Document:

exv10w16

 

Exhibit 10.16

RENT-A-CENTER, INC.

FORM OF LONG-TERM INCENTIVE CASH AWARD

          THIS AGREEMENT, made as of the ___ day of ______, ___, by and between Rent-A-Center,
Inc. (the “Company”) and ______ (the “Executive”), pursuant to the Amended and Restated
Rent-A-Center, Inc. Long-Term Incentive Plan (the “Plan”).

          1. Long-Term Incentive Cash Award. Subject to the vesting and other terms and
conditions set forth in this Agreement, the Company hereby grants to the Executive a cash award of
$______, of which $______ will be subject to adjustment pursuant to Exhibit A (the
“Award”) under the Plan.

          2. Provisions of the Plan Control. The provisions of the Plan, the terms of which are
incorporated in this Agreement, shall govern if and to the extent that there are inconsistencies
between those provisions and the provisions of this Agreement. The Executive acknowledges receipt
of a copy of the Plan prior to the execution of this Agreement.

          3. Vesting.

          (a) General. Subject to the further provisions of this Agreement and provided the
Executive remains continuously employed by the Company or a subsidiary of the Company through the
applicable anniversary dates or the end of said performance period, the Executive’s right to
receive payment of the Award shall vest (if at all) with respect to:

          (i) one-eighth of the Award ($______) on each of the first four anniversaries of the date
of this Agreement;

          (ii) one-quarter of the Award ($______) on the third anniversary of the date of this
Agreement; and

          (iii) the balance of the Award ($______, subject to adjustment pursuant to Exhibit A) at
the end of the performance period described in Exhibit A annexed to this Agreement, subject to the
Company’s attainment of the performance objectives specified in said Exhibit A.

          (b) Accelerated Vesting. If, before the applicable vesting date described in (a)
above, the Executive’s employment with the Company and its subsidiaries is terminated due to the
Executive’s death or “disability” (as defined below), or there occurs a “change in Company
ownership” (as defined below), then the Executive’s right to receive payment of the Award (to the
extent not previously vested) will become vested on the date of such termination of employment or
immediately prior to the consummation of the change in Company ownership, as the case may be.
Notwithstanding the preceding sentence, vesting will not accelerate by reason of a change in
Company ownership unless the Executive remains in the continuous employ of the Company or a
subsidiary until the consummation of the change in Company ownership or the Executive’s employment
is terminated sooner by the Company or a subsidiary in connection with such change in Company
ownership.

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          (c) Definitions. The term “disability” means the inability of Executive to perform the
principal duties of the Executive’s employment by reason of a physical or mental illness or injury
that is expected to last indefinitely or result in death, as determined by a duly licensed
physician selected by the Company. The term “change in Company ownership” means a transaction or
series of transactions as a result of which any one person or group of persons acquires (1)
ownership of common stock of the Company that, together with the common stock previously held by
such person or group of persons, constitutes more than 50% of the total fair market value or total
voting power of such stock, or (2) ownership of assets of the Company and its subsidiaries having a
total gross fair market value at least equal to 80% of the total gross fair market value of all of
the assets immediately prior to such transaction or series of transactions, all as determined
pursuant to the regulations issued by the Treasury Department under Section 409A of the Internal
Revenue Code of 1986 (it being intended that a “change in Company ownership” under this Agreement
will be a permissible distribution event under said section 409A).

          4. Termination of Employment or Service. Upon the termination of the Executive’s
employment or other service with the Company and its subsidiaries for any reason other than death
or disability, the Executive’s right to receive payment of the Award, to the extent not previously
vested or terminated, will thereupon terminate and be canceled.

          5. Restoration. The Executive has been provided and is privy to intellectual
property, trade secrets, and other confidential information of the Company. For two years
following the Executive’s termination of employment, the Executive has agreed not to engage in any
activity or provide any services which are similar to or competitive with the Company’s business.
For the same two year period, the Executive also agreed not to solicit or induce, or cause or
permit others to solicit or induce, any employee to terminate their employment with the Company.
These covenants are set forth and agreed to in the Loyalty and Confidentiality Agreement between
the Executive and the Company (the “Loyalty Agreement”). The parties hereto understand and agree
that the promises in this Agreement and those in the Loyalty Agreement, and not any employment of
or services performed by the Executive in the course and scope of that employment, are the sole
consideration for the Award. Further, it is agreed that should the Executive violate or be in
breach of any restrictions set forth herein or in the Loyalty Agreement (which determination shall
be made in the discretion of the Compensation Committee of the Company’s Board of Directors), (a)
the Executive shall immediately repay to the Company, in a single cash lump sum, the amount of any
Award received by the Executive hereunder and (b) the Executive shall have no right to receive, and
shall not receive, any further Award hereunder, whether or not such Award has otherwise vested
hereunder.

          6. Cash Settlement. On the applicable vesting dates described in Section 3 above, the
Company shall pay the vested amount of the Award to the Executive in cash. Any amount payable
pursuant to Section 3(a)(iii) hereof shall be deferred if and to the extent necessary to avoid a
loss of deduction by the Company under Section 162(m) of the Internal Revenue Code of 1986.

          7. Tax Withholding. The Company may withhold from any payments under this Agreement
all federal, state, city, or other taxes as may be required pursuant to any law or governmental
regulation or ruling.

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          8. No Service Rights. Nothing contained in the Plan or this Agreement shall confer
upon the Executive any right with respect to the continuation of the Executive’s employment or
other service with the Company or any subsidiary of the Company or interfere in any way with the
right of the Company or any subsidiary of the Company at any time to terminate such relationship.

          9. Governing Law. This Agreement shall be governed by and construed in accordance with
the laws of the State of Texas, without regard to its principles of conflict of laws.

          10. Miscellaneous. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the same instrument.
This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and may not be modified other than by
written instrument executed by the parties.

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          IN WITNESS WHEREOF, this Agreement has been executed as of the date first above written.

	 	 	 	 	 
	 	 	RENT-A-CENTER, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 	 	Executive

Signature Page

 

 

EXHIBIT A

PERFORMANCE VESTING CONDITIONS 

A-1exv10w17

 

Exhibit 10.17

FORM OF LOYALTY AND CONFIDENTIALITY AGREEMENT

<employee name>

     THIS LOYALTY AND CONFIDENTIALITY AGREEMENT (“Agreement”) is entered into between the
undersigned individual (the “Employee”) and Rent-A-Center, Inc., together with its subsidiaries
and affiliates whether hereafter acquired or formed (the “Company”), collectively referred to as
the “parties.” As a condition of employment, in exchange for the opportunity to participate in the
2006 Amended and Restated Long Term Incentive Plan of Rent-A-Center, Inc. (“LTIP”), for the mutual
promises of the parties herein, and for other good and valuable consideration, each of which is
independently sufficient to support this Agreement, the parties agree as follows:

SECTION 1. Duty of Loyalty. Employee agrees to avoid conflicts of interest and
promptly inform the Company of any business opportunities that are related to Company’s line of
business. Employee will avoid competing with Company, setting up a business to compete with the
Company, or undertaking other disloyal acts while employed with Company.

SECTION 2. Confidentiality and Business Interests. The parties agree to the
following to protect the Company’s legitimate business interests:

     2.1. Definitions. Company’s “Confidential Information” means the Company’s trade
secrets and any other legally protectable information retained by the Company that the Company has
not authorized for disclosure to the public. The parties agree that, without limitation, some
examples of the Company’s Confidential Information are: the Company’s High Touch Store System
database, internally created lists of customers, customer leads or prospects, customer history and
analysis including but not limited to demographic and other research related to current and
prospective customers, market analyses; internally created or maintained information concerning
assessments of Company’s employees and key vendor or contractor relationships; and, Company’s
business and strategic plans, marketing plans, real estate information, product purchasing
information, product pricing information, product service information, non-public rent-to-own and
financial services industry data, market penetration and concentration analyses, non-public
financial or operational records or data, and research and development information regarding new
products or services not yet released to the public. Additionally, the Company’s non-public
compilations of otherwise available information that attain greater value or utility because of
time and expense invested in a unique compilation, analysis, or formatting will be considered
Confidential Information. Information disclosed to the general public by Company through proper
means is not considered Confidential Information.

     2.2. Company Authorizations.. Upon the Effective Date of this Agreement, Company
will do one or more of the following: (a) provide Employee with authorization to access and use
some of the Company’s Confidential Information (such authorization may be provided through a
computer password, authorization letter, or other means); and/or, (b) provide Employee
authorization to develop and use goodwill of the Company through, for

 

 

example, authorization to represent the Company in communications with customers and
prospective customers, expense reimbursements in accordance with Company policy limits, and/or
assistance in facilitating contact with customers, and/or (c) provide Employee with authorization
to participate in specialized management training related to the business and Confidential
Information of the Company. The foregoing agreement is a fully enforceable ancillary agreement at
the time made. It is not contingent upon continued at-will employment for any certain length of
time, but it is contingent upon Employee’s full compliance with the restrictions provided for in
this Agreement.

     2.3. Employee Non-disclosure. Employee agrees not to engage in any unauthorized use
or disclosure of Company’s Confidential Information. Nothing herein will be construed to prohibit
Employee from a disclosure that is compelled by law; provided, however, that Employee agrees to
give Company as much notice as is possible (presumably 5 business days or more) before disclosure
under such circumstances. And, Employee will cooperate in the Company’s efforts to protect its
Confidential Information. Employee will help maintain records on Company customers, suppliers, and
other business relationships, and will not use these records to harm the business of the Company.
Employee will return to the Company all of the foregoing records and any other Company records and
copies thereof (physical or electronic) in Employee’s possession or control upon termination of
employment or earlier if so requested, and will not retain any such material or information except
where expressly authorized in writing to do so.

SECTION 3. Protective Covenants. Employee agrees that the covenants below are (i)
reasonable and necessary for the protection of legitimate business interests of Company, and (ii)
do not place an unreasonable burden upon the Employee’s ability to earn a living.

     3.1. Definitions. “Customer” means a person or entity that has an ongoing business
relationship or prospective business relationship with the Company prior to any act of prohibited
interference, and (i) that did business with a facility, division, or portion of Company’s business
that Employee received access to Confidential Information about in the preceding two years, or (ii)
had material contact with Employee or a person under Employee’s supervision in the preceding two
years. A “Competing Business” is a person or entity that is in the business of providing a
Conflicting Product or Service. A “Conflicting Product or Service” is a product or service that
would displace a product or service that Employee assists the Company in developing, selling,
distributing, servicing, or otherwise providing to Company’s customers or receives Confidential
Information about within the preceding two (2) years. The products and services that Company is in
the business of providing to its customers include, without limitation, renting or leasing
household durable goods, servicing and repairing durable goods, and providing financial services to
consumers, including but not limited to deferred deposit lending, short-term consumer loans, and/or
check cashing.

     3.2. Restriction on Interfering with Employee Relationships. During employment with
Company, and for two (2) years thereafter, Employee will not, either directly or indirectly, (a)
solicit, induce, or encourage any employee of the Company to

 

 

leave the Company, or (b) help another person or entity to hire away an employee of the
Company; unless such activity is expressly authorized by a supervisor of Employee on behalf of the
Company. Where required by law, the foregoing restriction will only apply to employees that
Employee, worked with, supervised, or help manage, within the last two years of Employee’s
employment with Company. The Company’s primary remedy shall be injunctive relief as provided for
in Section 5 below. However, the parties recognize that if Company loses an employee due to
interference by Employee prior to or in spite of an injunction, it will not be possible to quantify
the precise damage that this would cause. Accordingly, in the event Company loses an employee due,
in whole or in part, to conduct by Employee that violates this Agreement, then Employee shall pay
Company a sum equal to fifty percent (50%) of the lost employee’s annual compensation (based on the
lost employee’s last rate of pay with Company) as a reasonable estimate of part of the damages
caused by Employee’s breach. This shall not preclude or act as a substitute for any remedy that
would otherwise be available, including but not limited to, injunctive relief against further
prohibited solicitation or interference with employee relationships.

     3.3. Restriction on Interfering with Customer Relationships. During employment with
Company, and for two (2) years thereafter, Employee will not, directly or indirectly, interfere
with the relationship between the Company and a Customer. It shall be considered a prohibited act
of interference for Employee to, directly or indirectly, either: (a) solicit, encourage, or induce,
a Customer to buy or accept a Conflicting Product or Service , (b) help provide a Conflicting
Product or Service to a Customer, or (c) solicit, encourage, or induce a Customer to stop or reduce
doing business with the Company; unless, such activity has been expressly authorized by a
supervisor of Employee on behalf of the Company. The parties stipulate that this restriction is
inherently limited to a reasonable geography or geographic substitute because it is limited to the
place or location where the Customer is located at the time: provided, however, that if additional
geographic limitation is required by law then this Paragraph shall be deemed limited to Customers
who do business within the Restricted Area (defined in Exhibit A).

     3.4. Restriction Against Unfair Competition. Employee agrees that during employment,
and for a period of two (2) years after Employee’s employment with Company ends, Employee will not,
directly or indirectly, accept or participate in any position, as an employee, consultant, advisor,
contractor, shareholder, director, partner, joint-venturer, or investor, that would involve
assistance in the management, operation, administration, or sale or rental activities of a
Competing Business within the Restricted Area (defined in Exhibit A). The Restricted Area
definition is a reasonable estimate of the geographic area where Employee will help the Company do
business or plan to do business and/or about which Employee will receive Confidential Information.
The foregoing does not prohibit ownership of less than 2% of the outstanding stock of a publicly
traded company so long as it is a non-controlling interest, or passive mutual fund investments.

     3.5. Survival of Restrictions. Employee will advise any future employer of the
restrictions in this Agreement before accepting new employment. The post-employment restrictions
provided for in this Agreement shall survive the termination of Employee’s employment with Company
regardless of the cause of the termination. If a Court or

 

 

arbitrator finds that Employee has failed to comply with a time-limited restriction in this
Agreement, the time period applicable to that restriction shall be extended by one day for each day
Employee is found to have violated the restriction up to a maximum period of two (2) years so as to
give the Company the full benefit of the time period bargained for.

SECTION 4. Alternative Dispute Resolution.

     4.1 Notice and Early Resolution Conference. Employee will give Company at least
thirty (30) days written notice before either accepting an offer of employment with a Competing
Business or going to work for a Competing Business. If requested to do so, Employee will provide
Company with a description of the duties and activities of the new position, and will participate
in a mediation or in-person conference with a Company representative within the notice period in an
effort to help avoid unnecessary legal disputes. The Company shall not waive any of its rights
under this Agreement if it elects not to request a conference or elects to take no specific action
upon receipt of the notification.

     4.2. Arbitration. Temporary injunctive relief to secure compliance with the
restrictions in this Agreement, and related discovery, may be pursued in a court of law pursuant to
Section 5 below until such time as an arbitration can be conducted. All issues of final relief
related to this Agreement will be decided through arbitration in accordance with the Mutual
Agreement to Arbitrate Claims or comparable controlling agreement to arbitrate between the parties.
The parties waive trial by jury on any claim arising from this Agreement.

SECTION 5. Remedies and Reformation. In the event of a breach or threatened
breach of this Agreement, the offended party will be entitled to (i) an order of specific
performance, (ii) injunctive relief by temporary restraining order, temporary injunction, and/or
permanent injunction, (iii) damages, (iii) attorney’s fees and costs incurred in obtaining relief,
and (iv) any other legal or equitable relief or remedy allowed by law. To the extent a bond is
required for injunctive relief against Employee, the agreed bond amount shall be One Thousand
Dollars ($1,000.00). In the event the restrictions on Employee provided for in this Agreement are
found to be unenforceable as written, the parties authorize the applicable Court or arbiter to
reform the contract to make it enforceable.

SECTION 6. Severability, Waiver, Modification, Assignment, Governing Law. If any
provision contained in this Agreement is determined to be void, illegal or unenforceable, in whole
or in part, then the other provisions contained herein shall remain in full force and effect as if
the provision that was determined to be void, illegal, or unenforceable had not been contained
herein. No waiver of an obligation created by this Agreement shall be considered binding unless it
is agreed to in writing by the party it operates against. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by any party. Except as otherwise expressly provided for herein, this instrument
contains the entire agreement of the parties concerning the matters covered in it. This Agreement
may not be modified, altered or amended except by written agreement of all the parties or
reformation by a binding legal

 

 

authority under Section 5 above. Employee consents to the assignment of this Agreement by Company.
This Agreement will automatically inure to the benefit of Company’s successors in interest,
affiliates, subsidiaries, parents, purchasers, or assigns, without need for further action. The
laws of the state of Delaware shall govern this Agreement, the construction of its terms, and the
interpretation of the rights and duties of the parties hereto, without regard for any conflict of
laws doctrines to the contrary. The parties consent to personal jurisdiction of the courts located
in Dallas, Texas, over them. The exclusive venue location for any legal action related to this
Agreement shall be Dallas, Texas, unless otherwise agreed in writing. Both parties retain the
right to terminate the employment relationship at their discretion. Nothing herein modifies the
at-will nature of the parties’ employment relationship.

SECTION 7. Resolution of Rights Regarding Confidential Information and Goodwill.
The parties stipulate that Employee has received Confidential Information and/or developed business
goodwill with customers through a past association with the Company subject to agreements and
policies of the Company limiting the use of the Confidential Information and goodwill for the
Company’s benefit. Grounds for dispute exists between the parties as to what post-employment
activities of Employee would result in unauthorized disclosure or use of these items. This
Agreement is entered into, in part, to resolve such dispute, provide the parties with a
predictable set of expectations as to future conduct, avoid the cost of litigation, and provide
finality. This Agreement shall be construed as a form of settlement agreement and enforced in
accordance with public policies favoring same. Accordingly, Employee agrees not to file a lawsuit
to challenge the enforceability of this Agreement.

     AGREED to and effective as of ________________________(Effective Date).

	 	 	 
	THE COMPANY
 
 
 

	 	EMPLOYEE
 
 
 

	 

	 	 
	 

	 	<employee name>

 

 

Exhibit A — Restricted Area Definition

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