<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Rent-Way, Inc.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
<PAGE> 2
PRELIMINARY
RENT-WAY, INC.
3230 WEST LAKE ROAD
ERIE, PENNSYLVANIA 16505
------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MARCH 12, 1997
------------------
To The Shareholders of Rent-Way, Inc.:
Notice is hereby given that the Annual Meeting of the Shareholders
of Rent- Way, Inc. will be held at the Bel Aire Hotel located at 2800 West
Eighth Street, Erie, Pennsylvania, on Wednesday, March 12, 1997 at 10:00 a.m.
for the following purposes:
1. To elect two Class II directors to serve until the 2000 Annual
Meeting of Shareholders;
2. To consider and act upon a proposal to amend the Company's
Articles of Incorporation to increase the authorized number
of common shares, without par value, from 10,000,000 to
20,000,000 shares.
3. To consider and act upon other matters that may properly come
before the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on January
27, 1997 as the record date for determining the shareholders having the right
to vote at the meeting or any adjournment thereof. Each shareholder is entitled
to one vote per share on all matters to be voted on by shareholders, except
that shareholders are entitled to cumulative voting in the election of
directors.
By Order of the Board of Directors,
WILLIAM LERNER
Secretary
Erie, Pennsylvania
February __, 1997
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING,
PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY AND
RETURN IT IN THE ENCLOSED PREPAID ENVELOPE.
<PAGE> 3
PRELIMINARY
RENT-WAY, INC.
3230 WEST LAKE ROAD
ERIE, PENNSYLVANIA 16505
------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MARCH 12, 1997
------------------
This Proxy Statement and the accompanying form of proxy are being
mailed on or about February _, 1997 in connection with the solicitation by the
Board of Directors of Rent-Way, Inc. (hereinafter "Rent-Way" or the "Company")
of proxies to be voted at the Annual Meeting of Shareholders to be held on
Wednesday, March 12, 1997 and any adjournments thereof.
If the form of proxy enclosed herewith is executed and returned as
requested, it may nevertheless be revoked at any time prior to exercise by
filing an instrument with the Secretary of the Company revoking it or by
submitting a duly executed proxy bearing a later date.
The cost of soliciting proxies in the accompanying form will be
borne by the Company. The officers, directors and employees of the Company,
without additional compensation, may solicit proxies by mail, facsimile,
telephone or personal contact. The Company does not expect to pay any
compensation for the solicitation of proxies, but will reimburse brokerage
firms and other custodians, nominees and fiduciaries for their expenses in
forwarding proxies and proxy material to the beneficial owners of its common
stock.
The authorized common stock of the Company consists of 10,000,000
shares, no par value, of which 6,593,876 shares are issued and outstanding (the
"Common Stock"). Each outstanding share of Common Stock is eligible to be
voted at the meeting. Holders of record as of January 27, 1997 will be entitled
to one vote per share on all matters to be voted on by the shareholders, except
that shareholders are entitled to cumulative voting in the election of
directors, which means that a shareholder is entitled to a number of votes
equal to the number of shares held by such shareholder multiplied by the number
of directors to be elected, and all of such votes may be cast for one nominee
or distributed among any two or more nominees. Cumulative voting enables
shareholders to concentrate the voting of their shares in favor of the election
of a lesser number of nominees than the total number of directors being voted
upon. Persons holding less than a majority of the shares voting may therefore
be able to elect one or more directors.
The presence, in person or by proxy, of a majority of the shares of
the Common Stock outstanding on the record date will constitute a quorum at the
Annual Meeting. Abstentions and broker non-votes (i.e., proxies from brokers or
nominees indicating that such persons have not received instructions from the
beneficial owners or other persons entitled to vote shares as to a matter with
respect to which brokers or nominees
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do not have discretionary power to vote) will be treated as present for
purposes of determining a quorum. Abstentions and broker non-votes will not be
counted as voting on any matter at the Annual Meeting.
ELECTION OF DIRECTORS
The Company's by-laws require that the directors be divided into
three classes, with the term of office of at least one class expiring each
year. Pursuant to the by-laws, the members of a class are elected for a term of
three years and until their respective successors have been elected and
qualified, or until the respective director resigns, is removed or
disqualified. The term of office of Class II directors expires at the Annual
Meeting. The Board of Directors proposes that the nominees described below,
each of whom is currently serving as a Class II director, be elected as Class
II directors for a new term of three years ending at the 2000 Annual Meeting of
Shareholders and until their successors are duly elected and qualified.
When the accompanying proxy is properly executed and returned, the
shares it represents will be voted in accordance with the direction indicated,
or, if no direction is indicated, the shares will be voted in favor of the
election of the nominees identified below. The Company expects each nominee to
be able to serve, if elected, but if any nominee notifies the Company before
the meeting that he is unable to do so, then the proxies will be voted for such
other person as the Board shall designate.
Information regarding the nominees standing for election as Class II
directors is set forth below:
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.
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 Nasdaq that is a provider
and systems integrator of advanced technology
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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.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
ELECTION OF EACH OF THE NOMINEES FOR CLASS II DIRECTOR.
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MANAGEMENT INFORMATION
DIRECTORS AND EXECUTIVE OFFICERS
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 61 Chairman of the Board and Director
William E. Morgenstern 38 President, Chief Executive Officer and Director
William Lerner 61 Director and Secretary
Vincent A. Carrino 38 Director
Robert B. Fagenson 47 Director
Marc W. Joseffer 46 Director
Jeffrey A. Conway 39 Vice President and Chief Financial Officer
Ronald D. DeMoss 46 Vice President and General Counsel
Thomas E. Wurm 45 Vice President-Operations
</TABLE>
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 Nasdaq, 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. Mr. Ryan is a Class I
director of the Company whose term expires in 1999.
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 currently 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. Mr. Morgenstern is a Class III director of the
Company whose term expires in 1998.
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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, Healthy Planet Products, Inc., a
company listed on Nasdaq that designs, publishes and markets greeting cards,
Hudson Hotel Corporation (formerly Microtel Franchise and Development
Corporation), a company listed on Nasdaq and a developer of economy lodging
facilities and owner and operator of hotel, motel and resort properties,
AutoInfo, Inc., a company listed on Nasdaq and a dealer in computerized
products and services for after-market motor vehicle parts, and Nu-Tech
Biomedical, Inc., a company listed on Nasdaq that researches medicines for the
treatment of cancer. Mr. Fagenson was a director of Strings, Ltd., a specialty
retail chain which, in June 1992, filed for protection under Chapter 11 of the
Federal Bankruptcy Code. Mr. Fagenson has since resigned his position as a
director of that company. Mr. Fagenson is a Class I director of the Company
whose term expires in 1999.
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 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. From
early 1995, Mr. DeMoss also served as Director of Government Relations for
Rent-A-Center. Mr. DeMoss serves on APRO's Government Relations Committee and,
for his work in the area of governmental regulation of the rental-purchase
industry, Mr. DeMoss received APRO's 1995 President's Award of Excellence. From
1981 through 1990, Mr. DeMoss was a practicing attorney in Wichita, Kansas.
<PAGE> 8
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THOMAS E. WURM has been Director of Operations-Corporate of the Company
since October 1995 and was elected Vice President-Operations in February 1996.
From August 1994 through August 1995, Mr. Wurm was a partner in an Aaron's
Rental Purchase Franchise located in Springfield, Missouri. From May 1988
through July 1994, he served as a Regional Director of Rent-A-Center, where he
managed 116 stores in 15 states. Mr. Wurm has been involved in the
rental-purchase industry for over 20 years.
Addition information regarding Messrs. Joseffer and Lerner appears under
the caption "Election of Directors" in this Proxy Statement.
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors has standing Audit, Compensation and
Executive Committees. The Board does not have a Nominating Committee. The Board
of Directors held six meetings in 1996. Each director attended at least 75% of
meetings of the full Board and meetings of committees on which each served in
1996.
The Audit Committee consists of Messrs. Carrino, Fagenson and
Lerner. The Audit Committee ratifies the selection of the independent auditors,
reviews the arrangements for and scope of the annual audit and reviews the
results of such audit, inquires into important internal control, accounting and
financial reporting matters, reviews potential conflict of interest situations,
as appropriate, and reports and make recommendations to the full Board, as
appropriate. The Audit Committee had one meeting in 1996.
The Compensation Committee consists of Messrs. Fagenson and Lerner.
The Compensation Committee reviews the Company's compensation policies, reviews
and approves the compensation of executive officers, and until November 1996,
administered the Company's 1992 and 1995 Stock Option Plans. In November 1996,
Messrs. Fagenson and Lerner were appointed as the members of the Stock Option
Committee to administer the Company's 1992 and 1995 Stock Option Plans and
otherwise administer and oversee the grant of stock options by the Company. The
Compensation Committee had one meeting in 1996.
The Executive Committee consists of Messrs. Ryan and Morgenstern.
The Executive Committee meets between regular Board meetings to consider items
of general concern to the Company. In addition, it recommends nominees to the
Board, sets the compensation of senior management (other than executive
officers), approves locations for and timing of new store openings, and takes
such further action as appropriate for the Company to properly function between
Board meetings (subject to ratification or approval of the full Board, as
appropriate). The Executive Committee had twelve meetings in 1996.
<PAGE> 9
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COMPENSATION OF DIRECTORS
Directors who are not executive officers of the Company (Messrs.
Carrino, Fagenson and Lerner) receive $250 for each Board meeting attended in
person or by telephone and an annual retainer of $2,000, payable quarterly, and
are reimbursed for their out-of-pocket expenses incurred for attendance at
meetings of directors and shareholders. Mr. Lerner receives no compensation
for serving as Secretary to the Company. Directors who are executive officers
of the Company receive no additional compensation for their services as
directors.
EXECUTIVE COMPENSATION
The following table discloses compensation for the years ended
September 30, 1994, 1995 and 1996 received by the Chairman of the Board and the
President and Chief Executive Officer of the Company and by those executive
officers of the Company who served as such for the full fiscal year ended
September 30, 1996 (the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION(1) AWARDS
--------------- ------
SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS(#)
- --------------------------- ---- ---------- --------- ----------
<S> <C> <C> <C> <C>
Gerald A. Ryan 1996 $122,600 $13,750 --
Chairman of the Board 1995 114,000 -- 63,000
1994 95,000 -- 37,500
William E. Morgenstern 1996 $181,000 $14,000 --
President and 1995 144,000 -- 63,000
Chief Executive Officer 1994 125,000 -- 36,750
Jeffrey A. Conway 1996 $ 90,000 5,250 --
Vice President and 1995 89,000 -- 30,000
Chief Financial Officer 1994 70,000 -- 27,000
Thomas E. Wurm 1996 $124,000 $ 5,000 10,000
Vice President-Operations
</TABLE>
- ------------
(1) The Named Executive Officers did not receive any annual compensation not
properly characterized as salary or bonus, except for certain prerequisites
or other benefits the aggregate incremental cost of which to the Company
did not exceed the lesser of
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$50,000 or 10% of the total annual salary and bonus reported for each such
officer. The Company has a medical and health benefits plan and provides
term life insurance for its employees, however, such plans do not
discriminate in scope, terms or operation in favor of executive officers
or directors and are generally available to all salaried employees. The
Company has a 401(k) plan but does not have any other pension plan or any
long-term incentive plan other than the stock option plans described below.
EMPLOYMENT AGREEMENTS
The Company has entered into an employment agreement with Mr. Ryan
pursuant to which he serves as Chairman of the Board of the Company for a term
that commenced October 1, 1995 and continues until September 30, 1998, unless
earlier terminated in accordance with its terms. The term of the employment
agreement is automatically extended for an additional one year period unless
either party gives notice at least 60 days prior to the date which is one year
prior to the date on which the agreement would otherwise terminate. Mr. Ryan is
not required to render full-time service to the Company. Under the employment
agreement, Mr. Ryan receives an annual salary of $125,000 (subject to annual
cost of living increases) and is eligible to receive an annual bonus in an
amount determined by the Board of Directors. Mr. Ryan is also eligible to
participate in employee benefit plans and to receive fringe benefits made
generally available to senior management.
The Company has entered into an employment agreement with Mr.
Morgenstern pursuant to which he is employed full-time as the President and
Chief Executive Officer of the Company for a term that commenced on October 1,
1995 and continues to September 30, 1998, unless earlier terminated in
accordance with its terms. The term of the employment agreement is
automatically extended for an additional one year period unless either party
gives notice at least 60 days prior to the date which is one year prior to the
date on which the agreement would otherwise terminate. Under the employment
agreement, Mr. Morgenstern receives an annual salary of $175,000 (subject to
annual cost of living increases) and is eligible to receive an annual bonus in
an amount determined by the Board of Directors. Mr. Morgenstern is also
eligible to participate in all employee benefit plans and to receive fringe
benefits made generally available to senior management.
The Company has entered into an employment agreement with Mr.
Conway pursuant to which he is employed full-time as the Vice President and
Chief Financial Officer of the Company for a term that commenced on October 1,
1995 and continues to September 30, 1998, unless earlier terminated in
accordance with its terms. The term of the employment agreement is
automatically extended for additional two year periods unless either party
gives notice at least 60 days prior to the date which is one year prior to the
date on which the agreement would otherwise terminate. Under the employment
agreement,
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Mr. Conway receives an annual salary of $90,000, $95,000 and $100,000,
respectively, during the first three years of the employment agreement. In each
year following the third year, Mr. Conway's salary would be adjusted for
increases in the cost of living. Mr. Conway is also eligible to receive an
annual bonus in an amount determined by the Board of Directors. Mr. Conway is
also eligible to participate in all employee benefit plans and to receive
fringe benefits made generally available to senior management.
STOCK OPTION PLANS
1992 Stock Option Plan
The Company's Stock Option Plan of 1992 (the "1992 Plan"), which
expires in 2002 unless earlier terminated by the Board, provides for the
issuance of up to 600,000 shares of Common Stock pursuant to stock options
granted to officers, directors, key employees, consultants and advisors of the
Company. The 1992 Plan does not provide for stock appreciation rights. The 1992
Plan is administered by the Stock Option Committee of the Board which selects
the optionees and determines the terms and provisions of each option grant
within the parameters set forth in the 1992 Plan. Under the 1992 Plan, as of
January 20 1997, 509,599 options were outstanding and 46,209 options had been
exercised.
Each option granted under the 1992 Plan is evidenced by a stock
option agreement and may be intended to qualify as an "incentive stock option"
within the meaning Section 422 of the Internal Revenue Code of 1986, as
amended, or may not so be intended, as determined by the Stock Option
Committee. The exercise price of options must be at least the fair market value
of the Common Stock on the date the option is granted, and each option must
expire no later than ten years from the date of grant. To exercise an option,
the optionee must deliver to the Company full payment for the shares purchased,
provided that the Stock Option Committee may in its discretion (i) accept as
payment shares of Common Stock having a market value equal to the purchase
price of the shares being purchased or (ii) permit the optionee to surrender
the option without payment of additional consideration with the number of
shares to be issued in exchange for the option to be the product of the excess
of the fair market value of the Common Stock on the date of surrender over the
per share exercise price and the number of shares subject to the option,
divided by the fair market value of the Common Stock on the date of surrender.
The Board is empowered to amend the 1992 Plan, subject to shareholder approval
in certain circumstances.
1995 Stock Option Plan
The Company's 1995 Stock Option Plan (the "1995 Plan"), adopted by
the Board of Directors on October 18, 1995, and approved by the shareholders of
the Company at the 1995 Annual Meeting of Shareholders, provides for the
issuance of up to 400,000 shares of Common Stock pursuant to stock options
granted to officers, directors, key
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employees and other persons responsible for the success and growth of the
Company. The 1995 Plan does not provide for stock appreciation rights. The 1995
Plan is administered by the Stock Option Committee of the Board and contains
terms and provisions substantially identical to those contained in the 1992
Plan. Under the 1995 Plan, as of January 20, 1997, 321,700 options were
outstanding, none of which had been exercised.
The following table sets forth information concerning stock option grants made
to each of the Named Executive Officers in the fiscal year ended September 30,
1996:
OPTION GRANTS IN FISCAL YEAR ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
NUMBER OF
SECURITIES % OF TOTAL OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE
---- ----------- ----------- ------ ----
<S> <C> <C> <C> <C>
Thomas E. Wurm 10,000(1) 6.97% 8.81 10/23/00
</TABLE>
- -----------
(1) These options were granted under the 1995 Plan and are exercisable in full
on the date of grant.
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The Named Executive Officers did not exercise any stock options for
shares of Common Stock of the Company during the fiscal year ended September
30, 1996. The following table sets forth certain information concerning the
value of unexercised options held by Named Executive Officers at the end of the
fiscal year ended September 30, 1996.
SEPTEMBER 30, 1996 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SEPTEMBER 30,1996 SEPTEMBER 30, 1996 (1)
----------------- ----------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Gerald A. Ryan 79,500 21,000 $ 503,000 $117,120
William E. Morgenstern 138,750 21,000 1,115,000 117,120
Jeffrey A. Conway 47,000 10,000 312,500 48,800
Thomas E. Wurm 10,000 --- 126,000 ---
</TABLE>
- ------------
(1) Based on the closing sales price of the Common Stock on the Nasdaq National
Market of $12.63 per share on September 30, 1996 less the exercise price.
<PAGE> 14
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SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information concerning the shares of
Common Stock beneficially owned by (i) each beneficial owner of more than 5%
of the outstanding shares of Common Stock, (ii) each director of the Company;
(iii) the Named Executive Officers of the Company; and (iv) the directors and
executive officers of the Company as a group. This information is presented as
of January 20, 1997. Except as otherwise noted, the Company believes that the
persons listed below have sole investment and voting power with respect to the
shares of Common Stock beneficially owned by them.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER (1) OWNED (2) CLASS
---------------------------------------- --------- -----
<S> <C> <C>
Gerald A. Ryan (3) .......................... 1,207,224 18.0%
William E. Morgenstern (4) .................. 1,081,608 16.0
William Lerner .............................. 48,000 *
Vincent A. Carrino .......................... 73,000 1.1
Robert B. Fagenson (5) ...................... 204,000 3.1
Marc W. Joseffer ............................ 189,442 2.9
Jeffrey A. Conway ........................... 123,000 1.8
Thomas E. Wurm .............................. 27,500 *
Directors/Executive Officers as a group
(9 persons) ................................. 2,380,336 33.6
Massachusetts Mutual Life Insurance
Company and affiliates (6) .................. 809,225 11.4
1295 State Street
Springfield, Massachusetts 01111
Ryan Children's Trust of 1993 ............... 100,000 1.5
</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.
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(3) Includes 581,688 shares that Mr. Ryan and Mr. Morgenstern have the
right to vote pursuant to a voting agreement and certain irrevocable
proxies dated July 21, 1995 given in connection with the Company's
acquisition of McKenzie Leasing Corporation. The voting agreement provides
that such shares shall be voted in accordance with the direction of a
majority of the Company's Board of Directors. Also includes 100,000 shares
owned by the Ryan Children's Trust of 1993, of which Mr. Ryan is sole
trustee.
(4) Includes 581,688 shares that Mr. Morgenstern and Mr. Ryan have the
right to vote pursuant to a voting agreement and certain irrevocable
proxies dated July 21, 1995 given in connection with the Company's
acquisition of McKenzie Leasing Corporation. The voting agreement provides
that such shares shall be voted in accordance with the direction of a
majority of the Company's Board of Directors.
(5) Includes 6,000 shares owned by the Fagenson & Co., Inc. Employee Pension
Plan and Trust, of which Mr. Fagenson is a co-trustee.
(6) Represents shares of Common Stock issuable on the conversion of the
Convertible Subordinated Notes and exercise of certain warrants.
CERTAIN TRANSACTIONS INVOLVING MANAGEMENT
The Company owned approximately 225 acres of land and building lots
in Pennsylvania, Wisconsin and New York that were conveyed to the Company in
1992 by a company affiliated with Gerald A. Ryan, Chairman of the Board of the
Company in full satisfaction of loans by the Company to Mr. Ryan and such
company. The Company had the right exercisable for a thirty-day period
beginning May 31, 1996 to sell and require Mr. Ryan to purchase all or any
portion of such land and building lots at a purchase price determined with
reference to the Company's carrying cost of such land and building lots and
payable in cash and/or marketable securities, including shares of Common Stock
of the Company. On June 4, 1996, the Company exercised its right and sold the
land and building lots to Mr. Ryan at an aggregate purchase price of $946,000,
which was paid by Mr. Ryan by surrender for cancellation of 52,500 options to
acquire shares of Common Stock, by the delivery of 8,600 shares of Common
Stock, by the conveyance to the Company of a building owned by Mr. Ryan which
the Company had been leasing for storage space pursuant to a long-term lease
and by the payment of cash. The surrendered stock options had a value of
$633,000 based on the difference between the exercise price and the average
closing price of a share of the Company's Common Stock as reported on Nasdaq
during the 15 trading days preceding June 4. The outstanding shares delivered
by Mr. Ryan had a value of $123,668 based on the average closing price per
share during the 15 trading days preceding June 4. The value of the building
conveyed to the Company was based on the present value of its future rental
stream plus estimated residual value, $250,000, less the amount of the
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building's outstanding mortgage, $83,000, which was assumed by the Company. The
remaining portion of the purchase price of $10,000 was paid in cash to the
Company by Mr. Ryan.
William E. Morgenstern, President and Chief Executive Officer of
the Company, was indebted to the Company as of September 30, 1995 for loans
made to him from time-to-time since the formation of the Company in 1981. Such
loans were repayable by April 1, 1996 in cash or by delivery to the Company of
marketable securities, including Common Stock of the Company, or both, and bore
interest at the rate of 7.6% payable annually. On May 21, 1996, Mr. Morgenstern
repaid such loans in the aggregate amount of $311,308.58 by surrendering to the
Company 10,800 shares of Common Stock valued at $15.00 per share and paying the
balance in cash.
In connection with the acquisition of D.A.M.S.L. Corp. in May 1994,
the Company entered into an employment agreement, consulting agreement and
non-compete agreement with Marc W. Joseffer, a director of the Company. The
employment contract expired on May 18, 1996. Under the employment agreement,
Mr. Joseffer received salary of $172,666, $134,667 and $162,667 in the years
ended September 30, 1994, 1995 and 1996, respectively. The employment agreement
also entitled Mr. Joseffer to certain fringe benefits available to senior
management of the Company. Mr. Joseffer also receives payments from the Company
under a five-year consulting agreement which expires on May 18, 1999. Annual
payments to Mr. Joseffer for each year of such consulting agreement are
$132,000, $120,000, $144,000, $132,000 and $192,000, respectively. Under the
terms of the non-compete agreement entered into by Mr. Joseffer, he receives
monthly payments from the Company of $2,143, which monthly payments continue
through March 1999.
The Company leases six store locations from Mr. Joseffer or a
company controlled by him. The Company paid $239,000 and $217,000 in rent and
related amounts under such leases for the years ended September 30, 1996 and
1995, respectively. The Company believes the lease rate and terms, which
include the Company's obligation to pay real estate taxes, are similar to those
obtainable on an arms'-length basis.
In September 1995, the Company paid $170,000 and issued warrants to
purchase 37,500 shares of Common Stock to Starr Securities, Inc. and certain
officers thereof as a financial advisory and investment banking fee for
arranging the Company's sale of convertible subordinated notes to affiliates of
Massachusetts Mutual Life Insurance Company. Robert B. Fagenson, a director of
the Company, is a Vice President and Director of Starr Securities, Inc.
<PAGE> 17
- 15 -
PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION
The Board of Directors, by resolution adopted on January 24, 1997,
unanimously adopted a resolution amending the Company's Articles of
Incorporation (the "Articles"). The affirmative vote of a majority of the votes
cast by all shareholders entitled to vote thereon is required for adoption of
such amendment to the Articles.
The proposed amendment to Article 5 of the Articles would increase
the number of authorized shares of Common Stock from 10,000,000 to 20,000,000
shares.
As of January 20, 1997, 6,593,876 shares of Common Stock were
outstanding, and approximately 2,208,836 shares of Common Stock were reserved
or required for issuance on exercise of stock options, convertible notes and
warrants, which leaves 1,197,288 shares authorized and remaining for issuance.
The Board believes that it is desirable to have additional authorized shares of
Common Stock available for stock splits, dividends, possible future financings,
acquisitions and other general corporate purposes. In addition, the Company
plans to issue approximately $20.0 million of debentures in the near future.
Such debentures would be convertible into shares of Common Stock at a premium
to the market price of such Common Stock. The additional authorized shares
would be issuable at the Board's discretion without further shareholder action.
If the proposed amendment to the Articles is adopted, Article 5 of
the Articles will read in its entirety as follows (bracketed language is
deleted, underscored language is added):
5. The corporation is authorized to issue [11,000,000] 21,000,000
----------
shares of capital stock of which [10,000,000] 20,000,000
----------
shares shall be designated no par Common Stock, and 1,000,000
shares shall be designated Preferred Stock. The Board of
Directors shall have the full authority to divide the 1,000,000
shares of Preferred Stock into classes or series, or both, and
to determine for any such class or series its voting rights
(which may be full, limited, multiple or fractional, or no
voting rights) and such designations, preferences,
qualifications, privileges, limitations, restrictions, options,
conversion rights and other special or relative rights as may be
desired. Such division and determination may be accomplished by
an amendment to this Article, which amendment may be made solely
by action of the Board of Directors, which shall have the full
authority
<PAGE> 18
- 16 -
permitted by law to make such divisions and determinations.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
AMENDMENT OF THE ARTICLES OF INCORPORATION
REQUIREMENTS FOR REPORTING SECURITIES OWNERSHIP
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who own more than ten
(10%) of a registered class of the Company's equity securities, to file reports
of ownership and changes in ownership with the Securities and Exchange
Commission. Executive officers, directors and greater than ten-percent
shareholders are required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms they file. To the Company's knowledge, based solely
upon its review of copies of such forms furnished to it, or written
representations from reporting persons that no such forms were required for
those persons, the Company believes that during fiscal year 1996 all filing
requirements applicable to executive officers, directors, and greater than
ten-percent beneficial owners were complied with, except that one report
covering one transaction was filed late by Marc W. Joseffer, a director of the
Company.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand, L.L.P. served as the Company's independent
accountants for the 1996 fiscal year. Representatives of that firm will be
present at the Annual Meeting, will be given the opportunity to make a
statement if they so desire, and will be available to respond to any
appropriate questions. The auditors for fiscal year 1997 will be selected at
the meeting of the Board of Directors to be held immediately following the
Annual Meeting of Shareholders on March 12, 1997.
PROPOSALS OF SHAREHOLDERS
Any shareholder who intends to present a proposal intended to be
considered for inclusion in the Proxy Statement for presentation at the 1997
Annual Meeting of Shareholders must submit such proposal by November 1, 1997.
It is suggested that the proposal be submitted to the Company's corporate
offices in Erie, Pennsylvania by certified mail, return receipt requested,
and be directed to the Secretary of the Company.
<PAGE> 19
- 17 -
OTHER MATTERS
Management does not know of any matters to be presented at this
Annual Meeting other than those set forth in this Proxy Statement and in the
Notice accompanying this Proxy Statement. If other matters should properly come
before the Annual Meeting, it is intended that the proxy holders will vote on
such matters in accordance with their best judgment.
The 1996 Annual Report to Shareholders accompanies this Proxy
Statement, but is not a part hereof.
A copy of the Company's Annual Report on Form 10-KSB for fiscal
year 1996 may be obtained without charge by any shareholder of record by
written request made to Jeffrey A. Conway, Vice President and Chief Financial
Officer, Rent-Way, Inc., 3230 West Lake Road, Erie, Pennsylvania 16505.
By Order of the Board of Directors,
WILLIAM LERNER
Secretary
Erie, Pennsylvania
February __, 1997
<PAGE> 20
PROXY PROXY
RENT-WAY, INC.
3230 WEST LAKE ROAD
ERIE, PENNSYLVANIA 16505
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING ON MARCH 12, 1997.
The undersigned hereby appoints Gerald A. Ryan and William E. Morgenstern, and
each of them, proxies with the powers the undersigned would possess if
personally present and with full power of substitution, to vote all common
shares of the undersigned at the Annual Meeting of Shareholders of Rent-Way,
Inc. to be held at the Bel Aire Hotel, 2800 West 8th Street, Erie, Pennsylvania
on March 12, 1997, and at any adjournments, upon matters described in the proxy
statement furnished herewith and all other subjects that may properly come
before the meeting. IF NO DIRECTIONS ARE GIVEN, THE INDIVIDUALS DESIGNATED
ABOVE WILL VOTE FOR THE NOMINEES FOR DIRECTOR LISTED HEREIN, FOR THE AMENDMENT
TO THE COMPANY'S ARTICLES OF INCORPORATION, AND AT THEIR DISCRETION ON ANY
OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING.
(To be Signed on Reverse Side)
__________________________________________________
<PAGE> 21
/ X / Please mark your
votes as in this
example
FOR the nominee listed WITHHOLD
at right AUTHORITY
(except as marked to to vote for the nominee
the contrary) listed at right
<TABLE>
<S> <C> <C>
1. ELECTION / / / /
OF DIRECTORS
(INSTRUCTION: To withhold authority to Nominees: Class II (term to 2000) IF YOU DO NOT SIGN AND RETURN
vote for the nominee write his name in William Lerner A PROXY, OR ATTEND THE MEETING,
the space below:) Marc W. Joseffer YOUR SHARES CANNOT BE VOTED.
________________________________________ PLEASE SIGN HEREON AND RETURN
IN THE ENCLOSED ENVELOPE PROMPTLY.
2. Approve the Amendment FOR AGAINST ABSTAIN SHAREHOLDERS ARE ENTITLED TO
to the Company's Articles / / / / / / CUMULATIVE VOTING IN THE ELECTION
of Incorporation OF DIRECTORS.
3. In their discretion, upon such other business as may
properly come before the Annual Meeting or any adjournments.
SIGNATURE ________________________________________ _______________ ________________________________________ _______________
Note: Sign here as name(s) appears on label DATED SIGNATURE IF JOINTLY OWNED DATED
</TABLE>
