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

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


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

                                    FORM 10-Q

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

           (Mark One)

          [ X ]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 2000

                                       OR

[ ]  TRANSITION  REPORT  PURSUANT TO SECTION 13 or 15(d) OF THE  SECURITIES
                              EXCHANGE ACT of 1934


                         Commission File Number 0-22026

                                 RENT-WAY, INC.
             (Exact name of registrant as specified in its charter)


          Pennsylvania                                    25-1407782
          ------------                                    ----------
(State or other jurisdiction                (I.R.S. Employer Identification No.)
            of incorporation)

                   One RentWay Place, Erie, Pennsylvania 16505
                   -------------------------------------------
                     (Address of principal executive offices)

                                (814) 455-5378
                                --------------
                         (Registrant's telephone number)


        Indicate by check mark whether the  registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

Yes        X         No
     ------------        -------------

Indicate  the  number  of  shares  outstanding  of each of the  issuer's
classes of common stock, as of the latest practicable date.

        Class                                    Outstanding as of July 26, 2000
        -----                                    -------------------------------
     Common Stock                                             24,366,242


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

                                 RENT-WAY, INC.



<TABLE>
<CAPTION>
                                                                                                         Page
Part I           Financial Information

        Item 1.  Condensed Consolidated Financial Statements

                 Condensed Consolidated Balance Sheets as of June 30, 2000 (unaudited)
<S>                                      <C> <C>                                                                    <C>
                 and September 30, 1999                                                                   3

                 Condensed Consolidated Statements of Operations, three and nine months
                 ended June 30, 2000 and 1999 (unaudited)                                                 4

                 Condensed Consolidated Statements of Cash Flows, nine months ended
                 June 30, 2000 and 1999 (unaudited)                                                       5

                 Notes to Condensed Consolidated Financial Statements (unaudited)                         6

        Item 2.  Management's Discussion and Analysis
                 of Financial Condition and Results of Operations                                        13

        Item 3.  Quantitative and Qualitative Disclosures About Market Risk                              20

Part II          Other Information

        Item 2.  Changes in Securities and Use of Proceeds                                               21

        Item 6.  Exhibits and Reports on Form 8-K                                                        22

        Signatures                                                                                       23

</TABLE>
<PAGE>

<TABLE>
<CAPTION>

                                 RENT-WAY, INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                           (all dollars in thousands)



                                                                                        June 30,               September 30,
                                                                                          2000                     1999
                                                                                    ---------------         ---------------
                                                                                       (unaudited)

ASSETS

<S>                                                                               <C>                      <C>
Cash                                                                               $         11,087         $         8,646
Prepaid expenses                                                                             15,673                   9,610
Rental merchandise, net                                                                     287,103                 202,145
Property and equipment, net                                                                  65,327                  50,578
Goodwill, net                                                                               313,807                 305,900
Deferred financing costs, net                                                                 5,261                   3,688
Non-compete and prepaid consulting fees, net                                                  3,797                   5,494
Other assets                                                                                 15,725                  11,333
                                                                                   ----------------         ---------------
        Total assets                                                               $        717,780         $       597,394
                                                                                   ================         ===============


LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
Accounts payable                                                                   $         17,029         $         8,417
Other liabilities                                                                            16,026                  15,861
Income tax payable                                                                           18,237                   2,316
Deferred income taxes                                                                         4,397                   5,218
Debt                                                                                        319,952                 288,130
                                                                                   ----------------         ---------------
        Total liabilities                                                                   375,641                 319,942

Contingencies (see note 9)                                                                        -                       -

Shareholders' equity:
Preferred stock, without par value; 1,000,000 shares authorized;
     no shares issued and outstanding                                                             -                       -
Common stock, without par value; 50,000,000 shares
     authorized; 24,331,000 and 21,976,401 shares issued and
     outstanding for 2000 and 1999, respectively                                            288,805                 256,755
Retained earnings                                                                            53,334                  20,697
                                                                                   ----------------         ---------------
        Total shareholders' equity                                                          342,139                 277,452
                                                                                   ----------------         ---------------
        Total liabilities and shareholders' equity                                 $        717,780         $       597,394
                                                                                   ================         ===============



   The accompanying notes are an integral part of these financial statements.

</TABLE>


<PAGE>
<TABLE>
<CAPTION>



                                 RENT-WAY, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                (all dollars in thousands, except per share data)


                                                             For the three months ended                For the nine months ended
                                                                      June 30,                                 June 30,
                                                               2000                 1999                  2000                1999
                                                               ----                 ----                  ----                ----
                                                                     (unaudited)                               (unaudited)
Revenues:
<S>                                                       <C>               <C>                   <C>                 <C>
Rental revenue                                            $      126,671    $      105,357        $      373,676      $      321,824
Phone service revenue                                              4,256                 -                 4,256                   -
Other revenue                                                     21,159            16,594                63,955              49,837
                                                          --------------    --------------        --------------      --------------
       Total revenues                                            152,086           121,951               441,887             371,661
Costs and operating expenses:
Depreciation and amortization:
    Rental merchandise                                            35,704            29,905               103,180              93,369
    Property and equipment                                         4,214             2,487                11,797               6,912
    Amortization of goodwill and other intangibles                 3,291             2,300                 9,828               7,249
Cost of prepaid phone service                                      2,657                 -                 2,657                   -
Salaries and wages                                                37,624            31,956               108,918              97,440
Advertising                                                        4,426             5,346                15,896              19,323
Occupancy                                                          9,790             8,549                31,072              24,829
Name change expense                                                    -                 -                     -                  86
Business combination costs                                             -                 -                     -              16,800
Other operating expenses                                          29,157            23,742                85,521              78,721
                                                          --------------    --------------        --------------      --------------
        Total costs and operating expenses                       126,863           104,285               368,869             344,729
                                                          --------------    --------------        --------------      --------------
        Operating income                                          25,223            17,666                73,018              26,932
Other income (expense):
Interest expense                                                  (6,999)           (4,007)              (19,973)           (11,791)
Equity in loss of subsidiary                                           -                 -                  (197)                  -
Interest income                                                       36                 -                   120                  29
Other income (expense), net                                           23              (116)                 (175)              (337)
                                                          --------------    --------------        --------------      --------------
       Income before income taxes and
       extraordinary item                                         18,283            13,543                52,793              14,833
Income tax expense                                                 6,706             5,420                20,156               9,126
                                                          --------------    --------------        --------------      --------------
        Income before extraordinary item                          11,577             8,123                32,637               5,707
Extraordinary item, net of tax benefit                                 -                 -                     -               (519)
                                                          --------------    --------------        --------------      --------------


Net income                                                $       11,577    $        8,123        $       32,637      $        5,188
                                                          ==============    ==============       ===============      ==============

Earnings per common  share (Note 2):
Basic  earnings per commonshare:
     Income before extraordinary item                     $         0.48    $         0.38        $         1.42      $         0.27
                                                          ==============    ==============        ==============      ==============
     Net income                                           $         0.48    $         0.38        $         1.42      $         0.24
                                                          ==============    ==============        ==============      ==============

Diluted earnings per common share:
     Income before extraordinary item                     $         0.47    $         0.36        $         1.37      $         0.27
                                                          ==============    ==============        ==============      ==============

     Net income                                           $         0.47    $         0.36        $         1.37      $         0.24
                                                          ==============    ==============        ==============      ==============

Weighted average common shares outstanding:
     Basic                                                        23,984            21,335                22,932              21,222
                                                          ==============    ==============        ==============      ==============
     Diluted                                                      24,860            23,378                24,147              21,222
                                                          ==============    ==============        ==============      ==============

   The accompanying notes are an integral part of these financial statements.

</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                                 RENT-WAY, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (all dollars in thousands)

                                                                                            For the nine months ended
                                                                                                    June 30,
                                                                                          2000                    1999
                                                                                       (unaudited)             (unaudited)

Operating activities:
<S>                                                                                 <C>                     <C>
Net income                                                                          $        32,637         $         5,188
Adjustments to reconcile net income
 to net cash used in operating activities:
    Depreciation and amortization                                                           125,202                 109,832
    Equity in loss of subsidiary                                                                197                       -
    Deferred income taxes                                                                      (821)                    587
    Extraordinary item                                                                            -                     519
    Changes in assets and liabilities:
    Prepaid expenses                                                                         (6,063)                 (4,272)
    Rental merchandise                                                                     (187,438)               (105,664)
Income tax receivable                                                                             -                   1,529
Other assets                                                                                 (2,390)                  1,871
Accounts payable                                                                             (4,644)                (16,772)
Income taxes payable                                                                         15,921                   6,971
Other liabilities                                                                              (277)                 (1,825)
                                                                                    ---------------         ---------------
                     Net cash used in operating activities                                  (27,676)                 (2,036)


Investing activities:
    Purchase of businesses, net of cash acquired                                            (18,530)                 (1,054)
    Purchases of property and equipment                                                     (26,546)                (15,503)
                                                                                    ---------------         ---------------
                  Net cash used in investing activities                                     (45,076)                (16,557)

Financing activities:
    Proceeds from borrowings                                                                313,172                 273,556
    Payments on borrowings including early extinguishment                                  (261,350)               (256,322)
    Book overdraft                                                                           13,256                       -
    Deferred finance costs                                                                   (2,650)                 (1,366)
Proceeds from common stock issuance                                                          12,765                   4,313
                                                                                    ---------------         ---------------
    Net cash provided by financing activities                                                75,193                  20,181
                                                                                    ---------------         ---------------
    Increase in cash                                                                          2,441                   1,588

Cash at beginning of period                                                                   8,646                   5,326
                                                                                    ---------------         ---------------

Cash at end of period                                                               $        11,087         $         6,914
                                                                                    ===============         ===============

Supplemental disclosure of noncash financing activity:
    Common stock issued to extinguish debt                                          $        20,000         $             -
                                                                                    ===============         ===============





   The accompanying notes are an integral part of these financial statements.

</TABLE>

<PAGE>


                                 RENT-WAY, INC.

         Notes to Unaudited Condensed Consolidated Financial Statements
                (all dollars in thousands, except per share data)

1.    Basis of Presentation:

    Rent-Way,  Inc. (the  "Company" or  "Rent-Way")  is a corporation  organized
under the laws of the Commonwealth of Pennsylvania. The Company operates a chain
of  rental-purchase  stores that rent durable  household  products  such as home
entertainment equipment, furniture, major appliances and jewelry to consumers on
a weekly or monthly basis. The Company also provides prepaid local phone service
to consumers  on a monthly  basis  through its  majority-owned  subsidiary,  dPi
Teleconnect,  L.L.C. The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with the  instructions to Form 10-Q,
and therefore,  do not include all  information  and notes  necessary for a fair
presentation  of financial  position,  results of  operations  and cash flows in
conformity  with generally  accepted  accounting  principles.  In the opinion of
management,  all  adjustments  (which,  except as discussed  herein,  consist of
normal recurring  adjustments),  which are necessary for a fair statement of the
financial  position,  results of  operations  and cash flows of the Company have
been made. The results of operations for the interim periods are not necessarily
indicative  of the  results for the full year.  Certain  amounts in the June 30,
1999 financial statements have been reclassified to conform to the June 30, 2000
presentation.

    The condensed  consolidated financial statements include the accounts of the
Company and its wholly-owned and  majority-owned  subsidiaries.  All significant
intercompany transactions and balances have been eliminated.

    The Company has no items of other comprehensive income.

    These  financial  statements  and  the  notes  thereto  should  be  read  in
conjunction  with the Company's  audited  financial  statements  included in its
Annual Report on Form 10-K for the fiscal year ended September 30, 1999.

    In 1999, the Company adopted  Statement of Financial  Accounting  Standards,
("SFAS")  No. 131,  "Disclosures  about  Segments of an  Enterprise  and Related
Information".  This statement  requires that public business  enterprises report
certain  information about their products and services,  the geographic areas in
which they operate,  and their major customers.  During fiscal 1999, the Company
determined  it had only one  segment  and the  adoption  of SFAS No.  131 had no
impact on the  consolidated  financial  statements  and the  related  disclosure
information. The acquisition of dPi Teleconnect LLC (see Note 4) resulted in the
recognition of a separate operating segment (see Note 5).

    In June 1998,  the FASB  issued  SFAS No. 133,  "Accounting  for  Derivative
Instruments and Hedging Activities"  effective for all fiscal quarters of fiscal
years beginning after June 15, 1999. This Statement  establishes  accounting and
reporting  standards for derivative  instruments,  including certain  derivative
instruments   embedded  in  other  contracts,   (collectively   referred  to  as
derivatives)  and for hedging  activities.  It requires that an entity recognize
all  derivatives  as either assets or  liabilities in the statement of financial
position and measure those  instruments  at fair value.  In June 1999,  the FASB
issued   SFAS   No.   137,   "Accounting   for   Derivative    Instruments   and
Hedging Activities-Deferral  of the Effective Date of SFAS No. 133-an  Amendment
of FASB  Statement  133."  This  Statement  delays the  effective  date for this
standard  until  fiscal  years  beginning  after June 15,  2000.  The Company is
currently evaluating the provisions of this Statement.

    The Accounting  Standards  Executive  Committee  Statement of Position 98-5,
"Accounting for the Costs of Start-up Activities" ("SOP 98-5"),  issued in April
1998 and  effective  for fiscal  years  beginning  after  December 15, 1998 with
earlier application permitted, provides guidance on financial reporting of start
up costs and  organization  costs. The Company adopted this statement on October
1,  1999,  resulting  in  no  significant  effect  on  the  Company's  financial
statements.

    In December  1999,  the  Securities  and  Exchange  Commission  issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial  Statements." The
Company is in the process of  determining  the impact this adoption will have on
its consolidated financial statements.


<PAGE>


                                 RENT-WAY, INC.

   Notes to Unaudited Condensed Consolidated Financial Statements - continued
                (all dollars in thousands, except per share data)



2.   Earnings per Common Share:

    Basic earnings per common share is computed using income available to common
  shareholders   divided  by  the  weighted  average  number  of  common  shares
  outstanding.  Diluted  earnings  per common  share is  computed  using  income
  available to common  shareholders  adjusted for anticipated  interest savings,
  net of related taxes, on conversion of the Company's convertible  subordinated
  debentures and the weighted  average number of shares  outstanding is adjusted
  for the potential impact of options, warrants and the convertible subordinated
  debentures where the effects are dilutive. Since the effect of shares issuable
  upon  exercise  of  stock  options  and  upon  conversion  of  7%  convertible
  debentures was  anti-dilutive  for the nine months ended June 30, 1999,  basic
  and diluted earnings per common share were the same.

    The  following  table  discloses  the   reconciliation   of  numerators  and
  denominators of the basic and diluted earnings per common share computation:

<TABLE>
<CAPTION>


                                                                       For the three months          For the nine months
                                                                               ended                        ended
                                                                             June 30,                     June 30,
                                                                            (unaudited)                  (unaudited)
             Computation of EARNINGS per share:                        2000           1999          2000          1999
             ----------------------------------                    ------------   ------------  ------------  -----------

             BASIC
<S>                                                                <C>            <C>           <C>           <C>
             Earnings applicable to common shares...............   $     11,577   $      8,123  $     32,637  $      5,188
                                                                   ============   ============  ============  ============

             Weighted average number of common shares
               outstanding during the period....................         23,984         21,335        22,932        21,222
                                                                   ============   ============  ============  ============

             Basic earnings per common share:
               Earnings before extraordinary item...............   $       0.48   $       0.38  $       1.42  $       0.27
                                                                   ============   ============  ============  ============
               Net income.......................................   $       0.48   $       0.38  $       1.42  $       0.24
                                                                   ============   ============  ============  ============


             Diluted
             Earnings applicable to common shares...............   $     11,577   $      8,123  $     32,637  $      5,188
             Interest on 7% convertible debentures (net of tax).             --            210           350            --
                                                                   ------------   ------------   -----------  ------------

             Earnings applicable for diluted earnings per share    $     11,577   $      8,333  $     32,987  $      5,188
                                                                   ============   ============  ============  ============
             Weighted average number of common shares
               outstanding during the period used in basic
               calculation......................................         23,984         21,335        22,932        21,222
             Shares issuable upon exercise of stock options,
               warrants and escrowed shares.....................            876            547           472            --
             Shares issued on conversion of 7% convertible
               debentures.......................................             --          1,496           743            --
                                                                   ------------   ------------  ------------  ------------
             Weighted average number of shares used in
             calculation of diluted earnings per share .........         24,860         23,378        24,147        21,222
                                                                   ============   ============  ============  ============
               .......

             Earnings per common share:
               Earnings before extraordinary item...............   $       0.47   $       0.36  $       1.37  $       0.27
                                                                   ============   ============  ============  ============
               Net income.......................................   $       0.47   $       0.36  $       1.37  $       0.24
                                                                   ============   ============  ============  ============

</TABLE>

3.  Mergers and Acquisitions:

     On  March  22,  2000,  the  Company  purchased  a  portion  of  the  rental
merchandise and rental contracts of ABC Television and Appliance  Rental,  Inc.,
doing   business  as  Prime  Time  Rentals   ("Prime   Time"),   a  thirty-store
rental-purchase chain. The Company purchased the assets of ten stores located in
Alabama and Tennessee with annual revenues of  approximately  $3,800 in exchange
for  consideration of $3,000 in cash.  Pursuant to the terms of the acquisition,
$400 of the  purchase  price was placed in  escrow,  subject to the terms of the
escrow  agreement to satisfy  sellers'  representations  and  warranties and any
purchase price adjustments. The acquisition was accounted for using the purchase
method of accounting.  Prime Time's assets were recorded at their estimated fair
values at the date of the  acquisition.  The excess of the acquisition cost over
the estimated fair value of net assets acquired, ("goodwill") of $2,876 is being
amortized over 20 years on a straight-line  basis.  The total cost of net assets
acquired was $3,000 and consisted of assets of $3,636 less acquisition  costs of
$636.  Assets  acquired at estimated fair value,  other than  goodwill,  include
rental merchandise of $700 and a non-compete agreement of $60. The Company is in
the  process  of  finalizing  the  purchase  price  allocation.   The  Condensed
Consolidated  Statements of Operations  for the three and nine months ended June
30,  2000,  include  the results of  operations  of Prime Time since the date of
acquisition.


                                 RENT-WAY, INC.

         Notes to Unaudited Condensed Consolidated Financial Statements
                (all dollars in thousands, except per share data)



3.  Mergers and Acquisitions (continued):

    On September 23, 1999, the Company acquired all of the outstanding shares of
RentaVision, Inc. ("RentaVision"),  a rental-purchase chain located in 16 states
with  annual  revenues  of  approximately  $75,000.  The  consideration  paid in
exchange for all the outstanding shares of RentaVision was $73,874 consisting of
$68,774 in cash and 278,801  shares of the  Company's  common stock  (restricted
shares).  Pursuant to the terms of the  purchase  agreement,  181,201  shares of
common stock  equivalent  to $4,000 of the  purchase  price was placed in escrow
subject to the terms and conditions of the escrow  agreement to secure  seller's
representations  and warranties and any purchase price  adjustments.  As of June
30, 2000,  the Company had not released any funds from the escrow account due to
final  settlement of the purchase price. The acquisition was accounted for using
the purchase method of accounting.  RentaVision's  assets and  liabilities  were
recorded at their fair values as of the date of the  acquisition.  The excess of
the  acquisition  cost over the estimated fair value of the net assets  acquired
("goodwill")  of $90,189 is being  amortized  on a  straight-line  basis over 30
years.  The total cost of the net assets  acquired was $73,874 and  consisted of
assets of $106,179 less liabilities  assumed of $25,610 and acquisition costs of
$6,695.  Assets acquired (at fair value) other than goodwill consisted primarily
of rental  merchandise  of $12,267,  non-compete  agreement of $1,000,  customer
contracts of $1,200, cash of $725, and other assets of $798. Liabilities assumed
(at fair value) consisted  primarily of debt of $21,527,  accrued liabilities of
$3,125, and trade accounts payable of $958. The Condensed Consolidated Statement
of  Operations  for the three and nine months  ended June 30, 2000  includes the
results of operations of RentaVision for the entire period.

    On June 30,  1999,  the  Company  acquired  all the  outstanding  shares  of
America's Rent-To-Own Center, Inc.,  ("America's  Rent-To-Own").  At the time of
the acquisition,  America's  Rent-To-Own  operated a chain of 21 rental-purchase
stores located in Arkansas, Kansas, Missouri, and Oklahoma, with annual revenues
of  approximately  $8,000.  The  consideration  paid  in  exchange  for  all the
outstanding shares of America's  Rent-To-Own  consisted of 231,140 shares of the
Company's  common  stock  (restricted  shares).  Pursuant  to the  terms  of the
purchase  agreement  approximately $800 or 32,454 shares of the Company's common
stock were placed in escrow  subject to the terms and  conditions  of the escrow
agreement to secure  seller's  representations  and  warranties and any purchase
price  adjustments.  As of June 30, 2000, the Company had not released any funds
from the escrow  account due to final  settlement  of the  purchase  price.  The
acquisition was accounted for using the purchase method of accounting. America's
Rent-To-Own assets and liabilities were recorded at their fair value at the date
of the  acquisition.  The excess of the acquisition  cost over the fair value of
net assets  acquired,  ("goodwill")  of $4,858 is being  amortized on a straight
line basis over 30 years.  The total cost of the net assets  acquired was $4,838
and  consisted  of assets of  $7,284  less  liabilities  assumed  of $2,149  and
acquisition costs of $297. Assets acquired,  other than goodwill (at fair value)
consisted of rental  merchandise  of $1,269,  receivables  of $632,  prepaid and
other assets of $65, a deferred tax asset of $400,  and a non-compete  agreement
of $60. Liabilities assumed (at fair value) consisted of debt of $1,295, accrued
liabilities of $474 and trade  accounts  payables of $380. The Company is in the
process of finalizing the purchase price allocation.  The Condensed Consolidated
Statement  of  Operations  for the three and nine  months  ended June 30,  2000,
includes  the results of  operations  of  America's  Rent-To-Own  for the entire
period.

4.  dPi Teleconnect L.L.C. Acquisition:

     On January 4, 2000, the Company  acquired a 49% interest in dPi Teleconnect
L.L.C.  ("DPI").  DPI, a privately  held  Delaware  limited  liability  company,
provides  prepaid local phone service on a month by month basis. In exchange for
its 49% interest,  the Company paid  consideration of $6,400 in cash. As part of
the purchase  agreement with DPI, the Company  retained an option to purchase an
additional  21% interest,  which was  exercised  during the third  quarter.  The
consideration for the additional  interest is $1,100 in cash. In addition to the
option to  increase  its  ownership  interest,  the  Company  has agreed to fund
working capital  requirements  for DPI over the next three years,  for a maximum
amount of $3,000 at the  higher of the prime  rate plus 200 basis  points or the
rate at which the  Company is able to borrow  funds.  As of June 30,  2000,  the
Company had advanced working capital to DPI in the amount of $1,780. As a result
of the Company's  purchase of an additional 21% interest in DPI, the acquisition
has been  reported on a  consolidated  basis  beginning in the third  quarter in
accordance  with FAS 94. The excess of the  acquisition  cost over the estimated
fair value of net assets acquired ("goodwill") of $8,161 is being amortized on a
straight-line  basis over 15 years.  The total cost of net liabilities  acquired
was $386 with  acquisition  costs of $276.  The  purchase  price  allocation  is
subject to refinement  upon  finalization  of the review of fair value of assets
acquired.


                               RENT-WAY, INC.

         Notes to Unaudited Condensed Consolidated Financial Statements
                (all dollars in thousands, except per share data)


5.  Segment Information:

    Rent-Way is a national  rental-purchase  chain,  which provides a variety of
services  to its  customers  including  rental  of  house-hold  items  and local
telephone  service on a week by week or month by month  basis.  The  Company has
determined  that  its  reportable  segments  are  those  that  are  based on the
Company's  method of internal  reporting,  which  disaggregates  its business by
product category.  The Company's  reportable segments are: household rentals and
prepaid  telephone  service.  Its  household  rental  segment  rents  name brand
merchandise such as furniture,  appliances,  electronics and computers on a week
by week or month by month basis. Its prepaid  telephone service segment provides
a local dial tone on a month by month basis.

    The financial  results of the Company's  segments follow the same accounting
policies as described in "Summary of Significant  Accounting Policies" (see Note
1). The information  presented below does not include the results of the prepaid
telephone service segment prior to January 4, 2000 (see Note 4).

<TABLE>
<CAPTION>


                                                                   Rental          Phone           Total
                For the three months ended June 30, 2000           Segment        Segment         Segments
                ----------------------------------------           -------        -------         --------
<S>                                                                <C>
                Total revenue..................................    $147,830       $  4,488      $    152,318
                                                                   ========       ========      ============
                Operating income (loss)........................      25,407           (184)           25,223
                                                                   ========       ========      ============
                Net income (loss)..............................    $ 11,705           (128)           11,577
                                                                   ========       ========      ============

                For the nine months ended June 30, 2000
                Total revenue..................................    $437,631       $  8,080           445,711
                                                                   ========       ========      ============
                Operating income (loss)........................    $ 73,202           (580)           72,622
                                                                   ========       ========      ============
                Net income (loss)..............................    $ 32,962           (368)           32,594
                                                                   ========       ========      ============

                Total Assets...................................    $716,757       $  2,312      $    719,069
                                                                   ========       ========      ============


</TABLE>

The  following  is a  reconciliation  of segment  information  to the  Company's
Condensed Consolidated totals:

<TABLE>
<CAPTION>



                                                                         Period Ended June 30, 2000
                                                                         --------------------------
                                                                        Three months    Nine months
                                                                        ============    ===========

                 Total revenue:
<S>                                                                       <C>           <C>
                    Total segments.................................       $  152,318    $   445,711
                        Elimination of non-consolidated revenue....             (232)        (3,824)
                                                                          ----------    -----------
                        As reported................................       $  152,086    $   441,887
                                                                          ==========    ===========

                    Net income:
                        Total segments.............................       $   11,577    $    32,594
                        Elimination of non-consolidated loss                       -             43
                                                                          ----------    -----------

                        As reported................................          $11,577    $    32,637
                                                                          ==========    ===========

                    Total assets at June 30, 2000:
                        Total segments.............................                     $   719,069
                        Elimination of non-consolidated assets.....                          (1,289)
                                                                                        -----------
                        As reported................................                     $   717,780
                                                                                        ===========

</TABLE>




<PAGE>


                           RENT-WAY, INC.

         Notes to Unaudited Condensed Consolidated Financial Statements
                (all dollars in thousands, except per share data)


6. Debt:

    On June 28, 2000, the Company amended its existing  collateralized term loan
and revolving  credit facility  ("Senior  Credit  Facility") with a syndicate of
banks led by National City Bank of Pennsylvania  (the "Amended  Facility").  The
Amended Facility,  co-led by National City Bank, acting as administrative agent,
Bank of America,  N.A., acting as documentation  agent, and Bank of Montreal and
Harris Trust and Savings Bank, acting as syndication agents,  provides for loans
and letters of credit of up to $435,000  (revolving  notes and letters of credit
$114,444,  Term  Loans A  $143,056  and Term Loans B  $177,500).  The  syndicate
members and their ratable share of the Amended Facility are:

<TABLE>
<CAPTION>


<S>                                                                                            <C>
                             Bank of America, N.A                                              8.04598%
                             Harris Trust and Savings Bank                                     8.04598%
                             National City Bank of Pennsylvania                                8.04598%
                             Bank of Montreal                                                  7.18391%
                             National City Bank of Cleveland                                   7.18391%
                             Manufacturers and Traders Trust Company                           6.89655%
                             Firstar Bank, National Association                                5.74713%
                             LaSalle Bank National Association                                 5.17241%
                             Fleet Bank, N.A                                                   4.59770%
                             PNC Bank, National Association                                    4.59770%
                             SunTrust Bank                                                     4.59770%
                             Bank One, N.A.                                                    3.44828%
                             Fifth Third Bank, Northeastern Ohio                               3.44828%
                             Merrill Lynch Senior Floating Rate Fund, Inc.                     2.75862%
                             Franklin Floating Rate Trust                                      2.29885%
                             Heller Financial                                                  2.29885%
                             PPM Spyglass Funding Trust                                        2.29885%
                             Simsbury CLO, Limited                                             2.29885%
                             Maplewood (Cayman) Limited                                        1.91571%
                             Archimedes Funding III, Ltd.                                      1.14943%
                             Avalon Capital Ltd.                                               1.14943%
                             First Dominion Funding II                                         1.14943%
                             Morgan Guaranty Trust Company of New York                         1.14943%
                             Olympic Funding Trust Series 1999-1                               0.91954%
                             Archimedes Funding II, Ltd.                                       0.68966%
                             Merrill Lynch Senior Floating Rate Fund II, Inc.                  0.68966%
                             Kemper Floating Rate Fund                                         0.45977%
                             KZH Riverside LLC                                                 0.45977%
                             Muirfield Trading LLC                                             0.45977%
                             Sequils-ING I (HBDGM), Ltd.                                       0.45977%
                             Massachusetts Mutual Life Insurance Company                       0.38314%

</TABLE>


    Under the Amended  Facility,  the Company may borrow funds under a base rate
option plan or  euro-rate  option  plan.  Under the base rate option  plan,  the
Company  may borrow  funds  based on a spread of prime rate plus  0.250% to 2.0%
(prime rate at June 30, 2000 of 9.5%).  The actual spread is determined based on
the ratio of debt to cash flows from  operations  during the  period.  Under the
euro-rate  option,  the Company may borrow funds based on a spread of the London
Interbank Offer Rate,  ("LIBOR") plus 175 to 350 basis points (LIBOR at June 30,
2000 of 6.6525%).  The actual spread is determined based on the ratio of debt to
cash flow  generated from  operations  during the period.  Borrowings  under the
euro-rate  option require the Company to select a fixed  interest  period during
which the  euro-rate is  applicable  with the  borrowed  amount not to be repaid
prior to the last day of the selected  interest period.  In addition,  borrowing
tranches under the euro-rate  option must be in multiples of $1,000.  Commitment
fees  associated  with the Amended  Facility are equal to 0.375% for each banks'
commitment  starting with this facility.  These  borrowings may be repaid at any
time.

    As of June 30, 2000, the Company's debt under both the euro-rate  option and
base-rate option plans were as follows:

<TABLE>
<CAPTION>


               Borrowing option plan                 Amount          Rate            Expiration Date
               ---------------------                 ------          ----            ---------------
<S>                                                      <C>              <C>                   <C> <C>
               Base Rate...........................$143,055         10.75%               7/5/2000
               Base Rate...........................$176,775         11.50%               7/3/2000
                                                   --------
                                                   $319,830
                                                   ========
</TABLE>


    The principal  amount of the Term Notes A under the Amended  Facility  (with
maximum borrowings of $143,056 outstanding at June 30, 2000) shall be payable in
quarterly  payments  due on the  last day of each  December,  March,  June,  and
September, beginning with the quarter ending September 30, 2000, and as follows:

<TABLE>
<CAPTION>


       Quarter(s)Ending on Following Date or                           Percentage of Principal of Term A
        Commitments In the Following Period                               Due on Each Payment Date
       -------------------------------------                           ---------------------------------
<S>        <C>  <C>        <C>  <C>                                                         <C>
           9-30-00 through 6-30-01                                                          3.0%
           9-30-01 through 6-30-02                                                          4.0%
           9-30-02 through 6-30-03                                                          5.0%
           9-30-03 through 6-30-04                                                          6.0%
           9-30-04 through 6-30-05                                                          7.0%
</TABLE>


    The principal  amount of each of the Term Notes B under the Amended Facility
(with  maximum  borrowings  of $176,775  outstanding  at June 30, 2000) shall be
payable as  follows:  (i) one  payment  due on June 30,  2000,  in the amount of
$250,000  to be  applied  pro rata to the Term Loans B  outstanding  immediately
prior to Amendment No. 4 Closing Date, (ii) seventeen  quarterly payments due on
the last day of each September,  December,  March, and June,  beginning with the
quarter ending  September 30, 2000,  and  continuing  through the quarter ending
September  30, 2004,  each such payment in an amount equal to  one-fourth of one
percent  (1/4%) of the term Loan B  Commitments,  (iii) one payment on September
30, 2005, in an amount equal to forty-seven  and one-half  percent  (47-1/2%) of
the Term Loan B Commitments,  and (iv) a final payment on September 30, 2006, of
the remaining principal balance of the Term Loans B.

    By notice to the holders thereof dated December 10, 1999, the Company called
for a  mandatory  redemption  of its $20  million  7%  Convertible  Subordinated
Debentures  due 2007.  The  Company  had the right to redeem the  debentures  on
February  5,  2000,  at a price of 103%.  On  February  6,  2000,  $20,000 of 7%
Subordinated Convertible Debentures converted into 1,495 shares of the Company's
common  stock.  The  debentures  were  convertible  into shares of common stock,
without par value,  at a  conversion  price of $13.37 per share at the option of
the shareholders at any time on notice therefrom. Unamortized deferred financing
costs in the  amount of $715 were  charged  to  equity  in  connection  with the
conversion.









<PAGE>


7.  Derivative Financial Instruments:

    The fair value of the interest rate swap agreements based on settlement cost
as estimated by independent dealers as of June 30, 2000 is as follows:

<TABLE>
<CAPTION>


                                                                             Notional         Fair
                                                                              Amount          Value
<S>                                                                        <C>
        Interest rate swap, National City Bank.......................      $30,000        $       878
        Interest rate swap, Bank of America..........................      $20,000        $       235
        Interest rate swap, Manufacturers' and Traders Trust Company.      $10,000        $       293
        Interest rate swap, Harris Bank..............................      $20,000        $     1,219
        Interest rate swap, SunTrust Bank............................      $10,000        $       607
        Interest rate swap, LaSalle Bank.............................      $10,000        $       608
        Interest rate swap, Bank of America..........................      $10,000        $       683
        Interest rate swap, Harris Bank..............................      $10,000        $       600
        Interest rate swap, PNC Bank.................................      $ 5,000        $        31

</TABLE>


8.  Related Party Transactions:

    As of June 30, 2000,  the Company had full recourse  notes  receivable  (the
"Notes") of $766 from various  officers and directors of the Company.  The Notes
were  approved  by the Board of  Directors  for the  purpose of  certain  option
exercises.  The Notes  are  reflected  as a  reduction  to  common  stock in the
Company's condensed consolidated balance sheets.

9.  Contingencies:

     The  Company  is subject to legal  proceedings  and claims in the  ordinary
course of its business that have not been finally adjudicated.  Certain of these
cases have resulted in  contingent  liabilities  ranging in the  aggregate  from
$2,300 to $4,300. The majority of such claims are, in the opinion of management,
covered by  insurance  policies  and  therefore  such  claims  should not have a
material effect on the financial  position,  results of operations or cash flows
of the Company.

     Additional  claims  exist in the  aggregate  range of $69 to $135 for which
management believes it has meritorious  defenses but for which the likelihood of
an unfavorable outcome is currently not determinable.  In management's  opinion,
each of these claims will either be indemnified by the previous  shareholders of
prior  acquisitions or covered by insurance policies and therefore will not have
a material  effect on the financial  position,  results of  operations,  or cash
flows of the Company.

10.  Income Taxes:

     The  fiscal  1999   effective  tax  rate  has  been  adjusted  for  certain
non-deductible  business  combination  costs  which  have been  expensed  in the
quarter ended  December 31, 1998. As a result,  the impact on the effective rate
for the year has been entirely reflected in the quarter ended December 31, 1998,
and without these charges would have been approximately 41.5%.

11.  Changes in Shareholders' Equity

     Changes in  shareholders' equity for the nine months ended June 30, 2000,
are primarily due to the conversion of the Company's 7% Subordinated Convertible
Debentures, the sale of shares to Gateway Companies, Inc., the exercise of stock
options, and the issuance of shares to the Company's benefit plan.



<PAGE>




                                 RENT-WAY, INC.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (all dollars in thousands)

Overview

     Rent-Way is the second  largest  operator in the rental  purchase  industry
with 1,117 stores  located in 41 states.  The Company  offers quality brand name
home entertainment equipment,  furniture,  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 also provides prepaid local phone service to consumers
on a monthly  basis  through its  majority-owned  subsidiary,  dPi  Teleconnect,
L.L.C.

    On June 30, 1999, the Company acquired America's  Rent-To-Own  Center,  Inc.
("America's  Rent-To-Own").  The transaction  value was approximately $7 million
and was paid for with a combination of 231,140 shares of Rent-Way's common stock
and the assumption of certain  liabilities.  America's  Rent-To-Own  operated 21
rental-purchase  stores in Arkansas,  Kansas,  Missouri,  and Oklahoma,  and had
annual revenues of approximately $8 million.

    On September 23, 1999,  the Company  acquired all the stock of  RentaVision,
Inc.  ("RentaVision")  for  a  purchase  price  of  approximately  $74  million.
RentaVision  operated a chain of 250 rental-purchase  stores in 16 states, 50 of
which have been opened during the past year.  RentaVision had annual revenues of
approximately $75 million.

    On March 22,  2000,  the  Company  acquired  a portion  of the assets of ABC
Television   and  Appliance   Rental  Inc.   ("Prime   Time"),   a  thirty-store
rental-purchase chain. The Company purchased the assets of ten stores located in
Alabama and Tennessee  with  estimated  annual revenue of $3,800 in exchange for
consideration of $3,000 in cash.

    The Company completed the management  information systems integration of all
stores acquired in the America's  Rent-To-Own  acquisition by July 31, 1999, all
stores  acquired in the  RentaVision  acquisition  by November 11, 1999, and all
stores  acquired in the Prime Time  acquisition  by April 12, 2000. In addition,
the Company consolidated all back office functions such as accounting,  payroll,
and human  resources.  The  Company  closed  and  merged 51  stores  located  in
overlapping  markets.  The Company  also  closed  RentaVision's  five  warehouse
locations.  The Company  uses a  direct-ship  policy  from their  vendors to the
stores. This policy has minimized the amount of rental merchandise not on rent.

     On January 4, 2000, the Company acquired a 49% interest in dPi Teleconnect,
L.L.C.  ("DPI"), a privately-held  provider of prepaid local phone service.  The
Company had the option to acquire an  additional  21%  interest  upon receipt of
regulatory  approvals.  During the third  quarter,  the Company  exercised  this
option.  In fiscal  1999,  the  Company  began to act as an agent  for DPI.  The
Company  successfully  tested  this  service in 70 of its  stores and  currently
offers  this  service  in 392  stores.  The  Company  received  the  benefit  of
additional  traffic in these stores,  as well as, a 10% commission from the sale
of the service.  DPI is currently  licensed to offer prepaid local phone service
in 21 states and is working to expand to over 40 states by the end of 2000.

    On February 6, 2000,  $20,000 in  subordinated  convertible  debentures were
converted at a  conversion  price of $13.37 per share into  1,495,986  shares of
common  stock,  with  no par  value.  The  Company  had  previously  called  the
debentures for redemption on February 5, 2000, at a price of 103%.

    On April 21, 2000, the Company entered into an agreement with Gateway,  Inc.
("Gateway")  under which the Company will become the exclusive  rental  purchase
supplier of Gateway computers and technologies. Under the agreement, which calls
for an initial  term of three  years,  Rent-Way  will offer  Gateway  computers,
complete  with  Internet  access,  exclusively  to customers on a weekly  rental
basis.  Also as part of the agreement,  Gateway  Companies,  Inc.  invested $7.0
million in Rent-Way.

    Management continues to actively seek acquisition  candidates with financial
and geographic profiles consistent with the Company's growth objectives.

Results of Operations

    The following  table sets forth,  for the periods  indicated,  certain items
from the Company's  unaudited Condensed  Consolidated  Statements of Operations,
expressed as a percentage of revenues.

<TABLE>
<CAPTION>



                                                                  Three Months                          Nine Months
                                                                  Ended June 30                        Ended June 30

                                                   --------------------------------------------------------------------------------
                                                             2000               1999              2000               1999
                                                   --------------------------------------------------------------------------------
Revenues:
<S>                                                                <C>            <C>                  <C>                 <C>
  Rental revenue.............................                   83.3%             86.4%             84.6%               86.6%
  DPI revenue................................                    2.8                --               0.9                  --
  Other revenue..............................                   13.9              13.6              14.5                13.4
                                                       -------------     -------------     -------------       -------------
     Total revenues..........................                  100.0             100.0             100.0               100.0

Costs and operating expenses:
Depreciation and amortization
  Rental merchandise.........................                   23.5              24.5              23.3                25.1
  Property and equipment.....................                    2.8               2.0               2.7                 1.9
  Amortization of goodwill...................                    2.2               1.9               2.2                 2.0
                                                       -------------     -------------     -------------       -------------
     Total depreciation and amortization.....                   28.5              28.4              28.3                29.0
Cost of prepaid phone service                                    1.7                --               0.6                  --
Salaries and wages...........................                   24.7              26.2              24.6                26.2
Advertising..................................                    2.9               4.4               3.6                 5.2
Occupancy....................................                    6.4               7.0               7.0                 6.7
Name change expense..........................                     --                --                --                  --
Business combination costs...................                     --                --                --                 4.5
Other operating expenses.....................                   19.2              19.5              19.4                21.2
                                                       -------------     -------------     -------------       -------------
     Total costs and operating expenses......                   83.4              85.5              83.5                92.8
                                                       -------------     -------------     -------------       -------------
     Operating income........................                   16.6              14.5              16.5                 7.2
Interest expense.............................                   (4.6)             (3.3)             (4.6)               (3.2)
Equity in loss of subsidiary                                      --                --                --                  --
Interest income..............................                     --                --                --                  --
Other income.................................                     --              (0.1)               --                  --
                                                       -------------     -------------     -------------       -------------
     Income  before income taxes and
     extraordinary item......................                   12.0              11.1              11.9                 4.0
Income tax expense ..........................                    4.4               4.4               4.6                 2.5
                                                       -------------     -------------     -------------       -------------
     Income  before extraordinary item.......                    7.6               6.7               7.4                 1.5
Extraordinary item...........................                     --                --                --                (0.1)
                                                       -------------     -------------     -------------       -------------
Net Income...................................                    7.6%              6.7%              7.4%                1.4%
                                                       =============     =============     =============       =============

</TABLE>


Comparison of Three Months Ended June 30, 2000 and 1999

         Total revenues.  Total revenues  increased  $30.1 million,  or 24.7% to
$152.1 million from $122.0 million. The increase is attributable to the addition
of the stores  acquired  and opened in fiscal 1999 and 2000,  DPI  revenue,  and
increased  core store  revenues  offset by a decrease  in  revenue  from  stores
acquired from Home Choice  Holdings,  Inc. ("Home Choice") in December 1998. DPI
accounted  for  $4.2  million  of  the  increase.  The  stores  acquired  in the
RentaVision,  America's  Rent-To-Own,  and Prime Time acquisitions accounted for
$21.7  million,  $2.1 million,  and $0.9 million of the increase,  respectively.
Stores  opened  in  fiscal  1999 and 2000  accounted  for  $2.6  million  of the
increase.  Revenue  increases in core stores  accounted  for $0.4 million of the
increase. These increases were offset by a $1.8 million decrease in revenues for
the Home Choice  stores.  This  decrease is  attributable  to store  mergers and
closings.  The  Company  experienced  a 3.2%  increase  in same  store  revenues
compared to the same period last year.  Increase in same store  revenues for the
Rent-Way  stores and Home Choice  stores were 5.1% and 1.4%,  respectively.  The
Company  expects  increased  same store revenues for the rest of the fiscal 2000
due to, among many other  factors,  the  addition of new products and  services.
During the last quarter of fiscal 1999, the Company added personal  computers to
its product  line.  The Company also acts as an agent to provide  prepaid  phone
service through DPI. The DPI service is currently offered in over 300 stores. In
April 2000 the Company began offering Gateway  computers with Internet access to
customers on a weekly rental basis. Management believes that opportunities exist
to provide additional non-traditional merchandise to its customers.

         Depreciation and amortization.  Depreciation  expense related to rental
merchandise  decreased  1.0% as a  percentage  of total  revenues  to 23.5% from
24.5%. This decrease is primarily due to increases in weekly rental rates, lower
purchase  costs of rental  merchandise  due to  increased  volume,  and improved
realization of potential collectible rent. In addition,  depreciation expense as
a  percentage  of total  revenues  has shown  solid  improvement  in the  stores
acquired in the Home Choice  merger.  Acquired  merchandise  with high remaining
values  has  worked  its way out of the  Company's  system  and the  stores  are
replacing  poorly priced and termed  agreements  with new agreements  priced and
termed in accordance with Rent-Way operating procedures.

         Depreciation  expense  related to property and  equipment  increased to
2.8% as a percentage of total  revenues from 2.0%.  This increase is principally
due to the  depreciation  expense  related  to new store  signage  and  remodels
associated with the Home Choice stores, new computers and equipment installed in
the RentaVision  stores, and the computer and software costs associated with the
Company's  implementation of the PeopleSoft software package in January 1999 and
the development of a new Windows-based POS system.

         Amortization  of goodwill  increased to 2.2% as a  percentage  of total
revenues  from 1.9%.  This  increase  is  primarily  due to the  addition of the
goodwill associated with the RentaVision,  America's Rent-To-Own, and Prime Time
acquisitions.

     Cost of prepaid phone service.  Cost of prepaid phone service  increased to
$2.7  million,  or 1.7% as a  percentage  of total  revenues.  These  are  costs
associated with DPI telephone service.

         Salaries  and wages.  Salaries  and wages  increased by $5.7 million to
$37.6 million from $32.0  million,  but decreased  1.5% as a percentage of total
revenues  to 24.7% from  26.2%.  This 1.5%  decrease  as a  percentage  of total
revenues  is due to the  Company's  ability  to spread  corporate  and  regional
managers'  payroll over an increased  store revenue  base.  The decrease is also
attributable  to the Company  bringing Home Choice  payroll and store  personnel
levels within the Company's standards. As a result of these factors, the Company
expects  a further  decline  in  salaries  and  wages as a  percentage  of total
revenues during the remainder of fiscal 2000.

         Advertising.  Advertising  expense  decreased to $4.4 million from $5.3
million and decreased to 2.9% as a percentage of total revenues from 4.4%.  This
decrease is due to the Company's ability to focus advertising efforts in cluster
markets.  It  is  also  due  to  the  Company's  participation  in  co-operative
advertising  programs with its vendors. As part of these co-operative  programs,
the  Company  is able to  recoup a portion  of its  advertising  costs  from its
vendors in the form of rebates for advertising their products in Rent-Way ads.

         Occupancy.  Occupancy  expense  increased  to $9.8  million  from  $8.5
million, but decreased 0.6% as a percentage of total revenues to 6.4% from 7.0%.
This 0.6%  decrease as a percentage  of total  revenues is due to the  Company's
ability to spread these fixed costs over an increased revenue base.

         Other operating  expenses.  Other operating expenses increased to $29.2
million  from $23.7  million but  decreased  to 19.2% as a  percentage  of total
revenues from 19.5%.  This decrease is the result of the efficiencies  gained by
the Company  from its ability to spread  certain  fixed costs over an  increased
store revenue base.  These  decreased fixed costs include  liability  insurance,
legal and professional fees, state and local taxes, and office supplies.

         Operating income. Operating income increased to 16.6% of total revenues
from 14.5% of total  revenues due to the factors  discussed  above.  The Company
anticipates its operating income to remain between 16% and 17% in fiscal 2000 as
a result of its  continued  ability to leverage  costs over an  increased  store
revenue base.

         Interest  expense.  Interest  expense  increased to 4.6% from 3.3% as a
percentage of total  revenues.  This increase is mainly due to the $68.8 million
in funds  drawn on the  Company's  senior  credit  facility  to  consummate  the
RentaVision acquisition.  The Company has also purchased rental merchandise at a
higher rate in an effort to supplement the merchandise in the RentaVision stores
with newer merchandise and a broader product selection. In addition, the Company
has begun  purchasing  Gateway  computers  at a rapid  pace to  support  the new
initiative to offer customers Gateway computers with Internet access on a weekly
rental basis.

         Income tax expense.  Income tax expense remained  constant at 4.4% as a
percentage of total revenues.

     Net income.  Net income  increased to 7.6% of total  revenues  from 6.7% of
total revenues due to the factors discussed above.

Comparison of Nine Months Ended June 30, 2000 and 1999

         Total revenues.  Total revenues  increased  $70.2 million,  or 18.9% to
$441.9 million from $371.7 million. The increase is attributable to the addition
of the stores  acquired  and opened in fiscal 1999 and 2000,  DPI  revenue,  and
increased core store revenues offset by a decrease in Home Choice  revenue.  The
stores  acquired  in the  RentaVision,  America's  Rent-To-Own,  and Prime  Time
acquisitions  accounted for $63.1 million, $6.2 million, and $0.9 million of the
increase,  respectively.  DPI accounted for $4.3 million of the increase. Stores
opened in fiscal  1999 and 2000  accounted  for $5.6  million  of the  increase.
Revenue  increases in core stores  accounted  for $1.2 million of the  increase.
These increases were offset by a $11.0 million decrease in revenues for the Home
Choice stores. This decrease is attributable to store mergers and closings.  The
Company  experienced a 2.2% increase in same store revenues compared to the same
period last year.  Increase  (decrease) in same store  revenues for the Rent-Way
stores and Home  Choice  stores were 5.1% and (0.3)%  respectively.  The Company
expects  increased  same store  revenues for the rest of the fiscal 2000 due to,
among many other factors, the addition of new products and services.  During the
last quarter of fiscal 1999, the Company added personal computers to its product
line. The Company also acts as an agent to provide prepaid phone service through
DPI. The DPI service is currently offered in over 300 stores. In April 2000, the
Company began offering Gateway  computers with Internet access to customers on a
weekly rental basis.  Management  believes that  opportunities  exist to provide
additional non-traditional merchandise to its customers.

         Depreciation and amortization.  Depreciation  expense related to rental
merchandise  decreased  1.8% as a  percentage  of total  revenues  to 23.3% from
25.1%. This decrease is primarily due to increases in weekly rental rates, lower
purchase  costs of rental  merchandise  due to  increased  volume,  and improved
realization of potential collectible rent. In addition,  depreciation expense as
a  percentage  of total  revenues  has shown  solid  improvement  in the  stores
acquired in the Home Choice  merger.  Acquired  merchandise  with high remaining
values  has  worked  its way out of the  Company's  system  and the  stores  are
replacing  poorly priced and termed  agreements  with new agreements  priced and
termed in accordance with Rent-Way operating procedures.

         Depreciation  expense  related to property and  equipment  increased to
2.7% as a percentage of total  revenues from 1.9%.  This increase is principally
due to the  depreciation  expense  related  to new store  signage  and  remodels
associated with the Home Choice stores, new computers and equipment installed in
the RentaVision  stores, and the computer and software costs associated with the
Company's  implementation of the PeopleSoft software package in January 1999 and
the development of a new Windows-based POS system.

         Amortization  of goodwill  increased to 2.2% as a  percentage  of total
revenues  from  2.0%.  This  increase  is due to the  addition  of the  goodwill
associated  with  the  RentaVision,   America's  Rent-To-Own,   and  Prime  Time
acquisitions.


     Cost of prepaid phone service.  Cost of prepaid phone service  increased to
$2.7  million,  or 0.6% as a  percentage  of total  revenues.  These  are  costs
associated with DPI telephone service.

         Salaries and wages.  Salaries and wages  increased by $11.5  million to
$108.9 million from $97.4  million,  but decreased 1.6% as a percentage of total
revenues  to 24.6% from  26.2%.  This 1.6%  decrease  as a  percentage  of total
revenues  is due to the  Company's  ability  to spread  corporate  and  regional
managers'  payroll over an increased  store revenue  base.  The decrease is also
attributable  to the Company  bringing Home Choice  payroll and store  personnel
levels within the Company's standards. As a result of these factors, the Company
expects  a further  decline  in  salaries  and  wages as a  percentage  of total
revenues during the remainder of fiscal 2000.

         Advertising.  Advertising expense decreased to $15.9 million from $19.3
million and decreased to 3.6% as a percentage of total revenues from 5.2%.  This
decrease is due to the Company's ability to focus advertising efforts in cluster
markets.  It  is  also  due  to  the  Company's  participation  in  co-operative
advertising  programs with its vendors. As part of these co-operative  programs,
the  Company  is able to  recoup a portion  of its  advertising  costs  from its
vendors in the form of rebates for advertising their products in Rent-Way ads.

         Occupancy.  Occupancy  expense  increased  to $31.1  million from $24.8
million,  or 0.3% as a  percentage  of total  revenues  to 7.0% from 6.7%.  This
increase  is  primarily  due to the  addition  of the  RentaVision  stores.  The
RentaVision  stores have lower  revenue  averages to charge  fixed  rental costs
against. The Company expects occupancy expense as a percentage of total revenues
to decrease as the RentaVision per store revenue averages increase. Fifty of the
250 stores acquired were opened in the past twelve months.

           Name change expense.  Name change expense decreased to zero from $0.1
million. In 1997, HomeChoice launched a program to change the name of all of its
stores from the various trade names  acquired to  "HomeChoice  Lease or Own." In
connection  with this program,  Home Choice  incurred  nonrecurring  costs which
included  the  write-off  of the net  carrying  values of old signs and  branded
supplies and the expensing of new vehicle decals. The Company currently operates
under both the RentWay and HomeChoice trade names.

         Business  combination  costs. In conjunction  with the Company's merger
with Home Choice Holdings, Inc. on December 10, 1998, the Company incurred $16.8
million in costs in the nine months  ended June 30, 1999.  These costs  included
investment banker fees of $6.5 million,  proxy preparation,  printing, and other
professional fees of $1.3 million,  employee severance and stay-put arrangements
of $4.5 million, due diligence and other costs of $0.9 million, costs related to
closing or disposing of duplicate corporate  headquarters,  equipment and stores
in  overlapping  markets of $2.1 million,  and the  write-off of prepaid  assets
which could not be used of $1.5 million.

         Other operating  expenses.  Other operating expenses increased to $85.5
million  from $78.7  million but  decreased  to 19.4% as a  percentage  of total
revenues  from 21.2%.  This  decrease is due in part to a decrease in  inventory
write-offs.  In  connection  with the  merger  with  Home  Choice,  the  Company
identified a large number of rental  merchandise items, which failed to meet the
accepted quality standards of the company's operating  procedures.  Accordingly,
the Company  experienced an excessive  amount of inventory  deletions during the
three month  period  ended  December  31,  1998.  The amount of these  excessive
inventory  write-offs was approximately $1.1 million.  This decrease is also the
result of the  efficiencies  gained by the  Company  from its  ability to spread
certain fixed costs over an increased store revenue base.  These decreased fixed
costs include liability insurance,  legal and professional fees, state and local
taxes, and office supplies.

         Operating income. Operating income increased to 16.5% of total revenues
from 7.2% of total  revenues  due to the factors  discussed  above.  The Company
anticipates  its  operating  income to remain  between 16.0% and 17.0% in fiscal
2000 as a result of its  continued  ability to leverage  costs over an increased
store revenue base.

         Interest  expense.  Interest  expense  increased to 4.5% from 3.2% as a
percentage of total  revenues.  This increase is mainly due to the $68.8 million
in funds  drawn on the  Company's  senior  credit  facility  to  consummate  the
RentaVision  acquisition.  The Company has  purchased  rental  merchandise  at a
higher rate in an effort to supplement the merchandise in the RentaVision stores
with newer merchandise and a broader product selection. In addition, the Company
has begun  purchasing  Gateway  computers  at a rapid  pace to  support  the new
initiative to offer customers Gateway computers with Internet access on a weekly
rental basis.

     Equity in earnings of subsidiary. In conjunction with the Company's initial
purchase of 49% ownership interest in DPI, a charge of $0.2 million reflects the
unconsolidated  loss for the  period.  The  Company  used the  equity  method to
account for this  acquisition.  In the third quarter,  the Company exercised its
option to acquire an additional  21% of DPI. The Company  consolidated  DPI upon
reaching majority ownership.

         Income  tax  expense.  Income  tax  expense  increased  to  4.6%  as  a
percentage of total revenues from 2.5% of total  revenues.  The increase was due
to an increase in pretax income and operating  income.  The Company's  effective
tax rate is 38.2%

     Net income.  Net income  increased to 7.4% of total  revenues  from 1.4% of
total revenues due to the factors discussed above.

Liquidity and Capital Resources

    The Company's  capital  requirements  relate primarily to acquisitions,  new
store  openings,  and 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   through
acquisitions and new store openings. 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,  depending upon market
and other conditions.  There can be no assurance that such additional  financing
will be available on terms acceptable to the Company.

     Net cash used in operating  activities  increased to $27.7  million for the
nine month  period  ended June 30,  2000,  from $2.0  million for the nine month
period ended June 30, 1999.  This increase is principally due to a $27.4 million
increase in net income,  a $15.4 million  increase in  depreciation  expense,  a
$21.4  million  increase in accounts  payable,  and a $9.0  million  increase in
income taxes payable  offset by a $81.8 million  increase in rental  merchandise
purchases.

    Net cash used in  investing  activities  increased  $28.5  million  to $45.1
million in the nine month period ended June 30, 2000,  compared to $16.6 million
in the nine month period ended June 30, 1999.  The increase in cash used for the
purchase of business was  primarily due to the Prime Time  acquisition  for $3.6
and the purchase of DPI for $8.2. Capital  expenditures in the nine month period
ended June 30,  2000,  included  the  purchase  of new store  signage  and store
remodeling  costs and the purchase of  computers  and  equipment  for the stores
acquired from RentaVision.

     The Company has begun to  construct  a 30,000  square foot  addition to its
current corporate  headquarters  facility. The Company  estimates  the cost at
approximately  $3.5  million.  The  Company plans  to fund  this  project  with
borrowings  on its senior  credit  facility. As of June 30,  2000,  the Company
incurred $1.3 million in costs related to this project.

    Net cash provided by financing  activities increased to $75.2 million in the
nine month  period  ended June 30,  2000,  from $20.2  million in the nine month
period  ended  June  30,  1999.  Cash  flows  from  financing   activities  have
historically represented the Company's financing of its long term growth.

    On June 28,2000, the Company amended its existing collaterized term loan and
revolving  credit facility with a syndicate of banks led by Bank of Montreal and
National City Bank (the "Amended  Facility").  The Amended Facility provides for
loans and letters of credit up to $435.0 million.  Borrowings  under the Amended
Facility bear interest at the Company's  option either at a base rate or a LIBOR
based rate. The Amended Facility  requires the Company to meet certain financial
covenants and ratios including  maximum  leverage,  minimum  interest  coverage,
minimum tangible net worth, fixed charge coverage,  and rental merchandise usage
ratios.  As of June 30, 2000,  the Company was in compliance  with all covenants
contained  in the  Amended  Facility.  As of July 21,  2000,  $319.5  million in
borrowings is outstanding under the Amended Facility.

     On January 10,  2000,  the Company  acquired a 49% interest in DPI for $6.4
million in cash.  The Company  acquired an  additional  21% interest  during the
third  quarter  for $1.1  million in cash.  The Company  has also  committed  to
provide DPI $3.0 million in funds to meet working capital requirements as needed
and has provided $1.8 million through June 30, 2000.

    Management believes that sufficient  resources will be available to meet the
Company's  short-term  cash  requirements.  The  Company  believes  that  it can
adequately fund its short-term cash needs through  borrowings  under the Amended
Facility and cash  generated  from  operations.  Cash  requirements  for periods
beyond the next twelve months depend on the Company's profitability, its ability
to manage working capital requirements, and its rate of growth.

Seasonality and Inflation

    Management  believes that operating  results may be subject to  seasonality.
The first  quarter  typically  has a greater  percentage  of rentals  because of
traditional  holiday  shopping  patterns.  Management  plans for these  seasonal
variances  and takes  particular  advantage  of the first  quarter  with product
promotions,  marketing campaigns,  and employee incentives.  Because many of the
Company's expenses do not fluctuate with seasonal revenue changes,  such revenue
changes may cause fluctuations in the Company's quarterly earnings.

    During the nine months ended June 30, 2000, 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.

Recent Accounting Pronouncements

    In June 1998,  the FASB  issued  SFAS No. 133,  "Accounting  for  Derivative
Instruments and Hedging Activities"  effective for all fiscal quarters of fiscal
years beginning after June 15, 1999. This Statement  establishes  accounting and
reporting  standards for derivative  instruments,  including certain  derivative
instruments   embedded  in  other  contracts,   (collectively   referred  to  as
derivatives)  and for hedging  activities.  It requires that an entity recognize
all  derivatives  as either assets or  liabilities in the statement of financial
position and measure those  instruments  at fair value.  In June 1999,  the FASB
issued   SFAS   No.   137,   "Accounting   for   Derivative    Instruments   and
Hedging-Activities-Deferral  of the Effective Date of SFAS No. 133-an  Amendment
of FASB  Statement  133."  This  Statement  delays the  effective  date for this
standard  until  fiscal  years  beginning  after June 15,  2000.  The Company is
currently evaluating the provisions of this Statement.

    The Accounting  Standards  Executive  Committee  Statement of Position 98-5,
"Accounting for the Costs of Start-up Activities" ("SOP 98-5"),  issued in April
1998 and  effective  for fiscal  years  beginning  after  December 15, 1998 with
earlier application permitted, provides guidance on financial reporting of start
up costs and organization  costs.  The Company adopted this statement  effective
October 1, 1999,  resulting in no significant effect on the Company's  financial
statements.

    In December  1999,  the  Securities  and  Exchange  Commission  issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial  Statements." The
Company is in the process of  determining  the impact this adoption will have on
its consolidated financial statements.

Year 2000 Issues

    As of the date  hereof,  the Company  has not  experienced  any  significant
business disruptions as a result of Year 2000 issues.  However, Year 2000 issues
may arise that are not  apparent  currently.  The  Company  utilizes  management
information  systems and software  technology  that may be affected by Year 2000
issues  throughout  its  operations.  During  fiscal 1998,  the Company began to
implement  plans to ensure  those  systems  continue  to meet its  internal  and
external  requirements.  All  the  Company's  remote  locations  operate  on  an
internally  developed point of sale system. This system utilizes a peer to peer,
Windows 95 local area network.  Communications  between remote locations and the
corporate  office are handled via e-mail through the internet.  After completion
of testing,  the Company  has  determined  that its point of sale system is Year
2000  compliant.  As a result of the  Company's  growth,  a decision was made to
upgrade  information  systems at the  corporate  office.  The  installation  and
implementation  of  a  Year  2000  compliant  PeopleSoft  software  package  was
completed in January 1999. This package  encompasses  all accounting  functions,
payroll,  human resources and benefit  administration  requirements.  The system
operates  in an n-tier  environment  on a Windows NT  platform.  The cost of all
hardware,  software,  training and implementation  costs were approximately $1.5
million,  the majority of which was incurred in fiscal 1998.  In addition to the
PeopleSoft  package,  the  Company  has  implemented  a Year 2000  compliant  J.
Driscoll Package for cash management. This package operates on the same platform
as the PeopleSoft package.

      The Company developed questionnaires and contacted key suppliers regarding
their  Year 2000  compliance  to  determine  any impact on its  operations.  The
Company will continue to monitor its  suppliers on this matter.  The Company has
reviewed  and  continues  to review its  non-information  technology  systems to
determine  the extent of any changes  that may be necessary  and  believes  that
there will be minimal changes required for compliance.

Cautionary Statement

    This  Report  on Form 10-Q and the  foregoing  Management's  Discussion  and
Analysis of  Financial  Condition  and Results of  Operations  contains  various
"forward looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended.  Forward-looking  statements represent the Company's expectations or
beliefs concerning future events. Any  forward-looking  statements made by or on
behalf of the Company are subject to uncertainties  and other factors that could
cause  actual  results  to  differ   materially  from  such  statements.   These
uncertainties and other factors include, but are not limited to, (i) the ability
of the Company to acquire additional  rental-purchase stores on favorable terms,
(ii) the  ability of the  Company to improve the  performance  of such  acquired
stores and to integrate  such  acquired  stores into the  Company's  operations,
(iii) the ability of the Company to improve the  performance  of the Home Choice
stores  and other  stores  acquired  in fiscal  1999 and fiscal  2000,  (iv) the
Company's  ability to open new stores in  favorable  locations  and on favorable
terms and to cause such  stores to become  profitable  in a timely  manner or at
all,  and (v) the  impact of state and  federal  laws  regulating  or  otherwise
affecting the rental-purchase transaction.

    Undue reliance should not be placed on any  forward-looking  statements made
by or on behalf of the  Company  as such  statements  speak  only as of the date
made.  The Company  undertakes no  obligation  to publicly  update or revise any
forward-looking  statement,   whether  as  a  result  of  new  information,  the
occurrence of future events or otherwise.


<PAGE>

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

    The  Company's  major  market  risk  exposure is  primarily  due to possible
fluctuations in interest rates.  The Company's policy is to manage interest rate
risk by  utilizing  interest  rate swap  agreements  to convert a portion of the
floating  interest rate debt to fixed interest rates. The Company does not enter
into derivative financial instruments for trading or speculative  purposes.  The
interest rate swap agreements are entered into with major financial institutions
thereby minimizing the risk of credit loss.

    The  following  table  presents   information  about  the  Company's  market
sensitive  financial  instruments.  The  table  illustrates  the  principle  and
notional amounts,  as well as the date of maturity,  actual and weighted average
pay and receive rates for all  significant  financial and  derivative  financial
instruments in effect as of June 30, 2000:


<TABLE>
<CAPTION>



       Expected Maturity Dates
        (dollars in millions):                  1999       2000       2001      2002       2003       2004     Thereafter
--------------------------------------          ----       ----       ----      ----       ----       ----     ----------
Debt:
<S>                                                         <C>      <C>        <C>        <C>        <C>         <C>
  Term Loan A Euro-rate option........                     $4.3      $19.0     $24.0      $30.0      $35.7       $30.0
  --Actual floating rate..............                      8.684%     8.780%    8.780%     8.780%     8.780%
  Term Loan B Euro-rate option........                     $1.0       $1.0      $1.0       $1.0       $1.0      $171.0
  --Actual floating rate..............                      9.780%     9.780%    9.780%     9.780%     9.780%      9.780%
Interest rate swap agreements:
  National City Bank, notional amount.                                                    $30.0
  --Actual fixed interest rate pay rate                                                     5.965%
  --Actual variable interest rate receive
   rate, (based on 3 month LIBOR).....                                                      6.280%
  Bank of America, notional amount....                                                    $20.0
  --Actual fixed interest rate pay rate                                                     5.760%
  --Actual variable interest rate receive
   rate, (based on 3 month LIBOR).....                                                      6.280%
  Manufacturers and Traders Trust, notional
  amount..............................                                                    $10.0
  --Actual fixed interest rate pay rate                                                     5.925%
  --Actual variable interest rate receive
   rate, (based on 3 month LIBOR).....                                                      6.280%
  Harris Bank, notional amount........                                                    $20.0
  --Actual fixed interest rate pay rate                                                     5.090%
  --Actual variable interest rate receive
   rate, (based on 3 month LIBOR).....                                                      6.280%
  SunTrust Bank, notional amount......                                                    $10.0
  --Actual fixed interest rate pay rate                                                     5.105%
  --Actual variable interest rate receive
   rate, (based on 3 month LIBOR).....                                                      6.280%
  LaSalle Bank, notional amount.......                                                    $10.0
  --Actual fixed interest rate pay rate                                                     5.095%
  --Actual variable interest rate receive
   rate, (based on 3 month LIBOR).....                                                      6.280%
  Bank of America, notional amount....                                                    $10.0
  --Actual fixed interest rate pay rate                                                     5.120%
  --Actual variable interest rate receive
   rate, (based on 3 month LIBOR).....                                                      6.280%
  Harris Bank, notional amount........                                                    $10.0
  --Actual fixed interest rate pay rate                                                     5.120%
  --Actual variable interest rate receive
   rate, (based on 3 month LIBOR).....                                                      6.280%
  PNC Bank, notional amount...........                                                                $5.0
  --Actual fixed interest rate pay rate                                                                6.740%
  --Actual variable interest rate receive
   rate, (based on 3 month LIBOR).....                                                                 6.280%
Letters of credit:
  Letter of credit, Base rate option..        $650
  --Actual floating rate...............        N/A
  Letter of credit, Base rate option..        $300
  --Actual floating rate...............        N/A
  Letter of credit, Base rate option..                     $450
  --Actual floating rate...............                     N/A
  Letter of credit, Base rate option..                     $300
  --Actual floating rate...............                     N/A


</TABLE>

<PAGE>

                                 RENT-WAY, INC.

                            PART II OTHER INFORMATION

ITEM 2.        Changes in Securities and Use of Proceeds

     On May 1, 2000,  the Company  sold  348,910 of its common  stock to Gateway
Companies,  Inc. for aggregate  consideration  of $7.0 million.  The shares were
offered and sold in a transaction exempt from registration under section 4(2) of
the Securities Act of 1933, as amended.





<PAGE>


                                 RENT-WAY, INC.


ITEM 6.  Exhibits and Reports on Form 8-K


     a. Exhibits

       The Exhibits filed as part of this report are listed below.

               Exhibit No.                    Description
               -----------                    -----------
                 10.16        Amendment to credit agreement dated June 28, 2000
                  27                    Financial data schedule

b.  Reports on Form 8-K


        (1)    On June 29, 2000,  the Company filed a Current Report on Form 8-K
               announcing  its purchase of an additional 21 percent stake in dPi
               Teleconnect, LLC, a provider of pre-paid local telephone service.
               Rent-Way  has now invested a total of $7.5 million in dPi and now
               owns 70 percent of dPi. As a result of this transaction, Rent-Way
               will report dPi's results on a  consolidated  basis,  starting in
               the current quarter.

        (2)    On July 7, 2000,  the Company filed a Current  Report on Form 8-K
               announcing  that it has amended its existing  credit  facility to
               increase  the size of the facility to $435  million.  The amended
               facility  consists of  approximately  $115 million in a revolving
               line of credit and approximately  $320 million in term loans. The
               amended  facility is provided through a syndicate of banks led by
               National  City  Bank,  Harris  Trust and  Savings  Bank,  Bank of
               Montreal and Bank of America, N.A.



















<PAGE>



                                 RENT-WAY, INC.

                                   SIGNATURES


       Pursuant to the requirements of the Securities  Exchange Act of 1934, the
       Company  has duly  caused  this  report to be signed on its behalf by the
       undersigned thereunto duly authorized.

                                        RENT-WAY, INC.
                                        By




        July 31, 2000             /s/   William A. McDonnell
---------------------------     -----------------------------------------
            Date                        William A. McDonnell
                                Vice President and Chief Financial Officer



       July 31, 2000             /s/     Matthew J. Marini
 --------------------------     -----------------------------------------
            Date                         Matthew J. Marini
                             Corporate Controller and Chief Accounting Officer






<PAGE>



Exibit 10.16


                       AMENDMENT NO. 4 to credit agreement


         THIS AMENDMENT NO. 4 TO CREDIT AGREEMENT (the  "Amendment") is dated as
of June 28,  2000,  and is made by and  among  RENT-WAY,  INC.,  a  Pennsylvania
corporation  (the  "Borrower"),  RENT-WAY  OF TTIG,  L.P.,  an  Indiana  limited
partnership,  and RENTAVISION  INC., a New York  Corporation  (Rent-Way of TTIG,
L.P.  and  Rentavision   Inc.  are  referred  to  herein   collectively  as  the
"Co-Borrowers" and each separately as a "Co-Borrower"),  each of the GUARANTORS,
each of the LENDERS (as defined in the Credit Agreement defined below), NATIONAL
CITY  BANK OF  PENNSYLVANIA  in its  capacity  as  administrative  agent for the
Lenders under the Credit Agreement  (hereinafter referred to in such capacity as
the  "Administrative  Agent"),  BANK  OF  AMERICA,  N.A.,  in  its  capacity  as
documentation  agent for the Lenders,  and BANK OF MONTREAL and HARRIS TRUST AND
SAVINGS BANK, in their capacity as syndication agents.

                                 W I T N E S S E T H:

                  WHEREAS, the parties hereto are parties to that certain Credit
Agreement  dated as of September 23, 1999, as amended by Amendment No. 1 thereto
dated as of November 17, 1999,  Amendment  No. 2 thereto dated as of December 6,
1999,  and Amendment  No. 3 thereto dated as of December 7, 1999  (collectively,
the "Credit Agreement"),  pursuant to which the Lenders provided to the Borrower
and the Co-Borrowers a $100,000,000  revolving credit facility,  $125,000,000 in
Term Loans A and $100,000,000 in Term Loans B;

                  WHEREAS,  the Borrower and the Co-Borrowers have requested the
Lenders to amend the Credit Agreement to increase the amount of Revolving Credit
Loans,  Term  Loans  A and  Term  Loans  B  available  to the  Borrower  and the
Co-Borrowers,  to modify  the  amortization  of the Term  Loans A and extend the
maturity  dates with respect to the Revolving  Credit Loans and Term Loans A, to
modify the financial  covenants set forth in the Credit  Agreement and to effect
certain  other  changes  to the terms of the  Credit  Agreement.  The  foregoing
increases and modifications  have been agreed to by the Lenders,  subject to the
terms and conditions set forth in this Amendment.

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

Definitions.  Defined terms used herein unless  otherwise  defined  herein shall
have the  meanings  ascribed  to them in the  Credit  Agreement.  The  following
definitions set forth in Section 1.1 are hereby amended and restated as follows:
                           "Expiration  Date  shall  mean,  with  respect to the
Revolving Credit Commitments, June 30, 2005.

     Line of Business shall mean the rent-to-own  business,  the rental purchase
business, the rental business, related lines of business and other complementary
or  compatible  business  activities  intended  to service  the  Borrower's  and
Co-Borrowers' marketing demographics.

                           Syndications  Period  shall mean the  period  between
June 28, 2000, and the date upon which the Syndication
Agents and  National  City Bank  notify the  Borrower  and the  Co-Borrowers  in
writing that the syndication of the Loans is completed.

                           Term Loan A Maturity Date shall mean June 30, 2005.

     The following  new  definition is hereby added in Section 1.1 of the Credit
Agreement in alphabetical  order:  "Adjusted Leverage Ratio shall mean the ratio
of (i) the sum of  Consolidated  Funded  Debt plus  three  times  the  Occupancy
Expense minus Cash Equivalents, as measured at the end of each fiscal quarter of
the Borrower for the four quarters then ended,  to (ii)  Consolidated  Cash Flow
from  Operations plus Occupancy  Expense,  as measured at the end of each fiscal
quarter of the Borrower for the four quarters then ended.

                         Amendment No. 4 Closing Date shall mean June 28, 2000.

     Cash Equivalents shall mean cash and all investments  permitted by the Loan
Parties  described  in items (i)  through  (v) in the  definition  of  Permitted
Investments."

Sections  3.1 through 3.4 of the  Agreement  are hereby  amended and restated as
follows:

         "3.1  Term Loan Commitments.
                  3.1.1  Term Loan A Commitments.

                  Subject to the terms and conditions  hereof,  and relying upon
the  representations  and warranties  herein set forth,  each Lender with a Term
Loan A  Commitment  severally  agrees to make a term loan (the "Term Loan A") to
the Borrower and the  Co-Borrowers  on Amendment No. 4 Closing Date in an amount
equal to such Lender's Term Loan A Commitment. With respect to each Lender which
previously  made a Term Loan A to the  Borrower  and the  Co-Borrowers  prior to
Amendment  No. 4 Closing  Date,  such Lender  shall fund an amount  equal to the
difference  between  such  Lender's  Term Loan A  Commitment  and the  principal
balance  outstanding  on the prior  Term Loan A,  with  such  prior  outstanding
balance to be included as part of the Lender's Term Loan A Commitment. The prior
Term Loan A of a Lender (if any) and the Term Loan A funds advanced on Amendment
No. 4 Closing Date, shall together constitute a Lender's Term Loan A.


                  3.1.2  Term Loan B Commitments.

                  Subject to the terms and conditions  hereof,  and relying upon
the  representations  and warranties  herein set forth,  each Lender with a Term
Loan B  Commitment  severally  agrees to make a term loan (the "Term Loan B") to
the Borrower and the  Co-Borrowers in an amount equal to such Lender's Term Loan
B Commitment. With respect to each Lender which has a Term Loan B outstanding to
the Borrower and the Co-Borrowers  immediately  prior to Amendment No. 4 Closing
Date and is not increasing  the amount of its Term Loan B Commitment,  such Term
Loans B shall continue  outstanding  after giving effect to the increases in the
Commitments  effective on  Amendment  No. 4 Closing  Date.  With respect to each
Lender which is increasing the amount of its Term Loan B Commitment on Amendment
No. 4  Closing  Date or  which  did not have a Term  Loan B  outstanding  to the
Borrower and the Co-Borrowers immediately prior to Amendment No. 4 Closing Date,
such Lender shall fund an amount equal to the  difference  between such Lender's
new Term Loan B Commitment and the Term Loan B Commitment which existed prior to
Amendment  No. 4 Closing Date The prior Term Loan B of a Lender (if any) and the
Term Loan B funds  advanced  on  Amendment  No. 4 Closing  Date (if any),  shall
together constitute a Lender's Term Loan B.

         3.2   Nature of Lenders' Obligations with Respect to Term Loans.
                  The  obligations  of each  Lender to make Term  Loans A to the
Borrower and the Co-Borrowers shall be in the proportion that such Lender's Term
Loan A  Commitment  bears to the Term Loan A  Commitments  of all  Lenders;  the
obligations  of  each  Lender  to make  Term  Loans  B to the  Borrower  and the
Co-Borrowers  shall  be in  the  proportion  that  such  Lender's  Term  Loan  B
Commitment  bears to the Term Loan B Commitments  of all Lenders.  Each Lender's
Term Loans to the Borrower and the Co-Borrowers shall never exceed its Term Loan
Commitments. The failure of any Lender to make a Term Loan shall not relieve any
other  Lender of its  obligations  to make a Term  Loan nor shall it impose  any
additional  liability on any other Lender  hereunder.  The Lenders shall have no
obligation to make Term Loans  hereunder after Amendment No. 4 Closing Date. The
Term Loan Commitments are not revolving credit commitments, and the Borrower and
the  Co-Borrowers  shall not have the right to borrow,  repay and reborrow under
Section 3.1.

         3.3   Term Loan Notes.
                  The Obligation of the Borrower and the  Co-Borrowers  to repay
the  unpaid  principal  amount of the Term Loans  made to the  Borrower  and the
Co-Borrowers by each Lender,  together with interest thereon, shall be evidenced
by a Term Note dated  either the Closing Date (in the case of a Lender with Term
Loan B which is not increasing its Term Loan B Commitment, or if such Lender was
not a party to this  Agreement  on the Closing  Date,  the date that such Lender
joined in this  Agreement) or Amendment No. 4 Closing Date (or if such Lender is
not a party to this  Agreement on Amendment  No. 4 Closing  Date,  the date that
such Lender joins in this  Agreement),  payable to the order of each Lender in a
face amount equal to the Term Loan of such Lender.  The principal  amount of the
Term Notes A shall be payable in quarterly  payments due on the last day of each
September, December, March and June, beginning with the quarter ending September
30, 2000, and as follows:

<TABLE>
<CAPTION>

          Quarters Ending on Following Date or In The            Percentage of Principal of Term Loan A Commitments
                     Following Period                                        Due on Each Payment Date
          -------------------------------------------            --------------------------------------------------

<S>                 <C>  <C>          <C>  <C>              <C>  <C>  <C>
               9-30-00 through  6-30-01                                          three percent (3%)
               9-30-01 through  6-30-02                                          four percent  (4%)
               9-30-02 through  6-30-03                                          five percent  (5%)
               9-30-03 through  6-30-04                                          six  percent  (6%)
               9-30-04 through  6-30-05                                          seven percent (7%)


</TABLE>

                  The  principal  amount of the Term Notes B shall be payable as
follows:  (i) one payment due on June 30, 2000,  in the amount of $250,000 to be
applied pro rata to the Term Loans B outstanding  immediately prior to Amendment
No. 4 Closing Date,  (ii)  seventeen  quarterly  payments due on the last day of
each  September,  December,  March and June,  beginning  with the quarter ending
September 30, 2000,  and  continuing  through the quarter  ending  September 30,
2004,  each such payment in an amount equal to one-fourth of one percent  (1/4%)
of the Term Loan B  Commitments,  (iii) one payment on September  30, 2005 in an
amount equal to forty-seven  and one-half  percent  (47-1/2%) of the Term Loan B
Commitments,  and (iv) a final  payment on September  30, 2006 of the  remaining
principal balance of the Term Loans B."

The first paragraph of Section 4.2 of the Credit Agreement is hereby amended and
restated as follows:

        "4.2   Interest Periods.

                  At any  time  when the  Borrower  and the  Co-Borrowers  shall
select,   convert  to  or  renew  a  Euro-Rate  Option,  the  Borrower  and  the
Co-Borrowers  shall notify the  Administrative  Agent thereof at least three (3)
Business Days prior to the effective date of such Euro-Rate Option by delivering
a Loan  Request.  The notice  shall  specify an interest  period (the  "Interest
Period")  during which such  Interest  Rate Option shall  apply,  such  Interest
Period to be (i) two  weeks if the  Borrower  and the  Co-Borrowers  select  the
Euro-Rate Option to apply to the Loans during the Syndications  Period, and (ii)
after  the  Syndications  Period  has  ended,  one,  two,  three or six  Months.
Notwithstanding the preceding sentence,  the following provisions shall apply to
any selection of, renewal of, or conversion to a Euro-Rate Option:"

The               first  paragraph of Section  5.4.1 of the Credit  Agreement is
                  hereby amended and restated as follows: 5.4.1 Right to Prepay.

                           The  Borrower  and the  Co-Borrowers  shall  have the
right at their option from time to time to pay the Loans
in whole or part without premium or penalty, except for such premiums, penalties
and other payments provided for in Section 5.4.3 below or in Section 5.6:

           (i) at any time  with  respect  to any Loan to  which  the Base  Rate
Option or Euro-Rate Option applies;

           (ii) on the date  specified  in a notice by any  Lender  pursuant  to
Section  4.4  [Euro-Rate  Unascertainable]  with  respect to any Loan to which a
Euro-Rate Option applies.
Section 5.5.1 of the Credit Agreement is hereby amended and restated as follows:
        "5.5.1    Excess Cash Flow.

                  Within  five  (5)  Business   Days  of  the  delivery  of  the
Borrower's  annual  financial  statements  pursuant  to  Section  8.3.3  [Annual
Financial  Statements]  commencing with the financial  statements for the fiscal
year ended  September 30, 2001, but in any event no later than January 5 of each
year commencing  January 5, 2002 (each, a "Mandatory  Prepayment  Date"), and in
the event that the  Leverage  Ratio for the fiscal  year in  question is greater
than 2.5 to 1.0, as  determined  on a pro forma basis after giving effect to any
prepayments  under this Section 5.5.1, the Borrower and the  Co-Borrowers  shall
make a  mandatory  prepayment  of  principal  on the Term Loans  equal to 50% of
Excess Cash Flow for the immediately  preceding fiscal year, subject to a credit
for voluntary  prepayments made pursuant to Section 5.4 [Voluntary  Prepayments]
during the immediately  preceding fiscal year, together with accrued interest on
such principal amount (each, a "Mandatory Prepayment of Excess Cash Flow"). Each
Mandatory  Prepayment of Excess Cash Flow shall be applied by the Administrative
Agent to the outstanding  principal balance of the Term Loans A and Term Loans B
based upon the Ratable  Share of such Term Loan to all the Term  Loans,  in each
case by application to the unpaid installments of principal in the inverse order
of scheduled maturities.  Upon its receipt of the annual financial statements of
the Borrower and receipt of payment by the Borrower and the  Co-Borrowers of the
Mandatory  Prepayment of Excess Cash Flow, the  Administrative  Agent shall give
the Lenders with outstanding  principal on the Term Loans B notice of the amount
of the  Mandatory  Prepayment  of Excess Cash Flow. In the event that any one or
more  Lender  with Term Loans B  outstanding  elects not to receive its pro rata
share of such prepayment, such Lender shall provide written notice of the amount
it elects not to receive in prepayment of its Term Loan B, and such amount shall
be  reallocated  to payment of the Term Loans A based upon the Ratable  Share of
the Lenders with Term Loans A, to be applied by the Lenders with Term Loans A in
the  inverse  order of  scheduled  maturities.  To the extent  that a  Mandatory
Prepayment of Excess Cash Flow exceeds the outstanding  principal  amount of the
Term Loans,  such prepayment  shall be limited to the amount necessary to prepay
the Term Loans in full."

Section 5.5.2 of the Credit Agreement is hereby amended and restated as follows:
        "5.5.2    Sale of Assets; Issuance of Stock.

Within  five (5)  Business  Days of any sale of  assets  authorized  by  Section
8.2.7(v)  which  involves the sale of assets having a market value or book value
in an amount equal to or greater than $10,000,000 in the aggregate in any fiscal
year,  the Borrower and the  Co-Borrowers  shall make a mandatory  prepayment of
principal  equal to the  after-tax  proceeds of such sale (as  estimated in good
faith by the Borrower and the  Co-Borrowers),  together with accrued interest on
such principal amount. In the event that the Adjusted Leverage Ratio at the time
of any issuance of equity by the Borrower  authorized  by Section  8.2.13(iv) is
greater  than 2.5 to 1.0,  as  determined  on a pro forma basis at such time and
after  giving  effect to cash  received by the  Borrower  upon  issuance of such
equity and any prepayment required under this Section 5.5.2, then simultaneously
with the issuance of such capital stock by the Borrower, the Borrower shall make
a mandatory  prepayment of principal  equal to the net proceeds of such issuance
to the extent that the Adjusted  Leverage Ratio continues to be greater than 2.5
to 1.0 as a result of such mandatory prepayment of the net proceeds or a portion
thereof.  In the event  that the  Required  Lenders  permit  the  incurrence  of
Indebtedness  other than as permitted  under Section  8.2.1,  the Borrower shall
make a  mandatory  prepayment  of  principal  equal to the net  proceeds of such
Indebtedness.  In the event  that the  Administrative  Agent  does not  disburse
insurance proceeds in excess of $250,000 to the Loan Parties pursuant to Section
8.1.3,  such  proceeds  shall be applied as a mandatory  prepayment of principal
equal to the amount of such insurance proceeds. All prepayments pursuant to this
Section  5.5.2 shall be applied in  accordance  with the  provisions  of Section
5.5.1, and upon payment in full of the Term Loans, then as a permanent reduction
to the Revolving Credit  Commitments.  In the event that any one or more Lenders
with Term Loans B  outstanding  elects not to receive its pro rata share of such
prepayments,  such Lender shall provide  written  notice of the amount it elects
not to  receive  in  prepayment  of its Term  Loan B, and such  amount  shall be
reallocated  to payment of the Term Loans A based upon the Ratable  Share of the
Lenders with Term Loans A, to be applied by the Lenders with Term Loans A in the
inverse order of scheduled maturities.  Notwithstanding the foregoing and in the
case of asset  sales  authorized  by Section  8.2.7(v),  to the extent  that the
after-tax  proceeds of such sale are used by the applicable  Loan Party prior to
the due date of the  mandatory  prepayment to acquire  substitute  assets in the
ordinary  course of business of such Loan Party and such  substitute  assets are
subject to a Prior Security  Interest in favor of the  Administrative  Agent for
the  benefit  of  the  Lenders,   then  the   mandatory   prepayment   shall  be
correspondingly reduced or terminated, as the case may be."

Section 8.1.13 of the Credit Agreement is hereby amended and restated
as follows:

        "8.1.13   Interest Rate Protection.

     Within  ninety  (90) days  after  Amendment  No. 4 Closing  Date,  the Loan
Parties shall enter into one or more interest rate  protection  agreements  with
one or more of the  Lenders  and with the prior  consent  of the  Administrative
Agent,  which consent  shall not be  unreasonably  withheld.  Such interest rate
protection  agreements  shall be in an amount such that when aggregated with the
interest rate protection agreements of the Borrower in effect on Amendment No. 4
Closing  Date,  provide for interest  rate  protection  in a notional  principal
amount of at least  $200,000,000  (the  interest rate  protection  agreements in
effect on Amendment  No. 4 Closing Date and those  entered into pursuant to this
Section 8.1.13 are  collectively  referred to as the "Interest  Rate  Protection
Agreements").  Such Interest Rate Protection Agreements shall contain such terms
and conditions as shall be acceptable to the Administrative Agent. Documentation
for the Interest Rate Protection Agreement shall be in a standard  International
Swap  Dealer  Association   Agreement  and  shall  provide  for  the  method  of
calculating  the  reimbursable  amount of the  provider's  credit  exposure in a
reasonable and customary  manner.  Such financial  institution  (if other than a
Lender)  may be granted a security  interest in the  Collateral  pursuant to the
Loan Documents and receive a Lien pari passu with the Lien of the Administrative
Agent upon terms acceptable to the Administrative Agent."

Section 8.2.1 of the Credit Agreement is hereby amended and restated as follows:
        "8.2.1    Indebtedness.

     Each of the Loan  Parties  shall  not,  and  shall  not  permit  any of its
Subsidiaries  to,  at any time  create,  incur,  assume  or  suffer to exist any
Indebtedness, except:

                           (i)  Indebtedness under the Loan Documents;

     (ii) Existing  Indebtedness  as set forth on Schedule  8.2.1(including  any
extensions  or  renewals  thereof,  provided  there is no increase in the amount
thereof  or other  significant  change in the  terms  thereof  unless  otherwise
specified on Schedule 8.2.1;

     (iii)Capitalized  and operating leases as and to the extent permitted under
Section 8.2.15;

     (iv)  Indebtedness   secured  by  Purchase  Money  Security  Interests  not
exceeding $100,000;

                           (v)  Indebtedness  of a Loan  Party to  another  Loan
Party which is subordinated in accordance with the
provisions of Section 8.1.12;

                           (vi)   Indebtedness   incurred  in  connection   with
Permitted Acquisitions provided that after giving effect
thereto, no Potential Default or Event of Default exists; and

     (vii)other unsecured Indebtedness not exceeding $15,000,000 at any one time
outstanding."

Section 8.2.4 of the Credit Agreement is hereby amended and restated as follows:
        "8.2.4    Loans and Investments.

     Each of the Loan  Parties  shall  not,  and  shall  not  permit  any of its
Subsidiaries  to, at any time make or suffer to remain  outstanding  any loan or
advance to, or purchase,  acquire or own any stock,  bonds,  notes or securities
of,  or any  partnership  interest  (whether  general  or  limited)  or  limited
liability  company  interest in, or any other investment or interest in, or make
any capital contribution to, any other Person, or agree, become or remain liable
to do any of the foregoing, except:

     (i) trade  credit  extended on usual and  customary  terms in the  ordinary
course of business;

           (ii)  advances  to  employees  to  meet  expenses  incurred  by  such
employees in the ordinary course of business;

           (iii)  Permitted Acquisitions;

           (iv)   Permitted Investments;

           (v) loans,  advances and investments in other Loan Parties,  provided
however,  that additional loans,  advances and investments in Action Rent-to-Own
Holdings of South Carolina, Inc., a South Carolina corporation, shall be limited
to $500,000 in the aggregate; and
           (vi) an investment  not in excess of $7,500,000 for the purchase of a
seventy  percent  (70%)  ownership  interest  in the limited  liability  company
interests of dPi  Teleconnect,  L.L.C.,  a Delaware  limited  liability  company
("dPi"),  and loans and advances not in excess of  $3,500,000  to dPi at any one
time outstanding,  provided however,  that the Loan Parties' ownership interests
in dPi and the note  obligations  of dPi to the Loan Parties shall be pledged to
the  Administrative  Agent for the benefit of the Lenders.  For purposes of this
Credit  Agreement,  the  financial  results  of dPi  shall  be  included  in the
consolidated   financial   statements  of  the  Borrower,   as  determined   and
consolidated in accordance  with GAAP, but dPi shall not otherwise  constitute a
Subsidiary  subject to the terms and conditions of this Credit Agreement and the
Loan Documents which relate to the Subsidiaries of the Loan Parties."

Section 8.2.6 of the Credit Agreement is hereby amended and restated as follows:
        "8.2.6    Liquidations, Mergers, Consolidations, Acquisitions.

     Each of the Loan  Parties  shall  not,  and  shall  not  permit  any of its
Subsidiaries to, dissolve,  liquidate or wind-up its affairs,  or become a party
to any merger or consolidation,  or acquire by purchase,  lease or otherwise all
or  substantially  all of the  assets  or  capital  stock of any  other  Person,
provided that

                           (1) any Loan Party  other than the  Borrower  and the
Co-Borrower may consolidate or merge into another Loan
Party  which is  wholly-owned  by one or more of the  other  Loan  Parties,  and
Rentavision  may merge with and into the Borrower so long as the Borrower is the
surviving  corporation,  provided,  that  Borrower  and the  Co-Borrowers  shall
deliver  to  the  Administrative  Agent  copies  of  the  applicable  merger  or
consolidation  documentation  within five (5) Business  Days after the effective
date of such merger or  consolidation  and the  appropriate  Loan Parties  shall
promptly  thereafter  (but in no event in less than five (5) Business Days after
the  Administrative  Agent's  request  therefore)  execute  and  deliver  to the
Administrative Agent new UCC-1 financing statements or amendments to filed UCC-1
financing  statements,  as appropriate  in the discretion of the  Administrative
Agent,  and take such other action as is necessary  to maintain  first  priority
Liens in the assets of the parties to such merger or consolidation; and

     (2) any Loan Party may acquire,  whether by purchase or by merger,  (A) all
of the ownership  interests of another Person or (B) substantially all of assets
of another  Person or of a business  or  division  of  another  Person  (each an
"Permitted  Acquisition"),  provided that each of the following  requirements is
met:

     (i)such Person shall be a corporation,  limited  liability company or other
entity with respect to  applicable  state law  providing  that the owners of all
stock or other  ownership  interests  in such entity shall not be liable for any
obligations of such entity or for the claims of any creditors thereof,

                                    (ii) if the Loan Parties are  acquiring  the
ownership interests in such Person, such Person shall
execute a Guarantor  Joinder and join this Agreement as a Guarantor  pursuant to
Section 11.18 and such Person and its owners shall grant Liens in the assets and
stock or other  ownership  interests  in such Person and  otherwise  comply with
Section 11.18 on or before the date of such Permitted Acquisition,

                                    (iii)  the  board  of   directors  or  other
equivalent governing body of such Person shall have
approved such Permitted Acquisition and the Loan Parties shall have delivered to
the  Lenders  written   evidence  of  such  approval  prior  to  such  Permitted
Acquisition,

     (iv) the business  acquired,  or the business conducted by the Person whose
ownership  interests are being acquired,  as applicable,  shall be substantially
the same as the Line of Business and shall comply with Section 8.2.10,

     (v)no Potential  Default or Event of Default shall exist  immediately prior
to and after giving effect to such Permitted Acquisition,

                                    (vi) the Borrower and the Co-Borrowers shall
have given the Administrative Agent written notice
of the  acquisition  at least  five (5) days  prior to its  consummation,  which
notice shall include a quarterly  compliance  certificate of the Borrower in the
form of Exhibit 8.3.4 which  evidences that after giving effect to the Permitted
Acquisition  and any Loans to be made in connection  therewith,  the Borrower is
not in default with respect the covenants set forth in Section 8.2.16,

     (vii)  any  Consideration  given  by  the  Loan  Parties  in  the  form  of
Indebtedness  to be paid  at a date  after  the  closing  date of the  Permitted
Acquisition  shall be subordinated  to the Loans and other  Obligations on terms
and conditions satisfactory to the Administrative Agent,

                                    (viii) the Loan Parties shall have delivered
to the Lenders such opinions of counsel in form and
substance  satisfactory  to the  Administrative  Agent or such other evidence as
shall be  satisfactory to the  Administrative  Agent in its sole discretion that
the Loan Parties are in compliance  with all  applicable  Law in any  additional
states in which the Loan  Parties  do  business  after the  consummation  of the
Permitted Acquisition, and

                                    (ix) if after  giving  effect to a Permitted
Acquisition the Leverage Ratio is greater than or
equal  to 2.0 to 1.0,  the  Consideration  given by the  Loan  Parties  for such
Permitted  Acquisition  shall not exceed  $20,000,000 in value, and after giving
effect to such Permitted Acquisition,  the aggregate  Consideration given by the
Loan Parties for all Permitted  Acquisitions made during the then fiscal quarter
of the Permitted  Acquisition  and during the prior three fiscal  quarters shall
not exceed $50,000,000."

Section 8.2.7 of the Credit Agreement is hereby amended and restated as follows:
        "8.2.7    Disposition of Assets or Subsidiaries.

     Each of the Loan  Parties  shall  not,  and  shall  not  permit  any of its
Subsidiaries to, sell, convey,  assign,  lease, abandon or otherwise transfer or
dispose of,  voluntarily  or  involuntarily,  any of its  properties  or assets,
tangible  or  intangible   (including  sale,   assignment,   discount  or  other
disposition of accounts,  contract rights,  chattel paper,  equipment or general
intangibles with or without  recourse or of capital stock,  shares of beneficial
interest,  partnership  interests or limited  liability  company  interests of a
Subsidiary of such Loan Party), except:

     (i)transactions  involving the sale of inventory in the ordinary  course of
business;

                                    (ii) any sale, transfer,  rental or lease of
assets in the ordinary course of business which are
no longer  necessary  or required  in the  conduct of such Loan  Party's or such
Subsidiary's  business,  including,  without  limitation,  (a) the Real Property
located at 3230 West Lake Road,  Erie,  Pennsylvania,  (b)  assets  relating  to
closings of retail store sites of the Loan Parties,  provided however,  that the
market value of the assets  disposed of pursuant to this  subsection  (ii), when
aggregated with permitted dispositions described in subsection (iv) below, shall
not exceed $5,000,000 in any fiscal year of the Borrower;

                                    (iii) any sale,  transfer or lease of assets
by any wholly owned Subsidiary of such Loan Party to
another Loan Party;

                                    (iv) any sale,  transfer  or lease of assets
in the ordinary course of business which does not
cause the aggregate  market value or the aggregate book value of all such sales,
transfers  and  leases,  when  aggregated  with the  permitted  dispositions  in
subsection (ii) above,  to exceed  $5,000,000 in any fiscal year of the Borrower
and which are  replaced  by  substitute  assets  acquired  or leased  within the
parameters of Section 8.2.15, provided such substitute assets are subject to the
Lenders' Prior Security Interest; or

     (v)any  sale,  transfer or lease of assets,  other than those  specifically
excepted  pursuant to clauses (i) through  (iv) above,  which is approved by the
Required Lenders so long as the after-tax  proceeds (as reasonably  estimated by
the Borrower and the Co-Borrowers) are applied as a mandatory  prepayment of the
Term Loans in accordance with the provisions of Section 5.5.2 above."

Section 8.2.13 of the Credit Agreement is hereby amended and restated
as follows:

        "8.2.13   Issuance of Stock.

     Each of the Loan  Parties  shall  not,  and  shall  not  permit  any of its
Subsidiaries  to,  issue  any  additional  shares  of its  capital  stock or any
options,  warrants or other rights in respect thereof,  except that the Borrower
may issue additional  shares of capital stock (i) for Permitted  Acquisitions in
accordance  with the  provisions  of Section  8.2.6,  (ii) for  distribution  to
employees  as provided  for under the stock  option  plans and 401(k)  plans set
forth on Schedule  6.1.21 as in effect on the Closing Date,  (iii) in connection
with the Mass Mutual  Warrants,  and (iv) to the extent  required  under Section
5.5.2,if the net proceeds of the issuance are used by the Borrower to reduce (a)
the Loans  outstanding  under this  Agreement,  and (b) the  Commitments  of the
Lenders."

Section 8.2.16 of the Credit Agreement is hereby amended and restated
as follows:

        "8.2.16   Maximum Leverage Ratio.

     The Loan Parties  shall not permit the  Leverage  Ratio of the Borrower and
its  Subsidiaries  to  exceed  the ratio  set  forth  below for the four  fiscal
quarters then ended.

<TABLE>
<CAPTION>

                                     Period                                 Ratio

<S>                 <C>  <C>                                            <C>     <C>
                    6/30/00                                             3.25 to 1.00

                    9/30/00 through 12/31/00                            3.50 to 1.00

                    3/31/01                                             3.25 to 1.00

                    6/30/01                                             3.00 to 1.00

                    9/30/01 through 6/30/02                             2.75 to 1.00

                    9/30/02 and thereafter                              2.50 to 1.00"

</TABLE>

Section 8.2.18 of the Credit Agreement is hereby amended and restated
as follows:

    "8.2.18   Minimum Interest Coverage Ratio.

                           The  Loan  Parties  shall  not  permit  the  Interest
Coverage Ratio to be less than the ratio set forth below for
the four fiscal  quarters  then ended,  as  calculated at the end of each fiscal
quarter of the Borrower.

<TABLE>
<CAPTION>

                                    Period                                 Ratio

<S>                 <C>  <C>                                           <C>     <C>
                    6/30/00                                            4.00 to 1.00

                    9/30/00 through 12/31/00                           3.75 to 1.00

                    3/31/01 through 6/30/01                            4.00 to 1.00

                    9/30/01 through 12/31/01                           4.25 to 1.00

                    3/31/02                                            4.75 to 1.00

                    6/30/02 and  thereafter                            5.00 to 1.00"

</TABLE>


Section 8.2.20 of the Credit Agreement is hereby amended and restated
as follows:

        "8.2.20   Fixed Charge Coverage Ratio.

                           The  Borrower  shall not at any time permit the Fixed
Charge Coverage Ratio to be less that the amount set
forth below for the four fiscal quarters then ended, as calculated at the end of
each fiscal quarter of the Borrower.

<TABLE>
<CAPTION>

                                    Period                                 Ratio

<S>                 <C>  <C>        <C>  <C>                           <C>     <C>
                    6/30/00 through 9/30/00                            1.10 to 1.00

                    12/31/00                                           1.15 to 1.00

                    3/31/01 and  thereafter                            1.20 to 1.00"

</TABLE>

Section 8.2.21 of the Credit Agreement is hereby amended and restated
as follows:

"8.2.21   Rental Merchandise Usage.

     The Loan Parties shall not permit the value of the Rental Merchandise other
than personal computers held for rental under rental contracts (but including in
the  calculations  made pursuant to this sentence  personal  computers  held for
rental under rental-purchase contracts) under lease pursuant to Rental Contracts
to be less than (i) 70% of the  total  value of Rental  Merchandise  other  than
personal  computers held for rental under rental contracts (but including in the
calculations made pursuant to this sentence  personal  computers held for rental
under  rental-purchase  contracts),  as  measured  at the fiscal  quarter of the
Borrower  ending  June  30,  2000,  and (ii) 75% of the  total  value of  Rental
Merchandise other than personal computers held for rental under rental contracts
(but  including in the  calculations  made  pursuant to this  sentence  personal
computers held for rental under rental-purchase  contracts),  as measured at the
end of each fiscal  quarter of the Borrower  commencing  September  30, 2000 and
thereafter.  The  Loan  Parties  shall  not  permit  the  value  of  the  Rental
Merchandise  comprised  of  personal  computers  held for  rental  under  rental
contracts (but excluding  from the  calculations  made pursuant to this sentence
personal computers held for rental under rental-purchase  contracts) under lease
pursuant  to Rental  Contracts  to be less  than (i) 75% of the  total  value of
Rental Merchandise  comprised of personal computers held for rental under rental
contracts (but excluding  from the  calculations  made pursuant to this sentence
personal computers held for rental under rental-purchase contracts), as measured
at the fiscal quarter of the Borrower ending September 30, 2000, and (ii) 85% of
the total value of Rental  Merchandise  comprised of personal computers held for
rental under rental contracts (but excluding from the calculations made pursuant
to this  sentence  personal  computers  held for  rental  under  rental-purchase
contracts),  as  measured  at the end of each  fiscal  quarter  of the  Borrower
commencing  December  31, 2000 and  thereafter.  For  purposes  of this  Section
8.2.21,  the value of the Rental  Merchandise  shall be as it is recorded on the
books and records of the Loan Parties,  determined  in accordance  with GAAP and
the value of any jewelry shall be excluded from all calculations  made. The Loan
Parties  shall not permit the value of idle  jewelry to exceed 7.5% of the total
value of Rental  Merchandise,  as measured at the end of each fiscal  quarter of
the Borrower commencing June 30, 2000."

Section 11.1.1 of the Credit Agreement is hereby amended and restate
as follows:

        "11.1.1   Increase of Commitment; Extension or Expiration Date.

     With the exception of the Commitments  provided by the Lenders on Amendment
No. 4 Closing Date and  Commitments  provided  during the  Syndications  Period,
increase  the  amount  of the  Revolving  Credit  Commitment,  the  Term  Loan A
Commitment  or the Term Loan B  Commitment  of any  Lender  hereunder,  provided
however,  that no Commitment of a Lender may be increased  without such Lender's
written consent, or extend the Expiration Date, the Term Loan A Maturity Date or
the Term Loan B Maturity Date. In addition to increases  during the Syndications
Period, the Administrative  Agent and the syndication  agents,  with the written
consent of the Borrower  and the  Co-Borrowers  and written  notice to the other
Lenders,  may reallocate Term Loans B in an amount not to exceed  $50,500,000 to
Revolving Credit Loans and Term Loans A; provided  however,  that no Term Loan B
Commitment of a Lender may be reallocated without such Lender's written consent;

     Section  11.1.2 of the Credit  Agreement is hereby  amended and restated as
follows: "11.1.2 Extension of Payment;  Reduction of Principal Interest or Fees;
Modification of Terms of Payment.

     Whether or not any Loans are outstanding, extend the time for any regularly
scheduled payment (it is acknowledged that a mandatory prepayment of a Loan, and
any Commitment reduction in connection with such mandatory prepayment,  is not a
"regularly  scheduled  payment"  of such Loan) of  principal  or interest of any
Loan, the  Commitment Fee or any other fee payable to any Lender,  or reduce the
principal  amount of or the rate of  interest  borne by any Loan or  reduce  the
Commitment Fee or any other fee payable to any Lender,  or otherwise  affect the
terms of any regularly  scheduled payment of the principal of or interest of any
Loan, the Commitment Fee or any other fee payable to any Lender;"

New  Lenders.  Each  Lender  which  was not  previously  a party  to the  Credit
Agreement hereby agrees that upon its execution of this Amendment it will become
a party to and be bound by the Credit Agreement as if it were an original Lender
thereunder and will have the rights and  obligations of a Lender  thereunder and
will perform in accordance with their terms all of the obligations  which by the
terms  of the  Credit  Agreement  and the  Loan  Documents  are  required  to be
performed  by it as a Lender.  Solvency.  As of the date hereof and after giving
effect to the Revolving Credit Loans,  Term Loans A and Term Loans B advanced on
the  date  hereof:  (i) the  fair  value  of the  assets  of the  Borrower,  the
Co-Borrowers  and each of their  Subsidiaries  will  exceed the total  amount of
liabilities  (including  contingent,  subordinated,  unmatured and  unliquidated
liabilities) of the Borrower,  the  Co-Borrower and each of their  Subsidiaries,
(ii)  the  present  fair  saleable  value of the  assets  of the  Borrower,  the
Co-Borrowers  and each of their  Subsidiaries,  on a going concern  basis,  will
exceed the  probable  total  liabilities  (including  contingent,  subordinated,
unmatured and  unliquidated  liabilities) of the Borrower,  the Co-Borrowers and
each of their  Subsidiaries  as they  become  absolute  and  matured,  (iii) the
Borrower,  the Co-Borrowers and each of their  Subsidiaries  will be able to pay
their respective debts,  including  contingent  liabilities,  as they mature and
become due, (iv) the Borrower,  the Co-Borrowers and each of their  Subsidiaries
is not,  and will not be,  engaged in a business  for which its  capital  is, or
would be, unreasonably small, and (v) the Borrower, the Co-Borrowers and each of
their  Subsidiaries  has not incurred (by way of assumption  or  otherwise)  any
obligation or liability (contingent or otherwise) under the Credit Agreement, or
any of the  other  Loan  Documents  to which it is a party,  nor has it made any
conveyance pursuant to or in connection therewith, with actual intent to hinder,
delay or  defraud  either  present  or future  creditors  of the  Borrower,  the
Co-Borrowers or each of their  Subsidiaries.  Revised Schedule 1.1(A).  Schedule
1.1(A) to the Credit  Agreement  is hereby  amended and restated as set forth on
Schedule  1.1(A)  attached to this Amendment No. 4 and made a part hereof.  From
and  after  the date of this  Amendment  No. 4 and  subject  to the terms of the
Credit  Agreement,  the Loans,  Commitment  Fees and Letter of Credit Fees shall
bear  interest  or be  determined,  as the case may be, as set forth on Schedule
1.1(A)  attached to this  Amendment  No. 4. Revised  Schedule  1.1(B).  Schedule
1.1(B) to the Credit  Agreement  is hereby  amended and restated as set forth on
Schedule  1.1(B) attached to this Amendment No. 4 and made a part hereof Revised
Compliance Certificate.  Exhibit 8.3.4 to the Credit Agreement is hereby amended
and restated as set forth on Exhibit 8.3.4  attached to this Amendment No. 4 and
made  a  part  hereof.   Conditions  of  Effectiveness  of  this  Amendment  and
Restatement.  The effectiveness of this Amendment is expressly  conditioned upon
satisfaction of each of the following conditions precedent:  Representations and
Warranties;  No Defaults. The representations and warranties of the Borrower and
the  Co-Borrowers  contained in Article 6 of the Credit  Agreement shall be true
and   accurate  on  the  date  hereof  with  the  same  effect  as  though  such
representations  and  warranties  had been made on and as of such  date  (except
representations  and warranties  which relate solely to an earlier date or time,
which  representations and warranties shall be true and correct on and as of the
specific  dates  or  times  referred  to  therein),  and  the  Borrower  and the
Co-Borrowers shall have performed and complied with all covenants and conditions
hereof;  no Event of Default or  Potential  Default  under the Credit  Agreement
shall have  occurred  and be  continuing  or shall exist.  The  execution by the
Borrower  and the  Co-Borrowers  of  this  Amendment  shall  be  deemed  to be a
certification  of  all  such  matters  as of the  date  hereof.  Legal  Details;
Counterparts.   All  legal  details  and  proceedings  in  connection  with  the
transactions  contemplated  by this  Amendment  shall be in form  and  substance
satisfactory to the Administrative  Agent. The  Administrative  Agent shall have
received  counterparts  of this  Amendment  duly executed by the  Borrower,  the
Co-Borrowers,  the Guarantors and the Required Lenders,  and the  Administrative
Agent shall have received all such other  counterpart  originals or certified or
other  copies  of  such  documents  and  proceedings  in  connection  with  such
transactions,  in form and substance  satisfactory to the Administrative  Agent,
including without limitation,  replacement Notes and a modification agreement to
the Mortgage to evidence that the increased  Commitments are secured by the Real
Property.  The  Administrative  Agent shall have  received  such  officers'  and
secretaries'  certificates  of the Loan  Parties and  opinions  of counsel  with
respect to this Amendment and the Loan Documents  delivered  pursuant  hereto as
shall be satisfactory  to the  Administrative  Agent.  The Borrower shall pay or
cause to have  been paid to the  Administrative  Agent  and the  Lenders  to the
extent not previously paid the fees accrued through the date hereof and the cost
and expenses of the Administrative  Agent and the Lenders which are reimbursable
under the Agreement, the Loan Documents or any related documents. This Amendment
may be executed by the  parties  hereto in any number of separate  counterparts,
each of which when taken together and duly executed and delivered shall together
constitute one and the same  instrument.  Force and Effect.  Except as expressly
modified by this  Amendment,  the Credit  Agreement and the other Loan Documents
are hereby  ratified  and  confirmed  and shall  remain in full force and effect
after the date hereof.  By their execution and delivery of this  Amendment,  the
Guarantors   acknowledge  and  agree  that  their  respective   obligations  and
liabilities  under  the  Guaranty  Agreement  extend to all  Obligations  of the
Borrower  and  the  Co-Borrowers,  or  either  one of  them.  The  Loan  Parties
acknowledge and agree that the Security  Agreements  previously  executed by the
Loan Parties and all other Loan Documents,  including  without  limitation,  all
documents   which  grant  liens  and   security   interests   in  favor  of  the
Administrative  Agent for the benefit of the  Lenders,  remain in full force and
effect and secure the joint and  several  Obligations  of the  Borrower  and the
Co-Borrowers, and to the extent set forth in such Loan Documents, the other Loan
Parties.  Governing Law. This  Amendment  shall be deemed to be a contract under
the laws of the  Commonwealth  of  Pennsylvania  and for all  purposes  shall be
governed by and construed  and enforced in accordance  with the internal laws of
the  Commonwealth  of  Pennsylvania  without  regard  to its  conflict  of  laws
principles.  Effective  Date.  This Amendment  shall be dated as of and shall be
effective as of the date and year first above  written,  which date shall be the
date of the satisfaction of all conditions  precedent to effectiveness set forth
in this Amendment.



<PAGE>






<TABLE>
<CAPTION>



                                 SCHEDULE 1.1(A)

                                  PRICING GRID

------------------------------------------------------------------------------------------------------------------------------------
                                              Revolving Credit    Revolving Credit
                      Leverage Ratio           and Term Loan A     and Term Loan A     Term Loan B     Term Loan B
     Level                                    Euro-Rate Spread    Base Rate Spread      Euro-Rate       Base Rate    Commitment Fee*
     -----                                     and Letter of                             Spread        Spread rate
                                                Credit Fee

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

<S>                      <C>    <C>                <C>                 <C>               <C>             <C>              <C>
      I        Less than 2.0 to 1.0                1.750%              0.250%            3.500%          2.000%           .375%
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------

      II       Equal to or greater than 2.0        2.000%              0.500%            3.500%          2.000%           .375%
               to 1.0 but less than  2.5 to
               1.0
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------

     III       Equal to or greater than 2.5        2.375%              0.875%            3.500%          2.000%           .375%
               to 1.0 but less than  3.0 to
               1.0
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------

     IV**      Equal to or greater than 3.0        2.750%              1.250%            3.500%          2.000%           .500%
               to 1.0
------------------------------------------------------------------------------------------------------------------------------------

</TABLE>



         The  Applicable  Margin,  Applicable  Commitment Fee Rate and Letter of
Credit Fee shall be adjusted,  and any increase or decrease therein shall become
effective on the first day of each month following the due date for the delivery
of each  Compliance  Certificate  in the  form of  Exhibit  8.3.4,  based on the
Leverage Ratio as calculated in such Compliance Certificate.

         * For each day in a period when the  Revolving  Facility  Usage is less
than one half (1/2) of the aggregate amount of the Revolving Credit Commitments,
the  Applicable  Commitment  Fee Rate used to calculate the  Commitment  Fees in
accordance with Section 2.3 shall be one and one-half times the amount set forth
in the Pricing Grid.

         ** The default rate in Section 4.3 may increase these interest rates.