IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: ALLIED SYSTEMS HOLDINGS, INC., et al.

, Debtors.
1

Chapter 11 Case No. 12-11564 (CSS) (Jointly Administered)

Hearing Date: Sept. 28, 2012 at 11:00 a.m. (EDT) Objection Deadline: Sept. 21, 2012 at 4:00 p.m. (EDT)

DEBTORS MOTION PURSUANT TO 11 U.S.C. 363(b)(1) AND 503(c)(3) SEEKING AN ORDER AUTHORIZING THE DEBTORS TO IMPLEMENT KEY EMPLOYEE RETENTION PLAN Allied Systems Holdings, Inc. (Allied Holdings) and its U.S. and Canadian subsidiaries (collectively, the Debtors) respectfully submit this motion (the Motion) for entry of an order, pursuant to 363(b)(1) and 503(c)(3) of title 11 of the United States Code (the Bankruptcy Code), authorizing the Debtors to implement a Key Employee Retention Plan more fully described below. In support of the Motion, the Debtors rely upon and

incorporate by reference the declaration of John F. Blount (the Blount Declaration) attached hereto as Exhibit B. In further support of the Motion, the Debtors respectfully represent as follows:

The Debtors in these cases, along with the federal tax identification number (or Canadian business number where applicable) for each of the Debtors, are: Allied Systems Holdings, Inc. (58-0360550); Allied Automotive Group, Inc. (58-2201081); Allied Freight Broker LLC (59-2876864); Allied Systems (Canada) Company (900169283); Allied Systems, Ltd. (L.P.) (58-1710028); Axis Areta, LLC (45-5215545); Axis Canada Company (875688228); Axis Group, Inc. (58-2204628); Commercial Carriers, Inc. (38-0436930); CT Services, Inc. (382918187); Cordin Transport LLC (38-1985795); F.J. Boutell Driveaway LLC (38-0365100); GACS Incorporated (58-1944786); Logistic Systems, LLC (45-4241751); Logistic Technology, LLC (45-4242057); QAT, Inc. (592876863); RMX LLC (31-0961359); Transport Support LLC (38-2349563); and Terminal Services LLC (910847582). The location of the Debtors corporate headquarters and the Debtors address for service of process is 2302 Parklake Drive, Bldg. 15, Ste. 600, Atlanta, Georgia 30345.

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JURISDICTION AND VENUE 1. This Court has jurisdiction to consider this Motion pursuant to 28 U.S.C. 1334.

Consideration of this Motion is a core proceeding pursuant to 28 U.S.C. 157(b). Venue of this proceeding is proper before this Court pursuant to 28 U.S.C. 1408 and 1409. BACKGROUND 2. On May 17, 2012, involuntary petitions were filed against Allied Holdings and its

subsidiary Allied Systems, Ltd. (L.P.) (Allied Systems) under Chapter 11 of the Bankruptcy Code in this Bankruptcy Court (the Court). On June 10, 2012 (the Commencement Date), the remaining Debtors filed voluntary petitions in this Court and, in connection therewith, Allied Holdings and Allied Systems consented to the involuntary petitions filed against them. The Petition Date of such Debtor is the date that such involuntary petition or voluntary petition was filed by or against such Debtor. The Chapter 11 cases commenced thereby and the entry of related orders for relief in the involuntary cases are, collectively, the Chapter 11 Cases. 3. The Debtors are authorized to operate their businesses as debtors-in-possession

pursuant to 1107 and 1108 of the Bankruptcy Code. On June 19, 2012, an official committee of unsecured creditors (the Creditors Committee) was appointed by the Office of the United States Trustee (the U.S. Trustee). 4. The Debtors major line of business, known in the industry as car haul, is the

transport of light vehicles, such as automobiles, sport-utility vehicles and light trucks, from manufacturing plants, ports, auctions, and railway distribution points to automobile dealerships in the United States and Canada by means of tractor trailers referred to as Rigs. The Debtors smaller line of business is logistics, which includes arranging for and managing vehicle distribution services, automobile inspections, auction and yard management services, vehicle

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tracking, accessorizing, and dealer preparation services for the automobile industry in the United States and Canada, and providing yard management services in Mexico. 5. As of the Petition Date, the Debtors employed approximately 1139 individuals in

the United States (U.S.) and approximately 909 individuals in Canada. Approximately 905 of the U.S. employees and 390 of the Canadian employees are governed by various collective bargaining agreements. The Debtors also employ approximately 330 non-bargaining employees on a full time basis in the U.S. and Canada (the Employees). RELIEF REQUESTED 6. By this Motion, the Debtors seek authority under sections 363(b)(1) and 503(c)(3)

of the Bankruptcy Code to implement a Key Employee Retention Plan (the Retention Plan) as described below. BASIS FOR RELIEF 7. Since the commencement of the Debtors Chapter 11 Cases, the Debtors have lost

a number of employees at various locations in the U.S. and Canada. The Debtors are already short staffed, and given the uncertainties that come with any Chapter 11 case, the potential loss of additional key employees is substantial and would be detrimental to the Debtors reorganization efforts. As such, the Debtors seek to implement a retention plan to stem the tide of further employee attrition during the pendency of these Chapter 11 Cases. The non-insider employees that would be covered by the Retention Plan are critical to the functioning of the Debtors ongoing operations. Accordingly, if these key employees begin a mass exodus, the Debtors operations will be significantly impaired which could have catastrophic consequences for the Debtors reorganization efforts. In order to avoid this harm, the Debtors have determined that it is necessary to implement the Retention Plan for these key employees. The terms of the

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Retention Plan are fully set forth in the Allied Systems Holdings, Inc. 2012 Key Employee Retention Plan attached hereto as Exhibit A.2 8. The Retention Plan is intended to cover seventy-nine (79) key non-insider

employees that work for various of the Debtor entities in both the U.S. and Canada. Participants in the Retention Plan will receive a lump sum bonus payment equivalent to fifteen percent (15%) of such participants Annual Base Salary3 to the extent that each participant remains in the Debtors employ (a) through and including the Effective Date of a Chapter 11 Plan, or (b) the participant incurs a Qualifying Termination of Employment prior to that time. A Qualifying Termination of Employment includes by reason of the death or Disability of the participant, by reason of a Partial Sale of the Debtors business or a termination of the participants employment without cause. The Debtors estimate that the aggregate potential payout under the Retention Plan is $799,523.95. LEGAL ANALYSIS 9. Section 503(c) of the Bankruptcy Code is the result of an amendment to the

Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 that imposes certain restrictions on the compensation that a debtor can pay to its executives and other employees in bankruptcy. Section 503(c)(1) prohibits payments intended to induce insiders to remain with the debtor unless the individual has a bona fide offer from another entity at the same or greater rate and the individuals services are essential to the survival of the debtors business. 11 U.S.C. 503(c)(1). Section 503(c)(1) also limits the amount of retention payments that can be

The Retention Plan attached hereto as Exhibit A is submitted without the exhibit containing certain confidential information, including the list of proposed participants in the Retention Plan and their projected payout under the plan. A copy of Exhibit A to the Retention Plan has previously been provided to the U.S. Trustee, the Creditors Committee, and other parties in interest in advance of the filing of this Motion and a copy of the Exhibit will be filed under seal with the Court. 3 All capitalized terms not otherwise defined herein shall have the meaning set forth in the Retention Plan.

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made to insiders.

See id.

Likewise, section 503(c)(2) permits severance payments to

insiders only if they are part of a program applicable to all employees and are less than ten times the mean of severance payments made to nonmanagement employees during that calendar year. 11 U.S.C. 503(c)(2). These sections, however, are limited in their application to insiders, and neither apply in the event that a plan is not primarily motivated to retain personnel or is not in the nature of severance. See In re Global Home Prods., LLC, 369 B.R. 778, 785 (Bankr. D. Del. 2007). 10. The Debtors respectfully submit that the Retention Plan proposed by the Debtors

does not include insiders, and therefore, sections 503(c)(1) and (c)(2) are inapplicable to the relief requested. In particular, none of the employees covered by the Retention Plan is a member of any of the Debtors boards of directors or participates in corporate governance issues for the Debtors. None of the proposed employees holds a statutory or non-statutory officer position with any of the Debtors. Likewise, none of the covered employees has discretionary control over substantial budgetary amounts. Finally, none of the covered employees is a general partner of the Debtors or a relative of a general partner, director, officer or person in control of the Debtors. Blount Declaration, 8. Based on such, the covered employees do not meet the statutory definition of an insider under Section 101(31)(B) of the Bankruptcy Code, and as such, Sections 503(c)(1) and (c)(2) are inapplicable to the relief sought. 11. Section 503(c)(3) of the Bankruptcy Code, however, limits the payment of

obligations outside of the ordinary course of business that are not covered by sections 503(c)(1) or (2). Specifically, section 503(c)(3) provides as follows: There shall neither be allowed, nor paid . . . (3) other transfers or obligations that are outside the ordinary course of business and not justified by the facts and circumstances of the case, including transfers made to, or

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obligations incurred for the benefit of, officers, managers, or consultants hired after the date of the filing of the petition. 11 U.S.C. 503(c)(3). Section 503(c)(3) only limits payments that are outside the ordinary course of business. Id. To the extent a retention plan falls within the ordinary course of the Debtors business, approval of the plan should be governed by 11 U.S.C. 363(c)(1), and the Court will not entertain an objection to the transaction, provided that the conduct involves a business judgment made in good faith upon a reasonable basis and within the scope of authority under the Bankruptcy Code. In re Nellson Nutraceutical, Inc., 369 B.R. 787, 797 (Bankr. D. Del. 2007) (citing In re Curlew Valley Associates, 14 B.R. 506, 513 (Bank. D. Utah 1981)). Because the Debtors did not have a similar retention plan in place for those employees proposed to be covered under the Retention Plan prior to the commencement of the Chapter 11 Cases, the Debtors do not contend that the proposed Retention Plan falls within the ordinary course of the Debtors business. Analysis of the Retention Plan under section 503(c)(3), therefore, is directly applicable. 12. The relevant inquiry under section 503(c)(3) is whether the proposed plan is

justified by the facts and circumstances of the case. 11 U.S.C. 503(c)(3). Courts have generally used a form of the business judgment standard to determine whether the section 503(c)(3) facts and circumstances standard has been satisfied. See, e.g., Transcript of Record at 40:17-41:2, In re Dura Automotive Systems, Inc., Case No. 06-11202 (Bankr. D. Del. Apr. 25, 2007) [Docket No. 1170] (section 503(c)(3) mean[s] something above the business judgment standard but maybe not much farther above it.); Old Ladder Co. (DE), Inc., Case No. 06-10578 (Bankr. D. Del. July 28, 2006 [Docket No. 259]; Aug. 23, 2006 [Docket No. 357]; and Dec. 21, 2006 [Docket No. 847]) (ordering various relief requested in connection with debtors incentive retention plans pursuant to sections 363(b) and 503(c) of the Bankruptcy Code); Transcript of

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Record at 86:18-87:2, In re Nobex Corp., Case No. 05-20050 (Bankr. D. Del. Jan. 12, 2006) [Docket No. 194] (ruling that [section 503(c)(3)] is the catch-all and the standard . . . for any transfers or obligations made outside the ordinary course of business . . . that are justified by the facts and circumstances of the case . . . I find it quite frankly nothing more than a reiteration of the standard under 363 . . . the business judgment of the debtor . . . . ; and entering an order approving the management incentive plan at issue on Jan. 20, 2006 [Docket No. 172]). 13. In applying section 503(c)(3), the Court in In re Dana Corp., 358 B.R. 567

(Bankr. S.D.N.Y. 2006), noted that the test in section 503(c)(3) appears to be no more stringent a test than the one courts must apply in approving an administrative expense under section 503(b)(1)(A). Any expense must be an actual, necessary cost or expense of preserving the estate. Dana, 358 B.R. at 576. The Court then went on to consider the following factors in determining whether the debtor had satisfied the sound business judgment test: (i) whether a reasonable relationship existed between the proposed plan and the desired results; (ii) whether the cost of the plan was reasonable in light of the overall facts of the case; (iii) whether the scope of the plan was fair and reasonable; (vi) whether the plan was consistent with industry standards; (v) whether the debtor had put forth sufficient due diligence efforts in formulating the plan; and (vi) whether the debtor received sufficient independent counsel in performing any due diligence and formulating the plan. See id. at 576-77. See also, In re Global Aviation Holdings, Inc., 2012 Bankr. LEXIS 3437, *18 (Bankr. E.D.N.Y July 24, 2012). 14. The Debtors respectfully submit that the proposed Retention Plan is justified by The Debtors board of directors

the facts and circumstances of these Chapter 11 Cases.

exercised sound business judgment in approving the Retention Plan, and the Retention Plan should be approved by the Court for the reasons set forth in detail below.

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The Proposed Retention Plan has a Reasonable Relationship to the Results to be Obtained 15. The Debtors were short staffed before the commencement of the Chapter 11

Cases and have already suffered the additional loss of a number of key employees during the pendency of these Chapter 11 Cases. As such, the Debtors have legitimate concerns that they are likely to face the loss of additional key employees in the future if something is not done immediately to stem the tide of such losses. The Retention Plan is intended to retain these key employees during the pendency of the Debtors Chapter 11 Cases by providing key employees with a reasonable degree of security in order to mitigate their concerns in the short-term and prevent a mass exodus of key employees during the pendency of the Chapter 11 Cases. The Debtors believe that the benefits provided under the Retention Plan will create a meaningful level of stability, morale, and motivation in the workplace and allow the Debtors to effectively manage the Debtors operations. 16. Moreover, if the Debtors continue to experience employee attrition at the current

rate, or as is more likely in these circumstances, a vastly accelerated rate, the Debtors will be forced to fill positions with temporary employees at higher rates in order to operate their businesses. Without the knowledge and the background of the Debtors systems, temporary employees will inevitably hinder the Debtors operations. At this time, key employees must be focused on properly performing their jobs during this critical period. Training new employees on the Debtors basic internal systems will inevitably distract management from these goals. Moreover, the cost of training these temporary employees and the loss of an experienced and efficient workforce would be substantially detrimental to the Debtors estates. The Cost of the Proposed Retention Plan is Reasonable 17. The payments contemplated under the Retention Plan are reasonable under the

circumstances of these Chapter 11 Cases and constitute actual and necessary costs and expenses -8-

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of preserving the Debtors estates.

The maximum cost to the Debtors estates under the

Retention Plan is $799,523.95, which would be payable to 79 employees. The proposed bonus is equivalent to 15% of each employees annualized salary. The Debtors submit that this is not an overly generous plan but one that is limited in scope and costs and specifically geared to retain the non-insider employees proposed to be covered by the Retention Plan. As of the Petition Date, the Debtors average monthly gross4 amount for wages, salaries and other compensation to its employees totaled approximately $6,675,000.00. The proposed retention payments represent approximately 12.0% of such monthly payroll expenses of the estate and approximately 1% of the gross payroll expenses on an annualized basis. As such, the Debtors respectfully submit that the proposed payments are more than reasonable under the circumstances of these Chapter 11 Cases and are specifically limited given the Debtors financial condition. 18. The proposed payments under the Retention Plan are necessary to reduce the risks

of key employee attrition and to mitigate such employees concerns over the status and stability of their employment and economic situation over the near term, thereby ensuring that these key employees remain with the Debtors through the conclusion of the Chapter 11 Cases. The Debtors believe the Retention Plan will improve employee morale and create a meaningful level of stability. The Proposed Retention Plan does not Discriminate Unfairly 19. The Debtors proposed Retention Plan does not discriminate unfairly against any

particular group of employees. Discrimination is permitted as long as it is fair because different employees may have different values to a debtors reorganization efforts. Global Aviation, 2012 Bankr. LEXIS 3437, at *23 (citing In re Borders Group, Inc., 453 B.R. 459, 475-76 (Bankr.

The gross amount includes certain deductions, such as payroll taxes owed by the employees but does not include employer taxes or employee 401(k) contributions.

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S.D.N.Y. 2011)). Moreover, no unfair discrimination exists if the pool of bonus recipients is not limited to the most senior executives and is broad enough to include lower-ranking employees vital to the Chapter 11 process. Id. The Retention Plan here, like the plan in Global Aviation, specifically excludes senior executives and officers and proposes to pay retention bonuses to mid-ranking employees whose positions are key to the Debtors operations. No employee groups have been unfairly discriminated against in the development of the Retention Plan. The Proposed Retention Plan Comports with Industry Standards 20. The Debtors submit that the proposed Retention Plan comports with industry

standards. The Debtors believe that the wages paid to its non-bargaining employees are on the low side of the industry, which in large part is a result of its current financial condition and the general economic climate in the industry. The proposed bonuses are modest and specifically geared to incentivize mid-ranking employees to stay with the company, and the Debtors believe such bonuses are consistent with bonuses available to comparable employees in its industry and substantially below what has been approved as reasonable in other Chapter 11 cases of comparable size and complexity. The Debtors have Exercised Due Diligence in Formulating the Retention Plan and Have Received Sufficient Counsel in Developing the Retention Plan 21. The Debtors have performed sufficient due diligence in investigating the need for

a retention plan and in determining the specific employees that should be eligible for a bonus. As previously indicated, the Debtors have already lost key employees since the commencement of the Chapter 11 Cases, and the Debtors management has first-hand knowledge of a number of employees who are actively looking for other employment in light of the Debtors bankruptcy filings. In light of this evidence, the Debtors management began the process of polling the various department heads in the Debtors operating businesses to determine which employees

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should be included in any potential retention plan developed in these Chapter 11 Cases. From that process, the Debtors management compiled a list of employees the Debtors management believes are critical to the Debtors continued operations. Working in close consultation with the Debtors bankruptcy counsel and financial advisors, the Debtors reduced the number of employees intended to be covered by the Retention Plan to seventy-nine (79) key employees that work for various of the Debtor entities in both the U.S. and Canada. 22. As the Debtors worked to develop the list of critical employees to be included in

the Retention Plan, the Debtors also began working on the possible parameters upon which a retention bonus should be paid. The Debtors view confirmation of a plan in this case as the key milestone through which employees should be retained and developed the Retention Plan with that idea in mind. The Debtors also recognize, however, that a potential sale of some or all of the Debtors assets is a possibility in these Chapter 11 Cases. In the event a sale is to occur, the Debtors anticipate that a number of positions would be eliminated in the process. The Debtors believe that any employees who are designated to receive a retention bonus should receive the proposed bonus if their position is eliminated after any such sale. The Retention Plan as proposed thus provides that bonuses would be payable upon the earlier to occur of confirmation of a plan in the Chapter 11 Cases or termination of a participants employment from a Qualifying Termination Event, which would include a termination following a sale of the Debtors assets. 23. The Debtors have not retained an independent benefits consultant to assist in the

formulation of the Retention Plan in these Chapter 11 Cases because the Debtors do not believe the cost of such is justified under the circumstances of these Chapter 11 Cases. Notwithstanding such, the Debtors believe that they have properly exercised appropriate due diligence in formulating the Retention Plan and have received sufficient counsel in the development of the

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Retention Plan. The Debtors respectfully submit that the Retention Plan is justified by the facts and circumstances of these Chapter 11 Cases and should be approved by the Court. 24. The Debtors have been advised that the Debtors DIP Lender Yucaipa consents to

the relief sought in this Motion and BDCM Opportunity Fund II, LP, Black Diamond CLO 20051 Adviser L.L.C and Spectrum Investment Partners LP do not object to the relief sought in the Motion. The Debtors are continuing to work to address questions raised by the U.S. Trustee and the Unsecured Creditors Committee with respect to the Retention Plan. NOTICE 25. The Debtors have provided notice of this Application to: (i) the U.S. Trustee; (ii)

counsel for the agent for the Debtors debtor-in-possession lenders; (iii) counsel for the CIT Group/Business Credit, Inc., as resigning agent under the Debtors first lien credit agreement, counsel for BDCM Opportunity Fund II, LP, Black Diamond CLO 2005-1 Adviser L.L.C and Spectrum Investment Partners LP, and each other lender under the Debtors first lien credit agreement; (iv) counsel for The Bank of New York Mellon, in its capacity as administrative agent and collateral agent under the Debtors second lien credit agreement; (v) counsel for the Creditors Committee; and (vi) all other persons requesting notices pursuant to Bankruptcy Rule 2002. In light of the nature of the relief requested, the Debtors respectfully submit that no further notice is necessary. NO PRIOR REQUEST 26. other court. No previous application for the relief sought herein has been made to this or any

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CONCLUSION WHEREFORE, the Debtors respectfully request that this Court enter an order, substantially in the form attached hereto as Exhibit C, granting the Motion and such other relief as may be just or proper. Dated: September 7, 2012 Wilmington, Delaware Respectfully submitted, /s/ Marisa A. Terranova______________ Mark D. Collins (No. 2981) Christopher M. Samis (No. 4909) Marisa A. Terranova (No. 5396) RICHARDS, LAYTON & FINGER, P.A. One Rodney Square 920 North King Street Wilmington, Delaware 19801 Telephone: (302) 651-7700 Facsimile: (302) 651-7701 E-mail: collins@rlf.com E-mail: samis@rlf.com E-mail: terranova@rlf.com -andJeffrey W. Kelley (GA Bar No. 412296) Ezra H. Cohen (GA Bar No. 173800) Jeffery W. Cavender (GA Bar No. 117751) TROUTMAN SANDERS LLP Bank of America Plaza 600 Peachtree Street, Suite 5200 Atlanta, Georgia 30308-2216 Telephone No.: (404) 885-3000 Facsimile No.: (404) 885-3900 jeffrey.kelley@troutmansanders.com ezra.cohen@troutmansanders.com carolyn.richter@troutmansanders.com matthew.brooks@troutmansanders.com benjamin.carlsen@troutmansanders.com Counsel for the Debtors

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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: ALLIED SYSTEMS HOLDINGS, INC., et al.,1 Debtors. Chapter 11 Case No. 12-11564 (CSS) (Jointly Administered)
Hearing Date: Sept. 28, 2012 at 11:00 a.m. (EDT) Objection Deadline: Sept. 21, 2012 at 4:00 p.m. (EDT)

NOTICE OF DEBTORS MOTION PURSUANT TO 11 U.S.C. 363(b)(1) AND 503(c)(3) SEEKING AN ORDER AUTHORIZING THE DEBTORS TO IMPLEMENT KEY EMPLOYEE RETENTION PLAN PLEASE TAKE NOTICE that, on September 7, 2012, the above captioned debtors and debtors in possession (collectively, the Debtors) filed the Motion Pursuant to 11 U.S.C. 363(b)(1) and 503(c)(3) Seeking an Order Authorizing the Debtors to Implement Key Employee Retention Plan (the Motion) with the United States Bankruptcy Court for the District of Delaware, Court). PLEASE TAKE FURTHER NOTICE that any responses or objections to the Motion must be in writing, filed with the Clerk of the Bankruptcy Court, 824 Market Street, 3rd Floor, Wilmington, Delaware 19801, and served upon and received by the undersigned proposed counsel for the Debtors on or before September 21, 2012 at 4:00 p.m. (Eastern Daylight Time). 824 Market Street, 3rd Floor, Wilmington, Delaware 19801 (the Bankruptcy

The Debtors in these cases, along with the federal tax identification number (or Canadian business number where applicable) for each of the Debtors, are: Allied Systems Holdings, Inc. (58-0360550); Allied Automotive Group, Inc. (58-2201081); Allied Freight Broker LLC (59-2876864); Allied Systems (Canada) Company (900169283); Allied Systems, Ltd. (L.P.) (58-1710028); Axis Areta, LLC (45-5215545); Axis Canada Company (875688228); Axis Group, Inc. (58-2204628); Commercial Carriers, Inc. (38-0436930); CT Services, Inc. (382918187); Cordin Transport LLC (38-1985795); F.J. Boutell Driveaway LLC (38-0365100); GACS Incorporated (58-1944786); Logistic Systems, LLC (45-4241751); Logistic Technology, LLC (45-4242057); QAT, Inc. (592876863); RMX LLC (31-0961359); Transport Support LLC (38-2349563); and Terminal Services LLC (910847582). The location of the Debtors corporate headquarters and the Debtors address for service of process is 2302 Parklake Drive, Bldg. 15, Ste. 600, Atlanta, Georgia 30345.

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PLEASE TAKE FURTHER NOTICE that if an objection is timely filed, served and received and such objection is not otherwise timely resolved, a hearing to consider such objection and the Motion will be held before The Honorable Christopher S. Sontchi at the United States Bankruptcy Court for the District of Delaware, 824 Market Street, 5th Floor, Courtroom 6, Wilmington, Delaware 19801 on September 28, 2012 at 11:00 a.m. (Eastern Daylight Time). IF NO OBJECTIONS TO THE MOTION ARE TIMELY FILED, SERVED AND RECEIVED IN ACCORDANCE WITH THIS NOTICE, THE BANKRUPTCY COURT MAY GRANT THE RELIEF REQUESTED IN THE MOTION WITHOUT FURTHER NOTICE OR HEARING.

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Dated: September 7, 2012 Wilmington, Delaware

Respectfully submitted, /s/ Marisa A. Terranova Mark D. Collins (No. 2981) Christopher M. Samis (No. 4909) Marisa A. Terranova (No. 5396) RICHARDS, LAYTON & FINGER, P.A. One Rodney Square 920 North King Street Wilmington, Delaware 19801 Telephone: (302) 651-7700 Facsimile: (302) 651-7701 E-mail: collins@rlf.com E-mail: samis@rlf.com E-mail: terranova@rlf.com -andJeffrey W. Kelley (GA Bar No. 412296) Ezra H. Cohen (GA Bar No. 173800) Carolyn P. Richter (GA Bar No. 574097) TROUTMAN SANDERS LLP Bank of America Plaza 600 Peachtree Street, Suite 5200 Atlanta, Georgia 30308-2216 Telephone No.: (404) 885-3000 Facsimile No.: (404) 885-3900 Email: jeffrey.kelley@troutmansanders.com Email: ezra.cohen@troutmansanders.com Email: carolyn.richter@troutmansanders.com Attorneys for the Debtors and Debtors-inPossession

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EXHIBIT A RETENTION PLAN

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ALLIED SYSTEMS HOLDINGS, INC. 2012 KEY EMPLOYEE RETENTION PLAN INTRODUCTION This Allied Systems Holdings, Inc. 2012 Key Employee Retention Plan (the Plan) is hereby established in order to aid in the retention of designated key employees of Allied Systems Holdings, Inc. (the "Company") and its Subsidiaries (as defined below) who will be involved in the restructuring of the Company and its Subsidiaries through bankruptcy and/or Company and Subsidiary operations during the restructuring, and will contribute to maximizing the value of the Company and its Subsidiaries. This Plan will provide a financial incentive by offering a Retention Bonus to designated key employees in consideration of their continued employment with the Company and its Subsidiaries during the restructuring of the Company and its Subsidiaries, subject to the terms and conditions of this Plan. ARTICLE I EFFECTIVE DATE OF PLAN; TERMINATION OF PLAN; SURVIVAL OF PROVISIONS 1.01 Effective Date

The effective date of the Plan (the "Effective Date") shall be the date that the Plan is approved by the Bankruptcy Court. In the event the Plan is not approved by the Bankruptcy Court, the Plan shall be null and void ab initio, and the Company shall have no obligation to make, and shall not make, any payments hereunder. 1.02 Termination of the Plan The Plan shall terminate upon the Effective Date of the Chapter 11 Plan. 1.03 Survival of Provisions

The provisions of the Plan shall survive to the extent necessary to provide for the payment and administration of Retention Bonuses that are awarded on or before the date of termination of the Plan. ARTICLE II DEFINITIONS 2.01 Administrative Committee

Administrative Committee means the Board, or any person, committee or other entity designated from time to time by the Board to administer the Plan and determine benefit eligibility hereunder, in whole or in part.

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2.02

Annual Base Salary

Annual Base Salary means the annualized rate of all regular cash compensation, excluding bonus payments and other items of extraordinary compensation, but including any regular cash compensation which is contributed to a Company or Subsidiary sponsored benefit plan pursuant to a salary deferral or reduction agreement (including, without limitation, an arrangement described in Sections 401(k) and 125 of the Code or the Registered Retirement Savings Plan as defined in the Income Tax Act (R.S.C. 1987, e.1 (5th Supp.))), as shown on the payroll records of the applicable Company or Subsidiary as of the date of participation under the Plan. In the case of a non-exempt employee or an employee entitled to overtime pay, Annual Base Salary shall be determined by multiplying the regular hourly rate of pay of the Participant at the applicable time by the standard number of hours for which the Participant is regularly scheduled to work per week by fifty two (52). 2.03 Bankruptcy Code

Bankruptcy Code means Title 11 of the United States Code, as amended from time to time, as applicable to the Companys Chapter 11 Case. 2.04 Bankruptcy Court

Bankruptcy Court means the United States Bankruptcy Court for the District of Delaware or such other court as may have jurisdiction over the Companys Chapter 11 Case and, to the extent of any reference under Section 157 of Title 28 of the United States Code, the unit of such District Court under Section 157 of Title 28 of the United States Code. 2.05 Cause

Cause shall mean (i) the Participants willful misconduct or gross negligence in connection with the performance of the Participants duties; (ii) the Participants embezzlement of funds or property of the Company or any of its Subsidiaries; (iii) the Participants fraud or dishonesty with respect to the Company or any of its Subsidiaries; (iv) the Participants indictment or entering of a guilty plea or plea of no contest with respect to any felony or any other crime involving moral turpitude; (v) the Participants material neglect of job duties in the course of the Participants employment (and for purposes of this Plan neglect shall be defined as not using efforts and devoting time to job duties consistent with past practices in all material respects), which is not cured within ten (10) days of receipt of written notice from the Company or any of its Subsidiaries; (vi) the Participants willful failure to perform the duties and responsibilities assigned to the Participant from time to time or to act in accordance with any specific instructions or policies of the Company or Subsidiary which employs the Participant; or (vii) anything that would constitute Cause under an employment or similar agreement between the Participant and the Company or any of its Subsidiaries, if applicable, regardless of whether such employment or similar agreement is subsequently approved or rejected by the Bankruptcy Court.

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2.06

Chapter 11 Case

Chapter 11 Case means the Companys and its Subsidiaries pending bankruptcy case in the United States Bankruptcy Court for the District of Delaware filed on June 10, 2012 (Case No. 12-11564). 2.07 Chapter 11 Plan

Chapter 11 Plan means any plan of reorganization or liquidation for the Company and its Subsidiaries under Chapter 11 of the Bankruptcy Code, proposed and/or supported by the Company and its Subsidiaries in the Chapter 11 Case. 2.08 Code Code means the Internal Revenue Code of 1986, as amended from time to time. 2.09 Company Company means Allied Systems Holdings, Inc., a Delaware corporation. 2.10 Disability

Disability shall have the meaning set forth in any long-term disability plan of the Company or any Subsidiary which covers the Participant, as in effect as of the Effective Date. If there is no such long-term disability plan, Disability shall mean (i) in the case of U.S. Participants, permanent and total disability as set forth in Section 22(e)(3) of the Code and (ii) in the case of Canadian Participants, the inability to perform the regular duties of the Participants job for a period of ninety (90) days. Notwithstanding the foregoing, if any employment or similar agreement between the Participant and the Company or a Subsidiary, as in effect as of immediately prior to commencement of the Companys Chapter 11 Case, contains a different definition of "Disability," such other definition as in effect as of such time shall apply for purposes of this Plan, regardless whether such employment or similar agreement is subsequently approved or rejected by the Bankruptcy Court. 2.11 Effective Date of the Chapter 11 Plan

Effective Date of the Chapter 11 Plan means the entry of a Final Order by the Bankruptcy Court confirming the Companys Chapter 11 Plan pursuant to Section 1129 of the Bankruptcy Code. Final Order means an order of the Bankruptcy Court as to which the time to appeal, to petition for certiorari, or to move for reargument or rehearing has expired and as to which no appeal, petition for certiorari or other proceedings for reargument or rehearing shall then be pending or as to which any right to appeal, petition for certiorari, reargue or rehear shall have been waived in writing in form and substance satisfactory to the Company or, in the event an appeal, writ of certiorari, reargument or rehearing thereof has been sought, such order of the Bankruptcy Court shall have been affirmed by the highest court to which such order was appealed, or certiorari, reargument or rehearing shall have been denied and the time to take any further appeal, petition for certiorari, or move for reargument or rehearing shall have expired; -3-

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provided, however, that the possibility that a motion under Rule 59 or Rule 60 of the Federal Rules of Procedure, or any analogous rule under the Federal Rules of Bankruptcy Procedure, may be filed with respect to such order shall not cause such order not to be a Final Order. 2.12 Employee

Employee means a full-time employee of the Company or any Subsidiary as shown on the payroll records of the Company or applicable Subsidiary. 2.13 Insider

Insider means the same as the definition of Insider in Section 101(31) of the Bankruptcy Code which includes, but is not limited to, a director, officer, person in control, a partnership in which the Company is a general partner, a general partner of the Company, or a relative of a general partner, director, officer or person in control of the debtor. 2.14 Notice of Participation

Notice of Participation means a written or electronic notice provided to an Employee that the Employee has been designated as a Participant in the Plan and setting forth the terms and conditions of the Participants Retention Bonus under the Plan. 2.15 Partial Sale of the Companys Business

Partial Sale of the Companys Business means any lease, sale, transfer or other disposition of some portion of the Companys business that does not constitute a Sale of the Companys Assets. 2.16 Participant

Participant means any Employee designated on the attached Exhibit A as a Participant in the Plan. 2.17 Plan

Plan means this Allied Systems Holdings, Inc. 2012 Key Employee Retention Plan, as may be amended from time to time. 2.18 Qualifying Termination of Employment

Qualifying Termination of Employment means, with respect to any Participant, the termination of the Participant's employment with the Company and its Subsidiaries (i) by reason of the Participant's death or Disability; (ii) by reason of a Partial Sale of the Companys Business or a Sale of the Companys Assets, in each case as determined by the Administrative Committee; (iii) by the Company without Cause; or (iv) as otherwise specifically set forth in the Participant's Notice of Participation. Termination of a Participant's employment for any other reason shall not constitute a Qualifying Termination of Employment.

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2.19

Retention Bonus

Retention Bonus means the bonus that a Participant would be eligible to receive upon satisfaction of the terms and conditions of the Plan and the Participant's Notice of Participation. For Canadian Participants, the Retention Bonus is inclusive of accrued vacation pay, so no separate vacation pay will be accrued or paid on such Retention Bonus for Canadian Participants. 2.20 Sale of the Companys Assets

Sale of the Company's Assets means the lease, sale or other disposition of all or substantially all of the assets of the Company unless the Board declares that a transaction involving the sale or other transfer of the securities of the Company or a Subsidiary or the lease, sale or other disposition of the assets of the Subsidiary constitute a sale of substantially all of the Company's assets, which determination may be made by the Board in its sole and absolute discretion and need not be determined for the purposes of all Participants but may be determined on a case-by-case basis for each individual Participant. Further, whether a transaction is a sale of substantially all of the assets of the Company need not be determined with reference to the Delaware General Corporation Law or cases decided thereunder. 2.21 Subsidiary

Subsidiary means any corporation during any period in which it is a subsidiary corporation (as that term is defined in Section 424(f) of the Code) with respect to the Company. ARTICLE III ADMINISTRATION OF THE PLAN 3.01 Administrative Committee The Plan shall be administered by the Administrative Committee. 3.02 Administrative Committee Action; Decisions Final

A majority of the Administrative Committee may act by meeting (whether in person or by telephone) or by a writing executed without a meeting. The Administrative Committee shall have the discretionary authority to interpret and administer the provisions of the Plan, including, but not limited to, the terms and conditions of the Participants Retention Bonus (to the extent not inconsistent with the Plan). The determination of the Administrative Committee shall be final and binding upon all parties. 3.03 Rules and Regulations

Subject to the limitations provided in this Article and Article V below, the Administrative Committee, from time to time, shall establish such supplemental rules and regulations for the administration of the Plan as it deems necessary.

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3.04

Indemnification of Members of Administrative Committee

To the extent not insured against by an insurance company pursuant to the provisions of any applicable insurance policy and to the extent permitted by applicable laws, the Company shall indemnify and hold harmless each member of the Administrative Committee against any personal liability or expense incurred by him or her as a result of any act or omission in his or her capacity as a member of the Administrative Committee, except as a result of his or her own negligence or willful misconduct. ARTICLE IV ELIGIBILITY 4.01 Designation of Participants

The Employees listed on the attached Exhibit A shall be Participants in the Plan and eligible to receive the Retention Bonuses set forth opposite their names. No other Employees will be designated as Participants in the Plan. The Administrative Committee shall have the sole and absolute discretion (to the extent not inconsistent with the Plan and subject to the prohibition of the award of Retention Bonuses to Insiders as set forth in Section 4.03 below) to determine (i) the terms and conditions of the Participants Retention Bonus and (ii) what other events may be treated as a Qualifying Termination of Employment. 4.02 Notice of Participation

The Administrative Committee shall provide a Notice of Participation to each Employee who is designated as a Participant. The Notice of Participation shall set forth the terms and conditions of the Participants Retention Bonus. In the event that, through clerical error or otherwise, an individual Notice of Participation does not accurately reflect the determination of the Administrative Committee as provided above, the determination of the Administrative Committee shall control. 4.03 No Insiders

Retention Bonuses will only be awarded to Employees who are not Insiders. Any Retention Bonus awarded to an Insider shall be null and void and no Retention Bonus will be earned by or payable to an Insider. ARTICLE V RETENTION BONUS 5.01 Amount of Retention Bonus

The Retention Bonus for each Participant will be equal to fifteen percent (15%) of the Participants Annual Base Salary.

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5.02

Retention Bonus

The Retention Bonus will become payable if (i) the Participant remains employed by the Company or any Subsidiary from the date of award of the Retention Bonus through and including the Effective Date of the Chapter 11 Plan or such later date as the Administrative Committee may specify in the Participants Notice of Participation or (ii) the Participant incurs a Qualifying Termination of Employment on or prior to the date set forth in clause (i) of this sentence. 5.03 Payment of Retention Bonus

A Participant need not file a claim in order to receive the Participants Retention Bonus. The Participants Retention Bonus will be paid in a lump sum by the Company or Subsidiary that employs the Participant within thirty (30) days following the date on which the Retention Bonus becomes payable as described above. Payment of a Retention Bonus under this Plan shall be subject to all applicable tax withholdings. 5.04 Pro Rata Payment of Retention Bonus

Participants taking a leave of absence approved by the Company or Subsidiary which employs the Participant shall have their Retention Bonus reduced pro rata for the period of the leave (other than with respect to a leave of absence under the Family and Medical Leave Act of 1993). 5.05 Termination of Participation

Participation in the Plan for any Participant shall automatically terminate, and all eligibility for further payment of any Retention Bonus under this Plan shall cease, without notice to or consent of such Participant, upon any termination of the Participants employment with the Company and its Subsidiaries, prior to the date the Retention Bonus otherwise becomes payable, which is not a Qualifying Termination of Employment. ARTICLE VI MISCELLANEOUS 6.01 Amendment and Termination of the Plan

The Plan is completely voluntary on the part of the Company and, except as provided herein, neither its existence nor its continuation shall be construed as creating any contractual right or obligation for its continued existence. The Board shall have the right to amend or terminate the Plan from time to time in any manner provided that (i) such amendment or termination is consistent with the terms of any order of the Bankruptcy Court approving the Plan and (ii) no amendment or termination may, in the absence of written consent to the change by the affected Participant (or, if the Participant is not then living, the affected beneficiary), materially adversely affect the rights of any Participant or beneficiary under any award with respect to any Retention Bonus granted under the Plan, and no such amendment or termination shall have the

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effect of retroactively changing or depriving Participants of payments already owed under the Plan. 6.02 Construction

One gender includes the other, and the singular and plural include each other when the meaning would be appropriate. The Plans headings and subheadings have been inserted for convenience of reference only and must be ignored in any construction of the provisions. If a provision of this Plan is illegal or invalid, that illegality or invalidity does not affect other provisions. Any term with an initial capital not expected by capitalization rules is a defined term according to Article II. This Plan must be construed according to applicable provisions of the Code and the Bankruptcy Code in a manner that assures that the Plan provides the benefits and tax consequences intended for Participants. Any terms defined in the Code and Bankruptcy Code that are not defined terms according to Article II are incorporated in this Plan by reference. 6.03 Governing Law

This Plan shall be construed, enforced, and administered with (i) for U.S. Participants, the laws of the State of Delaware, except to the extent that those laws are superseded by the laws of the United States of America and (ii) for Canadian Participants, the laws of the Province of Ontario, Canada. 6.04 Plan Creates No Separate Rights

Neither the creation, continuance, amendment or termination of the Plan and any Retention Bonus granted under the Plan gives any person a non-statutory legal or equitable right against the Company or any Subsidiaries or any of the Companys or Subsidiaries officers, agents, or other persons. The Plan does not modify the terms of the Participants employment. Notwithstanding any other provision of the Plan, nothing in this Plan shall confer upon any Participant the right to continue in the employment of the Company or any Subsidiary or affect any right of the Company or any Subsidiary to terminate the employment of such Participant at any time for any reason. 6.05 Non-Alienation of Benefits

None of the payments, benefits or rights of a Participant under the Plan shall be subject to any claim of any creditor, and, to the fullest extent permitted by law, all such payments, benefits and rights shall be free from attachment, garnishment, levy, execution, trustee's process, or any other legal or equitable process available to any creditor of such Participant, other than through the laws of descent and distribution. Any attempt by a Participant to alienate, anticipate, sell, transfer, commute, pledge, encumber, assign or charge any payments, benefits or rights, contingent or otherwise, under this Plan, other than through the laws of descent and distribution, shall be null and void.

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6.06

Successors

No rights or obligations of any Participant under this Plan may be assigned or transferred by the Participant other than rights to any Retention Bonus payable hereunder, which may be transferred only by will or the laws of descent and distribution. Each Participant shall have the right to designate a Beneficiary to receive such Participant's unpaid Retention Bonus in the event of the Participant's death. If no designated Beneficiary survives the Participant or if the Participant fails to designate a Beneficiary, payment of the Participants Retention Bonus shall be made to the Participants Estate. In the event of a Participant's death or a judicial determination of his incompetence, reference in this Plan to the Participant shall be deemed, where appropriate, to refer to the Participant's Beneficiary or Beneficiaries, estate or other legal representative(s). 6.07 Unfunded Plan

The Plan is intended to constitute an "unfunded" plan in regards to the payment of all Retention Bonuses. Except as may otherwise be provided by order of the Bankruptcy Court with respect to any Retention Bonus that is payable to a Participant, nothing contained herein shall give any Participant any rights that are greater than those of a general unsecured creditor of the Company and its Subsidiaries. 6.08 Omnibus Section 409A Provision

It is intended that any Retention Bonus that is granted under the Plan shall be exempt from Section 409A of the Code as a short-term deferral within the meaning of Treas. Reg. 1.409A-1(b)(4). Towards that end, each Retention Bonus granted under the Plan shall be construed to contain such terms as will qualify the payments for such exemption from Section 409A of the Code. Notwithstanding the foregoing, however, neither the Company nor any Subsidiary shall be liable to any Participant or any beneficiary of a Participant if any Retention Bonus is subject to Section 409A of the Code or the Participant or any beneficiary of a Participant is otherwise subject to any additional tax, interest or penalty for failure to comply with Section 409A of the Code.

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Exhibit A DOCUMENT TO BE FILED UNDER SEAL

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EXHIBIT B DECLARATION OF JOHN F. BLOUNT

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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: ALLIED SYSTEMS HOLDINGS, INC., et al.,1 Debtors. Chapter 11 Case No. 12-11564 (CSS) (Jointly Administered)

DECLARATION OF JOHN F. BLOUNT IN SUPPORT OF DEBTORS MOTION PURSUANT TO 11 U.S.C. 363(b)(1) AND 503(c)(3) SEEKING AN ORDER AUTHORIZING THE DEBTORS TO IMPLEMENT KEY EMPLOYEE RETENTION PLAN I, John F. Blount, hereby declare that the facts set forth herein are based upon my personal knowledge, information and belief. 1. I hold the positions of Senior Vice President, Chief Administrative Officer,

Secretary and General Counsel for Allied Systems Holdings, Inc. In those capacities, I am in charge of the legal, labor, risk, IT, human resources and benefits functions of the Debtors in these Chapter 11 Cases. 2 I have been employed by the Debtors since January of 2003, and I have had primary responsibility for the human resources function of the Debtors since 2007. As Chief Administrative Officer of the Company, and the person ultimately responsible for the human resource functions of the Debtors, I was directly involved in the process of developing the Allied Systems Holdings, Inc. 2012 Key Employee Retention Plan (the Retention Plan). In

The Debtors in these cases, along with the federal tax identification number (or Canadian business number where applicable) for each of the Debtors, are: Allied Systems Holdings, Inc. (58-0360550); Allied Automotive Group, Inc. (58-2201081); Allied Freight Broker LLC (59-2876864); Allied Systems (Canada) Company (900169283); Allied Systems, Ltd. (L.P.) (58-1710028); Axis Areta, LLC (45-5215545); Axis Canada Company (875688228); Axis Group, Inc. (58-2204628); Commercial Carriers, Inc. (38-0436930); CT Services, Inc. (382918187); Cordin Transport LLC (38-1985795); F.J. Boutell Driveaway LLC (38-0365100); GACS Incorporated (58-1944786); Logistic Systems, LLC (45-4241751); Logistic Technology, LLC (45-4242057); QAT, Inc. (592876863); RMX LLC (31-0961359); Transport Support LLC (38-2349563); and Terminal Services LLC (910847582). The location of the Debtors corporate headquarters and the Debtors address for service of process is 2302 Parklake Drive, Bldg. 15, Ste. 600, Atlanta, Georgia 30345. 2 All capitalized terms not otherwise defined herein shall have the meaning set forth in the Debtors Motion Pursuant to 11 U.S.C. 363(b)(1) and 503(c)(3) Seeking an Order Authorizing the Debtors to Implement Key Employee Retention Plan or the Retention Plan attached thereto as Exhibit A.

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connection therewith, I worked closely with the Debtors Chief Executive Officer and other senior management and consulted the Debtors bankruptcy attorneys and financial advisors. 2. The Debtors were short staffed before the commencement of the Chapter 11

Cases, and since the commencement of these Chapter 11 Cases the Debtors have lost a number of key employees at various locations in the U.S. and Canada. In addition, the Debtors

management is aware that a number of employees are actively exploring other employment opportunities in light of the fact that the Debtors find themselves in Chapter 11 bankruptcy proceedings for the second time. Given the uncertainties that come with any Chapter 11 case, and given the employee attrition the Debtors have already experienced to date, the Debtors management is concerned that the Debtors are likely to face the loss of additional key employees in the future, if something is not done immediately to stem the tide of such losses. 3. Moreover, if the Debtors continue to experience employee attrition at the current

rate, or as is more likely in these circumstances, a vastly accelerated rate, the Debtors will be forced to fill positions with temporary employees at higher rates in order to operate their businesses. Without the knowledge and the background of the Debtors systems, temporary employees will inevitably hinder the Debtors operations. At this time, key employees should be focused on properly performing their jobs during this critical period. Training new employees on the Debtors basic internal systems would distract management from these goals. Moreover, the cost of training temporary employees and the loss of an experienced and efficient workforce would be substantially detrimental to the Debtors estates. 4. In light of these facts, the Debtors management saw the specific need to develop

a program aimed at retaining key employees through the Chapter 11 process. In developing the Retention Plan and determining the appropriate people to participate in the Retention Plan, I

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began the process by polling the various department heads in the Debtors operating businesses to determine which employees should be included in any potential retention plan developed in these Chapter 11 Cases. From that process, I compiled a list of employees the Debtors Working in close

management believes are critical to the Debtors continued operations.

consultation with the Debtors bankruptcy counsel and its financial advisors, the Debtors reduced the number of employees to be covered under the Retention Plan to seventy-nine (79) key noninsider employees that work for various of the Debtor entities in both the U.S. and Canada. 5. As the Debtors developed the list of critical employees, the Debtors also began

working on the possible parameters upon which a retention bonus should be paid. The Debtors management views confirmation of a plan in these Chapter 11 Cases as the key milestone through which employees should be retained and developed the Retention Plan with that idea in mind. The Debtors management also recognized, however, that a potential sale of some or all of the Debtors assets is a possibility in these Chapter 11 Cases. In the event a sale is to occur, the Debtors management anticipates that a number of positions would be eliminated in the process. The Debtors management believes that any key employees designated to receive a retention bonus should receive the proposed bonus if their position is eliminated after any such sale. The Retention Plan was designed to accommodate that issue. 6. Under the Retention Plan as proposed, participants will receive a lump sum bonus

payment equivalent to fifteen percent (15%) of such participants Annual Base Salary to the extent that each participant remains in the Debtors employ (a) through and including the Effective Date of a Chapter 11 Plan, or (b) the participant incurs a Qualifying Termination of Employment prior to that time. A Qualifying Termination of Employment includes by reason of

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the death or Disability of the participant, by reason of a Partial Sale of the Debtors business or a termination of the participants employment without cause. 7. The Debtors estimate that the aggregate potential payout under the Retention Plan

is $799,523.95. The Debtors management believes that this is not an overly generous plan but one that is limited in scope and costs and specifically geared to retain the non-insider employees proposed to be covered by the Retention Plan. As of the Petition Date, the Debtors average monthly gross3 amount for wages, salaries and other compensation to its employees totaled approximately $6,675,000.00. The proposed retention payments represent approximately 12.0% of such monthly payroll expenses of the estate and approximately 1% of the gross payroll expenses on an annualized basis. As such, the proposed payments are more than reasonable under the circumstances of these Chapter 11 Cases and are specifically limited given the Debtors financial condition. 8. The Retention Plan excludes senior executives and officers of the Debtors and

proposes to pay retention bonuses only to mid-ranking employees whose positions are key to the Debtors operations. None of the employees proposed to be covered by the Retention Plan is a member of any of the Debtors boards of directors or participates in corporate governance issues for the Debtors. None of the proposed employees holds a statutory or non-statutory officer position with any of the Debtors. Likewise, none of the covered employees has discretionary control over substantial budgetary amounts. None of the covered employees is a general partner of the Debtors or a relative of a general partner, director, officer or person in control of the Debtors. Also, no employee groups have been unfairly discriminated against in the development of the Retention Plan.

The gross amount includes certain deductions, such as payroll taxes owed by the employees but does not include employer taxes or employee 401(k) contributions.

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9.

The proposed payments under the Retention Plan are necessary to reduce the risks

of key employee attrition and to mitigate such employees concerns over the status and stability of their employment and economic situation over the near term, thereby incentivizing these key employees to remain with the Debtors through the conclusion of the Chapter 11 Cases. The Debtors management believes the Retention Plan will improve employee morale and create a meaningful level of stability. 10. The Debtors management believes that the wages paid to its non-bargaining

employees are on the low side of the industry, which in large part is a result of its current financial condition and the general economic climate in the industry. The proposed bonuses are modest and specifically geared to incentivize mid-ranking employees to stay with the company. The Debtors believe such bonuses are consistent with bonuses available to comparable employees in the industry. 11. The Debtors have not retained an independent benefits consultant to assist in the

formulation of the Retention Plan in these Chapter 11 Cases because the Debtors do not believe the cost of such is justified under the circumstances of these Chapter 11 Cases. Notwithstanding such, the Debtors management believes that they have properly exercised appropriate due diligence in formulating the Retention Plan. 12. The Debtors board of directors has considered the Retention Plan developed by

the Debtors management team as a means to stem employee attrition in these Chapter 11 Cases, and after consultation with the Debtors bankruptcy counsel and financial advisors, the board of directors unanimously approved the Retention Plan. 13. Based upon my experience with the Debtors businesses, as well as my

knowledge of how the Debtors operate, I have concluded that the Retention Plan is necessary to

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retain the employees that are essential to the Debtors restructuring efforts. Retention Plan is narrowly tailored for the Debtors business purposes to

I believe the retain critical

employees, is in the best interest of the Debtors and their continuing business operations, and is justified by the facts and circumstances of these Chapter 11 Cases. I declare under penalty of perjury under the laws of the United States that the

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foregoing is true and cmTect.

JOHN F. BLOUNT

200985 13v l 002872.111292

EXHIBIT C PROPOSED ORDER

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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: ALLIED SYSTEMS HOLDINGS, INC., et al., Debtors.
1

Chapter 11 Case No. 12-11564 (CSS) (Jointly Administered)

Re: Docket No. ____

ORDER GRANTING DEBTORS MOTION PURSUANT TO 11 U.S.C. 363(b)(1) AND 503(c)(3) SEEKING AN ORDER AUTHORIZING THE DEBTORS TO IMPLEMENT KEY EMPLOYEE RETENTION PLAN Upon the Debtor Motion Pursuant to 11 U.S.C. 363(b)(1) and 503(c)(3) Seeking an Order Authorizing the Debtors to Implement Key Employee Retention Plan (collectively, the Motion), filed by the above-captioned debtors and debtors in possession (collectively, the Debtors); the Court having reviewed the Motion and all pleadings related thereto; the Court finding that (i) the Court has jurisdiction over this matter pursuant to 28 U.S.C. 157 and 1334, (ii) this is a core proceeding pursuant to 28 U.S.C. 157(b)(2)(A), (iii) notice of the Motion was sufficient under the circumstances and that no other or further notice need be provided, and (iv) capitalized terms not otherwise defined herein have the meaning given to them in the Motion; and the Court having determined that the legal and factual bases set forth in the Motion establish just cause for the relief granted herein; and the Court having determined that the relief sought in the Motion is in the best interests of the Debtors and their estates; and after due deliberation and sufficient cause appearing therefor,
The Debtors in these cases, along with the federal tax identification number (or Canadian business number where applicable) for each of the Debtors, are: Allied Systems Holdings, Inc. (58-0360550); Allied Automotive Group, Inc. (58-2201081); Allied Freight Broker LLC (59-2876864); Allied Systems (Canada) Company (900169283); Allied Systems, Ltd. (L.P.) (58-1710028); Axis Areta, LLC (45-5215545); Axis Canada Company (875688228); Axis Group, Inc. (58-2204628); Commercial Carriers, Inc. (38-0436930); CT Services, Inc. (382918187); Cordin Transport LLC (38-1985795); F.J. Boutell Driveaway LLC (38-0365100); GACS Incorporated (58-1944786); Logistic Systems, LLC (45-4241751); Logistic Technology, LLC (45-4242057); QAT, Inc. (592876863); RMX LLC (31-0961359); Transport Support LLC (38-2349563); and Terminal Services LLC (910847582). The location of the Debtors corporate headquarters and the Debtors address for service of process is 2302 Parklake Drive, Bldg. 15, Ste. 600, Atlanta, Georgia 30345.
1

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NOW, THEREFORE, IT IS HEREBY ORDERED THAT: 1. 2. 3. The relief sought in the Motion is GRANTED. The Retention Plan attached hereto as Exhibit A is approved. The Debtors are authorized and directed to make the payments authorized

under the Retention Plan in accordance with the terms thereof. 4. The provision of postpetition payments to the participants under the Retention

Plan as authorized herein shall be administrative expenses of the estates pursuant to section 503(b) of the Bankruptcy Code. 5. No statutory insider may receive payments pursuant to this Order, and the

Retention Plan may not be amended to include statutory insiders as participants without the prior approval of this Court. 6. The Debtors, their officers, employees and agents, are authorized to take or

refrain from taking such acts as are necessary and appropriate to implement and effectuate the relief granted herein. 7. This Court shall retain jurisdiction over all matters arising from or related to

the interpretation and implementation of this Order. Dated: _______________, 2012 Wilmington, Delaware

___________________________________________ THE HONORABLE CHRISTOPHER S. SONTCHI UNITED STATES BANKRUPTCY JUDGE

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EXHIBIT A TO ORDER RETENTION PLAN

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