Document:

Exhibit 10.24

 

Exhibit 10.24

Rent-Way, Inc.

Third Amendment To Credit Agreement

     This Third Amendment to Credit Agreement (herein, the “Amendment”) is entered into as of
November 18, 2005, among Rent-Way, Inc., a Pennsylvania corporation (the “Company”), the direct and
indirect Subsidiaries of the Borrower (the “Subsidiaries”), the Lenders party hereto, and Harris
N.A., successor by merger to Harris Trust and Savings Bank, as administrative agent for the Lenders
(the “Agent”).

Preliminary Statements

     A. The Company, the Subsidiaries, the Lenders, and the Agent are parties to that certain
Credit Agreement dated as of June 2, 2003, as amended (the “Credit Agreement”). All capitalized
terms used herein without definition shall have the same meanings herein as such terms have in the
Credit Agreement.

     B. The Company, the Subsidiaries and the Lenders have agreed to make certain amendments to the
Credit Agreement, in each case under the terms and conditions set forth in this Amendment.

     Now, Therefore, for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:

Section 1. Amendments to the Credit Agreement.

     Subject to the satisfaction of the conditions precedent set forth in Section 2 hereof, the
Credit Agreement shall be and hereby is amended as follows:

     1.1. The table appearing in the definition of the term “Applicable Margin” contained in
Section 5.1 of the Credit Agreement shall be amended to read as follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	APPLICABLE MARGIN	 	APPLICABLE MARGIN 	 	 
	 	 	 	 	FOR BASE RATE LOANS	 	FOR EURODOLLAR 	 	 
	 	 	 	 	UNDER REVOLVING	 	LOANS UNDER	 	APPLICABLE
	 	 	LEVERAGE RATIO	 	CREDIT AND	 	REVOLVING CREDIT	 	MARGIN FOR
	 	 	FOR SUCH PRICING	 	REIMBURSEMENT	 	AND LETTER OF CREDIT	 	COMMITMENT
	LEVEL	 	DATE	 	OBLIGATIONS SHALL BE:	 	FEE SHALL BE:	 	FEE SHALL BE:
	V

	 	Greater than 4.5 to 1.0
	 	 	2.00	%	 	 	3.75	%	 	 	0.50	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	IV

	 	Less than or equal to
4.5 to 1.0, but greater
than 4.0 to 1.0
	 	 	1.75	%	 	 	3.50	%	 	 	0.50	%

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	APPLICABLE MARGIN	 	APPLICABLE MARGIN	 	 
	 	 	 	 	FOR BASE RATE LOANS	 	FOR EURODOLLAR	 	 
	 	 	 	 	UNDER REVOLVING	 	LOANS UNDER	 	APPLICABLE
	 	 	LEVERAGE RATIO	 	CREDIT AND	 	REVOLVING CREDIT	 	MARGIN FOR
	 	 	FOR SUCH PRICING	 	REIMBURSEMENT	 	AND LETTER OF CREDIT	 	COMMITMENT
	LEVEL	 	DATE	 	OBLIGATIONS SHALL BE:	 	FEE SHALL BE:	 	FEE SHALL BE:
	III

	 	Less than or equal to
4.0 to 1.0, but greater
than 3.5 to 1.0
	 	 	1.50	%	 	 	3.25	%	 	 	0.50	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	II

	 	Less than or equal to
3.5 to 1.0, but greater
than 3.0 to 1.0
	 	 	1.0	%	 	 	2.75	%	 	 	0.50	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	I

	 	Less than or equal to
3.0 to 1.0
	 	 	0.50	%	 	 	2.25	%	 	 	0.50	%

     1.2. The definition of the term “Indebtedness for Borrowed Money” contained in Section
5.1 of the Credit Agreement shall be amended by adding the following proviso thereto immediately
before the period appearing at the end of such definition:

“; provided however, that the term “Indebtedness for Borrowed Money” shall not include the
indebtedness evidenced by any Senior Notes owned by the Company or any Subsidiary of the
Company so long as such Senior Notes are not shown as an asset on the Company’s financial
statements.”

     1.3. Clause (d) of the definition of Permitted Acquisition in Section 5.1 of the Credit
Agreement shall be amended by deleting the reference to “$3,000,000” therein and replacing such
reference with “$5,000,000” in lieu thereof.

     1.4. Section 8.22 of the Credit Agreement shall be amended to read as follows:

     “Section 8.22. Capital Expenditures The Borrower shall not, nor shall it permit any of
the Guarantors to, incur Capital Expenditures in an amount in excess of $25,000,000 in the
aggregate during any fiscal year.”

     1.5. Section 8.24 of the Credit Agreement shall be amended to read as follows:

     “Section 8.24. Leverage Ratio. As of the last day of each fiscal quarter of the
Borrower ending during each of the periods specified below, the Borrower shall not permit
the Leverage Ratio at such time to be greater than:

-2-

 

	 	 	 	 	 
	 	 	 	 	Leverage Ratio shall not be 
	From and including	 	To and including	 	More than:
	December 31, 2005
	 	December 31, 2005
	 	5.25 to 1.0
	January 1, 2006
	 	June 30, 2006
	 	5.75 to 1.0
	July 1, 2006
	 	December 31, 2006
	 	5.00 to 1.0
	January 1, 2007
	 	June 30, 2007
	 	4.50 to 1.0
	July 1, 2007
	 	Thereafter
	 	4.25 to 1.0”

     1.6. Section 8.27 of the Credit Agreement shall be amended and restated in its entirety to
read as follows:

     “Section 8.27. Monthly Minimum EBITDA. As of the last day of each calendar month
ending during each of the periods specified below, the Borrower shall not permit its EBITDA
for the twelve (12) consecutive calendar months then ended to be less than:

	 	 	 	 	 
	 	 	 	 	EBITDA shall not be Less 
	From and including	 	To and including	 	than:
	October 1, 2005
	 	March 31, 2006
	 	$45,000,000
	April 1, 2006
	 	May 31, 2006
	 	$40,000,000
	June 1, 2006
	 	August 31, 2006
	 	$42,000,000
	September 1, 2006
	 	November 30, 2006
	 	$45,000,000
	December 1, 2006
	 	February 28, 2007
	 	$50,000,000
	March 1, 2007
	 	May 31, 2007
	 	$52,500,000
	June 1, 2007
	 	Thereafter
	 	$55,000,000”

     1.7. Section 8.21(a) of the Credit Agreement shall be amended to read as follows:

     “Section 8.21. Senior Notes (a) The Borrower shall not, nor shall it permit any
Subsidiary to, (i) amend or modify any of the terms or conditions relating to Senior Notes
(other than amendments and modifications that (A) would extend the maturity or reduce the
amount of any payment of principal or reduce the rate or extend any date for payment of
interest, (B) adds collateral that conforms to collateral covered by the Collateral
Documents, or (C) releases collateral) or (ii) directly or indirectly make any voluntary
prepayment of any Senior Notes, purchase any Senior Notes, or effect any voluntary
redemption of any Senior Notes; provided, however, the foregoing shall not prohibit the
Borrower from:

-3-

 

     (1) prepaying, purchasing and redeeming Senior Notes (x) with the proceeds of
the issuance and sale of common stock of the Borrower so long as no Default or Event
of Default shall exist before or after giving effect thereto and (y) after the
Borrower’s obligations under Section 4.19 of the Senior Note Indenture have
terminated pursuant to Section 4.19(d) of the Senior Note Indenture so long as (I)
no Revolving Loans are outstanding immediately prior to and for 10 consecutive days
immediately after such prepayment, purchase or redemption, and (II) no Default or
Event of Default shall exist before and after giving effect thereto, and

     (2) purchasing Senior Notes in the open market for an aggregate purchase price
not to exceed $10,000,000 during the term of this Agreement so long as (x) after
giving effect to each such purchase, no Default or Event of Default shall exist
before or after giving effect thereto, including with respect to the covenants
contained in Sections 8.22, 8.23, 8.24, 8.25, 8.26 and 8.27 on a pro forma basis,
and (y) the Borrower has complied with all requirements of the Senior Note Indenture
applicable to such purchase, including without limitation obtaining any necessary
consents of the holders of the Senior Notes.”

     1.8. Schedule 6.2 of the Credit Agreement shall be replaced by Schedule 6.2 attached to this
Amendment.

Section 2. Conditions Precedent.

     The effectiveness of this Amendment is subject to the satisfaction of all of the following
conditions precedent:

     2.1. The Company, the Subsidiaries, the Agent, and the Required Lenders shall have executed
and delivered this Amendment.

     2.2. Each of the representations and warranties set forth in Section 6 of the Credit Agreement
shall be true and correct (except that for purposes of this paragraph the representations contained
in Section 6.5 shall be deemed to refer to the most recent financial statements of the Company
delivered to the Lenders).

     2.3. The Company shall be in full compliance with all of the terms and conditions of the
Credit Agreement and no Event of Default or Default shall have occurred and be continuing
thereunder or shall result after giving effect to this Amendment.

     2.4. Legal matters incident to the execution and delivery of this Amendment shall be
satisfactory to the Agent and its counsel.

     2.5. The Subsidiaries shall have executed and delivered to the Agent their consent to this
Amendment in the form set forth below.

-4-

 

     2.6. The Agent shall have received for the account of each Lender executing this Amendment a
non-refundable amendment fee in the amount equal to 0.30% of each such Lenders Revolving Credit
Commitment.

Section 3. Representations.

     In order to induce the Lenders to execute and deliver this Amendment, the Company hereby
represents to the Lenders that as of the date hereof, and after giving effect to the amendments
called for hereby, the representations and warranties set forth in Section 6 of the Credit
Agreement are and shall be and remain true and correct (except that for purposes of this paragraph
the representations contained in Section 6.5 shall be deemed to refer to the most recent financial
statements of the Company delivered to the Lenders) and the Company is in compliance with all of
the terms and conditions of the Credit Agreement and no Default or Event of Default exists under
the Credit Agreement or shall result after giving effect to this Amendment.

Section 4. Miscellaneous.

     4.1. The Company and the Subsidiaries heretofore executed and delivered to the Agent and the
Lenders the Collateral Documents to which it is a party. The Company and the Subsidiaries hereby
acknowledge and agree that the Liens created and provided for by the Collateral Documents to which
it is a party continue to secure, among other things, the Obligations arising under the Credit
Agreement as amended hereby; and the Collateral Documents to which it is a party and the rights and
remedies of the Lenders thereunder, the obligations of the Company and the Subsidiaries thereunder,
and the Liens created and provided for thereunder remain in full force and effect and shall not be
affected, impaired or discharged hereby. Nothing herein contained shall in any manner affect or
impair the priority of the liens and security interests created and provided for by the Collateral
Documents to which it is a party as to the indebtedness which would be secured thereby prior to
giving effect to this Amendment.

     4.2. Except as specifically amended herein or waived hereby, the Credit Agreement shall
continue in full force and effect in accordance with its original terms. Reference to this
specific Amendment need not be made in the Credit Agreement, the Notes, or any other instrument or
document executed in connection therewith, or in any certificate, letter or communication issued or
made pursuant to or with respect to the Credit Agreement, any reference in any of such items to the
Credit Agreement being sufficient to refer to the Credit Agreement as amended hereby.

     4.3. This Amendment may be executed in any number of counterparts, and by the different
parties on different counterpart signature pages, all of which taken together shall constitute one
and the same agreement. Any of the parties hereto may execute this Amendment by signing any such
counterpart and each of such counterparts shall for all purposes be deemed to be an original. This
Amendment shall be governed by the internal laws of the State of Illinois.

     4.4. The Company agrees to pay all reasonable out-of-pocket costs and expenses incurred by the
Agent in connection with the credit facilities and the preparation, execution and delivery of this
Amendment, and the documents and transactions contemplated hereby, including the reasonable fees
and expenses of counsel for the Agent with respect to the foregoing.

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[Signature Page(s) to Follow]

-6-

 

     This Third Amendment to Credit Agreement is entered into as of the date and year first above
written.

	 	 	 	 	 	 	 	 	 
	 	 	Rent-Way, Inc.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 

	 	 	 	Name	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Rent-Way of Tomorrow, Inc.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 

	 	 	 	Name	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Rent-Way of Michigan, Inc.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 

	 	 	 	Name	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Rent-Way Developments, Inc.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 

	 	 	 	Name	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Rent-Way of TTIG, L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 

	 	 	 	Name	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title	 	 	 	 
	 

	 	 	 	 	 	 	 	 

Rent-Way, Inc.

Signature Page to Third Amendment to Credit Agreement

 

 

     Accepted and agreed to as of the date and year last above written.

	 	 	 	 	 	 	 	 	 
	 	 	Harris N.A., successor by merger to

Harris Trust and Savings Bank, as Agent	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 

	 	 	 	Name	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	General Electric Capital Corporation	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 

	 	 	 	Name	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	National City Bank of Pennsylvania	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 

	 	 	 	Name	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title	 	 	 	 
	 

	 	 	 	 	 	 	 	 

Rent-Way, Inc.

Signature Page to Third Amendment to Credit Agreement

 

 

Guarantors’ Acknowledgement and Consent

     Each of the undersigned heretofore executed and delivered to the Agent one or more Guaranties
and Collateral Documents. Each of the undersigned hereby consents to the Amendment as set forth
above and agrees to the terms set forth therein and confirms that the Loan Documents executed and
delivered by it and all of such undersigned’s obligations thereunder remain in full force and
effect. Each of the undersigned further agrees that the consent of such undersigned to any further
amendments to the Credit Agreement or to the Security Agreement shall not be required as a result
of this consent having been obtained. Each of the undersigned acknowledges that the Lenders are
relying on this acknowledgement and consents in entering into the Amendment set forth above.

	 	 	 	 	 	 	 	 	 
	 	 	Rent-Way of Tomorrow, Inc.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 

	 	 	 	Name	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Rent-Way of Michigan, Inc.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 

	 	 	 	Name	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Rent-Way Developments, Inc.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 

	 	 	 	Name	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Rent-Way of TTIG, L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 

	 	 	 	Name	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title	 	 	 	 
	 

	 	 	 	 	 	 	 	 

Rent-Way, Inc.

Signature Page to Guarantors’ Acknowledgement and Consent to

Third Amendment to Credit Agreement

 

 

SCHEDULE 6.2

SUBSIDIARIES

	 	 	 	 	 	 	 
	 	 	JURISDICTION	 	 	 	 
	 	 	OF	 	PERCENTAGE	 	 
	NAME	 	ORGANIZATION	 	OWNERSHIP	 	OWNER
	Rent-Way of Tomorrow, Inc.
(“Tomorrow”)
	 	Delaware	 	100%	 	Borrower
	 
	Rent-Way of Michigan, Inc.
(“Michigan”)
	 	Delaware	 	100%	 	Borrower
	 
	Rent-Way Developments,
Inc. (“Developments”)
	 	Delaware	 	100%	 	Michigan
	 
	Rent-Way of TTIG, L.P.
	 	Indiana	 	100%	 	Developments and
	 
	 
	 	 	 	 	 	Tomorrow
	 
	dPi Teleconnect, L.L.C.
	 	Delaware	 	83.5%	 	BorrowerExhibit 10.25

 

Exhibit 10.25

RENT-WAY, INC.

EXECUTIVE NON-QUALIFIED RETIREMENT PLAN

          The Board of Directors of Rent-Way, Inc. (the “Employer”) authorized the adoption of the
Rent-Way Executive Non-Qualified Retirement Plan (the “Plan”) as of the Effective Date (as defined
under Section 1.3).

ARTICLE I

DEFINITIONS AND EFFECTIVE DATE

          Section 1.1 Definitions. For purposes of the Plan, the following terms have
the definitions stated below unless the context clearly indicates otherwise:

	 	(a)	 	“Accounts” means a Participant’s
Employee Contribution Account and Company Contribution Account.
	 
	 	(b)	 	“Beneficiary” means any one or more
persons, trusts, or other entity, last designated by the Participant to
receive the death benefits provided under the Plan.
	 
	 	(c)	 	“Board” means the Board of Directors of
Rent-Way, Inc..
	 
	 	(d)	 	“Code” means the Internal Revenue Code
of 1986, as amended.
	 
	 	(e)	 	“Company” means the Employer and any
other Organization Under Common Control that adopts the Plan in
accordance with Section 1.4.
	 
	 	(f)	 	“Company Contribution Account” means an
account established and maintained under Section 4.1 for the purpose of
holding Company contributions made under Section 3.2.
	 
	 	(g)	 	“Compensation” means “Compensation” as
that term is defined under the 401(k) Plan, including bonuses, without
regard to the dollar limitation under Section 401(a)(17) of the Code.
	 
	 	(h)	 	“Election Period” means the 30-day
period after a Participant is notified of his or her selection for
coverage under the Plan under Article II and, thereafter, the 30-day
period preceding each Plan Year.
	 
	 	(i)	 	“Employee” means any common law
employee of the Company.
	 
	 	(j)	 	“Employee Contribution Account” means
an account established and maintained under Section 4.1 for the purpose
of holding Employee contributions made under Section 3.1.

 

 

- 2 -

	 	(k)	 	“ERISA” means the Employee Retirement
Income Security Act of 1974, as amended.
	 
	 	(l)	 	“401(k) Plan” means the Rent-Way, Inc.
401(k) Retirement Savings Plan.
	 
	 	(m)	 	“Hour of Service” means “Hour of
Service” as the term is defined under the 401(k) Plan.
	 
	 	(n)	 	“Organization Under Common Control”
means any corporation or other trade or business that, together with
the Employer, is treated as a single employer under Section 414(b) or
(c) of the Code.
	 
	 	(o)	 	“Participant” means an Employee who
satisfies the requirements of Article II.
	 
	 	(p)	 	“Plan” means the Rent-Way Executive
Non-Qualified Retirement Plan.
	 
	 	(q)	 	“Plan Administrator” means the
Employer.
	 
	 	(r)	 	“Plan Year” means the 12-month period
beginning each October 1 and ending on the following September 30,
except that the first Plan Year begins on the date this Plan is adopted
and ends on September 30, 2006.
	 
	 	(s)	 	“Separated from Service” means the
termination of an employment relationship between the Company and an
Employee resulting from resignation, discharge, retirement, or failure
to return from work after an authorized leave of absence.
	 
	 	(t)	 	“Specified Key Employee.” An Employee
who is: (i) one of the highest paid 50 officers of the Company with
annual compensation over $135,000; (ii) a 5% owner; or (iii) a 1% owner
earning more than $150,000 (or such higher dollar amounts for
subsequent years as provided under Code Section 416(i)); at any time
during the 12 month period prior to September 30th, will be deemed to
be a Specified Key Employee for the 12 month period commencing the
following January 1st.
	 
	 	(u)	 	“Trust” means the grantor trust
agreement entered into by and between the Employer and                                          or any successor
trustee, established in connection with the Plan.

 

 

- 3 -

	 	(v)	 	“Year of Vesting Service” means a
calendar year during which an Employee completes at least 1,000 Hours
of Service with the Company.

          Section 1.2 Background and Purpose of the Plan. The primary purpose of this
unfunded Plan is to defer compensation for a select group of highly compensated Employees within
the meaning of Sections 201(2), 301(3) and 401(a)(1) of ERISA and to supplement benefits under the
401(k) Plan due to the limitations of Sections 401(a)(4), 401(a)(17), 402(g) and 415 of the Code.

          Section 1.3 Effective Date. The Effective Date of this Plan is the date the
plan is adopted as indicated above the signature line on the last page of this document.

          Section 1.4 Adoption of Plan by Organization Under Common Control. With the
consent of the Board, any Organization Under Common Control may adopt the Plan for the benefit of
its employees as specified in resolutions formally adopted by its governing board.

ARTICLE II

PARTICIPATION

          An Employee of the Company is a Participant in the Plan if the Employee is in a select group
of management or highly compensated Employees of the Company and is selected by the Board or its
delegate to participate in the Plan.

ARTICLE III

CONTRIBUTIONS

          Section 3.1 Employee Contributions. During the Election Period, a Participant
may irrevocably elect to defer:

     (a) a percentage or dollar amount from his or her base compensation up to 30%
of such compensation, and

     (b) a percentage or dollar amount from any incentive compensation, including
bonuses, up to 100% of such incentive compensation.

Deferral elections made during any Election Period will apply to Compensation earned during the
Plan Year ending after the Election Period and will be made under rules and procedures prescribed
by the Plan Administrator. Employee contributions under this Plan will be contributed to the Trust
at those times and in those amounts as would otherwise have been paid or made available to the
Participant or within a reasonable time thereafter.

          Section 3.2 Company Contributions. For each Plan Year, the Company may
contribute to the Plan on behalf of each Participant an amount equal to a percentage of the

 

 

- 4 -

Compensation paid to the Participant during the Plan Year or a percentage of all or a portion
of the employee contributions under this Plan, as determined in the discretion of the Company.
Company contributions under this Plan will be contributed to the Trust as soon as administratively
feasible after the close of the Plan Year.

ARTICLE IV

ACCOUNTS AND FUNDING

          Section 4.1 Accounts.

     (a) The Plan Administrator will establish and maintain one or more Employee
Contribution Accounts for each Participant to be credited with the amount of the
elective deferral of the Participant under Section 3.1. The Plan Administrator will
credit the Participant’s Employee Contribution Account with an amount equal to his
or her employee contributions under Section 3.1 as of the date the contributions are
made to the Trust.

     (b) The Plan Administrator will also establish and maintain one or more Company
Contribution Accounts for each Participant to be credited with the amount of Company
contributions, if any, under Section 3.2. Company contributions under Section 3.2
will be credited to the Participant’s Company Contribution Account as of the date
the contributions are made to the Trust.

     (c) Periodically, and no less often than annually, the Plan Administrator will
adjust each Participant’s Accounts to reflect the value of employee contributions,
Company contributions and any return on investments of amounts credited to the
Participant.

          Section 4.2 Informal Trust Funding. The Employer will maintain the Trust to
hold contributions made under Article III of this Plan. The Participant’s interest in the Trust
and the Accounts is limited to the right to receive payments as provided under the Plan and the
Trust, and the Participants’ position is that of general unsecured creditors of the Company.

          Section 4.3 Power to Invest.

     (a) The Trustee of the Trust will invest the amounts contributed to the Trust
in the manner directed by the Participant. In making investment directions,
Participants will select from among the investment options made available by the
Trustee. The Plan Administrator will prescribe rules similar to those under the
401(k) Plan regarding the manner and frequency of changes of investment selections
by Participants.

     (b) Any return on investment of the assets held in the Trust will be credited
upon receipt by the Trustee.

 

 

- 5 -

     (c) The Company will not be liable to the Participant or his or her Beneficiary
for any loss or other claim arising out of the operations of the Trust.

          Section 4.4 Vesting.

     (a) A Participant will at all times have a 100% nonforfeitable right to an
amount equal to the value of his or her Employee Contribution Account.

     (b) A Participant will have a nonforfeitable right to an amount equal to the
value of his or her Company Contribution Account multiplied by a percentage, based
on the Participant’s Years of Vesting Service, determined in accordance with the
following table:

	 	 	 	 	 
	Number of Years 	 	Nonforfeitable
	   of
Vesting Service   	 	Percentage
	Less than 1

	 	 	0	%
	1 but less than 2

	 	 	20	%
	2 but less than 3

	 	 	40	%
	3 but less than 4

	 	 	60	%
	4 but less than 5

	 	 	80	%
	5 or more

	 	 	100	%

     (c) The Company Contribution Account of a Participant who is Separated from
Service and who does not have a 100% nonforfeitable right to an amount equal to the
value of his or her Company Contribution Account is determined as of the close of
the Plan Year in which the Participant is Separated from Service. The value of the
Participant’s Company Contribution Account to which he or she does not have a
nonforfeitable right is forfeited at that time.

          Section 4.5 Payment of Benefits.

     (a) Normal Form. Except as provided in Section 4.5(b), the value of a
Participant’s vested Accounts will be paid in the form of single, cash lump sum as
soon as practicable after the close of the calendar quarter in which the Participant
is Separated from Service. If the Participant is a Specified Key Employee on the
date the Participant is Separated from Service, payment will occur no earlier than 6
months following the date the Participant is Separated from Service.

     (b) Installments. (1) Election to Receive Installments. If a
Participant files a timely election in the manner described in this subsection for
any Plan Year, the value of the Participant’s vested Accounts attributable to that

 

 

 - 6 -

Plan Year will be paid in three or five cash installments based on the value of
those vested Accounts on the most recent valuation under Section 4.1 at the time
each installment is paid (the “Account Value”). If paid in three installments, the
first installment will equal 1/3 of the Account Value; the second installment will
equal 1/2 of the Account Value; and the third installment will equal the entire
remaining Account Value. If paid in five installments, the first installment will
equal 1/5 of the Account Value; the second installment will equal 1/4 of the Account
Value; the third installment will equal 1/3 of the Account Value; the fourth
installment will equal 1/2 of the Account Value; and the fifth installment will
equal the entire remaining Account Value. In either case, the first installment
will be paid as soon as practicable after the close of the calendar quarter in which
the Participant is Separated from Service, and the subsequent installments will be
paid on the succeeding anniversaries of the first installment payment. If the
Participant is a Specified Key Employee on the date the Participant is Separated
from Service, the first installment (as described in this paragraph) will be paid no
earlier than 6 months following the date the Participant is Separated from Service.
Subsequent installments will be paid in the same manner as installments paid to
non-Specified Key Employees.

     (2) Time and Manner of Election. A separate election specifying the form of
payment may be made with respect to contributions under Sections 3.1 and 3.2
attributable to each Plan Year. An election must be filed in writing with the Plan
Administrator. To be timely, the election must be filed in compliance with the
rules and procedures prescribed by the Plan Administrator during the Election
Period. Once the Election Period for any Plan Year has ended, no further election
regarding the form of payment applicable to that Plan Year may be made.

          Section 4.6 Death Benefits

     (a) Death Benefit During Employment. If a Participant dies after he or
she becomes entitled to a benefit but before any payments to the Participant have
commenced, the value of the Participant’s vested Accounts will be paid to the
Participant’s Beneficiary in a single, cash lump sum unless the Participant had
filed a timely election prior to his or her death under Section 4.5(b) to receive
payment in three or five cash installments. The lump sum or first installment, as
the case may be, will be paid as soon as practicable on or after the date on which
the Participant dies. Subsequent installments, as the case may be, will be paid on
the succeeding anniversaries of the Participant’s date of death.

     (b) Death Benefit Following Separation. If a Participant dies after
the payment of his or her benefit has commenced under Section 4.5(b) but before
payment of the entire benefit has been completed, the installments remaining will be
paid to the Participant’s Beneficiary.

 

 

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     (c) Designation of Beneficiary. Each Participant may designate a
Beneficiary for the benefits provided on his or her death under the Plan. This
designation may be changed from time to time. All designations will be made in
writing and filed with the Plan Administrator. If the Company, in its sole
discretion, determines that there is not a valid designation, the Beneficiary will
be the executor or administrator of the Participant’s estate.

ARTICLE V

AMENDMENT, SUSPENSION, OR TERMINATION

          Section 5.1 Amendment, Suspension, or Termination. Subject to Section 5.2,
the Board may amend, suspend or terminate the Plan, in whole or in part, at any time and from time
to time by resolution adopted at a regular or special meeting of the Board, including action taken
pursuant to a resolution delegating the authority to act under this Section to one or more officers
or a committee.

          Section 5.2 No Reduction. No amendment, suspension or termination may operate
to adversely affect the benefit otherwise available to a Participant under the Plan determined as
if the Participant had ceased being a Participant on or before the effective date of the amendment,
suspension, or termination. The value of a Participant’s Accounts, if any, determined as of the
effective date of the amendment, suspension or termination, will continue to be adjusted for
earnings as provided in Article IV. Any benefit determined as of that date will continue to be
payable as provided in Sections 4.5 and 4.6.

ARTICLE VI

GENERAL PROVISIONS

          Section 6.1 Non-assignability. The interests of any person under the Plan
(other than that of the Company) will not be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, attachment or encumbrance, or to the claims of creditors of
that person, and any attempt to effectuate any such actions will be void.

          Section 6.2 Interest of Participant. Except as provided in the Trust,
Participants and their Beneficiaries, with respect to the value of their Accounts, if any, any
asset held by the Trust, and any benefit to be paid under the Plan, will be and remain creditors of
the Company in the same manner as any other creditor having a general claim for compensation, if
and when the Participants’ or Beneficiaries’ rights to receive payments mature and become payable.
Except as provided in the Trust, at no time will a Participant be deemed to have any right, title
or interest, legal or equitable, in any asset of the Company, including, but not limited to any
investments held in the Trust.

          Section 6.3 Withholding. The Company will have the right to deduct or
withhold from the benefits paid under the Plan (or from other amounts payable to the Participant,

 

 

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if necessary) all taxes which may be required to be deducted or withheld under any provision
of law (including, but not limited to, Social Security taxes, income taxes and any other deduction
or withholding required by law) now in effect or which may become effective any time during the
term of the Plan.

          Section 6.4 Administration. The Plan will be administered by the Plan
Administrator. The Plan Administrator will pay any and all expenses incurred in the administration
of the Plan.

          Section 6.5 Exclusivity of Plan. The Plan is intended solely for the purpose
of providing deferred compensation to the Participants to the mutual advantage of the parties.
Nothing contained in the Plan will in any way affect or interfere with the right of a Participant
to participate in any other benefit plan in which he or she may be entitled to participate.

          Section 6.6 No Right to Continued Service. Neither the Plan nor any of its
provisions will be construed as giving any Participant a right to continued employment with the
Company.

          Section 6.7 Notice. Each notice and other communication to be given pursuant
to the Plan will be in writing and will be deemed given only when (a) delivered by hand, (b)
transmitted by telex, telecopier, or email (provided that a copy is sent at approximately the same
time by registered or certified mail, return receipt requested), (c) received by the addressee, if
sent by registered or certified mail, return receipt requested, or by Express Mail, Federal Express
or other overnight delivery service, to the Plan Administrator at its principal office and to a
Participant at the last known address of the Participant (or to such other address or telecopier
number as a party may specify by notice given to the other party pursuant to this Section).

          Section 6.8 Claims Procedure. If a Participant or the Participant’s
Beneficiary does not receive benefits to which he or she believes he or she is entitled, that
person may file a claim in writing with the Plan Administrator. The Plan Administrator will
establish a claims procedure under which:

     (a) the Plan Administrator will be required to provide adequate notice in
writing to the Participant or the Beneficiary whose claim for benefits has been
denied, setting forth specific reasons for such denial, written in a manner
calculated to be understood by the Participant or the Beneficiary; and

     (b) the Plan Administrator will afford a reasonable opportunity to the
Participant or the Beneficiary whose claim for benefits has been denied for a full
and fair review by the Company of the decision denying the claim.

 

 

- 9 -

          Section 6.9 Pennsylvania Law Controlling. The Plan will be construed in
accordance with the internal laws of the Commonwealth of Pennsylvania, to the extent not preempted
by Federal law.

          Section 6.10 Severability. Every provision of the Plan is intended to be
severable. If any provision of the Plan is illegal or invalid for any reason whatsoever, the
illegality or invalidity of that provision will not affect the validity or legality of the
remainder of the Plan, and the Plan will be construed and enforced as if the illegal or invalid
provision had never been made part of the Plan.

          Section 6.11 Binding on Successors. The Plan will be binding upon the
Participants and the Company, their heirs, successors, legal representatives and assigns.

          EXECUTED by the Employer this ___day of                    ,200___.

	 	 	 	 	 
	 	 	RENT-WAY, INC.
	 
	 	 	 	 
	 

	 	By

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