EX-10.21 EMPLOYMENT AGREEMENT

Exhibit 10.21

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT is made and entered into as of the 25th day of January, 2005 (the “Effective Date”), by and between THOMAS H. KING (“Employee”) and ALLIED HOLDINGS, INC., a Georgia corporation (“Employer”).

W I T N E S S E T H:

     WHEREAS, Employer, through the Affiliates (as hereinafter defined), is engaged in the transportation of automobiles and light trucks from the manufacturer to retailers and others, including nontraditional car haulers involved in the vehicle distribution process and providing logistics and distribution services to the new and used vehicle distribution market and other segments of the automotive industry (the “Business”);

     WHEREAS, Employee has management skills of which Employer desires to avail itself; and

     WHEREAS, Employer and Employee deem it to their respective best interest to outline the duties and obligations, each to the other, by executing this 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 as follows:

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     2. TERM. Subject to the provisions hereinafter set forth, the term of this Agreement shall commence as of the Effective Date and shall expire one year after the Effective Date (the “Initial Term”) and shall extend for additional terms of one (1) year (the “Renewal Term”) unless either party gives written notice of termination not less (90) days prior to the end of a Term. As used herein, “Term” shall mean the then current Initial Term or Renewal Term, as the case may be.

     3. DUTIES.

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     4. BASE SALARY. 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 Three Hundred Thirty Thousand Dollars ($330,000) (the “Base Salary”), in installments in accordance with Employer’s payroll practices. Employee’s salary shall be reviewed by the Board of Directors of Employer annually and may be increased, but not decreased, at the sole discretion of the Board.

     5. BONUS COMPENSATION.

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

     7. VACATION. Employee shall receive no fewer than three (3) weeks 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 or prior to termination of employment, 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:

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     9. SEVERANCE BENEFITS.

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

     11. 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

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(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.

     To protect Employer from Employee’s solicitation of business from customers during the Restricted Period, Employee agrees that, subject to Paragraph 17 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 Business, solicit transportation, logistics or other business of the type provided by Employer for any customer with whom the Employee had material contact during the twelve (12) month period immediately preceding the termination of Employee’s employment. Material contact includes personal contact with customers, the supervision of the efforts of others who have personal contact with the customers, and the receipt of confidential information of customers of Employer. This Paragraph 11 shall, except as otherwise provided in this Agreement, survive the termination of this Agreement.

     12. COVENANT NOT-TO-DISCLOSE. Employee agrees that during employment with Employer and for a period of three (3) years following the cessation of that employment for any reason, Employee shall not directly or indirectly divulge or make use of any Confidential Information or Trade Secrets (so long as the information remains a Trade Secret or remains confidential) without prior written consent of Employer. Employee further agrees that if Employee is questioned about information subject to this agreement by anyone not authorized to receive such information, Employee will promptly notify Employee’s supervisor(s) or an officer of Employer. This Agreement does not limit the remedies available under common or statutory law, which may impose longer duties of non-disclosure. For purposes of this Agreement, the following definition shall apply:

“Confidential Information” means information about Employer and its Employees, Customers and/or Suppliers which is not generally known outside of Employer, which employee learns of in connection with employee’s employment with Employer, and which would be useful to competitors of Employer. Confidential Information includes, but is not limited to: (1) business and employment policies, marketing methods and the targets of those methods, finances, business plans, promotional materials and price lists; (2) the terms upon which Employer obtains products or services from its vendors and sells them to customers; (3) the nature, origin, composition and development of Employer’s products; (4) the manner in which Employer provides products and services to its customers.

Confidential Information shall not include information which: (1) Employee can show was in his possession on a nonconfidential basis, was known to the public, or appeared in published literature, prior to disclosure of such Confidential Information, (b) becomes known to the public or appears in published literature through no act of the Employee subsequent to the time of the Employee’s receipt of such Confidential Information, or (c) is lawfully acquired by the Employee from a third party who is not in breach of any confidentiality agreement or obligation with the disclosing party with respect to such Confidential Information.

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If the Employee is requested or becomes legally compelled (by oral questions, interrogatories, requests for information or documents, subpoena, civil or criminal investigative demand, or similar process) or is required by a regulatory body to make any disclosure that is prohibited or otherwise constrained by this Agreement, the Employee will provide the Employer with prompt notice of such request so that the Employer may seek an appropriate protective order or other appropriate remedy. Subject to the foregoing, the Employee may furnish that portion (and only that portion) of the Confidential Information which, in the written opinion of Employee’s counsel, the Employee is legally compelled or is otherwise required to disclose or else stand liable for contempt or suffer other material censure or material penalty; provided, however, that the Employee must use reasonable efforts to obtain reliable assurance that confidential treatment will be accorded any Confidential Information so disclosed.

     13. COVENANT NOT-TO-INDUCE. Employee covenants and agrees that during the Restricted Period, he will not, directly or indirectly, on Employee’s own behalf or in the service or on behalf of others, solicit, induce or attempt to solicit or induce an employee or other personnel of Employer and the Affiliates to terminate employment with such party. This Paragraph 13 shall, except as otherwise provided in this Agreement, survive the termination of this Agreement.

     14. COVENANT OF NON-DISPARAGEMENT AND COOPERATION. Employee agrees that he shall not, at any time during or following the Term, make any remarks disparaging the conduct or character of Employer or any of its current or former Affiliates, agents, employees, officers, directors, shareholders, successors or assigns (in the aggregate, such persons and entities are referred to herein as the “Protected Persons”); provided, however, that during the Term, Employer acknowledges and agrees that Employee may be required from time to time to make such remarks about Protected Persons for legitimate business purposes and if consistent with the discharge of Employee’s duties hereunder. In addition, following termination of Employee’s employment hereunder, Employee agrees to reasonably cooperate with Employer, 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 and other related expenses approved by Employer incurred in providing such assistance. This Paragraph 14 shall survive the termination of this Agreement.

     15. COVENANT NOT TO COMPETE. Employer and Employee acknowledge that, by virtue of Employee’s responsibilities and authority, he will, during the course of Employee’s employment, be instrumental in developing, and will receive, highly confidential information concerning Employer and the Affiliates, their services, their trade secrets, their proprietary information, and other information concerning the business of Employer and the Affiliates, much of which is unavailable to persons 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 Employee’s using or exploiting Employee’s information, Employee agrees that he shall not, for a period of twelve (12) months from the date

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of termination of this Agreement for any reason, perform substantially similar job duties or functions as those performed for Employer under this Agreement for any entity engaged in the Business in the 48 states of the continental United States of America (the “Restricted Territory”). This Paragraph 15 shall survive termination of this Agreement.

     16. SPECIFIC ENFORCEMENT. Employer and Employee expressly agree that a violation of the covenants contained in Paragraphs 11, 12, 13, 14 and 15 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 11, 12, 13, 14 and 15 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 11, 12, 13,14 and 15 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 11, 12, 13, 14 and 15 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. 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.

     20. 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 Employee’s 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.

     21. ASSIGNMENT.

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     22. NOTICES. All notices required herein shall be in writing and shall be deemed to have been given when delivered personally or five (5) days after the date on which such notice is 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
Attn: Thomas M. Duffy, General Counsel

If to Employee at:

1298 Waterford Green Trail
Marietta, GA 30068

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.

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

     24. 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.

     25. 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.

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     26. 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.

     27. D&O INSURANCE; INDEMNIFICATION. Employer shall maintain, for the benefit of Employee, director and officer liability insurance, in form at least as comprehensive as, and in an amount that is equal to, that maintained by Employer on the Effective Date, provided, however, that Employer’s Board of Directors or chief senior Executive Officer shall have the discretion to modify such coverage so long as such modification applies to all officers and directors. In addition, Employer shall indemnify Employee against liability as an officer and director of Employer to the same extent as other officers and directors of Employer in accordance with the constituent and organizational documents of Employer and consistent with applicable law. Employee’s rights under this Paragraph 27 shall continue so long as he may be subject to such liability, whether or not this Agreement may have been terminated prior hereto.

[signature page follows]

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

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EXHIBIT A

Release Agreement

Release

(a) Employee (including his heirs, successors and assigns) hereby releases the Company from any and all claims, demands, actions, and causes of action, and all liability whatsoever, whether known or unknown, suspected or unsuspected, fixed or contingent relating to Employee’s employment or termination from employment from AHI (including, without limitation, claims relating to Employee’s employment letter), up to the date of the execution of this Agreement. This includes but is not limited to claims at law or equity or sounding in contract (express or implied) or tort arising under federal, state, or local laws, anti-discrimination laws, and specifically includes, without limitation, the Age Discrimination in Employment Act (“ADEA”), and the Older Workers’ Benefits Protection Act (“OWBPA”) and any other comparable statute or law.

(b) Nothing contained in this Agreement shall affect or limit Employee’s rights under any pension, profit-sharing, 401(k) plan or similar qualified retirement plan currently in effect, or his rights to elect continued health insurance coverage, at his own cost, under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”). Nothing in this Agreement shall be interpreted to release any claims which arise under the terms of this Agreement or after the effective date of this Agreement. Employee’s release of claims herein is in exchange for the consideration set forth in this Agreement, which Employee agrees and acknowledges is in addition to anything of value to which Employee is already entitled. Any rights to indemnification which Employee may have under AHI’s Articles of Incorporation, Bylaws, insurance policies or other applicable agreements remain in effect notwithstanding this release.