RENT WAY INC, S-3/A, 1997-11-13

RENT WAY INC
S-3/A, 1997-11-13
EQUIPMENT RENTAL & LEASING, NEC

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 13, 1997

REGISTRATION NO. 333-39709

================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

AMENDMENT NO. 1

FORM S-3

REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933

RENT-WAY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C>
Pennsylvania 25-1407782
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification No.)
organization)
</TABLE>

3230 WEST LAKE ROAD
ERIE, PENNSYLVANIA 16505
(814) 836-0618
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)

WILLIAM E. MORGENSTERN, PRESIDENT
3230 WEST LAKE ROAD
ERIE, PENNSYLVANIA 16505
(814) 836-0618
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

------------------------

COPIES TO:

<TABLE>
<S> <C>
John J. Zak, Esq. Valerie Ford Jacob, Esq.
Hodgson, Russ, Andrews, Woods & Goodyear, LLP Fried, Frank, Harris, Shriver & Jacobson
1800 One M & T Plaza One New York Plaza
Buffalo, New York 14203 New York, New York 10004-1980
(716) 848-1253 (212) 859-8000
</TABLE>

------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS
PRACTICABLE
AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.

If the only securities on this Form are being offered pursuant to dividend
or interest reinvestment plans, please check the following box: [ ]

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [ ]

If the Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
- ------------------.

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
- ------------------.

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

================================================================================
<PAGE> 2

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may
not be sold nor may offers to buy be accepted prior to the time the
registration statement becomes effective. This prospectus shall not
constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of these securities in any State in which such
offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such State.

SUBJECT TO COMPLETION, DATED NOVEMBER 13, 1997

2,587,250 SHARES

LOGO

COMMON STOCK

Of the 2,587,250 shares of Common Stock offered hereby, 2,500,000 are being
offered by Rent-Way, Inc. (the "Company") and 87,250 are being offered by
certain shareholders of the Company (the "Selling Shareholders"). See "Principal
and Selling Shareholders." The Company will not receive any of the proceeds from
the sale of Common Stock by the Selling Shareholders.

The Company's Common Stock is traded on the Nasdaq National Market under
the symbol "RWAY." On November 5, 1997, the last reported sale price of the
Common Stock, on the Nasdaq National Market, was $18.25 per share. See "Price
Range of Common Stock."

SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
===================================================================================================
Proceeds to
Price to Underwriting Proceeds to Selling
Public Discount(1) Company(2) Shareholders
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share...... $ $ $ $
Total(3)....... $ $ $ $
===================================================================================================
</TABLE>

(1) See "Underwriting" for information concerning indemnification of the
Underwriters and other matters.

(2) Before deducting estimated offering expenses of $250,000 which will be
payable by the Company.

(3) The Company has granted to the Underwriters a 30-day option to purchase up
to 388,088 additional shares of Common Stock solely to cover
over-allotments, if any. If the Underwriters exercise this option in full,
the Price to Public will total $ , the Underwriting Discount
will total $ and the Proceeds to Company will total $ .
See "Underwriting."

The shares of Common Stock are offered by the several Underwriters named
herein when, as and if delivered to and accepted by the Underwriters and subject
to their right to reject any orders in whole or in part. It is expected that
delivery of the certificates representing the shares offered hereby will be made
against payment therefor at the office of NationsBanc Montgomery Securities,
Inc., on or about , 1997.

------------------------

NATIONSBANC MONTGOMERY SECURITIES, INC.

RAUSCHER PIERCE REFSNES, INC.

THE ROBINSON-HUMPHREY COMPANY
, 1997
<PAGE> 3

[IN THIS SPACE ARE FOUR SEPARATE PHOTOGRAPHS OF THE INSIDE OF COMPANY STORES
DEPICTING (1) A DISPLAY OF TELEVISIONS, (2) A BLACK DINETTE SET, (3) A KITCHEN
DISPLAY IN WHICH A STORE EMPLOYEE INTERACTS WITH CUSTOMERS AND (4) A SET OF
BUNKBEDS]

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK OF
THE COMPANY, INCLUDING STABILIZING BIDS, SYNDICATE COVERING TRANSACTIONS AND THE
IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK OF
THE COMPANY ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 103 OF
REGULATION M. SEE "UNDERWRITING."
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information and financial
statements appearing elsewhere in or incorporated by reference into this
Prospectus. Unless otherwise noted, all information in this Prospectus assumes
the Underwriters' over-allotment option is not exercised.

THE COMPANY

Rent-Way, Inc. (the "Company") offers quality, brand name home
entertainment equipment, furniture, major appliances and jewelry to customers
under full-service rental-purchase agreements that generally allow the customer
to obtain ownership of the merchandise at the conclusion of an agreed upon
rental period. The Company has been engaged in the rental-purchase business
since 1981 and as of September 30, 1997 operated 184 stores in 14 states and the
District of Columbia. Management believes that the Company's rental-purchase
arrangements appeal to a wide variety of customers by allowing them to obtain
merchandise they might otherwise be unable or unwilling to obtain due to
insufficient cash resources or lack of access to credit or because they have a
temporary, short-term need for the merchandise or a desire to rent rather than
purchase the merchandise.

The Association of Progressive Rental Organizations ("APRO"), an industry
trade association, estimated that at the end of 1996 the U.S. rental-purchase
industry consisted of approximately 7,500 stores that provided 5.8 million
products to 2.9 million households. APRO estimates that the U.S. rental-purchase
industry had gross revenues of $4.1 billion in 1996. The rental-purchase
industry is highly fragmented. Based on APRO estimates, the ten largest industry
participants account for less than 50% of total industry stores, and the
majority of the industry consists of operations with fewer than 20 stores.
Management believes that the rental-purchase industry is experiencing increasing
consolidation due to, among other factors, the recognition by smaller operators
of the increased operating efficiencies and better competitive position
achievable through larger organizations, greater availability of capital for
larger organizations, and the willingness of an older generation of operators to
resolve succession issues through disposition of the business. Management
believes that this trend toward consolidation in the industry presents an
opportunity for the Company to continue to acquire additional stores on
favorable terms.

The Company opened its first store in 1981 and by 1993, as a result of
acquisitions and new store openings, operated 19 stores in three states and had
completed its initial public common stock offering. The Company subsequently
accelerated its acquisition program and, as of September 30, 1997, operated 184
stores in 14 states and the District of Columbia as follows: Ohio (49), Michigan
(28), Pennsylvania (24), New York (20), Indiana (17), Maryland (11), Illinois
(8), Virginia (8), Florida (7), Delaware (4), Colorado (3), West Virginia (2),
Kentucky (1), New Jersey (1) and Washington, D.C. (1). Primarily as a result of
its acquisitions and the improved performance of its stores, the Company's total
revenues and net income increased from $8.4 million and $0.2 million,
respectively, for the year ended September 30, 1993 to $88.0 million and $5.4
million, respectively, for the year ended September 30, 1997. In addition, the
Company's operating income as a percentage of total revenues improved from 8.2%
for the year ended September 30, 1993 to 15.7% for the year ended September 30,
1997.

On October 6, 1997, the Company signed a letter of intent to acquire
substantially all of the assets of the Ace TV Rentals rental-purchase chain
("Ace Rentals"). Ace Rentals operates 46 stores in South Carolina and four
stores in California. The purchase price for the Ace Rentals assets is estimated
to be approximately $24.5 million. Subject to the satisfaction of certain
conditions, including negotiation of a definitive purchase agreement, the
Company expects to consummate the Ace Rentals acquisition in early January 1998.

3
<PAGE> 5

BUSINESS STRATEGY

The Company's business strategy is to continue to increase revenues and net
income by: (i) increasing the number of stores it owns, primarily through
acquisitions; (ii) emphasizing its customer-focused philosophy designed to make
each customer feel "Welcome, Wanted and Important"; (iii) increasing the average
revenue per unit rented by expanding the Company's offerings of higher priced
lines of merchandise; (iv) closely monitoring each store's performance,
particularly through the use of its proprietary management information system;
and (v) emphasizing results-oriented compensation structures and offering
intensive training programs for its employees. The Company's business strategy
is designed to capitalize on the fragmentation and growth potential of the
rental-purchase industry, which management believes should provide
well-capitalized and customer-focused operators opportunities to grow primarily
through acquisitions.

THE OFFERING

Common Stock offered by the Company... 2,500,000 shares

Common Stock offered by the Selling
Shareholders.......................... 87,250 shares(1)

Common Stock to be outstanding after
the Offering.......................... 10,299,863 shares(1)(2)

Use of proceeds....................... To repay outstanding indebtedness
(including indebtedness incurred in
connection with previous
acquisitions) and for general
corporate purposes, including
acquisitions (including the Ace
Rentals acquisition, if consummated).
See "Use of Proceeds."

Nasdaq National Market symbol......... RWAY
- ---------
(1) Includes 27,250 shares of Common Stock to be issued upon the exercise of
outstanding warrants. See "Principal and Selling Shareholders."

(2) Excludes (i) 186,000 shares of Common Stock reserved for issuance upon the
exercise of other outstanding warrants, of which warrants covering 105,000
shares have an exercise price of $9.94 per share and warrants covering
81,000 shares have an exercise price of $6.77 per share, (ii) 1,495,886
shares of Common Stock reserved for issuance upon the conversion of the
Company's 7.0% Convertible Subordinated Debentures due 2007 (the
"Debentures"), which Debentures have a conversion price of $13.37 per share
and (iii) 1,264,640 shares of Common Stock reserved for issuance upon
exercise of outstanding stock options, which options have exercise prices
ranging from $4.67 to $18.13 per share.

4
<PAGE> 6

SUMMARY HISTORICAL FINANCIAL AND OPERATING DATA(1)

- ---------
(1) The comparability of the historical financial information and operating data
for the periods presented has been affected by the acquisition of
rental-purchase stores during these periods as discussed in the following
footnotes.

(2) During the year ended September 30, 1994, the Company acquired 20
rental-purchase stores through its acquisition of D.A.M.S.L. Corp. on May
18, 1994.

(3) During the year ended September 30, 1995, the Company acquired 50
rental-purchase stores, 46 of which were acquired through the acquisition of
McKenzie Leasing Corporation on July 21, 1995.

(4) During the year ended September 30, 1996, the Company acquired 32
rental-purchase stores in four separate transactions.

(5) During the year ended September 30, 1997, the Company acquired 92
rental-purchase stores, 15 of which were acquired on January 2, 1997 from
Bill Coleman TV, Inc. and 70 of which were acquired on February 6, 1997 from
Perry Electronics, Inc. d/b/a Rental King.

(6) Comparable store revenue growth for each period presented includes revenues
of stores open throughout such period and the immediately preceding period.

5
<PAGE> 7

RISK FACTORS

Prospective investors should carefully review the following factors,
together with the information set forth elsewhere in or incorporated by
reference into this Prospectus prior to purchasing any Common Stock offered
hereby.

ACQUISITION RISKS

The continued growth of the Company will depend, in part, on the Company's
ability to acquire additional rental-purchase stores on favorable terms, to
integrate the acquired stores into the Company's operations, and to enhance
their performance. The Company will compete for acquisition opportunities with
companies that have significantly greater financial and other resources. There
can be no assurance that the Company will be able to locate or acquire suitable
acquisition candidates, that acquisition candidates, once located, will be
acquired by the Company on terms comparable with terms available to its
acquisition competitors, or that any operations that are acquired can be
effectively and profitably integrated into the Company's existing operations.
Furthermore, future acquisitions may negatively impact the Company's operating
results, particularly during the periods immediately following an acquisition.
The Company may acquire operations that are unprofitable or have inconsistent
profitability. The inability to improve the profitability of such acquired
stores could have a material adverse effect on the Company. The Company's
acquisition strategy is also likely to place significant demands on the
Company's management and its financial resources.

RISKS ASSOCIATED WITH PENDING ACE RENTALS TRANSACTION

The Company has signed a letter of intent to acquire substantially all of
the assets of Ace Rentals, a privately-owned rental-purchase concern operated
through three affiliated corporations with 46 stores in South Carolina and four
stores in California, for an estimated aggregate purchase price of approximately
$24.5 million. Consummation of the Ace Rentals acquisition is subject to certain
conditions, the satisfaction of which are outside the control of the Company,
including the negotiation of a definitive purchase agreement and receipt of
financing, consents to assignments of store leases, and consents of the
Company's senior lenders. The Company intends to apply a substantial portion of
the net proceeds of the Offering to the payment of the purchase price due on the
Ace Rentals acquisition. However, the Company will not know whether the
conditions to the closing of the Ace Rentals acquisition will be satisfied prior
to the consummation of the Offering and, accordingly, an investor purchasing the
Common Stock offered hereby will have no assurance that the Ace Rentals
acquisition will in fact occur. Consequently, an investor in the Common Stock
offered hereby should make an investment decision taking into consideration the
possibility that the Ace Rentals acquisition will not be consummated. In the
event that the Ace Rentals acquisition is not consummated, the Company will
apply the net proceeds of the Offering not theretofore used to repay all amounts
outstanding on its senior credit facility for general corporate purposes,
including the acquisition of additional rental-purchase stores. Audited
financial statements for Ace Rentals for years ending after December 31, 1994
are not available. Therefore, there may exist unanticipated or unknown problems
or liabilities impacting the financial condition of Ace Rentals that audited
financial statements may have revealed.

The Ace Rentals acquisition, if consummated, will materially increase the
scope of the Company's operations. The Company currently has no operations in
South Carolina or California where the Ace Rentals stores are located. There can
be no assurance that the stores acquired in the Ace Rentals acquisition will
perform in accordance with management's expectations or that the Company will
not encounter unanticipated problems or liabilities in connection with the
acquisition or operation of such stores. Moreover, it is possible that the
integration of the stores acquired in the Ace Rentals acquisition will require
the dedication of management resources that otherwise would be dedicated to the
day-to-day business of the Company's other stores.

RISKS ASSOCIATED WITH SIGNIFICANT GOVERNMENT REGULATION OF THE RENTAL-PURCHASE
INDUSTRY

6
<PAGE> 8

certain contractual and advertising disclosures concerning the nature of the
transaction and also provide varying levels of substantive consumer protection,
such as requiring a grace period for late payments and contract reinstatement
rights in the event the agreement is terminated for non-payment. The
rental-purchase laws of some states, including Michigan, New York, Ohio,
Pennsylvania and West Virginia, limit the total dollar amount of rentals that
may be charged over the life of the rental-purchase agreement. The District of
Columbia, where the Company operates one store, currently has no laws
specifically regulating a rental-purchase transaction. The District of Columbia
is subject to federal consumer credit laws of general application that the
Federal Reserve Board of Governors and federal courts have interpreted as not to
apply to a rental-purchase transaction as offered by the Company. If the Company
acquires or opens new stores in states in which it does not currently operate,
the Company will become subject to the rental-purchase laws of such states, if
any. Furthermore, there can be no assurance against the enactment of new or
revised rental-purchase laws that would have a material adverse effect on the
Company.

No federal legislation has been enacted regulating or otherwise impacting
the rental-purchase transaction. From time to time, legislation has been
introduced in Congress that would regulate the rental-purchase transaction,
including legislation that would subject the rental-purchase transaction to
interest rate, finance charge and fee limitations, as well as the Federal Truth
in Lending Act. Any such federal legislation, if enacted, could have a material
adverse effect on the Company. See "Business--Government Regulation."

RISKS ASSOCIATED WITH PARTICIPATION IN HIGHLY COMPETITIVE RENTAL-PURCHASE
INDUSTRY

The rental-purchase industry is highly competitive. The Company competes
with other rental-purchase businesses and, to a lesser extent, with rental
stores that do not offer their customers a purchase option. Competition is based
primarily on rental prices and terms, product selection and availability, and
customer service. With respect to consumers who are able to purchase a product
for cash or on credit, the Company also competes with department stores,
discount stores and retail outlets. These competitors may offer an installment
sales program or may compete with the Company simply on the basis of product and
price. Several competitors of the Company in the rental-purchase business are
national in scope and have significantly greater financial and operating
resources and name recognition than does the Company. There can be no assurance
that the Company will be able to compete successfully against these competitors.
Furthermore, additional competitors may emerge, especially since the cost of
entry into the rental-purchase business is relatively low. Increased competition
may have a material adverse effect on the Company.

SIGNIFICANT CONTINUING CASH REQUIREMENTS ASSOCIATED WITH THE COMPANY'S GROWTH
STRATEGY

The Company's cash requirements have been and will continue to be
significant. In fiscal years 1995, 1996 and 1997, the Company used $1.7 million,
$8.6 million and $25.9 million for acquisitions, respectively, and $9.2 million,
$20.4 million and $27.6 million for purchases of rental merchandise,
respectively. The continued pursuit of the Company's growth strategy will
require significant additional capital resources. Capital is needed not only for
acquisitions, but also to service acquisition-related debt, for the effective
integration, operation and expansion of acquired rental-purchase stores and for
the purchase of new rental merchandise. There can be no assurance that capital
will be available to the Company in the future or, if available, on terms
acceptable to it.

RISKS ASSOCIATED WITH INTANGIBLE ASSETS

A substantial portion of the Company's assets consists of intangible
assets, including goodwill and covenants not to compete relating to the
acquisition of rental-purchase stores. At September 30, 1997, the Company had
$43.4 million of goodwill, a substantial portion of the Company's $96.3 million
in total assets at such date. For the year ended September 30, 1997,
amortization of goodwill amounted to 2.2% of total revenues. The Company expects
goodwill on its balance sheet to continue to increase in the future due to
additional acquisitions, including the pending Ace Rentals acquisition, if
consummated. These additions to goodwill will be amortized against earnings in
future periods. In the event of any sale or liquidation of the Company, there
can be no assurance that the value of the Company's intangible assets will be
realized. If and when factors indicate that these intangible assets should be
evaluated for possible impairment, the Company may be required to reduce the
carrying value of its intangible assets. Such a reduction could have a material
adverse effect on the Company.

7
<PAGE> 9

DEPENDENCE UPON KEY PERSONNEL

The Company's operations and future success are largely dependent upon its
management, and in particular, William E. Morgenstern, the Company's co-founder
and President and Chief Executive Officer. The loss of Mr. Morgenstern's
services could have a material adverse effect on the Company. The Company
maintains no policies of life insurance on Mr. Morgenstern nor on other members
of management. See "Management."

EFFECT OF ANTI-TAKEOVER PROVISIONS

The Company's Articles of Incorporation and By-Laws contain provisions that
could delay, deter or prevent a merger, tender offer or other business
combination or change in control involving the Company that some or a majority
of the shareholders might consider to be in their best interests, including
offers or attempted takeovers that might otherwise result in such shareholders
receiving a premium over the then market price of the Common Stock. The
Company's Articles of Incorporation contain a provision authorizing the issuance
of "blank check" preferred stock. The Company's By-Laws contain provisions
establishing a classified Board of Directors and advance notice requirements for
director nominations and actions to be taken at annual shareholder meetings,
provide that only the directors may call special meetings of the shareholders
and that the Board, or any class of the Board or any individual director, may
only be removed from office for cause by the holders of greater than 50% of the
outstanding stock entitled to vote thereon.

EFFECT OF SHARES ELIGIBLE FOR FUTURE SALE ON MARKET PRICE OF COMMON STOCK

No prediction can be made as to the effect, if any, that future sales of
shares of Common Stock, or the availability of such shares for future sale, will
have on the market price of the Common Stock prevailing from time to time. Sales
of substantial amounts of the Common Stock (including shares issued upon the
exercise of stock options or outstanding warrants or upon conversion of the
Debentures), or the perception that such sales could occur, could adversely
affect prevailing market prices for the Common Stock. See "Shares Eligible for
Future Sale."

8
<PAGE> 10

USE OF PROCEEDS

The net proceeds to the Company from the Offering are estimated to be
approximately $42.9 million ($49.6 million if the Underwriters' over-allotment
option is exercised in full), based upon an assumed offering price of $18.25 per
share (the closing sales price of the Common Stock on the Nasdaq National Market
on November 5, 1997), after deducting the underwriting discount and estimated
expenses of the Offering payable by the Company. The Company will not receive
any proceeds from the sale of Common Stock by the Selling Shareholders.

The Company intends to apply such net proceeds to repay all outstanding
borrowings under the Company's collateralized revolving credit facility (the
"Credit Facility") with a syndicate of banks led by National City Bank of
Pennsylvania ("National City Bank"), and the remaining net proceeds to general
corporate purposes, including acquisitions (including the Ace Rental
acquisition, if consummated). The Company intends to invest such remaining net
proceeds in short-term interest-bearing securities pending application of such
net proceeds as described above. As of October 31, 1997, borrowings outstanding
under the Credit Facility totaled $21.0 million and bore interest at a weighted
average interest rate of 8.2%. Borrowings under the Credit Facility mature on
expiration of the Credit Facility on November 22, 1999.

PRICE RANGE OF COMMON STOCK

The Common Stock is traded on the Nasdaq National Market under the symbol
"RWAY." The following table sets forth, for the periods indicated, the high and
low closing sales price per share of the Common Stock as reported on the Nasdaq
National Market.

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 1996 HIGH LOW
------ ------
<S> <C> <C>
First Quarter........................................... $10.50 $ 8.38
Second Quarter.......................................... 10.13 7.38
Third Quarter........................................... 15.50 9.75
Fourth Quarter.......................................... 14.13 11.00

YEAR ENDED SEPTEMBER 30, 1997
First Quarter........................................... 12.63 8.25
Second Quarter.......................................... 12.81 8.75
Third Quarter........................................... 14.75 8.63
Fourth Quarter.......................................... 21.31 12.88

YEAR ENDING SEPTEMBER 30, 1998
First Quarter (through November 5, 1997)................ 20.88 16.75
</TABLE>

As of November 5, 1997, there were 117 holders of record of the Common
Stock.

DIVIDEND POLICY

The Company has not paid any cash dividends to shareholders. At this time,
the Company does not intend to pay any cash dividends. The declaration of any
cash or stock dividends will be at the discretion of the Company's Board of
Directors, and will depend upon the earnings, capital requirements and financial
position of the Company, general economic conditions and other pertinent
factors. The Credit Facility prohibits the payment of dividends.

9
<PAGE> 11

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
September 30, 1997, and as adjusted to reflect (i) the conversion (as of October
8, 1997) of its 10% Convertible Subordinated Notes due 2002 (the "Notes") into
704,225 shares of Common Stock and (ii) the sale of the 2,500,000 shares of
Common Stock offered hereby, based upon an assumed offering price per share of
$18.25 (the closing sales price of the Common Stock on the Nasdaq National
Market on November 5, 1997), and the application of the net proceeds therefrom
as described under "Use of Proceeds." The historical data has been abstracted
from the Company's financial statements incorporated by reference into this
Prospectus and should be read in conjunction with such financial statements and
the notes thereto.

<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
---------------------------------
ACTUAL AS ADJUSTED(1)(2)
--------- -----------------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C>
Cash........................................................... $ 599 $ 22,725
======= ========
Debt:
Revolving Credit Facility.................................... $21,022 $ --
Notes payable................................................ 134 134
Convertible Subordinated Notes............................... 7,000 --
Convertible Subordinated Debentures.......................... 20,000 20,000
------- --------
Total debt................................................ 48,156 20,134
------- --------
Shareholders' equity:
Preferred Stock, without par value; 1,000,000 shares
authorized; no shares issued and outstanding.............. -- --
Common Stock, without par value; 20,000,000 shares
authorized; 7,059,451 shares issued and outstanding
(actual); 10,299,863 shares issued and outstanding (as
adjusted)(1)(3)........................................... 32,760 82,908
Retained earnings............................................ 8,197 8,197
------- --------
Total shareholders' equity................................ 40,957 91,105
------- --------
Total capitalization.................................... $89,113 $ 111,239
======= ========
</TABLE>

- ---------
(1) Includes 27,250 shares of Common Stock to be issued upon the exercise of
outstanding warrants.

(2) If further adjusted to give effect to the consummation of the Ace Rentals
acquisition as of September 30, 1997, and assuming a purchase price of $24.5
million, the amount of cash would be reduced to $0 and the amount
outstanding on the Revolving Credit Facility would be increased to $1.8
million.

(3) Excludes (i) 186,000 shares of Common Stock reserved for issuance upon the
exercise of outstanding warrants, of which warrants covering 105,000 shares
have an exercise price of $9.94 per share and warrants covering 81,000
shares have an exercise price of $6.77 per share, (ii) 1,495,886 shares of
Common Stock reserved for issuance upon the conversion of the Debentures,
which Debentures have a conversion price of $13.37 per share and (iii)
1,264,640 shares of Common Stock reserved for issuance upon exercise of
outstanding stock options, which options have exercise prices ranging from
$4.67 to $18.13 per share.

10
<PAGE> 12

SELECTED HISTORICAL FINANCIAL INFORMATION AND OPERATING DATA(1)

The following selected financial information for the five years ended
September 30, 1997 was derived from the Company's financial statements for the
five years ended September 30, 1997, audited by Coopers & Lybrand L.L.P.,
independent auditors. The selected financial information is qualified in its
entirety by, and should be read in conjunction with, the financial statements of
the Company and the notes thereto incorporated in this Prospectus by reference.

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-------------------------------------------------------
1993 1994(2) 1995(3) 1996(4) 1997(5)
------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues:
Rental revenue........................................ $ 7,490 $12,111 $24,080 $43,891 $77,498
Other revenue......................................... 957 1,897 4,114 7,280 10,545
------- ------- ------- ------- -------
Total revenues...................................... 8,447 14,008 28,194 51,171 88,043
Costs and operating expenses:
Depreciation and amortization:
Rental merchandise.................................. 2,410 4,073 8,312 13,229 20,314
Property and equipment.............................. 216 331 525 775 1,530
Amortization of goodwill............................ 7 108 334 875 1,926
------- ------- ------- ------- -------
Total depreciation and amortization............... 2,633 4,512 9,171 14,879 23,770
Salaries and wages.................................... 2,205 4,024 6,909 13,101 22,810
Advertising........................................... 410 540 1,259 2,123 3,899
Occupancy............................................. 589 1,006 1,888 3,269 5,988
Other operating expenses.............................. 1,921 3,256 6,387 11,148 17,790
------- ------- ------- ------- -------
Total costs and operating expenses................ 7,758 13,338 25,614 44,520 74,257
Operating income.................................. 689 670 2,580 6,651 13,786
Interest expense...................................... (580) (542) (1,162) (1,493) (3,130)
Other income (expense)................................ 32 89 36 70 (342)
------- ------- ------- ------- -------
Income before income taxes........................ 141 217 1,454 5,228 10,314
Income tax expense (benefit).......................... (32) -- 445 2,381 4,629
------- ------- ------- ------- -------
Income before extraordinary item.................. 173 217 1,009 2,847 5,685
Extraordinary item.................................... -- -- -- -- (269)
------- ------- ------- ------- -------
Net income........................................ 173 217 1,009 2,847 5,416
Preferred stock (dividend)/gain on redemption......... -- -- (38) (129) 280
------- ------- ------- ------- -------
Earnings applicable to common shares.............. $ 173 $ 217 $ 971 $ 2,718 $ 5,696
======== ======== ======== ======== ========
Earnings per common share--fully diluted.............. $ 0.07 $ 0.06 $ 0.22 $ 0.45 $ 0.72
======== ======== ======== ======== ========
OPERATING DATA:
Stores open at end of period.......................... 19 40 83 108 184
Comparable store revenue growth(6).................... 5.5% 13.0% 15.1% 5.4% 7.6%
BALANCE SHEET DATA:
Rental merchandise, net............................... $ 2,723 $ 7,068 $12,593 $17,862 $35,132
Goodwill, net......................................... 436 4,336 14,893 21,867 43,447
Total assets.......................................... 7,784 15,129 36,155 49,974 96,288
Total debt............................................ 3,858 7,255 19,151 12,979 48,156
Total liabilities..................................... 4,840 9,167 22,545 18,134 55,331
Redeemable preferred stock............................ -- -- 2,750 1,121 --
Shareholders' equity.................................. 2,944 5,962 10,860 30,719 40,957
</TABLE>

- ---------

(1) The comparability of the historical financial information and operating data
for the periods presented has been affected by the acquisition of
rental-purchase stores during these periods as discussed in the following
footnotes.

(2) During the year ended September 30, 1994, the Company acquired 20
rental-purchase stores through its acquisition of D.A.M.S.L. Corp. on May
18, 1994.

(3) During the year ended September 30, 1995, the Company acquired 50 rental
purchase stores, 46 of which were acquired through the acquisition of
McKenzie Leasing Corporation on July 21, 1995.

(4) During the year ended September 30, 1996, the Company acquired 32
rental-purchase stores in four separate transactions.

(6) Comparable store revenue growth for each period presented includes revenues
of stores open throughout such period and the immediately preceding period.

11
<PAGE> 13

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

As of September 30, 1997, the Company operated 184 rental-purchase stores
located in 14 states and the District of Columbia. Primarily through
acquisitions, the number of stores operated by the Company has increased from 19
as of September 30, 1993 to 184 as of September 30, 1997. The following table
shows the number of stores opened, acquired and/or combined during this
five-year period.

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
----------------------------------------
STORES 1993 1994 1995 1996 1997
------------------------------------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Open at Beginning of Period...................... 17 19 40 83 108
Opened........................................... 2 3 -- -- --
Acquired......................................... -- 20 50 32 92
Closed or Combined............................... -- 2 7 7 16
--- --- --- --- ---
Open at End of Period............................ 19 40 83 108 184
=== === === === ===
</TABLE>

During the year ended September 30, 1997, the Company entered into several
acquisitions in which the Company acquired 92 stores (the "1997 Acquisitions").
On January 2, 1997, the Company acquired 15 stores located in Michigan from Bill
Coleman TV, Inc. (the "Coleman Acquisition"). On February 6, 1997, the Company
acquired 70 stores located in Colorado, Florida, Indiana, Kentucky, Michigan,
West Virginia, and Ohio from Perry Electronics, Inc. d/b/a Rental King (the
"Rental King Acquisition"). In July and September 1997, the Company acquired
seven rental-purchase stores located in Pennsylvania, Maryland, and Virginia. In
connection with the acquisition of stores, the Company implements a strategy to
improve the operations of the acquired stores. As part of this strategy, the
Company purchases new merchandise, upgrades the appearance of the stores,
increases the amount of advertising utilized per store, and implements a
training program for the store employees.

On October 6, 1997, the Company signed a letter of intent to acquire
substantially all of the assets of Ace Rentals. Ace Rentals operates 46 stores
in South Carolina and four stores in California. The purchase price for the
assets is estimated to be approximately $24.5 million.

12
<PAGE> 14

RESULTS OF OPERATIONS

As an aid to understanding the Company's operating results, the following
table expresses certain items of the Company's statements of income for the
years ended September 30, 1995, 1996 and 1997 as a percentage of total revenues.

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-----------------------------
1995 1996 1997
----- ----- -----
<S> <C> <C> <C>
Revenues:
Rental revenue.................................. 85.4% 85.8% 88.0%
Other revenue................................... 14.6 14.2 12.0
----- ----- -----
Total revenues................................ 100.0 100.0 100.0
Costs and operating expenses:
Depreciation and amortization:
Rental merchandise.............................. 29.5 25.9 23.1
Property and equipment.......................... 1.9 1.5 1.7
Amortization of goodwill........................ 1.2 1.7 2.2
Salaries and wages.............................. 24.5 25.6 25.9
Advertising..................................... 4.5 4.1 4.4
Occupancy....................................... 6.7 6.4 6.8
Other operating expense......................... 22.6 21.8 20.2
----- ----- -----
Total costs and operating expenses............ 90.9 87.0 84.3
----- ----- -----
Operating income................................ 9.1 13.0 15.7
Interest expense................................ (4.1) (2.9) (3.6)
Other income (expenses), net.................... 0.2 0.1 (0.4)
----- ----- -----
Income before income taxes.................... 5.2 10.2 11.7
Income tax expenses............................. (1.6) (4.6) (5.3)
----- ----- -----
Income before extraordinary item................ 3.6 5.6 6.4
----- ----- -----
Extraordinary Item.............................. -- -- (0.2)
----- ----- -----
Net Income.................................... 3.6% 5.6% 6.2%
===== ===== =====
</TABLE>

COMPARISON OF YEARS ENDED SEPTEMBER 30, 1997 AND 1996

For the year ended September 30, 1997 as compared to the year ended
September 30, 1996, total revenues increased to $88.0 million from $51.2
million, or 72.1%. The increase was due to the inclusion of a full year's
results for the stores acquired by the Company in fiscal 1996 (the "1996
Acquisitions"), a partial year's operations for the stores acquired in the 1997
Acquisitions, and increased same store revenues. The stores acquired in the
Rental King Acquisition accounted for $16.8 million, or 45.5%, of the increase,
the stores acquired in the Coleman Acquisition accounted for $6.1 million, or
16.5%, of the increase, the stores acquired in the 1996 Acquisitions accounted
for $11.1 million, or 30.1%, of the increase, the Company's same stores
accounted for $2.3 million, or 6.2%, of the increase, and other 1997
Acquisitions accounted for $0.6 million, or 1.7%, of the increase.

For the year ended September 30, 1997 as compared to the year ended
September 30, 1996, total costs and operating expenses increased to $74.3
million from $44.5 million principally as a result of costs and operating
expenses associated with the 1996 Acquisitions, the Coleman Acquisition, and the
Rental King Acquisition, but decreased to 84.3% from 87.0% of total revenues.
This resulted principally from a decrease in depreciation expense as a
percentage of total revenues and other operating expenses as a percentage of
total revenues. Depreciation expense related to rental merchandise increased to
$20.3 million from $13.2 million, but decreased to 23.1% from 25.9% of total
revenues, principally due to increases in weekly rental rates, lower purchase
costs of rental merchandise due to increased volume, and improved realization of
collectible rent. Amortization of goodwill increased to 2.2% from 1.7% of total
revenues principally because of the increase in goodwill related to the Coleman
Acquisition and Rental King Acquisition. Salaries and wages increased to $22.8
million from

13
<PAGE> 15

$13.1 million principally due to the addition of the store personnel associated
with the 1996 Acquisitions, the Coleman Acquisition, the Rental King
Acquisition, and the addition of several management personnel in the Company's
operations, marketing, human resources, accounting, and information systems
departments. Salaries and wages were 25.9% and 25.6% of total revenues for the
years ended September 30, 1997 and 1996, respectively. Advertising expense
increased to $3.9 million from $2.1 million principally due to the addition of
stores associated with the Coleman Acquisition and Rental King Acquisition.
Advertising expense increased to 4.4% from 4.1% of total revenues. Occupancy
expense increased to $6.0 million from $3.3 million principally due to the
addition of stores associated with the Coleman Acquisition and Rental King
Acquisition, and increased to 6.8% from 6.4% of total revenues. Other operating
expenses increased to $17.8 million from $11.1 million principally due to the
addition of the stores acquired in the Coleman Acquisition and Rental King
Acquisition, but decreased to 20.2% from 21.8% of total revenues.

For the year ended September 30, 1997 as compared to the year ended
September 30, 1996, operating income increased to $13.8 million from $6.7
million, or 107.3%, and increased to 15.7% from 13.0% of total revenues. The
$7.1 million increase in operating income and the 2.7% increase in operating
income as a percentage of total revenues occurred principally because of the
successful integration and conversion of the stores acquired in the 1996
Acquisitions, the Coleman Acquisition and the Rental King Acquisition, the
increase in same-store revenues, and the other factors discussed above.

For the year ended September 30, 1997 as compared to the year ended
September 30, 1996, interest expense increased to $3.1 million from $1.5
million, and increased to 3.6% from 2.9% of total revenues principally due to
borrowings drawn on the Credit Facility in connection with the Coleman
Acquisition and the issuance of the Debentures in connection with the Rental
King Acquisition.

The Company is recording income tax expense based on an effective tax rate
of 44.9%, which is higher than the statutory tax rates, principally due to
amortization expense related to goodwill incurred in connection with certain
acquisitions that is not deductible for tax purposes.

For the year ended September 30, 1997 as compared to the year ended
September 30, 1996, net income increased to $5.4 million from $2.8 million, or
90.2%. The increase, which resulted in net income increasing to 6.2% from 5.6%
of total revenues, was due to the factors discussed above.

COMPARISON OF YEARS ENDED SEPTEMBER 30, 1996 AND 1995

For the year ended September 30, 1996 as compared to the year ended
September 30, 1995, total revenues increased to $51.2 million from $28.2
million, or 81.5%. The increase was due to the inclusion of a full year's
results for the stores acquired by the Company in connection with its
acquisition of McKenzie Leasing Corporation on July 21, 1995 (the "McKenzie
Acquisition"), a partial year's operations for the stores acquired in the 1996
Acquisitions and increased same store revenues. The stores acquired in the
McKenzie Acquisition accounted for $19.7 million, or 85.6%, of the increase, the
stores acquired in the 1996 Acquisitions accounted for $2.5 million, or 10.9%,
of the increase, and the Company's same stores accounted for $0.8 million, or
3.5%, of the increase.

For the year ended September 30, 1996 as compared to the year ended
September 30, 1995, total costs and operating expenses increased to $44.5
million from $25.6 million principally as a result of costs and operating
expenses associated with the McKenzie Acquisition and the 1996 Acquisitions, but
decreased to 87.0% from 90.9% of total revenues. This resulted principally from
a decrease in depreciation expense as a percentage of total revenues.
Depreciation expenses related to rental merchandise increased to $13.2 million
from $8.3 million, but decreased to 25.9% from 29.5% of total revenues
principally due to increases in weekly rental rates, lower purchase costs of
rental merchandise due to increased volume, and improved realization of
collectible rent. Amortization of goodwill increased to 1.7% from 1.2% of total
revenues principally because of the increase in goodwill related to the McKenzie
Acquisition. Salaries and wages increased to $13.1 million from $6.9 million
principally due to the addition of the store personnel associated with the
McKenzie Acquisition, the 1996 Acquisitions, and the addition of several
management personnel in the operations, legal, human resources, accounting, and
information systems departments. Salaries and wages were 25.6% and 24.5% of
total revenues for the years ended September 30, 1996 and 1995, respectively.
Advertising expense increased to $2.1 million from $1.3 million principally due
to the addition of stores associated with the McKenzie Acquisition. Advertising

14
<PAGE> 16

expense decreased to 4.1% from 4.5% of total revenues. Occupancy expense
increased to $3.3 million from $1.9 million principally due to the addition of
stores associated with the McKenzie Acquisition, but decreased to 6.4% from 6.7%
of total revenues. Other operating expenses increased to $11.1 million from $6.4
million principally due to the addition of the stores acquired in the McKenzie
Acquisition, but decreased to 21.8% from 22.6% of total revenues.

For the year ended September 30, 1996 as compared to the year ended
September 30, 1995, operating income increased to $6.7 million from $2.6
million, or 157.8%, and increased to 13.0% from 9.1% of total revenues. The $4.1
million increase in operating income and the 3.9% increase in operating income
as a percentage of total revenues occurred principally because of the successful
integration and conversion of the stores acquired in the McKenzie Acquisition,
the increase in same-store revenues, and the factors discussed above.

For the year ended September 30, 1996 as compared to the year ended
September 30, 1995, interest expense increased to $1.5 million from $1.2
million, but decreased to 2.9% from 4.1% of total revenues principally due to
the repayment of $13.2 million of outstanding borrowings under the Company's
credit agreement in March 1996.

The Company is recording income tax expense based on an effective tax rate
of 45.5%, which is higher than the statutory tax rates, principally due to
amortization expense related to goodwill incurred in connection with the
acquisitions that is not deductible for tax purposes.

For the year ended September 30, 1996 as compared to the year ended
September 30, 1995, net income increased to $2.8 million from $1.0 million, or
182.3%. The increase, which resulted in net income increasing to 5.6% from 3.6%
of total revenues, was due to the factors discussed above.

LIQUIDITY AND CAPITAL RESOURCES

On November 22, 1996, the Company entered into the Credit Facility with a
syndicate of banks led by National City Bank, which provides for loans or
letters of credit of up to $40.0 million, subject to formula-based availability.
The syndicate consists of four banks, with National City Bank, LaSalle National
Bank, and Harris Trust and Savings Bank each committed for a ratable share of
27.25% of the facility and Heller Financial, Inc. committed for an 18.25%
ratable share of the facility. The Credit Facility replaced the Company's $15.0
million collateralized credit agreement with First Source Financial LLP. Of the
$40.0 million available under the Credit Facility approximately $7.0 million was
used to refinance previously existing senior indebtedness, and $0.8 million was
used to redeem the remainder of the Company's outstanding Series A Redeemable
Preferred Stock. The Company redeemed the preferred stock at a 25% discount to
face value resulting in a gain of $0.3 million. As of September 30, 1997, the
Company had approximately $19.0 million unused of which approximately $12.0
million was available under the Credit Facility.

On February 6, 1997, the Company completed the private placement of $20.0
million aggregate principal amount of the Debentures. The Debentures are due
February 1, 2007 and are convertible into shares of Common Stock at a conversion
price of $13.37 per share. The Debentures will become subject to redemption at
the option of the Company on February 5, 2000 at a price of 103% of par. The
redemption price will decrease at a rate of 1% per year, reaching a price of
100% of par in the year 2003 and remaining fixed until the date of maturity. The
indebtedness evidenced by the Debentures is subordinated and junior in right of
payment to senior indebtedness, including indebtedness under the Credit
Facility. The Debentures bear an annual interest rate of 7.0% with semi-annual
payments in August and February, beginning August 1, 1997. The Company filed a
registration statement to register the Debentures and the shares of Common Stock
underlying the Debentures for resale with the Securities and Exchange Commission
(the "Commission") on May 9, 1997 and the registration statement became
effective on June 19, 1997. The net proceeds raised on issuance of the
Debentures were used in payment of the purchase price on the Rental King
Acquisition.

On October 8, 1997, the Company exercised its right to convert mandatorily
the Notes. The Notes were convertible by the Company at a conversion price of
$9.94 per share upon the Common Stock trading at a price above $16.50 per share
for 20 consecutive days during any 30-day period. The Notes converted into
704,225 shares of Common Stock, which have been registered for resale pursuant
to a shelf registration statement filed by the Company that became effective in
June 1997. See "Principal and Selling Shareholders."

15
<PAGE> 17

For the year ended September 30, 1997, the Company's net cash provided by
(used in) operating activities was $0.7 million as compared to ($1.2) million
for the year ended September 30, 1996. The increase was principally due to a
$7.2 million increase in rental merchandise purchases offset by a $2.6 million
increase in net income, a $9.1 million increase in non-cash depreciation and
amortization, a $1.5 million decrease in other liabilities, a $1.9 million
decrease in income taxes payable and a $0.5 million increase in deferred income
taxes. The increase in depreciation and amortization and rental merchandise
resulted principally from the Coleman Acquisition and Rental King Acquisition,
which significantly increased the size of the Company.

For the year ended September 30, 1997 as compared to the year ended
September 30, 1996, the Company's net cash used in investing activities
increased from ($10.6) million to ($30.6) million. The increase in net cash used
in investing activities was principally due to the 1997 Acquisitions and the
remodeling and computer conversion costs incurred in connection with the Coleman
Acquisition and Rental King Acquisition.

For the year ended September 30, 1997, as compared to the year ended
September 30, 1996, the Company's net cash provided by financing activities
increased to $30.4 million from $11.1 million. The increase in net cash provided
by financing activities was principally due to the net proceeds received in
connection with the issuance of the Debentures. Historically, the Company's
growth has been financed through internally generated working capital,
borrowings under its available credit facilities and, in connection with
acquisitions, issuance of Common Stock, Preferred Stock and convertible debt.
During the year ended September 30, 1997, the Company's acquisitions were
financed by a combination of cash generated by the issuance of the Debentures
and borrowings under the Credit Facility.

The Company's primary requirements for capital (other than those related to
acquisitions) consist of purchasing additional rental merchandise and replacing
rental merchandise that has been sold or is no longer suitable for rent. The
Company intends to increase the number of stores it operates principally through
acquisitions. Such acquisitions will vary in size and the Company will consider
large acquisitions that could be material to the Company. To provide any
additional funds necessary for the continued pursuit of its growth strategies,
the Company may incur, from time-to-time, additional short and long-term bank or
other institutional indebtedness and may issue, in public or private
transactions, its equity and debt securities, the availability of such financing
to depend upon market and other conditions. There can be no assurance that such
financing will be available on terms acceptable to the Company.

INFLATION

During the year ended September 30, 1997, the cost of rental merchandise,
store lease rental expense and salaries and wages have increased modestly. These
increases have not had a significant effect on the Company's results of
operations because the Company has been able to charge commensurately higher
rental for its merchandise. This trend is expected to continue in the
foreseeable future.

OTHER MATTERS

Effective July 1, 1995, the Company changed its depreciation method for
rental merchandise from the straight-line method to the units of activity method
for new purchases. This change had no significant impact on the Company's
financial position or results of operations.

The Company adopted the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 121 "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of" for the year ended September 30,
1995. The adoption of SFAS No. 121 had no impact on the Company's financial
position or results of operations.

In October 1995, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 123, "Accounting for Stock-Based Compensation" effective for
transactions entered into in fiscal years that begin after December 19, 1995.
The Company adopted this standard's disclosure-only provisions in fiscal 1996.
The adoption of this standard had no impact on the Company's financial position
or results of operations.

In March 1997, the FASB issued SFAS No. 128, "Earnings Per Share" effective
for periods ending after December 15, 1997. The Company has disclosed the
estimated impact of SFAS No. 128 on the years ended September 30, 1997, 1996 and
1995.

16
<PAGE> 18

In March 1997, the FASB also issued SFAS No. 129, "Disclosure of
Information about Capital Structure" effective for fiscal years beginning after
December 15, 1997. The adoption of SFAS No. 129 will have no impact on the
Company's financial position and results of operations.

In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income" and SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information" both effective for fiscal years beginning after December
15, 1997. The Company is currently studying the provisions of these statements
and has not adopted such provisions in its financial statements.

17
<PAGE> 19

BUSINESS
GENERAL

The Company offers quality, brand name home entertainment equipment,
furniture, major appliances and jewelry to customers under full-service
rental-purchase agreements that generally allow the customer to obtain ownership
of the merchandise at the conclusion of an agreed upon rental period. The
Company has been engaged in the rental-purchase business since 1981 and as of
September 30, 1997 operated 184 stores in 14 states and the District of
Columbia. Management believes that the Company's rental-purchase arrangements
appeal to a wide variety of customers by allowing them to obtain merchandise
that they might otherwise be unable or unwilling to obtain due to insufficient
cash resources or lack of access to credit or because they have a temporary,
short-term need for the merchandise or a desire to rent rather than purchase the
merchandise.

The Company's principal executive offices are located at 3230 West Lake
Road, Erie, Pennsylvania 16505, and its telephone number is (814) 836-0618.

THE RENTAL-PURCHASE INDUSTRY

APRO, the industry's trade association, estimated that at the end of 1996
the U.S. rental-purchase industry comprised approximately 7,500 stores providing
5.8 million products to 2.9 million households. Management believes that its
customers generally have annual household incomes ranging from $20,000 to
$40,000. APRO estimates that the U.S. rental-purchase industry had gross
revenues of $4.1 billion in 1996. The rental-purchase industry is highly
fragmented. Based on APRO estimates, the ten largest industry participants
account for less than 50% of total industry stores, and the majority of the
industry consists of operations with fewer than 20 stores. Management believes
that the rental-purchase industry is experiencing increasing consolidation due
to, among other factors, the recognition by smaller operators of the increased
operating efficiencies and better competitive position achievable through larger
organizations, greater availability of capital for larger organizations, and the
willingness of an older generation of operators to resolve succession issues
through disposition of the business. Management believes that this trend toward
consolidation of operations in the industry presents an opportunity for the
Company to continue to acquire additional stores on favorable terms. See
"--Business Strategy."

BUSINESS STRATEGY

Management believes that the Company's continued success depends on
successful implementation of the following business strategies:

Acquiring and Opening New Stores. The Company currently intends to expand
its operations by acquiring existing stores and opening new stores, both within
its present market areas and in geographic regions not currently served by the
Company. At present, the majority of that expansion is expected to be
accomplished through acquisitions. The Company believes that acquisitions can
effectively increase the Company's market share while simultaneously expanding
its customer base. In addition, in pursuing its growth strategies, the Company
expects to benefit from both enhanced purchasing power and the ability to
exploit economies of scale for certain fixed operational expenses.

The Company continually reviews acquisition opportunities, and management
believes that a number of acquisition opportunities currently exist. At present,
except for the Ace Rentals acquisition, the Company has no

18
<PAGE> 20

plans, proposals, arrangements or understandings with respect to significant
acquisitions. In identifying targets for acquisition, the Company intends to
focus on operations that complement the Company's existing markets, while
remaining open to the possibility of making acquisitions in other areas. The
Company has not established formal criteria for potential acquisitions.
Generally, however, the Company seeks to acquire rental-purchase businesses that
operate profitably and are located in geographic markets that complement the
Company's existing stores. The Company seeks to acquire such businesses at
purchase prices that will permit the Company a prompt return on its investment
in the form of increased earnings. The Company has no formal policy with respect
to acquisitions with related entities. To date, no related-party acquisitions
have been considered nor does the Company anticipate considering such
acquisitions in the future. Management believes that its senior management has a
level of ability and experience that provides the Company with a competitive
advantage in the evaluation and consummation of acquisition opportunities.

Customer-Focused Philosophy. Management believes that through the
continued adherence to its
"Welcome, Wanted and Important" business philosophy it will increase its new and
repeat customer base, and thus the number of units it has on rent, thereby
increasing revenues and net income. The "Welcome, Wanted and Important"
philosophy is a method by which the Company seeks to create a store atmosphere
conducive to customer loyalty. The Company attempts to create this atmosphere
through the effective use of advertising and merchandising strategies, by
maintaining the clean and well-stocked appearance of its stores, and by
providing a high level of customer service (such as the institution of a
1-800-RENTWAY complaint and comment line). The Company's advertising emphasizes
brand name merchandise from leading manufacturers. In addition, merchandise
selection within each product category is periodically updated to incorporate
the latest offerings from suppliers. Services provided by the Company to the
customer include home delivery, installation, ordinary maintenance and repair
services and pick-up during the term of the contract at no additional charge.
Store managers also work closely with each customer in choosing merchandise,
setting delivery dates and arranging a suitable payment schedule. As part of the
"Welcome, Wanted and Important" philosophy, store managers are empowered,
encouraged and trained to make decisions regarding store operations subject only
to certain Company-wide operating guidelines and general policies. All acquired
stores are promptly evaluated and, if necessary, remodeled. Personnel of
acquired stores are also evaluated for their ability to operate in accordance
with the Company's customer-focused philosophy.

Expanding the Company's Product Lines. One of the Company's principal
strategies is to provide the rental-purchase customer with the opportunity to
obtain merchandise of higher quality than the merchandise available from its
competitors on competitive terms. To this end, the Company attempts to maintain
a broad selection of products while emphasizing higher priced merchandise. The
Company intends to continue expanding its offerings of higher priced products in
all product areas. Management believes that previous offerings of higher priced
products have succeeded in both increasing the Company's profitability and
attracting new customers to the Company's existing stores. In addition, the
Company selectively tests new merchandise. Management believes that
opportunities exist to provide additional or non-traditional merchandise to its
customers.

Monitoring Store Performance. Each store is provided with a management
information system that allows management to track rental and collection
activity on a daily basis. The system generates detailed reports that track
inventory movement by piece and by product category and the number and frequency
of past due accounts and other collection activity. In addition, physical
inventories are regularly conducted at each store to ensure the accuracy of the
management information system data. Senior management monitors this information
to ensure adherence to established operating guidelines. Management believes the
Company's proprietary management information systems enhance its ability to
monitor and affect the operating performance of existing stores and to integrate
and improve the performance of newly acquired stores.

Results-Oriented Compensation. Management believes that an important
reason for the Company's positive financial performance and growth is the
structure of its management compensation system, which provides incentives for
both regional and store managers to increase both store revenues and operating
profits. A significant portion of the Company's regional and store managers'
total compensation is dependent upon store performance. As further incentive,
the Company grants its managers stock options in the Company. Management
believes that the Company's emphasis on incentive-based compensation is
instrumental in the Company's ability to attract, retain and motivate its
regional and store managers.

19
<PAGE> 21

Manager Training. Management believes that well-trained store managers are
important to the Company's efforts to maximize individual store performance. The
Company employs one full-time trainer who conducts classroom programs in the
areas of sales, store operations and personnel management. These training
programs often continue for several months and culminate in an exam. The Company
requires its managers to attend, at the Company's expense, leadership and
management programs offered by leading management and organization experts.

OPERATIONS

Company Stores. As of September 30, 1997, the Company operated 184 stores
in 14 states and the District of Columbia and, assuming consummation of the Ace
Rentals acquisition, will operate 234 stores in 16 states and the District of
Columbia as depicted below:

[A PARTIAL MAP OF THE UNITED STATES THAT INDICATES BY NUMBERS SET IN STARS THE
STATES IN WHICH THE COMPANY OPERATES STORES AND BY NUMBERS SET IN CIRCLES THE
STATES IN WHICH THE COMPANY MAY OPERATE STORES ON CONSUMMATION OF A PENDING
ACQUISITION.]

The Company's stores average approximately 3,000 square feet in floor space and
are generally located in strip shopping centers in or near low to middle income
neighborhoods. The Company's stores are generally consistent in interior
appearance and design and display of available merchandise. In selecting store
locations, the Company uses a variety of market information sources to locate
areas of a town or city that are readily accessible to low and middle income
consumers. Generally, the Company refurbishes its stores every two to three
years. A Company store normally employs one store manager, one assistant
manager, two account managers, one full-time office manager, and one full-time
delivery and installation technician.

Product Selection. The Company offers brand name home entertainment
equipment, furniture, major appliances and jewelry. The Company's product line
currently includes the Zenith, RCA, Pioneer and JVC brands in home entertainment
equipment, the Ashley brand in furniture, and the Kenmore and Crosley brands in
major appliances. The Company closely monitors customer rental requests and
adjusts its product mix to offer rental merchandise desired by customers. For
the year ended September 30, 1997, the contribution to rental revenues of the
individual product categories was approximately as follows: home entertainment
products--44.1%, furniture--27.4%, appliances--24.5%, jewelry--2.8%, and other
items--1.2%. Weekly rentals currently range from $4.99 to $59.99 for home
entertainment equipment, from $1.99 to $49.99 for furniture, from $3.99 to
$36.99 for major appliances, and from $1.99 to $34.99 for jewelry.

Rental-Purchase Agreements. Merchandise is provided to customers under
standard form rental-purchase agreements that are reviewed by legal counsel and
customized to meet the legal requirements of the various states in which they
are used. Customers rent merchandise on a week-to-week basis, or to a lesser
extent, on a month-

20
<PAGE> 22

to-month basis, with rent payable in advance. The customer may terminate the
agreement at any time, in which case the merchandise is returned to the store
and is then available for rent to another customer. The Company retains title to
the merchandise during the term of the rental-purchase agreement. If a customer
rents merchandise for a sufficient period of time, usually 12 to 24 months,
ownership is transferred to the customer without further payments being
required. Rental payments are typically made in cash or by check or money order.
The Company does not extend credit. See "--Government Regulation."

Product Turnover. Generally, a minimum rental term of between 12 and 24
months is required to obtain ownership of new merchandise. Based upon
merchandise returns for the year ended September 30, 1997, the Company believes
that the average period of time during which customers rent merchandise is 16 to
17 weeks. However, turnover varies significantly based on the type of
merchandise being rented, with certain consumer electronic products, such as
camcorders and VCRs, generally being rented for shorter periods, while
appliances and furniture are generally rented for longer periods. During the
year ended September 30, 1997, the average monthly number of idle rental
merchandise items as a percentage of the average monthly total number of rental
merchandise items was 27.7% and average monthly dollar value of idle rental
merchandise items as a percentage of the average monthly dollar value of total
items was 19.8%.

Customer Service. Through its "Welcome, Wanted and Important" business
philosophy, the Company believes it is able to increase its new and repeat
customer base. Management believes that a significant percentage of its business
is repeat customers. The Company offers same day delivery, installation and
pick-up of its merchandise at no additional cost to the customer. The Company
also provides any required service or repair without charge, except for damage
in excess of normal wear and tear. If the product cannot be repaired at the
customer's residence, the Company provides a temporary replacement while the
product is being repaired.

Collections. Management believes that effective collection procedures are
important to the Company's success in the rental-purchase business. Senior
management, as well as store managers, use the Company's computerized management
information system to monitor cash collections on a daily basis. When a
customer's payment is late, the Company's policy is to contact the customer
promptly to determine the customer's ability to pay. If an item on rent is not
returned or payment thereon is not received within 90 days of its due date, the
Company's policy is to charge-off the item. Charge-offs due to lost or stolen
merchandise were approximately 3.0% and 2.7% of the Company's revenues for the
years ended September 30, 1997 and 1996, respectively. The charge-off rate for
chains with over 20 stores reporting to APRO in 1996 was 2.9%.

Purchasing and Distribution. The Company's general product mix is
determined by senior management, based on an analysis of customer rental
patterns and introduction of new products on a test basis. Individual store
managers are responsible for determining the particular product selection for
their store from a list of products approved by senior management. All purchase
orders are executed through regional managers and the Company's purchasing
department to insure that inventory levels and mix throughout the store regions
are appropriate. Merchandise is generally shipped by vendors directly to each
store, where it is held for rental.

Marketing. The Company promotes its products and services primarily
through direct mail and, in certain markets, through television advertising,
and, to a lesser extent, through radio and secondary print media advertising.
The Company's print advertisements emphasize product and brand name selection,
prompt delivery and repair, and the absence of any downpayment, credit
investigation or long-term obligation. The Company has recently begun dedicating
an increasing percentage of its marketing dollars to television advertising to
build name recognition in markets where it is economically attractive to do so.

Management. The Company's stores are organized geographically with several
levels of management. Each store manager reports to one of 25 regional managers
each of whom typically oversees six to eight stores. Regional managers are
primarily responsible for monitoring individual store performance and inventory
levels within their respective regions. The Company's regional managers report
to four directors of operations, located at the Company's headquarters, who
monitor the operations of their respective regions and, through the regional
managers, individual store performance. The directors of operations report to
the Chief Operating Officer who is responsible for Company-wide store
operations.

21
<PAGE> 23

MANAGEMENT INFORMATION SYSTEM

The Company believes that its proprietary management information system
provides it with a competitive advantage over many small rental-purchase
operations. The Company uses an integrated computerized management information
and control system to track each unit of merchandise and each rental-purchase
agreement. The Company's system also includes extensive management software and
report generating capabilities. Each store is equipped with a computer system
that tracks individual components of revenue, idle items, items on rent,
delinquent accounts and other account information. Management electronically
gathers each day's activity report through the computer located at the
headquarters office. Utilizing the management information system, senior
management, regional managers and store managers can closely monitor the
productivity of stores under their supervision compared to Company-prescribed
guidelines. Reports for all stores are reviewed daily by senior management and
any irregularities are addressed the following business day. The Company
believes its management information system is adequate to meet its needs for the
foreseeable future.

GOVERNMENT REGULATION

Forty-five states have enacted laws specifically regulating the
rental-purchase transaction, including all the states in which the Company's
stores are located except New Jersey, where the Company operates only one store
(which the Company intends to close or relocate out of state by the end of the
year.) These laws generally require certain contractual and advertising
disclosures concerning the nature of the transaction and also provide varying
levels of substantive consumer protection, such as requiring a grace period for
late payments and contract reinstatement rights in the event the agreement is
terminated for non-payment. The rental-purchase laws of some states, including
Michigan, New York, Ohio, Pennsylvania and West Virginia limit the total dollar
amount of rentals that may be charged over the life of the rental-purchase
agreement. The District of Columbia, where the Company operates one store,
currently has no laws specifically regulating a rental-purchase transaction. The
District of Columbia is subject to federal consumer credit laws of general
application that the Federal Reserve Board of Governors and the federal courts
have interpreted as not to apply to a rental-purchase transaction as offered by
the Company. If the Company acquires or opens new stores in states in which it
does not currently operate, the Company will become subject to the
rental-purchase laws of such states, if any. The Company prefers to operate its
stores in those states that have enacted laws specifically regulating the
rental-purchase transaction as such laws provide the Company with a measure of
certainty regarding its legal obligations to its customers, unlike states in
which no such laws have been enacted. There can be no assurance against the
enactment of new or revised rental-purchase laws that would have a material
adverse effect on the Company.

No federal legislation has been enacted regulating or otherwise impacting
the rental-purchase transaction. From time to time legislation has been
introduced in Congress that would regulate the rental-purchase transaction,
including legislation that would subject the rental-purchase transaction to
interest rate, finance charge and fee limitations, as well as the Federal Truth
in Lending Act. As the rental-purchase transaction is not currently subject to
any such limitations, any such federal legislation, if enacted, could have a
material adverse effect on the Company. See "Risk Factors--Risks Associated with
Significant Government Regulation of the Rental-Purchase Industry."

The Company instructs its managers in the procedures required pursuant to
applicable law through training seminars and policy manuals and believes that it
has operated in compliance with the requirements of applicable law in all
material respects. In addition, the Company provides its customers with a
toll-free number, 1-800-RENTWAY, to telephone corporate headquarters to report
any irregularities in service or misconduct by its employees. Any such calls are
reviewed daily and are the subject of immediate follow-up investigation by
senior management.

RELATED PARTY TRANSACTIONS

Although the Company has in the past and may in the future enter into
transactions with related parties, the Company has adopted no formal policies,
procedures or controls with respect to such transactions. Generally, however,
the Company requires that any transactions with related entities be on terms no
less favorable to the Company than would be available from an unrelated third
party.

22
<PAGE> 24

RECENT DEVELOPMENTS

Pending Acquisition of Ace Rentals. On October 6, 1997, the Company signed
a letter of intent to acquire substantially all of the assets of Ace Rentals.
Ace Rentals' business is operated through three affiliated corporations and
consists of 46 stores in South Carolina and four stores in California. The
purchase price for the Ace Rentals assets is estimated to be approximately $24.5
million. The Company expects to consummate the Ace Rentals acquisition in early
January 1998. If consummated, the Ace Rentals acquisition will give the Company
an expanded presence in the southeast United States, which management believes
is a growing market for the rental-purchase business.

Consummation of the Ace Rentals acquisition is subject to certain
significant conditions, including (i) negotiating a definitive purchase
agreement, (ii) the Company completing an acceptable due diligence review; (iii)
the acquired business meeting certain financial tests as of closing; (iv) the
Company obtaining necessary consents to the assignment of the rental-purchase
store leases; (v) the Company obtaining the consent of the lenders under the
Credit Facility; and (vi) other customary closing conditions. There can be no
assurance that the Ace Rentals acquisition will be consummated, or if
consummated, that its operations will be successfully integrated into the
Company. See "Risk Factors--Risks Associated with Pending Ace Rentals
Transaction."

Mandatory Conversion of the Company's $7.0 million 10% Convertible
Subordinated Notes due 2002. On October 8, 1997, the Company exercised its
right to convert mandatorily the Notes into an aggregate of 704,225 shares of
Common Stock. The Notes were mandatorily convertible by the Company at a
conversion price of $9.94 per share upon the Common Stock trading at a price
above $16.50 per share for 20 consecutive days during any 30-day period. As of
September 18, 1997, the Common Stock had traded at a price sufficient to meet
the requirements for mandatory conversion and the Company promptly gave notice
to the holders of the Notes of the exercise of its mandatory conversion right.
The shares of Common Stock received by the holders on conversion of the Notes
have been registered for resale pursuant to a shelf registration statement filed
by the Company that became effective in June 1997.

23
<PAGE> 25

MANAGEMENT

Certain information regarding the directors and executive officers of the
Company is set forth below.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------- --- ---------------------------------------------
<S> <C> <C>
Gerald A. Ryan(1).................... 62 Chairman of the Board and Director
William E. Morgenstern(1)............ 39 President, Chief Executive Officer and
Director
William Lerner(2).................... 61 Director and Secretary
Vincent A. Carrino................... 38 Director
Robert B. Fagenson(2)................ 47 Director
Marc W. Joseffer..................... 49 Director
Jeffrey A. Conway.................... 40 Vice President and Chief Financial Officer
Ronald D. DeMoss..................... 46 Vice President and General Counsel
Kirk R. Smithee...................... 34 Chief Operating Officer
</TABLE>

- ---------

(1) Member of Executive Committee of Board of Directors.

(2) Member of Audit and Compensation Committees of Board of Directors.

Gerald A. Ryan, a founder of the Company, has served as Chairman of the
Board of the Company since its formation in 1981. Mr. Ryan has also been
instrumental in the formation of several other companies, including Spectrum
Control, Inc., a company listed on the Nasdaq National Market, which produces
electronic components. He presently serves as Chairman of the Board of Spectrum
Control, Inc. In 1986, Mr. Ryan acquired Skinner Engine Company, a
privately-held company, which manufactures and rebuilds mixers for use in the
rubber industry, and serves as Chairman of the Board of that company.

William E. Morgenstern, a founder of the Company, has served as its
President and Chief Executive Officer since its formation in 1981. Mr.
Morgenstern began his rental-purchase industry career with Rent-A-Center in 1979
in Ft. Worth, Texas. While employed by Rent-A-Center, he held the positions of
store manager and district manager for Pennsylvania and New York. Mr.
Morgenstern is former President of the Pennsylvania Association of Rental
Dealers ("PARD"), a trade association that monitors activities in the state
legislature that affect the rental-purchase industry. From 1986 to 1988, he
served on the Board of Directors of APRO, the rental-purchase industry's
national trade association.

William Lerner has been a director of the Company since November 1992 and
its Secretary since January 1993. Mr. Lerner, a practicing attorney in New York
since 1961 and in Pennsylvania since 1990, is of counsel to Snow Becker Krauss
P.C., New York, New York. Mr. Lerner is also a director of Seitel, Inc., a
company listed on the New York Stock Exchange ("NYSE") that develops and
maintains a seismic data bank for the oil and gas industry, Helm Resources,
Inc., a company listed on the American Stock Exchange with interests in the
packaging and distribution of plastic resins, the distribution of films to cable
television companies and asset based lending activities and
Micros-to-Mainframes, Inc., a company listed on the Nasdaq National Market that
is a provider and systems integrator of advanced technology communications
products and Internet services. From 1986 to 1989, Mr. Lerner was General
Counsel to The Geneva Companies, which provides merger and acquisition services
to privately-owned middle market companies, and from 1989 to 1990 was General
Counsel to Hon Development Company, a southern California real estate
development company.

Vincent A. Carrino has been director since January 1995 when he was elected
by the Board for a one-year term expiring in 1996. At the 1996 Annual Meeting of
Shareholders, Mr. Carrino was elected as a Class III director of the Company
whose term expires in 1998. Mr. Carrino founded Brookhaven Capital Management,
Inc., an investment management company headquartered in Menlo Park, California,
in 1986 and has been its President since that date.

Robert B. Fagenson has been a director since August 1993. He has, for more
than the past five years, been President and a director of Fagenson & Co., Inc.,
a NYSE specialist firm, and a Vice President and director of Starr Securities,
Inc., a registered broker-dealer and member of the NYSE. Mr. Fagenson is also a
director of the NYSE, of Healthy Planet Products, Inc., a company listed on the
American Stock Exchange that designs,

24
<PAGE> 26

publishes and markets greeting cards, Hudson Hotel Corporation (formerly
Microtel Franchise and Development Corporation), a company listed on the Nasdaq
National Market and a developer of economy lodging facilities and owner and
operator of hotel, motel and resort properties, AutoInfo, Inc., a company listed
on the Nasdaq National Market and a dealer in computerized products and services
for after-market motor vehicle parts, and Nu-Tech Biomedical, Inc., a company
listed on the Nasdaq Small-Cap Market that researches medicines for the
treatment of cancer.

Marc W. Joseffer has been a director of the Company since May 1994 and was
employed by the Company in various management positions from May 1994 through
October 1996. For more than five years prior thereto, he was Vice President and
a principal shareholder of D.A.M.S.L. Corp., a privately-owned company engaged
in the rental-purchase industry. D.A.M.S.L. Corp. was acquired by the Company in
May 1994, at which time Mr. Joseffer was elected a director of the Company by
the Board.

Jeffrey A. Conway was employed by the Company as a financial advisor from
February 1992 through September 1992 and in October 1992 was appointed Vice
President and Chief Financial Officer. He served as Chief Financial Officer of
Rentclub, Inc., a 17 store rental-purchase chain, from June 1990 through
November 1991. From May 1979 through June 1987 and from July 1987 to October
1989, Mr. Conway was employed by the independent accounting firms of Coopers &
Lybrand and Ernst & Young, respectively, as an Audit Manager. Mr. Conway is a
certified public accountant.

Ronald D. DeMoss was elected Vice President and General Counsel of the
Company in February 1996. From June 1990 through November 1995, Mr. DeMoss was
employed as a corporate counsel for Rent-A-Center and, in such capacity, was
involved in the enactment of rental-purchase legislation in 11 states. During
1995, Mr. DeMoss also served as Rent-A-Center's Director of Government
Relations. In August 1996, Mr. DeMoss was elected to APRO's Board of Directors
for a two-year term. Mr. DeMoss also serves on APRO's Government Relations
Committee. From 1981 through 1990, Mr. DeMoss was a practicing attorney in
Wichita, Kansas.

Kirk R. Smithee was hired by the Company in September 1995 as a regional
manager, in July 1996 was named a director of operations and in October 1997 was
promoted to Chief Operating Officer. From September 1987 through September 1995,
Mr. Smithee served in various management positions with Rent-A-Center, including
field training manager, district manager and regional manager.

25
<PAGE> 27

PRINCIPAL AND SELLING SHAREHOLDERS

The following table sets forth as of November 5, 1997 certain information
regarding beneficial ownership of the Common Stock by (i) each director and
executive officer of the Company, (ii) all directors and executive officers of
the Company as a group, (iii) each person known by the Company to be the
beneficial owner of more than five percent of the outstanding Common Stock, and
(iv) each Selling Shareholder.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
PRIOR TO THE BENEFICIAL OWNERSHIP
OFFERING(2) NUMBER OF AFTER THE OFFERING(2)
--------------------- SHARES BEING ---------------------
NAME OF BENEFICIAL OWNER(1) NUMBER PERCENT OFFERED NUMBER PERCENT
- -------------------------------------- --------- ------- ------------ --------- -------
<S> <C> <C> <C> <C> <C>
Gerald A. Ryan(3)..................... 680,576 8.6% -- 680,576 6.5%
William E. Morgenstern................ 510,525 6.5 40,000 470,525 4.5
Marc W. Joseffer...................... 121,442 1.6 -- 121,442 1.2
William Lerner........................ 48,000 * -- 48,000 *
Vincent A. Carrino.................... 50,000 * -- 50,000 *
Robert B. Fagenson(4)................. 214,000 2.7 -- 214,000 2.1
Jeffrey A. Conway..................... 133,500 1.7 20,000 113,500 1.1
Ronald D. DeMoss...................... 13,250 * -- 13,250 *
Kirk R. Smithee....................... 7,375 * -- 7,375 *
Directors/Executive Officers as a
group (9 persons)................... 1,778,668 21.7 60,000 1,718,668 16.0
Massachusetts Mutual Life Insurance
Company and affiliates(5)........... 809,225 10.3 -- 809,225 7.8
1295 State Street
Springfield, Massachusetts 01111
Starr Securities, Inc.(6)(7).......... 7,000 * 7,000 -- --
Michael A. Bauer(6)(7)................ 6,000 * 6,000 -- --
Michael Bowe(6)(7).................... 10,250 * 10,250 -- --
Robert Postma(6)(7)................... 4,000 * 4,000 -- --
------
87,250
======
</TABLE>

- ---------
*Less than 1%

(1) Unless otherwise indicated, the address for all persons listed above is c/o
Rent-Way, Inc., 3230 West Lake Road, Erie, Pennsylvania 16505.

(2) Includes shares issuable upon exercise of stock options and warrants which
are currently exercisable or which will become exercisable within 60 days.

(3) Includes 112,500 shares owned by the Ryan Children's Trust of 1993, of which
Mr. Ryan is sole trustee.

(4) Includes 6,000 shares owned by the Fagenson & Co., Inc. Employee Pension
Plan and Trust, of which Mr. Fagenson is a co-trustee.

(5) Includes 105,000 shares of Common Stock issuable on the exercise of certain
warrants.

(6) The address for such owner is 19 Rector Street, New York, New York 10006.

(7) Represents shares of Common Stock underlying warrants that are currently
exercisable, which shares will be offered in the Offering.

26
<PAGE> 28

SHARES ELIGIBLE FOR FUTURE SALE

Upon consummation of the Offering, the Company will have 10,299,863 shares
of Common Stock outstanding and will have reserved for issuance (i) 186,000
shares of Common Stock issuable upon the exercise of outstanding warrants (of
which warrants covering 105,000 shares have an exercise price of $9.94 per share
and warrants covering 81,000 shares have an exercise price of $6.77 per share),
(ii) 1,495,886 shares of Common Stock issuable upon conversion of the Debentures
(at a conversion price of $13.37 per share) and (iii) 1,264,640 shares of Common
Stock issuable upon exercise of outstanding stock options (at exercise prices
ranging from $4.67 to $18.13 per share). Of the 10,299,863 shares outstanding,
6,516,647 shares are currently traded or available for sale in the open market,
and all of the 2,587,250 shares sold in the Offering (2,975,338 shares if the
Underwriters' over-allotment option is exercised in full), will be freely
tradeable without restriction or further registration under the Securities Act,
unless acquired by an "affiliate" of the Company as that term is defined in Rule
144 described below. All of the shares of Common Stock issuable upon exercise of
the warrants, all of the shares of Common Stock issuable on conversion of the
Debentures and 639,736 of the shares of Common Stock issuable on exercise of the
stock options described above will similarly be freely tradeable upon issuance
as such shares are registered for resale by the holders thereof under the
Securities Act of 1933, as amended (the "Securities Act"). The remaining
1,255,966 shares outstanding, which are held by directors and executive officers
of the Company, are subject to the restrictions of Rule 144. The Company's
directors and executive officers and Massachusetts Mutual Life Insurance Company
and certain of its affiliates ("MassMutual") have agreed pursuant to certain
lock-up agreements entered into in connection with the Offering not to sell or
otherwise dispose of any shares of Common Stock or any securities convertible
into or exchangeable or exercisable for shares of Common Stock for a period of
90 days following the date of this Prospectus without the consent of NationsBanc
Montgomery Securities, Inc. All of such shares will become eligible for sale in
the public market after expiration of these lockup agreements, subject to the
provisions of Rule 144.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), who has beneficially owned restricted shares for
at least one year or an affiliate of the Company is entitled to sell within any
three-month period a number of shares that does not exceed the greater of one
percent (1%) of the then outstanding shares of the Common Stock or the average
weekly trading volume in the Common Stock during the four calendar weeks
preceding such sale, provided certain manner and notice of sale requirements and
requirements as to the availability of current public information about the
Company are satisfied. A person who is deemed not to have been an affiliate of
the Company at any time during the 90 days preceding a sale of restricted shares
by such person, and who has beneficially owned such shares for two years would
be entitled to sell such shares without regard to the availability of current
public information and the volume limitations described above. The Company is
unable to predict the effect that sales made under Rule 144, pursuant to future
registration statements, or otherwise, may have on any then prevailing market
price for shares of the Common Stock. Nevertheless, sales of a substantial
amount of Common Stock in the public market, or the perception that such sales
could occur, could adversely affect market prices.

The Company also has agreed not to offer, sell, contract to sell, or
otherwise dispose of any shares of Common Stock or securities convertible into
or exchangeable or exercisable for shares of Common Stock for a period of 90
days following the date of this Prospectus without the prior written consent of
NationsBanc Montgomery Securities, Inc., except that the Company, without such
consent, may grant stock options and issue Common Stock upon exercise of the
warrants or the stock options or the conversion of the Debentures described
above.

27
<PAGE> 29

UNDERWRITING

The underwriters named below (the "Underwriters") have severally agreed,
subject to the terms and conditions contained in the underwriting agreement
among the Company, the Selling Shareholders and the Underwriters (the
"Underwriting Agreement"), to purchase from the Company and the Selling
Shareholders the number of shares of Common Stock indicated below opposite their
respective names, at the public offering price less the underwriting discount
set forth on the cover page of this Prospectus. The Underwriting Agreement
provides that the obligations of the Underwriters are subject to certain
conditions precedent and that the Underwriters are committed to purchase all of
the shares of Common Stock if they purchase any.

<TABLE>
<CAPTION>
NUMBER OF
NAME OF UNDERWRITERS SHARES
- --------------------------------------------------------------------------------- ---------
<S> <C>
NationsBanc Montgomery Securities, Inc. .........................................
Rauscher Pierce Refsnes, Inc. ...................................................
The Robinson-Humphrey Company, LLC...............................................
---------
Total....................................................................... 2,587,250
=========
</TABLE>

The Underwriters have advised the Company and the Selling Shareholders that
the Underwriters propose initially to offer the shares of Common Stock to the
public on the terms set forth on the cover page of this Prospectus. The
Underwriters may allow selected dealers a concession of not more than $ per
share, and the Underwriters may allow, and such dealers may reallow, a
concession of not more than $ per share to certain other dealers. After the
Offering, the public offering price and other selling terms may be changed by
the Underwriters. The Common Stock is offered subject to receipt and acceptance
by the Underwriters and to certain other conditions, including the right to
reject orders in whole or in part.

The Company has granted an option to the Underwriters, exercisable during
the 30-day period after the date of this Prospectus, to purchase up to a maximum
of 388,088 additional shares of Common Stock to cover over-allotments, if any,
at the same price per share as the initial 2,587,250 shares to be purchased by
the Underwriters. To the extent that the Underwriters exercise this option, each
of the Underwriters will be committed, subject to certain conditions, to
purchase such additional shares in approximately the same proportion as set
forth in the above table. The Underwriters may purchase such shares only to
cover over-allotments made in connection with the Offering.

The Underwriting Agreement provides that the Company will indemnify the
Underwriters against certain liabilities, including civil liabilities under the
Securities Act, or will contribute to payments the Underwriters may be required
to make in respect thereof.

Each director and executive officer of the Company and MassMutual have
agreed that for a period of 90 days following the date of this Prospectus, that
they will not, directly or indirectly, offer to sell, sell, contract to sell or
otherwise sell or dispose of any shares of Common Stock or any securities
convertible into or exchangeable or exercisable for shares of Common Stock
without the consent of NationsBanc Montgomery Securities, Inc. The Company has
agreed not to offer to sell, sell, contract to sell or otherwise dispose of any
shares of Common Stock or securities convertible into or exchangeable or
exercisable for shares of Common Stock for a period of 90 days from the date of
this Prospectus without the prior written consent of NationsBanc Montgomery
Securities, Inc. except that the Company may, without such consent, grant stock
options and issue shares of Common Stock upon exercise of outstanding stock
options and warrants and conversion of the Debentures.

Certain persons participating in the Offering may overallot or effect
transactions which stabilize, maintain or otherwise affect the market price of
the Common Stock at levels above those which might otherwise prevail in the open
market. Such transactions may include stabilizing bids, effecting syndicate
covering transactions or imposing penalty bids. A stabilizing bid means the
placing of any bid or effecting any purchase for the purpose of pegging, fixing
or maintaining the price of the Common Stock. A syndicate covering transaction
means the placing of any bid on behalf of the underwriting syndicate or the
effecting of any purchase to reduce a short position created in connection with
the Offering. A penalty bid means an arrangement that permits the Underwriters
to reclaim a selling concession from a syndicate member in connection with the
Offering when

28
<PAGE> 30

shares of Common Stock sold by the syndicate member are purchased in syndicate
covering transactions. Such transactions may be effected on the Nasdaq National
Market, in the over-the-counter market, or otherwise.

In connection with the Offering, the Underwriters may engage in passive
market making transactions in the Common Stock on the Nasdaq National Market
immediately prior to the commencement of sales in the Offering, in accordance
with Rule 103 of Regulation M under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Passive market making consists of displaying bids
on the Nasdaq National Market limited by the bid prices of independent market
makers and purchases limited by such prices and effected in response to order
flow. Net purchases by a passive market maker on each day are limited to a
specified percentage of the passive market maker's average daily trading volume
in the Common Stock during a specified prior period and must be discontinued
when such limit is reached. Passive market making may stabilize the market price
of the Common Stock at a level above that which might otherwise prevail and, if
commenced, may be discontinued at any time.

LEGAL MATTERS

Certain legal matters relating to the validity of the Common Stock offered
hereby will be passed upon for the Company and the Selling Shareholders by
Hodgson, Russ, Andrews, Woods & Goodyear LLP, Buffalo, New York. Certain legal
matters will be passed upon for the Underwriters by Fried, Frank, Harris,
Shriver & Jacobson (a partnership including professional corporations), New
York, New York. Fried, Frank, Harris, Shriver & Jacobson will rely on the
opinion of Hodgson, Russ, Andrews, Woods & Goodyear LLP with respect to matters
of Pennsylvania law.

EXPERTS

The balance sheets as of September 30, 1997 and 1996 and the related
statements of income, shareholders' equity and cash flows for the years ended
September 30, 1997, 1996 and 1995 of Rent-Way, Inc. and the balance sheets as of
December 31, 1996 and 1995 and the related statements of operations,
shareholders' equity and cash flows for the years then ended of Perry
Electronics, Inc. (d/b/a Rental King) have been incorporated by reference into
this Prospectus and the registration statement of which this Prospectus forms a
part from the Company's Annual Report on Form 10-K for the year ended September
30, 1997 and Current Report on Form 8-K/A dated April 21, 1997, respectively, in
reliance on the reports of Coopers & Lybrand L.L.P., independent accountants,
given on the authority of that firm as experts in accounting and auditing.

AVAILABLE INFORMATION

The Company has filed with the Commission a Registration Statement on Form
S-3 (the "Registration Statement") under the Securities Act, with respect to the
registration of the Common Stock offered hereby. This Prospectus does not
contain all of the information set forth in the Registration Statement and the
exhibits thereto, certain portions of which have been omitted as permitted by
the rules and regulations of the Commission. Statements contained in this
Prospectus or in any document incorporated by reference herein as to the
contents of any contract or other documents referred to herein or therein are
not necessarily complete and, in each instance, reference is made to the copy of
such documents filed as an exhibit to the Registration Statement or such other
documents, which may be obtained from the Commission as indicated above upon
payment of the fees prescribed by the Commission. Each such statement is
qualified in its entirety by such reference.

The Company is subject to the informational reporting requirements of the
Exchange Act, and, in accordance therewith, files reports, proxy statements and
other information with the Commission. Such reports, proxy statements and other
information filed by the Company may be inspected at the public reference
facilities of the Commission located at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at the New York Regional Office of the Commission, Seven
World Trade Center, Suite 1300, New York, New York 10048, and at the Chicago
Regional Office of the Commission, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60621. Copies of such material can also be obtained at prescribed rates
from the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission maintains a World Wide Web

29
<PAGE> 31

site on the Internet at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. In addition, the Common Stock is traded on
the Nasdaq National Market and the Company's reports, proxy statements and
information statements and other information filed with the Nasdaq National
Market can be inspected at the offices of the Nasdaq National Market, 1735 K
Street, N.W., Washington, D.C. 20006.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents, which have been filed by the Company with the
Commission, are incorporated by reference into this Prospectus:

(i) the Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1997;

(ii) the Company's Current Report on Form 8-K/A, dated April 21, 1997;
and

(iii) the description of the Common Stock contained in the Company's
Registration Statement on Form 8-A dated August 19, 1993, including any
amendment or report filed for the purpose of updating such description.

In addition, all documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus
and prior to termination of the Offering shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the date such
document is filed with the Commission.

Any statement contained herein, or any document, all or a portion of which
is incorporated or deemed to be incorporated by reference herein, shall be
deemed to be modified or superseded for purposes of the Registration Statement
and this Prospectus to the extent that a statement contained herein, or in any
subsequently filed document that also is or is deemed to be incorporated by
reference herein, modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute part of the Registration Statement or this Prospectus. All
information appearing in this Prospectus is qualified in its entirety by the
information and financial statements (including notes thereto) appearing in the
documents incorporated herein by reference.

This Prospectus incorporates documents by reference which are not presented
herein or delivered herewith. These documents (other than exhibits thereto,
unless such exhibits are specifically incorporated by reference therein) are
available without charge, upon written or oral request by any person to whom
this Prospectus has been delivered, from Jeffrey A. Conway, Chief Financial
Officer, Rent-Way, Inc., 3230 West Lake Road, Erie, Pennsylvania 16505,
telephone number (814) 836-0618.

FORWARD-LOOKING STATEMENTS

Certain statements included in this Prospectus, and in documents
incorporated by reference herein, are forward-looking statements within the
meaning of Section 27A(i) of the Securities Act and Section 21E(i) of the
Exchange Act. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by any such
forward-looking statements. Such factors include, among other things, the
ability of the Company to acquire additional rental-purchase stores on favorable
terms, the ability of the Company to improve the performance of such acquired
stores and to integrate such stores profitably into the Company's existing
operations, and the impact of state and federal laws, including new legislation,
regulating or otherwise affecting the rental-purchase transaction, as well as
other factors set forth in this Prospectus.

30
<PAGE> 32

[AT THE TOP OF THIS PAGE IS A PICTURE OF THE OUTSIDE OF A COMPANY STORE WITH A
COMPANY TRUCK PARKED IN FRONT OF SUCH STORE. THE COMPANY'S LOGO IS PROMINENTLY
DISPLAYED ON THE SIDE OF THE TRUCK. AT THE BOTTOM OF THIS PAGE IS A PICTURE OF
THE INSIDE OF A COMPANY STORE DISPLAYING A SELECTION OF FURNITURE.]
<PAGE> 33

======================================================

No dealer, salesperson or other person has been authorized to give any
information or to make any representations in connection with this Offering
other than those contained in this Prospectus, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company or any Underwriter. This Prospectus does not constitute an offer
to sell or a solicitation of an offer to buy any securities other than the
securities to which it relates or an offer to, or a solicitation of, any person
in any jurisdiction in which such an offer or solicitation would be unlawful.
Neither the delivery of this Prospectus nor any sale made hereunder shall, under
any circumstances, create any implication that there has been no change in the
affairs of the Company since the date hereof or that the information contained
herein is correct as of any time subsequent to the date hereof.

----------------------------

TABLE OF CONTENTS

----------------------------

<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 6
Use of Proceeds....................... 9
Price Range of Common Stock........... 9
Dividend Policy....................... 9
Capitalization........................ 10
Selected Historical Financial
Information and Operating Data...... 11
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 12
Business.............................. 18
Management............................ 24
Principal and Selling Shareholders.... 26
Shares Eligible for Future Sale....... 27
Underwriting.......................... 28
Legal Matters......................... 29
Experts............................... 29
Available Information................. 29
Incorporation of Certain Documents by
Reference........................... 30
Forward-Looking Statements............ 30
</TABLE>

======================================================

2,587,250 SHARES

RENTWAY LOGO

COMMON STOCK
----------------------------

PROSPECTUS

----------------------------
NATIONSBANC MONTGOMERY
SECURITIES, INC.

RAUSCHER PIERCE REFSNES, INC.

THE ROBINSON-HUMPHREY
COMPANY

, 1997

======================================================
<PAGE> 34

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The expenses to be incurred in connection with the Offering are set forth
below (other than underwriting commissions and discounts). The Selling
Shareholders will not pay any expenses of the Offering.

<TABLE>
<S> <C>
SEC registration fee.............................................................. $ 15,328
NASD filing fee................................................................... 5,559
Accounting fees and expenses...................................................... 25,000*
Printing and mailing.............................................................. 75,000*
Legal fees and expenses........................................................... 75,000*
Blue sky fees and expenses........................................................ 15,000
Nasdaq National Market listing fee................................................ 17,500
Miscellaneous..................................................................... 21,613*
--------
Total........................................................................... $250,000
========
</TABLE>

- ---------

*Estimated

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The provisions of Sections 1741 through 1750 of the Pennsylvania Business
Corporation Law provide that a corporation shall have the power to indemnify any
person who was or is a party or is threatened to be made a party to any action
or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he or she is or was a representative of the corporation,
against expenses (including attorney's fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
the action or proceeding if they acted in good faith and in a manner they
reasonably believed to be in, or not opposed to, the best interests of the
corporation. To the extent that a representative of the corporation has been
successful on the merits or otherwise in defense of any action or proceeding or
in defense of any claim, issue or matter therein, the corporation is required by
the Pennsylvania Business Corporation Law to indemnify them against expenses
actually and reasonably incurred by them in connection with such defense.

The Company's By-Laws provide that it shall indemnify its officers and
directors against claims arising from actions taken in their official capacity
except where the conduct giving rise to the claim is finally determined by a
court or in arbitration to have constituted willful misconduct or recklessness
or to have involved the receipt from the Company of a personal benefit to which
the officer or director was not entitled, or where such indemnification has been
determined in a final adjudication to be unlawful. The Company may create a
fund, trust or other arrangement to secure the indemnification. In addition, the
Company is required to pay the expenses of defending the claim in advance of
final adjudication upon the receipt of an undertaking by the officer or director
to repay such advanced amounts if it is ultimately determined that the officer
or director is not entitled to be indemnified. These provisions of the By-Laws
are expressly permitted pursuant to the Pennsylvania Business Corporation Law.

II-1
<PAGE> 35

ITEM 16. EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- --------------------------------------------------------------------------------
<C> <S>
1.1(4) Form of Underwriting Agreement
4.1(1) Articles of Incorporation of the Company, as amended
4.2(2) By-Laws of the Company, as amended
4.3(1)* Credit Agreement dated November 22, 1996 by and among the Company, the banks
parties thereto and National City Bank of Pennsylvania, as agent, as amended
4.4(3)* Form of the Company's 7% Convertible Subordinated Debentures due 2007 (the
"Debentures")
4.5(3)* Indenture, dated as of February 4, 1997, between the Company and Manufacturers
and Traders Trust Company, as trustee, in respect of the Debentures
5.1(4) Opinion of Hodgson, Russ, Andrews, Woods & Goodyear, LLP
23.1(4) Consent of Hodgson, Russ, Andrews, Woods & Goodyear, LLP (included in Exhibit
5.1)
23.2(5) Consent of Coopers & Lybrand L.L.P.
24.1(4) Power of Attorney
</TABLE>

- ---------

* None of the other indebtedness of the Company exceeds 10% of its total
consolidated assets. The Company will furnish copies of the agreements
relating to such other indebtedness to the Securities and Exchange Commission
upon request.

(1) Previously filed, on November 6, 1997, as an exhibit to the Company's Annual
Report on Form 10-K for the year ended September 30, 1997.

(2) Previously filed, on December 8, 1992, as an exhibit to the Company's Annual
Report on Form 10-K for the year ended September 30, 1992.

(3) Previously filed, on May 9, 1997, as an exhibit to the Company's
Registration Statement on Form S-3 (No. 333-26835).

(4) Previously filed, on November 6, 1997, as an exhibit to the Company's
Registration Statement on Form S-3 (No. 333-39709).

(5) Filed herewith.

ITEM 17. UNDERTAKINGS

(a) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

(b) The Company also hereby undertakes that:

(1) For purposes of determining any liability, under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Company pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be a part of this
Registration Statement as of the time it was declared effective.

(2) For the purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-2
<PAGE> 36

(c) The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual report
pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

II-3
<PAGE> 37

SIGNATURES

Pursuant to the requirements of the Securities Act, the Company has duly
caused this Amendment No. 1 to the Registration Statement to be signed on its
behalf by the undersigned thereunto duly authorized in the City of Erie,
Commonwealth of Pennsylvania, on November 13, 1997.

RENT-WAY, INC.

By: /s/ WILLIAM E. MORGENSTERN
------------------------------------
William E. Morgenstern, President

In accordance with the requirements of the Securities Act, this
Registration Statement has been signed by the following persons in the
capacities and on the date stated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------- ----------------------------------- ------------------
<S> <C> <C>

* Chairman of the Board November 13, 1997
- --------------------------------------- and Director
Gerald A. Ryan

/s/ WILLIAM E. MORGENSTERN President, Chief Executive November 13, 1997
- --------------------------------------- Officer and Director
William E. Morgenstern (Principal Executive Officer)

/s/ JEFFREY A. CONWAY Vice President and Chief Financial November 13, 1997
- --------------------------------------- Officer (Principal Financial and
Jeffrey A. Conway Accounting Officer)

* Director November 13, 1997
- ---------------------------------------
Marc W. Joseffer

* Director November 13, 1997
- ---------------------------------------
William Lerner

* Director November 13, 1997
- ---------------------------------------
Vincent A. Carrino

* Director November 13, 1997
- ---------------------------------------
Robert B. Fagenson
</TABLE>

* By: /s/ WILLIAM E. MORGENSTERN
------------------------------------------------
William E. Morgenstern,
Attorney-in-Fact

II-4
<PAGE> 38

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ------------------------------------------------------------------------------
<C> <S>
1.1(4) Form of Underwriting Agreement
4.1(1) Articles of Incorporation of the Company, as amended
4.2(2) By-Laws of the Company, as amended
4.3(1)* Credit Agreement dated November 22, 1996 by and among the Company, the banks
parties thereto and National City Bank of Pennsylvania, as agent, as amended
4.4(3)* Form of the Company's 7% Convertible Subordinated Debentures due 2007
(the "Debentures")
4.5(3)* Indenture, dated as of February 4, 1997, between the Company and Manufacturers
and Traders Trust Company, as trustee, in respect of the Debentures
5.1(4) Opinion of Hodgson, Russ, Andrews, Woods & Goodyear, LLP
23.1(4) Consent of Hodgson, Russ, Andrews, Woods & Goodyear, LLP (included in Exhibit
5.1)
23.2(5) Consent of Coopers & Lybrand L.L.P.
24.1(4) Power of Attorney
</TABLE>

- ---------

(1) Previously filed, on November 6, 1997, as an exhibit to the Company's Annual
Report on Form 10-K for the year ended September 30, 1997.

(2) Previously filed, as of December 8, 1992, as an exhibit to the Company's
Annual Report on Form 10-K for the year ended September 30, 1992.

(3) Previously filed, on May 9, 1997, as an exhibit to the Company's
Registration Statement on Form S-3 (No. 333-26835).

(4) Previously filed, on November 6, 1997, as an exhibit to the Company's
Registration Statement on Form S-3 (No. 333-39709).

(5) Filed herewith.

<PAGE> 1

EXHIBIT 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in this registration statement
on Form S-3 (File No. 333-39709) of our report dated October 31, 1997 on our
audits of the financial statements of Rent-Way, Inc., and of our report dated
March 28, 1997 on our audits of the financial statements of Perry Electronics,
Inc. (dba Rental King). We also consent to the references to our firm under the
captions "Experts" and "Selected Historical Financial Information and Operating
Data."

/s/ COOPERS & LYBRAND L.L.P.

Cleveland, Ohio

November 13, 1997