In re Rent-Way, Inc. Securities Litigation 00-CV-323-Notice Of by pas31212

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									                                      UNITED STATES DISTRICT COURT
                                FOR THE WESTERN DISTRICT OF PENNSYLVANIA
IN RE RENT-WAY SECURITIES LITIGATION                                     Case No. 00-323 Erie

This Document Relates To:                                                CLASS ACTION

          ALL ACTIONS.


            NOTICE OF PENDENCY OF CLASS ACTION HEARING ON PROPOSED PARTIAL SETTLEMENT
                 AND ATTORNEYS’ FEE PETITION AND RIGHT TO SHARE IN SETTLEMENT FUND
TO:       ALL PERSONS WHO PURCHASED RENT-WAY, INC. COMMON STOCK DURING THE PERIOD FROM DECEMBER 10,
          1998 THROUGH OCTOBER 27, 2000, INCLUSIVE AND WHO SUFFERED DAMAGES THEREBY.
PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. YOUR RIGHTS WILL BE AFFECTED BY PROCEEDINGS
IN THIS ACTION. IF YOU ARE A CLASS MEMBER, YOU ULTIMATELY MAY BE ENTITLED TO RECEIVE BENEFITS
PURSUANT TO THE PROPOSED SETTLEMENT DESCRIBED HEREIN.
CLAIMS DEADLINE: CLAIMANTS MUST SUBMIT PROOFS OF CLAIM, ON THE FORM ACCOMPANYING THIS NOTICE,
POSTMARKED ON OR BEFORE OCTOBER 23, 2003.
EXCLUSION DEADLINE: REQUESTS FOR EXCLUSION MUST BE SUBMITTED POSTMARKED ON OR BEFORE AUGUST 4,
2003.
SECURITIES BROKERS AND OTHER NOMINEES: PLEASE SEE INSTRUCTIONS ON PAGE 6 HEREIN.
                                    SUMMARY OF SETTLEMENT AND RELATED MATTERS
I.    Purpose of this Notice
    1. This Notice is given pursuant to Rule 23 of the Federal Rules of Civil Procedure and an Order of the Court dated June 5, 2003. The
purpose of this Notice is to inform you that this Class Action and the proposed partial Settlement will affect all Class Members’ rights. This
Notice describes rights you may have under the proposed Settlement and what steps you may take in relation to this Class Action. This
Notice is not an expression of any opinion by the Court as to the merits of any claims or any defenses asserted by any party in this Class
Action, or the fairness or adequacy of the proposed Settlement.
II. Statement of Potential Outcome of Case
      2. The Plaintiffs and the Settling Defendants and Released Parties disagree on both liability and damages and do not agree on the
average amount of damages per share that would be recoverable if Plaintiffs were to have prevailed on each claim alleged. In addition to
the numerous risks of litigation and liability issues on which the parties disagree, the damage-related issues on which the parties disagree
include: (a) whether the alleged material misstatements or omissions were made intentionally or recklessly so as to support liability under
the federal securities laws; (b) the appropriate economic model for determining the amount by which Rent-Way’s common stock was
allegedly artificially inflated (if at all) during the Class Period; (c) the amount by which Rent-Way’s common stock was allegedly artificially
inflated (if at all) during the Class Period; (d) the effect of various market forces influencing the trading price of Rent-Way’s common stock
at various times during the Class Period; (e) the extent to which external factors such as general market and industry conditions, influenced
the trading price of Rent-Way’s common stock at various times during the Class Period; (f) the extent to which the various matters that
Plaintiffs alleged were materially false or misleading influenced (if at all) the trading price of Rent-Way’s common stock at various times
during the Class Period; (g) the extent to which the various allegedly adverse material facts that Plaintiffs alleged were omitted influenced
(if at all) the trading price of Rent-Way’s common stock at various times during the Class Period; and (h) whether the statements made or
facts allegedly omitted were material or otherwise actionable under the federal securities laws.
    3. Plaintiff’s Counsel consider that there was a substantial risk that Plaintiffs and the Class might not have been able to recover any
greater amount from these Settling Defendants and Released Parties in light of the company’s current financial condition and liquidity
position and the amount of insurance which is available to satisfy the claims asserted in the Class Action and potential defenses thereto.
Therefore, absent the Settlement, Plaintiffs could have recovered nothing or substantially less than this amount from these Settling
Defendants and Released Parties. Plaintiffs are continuing litigation against the Non-Settling Defendants, who are PricewaterhouseCoopers
LLP and Matthew Marini, Rent-Way’s former Controller.
    4. The Settling Defendants and Released Parties deny that they are liable to the Plaintiffs or the Class and deny that Plaintiffs or the
Class have suffered any damages.
III. Statement of Plaintiff Recovery
     5. As described more fully below, a partial settlement has been proposed, valued at $25 million, including cash in the amount of $21
million and a $4 million, two year interest-bearing (6%) unsecured promissory note. Plaintiffs estimate that if all eligible Rent-Way
common stock covered by this Settlement filed claims to share in the Settlement, then the average recovery per damaged share of common
stock under the Settlement is estimated to be $0.52 per share (before the deduction of Court-awarded attorneys fees and expenses).
Depending on the number of claims filed, whether Rent-Way stock was held at the end of the Class Period or sold during the Class Period,
and if sold, when sold, an individual Class Member may receive more or less than this average amount.
     6. Under the relevant securities laws, a claimant’s recoverable damages are limited to the losses attributable to the alleged fraud.
Losses which resulted from factors other than the alleged fraud are not compensable from the Settlement Fund. For purposes of the
Settlement herein, a Class Member’s distribution from the Net Settlement Fund will be governed by the proposed Plan of Allocation
described below at paragraphs 34-37, or such other Plan of Allocation as may be approved by the Court.
    7. A detailed explanation of how each Class Member’s claim will be calculated is set forth in the proposed Plan of Allocation which
appears at page 4 of this Notice.
IV. Statement of Attorneys’ Fees and Costs Sought
     8. Plaintiffs’ Counsel intend to apply for fees of up to 30% of the Gross Settlement Fund, and for reimbursement of expenses incurred
in connection with the prosecution of this Class Action in the approximate amount of $300,000, or an average of $0.16 per damaged share.
Plaintiffs’ Counsel have expended considerable time and effort in the prosecution of this litigation on a contingent fee basis, and have
advanced the expenses of the litigation, in the expectation that if they were successful in obtaining a recovery for the Class they would be
paid from such recovery. In this type of litigation it is customary for counsel to be awarded a percentage of the common fund recovery as
their attorneys’ fees.
V. Further Information
    9. Further information regarding the Class Action and this Notice may be obtained by contacting Plaintiff’s Counsel: Solomon B. Cera,
Esq., Gold Bennett Cera & Sidener LLP, 595 Market Street, Suite 2300, San Francisco, CA 94105, (415) 777-2230.
VI. Reasons for the Settlement
    10. The principal reason for the Settlement is the benefit to be provided to the Class now from this partial Settlement. This benefit
must be compared to the risk that no recovery might be achieved from these Settling Defendants and Released Parties in view of the
company’s current financial condition and liquidity position, the fact that the company has no current means of paying it’s existing bank
debt at maturity, and the amount of insurance which is available to satisfy the claims asserted in the Class Action. The litigation is
continuing against the Non-Settling Defendants.
                                         NOTICE OF SETTLEMENT FAIRNESS HEARING
     11. NOTICE IS HEREBY GIVEN, pursuant to Rule 23 of the Federal Rules of Civil Procedure and an Order of the United States
District Court for the Western District of Pennsylvania (the “Court”) dated June 5, 2003, that a hearing will be held before the Honorable
Sean J. McLaughlin, in the United States Courthouse, Courtroom C, 17 S. Park Row, Erie, PA 16501, at 9:00 a.m., on September 12, 2003
(the “Settlement Fairness Hearing”) to determine whether a proposed partial settlement (the “Settlement”) of the above-captioned action (the
“Class Action”) as set forth in the Stipulation and Agreement of Settlement with Rent-Way Settling Defendants dated April 18, 2003 (the
“Stipulation”), is fair, reasonable and adequate, to consider the proposed Plan of Allocation for the settlement proceeds, to consider whether
the promissory note to be issued pursuant to the Stipulation should be exempt from registration with the Securities and Exchange
Commission pursuant to Section 3(a)(10) of the Securities Act of 1933, 15 U.S.C. §77c(a)(10), and to consider the application of Plaintiffs’
Counsel for attorneys’ fees and reimbursement of expenses.
     12. The Court, by Preliminary Order In Connection With Settlement Proceedings, dated June 5, 2003, has, for settlement purposes,
certified a Plaintiff Settlement Class consisting of: “all persons who purchased Rent-Way common stock on the open market during the
period from December 10, 1998 through October 27, 2000, inclusive and who suffered damages thereby.” Excluded from the Class are
Defendants in the Class Action, members of the immediate families (parents, spouses, siblings and children) of each of the individual
Defendants, any person, firm, trust, corporation, entity in which any Defendant has a controlling interest, the officers, directors, parents,
subsidiaries and affiliates of Rent-Way, and the legal representatives, heirs, successors in interest or assigns of any such excluded party.
                                                BACKGROUND OF THE LITIGATION
     13. Defendant Rent-Way is a leading operator of a chain of rental-purchase stores that rent durable household products such as home
entertainment, equipment, furniture, computers, major appliances and jewelry to consumers on a weekly or monthly basis. The Company
also provides pre-paid local phone service to consumers on a monthly basis through its majority-owned subsidiary, dPi Teleconnect, LLC.
     14. Beginning in October 2000, class action complaints alleging violations of the federal securities laws were filed against the Defendants
in the United States District Court for the Western District of Pennsylvania. These class actions were consolidated pursuant to an Order of the
Court entered on January 11, 2001. By Order dated March 9, 2001, the Court appointed Cramer Rosenthal & McGlynn, LLC as the Lead
Plaintiff and appointed the law firm of Gold Bennett Cera & Sidener LLP as Lead Counsel.


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     15. On October 5, 2001, the Lead Plaintiff filed its Amended Consolidated Class Action Complaint For Violations Of The Federal
Securities Laws (the "Complaint"). The Complaint alleges violations of §§10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule
10b-5 promulgated thereunder. The Complaint alleges that Defendants disseminated a series of materially false and misleading statements
in public filings, press releases, shareholder reports, and communications with securities analysts during the Class Period. Specifically,
Lead Plaintiff alleges that the Company falsely reported during the Class Period that it had generated tens of millions of dollars in earnings
when, in truth, it had lost money.
      16. It has been alleged that the material overstatements of the Company's earnings resulted from Defendants' deliberate failure to
record nearly $100 million in expenses on the Company's general ledger. In addition, Lead Plaintiff alleges that Defendants overstated the
value of the Company's assets and understated expenses. The Company has restated earnings for fiscal years 1998 and 1999, and for the
first three quarters of fiscal year 2000. The primary reason for the restatements was the understatement of expenses.
     17. The Complaint further alleges that the public did not begin to learn about the significant problems that Rent-Way was experiencing
until October 30, 2000, when the Company first announced that it was conducting an internal investigation of possible accounting
irregularities.
    18. The Complaint further alleges that Plaintiffs and other Class Members purchased the common stock of Rent-Way during the Class
Period at artificially inflated prices as a result of the Defendants’ dissemination of false and misleading statements regarding Rent-Way.
     19. The Settling Defendants and Released Parties (as defined below) have filed answers to the Complaint, denied all averments of
wrongdoing or liability in the Class Action and all other accusations of wrongdoing or violations of law, and asserted numerous defenses.
The Stipulation is not and shall not be construed or be deemed to be evidence or an admission or a concession on the part of any of the
Settling Defendants or Released Parties of any fault or liability or damages whatsoever, and Settling Defendants and Released Parties do not
concede any infirmity in the defenses which they have asserted or intended to assert in the Class Action.
                                                BACKGROUND TO THE SETTLEMENT
     20. Plaintiff’s Counsel have conducted an investigation relating to the claims and the underlying events and transactions alleged in the
Complaint. Plaintiffs’ Counsel have examined all filings by Rent-Way with the U.S. Securities and Exchange Commission (“SEC”) before,
during and after the Class Period, including recent filings made by Rent-Way with the SEC which contain the current financial results for
Rent-Way for fiscal year 2002 and the first quarter of fiscal year 2003. Plaintiffs believe that Rent-Way’s current financial condition is such
that the terms of the settlement represent the maximum possible recovery for the class.
    21. Plaintiff’s Counsel have analyzed the evidence adduced during their factual investigation and have researched the applicable law
with respect to the claims of Plaintiffs and the Class against the Settling Defendants and Released Parties and the potential defenses thereto.
Prior to entering into the Settlement Agreement, Lead Counsel conducted an extensive investigation of the claims, including the analysis of
more than 70,000 documents and e-mails produced by Rent-Way and its auditor, PricewaterhouseCoopers LLP. Lead Counsel also
subpoenaed and analyzed documents produced by numerous securities analysts and other entities which interacted with Rent-Way.
     22. Plaintiff’s counsel have investigated the scope of coverage, including the amount of directors and officers liability insurance which
is available to satisfy the claims asserted in the Class Action, potential defenses to coverage, and have consulted with an investment advisor
to assist in evaluating the company’s current and future cash flow position.
    23. Plaintiffs, by their counsel, have conducted discussions and arm’s length negotiations with counsel for Settling Defendants with
respect to a compromise and settlement of the Class Action with a view to settling the issues in dispute and achieving the best relief possible
consistent with the interests of the Class.
     24. Plaintiffs and Settling Defendants in the Class Action realize that the continued litigation of the claims would entail substantial
effort and expense and Plaintiffs and Settling Defendants believe that the claims in the Class Action as against the Settling Defendants are
best settled as set forth herein.
     25. No determination has been made by the Court as to liability or the amount, if any, of damages suffered by the Class, nor on the proper
measure of any such damages. The Settlement herein is providing an immediate and substantial cash benefit from the Settling Defendants and
avoids the risks that liability or damages might not have been proven against them at trial, or that if liability and damages were proven as against
these Settling Defendants, that such judgment might not have been collectible against these Settling Defendants. The Settlement does not settle
the claims against the Non-Settling Defendants, although under relevant law, the ultimate liability of the Non-Settling Defendants, if any, may be
reduced by the larger of the amount of the settlement payment or the proportionate responsibility of the Settling Defendants for the Class’
damages.
   26. THE COURT HAS NOT DETERMINED THE MERITS OF THE PLAINTIFFS’ CLAIMS OR THE DEFENSES THERETO.
THIS NOTICE DOES NOT IMPLY THAT THERE HAS BEEN OR WOULD BE ANY FINDING OF VIOLATION OF THE LAW OR
THAT RECOVERY COULD BE HAD IN ANY AMOUNT IF THE ACTION WERE NOT SETTLED.
                                               TERMS OF THE PARTIAL SETTLEMENT
    27. In full and complete resolution of the claims which have or could have been asserted in this Class Action as against the Settling
Defendants and Released Parties, and subject to the terms and conditions of the Stipulation, Rent-Way has agreed to pay, or to cause its
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insurers to pay, into escrow on or before July 31, 2003, on behalf of Plaintiffs and the Class (i) $21,000,000 (the “Cash Settlement
Amount”), and (ii) to provide a $4,000,000 promissory note to be paid within two (2) years from July 31, 2003, said note to be unsecured
and providing for payment of 6% annual interest (the “Note”). BECAUSE OF THE CURRENT FINANCIAL CONDITION OF
RENT-WAY THIS PROPOSED PARTIAL SETTLEMENT IS CONTINGENT ON RENT-WAY SUCCESSFULLY
RESTRUCTURING OR REFINANCING ITS OUTSTANDING INDEBTEDNESS UNDER ITS CREDIT AGREEMENT DATED
SEPTEMBER 23, 1999 AS AMENDED OR OTHERWISE AMENDING SUCH CREDIT AGREEMENT TO ENABLE RENT-
WAY TO COMPLY WITH ITS OBLIGATIONS PURSUANT TO THE SETTLEMENT. IF THIS CONDITION IS NOT
SATISFIED BY JULY 31, 2003 THE SETTLEMENT SHALL BECOME NULL AND VOID AND THERE WILL BE NO
PAYMENT OF ANY MONIES PURSUANT TO THIS SETTLEMENT TO CLASS MEMBERS. NONETHELESS, TO
PARTICIPATE IN THE SETTLEMENT IF IT IS CONSUMMATED AND FINALLY APPROVED BY THE COURT YOU
MUST TIMELY SUBMIT A PROOF OF CLAIM.
    28. Pursuant to the Settlement, and on the Effective Date, Plaintiffs and members of the Class on behalf of themselves, their heirs,
executors, administrators, successors and assigns, and any persons they represent, shall release and forever discharge, and shall forever be
enjoined from prosecuting the Released Parties (defined below) with respect to each and every Settled Claim (defined below).
     29. The “Settling Defendants” includes Rent-Way, Inc., William E. Morgenstern, and William A. McDonnell, each of whom will be
released from all claims relating to the allegations in the Complaint. In addition the Settlement will release claims against any and all of the
Settling Defendants and their respective predecessors, successors, current or former affiliates, officers, directors, attorneys, agents, insurers,
and assigns, including Jeffrey Conway (collectively, the “Released Parties”), but excluding Matthew Marini and PricewaterhouseCoopers
LLP, who remain Defendants and are Non-Settling Defendants.
    30. “Settled Claims” means all claims, rights, demands, suits, matters, issues or causes of action, whether known or unknown, fixed or
contingent, foreseen or unforeseen, against the Released Parties, whether under state or federal law, including the federal securities laws, in
connection with, based upon, arising out of, or relating to any claim that has been or could be raised in the Class Action or the acts, facts or
events alleged in the Class Action, but excluding any claims to enforce the terms of the Settlement.
     31. If the Settlement is approved by the Court, all claims which have or could have been asserted in the Class Action as against the
Settling Defendants and the Released Parties will be dismissed on the merits and with prejudice as to all Class Members and all Class
Members shall be forever barred from prosecuting a class action or any other action raising any Settled Claims against any of the Settling
Defendants or Released Parties.
     32. The Stipulation provides that Rent-Way, Inc. may withdraw from and terminate the Settlement in the event that in excess of a
certain amount of claimants exclude themselves from the Class.
     33. The Settlement will become effective at such time as Orders entered by the Court approving the Settlement shall become final and
not subject to appeal (the “Effective Date”).
                                      PLAN OF ALLOCATION OF SETTLEMENT PROCEEDS
                                                 AMONG CLASS MEMBERS
     34. The $25,000,000 total settlement consideration and the interest earned thereon shall be the “Gross Settlement Fund.” The Gross
Settlement Fund, less all taxes, approved costs, fees and expenses (the “Net Settlement Fund”) shall be distributed to members of the Class
who file acceptable Proofs of Claim (“Authorized Claimants”).
    35. Each Authorized Claimant shall receive, on a pro rata basis, that share of the Net Settlement Fund that the Authorized Claimant’s
“Recognized Loss” bears to the total Recognized Losses of all Authorized Claimants. An Authorized Claimant’s “Recognized Loss” shall
be calculated as follows:
   For Class Members who purchased Shares during the Class Period and who sold such Shares at a loss during the Class Period, the
Recognized Loss is the difference between the purchase price and the sales price multiplied by .5.
    For Class Members who purchased Shares during the Class Period and who sold their Shares at a loss on or after October 30, 2000, or
who still held such Shares on that date, the Recognized Loss is the difference between the purchase price and $4.29 per share, being the
average closing price during a 90-day period following the end of the Class Period.
    36. In connection with the determination of Recognized Loss the following rules shall apply: The date of purchase or sale is the
“contract’ or “trade” date as distinguished from the “settlement” date. For purposes of computing purchases and sales prices, commissions
and fees with respect to the purchase or sale of the Rent-Way common stock shall not be included. Transactions in Rent-Way common
stock shall be matched against the same type of Rent-Way common stock on a “first-in, first-out” (“FIFO”) basis within the Class Period, by
matching the first Rent-Way common stock purchased during the Class Period against the first Rent-Way common stock sold during the
Class Period. The Plan of Allocation may be further altered or amended by order of the Court for good cause shown. “Short” sales shall
not be recognized for any amount of loss on the cover or purchase transaction and no Recognized Loss will be computed for any such
covering purchase transaction.
     37. Checks will be distributed to Authorized Claimants after all claims have been processed and after the Court has finally approved the
Settlement. If any funds remain in the Net Settlement Fund by reason of uncashed checks or otherwise, then after the Claims Administrator has
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made reasonable and diligent efforts to have Class Members who are entitled to participate in the distribution of the Net Settlement Fund cash
their distribution checks, any balance remaining in the Net Settlement Fund one (1) year after the initial distribution of such funds shall be re-
distributed to Class Members who have cashed their checks and who would receive at least $10.00 from such re-distribution. If, after six months
after such re-distribution any funds shall remain in the Net Settlement Fund, such balance shall be contributed to non-sectarian, not-for- profit,
IRS Section 501(c)(3) charitable organization(s) designated by Plaintiffs’ Counsel and not affiliated with Plaintiff’s Counsel.
                                                  THE RIGHTS OF CLASS MEMBERS
   38. The Court has certified a Settlement Class allowing this Settlement to proceed on behalf of a class. If you purchased Rent-Way
common stock during the period from December 10, 1998 through October 27, 2000, inclusive, then you are a Class Member. Class
Members have the following options pursuant to Rule 23(c)(2) of the Federal Rules of Civil Procedure:
         (a) If you wish to remain a member of the Class, you may share in the proceeds of the Settlement, provided that you submit an
acceptable Proof of Claim. Class Members will be represented by the Lead Plaintiff and its counsel, unless you enter an appearance through
counsel of your own choice at your own expense. You are not required to retain your own counsel, but if you choose to do so, such counsel
must file an appearance on your behalf on or before August 4, 2003, and must serve copies of such appearance on the attorneys listed in
paragraph 46 below.
         (b) If you do not wish to remain a member of the Class, you may exclude yourself from the Class by following the instructions in
paragraph 44 below. Persons who exclude themselves from the Class will NOT receive any share of the Settlement proceeds and will not be
bound by the Settlement.
         (c) If you object to the Settlement or any of its terms, or to Plaintiff’s Counsels’ application for fees and expenses, and if you do
not exclude yourself from the Class, you may present your objections by following the instructions in paragraph 46 below.
                                        FILING AND PROCESSING OF PROOFS OF CLAIM
   39. IN ORDER TO BE ELIGIBLE TO RECEIVE ANY DISTRIBUTION FROM THE SETTLEMENT FUND, YOU MUST
COMPLETE AND SIGN THE ATTACHED PROOF OF CLAIM AND RELEASE FORM AND SEND IT BY PREPAID FIRST CLASS
MAIL POSTMARKED ON OR BEFORE OCTOBER 23, 2003, ADDRESSED AS FOLLOWS:
                                                     In re Rent-Way Securities Litigation
                                                            c/o Gilardi & Co. LLC
                                                             Claims Administrator
                                                            Post Office Box 5100
                                                          Larkspur, CA 94977-5100
   40. IF YOU DO NOT SUBMIT A PROPER PROOF OF CLAIM FORM, YOU WILL NOT BE ENTITLED TO ANY SHARE OF
THE SETTLEMENT FUND.
   41. IF YOU ARE A CLASS MEMBER AND YOU DO NOT PROPERLY EXCLUDE YOURSELF FROM THE CLASS, YOU
WILL BE BOUND BY THE SETTLEMENT AND THE FINAL JUDGMENT OF THE COURT DISMISSING THIS ACTION, EVEN IF
YOU DO NOT SUBMIT A PROOF OF CLAIM. IF YOU EXCLUDE YOURSELF, YOU WILL NOT BE BOUND BY THE
JUDGMENT BUT YOU WILL NOT BE ENTITLED TO ANY SHARE OF THE SETTLEMENT FUND.
    42. All Proofs of Claim must be submitted by the date specified in this Notice unless such period is extended by Order of the Court.
    43. Each Claimant shall be deemed to have submitted to the jurisdiction of the United States District Court for the Western District of
Pennsylvania with respect to his, her or its claim.
                                               EXCLUSION FROM THE SETTLEMENT
     44. Each Member of the Class shall be bound by all determinations and judgments in this Class Action concerning the Settlement,
whether favorable or unfavorable, unless such person shall mail, by first class mail, a written request for exclusion from the Class,
postmarked no later than August 4, 2003, addressed to In re Rent-Way Securities Litigation Exclusions, c/o Gilardi & Co. LLC, Claims
Administrator, Post Office Box 5100, Larkspur, CA 94977-5100. No person may be excluded from the Class after that date. In order to
be valid, each such request for exclusion must set forth the name and address of the person or entity requesting exclusion, must state that
such person or entity “requests exclusion from the Class in In re Rent-Way Securities Litigation”, and must be signed by such person or
entity. Persons and entities requesting exclusion must also provide the date, number and prices of all Rent-Way common stock
purchased and sold during the Class Period. Persons or entities requesting exclusion are requested to provide a telephone number. The
request for exclusion shall not be effective unless the request for exclusion provides the required information and is made within the
time stated above, or the exclusion is otherwise accepted by the Court.
                                                 SETTLEMENT FAIRNESS HEARING
    45. At the Settlement Fairness Hearing, the Court will determine whether to finally approve the Settlement and dismiss the Class
Action and the claims of the Class Members as against the Settling Defendants and Released Parties only. The Court will also determine
whether the Plan of Allocation for the Settlement proceeds is fair and reasonable, and whether the issuance of the Note should be exempt
from registration as provided under Section 3(a)(10) of the Securities Act of 1933. The Settlement Fairness Hearing may be adjourned from

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time to time by the Court without further written notice to the Class. If the Settlement is approved, the Court will also consider the
application of Plaintiff’s Counsel for attorneys’ fees.

     46. At the Settlement Fairness Hearing, any Class Member who has not properly submitted a Request for Exclusion from the Class may
appear in person or by counsel and be heard to the extent allowed by the Court in opposition to the fairness, reasonableness and adequacy of
the Settlement, the Plan of Allocation, or the application for an award of attorneys’ fees and reimbursement of expenses, provided, however,
that in no event shall any person be heard in opposition to the Settlement, the Plan of Allocation, or Plaintiff’s Counsels’ application for
attorneys’ fees and expenses and in no event shall any paper or brief submitted by any such person be accepted or considered by the Court,
unless, on or before August 4, 2003, such person (a) files with the Clerk of the Court notice of such person’s intention to appear, showing
proof of such person’s membership in the Class, and providing a statement that indicates the basis for such opposition, along with any
documentation in support of such objection, and (b) simultaneously serves copies of such notice, proof, statement and documentation,
together with copies of any other papers or briefs such person files with the Court, in person or by mail upon each of the following: Solomon
B. Cera, Esq., Gold Bennett Cera & Sidener LLP, 595 Market Street, Suite 2300, San Francisco, CA 94105, on behalf of Plaintiff; and
Robert J. Lane, Esq., Hodgson Russ LLP, One M&T Plaza, Suite 2000, Buffalo, NY 14203-2391, John Oberdorfer, Esq., Patton Boggs
LLP, 2550 M Street, N.W., Washington, DC 20037, Robert N. Rapp, Esq., Calfee, Halter & Griswold LLP, 1400 McDonald Investment
Center, 800 Superior Avenue, Cleveland, OH 44114, and Bryan D. Kocher, Jones Day, 500 Grant Street, 31st Floor, Pittsburgh, PA 15219.
                                            ATTORNEYS’ FEES AND DISBURSEMENTS
     47. At the Settlement Fairness Hearing or at such other time as the Court may direct, Plaintiff’s Counsel intend to apply to the Court
for an award of attorneys’ fees from the Settlement Fund in an amount not greater than 30% of the Gross Settlement Fund, and for
reimbursement of their expenses up to a maximum amount of $300,000, plus interest at the same rate as earned by the Gross Settlement
Fund. Plaintiff’s Counsel, without further notice to the Class, may subsequently apply to the Court for fees and expenses incurred in
connection with administering and distributing the Settlement proceeds to the members of the Class.
                                                      FURTHER INFORMATION
     48. For a more detailed statement of the matters involved in this Class Action, reference is made to the pleadings, to the Stipulation, to
the Orders entered by the Court and to the other papers filed in the Class Action, which may be inspected at the Office of the Clerk of the
Court, United States Courthouse, 617 State Street, Room 240, Erie, PA 16501, during regular business hours.
  49. ALL INQUIRIES CONCERNING THIS NOTICE OR THE PROOF OF CLAIM FORM BY CLASS MEMBERS SHOULD BE
MADE TO THE CLAIMS ADMINISTRATOR IN WRITING AT THE ADDRESS INDICATED BELOW.
                           SPECIAL NOTICE TO SECURITIES BROKERS AND OTHER NOMINEES
     50. If you purchased common stock of Rent-Way, Inc. during the period from December 10, 1998 through October 27, 2000, inclusive for
the beneficial interest of a person or organization other than yourself, the Court has directed that, within seven days of your receipt of this
Notice, you either (a) provide to the Claims Administrator the name and last known address of each person or organization for whom or which
you purchased such Rent-Way common stock during such time period or (b) request additional copies of this Notice and the Proof of Claim
form, which will be provided to you free of charge, and within seven days mail the Notice and Proof of Claim form directly to the beneficial
owners of the Rent-Way common stock. If you choose to follow alternative procedure (b), the Court has directed that, upon such mailing, you
send a statement to the Claims Administrator confirming that the mailing was made as directed. You are entitled to reimbursement from the
Settlement Fund of your reasonable expenses actually incurred in connection with the foregoing, including reimbursement of postage expense
and the cost of ascertaining the names and addresses of beneficial owners. Those expenses will be paid upon request and submission of
appropriate supporting documentation. All communications concerning the foregoing should be addressed to the Claims Administrator:
                                                    In re Rent-Way Securities Litigation
                                                           c/o Gilardi & Co. LLC
                                                            Claims Administrator
                                                           Post Office Box 5100
                                                         Larkspur, CA 94977-5100
                                                         Telephone: (800) 447-7657

Dated: June 5, 2003                                                    By Order of the Court
                                                                       Clerk of the Court




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