EXHIBIT 10.5
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of November 20, 2001, is between
RENT-WAY, INC., a Pennsylvania corporation with its executive offices at Xxx
XxxxXxx Xxxxx, Xxxx, Xxxxxxxxxxxx, 00000 (the "Corporation"), and Xxxxxxx X.
Xxxxxxxxxxx, an individual residing at 0000 Xxxxxxxx Xxxxx Xxxxx, Xxxx,
Xxxxxxxxxxxx 00000 (the "Executive").
RECITALS:
WHEREAS, the Executive is currently employed by the
Corporation pursuant to an employment agreement dated October 1, 1998;
WHEREAS, the Corporation wishes to acknowledge the Executive's
extraordinary efforts on behalf of the Corporation since first disclosure of the
Corporation's accounting improprieties in October 2000, to extend the
Executive's term of employment and in connection therewith provide the Executive
with certain benefits and protections;
NOW, THEREFORE, in consideration of the promises and of the
covenants contained in this Agreement, the Corporation and the Executive agree
as follows:
1. Definitions. The following definitions apply for purposes of this Agreement:
(a) "Board of Directors" or "Board" means the Board of Directors of the
Corporation.
(b) "Cause" means a finding by the Board of Directors that any of the
following conditions exist:
(i) The Executive's willful failure to perform his material duties
under this Agreement (other than as a result of his
Disability) if such failure is not substantially cured within
15 days after written notice of such failure is provided to
the Executive.
(ii) The Executive's willful breach of his fiduciary duty or duty
of loyalty to the Corporation which is injurious to the
financial condition or the business reputation of the
Corporation.
(iii) The Executive's conviction for a felony offense under the laws
of the United States or any state thereof.
(iv) Willful breach by the Executive of any restrictive covenant
contained in Sections 12 and 13 of this Agreement.
For purposes of this definition, no act or failure to act will
be deemed "willful" unless effected by the Executive not in
good faith and without a reasonable belief that his action or
failure to act was in or not opposed to the Corporation's best
interests.
(c) "Change in Control" means and shall be deemed to have occurred if:(i)
any "person" as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (other
than the Corporation, any trustee or other fiduciary holding securities
under any employee benefit plan of the Corporation, or any entity
owned, directly or indirectly, by the shareholders of the Corporation
in substantially the same proportions as their ownership of the voting
securities of the Corporation), is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act, or any successor rule
or regulation thereto as in effect from time to time), directly or
indirectly, of securities representing 25% or more of the combined
voting power of the Corporation's then outstanding securities; (ii)
during any period of two consecutive years (not including any period
prior to the date of this Agreement), individuals who at the beginning
of such period constitute the Board of Directors, and any new director
(other than a director designated by a person who has entered into an
agreement with the Corporation to effect a transaction described in
clause (i), (iii), or (iv) of this paragraph) whose election by the
Board of Directors or nomination for election by the Corporation's
shareholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the
beginning of the two-year period or whose election or nomination for
election was previously approved, cease for any reason to constitute at
least a majority of the Board of Directors; (iii) the Corporation's
shareholders approve a merger or consolidation of the Corporation with
any other corporation, other than a merger or consolidation that would
result in the voting securities of the Corporation outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of voting
securities of the Corporation or such surviving entity outstanding
immediately after such merger or consolidation; provided, however, that
a merger or consolidation effected to implement a recapitalization of
the Corporation (or similar transaction) in which no person acquires
more than 25% of the combined voting power of the Corporation's then
outstanding securities shall not constitute a Change in Control; or
(iv) the Corporation's shareholders approve a plan of complete
liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of the
Corporation's assets. If any of the events enumerated in clause (i)
through (iv) occur, the Corporation's Board of Directors shall
determine in good faith the effective date of the Change in Control
resulting therefrom for purposes of this Agreement.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Corporation" means Rent-Way, Inc.
(f) "Disability" means a disability that has existed for a period of 6
consecutive months and because of which the Executive is physically or
mentally unable to substantially perform his regular duties as Chief
Executive Officer of the Corporation.
(g) "Good Reason" means:
(i) The Executive's reasonable belief that there has been a material
diminution in the Executive's responsibilities, duties, title,
reporting responsibilities within the business organization,
status, role or authority which is not restored within 15 days
after written notice of such diminution is provided to the
Corporation.
(ii) Removal of the Executive from, or failure to re-elect the
Executive to, the position of Chairman of the Board or Chief
Executive Officer of the Corporation.
(iii) A determination by the Executive using his reasonable judgment
that the services required to be performed by the Executive would
necessitate the Executive moving his residence from the Erie,
Pennsylvania area.
(iv) A breach by the Corporation of any of the material terms of this
Agreement if such breach is not substantially cured within 15 days
after written notice of such breach is provided to the
Corporation.
(h) "Termination In Connection With A Change In Control" means any of the
following events occurring within twenty four (24) months following,
or, directly or indirectly, in connection with, or in anticipation of a
Change in Control:
(1) a termination of Executive's employment by the Corporation for any
reason other than Cause;
(2) a termination of Executive's employment by the Executive for
Good Reason;
(3) a termination of Executive's employment by Executive because any
successor to the Corporation's operations or assets (whether
acquired by merger, sale, consolidation or otherwise)
("Successor") fails to:
(i) appoint the Executive to a position with the Successor having
the same responsibilities, duties, title, reporting
responsibilities within the business organization, status, role
and authority the Executive now holds with the Corporation,
(ii) acknowledge and assume, in writing, this Agreement at the time
of the Change in Control, or
(iii) acknowledge and assume, in writing, any indemnification
agreement with the Executive or by law provisions regarding
indemnification which are in effect at the time of the Change
in Control.
2. Employment; Duties. Subject to the terms and conditions set forth in this
Agreement, the Corporation hereby agrees to employ the Executive, and the
Executive hereby accepts employment as Chairman of the Board and Chief Executive
Officer of the Corporation, in full charge of the operation of its business and
affairs, subject to the provisions of the by-laws of the Corporation in respect
of the duties and responsibilities assigned from time to time by the Board of
Directors to the Chairman of the Board and Chief Executive Officer, and subject
also at all times to the control of the Board of Directors. The Executive will
perform those duties and discharge those responsibilities as are commensurate
with his position, and as the Board of Directors may from time to time
reasonably direct that are commensurate with his position. The Executive agrees
to perform his duties and discharge his responsibilities in a faithful manner
and to the best of his ability and to use all reasonable efforts to promote the
interests of the Corporation. The Executive may not accept other gainful
employment except with the prior consent of the Board of Directors of the
Corporation. To the extent the Executive performs services for any affiliate or
subsidiary of the Corporation, the Executive shall be entitled to compensation
for such services in amounts approved by the Board of Directors. With the prior
consent of the Board of Directors of the Corporation, the Executive may become a
director, trustee or other fiduciary of other corporations, trusts or entities.
The Executive may be involved in charitable, civic and religious organizations
so long as they do not materially interfere with the performance of the
Executive's duties hereunder. The Executive shall be entitled to make and manage
personal investments, provided such investments and any activities undertaken in
connection therewith do not violate any restrictive covenants in Sections 12 or
13 of this Agreement.
3.Compensation.
(a) Base Salary. During the term of the Executive's employment under this
Agreement, the Executive will receive a base salary of Five Hundred
Thousand Dollars ($500,000) per year, payable in accordance with the
Corporation's normal payroll practices. On an annual basis, the Board
of Directors will, in good faith, review the base salary of the
Executive to consider appropriate increases (but not decreases)
therein. If the Executive dies during the period of his employment
under this Agreement, employment for any part of the month of his death
will be considered employment for the entire month.
(b) Annual Cash Bonuses. During the term of the Executive's employment
under this Agreement, the Executive will be entitled to receive an
annual cash bonus calculated pursuant to performance standards
developed by the Corporation's compensation committee in consultation
with the Executive, as such standards are in effect from time to time.
The target amount of the bonus shall be 100% of the Executive's base
salary as of the end of the fiscal period of the Corporation for which
the bonus is calculated. The Board of Directors of the Corporation, in
its discretion, may award bonuses to the Executive in addition to those
provided for above, as it may from time to time determine.
(c) Special Bonus. Upon execution of this Agreement, the Corporation will
pay the Executive a special one-time cash bonus of Seven
Hundred Fifty Thousand Dollars ($750,000).
(d) Stock Options. Upon execution of this Agreement, the Corporation will
award the Executive a grant of 250,000 options to acquire shares of the
Corporation's common stock under the Corporation's stock option plans
at an exercise price equal to the closing price of the Corporation's
common stock as reported by the New York Stock Exchange on the date of
grant. The agreement evidencing these options will provide for the
vesting of the options as follows: 83,333 options on the date of this
Agreement; 83,333 options on October 1, 2002 and 83.334 options on
October 1, 2003.
(e) Withholding. The Corporation will deduct or withhold from all salary
and bonus payments, and from all other payments made to the Executive
pursuant to this Agreement, all amounts that may be required to be
deducted or withheld under any applicable Social Security contribution,
income tax withholding or other similar law now in effect or that may
become effective during the term of this Agreement.
4.Other Benefits And Terms. During the term of the Executive's employment under
this Agreement, the Executive will be entitled to the following other benefits
and terms:
(a) The Executive will be entitled to participate in the Corporation's
health and medical benefit plans, any pension, profit sharing and
retirement plans, and any insurance policies or programs from time to
time generally offered to all or substantially all executive officers
who are employed by the Corporation. These plans, policies and programs
are subject to change at the sole discretion of the Corporation.
(b) The Executive will be entitled to any other fringe benefit from time to
time generally offered to all or substantially all senior executives
employed by the Corporation.
(c) The Corporation will pay on behalf of or reimburse the Executive for
personal legal and financial advice an amount not to exceed $10,000 in any
fiscal year.
(d) The Corporation will pay on behalf of or reimburse the Executive for the
premiums on that certain policy of life insurance (Policy No. 2509258) through
First Colony Life Insurance Company insuring the Executive's life in the amount
of $7 million in an amount not to exceed $5,000 in any fiscal year.
0.Xxxxxxxxx. The Executive will be entitled to four (4) weeks of paid vacation
each calendar year. Unused vacation in any year may not be carried over to
subsequent years.
6. Reimbursement For Expenses. The Corporation will reimburse the Executive for
expenses which the Executive may from time to time reasonably incur on behalf of
the Corporation in the performance of his responsibilities and duties including,
but not limited to, membership dues in trade and business organizations and
attendance at trade and business conferences.
7. Period Of Employment. Subject to the provisions of this Section, the period
of employment of the Executive under this Agreement will be deemed to begin on
October 1, 2001 and continue until October 1, 2006 (the "Initial Term"). Upon
the expiration of the Initial Term, the period of employment will be
automatically extended for additional one year periods thereafter, unless either
party provides 120 days prior written notice to the other that it does not wish
to extend the Executive's employment beyond its then present term.
Notwithstanding the foregoing:
(a) The Executive's employment will automatically terminate upon the death
or Disability of the Executive. The foregoing is subject to the duty of
the Corporation to provide reasonable accommodation under the Americans
with Disabilities Act.
(b) The Corporation may, at its sole option, terminate the Executive's
employment at any time and for any reason by delivering written notice
to the Executive.
(c) The Executive, at his sole option, may terminate his employment for
Good Reason by providing written notice to the Corporation at least 30
days prior to the effective date of the termination of employment
specified in the notice.
(d) The Executive, at his sole option, may terminate his employment absent
Good Reason by providing written notice to the Corporation at least 90
days prior to the effective date of the termination of employment
specified in the notice.
Any notice of termination of employment given by a party must specify the
particular termination provision of this Agreement relied upon by the party and
must set forth in reasonable detail the facts and circumstances that provide a
basis for the termination.
8.Benefits Upon Termination. The Corporation will provide the following benefits
upon the termination of the Executive's employment with the Corporation.
(a) Upon Termination By The Corporation Other Than For Cause Or By The
Executive With Good Reason. Upon the Executive's termination of his
employment for Good Reason or the Corporation's termination of the
Executive's employment for other than Cause, the Corporation will
provide the following:
(i) Salary And Fringe Benefits. The Executive will receive his
salary and Fringe Benefits through the effective date of
termination of employment. The Executive will also receive (i)
his annual base salary, (ii) his full fringe benefits,
including medical and health insurance ("Fringe Benefits"), in
effect on the date of notice of termination for a period of 24
months beginning with the month next following the month
during which his employment terminates or the balance of the
Initial Term, whichever is the longer period. If the Executive
dies during this period, dependent health or medical Fringe
Benefits will be provided for the balance of the period.
(ii) Bonus. The Executive will receive a bonus payment equal to the
sum of (A) 200% of his base salary in effect in the year of
the termination of his employment or an amount equal to 10% of
his base salary in effect in the year of termination
multiplied by each full month remaining in the Initial Term,
whichever is the greater amount, plus (B) an amount determined
by multiplying 100% of his base salary by a fraction the
numerator of which is the number of full and partial
calendar months in the calendar year that precede the date of
the termination of his employment and the denominator of which
is 12, plus (c) an amount equal to the unpaid portion of any
bonus earned for any fiscal year prior to the year in which
his employment terminates.
(iii) Accrued Vacation. The Executive will receive payment for
accrued but unused vacation, which payment will be equitably
prorated based on the period of active employment for that
portion of the calendar year in which the Executive's
termination of employment becomes effective.
(iv) Stock Options. Notwithstanding any contrary provisions
contained in any stock option agreement evidencing stock
options granted to the Executive, as of the effective date of
the Executive's termination of employment, (x) the Corporation
will vest the Executive in any outstanding unvested stock
options of the Corporation granted the Executive prior to his
termination of employment, and (y) the period during which the
Executive shall have the right to exercise such vested options
will be extended by the Corporation to the later of the
expiration of the term of the options assuming no termination
of employment or the one year anniversary of the effective
date of the Executive's termination of employment.
The cash payments provided for in this subsection (a) will made in one lump sum
within ten business days following the effective date of the Executive's
termination of employment.
(b) Upon Termination By The Executive Absent Good Reason Or By The
Corporation For Cause. Upon the Executive's termination of employment
absent Good Reason or by the Corporation for Cause, the Corporation
will provide the following:
(i) Salary, Bonus And Fringe Benefits. The Executive will receive
his salary and Fringe Benefits through the effective date of
termination of employment and the unpaid portion of any bonus
earned for a prior year.
(ii) Accrued Vacation. The Executive will receive payment for
accrued but unused vacation, which payment will be equitably
prorated based on the period of active employment for that
portion of the calendar year in which the Executive's
termination of employment becomes effective. Payment for
accrued but unused vacation will be payable in one lump sum on
the effective date of termination of employment.
(c) Upon Termination For Disability. Upon termination of the Executive's
employment because of Disability, the Corporation will provide the
following:
(i) Salary And Fringe Benefits. The Executive will receive his
salary and Fringe Benefits through the effective date of
termination of employment. The Executive will also receive his
annual base salary and Fringe Benefits, as in effect on the
date immediately before the Disability, for a period of 18
months commencing with the month following the month during
which his employment terminates. If the Executive dies during
the 18-month period, his salary payments under this subsection
will continue be paid to his estate for the balance of the
18-month period and any dependent health or medical Fringe
Benefits will be provided in each case for the balance of the
18-month period.
(ii) Bonus. The Executive will receive a bonus payment equal to an
amount determined by multiplying 100% of his base salary by a
fraction the numerator of which is the number of full and
partial calendar months in the calendar year that precede the
date of the termination of his employment and the denominator
of which is 12, plus an amount equal to the unpaid portion of
any bonus earned for any fiscal year prior to the year in
which his employment terminates.
(iii) Accrued Vacation. The Executive will receive payment for
accrued but unused vacation, which payment will be equitably
prorated based on the period of active employment for that
portion of the calendar year in which the Executive's
termination becomes effective.
(iv) Stock Options. Notwithstanding any contrary provisions
contained in any stock option agreement evidencing stock
options granted to the Executive, as of the effective date of
the Executive's termination of employment because of
Disability the Corporation will cause the Executive to become
vested in (only to the extent he is not already vested in)
that number of the options granted in Section 3(d) hereof as
are equal to 250,000 multiplied by a percentage determined by
dividing the number of days from the date of this Agreement to
the date of termination of employment because of Disability
divided by the number of days from the date of this Agreement
to October 1, 2003.
The bonus and vacation payments provided for in this subsection (c) will be made
in one lump sum within ten business days following the effective date of the
Executive's termination of employment because of Disability.
(d) Upon Termination For Death. Upon termination of the Executive's
employment because of his death, the Corporation will provide the
following:
(i) Salary And Fringe Benefits. The Executive's salary and Fringe
Benefits through the effective date of termination of
employment. The Executive's estate will also receive his
annual base salary as an effect on the date immediately prior
to his date of death, for a period of 18 months. Any dependent
health or medical Fringe Benefits will be provided for the
18-month period following the month in which the Executive
dies.
(ii) Bonus. The Executive's successor as provided in Section 14
will receive a bonus payment equal to an amount determined by
multiplying 100% of his base salary by a fraction the
numerator of which is the number of full and partial calendar
months in the calendar year that precede the date of the
termination of his employment and the denominator of which is
12, plus an amount equal to the unpaid portion of any bonus
earned for any fiscal year prior to the year in which his
employment terminates.
(iii) Accrued Vacation. The Executive's successor as provided in
Section 14 will receive payment for accrued but unused
vacation, which payment will be equitably prorated based on
the period of active employment for that portion of the
calendar year in which the Executive died.
(iv) Stock Options. Notwithstanding any contrary provisions
contained in any stock option agreement evidencing stock
options granted to the Executive, as of the effective date of
the Executive's termination of employment because of Death the
Corporation will cause the Executive to become vested in (only
to the extent he is not already vested in) that number of the
options granted in Section 3(d) hereof as are equal to 250,000
multiplied by a percentage determined by dividing the number
of days from the date of this Agreement to the date of
termination of employment because of Death divided by the
number of days from the date of this Agreement to October 1,
2003.
The bonus and vacation payments provided for in this subsection (d) will be made
in one lump sum within ten business days following the effective date of the
Executive's termination of employment because of death.
(e) Upon Termination In Connection With A Change In Control. Upon the
Executive's Termination in Connection With A Change In Control, the
Executive will be entitled to the following:
(i) Salary And Fringe Benefits: The Executive's salary and Fringe
Benefits through the effective date of termination of
employment. The Executive will also receive an amount equal to
two times the sum of the Executive's annual base salary or an
amount equal to the sum of the remaining payments of base
salary for the balance of the Initial Term in each case at the
rate in effect on the date of such termination, whichever is
greater. The Executive and his dependents will also receive
Fringe Benefits as in effect on the date of such termination
for a continuing period of twenty-four (24) months following
the date of such termination or for the remaining balance of
the Initial Term, whichever shall be the longer period.
(ii) Bonus. The Executive will receive a bonus payment equal to the
sum of (A) 200% of his base salary in effect in the year of
the Termination in Connection With a Change in Control or an
amount equal to 10% of his base salary in effect in the year of
the Termination in Connection with a Change in Control
multiplied by each full month remaining in the Initial Term,
whichever is the greater amount, plus (B) an amount determined
by multiplying 100% of his base salary by a fraction the
numerator of which is the number of full and partial calendar
months in the calendar year that precede the date of such
termination and the denominator of which is 12, plus (C) an
amount equal to the unpaid portion of any bonus earned for any
fiscal year prior to the year in which his employment
terminates.
(iii) Accrued Vacation. The Executive will receive payment for
accrued but unused vacation, which payment will be equitably
prorated based on the period of active employment for that
portion of the calendar year in which the Termination in
Connection With a Change in Control occurs.
(iv) Expenses. For a twenty-four (24) month period following the
effective date of the Termination in Connection With A Change
in Control, the Corporation will promptly pay or reimburse the
Executive for expenses, in an aggregate amount not to exceed
5% of the Executive's annual base salary, at the rate in
effect on the date of such termination, incurred by the
Executive for outplacement services, which may include
consultants, reasonable travel, rental of an office off the
Corporation's premises, secretarial support, and photocopying,
telephone, and other miscellaneous office expenses.
(v) Plan Benefits. The Executive will be fully vested in his
accrued benefit under any qualified or non-qualified pension
or profit sharing plan maintained by the Corporation,
provided, however, if the terms of such plan do not permit
acceleration of full vesting, the Executive will receive a
cash payment in an amount equal to the value of the accrued
benefit which was not so vested.
(vi) Stock Options. Notwithstanding any contrary provisions
contained in any stock option agreement evidencing stock
options granted to the Executive, as of the effective date of
the Executive's termination of employment, (x) the Corporation
will vest the Executive in any outstanding unvested stock
options of the Corporation granted the Executive prior to such
termination, and (y) the period during which the Executive
shall have the right to exercise such vested options will be
extended by the Corporation to the later of the expiration of
the term of the options assuming no termination of employment
or the one year anniversary of the effective date of such
termination.
The cash payments provided for in this subsection (e) (other than the payments
and reimbursements provided for in clause (iv) thereof) will be made in one lump
sum within ten business days following the effective date of the Executive's
Termination in Connection With a Change in Control.
(f) Reduction In Fringe Benefits. Medical and health Fringe Benefits under
this Section will be reduced to the extent of any medical and health
fringe benefits provided by and available to the Executive from any
subsequent employer. (g) Determination of Disability. Any question as
to the existence of a physical or mental condition which would give
rise to the Disability of the Executive upon which the Executive and
the Corporation cannot agree will be determined by a qualified
independent physician selected by the Executive and reasonably
acceptable to the Corporation (or, if the Executive is unable to make a
selection, the selection of the physician will be made by any adult
member of his immediate family). The physician's written determination
to the Corporation and to the Executive will be final and conclusive
for all purposes of this Agreement.
(h) Continuation of Healthcare Coverage. For purposes of COBRA continuation
healthcare coverage, the "qualifying event" will be deemed to have
occurred at the end of the period during which health and medical
benefits are provided under this Section 8.
(i) Indemnity. For a 60 month period following the date of the Executive's
termination of employment regardless of reason, the Corporation will
continue any indemnification agreement with the Executive and any
directors' and officers' liability insurance insuring the Executive at
the date of such termination. At the Executive's request, the
Corporation will cause a certificate of insurance, in a form
satisfactory to the Executive, verifying this coverage to be provided
to the Executive on an annual basis.
9. Additional Payments. Notwithstanding anything in this Agreement or any other
agreement to the contrary, in the event it is determined that any payments or
distributions (including, without limitation, the vesting of an option or other
non-cash benefit or property or the forgiveness of any indebtedness) by the
Corporation or any affiliate (as defined under the Securities Act of 1933, as
amended, and the regulations thereunder) thereof or any other person to or for
the benefit of the Executive, whether paid or payable pursuant to the terms of
this Agreement, or pursuant to any other agreement or arrangement with the
Corporation or any such affiliate ("Payments"), would be subject to the excise
tax imposed by Section 4999 of the Code, or any successor provision, or any
interest or penalties with respect to the excise tax (the excise tax, together
with any interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive will be entitled to receive an additional
payment from the Corporation (a "Gross-Up Payment") in an amount that after
payment by the Executive of all taxes (including, without limitation, any
interest or penalties imposed with respect to such taxes and 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 Payments. The amount
of the Gross-Up Payment will be calculated by the Corporation's independent
accounting firm, engaged immediately prior to the event that triggered the
payment, in consultation with the Corporation's outside legal counsel. For
purposes of making the calculations required by this Section, the accounting
firm may make reasonable assumptions and approximations concerning applicable
taxes and may rely on reasonable, good faith interpretations concerning the
application of Sections 280G and 4999 of the Code, provided that the accounting
firm's determinations must be made with substantial authority (within the
meaning of Section 6662 of the Code). The Gross-Up Payment will be paid on the
Executive's last day of employment or on the occurrence of the event that
results in the imposition of the Excise Tax, if later. If the precise amount of
the Gross-Up Payment cannot be determined on the date it is to be paid, an
amount equal to the best estimate of the Gross-Up Payment will be made on that
date and, within 10 days after the precise calculation is obtained, either the
Corporation will pay any additional amount to the Executive or the Executive
will pay any excess amount to the Corporation, as the case may be. If
subsequently the Internal Revenue Service (the "IRS") claims that any additional
Excise Tax is owing, an additional Gross-Up Payment will be paid to the
Executive within 30 days of the Executive providing substantiation of the claim
made by the IRS. After payment to the Executive of the Gross-Up Payment, the
Executive will provide to the Corporation any information reasonably requested
by the Corporation relating to the Excise Tax, the Executive will take those
actions as the Corporation reasonable requests to contest the Excise Tax,
cooperate in good faith with the Corporation to effectively contest the Excise
Tax and permit the Corporation to participate in any proceedings contesting the
Excise Tax. The Corporation will bear and pay directly all costs and expenses
(including any interest or penalties on the Excise Tax), and indemnify and hold
the Executive harmless, on an after-tax basis, from all such costs and expenses
related to such contest. Should it ultimately be determined that any amount of
an Excise Tax is not properly owed, the Executive will refund to the Corporation
the related amount of the Gross-Up Payment.
10. Non-exclusivity of Rights. Except as otherwise specifically provided,
nothing in this Agreement will prevent or limit the Executive's continued or
future participation in any benefit, incentive, or other plan, practice, or
program provided by the Corporation and for which the Executive may qualify. Any
amount of vested benefit or any amount to which the Executive is otherwise
entitled under any plan, practice, or program of the Corporation will be payable
in accordance with the plan, practice, or program, except as specifically
modified by this Agreement.
11. No Obligation To Seek Other Employment. The Executive will not be obligated
to seek other employment or to take other action to mitigate any amount payable
to him under this Agreement and, except as provided in Section 8(f), amounts
owed to him hereunder shall not be reduced by amounts he may receive from
another employer.
12. Confidentiality. During the course of his employment, the Executive will
have access to confidential information relating to the lines of business of the
Corporation, its trade secrets, marketing techniques, technical and cost data,
information concerning customers and suppliers, information relating to product
lines, and other valuable and confidential information relating to the business
operations of the Corporation not generally available to the public (the
"Confidential Information"). The parties hereby acknowledge that any
unauthorized disclosure or misuse of the Confidential Information could cause
irreparable damage to the Corporation. The parties also agree that covenants by
the Executive not to make unauthorized use or disclosures of the Confidential
Information are essential to the growth and stability of the business of the
Corporation. Accordingly, the Executive agrees to the confidentiality covenants
set forth in this Section.
The Executive agrees that, except as required by his duties
with the Corporation as he reasonably determines or as authorized by the
Corporation in writing, he will not use or disclose to anyone at any time,
regardless of whether before or after the Executive ceases to be employed by the
Corporation, any of the Confidential Information obtained by him in the course
of his employment with the Corporation. The Executive shall not be deemed to
have violated this Section 12 by disclosure of Confidential Information that at
the time of disclosure (a) is publicly available or becomes publicly available
through no act or omission of the Executive, or (b) is disclosed as required by
court order or as otherwise required by law, on the condition that notice of the
requirement for such disclosure is given to the Corporation prior to make any
disclosure.
The Executive agrees that since irreparable damage could
result from his breach of the covenants in this Section, in addition to any and
all other remedies available to the Corporation, the Corporation will have the
remedies of a restraining order, injunction or other equitable relief to enforce
the provisions thereof. The Executive consents to jurisdiction in Erie County,
Pennsylvania on the date of the commencement of any action for purposes of any
claims under this Section. In addition, the Executive agrees that the issues in
any action brought under this Section will be limited to claims under this
Section, and all other claims or counterclaims under other provisions of this
Agreement will be excluded.
13. Non-competition. In consideration of the compensation and other benefits to
be paid to the Executive under and in connection with this Agreement, the
Executive agrees that, beginning on the date of this Agreement and continuing
until the Covenant Expiration Date (as defined in subsection (b) below), he will
not, directly or indirectly, for his own account or as agent, employee, officer,
director, trustee, consultant, partner, stockholder or equity owner of any
corporation or any other entity (except that he may passively own securities
constituting less than 1% of any class of securities of a public company), or
member of any firm or otherwise, (i) engage or attempt to engage, in the
Restricted Territory (as defined in subsection (d) below), in any business
activity which is directly or indirectly competitive with the business conducted
by the Corporation or any Affiliate at the Reference Date (as defined in
subsection (c) below), (ii) employ or solicit the employment of any person who
is employed by the Corporation or any Affiliate at the Reference Date or at any
time during the six-month period preceding the Reference Date, except that the
Executive will be free to employ or solicit the employment of any such person
whose employment with the Corporation or any Affiliate has terminated for any
reason (without any interference from the Executive) and who has not been
employed by the Corporation or any Affiliate for at least six months, (iii)
canvass or solicit business in competition with any business conducted by the
Corporation or any Affiliate at the Reference Date from any person or entity who
during the six-month period preceding the Reference Date was a customer of the
Corporation or any Affiliate or from any person or entity which the Executive
has reason to believe might in the future become a customer of the Corporation
or any Affiliate as a result of marketing efforts, contacts or other facts and
circumstances of which the Executive is aware, (iv) willfully dissuade or
discourage any person or entity from using, employing or conducting business
with the Corporation or any Affiliate or (v) intentionally disrupt or interfere
with, or seek to disrupt or interfere with, the business or contractual
relationship between the Corporation or any Affiliate and any supplier who
during the six-month period preceding the Reference Date shall have supplied
components, materials or services to the Corporation or any Affiliate.
Notwithstanding the foregoing, the restrictions imposed by
this Section: (i) shall not in any manner be construed to prohibit, directly or
indirectly, the Executive from serving as an employee or consultant of the
Corporation or any Affiliate, and (ii) shall not apply if the termination of the
Executive's employment was a Termination in Connection With A Change In Control
or occurs by reason of expiration of the term of this Agreement (which term
includes any extension period pursuant to the operation of Section 7 hereof) or
occurs after the expiration of the term of this Agreement (which term includes
any extension period pursuant to the operation of Section 7 hereof).
For purposes of this Agreement, the following terms have the
meanings given to them below:
(a) "Affiliate" means any joint venture, partnership or subsidiary now or
hereafter directly or indirectly owned or controlled by the
Corporation. For purposes of clarification, an entity shall not be
deemed to be indirectly or directly owned or controlled by the
Corporation solely by reason of the ownership or control of such entity
by shareholders of the Corporation.
(b) "Covenant Expiration Date" means the date which is 365 days after the
Termination Date.
(c) "Reference Date" means (A) for purposes of applying the covenants set
forth in this Section at any time prior to the Termination Date, the
then current date, or (B) for purposes of applying the covenants set
forth in this Section at any time on or after the Termination Date, the
Termination Date.
(d) "Restricted Territory" means the 50 states of the United States of
America.
(e) "Termination Date" means the date of termination of the Executive's
employment with the Corporation; provided however that the Executive's
employment will not be deemed to have terminated so long as the
Executive continues to be employed or engaged as an employee or
consultant of the Corporation or any Affiliate, even if such employment
or engagement continues after the expiration of the term of this
Agreement.
14. Successors. This Agreement is personal to the Executive and may not be
assigned by the Executive other than by will or the laws of descent and
distribution. This Agreement will inure to the benefit of and be enforceable by
the Executive's legal representatives or successors in interest. Notwithstanding
any other provision of this Agreement, the Executive may designate a successor
or successors in interest to receive any amounts due under this Agreement after
the Executive's death. If he has not designated a successor in interest, payment
of benefits under this Agreement will be made to his wife, if surviving, and if
not surviving, to his estate. A designation of a successor in interest must be
made in writing, signed by the Executive, and delivered to the Employer pursuant
to Section 18. Except as otherwise provided in this Agreement, if the Executive
has not designated a successor in interest, payment of benefits under this
Agreement will be made to the Executive's estate. This Section will not
supersede any designation of beneficiary or successor in interest made by the
Executive or provided for under any other plan, practice, or program of the
Employer.
This Agreement will inure to the benefit of and be binding
upon the Corporation and its successors and assigns.
The Corporation will require any successor (whether direct or
indirect, by acquisition of assets, merger, consolidation or otherwise) to all
or substantially all of the operations or assets of the Corporation or any
successor and without regard to the form of transaction used to acquire the
operations or assets of the Corporation, to assume and agree to perform this
Agreement in the same manner and to the same extent that the Corporation would
be required to perform it if no succession had taken place. As used in this
Agreement, "Corporation" means the Corporation and any successor to its
operations or assets as set forth in this Section that is required by this
clause to assume and agree to perform this Agreement or that otherwise assumes
and agrees to perform this Agreement.
15. Benefit Claims. In the event the Executive or his legal representatives or
beneficiaries, as the case may be, and the Corporation disagree as to their
respective rights and obligations under this Agreement, and the Executive or his
legal representatives or beneficiaries are successful in establishing, privately
or otherwise, that his or their position is substantially correct, or that the
Corporation's position is substantially wrong or unreasonable, or in the event
that the disagreement is resolved by settlement, the Corporation will pay all
costs and expenses, including counsel fees, which the Executive or his legal
representatives or beneficiaries may incur in connection therewith directly to
the provider of the services or as may otherwise be directed by the Executive or
his legal representatives or beneficiaries. The Corporation will not delay or
reduce the amount of any payment provided for hereunder or setoff or
counterclaim against any such amount for any reason whatsoever; it is the
intention of the Corporation and the Executive that the amounts payable to the
Executive or his legal representatives or beneficiaries hereunder will continue
to be paid in all events in the manner and at the times herein provided. All
payments made by the Corporation hereunder will be final and the Corporation
will not seek to recover all or any part of any portion of any payments
hereunder for any reason.
16. Failure, Delay or Waiver. No course of action or failure to act by the
Corporation or the Executive will constitute a waiver by the party of any right
or remedy under this Agreement, and no waiver by either party of any right or
remedy under this Agreement will be effective unless made in writing.
17. Severability. Whenever possible, each provision of this Agreement will be
interpreted in such a manner as to be enforceable under applicable law. However,
if any provision of this Agreement is deemed unenforceable under applicable law
by a court having jurisdiction, the provision will be unenforceable only to the
extent necessary to make it enforceable without invalidating the remainder
thereof or any of the remaining provisions of this Agreement.
18. Notice. All written communications to parties required hereunder must be in
writing and (a) delivered in person, (b) mailed by registered or certified mail,
return receipt requested, (such mailed notice to be effective 4 days after the
date it is mailed) or (c) sent by facsimile transmission, with confirmation sent
by way of one of the above methods, to the party at the address given below for
the party (or to any other address as the party designates in a writing
complying with this Section, delivered to the other party):
If to the Corporation:
Rent-Way, Inc.
Xxx XxxxXxx Xxxxx
Xxxx, Xxxxxxxxxxxx 00000
Attention: Chairman, Compensation Committee
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
Xxxxxxx Xxxx, XXX
Xxx X&X Xxxxx, Xxxxx 0000
Buffalo, New York 14203
Attention: Xxxx X. Xxx, Esq.
Telephone: 000-000-0000
Telecopier: 000-000-0000
If to the Executive:
Xxxxxxx X. Xxxxxxxxxxx
0000 Xxxxxxxx Xxxxx Xxxxx
Xxxx, Xxxxxxxxxxxx 00000
Telephone: 000-000-0000
with a copy to:
Kronish Xxxx Xxxxxx & Xxxxxxx, LLP
1114 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
19. Miscellaneous. This Agreement (a) may not be amended, modified or terminated
orally or by any course of conduct pursued by the Corporation or the Executive,
but may be amended, modified or terminated only by a written agreement duly
executed by the Corporation and the Executive, (b) is binding upon and inures to
the benefit of the Corporation and the Executive and each of their respective
heirs, representatives, successors and assignees, except that the Executive may
not assign any of his rights or obligations pursuant to this Agreement, (c)
except as provided in Sections 4 and 10 of this Agreement, constitutes the
entire agreement between the Corporation and the Executive with respect to the
subject matter of this Agreement, and supersedes all oral and written proposals,
representations, understandings and agreements previously made or existing with
respect to such subject matter, including, but not limited to, the prior
employment agreement between the parties dated October 1, 1998, and (d) will be
governed by, and interpreted and construed in accordance with, the laws of the
Commonwealth of Pennsylvania, without regard to principles of conflicts of law.
20. Multiple Counterparts. This Agreement may be executed in one or more counter
parts, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument. Any party may execute this
Agreement by facsimile signature and the other party shall be entitled to rely
on such facsimile signature as evidence that this Agreement has been duly
executed by such party. Any party executing this Agreement by facsimile
signature shall immediately forward to the other party an original page by
overnight mail.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
RENT-WAY, INC.:
By /s/Xxxxxx Xxxxxxxx
-------------------
Xxxxxx Xxxxxxxx
Chairman, Compensation Committee of the
Board of Directors
EXECUTIVE:
By /s/Xxxxxxx X. Xxxxxxxxxxx
-------------------------
Xxxxxxx X. Xxxxxxxxxxx
