EXHIBIT 10.21
RENT-A-CENTER, INC.
EXECUTIVE TRANSITION AGREEMENT
WITH [NAME OF EXECUTIVE]
          AGREEMENT made as of the ___day of                     , 2006, by and
between RENT-A-CENTER, INC. (“Company”) and
                                         (“Executive”).
     1. Background. This Agreement is intended to provide the Executive with
certain payments and benefits upon an involuntary termination of Executive’s
employment or the occurrence of certain other circumstances that may affect the
Executive. The Company believes this Agreement will help ensure the Executive’s
undivided focus on the business of the Company and thereby enhance shareholder
value.
     2. Certain Defined Terms. The following terms have the following meanings
when used in this Agreement.
          (a) “Accrued Compensation” means, as of any date, (1) the unpaid
amount, if any, of Executive’s previously earned base salary, (2) the unpaid
amount, if any, of the bonus earned by the Executive for the preceding year, and
(3) additional payments or benefits, if any, earned by the Executive under and
in accordance with any employee plan, program or arrangement of or with the
Company or an Affiliate (other than this Agreement).
          (b) “Affiliate” means an entity at least 50% of the voting, capital or
profits interests of which are owned directly or indirectly by Company.
          (c) “Benefit Continuation Coverage” means continuing group health
insurance coverage for Executive and, where applicable, Executive’s covered
spouse and covered eligible dependents for a specified period following the
termination of Executive’s Employment with Company and its Affiliates at the
same benefit and contribution levels that would be in effect if the Executive’s
employment had continued, if and to the extent such coverage would be permitted
by the applicable plan and applicable law. Benefit Continuation Coverage, if
any, shall be in addition to and not in lieu of COBRA coverage. Unless sooner
terminated, Benefit Continuation Coverage will be subject to early termination
if and when the Executive becomes entitled to comparable coverage from another
employer.
          (d) “Board” means the Board of Directors of the Company.
          (e) “Cause” means (1) material act or acts of willful misconduct by
Executive, whether in violation of the Company’s policies, including, without
limitation, the Company’s Code of Business Conduct and Ethics, or otherwise;
(2) Executive’s willful and repeated failure (except where due to physical or
mental incapacity) or refusal to perform in any material respect the duties and
responsibilities of Executive’s employment; (3) embezzlement or fraud committed
by Executive, at Executive’s direction, or with Executive’s prior personal
knowledge; (4) Executive’s conviction of, or plea of guilty or nolo contendere
to, the commission of a felony; or (5) substance abuse or use of illegal drugs
that, in the reasonable judgment of the Compensation Committee, (A) impairs the
ability of the Executive to perform the duties of the

 

--------------------------------------------------------------------------------

 

Executive’s employment, or (B) causes or is likely to cause harm or
embarrassment to the Company or any of its Affiliates. Except as specified, the
Compensation Committee, acting in its own discretion, will be responsible for
determining whether particular conduct constitutes “Cause” for the purposes of
this Agreement.
          (f) “Change in Control” means the occurrence of any of the following
after September 14, 2006:
     (i) any person (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (“Exchange Act”)) becomes the
beneficial owner (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 40% or more of the combined voting power of the then
outstanding voting securities of Company;
     (ii) a consolidation, merger or reorganization of the Company, unless
(1) the stockholders of Company immediately before such consolidation, merger or
reorganization own, directly or indirectly, at least a majority of the combined
voting power of the outstanding voting securities of the corporation or other
entity resulting from such consolidation, merger or reorganization,
(2) individuals who were members of the Board immediately prior to the execution
of the agreement providing for such consolidation, merger or reorganization
constitute a majority of the board of directors of the surviving corporation or
of a corporation directly or indirectly beneficially owning a majority of the
voting securities of the surviving corporation, and (3) no person beneficially
owns more than 40% of the combined voting power of the then outstanding voting
securities of the surviving corporation (other than a person who is (A) Company
or a subsidiary of Company, (B) an employee benefit plan maintained by Company,
the surviving corporation or any subsidiary, or (C) the beneficial owner of 40%
or more of the combined voting power of the outstanding voting securities of
Company immediately prior to such consolidation, merger or reorganization);
     (iii) individuals who, as of September 14, 2006, constitute the entire
Board (the “Incumbent Board”) cease for any reason to constitute a majority of
the Board, provided that any individual becoming a director subsequent to
September 14, 2006 whose appointment or nomination for election by Company’s
stockholders, was approved by a vote of at least two-thirds of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board;
     (iv) approval by the stockholders of the Company of a complete liquidation
or dissolution of Company, or a sale or other disposition of all or
substantially all of the assets of the Company (other than to an entity
described in (f)(ii) above); or
     (v) any other event or transaction which the Board, acting in its
discretion, designates is a Change in Control.

- 2 -

--------------------------------------------------------------------------------

 

          (g) “Code” means the Internal Revenue Code of 1986, as amended.
          (h) “Company” means Rent-A-Center, Inc. and any successor thereto.
          (i) “Compensation Committee” means the Compensation Committee of the
Board.
          (j) “Disability” means the inability of Executive to substantially
perform the customary duties and responsibilities of Executive’s Employment with
Company or an Affiliate for a period of at least 120 consecutive days or
120 days in any 12-month period by reason of a physical or mental incapacity
which is expected to result in death or last indefinitely, as determined by a
duly licensed physician appointed by the Company.
          (k) “Employment” means Executive’s employment with the Company and/or
any of its Affiliates.
          (l) “Good Reason” means the occurrence of any of the following without
the written consent of Executive: (1) a material diminution by Company or an
Affiliate of Executive’s duties or responsibilities in a manner which is
inconsistent with Executive’s position or which has or is reasonably likely to
have a material adverse effect on Executive’s status or authority; (2) a
relocation by more than 50 miles of Executive’s principal place of business; or
(3) a reduction by Company or an Affiliate of Executive’s rate of salary or
annual incentive opportunity or a breach by Company or any of its Affiliates of
a material provision of any written employment or other agreement with Executive
which is not corrected within 15 business days following notice thereof by
Executive to Company.
          (m) “Pro Rata Bonus” means the annual bonus, if any, earned by
Executive for the calendar year preceding the year in which the Executive’s
Employment terminates multiplied by a fraction, the numerator of which is the
number of days elapsed from the beginning of the calendar year in which the
Executive’s Employment terminates until the date the Executive’s Employment
terminates, and the denominator of which is 365. If the Executive’s Employment
terminates before April 1 of a calendar year, the Pro Rata Bonus for such
calendar year shall be deemed to be zero.
          (n) “Salary & Bonus” means, as of the effective date of the
termination of Executive’s Employment with Company and its Affiliates, the sum
of: (1) Executive’s highest annual rate of salary at any time during the
preceding 24 months, and (2) Executive’s average annual bonus for the two
preceding calendar years. If the number of preceding years of Executive’s
Employment is less than two, then the bonus component of Executive’s Salary &
Bonus will be equal to bonus earned during the calendar year preceding the date
of Executive’s termination of Employment; and, if the Executive has not
completed at least a full calendar year of Employment, the bonus component of
Executive’s Salary & Bonus will be zero.
     3. General Severance Protection. Subject to the provisions hereof,
including, without limitation, Section 7 (relating to non-duplication of
payments and benefits provided under other agreements and arrangements) and
Section 8 (relating to the execution and delivery of a release as a condition of
Executive’s (or a beneficiary’s) entitlement to payments and benefits

- 3 -

--------------------------------------------------------------------------------

 

hereunder), upon termination of Employment, other than a termination of
Employment in conjunction with a Change in Control to which Section 4 applies,
Executive (or Executive’s beneficiary, as the case may be) will be entitled to
receive the applicable severance payments and benefits set forth in this
Section.
          (a) Termination by Company or an Affiliate without Cause. If
Executive’s Employment is terminated by the Company or an Affiliate without
Cause, then Executive shall be entitled to receive the following payments and
benefits:
     (i) Accrued Compensation;
     (ii) Pro Rata Bonus;
     (iii) 1.0 times Salary & Bonus, payable to Executive in equal monthly (or,
at the option of the Company, more frequent) installments; and
     (iv) Benefit Continuation Coverage for the period covered by
Section 3(a)(iii).
          (b) Disability or Death. If Executive’s Employment is terminated by
the Company or an Affiliate due to Executive’s Disability or if Executive’s
Employment terminates by reason of death, then Executive (or Executive’s
beneficiary) shall be entitled to receive the following payments and benefits:
     (i) Accrued Compensation;
     (ii) Pro Rata Bonus; and
     (iii) Benefit Continuation Coverage for twelve months.
          (c) Termination by Company or an Affiliate for Cause or Termination by
Executive. If Company or an Affiliate terminates Executive’s Employment for
Cause or if Executive terminates such Employment for any reason (other than
death), then Executive shall be entitled to receive any Accrued Compensation,
subject to set off for amounts owed by Executive to Company or an Affiliate, and
nothing more.
          (d) Restoration. Any severance payments and benefits paid under this
Section 3 shall be subject to continuing compliance with the covenants described
in and repayment pursuant to Section 9.
     4. Termination in Conjunction with a Change in Control. Subject to the
provisions hereof, including, without limitation, Section 6 (relating to a
reduction of severance payments and benefits in order to avoid adverse tax
consequences), Section 7 (relating to non-duplication of payments and benefits
provided under other agreements and arrangements), and Section 8 (relating to
execution and delivery of a general release as a condition of Executive’s
entitlement to payments and benefits hereunder), upon the termination of
Executive’s Employment with Company and its Affiliates in conjunction with a
Change in Control, Executive (or Executive’s

- 4 -

--------------------------------------------------------------------------------

 

beneficiary, as the case may be) will be entitled to receive the applicable
severance payments and benefits set forth in this Section. For the purposes
hereof, a termination of Employment is in conjunction with a Change in Control
if (and only if) it occurs during the period beginning six months prior to a
Change in Control (or, in the case of a Change in Control described in Section
2(f)(i) or (ii), beginning on the date of the definitive agreement pursuant to
which the Change in Control is consummated), and ending on the second
anniversary of the date of the Change in Control. If Executive is entitled to
receive payments and benefits under Section 3 (due to a termination of
Employment not in conjunction with a Change in Control) and if, by reason of a
subsequent Change in Control, Executive’s termination of Employment is deemed to
be in conjunction with the Change in Control, then, in order to avoid
duplication, the payments and benefits to which Executive is entitled under this
Section upon and following the Change in Control will be reduced by the payments
and benefits which Executive received under Section 3, and no further payments
will be made under Section 3.
          (a) Termination by Company or an Affiliate without Cause or by
Executive for Good Reason. If Executive’s Employment is terminated by Company or
an Affiliate without Cause or by Executive for Good Reason, then Executive shall
be entitled to receive the following payments and benefits:
     (i) Accrued Compensation;
     (ii) Pro Rata Bonus;
     (iii) an amount equal to 1.5 times Salary & Bonus, which amount shall be
payable in a lump sum in cash within 10 business days following the date of
Executive’s termination of Employment or, if later, the date of the Change in
Control; and
     (iv) Benefit Continuation Coverage for 1.5 years following termination.
          (b) Disability or Death. If Executive’s Employment is terminated by
Company or an Affiliate due to Executive’s Disability, or if Executive’s
Employment terminates by reason of death, then Executive (or Executive’s
beneficiary) shall be entitled to receive the following payments and benefits:
     (i) Accrued Compensation;
     (ii) Pro Rata Bonus; and
     (iii) Benefit Continuation Coverage for twelve months.
          (c) Termination by Company or an Affiliate for Cause or Termination by
Executive without Good Reason. If Executive’s Employment is terminated by
Company or an Affiliate for Cause or is terminated by Executive without Good
Reason, Executive shall be entitled to receive Accrued Compensation through the
date of termination, subject to set off for amounts owed by Executive to Company
or an Affiliate, and nothing more.

- 5 -

--------------------------------------------------------------------------------

 

          (d) Restoration. Any severance payments and benefits paid under this
Section 4 shall be subject to continuing compliance with the covenants described
in and repayment pursuant to Section 9.
     5. Effect of a Change in Control on Options and Other Equity-Based Awards.
All outstanding Company stock options and other Company equity-based awards held
by Executive shall become fully vested immediately before the occurrence of a
Change in Control if (a) Executive is then still employed by Company or an
Affiliate; or (b) Executive is entitled to payments and benefits under Section
4(a) as a result of the termination of Employment during the pre-Change in
Control severance protection period described in Section 4. If Executive becomes
vested in a stock option or other equity-based award pursuant to part (b) of the
preceding sentence, then, before the Change in Control, Company will either
reinstate the option or other award to the extent it would otherwise not be
vested, or make a cash payment to Executive equal to the intrinsic value of the
non-vested portion of the option or other award based upon the then value per
share of Company’s Common Stock. The vesting and other terms and conditions of
Executive’s stock options and other equity-based awards will continue to govern
except as otherwise specifically provided by this Section 5.
     6. Golden Parachute Tax Limitation. If Executive is entitled to receive
payments and benefits under this Agreement and if, when combined with the
payments and benefits Executive is entitled to receive under any other plan,
program or arrangement of Company or an Affiliate, Executive would be subject to
excise tax under Section 4999 of the Code or Company would be denied a deduction
under Section 280G of the Code, then the severance amounts otherwise payable to
Executive under this Agreement will be reduced by the minimum amount necessary
to ensure that Executive will not be subject to such excise tax and Company will
not be denied any such deduction.
     7. Effect of Other Agreements. Notwithstanding the provisions hereof, the
post-termination payment and benefit provisions of Executive’s written
employment or other agreement with Company or an Affiliate in force at the
termination of Executive’s Employment (if any) will apply in lieu of the
provisions hereof if and to the extent that, with respect to Executive’s
termination of Employment, the provisions of such employment or other agreement
would provide greater payments or benefits to Executive (or to Executive’s
covered dependents or beneficiaries). If any termination or severance payments
or benefits are made or provided to Executive by Company or any or its
Affiliates pursuant to a written employment or other agreement with Company or
an Affiliate, such payments and benefits shall reduce the amount of the
comparable payments and benefits payable hereunder. This Section is intended to
provide Executive with the most favorable treatment and, at the same time, avoid
duplication of payments or benefits, and it will be construed and interpreted
accordingly.
     8. Release of Claims. Notwithstanding anything herein to the contrary, the
Compensation Committee or the Board may condition severance payments or benefits
otherwise payable under this Agreement upon the execution and delivery by
Executive (or Executive’s beneficiary) of a general release in favor of Company,
its Affiliates and their officers, directors and employees, in such form as the
Board or the Compensation Committee may specify; provided, however, that no such
release will be required as a condition of Executive’s (or the

- 6 -

--------------------------------------------------------------------------------

 

beneficiary’s) entitlement to Accrued Compensation. Any payment or benefit that
is so conditioned may be deferred until the expiration of the seven day
revocation period prescribed by the Age Discrimination in Employment Act of
1967, as amended, or any similar revocation period in effect on the effective
date of the termination of Executive’s Employment.
     9. Restoration. The Executive has been provided and is privy to
intellectual property, trade secrets and other confidential information of the
Company and its Affiliates. For two years following the Executive’s termination
of Employment, the Executive has agreed not to engage in any activity or provide
any services which are similar to or competitive with the business of the
Company and its Affiliates. For the same two year period, the Executive also
agreed not to solicit or induce, or cause or permit others to solicit or induce,
any employee to terminate their employment with the Company and its Affiliates.
These covenants are set forth and agreed to in the Loyalty and Confidentiality
Agreement between the Executive and the Company (“Loyalty Agreement”). The
parties hereto understand and acknowledge that the promises in this Agreement
and those in the Loyalty Agreement, and not any employment of or services
performed by the Executive in the course and scope of that employment,
constitute the sole consideration for the severance payments and benefits
provided by this Agreement. Further, it is agreed that should the Executive
violate or be in breach of any restrictions set forth herein or in the Loyalty
Agreement (which determination shall be made in the discretion of the
Compensation Committee), (a) the Executive shall not be entitled to any further
severance payments and benefits under this Agreement, (b) the Executive shall
immediately return to the Company any severance payments and the value of any
severance benefits which were received hereunder, and (c) the Executive will
have no further rights or entitlements under this Agreement. This Section 9
shall not in any manner supersede or limit any other right the Company may have
to enforce or seek legal or equitable relief based on this Agreement or the
Loyalty Agreement.
     10. No Duty to Mitigate. Except as otherwise specifically provided herein
with respect to early termination of Benefit Continuation Coverage, Executive’s
entitlement to payments or benefits hereunder is not subject to mitigation or a
duty to mitigate by Executive.
     11. Amendment. The Board may amend this Agreement, provided, however, that,
no such action which would have the effect of reducing or diminishing
Executive’s entitlements under this Agreement shall be effective without the
express written consent of the Executive.
     12. Successors and Beneficiaries.
          (a) Successors and Assigns of Company. Company shall require any
successor or assignee, whether direct or indirect, by purchase, merger,
consolidation or otherwise, to all or substantially all the business or assets
of Company and its subsidiaries taken as a whole, expressly and unconditionally
to assume and agree to perform or cause to be performed Company’s obligations
under this Agreement. In any such event, the term “Company,” as used herein
shall mean Company, as defined in Section 2 hereof, and any such successor or
assignee. Executive acknowledges and agrees that this Agreement and the Loyalty
Agreement shall be fully enforceable by the Company’s successor or assignee.

- 7 -

--------------------------------------------------------------------------------

 

          (b) Executive’s Beneficiary. For the purposes hereof, Executive’s
beneficiary will be the person or persons designated as such in a written
beneficiary designation filed with the Company, which may be revoked or revised
in the same manner at any time prior to Executive’s death. In the absence of a
properly filed written beneficiary designation or if no designated beneficiary
survives Executive, Executive’s estate will be deemed to be the beneficiary
hereunder.
     13. Nonassignability. With the exception of Executive’s beneficiary
designation, neither Executive nor Executive’s beneficiary may pledge, transfer
or assign in any way the right to receive payments or benefits hereunder, and
any attempted pledge, transfer or assignment shall be void and of no force or
effect.
     14. Legal Fees to Enforce Rights after a Change in Control. If, following a
Change in Control, Company fails to comply with any of its obligations under
this Agreement or Company takes any action to declare this Agreement void or
unenforceable or institutes any litigation or other legal action designed to
deny, diminish or to recover from Executive (or Executive’s beneficiary) the
payments and benefits intended to be provided, then Executive (or Executive’s
beneficiary, as the case may be) shall be entitled to select and retain counsel
at the expense of Company to represent Executive (or Executive’s beneficiary) in
connection with the good faith initiation or defense of any litigation or other
legal action, whether by or against Company or any director, officer,
stockholder or other person affiliated with Company or any successor thereto in
any jurisdiction.
     15. Not a Contract of Employment. This Agreement shall not be deemed to
constitute a contract of employment between Executive and Company or any of its
Affiliates. Nothing contained herein shall be deemed to give Executive a right
to be retained in the employ or other service of Company or any of its
Affiliates or to interfere with the right of Company or any of its Affiliates to
terminate Executive’s employment at any time.
     16. Governing Law. This Agreement shall be governed by the laws of the
State of Texas, excluding its conflict of law rules. Any suit with respect to
this Agreement will be brought in the federal or state courts in the districts,
which include Dallas, Texas, and Executive hereby agrees to submit to the
personal jurisdiction and venue thereof.
     17. Compliance with Section 409A of the Code. This Agreement is intended to
comply with Section 409A of the Code, if and to the extent applicable, and will
be interpreted and applied in a manner consistent with that intention. Toward
that end, unless permitted sooner by Section 409A of the Code, severance amounts
otherwise payable within six-months after termination of employment will be
deferred until and become payable on the first day of the seventh month
following termination of employment.
     18. Withholding. Company and its Affiliates may withhold from any and all
amounts payable under this Agreement such federal, state and local taxes as may
be required to be withheld pursuant to applicable law.

- 8 -

--------------------------------------------------------------------------------

 

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

              RENT-A-CENTER, INC.
 
       
 
  By:    
 
       
 
                  Executive

- 9 -