EMPLOYMENT AGREEMENT
Exhibit 10.23
THIS AGREEMENT is made as of the 1st day of October, 2005, by and between RENT-WAY,
INC., a Pennsylvania corporation, with offices at One RentWay Place, Erie, Pennsylvania 16505 (the
“Company”) and Xxxxxxx X. Xxxxxxx, an individual residing at 0000 Xxxx Xxxx, Xxxxxxxxx,
Xxxxxxxxxxxx 00000 (the “Employee”).
WHEREAS, the Company desires to employ the Employee and the Employee desires to accept such
employment upon the terms and conditions contained in this Agreement, and
WHEREAS, the Company and the Employee desire to rescind all prior agreements regarding
employment between them and make this Agreement the sole contract governing the Company’s
employment of the Employee.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein the
Company and the Employee agree as follows:
1. Term. Subject to the terms and conditions set forth in this Agreement, the Company
hereby agrees to employ the Employee, and the Employee hereby accepts such employment, for the
period beginning on the date of this Agreement and continuing until 1) either party gives at least
two (2) weeks prior written notice to the other of the termination of this Agreement or 2) until
this Agreement is otherwise terminated as provided herein.
If the Company terminates this Agreement for any reason other than the Employee’s death
pursuant to Section 5, the Employee’s disability pursuant to Section 6, or for cause pursuant to
Section 9, the Employee shall have the right to receive continuing payments of bi-weekly base
salary (at the rate in effect at the time notice of termination is given) during the 12-month
period following the date on which termination is effective. Such continuing payments of base
salary shall be severance pay and shall not constitute a continuation of the Employee’s employment
for any reason.
2. Office; Duties. During the Term, the Employee shall serve as Executive Vice
President/Chief Operating Officer. The President or his designee may at any time change the title
of the Employee.
Employee shall perform such duties and discharge such responsibilities as the President or his
designee shall from time to time reasonably direct. The Employee agrees to perform such duties and
discharge such responsibilities in a faithful manner and to the best of his ability. The Employee
agrees to devote his full business time and attention to the business and affairs of the Company
and to use his best efforts to promote the interests of the Company. The Employee further agrees
that he will engage in no outside business concerns or activities that conflict with his duties to
the Company, or are directly or indirectly competitive with the Company, without the Company’s
prior written consent.
The President or his designee may from time to time assign to the Employee additional duties
and responsibilities and delegate to other employees of the Company duties and responsibilities
normally discharged by the Employee. All such assignments and delegations of duties and
responsibilities shall be made by the President or his designee and may include a reduction of the
Employee’s duties and responsibilities or a reduction in the Employee’s position as reasonably
determined by the President or his designee.
3. Compensation. During the Term, the Company agrees that:
3.1 The Employee shall receive an annual base salary of $215,000, payable in installments in
accordance with the regular payroll practices of the Company. The Company shall deduct
or withhold
from payments of base salary, and from all other payments made to the Employee pursuant to this
Agreement, all amounts which may be required to be deducted or withheld under any applicable law
now in effect or which may become effective during the term of this Agreement (including but not
limited to Social Security contributions and income tax withholdings). The Employee’s base salary
shall be reviewed annually by the President or his designee and may reasonably be increased or
decreased on the basis of individual and corporate performance in accordance with criteria and
standards established by the President or his designee.
3.2 Incentive Compensation; Bonuses. In addition to base salary, the Employee shall
be entitled to (i) participate in such incentive plans (including the right to defer income and
bonuses) made available by the Company to its executives and key employees and (ii) receive such
additional bonus or discretionary compensation payments as the President or his designee may
determine from time to time. The Employee’s eligibility for incentive plan participation and
additional bonus or discretionary compensation payments shall be reviewed annually by the President
or his designee and shall be awarded on the basis of corporate performance and in accordance with
criteria and standards established in the sole discretion of the President or his designee. The
target amount of the bonus shall be 40% of the Employee’s base salary at the end of the fiscal
period for which the bonus is calculated.
3.3 Expenses. During the Term, the Employee shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred in connection with the performance of his duties
in accordance with the policies and procedures of the Company as may be in effect from time to
time.
3.4 Benefits. During the Term, the Employee shall be entitled to receive a package of
benefits that includes all of the programs, plans and perquisites currently provided by the Company
to its employees, for so long as such programs, plans and perquisites are continued by the Company
and are available to employees of the Company.
4. Stock Options. Immediately following the execution of this Agreement, the Company
shall grant to the Employee incentive stock options to purchase 50,000 shares of the Company’s
Common Stock pursuant to and in accordance with a Stock Option Plan of the Company, as designated
by the Company. The options shall vest and become exercisable immediately but must be exercised
within a five-year period from the date of grant. Additionally, the shares received on exercise of
options will not be transferable except as follows: 16,666 shares on the third anniversary of the
date of grant, 16,667 shares on the fourth anniversary of the date of grant, and 16,667 shares on
the fifth anniversary of the date of the grant.
5. Termination of Employment by Reason of Death. If the Employee dies during the
Term, this Agreement shall terminate automatically as of the date of his death and the Company
shall pay to the Employee’s legal representatives such benefits determined in accordance with any
then existing Company-sponsored plans or programs providing benefits at death.
6. Termination of Employment by Reason of Disability. In the event that the Employee
shall sustain a disability which in the opinion of medical authority satisfactory to the Company
would substantially prevent him from rendering the services required under this Agreement for a
total of 180 days during any 360-day period, the Company shall have the right to terminate this
Agreement upon thirty (30) days’ prior written notice to the Employee.
7. Termination After a Change in Control of the Company.
(a) If within ninety (90) days following the occurrence of a Change of Control of the Company
(as defined in Appendix A) the Employee elects to voluntarily terminate his employment with the
Company, the Employee shall be entitled to receive continuing payments of bi-weekly base salary (at
the rate in effect at the time notice of termination is given) for 12 months following the date on
which termination is effective.
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(b) Except as stated in (a) above, a Change of Control of the Company shall not affect the
terms of this Agreement.
8. Termination of Employment at Employee’s Election. If the Employee elects to
terminate this Agreement and the Employee gives two (2) weeks prior written notice of such
termination, the Employee shall be entitled to receive his salary then in effect for the two (2)
weeks notice period regardless of whether the Company desires the Employee to continue his
employment during that period.
9. Termination of Employment for Cause. The Company shall have the right to terminate
the Employee’s employment immediately in the event the Employee shall do or cause to be done any
act that constitutes “cause” (as hereinafter defined) for termination. For purposes of this
Agreement, “cause” shall be deemed to mean a breach of his obligations under this Agreement (any
breach of Section 10, 11 or 12 hereof being an example of such a breach), gross negligence, willful
misconduct, insubordination, dishonesty to the Company, engaging in any conduct which could have
the effect of causing the termination or suspension of any license or permit which the Company
holds, conviction of any felony, or excessive absenteeism not related to disability. In addition,
“cause” shall include the Employee’s failure, as reasonably determined by the President, to
adequately perform his job responsibilities or to meet the performance goals and objectives
established for him by the Company. Should the Employee’s employment be terminated by the Company
for cause, the Company’s only obligation shall be to pay the Employee his base salary through the
date of termination. Nothing contained in this Section 8 shall in any way waive, restrict or
prejudice the Company’s rights and remedies in equity and at law against the Employee with respect
to the matter for which the Employee’s employment under this Agreement is terminated for cause.
10. Confidentiality.
10.1 During the course of his employment with the Company, the Employee has had and will have
access to and will gain knowledge with respect to all aspects of the business of the Company,
including financial information; business and marketing practices and procedures; information
concerning employees, customers, suppliers; and other valuable and proprietary information relating
to the business of Company (“Confidential Information”). The parties agree that certain covenants
by the Employee are essential to the growth and stability of the business of the Company. Among
these covenants are the Employee’s promises not to make unauthorized disclosures of the
Confidential Information nor to use the Confidential Information regardless of whether the
Employee’s employment with the Company has terminated. Accordingly, Employee agrees that, except
as required by his duties under this Agreement, he shall not use nor disclose to anyone at anytime
during or after the Term any Confidential Information obtained by him in the course of his
employment with the Company. The Employee agrees to enter into any further agreement regarding
confidentiality that the Company may request. The Employee shall use his best efforts to prevent
the removal of any Confidential Information from the premises of the Company, except as required in
his normal course of employment by the Company. The Employee shall use his best efforts to cause
all persons or entities to whom any Confidential Information shall be disclosed by him hereunder to
observe the terms and conditions set forth herein as though each such person or entity was bound
hereby.
10.2 Employee agrees to hold as the Company’s property all memoranda, books, papers, letters,
customer lists, processes, computer software, records, financial information, policy and procedure
manuals, training and recruiting procedures and other data, and all copies thereof and
therefrom in any way relating to the Company’s business and affairs, whether made by him or
otherwise coming into his possession, and on termination of his employment, or on demand of the
Company at any time, to deliver the same to the Company.
11. Non-Competition; Non-Solicitation.
11.1 During the Term of this Agreement and for a period continuing for one (1) year after the
date of its termination, the Employee agrees that he shall not directly or indirectly, for his own
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account or as agent, employee, officer, director, trustee, consultant or shareholder of any
corporation or other entity [except for a two percent (2%) interest or less in any publicly traded
corporation or other entity] engage or attempt to engage anywhere in North America in any business
activity which is the same as, substantially similar to or directly competitive with the business
of the Company, or any subsidiary of the Company, as now or in the future conducted by the Company.
11.2 During the Term of this Agreement and for a period continuing for one (1) year after the
date of its termination, the Employee agrees that he shall not, directly or indirectly, for his own
account or as agent, employee, officer, director, trustee, consultant or shareholder of any
corporation or other entity [except for a two percent (2%) interest or less in any publicly traded
corporation or other entity] (i) employ or solicit the employment of any employee of the Company,
any employee of a subsidiary of the Company, or any former employee of the Company whose employment
with the Company terminated within the preceding six (6) months or (ii) induce or attempt to induce
any employee of the Company, or any employee of a subsidiary of the Company, to terminate his or
her employment with the Company or any subsidiary of the Company.
11.3 The Employee acknowledges and agrees that the foregoing territorial and time limitations
and restrictive covenants are reasonable and properly required for the adequate protection of the
business and affairs of the Company. In the event any such territorial or time limitation is found
to be unreasonable by a court of competent jurisdiction, the Employee agrees and submits to the
reduction of either said territorial or time limitation (or both) to such an area or period as the
court may determine to be reasonable.
12. Rights to Discoveries. The Employee agrees that all ideas, inventions, trademarks
and other techniques, procedures, developments or improvements conceived, developed or acquired by
the Employee, whether or not during working hours, at the premises of the Company or elsewhere,
alone or with others, that are within the scope of the Company’s business operations or that relate
to any work or projects of the Company shall be the sole and exclusive property of the Company.
The Employee agrees to disclose promptly and fully to the Company all such ideas, inventions,
trademarks or other techniques, procedures, developments or improvements and, at the request of the
Company, the Employee shall submit to the Company a full written report thereof regardless of
whether the request for a written report is made after the termination of this Agreement. The
Employee agrees that during the Term and thereafter, upon the request of the Company and at its
expense, he shall execute and deliver any and all applications, assignments and other instruments
which the Company shall deem necessary or advisable to transfer to and vest in the Company the
Employee’s entire right, title and interest in and to all such ideas, inventions, trademarks or
other techniques, procedures, developments or improvements and shall assist the Company in applying
for and obtaining patent, trademark or copyright protection for any such protectible ideas,
inventions, trademarks and other techniques, procedures, developments and improvements.
13. Notices. All notices and other communications given pursuant to this Agreement
shall be deemed to have been properly given or delivered if mailed, by certified mail, postage
prepaid, addressed to the appropriate party, at the address for such party set forth at the
beginning of this Agreement. Any party may from time to time designate by written notice given
pursuant to this Section 13 any other address or party to which any such notice or communication or
copies thereof shall be sent.
14. Equitable Relief. The Employee acknowledges that the Company will suffer damages
incapable of ascertainment in the event that any of the provisions of Section 10, 11 or 12 hereof
are breached and that the Company will be irreparably damaged in the event that the provisions of
Section 10, 11 or 12 are not enforced. Therefore, should any dispute arise with respect to the
breach or threatened breach of any such Sections, the Employee agrees and consents that in addition
to any and all other remedies available to the Company an injunction or restraining order or other
equitable relief may be issued or ordered by a court of competent jurisdiction restraining any
breach or threatened breach of such Sections. The Employee agrees not to urge in any such action
that an adequate remedy exists at law. All expenses, including, without limitation, attorney’s
fees and expenses incurred in connection with
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any legal proceeding arising as a result of a breach
or threatened breach of Section 10, 11 or 12 of this Agreement shall be borne by the losing party
to the fullest extent permitted by law and the losing party hereby agrees to indemnify and hold the
other party harmless from and against all such expenses.
15. Arbitration of Disputes. Except for an alleged violation of Section 10, 11
or 12 of this Agreement, the Employee and the Company waive any right to a court (including
jury) proceeding and instead agree to submit any dispute over the Employee’s employment with
the Company or the application, interpretation, validity or any other aspect of this
Agreement to final and binding arbitration consistent with the Company’s alternative dispute
resolution program or, if none, then consistent with the application of the Federal
Arbitration Act and the rules for arbitration of employment disputes of the American
Arbitration Association (“AAA”) before a single arbitrator. Only true neutrals will be
eligible for consideration as arbitrators and under no circumstances will AAA furnish the
names of individuals who represent employees, unions or companies.
16. Successors. The Company will require any successor to all or substantially all of
the business and/or assets of the Company (whether direct or indirect by purchase, merger,
consolidation or otherwise) to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform if no such succession
had taken place. As used in this Agreement, the “Company” shall mean both Rent-Way, Inc. and any
successor to its business and/or assets (by merger, purchase or otherwise).
17. Miscellaneous. This Agreement shall be governed by the internal domestic laws of
the Commonwealth of Pennsylvania without reference to conflict of laws principles. The Employee
consents to jurisdiction in Pennsylvania and venue in Erie County for purposes of all claims
arising under this Agreement. All headings and subheadings are for convenience only and are not of
substantive effect. This Agreement constitutes the entire agreement between the parties hereto
with respect to the subject matter hereof and supersedes all prior agreements, negotiations,
understandings and writings (or any part thereof) whether oral or written between the parties
hereto relating to the subject matter hereof, all of which are hereby terminated and canceled.
There are no oral agreements in connection with this Agreement. Neither this Agreement nor any
provision of this Agreement may be waived, modified or amended orally or by any course of conduct
but only by an agreement in writing duly executed by both of the parties hereto. If any section,
portion, subsection or subportion of this Agreement shall be determined to be unenforceable or
invalid, then such section, portion, subsection or subportion shall be modified in the letter and
spirit of this Agreement to the extent permitted by applicable law so as to be rendered valid and
any such determination shall not affect the remainder of this Agreement, which shall be and remain
binding and effective as against the parties hereto.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement to be effective as of
the date first above written.
COMPANY:
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EMPLOYEE:
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RENT-WAY, INC. | |||||
| By: | ||||||
Xxxxxxx X. Xxxxxxx Date
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Xxxxxxx X. Short, President | Date | ||||
Executive Vice President/ Chief Operating Officer |
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APPENDIX A
A “Change in Control of the Company” shall be deemed to have occurred if, as the result of a
single transaction or a series of transactions, the event set forth in either of the following
paragraphs shall have occurred:
(1) there is consummated a merger or consolidation of the Company with any other corporation
or entity, other than a merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior to such merger or consolidation continuing to represent
(either by remaining outstanding or by being converted into voting securities of the surviving
entity or any parent thereof) at least 60% of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof outstanding immediately after such merger or
consolidation as appropriate; or
(2) the stockholders of the Company approve a plan of liquidation or dissolution of the
Company or an agreement for the sale or disposition by the Company of all or substantially all of
the Company’s assets, other than a sale or disposition by the Company of all or substantially all
of the Company’s assets to an entity, at least 60% of the combined voting power of the voting
securities of which are owned by stockholders of the Company in substantially the same proportions
as their ownership of the Company immediately prior to such sale.
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