Exhibit 10.3

 

EXECUTIVE SEVERANCE AGREEMENT

 

THIS EXECUTIVE SEVERANCE AGREEMENT (this “Agreement”) between YRC Worldwide
Inc., a Delaware corporation (“YRC”) and William D. Zollars (the “Executive”),

 

W I T N E S S E T H:

 

WHEREAS, the duly authorized Compensation Committee (the “Committee”) of the
Board of Directors (the “Board”) of YRC or the Board, has approved YRC entering
into revised severance agreements with key executives of YRC and its
Subsidiaries (collectively, the “Corporation”);

 

WHEREAS, the duly authorized Committee or the Board has selected the Executive
as a key executive of the Corporation; and

 

WHEREAS, should YRC receive any proposal from a third person concerning a
possible Business Combination (defined below) with, or acquisition of equity
securities of, YRC, the Board believes it important that the Corporation and the
Board be able to rely upon the Executive to continue in his position, and that
YRC have the benefit of the Executive performing his duties without his being
distracted by the personal uncertainties and risks created by such a proposal;

 

NOW, THEREFORE, the parties agree as follows:

 

1. Definitions. As used in this Agreement, the following capitalized terms shall
have the meanings given the terms in this Section 1.

 

(a) “Business Combination” means any transaction that is referred to as such in
the Certificate of Incorporation of YRC, as amended.

 

(b) “Cause” means

 

  (1) a conviction of a felony involving moral turpitude by a court of competent
jurisdiction that is no longer subject to direct appeal,

 

  (2) conduct that is materially and demonstrably injurious to YRC, or

 

  (3) the Executive’s willful engagement in one or more acts of dishonesty
resulting in material personal gain to the Executive at the expense of YRC.

 

(c) “Change of Control,” for the purposes of this Agreement, shall be deemed to
have taken place if:

 

  (1) a third person, including a “group” as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), purchases or
otherwise acquires shares of YRC after the date of this Agreement that, together
with stock held by such person or group, constitutes more than 50% of the total
fair market value or total voting power of the stock of YRC;

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  (2) a third person, including a “group” as defined in Section 13(d)(3) of the
Exchange Act purchases or otherwise acquires (or has acquired during the
12-month period ending on the date of the most recent acquisition by such person
or group) shares of YRC after the date of this Agreement and as a result thereof
becomes the beneficial owner of shares of YRC having 35% or more of the total
number of votes that may be cast for election of directors of YRC; or

 

  (3) as the result of, or in connection with any cash tender or exchange offer,
merger or other Business Combination, or contested election, or any combination
of the foregoing transactions, the Continuing Directors shall cease to
constitute a majority of the Board of Directors of YRC or any successor to YRC
during any 12-month period.

 

(d) “Continuing Director” means a director of YRC who meets the definition of
Continuing Director contained in the Certificate of Incorporation of YRC, as
amended.

 

(e) “Normal Retirement Age” means the last day of the calendar month in which
the Executive’s 65th birthday occurs.

 

(f) “Permanent Disability” means, as determined in the reasonable discretion of
the Board or the duly authorized Committee, Executive is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months or is, by reason of any
medically determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months, receiving income replacement benefits for a period of not less
than three months under an accident and health plan covering employees of the
Executive’s employer.

 

(g) “Subsidiary” means any domestic or foreign entity, of which YRC or its
Subsidiaries directly or indirectly owns a majority of the entity’s shares or
other equity interests normally entitled to vote in electing directors or
selecting management.

 

(h) “Target Bonus” means the incentive compensation that the Board or the duly
authorized Committee set or approved, that the Corporation has targeted to pay
the Executive if the Executive, the Corporation or a Subsidiary achieves certain
specified objectives that the Board or the duly authorized Committee has
outlined or approved. The term “Target Bonus” for the year of a Termination
means the Target Bonus of the Executive calculated as if the Executive were
entitled to receive the entire Target Bonus for the relevant period without
regard to whether the specified objectives are actually achieved.

 

(i) Construction & Interpretation. As used in this Agreement, unless the context
expressly requires the contrary, references to Sections shall mean the sections
and subsections of this Agreement; references to “including” shall mean
“including (without limitation)”; references to a “person” shall mean both legal
entities and natural persons; references to the singular shall include the
plural and vice versa; and references to the masculine shall include the
feminine and neutral, and vice versa.

 

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2. Services During Certain Events. If a third person begins a tender or exchange
offer for the shares of the Corporation, circulates a proxy to shareholders of
the Corporation, or takes other steps seeking to effect a Change of Control, the
Executive agrees that the Executive will not voluntarily leave the employ of the
Corporation without the consent of the Corporation and will render the services
contemplated in the recitals to this Agreement, until the third person has
abandoned or terminated the third person’s efforts to effect a Change of Control
or until 90 days after a Change of Control has occurred. If the Executive fails
to comply with the provisions of this Section 2, the Corporation will suffer
damages that are difficult, if not impossible, to ascertain. Accordingly, should
the Executive fail to comply with the provisions of this Section 2, the
Corporation shall retain the amounts that would otherwise be payable to the
Executive (other than accrued salary under Section 4(a) and normal health,
welfare and retirement benefits until the date of the Executive’s termination)
under this Agreement as fixed, agreed and liquidated damages but shall have no
other recourse against the Executive.

 

3. Termination After or in Connection With a Change of Control. For purposes of
this Agreement, the term “Termination” shall include the following in this
Section 3:

 

(a) the Corporation’s termination of the Executive’s employment with the
Corporation within two years after a Change of Control for any reason other than
death, Permanent Disability, retirement at or after his Normal Retirement Age or
Cause;

 

(b) the Corporation’s termination of the employment of the Executive with the
Corporation, for any reason other than death, Permanent Disability, retirement
at or after his Normal Retirement Age or Cause, if the termination occurs at any
time between:

 

  (1) the date the Corporation enters into a definitive agreement or files a
proxy statement, or the date a third person begins a tender or exchange offer,
in each case, in connection with a transaction that would constitute a Change of
Control, or the date the Corporation takes other steps seeking to effect a
Change of Control, and

 

  (2) the date the Change of Control transaction is either consummated,
abandoned or terminated (for this purpose, the Board shall have the sole and
absolute discretion to determine that a proposed transaction has been
abandoned), or

 

(c) the resignation of the Executive after the occurrence of any of the
following events within two years after a Change of Control:

 

  (1) an adverse change of the Executive’s title or a reduction or adverse
change in the nature or scope of the Executive’s authority or duties from those
the Executive exercised and performed immediately prior to the Change of
Control;

 

  (2) a transfer of the Executive to a location that is more than 35 miles away
from the location where the Executive was employed immediately prior to the
Change of Control;

 

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  (3) a substantial increase occurs in the amount of time the Executive is
required to spend traveling (for this purpose, a “substantial increase” will be
deemed to occur if the Executive is required to travel in an amount greater than
30% more in any calendar year, measured in number of days, as compared to the
average number of days the Executive was required to travel during the three
preceding calendar years).

 

  (4) any reduction in the rate of the Executive’s annual salary below his rate
of annual salary immediately prior to the Change of Control; or

 

  (5) any reduction in the level of the Executive’s fringe benefits or bonus
below a level consistent with the Corporation’s practice prior to the Change of
Control, other than changes applicable to all similarly situated executives of
the Corporation.

 

4. Termination Payments. In the event of a Termination, YRC shall provide to the
Executive the following benefits:

 

(a) YRC shall pay to the Executive, in accordance with its normal payroll
policies, the compensation and benefits that the Executive accrued through the
date of Termination. This amount shall include the pro rata amount of the
Executive’s Target Bonus for the year that includes the date of Termination.

 

(b) YRC shall pay to the Executive, on the “Termination Payment Commencement
Date” (defined below), as additional compensation for services rendered to the
Corporation, a lump sum cash amount (subject to the minimum applicable federal,
state or local lump sum withholding requirements, if any, unless the Executive
requests that a greater amount be withheld) equal to two times the sum of:

 

  (1) the Executive’s current base salary, and

 

  (2) the Executive’s Target Bonus in effect for the year that includes the date
of the Executive’s Termination (or if no such Target Bonus has been set, the
Target Bonus for the prior year).

 

If there are fewer than 120 whole or partial months remaining from the date of
the Executive’s Termination to his Normal Retirement Age, in lieu of the amount
described above in this Section 4(b), YRC shall pay to the Executive, on the
Termination Payment Commencement Date, as additional compensation for services
rendered to the Corporation, a lump sum cash amount (subject to the minimum
applicable federal, state or local lump sum withholding requirements, if any,
unless the Executive requests that a greater amount be withheld) equal to three
times the sum of:

 

  (3) the Executive’s current base salary, and

 

  (4) the Executive’s Target Bonus in effect for the year that includes the date
of the Executive’s Termination.

 

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With respect to a payment to the Executive pursuant to this Agreement, the
“Termination Payment Commencement Date” shall mean (x) if the Board (or its
delegate) determines in its sole discretion that as of the date of the
Executive’s Termination the Executive is a “specified employee” (as defined in
Section 409A(a)(2)(B)(i) of the Internal Revenue Code of 1986, as amended (the
“Code”), and Department of Treasury regulations and other interpretive guidance
issued thereunder) as of the date of the Executive’s Termination and that
Section 409A of the Code applies with respect to such payment, the first
business day following the six-month anniversary of the date of the Executive’s
Termination; or (y) if the Board (or its delegate) determines in its sole
discretion that the Executive is not such a “specified employee” as of the date
of the Executive’s Termination (or that Section 409A of the Code does not apply
with respect to such payment), the date of the Executive’s Termination. The
period commencing on the Executive’s date of Termination and ending on the
six-month anniversary of such date is referred to herein as the “Six-Month Delay
Period”)

 

(c) During the “Applicable Period” (defined below), following the Executive’s
Termination, the Corporation shall arrange to provide the Executive with
substantially similar benefits to the benefits the Executive would have received
if the Executive had remained an employee of the Corporation, including the
applicable medical, dental, life insurance, short-term disability, long-term
disability and perquisite plans and programs covering key executives of the
Corporation; provided that the Executive shall not be entitled to accrue any
benefits after Termination under any 401(k) plan or defined benefit or
contribution pension plan of the Corporation.

 

If the Board (or its delegate) determines in its sole discretion that
Section 409A of the Code applies with respect to any amount payable to or on
behalf of the Executive under a perquisite plan or other similar program of the
Corporation, then any amount payable to or on behalf of the Executive under such
perquisite plan or other similar program of the Corporation for each calendar
month during the Applicable Period shall be paid in monthly installments on the
last business day of the calendar month following such month; provided, however,
that if the Board (or its delegate) also determines in its sole discretion that
the Executive is a “specified employee” as of the date of the Executive’s
Termination, any such amount(s) payable during the Six-Month Delay Period shall
be paid in a lump sum on the Termination Payment Commencement Date, and for each
calendar month during the Applicable Period thereafter shall be paid in monthly
installments on the last business day of the calendar month following such
month. In addition, if the Board (or its delegate) determines in its sole
discretion that Section 409A of the Code applies to any medical, dental or life
insurance benefit that is to be provided to Executive pursuant to this Section
and that the Executive is a “specified employee” as of the date of the
Executive’s Termination, such benefit(s) shall not be provided during the
Six-Month Delay Period; provided, however, that, Executive and his dependent
shall be eligible to participate in and may elect to receive continued coverage
under the Corporation’s medical and dental plans in which he previously
participated in accordance with the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended (“COBRA”) or any successor law during the Six-Month
Delay Period, and YRC will reimburse Executive on the Termination Payment
Commencement Date the total amount

 

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of COBRA premiums Executive paid during such period; provided, further, that
thereafter, for the remainder of the Applicable Period, the Corporation shall
arrange to provide the Executive with substantially similar benefits to the
medical and dental benefits the Executive would have received if the Executive
had remained an employee of the Corporation.

 

“Applicable Period” means:

 

  (1) if there are fewer than 120 whole or partial months remaining from the
date of the Executive’s Termination to his Normal Retirement Date, three years,
or

 

  (2) if Section 4(c)(1) above is not applicable, two years,

 

in each case, from the date of the Executive’s Termination.

 

(d) The Executive shall be entitled to the Gross-Up Payment, if any, described
in Section 6.

 

5. Change of Control—Equity Grants and Awards and Supplemental Retirement
Benefits. In the event of a Change of Control, all options to acquire shares of
YRC, all shares of restricted YRC stock, all performance or share units and all
other equity or phantom equity incentives that the Corporation granted the
Executive under any agreement between Executive and Corporation or any plan of
the Corporation, including YRC’s 1992, 1996, 1997 and 1999 Stock Option Plans,
YRC’s 2002 Stock Option and Share Award Plan, YRC’s Executive Performance Plan,
as amended, YRC’s 2004 Long-Term Incentive and Equity Award Plan, and the 2004
Long-Term Incentive Plan, as amended from time to time, shall become immediately
vested, exercisable and non-forfeitable and all conditions of any grant or award
(including any required holding periods) shall be deemed to have been satisfied.
If the Executive is a participant in YRC’s 2004 Long-Term Incentive Plan or any
similar or successor plan,

 

(a) for any incomplete performance period under the plan, the Corporation shall
pay the Executive any cash or equity component upon the Change of Control that
the plan provides only if the plan so provides, assuming that the Corporation
would meet a Target performance for each period;

 

(b) for any completed performance period under the plan, to the extent the
Executive has not received the grant for the period:

 

  (i) if 75% or more of the data of the comparative companies necessary for
completing the calculation is available, then the Executive shall receive the
remaining portion of the grant upon the Change of Control based on the data
available seven days prior to the Change of Control; otherwise

 

  (ii) if less than 75% of the data of the comparative companies necessary for
completing data is available, then the Executive shall receive the remaining
portion of the grant upon the Change of Control, assuming that the Corporation
would meet the Target performance for the period; provided that if the Executive
had previously received a partial grant and that grant exceeded a grant for
Target performance, the Executive shall not be required to return the prior
grant; and, in each case, any equity component shall be treated in accordance
with the first sentence of this Section 5.

 

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In addition to the foregoing, in the event of a Change of Control, YRC shall pay
the Executive the Supplemental Retirement Benefit provided for under
Section 4(h) of the Employment Agreement by and between YRC and Executive dated
January 25, 2006 in one lump sum payment within 30 days following such Change of
Control; provided that such benefit shall be determined by taking into account
the reduction for early payment as described in Section 4(h)(i) and applying the
Moody’s Corporate Bond Rate in existence at the time of the lump sum payment as
the “Discount Rate.”

 

6. Additional Payments by YRC.

 

(a) Gross-Up Payment. If it shall be determined that the Corporation’s payment
or provision of any payment or benefit of any type to or for the benefit of the
Executive, whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise (determined without regard to any
additional payments required under this Section 6) (the “Total Payments”) would
be subject to the excise tax imposed by Section 4999 of the Code(or any similar
tax that may hereafter be imposed) or any interest or penalties with respect to
the excise tax (the excise tax, together with any interest and penalties, are
collectively referred to as the “Excise Tax”), then YRC shall pay the Executive
an additional payment (a “Gross-Up Payment”) in an amount such that after the
Executive’s payment of all taxes (including all federal, state or local taxes
and any interest or penalties imposed with respect to those taxes), including
any Excise Tax, imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Total
Payments. YRC shall pay the Gross-Up Payment promptly following the Accounting
Firm’s (defined below) determination described in Section 6(b) or in accordance
with Sections 6(c) or 6(e).

 

(b) Accounting Firm Determination. An independent accounting firm that YRC
retains (the “Accounting Firm”) shall make all determinations that this
Section 6 requires, including whether a Gross-Up Payment is required and the
amount of the Gross-Up Payment. YRC shall cause the Accounting Firm to provide
detailed supporting calculations both to YRC and the Executive within 15
business days of the date of Termination, if applicable, or such earlier time
that YRC requests. If the Accounting Firm determines that the Executive is not
required to pay an Excise Tax, the Accounting Firm shall furnish the Executive
with an opinion that the Executive has substantial authority not to report any
Excise Tax on his federal income tax return. The Accounting Firm’s determination
shall be binding upon YRC and the Executive. As a result of the uncertainty in
the application of Section 4999 of the Code at the time of the Accounting Firm’s
initial determination, it is possible that Gross-Up Payments that YRC will not
have been made should have been made (“Underpayment”) consistent with the
calculations that this Agreement requires. If YRC exhausts its remedies pursuant
to Section 6(c) and the Executive thereafter is required to make a payment of
any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and YRC shall pay the Underpayment promptly to or
for the benefit of the Executive. YRC shall promptly pay all expenses of the
Accounting Firm.

 

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(c) Notification Required. The Executive shall notify YRC in writing of any
Internal Revenue Service claim that, if successful, would require YRC’s payment
of the Gross-Up Payment. The Executive shall give YRC the notification as soon
as practicable but no later than ten business days after the Executive knows of
the claim and shall apprise YRC of the nature of such claim and the date on
which such claim is requested to be paid; provided that the Executive’s failure
to give the notice within the 10-day period shall only prejudice the Executive’s
rights pursuant to Section 6 to the extent that YRC’s ability to reduce the
amount of the Gross-Up Payment have been prejudiced. The Executive shall not pay
the claim prior to the expiration of the 30-day period following the date on
which the Executive gives notice to YRC (or such shorter period ending on the
date that any payment of taxes with respect to the claim is due). If YRC
notifies the Executive in writing prior to the expiration of the period that it
desires to contest the claim, the Executive shall:

 

  (1) give YRC any information that YRC reasonably requests relating to the
claim,

 

  (2) take such action in connection with contesting the claim as YRC shall
reasonably request in writing from time to time, including, accepting legal
representation with respect to the claim by an attorney that YRC reasonably
selects,

 

  (3) cooperate with YRC in good faith to effectively contest the claim,

 

  (4) permit YRC to participate in any proceedings relating to the claim;
provided, that YRC shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with the contest and
shall indemnify and hold the Executive harmless, on an after-tax basis, for any
Excise Tax or income tax, including interest and penalties, imposed as a result
of the representation and payment of costs and expenses.

 

Without limitation on the foregoing provisions of this Section 6(c), YRC shall
control all proceedings taken in connection with the contest and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of a claim and
may, at its sole option, either direct the Executive to pay the tax claimed and
sue for a refund, or contest the claim in any permissible manner. The Executive
agrees to prosecute the contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as YRC shall determine; provided, that if YRC directs the Executive to
pay the claim and sue for a refund, YRC shall advance the amount of the payment
to the Executive, on an interest-free basis and shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income tax,
including interest or penalties, imposed with respect to the advance or with
respect to any imputed income with respect to the advance; and further provided
that any extension of the statute of limitations relating to payment of taxes
for the taxable year of the Executive with respect to which the contested amount
is claimed to be due is limited solely to the contested amount. YRC’s control of
the contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable under this Agreement and the Executive shall be entitled to
settle or contest, as the case may be, any other issue that the Internal Revenue
Service or any other taxing authority raises.

 

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(d) Repayment. If, after the Executive’s receipt of an amount that YRC paid or
advanced pursuant to this Section 6, the Executive becomes entitled to receive a
refund with respect to the claim, the Executive shall (subject to YRC’s
complying with the requirements of this Section 6), promptly pay to YRC the
amount of the refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after the Executive’s receipt of an amount that
YRC paid or advanced pursuant to this Section 6, a determination is made that
the Executive shall not be entitled to any refund with respect to the claim and
YRC does not notify the Executive in writing of its intent to contest the denial
of refund prior to the expiration of 30 days after the determination, then the
payment or advance shall be forgiven and shall not be required to be repaid and
the amount of the payment or advance shall offset, to the extent thereof, the
amount of Gross-Up Payment required to be paid.

 

(e) Section 409A. If any Gross-Up Payment required pursuant to this Section 6 is
determined by the Board (or its delegate) to be subject to Section 409A of the
Code, such payment shall be made as follows:

 

  (i) if such Gross-Up Payment is made due to a Change in Control (i.e., such
payment or provision is made without taking into account Executive’s
Termination), then YRC shall pay such Gross-Up Payment on the date of the Change
of Control or, if later, as soon as administratively practicable following the
Accounting Firm’s determination described in Section 6(b);

 

  (ii) if such Gross-Up Payment is made on or after, and due to, Executive’s
Termination, then YRC shall pay such Gross-Up Payment incurred during the
Six-Month Delay Period in a lump sum on the Termination Payment Commencement
Date, and for each calendar month thereafter in which such a Gross-Up Payment
becomes due in monthly installments on the last business day of the calendar
month following the month such payment becomes due; and

 

  (iii) if such Gross-Up Payment is due pursuant to Section 6(c), then YRC shall
pay such Gross-Up Payment no later than March 15th of the calendar year
following the calendar year in which the alleged obligation of Executive, as
reflected by Executive’s receipt of a claim by the Internal Revenue Service, is
received by Executive; and

 

  (iii) notwithstanding Sections 6(e)(i) or (ii), if a Gross-Up Payment due
under Section 6 is paid pursuant to Section 6(b) or (c), such payment will be
considered a distribution payable on the date of the Change in Control or the
Executive’s date of Termination, respectively, as permitted under Section 409A
and proposed Treasury Regulation § 1.409-3(d) (because such payment was not
administratively practicable due to events beyond the control of the Executive)
and, as such, shall be made as soon as administratively practicable (but in no
event shall it be made later than the end of the first calendar year in which
the payment becomes administratively practicable).

 

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7. General.

 

(a) Confidentiality. The Executive shall hold in a fiduciary capacity for the
benefit of the Corporation all data, reports and other information relating to
the business of the Corporation that comes into the possession of the Executive
during the Executive’s employment with the Corporation (collectively,
“Confidential Information”). During the Executive’s employment with the
Corporation and after termination of the Executive’s employment, the Executive
agrees:

 

  (i) to take all such precautions as may be reasonably necessary to prevent the
disclosure to any third person of any of the Confidential Information;

 

  (ii) not to use for the Executive’s own benefit any of the Confidential
Information; and

 

  (iii) not to aid any other person in the use of the Confidential Information
in competition with the Corporation; provided that nothing in this Agreement
shall prohibit the Executive from disclosing or using any Confidential
Information:

 

  (A) in the performance of the Executive’s duties as an employee of the
Corporation,

 

  (B) as required by applicable law,

 

  (C) in connection with the enforcement of the Executive’s rights under this
Agreement or any other agreement with the Corporation,

 

  (D) in connection with the defense or settlement of any claim, suit or action
brought or threatened against the Executive by or in the right of the
Corporation, or

 

  (E) with the prior written consent of the Board.

 

Notwithstanding any provision contained herein to the contrary, the term
“Confidential Information” shall not be deemed to include any general knowledge,
skills or experience acquired by the Executive or any knowledge or information
known or available to the public in general. The Executive further agrees that,
within 90 days after termination of the Executive’s employment for any reason,
the Executive will surrender to the Corporation all Confidential Information,
and any copies of Confidential Information, in his possession and agrees that
all the materials and copies, are at all times the property of the Corporation.
Notwithstanding the foregoing, the Executive shall be permitted to retain copies
of, or have access to, all Confidential Information relating to any
disagreement, dispute or litigation (pending or threatened) involving the
Executive.

 

(b) Remedies. In the event of a breach or threatened breach by the Executive of
the provisions of Section 7(a), the Corporation shall be entitled to an
injunction restraining the Executive from violating Section 7(a) without the
necessity of posting a bond. Nothing herein shall be construed as prohibiting
the Corporation from pursuing any other

 

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remedies available to it at law or in equity. The parties agree that the
provisions of this Section 7(a) shall survive the termination of the Executive’s
employment with the Corporation, as the continuation of this covenant is
necessary for the protection of the Corporation.

 

(c) Payment Obligations Absolute. YRC’s obligation to pay the Executive the
compensation and to make the arrangements provided herein shall be absolute and
unconditional and shall not be affected by any circumstance, including any
setoff, counterclaim, recoupment, defense or other right that the Corporation
may have against the Executive or anyone else. Notwithstanding the foregoing,
the Company shall have the right to withhold all applicable federal, state or
local taxes on any amount paid or payable under this Agreement. All amounts that
YRC owes under this Agreement shall be paid without notice or demand. Each and
every payment that YRC makes under this Agreement shall be final, and YRC will
not seek to recover all or any part of the payment from the Executive or from
whosoever may be entitled to the payment, for any reason whatsoever. The
Executive shall not be obligated to seek other employment in mitigation of the
amounts payable or arrangements made under any provision of this Agreement, and
the obtaining of any such other employment shall in no event affect any
reduction of YRC’s obligations to make the payments that this Agreement
requires.

 

(d) Obligations to Pay Costs. If the Corporation terminates the Executive, and
if the Executive successfully asserts a claim, action or proceeding against the
Corporation for benefits under this Agreement or any other agreement between the
Executive and the Corporation, the Corporation shall promptly pay or reimburse
the Executive for all costs and expenses, including court costs and attorneys’
fees, that the Executive incurs in connection with the claim, action or
proceeding. For purposes of this Section 7(e), the Executive will be deemed to
have successfully asserted a claim, action or proceeding against the Corporation
if, as a result of the claim, action or proceeding, the Corporation pays to the
Executive, under this Agreement or any other agreement between the Executive and
the Corporation, any amounts in addition to the amounts the Executive would be
entitled to receive upon a termination for Cause.

 

(e) Successors. This Agreement shall be binding upon and insure to the benefit
of the Executive and his estate and the Corporation and any successor of the
Corporation, but the Executive may neither assign nor pledge this Agreement or
any rights arising under this Agreement.

 

(f) Severability. Any provision in this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to the jurisdiction, be ineffective
only to the extent of the prohibition or unenforceability without invalidating
or affecting the remaining provisions of this Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable the provision in any other jurisdiction.

 

(g) Controlling Law. The laws of the State of Delaware, without reference to its
law on conflicts of law, shall govern this Agreement shall in all respects.

 

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(h) Termination. A majority of the Continuing Directors may terminate this
Agreement upon notifying the Executive; except that a termination shall not be
made, and if made shall have no effect,

 

  (1) within two years after the Change of Control in question, or

 

  (2) during any period of time when YRC has knowledge that any third person has
taken steps reasonably calculated to effect a Change of Control until, in the
opinion of a majority of the Continuing Directors the third person has abandoned
or terminated his efforts to effect a Change of Control. Any decision by a
majority of the Continuing Directors that the third person has abandoned or
terminated his efforts to effect a Change of Control shall be conclusive and
binding on the Executive.

 

(i) This Agreement amends, restates, replaces and supercedes those Executive
Severance Agreements dated as of April 4, 1997 and October 20, 1998 between the
Corporation and the Executive in its entirety.

 

(j) Deferred Compensation. This Agreement is intended to meet the requirements
of Section 409A of the Code and may be administered in a manner that is intended
to meet those requirements and shall be construed and interpreted in accordance
with such intent. To the extent that an award or payment, or the settlement or
deferral thereof, is subject to Section 409A of the Code, except as the
Committee otherwise determines in writing, the award shall be granted, paid,
settled or deferred in a manner that will meet the requirements of Section 409A
of the Code, including regulations or other guidance issued with respect
thereto, such that the grant, payment, settlement or deferral shall not be
subject to the excise tax applicable under Section 409A of the Code. Any
provision of this Agreement that would cause the award or the payment,
settlement or deferral thereof to fail to satisfy Section 409A of the Code shall
be amended (in a manner that as closely as practicable achieves the original
intent of this Agreement) to comply with Section 409A of the Code on a timely
basis, which may be made on a retroactive basis, in accordance with regulations
and other guidance issued under Section 409A of the Code. In the event
additional regulations or other guidance is issued under Section 409A of the
Code or a court of competent jurisdiction provides additional authority
concerning the application of Section 409A with respect to the payments
described in Sections 4 and 6 of the Agreement, then the provisions of such
Sections shall be amended to permit such payments to be made at the earliest
time permitted under such additional regulations, guidance or authority that is
practicable and achieves the original intent of this Agreement. Any payments
made under the Agreement due to the Executive’s Termination as defined in
Section 3 hereof are intended to be payments made upon a “separation from
service” as described in Section 409A of the Code.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the 25th day
of January, 2006.

 

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EXECUTIVE:   YRC WORLDWIDE INC.

/s/ William D. Zollars

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  By:  

/s/ Daniel J. Churay

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William D. Zollars       Daniel J. Churay         Senior Vice President, General
Counsel & Secretary

 

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