire to amend the Employment Agreement as set forth herein; NOW, THEREFORE, for and in consideration of the covenants and conditions hereafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Employee and Employer hereby agree as follows: 1. Notwithstanding anything in the Employment Agreement to the contrary, Employer shall pay to Employee a bonus for the calendar year ending December 31, 2001, in an amount not less than One Hundred Twenty-Five Thousand Dollars ($125,000.00), with such bonus to be due and payable on or before January 5, 2002. Employer and Employee acknowledge and agree that Employee shall be entitled to participate in the Allied Holdings, Inc. EVA based incentive plan and any other bonus plan utilized by Employer for calendar year 2001, and that the bonus paid pursuant to this First Amendment shall be credited toward any bonus due to Employee under the EVA Plan or any other bonus plan of the Company. Employer shall not be required to pay such bonus if Employee terminates his employment on or before December 31, 2001 (other than a termination by Employee pursuant to Paragraph 9(b) or 9(d) of the Employment Agreement). In the event of termination of Employee for Cause, as defined by the Employment Agreement, Employer shall pay to Employee a pro rata portion of such bonus calculated from January 1, 2001 through the date of termination for Cause. 2. Section 4(a) of the Employment Agreement shall be amended to provide that the annual salary of Employee shall be Two Hundred Fifty Thousand ($275,000.00) and the remaining terms and conditions of Section 4(a) of the Employment Agreement shall remain in effect without amendment. 3. All remaining terms and conditions of the Employment Agreement which are not amended by this First Amendment shall remain in full force and effect. IN WITNESS WHEREOF, the undersigned have executed this Amendment this 1st day of June, 2001. Employer: ALLIED HOLDINGS, INC. By: ---------------------------------------- Title: ------------------------------------- Employee: ------------------------------------------- DANIEL H. POPKY EX-10.3 6 g75961ex10-3.txt EMPLOYMENT AGREEMENT - DUFFY EXHIBIT 10.3 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT is made and entered into as of the 23rd day of February, 2000, by and between THOMAS M. DUFFY ("Employee") and ALLIED HOLDINGS, INC., a Georgia corporation ("Employer"). WITNESSETH WHEREAS, Employer, through its Affiliates (as hereinafter defined), is engaged in the transportation of automobiles and light trucks from manufacturers to retailers, and other related activities (the "Business"); and WHEREAS, Employee has practiced law for a number of years, has pertinent legal experience, and has, from time to time, provided legal services to Employer; and WHEREAS, Employer desires in-house legal counsel and Employee desires to serve as Employer's in-house legal counsel; and WHEREAS, Employer and Employee have made and entered into a previous employment agreement; and WHEREAS, Employer and Employee deem it in their respective best interests to clarify the duties and obligations, each to the other, by executing this new Employment Agreement, NOW, THEREFORE, for and in consideration of the covenants and conditions hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Employer and Employee hereby mutually agree that all previous employment agreements are superseded, null, void, and of no further force and effect, and Employer and Employee further mutually agree as follows: 1. DEFINITIONS. (a) "Affiliate" means any corporation, partnership or other entity of which Employer owns at least eighty percent (80%) of the outstanding equity and voting rights directly or indirectly through any other corporation, partnership or other entity. (b) "Base Salary" means the annual salary payable pursuant to Paragraph 4(a) hereof as adjusted, from time to time, by Employer. (c) "Cause" means (i) the commission by Employee of an act constituting a felony and Employee's conviction thereof; (ii) Employee's prolonged absence, without the consent of Employer, other than as a result of Employee's Disability or permitted absence or vacation; (iii) conduct of Employee which amounts to fraud, dishonesty, gross or willful neglect of duties; or (iv) engaging in activities prohibited by Paragraphs 13, 14, or 15 hereof. (d) "Disability" shall conclusively be deemed to have occurred with respect to Employee (i) if Employee shall be receiving payments pursuant to a policy of long-term disability income insurance; (ii) if Employee shall have no long-term disability income coverage then in force and any insurance company insuring Employee's life shall agree to waive the premiums due on such policy pursuant to a long-term disability waiver of premium provision in the contract of life insurance; or (iii) if Employee shall have no long-term disability waiver of premium provision in any contract of life insurance, then if Employee shall be receiving long-term disability benefits from or through the Social Security Administration; provided, however, that in the event Employee's disability shall, otherwise and in good faith, come into question (and, for purposes of this proviso, "disability" shall mean the permanent and continuous inability of Employee to perform substantially all of the duties being performed immediately prior to his disability coming into question), and a dispute shall arise with respect thereto, then Employee (or his personal representatives) shall appoint a medical doctor, Employer shall appoint a medical doctor, and said two (2) doctors shall, in turn, appoint a third party medical doctor who shall examine Employee to determine the question of disability and whose determination shall be binding upon all parties to this Agreement. (e) "Restricted Period" means the period commencing as of the date hereof and ending on that date one (1) year after the termination of Employee's employment with Employer for any reason, whether voluntary or involuntary. (f) "Term" means the Initial Term and any Renewal Term (each as defined in Paragraph 2 hereof); provided, however, that, in the event Employee's employment shall terminate by reason of the applicability of Paragraph 8 hereof then, in such event, the "Term" shall end upon the termination of Employee's employment. 2. TERM. Subject to the provisions hereinafter set forth, the Term of this Agreement shall commence as of the date hereof and shall end on December 31, 2001 (the "Initial Term"). Upon the expiration of the Initial Term, and on the expiration of each successive Renewal Term (as hereinafter defined), Employee's employment shall be automatically renewed for an additional term of one (1) years (the "Renewal Term(s)"), unless written notification of termination is given by either party to the other party not less than three (3) months prior to the expiration of the Initial Term or, as the case may be, the then-current Renewal Term. 2 3. DUTIES. (a) Employee shall, during the Term, serve as "Vice-President, Corporate Affairs and General Counsel." Employee's principal duties shall be to (1) act as legal counsel to Employer and (2) perform such executive, managerial and administrative duties as the Chairman and Board of Directors of Employer may, from time to time, reasonably request and which shall not be inconsistent or incompatible with Employee's role as legal counsel. ANY IMPLICATION ANYWHERE IN THIS AGREEMENT TO THE CONTRARY NOTWITHSTANDING, EMPLOYER AND EMPLOYEE RECOGNIZE THAT, AS A MEMBER OF THE STATE BAR OF GEORGIA, EMPLOYEE SHALL, AT ALL TIMES, (I) BE BOUND BY AND ACT IN ACCORDANCE WITH THE RULES, REGULATIONS AND POLICIES OF THE STATE BAR OF GEORGIA, INCLUDING WITHOUT LIMITATION THE CANONS OF ETHICS AND STANDARDS OF CONDUCT, AS FROM TIME TO TIME PROMULGATED AND/OR AMENDED, AND (II) ACT IN SUCH MANNER AS TO PROTECT THE ATTORNEY-CLIENT PRIVILEGE BETWEEN HIM AND EMPLOYER UNLESS EMPLOYER SHALL SPECIFICALLY CONSENT, IN A WRITING SIGNED BY THE CHAIRMAN OR PRESIDENT OF EMPLOYER, TO THE WAIVER OF SUCH PRIVILEGE. IN NO EVENT SHALL EMPLOYEE'S EMPLOYMENT BE TERMINATED, NOR SHALL EMPLOYEE BE DEEMED TO BE IN BREACH OF THIS AGREEMENT, BY REASON OF ANY ACTION OR DECISION TAKEN BY HIM IN GOOD FAITH WHILE ACTING PURSUANT TO AND IN ACCORDANCE WITH THE PRECEDING SENTENCE. (b) Subject to the preceding subparagraph, during the Term, Employee shall devote substantially all of his time, energy and skill to performing the duties of his employment (vacations as provided hereunder and reasonable absences because of illness excepted), shall faithfully and industriously perform such duties, and shall use his best efforts to follow and implement all management policies and decisions of Employer. Employee shall not become personally involved in the management or operations of any other company, partnership, proprietorship or other entity, other than any Affiliate, without the prior written consent of Employer; provided, however, that so long as it does not interfere with Employee's employment hereunder, Employee may, with Employer's consent, (1) serve as a director, officer or partner in a company that does not compete with the Business of Employer and the Affiliates so long as the aggregate amount of time spent by Employee in all such capacities shall not exceed twenty (20) hours per month, and (2) serve as an officer or director of, or otherwise participate in, educational, welfare, social, religious, civic, trade and industry-related organizations. 3 4. BASE SALARY. (a) For and in consideration of the services to be rendered by Employee pursuant to this Agreement, Employer shall pay to Employee, for each year during the Term, an annual salary of Two Hundred Thousand Dollars ($200,000.00), payable in equal semi-monthly installments in accordance with Employer's payroll practices. Employee's salary shall be reviewed by the Board of Directors of Employer annually and, in the sole discretion of the Board of Directors, may be increased, but not decreased. (b) In addition to the Base Salary paid to Employee pursuant to Paragraph 4(a) hereof, Employee shall be eligible to receive monthly compensation of up to (x) 3% of (y) Employee's Base Salary multiplied by one-twelfth (1/12), through Employer's anticipated "Monthly R+" performance incentive plan, as such plan shall be developed, implemented and maintained from time to time by Employer. The pertinent terms of the plan and the specific performance objectives to be developed to measure Employee's performance under such plan shall be provided to Employee at such time as Employer shall have implemented the same. This Paragraph 4(b) shall not create any entitlement for Employee, require Employer to actually implement the Monthly R+ plan or prevent Employer from, in its sole and exclusive discretion, terminating or changing the terms to any such plan Employer does so implement. 5. BONUS COMPENSATION. Employee shall, with respect to each calendar year of Employer ending during the Term, be entitled to participate in the Allied Holdings, Inc. EVA Based Incentive Plan, as the same may be from time to time amended and in effect (the "EVA Plan"). The Employee's Target Bonus for purposes of the EVA Plan shall be such percentage of Employee's Base Salary as shall, from time to time, be determined by Employer. Employee's actual bonus shall be calculated in accordance with the terms of the EVA Plan. Employee shall be provided with a copy of the EVA Plan within thirty (30) days of execution of this Agreement. 6. OTHER BENEFITS. During the Term, Employer shall provide the following benefits to Employee: (a) Employee shall be entitled to participate in all group medical and hospitalization benefit programs, dental care, sick leave, life insurance or other benefit plans for highly compensated employees of Employer or any Affiliate as are now or hereafter provided by Employer or any Affiliate, in each case in accordance with the terms and conditions of each such plan and benefit package. (b) Employee shall be entitled to participate in all long term incentive plans, stock option plans and other similar plans for highly compensated employees of Employer as are now or hereafter provided by Employer or 4 any Affiliate, in each case in accordance with the terms and conditions of each such plan. (c) Employee shall be provided with the use of an automobile, which shall be comparable to other automobiles Employer provides to persons serving in the capacity of Vice-President of Employer, or President of an Affiliate, and which shall be chosen by Employee from a list of automobiles Employer typically makes available to its Vice-Presidents and Presidents of its Affiliates and Employer shall pay for the cost of all insurance, ad valorem taxes and tag charges for such automobile and all operating and maintenance charges for such automobile. In addition, Employee shall be entitled to an automobile allowance for his spouse comparable to the spousal allowance Employer provides to persons serving in the capacity of Vice-President of Employer, or President of an Affiliate, as determined from time to time by the Board of Directors of Employer. (d) Employee shall be provided with the use of a cellular telephone, at no cost to Employee. (e) Employer shall reimburse Employee for dues paid by Employee for membership in such professional organizations and eating clubs as shall, from time to time, be deemed appropriate and necessary by Employer. (f) Employee shall, at all times, have available to him an expense account, including the use of a corporate American Express card, to defray ordinary and necessary business expenses incurred in the performance of his duties hereunder. Employee shall be reimbursed for such expenses upon presentation and approval of expense statements or written vouchers or other supporting documents as may be reasonably requested in advance by Employer, which approval shall not be unreasonably withheld or delayed. The benefits described in subparagraph (a) of this Paragraph shall not be construed to require Employer to establish any such plans or programs or to prevent Employer from modifying or terminating any such plans or programs, and no such action or failure thereof shall affect this Agreement; provided, however, that in the event of any reduction in the group medical and hospitalization benefits in place as of the date hereof, the salary payable to Employee shall be increased, as of the effective date of such reduction, by that amount necessary to enable Employee to supplement the benefits provided by Employer to maintain the level of benefits currently provided to him by it. 7. VACATION. Employee shall receive no fewer than three (3) weeks of paid vacation for each year during the Term. Scheduling of vacation shall be subject to the prior approval of Employer (which approval shall not be unreasonably withheld). Vacation time shall not accrue, and in the event Employee prior to the end of any year shall not use all of his vacation time for such year, such vacation time shall be forfeited. 5 8. TERMINATION. Anything herein to the contrary notwithstanding, Employee's employment hereunder shall terminate upon the first to occur of any of the following events: (a) Employee's Disability; (b) Employee's death; (c) Employee's materially breaching this Agreement by the non-performance or non-observance of any material term or condition of this Agreement, which breach shall not be corrected within forty-five (45) days after receipt of written notice of same from Employer; (d) Employer's sending Employee written notice terminating his employment hereunder prior to the expiration of the Initial Term or any Renewal Term in accordance with Paragraph 2 hereof; (e) Employee's voluntarily terminating his employment hereunder prior to the expiration of the Initial Term or any Renewal Term; or (f) Employee's being terminated for Cause. 9. TERMINATION PAYMENT. Subject to the provisions of Paragraph 12 hereof, in the event (a) Employee's employment shall terminate pursuant to Paragraph 8(a) (Disability) or Paragraph 8(b) (death) hereof; or (b) Employee shall terminate his employment as a result of (i) any failure to elect or reelect or to appoint or reappoint Employee to the position of Vice-President, Corporate Affairs and General Counsel of Employer unless agreed to by Employee; (ii) any material change by Employer in Employee's function, duties, responsibility, importance, or scope from the position and attributes thereof described in Paragraph 3 hereof unless agreed to by Employee, or any change in location of the principal offices of Employer outside the metropolitan Atlanta, Georgia, area, or any requirement that Employee perform substantially all of his duties outside the metropolitan Atlanta, Georgia, area (and any such material change or relocation of Employer or Employee shall be deemed a continuing breach of this Agreement); 6 (iii) the liquidation, dissolution, consolidation or merger of Employer (other than a merger or other combination of Employer and an Affiliate); provided, however, that if there shall be a termination of employment resulting from events described in this subsection (iii) and in subsection (d) below, then such termination shall be deemed to fall within the terms of subsection (d) below which shall control and be paramount; (iv) any other material breach of this Agreement by Employer which shall not be cured within thirty (30) days after receipt of written notice of same from Employee; (v) Employer filing a petition for protection or relief from creditors under the federal bankruptcy law, or any petition shall be filed against Employer under the federal bankruptcy law, or shall admit in writing its inability to pay its debts or shall make an assignment for the benefit of creditors, or a petition or application for the appointment of a receiver or liquidator or custodian of Employer is filed, or Employer shall seek a composition with creditors; or (c) Employee's employment shall be terminated by Employer for any reason other than for Cause or because Employer elects not to extend this Agreement beyond the Initial or any Renewal Term; or (d) If (i) Employer undergoes any change in control or ownership whereby Employer is reorganized, merged, or consolidated with one or more corporations as a result of which the owners of all of the outstanding shares of common stock immediately prior to such reorganization, merger or consolidation own in the aggregate less than seventy percent (70%) of the outstanding shares of common stock of the Employer or any other entity into which Employer shall be merged or consolidated immediately following the consummation thereof (hereinafter, "Employer's successor-in-interest"), or (ii) the sale, transfer or other disposition of all or substantially all of the assets or more than thirty percent (30%) of the then outstanding shares of common stock of Employer is effectuated, other than as a result of a merger or other combination of Employer and an Affiliate, or (iii) the acquisition by any "person" as used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934 of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent (20%) or more of the combined voting power of Employer's then outstanding voting securities is effectuated; or (iv) the individuals who, as of the date of execution of this Agreement, are members of the Board of Directors (the "incumbent Board") cease for any reason to constitute at least two-thirds (2/3) of the Board; provided, however, that if the election, or nomination for election 7 by the shareholders of any new director was approved by a vote of at least two-thirds (2/3) of the incumbent Board, such new director shall, for purposes of this Agreement, be considered as a member of the incumbent Board, and (a) Employee's employment with Employer or Employer's successor-in-interest is terminated by Employer or Employer's successor-in-interest (as the case may be) or Employee for any reason, or (b) Employee's employment under this Agreement is not extended by Employer or Employer's successor-in-interest for any Renewal Term, and such termination or non-renewal occurs within two (2) years after the closing of the transaction which resulted in the change in control, then Employer shall, depending upon the reason for the termination of Employee's employment, immediately pay in cash to Employee an amount determined as follows: (x) If the termination shall be pursuant to subparagraph (d) above, the amount shall be equal to the sum of (1) three hundred percent (300%) of Employee's then-effective annual Base Salary; and (2) three hundred percent (300%) of Employee's then-effective Bonus, as hereinafter defined. In addition, Employer shall continue to provide to Employee (except in the case of Employee's death), for a period of three (3) years from said termination, the benefits enumerated in Paragraph 6(a) and Paragraph 6(c) hereof. (y) If the termination shall be other than pursuant to subparagraph (d) above, the amount shall be equal to the sum of (1) two hundred percent (200%) of Employee's then-effective annual Base Salary; and (2) two hundred percent (200%) of Employee's then-effective Bonus, as hereinafter defined. In addition, Employer shall continue to provide to Employee (except in the case of Employee's death), for a period of two (2) years from said termination, the benefits enumerated in Paragraph 6(a) and Paragraph 6(c) hereof. 10. OPERATIVE PROVISIONS. (a) As used in this Agreement, the term "Bonus" shall mean: 8 (i) with respect to the most recent grant or award of restricted stock, pursuant to Employer's "Long Term Incentive Plan", made prior to the date of termination of Employee's employment, the Dollar value, as of the date of such grant or award, of the Long Term Incentive Plan restricted stock plan target for Employee as approved by the Compensation Committee of Employer's Board of Directors, which Dollar value is established by the Compensation Committee notwithstanding the number of shares actually received pursuant to such grant or award and notwithstanding the value of such shares actually received; plus (ii) the highest of (1) the average of the EVA bonuses actually paid to Employee for the two (2) years immediately preceding the year in which termination of employment occurs; (2) the average of the EVA bonuses which would have been paid to Employee for the two (2) years immediately preceding the year in which termination of employment occurs, assuming his EVA target bonus had been achieved for each such year; or (3) the amount of the EVA target bonus for Employee for the year in which termination of employment occurs. (b) In the event of a termination of employment pursuant to Paragraph 9 hereof, all restricted stock awards of Employee shall become wholly unrestricted and all unvested stock options of Employee shall become fully vested in Employee, and all such agreements pertaining thereto shall be read accordingly; provided, however, that Employee shall not have any such rights with respect to any stock issued under any employee stock plan of Employer qualifying under Section 402(a) et seq. of the Code if, and to the extent, such rights would jeopardize the qualification of such plan under said Section. As used in the preceding sentence, "Code" means the Internal Revenue Code of 1986 as amended from time to time or any provisions from time to time enacted and corresponding in substance thereto. (c) Paragraph 9 and this Paragraph 10 shall survive the termination of this Agreement, and this Agreement shall be read accordingly. 11. INTENTION OF PARTIES. It is the express understanding and intention of Employer and Employee that the provisions of Paragraph 5 and Paragraph 9 hereof shall be read together and be non-exclusive so that, in the event of a termination of Employee's employment pursuant to Paragraph 9 of this Employment Agreement, Employee shall receive both (i) all of the compensation specified in Paragraph 9 hereof (including, but not limited to, the applicable percentage of Employee's then-effective Base Salary and the applicable percentage of the cash portion of Employee's Bonus) and (ii) one hundred percent (100%) of the pro rata portion of 9 both the cash and equity parts of Employee's Bonus based on the number of days in the fiscal year falling within the Term (which shall include the amount of any EVA bonus paid to Employee during that year, if any), but in no event shall such pro rata portion be less than the pro rata share of the highest of (i) the average of the EVA bonuses actually paid to Employee for the two (2) years immediately preceding the year in which termination of employment occurs; (ii) the average of the EVA bonuses which would have been paid to Employee for the two (2) years immediately preceding the year in which termination of employment occurs, assuming his EVA target bonus had been achieved for each such year; or (iii) the amount of the EVA target bonus for Employee for the year in which termination of employment occurs. The amounts referred to in this Paragraph are in addition to the benefits enumerated in Paragraphs 6(b) and 6(c) hereof. 12. CONDITIONS TO BENEFITS. Anything in this Agreement to the contrary notwithstanding: (a) To receive the benefits enumerated in Paragraph 9 hereof, Employee shall execute and agree to be bound by a release agreement substantially in the form attached to this Agreement as Exhibit A and, to the extent applicable, a resignation letter substantially in the form attached as Exhibit B, prior to, and as a condition to, receiving any payments or benefits provided for in Paragraph 9 hereof or otherwise following termination of his employment hereunder [and, if applicable, the release agreement may contain provisions required by federal, state or local law (e.g., the Older Worker's Benefit Protection Act) to effect a general release of all claims]. (b) Employee's right to receive any of the benefits provided for in Paragraph 9 or otherwise in this Agreement following termination of his employment hereunder shall immediately cease and be of no further force or effect if Employee violates any of the covenants contained in Paragraphs 13, 14, 15 or 16 hereof. 13. COVENANT NOT-TO-DISCLOSE. Employer and Employee recognize that, during the course of Employee's term of employment with Employer pursuant to this Agreement, Employer will disclose to Employee information concerning Employer and the Affiliates, their products, their customers, their services, their trade secrets, their proprietary information and other information concerning their business all of which constitute valuable assets of Employer and the Affiliates. Employer and Employee further acknowledge that Employer has, and will, invest considerable amounts of time, effort and corporate resources in developing such valuable assets and that disclosure by Employee of such assets to the public shall cause irreparable harm, damage and loss to Employer and the Affiliates. (a) To protect these assets, Employee agrees that he shall not, during the Restricted Period, advise or disclose to any person, corporation, firm, partnership or other entity whatsoever (except Employer or an Affiliate), or any officer, director, stockholder, partner or associate of any such corporation, firm, partnership or entity any information received from 10 Employer by Employee during the course of Employee's association with Employer relating to the business affairs of Employer and the Affiliates including information concerning Employer's and the Affiliates' finances, services, customers, customer lists, prospective customers, staff, contemplated acquisitions (whether of business or assets), ideas, proprietary information, methods, marketing investigations, surveys, research and any other information relating to the business and objectives of Employer and the Affiliates, except as permitted by Exhibit C hereof. (b) Employee further agrees that he shall not, during the term of his employment or any time thereafter, advise or disclose to any person or entity any trade secret which Employer or any Affiliate has disclosed to Employee during the course of his employment with Employer. (c) In the event Employee's employment is terminated, Employee agrees that, if requested by Employer, he will acknowledge in writing that he received the disclosures referred to herein and is under the obligations referred to in this Agreement. (d) This Paragraph 13 shall, except as otherwise provided in this Agreement, survive the termination of this Agreement. 14. COVENANT NOT-TO-INDUCE. Employee covenants and agrees that during the Restricted Period, he will not, directly or indirectly, on his own behalf or in the service or on behalf of others, hire, solicit, take away or attempt to hire, solicit or take away any employee or other personnel of Employer and the Affiliates. This Paragraph 14 shall, except as otherwise provided in this Agreement, survive the termination of this Agreement. 15. COVENANT OF NON-DISPARAGEMENT AND COOPERATION. Employee agrees that he shall not at any time during or following the term of this Agreement make any remarks disparaging the conduct or character of Employer or the Affiliates or any of Employer's or the Affiliates' current or former agents, employees, officers, directors, successors or assigns (collectively the "Related Companies"). In addition, Employee agrees to cooperate with the Related Companies, at no extra cost, in any litigation or administrative proceedings (e.g., EEOC charges) involving any matters with which Employee was involved during Employee's employment with Employer. Employer shall reimburse Employee for travel expenses approved by Employer or the Affiliates incurred in providing such assistance. This Paragraph 15 shall survive the termination of this Agreement. 16. COVENANT NOT-TO-COMPETE. Employer and Employee acknowledge that, by virtue of Employee's responsibilities and authority, he shall, during the course of his Employment, be instrumental in developing, and shall receive, highly confidential information concerning Employer, its customers, its services, its trade secrets, its proprietary information and other information concerning the business of transporting automobiles and light trucks from the manufacturer to retailers (and related activities) and the logistics business in connection with 11 automobiles and light trucks (all of which is, collectively, referred to as the "Business"), much of which will be unavailable to those in positions of lesser responsibility and authority. Employee further acknowledges that the ability of such information to benefit a competitor or potential competitor of Employer and the Affiliates shall cause irreparable harm, damage and loss to Employer and the Affiliates. To protect Employer from Employee's using or exploiting this information, Employee agrees that, if the employment relationship between Employee and Employer terminates for any reason whatsoever, then, in such event, for a period of one (1) year or, in the case of Employee's termination pursuant to Paragraph 9(d) hereof, two (2) years from the date of Employee's termination of employment, Employee shall not serve as general counsel or in a similar capacity for any other person or entity who engages in the Business in the United States, Canada, Mexico, Brazil, Argentina, the United Kingdom or South Africa (collectively, the "Restricted Territory"), and Employee shall not directly or indirectly, own, manage, join, control, contract with, be employed by, act in the capacity of an officer, director, trustee, shareholder or partner or consultant, or participate in any manner in the ownership, management, operation, or control of any business or person engaged in the Business in the Restricted Territory; provided, however, Employee shall be permitted to own not more than five percent (5%) of the stock of a corporation required to file reports pursuant to the Securities Exchange Act of 1934. As to the foregoing, Employee acknowledges that he has the ability to earn a comparable income within or without the Restricted Territory as an attorney for persons or entities not engaged in the Business and that earning a livelihood for clients not engaged in the Business within or without the Restricted Territory would not constitute a hardship or an unreasonable restriction on the Employee or restrict him from earning comparable income. This Paragraph 16 shall survive the termination of this Agreement. 17. SPECIFIC ENFORCEMENT. Employer and Employee expressly agree that a violation of the covenants not-to-disclose, not-to-induce, not-to-disparage and not-to-compete contained in Paragraphs 13, 14, 15 and 16 hereof, or any provision thereof, shall cause irreparable injury to Employer and that, accordingly, Employer shall be entitled, in addition to any other rights and remedies it may have at law or in equity, to an injunction enjoining and restraining Employee from doing or continuing to do any such act and any other violation or threatened violation of said Paragraphs 13, 14, 15 and 16 hereof. 18. SEVERABILITY. In the event any provision of this Agreement shall be found to be void, the remaining provisions of this Agreement shall nevertheless be binding with the same effect as though the void part were deleted; provided, however, if Paragraphs 13, 14, 15 and 16 hereof shall be declared invalid, in whole or in part, Employee shall execute, as soon as possible, a supplemental agreement with Employer, granting Employer, to the extent legally possible, the protection afforded by said Paragraphs. It is expressly understood and agreed by the parties hereto that Employer shall not be barred from enforcing the restrictive covenants contained in each of Paragraphs 13, 14, 15 and 16 as each are separate and distinct, so that the invalidity of any one or more of said covenants shall not affect the enforceability and validity of the other covenants. 12 19. INCOME TAX WITHHOLDING. Employer or any other payor may withhold from any compensation or benefits payable under this Agreement such Federal, State, City or other taxes as shall be required pursuant to any law or governmental regulation or ruling. 20. OTHER TAX CONSIDERATIONS. Notwithstanding any other provision of this Agreement to the contrary, in the event that any payment or benefit received or to be received by Employee is triggered by an event described in subparagraph (d) of Paragraph 9 of this Agreement, whether such payment or benefit is pursuant to the terms of this Agreement or any other plan, arrangement or agreement with Employer or any Affiliate of Employer (hereinafter, all such payments and benefits being sometimes referred to as "Total Payments"), and would not be deductible, either in whole or in part, by Employer or an Affiliate making such payment or providing such benefit as a result of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), then, to the extent necessary to make such portion of the Total Payments deductible (and after taking into account any reduction in the Total Payments provided by reason of Section 280G of the Code in any such other plan, arrangement or agreement), (A) the cash portion of the Total Payments provided in this Paragraph 20 shall first be reduced (if necessary, to zero (0)), and (B) all other non-cash Total Payments under this Paragraph 20 shall next be reduced (if necessary, to zero (0)); provided, however, that the Employee's payment shall only be reduced by this Paragraph 20 if Employer determines that reducing the Total Payments would result in greater after-tax proceeds to the Employee than if no such reduction in Total Payments had occurred. Any determination required by the preceding sentence shall be made by independent certified public accountants or tax counsel (hereinafter, such party shall sometimes be hereinafter referred to as the "Independent Adviser") selected by Employer, the selection of which shall be reasonably acceptable to Employee. In making Employer's determination as to the application and effect of this Paragraph 20 on any payments or benefits received or to be received by Employee, (i) no portion of the Total Payments shall be taken into account which in the opinion of the Independent Adviser does not constitute a "parachute payment" within the meaning of Section 280G(b)(2) of the Code, including by reason of Section 280G(b)(4)(A) of the Code; (ii) those Total Payments provided under this Paragraph 20 shall be reduced only to the extent necessary so that the Total Payments (other than those referred to in clause (i)) in their entirety constitute reasonable compensation for services actually rendered within the meaning of Section 280G(b)(4)(B) of the Code or are otherwise not subject to disallowance as deductions, in the opinion of the Independent Adviser; and (iii) the value of any non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Company's independent certified public accountants in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. 21. WAIVER. The waiver of a breach of any term of this Agreement by any of the parties hereto shall not operate or be construed as a waiver by such party of the breach of any other term of this Agreement or as a waiver of a subsequent breach of the same term of this Agreement. 13 22. RIGHTS AND LIABILITIES UPON NOTICE OF TERMINATION. As soon as notice of termination of this Agreement is given, Employee shall immediately cease contact with all customers of Employer and shall forthwith surrender to Employer all customer lists, documents and other property of Employer then in his possession, compliance with which shall not be deemed to be a breach of this Agreement by Employee. Pending the surrender of all such customer lists, documents and other property to Employer, Employer may hold in abeyance any payments due Employee pursuant to this Agreement. 23. ASSIGNMENT. (a) Employee shall not assign, transfer or convey this Agreement, or in any way encumber the compensation or other benefits payable to him hereunder, except with the prior written consent of Employer or upon Employee's death. (b) The covenants, terms and provisions set forth herein shall be binding upon and shall inure to the benefit of, and be enforceable by, Employer and its successors and assigns. 24. NOTICES. All notices required herein shall be in writing and shall be deemed to have been given when delivered personally or when deposited in the U.S. Mail, certified or registered, postage prepaid, return receipt requested, addressed as follows, to wit: If to Employer at: 160 Clairemont Avenue Suite 200 Decatur, Georgia 30030 With a copy to: Cohen Pollock Merlin Axelrod & Tanenbaum, P.C. 2100 RiverEdge Parkway Suite 300 Atlanta, Georgia 30328-4656 Attn: Elliott Cohen, Esquire If to Employee at: 2416 Hyde Manor Drive Atlanta, Georgia 30327 or at such other addresses as may, from time to time, be furnished to Employer by Employee, or by Employer to Employee on the terms of this Paragraph. 25. BINDING EFFECT. This Agreement shall be binding on the parties hereto and on their respective heirs, administrators, executors, successors and permitted assigns. 14 26. ENFORCEABILITY. This Agreement contains the entire understanding of the parties and may be altered, amended or modified only by a writing executed by both of the parties hereto. This Agreement supersedes all prior agreements and understandings by and between Employer and Employee relating to Employee's employment. 27. APPLICABLE LAW. This Agreement and the rights and liabilities of the parties hereto shall be governed by, and construed and interpreted in accordance with, the laws of the State of Georgia. 28. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall constitute an original, but all of which together shall constitute but a single document. IN WITNESS WHEREOF, Employee has hereunder set his hand and seal, and Employer has caused this Agreement to be executed and delivered by its duly authorized officers, all as of the day and year first above written. (SEAL) - ------------------------------- ------------------------------- WITNESS THOMAS M. DUFFY ATTEST: ALLIED HOLDINGS, INC. By: By: ---------------------------- ---------------------------------- Its Secretary Its President -------------- --------------- [CORPORATE SEAL] 15 EX-10.3(A) 7 g75961ex10-3a.txt FIRST AMENDMENT TO EMPLOYMENT AGREEMENT - DUFFY EXHIBIT 10.3(a) FIRST AMENDMENT TO EMPLOYMENT AGREEMENT THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT ("Amendment") is made as of the 1st day of June, 2001, by and between THOMAS M. DUFFY ("Employee") and ALLIED HOLDINGS, INC. ("Employer"). WHEREAS, Employer and Employee have entered into an Employment Agreement dated February 23, 2000; and WHEREAS, Employer and Employee desire to amend the Employment Agreement as set forth herein; NOW, THEREFORE, for and in consideration of the covenants and conditions hereafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Employee and Employer hereby agree as follows: 1. Notwithstanding anything in the Employment Agreement to the contrary, Employer shall pay to Employee a bonus for the calendar year ending December 31, 2001, in an amount not less than One Hundred Twenty-Five Thousand Dollars ($125,000.00), with such bonus to be due and payable on or before January 5, 2002. Employer and Employee acknowledge and agree that Employee shall be entitled to participate in the Allied Holdings, Inc. EVA based incentive plan and any other bonus plan utilized by Employer for calendar year 2001, and that the bonus paid pursuant to this First Amendment shall be credited toward any bonus due to Employee under the EVA Plan or any other bonus plan of the Company. Employer shall not be required to pay such bonus if Employee terminates his employment on or before December 31, 2001 (other than a termination by Employee pursuant to Paragraph 9(b) or 9(d) of the Employment Agreement). In the event of termination of Employee for Cause, as defined by the Employment Agreement, Employer shall pay to Employee a pro rata portion of such bonus calculated from January 1, 2001 through the date of termination for Cause. 2. Section 4(a) of the Employment Agreement shall be amended to provide that the annual salary of Employee shall be Two Hundred Fifty Thousand ($250,000.00) and the remaining terms and conditions of Section 4(a) of the Employment Agreement shall remain in effect without amendment. 3. All remaining terms and conditions of the Employment Agreement which are not amended by this First Amendment shall remain in full force and effect. IN WITNESS WHEREOF, the undersigned have executed this Amendment this 1st day of June, 2001. Employer: ALLIED HOLDINGS, INC. By: -------------------------------------- Title: ----------------------------------- Employee: ----------------------------------------- THOMAS M. DUFFY EX-10.4 8 g75961ex10-4.txt EMPLOYEMENT AGREEMENT - RUTLAND EXHIBIT 10.4 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT is made and entered into as of the 23rd day of February, 2000, by and between ROBERT J. RUTLAND ("Employee") and ALLIED HOLDINGS, INC., a Georgia corporation ("Employer"). WITNESSETH WHEREAS, Employer, through the Affiliates (as hereinafter defined), is engaged in the transportation of automobiles and light trucks from the manufacturer to retailers and related activities (the "Business"); WHEREAS, Employee has a number of years of experience in said industry and in addition to having management skills of which Employer desires to avail itself, Employee has established numerous contacts and relationships with customers, potential customers and suppliers of Employer and the Affiliates, which contacts and relationships are of great value to Employer; WHEREAS, Employer and Employee have made and entered into a previous employment agreement, as well as clarifications and amendments thereto; and WHEREAS, Employer and Employee deem it to their respective best interest to clarify the duties and obligations, each to the other, by executing this new Employment Agreement, NOW, THEREFORE, for and in consideration of the covenants and conditions hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Employer and Employee hereby mutually agree that all previous employment agreements, and all clarifications and amendments thereto, are superseded, null, void, and of no further force and effect, and Employer and Employee further mutually agree as follows: 1. DEFINITIONS. (a) "Affiliate" means any corporation, partnership or other entity of which at least eighty percent (80%) of the outstanding equity and voting rights are owned, directly or indirectly through any other corporation, partnership or other entity, by Employer. (b) "Base Salary" means the annual salary payable pursuant to Paragraph 4(a) hereof as adjusted, from time to time, pursuant to Paragraph 4(b) hereof. (c) "Cause" means (i) the commission by Employee of an act constituting a felony and Employee's conviction thereof; (ii) Employee's prolonged absence, without the consent of Employer, other than as a result of Employee's Disability or permitted absence or vacation; (iii) conduct of Employee which amounts to fraud, dishonesty, gross or willful neglect of duties; or (iv) engaging in activities prohibited by Paragraphs 12, 13 or 14 hereof. (d) "Disability", with respect to Employee, shall conclusively be deemed to have occurred (i) if Employee shall be receiving payments pursuant to a policy of disability income insurance; or (ii) if Employee shall have no disability income coverage then in force, then if any insurance company insuring Employee's life shall agree to waive the premiums due on such policy pursuant to a disability waiver of premium provision in the contract of life insurance; or (iii) if Employee shall have no disability waiver of premium provision in any contract of life insurance, then if Employee shall be receiving disability benefits from or through the Social Security Administration; provided, however, that in the event Employee's disability shall, otherwise and in good faith, come into question (and, for purposes of this proviso, "disability" shall mean the permanent and continuous inability of Employee to perform substantially all of the duties being performed immediately prior to his disability coming into question), and a dispute shall arise with respect thereto, then Employee (or his personal representatives) shall appoint a medical doctor, Employer shall appoint a medical doctor, and said two (2) doctors shall, in turn, appoint a third party medical doctor who shall examine Employee to determine the question of disability and whose determination shall be binding upon all parties to this Agreement. (e) "Restricted Period" means the period commencing as of the date hereof and ending on that date three (3) years after the termination of Employee's employment with Employer for any reason, whether voluntary or involuntary. (f) "Term" means the Initial Term and any Renewal Term (each as defined in Paragraph 2 hereof); provided, however, that, in the event Employee's employment shall terminate by reason of the applicability of Paragraph 8 hereof then, in such event, the "Term" shall end upon the termination of Employee's employment. 2. TERM. Subject to the provisions hereinafter set forth, the Term of this Agreement shall commence as of the date hereof and shall end on that date five (5) years after such date (the "Initial Term"). Upon the expiration of the Initial Term, and on the expiration of each successive Renewal Term (as hereinafter defined), Employee's 2 employment shall be automatically renewed for an additional term of two (2) years (the "Renewal Term(s)"), unless written notification of termination is given by either party to the other party not less than one (1) year prior to the expiration of the Initial Term or, as the case may be, the then-current Renewal Term. 3. DUTIES. (a) Employee shall, during the Term, serve as Chairman of the Board of Employer, at the direction of the Board of Directors of Employer. Employee's principal duties shall be such executive, managerial and administrative duties as the Board of Directors of Employer may, from time to time, reasonably request. (b) During the Term, Employee shall devote substantially all of his time, energy and skill to performing the duties of his employment (vacations as provided hereunder and reasonable absences because of illness excepted), shall faithfully and industriously perform such duties, and shall use his best efforts to follow and implement all management policies and decisions of Employer. Employee shall not become personally involved in the management or operations of any other company, partnership, proprietorship or other entity, other than any Affiliate, without the prior written consent of Employer; provided, however, that so long as it does not interfere with Employee's employment hereunder, Employee may (i) serve as a director, officer or partner in a company that does not compete with the Business of Employer and the Affiliates so long as the aggregate amount of time spent by Employee in all such capacities shall not exceed twenty (20) hours per month, and (ii) serve as an officer or director of, or otherwise participate in, educational, welfare, social, religious, civic, trade and industry-related organizations. (c) Employee shall not be required to relocate outside of the metropolitan Atlanta, Georgia, area. 4. BASE SALARY. (a) For and in consideration of the services to be rendered by Employee pursuant to this Agreement, Employer shall pay to Employee, for each year during the Term, an annual salary of Four Hundred Thousand Dollars ($400,000.00), adjusted as provided in subparagraph (b) below, in equal semi-monthly installments in accordance with Employer's payroll practices. Employee's salary shall be reviewed by the Board of Directors of Employer annually (on each anniversary of the date hereof) and, in the sole discretion of the Board of Directors, may be increased, but not decreased. 3 (b) Commencing as of January 1, 2001, and as of each January 1st thereafter during the Term, the annual salary shall be increased, but not decreased, by an amount equal to the greater of (i) such amount as shall be determined by the Compensation Committee of the Board of Directors of Employer; or (ii) the amount equal to the percentage, if any, by which the Consumer Price Index (All Items Less Shelter), Urban Wage Earners and Clerical Workers, for the Southeast Region/Population Size Class B, published by the United States Government Bureau of Labor Statistics for the December 1 preceding such January exceeds such Index for the December 1 of the preceding year. (As an example, as of January 1, 2001, the difference will be between said Index as of December 1, 2000 compared to said Index as of December 1, 1999.) 5. BONUS COMPENSATION. Employee shall, with respect to each calendar year of Employer ending during the Term, be entitled to participate in the Allied Holdings, Inc. EVA Based Incentive Plan (as from time to time amended and in effect), to the extent and on such terms and conditions as shall from time to time be determined by the Board of Directors of Allied Holdings, Inc.; and to receive an annual bonus, if any, calculated pursuant thereto. 6. OTHER BENEFITS. During the Term, Employer shall provide the following benefits to Employee: (a) Employee shall be elected to a seat on the Board of Directors of Employer but shall not, however, be entitled to any additional compensation for such service; (b) Employee shall be entitled to participate in all group medical and hospitalization benefit programs, dental care, sick leave, life insurance or other benefit plans for highly compensated employees of Employer as are now or hereafter provided by Employer or any Affiliate, in each case in accordance with the terms and conditions of each such plan and benefit package; (c) Employee shall be provided with the use of automobiles at least comparable to any automobile currently provided to Employee, and Employer shall pay for the cost of all insurance, ad valorem taxes and tag charges for such automobile and all operating and maintenance charges for such automobile; (d) Employee shall be provided with the use of a car or mobile telephone, at no cost to Employee; (e) Employer shall reimburse Employee for dues paid by Employee for membership in such professional organizations and eating clubs as 4 shall, from time to time, be deemed appropriate and necessary by Employee; and (f) Employee shall, at all times, have available to him an expense account to defray ordinary and necessary business expenses incurred in the performance of his duties hereunder. Employee shall be reimbursed for such expenses upon presentation and approval of expense statements or written vouchers or other supporting documents as may be reasonably requested in advance by Employer, which approval shall not be unreasonably withheld or delayed. The benefits described in subparagraph (b) of this Paragraph shall not be construed to require Employer to establish any such plans or programs or to prevent Employer from modifying or terminating any such plans or programs, and no such action or failure thereof shall affect this Agreement; provided, however, that in the event of any reduction in the group medical and hospitalization benefits in place as of the date hereof, the salary payable to Employee shall be increased, as of the effective date of such reduction, by that amount necessary to enable Employee to supplement the benefits provided by Employer to maintain the level of benefits currently provided to him by it. 7. VACATION. Employee shall receive five (5) weeks of paid vacation for each year during the Term. Scheduling of vacation shall be subject to the prior approval of Employer (which approval shall not be unreasonably withheld). Vacation time shall not accrue, and in the event any vacation time for any year shall not be used by Employee prior to the end of such year, it shall be forfeited. 8. TERMINATION. Anything herein to the contrary notwithstanding, Employee's employment hereunder shall terminate upon the first to occur of any of the following events: (a) Employee's Disability; or (b) Employee's death; or (c) Employee's materially breaching this Agreement by the non-performance or non-observance of any material term or condition of this Agreement, which breach shall not be corrected within forty-five (45) days after receipt of written notice of same from Employer; or (d) Employer's sending Employee written notice terminating his employment hereunder prior to expiration of the Term in accordance with Paragraph 2 hereof; or 5 (e) Employee's voluntarily terminating his employment with Employer prior to the expiration of the Term; or (f) Employee's being terminated for Cause. 9. TERMINATION PAYMENT. In the event (a) Employee's employment shall terminate pursuant to Paragraph 8(a) (Disability) or Paragraph 8(b) (death) hereof; or (b) Employee shall terminate his employment as a result of (i) any failure to elect or reelect or to appoint or reappoint Employee to the position of Chairman of the Board of Directors of Employer unless agreed to by Employee; (ii) any material change by Employer in Employee's function, duties, responsibility, importance, or scope from the position and attributes thereof described in Paragraph 3 hereof unless agreed to by Employee, or any change in location of the principal offices of Employer outside the metropolitan Atlanta, Georgia, area, or any requirement that Employee perform substantially all of his duties outside the metropolitan Atlanta, Georgia, area (and any such material change or relocation of Employer or Employee shall be deemed a continuing breach of this Agreement); (iii) the liquidation, dissolution, consolidation or merger of Employer (other than a merger or other combination of Employer and an Affiliate); however, if a termination of employment results from events described in this subsection (iii) and in subsection (d) below, then such termination shall be deemed to be pursuant to subsection (d) below; (iv) any other material breach of this Agreement by Employer which shall not be cured within thirty (30) days after receipt of written notice of same from Employee; (v) Employer filing a petition for protection or relief from creditors under the federal bankruptcy law, or any petition shall be filed against Employer under the federal bankruptcy law, or Employer shall admit in writing its inability to pay its debts or shall make an assignment for the benefit of creditors, or a petition or application for the appointment of a receiver or liquidator or custodian of Employer is filed, or Employer shall seek a composition with creditors; or 6 (c) Employee's employment shall be terminated by Employer for any reason other than for Cause or because Employer elects not to extend this Agreement beyond the Initial or any Renewal Term; or (d) If (i) Employer undergoes any change in control or ownership whereby Employer is reorganized, merged, or consolidated with one or more corporations as a result of which the owners of all of the outstanding shares of common stock immediately prior to such reorganization, merger or consolidation own in the aggregate less than seventy percent (70%) of the outstanding shares of common stock of the Employer or any other entity into which Employer shall be merged or consolidated immediately following the consummation thereof (hereinafter, "Employer's successor-in-interest"), or (ii) the sale, transfer or other disposition of all or substantially all of the assets or more than thirty percent (30%) of the then outstanding shares of common stock of Employer is effectuated, other than as a result of a merger or other combination of Employer and an Affiliate, or (iii) the acquisition by any "person" as used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934 of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent (20%) or more of the combined voting power of Employer's then outstanding voting securities is effectuated; or (iv) the individuals who, as of the date of execution of this Agreement, are members of the Board of Directors (the "incumbent Board") cease for any reason to constitute at least two-thirds (2/3) of the Board; provided, however, that if the election, or nomination for election by the shareholders of any new director was approved by a vote of at least two-thirds (2/3) of the incumbent Board, such new director shall, for purposes of this Agreement, be considered as a member of the incumbent Board, and (a) Employee's employment with Employer or Employer's successor-in-interest is terminated by Employer or Employer's successor-in-interest (as the case may be) or Employee for any reason, or (b) Employee's employment under this Agreement is not extended by Employer or Employer's successor-in-interest for any Renewal Term, and such termination or non-renewal occurs within two (2) years after the closing of the transaction which resulted in the change in control, then Employer shall, depending upon the reason for the termination of Employee's employment, immediately pay in cash to Employee an amount determined as follows: (x) If the termination shall be pursuant to subparagraph (d) above, the amount shall be equal to the sum of 7 (1) three hundred percent (300%) of Employee's then-effective annual Base Salary; and (2) three hundred percent (300%) of the Bonus, as hereinafter defined. In addition, Employer shall continue to provide to Employee (except in the case of Employee's death), for a period equal to the greater of (i) the remainder of the Term had not said termination occurred, and (ii) three (3) years from said termination, the benefits enumerated in Paragraphs 6(b) and 6(c) hereof. (y) If the termination shall be other than pursuant to subparagraph (d) above, the amount shall be equal to the sum of (1) that percentage of Employee's then-effective annual Base Salary equal to the product of the number of whole or partial years remaining in the Term and one hundred (100); and (2) that percentage of Employee's then-effective Bonus, as hereinafter defined, equal to the product of the number of whole or partial years remaining in the Term and one hundred (100); provided, however, in no event shall the percentage in subparagraphs (1) and (2) hereof be less than three hundred percent (300%). In addition, Employer shall continue to provide to Employee (except in the case of Employee's death), for a period of years equal to the number of whole or partial years remaining in the Term, but in no event fewer than three (3) years, the benefits enumerated in Paragraphs 6(b) and 6(c) hereof. 10. OPERATIVE PROVISIONS. (a) As used in this Agreement, the term "Bonus" shall mean: (i) with respect to the most recent grant or award of restricted stock, pursuant to Employer's "Long Term Incentive Plan", made prior to the date of termination of Employee's employment, the Dollar value, as of the date of such grant or award, of the Long Term Incentive Plan restricted stock plan target for Employee as approved by the Compensation Committee of Employer's Board of Directors, which Dollar value is established by the Compensation Committee notwithstanding the number of shares actually received pursuant to such grant or award and notwithstanding the value of such shares actually received; plus 8 (ii) the highest of (1) the average of the EVA bonuses actually paid to Employee for the two (2) years immediately preceding the year in which termination of employment occurs; (2) the average of the EVA bonuses which would have been paid to Employee for the two (2) years immediately preceding the year in which termination of employment occurs, assuming his EVA target bonus had been achieved for each such year; or (3) the amount of the EVA target bonus for Employee for the year in which termination of employment occurs. (b) In the event of a termination of employment pursuant to Paragraph 9 hereof, all restricted stock awards of Employee shall become wholly unrestricted and all unvested stock options of Employee shall become fully vested in Employee, and all such agreements pertaining thereto shall be read accordingly; provided, however, that Employee shall not have any such rights with respect to any stock issued under any employee stock plan of Employer qualifying under Section 402(a) et seq. of the Code if, and to the extent, such rights would jeopardize the qualification of such plan under said Section. As used in the preceding sentence, "Code" means the Internal Revenue Code of 1986 as amended from time to time or any provisions from time to time enacted and corresponding in substance thereto. (c) Paragraph 9 and this Paragraph 10 shall survive the termination of this Agreement, and this Agreement shall be read accordingly. 11. INTENTION OF PARTIES. It is the express understanding and intention of Employer and Employee that the provisions of Paragraph 5 and Paragraph 9 hereof shall be read together and be non-exclusive so that, in the event of a termination of Employee's employment pursuant to Paragraph 9 of this Employment Agreement, Employee shall receive both (i) all of the compensation specified in Paragraph 9 hereof (including, but not limited to, the applicable percentage of Employee's then-effective Base Salary and the applicable percentage of the cash portion of Employee's Bonus) and (ii) one hundred percent (100%) of the pro rata portion of both the cash and equity parts of Employee's Bonus based on the number of days in the fiscal year falling within the Term (which shall include the amount of any EVA bonus paid to Employee during that year, if any), but in no event shall such pro rata portion be less than the pro rata share of the highest of (i) the average of the EVA bonuses actually paid to Employee for the two (2) years immediately preceding the year in which termination of employment occurs; (ii) the average of the EVA bonuses which would have been paid to Employee for the two (2) years immediately preceding the year in which termination of employment occurs, assuming his EVA target bonus had been achieved for each such year; or (iii) the amount of the EVA target bonus for Employee for the year in which 9 termination of employment occurs. The amounts referred to in this Paragraph are in addition to the benefits enumerated in Paragraphs 6(b) and 6(c) hereof. 12. COVENANT NOT-TO-SOLICIT. Employer and Employee acknowledge that, during Employee's employment, Employer will spend considerable amounts of time, effort and resources in providing Employee with knowledge relating to the business affairs of Employer and the Affiliates, including Employer's and the Affiliates' trade secrets, proprietary information and other information concerning Employer's and the Affiliates' financing sources, finances, customer lists, customer records, prospective customers, staff, contemplated acquisitions (whether of business or assets), ideas, methods, marketing investigations, surveys, research, customers' records and any other information relating to Employer's and the Affiliates' Business. Employer and Employee recognize that, during the course of Employee's term of employment with Employer pursuant to this Agreement, Employee shall contact, solicit or approach Employer's and the Affiliates' customers and prospective customers on behalf of Employer. Employer and Employee further acknowledge that Employee has and shall, during his term of employment with Employer, solicit business for Employer and the Affiliates from the customers listed on EXHIBIT A attached hereto and made a part hereof (collectively, the "Restricted Customers"). To protect Employer from Employee's solicitation of business from such customers during the Restricted Period, Employee agrees that, subject to Paragraph 15 hereof, he shall not, directly or indirectly, for any person (including Employee himself), corporation, firm, partnership, proprietorship or other entity, other than Employer or an Affiliate, engaged in the transportation of automobiles and light trucks from manufacturers to retailers, solicit business from any Restricted Customer. This Paragraph 12 shall, except as otherwise provided in this Agreement, survive the termination of this Agreement. 13. COVENANT NOT-TO-DISCLOSE. Employer and Employee recognize that, during the course of Employee's term of employment with Employer pursuant to this Agreement, Employer will disclose to Employee information concerning Employer and the Affiliates, their products, their customers, their services, their trade secrets, their proprietary information and other information concerning their business all of which constitute valuable assets of Employer and the Affiliates. Employer and Employee further acknowledge that Employer has, and will, invest considerable amounts of time, effort and corporate resources in developing such valuable assets and that disclosure by Employee of such assets to the public shall cause irreparable harm, damage and loss to Employer and the Affiliates. (a) To protect these assets, Employee agrees that he shall not, during the Restricted Period, advise or disclose to any person, corporation, firm, partnership or other entity whatsoever (except Employer or an Affiliate), or any officer, director, stockholder, partner or associate of any such corporation, firm, partnership or 10 entity any information received from Employer by Employee during the course of Employee's association with Employer relating to the business affairs of Employer and the Affiliates including information concerning Employer's and the Affiliates' finances, services, customers, customer lists, prospective customers, staff, contemplated acquisitions (whether of business or assets), ideas, proprietary information, methods, marketing investigations, surveys, research and any other information relating to the business and objectives of Employer and the Affiliates, except as permitted by this Paragraph 13. (b) Employee further agrees that he shall not, during the term of his employment or any time thereafter, advise or disclose to any person or entity any trade secret which Employer or any Affiliate has disclosed to Employee during the course of his employment with Employer. (c) In the event Employee's employment is terminated, Employee agrees that, if requested by Employer, he will acknowledge in writing that he received the disclosures referred to herein and is under the obligations referred to in this Agreement. (d) This Paragraph 13 shall, except as otherwise provided in this Agreement, survive the termination of this Agreement. Any implication in this Paragraph 13 to the contrary notwithstanding, this Paragraph 13 shall not, and shall not be deemed to, prohibit Employee from disclosing information regarding Employer that (i) is already public information other than because of any breach of this Paragraph 13 by Employee; (ii) shall be required by applicable Federal or state laws; (iii) shall not be confidential or proprietary and shall be required in the ordinary course of business; and (iv) shall be required pursuant to the order of any court or administrative agency having jurisdiction; provided, however, that the foregoing shall not permit the disclosure of any trade secret of Employer. 14. COVENANT NOT-TO-INDUCE. Employee covenants and agrees that during the Restricted Period, he will not, directly or indirectly, on his own behalf or in the service or on behalf of others, hire, solicit, take away or attempt to hire, solicit or take away an employee or other personnel of Employer and the Affiliates. This Paragraph 14 shall, except as otherwise provided in this Agreement, survive the termination of this Agreement. 15. PARAMOUNT PROVISION. Anything in this Agreement to the contrary notwithstanding, the provisions of Paragraph 12 and Paragraphs 13(a) and 13(c) hereof shall not apply to Employee, and shall be absolutely null and void, in the event Employee shall terminate his employment hereunder for any one of the reasons set forth in Paragraph 9(b) hereof. 11 16. SPECIFIC ENFORCEMENT. Employer and Employee expressly agree that a violation of the covenants not-to-solicit, not-to-disclose and not-to-induce contained in Paragraphs 12, 13 and 14 hereof, or any provision thereof, shall cause irreparable injury to Employer and that, accordingly, Employer shall be entitled, in addition to any other rights and remedies it may have at law or in equity, to an injunction enjoining and restraining Employee from doing or continuing to do any such act and any other violation or threatened violation of said Paragraphs 12, 13 and 14 hereof. 17. SEVERABILITY. In the event any provision of this Agreement shall be found to be void, the remaining provisions of this Agreement shall nevertheless be binding with the same effect as though the void part were deleted; provided, however, if Paragraphs 12, 13 and 14 shall be declared invalid, in whole or in part, Employee shall execute, as soon as possible, a supplemental agreement with Employer, granting Employer, to the extent legally possible, the protection afforded by said Paragraphs. It is expressly understood and agreed by the parties hereto that Employer shall not be barred from enforcing the restrictive covenants contained in each of Paragraphs 12, 13 and 14 as each are separate and distinct, so that the invalidity of any one or more of said covenants shall not affect the enforceability and validity of the other covenants. 18. INCOME TAX WITHHOLDING. Employer or any other payor may withhold from any compensation or benefits payable under this Agreement such Federal, State, City or other taxes as shall be required pursuant to any law or governmental regulation or ruling. 19. OTHER TAX CONSIDERATIONS. Notwithstanding any other provision of this Agreement to the contrary, in the event that any payment or benefit received or to be received by Employee is triggered by an event described in subparagraph (d) of Paragraph 9 of this Agreement, whether such payment or benefit is pursuant to the terms of this Agreement or any other plan, arrangement or agreement with Employer or any Affiliate of Employer (hereinafter, all such payments and benefits being sometimes referred to as "Total Payments"), and would not be deductible, either in whole or in part, by Employer or an Affiliate making such payment or providing such benefit as a result of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), then, to the extent necessary to make such portion of the Total Payments deductible (and after taking into account any reduction in the Total Payments provided by reason of Section 280G of the Code in any such other plan, arrangement or agreement), (A) the cash portion of the Total Payments provided in this Paragraph 19 shall first be reduced (if necessary, to zero (0)), and (B) all other non-cash Total Payments under this Paragraph 19 shall next be reduced (if necessary, to zero (0)); provided, however, that the Employee's payment shall only be reduced by this Paragraph 19 if Employer determines that reducing the Total Payments would result in greater after-tax proceeds to the Employee than if no such reduction in Total Payments had occurred. Any determination required by the preceding sentence shall be made by independent certified public accountants or tax counsel (hereinafter, such party shall sometimes be hereinafter referred to as the "Independent Adviser") selected by Employer, the 12 selection of which shall be reasonably acceptable to Employee. In making Employer's determination as to the application and effect of this Paragraph 19 on any payments or benefits received or to be received by Employee, (i) no portion of the Total Payments shall be taken into account which in the opinion of the Independent Adviser does not constitute a "parachute payment" within the meaning of Section 280G(b)(2) of the Code, including by reason of Section 280G(b)(4)(A) of the Code; (ii) those Total Payments provided under this Paragraph 19 shall be reduced only to the extent necessary so that the Total Payments (other than those referred to in clause (i)) in their entirety constitute reasonable compensation for services actually rendered within the meaning of Section 280G(b)(4)(B) of the Code or are otherwise not subject to disallowance as deductions, in the opinion of the Independent Adviser; and (iii) the value of any non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Company's independent certified public accountants in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. 20. WAIVER. The waiver of a breach of any term of this Agreement by any of the parties hereto shall not operate or be construed as a waiver by such party of the breach of any other term of this Agreement or as a waiver of a subsequent breach of the same term of this Agreement. 21. RIGHTS AND LIABILITIES UPON NOTICE OF TERMINATION. As soon as notice of termination of this Agreement is given, Employee shall immediately cease contact with all customers of Employer and shall forthwith surrender to Employer all customer lists, documents and other property of Employer then in his possession, compliance with which shall not be deemed to be a breach of this Agreement by Employee. Pending the surrender of all such customer lists, documents and other property to Employer, Employer may hold in abeyance any payments due Employee pursuant to this Agreement. 22. ASSIGNMENT. (a) Employee shall not assign, transfer or convey this Agreement, or in any way encumber the compensation or other benefits payable to him hereunder, except with the prior written consent of Employer or upon Employee's death. (b) The covenants, terms and provisions set forth herein shall be binding upon and shall inure to the benefit of, and be enforceable by, Employer and its successors and assigns. 23. NOTICES. All notices required herein shall be in writing and shall be deemed to have been given when delivered personally or when deposited in the U.S. Mail, certified or registered, postage prepaid, return receipt requested, addressed as follows, to wit: 13 If to Employer at: 160 Clairemont Avenue, Suite 200 Decatur, Georgia 30030 With a copy to: Cohen Pollock Merlin Axelrod & Tanenbaum, P.C. 2100 RiverEdge Parkway, Suite 300 Atlanta, Georgia 30328-4656 Attn: Elliott Cohen, Esquire If to Employee at: 2121 Floyd Street Covington, Georgia 30014 or at such other addresses as may, from time to time, be furnished to Employer by Employee, or by Employer to Employee on the terms of this Paragraph. 24. BINDING EFFECT. This Agreement shall be binding on the parties hereto and on their respective heirs, administrators, executors, successors and permitted assigns. 25. ENFORCEABILITY. This Agreement contains the entire understanding of the parties and may be altered, amended or modified only by a writing executed by both of the parties hereto. This Agreement supersedes all prior agreements and understandings by and between Employer and Employee relating to Employee's employment. 26. APPLICABLE LAW. This Agreement and the rights and liabilities of the parties hereto shall be governed by, and construed and interpreted in accordance with, the laws of the State of Georgia. 27. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall constitute an original, but all of which together shall constitute but a single document. [SIGNATURE PAGE TO FOLLOW] 14 IN WITNESS WHEREOF, Employee has hereunder set his hand and seal, and Employer has caused this Agreement to be executed and delivered by its duly authorized officers, all as of the day and year first above written. (SEAL) - ------------------------------- ----------------------------------- WITNESS ROBERT J. RUTLAND ATTEST: ALLIED HOLDINGS, INC. By: By: ---------------------------- -------------------------------------- Its Secretary Its President ----------------- ------------------ [CORPORATE SEAL] 15 EX-10.5 9 g75961ex10-5.txt EMPLOYMENT AGREEMENT - GROSS EXHIBIT 10.5 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT is made and entered into as of the 22nd day of May, 2000, by and between JACK GROSS ("Employee"), AXIS GROUP, INC., a Georgia corporation ("Employer"), and ALLIED HOLDINGS, INC., a Georgia corporation ("Allied"). WITNESSETH WHEREAS, Employer, through the Affiliates (as hereinafter defined), is engaged, within and without the United States, in inter alia, (i) the business of transporting automobiles and light trucks from the manufacturer to retailers and related activities (the "Transportation Business"); and (ii) the logistics business in connection with automobiles and light trucks (the "Logistics Business") (hereinafter the Transportation Business and the Logistics Business are sometimes referred to, individually, as a "Business" and, collectively, as the "Businesses"); and WHEREAS, Employee has a number of years of experience in the Logistics Business and in addition to having management skills of which Employer desires to avail itself, Employee has established numerous contacts and relationships with customers, potential customers and suppliers of Employer and the Affiliates, which contacts and relationships are of great value to Employer; NOW, THEREFORE, for and in consideration of the covenants and conditions hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Employer, Employee and Allied hereby mutually agree as follows: 1. DEFINITIONS. (a) "Affiliate" means any corporation, partnership or other entity of which Employer or Allied owns at least eighty percent (80%) of the outstanding equity and voting rights directly or indirectly through any other corporation, partnership or other entity. (b) "Base Salary" means the annual salary payable pursuant to Paragraph 4(a) hereof as adjusted, from time to time, by Employer. (c) "Cause" means (i) the commission by Employee of an act constituting a felony and Employee's conviction thereof; (ii) Employee's prolonged absence, without the consent of Employer, other than as a result of Employee's Disability or permitted absence or vacation; (iii) conduct of Employee which amounts to fraud, dishonesty, gross or willful neglect of duties; or (iv) engaging in activities prohibited by Paragraphs 13, 14 or 15 hereof. (d) "Disability" shall conclusively be deemed to have occurred with respect to Employee (i) if Employee shall be receiving payments pursuant to a policy of long-term disability income insurance; (ii) if Employee shall have no long- term disability income coverage then in force and any insurance company insuring Employee's life shall agree to waive the premiums due on such policy pursuant to a long-term disability waiver of premium provision in the contract of life insurance; or (iii) if Employee shall have no long-term disability waiver of premium provision in any contract of life insurance, then if Employee shall be receiving long-term disability benefits from or through the Social Security Administration; provided, however, that in the event Employee's disability shall, otherwise and in good faith, come into question (and, for purposes of this proviso, "disability" shall mean the permanent and continuous inability of Employee to perform substantially all of the duties being performed immediately prior to his disability coming into question), and a dispute shall arise with respect thereto, then Employee (or his personal representatives) shall appoint a medical doctor, Employer shall appoint a medical doctor, and said two (2) doctors shall, in turn, appoint a third party medical doctor who shall examine Employee to determine the question of disability and whose determination shall be binding upon all parties to this Agreement. (e) "Restricted Period" means the period commencing as of the date hereof and ending on that date one (1) year after the termination of Employee's employment with Employer for any reason, whether voluntary or involuntary. (f) "Term" means the Initial Term and any Renewal Term (each as defined in Paragraph 2 hereof); provided, however, that, in the event Employee's employment shall terminate by reason of the applicability of Paragraph 8 hereof then, in such event, the "Term" shall end upon the termination of Employee's employment. 2. TERM. Subject to the provisions hereinafter set forth, the Term of this Agreement shall commence as of the date hereof and shall end on December 31, 2001 (the "Initial Term"). Upon the expiration of the Initial Term, and on the expiration of each successive Renewal Term (as hereinafter defined), Employee's employment shall be automatically renewed for an additional term of one (1) years (the "Renewal Term(s)"), unless written notification of termination is given by either party to the other party not less than three (3) months prior to the expiration of the Initial Term or, as the case may be, the then-current Renewal Term. 3. DUTIES. (a) Employee shall, during the Term, serve as President of Employer. Employee's principal duties shall be to perform such executive, managerial and administrative duties as the Chairman and Board of Directors of Employer may, from time to time, reasonably request as are consistent with the position of President. 2 (b) Subject to the preceding subparagraph, during the Term, Employee shall devote substantially all of his time, energy and skill to performing the duties of his employment (vacations as provided hereunder and reasonable absences because of illness excepted), shall faithfully and industriously perform such duties, and shall use his best efforts to follow and implement all management policies and decisions of Employer. Employee shall not become personally involved in the management or operations of any other company, partnership, proprietorship or other entity, other than any Affiliate, without the prior written consent of Employer; provided, however, that so long as it does not interfere with Employee's employment hereunder, Employee may, with Employer's consent, (1) serve as a director, officer or partner in a company that does not compete with the Business of Employer and the Affiliates so long as the aggregate amount of time spent by Employee in all such capacities shall not exceed twenty (20) hours per month, and (2) serve as an officer or director of, or otherwise participate in, educational, welfare, social, religious, civic, trade and industry-related organizations. 4. BASE SALARY. (a) For and in consideration of the services to be rendered by Employee pursuant to this Agreement, Employer shall pay to Employee, for each year during the Term, an annual salary of Two Hundred Fifty Thousand Dollars ($250,000.00), payable in equal semi-monthly installments in accordance with Employer's payroll practices. Employee's salary shall be reviewed by the Board of Directors of Employer annually and, in the sole discretion of the Board of Directors, may be increased, but not decreased. 5. BONUS COMPENSATION. Employee shall, with respect to each calendar year of Employer ending during the Term, be entitled to participate in the Allied Holdings, Inc. EVA Based Incentive Plan, as the same may be from time to time amended and in effect (the "EVA Plan"). The Employee's Target Bonus for purposes of the EVA Plan shall be such percentage of Employee's Base Salary as shall, from time to time, be determined by Employer. Employee's actual bonus shall be calculated in accordance with the terms of the EVA Plan. Employee shall be provided with a copy of the EVA Plan within thirty (30) days of execution of this Agreement. 6. OTHER BENEFITS. During the Term, Employer shall provide the following benefits to Employee: (a) Employee shall be entitled to participate in all group medical and hospitalization benefit programs, dental care, sick leave, life insurance or other benefit plans for highly compensated employees of Employer or any Affiliate as are now or hereafter provided by Employer or any Affiliate, in each case in accordance with the terms and conditions of each such plan and benefit package. 3 (b) Employee shall be entitled to participate in all long term incentive plans, stock option plans and other similar plans for highly compensated employees of Employer as are now or hereafter provided by Employer or any Affiliate, in each case in accordance with the terms and conditions of each such plan. (c) Employee shall be provided with the use of an automobile, which shall be comparable to other automobiles Allied provides to persons serving in the capacity of President of an Allied subsidiary, and which shall be chosen by Employee from a list of automobiles Allied typically makes available to its Presidents of its subsidiaries and Employer shall pay for the cost of all insurance, ad valorem taxes and tag charges for such automobile and all operating and maintenance charges for such automobile. In addition, Employee shall be entitled to an automobile allowance for his spouse comparable to the spousal allowance Allied provides to persons serving in the capacity of President of a subsidiary, as determined from time to time by the Board of Directors of Allied. (d) Employee shall be provided with the use of a cellular telephone, at no cost to Employee. (e) Employer shall reimburse Employee for dues paid by Employee for membership in such professional organizations and eating clubs as shall, from time to time, be deemed appropriate and necessary by Employer. (f) Employee shall, at all times, have available to him an expense account, including the use of a corporate American Express card, to defray ordinary and necessary business expenses incurred in the performance of his duties hereunder. Employee shall be reimbursed for such expenses upon presentation and approval of expense statements or written vouchers or other supporting documents as may be reasonably requested in advance by Employer, which approval shall not be unreasonably withheld or delayed. The benefits described in subparagraph (a) of this Paragraph shall not be construed to require Employer to establish any such plans or programs or to prevent Employer from modifying or terminating any such plans or programs, and no such action or failure thereof shall affect this Agreement; provided, however, that in the event of any reduction in the group medical and hospitalization benefits in place as of the date hereof, the salary payable to Employee shall be increased, as of the effective date of such reduction, by that amount necessary to enable Employee to supplement the benefits provided by Employer to maintain the level of benefits currently provided to him by it. 7. VACATION. Employee shall receive no fewer than three (3) weeks of paid vacation for each year during the Term. Scheduling of vacation shall be subject to the prior approval of Employer (which approval shall not be unreasonably withheld). Vacation time shall not accrue, and 4 in the event Employee prior to the end of any year shall not use all of his vacation time for such year, such vacation time shall be forfeited. 8. TERMINATION. Anything herein to the contrary notwithstanding, Employee's employment hereunder shall terminate upon the first to occur of any of the following events: (a) Employee's Disability; (b) Employee's death; (c) Employee's materially breaching this Agreement by the non-performance or non-observance of any material term or condition of this Agreement, which breach shall not be corrected within forty-five (45) days after receipt of written notice of same from Employer; (d) Employer's sending Employee written notice terminating his employment hereunder prior to the expiration of the Initial Term or any Renewal Term in accordance with Paragraph 2 hereof; (e) Employee's voluntarily terminating his employment hereunder prior to the expiration of the Initial Term or any Renewal Term; or (f) Employee's being terminated for Cause. 9. TERMINATION PAYMENT. Subject to the provisions of Paragraph 12 hereof, in the event (a) Employee's employment shall terminate pursuant to Paragraph 8(a) (Disability) or Paragraph 8(b) (death) hereof; or (b) Employee shall terminate his employment as a result of (i) any failure to elect or reelect or to appoint or reappoint Employee to the position of President of Employer unless agreed to by Employee; (ii) any material change by Employer in Employee's function, duties, responsibility, importance, or scope from the position and attributes thereof described in Paragraph 3 hereof unless agreed to by Employee, or any change in location of the principal offices of Employer outside the metropolitan Atlanta, Georgia, area, or any requirement that Employee perform substantially all of his duties outside the metropolitan Atlanta, Georgia, area (and any such material change or relocation of Employer or Employee shall be deemed a continuing breach of this Agreement); 5 (iii) the liquidation, dissolution, consolidation or merger of Employer or Allied (other than a merger or other combination of Employer and Allied or Employer and an Affiliate); provided, however, that if there shall be a termination of employment resulting from events described in this subsection (iii) and in subsection (d) below, then such termination shall be deemed to fall within the terms of subsection (d) below which shall control and be paramount; (iv) any other material breach of this Agreement by Employer which shall not be cured within thirty (30) days after receipt of written notice of same from Employee; (v) Employer or Allied filing a petition for protection or relief from creditors under the federal bankruptcy law, or any petition shall be filed against Employer or Allied under the federal bankruptcy law, or Employer or Allied shall admit in writing its inability to pay its debts or shall make an assignment for the benefit of creditors, or a petition or application for the appointment of a receiver or liquidator or custodian of Employer or Allied is filed, or Employer or Allied shall seek a composition with creditors; or (c) Employee's employment shall be terminated by Employer for any reason other than for Cause or because Employer elects not to extend this Agreement beyond the Initial or any Renewal Term; or (d) If (i) Employer or Allied undergoes any change in control or ownership whereby Employer or Allied is reorganized, merged, or consolidated with one or more corporations as a result of which the owners of all of the outstanding shares of common stock immediately prior to such reorganization, merger or consolidation own in the aggregate less than seventy percent (70%) of the outstanding shares of common stock of the Employer or Allied or any other entity into which Employer or Allied shall be merged or consolidated immediately following the consummation thereof (hereinafter, "Employer's successor-in- interest"), or (ii) the sale, transfer or other disposition of all or substantially all of the assets or more than thirty percent (30%) of the then outstanding shares of common stock of Employer or Allied is effectuated, other than as a result of a merger or other combination of Employer and an Affiliate, or (iii) the acquisition by any "person" as used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934 of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent (20%) or more of the combined voting power of Employer's or Allied's then outstanding voting securities is effectuated; or (iv) the individuals who, as of the date of execution of this Agreement, are members of the Board of Directors (the "incumbent Board") of Allied cease for any reason to constitute at least two-thirds (2/3) of the 6 Board; provided, however, that if the election, or nomination for election by the shareholders of any new director was approved by a vote of at least two-thirds (2/3) of the incumbent Board, such new director shall, for purposes of this Agreement, be considered as a member of the incumbent Board, and (a) Employee's employment with Employer or Employer's successor-in-interest is terminated by Employer or Employer's successor-in-interest (as the case may be) or Employee for any reason, or (b) Employee's employment under this Agreement is not extended by Employer or Employer's successor-in-interest for any Renewal Term, and such termination or non-renewal occurs within two (2) years after the closing of the transaction which resulted in the change in control, then Employer shall, depending upon the reason for the termination of Employee's employment, immediately pay in cash to Employee an amount determined as follows: (x) If the termination shall be pursuant to subparagraph (d) above, the amount shall be equal to the sum of (1) three hundred percent (300%) of Employee's then-effective annual Base Salary; and (2) three hundred percent (300%) of Employee's then-effective Bonus, as hereinafter defined. In addition, Employer shall continue to provide to Employee (except in the case of Employee's death), for a period of three (3) years from said termination, the benefits enumerated in Paragraph 6(a) and Paragraph 6(c) hereof. (y) If the termination shall be other than pursuant to subparagraph (d) above, the amount shall be equal to the sum of (1) two hundred percent (200%) of Employee's then-effective annual Base Salary; and (2) two hundred percent (200%) of Employee's then-effective Bonus, as hereinafter defined. In addition, Employer shall continue to provide to Employee (except in the case of Employee's death), for a period of two (2) years from said termination, the benefits enumerated in Paragraph 6(a) and Paragraph 6(c) hereof. 10. OPERATIVE PROVISIONS. (a) As used in this Agreement, the term "Bonus" shall mean: 7 (i) with respect to the most recent grant or award of restricted stock, pursuant to Employer's "Long Term Incentive Plan", made prior to the date of termination of Employee's employment, the Dollar value, as of the date of such grant or award, of the Long Term Incentive Plan restricted stock plan target for Employee as approved by the Compensation Committee of Employer's Board of Directors, which Dollar value is established by the Compensation Committee notwithstanding the number of shares actually received pursuant to such grant or award and notwithstanding the value of such shares actually received; plus (ii) the highest of (1) the average of the EVA bonuses actually paid to Employee for the two (2) years immediately preceding the year in which termination of employment occurs; (2) the average of the EVA bonuses which would have been paid to Employee for the two (2) years immediately preceding the year in which termination of employment occurs, assuming his EVA target bonus had been achieved for each such year; or (3) the amount of the EVA target bonus for Employee for the year in which termination of employment occurs. (b) In the event of a termination of employment pursuant to Paragraph 9 hereof, all restricted stock awards of Employee shall become wholly unrestricted and all unvested stock options of Employee shall become fully vested in Employee, and all such agreements pertaining thereto shall be read accordingly; provided, however, that Employee shall not have any such rights with respect to any stock issued under any employee stock plan of Employer qualifying under Section 402(a) et seq. of the Code if, and to the extent, such rights would jeopardize the qualification of such plan under said Section. As used in the preceding sentence, "Code" means the Internal Revenue Code of 1986 as amended from time to time or any provisions from time to time enacted and corresponding in substance thereto. (c) Paragraph 9 and this Paragraph 10 shall survive the termination of this Agreement, and this Agreement shall be read accordingly. 11. INTENTION OF PARTIES. It is the express understanding and intention of Employer and Employee that the provisions of Paragraph 5 and Paragraph 9 hereof shall be read together and be non-exclusive so that, in the event of a termination of Employee's employment pursuant to Paragraph 9 of this Employment Agreement, Employee shall receive both (i) all of the compensation specified in Paragraph 9 hereof (including, but not limited to, the applicable percentage of Employee's then-effective Base Salary and the applicable percentage of the cash portion of Employee's Bonus) and (ii) one hundred percent (100%) of the pro rata portion of both the cash and equity parts of Employee's Bonus based on the number of days in the fiscal year falling within the Term (which shall include the amount of any EVA bonus paid to Employee during that 8 year, if any), but in no event shall such pro rata portion be less than the pro rata share of the highest of (i) the average of the EVA bonuses actually paid to Employee for the two (2) years immediately preceding the year in which termination of employment occurs; (ii) the average of the EVA bonuses which would have been paid to Employee for the two (2) years immediately preceding the year in which termination of employment occurs, assuming his EVA target bonus had been achieved for each such year; or (iii) the amount of the EVA target bonus for Employee for the year in which termination of employment occurs. The amounts referred to in this Paragraph are in addition to the benefits enumerated in Paragraphs 6(b) and 6(c) hereof. 12. CONDITIONS TO BENEFITS. Anything in this Agreement to the contrary notwithstanding: (a) To receive the benefits enumerated in Paragraph 9 hereof, Employee shall execute and agree to be bound by a release agreement substantially in the form attached to this Agreement as Exhibit A and, to the extent applicable, a resignation letter substantially in the form attached as Exhibit B, prior to, and as a condition to, receiving any payments or benefits provided for in Paragraph 9 hereof or otherwise following termination of his employment hereunder [and, if applicable, the release agreement may contain provisions required by federal, state or local law (e.g., the Older Worker's Benefit Protection Act) to effect a general release of all claims]. (b) Employee's right to receive any of the benefits provided for in Paragraph 9 or otherwise in this Agreement following termination of his employment hereunder shall immediately cease and be of no further force or effect if Employee violates any of the covenants contained in Paragraphs 13, 14, 15 or 16 hereof. 13. COVENANT NOT-TO-DISCLOSE. Employer and Employee recognize that, during the course of Employee's term of employment with Employer pursuant to this Agreement, Employer will disclose to Employee information concerning Employer and the Affiliates, their products, their customers, their services, their trade secrets, their proprietary information and other information concerning their business all of which constitute valuable assets of Employer and the Affiliates. Employer and Employee further acknowledge that Employer has, and will, invest considerable amounts of time, effort and corporate resources in developing such valuable assets and that disclosure by Employee of such assets to the public shall cause irreparable harm, damage and loss to Employer and the Affiliates. (a) To protect these assets, Employee agrees that he shall not, during the Restricted Period, advise or disclose to any person, corporation, firm, partnership or other entity whatsoever (except Employer or an Affiliate), or any officer, director, stockholder, partner or associate of any such corporation, firm, partnership or entity any information received from Employer by Employee during the course of Employee's association with Employer relating to the business affairs of Employer and the Affiliates 9 including information concerning Employer's and the Affiliates' finances, services, customers, customer lists, prospective customers, staff, contemplated acquisitions (whether of business or assets), ideas, proprietary information, methods, marketing investigations, surveys, research and any other information relating to the business and objectives of Employer and the Affiliates, except as permitted by Exhibit C hereof. (b) Employee further agrees that he shall not, during the term of his employment or any time thereafter, advise or disclose to any person or entity any trade secret which Employer or any Affiliate has disclosed to Employee during the course of his employment with Employer. (c) In the event Employee's employment is terminated, Employee agrees that, if requested by Employer, he will acknowledge in writing that he received the disclosures referred to herein and is under the obligations referred to in this Agreement. (d) This Paragraph 13 shall, except as otherwise provided in this Agreement, survive the termination of this Agreement. 14. COVENANT NOT-TO-INDUCE. Employee covenants and agrees that during the Restricted Period, he will not, directly or indirectly, on his own behalf or in the service or on behalf of others, hire, solicit, take away or attempt to hire, solicit or take away any employee or other personnel of Employer and the Affiliates. This Paragraph 14 shall, except as otherwise provided in this Agreement, survive the termination of this Agreement. 15. COVENANT OF NON-DISPARAGEMENT AND COOPERATION. Employee agrees that he shall not at any time during or following the term of this Agreement make any remarks disparaging the conduct or character of Employer or the Affiliates or any of Employer's or the Affiliates' current or former agents, employees, officers, directors, successors or assigns (collectively the "Related Companies"). In addition, Employee agrees to cooperate with the Related Companies, at no extra cost, in any litigation or administrative proceedings (e.g., EEOC charges) involving any matters with which Employee was involved during Employee's employment with Employer. Employer shall reimburse Employee for travel expenses approved by Employer or the Affiliates incurred in providing such assistance. This Paragraph 15 shall survive the termination of this Agreement. 16. COVENANT NOT-TO-COMPETE. Employer and Employee acknowledge that, by virtue of Employee's responsibilities and authority, he shall, during the course of his Employment, be instrumental in developing, and receive highly confidential information concerning, Employer and the Affiliates, their customers, their services, their trade secrets, their proprietary information and other information concerning the Logistics Business, much of which will be unavailable to those in positions of lesser responsibility and authority. Employee further acknowledges that the ability of such information to benefit a competitor or potential competitor of Employer shall cause irreparable harm, damage and loss to Employer and the Affiliates. To protect Employer and the Affiliates from 10 Employee's using or exploiting this information, Employee agrees that, if the employment relationship between Employee and Employer terminates for any reason whatsoever other than termination by Employer without Cause, then, in such event, for a period of one (1) year from the date of Employee's termination of employment, Employee shall not engage in the Logistics Business in the Restricted Territory, and Employee shall not directly or indirectly, own, manage, join, control, contract with, be employed by, act in the capacity of an officer, director, trustee, shareholder or partner or consultant, or participate in any manner in the ownership, management, operation, or control of any business or person engaged in the Logistics Business in the Restricted Territory; provided, however, Employee shall be permitted to own not more than five percent (5%) of the stock of a corporation required to file reports pursuant to the Securities Exchange Act of 1934. As to the foregoing, Employee acknowledges that he has the ability to earn a comparable income within or without the Restricted Territory in other than the Logistics Business and that earning a livelihood outside the Logistics Business within or without the Restricted Territory would not constitute a hardship or an unreasonable restriction on the Employee or restrict him from earning comparable income. Employee acknowledges that the area in which the Employer engages in the Logistics Business shall geographically increase under the leadership of Employee and that, as such increase occurs in such new areas, it is necessary for the interests of the Employer to be protected in them. Accordingly, Employee acknowledges and agrees that, upon receipt of consideration from Employer in the sum of One Hundred Dollars ($100.00), in each case, he shall, at any time and from time to time, execute an amendment to this Agreement amending the definition of Restricted Territory to include such new areas. This Paragraph 16 shall survive the termination of this Agreement. 17. SPECIFIC ENFORCEMENT. Employer and Employee expressly agree that a violation of the covenants not-to-disclose, not-to-induce, not-to-disparage and not-to-compete contained in Paragraphs 13, 14, 15 and 16 hereof, or any provision thereof, shall cause irreparable injury to Employer and that, accordingly, Employer shall be entitled, in addition to any other rights and remedies it may have at law or in equity, to an injunction enjoining and restraining Employee from doing or continuing to do any such act and any other violation or threatened violation of said Paragraphs 13, 14, 15 and 16 hereof. 18. SEVERABILITY. In the event any provision of this Agreement shall be found to be void, the remaining provisions of this Agreement shall nevertheless be binding with the same effect as though the void part were deleted; provided, however, if Paragraphs 13, 14, 15 and 16 hereof shall be declared invalid, in whole or in part, Employee shall execute, as soon as possible, a supplemental agreement with Employer, granting Employer, to the extent legally possible, the protection afforded by said Paragraphs. It is expressly understood and agreed by the parties hereto that Employer shall not be barred from enforcing the restrictive covenants contained in each of Paragraphs 13, 14, 15 and 16 as each are separate and distinct, so that the invalidity of any one or more of said covenants shall not affect the enforceability and validity of the other covenants. 19. INCOME TAX WITHHOLDING. Employer or any other payor may withhold from any compensation or benefits payable under this Agreement such Federal, State, City or other taxes as shall be required pursuant to any law or governmental regulation or ruling. 11 20. OTHER TAX CONSIDERATIONS. Notwithstanding any other provision of this Agreement to the contrary, in the event that any payment or benefit received or to be received by Employee is triggered by an event described in subparagraph (d) of Paragraph 9 of this Agreement, whether such payment or benefit is pursuant to the terms of this Agreement or any other plan, arrangement or agreement with Employer or any Affiliate of Employer (hereinafter, all such payments and benefits being sometimes referred to as "Total Payments"), and would not be deductible, either in whole or in part, by Employer or an Affiliate making such payment or providing such benefit as a result of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), then, to the extent necessary to make such portion of the Total Payments deductible (and after taking into account any reduction in the Total Payments provided by reason of Section 280G of the Code in any such other plan, arrangement or agreement), (A) the cash portion of the Total Payments provided in this Paragraph 20 shall first be reduced (if necessary, to zero (0)), and (B) all other non-cash Total Payments under this Paragraph 20 shall next be reduced (if necessary, to zero (0)); provided, however, that the Employee's payment shall only be reduced by this Paragraph 20 if Employer determines that reducing the Total Payments would result in greater after-tax proceeds to the Employee than if no such reduction in Total Payments had occurred. Any determination required by the preceding sentence shall be made by independent certified public accountants or tax counsel (hereinafter, such party shall sometimes be hereinafter referred to as the "Independent Adviser") selected by Employer, the selection of which shall be reasonably acceptable to Employee. In making Employer's determination as to the application and effect of this Paragraph 20 on any payments or benefits received or to be received by Employee, (i) no portion of the Total Payments shall be taken into account which in the opinion of the Independent Adviser does not constitute a "parachute payment" within the meaning of Section 280G(b)(2) of the Code, including by reason of Section 280G(b)(4)(A) of the Code; (ii) those Total Payments provided under this Paragraph 20 shall be reduced only to the extent necessary so that the Total Payments (other than those referred to in clause (i)) in their entirety constitute reasonable compensation for services actually rendered within the meaning of Section 280G(b)(4)(B) of the Code or are otherwise not subject to disallowance as deductions, in the opinion of the Independent Adviser; and (iii) the value of any non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Company's independent certified public accountants in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. 21. WAIVER. The waiver of a breach of any term of this Agreement by any of the parties hereto shall not operate or be construed as a waiver by such party of the breach of any other term of this Agreement or as a waiver of a subsequent breach of the same term of this Agreement. 22. RIGHTS AND LIABILITIES UPON NOTICE OF TERMINATION. As soon as notice of termination of this Agreement is given, Employee shall immediately cease contact with all customers of Employer and shall forthwith surrender to Employer all customer lists, documents and other property of Employer then in his possession, compliance with which shall not be deemed to be a breach of this Agreement by Employee. Pending the surrender of all such customer lists, documents and other property to Employer, Employer may hold in abeyance any payments due Employee pursuant to this Agreement. 12 23. ASSIGNMENT. (a) Employee shall not assign, transfer or convey this Agreement, or in any way encumber the compensation or other benefits payable to him hereunder, except with the prior written consent of Employer or upon Employee's death. (b) The covenants, terms and provisions set forth herein shall be binding upon and shall inure to the benefit of, and be enforceable by, Employer and its successors and assigns. 24. NOTICES. All notices required herein shall be in writing and shall be deemed to have been given when delivered personally or when deposited in the U.S. Mail, certified or registered, postage prepaid, return receipt requested, addressed as follows, to wit: If to Employer at: 160 Clairemont Avenue Suite 200 Decatur, Georgia 30030 With a copy to: Cohen Pollock Merlin Axelrod & Tanenbaum, P.C. 2100 RiverEdge Parkway Suite 300 Atlanta, Georgia 30328-4656 Attn: Elliott Cohen, Esquire If to Employee at: ------------------------------------------------- ------------------------------------------------- or at such other addresses as may, from time to time, be furnished to Employer by Employee, or by Employer to Employee on the terms of this Paragraph. 25. BINDING EFFECT. This Agreement shall be binding on the parties hereto and on their respective heirs, administrators, executors, successors and permitted assigns. 26. ENFORCEABILITY. This Agreement contains the entire understanding of the parties and may be altered, amended or modified only by a writing executed by both of the parties hereto. This Agreement supersedes all prior agreements and understandings by and between Employer and Employee relating to Employee's employment. 13 27. APPLICABLE LAW. This Agreement and the rights and liabilities of the parties hereto shall be governed by, and construed and interpreted in accordance with, the laws of the State of Georgia. 28. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall constitute an original, but all of which together shall constitute but a single document. 29. GUARANTY BY ALLIED. Allied hereby unconditionally guarantees the performance and payment obligations of Employer pursuant to this Agreement including, without limitation, the payment of base salary and bonus compensation pursuant to Paragraphs 4 and 5 hereof, and the termination payment pursuant to Paragraph 9 hereof. IN WITNESS WHEREOF, Employee has hereunder set his hand and seal, and Employer has caused this Agreement to be executed and delivered by its duly authorized officers, all as of the day and year first above written. (SEAL) - ------------------------------- ----------------------------------- WITNESS JACK GROSS ATTEST: AXIS GROUP, INC. By: By: ---------------------------- -------------------------------------- Its Secretary Its President ---------------- ---------------- [CORPORATE SEAL] ATTEST: ALLIED HOLDINGS, INC. By: By: ---------------------------- -------------------------------------- Its Secretary Its President ---------------- ---------------- [CORPORATE SEAL] 14 -----END PRIVACY-ENHANCED MESSAGE-----

EX-10.1

                                                                   EXHIBIT 10.1


                               FIRST AMENDMENT TO
                              EMPLOYMENT AGREEMENT

         THIS FIRST AMENDMENT to Employment Agreement (the "Amendment") is made
and entered into as of the 22nd day of December, 2001, by and between Hugh E.
Sawyer ("Employee") and Allied Holdings, Inc. ("Employer").

                                  WITNESSETH:

         WHEREAS, Employer and Employee entered into that certain Employment
Agreement dated effective as of June 18, 2001 (the "Employment Agreement"); and

         WHEREAS, the parties desire to amend the Employment Agreement as set
forth herein;

         NOW, THEREFORE, for and in consideration of the covenants and
conditions set forth herein, and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, Employer and Employee
hereby mutually agree as follows:

         1.       The last sentence of Section 5(a) shall be deleted in its
entirety, and the following shall be substituted in its place:

                  "Such annual cash bonuses will be payable on such date or
                  dates as is determined by the Compensation Committee of the
                  Board of Directors, but in no event later than thirty (30)
                  days after completion of the independent certified audit for
                  the applicable year (each, an "Annual Bonus"); and

         2.       The second to the last sentence of Section 5(b) shall be
deleted in its entirety, and the following shall be substituted in its place:

                  "Such Annual Bonus shall be payable on a date or dates to be
determined by the Compensation Committee of the Board of Directors."

         3.       All terms which are capitalized herein, but which are not
defined herein, shall have the meanings ascribed to them in the Employment
Agreement.

         4.       All provisions of the Employment Agreement which have not
been amended by this Amendment shall remain in full force and effect.
Notwithstanding the foregoing, to the extent there is any inconsistency between
the provisions of the Employment Agreement and the provisions of this
Amendment, the provisions of this Amendment shall control.

         5.       Each of the parties hereto will, from time to time, and at
all times hereafter, upon every reasonable request to do so by any other party,
make, do, execute





and deliver, or cause to be made done, executed and delivered, all such further
acts, deeds, assurances and things as may be reasonably required or necessary
in order to further implement and carry out the terms and purpose of this
Amendment.

         6.       This Amendment may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute the same agreement, document, or instrument. Any signature page of
any such counterpart, or any electronic facsimile thereof, may be attached or
appended to any other counterpart to complete a fully executed counterpart of
such agreement, document or instrument, and any telecopy or other facsimile
transmission of any signature shall be deemed an original and shall bind such
party.

         IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to be duly executed on its behalf, all as of the day and year first
written above.


                                    "Employer"


                                    ALLIED HOLDINGS, INC.



                                    By:  /s/ Robert J. Rutland
                                       ----------------------------------------
                                       Robert J. Rutland, Chairman


                                    "Employee"


                                    /s/ Hugh E. Sawyer
                                    -------------------------------------------
                                    HUGH E. SAWYER

EX-10.2

                                                                   EXHIBIT 10.2


                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT is made and entered into as of the 23rd day
of February, 2000, by and between DANIEL H. POPKY ("Employee") and ALLIED
HOLDINGS, INC., a Georgia corporation ("Employer").

                                  WITNESSETH

         WHEREAS, Employer, through its Affiliates (as hereinafter defined), is
engaged in the transportation of automobiles and light trucks from
manufacturers to retailers, and other related activities (the "Business"); and

         WHEREAS, Employee has a number of years of experience in the Business
in addition to having management skills of which Employer desires to avail
itself; and

         WHEREAS, Employer and Employee have made and entered into a previous
employment agreement; and

         WHEREAS, Employer and Employee deem it in their respective best
interests to clarify the duties and obligations, each to the other, by
executing this new Employment Agreement,

         NOW, THEREFORE, for and in consideration of the covenants and
conditions hereinafter set forth, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Employer and
Employee hereby mutually agree that all previous employment agreements are
superseded, null, void, and of no further force and effect, and Employer and
Employee further mutually agree as follows:

         1.       DEFINITIONS.

                  (a)      "Affiliate" means any corporation, partnership or
                           other entity of which Employer owns at least eighty
                           percent (80%) of the outstanding equity and voting
                           rights directly or indirectly through any other
                           corporation, partnership or other entity.

                  (b)      "Base Salary" means the annual salary payable
                           pursuant to Paragraph 4(a) hereof as adjusted, from
                           time to time, by Employer.

                  (c)      "Cause" means (i) the commission by Employee of an
                           act constituting a felony and Employee's conviction
                           thereof; (ii) Employee's prolonged absence, without
                           the consent of Employer, other than as a result of
                           Employee's Disability or permitted absence or
                           vacation; (iii) conduct of Employee which amounts to
                           fraud, dishonesty, gross or willful neglect of
                           duties; or (iv) engaging in activities prohibited by
                           Paragraphs 13, 14 or 15 hereof.





                  (d)      "Disability" shall conclusively be deemed to have
                           occurred with respect to Employee (i) if Employee
                           shall be receiving payments pursuant to a policy of
                           long-term disability income insurance; (ii) if
                           Employee shall have no long-term disability income
                           coverage then in force and any insurance company
                           insuring Employee's life shall agree to waive the
                           premiums due on such policy pursuant to a long-term
                           disability waiver of premium provision in the
                           contract of life insurance; or (iii) if Employee
                           shall have no long-term disability waiver of premium
                           provision in any contract of life insurance, then if
                           Employee shall be receiving long-term disability
                           benefits from or through the Social Security
                           Administration; provided, however, that in the event
                           Employee's disability shall, otherwise and in good
                           faith, come into question (and, for purposes of this
                           proviso, "disability" shall mean the permanent and
                           continuous inability of Employee to perform
                           substantially all of the duties being performed
                           immediately prior to his disability coming into
                           question), and a dispute shall arise with respect
                           thereto, then Employee (or his personal
                           representatives) shall appoint a medical doctor,
                           Employer shall appoint a medical doctor, and said
                           two (2) doctors shall, in turn, appoint a third
                           party medical doctor who shall examine Employee to
                           determine the question of disability and whose
                           determination shall be binding upon all parties to
                           this Agreement.

                  (e)      "Restricted Period" means the period commencing as
                           of the date hereof and ending on that date one (1)
                           year after the termination of Employee's employment
                           with Employer for any reason, whether voluntary or
                           involuntary.

                  (f)      "Term" means the Initial Term and any Renewal Term
                           (each as defined in Paragraph 2 hereof); provided,
                           however, that, in the event Employee's employment
                           shall terminate by reason of the applicability of
                           Paragraph 8 hereof then, in such event, the "Term"
                           shall end upon the termination of Employee's
                           employment.

         2.       TERM. Subject to the provisions hereinafter set forth, the
Term of this Agreement shall commence as of the date hereof and shall end on
December 31, 2001 (the "Initial Term"). Upon the expiration of the Initial
Term, and on the expiration of each successive Renewal Term (as hereinafter
defined), Employee's employment shall be automatically renewed for an
additional term of one (1) years (the "Renewal Term(s)"), unless written
notification of termination is given by either party to the other party not
less than three (3) months prior to the expiration of the Initial Term or, as
the case may be, the then-current Renewal Term.

          3.      DUTIES.

                  (a)      Employee shall, during the Term, serve as Senior
                           Vice President and Chief Financial Officer of
                           Employer. Employee's principal duties shall be


                                       2



                           to perform such executive, managerial and
                           administrative duties as the Chairman and Board of
                           Directors of Employer may, from time to time,
                           reasonably request as are consistent with the
                           position of Senior Vice President and Chief
                           Financial Officer.

                  (b)      Subject to the preceding subparagraph, during the
                           Term, Employee shall devote substantially all of his
                           time, energy and skill to performing the duties of
                           his employment (vacations as provided hereunder and
                           reasonable absences because of illness excepted),
                           shall faithfully and industriously perform such
                           duties, and shall use his best efforts to follow and
                           implement all management policies and decisions of
                           Employer. Employee shall not become personally
                           involved in the management or operations of any
                           other company, partnership, proprietorship or other
                           entity, other than any Affiliate, without the prior
                           written consent of Employer; provided, however, that
                           so long as it does not interfere with Employee's
                           employment hereunder, Employee may, with Employer's
                           consent, (1) serve as a director, officer or partner
                           in a company that does not compete with the Business
                           of Employer and the Affiliates so long as the
                           aggregate amount of time spent by Employee in all
                           such capacities shall not exceed twenty (20) hours
                           per month, and (2) serve as an officer or director
                           of, or otherwise participate in, educational,
                           welfare, social, religious, civic, trade and
                           industry-related organizations.

          4.      BASE SALARY.

                  (a)      For and in consideration of the services to be
                           rendered by Employee pursuant to this Agreement,
                           Employer shall pay to Employee, for each year during
                           the Term, an annual salary of Two Hundred
                           Twenty-seven Thousand Dollars ($227,000.00), payable
                           in equal semi-monthly installments in accordance
                           with Employer's payroll practices. Employee's salary
                           shall be reviewed by the Board of Directors of
                           Employer annually and, in the sole discretion of the
                           Board of Directors, may be increased, but not
                           decreased.

                  (b)      In addition to the Base Salary paid to Employee
                           pursuant to Paragraph 4(a) hereof, Employee shall be
                           eligible to receive monthly compensation of up to
                           (x) 3% of (y) Employee's Base Salary multiplied by
                           one-twelfth (1/12), through Allied's anticipated
                           "Monthly R+" performance incentive plan, as such
                           plan shall be developed, implemented and maintained
                           from time to time by Allied. The pertinent terms of
                           the plan and the specific performance objectives to
                           be developed to measure Employee's performance under
                           such plan shall be provided to Employee at such time
                           as Allied shall have implemented the same. This
                           Paragraph 4(b) shall not create any entitlement for
                           Employee, require Allied to actually implement the
                           Monthly R+ plan or prevent Allied from, in its sole
                           and exclusive


                                       3



                           discretion, terminating or changing the terms to any
                           such plan Allied does so implement.

         5.       BONUS COMPENSATION. Employee shall, with respect to each
calendar year of Employer ending during the Term, be entitled to participate in
the Allied Holdings, Inc. EVA Based Incentive Plan, as the same may be from
time to time amended and in effect (the "EVA Plan"). The Employee's Target
Bonus for purposes of the EVA Plan shall be such percentage of Employee's Base
Salary as shall, from time to time, be determined by Employer. Employee's
actual bonus shall be calculated in accordance with the terms of the EVA Plan.
Employee shall be provided with a copy of the EVA Plan within thirty (30) days
of execution of this Agreement.

         6.       OTHER BENEFITS. During the Term, Employer shall provide the
following benefits to Employee:

                  (a)      Employee shall be entitled to participate in all
                           group medical and hospitalization benefit programs,
                           dental care, sick leave, life insurance or other
                           benefit plans for highly compensated employees of
                           Employer or any Affiliate as are now or hereafter
                           provided by Employer or any Affiliate, in each case
                           in accordance with the terms and conditions of each
                           such plan and benefit package.

                  (b)      Employee shall be entitled to participate in all
                           long term incentive plans, stock option plans and
                           other similar plans for highly compensated employees
                           of Employer as are now or hereafter provided by
                           Employer or any Affiliate, in each case in
                           accordance with the terms and conditions of each
                           such plan.

                  (c)      Employee shall be provided with the use of an
                           automobile, which shall be comparable to other
                           automobiles Employer provides to persons serving in
                           the capacity of Vice-President of Employer, or
                           President of an Affiliate, and which shall be chosen
                           by Employee from a list of automobiles Employer
                           typically makes available to its Vice-Presidents and
                           Presidents of its Affiliates, and Employer shall pay
                           for the cost of all insurance, ad valorem taxes and
                           tag charges for such automobile and all operating
                           and maintenance charges for such automobile. In
                           addition, Employee shall be entitled to an
                           automobile allowance for his spouse comparable to
                           the spousal allowance Employer provides to persons
                           serving in the capacity of Vice-President of
                           Employer or President of an Affiliate, as determined
                           from time to time by the Board of Directors of
                           Employer.

                  (d)      Employee shall be provided with the use of a
                           cellular telephone, at no cost to Employee.


                                       4



                  (e)      Employer shall reimburse Employee for dues paid by
                           Employee for membership in such professional
                           organizations and eating clubs as shall, from time
                           to time, be deemed appropriate and necessary by
                           Employer.

                  (f)      Employee shall, at all times, have available to him
                           an expense account, including the use of a corporate
                           American Express card, to defray ordinary and
                           necessary business expenses incurred in the
                           performance of his duties hereunder. Employee shall
                           be reimbursed for such expenses upon presentation
                           and approval of expense statements or written
                           vouchers or other supporting documents as may be
                           reasonably requested in advance by Employer, which
                           approval shall not be unreasonably withheld or
                           delayed.

         The benefits described in subparagraph (a) of this Paragraph shall not
be construed to require Employer to establish any such plans or programs or to
prevent Employer from modifying or terminating any such plans or programs, and
no such action or failure thereof shall affect this Agreement; provided,
however, that in the event of any reduction in the group medical and
hospitalization benefits in place as of the date hereof, the salary payable to
Employee shall be increased, as of the effective date of such reduction, by
that amount necessary to enable Employee to supplement the benefits provided by
Employer to maintain the level of benefits currently provided to him by it.

         7.       VACATION. Employee shall receive no fewer than three (3)
weeks of paid vacation for each year during the Term. Scheduling of vacation
shall be subject to the prior approval of Employer (which approval shall not be
unreasonably withheld). Vacation time shall not accrue, and in the event
Employee prior to the end of any year shall not use all of his vacation time
for such year, such vacation time shall be forfeited.

         8.       TERMINATION. Anything herein to the contrary notwithstanding,
Employee's employment hereunder shall terminate upon the first to occur of any
of the following events:

                  (a)      Employee's Disability;

                  (b)      Employee's death;

                  (c)      Employee's materially breaching this Agreement by
                           the non-performance or non-observance of any
                           material term or condition of this Agreement, which
                           breach shall not be corrected within forty-five (45)
                           days after receipt of written notice of same from
                           Employer;

                  (d)      Employer's sending Employee written notice
                           terminating his employment hereunder prior to the
                           expiration of the Initial Term or any Renewal Term
                           in accordance with Paragraph 2 hereof;


                                       5



                  (e)      Employee's voluntarily terminating his employment
                           hereunder prior to the expiration of the Initial
                           Term or any Renewal Term; or

                  (f)      Employee's being terminated for Cause.

         9.       TERMINATION PAYMENT. Subject to the provisions of Paragraph
11 hereof, in the event

                  (a)      Employee's employment shall terminate pursuant to
                           Paragraph 8(a) (Disability) or Paragraph 8(b)
                           (death) hereof; or

                  (b)      Employee shall terminate his employment as a result
                           of

                           (i)      any failure to elect or reelect or to
                                    appoint or reappoint Employee to the
                                    position of Senior Vice President and Chief
                                    Financial Officer of Employer unless agreed
                                    to by Employee;

                           (ii)     any material change by Employer in
                                    Employee's function, duties,
                                    responsibility, importance, or scope from
                                    the position and attributes thereof
                                    described in Paragraph 3 hereof unless
                                    agreed to by Employee, or any change in
                                    location of the principal offices of
                                    Employer outside the metropolitan Atlanta,
                                    Georgia, area, or any requirement that
                                    Employee perform substantially all of his
                                    duties outside the metropolitan Atlanta,
                                    Georgia, area (and any such material change
                                    or relocation of Employer or Employee shall
                                    be deemed a continuing breach of this
                                    Agreement);

                           (iii)    the liquidation, dissolution, consolidation
                                    or merger of Employer (other than a merger
                                    or other combination of Employer and an
                                    Affiliate); provided, however, that if
                                    there shall be a termination of employment
                                    resulting from events described in this
                                    subsection (iii) and in subsection (d)
                                    below, then such termination shall be
                                    deemed to fall within the terms of
                                    subsection (d) below which shall control
                                    and be paramount;

                           (iv)     any other material breach of this Agreement
                                    by Employer which shall not be cured within
                                    thirty (30) days after receipt of written
                                    notice of same from Employee;

                           (v)      Employer filing a petition for protection
                                    or relief from creditors under the federal
                                    bankruptcy law, or any petition shall be
                                    filed against Employer under the federal
                                    bankruptcy law, or Employer shall admit in
                                    writing its inability to pay its debts or
                                    shall make an assignment for the benefit of
                                    creditors, or a petition or application for
                                    the appointment of a receiver or liquidator
                                    or custodian of


                                       6



                                    Employer is filed, or Employer shall seek a
                                    composition with creditors; or

                  (c)      Employee's employment shall be terminated by
                           Employer for any reason other than for Cause or
                           because Employer elects not to extend this Agreement
                           beyond the Initial or any Renewal Term; or

                  (d)      If (i) Employer undergoes any change in control or
                           ownership whereby Employer is reorganized, merged,
                           or consolidated with one or more corporations as a
                           result of which the owners of all of the outstanding
                           shares of common stock immediately prior to such
                           reorganization, merger or consolidation own in the
                           aggregate less than seventy percent (70%) of the
                           outstanding shares of common stock of the Employer
                           or any other entity into which Employer shall be
                           merged or consolidated immediately following the
                           consummation thereof (hereinafter, "Employer's
                           successor-in-interest"), or (ii) the sale, transfer
                           or other disposition of all or substantially all of
                           the assets or more than thirty percent (30%) of the
                           then outstanding shares of common stock of Employer
                           is effectuated, other than as a result of a merger
                           or other combination of Employer and an Affiliate,
                           or (iii) the acquisition by any "person" as used for
                           purposes of Section 13(d) or 14(d) of the Securities
                           Exchange Act of 1934 of beneficial ownership (within
                           the meaning of Rule 13d-3 promulgated under the
                           Exchange Act) of twenty percent (20%) or more of the
                           combined voting power of Employer's then outstanding
                           voting securities is effectuated; or (iv) the
                           individuals who, as of the date of execution of this
                           Agreement, are members of the Board of Directors
                           (the "incumbent Board") cease for any reason to
                           constitute at least two-thirds (2/3) of the Board;
                           provided, however, that if the election, or
                           nomination for election by the shareholders of any
                           new director was approved by a vote of at least
                           two-thirds (2/3) of the incumbent Board, such new
                           director shall, for purposes of this Agreement, be
                           considered as a member of the incumbent Board, and
                           (a) Employee's employment with Employer or
                           Employer's successor-in-interest is terminated by
                           Employer or Employer's successor-in-interest (as the
                           case may be) or Employee for any reason, or (b)
                           Employee's employment under this Agreement is not
                           extended by Employer or Employer's
                           successor-in-interest for any Renewal Term, and such
                           termination or non-renewal occurs within two (2)
                           years after the closing of the transaction which
                           resulted in the change in control,

then Employer shall, depending upon the reason for the termination of
Employee's employment, immediately pay in cash to Employee an amount determined
as follows:

         (x)      If the termination shall be pursuant to subparagraph (d)
                  above, the amount shall be equal to the sum of


                                       7



                  (1)      three hundred percent (300%) of Employee's
                           then-effective annual Base Salary; and

                  (2)      three hundred percent (300%) of Employee's
                           then-effective Bonus, as hereinafter defined.

         In addition, Employer shall continue to provide to Employee (except in
         the case of Employee's death), for a period of three (3) years from
         said termination, the benefits enumerated in Paragraph 6(a) and
         Paragraph 6(c) hereof.

         (y)      If the termination shall be other than pursuant to
                  subparagraph (d) above, the amount shall be equal to the sum
                  of

                  (1)      two hundred percent (200%) of Employee's
                           then-effective annual Base Salary; and

                  (2)      two hundred percent (200%) of Employee's
                           then-effective Bonus, as hereinafter defined.

         In addition, Employer shall continue to provide to Employee (except in
         the case of Employee's death), for a period of two (2) years from said
         termination, the benefits enumerated in Paragraph 6(a) and Paragraph
         6(c) hereof.

         10.      OPERATIVE PROVISIONS.

                  (a)      As used in this Agreement, the term "Bonus" shall
                           mean:

                           (i)      with respect to the most recent grant or
                                    award of restricted stock, pursuant to
                                    Employer's "Long Term Incentive Plan", made
                                    prior to the date of termination of
                                    Employee's employment, the Dollar value, as
                                    of the date of such grant or award, of the
                                    Long Term Incentive Plan restricted stock
                                    plan target for Employee as approved by the
                                    Compensation Committee of Employer's Board
                                    of Directors, which Dollar value is
                                    established by the Compensation Committee
                                    notwithstanding the number of shares
                                    actually received pursuant to such grant or
                                    award and notwithstanding the value of such
                                    shares actually received; plus

                           (ii)     the highest of (1) the average of the EVA
                                    bonuses actually paid to Employee for the
                                    two (2) years immediately preceding the
                                    year in which termination of employment
                                    occurs; (2) the average of the EVA bonuses
                                    which would have been paid to Employee for
                                    the two (2) years immediately preceding the
                                    year in which termination of employment
                                    occurs, assuming his EVA target bonus had
                                    been achieved for each such year; or (3)
                                    the amount of the EVA target


                                       8



                                    bonus for Employee for the year in which
                                    termination of employment occurs.

                  (b)      In the event of a termination of employment pursuant
                           to Paragraph 9 hereof, all restricted stock awards
                           of Employee shall become wholly unrestricted and all
                           unvested stock options of Employee shall become
                           fully vested in Employee, and all such agreements
                           pertaining thereto shall be read accordingly;
                           provided, however, that Employee shall not have any
                           such rights with respect to any stock issued under
                           any employee stock plan of Employer qualifying under
                           Section 402(a) et seq. of the Code if, and to the
                           extent, such rights would jeopardize the
                           qualification of such plan under said Section. As
                           used in the preceding sentence, "Code" means the
                           Internal Revenue Code of 1986 as amended from time
                           to time or any provisions from time to time enacted
                           and corresponding in substance thereto.

                  (c)      Paragraph 9 and this Paragraph 10 shall survive the
                           termination of this Agreement, and this Agreement
                           shall be read accordingly.

         11.      INTENTION OF PARTIES. It is the express understanding and
intention of Employer and Employee that the provisions of Paragraph 5 and
Paragraph 9 hereof shall be read together and be non-exclusive so that, in the
event of a termination of Employee's employment pursuant to Paragraph 9 of this
Employment Agreement, Employee shall receive both (i) all of the compensation
specified in Paragraph 9 hereof (including, but not limited to, the applicable
percentage of Employee's then-effective Base Salary and the applicable
percentage of the cash portion of Employee's Bonus) and (ii) one hundred
percent (100%) of the pro rata portion of both the cash and equity parts of
Employee's Bonus based on the number of days in the fiscal year falling within
the Term (which shall include the amount of any EVA bonus paid to Employee
during that year, if any), but in no event shall such pro rata portion be less
than the pro rata share of the highest of (i) the average of the EVA bonuses
actually paid to Employee for the two (2) years immediately preceding the year
in which termination of employment occurs; (ii) the average of the EVA bonuses
which would have been paid to Employee for the two (2) years immediately
preceding the year in which termination of employment occurs, assuming his EVA
target bonus had been achieved for each such year; or (iii) the amount of the
EVA target bonus for Employee for the year in which termination of employment
occurs. The amounts referred to in this Paragraph are in addition to the
benefits enumerated in Paragraphs 6(b) and 6(c) hereof.

         12.      CONDITIONS TO BENEFITS. Anything in this Agreement to the
contrary notwithstanding:

                  (a)      To receive the benefits enumerated in Paragraph 9
                           hereof, Employee shall execute and agree to be bound
                           by a release agreement substantially in the form
                           attached to this Agreement as Exhibit A and, to the
                           extent applicable, a resignation letter
                           substantially in the form attached as Exhibit B,
                           prior to,


                                       9



                           and as a condition to, receiving any payments or
                           benefits provided for in Paragraph 9 hereof or
                           otherwise following termination of his employment
                           hereunder [and, if applicable, the release agreement
                           may contain provisions required by federal, state or
                           local law (e.g., the Older Worker's Benefit
                           Protection Act) to effect a general release of all
                           claims].

                  (b)      Employee's right to receive any of the benefits
                           provided for in Paragraph 9 or otherwise in this
                           Agreement following termination of his employment
                           hereunder shall immediately cease and be of no
                           further force or effect if Employee violates any of
                           the covenants contained in Paragraphs 13, 14, 15 or
                           16 hereof.

         13.      COVENANT NOT-TO-DISCLOSE. Employer and Employee recognize
that, during the course of Employee's term of employment with Employer pursuant
to this Agreement, Employer will disclose to Employee information concerning
Employer and the Affiliates, their products, their customers, their services,
their trade secrets, their proprietary information and other information
concerning their business all of which constitute valuable assets of Employer
and the Affiliates. Employer and Employee further acknowledge that Employer
has, and will, invest considerable amounts of time, effort and corporate
resources in developing such valuable assets and that disclosure by Employee of
such assets to the public shall cause irreparable harm, damage and loss to
Employer and the Affiliates.

                  (a)      To protect these assets, Employee agrees that he
                           shall not, during the Restricted Period, advise or
                           disclose to any person, corporation, firm,
                           partnership or other entity whatsoever (except
                           Employer or an Affiliate), or any officer, director,
                           stockholder, partner or associate of any such
                           corporation, firm, partnership or entity any
                           information received from Employer by Employee
                           during the course of Employee's association with
                           Employer relating to the business affairs of
                           Employer and the Affiliates including information
                           concerning Employer's and the Affiliates' finances,
                           services, customers, customer lists, prospective
                           customers, staff, contemplated acquisitions (whether
                           of business or assets), ideas, proprietary
                           information, methods, marketing investigations,
                           surveys, research and any other information relating
                           to the business and objectives of Employer and the
                           Affiliates, except as permitted by Exhibit C hereof.

                  (b)      Employee further agrees that he shall not, during
                           the term of his employment or any time thereafter,
                           advise or disclose to any person or entity any trade
                           secret which Employer or any Affiliate has disclosed
                           to Employee during the course of his employment with
                           Employer.

                  (c)      In the event Employee's employment is terminated,
                           Employee agrees that, if requested by Employer, he
                           will acknowledge in writing that he received the
                           disclosures referred to herein and is under the
                           obligations referred to in this Agreement.


                                      10



                  (d)      This Paragraph 13 shall, except as otherwise
                           provided in this Agreement, survive the termination
                           of this Agreement.

         14.      COVENANT NOT-TO-INDUCE. Employee covenants and agrees that
during the Restricted Period, he will not, directly or indirectly, on his own
behalf or in the service or on behalf of others, hire, solicit, take away or
attempt to hire, solicit or take away any employee or other personnel of
Employer and the Affiliates. This Paragraph 14 shall, except as otherwise
provided in this Agreement, survive the termination of this Agreement.

         15.      COVENANT OF NON-DISPARAGEMENT AND COOPERATION. Employee
agrees that he shall not at any time during or following the term of this
Agreement make any remarks disparaging the conduct or character of Employer or
the Affiliates or any of Employer's or the Affiliates' current or former
agents, employees, officers, directors, successors or assigns (collectively the
"Related Companies"). In addition, Employee agrees to cooperate with the
Related Companies, at no extra cost, in any litigation or administrative
proceedings (e.g., EEOC charges) involving any matters with which Employee was
involved during Employee's employment with Employer. Employer shall reimburse
Employee for travel expenses approved by Employer or the Affiliates incurred in
providing such assistance. This Paragraph 15 shall survive the termination of
this Agreement.

         16.      COVENANT NOT-TO-COMPETE. Employer and Employee acknowledge
that, by virtue of Employee's responsibilities and authority, he shall, during
the course of his Employment, be instrumental in developing management services
related to the Business, much of which will be unavailable to those in
positions of lesser responsibility and authority. Employee further acknowledges
that the ability of such information to benefit a competitor or potential
competitor of Employer and the Affiliates shall cause irreparable harm, damage
and loss to Employer. To protect Employer and the Affiliates from Employee's
using or exploiting this information, Employee agrees that, if the employment
relationship between Employee and Employer terminates for any reason
whatsoever, then, in such event, for a period of one (1) year or, in the case
of Employee's termination pursuant to Paragraph 9(d) hereof, two (2) years,
from the date of Employee's termination of employment, Employee shall not
engage in management services related to the Business or in a similar capacity
for any other person or entity who engages in the Business in the United
States, Canada, Mexico, Brazil, Argentina, the United Kingdom or South Africa
(collectively, the "Restricted Territory"), and Employee shall not directly or
indirectly, own, manage, join, control, contract with, be employed by, act in
the capacity of an officer, director, trustee, shareholder or partner or
consultant, or participate in any manner in the ownership, management,
operation, or control of any business or person engaged in the Business in the
Restricted Territory; provided, however, Employee shall be permitted to own not
more than five percent (5%) of the stock of a corporation required to file
reports pursuant to the Securities Exchange Act of 1934. As to the foregoing,
Employee acknowledges that he has the ability to earn a comparable income
within or without the Restricted Territory as a manager or executive for
persons or entities not engaged in the Business and that earning a livelihood
by working for persons or entities not engaged in the Business within or
without the Restricted Territory would not constitute a hardship or an
unreasonable restriction on the


                                      11



Employee or restrict him from earning comparable income. This Paragraph 16
shall survive the termination of this Agreement.

         17.      SPECIFIC ENFORCEMENT. Employer and Employee expressly agree
that a violation of the covenants not-to-disclose, not-to-induce,
not-to-disparage and not-to-compete contained in Paragraphs 13, 14, 15 and 16
hereof, or any provision thereof, shall cause irreparable injury to Employer
and that, accordingly, Employer shall be entitled, in addition to any other
rights and remedies it may have at law or in equity, to an injunction enjoining
and restraining Employee from doing or continuing to do any such act and any
other violation or threatened violation of said Paragraphs 13, 14, 15 and 16
hereof.

         18.      SEVERABILITY. In the event any provision of this Agreement
shall be found to be void, the remaining provisions of this Agreement shall
nevertheless be binding with the same effect as though the void part were
deleted; provided, however, if Paragraphs 13, 14, 15 and 16 hereof shall be
declared invalid, in whole or in part, Employee shall execute, as soon as
possible, a supplemental agreement with Employer, granting Employer, to the
extent legally possible, the protection afforded by said Paragraphs. It is
expressly understood and agreed by the parties hereto that Employer shall not
be barred from enforcing the restrictive covenants contained in each of
Paragraphs 13, 14, 15 and 16 as each are separate and distinct, so that the
invalidity of any one or more of said covenants shall not affect the
enforceability and validity of the other covenants.

         19.      INCOME TAX WITHHOLDING. Employer or any other payor may
withhold from any compensation or benefits payable under this Agreement such
Federal, State, City or other taxes as shall be required pursuant to any law or
governmental regulation or ruling.

         20.      OTHER TAX CONSIDERATIONS. Notwithstanding any other provision
of this Agreement to the contrary, in the event that any payment or benefit
received or to be received by Employee is triggered by an event described in
subparagraph (d) of Paragraph 9 of this Agreement, whether such payment or
benefit is pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with Employer or any Affiliate of Employer
(hereinafter, all such payments and benefits being sometimes referred to as
"Total Payments"), and would not be deductible, either in whole or in part, by
Employer or an Affiliate making such payment or providing such benefit as a
result of Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), then, to the extent necessary to make such portion of the Total
Payments deductible (and after taking into account any reduction in the Total
Payments provided by reason of Section 280G of the Code in any such other plan,
arrangement or agreement), (A) the cash portion of the Total Payments provided
in this Paragraph 20 shall first be reduced (if necessary, to zero (0)), and
(B) all other non-cash Total Payments under this Paragraph 20 shall next be
reduced (if necessary, to zero (0)); provided, however, that the Employee's
payment shall only be reduced by this Paragraph 20 if Employer determines that
reducing the Total Payments would result in greater after-tax proceeds to the
Employee than if no such reduction in Total Payments had occurred. Any
determination required by the preceding sentence shall be made by independent
certified public accountants or tax counsel (hereinafter, such party shall
sometimes


                                      12



be hereinafter referred to as the "Independent Adviser") selected by Employer,
the selection of which shall be reasonably acceptable to Employee. In making
Employer's determination as to the application and effect of this Paragraph 20
on any payments or benefits received or to be received by Employee, (i) no
portion of the Total Payments shall be taken into account which in the opinion
of the Independent Adviser does not constitute a "parachute payment" within the
meaning of Section 280G(b)(2) of the Code, including by reason of Section
280G(b)(4)(A) of the Code; (ii) those Total Payments provided under this
Paragraph 20 shall be reduced only to the extent necessary so that the Total
Payments (other than those referred to in clause (i)) in their entirety
constitute reasonable compensation for services actually rendered within the
meaning of Section 280G(b)(4)(B) of the Code or are otherwise not subject to
disallowance as deductions, in the opinion of the Independent Adviser; and
(iii) the value of any non-cash benefit or any deferred payment or benefit
included in the Total Payments shall be determined by the Company's independent
certified public accountants in accordance with the principles of Sections
280G(d)(3) and (4) of the Code.

         21.      WAIVER. The waiver of a breach of any term of this Agreement
by any of the parties hereto shall not operate or be construed as a waiver by
such party of the breach of any other term of this Agreement or as a waiver of
a subsequent breach of the same term of this Agreement.

         22.      RIGHTS AND LIABILITIES UPON NOTICE OF TERMINATION. As soon as
notice of termination of this Agreement is given, Employee shall immediately
cease contact with all customers of Employer and shall forthwith surrender to
Employer all customer lists, documents and other property of Employer then in
his possession, compliance with which shall not be deemed to be a breach of
this Agreement by Employee. Pending the surrender of all such customer lists,
documents and other property to Employer, Employer may hold in abeyance any
payments due Employee pursuant to this Agreement.

         23.      ASSIGNMENT.

                  (a)      Employee shall not assign, transfer or convey this
                           Agreement, or in any way encumber the compensation
                           or other benefits payable to him hereunder, except
                           with the prior written consent of Employer or upon
                           Employee's death.

                  (b)      The covenants, terms and provisions set forth herein
                           shall be binding upon and shall inure to the benefit
                           of, and be enforceable by, Employer and its
                           successors and assigns.

         24.      NOTICES. All notices required herein shall be in writing and
shall be deemed to have been given when delivered personally or when deposited
in the U.S. Mail, certified or registered, postage prepaid, return receipt
requested, addressed as follows, to wit:


                                      13



                  If to Employer at:

                           160 Clairemont Avenue
                           Suite 200
                           Decatur, Georgia  30030

                  With a copy to:

                           Cohen Pollock Merlin Axelrod & Tanenbaum, P.C.
                           2100 RiverEdge Parkway
                           Suite 300
                           Atlanta, Georgia 30328-4656
                           Attn:  Elliott Cohen, Esquire

                  If to Employee at:

                           --------------------------------------------

                           --------------------------------------------

or at such other addresses as may, from time to time, be furnished to Employer
by Employee, or by Employer to Employee on the terms of this Paragraph.

         25.      BINDING EFFECT. This Agreement shall be binding on the
parties hereto and on their respective heirs, administrators, executors,
successors and permitted assigns.

         26.      ENFORCEABILITY. This Agreement contains the entire
understanding of the parties and may be altered, amended or modified only by a
writing executed by both of the parties hereto. This Agreement supersedes all
prior agreements and understandings by and between Employer and Employee
relating to Employee's employment.

         27.      APPLICABLE LAW. This Agreement and the rights and liabilities
of the parties hereto shall be governed by, and construed and interpreted in
accordance with, the laws of the State of Georgia.

         28.      COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, but all of which
together shall constitute but a single document.


                           [SIGNATURE PAGE TO FOLLOW]


                                      14



         IN WITNESS WHEREOF, Employee has hereunder set his hand and seal, and
Employer has caused this Agreement to be executed and delivered by its duly
authorized officers, all as of the day and year first above written.


                                                                         (SEAL)
- -------------------------------           -------------------------------
WITNESS                                   DANIEL H. POPKY


ATTEST:                                   ALLIED HOLDINGS, INC.

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


[CORPORATE SEAL]


                                      15

EX-10.2(A)

                                                                EXHIBIT 10.2(A)


                               FIRST AMENDMENT TO
                              EMPLOYMENT AGREEMENT

         THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT ("Amendment") is made as
of the 1st day of June, 2001, by and between DANIEL H. POPKY ("Employee") and
ALLIED HOLDINGS, INC. ("Employer").

         WHEREAS, Employer and Employee have entered into an Employment
Agreement dated February 23, 2000; and

         WHEREAS, Employer and Employee desire to amend the Employment
Agreement as set forth herein;

         NOW, THEREFORE, for and in consideration of the covenants and
conditions hereafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Employee and Employer
hereby agree as follows:

         1.       Notwithstanding anything in the Employment Agreement to the
contrary, Employer shall pay to Employee a bonus for the calendar year ending
December 31, 2001, in an amount not less than One Hundred Twenty-Five Thousand
Dollars ($125,000.00), with such bonus to be due and payable on or before
January 5, 2002. Employer and Employee acknowledge and agree that Employee
shall be entitled to participate in the Allied Holdings, Inc. EVA based
incentive plan and any other bonus plan utilized by Employer for calendar year
2001, and that the bonus paid pursuant to this First Amendment shall be
credited toward any bonus due to Employee under the EVA Plan or any other bonus
plan of the Company. Employer shall not be required to pay such bonus if
Employee terminates his employment on or before December 31, 2001 (other than a
termination by Employee pursuant to Paragraph 9(b) or 9(d) of the Employment
Agreement). In the event of termination of Employee for Cause, as defined by
the Employment Agreement, Employer shall pay to Employee a pro rata portion of
such bonus calculated from January 1, 2001 through the date of termination for
Cause.

         2.       Section 4(a) of the Employment Agreement shall be amended to
provide that the annual salary of Employee shall be Two Hundred Fifty Thousand
($275,000.00) and the remaining terms and conditions of Section 4(a) of the
Employment Agreement shall remain in effect without amendment.

         3.       All remaining terms and conditions of the Employment
Agreement which are not amended by this First Amendment shall remain in full
force and effect.

         IN WITNESS WHEREOF, the undersigned have executed this Amendment this
1st day of June, 2001.


                                    Employer:


                                    ALLIED HOLDINGS, INC.


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


                                    Employee:


                                    -------------------------------------------
                                    DANIEL H. POPKY

EX-10.3

                                                                   EXHIBIT 10.3


                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT is made and entered into as of the 23rd day
of February, 2000, by and between THOMAS M. DUFFY ("Employee") and ALLIED
HOLDINGS, INC., a Georgia corporation ("Employer").

                                  WITNESSETH

         WHEREAS, Employer, through its Affiliates (as hereinafter defined), is
engaged in the transportation of automobiles and light trucks from
manufacturers to retailers, and other related activities (the "Business"); and

         WHEREAS, Employee has practiced law for a number of years, has
pertinent legal experience, and has, from time to time, provided legal services
to Employer; and

         WHEREAS, Employer desires in-house legal counsel and Employee desires
to serve as Employer's in-house legal counsel; and

         WHEREAS, Employer and Employee have made and entered into a previous
employment agreement; and

         WHEREAS, Employer and Employee deem it in their respective best
interests to clarify the duties and obligations, each to the other, by
executing this new Employment Agreement,

         NOW, THEREFORE, for and in consideration of the covenants and
conditions hereinafter set forth, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Employer and
Employee hereby mutually agree that all previous employment agreements are
superseded, null, void, and of no further force and effect, and Employer and
Employee further mutually agree as follows:

         1.       DEFINITIONS.

                  (a)      "Affiliate" means any corporation, partnership or
                           other entity of which Employer owns at least eighty
                           percent (80%) of the outstanding equity and voting
                           rights directly or indirectly through any other
                           corporation, partnership or other entity.

                  (b)      "Base Salary" means the annual salary payable
                           pursuant to Paragraph 4(a) hereof as adjusted, from
                           time to time, by Employer.

                  (c)      "Cause" means (i) the commission by Employee of an
                           act constituting a felony and Employee's conviction
                           thereof; (ii) Employee's prolonged absence, without
                           the consent of Employer, other than as a result of
                           Employee's Disability or permitted absence or
                           vacation; (iii) conduct of Employee which amounts to
                           fraud, dishonesty, gross or willful neglect of





                           duties; or (iv) engaging in activities prohibited by
                           Paragraphs 13, 14, or 15 hereof.

                  (d)      "Disability" shall conclusively be deemed to have
                           occurred with respect to Employee (i) if Employee
                           shall be receiving payments pursuant to a policy of
                           long-term disability income insurance; (ii) if
                           Employee shall have no long-term disability income
                           coverage then in force and any insurance company
                           insuring Employee's life shall agree to waive the
                           premiums due on such policy pursuant to a long-term
                           disability waiver of premium provision in the
                           contract of life insurance; or (iii) if Employee
                           shall have no long-term disability waiver of premium
                           provision in any contract of life insurance, then if
                           Employee shall be receiving long-term disability
                           benefits from or through the Social Security
                           Administration; provided, however, that in the event
                           Employee's disability shall, otherwise and in good
                           faith, come into question (and, for purposes of this
                           proviso, "disability" shall mean the permanent and
                           continuous inability of Employee to perform
                           substantially all of the duties being performed
                           immediately prior to his disability coming into
                           question), and a dispute shall arise with respect
                           thereto, then Employee (or his personal
                           representatives) shall appoint a medical doctor,
                           Employer shall appoint a medical doctor, and said
                           two (2) doctors shall, in turn, appoint a third
                           party medical doctor who shall examine Employee to
                           determine the question of disability and whose
                           determination shall be binding upon all parties to
                           this Agreement.

                  (e)      "Restricted Period" means the period commencing as
                           of the date hereof and ending on that date one (1)
                           year after the termination of Employee's employment
                           with Employer for any reason, whether voluntary or
                           involuntary.

                  (f)      "Term" means the Initial Term and any Renewal Term
                           (each as defined in Paragraph 2 hereof); provided,
                           however, that, in the event Employee's employment
                           shall terminate by reason of the applicability of
                           Paragraph 8 hereof then, in such event, the "Term"
                           shall end upon the termination of Employee's
                           employment.

         2.       TERM. Subject to the provisions hereinafter set forth, the
Term of this Agreement shall commence as of the date hereof and shall end on
December 31, 2001 (the "Initial Term"). Upon the expiration of the Initial
Term, and on the expiration of each successive Renewal Term (as hereinafter
defined), Employee's employment shall be automatically renewed for an
additional term of one (1) years (the "Renewal Term(s)"), unless written
notification of termination is given by either party to the other party not
less than three (3) months prior to the expiration of the Initial Term or, as
the case may be, the then-current Renewal Term.


                                       2



         3.       DUTIES.

                  (a)      Employee shall, during the Term, serve as
                           "Vice-President, Corporate Affairs and General
                           Counsel." Employee's principal duties shall be to
                           (1) act as legal counsel to Employer and (2) perform
                           such executive, managerial and administrative duties
                           as the Chairman and Board of Directors of Employer
                           may, from time to time, reasonably request and which
                           shall not be inconsistent or incompatible with
                           Employee's role as legal counsel.

                           ANY IMPLICATION ANYWHERE IN THIS AGREEMENT TO THE
                           CONTRARY NOTWITHSTANDING, EMPLOYER AND EMPLOYEE
                           RECOGNIZE THAT, AS A MEMBER OF THE STATE BAR OF
                           GEORGIA, EMPLOYEE SHALL, AT ALL TIMES, (I) BE BOUND
                           BY AND ACT IN ACCORDANCE WITH THE RULES, REGULATIONS
                           AND POLICIES OF THE STATE BAR OF GEORGIA, INCLUDING
                           WITHOUT LIMITATION THE CANONS OF ETHICS AND
                           STANDARDS OF CONDUCT, AS FROM TIME TO TIME
                           PROMULGATED AND/OR AMENDED, AND (II) ACT IN SUCH
                           MANNER AS TO PROTECT THE ATTORNEY-CLIENT PRIVILEGE
                           BETWEEN HIM AND EMPLOYER UNLESS EMPLOYER SHALL
                           SPECIFICALLY CONSENT, IN A WRITING SIGNED BY THE
                           CHAIRMAN OR PRESIDENT OF EMPLOYER, TO THE WAIVER OF
                           SUCH PRIVILEGE. IN NO EVENT SHALL EMPLOYEE'S
                           EMPLOYMENT BE TERMINATED, NOR SHALL EMPLOYEE BE
                           DEEMED TO BE IN BREACH OF THIS AGREEMENT, BY REASON
                           OF ANY ACTION OR DECISION TAKEN BY HIM IN GOOD FAITH
                           WHILE ACTING PURSUANT TO AND IN ACCORDANCE WITH THE
                           PRECEDING SENTENCE.

                  (b)      Subject to the preceding subparagraph, during the
                           Term, Employee shall devote substantially all of his
                           time, energy and skill to performing the duties of
                           his employment (vacations as provided hereunder and
                           reasonable absences because of illness excepted),
                           shall faithfully and industriously perform such
                           duties, and shall use his best efforts to follow and
                           implement all management policies and decisions of
                           Employer. Employee shall not become personally
                           involved in the management or operations of any
                           other company, partnership, proprietorship or other
                           entity, other than any Affiliate, without the prior
                           written consent of Employer; provided, however, that
                           so long as it does not interfere with Employee's
                           employment hereunder, Employee may, with Employer's
                           consent, (1) serve as a director, officer or partner
                           in a company that does not compete with the Business
                           of Employer and the Affiliates so long as the
                           aggregate amount of time spent by Employee in all
                           such capacities shall not exceed twenty (20) hours
                           per month, and (2) serve as an officer or director
                           of, or otherwise participate in, educational,
                           welfare, social, religious, civic, trade and
                           industry-related organizations.


                                       3



         4.       BASE SALARY.

                  (a)      For and in consideration of the services to be
                           rendered by Employee pursuant to this Agreement,
                           Employer shall pay to Employee, for each year during
                           the Term, an annual salary of Two Hundred Thousand
                           Dollars ($200,000.00), payable in equal semi-monthly
                           installments in accordance with Employer's payroll
                           practices. Employee's salary shall be reviewed by
                           the Board of Directors of Employer annually and, in
                           the sole discretion of the Board of Directors, may
                           be increased, but not decreased.

                  (b)      In addition to the Base Salary paid to Employee
                           pursuant to Paragraph 4(a) hereof, Employee shall be
                           eligible to receive monthly compensation of up to
                           (x) 3% of (y) Employee's Base Salary multiplied by
                           one-twelfth (1/12), through Employer's anticipated
                           "Monthly R+" performance incentive plan, as such
                           plan shall be developed, implemented and maintained
                           from time to time by Employer. The pertinent terms
                           of the plan and the specific performance objectives
                           to be developed to measure Employee's performance
                           under such plan shall be provided to Employee at
                           such time as Employer shall have implemented the
                           same. This Paragraph 4(b) shall not create any
                           entitlement for Employee, require Employer to
                           actually implement the Monthly R+ plan or prevent
                           Employer from, in its sole and exclusive discretion,
                           terminating or changing the terms to any such plan
                           Employer does so implement.

         5.       BONUS COMPENSATION. Employee shall, with respect to each
calendar year of Employer ending during the Term, be entitled to participate in
the Allied Holdings, Inc. EVA Based Incentive Plan, as the same may be from
time to time amended and in effect (the "EVA Plan"). The Employee's Target
Bonus for purposes of the EVA Plan shall be such percentage of Employee's Base
Salary as shall, from time to time, be determined by Employer. Employee's
actual bonus shall be calculated in accordance with the terms of the EVA Plan.
Employee shall be provided with a copy of the EVA Plan within thirty (30) days
of execution of this Agreement.

         6.       OTHER BENEFITS. During the Term, Employer shall provide the
following benefits to Employee:

                  (a)      Employee shall be entitled to participate in all
                           group medical and hospitalization benefit programs,
                           dental care, sick leave, life insurance or other
                           benefit plans for highly compensated employees of
                           Employer or any Affiliate as are now or hereafter
                           provided by Employer or any Affiliate, in each case
                           in accordance with the terms and conditions of each
                           such plan and benefit package.

                  (b)      Employee shall be entitled to participate in all
                           long term incentive plans, stock option plans and
                           other similar plans for highly compensated employees
                           of Employer as are now or hereafter provided by
                           Employer or


                                       4



                           any Affiliate, in each case in accordance with the
                           terms and conditions of each such plan.

                  (c)      Employee shall be provided with the use of an
                           automobile, which shall be comparable to other
                           automobiles Employer provides to persons serving in
                           the capacity of Vice-President of Employer, or
                           President of an Affiliate, and which shall be chosen
                           by Employee from a list of automobiles Employer
                           typically makes available to its Vice-Presidents and
                           Presidents of its Affiliates and Employer shall pay
                           for the cost of all insurance, ad valorem taxes and
                           tag charges for such automobile and all operating
                           and maintenance charges for such automobile. In
                           addition, Employee shall be entitled to an
                           automobile allowance for his spouse comparable to
                           the spousal allowance Employer provides to persons
                           serving in the capacity of Vice-President of
                           Employer, or President of an Affiliate, as
                           determined from time to time by the Board of
                           Directors of Employer.

                  (d)      Employee shall be provided with the use of a
                           cellular telephone, at no cost to Employee.

                  (e)      Employer shall reimburse Employee for dues paid by
                           Employee for membership in such professional
                           organizations and eating clubs as shall, from time
                           to time, be deemed appropriate and necessary by
                           Employer.

                  (f)      Employee shall, at all times, have available to him
                           an expense account, including the use of a corporate
                           American Express card, to defray ordinary and
                           necessary business expenses incurred in the
                           performance of his duties hereunder. Employee shall
                           be reimbursed for such expenses upon presentation
                           and approval of expense statements or written
                           vouchers or other supporting documents as may be
                           reasonably requested in advance by Employer, which
                           approval shall not be unreasonably withheld or
                           delayed.

         The benefits described in subparagraph (a) of this Paragraph shall not
be construed to require Employer to establish any such plans or programs or to
prevent Employer from modifying or terminating any such plans or programs, and
no such action or failure thereof shall affect this Agreement; provided,
however, that in the event of any reduction in the group medical and
hospitalization benefits in place as of the date hereof, the salary payable to
Employee shall be increased, as of the effective date of such reduction, by
that amount necessary to enable Employee to supplement the benefits provided by
Employer to maintain the level of benefits currently provided to him by it.

         7.       VACATION. Employee shall receive no fewer than three (3)
weeks of paid vacation for each year during the Term. Scheduling of vacation
shall be subject to the prior approval of Employer (which approval shall not be
unreasonably withheld). Vacation time shall not accrue, and in the event
Employee prior to the end of any year shall not use all of his vacation time
for such year, such vacation time shall be forfeited.


                                       5



         8.       TERMINATION. Anything herein to the contrary notwithstanding,
Employee's employment hereunder shall terminate upon the first to occur of any
of the following events:

                  (a)      Employee's Disability;

                  (b)      Employee's death;

                  (c)      Employee's materially breaching this Agreement by
                           the non-performance or non-observance of any
                           material term or condition of this Agreement, which
                           breach shall not be corrected within forty-five (45)
                           days after receipt of written notice of same from
                           Employer;

                  (d)      Employer's sending Employee written notice
                           terminating his employment hereunder prior to the
                           expiration of the Initial Term or any Renewal Term
                           in accordance with Paragraph 2 hereof;

                  (e)      Employee's voluntarily terminating his employment
                           hereunder prior to the expiration of the Initial
                           Term or any Renewal Term; or

                  (f)      Employee's being terminated for Cause.

         9.       TERMINATION PAYMENT. Subject to the provisions of Paragraph
12 hereof, in the event

                  (a)      Employee's employment shall terminate pursuant to
                           Paragraph 8(a) (Disability) or Paragraph 8(b)
                           (death) hereof; or

                  (b)      Employee shall terminate his employment as a result
                           of

                           (i)      any failure to elect or reelect or to
                                    appoint or reappoint Employee to the
                                    position of Vice-President, Corporate
                                    Affairs and General Counsel of Employer
                                    unless agreed to by Employee;

                           (ii)     any material change by Employer in
                                    Employee's function, duties,
                                    responsibility, importance, or scope from
                                    the position and attributes thereof
                                    described in Paragraph 3 hereof unless
                                    agreed to by Employee, or any change in
                                    location of the principal offices of
                                    Employer outside the metropolitan Atlanta,
                                    Georgia, area, or any requirement that
                                    Employee perform substantially all of his
                                    duties outside the metropolitan Atlanta,
                                    Georgia, area (and any such material change
                                    or relocation of Employer or Employee shall
                                    be deemed a continuing breach of this
                                    Agreement);


                                       6



                           (iii)    the liquidation, dissolution, consolidation
                                    or merger of Employer (other than a merger
                                    or other combination of Employer and an
                                    Affiliate); provided, however, that if
                                    there shall be a termination of employment
                                    resulting from events described in this
                                    subsection (iii) and in subsection (d)
                                    below, then such termination shall be
                                    deemed to fall within the terms of
                                    subsection (d) below which shall control
                                    and be paramount;

                           (iv)     any other material breach of this Agreement
                                    by Employer which shall not be cured within
                                    thirty (30) days after receipt of written
                                    notice of same from Employee;

                           (v)      Employer filing a petition for protection
                                    or relief from creditors under the federal
                                    bankruptcy law, or any petition shall be
                                    filed against Employer under the federal
                                    bankruptcy law, or shall admit in writing
                                    its inability to pay its debts or shall
                                    make an assignment for the benefit of
                                    creditors, or a petition or application for
                                    the appointment of a receiver or liquidator
                                    or custodian of Employer is filed, or
                                    Employer shall seek a composition with
                                    creditors; or

                  (c)      Employee's employment shall be terminated by
                           Employer for any reason other than for Cause or
                           because Employer elects not to extend this Agreement
                           beyond the Initial or any Renewal Term; or

                  (d)      If (i) Employer undergoes any change in control or
                           ownership whereby Employer is reorganized, merged,
                           or consolidated with one or more corporations as a
                           result of which the owners of all of the outstanding
                           shares of common stock immediately prior to such
                           reorganization, merger or consolidation own in the
                           aggregate less than seventy percent (70%) of the
                           outstanding shares of common stock of the Employer
                           or any other entity into which Employer shall be
                           merged or consolidated immediately following the
                           consummation thereof (hereinafter, "Employer's
                           successor-in-interest"), or (ii) the sale, transfer
                           or other disposition of all or substantially all of
                           the assets or more than thirty percent (30%) of the
                           then outstanding shares of common stock of Employer
                           is effectuated, other than as a result of a merger
                           or other combination of Employer and an Affiliate,
                           or (iii) the acquisition by any "person" as used for
                           purposes of Section 13(d) or 14(d) of the Securities
                           Exchange Act of 1934 of beneficial ownership (within
                           the meaning of Rule 13d-3 promulgated under the
                           Exchange Act) of twenty percent (20%) or more of the
                           combined voting power of Employer's then outstanding
                           voting securities is effectuated; or (iv) the
                           individuals who, as of the date of execution of this
                           Agreement, are members of the Board of Directors
                           (the "incumbent Board") cease for any reason to
                           constitute at least two-thirds (2/3) of the Board;
                           provided, however, that if the election, or
                           nomination for election


                                       7



                           by the shareholders of any new director was approved
                           by a vote of at least two-thirds (2/3) of the
                           incumbent Board, such new director shall, for
                           purposes of this Agreement, be considered as a
                           member of the incumbent Board, and (a) Employee's
                           employment with Employer or Employer's
                           successor-in-interest is terminated by Employer or
                           Employer's successor-in-interest (as the case may
                           be) or Employee for any reason, or (b) Employee's
                           employment under this Agreement is not extended by
                           Employer or Employer's successor-in-interest for any
                           Renewal Term, and such termination or non-renewal
                           occurs within two (2) years after the closing of the
                           transaction which resulted in the change in control,

then Employer shall, depending upon the reason for the termination of
Employee's employment, immediately pay in cash to Employee an amount determined
as follows:

         (x)      If the termination shall be pursuant to subparagraph (d)
                  above, the amount shall be equal to the sum of

                  (1)      three hundred percent (300%) of Employee's
                           then-effective annual Base Salary; and

                  (2)      three hundred percent (300%) of Employee's
                           then-effective Bonus, as hereinafter defined.

         In addition, Employer shall continue to provide to Employee (except in
         the case of Employee's death), for a period of three (3) years from
         said termination, the benefits enumerated in Paragraph 6(a) and
         Paragraph 6(c) hereof.

         (y)      If the termination shall be other than pursuant to
                  subparagraph (d) above, the amount shall be equal to the sum
                  of

                  (1)      two hundred percent (200%) of Employee's
                           then-effective annual Base Salary; and

                  (2)      two hundred percent (200%) of Employee's
                           then-effective Bonus, as hereinafter defined.

         In addition, Employer shall continue to provide to Employee (except in
         the case of Employee's death), for a period of two (2) years from said
         termination, the benefits enumerated in Paragraph 6(a) and Paragraph
         6(c) hereof.

         10.      OPERATIVE PROVISIONS.

                  (a)      As used in this Agreement, the term "Bonus" shall
                           mean:


                                       8



                           (i)      with respect to the most recent grant or
                                    award of restricted stock, pursuant to
                                    Employer's "Long Term Incentive Plan", made
                                    prior to the date of termination of
                                    Employee's employment, the Dollar value, as
                                    of the date of such grant or award, of the
                                    Long Term Incentive Plan restricted stock
                                    plan target for Employee as approved by the
                                    Compensation Committee of Employer's Board
                                    of Directors, which Dollar value is
                                    established by the Compensation Committee
                                    notwithstanding the number of shares
                                    actually received pursuant to such grant or
                                    award and notwithstanding the value of such
                                    shares actually received; plus

                           (ii)     the highest of (1) the average of the EVA
                                    bonuses actually paid to Employee for the
                                    two (2) years immediately preceding the
                                    year in which termination of employment
                                    occurs; (2) the average of the EVA bonuses
                                    which would have been paid to Employee for
                                    the two (2) years immediately preceding the
                                    year in which termination of employment
                                    occurs, assuming his EVA target bonus had
                                    been achieved for each such year; or (3)
                                    the amount of the EVA target bonus for
                                    Employee for the year in which termination
                                    of employment occurs.

                  (b)      In the event of a termination of employment pursuant
                           to Paragraph 9 hereof, all restricted stock awards
                           of Employee shall become wholly unrestricted and all
                           unvested stock options of Employee shall become
                           fully vested in Employee, and all such agreements
                           pertaining thereto shall be read accordingly;
                           provided, however, that Employee shall not have any
                           such rights with respect to any stock issued under
                           any employee stock plan of Employer qualifying under
                           Section 402(a) et seq. of the Code if, and to the
                           extent, such rights would jeopardize the
                           qualification of such plan under said Section. As
                           used in the preceding sentence, "Code" means the
                           Internal Revenue Code of 1986 as amended from time
                           to time or any provisions from time to time enacted
                           and corresponding in substance thereto.

                  (c)      Paragraph 9 and this Paragraph 10 shall survive the
                           termination of this Agreement, and this Agreement
                           shall be read accordingly.

         11.      INTENTION OF PARTIES. It is the express understanding and
intention of Employer and Employee that the provisions of Paragraph 5 and
Paragraph 9 hereof shall be read together and be non-exclusive so that, in the
event of a termination of Employee's employment pursuant to Paragraph 9 of this
Employment Agreement, Employee shall receive both (i) all of the compensation
specified in Paragraph 9 hereof (including, but not limited to, the applicable
percentage of Employee's then-effective Base Salary and the applicable
percentage of the cash portion of Employee's Bonus) and (ii) one hundred
percent (100%) of the pro rata portion of


                                       9



both the cash and equity parts of Employee's Bonus based on the number of days
in the fiscal year falling within the Term (which shall include the amount of
any EVA bonus paid to Employee during that year, if any), but in no event shall
such pro rata portion be less than the pro rata share of the highest of (i) the
average of the EVA bonuses actually paid to Employee for the two (2) years
immediately preceding the year in which termination of employment occurs; (ii)
the average of the EVA bonuses which would have been paid to Employee for the
two (2) years immediately preceding the year in which termination of employment
occurs, assuming his EVA target bonus had been achieved for each such year; or
(iii) the amount of the EVA target bonus for Employee for the year in which
termination of employment occurs. The amounts referred to in this Paragraph are
in addition to the benefits enumerated in Paragraphs 6(b) and 6(c) hereof.

         12.      CONDITIONS TO BENEFITS. Anything in this Agreement to the
contrary notwithstanding:

                  (a)      To receive the benefits enumerated in Paragraph 9
                           hereof, Employee shall execute and agree to be bound
                           by a release agreement substantially in the form
                           attached to this Agreement as Exhibit A and, to the
                           extent applicable, a resignation letter
                           substantially in the form attached as Exhibit B,
                           prior to, and as a condition to, receiving any
                           payments or benefits provided for in Paragraph 9
                           hereof or otherwise following termination of his
                           employment hereunder [and, if applicable, the
                           release agreement may contain provisions required by
                           federal, state or local law (e.g., the Older
                           Worker's Benefit Protection Act) to effect a general
                           release of all claims].

                  (b)      Employee's right to receive any of the benefits
                           provided for in Paragraph 9 or otherwise in this
                           Agreement following termination of his employment
                           hereunder shall immediately cease and be of no
                           further force or effect if Employee violates any of
                           the covenants contained in Paragraphs 13, 14, 15 or
                           16 hereof.

         13.      COVENANT NOT-TO-DISCLOSE. Employer and Employee recognize
that, during the course of Employee's term of employment with Employer pursuant
to this Agreement, Employer will disclose to Employee information concerning
Employer and the Affiliates, their products, their customers, their services,
their trade secrets, their proprietary information and other information
concerning their business all of which constitute valuable assets of Employer
and the Affiliates. Employer and Employee further acknowledge that Employer
has, and will, invest considerable amounts of time, effort and corporate
resources in developing such valuable assets and that disclosure by Employee of
such assets to the public shall cause irreparable harm, damage and loss to
Employer and the Affiliates.

                  (a)      To protect these assets, Employee agrees that he
                           shall not, during the Restricted Period, advise or
                           disclose to any person, corporation, firm,
                           partnership or other entity whatsoever (except
                           Employer or an Affiliate), or any officer, director,
                           stockholder, partner or associate of any such
                           corporation, firm, partnership or entity any
                           information received from


                                      10



                           Employer by Employee during the course of Employee's
                           association with Employer relating to the business
                           affairs of Employer and the Affiliates including
                           information concerning Employer's and the
                           Affiliates' finances, services, customers, customer
                           lists, prospective customers, staff, contemplated
                           acquisitions (whether of business or assets), ideas,
                           proprietary information, methods, marketing
                           investigations, surveys, research and any other
                           information relating to the business and objectives
                           of Employer and the Affiliates, except as permitted
                           by Exhibit C hereof.

                  (b)      Employee further agrees that he shall not, during
                           the term of his employment or any time thereafter,
                           advise or disclose to any person or entity any trade
                           secret which Employer or any Affiliate has disclosed
                           to Employee during the course of his employment with
                           Employer.

                  (c)      In the event Employee's employment is terminated,
                           Employee agrees that, if requested by Employer, he
                           will acknowledge in writing that he received the
                           disclosures referred to herein and is under the
                           obligations referred to in this Agreement.

                  (d)      This Paragraph 13 shall, except as otherwise
                           provided in this Agreement, survive the termination
                           of this Agreement.

         14.      COVENANT NOT-TO-INDUCE. Employee covenants and agrees that
during the Restricted Period, he will not, directly or indirectly, on his own
behalf or in the service or on behalf of others, hire, solicit, take away or
attempt to hire, solicit or take away any employee or other personnel of
Employer and the Affiliates. This Paragraph 14 shall, except as otherwise
provided in this Agreement, survive the termination of this Agreement.

         15.      COVENANT OF NON-DISPARAGEMENT AND COOPERATION. Employee
agrees that he shall not at any time during or following the term of this
Agreement make any remarks disparaging the conduct or character of Employer or
the Affiliates or any of Employer's or the Affiliates' current or former
agents, employees, officers, directors, successors or assigns (collectively the
"Related Companies"). In addition, Employee agrees to cooperate with the
Related Companies, at no extra cost, in any litigation or administrative
proceedings (e.g., EEOC charges) involving any matters with which Employee was
involved during Employee's employment with Employer. Employer shall reimburse
Employee for travel expenses approved by Employer or the Affiliates incurred in
providing such assistance. This Paragraph 15 shall survive the termination of
this Agreement.

         16.      COVENANT NOT-TO-COMPETE. Employer and Employee acknowledge
that, by virtue of Employee's responsibilities and authority, he shall, during
the course of his Employment, be instrumental in developing, and shall receive,
highly confidential information concerning Employer, its customers, its
services, its trade secrets, its proprietary information and other information
concerning the business of transporting automobiles and light trucks from the
manufacturer to retailers (and related activities) and the logistics business
in connection with


                                      11



automobiles and light trucks (all of which is, collectively, referred to as the
"Business"), much of which will be unavailable to those in positions of lesser
responsibility and authority. Employee further acknowledges that the ability of
such information to benefit a competitor or potential competitor of Employer
and the Affiliates shall cause irreparable harm, damage and loss to Employer
and the Affiliates. To protect Employer from Employee's using or exploiting
this information, Employee agrees that, if the employment relationship between
Employee and Employer terminates for any reason whatsoever, then, in such
event, for a period of one (1) year or, in the case of Employee's termination
pursuant to Paragraph 9(d) hereof, two (2) years from the date of Employee's
termination of employment, Employee shall not serve as general counsel or in a
similar capacity for any other person or entity who engages in the Business in
the United States, Canada, Mexico, Brazil, Argentina, the United Kingdom or
South Africa (collectively, the "Restricted Territory"), and Employee shall not
directly or indirectly, own, manage, join, control, contract with, be employed
by, act in the capacity of an officer, director, trustee, shareholder or
partner or consultant, or participate in any manner in the ownership,
management, operation, or control of any business or person engaged in the
Business in the Restricted Territory; provided, however, Employee shall be
permitted to own not more than five percent (5%) of the stock of a corporation
required to file reports pursuant to the Securities Exchange Act of 1934. As to
the foregoing, Employee acknowledges that he has the ability to earn a
comparable income within or without the Restricted Territory as an attorney for
persons or entities not engaged in the Business and that earning a livelihood
for clients not engaged in the Business within or without the Restricted
Territory would not constitute a hardship or an unreasonable restriction on the
Employee or restrict him from earning comparable income. This Paragraph 16
shall survive the termination of this Agreement.

         17.      SPECIFIC ENFORCEMENT. Employer and Employee expressly agree
that a violation of the covenants not-to-disclose, not-to-induce,
not-to-disparage and not-to-compete contained in Paragraphs 13, 14, 15 and 16
hereof, or any provision thereof, shall cause irreparable injury to Employer
and that, accordingly, Employer shall be entitled, in addition to any other
rights and remedies it may have at law or in equity, to an injunction enjoining
and restraining Employee from doing or continuing to do any such act and any
other violation or threatened violation of said Paragraphs 13, 14, 15 and 16
hereof.

         18.      SEVERABILITY. In the event any provision of this Agreement
shall be found to be void, the remaining provisions of this Agreement shall
nevertheless be binding with the same effect as though the void part were
deleted; provided, however, if Paragraphs 13, 14, 15 and 16 hereof shall be
declared invalid, in whole or in part, Employee shall execute, as soon as
possible, a supplemental agreement with Employer, granting Employer, to the
extent legally possible, the protection afforded by said Paragraphs. It is
expressly understood and agreed by the parties hereto that Employer shall not
be barred from enforcing the restrictive covenants contained in each of
Paragraphs 13, 14, 15 and 16 as each are separate and distinct, so that the
invalidity of any one or more of said covenants shall not affect the
enforceability and validity of the other covenants.


                                      12



         19.      INCOME TAX WITHHOLDING. Employer or any other payor may
withhold from any compensation or benefits payable under this Agreement such
Federal, State, City or other taxes as shall be required pursuant to any law or
governmental regulation or ruling.

         20.      OTHER TAX CONSIDERATIONS. Notwithstanding any other provision
of this Agreement to the contrary, in the event that any payment or benefit
received or to be received by Employee is triggered by an event described in
subparagraph (d) of Paragraph 9 of this Agreement, whether such payment or
benefit is pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with Employer or any Affiliate of Employer
(hereinafter, all such payments and benefits being sometimes referred to as
"Total Payments"), and would not be deductible, either in whole or in part, by
Employer or an Affiliate making such payment or providing such benefit as a
result of Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), then, to the extent necessary to make such portion of the Total
Payments deductible (and after taking into account any reduction in the Total
Payments provided by reason of Section 280G of the Code in any such other plan,
arrangement or agreement), (A) the cash portion of the Total Payments provided
in this Paragraph 20 shall first be reduced (if necessary, to zero (0)), and
(B) all other non-cash Total Payments under this Paragraph 20 shall next be
reduced (if necessary, to zero (0)); provided, however, that the Employee's
payment shall only be reduced by this Paragraph 20 if Employer determines that
reducing the Total Payments would result in greater after-tax proceeds to the
Employee than if no such reduction in Total Payments had occurred. Any
determination required by the preceding sentence shall be made by independent
certified public accountants or tax counsel (hereinafter, such party shall
sometimes be hereinafter referred to as the "Independent Adviser") selected by
Employer, the selection of which shall be reasonably acceptable to Employee. In
making Employer's determination as to the application and effect of this
Paragraph 20 on any payments or benefits received or to be received by
Employee, (i) no portion of the Total Payments shall be taken into account
which in the opinion of the Independent Adviser does not constitute a
"parachute payment" within the meaning of Section 280G(b)(2) of the Code,
including by reason of Section 280G(b)(4)(A) of the Code; (ii) those Total
Payments provided under this Paragraph 20 shall be reduced only to the extent
necessary so that the Total Payments (other than those referred to in clause
(i)) in their entirety constitute reasonable compensation for services actually
rendered within the meaning of Section 280G(b)(4)(B) of the Code or are
otherwise not subject to disallowance as deductions, in the opinion of the
Independent Adviser; and (iii) the value of any non-cash benefit or any
deferred payment or benefit included in the Total Payments shall be determined
by the Company's independent certified public accountants in accordance with
the principles of Sections 280G(d)(3) and (4) of the Code.

         21.      WAIVER. The waiver of a breach of any term of this Agreement
by any of the parties hereto shall not operate or be construed as a waiver by
such party of the breach of any other term of this Agreement or as a waiver of
a subsequent breach of the same term of this Agreement.


                                      13



         22.      RIGHTS AND LIABILITIES UPON NOTICE OF TERMINATION. As soon as
notice of termination of this Agreement is given, Employee shall immediately
cease contact with all customers of Employer and shall forthwith surrender to
Employer all customer lists, documents and other property of Employer then in
his possession, compliance with which shall not be deemed to be a breach of
this Agreement by Employee. Pending the surrender of all such customer lists,
documents and other property to Employer, Employer may hold in abeyance any
payments due Employee pursuant to this Agreement.

         23.      ASSIGNMENT.

                  (a)      Employee shall not assign, transfer or convey this
                           Agreement, or in any way encumber the compensation
                           or other benefits payable to him hereunder, except
                           with the prior written consent of Employer or upon
                           Employee's death.

                  (b)      The covenants, terms and provisions set forth herein
                           shall be binding upon and shall inure to the benefit
                           of, and be enforceable by, Employer and its
                           successors and assigns.

         24.      NOTICES. All notices required herein shall be in writing and
shall be deemed to have been given when delivered personally or when deposited
in the U.S. Mail, certified or registered, postage prepaid, return receipt
requested, addressed as follows, to wit:

                  If to Employer at:

                           160 Clairemont Avenue
                           Suite 200
                           Decatur, Georgia  30030

                  With a copy to:

                           Cohen Pollock Merlin Axelrod & Tanenbaum, P.C.
                           2100 RiverEdge Parkway
                           Suite 300
                           Atlanta, Georgia 30328-4656
                           Attn:  Elliott Cohen, Esquire

                  If to Employee at:

                           2416 Hyde Manor Drive
                           Atlanta, Georgia 30327

or at such other addresses as may, from time to time, be furnished to Employer
by Employee, or by Employer to Employee on the terms of this Paragraph.

         25.      BINDING EFFECT. This Agreement shall be binding on the
parties hereto and on their respective heirs, administrators, executors,
successors and permitted assigns.


                                      14



         26.      ENFORCEABILITY. This Agreement contains the entire
understanding of the parties and may be altered, amended or modified only by a
writing executed by both of the parties hereto. This Agreement supersedes all
prior agreements and understandings by and between Employer and Employee
relating to Employee's employment.

         27.      APPLICABLE LAW. This Agreement and the rights and liabilities
of the parties hereto shall be governed by, and construed and interpreted in
accordance with, the laws of the State of Georgia.

         28.      COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, but all of which
together shall constitute but a single document.

         IN WITNESS WHEREOF, Employee has hereunder set his hand and seal, and
Employer has caused this Agreement to be executed and delivered by its duly
authorized officers, all as of the day and year first above written.


                                                                         (SEAL)
- -------------------------------           -------------------------------
WITNESS                                   THOMAS M. DUFFY


ATTEST:                                   ALLIED HOLDINGS, INC.

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


[CORPORATE SEAL]


                                      15

EX-10.3(A)

                                                                 EXHIBIT 10.3(a)

                               FIRST AMENDMENT TO
                              EMPLOYMENT AGREEMENT

         THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT ("Amendment") is made as
of the 1st day of June, 2001, by and between THOMAS M. DUFFY ("Employee") and
ALLIED HOLDINGS, INC. ("Employer").

         WHEREAS, Employer and Employee have entered into an Employment
Agreement dated February 23, 2000; and

         WHEREAS, Employer and Employee desire to amend the Employment
Agreement as set forth herein;

         NOW, THEREFORE, for and in consideration of the covenants and
conditions hereafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Employee and Employer
hereby agree as follows:

         1.       Notwithstanding anything in the Employment Agreement to the
contrary, Employer shall pay to Employee a bonus for the calendar year ending
December 31, 2001, in an amount not less than One Hundred Twenty-Five Thousand
Dollars ($125,000.00), with such bonus to be due and payable on or before
January 5, 2002. Employer and Employee acknowledge and agree that Employee
shall be entitled to participate in the Allied Holdings, Inc. EVA based
incentive plan and any other bonus plan utilized by Employer for calendar year
2001, and that the bonus paid pursuant to this First Amendment shall be
credited toward any bonus due to Employee under the EVA Plan or any other bonus
plan of the Company. Employer shall not be required to pay such bonus if
Employee terminates his employment on or before December 31, 2001 (other than a
termination by Employee pursuant to Paragraph 9(b) or 9(d) of the Employment
Agreement). In the event of termination of Employee for Cause, as defined by
the Employment Agreement, Employer shall pay to Employee a pro rata portion of
such bonus calculated from January 1, 2001 through the date of termination for
Cause.

         2.       Section 4(a) of the Employment Agreement shall be amended to
provide that the annual salary of Employee shall be Two Hundred Fifty Thousand
($250,000.00) and the remaining terms and conditions of Section 4(a) of the
Employment Agreement shall remain in effect without amendment.

         3.       All remaining terms and conditions of the Employment
Agreement which are not amended by this First Amendment shall remain in full
force and effect.




         IN WITNESS WHEREOF, the undersigned have executed this Amendment this
1st day of June, 2001.


                                       Employer:


                                       ALLIED HOLDINGS, INC.



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


                                       Employee:



                                       -----------------------------------------
                                       THOMAS M. DUFFY

EX-10.4

                                                                   EXHIBIT 10.4

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT is made and entered into as of the 23rd day
of February, 2000, by and between ROBERT J. RUTLAND ("Employee") and ALLIED
HOLDINGS, INC., a Georgia corporation ("Employer").

                                   WITNESSETH

         WHEREAS, Employer, through the Affiliates (as hereinafter defined), is
engaged in the transportation of automobiles and light trucks from the
manufacturer to retailers and related activities (the "Business");

         WHEREAS, Employee has a number of years of experience in said industry
and in addition to having management skills of which Employer desires to avail
itself, Employee has established numerous contacts and relationships with
customers, potential customers and suppliers of Employer and the Affiliates,
which contacts and relationships are of great value to Employer;

         WHEREAS, Employer and Employee have made and entered into a previous
employment agreement, as well as clarifications and amendments thereto; and

         WHEREAS, Employer and Employee deem it to their respective best
interest to clarify the duties and obligations, each to the other, by executing
this new Employment Agreement,

         NOW, THEREFORE, for and in consideration of the covenants and
conditions hereinafter set forth, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Employer and
Employee hereby mutually agree that all previous employment agreements, and all
clarifications and amendments thereto, are superseded, null, void, and of no
further force and effect, and Employer and Employee further mutually agree as
follows:

         1.       DEFINITIONS.

                  (a)      "Affiliate" means any corporation, partnership or
                           other entity of which at least eighty percent (80%)
                           of the outstanding equity and voting rights are
                           owned, directly or indirectly through any other
                           corporation, partnership or other entity, by
                           Employer.

                  (b)      "Base Salary" means the annual salary payable
                           pursuant to Paragraph 4(a) hereof as adjusted, from
                           time to time, pursuant to Paragraph 4(b) hereof.




                  (c)      "Cause" means (i) the commission by Employee of an
                           act constituting a felony and Employee's conviction
                           thereof; (ii) Employee's prolonged absence, without
                           the consent of Employer, other than as a result of
                           Employee's Disability or permitted absence or
                           vacation; (iii) conduct of Employee which amounts to
                           fraud, dishonesty, gross or willful neglect of
                           duties; or (iv) engaging in activities prohibited by
                           Paragraphs 12, 13 or 14 hereof.

                  (d)      "Disability", with respect to Employee, shall
                           conclusively be deemed to have occurred (i) if
                           Employee shall be receiving payments pursuant to a
                           policy of disability income insurance; or (ii) if
                           Employee shall have no disability income coverage
                           then in force, then if any insurance company
                           insuring Employee's life shall agree to waive the
                           premiums due on such policy pursuant to a disability
                           waiver of premium provision in the contract of life
                           insurance; or (iii) if Employee shall have no
                           disability waiver of premium provision in any
                           contract of life insurance, then if Employee shall
                           be receiving disability benefits from or through the
                           Social Security Administration; provided, however,
                           that in the event Employee's disability shall,
                           otherwise and in good faith, come into question
                           (and, for purposes of this proviso, "disability"
                           shall mean the permanent and continuous inability of
                           Employee to perform substantially all of the duties
                           being performed immediately prior to his disability
                           coming into question), and a dispute shall arise
                           with respect thereto, then Employee (or his personal
                           representatives) shall appoint a medical doctor,
                           Employer shall appoint a medical doctor, and said
                           two (2) doctors shall, in turn, appoint a third
                           party medical doctor who shall examine Employee to
                           determine the question of disability and whose
                           determination shall be binding upon all parties to
                           this Agreement.

                  (e)      "Restricted Period" means the period commencing as
                           of the date hereof and ending on that date three (3)
                           years after the termination of Employee's employment
                           with Employer for any reason, whether voluntary or
                           involuntary.

                  (f)      "Term" means the Initial Term and any Renewal Term
                           (each as defined in Paragraph 2 hereof); provided,
                           however, that, in the event Employee's employment
                           shall terminate by reason of the applicability of
                           Paragraph 8 hereof then, in such event, the "Term"
                           shall end upon the termination of Employee's
                           employment.

         2.       TERM. Subject to the provisions hereinafter set forth, the
Term of this Agreement shall commence as of the date hereof and shall end on
that date five (5) years after such date (the "Initial Term"). Upon the
expiration of the Initial Term, and on the expiration of each successive
Renewal Term (as hereinafter defined), Employee's


                                       2


employment shall be automatically renewed for an additional term of two (2)
years (the "Renewal Term(s)"), unless written notification of termination is
given by either party to the other party not less than one (1) year prior to
the expiration of the Initial Term or, as the case may be, the then-current
Renewal Term.

         3.       DUTIES.

                  (a)      Employee shall, during the Term, serve as Chairman
                           of the Board of Employer, at the direction of the
                           Board of Directors of Employer. Employee's principal
                           duties shall be such executive, managerial and
                           administrative duties as the Board of Directors of
                           Employer may, from time to time, reasonably request.

                  (b)      During the Term, Employee shall devote substantially
                           all of his time, energy and skill to performing the
                           duties of his employment (vacations as provided
                           hereunder and reasonable absences because of illness
                           excepted), shall faithfully and industriously
                           perform such duties, and shall use his best efforts
                           to follow and implement all management policies and
                           decisions of Employer. Employee shall not become
                           personally involved in the management or operations
                           of any other company, partnership, proprietorship or
                           other entity, other than any Affiliate, without the
                           prior written consent of Employer; provided,
                           however, that so long as it does not interfere with
                           Employee's employment hereunder, Employee may (i)
                           serve as a director, officer or partner in a company
                           that does not compete with the Business of Employer
                           and the Affiliates so long as the aggregate amount
                           of time spent by Employee in all such capacities
                           shall not exceed twenty (20) hours per month, and
                           (ii) serve as an officer or director of, or
                           otherwise participate in, educational, welfare,
                           social, religious, civic, trade and industry-related
                           organizations.

                  (c)      Employee shall not be required to relocate outside
                           of the metropolitan Atlanta, Georgia, area.

         4.       BASE SALARY.

                  (a)      For and in consideration of the services to be
                           rendered by Employee pursuant to this Agreement,
                           Employer shall pay to Employee, for each year during
                           the Term, an annual salary of Four Hundred Thousand
                           Dollars ($400,000.00), adjusted as provided in
                           subparagraph (b) below, in equal semi-monthly
                           installments in accordance with Employer's payroll
                           practices. Employee's salary shall be reviewed by
                           the Board of Directors of Employer annually (on each
                           anniversary of the date hereof) and, in the sole
                           discretion of the Board of Directors, may be
                           increased, but not decreased.


                                       3



                  (b)      Commencing as of January 1, 2001, and as of each
                           January 1st thereafter during the Term, the annual
                           salary shall be increased, but not decreased, by an
                           amount equal to the greater of (i) such amount as
                           shall be determined by the Compensation Committee of
                           the Board of Directors of Employer; or (ii) the
                           amount equal to the percentage, if any, by which the
                           Consumer Price Index (All Items Less Shelter), Urban
                           Wage Earners and Clerical Workers, for the Southeast
                           Region/Population Size Class B, published by the
                           United States Government Bureau of Labor Statistics
                           for the December 1 preceding such January exceeds
                           such Index for the December 1 of the preceding year.
                           (As an example, as of January 1, 2001, the
                           difference will be between said Index as of December
                           1, 2000 compared to said Index as of December 1,
                           1999.)

         5.       BONUS COMPENSATION. Employee shall, with respect to each
calendar year of Employer ending during the Term, be entitled to participate in
the Allied Holdings, Inc. EVA Based Incentive Plan (as from time to time
amended and in effect), to the extent and on such terms and conditions as shall
from time to time be determined by the Board of Directors of Allied Holdings,
Inc.; and to receive an annual bonus, if any, calculated pursuant thereto.

         6.       OTHER BENEFITS. During the Term, Employer shall provide the
following benefits to Employee:

                  (a)      Employee shall be elected to a seat on the Board of
                           Directors of Employer but shall not, however, be
                           entitled to any additional compensation for such
                           service;

                  (b)      Employee shall be entitled to participate in all
                           group medical and hospitalization benefit programs,
                           dental care, sick leave, life insurance or other
                           benefit plans for highly compensated employees of
                           Employer as are now or hereafter provided by
                           Employer or any Affiliate, in each case in
                           accordance with the terms and conditions of each
                           such plan and benefit package;

                  (c)      Employee shall be provided with the use of
                           automobiles at least comparable to any automobile
                           currently provided to Employee, and Employer shall
                           pay for the cost of all insurance, ad valorem taxes
                           and tag charges for such automobile and all
                           operating and maintenance charges for such
                           automobile;

                  (d)      Employee shall be provided with the use of a car or
                           mobile telephone, at no cost to Employee;

                  (e)      Employer shall reimburse Employee for dues paid by
                           Employee for membership in such professional
                           organizations and eating clubs as


                                       4



                           shall, from time to time, be deemed appropriate and
                           necessary by Employee; and

                  (f)      Employee shall, at all times, have available to him
                           an expense account to defray ordinary and necessary
                           business expenses incurred in the performance of his
                           duties hereunder. Employee shall be reimbursed for
                           such expenses upon presentation and approval of
                           expense statements or written vouchers or other
                           supporting documents as may be reasonably requested
                           in advance by Employer, which approval shall not be
                           unreasonably withheld or delayed.

         The benefits described in subparagraph (b) of this Paragraph shall not
be construed to require Employer to establish any such plans or programs or to
prevent Employer from modifying or terminating any such plans or programs, and
no such action or failure thereof shall affect this Agreement; provided,
however, that in the event of any reduction in the group medical and
hospitalization benefits in place as of the date hereof, the salary payable to
Employee shall be increased, as of the effective date of such reduction, by
that amount necessary to enable Employee to supplement the benefits provided by
Employer to maintain the level of benefits currently provided to him by it.

         7.       VACATION. Employee shall receive five (5) weeks of paid
vacation for each year during the Term. Scheduling of vacation shall be subject
to the prior approval of Employer (which approval shall not be unreasonably
withheld). Vacation time shall not accrue, and in the event any vacation time
for any year shall not be used by Employee prior to the end of such year, it
shall be forfeited.

         8.       TERMINATION. Anything herein to the contrary notwithstanding,
Employee's employment hereunder shall terminate upon the first to occur of any
of the following events:

                  (a)      Employee's Disability; or

                  (b)      Employee's death; or

                  (c)      Employee's materially breaching this Agreement by
                           the non-performance or non-observance of any
                           material term or condition of this Agreement, which
                           breach shall not be corrected within forty-five (45)
                           days after receipt of written notice of same from
                           Employer; or

                  (d)      Employer's sending Employee written notice
                           terminating his employment hereunder prior to
                           expiration of the Term in accordance with Paragraph
                           2 hereof; or


                                       5



                  (e)      Employee's voluntarily terminating his employment
                           with Employer prior to the expiration of the Term;
                           or

                  (f)      Employee's being terminated for Cause.

         9.       TERMINATION PAYMENT. In the event

                  (a)      Employee's employment shall terminate pursuant to
                           Paragraph 8(a) (Disability) or Paragraph 8(b)
                           (death) hereof; or

                  (b)      Employee shall terminate his employment as a result
                           of

                           (i)      any failure to elect or reelect or to
                                    appoint or reappoint Employee to the
                                    position of Chairman of the Board of
                                    Directors of Employer unless agreed to by
                                    Employee;

                           (ii)     any material change by Employer in
                                    Employee's function, duties,
                                    responsibility, importance, or scope from
                                    the position and attributes thereof
                                    described in Paragraph 3 hereof unless
                                    agreed to by Employee, or any change in
                                    location of the principal offices of
                                    Employer outside the metropolitan Atlanta,
                                    Georgia, area, or any requirement that
                                    Employee perform substantially all of his
                                    duties outside the metropolitan Atlanta,
                                    Georgia, area (and any such material change
                                    or relocation of Employer or Employee shall
                                    be deemed a continuing breach of this
                                    Agreement);

                           (iii)    the liquidation, dissolution, consolidation
                                    or merger of Employer (other than a merger
                                    or other combination of Employer and an
                                    Affiliate); however, if a termination of
                                    employment results from events described in
                                    this subsection (iii) and in subsection (d)
                                    below, then such termination shall be
                                    deemed to be pursuant to subsection (d)
                                    below;

                           (iv)     any other material breach of this Agreement
                                    by Employer which shall not be cured within
                                    thirty (30) days after receipt of written
                                    notice of same from Employee;

                           (v)      Employer filing a petition for protection
                                    or relief from creditors under the federal
                                    bankruptcy law, or any petition shall be
                                    filed against Employer under the federal
                                    bankruptcy law, or Employer shall admit in
                                    writing its inability to pay its debts or
                                    shall make an assignment for the benefit of
                                    creditors, or a petition or application for
                                    the appointment of a receiver or liquidator
                                    or custodian of Employer is filed, or
                                    Employer shall seek a composition with
                                    creditors; or


                                       6



                  (c)      Employee's employment shall be terminated by
                           Employer for any reason other than for Cause or
                           because Employer elects not to extend this Agreement
                           beyond the Initial or any Renewal Term; or

                  (d)      If (i) Employer undergoes any change in control or
                           ownership whereby Employer is reorganized, merged,
                           or consolidated with one or more corporations as a
                           result of which the owners of all of the outstanding
                           shares of common stock immediately prior to such
                           reorganization, merger or consolidation own in the
                           aggregate less than seventy percent (70%) of the
                           outstanding shares of common stock of the Employer
                           or any other entity into which Employer shall be
                           merged or consolidated immediately following the
                           consummation thereof (hereinafter, "Employer's
                           successor-in-interest"), or (ii) the sale, transfer
                           or other disposition of all or substantially all of
                           the assets or more than thirty percent (30%) of the
                           then outstanding shares of common stock of Employer
                           is effectuated, other than as a result of a merger
                           or other combination of Employer and an Affiliate,
                           or (iii) the acquisition by any "person" as used for
                           purposes of Section 13(d) or 14(d) of the Securities
                           Exchange Act of 1934 of beneficial ownership (within
                           the meaning of Rule 13d-3 promulgated under the
                           Exchange Act) of twenty percent (20%) or more of the
                           combined voting power of Employer's then outstanding
                           voting securities is effectuated; or (iv) the
                           individuals who, as of the date of execution of this
                           Agreement, are members of the Board of Directors
                           (the "incumbent Board") cease for any reason to
                           constitute at least two-thirds (2/3) of the Board;
                           provided, however, that if the election, or
                           nomination for election by the shareholders of any
                           new director was approved by a vote of at least
                           two-thirds (2/3) of the incumbent Board, such new
                           director shall, for purposes of this Agreement, be
                           considered as a member of the incumbent Board, and
                           (a) Employee's employment with Employer or
                           Employer's successor-in-interest is terminated by
                           Employer or Employer's successor-in-interest (as the
                           case may be) or Employee for any reason, or (b)
                           Employee's employment under this Agreement is not
                           extended by Employer or Employer's
                           successor-in-interest for any Renewal Term, and such
                           termination or non-renewal occurs within two (2)
                           years after the closing of the transaction which
                           resulted in the change in control,

then Employer shall, depending upon the reason for the termination of
Employee's employment, immediately pay in cash to Employee an amount determined
as follows:

         (x)      If the termination shall be pursuant to subparagraph (d)
                  above, the amount shall be equal to the sum of


                                       7



                  (1)      three hundred percent (300%) of Employee's
                           then-effective annual Base Salary; and

                  (2)      three hundred percent (300%) of the Bonus, as
                           hereinafter defined.

                  In addition, Employer shall continue to provide to Employee
                  (except in the case of Employee's death), for a period equal
                  to the greater of (i) the remainder of the Term had not said
                  termination occurred, and (ii) three (3) years from said
                  termination, the benefits enumerated in Paragraphs 6(b) and
                  6(c) hereof.

         (y)      If the termination shall be other than pursuant to
                  subparagraph (d) above, the amount shall be equal to the sum
                  of

                  (1)      that percentage of Employee's then-effective annual
                           Base Salary equal to the product of the number of
                           whole or partial years remaining in the Term and one
                           hundred (100); and

                  (2)      that percentage of Employee's then-effective Bonus,
                           as hereinafter defined, equal to the product of the
                           number of whole or partial years remaining in the
                           Term and one hundred (100);

                  provided, however, in no event shall the percentage in
                  subparagraphs (1) and (2) hereof be less than three hundred
                  percent (300%).

                  In addition, Employer shall continue to provide to Employee
                  (except in the case of Employee's death), for a period of
                  years equal to the number of whole or partial years remaining
                  in the Term, but in no event fewer than three (3) years, the
                  benefits enumerated in Paragraphs 6(b) and 6(c) hereof.

         10.      OPERATIVE PROVISIONS.

                  (a)      As used in this Agreement, the term "Bonus" shall
                           mean:

                           (i)      with respect to the most recent grant or
                                    award of restricted stock, pursuant to
                                    Employer's "Long Term Incentive Plan", made
                                    prior to the date of termination of
                                    Employee's employment, the Dollar value, as
                                    of the date of such grant or award, of the
                                    Long Term Incentive Plan restricted stock
                                    plan target for Employee as approved by the
                                    Compensation Committee of Employer's Board
                                    of Directors, which Dollar value is
                                    established by the Compensation Committee
                                    notwithstanding the number of shares
                                    actually received pursuant to such grant or
                                    award and notwithstanding the value of such
                                    shares actually received; plus


                                       8



                           (ii)     the highest of (1) the average of the EVA
                                    bonuses actually paid to Employee for the
                                    two (2) years immediately preceding the
                                    year in which termination of employment
                                    occurs; (2) the average of the EVA bonuses
                                    which would have been paid to Employee for
                                    the two (2) years immediately preceding the
                                    year in which termination of employment
                                    occurs, assuming his EVA target bonus had
                                    been achieved for each such year; or (3)
                                    the amount of the EVA target bonus for
                                    Employee for the year in which termination
                                    of employment occurs.

                  (b)      In the event of a termination of employment pursuant
                           to Paragraph 9 hereof, all restricted stock awards
                           of Employee shall become wholly unrestricted and all
                           unvested stock options of Employee shall become
                           fully vested in Employee, and all such agreements
                           pertaining thereto shall be read accordingly;
                           provided, however, that Employee shall not have any
                           such rights with respect to any stock issued under
                           any employee stock plan of Employer qualifying under
                           Section 402(a) et seq. of the Code if, and to the
                           extent, such rights would jeopardize the
                           qualification of such plan under said Section. As
                           used in the preceding sentence, "Code" means the
                           Internal Revenue Code of 1986 as amended from time to
                           time or any provisions from time to time enacted and
                           corresponding in substance thereto.

                  (c)      Paragraph 9 and this Paragraph 10 shall survive the
                           termination of this Agreement, and this Agreement
                           shall be read accordingly.

         11.      INTENTION OF PARTIES. It is the express understanding and
intention of Employer and Employee that the provisions of Paragraph 5 and
Paragraph 9 hereof shall be read together and be non-exclusive so that, in the
event of a termination of Employee's employment pursuant to Paragraph 9 of this
Employment Agreement, Employee shall receive both (i) all of the compensation
specified in Paragraph 9 hereof (including, but not limited to, the applicable
percentage of Employee's then-effective Base Salary and the applicable
percentage of the cash portion of Employee's Bonus) and (ii) one hundred
percent (100%) of the pro rata portion of both the cash and equity parts of
Employee's Bonus based on the number of days in the fiscal year falling within
the Term (which shall include the amount of any EVA bonus paid to Employee
during that year, if any), but in no event shall such pro rata portion be less
than the pro rata share of the highest of (i) the average of the EVA bonuses
actually paid to Employee for the two (2) years immediately preceding the year
in which termination of employment occurs; (ii) the average of the EVA bonuses
which would have been paid to Employee for the two (2) years immediately
preceding the year in which termination of employment occurs, assuming his EVA
target bonus had been achieved for each such year; or (iii) the amount of the
EVA target bonus for Employee for the year in which


                                       9



termination of employment occurs. The amounts referred to in this Paragraph are
in addition to the benefits enumerated in Paragraphs 6(b) and 6(c) hereof.

         12.      COVENANT NOT-TO-SOLICIT. Employer and Employee acknowledge
that, during Employee's employment, Employer will spend considerable amounts of
time, effort and resources in providing Employee with knowledge relating to the
business affairs of Employer and the Affiliates, including Employer's and the
Affiliates' trade secrets, proprietary information and other information
concerning Employer's and the Affiliates' financing sources, finances, customer
lists, customer records, prospective customers, staff, contemplated
acquisitions (whether of business or assets), ideas, methods, marketing
investigations, surveys, research, customers' records and any other information
relating to Employer's and the Affiliates' Business.

         Employer and Employee recognize that, during the course of Employee's
term of employment with Employer pursuant to this Agreement, Employee shall
contact, solicit or approach Employer's and the Affiliates' customers and
prospective customers on behalf of Employer. Employer and Employee further
acknowledge that Employee has and shall, during his term of employment with
Employer, solicit business for Employer and the Affiliates from the customers
listed on EXHIBIT A attached hereto and made a part hereof (collectively, the
"Restricted Customers").

         To protect Employer from Employee's solicitation of business from such
customers during the Restricted Period, Employee agrees that, subject to
Paragraph 15 hereof, he shall not, directly or indirectly, for any person
(including Employee himself), corporation, firm, partnership, proprietorship or
other entity, other than Employer or an Affiliate, engaged in the
transportation of automobiles and light trucks from manufacturers to retailers,
solicit business from any Restricted Customer. This Paragraph 12 shall, except
as otherwise provided in this Agreement, survive the termination of this
Agreement.

         13.      COVENANT NOT-TO-DISCLOSE. Employer and Employee recognize
that, during the course of Employee's term of employment with Employer pursuant
to this Agreement, Employer will disclose to Employee information concerning
Employer and the Affiliates, their products, their customers, their services,
their trade secrets, their proprietary information and other information
concerning their business all of which constitute valuable assets of Employer
and the Affiliates. Employer and Employee further acknowledge that Employer
has, and will, invest considerable amounts of time, effort and corporate
resources in developing such valuable assets and that disclosure by Employee of
such assets to the public shall cause irreparable harm, damage and loss to
Employer and the Affiliates.

                  (a)      To protect these assets, Employee agrees that he
                           shall not, during the Restricted Period, advise or
                           disclose to any person, corporation, firm,
                           partnership or other entity whatsoever (except
                           Employer or an Affiliate), or any officer, director,
                           stockholder, partner or associate of any such
                           corporation, firm, partnership or


                                      10



                           entity any information received from Employer by
                           Employee during the course of Employee's association
                           with Employer relating to the business affairs of
                           Employer and the Affiliates including information
                           concerning Employer's and the Affiliates' finances,
                           services, customers, customer lists, prospective
                           customers, staff, contemplated acquisitions (whether
                           of business or assets), ideas, proprietary
                           information, methods, marketing investigations,
                           surveys, research and any other information relating
                           to the business and objectives of Employer and the
                           Affiliates, except as permitted by this Paragraph
                           13.

                  (b)      Employee further agrees that he shall not, during
                           the term of his employment or any time thereafter,
                           advise or disclose to any person or entity any trade
                           secret which Employer or any Affiliate has disclosed
                           to Employee during the course of his employment with
                           Employer.

                  (c)      In the event Employee's employment is terminated,
                           Employee agrees that, if requested by Employer, he
                           will acknowledge in writing that he received the
                           disclosures referred to herein and is under the
                           obligations referred to in this Agreement.

                  (d)      This Paragraph 13 shall, except as otherwise
                           provided in this Agreement, survive the termination
                           of this Agreement.

         Any implication in this Paragraph 13 to the contrary notwithstanding,
this Paragraph 13 shall not, and shall not be deemed to, prohibit Employee from
disclosing information regarding Employer that (i) is already public
information other than because of any breach of this Paragraph 13 by Employee;
(ii) shall be required by applicable Federal or state laws; (iii) shall not be
confidential or proprietary and shall be required in the ordinary course of
business; and (iv) shall be required pursuant to the order of any court or
administrative agency having jurisdiction; provided, however, that the
foregoing shall not permit the disclosure of any trade secret of Employer.

         14.      COVENANT NOT-TO-INDUCE. Employee covenants and agrees that
during the Restricted Period, he will not, directly or indirectly, on his own
behalf or in the service or on behalf of others, hire, solicit, take away or
attempt to hire, solicit or take away an employee or other personnel of
Employer and the Affiliates. This Paragraph 14 shall, except as otherwise
provided in this Agreement, survive the termination of this Agreement.

         15.      PARAMOUNT PROVISION. Anything in this Agreement to the
contrary notwithstanding, the provisions of Paragraph 12 and Paragraphs 13(a)
and 13(c) hereof shall not apply to Employee, and shall be absolutely null and
void, in the event Employee shall terminate his employment hereunder for any
one of the reasons set forth in Paragraph 9(b) hereof.


                                      11



         16.      SPECIFIC ENFORCEMENT. Employer and Employee expressly agree
that a violation of the covenants not-to-solicit, not-to-disclose and
not-to-induce contained in Paragraphs 12, 13 and 14 hereof, or any provision
thereof, shall cause irreparable injury to Employer and that, accordingly,
Employer shall be entitled, in addition to any other rights and remedies it may
have at law or in equity, to an injunction enjoining and restraining Employee
from doing or continuing to do any such act and any other violation or
threatened violation of said Paragraphs 12, 13 and 14 hereof.

         17.      SEVERABILITY. In the event any provision of this Agreement
shall be found to be void, the remaining provisions of this Agreement shall
nevertheless be binding with the same effect as though the void part were
deleted; provided, however, if Paragraphs 12, 13 and 14 shall be declared
invalid, in whole or in part, Employee shall execute, as soon as possible, a
supplemental agreement with Employer, granting Employer, to the extent legally
possible, the protection afforded by said Paragraphs. It is expressly
understood and agreed by the parties hereto that Employer shall not be barred
from enforcing the restrictive covenants contained in each of Paragraphs 12, 13
and 14 as each are separate and distinct, so that the invalidity of any one or
more of said covenants shall not affect the enforceability and validity of the
other covenants.

         18.      INCOME TAX WITHHOLDING. Employer or any other payor may
withhold from any compensation or benefits payable under this Agreement such
Federal, State, City or other taxes as shall be required pursuant to any law or
governmental regulation or ruling.

         19.      OTHER TAX CONSIDERATIONS. Notwithstanding any other provision
of this Agreement to the contrary, in the event that any payment or benefit
received or to be received by Employee is triggered by an event described in
subparagraph (d) of Paragraph 9 of this Agreement, whether such payment or
benefit is pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with Employer or any Affiliate of Employer
(hereinafter, all such payments and benefits being sometimes referred to as
"Total Payments"), and would not be deductible, either in whole or in part, by
Employer or an Affiliate making such payment or providing such benefit as a
result of Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), then, to the extent necessary to make such portion of the Total
Payments deductible (and after taking into account any reduction in the Total
Payments provided by reason of Section 280G of the Code in any such other plan,
arrangement or agreement), (A) the cash portion of the Total Payments provided
in this Paragraph 19 shall first be reduced (if necessary, to zero (0)), and
(B) all other non-cash Total Payments under this Paragraph 19 shall next be
reduced (if necessary, to zero (0)); provided, however, that the Employee's
payment shall only be reduced by this Paragraph 19 if Employer determines that
reducing the Total Payments would result in greater after-tax proceeds to the
Employee than if no such reduction in Total Payments had occurred. Any
determination required by the preceding sentence shall be made by independent
certified public accountants or tax counsel (hereinafter, such party shall
sometimes be hereinafter referred to as the "Independent Adviser") selected by
Employer, the


                                      12



selection of which shall be reasonably acceptable to Employee. In making
Employer's determination as to the application and effect of this Paragraph 19
on any payments or benefits received or to be received by Employee, (i) no
portion of the Total Payments shall be taken into account which in the opinion
of the Independent Adviser does not constitute a "parachute payment" within the
meaning of Section 280G(b)(2) of the Code, including by reason of Section
280G(b)(4)(A) of the Code; (ii) those Total Payments provided under this
Paragraph 19 shall be reduced only to the extent necessary so that the Total
Payments (other than those referred to in clause (i)) in their entirety
constitute reasonable compensation for services actually rendered within the
meaning of Section 280G(b)(4)(B) of the Code or are otherwise not subject to
disallowance as deductions, in the opinion of the Independent Adviser; and
(iii) the value of any non-cash benefit or any deferred payment or benefit
included in the Total Payments shall be determined by the Company's independent
certified public accountants in accordance with the principles of Sections
280G(d)(3) and (4) of the Code.

         20.      WAIVER. The waiver of a breach of any term of this Agreement
by any of the parties hereto shall not operate or be construed as a waiver by
such party of the breach of any other term of this Agreement or as a waiver of
a subsequent breach of the same term of this Agreement.

         21.      RIGHTS AND LIABILITIES UPON NOTICE OF TERMINATION. As soon as
notice of termination of this Agreement is given, Employee shall immediately
cease contact with all customers of Employer and shall forthwith surrender to
Employer all customer lists, documents and other property of Employer then in
his possession, compliance with which shall not be deemed to be a breach of
this Agreement by Employee. Pending the surrender of all such customer lists,
documents and other property to Employer, Employer may hold in abeyance any
payments due Employee pursuant to this Agreement.

         22.      ASSIGNMENT.

                  (a)      Employee shall not assign, transfer or convey this
                           Agreement, or in any way encumber the compensation
                           or other benefits payable to him hereunder, except
                           with the prior written consent of Employer or upon
                           Employee's death.

                  (b)      The covenants, terms and provisions set forth herein
                           shall be binding upon and shall inure to the benefit
                           of, and be enforceable by, Employer and its
                           successors and assigns.

         23.      NOTICES. All notices required herein shall be in writing and
shall be deemed to have been given when delivered personally or when deposited
in the U.S. Mail, certified or registered, postage prepaid, return receipt
requested, addressed as follows, to wit:


                                      13



                  If to Employer at:

                           160 Clairemont Avenue, Suite 200
                           Decatur, Georgia  30030

                  With a copy to:

                           Cohen Pollock Merlin Axelrod & Tanenbaum, P.C.
                           2100 RiverEdge Parkway, Suite 300
                           Atlanta, Georgia  30328-4656
                           Attn:  Elliott Cohen, Esquire

                  If to Employee at:

                           2121 Floyd Street
                           Covington, Georgia 30014

or at such other addresses as may, from time to time, be furnished to Employer
by Employee, or by Employer to Employee on the terms of this Paragraph.

         24.      BINDING EFFECT. This Agreement shall be binding on the
parties hereto and on their respective heirs, administrators, executors,
successors and permitted assigns.

         25.      ENFORCEABILITY. This Agreement contains the entire
understanding of the parties and may be altered, amended or modified only by a
writing executed by both of the parties hereto. This Agreement supersedes all
prior agreements and understandings by and between Employer and Employee
relating to Employee's employment.

         26.      APPLICABLE LAW. This Agreement and the rights and liabilities
of the parties hereto shall be governed by, and construed and interpreted in
accordance with, the laws of the State of Georgia.

         27.      COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, but all of which
together shall constitute but a single document.

                           [SIGNATURE PAGE TO FOLLOW]


                                      14



         IN WITNESS WHEREOF, Employee has hereunder set his hand and seal, and
Employer has caused this Agreement to be executed and delivered by its duly
authorized officers, all as of the day and year first above written.



                                                                          (SEAL)
- -------------------------------        -----------------------------------
WITNESS                                ROBERT J. RUTLAND



ATTEST:                                ALLIED HOLDINGS, INC.



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


      [CORPORATE SEAL]


                                      15

EX-10.5

                                                                   EXHIBIT 10.5

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT is made and entered into as of the 22nd day
of May, 2000, by and between JACK GROSS ("Employee"), AXIS GROUP, INC., a
Georgia corporation ("Employer"), and ALLIED HOLDINGS, INC., a Georgia
corporation ("Allied").

                                   WITNESSETH

         WHEREAS, Employer, through the Affiliates (as hereinafter defined), is
engaged, within and without the United States, in inter alia, (i) the business
of transporting automobiles and light trucks from the manufacturer to retailers
and related activities (the "Transportation Business"); and (ii) the logistics
business in connection with automobiles and light trucks (the "Logistics
Business") (hereinafter the Transportation Business and the Logistics Business
are sometimes referred to, individually, as a "Business" and, collectively, as
the "Businesses"); and

         WHEREAS, Employee has a number of years of experience in the Logistics
Business and in addition to having management skills of which Employer desires
to avail itself, Employee has established numerous contacts and relationships
with customers, potential customers and suppliers of Employer and the
Affiliates, which contacts and relationships are of great value to Employer;

         NOW, THEREFORE, for and in consideration of the covenants and
conditions hereinafter set forth, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Employer,
Employee and Allied hereby mutually agree as follows:

         1.       DEFINITIONS.

                  (a)      "Affiliate" means any corporation, partnership or
                           other entity of which Employer or Allied owns at
                           least eighty percent (80%) of the outstanding equity
                           and voting rights directly or indirectly through any
                           other corporation, partnership or other entity.

                  (b)      "Base Salary" means the annual salary payable
                           pursuant to Paragraph 4(a) hereof as adjusted, from
                           time to time, by Employer.

                  (c)      "Cause" means (i) the commission by Employee of an
                           act constituting a felony and Employee's conviction
                           thereof; (ii) Employee's prolonged absence, without
                           the consent of Employer, other than as a result of
                           Employee's Disability or permitted absence or
                           vacation; (iii) conduct of Employee which amounts to
                           fraud, dishonesty, gross or willful neglect of
                           duties; or (iv) engaging in activities prohibited by
                           Paragraphs 13, 14 or 15 hereof.

                  (d)      "Disability" shall conclusively be deemed to have
                           occurred with respect to Employee (i) if Employee
                           shall be receiving payments pursuant to a policy of
                           long-term disability income insurance; (ii) if
                           Employee shall have no long-




                           term disability income coverage then in force and
                           any insurance company insuring Employee's life shall
                           agree to waive the premiums due on such policy
                           pursuant to a long-term disability waiver of premium
                           provision in the contract of life insurance; or
                           (iii) if Employee shall have no long-term disability
                           waiver of premium provision in any contract of life
                           insurance, then if Employee shall be receiving
                           long-term disability benefits from or through the
                           Social Security Administration; provided, however,
                           that in the event Employee's disability shall,
                           otherwise and in good faith, come into question
                           (and, for purposes of this proviso, "disability"
                           shall mean the permanent and continuous inability of
                           Employee to perform substantially all of the duties
                           being performed immediately prior to his disability
                           coming into question), and a dispute shall arise
                           with respect thereto, then Employee (or his personal
                           representatives) shall appoint a medical doctor,
                           Employer shall appoint a medical doctor, and said
                           two (2) doctors shall, in turn, appoint a third
                           party medical doctor who shall examine Employee to
                           determine the question of disability and whose
                           determination shall be binding upon all parties to
                           this Agreement.

                  (e)      "Restricted Period" means the period commencing as
                           of the date hereof and ending on that date one (1)
                           year after the termination of Employee's employment
                           with Employer for any reason, whether voluntary or
                           involuntary.

                  (f)      "Term" means the Initial Term and any Renewal Term
                           (each as defined in Paragraph 2 hereof); provided,
                           however, that, in the event Employee's employment
                           shall terminate by reason of the applicability of
                           Paragraph 8 hereof then, in such event, the "Term"
                           shall end upon the termination of Employee's
                           employment.

         2.       TERM. Subject to the provisions hereinafter set forth, the
Term of this Agreement shall commence as of the date hereof and shall end on
December 31, 2001 (the "Initial Term"). Upon the expiration of the Initial
Term, and on the expiration of each successive Renewal Term (as hereinafter
defined), Employee's employment shall be automatically renewed for an
additional term of one (1) years (the "Renewal Term(s)"), unless written
notification of termination is given by either party to the other party not
less than three (3) months prior to the expiration of the Initial Term or, as
the case may be, the then-current Renewal Term.

         3.       DUTIES.

                  (a)      Employee shall, during the Term, serve as President
                           of Employer. Employee's principal duties shall be to
                           perform such executive, managerial and
                           administrative duties as the Chairman and Board of
                           Directors of Employer may, from time to time,
                           reasonably request as are consistent with the
                           position of President.


                                       2



                  (b)      Subject to the preceding subparagraph, during the
                           Term, Employee shall devote substantially all of his
                           time, energy and skill to performing the duties of
                           his employment (vacations as provided hereunder and
                           reasonable absences because of illness excepted),
                           shall faithfully and industriously perform such
                           duties, and shall use his best efforts to follow and
                           implement all management policies and decisions of
                           Employer. Employee shall not become personally
                           involved in the management or operations of any
                           other company, partnership, proprietorship or other
                           entity, other than any Affiliate, without the prior
                           written consent of Employer; provided, however, that
                           so long as it does not interfere with Employee's
                           employment hereunder, Employee may, with Employer's
                           consent, (1) serve as a director, officer or partner
                           in a company that does not compete with the Business
                           of Employer and the Affiliates so long as the
                           aggregate amount of time spent by Employee in all
                           such capacities shall not exceed twenty (20) hours
                           per month, and (2) serve as an officer or director
                           of, or otherwise participate in, educational,
                           welfare, social, religious, civic, trade and
                           industry-related organizations.

         4.       BASE SALARY.

                  (a)      For and in consideration of the services to be
                           rendered by Employee pursuant to this Agreement,
                           Employer shall pay to Employee, for each year during
                           the Term, an annual salary of Two Hundred Fifty
                           Thousand Dollars ($250,000.00), payable in equal
                           semi-monthly installments in accordance with
                           Employer's payroll practices. Employee's salary
                           shall be reviewed by the Board of Directors of
                           Employer annually and, in the sole discretion of the
                           Board of Directors, may be increased, but not
                           decreased.

         5.       BONUS COMPENSATION. Employee shall, with respect to each
calendar year of Employer ending during the Term, be entitled to participate in
the Allied Holdings, Inc. EVA Based Incentive Plan, as the same may be from
time to time amended and in effect (the "EVA Plan"). The Employee's Target
Bonus for purposes of the EVA Plan shall be such percentage of Employee's Base
Salary as shall, from time to time, be determined by Employer. Employee's
actual bonus shall be calculated in accordance with the terms of the EVA Plan.
Employee shall be provided with a copy of the EVA Plan within thirty (30) days
of execution of this Agreement.

         6.       OTHER BENEFITS. During the Term, Employer shall provide the
following benefits to Employee:

                  (a)      Employee shall be entitled to participate in all
                           group medical and hospitalization benefit programs,
                           dental care, sick leave, life insurance or other
                           benefit plans for highly compensated employees of
                           Employer or any Affiliate as are now or hereafter
                           provided by Employer or any Affiliate, in each case
                           in accordance with the terms and conditions of each
                           such plan and benefit package.


                                       3



                  (b)      Employee shall be entitled to participate in all
                           long term incentive plans, stock option plans and
                           other similar plans for highly compensated employees
                           of Employer as are now or hereafter provided by
                           Employer or any Affiliate, in each case in
                           accordance with the terms and conditions of each
                           such plan.

                  (c)      Employee shall be provided with the use of an
                           automobile, which shall be comparable to other
                           automobiles Allied provides to persons serving in
                           the capacity of President of an Allied subsidiary,
                           and which shall be chosen by Employee from a list of
                           automobiles Allied typically makes available to its
                           Presidents of its subsidiaries and Employer shall
                           pay for the cost of all insurance, ad valorem taxes
                           and tag charges for such automobile and all
                           operating and maintenance charges for such
                           automobile. In addition, Employee shall be entitled
                           to an automobile allowance for his spouse comparable
                           to the spousal allowance Allied provides to persons
                           serving in the capacity of President of a
                           subsidiary, as determined from time to time by the
                           Board of Directors of Allied.

                  (d)      Employee shall be provided with the use of a
                           cellular telephone, at no cost to Employee.

                  (e)      Employer shall reimburse Employee for dues paid by
                           Employee for membership in such professional
                           organizations and eating clubs as shall, from time
                           to time, be deemed appropriate and necessary by
                           Employer.

                  (f)      Employee shall, at all times, have available to him
                           an expense account, including the use of a corporate
                           American Express card, to defray ordinary and
                           necessary business expenses incurred in the
                           performance of his duties hereunder. Employee shall
                           be reimbursed for such expenses upon presentation
                           and approval of expense statements or written
                           vouchers or other supporting documents as may be
                           reasonably requested in advance by Employer, which
                           approval shall not be unreasonably withheld or
                           delayed.

         The benefits described in subparagraph (a) of this Paragraph shall not
be construed to require Employer to establish any such plans or programs or to
prevent Employer from modifying or terminating any such plans or programs, and
no such action or failure thereof shall affect this Agreement; provided,
however, that in the event of any reduction in the group medical and
hospitalization benefits in place as of the date hereof, the salary payable to
Employee shall be increased, as of the effective date of such reduction, by
that amount necessary to enable Employee to supplement the benefits provided by
Employer to maintain the level of benefits currently provided to him by it.

         7.       VACATION. Employee shall receive no fewer than three (3)
weeks of paid vacation for each year during the Term. Scheduling of vacation
shall be subject to the prior approval of Employer (which approval shall not be
unreasonably withheld). Vacation time shall not accrue, and


                                       4



in the event Employee prior to the end of any year shall not use all of his
vacation time for such year, such vacation time shall be forfeited.

         8.       TERMINATION. Anything herein to the contrary notwithstanding,
Employee's employment hereunder shall terminate upon the first to occur of any
of the following events:

                  (a)      Employee's Disability;

                  (b)      Employee's death;

                  (c)      Employee's materially breaching this Agreement by
                           the non-performance or non-observance of any
                           material term or condition of this Agreement, which
                           breach shall not be corrected within forty-five (45)
                           days after receipt of written notice of same from
                           Employer;

                  (d)      Employer's sending Employee written notice
                           terminating his employment hereunder prior to the
                           expiration of the Initial Term or any Renewal Term
                           in accordance with Paragraph 2 hereof;

                  (e)      Employee's voluntarily terminating his employment
                           hereunder prior to the expiration of the Initial
                           Term or any Renewal Term; or

                  (f)      Employee's being terminated for Cause.

         9.       TERMINATION PAYMENT. Subject to the provisions of Paragraph
12 hereof, in the event

                  (a)      Employee's employment shall terminate pursuant to
                           Paragraph 8(a) (Disability) or Paragraph 8(b)
                           (death) hereof; or

                  (b)      Employee shall terminate his employment as a result
                           of

                           (i)      any failure to elect or reelect or to
                                    appoint or reappoint Employee to the
                                    position of President of Employer unless
                                    agreed to by Employee;

                           (ii)     any material change by Employer in
                                    Employee's function, duties,
                                    responsibility, importance, or scope from
                                    the position and attributes thereof
                                    described in Paragraph 3 hereof unless
                                    agreed to by Employee, or any change in
                                    location of the principal offices of
                                    Employer outside the metropolitan Atlanta,
                                    Georgia, area, or any requirement that
                                    Employee perform substantially all of his
                                    duties outside the metropolitan Atlanta,
                                    Georgia, area (and any such material change
                                    or relocation of Employer or Employee shall
                                    be deemed a continuing breach of this
                                    Agreement);


                                       5



                           (iii)    the liquidation, dissolution, consolidation
                                    or merger of Employer or Allied (other than
                                    a merger or other combination of Employer
                                    and Allied or Employer and an Affiliate);
                                    provided, however, that if there shall be a
                                    termination of employment resulting from
                                    events described in this subsection (iii)
                                    and in subsection (d) below, then such
                                    termination shall be deemed to fall within
                                    the terms of subsection (d) below which
                                    shall control and be paramount;

                           (iv)     any other material breach of this Agreement
                                    by Employer which shall not be cured within
                                    thirty (30) days after receipt of written
                                    notice of same from Employee;

                           (v)      Employer or Allied filing a petition for
                                    protection or relief from creditors under
                                    the federal bankruptcy law, or any petition
                                    shall be filed against Employer or Allied
                                    under the federal bankruptcy law, or
                                    Employer or Allied shall admit in writing
                                    its inability to pay its debts or shall
                                    make an assignment for the benefit of
                                    creditors, or a petition or application for
                                    the appointment of a receiver or liquidator
                                    or custodian of Employer or Allied is
                                    filed, or Employer or Allied shall seek a
                                    composition with creditors; or

                  (c)      Employee's employment shall be terminated by
                           Employer for any reason other than for Cause or
                           because Employer elects not to extend this Agreement
                           beyond the Initial or any Renewal Term; or

                  (d)      If (i) Employer or Allied undergoes any change in
                           control or ownership whereby Employer or Allied is
                           reorganized, merged, or consolidated with one or
                           more corporations as a result of which the owners of
                           all of the outstanding shares of common stock
                           immediately prior to such reorganization, merger or
                           consolidation own in the aggregate less than seventy
                           percent (70%) of the outstanding shares of common
                           stock of the Employer or Allied or any other entity
                           into which Employer or Allied shall be merged or
                           consolidated immediately following the consummation
                           thereof (hereinafter, "Employer's successor-in-
                           interest"), or (ii) the sale, transfer or other
                           disposition of all or substantially all of the
                           assets or more than thirty percent (30%) of the then
                           outstanding shares of common stock of Employer or
                           Allied is effectuated, other than as a result of a
                           merger or other combination of Employer and an
                           Affiliate, or (iii) the acquisition by any "person"
                           as used for purposes of Section 13(d) or 14(d) of
                           the Securities Exchange Act of 1934 of beneficial
                           ownership (within the meaning of Rule 13d-3
                           promulgated under the Exchange Act) of twenty
                           percent (20%) or more of the combined voting power
                           of Employer's or Allied's then outstanding voting
                           securities is effectuated; or (iv) the individuals
                           who, as of the date of execution of this Agreement,
                           are members of the Board of Directors (the
                           "incumbent Board") of Allied cease for any reason to
                           constitute at least two-thirds (2/3) of the


                                       6



                           Board; provided, however, that if the election, or
                           nomination for election by the shareholders of any
                           new director was approved by a vote of at least
                           two-thirds (2/3) of the incumbent Board, such new
                           director shall, for purposes of this Agreement, be
                           considered as a member of the incumbent Board, and
                           (a) Employee's employment with Employer or
                           Employer's successor-in-interest is terminated by
                           Employer or Employer's successor-in-interest (as the
                           case may be) or Employee for any reason, or (b)
                           Employee's employment under this Agreement is not
                           extended by Employer or Employer's
                           successor-in-interest for any Renewal Term, and such
                           termination or non-renewal occurs within two (2)
                           years after the closing of the transaction which
                           resulted in the change in control,

then Employer shall, depending upon the reason for the termination of
Employee's employment, immediately pay in cash to Employee an amount determined
as follows:

         (x)      If the termination shall be pursuant to subparagraph (d)
                  above, the amount shall be equal to the sum of

                  (1)      three hundred percent (300%) of Employee's
                           then-effective annual Base Salary; and

                  (2)      three hundred percent (300%) of Employee's
                           then-effective Bonus, as hereinafter defined.

         In addition, Employer shall continue to provide to Employee (except in
         the case of Employee's death), for a period of three (3) years from
         said termination, the benefits enumerated in Paragraph 6(a) and
         Paragraph 6(c) hereof.

         (y)      If the termination shall be other than pursuant to
                  subparagraph (d) above, the amount shall be equal to the sum
                  of

                  (1)      two hundred percent (200%) of Employee's
                           then-effective annual Base Salary; and

                  (2)      two hundred percent (200%) of Employee's
                           then-effective Bonus, as hereinafter defined.

         In addition, Employer shall continue to provide to Employee (except in
         the case of Employee's death), for a period of two (2) years from said
         termination, the benefits enumerated in Paragraph 6(a) and Paragraph
         6(c) hereof.

         10.      OPERATIVE PROVISIONS.

                  (a)      As used in this Agreement, the term "Bonus" shall
                           mean:


                                       7



                           (i)      with respect to the most recent grant or
                                    award of restricted stock, pursuant to
                                    Employer's "Long Term Incentive Plan", made
                                    prior to the date of termination of
                                    Employee's employment, the Dollar value, as
                                    of the date of such grant or award, of the
                                    Long Term Incentive Plan restricted stock
                                    plan target for Employee as approved by the
                                    Compensation Committee of Employer's Board
                                    of Directors, which Dollar value is
                                    established by the Compensation Committee
                                    notwithstanding the number of shares
                                    actually received pursuant to such grant or
                                    award and notwithstanding the value of such
                                    shares actually received; plus

                           (ii)     the highest of (1) the average of the EVA
                                    bonuses actually paid to Employee for the
                                    two (2) years immediately preceding the
                                    year in which termination of employment
                                    occurs; (2) the average of the EVA bonuses
                                    which would have been paid to Employee for
                                    the two (2) years immediately preceding the
                                    year in which termination of employment
                                    occurs, assuming his EVA target bonus had
                                    been achieved for each such year; or (3)
                                    the amount of the EVA target bonus for
                                    Employee for the year in which termination
                                    of employment occurs.

                  (b)      In the event of a termination of employment pursuant
                           to Paragraph 9 hereof, all restricted stock awards
                           of Employee shall become wholly unrestricted and all
                           unvested stock options of Employee shall become
                           fully vested in Employee, and all such agreements
                           pertaining thereto shall be read accordingly;
                           provided, however, that Employee shall not have any
                           such rights with respect to any stock issued under
                           any employee stock plan of Employer qualifying under
                           Section 402(a) et seq. of the Code if, and to the
                           extent, such rights would jeopardize the
                           qualification of such plan under said Section. As
                           used in the preceding sentence, "Code" means the
                           Internal Revenue Code of 1986 as amended from time
                           to time or any provisions from time to time enacted
                           and corresponding in substance thereto.

                  (c)      Paragraph 9 and this Paragraph 10 shall survive the
                           termination of this Agreement, and this Agreement
                           shall be read accordingly.

         11.      INTENTION OF PARTIES. It is the express understanding and
intention of Employer and Employee that the provisions of Paragraph 5 and
Paragraph 9 hereof shall be read together and be non-exclusive so that, in the
event of a termination of Employee's employment pursuant to Paragraph 9 of this
Employment Agreement, Employee shall receive both (i) all of the compensation
specified in Paragraph 9 hereof (including, but not limited to, the applicable
percentage of Employee's then-effective Base Salary and the applicable
percentage of the cash portion of Employee's Bonus) and (ii) one hundred
percent (100%) of the pro rata portion of both the cash and equity parts of
Employee's Bonus based on the number of days in the fiscal year falling within
the Term (which shall include the amount of any EVA bonus paid to Employee
during that


                                       8


year, if any), but in no event shall such pro rata portion be less than the
pro rata share of the highest of (i) the average of the EVA bonuses actually
paid to Employee for the two (2) years immediately preceding the year in which
termination of employment occurs; (ii) the average of the EVA bonuses which
would have been paid to Employee for the two (2) years immediately preceding
the year in which termination of employment occurs, assuming his EVA target
bonus had been achieved for each such year; or (iii) the amount of the EVA
target bonus for Employee for the year in which termination of employment
occurs. The amounts referred to in this Paragraph are in addition to the
benefits enumerated in Paragraphs 6(b) and 6(c) hereof.

         12.      CONDITIONS TO BENEFITS. Anything in this Agreement to the
contrary notwithstanding:

                  (a)      To receive the benefits enumerated in Paragraph 9
                           hereof, Employee shall execute and agree to be bound
                           by a release agreement substantially in the form
                           attached to this Agreement as Exhibit A and, to the
                           extent applicable, a resignation letter
                           substantially in the form attached as Exhibit B,
                           prior to, and as a condition to, receiving any
                           payments or benefits provided for in Paragraph 9
                           hereof or otherwise following termination of his
                           employment hereunder [and, if applicable, the
                           release agreement may contain provisions required by
                           federal, state or local law (e.g., the Older
                           Worker's Benefit Protection Act) to effect a general
                           release of all claims].

                  (b)      Employee's right to receive any of the benefits
                           provided for in Paragraph 9 or otherwise in this
                           Agreement following termination of his employment
                           hereunder shall immediately cease and be of no
                           further force or effect if Employee violates any of
                           the covenants contained in Paragraphs 13, 14, 15 or
                           16 hereof.

         13.      COVENANT NOT-TO-DISCLOSE. Employer and Employee recognize
that, during the course of Employee's term of employment with Employer pursuant
to this Agreement, Employer will disclose to Employee information concerning
Employer and the Affiliates, their products, their customers, their services,
their trade secrets, their proprietary information and other information
concerning their business all of which constitute valuable assets of Employer
and the Affiliates. Employer and Employee further acknowledge that Employer
has, and will, invest considerable amounts of time, effort and corporate
resources in developing such valuable assets and that disclosure by Employee of
such assets to the public shall cause irreparable harm, damage and loss to
Employer and the Affiliates.

                  (a)      To protect these assets, Employee agrees that he
                           shall not, during the Restricted Period, advise or
                           disclose to any person, corporation, firm,
                           partnership or other entity whatsoever (except
                           Employer or an Affiliate), or any officer, director,
                           stockholder, partner or associate of any such
                           corporation, firm, partnership or entity any
                           information received from Employer by Employee
                           during the course of Employee's association with
                           Employer relating to the business affairs of
                           Employer and the Affiliates


                                       9



                           including information concerning Employer's and the
                           Affiliates' finances, services, customers, customer
                           lists, prospective customers, staff, contemplated
                           acquisitions (whether of business or assets), ideas,
                           proprietary information, methods, marketing
                           investigations, surveys, research and any other
                           information relating to the business and objectives
                           of Employer and the Affiliates, except as permitted
                           by Exhibit C hereof.

                  (b)      Employee further agrees that he shall not, during
                           the term of his employment or any time thereafter,
                           advise or disclose to any person or entity any trade
                           secret which Employer or any Affiliate has disclosed
                           to Employee during the course of his employment with
                           Employer.

                  (c)      In the event Employee's employment is terminated,
                           Employee agrees that, if requested by Employer, he
                           will acknowledge in writing that he received the
                           disclosures referred to herein and is under the
                           obligations referred to in this Agreement.

                  (d)      This Paragraph 13 shall, except as otherwise
                           provided in this Agreement, survive the termination
                           of this Agreement.

         14.      COVENANT NOT-TO-INDUCE. Employee covenants and agrees that
during the Restricted Period, he will not, directly or indirectly, on his own
behalf or in the service or on behalf of others, hire, solicit, take away or
attempt to hire, solicit or take away any employee or other personnel of
Employer and the Affiliates. This Paragraph 14 shall, except as otherwise
provided in this Agreement, survive the termination of this Agreement.

         15.      COVENANT OF NON-DISPARAGEMENT AND COOPERATION. Employee
agrees that he shall not at any time during or following the term of this
Agreement make any remarks disparaging the conduct or character of Employer or
the Affiliates or any of Employer's or the Affiliates' current or former
agents, employees, officers, directors, successors or assigns (collectively the
"Related Companies"). In addition, Employee agrees to cooperate with the
Related Companies, at no extra cost, in any litigation or administrative
proceedings (e.g., EEOC charges) involving any matters with which Employee was
involved during Employee's employment with Employer. Employer shall reimburse
Employee for travel expenses approved by Employer or the Affiliates incurred in
providing such assistance. This Paragraph 15 shall survive the termination of
this Agreement.

         16.      COVENANT NOT-TO-COMPETE. Employer and Employee acknowledge
that, by virtue of Employee's responsibilities and authority, he shall, during
the course of his Employment, be instrumental in developing, and receive highly
confidential information concerning, Employer and the Affiliates, their
customers, their services, their trade secrets, their proprietary information
and other information concerning the Logistics Business, much of which will be
unavailable to those in positions of lesser responsibility and authority.
Employee further acknowledges that the ability of such information to benefit a
competitor or potential competitor of Employer shall cause irreparable harm,
damage and loss to Employer and the Affiliates. To protect Employer and the
Affiliates from


                                      10



Employee's using or exploiting this information, Employee agrees that, if the
employment relationship between Employee and Employer terminates for any reason
whatsoever other than termination by Employer without Cause, then, in such
event, for a period of one (1) year from the date of Employee's termination of
employment, Employee shall not engage in the Logistics Business in the
Restricted Territory, and Employee shall not directly or indirectly, own,
manage, join, control, contract with, be employed by, act in the capacity of an
officer, director, trustee, shareholder or partner or consultant, or
participate in any manner in the ownership, management, operation, or control
of any business or person engaged in the Logistics Business in the Restricted
Territory; provided, however, Employee shall be permitted to own not more than
five percent (5%) of the stock of a corporation required to file reports
pursuant to the Securities Exchange Act of 1934. As to the foregoing, Employee
acknowledges that he has the ability to earn a comparable income within or
without the Restricted Territory in other than the Logistics Business and that
earning a livelihood outside the Logistics Business within or without the
Restricted Territory would not constitute a hardship or an unreasonable
restriction on the Employee or restrict him from earning comparable income.

         Employee acknowledges that the area in which the Employer engages in
the Logistics Business shall geographically increase under the leadership of
Employee and that, as such increase occurs in such new areas, it is necessary
for the interests of the Employer to be protected in them. Accordingly,
Employee acknowledges and agrees that, upon receipt of consideration from
Employer in the sum of One Hundred Dollars ($100.00), in each case, he shall,
at any time and from time to time, execute an amendment to this Agreement
amending the definition of Restricted Territory to include such new areas. This
Paragraph 16 shall survive the termination of this Agreement.

         17.      SPECIFIC ENFORCEMENT. Employer and Employee expressly agree
that a violation of the covenants not-to-disclose, not-to-induce,
not-to-disparage and not-to-compete contained in Paragraphs 13, 14, 15 and 16
hereof, or any provision thereof, shall cause irreparable injury to Employer
and that, accordingly, Employer shall be entitled, in addition to any other
rights and remedies it may have at law or in equity, to an injunction enjoining
and restraining Employee from doing or continuing to do any such act and any
other violation or threatened violation of said Paragraphs 13, 14, 15 and 16
hereof.

         18.      SEVERABILITY. In the event any provision of this Agreement
shall be found to be void, the remaining provisions of this Agreement shall
nevertheless be binding with the same effect as though the void part were
deleted; provided, however, if Paragraphs 13, 14, 15 and 16 hereof shall be
declared invalid, in whole or in part, Employee shall execute, as soon as
possible, a supplemental agreement with Employer, granting Employer, to the
extent legally possible, the protection afforded by said Paragraphs. It is
expressly understood and agreed by the parties hereto that Employer shall not
be barred from enforcing the restrictive covenants contained in each of
Paragraphs 13, 14, 15 and 16 as each are separate and distinct, so that the
invalidity of any one or more of said covenants shall not affect the
enforceability and validity of the other covenants.

         19.      INCOME TAX WITHHOLDING. Employer or any other payor may
withhold from any compensation or benefits payable under this Agreement such
Federal, State, City or other taxes as shall be required pursuant to any law or
governmental regulation or ruling.


                                      11



         20.      OTHER TAX CONSIDERATIONS. Notwithstanding any other provision
of this Agreement to the contrary, in the event that any payment or benefit
received or to be received by Employee is triggered by an event described in
subparagraph (d) of Paragraph 9 of this Agreement, whether such payment or
benefit is pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with Employer or any Affiliate of Employer
(hereinafter, all such payments and benefits being sometimes referred to as
"Total Payments"), and would not be deductible, either in whole or in part, by
Employer or an Affiliate making such payment or providing such benefit as a
result of Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), then, to the extent necessary to make such portion of the Total
Payments deductible (and after taking into account any reduction in the Total
Payments provided by reason of Section 280G of the Code in any such other plan,
arrangement or agreement), (A) the cash portion of the Total Payments provided
in this Paragraph 20 shall first be reduced (if necessary, to zero (0)), and
(B) all other non-cash Total Payments under this Paragraph 20 shall next be
reduced (if necessary, to zero (0)); provided, however, that the Employee's
payment shall only be reduced by this Paragraph 20 if Employer determines that
reducing the Total Payments would result in greater after-tax proceeds to the
Employee than if no such reduction in Total Payments had occurred. Any
determination required by the preceding sentence shall be made by independent
certified public accountants or tax counsel (hereinafter, such party shall
sometimes be hereinafter referred to as the "Independent Adviser") selected by
Employer, the selection of which shall be reasonably acceptable to Employee. In
making Employer's determination as to the application and effect of this
Paragraph 20 on any payments or benefits received or to be received by
Employee, (i) no portion of the Total Payments shall be taken into account
which in the opinion of the Independent Adviser does not constitute a
"parachute payment" within the meaning of Section 280G(b)(2) of the Code,
including by reason of Section 280G(b)(4)(A) of the Code; (ii) those Total
Payments provided under this Paragraph 20 shall be reduced only to the extent
necessary so that the Total Payments (other than those referred to in clause
(i)) in their entirety constitute reasonable compensation for services actually
rendered within the meaning of Section 280G(b)(4)(B) of the Code or are
otherwise not subject to disallowance as deductions, in the opinion of the
Independent Adviser; and (iii) the value of any non-cash benefit or any
deferred payment or benefit included in the Total Payments shall be determined
by the Company's independent certified public accountants in accordance with
the principles of Sections 280G(d)(3) and (4) of the Code.

         21.      WAIVER. The waiver of a breach of any term of this Agreement
by any of the parties hereto shall not operate or be construed as a waiver by
such party of the breach of any other term of this Agreement or as a waiver of
a subsequent breach of the same term of this Agreement.

         22.      RIGHTS AND LIABILITIES UPON NOTICE OF TERMINATION. As soon as
notice of termination of this Agreement is given, Employee shall immediately
cease contact with all customers of Employer and shall forthwith surrender to
Employer all customer lists, documents and other property of Employer then in
his possession, compliance with which shall not be deemed to be a breach of
this Agreement by Employee. Pending the surrender of all such customer lists,
documents and other property to Employer, Employer may hold in abeyance any
payments due Employee pursuant to this Agreement.


                                      12



         23.      ASSIGNMENT.

                  (a)      Employee shall not assign, transfer or convey this
                           Agreement, or in any way encumber the compensation
                           or other benefits payable to him hereunder, except
                           with the prior written consent of Employer or upon
                           Employee's death.

                  (b)      The covenants, terms and provisions set forth herein
                           shall be binding upon and shall inure to the benefit
                           of, and be enforceable by, Employer and its
                           successors and assigns.

         24.      NOTICES. All notices required herein shall be in writing and
shall be deemed to have been given when delivered personally or when deposited
in the U.S. Mail, certified or registered, postage prepaid, return receipt
requested, addressed as follows, to wit:

                  If to Employer at:

                           160 Clairemont Avenue
                           Suite 200
                           Decatur, Georgia  30030

                  With a copy to:

                           Cohen Pollock Merlin Axelrod & Tanenbaum, P.C.
                           2100 RiverEdge Parkway
                           Suite 300
                           Atlanta, Georgia 30328-4656
                           Attn:  Elliott Cohen, Esquire

                  If to Employee at:

                           -------------------------------------------------

                           -------------------------------------------------

or at such other addresses as may, from time to time, be furnished to Employer
by Employee, or by Employer to Employee on the terms of this Paragraph.

         25.      BINDING EFFECT. This Agreement shall be binding on the
parties hereto and on their respective heirs, administrators, executors,
successors and permitted assigns.

         26.      ENFORCEABILITY. This Agreement contains the entire
understanding of the parties and may be altered, amended or modified only by a
writing executed by both of the parties hereto. This Agreement supersedes all
prior agreements and understandings by and between Employer and Employee
relating to Employee's employment.


                                      13



         27.      APPLICABLE LAW. This Agreement and the rights and liabilities
of the parties hereto shall be governed by, and construed and interpreted in
accordance with, the laws of the State of Georgia.

         28.      COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, but all of which
together shall constitute but a single document.

         29.      GUARANTY BY ALLIED. Allied hereby unconditionally guarantees
the performance and payment obligations of Employer pursuant to this Agreement
including, without limitation, the payment of base salary and bonus
compensation pursuant to Paragraphs 4 and 5 hereof, and the termination payment
pursuant to Paragraph 9 hereof.

         IN WITNESS WHEREOF, Employee has hereunder set his hand and seal, and
Employer has caused this Agreement to be executed and delivered by its duly
authorized officers, all as of the day and year first above written.



                                                                          (SEAL)
- -------------------------------        -----------------------------------
WITNESS                                JACK GROSS



ATTEST:                                AXIS GROUP, INC.



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

[CORPORATE SEAL]



ATTEST:                                ALLIED HOLDINGS, INC.



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

[CORPORATE SEAL]


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