Exhibit 10.2
**NONCOMPETITION AGREEMENT**
     This Noncompetition Agreement (the “Noncompetition Agreement”) is made and entered into as ofMarch 22, 2005, by and between William E. Morgenstern and Rent-Way, Inc. (“Rent-Way”), aPennsylvania corporation. For purposes of this Noncompetition Agreement, the “Rent-Way Companies”refers to Rent-Way, together with its past and present parents, subsidiaries, affiliates anddivisions.
**RECITALS**
     **WHEREAS**, Morgenstern was one of the founders of Rent-Way and has served as its Chief ExecutiveOfficer and President and a member of its Board of Directors (the “Board”) since the formation ofRent-Way in 1981;
     **WHEREAS**, Morgenstern was elected Chairman of the Board of Rent-Way in October 1999 and iscurrently serving in such position;
     **WHEREAS**, Morgenstern has been employed by Rent-Way pursuant to an Employment Agreement datedas 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 Morgensterndesires to provide such services; and
     **WHEREAS**, this Noncompetition Agreement is being executed simultaneously with the ConsultingAgreement and Release between Morgenstern and Rent-Way, dated as of March 22, 2005 (the “ConsultingAgreement”);
     **NOW, THEREFORE**, in consideration of the mutual covenants and agreements hereinafter set forthand set forth in the Consulting Agreement, and intending to be and being legally bound hereby, theparties agree as follows:
**AGREEMENT**
     1. Payments to Morgenstern in Consideration for His Obligations Under NoncompetitionAgreement. In exchange for and in full consideration of Morgenstern’s promises, covenants andagreements set forth in this Noncompetition Agreement, Rent-Way will pay Morgenstern andMorgenstern will accept payments (the “Noncompetition Payments”) at the annual rate of One HundredFifty 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 ofMorgenstern’s consulting engagement with Rent-Way other than a termination by the Company withoutCause (as defined in the Consulting Agreement) or byMorgenstern 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 ConsultingAgreement (such time, the “Covered Time”). Such Noncompetition Payments will be paid monthly inarrears and shall be subject to all legally required and customary withholdings. TheNoncompetition Payments to be provided herein shall not affect, limit or restrict any remunerationMorgenstern may be eligible to receive under the Consulting Agreement or in connection withrendering 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’sbusiness and that access to Rent-Way’s confidential records and proprietary information renders himspecial and unique within Rent-Way’s industry. In consideration of the payments to be made byRent-Way to Morgenstern pursuant to this Noncompetition Agreement, Morgenstern agrees that duringthe 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 theconduct of, any business in the United States in the rental purchase industry or which engages inan 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 merelybecause Morgenstern is a passive investor who owns less than 1% of the outstanding common stock ofa publicly-traded company; and further provided that this provision shall not prohibitMorgenstern’s employment or provision of services to a business by virtue of the fact that suchbusiness has divisions or affiliates that engage in the Business so long as Morgenstern does notprovide services to and has no managerial or supervisory authority with respect to such divisionsor affiliates. As used in this Noncompetition Agreement, “Other Competitive Business” shall mean abusiness not in the rental purchase industry that (i) is the same or substantially similar to anybusiness engaged in or proposed to be engaged in by Rent-Way at the time Morgenstern begins anyinvolvement with such business and (ii) generates or is reasonably expected within the ensuingtwenty-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 tothis Noncompetition Agreement, Morgenstern agrees that during the Covered Time, he shall notdirectly or indirectly (i) solicit, encourage or attempt to solicit or encourage any of theemployees, agents, consultants or representatives of any of the Rent-Way Companies to terminatehis, her, or its relationship with such Rent-Way Company; (ii) solicit, encourage or attempt tosolicit or encourage any of the employees, agents, consultants or representatives of the Rent-WayCompanies to become employees, agents, consultants or representatives of any other person orentity; (iii) directly or indirectly solicit or do business with or attempt to solicit or dobusiness with any customer, vendor or distributor of any of the Rent-Way Companies with respect toany product or service being furnished, made, sold or leased by such Rent-Way Company in connectionwith Morgenstern’s involvement with any business or venture in the rental purchase industry or anOther Competitive Business; or (iv) persuade or seek to persuade any customer of any of theRent-Way Companies to cease to do business or to reduce the amount of business which any customerhas customarily done or contemplates doing with such Rent-Way Company, whether or not therelationship between the Rent-Way Companyand such customer was originally established in whole or in part through Morgenstern’sefforts.
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For purposes of this Section 2(b) only, during any period within the Covered Timesubsequent 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 withthe Rent-Way Companies within twenty-four months preceding the termination of Morgenstern’sconsulting engagement.
          (c) During the Covered Time, Morgenstern agrees that upon the earlier of his (i) negotiatingwith any Competitor (as defined below) concerning the possible employment of Morgenstern by theCompetitor, (ii) receiving an offer of employment from a Competitor, or (iii) becoming employed bya Competitor, Morgenstern will (x) immediately provide notice to Rent-Way and (y) provide copies ofthis Noncompetition Agreement and Section 11 of the Consulting Agreement to the Competitor.Morgenstern further agrees that Rent-Way may provide notice to a Competitor of Morgenstern’sobligations under this Noncompetition Agreement and Section 11 of the Consulting Agreement. Forpurposes of this Noncompetition Agreement, “Competitor” shall mean any entity (other than any ofthe Rent-Way Companies) that (A) engages, directly or indirectly, in any business in the UnitedStates in the rental purchase industry or (B) engages in an Other Competitive Business.
          (d) Morgenstern understands that the provisions of this Section 2 of the NoncompetitionAgreement may limit his ability to earn a livelihood in a business similar to the business of theRent-Way Companies but nevertheless agrees and hereby acknowledges that the consideration providedto him under this Noncompetition Agreement is sufficient to justify the restrictions contained insuch provisions. In consideration thereof and in light of Morgenstern’s education, skills andabilities, Morgenstern agrees that he will not assert in any forum that such provisions prevent himfrom earning a living or otherwise are void or unenforceable or should be held void orunenforceable.
     2. Enforcement. Morgenstern acknowledges and agrees that, by virtue of his position,his services, and access to and use of confidential records and proprietary information, anyviolation by him of any of the undertakings contained in this Noncompetition Agreement would causethe Rent-Way Companies immediate, substantial and irreparable injury for which they have noadequate remedy at law. Accordingly, Morgenstern agrees and consents to the entry of an injunctionor other equitable relief by a court of competent jurisdiction restraining any violation orthreatened violation of any undertaking contained in this Noncompetition Agreement. Morgensternwaives posting by the Rent-Way Companies of any bond otherwise necessary to secure such injunctionor other equitable relief. Rights and remedies provided for in this Noncompetition Agreement arecumulative and shall be in addition to rights and remedies otherwise available to the Rent-WayCompanies under any other agreement or applicable law.
     3. Cancellation of Noncompetition Agreement. Rent-Way, in its sole discretion, mayelect to cancel the Noncompetition Agreement if a court of competent jurisdiction makes apreliminary or final determination that (a) any covenant in the Noncompetition Agreement isunenforceable or invalid in its entirety, or (b) reduces the scope, duration and/or area of suchprovision (and substitutes provisions for any such invalid or unenforceable provisions) and/ordeletes specific words and phrases in order to make such provision enforceable to the fullestextent permitted by law; provided that Rent-Way may not cancel thisNoncompetition Agreement pursuant to this Section 4 unless Morgenstern contended in the
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proceeding resulting in such determination that the Noncompetition Agreement was invalid orunenforceable in whole or in part.
     3. Notices. Any notice required or permitted hereunder shall be in writing and shallbe sufficiently given if personally delivered or if sent by registered or certified mail, postageprepaid, 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 copyto Kramer Levin Naftalis & Frankel LLP, 919 Third Avenue, New York, New York 10022, attn.: RobertN. Holtzman, Esq. if prior to April 10, 2005 and to Kramer Levin Naftalis & Frankel LLP, 1177Avenue of the Americas, New York, New York 10036, attn.: Robert N. Holtzman, Esq. if on or afterApril 10, 2005; and (b) in the case of Morgenstern, to William E. Morgenstern, 4011 Westbury RidgeDrive, Erie, Pennsylvania 16506, or to such other address as Morgenstern shall designate by writtennotice 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 tohave been given at the time of receipt thereof by the person to whom such notice is given ifpersonally delivered or at the time of mailing if sent by registered or certified mail.
     4. Assignment and Transfer.
          (a) Rent-Way. This Noncompetition Agreement shall inure to the benefit of and beenforceable by, and shall be assignable by Rent-Way to, any purchaser of all or substantially allof Rent-Way’s business or assets, any successor to Rent-Way or any assignee thereof (whether director indirect, by purchase, merger, consolidation or otherwise).
          (b) Morgenstern. The parties hereto agree that Morgenstern is obligated under theConsulting Agreement to render personal services of a special, unique, unusual, extraordinary andintellectual character, thereby giving the Consulting Agreement and this Noncompetition Agreementspecial value. Morgenstern’s rights and obligations under this Noncompetition Agreement shall notbe transferable by Morgenstern by assignment or otherwise, and any purported assignment, transferor delegation thereof shall be void; provided, however, that if Morgenstern shall die, all amountsthen payable to Morgenstern hereunder shall be paid in accordance with the terms of thisNoncompetition Agreement to Morgenstern’s estate.
     4. Miscellaneous.
          (a) In the event any payments made or to be made pursuant to this Noncompetition Agreementshall be deemed to be subject to an excise tax imposed pursuant to Section 409A of the InternalRevenue Code, Rent-Way agrees to negotiate in good faith with Morgenstern to seek to avoid theimposition of, or reduce the amount of, such excise tax.
          (b) Any waiver of any term or provision hereof, or of the application of any such term orprovision to any circumstances, shall be in writing signed by the party charged with giving suchwaiver. Waiver by any of the parties hereto of any breach hereunder by any other party shall notoperate 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 ofany of their respective rights or remedies shall operate as a waiver thereof, and no single or
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partial exercise by any of the parties of any such right or remedy shall preclude other or furtherexercise thereof.
          (c) If any provision of this Noncompetition Agreement or the application of any such provisionto any party or circumstances shall be determined by any court of competent jurisdiction to beinvalid or unenforceable to any extent, the remainder of this Noncompetition Agreement, or theapplication of such provision to such person or circumstances other than those to which it is sodetermined to be invalid or unenforceable, shall not be affected thereby, and each provision hereofshall be enforced to the fullest extent permitted by law. If any provision of this NoncompetitionAgreement, or any part thereof, is held to be invalid or unenforceable because of the scope orduration of or the area covered by such provision, the parties hereto agree that the court makingsuch determination shall reduce the scope, duration and/or area of such provision (and shallsubstitute appropriate provisions for any such invalid or unenforceable provisions) in order tomake such provision enforceable to the fullest extent permitted by law and/or shall delete specificwords and phrases, and such modified provision shall then be enforceable and shall be enforced.The parties hereto recognize that if, in any judicial proceeding, a court shall refuse to enforceany of the separate covenants contained in this Noncompetition Agreement, then that invalid orunenforceable covenant contained in this Noncompetition Agreement shall be deemed eliminated fromthese provisions to the extent necessary to permit the remaining separate covenants to be enforced.In the event that any court determines that the time period or the area, or both, are unreasonableand that any of the covenants is to that extent invalid or unenforceable, the parties hereto agreethat such covenants will remain in full force and effect, first, for the greatest time period, andsecond, in the greatest geographical area that would not render them unenforceable. Following anycourt action taken pursuant to this Section 7(b), Rent-Way shall have the rights provided for inSection 4 above.
          (d) This Noncompetition Agreement shall be governed by and construed (both as to validity andperformance) and enforced in accordance with the internal laws of the Commonwealth of Pennsylvaniaapplicable to agreements made and to be wholly performed within such jurisdiction, without regardto the principles of conflicts of law or where the parties are located at the time a disputearises. The parties consent and submit themselves to the non-exclusive jurisdiction of the stateand federal courts sitting in Erie County, Pennsylvania over any dispute arising out of or relatedto this Noncompetition Agreement.
          (e) This Noncompetition Agreement, together with the Consulting Agreement and the plans andagreements or grants governing stock options granted to Morgentstern, constitutes the entireagreement between Morgenstern and Rent-Way and cannot be modified or altered except in a writingsigned by both Morgenstern and Rent-Way. The parties acknowledge that they entered into thisNoncompetition Agreement voluntarily, that they fully understand all of its provisions, and that norepresentations were made to induce execution of this Noncompetition Agreement, which are notexpressly contained herein or in the Consulting Agreement.
          (f) The Section headings herein are for convenience of reference only and shall not affect themeaning of any provision of this Noncompetition Agreement
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          (g) Cessation or termination of Morgenstern’s consulting engagement hereunder with Rent-Wayshall not result in termination of this Noncompetition Agreement. The respective obligations ofMorgenstern and rights and benefits afforded to Rent-Way as provided in this NoncompetitionAgreement shall survive cessation or termination of Morgenstern’s consulting engagement hereunder.
     **IN WITNESS WHEREOF**, the parties have executed this Noncompetition Agreement.       **RENT-WAY, INC.**      By:       William E. Morgenstern   Robert Fagenson   Chairman, Compensation Committee of the Board of Directors
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