Document:

Exhibit 10.22

 

Exhibit 10.22

RENT-WAY, INC.

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     THIS AGREEMENT is made effective as of October 1, 2005, between Rent-Way, Inc., a Pennsylvania
corporation with its principal offices at One RentWay Place, Erie, Pennsylvania 16505 (the
“Employer” or “Corporation”), and William Short, an individual residing at 5022 Robinhood Lane,
Erie, Pennsylvania 16509 (the “Employee”).

     WHEREAS, the Employee is currently employed by the Corporation pursuant to an employment
agreement dated July 1, 2002 (the “Existing Employment Agreement”);

     WHEREAS, the Corporation and the Employee desire to continue such employment with the Employee
serving as the Corporation’s President, and otherwise subject to the terms and conditions contained
in this Agreement;

     NOW, THEREFORE, in consideration of the promises and of the covenants contained in this
Agreement, the Corporation and the Employee agree that the Existing Employment Agreement is amended
and restated in its entirety 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 (i) a material breach of his obligations under this Agreement (any breach of
Sections 11, 12 or 13 hereof being an example of such a material breach), (ii) gross negligence or
willful misconduct in the performance of his duties to the Corporation, (iii) dishonesty to the
Corporation, (iv) conviction of any crime which could have the effect of causing the termination or
suspension of any license or permit which the Corporation holds, (v) conviction of any felony, (vi)
conviction of a misdemeanor which substantially impairs the Employee’s ability to perform his
duties to the Corporation, or (vii) excessive absenteeism not related to disability. The Employee
will not be deemed to have been terminated for Cause under subsection (i) or (ii) of this
definition unless and until he is provided written notice of the alleged grounds for such
termination and such grounds are not substantially cured within 15 days following the Employee’s
receipt of such notice.

          c) “Change in Control” means and will 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 will 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 will 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 Employee is physically or mentally unable to substantially perform his regular
duties as required under this Agreement.

          g) “Good Reason” means any of the following to which the Employee will not consent in writing:

               (i) Other than a determination by the Board of Directors that the Employee will not have the
duties and responsibilities of the Chief Executive Officer of the Corporation, a material
diminution in the Employee’s responsibilities, duties, titles, reporting responsibilities within
the business organization, status, role or authority which is not substantially cured within 15
days after written notice of such diminution is provided to the Corporation;

               (ii) A relocation of the Corporation’s executive offices to a location more than 50 miles from
Erie, Pennsylvania; or

               (iii) 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.

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          h) “Termination In Connection With A Change In Control” means any of the following events
occurring within 24 months following, or, directly or indirectly, in connection with, or in
anticipation of a Change in Control:

               (i) A termination of Employee’s employment by the Corporation for any reason other than Cause
or by the Employee for Good Reason.

               (ii) A termination of Employee’s employment by Employee because any successor to the
Corporation’s operations or assets (whether acquired by merger, sale, consolidation or otherwise)
(“Successor”) fails to:

                    (A) acknowledge and assume, in writing, this Agreement at the time of the Change in Control;
or

                    (B) acknowledge and assume, in writing, any indemnification agreement with the Employee or
by-law provisions regarding indemnification which are in effect at the time of the Change in
Control.

     2. Employment; Duties.

          (a) Duties. Subject to the terms and conditions set forth in this Agreement, the
Corporation hereby agrees to employ the Employee and the Employee hereby accepts employment as
President of the Corporation having such duties as are set forth in the by-laws of the Corporation
or as are assigned from time to time by the Board of Directors. The Employee will report to the
Board of Directors and will perform those duties and discharge those responsibilities as are
commensurate with his position, and as the Board of Directors from time to time may reasonably
direct, provided that such duties and responsibilities are commensurate with his position. The
Employee acknowledges and agrees that any determination by the Board of Directors during the term
of the Employee’s employment under this Agreement that the Employee will not have the duties and
responsibilities of the Chief Executive Officer of the Corporation will not constitute a breach of
this Agreement. The Employee 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 Employee may not accept other gainful employment except with the
prior consent of the Board of Directors. The Employee may be involved in charitable, civic and
religious organizations so long as they do not materially interfere with the performance of the
Employee’s duties hereunder. The Employee will 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 10 or 11 of this Agreement.

          (b) Resignation. If the Employee’s employment with the Corporation terminates for any
reason, if the Employee ceases for any reason to serve as President of the Corporation, or if as
President the Employee ceases for any reason to have the duties and responsibilities of the Chief
Executive Officer of the Corporation, then the Employee will, if requested by the Board of
Directors, immediately resign as a director of the Corporation. If the

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Employee fails to resign immediately upon such request, the Employee shall be deemed to have
resigned as of the date of such request.

     3. Compensation.

          (a) Base Salary. During the first year of the term of the Employee’s employment under
this Agreement, the Employee will receive a base salary of Three Hundred Twenty-Five Thousand
Dollars ($325,000) per year, and thereafter during the term of the Employee’s employment hereunder,
the Employee will receive a base salary of Three Hundred Fifty Thousand Dollars ($350,000), 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 Employee to consider appropriate
increases (but not decreases) therein. If the Employee 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 Employee’s employment under this
Agreement, the Employee will be entitled to receive an annual cash bonus calculated pursuant to
performance standards developed by the Corporation’s compensation committee, as such standards are
in effect from time to time. The target amount of the bonus will be 100% of the Employee’s base
salary as of the end of the fiscal period of the Corporation for which the bonus is calculated.

          (c) Equity Compensation. The Employee acknowledges that on September 30, 2005, the
Corporation awarded the Employee a grant of 75,000 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 day prior
to the date of grant. The agreement evidencing these options will provide for the vesting of the
options immediately on grant, subject to certain restrictions on transfer described in such
agreement. In addition to this award and any other equity awards outstanding as of the date of
this Agreement, the Employee will be eligible to receive awards of the Corporation’s stock or stock
equivalents during the term of the Employee’s employment under this Agreement in accordance with
the terms of the Corporation’s equity incentive plans and subject to the approval of the
Corporation’s Board of Directors.

          (d) Withholding. The Corporation will deduct or withhold from all salary and bonus
payments, and from all other payments made to the Employee pursuant to this Agreement, all amounts
that are legally required to be deducted or withheld.

     4. Other Benefits And Terms. During the term of the Employee’s employment under this
Agreement, the Employee will be entitled to the following other benefits and terms:

          (a) The Employee 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.

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          (b) The Employee 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.

     5. Vacations. The Employee will be entitled to four 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 Employee for
expenses, which the Employee 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 Employee under this agreement will be deemed to begin on October 1, 2005 and
continue until September 30, 2007 (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 written notice to the other at least 120 days prior to the date the
period of employment would otherwise automatically extend that it does not wish to extend the
Employee’s employment beyond its then present term.

     Notwithstanding the foregoing:

          (a) The Employee’s employment will automatically terminate upon the death or Disability of the
Employee. 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 Employee’s employment at any time
and for any reason by delivering written notice to the Employee.

          (c) The Employee, at his sole option, may terminate his employment 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 Employee, 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. If the Employee terminates his employment under
this Section 7(d), he will only be entitled to receive the compensation and other benefits provided
under this Agreement through the effective date of such termination.

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 Employee’s employment with the Corporation. Unless otherwise
specifically set forth in this Section 8 or elsewhere in this Agreement, all payments to the
Employee provided for in this Section 8 shall be paid by the Corporation within 30 days following
the date of termination of the Employee’s employment with the Corporation.

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          (a) Upon Termination By The Corporation Other Than For Cause, By The Employee With Good
Reason or Termination In Connection With A Change In Control. Upon the Corporation’s
termination of the Employee’s employment for other than Cause, the Employee’s termination of his
employment for Good Reason or a Termination In Connection With A Change In Control, the Corporation
will provide the following:

               (i) Salary And Fringe Benefits. The Employee will receive his salary and Fringe
Benefits (as defined below) through the effective date of termination of employment. The Employee
will also receive (A) his annual base salary and (B) 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 Employee
dies during this period, dependent health or medical Fringe Benefits will be provided for the
balance of the period.

               (ii) Bonus. The Employee will receive a bonus payment equal to the sum of (A) (1) in
the event of a Termination by the Corporation other than for Cause or Termination by the Employee
for Good Reason, an amount equal to the bonus earned by the Employee for the fiscal year prior to
the year in which his employment terminates (but in no event in an amount less than one-half of the
Employee’s target bonus for the fiscal year in which his employment terminates), or (2) in the
event of a Termination in Connection With a Change in Control, an amount equal to 200% of the
Employee’s target bonus for the fiscal year in which his employment terminates and (B) 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 Employee 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 Employee’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 Employee, as of the effective date of the
Employee’s termination of employment, (x) the Corporation will vest the Employee in any outstanding
unvested stock options of the Corporation granted the Employee prior to his termination of
employment, (y) the period during which the Employee shall have the right to exercise all
outstanding vested options will be extended by the Corporation to the one year anniversary of the
effective date of the Employee’s termination of employment, and (z) subject to applicable
securities laws, the Corporation will release any contractual restrictions on transfer applying to
shares of common stock acquired or to be acquired by the Employee pursuant to the exercise of stock
options of the Corporation.

At the Corporation’s discretion, the cash payments provided for in this subsection (a) may be made
in one lump sum within 30 business days following the effective date of the Employee’s termination
of employment; provided, however, that in the case of a Termination in Connection With a Change in
Control, the cash payments provided for in this subsection (a) will be made in one lump sum within
such 30 business day period.

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          (b) Termination of Employment for Cause. The Corporation will have the right to
terminate the Employee’s employment immediately in the event the Employee will do or cause to be
done any act, which constitutes “cause” (as defined in Section 1.b. of this Agreement) for
termination. Should the Employee’s employment be terminated by the Corporation for cause, the
Corporation’s only obligation will be to pay the Employee his base salary through the date of
termination. Nothing contained in this Article 8 will in any way waive, restrict or prejudice the
Corporation’s rights against the Employee with respect to the matter for which the Employee’s
employment under this Agreement is terminated for cause.

          (c) Upon Termination For Disability. Upon termination of the Employee’s employment
because of Disability, the Corporation will provide the following:

               (i) Salary And Fringe Benefits. The Employee will receive his salary and Fringe
Benefits through the effective date of termination of employment. The Employee 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 Employee dies during the 18-month period, his salary payments
under this subsection will continue to 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 Employee will receive a bonus payment equal to an amount determined
by multiplying 100% of his base salary in effect in the year of termination 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 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 Employee 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 Employee’s termination becomes effective.

               (iv) Stock Options. Notwithstanding any contrary provisions contained in any stock
option agreement evidencing stock options granted to the Employee, as of the effective date of the
Employee’s termination of employment because of Disability the Corporation will (x) allow the
Employee 12 months from the date of termination to exercise any stock option vested in the Employee
at the date of termination and (y) subject to applicable securities laws, release any contractual
restrictions on transfer applying to shares of common stock acquired or to be acquired by the
Employee pursuant to the exercise of stock options of the Corporation.

At the Corporation’s discretion, the bonus and vacation payments provided for in this subsection
(c) may be made in one lump sum within 30 business days following the effective date of the
Employee’s termination of employment because of Disability.

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          (d) Upon Termination For Death. Upon termination of the Employee’s employment because
of his death, the Corporation will provide the following:

               (i) Salary And Fringe Benefits. The Employee’s salary and Fringe Benefits through the
effective date of termination of employment. The Employee’s estate will also receive his annual
base salary as in 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 Employee dies.

               (ii) Bonus. The Employee’s successor as provided in Section 13 will receive a bonus
payment equal to an amount determined by multiplying 100% of his base salary in effect in the year
of termination 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 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 Employee’s successor as provided in Section 13 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 Employee died.

               (iv) Stock Options. Notwithstanding any contrary provisions contained in any stock
option agreement evidencing stock options granted to the Employee, as of the effective date of the
Employee’s termination of employment because of Death, the Corporation will (x) will allow the
successor 12 months from the date of death to exercise any stock option vested in the Employee at
the time of death and (y) subject to applicable securities laws, release any contractual
restrictions on transfer applying to shares of common stock acquired or to be acquired by the
Employee pursuant to the exercise of stock options of the Corporation.

At the Corporation’s discretion, the bonus and vacation payments provided for in this subsection
(d) may be made in one lump sum within 30 business days following the effective date of the
Employee’s termination of employment because of death.

          (e) 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 Employee from any subsequent employer.

          (f) Determination of Disability. Any questions as to the existence of a physical or
mental condition which would give rise to the Disability of the Employee upon which the Employee
and the Corporation cannot agree will be determined by a qualified independent physician selected
by the Corporation and reasonably acceptable to the Employee (or, if the Employee is incapacitated
and unable to make a selection, the determination of acceptability 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 Employee will be final and conclusive for all purposes of this Agreement.

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          (g) 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.

          (h) Indemnity. During the term of the Employee’s employment under this Agreement and
thereafter, the Employer shall indemnify the Employee to the full extent permitted under its
articles of incorporation and bylaws and pursuant to any other agreements or policies in effect
from time to time in connection with any claim or proceeding arising out of his employment by the
Employer. For a 60-month period following the date of the Employee’s termination of employment
regardless of reason, in the event the Corporation is unable or unwilling to continue any
directors’ and officers’ liability insurance insuring the Employee at the date of such termination,
the Employer will provide the Employee with written notice of such determination at least 60 days
in advance of the date such insurance coverage will expire.

     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 Employee, 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 Employee will be entitled to receive an additional payment from the
Corporation (a “Gross-Up Payment”) in an amount that after payment by the Employee 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 Employee 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 Employee’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 Employee or the Employee 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
Employee within 30 days of the Employee providing substantiation of the claim made by the IRS.
After payment to the Employee of the Gross-Up Payment, the Employee will provide to the Corporation
any information reasonably requested by the Corporation relating to the Excise Tax, the Employee

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will take those actions as the Corporation reasonably 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 Employee 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 Employee 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 Employee’s continued or future participation in any
benefit, incentive, or other plan, practice, or program provided by the Corporation and for which
the Employee may qualify. Any amount of vested benefit or any amount to which the Employee 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. Confidentiality. During the course of his employment, the Employee 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 Employee 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 Employee agrees to the confidentiality covenants set forth in this
Section.

          The Employee 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 Employee 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 Employee will not be deemed to have violated this Section 10
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 Employee, 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 making any disclosure.

          The Employee 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 Employee 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 Employee 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.

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     12. Non-competition. In consideration of the compensation and other benefits to be
paid to the Employee under and in connection with this Agreement, the Employee 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 12-month period preceding the Reference Date,
except that the Employee 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 Employee) and who has not been employed by the Corporation or any Affiliate
for at least 12 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 12-month period preceding the Reference Date was a customer of the Corporation or any
Affiliate or from any person or entity which the Employee 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 Employee 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 12-month period preceding the Reference Date will have supplied products, materials or
services to the Corporation or any Affiliate.

          Notwithstanding the foregoing, the restrictions imposed by this Section (i) will not in any
manner be construed to prohibit, directly or indirectly, the Employee from serving as an employee
or consultant of the Corporation or any Affiliate, and (ii) will not apply if the termination of
the Employee’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 will 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 730 days after the Termination
Date.

- 11 -

 

          (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 and
wherever the Corporation has planned or is operating stores at the Termination Date.

          (e) “Termination Date” means the date of termination of the Employee’s employment with
the Corporation; provided however that the Employee’s employment will not be deemed to have
terminated so long as the Employee 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.

     13. Successors. This Agreement is personal to the Employee and may not be assigned by
the Employee other than by will or the laws of descent and distribution. This Agreement will inure
to the benefit of and be enforceable by the Employee’s legal representatives or successors in
interest. Notwithstanding any other provision of this Agreement, the Employee may designate a
successor or successors in interest to receive any amounts due under this Agreement after the
Employee’s death. If he has not designated a successor in interest, payment of benefits under this
Agreement will be made to his estate. A designation of a successor in interest must be made in
writing, signed by the Employee, and delivered to the Employer pursuant to Section 16. Except as
otherwise provided in this Agreement, if the Employee has not designated a successor in interest,
payment of benefits under this Agreement will be made to the Employee’s estate. This Section will
not supersede any designation of beneficiary or successor in interest made by the Employee or
provided for under any other plan, practice, or program of the Employer.

          The 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.

     14. Failure, Delay or Waiver. No course of action or failure to act by the
Corporation or the Employee 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.

- 12 -

 

     15. 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.

     16. 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.

One RentWay Place

Erie, Pennsylvania 16505

Attention: Chairman of the Board

Telephone: (814) 455-5378

Telecopier: (814) 455-5379

If to the Employee:

William Short

5022 Robinhood Lane

Erie, Pennsylvania 16509

(814) 838-1753

     17. Arbitration of Disputes. Except for an alleged violation of Section 11 or 12 of
this Agreement, the Employee and the Corporation waive any right to a court (including jury)
proceeding and instead agree to submit any dispute over the Employee’s employment with the
Corporation or the application, interpretation, validity or any other aspect of this Agreement to
final and binding arbitration consistent with the application of the Federal Arbitration Act and
the procedural rules of the American Arbitration Association (“AAA”) before an arbitrator who is a
member of the National Academy of Arbitrators (“NAA”) out of an NAA panel of 11 arbitrators to be
supplied by the AAA. Only true neutrals will be eligible for consideration as arbitrators and
under no circumstances will AAA furnish the names of individuals who represent employees, unions or
companies. Unless otherwise agreed by the parties, any such arbitration will take place in Erie,
Pennsylvania. The Corporation will pay all of the fees, if any, and expenses of the arbitrator
and, if the Employee is the prevailing party in the arbitration, the Corporation will pay the
Employee’s expenses (including reasonable attorney’s fees) related to the arbitration or reimburse
the Employee for such expenses.

     18. Miscellaneous. This Agreement (a) may not be amended, modified or terminated
orally or by any course of conduct pursued by the Corporation or the Employee, but may be

- 13 -

 

amended, modified or terminated only by a written agreement duly executed by the Corporation and
the Employee, (b) is binding upon and inures to the benefit of the Corporation and the Employee and
each of their respective heirs, representatives, successors and assignees, except that the Employee
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 Employee 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 Existing Employment Agreement,
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.

     19. Multiple Counterparts. This Agreement may be executed in one or more counter
parts, each of which will be deemed an original, but all of which together will constitute one and
the same instrument. Any party may execute this Agreement by facsimile signature and the other
party will 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 will
immediately forward to the other party an original page by overnight mail.

     20. Construction. As used in this Agreement, unless the context otherwise requires:
(a) the terms defined herein will have the meanings set forth herein for all purposes; (b)
references to “Section” are to a section hereof; (c) “include,” “includes” and “including” are
deemed to be followed by “without limitation” whether or not they are in fact followed by such
words or words of like import; (d) “writing,” “written” and comparable terms refer to printing,
typing, lithography and other means of reproducing words in a visible form; (e) “hereof,” “herein,”
“hereunder” and comparable terms refer to the entirety of this Agreement and not to any particular
section or other subdivision hereof or attachment hereto; (f) references to any gender include
references to all genders; and (g) references to any agreement or other instrument or statute or
regulation are referred to as amended or supplemented from time to time (and, in the case of a
statute or regulation, to any successor provision).

     21. Section 409A Compliance. The parties to this Agreement intend that the Agreement
complies with Section 409A of the Code, where applicable, and this Agreement will be interpreted in
a manner consistent with that intention. To the extent not otherwise provided by this Agreement,
and solely to the extent required by Section 409A of the Code, no payment or other distribution
required to be made to the Employee hereunder (including any payment of cash, any transfer of
property and any provision of taxable benefits) as a result of his termination of employment with
the Corporation will be made earlier than the date that is six (6) months and one day following the
date on which the Employee separates from service with the Corporation and its affiliates (within
the meaning of Section 409A of the Code).

- 14 -

 

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

	 	 	 	 	 
	 	 	CORPORATION:
	 
	 	 	 	 
	 	 	RENT-WAY, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	     Marc Joseffer
	 

	 	 	 	     Chair, Compensation Committee of the
	 

	 	 	 	     Board of Directors
	 
	 	 	 	 
	 	 	EMPLOYEE:
	 
	 	 	 	 
	 	 	 
	 

	 	 	 	     William Short

- 15 -Exhibit 10.23

 

Exhibit 10.23

EMPLOYMENT AGREEMENT

     THIS AGREEMENT is made as of the 1st day of October, 2005, by and between RENT-WAY,
INC., a Pennsylvania corporation, with offices at One RentWay Place, Erie, Pennsylvania 16505 (the
“Company”) and Gregory L. Matheny, an individual residing at 4274 Loop Road, Waterford,
Pennsylvania 16441 (the “Employee”).

     WHEREAS, the Company desires to employ the Employee and the Employee desires to accept such
employment upon the terms and conditions contained in this Agreement, and

     WHEREAS, the Company and the Employee desire to rescind all prior agreements regarding
employment between them and make this Agreement the sole contract governing the Company’s
employment of the Employee.

     NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein the
Company and the Employee agree as follows:

     1. Term. Subject to the terms and conditions set forth in this Agreement, the Company
hereby agrees to employ the Employee, and the Employee hereby accepts such employment, for the
period beginning on the date of this Agreement and continuing until 1) either party gives at least
two (2) weeks prior written notice to the other of the termination of this Agreement or 2) until
this Agreement is otherwise terminated as provided herein.

     If the Company terminates this Agreement for any reason other than the Employee’s death
pursuant to Section 5, the Employee’s disability pursuant to Section 6, or for cause pursuant to
Section 9, the Employee shall have the right to receive continuing payments of bi-weekly base
salary (at the rate in effect at the time notice of termination is given) during the 12-month
period following the date on which termination is effective. Such continuing payments of base
salary shall be severance pay and shall not constitute a continuation of the Employee’s employment
for any reason.

     2. Office; Duties. During the Term, the Employee shall serve as Executive Vice
President/Chief Operating Officer. The President or his designee may at any time change the title
of the Employee.

     Employee shall perform such duties and discharge such responsibilities as the President or his
designee shall from time to time reasonably direct. The Employee agrees to perform such duties and
discharge such responsibilities in a faithful manner and to the best of his ability. The Employee
agrees to devote his full business time and attention to the business and affairs of the Company
and to use his best efforts to promote the interests of the Company. The Employee further agrees
that he will engage in no outside business concerns or activities that conflict with his duties to
the Company, or are directly or indirectly competitive with the Company, without the Company’s
prior written consent.

     The President or his designee may from time to time assign to the Employee additional duties
and responsibilities and delegate to other employees of the Company duties and responsibilities
normally discharged by the Employee. All such assignments and delegations of duties and
responsibilities shall be made by the President or his designee and may include a reduction of the
Employee’s duties and responsibilities or a reduction in the Employee’s position as reasonably
determined by the President or his designee.

     3. Compensation. During the Term, the Company agrees that:

          3.1 The Employee shall receive an annual base salary of $215,000, payable in installments in
accordance with the regular payroll practices of the Company. The Company shall deduct

 

or withhold
from payments of base salary, and from all other payments made to the Employee pursuant to this
Agreement, all amounts which may be required to be deducted or withheld under any applicable law
now in effect or which may become effective during the term of this Agreement (including but not
limited to Social Security contributions and income tax withholdings). The Employee’s base salary
shall be reviewed annually by the President or his designee and may reasonably be increased or
decreased on the basis of individual and corporate performance in accordance with criteria and
standards established by the President or his designee.

          3.2 Incentive Compensation; Bonuses. In addition to base salary, the Employee shall
be entitled to (i) participate in such incentive plans (including the right to defer income and
bonuses) made available by the Company to its executives and key employees and (ii) receive such
additional bonus or discretionary compensation payments as the President or his designee may
determine from time to time. The Employee’s eligibility for incentive plan participation and
additional bonus or discretionary compensation payments shall be reviewed annually by the President
or his designee and shall be awarded on the basis of corporate performance and in accordance with
criteria and standards established in the sole discretion of the President or his designee. The
target amount of the bonus shall be 40% of the Employee’s base salary at the end of the fiscal
period for which the bonus is calculated.

          3.3 Expenses. During the Term, the Employee shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred in connection with the performance of his duties
in accordance with the policies and procedures of the Company as may be in effect from time to
time.

          3.4 Benefits. During the Term, the Employee shall be entitled to receive a package of
benefits that includes all of the programs, plans and perquisites currently provided by the Company
to its employees, for so long as such programs, plans and perquisites are continued by the Company
and are available to employees of the Company.

     4. Stock Options. Immediately following the execution of this Agreement, the Company
shall grant to the Employee incentive stock options to purchase 50,000 shares of the Company’s
Common Stock pursuant to and in accordance with a Stock Option Plan of the Company, as designated
by the Company. The options shall vest and become exercisable immediately but must be exercised
within a five-year period from the date of grant. Additionally, the shares received on exercise of
options will not be transferable except as follows: 16,666 shares on the third anniversary of the
date of grant, 16,667 shares on the fourth anniversary of the date of grant, and 16,667 shares on
the fifth anniversary of the date of the grant.

     5. Termination of Employment by Reason of Death. If the Employee dies during the
Term, this Agreement shall terminate automatically as of the date of his death and the Company
shall pay to the Employee’s legal representatives such benefits determined in accordance with any
then existing Company-sponsored plans or programs providing benefits at death.

     6. Termination of Employment by Reason of Disability. In the event that the Employee
shall sustain a disability which in the opinion of medical authority satisfactory to the Company
would substantially prevent him from rendering the services required under this Agreement for a
total of 180 days during any 360-day period, the Company shall have the right to terminate this
Agreement upon thirty (30) days’ prior written notice to the Employee.

     7. Termination After a Change in Control of the Company.

          (a) If within ninety (90) days following the occurrence of a Change of Control of the Company
(as defined in Appendix A) the Employee elects to voluntarily terminate his employment with the
Company, the Employee shall be entitled to receive continuing payments of bi-weekly base salary (at
the rate in effect at the time notice of termination is given) for 12 months following the date on
which termination is effective.

2

 

          (b) Except as stated in (a) above, a Change of Control of the Company shall not affect the
terms of this Agreement.

     8. Termination of Employment at Employee’s Election. If the Employee elects to
terminate this Agreement and the Employee gives two (2) weeks prior written notice of such
termination, the Employee shall be entitled to receive his salary then in effect for the two (2)
weeks notice period regardless of whether the Company desires the Employee to continue his
employment during that period.

     9. Termination of Employment for Cause. The Company shall have the right to terminate
the Employee’s employment immediately in the event the Employee shall do or cause to be done any
act that constitutes “cause” (as hereinafter defined) for termination. For purposes of this
Agreement, “cause” shall be deemed to mean a breach of his obligations under this Agreement (any
breach of Section 10, 11 or 12 hereof being an example of such a breach), gross negligence, willful
misconduct, insubordination, dishonesty to the Company, engaging in any conduct which could have
the effect of causing the termination or suspension of any license or permit which the Company
holds, conviction of any felony, or excessive absenteeism not related to disability. In addition,
“cause” shall include the Employee’s failure, as reasonably determined by the President, to
adequately perform his job responsibilities or to meet the performance goals and objectives
established for him by the Company. Should the Employee’s employment be terminated by the Company
for cause, the Company’s only obligation shall be to pay the Employee his base salary through the
date of termination. Nothing contained in this Section 8 shall in any way waive, restrict or
prejudice the Company’s rights and remedies in equity and at law against the Employee with respect
to the matter for which the Employee’s employment under this Agreement is terminated for cause.

     10. Confidentiality.

          10.1 During the course of his employment with the Company, the Employee has had and will have
access to and will gain knowledge with respect to all aspects of the business of the Company,
including financial information; business and marketing practices and procedures; information
concerning employees, customers, suppliers; and other valuable and proprietary information relating
to the business of Company (“Confidential Information”). The parties agree that certain covenants
by the Employee are essential to the growth and stability of the business of the Company. Among
these covenants are the Employee’s promises not to make unauthorized disclosures of the
Confidential Information nor to use the Confidential Information regardless of whether the
Employee’s employment with the Company has terminated. Accordingly, Employee agrees that, except
as required by his duties under this Agreement, he shall not use nor disclose to anyone at anytime
during or after the Term any Confidential Information obtained by him in the course of his
employment with the Company. The Employee agrees to enter into any further agreement regarding
confidentiality that the Company may request. The Employee shall use his best efforts to prevent
the removal of any Confidential Information from the premises of the Company, except as required in
his normal course of employment by the Company. The Employee shall use his best efforts to cause
all persons or entities to whom any Confidential Information shall be disclosed by him hereunder to
observe the terms and conditions set forth herein as though each such person or entity was bound
hereby.

          10.2 Employee agrees to hold as the Company’s property all memoranda, books, papers, letters,
customer lists, processes, computer software, records, financial information, policy and procedure
manuals, training and recruiting procedures and other data, and all copies thereof and
therefrom in any way relating to the Company’s business and affairs, whether made by him or
otherwise coming into his possession, and on termination of his employment, or on demand of the
Company at any time, to deliver the same to the Company.

     11. Non-Competition; Non-Solicitation.

          11.1 During the Term of this Agreement and for a period continuing for one (1) year after the
date of its termination, the Employee agrees that he shall not directly or indirectly, for his own

3

 

account or as agent, employee, officer, director, trustee, consultant or shareholder of any
corporation or other entity [except for a two percent (2%) interest or less in any publicly traded
corporation or other entity] engage or attempt to engage anywhere in North America in any business
activity which is the same as, substantially similar to or directly competitive with the business
of the Company, or any subsidiary of the Company, as now or in the future conducted by the Company.

          11.2 During the Term of this Agreement and for a period continuing for one (1) year after the
date of its termination, the Employee agrees that he shall not, directly or indirectly, for his own
account or as agent, employee, officer, director, trustee, consultant or shareholder of any
corporation or other entity [except for a two percent (2%) interest or less in any publicly traded
corporation or other entity] (i) employ or solicit the employment of any employee of the Company,
any employee of a subsidiary of the Company, or any former employee of the Company whose employment
with the Company terminated within the preceding six (6) months or (ii) induce or attempt to induce
any employee of the Company, or any employee of a subsidiary of the Company, to terminate his or
her employment with the Company or any subsidiary of the Company.

          11.3 The Employee acknowledges and agrees that the foregoing territorial and time limitations
and restrictive covenants are reasonable and properly required for the adequate protection of the
business and affairs of the Company. In the event any such territorial or time limitation is found
to be unreasonable by a court of competent jurisdiction, the Employee agrees and submits to the
reduction of either said territorial or time limitation (or both) to such an area or period as the
court may determine to be reasonable.

     12. Rights to Discoveries. The Employee agrees that all ideas, inventions, trademarks
and other techniques, procedures, developments or improvements conceived, developed or acquired by
the Employee, whether or not during working hours, at the premises of the Company or elsewhere,
alone or with others, that are within the scope of the Company’s business operations or that relate
to any work or projects of the Company shall be the sole and exclusive property of the Company.
The Employee agrees to disclose promptly and fully to the Company all such ideas, inventions,
trademarks or other techniques, procedures, developments or improvements and, at the request of the
Company, the Employee shall submit to the Company a full written report thereof regardless of
whether the request for a written report is made after the termination of this Agreement. The
Employee agrees that during the Term and thereafter, upon the request of the Company and at its
expense, he shall execute and deliver any and all applications, assignments and other instruments
which the Company shall deem necessary or advisable to transfer to and vest in the Company the
Employee’s entire right, title and interest in and to all such ideas, inventions, trademarks or
other techniques, procedures, developments or improvements and shall assist the Company in applying
for and obtaining patent, trademark or copyright protection for any such protectible ideas,
inventions, trademarks and other techniques, procedures, developments and improvements.

     13. Notices. All notices and other communications given pursuant to this Agreement
shall be deemed to have been properly given or delivered if mailed, by certified mail, postage
prepaid, addressed to the appropriate party, at the address for such party set forth at the
beginning of this Agreement. Any party may from time to time designate by written notice given
pursuant to this Section 13 any other address or party to which any such notice or communication or
copies thereof shall be sent.

     14. Equitable Relief. The Employee acknowledges that the Company will suffer damages
incapable of ascertainment in the event that any of the provisions of Section 10, 11 or 12 hereof
are breached and that the Company will be irreparably damaged in the event that the provisions of
Section 10, 11 or 12 are not enforced. Therefore, should any dispute arise with respect to the
breach or threatened breach of any such Sections, the Employee agrees and consents that in addition
to any and all other remedies available to the Company an injunction or restraining order or other
equitable relief may be issued or ordered by a court of competent jurisdiction restraining any
breach or threatened breach of such Sections. The Employee agrees not to urge in any such action
that an adequate remedy exists at law. All expenses, including, without limitation, attorney’s
fees and expenses incurred in connection with

4

 

any legal proceeding arising as a result of a breach
or threatened breach of Section 10, 11 or 12 of this Agreement shall be borne by the losing party
to the fullest extent permitted by law and the losing party hereby agrees to indemnify and hold the
other party harmless from and against all such expenses.

     15. Arbitration of Disputes. Except for an alleged violation of Section 10, 11
or 12 of this Agreement, the Employee and the Company waive any right to a court (including
jury) proceeding and instead agree to submit any dispute over the Employee’s employment with
the Company or the application, interpretation, validity or any other aspect of this
Agreement to final and binding arbitration consistent with the Company’s alternative dispute
resolution program or, if none, then consistent with the application of the Federal
Arbitration Act and the rules for arbitration of employment disputes of the American
Arbitration Association (“AAA”) before a single arbitrator. Only true neutrals will be
eligible for consideration as arbitrators and under no circumstances will AAA furnish the
names of individuals who represent employees, unions or companies.

     16. Successors. The Company will require any successor to all or substantially all of
the business and/or assets of the Company (whether direct or indirect by purchase, merger,
consolidation or otherwise) to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform if no such succession
had taken place. As used in this Agreement, the “Company” shall mean both Rent-Way, Inc. and any
successor to its business and/or assets (by merger, purchase or otherwise).

     17. Miscellaneous. This Agreement shall be governed by the internal domestic laws of
the Commonwealth of Pennsylvania without reference to conflict of laws principles. The Employee
consents to jurisdiction in Pennsylvania and venue in Erie County for purposes of all claims
arising under this Agreement. All headings and subheadings are for convenience only and are not of
substantive effect. This Agreement constitutes the entire agreement between the parties hereto
with respect to the subject matter hereof and supersedes all prior agreements, negotiations,
understandings and writings (or any part thereof) whether oral or written between the parties
hereto relating to the subject matter hereof, all of which are hereby terminated and canceled.
There are no oral agreements in connection with this Agreement. Neither this Agreement nor any
provision of this Agreement may be waived, modified or amended orally or by any course of conduct
but only by an agreement in writing duly executed by both of the parties hereto. If any section,
portion, subsection or subportion of this Agreement shall be determined to be unenforceable or
invalid, then such section, portion, subsection or subportion shall be modified in the letter and
spirit of this Agreement to the extent permitted by applicable law so as to be rendered valid and
any such determination shall not affect the remainder of this Agreement, which shall be and remain
binding and effective as against the parties hereto.

     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement to be effective as of
the date first above written.

	 	 	 	 	 	 	 
	 

	 	 	 	COMPANY:

	 	 
	 
	 	 	 	 	 	 
	EMPLOYEE:

	 	 	 	RENT-WAY, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	Gregory L. Matheny                                        Date

	 	 	 	William S. Short, President
	 	Date
	Executive Vice President/

Chief Operating Officer
	 	 	 	 	 	 

5

 

APPENDIX A

          A “Change in Control of the Company” shall be deemed to have occurred if, as the result of a
single transaction or a series of transactions, the event set forth in either of the following
paragraphs shall have occurred:

          (1) there is consummated a merger or consolidation of the Company with any other corporation
or entity, other than a merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior to such merger or consolidation continuing to represent
(either by remaining outstanding or by being converted into voting securities of the surviving
entity or any parent thereof) at least 60% of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof outstanding immediately after such merger or
consolidation as appropriate; or

          (2) the stockholders of the Company approve a plan of liquidation or dissolution of the
Company or an agreement for the sale or disposition by the Company of all or substantially all of
the Company’s assets, other than a sale or disposition by the Company of all or substantially all
of the Company’s assets to an entity, at least 60% of the combined voting power of the voting
securities of which are owned by stockholders of the Company in substantially the same proportions
as their ownership of the Company immediately prior to such sale.

6

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