Exhibit 10.1

CONSULTING AGREEMENT

     This Consulting Agreement (the “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 Agreement, the
“Rent-Way Parties” refers to Rent-Way, together with its past and present
parents, subsidiaries, affiliates and divisions, and each of their respective
past and present officers, directors, agents, employees, representatives,
successors, and assigns, in both their individual and corporate capacities. For
purposes of this 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 serving as Chairman, President, and Chief
Executive Officer of Rent-Way pursuant to an Employment Agreement dated as of
November 20, 2001 (the “Employment Agreement”);

     WHEREAS, the Board and Morgenstern believe that a separation of the role of
Chairman of the Board from the role of President and/or Chief Executive Officer
should be implemented to enhance the effectiveness of the Board, among other
reasons;

     WHEREAS, Morgenstern desires to resign as Rent-Way’s President and Chief
Executive Officer and continue to serve as Chairman of the Board if selected;

     WHEREAS, Rent-Way desires to continue to employ Morgenstern as a
consultant, and Morgenstern desires to provide such services; and

     WHEREAS, this Agreement is being executed simultaneously with the
Noncompetition Agreement between Morgenstern and Rent-Way, dated as of March 22,
2005 (the “Noncompetition Agreement”);

     NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and set forth in the Noncompetition Agreement, and
intending to be and being legally bound hereby, the parties agree as follows:

 

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AGREEMENT

     1. Superceding of Employment Agreement. As of the Effective Date (defined
below), the Employment Agreement and all existing employment agreements between
Morgenstern and the Rent-Way Parties, whether oral or written, are hereby
terminated, and neither Morgenstern nor Rent-Way shall have any further rights
or obligations under any such agreements, except as otherwise expressly provided
herein or in the Noncompetition Agreement. Except as otherwise expressly
provided herein, the parties agree that this Agreement and the Noncompetition
Agreement supersede the Employment Agreement (and any other existing employment
agreements between the parties).

     2. Morgenstern’s Service as Chairman of the Board, Board Member, and
Officer of Rent-Way.

          (a) Morgenstern resigns his positions as President and Chief Executive
Officer of Rent-Way as of the Effective Date and agrees that he shall resign
from any officer, director, or other positions he holds with respect to any
subsidiary or affiliate of Rent-Way as, when, and to the extent requested by
Rent-Way. Morgenstern agrees that he shall execute such documents and take such
other action (if any) as may be requested by Rent-Way and necessary to give
effect to this Section 2(a).

          (b) Morgenstern agrees that he shall, during the Term, serve or
continue to serve as Chairman of the Board of Rent-Way and/or a member of
Rent-Way’s Board as and to the extent requested by Rent-Way’s Board. The
determination as to whether Morgenstern will remain Chairman of the Board of
Rent-Way subsequent to the next meeting of the shareholders of Rent-Way and/or a
member of Rent-Way’s Board following the expiration of his current term is
solely within the Board’s sole discretion, and nothing herein shall be construed
as an obligation of Rent-Way to continue Morgenstern in such capacities for any
longer period or, if no longer serving in such capacities, to take steps to have
him elected to a position as a member of the Board or as Chairman of the Board.
Subject to the foregoing, if applicable, Morgenstern agrees that he shall
execute such documents and take such other action (if any) as may be requested
by Rent-Way and necessary to remove Morgenstern from all such positions with
Rent-Way.

          (c) If requested by the Board, Morgenstern shall continue to perform
the duties of President and Chief Executive Officer until September 30, 2005 or
such earlier date as a new, acting, or interim Chief Executive Officer is
appointed.

          (d) Morgenstern’s activities as Chairman of the Board of Rent-Way
and/or a member of Rent-Way’s Board shall not be considered consulting services
provided pursuant to this Agreement.

          (e) During any period that Morgenstern is Chairman of the Board of
Rent-Way and/or a member of Rent-Way’s Board, he shall be eligible to receive
such compensation and benefits as may generally be accorded non-employee
directors of Rent-Way.

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     3. Release of Claims. Except as necessary to enforce the terms of this
Agreement and the Noncompetition Agreement, and in exchange for and in
consideration of the promises, covenants and agreements set forth herein and the
Noncompetition Agreement, Morgenstern hereby releases the Rent-Way Parties to
the maximum extent permitted by law from any and all manner of claims, demands,
causes of action, obligations, damages, or liabilities whatsoever of every kind
and nature, at law or in equity, known or unknown, and whether or not
discoverable, which Morgenstern has or may have for any period prior to his
execution of this Agreement and which arise out of or are related to his
employment by Rent-Way and the termination thereof, including, but not limited
to, all claims arising out of or related to the Employment Agreement, claims for
additional compensation, claims for severance pay, claims of defamation,
wrongful discharge or breach of contract, claims for unpaid wages or commissions
or bonuses, claims arising under any federal, state or local labor laws, claims
of discrimination under the Age Discrimination in Employment Act of 1967, as
amended, Title VII of the Civil Rights Act of 1964, as amended, the Americans
with Disabilities Act of 1990, the Pennsylvania Human Relations Act, or any
other federal, state or local laws, claims arising under the Employee Retirement
Income Security Act of 1974, any claim under the common law, and any claim for
attorneys’ fees or costs. Rent-Way represents that it is not currently aware of
any claims, demands, causes of action, obligations, damages, or liabilities
whatsoever of any kind or nature, at law or in equity, it may have against
Morgenstern.

     4. Engagement; Term. Rent-Way hereby engages Morgenstern, and Morgenstern
hereby accepts such engagement and agrees to serve as a consultant to Rent-Way,
upon the terms and conditions hereinafter set forth, for a term commencing on
May 1, 2005 (the “Effective Date”) and (unless sooner terminated as hereinafter
provided) expiring on April 30, 2010 (such term being hereinafter referred to as
the “Term”). Morgenstern shall report to the Board or any committee of the Board
to which such responsibility may be assigned.

     5. Duties. During the Term, Morgenstern shall be available to render
consulting services from time to time not to exceed 25% of his business time per
month (based upon a standard forty-hour workweek), provided that any time spent
by Morgenstern rendering services for Rent-Way in connection with his service as
Chairman of the Board or as a member of the Board shall not be included in
calculating the maximum amount of time Rent-Way may require consulting services
from Morgenstern. Morgenstern’s consulting duties shall include
(a) participating in Rent-Way’s budgeting, strategic planning, expansion, and
financing activities, (b) communicating with Rent-Way’s shareholders and
institutional investors, and (c) providing other services as may be reasonably
assigned, consistent with an executive level position, to Morgenstern by the
Board or such committee of the Board to which such responsibility may be
assigned. Morgenstern agrees that he shall use his best efforts to perform such
services faithfully and diligently, and to the best of his ability and in the
best interests of Rent-Way. Such services will be performed at reasonably
convenient and mutually acceptable times, with consideration for Morgenstern’s
other business and personal obligations. Morgenstern shall be permitted to
engage in other business activities (including employment), provided that such
activities do not otherwise violate the terms of this Agreement or the
Noncompetition Agreement or materially impair his ability to perform his duties
hereunder. The parties expressly agree that Rent-Way shall not be obligated to
provide Morgenstern with any staff, office space or office allowance.

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     6. Compensation and Benefits. As full compensation and benefits for the
consulting services to be provided by Morgenstern hereunder, Rent-Way shall
provide the following to Morgenstern:

          (a) Consulting Fees. Rent-Way will pay Morgenstern and Morgenstern
will accept consulting fees (“Consulting Fees”) during the Term at an annual
rate of Two Hundred Thousand Dollars ($200,000). Such Consulting Fees will be
paid in Rent-Way’s normal payroll cycle. The Consulting Fees to be provided
herein shall not affect, limit or restrict any remuneration Morgenstern may be
eligible for in connection with rendering services for Rent-Way as its Chairman
of the Board or as a member of its Board.

          (b) 2005 Bonus. At the time Rent-Way pays bonuses to its executives in
respect of its 2005 fiscal year, Rent-Way shall pay a bonus to Morgenstern for
the 2005 fiscal year for work performed in his capacity as Chief Executive
Officer and President in such amount as may be determined by the Compensation
Committee of the Board, giving consideration to Morgenstern’s performance during
the 2005 fiscal year as Chief Executive Officer and President (whether prior to
or subsequent to the Effective Date of this Agreement) and the financial
performance of Rent-Way.

          (c) Bonus. The Board, in its sole discretion, may award Morgenstern a
bonus in respect of any fiscal year.

          (d) Benefits and Perquisites. During the Term, Morgenstern shall be
entitled to participate in, to the extent Morgenstern is otherwise eligible
under the terms thereof, the benefit plans and programs, and receive the
benefits and perquisites, generally provided by Rent-Way to executive officers
of Rent-Way. For purposes of such plans and programs, Morgenstern shall be
considered to be employed by Rent-Way during his engagement hereunder. Nothing
herein is intended to affect, limit or restrict any medical insurance coverage
or other benefits Morgenstern may be eligible for by virtue of his service as a
member of the Board.

          (e) Life Insurance. During the first two years of the Term, Rent-Way
will pay on behalf of or reimburse Morgenstern for the premiums on that certain
policy of life insurance (Policy No. ___) through First Colony Life Insurance
Company insuring Morgenstern’s life in the amount of $7 million in an amount not
to exceed $5,000 in any fiscal year.

          (f) Reimbursement of Expenses. Rent-Way will reimburse Morgenstern for
all reasonable travel, business entertainment and other business expenses as may
be incurred by him during the Term in the performance of the duties and
responsibilities assigned to him under this Agreement in accordance with
Rent-Way’s standard practices applicable to senior executives of Rent-Way. Such
reimbursements shall be made by Rent-Way on a timely basis upon submission by
Morgenstern of proper accounts therefor in accordance with Rent-Way’s standard
procedures.

          (g) No Other Compensation or Benefits; Payment. Except as provided in
the Noncompetition Agreement, the compensation and benefits specified in this
Section 6 and in Sections 7 and 10 of this Agreement shall be in lieu of any and
all other compensation and

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benefits. Payment of all compensation and benefits to Morgenstern specified in
this Section 6 and in Sections 7 and 10 of this Agreement shall be subject to
all legally required and customary withholdings applicable to payments to
employees.

          (h) Cessation of Engagement. In the event Morgenstern’s engagement
hereunder shall cease for any reason, then Morgenstern’s compensation and
benefits shall cease on the date of such event, except as otherwise specifically
provided herein or in any applicable employee benefit plan or program or as
required by law.

     7. Treatment of Stock Options. All stock options previously granted to
Morgenstern shall continue in accordance with the agreements and plans governing
such grants. For purposes of such agreements and plans, Morgenstern shall be
considered to be employed by Rent-Way during his engagement hereunder.

     8. Noncompetition Agreement. Simultaneously with the execution of this
Agreement, the parties will execute the Noncompetition Agreement, which is
attached as Exhibit A hereto. It is a material condition of this Agreement that
Morgenstern comply with the obligations contained in the Noncompetition
Agreement, the terms of which are incorporated by reference herein.

     9. Termination of Engagement. Morgenstern’s consulting engagement hereunder
may be terminated prior to the end of the Term under the following
circumstances.

          (a) Death. Morgenstern’s consulting engagement hereunder shall
terminate upon his death.

          (b) Morgenstern Becoming Totally Disabled. Rent-Way may terminate
Morgenstern’s consulting engagement hereunder at any time after Morgenstern
becomes “Totally Disabled”. For purposes of this Agreement, Morgenstern shall be
“Totally Disabled” in the event Morgenstern is unable to perform the duties and
responsibilities contemplated under this Agreement for a period of six
(6) consecutive months due to physical or mental incapacity or impairment. Any
question as to the existence of a physical or mental condition which would cause
Morgenstern to be considered Totally Disabled upon which Morgenstern and
Rent-Way cannot agree will be determined by a qualified independent physician
selected by Morgenstern and reasonably acceptable to Rent-Way (or, if
Morgenstern is unable to make a selection, the selection of the physician will
be made by any adult member of his immediate family). The physician’s written
determination shall be delivered to Rent-Way and to Morgenstern and shall be
final and conclusive for all purposes of this Agreement. During any period that
Morgenstern fails to perform his duties hereunder as a result of incapacity due
to physical or mental illness (the “Disability Period”), Morgenstern shall
continue to receive the compensation and benefits provided by Section 6 of this
Agreement until Morgenstern’s engagement hereunder is terminated; provided,
however, that the amount of base compensation and benefits received by
Morgenstern during the Disability Period shall be reduced by the aggregate
amounts, if any, payable to Morgenstern under any disability benefit plan or
program provided to Morgenstern by Rent-Way.

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          (c) Termination by Rent-Way for Cause. Rent-Way may terminate
Morgenstern’s consulting engagement hereunder for Cause at any time after
providing written notice to Morgenstern. For purposes of this Agreement, the
term “Cause” shall mean any of the following: (i) Morgenstern’s willful failure
to perform his material duties under this Agreement (other than as a result of
total or partial incapacity due to physical or mental illness) if such failure
is not substantially cured within 15 days after written notice of such failure
is provided to Morgenstern; (ii) Morgenstern’s willful breach of his fiduciary
duty or duty of loyalty to Rent-Way which is injurious to the financial
condition or business reputation of Rent-Way; (iii) Morgenstern’s conviction for
a felony offense under the laws of the United States or any state thereof;
(iv) the willful material breach by Morgenstern of this Agreement if such breach
is not substantially cured within 15 days after written notice of such breach is
provided to Morgenstern; (v) the willful material breach by Morgenstern of any
covenant set forth in the Noncompetition Agreement if such breach is not
substantially cured within 15 days after written notice of such breach is
provided to Morgenstern; and (vi) a preliminary or final determination by any
court of competent jurisdiction that any covenant in the Noncompetition
Agreement is unenforceable or invalid in its entirety, provided that
(A) Rent-Way cancels the Noncompetition Agreement as a result of such
determination; (B) in the event the court does not strike the offending covenant
in its entirety, but rather reduces the scope, duration and/or area of such
provision (and substitutes provisions for any such invalid or unenforceable
provisions) and/or deletes specific words and phrases in order to make such
provision enforceable to the fullest extent permitted by law, such reformation
by the court may still constitute Cause, at Rent-Way’s election, provided that
Rent-Way cancels the Noncompetition Agreement as a result of such reformation;
and (C) Morgenstern contended in the proceeding resulting in such determination
that the Noncompetition Agreement was invalid or unenforceable in whole or in
part. For purposes of this “Cause” definition, an act or failure to act will be
not deemed “willful” if Morgenstern acted in good faith and with a reasonable
belief that his action or failure to act was in Rent-Way’s best interests.

          (d) Termination by Rent-Way Without Cause. Rent-Way may terminate
Morgenstern’s consulting engagement hereunder at any time for any reason or no
reason.`

          (e) Termination by Morgenstern Without Good Reason. Morgenstern may
terminate his consulting engagement hereunder without Good Reason (as defined in
Section 5(f) below) upon ninety (90) days’ prior written notice to Rent-Way,
provided that Rent-Way, in its sole discretion, may waive this notice
requirement, in whole or in part, so long as it pays Morgenstern the Consulting
Fees that Morgenstern would have otherwise been due over such 90-day period.

          (f) Termination by Morgenstern for Good Reason. Morgenstern may
terminate his consulting engagement hereunder for Good Reason (as defined below)
at any time after providing written notice to Rent-Way. For purposes of this
Agreement, the term “Good Reason” shall mean, without Morgenstern’s prior
written consent, (i) a material breach of this Agreement by Rent-Way if such
breach is not substantially cured within 15 days after written notice of such
breach is provided to Rent-Way by Morgenstern; (ii) the committee responsible
for nominating candidates for election to the Board, or the Board itself if it
exercises that function, fails to nominate Morgenstern for re-election as a
director effective upon expiration of

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his current or any subsequent term, other than as a result of Morgenstern’s
stated intent or desire not to serve or his prior removal from the Board
pursuant to Section 4.05 of Rent-Way’s Bylaws; (iii) the Board has failed or
fails to re-elect Morgenstern to serve as Chairman of the Board, other than as a
result of Morgenstern’s stated intent or desire not to serve or his prior
removal from the Board pursuant to Section 4.05 of Rent-Way’s Bylaws, provided
that Morgenstern may not terminate his consulting engagement under this clause
(iii) until after the expiration of his current term as a director; or (iv) a
Change in Control has occurred within the preceding 180 days.

          For purposes of this Agreement, a Change in Control shall mean the
occurrence of any of the following:

  (A)   a change in control shall have occurred of a nature that would be
required to be reported in Item 5.01 of Form 8-K, unless such change in control
results in control by Morgenstern, any person with whom Morgenstern is or was
acting in concert, or their respective designee(s) or affiliate(s) or any
combination thereof;     (B)   any “person” (as such term is used in Sections
13(d) and 14(d)(2) of the Exchange Act), other than Morgenstern, any person with
whom Morgenstern is or was acting in concert, or their respective designee(s) or
affiliate(s) or any combination thereof, is or becomes the “beneficial owner”
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of Rent-Way representing fifty percent (50%) or more of the combined
voting power of Rent-Way’s then outstanding securities;     (C)   the
stockholders of Rent-Way approve a merger or consolidation of Rent-Way with any
other corporation, other than (i) a merger or consolidation with any of its
affiliates, (ii) a merger or consolidation which would result in the holders of
voting securities of Rent-Way outstanding immediately prior thereto continuing
to hold more than 50% of the combined voting power of the voting securities of
Rent-Way or such surviving entity outstanding immediately after such merger or
consolidation, (iii) a merger or consolidation of Rent-Way with any corporation
50% or more of the combined voting power of which is held by Morgenstern, any
person with whom Morgenstern is or was acting in concert, or their respective
designee(s) or affiliate(s) or any combination thereof, or (iv) a merger or
consolidation effected to implement a recapitalization of Rent-Way (or similar
transaction) in which no “person” (as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act) acquires more than 50% of the combined voting
power of Rent-Way’s then outstanding securities or a reverse takeover; or    
(D)   the stockholders of Rent-Way approve a plan of complete liquidation of
Rent-Way or an agreement for the sale or disposition

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      by Rent-Way of, or Rent-Way sells or disposes of, all or substantially all
of Rent-Way’s assets, provided that this provision shall not apply to a sale of
Rent-Way’s assets to an affiliate of Rent-Way if such affiliate agrees to
succeed to Rent-Way’s obligations under this Agreement.

     10. Compensation Following Termination Prior to the End of the Term. In the
event that Morgenstern’s consulting engagement hereunder is terminated prior to
the end of the Term, Morgenstern shall be entitled only to the following
compensation and benefits upon such termination:

          (a) Termination by Reason of Morgenstern Becoming Totally Disabled;
Termination by Rent-Way for Cause; Termination by Morgenstern Without Good
Reason. In the event that Morgenstern’s consulting engagement hereunder is
terminated prior to the expiration of the Term by reason of Morgenstern becoming
Totally Disabled pursuant to Section 9(b), by Rent-Way for Cause pursuant to
Section 9(c), or by Morgenstern Without Good Reason pursuant to Section 9(e),
Rent-Way shall pay the following amounts to Morgenstern:

  (i)   any accrued but unpaid Consulting Fees (as determined pursuant to
Section 6(a)) for services rendered to the date of termination; provided,
however, that in the event Morgenstern’s consulting engagement hereunder is
terminated pursuant to Section 9(b), the amount of Consulting Fees received by
Morgenstern during the Disability Period shall be reduced by the aggregate
amounts, if any, payable to Morgenstern under any disability benefit plan or
program provided to Morgenstern by Rent-Way;     (ii)   any bonus that has been
awarded by the Compensation Committee of the Board pursuant to Section 6(b) or
by the Board pursuant to Section 6(c) but has not yet been paid; and     (iii)  
any accrued but unpaid expenses required to be reimbursed pursuant to
Section 6(d).

          (b) Termination by Rent-Way Without Cause; Termination by Morgenstern
for Good Reason; Termination by Reason of Morgenstern’s Death. In the event that
Morgenstern’s consulting engagement hereunder is terminated prior to the
expiration of the Term by Rent-Way without Cause pursuant to Section 9(d) , by
Morgenstern for Good Reason pursuant to Section 9(f), or by reason of
Morgenstern’s death pursuant to Section 9(a), Rent-Way shall pay the following
amounts and provide the following benefits to Morgenstern:

  (i)   any accrued but unpaid Consulting Fees (as determined pursuant to
Section 6(a)) for services rendered to the date of termination;     (ii)   any
bonus that has been awarded by the Compensation Committee of the Board pursuant
to Section 6(b) or by the Board pursuant to Section 6(c) but has not yet been
paid;

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  (iii)   any accrued but unpaid expenses required to be reimbursed pursuant to
Section 6(d);     (iv)   the continued payment of the Consulting Fees (as
determined pursuant to Section 6(a)) for the remainder of the Term (such sums to
be paid at the times and in the amounts such Consulting Fees would have been
paid had Morgenstern’s consulting engagement not been terminated); and     (v)  
to the extent permitted by law and the applicable plan documents and agreements,
continued participation in the plans and programs referenced in Section 6(d) in
which he participated just prior to such termination through the end of the
Term, provided that if Morgenstern is not permitted to continue in Rent-Way’s
medical and/or dental plans but elects continuation of such coverage in
accordance with COBRA, Rent-Way shall pay the premiums for such coverage through
the earlier of (A) the end of the Term and (B) the date that is eighteen months
after such termination of his engagement hereunder;

          (c) Termination by the Company Without Cause or by Morgenstern for
Good Reason Following a Change in Control. In lieu of the payments and benefits
provided under Section 10(b) above, in the event that Morgenstern’s consulting
engagement hereunder is terminated prior to the expiration of the Term by the
Company without Cause or by Morgenstern for Good Reason following a Change in
Control pursuant to Section 9(f)(iv), Morgenstern shall be entitled to a lump
sum payment, payable within thirty (30) days after such termination, equal to
the sum of:

  (i)   any accrued but unpaid Consulting Fees (as determined pursuant to
Section 6(a)) for services rendered to the date of termination;     (ii)   any
bonus that has been awarded by the Compensation Committee of the Board pursuant
to Section 6(b) or by the Board pursuant to Section 6(c) but has not yet been
paid;     (iii)   any accrued but unpaid expenses required to be reimbursed
pursuant to Section 6(d); and     (iv)   the Consulting Fees (as determined
pursuant to Section 6(a)) that would have been payable through the remainder of
the Term had Morgenstern’s consulting engagement not been terminated.

If it shall be determined that any payment made or benefit provided to
Morgenstern in connection with a Change in Control (as defined in Section 280G
of the Internal Revenue Code of 1986, as amended (the “Code”), or any successor
thereto) is subject to the excise tax imposed by Section 4999 of the Code,
Rent-Way shall pay Morgenstern an amount of cash (the “Additional Amount”) such
that the net amount received by Morgenstern after paying all applicable taxes on
such Additional Amount and any penalties, interest and other reasonable

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costs incurred as a result of such excise tax or additional payment, shall be
equal to the amount that Morgenstern would have received if Section 4999 were
not applicable. All determinations concerning the application of the foregoing
shall be made by a nationally recognized firm of independent accountants
(together with legal counsel of its choosing), selected by Rent-Way after
consultation with Morgenstern (which may be Rent-Way’s independent auditors),
whose determination shall be conclusive and binding on all parties. The fees and
expenses of such accountants and counsel shall be borne by Rent-Way. If the
accounting firm determines that no Excise Tax is payable by Morgenstern, it
shall furnish Morgenstern with an opinion that Morgenstern has substantial
authority not to report any Excise Tax on his Federal income tax return. In the
event the Internal Revenue Service assesses Morgenstern an amount of excise tax
pursuant to Section 4999 of the Code in excess of that determined in accordance
with the foregoing, Rent-Way shall pay to Morgenstern an additional Gross-Up
Payment, calculated as described above in respect of such excess excise tax,
including a Gross-Up Payment in respect of any interest or penalties imposed by
the Internal Revenue Service with respect to such excess excise tax.

          (d) Effect on Payments and Benefits Under Section 10(b)(iv) and (v) of
Willful Material Breach of This Agreement or Any Covenant in Noncompetition
Agreement or of Finding By Court of Competent Jurisdiction Of Unenforceability
or Invalidity of Any Covenant in Noncompetition Agreement.

  (i)   Morgenstern shall not be entitled to any payment or continued payment or
benefits under clauses (iv) and (v) of Section 10(b) of this Agreement if, at
the time of such termination or any time thereafter, Morgenstern is in willful
material breach of Section 11 of this Agreement, or Morgenstern is in willful
material breach of any covenant contained in the Noncompetition Agreement, and
such breach, if susceptible of cure, is not substantially cured within 15 days
after written notice of such breach is provided to Morgenstern.     (ii)  
Morgenstern shall not be entitled to any payment or continued payment or
benefits under clauses (iv) and (v) of Section 10(b) of this Agreement in the
event a court of competent jurisdiction renders a preliminary or final
determination that any covenant in the Noncompetition Agreement is unenforceable
or invalid in its entirety, provided that (A) Rent-Way cancels the
Noncompetition Agreement as a result of such determination; (B) in the event the
court does not strike the offending covenant in its entirety, but rather reduces
the scope, duration and/or area of such provision (and substitutes provisions
for any such invalid or unenforceable provisions) and/or deletes specific words
and phrases in order to make such provision enforceable to the fullest extent
permitted by law, such reformation by the court may still constitute Cause, at
Rent-Way’s election, provided that Rent-Way cancels the Noncompetition Agreement
as a result of such reformation; and (C) Morgenstern contended in the proceeding
resulting in such

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      determination that the Noncompetition Agreement was invalid or
unenforceable in whole or in part.

          (e) Effect of Termination on Stock Options. Notwithstanding any
contrary provisions contained in any stock option agreement evidencing stock
options granted to Morgenstern, as of the effective date of any termination
pursuant to Section 9(a), (b), (d), or (f), (i) Rent-Way will vest Morgenstern
in any outstanding unvested stock options of Rent-Way granted to Morgenstern
prior to such termination and (ii) the period during which Morgenstern shall
have the right to exercise such vested options shall be extended by Rent-Way to
the expiration of the term of such options assuming no such termination had
occurred.

          (f) Benefits Following Termination. Except as otherwise provided in
this Section 10, the benefits to which Morgenstern (or, as applicable, his
spouse or estate) may be entitled pursuant to the plans and programs referred to
in Section 6(c) hereof upon termination of Morgenstern’s consulting engagement
hereunder shall be determined and paid in accordance with the terms of such
plans and programs or as may otherwise be required by applicable law.

          (g) No Further Liability; Release. Payment made and performance by
Rent-Way in accordance with this Section 10 shall operate to fully discharge and
release the Rent-Way Parties from any further obligation or liability with
respect to Morgenstern’s consulting engagement and termination of such
consulting engagement. Other than providing the compensation and benefits
provided for in accordance with this Section 10 and any payments due under the
Noncompetition Agreement, the Rent-Way Parties shall have no further obligation
or liability to Morgenstern or any other person under this Agreement or the
Noncompetition Agreement. The payments and benefits to be provided pursuant to
Section 10(b)(iv) and (v) are expressly conditioned upon the delivery by
Morgenstern to Rent-Way of a release in form and substance satisfactory to
Rent-Way of any and all claims Morgenstern may have against the Rent-Way Parties
arising out of his employment and consulting relationships with Rent-Way and the
termination thereof.

     11. Proprietary Information; Confidentiality; Inventions.

          (a) Proprietary Information. Morgenstern acknowledges that during the
course of his past employment with Rent-Way and his engagement hereunder, he has
had, and will necessarily continue to have, access to proprietary information
(as defined below) and confidential records (as defined in Section 11(b)) of the
Rent-Way Companies, and has made, and will continue to make, use of proprietary
information and confidential records of the Rent-Way Companies. Morgenstern
agrees that he shall not during his consulting engagement with Rent-Way or at
any time thereafter, directly or indirectly, use for his own purpose or for the
benefit of any person or entity other than Rent-Way, nor otherwise disclose, any
proprietary information to any individual or entity, unless such disclosure has
been authorized in writing by Rent-Way or is otherwise required by law.
Morgenstern acknowledges and understands that the term “proprietary information”
includes, but is not limited to: (a) the software products, programs,
applications, and processes utilized by the Rent-Way Companies; (b) the name
and/or address of any customer, vendor or distributor of the Rent-Way Companies
or any information concerning the transactions or relations of any customer,
vendor or distributor of the Rent-Way Companies or any of its or their partners,
principals, directors, officers or agents; (c) any

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information concerning any product, technology, or procedure employed by the
Rent-Way Companies but not generally known to its or their customers, vendors or
competitors, or under development by or being tested by the Rent-Way Companies
but not at the time offered generally to customers, vendors or distributors;
(d) any information concerning the structure or content of the proprietary
databases of any of the Rent-Way Companies; (e) any information relating to the
computer software, computer systems, pricing or marketing methods, sales
margins, cost of goods, cost of material, capital structure, operating results,
borrowing arrangements or business plans of any of the Rent-Way Companies;
(f) customer lists and contact information; (g) any information which is
generally regarded as confidential or proprietary in any line of business
engaged in by the Rent-Way Companies; (h) product information and future
development plans; (i) any business plans, budgets, advertising or marketing
plans; (j) any information contained in any of the written or oral policies and
procedures or manuals of the Rent-Way Companies; (k) any information belonging
to customers, vendors or distributors of the Rent-Way Companies or any other
person or entity which the Rent-Way Companies has agreed to hold in confidence;
(l) any inventions, innovations or improvements covered by this Agreement; and
(m) all written, graphic and other material relating to any of the foregoing.
Morgenstern acknowledges and understands that information that is not novel or
copyrighted or patented may nonetheless be proprietary information. The term
“proprietary information” shall not include information (i) generally available
to and known by the public or information that is or becomes available to
Morgenstern on a non-confidential basis from a source other than Rent-Way, the
other Rent-Way Companies, or the directors, officers, employees, partners,
principals or agents of any of the Rent-Way Companies (other than as a result of
a breach of any obligation of confidentiality) or (ii) that is within
Morgenstern’s general business or industry knowledge, know-how or expertise
(collectively, “know-how”), provided such kno w-how is of a generic nature not
specifically pertaining to Rent-Way.

          (b) Confidentiality and Surrender of Records. Morgenstern shall not
during his consulting engagement or at any time thereafter, except as required
by law, directly or indirectly publish, make known or in any fashion disclose
any confidential records to, or permit any inspection or copying of confidential
records by, any individual or entity other than in the course of such
individual’s or entity’s employment or retention by Rent-Way. Upon termination
of his engagement hereunder for any reason or at any earlier time upon request
by Rent-Way, Morgenstern shall deliver promptly to Rent-Way all property and
records of the Rent-Way Companies, including, without limitation, all
confidential records. For purposes hereof, “confidential records” means all
correspondence, reports, memoranda, files, manuals, books, lists, financial,
operating or marketing records, magnetic, optical, or electronic or other media
or equipment of any kind which may be in Morgenstern’s possession or under his
control or accessible to him which contain any proprietary information.
Morgenstern agrees that all property and records of the Rent-Way Companies
(including, without limitation, all confidential records) shall be and remain
the sole property of the Rent-Way Companies during Morgenstern’s consulting
engagement with Rent-Way and thereafter.

          (c) Inventions and Patents. All inventions, innovations or
improvements (including policies, procedures, products, improvements, software,
ideas and discoveries, whether patent, copyright, trademark, service mark, or
otherwise) conceived or made by Morgenstern, either alone or jointly with
others, in the course of his employment by Rent-Way or his engagement hereunder,
belong to Rent-Way. Morgenstern will promptly

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disclose in writing such inventions, innovations or improvements to Rent-Way and
perform all actions reasonably requested by Rent-Way to establish and confirm
such ownership by Rent-Way, including, but not limited to, cooperating with and
assisting Rent-Way in obtaining patents, copyrights, trademarks, or service
marks for Rent-Way in the United States and in foreign countries.

          (d) Enforcement. Morgenstern acknowledges and agrees that, by virtue
of his position, his services, and access to and use of confidential records and
proprietary information, any violation by him of any of the undertakings
contained in this Section 11 would cause the Rent-Way Companies immediate,
substantial and irreparable injury for which they have no adequate remedy at
law. Accordingly, Morgenstern agrees and consents to the entry of an injunction
or other equitable relief by a court of competent jurisdiction restraining any
violation or threatened violation of any undertaking contained in this
Section 11. Morgenstern waives posting by the Rent-Way Companies of any bond
otherwise necessary to secure such injunction or other equitable relief. Rights
and remedies provided for in this Agreement are cumulative and shall be in
addition to rights and remedies otherwise available to the Rent-Way Companies
under any other agreement or applicable law.

     12. Non-Disparagement. The parties agree that it is a material condition of
this Agreement that Morgenstern shall not willfully make, publish (orally,
electronically, or in writing), instigate, assist or participate in the making
or publication of any public statement or any statement to the press or to any
individual or entity with whom Rent-Way has or desires a business relationship,
which would or could adversely affect, libel, slander or disparage (whether or
not such disparagement legally constitutes libel or slander) or expose to
hatred, contempt or ridicule (a) Rent-Way or any of its current or former
officers or directors; or (b) any of the products, services, affairs or
operations of Rent-Way or any of its affiliates. Rent-Way agrees that it will
not make any official or internal announcements or issue any press releases
which contain any negative or derogatory statements about Morgenstern and will
direct its officers and directors not to make any negative or derogatory
statements about Morgenstern. This provision does not prohibit Morgenstern,
Rent-Way, or any person from cooperating with appropriate regulatory authorities
or making statements required by such person’s fiduciary duties to Rent-Way or
its shareholders.

     13. Cooperation.

          (a) Morgenstern shall reasonably cooperate with Rent-Way in connection
with any and all actions, governmental inquiries or other legal proceedings in
which Morgenstern’s assistance may be requested by Rent-Way. Such cooperation
shall include, among other things, making documents relating to Rent-Way in
Morgenstern’s custody or control available to Rent-Way or its counsel, making
Morgenstern reasonably available for interviews by Rent-Way or its counsel, and
being reasonably available to appear as a witness at deposition, trial or
otherwise. In addition, following termination of his engagement hereunder for
any reason, Morgenstern shall reasonably cooperate with Rent-Way, as requested
by Rent-Way, to effect a transition of his responsibilities and to ensure that
Rent-Way is aware of all matters being handled by him. During the Term, any
cooperation rendered pursuant to this Section 13 shall be included in
calculating the amount of consulting time Morgenstern is to provide pursuant to
Section 5. Any reasonable vouchered out-of-pocket expenses incurred by

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Morgenstern in fulfilling his obligations under this Section 13 shall be
promptly reimbursed by Rent-Way.

          (b) In the event any payments made or to be made pursuant to this
Agreement shall be deemed to be subject to an excise tax imposed pursuant to
Section 409A of the Internal Revenue Code, Rent-Way agrees to negotiate in good
faith with Morgenstern to seek to avoid the imposition of, or reduce the amount
of, such excise tax.

     14. Indemnification. During the Term and thereafter, Rent-Way shall
indemnify Morgenstern to the full extent permitted under its Certificate of
Incorporation or 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 Rent-Way or engagement hereunder.

     15. Key Man Insurance. Morgenstern agrees that Rent-Way may seek and
purchase one or more policies providing key man life insurance with respect to
Morgenstern, the proceeds of which would be payable to Rent-Way or one of its
affiliates. Morgenstern hereby consents to Rent-Way seeking and purchasing such
insurance and agrees that he will (at Rent-Way’s sole expense) provide such
information, undergo such medical examinations, execute such documents, and
otherwise take any and all actions reasonably necessary or desirable in order
for Rent-Way to seek, purchase, and maintain in full force and effect such
policy or policies.

     16. Notices. Any notice required or permitted hereunder shall be in writing
and shall be sufficiently given if personally delivered or if sent by registered
or certified mail, postage prepaid, with return receipt requested, addressed:
(a) in the case of Rent-Way, to Rent-Way, Inc., One RentWay Place, Erie,
Pennsylvania 16505, attn.: Chairman, Compensation Committee, with a copy to
Kramer Levin Naftalis & Frankel LLP, 919 Third Avenue, New York, New York 10022,
attn.: Robert N. Holtzman, Esq. if prior to April 10, 2005 and to Kramer Levin
Naftalis & Frankel LLP, 1177 Avenue of the Americas, New York, New York 10036,
attn.: Robert N. Holtzman, Esq. if on or after April 10, 2005; and (b) in the
case of Morgenstern, to William E. Morgenstern, 4011 Westbury Ridge Drive, Erie,
Pennsylvania 16506, or to such other address as Morgenstern shall designate by
written notice to Rent-Way, with a copy to Kronish Lieb Weiner & Hellman LLP,
1114 Avenue of the Americas, New York, New York 10036, attn: Paul M. Ritter,
Esq. Any notice given hereunder shall be deemed to have been given at the time
of receipt thereof by the person to whom such notice is given if personally
delivered or at the time of mailing if sent by registered or certified mail.

     17. Assignment and Transfer.

          (a) Rent-Way. This Agreement shall inure to the benefit of and be
enforceable by, and shall be assignable by Rent-Way to, any purchaser of all or
substantially all of Rent-Way’s business or assets, any successor to Rent-Way or
any assignee thereof (whether direct or indirect, by purchase, merger,
consolidation or otherwise).

          (b) Morgenstern. The parties hereto agree that Morgenstern is
obligated under this Agreement to render personal services during the Term of a
special, unique,

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unusual, extraordinary and intellectual character, thereby giving this Agreement
special value. Morgenstern’s rights and obligations under this Agreement shall
not be transferable by Morgenstern by assignment or otherwise, and any purported
assignment, transfer or delegation thereof shall be void; provided, however,
that if Morgenstern shall die, all amounts then payable to Morgenstern hereunder
shall be paid in accordance with the terms of this Agreement to Morgenstern’s
estate.

     18. Miscellaneous.

          (a) In executing this Agreement, neither Rent-Way nor Morgenstern
admits any liability or wrongdoing, and the considerations exchanged herein do
not constitute an admission of any liability, error, contract violation, or
violation of any federal, state, or local law or regulation.

          (b) Any waiver of any term or provision hereof, or of the application
of any such term or provision to any circumstances, shall be in writing signed
by the party charged with giving such waiver. Waiver by any of the parties
hereto of any breach hereunder by any other party shall not operate as a waiver
of any other breach, whether similar to or different from the breach waived. No
delay on the part of any of the parties in the exercise of any of their
respective rights or remedies shall operate as a waiver thereof, and no single
or partial exercise by any of the parties of any such right or remedy shall
preclude other or further exercise thereof.

          (c) The unenforceability or invalidity of any provision or provisions
of this Agreement shall not render any other provision or provisions hereof
unenforceable or invalid.

          (d) This Agreement shall be governed by and construed (both as to
validity and performance) and enforced in accordance with the internal laws of
the Commonwealth of Pennsylvania applicable to agreements made and to be wholly
performed within such jurisdiction, without regard to the principles of
conflicts of law or where the parties are located at the time a dispute arises.
The parties consent and submit themselves to the non-exclusive jurisdiction of
the state and federal courts sitting in Erie County, Pennsylvania over any
dispute arising out of or related to this Agreement.

          (e) This Agreement, together with the Noncompetition Agreement and the
plans and agreements or grants governing stock options granted to Morgentstern,
constitutes the entire agreement between Morgenstern and Rent-Way and cannot be
modified or altered except in a writing signed by both Morgenstern and Rent-Way.
The parties acknowledge that they entered into this Agreement voluntarily, that
they fully understand all of its provisions, and that no representations were
made to induce execution of this Agreement, which are not expressly contained
herein or in the Noncompetition Agreement.

          (f) The Section headings herein are for convenience of reference only
and shall not affect the meaning of any provision of this Agreement

          (g) Cessation or termination of Morgenstern’s consulting engagement
hereunder with Rent-Way shall not result in termination of this Agreement. The
respective

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obligations of Morgenstern and rights and benefits afforded to Rent-Way as
provided in this Agreement shall survive cessation or termination of
Morgenstern’s consulting engagement hereunder.

     19. Consultation with Attorney; Time Period for Consideration; Revocation.
Morgenstern is hereby advised to consult with an attorney prior to executing
this Agreement. Morgenstern acknowledges that he has been afforded an
opportunity to take at least twenty-one (21) days to consider this Agreement.
Morgenstern further acknowledges that he has consulted with Paul M. Ritter, Esq.
of Kronish Lieb Weiner & Hellman LLP prior to executing this Agreement, and that
he and Mr. Ritter have had an adequate opportunity to review this Agreement
before its execution. The parties understand and acknowledge that Morgenstern
will have a period of seven (7) calendar days following his execution of this
Agreement in which to revoke his consent. Such revocation must be in writing and
shall be transmitted to:

Robert N. Holtzman, Esq.
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
Fax: 212-715-8035

such that it is actually received prior to the expiration of the seven-day
revocation period. This Agreement will not become effective or enforceable until
the revocation period has expired. A timely revocation of this Agreement under
this Section shall also serve to revoke the Noncompetition Agreement.

     IN WITNESS WHEREOF, the parties have executed this Agreement.

              RENT-WAY, INC.  
 
  By:    
 
       
William E. Morgenstern
      Robert Fagenson

      Chairman, Compensation Committee of the Board of Directors

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