Exhibit 10.2
NONCOMPETITION AGREEMENT
This
Noncompetition Agreement (the “Noncompetition
Agreement”) is made and entered into as of March 22,
2005, by and between William E. Morgenstern and Rent-Way, Inc.
(“Rent-Way”), a Pennsylvania corporation. For purposes
of this Noncompetition Agreement, the “Rent-Way
Companies” refers to Rent-Way, together with its past and
present parents, subsidiaries, affiliates and divisions.
RECITALS
WHEREAS , Morgenstern was one of the founders of Rent-Way
and has served as its Chief Executive Officer and President and a
member of its Board of Directors (the “Board”) since
the formation of Rent-Way in 1981;
WHEREAS , Morgenstern was elected Chairman of the Board of
Rent-Way in October 1999 and is currently serving in such
position;
WHEREAS , Morgenstern has been employed by Rent-Way pursuant
to an Employment Agreement dated as of November 20, 2001 (the
“Employment Agreement”);
WHEREAS , Morgenstern desires to resign as Rent-Way’s
President and Chief Executive Officer;
WHEREAS , Rent-Way desires to continue to engage Morgenstern
as a consultant, and Morgenstern desires to provide such services;
and
WHEREAS , this Noncompetition Agreement is being executed
simultaneously with the Consulting Agreement and Release between
Morgenstern and Rent-Way, dated as of March 22, 2005 (the
“Consulting Agreement”);
NOW, THEREFORE , in consideration of the mutual covenants
and agreements hereinafter set forth and set forth in the
Consulting Agreement, and intending to be and being legally bound
hereby, the parties agree as follows:
AGREEMENT
1.
Payments to Morgenstern in Consideration for His Obligations
Under Noncompetition Agreement . In exchange for and in full
consideration of Morgenstern’s promises, covenants and
agreements set forth in this Noncompetition Agreement, Rent-Way
will pay Morgenstern and Morgenstern will accept payments (the
“Noncompetition Payments”) at the annual rate of One
Hundred Fifty Thousand Dollars ($150,000) for the period beginning
May 1, 2005 and ending on the lesser of (a) seven years
from such date, and (b) two years after the termination for
any reason of Morgenstern’s consulting engagement with
Rent-Way other than a termination by the Company without Cause (as
defined in the Consulting Agreement) or by Morgenstern for Good
Reason (as defined in the Consulting Agreement) following a Change
in
Control (as defined in the
Consulting Agreement) pursuant to Section 9(f)(iv) of the
Consulting Agreement (such time, the “Covered Time”).
Such Noncompetition Payments will be paid monthly in arrears and
shall be subject to all legally required and customary
withholdings. The Noncompetition Payments to be provided herein
shall not affect, limit or restrict any remuneration Morgenstern
may be eligible to receive under the Consulting Agreement or in
connection with rendering services for Rent-Way as its Chairman of
the Board or as a member of its Board.
2.
Noncompetition; Nonsolicitation .
(a) Morgenstern
acknowledges and recognizes the highly competitive nature of
Rent-Way’s business and that access to Rent-Way’s
confidential records and proprietary information renders him
special and unique within Rent-Way’s industry. In
consideration of the payments to be made by Rent-Way to Morgenstern
pursuant to this Noncompetition Agreement, Morgenstern agrees that
during the Covered Time, Morgenstern will not directly or
indirectly, establish, finance, own, manage, operate, engage in, be
employed by, act as a consultant for, or otherwise participate in
the conduct of, any business in the United States in the rental
purchase industry or which engages in an Other Competitive Business
(as defined below) engaged in by Rent-Way (together, the
“Business”); provided, however, that the provisions of
this Section 2(a) will not be deemed breached merely because
Morgenstern is a passive investor who owns less than 1% of the
outstanding common stock of a publicly-traded company; and further
provided that this provision shall not prohibit Morgenstern’s
employment or provision of services to a business by virtue of the
fact that such business has divisions or affiliates that engage in
the Business so long as Morgenstern does not provide services to
and has no managerial or supervisory authority with respect to such
divisions or affiliates. As used in this Noncompetition Agreement,
“Other Competitive Business” shall mean a business not
in the rental purchase industry that (i) is the same or
substantially similar to any business engaged in or proposed to be
engaged in by Rent-Way at the time Morgenstern begins any
involvement with such business and (ii) generates or is
reasonably expected within the ensuing twenty-four months to
generate at least 20% of Rent-Way’s revenues or
profits.
(b) In
further consideration of the payments to be made by Rent-Way to
Morgenstern pursuant to this Noncompetition Agreement, Morgenstern
agrees that during the Covered Time, he shall not directly or
indirectly (i) solicit, encourage or attempt to solicit or
encourage any of the employees, agents, consultants or
representatives of any of the Rent-Way Companies to terminate his,
her, or its relationship with such Rent-Way Company;
(ii) solicit, encourage or attempt to solicit or encourage any
of the employees, agents, consultants or representatives of the
Rent-Way Companies to become employees, agents, consultants or
representatives of any other person or entity; (iii) directly
or indirectly solicit or do business with or attempt to solicit or
do business with any customer, vendor or distributor of any of the
Rent-Way Companies with respect to any product or service being
furnished, made, sold or leased by such Rent-Way Company in
connection with Morgenstern’s involvement with any business
or venture in the rental purchase industry or an Other Competitive
Business; or (iv) persuade or seek to persuade any customer of
any of the Rent-Way Companies to cease to do business or to reduce
the amount of business which any customer has customarily done or
contemplates doing with such Rent-Way Company, whether or not the
relationship between the Rent-Way Company and such customer was
originally established in whole or in part through
Morgenstern’s efforts.
-2-
For purposes of this Section 2(b)
only, during any period within the Covered Time subsequent to the
termination of Morgenstern’s consulting engagement, the terms
“customer,” “vendor” and
“distributor” shall mean a customer, vender or
distributor who has done business with the Rent-Way Companies
within twenty-four months preceding the termination of
Morgenstern’s consulting engagement.
(c) During
the Covered Time, Morgenstern agrees that upon the earlier of his
(i) negotiating with any Competitor (as defined below)
concerning the possible employment
|
